Everest Bank Limited Annual Report · 7/14/2018 · EVEREST BANK LIMITED ANNUAL REPORT 2007/2008 2 Introduction Inception Everest Bank Limited was registered on November 17, 1992

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P e r f e c t i o n

Annual Report

2007/2008

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Contents

BUSINESS REVIEW

Introduction 2

DIRECTORS’ REPORT 4

Review of the Operating Activities 5

General Economic Environment (Annexure I) 10

Everest Bank Limited - The Brand 11

Performance and Analysis 12

Corporate Governance 18

Board Members 20

Management Team 21

Branch Managers 22

Human Resources 24

Risk Management 26

I T (Information Technology) 28

Credit Control 30

Internal Affairs 32

Marketing- The crux of business development 34

Our store of Products and Services 36

Auditors Report 40

FINANCIAL STATEMENTS AND

NOTES TO ACCOUNTS

Balance Sheet 41

Profit & Loss Account 42

Profit & Loss Appropriation Account 43

Statement of Changes in Equity 44

Cash Flow Statement 45

Schedules 46

Significant Accounting Policies 67

Note to Accounts 68

Disclosure Relating to Base-II Framework (Additional) 71

Annual Report 2007/2008

Everest Bank Limited

EVEREST BANK LIMITED ANNUAL REPORT

2007/2008

2

Introduction

InceptionEverest Bank Limited was registered on November 17, 1992 and come into operation on October 18, 1994 with an objectives of extending professionalized and efficient banking services to various segments of the society. The bank had an initial paid up capital of Rs 3 Crore. Today the bank has grown to become one of the leading banks in Nepal.

Joint Venture PartnerPNB joined hands with EBL as a Joint Venture in 1997 and turned it around to a highly profitable bank. There has been no looking back since then. PNB provides top management support under the Technical Service Agreement. Punjab National Bank (PNB), our joint venture partner one of the largest nationalized bank in India having 114 years of banking history, holds 20% equity

Shareholding Pattern50 % of the shares are owned by the local promoters, 20% by our joint venture partner Punjab National Bank, India and 30% of the shares are owned by the general public.

Vision To evolve & position the bank as a progressive, cost

effective & customer friendly Institution providing comprehensive financial & related services

Integrating frontiers of technology & servicing various segments of society

Committed to excellence in serving the public & also excelling in corporate values

Mission To provide excellent professional services &

improve itÊs position as a leader in the field of financial related services

Build & maintain a team of motivated & committed workforce with high work ethos

Use latest technology aimed at customer satisfaction & act as an effective catalyst for socio-economic developments

Values and EthicsWe at EBL believe that the long term development of an organization depends on how we build trust among our stakeholders. Our values are focused on the ethics at work place and outside. Thus we need to be as transparent as possible through proper corporate governance. We have built a code of conduct where by all employees working, needs to follow it stringently.

Awards The bank has been conferred with „Bank of the

Year 2006, Nepal‰ by the banker, a publication of financial times, London.

The bank was bestowed with the „NICCI Excellence award‰ twice in 1999 and 2003 by Nepal India chamber of commerce for its spectacular performance under finance sector.

Pioneering Steps Recognizing the value of offering a complete range

of services, we have pioneered in extending various customer friendly products such as Home Loan, Education Loan, EBL Flexi Loan, EBL Property Plus (Future Lease Rental), Home Equity Loan, Loan Against Share, Loan Against Life Insurance Policy and Loan for Professionals

EBL was one of the first bank to introduce Any Branch Banking System (ABBS) in Nepal

EBL has introduced ÂBank on WheelÊ system, whereby the bank is installed in a vehicle and moves around to various places to serve the segment deprived of proper banking facilities through its Birtamod Branch

EBL is the only bank having representative office in a foreign soil. The office facilitates remittance and Nepalese working in India can even open accounts through the office.

C o n n e c t i n g f o r E f f i c i e n c y


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Ladies and Gentlemen:It gives me great pleasure to welcome you to the 14th Annual General Meeting (AGM) of the Bank. I have the privilege of presenting the Balance Sheet as at 31st Ashadh 2065 (15th July, 2008), the Profit & Loss Account and Cash Flow Statement of the Bank for the year ending on that date and the AuditorsÊ report made there on.

Mr. Bishnu Krishna ShresthaChairman

DIRECTORS’ REPORT

It is the considered view that the progress and

success of any organization depends upon the

knowledge, skills and motivational level of its

workforce. The Bank has been taking keen and

special interest in the development of its human

resources by imparting its employees training

in various aspects of banking and relevant

subjects. Besides this, the Bank has taken

special care to keep the motivational level of

its employees high as also to instill a sense of

belongingness to the Bank.


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Note : (1) Capital Adjustment Reserve is available for distribution by way of Bonus shares to increase the capital.

(Rs. in crore)

2060/61 2061/62 2062/63 2063/64 2064/65 Particulars (2003/2004) ( 2004/05) (2005/06) (2006/07) (2007/08)

Paid up capital – Ordinary shares 31.5 31.5 37.8 37.8 49.14

Statutory General Reserve 9.195 12.611 17.356 23.285 32.12

Share Premium 0.643 0.643 0.643 0.643 20.643

Capital Adjustment Reserve

(Pls. See Note 1) 6.3 9.45 13.23 17.01 22.01

Other Reserves 1.705 1.705 2.387 3.019

Proposed Bonus Shares - 6.3 - 11.34 0

Retained Profit 4.69 7.053 10.864 13.055 34.083

General Loan Loss

Provision and Provision for NBA 22.183 30.543 37.517 45.318 53.153

Total Shareholders’ Funds 76.216 99.805 119.797 151.467 211.149

Total Deposits 806.39 1009.769 1380.244 1818.625 2397.63

Total Loans and advances 609.584 790.001 1013.625 1408.269 1883.643

Total Investments 253.566 212.893 420.132 498.512 506.116

Profit & Loss Account

Total Income 78.506 85.896 106.651 137.871 184.815

Interest Expenses (31.637) (29.956) (40.140) (51.717) (63.261)

Employees Expenses (4.853) (5.510) (6.838) (8.612) (12.806)

Operating Expenses (10.380) (12.907) (14.356) (17.755) (23.369)

Operating Profit 31.636 37.523 45.317 59.787 85.379

Provision for possible losses (8.178) (8.893) (7.047) (8.969) (9.934)

Staff Bonus (2.346) (2.808) (3.456) (4.547) (6.587)

Gratuity provision - (0.550) (0.255) (0.800) (2.990)

Profit before Income Tax 21.112 25.272 34.559 45.471 65.868

Provision for Income Tax (6.755) (8.191) (10.831) (15.830) (20.75)

Net profit ( after tax and all provision) 14.357 17.081 23.728 29.641 4512

Review of the Operating Activities of your Bank &

General Economic Environment of the Country

(Please refer Annexure 1)

Review of the operating activities

I have pleasure to present the five yearsÊ financial performance of the bank, which is as under- The table shows consistent progress of the Bank over the last five years. During the year being reported, your Bank has earned operating profit of Rs. 853.79 Million( before provision of staff gratuities of Rs. 29.9 Million) which is 42.8% more than last year and has been able to post a after tax net profit of Rs. 451.2 million, which is 52.2% higher than the last year. The total deposits have reached Rs.23,976 million recording an annual growth

of 31.8%. The loans and advances stood at Rs.18,836 million showing an annual growth of 33.8%.

EPS (Earning Per Share) is an important indicator of the financial health of a Bank. Everest Bank Ltd. has the third highest EPS. While the EPS of other banks higher than Everest Bank is going down the EPS of Everest Bank is going up. This may be seen in the chart attached to this Report.

NRB had issued a directive of all Commercial Banks to have a minimum Capital base of Rs.2000.00


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millions by Asadh 2070 - out of which the Issued and Paid-Up Capital should be Rs.1600.00 millions. We are glad to let you know that we do not see any difficulty in reaching the aforesaid figures within the prescribed time. We do not think it will be necessary to raise any further Capital for this purpose from the shareholders.

Since we have still five years available for reaching the required figure of Rs. 1600 millions, the Directors feel confident that even with the present trend of profit and the policy adopted by the Directors regarding Dividend/Bonus Shares, there will be no difficulty in reaching the figure of Rs. 1600 millions by Ashadh 2070.

The Capital base of your Bank stand at Rs.1228.25 millions as stated below (In Rs. Million)

* This reserve is created for redemption of 6% debenture of Rs. 300 million on itsÊ due date.

If we add Other Reserves, which also belong to the Shareholders, the total shareholderÊs funds stands at Rs.2112.65 million.

The Bank has NBA (Non Banking Assets) of the book value of Rs.3.42 crore. This also belongs to the shareholders. We are reasonably certain that the actual realization from disposal of such NBA would not be less than the book value.

The key factor together with other management aspects, for this achievement, is the result of the continuing efforts made by the management for keeping the non-performing loans at lowest level. I would like to inform the respected shareholders that the level of non-performing loans of your Bank is just 0.67% ( previous year 0.8 %) of total gross loans and the net non performing loan is nil. With increase in profit, a) the bonus payable to the employees has gone up

from Rs. 4.55 crore to Rs. 6.56 crore;b) the income tax payment to the Government

has similarly gone up from Rs.15.83 crore to Rs. 21.69 crore (including deferred tax of Rs.94.00 lacs).Average Spread (Average yield on advances

minus average cost of deposit) improved from 3.91% to 4.34%. This has happened mainly because of reduction in the average cost of deposit from 3.07% to 2.82%.

Activities of the Bank and Future Plan

Operations As you know, the Bank had opened its representative office in New Delhi, India with an aim to;i) facilitate the opening of account of Nepalese

residing and working in India and remitting their funds to any EBL branch in Nepal, and

ii) to liaise with and attract the business relating to trade finance emanating to and from India. Respected shareholders, I am happy to note

that the representative office has been successful in achieving the above mentioned goals.

With a view to improve the BankÊs IT Technology, the Bank has procured most advanced world class software (Finacle) and all information has been migrated into it. The branches of Everest Bank have been centralized and work as if it is one branch.

We are not only increasing the number of our own ATMs but also increasing our customers to avail and use „EBL Debit Card‰. At the present time Everest BankÊs own 15 ATMs are in operation at various important locations. Additional 11 ATMs are in the process of being installed within January, 2009. Our Debit Card could be used not only in our own 15 ATMs but also in other 149 ATMS within the country. EBL Debit Card can also be used at more than 1000 Point of Sales for purchase of merchandise. Further EBL Debit Cards can be used also in more than 1500 ATM of PNB in India.

Paid up Equity Capital

(ordinary shares) 491.40

Proposed bonus share 147.40

Share Premium 206.40

Capital Adjustment Reserve 220.10

Capital Redemption Reserve

( Please see note below) * 60.00

Accumulated Retained Profit 83.75

Other Free Reserve 19.20

Ordinary Capital &

Other related Funds

(Rs. in million)

Total funds as above 1228.25

Statutory General Reserve 323.10

Deferred Tax Reserve 9.40

Exchange equalization fund 20.40

Provision against

Loan/NBA/Investment 531.50

TOTAL


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The Bank has recently introduced SMS as well as Internet Banking so that the customers could find out the balance in their account from their own computers.

Our New Road branch provides 365 banking services. Further branches within the Kathmandu Valley as well as Pokhara branch are providing extended customer service through Evening Counters.

On the front of remittance from outside to Nepal through your Bank, the Bank has launched itsÊ own remittance software package - „Everest Remit‰. This facility is available to the Nepalese who are employed in UAE, Qatar, UK, Bahrain and Malaysia. It is proposed to extend this facility also to other places where Nepalese are employed.

In order to facilitate foreign trade, we have tied up with a) Commerzbank AG,Germany; b) HDFC Bank Limited, India; c) American Express Bank Limited, Tokyo; d) American Express Bank Ltd, New York.

Branch expansionDuring the last year, the Bank has opened five branches namely a) Gwarko and b) Bhaktapur in Kathmandu Valley. b) Baglung d) Lekhnath and e) Narayangarh

The total branch network of your Bank has reached 26 and we are scheduled to open 5 more branches soon namely a) Besisahar, b) Golfutar, c) Kirtipur, d) Tulsipur in District Dang and e) Surkhet.

