2 Nabil Bank Limited Annual Report 2016/17 1

Throughout its three decade long journey,

Nabil Bank has been successful in knitting warm
relationships with its customers. The bank has
been the preferred financial solution partner,
leveraging technology and superior services.
Nabil Bank perfectly weaves together deep insights
with simplified banking. It endeavors in providing
variety of services. Persistent in its growth through
an enduring commitment to business excellence,
improving quality and innovation has resulted
Nabil Bank’s healthy and balanced growth
across all parameters.
 Contents Inside
[1] overview
About Nabil Bank 5
Vision, Mission & Values Statement 6
Financial Highlights 8
Message from Chairman 10
Board of Directors 14
CEO’s Message 16
Macro-economic Outlook 18
[2] Operating & Financial Review
Commentary on key items of Statement of
Financial Position of past 5 years 22-24
Shareholder’s Fund Interim Financial Position
Deposit Mobilisation
Gross Lending Portfolio
Gross Investment Portfolio
Dividend Distribution
Commentary on key items of
Income Statement of past 5 years 25-27
Net Interest Income
Fees, Commission and Other Operating Income
Foreign Exchange Income
Staff Expense
Office Operating Expenses
Net Provision Expense
Profitability
Achievements of Current Year 28-34
Equity
Deposits
Loans
Investments
Net Interest Income
Fees, Commission and Other Operating Income
Foreign Exchange Income
Non-operating Income
Staff Expense
Office Operating Expense
Provision for Possible Losses
Details of Loan Written Off
Staff bonus, Corporate Tax and Net Profit
Value Generation and Distribution 35-36
Value Generation
Application of Value Generation
Segmental Performance Analysis 36-38
Primary Segment
Secondary Segment
Interim position and performance (unaudited) 40-41
Interim Financial Performance
Nabil Investment Banking Ltd. 42-43
Overview
Commentary on key items of
Statement of Financial Position of past 5 years Corporate Sustainability 68
Commentary on key items of Income Statement
of past 5 years
[3] Products and Services
Corporate Banking SBU 45
Infrastructure and Project Financing SBU 45
SME and Microfinance SBU 46
Retail Lending SBU 46
Deposit Relationship Management SBU 47
Cards and Electronic Banking SBU 50
Remittance Business Center SBU 53
Bancassurance SBU 54
Treasury SBU 54
Other Services 54
[4] Governance
The Board of Directors 56-57
Structure of the Board
Information to the Board
Director’s Appointment and Induction
Changes in the Board
Relation with Shareholders
[6] Shareholder’s Information
Board Committees 58-61
Audit Committee (AC)
Risk Management Committee (RMC)
Committee relating to Staff Services and Facilities
Internal Controls 62-64
Addressing Operations Risk
Addressing Credit Risk
Addressing Exchange Risk
Addressing Data Security Risk communication 204-205
Statutory and Regulatory Compliances
Employees 65-67
Corporate Social Responsibility 71
[7] Nabil Investment
[5] Financial Statements and
Other Information
Statement of director’s responsibility 74
Disclosure of information under Section
109(4) of Companies Act 2006 75
Disclosure Related to Sub Rule (1) of Rule
22 of Securities Registration and Issuance
Regulation, 2065 78
Independent Auditors’ Report-group 80
Consolidated Financials 82
Independent Auditors’ Report -Nabil bank 87
Financial Statements -Nabil bank 89-93
Financial Statements
Schedule 1 to 31 94-130
Principal Accounting Policies Sch. 32 131-142
Notes to Accounts Sch. 33 143-197
Schedule 34 to 35 197-201
Structure of Share Capital 202
Representation in the Board of Directors 202
Shareholder’s Profile 203
Stock symbol 203
Annual General Meeting 203
Ordinary resolution
Special resolution
Shareholder enquiries and
Communication
Enquires
Taxation on dividends and bonus shares 205
Taxation on dividends
Capital gains on disposal of shares
Banking Limited
Director’s Report 207
Information under section 109(4) of
Companies Act, 2063 212
Independent Auditor Report -Nabil Invest 216
Financials of Nabil Investment
Banking Limited 217-237
CSR Activities 238
Awards 239
Office Networks 240
4 Nabil Bank Limited Annual Report 2016/17 5

c r i s p [01]
overview
CUSTOMER FOCUSED
ABOUT NABIL BANK
Nabil is a milestone in the Nepalese banking industry that not only commenced private sector banking but also
helped to flourish the industry through the introduction of modern technologies, innovative customer focused
products and efficient processes. Private sector banking in Nepal dates back to 1984 A.D. that budded with the
establishment of Nabil Bank. At that time, the services provided by the government banks were primitive, inefficient
and cumbersome and thus customers were discouraged to avail the banking services. The access to the traditional
banking was limited to 2 commercial banks and 2 sectoral development banks. Loans catering the specific needs of
the business sector were not offered, instead all loans were backed up by collateral (either land or building).

Nabil Bank from its inception has
At such circumstances, Nabil supported
both the retail and business clients.
Reduction in service delivery time,
the growth of business sector through
receivable financing and hypothecation
loan which proved to be a boon for the
business community and to drive the
economy of the country.
The successful operation of Nabil helped
to attract further investments in the
financial sector both from within the
country and international banks and
investors.
Nabil is proud not only of its glorious
history but also of the current position
that it has exhibited in the recent
times as well and it aims to continue
along the same continuum. We have
continuously endeavored to develop new
products that cater to the needs of the
customer service etc has helped Nabil to
reach newer heights every passing year.
Continuous focus in technology, human
resource development and product
innovation ensures quality service delivery
to satiate needs and wants of the mass.
We create and maintain the confidence,
trust, and build the bond with customers
towards the bank, leading to set
benchmark in the private banking sector
of the country in terms of balance sheet
size, customer base, geographic outreach,
business portfolio and value creation for
all our stakeholders.
Nabil as of 15 July 2017 serves its
expanding clientele base with a network
of 52 branch offices, 100 ATM machines
Major Highlights both in NPR and USD Value:
Business Avenues Value in NPR Exchange Rate - Mid Rate Value in USD
and numerous POS terminals, remittance
agents spread across the nation and over
170 international correspondent banking
relationships.
Nabil’s balance sheet size has grown
annually by 10.2% and reached NRs.
140 billion at 15th July, 2017. It has
net worth over Nrs.14 billion, customer
deposits of NRs. 119 billion, gross
customer lending of Nrs.91.5 billion
and profit after tax of Nrs. 3.61 billion.
In USD terms these figures translate to
balance sheet of USD 1.36 billion, net
worth over USD 137 million, customer
deposits of USD 1.15 billion, gross
customer lending of USD 887 million and
profit after tax of USD 35.03 million.
(in million)

focused on partnering customers and
helping meet their need and aspirations.
As a provider of banking and financial
services, Nabil recognizes that its role
goes beyond just transaction. We believe
in being its customer’s companion of
growth. It has been a continuing effort
to offer array of services by anticipating
the needs of the customers.
customer. Furthermore, we have offered
international products and services.
With the investment in Information
Technology Nabil has continuously
redefined modern banking approach
with innovations in systems, processes
and service delivery and made it more
customer friendly through automated
procedures and systems. Alignment of
the systems with the latest technological
advancement, process improvements, and
Balance Sheet 140,332 103.15 1,360
Loan 91,491 103.15 887
Deposit 118,896 103.15 1,153
Net Worth 14,095 103.15 137
Profit after Tax 3,613 103.15 35
Nabil’s strong foundations, inexorable endeavors, effective strategies, teamwork and prudent
management practices are the pillars of unprecedented success that it has enjoyed over the years.
Over the period the culture and values inculcated in the bank, the HR it has groomed, the structure,
systems and processes it has developed and continuous oversight and guidance from the Board
provides strong grounds for the bank moving forth on enhancing values for all the stakeholders.
6 Nabil Bank Limited Annual Report 2016/17 7

[01] c r i s p
VISION, MISSION
AND VALUE STATEMENT RESULT ORIENTED
VISION Nabil Bank is determined in producing outcomes
beneficial to all its stakeholders. Every knit and
At Nabil, our Vision is to be the bank for all across the geopolitical zones and socioeconomic
purl made by bank is done keeping the end result
strata of the nation which can provide myriads of financial solutions and create values for all our
in mind. The actions are driven by the customer
stakeholders, to stand in the community with our economic and civic roles. We look forward to
needs and satisfaction. We make commitments and
emerging as a first rate bank across all stratums of the nation.
services that are indented to create better result.

MISSION
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 endeavors. 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.

VALUE 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 bank’s business.
8 Nabil Bank Limited Annual Report 2016/17 9

[01]
FINANCIAL HIGHLIGHTS AVERAGE RETURN ON ASSETS (in Percentage) RETURN ON EQUITY (in Percentage)

3.25
32.78
27.91 25.61 25.61
2.65 2.70 22.73

TOTAL OPERATING INCOME (NRs. in Billion) NET PROFIT AFTER TAX (NRs. in Billion) 2.32
8 2.06
7.07
7 7
5.73 6 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
6
4.96 4.76
5 4.61 5
3.61
4 4
2.82 CREDIT TO DEPOSIT RATIO (in Percentage) CAPITAL ADEQUACY RATIO (in Percentage)
3 3 2.22 2.32
2.09
2 2 74.90 74.55 11.73
1 1 72.219
70.49 11.59 11.72
0 0 64.43 11.57
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 11.18

SHAREHOLDER'S FUND (NRs. in Billion) TOTAL ASSETS (NRs. in Billion)

140 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
16
14.09 140 127
14 116
120
11.59
12
100 87 GROSS NPA RATIO AND NET NPA RATIO (in Percentage) EARNING PER SHARE AND DIVIDEND PER SHARE (in %)
10 9.49
80 73
7.64
8
6.69 2.13 2.23 91.05
60 76.12
6 1.82
4 40 57.24 59.32 58.41
1.14
2 20 0.80 65.00
65.00
0 0 45.00 48.00
2013 2014 2015 2016 2017
36.84
2013 2014 2015 2016 2017

2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
TOTAL DEPOSIT (NRs. in Billion) GROSS LOANS AND ADVANCES (NRs. in Billion)

119 100
120 110 91 CLOSING PRICE IN NEPSE (in NRs.) MARKET CAPITALISATION (NRs. in Billion)
104
78
100 80
67 2,535 92.85
75 56 2,344 77.19
80
64 60 48 1,910
1,815 59.01 54.86
60 1,523
40
40
31.84
20
20

0 0
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
10 Nabil Bank Limited
[01]
Message from chairman
I am pleased to share that the year
2016/17 has been the best year in
the Bank’s 33 years history in terms
of business volumes, client base and
profitability. Achievements under both top
line volumes and bottom line has been as
per the expectations.
The after tax profit has increased by
28% and reached a historical high of
NPR 3.62 billion. The results we have
achieved has positioned ourselves as one
of the highest profit earning banks. We
continue to lead the industry on several
key fronts like profit, dividend payment
etc.
In line with our capital plan we have
proposed 30% bonus share (stock
dividend) which is one of the highest and
that too from internal generation. From
the proposed bonus share Bank’s paid up
capital crosses minimum requirement of
Rs.8 billion. Similarly we have proposed
18% cash dividend which is also one of
the highest in the industry.
The year went through positive
development under political front. Local
level elections have been concluded in
phases and provincial and federal level
election are also likely to take the same
path, enhancing business climate of
the country. Once these take place as
planned this will have full implementation
of new constitution and the country
is expected to tread on the path of
development. This on the other hand is
also help banking industry to consolidate
its business since all the commercial
banks will cross the minimum capital
requirement of NPR.8 billion.
Yet we stood firm with the sole objective
of leading the industry through service
excellence, product innovation and risk
management. We continued to invest
in our information technology, human
resources and market development. We
believe that our sincere efforts in these
aspects will continue to generate better
results and we will be able to keep up
with the aspirations of our shareholders
thereby yielding better result for our
stakeholders.
The bank has embraced all the changes
The strong
foundation of the
bank is one of the
facets that has been
put in place by the
Nabil cadre over the
last 33 years.
“
and is ready to meet the need of time. “In the bank’s
The institution that it is today is all 33 years history,
because of the untiring efforts put in by
2016/17 has been the
the visionary board, dedicated staff, and
best in terms of business
continued guidance from the regulatory
authority as well as the patronage of our volumes, client base
diverse customers. Introduction of new and profitability.”
services in the country like Credit Card,
- Shambhu Prasad Poudyal
Electronic Payment Gateway, Consumer
CHAIRMAN
Finance on a larger scale, Infrastructure
Project Financing under a dedicated unit,
felicitating Public Shareholder for their
silent but valuable contributions are some
of the initiatives the Bank takes pride in.
Likewise, the Bank’s contribution towards
business expansion, employment creation
and significant tax contribution to the
government are some of the feathers in
our cap.
The strong foundation of the bank is
one of the facets that has been put in
place by the Nabil cadre over the last
33 years. The brand we have created
today is by the best efforts put in by
the Team Nabil and I put on record the
acknowledgement of the contribution of
the dedicated team that has produced
satisfying results over 33 years of Nabil
journey. Our predecessors, both members
of the staff and the board, have gone the
extra mile at the most challenging times
in reinforcing the bank and for bringing
it to present level. On this occasion I
would like to take a few of those names
12 Nabil Bank Limited
whose invaluable contribution has driven
the Bank to present stature. They have
been my companions who played key
roles in the success story of Nabil Bank.
They are late Sashi Narayan Shah, the
first chairman of the Board, Late Kalyan
Bikram Adhikary, former governor of
Nepal Rastra Bank, Late G.S. Srivastav
and Mr. S. C. Kabadkar, both former
Executive Directors of the Bank and
my fellow board members and Late
Supriya Gupta, a veteran banker and
former board member. They deserve
deep respect and appreciation for their
contribution to the success of this Bank.
It is my firm belief that their contribution
and the light shown by them will lead
this great organization to new heights.
I myself being the longest serving
member of the Board, and having been
associated with the bank for about
thirty two years intermittently, I also feel
honored to be a part of this institution
which heralded a new era of banking in
the country. I express my gratitude to
all those who have supported me in my
journey of thirty two years in the Banking
Industry.
I am hopeful that we will have even
better results for the running year
2017/18 with some political stability and
improvement in investor sentiment. The
growth indications of the early months
are encouraging. Focus on business
volumes, client base and profitability
will continue in the year as well. With
With opening
10 new branches
in the current fiscal
year I am confident
that these branches
will add value to our
drive of extending
quality banking
services to the society.
“
opening 10 new branches in the current
fiscal year I am confident that these
branches will add value to our drive
of extending quality banking services
to the society. We will be taking the
technological advancements in positive
stride and will continue to enhance the
effectiveness of internal control system.
As we move ahead in search of
excellence, we are bound to come
across challenging circumstances under
business and operating conditions. I
firmly reiterate that we will hold ground
and we will move forward always striving
to ensure the security of every ground
we cover. We will maintain the best
governance practices to earn trust from
all business partners, regulators and other
stakeholders. We will keep up the spirit
and shall give our fullest for the overall
betterment of the institution, stakeholders
and the industry.
Annual Report 2016/17 13
Once again I would like to assure that we
are always trying our best to maintain our
leadership position in the industry even if
competition is intense and we are being
chased more closely. This accelerates
our speed for innovation and drives our
thinking beyond the box on the ways
we work and the ways we serve all our
stakeholders. We equally prioritize our
actions so that we deliver desired results
for our customer, staff, shareholder and
the regulators who always expect us to
play a leading role. In doing so, we will
continue to deliver the most satisfying
results in the days ahead.
I equally feel privileged in recognizing
the contribution of my fellow board
members. The success of any institution
is only possible when all members in
the board work in unison which was
amply evidenced for which they deserve
a round of applause. I would also like to
express my sincere gratitude towards our
customers and business partners for their
trust and cooperation that has enabled
us to become their Bank of First Choice.
Similarly, standing on the verge of the
34th year of operation would not have and keep advising us on our business. its family members. This well-built family the same to continue in the years ahead.
been possible without the continuous
This is one of the great strengths to the is also an outcome of the craftsmanship
support and guidance from the regulators Shambhu Prasad Poudyal
Bank for the own-ness shown by public of predecessors whose hard effort
for which I would like to thank Nepal Chairman
shareholders. I would like to extend them and family feelings has nourished in
Rastra Bank, Securities Exchange Board
my sincere thanks to you all and expect developing the Nabil Family. So, on
of Nepal and Office of Company Registrar.
similar guidance in the days ahead. behalf of the Board, I would like to
I also put on record the acknowledgement
express my appreciation to the employees
for the contribution by common The position achieved by Nabil today is
and the management and thank them for
shareholders who always come to me because of the concerted efforts from all
all their efforts year after year and expect
14 Nabil Bank Limited Annual Report 2016/17 15

[01] the Board of Directors Mr. Dayaram Gopal Agrawal Mr. Nirvana Chaudhary Mr. Pratap Kumar Pathak
Board Member Board Member Board Member
Represents Group “A” Shareholders Represents Group “A” Shareholders Independent / Professional Director

Mr. Agrawal has held directorship
in the Bank since 2004. He also
held directorship in the Bank
during 1994–2003. Mr. Agrawal
is an entrepreneur, a social
activist and a media person. He
has been in the business for the
last three decades.
Mr. Chaudhary has held
directorship in the Bank since
November 2010. Mr. Chaudhary
is Managing Director of Chaudhary
Group, a Nepali business
conglomerate. He holds an MBA
Degree from Kathmandu University,
Nepal. He also holds directorship
in United Insurance Company. He
had previously held directorship in
United Finance Company.
Mr. Pathak is an MPA with
specialization in Managerial Finance.
He has served in the Govt. Sector in
different capacities and recently held
the post of Expert Consultant of the
Ministry of Youth and Sports. In the
past he also served as the Financial
Comptroller General under the
Ministry of Finance. He also held the
post of Chief District Officer of Nepal
Govt. in different intervals.

Mr. Shambhu Prasad Poudyal

Chairman

Represents Group “C” Shareholders

Mr. Poudyal has held directorship in the Bank since 2004. He

also held directorship in the Bank during 1986–1994. He was the
Executive Chairman of Rastriya Beema Sansthan, a public sector
corporation carrying out both life and general (non-life) insurance
business and is one of the largest insurers in the country. He held the
said position during 1999–2002. He has also served as a director in Mr. Virender Paul Dani Mr. Ashish Sharma Mr. Krishna Prasad Sharma
the Board of Unilever Nepal Limited. He also held Chairman of Board Board Member Board Member Board Member
of Nepal Housing and Development Finance Co. Ltd. Besides, he has Represents Group “A” Shareholders Represents Group “A” Shareholders Represents Group “A” Shareholders
also been associated with non-profit making institutions like Nepal
Mountaineering Association in the capacity of Vice President, Nepal Mr. Dani is a senior banking Mr. Sharma has held directorship Mr. Sharma, aged 60, is an MBA & MA
Red Cross Society (Kathmandu Branch) and Nepal Family Planning & insurance executive with an in the Bank since 2016. He has (Sociology) with almost 33 years of banking
experience in banking operations, business
Association (Kathmandu Branch) in the capacity of Executive extensive knowledge in dealing with held directorship in the Bank in
and HR Management. He was serving, in the
Member. He also has 17 years of banking experience at retail and corporate clients. He was the past years as well. He holds an recent past, as the Chief Executive Officer of
Nepal Rastra Bank, the Central Bank of Nepal. the Managing Director & CEO of MBA degree from Asian Institute Rastriya Banijya Bank from 2012 to 2016.
Nepal SBI Bank, Kathmandu during of Technology, Thailand. He is Besides, he has held directorship of different
2003 to 2008. He had also held the the chairman of United Insurance banks, insurance companies and financial
institutions including Employees’ Provident
post of Senior Vice President of SBI Company Ltd, a general insurance
Fund, Credit Information Centre, Credit
Life Insurance Co. Ltd., Mumbai. company. He has been associated Guarantee & Deposit Insurance Company etc.
with different business and social
organizations. He is presently working as a Senior National
Note : Consultant, for Development of Social Security
Payment Strategy to the Ministry of Federal
Group “A” relates to 50% interest of N.B. International Ltd. Affairs and Local Development supported by
Group “C” relates to in relation to 30% interest of public shareholders UNCDF and the World Bank.
16 Nabil Bank Limited
[01] cEO’s Message
The year 2016-2017 has been immensely
satisfying for Nabil Bank despite of the economic
hardship in the country. The country went into
election under the new constitution and has
conducted Local Level elections in phases (1st
on 28 June 2017, Second on 14 May 2017),
third and final being slated for 18th September
2017. Similarly Federal Level and Center
Level elections are also slated into two phases
first on 26 November 2017 and second on 7
December 2017. A total of about 14.1 million
voters will use their right to exercise franchise.
With completion of election for all levels and
formation of all 3 level government machineries
the transition is likely to complete with full
functional of new constitution. 1 Center (with
165 members FPTP and 110 PR), 7 Provincial
Assembly (330 members) and 753 Local Level
Units (35,218 representatives) will then full
functional in all formats of government (Local
Level, Province/State Level and Center/Federal
Level). The country then is poised for economic
activities for which the country spent almost
two decades for changes in the system/regime,
passing through armed conflict and finally
resorting to peaceful process of electoral system.
The year 2016-17 witnessed with credit crunch
for almost two quarters. CCD ratio of the entire
system went beyond the norm where central
bank provided time and allowed adjustment to
bring it down to the required level. The growth
of deposit in the market was lower than the
demand of credit. This did not help banking
industry to flourish. With such a situation
prevalence, interest under both sides, lending
and deposit went up. This in turn led to interest
rate risk and also risk of liquidity where banks
had to offer higher interest rate under some
large ticket deposit which ultimately impacted
the bottom line adversely. The system reacted
angrily where lending rates were also adjusted
and feeling the need of scientific adjustment
central bank also introduced some measures
for interest rate fixation and adjustment so
that any adjustment in the lending rates can
be proportional to the input cost of the bank.
The system is introduced with Base Rate plus
Premium although its full implementation and
impact will be there in the year 2017-18.
The country which was reeling under power
shortage since long has now heaved a sigh of
relief. Power outage particularly for household
consumption is occasional and that too for very
short period. This has boosted the sentiment of
public including businesses. Operation of factory
and business houses remained at a higher level.
The consumption of goods and services has also
increased. However since most of the goods and
services are being imported from outside this
put pressure under trade deficit and ultimately
under Balance of Payment, although we still
maintain required level of foreign reserve in the
country. Going forward with likely growth under
consumption and widening trade deficit there
will be some constraints under the business too.
Despite the facts, the achievement of the Bank
in the year 2016-17 was one of the best not
only with the bank but in the entire industry.
With some constraints under topline growth
amidst credit crunch and deposit shortage, the
bank’s bottom line results are highest in the
industry registering net profit of Rs.3.61 billion.
This is 28% growth in comparison to the year
before. The Bank propose for stock and cash
dividend that too is one of the highest in the
industry. Most of the banks this year will not
distribute cash dividend as they need to raise
capital to reach or cross Rs.8 billion mark.
However the Bank is well able to distribute both
cash and stock dividend yet managing to raise
capital to cross the minimum requirement of
Rs.8 billion.
The result gave a healthy Return on Equity
(ROE) of 26.65% and Return on Assets (ROA) of
2.70% which surpasses industry benchmarks.
Gross Non-Performing Assets (Gross NPA) have
been maintained at 0.79%, with nil Net Non-
Performing Assets (Net NPA), as we have taken a
very conservative approach to ensuring adequate
loan loss provisioning as a cushion against
potential future shocks.
The Bank has a strong capital base with a
Capital Adequacy Ratio (CAR) of 12.42% which
is well above the regulatory requirement of 11%.
Maintaining healthy
profitability with a
Return on Equity of
26.65%, Return on Asset
of 2.70% and Net Non-
Performing Assets of 0%.
“
Annual Report 2016/17 17
“The year 2016-17
remained one of the most
In order to bolster our capital, a stock dividend of
30% has been proposed through appropriation
rewarding years for all
of distributable earnings, net of an 18% cash the stakeholders where
dividend proposed, leaving adequate reserves to
support business growth. We continue to invest the bank was able to live
in upgrading our systems, processes and people
to not only provide better customer experience
up to the aspiration of
but also to manage risks better. With volumes all the stakeholders with
increasing, transactions being more complex,
regulatory requirements getting more stringent enhanced values.”
and connectivity being more extensive, we
cannot afford to take our eye off the ball as far
as strengthening risk management is concerned.
- Sashin Joshi
CEO
We believe that as the premier bank in the
country the practices we follow will also help set
industry benchmarks contributing to the overall
betterment of the industry.
The current year appears to be promising with
likely good GDP growth projection of 6.9%
although it has been affected to due to flood in
whole terai region of the country with collateral
damage to a large extent. GDP growth of last
year being an admirable level of 0.6% and
revised forecast of 6.5 % also being an august
target, this is likely to have a positive trickledown
effect in all spheres of the economy.
Our success would not have been possible
without the excellent support and continuous
guidance provided by our Board of Directors
comprising of a group of experienced
professionals in diverse fields of expertise.
They have not only helped build the right, and
yet flexible, strategic architecture of the Bank
but also ensured that there is an appropriate
degree of board oversight to guide Management
in achieving the Bank’s goals. I would like to
record my sincere thanks to them for their wise
counsel and support.
Lastly, I would like to thank our wonderful
team of Nabilians. Their sense of ownership,
responsibility, dedication and commitment
to hard work that are the foundations of our
success. I believe that we have a great team, a
superb franchise, a great strategy, and a unique
and robust platform as Nepal’s premier bank. I
look forward to continuing to deliver sustained
results with the support of all our stakeholders,
including our customers, regulators, vendors,
investors, the Board of Directors, employees and
the community at large, with a view to adding
sustained value to this enterprise.
Sashin Joshi
Chief Executive Officer
18 Nabil Bank Limited Annual Report 2016/17 19

[01]
Macroeconomic Outlook than previously envisioned. Despite an remains below target, producer price recovery from catastrophic earthquake
easing of short-term macroeconomic inflation has increased sharply, reflecting and border disputes, with the highest
Global Economy to be better after the subdued growth in Area fell rapidly throughout 2016, but
pressures in EMDEs, the long term higher commodity prices reduced over GDP growth rate since 1993/94.
A gaining momentum in global trade 2016. Moderated private consumption, remains above the structural levels,
EMDEs outlook is constrained by capacity in heavy industry. Reserves Economic activities’ progression had
coinciding improved industrial activity improved labor market and strengthened indicating some labor market slack
structural headwinds to world trade and remain at a round $3 trillion, helped arisen from the increment in the capital
remains on trajectory, estimated in IMF import demand have further contributed persists. The recovery momentum in
slowing productivity growth. by a tightening of capital controls and expenditure, energy management,
world economic outlook 2017, leading to recovery of the global trade. Forecast private investment and export growth is
measures to encourage FDI. favorable monsoon, and improvement
towards recovery to 3.5 percent in the for several major economies have been expected to continue, still remains low
EMDEs growth is estimated to be 4.6 in the investment environment including
review year compared to 3.1 percent upgraded. Economics slack continues to on arc compared to previous upturns.
percent in 2017 compared to 4.3 Growth in India is projected to be strong overall supply situation. The GDP growth
in 2016, furthermore improving to 3.6 diminish but unused capacity remains While private consumption decelerates
percent in 2016, reflecting a recovery in around 7.1 percent, which is higher rate at basic price for the FY 2016/17
percent in 2018. Advanced economies, above pre-crisis levels, and inflation on receding tailwinds from low energy
commodity exporters and steady growth than growth in other economies, makes is estimated to grow by 6.94 percent in
emerging market and developing expectation are arising, albeit at different prices. The United States and United
in commodity importers. Robust domestic it fastest growing G20 economy; robust contrast to the 0.01 percent growth rate
economies (EMDEs) make accelerated levels. Kingdom remain the largest destination
demand and stronger imports from Euro growth reflects the escalating exports, during the previous FY.
progress to 2 percent from 1.7 percent for extra Euro area exports.
area has favored commodity importers ease of cash shortages, and increase in
and 4.6 percent from 4.3 percent The growth forecast for the United States Accelerated growth in Japan is ensued
from Europe and Central Asia. Activity in soft private investment-resulted through Agriculture sector and non-agriculture
respectively in 2017, reflecting the and United Kingdom has revised down with heightened exports, especially for
commodity importers in the Middle East an increase in government spending and sector in review year are expected to
strengthening domestic demand and from 2.3 percent to 2.1 percent and 1.7 information technology-related products
and North Africa is improving as reforms capital formation. grow 5.29 percent and 7.74 percent
exports in advanced economies; and in percent to 1.5 percent respectively in and capital goods. A relative increase in
are implemented, and political condition respectively compared to growth of 0.03
EMDEs, benign financing condition, low 2017. The growth in ASEAN-5 countries the domestic and international orders
market volatility, investors’ risk appetite is also expected to remain robust at 5 is consistent with a gaining business
normalize. However, EMDEs investment Domestic Outlook percent in agricultural sector and 0.16
is likely to remain subdued, with the Economic activities during FY 2016/17 percent in non-agricultural sector during
and some level of market complacency percent with a steady pickup in global investment momentum. Despite some
investment mainly concentrated in a few seem heartening, after the almost the previous year.
supplemented fuel for raced growth. trade and domestic demand. Whereas, improvement, consumption continues
large EMDEs.
Similarly, two neighboring large growth for Japan and euro area countries to be on subdued trends, and weak
economies viz. India and China growth like France, Germany, Italy and Spain wage increment despite tight labor
In emerging market economies and Sector contribution to GDP
are revised up to 7.1 percent and 6.6 has been revised up to 1.9 percent from market. Inflation expectation have been
emerging Asia, India and China in Contribution to GDP growth Share of GDP (%)
percent in 2017. 1.7 percent and 1.0 percent 1.3 percent increased, but remain low below the Sector (at basic price in %)
particular have consistently uphold growth
respectively in 2017. central banks’ target. 2016-17 2015-16 2016-17 2015-16
around 6.7 percent and 7.2 percent
Consistent growth prevails in the Agriculture 5.32 -0.01 33.07 33.44
Advanced Economies respectively and Sub-Saharan Africa
Advanced economies with investment
euro area during 2017, uphold Emerging market and Services 10.97 -6.45 14.21 14.13
experiencing slight rise to 2.7 percent in
and exports regaining momentum seem
by strengthening global trade and developing economies Industry 6.9 2.06 52.71 52.43
2017 from 1.3 percent in 2016; mainly
investment. Unemployment in the Euro (EMDEs)
reflects modest growth prospect for south
Emerging market and developing
World Economic Outlook Africa, which is experiencing bumper crop Inflation
economies have portrayed firming The annual consumer price inflation
due to better rainfall and an increase in Consistently high Inflationary pressure
Projections growth, led by commodity exporters, decreased to 4.5 percent in the review
mining output prompted by a moderate for over the past decade had dropped in
2015 % 2016 % 2017 % 2018 % where the investment is easing and
rebound in commodity prices. FY 2016/17. In contrast to the non-food year compared to 9.9 percent in previous
World Output 3.4 3.2 3.5 3.6 imports are bottoming out, while
inflation, food inflation has been volatile year. In terms of region-wise consumer
Advanced Economies 2.1 1.7 2.0 1.9
growth in commodity importing EMDEs price situation in FY 2016/17, the
United States 2.6 1.6 2.1 2.1 China growth rate forecasted to be steady over the period of time. Volatility in food
have hold back due to idiosyncratic annual average consumer price inflation
Euro Area 2.0 1.8 1.9 1.7 at 6.7 percent like last year. Easing state- inflation mainly caused due to the factors
factors. The recovery is broad based in mountain region, Hill region and Terai
Japan 1.1 1.0 1.3 0.6 driven investment growth has offset by viz. fluctuations in prices and supply of
among energy, metal and agricultural region tends to be 4.1 percent, 6.4
United Kingdom 2.2 1.8 1.7 1.5 strengthening export growth and still petroleum products, monopolistic trend,
Emerging and Developing Asia 4.3 4.3 4.6 4.8
commodity exporters. However, some percent and 4.4 percent respectively;
weak private sector investment growth. black marketing, unhealthy competition,
China 6.9 6.7 6.7 6.4 other economies still facing longer than only 3.4 percent in Kathmandu Valley.
Despite monetary tightening, credit closures and strikes, and inconvenient
India 8.0 7.1 7.2 7.7 expected adjustment needs, suggesting
growth still outpaces the nominal GDP structural and supply systems among
that recovery will be somewhat softer
Source: IMF World Economic Outlook Update – July 2017 growth. While consumer price inflation others.
20 Nabil Bank Limited
Credit to
private sector
Credit to private sector from BFIs
decreased 18.2 percent in the review
year compared to a growth of 23.7
percent in previous year. Credit to
agriculture sector, industry production,
construction sector, wholesale and retail
sector, service sector and transport
communication and public sector had
increased by 14.3 percent, 11.4 percent,
16 percent, 16.1 percent, 23.3 percent,
and 25.2 percent respectively.
Interest Rates
Liquidity scarcity or credit crisis in the
banking industry exerted pressure on
interest rates across deposit and loan
products, gradually increasing the rates
throughout the year. The base rate of the
Commercial Banks increased to 9.49
percent in the review year compared
to 6.54 percent in last fiscal year. The
weighted average interest rate spread
between deposit and lending rate
of commercial banks decreased to 5.2
percent in the review month from 5.6
percent a year ago.
External Sector
The overall BOP recorded a surplus of
Rs. 82.15 billion in the review year
compared to surplus of Rs. 188.95
billion in the last fiscal year despite a
high trade deficit of 30.4 percent to
Rs. 917.06- resulted from the surge
in imports relative to the exports; and
low deficit in current account as result
of increase in the foreign grants and
pension amid low remittance inflow.
Total merchandise import and export, in
USD term, increased 30 percent and 9.9
percent respectively in the review year
compared to the 7.4 percent and 28.8
percent shrinkage in the previous year.
Commodity wise, imports of petroleum
products, vehicles and spare parts, MS
billet, Cement, among others, increased
whereas imports of chemical fertilizer,
medicine, Cold rolled-sheet in coil, dry
cell battery, among others, decreased
in the review year. Total import-to-GDP
ratio increased to 38.1in the review
year from 34.4percent of the previous
year. The export-import ratio declined
to 7.4 percent in the review year
compared to 9.1 percent in the last year.
Thus, Nepal’s external sector situation
continued to be satisfactory.
Foreign Exchange
Reserve Position
The gross foreign exchange reserves in
USD terms increased by 3.9 percent
reaching to a total of USD 1079.52
billion compared to USD 1039.21
billion in previous year. Based on the
total imports of merchandise goods
and services for the year, this level of
foreign exchange reserves is sufficient for
financing merchandise imports of good
for 13.2 months and both of gods and
services for 11.4 months.
Annual Report 2016/17 21
c r i s p
Innovative
Banking
Monetary and banking sector has
remained stable over the FY 2016/17.
The total deposits and domestic credit
have increased 12.6 percent and 18.1
percent respectively in the FY 2016/17
compared to previous year 19 percent
and 23.5 percent respectively a year ago.
As per the regulation laid upon all the
commercial banks by the central bank
to raise their paid up equity capital to
NRS. 8 billion by mid July 2018 aiming
to robust banks’ risk bearing capacity
and make them more resilient. Banks
are also adopting merger and acquisition
strategy to meet the required paid
up capital along with increasing their
competitiveness. The significant surplus
in the BOP, comfortable reserve position
and single digit inflation; all indicates a
stable macroeconomic situation.
The implementation of federal structure
and proper monetary policy implemented
by NRB will largely guide the economic
development of country for the coming
few years.
At Nabil Bank we understand the essentiality of innovation in
both idea as well as technology for the continuing growth of the
organization. There has been a constant effort to knit together
innovative systems to make the banking more efficient and
hands-on. We take pride in identifying the need of customers
and designing products that meets the requirements.
22 Nabil Bank Limited Annual Report 2016/17 23

[02] OPERATING AND

FINANCIAL REVIEW Shareholders’ Fund
Over the period of 5 years from mid
July, 2012 to mid July, 2017, total
exceeded the minimum paid up capital
requirement of Nrs 8 billion. Besides
stock dividend, bank has distributed cash
DEPOSIT GROWTH

38%

shareholder’s fund has increased from dividend consistently in the past five

Commentary On Key Items Of

26%

NRs. 5.44 billion to NRs. 14.09 billion years. Total cash dividend payout in the 18% 18%
21%
19%

with a compounded annual growth rate past five years is NRs. 4.42 billion. 21%

Statement Of Financial Position

19%
16%
of 20.96%. Of the total shareholder’s 11% 8%
6%
fund, share capital of the bank increased Similarly, reserves have increased to

Of Past 5 Years from NRs. 2.43 billion to NRs. 8.04

billion as the result of the distribution of
NRs. 6.05 billion from NRs. 3.01 billion
as at mid July, 2012. This increase
2012 2013 2014
Commercial Banks
2015 2016 2017
Nabil Bank

Nabil has displayed resiliency in the past five years despite numerous economic and political upheavals. Nation has gone through stock dividend.
multitude of unexpected economic, legal and political events. However, even at the testing circumstances, performance of the bank
has been impressive. Bank has broadened its outreach, expanded the customer base, improved its asset quality, and has diversified The increment has been achieved entirely
its portfolio in the last five years to further strengthen its position in the Nepalese banking industry. out of profit retention in form of stock
dividend and various reserve headings.
The bank’s balance sheet has expanded at a Compounded Annual Growth Rate (CAGR) of 17.3% in the last five years, recording
This is inclusive of the appropriation
a point to point absolute annual growth of 122.1%, since mid-July 2012. There has been astonishing growth in terms of
of profit of financial year 2016-17
shareholder’s fund, deposits, loans and investments which are the major elements in a bank’s balance sheet. The table and the
into various reserve headings and the
synopsis lay below highlights upon the Bank’s financial position in the preceding 5 years:
proposed distribution of stock dividend
(nrs. in million)
at 30% of paid up capital. With the
AT MID JULY 2017 2016 2015 2014 2013 2012
increments in shareholders fund and
CAPITAL & LIABILITIES YEAR 5 YEAR 4 YEAR 3 YEAR 2 YEAR 1 BASE YEAR
the dynamic business environment,
1. Share Capital 8,041 6,186 4,755 3,657 3,046 2,436
the bank’s Return on Equity (ROE) has
2. Reserves & Surplus 6,054 5,410 4,731 3,984 3,645 3,008
come down to 26.65% for financial year
3. Debentures & Bonds 300 300 300 300 300 300
2016-17, from 30.25% for financial
4. Borrowings 3,056 1,900 - - - 311
year 2011-12. Bank’s retains its
5. Deposits 118,896 110,267 104,238 75,389 63,610 55,024
number one position among the private
6. Bills Payable 319 294 243 214 530 179
commercial banks in terms of ROE at
7. Proposed Dividend 1,113 712 250 1,371 975 812
mid July 2017.
8. Income Tax Liabilities - - 1 3 65 51
9. Other Liabilities 2,552 2,233 1,468 2,357 1,071 1,072
Bank has consistently distributed 30%
Total 140,332 127,300 115,986 87,275 73,241 63,193 stock dividend in the past 3 years and
the paid up capital of the bank has
ASSETS
1. Cash Balance 1,637 1,641 1,820 1,468 1,140 1,051 SHAREHOLDERS' FUND (NRs. in Million)
2. Balance with Nepal Rastra Bank 10,274 5,826 12,925 7,068 4,789 3,682
14.09
14
3. Balance with Banks/Financial Institutions 1,180 2,796 1,259 1,457 (47) (457) 11.59
12 9.49
4. Money at Call and Short Notice - 390 324 738 1,634 826 10
6.69
5. Investment 32,594 36,528 30,972 18,277 16,332 14,049 8 6.69
6 5.44
6. Loans, Advances and Bills Purchased 89,877 76,106 65,502 54,692 46,370 41,606
4 25.60 26.65
7. Fixed Assets 791 770 812 843 872 888 32.8 22.7
2 30.2
27.9
8. Non Banking Assets - - - - - - 0 2017
2012 2013 2014 2015 2016 2017
9. Other Assets 3,979 3,243 2,372 2,732 2,150 1,549
Shareholders' Fund ROE (%)
Total 140,332 127,300 115,986 87,275 73,242 63,194
is mainly attributed to the increase in
retained earnings. Moreover, the bank deposits and interest bearing deposits
has also appropriated NRs. 288,000 respectively from the FY 2011/12.
thousands to debenture redemption Similarly, CASA ratio for the bank has
reserve this year as per the terms grown to 59.90% in the review year
of debenture issuance. Increase in from 46.18% in the financial year
shareholder’s fund has thus enhanced 2011/12 resulting in the compounded
risk taking appetite of the bank. annual growth rate of 22.89% during
the past five years. However, year-
on-year comparison shows that CASA
Deposit Mobilization
ratio has decreased in this financial
Deposit volume of the bank is in
year to 59.90% from 65.72% in the
increasing trend with the average CAGR
last financial year. Crunch of loanable
during the past five years at 16.66%
funds prompted many BFIs to revise
which is in line with the industry
their interest rate under FD products
growth. The point to point growth of
to as high as 12%. This impacted our
deposits from July, 2012 to July, 2017
deposit portfolio in two ways. First, some
is 116.08% and the Y-o-Y growth is
of our savings depositors transferred
7.83%. Across industry the bank holds
and converted their deposits into fixed
the second highest deposit among private
deposits at other banks leading to
commercial banks, and is overall ranked
erosion of our savings deposits.
third as at mid July 2017.
DEPOSIT MIX
TOTAL DEPOSITS (NRs. in Billion)
140
119 28%
120 110
104
100 20% 46%
80 75
64
60 55
40
20% 60%
20
26%
0 2012
2012 2013 2014 2015 2016 2017
There is compounded annual growth of
CASA Fixed Call
21.72% and 15.79% in Interest free
24 Nabil Bank Limited
Secondly, we were also forced to revised limited. Despite slower growth rate in
rates under our savings and FD products Loans and advances as compared to the
which resulted in increase in FD volume growth in deposits, the bank’s CD ratio
in higher proportion to the increase in has improved to 76.95% compared to
savings deposits. However, the CASA last year’s 70.49%.
ratio is significantly higher than that of
the industry. CASA ratio of industry has Despite the increase in lending volume,
also decreased due to change in the the bank credit portfolio has improved
deposit mix of the commercial banks. as compared to last year. Gross NPA
CASA ratio of industry has decreased ratio of the bank is 0.80% as compared
to 43.11% from 49.90% a year ago. to 1.14% in the last year which
The Following graph displays the mix
proportion in Mid July 2012 and 2017
indicates that the bank’s credit portfolio
is impending towards impunity from
respectively. defaults.
With the change in the interest rate across
several deposit products, the deposit mix 100
90
has also changed. In order to prevent the
80
outflow of deposits maintained with us 67.16
70
and to further build up the FD portfolio, 60 56.20
47.65
we had made periodic revisions under our 50 42.87
40
FD products multiple times in this fiscal
30
year. This strategy enabled us to build
20
our FD portfolio from Nrs.8.9 Billion to 10
Nrs.24 billion in the fiscal year. However, 0 attractive returns to its shareholders.
2012 2013 2014 2015
our savings deposits has decreased
from Nrs 53.4 Bio to Nrs 51.4 billion.
Similarly, the call deposits volume has Gross Investment
also decreased from Nrs. 28.9 billion to Portfolio
Nrs. 23.6 billion. Gross investment portfolio has reached
Nrs. 32.59 billion at Mid July, 2017
Gross Lending Portfolio from NRs.14.08 billion at Mid July,
Gross loans and advances of the bank 2012 recording the CAGR of 15.01%
has recorded the compounded annual in the last five years. The bank has the
growth rate of 16.4% over the five years largest investment book among private
period and has reached to Nrs. 91.49 commercial banks, and overall second
billion at Mid July 2017 from Nrs. rank across industry at mid July 2017.
42.87 billion at Mid July 2012. Year on
Year growth as compared to last year is
recorded at 17.7%.
40
35
Industry wide the gross loans and 30.98
30
advances of commercial banks has
25
expanded at a CAGR of 23.17% in this 20 18.28
period. Similarly the share of bank’s loans 14.08 16.35
15
and advances in the market has declined 10
to 5.27% from last year share of 5.58%. 5
This seems satisfactory in a situation in 0
2012 2013 2014 2015
which new avenues for lending have been
Annual Report 2016/17 25
Gross Investments of commercial banks
[02]
has expanded at a CAGR of 14.33% in
this period. The bank’s market share has
also increased from 8.5% at mid July
2010 to 8.8% at mid July 2017.
Commentary
However, year-on year investments has
On Key Items Of
declined by NRs. 3.93 billion or 10.8%
as compared to the last year. There was
Income Statement
crunch of loanable funds and liquidity
in the market in the second half of this
financial year, thus we opted to shift our
focus from cost compensation approach
Of Past 5 Years
to profit maximization approach by
Achievement of Nabil bank in the bottom line has been astounding in the last five years. We have been able to generate higher
liquidating our surplus investments
net income through the expansion of our books, cost management, streamlining the revenue lines, increasing our customer base
(NRs. in Billion) with minimum yield and utilize it for and recovery from NPA accounts.
91.49 increasing our lending portfolio.
77.56
Information presented below reflects the strength of the bank’s financial results, and the bank’s market presence based on the
Dividend Distribution fourth quarter provisional financial statements published by individual banks, unless specifically stated otherwise.
Nabil Bank has consistently strived to
meet the shareholders expectations
Income Statement
by creating and distributing maximum
NPR in Million
wealth to the shareholders. In the
PERIOD ENDING MID JULY 2017 2016 2015 2014 2013 2012 CAGR
past five years, bank has distributed
YEAR 5 YEAR 4 YEAR 3 YEAR 2 YEAR 1 BASE YEAR
2016 2017 1. Interest Income 8,066 6,156 5,762 5,636 5,702 6,127 5.65%
From Mid July 2012 to Mid July 2016
2. Interest Expense 2,606 1,830 2,236 1,940 2,186 3,155 -3.75%
the bank has distributed 60%, 65%,
Net Interest Income 5,460 4,326 3,526 3,696 3,516 2,971 12.94%
65%, 36.84% and 45% dividends to
3. Fee, Commission and Discount Income 962 818 721 732 603 567 11.13%
the shareholders from the profits of
4. Exchange Income 647 586 512 530 489 447 7.68%
respective years. The bank has proposed
Total Operating Income 7,069 5,730 4,759 4,958 4,608 3,986 12.14%
the distribution of 30% stock dividend
5. Staff Expense 932 775 743 628 647 501 13.24%
and 18% cash dividend from the profits
6. Other Operating Expense 652 605 613 543 469 431 8.65%
of this fiscal year.
Operating Profit before Provision for Possible Losses 5,484 4,350 3,403 3,787 3,492 3,054 12.42%
7. Provision for Possible Losses 19 5 167 238 27 414 -45.87%
The bank has distributed cumulative
Operating Profit 5,465 4,344 3,236 3,549 3,465 2,640 15.66%
cash dividends of Nrs.4.42 billion out of
8. Non Operating Income /(Expense) 149 59 44 35 13 14 60.80%
profits generated in the last five years,
9. Provision for Possible Losses Write Back 31 52 2 15 25 0 -
inclusive of the 18% cash dividend
Profit from Regular Activities 5,644 4,456 3,282 3,599 3,503 2,654 16.29%
(NRs. in Billion) proposed for financial year 2016-17.
10. Income/(Expense) from Extra-ordinary Activities 11 (47) (3) 34 -17 -3 -229.96%
36.53
Appropriation of EPS (Nrs.)
Profit from All Activities 5,656 4,409 3,279 3,633 3,486 2,651 16.36%
32.59
11. Provision for Staff Bonus 514 401 298 330 316 242 16.30%
40 40
45
7 12. Provision for Income Tax 1,528 1,188 888 983 950 720 16.24%
15
18
Net Profit/(Loss) 3,613 2,819 2,094 2,320 2,219 1,689 16.42%
20 25
30
30 30
20
26
23
11 20 14 10 Net profit over the last 5 years has increased at a CAGR of 16.42% or NRs. 1.92 billion and has reached to NRs. 3.61 billion at
2012 2013 2014 2015 2016 2017 mid July, 2017 from NRs. 1.69 billion at mid July, 2012. It accounts to absolute growth of 113.88% from FY 2011/12.
2016 2017 Profit Retention Stock Dividend Cash Dividend
26 Nabil Bank Limited
(NRs. in Million)
2,819
2,219 2,320
2,094
1,689
2012 2013 2014 2015 2016
Net Profit
Net Interest Income
Net Interest Income (NII) has increased
at a CAGR of 12.93% over the five years
period and has reached NRs. 5,460
million at Mid July 2017. It was NRs.
2,971 million in the year 2011-12.
Year-on Year comparison shows that NII
has increased by 26.20% or NRs. 1,134
million. Last year Net interest income of
the bank was NRs. 4,326 Million.
Reduction in cost, increase in lending
volume and expansion of customer base
are the major factors contributing towards
the significant increase in Net Interest
Income in the five years period.
Interest costs/expenses of the bank has
declined from NRs. 3,155 million at Mid
July, 2012 to NRs. 2,606 Million at Mid
July, 2017. There was surplus liquidity in
the market in the past few years because
of which Bank and Financial Institutions
offered low interest rates in deposit
products. We were also able to decrease
our average cost of fund significantly from
5.74% in FY 2011/12 to 2.15% in the
FY 2016/17.
Surplus liquidity in the market has
increased competition among the banks
to attract the loan customers and has
dragged the interest rates under lending
products downwards. Average Interest
Rate of Interest Bearing Assets has also
Annual Report 2016/17 27
have received significant income from
(NRs. in Million) In line with the increase in profitability growth rate of 8.65% in last five years Net Profit and Operating Profit before
loan administration fee, Bancassurance,
8,066 of the Bank, the bonus distribution period. It has reached to 652 Million provision of Nabil increased at a CAGR
Bullion, Merchant banking and
3,613
6,127 6,156 to the staff has also increased. Total from NRs. 602 Million from July 2012 of 16.42% and 15.66% respectively
5,702 5,636 5,762 E-banking. Moreover, bank has generated
bonus distribution has increased at a to July 2017. This is an absolute growth in the last five years and stands at
higher income from major segments like
5,460
compounded annual growth rate of of 51.4%. Despite high inflation over the Nrs.3,613 million and Nrs.5,465 million
4,326 trade finance transactions, consortium
3,516 3,696 3,526
2,971 16.30% and reached NRs. 514 million. past few years we have been able to limit for the financial year 2016-17. These
management, card and ATM/POS
Growth in personnel expenses can be the growth in expenses through prudent were Nrs.1,689 million and Nrs.2,640
2017 channels, inward remittance from South
2012 2013 2014 2015 2016 2017
seen almost in line with increase in bonus measures. Similarly, we have gone for million respectively for the financial year
Gross Interest Income Net Interest Income
Korea and increases offering of ancillary
benefit to the employees which has been automation in processes that has also 2011-12. Similarly, the Net profit per
banking services through more branch
depicted in the graph below: helped to reduce the operating expenses. employee has increased to Nrs 3.56
come down from 10.69% in FY 2011/12 offices.
Million in the review year from 2.97
to 6.38% in FY 2016/17.
Foreign Exchange
(NRs. in Million)
Net Provision Expense Million in previous fiscal year.
775 Five year CAGR of the bank’s net
The ratio of NII to Gross Interest Income Income 743 932
647 628 provision expenses remained negative by The five year industry CAGR of net
over the past five financial years from There is steady growth in foreign
501 514
148.96%. It is because the net expense profit is recorded at 19.61%, but
2011-12 to 2016-17 period is recorded exchange income of the Nabil Bank from 401
316 330 298 was Nrs.414 million for financial year asymmetries exists due to contributions
at 48%, 62%, 66% 61%, 70% and 68% NRs. 447 Million to NRs. 647 Million 242
2011-12 which is the base year, and has of huge one off profit recognitions out of
respectively. recording the compounded annual growth
constantly reduced in past few years. For investment disposals and NPL recoveries
of 7.68%. Similarly there is absolute 2012 2013 2014 2015 2016 2017
the most recent financial year 2016-17, at government owned banks. A better
Fees, Commission and growth of 44.78%. Strengthening of Staff Expense Provision for Staff Bonus
the net provision expense stood negative reference can be taken of the industry
Other operating Income dollars against INR and Nepali Rupees
Nrs.11.64 million. Last year, the net CAGR of operating profit before loss
There is an absolute growth of 69.5% has led to the slow growth as compared
At Nabil, employees are given utmost provision was negative Nrs. 47 Million. provisioning which is recorded at 14.62%
from NRs. 567 Million to NRs. 962 to growth under other income headings.
priority as we believe that the quality However, the bank’s NPL ratio has as compared to Nabil’s 14.70%. The
Million over the period of 5 years from human resource are the pillars of the industry growth rate indicates a highly
(NRs. in Million) decreased to 0.80% in review year from
Mid July, 2012 to mid July, 2017. There bank on which both the present and competitive market wherein mid-sized
647 1.14% in previous year. The coverage of
is Compounded Annual Growth Rate future of the bank rests on. Thus we have banks are coming up strongly and posting
586 total loan loss provision to gross NPL has
of 11.1%. Fees and commission from 530 512 been one of the best organizations to impressive profit growth.
489 remained above 100% throughout and
letters of credit, guarantees, remittance work for which pays good remuneration
447 the bank’s NPL ratio is well within the
and cards saw commendable growth to the staffs. Throughout the last five financial years,
manageable limit.
which was compensated by a decrease in from 2011-12 to 2016-17, Nabil has
discount income from bills. 2012 2013 2014 2015 2016 2017 (NRs. in Million)
maintained its market leader positioning
Forex Income
Other Office 414
in terms of highest operating profit.
Operating Expenses
Focused approach for increasing the 223 Likewise, for the same period Nabil has
With the growth in business volume of 167
contribution of fee income towards the Staff Expense remained the highest net profit generating
the bank, other operating expenses have 27 19
gross income has provided competitive Nabil bank has invested considerable 5
bank among private commercial banks.
also grown considerably in the past few
edge in major fee income segments. We amount of its earnings in recruiting, Nabil has also retained its leading
years. There is compounded annual
developing and managing performance of 2012 2013 2014 2015 2016 2017 position in terms of net profit and
(NRs. in Million)
its staffs. Therefore, staff expenses have Net Provision Expenses continues to lead the industry as the
OTHER OPERATING EXPENSES (NRs. in Million)
962
increased considerably from NRs. 501 highest profit generating commercial bank
721 818 million in the year 2012 to NRs. 932 613
732 652 Profitability in the country.
603 million in 2016-17 at a compounded 543 605
567 Nabil, after considering all commercial
annual growth rate of 13.24%. These 469
431 banks’ provisional financial statement for
expenses have been incurred for
2012 2013 2014 2015 2016 2017
final quarter of FY 2016-17, is ranked as
monthly salary, allowances, training and
the market leader in terms of operating as
Fees, Commission and Discount Income development, employee engagement 2012 2013 2014 2015 2016 2017
well as Net profit.
Other Operating Expenses
programs, leave encashment etc.
28 Nabil Bank Limited
[02]
Achievements of Current Year
In this section, we have presented the
review of current year’s performance
that includes changes in the bank’s
equity position, major sources and uses
of funds, and performance across broad
operating lines during the review year
vis-a-vis that of the previous year. The
bank has been able to expand its balance
sheet size by 10.24% in the review year.
Net profit of the bank has also increased
by 28.16% during the review year.
Equity
Total equity fund of the bank has
increased to Nrs. 14,095 million from
previous years Nrs. 11,595 million. This
growth is generated entirely out of profit
retention, wherein a 30% stock dividend
and 18% cash dividend proposal has
increased the equity by Nrs. 1.86 billion
and Nrs. 1.11 billion respectively.
Besides, the bank has also appropriated
a total of Nrs. 929.24 million to various
reserve headings as required under
regulatory provisions.
Annual Report 2016/17 29
Deposits for fresh credit in a bid to avoid costs of 171.14%. CASA and call segments
Total deposit mobilization of the bank has incurred for surplus deposit fund. Of the have however seen negative growths.
increased to Nrs. 118,896 million from Bank’s total deposits, 85.30% is local Presented hereunder is the average
previous years Nrs. 110,267 million. This currency deposits and the remaining deposit volume recorded for the review
is an annual growth of Nrs. 8,629 million 14.70% foreign currency deposits. year, along with respective weighted
or annual growth rate of 7.8%. As per the average cost of deposit.
published provisional financial statements With the banking industry as a whole
of all commercial banks for current year, offering higher rates of fixed deposits
DEPOSIT MIX
their combined deposit mobilization has owing to shortage of loanable funds,
increased to Nrs. 2,093,255.77 million customer preference towards fixed
2016
from previous years Nrs. 1,764,592.44 deposits yielding higher return has been 26%
million registering the industry growth prevalent. The same effect has also been 20% 66%
rate of 18.6%. We opted for optimum
deposit growth amidst limited demand
seen on the bank’s deposit with fixed
deposits observing an absolute growth 2017
(Npr in Million) 20% 60%
(Npr in Million)
CAPITAL Mid July Growth 8%
2017 2016 Volume % Deposit Mid July Growth
2017 2016 Volume %
Paid Up Equity 8,041 6,186 1,856 30.0%
Local Currency 101,418 89,400 12,019 13.4%
Reserve Fund 6,054 5,410 644 11.9%
Foreign Currency 17,478 20,868 (3,390) -16.2%
Total 14,095 11,595 2,500 21.6% CASA Fixed Call
Total 118,896 110,267 8,629 7.8%
NPR. in Million
The bank has appropriated Period ending mid July
deposits
2017
Volume Interest
2016
Cost Volume Interest Cost
Local Currency
a total of Nrs. 929.24 million
- Current and Savings accounts 69,505 1,331 1.9% 58,709 877 1.5%
- Fixed and Call accounts 29,081 1,153 4.0% 30,696 851 2.8%
Total 98,586 2,484 2.5% 89,405 1,727 1.9%
to various reserve headings Foreign Currency
- Current and Savings accounts 6,522 10 0.2% 6,652 12 0.2%
- Fixed and Call accounts 14,895 61 0.4% 13,822 48 0.3%
as required under Total 21,417 71 0.3% 20,473 61 0.3%
Total Deposits 120,003 2,555 2.1% 109,878 1,788 1.6%
regulatory provisions. As shown in above figure, weighted average cost of local currency deposit has increased to 2.5% from previous year’s 1.9%. This is
a growth of 59 basis points which is due to growth in interest rates across all deposit product categories amidst liquidity shortage in
“
the market.
30 Nabil Bank Limited Annual Report 2016/17 31

Loans
Gross Loans and advances have Npr. in Million Presented hereunder is the average investment volume recorded for the review year, along with respective weighted average yield on
increased by NRs. 13,761 million or loan Mid July Growth investment.
2017 2016 Volume %
17.7% to NRs. 91,491 million from
Local Currency 87,603 74,682 12,922 17.3% Investments
previous years NRs. 77,730 million. Npr. in Million
Foreign Currency 3,888 3,049 839 27.5%
Period ending mid July 2017 2016
Total 91,491 77,730 13,761 17.7% Volume Interest yield Volume Interest yield
Nepal Government Bond 8,784 302 3.4% 3,544 166 4.7%
The first half of the fiscal saw good in foreign currency portfolio. This year, Presented hereunder is the average loan Nepal Government Treasury Bills 6,266 102 1.6% 19,389 157 0.8%
growth in the lending portfolio but the bank took cautious approach and volume recorded for the review year, Deposits and Placements in Foreign Banks 21,405 426 2.0% 18,090 246 1.4%
the same in the second half declined focused more on consolidation and along with respective weighted average Equity Instruments 585 91 15.6% 421 62 14.7%
gradually owing to the crunch in improving asset quality, while opting for yield on loan. Other investments 1,215 5 0.4% 2,654 5 0.2%
loanable funds in the industry. The organic growth in our existing business Total 38,255 926 2.4% 44,098 636 1.4%
regulator’s discontinuance of import loan portfolio.
bill discounting also led to a decline
The average Investment volume during decline of 13.25% or NRs. 5,843 Million. increase in volume limits for institutions
Npr. in Million
the review year has stood at NRs. 38,255 As compared to last year, there is increase offering higher rates contributed to the
Period ending mid July 2017 2016
Million against the last year average in investment yield by 98 basis points. increase in the yield.
Volume Interest yield Volume Interest yield
volume of NRs. 44,098 Million. This is a Higher yield on FCY placements and
Business Loan 65,360 5,333 8.2% 52,250 4,057 7.8%
Retail Loan 21,171 1,832 8.7% 16,077 1,462 9.1%
Total 86,531 7,165 8.28% 68,326 5,519 8.52%

The average loan volume has increased by 26.6% as compared to the previous year. The portfolio yield however has declined by
24 basis points.
Investments
At Balance sheet date, the gross
investment volume of the bank is NRs.
32,595 Million, which is a negative
growth by NRs. 3,934 Million or 10.8%
over the corresponding period last year.
Net Interest Income high yield FCY investments. The cumulative effect of all these factors resulted in
Net interest income of the bank has increased growth in interest income generation with satisfactory growth under volume.
Npr. in Million
increased by 26.2% or NRs. 1,134
Million as compared to the same period Period ending mid July 2017 2016 Changes
Amount %
last year. In the first half of the fiscal,
Interest Income 8,066 6,156 1,910 31.0%
we were able to achieve healthy growth
Npr. in Million
in our lending book. The second half Interest Expense 2,606 1,830 776 42.4%
Investments Mid July Growth however brought a shortage of investible Net Interest Income 5,460 4,326 1,134 26.2%
2017 2016 Volume %
funds due to which the focus shifted
Local Currency 12,227 17,675 (5,448) -30.8% Presented hereunder is the average volume of interest earning assets, along with
towards asset and liability management.
Foreign Currency 20,367 18,853 1,514 8.0% respective yield rate.
The growth achieved was complemented
Total 32,595 36,528 (3,934) -10.8%
by the improvement in the yield as well. Yield on Earning Assets Npr. in Million

Owing to constriction of LCY investment
avenues, local currency investments
have shrunken by 30.8% or NRs.5,448
Million. FCY investments volume however
has grown by 8% since investment
opportunities with better return were
available. Foreign currency book is almost
entirely fixed term placements in foreign
banks.
A profitable book expansion is thus
challenging, particularly in view of one of
the lowest interest rates in global markets
and negative interest rates under some
investment like Euro and JPY. As such
we have focused towards penetrating
developing markets in Asia and strike a
risk-return balance in our portfolio.
Therefore, there is increase in the net
interest income of the bank. Total net
interest income of the bank during the
year is NRs. 5,460 Million.
Weighted average yield on loans and
advances has improved by 34 basis
points and reached 8.2% from last
year’s 7.8%. The cost of our deposits
also increased by 50 basis points as
compared to the last year. Such an
increase was more than compensated
Period ending mid July 2017 2016 Changes
Aggregate Volume of interest earning assets 126,342 114,998 9.9%
- average loan and advances (including staff Loan) 88,672 71,322 24.3%
- average investments* 37,670 43,676 -13.8%
Interest Income on earning assets 8,080 6,156 31.3%
- on loans and advances 7,245 5,582 29.8%
- on investments* 835 574 45.4%
Weighted Average Yield 6.4% 5.4% 1.0%
- yield on loans and advances 8.2% 7.8% 0.3%
- yield on investments* 2.2% 1.3% 0.9%
* excluding investments in equity instruments
32 Nabil Bank Limited Annual Report 2016/17 33

Aggregate yield on interest earning assets amidst limited lending avenues. Amidst
has improved by 104 basis points and surplus liquidity the bank rather focused Foreign Foreign Exchange Income Npr. in Million

reached 6.4% in the review year from on improving asset quality, supporting Exchange Income
5.4% as recorded in the last year. Among organic growth of existing credit portfolio, There is increase The bank generated total foreign
Period ending mid July

2017 2016 Changes
Amount %

the interest earning assets, there is higher
growth in the yield on investments by 90
basis points which was the prime factor
for growth in the average yield on interest
earning asset.
and expanding SME and Retail portfolio.
Aggregate cost of total interest bearing
liabilities also increased by 50 basis
points in the review year, settling at
in the net interest
Total exchange income 647 586 61 10.4%
exchange income of NRs. 647 Million
- Revaluation 326 236 89 37.7%
as compared to NRs. 586 Million
recorded in the corresponding period
- Trading 322 350 (28) -8.0%
last year. In the previous year, the Bank
Non-Operating Income Npr. in Million

The bank had to slash yield under lending
portfolio in order to expand its lending
volume owing to the intense competition
among commercial banks for pricing
2.15% from previous years 1.65%.
Presented hereunder is the average
volume of interest bearing liabilities,
along with respective cost.
income of the was able to secure a couple of high
value deals through bid which largely
aided to trading income. There have
bank. Total net been no such significant opportunities
this year. Further, selective approval of
import business following the shortage
Period ending mid July 2017 2016 Changes
Amount %
Total non operating income / (loss) 149 59 90 151.1%
- on sale of fixed assets 58 (3) 60 2221.3%
- dividend income 91 62 29 47.2%

Cost of Resources
interest income of of loanable funds also has had a huge Staff Expense Npr. in Million

Npr. in Million impact of forex generation. Period ending mid July 2017 2016 Changes
Amount %
Period ending mid July 2017 2016 Changes

Aggregate volume of interest bearing liabilities 121,194 111,142 9.0% the bank during Non-Operating Income Total staff expense
Major areas:
932 775 157 20.3%

- average deposits 120,003 109,878 9.2% In the current year, the Bank was
Salary 268 241 27 11.3%
- average borrowings 1,191 1,264 -5.8% able to sell off a property which is the
Interest expense on liabilities 7,690 1,830 320.3% the year is NRs. major reason behind the spike in non-
Allowances
Pension and Gratuity
341
130
303
88
38
42
12.5%
48.1%
- on deposits 7,639 1,788 327.2% operating income. Significant growth Leave 85 52 33 64.8%
- on borrowings 51 42 23.1%
5,460 Million.
(47.2%) in dividend income received Dashain 44 40 4 9.7%
Weighted Average Cost 2.15% 1.65% 0.50% by the bank against investments made Providend Fund 27 24 3 11.5%
- cost of deposit 2.13% 1.63% 0.50% in equity of various companies also Training 10 5 5 90.3%

“
- cost of borrowing 4.30% 3.29% 1.01% aided to the boost in income. Uniform 12 11 1 11.3%
Others 15 11 3 29.6%

Staff Expense
Fees, Commission and Other Operating Income Other Office Operating Expense Npr. in Million
Apart from normal growth in salaries
A brief snapshot of the fee incomes under major headings are presented below: and allowances that arose out of Period ending mid July 2017 2016 Changes
Amount %
Npr. in Million The bank generated NRs. 962 Million additional recruitments, promotions
Total operating expense 652 605 48 7.9%
Period ending mid July 2017 2016 Changes fee, commission and other operating and appraisals, a significant jump in Major areas:
Amount % staff expenses is due to the effect of
income which is an increment of Amortization & Depreciation 102 100 1 1.4%
Total Fee Income 962 818 144 17.54% bi-annual collective bargaining.
17.54% or NPR 144 Million as Rent Charges 109 95 14 14.5%
Major areas:
compared to same period last year. Security Service 62 56 6 11.1%
Loan Management 291 250 42 16.74%
Office Stationery & Supplies 41 32 9 29.5%
Cards & E-banking Services 163 156 6 4.08%
Operating Expense Outsourced Services 61 47 14 30.3%
Letter of Credit 113 94 19 20.01% Consultancy Service 38 47 (9) -19.0%
Expenses on stationery and supplies,
Remittance 111 103 8 8.23% Fuel & Lubricants 17 23 (6) -25.8%
advertisements, electricity and water
Bank Guarantees 103 70 33 47.44% Communication 37 34 3 8.4%
have gone up. On the other hand,
Communication 33 26 7 27.04% Deposit Insurance 30 40 (9) -23.8%
expenses on consultancy service, fuel Donations 0 0 (0) -6.6%
Cards Issuance & Renewal 21 15 7 45.70%
and lubricants and deposit insurance Electricity & Water 24 17 7 38.0%
Agency Services 27 9 18 210.16%
have gone down causing the overall Fixed Assets Repair 20 19 1 7.6%
Other Services 100 96 4 3.96%
operating expense of the bank to Assets Insurance 11 11 (1) -6.7%
increase by 7.9%. Advertisements 16 10 6 63.0%
Janitorial Services 14 12 2 15.1%
Other Expenses 71 62 9 14.1%
34 Nabil Bank Limited
Provision for
Possible Losses
During the review year, the bank
accounted a net write back of Nrs 12
million on account of provision for
possible losses. This is an absolute
decline of Nrs. 35 million as compared
to Nrs 47 million of the previous
year. Recovery was one of our prime
goals for this year and we had taken
focused approach towards recovery and
regularization of delinquent accounts
which has been reflected in the decrease
in the provisions.
Details of
Loans Written Off
During the review year the bank has
written off Nrs. 3.5 million in line with
its Loan Write-off Policy pertaining to
retail consumer loans and credit card
receivables. Total written-off amount
include interest of NRs. 1.8 million. On
the other hand, the bank has been able
to recover NRs. 16.1 million. With this,
the bank still has to recover NRs. 499.7
million (including interest of NRs. 233.2
million) from the written off accounts. As
of balance sheet date, it has relinquished
rights of recovery on loan accounts of NRs.
145 million, including interest write off.
Staff Bonus, Corporate
Tax and Net Profit
For the review year the bank has
generated net profit of NRs. 3,613
million posting a 28.16% growth
over that of previous year. The bank’s
operating profit before provision is
recorded at NRs. 5,484 million posting
Annual Report 2016/17 35
[02]
Provision for Possible Losses Npr. in Million
Period ending mid July 2017 2016 Changes
Amount %
Total provision expense (Net) (12) (47) 35 -75.3%
- on loan impairment
- on investment impairment
(10)
1
(35)
(7)
25
8
-71.0%
-111.4%
Value generation and distribution
- on other assets (2) (5) 3 -56.7%
Value Generation 31.9% in the review year. In the same financial services has also increased by
The bank created total value of NRs. period the bank’s total interest earning 14.6% in the review year. This typically
6,698 million. The value generated by assets base has increased by NRs.11.3 reflects increase in fee, commission, other
Income / (Expense) from Extra Ordinary Activities Npr. in Million
the bank has increased by 27.3% or billion or 9.9%. Value generation from operating and foreign exchange income.
Period ending mid July 2017 2016 Changes
Amount % NRs. 1,436 Million as compared to the NPr. in Million
Net Income/ (Expense) 11 (3) 14 485.0% corresponding period last year. Financial Period ending mid July 2017 2016 Changes
Amount %
Recovery from written off loan 16 8 9 113.1% intermediation which is the core business
Interest Income 8,066 6,156 1,910 31.0%
Loan written off expense (2) (10) 8 -83.1% of the bank contributed 76% in the total
Interest Expense (2,581) (1,804) (776) 43.0%
Others (3) (0) (3) 788.4% value generation. Similarly, financial
Operating Cost (503) (560) 56 -10.0%
services which comprise of providing
Other Income from financial intermediation 107 67 41 60.7%
various auxiliary services not directly
Value addition from financial intermediation 5,089 3,859 1,230 31.9%
relating to financial intermediation,
Details of Loans Written Off Income from financial services 1,609 1,404 206 14.6%
Npr. in Million contributed 24%. Value generation from
Total Value Addition 6,698 5,262 1,436 27.3%
Period ending mid July Principal
Interest Total financial intermediation has increased by
Loan written off till date (A): 768.1 333.2 1,101.3
- in FY 2016-17 1.7 1.8 3.5
- up to FY 2015-16 766.4 331.4 1,097.8 Application of Value Generation
Total recovery from written off loan (B): (501.6) (100.0) (601.6) The value created during the review financial year has been applied in the interests of all stakeholders. While applying the value
- in FY 2016-17 (7.0) (9.1) (16.1) to the stakeholders, the Bank has addressed the interests of its stakeholders in a reasonable manner by prioritizing the long term
- up to FY 2015-16 (494.6) (90.8) (585.5) interests of its business.
Net not recovered portion (A-B): 266.5 233.2 499.7
NPr. in Million
- actual write off * 15.6 129.4 145.0
Period ending mid July 2017 2016 change
- book write off 250.9 138.2 389.1 Amount Share % Amount Share % Amount %
Recovery ratio (B as a % of A) 65.3% 30.0% 54.6% To Employee 1,447 21.6% 1176 22.3% 270.42 23%
To Government 1,538 23.0% 1199 22.8% 338.83 28%
To Long term Financier 26 0.4% 26 0.5% - 0%
a growth of 26.08% over previous year. NRs. 1,528 million and NRs. 514
To Investor 1,113 16.6% 713 13.6% 399.91 56%
The bank has maintained its ace position million respectively up from NRs. 1,188
To Provide for maintenance and expansion 2,575 38.4% 2148 40.8% 426.60 20%
both in terms of generating the highest million and NRs. 401 million in the last
- Depreciation and Amortisation 96 1.4% 100 1.9% (3.76) -4%
operating profit and the highest net profit year. The provision of income tax and
- Provision for Loan and Investment Loss (12) -0.2% -47 -0.9% 35.43 -75%
among commercial banks. staff bonus made by the Bank is also the
- Deferred Tax (10) -0.1% -10 -0.2% 0.97 -9%
highest in the banking industry.
- Capital / Retained Earning / Reserves 2,500 37.3% 2106 40.0% 393.96 19%
The income tax provision and staff bonus
Total Value Addition 6,698 100.0% 5,262 100.0% 1,436 27.3%
also recorded good growths reaching
36 Nabil Bank Limited
Application of value generation towards
investors comes to 16.6% of the total
value generated this year. Distribution
to shareholders, in the form of cash
dividend, has increased by NRs. 400
million or 56% this year. Apart from this,
shareholders have also benefited from
stock dividend of NRs. 1,856 million
distributions in form of stock dividend
that is reported under Capital / Retained
Earnings in the table. The growth in value
allocated to shareholders substantiates
the fact that the bank is capable of
providing excellent shareholder return.
The bank is resolute towards meeting
shareholders expectations.
[02]
Segmental Performance Analysis
For the purpose of assessing segmental
performance, the Bank has identified
business segment as its primary segment
and geographical segment as its
secondary segment.
The different businesses operated by
the bank can be grouped into distinct
business segments based on the nature
of products and services. The nature
of product offerings in each segment
is distinct from others, and they also
vary in terms of the involved risk and
reward. As such, business segmentation
has significant influence on the bank’s
business risks and its pricing strategies.
Branches and business units can also
be grouped into distinct geographic
segments based on their location.
However, this factor does not have
There are no significant deviations in
the value application towards other
stakeholder groups as compared against
previous year. Employees received 21.6%
of the value generated in the form of
employee benefits and statutory bonus.
By providing a fair share to its employees,
the bank has surely become the 1st
choice employer for the country’s aspiring
youth who want to pursue a career in the
country’s financial services sector.
Similarly, 23% of the value generation
was allocated to government treasury
in the form of corporate tax payments.
The bank takes pride in being one of
significant influence on the bank’s
business risks and its pricing strategies.
The bank takes account of social,
economic and political factors while
assessing the impact of geographic
location in its businesses.
Primary Segment
The bank has identified four primary
segments based on the nature of business
operations. These are Banking, Treasury,
Cards and Other businesses. Their shared
contribution ratio to the net profit of the
bank for the review year was recorded
at 74.7%, 20.5%, 1.6% and 3.2%
respectively. Interest earnings and foreign
exchange gains/losses generated while
conducting businesses under different
segments are reported under
the respective segment.
the largest tax payers in the country and
in supporting the government in nation
building drive.
The bank is also prudent in enhancing its
corporate capacities and as such it has
retained a substantial portion of value
generation for reinvestment in business.
A total of 37.3% of value generation has
been retained in form of appropriation
of current year’s profit to various reserve
headings. It also includes profit retention
in form of stock dividend distribution,
depreciation funds, retained earning,
statutory reserve and loss provisioning.
Annual Report 2016/17 37
PRIMARY- BUSINESS SEGMENT Npr. in Million
Banking Treasury Cards Others Total
Revenue
Interest Income (Including Transfer Pricing) 10,002 3,248 25 - 13,274
Fee Income 530 49 421 189 1,189
Forex Income 155 572 (1) 22 749
Non Operating Income 16 91 - - 107
Total Revenue 10,703 3,960 445 212 15,320
Expense
Interest Expense (Including Transfer Pricing) (4,962) (2,700) (1) - (7,664)
Staff Expense (915) (5) (27) (12) (960)
Operating Expense (670) (95) (319) (20) (1,104)
Provision for possible Loss / (write back) 15 (1) (2) - 12
Non Operating Expense / (income) 55 - (3) - 53
Total Expense (6,477) (2,802) (353) (32) (9,664)
Segment Result 4,225 1,158 92 180 5,656
Staff Bonus 514
Income Tax 1,528
Net Profit for the Year 3,613
% Share 74.7% 20.5% 1.6% 3.2% 100.0%
% Growth over last year 27% 52% -11% -12% 28%
The Bank’s business is mainly profit center that is responsible for overall segment comprise of agency nature
concentrated in “Banking” segment that liquidity management, open market businesses like insurance, remittance
contributes more than three quarters in operations and investment portfolio. and bullion operations.
the bank’s gross earnings and net profit.
The core business of deposit mobilization Card segment comprises of all card Secondary Segment
and lending activities, along with other related operations including debit The bank has identified five secondary
auxiliary banking services outside of and credit card issuance, merchant segments based on the geographic
card operations, treasury operations and relationships, e-banking, m-banking locations of its offices. These are Eastern,
other businesses are reported under the and ATM management. The bank is Central, Western, Mid-Western and Far-
Banking segment. among the pioneers in this segment and Western. Their shared contribution ratio
has recognized this as a major growth to the net profit of the bank for the review
Treasury segment contributes about segment for fee based income. The year was recorded at 9.1%, 77.3%,
one fourth to the bank’s gross earnings bank has been investing substantially 9.8%, 2.3% and 1.5% respectively.
and hence net profit. The bank’s entire in upgrading its cards and electronic Interest earnings and foreign exchange
investment book is reported under channels, particularly with regards to gains/losses generated while conducting
treasury segment, and so does a majority enhancing transaction security, expanding businesses under different segments are
of the foreign currency operations. The payment network, adding new services, reported under the respective segment.
bank’s operates its treasury segment as a and increasing client base. Others
38 Nabil Bank Limited Annual Report 2016/17 39

The first step to

a secure future
is having
SECONDARY- GEOGRAPHIC SEGMENT Npr. in Million a reliable bank
Eastern Central Western Mid Western Far Western Total to bank on.
Revenue

“
Interest Income (Including Transfer Pricing) 1,001 11,096 804 231 142 13,274
Fee Income 74 1,002 81 19 12 1,189
Forex Income 14 722 10 1 1 749
Non Operating Income - 107 - - - 107
Total Revenue 1,090 12,928 895 252 156 15,320

Expense
Interest Expense (Including Transfer Pricing) (396) (6,913) (233) (77) (45) (7,664)
Staff Expense (69) (790) (69) (21) (11) (960.32)
Operating Expense (53) (949) (66) (26) (11) (1,104.19)
Provision for possible Loss (56) 42 25 3 (3) 11.64
Non Operating Expense - 53 - - - 53
Total Expense (573) (8,557) (342) (121) (71) (9,664)
Segment Result 516 4,371 552 131 85 5,656
Staff Bonus - - - - - 514
Income Tax - - - - - 1,528
Net Profit for the Year - - - - - 3,613
% Share 9.1% 77.3% 9.8% 2.3% 1.5% 100.0%
% Growth over last year 11% 30% 41% 18% 13% 28%

This regional segmentation follows the
name of five development regions of
the county. For segmentation purpose,
all business transactions of offices and
business units located in a particular
development region are grouped together.
Central region has the largest contribution
in overall profitability of the bank. All
strategic business units are located in
the Central region and it has the highest
number of branch offices in comparison
to other geographic regions. Country’s
capital being located in Central region,
this hosts the highest economic activities
and demand for both loan products and
deposit products are concentrated in this
region.
40 Nabil Bank Limited Annual Report 2016/17 41

[02]
Interim Position and Performance
(Un-audited)
Interim Financial Position INTERIM FINANCIAL PERFORMANCE
NPR. in Million NPR. in Million

AT QUARTER ENDING Mid Oct 16 Q1 Mid Jan 17 Q2 Mid Apr 17 Q3 Mid Jul 17 Q4 FOR QUARTER ENDING Mid Oct 16 Q1 Mid Jan 17 Q2 Mid Apr 17 Q3 Mid Jul 17 Q4 Total

Capital and Liabilities Interest Income 1,723 1,853 2,143 2,348 8,066
Paid up capital 6,184 6,184 6,186 6,186 Interest Expense 452 458 726 970 2,606
Reserve and surplus 6,208 7,157 8,093 9,030 Net Interest Income 1,270 1,395 1,416 1,378 5,460
Debenture and bond 300 300 300 300 Fees,Commission and Discount & Other 138 151 126 166 580
Borrowings 1,700 3,554 9 3,056 Other Operating Income 97 96 90 99 382
Deposits 120,128 120,814 117,060 118,896
Foreign Exchange Gain 153 152 156 187 647
- domestic currency 98,250 97,979 96,077 101,418
Total Operating Income 1,658 1,794 1,788 1,829 7,069
- foreign currency 21,879 22,835 20,982 17,478
Staff Expenses 227 192 214 298 932
Income tax liability 304 99 47 -
Other Operating Expenses 150 167 157 178 652
Other liabilities 5,936 5,139 5,558 4,476
Operating Profit Before Provision 1,280 1,434 1,417 1,353 5,484
Total 140,760 143,247 137,253 141,944
Assets Provision for Possible Losses 95 (9) (55) (11) 19

Cash and bank balance 12,085 10,184 10,493 13,092 Operating Profit 1,185 1,443 1,472 1,364 5,465
Money at call and short notice 1,466 347 2,472 774 Non Operating Income / (Expenses) 54 27 5 63 149
Investments (gross) 38,154 38,032 28,227 31,821 Write Back of Provision for Possible Loss 4 6 (9) 42 43
Loans and advances (gross) 83,547 90,300 90,555 91,491 Profit from Regular Activities 1,243 1,476 1,468 1,469 5,656
- Real estate loan 3,912 3,888 4,022 4,028 Extra Ordinary Income / (Expenses) 5 4 0 3 11
- Home loan (upto 100 Million) 6,722 7,064 7,156 7,074 Profit before Bonus and Taxes 1,247 1,480 1,468 1,472 5,668
- Margin loan 1,279 1,370 1,576 1,410 Provision for Staff Bonus 113 135 133 134 515
- Term loan 13,959 15,048 16,007 16,950
Provision for Tax 336 396 399 401 1,532
- Working capital loan 48,370 53,014 51,397 51,442
Net Profit 798 950 936 937 3,621
- Others loan 9,305 9,916 10,397 10,587
Fixed assets 807 821 802 852
Non banking assets - - - - Negative current account balance, poor and 17.38% in Q4. Net interest income, Operating expenses, including staff
Other assets 4,700 3,564 4,704 3,914 capital spending of the government which makes up almost three quarters expenses followed a normal growth
Total 140,760 143,247 137,253 141,944 and decrease in remittance growth rate of the total operating income, has in pattern in line with the average price
Note: Annual financial results per interim financial statements (un-audited) differ from that of the year - end financial statements resulted in a slower deposit growth in fact posted increasing quarterly trend inflation and the increased consumption
(audited) and the difference are explained for in “Schedule 4A” of financial statements.
the first 3 quarters of the fiscal year, line from Q2 before declining in Q4. In of goods and services required for
whereas, the demand for credit remained absolute terms, the NII has increased by business growth. We were able to
In Q1, the Bank’s total assets recorded a in the immediately preceding quarter. quarters. These corresponded to an
high throughout the year. Despite these negative 1.5% in Q1, by 9.82% in Q2 regularize some of our NPA accounts and
growth of 9.18% (NPR 11.84 billion) as These corresponded to an absolute absolute volume increment of Nrs.5.82
adversities and shortage of investable and by 1.52% in Q3 and by negative settle the dues from some other major
compared to the previous year. Starting volume increment of Nrs.9.9 billion in billion, Nrs.6.75 billion, Nrs.255 million
funds in the financial system, revenue 2.73% in Q4, in comparison with NPA accounts with our concerted efforts.
from the first quarter and moving on to Q1 and Nrs.685 million in Q2; decrease and Nrs.936 million in the respective
the fourth quarter, the bank’s total assets by Nrs.3.8 billion in Q3, and by Nrs.1.8 quarters. generation for the review year remained that of immediately preceding quarter. This helped us to improve the health of
increased by 1.77% (NPR 2.49 billion) billion in Q4 over that in the immediately satisfactory. Quarterly growth in Total operating income increased by our lending book and the total loan loss
in Q2 and 3.42% (NPR 4.69 billion) preceding quarter. Gross investment volume recorded a profitability was observed as is evident negative 2.99% in Q1, by 8.20% in provision expense significantly declined
in Q4; decreased by 4.19% (NPR 6 growth of 5.69% or Nrs.2.06 billion in from the tabulated data. The net profit Q2, by negative 0.31% in Q3 and by as compared to the same period last
billion) in Q3 over that in the immediately Quarterly growth under gross loans Q1, decline of 0.32% or Nrs.122 million increased by 4.09% in Q1, increased 2.31% in Q4, in comparison with that of year resulting in write back of provision
preceding quarter. Quarterly deposit and advances was recorded at 7.48%, in Q2 and 25.78% decline or Nrs. 9.81 by 18.94% in Q2 and 17.21% in Q3 immediately preceding quarter. expense.
growth was recorded at 8.94%, 0.57%, 8.08%, 0.28% and 1.03% respectively billion in Q3 followed by a volume growth
-3.11% and 1.57% respectively over that over that in the immediately preceding of 12.73% or Nrs.3.60 billion in Q4.
42 Nabil Bank Limited Annual Report 2016/17 43

[02]
Nabil Investment Banking Ltd.
Overview
[02]
The principal activities of Nabil Invest the subsidiary company. Likewise, under
Nabil Bank has established Nabil are to provide merchant banking and the Service Level Agreement, the Bank
Investment Banking Ltd. (“Nabil Invest” investment banking services that include has been providing various administrative

COMMENTARY ON
in short) as its subsidiary as per the management of public offerings, portfolio services necessary for service operations
Companies Act, 2006 on 07th of February management, underwriting of securities, of the subsidiary. Such administrative

KEY ITEMS OF income

2010. It is a Merchant Banker licensed
by Securities Board of Nepal under the
Securities Businessperson (Merchant
Banker) Rules, 2064. Nabil Bank as
at the Balance Sheet date holds 52%
controlling interest in the total paid up
capital of Nabil Invest. The financial year
of the subsidiary is common financial year
administration and record keeping of
securities of its clients (RTS), management
of mutual fund, depository participants,
and corporate advisory.
The subsidiary has entered into
Management Service Agreement and
Service Level Agreement with the
services include general administration,
accounting, finance and planning,
information technology, cheque clearing,
human resource administration, legal statement OF PAST 5 YEARS
advisory and fund management service.
INCOME STATEMENT
The transactions between Bank and its
subsidiary during the review year 2016- Period ending mid July NPR. in Million

with that of Nabil Bank (parent company)
that ended on July 16, 2017.
Bank. Under the Management Service
Agreement, the staff deputed by the
Bank has been working as the CEO of
17 have been presented in point 11.4
of Schedule 33 “Notes to Accounts” of
financial statements annexed herewith.
At mid July 2017 2016 2015 2014 2013 2012
Year 5 Year 4 Year 3 Year 2 Year 1 base year
Income from Merchant Banking Activity 38 24 21 15 12 4
Income from Mutual Fund operations 57 35 28 24 4 -

[02]

Interest Income 71 16 18 18 22 15

Other Income 15 16 6 18 13 10
Gross Income 181 92 74 75 52 29

COMMENTARY ON KEY ITEMS OF STATEMENT

Personnel Expenses (15) (13) (11) (10) (6) (4)
Office Operating Expenses (30) (23) (23) (18) (11) (8)

OF FINANCIAL POSITION OF PAST 5 YEARS

Interest Expenses (1) (1) (0) (1) (4) (0)
Gross Expenses (46) (37) (34) (29) (21) (13)

At the end of the review year, the total balance sheet size has decreased primarily due to refund of NRs. 2.9 billion to the applicants after the Operating Profit 135 56 39 46 31 16
allotment of securities under public offerings. There has been an increament in paid up capital to NRs. 150 million from Nrs. 105 million, due to Provision for Staff Bonus (12) (5) (4) (4) (3) (1)
additional stake taken on by CG finco.
Profit before tax 123 51 36 42 28 14
BALANCE SHEET NPr. in Million Tax Expense (31) (13) (9) (11) (7) (4)

At mid July 2017 2016 2015 2014 2013 2012 Profit after tax 92 38 27 32 21 11
Year 5 Year 4 Year 3 Year 2 Year 1 base year Opening Retained Earning 61 45 39 23 13 7
Capital and Liabilities
Dividend Payout (30) (21) (21) (16) (11) (5)
Share Capital 150 150 105 105 105 105 Deferred Tax Reserve 0 0 (1) 0 (0) -
Reserves & Surplus 151 85 46 41 24 13 Closing Retained Earning 123 62 45 39 23 13
Other Liabilities and Provisions 354 220 2,918 2,986 162 135
Total 655 455 3,069 3,132 291 253
Income from merchant banking activities and 7% as compared to previous year The Company has proposed distribution

and that from the mutual fund operations resulting in 41% increment in profit after of 20% cash dividend from the review
Assets
have posted a growth of 56% and 25% tax for the review period. In the previous year’s profit. In light of the satisfactory
Cash and Bank Balance 338 278 2,921 2,980 118 128
respectively. The only decrease in the year, a new income stream from auction of performance of the subsidiary in the
Investments 22 18 92 93 98 107
income book is observed under interest share management has been added by the review year, the bank and the subsidiary
Net Fixed Assets 222 97 15 17 6 7
income by 11%. Total gross income and subsidiary from which commission and are committed for the company’s growth.
Other assets 72 61 41 42 69 11
total gross expense are increased by 25% management fee is generated.
Total 655 455 3,069 3,132 291 253
44 Nabil Bank Limited Annual Report 2016/17 45

c r i s p
synergistic
Nabil Bank represents the true spirit
of team works, recognizes that the real
source of competitive advantage for
any organization is the satisfaction and
synergy among its staff. Equipped with
a team of industry and banking experts
Nabil’s credo is to move together ahead.
[03]
Products
and services
Nabil has structured its delivery platform by constituting specific Strategic Business Units (SBUs) to ensure single window customer
dealing in specific product segments. Most of the bank’s product and service offerings are channeled through these SBUs for effective
and efficient delivery. All SBUs are equipped with the resources and expertise required for driving business in their respective markets.
Within respective markets the SBUs undertake market research, product enhancement, delivery channel optimization, relationship
marketing, and relationship management. The bank’s product and services are being offered through the following SBUs.

Nabil Bank’s continuous effort in breaking new ground

with innovative products/services in the banking
industry enhances the value of stakeholders.

Corporate Banking SBU
Corporate Banking (CB) is a one window banking designed for
catering the entire gamut of financial services to large corporate.
CB offers entire banking services required for corporate
establishments such as manufacturing and processing industries,
export and import trading, real estate development, hotels,
agro production, service industries, and others. CB offers
capital investment in the form of multi-year term loan; working
capital in the form of overdraft and structured time loans; trade
transactions in the form of letter of credit, bank guarantees,
import loans, pre shipment / post-shipment loans, bills and
documentary negotiation / collection / advising; and open
account arrangements. Having been banker to most of the large
corporate houses in the country for over three decades, Nabil has
developed the expertise to foresee requirements of businesses
and has tailored its products to meet those requirements.

Infrastructure and Project

Financing SBU
Infrastructure and Project Financing (IPF) is an one window
banking designed for catering to large capital intensive projects
such as hydropower generation, power transmission lines,
telecommunication infrastructures, cement manufacturing,
civil aviation, and others. While IPF offers all the products as
CB SBU, it additionally caters to large funding requirements
of mega-projects through loan syndication and banking
Deepak Shrestha consortium; high value import LC and multi-year import bills
Head-Corporate Banking and Infrastructure discounting for machinery import on consortium risk sharing
basis; and loans denominated in foreign currency against
46 Nabil Bank Limited Annual Report 2016/17 47

imported machinery, airplanes, etc. Nabil has a good exposure
in Hydropower Projects and Cement units and is a major
bank chosen by foreign joint ventures operating in Nepal for
infrastructure development.
SME, Microfinance and
Mid Corporate SBU
SME, MF and MCOR is a one window banking designed for
catering the entire gamut of financial services to smaller and
mid-sized businesses which largely occupies the lower to
middle level of the supply chain. These are mostly entrepreneurs
engaged in small and medium scale imports / exports, trading
in FMCG and construction materials, cottage and small scale
industries, agro-production and processing, other trading and
service businesses, etc. SME also caters to specific requirements
of small businesses such as easy business financing with less
turnaround time. Further, in line with Nepal Government’s
strategy and Central Bank’s guidelines to promote productive
sectors, we also cater financing on interest subsidy agriculture
loan and mid-sized tourism business loans to hotels, restaurants,
travel agencies, tour operators etc.
this segment the bank has partnered with selected Micro-
Finance Institutions (MFIs) that are licensed by the Central
Bank to operate as financial intermediary. The bank provides
wholesale credit to these MFIs in form of loan refinancing. The
bank has also injected equity in some of the major MFIs since
their inception and has been on their Board to support capacity
development. Besides, the bank also directly finances on micro
businesses, small scale agriculture businesses, individual small
projects, low cost housing and further promotes female run
micro enterprises etc. through direct lending being within the
definition of microfinance as per regulatory body.
Nabil’s large branch network is strategically located to support
SME and Mid Corporate businesses across the country and
entrepreneurs can reach any branches of the bank for their
funding requirements.
Retail Lending SBU
Retail Lending is a one window banking designed to extend easy
financing to fulfill social requirements of a larger population
mass, such as those requiring to purchase a house or a vehicle
and those requiring funds for abroad studies or for immediate
social obligations. Major features of this segment include
competitive interest rates, standardized documentation, fast
processing, flexible tenor and structured repayment options
backed by regular cash flow. Retail lending products are offered
across all branch offices and customers can visit any branch
to avail their funding requirements. Within the retail lending
segment the bank offers a range of products and regularly
introduces various schemes within those products, to make our
offerings attractive for the larger mass.
Nabil Auto
This product is for financing of motor vehicles, both for private
and commercial use. Clients can avail easy financing for
purchase of cars, van, jeeps, taxi, trucks, bus, etc. either for
personal use or use by offices such as schools, hotels, hospitals,
transport operators, small businesses, among others. The bank
has also entered into agreement with major automobile dealers
to support low interest offerings and fast processing to clients.
;fgf] EMI af6}
7"nf] v'zL
AUTO
l8«d sf/ lng] tkfO{+sf] ;kgf ca k"/f ug]{5 glan c6f] nf]gn],
hxfF tkfO{+n] ;lhn} nf]g k|fKt u/L ;–;fgf] EMI lt/]/} 7"nf] v'zL
kfpg ;Sg'x'G5 . yk hfgsf/Lsf nflu <AUTO> 6fOk u/L
#%^^% df k7fpg'xf];\ .
framework. Nabil is the largest caterer of education loan in
Nepal and is among the two banks highly preferred by the
Australian High Commission for loan facility based in its
acceptability and recognition received by Australian
institutions for higher education.
Personal Overdraft
This product offers overdraft limit to clients against mortgage of
land and building, within the threshold of regulatory framework.
This is a quick solution to our customers’ immediate and
contingent funding requirements. Loan processes are simplified
and expedited and includes features of convenient payback
facilities together with revolving credit line.
Nabil Share Loan
“Nabil Share Loan” is an easy loan provided against the pledge
of de-mat shares in the form of either overdraft or demand loan
facility. It is being provided to meet client’s personal obligations
being within the norms prescribed by Nepal Rastra Bank.
Deposit Relationship Management SBU
Deposit Relationship Management has been structured into
a centrally developed and locally delivered range of deposit
products. Central core of this SBU is continuously engaged in
product development and innovation in delivery channels.
The bank offers a wide range of deposit products and regularly

Nabil Housing ljz]iftfx?M


cfs{ifs Aofh b/ ;lhnf] / l56f] k|lqmof ^ jif{;Ddsf] nf]g cjlw
 

Gyaneshwar Acharya
Head-SME, Mid Corporate and Microfinance
Microfinance product line is specially designed to extend
financing to income generating initiatives of the socially under
privileged population; most of those residing in rural areas
where commercial bank’s branches are rare. To reach out to
This product is for financing of home, an ideal home dreamt
of by our clients. Financing is available for purchase of land,
building construction, furnishing, refurbishment, and purchase
of individual homes and apartments.
Nabil Properties
This product offers clients with a simple option to obtain credit
against mortgage of properties. Clients have the access to credit
towards funding their social obligations like marriages, travelling,
education, equity infusion in businesses, etc.
lj:t[t hfgsf/Lsf] nfluM
u|fxs ;]jf s]Gb|, k'Nrf]s, nlntk'/ kmf]g g+=M %%$@*(!, %%@)$#!
Nabil Sikshya
This product is for financing of higher education to aspiring
Nepali students choosing foreign universities and colleges as
their next study destinations. Specially packaged study loans
Ramesh Prasad Lohani
covers funding for tuition, accommodation, travel and insurance
Head-DRM Unit
required for the full course period. Nabil has promoted its
education loan as a social initiate within a financially feasible
 48 Nabil Bank Limited
STRONG.STABLE.DEPENDABLE.
TOGETHER AHEAD
The foundation of our relationship reflects
on our strength, stability and dependability.
And our endeavor is to ensure an enduring
relationship - the one that moves
Together Ahead!
introduces various schemes and value offers within those
products, to make the offerings appealing for larger mass.
Nabil Bank offers a range of deposit products to meet the
requirements of our valued customers, both individual and
corporate. Besides regular deposit products like Current, General
Savings and high yielding Fixed Deposit Accounts, Nabil offers
special savings deposit schemes such as “Bachat Yojana”,
tailor made for higher returns and a host of waivers/discounts
on various products and services like Visa Electron Debit
Card, Anywhere Branch Banking Service (ABBS), to name few
amongst others.
Nabil offers “LokBachat”, a savings deposit product under which
accounts can be opened without minimum balance requirement
and the option to use the account for investing in Initial Public
Offerings (IPOs) and various financial activities. The basic
purpose of this account is to provide banking access as well as
educate savings habit among the general public. This account
can also be used to manage salaries of employees of corporate
houses.
Nabil also offers “StudentSavings”, a savings deposit product
meant for students pursuing higher studies with discount on
issuance of Bank Drafts, hassle free online registration for
TOEFL, IELTS, and GMAT etc. amongst others.
“JesthaBachat”, is a savings deposit product primarily meant for
the senior citizens of the country, which can be opened without
minimum balance requirement and comes with a host of waivers
/ discounts on Good for Payment, Stop Payment, Safe Deposit
Locker, etc. This account has been designed especially to respect
the senior citizens, hence the interest is provided on monthly
basis in this account.
Further, Nabil offers “NariBachat”, a specially designed
deposit product for female customers. There is no provision
of maintaining minimum balance to open account under this
scheme. The account holders are offered with a customized Visa
Electron Debit Card and with this Nabil is the first Bank ever to
have crafted a special Visa Electron Debit card for women. This
product is suitable for ladies from various walks of life.
Other special savings products are “BalBachat”, meant for
children. Similarly, “Share Khata” newly launched savings
account scheme targeting the general public who invest in
securities of various companies listed on Nepal Stock Exchange.
This is designed to integrate with the Demat (Dematerialized)
accounts of the customers maintained with Nabil Investment
Banking (NI). In addition to the regular services, this deposit
scheme provides following solutions with the minimum balance
requirement of Rs. 500/-
Convenience and security to transact/invest in securities.
Ø Ease of obtaining cash dividend and IPO/FPO refund.
Ø Ease of day to day banking transactions without need for
multiple deposit accounts.
Ø Secured online platform to keep track of account
transactions 24X7.
Ø Online/internet banking access to track Demat account status.
In order to cater needs of the staff of corporate houses having
business (credit/deposit) relationship with us to maintain their
staffs’ pay roll account. We offer various salary account schemes
namely
Ø Corporate Staff Savings
Ø Salary Savings
Ø Employee Savings
We also offer Call Deposit Accounts where high volume short
term deposits can be parked with negotiable interest rates.
Large network of branches and ATMs spread across the country
coupled with a range of services; Nabil Bank’s deposit schemes
provide both the features of safety and adequate returns to
account holders. Financial institutions in this vicinity have also
tried their hands in various digital banking channels like: Online
or Internet banking access, Mobile banking, Utility Payment
facilities etc., to give flavor of international banking practice at
local level. Being pioneer of modern banking service provider
in the country, we have taken digital culture at next level by
providing entirely new digital experience in the context of
Nepalese Banking Industry in the form of:
Electronic online account opening form – In this form of account
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
account opening approach.
Smart Fixed Deposit – Unlike existing Fixed Deposit account
accompanied with certificate, this is a paperless fixed deposit
opening scheme, which has various smart features. For
additional information on our deposit products please visit the
Bank’s website.
50 Nabil Bank Limited
Cards & e-Banking Division - SBU
Nabil Bank is the pioneer in introducing credit cards in Nepal.
We are one of the principal members of Visa Worldwide Inc.,
MasterCard Worldwide Inc. since early 1990s and UnionPay
International Co. Ltd. and Smart Choice Technologies (P) Ltd.
Nabil has the widest range of services in cards, which includes
issuance of Visa and MasterCard brands of cards whereas
on the acquiring we process Visa, MasterCard, UnionPay
International (UPI), Smart Choice Technology (SCT) brands of
payment cards as a mode of payment. The Bank has employed
with ‘state of the art technology’ to provide online banking
services, mobile banking services, credit, debit and pre-paid
cards under Visa and MasterCard brands to the accountholders
and non-accountholders.
We issue EMV chip based card (termed as Nabil Smart Cards)
which enhances the security of the card and card transactions
of the customers by manifolds. With this enhanced security
measure, the cardholders can use their Nabil Smart Cards
(Debit & Pre-Paid) at both ATMs & Point of Sales (POS)
transactions with Chip+ PIN verification method. Unlike debit
cards, the cardholders can use their Nabil Smart Cards (Credit)
at Point of Sales (POS) transaction with Chip +Signature
verification method. Similarly, we deploy EMV compliant POS
terminals at our merchant locations for safely of our merchants
and security of each card transactions.
Domestic Cards
Nabil Visa Domestic Debit Card and Nabil Visa/MasterCard
Domestic Credit Card are accepted at over 2.8 million merchant
outlets and over 200,000 ATMs in Nepal and India. Nabil
Visa Domestic Debit Card can be availed and used without
any hassle of limits, interests, late payment fees and other
penalties. Nabil Visa Domestic Pre-Paid Card is widely accepted
at par with Nabil Visa Domestic Debit Card and can be availed
instantly at any of our branch without having to open an
account in the Bank.
International Cards
Nabil offers International Dollar Cards like Nabil MasterCard
International Credit Card and Nabil Visa International Pre-Paid
Card under MasterCard & Visa brands, which are accepted
over millions of merchant outlets and ATMs worldwide. These
cards are becoming exceptionally convenient to the customers
who travel abroad other than India where transactions through
cards are the most preferred mode of payment unlike drafts or
traveler’s cheques. Nabil Visa International Pre-paid Card can
be availed instantly at any of our branch without having to open
an account in the Bank.
Nabil Installment
Nabil offers a unique supplementary service called “Nabil
Installment” for Nabil Domestic Visa and MasterCard credit
cardholders because of its simplicity and easy access. Nabil
Installment offers easy Equated Monthly Installments (EMIs) at
0% interest or interest rate offer from our selected merchants
with minimum 6 to maximum 18 months tenure for purchase
of goods & services with minimum purchase amount of NPR
20,000/- to maximum NPR 200,000/- from its selected
merchant locations. Under Nabil Installment facility, currently
Nabil Bank cardholders can purchase various consumer
electronics gadgets, home appliances, mobiles/smart phones/
tablets, solar systems, bicycles, branded watches, home
furniture, readymade jewelry, hair transplant treatment service
and various travel packages.
Nabil eSecure
Nabil offers secured internet payment solution for Visa and
MasterCard cardholders (debit, credit and pre-paid) to enjoy the
new world of e-commerce (online) shopping experience in safe
and convenient way called “Nabil eSecure”. Nabil eSecure are
secured by Verified by Visa and MasterCard SecureCode, 3D
Secure Service which makes online transaction more safe and
secure. 3D Secure Service provides the cardholders with “ONE
TIME PASSWORD (OTP)” to protect online transactions just like
cardholders use PIN at the ATM. With this service, it confirms
the cardholder’s identity through a swift but comprehensive
check process when the cardholders make online purchases.
Further it enables the cardholders to authenticate at the time of
online purchase by using 3D Secure OTP and protect the cards
against misuse. Cardholders are requested to visit only trusted
merchant websites for online payment of goods & services.
Cardholders can purchase railway tickets, airlines tickets, hotel
reservations, tour packages and many more with the help of
hassle free Nabil eSecure.
Annual Report 2016/17 51
Mobile Commerce process called “Mobitoken”. In Mobitoken, the first factor
The utility of mobile commerce is growing exponentially. is the conventional User ID and Password and the second
factor is One Time Password (OTP) generated by the system
With the intention of providing all modern banking services
for each internet transaction. OTP are sent to customer’s
to its customers, Nabil has upgraded user friendly Mobile
registered mobile number via SMS or through registered e-mail
Banking application with dual channel access (Internet/SMS)
address. Customers need to enter both the factors for NabilNet
with personalization features called “Nabil SmartBank”. With
transaction.
this mobile banking application, customers can navigate
Nabil Bank’s branches/ATMs/Merchant locations easily. This
application 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, Full Statement Request, NABILNET is
More Secure !
View Foreign Exchange Rate/Stock Market/Account Statement
and PIN Change and financial transactions such as Third Party
Fund Transfer within Nabil Bank & e-Sewa Member Banks,
Payment of Nabil credit card bills, Purchase of NTC Prepaid
Mobile (Namaste) Recharge Card, Payment of NTC Post Paid
Mobile Bill, Payment of Ncell Post Paid Mobile Bill, Payment of
NTC PSTN Bill, Payment of ADSL Bill, Top-up (NTC Prepaid/
Postpaid/PSTN/ADSL/Ncell Prepaid/Postpaid), Electricity Bill
Payment, load e-sewa wallets, Recharge card of Dish Home,
Recharge card of Broadlink, Merchant Payments. In addition,
customers will get notification & alerts viz. transactions alerts,
push notifications, loan repayments alerts etc. The entire range
of the above services is available for both NTC and NCell mobile
service users. Nabil will always be keen to expand the scope of
mobile commerce services in order to facilitate our esteemed
customers.
NabilNet
Through Nabil’s internet banking facility “NabilNet”,
customers can bring the Bank right to their homes and
offices. Customers ranging from individuals, NGO’s/INGO’s,
development agencies, and corporate houses can enjoy a host
of services like transferring funds, viewing account balances,
Electronic Payment Gateway (EPG)
downloading and printing account statements, payment of
Electronic payment gateway is a software system that enables
credit card bills, payment of NTC/Ncell Post Paid bill, payment
online card processing. Via an electronic payment system,
of NTC ADSL bill, payment of NTC PSTN bill, load e-sewa
customers can browse an online catalog and purchase items
wallets. NabilNet is highly secured and in order to make the
online through automated online transactions. E-commerce
environment more secure it has initiated publicizing awareness
website ultimately improves the way of doing business,
programs through newspapers and is constantly updating its
increases level of sales, expands business and improves
products and services to serve bank’s valued customers. Nabil
relationships with existing customers. This service offered
has enhanced its security feature on NabilNet transaction
though our system enables the online business establishment
with the implementation of two factor authentication (2FA)
52 Nabil Bank Limited Annual Report 2016/17 53

to offer customers an online payment facility that is convenient,
robust and secure. It is a functionally rich solution that is 3D
secure standard compliant and is suitable for businesses of all
sizes, from small to corporate. As Electronic Payment Gateway
is an e-commerce application service that connects a website
with the bank, this terminal assembles, encrypts and transmits
the data to complete the transaction. It executes a series of
tasks to process a transaction upon receiving a customer’s
request to buy a product from a payment gateway enabled
merchant. Through Nabil Electronic Payment Gateway service,
Nepali businesses can sell their products/services online in
a secure environment by accepting payment through Visa,
MasterCard & UnionPay International Cards issued in Nepal or
abroad.
Nabil ViberBanking
Viber is a free, internet based cross-platform instant messaging
and voice over IP (VoIP) application that offers cheap and
WE’RE NOW VIBER AWAY!
efficient way to communicate for millions of users worldwide.
Nabil Bank’s Viber Banking facility is available to all users
through Viber application which is available for download from
Google Play Store and App Store. Multiple banking functions are
delivered through the bank’s Public account. This enterprise
service allows customers to interact with bank via Public Chats
in a direct, personalized and spontaneous manner. Customers
can easily search for and subscribe to this bank’s Public
Account within Viber app to enjoy various features like, account
information, balance enquiry, mini statements, forex rates,
interest rates, ATM & branch locations, banking hours, FAQ’s
and about different products and services etc. Account holders
need to register their bank accounts through the registration
menu in order to access their account information. Any ad-hoc
comments/suggestions of the customers shall be processed
through chat-bot which is not visible to all customers but only
to bank administrator.
NABIL VIBERBANKING
Go digital. Access your account
and enjoy various services by
interacting with the Bank
directly through Viber.
For registration:
Scan the Code
or Go to Public Accounts on Viber
& Search ‘Nabil Bank’
DISCOVER
ATMs
Nabil has a large domestic network of 100 ATMs in the
Kathmandu and outside valley. These ATMs serve customers
365 days a year. Nabil ATMs accept debit, credit and pre-paid
cards of Visa, Visa Electron, Plus, MasterCard, Maestro, Cirrus,
Union Pay International and SCT. Further extension of ATMs in
various locations inside and outside valley is still under Nabil’s
immediate business plan.
Remittance Business Center SBU
Remittance business segment has been structured into a
centrally developed and locally delivered range of remittance
products. The central core of this SBU is continuously engaged
in product development, network enhancement and innovation
in delivery channels. Remittance business is catered from across
the branch offices and also through the extensive network of
payout agents deployed across the nation.
Western Union
Nabil Bank is the only Principal Bank Agent of Western Union
International for Nepal. Western Union provides fast, reliable
and convenient ways to transfer money. Through Western
Union, the customers can receive the fund through more
than 500,000 Western Union Agent locations in more than
200 countries and territories. One does not need to have an
account with Nabil Bank to receive funds. The bank has built
up extensive agent network throughout the country for effective
payout of Western Union remittance.
Western Union (WU), Nabil Bank Ltd. & eSewa Pvt. Ltd. has
also launched Mobile Money Transfer (MMT) Service to WU
customers in Nepal. Sender can send money directly to their
beneficiary’s mobile in Nepal or beneficiary can load money in
his/her mobile wallet by submitting MTCN no., sender’s name,
expected amount etc. Beneficiaries can transfer their amount
in different member banks of eSewa Pvt. Ltd or can use it in
payments of utilities. For this, he or she needs to be registered
with eSewa.
Nabil Remit
This is a proprietary brand the bank has developed in order to
provide domestic remittance services for money transfers within
Nepal. NABILREMIT is a web-based online money transfer
system introduced by Nabil Bank Ltd. to ease the fund transfer
from one place of the country to the other. NABILREMIT has
one of the largest networks of over 1,500 Nabil Remit agents
located across the nation. Over the year NabilRemit has become
one of the largest and most popular local remittance brands in
the country.
Foreign Inward Remittances: Nabil Bank has established
remittance relationships with a number of exchange companies
and banks in Qatar, UAE, Kuwait, Saudi Arabia, Bahrain,
India and South Korea for rendering foreign inward remittance
services.
Drafts and Swift Transfers: The bank issues demand drafts
and executes fund transfer instructions for transfer of funds
across the globe using the platform provided by SWIFT.
The bank has wide correspondent banking arrangement
with international banks in order to execute fund transfer
requests from clients so as to facilitate individual fund transfer
requirements, international trade transactions and treasury
operation of bi-lateral and multilateral agencies.

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54 Nabil Bank Limited Annual Report 2016/17 55

Bancasurrance SBU
Bancassurance is one of the new concept products which
the bank has focused with the SBU concept. Centralized
business development and support team is continuously
engaged in business development and process innovation in
close coordination with the insurers and the clients. Insurance
policies on the other hand are available across all branches and
lending SBUs so as to facilitate clients with choice and effective
selection. The SBU coordinates with insurers for expeditious
settlement of claims in compliance with the standard
procedures. The bank offers insurance services to clients for
coverage of both property and life under agency relationships
with major insurers in Nepal. Credit clients can conveniently
choose a policy for risk coverage on properties pledged to bank.
Likewise all clients can choose to select from a range of different
life insurance policies as per their requirement and investment
plans. This arrangement between the Bank and insurance
companies to sell insurance products to the Bank’s customers
brings mutual benefits to insurer, bank and the clients at the
same time.
c r i s p
Professional
accessible to its customers no matter where they are located.
Clients can benefit from hassle free transaction banking services
from each and every branch offices, irrespective of the branch
where they opened an account.
Extended Banking (EB) Services
Nabil has offered “365 Days Banking” services” and
“Extended Banking” services” from selected branches to cater
to the banking needs of customers who do not have time to visit
a branch during regular banking hours. Teendhara and Lalitpur
(Kupondole) branches in Kathmandu valley provides “365 Days The team at Nabil is experienced and
Banking” services” and “Extended Banking” services”, while endeavors to values customers above
many more branches across the country provides “Extended everything and this is what sets Nabil
Banking services”. Bank apart from others. Professionalism
and proficiency is something we have
Bullion Operation always given immense value to. We
Nabil is a wholesale importer if gold on consignment basis and recognize the value of good work ethics
has developed a credible name on the domestic bullion supply in the progress of any organization.
chain. The bank offers bullion import services to merchants as
well as licensed financial institutions.

Treasury SBU
The bank’s treasury offers complete solution for foreign currency
transaction requirement of its customers. The bank is well
equipped with real time transaction window for transacting in
global financial markets. Extensive network of correspondent
banking arrangements worldwide support clients requirement
of transactions with foreign counterparties, be it for individual
requirements, trade transactions or for treasury operations of bi-
lateral and multi-lateral foreign agencies. The bank undertakes
all forex transactions as permitted by the regulation, competitive
spot and forward currency exchange rates, and non deliverable
forward contracts for licensed financial institutions.

Other Services
Any Branch Banking Services (ABBS)
The bank has capitalized on its technology resources to offer
uninterrupted transactions across a wide network of its branch Krishna Dutta Bhattarai
Chief Financial Officer
offices, ATM network, and POS machine network. The objective
is to ensure that Nabil’s products and services are easily
56 Nabil Bank Limited
[04]
GOVERNANCE
The Board of Directors
Structure of the Board
There are seven members in the board
including the Chairman. All the board
members are non-executive directors and
thus they do not take part in day to day
management decisions. Board of directors
are from diverse background and possess
specialization and expertise in various
fields and thus bring about an external
perspective on company affairs and provide
constructive suggestions to the CEO.
Individual directors exercise their authority
in the board meetings and the board acts in
the collective interests of the shareholders.
The prime objective of the Board is to
form policies and provide guidance and
suggestions to the Management for long
term sustainability of the Bank with
reasonable returns to shareholders and
maximize shareholders’ wealth.
The Board decides on corporate and
business strategies, approves capital and
operational plan and consistently monitors
and reviews the management’s performance
so as to ensure that the actual performances
The core objective of the Board has always been to form policies and
guide Management for long term sustainability of the Bank with
reasonable returns to shareholders and enhance shareholders’ value.
are in tandem with the annual and long
term targets. Similarly, the Board sets
strategic path for the organization, identifies
business objectives, reviews Management’s
performance and provides guidance to the
Management towards achieving the targeted
goals and objectives.
The Board is collectively responsible for
long term sustainability of the Bank. To this
end, the Board exercises its authority within
the framework of regulatory provisions,
Companies Act, Bank and Financial
Institutions Act, Memorandum and Articles
of Association and other relevant laws and
regulations. The Board delegates executive
responsibility for running the Bank’s
business to the Chief Executive Officer.
The CEO heads the executive management
team and is empowered to further delegate
authority and assign responsibility through
the organizational structure.
As per the NRB Directive, the Board,
may form committees for specific purpose
considering the job requirement ascribing
specific responsibilities and delegating its
authorities and powers to such committees.
However, the Board keeps certain
important authorities and rights to itself
including, but not limited to, the approval
of strategic plans, performance targets,
policy documents, annual budgets, annual
financial statements and the authority or the
delegation of authority to approve credit and
market risk limits.
A total of 25 Board Meetings were held
during the year.
The following table shows attendance of
individual directors at the meetings.
director meeting fee Sitting Fees
S.P. Poudyal 24/25 360,000
D.G. Agrawal 24/25 288,000
N. Chaudhary 12/25 144,000
Ashish Sharma 18/25 216,000
J.P. Kanoria 2/25 24,000
V.P. Dani 15/25 180,000
P.K. Pathak 25/25 300,000
K.P. Sharma 21/25 252,000
R. J. Karki 16/25 192,000
Total 1,956,000
Information
to the Board
Nabil has open communication culture
which has fostered healthy working
relationship across all levels. Open
communication policy at the board level
has smoothened the communication and
information sharing between the board
and bank’s executive team. The Board
receives reports and presentation from
conveners of board committees and
the CEO which covers the 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.
There are three permanent board level
committees viz. Board Audit committee,
Committee related to the staff services
and Risk Management Committee which
are formed as per the NRB Unified
Directive No.6, Section 5. However, as
per Unified directive, board can form
other committees as well for specific
requirement and for specified period
of time. Each committee can include
minimum three members and maximum
five members.
All Board Committees have a Member
Secretary who is engaged and has
expertise knowledge in the concerned
area of business within the Bank. For
effective discussions of the items in
agenda, other members from the bank’s
management, whose responsibilities
relate to the matter in agenda, are also
invited as required.
Agendas of the meeting are
communicated to the BOD members in
advance of the board meeting for their
purview. 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.
Director’s Appointment
and Induction
Director’s appointment, retirement and
re-election are done as per the provisions
laid out in the prevailing companies
act, Bank and Financial Institution Act,
Article of Association of the bank and
other relevant laws and regulations.
Professional director is appointed from
the list of Financial Experts published
by Nepal Rastra Bank, where as
board member representing “C” class
shareholder is appointed by the AGM
of the bank for the period of four years.
None of the directors have a service
contract with the Bank.
Directors take the oath of secrecy and
fidelity in presence of the governor of
Nepal Rastra Bank at the later’s office
immediately after the appointment.
They are also given induction training
within a month of appointment that
covers important aspects of banking in
Nepal, transparency, disclosure, conflict
of interest, international best practices,
compliance and relationships with
regulatory institutions.
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 Bank’s business, strategies,
operations and risk culture.
Changes in the Board
The composition of the Board is always
balanced with a mix of professional
expertise and experience. In order to
Annual Report 2016/17 57
align strategies with the changes in
the external environment, national and
international developments and exposure
to higher level risks, bank’s board is
composed with the diversified talent pool
who have proven their mettle in their
previous stint. This has strengthened
the board and has ensured the quality
oversight from the board.
Mr. Krishna Prasad Shrama and Mr.
Ashish Sharma both of whom represent
Group A shareholders were appointed
as Directors. Similarly, 32nd Annual
General Meeting of the bank has
appointed Mr. Shambhu Prasad Poudyal
and Mr. Dayaram Gopal Agrawal as
the representatives of the class “C”
shareholders. Mr. Rajendra Jung Karki
who represented Group B shareholders
stepped down from the Board owing to
the limitations imposed by BAFIA, 2073.
Relation with
the Shareholders
The Board has always encouraged active
participation of shareholders in every
Annual General Meeting. The meeting
has always been a very important
platform for the Board to interact with
many shareholders, both individual
and institutional, communicating the
objectives and strategic plans, clarifying
on shareholders’ concerns and sharing
the collective vision.
Directors, most of whom represent
institutional shareholders, engage in
regular dialogues with institutional
shareholders, continuously conveying on
business strategies and apprising them
of the Bank’s performance based on
mutual understanding of organizational
objectives.
The Bank had following board
committees during the year:
1. Audit Committee (AC)
2. Risk Management Committee (RMC)
3. Committee relating to Staff Services
and Facilities
58 Nabil Bank Limited Annual Report 2016/17 59