Human resources development & per employee businessThe staff strength of the Bank at the end of the financial year 2063-64 (2006-07) was 393, which has now gone upto 449 (excluding the seconded staff from PNB). The per employee business as at the end of the financial year is as under:

It is the considered view that the progress and success of any organization depends upon the knowledge, skills and motivational level of its workforce. The Bank has been taking keen and special interest in the development of its human resources by imparting its employees training in various aspects of banking and relevant subjects. Besides this, the Bank has taken special care to keep the motivational level of its employees high as also to instill a sense of belongingness to the Bank.

In order to bring positive swing in the working attitude of senior officers, the Bank has been conducting special program on Management Development. In addition to this, during the review period various types of in-house training/talk program were conducted, staffs were deputed/sent for training in programs organized by other institutions too.

Future strategic plan of the bankYour Bank has been growing on an average at 30% per annum for the past several years against 28% for the banking system in the country.

For sustained growth in future, the focus will be in following areas :� Incr ease customer base by upgrading information

technology initiatives to reduce transaction time and cost of transaction and providing alternative delivery channels.

� T o increase customer base in low cost deposits with a view to reduce average cost of deposits.

� T o increase average yield on advances by aggressive marketing of retail lending schemes.

� Recr uit ideally suitable manpower and train them for movement of fast track to man the position of responsibilities at branches and Head Office.

� Further improve internal control system.

Profit & Loss Appropration AccountThe net profit of Rs.44.177 crore has been as under:

Towards shareholdersi. Bonus share to ordinary shareholders: Rs. 147.42

million @30 %;ii. Cash dividend Rs. 98.28 million @ 20% ;iii. Tax on bonus share Rs.9.493 million iv. Dividend/Interest to Preference Shareholders: Rs.

23.72 million

(Rs. in Million)

2006/07 2007/08 (2063-64) (2064-65) %

Total Per Total Per Increase Amount Employee Amount Employee overDescription Amount Amount last year

Total Business 32269 82.1 42812.7 95.4 16.2Operating Profit 597.9 1.52 853.79 1.90 25.0

Net Profit 310.3 0.79 451.22 1.00 26.6


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Towards reserves and retained earningsi. Rs. 83.750 million as accumulated profit including

up to last year,ii. Rs. 50.0 million for Capital Adjustment Reserve,iii. Rs. 90.24 million, being 20% of the net profit for

the year, for statutory reserves,iv. Rs. 6.0 million for contingency reserve,v. Rs. 3.41 million for Exchange Equalization

Reserve.vi. Rs. 60.0 million for Debenture Redemption

Reservevii. Rs. 9.445 million for deferred tax reserve

Bonus Share / DividendThe Board in itsÊ meeting held on 3rd Sept. 2008 has decided to recommend to the forthcoming Annual General Meeting to declare bonus share @ 30% % and 20 % cash dividend the share holders after approval of Nepal Rastra Bank. The Board set aside a sum of Rs.156.913 million inclusive of tax on bonus share.

The same is being placed before you for final approval.

Capital AdequacyNepal Rastra Bank earlier provided that the Capital Adequacy ratio should be 8%. This has since been increased to 11 % which was to be 12% from this financial year but revised to 11% till the Basel-II standard comes into effect (2008). The Capital Adequacy Ratio of the Bank as at the year end 15th July 2008 stands at 12.02%.

Board of DirectorsThere were some changes in Board of Directors of the Bank during the financial year under review. Mr. Jas Pal Singh Jass , CEO and nominee director from PNB has been called back by the parent company. Mr. R.K.Ummat has been deputed from PNB to takeover the charge of CEO of the Bank and he is nominated as director on EBLÊs Board.

I would like to welcome Mr. Ummat and would like to place on record of appreciation for the valuable contributions made by Mr. Jass for the BankÊs development.

Amendment in Memorandum and Articles of Association( to be incorporated as per the changes if any)With the proposed issue of Bonus Share @ 30%, it would be necessary to amend the Memorandum and Articles of Association as per the attached sheet with the Agenda no. 4 for approval of the shareholders.

The Board of Directors request and require some of the Directors to perform a specified assignment for the Bank. To enable the Bank to pay compensation and reimburse the expenses of such Directors for the specific work assigned to them, it has been considered necessary to amend Article of Association as stated in the Agenda no. 4 circulated with the notice of the Annual General Meeting. The Board would like to recommend to the shareholders the approval of the same.


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Employee RelationsThe Bank has its own staff training program and conducts various formal trainings. In addition to this, staff is deputed to PNB Training Colleges for specialized courses. Due to ever increasing number of banks and financial institutions, the demand of trained manpower is also growing.

There is a tendency of high movement of staff in the banking sector due to the reason of mismatch in the range of salary package & emoluments being offered. Management is taking steps to correct these anomalies. The Board is pleased to report that during the year under review the Management-Employee relations remained at excellent levels. The Management has been always committed in recruiting and retaining competent, motivated and satisfied employees in the Bank and retain them.

Appoinment of the Statutory AuditorsThe present Auditor namely Sundar and Company has completed three years has Statutory Auditor of this Bank. Hence, a new Auditor is required to be appointed.

As per the Company Act 2063 Section 165 (Gha), the Auditor is to be recommended by the Audit Committee of the Bank. The recommendation of the Audit Committee in this regard shall be read out during the Annual General Meeting. The shareholders are requested to approve the appointment of the Auditor and his remuneration as recommended by the Audit Committee for the FY 2065-66 (2008-09).

AcknowledgementOn this occasion, on behalf of the Board of Directors and on my own behalf, I would like to thank all the shareholders for their continuous support and guidance. I also take this opportunity to extend grateful thanks to our valued customers for their patronage. Further, we extend our sincere gratitude to the officials of concerned Departments of Nepal Government, Nepal Rastra Bank, our joint-venture partner, Punjab National Bank, other concerned authorities and institutions for their patronage and all the employees of the Bank for their hard work and dedication. Further we also express our sincere thanks to members of the press and other well wishers of the Bank for their valuable co-operation and support.

Finally, I am sure that the Bank shall continue to get the same co-operation and support from all of you in the future which will be a source of inspiration in our endeavor to take our Bank to new heights of success in the times to come.

Thank you.On behalf of the Board of Directors,

B. K. Shrestha, Chairman


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(Rs. in Crores)

PARTICULARS F.Y. Share F.Y. Share Increase 2062/63 % 2062/63 % %

(2005/06) (2005/06)

EXPORT

To India 2991 69.06 To Other countries 1340 30.94 TOTAL EXPORT 4331

IMPORT

From India 7217 61.4 From Other countries 4531 38.6 TOTAL IMPORT 11748

Total Foreign Trade

With India 10208 63.5 With other countries 5871 36.5

TOTAL FOREIGN TRADE 16079

Source : Economic Survey 2063/64

Before presenting further performance highlights of the Bank, it would be pertinent to have an overview on the general economic and banking scenario of the country for the fiscal year 2062/063 (2005/2006). For this purpose we have extracted here some relevant information from the Economic Survey for the year 2062/63 (2005/06) published by Nepal Government. The related data for the year as well as corresponding past year is based on the first eight months.

Economic growth rateThe law and order situation of the country did not improve in this year too. Due to this reason, economic sector has been badly affected. In the economic survey it has been stated that, during the review period, the Gross Domestic Product (GDP) growth rate ( at factor cost) of agricultural and non-agricultural sector( before adjusting bank service charges) is estimated to be 1.7 % and 2.8% respectively resulting thereby 2.4% of economic growth rate.

Per capita income The total GDP at current producersÊ price is estimated to reach at Rs. 595 billion compared to Rs. 543 billion in the last year ( grew by 9.5% over the last year) and the per capita GDP ( at current producersÊ price) is estimated to be Rs. 23,032 (US$ 322, previous year US$ 302).

Utilization of Resources The ratio of total consumption to GDP is expected to be 88.9 percent. The ratio of total investments to GDP is expected to be 30.3 percent against 28.9 percent in the last year. Similarly, the ratio of total Gross Domestic Savings (GDS) to GDP has marginally reduced to 11.10 percent as against 12.43 percent in the last year. The Gap between GDS and total Investment is estimated to have increased by 27.9 percent in the year under review against an increase of 39.1 percent in the last year.

Capital formationFormation of the fixed capital is estimated to have grown by 6.5 percent ( previous year 6.3 percent). Due to some obvious impending disturbances, the public sector capital formation increased by 6.4 percent , last year it was (�)1.4 per cent. However, the private sector capital formation is expected to increase by 6.4 percent as against 10 percent increase in the last year.

Foreign Trade:The following comparative table of foreign trade of the country is presented on the basis of the information provided in the Economic Survey 2062/63 published by the Nepal Government for information of the shareholders.

From the above, total volume of foreign trade has increased by Rs. 3114 crore in the year under review showing a growth of 24 percent over the previous year. The share of total foreign trade with India and other countries stand at 63.5 percent and 36.5 percent respectively (previous year 60.3 percent and 39.7 percent). Total export increased by 14.7 percent ( export to India increased by 21.5% and to other countries increased by 1.9%)

Against the increase of 14.7% in total export, the import increased by 24 %.Import from India increased by 30.6% and from other countries increased by 14%.

BankingTotal deposits of commercial banks in the first eight months of the F.Y. 2062/63 increased by 7.6 percent against 2.4 percent for the same period last year. The total deposits of commercial banks as on the first eight months has reached Rs. 26,961 crores. Total loans and advances during the same period of the commercial banks increased by 8.1 percent against 9.7 percent of last year. Loans to private sector has been increased by 10.1 percent against an increase of 12.1 percent in the last year.

General Economic Environment

(Annexure I)


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Everest Bank Limited

The Brand

Everest Bank has strived to establish itself as a strong brand that creates an image of a local bank that is easy to access and is reliable. That is the reason we always say that Everest Bank is the name you can bank upon.

The bank has been successful in positioning itself as a common manÊs bank that is easy to access. The color has a very strong association with the target audience. Further the Punjab National Bank logo lends its equity to the brand.


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Performance and

Analysis

CapitalThe total capital fund of the bank has grown by 43.55% to Rs 240.61 Crores. The core capital has increased by 62.31% to Rs 190.09 Crore. With the increase of capital the bank is now able to absorb greater risks and invest in larger portfolios.

With the increase of capital funds the capital adequacy ratio has increase to 11.44% this year from 11.19% against the requirement of 11%. Thus indicating good capital base for managing risks.

The market price of share has increased by 28.89% to Rs 3132 per share reflecting a good market

confidence. A growth in net profits has lead to a 17.12% growth in earning per share which at present stands at Rs 91.82

The growth in market price and earning per share has been in a similar trend which indicates that the profits generation and the financial strength has lead to the growth in the market price.

Indicators 2006/07 2007/08 Increase

Book Net Worth

(in Crore) 106.15 158.12 51.97

Deposits (in Crore) 1818.63 2397.63 579

Advancs(in Crore) 1366.41 1833.91 467.4

Net Profit (in Crore) 29.64 45.12 15.48

Earning per Share 78.42 91.82 13.4

Price Earning Ratio 30.99 34.1 3.1

NPA/Total Loans 0.80% 0.68% -0.12%

Capital Adequacy 11.2 11.44 0.24

Employees 393 449 56

Per employee

business (in Lakh) 821.1 954 132.9

Return on Asset 1.4% 1.7% 0.3%

Branch Network 21 26 5


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Deposits

Our deposit products have been widely accepted over the market. As per our vision and mission we have been successful in serving the middle class and the lower class of the society and brought them under the banking scenario. Over 85% of our deposit customers are saving account holders. Over the last five years our customer base has increased by 4 folds.

Deposits have grown by 31.8% in the fiscal year ended mid July 2008 over last fiscal year. Average growth is 29.2% in the last five years. Deposits have grown by over two folds in three years and 49.6% of the total deposit constitute saving fund. Saving and current constitute 62.1% of the deposit. Thus we have been able to garner a good base of low cost deposit.

Debit CardsThe bank has issued debit cards to a large customer base. The customer has a choice to avail the instant card or the regular card with embossment. 19.95% of the cards are instant card that is available over the counter and 80.05% are regular card. The ratio of debit cards to total saving accounts is as high as 38.76%, thus indicating a high demand for our debit cards.

The bank has 15 ATM counters at strategic locations. EBL debit card has access to around 150 ATMs in Nepal and more than 1500 ATM locations in India where by EBL customers going to India need not carry cash but simply withdraw through EBL Debit cards.

Advances

The growth in lending has been well managed through proper risk management and appraisal process. As on mid July 2008 it grew by 33.8% to Rs 1883.64 Crore from Rs 1408.27 Crore. The bank has a major focus on wholesalers and retailers in commercial segment and in the housing loan in term of retail segment where majority of the growth took place.

Retail Everest bank has been the pioneers of retail lending products. A special attention is given to the retail portfolio which account to 40.4% of the total loans and advances. With a long product line, the bank has been able to cater to over 8700 customers.

A special retail lending cell has been established for quick disposal of proposals and the sanctioning power has been decentralized. This move has enabled the bank in quick decision making process which is reflected on the volume of the portfolio.


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Cost of Deposit and Yield on AdvancesThe bank has been able to maintain a stable net interest margin through control in cost of deposit and maintaining a yield that gives optimum business as well as profits.

Treasury Our treasury department plans, organizes and controls cash and borrowings so as to optimize interest and currency flows, which in return minimizes the cost of funds.

Treasurers substantially improve the liquidity and working capital with rapid return on investment. Investment decisions are taken considering the risk and returns with an insight on utilizing cash optimally and diversifying risk. The key is not just to throw more money and more resources at a problem but to think creatively about addressing challenges.

Treasury showed an increase of 31.6% in income from various investment activities. There was an increase of 360.19% in interest income from Bonds and an increase of 128.54% in interest from inter bank lending.

InvestmentsThe bank has managed to wisely invest in high yielding portfolio and hence increase the income by 31.6% this fiscal year.

Profitability

Operating profits before provisioning have increased by 41.63% to Rs 81.82 Crore in the fiscal year ended mid July 2008. Similarly Net profits have increased by 52.2% and reached Rs 45.12 Crore. The average growth of operating profits for the last 5 years is 33.95%. Similarly the average growth of net profits for the last five years is 37.42%. Thus we have been successfully managing the business profitably. The graph below shows the growth pattern of our operating and net profits.

The graph below shows the growth trend of our interest income, interest expense and the net interest income. The net interest income has seen a rise in the fiscal year ended mid July 2008 by 46%, due to improvement of the low cost deposit portfolio to 62.1% from 60.1%.


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Remittance

Off late remittance has taken almost the centre stage in the economic development of the country. A decade long political instability, insecurity and sky rocketing unemployment prevailing in the country can be taken as some of the prominent causes which led to a large chunk of Nepalese youth force to leave the country in search of Foreign Employment.

With the opening of labor market since 1990s in the Middle East, a large number of Nepalese people have started going to these countries for fulfilling the demand of workers in these countries.

With the approval of Nepal Rastra Bank (NRB), central bank of Nepal, many private companies emerged out as Money Transfer Companies (MTCs) whose main motto was to facilitate the inward remittance business. The wide network of such MTCs extended all over the country has facilitated remittance payments even to a remote area where there is no banking facility.

It was only during late 90s that Commercial Banks of Nepal started diverting their focus for bringing inward remittances from the Middle East into their fold. Currently, various commercial banks have tied up with various Exchange Houses abroad for facilitating remittance payments. This has not only helped the country to bring remittances through formal channel thereby discouraging the informal channels used but has also helped in increasing the Foreign Exchange Reserves with the Central Bank of Nepal, thereby making a positive impact in the Balance of Payments.

The figure below shows the remittance received from various areas.

Everest Bank Ltd. (EBL) with the inception of carrying out remittance activities, joined hands with various Exchange Cos. Specially in the Middle East due to higher concentration of Nepalese in these areas. Identifying the ever increasing volume of remittances from the Middle East and equally prospering informal channels of remitting funds known as ÂHundiÊ, EBL felt the need to take initiative to bring the remittances into the official fold. With this aim EBL developed its own web-based remittance product known as ÂEverest RemitÊ and officially launched the same from UAE on 25th July, 2006. Currently, EBL receives remittance payments from more than 20 Exchange Houses covering countries such as UAE, Qatar, Bahrain, Malaysia and UK and are disbursed through its wide network covering more than 175 locations across the country.

As per the statistics from Nepal Government, Dept of Labour, during FY 2007/08 more than 240,000 people left Nepal in search of foreign employment. Similarly, statistics from Nepal Rastra Bank shows that during 11 months of FY 2007/08 the volume of inward remittances entering inside the country totaled to Rs125 billion compared to 91.10 billion during the same period last year i.e. during 11 months of FY 2007/08, thereby making a growth of 37.3 percent. Similarly, EBL through its extensive marketing policy, have been able to bring a large chunk of remittances entering inside


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the country into the official fold. The graph below reveals EBLÊs growth in remittance volume during FY 2007/08 in comparison to the volume of remittance received during FY 2007/08.

With the increasing public insecurity even today, there is no sign of decline in the outgoing Nepalese youth force in search of Foreign Employment. With an average of 400 individuals leaving the country each day for foreign employment, the remittance business still has a greater scope in the days to come. To reap the benefits of this, EBL targets to widen its network to countries such as Israel, Saudi Arabia, Australia and Korea in coming Fiscal Year. Similarly, EBLÊs internal network is expected to reach to 250 during the same period.

Remittances play a central role in the economies of many labor-sending countries and Nepal is no exception to this. The flow of remittance in the economy does not determine the level of economic growth but

the manner the country uses it is of much importance. Meaningful utilization of remittance money paves the way for boosting socio-economic activities towards deprived people and for the development of remote areas of the nation. Mere collection of remittances in banks and financial institutions does not bring desired outcome in the economy. Such funds should be channelized into different layers of the economy to meet twin goals of poverty alleviation and sustainable development. Presently planners, policy makers are also recognizing the crucial significance of remittances to national economy. Through the meaningful utilization of remittance, economic activities could boost up and thereby lift the standard of livings of the people in a sustainable manner. This would in turn raise the level of output, employment, export and foreign earnings. The GDP growth of the nation could be improved in the long run with the better use of remittances.

I n n o v a t i n g a s a T e a m


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Corporate Governance

Today corporate governance plays an important role in developing an organization. It is not only compliance to the legal and regulatory requirement but laying down the best practice to protect all the stake holders i.e. the investors, the customers and the employees. Thus the requirement for transparent and fair policies comes into existence.

At Everest Bank practices are developed and followed at all levels and is considered that there should be a continuous improvement. All practices are clearly laid down and practiced in a transparent and fair manner.

The board members are committed to corporate governance and encourage the implementation of best practices. a) Chairman: Mr. Bishnu Krishna Shrestha is the Chairman of the bankb) Directors from Promoters Mr. Ved Krishna Shresha Mr. Bal Gopal Vaidhya Mr. Arun Man Serchanc) Director from the Joint Venture Partner Mr. Indra Dev Singh Mr. R K Ummatd) Director from General Public Mr. Nabin Bhakta Shrestha Mr. Shiv Saran K C

The board meetings are planned and announced to the directors in advance. The agenda along with the reports are circulated to the members for first hand preparation.The average attendance is 86.1%.

S. No. Meeting Date Attendance %ge attended

1 10th August 2007 8 88.9%

2 18th September 2007 8 88.9%

3 27th September 2007 6 66.7%

4 31st October 2007 9 100%

5 2nd November 2007 9 100%

6 13th December 2007 8 88.9%

7 18th January 2008 6 66.7%

8 27th February 2008 8 88.9%

9 4th April 2008 7 77.8%

10 27th April 2008 7 77.8%

11 8th June 2008 8 88.9%

12 3rd July 2008 9 100%

Average 93 86.1%


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19

Asset Liability Management Committee An ALCO committee has been formed to monitor, review and strategies on Deposit, Investment position to maintain adequate liquidity. The committee meets on a regular basis which comprise of

1. Chief Executive Officer2. Dy General Manager- Credit3. Dy. General Manager- Operations4. Asst. General Manager- Planning and Development5. Marketing- Head6. Treasury - Head

The committee has effectively planned strategies to manage liquidity risk and the bank is in a healthy position.

Inspection and AuditInspection department is considered the ÂdoctorÊ of the organization which examines the health of the bank and recommends proper remedies. Internal Audit and Compliance are two wings of the department.

An audit committee with specific authorities has been set up which monitors the inspection and audit reports and submits it to the Board. The committee members meet monthly and provide feedback and guidance to the management. The members comprise of

Dr. Bal Gopal Vaidhya Non Executive Director, Co-ordinator

Mr. Arun Man Serchan Non Executive Director, Member

Mr. Nabin Bhakta Shrestha Non Executive Director, Member

All the members are non executive and function as per NRB directives.

Internal audit of the branches are done once a year which cover all the banking areas. However we have segregated it into three broad categories as given below'A'- Bank General Routine and House Keeping'B'- Credit Management 'C'- Income & Expenditure

LC audit is done twice a year covering the business of first six months and second six months respectively. Besides Âon site auditÊ the department carries offsite audit utilizing banking software and monthly/quarterly return from the branches

With reference to the audit report the department issues necessary circulars and guidelines to the branches as corrective measures.

All branches are rated on the basis of inspection report and removals of all irregularities are given a time frame of three months. Further serious irregularities are treated at top most priority. Thus keeping the bank at the best of health and risk.

B o a r d M e m b e r s

4

1

7

8 9

6

25

3

1 Bishnu Krishna Shrestha 2 Ved Krishna Shrestha

3 Indra Dev Singh 4 Ravinder Kumar Ummat

5 Arun Man Serchan 6 Dr. Bal Gopal Baidhya

7 Ratna Sansar Shrestha 8 Nabin Bhakta Shrestha

9 Shiv Saran KC

M a n a g e m e n t T e a m

Kumar Joshi

Head-Human Resource

Avishek DhakalHead-MarketingHead-Planning and Development

Raju Gauli

Head-Account

Keshab Poudel

Head- Credit

Vivek Niraula

Head-Remittance

Raghunath PradhanHead-Audit and Inspection

Shukra Gautam

Head-TreasurySuman Raj SharmaHead-General Administration

Pramod Raj Sharma

Company Secretary

Indrajeet AroraDy General Manager

Hum Nath GurungAsst. General Manager

Ravinder Kumar UmmatChief Executive Officer

Bijay Gautam

Head-IT Department

Pradeep Kumar PradhanDy General Manager

Bishwajit Lal Maskey

Head-Retail

Dharma Gauli

Head- Legal

D e p a r t m e n t H e a d

B r a n c h M a n a g e r s

Ashutosh UpadhyayNew Baneshwor

Santosh BhattaraiNew Road

Ujjwal PokhrelSatungal

Pradeep KhanalTeku

Ranjan KhadkaPulchowk

Anil KarkiLazimpat

Bel Bahadur ThapaBalaju

Kalpana PandeyChabahil

Madan Raj TamrakarBhaktapur

Gokul Prasad AdhikariBirtamod

Ram Hari AcharyaItahari

Sumit Bhakta JoshiDuhabi

Purna Bahadur ShresthaBiratnagar

Vijay Kumar SinghJanakpur

Naresh Man Singh PradhanBirgunj

Suman ShresthaICD

Harish AcharyaNarayangarh

Devi Dutta GyawaliPokhara

Nishit SharmaBaglung

Surendra Nath SharmaLekhnath

Nar Bahadur RawalButwal

Bishnu GyawaliBhairawa

Satish Pratap SinghDhangadi

Anju SharmaGwarko

Maniram LammichhaneSimara

Janak ChapagainNepalgunj


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23

Basel II committeeBanks need to develop, enforce and maintain minimum capital requirement based on international practices with appropriate level of customization based on domestic state of market so as to develop safe and sound financial system by way of sufficient amount of qualitative capital and risk management practices.

The framework incorporates three mutually reinforcing pillars, viz. minimum capital requirements, supervisory review process and disclosure requirements which help to ensure that banks are adequately capitalized in commensurate with their risk profile.

The framework also allows the bank, in certain conditions, to use their own internal models and techniques to measure the key risks that they face, the probability of loss and the capital required to meet their losses.

The bank will be using Simplified Standardized Approach (SSA) to measure credit risk and Basic Indicator Approach and indigenous Net Open Position Approach to measure Operational Risk and Market Risk respectively in the initial phase due to various inherent limitations of the Nepalese banking system.

The bank will implement the Basel II norms compulsorily from 1st Shrawan 2065 ( 16th July 2008) for ensuring the safety and soundness of the individual bank and their banking system.