[04]
Board Committees
20. Annual and Semi-annual verification of Portfolio of the Bank by the Management for full compliance of
Cash and Cash value items of all Branches 33. Memorandum on Audit Plan for the irregularities pointed out in the report.
FY 2073/74 (2016-17)
Other Agendas 34. Memorandum on Quarterly Audit Ø Review and discussions made on the
Audit Committee (AC) exposure to credit risk, operations risk strengthening the bank’s overall risk
and market risk. management systems. For effective 21. Review of Compliances and Branch/ Programs of FY 2073/74 preliminary statutory audit report along
The Committee is formed and functions in
discussions on specific agenda, members Unit Responses on Audit reports – 35. Memorandum on Budget for with the Management response and annual
compliance to the regulatory provisions of 6. Advising and recommending the Board
114 reports FY 2074/75 (2017/18) financial statements of the Bank and
NRB Unified Directives and the provisions on management actions required for from senior management team of the bank
22. Memorandum on Status/Progress of 36. Memorandum on Revision of Standard suggested appropriate measures to be taken
of Sections 164 and 165 of Company Act achieving the desired level of were also invited to BAC meetings on need
the Audit Reports issued during FY Instruction Manual (SIM) of Corporate by the Management for compliance and
2063. The Coordinator and other members effectiveness and compliance in response basis.
2071/72 (2014-15) and FY 2072/73 Communication Unit and Corporate recommended the Board for adoption of
of BAC are non-executive directors. The role to above reviews.
(2015-16) Social Responsibility Unit annual accounts of the Bank.
of committee secretary is performed by the 7. Recommending the Board on appointing Agenda Discussed in AC Meetings
23. Memorandum on submission of Annual 37. Memorandum on Revised Audit
Head of Internal Audit department. Internal statutory auditor, auditor’s remuneration 1. Monthly Report on Status of Total Loans
Financial Statements and Preliminary Policy Statement Ø Provided feedback to the Board of
Auditors and Statutory Auditors have direct and reviewing that the auditor’s actions 2. Monthly Status Report on Nostro
Statutory Audit Reports (with 38. Memorandum on Draft Concept Paper Directors by tabling Audit Committee
access to the Audit Committee. in course of bank’s audit, do not Account Reconciliation
Management Response) of the Bank for on Risk Based Internal Audit meeting minutes at the subsequent board
contravene with applicable laws and 3. Audit Report of Remittance
FY 2072/73 (2015/16) (RBIA)-2017 meeting for review.
As on 15 July 2017, the composition of the provisions. Business Center
24. Memorandum on Reappointment 39. Memorandum on Review Report on
Committee is as follows: 4. Audit Report of Treasury and
of Statutory Auditors for FY 2073/74 Compliance Status of NRB Inspection Ø Review and discussions made on the
1. Director Mr. P.K. Pathak, Coordinator BAC Attendance Record Correspondent Banking
(2016/17) (TR Upadhya & Co.) Report, 2071 risk mitigation (such as credit, operations,
2. Director Mr. Nirvana Chaudhary, Member Total seven BAC meetings were conducted 5. Audit Report of HO-Operations
25. Memorandum on Disclosure of market, regulatory, external etc.), internal
3. Director Mr. Ashish Sharma, Member during the year. 6. Audit report of Administration
information, (in regard to Audit Recommendations check and control and security position
Department
Committee) in line with stipulations Issued To Management in respect of all the operations/activities
AC Role and Responsibility Directors Attendance Sitting Fees 7. Audit report of NPA Management
of the Company Act, 2063, in Ø Monthly review of past due loan accounts conducted by the Bank such as: Corporate/
The committee’s role is extensive and N. Chaudhary 3/7 36,000 8. Audit report of Card Division and
Directors’ Report of the Bank for FY and appropriate measures were advised to Infrastructure & Project Financing, Branch
D.G. Agrawal 2/7 24,000 E-Banking
strongly supports the board in dealing with 2072-73 the Management to deal with and keep a Operations, PLU Business, CTO, SME &
M. Ahmed 1/7 12,000
aspects of good corporate governance, 9. Audit report of Central Loan and
Ashish Sharma 5/7 60,000 26. Memorandum on Preliminary Findings watch on overdue loan accounts. Micro Lending, Treasury and Correspondent
internal control, risks management, financial Administration Department (CLAD) of Onsite NRB Inspection, 2073 along Banking, Cash and CVD verification, Nabil
P.K. Pathak 6/7 72,000
reporting, legal and regulatory compliance R. J. Karki 4/7 48,000
10. Audit Report of Central Credit with Management Resposne Ø Monthly review on status on old and Investment Banking, Remittance Business
and ethical conduct of business.Major TOTAL 252,000 Administration and Support (CAS) 27. Memorandum on Final Report of unreconciled items in the nostro accounts Center, HR Department, Central Accounts
responsibility of the committee includes: 11. Audit report of Human Resource NRB Onsite Inspection, 2073 along of the Bank and appropriate directions and Administration, Central CAS, CLAD.
Committee Secretary attended all seven meetings
1. Reviewing the Banks’ overall system of held during the year. Department with Management Response were given to the Management for timely CPC, Reconciliation of Nostro Accounts of
internal controls. Committee Activities 12. Memorandum on Special Review 28. Memorandum on Review of Stress reconciliation and to keep the unreconciled the Bank, Compliance Position of the Bank.
2. Reviewing observations and BAC meetings reviews and discusses a Report of SWIFT Department Testing conducted by the Management items under control.
recommendations made in audit reports number of internal audit reports, statutory 13. Audit Report of Operations of Branches for 1st quarter of FY 2016/17 Risk Management
issued by internal auditors, statutory audit report and regulator’s inspection – 30 reports (Ashwin end 2073) Ø Review the compliance of the branches/ Committee (RMC)
auditors and regulators. report. The committee updates the Board 14. Audit Report of Corporate and SME 29. Quarterly certification of Unaudited units in regard to NRB directives, Bank’s Directors’ Risk Management Committee
3. Reviewing the bank’s financial of its actions by sending copies of its Banking of Branches – 28 reports Financial Results of the Bank credit policy, internal rules & guidelines is constituted in line with the spirit of
statements, ensuring its accuracy and the minutes, which are discussed in Board 15. Audit Report on PLU of Branches 30. Monthly certification of Capital and compliance of prevailing laws of the Risk Management Guidelines (RMG) of
required level of compliance in relation to meetings. BAC issues recommendations – 28 reports Adequacy Ratio and Risk Weighted country. Issue necessary instructions/ Nepal Rastra Bank and the NRB Unified
financial reporting standards. for strengthening bank’s system of internal 16. Audit Report of Import Letter of Credit Assets of the Bank directions for addresal of the non- Directives. The RMG highlights on risk
4. Reviewing compliance in relation to controls and its effectiveness in practice. 17. Audit Report of Bancassurance Unit 31. Monthly certification of Capital compliances/irregularities. governance and identifies the need of a
the bank’s internal policy and prevailing 18. Audit Report of Nabil Investment Adequacy ratio and Risk Weighted strong risk management framework, well
regulatory and legal provisions. A number of agenda items were Banking Assets of the Bank as of 15.07.2016 Ø Review and discussions made on the defined risk management processes and
5. Reviewing risk management systems and discussed in BAC meetings and numerous 19. Audit Report of SME, Microfinance and (Parallel run of CAF 2015) NRB inspection report of the Bank and effective risk assessment and measurement
security position of the bank in respect of recommendations were issued towards Mid Corporate 32. Half yearly review of Investment advised appropriate measures to be taken mechanism.
60 Nabil Bank Limited
RMC members as on 15 July 2017:
1. Director Mr. Krishna P. Sharma
- (Coordinator)
2. Director Mr. Pratap K. Pathak
- Member (Coordinator Audit Committee)
3. Director Mr. V.P. Dani - Member
4. Mr. Binay K Regmi
- (Chief Operating Officer) Member
5. Mr. Anil Khanal - (Chief Risk Officer)
Member Secretary
RMC Roles and Responsibilities
The Committee oversees overall risk
governance framework of the Bank. It
ensures that proper risk management
policy and procedures are in place and
effectively practiced at all levels within
the Bank. In doing so it assess whether
or not the Bank’s 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:
Ø Strength of capital base
Ø Quality and growth of earning
assets base
Ø Brand reputation
Ø Perceived customer value
Ø Balanced approach to business risks Within the bank, RMC is responsible for
and returns
Ø Risks diversification
RMC reviews 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-à-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 reports 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.
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
Director ATTENDANCE SITTING FEES
N. Chaudhary 1/8 12,000
P.K. Pathak 7/8 84,000
V.P. Dani 5/8 60,000
K.P. Sharma 7/8 84,000
Total 240,000
Before reconstitution of the committee, Mr. Nirvana
Chaudhary was the coordinator and attended one
meeting. Member Secretary (Chief Risk Officer) and
Chief Operating Officer also attended the meetings.
Agenda Discussed in
RMC Meetings
The Committee discussed on the
following agenda in its meeting.
1. Review of lending authority delegated
by the Board to the management.
2. Performance review of the bank.
3. Stress testing reports of the bank.
4. Review of non-performing loan
Annual Report 2016/17 61
accounts and recovery strategies. 5. Stress testing scenarios and Role and Responsibilities
5. Review of minutes of the Asset satisfactory liquidity and capital a. To assist Board of the Bank to
Liability Committee (ALCO) meetings. position of the Bank. formulate “Remuneration Policy”.
6. Review of Credit Concentration 6. Need to analyze concentration risk in b. To study and analyze market salary
reports, including top exposures at deposit/loan portfolio. structure and submit report
borrower, group and sectoral level. 7. Satisfactory conduct of ALCO. to the Board in regard to possible
7. Know Your Customers (KYC) & Anti 8. Need to cover review of specific consequences in the bank due to
Money Laundering (AML)/Combating risks which otherwise may not be change in remuneration structure of
Financing in Terrorism Policy of routinely covered in ALCO meetings or the market.
Nabil Bank. in standard performance reviews. c. To recommend the Board, as per
8. Review of the minutes of meetings of remuneration policy, with the
justification for increasing
AML/KYC committee. After the conclusion of each meeting,
remuneration of CEO and employees
9. Operation Risk Management Policy of the Committee communicates necessary
of the Bank within prevailing rules,
Nabil Bank. actions to be taken to the management
guidelines.
10. Information on fraudulent activities and also reports its decisions to the
d. To develop Job description, Goal and
through ATMs Board.
KPIs and review Performance
11. Information regarding monitoring
Appraisal System accordingly.
mechanism of the Exception reports Committee relating e. To formulate guidelines, rules relating
by HO-Operations. to Staff Services and to HR functions such as recruitment
Facilities & selection, placement, transfer,
Recommendation The Board has constituted Human performance appraisal, reward and
Issued to Management Resource Committee in March 2014 in punishment and labor relations.
The committee took note of the following line with the Unified Directives of Nepal f. To review Employees by-laws,
and issued appropriate instructions to the Rastra Bank. The committee consisted of Employee composition, and prepare
management. following members as on 15 July 2017: succession planning and recommend
Committee Members Position: the same to the Board.
1. Budget achievements and capital Director Mr. Dayaram Gopal Agrawal
strength of the Bank. - Coordinator The committee met sixteen times in the
2. Development in market conditions and Director Mr. Ashish Sharma - Member review year and following is attendance of
likely impact on the Bank’s earning. Chief Executive Officer Mr. Sashin Joshi the same.
3. Recovery efforts and strategy pursued - Member Director ATTENDANCE SITTING FEES
to regularize in large non-performing Chief Financial Officer Mr. Krishna Dutta D.G. Agrawal 16/16 192,000
loan accounts. Bhattarai - Member Ashish Sharma 11/16 132,000
4. Requirement of regular reporting Head – Human Resource Mr. Roshan P.K. Pathak 10/16 120,000
mechanism on Risk Management. Koirala- Member Secretary Total 444,000
62 Nabil Bank Limited
[04]
Internal Controls
Bank, under guidance from its Board which is to take account of
effective implementation and monitoring of internal control system,
is following prudent banking norms and best business practices in
line with its modus operandi. In doing so the Board acts through
the Board’s 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.
Banking business involves some degree of risk. The same in
latter days has even increased. 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 year.
Addressing Operations Risk
The Board has delegated the authority to operate bank’s
business and assigned responsibilities for regular
functioning of the Bank to CEO.
Binay Kumar Regmi
Chief Operating Officer
The CEO further delegates the authority and assigns
responsibilities of processing transactions to various officials
under the authority of further delegation vested on him by the
Board. 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 centralized processing units
collectively terms as bank management.
Bank has an executive committee (Xcom) headed by CEO,
comprising of SBU heads and heads of other functional
departments. Xcom meets weekly to review the Bank’s
performance, the developments in operating environment and
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 (Assets and
Liabilities Committee) meeting that takes place every month.
The CEO has approved a number of Standard Instruction
Manuals (SIM) which, in essence, is standardized detailed
procedural guidelines for execution of transactions for banking
business. Activities at all level conform to the procedures in
SIM. Budgeting and variance reporting mechanism is also in
place with regard to Bank’s performance review on monthly
basis. Finance Department and Xcom members under one’s
area review the variances and progress against budgets. A
Monthly Business Letter is prepared for information and perusal
of the board which discusses business developments on all
activities of the bank basically on four facets viz. financials;
product/service; process/control and human resource activities.
The report among other includes market developments, overall
economic issues that may have impact on the business and
other miscellaneous issues. Financial Administration Bylaws
specifies centralized functional control over all expenses of the
Bank. All expenses within the budget are approved by different
officials as per the delegated authority. Expenses beyond their
authority are approved by the CEO upon recommendation of
management level Financial Directive Committee or concerned
division head.
The Bank has strong Management Information System which
generates many exception reports and sends to Head Office
Operation, Finance and Planning and related senior managers
automatically every day. The recipients of the reports promptly
take corrective and preventive actions.
The Bank has also set up dedicated Operation Risk Unit which
reviews the transactions to detect the suspicious transactions
from money laundering point of view and reports to the relevant
authorities including FIU, if and when detected.
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 management’s responsibility to ensure that Internal
Auditor’s recommendations are implemented within an
appropriate and reasonable time frame. Bank’s 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.
Addressing Credit Risk
Credit marketing unit and Credit risk units are independent.
Credit marketing unit conducts marketing activities and forwards
credit proposal for approval. Then onwards credit risk unit
Anil Khanal
Chief Risk Officer
Annual Report 2016/17 63
independently analyzes each credit proposal in light of inherent
and external risks involved in the to approve each credit
proposal within their authority.
Besides, the bank has Credit Administration and Support unit
(CAS) and exposure accounting unit (Loan Administration
Department) which are independent to Credit Marketing and
Credit Risk. CAS directly reports to CRO (Chief Risk Officer)
and CPU reports to COO (Chief Operating Officer). These are
independent from credit marketing and credit risk functions
and are assigned with specific responsibilities of conducting
periodic onsite inspection of credit customers, examining credit
documentation and ensuring all the terms of credit approvals
are complied with throughout the life of a credit account.
Addressing Exchange Risk
The Board has delegated foreign currency dealing and
investment decision limits to CEO. The CEO has further
delegated the authority to Chief Investment Officer/CFO, Head of
Treasury and individual dealers (Treasury Front Office bearers).
TFO reports to CFO. Treasury back office, having reporting
line to COO, is responsible to ensure that treasury front office
operates within the authorized limits and is in compliance to the
Bank’s investment policy.
All the transactions under each deal done by TFO and their
exposure accounting, maturity profile, follow up and record
keeping is done by TBO.
Addressing Data Security Risk
IT Policy specifies centralized functional control over all
IT operations including defining access authority in Core
Banking Software, MIS and hardware facilities including data
center. Access authority to any staff is given at the request of
department head and approval from COO.
All decisions on procuring IT equipment and services are
reviewed by IT Department for technical feasibility beforehand.
To mitigate data security risks the IT Department further adopts
three pronged approach
Ø External Risk is mitigated by deploying Perimeter Firewall
equipped with Intruder Prevention System, Intruder Detection
64 Nabil Bank Limited
System, Antimalware, Antivirus, AntiSpam, Application within the management and appropriate instructions are issued
Control and two Factor Authentication for all the services to concerned operation managers.
accessed from outside.
Ø For Internal Network, risks are mitigated via Network requirements. Such requirements, among other things, include
Segregation, granting Access Control as per need basis,
Server Hardening, VPN Implementation and Encryption of
communication links between critical servers
Ø End users data is protected by deploying industry standard liquidity ratio and monthly provisional statements of financial
Antivirus, User access control measures via Active Directory.
The Bank publishes notice, keeps the same in website,
periodically for public awareness in order to safeguard from
probable fraudulent activities through our internet banking
platform. Similar instructions are regularly issued to all the
employees.
Statutory and
Regulatory Compliances
Compliance unit, reporting directly to the CRO, operates as
guided by the Bank’s Know Your Customer and Anti Money
Laundering policies. Reporting mechanism requires branches
to conform 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
threshold transaction report (TTR), suspicious transaction report
(STR) and any other specific report are submitted to concerned
authority including NRB as per the reporting guidelines.
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
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.
Mechanisms are in place to comply with all regulatory reporting
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
position and income statements. Functional managers are
accountable for complying with the reporting requirements.
The Audit Committee ensures that required disclosures are
made properly in the financial statements. The Committee
obtains reasonable assurance from statutory auditors on the
reliability of financial information presented in the annual
financial statements and recommends the Board for its
adoption.
CFO ensures that quarterly interim financial statements of
the Bank are filed with the regulatory authority, the Security
Exchange Board of Nepal and published in national daily
newspaper for public information within the prescribed time
periods.
Centralized functional control is exercised over all transactions
involving tax deductions at source. All such transactions are
administered and authorized directly under COO. Payroll tax is
administered by Human Resource department. Tax deducted
at source is timely deposited with Large Tax Payers’ Office.
Responsibilities are clearly defined and distributed to COO, CFO
and H-HR as appropriate.
The Audit Committee has been reviewing the effectiveness of
Internal Control Systems and has been reporting to the Board on
a regular basis.
Employees
Management of human capital strength
of any organization is gaining paramount
importance for effective implementation
of business strategies to achieve the
corporate goals. For this, guidance and
careful attention from the supervisors
has become indispensable. In our
organizational set up, all senior staff
members enjoin to act as HR managers in
their areas of operations by implementing
policies and guidelines of the Bank.
They ensure that strong ethical practices
while conducting Bank’s businesses
are put in place by nurturing talent and
sharing knowledge. On the other hand,
the HR Department is responsible for
monitoring and ensuring that Bank’s
HR policies are interpreted consistently
across the Bank. Employee Bylaws acts
as a framework that guides Human
Resource Management practices within
the Bank. This document is approved
by the Board and also by the regulatory
authority. Principles of ethical work
culture, open communication, objective
career development, transparency in
remuneration and pay – performance
correlation support HR practices employed
within the Bank.
As at 15th July 2017, the Bank has a
total of 847 permanent and 569 contract
employees in its employment. Contract
employees include outsourced Non core
banking clerical Level - 37 and support
staff - 529 and 1 Security Consultant,
2 staff under direct contract with the
Bank (support staff - 1 and CEO). The
increasing HR strength has been smoothly
incorporated into the organizational
structure which has enabled the Bank
to maintain the good practices that has
been adopted consistently over time. A
high performance culture that has evolved
within Team- Nabil has been shaped by
the drive of the employees to deliver. Our
managers are also always encouraged to
promote open communication at all levels,
both vertical and lateral.
Our core corporate values CRISP –
Customer Focused, Result Oriented,
Innovative, Synergistic and Professional
are embedded in our daily work culture.
Being a service provider, we believe every
action of ours should create some value
to our customers. For us to align our
actions with our belief, communication
within is the key. Communication
strengthens sharing of knowledge, ideas
and viewpoints. Issues affecting individual
Annual Report 2016/17 65
job areas and the overall financial
performance of the Bank are regularly
communicated to our staff. The Bank has
implemented a staff Code of Conduct
which follows this very essential theme
and is abided by all staff in action. The
strength of our HR rests in its diversity
and fair treatment. Our culture respects
individual differences and learning
aptitudes. We do not allow discrimination
on any grounds be it social, religious,
hierarchical or gender. Any kind of
discrimination or any form of harassment
is dealt with as per disciplinary provisions
in the Employee By- Laws.
At Nabil, employees perceive that their
views are heard, their concerns are
attended and their career progression
is based on objective performance
assessment. Towards this end, the Bank
has implemented point scoring based
appraisal rating system that endeavors
objective assessment of employees’
performance through 12 dimensions.
Moreover, appraisal allows appraisee staff
to put their comment on appraisal.
We have a recognized Staff Union in
the Bank. The management and the
union execute a collective bargaining
66 Nabil Bank Limited Annual Report 2016/17 67

exercise once every two years. Collective for one’s abilities and growth potential. Market forces constantly pose a challenge interests with the interest of our The Act allows certain deductions from Taxation on Retirement Benefits
Bargaining exercises have been Performance appraisal system is fair and to our HR strategy and retaining the best shareholders. taxable income, the most relevant in (Gratuity and Provident Fund)

harmonious throughout and has never
resulted disruption in normal banking
operations and customer service. In
the review year, a separate board
committee named “Committee Relating
to Staff Services and Facilities” has also
been set up for better human resource
management.
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.
career progression is based on objective
assessment of one’s performance
and team work. Besides training and
development activities, placement,
transfer, job rotation, job enrichment,
job enlargement, succession planning
and cross functional teams are some
of the tools we employ for employee
development. Individual training and
development needs form an important
component of annual performance
appraisal of all staff.
Remuneration
and Benefits
The quality of our human capital defines
brains is not easy. Remuneration is one of
the major factors affecting one’s 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
Ø Bank’s contribution to employees case of our employees being contribution Tax Rate Accumulated Fund NRs.
Gratuity Fund and Provident Fund to approved retirement fund up to Tax Free Higher of 500000 or
is proportionately linked to the number NRs.300,000 or 1/3rd of total assessable 50% of Total Fund
of years in employment and the last income whichever is lower and life 5% Balance Balance Amount
drawn salary at the time of making insurance and medical insurance premium
such contribution. expenses of self and spouse up to NRs. Contribution to
Ø Besides, our employees receive the 20,000 each. Additionally, donation up to National Level
benefit of housing loan, vehicle loan NRs.100,000 or 5% of total assessable Welfare Fund
and personal loan facilities at income, whichever is lower, is also available The prevailing Bonus Act 1974 (2030
concessional rates as per their for deduction. The Act offers female B.S.) requires the bank to deposit 30% of
individual eligibility in line with the employees (unmarried) the benefit of 10% the residuary amount, after distribution of
Integrated Staff Loan Policy approved tax rebate on their total tax liability for a bonus from the allocated amount for staff
by the Board. given year. bonus, at National Level Welfare Fund
(NLWF) operated by the Government of
Tax on Taxation on Retirement Nepal. Remaining 70% is to be deposited
Remuneration Income Benefits (Gratuity and at Welfare Fund established in accordance

the scale of our business success. Our covers the following: All pay and benefits paid to the employees Provident Fund) with Section 37 of the Labour Act 1992
However, the Board has the authority are taxed at source as per the provisions Income Tax Act 2002 applies the following (2048 B.S.).
business stands on trust, relationships Ø Salary structure comprises of fixed
to make appointments at other levels in of Income Tax Act 2002. Payment to tax rates in payment of post-retirement
and ethical conduct. Our strategy is basic pay and variable incremental
order to bring in appropriate set of skills employees in the form of salary, allowances, benefits i.e. when the Gratuity and Pension The Bank has deposited a total of NRs.
in being proactive to attract, recruit, pay. Salary structure is maintained
in existing or new areas of businesses. leave encashment, overtime payment, Fund is paid to the employee upon his / her 519.80 million with NLWF in respect of
develop and retain the best people. We based on documented position grades
Based on the requirements of business incentives, commission, bonus, gifts, retirement from the employment. Prior to staff bonus allocated for upto financial year
need to constantly ensure that we have of individual employee as per his her
expansion the Bank may outsource its retirement benefits etc. constitute their pronouncement of Income Tax Act 2002, 2015/16. In respect of undistributed staff
the required set of skills, knowledge and annual performance appraisal ratings.
staff requirement to external party. All taxable income from employment. In line the fund accumulated in gratuity and bonus for current fiscal year 2016/17, the
expertise in our human pool. We believe The grade earned in annual
appointed staff, whether permanent or with the provisions in Income Tax Act provident fund was tax free. All such amount bank will be depositing 103.71 million at
staff commitment and motivation towards performance appraisal ratings has an
contracted, will adhere to employment (amended by Finance Ordinance 2073), held in gratuity and provident fund and NLWF.
the job is achieved over time, which is incremental impact in the basic pay.
standards as stipulated by the employees’ taxable income is taxed applying contributed by employer before the Act came
affected by multiple factors among which Ø Salary structure is reviewed every two
Employees Bylaws of the Bank. Staff the tax rates presented in the table below. into effect will not be taxed at the time of
financial benefits is a very important one. years with reference to national
placements are assigned as best suited making payment to concerned employees.
economic scenario, bank’s business Tax on Remuneration Income
performance and market practice. Any Tax Rate Annual Income Slab
Staff Category Male Female Total one or both of the basic and variable Single Couple

Designation Male Female Total
Senior Manager* 6 0 6
Middle Manager 45 8 53
Officers 161 49 210
Assistants 261 216 477
Support Staff 86 15 101
Total 559 288 847
components may be revised as 1%# 350,000 400,000
appropriate. 15% 350,001-450,000 400,001-500,000
Ø The bonus element of annual pay is 25% 450,001-2,500,000 500,001-2,500,000
tied up to the overall performance of 35%* Above 2,500,000 Above 2,500,000
the Bank at the end of each financial
# Social Security Tax.
year. This instills a winning spirit in
* The Act provisions 40% surcharge on tax calculated on taxable income above NRs.2,500,000 applying tax
our employees, drives business rate of 25% resulting effective tax rate of 35% for that slab.

*Employees bearing corporate title AGM and above excluding CEO

performance and coincide their own
68 Nabil Bank Limited
[04]
Corporate Sustainability
It has been a good year, both in terms
of performance and contribution to the
society. We feel that it is impertinent that
all encompassing business strategies
are adopted on our way ahead to ensure
that we remain the 1st choice provider of
complete financial solutions. We believe
we have been benefited from the positive
perception that the public in general
holds in our regards and sustainable
business branding. Our employees are
more than responsible for the times
we were able to hold the boat even
though they were experiencing the same
turbulence that shook the nation. Giving
back to the people, inside or outside the
organization and protecting and nurturing
the society and the environment where
we operate in, thus has been sculpted
in our values. It is a priority for us to
ensure that all the stakeholder groups
are abreast of the on goings of the
organization and aid in their well-being
through various ways. Investor groups
are updated through the annual general
meetings and published quarterly and
annual financial reports. The regulators
are updated through regular onsite/offsite
supervision and reporting. Customers
are updated through various touch
points such as dedicated relationship
officers, advertisements in various media
and our website as well. Employees
are continuously updated through the
intranet site of HR department and they
come together for various special events
also. The community as a whole is
reached through banking channels, press
conferences, sponsorship events and
regular updates in the website.
Transparency and Good
Corporate Governance
Being transparent in its affairs and
adopting good corporate governance
practices are a top priority for any public
institution, especially so in the case of
banking institution which runs purely
on the trust of the people. The global
financial meltdown revealed that there
were major flaws in the ways public
corporations operated and many countries
since have adopted laws targeting good
corporate governance. Even in Nepal,
people are skeptical about financial
institutions because of frequent news
on financial and banking scandals and
scams. In such a scenario, it is absolutely
essential to be fair and transparent.
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 to the high
professional and ethical standards across
all levels.
The level of trust and the reputation we
have achieved and maintained in the past
33 years can be attributed to the practice
of disclosing our business affairs fairly
transparently to the public, the regulators
and to all our 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 consistently applied at all
times. In addition, all the necessary
information is provided to the statutory
auditors, bank’s internal auditors and
NRB Inspection team so as to enable
them to make a fair assessment of 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 a highly positive attitude
and has implemented recommendations
appropriately.
Environmental
Sustainability
Nabil operates in the financial services
sector and hence does not plough
through the limited natural resources the
globe has to offer. Even as such; every
effort possible is done to reduce paper,
energy, fossil fuel and water consumption
and much more so as to reduce its
environmental footprint.
Sustainability of the environment is
closely tied with the sustainability of
our business. Environment is one of the
crucial aspects that we need to look into
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
calamities are serious issues across the
globe which perhaps are the outcome
of adverse human actions. To minimize
the impacts of our adverse actions,
we are committed towards facilitating
development of clean and renewable
energy projects.
Some of the initiatives we have
undertaken as of date amply speak of our
priorities. 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. Not only our operations, but
the operations of the partners in our
value/supply chain or the businesses/
projects of our customers could also
make a significant impact on the
environment. Nabil also looks for ways to
contribute in minimizing such impact too.
We believe that our small but numerous
steps will ultimately help us minimize
the impact of our operations on the
environment. Our commitment for
arranging finances to national priority
projects like those in renewable energy
sector and to export based industries is
high. We have also prioritized financing to
sectors that use local materials, generate
employment and replace imports. Toward
this end, the Bank, has accounted big
volume lending in large sized national
priority projects viz., hydro projects and
cement industries.
Similarly the bank is expanding its
credit exposure in the agriculture and
forest related sectors. As a small effort
to promote environmental sustainability,
Nabil has made tree plantation
and preservation a major part of its
anniversary celebrations also.
Labor Practices
and Decent Work
Human resources are the drivers of
bank’s success. So, acquisition of skilled
staff, placing the right person at the
right job and imparting job trainings are
undeniable functions in any organization.
Nabil Bank encourages a learning
culture throughout the organization and
motivates the staff through enrollment in
various training programs for upgrading
their job skills, personality development
and emotional intelligence.
The Bank also ensures that the
compensation and benefits offered to the
employees are appropriate as per their
Annual Report 2016/17 69
job responsibilities and also instills in
them a vital feeling of social and financial
security. During the review period, Nabil
incurred cash remuneration of NRs.932
million towards its employees while it
also set aside NRs. 514 million as bonus.
Employee Bylaws have been put in place
to ensure that fair labour practices are
adopted and decent working conditions
are provided at all levels. In addition, a
Code of Conduct has been established
to ensure proper practices across the
organization and also to ensure uniformity
in employees conduct. 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, domestic financial industry
has also been the beneficiary of
resource pool which comprises of many
individuals who at some point of time
have been associated with Nabil as a
staff member. “Employee Survey 2013”
which was conducted in the year 2013
indicated a very high degree of employee
commitment and 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.
70 Nabil Bank Limited
Partnership with
the Government
Contribution to government in any
form is extremely essential to build the
nation. We recognize this responsibility
towards the nation in addition to our
own satisfaction and longevity. Being
a banking institution, Nabil aligns its
operations with the directions of the
Central Bank. Other legislations affecting
our operations are also properly complied
with. For example it helps in preventing
money laundering activities by putting
Know Your Customer and Anti Money
Laundering Policies in place. Moreover,
the recognition we hold from the
national treasury as one of the highest
contributors in the form of payments in
taxes gives us 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. In the review year alone, we
have deposited NRs. 1,528 million in the
government’s coffer. With all our efforts
and contributions, Nabil strives to operate
as a great multiplier to the national
economy.
Giving Back
To the Society
Nepal still being in the developing phase,
reach of the financial services has not
penetrated to all levels of the society
and all areas of the country as required.
Moreover, it is a well accredited fact that
middle and low income group constitute
major portion of our communities but
only a small portion of this group has
access to the financial services market.
As one of the leading commercial
banks, we acknowledge that we have
a role in bringing this segment into the
formal banking ambit. Furthermore, in
order to cater to the specific financial
requirements of budding entrepreneurs
and growth aspirants, a separate SME
and Microfinance division has also been
established. The branch network and
ATM network has also been expanded
to serve the areas requiring banking
facilities.
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
growth in order to ensure success of such
entrepreneurial ventures.
As a financing partner, our contribution
has expanded economic activities
at local level, fostered investment,
generated employment, and increased
consumptions. Our Microfinance
project is operated through selected
partner organizations viz. microfinance
institutions (MFIs), cooperatives and
non-governmental organizations working
as financial intermediaries. We have also
invested in promoter equity in selected
MFIs and extended our managerial
expertise through representation on their
Board. We have also extended credit to
Annual Report 2016/17 71
[04]
Corporate Social Responsibility
Corporate conscience is the latest institutions. The Bank is responsible to our success and that of the customers,
benchmark by which we measure in sharing the value it has created to investors and, shareholders, employees
Youth Self Employment Project of the
our value generation and distribution all those involved in the value creation and the community. We work with the
government. Our target end users are
process. A socially responsible business process and to the community where the underlying values of honesty, integrity,
economically disadvantaged population
recognizes that value sharing with all the Bank is allowed to operate. good work, ethics giving back to the
and they receive micro credit through stakeholders’ viz. investors, employees, community and above all creating a
our partner organizations to which we customers, regulators, business partners The sharing of value generally happens sustainable and valuable business that
extend credit in bulk. These initiatives and the public at large are integral to be the compensation of value received not only enables us to conduct business,
are intended for self-employed income to sustainability. As a catalyst in the which could take form of capital or develop products & services and deliver
generating activities or small businesses overarching value system, Nabil assumes services. However, at times we contribute on our goals and commitments but also
with which the aspirants having skills the moral duty of giving a fair share of to our stakeholders, particularly the creates opportunities, both social and
and energy are not deprived of financial the value created back to the community. philanthropic institutions or individuals economic for the country.
resources and upgrade their living In the 33 years of our existence, we have working for a noble cause, with no such
standard. Personal Lending Unit in the driven our business forward by building expectation of value in exchange or in Our Corporate Social Responsibility
strong foundations through catering monetary terms. Such contribution has program not only guides the values and
bank is well equipped to take care of the
tailor-made credit products, attracting been an essential part of Nabil’s principle principles of our bank, but also makes
funding requirement against personal
and retain more deposits, and providing which is evident in its involvement and the impact of five core principles of CSR
needs like home, vehicle, and education
the best in class customer service. This partnerships with various institutions more meaningful in the communities.
etc.
has enabled us to generate comparatively on different occasions for many years.
higher value among domestic financial Being a responsible business is integral
Since financing these activities makes
the lives of common people easier, it
gives satisfaction to the organization
also. Through the advertisement, the
Bank aims to encourage more people to Enabling Talent within and outside of the bank
use banking channels for their financial
transactions. Customers are properly
communicated about the benefits of using
Community Engagement
formal banking channels, associated risks
and ways to mitigate them to enhance
their banking experience. Through
numerous remittance agents located
within and outside the country, the Bank CSR Fostering Creativity
seeks to provide access to the financial
services in previously un-served areas. CORE
Nabil believes that all these efforts have
PRINCIPLES
brought a larger number of people into Environment Sustainability
the banking net and hopes to increase
the accessibility of its services by people
from all walks of life.
Creating Opportunities through Social Investment
72 Nabil Bank Limited
Responsibility to customers
We fulfill our social responsibility by
creating and offering high value products
and services with full support and
adequate response mechanisms.
Responsibility to Investors
and Shareholders
Promoting growth, profitability and
efficiency, we work to create a sound
management base that is driven to
achieve sustainable growth as we work
towards improved performance and
increased corporate value.
Responsibility to Business Partners
We work with individuals and companies
that share our work standards and ethics,
building a cooperative relationship and
ensuring commitment to continuous
improvement and advancement.
Responsibility to Employees
We consistently work towards creating a
work environment that offers equality of
opportunity and ensures growth of the
employees with the best possible systems
and career development opportunities,
and advance personal enhancement.
Responsibility to Society and Nation
We undertake and promote philanthropic
activities in the core areas of environment
sustainability, community engagement,
creating opportunities through social
investment, enabling talent within
and outside of the bank and fostering
creativity. Our CSR activities associate
with the entire nation including
customers, shareholders, investors,
business partners, employee, society and
nation.
As a catalyst in the overarching value
system, we assume the moral duty of
giving a fair share of the value created
back to the community. We foster the
community activities in these main fields:
Ø Science & Technology
Ø Poverty Alleviation
Ø Economic Development
Ø Management
Ø Environment
Ø Sports
Ø Education
Ø Health
Ø Literature/Culture/Art
As a part of its CSR initiatives, several
programs were organized throughout
the nation at different branches of the
Bank. These activities included charities
to local institutions, old age homes,
orphanages, betterment of differently-able
children, donation of school bags and
educational materials, tree plantation etc.
Some of the CSR events in the year are
highlighted below:
At one with the Earth
The Bank has given continuity to
the agreement entered into with the
Kathmandu Metropolitan City for the
maintenance of trees planted and
preservation of greenery along the
roadside of Tundikhel. Bank has also
given continuity to the agreement with
“Adhikar Sampanna Bagmati Savyata
Yikekrit Bikash Samiti”,Guheshwari for
the maintenance and protection of the
trees for conservation of environment at
Bagmati belt, Minbhawan.
At one with the People
We have continued our support to
Indrawatee Community Service, Sipaghat
(Dhandkhola) Sindhupalchowk to run
health centre. Bank’s official doctor
Dr Komal Thapa is provided with
the transportation service to and fro
Kathmandu-Sindhupalchowk every
Saturday to run the health centre. ICSC
has been providing emergency and
general health services to the locals at
Sindhupalchowk.
The Bank also provided food items,
stationeries and goods of daily necessities
worth Rs. 115,000 (Rupees One
Hundred fifteen thousand only) to Baby
Life Home, Kirtipur in association with
Association of St. Mary’s Alumnae Nepal
(ASMAN).
Furthermore, the Bank handed over
educational materials and nutrition
supplements worth Rs. 100,000 (Rupees
One hundred thousand only) to Burns
Violence Survivors- Nepal (BVS Nepal).
Since its establishment, BVS Nepal has
provided medical and surgical support
to over 600 burns children living in
and around villages who were facing
difficulties in continuing education due to
their deprived condition.
At one with the Nation
Nabil Bank has instituted the country’s
first-ever annual “Nabil Science &
Technology Awards” to be conferred by
Nepal Academy of Science & Technology
(NAST). Under these awards, the best
research contributors in various fields
in the development of science and
technology will be awarded by NAST. The
awards carries a purse of Rs. 125,000
each to be given annually to individual
scientists or institutions demonstrating
a positive impact on humanity with the
prospect of instant use in the field of
Science and Technology. The objective
of the awards is to recognize and duly
reward talented scientists and institutions
working in the field of science and
In the 33 years of our existence, we
have driven our business forward by
building strong foundations through
catering tailor-made credit products,
attracting and retain more deposits,
and providing the best in class
customer service.
“
technology to encourage them to deliver
much more to enhance scientific and
technological capability of the nation.
The awards selection process will be fully
handled by a team of scientific experts
and academicians under the aegis of
NAST. The awardees were felicitated by
Rt. Hon. Prime Minister and Chancellor
of NAST Mr. Pushpa Kamal Dahal
(Prachanda) on the occasion of NAST’s
34th anniversary held on December 5,
2016. The four best research contributors
namely Prof. Dr. Tanka Nath Dhamala,
Dr. Hari Prasad Aryal, Prof. Dr. Krishna
Das Manandhar and Prof. Dr. Srijan Lal
Shrestha were awarded “Nabil Science
& Technology Award” with a purse of Rs
125,000 each for their contributions in
Annual Report 2016/17 73
different areas under the field of science
and technology. The award selection
process was fully handled by a team of
scientific experts and academicians under
the aegis of NAST.
Apart from this, the Bank continues to
contribute to the Government’s coffer in
the form of various taxes. Besides direct
contribution in the form of taxes, it is
among leading institutions that arranges
finance to national priority projects
like those in renewable energy sector,
hydropower plants and cement industries
etc. which form the basic building blocks
of the nation.
74 Nabil Bank Limited
[05] financial
statement and
other information
Statement of
Director’s Responsibility
The statement of directors’ responsibilities
addressing to the shareholders of the Bank
should be read in juxtaposition with the
Auditor’s Report, that is introduced in order
to distinguish the respective responsibilities
of the Board from that of auditors in relation
to the preparation and presentation of
financial statements of the Bank. The Board
of Directors are responsible for preparing
the Annual Report, the separate financial
statements of the Bank and the consolidated
financial statements of the Bank and
its subsidiary(ies) in accordance to the
prevailing laws and regulations of Nepal.
Section 108 read together with Section
109 of the Companies Act 2006 of Nepal
stipulates 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 2073 prescribes
preparation and presentation of consolidated
financial statements of the Bank and its
subsidiary (ies) in addition to the preparation
of separate financial statements in line
with Directive No. 4. The Bank has taken
the guidance of IFRS 10 “Consolidated
Financial Statements” for its preparation.
NAS 1 ‘Presentation and Preparation of
Financial Statements’ and Section 109(2)
of Companies Act 2006 requires companies
to prepare financial statements that reflect
a fair presentation of its financial position,
financial performance and cash flows of the
relevant period.
For the purpose of applying Nepal Financial
Reporting Standards as notified by The
Institute of Chartered Accountants of Nepal,
Nepal Rastra Bank has issued a notice
on NFRS Migration Guidelines to Bank
and Financial Institutions to the licensed
institutions. According to the same, the
licensed institutions are to prepare NFRS
based financial statements by remaining
within the purview of NRB regulations. The
financial statements of FY 2073/74 of the
Bank and the Group have not been prepared
on the basis of NFRS.
The financials of FY 2073/74 of the
Bank and the Group have been prepared
on the basis of format prescribed in the
Unified Directives whilst complying with
the provisions of the Companies Act and
BAFIA. Apart from the specific provisions of
Unified Directives of NRB, BAFIA and the
Companies Act, the financial statements
have been prepared on the basis of generally
accepted accounting principles. As such,
consistency has been maintained.
Consistency has been maintained in the
principal accounting policies adopted in
the preparation of stand-alone statements
as well as the presentation of financial
statements of the Bank and the subsidiary
except where regulatory provision require
otherwise. The stand alone financials
have been consolidated on the basis of
International Financial Reporting Standard
(IFRS) 10 to arrive at the consolidated
financial statements.
In preparing the consolidated and separate
financial statements, the directors are
required to:
Ø Select suitable accounting policies
and then apply them consistently;
Ø Make judgments and estimates that are
reasonable and prudent; and
Ø State whether they have been prepared
in accordance with NAS.
Financial statements should be prepared
on going concern basis by the directors
unless it is not appropriate. Since the
directors are satisfied that the Group and
the Bank have the resources to continue the
business for the foreseeable future and there
are no indicators that casts doubt on the
Bank’s and its subsidiary’s going concern
assumption, the financial statements are
continually prepared on going concern basis.
The directors are also entrusted with the
fundamental responsibility of keeping
adequate accounting records that are
sufficient to show and explain the Bank’s
transactions and disclose with reasonable
accuracy at any time, the financial position
of the Bank which also enables them to
ensure that its financial statement comply
with the NRB directives. Section 1(6) of
Directive 6 of NRB Unified Directives 2073
also specifies the requirement of maintaining
records of transactions up-to date and intact
at all times. Moreover, it also restricts the
directors to add/ modify official accounting
records in their personal capacity.
[05] Disclosure of Information under
Section 109(4) Of Companies Act 2006
a. Business review of last year
- This has been disclosed under sections
“Achievements of Current Year” under“
Operating and Financial Review” of the
Director’s Report.
b. Any impact caused to the
business of the Company due to
national and international condition
– Due to the shortage of investible funds
from the second quarter of the review
year, the Bank was not able to extend
lending and investment portfolio as
expected. With the increase in deposit
boosted by government spending, such
shortage has gradually eased.
c. Current year’s (2017/18)
achievement until the date of
preparation of Report from the
Directors and Board of Directors’
view on future activities of the
Company: - The Bank has expanded
it’s business satisfactorily right from the
beginning of FY 2017/18. In the first
month of FY 2017/18, total deposits
of the Bank has increased to Nrs.
123 billion, gross loans and advances
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. The Bank has constituted
increased to NRs. 91.2 billion, and
investment increased to Nrs. 34.5 billion.
While comparing with the review year’s
end, increment of Nrs. 4.58 or 3.86%
in total deposit, Nrs. 300 million or
0.33% in gross loans and advances,
and 1.91 billion or 5.85% in investment
has been achieved. Besides, Bank’s
major challenges in the current year
is to improve assets quality, managing
liquidity, achieving organic credit growth
and adding more revenue avenue.
d. Industrial and professional
relations of the Company – The Bank
maintains cordial relationships with all its
stakeholders including the staff members.
The Bank has been imparting a feeling of
belongingness by maintaining harmony
amongst employees of all hierarchy. It
has always encouraged the management
and the employees’ union to interact
for improvement of Bank’s systems and
processes. Such an open culture where
every individual employee senses his/
her role on attaining Bank’s common
objective is believed to be an essential
ingredient for corporate success. The
Annual Report 2016/17 75
Audit Committee that comprises of four
non-executive directors and the Head-
Internal Audit, who is the secretary of the
Committee. The Audit Committee functions
independently and reports directly to the
Board of Directors.
Chairman
On behalf of the Board
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
“Changes in the Board’ under “Governance”
section of the Director’s Report.
f. Main factors
that affect business activities:
1. Increased Competition
2. Shortage of investible funds
3. Increase in cost of deposits
g. Any remarks and observation
stated in the Independent Auditors’
Report and Board of Directors’
response thereon
– No implementation of NFRS till now, it
will be implemented gradually.
h. Amount recommended for
distribution of dividend – NRs.18 per
share cash dividend (including tax) and
NRs.30 per share stock dividend.
76 Nabil Bank Limited Annual Report 2016/17 77

i. Details of shares forfeited (number k. Main activities carried out by the underwriting and registrar to shares and
of share, face value, amount Company and its subsidiary(s) in depository participant’s service of CDS
received by the Company prior to last fiscal year and any significant and Clearing Ltd.
forfeiture, amount received by the changes in the business activities
Company after putting such forfeited of the Company and its subsidiary l. Any information given to
shares into subscription and amount during the same period: the Company by its principal n. Information provided on personal 2. Director Mr. Nirvana Chaudhary, u. Uncollected dividend by the
refunded on account of forfeited shareholder (who holds 1% or more interest of Board of Directors and Member Shareholders – NRs.514,491,796.45/-
shares) - The bank has not forfeited any Nabil Bank – Commercial banking shares of the Company) during the their relatives (nearest kin) regarding 3. Director Mr. Ashish Sharma,
shares. activities like credit disbursement, financial year – No such information contract or agreement done with the Member v. Information on asset bought or
investment, deposit mobilization, provided by the principal shareholders. Company during the year – There is sold as per Section 141 – The Bank
j. Review of the progress made by remittance, card and other financial no record of such event/transaction. Apart from sitting fees and per diem has sold it’s property located at New
the Company and its subsidiary(s) services. m. Shares held by the directors for outstation visit of foreign directors, Road, Kathmandu.
in the current fiscal year 2016/17 and officials of the Company o. Buyback of share by the all directors receive NRs.15, 000
and the position of the same at Subsidiary Company – Investment and information received by the Company, reason thereof for (net of TDS) on monthly basis for w. Details of related party
the end of fiscal year – Disclosed banking activities like portfolio Company on their involvement in buyback, number of shares bought newspaper/communication allowance. transaction as per Section 175
in “Achievement of Current Year” and management service, corporate advisory trading of shares: - Shares held by the back, face value of share and Details of committee activities and the (transactions between associated
“Financial position of Nabil Invest” and service and mutual fund scheme directors and officials of the company and amount paid during the buyback - recommendation are presented in “Board companies) – Disclosed in Point 11
Financial performance of Nabil Invest” management along with merchant their involvement in trading: The Bank has not bought back any share. Committees” under “Governance”. “Related Parties Disclosures” of Schedule
under “Operating and Financial Review”. banking activities like issue management, 33 “Notes to Accounts” of the financial
p. Information on existence of s. Dues payable to the Company by statement.
DESIGNATION SHAREHOLDER NO. DIRECTORS AND OFFICIALS SHARE UNIT Internal control system and if any director, MD, CEO, principal
Director 2663 Mr. Shambhu Prasad Poudyal 9,965 there is, its detail - Disclosed in point shareholders (holding share more x. Any other details to be disclosed
Director 90 Mr. Dayaram Gopal Agrawal 5,941 “Internal Control” under “Governance”. than 1%) or their relatives or in the Report from the Directors in
Director 13010400-00123783 Mr. Nirvana Chaudhary 550,536 firms or institutions in which they accordance with Companies Act,
Director 17089 Mr. Ashish Sharma 107 r. Name list of members in the have their involvement (interest) – 2006 or other prevailing laws –
CEO 13010400-00130784 Mr. Sashin Joshi 9,743 audit committee, remuneration, Disclosed in Schedule 29 of the financial Disclosed in appropriate part of this
Deputy General Manager 13010400-00038915 Mr. Deepak Shrestha 1,884 allowance and benefits they have statements. Report and financial statements.
Senior Manager 2174 Ms. Neena Thapa 1,681 received, the details of activities
Senior Manager 4733 Mr. Rajendra Bahadur Malla 10,339 of the committee and the details t. Remuneration, allowances and y. Any other pertinent details –
Manager 13010400-00003605 Mr. Iswar Man Shrestha 1,512 of any recommendation by them: - benefits paid to director, MD, CEO Disclosed in appropriate part of this
Manager 13010400-0001118 Mr. Babu Ratna Bajracharya 11,541 As of 15th July 2017, the Committee and officials – Disclosed in Point 11 Report and financial statements.
Manager 4852 Mr. Yugesh Lal Bijukchhe 1,245 constituted comprising of the following “Related Parties Disclosures” of Schedule
Manager 5076 Mr. Rajeshwor Lal Shrestha 488 Directors: 33 “Notes to Accounts” of the financial
Manager 13010400-00012962 Mr. Yagya Prasad Sharma 626 Ø Director Pratap Kumar Pathak, statement.
Manager 13010400-00013552/11391 Mr. Jaya krishna shrestha 4,646 Coordinator
SHARES ACQUIRED DURING 2016/17
Manager 13010400-00013552 Mr. Jaya krishna Shrestha 100
Officer 13010400-00048323 Mr. Akash Deep Shrestha 193
Officer 13011800-00004155 Mr. Sunav Shrestha 71
Officer 13011800-00019252 Mr. Sanat Kumar Poudyal 50
Officer 13011800-00020382 Mr. Birendra Bahadur Chand 100
Officer 13011800-00048955 Mrs. Meeta Shrestha 140
Officer 13010800-00006786 Mr. Iroj Shrestha 50
Officer 13010400-00007078 Mr. Sushil Sapkota 100
SHARES DISPOSED DURING 2016/17
Manager 13010400-00013552 Jaya Krishna Shrestha 100
Officer 13010400-00018341 Prakash Basukala 292
Officer 13010400-00000551 Kamal Prasad Lacaul 1,800
Officer 13010400-00000526 Tirendra Basnet 9,179
78 Nabil Bank Limited Annual Report 2016/17 79

[05] 6. Problem and challenges a. The bank has a Board of Directors been issued to ensure maintenance of

Disclosure related to sub rule (1) of Unhealthy competition induced by

increasing liquidity in the banking
along with the committees of the
board namely Audit Committee, Risk
corporate governance. The compliance
of the same is also periodically

rule 22 of securities registration sector along with reduced investment management committee and reviewed.

and issuance regulation, 2065

opportunities, fluid political conditions committee relating to staff services and
among declining business sentiment, facilities. Management level executive 8. If there is a deviation of 20% or
impact of the earthquake on the and asset and liability Management more between the details as per the
nation’s economy acute discomfort in committee are also operational. audited financial statements and
1. Report of the Board of Directors period-no mentionable suits have been 5. Analysis of stock performance of the transportation and supply system, b. Internal audit is conducted by the those forecasted in the prospectus,
- Disclosed in the “Director’s report” part filed by the bank except for regular the body corporate trade deficit, fluctuating exchange rates internal auditors of the bank to details of such deviation - No
of this report. law-suit concerning loan recovery and a) Management’s view on the Stock and increasing inflation rates have been manage the internal control processes. prospectus has been issued during
tax liabilities arising in normal course Exchange- The bank’s share price recognized by the challenges apart from Regular meetings of the committee are the fiscal year 2016/17.
2. Auditor’s report - Disclosed in of banking business. is guided by market operations of those outside of control of the bank, the conducted to ensure the execution and
the appropriate part of this financial b) A law-suit filed by or against the the capital market. The Bank does not bank has adopted business diversification, review of suggestions presented in the 9. Details on special events and
statements. promoter or director of the body comment on its share transactions. customer focused quality service along audit report. circumstances as specified in sub
corporate involving statutory b) High, Low and Closing price of the with effective risk management strategy. c. Various internal policies, regulations rule (5) of Rule 22 - None
3. Audited financial reports - regulations or criminal offence- The stocks of the company during each and directives have been put in place
Disclosed in appropriate part of this bank does not have any knowledge of quarter of the preceding year of the 7. Corporate governance - Description to minimize operational risk as well as
report and financial statements. any such claims. preceding year along with total volume of management’s initiative towards good to regulate the transaction.
c) A law-suit, if any, filed against the of trading of shares and number of governance: d. Employees Code of Conduct has
4. Legal Proceedings- promoter and director for committing days traded.
a) A law-suit filed by or against the economic crimes- The bank does not
body corporate during the quarterly have knowledge of any such claims.

Quarter (Month) Maximum Minimum Closing Total Total

Price per Price per Price per Shares Days
share (NRS.) Share (NRS.) Share (NRS.) Traded traded
First quarter (mid October 2016) 2,548 1,685 1,770 579,407 54
Second quarter (mid January 2017) 1,800 1,421 1,560 286,007 57
Third quarter (mid April 2017) 1,716 1,275 1,590 378,295 59
Fourth quarter (mid July 2017) 1,650 1,436 1,523 243,852 57
80 Nabil Bank Limited

independent auditor’s report-group

82 Nabil Bank Limited
consolidated financials
Consolidated Balance Sheet
As at 15 July 2017 (31 Ashadh 2074) (NPR)
Capital & Liabilities This Year Previous Year
1. Share Capital 8,041,159,100 6,185,507,000
2. Reserves & Surplus 6,132,250,589 5,453,679,291
3. Non Controlling Interest 144,530,683 112,763,605
4. Debentures & Bonds 300,000,000 300,000,000
5. Borrowings 3,056,310,000 1,900,000,000
6. Deposits 118,684,419,344 110,210,927,524
7. Bills Payable 319,186,262 293,514,363
8. Proposed Dividend 1,113,391,260 711,518,920
9. Income Tax Liabilities - -
10. Other Liabilities 2,906,015,003 2,451,448,463
Total 140,697,262,241 127,619,359,166
Assets This Year Previous Year
1. Cash Balance 1,637,483,131 1,640,632,219
2. Balance with Nepal Rastra Bank 10,274,403,004 5,826,016,495
3. Balance with Banks/Financial Institutions 1,314,550,973 3,025,881,300
4. Money at Call and Short Notice - 390,018,493
5. Investment 32,729,357,228 36,539,256,759
6. Loans, Advances and Bills Purchased 89,877,127,406 76,106,016,881
7. Fixed Assets 813,297,010 788,036,713
8. Non Banking Assets - -
9. Other Assets 4,051,043,489 3,303,500,306
Total 140,697,262,241 127,619,359,166
Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary A. Sharma As per our Report of even date
Chief Executive Officer Chairman Director Director Director Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary A. Sharma As per our Report of even date
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai K. P. Sharma P.K. Pathak V.P. Dani
Chief Financial Officer Director Director Director TR Upadhya & Co.
Chartered Accountants
Date: August 25, 2017
Place: Kathmandu
Annual Report 2016/17 83
Consolidated Profit and Loss Account
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)
Particulars This Year Previous Year
1. Interest Income 8,116,152,416 6,170,462,161
2. Interest Expense 2,586,865,889 1,829,490,964
Net Interest Income 5,529,286,527 4,340,971,197
3. Commission and Discount 617,152,189 508,797,332
4. Other Operating Income 451,147,761 381,205,183
5. Exchange Income 647,266,251 586,057,240
Total Operating Income 7,244,852,728 5,817,030,952
6. Staff Expense 947,013,659 787,900,575
7. Other Operating Expense 678,790,616 623,965,573
8. Exchange Loss - -
Operating Profit before Provision for Possible Losses 5,619,048,453 4,405,164,804
9. Provision for Possible Losses 19,228,711 5,076,142
Operating Profit 5,599,819,742 4,400,088,662
10. Non Operating Income /(Expense) 133,961,396 44,435,966
11. Provision for Possible Losses Write Back 30,870,032 52,150,704
Profit from Regular Activities 5,764,651,170 4,496,675,332
12. Income/(Expense) from Extra-ordinary Activities 11,259,673 (47,300,717)
Profit from All Activities 5,775,910,843 4,449,374,615
13. Provision for Staff Bonus 526,430,077 405,835,874
14. Provision for Income Tax 1,560,189,235 1,201,867,899
Current Tax 1,569,234,521 1,212,397,367
Prior Period Tax - -
Deferred Tax (9,045,286) (10,529,468)
15. Share of Non-Controlling Interest in the Profit of Subsidiary 44,011,780 18,209,803
Net Profit/(Loss) 3,645,279,751 2,823,461,039
Chief Executive Officer Chairman Director Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai K. P. Sharma P.K. Pathak V.P. Dani
TR Upadhya & Co.
Chief Financial Officer Director Director Director
Chartered Accountants
Date: August 25, 2017
Place: Kathmandu
 84

Sashin Joshi

Place: Kathmandu
Krishna D. Bhattarai
Chief Financial Officer
Chief Executive Officer
Nabil Bank Limited

Date: August 25, 2017

Director
Chairman

K. P. Sharma
S. P. Poudyal

Director
P.K. Pathak
Director
D.G. Agrawal
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)

18. Employee Training and Capacity Development Fund

17. Corporate Social Responsibility Fund
16. Effects of changes in Controlling Interest held in Subsidiary
15. Investment Adjusment Reserve
14. Deferred Tax Reserve
13. Capital Adjustment Fund
12. Capital Redemption Reserve
11. Exchange Fluctuation Fund
10. Special Reserve Fund
9. Proposed Stock Dividend (Bonus Shares)
8. Proposed Cash Dividend
7. Employees Related Reserve
6. Dividend Equalization Fund
5. Institution Development Fund
4. Contingent Reserve
3. General Reserve
2. Current Year’s Loss
1. Accumulated Loss up to Last Year
8. Contingent Reserve
7. Dividend Equalisation Fund
6. Investment Adjustment Reserve
5. Deferred Tax Reserve
4. Capital Adjustment Reserve
3. Exchange Equalization Fund
2. Current Year’s Profit
1. Accumulated Profit up to Last Year (Restated Balance)

19. Accumulated Profit/(Loss)

Total
Total

Director
V.P. Dani
Director
N. Chaudhary
Director
A. Sharma
Particulars This Year

12,961,650
36,132,003
5,130,748
9,517,686
60,000,000
81,500,000
1,855,652,100
1,113,391,260
1,000,000
723,000,000
500,000
472,400
3,645,279,751
650,097,537

398,064,241
3,898,285,447
4,296,349,688

-
-
-
-
-
-
-
-
-
-
-
-
Consolidated Profit & Loss Appropriation Account

Managing Partner
TR Upadhya & Co.
FCA Shashi Satyal

Chartered Accountants
650,097,537
2,893,584,654
-
-
5,257,711
-
10,529,468
-
108,000,000
59,200,000
5,141,155
1,428,937,400
711,518,920
-
-
-
1,000,000
564,000,000
-
-
3,543,682,191
250,000
-
13,149,583
-
-
-
2,823,461,039
706,821,569
Previous Year
(NPR)

As per our Report of even date

Expense
Income

Consolidated Statement of Changes in Equity

For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074) (NPR)

Particulars Share Capital Accumulated General Proposed Capital Share Contingent special Capital Exchange Interest other Investment Total
Profit/Loss Reserve
Bonus Reserve Premium Reserve reserve Redemption Equalization Spread Reserve Adjustment Amount (RS.)
Share Fund Fund Reserve Fund Reserve Reserve
Balance as on 16 July 2016 4,756,569,600 650,097,537 4,067,500,000 1,426,970,880 - 10,370,000 15,873,837 5,141,155 228,000,000 282,100,000 2,578,000 64,530,441 127,488,321 11,637,219,771
Changes in Accounting Policy - - - - - - - - - - - - - -
Bonus Share issued 1,426,970,880 - - (1,426,970,880) - - - - - - - - - -
Fraction Share Adjustment from
Cash Dividend 1,966,520 - - - - - - - - - - - - 1,966,520
Increase in Deferred Tax Expense - - -
Restated Opening Balance 6,185,507,000 650,097,537 4,067,500,000 - - 10,370,000 15,873,837 5,141,155 228,000,000 282,100,000 2,578,000 64,530,441 127,488,321 11,639,186,291
Changes in Controlling Interest -
Revaluation of Properties - - - - - - - - - - - - - -
Currency Translation Difference - - - - - - - - - - - - - -
Net Gains and Losses not recognised
in the Income Statement - - - - - - - - - - - - - -
Net Profit for the period - 3,645,279,751 - - - - - - - - - - - 3,645,279,751
Adjustments: - - - - - - - - - - - - - -
Issuance of Share Capital - - - - - - - - - - - - - -
Revaluation of Properties - - - - - - - - - - - - - -
Special Reserve Fund - - - - - - - - - - - - - -
Cash Dividend - (1,113,391,260) - - - - - - - - - - - (1,113,391,260)
Proposed Stock Dividend - (1,855,652,100) - 1,855,652,100 - - - - - - - - - -
General Reserve Fund - (723,000,000) 723,000,000 - - - - - - - - - - -
Contingent Reserve - (1,000,000) - - - - 1,000,000 - - - - - - -
Equivalent amount of medical expense under
Hospitalization Scheme - 500,000 - - - - (500,000) - - - - - - -
Dividend Equalization Fund - - - - - - - - - - - - - -
Capital Redemption Reserve (Debenture Redemption) - (60,000,000) - - - - - - 60,000,000 - - - - -
Exchange Fluctuation Reserve - (81,500,000) - - - - - - - 81,500,000 - - - -
Interest Spread Reserve - - - - - - - - - - - - - -
Other Reserve (Deferred Tax) - (9,045,286) - - - - - - - - - 9,045,286 - -
Corporate Social Responsibility Fund - (36,132,003) 36,132,003 - -
Employee Training and Capacity Development Fund - (12,961,650) 12,961,650 - -
Investment Adjustment Reserve - (5,130,748) - - - - - - - - - - 7,465,654 2,334,906
Balance as on 15 July 2017 6,185,507,000 398,064,241 4,790,500,000 1,855,652,100 - 10,370,000 16,373,837 5,141,155 288,000,000 363,600,000 2,578,000 122,669,380 134,953,974 14,173,409,688

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary A. Sharma As per our Report of even date
Chief Executive Officer Chairman Director Director Director
FCA Shashi Satyal
Krishna D. Bhattarai K. P. Sharma P.K. Pathak V.P. Dani Managing Partner
Chief Financial Officer Director Director Director TR Upadhya & Co.
Annual Report 2016/17

Chartered Accountants
Date: August 25, 2017
85

Place: Kathmandu
86 Nabil Bank Limited

Consolidated Cash Flow Statement

For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074) (NPR)
independent auditor’s report
-Nabil bank
Particulars This Year Previous Year
(a) Cash Flow from Operating Activities 5,918,751,937 (4,488,429,651)
1. Cash Received 9,485,951,754 7,387,446,568
1.1 Interest Income 7,721,650,004 5,897,879,989
1.2 Commission and Discount Income 649,741,303 517,439,157
1.3 Income from Foreign Exchange Transaction 647,266,251 586,057,240
1.4 Recovery of Loan Written Off 16,146,435 4,864,999
1.5 Other Incomes 451,147,761 381,205,183
2. Cash Payment (6,116,943,983) (4,614,330,837)
2.1 Interest Expenses (2,585,330,006) (1,829,280,488)
2.2 Staff Expenses (1,317,337,656) (1,045,619,275)
2.3 Office Operating Expenses (580,802,071) (517,952,706)
2.4 Income Tax Paid (1,630,299,202) (1,215,390,059)
2.5 Other Expenses (3,175,049) (6,088,308)
Cash Flow before changes in Working Capital 3,369,007,771 2,773,115,731
(Increase)/Decrease in Current Assets (7,059,616,777) (13,277,155,657)
1. (Increase)/Decrease in Money at Call and Short Notice 390,018,493 (66,477,493)
2. (Increase)/Decrease in Other Short Term Investment 6,883,188,901 (1,884,577,074)
3. (Increase)/Decrease in Loans, Advances and Bills Purchase (13,762,562,547) (10,614,808,030)
4. (Increase)/Decrease in Other Assets (570,261,624) (711,293,059)
Increase/(Decrease) in Current Liabilities 9,609,360,943 6,015,610,274
1. Increase/(Decrease) in Deposits 8,473,491,820 6,253,831,716
2. Increase/(Decrease) in Certificates of Deposits - -
3. Increase/(Decrease) in Short Term Borrowings 1,156,255,327 1,900,054,673
4. Increase/(Decrease) in Other Liabilities (20,386,204) (2,138,276,115)
(b) Cash Flow from Investment Activities (2,772,071,333) (3,566,725,353)
1. (Increase)/Decrease in Long-term Investment (3,069,568,000) (3,666,474,347)
2. (Increase)/Decrease in Fixed Assets (69,637,333) (81,971,047)
3. Interest income from Long term Investment 290,715,849 130,125,429
4. Dividend Income 76,418,151 51,594,612
5. Other - -
(c) Cash Flow from Financing Activities (412,773,509) (104,042,554)
1. Increase/(Decrease) in Long term Borrowings (Bonds, Debentures etc) - -
2. Increase/(Decrease) in Share Capital* - 66,419,400
3. Increase/(Decrease) in Other Liabilities - -
4. Increase/(Decrease) in Refinance/facilities received from NRB - -
5. Dividend Paid (412,773,509) (170,461,954)
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
(e) Current Year’s Cash Flow from All Activities 2,733,907,095.01 (8,159,197,558)
(f) Opening Cash and Bank Balance 10,492,530,014 18,651,727,571
(g) Closing Cash and Bank Balance 13,226,437,109 10,492,530,014

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

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary A. Sharma As per our Report of even date
Chief Executive Officer Chairman Director Director Director
FCA Shashi Satyal
Krishna D. Bhattarai K. P. Sharma P.K. Pathak V.P. Dani Managing Partner
Chief Financial Officer Director Director Director TR Upadhya & Co.
Chartered Accountants
Date: August 25, 2017
Place: Kathmandu
 Annual Report 2016/17 89

financial statement-Nabil bank

Balance Sheet
As at 15 July 2017 (31 Ashadh 2074) (NPR)

Capital & Liabilities Schedule This Year Previous Year

1. Share Capital 1 8,041,159,100 6,185,507,000

2. Reserves & Surplus 2 6,053,675,682 5,409,518,719
3. Debentures & Bonds 3 300,000,000 300,000,000
4. Borrowings 4 3,056,310,000 1,900,000,000
5. Deposits 5 118,896,156,802 110,267,271,749
6. Bills Payable 6 319,186,262 293,514,363
7. Proposed Dividend 1,113,391,260 711,518,920
8. Income Tax Liabilities - -
9. Other Liabilities 7 2,552,181,076 2,232,864,622
Total 140,332,060,182 127,300,195,373

Assets Schedule This Year Previous Year

1. Cash Balance 8 1,637,483,131 1,640,632,219

2. Balance with Nepal Rastra Bank 9 10,274,403,004 5,826,016,495
3. Balance with Banks/Financial Institutions 10 1,179,844,151 2,796,200,111
4. Money at Call and Short Notice 11 - 390,018,493
5. Investment 12 32,593,660,420 36,527,949,503
6. Loans, Advances and Bills Purchased 13 89,877,127,406 76,106,016,881
7. Fixed Assets 14 790,964,879 770,212,692
8. Non Banking Assets 15 - -
9. Other Assets 16 3,978,577,191 3,243,148,979
Total 140,332,060,182 127,300,195,373

Contingent Liabilities Schedule 17

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

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

Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary A. Sharma As per our Report of even date
Chief Executive Officer Chairman Director Director Director
FCA Shashi Satyal
Krishna D. Bhattarai K. P. Sharma P.K. Pathak V.P. Dani Managing Partner
Chief Financial Officer Director Director Director TR Upadhya & Co.
Chartered Accountants
Date: August 25, 2017
Place: Kathmandu
90 Nabil Bank Limited
Profit and Loss Account
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)
Particulars Schedule This Year Previous Year
1. Interest Income 18 8,065,591,460 6,155,660,129
2. Interest Expense 19 2,606,090,642 1,829,689,197
Net Interest Income 5,459,500,818 4,325,970,932
3. Commission and Discount 20 579,802,687 484,960,909
4. Other Operating Income 21 382,107,271 332,650,122
5. Exchange Income 22 647,266,251 586,057,240
Total Operating Income 7,068,677,027 5,729,639,203
6. Staff Expense 23 932,355,986 775,306,321
7. Other Operating Expense 24 652,414,089 604,809,144
8. Exchange Loss 22 - -
Operating Profit before Provision for Possible Losses 5,483,906,952 4,349,523,738
9. Provision for Possible Losses 25 19,228,711 5,076,142
Operating Profit 5,464,678,241 4,344,447,596
10. Non Operating Income /(Expense) 26 148,781,396 59,255,966
11. Provision for Possible Losses Write Back 27 30,870,032 52,150,704
Profit from Regular Activities 5,644,329,669 4,455,854,266
12. Income/(Expense) from Extra-ordinary Activities 28 11,259,673 (47,300,717)
Profit from All Activities 5,655,589,342 4,408,553,549
13. Provision for Staff Bonus 514,144,486 400,777,595
14. Provision for Income Tax 1,528,244,534 1,188,442,202
Current Tax 1,537,762,220 1,198,929,077
Prior Period Tax - -
Deferred Tax (9,517,686) (10,486,875)
Net Profit/(Loss) 3,613,200,322 2,819,333,752
Schedules 18 to 28 form an integral part of this Profit and Loss Account. 15. Investment Adjusment Reserve 5,130,748 -
Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary A. Sharma As per our Report of even date
Chief Executive Officer Chairman Director Director Director Total 3,898,285,447 2,888,284,350
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai K. P. Sharma P.K. Pathak V.P. Dani
Chief Financial Officer Director Director Director TR Upadhya & Co.
Chartered Accountants
Date: August 25, 2017
Place: Kathmandu
Annual Report 2016/17 91
Profit & Loss Appropriation Account
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)
Particulars This Year Previous Year
Income
1. Accumulated Profit up to Previous Year (Restated Balance) 618,353,137 673,904,152
2. Current Year’s Profit 3,613,200,322 2,819,333,752
3. Exchange Equalization Fund - -
4. Capital Adjustment Reserve - -
5. Deferred Tax Reserve - -
6. Investment Adjustment Reserve - 13,149,583
7. Dividend Equalisation Fund - -
8. Contingent Reserve 500,000 250,000
Total 4,232,053,459 3,506,637,487
Expense
1. Accumulated Loss up to Previous Year - -
2. Current Year’s Loss - -
3. General Reserve 723,000,000 564,000,000
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 1,113,391,260 711,518,920
9. Proposed Stock Dividend (Bonus Shares) 1,855,652,100 1,428,937,400
10. Special Reserve Fund - 5,141,155
11. Exchange Fluctuation Fund 81,500,000 59,200,000
12. Capital Redemption Reserve (Debenture Redemption) 60,000,000 108,000,000
13. Capital Adjustment Fund - -
14. Other Reserve (Deferred Tax) 9,517,686 10,486,875
16. Corporate Social Responsibility Fund 36,132,003
17. Employee Training and Capacity Development Fund 12,961,650
18. Accumulated Profit/(Loss) 333,768,012 618,353,137
Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary A. Sharma As per our Report of even date
Chief Executive Officer Chairman Director Director Director
FCA Shashi Satyal
Managing Partner
Krishna D. Bhattarai K. P. Sharma P.K. Pathak V.P. Dani
Chief Financial Officer Director Director Director TR Upadhya & Co.
Chartered Accountants
Date: August 25, 2017
Place: Kathmandu
92 Nabil Bank Limited

1,966,520
-
other Investment Total

- 74,000 15,873,837 5,141,155 228,000,000 282,100,000 2,578,000 63,858,363 126,040,227 11,595,025,719

-
-
-

-
Net Profit for the period 3,613,200,322 3,613,200,322

-
-
-
-
-
-
Amount (RS.)