For the smooth implementation of Basel II norms, we have formed a high level committee consisting of the following Dy General Manager Credit Dy General Manager Operation Asst. General Manager Planning and

DevelopmentUnder the high level committee there are three

members in the task force from the Credit Department and IT Department

We have also prepared Product Paper for Claims on regulatory retail portfolio and Claims secured by residential properties, having lowest risk weighed at 75% and 60% under Credit Risk.

Quality Control and EvaluationOur management team comprising of the Chief Executive Officer, Dy General ManagerÊs and Asst. General Manager consistently evaluate performance and control the operations to get the best output.

Branches are stringently monitored and controlled on their performance on a weekly, monthly and quarterly basis. Targets are set branch wise for each performance parameter and are monitored weekly and discussed in the ÂMonday MeetingÊ. The weekly monitoring exercise keeps the branches on their toes and does not leave any space for complacency at any point of time.

ÂManagers MeetingÊ are held every quarter to monitor and appraise the branches and departments on the performance and areas for improvement. Various parameters like business performance, NPA/NBA, Irregular accounts, profitability etc are stringently monitored and targets are set. Further various feedbacks are taken to improve the performance of the bank as a whole.

Many irregularities are controlled through our software database and replies are sorted for accordingly through the head office itself.


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Human Resource

Human Resource, as a strategic partner, strive to provide support to the organisation through the delivery of key business outcomes. In the fiscal year 2064/065, Human Resource services continued to enhance our activities in all areas including customer services, branch expansion, technology upgradation and compensation packages. Our approach to leadership development, human resource planning and development continued to add values to the effectiveness of BankÊs performance. Our organisational strength is our people and Human Resources are positioned to assist the organisation in an effort to attract, develop, motivate and retain talented workforce committed to providing outstanding services.

AccomplishmentHuman Resources efforts to attract and retain employees continued over the year. Policies and practices have been revised to support our efforts to compete in the existing labour market, Revisions in the areas like Staff Service Bylaws, Training and Promotion plans and policies, salary revision and own your vehicle scheme have allowed our staff an improved opportunity to achieve work-life balance.

InitiativesPlanning for HRMÊs workforce and our ability to meet the needs of job seeking candidates go hand in hand. HR is committed to preparing a corporate Human Resource Plan that will provide a framework for our HR Activities and guide us with addressing the challenges that we face in attracting and retaining an effective workforce. Leadership development will continue to be a major focus of training and development activities in order to support the ongoing development of an efficient, effective workforce. Succession Planning is an ongoing effort for which Human Resources provides support to the Business Units. Knowledge transfer continues with its efforts to ensure that tools are in place to assist with the maintenance and transfer of this important asset.

Outdoor activitiesThe bank in an effort to recognize those involved in sports and to nominate them in various corporate sports activities, organize sporting activities yearly. The event not only acts as an entertainment but also helps in the team building and competitiveness. In the year the bank had inter branch competition in events like athletics (100 m, long jump, high jump), table tennis and badminton. The winners of the events were awarded respectively.

The bank also organizes yearly picnic which brings the bank members together and is a good source of building relationship among the employees. The relationship helps in the team work which at EBL we believe is very crucial for the success of the organization.

Employees PyramidWith the increase in the business the bank has increased in size in terms of employees. In the year the total number of employees has reached 449. The chart below shows the employees pyramid.

Most of the employees are junior staffs that are the forefront in terms of service quality. The Mid Management controls the functioning of various departments and the employees under them. The Senior Management handles various planning and monitoring activities. In addition there are support staffs that provide various support functions to all levels of employees. Thus we have a perfect employee pyramid that functions with synergy.


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Promotion during the yearThe bank recognizes the performance of its employees and promotes them as per the need of the organization. In the year 80 promotions we done to positions as indicated in the chart

RecruitmentTo fulfill the HR Requirement the bank recruited 108 employees. Most of the recruitment was focused on the entry level employees for fulfilling branch requirements due to increase in business volume and new openings.

TrainingAs part of the employee development various trainings are organized where by all cadres of employees are nominated. We have categorized training into three parts In House, through institutes and abroad. In the year a total of 212 employees were trained in 48 various training programs on various functions. Most of the trainings were organized through various institutes in Nepal.


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Risk Management

Risk Exposures Risk weighted exposures for credit risk, market risk and operational risk are as given below

Credit Risk

Pre SanctionEach credit limit is approved after due scrutiny by two layer of authority in branch level of their limit. Loans are approved after due scrutiny of background of the promoter, nature of business, turnover in account, cash flow, debt/equity ration, income or profit, value of primary and collateral security. Loans above branch power are recommended to Head Office for consideration on merit

Post SanctionConcerned branch obtain regular returns from the borrower as stipulated in the sanctioned letter on regular interval. Drawing Power in case of revolving type of loan is calculated to keep the exposure within its limit. Business place of the borrower is visited and physical stocks are checked and verified with the statement given to the bank. Loans more than Rs 1 Lakh which are either irregular or likely irregular are reported to the board and discussed on the course of action in a regular basis. Various credit returns like credit report, review sheet etc. of the clients are submitted to the head office by the branch in a specified time interval to ensure the quality of credit is maintained at the best level.

Market Risk

InvestmentThe bank has instruments of either government securities or bonds issued by semi government and no investments are made for trading purpose. Instrument issued by semi government body have been purchased at face value with fixed coupon rate. Premium paid on purchase of government bonds are amortized out of income on prorat basis in each year.

Foreign ExchangeThe bank has a policy to maintain a net open position of convertible foreign currency where exchange rate risk persists in matching position. 25% of total revaluation profit in the fiscal year is transferred to a separate reserve for building a cushion.

Operation RiskType of eligible credit risk mitigants used and the benefits availed under CRM- Margin money deposited with the bank against off balance sheet exposures like LC, Guarantee etc. have been claimed as CRM. Under this Rs 20,15,13 thousand has been deducted from risk as CRM.

Operating manual describing procedures related to banking functions are in place. Regular returns are submitted by every branch on regular basis from Head Office. Extraction of reports are done directly from the software and monitoring is done regularly. The internal audit department conducts off site as well as on site inspection. Monthly managerÊs certificate in respect of compliance of system and procedures are obtained from each branch.

Disaster Recovery Site (DRS): To safe guard the natural disaster, DRS site is selected out of country.

Each entry in the account is revalidated by another staff having the authorization power. Level wise access authority is given for data entry, update, modification and validation process. Password control is maintained at each level of operation very strictly and confidentially.

Risk Types Amount (000)

Credit Risk 19,509,798

Market Risk 92,071

Operational Risk 1,372,994

Total 20,974,862

I n s p i r i n g C r e a t i v i t y


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28

I T (Information Technology)

in Everest Bank- A Review

Initially the Bank had a team of three IT staffs having general banking experience and they were responsible for making software in FOXPRO environment. With the best effort of all the technicians and other staff and guidance from management, software based on FOXPRO was prepared for Banking operations covering general modules e.g. Savings, Current, Fixed, CDS, UFD, RDP, Loans and Overdraft with multi-currency


2007/2008

29

feature. For the Back-Office operation, General Ledger software was developed using CLIPPER. The software was in stand-alone mode and for the compilation of GL and other financial accounts, there was middle layer tool developed which was so easy to compile all the accounts and aggregating the figures to make a single report. Besides, the software had the checksum feature within it and there were no threat of tampering even hacking the database. Besides, it was support-less i.e. was so easy to operate by any laymen.

After analyzing softwares, PumoriPlus version 2.0 from M/s Mercantile Office System, local software provider, was selected best for the Bank. Which was the first bank-through in the development of IT in Everest Bank.

Initially the new software system was introduced at branch Offices Baneshwor and Newroad. The software was quite user-friendly as it was GUI based software as well as network based system. Pumori started from July 17, 1998; however, the old software was still running in number of other branches, which later on migrated to Pumori. The beauty of the new system was Any Branch Banking System (ABBS), which was introduced first in Nepal by EBL. Besides, the system had plenty of reports, which the older system could not provide due to its limitation of stand-alone feature and less customization.

The Bank implemented SWIFT on 1998 September, which may be stated as the second break-through. This enabled transaction with many international banks.

The Bank not only provided general services to its customers, rather it offered user friendly product and services through the means of technology. In addition to ABBS facility, it introduced ATM operation from 2004 and in a short span of time; it has now 18 ATMs working at different places and plans to expand its ATM network to 30 by the end of 2009.

In addition to the services to the customers, Bank also caters to the services to its 24000 shareholders. To manage and provide betters services to the shareholders, the Bank implemented Share Management System from M/s Professional Computer System.

It introduced its own Remittance System Everest Remit in the year 2006. The Everest Remit system has contributed significant percentage in national economy by means of inward foreign currency remittances.

To provide best services to its customers through the help of Information Technology, the bank switched its software to the worldÊs number one Core Banking

System, Finacle CBS of M/s Infosys, Bangalore, within a very limited period; less than 3 three months; by 29th February, 2008 commencing the pilot migration on 7th December, 2008. It was the third and recent break-through in the advancement of Technology in the Bank.

Besides, being centrally monitored software, IT hassles at the branches have been totally removed and it has helped much for the decision making body of the Bank.

With the implementation of CBS in the Bank, there is plenty of scopes to introduce new and innovative products in the Bank. Continuing adding new services to its customers, Bank started e-Banking/SMS Banking from July 14, 2008 followed by on-line UTL bill payment; which was a step ahead of the Bank to reach to its customers through on-line medium.

After implementation of Finacle in the Bank, the system has helped to reduce the work at different departments and thru continuous research and development from Data Center, users of the Finacle are benefited. One of research-based module developed by the Data Center is the BankÊs Intranet portal � Finacle Discussion Board- where the users can lodge their system related problem and can also assign the respective person for the solution. It has definitely helped to sort out the problem at the branches very well and the calls related to system problem have been pretty reduced at Data Center.

To add another feather in its cap, Everest Bank has recently introduced the utility bill payment through Mobile SMS, which is the first in Nepal, and EBL is proud in introducing this product to its customers. Initially, the service will be for pre-paid mobile recharge facility for Namaste and Sky-Phone of Nepal Telecom and shortly, other utility bill payment features e.g. Electricity, Air-ticketing, Merchant-shopping, Restaurant billing etc. will be introduced. The payment through mobile, as we like to say m-Banking, is a revolutionary break-through in the area of development of IT in Nepal and it will definitely go beyond the usage of Debit and Credit cards and people at large will be benefited through it.

Through the help of IT, the organizations can strengthen their business intelligence by carrying out better business decisions and any company hoping to exploit the potential of their business through electronic means must bring proper and efficient infrastructure development in their organization.


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Credit Control

Credit ConcentrationTo diversify risk we stringently scrutinize credit concentration and make decisions. The portfolios are properly balanced and ensured that a single portfolio is not subjected to high exposure defined by a limit.

Credit rating: Bank has recently developed a comprehensive risk scoring / rating system that serves as a single point indicator of diverse risk factors of counterparty and for taking credit decisions in a consistent manner. The risk rating system is drawn up considering different factors such as segment wise, borrower wise & even geographical region wise. A credit rating assesses the credit worthiness of an individual, corporation, or even a country. Credit ratings are calculated from financial history and current assets and liabilities. Typically, a credit rating tells a lender or investor the probability of the subject being able to pay back a loan. However, in recent years, credit ratings have also been used to adjust insurance premiums, determine employment eligibility, and establish the amount of a utility or leasing deposit.

As an integral part of Risk Management System, a suitable framework for reporting and evaluating credit decisions has been put in place in the Bank, through a well defined Loan Review Mechanism (LRM), for evaluating the quality of loan book and to bring about qualitative improvements in credit administration.

The rating category wise portfolio of loan assets is reviewed on half yearly basis to analyze mix of quality of assets. The rating migration is undertaken annually to assess the robustness of risk rating system.

NPA managementThis fiscal year the bank has managed to control NPA at 0.64% against 0.9% last year.

Bank has initiated appropriate actions/steps on an on going basis to prevent deterioration in assets quality and to recover stressed loans through Special Assets Management Department enforcing the securities available and through one-time settlement / action under commercial bank act / filing of recovery suit etc.

To prevent slippage of accounts to non-performing category, Credit Administration Division and Special Asset Management Division at Head Office has been monitoring weak and irregular accounts beyond a threshold limit. All identified weak and irregular accounts have been subject to review at frequent intervals by Chief Executive Officer of the bank through recommendation of Dy. General Manager � Cr edit.

The bank is required to make provision for Non Performing Assets. Loans whose principle is overdue by over three months and below six months are categorized as substandard loans, Loans whose overdue is over six months and up to 1 year is categorized as doubtful loans. Loans whose overdue is over one year is categorized as Loss loan. Due to the risk faced in each category the bank makes provision for loss accordingly. The bank makes 100% provision for loan loss and maintains it for optimum risk management and profitability.

Due to stringing quality control the bank is able to control non performing loans at 0.68%.

P u t t i n g i t T o g e t h e r


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Internal Affairs

The Best Branch AwardBranches have been categorized into large, medium and small branches as per their business volumes. Internal competition in a healthy manner is considered a way of improving the efficiency and effectiveness of an organization. To garner healthy competition among the branches Best Branch award is declared in a yearly basis to various branch categories. The evaluation of the branches are done on the basis of business growth, profits growth, control of NPA, Increase in customer base, improvement in low cost deposits, control of irregularities.

In the fiscal year ended Ashad 65 the following branches won the award as per their categoriesLarge: PulchowkMedium: ChabahilSmall: Itahari

The bank has been opening branches to expand its network. A new branch award has been included in the category to encourage competition among the new branches. In the fiscal year Chabahil branch was awarded the best new branch.

Internal CommunicationÂEveresterÊ a monthly newsletter is published to keep the employees informed on various activities of the bank and external affairs.

Various circulars are issued from time to time to keep the employees updated on various banking aspects and strategies. Intra Branch and Department meeting are made mandatory for proper communication of the banking strategies and feedback.

Branch Network and ExpansionWe have always looked into expanding the branch network to come closer to the customers. In the fiscal year we expanded to three locations and this year we have reached to five additional locations, two in the western region and three in the central region 1. Baglung � 1 1th Bhadra 20642. Gwarko � 28 th Mangsir 2064 3. Lekhnath � 16 th Falgun 20644. Narayangarh � 15 th Baisakh 20655. Bhaktapur � 24 th Jesth 2065

Our branch network is stretched from the eastern region to the far western region covering all section of the society. With 26 branches the bank has been able to maintain its position as one of the bank with the largest network among private sector commercial bank.

F i n d i n g t h e

P e r f e c t P i t c h


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At EBL marketing has always been the focus and this is how the bank has builds its self to the size we are today.

The marketing focus has been under three levels, the client servicing, new market opportunity and brand.

The client servicing is done through the branches and new market opportunity is looked for by the branches as well as through the head office. Identification of new segments and pitching relevant products is done at the head office level, however test marketing precedes the process. Test marketing is considered very crucial in all product launches and hence proper steps are taken for its effectiveness.

Supporting activities like promotions which include publicity, schemes, advertisement, outdoors are done through the advertising agency. The bank evaluates the advertising agency with regards to quality of brand representation, the communication to its target audience and its efficiency. For the fiscal year Media Concepts, our advertising agency did our promotions across various media.

Various customer relationship activates like greetings, functions, customer meet parties are organized which we believe is the essence for long term business.

Branding activities like displays, sponsorships etc are done with the focus of its association with the brand and its target audience. The brand is nurtured very carefully such that our target audience associate with it directly and a favorable image is created in their minds.

Corporate Social ResponsibilityAt Everest Bank we believe that the society contributes a lot to the development of any organization and hence it is the responsibility of the organization to give something back. In this effort we support various events leading to the upliftment of the under privileged.

Flood hit the terai region and made thousands homeless suffering from various diseases due to unhealthy environment. Everest Bank supported these people through free medical camps is various regions. An account was opened for all willing people who wanted to lend a helping hand and was contributed to the relief camp to support the victims. A total of Rs 2 Lakhs were collected in the account out of which EBL contributed Rs 1 Lakh.

Apart from this we have been supporting various organization associated with development of the under privileged. The camps were setup as given belowDate: 2064/04/25 FridayTime: 10am to 5 pmVenue: Shree Ram Dulari Sec SchoolKalyanpur, Jadi-7, Siraha Date:2064/04/26 and 27, sat & sunTime: 10am to 5pmVenue:Fattepur Health Post,Fattepur VDC Bankey

Marketing-

The crux of business development


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35

O u t s t a n d i n g O u t p u t


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36

Our store of Products

and Services

DepositsSaving Account: Our saving account offers all facilities required for normal transactions like deposit, payments with additional facility of debit cards, ABBS. The deposit offers an interest on the amount. The customer can avail the service from all the 26 branches across the country and 15 ATM counters. During the fiscal year the bank was able to cater to 1,45,356 satisfied customers. On the total portfolio saving account has 49.6% of the deposit mix.

Saving Premium The saving premium account is a premium account that offers a variety of facilities like free accidental death insurance of Rs 3 Lakh, no draft commission upto Rs 1 Lakh once a month, Free debit card, free ABBS.

Sunaulo Bhawisya Yojana To cater to people who have the habit to save in a regular basis and avail the bulk sum at the end with a high yielding interest rate the bank launched the recurring deposit. The deposit has become very popular among the middle class families who save for specific purpose like purchase of items, marriage etc.

Unfixed Fixed Deposit The deposit provides the benefit of yield of a term deposit with the flexibility to withdraw up to 90% of the amount at any time. The product is suited to people who want to park their surpluses in Fixed Deposit and may require liquidity at times.

Fixed Deposit: The deposit product offers high interest rates with respect to the term of the deposit.

Call Deposit To cater to institutions and companies who have

the requirement of collection of funds, EBL offers Call account. An interest rate is offered along with the collection facility.

Current Deposit EBL offers a wide range of products and services designed to make banking easier and to match each and every customer's requirements. This account is mostly suitable for trading, business houses, industry, school, colleges etc.

Retail Lending

Housing Loan EBL is the pioneer bank to introduce housing loan in Nepalese commercial bank. In order to meet the needs of home seekers, Everest Bank Ltd offers Direct Housing Finance for individuals for construction /acquisition/ purchase of house/flat allotted by the private builders or Development Authorities and also for carrying out repairs/ renovation/ additions/alteration to the house/flat. Generally there is no prepayment if the loan amount is paid through own income source of the borrower. There is no hidden cost in the product and we are offering competitive interest rate with long repayment period.

Vehicle Loan The product offers the borrowers to purchase new car / van / jeep. Generally there is no prepayment if the loan amount is paid from the own income source of the borrower. There is no any additional collateral required in this scheme.

Education Loan EBL pioneered education loan in Nepal. To bring education within the reach of the people and help the needy students who intend to pursue higher studies in Nepal as well as abroad, to meet the increasing cost of admission fees / monthly fees / examination fees, books, etc. Boarding and lodging expenses if students putting up in recognized Boarding House where charges are standardized and can be paid to the management of boarding house on behalf of boarders. The USP of the product is that the repayment starts one year after the completion of the study or one-month after getting employment whichever is earlier. Thus the student can repay their own loan amount rather than depend on their parents.

Professional Loan EBL pioneered the professional loan. Professional or self employed persons registered with Nepal Government and engaged in respective professions medical practitioners including dentists, Architect, Engineers, Chartered Accounts etc can now set up their own firms. This product facilities the professional to Purchase of Equipment used in the profession undertaken, Purchase of furniture, furnishing of the office premises, and Working Capital requirement.


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Loan against mortgage of immovable property located in urban centers will be offered to Individuals / Business Enterprises for meeting their business and /or personal needs. The loan may be allowed as term loan or overdraft loan as per the requirement of the customers. Loan amount together with interest can be repaid in maximum of 120 EMIs in Flexi term loan. In case of Overdraft, one year & renewed/reviewed on satisfactory performance. Facility of Over Draft is offered for people with business.

Loan against future Lease and Rental This facility has been introduced by EBL for meeting business/personal needs. Property owners having their properties situated in urban areas (Kathmandu /Pokhara /Birgunj/ Biratnagar) who have let out such properties to Government / Semi Government and reputed Corporates, Banks, Financial Institutions, Insurance Companies, Multi National Companies, NGOs/INGOs and Embassy Officials can avail loans against their rentals.

Loan against sharesThis loan is provided to Individuals/ Firms/ Companies for Advances against primary security of physical shares or shares in dematerialized form. EBL may provide Demand Loan or Overdraft facility against the physical shares.

Business BankingMost of the large corporates in the country has chosen us as their financial partner and that is the reason our growth in the segment is high. Through our business banking we offer a warehouse of products and services to match the need of our valued clients

Working Capital Finance The bank services the working capital requirement of business by assessing the current asset and liabilities. The business can draw up to a limit determined by the drawing power which is appraised on a regular basis. The bank has been successful in servicing the working capital needs especially of the trading units. The bank makes a continuous customer visit to ensure that the requirement is met on time and up to an optimum level.

Project Finance Depending on the projects rate of return, repayment ability, cash flow and generation of cash surplus various projects are financed. The technical, financial, economical and managerial competencies are appraised in such cases and decisions are taken accordingly.

Trade Finance Through an extensive global network that facilitate domestic and international transaction we are able to meet customerÊs need of import, export, payments through offering facilites like LCs, SWIFT transfers, Guarantees etc. Trust Receipt loans are offered to retire import bills. The bank also offers pre shipment and post shipment loans as part of export finance.

Consortium FinanceWe have been arranging for financial closure of various large projects through leading various consortium finance. We have offered such services to various business segments like Hydropower, Manufacturing Industry, Hospital etc. We would explore for such possibilities of finance in the form of lead as well as member bank in the future.

Priority and Deprived Sector Lending The bank has been extending loan facilities to priority and deprived sector in the form of direct as well as indirect lending. As per the requirement of extending 3% of the loan in the deprived sector, we have been able to maintain it at 3.09%.

Remittance In order to facilitate remittances of Nepalese residing in U.A.E, Bahrain, Kuwait, Qatar, Malaysia and Saudi Arabia, Everest Bank is a step ahead. We hold special drawing arrangement with different exchanges houses by which the saving is safely and quickly available to the families of the remitter.

EBL is playing a pivotal role in facilitating remittance to and from across globe. Being the first Nepalese bank to open representative office in Delhi, India, the Nepalese in India can open account in Nepal from the designation branches of Punjab National Bank and remit their saving economically through banking channel of Nepal. The bank is also offering Cash Management System (CMS) through HDFC bank, India for managing the finds of corporate exploring to India by collection their fund from about 183 locations in India.


2007/2008

38

The bankÊs own web based online remittance product „Everest Remit‰ facilitates remittance from London, UAE, Bahrain, Malysia, Qatar to more than 170 pay out location in Nepal. With India remit, the bank has same day remittance facility with India with association of PNBÊs 2200 networked branches, based draft drawing arrangement with 250 PNB branches across India.

EBL Debit Card: EBL Debit Card is your key to ultimate convenience regarding day to day monetary transactions providing you the power of real cash in form of card. Associated with the Smart Choice Technology (SCT), it facilitates wide sharing of ATMs under SCT network. Therefore, EBL Debit card can be accessed at any of the 150 ATMs linked with SCT for withdrawing cash and also at any of the merchant establishments (POS) having SCT logo, for purchasing goods and services. The card can be accessed in India through any of the 1500 Punjab National BankÊs ATMs. Thus the customer need not carry cash and simply use the EBL Debit card.

Centralized Banking System: The bank is connected to all its counters through the Centralized Banking System and transactions from any branch can be done due to a centralized database.

Revenue CountersEBL has been collecting government revenue from Pulchowk, Lazimpat, Babar Mahal, Singha Durbar, Birgunj Custom Office and ICD Dry Port. This step has helped the bank in supporting the government with its capabilities and competencies of quick and reliable service to the society.

Evening CountersThe bank has been looking forward to servicing various needs of the customers and hence in this effort the bank has been serving thorough evening counters at 12 branches. All the 10 valley branches have evening counters and in addition Pokhara and Janakpur also serve through the counters.

365 Days Banking and Holiday counterThe customer today, especially the working class, is very busy and gets free only during holidays. There is a need for banking facilities during their free time. Thus, the bank offers 365 days banking facility through our New Road branch which is the busiest market place. Services provided through the counter Deposits Withdrawal Remittance (including foreign exchange

transaction) Travellers Cheque

The facility of holiday counter is offered during holidays like Dashain and Tihar through all our Kathmandu Valley branches and few of our terai region branches so that our customers are not deprived of financial requirement during long holidays.