- 74,000 15,873,837 5,141,155 228,000,000 282,100,000 2,578,000 63,858,363 126,040,227 11,593,059,199

-
-
-
-
Cash Dividend (1,113,391,260) (1,113,391,260)
-
-
-
-
-
-

- 74,000 16,373,837 5,141,155 288,000,000 363,600,000 2,578,000 122,469,702 131,170,975 14,094,834,781

-
(NPR)
Cash Flow Statement

Restatements:
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074) (NPR)

5,130,748
1,966,520
Increase in Deferred Tax Income

Surplus on Revaluation of Properties

Deficit on Revaluation of Properties
Currency Translation Difference

Income Statement

Appropriations:

-
(9,517,686) 9,517,686
Corporate Social Responsibility Fund (36,132,003) 36,132,003
Employee Training and Capacity Development Fund (12,961,650) 12,961,650
Changes in Accounting Policy

Transfer of Reserve Heading

Revaluation of Properties
-

Proposed Stock Dividend (1,855,652,100) 1,855,652,100

General Reserve Fund (723,000,000) 723,000,000
1,000,000
(500,000)
-
Capital Redemption Reserve (Debenture Redemption) (60,000,000) 60,000,000
Exchange Fluctuation Reserve (81,500,000) 81,500,000
1,426,970,880 (1,426,970,880)
Adjustment
Fund Reserve Reserve
Particulars This Year Previous Year
(a) Cash Flow from Operating Activities 5,893,663,963 (2,033,919,627)
1. Cash Received 9,329,000,806 7,300,253,052
1.1 Interest Income 7,671,089,048 5,883,077,957

(5,130,748)
Spread Reserve
1.2 Commission and Discount Income 612,391,801 493,602,734
1.3 Income from Foreign Exchange Transaction 647,266,251 586,057,240
1.4 Recovery of Loan Written Off 16,146,435 4,864,999

Capital Exchange Interest

1.5 Other Incomes 382,107,271 332,650,122
2. Cash Payment (6,050,739,563) (4,574,480,315)
2.1 Interest Expenses (2,604,554,759) (1,829,478,721)

Interest Spread Reserve

reserve Redemption Equalization
2.2 Staff Expenses (1,297,621,704) (1,029,446,461)
2.3 Office Operating Expenses (559,979,775) (503,410,630)
2.4 Income Tax Paid (1,585,408,276) (1,206,056,195)

As per our Report of even date

Fund Reserve
2.5 Other Expenses (3,175,049) (6,088,308)
Cash Flow before changes in Working Capital 3,278,261,243 2,725,772,737

Chartered Accountants
(Increase)/Decrease in Current Assets (7,022,389,275) (13,251,117,061)

FCA Shashi Satyal

TR Upadhya & Co.

Managing Partner
Contingent special
1. (Increase)/Decrease in Money at Call and Short Notice 390,018,493 (66,477,493)
2. (Increase)/Decrease in Other Short Term Investment 6,923,088,250 (1,882,241,704)
3. (Increase)/Decrease in Loans, Advances and Bills Purchase (13,762,562,547) (10,614,808,030)
4. (Increase)/Decrease in Other Assets (572,933,471) (687,589,834)

Bonus Reserve Premium Reserve

-
Increase/(Decrease) in Current Liabilities 9,637,791,995 8,491,424,697
1. Increase/(Decrease) in Deposits 8,628,885,053 6,029,361,666
2. Increase/(Decrease) in Certificates of Deposits - -

(1,000,000)
500,000
Share

Fund
3. Increase/(Decrease) in Short Term Borrowings 1,156,310,000 1,900,000,000

A. Sharma
Director
4. Increase/(Decrease) in Other Liabilities (147,403,058) 562,063,031
(b) Cash Flow from Investment Activities (2,667,188,992) (3,548,755,029)

Proposed Capital
1. (Increase)/Decrease in Long-term Investment (2,989,568,000) (3,666,474,347)
2. (Increase)/Decrease in Fixed Assets (59,574,992) (74,374,723)

-
4,756,569,600 618,353,137 4,067,500,000 1,426,970,880

6,185,507,000 333,768,012 4,790,500,000 1,855,652,100

Share
3. Interest income from Long term Investment 290,715,849 130,125,429

N. Chaudhary
Director
4. Dividend Income 91,238,151 61,968,612

V.P. Dani
Director
5. Other - -

For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(c) Cash Flow from Financing Activities (397,593,509) (158,216,554)

Statement of Changes in Equity

6,185,507,000 618,353,137 4,067,500,000

Profit/Loss Reserve
General

1. Increase/(Decrease) in Long term Borrowings (Bonds, Debentures etc) - -
2. Increase/(Decrease) in Share Capital* - 1,619,400
3. Increase/(Decrease) in Other Liabilities - -

D.G. Agrawal
Director

P.K. Pathak
4. Increase/(Decrease) in Refinance/facilities received from NRB - -

Accumulated

Director
5. Dividend Paid (397,593,509) (159,835,954)
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
(e) Current Year’s Cash Flow from All Activities 2,828,881,462 (5,740,891,209)
(f) Opening Cash and Bank Balance 10,262,848,825 16,003,740,034

Share Capital

Special Reserve Fund

Contingent Reserve

Other Reserve (Deferred Tax)

Investment Adjustment Reserve

Medical expenses under Hospitalization Scheme
Dividend Equalization Fund

(g) Closing Cash and Bank Balance 13,091,730,286 10,262,848,825

S. P. Poudyal

K. P. Sharma
Chairman
*Only fraction shares adjusted with Cash Dividend is disclosed as increment. Schedule 1 to 28 form an integral part of this Cash Flow Statement

Director
Net Gains and Losses not recognised in the
Sashin Joshi S. P. Poudyal D.G. Agrawal N. Chaudhary A. Sharma As per our Report of even date

Balance as on 16 July 2016

Balance as on 15 July 2017

Chief Executive Officer Chairman Director Director Director

Fraction Share Adjustment

Date: August 25, 2017

Restated Opening Balance

Chief Executive Officer

Chief Financial Officer

FCA Shashi Satyal

Krishna D. Bhattarai

Place: Kathmandu
from Cash Dividend
Krishna D. Bhattarai K. P. Sharma P.K. Pathak V.P. Dani Managing Partner

Bonus Share issued

Sashin Joshi
Chief Financial Officer Director Director Director TR Upadhya & Co.
Particulars
Chartered Accountants
Date: August 25, 2017
Place: Kathmandu
94 Nabil Bank Limited Annual Report 2016/17 95

Share Capital and Ownership Schedule 1

Details of Shareholders Holding ≥ 0.5% shares
As at 15 July 2017 (NPR)

(NPR) particulars THIS YEAR

Particulars This Year Previous Year % AMOUNT (in NPR)
1. Share Capital 1. NB International Limited 50.00 3,092,753,500
1.1 Authorized Capital 6,500,000,000 5,000,000,000 2. Rastriya Beema Co. Ltd. 9.67 598,180,100
a) 65,000,000 Ordinary Shares of Rs. 100 each 6,500,000,000 5,000,000,000 3. Mr. Arjun Bandhu Regmi 1.43 88,738,900

b) ………...Non-redeemable Preference Shares of Rs……….. each 4. Mr. Nirvana Kumar Chaudhary 0.89 55,053,700
5. Mr. Barun Chaudhary 0.85 52,486,600
c) …………Redeemable Preference Shares of Rs……….. each
6. Mrs. Sarika Chaudhary 0.78 48,423,000
1.2 Issued Capital 6,185,507,000 4,756,569,600
7. Nepal Trust Office 0.59 36,623,800
a) 61,855,070 Ordinary Shares of Rs. 100 each 6,185,507,000 4,756,569,600
8. Mr. Rahul Chaudhary 0.59 36,575,500
b) ………...Non-redeemable Preference Shares of Rs……….. each
9. Life Insurance Corporation (Nepal) Ltd. 0.54 33,679,500
c) …………Redeemable Preference Shares of Rs……….. each
1.3 Paid Up Capital 6,185,507,000 4,756,569,600
a) 61,855,070 Ordinary Shares of Rs. 100 each 6,185,507,000 4,756,569,600
b) ………...Non-redeemable Preference Shares of Rs……….. each
c) …………Redeemable Preference Shares of Rs……….. each Reserves & Surplus Schedule 2

1.4 Proposed Bonus Shares* 1,855,652,100 1,428,937,400 As at 15 July 2017

(NPR)
1.5 Calls in Advance - -
1.6 Total (1.3 + 1.4 + 1.5) 8,041,159,100 6,185,507,000 Particulars This Year Previous Year

1. General Reserve 4,790,500,000 4,067,500,000

*Note: Proposed Bonus Shares of previous year has been restated to include the effect of rounding up of fraction shares to whole number.
2. Capital Reserve 74,000 74,000
a. Share Premium 74,000 74,000
3. Capital Redemption Reserve (Debenture Redemption) 288,000,000 228,000,000
4. Capital Adjustment Reserve - -

Share Ownership 5. Other Reserve and Fund

a. Contingent Reserve
277,733,670
16,373,837
213,491,582
15,873,837
(NPR)
b. Institution Development Fund - -
Particulars % This Year Previous Year %
c. Dividend Equalization Fund - -
1. Local Ownership 50.00 3,092,753,500 3,092,753,500 50.00
d. Special Reserve Fund 5,141,156 5,141,155
1.1 Government of Nepal - - - -
e. Assets Revaluation Reserve - -
1.2 “Ka” Class Licensed Institutions - - - -
f. Other Reserve (Deferred Tax) 73,376,049 63,858,363
1.3 Other Licensed Institutions - - - -
g. Other Free Reserve (Interest Spread Reserve) 2,578,000 2,578,000
1.4 Other Entities 9.67 598,180,100 598,180,100 9.67
h. Investment Adjustment Reserve 131,170,975 126,040,227
1.5 General Public 30.00 1,855,779,100 1,855,779,100 30.00
i. Other Reserve (Corporate Social Responsibility) 36,132,003 -
1.6 Others 10.33 638,794,300 638,794,300 10.33
j. Other Reserve (Employees Training and Development) 12,961,650 -
2. Foreign Ownership 50.00 3,092,753,500 3,092,753,500 50.00
6. Accumulated Profit/(Loss) 333,768,012 618,353,137
Total 100.00 6,185,507,000 6,185,507,000 100.00
7. Exchange Fluctuation Fund 363,600,000 282,100,000

Note: Current Year figures are before incorporating the effect of Proposed Bonus Shares. Total 6,053,675,682 5,409,518,719
96 Nabil Bank Limited Annual Report 2016/17 97

Debentures & Bonds Schedule 3 Deposits Schedule 5

As at 15 July 2017
As at 15 July 2017

(NPR) (NPR)

Particulars This Year Previous Year Particulars This Year Previous Year

1. 8.50% Debenture of Rs.1000 each 300,000,000 300,000,000 1. Interest Free Deposits

Issued in July / August 2008 with maturity in July / August 2018 A. Current Deposits 16,946,016,377 16,237,275,994
(Redemption Reserve till date: Rs.288,000,000) 1. Local Currency 14,545,410,269 13,506,492,214
2. ……….% Bond/Debentures of Rs……..…each - - 1.1 Nepal Government - -
Issued on …………… with maturity on ………. 1.2 “Ka” Class Licensed Institutions 795,642,310 426,017,820
(Redemption Reserve till date:Rs…….) 1.3 Other Licensed Financial Institutions 417,695,590 314,146,390
Total (1+2) 300,000,000 300,000,000 1.4 Other Organized Institutions 11,878,916,140 11,648,154,875
1.5 Individuals 1,453,156,229 1,118,173,129
1.6 Others - -
2. Foreign Currency 2,400,606,108 2,730,783,780
2.1 Nepal Government - -
2.2 “Ka” Class Licensed Institutions 13,544,080 2,299,690

Borrowings Schedule 4 2.3 Other Licensed Financial Institutions - -

As at 15 July 2017 2.4 Other Organized Institutions 2,234,258,458 2,612,810,190

2.5 Individuals 152,803,570 115,673,900
(NPR)
2.6 Others - -
Particulars This Year Previous Year
B. Margin Deposits 2,713,427,981 2,421,426,857
A. Local
1. Employees 6,499,794 7,842,964
1. Government of Nepal - -
2. Guarantee 517,673,085 450,816,127
2. Nepal Rastra Bank (Refinance) 13,385,000 -
3. Letter of Credit 1,029,143,084 779,107,906
3. Repo Liability - -
4. Others 1,160,112,018 1,183,659,860
4. Inter-Bank and Financial Institutions 3,042,925,000 1,900,000,000
C. Others 158,611,329 371,050,002
5. Other Organized Institutions - -
1. Local Currency 154,874,628 326,583,323
6. Others - -
1.1 Financial Institutions - -
Total 3,056,310,000 1,900,000,000
1.2 Other Organized Institutions 4,936,000 7,718,147
B. Foreign
1.3 Individual 149,938,628 318,865,176
1. Banks - -
2. Foreign Currency 3,736,701 44,466,679
2. Others - -
2.1 Financial Institutions - -
Total - -
2.2 Other Organized Institutions - 41,821,500
Total (A+B) 3,056,310,000 1,900,000,000
2.3 Individual 3,736,701 2,645,179
Total (A+B+C) 19,818,055,687 19,029,752,853

Contd.
98 Nabil Bank Limited Annual Report 2016/17 99

Contd.

Particulars This Year

(NPR)

Previous Year
Bills Payable Schedule 6

As at 15 July 2017
2. Interest Bearing Deposits
(NPR)
A. Savings Deposits 51,398,992,843 53,437,506,395
1. Local Currency 47,915,932,935 49,992,598,276 Particulars This Year Previous Year

1.1 Institutions 1,465,182,322 1,391,241,470 1. Local Currency 2,572,571 995,124

1.2 Individuals 46,450,750,613 48,601,356,806 2. Foreign Currency 316,613,691 292,519,239

1.3 Others - - Total 319,186,262 293,514,363

2. Foreign Currency 3,483,059,908 3,444,908,119

2.1 Institutions 1,803,172,518 1,646,784,899
2.2 Individuals 1,679,887,390 1,798,123,220
2.3 Others
B. Fixed Deposits
-
24,044,677,446
-
8,868,607,580
Other Liabilities Schedule 7

As at 15 July 2017
1. Local Currency 19,224,354,946 8,154,107,740
(NPR)
1.1 Institutions 10,809,763,600 2,861,242,250
Particulars This Year Previous Year
1.2 Individuals 8,414,591,346 5,292,865,490
1. Gratuity Fund 60,196,051 61,779,668
1.3 Others - -
2. Employees Provident Fund - -
2. Foreign Currency 4,820,322,500 714,499,840
3. Employees Leave Fund 205,540,832 168,445,338
2.1 Institutions 4,762,307,480 654,577,080
4. Provision for Staff Bonus 514,144,486 400,777,595
2.2 Individuals 58,015,020 59,922,760
5. Interest Payable on Deposits 467,300 17,259
2.3 Others - -
6. Interest Payable on Borrowings 1,475,792 389,950
C. Call Deposits 23,634,430,826 28,931,404,921
7. Unearned Discount and Commission 96,779,955 64,190,841
1. Local Currency 16,902,255,491 15,209,124,149
8. Sundry Creditors 1,140,248,479 1,313,494,325
1.1 “Ka” Class Licensed Institutions - -
9. Branch Reconciliation Account - -
1.2 Other Licensed Financial Institutions 277,557,840 268,596,300
10. Audit Fees Payable 1,300,000 1,125,000
1.3 Other Organized Institutions 16,597,366,981 14,899,029,339
11. Deferred Tax Liabilities - -
1.4 Individuals 27,330,670 41,498,510
12. Dividend Payable 514,491,796 200,566,385
1.5 Others - -
13. Others 17,536,385 22,078,261
2. Foreign Currency 6,732,175,335 13,722,280,772
Total 2,552,181,076 2,232,864,622
2.1 “Ka” Class Licensed Institutions - -
2.2 Other Licensed Financial Institutions - -
2.3 Other Organized Institutions 6,715,440,465 13,698,637,382
2.4 Individuals 16,734,870 23,643,390
2.5 Others - - Cash Balance Schedule 8

D. Certificate of Deposit - - As at 15 July 2017

1. Organized Institutions - - (NPR)

2. Individuals - - Particulars This Year Previous Year

3. Others - - 1. Local Currency (Including Coins) 1,495,904,588 1,538,784,717
Total (A+B+C+D) 99,078,101,115 91,237,518,896 2. Foreign Currency 141,578,543 101,847,502
Total Deposits (1+2) 118,896,156,802 110,267,271,749 Total 1,637,483,131 1,640,632,219
100 Nabil Bank Limited Annual Report 2016/17 101

Balance with Nepal Rastra Bank Schedule 9 Investments Schedule 12

As at 15 July 2017 As at 15 July 2017

(NPR) (NPR)

Particulars Local Foreign Currency
Currency INR Convertible FCY Total This Year Previous Year
1. Nepal Rastra Bank 9,057,104,011 - 1,217,298,993 1,217,298,993 10,274,403,004 5,826,016,495
a. Current Account 9,057,104,011 - 1,217,298,993 1,217,298,993 10,274,403,004 5,826,016,495
b. Other Account - - - - - -
Particulars Purpose This Year Previous Year
Trading Others
1. Nepal Government Treasury Bills - 2,719,231,009 2,719,231,009 8,164,766,029
2. Nepal Government Saving Bonds - - - -
3. Nepal Government Other Securities - 8,821,500,000 8,821,500,000 5,821,500,000

Note: Balance as per the confirmation statements is Rs.10,244,305,713. Reconcilation is presented in Schedule 33 “Notes to Accounts”. 4. Nepal Rastra Bank Bonds (Term Deposits) - - - 3,260,875,000
5. Foreign Bonds - - - 268,139,993
6. Local Licensed Institutions - - - -
7. Foreign Banks - 20,365,352,761 20,365,352,761 18,583,041,177
8. Organized Institutions’ Shares - 289,204,994 289,204,994 255,886,900

Balance with Banks / Financial Institutions Schedule 10 9. Organized Institutions’ Bonds and Debentures - - - -

As at 15 July 2017 10. Other Investments - 399,381,842 399,381,842 173,981,757

Total Investment - 32,594,670,606 32,594,670,606 36,528,190,856
(NPR)

Particulars Local Foreign Currency

Provision - 1,010,186 1,010,186 241,353

Currency INR Convertible FCY Total This Year Previous Year

Net Investment - 32,593,660,420 32,593,660,420 36,527,949,503

1. Local Licensed Institutions 117,260,460 - - - 117,260,460 121,582,117

a. Current Account 117,260,460 - - - 117,260,460 121,582,117
b. Other Account - - - - - -
2. Foreign Banks - 695,706,961 366,876,730 1,062,583,691 1,062,583,691 2,674,617,994
a. Current Account - 695,706,961 366,876,730 1,062,583,691 1,062,583,691 2,674,617,994
b. Other Account - - - - - -
Total 117,260,460 695,706,961 366,876,730 1,062,583,691 1,179,844,151 2,796,200,111

Note: Balance as per the confirmation statements is Rs.1,590,494,544. Reconcilation is presented in Schedule 33 “Notes to Accounts”.

Money at Call and Short Notice Schedule 11

As at 15 July 2017

(NPR)

Particulars This Year Previous Year

1. Local Currency - 390,018,493

2. Foreign Currency - -
Total - 390,018,493
102 Nabil Bank Limited Annual Report 2016/17 103

Investment in Shares, Debentures and Bonds Schedule 12-A

As at 15 July 2017
(NPR)

Particulars Cost Price Market Value Provision This Year Previous Year Particulars Cost Price Market Value Provision This Year Previous Year

1. Investment in Shares 289,204,994 392,544,847 - 289,204,994 255,645,547 1.14 Visa Inc. - 246,598,799 - - -
1.1 Rural Microfinance Development Centre Ltd. 50,720,000 Not Available - 50,720,000 50,720,000 (6,166 units of Class C Common Stock)
[675,083 ordinary shares of Rs. 100 paid up 1.15 MasterCard Incorporated - 145,946,048 - - -
(Including 167,883 Bonus Shares)] (11,140 units Class B Common Stock - CB1)
1.2 Nirdhan Utthan Bank Ltd. 16,711,200 Not Available - 16,711,200 16,711,200 2. Investment in Debentures and Bonds - - - - 268,139,993
[830,701 ordinary shares of Rs. 100 paid up 2.1 ICICI Bank Bonds - - - - 268,139,993
(Including 663,589 Bonus Shares)] (Bonds of face value USD 2,500,000
1.3 Chhimek Laghubitta Bikas Bank Ltd. 24,377,900 Not Available - 24,377,900 24,377,900 coupon rate 6.375% maturing on 30 April 2022)
[999,468 ordinary shares of Rs. 100 paid up 3. Other Investments 399,381,842 479,823,049 1,010,186 398,371,656 173,981,757
(Including 755,689 Bonus Shares)] 3.1 Mutual Fund - Nabil Balance Fund 1 105,000,000 206,850,000 - 105,000,000 105,000,000
1.4 Deprosc Laghubitta Bikas Bank Ltd. 43,044,794 Not Available - 43,044,794 9,726,700 (10,500,000 units of Rs. 10 each)
[782,975 ordinary shares of Rs. 100 paid up 3.2 Mutual Fund - NMV Sulav Investment Fund 1 13,049,980 16,312,475 - 13,049,980 13,049,980
(Including 685,708 Bonus Shares)] (1,304,998 units of Rs. 10 each)
1.5 Sanakisan Bikas Bank Ltd. 9,561,600 Not Available - 9,561,600 9,561,600 3.3 Mutual Fund - NIBL Samridhi Fund 1 17,389,120 20,606,107 - 17,389,120 17,389,120
[152,720 ordinary shares of Rs. 100 paid up (1,738,912 units of Rs. 10 each)
(Including 57,104 Bonus shares)] 3.4 Mutual Fund - Laxmi Value Fund - Scheme 1 12,864,430 15,758,927 - 12,864,430 12,864,430
1.6 Swabalamban Laghubitta Bikas Bank Ltd. 12,490,500 Not Available - 12,490,500 12,490,500 (1,286,443 units of Rs. 10 each)
[503,669 ordinary shares of Rs. 100 paid up 3.5 Mutual Fund - Global IME Mutual Fund -
(Including 378,764 Bonus Shares)] Sammunat Scheme 1 23,732,930 24,190,275 - 23,732,930 23,732,930
1.7 Nepal Grameen Bikas Bank Ltd. 5,363,500 Not Available - 5,363,500 5,122,147 (2,373,293 units of Rs. 10 each)
(53,635 ordinary shares of Rs. 100 paid up) 3.6 Mutual Fund - Nabil Equity Fund 175,000,000 175,000,000 525,000 174,475,000 -
1.8 Mahila Sahayatra Microfinance Bittiya Sanstha Ltd. 4,000,000 Not Available - 4,000,000 4,000,000 (17,500,000 units of Rs. 10 each)
[(44,000 ordinary shares of Rs. 100 paid up 3.7 Mutual Fund - NMB Capital Hybrid Fund L-1 12,619,210 12,543,495 75,715 12,543,495 -
(including 4,000 Bonus Shares)] (1,261,921 units of Rs. 10 each)
1.9 NADEP Laghubitta Bittiya Sanstha Ltd. 40,000,000 Not Listed - 40,000,000 40,000,000 3.8 Mutual Fund - NIBL Pragati Fund 8,561,770 8,561,770 - 8,561,770 -
(400,000 ordinary shares of Rs. 100 each) (856,177 units of Rs. 10 each)
1.10 Karja Suchana Kendra Ltd. 1,235,500 Not Listed - 1,235,500 1,235,500 3.9 Mutual Fund - Laxmi Equity Fund 29,247,920 - 409,471 28,838,449 -
[36,599 ordinary shares of Rs. 100 paid up (2,924,792 units of Rs. 10 each)
(Including 24,244 Bonus Shares)] 3.10 SWIFT Investment (denominated in €) 1,916,482 Not Listed - 1,916,482 1,945,297
1.11 National Banking Training Institute Ltd. 1,200,000 Not Listed - 1,200,000 1,200,000 Total Investment 688,586,836 872,367,896 1,010,186 687,576,650 697,767,297
(12,000 ordinary shares of Rs. 100 paid up) 4. Provision for Loss
1.13 Nepal Clearing House Ltd. 2,500,000 Not Listed - 2,500,000 2,500,000 3.1 Up to Previous Year 241,353 - - 6,987,391
(25,000 ordinary shares of Rs. 100 paid up) 3.2 Addition/(Writeback) Current Year 768,833 - - (6,746,038)
1.13 Nabil Investment Banking Ltd. 78,000,000 Not Listed - 78,000,000 78,000,000 Total Provision 1,010,186 - - 241,353
(780,000 ordinary shares of Rs. 100 each)

Note: Nepal Grameen Bikas Bank Ltd. and NADEP Laghubitta Bittiya Sanstha Ltd. have not declared and distributed dividend in the last three years.
Market Prices for share investments in Microfinance Companies are quoted as Not Available because these are not actively traded.



104 Nabil Bank Limited Annual Report 2016/17 105

Held for Trading Investments Schedule 12.1 Available for Sale Investments Schedule 12.3
As at 15 July 2017 As at 15 July 2017

(NPR) (NPR)

Particulars Market Price As At Profit / Loss Remarks Particulars Market Price As At This Year Last Year Remarks
Cost Price ( RS.) 15-Jul-2017 15-Jul-2016 This Year (RS.) Previous Year (RS.) Cost Price 15-Jul-2016 (A) 15-Jul-2017 (B) Investment Profit/ Loss
Adjustment
1. Nepal Government Treasury Bills - - - - -
Reserve (B -A)
2. Nepal Government Saving Bonds - - - - -
1. Nepal Government Treasury Bills -
3. Nepal Government Other Securities - - - - -
2. Nepal Government Saving Bonds -
4. Nepal Rastra Bank Bonds - - - - -
3. Nepal Government Other Securities -
5. Foreign Bonds - - - - -
4. Nepal Rastra Bank Bonds -
6. Shares of Local Licensed Institutions - - -
5. Foreign Bonds -
7. Debentures and Bonds of
6. Shares of Local Licensed Institutions 206,269,494 - - 43,325,390 -
Local Licensed Institutions - - - - -
7. Debentures and Bonds of Local Licensed
8. Shares, Debentures and Bonds of
Institutions -
Local Organised Institutions - - - - -
8. Shares, Debentures and Bonds of
9. Placement in Foreign Banks - - - - -
Local Organised Institutions 82,935,500 - - 78,000,000 -
10. Inter Bank Lending - - - - -
9. Placement in Foreign Banks -
11. Other Investments - - - - -
10. Other Investments 399,381,842 316,919,259 479,823,049 94,255,318 -
Total Investments - - - - -
Total Investments 688,586,836 316,919,259 479,823,049 215,580,708 -

Note: Market Price represents only listed securities valued at their last traded price or reference price.
Calculation of Investment Adjustment Reserve is presented in Schedule 33, “Notes to Accounts”.

Held to Maturity Investments Schedule 12.2

As at 15 July 2017

(NPR)

Particulars Impaired Amount till Profit / Loss Remarks

Cost Price ( RS.) 15-Jul-2017 15-Jul-2016 This Year (RS.) Previous Year (RS.)
1. Nepal Government Treasury Bills 2,719,231,009
2. Nepal Government Saving Bonds -
3. Nepal Government Other Securities 8,821,500,000
4. Nepal Rastra Bank Bonds (Term Deposit) -
5. Foreign Bonds (denominated in $) - - - - -
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 20,365,352,761 1,010,186 -
10. Other Investments -
Total Investments 31,906,083,770 1,010,186 - - -
 106

Classification of Loans, Advances and Bills Purchased & Provisioning Schedule 13

As at 15 July 2017

(NPR)

Loans & Advances Bills Purchased & Discounted

Nabil Bank Limited

Particulars Domestic
Deprived Sector Other Foreign Total Domestic Foreign Total This Year Previous Year
Insured Uninsured
1. Performing Loans - 4,516,741,415 82,250,765,062 3,874,062,534 90,641,569,011 110,112,042 11,512,313 121,624,355 90,763,193,365 76,841,366,126
1.1 Pass - 4,516,741,415 81,199,595,843 3,874,062,534 89,590,399,792 110,112,042 11,512,313 121,624,355 89,712,024,146 74,947,912,128
1.2 Watch List - - 1,051,169,219 - 1,051,169,219 - - - 1,051,169,219 1,893,453,999
2. Non-Performing Loans - 33,235,600 692,535,584 1,506,710 727,277,894 5,323 775,788 781,111 728,059,005 889,035,409
2.1 Restructured / Rescheduled - 3,284,000 134,547,141 - 137,831,141 - - - 137,831,141 33,526,732
2.2 Sub-Standard - - 71,412,760 - 71,412,760 - - - 71,412,760 60,458,474
2.3 Doubtful - - 20,846,390 - 20,846,390 - - - 20,846,390 90,506,844
2.4 Loss - 29,951,600 465,729,292 1,506,710 497,187,602 5,323 775,788 781,111 497,968,713 704,543,360
A. Total Loan (1+2) - 4,549,977,015 82,943,300,646 3,875,569,244 91,368,846,904 110,117,365 12,288,101 122,405,466 91,491,252,370 77,730,401,536
3. Loan Loss Provision
3.1 Pass - 45,167,414 812,613,534 38,740,626 896,521,574 1,101,120 115,123 1,216,244 897,737,817 749,933,622
3.2 Watch List - - 52,558,461 - 52,558,461 - - - 52,558,461 75,951,270
3.3 Restructured / Rescheduled - 3,284,000 134,199,587 - 137,483,587 - - - 137,483,587 33,526,732
3.4 Sub-Standard - - 17,853,190 - 17,853,190 - - - 17,853,190 15,176,249
3.5 Doubtful - - 10,523,195 - 10,523,195 - - - 10,523,195 45,253,422
3.6 Loss - 29,951,600 465,729,292 1,506,710 497,187,602 5,323 775,788 781,111 497,968,713 704,543,360
B. Total Provisioning - 78,403,014 1,493,477,259 40,247,336 1,612,127,609 1,106,443 890,911 1,997,355 1,614,124,964 1,624,384,655
4. Provisioning up to previous year
4.1 Pass - 33,452,355 684,098,982 30,346,123 747,897,460 1,934,344 101,819 2,036,163 749,933,622 635,492,671
4.2 Watch List - - 75,951,270 - 75,951,270 - - - 75,951,270 49,347,226
4.3 Restructured / Rescheduled - 3,284,000 30,242,732 - 33,526,732 - - - 33,526,732 -
4.4 Sub-Standard - - 15,176,249 - 15,176,249 - - - 15,176,249 14,721,052
4.5 Doubtful - - 45,253,422 - 45,253,422 - - - 45,253,422 202,341,087
4.6 Loss - 29,951,600 670,624,273 3,369,810 703,945,683 22,000 575,676 597,676 704,543,360 757,843,712
C. Total Previous Year’s Provision - 66,687,955 1,521,346,928 33,715,933 1,621,750,816 1,956,344 677,495 2,633,839 1,624,384,655 1,659,745,748
D. Written Back Current Year 27,869,669 27,869,669 849,900 849,900 28,719,569 40,437,236
E. Addition Current Year 11,715,060 6,531,403 18,246,462 213,416 213,416 18,459,878 5,076,142
F. Changes Current Year - 11,715,060 (27,869,669) 6,531,403 (9,623,206) (849,900) 213,416 (636,484) (10,259,691) (35,361,093)
Net Loan (A-B) - 4,471,574,000 81,449,823,387 3,835,321,908 89,756,719,295 109,010,921 11,397,190 120,408,111 89,877,127,406 76,106,016,881

Note:
A. Secured

B. Unsecured
a. Own
As at 15 July 2017

10. Other Securities

5. Export Documents

8. Counter Guarantee
9. Personal Guarantee
7. Government Securities
6. Fixed Deposit Receipts
3. Government Guarantee
1. Movable/Immovable Assets

Total (Gross Loans and Advances)

b. Other Licensed Institutions
4. Internationally Rated Bank Guarantee
2. Guarantee of Local Licensed Institutions

Credit Card loans is presented under Unsecured Loans.

Particulars This Year

7,380,669,208
1,526,208
49,182,942
378,288,449
424,619,535
802,907,984
112,964,512
82,908,814,030

91,491,252,370
235,187,486
91,256,064,884

-
-
-
-
Securitywise Loans, Advances and Bills Purchased
Annual Report 2016/17

77,730,401,536
59,464,558
4,913,645,943
3,338,053
-
456,393,693
371,588,777
353,722,573
725,311,350
257,807,354
-
-
-
71,314,440,585
77,670,936,978
Previous Year
(NPR)
Schedule 13-A
107
108 Nabil Bank Limited Annual Report 2016/17 109

(NPR)
Non Banking Assets
Schedule 14

Previous
Vehicles Machinery Office Equipment Others Year Year

1,219,655,554
72,564,399
-
(25,613,991)
(154,810)
1,266,451,152

692,838,459
82,428,765
-
(19,471,835)
(125,018)
755,670,371
510,780,781
241,517,149
-
17,914,762
770,212,692
Schedule 15

1. Cost Price

2. Depreciation
As at 15 July 2017
(NPR)

Name & Address of Date of Acquisition Total Amount of Loss Provision This Year’s Net Previous
Borrower / Party of Non Banking Assets Non Banking Assets % Amount Non-Banking Assets Year

-
-

-
- 1,321,257,218

799,344,989
521,912,229
240,542,149

28,510,501
- 1,266,451,152
119,450,309

790,964,879
755,670,371
87,277,519
ASSETS This

(28,044,243)
(36,600,000)

(19,071,431)
(24,531,470)
None
Grand Total

Other Assets

-
-

-
-
-
-
-

-
-
-
-
-

28,510,501
269,052,650
Schedule 16
As at 15 July 2017
(NPR)

Particulars This Year Previous Year

1. Stock of Stationery 9,059,816 7,295,511

-
-
-
-

-
-
708,061,361

553,907,493
154,153,868
665,779,052
42,282,309

154,153,868
511,339,711
42,567,782
c. Revaluation/Write Back Current Year

c. Revaluation/Write Back Current Year

-
2. Income receivable on Investment 230,313,701 180,199,770
3. Accrued Interest on Loan 632,312,374 - -
Less: Interest Suspense Account (632,312,374)
4. Commission Receivable - -
5. Sundry Debtors 614,606,995 764,512,942
-

-
-

-
-
-
-

6. Staff Loans & Advances 2,580,383,370 1,904,688,440

- 77,168,000

(7,042,147)
- (36,600,000)

33,469,180

(6,029,311)
- (24,531,470)

7. Pre - Payments 44,704,732 44,330,829

8. Cash in Transit - -
9. Other Transit items (including Cheques) - -
-
-
-

10. Drafts paid without notice - -

316,531,248 296,664,609

110,920,642 134,516,854
205,610,606 162,147,755
337,533,344 263,138,756

205,610,606 162,147,755
112,722,205 131,608,455
Particulars

11. Expenses not written off - -

12. Branch Reconciliation Account - -
13. Deferred Tax Assets 73,376,049 63,858,363
14. Others 426,132,528 278,263,124
-
-
-
11,240,557
Building

(21,002,096)

(13,042,120)

a) Advance Income Tax (net of tax provision) 52,981,114 5,335,057

b) Interest Receivable on Staff Housing Loan 310,416,116 257,349,512
c) Deposits for Utilities 1,320,843 1,335,093
d) Net Book Value of Software 61,414,455 14,243,462
Total 3,978,577,191 3,243,148,979
e. Depreciation on Writen Off Assets*

Other Assets (Additional Statement)

d. Depreciation on Sold Assets
e. Write off during the Year*

Schedule 16 (A)
3. Book Value (WDV*) (1-2)
b. Addition during the Year
Fixed Assets

a. Previous Year Balance

Total Cost (a+b+c+d+e)

5. Pending Capitalization
d. Sold during the Year

As at 15 July 2017
a. Up to Previous Year

* Written Down Value

b. For Current Year

6. Leasehold Assets

(NPR)
Total (3+4+5+6)
Total Depreciation

Particulars This Year Previous Year

-
As at 15 July 2017

Up to 1 Year 1 to 3 Year Above 3 Years total

4. Land

1. Accrued Interest on Loan 308,200,383 10,063,309 314,048,682 632,312,374 537,625,130

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

4. Domestic and Foreign Agency Balance - -

110 Nabil Bank Limited
Contingent Liabilities Schedule 17
As at 15 July 2017 For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)
Particulars This Year Previous Year
1. Claims on Institution but not accepted by the Institution 209,534,289 16,386,500
2. Letter of Credit (Full Amount) 8,616,620,145 9,003,644,211
a. Maturity up to 6 Months 5,867,273,457 5,686,684,061
b. Maturity more than 6 Months 2,749,346,688 3,316,960,150
3. Rediscounted Bills - -
4. Guarantees/Bonds 6,129,280,154 5,805,208,986
a. Bid Bonds 229,318,677 174,641,253
b. Performance Bonds 5,899,961,477 5,630,567,732
c. Other Guarantees/Bonds - -
5. Unpaid portion of Partly paid shares - -
6. Forward Exchange Contract Liabilities 6,050,511,805 10,408,658,879
7. Bills under Collection 651,032,662 380,059,043
8. Acceptance & Endorsement 1,680,218,408 1,644,658,096
9. Underwriting Commitment - -
10. Irrevocable Loan Commitment 9,254,667,191 11,496,129,938
11. Guarantee issued against Counter Guarantee of Internationally Rated Banks 3,729,461,910 3,670,192,161
12. Advance Payment Guarantee 2,928,451,241 1,810,104,205
13. Financial Guarantee - -
14. Contingent Liabilities on Income Tax 125,422,008 55,644,110
Total 39,375,199,813 44,290,686,129
Annual Report 2016/17 111
Interest Income Schedule 18
(NPR)
Particulars This Year Previous Year
A. Loans, Advances and Overdraft 7,154,866,050 5,520,046,491
1. Loans & Advances 5,525,276,604 4,015,745,940
2. Overdraft 1,629,589,446 1,504,300,551
B. Investment 408,670,771 262,792,214
1. Government Securities 395,027,614 245,871,161
a. Treasury Bills 101,742,530 80,284,902
b. Development Bonds 293,285,084 165,586,259
c. National Saving Certificates - -
2. Foreign Securities 13,611,460 16,921,053
a. ICICI Bank Bond 13,611,460 16,921,053
b. ……….. - -
3. Nepal Rastra Bank Bonds 31,697 -
4. Debenture & Bonds - -
a. Bank/Financial Institutions - -
b. Other Organizations - -
5. Interbank Investment - -
a. Bank/Financial Institutions - -
b. Other Organizations - -
C. Agency Balances 5,201,745 4,554,220
1. Local Banks/Financial Institutions - -
2. Foreign Banks 5,201,745 4,554,220
D. Money at Call and Short Notice 15,096,144 2,569,025
1. Local Banks/Financial Institutions 15,096,144 2,569,025
2. Foreign Banks - -
E. Others 481,756,750 365,698,179
1. Certificate of Deposits (NRB Term Deposit) 4,671,427 77,202,894
2. Inter-Bank/Financial Institutions Loan - -
3. Placements in Foreign Banks 396,799,862 226,977,863
4. Staff Loans 80,285,461 61,517,422
Total 8,065,591,460 6,155,660,129
112 Nabil Bank Limited
Interest Expense Schedule 19
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074) For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)
Particulars This Year Previous Year
A. Deposits 2,554,924,521 1,788,108,096
1. Fixed Deposits 687,983,677 403,891,819
1.1 Local Currency 673,102,090 395,969,782
1.2 Foreign Currency 14,881,587 7,922,037
2. Savings Deposits 1,341,316,134 889,226,416
2.1 Local Currency 1,331,089,880 773,709,661
2.2 Foreign Currency 10,226,254 115,516,755
3. Call Deposits 525,624,710 494,989,861
3.1 Local Currency 479,631,746 454,602,742
3.2 Foreign Currency 45,992,964 40,387,119
4. Certificate of Deposits - -
B. Borrowings 51,166,121 41,581,101
1. Debentures & Bonds 25,500,000 25,500,000
2. Loan from Nepal Rastra Bank - -
3. Inter Bank /Financial Institutions Borrowing 25,666,121 16,081,101
4. Other Organized Institutions - -
5. Others - -
C. Others - -
Total 2,606,090,642 1,829,689,197
Commission & Discount Schedule 20
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)
Particulars This Year Previous Year
A. Bills Purchase & Discount 358,558 782,427
1. Local 126,581 315,442
2. Foreign 231,977 466,985
B. Commission 517,984,144 432,855,990
1. Letters of Credit 113,160,436 94,290,933
2. Guarantees 102,557,745 69,557,973
3. Collection Fees 1,229,443 1,123,635
4. Remittance Fees 111,260,928 102,801,256
5. Cards and E-Banking 162,741,794 156,366,118
6. Share Underwriting/Issue - -
7. Government Transactions - -
8. Agency Commission 27,033,798 8,716,075
9. Exchange Fee - -
C. Others 61,459,985 51,322,492
Total 579,802,687 484,960,909
Annual Report 2016/17 113
Other Income Schedule 21
(NPR)
Particulars This Year Previous Year
1. Safe Deposit Lockers Rental 12,722,277 11,936,867
2. Issue & Renewals of Credit Cards 923,340 1,568,916
3. Issue & Renewals of Debit Cards 20,532,673 13,157,562
4. Telex / T. T. / Communication Fees 32,672,466 25,717,980
5. Service Charges 291,460,534 249,657,714
6. Renewal Fees - -
7. Others 23,795,981 30,611,083
Service Fees from Nabil Invest 3,076,090 3,125,080
Service Fees from Nabil Retirement Fund 2,739,600 2,654,118
Others 17,980,291 24,831,885
Total 382,107,271 332,650,122
Exchange Gain / (Loss) Schedule 22
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)
Particulars This Year Previous Year
a. Revaluation 325,666,511 236,425,836
b. Trading (except Exchange Fees) 321,599,740 349,631,404
Total Gain/(Loss) 647,266,251 586,057,240
Personnel Expense Schedule 23
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)
Particulars This Year Previous Year
1. Salary 267,934,040 240,638,961
2. Allowances 341,239,394 303,291,293
3. Contribution to Provident Fund 26,756,084 23,998,482
4. Training Expenses 10,360,820 5,444,033
5. Uniform 12,248,880 11,004,000
6. Medical 1,789,542 1,569,645
7. Insurance 8,296,255 8,282,460
8. Pension and Gratuity Contribution 129,671,093 87,552,421
9. Others 134,059,878 93,525,026
a. Leave Expenses 85,130,736 51,646,092
b. Dashain Expenses 44,126,840 40,243,250
c. Other Expenses 4,802,302 1,635,684
Total 932,355,986 775,306,321
114 Nabil Bank Limited Annual Report 2016/17 115

Office Operating Expense Schedule 24

For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
(NPR)

Particulars This Year

1. House Rent 108,512,722

Previous Year

94,771,696
Provision for Possible Losses Schedule 25
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
2. Electricity & Water 24,057,922 17,439,254
3. Repair & Maintenance 5,190,852 5,824,216 (NPR)

a. Building 1,797,853 2,658,324 Particulars This Year Previous Year

b. Vehicles 3,392,999 3,165,892 1. Loans and Advances 18,459,878 5,076,142

c. Others - - 2. Investments 768,833 -
4. Insurance 10,704,329 11,477,455 3. Non-Banking Assets - -
5. Postage, Telex, Telephone & Fax 36,756,655 33,906,365 4. Other Assets - -
6. Office Equipment and Furniture Repair 15,035,972 12,968,009 Total 19,228,711 5,076,142
7. Travelling Allowances & Expenses 8,039,164 8,466,311
8. Printing & Stationery 41,126,762 31,763,287
9. Books & Periodicals 823,668 779,748
10. Advertisements 16,361,111 10,036,433
11. Legal Expenses
12. Donations
759,220
74,000
458,500
79,208
Non-Operating Income/(Loss) Schedule 26
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
13. Expenses relating to Board of Directors 6,573,798 4,929,482
a. Meeting Fees 3,240,000 2,097,000 (NPR)

b. Other Expenses 3,333,798 2,832,482 Particulars This Year Previous Year

14. Annual General Meeting Expenses 1,663,595 1,638,480 1. Gain/(Loss) on Disposal of Investments - -
15. Expenses relating to Audit 1,800,000 1,500,000 2. Gain/(Loss) on Disposal of Fixed Assets 57,543,245 (2,712,646)
a. Audit Fees 1,800,000 1,500,000 3. Dividend 91,238,151 61,968,612
b. Other Expenses - - 4. Subsidies Received from Nepal Rastra Bank - -
16. Commission on Remittances - - a. Compensation Agreement for Losses of Specified Branches - -
17. Depreciation of Fixed Assets 96,366,050 93,352,281 b. Interest Indemnity - -
18. Amortization of Pre-Operating Expenses - - c. Exchange Counter - -
19. Share Issue expenses - - 5. Others - -
20. Technical/Consultancy Services Fee 38,236,471 47,229,533 Total Non-Operating Income/(Loss) 148,781,396 59,255,966
21. Entertainment - -
22. Write Off Expenses - -
23. Security Expenses 61,756,083 55,574,378
24. Deposit Insurance Premium 30,144,943 39,543,252
25. Commission & Discount - - Provision for Possible Losses Write Back Schedule 27
26. Others 148,430,772 133,071,257 For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
a. Fuel Expenses 17,046,520 22,961,324 (NPR)
b. Tea/ Coffee/ Snacks 8,371,755 6,662,640
Particulars This Year Previous Year
c. Outsourced Services 60,980,098 46,795,052
1. Loans and Advances 28,719,569 40,437,236
d. Small Purchase 1,587,345 1,461,054
2. Non-Banking Assets - -
e. Customer Relations and Sponsorship 6,259,758 6,911,346
3. Investments - 6,746,038
f. Membership Fees 1,776,083 1,188,650
4. Other Assets 2,150,463 4,967,430
g. Janitorial 13,854,165 12,034,142
Total 30,870,032 52,150,704
h. Amortization of Software 5,152,201 6,776,691
i. Others 33,402,847 28,280,358
Total 652,414,089 604,809,144

116

Total

Total Loan
1. Retail Loans
Types of Loan
Nabil Bank Limited

2. Credit Card Loans

3. Bad Loan Written Off
4. Other Income/(Expense)
1. Recovery of Write off Loan

1,079,496
2. Voluntary Retirement Scheme Expenses

amount (RS.) Security & Amount

Written off Types of

632,217
Non Existent
Details of Loan Written-Off
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)
For the period 16 July 2016 to 15 July 2017 (1 Shrawan 2073 to 31 Ashadh 2074)

1,711,713
Not Applicable
Basis of
Security Valuation approved by
Particulars This Year

(3,175,049)
(1,711,713)
16,146,435

11,259,673
-
Income/(Expense) from Extra-Ordinary Activities

recovery of Loans

blacklisting borrowers with

facility call back notice, and
Regular follow ups, serving of

Credit Information Center Ltd.

(47,300,717)
(6,088,308)
(46,077,408)
-
4,864,999
Previous Year

loan Efforts made for Remarks

(NPR)
Schedule 28-A
(NPR)
Schedule 28

Statement of Loans and Advances extended to Directors/ Chief Executive/

Promoters/ Employees and Shareholders with more than 1% Shares Schedule 29
As at 15 July 2017

(NPR)

Name of Promoter/Director/ Outstanding up to Last Year Recovered in Current Year Additional Lending Outstanding as of 15 July 2017
Chief Executive officer Principal Interest Principal Interest in this year Principal Interest
A. Directors - - - - - - -
1. …………………………………. - - - - - - -
2. ……….……………………...…. - - - - - - -
3. …………………………………. - - - - - - -
B. Chief Executive Officer - - - - - - -
1. …………………………………. - - - - - - -
2. ……….……………………...…. - - - - - - -
3. …………………………………. - - - - - - -
C. Promoters - - - - - - -
1. …………………………………. - - - - - - -
2. ……….……………………...…. - - - - - - -
3. …………………………………. - - - - - - -
D. Employees (inclusive of Family Members) 818,506 6,100 818,506 16,579 - - -
1. Usha Khanal/Rajaram Khanal 818,506 6,100 818,506 16,579 - - -
- - -
- - -
E. Shareholders - - - - - - -
1. …………………………………. - - - - -
2. ……….……………………...…. - - - - - - -
3. …………………………………. - - - - - - -
Total 818,506 6,100 818,506 16,579 - - -

Note:
Presented in S.No. D above are loans extended to family members of employees. Loan given to employees against fixed deposits / government securities, credit facilities under
Employees By-Laws, and Education Loan for abroad studies (approval obtained from NRB) are not presented under Loans extended to Employees (inclusive of Family Members).

Annual Report 2016/17
117
118 Nabil Bank Limited Annual Report 2016/17 119

(NPR)
Schedule 30 (B)

Contd.
Exposure

-
-
-
-
-
-
-
-
-

-
-
-
-
-
-
652,639,737

55,178,706
479,701,997
2,055,844,540
-
-

2,973,467,152
As at 15 July 2017 As at 15 July 2016
Net Value Risk Weighted

-
-
-

64,207,429,820 54,188,946,987 54,188,946,987

Table of Capital Fund Schedule 30 (A1)
(NPR)

Particulars As at 15 July 2017 As at 15 July 2016

1.1 Risk Weighted Exposures

-
-
-
-
-

-
-
-
-
-
-

-
-
- 15,247,141,029
279,990,121
- 2,000,000,000
11,601,495

3,263,198,683

55,178,706
2,398,509,984
4,111,689,081

3,572,615,184 14,867,335,759
- 1,640,632,219
- 5,826,016,495

a. Credit Risk 105,621,541,358 91,993,791,222
b. Operation Risk 7,798,938,686 7,265,400,651
c. Market Risk 290,250,795 344,106,230

A. Balance Sheet Exposures a b c d=a-b-c e f=d*e

Total Risk Weighted Exposures Before Adjustment 113,710,730,839 99,603,298,103
Adjustment under Pillar - II

-
-
-
-
-
-

-
-
-
-
-
-

-
-
694,628,256

278,035,180
1,231,743,859
Weight Exposure
Net Value Risk Risk Weighted
ADD: 3% 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 3,411,321,925 2,988,098,943
ADD:.. % of the total RWE due to non compliance to Disclosure Requirement
Add: 3% Capital Charge for Operational Risk 1,705,849,454 1,448,246,053
Total Risk Weighted Exposures 118,827,902,218 104,039,643,099

0%
0%
0%
0%
0%
0%
0%
0%
20%
50%
100%
150%

0%
100%
20%
50%
100%
150%
20%

100%
20%
50%
100%
150%

20%
100%
1.2 Capital As at 15 July 2017 As at 15 July 2016
Core Capital (Tier 1) 13,321,805,813 10,939,186,772
a. Paid up Equity Share Capital 6,185,507,000 4,756,569,600

-
-
-
-
-

-
-
-
-
-
-

-
-
- 1,637,483,131
- 10,270,609,753

- 11,540,731,009
279,990,121

302,609,601

- 3,473,141,279

- 1,390,175,900
- 2,463,487,718

- 17,863,075,921
64,311,047,058 41,847,691 61,769,548 64,207,429,820
b. Irredeemable Non-cumulative preference shares
c. Share Premium 74,000 74,000
d. Proposed Bonus Equity Shares 1,855,652,100 1,426,970,880
e. Statutory General Reserves 4,790,500,000 4,067,500,000
f. Retained Earnings 333,768,012 618,353,137

-
-
-
-
-
-
-
-

-
-
-
-
-
-

-
-
CRM
Specific Eligible
g. Un-audited current year cumulative profit
h. Capital Redemption Reserves

Credit Risk
i. Capital Adjustment Reserves

-
-
-
-
-
-
-

-
-
-
-
-
-
-

-
-
-
-
-

-
-
-
-
-
-
j. Dividend Equalization Reserves - -

Provision
k. Debenture Redemption Reserves 288,000,000 228,000,000
L. Other Free Reserves 81,095,205 71,577,518
m. Less: Goodwill

-
-
-
-
-

-
-
-
-
-
-

-
-
n. Less: Fictitious Assets (61,414,455)

302,609,601

3,473,141,279

1,390,175,900
2,463,487,718

17,863,075,921
1,637,483,131
10,270,609,753

11,540,731,009
279,990,121


Book Value
o. Less: Deferred Tax Assets (73,376,049) (63,858,363)
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

Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks

t. Less: Reciprocal crossholdings

Claims on Foreign Government and Central Bank (ECA Rating: 4-6)

Claims on domestic banks that meet capital adequacy requirements

Claims on foreign bank incorporated in SAARC region operating with

Claims on Foreign Government and Central Bank (ECA Rating: 0-1)

a buffer of 1% above their respective regulatory capital requirement

Claims on Foreign Government and Central Bank (ECA Rating: 2)
Claims on Foreign Government and Central Bank (ECA Rating: 3)

Claims on Foreign Government and Central Bank (ECA Rating: 7)

u. Less: Other Deductions
Adjustment Under Pillar - II

Claims on domestic banks that do not meet capital adequacy

Less: Shortfall In Provision
Less: Loans & Facilities extended to Related Parties & Restricted Lending - (88,000,000)

Claims on Other Multilateral Development Banks

Supplementary Capital (Tier 2) 1,430,833,006 1,264,427,725

Investment in Nepalese Government Securities

a. Cumulative and/or Redeemable Preference Share

Investment in Nepal Rastra Bank Securities

Claims on Public Sector Entity (ECA 3-6)

Claims on foreign bank (ECA Rating 3-6)

Claims on Public Sector Entity (ECA 0-1)

Claims on foreign bank (ECA Rating 0-1)

b. Subordinated Term Debt (net of redemption reserve) 12,000,000 72,000,000

Claims on Public Sector Entity (ECA 7)

Claims on foreign bank (ECA Rating 7)

Claims on Public Sector Entity (ECA 2)

Claims on foreign bank (ECA Rating 2)

(MDBs) recognized by the Framework
c. Hybrid Capital Instruments

All Claims on Government of Nepal

Balance With Nepal Rastra Bank

All claims on Nepal Rastra Bank

Claims on Domestic Corporates

d. General loan loss provision 907,688,194 768,413,661
e. Exchange Equalization Reserves 363,600,000 282,100,000
f. Investments Adjustment Reserves 131,170,975 126,040,227
g. Assets Revaluation Reserves

As at 15 July 2017
h. Other Reserves 16,373,837 15,873,837

Cash Balance

requirements
Total Capital Fund (Tier 1 and Tier 2) 14,752,638,819 12,203,614,497

Assets
1.3 Capital Adequacy Ratio As at 15 July 2017 As at 15 July 2016

Gold
Tier 1 Capital to Total Risk Weighted Exposures 11.21% 10.51%

Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures 12.42% 11.73%
 120

Contd.

Credit Risk Schedule 30 (B)

Nabil Bank Limited

As at 15 July 2017

(NPR)

As at 15 July 2017 As at 15 July 2016

Assets Book Value Specific Eligible Net Value Risk Risk Weighted Net Value Risk Weighted
Provision CRM Weight Exposure Exposure
A. Balance Sheet Exposures a b c d=a-b-c e f=d*e
Claims on Foreign Corporates (ECA 0-1) - - - - 20% - - -
Claims on Foreign Corporates (ECA 2) - - - - 50% - - -
Claims on Foreign Corporates (ECA 3-6) - - - - 100% - - -
Claims on Foreign Corporates (ECA 7) - - - - 150% - - -
Regulatory Retail Portfolio (Not Overdue) 9,405,539,687 1,889,348 338,661,406 9,064,988,933 75% 6,798,741,700 7,298,896,284 5,474,172,213
Regulatory Retail Portfolio Except for Granularity - - - - 100% - - -
Claims secured by residential properties 8,344,128,929 2,191,893 - 8,341,937,036 60% 5,005,162,222 7,925,693,344 4,755,416,006
Claims not fully secured by residential properties - - - - 150% - - -
Claims secured by residential properties (Overdue) 118,462,334 21,135,705 - 97,326,629 100% 97,326,629 102,956,980 102,956,980
Claims secured by Commercial real estate 237,046,849 - - 237,046,849 100% 237,046,849 57,394,741 57,394,741
Past due claims (except for claim secured by residential properties) 902,578,104 632,939,933 - 269,638,171 150% 404,457,256 497,729,080 746,593,620
High Risk claims 4,536,578,469 6,432,199 46,953,072 4,483,193,197 150% 6,724,789,796 2,922,294,524 4,383,441,786
Investments in equity and other capital instruments of
institutions listed in the stock exchange 563,734,854 - - 563,734,854 100% 563,734,854 573,127,853 573,127,853
Investments in equity and other capital instruments of
institutions not listed in the stock exchange 46,851,982 1,010,186 - 45,841,795 150% 68,762,693 46,639,445 69,959,167
Staff loan secured by residential property 2,249,090,842 - - 2,249,090,842 60% 1,349,454,505 1,679,348,677 1,007,609,206
Interest Receivable/claim on government securities 80,961,570 - - 80,961,570 0% - 61,147,914 -
Cash in transit and other cash items in the process of collection - - - - 20% - - -
Other Assets 3,344,774,491 1,483,141,722 - 1,861,632,770 100% 1,861,632,770 2,076,097,073 2,076,097,073
TOTAL 143,362,099,601 2,190,588,678 447,384,026 140,724,126,898 93,095,561,573 127,131,566,470 79,652,547,762
Contd.