Strategies Considering the market conditions and competition our strategies would focus on the following

Expansion and Development of New Market We believe in growing by way of entering and developing new market segments. Thus we would focus on offering new products to new segments and expand our network to new locations.

Human Resource DevelopmentHuman Resource is an important part of the organization and we believe in developing our employees, through intensive trainings to improve the efficiency and effectiveness of the organization.

ProfitabilityDue to competition the margins have squeezed and hence we would look to build our low cost deposits and high yielding advances to maintain our spread. We would focus on offering better facilities to the customer and gain loyalty.

Risk MinimizationRisk Management is an important factor and we would focus on diversifying risk by way of focusing on retail segment. NPAs would be further controlled through rigorous monitoring of irregular accounts.

M a k i n g O u r s e l v e s H e a r d

Pulchowk (Machagaa), Lalitpur 20/8 Gha,PO Box: 3102, Kathmandu, NepalTel.: 977-1-5521804/5529942, Fax: 977-1-5524408E-mail: [email protected]

Auditors Report to the Shareholders of

Everest Bank Ltd.

1. We have audited the accompanying Balance Sheet of Everest Bank Limited as on Ashadh 31, 2065 (July 15, 2008) and the related Profit and Loss Account and Cash Flow Statement for the year then ended. These financial statements are the responsibility of the bankÊs management. Our responsibility is to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with the generally accepted auditing standards in Nepal and the directives issued by the Nepal Rastra Bank. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. On examination of the financial statements as aforesaid, we report that:a) We have obtained all information and explanations, which to the best of our knowledge and belief

were necessary for the purpose of our examination.b) In our opinion, proper books of account as required by law have been kept by the Bank, in so far as

appears from our examination of those books of account and the financial statements dealt with by this report are in agreement with the books of accounts.

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

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

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

4. In our opinion and to the best of our information and according to the explanations given to us, the said financial statements referred to above, read together with the notes attached thereon give a true and fair view:a) In the case of the Balance Sheet, of the state of affairs of the Bank as on Ashadh 31, 2065 (July 15,

2008) and b) In the case of the Profit and Loss Account and the Cash Flow Statement, the profit of the Bank and its

cash flow for the year ended on that date.

Date: 5 September 2008 Sundar Man Shrestha, FCAChartered Accountant

For, Sundar & Co.

SUNDAR & CO.Chartered Accounts


2007/2008

41

BALANCE SHEETAs on end of Ashad 2065 (15 July 2008)

Contingent Liabilities 4.17

Directors’ Declaration 4.29

Table of Capital Adequacy Ratio 4.30

Table of Risk Weighted Assets 4.30(ka)

Main Indicators 4.31

Significant Accounting Policy 4.32

Notes to Accounts 4.33

( Schedules 4.1 to 4.17 are integral part of the Balance Sheet)

This Year Previous Year

Share Capital and Liabilities Schedule Amount Rs. Amount Rs.

1 Share Capital 4.1 831,400,000 518,000,000

2 Reserve and Surplus 4.2 1,089,837,580 683,515,266

3 Debenture and Bonds 4.3 300,000,000 300,000,000

4 Loan and Borrowings 4.4 -

5 Deposit Liabilities 4.5 23,976,298,535 18,186,253,541

6 Bills Payable 4.6 49,429,700 26,776,480

7 Proposed and un paid dividend 140,790,370 68,146,323

8 Income Tax Liabilities 41,143,107 15,278,110

9 Other Liabilities 4.7 720,443,592 1,634,604,580

TOTAL LIABILITES 27,149,342,884 21,432,574,300

ASSETS

1 Cash in hand 4.8 822,989,425 534,996,791

2 Balance with Nepal Rastra Bank 4.9 1,080,914,554 1,178,198,197

3 Balance with other banks & financial institutions 4.10 764,067,851 678,225,606

4 Money at Call and Short Notice 4.11 346,000,000 -

5 Investments 4.12 5,059,557,544 4,984,314,586

6 Loan,Advances and Bills Purchased 4.13 18,339,085,562 13,664,081,664

7 Fixed Assets 4.14 360,512,480 170,097,452

8 Non-Banking Assets 4.15 - -

9 Other Assets 4.16 376,215,468 222,660,004

TOTAL ASSETS 27,149,342,884 21,432,574,300


2007/2008

42

PROFIT AND LOSS ACCOUNT

From 1st Shrawan 2064 to 31 Ashadh 2065 ( 17 th July 2007 to 15th July 2008)

This Year Previous Year Particulars Schedule Rs Rs

1 Interest Income 4.18 1,548,657,132 1,144,408,308

2 Interest Expenses 4.19 632,609,264 517,166,241

Net Interest Income 916,047,868 627,242,067

3 Commission and Discounts 4.20 150,264,074 117,718,162

4 Other Operating Income 4.21 79,133,767 67,967,525

5 Exchange Income 4.22 64,452,378 28,404,544

TOTAL OPERATING INCOME 1,209,898,087 841,332,298 6 Staff Expenses 4.23 157,957,084 86,118,226

7 Other Operating Expenses 4.24 233,766,645 177,545,649

8 Exchange Loss 4.22 - -

Operating Profit Before Provision for possible Loss 818,174,358 577,668,423

9 Provision for prssible losses 4.25 99,340,505 89,695,764

Operating Profit 718,833,853 487,972,659

10 Non-operating Income/Loss 4.26 4,519,287 1,315,211

11 Write-back from Loan Loss Provision 4.27 20,201,067 11,686,657

Profit from regular activities 743,554,207 500,974,527

12 Profit /Loss from transaction of extraordinary nature 4.28 (18,998,727) (795,224)

Profit after inclusion of all types of transaction 724,555,480 500,179,303

13 Provision for Staff Bonus 65,868,680 (45,470,846)

14 Provision for Income Tax

- This year 216,913,302 158,299,176

Less : Deferred Tax Assets (9,445,115)

Net after deferred Tax 207,468,187

Net Profit 451,218,613 296,409,281


2007/2008

43

From 1st Shrawan 2064 to 31 Ashadh 2065 (17 th July 2007 to 15th July 2008)

PROFIT APPROPRIATION ACCOUNT

This Year Previous Year

Particulars Amount Rs. Amount Rs.

INCOME1 Retained Profit upto last year 130,546,505 108,640,082

2 Profit for this year 451,218,613 296,409,281

3 Exchange Equalization Fund

TOTAL 581,765,118 405,049,363 APPROPRIATION 1 Accumulated Loss upto last year - -

2 Loss for this year - -

3 General Reserve 90,244,000 59,281,900

4 Contingency Reserve ( Deferred Tax Reserve) 9,445,115 -

5 Bank Development Fund - -

6 Dividend Equalization Fund - -

7 Staff related funds - -

8 Dividend on Preference Share 23,723,288 12,600,000

9 Proposed dividend on ordinary shares 107,773,011 45,102,316

10 Proposed Bonus Share 147,420,000 113,400,000

11 Special Reserve

12 Exchange Equalization Fund 3,410,000 318,642

13 Capital Redemption Fund- Debenture 60,000,000 -

14 Capital Adjustment Reserve 50,000,000 37,800,000

14 Other Free Reserve 6,000,000 6,000,000

TOTAL 498,015,414 274,502,858

16 Accumulated Profit/Loss 83,749,704 130,546,505


2007/2008

44

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2007/2008

45

From 1st Shrawan 2064 to 31 Ashadh 2065 (17 th July 2007 to 15th July 2008)

CASH FLOW STATEMENT

Previous Year Rs. Particulars This Year Rs. A. Cash flow from Operating Activities 1,372,775,899

1. Cash Received 1,764,958,355 1,157,394,126 1.1 Interest Income 1,480,965,056 117,718,162 1.2 Commission & Discounts Income 150,264,074 27,129,990 1.3 Income from Foreign Exchange Transaction 50,815,249 - 1.4 Recovery of Loan written off - 70,533,621 1.5 Other Income 82,913,977 (892,082,135) 2. Cash Paid (1,154,930,217) (492,278,489) 2.1 Interest Expense (612,862,000) (78,118,226) 2.2 Staff Expense (127,972,593) (146,568,951) 2.3 Office Administration Expenses (177,576,476) (140,556,436) 2.4 Income Tax Paid (191,048,302) (34,560,033) 2.5 Other Expenses (45,470,846) 480,693,764 Cash Flow before Changes in Working Capital 610,028,138

- (Increase)/Decrease in Current Assets - 66,960,000 1. (Increase)/Decrease in Money at Call & Short Notice (346,000,000) 80,118,131 2. (Increase)/Decrease in Short-Term Investmentse 498,762,587 (3,947,226,863) 3. (Increase)/Decrease in Loan & Advances and BP (4,772,744,402) (72,378,997) 4. (Increase)/Decrease in Other Assets (134,857,710) Increase/(Decrease) in Current Assets 4,383,808,553 1. Increase/(Decrease) in Deposit 5,790,044,994 - 2. Increase/(Decrease) in Certificate of Deposit - - 3. Increase/(Decrease) in Short-Term Borrowing - (56,197,716) 4. Increase/(Decrease) in Other Liabilities (26,376,627) 935,776,872 Total Cash Flow from Operating Activities 1,618,856,980

B. Cash flow from Investing Activities - 1. Purchase of Shares & Debentures (94,679,000) - 2. Proceeds from Sale of Shares & Debentures 13,414,000 (49,934,128) 3. Purchase of Fixed Assets (248,462,452) 949,783 4. Proceeds from Sale of Fixed Assets 1,845,299 (863,917,497) 5. (Increase)/Decrease in Government Seurities (493,535,705) 11,580,378 6. Proceeds from Sale of Non-Banking Assets 397,500 12,276,398 7. Interest Income from Long-Term Investments 58,439,435 253,920 8. Dividend Received 751,032 - 9 Others - (888,791,146) Total Cash flow from Investing Activities (761,829,890)

- C. Cash flow from Financing Activities - - 1. Increase/(Decrease) in Long Term borrowings (Bond, Debentrues, etc) - - 2. Increase/(Decrease) in Share Capital - 911,512,000 3 Share Application Money Received/Refund (511,512,000) (104,222,751) 4. Dividend Paid (58,852,252) (17,096,429) 5. Interest in Borrowing Paid (23,748,730) - 6. Increase/(Decrease) in Refinance / facilities received from NRB - 790,192,820 Total Cash flow from Financing Activities (594,112,982)

1,274,554 D. Income / Loss from change in exchange rate in Cash and Bank Balance 13,637,129 838,453,100 E. Current Year’s Cash Flow from all activities 276,551,237 1,552,967,494 F. Opening Balance fo Cash & Bank Balances 2,391,420,594 2,391,420,594 G. Closing Balance fo Cash & Bank Balances 2,667,971,831


2007/2008

46

SHARE CAPITAL AND SHAREHOLDINGAs on 15 July 2008

Schedule 4.1

SHARE OWNERSHIP PARTICULARS

Amount Rs. % Share Ownership particulars % Amount Rs.

190,080,000 50 A. Promoters 50 247,104,000

1.1 Nepal Government -

76,032,000 20 1.2 Foreign Institutions-Punjab National Bank, India 20 98,841,600

1.3 ‘A’ Class Licensed Institutions -

1.4 Other Licensed Institutions -

35,323,200 9.34 1.5 Other Institutions 9.34 45,920,160

154,756,800 40.66 1.6 Individual 40.66 201,183,840

1.7 Others -

111,888,000 30 B. General Public 30 145,454,400

378,000,000 100 TOTAL 100 49,140,000

Previous Year Particulars This Year

1. Share Capital

1,000,000,000 1.1 Authorized Capital 1,000,000,000

650,000,000 A) 65,00,000 Ordinary shares of Rs. 100/- each 650,000,000

150,000,000 B) 15,00,000 , 9% Cumulative Non-Redeemable

Preference share of Rs. 100/- each 150,000,000

200,000,000 C) 20,00,000, 7% Cumulative Convertible Preference

Share of Rs.100/- each 200,000,000

729,800,000 1.2 Issued Capital 843,200,000

379,800,000 A) 49,32,000 Ordinary Shares of Rs. 100/- each 493,200,000

150,000,000 B) 15,00,000 , 9% Cumulative Non-Redeemable

Preference Share of Rs. 100/- each 150,000,000

200,000,000 C) 20,00,000, 7% Cumulative Convertible Preference

Share of Rs.100/- each 200,000,000

518,000,000 1.3 Paid up Capital 831,400,000

378,000,000 A) 49,14,000 Ordinary shares of Rs. 100/- each

( including 25,16,357 bonus shares fully paid 491,400,000

140,000,000 B) 14,00,000 , 9% Cumulative Non- Redeemable Preference

share of Rs. 100/- each 140,000,000

C) 20,00,000, 7% Cumulative Convertible Preference

Share of Rs.100/- each 200,000,000


2007/2008

47

RESERVE AND SURPLUSAs on 15 July 2008 Schedule 4.2

Previous Year This Year

Rs. Particulars Amount Rs.