Contd.

Credit Risk Schedule 30 (B)

As at 15 July 2017

(NPR)

As at 15 July 2017 As at 15 July 2016

Assets Book Value Specific Eligible Net Value Risk Risk Weighted Net Value Risk Weighted
Provision CRM Weight Exposure Exposure
B. Off Balance Sheet Exposures Gross Book a b c d=a-b-c e f=d*e d=a-b-c f=d*e
Revocable Commitments 12,590,324,736.10 - - 12,590,324,736 0% - - -
Bills Under Collection 651,032,662 - - 651,032,662 0% - 380,059,043 -
Forward Exchange Contract 6,050,511,805 - - 6,050,511,805 10% 605,051,181 10,408,658,879 1,040,865,888
LC Commitments With Original Maturity Up to 6 months
domestic counterparty 5,867,273,457 - 309,020,009 5,558,253,448 20% 1,111,650,690 5,343,643,336 1,068,728,667
foreign counterparty (ECA Rating: 0-1) - - - - 20% - - -
foreign counterparty (ECA Rating: 2) - - - - 50% - - -
foreign counterparty (ECA Rating: 3-6) - - - - 100% - - -
foreign counterparty (ECA Rating 7 ) - - - - 150% - - -
LC Commitments With Original Maturity Over 6 months
domestic counterparty 2,749,346,688 - 591,270,398 2,158,076,290 50% 1,079,038,145 2,875,177,916 1,437,588,958
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 6,129,280,154 - 616,209,720 5,513,070,434 50% 2,756,535,217 5,251,856,730 2,625,928,365
foreign counterparty (ECA Rating: 0-1) 954,683,453 - 763,746,763 190,936,691 20% 38,187,338 320,300,436 64,060,087
foreign counterparty (ECA Rating: 2) 1,309,296,230 - 726,964,977 582,331,253 50% 291,165,627 255,257,206 127,628,603
foreign counterparty (ECA Rating: 3-6) 635,290,439 - - 635,290,439 100% 635,290,439 703,708,650 703,708,650
foreign counterparty (ECA Rating: 7) - - - - 150% - - -
Underwriting commitments - - - - 50% - - -

Contd.
Annual Report 2016/17
121
 122

Contd.

Schedule 30 (B)
Nabil Bank Limited

Credit Risk
As at 15 July 2017

(NPR)

As at 15 July 2017 As at 15 July 2016

Assets Book Value Specific Eligible Net Value Risk Risk Weighted Net Value Risk Weighted
Provision CRM Weight Exposure Exposure
B. Off Balance Sheet Exposures Gross Book a b c d=a-b-c e f=d*e d=a-b-c f=d*e
Lending of Bank’s Securities or Posting of Securities as collateral - - - - 100% - - -
Repurchase Agreements - - - - 100% - - -
Advance Payment Guarantee 2,928,451,241 - 986,938,228 1,941,513,014 100% 1,941,513,014 1,301,315,472 1,301,315,472
Financial Guarantee - - - - 100% - - -
Acceptances and Endorsements 1,680,218,408 - - 1,680,218,408 100% 1,680,218,408 1,644,658,096 1,644,658,096
Unpaid portion of Partly paid shares and Securities - - - - 100% - - -
Irrevocable Credit commitments (short term) 9,254,667,191 - 40,471,487 9,214,195,704 20% 1,842,839,141 11,191,717,824 2,238,343,565
Irrevocable Credit commitments (long term) - - - 50% - -
Other Contingent Liabilities 125,422,008 - - 125,422,008 100% 125,422,008 55,644,110 55,644,110
Guarantee claimed but not accepted / honoured 209,534,289 - - 209,534,289 200% 419,068,579 16,386,500 32,773,000
TOTAL 51,135,332,761 - 4,034,621,581 47,100,711,181 12,525,979,785 39,748,384,196 12,341,243,460
Total RWE for credit Risk (A) +(B) 194,497,432,362 2,190,588,678 4,482,005,606 187,824,838,078 105,621,541,358 166,879,950,666 91,993,791,222
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) 194,497,432,362 2,190,588,678 4,482,005,606 187,824,838,078 105,621,541,358 166,879,950,666 91,993,791,222

Credit Risk Mitigation Schedule 30 (C)

As at 15 July 2017
(NPR)

Credit exposures Deposits Deposits Gold Govt.& G’tee of Sec/G’tee of G’tee of G’tee of Sec/G’tee of Total
with Bank with other NRB Govt. of Other domestic MDBs Foreign
banks/FIs Securities Nepal Sovereigns banks Banks

(a) (b) (c) (d) (e) (f) (g) (h) (I)

Balance Sheet Exposures

Cash Balance -
Balance With Nepal Rastra Bank -
Gold -
Investment in Nepalese Government Securities -
All Claims on Government of Nepal -
Investment in Nepal Rastra Bank Securities -
All claims on Nepal Rastra Bank -
Claims on Foreign government and Central Bank (ECA:0-1) -
Claims on Foreign government and Central Bank (ECA: 2) -
Claims on Foreign government and Central Bank (ECA: 3) -
Claims on Foreign government and Central Bank (ECA: 4-6) -
Claims on Foreign government and Central Bank (ECA: 7) -
Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks
(MDBs) recognized by the Framework -
Claims on Other Multilateral Development Banks -
Claims on Public Sector Entity (ECA: 0-1) -
Claims on Public Sector Entity (ECA: 2) -
Claims on Public Sector Entity (ECA: 3-6) -
Claims on Public Sector Entity (ECA: 7) -

Contd.
Annual Report 2016/17
123
 124

Contd.

Credit Risk Mitigation Schedule 30 (C)

Nabil Bank Limited

As at 15 July 2017
(NPR)

Credit exposures Deposits Deposits Gold Govt.& G’tee of Sec/G’tee of G’tee of G’tee of Sec/G’tee of Total
with Bank with other NRB Govt. of Other domestic MDBs Foreign
banks/FIs Securities Nepal Sovereigns banks Banks

(a) (b) (c) (d) (e) (f) (g) (h) (I)

Claims on domestic banks that meet capital adequacy requirements -
Claims on domestic banks that do not meet capital
adequacy requirements -
Claims on foreign bank (ECA Rating: 0-1) -
Claims on foreign bank (ECA Rating: 2) -
Claims on foreign bank (ECA Rating: 3-6) -
Claims on foreign bank (ECA Rating: 7) -
Claims on foreign bank incorporated in SAARC region operating with
a buffer of 1% above their respective regulatory capital requirement -
Claims on Domestic Corporates / Individuals 57,505,821 4,263,726 61,769,548
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) 296,360,641 42,300,765 338,661,406
Regulatory Retail Portfolio (Overdue)
Regulatory Retail Portfolio Except for Granularity -
Claims secured by residential properties -
Claims not fully secured by residential properties -
Claims secured by residential properties (Overdue) -

Contd.

Credit Risk Mitigation Schedule 30 (C)

As at 15 July 2017
(NPR)

Credit exposures Deposits Deposits Gold Govt.& G’tee of Sec/G’tee of G’tee of G’tee of Sec/G’tee of Total
with Bank with other NRB Govt. of Other domestic MDBs Foreign
banks/FIs Securities Nepal Sovereigns banks Banks

(a) (b) (c) (d) (e) (f) (g) (h) (I)

Claims secured by Commercial real estate -

Past due claims (except for claim secured
by residential properties) - -
High Risk claims 46,953,072 - 46,953,072
Investments in equity and other capital instruments
of institutions listed in the stock exchange -
Investments in equity and other capital instruments
of institutions not listed in the stock exchange -
Staff loan secured by residential property -
Interest Receivable/claim on government securities -
Cash in transit and other cash items in the process of collection -
Other Assets -
Off Balance Sheet Exposures

Revocable Commitments -
Bills Under Collection -
Forward Exchange Contract Liabilities -
LC Commitments With Original Maturity Up to 6 months
domestic counterparty 309,020,009 309,020,009
foreign counterparty (ECA Rating: 0-1) -
foreign counerparty (ECA Rating: 2) -
foreign counterparty (ECA Rating: 3-6) -
foreign counterparty (ECA Rating: 7) -
Annual Report 2016/17
125
 126

Contd.

Credit Risk Mitigation Schedule 30 (C)

As at 15 July 2017
Nabil Bank Limited

(NPR)

Credit exposures Deposits Deposits Gold Govt.& G’tee of Sec/G’tee of G’tee of G’tee of Sec/G’tee of Total
with Bank with other NRB Govt. of Other domestic MDBs Foreign
banks/FIs Securities Nepal Sovereigns banks Banks

(a) (b) (c) (d) (e) (f) (g) (h) (I)

LC Commitments With Original Maturity Over 6 months

domestic counterparty 591,270,398 591,270,398
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 616,209,720 616,209,720
foreign counterparty (ECA Rating: 0-1) 763,746,763 763,746,763
foreign counteparty (ECA Rating: 2) 726,964,977 726,964,977
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 15,310,768 971,627,460 986,938,228
Financial Guarantee -
Acceptances and Endorsements -
Unpaid portion of Partly paid shares and Securities -
Irrevocable Credit commitments (short term) 29,018,687 11,452,800 40,471,487
Irrevocable Credit commitments (long term) -
Other Contingent Liabilities 4,482,005,606


Alfa (b)
Particulars
As at 15 July 2017

Gross income (a)

Net Interest Income

Other Operating Income

Year 3 = FY 2072/073
Year 2 = FY 2071/072
Note: Year 1 = FY 2070/071
Exchange Fluctuation Income
Commission and Discount Income

Additional Interest Suspense during the period

Fixed Percentage of Gross Income [c=(a×b)]

Operations Risk

Year 1

15%
130,814,746
529,995,584
267,837,635
459,164,723

762,633,852
Year 2

Equivalent Risk Weight Exposure (g)

Risk Weight (reciprocal of capital requirement of 10%) in times
Capital Requirement for operational risk (5%)
Total Credit and Investment (Net of Specific Provision)
Risk Weight (reciprocal of capital requirement of 10%) in times (e)
15%

Equivalent Risk Weight Exposure (h=f+g)

Equivalent Risk Weight Exposure [f=(d×e)]
Capital Requirement for operational risk (d) (average of c)
67,988,413
512,477,284
240,460,391
480,279,523
3,696,412,993 3,526,281,233

724,123,027
5,084,225,681 4,827,486,844
Year 3

If Gross Income for all the last three years is negative

15%
(43,474,357)

Adjustment Under Pillar - II

10
10
586,057,240
332,650,122
484,960,909
4,325,970,932

7,798,938,686
7,798,938,686
779,893,869
852,924,727
5,686,164,846

-
-
-
Annual Report 2016/17

7,265,400,651
-
10
-
-
7,265,400,651
10
726,540,065
last Year
(NPR)
Schedule 30(D)
127
128 Nabil Bank Limited
Market Risk Schedule 30(e)
As at 15 July 2017
(NPR)
CURRENCY This Year Previous Year
Open Position Open Position Relevant Open Relevant Open
(FCY) (NPR) Position Position
1. INR 315,388,479 504,858,108 504,858,108 648,341,468
2. USD 371,640 38,334,630 38,334,630 16,044,498
3. GBP 58,214 7,783,261 7,783,261 894,885
4. EUR (21,882) (2,575,918) 2,575,918 1,132,333
5. THB 16,210 49,441 49,441 77,540
6. CHF 21,108 2,248,005 2,248,005 1,087,938
7. AUD 22,241 1,779,725 1,779,725 1,427,580
8. CAD (75,749) (6,138,734) 6,138,734 6,251,598
9. SGD 10,661 800,434 800,434 3,466,106
10. JPY 4,464,561 4,066,769 4,066,769 561,967
11. HKD 12,220 161,426 161,426 141,691
12. DKK 409,935 6,489,267 6,489,267 3,784,004
13. SEK 1,080 13,349 13,349 -
14. SAR 25,803 709,583 709,583 2,100,709
15. QAR 21,507 601,121 601,121 869,799
16. AED 22,585 634,413 634,413 572,506
17. MYR 24,570 590,663 590,663 838,223
18. KRW 2,906,000 264,446 264,446 264,312
19. CNY 109,366 1,663,462 1,663,462 261,434
20. KWD 2,166 730,440 730,440 93,591
21. BHD 31 8,397 8,397 284
Total Open Position (a) 563,072,286 580,501,590 688,212,465
Fixed Percentage (b) 5% 5%
Capital Charge for Market Risk [c=(a×b)] 29,025,080 34,410,623
Risk Weight
(reciprocal of capital requirement of 10%) in times (d) 10 10
Equivalent Risk Weight Exposure [e=(c×d)] 290,250,795 344,106,230
Annual Report 2016/17 129
Principal Indicators Schedule 31
(NPR)
Particulars Indicators financial year
2012/13 2013/14 2014/15 2015/16 2016/17
1. Net Profit/Gross Income % 32.66 33.65 29.93 37.30 37.35
2. Earnings Per Share NPR 91.05 83.68 57.24 59.27 58.41
3. Market Value per Share NPR 1,815 2,535 1,910 2,344 1,523
4. Price Earning Ratio Times 19.08 30.29 33.37 39.55 26.07
5. Dividend (including bonus) on share capital % 65.00 65.00 36.84 45.00 48.00
6. Cash Dividend on Share Capital % 40.00 45.00 6.84 15.00 18.00
7. Interest Income/Loans & Advances % 11.64 10.16 8.50 8.08 8.27
8. Employee Expense/Total Operating Expense % 19.59 20.99 20.70 24.15 22.25
9. Interest Expense on Total Deposit and Borrowings % 3.67 2.69 2.56 1.65 2.15
10. Exchange Gain/Total Income % 7.20 7.69 7.33 7.75 6.69
11. Staff Bonus/ Total Employee Expenses % 48.90 50.67 40.10 51.69 55.14
12. Net Profit/Loans & Advances % 5.04 4.55 3.31 4.13 4.18
13. Net Profit/ Total Assets % 3.25 2.89 2.06 2.32 2.70
14. Total Credit/Deposit % 74.90 74.55 64.43 70.49 65.38
15. Total Operating Expenses/Total Assets % 4.84 3.87 3.53 2.64 3.13
16. Adequacy of Capital Fund on Risk Weighted Assets
a. Core Capital % 9.98 9.74 10.18 10.51 11.21
b. Supplementary Capital % 1.61 1.50 1.39 1.22 1.20
c. Total Capital Fund % 11.59 11.24 11.57 11.73 12.42
17. Liquidity (CRR) % 9.32 11.32 14.15 6.77 10.02
18. Non Performing Loans/Total Loans % 2.13 2.23 1.82 1.14 0.79
19. Base Rate % 7.04 5.67 5.78 4.17 6.61
20. Weighted Average Interest Rate Spread % 5.48 5.03 3.97 3.74 4.23
21. Book Net Worth per Share NPR 275 251 259 244 228
22. Total Shares Outstanding Number 24,368,414 30,471,684 36,576,540 47,565,696 61,855,070
23. Total Permanent Employees Number 742 724 706 792 848
24. Return on Equity % 32.78 27.97 22.73 25.61 26.65
25. Return on Assets % 3.25 2.89 2.06 2.32 2.70
26. Dividend Payout Ratio % 68.32 77.68 64.36 75.93 82.17
27. Earnings Yield % 5.24 3.30 3.00 2.53 3.84
28. Dividend Yield % 3.58 2.56 1.93 1.92 3.15
29. Cost to Income Ratio % 48.60 45.06 51.35 42.46 43.32
30. Total Assets to Shareholders’ Fund times 9.56 9.68 11.91 10.34 9.23
31. Shareholders’ Fund to Liability including
Contingent Liability % 8.33 8.13 6.64 7.73 9.25
32. Number of Offices Number 51 51 55 55 55
33. Number of ATMs Number 81 85 89 90 100
130 Nabil Bank Limited
Note:
1. Gross Income in S.N. 1 comprises of
Gross Interest Income, Commission and
Discount, Other Operating Income and
Exchange Income. financial year. The average balances of
2. EPS computation policy is disclosed
in Schedule 32 “Principal Accounting
Policies”. sheet date. The CRR (as per NRB
3. Market Value per Share in S.N. 3
is the closing price of ordinary shares
quoted in Nepal Stock Exchange on
Thursday, 13th July 2017, the last
trading day in the reporting period. including Proposed Dividend of previous
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 NPR
86,530,905,453.86. by averaging outstanding balance of
5. Total Operating Expense in S.N. 8
comprises Gross Interest Expense, Staff
Expense and Other Operating Expense. within Nepal, through its network of
6. The Deposits and Borrowings in S.N.9
are the average deposits and borrowings
(including debentures) for the entire
deposits and borrowing during the year
was NPR 120,003,058,343.47 and
NPR 1,190,501,670.03 respectively. and deposits outstanding on the balance
7. Total Income in S.N. 10 is same as
Gross Income in S.N. 1 comprising of
Gross Interest Income, Commission and
Discount, Other Operating Income and
Exchange Income. computed by taking average Equity
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. accordingly wherever necessary.
9. Total Assets in S.N. 13 and S.N. 15
are average balance of assets computed
previous financial year and current
financial year. 14. Dividend Yield represent dividend per
Principal
10. Credit and Deposit in S.N. 14 is the
outstanding balance as of balance sheet
Accounting Policies
date.
11. CRR in the S.N. 17 is computed on
1. Reporting Entity
1.1. Corporate information
the basis of cash and cash equivalents
Nabil Bank Limited (“the Bank”) is a
public limited company listed on the
Nepal Stock Exchange, incorporated on
Directives) for the last week of the current
May 11, 1984 under the Companies Act
financial year is 7.44%.
2006 A.D. of Nepal, and is domiciled
in Nepal. It is a class “A” licensed
12. Return on Equity in S.N. 25 is
commercial bank regulated under the
Banks and Financial Institutions Act
2017 A.D.. The Bank commenced its
year till the date of AGM and average
commercial banking operations on July
after-tax net profit of current year. Figures
12, 1984. The Bank has its registered
of previous years have been restated
office at ‘Nabil Center’, Tindhara,
Durbarmarg, Kathmandu – 01, Nepal
and its branch offices are located across
13. Earnings Yield represent earning
the Nepal.
(attributable to equityholders) per market
value of share.
1.2. Consolidated Financial
Statements
The Consolidated Financial Statements as
market value of share. offices, ATMs and agents located
of July 15, 2017, and for the reporting
period then ended, comprise the Bank as
Parent Company and Nabil Investment
Banking Ltd. as its Subsidiary Company
(collectively referred to as “the Group”).
1.3. Subsidiary Company
At the reporting date the Bank
held 52.00% controlling interest in
Nabil Investment Banking Ltd. (“the
Subsidiary”). The Subsidiary is a public
limited company that was incorporated
on February 07, 2010 under the
Company Act 2006 A.D. of Nepal. The
Subsidiary is a Merchant Banker licensed
under the Securities Businessperson
(Merchant Banker) Regulations, 2008
A.D. The Subsidiary commenced its
commercial operations on May 26, 2010
and operates from its registered office
at Central Plaza, Narayanchaur, Naxal,
Kathmandu, Nepal. The Subsidiary is not
listed.
1.4. Principal Activities of the Bank
The Bank provides full-fledged
commercial banking products including
financial intermediation, trade finance
services, remittance, treasury, cards and
e-banking, agency services and other
ancillary banking services to a diverse
clientele encompassing individuals,
corporates, multinationals, state owned
enterprises, public sector companies,
developmental aid agencies, embassies,
NGOs and INGOs.
The Bank delivers its products and
services through its network of branch
correspondent banking relationship
having global presence, and through
internet and mobile banking platforms.
1.5. Principal Activities
of the Subsidiary
The Subsidiary operates merchant
banking and investment banking
services, which among others, include
securities issue management, portfolio
management, underwriting of securities,
securities trustee, registrar to shares,
fund management and depository for
mutual fund, corporate advisory services,
and depository participant service under
Central Depository Service (CDS).
Annual Report 2016/17 131
Schedule 32
1.6.Reporting Period
The Bank and the Subsidiary report their
respective annual financial statements
for the Nepali Financial Year which, for
the current reported period, ran through
1st of Shrawan 2073 to 31st of Ashad
2074. This period corresponds to English
Calendar period beginning on July 16,
2016 and ending on July 15, 2017.
 
2. Basis of Accounting
2.1. Statement of Compliance
Nepal Rastra Bank (NRB), the banking
regulator of the country, has issued a
notice on “NFRS Migration Guidelines to
Banks & Financial Institutions” stating
that licensed financial institutions comply
with Nepal Financial Reporting Standards
(NFRS) as issued by the Institute of
Chartered Accountants of Nepal (ICAN),
subject to NRB regulations. The Bank
and the Group have not prepared NFRS
based financial statements.
Financial Statements of the Bank
have been prepared and presented
in conformity with the regulatory
requirements per directives, circulars
and guidelines issued by NRB and
in compliance with the statutory
requirements of Bank and Financial
Institutions Act and Companies Act.
The presentation formats are the ones
prescribed in the Unified Directive
No.4/073 issued by NRB.
In preparing the financial statements the
bank has applied significant accounting
132 Nabil Bank Limited
policies in accordance with Generally
Accepted Accounting Principles (GAAP),
to the extent that they are in conformity
with afore-stated regulatory requirements.
The accounting policy and presentation
formats adopted by the Bank and
the Subsidiary are consistent, except
otherwise required under respective
regulatory frameworks, in which case
appropriate disclosures have been
presented in relevant sections within the
financial statements.
2.2. Responsibility for Financial
Statements
The Board of Directors of the Bank is
responsible for the preparation and
presentation of the Financial Statements
as per the provisions of the Companies
Act, 2006 A.D.
The Board of Directors acknowledges
their responsibility for Financial
Statements as set out in the ‘Statement
of Director’s Responsibility’ on page …..
and in the certification on the Financial
Statements on pages ….. of the Annual
Report.
Financial Statements of the Bank, and
that of the Group, comprising of the
following components, cover the annual
reporting period between July 16, 2016
and July 15, 2017 (the reporting period)
and the status is reported as at the year-
end date of July 15, 2017 (the reporting
date).
Ø Balance Sheet (including consolidated
balance sheet) that disclose the
information on financial position of the
Bank and the Group at the reporting date;
Ø Profit and Loss Account (including
consolidated profit and loss account)
that disclose the information on financial
performance of the Bank and the Group
for the reporting period;
Ø Cash Flow Statement (including
consolidated cash flow statement) that
disclose the information on the ability of
the Bank and the Group to generate cash
and cash equivalents;
Ø Statement of Changes in Equity
(including consolidated statement of
changes in equity) that disclose the
information on the movement in equity of
the Bank and the Group; and
Ø Notes to the Financial Statements
comprising a summary of principal
accounting policies of the Bank and the
Group and other relevant explanatory
notes that are of significant importance
to the readers of the financial statements
that is required for informed decision
making.
2.3. Approval of Financial
Statements by the Board of Directors
The financial statements of the Bank, and
the consolidated financial statements of
the Group, for the year ended July 15,
2017 have been adopted and authorized
for issue by the Board of Directors in its
meeting dated August 25, 2017 and
have been recommended for approval at
the shareholders Annual General Meeting.
2.4. Basis of Measurement
Financial statements have been prepared
under the historical cost convention
following the accrual basis of accounting,
except for interest income on loans and
advances which is accounted for on cash
Annual Report 2016/17 133
3. Basis of Ø Power over the Subsidiary exists from Ø The Group discloses all residual
realization basis. Other exceptions to this,
Consolidation the voting rights granted by the equity interest in the form of Share Capital
if any, are specifically disclosed under
The consolidated financial statements share. The Bank holds 52.00% of and Reserves Surplus on the face of
respective headings within the financial
for the Group have been prepared controlling interest in the Subsidiary. balance sheet except proposed cash
statements.
in accordance with Nepal Financial dividend, which is separately disclosed as
Reporting Standards – NFRS 10 on Ø The Subsidiary’s capital composes Proposed Dividend on the face as per the
2.5. Going Concern Basis of only of equity instruments and the Bank’s presentation format prescribed by NRB,
“Consolidated Financial Statements”.
Accounting returns from the involvement in equity and is a deviation from GAAP. Proposed
The Bank’s management has made an
In doing so, financial statements of instruments have the potential to vary cash dividend continues to remain as a
assessment of its ability to continue as a
the Bank and that of the Subsidiary with the performance of the Subsidiary. part of equity until the date of approval
going concern and is satisfied that it has
are consolidated line by line by adding The Bank has thus exposure, or rights, to at AGM.
the resources to continue in business for
together like items of assets, liabilities, variable returns from its involvement with
the foreseeable future. Furthermore, the
equity, income and expenses. All intra- the Subsidiary. Ø As per regulatory requirements all
management is not aware of any material
group transactions and outstanding licensed institutions to transfer minimum
uncertainties that may cast significant
balances, income and expenses and any Ø The Bank has nominated two of its 20% of net profit after tax to the General
doubt upon the Bank’s ability to continue
representatives on the Board of the Reserve until it becomes double of
unrealised gains / losses arising from such
as a going concern, such as restrictions or
Subsidiary and has also deputed its staff paid up capital. The Bank consistently
intra-group transactions and balances are
plans to curtail operations. Therefore, the
completely eliminated in the consolidated as CEO of the Subsidiary. The Bank thus transfers the fund from the profit in the
financial statements of the Bank continue
statements. has the ability to exercise its power over General Reserve to comply with this
to be prepared on the going concern basis.
the Subsidiary to affect the amount of the requirement. There is no such statutory
The Bank consolidates the financial Bank’s return. requirement for the Subsidiary.
2.6. Functional and Presentation
statements of the Subsidiary only when
Currency The financial statements of the Subsidiary Ø As per regulatory requirements all
it controls the Subsidiary. An investor
Assets and liabilities reported in
controls investee when it is exposed, or are included in the consolidated financial licensed institutions to transfer minimum
consolidated financial statements of the
has rights, to variable returns from its statements from the date that control 25% of the total Revaluation Gain (except
Group and and of the Bank are presented
involvement with the investee and has effectively commences until the date that gain from revaluation of Indian Currency)
in functional currency i.e. Nepalese
the ability to affect those returns through the control effectively ceases. in the Exchange Fluctuation Reserve. The
Rupees (NPR).
its power over the investee. Bank consistently maintains the Reserve
4. Significant by transferring the fund from the profit
2.7. Use of Judgements and Accounting Policies to comply with this requirement. There
Estimates The principal accounting policies applied is no such statutory requirement for the
Para 7 of NFRS 10 outlines three
Preparation of financial statements
conditions and all are to be fulfilled in by the Group and the Bank in the Subsidiary.
requires the management to make critical
order to establish control: preparation of these financial statements
judgments, estimates and assumptions
Ø power over the investee; are presented below. These policies have Ø As per regulatory requirements
that could potentially have a material
been consistently applied to all the years all licensed institutions to maintain
impact on the reported financial figures.
Ø exposure, or rights, to variable returns presented unless stated otherwise. Debenture Redemption Reserve in respect
These affect the application of accounting
from its involvement with the investee; and of borrowing raised through debenture
policies and the reported amounts of
4.1. Equity issuance. As per approval obtained from
assets, liabilities, income and expenses.
Ø the ability to use its power over the Equity is the residual interest of the NRB, the Bank has been appropriating
equity holders in the assets after 20% of the carrying value of debenture to
investee to affect the amount of the
Estimates and underlying assumptions
investor’s returns. deducting all its liabilities. It comprise this reserve fund, starting from sixth year
are reviewed on an ongoing basis to
of all funds contributed by equity of debenture issuance. The Subsidiary
ensure that they continue to be relevant
In the case of the Bank and the holders, funds held in reserves through has not raised any borrowing through
and reasonable. Revisions to accounting
Subsidiary’s investor-investee appropriation of profit, and accumulated debenture issuance.
estimates are recognized prospectively.
relationship: profit/(loss).
134 Nabil Bank Limited
Ø The Group maintains Investment
Adjustment Reserve for Available for Sale
Investment which is not available for
distribution to its equity holders.
Ø The Bank has constituted a Contingent
Reserve in line with “Scheme for Payment
of Staff Hospitalization Charges” that is
primarily intended for reimbursement
of staff’s medical treatment expenses
for cases of severe ailments that are
not adequately covered under medical
insurance policy. Annually, the Bank
appropriates NPR 1 Million from
accumulated profit/(loss) into this reserve
fund. Amounts paid to staff from this fund
are re-classified into accumulated profit/
(loss) and is recognized as ‘Staff Expense’
in the Profit and Loss Account. No such
reserve is maintained by the Subsidiary.
Ø As per regulatory requirement, the
Bank has created a Special Reserve Fund
for parking the capitalized portion of
interest income on borrowing accounts
where credit facility was rescheduled
or restructured as allowed by NRB,
following the after effects of the great
earthquake that struck the nation in
April 2015. The capitalized interest
income is appropriated into the Special
Reserve Fund and can be reclassified to
Accumulated Profit / (Loss) Account upon
full and final repayment of the credit.
4.2. 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 NRB and
financial institutions, investments, loans
and advances, fixed assets, non-banking
assets and the assets aggregated under
other assets.
4.2.1.Loans and Advances including
Bills Purchased
Ø 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, overdrafts and loans to
deprived sectors.
Ø Loans and advances are recognised
when the loans are actually disbursed
and are derecognized at the time of their
settlement.
Ø 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.
Ø All Loans and Advances including bills
purchased are presented at net of loan
loss provisions.
 
4.2.2. Investment
Ø 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.
Ø 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 three categories:
a. Held to Maturity (HTM)
Investments
These investments are primarily intended
to be held until the maturity and are
stated at cost and carried at these values
in the Balance Sheet until maturity.
Any impairment loss arising in such
investments are provisioned and charged
to the Profit and Loss Account. Premiums
paid/ discount received while acquiring
HTM Investments is recognized as a
part of the initial cost and subsequently
adjusted with the interest income on
effective interest basis until the maturity.
b. Held for Trading (HFT)
Investments
These are marketable investments
and held with the primary intention of
resale over a short period of time. These
investments are initially measured at cost
and subsequently recognized at market
value. Gains or losses arising from trading
/ revaluation are recognized in Profit and
Loss Account.
c. Available for Sale (AFS)
Investments
These are the investments other than
those classified as Held to Maturity and
Held for Trading. These investments are
initially measured at cost and subsequently
recognized at market value with changes
in carrying amounts recognized in AFS
Reserve. Any gains or losses are recognized
in Profit and Loss Account only at the time
of disposal of such investments.
While assessing the market value,
consideration is given to the active trading
at stock exchange and conservative
approach is adopted in order to avoid
overstatement in the investments carrying
value, and the consequent overstatement
of equity. Accordingly, investments which
are not listed, or which are listed but are
not actively traded, are carried at cost
and not measured at mark-to-market.
Investment Adjustment Reserve (IAR) at
2% of all AFS investments is appropriated
through Profit and Loss Appropriation
Account.
NRB Unified Directive 8/073 has further
specified IAR requirement as follows:
Ø 100% IAR on bank’s investments in
unlisted securities if such securities are
not listed within one year from the date of
investment;
Ø IAR is not mandatory in case of
investments in wholly owned Subsidiary
that do not require a listing under
applicable laws;
Ø Investment in institutions where the
banks holds financial interest, including
partly owned subsidiary, is to be
deducted from the bank’s core capital for
capital adequacy reporting purpose;
Ø Mandatory investment in mutual fund
in the capacity of fund sponsor is exempt
from deduction from the bank’s core
capital for capital adequacy reporting
purpose;
Ø 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.
4.2.3.Property, Plant and
Equipment (Fixed Assets)
Ø Property, plant and equipment are
tangible items that are held for use in
the production or supply of services, for
rental to others, or for administrative
purposes and are expected to be used for
more than one financial year.
Ø Group’s property, plant and equipment
comprise of land and premises registered
under the Bank’s ownership, and
various other fixed assets such as office
equipment, furniture, vehicles, leasehold,
work-in-progress, etc. held under control
of the Bank and the Subsidiary.
Ø 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. Cost of an item of an
asset includes cost of an asset under
construction and work-in-progress.
Ø 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 Profit and Loss Account.
Annual Report 2016/17 135
Ø The carrying amount of an asset is
derecognised at the time of disposal
or when no future economic benefits
are expected to flow from its use or
disposal. The gain or loss arising from de-
recognition of an item of property, plant
and equipment is included in profit or
loss when the item is derecognised.
Ø 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.
Ø Non-consumable items costing less
than NPR 5,000 are expensed off in the
year of purchase.
Ø The Bank consistently adopts cost
model for entire class of its property,
plant and equipment.
4.2.4. Intangible Assets
Ø Cost of an item of intangible is
recognised as an asset, if it is probable
that future economic benefits associated
with the asset will flow to the entity and
the cost of the asset can be measured
reliably
Ø Group’s property, plant and equipment
comprise of Software held under control
of the Bank and the Subsidiary.
Ø Software acquired by the Bank is
measured at cost less accumulated
amortization and any accumulated
impairment losses.
Ø Expenditure incurred on software is
capitalized only when it is probable that
this expenditure will enable the asset
136 Nabil Bank Limited
to generate future economic benefits in
excess of its originally assessed standard
of performance and this expenditure can
be measured and attributed to the asset
reliably. All other expenditure is expensed
as incurred.
Ø Software is amortized on a straight–
line basis over the estimated useful
economic life.
4.2.5. Inventory of Stationery
Ø Stationery stocks are inventories in the
form of materials or supplies held by the
Group and the Bank for consumption in
course of rendering services. The Group
and the Bank 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.
Ø 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.
Ø Stationeries are recorded at actual cost
basis and charged to revenue at the time
of its consumption.
4.2.6. Bullion Stock under
Consignment
Ø The Bank holds precious metals (gold
and silver) in its custody arising from
consignment transaction. Risks and
rewards pertaining to the asset prices
are vested with the consignor. The
Bank merely acts as a consignee to the
consignor and hence does not recognise
the stock in its books as asset.
4.2.7. Staff Loans
Ø Loans granted to staff as per the
Integrated Staff Loan Policy of the
Bank are recognised as loans at the
time of their disbursement. They are
de-recognised at the time of recovery/
settlement.
Ø 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.
4.2.8. Interest Receivables
Ø 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.
Ø Interest receivables on loans (except
staff housing loans) are stated at full
value and are disclosed net of interest
suspense under “Accrued Interest on
Loan” in Schedule 16 of the Financial
Statements. Similarly, Interest receivables
on staff housing loans are presented
under “Others” in the same Schedule.
Ø Interest receivables on investments are
stated at full value.
4.2.9. Prepayments
Ø 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.
Ø Prepayments are recognised as asset at
full value on the date of payment.
ØThey are derecognised as and when
services are received or at the time
service accrues or period mature.
4.2.10. Security Deposits
Ø 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.
Ø 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.
4.2.11. Non Banking Assets (NBA)
Ø In the course of forced recovery of
bank loan, when the mortgaged collateral
security is not saleable even after
exercising all legal measures including
auction, Bank is allowed to assume
ownership of the mortgaged collateral
security. Loan claim is derecognized
and so is the corresponding loss
provision. Instead a Non Banking Asset
is recognized with its corresponding loss
provisioning.
Ø Recoverable amount of NBA is
determined based on a professional
valuation report.
4.3.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.
4.3.1. Borrowings
Ø Borrowings comprise of local and
foreign currencies’ inter-bank borrowing
and the debentures issued to the public.
Ø 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.
4.3.2. Deposits from Customers
Ø Deposits of the Bank, and hence of
the Group, comprise of local and foreign
currency deposits held in customer
accounts viz. current, savings, call, fixed,
margin and other accounts.
Ø Deposits are stated at full value and
recognised on the date of deposition.
Deposits are derecognised at the time of
its withdrawal / maturity.
4.3.3. Bills Payable
Ø Bills payable are negotiable
instruments issued/endorsed by the Bank
for consideration received in exchange
from the customer. Bills payable comprise
of 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.
Ø These are recorded at full value and
recognised at the time of its issuance
for the consideration received. They are
derecognised at the time of its disposal
at the Bank’s counter or after receipt of
information of disposal from other banks
and financial institutions.
4.3.4. Dividend Payable
Ø Dividend payables are the dividends,
payable to its equity holders duly ratified
by the current or earlier Annual General
Meetings.
Ø They are stated at full value
immediately after Annual General Meeting
ratifies the Board’s proposal on dividend.
4.3.5. Interest Accruals
Ø 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.
Ø Interest accruals are derecognised at
the due date i.e. on the date it is credited
in customers’ account.
4.3.6. Unearned Income
Ø Unearned Income comprise of income
received in advance on account of loans
under subvention scheme, LC fees and
guarantee fees issued with a risk period
of more than 1 year period and for fees
with more than NRs.50 thousands.
Ø They are recognised as liability at the
time of its receipt and are derecognised
as and when income accrues and / or risk
period expires.
4.3.7. Other Expense Accruals
Ø Payable for other expenses where
uncertainty over the timing and / or
amount of cash outflow exists such as
utility, communication, professional
services, etc. are recognised on
estimation basis taking reference of
immediate past trends, consumption
pattern, agreements, etc. These payables
are subsequently settled at the time of
payment upon receipt of invoice.
Annual Report 2016/17 137
4.4. Income
Ø Incomes are increase in economic
benefits during the accounting period
in the form of inflows or enhancements
of assets or decreases of liabilities that
result in increases in equity, other than
those relating to contributions from equity
participants. Income comprises of interest
income, fees and commission, foreign
exchange income, cards income, disposal
income etc.
4.4.1. Interest Income
Ø Interest income comprise of interest
earnings on loans and advances,
investments, inter-bank placements, bank
balances, and staff loans.
Ø Interest income on loans and
advances, except accruals in staff
housing loan and interest capitalized on
project loans, are recognised on cash
basis as prescribed by NRB Directives.
This treatment is not in accordance
with GAAP requirement of recognition
of interest on effective interest method.
The practice followed by the Bank, as per
NRB Directives, is more conservative and
prudent.
Ø Interest income on Investments,
including earnings from inter-bank
placements, 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 on treasury bills are
capitalised in the bid value.
Ø Interest income received by the
Bank from the vendors / dealers under
138 Nabil Bank Limited
subvention scheme at the beginning of
the loan tenure is initially recognised
as liability and subsequently charged to
Profit or Loss Account as and when they
are earned.
Ø All interest earnings (including on
foreign currency assets) are accounted in
functional currency.
4.4.2. Fees and Commission Income
Ø All transactional fees and charges
incidental to provision of various banking
services are recognized immediately upon
rendering of services.
Ø Fees on loans and credit cards are
recognized at the inception of the
transaction.
Ø Commission on guarantees are
recognised over the facility tenure,
except for commission amount within
NPR 50,000 ceiling which is recognized
upfront.
Ø Agency commission on insurance
services which do not require
rendition of additional services in
future are recognised on the effective
commencement or renewal dates of the
policies.
Ø Commission from bullion operation
is recognised at the time the risks and
rewards attributable to the bullion are
transferred to the buyer.
Ø Fees for management service rendered
to the Subsidiary are recognised on
accrual basis at the end of every month
in line with the contract executed.
4.4.3. Dividend Income
Ø Cash dividend on equity shares is
recognised as and when right to receive is
established.
Ø Cash dividend declared by resident
companies are recorded at net of
withholding tax, while declared by non
resident companies are recorded at gross
value. Dividend income from resident
Mutual Funds is recorded at gross values.
Tax deducted by Mutual Fund and non
resident companies is recognised as
Advance Tax to the extent adjustable with
the Bank’s corporate tax liability.
Ø Bonus/Stock dividend is not recognised
as income, rather disclosed in Schedule
12(A) of the financial statements, with a
corresponding increase in the number of
scrips.
4.4.4. Foreign Exchange
Transactions
Ø 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.
Ø 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.
Ø Gain or loss realized on trading of
foreign currencies is recognized on daily
basis and accounted as Trading Gain /
(Loss).
Ø 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).
Ø Premium/discount on foreign exchange
forward contract is accounted for as
trading gain or loss at the time of
transaction.
4.4.5. Recovery from Written-Off
Loans
Ø Recovery from written-off loans is
recognised as income net of expenses
incurred on recovery when the amount is
actually received from the borrower.
4.5. Expenses:
Expenses are decrease in economic
benefits during the accounting period
in the form of outflows or depletions of
assets or incurrence of liabilities that
result in decreases in equity, other than
those relating to distributions to equity
participants.
4.5.1. Interest Expense
Ø Interest expense comprise of interest
expense accrued on foreign currencies
and local currency deposits, bonds and
borrowings.
Ø All interest expenses are accounted in
functional currency on accrual basis.
4.5.2. Depreciation
Ø Depreciation is the systematic
allocation of depreciable amount of an
asset over its useful life.
Ø 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.
Ø 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.
Ø Depreciation on assets is charged to
Profit and Loss Account on diminishing
balance method. Based on past
experience regarding the economic life of
different classes of assets, their estimated
life and depreciation rates have been
determined as follows, after considering
for the likely salvage value at the end of
estimated life.
Nature Estimated Depreciation
of Assets Useful Life Rate
Furniture 10 years 25%
Equipments 10 years 25%
Vehicles 7 years 20%
Computers 7 years 25%
Building 50 years 5%
4.5.3. Amortization
Ø Leasehold assets (improvements)
and cost of Software are amortized on a
straight line basis over a period of useful
life of the asset, estimated as 5 years
from the booking date.
4.5.4. Impairment Provision
Ø The amount of loss that results due to
the reduction of recoverable amount than
the carrying amount of an asset or as a
result of legal requirement is charged to
Profit and Loss Account as an impairment
loss. The impairment loss is provided
for on the credit portfolios, investments,
receivables and fixed assets (if any) at
every reporting date.
a. Loan Loss Provision
Ø Provision for possible losses on loans
is made to cover the risks inherent in
the Bank’s credit portfolio. Provision for
possible losses are made according to
the classification of such risk assets as
per NRB Directives, ranging from 1% to
100% of the outstanding loans, advances
and bills purchased at the reporting date.
b. Provision on Investments
Ø 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.
Ø 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.
Annual Report 2016/17 139
c.Impairment on Fixed Assets
Ø The Bank does not identify Cash
Generating Unit (CGU) i.e. the smallest
group of fixed assets that generates cash
inflows that are largely independent of the
cash inflows from other assets or group
of assets. Hence, no impairment loss is
provided unless there is clear evidence
that an asset’s market value has been
reduced.
Ø 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.
4.5.5. Write Off Expense
Ø Loan accounts graded ”Bad / Loss” are
written off from the books in compliance
with NRB Directives and Income Tax Act
2002, without prejudice to the Bank’s
right to recovery.
Ø Impairment provisions on loss accounts
are written back at the time of loan
written-off.
4.5.6. Income Tax Expense
Ø Income tax expense comprises of
current tax, deferred income tax and any
prior period tax. Disclosure of additional
income tax in the Profit and Loss Account
is made as required by NRB.
140 Nabil Bank Limited
Ø 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.
Ø Deferred income tax arise from the
temporary differences between the
tax base of assets and liabilities and
their carrying valued in the financial
statements, which will result in taxable or
deductible amounts in the future.
Ø 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’.
Ø Deferred Tax Reserve is earmarked
to the extent of outstanding balance
of Deferred Tax Assets as per NRB
guidelines.
4.6. Employee Benefits
Employee benefits are all forms of
consideration given by the Bank and
the Subsidiary in exchange for service
rendered by employees. These
comprises of:
4.6.1. Type of Benefits
Ø Short term employee benefits viz.,
salary and allowances, short term
compensated expenses, profit sharing
bonuses and perquisites which are
payable within the reporting period as
those accrue and are recognised as
expenses when an employee renders
the service or at the time when the
entitlement of compensation increases
due to rendition of service.
Ø Post-employment benefits that
is payable after the completion of
employment and are recognised as
expense when the entitlement of
compensation accrues as a result of
rendition of service.
Ø 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.
4.6.2. Employee Leave
Ø 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.
Ø Entitlement to compensated
absences is either accumulating or non
accumulating.
Ø The Group recognizes cost of
compensated absences as follows:
• in case of accumulating, when the
employees render service that increases
their entitlement to future compensated
absences; and
• in case of non accumulating, when the
absences occur.
Ø Annual leave and sick leave are
accumulated to the maximum extent
of 60 days each and is carried forward
for the use in future periods. Total of
annual and sick leave balance in excess
of 120 days as at mid April is paid each
year. Leave earned and accrued on a
proportionate basis as at the balance
sheet date (Mid July) is netted off for the
absences availed by the employees and is
recognized as liability.
Ø The bank does not value leave liability
based on actuarial valuation.
4.6.3.Gratuity, Insured Benefits and
Provident Fund
Ø 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.
Ø 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. The bank does
not value employee gratuity based on
actuarial valuation.
Ø 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 incremental
gratuity obligations has been made
annually.
4.6.4. Provision for
staff bonus expenses
Ø 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.
4.7. Provisions and Contingencies
4.7.1. Provisions
Ø 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.
Ø 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
and thus is disclosed as a contingent
liability.
4.7.2. Contingent Liabilities
Ø The contingent liabilities comprise of:
• 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
• present obligations that arise from past
events but is not recognised because:
Ø it is not probable that an outflow of
resources embodying economic benefits
will be required to settle the obligation; or
Annual Report 2016/17 141
Ø the amount of the obligation cannot be
measured with sufficient reliability.
Ø All letter of credit, bank guarantee and
forward exchange contract liabilities,
within their validity period, have been
shown in full amount as contingent
liabilities in accordance with the directive
issued by NRB.
Ø 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.
4.8. Recovery of Principal and
Interest on Loans
Ø The Bank applies amount recovered
from borrowers, first for recovery of
overdue interest and then for recovery of
overdue principal. There is one exception
to this treatment in case of restructuring
/ rescheduling of non-performing loan
accounts, where the amount recovered
from borrower can be applied first for
recovery of a minimum 25% of overdue
interest and thereafter for recovery
of overdue principal. This policy is
consistent with the regulatory provisions
prescribed by NRB.
142 Nabil Bank Limited
4.9. Events after the
Balance Sheet Date
Ø Events after the Balance Sheet Date are
those events, favourable and unfavourable,
that occur between the Balance Sheet
date and the date when the financial
statements are authorized for issue.
Ø In this regard, all material and
important events that occurred after the
balance sheet date have been considered
and appropriate disclosures are made in
the financial statements in Schedule 33
“Notes to Accounts”.
4.10. Earnings Per Share
4.10.1. Basic Earnings per Share
Ø It is calculated by dividing the net
profit for the year attributable to the
Bank’s and the Subsidiary’s ordinary
equity holders by the weighted average
number of ordinary shares outstanding
during the year.
Ø 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 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 year.
4.10.2. Diluted Earnings per Share
Ø It is calculated by dividing the net
profit attributable to the Bank’s and the
Subsidiary’s ordinary equity holders by
the weighted average number of ordinary
shares outstanding during the year and
is adjusted for the effects of all dilutive
potential ordinary shares.
Ø 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.
4.11. Basis of Interest Computation
Ø Interest expenses on deposits/
borrowings/bonds and interest income
on loans and local currency investments
are computed on the basis of 365 days
a year.
Ø Interest on foreign currency
investments is computed on the basis of
365 days a year for GBP and 360 days a
year for USD, EUR, DKK and JPY.
Annual Report 2016/17 143
Notes to Accounts
Schedule 33
1. Share Capital
1.1. Paid-up equity capital
Nepal Rastra Bank, the licensing and regulatory authority of the country, has raised the minimum
paid up equity capital requirement for licensed Banks and Financial Institutions (BFIs). Under this,
all “A” class Commercial Banks are required to increase their paid up share capital to NPR 8 billion
by the end of financial year 2016-17, inclusive of the bonus shares proposal for the year.
Towards this compliance, the Bank has its Capital Plan approved from Nepal Rastra Bank and has
also disclosed it in the Bank’s website. At the balance sheet date, Bank’s paid up equity capital
stood at NPR 6,185,507 thousands, which will be raised to NPR 8,041,159 thousands following
the 30% proposed bonus shares for the year 2016-17. This increment in paid up capital is in
alignment with the approved Capital Plan.
Chronology of Paid up Capital Enhancement (NPR) 000
Year Particulars Issuance Cumulative
1984 Initial Issuance (469,707 units @ NPR 60 per share) 28,182 28,182
1985 Additional Issuance (3,820 units @ NPR 60 per share) 229 28,411
1986 Additional Issuance (180 units @ NPR 60 per share) 11 28,422
1987 Additional Issuance (23,333 units @ NPR 60 per share) 1,400 29,822
1988 Additional Issuance (2,960 units @ NPR 60 per share) 178 30,000
1991 Final Call Money (500,000 units @ NPR 40 per share)* 20,000 50,000
1992 Bonus Shares @ 30% 15,426 65,426
1994 Bonus Shares @ 100% 65,426 130,852
1996 Bonus Shares @ 100% 130,851 261,703
1997 Bonus Shares @ 50% 131,094 392,797
2000 Bonus Shares @ 25% 98,858 491,655
2007 Bonus Shares @ 40% 197,562 689,217
2008 Bonus Shares @ 40% 276,531 965,748
2009 Bonus Shares @ 50% 483,377 1,449,125
2010 Bonus Shares @ 40% 580,644 2,029,769
2012 Bonus Shares @ 20% 407,072 2,436,841
2013 Bonus Shares @ 25% 610,327 3,047,168
2014 Bonus Shares @ 20% 610,486 3,657,654
2015 Bonus Shares @ 30% 1,098,916 4,756,570
2016 Bonus Shares @ 30% 1,428,937 6,185,507
* The final call amount of NPR 40 per share was capitalized out of retained earnings.
144 Nabil Bank Limited Annual Report 2016/17 145

1.2 Proposed changes in paid-up equity capital

The Board of directors at its meeting dated August 25, 2017 passed a resolution recommending
2.5 Investment Adjustment Reserve
for distribution of bonus shares (stock dividend) and cash dividend respectively at 30% and 18%
NRB directives 4/073 and 8/073 require BFIs to maintain adequate Investment Adjustment Reserve
of the Bank’s paid up capital at July 15, 2017. Proposed bonus share and cash dividend amount
(IAR) in respect of investments classified as Available-for-Sale. For the reported period, the Bank’s
to an equivalent NPR 1,855,652 thousands and NPR 1,113,391 thousands respectively. In the
IAR requirement has increased by NPR 5,131 thousands compared to the IAR requirement at
presentation of the financial statements, these amounts have been appropriated to Share Capital and
previous year end, thus an equivalent amount is credited to the IAR with a corresponding debit to
Proposed Dividend headings respectively and presented on the face of the Balance Sheet under these
the Profit and Loss Appropriation Account.
headings, as required by regulator prescribed presentation format.

2.6 Exchange Fluctuation Reserve

2. Reserves and Surplus
NRB directive 4/073 requires BFIs to appropriate 25% of the net foreign exchange revaluation gain
2.1 Share Premium
into Exchange Fluctuation Reserve every year. This applies to revaluation gain on foreign currency
There is a balance of NPR 74 thousands in Share Premium which has not changed in the reporting
positions except the Indian Currency. Accordingly, the Bank appropriated NPR 81,500 thousands to
period.
this reserve for the reported period.

2.2 Statutory Reserves

The Bank has appropriated following amounts into different statutory reserve headings as required
under the prevailing banking regulations.
Appropriation into Statutory Reserve
(NPR) 000
Opening Balance Credit Closing Balance
General Reserve 4,067,500 723,000 4,790,500
Investment Adjustment Reserve 126,040 5,131 131,171
Exchange Fluctuation Reserve 282,100 81,500 363,600
Debenture Redemption Reserve 228,000 60,000 288,000
Special Reserve Fund 5,141 - 5,141
Employees Development Fund - 12,962 12,962
Corporate Social Responsibility Fund - 36,132 36,132
Total 4,708,781 918,724 5,627,506
2.7 Special Reserve Fund
NRB Circular 12/072/73 requires BFIs to create Special Reserve Fund for parking the capitalized
portion of interest income on borrowing accounts where credit facility was rescheduled or
restructured, following the after effects of the great earthquake that struck the nation in April 2015.
There was an opening balance of NPR 5,141 thousands in this reserve fund and there were no
movements recorded in the reporting period.
2.8 Employees Training and Capacity Development Fund
NRB Circular 10/073/74 requires BFIs to incur expenses towards employee training and
development equivalent to at least 3% of the preceding year’s total staff expenses. Any shortfall in
meeting this mandatory expense requirement in the year 2016-17 will have to be credited to this
reserve fund for onward expense in the year 2017-18, as per provisions in the NRB Circular. The
Bank has credited NPR 12,962 thousands into this reserve fund in the current year. Balance in this
fund will be reclassified to Accumulated Profit / (Loss) and recognized as Staff Expense in the Profit
and Loss Account in the subsequent year.

2.3 General Reserve

2.9 Corporate Social Responsibility Fund
NRB directive 4/073 require BFIs to appropriate 20% of the current year’s net profit into general
NRB Circular 11/073/74 requires BFIs to create Corporate Social Responsibility Fund and annually
reserve until the amount of the reserve is double the amount of the paid up equity capital. This is
appropriate an amount equivalent to 1% of net profit into this fund. The fund is created towards
a statutory reserve heading. It is non-distributable and non-transferrable to other headings, unless
covering the Bank’s expense in CSR activities in the subsequent year. Accordingly, the Bank
specifically approved by the regulator. Accordingly, the Bank appropriated NPR 723,000 thousands
appropriated NPR 36,132 thousands to this fund for the reported period. Balance in this fund will
to this reserve for the reported period.
be reclassified to Accumulated Profit / (Loss) and recognized as CSR Expense in the Profit and Loss
Account in subsequent year.
2.4 Capital Redemption Reserve (Debenture redemption)
NRB directive 16/073 requires BFIs to maintain a redemption reserve in respect of debenture
liability. As per the terms of NRB approval relating to the Bank’s debenture issuance, the Bank is
annually required to transfer 20% of the debenture’s face value to redemption reserve, starting from
the 6th year of the issue. Accordingly, the Bank has appropriated NPR 60,000 thousands to this
reserve for the reported period and the reserve balance stood at NPR 288,000 thousands at the
reporting date.
146 Nabil Bank Limited
2.10 Non Statutory Reserves
The Bank has appropriated following amounts into different non-statutory reserve headings as per
the Bank’s internal policy and financial reporting framework.
Appropriation into Non Statutory Reserve Headings equity as tabulated hereunder:
(NPR) 000
Opening Credit Debit Closing Movement in Accumulated Profit / (Loss)
Balance Balance
Interest Spread Reserve 2,578 - - 2,578
Contingent Reserve 15,874 1,000 (500) 16,374
Other Reserve (Deferred Tax) 63,858 9,518 - 73,376
Total 82,310 10,518 (500) 92,328
Interest Spread Reserve
There is a balance of NPR 2,578 thousands in Interest Spread Reserve. There is no movement in
this reserve in the reporting period.
Contingent Reserve
The Bank has appropriated NPR 1,000 thousands (PY – NPR 1,000 thousands) into contingent
reserve from current year’s profit. The Bank has paid a total sum of NPR 500 thousands (PY – NPR
250 thousands) towards treatment of life-threatening ailments of its employees. This amount has
been reclassified from Contingent Reserve to Accumulated Profit / (Loss) and recognized as Staff
Expense in the Income Statement.
Other Reserve (Deferred Tax Reserve)
Other reserve is created in respect of the Bank’s deferred tax assets as required by NRB Directive.
This reserve has increased by NPR 9,518 thousands in the current year, resultant of an equivalent
increase in the Bank’s deferred tax assets.
Annual Report 2016/17 147
2.11 Accumulated Profit / (Loss)
The balance in Accumulated Profit / (Loss) at the reporting date is NPR 3,305,388 thousands,
which is an increment of NPR 2,687,034 thousands from opening balance of NPR 618,353, after
taking account of current year profit, appropriations to reserves and other movements within the
(NPR) 000
Debit Credit Balance
Opening Balance 618,353
Current Year Net Profit 3,613,200
Net Appropriations : (3,898,285) 500 (3,897,785)
to Proposed Bonus Shares (Share Capital) (1,855,652) - (1,855,652)
to Statutory Reserves (918,724) - (918,724)
to Non - Statutory Reserves (10,518 (500) (10,018)
to Proposed Cash Dividend (1,113,391) - (1,113,391)
Closing Balance 333,768
3. Liabilities
3.1 Debenture
Bank has raised NPR 300 million as debt capital in the year 2008 A.D. through issuance of
debentures. The instrument is listed at Nepal Stock Exchange (NEPSE) with symbol NABILB2075.
Main features of this capital instrument are as follows:
- Issue size: 300,000 units at NPR 1,000 per unit paid up
- Interest rate: 8.50% per annum
- Maturity period: 10 Years (2018 A.D.)
- Interest Payment frequency: Half Yearly
- Claim in case of liquidation: After depositors.
- Pledgebility: Can be pledged with banks and financial institutions except Nabil.
Bank appropriated NPR 60,000 thousands into redemption reserve in the current year and the reserve
balance has increased to NPR 288,000 thousands from previous year’s NPR 228,000 thousands.
148 Nabil Bank Limited
3.2 Borrowing
Bank’s borrowing is NPR 3,056,310 thousands at reporting date up from previous year’s NPR
1,900,000 thousands. Of this, NPR 13,385 thousands (PY – NIL) is refinance availed from NRB
under Earthquake Relief Refinancing program. Remaining NPR 3,042,925 thousands is borrowing
from local financial institutions.
3.3 Deposits
Bank’s deposits was NPR 118,896,157 thousands (PY – NPR 110,267,272K) at the reporting
date. In the current year total deposits increased by 7.8% or NPR 8,628,885 thousands (PY –
increased by 5.8% or NPR 6,029,362K).
(NPR) 000
Current Year Previous Year Change (%)
Interest Free Deposit 19,818,056 19,029,753 788,303 4.14
Local currency 17,375,495 16,043,783 1,331,713 8.30
Foreign currency 2,442,560 2,985,970 (543,410) (18.20)
Interest Bearing Deposit 99,078,101 91,237,519 7,840,582 8.59
Local currency 84,042,543 73,355,830 10,686,713 14.57
Foreign currency 15,035,558 17,881,689 (2,846,131) (15.92)
Total 118,896,157 110,267,272 8,628,885 7.83
Deposit Insurance
Bank has insured savings and fixed deposits of all natural person account holders for balance up to
NPR 200 thousands with Deposit and Credit Guarantee Corporation Pvt. Ltd. Total insured deposit
portfolio is NPR 14,852,221 thousands (PY – NPR 14,376,057K) and total number of insured
deposit accounts is 390,397 (PY – 355,288).
3.4 Bills Payable
Bills payable comprise of local currency demand drafts issued by the Bank and bills (cheque)
realized on behalf of customers from Nostro banks but not yet credited in customers’ accounts.
The Bank also issues foreign currency demand drafts of Nostro banks by directly crediting the
Nostro accounts.
(NPR) 000
Current Year Previous Year Change (%)
Local Currency Bills 2,573 995 1,577 158.52
Demand Draft 133 130 3 2.40
Bill of Exchange 2,440 865 1,574 181.92
Foreign Currency Bills 316,614 292,519 24,094 8.24
Demand Draft - - - -
Bill of Exchange 316,614 292,519 24,094 8.24
Total 319,186 293,514 25,672 8.75
Annual Report 2016/17 149
3.5 Other Liabilities
Following disclosure relate to Other Liabilities NPR 2,552,688 thousands (PY – 2,232,865
thousands) presented in the face of balance sheet and follow the order of presentation in “Schedule
7” of financial statements.
3.5.1 Gratuity Obligation
Bank has a separate gratuity fund in respect of gratuity obligation that accrued till Mid July 2003 i.e.
before the IT Act 2003 came into effect. As per Income Tax Rules, 2003, this portion of retirement
benefit is tax free for employees. This obligation is settled when staff retire or resign from the
services of the Bank. Bank paid gratuity obligation of NPR 1,584 thousands from this fund in the
current year.
(NPR) 000
Current Year Previous Year Change (%)
Opening Balance 61,780 63,141 (1,362) (2.16)
Paid on retirement (1,558) (1,291)
Paid on resignation (26) (71)
Closing Balance 60,196 61,780 (1,584) (2.56)
Gratuity liability in respect of reporting period after Mid-July 2003 is funded. The annual gratuity
liability is deposited in an approved retirement fund.
3.5.2 Leave Obligation
Accrued staff leave has increased by NPR 37,095 thousands in the current year (PY – NPR
45,354K). Movement in accrued leave is presented hereunder:
months (NPR) 000
Particulars Average last drawn Weighted average Total leave
monthly salary leave accrued obligation
A. Opening balance as at 16-Jul-2016 168,445
i. As at 16-Jul-2016 60,020 2,806 168,445
ii. As at 15-Jul-2017 72,080 2,852 205,541
B. Incremental leave obligation in current year 12,060 45 37,095
Closing balance as at 15-Jul-2016 205,541
Presented in Schedule 7 “Other Liabilities” 60,196
Incremental obligation due to impact of:
- salary raise (on leave balance at 15-Jul-2017) 12,060 33,846
- increased leave period (on salary level at 15-Jul-2017) 45 3,249
Incremental leave obligation in current year 37,095
Employees leave obligation has increased this year due to the rise in average salary scale. In the
current year the average salary of bank employee increased by NPR 12 thousands to reach NPR 72
thousands. The total leave accrual period, on the other hand, has increased by 45 months.
150 Nabil Bank Limited
3.5.3 Provision for Staff Bonus
Bank recognizes provision for employee bonus as required under the Bonus Act 1974, which
stipulates a mandatory employee bonus equivalent to 10% of current year’s profit before tax.
(NPR) 000
Particulars Current Previous
Year Year
Profit from all activities per profit and loss account 5,655,589 4,408,554
Provision for staff bonus @ 10% of net profit before tax 514,144 400,778
Provision for staff bonus per Profit and Loss Account 514,144 400,778
3.5.4 Unearned income
Bank has recognized NPR 96,780 thousands unearned commission on Bank Guarantees which
have risk period of more than 1 year and commission more than NPR 50 thousands. These are
subsequently recognized in income as and when the income accrues and / or risk period expires.
3.5.5 Sundry creditors
A break-down of the sundry creditor balance is presented hereunder.
(NPR) 000
Particulars Current Previous Unearned income on loans 29 635
Year Year
- TDS payable 149,545 94,403
- VAT payable 5,472 896
- Stale instruments 7,876 6,591
- Payable to Customers 754,677 629,846
- Payable to Employees 9 409
- Other Payables 222,669 581,349
Total 1,140,248 1,313,494
Payable to customers comprises of items such as advance received for issuance of prepaid cards,
payable to card merchants, remittance awaiting disposal and advance received against loan
commitment.
TDS payable are those arising on regular banking business and are deposited on monthly basis
within 25th of the following month of TDS collection, in compliance with the Income Tax Act.
Other payable is mostly on account of outstanding amount payable to the consignor of bullion stock.
Annual Report 2016/17 151
3.5.6 Dividend Payable
A break-down of the dividend payable is presented hereunder:
(NPR) 000
Particulars Current Previous
Year Year
Dividend relating to profit of Financial Year (FY)
1989 - 1990 to 1999 - 2000 2,696 2,697
2000 - 2001 to 2009 - 2010 12,399 13,000
2010 - 2011 to 2014 - 15 132,598 184,870
2015 - 2016 366,798 -
Total 514,492 200,566
In compliance with NRB Directive 16/073 Bank has published a general notice to shareholders on
August 12, 2017 (Shrawan 28, 2074 B.S.) calling them to collect unclaimed dividends.
3.5.7 Others
NPR 17,536 thousands presented under this heading relate to accruals for various expenses.
(NPR) 000
Particulars Current Previous
Year Year
Accrued expenses 13,706 17,813
Other liabilities 3,801 3,630
Total 17,536 22,078
Presented in Schedule 7 “Other Liabilities” 17,536 22,078
3.6 Inter-Branch Reconciliation
There are no un-reconciled balances in case of inter-branch transactions at reporting date.
4. Assets
4.1 Cash Balance
Cash balance of NPR 1,637,483 thousands (PY – NPR 1,640,632K) comprise of currency notes
and coins held in Bank’s Vaults and ATM machines at the reporting date.
It included NPR 1,495,905 thousands (PY – NPR 1,538,785K) in local currency and equivalent
NPR 141,579 thousands (PY – NPR 101,848K) in foreign currencies.
152 Nabil Bank Limited Annual Report 2016/17 153

Ageing of pending items Ledger Statement Ledger Statement

4.2 Balance with Nepal Rastra Bank (NRB)
NRB balance of NPR 10,274,403 thousands (PY – NPR 5,826,016K) comprise of balances held
in NRB accounts, including those for maintenance of minimum Cash Reserve Requirement, at the
reporting date.
It included NPR 9,057,104 thousands (PY – NPR 4,454,493K) in local currency and equivalent
NPR 1,217,299 thousands (PY – NPR 1,371,523K) in foreign currencies.
in bank balance Debit Debit Credit Credit
< 1 month - 11,340 14,370 66
> 1 month < 3 months - - 1 -
> 3 month < 6 months - - - -
> 6 month < 12 months - - - -
> 12 month < 24 months - - - -
> 24 months - - - -
Total - 11,340 14,370 66

NRB Bank Reconciliation Statement (NPR) 000

Foreign Bank Reconciliation Statement (NPR) 000
Ledger Statement
Ledger Statement
Un-reconciled balance at 15-Jul-2017 10,274,403 10,244,306
Un-reconciled balance at 15-Jul-2017 1,062,579 1,470,137
Ledger Debit (227,440) -
Ledger Debit (108,143) -
Statement Debit - -
Statement Debit (590,888) -
Ledger Credit 136,562 -
Ledger Credit 732,952 -
Statement Credit 60,780 -
Statement Credit 373,638 -
Reconciled balance at 15-Jul-2017 10,244,306 10,244,306
Reconciled balance at 15-Jul-2017 1,470,137 1,470,137

Ageing of pending items Ledger Statement Ledger Statement

in bank balance Debit Debit Credit Credit Ageing of pending items Ledger Statement Ledger Statement
in bank balance Debit Debit Credit Credit
< 1 month 227,440 - 104,357 60,780
< 1 month 108,143 590,885 708,422 373,023
> 1 month < 3 months - - 7,019 -
> 1 month < 3 months - 3 21,053 230
> 3 month < 6 months - - 8,764 -
> 3 month < 6 months - - 1,837 0
> 6 month < 12 months - - 3,006 -
> 6 month < 12 months - - 17 385
> 12 month < 24 months - - 4,563 -
> 12 month < 24 months - - 1,621 -
> 24 months - - 8,854 -
> 24 months - - - -
Total 227,440 - 136,562 60,780
Total 108,143 590,888 732,952 373,638

4.3 Balance with Banks/Financial Institutions

Other Banks/Financial Institutions balance of NPR 1,179,844 thousands (PY – NPR 2,796,200K)
comprise of balances held in nostro accounts at various domestic and foreign banks at the reporting date.
It included NPR 117,260 thousands (PY – NPR 121,582K) in local currency at local banks and
equivalent NPR 1,062,584 thousands (PY – NPR 2,674,618K) in foreign currencies at foreign banks.
4.4 Money at Call and Short Notice
Money at Call comprise of money parked at different banks for maximum seven days deposit period,
whereas inter-bank placements made with a call notice period of up to 48 hours is classified as
Money at Short Notice.
There were no money at call and short notice at the reporting date (PY – NPR 390,018K).

Domestic Bank Reconciliation Statement (NPR) 000 4.5 Investments

Bank’s gross investment was NPR 32,594,671 thousands (PY – NPR 36,528,191K) at the
Ledger Statement
reporting date. In the current year gross investments decreased by 10.8% or NPR 3,933,520
Un-reconciled balance at 15-Jul-2017 117,260 120,357
thousands (PY – increased by 17.9% or NPR 5,548,716K).
Ledger Debit - -
Statement Debit (11,340) -
4.5.1 Held-for-Trading Investments
Ledger Credit 14,370 -
NRB Directive 4/073 has capped Held-for-Trading portfolio of licensed institutions at 1% of core
Statement Credit 66 -
capital. At reporting date, the Bank does not hold investments that are primarily intended for trading
Reconciled balance at 15-Jul-2017 120,357 120,357
purpose because the Bank does not recognize securities trading activity as its core business activity.
154 Nabil Bank Limited
4.5.2 Held-to-Maturity Investments
(NPR) 000
Type of Investment Current Previous Change %
year year
Nepal Government Treasury Bills 2,719,231 8,164,766 (5,445,535) (66.70)
Nepal Government Other Securities 8,821,500 5,821,500 3,000,000 51.5
Nepal Rastra Bank Term Deposits - 3,260,875 (3,260,875) (100.0)
Foreign Bonds* - 268,140 (268,140) (100.0)
Placement in Local Banks - - - -
Placement in Foreign Banks 20,365,353 18,583,041 1,782,312 9.6
Total 31,906,084 36,098,322 (4,192,238) (11.6)
*Investment in foreign bond was called back by the issuer in the current year.
4.5.3 Available-for-Sale Investments
Available-for-Sale (AFS) investments comprise of all investments other than Held-to-Maturity and
Held-for-Trading investments. These investments should be marked to market on a regular basis and
the difference to be adjusted through AFS Reserves (Equity) as required under NRB Directives 4/073
and 8/073. The Bank has deviated from this measurement method, otherwise the carrying value of
AFS investments would have increased by NPR 504,220 thousands with corresponding increment
in AFS Reserves. The Bank carries its AFS investments at historical cost net of impairment loss. The
rationale for this measurement is explained in subsequent paragraphs.
NRB Directive 4/073 stipulates requirement of Investment Adjustment Reserve (IAR) to the extent of
2% of AFS portfolio. NRB Directive 8/073 has stipulated additional IAR requirement for investments
in not listed securities and allowed complete exemption for certain securities.
Bank has complied with the IAR requirement by maintaining IAR at 2% of investments in listed
securities and at 100% of investments where the securities are not listed within one year from the
date of investment. Bank has maintained IAR at 100% of its equity investment in subsidiary and has
also deducted this investment from Tier – I Capital in the calculation of Capital Adequacy Ratio.
  (NPR) 000
Type of Investment Historical Impairment Net IAR The Bank holds eight units of shares in SWIFT (Society for Worldwide Interbank Financial
Cost Provision Investment Requirement
Shares in licensed BFIs – listed 166,269 - 166,269 3,325
Shares in licensed BFIs – not listed 40,000 - 40,000 40,000
Shares in other institutions – not listed 4,936 - 4,936 -
Shares in subsidiary – not listed 78,000 - 78,000 78,000
Shares in SWIFT – not listed 1,916 - 1,916 1,916
Mutual Fund Units – listed 368,217 601 367,617 7,352
Mutual Fund Units – not listed 29,248 409 28,838 577
Total 688,587 1,010 687,577 131,171
(A) Closing balance of IAR at 15-Jul-2017 - - - 131,171
(B) Opening balance of IAR at 15-Jul-2016 - - - 126,040
(A-B) Current Year Appropriations to / (from) IAR - - - 5,131
Annual Report 2016/17 155
Bank’s investment in equity of Credit Information Center Ltd., National Banking Training Institute Ltd.
and Nepal Clearing House Ltd., collectively presented in above table as ‘Shares in other institutions –
not listed ‘are exempted from IAR requirement under NRB Directive 8/073.
4.5.3.1 Shares in licensed BFIs
Bank’s investments in shares of Micro Finance Institutions (MFIs) operating under class “D” license
from NRB are grouped in this class. Bank’s intention in investing on MFIs promoter class of shares is to
align its priorities with those of the government, and these priorities are directed towards development
of the microfinance sector. These investments count towards the mandatory lending to deprived sector
under the prevailing banking regulation.
These investments are recognized at historical cost net of impairment, considering inactive market and
unavailability of market prices for promoter class of shares. Although the ordinary class of shares of
MFIs is actively traded at Stock Exchange, these are generally quoted at prices much higher than those
actually fetched by promoter class shares. Moreover, bulk promoter shares are seldom traded due to
stringent trading regulations for this class of shares. The number of institutional investors required to
ensure active trading of this class of shares is also limited. Due to these reasons, quoted market prices
cannot be used to estimate their fair value and hence these have been carried at historical cost, rather
than “mark-to-market” measurement required under NRB directives 4/073 and 8/073.
4.5.3.2 Shares in Other Institutions
Bank’s investments in shares of Karja Suchana Kendra Limited (Credit Information Bureau of Nepal),
National Banking Training Institute and Nepal Clearing House Ltd. are grouped in this class. These are
not listed securities, are exempt from IAR requirement and are carried at historical cost.
4.5.3.3 Shares in Subsidiary
Bank has invested NPR 78,000 thousands (PY – NPR 78,000K), equivalent to a 52% equity interest,
in its merchant banking subsidiary which is yet to be listed and is carried at cost. A 100% IAR has
been maintained against such investment.
4.5.3.4 Shares in SWIFT
Telecommunication) having nominal value of EUR 125 per share. These shares are conferred to the
Bank in respect of its membership interest in SWIFT network and are carried at cost, being the actual
transfer value paid by the Bank. 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 4,665
(EUR 125 capital and EUR 4,540 premium) at July 15, 2017. These are carried at historical cost,
being the actual transfer value paid while subscribing the shares.
156 Nabil Bank Limited Annual Report 2016/17 157

4.5.3.5 Mutual Fund Units
Bank has sponsored two Schemes of Mutual Fund viz. Nabil Balance Fund – 1 and Nabil Equity Fund, with
a size of NPR 750,000 thousands and NPR 1,250,000 thousands, respectively. Bank holds 14% equity in
each scheme towards meeting the minimum seed capital requirements. Selling off of seed capital is subject
to regulator’s permission, which Bank has assessed to be remote, and therefore the Bank has carried these at
historical cost.
At the reporting date the Net Assets Value per unit of Nabil Balanced Fund – I and Nabil Equity Fund is NPR
23.95 and NPR 9.98 respectively. Based on the respective year-end closing prices of these schemes at NPR
19.70 and NPR 10.00, their combined market value stood at NPR 382,375 thousands vis.a.vis. cost price of
NPR 280,000 thousands.
Bank has also invested in mutual funds issued under sponsorship of different commercial banks. Presented in
Schedule 12 (A) of the financial statements these investments have collective market value of NPR 98 Million
vis.a.vis. collective cost price of NPR 88 Million. Additionally, Bank holds an investment in one more Mutual
Fund for a cost price of NPR 29 Million which is yet to obtain a listing. These investments have been tested for
impairment based on the lower of respective Market Price and Net Assets Value and a collective impairment
provision of NPR 1,010 thousands has been recognized. The Bank has carried these at historical cost.
4.5.3.6 Equity investments in foreign entities
Bank holds different classes of common stocks in MasterCard International and VISA Inc.
MasterCard International on conversion into a private stock corporation allocated its franchisee class
B common stock to its members in recognition of their membership interest. The Bank presently holds
11,140 units of Class B Common Stock having par value of USD 0.0001 each in MasterCard International
These shares were conferred to the Bank without any transfer value payment, and hence are not
recognized in the financial statements, except for disclosure of fair market value.
4.6 Loans and Advances
Outstanding loans and advances was NPR 91,491,252 thousands (PY – NPR 77,730,402K)
at the reporting date. In the current year total loans increased by 17.7% or NPR 13,760,851
thousands (PY – increased by 15.7% or NPR 10,568,731K).
Sector wise breakdown of Gross Loans and Advances
(NPR) 000
Type of Investment Current Previous Change %
year year
Real Estate Loan 4,028,251 3,559,514 468,737 13.17
Residential Real Estate * 1,421,936 1,482,093 (60,157) (4.06)
Apartment & Business Complex Construction 287,124 309,266 (22,142) (7.16)
Income Generating Commercial Complex 223,373 262,661 (39,288) (14.96)
Other Real Estate (Land Purchase & Plotting) 2,095,818 1,505,493 590,324 39.21
Home Loan up to NPR 10 Million 7,074,366 6,520,943 553,423 -
Margin Type Loan 1,409,716 893,919 515,797 57.70
Term Loans 16,949,720 13,658,225 3,291,495 24.10
Overdraft / TR Loan / Working Capital 51,441,742 44,226,788 7,214,954 16.31
Other Loans 10,587,457 8,871,013 1,716,444 19.35
Total 91,491,252 77,730,402 13,760,851 17.70
* Residential home loan above NPR 10 Million.

Incorporated. Holders of Class B common stock are entitled to receive equal amount of dividend declared for
Class A stock and confer equity rights but not the voting rights in MasterCard Incorporated.
4.6.1 Real Estate Loan
According to NRB Directive 3/073 real estate loans includes residential real estate loans in
The shares of Class B common stock may be traded privately among the eligible members of MasterCard
excess of NPR 10 million; business complex and residential apartment construction loans; loans
International Incorporated (subsidiary of MasterCard Incorporated) while Class A common stock is traded in
to income generating commercial complex; and other real estate loans for land purchasing and
New York Stock Exchange. As on July 15, 2017, the closing price of Class A Common Stock was USD 127.01
plotting. NRB directive has set maximum ceiling of 25% of gross loans and advances for lending
per share. Applying this price to the Bank’ holding of 11,140 units Class B Common Stock, its market value
to the real estate sector. Within this ceiling, there is a specific ceiling of 10% of Gross Loans on
would be around NPR 145,946 thousands.
exposure in other real estate loans for land purchasing and plotting.

Similarly, the Bank currently holds 6,166 units of Class C Common Stock of VISA Inc. having a par value of
At reporting date, the bank’s exposure under real estate loans is 4.4% of gross loan portfolio
USD 0.0001 each allocated after its conversion to VISA Inc. This class of stock is eligible for public sale since
(PY – 4.6%), and under other real estate loans for land purchasing and plotting is 2.3% of gross
7th February, 2011 and trades at same price as Class A or Class B shares. Effective March 19, 2015 the
loan portfolio (PY – 1.9%).
conversion rate for Class C Common Stock equals to 4 units of Class A Common Stock. At 15th July 2017,
Class A Common Stocks were priced at USD 96.93, which derives the equivalent price of Class C Common
Stock at USD 387.72 per share. Based on this the fair value of Bank’s holding would be NPR 246,599
thousands.

These shares were conferred to the Bank without any transfer value payment, and hence are not recognized in
the financial statements, except for disclosure of fair market value.
158 Nabil Bank Limited
4.7 Leasehold Assets
Current Year movement in leasehold assets Accrued interest receivable on loan was NPR 632,312 thousands (PY – NPR 537,625K) at the
(NPR) 000
Current Year Previous Year
Particulars Nabil Subsidiary Group Nabil Subsidiary Group
Bank Bank date is not due was NPR 144,187 thousands (PY – NPR 111,656K) while those that are under
Historical Cost 44,053 6,955 51,008 39,029 6,955 45,984
Opening balance 39,029 6,955 45,984 66,204 6,955 73,159
Additions this year 19,684 - 19,684 5,270 - 5,270
Deductions this year (14,661) - (14,661) (32,444) - (32,444)
Accumulated Amortization 15,542 4,991 20,533 21,114 3,605 24,719
Opening balance 21,114 3,605 24,719 42,635 2,218 44,853
Additions this year 9,089 1,386 10,475 10,924 1,387 12,310
Deductions this year (14,661) - (14,661) (32,444) - (32,444)
Net Book Value 28,511 1,964 30,474 17,915 3,350 21,265
4.8 Other Assets
Following disclosure relate to Other Assets NPR 3,977,056 thousands presented in the face of
balance sheet and follow the order of presentation in Schedule 16.
 
4.8.1 Stock of Stationery
Bank held closing stock of stationery worth NPR 9,060 thousands (PY – NPR 7,296K) at the
reporting date. It included stationery worth NPR 4,463 thousands (PY – NPR 4,019K) held at
branches and additional worth NPR 4,597 thousands (PY – NPR 3,277K) held at central store. No
material items that are disposable / obsolete were held in possession at the reporting date.
4.8.2 Income Receivable on Investments
Income receivable on investments comprise of interest accrued on placements, bonds and term
deposit of central bank. Interest accrued on treasury bills, being amortization of discount, is
capitalized.
(NPR) 000
Particulars Current Previous Change change (NPR) 000
year year amount %
Interest accrued on placements 149,352 115,419 33,933 29.4%
Interest accrued on government bonds 80,962 64,781 16,181 25.0%
Total 230,314 180,200 50,114 27.8%
Annual Report 2016/17 159
4.8.3 Accrued Interest Receivable on Loan
reporting date. These comprise of interest on loans, advances and bills purchased that have accrued
but not yet realized in cash at reporting date. The portion of accrued interest for which the demand
overdue status stood at NPR 488,125 thousands (PY – NPR 425,969K).
The Bank has recognized interest suspense equivalent to the entire accrued interest that is not
realized in cash at year end. This treatment of recognizing interest income on loans in cash basis
complies with regulatory provisions set out in NRB Directive 4/073.
4.8.4 Sundry Debtors
Sundry debtors comprise of accounts receivables and deposits at Inland Revenue Department (IRD)
against legally contested cases of tax disputes. Deposit at IRD relate to dispute over additional tax
demands raised by the Large Tax Payers Office.
(NPR) 000
Particulars Current Previous Change change
year year amount %
Account Receivables 565,428 745,366 (179,939) (24.1)
- Nepal Rastra Bank 302,610 11,601 291,008 2,508.4
- Customers 121,847 97,193 24,654 25.4
- Employees 63,791 36,018 27,773 77.1
- Others 77,180 600,554 (523,374) (87.1)
Deposit at Tax Office 49,179 19,147 30,033 156.9
Total 614,607 764,513 (149,906) (19.6)
4.8.5 Staff loans and advances
Staff Loans and advances are extended in line with the integrated staff loan policy of the Bank.
Eligibility criteria for availing staff loans are directly linked to the period of service under permanent
payroll of the Bank. A break-down of staff loans and advances at the reporting date is presented
hereunder:
Particulars Current Previous Change change
year year amount %
Auto Loan 27,804 34,017 (6,213) (18.3)
Personal Loan 613,904 448,672 165,232 36.8
Housing Loan 1,938,675 1,421,999 516,676 36.3
Total 2,580,383 1,904,688 675,695 35.5
Presented in Schedule 16 “Other Assets” 2,580,383 1,904,688
Within integrated staff loan policy the bank has provided housing loan facility to employees and as
such the provision of staff housing fund as required under the Labor Act 1992 has not been created.
160 Nabil Bank Limited Annual Report 2016/17 161

4.8.6 Prepayments 4.8.8 Software Assets

Prepayments relate to advance payment for rent, insurance, communication, asset maintenance Current Year movement in software assets
(NPR) 000
contracts, etc. A break-down of prepayment balance at the reporting date is presented hereunder:
Current Year Previous Year
(NPR) 000
Particulars Nabil Subsidiary Group Nabil Subsidiary Group
Bank Co. Bank Co.
Particulars Current Previous Change change
year year amount % Historical Cost 74,759 1,718 76,477 84,172 1,607 85,779
Prepaid items Opening balance 26,852 1,607 28,458 83,690 1,297 84,987
- Rent 10,968 10,687 281 2.6 Additions this year 52,323 111 52,434 483 310 792
- Insurance 11,142 11,267 (125) (1.1) Deductions this year (4,416) - (4,416) - - -
- Maintenance 8,121 7,151 970 13.6 Accumulated Amortization 13,344 1,545 14,889 69,929 1,313 71,242
- Communication 7,196 6,681 515 7.7 Opening balance 12,608 1,313 13,921 63,152 868 64,020
- Others 7,277 8,545 (1,268) (14.8) Additions this year 5,152 232 5,384 6,777 445 7,221
Total 44,705 44,331 374 0.8 Deductions this year (4,416) - (4,416) - - -
Presented in Schedule 16 “Other Assets” 44,705 44,331 Net Book Value 61,414 173 61,588 14,243 294 14,537

4.8.7 Others
4.8.9 Bullion under Consignment
These consists of accrued interest receivable on staff loans, security amount deposited by the Bank
At reporting date, the Bank held 90 Kilograms of Gold in its custody under consignment transaction.
for availing public utility services and advance tax (net of tax liability).
At reporting date the market value of this gold is NPR 364 Million. The Bank does not recognize
(NPR) 000
bullion asset in its book.
Particulars Current Previous Change change (NPR) 000
year year amount %
Particulars Current Previous Change change
AIR on Staff Housing Loan 310,416 257,350 53,066 20.62
year year amount %
Advance deposits for utilities 1,321 1,335 (14) (1.06)
Opening Balance 84 80 4 5.00
Advance Tax (net of tax liability) 52,981 5,335 47,646 893.07
Add: consignments received 1,232 750 482 64.27
Net Book Value of Software 61,414 14,243 47,171 331.18
Less: sold to banks (726) (464) 262 56.47
Total 426,133 278,264 147,869 53.14
Less: sold to other parties (500) (282) 218 77.30
Presented in Schedule 16 “Other Assets” 426,133 278,263
Closing Balance 90 84 6 7.14
Market Value :
- Price per Ounce in USD 1,218 1,333 (115) (8.63)
AIR on Staff Housing Loan is realized out of proceeds from Endowment Life Policy bought for
- Market Value in USD 3,524,064 3,582,253 (58,189) (1.62)
each staff. On policy maturity, the proceeds / bonus are applied towards settlement of interest and
Value in NPR ‘000 363,507 385,809 (22,302) (5.78)
principal loan amount in a single installment. Concerned employee is entitled to any surplus or
shortfall.

Detail for advance tax deposit of NPR 51,460 thousands is presented in point no. 7.3.7 under
heading ‘Advance Tax Deposit’.
162 Nabil Bank Limited Annual Report 2016/17 163

5. Contingent Liabilities (Off Balance Sheet items) Bank has deposited total NPR 49,179 the approved retirement fund. The Bank does
5.1 Claims on Institution but not accepted by the Institution thousands (PY – NPR 19,147K) at Inland not have any incremental gratuity obligation at
The Bank has received but is yet to honor guarantee claims totaling NPR 209,534 thousands Revenue Department towards legally contesting reporting date.
(PY – NPR 16,387K) at the reporting date. The Bank has assessed least likelihood of these claims the disputed tax demand by LTPO in respect of
resulting in a liability to the Bank. income year 2006-07 up to year 2012-13. 7.1.2 Uniform Expense
The Bank provides office uniform to employees
5.2 Reconciliation of Guarantee presented in Schedule 17 and Schedule 30(B) 6. Income up to certain corporate level every year which
In calculation of risk weighted exposure for capital adequacy reporting Bank has assigned zero risk 6.1 Interest Income on loans is recognized as staff expense in the same year.
weight in respect of certain bank guarantees, under specific NRB approval. As such, a difference and advances This expense is also recognized as a component
appears between the bank guarantee figure reported in Schedule 17 and in Schedule 30(B). Bank recognizes interest income from loans and of taxable income while calculating employees’
A reconciliation of the same is presented hereunder: advances on cash realization basis as stipulated individual tax liability. The Bank has provided
in NRB Directive 4/073. NPR 12,249 thousands (PY – NPR 11,004K)
(NPR) 000 as uniform allowance to its permanent
Particulars Current Previous Bank has not availed the facility in NRB employees in the current year.
Year Year
Directive 4/073 that allows licensed institutions
Guarantee stated in Schedule 17 : 12,787,193 11,285,505
to recognize interest income that accrued at July 7.1.3 Dashain Expense
- Guarantees (Bid Bond / Performance Bond) 6,129,280 5,805,209
15, 2017 but was realized in cash within 15 Each year during the annual dashain festival,
- Advance Payment Guarantee 2,928,451 1,810,104
days after the reporting date. employees are provided with festival allowance
- Guarantee issued against Counter Guarantee of
equivalent to their one month’s gross salary.
Internationally rated banks 3,729,462 3,670,192
6.2 Dividend Income
Guarantee stated in Schedule 30(B) : 10,012,415 9,216,815
Bank has recognized NPR 91,238 thousands 7.1.4 Leave Expense
- Advance payment guarantee 2,928,451 1,810,104
(PY – NPR 61,969K) as dividend income during In the reporting period, the Bank accrued
- Bid bond, performance bond and counter guarantee
the current financial year. This includes final total leave expense of NPR 85,131 thousands
domestic counterparty 6,129,280 5,805,209
withholding income of NPR 47,098 thousands (PY – NPR 51,646K). Of this NPR 37,095
foreign counterparty (ECA Rating: 0-1) 954,683 1,601,502
(PY – NPR 46,076K). Dividend received from thousands was provided for incremental leave
foreign counterparty (ECA Rating: 2) 1,309,296 510,514
Mutual Funds and Foreign Companies are liability (presented in Schedule 7) while NPR
foreign counterparty (ECA Rating: 3-6) 635,290 703,709
accounted on gross basis and a tax credit is 48,035 thousands was paid to employees as
- Counter guarantee assigned zero risk weightage 830,192 854,467
claimed for withholding tax deducted at source. leave encashment. Employee By-laws stipulates
Reconciled position 12,787,193 11,285,505
that leave liability can be accumulated up to
7. Expenses maximum of 120 days (60 days each for sick
7.1 Staff Expense leave and annual leave). At Mid April each year,
5.3 Contingent Income Tax Liability
7.1.1 Gratuity Expense when fresh leave is assigned to employees,
The Bank files its annual income tax returns under the self assessment process as per the prevailing
The Bank, during the current financial year, accrued leave in excess of 120 days is en-
income tax regulations. The self assessed returns are reviewed by Large Tax Payers Office (LTPO)
funded NPR 129,671 thousands (PY – NPR cashed by employees mandatorily.
within four years after end of each year. Following its review, LTPO can revise tax liability and raise
87,552K) in respect of staff gratuity liability
additional tax demand, including penalty and interest surcharges. Taxpayer may choose to contest
accrued till the reporting date by contributing in
against LTPO’s additional tax demands under Income Tax Act.

LTPO has completed its review of the Bank’s income tax returns and the corresponding corporate
tax liabilities for up to income year 2012-13. They have cleared the Bank’s returns for up to
income year 2005-06 and have raised additional tax demands for each of the later years for up to
income year 2012-13. The Bank has contested against the additional tax demanded by LTPO. Total
contested amount is NPR 125,422 thousands that include additional tax, interest surcharges and
penalty, in respect of all the contested years. Bank has recognized this amount as Continent Liability.
164 Nabil Bank Limited
7.2 Impairment Loss
The Bank derives impairment loss on assets by conducting impairment test annually on following basis:
Assets Basis for Impairment Testing
Loans and Advances Overdue period per NRB regulations
Investment in Listed Securities Stock exchange price
Investment in Non - Listed Securities Net worth
Other Receivables Recovery prospects of Group arose on donation paid to non-exempt entities and on final withholding income. Deferred
Bank recognized the following amounts as impairment loss in the current year.
(NPR) 000
Particulars Current Previous
Year Year
Impairment loss (net of write back):
- on loans and advances (10,260) (35,361)
- on investments 769 (6,746)
- on receivables (2,150) (4,967)
Total (11,641) (47,075) - final withholding income (47,370) (152) - (47,523)
7.3 Income Tax
7.3.1 Corporate Tax Rate
Corporate tax rate applicable to Bank and Subsidiary are 30% and 25% respectively. Corporate tax
liabilities of the Bank and the Subsidiary are computed and assessed separately for each entity.
7.3.2 Corporate Tax Rate
Computation of current year’s tax liability
(NPR) 000
Nabil Bank Subsidiary
Profit from all activities per Profit and Loss Account 5,655,589 135,142
Less: provision for staff bonus (514,144) (12,286)
Profit before tax 5,141,445 122,856
Income Tax related adjustments: Bank Co. adjustments Total
Add back: 48,244 965
- Loss on disposal of fixed assets - 31
- Donation expense disallowed in tax 74 -
- Impairment provision expense disallowed in tax 769 -
- Employee leave provision expense disallowed in tax 37,095 83
- Repair expenses in excess of permitted threshold in tax 9,647 -
- Capital nature expenses charged to Profit and Loss Account 659 -
- Excess depreciation expense claim in accounting book - 851
Deductions: (63,815) (1,051)
- Final withholding income (47,370) (152)
- Gains on disposal of fixed assets (5,918) -
- Gratuity expenses permitted in tax (1,584) -
- Write back from impairment provision permitted in tax (2,150) -
- Excess depreciation expense claim in tax book (6,792) -
- Unrealised gain on investments - (899)
Taxable Income computed per Income Tax Act 5,125,874 122,769
Corporate Tax Rate applicable 30% 25%
Corporate Tax Liability 1,537,762 30,692
Note: figures stated in parenthesis are deductible balance.
Annual Report 2016/17 165
7.3.3 Deferred Tax
Difference between current tax and accounting tax is recognized as deferred tax. Accounting tax is
computed on accounting profit adjusted for permanent differences. Permanent difference in the case
tax computation is presented hereunder:
(NPR) 000
Particulars Nabil Subsidiary Inter-Co. Group
Bank Co. adjustments Total
Profit from all activities 5,655,589 135,142 (14,820) 5,775,911
- provision for staff bonus (514,144) (12,286) - (526,430)
Profit before tax and adjustments 5,141,445 122,856 (14,820) 5,249,481
Adjustments for permanent difference:
- donation 74 - - 74
- other disallowed expenses - 1,955 - 1,955
Accounting profit after adjustments 5,094,148 124,659 (14,820) 5,203,987
Accounting tax @ 30% and @ 25%
respectively (A) 1,528,245 31,165 - 1,559,409
Current Tax per Profit and Loss Account (B) 1,537,762 30,692 780 1,569,235
Deferred Tax Income (B-A) 9,518 (472) 9,045
Inter-company adjustment is related to dividend payment by Subsidiary to Bank and its TDS.
7.3.4 Reconciliation of Accounting tax with tax expense
The relationship between tax expense and accounting profit is explained hereunder:
(NPR) 000
Particulars Nabil Subsidiary Inter-Co. Group
Profit before tax and tax related adjustments 5,141,445 122,856 (14,820) 5,249,481
- corporate tax rate 30% 25%
Corporate tax 1,542,433 30,714 1,573,147
Tax impact of permanent difference:
- donation 22 - 22
- final withholding income (14,211) (38) (14,249)
- other disallowed expenses - 489 489
Prior period tax - - -
Total Accounting Tax 1,528,245 31,165 1,559,409
Accounting Tax as expensed in Profit and
Loss account:
- current tax 1,537,762 30,692 780 1,569,235
- deferred tax (9,518) 472 (9,045)
- prior period tax - - -
Tax expense in Profit and Loss account 1,528,245 31,165 780 1,560,189
166 Nabil Bank Limited
7.3.5 Deferred Tax Assets
Deferred tax assets of the Bank increased to NPR 73,376 thousands (PY – NPR 63,858K) and that
of the Subsidiary decreased by NPR 472 thousands (PY – NPR 853K) in the current year.
Computation of temporary differences and deferred tax assets/liabilities is presented hereunder:
(NPR) 000
Current Year Previous Year
Particulars Nabil Subsidiary Group Nabil Subsidiary Group
Bank Co. Bank Co.
Temporary difference on
fixed assets (34,758) 1,636 (33,122) (32,354) 754 (31,599)
- tax base 577,079 17,285 594,364 510,585 18,578 529,164
- carrying value 611,837 15,649 627,486 542,939 17,824 560,763
Other Items of temporary differences 279,345 (116) 279,230 245,215 2,656 247,871
- provision for other assets 12,598 - 12,598 14,748 1,955 16,703
- employees’ leave provision 205,541 784 206,325 168,445 701 169,146
- employees’ gratuity provision 60,196 - 60,196 61,780 - 61,780
- investment impairment provision 1,010 - 1,010 241 - 241
- unrealised gain on investments - (899) (899)
Net temporary difference * 244,587 1,521 246,108 212,861 3,410 216,272
DTA calculation @ 30% / 25% 73,376 380 73,756 63,858 853 64,711
* Net Temporary difference presented in parenthesis represents net taxable difference.
7.3.6 Temporary Difference in Fixed Assets
Carrying amount and tax base of Bank’s fixed assets that result in taxable / deductible differences is
presented hereunder:
(NPR) 000
Particulars Carrying Tax Taxable 8. Non-Controlling Interest (NCI)
Amount Base difference
Asset Class :
- vehicle 162,148 152,935 9,213
- building 205,611 203,618 1,992
- software 61,414 53,222 8,192
- leasehold 28,511 21,557 6,953
- office equipment 154,154 143,815 10,338
- other assets - 1,931 (1,931)
Total 611,837 577,079 34,758
Annual Report 2016/17 167
7.3.7 Advance Income Tax Deposit
Bank and Subsidiary deposit advance income tax in line with Income Tax Act 2002. Advance
income tax deposits and tax liability are netted off and the net figure is reported in separate financial
statements.
(NPR) 000
Particulars Nabil Subsidiary Group
Bank Co.
Opening balance of tax liability - (1,111)
add : current tax payable 1,537,762 30,692
less : advance tax paid (1,590,743) (44,891)
less : previous year’s tax paid - -
Closing balance of tax liability / (advance tax) (52,981) (15,309) (52,981)
Advance Tax (net of liability) in balance sheet (52,981) (52,981)
There is advance tax (net of tax liability) of NPR 15,309 thousands (PY – NPR 1,111K) in
Subsidiary’s book.
Bank and Subsidiary made the following advance tax deposits in the current year.
(NPR) 000
Details of advance tax payments Nabil Subsidiary Group
Bank Co.
- 1st instalment 600,000 - 600,000
- 2nd instalment 450,000 - 450,000
- 3rd instalment 500,000 - 500,000
- tax deducted at source by withholder 10,371 44,891 55,262
- carry forward of tax credit of previous year 25,335 - 25,335
- Capital Gain Tax on property disposal 5,037
Total 1,590,743 44,891 1,630,597
At reporting date Bank’s equity interest in Subsidiary is 58.00% and that of NCI is 42.00%.
8.1 NCI’s share in the profit of Subsidiary
Subsidiary’s net profit attributable to NCI is presented hereunder:
(NPR) 000
Particulars Current Previous
Year Year
Subsidiary’s operating profit 135,142 55,641
- less : provision for staff bonus (12,286) (5,058)
- less : provision for income tax (31,165) (12,646)
Subsidiary’s net profit 91,691 37,937
NCI’s share @ 48% 44,012 18,210
168 Nabil Bank Limited Annual Report 2016/17 169

8.2 NCI in Consolidated Balance Sheet Ø Increasing complexities in risks, vulnerabilities a serious threat its success. As such risk
With increase in Subsidiary’s net worth, the proportionate equity attributable to NCI has also of businesses and fast changing world management is a daunting task that has a grave
increased to NPR 144,531 thousands (PY – NPR 112,764K) at a year-on-year growth rate of with intense competition pose a threat to impact on its operations. The Bank has taken
28.17% (PY – 191.07%). sustainability. The Bank, in order to address the into account the likely impact of the identified
(NPR) 000
varieties of risk that keep coming out of business risks and has aligned its business accordingly.
Subsidiary Co. NCI’s share operations, has identified different risks and
Particulars Current Previous Current Previous
Year Year Year Year adopted different measures to minimize them. Ø Banking business in Nepal is exposed to
Carrying amount Credit Risk to a much larger extent. Nabil’s
- paid up equity capital 150,000 150,000 72,000 72,000 Ø Capital is crucial component in any business business is also concentrated in its Credit Risk
- reserves and surplus 151,106 84,924 72,531 40,764 and even more so in case of banks. Hence, Exposure. Bulk of its earnings is generated from
Total 301,106 234,924 144,531 112,764 bank capital is regulated so as to withstand credit related business, be it in form of interest
Increment in carrying amount (%) 28.17% 55.93% 28.17% 191.07% the impact of adverse developments in its income, fee income or forex income. Given the
internal operations and its external operating volatile economic environment that the Bank
Apart from its share in equity, NCI also benefited from a gross dividend payout of NPR 14,400 environment. Similarly, the Bank needs to operates in, the margin between performing loan
thousands, or 20% on paid up equity, out of previous year’s income that was subsequently
maintain sufficient capital for business growth. and non-performing loan can often be very thin.
distributed in the current year.
The Bank has adopted ICAAP and it follows Risk Therefore it is always a major threat that any of
Management Guidelines while taking decision on the Bank’s credit customers may default.
9. Risk Management and on Banking Supervision and are taken as any business.
Basel III Disclosure reference before assuming risk exposure in Ø Nabil has always placed Credit Risk
Ø Risk is an inherent feature of any business any new business. The Bank, taking stock of Ø Capital planning is an integral part of the Management in a high priority list. The Bank
and it drives an entity towards income local ingredients as well, defines different risk Bank’s medium term strategic planning and has Credit Policy and Investment Policy in place
generation. Likewise, risk management objective aspects and designs system to minimize and annual budget formulation process. Total which guides the do’s and the don’ts in business
of the Bank is to strike balance between risk remove those risks. The Bank’s risk appetite and risk weighted exposures for the projected generation. Any generation of risk assets and
and return, and ensure optimum risk-adjusted approach towards risk taking is discussed in level of business operations is calculated, the their impact on long term value generation
return on capital. A reasonable level of return detail at management and board level. These are required capital level is projected, and a plan is is well deliberated in every credit proposals.
is essential for sustainability of the business. always aligned with the business, its return and formulated to maintain the required capital. Risks and returns are properly weighed and risk
However, taking higher risk in search of sufficiency of capital. mitigating measures are explicitly spelled out.
higher earnings increases the risk of failure of Ø Ever since its establishment 33 years ago,
business. Thus effective risk management is Ø The Bank follows Internal Capital Adequacy the Bank has been able to generate and retain Ø In its’ Risk Management Architecture the Bank
a must for sustainability of business. Towards Assessment Process (ICAAP) and Risk substantial earnings in order to ensure adequate has set clear demarcation between business
this end the Bank has implemented robust risk Management Guidelines while taking decision on capital formation, as required for its business generation division and risk management
management architecture as well as policies and any business. It has always taken note of ICAAP growth. The Bank is well capitalized and able division. Accordingly the Bank has set up a
processes approved by the Board of Directors. and has taken steps accordingly in ensuring to maintain the required capital through internal separate Credit Risk Division, which is headed
These encompass independent identification, soundness of capital position and sustainability generation, and equally through other means if by Chief Risk Officer (CRO), one of the most
measurement and management of risks across of the business. Bank’s different committees like needed. senior level positions in the Bank. The division
various facets of banking operation. Audit Committee, Risk Management Committee is independent to business generation and does
review the business and risks periodically and Ø The Bank’s business is exposed to increasing not have any targets, nor has any incentive
  take account of stress test results, scenario complexities in risks which pose a threat to for growth in business. The division oversees
Ø Bank has been following the practices that analysis so as to align risk, return and capital in sustainability. Failure in timely identification global, macro, micro and unit level risk that
are envisaged in Principles of Basel Committee sustainable manner. of risk and its correction/management poses arise out of daily business operation as well as
170 Nabil Bank Limited
out of changes in market conditions that affect
particular borrowing customers / counterparties.
Ø The Bank’s credit functions are broadly
categorized as Large and Corporate (including
infrastructure financing), SME and Retail credit.
Credit Risk Division is manned with separate
set of skills for analyzing risks in these different
credit functions and all of them report to the
Chief Risk Officer. Besides, the Bank has a
system to check and analyze the health of credit
portfolio minutely at each borrowing unit level
irrespective of size of the exposure on defined
periodic manner. At all times this system ensures
that any borrowing unit showing smoke signal
gets prompt doses of correction as deemed
appropriate.
Ø The Bank makes credit extension decision by
assessing each business proposal thoroughly. It
also ensures that the inherent credit risks that
are associated with the business are addressed
appropriately through coverage of better safety
margin, additional collateral back up and lower
exposure to keep the business at low leverage.
Ø There is separate Credit Administration and
Support Division (CAS Division), which prepares
security documents and retains custody of
same. This is a four eyes concept in verifying
the security aspects in line with the approved
conditions. CAS Division is also independent to
business division and it ensures, on an ongoing
basis, on the safety and going concern of the
borrowers, through post relationship assessment.
Periodic review of all accounts under credit
exposure is one of the prudent practices that
the Bank follows in order to take necessary
steps to avert/minimize the risk. Quarterly on-
site inspection of the borrower and suggestion
for timely corrective actions itself help protect
borrowers as well. Besides, in case any borrower
face difficulties and pose a risk to the Bank in
terms of fall in the value of assets, the Bank sets
aside adequate loan loss provision. Any business
decision for credit exposure is taken only if it is
vetted and approved by the credit risk division.
Business generation unit singly cannot take a
credit exposure decision except on instrument
purchase where security is instrument itself and
the loan gets settled once instrument is realized.
Ø Bank has standardized Product Papers that
stipulate proper governance and procedure
for all credit relationship. Similarly, periodic
monitoring of business and annual review of
credit relationship provides the Bank a fair idea
on whether or not to continue the relationship.
Besides, periodic review of same by the Internal
Audit Department or Statutory Audit also
assists in identifying the status of exposure/
relationship in line with guiding documents
of the Bank. Any weaknesses on the part of
the business of borrower and the relationship
strength are independently assessed by Internal
Audit and the advice is taken positively for
necessary changes. Similarly, a separate
division, Centralized Loan Administration
Department (CLAD) which reports to the COO
takes responsibility for exposure accounting,
disbursement and settlement.
Ø Within the Credit Risk Management,
processes are well defined where checking,
control and independence of the credit
extension, risk assessment, review, monitoring
and exposure accounting is fully complied with.
Ø All such actions and processes are properly
recorded, reported and discussed. These reports
on need basis and on a defined frequency are
put to the oversight of Senior Management, Risk
Management Committee and the Board. Internal
Audit Department of the Bank too takes up the
matter on credit observations and discusses the
same at Audit Committee. Senior Management
or the Board, on need basis, issue instructions
as appropriate.
Ø Operations Risk that arises out of inefficient
processes and people inside and outside the
Bank is increasing these days. Operation risk,
market risk and other risks are discussed in
the Asset Liability Management Committee
(Alco) in line with ALM Policy. Banking System
(BS) is another area of concern and vulnerable
to threats from outside. Information and
Technology Division in the Bank reviews and
checks the security aspects in line with IT Policy
of the Bank. Bank has conducted an IS Audit
of the Bank’s system and suggestions given by
the audit with respect to safety and security
standards are being put in place.
Ø 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 SIMs, policies and
guidelines including Directives and circulars
from central bank. 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.
Annual Report 2016/17 171
Ø 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 errors due
to inadequate knowledge on the part of staff.
Similarly, awareness to the public is made
on our services and products periodically by
placing notices in the website of the Bank, or in
branches or publishing notices as appropriate.
Staffs are given orientation on the job including
that of system of the Bank before they are
placed for the job and are guided to follow
the SIMs for the job. Any staff for the first
time in any job is put under the supervision
of an experienced staff and is allowed to work
independently after attaining required skills.
Bank has Whistle Blowing Policy to report to
senior or management directly on anyone’s
suspicious conduct outside and inside the
Bank. Skill development and skill enhancement
programs are conducted on periodic basis
and staffs identified for the program get the
opportunity for training, seminar and workshop.
Adequate numbers of trainings are conducted
and staffs required with training are given the
opportunity for skill enhancement. Knowledge
sharing is one of the core methods of skill
development. If a staff gets any training, s/he is
encouraged to share the same among the peers
in the division/branch.
Ø In operations, the Bank has put in place
a maker and checker concept in which a
transaction has to compulsorily go through two
individuals from a control standpoint with proper
transaction right to capture deviations, if any.
Similarly MIS Reports are generated to check
correctness of transactions and any errors are
promptly addressed and rectified. The activities
172 Nabil Bank Limited Annual Report 2016/17 173

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.
Ø Each desktop is implemented with Active
Directory System (ADS) which does not allow
user to take away the data in devices like
data traveler (pen drive) or bring in data for
processing or any other purposes posing threat
to the repository. Similarly individual data in
desk are also stored and backed up in periodic
interval at data center so that any loss of data in
desktop can be retrieved from data center.
Ø The Bank has a separate Legal division
Ø The Bank in line with Basel provisions
calculates risk exposure and allocates sufficient
capital/cushion for perceived operational risks.
Ø Market Risks are discussed at Asset Liability
Management Committee (ALCO) of the Bank
and even discussed at respective division level
on open position on daily basis. The limits for
open position are controlled, level wise which
ensures in-depth knowledge of the market and
movement before taking decision (by choice).
The monthly reports on such aspects are well
discussed and dealt in ALCO. The committee
ensures functioning of the jobs in line with
the policies and procedures and suggests/
recommends for necessary steps 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 Treasury Front
Office which reports to the Chief Financial
Officer and exposure accounting including
booking of income/expense is done from
Treasury Back Office (TFO) which reports to the
Chief Operating Officer. The Bank assesses the
open position on daily basis and calculates risk
exposure for allocation of required capital in line
with Basel provisions. Likely impact on earnings
Ø The Bank takes on the capital adequacy norms
pursuant to the central bank’s statutory provision
under Basel requirements, like ICAAP, Risk
Management Guidelines etc. The determinants
to this end are the past experiences with the
products, Bank’s 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 of the Bank. Wherever possible
the Bank obtains additional collateral, set aside
higher safety margin and operates under prudent
banking norms. The Bank, equally through its
Ø Risk Management Framework and Reporting Line are presented as follows:
Committee
Relating Board
to Staff Services of the Directors
and Facilities
annual plans, projects the capital adequacy and
risk exposure growth which is reviewed monthly.
The Bank also reviews its total risk weighted
exposure and Capital Adequacy Ratio (CAR) on
daily basis. These are discussed at ALCO and
Ex-Com (Executive Committee) meetings on
monthly basis. If growth exposure is higher than
the formation of capital in the Bank, the Bank
pulls rein on business generation so that CAR
can be maintained. However the Bank has not
experienced such instances in its history of 33
years. The adequacy of capital is seriously taken
into consideration at regular meetings like ALCO,
Ex-Com, RMC and the Board meetings.
Audit
Committee
ALCO
(including CEO)

which is adequately manned by qualified and due to change in the market condition and Risk Chief (Operations Risks
Management Executive and Market Risks -
experienced staff. All legal agreements, deeds change in the standing of the counterparty are Committee Officer exchange, interest,
equity price, liquidity
and documents including claims and charges well assessed periodically and necessary actions and others risk)
are thoroughly studied prior to making any are taken as appropriate. TFO is equipped
decision involving such documents. Compliance with advanced dealing platform for timely and
with existing rules and regulations and business effectively concluding the deals. Similarly the
Head– Credit
practices practiced globally and locally are taken unit is equipped with modern and advanced Head-Legal, Risk Management
Chief Risk Officer of Infrastructure,
Operation Risk, (Credit Risks and
into account before arriving at the decision. information system on global news, market AML & Corporate, SME,
Legal Risks) and Retail
Compliance
Professional services of experts are sought after movements and any incidents so that bank can Credit

wherever the Bank needs expert’s opinion on manage and maintain the position favorably.
pertinent issues.
174 Nabil Bank Limited
Ø Internal audit of the Bank is independent from
the management and directly reports to Audit
Committee, a board level committee. Internal
Audit too is conducted in line with the spirit of
risk based audit. Further, the Bank’s 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.
Ø Bank has Risk Management Committee (a
board level committee comprising member
from risk divisions of the Bank) where overall
risk management including performance of
the Bank is discussed in detail so as to assess
the solvency of the Bank and necessary
instructions are issued to concerned division
and recommendation are made to the Board
for necessary deliberation and implementation.
Ø Bank has also formed a committee called,
Committee Related to Staff Service and
Benefit (a board level committee comprising
members from HRD and Finance divisions of
the Bank) where overall policy with respect
to employment management and staff benefit
is assessed and necessary suggestions are
made to the Board taking account of market/
environment.
Ø The Bank has developed a risk assessment
culture and has in place the required reports
for assessing concentration of risks. Periodic
performance reporting based on Balanced
Scorecard, in line with capital strength, to
the Board is also in place. These reports are
periodically put up to the board. Board also
reviews the same and issues instructions, as
appropriate, to the Bank’s management.
- Deposits with Banks,
- Deposits with other banks and financial
institutions,
- Securities / instruments issued by the
Government and NRB,
- Guarantee of government of Nepal,
- Security / guarantee of other sovereigns,
- Guarantee of domestic banks,
- Security / guarantee of specified multilateral
development banks, and
- Security / guarantee of foreign banks.
Ø Credit risk mitigating factors are recognized ECA rating 0 - 1 and ECA rating 2.
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.
Annual Report 2016/17 175
9.1 Credit Risk Mitigation
During the current financial year, the Bank has availed the benefits of credit risk mitigation as under:
(NPR) 000
Particulars Current Previous
Year Year
Benefits availed of following credit risk mitigants :
- deposit with own bank 1,961,649 1,835,738
- deposit with other banks and financial institutions - -
- securities and bank guarantees issued by foreign banks 2,462,339 2,034,895
- securities issued by nepal government and nepal rastra bank 58,017 610,978
Total 4,482,006 4,481,611
While availing the benefits of credit risk mitigation, supervisory haircuts have been assigned on case
to case basis by:
Ø 20%, in case of CRM in the form of deposits with other banks and financial institutions,
Ø 20% and 50%, in case of CRM in the form of security / guarantee of foreign banks with
9.2 Capital Structure and Capital Adequacy:
The Bank’s capital adequacy status as the reporting date is presented as under:
(NPR) 000
Particulars Current Previous
Year Year
Total Capital Fund 14,752,639 12,203,614
- Core Capital Fund (Tier - I) 13,321,806 10,939,187
- Supplementary Capital Fund (Tier - II) 1,430,833 1,264,428
Total Risk Weighted Exposures (RWE) 118,827,902 104,039,643
Tier - I Capital Fund to Total RWE (%) 11.21 10.51
Total Capital Fund to Total RWE (%) 12.42 11.73
Detail information on capital adequacy ratio calculation is presented in financial statements under
Schedule 30 (A1), 30 (B), 30 (C), 30 (D) and 30 (E).
176 Nabil Bank Limited Annual Report 2016/17 177

9.3 Components of Tier I Capital Fund: 9.5 Components of Tier II Capital Fund:
(NPR) 000 (NPR) 000

Particulars Current Previous Particulars Current Previous

Year Year Year Year
Eligible items for Tier - I Capital Fund : Eligible items for Tier - II Capital Fund :
a. Paid up equity share capital 6,185,507 4,756,570 a. Cumulative and / or Redeemable Preference Share - -
b. Irredeemable Non-cumulative preference shares - - b. Subordinated Term Debt 12,000 72,000
c. Share Premium 74 74 c. Hybrid Capital Instruments - -
d. Proposed Bonus Shares 1,855,652 1,426,971 d. General loan loss provision 907,688 768,414
e. General Reserves 4,790,500 4,067,500 e. Exchange Equalization Reserves 363,600 282,100
f. Retained Earnings 333,768 618,353 f. Investments Adjustment Reserves 131,171 126,040
g. Current year Profit/(loss) - - g. Assets Revaluation Reserves - -
h. Debenture Redemption Reserves 288,000 228,000 h. Other Reserves 16,374 15,874
i. Capital Redemption Reserves - - Supplementary Capital Fund (Tier - II) 1,430,833 1,264,428
j. Capital Adjustment Reserves - -
k. Dividend Equalization Reserves - -
Subordinated Term Debt is netted off with set at 1.25% of total risk weighted exposures
l. Other Free Reserves 81,095 71,578
debenture redemption reserve NPR 288,000 i.e. NPR 1,485,349 thousands derived from
m Less: Goodwill - -
thousands, thus is presented at Nil in Tier II total risk exposures of the Bank at year end.
n Less: Fictitious Assets not written off (61,414) -
Capital Fund, while the debenture redemption However, the additional loan loss provision
o Deferred Tax Reserve (73,376) (63,858)
reserve of NPR 288,000 is presented in Tier created for performing loans in respect of
p. Less: Investment in equity of licensed Financial Institutions - -
I Capital Fund. This presentation reflects the loans secured by personal guarantee and loans
q. Less: Investment in equity of institutions with financial interests (78,000) (78,000)
diminishing value of these instruments as a extended in excess of the Bank’s single obligor
r. Less: Loans & Facilities extended to Related Parties & Restricted Lending - (88,000)
continuing source of strength and complies limit are defined as specific provision and
Core Capital Fund (Tier - I) 13,321,806 10,939,187
with the requirement of applying a cumulative do not qualify for inclusion in Tier II Capital
discount (amortization) factor of 20% per Fund. The Bank has thus presented NPR
Other Free reserve includes deferred tax reserve, interest spread reserve and special reserve fund
annum for capital adequacy computations, 907,688 thousands general loan loss provision
presented in Schedule – 2 of the financial statements.
during the last five years to maturity. This component under Tier II capital fund in above
presentation ensures avoidance of a sudden table. This amount differs with the loan loss
9.4 Deductions from Core Capital:
drop in the Bank’s capital fund, by debenture provision of NPR 950,353 thousands in respect
Following items are deducted from Tier I Capital Fund:
value, in the event of its redemption. The of pass loans (including watch list) presented in
ØNPR 78,000 thousands equity investment in Subsidiary
carrying value of debenture continues at its face Schedule 13 due to the reason explained above.
ØNPR 73,376 thousands deferred tax assets
value of NPR 300,000 thousands in the Bank’s
ØNPR 61,414 thousands software assets
financial statements. Other Reserves NPR 16,374 thousands
presented under Tier II Capital Fund is the
General Loan loss provision created in respect contingent reserve fund disclosed in this notes
of performing loans is eligible for inclusion in to accounts earlier in point 2.3.2.
Tier II Capital Fund. The maximum threshold is
 178
Nabil Bank Limited

thousands.

j. Other Assets
Particulars

Particulars
for Credit Risk

for Market Risk

h. Past due claims

c. Claims on Banks

i. High Risk claims

k. Off Balance Items

for Operational Risk
Risk Weighted Exposures :

Adjustments under Pillar - II

b. Claims on Other Financial Entities

Ø Interest rate: 8.50% per annum

e. Claims on Regulatory Retail Portfolio

a. Claims on Government & Central Bank

f. Claims Secured by Residential Properties

Risk exposure categories under Credit Risk :

g. Claims secured by Commercial real estate

Ø Maturity period: 10 Years (2018 A.D.)
Ø Interest Payment frequency: Half Yearly

add: 3% Capital Charge for Operational Risk

Total risk weighted Exposure under Credit Risk

9.6 Details of Subordinated Term Debt

Ø Claim in case of liquidation: After depositors.

features of this capital instrument are as follows:

add: 2% of the total RWE upon Supervisory Review

d. Claims on Domestic Corporates and Securities Firms

104,039,643K), a growth of 14.2% p.a. (PY – 18.5%).

add: … % of the total Deposit due to insufficient Liquid Assets

Ø Issue size: 300,000 units at NPR 1,000 per unit paid up

Total Risk Weighted Exposures (after bank’s adjustments of Pillar II)

add: …. % of the total RWE due to non compliance to Disclosure Requirement

9.8 Risk Weighted Exposures under 11 categories of Credit Risk

9.7 Risk Weighted Exposures for Credit, Market and Operational Risk
Ø Pledgebility: Can be pledged with banks and financial institutions except Nabil.

105,621,541
12,525,980
1,861,633
6,793,552
501,784
237,047
6,354,617
6,798,742
64,207,430
6,340,757
-
-
Year

290,251
7,798,939
105,621,541

118,827,902
1,705,849
3,411,322

Current
-
-
Year
Current
Total risk weighted exposures has increased to NPR 118,836,517 thousands (PY – NPR
reserve balance has increased to NPR 288,000 thousands from previous year’s NPR 228,000
Ø Bank appropriated NPR 60,000 thousands into redemption reserve in the current year and the

91,993,791
Year
Previous

12,341,243
2,076,097
4,453,401
849,551
57,395
5,763,025
5,474,172
54,188,947
6,789,960
-
-
Year
Previous

-
-
debentures. The Bond is listed at Nepal Stock Exchange (NEPSE) with symbol NABILB2075. Main

344,106
7,265,401

1,448,246
2,988,099
91,993,791

104,039,643

(NPR) 000
(NPR) 000
Bank has raised NPR 300,000 thousands as debt capital in the year 2008 A.D. through issuance of

10. Statement of Liquidity Risk Analysis as at 15 July 2017

(NPR) 000

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 1,637,483 - - - - - - 1,637,483
2 Balances held with Banks and Financial Institutions 1,179,839 - - - - - 10,274,408 11,454,247
3 Investments in Foreign Banks - 5,470,760 3,314,758 4,848,477 4,435,450 2,295,908 - 20,365,353
4 Call Money - - - - - - - -
5 Government Securities 250,000 269,915 968,420 1,480,896 - - 8,571,500 11,540,731
6 NRB Bonds - - - - - - - -
7 Inter-Bank / Financial Lending / Investments in Local Banks - - - - - - - -
8 Loans and Advances (including staff loans) 1,469,349 2,996,179 8,453,706 11,946,413 7,937,015 7,937,015 53,331,961 94,071,636
9 Accrued Interest Receivables (including AIR from staff loans) 12,210 22,222 314,731 166,593 136,440 112,902 97,528 862,626
10 Reverse Repo - - - - - - - -
11 Receivable under Commitment - - - - - - - -
12 Receivable under facility mentioned in S. No. 20, 21 and 22 1,204,640 2,946,112 7,701,717 5,909,727 4,719,438 2,600,865 5,269,730 30,352,230
13 Others 335,265 2,587 115,679 1,801 - - 35,073 490,404
Total Assets 6,088,786 11,707,775 20,869,009 24,353,908 17,228,343 12,946,690 77,580,200 170,774,710
Liabilities :
14 Current Deposits (Including Margin Deposits and Matured TDs) 405,594 608,392 - - - - 18,804,070 19,818,056
15 Savings Deposit 875,282 1,312,923 - - - - 49,210,787 51,398,993
16 Fixed Deposits 167,434 4,356,223 1,640,299 3,257,078 3,086,827 4,724,322 6,812,494 24,044,677
17 Bonds / Debentures - - - - - - - -
18 Borrowings: 876,775 2,166,150 4,185 - 2,400 1,300 5,500 3,056,310
Call / Short Notice - - - - - - - -
Inter-Bank / Financial Institutions 876,775 2,166,150 - - - - - 3,042,925
Refinance - - 4,185 - 2,400 1,300 5,500 13,385
Others (Standing Liquidity Facility) - - - - - - - -
19 Other Liabilities and Provisions 194,370 792,406 177,503 99,970 30,355 36,607 669,608 2,000,819
Sundry Creditors - - - - - - - -
Bills Payable 63,836 95,759 95,754 63,836 - - - 319,186
Accrued Interest Payable 1,476 467 - - - - - 1,943
Provisions - - - - - - - -
Others 129,058 696,179 81,749 36,133 30,355 36,607 669,608 1,679,689
20 Payable to Institutions under Commitment (Customer Acceptance) 248,840 494,837 573,846 165,192 48,343 3,315 - 1,534,372
21 Unutilised Credit Facilities 707,268 1,293,918 1,813,540 2,487,691 2,318,380 632,831 1,040 9,254,667
22 Letter of Credit / Guarantee (Net) 382,381 1,484,703 6,170,077 2,962,651 2,253,149 1,740,385 5,031,037 20,024,385
23 Repo - - - - - - - -
24 Payable of facilities under mentioned in S. No. 11 - - - - - - - -
25 Call Deposit 853,208 1,279,812 - - - - 21,501,410 23,634,431
26 Others - - - - - - - -
Total Liabilities 4,711,153 13,789,364 10,379,450 8,972,582 7,739,453 7,138,761 102,035,947 154,766,710
Annual Report 2016/17

Net Assets 1,377,633 (2,081,589) 10,489,559 15,381,326 9,488,889 5,807,929 (24,455,747) 16,008,000
Cumulative Net Assets 1,377,633 (703,956) 9,785,603 25,166,929 34,655,818 40,463,747 16,008,000
179
180 Nabil Bank Limited Annual Report 2016/17 181

11. Related Parties Disclosures 11.3 Compensation to Management Level Employees

11.1 Key Management Personnel The compensation paid towards the executive management team, which includes all managerial
Bank has defined its key management personnel to include board members, chief executive officer and level employees of the Bank is as follows:
(NPR) 000
all employees at Manager Level in the organizational hierarchy. Following is a list of Board of Directors
and CEO bearing office at year-end. Managerial level Head Short term Post Total
count benefits retirement benefits
benefits

Mr. Shambhu Prasad Poudyal Chairman Chief Executive Officer 1 18,563 2,135 20,698

Mr. Dayaram Gopal Agrawal Director Asst. General Manager and above * 7 35,300 10,952 46,252

Mr. Nirvana Kumar Chaudhary Director below Asst. General Manager 53 145,484 45,848 191,332

Mr. Ashish Sharma Director Total 61 199,347 58,935 258,282

Mr. Virender Paul Dani Director *as of balance sheet date there are only 6 AGM and above employees except CEO, making the total head count including CEO 60.