232,847,514 1. Statutory General Reserve 323,091,514

113,400,000 2. Proposed Bonus Share 147,420,000

3. Capital Reserve

6,427,200` 3.1 Share Premium 206,427,200

- 4. Capital Redemption Reserve -

170,100,000 5. Capital Adjustment Reserve 220,100,000

- 6. Other Reserve

- a. Reserve for contingencies -

- b. Bank Development Fund -

- c. Dividend Equlization Fund -

- d. Special Reserve -

- e. Assets Revaluation Fund -

12,000,000 f. Other free reserves 18,000,000

1,225,808 g. Others 1,225,808

- h. Debenture Redemption Reserve 60,000,000

130,546,505 7. Retained Profit 83,749,704

- 8. Deferred Tax Reserve 9,445,115

16,968,239 9. Exchange Equalization Reserve 20,378,239

683,515,266 Total 1,089,837,580

S.No. Name & Address % Amount Rs.

1 Sh. B.K.Shrestha, Sanepa Lalitpur 9.22 45,302,400

2 M/s Snow Lion Hotel, Bagbazar Kathmandu 9.34 45,920,160

3 Sh. Maitra Dev Pathak, Kamalpokhari, Kathmandu 6.67 32,791,200

4 Sh. Bhagawan Lal Shrestha, Tapahiti Lalitpur 8.8 43,243,200

5 Sh. Nepal Krishna Shrestha, Tahachal, Kathmandu 9.22 45,302,400

6 Sh. Arun Man Sherchan, Himalayan Height , Lalitpur-Sanepa 3.9 19,150,560

7 Sh. Shanta Dev Pathak, Kamalpokhari, Kathmandu 2.12 10,452,000

8 Sh. Kul Bir Singh Tuladhar, Tripureshwor , Kathmandu 1.01 4,942,080

9 M/s Punjab National Bank, India 20 98,841,600

10 Sh. Nirmal Pradhan, Guaneshwor-33 , Kathmandu 0.99 4,912,700

11 Ms. Roma Pradhan , Gyaneshwor - 33 , Kathmandu 0.99 4,895,300

12 M/s Baba Palace (P) Ltd. , Naxal -1 Kathmandu 0.99 4,871,700

13 Ms. Rukmani Pradhan, Gyaneshwor, Kathmandu 0.92 4,531,900

14 M/s Baba Palace Stock Market Pvt. Ltd., Gyaneshwor- Kathmandu 0.68 3,329,800

15 M/s Rajdhani Investment Fund Ltd., Baluwatar, Kathmandu 0.53 2,607,100

SHAREHOLDERS HOLDING MORE THAN 0.5% SHARE IS AS UNDER


2007/2008

48

Schedule 4.3DEBENTURE AND BONDAs on 15 July 2008

Previous Year This Year Rs. Particulars Amount Rs.

300,000 , 6% Unsecured Debenture per

Debenture of Rs. 1,000/- each, issued on

300,000,000 16/07/2005 maturing on 15/07/2012 300,000,000

- (Redemption Reserve upto the yaer Rs. 60,000,000) -

300,000,000 Total 300,000,000

LOAN AND BORROWINGAs on 15 July 2007

Schedule 4.4


Rs. Particulars Amount Rs.

A. Local

- 1. Nepal Government -

- 2. Nepal Rastra Bank -

- 3. Repo Obligation -

- 4. Inter-bank & financial institutions -

- 5. Other Body Corporates -

- 6. Others -

- TOTAL OF (A) - B. Foreign

1. Banks

2. Others

TOTAL OF (B) Grand Total (A+B)


2007/2008

49

DEPOSIT LIABILITIESAs on 15 July 2008

Schedule 4.5

Cont...

Previous Year This Year Rs. Particulars RsRs..

1. Non-interest bearing deposits

1,673,983,140 A. Current Deposits 2,492,346,111

1,639,194,618 1. Local currency 2,443,034,059

399,308,231 1.1 Nepal Government 712,541,320 - 1.2 ‘A’ Class Licensed Institutions 6,698,673 126,775,164 1.3 Other Licensed Financial Institutions 156,611,510 871,988,870 1.4 Other Body Corporates 1,418,719,296 150,459,459 1.5 Individuals 73,184,793 90,662,894 1.6 Others 75,278,467

34788522 2. Foreign currency 49,312,052 - 2.1 Nepal Government - - 2.2 ‘A’ Class Licensed Institutions - 1,798,401 2.3 Other Licensed Financial Institutions 32,343,605 2.4 Other Body Corporates 49,262,747 313,496 2.5 Individuals 49,305 333,020 2.6 Others -

222,067,857 B. Margin 221,439,126 - 1. Staff earnest money - 49,802,849 2. Security margin 16,327,039 172,265,008 3. LC margin 205,112,087

60,789,022 C. Others 151,827,057

60,754,022 1. Local currency 151,827,057 - 1.1 Financial Institutions - 31,567,685 1.2 Other Body Corporates 113,162,705 29,186,337 1.3 Individual 38,664,352

35,000 2. Foreign currency - - 2.1 Financial Institutions - - 2.2 Other Body Corporates - 35,000 2.3 Individual -

1,956,840,019 Total Non-interest Bearing Deposit 2,865,612,294

2. Interest Bearing Deposits

9,029,255,366 A. Saving Deposit 11,883,857,171

8,898,456,515 1. Local currency 11,724,184,150 352,690,830 1.1 Body Corporate 376,380,611 8,495,571,339 1.2 Individual 11,313,739,771 50,194,346 1.3 Others 34,063,768

130,798,851 2. Foreign currency 159,673,021 14,040,861 2.1 Body Corporate 38,941,735 94,410,918 2.2 Individual 120,584,562 22,347,072 2.3 Others 146,724

5,626,661,717 B. Fixed Deposit 6,446,181,289

5,336,352,717 1. Local currency 6,254,216,614 4,190,166,178 1.1 Body Corporate 5,189,576,809 1,055,691,152 1.2 Individual 981,271,800 90,495,387 1.3 Others 83,368,005

290,309,000 2. Foreign currency 191,964,675 287,703,000 2.1 Body Corporate 190,580,667 2,606,000 2.2 Individual 1,384,008 - 2.3 Others -

1,573,496,439 C.Call Deposit 2,780,647,781

1,567,326,425 1. Local currency 2,755,434,668


2007/2008

50

- 1.1 ‘A’ Class Licensed Institution - 627,112,113 1.2 Other Licensed Institutions 607,739,890 869,254,751 1.3 Other Body Corporates 2,052,215,187 62,688,244 1.4 Individual 94,746,491 8,271,317 1.5 Others 733,100

6,170,014 2. Foreign currency 25,213,113 - 2.1 ‘A’ Class Licensed Institution - - 2.2 Other Licensed Institutions - 4,581,928 2.3 Other Body Corporates 25,213,113 - 2.4 Individual - 1,588,086 2.5 Others -

- D. Certificate of Deposits - 1. Body Corporate - - 2. Individual - - 3. Others -

16,229,413,522 Total Interest bearing deposits 21,110,686,241

18,186,253,541 Total Deposits 23,976,298,535

Cont...

Schedule 4.6BILLS PAYABLEAs on 15 July 2008

Previous Year This Year Rs. Particulars Rs.

26,776,480 1. Local currency 49,429,700

- 2. Foreign currency -

26,776,480 Total 49,429,700

Schedule 4.7OTHER LIABILITIESAs on 15 July 2008


Rs. Particulars Rs.

16,045,650 1. Pension / gratuty fund 46,030,141

- 2. Staff provident fund -

- 3. Staff welfare fund -

45,470,846 4. Staff Bonus 65,868,680

27,811,497 5. Interest payable on deposits 29,558,761

- 6. Interest payable on loans -

- 7. Unearned discount/comm. -

29,346,227 8. Sundry Creditors 94,887,863

579,176,702 9. Branch Adjustment Account 423,837,407

10. Others

- a) Agency Account -

8,198,427 b) Interest on Debenture 2,440,697

16,918,231 c) Others 57,670,043

125,000 d) Audit Fee 150,000

e) Application Money for 7% Cumulative

911,512,000 Convertible Preference Shares

1,634,604,580 Total 720,443,592


2007/2008

51

Schedule 4.8CASH IN HANDAs on 15 July 2008


Rs. Particulars Rs.

512,275,972 1. Local Currency ( Including Coins) 809,176,614

22,720,819 2. Foreign Currencies 13,812,811

534,996,791 Total 822,989,425

BALANCE WITH NEPAL RASTRA BANKAs on 15 July 2008

Schedule 4.9

Previous Year Foreign Currencies This Year

Rs Particulars Local Currency INRs. Convertible Total Rs.

- 1. Nepal Rastra Bank 0 -

1,178,198,197 a. Current Account 1,063,220,088 17,694,467 17,694,467 1,080,914,554

- b. Others -

1,178,198,197 TOTAL 1,063,220,088 - 17,694,467 17,694,467 1,080,914,554

Balance as per Balance Certificate Rs. 1,12,33,92,413

BALANCE WITH OTHER BANK & FINANCIAL INSTITUTIONSAs on 15 July 2008

Balance as per Balance Certificate Rs. 1,16,72,75,543.

Previous Year Foreign Currencies This Year

Rs. Particulars Local Currency INRs Convertible Total Rs.

1. Other Local

34,408,556 Licensed Institutions 38,022,897 - 38,022,897

34,408,556 a. Current Account 38,022,897 38,022,897

- b. Others -

643,817,050 2. Foreign Banks 698,432,388 17,808,779 716,241,167 716,241,167

643,817,050 a. Current Account 698,432,388 17,808,779 716,241,167 716,241,167

- b. Others -

- -

678,225,606 TOTAL 38,022,897 698,432,388 17,808,779 716,241,167 754,264,064

Schedule 4.10

Schedule 4.11MONEY AT CALL & SHORT NOTICEAs on 15 July 2008


Rs. Particulars Rs.

- 1. Local Currency -

- 2. Foreign Currencies 346,000,000.00

- Total 346,000,000


2007/2008

52

INVESTMENTSAs on 15 July 2008

Schedule 4.12

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

3,614,541,127 1. Nepal Government Treasury Bills 3,237,977,740 3,237,977,740

- 2. Nepal Government Saving Bonds - -

1,090,091,299 3. Nepal Government Other Securities 1,583,627,004 1,583,627,004

- 4. Nepal Rastra Bank Bonds -

- 5. Foreign Securities -

- 6. Local Licensed Institutions -

260,600,000 7. Foreign Banks 138,400,800 138,400,800

19,887,000 8. Corporate Shares 16,225,000 16,225,000

- 9. Corporate Bond & Debenture 84,927,000 84,927,000

- 10. Other Investments -

4,985,119,426 TOTAL INVESTMENTS 5,061,157,544 5,061,157,544

(804,840) Provisions (1,600,000) (1,600,000)

4,984,314,586 Net Investments 5,059,557,544 5,059,557,544

INVESTMENTS IN SHARES, DEBENTURES AND BONDSAs on 15 July 2008

Schedule 4.12 (ka)

Previous Year

Rs. Particulars Cost Market value Provision

1. Investments in Shares

3,120,000 1.1 31,200 shares of Rs. 100/- each in Rural Microfinance Co.Ltd 3,120,000 NA -

3,000,000 1.2 77,520 shares (including 3,000 bonus shares)

of Rs. 100/- each in Nirdhan Utthan Bank Ltd 7,752,000 NA -

13,414,000 1.3 1,34,140 shares of Rs. 100/- each in Himalayan Distillery Ltd. - - -

353,000 1.4 3,530 shares of Rs. 100/- each in Credit Information Center Ltd. 353,000 NA -

- 1.5 50,000 shares of Rs. 100/- each

in Taragaon Regency Hotel. 5,000,000 3,400,000.00 1,600,000

2. Investment in Debentures - 7 years 7.75% 84,927 Nepal Electricity Authority

Bond of Rs. 1,000/- each 84,927,000

19,887,000 Total Investments 101,152,000 - - 3. Provision -

804,840 3.1 Upto last year - - -

3.2 This year (1,600,000) - -

804,840 Total Provision (1,600,000) - 1,600,000

19,082,160 Net Investments 99,552,000 - -


2007/2008

53

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2007/2008

54

SECURITY OF LOANS, ADVANCES AND BILLS PURCHASESAs on 15 July 2008

Schedule 4.13 (Ka)


Rs. Particulars Rs.