Mr. Krishna Prasad Sharma Director

Mr. Pratap Kumar Pathak Professional Director Short term benefits are paid to employees in the year of accrual itself.
Mr. Sashin Joshi Chief Executive Officer

11.2 Compensation to Board of Directors
All members of the Board are non-executive directors and only the following specific non-executive
allowances paid:
(NPR) 000
Nature of Transation Current Previous
Year Year
Meeting Fees Paid 3,240 2,097
Allowance and other expenses 3,334 2,832
Total Compensation Paid 6,574 4,929
Directors are paid a monthly allowance to cover newspaper and communication expenses. Other
expenses are incurred for conducting board meeting and towards reimbursement of travelling,
accommodation and daily allowances paid to directors who reside abroad and have to travel to
Nepal for attending board meetings.
Post-employment benefits include incremental leave provision, provident fund and gratuity
payment, and employee’s life insurance premium paid by the employer. These benefits accrue over
employment period but are realizable at the hands of employee after retirement.
Other benefits (perquisites) are provided to CEO and managerial level employees as per the Bank’s
policy. Above, head count and total benefits also include payment made in the current year to those
management personnel who retired/resigned during the year.
11.4 Transactions with Subsidiary
11.4.1 Bank has entered into a Management Service Agreement (MSA) with Subsidiary for providing
management services. Provisions laid in MSA are in line with arms-length principle. Bank has
deputed its staff as the Subsidiary’s CEO.
11.4.2 Bank has entered into a Service Level Agreement (SLA) with Subsidiary for providing various
administrative services. Provisions laid in SLA are in line with arms-length principle. Bank’s bullion
business is outsourced to Subsidiary under terms covered in SLA.

11.4.3 Other transactions between Bank and Subsidiary are listed hereunder:
Ø Subsidiary maintains deposit and overdraft accounts with Bank
Ø Subsidiary is Bank’s share registrar
Ø Bank’s branch offices are sales point for Portfolio Management Services products of Subsidiary
Ø Bank’s branch offices are collection centers for securities issued by Subsidiary
182 Nabil Bank Limited
11.4.4 Transactions with Subsidiary (Nabil Investment Banking Ltd.)
Balance Sheet (NPR) 000
Particulars 2017 2016
Total Assets - -
Loans and advances - -
Other receivables - -
Total Liabilities 211,089 57,405
Customer deposits 210,877 56,344
Other Payables 213 1,061
Commitments and Contingencies (NPR) 000
Particulars 2017 2016
Undrawn Credit Limits 7,600 8,000
Other Contingencies - -
Total - 8,000
Income Statement (NPR) 000
Particulars 2017 2016
Interest Income 6 88
Interest Expense 20,347 1,413
Other Income: 3,623 3,687
SLA Fee income 500 500
TSA Fee income 2,576 2,625
PMS commission income 547 561
Other Expense: 7,387 3,897
Bullion commission expense 6,962 3,472
RTS-Annual Fee 425 425
Dividend Income (net) - 14,820
11.4.5 The subsidiary has reimbursed Gross amount of Rs 2,576,090 to the Bank as employee
benefits paid to Mr. Pravin Raman Parajuli, staff of Nabil Bank deputed as the CEO of the subsidiary.
11.5 Transactions with companies where directors have financial interest
In the current year the Bank entered into financial transactions with following related entities where
directors of the Bank have financial interest.
Annual Report 2016/17 183
11.5.1 CG Finco Pvt. Ltd. (CGF)
Mr. Nirvana Chaudhary, director of the Bank, held the position of Chairman at CGF. CGF is a depository
client of the Bank and has maintained NPR 16,570 thousands in its deposit account maintained with the
Bank. The Bank paid NPR 61 thousands interest to CGF in the current year.
CGF is a 48% shareholder in the Bank’s Subsidiary Co. Nabil Investment Banking Ltd. The Subsidiary
recorded gross dividend payout of NPR 14,400 thousands to CGF during the current year that was
distributed out of previous year’s profit. The payment was made net of 5% TDS.
No loans were granted and all transactions with CGF were conducted in arms-length.
11.6 Transactions with the Bank’s Post - Employment Benefit Plan
11.6.1 Bank’s post-employment benefit plan is managed by Nabil Bank Limited Retirement Fund (NRF).
Bank has entered into Service Level Agreement (SLA) with NRF for providing human resource to NRF with
sole purpose of delivering quality service as per the Bank’s service standards.
11.6.2 Transactions between Bank and NRF are listed hereunder:
NRF maintains deposit and overdraft accounts with Bank. The overdraft was settled on March 10, 2017.
Bank deposits Gratuity and Provident Fund contributions to NRF
11.6.3 Transactions with NRF
Balance Sheet (NPR) 000
Particulars 2017 2016
Total Assets - 1,323
Loans and advances - 1,323
Other receivables - -
Total Liabilities 1,544,676 447,309
Customer deposits 1,394,771 29,7404
Debenture 149,905 149,905
Commitments and Contingencies (NPR) 000
Particulars 2017 2016
Undrawn Credit Limits - 248,677
Other Contingencies - -
Total - 248,677
Income Statement (NPR) 000
Particulars 2017 2016
Interest Income 3,347 1,323
Interest Expense 38,531 26,193
Other Income: 2,740 1,500
SLA Fee Income 2,740 1,500
Other Expense: 156,427 111,551
Provident/Gratuity Fund Expense 156,427 111,551
184 Nabil Bank Limited
11.7 Transactions with Mutal Fund Investment- Nabil Balanced Fund-I
11.7.1 The Bank has sponsored a Mutual Fund Scheme under the name “Nabil Balanced Fund - I”.
The Bank has subscribed to 10,500,000 units @ Rs. 10 per unit.
11.7.2 Transactions between Bank and Nabil Balanced Fund-I are listed hereunder:
Balance Sheet (NPR) 000
Particulars 2017 2016
Total Assets 105,000 105,000
Investment (Seed Capital) 105,000 105,000
Other receivables - -
Total Liabilities 513,123 308
Customer deposits 513,123 308
Commitments and Contingencies (NPR) 000
Particulars 2017 2016
Undrawn Credit Limits - -
Other Contingencies - -
Total - -
Income Statement (NPR) 000
Particulars 2017 2016
Interest Income - -
Interest Expense 10,148 289
Dividend Income 31,500 14,700
11.8 Transactions with Mutal Fund Investment -Nabil Equity Fund
11.8.1 The Bank has sponsored a Mutual Fund Scheme under the name “Nabil Equity Fund”. The
Bank has subscribed to 17,500,000 units @ Rs. 10 per unit.
Annual Report 2016/17 185
11.8.2 Transactions between Bank and Nabil Equity Fund are listed hereunder:
Balance Sheet (NPR) 000
Particulars 2017 2016
Total Assets 175,000 -
Investment (Seed Capital) 175,000 -
Other receivables - -
Total Liabilities 517,645 -
Customer deposits 517,645 -
Commitments and Contingencies (NPR) 000
Particulars 2017 2016
Undrawn Credit Limits - -
Other Contingencies - -
Total - -
Income Statement (NPR) 000
Particulars 2017 2016
Interest Income - -
Interest Expense 5,876 -
Dividend Income - -
12. Ratios and other information
12.1 Weighted average interest rate spread
(NPR) 000
Particulars Current Previous
Year Year
Weighted average interest :
- yield on loans and investments 6.38% 6.53%
- cost on deposit and borrowings 2.15% 2.56%
Average Interest Spread 4.23% 3.97%
Above yield and cost is calculated based on the annual average volume of loans, investments,
deposits and bonds/borrowings. The actual interest income and interest expense reported in the
Bank’s profit and loss account have been taken in the above calculations.
186 Nabil Bank Limited Annual Report 2016/17 187

12.2 Interest spread for the month of Asar 2074 12.4.2 NPA Ratios NPR
Under regulatory requirement, licensed banks and financial Institutions are required to publish
Particulars Gross Loss Net
monthly interest spread of local currency deposits and local currency loans / investment in government NPL Provision Loan

securities. The Bank’s local currency interest spread for the month of Asar 2074 (the last month of
current financial year) is recorded at 4.92%.
12.3 Earnings per Share
The Bank’s and the Group’s earnings per share has been disclosed in the financial statements under
Schedule 31 “Principal Indicators”. At reporting date, the Bank’s and the Group’s earnings per share
stood at NPR 58.41 and NPR 58.99 respectively.
NPR.
Particulars Current Previous
Year Year
Net Profit for the year (in NRs. 000) 3,613,200 3,648,828
Weighted average number of outstanding shares 61,855,070 61,855,070
Earnings per Share in NRs. 58.41 58.99
Earnings per Share in NRs. (previous year) 59.26 57.36
Annual growth rate in Earnings per Share -1.43% 2.84%
The Bank’s EPS has decreased by NPR 0.85 and the Group’s EPS has improved by NPR 1.63
respectively. The marginal decline in EPS despite the increase in number of shares through the bonus
shares dividend of 30% in the last fiscal year reflects strong performance of the Bank. On the other
hand the Bank’s net profit has also increased by 28.16%.
Performing Loan 90,763,193 950,296 89,812,897
Non Performing Loans (NPL) : 728,059 663,829 64,230
- restructured / rescheduled 137,831 137,484 348
- substandard 71,413 17,853 53,560
- doubtful 20,846 10,523 10,323
- loss 497,969 497,969 -
Total 91,491,252 1,614,125 89,877,127
Gross NPL to Gross loans and advances 0.80%
12.5 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:
(NPR) 000
Particulars Amount
Loan Written Off 1,712
Interest Suspense related to written off loan 26,261
12.6 Summary of book write off loan and recovery
NPR

The Bank and the Group has not issued any form of capital raising instruments with embedded options
of conversion into equity shares. Consequently, the Bank’s and the Group’s basic and diluted earnings
per share both stand at NPR 58.41 and NPR 58.99 respectively.
12.4 Non-performing Assets
12.4.1 Amount of non-performing assets (both gross and net)
The Bank’s gross non-performing loans, inclusive of re-structured loans, are recorded at NPR 722,433
thousands (PY – NPR 889,035K), which is 0.79% (PY – 1.14%) of total loan. The Bank has set aside
possible loss provisioning of NPR 658,196 thousands (PY – NPR 798,500K) in respect of these loan assets.
Particulars Principal Interest Total
- loan written off till previous year 766,381 331,425 1,097,806
- loan written off in current year 1,712 1,785 3,497
Total loan written off (A) 768,093 333,210 1,101,303
- recovered till previous year (494,612) (90,841) (585,453)
- recovered in current year (6,987) (9,135) (16,122)
Total recovery from written off loan (B) (501,599) (99,976) (601,575)
Net not recovered portion (A-B) 266,494 233,234 499,728
- book write off 250,733 138,195 388,928
- actual write off * 15,596 129,390 144,986

(NPR) 000 Recovery ratio (on total write-off amount) 65.30% 30.00% 54.62%

Particulars Current Previous Changes % * The Bank has relinquished its recovery rights considering remote possibility of loan recovery.
Year Year
Loan Classification per NRB’s definition
- pass loan (including watch list) 90,763,193 76,841,366 13,921,827 18.1
- non performing loans 728,059 889,035 (160,976) (18.1)
- restructured / rescheduled 137,831 33,527 104,304 -
- substandard 71,413 60,458 10,954 18.1
- doubtful 20,846 90,507 (69,660) (77.0)
- loss 497,969 704,543 (206,575) (29.3)
Gross loans and advances 91,491,252 77,730,402 13,760,851 17.7
188 Nabil Bank Limited
12.7 Movement in loan loss provision and interest suspense
The Bank’s loan loss provision has decreased by NPR 10,260 thousands or 0.63% and reached
NPR 1,614,125 thousands at year end.
Interest suspense increased by NPR 94,687 thousands or 17.61% and reached NPR 632,312
thousands at year end. The suspended interest figures is about 7.84% of the Bank’s gross interest
income reported in Profit and Loss account. Interest accruals on non-performing loans continue to
be booked under suspense.
(NPR) 000
Particulars Current Previous Changes %
Year Year
Loan Loss Provision 1,614,125 1,624,385 (10,260) (0.63)
Interest Suspense (632,312) (537,625) (94,687) 17.61
13. Disclosure of components of cash and
cash equivalents in Cash Flow Statement:
13.1 From operating activities:
13.1.1 Interest Income
NPR.
Particulars Current Previous
Year Year
Interest Income in Income Statement 8,065,591,460 6,155,660,129
Interest Income from Long term Investment (306,896,544) (182,507,312)
Income Receivable on Short Term Investments (Current Year) (149,352,131) (115,418,895)
Income Receivable on Short Term Investment (Previous Year) 115,418,895 63,985,784
Interest Receivable on Staff Housing Loan (Current Year) (310,416,116) (257,349,512)
Interest Receivable on Staff Housing Loan (Previous Year) 257,349,512 219,327,295
Unearned Interest Income - Vehicle Loan (Current Year) 29,341 88,782
Unearned Interest Income - Vehicle Loan (Previous Year) (88,782) (161,726)
Unearned Interest Income - Housing Loan (Current Year) - 546,587
Unearned Interest Income - Housing Loan (Previous Year) (546,587) (1,093,175)
Unearned Interest Income - Bills (Current Year) - -
Unearned Interest Income - Bills (Previous Year) - -
Cash Inflow 7,671,089,048 5,883,077,957
13.1.2 Commission and Discount Income NPR.
Particulars Current Previous
Year Year
Commission and Discount Income in Income Statement 579,802,687 484,960,909
Unearned Commission - Guarantee (Current Year) 96,779,955 64,190,841
Unearned Commission - Guarantee (Previous Year) (64,190,841) (55,549,016)
Cash Inflow 612,391,801 493,602,734
Annual Report 2016/17 189
13.1.3 Income from Foreign Exchange Transaction
NPR.
Particulars Current Previous
Year Year
Exchange Income in Income Statement 647,266,251 586,057,240
Unearned Commission - Forward (Current Year) - -
Unearned Commission - Forward (Previous Year) - -
Cash Inflow 647,266,251 586,057,240
13.1.4 Interest Expense
NPR.
Particulars Current Previous
Year Year
Interest Expense in Income Statement (2,606,090,642) (1,829,689,197)
Interest Payable on Deposit (Current Year) 467,300 17,259
Interest Payable on Deposit (Previous Year) (17,259) (25,202)
Interest Payable on Borrowing (Current Year) 1,475,792 389,950
Interest Payable on Borrowing (Previous Year) (389,950) (171,531)
Cash Outflow (2,604,554,759) (1,829,478,721)
13.1.5 Staff Expense
NPR.
Particulars Current Previous
Year Year
Staff Expenses as per Income Statement (932,355,986) (775,306,321)
Bonus Expenses (regrouped from other liabilities) (514,144,486) (400,777,595)
Total Staff Expenses (1,446,500,472) (1,176,083,916)
Grauity Fund Balance (Current Year) 60,196,051 61,779,668
Grauity Fund Balance (Previous Year) (61,779,668) (63,141,191)
Leave Provision (Current Year) 205,540,832 168,445,338
Leave Provision (Previous Year) (168,445,338) (123,091,223)
Other Staff Expenses Payable (Current Year) - -
Other Staff Expenses Payable (Previous Year) - -
Staff Bonus Payable (Current Year) 514,144,486 400,777,595
Staff Bonus Payable (Previous Year) (400,777,595) (298,132,732)
Cash Outflow (1,297,621,704) (1,029,446,461)
190 Nabil Bank Limited
13.1.6 Office Operating Expense NPR.
Particulars Current Previous
Year Year
Office Operating Expenses as per Income Statement (652,414,089) (604,809,144)
Depreciation / Amortisation on Fixed Assets / Intangibles 96,366,050 93,352,281
Accrued Expense Payable (Current Year) 15,006,391 18,938,127
Accrued Expense Payable (Previous Year) (18,938,127) (10,891,893)
Cash Outflow (559,979,775) (503,410,630)
13.1.7 Income Tax Payments NPR.
Particulars Current Previous
Year Year
Income Tax Expense in Income Statement (Current Year) (1,537,762,220) (1,198,929,077)
Prior Period Tax - -
Current Year Tax Liability (52,981,114) (5,335,057)
Previous Year Tax Liability 5,335,057 (1,792,061)
Cash Outflow (1,585,408,277) (1,206,056,195)
NPR.
Reconciliation of Income Tax Paid from Tax Exhibit Current Previous
Year Year
1st Instalment of Corporate Tax Paid in Advance 600,000,000 450,000,000
Advance Tax Deposited at the request of LTPO - -
2nd Instalment of Corporate Tax Paid in Advance 450,000,000 350,000,000
3rd Instalment of Corporate Tax Paid in Advance 500,000,000 380,000,000
Payment of Previous Year’s Tax 20,000,000 21,564,350
Payment of Prior’s Year Tax - -
TDS Deposition (Insurance Commision, TSF, Dividend) 10,370,876 4,491,845
Capital Gain Tax on Sale of Land and Building 5,037,400 -
Cash Outflow 1,585,408,276 1,206,056,195
13.1.8 Other Expense
NPR.
Particulars Current Previous
Year Year
Income/(Expense) from Extra-ordinary Activities
as per Income Statement 11,259,673 (47,300,717)
Recovery of Loan Write Off (16,146,435) (4,864,999)
Bad Loan Write Off 1,711,713 46,077,408
Cash Outflow (3,175,049) (6,088,308)
Annual Report 2016/17 191
13.1.9 (Increase)/Decrease in Other Short Term Investment
FY 2016/17 NPR
Particulars Current Previous Inflow /
Year Year (Outflow)
Total Investment in Balance Sheet 32,593,660,420 36,527,949,503 3,934,289,083
Nepal Government Other Securities (8,821,500,000) (5,821,500,000) 3,000,000,000
Foreign Bonds - (268,139,993) (268,139,993)
Organized Institutions’ Shares (289,204,994) (255,886,900) 33,318,094
Organized Institutions’ Bonds and Debentures - - -
Indexed Linked and Credit Linked Deposits - - -
Mutual Fund (396,455,174) (172,036,460) 224,418,714
SWIFT Investment (1,916,482) (1,945,297) (28,815)
Provision for Investments 1,010,186 241,353 (768,833)
Cash Inflow (Outflow) 23,085,593,956 30,008,682,206 6,923,088,250
FY 2015/16 NPR
Particulars Current Previous Inflow /
Year Year (Outflow)
Total Investment in Balance Sheet 36,527,949,503 30,972,487,414 (5,555,462,089)
Nepal Government Other Securities (5,821,500,000) (2,183,994,157) 3,637,505,843
Foreign Bonds (268,139,993) (253,902,471) 14,237,522
Organized Institutions’ Shares (255,886,900) (265,032,600) (9,145,700)
Organized Institutions’ Bonds and Debentures - - -
Indexed Linked and Credit Linked Deposits - - -
NCM Mutual Fund (172,036,460) (148,303,530) 23,732,930
SWIFT Investment (1,945,297) (1,801,545) 143,752
Provision for Investments 241,353 6,987,391 6,746,038
Cash Inflow (Outflow) 30,008,682,206 28,126,440,502 (1,882,241,704)
13.1.10 (Increase)/Decrease in Loans, Advances and Bills Purchase
FY 2016/17 NPR
Particulars Current Previous Inflow /
Year Year (Outflow)
Loans and Advances in Balance Sheet
(Net of Provision & Loan Write-Off) (89,877,127,406) (76,106,016,881) (13,771,110,525)
Net Provision Change 10,259,691 10,259,691
Loan Write Off During the Year (1,711,713) (1,711,713)
Cash Inflow (Outflow) (89,868,579,428) (76,106,016,881) (13,762,562,547)
192 Nabil Bank Limited
FY 2015/16 NPR
Particulars Current Previous Inflow /
Year Year (Outflow)
Loans and Advances in Balance Sheet
(Net of Provision & Loan Write-Off) (76,106,016,881) (65,501,925,164) (10,604,091,717)
Net Provision Change 35,361,093 35,361,093
Loan Write Off During the Year (46,077,408) (46,077,408)
Cash Inflow (Outflow) (76,116,733,195) (65,501,925,164) (10,614,808,031)
13.1.11 (Increase) / Decrease in Other Assets
NPR.
FY 2016/17
Particulars Current Previous Inflow / Unearned Income
Year Year (Outflow)
Other Assets in Balance Sheet (Net of Provision) (3,925,596,077) (3,237,813,922) (687,782,155)
Income receivable on Investment 230,313,701 180,199,770 50,113,931
Interest receivable from Staff Housing Loan 310,416,116 257,349,512 53,066,604
Deferred Tax 73,376,049 63,858,363 9,517,686
Provision on Receivables (12,597,990) (14,748,453) 2,150,463
Cash Outflow (3,324,088,201) (2,751,154,730) (572,933,471)
FY 2015/16 NPR
Particulars Current Previous Inflow / Particulars Current
Year Year (Outflow)
Other Assets in Balance Sheet (3,237,813,922) (2,392,932,572) (844,881,350)
Income receivable on Investment 180,199,770 76,384,776 103,814,994
Interest receivable from Staff Housing Loan 257,349,512 219,327,295 38,022,217
Deferred Tax 63,858,363 53,371,488 10,486,875
Provision on Receivables (14,748,453) (19,715,883) 4,967,430
Cash Outflow (2,751,154,730) (2,063,564,896) (687,589,834)
Annual Report 2016/17 193
13.1.12 (Increase) / Decrease in Other Liabilities
NPR.
FY 2016/17
Particulars Current Previous Inflow /
Year Year (Outflow)
Bills Payable as per Balance Sheet 319,186,262 293,514,363 25,671,899
Other Liabilities as per Balance Sheet 2,552,181,076 2,232,864,622
Interest Payable on Deposits (467,300) (17,259)
Interest Payable on Borrowings (1,475,792) (389,950)
Gratuity Fund (60,196,051) (61,779,668)
Employees’ Welfare Fund / Leave Fund (205,540,832) (168,445,338)
Provision for Staff Bonus (514,144,486) (400,777,595)
Dividend Payable (514,491,796) (200,566,385)
(Int on Housing/Vehicle Loans and Bills) (29,341) (635,369)
Accrued Expense Payable (15,006,391) (18,938,127)
Unearned Income (Guarantee) (96,779,955) (64,190,841)
Other Staff Expenses Payable - -
1,144,049,132 1,317,124,090 (173,074,958)
Cash Outflow (147,403,059)
NPR.
FY 2015/16
Previous Inflow /
Year Year (Outflow)
Bills Payable as per Balance Sheet 293,514,363 243,433,464 50,080,899
Other Liabilities as per Balance Sheet 2,232,864,622 1,467,541,449
Interest Payable on Deposits (17,259) (25,202)
Interest Payable on Borrowings (389,950) (171,531)
Gratuity Fund (61,779,668) (63,141,191)
Employees’ Welfare Fund / Leave Fund (168,445,338) (123,091,223)
Provision for Staff Bonus (400,777,595) (298,132,732)
Dividend Payable (200,566,385) (110,141,802)
Unearned Income
(Int on Housing/Vehicle Loans and Bills) (635,369) (1,254,901)
Accrued Expense Payable (18,938,127) (10,891,893)
Unearned Income (Guarantee) (64,190,841) (55,549,016)
Other Staff Expenses Payable - -
1,317,124,090 805,141,958 511,982,132
Cash Outflow 562,063,031
194 Nabil Bank Limited Annual Report 2016/17 195

13.2 From investing activities: 13.3 From investing activities:

13.2.1 (Increase) / Decrease in Long Term Investments 13.3.1 Dividend Payments
NPR.

FY 2016/17 NPR Particulars Current Previous

Year Year
Particulars Current Previous Inflow / Closing Dividend Payable in Balance Sheet 514,491,796 200,566,385
Year Year (Outflow)
Proposed Cash Dividend Previous Year (711,518,920) (250,260,537)
Foreign Bonds - 268,139,993 268,139,993
Opening Dividend Payable in Balance Sheet (200,566,385) (110,141,802)
Long Term Government Bonds 8,821,500,000 5,821,500,000 (3,000,000,000)
Cash Outflow (397,593,509) (159,835,954)
Shares Investment 289,204,994 255,886,900 (33,318,094)
Mutual Fund 396,455,174 172,036,460 (224,418,714)
SWIFT Investment 1,916,482 1,945,297 28,815
14. Events after the Balance Sheet date
Indexed Linked Deposits / Credit Linked Deposits - - -
No circumstances have arisen since the reporting date which would require adjustments to or
Cash Outflow 9,509,076,650 6,519,508,650 (2,989,568,000)
disclosure in the Financial Statements other than those disclosed below.

14.1 Proposed Dividend

13.2.2 (Increase) / Decrease in Fixed Assets The Board of Directors of the Bank has recommended the payment of dividend of NPR 48 per share
NPR.
which consists of a cash dividend of NPR 18 per share and a stock dividend of NPR 30 per share for
Particulars Current Previous
the year ended July 15, 2017 for ratification at the forthcoming Annual General Meeting of the Bank.
Year Year
Addition during the Year (Excluding LeaseHold) (119,450,309) (72,564,399)
14.2 Recognition of Interest Income on deferred cash basis
Addition during the Year (LeaseHold) (19,684,270) (5,269,624)
Bank has not availed the facility in NRB Directive 4/073 that allows licensed institutions to recognize
Disposal During the Year 79,559,586 3,459,302
in interest income, such amount that stood accrued at year end but was subsequently recovered in
Cash Outflow (59,574,993) (74,374,721)
cash within 15 days after the year-end date.

15. Rounding off, Regrouping and Restatements

13.2.3 Interest Income from Long Term Investment
NPR.
15.1 All figures have been rounded off to the nearest rupee.
Particulars Current Previous
Year Year
15.2 Previous year’s figures have been regrouped/rearranged, and their corresponding effects in the
Interest Income in Income Statement 306,896,544 182,507,312
Cash Flow Statements, in the current year’s financial statements to facilitate comparison and such
Income Receivable on Long Term Investment (Current Year) (80,961,570) (64,780,875)
details are presented hereunder,:
Income Receivable on Long Term Investment (Previous Year) 64,780,875 12,398,992
Cash Inflow 290,715,849 130,125,429
15.2.1 Share Capital
(NPR) 000

Share Capital (NRs.) Nabil Group

Share capital stated in last years financial statements 6,183,540,480 6,183,540,480

-Impact of adjustment of fractional shares in proposed stock dividend 1,966,520 1,966,520
Restated in current years financial statements under Previous Year Column 6,185,507,000 6,185,507,000
196 Nabil Bank Limited Annual Report 2016/17 197

15.2.2 Bills Payable

(NPR) 000 15.2.6 Fixed Assets
(NPR) 000
Bills Payable (NRs.) Nabil Group

Bills payable presented in last years financial statements 453,715,059 453,715,059 Fixed Assets (NRs.) Nabil Group

-Impact of regrouping of Manager’s Cheque to Sundry Creditors (160,200,696) (160,200,696) Fixed Assets presented in last years financial statements 784,456,154 802,280,175

Restated in current years financial statements under Previous Year Column 293,514,363 293,514,363 - Regrouping of Software from Fixed Assets to Other Assets (14,243,462) (14,243,462)
Restated in current years financial statements under Previous Year Column 770,212,692 788,036,713

15.2.3 Other Liabilities

(NPR) 000
15.2.7 Other Assets
(NPR) 000
Other Liabilities (NRs.) Nabil Group

Other liabilities stated in last years financial statements 2,072,663,926 2,291,247,767 Other Assets (NRs.) Nabil Group

-Impact of regrouping of Manager’s Cheque to Sundry Creditors 160,200,696 160,200,696 Other Assets presented in last years financial statements 3,228,905,517 3,289,256,844
Restated in current years financial statements under Previous Year Column 2,232,864,622 2,451,448,463 - Regrouping of Software from Fixed Assets to Other Assets 14,243,462 14,243,462
Restated in current years financial statements under Previous Year Column 3,243,148,979 3,303,500,306

15.2.4 Money at Call and Short Notice

(NPR) 000

Money at Call and Short Notice (NRs.) Nabil Group

Money at call and short notice presented in last years financial statements 819,418,493 819,418,493 Schedule 34
- Impact of regrouping of placement with original maturity
exceeding 7 days regrouped to Investment (429,400,000) (429,400,000)
Statement of Loans availed by promoters / shareholders
Restated in current years financial statements under Previous Year Column 390,018,493 390,018,493 classified under promoters’ group from other banks
and financial institutions by pledging shares
15.2.5 Investment
(NPR) 000
under their ownership
Investment (NRs.) Nabil Group
Promoters / Shareholders Shareholding Statement of Loans
Investment presented in last years financial statements 36,098,549,503 36,109,856,759 classified under Total No % on Total Name of Banks/ Loan Amount No of Remarks
Promoters group of shares Paid up Capital Financial Institution Shares
- Impact of regrouping of placement with original maturity
Shares providing loans pledged
exceeding 7 days regrouped from Money at Call 429,400,000 429,400,000
Restated in current years financial statements under Previous Year Column 36,527,949,503 36,539,256,759

NIDC Ltd, one of the founding promoters of the bank, has disposed off its entire holding through public auction on different dates, in order to
comply with the regulatory directives prohibiting cross holding. The auctioned shares are held by general public / entities and are actively traded
at Nepal Stock Exchange Ltd. As of balance sheet date, 483 of those shareholders have pledged total 1,181,496 shares with various Banks and
Financial Institutions and Co-operative Societies.
198 Nabil Bank Limited Annual Report 2016/17 199

Schedule 35

Comparison of Unaudited and Audited Financial Statement

As of 15.07.2017 of Financial Year 2016-17
NPR. in ‘000 Continued...

Particulars As per As per Variance Reasons for Particulars As per As per Variance Reasons for
Unaudited audited Variance Unaudited audited Variance
Financial Financial In Amount In % Financial Financial In Amount In %
Statement Statement Statement Statement

1. Total Capital and Liabilities (1.1 to 1.7) 141,943,924 140,332,060 (1,611,864) -1.14% C Operating Profit Before Provision (B-3.6-3.7) 5,483,907 5,483,907 - 0.00%
11.1 Paid up Capital 6,185,507 8,041,159 1,855,652 30.00% Note 1 3.8 Provision for Possible Losses 19,351 19,229 (122) -0.63% Note 10
1.2 Reserve and Surplus 9,030,340 7,167,067 (1,863,274) -20.63% Note 2 D Operating Profit (C-3.8) 5,464,556 5,464,678 122 0.00%
1.3 Debenture and Bonds 300,000 300,000 - 0.00% 3.9 Non Operating Income/Expenses (Net) 148,781 148,781 - 0.00%
1.4 Borrowings 3,056,310 3,056,310 - 0.00% 3.10 Write Back of Provision for Possible Loss 42,969 30,870 (12,099) -28.16% Note 11
1.5 Deposits (a+b) 118,896,157 118,896,157 - 0.00% E Profit from Regular Activities (D+3.9+3.10) 5,656,306 5,644,330 (11,977) -0.21%
Domestic Currency (a) 101,418,039 101,418,039 - 0.00% 3.11 Extra Ordinary Income/Expense (Net) 11,260 11,260 - 0.00%
Foreign Currency (b) 17,478,118 17,478,118 - 0.00% F Profit before Bonus and Taxes (E+3.11) 5,667,566 5,655,589 (11,977) -0.21%
1.6 Income Tax Liability - - - - 3.12 Provision for Staff Bonus 515,233 514,144 (1,089) -0.21%
1.7 Other Liabilities 4,475,610 2,871,367 (1,604,242) -35.84% Note 3 3.13 Provision for Tax 1,531,511 1,528,245 (3,266) -0.21%
2. Total Assets (2.1 to 2.7) 141,943,924 140,332,060 (1,611,864) -1.14% G Net Profit/(Loss) (F-3.12-3.13) 3,620,822 3,613,200 (7,621) -0.21%
2.1 Cash and Bank Balance 13,091,725 13,091,730 5 0.00% Note 4
2.2 Money at Call and Short Notice 773,625 - (773,625) -100.00% Note 5
Note 1: Impact of 30% bonus shares proposed on paid up equity capital at July 15, 2017.
2.3 Investments 31,821,046 32,593,660 772,615 2.43% Note 6
Note 2: Impact of change stated in Note 1 and cumulative impact of changes in Profit and Loss Account.
2.4 Loans and Advances 91,491,252 89,877,127 (1,614,125) -1.76% Note 7
Note 3: Loss provision presented in Other Liabilites in Un-audited Financial but presented as net assets in Audited Financial (Note 5 & 6).
2.5 Fixed Assets 852,379 790,965 (61,414) -7.21% Note 8 Cumulative impact of changes stated in Note 4, 10 & 11.
2.6 Non Banking Assets - - - 0.00% Note 4: Corrections in Bank Balance following completion of reconciliation.
2.7 Other Assets 3,913,896 3,978,577 64,681 1.65% Note 9 Note 5: Regrouping effect from Money at Call to Investments, in respect of Placement with less than 90 days remaining term to maturity.
3. Profit and Loss Account Note 6: Effect of changes stated in Note 3 & 5.
3.1 Interest Income 8,065,591 8,065,591 - 0.00% Note 7: Effect of changes stated in Note 3.
3.2 Interest Expense 2,606,091 2,606,091 - 0.00% Note 8: Regrouping effect from Fixed Assets to Other Assets, in respect of carrying value of unammortized sotware.
A Net Interest Income (3.1-3.2) 5,459,501 5,459,501 - 0.00% Note 9: Cumulative impact of changes stated in Note 8 and tax effect of other changes to Profit and Loss Account.

3.3 Fees,Commission and Discount 579,803 579,803 - 0.00% Note 10: Changes in impairment provision on investments following Statutory Audit.
Note 11: Changes in impairment provision on loan assets following Statutory Audit.
3.4 Other Operating Income 382,107 382,107 - 0.00%
3.5 Foreign Exchange Gain/Loss (Net) 647,266 647,266 - 0.00%
B Total Operating Income (A+3.3+3.4+3.5) 7,068,677 7,068,677 - 0.00%
3.6 Staff Expense 932,356 932,356 - 0.00%
3.7 Other Operating Expense 652,414 652,414 - 0.00%
Continued...
200 Nabil Bank Limited
Unaudited Financial Highlights
As at 4th Quarter End of FY 2016/17
contd.
NPR in Thousand
Particulars As at Particulars As at
15-Jul-17 13-Apr-17 15-Jul-16 (Audited) 15-Jul-17 13-Apr-17 15-Jul-16 (Audited)
Group Nabil Group Nabil Group Nabil
1. Total Capital and Liabilities (1.1 to 1.7) 142,309,126 141,943,924 137,717,552 137,252,511 129,238,633 128,919,486
1.1 Paid up Capital 6,185,507 6,185,507 6,185,507 6,185,507 4,756,570 4,756,570
1.2 Reserve and Surplus 9,108,915 9,030,340 8,157,885 8,093,259 7,596,353 7,552,205
1.3 Debenture and Bond 300,000 300,000 300,000 300,000 300,000 300,000
1.4 Borrowings 3,056,310 3,056,310 9,485 9,485 1,900,000 1,900,000
1.5 Deposits (a+b) 118,684,419 118,896,157 116,931,316 117,059,623 110,210,928 110,267,272
Domestic Currency (a) 101,206,301 101,418,039 95,948,880 96,077,188 89,343,268 89,399,613
Foreign Currency (b) 17,478,118 17,478,118 20,982,436 20,982,436 20,867,659 20,867,659
1.6 Income Tax Liability - - 47,045 47,045 (4,379) (4,379)
1.7 Other Liabilities 4,829,443 4,475,610 5,954,659 5,557,592 4,366,410 4,147,819
1.8 Non-Controlling Interest 144,531 - 131,655 - 112,752 -
2. Total Assets (2.1 to 2.7) 142,309,126 141,943,924 137,717,552 137,252,511 129,238,633 128,919,486
2.1 Cash and Bank Balance 13,226,432 13,091,725 10,778,766 10,493,211 10,492,530 10,262,849
2.2 Money at Call and Short Notice 773,625 773,625 2,471,758 2,471,758 819,418 819,418
2.3 Investments 31,956,742 31,821,046 28,271,579 28,226,502 36,110,032 36,098,791
2.4 Loans and Advances 91,491,252 91,491,252 90,554,767 90,554,767 77,730,402 77,730,402
a. Real Estate Loan 4,028,251 4,028,251 4,021,762 4,021,762 3,559,514 3,559,514
1. Residential Real Estate Loan
(Except Personal Home Loan up to
Rs.10 Million) 1,421,936 1,421,936 1,570,848 1,570,848 1,482,093 1,482,093
2. Business Complex & Residential
Apartment Construction Loan 287,124 287,124 292,002 292,002 309,266 309,266
3. Income generating Commercial
Complex Loan 223,373 223,373 233,581 233,581 262,661 262,661
4. Other Real Estate Loan (Including
Land purchase & Plotting) 2,095,818 2,095,818 1,925,332 1,925,332 1,505,493 1,505,493
b. Personal Home Loan up to Rs.10 Million 7,074,366 7,074,366 7,155,987 7,155,987 6,518,473 6,518,473
c. Margin Type Loan 1,409,716 1,409,716 1,575,533 1,575,533 893,919 893,919
d. Term Loan 16,949,720 16,949,720 16,006,968 16,006,968 13,658,225 13,658,225
e. Overdraft Loan/TR Loan/WC Loan 51,441,742 51,441,742 51,397,237 51,397,237 44,226,788 44,226,788
f. Others 10,587,457 10,587,457 10,397,279 10,397,279 8,873,483 8,873,483
2.5 Fixed Assets 874,711 852,379 819,182 802,024 802,280 784,456
2.6 Non Banking Assets - - - - - -
2.7 Other Assets 3,986,363 3,913,896 4,821,499 4,704,249 3,283,971 3,223,570
contd.
Annual Report 2016/17 201
NPR in Thousand
Group Nabil Group Nabil Group Nabil
3. Profit and Loss Account 4th Quarter This Year 3rd Quarter This Year 4th Quarter Last Year
3.1 Interest Income 8,116,152 8,065,591 5,761,891 5,718,067 6,170,462 6,155,660
3.2 Interest Expense 2,586,866 2,606,091 1,618,005 1,636,246 1,829,491 1,829,689
A Net Interest Income (3.1-3.2) 5,529,287 5,459,501 4,143,885 4,081,821 4,340,971 4,325,971
3.3 Fees,Commission and Discount 614,076 579,803 437,263 414,300 505,717 484,961
3.4 Other Operating Income 454,224 382,107 331,510 282,665 384,348 332,650
3.5 Foreign Exchange Gain/Loss (Net) 647,266 647,266 460,567 460,567 586,057 586,057
B Total Operating Income (A+3.3+3.4+3.5) 7,244,853 7,068,677 5,373,225 5,239,353 5,817,093 5,729,639
3.6 Staff Expenses 947,014 932,356 644,648 634,076 787,901 775,306
3.7 Other Operating Expenses 678,791 652,414 491,515 474,009 623,966 604,809
C Operating Profit Before Provision (B-3.6-3.7) 5,619,048 5,483,907 4,237,061 4,131,267 4,405,227 4,349,524
3.8 Provision for Possible Losses 19,351 19,351 31,748 30,362 5,082 5,082
D Operating Profit (C-3.8) 5,599,697 5,464,556 4,205,313 4,100,906 4,400,145 4,344,442
3.9 Non Operating Income/(Expenses) Net 133,961 148,781 70,703 85,523 44,436 59,256
3.10 Write Back of Provision for Possible Loss 42,969 42,969 514 514 55,661 55,661
E Profit from Regular Activities (D+3.9+3.10) 5,776,628 5,656,306 4,276,530 4,186,943 4,500,242 4,459,359
3.11 Extra Ordinary Income/Expenses (Net) 11,260 11,260 8,526 8,526 (47,301) (47,301)
F Profit before Bonus and Taxes (E+3.11) 5,787,887 5,667,566 4,285,056 4,195,469 4,452,941 4,412,058
3.12 Provision for Staff Bonus 527,519 515,233 390,898 381,406 406,160 401,096
3.13 Provision for Tax 1,563,456 1,531,511 1,154,832 1,130,323 1,202,838 1,189,398
G Net Profit/(Loss) (F-3.12-3.13) 3,696,913 3,620,822 2,739,327 2,683,740 2,843,943 2,821,564
3.14 Share of Non-Controlling Interest
on Profit of Subsidiary 44,012 - 34,170 - 18,230 -
H Net Profit/(Loss) (G-3.14) 3,652,901 3,620,822 2,705,157 2,683,740 2,825,713 2,821,564
As at
4. Ratios & Others (%) 15-Jul-17 13-Apr-17 15-Jul-16 (Audited)
4.1 Capital Fund to RWA 13.44 13.34 12.95 12.84 11.83 11.73
4.2 Non Performing Loan (NPL) to Total Loan 0.79 0.79 0.95 0.95 1.14 1.14
4.3 Total Loan Loss Provision to Total NPL 221.75 221.75 192.12 192.12 182.32 182.32
4.4 Cost of Funds (Annualized) 2.70 2.70 2.28 2.28 2.08 2.08
4.5 CDC Ratio 75.62 75.62 79.75 79.75 73.84 73.84
4.6 Base Rate 6.61 6.61 5.71 5.71 4.17 4.17
4.7 LCY Interest Spread (per NRB Directive) 4.92 4.92 5.33 5.33 4.98 4.98
202 Nabil Bank Limited Annual Report 2016/17 203

06

06 shareholders’ Shareholder’s Profile

As at balance sheet date (15th July, 2017), the Bank’s Share Registrar,

information
M/s. Nabil Investment Banking Ltd. has recorded following details of shareholders:

Shareholding Range No. Of Shareholders Total Shares Held

1-100 8,551 460,953

101-500 10,529 2,548,965
501-1,000 2,673 1,913,548
1,001-2,500 2,397 3,610,982
2,501-5,000 946 3,419,525

06 5,001-10,000
10,001-25,000
429
160
2,833,109
2,436,986
25,001-50,000 28 949,953

Structure of Share Capital 50,001-100,000

Above 100,000
19
24
1,364,631
42,316,418
Total 25,756 61,855,070

Representation in
the Board of Directors
06
9.67 10.33 Others*
Representation of “A” Class Shareholders

Stock Symbol
Rastriya (in relation to 50% interest of NB International Ltd.)
Beema
Sansthan 1. Mr. Nirvana Chaudhary
2. Krishna Prasad Sharma Nabil Bank’s Shares are traded on the Nepal Stock Exchange Ltd. (NEPSE)
3. Virender Paul Dani with stock symbol “NABIL” for ordinary shares and “NABILP” for promoter shares.
4. Ashish Sharma

ownership Representation of “B“ Class Shareholders

50.00
structure NB
(In relation to 20% interest of promoter shares with
Financial Institutions/General Public)
06
of nabil International
Limited To be elected in 33rd AGM

Representation of “C” Class Shareholders

Annual General Meeting
(in relation to 30% interest of public shareholders)
30.00
1. Mr. Shambhu Prashad Poudyal
The 33rd Annual General Meeting (AGM) of the Bank will be held on
General Public
2. Mr. Dayaram Gopal Agrawal 26th September 2017 at 10:30 am at Nepal Academy Hall, Kamaladi,
*Others include promoters shares divested by NIDC, Independent / Professional Director Kathmandu, Nepal. Following agendas will be discussed in the meeting.
which is freely traded at Nepal Stock Exchange. 1. Mr. Pratap Kumar Pathak
204 Nabil Bank Limited Annual Report 2016/17 205

Ordinary Resolution Special Resolution 06

1. To approve Directors’ Report 2016/17 (2073/74);
2. To approve Balance Sheet as of 15 July 2017, Profit
and Loss Account and Cash Flow Statement for the year
ended thereat, together with Auditor’s Report;
3. To approve consolidated books of accounts i.e. including
books of accounts of Bank’s subsidiary Nabil Investment
Banking Ltd. for the FY 2016/17 (2073/74);
4. To approve cash dividend @ 18% (including tax on
bonus share and cash dividend) of the paid up capital as
proposed by the Board; and
5. To appoint Auditor, as per Section 111 of Companies Act,
2063, for the Fiscal Year 2017/18 (2074/75) and to fix
the auditor’s remuneration (Pursuant to Sec. 60(2) of the
Banks & Financial Institutions Act, 2063, the present
Auditor T.R. Upadhya & Co. cannot be reappointed).
06
1. To approve increment of Bank’s Authorized Capital to Rs.
10 billion;
2. To approve to issue Bonus shares at the rate of 10:3
Taxation on
(i.e. 3 bonus shares for presently held every 10 shares
or 30% per share) from the profit of FY 2016/17,
Dividends and bonus Shares
for increasing issued and paid up capital to Rs.
8,041,159,100/- and also to approve conversion of
Taxation on Dividends Capital Gains on Disposal of Shares
fraction shares, if any, arisen due to the said ratio, into
(CASH AND BONUS DIVIDENDS) Pursuant to clause (a) of Section 95A (2) of the Income
Pursuant to Section 88(2) of the Income Tax Act 2002, the Tax Act, 2002 (amended by Finance Ordinance 2073),
whole by adjusting against cash dividend, so as to
tax on dividend received by the shareholders of Nabil Bank the gain on disposal of shares listed in the Securities
maintain the present shareholding ratio of the different
from the Nabil Bank is subject to withholding tax at the rate Board of Nepal computed as per Section 37 of the Act
groups of shareholders;
of 5%. The tax is final withholding tax as per Section 92(1)
3. To approve amendment in some provisions of is subject to withholding tax at the rate of 5%, in case,
(a) of the Act and need not require further assessment while
Memorandum and Articles and to authorize the Board the beneficiary of the gain is resident natural person and
filing annual tax return under Section 96.
(or its nominee) for making necessary changes in at the rate of 10%, in case of any other person other
the proposed amendments if the same is advised by than resident natural person. Shares of Nabil Bank are
However, the dividend distributed by the Bank from the
Regulatory Authority(ies) ; and listed both in the Securities Board of Nepal and Nepal
dividend earned from the resident company is not subject to
4. To set aside an amount equal to at least 1% of the net
tax at the time of its distribution as per Section 54(3).The Stock Exchange Ltd. for the purpose of public trading and
profits of every fiscal year for assuming corporate social
Bank has received dividend of NRs. 208.81 million from therefore the gain on disposal of Bank’s shares is subject
responsibility as per the direction of Nepal Rastra Bank
the resident companies from financial year 2001- 02 till to withholding tax in accordance to clause (a) of Section
and to expend such amount through Nabil Foundation.
2016-17. Capitalization of profits is deemed as distribution 95A (2).
under Section 53(1) (b) of the Act and hence, issuance of
bonus shares by the Bank from the profits earned (excluding Gain or loss arising from disposal of shares under Section

Shareholder dividend received) is subject to withholding tax at the rate of

5% under Section 88(2).
37 of the Act shall be the amount that is determined
by reducing the amount incurred while acquiring the
Enquiries and Communication Fiscal Year NPR
shares with the amount that is received at the time of its

1. FY 2001-02 (2058-59) 323

Communication
The Bank regularly communicates all the pertinent
information to shareholders, customers and general public
through print media (national daily) and electronically
through Bank’s official website www.nabilbank.com. The
detailed information on AGM including ordinary agendas and
special agendas to be discussed in the meeting is published
in the national daily newspapers 21 days prior to the date of
AGM.
Similarly, interim financial highlights are published within
the stipulated deadline of 30 days prescribed by the
Securities Board of Nepal. These statements along with
Basel II Disclosures as prescribed by Point 7.4(b) of Capital
Enquires
Any enquiries related to the shareholders of Nabil Bank on
the share register viz., maintenance of shareholder’s record,
share transfer including domestic transfer in case of death of
a shareholder, replacement of lost share certificates, pledge
of shares, dividend warrants/bonus shares declared and
ratified by the AGM, payment against dividend/lost warrant,
opening of Demat Account, dematerialization of shares
should be sent at the address given below:
Nabil Investment Banking Ltd.
Naxal, Narayan Chaur, Kathmandu, Nepal
Tel : 977-1-4411604, 4411733
Fax : 977-1-4410554
2. FY 2002-03 (2059-60) 418
3. FY 2003-04 (2060-61) 456
4. FY 2004-05 (2061-62) 477
5. FY 2005-06 (2062-63) 469
6. FY 2006-07 (2063-64) 720
7. FY 2007-08 (2064-65) 1,851
8. FY 2008-09 (2065-66) 2,409
9. FY 2009-10 (2066-67) 7,765
10. FY 2010-11 (2067-68) 10,527
11 . FY 2011-12 (2068-69) 16,074
12 . FY 2012-13 (2069-70) 18,065
13 . FY 2013-14 (2070-71) 28,447
14 . FY 2014-15 (2071-72) 27,640
15 . FY 2015-16 (2072-73) 46,076
16 . FY 2016-17 (2073-74) 47,098
disposal. The amount of disposal in case the Nabil Bank’s
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.

Adequacy Framework 2007 (updated July 2008) under Email : nabilinvest@nabilbank.com Total 208,814

Directive 1 of NRB Unified Directives are posted in the Web : www.nabilinvest.com.np

Bank’s official website.
206 Nabil Bank Limited
Nabil
07 Investment
Banking Limited
Directors’ Report
For the Fiscal Year 2016/17
Respected Shareholders,
On behalf of Nabil Investment Banking
Limited, I would like to welcome all
the shareholders in the Seventh Annual
General Meeting (AGM) of the Company.
Nabil Bank Limited with its mission to
be the First Choice Provider of Complete
Financial Solutions incepted “Nabil
Investment Banking Ltd. (Nabil Invest)”
as a Subsidiary in order to develop
the company as Investment Banker of
First Choice in the long run expanding
continuously its scope of activities.
I will be presenting achievements of the
Company during the review FY 2016/17,
policies and strategies adopted by and
future plans of the Company in this AGM
for your endorsement and resolution. In
this context, I would like to seek your
consent for presenting financial glimpses
of the company for the review period
including audited Balance Sheet, Income
Statement, Cash Flow Statement and
Accounting Policies & Notes along with
the accompanied Directors’ Report for
your discussion and onward approval.
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:
Annual Report 2016/17 207
1. Expansion in Financial System
1.1) Presence of Banks and Financial Institutions
The number of BFIs and Insurance Companies as of July 15, 2017 are as follows:
BFIs/Insurance Companies Mid July 2017 Mid July 2016
Commercial Banks 28 28
Development Banks 40 67
Finance Companies 28 42
Microfinance Institutions 53 42
Insurance Companies 25 25
Merchant Bankers licensed by SEBON 23 17
The number of BFIs licensed by NRB 1.2) Deposit mobilization
as of mid July 2016 was 179 which During the review FY 2016-17, the total
reduced to 149 as of mid July 2017. deposit of BFIs has increased by 41.4
Merger & Acquisition process continued percent as compared to 19.4 percent
during the review period causing the
increase in previous FY. As of mid of July
decline of the total number of BFIs.
2017, compare to total deposit of BFIs,
Accordingly, the number of commercial
the proportion of saving, fixed and current
banks as of mid July 2017 is 28 whereas
deposits are 8.7 percent, 35.4 percent
the number of development banks,
finance companies and micro-finance and 43.2 percent. During the previous
development banks are respectively 40, year, the proportions of deposit are 9.1
28 and 53. percent, 43.3 percent and 30.5 percent
respectively.
208 Nabil Bank Limited
1.3) Loans and Advances
Loans and advances of BFIs to private
sector have increased by 18.2 percent.
Last FY it was increased by 23.7 percent
Out of the loans disbursed to private
sectors in the review period, loans
disbursed by commercial banks have
increased by 25 percent and whereas
loans provided by development banks
and finance companies has declined
by 13.7 percent and 13.3 percent
respectively. As a result of merger and
acquisition, several development banks
and finance companies were merged with
commercial banks that decline the loan
flow of development banks and finance
companies.
1.4) Inter-Bank Transaction
During the FY 2016-17, the total inter-
bank transactions of commercial banks
were NPR 1,062.4 billion and inter-bank
transactions of other financial institutions
(excluding commercial banks) were NPR
381.2 Billion. During the last year inter-
bank transaction of commercial banks
and other financial institutions were NPR
961.72 Billion and NPR 129.6 billion
respectively.
1.5) Interest rates
The weighted average interest rate on
91 days TB remained 0.05 percent as of
mid July 2017. Similarly, the weighted
average interest rate on interbank
transactions among commercial banks
as of mid July 2017 was 0.64 percent
as compared to 0.69 percent previous
year same period. The weighted average
interest rate on interbank transactions
among other financial institutions as of
mid July 2017 stood up at 4.47 percent
while the similar rate was 3.25 percent
last year.
As on mid July 2017, spread on
weighted average interest rate of
commercial banks is 5.2 percent. During
the same point of time last year, the
spread rate was 5.6 percent. Similarly,
average base rate of commercial banks
is 9.9 percent as of mid July 2017 in
comparison to 6.5 percent as on mid July
2016.
2. Securities Market:
The main glimpses of securities market
of the country during FY 2016/17 are as
follows:
2.1) Nepse Index
By the mid July 2017 NEPSE index has
declined to a level of 1,582.7 points. The
index was at a level of 1,718.2 points
during the same period last year.
2.2) Market Capitalization
During the review, there was a decline
of 1.8 percent in market capitalization
and remained at NPR 1,856.83 billion
at the end of review period. During FY
2016/17, market capitalization stood as
74.1 percent of total GDP of the country
as compared to 84.1 percent as on mid
July 2016.
The entire market capitalization as
on mid July 2017 comprised of 85.4
percent banks and financial institutions
(including insurance companies),
4.2 percent hydropower, 2.3 percent
manufacturing and processing
companies, 1.6 percent hotels, 0.01
percent trading companies and 6.5
percent other companies.
2.3) Listed Companies
The number of listed companies with
NEPSE reached 208 by the mid July
2017 whereas it was 230 in mid July
2016. A small decrease in the count of
listed companies was observed because
of merger of some BFIs. The listed
companies comprise of 165 banks and
financial institutions (including insurance
companies), 18 manufacturing and
processing companies, 4 hotels, 4 trading
companies, 14 hydropower companies
and 3 others category.
2.4) Paid up Capital of Listed Companies
In mid of July 2017, the paid up capital
of listed companies increased by 41.9
percent to be NPR 289 billion 590
million.
2.5) Securities Business
During the review period, 23 Securities
Business Persons (Merchant Banker)
and 62 Depository Members has
been providing their services. A these
companies licensed from SEBON have
been providing their services of Issue
Management, Share Registration,
Portfolio Management and Underwriting
in accordance with their paid up
capital. Some of the institutions are also
rendering the services of Fund Manager/
Depository and Depository Participant
(CDS) under the provisions of prevailing
laws. Further, there is an increasing
trend of entering new institution in the
merchant banking industry.
In FY 2016/17, total worth of NPR
133.98 billion additional securities were
listed including 4.67 billion ordinary
shares, 29.64 billion right shares,
36.42 billion bonus shares, 62 billion
government debentures and 1.25 billion
mutual funds.
2.6) Approval of Securities Issue
During the review period, SEBON
approved issuance of common shares
(IPO) and further public offer (FPO) of
25 corporate bodies (including mutual
fund schemes) comprising NPR 13.75
billion, right issues of 76 companies
comprising NPR 45.64 billion which
resulted to share registration, approval
of prospectus and share issuance worth
equivalent to NPR 59.39 billion of 101
companies. There was no debenture
issue of any corporate during the review
period. Similarly, bonus shares of NPR
34.80 billion of 164 companies have
been registered with SEBON during the
review fiscal year.
In the previous year, SEBON approved
issuance of NPR 9.59 billion worth
common shares of 18 companies
including mutual fund schemes, right
issues of 55 companies comprising NPR
19 billion and no debenture issue of any
corporate. Similarly, bonus shares of 134
companies equivalent to NPR 21.06
billion was registered with SEBON during
the review period.
3. Summary of Financial
Information of FY 2016/17
The major activities of the company and
its financial highlights during FY 2016/17
have been presented below:
3.1) Major Activities:
Issue Management: During the review
period, the company in the capacity
of Issue Manager has successfully
completed IPO issues management
of Nabil Equity Fund and Forward
Community Microfinance Bittiya Sanstha
Ltd. and right issues of 2 companies and
entered into agreement for managing IPO
of 3 institutions and right share issue of
2 companies. The company has been
providing debenture trusteeship services
to 7 commercial banks.
Depository Participant and Registrar to
Shares: The Company has been providing
DP related services in full fledge wherein
more than 20,000 demat accounts have
been opened with the company till the
review period. Likewise, the company has
been rendering RTS service to 12 listed
companies including Nabil Balanced
Fund – 1 and Nabil Equity Fund.
Mutual Fund: During the review period,
company has been rendering services of
Fund Manager and Depository to Nabil
Balanced Fund I under the Nabil Mutual
Fund. The Company has also successfully
completed public issue of second mutual
fund “Nabil Equity Fund” and bring its’
on operation with fund management and
depository service.
Portfolio Management Service: As per
the objective of the company to cater its
services to the investors, the company
has been providing Portfolio Management
Services (PMS) to its broader clientele in
a professional manner. Accordingly, the
asset under management (AUM) of PMS
439 clients as at the end of the review
Annual Report 2016/17 209
period stands at NPR 1.66 billion.
Corporate Advisory Service: During the
review period, the Company has been
rendering services of Loan Syndication,
Investment Advisory and Business
Valuation under the Corporate Advisory
Services.
The Company has adopted policy of
expanding such services in the coming
years and extending required co-
operation, through co-ordination with
Nepal Merchant Bankers Association,
to SEBON to amend the existing laws
and regulation related to merchant
banking services. Further, the Company
has continued, as in the previous years,
providing administrative services to its
promoter Nabil Bank Limited in the
review fiscal year also.
During FY 2016/17, the company has
earned about NPR 37.8 million from
securities business (including PMS),
NPR 57.5 million from mutual fund and
remaining income constitute the return
of NPR 7.9 million from investment of
its share capital and the fund received
during issue management; and service
fees of NPR 6.96 million in lieu of
various administrative/operational
supports provided to its promoter Nabil
Bank Limited. Similarly, the Company’s
attempt to maximize the short term
returns by investing in the IPOs including
mutual funds’ units resulted to an income
of NPR 2.68 million during the review
period.
210 Nabil Bank Limited Annual Report 2016/17 211

3.2) Financial Highlights:

The financial position of the company as on mid July 2017 is as under:

Particulars NPR in thousand NPR in thousand Growth (%)

FY 2016/17 FY 2015/16

Share Capital 150,000 150,000 -

Total Assets 654,940 293,292 44.08
Total Income 180,805 92,245 96.01
Total Expenses 45,664 36,604 24.75
Operating Profit 135,142 55,641 142.88
Net Profit (After Employees Bonus and Tax) 91,691 37,937 141.69
Proposed Dividend 80,000 30,000 166.67
No. of Shares (in thousands) 1,500 1,500 -
Earnings Per Share (Rs.) 61.13 25.29 141.69
Return on Assets (Rs.)* 14 12.93 67.75
Net worth per Share (after Dividend)(Rs.) 200.74 156.62 28.18

*Excluding the monies placed with bankers to the issue account to be refunded to the applicants after the allotment of securities in the IPO.

The company witnessed an increase
of 96.01 percent in its revenue in the
review period as compared to previous
period whereas total expense has
increased by 24.75 percent resulting to
a growth of net profit by 141.69 percent.
Under the review period, rises in interest
rate of deposit due to liquidity crisis in
baking system, increase the interest
income from issue management which
significantly increase in net profit.
On last FY total 20 percent cash dividend
(NPR 30 Million) has been distributed
to shareholders. Considering the last
FY dividend payout, the total purpose
dividend of this review FY is 53.333
percent including 20 percent cash
dividend (NPR 30 Million) not less
than last year return and stock dividend
33.3333 percent ( NPR 50 million) to
increase company capital.
The additional details as required by
section 109(4) of prevailing Companies
Act has been presented in Annexure.
Expression of Gratitude:
On behalf of the Board, I would like
to express sincere gratitude to all the
customers, well-wishers, promoter
company Nabil Bank Limited and its
employees; and institutional shareholder
CG Finco Pvt. Ltd. for their continuous
support and cooperation. I also thank all
the Regulators for their cooperation and
guidance. I extend my sincere thanks
to Mr. Rabin Sapkota of M/s R. Sapkota
& Associates, Chartered Accountants,
Mr. Sunir Kumar Dhungel of M/s LDSA
Associates, Chartered Accountants
and Mr. S. R. Pandey for professionally
completing the audit of the company,
Nabil Balanced Fund I and Nabil equity
Fund under Nabil Mutual Fund for
the review period and suggestion and
contributions made during the course
of audit. Similarly, my especial thanks
go to all the employees of the company
for their noteworthy contributions for
achieving objectives of the company and
expect similar contributions in the days
ahead. Further, I would like to thank
the board members for their valuable
suggestions and support.
Thank you.
On behalf of the Board
Sashin Joshi
Chairman
Date:
 07

Information under
section 109(4) of Companies Act, 2063
d) Industrial and professional Note: Mr. Mahesh Kumar Karki, does not have any subsidiary.

a) Business assessment b) Any impact that caused to the bank and financial institutions might have relation of the company: Independent Professional Director

of review fiscal year:
During the review period, the company
in the capacity of Issue Management
has successfully completed public offer
of Nabil Equity Fund operating under
the Nabil Mutual Fund and Forward
Community Microfinance Bittiya Sanstha
Ltd. Accordingly during the review period,
entered into agreement for managing
IPO of 3 institutions and right share
issue of 2 institutions. The company has
been providing debenture trusteeship
services to 7 commercial banks. The
Company has been providing DP related
services in full fledge wherein more
than 20,000 demat accounts have been
opened with the company till the review
period. Likewise, the company has
been rendering RTS service to 12 listed
companies including Nabil Balanced
Fund – 1 and Nabil Equity Fund.
As per the objective of the company to
cater its services to the investors, the
company has been providing Portfolio
Management Services (PMS) to its
clientele in a professional manner and
rendering services of Fund Manager and
Depository to Nabil Balanced Fund I
under the Nabil Mutual Fund During 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
capital market. However the Nepalese
capital market will not be affectless from
neighbor’s countries’ economic, social
and political activities.
Because of these steps taken by
Securities Board of Nepal during the
last FY towards the expansion and
development of capital market likewise
compulsory ASBA, fully implementation
of DEMAT, new allotment directive,
broker’ branches outside the valley, action
taken to bringing fully-automated online-
trading system, initiative to development
of Mutual Funds and also activeness in
supervision and regulation of markets
will bring additional improvement in
markets. Further, the development of
the capital market can be expected from
the completion of two phase election of
local and also certainty of third phase
election will be on timely, declaration the
date of election for province and house of
adverse impact on the capital market
and risk of affecting company business of
remain same.
c) Current year’s achievement until
the date of preparation of Report
from the Board of Directors view on
future activities of the company:
Till the date of this FY, the services has
been provided by company likes issue
management and other services like
depository participant and registrar to
shares, fund management and depository
services to Nabil Balanced Fund I and
Nabil Equity Fund, portfolio management
service and advisory services will be
continue.
In addition to the above services,
the company shall coordinate with
the regulators to provide high level
investment banking services (private
equity, venture capital, investment
advisory) to its clientele as provided by
the regional level investment bankers
after customizing them as per Nepalese
requirement. Likewise, the company has
a policy to increase the both client base
and management amount by enhancing
the portfolio management service.
Likewise, the company has adopted
The company has been maintaining
cordial relationship with industrial
and professional corporate bodies and
enhancing its business substantially
there from. The company has always
placed high priority to the compliance
with related acts, laws and directives
issued by the regulators from time
to time. The company has been
conducting its business on the basis of
healthy competition with other licensed
merchant bankers. The company has
been contributing growth of overall
capital market with association with the
Merchant Bankers’ Association in the
capacity of President. There is amicable
relationship between the management
and other employees in the company.
e) Board of Directors:
The details of Board of Directors and
the Chief Executive Officer have been
presented below:
Mr. Sashin Joshi & Notes of the company.
Chairman - Representative Group “A”
Mr. Krishna Dutta Bhattarai g) Details of shares forfeited:
Director - Representative Group “A”
Mr. Kapil Adhikari Directors and their close relatives do not
Director - Representative Group “B”
resigned citing personal reasons and
his resignation was duly accepted by
the 47th Board meeting dated January
20, 2016 effective from December 31,
2015. Further, the 52nd Board meeting
of the Company dated 2073/03/17 has
appointed Mr. Bansidhar Ghimire as
Independent Professional Director of the
Company for 4 years period.
f) Board of Directors response on
Independent Auditor’s Report:
The audit of review period was carried
out by auditor Mr. Rabin Sapkota of
M/s R. Sapkota & Associates, Chartered
Accountants appointed unanimously
by the Sixth AGM of the company. The
suggestions and remarks pointed by the
auditor shall be addressed gradually.
The Board discussed the auditor’s report
and unanimously approved the audited
annual accounts, Balance Sheet, Profit
& Loss A/c, P/L Appropriation A/c, Cash
Flow Statement and Accounting Policies
The company has not forfeited any shares.
h) Review of the progresses made by
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:
According to the information made
available to the Company, the Board of
have personal interest regarding contract

review period, the Company has been representative, national budget passed on policy of broadening its customer base Mr. Bharat Adhikari the company and its subsidiary and or agreement done with the Company.

rendering services of Loan Syndication,
Investment Advisory and Business
Valuation under the Corporate Advisory
Services.
timely and improvement in economic and
political environment of country. Because
of said election will not be on timely,
instability environment creates from
mistrust between political parties, due
to oversupply from capital increment of
under PMS and thereby enhancing
asset under management. Further, the
company has started rendering DP
related services through Nabil Bank
branches in coordination with the bank.
Independent Professional Director the position of the same at the end
Mr. Bansidhar Ghimire of the fiscal year: l) Buy back of shares by the
Independent Professional Director The progresses made and major activities company and information
Mr. Pravin Raman Parajuli undertaken by the company during pertaining to this:
Chief Executive Officer/Company the review period have already been The company has not bought back any
Secretary mentioned above. Until now the company shares

m) Information of internal
control system:
Board of director of company has
appointment to M/s NBSM & Associates,
Chartered Accountants as an internal
auditor to carry out internal audit of
company and mutual funds on quarterly
basis for the review period and also
completed internal audit accordingly. To
carry out internal audit of company, the
provision of Service Level Agreement
remains same. Further, with the
coordinator of professional director an
internal audit committee was formulated
in review FY with the provision of
Financial Administrative Bylaws
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. The Company
has been reviewing and revising the
above mentioned documents as per
necessity.
n) Details of management expenses
incurred during the year:
The total management expenses
under the heading of employee and
administrative expense incurred by the
company during the review period is
NPR 44,535,290.
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 the provision of paying
NPR 4,000 per month to its Professional
Independent Directors as transportation
and communication facility. During the
review period, the company paid a total
of NPR 220,000 to its Professional
Independent Directors and Directors
representing from Group B as board
meeting allowance, NPR 10,000 as audit
committee meeting allowance, and a total
of NPR 96,000 as transportation and
communication facility to its Professional
Independent Directors. However, the
Board of Directors representing Group A
have not taken any meeting fees during
the review period. The Company does not
provide any other financial benefits to its
Board of Directors.
The employees of the company are being
provided remuneration, allowances and
benefits as provided in the Employees’
Bylaws of the company approved by the
Board. In case of employees deputed by
the promoter bank, the remuneration,
allowances and benefits have been
provided as per the Bylaws of the bank
and agreements between the bank and
the company. Accordingly, the salary,
allowances and addition to Provident
Fund paid to Chief Executive Officer
of the company in the review period
amounts to NPR 2,576,090.
p) Income Tax:
During the review FY company the
company has provided NPR 31,164,701
tkfO{+sf] nufgLsf]
Joj:yfkg s;n] u5{<
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 50,582,787 i.e.
NPR 30,692,301 and adjusting deferred
tax of NPR 472,400 thereon.
q) Location of office:
The company currently has its office at
Naxal, Kathmandu.
r) Technology:
The company has been using Accounting
Software purchased from MicroBanker
Pvt. Ltd. for recording all financial and
accounting transactions.
Similarly, the company has been using
different software developed by local
vendors for transactions relating to
issue management, RTS, PMS and fund
management and depository under
mutual fund. For providing Depository
Participant related services, the Company
is using DP software made available
by CDS & Clearing Ltd. In addition, the
company is operating its separate official
NABIL INVEST
website for its customers. Further, the
Company has been customizing the
software as required.
tkfO{sf] nufgLsf] Joj:yfkg ug{ glanOGe]i6 5 tkfO{sf] ;fy⁄
References: Nabil Investment Banking Limited, 3rd Floor, Central Plaza,
1. Official website and Narayanchaur, Naxal, Kathmandu
publications of Nepal Rastra Bank Phone No. 01 4411604, 4411733, Email: nabilinvest@nabilbank.com,
2. Official website of SEBON
web: www.nabilinvest.com.np
3. Official website and
publications of NEPSE
4. Official website of CDS & Clearing Ltd.
 Annual Report 2016/17 217

independent auditor’s report

-nabil invest

financial of
Nabil Investment Banking Limited
Naxal, Kathmandu, Nepal

Balance Sheet
As at 15 July 2017 (31 Ashadh 2074)

NPR

Capital & Liabilities Schedule This Year Previous Year

Share Capital 1 150,000,000 150,000,000

Reserves and Surplus 2 151,105,590 84,924,178
Other Liabilities and Provisions 3 353,833,927 219,644,434
Total 654,939,517 454,568,612

Assets Schedule This Year Previous Year

Cash and Bank Balance 4 338,444,280 278,025,414

Fixed Assets 5 22,332,131 17,824,021
Investments 6 221,696,808 97,307,256
Other Assets 7 72,466,298 61,411,920
Total 654,939,517 454,568,612

Significant Accounting Policies Schedule 13

Notes to Accounts Schedule 14

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

Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi Bansidhar

Ghimire As per our Report of even date
Head - Accounts Chief Executive Officer Chairman Professional Independent Director

Krishna Dutta Bhattarai Kapil Adhikari Bharat Adhikari Rabin Sapkota, CA

Director Director Professional For and on behalf of R. Sapkota &
Independent Director
Associates Chartered Accountants

Date: August 16, 2017

Place: Naxal, Kathmandu
218 Nabil Bank Limited Annual Report 2016/17 219

Income Statement Profit and Loss Appropriation Account

(For the period from 16 July 2016 to 15 July 2017) Fiscal Year 2016/17 (2073/2074)
NPR NPR

particulars Schedule This Year Rs. Previous Year Rs. particulars Schedule This Year Previous Year

Income Income
Income from Merchant Banking Activity 8 37,774,502 25,495,240 Accumulated Profit up to Last Year (Restated Balance) 61,486,789 44,592,292
Income from Mutual Fund operations 9 57,458,371 35,204,348 Current Year’s Profit 91,691,209 37,937,091
Interest Income 70,914,328 16,303,021 Deferred Tax Reserve 472,400 -
Other Income 10 14,658,209 15,241,977 Total 153,650,398 82,529,383
Total Income 180,805,410 92,244,585
Expense
Expenses Accumulated Loss up to Last Year - -
Personnel Expenses 11 14,657,673 12,594,254 Current Year’s Loss - -
General Operating Expenses 12 24,323,386 18,092,157 Deferred Tax Reserve - 42,593
Depreciation Charge 5 5,554,231 4,614,352 Dividend Payment 30,000,000 21,000,000
Interest Expenses 1,128,619 1,302,756 Total 30,000,000 21,042,593
Total Expenses 45,663,909 36,603,519 Retained Earnings 123,650,398 61,486,789
Profit from Regular Activities 135,141,501 55,641,066
Provision for Staff Bonus 12,285,591 5,058,279
Profit Before Income tax 122,855,910 50,582,787 Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi Bansidhar
Ghimire As per our Report of even date
Head - Accounts Chief Executive Officer Chairman Professional Independent Director
Provision for Income Tax 31,164,701 12,645,697
Current Tax 30,692,301 12,688,290
Deferred Tax 472,400 (42,593) Krishna Dutta Bhattarai Kapil Adhikari Bharat Adhikari Rabin Sapkota, CA
Net Profit/(Loss) for the year 91,691,209 37,937,091 Director Director Professional For and on behalf of R. Sapkota &
Independent Director
Associates Chartered Accountants
Schedules 8 to 12 form integral part of the income statement.

Date: August 16, 2017

Bansidhar As per our Report of even date Place: Naxal, Kathmandu

Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi Ghimire
Head - Accounts Chief Executive Officer Chairman Professional Independent Director

Krishna Dutta Bhattarai Kapil Adhikari Bharat Adhikari Rabin Sapkota, CA

Director Director Professional For and on behalf of R. Sapkota &
Independent Director
Associates Chartered Accountants

Date: August 16, 2017

Place: Naxal, Kathmandu
220 Nabil Bank Limited Annual Report 2016/17 221

Cash Flow Statement Statement of Changes in Equity

(For the period from 16 July 2016 to 15 July 2017)
Fiscal Year 2016/17 (2073/74)
NPR
NPR

particulars This Year Previous Year Particulars Share Share Retained Deferred Available for Total
Capital Premium Earnings Tax Reserve Sale Reserve Amount
(a) Cash Flow from Operating Activities 180,481,207 (2,678,980,074)
Balance as on 15 July 2016 150,000,000 19,800,000 61,486,789 852,592 2,784,796 234,924,178
1. Cash Received from Income 180,805,410 92,244,585
Changes in Accounting Policy - -
1.1 Income from Merchant Banking Operation 37,774,502 24,261,423
Share Capital Adjustment -
1.2 Income from Mutual Fund Operation 57,458,371 35,204,348
Changes in Tax Accounting Policy - -
1.3 Interest Income 70,914,328 16,303,021
Restated Balance 150,000,000 19,800,000 61,486,789 852,592 2,784,796 234,924,178
1.4 Other Income 14,658,209 16,475,793
Net Gains and Losses not recognised
2. Cash Payment (90,058,882) (44,901,591)
in the Income Statement -
2.1 Personnel Expenses (19,715,952) (16,172,814)
Net Profit for the period 91,691,209 91,691,209
2.2 Office Operating Expenses (24,323,386) (18,092,157)
Adjustments: -
2.3 Interest Expenses (1,128,619) (1,302,756)
Issuance of Share Capital -
2.4 Income Tax Paid (44,890,926) (9,333,864)
Share Premium -
Cash Flow before changes in Working Capital 90,746,528 47,342,994
General Reserve Fund -
(Increase)/Decrease in Current Assets (37,227,501) (26,038,595)
Proposed Stock Dividend -
1. (Increase)/Decrease in Available for Sale and Trading Investments (39,899,349) (2,335,370)
Cash Dividend (30,000,000) (30,000,000)
2. (Increase)/Decrease in Other Assets 2,671,847 (23,703,225)
Available for Sale Reserve 4,490,204 4,490,204
Increase/(Decrease) in Current Liabilities 126,962,180 (2,700,284,472)
Dividend Equalization Fund - -
3. Increase/(Decrease) in Borrowings (54,673) 54,673
Deferred Tax Reserve 472,400 (472,400) -
4. Increase/(Decrease) in Other Liabilities 127,016,854 (2,700,339,146)
Closing Balance 150,000,000 19,800,000 123,650,398 380,192 7,275,000 301,105,590
(b) Cash Flow from Investment Activities (90,062,341) (7,596,325)
1. (Increase)/Decrease in HTM Investment (80,000,000) -
2. (Increase)/Decrease in Fixed Assets (10,062,341) (7,596,325)
3. Interest income from Long term Investment - -
(c) Cash Flow from Financing Activities (30,000,000) 43,800,000 Share Capital
1. Increase/(Decrease) in Share Capital - 45,000,000 (As at 15 July 2017) Schedule 1
2. Increase/(Decrease) in Share Premium - 19,800,000 NPR
3. Payment of Dividend (30,000,000) (21,000,000)
particular This Year Previous Year
(d) Income/(Loss) from change in exchange rate in Cash & Bank balance - -
1. Share Capital
(e) Current Year’s Cash Flow from All Activities 60,418,866 (2,642,776,399)
1.1 Authorized Capital 200,000,000 200,000,000
(f) Opening Cash and Bank Balance 278,025,414 2,920,801,813
a) 2,000,000 Ordinary Shares of Rs. 100 each 200,000,000 200,000,000
(g) Closing Cash and Bank Balance 338,444,280 278,025,414
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
Suman Kumar Bohara Pravin Raman Parajuli Sashin Joshi Bansidhar
Ghimire As per our Report of even date
Professional Independent Director a) 1,500,000 Ordinary Shares of Rs. 100 each 150,000,000 150,000,000
Head - Accounts Chief Executive Officer Chairman
b) ………...Non-redeemable Preference Shares of Rs……….. each
c) …………Redeemable Preference Shares of Rs……….. each
Krishna Dutta Bhattarai Kapil Adhikari Bharat Adhikari Rabin Sapkota, CA
1.3 Paid Up Capital 150,000,000 150,000,000
Director Director Professional For and on behalf of R. Sapkota &
Independent Director a) 1,500,000 Ordinary Shares of Rs. 100 each 150,000,000 150,000,000
Associates Chartered Accountants
b) ………...Non-redeemable Preference Shares of Rs……….. each
c) …………Redeemable Preference Shares of Rs……….. each
Date: August 16, 2017
1.4 Proposed Bonus Shares - -
Place: Naxal, Kathmandu
1.5 Calls in Advance - -
222 Nabil Bank Limited
Cash and Bank Balance
(As at 15 July 2017) Schedule 4
Share Ownership nPR
particulars This Year Previous Year
Particulars % This Year % Previous Year
1. Local Ownership 100.00 150,000,000 100.00 150,000,000
1.1 Government of Nepal - - - -
1.2 “Ka” Class Licensed Institutions 52.00 78,000,000.00 52.00 78,000,000
1.3 Other Licensed Institutions - - - -
1.4 Other Entities 48.00 72,000,000.00 48.00 72,000,000
1.5 General Public - - - -
1.6 Others - - - -
2. Foreign Ownership - - - -
Total 100.00 150,000,000 100.00 150,000,000
Details of Shareholders Holding ≥ 0.5% Shares NPR
particulars This Year
% Rs.
1. Nabil Bank Limited 52.00 78,000,000
2. CG Finco Pvt. Ltd. 48.00 72,000,000
3. General Public - -
Reserves & Surplus Schedule 2
(As at 15 July 2017) 2. Sanima Bank Limited 401,628 180,544,987
NPR
particulars This Year previous year 4. Nabil Bank Limited -RTS (SKBBL) 4,835,600 4,891,289
1. Deferred Tax Reserve 380,192 852,592
2. Available for Sale Reserve 7,275,000 2,784,796
3. Retained Earnings 123,650,398 61,486,789
4. Securities Premium (450,000 shares @ Rs. 44 each) 19,800,000 19,800,000
Total 151,105,590 84,924,178
Other Liabilities & Provisions Schedule 3
(As at 15 July 2017) 9. Rastriya Banijya Bank Ltd. 10,559 10,525
NPR
particulars This Year Previous Year
1. Creditors and Accounts Payable 49,809,768 52,554,232
2. Payables and Refundables to Investors 290,578,867 161,276,164
3. Provision for Expenses 783,704 701,086
4. Provision for Staff Bonus 12,285,591 5,058,279
5. Deferred Tax Liability - -
6. Short Term Loan - 54,673
7. Others 375,997 -
Total 353,833,927 219,644,434
Annual Report 2016/17 223
NPR
Cash Balance - -
Petty Cash Fund - -
Current Account 22,427,710 24,061,078
1. Nepal Rastra Bank - -
2. Nabil Bank Limited 42,477 181,458
3. Sunrise Bank Limited (Current A/c - PMS) 900 17,197
4. NIDC Development Bank Ltd. (Current A/c- PMS) 6,000 889,047
5. Nabil Bank Limited - RTS 1,039,181 559,526
6. Civil Bank Limited 528,253 693,893
7. Prabhu Bank Limited (Grand Bank Ltd. - PMS) 1,000 1,000
8. Janata Bank Ltd. (Current A/c - PMS) 751,181 48,671
9. Global IME Bank Ltd. (Current A/c - PMS) 2,500 2,500
10. Citizens Bank International Ltd. (Current A/c - PMS) 951,472 1,909,063
11. NMB Bank Limited (Clean Energy Dev. Bank Ltd. - PMS) 6,352 98,905
12. Sanima Bank Ltd. (Current -PMS) 1,169,852 1,192,049
13. Bank of Kathmandu Ltd. (Lumbini Bank Ltd. - PMS)
14. Mega Bank Ltd. (Current A/c - PMS)
869
9,621,310
12,300,697
12,000
15. NMB Bank Ltd. (Current A/c - PMS) 1,592,562 1,425,248
16. NIC Asia Bank Ltd. (Current A/c - PMS) 1,755,723 4,635,862
17. Garima Bikash Bank Ltd. (Current PMS) 1,098,026 26,255
18. Shangrila Dev.Bank Ltd.(Current PMS) 663,465 67,707
19. Nepal Credit & Commerce (Current PMS ) 1,023,358 -
20. Nepal SBI Bank Ltd. (Current PMS) 102,240 -
21. Century Commercial Bank(Current PMS) 81,432 -
22. Kailash Bikash Bank Ltd.(Current PMS 1,987,557 -
23. Siddhartha Dev Bank Ltd(Current PMS) 2,000 -
Call Account
1. Nabil Bank Limited
76,433,916
7,078,719
225,027,494
2,550,864
3. Nabil Bank Limited -RTS (SWBBL) 7,188,888 3,833,563
5. Nabil Bank Limited - RTS (NBF I) 56,929,082 33,206,793
Bankers to the Issue Account 239,582,654 28,936,842
1. Nabil Bank Limited (06 Account) 113,912,258 1,580,184
2. Mega Bank Nepal Limited 412,778 -
3. Laxmi Bank Limited 24,076 -
4. NIC Asia Bank Ltd. 3,076,848 -
5. Nabil Bank Limited - MF 479,715 611,962
6. Nabil Bank Ltd. (Mega IPO) 6,991 6,991
7. Machhapuchhre Bank Ltd.
8. Nabil Bank Ltd. (Mahila Sahayatra IPO)
84,877,410
11,392,511
107,368
921,597
10. NCC Bank Ltd. 7,290 -
11. Lumbini Bank Limited 24,310,600 23,268,367
12. Prabhu Bank Limited 10,133 2,247,581
13. Everest Bank Limited 16,053 177,831
14. Nepal Investment Bank Ltd. 7,245 4,435
15. Siddhartha Bank Limited 2,914 -
16. Nabil Bank (NEF 3501017500631) 832,036 -
17. Bank of Kathmandu Lumbini Ltd. 200,662 -
18. Global IME Bank Limited 2,534 -
19. Century Commercial Bank Ltd. 41 -
20. NMB Bank Limited 0 -
Total 338,444,280 278,025,414
224 Nabil Bank Limited Annual Report 2016/17 225

npr
Schedule 5
Investments

This Previous
Software Others Year Year

19,180,242
7,596,325
-
-
-
26,776,567

9,075,050
3,227,679
-
-
-
12,302,729
14,473,838

-
3,350,183
17,824,021
Schedule 6

2. Depreciation
(As at 15 July 2017)
NPR

particulars This Year Previous Year

-
-

-
-
Fixed Deposits 88,000,000 8,000,000

30,063,858

16,378,727
13,685,132

6,683,099
1,963,901
22,332,131
26,776,567
3,409,968

12,302,729
4,167,948
(122,677)

(91,951)

-
1. Nabil Bank Limited 8,000,000 8,000,000

1. Cost Price
2. Machhapuchchhre Bank Limited 40,000,000 -
3. NMB Bank Limited 40,000,000 -
Investment in Shares, Debentures & Mutual Fund units 133,696,808 89,307,256

-
-
-
-
-
-
-
-

-
-
-
-
-

- 6,683,099
- 1,963,901
8,646,999
ASSETS

1. 12.5% Nepal SBI Bank Debenture 60,000,000 60,000,000

2. 11% Siddhartha Bank Debenture 15,000,000 15,000,000
3. Nabil Balanced Fund I (Seed Capital) 14,775,000 7,500,000
4. Nabil Equity Fund (Seed Capital) 12,500,000 -

-
-
-
-

-
-
-
1,717,932

1,544,600
173,333

173,333
1,606,627
111,305

1,312,973
231,627
5. NIBL Samriddhi Fund I 412,107 459,056
6. NMB Hybrid Fund I 783,968 -
7. Nepal Investment Bank Ltd. FPO 1,777,160 6,333,600
8. Mero Microfinance Company Ltd. IPO 99,180 4,100

-
-
-
-
-

-
-
9,456,811

6,579,271
2,877,540

2,877,540
8,372,368
1,099,663

5,371,160
1,222,017
(15,220)

(13,905)
Computer &

Office Equipment

9. Green Development Bank Ltd. IPO - 10,500

10. National Microfinance Company Ltd. IPO 32,566 -
11. RDSD Microfinance Company Ltd. IPO 47,200 -
12. Nepal Life Insurance Company Ltd. FPO 4,674,048 -
13. Standard Chartered Bank Limited FPO 3,740,850 -

-
-
-
-
-
-

-
-

14 Forward Community Microfinance Co. Ltd. IPO 83,746 -

4,750,588

3,099,855
1,650,733

1,650,733
4,858,045

2,617,852
560,048
(107,457)

(78,046)
Vehicles furniture

Particulars

15. Global IME Bank Ltd. 898,220 -

16. NMB Bank Ltd. 1,294,920 -
17. Premier Insurance Co. 3,954,600 -
18. NLG Insurance Co. Ltd. 3,712,500 -
-
-
-
-
-
-

-
-
-
- 14,138,527

5,155,001
8,983,526

8,983,526
- 11,939,527
2,199,000

3,000,745
2,154,256

19. Nepal Investment Promo 4,988,276 -

20. Prime Commercial Bank 1,316,467 -
21. Nepal Life Insurance 2,148,000 -
22. Asian Life Insurance 1,458,000 -
-
-
-
-
-
-
-
-
-
-

-
-
-
-
-
Building

Total 221,696,808 97,307,256

Fixed Assets

Other Assets Schedule 7

(As at 15 July 2017)
NPR

particulars This Year Previous Year

e. Depreciation on Writen Off Assets
c. Revaluation/Write Back This Year

c. Revaluation/Write Back This Year

1. Deferred Tax Assets 380,192 852,592

5. Pending Capitalization (CWIP)
d. Depreciation on Sold Assets

2. Account Receivables 56,151,427 60,901,109

3. Book Value (WDV*) (1-2)
b. Addition during the Year

e. Write off during the Year

a. Previous Year Balance

Total Cost (a+b+c+d+e)

Less: Provision for doubtful receivable - (2,030,000)

d. Sold during the Year

a. Up to Previous Year

6. Leasehold Assets*

3. Advance Tax ( Net of Tax Liability) 15,309,452 1,110,828

*Written down value
Total (3+4+5+6)
Total Depreciation
b. For This Year
(As at 15 July 2017)

4. Deposits 121,500 118,500

-

5. Advance Salary 63,250 139,500

6. Others 440,477 319,391
4. Land

Total 72,466,298 61,411,920

226 Nabil Bank Limited
Personnel Expenses Schedule 11
(For the period from 16 July 2016 to 15 July 2017)
Income from Merchant Banking Activity Schedule 8
(For the period from 16 July 2016 to 15 July 2017) NPR
particulars This Year Previous Year
1. Issue Management Income 11,823,377 6,536,573
2. Underwriting Commission 142,500 -
3. Registrar to Shares 4,017,004 2,598,564
4. Portfolio Management Services 19,015,773 15,110,728
5. Income from Depository Participant Services 2,193,788 1,233,817
6. Income from Auction of Shares Management 582,060 15,558
Total 37,774,502 25,495,240
General Operating Expenses Schedule 12
(For the period from 16 July 2016 to 15 July 2017)
Income from Mutual Fund Operations Schedule 9
(For the period from 16 July 2016 to 15 July 2017)
NPR
particulars This Year Previous Year
1. Fund Management Fees - NBF I 32,878,576 28,163,478
2. Depository Fees - NBF I 8,219,645 7,040,870
3. Fund Management Fees - NEF 12,270,112 -
4. Depository Fees - NEF 4,090,038 -
Total 57,458,371 35,204,348
Other Income Schedule 10
(For the period from 16 July 2016 to 15 July 2017) NPR
particulars This Year Previous Year
1. Operational Support/Advisory Fees 6,962,175 3,393,329
2. Business Advisory 2,004,600 2,233,382
3. Gain on investment in Securities 2,675,949 8,053,657
4. Dividend Income 2,446,446 1,050,000
5. Miscellaneous Income 569,039 511,608
Total 14,658,209 15,241,977
Annual Report 2016/17 227
NPR
particulars This Year Previous Year
1. Salary 5,854,773 5,093,197
2. Allowances 5,709,929 4,675,663
3. Contribution to Provident Fund
4. Overtime
434,485
23,842
446,103
2,907
5. Staff Training Expenses 287,264 135,330
6. Dashain Expenses 836,261 742,503
7. Staff Insurance Premium 374,943 334,953
8. Leave Encashment 484,974 342,287
9. Gratuity Expenses 374,951 821,311
10. Staff Recruitment Expenses 276,251 -
Total 14,657,673 12,594,254
NPR
particulars This Year Previous Year
1. Supplies and Stationeries
2. Communication Expenses
1,205,943
405,648
846,701
375,522
3. Expenses relating to Audit
a. Statutory Audit Fees 113,000 100,000
b. Intenal Audit Fees 200,000 -
4. Repairs & Maintenance 594,315 457,894
5. Water 221,327 101,712
6. Electricity 505,732 436,275
7. Janitorial & Cleaning 97,434 44,154
8. Advertisement & Business Promotions 197,242 317,413
9. Insurance - Fire & Others 227,949 132,534
10. Board Meeting Allownaces 326,000 332,000
11. SLA Service Expenses 500,000 500,000
12. Technical Management Service Fees 2,576,090 2,625,080
13. Fuel Expenses - Vehicle 444,536 243,738
14. Fuel Expenses - Generator 121,230 457,179
15. Newspapers/Periodicals/ Books 57,434 62,294
16. Tea, Coffee & Snacks 482,013 269,577
17. Membership Fees 55,000 45,000
18. Other Taxes & Fees (SEBON) 300,000 300,000
19. Vehicle Registration & Renewal 111,440 84,108
20. Outsourced Service Expenses 7,586,651 5,222,023
21. Miscellaneous Expenses 97,515 72,307
22. AGM Expenses 5,762 13,309
23.Travelling Expenses 41,235 231,264
24. AMC Charges 555,080 450,672
25. Bank Charges 242,501 83,944
26. Rent Expenses 4,428,072 3,971,935
27. Leasehold Expenses 210,964 139,878
28. Semi-annual & Budget Review Expenses 181,832 175,646
29. Professional Service Charges 465,032 -
30. Issue Management Expenses 1,722,567 -
31. Postage & Courier 13,114 -
32. Fixed Assets Write off 30,726 -
Total 24,323,386 18,092,157
228 Nabil Bank Limited
Significant Accounting Policies
Schedules to and forming part of Financial Statements as of 15th July 2017
1. Corporate information
Nabil Investment Banking Ltd. (Nabil
Invest) is a limited liability Company,
incorporated on 7th February, 2010
and domiciled in Nepal. It is a licensed
Merchant Banker - a subsidiary of Nabil
Bank Ltd. with CG Finco Ltd. as its
Institutional shareholder, licensed under
Securities Businessperson (Merchant
Banker) (First Amendment) Regulations,
2074 from the Securities Board of Nepal
(SEBON). The 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, 2017 was approved
for issuance by the Board of Directors on
August 16, 2017.
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 for
Nabil Mutual fund, depository participant
services in a central depository services,
corporate advisory services, allied support
services etc.
Issue Management
During the review period, Nabil Invest
has entered into Agreements with the
following institutions for managing their
public/right offer.
Himalayan Urja Bikas Company
Ø Registrar to Shares (RTS) &
Limited (IPO)
Bank Of Kathmandu Limited (FPO)
Ø Services:
Panchakanya Mai Hydropower Limited
Ø
(IPO) on joint basis with Sunrise services to the following companies:
Capital.
Siddhartha Development Bank Limited
Ø Ø Mega Bank Nepal Limited.
(Right Issue)
Deprosc Development Bank Limited
Ø Limited.
(Right Issue)
United Finance Limited (Right Issue)
Ø Ø Surya Life Insurance Company Nabil Invest provides the following
Mega Bank Nepal Limited
Ø Limited.
(Right Issue)
The Company has successfully managed
the IPOs of Nabil Equity Fund (a Mutual
Fund Scheme under Nabil Mutual Fund),
Forward Community Microfinance Bittiya
Santha Ltd. and IPO of Radhi Bidyut
Company Ltd. to the project affected
community. Further, it also managed two
right issues of Siddhartha Development
Bank Ltd and Deprosc Development Bank
Ltd.
Underwriting:
During the review period, Nabil Invest
has entered into Agreements with
Himalayan Urja Bikas Company Ltd. to
undertake the underwriting commitment
of upcoming IPO. The total underwriting
Schedule 13
commitment undertaken by the Company
including that of NADEP Laghubitta
Bittiya Sanstha Ltd. and Radhi Bidyut
Company Ltd. as on Asar end, 2074 is
Rs.129 million.
Depository Participant (DP)
Nabil Invest has been rendering RTS
Ø Nabil Bank Limited
Ø Prime Life Insurance Company investors who lag these aspects seek the
Ø Sana Kishan Bikas Bank Limited.
Ø Bottlers Nepal Limited
Ø Bottlers Nepal Terai Limited
Ø Himalayan Distillery Limited
Ø Bank of Kathmandu Limited
Ø Forward Community Microfinance
Bittiya Sanstha Limited.
During the review period, the Company
has entered into RTS agreement with
Bank of Kathmandu Ltd. & Forward
Community Microfinance Bittiya Sanstha
Ltd while others are continuation of
earlier years.
In addition, Nabil Invest under Depository
services has been rendering depository
services to unit holders of Nabil Balanced
Fund – I and Nabil Equity Fund under
Nabil Mutual Fund.
Nabil Invest has also been rendering
Depository Participant (DP) services and
has earned revenue of Rs. 2.19 million in
the review period. The number of De-mat
accounts opened with the Company has
crossed 20,000 by the end of Asar 2074
and the number is expected to grow
further in the coming year.
Portfolio Management Services (PMS)
PMS is a professional service offered by
Portfolio Managers to their Clients to help
them manage their wealth professionally.
The Portfolio Manager manages the assets
of the Client considering their investment
goals and risk appetite. As managing
investments requires time, knowledge,
experience and constant monitoring,
support of professional Portfolio Managers.
services to the investors under PMS:
Ø Discretionary Portfolio Management Movement in NAV has direct relation in
Services
Ø Non Discretionary Portfolio Depository & the Fund Supervisors as
Management Services
Ø Advisory Services
The size of the total Assets under
Management (AuM) has reached Rs.1.66
billion with client base of 439 (individuals
& institutions) at the end of the review
period. Of the total, Rs.739 million
constitutes the NI Fixed Returns portfolio.
Fund Management & Depository
Services to Nabil Mutual Fund
The Sponsor Nabil Bank appointed Nabil
Invest, an institution licensed by SEBON
to render Fund Management services to
the Schemes of Nabil Mutual Fund. The
Company has been managing the assets
of Nabil Balance Fund I (NBF I) & Nabil
Equity Fund (NEF) under Nabil Mutual
Fund as Fund Manager.
The Company has also been rendering
Depository services to the unit holders of
NBF I and NEF as per its license obtained
from SEBON & in line with the provisions
of prevailing regulations on mutual funds.
NBF I & NEF both are closed ended
mutual fund schemes having maturity
period of 5 and 7 years respectively. NBF
I was established on Chaitra 30, 2069
which will mature on Chaitra 29, 2074
whereas NEF was established on Kartik
19, 2073.
The performance of the Schemes in terms
of Net Assets Value (NAV) as compared
to the movement of NEPSE remained
satisfactory during the review period.
terms of benefit to the Fund Manager,
their commission is based on NAV of
the Scheme. Nabil Invest has been able
to book an income of Rs. 57.45 million
(Rs.41.10 mio from NBF I and Rs.16.36
mio from NEF) under mutual fund
segment. The NAV per unit of NBF I and
NEF as on Asar End 2074 remained at
Rs. 23.95 and Rs. 9.97 respectively.
Corporate Advisory Services
Nabil Invest has started rendering
advisory services to few institutions in
the form of Loan Syndication, Investment
Advisory and Business Valuation. During
the review period, the Company has
Annual Report 2016/17 229
earned income of Rs. 2 million from
advisory services. The Company targets
to widen the scope of advisory services
in order to improve the revenue from
this segment in the next financial year as
SEBON has enhanced the existing scope
of work of Merchant Bankers further in
line with regional standards.
Other Support Services
Nabil Invest continued rendering its
operational support services to Nabil
Bank in their bullion operations in
coordination with Treasury & the
Branches of the Bank and has earned Rs.
6.96 million of revenue.
4. Responsibility for
Financial Statements
The Management of Nabil Invest is
responsible for the preparation of
financial statements. The Management &
the Board of Directors acknowledges the
accountability of the Financial Statements
prepared as set out in the “Annual Report
of the Board of Directors”.
These Financial Statements include the
following components:
a. a Balance Sheet disclosing the
information on financial position of Nabil
Invest;
b. an Income Statement disclosing the
financial performance of Nabil Invest for
the period under review;
c. a Statement of Changes in Equity
showing all changes in equity of Nabil
Invest;
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.
230 Nabil Bank Limited Annual Report 2016/17 231

5. Statement of Compliance Ø Underwriting Commission is outsourcing services, Ø Investments Available for Sale: b. Depreciation is charged to Income 7.5 Contingent Liabilities
The Financial Statements which recognised when the Issuing - on accrual basis, if the right to These are investments held with the Statement on Written Down Value All types of guarantees & claims whose
comprises components mentioned above Company complies with all the terms receive the fee is established after primary intention to recover value of method over the estimated useful lives of future outcome cannot be ascertained
have been prepared in accordance with of underwriting commitment elapse of a time. investments through sale rather than the fixed assets. The depreciation rates with reasonable certainty is recognized
Nepal Accounting Standards (NAS) Agreement. Ø Fee from Cross Sale Services are continuing to hold. These investments applied for various asset categories are as as contingent liabilities in accordance
pronounced by the Institute of Chartered recognised when the cross selling are initially measured at cost and follows: with NAS–12 “Provisions, Contingent
Accountants of Nepal and in compliance Ø Portfolio / Assets Management Income services are rendered. subsequently accounted at market Liabilities and Contingent Assets”.
Nature of Depreciation Estimated
with Companies Act, 2007. is recognised when the contract with Ø Commission on ETF is accounted value. Assets Rate Useful Life

the Client for the Portfolio for as and when contract for ETF is 7.6 Stationery Stock
Furniture 25% 15 years
6. Basis of Preparation Management Service is executed. executed. Ø Investments Held Till Maturity (HTM): Equipments 25% 15 years
Stationery purchased are charged to
The Financial Statements are presented These investments are primarily Vehicles 20% 7 years revenue at the time of consumption and
in Nepalese Rupees (Rs) and are Ø Bond / Debenture Trusteeship Income c. Gains / Losses on trading and intended to be held till maturity Computers 40% 5 years valued at average cost basis.
prepared on historical cost basis. are accounted for on accrual basis available for securities (sell) and are valued at cost and carried at Building 5% 50 years
Preparation of financial statements in when the Trust Deed provides lump Ø Gains and losses arising from trading these values in the Balance Sheet till Leasehold Items 20% (Straight Line) 5 years 7.7 Income Taxes
conformity with NAS and GAAP requires sum fee covering period more than 1 are recognised after the securities maturity. Any impairment losses arising a. Provision for current tax is made based
the use of certain critical accounting year, it shall be accounted on pro-rata are sold while gains and losses arising in such investments are provisioned c. In case of fixed assets purchased on the provisions of the Income Tax Act,
estimates and also requires management basis. from revaluation are recognised on and charged in the Income Statement. during the year and booked for more 2058 and amendments thereto.
to exercise judgement in the process daily basis. Premiums paid while acquiring HTM than one month, depreciation is charged
of applying Nabil Invests accounting Ø Income with respect to advisory Investments shall be recognized as from the subsequent month of booking. b. Deferred tax is recognized and
policies. services are recognised: 7.2 Expense Recognition the part of initial cost and Depreciation on fixed assets sold or provided for on the timing differences
a. Interest on Borrowings subsequently amortized on disposed off during the year is charged to between taxable income and accounting
7. Summary of Principal - After the services are fully rendered, Ø Interest expenses on borrowings are proportionate basis till maturity. the previous month of such disposal. income.
Accounting Policies if the right to receive the fee is accounted for on accrual basis.
The principal accounting policies adopted subject to the fulfilment of terms of Ø Interest assured on funds received for b. Investments in unlisted companies d. Leasehold improvements are amortized c. Deferred tax assets are not recognised
by the Board of Directors are presented advisory services, Portfolio Management are accounted are initially stated at cost and over the period of lease. unless there is a virtual/reasonable
below. - On accrual basis, if the right to for on accrual basis. carried at these values in the Balance certainty that there will be sufficient
receive the fee is established after Sheet. Any impairment losses arising e. Cost of computer software licences future taxable income available to
7.1 Income Recognition elapse of a time. b. Staff Bonus in such investments are provisioned are capitalised and are amortized over realize such assets. Deferred tax assets
a. Income from Investments Ø Income from facilitation services to Ø Provision for staff bonus is provided for and charged in the Income Statement. a period of useful life of the software, & liabilities are netted off and presented
Ø Interest earnings on fixed deposits, call Bank’s customers is recognised after as per the Bonus Act, 1974. Nabil Invest recognizes equity method estimated as 5 years from the date of either under ‘Other Assets’ or under
deposits and bonds and debentures are the transactions are executed. to calculate impairment losses on acquisition. ‘Other Liabilities’.
recognised on accrual basis. 7.3 Investments unlisted investments.
Ø Dividend on share investments is Ø Loan Syndication Fee is recognised a. The investments held by Nabil Invest f. Non-consumable items having life less d. The equivalent amount of outstanding
recognised as and when the right to after the loan syndication services are are classified under 3 categories: 7.4 Fixed Assets and Depreciation than one year and/or costing less than Deferred Tax Assets is earmarked under
receive is established. rendered. Ø Investments Held for Trading: a. Fixed assets are stated at cost less Rs.5,000 are expensed off during the Deferred Tax Reserve in order to make
These are marketable investments accumulated depreciation. year of purchase. the accounting policy uniform with the
b. Fee Income Ø Fee from Business Outsourcing and held with the primary intention of accounting policy of Nabil Bank Limited,
Ø Issue Management Income is Services are recognised: resale over a short period of time. the parent Company.
recognised when the issue - after the services are fully rendered, These investments are initially
management services are fully if the right to receive the fee is subject measured at cost and subsequently
rendered. to the fulfilment of terms of business accounted at market value.
232 Nabil Bank Limited Annual Report 2016/17 233

Notes to Accounts Schedule 14

1. Paid up Capital
The issued and paid up capital of Nabil Invest is
2. Income Tax & Deferred Tax
The tax liability of Nabil Invest for the review
Deferred tax expenses of Rs.472,400 has been booked in the income statement this year on the
taxable temporary difference arising due to charge of depreciation and on creating provision for
Leave Encashment as shown hereunder:
Deferred Tax Previous Year npr

Rs.150 million each respectively. Of the paid-up period, after adjusting for inadmissible and tax
Items Carrying Tax Base Taxable Deductible Deferred
capital, Nabil Bank Ltd. holds Rs.78 million free items computed on self-assessment basis Amount Temporary Temporary Tax Liability
Differences Differences / (Assets)
while the balance of Rs.72 million is held by under Income Tax Act, 2002 is Rs.30,692,301.
Fixed Assets 17,824,021 18,578,303 (754,282) - (188,570)
CG Finco Ltd.
Provision for Leave Encashment 701,086 - (701,086) - (175,272)
NPR
Provision for Doubtful Receivable 1,955,000 - (1,955,000) (488,750)
Before Tax Profit as per Income Statement 122,855,910
Total 20,480,108 18,578,303 (3,410,368) - (852,592)
Add: Disallowable Expenses 5,667,574
Expenses without proper supporting -
Excess Repair and Maintenance -
Deferred Tax This Year npr

Leave Provision 82,617
Loss on disposal of Fixed Assets 30,726
Depreciation as per Books 5,554,231
Less: allowable exp & exempt income 5,754,280
Depreciation as per Tax 4,702,948
Dividend Income (Net of tax) 152,106
Unrealized Gain on Investment 899,226
Taxable income 122,769,205
Income tax liability @ 25% 30,692,301
Items Carrying Tax Base Taxable Deductible Deferred
Amount Temporary Temporary Tax Liability
Differences Differences / (Assets)
Fixed Assets 15,649,032 17,285,323 (1,636,290) - (409,073)
Provision for Leave Encashment 783,704 - (783,704) - (195,926)
Provision for Doubtful Receivable - - - -
Investment Held for Trading 31,421,808 30,522,582 899,226 224,806
Total 47,854,544 47,807,905 (1,520,768) - (380,192)
Deferred Tax expense booked in the review period is Rs.472,400.

Accounting tax has been computed on accounting profit which is profit before tax and adjustments 3. Related Parties Disclosures
for permanent difference arising out of dividend income from resident company as the tax on (As identified by the Management and relied upon by the Auditors)
dividend from resident company is considered to be final withholding tax. The accounting tax has a. Nabil Invest has the following related parties:
been calculated as under:
Name Relationship
NPR
1. Nabil Bank Limited Holding Company
Profit from Regular Activities 135,141,501 2. CG Finco Limited An Associate Company
Provision for staff Bonus 12,285,591 3. Nabil Balanced Fund I Fund Manager & Depository
Profit Before Tax and Tax related adjustment 122,855,910 4. Nabil Equity Fund Fund Manager & Depository
Adjustment for permanent difference:
Disallowable Expenses 1,955,000
Dividend Income (152,106)
Accounting Profit after adjustment 124,658,805
Accounting Tax @ 25% 31,164,701
Current year tax 30,692,301
Deferred Tax 472,400
234 Nabil Bank Limited Annual Report 2016/17 235

The Company has entered into following transactions with its related parties during F.Y.2073/74: 4. Usage of Nabil Bank’s Some of these investments (debentures & time
Infrastructure/Resources deposits) have been made with objective of
Related Party Transactions Amount a. Nabil Invest has entered into Service Level holding them till maturity for regular contractual
1. Nabil Bank Ltd. Balance in Call/Current Account 203,737,458
Agreement (SLA) with Nabil Bank under which cash flows and hence valued at cost. The
2. Nabil Bank Ltd. Balance in Fixed Deposit 8,000,000
the Company receives services of the Bank in investment in mutual fund schemes under Nabil
3. Nabil Bank Ltd. Interest Income on Call & Fixed Deposit Accounts 20,347,272
areas like Administration, Operations, Accounts, Mutual Fund as seed capital will be held till
4. Nabil Bank Ltd. Proceeds realised from rendering operational
Finance & Planning, Information Technology, maturity and as they do not provide contractual
support assistance for the Bank 6,962,175
Clearing & Settlement, Human Resources, Legal, cash flows, they have been classified as Available
5. Nabil Bank Ltd Annual Fee of RTS Service Provided 425,000
6. Nabil Bank Ltd. Interest paid on Short term loan 6,100 Treasury etc. at an annual fees of Rs. 500,000 for Sale investments. All other equity or equity
7. Nabil Bank Ltd. Service Level Agreement (SLA) fees paid 500,000 related investments, shares listed with NEPSE
8. Nabil Bank Lt.d Technical Management Service fee paid 2,576,090 b. Nabil Invest has also been availing services of have been classified under Held for Trading
9. Nabil Balanced Fund I Fund Management & Depository fee 41,098,221 the CEO deputed by Nabil Bank. During the year, category and valued at market price as on Balance
10. Nabil Equity Fund Fund Management & Depository fee 16,360,150 the Company has reimbursed Rs. 2,576,090 to Sheet date. For shares which are not listed till the
11. Ms. Sarika Chaudhary Investment of NPR 45,003,990 NPR 225,020 the Bank as fees paid on actual cost basis for the Balance Sheet date, they are valued at cost.
(Mother of Mr. Nairvana Chaudhary, under Portfolio Management Service (PMS) (AMC & deputed staff as per the provisions of Management
Director of Nabil Bank Limited) rendered by the Company Performance Fee) Service Agreement (MSA) entered between Nabil The Company had classified its equity investment
12. Ms. Shruti Regmi Investment of NPR 700,000 under PMS NPR 91,459
Bank & the Company. through IPO/FPO as available-for-sale investments
(Spouse of Mr. Kapil Adhikari, Director) (AMC &
(financial assets measured at fair value through
Performance Fee)
5. Investments other comprehensive income) till last year but
The investments of Nabil Invest constitute the same has been classified as held-for-trading
b. Key Management Personnel investment in Debentures, Time Deposits, Mutual investments (financial assets measured at fair
Key Management personnel of Nabil Invest includes the Board of Directors and Fund Units and Equity Shares purchased through value through profit or loss) from this financial
the Chief Executive Officer: IPO/FPO and investment in secondary markets. year after due approval granted by the Board.

Mr. Sashin Joshi - Chairman The details of investments of the Company as on Balance Sheet date is as follows:
Mr. Krishna Dutta Bhattarai - Director
Mr. Kapil Adhikari - Director Held to Maturity Category
(in Rs)
Mr. Bharat Adhikari - Independent Professional Director
Mr. Bansidhar Ghimire - Independent Professional Director Fixed Deposits Cost Price
Mr. Pravin Raman Parajuli - Chief Executive Officer/Company Secretary Nabil Bank Limited 8,000,000
Machhapuchchhre Bank Limited 40,000,000
c. Compensation to Key Management Personnel of Nabil Invest NMB Bank Limited 40,000,000
The total employee benefits paid to Mr. Pravin Raman Parajuli in the capacity as Chief Executive Debentures
Officer of Nabil Invest in the review period amounts to Rs. 2.58 million. 12.5% Nepal SBI Bank Debenture (60,000 Debentures @ Rs. 1,000 each) 60,000,000
11% Siddhartha Bank Debenture (15,000 Debentures @ Rs. 1,000 each) 15,000,000
d. Transaction with Key Management Personnel of the Bank Total 163,000,000
The Board of Directors representing the Bank have decided not to accept any meeting fees
until otherwise decided at a later stage. However, this decision does not apply to the director Available for Sale Category (in Rs)
representing CG Finco Ltd. and Professional Independent Directors. The Company has paid
Rs.220,000 to its Directors as Board meeting fee & Rs.10,000 as Audit Committee meeting fee Name of Company Quantity Total Cost Cost per
Price as on Market Value Gain/(Loss)
share Asar end 2074 as on Asar as on Asar
during the review period. In addition, the Company pays Rs. 4,000 per month to Professional end 2074 end 2074

Independent Directors towards communication and transportation allowance, the total of which is Nabil Balanced Fund I 750,000 7,500,000 10 19.7 14,775,000 7,275,000

Rs. 96,000 in the review period. The Company does not provide any other financial benefits to its Nabil Equity Fund 1,250,000 12,500,000 10 10 12,500,000 -

Board of Directors except mentioned above. Total 20,000,000 27,275,000 7,275,000

236 Nabil Bank Limited
8. Interest Income
Nabil Invest has earned total interest income of Rs.
Held for Trading Category (in Rs) 70,914,328 which includes Rs. 54,980,686 earned from
placement of subscription amount raised from public offers
Name of Company Quantity Total Cost Cost per Price as Market Value
Gain/(Loss) with Bankers to the Issue and the remaining interest is
share on Asar as on Asar as on Asar
end 2074 end 2074 end 2074 received from interest bearing call deposits and Investment
Global IME Bank Ltd. 2,315 1,186,270 512 388 898,220 (288,050) on Debentures and Bank Deposits.
NMB Bank Ltd. 2,376 1,760,887 741 545 1,294,920 (465,967)
9. Bank Balance
Premier Insurance Co. Ltd. 2,340 4,770,731 2,039 1,690 3,954,600 (816,131)
The total bank balance of Nabil Invest as on Balance
NLG Insurance Co. Ltd. 2,500 4,442,570 1,777 1,485 3,712,500 (730,070) Sheet date stands at Rs. 338,444,280 which includes Rs.
Nepal Investment Bank PO 7,412 5,465,021 737 673 4,988,276 (476,745) 290,578,867 payable & to be refunded to the investors
for dividends, application money of IPO, right shares and
Prime Commercial Bank 3,127 1,875,978 600 421 1,316,467 (559,511)
debentures.
Nepal Life Insurance Co. Ltd. 3,176 4,997,490 1,574 2,148 6,822,048 1,824,558
Asian Life Insurance Co. Ltd. 1,000 1,618,542 1,619 1,458 1,458,000 (160,542) 10. Contingent Tax Liability construction work has not been completed, certified and
Nepal Investment Bank FPO 2,308 1,155,923 501 770 1,777,160 621,237 Audit report of 2073 issued by Office of Auditor General
Standard Chartered Bank Ltd.FPO 1,630 2,102,700 1,290 2,295 3,740,850 1,638,150 (OAG) Nepal has a remarks which qualifies Merchant
Bankers (MBs) as financial service providers thus exempting
NIBL Samriddhi Fund 34,777 347,770 10 12 412,107 64,337
them from VAT but have stated that since MBs are rendering
NMB Hybrid Fund 78,870 788,700 10 10 783,968 (4,732)
financial services as Financial Service Providers MBs are
Forward Community Micro Fin. 26 2,600 100 3,221 83,746 81,146 subject to 30% corporate tax as applicable to BFIs and OAG
Mero Micro Finance 45 4,100 91 2,204 99,180 95,080 has instructed Inland Revenue Office to recover the shortfall
National Microfinance 19 1,900 100 1,714 32,566 30,666 tax of F.Y.2069/70, F.Y.2070/71 and F.Y.2071/72 amounting
to Rs. 5,479,795 (excluding interest and penalties) from
RSDC Microfinance 16 1,400 88 2,950 47,200 45,800
Nabil Invest. However, Nabil Invest has not received any
Total 30,522,582 31,421,808 899,226 letter in this regard from Inland Revenue Office except a
letter dated 2073/05/26 requesting us to furnish some
information and documents for the purpose of full tax audit.
6. Gain on Investment in Securities
During the review period, Nabil Invest earned a gain on investment of securities of Rs. 2.68 million As per Nabil Invest, the services rendered by the Company
which includes a realised gain of Rs. 1.78 million from sale of shares which were purchased in IPO, is financial services but the Company itself is not a Bank or
Financial Institution and therefore the appropriate tax rate
FPO or from secondary market as detailed below:
for the Company is 25% (not 30% as applicable for BFIs).
Name of Company No. of Cost Price, Net Sale Net Gain, The issue has been taken up by the Merchant Bankers
Units Rs. Proceeds, Rs. Rs. Association of Nepal (MBAN) and the Association has
1. Green Development Bank Ltd. 105 10,500 53,744 43,244 already notified the issue to SEBON and has also obtained a
tax experts opinion in this regard.
2. Nepal Investment Bank Ltd. (FPO) 5,000 2,504,167 3,940,603 1,436,436
3. Nepal Bangladesh Bank Ltd. 2,633 1,999,518 1,964,020 (35,498)
Had the case gone against the Company and Nabil Invest
4. Arun Kabeli Power Co. Ltd. 295 29,500 129,335 99,835 had to pay 30% tax liability instead of 25% paid, the
5. Synergy Power Development Ltd 610 61,000 188,031 127,031 total additional tax liability including Rs. 2,537,658 of
F.Y.2072/73 and Rs.6,183,422 of F.Y.2073/74 would
6. United Modi Hydropower Ltd 337 33,700 139,375 105,675
be Rs.14,200,875 exclusive of interest and penalties.
Total 4,638,385 6,415,108 1,776,723
However, the Company has deposited an advance tax of
additional Rs.14,000,000 in the review period for any
uncertain contingencies.
7. Unexpired Underwriting Commitment
The Company has entered into Agreements with NADEP Laghubitta Bittiya Sanstha Ltd., Radhi 11. Write off of Receivables
Bidyut Company Ltd. and Himalayan Urja Bikas Company Ltd. to undertake the underwriting Nabil Invest was awarded valuation job by Water and
commitment of their upcoming IPOs to general public. The total unexpired underwriting commitment Energy Nepal Pvt. Ltd. (WENPL) on 08.05.2013 which was
successfully completed by providing deliverables – Valuation
undertaken by the Company as on Asar end 2074 is Rs. 129 million as detailed below:
(in Rs) Certificate and Report of WENPL on May 14, 2013 and an
invoice of Rs. 570,700 was raised to the client. Out of the
Name of Company Underwriting Amount total invoice, Rs. 530,000 has been booked as receivable
1. NADEP Laghubitta Bittiya Sanstha Ltd. 24,000,000 in the books of accounts including fees paid to engineering
consultancy, SEEC of Rs 30,000 in an arrangement to be
2. Radhi Bidyut Company Ltd. 30,750,000
claimed from WENPL at a later date. In spite a numerous
3. Himalayan Urja Bikas Company Ltd. 74,250,000
recovery efforts, the amount could not been recovered
Total 129,000,000 and therefore a provision towards doubtful receivable was
Annual Report 2016/17 237
created in the book in F.Y.2071/72. This amount of Rs.
530,000 has been written off from the books this year since
the possibility of recovery of the amount is remote.
12. Fixed Assets Disposal/Write off
Nabil Invest has written off few damaged chairs and one
printer (beyond repair) having original cost of Rs. 122,677
and book value of Rs. 30,726.
13. Capital Work in Progress (CWIP)
M/s Alfa Interiors Pvt. Ltd. has been awarded with Interior
Construction works (including civil, electrical and furniture
works) at a contract price of NPR 7,053,274 for the
expansion of the existing office space to the fourth floor
of the existing leased building. As on reporting date, the
handed over. However the vendor has completed more than
90% of the works by the reporting date and therefore the
advance mobilization amount paid to the vendor and other
ancillary costs related to the leasehold development has
been accounted for as capital work in progress.
14. Internal Audit Function
The Board has appointed M/s NBSM & Associates,
Chartered Accountants to carry out internal audit function
of the Company and the Mutual Fund Schemes under Nabil
Mutual Fund on quarterly basis for F.Y.2073/74 at a fee
of Rs. 200,000 inclusive of VAT and other out of pocket
expense. The internal auditor thus appointed shall directly
report of the Audit Committed formed under the Financial
Administration Bylaws of the Company. However, the
internal audit services as being provided in previous years
by Nabil Bank under SLA will be continued.
15.Leave Encashment and Gratuity
Nabil Invest makes a provision towards leave encashment
to its staffs on each balance date on the basis of total
accrued leave balance on that date. The actual payment
of leave encashment is set off against the provision. As on
reporting date, the total liability for leave benefits stands
NPR. 783,704. During the current fiscal year, Nabil
Invest paid NPR 374,951 in respect of gratuity obligation
accrued till the balance sheet date by contributing to the
approved retirement fund. The Company does not have any
incremental gratuity obligation as of balance sheet date.
The Company does not have provisions of actuarial valuation
of long term employee benefits till date as the amount of
such benefits, in view of management, is not significant.
16. Proposed Dividend
The Board of Directors of Nabil Invest has decided to propose
53.33333 percent of paid up capital as dividend of which
33.3333 percent (Equivalent to Rs. 50 Mio) shall be stock
dividend & 20.00 percent shall be cash dividend (inclusive of
tax for bonus shares) amounting Rs 80,000,000 for approval
in its forth coming Annual General Meeting.
17. Previous year’s figures have been
regrouped/rearranged wherever necessary.
238 Nabil Bank Limited
Major CSR Activities for FY 2016-17
Four Researchers honored
by Nabil Science & Technology Awards 2073
Nabil Bank conducts tree plantation
and cleaning program
Nabil Bank’s Support to Baby Life Home
Annual Report 2016/17 239
Awards
Nepal Academy of Science & Technology (NAST)
announced Nabil Science & Technology Awards 2073
to four researchers/scientists. The awardees were
felicitated by Rt. Hon. Prime Minister and Chancellor of
NAST Puspa Kamal Dahal (Prachanda) on the occasion
of NAST’s 34th anniversary held on December 5,
2016.The four best research contributors namely Prof.
Dr. Tanka Nath Dhamala, Dr. Hari Prasad Aryal, Prof.
Dr. Krishna Das Manandhar and Prof. Dr. Srijan Lal
Shrestha were awarded “Nabil Science & Technology
Award” with a purse of Rs 125,000 each for their
contributions in different areas under the field of
science and technology.
Recognition as Leading Partner Bank in Nepal
by Asian Development Bank, Year 2015
To celebrate Bank’s 33rd anniversary Nabil
Bank has conducted a tree plantation and
cleaning program alongside of Bagmati river belt,
Minbhawan on August 5, 2017 with a view to
conserving environment and maintaining greenery.
The tree plantation was initially done during
July 2014 in this area on the occasion of bank’s
30th anniversary and since then Bank has been
continuously maintaining this plantation site.
Frost and Sullivan- Financial Institution Recognition as highest Tax Payer among
of the Year-Banks, Year 2016 Commercial Banks of FY 2071/72
Nabil Bank provided food items, stationery and
goods of daily necessities worth Rs. 115,000
(Rupees One Hundred fifteen thousand only) to
Baby Life Home, Kirtipur in association with
Association of St. Mary’s Alumnae Nepal (ASMAN).
BPA Award 2014 Recognition as Best Managed
Commercial Bank, Year 2016
240 Nabil Bank Limited
office networks
Head Office: Nabil Center
Beena Marga, Teendhara, Durbar Marg
Kathmandu, Nepal
Tel: 01-4221718, 01-4227181
Fax: 01-4226905
SWIFT: NARBNPKA
Inside Valley
Anamnagar Branch (01) 4249884, 4245274
Attarkhel Branch (01) 4912990, 4912991
Balaju Branch 4388915, 4388916
Chabahil Branch 4464470, 4461895
Dhapashi Branch (01)4384990, 4384991
Gwarko Branch (01)5186090, 5186190
Halchowk Branch 4033553/54
Jorpati Branch 4917498, 4917569
Kantipath Branch 4239204, 4239205
Kaushaltar Branch 6635184, 6635460
Kuleshwar Branch 4287576, 4287596
Lalitpur Branch 5542891, 5520431, 5532189
Maharajgunj Branch 4720870
Maitidevi Branch 4439488, 4443706
New Baneshwar Branch 4485212, 4492125
New Road Branch 4224592, 4224533, 4225420
Satdobato Branch 5550332, 5152298
Sinamangal Branch (01)4490477, 4490478
Teendhara Branch (01)44227181, 4221718
Thamel Branch 4212167, 4212606
Tripureshwar Branch 4117014-17
Annual Report 2016/17 241
1
Outside Valley
Lahan (1)
Baglung Branch (068) 522193-94
Besisahar Branch (066)520805,520806
Bhairahawa Branch (071) 524041, 524045
Mahottari (1)
Bhalwari Branch (071) 560357, 561357
Sarlahi (1)
3
Biratnagar Branch (021) 526213, 536331
Birgunj Branch (051) 521476, 521746, 530723
Birtamod Branch (023) 543727, 543474
2
Butwal Branch (071) 541059, 542274
Chandragadhi Branch (023)457021,457022
Charikot Branch (049)421882,421883
Damak Branch (023) 585190-91
Taandi
4
Damauli “065-562527, 562526“
Pokhara (5)
Dhangadhi Branch (091) 526683,85
Dharan Branch (025) 530130, 530621
Dhulikhel Branch (011)490731,490732
Ghorahi Branch (082) 561685-86
Gorkha Branch (064)421529
Hetauda Branch (057) 524667/689
Itahari Branch (025) 580741, 581400
6
Janakpur (041) 528706, 528709, 528708
Khandbari Branch (029)560873, 560874
Kohalpur 081-541726/541727
Dang (1)
Pokhara Lakeside Branch (061) 464268,
5
Mahendranagar Branch (099) 525450, 525431
Narayangadh Branch (056) 523033,532487
Nepalgunj Branch (081) 524221
Surkhet (1)
Pokhara Branch (061) 520162, 525715, 532951
Power House Chowk Branch (051) 525449, 530216
Simara Branch 053-521936, 521937, 521938
Sunwal 078-570506
Tikapur (1)
Tulsipur Branch (082) 522673-74
7
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