14,081,353,439 A. Secured 12,774,352,674 1. Against Fixed/Movable Properties 18,352,610,332

- 2. Loan Against Gurantee Local Licensed Institutions -

- 3. Against Government Gurantee -

- 4. Against International Rated Bank’s Gurantee -

- 5. Against Export Document -

565,822,388 6. Against Fixed Deposit Receipts

271,542,807 a) Own Fixed Deposit Receipts 258,295,711

294,279,581 b) Other Licensed Institutions’ Fixed Deposit 141,383,103

56,909,608 7. Against Government Securities 46,539,072

- 8. Against Counter Gurantee -

2,500,000 9. Against Personal Gurantee 2,496,005

681,768,769 10. Against Other Securities 35,107,539

1,332,648 B. Unsecured -

14,082,686,087 TOTAL 18,836,431,762


2007/2008

55

Prev

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4


2007/2008

56

NON BANKING ASSETSJuly 15, 2008

Schedule 4.15

Prev. year Name of the Party / Borrower, NBA Booked NBA Value Provisoning This Year

Rs. Address Date % Amount Rs. Net NBA Rs.

17,704,739 1. Pinkymala & Company 14.01.2006 17,704,739 100 17,704,739 -

Birgunj -13, Adarshnagar

City Office- Lel Tole, Kathmandu

3,000,000 2. Unnat Industries 08.04.2002 3,000,000 100 3,000,000 -

Main Road, Biratnagar

2,217,500 4. Deepak Food Traders 22.02.2004 1,820,000 100 1,820,000 -

Dhangadhi Municipality - 2, Kailali

9,979,067 5. NB Garments 04.06.2004 9,979,067 100 9,979,067 -

Bathnah VDC - 6, Simara

1,675,000 6. Siddheswari Industries P. Ltd. 06.12.2004 1,675,000 100 1,675,000 -

Ratna Nagar - 1, Chitwan

(34,576,306) Previous Year’s Provisions

- TOTAL 34,178,806 34,178,806 -

OTHER ASSETSAs on 15 July 2008

Schedule 4.16


Rs. Rs.

6,107,802 1. Stationeries stock 5,424,971

26,072,224 2. Interest receivable on Investmnets 35,324,866

2 (a) Government Securities 33,730,829

2 (b) Other Investments 1,594,037

- 3. Interest receivable on Loans & advances -

83,373,555 Gross Interest receivable on Loans & advances 92,216,004

(83,373,555) Less: Interest Suspense (92,216,004)

4. Commission receivables

57,204,223 5. Sundry debtors 141,418,583

5 (a) Government Revenue Related 65,914,561

5 (b) Others 75,504,022

100,582,094 6. Staff loans & advances 156,643,983

2,615,706 7. Pre-paid expenses 2,672,422

22,544 8. Cash in transit 3,195

29,026,867 9. Others in transit( including cheques) 24,153,377

- 10. Draft paid without advices -

- 11. Expenses to be written -off -

- 13. Branch Account -

- 14. Others -

1,028,544 - Security Deposit

1,128,956 - - Misc. -

- Advance Tax

- - Deferred Tax Assets 9,445,115

222,660,004 Total :- 376,215,468


2007/2008

57

OTHER ASSETS ( ADDITIONAL DETAILS) As on 15 July 2008

Schedule 4.16(ka)

More than 1 year & Particulars Upto 1 Year upto 3 years More than 3 years This Year Rs.

83,373,555 1. Interest Receivables on Loan 22,053,986 15,549,713 54,612,305 92,216,004

- 2. Draft Paid without Schedule - - - -

- 3. Branch Account - - - -

83,373,555 TOTAL 22,053,986 15,549,713 54,612,305 92,216,004

CONTINGENT LIABILITIESAs on 15 July 2008

Schedule 4.17


Rs. Rs.

1. Claim lodged but not accepted by the bank

2. Letters of Credits

1,355,800,165 a. Maturity value of less than six months 2,056,005,401

295,095,000 b. Maturity value of more than six months 79,441,031

- 3. Re-discounted Bills

4. Unexpired guarantees

67,624,116 a. Bid bond 123,469,573

467,699,468 b. Performance Bond 821,506,604

- 5. Share money against investments in shares -

31,340,252 6. Forwar Exchange Contracts 7,595,851

60,613,228 7. Bills on collection 77,762,082

110,810,962 8. Acceptance and Endorsements 486,158,768

- 9. Underwriting Commitment -

- 10. Irrevocable Loan Commitment -

19,177,599 11. Guarantee Against Counter Guarantee of International Rated Bank 16,581,961

54,519,033 12. Advance Payment Guarantee 62,850,687

18,793,000 13. Financial Guarantees 77,784,538

- 14. Contigent liability against Income Tax -

- 15. Others -

2,481,472,823 TOTAL 3,809,156,495


2007/2008

58

Previous Year This year

Rs. Particulars Rs.

967,177,963 A. Interest on Loans & advances 1,329,694,619 584,479,080 1. Loans & advances 794,889,029

382,698,883 2. Overdrafts 534,805,590

134,256,035 B. Interest on Investments 193,223,609 128,565,724 1. Government Securities 180,218,958

114,352,592 a. Treasury bills 114,810,856

14,213,132 b. Development Bonds 65,408,102

- c. National Saving Bonds -

- 2. Foreign Securities -

- 3. Nepal Rastra Band Securities -

- 4. Debenture & Bond -

5,690,311 5. Interest on Inter-bank lending 13,004,651

5,690,311 a. Bank/Financial Institutions 13,004,651

b. Other Institutions -

6,760,249 C. Agency Balance 10,244,978 - 1. Local Banks/Financial Institutions -

6,760,249 2. Foreign Banks 10,244,978

32,256,018 D. Money at Call & short notice 8,993,070 - 1. Local Banks/Financial Institutions -

32,256,018 2. Foreign Banks 8,993,070

3,958,043 E. Others 6,500,856 1. Certificate of deposits -

- 2. Inter Bank/Financial Institution Loan -

3,958,043 3. Others 6,500,856

1,144,408,308 TOTAL 1,548,657,132

INTEREST INCOMEFrom 17 July 2007 to 15 July 2008

Schedule 4.18


2007/2008

59

COMMISSION AND DISCOUNTSFrom 17 July 2007 to 15 July 2008

Schedule 4.20

Previous Year This year Rs. Particulars Rs.

1,088,476 A. Bills purchased & discounted 1,224,616 776,193 1. Local 974,993

312,283 2. Foreign 249,623

84,946,526 B. Commission 115,054,890 13,916,549 1. Letter of credits 18,702,715

10,057,638 2. Letter of guarantees 19,262,414

2,262,920 3. Collection fees 1,437,533

30,215,285 4. Remmittance fees 43,914,171

- 5. Credit card -

- 6. Share underwriting/issue com. -

2,505,970 7. Government transaction 3,763,429

- 8. Exchange commission -

25,988,164 9. Batta 27,974,628

31,683,160 C. Others 33,984,568

117,718,162 TOTAL 150,264,074

INTEREST EXPENSES From 17 July 2007 to 15 July 2008


499,166,241 A. Interest on deposits 608,975,166 237,076,220 1. Fixed Deposits 278,153,304

204,258,157 1.1 Local currency 267,883,560

32,818,063 1.2 Foreign currency 10,269,744

205,718,951 2. Saving Deposits 262,156,217

203,362,596 2.1 Local currency 258,338,456

2,356,355 2.2 Foreign currency 3,817,761

56,371,070 3. Call Deposits 68,665,645

56,325,589 3.1 Local currency 68,457,024

45,481 3.2 Foreign currency 208,621

- 4. Certificate of Deposits -

18,000,000 B. Interest on Loans 23,634,098 1. Overdraft -

2. Loan from NRB 5,007,397

- 3. Inter-bank loan 82,192

18,000,000 4. Other Loans & Refinance/Bond 18,544,509

- C. Others -

517,166,241 TOTAL 632,609,264

Schedule 4.19


2007/2008

60

OTHER OPERATING INCOMEFrom 17 July 2007 to 15 July 2008


1,635,620 1. Safe deposit vault rental income 2,028,447

- 2. Credit card issue and renewals -

1,890,457 3. ATM card 2,321,338

3,521,785 4. Telex / T.T. 4,595,907

38,660,563 5. Service charges 43,188,747

1,029,000 6. Renewal charges 5,339,585

- 7. Write back from loan loss provision -

21,230,100 8. Others 21,659,743

67,967,525 TOTAL 79,133,767

Schedule 4.21

EXCHANNGE GAIN/LOSSFrom 17 July 2007 to 15 July 2008

Schedule 4.22


1,274,554 A. Exchange rate difference 13,637,129

27,129,990 B. Foreign exchange trading ( except batta) 50,815,249

28,404,544 TOTAL 64,452,378

STAFF EXPENSESFrom 17 July 2007 to 15 July 2008

Schedule 4.23


45,927,776 1. Salary 86,042,328

17,534,297 2. Allowances 11,205,698

4,008,258 3. PF Contributions 7,477,514

2,321,919 4. Training 2,495,154

1,236,595 5. Uniform 4,393,132

293,400 6. Medical 383,400

616,339 7. Insurance 853,301

8,875,150 8. Gratuty 33,587,124

9. Others

3,474,435 a) Dashain Expenses 7,325,489

1,830,057 b) Leave Encashment 4,193,944

86,118,226 TOTAL 157,957,084


2007/2008

61


24,360,708 1. House rent 32,343,834

6,741,836 2. Electricity & water charges 8,879,524

- 3. Repair & maintenance -

360,874 a. Building 117,355

1,859,872 b. Vehicles 2,153,592

c. Others -

5,785,476 4. Insurance premium 4,650,549

12,876,994 5. Postage,telex,telephone,fax 20,860,109

2,470,734 6. Office equipment/furniture & maintenance 5,706,015

4,314,914 7. Traveling expenses 8,956,534

7,563,352 8. Printing & stationeries 9,294,750

531,844 9. Newspaper & magazine 481,996

7,987,495 10. Advertisement 8,359,645

471,377 11. Legal expenses 696,755

285,191 12. Donation 222,556

- 13. Board expenses -

336,000 a. Meeting fee 342,800

540,058 b. Other expenses 1,027,958

1,526,602 14. Annual general meeting expenses 1,193,377

15. Audit expenses

125,000 a. Audit fee 150,000

288,253 b. Other expenses 206,890

6,428,235 16. Remmittance expenses 9,804,650

27,481,296 17. Depreciation 46,721,302

- 18. Pre-operating expenses write off -

2,097,936 19. Debenture /Share Issue Expenses 1,653,795

11,194,230 20. TSA fee reimbursement 11,610,162

2,916,847 21. Entertainment 4,216,792

3,271,776 22. Amortization 9,468,867

6,705,288 23. Security expenses 10,086,255

- 24. Loan insurance premium -

- 25. Commission & discounts -

- 26. Others -

15,829,990 a) Business Promotion 8,321,542

- b) NRB Penal Interest -

636,211 c) Consultancy Charges 891,434

2,167,826 d) Honorarium Paid to Director 300,000

2,493,986 e) Registration/Renewals 2,712,619

3,787,172 f) Misc. 4,276,346

4,386,556 g) Fuel & Lubricant 7,597,499

- h) Assets Written Off -

2,262,468 I) A.T.M. related Expenses 2,199,580

3,428,437 j) Temporary staff wages 5,217,851

1,555,944 k) Software Contract Expenses 1,975,602

2,474,871 l) Expenses for Advisor to the Board 994,929

- m) Brockerage chare on sale of share 73,181

177,545,649 TOTAL 233,766,645

OPERATING EXPENSESFrom 17 July 2007 to 15 July 2008

Schedule 4.24


2007/2008

62

PROVISION FOR POSSIBLE LOSSFrom 17 July 2007 to 15 July 2008


Rs. Particulars Rs.

84,452,873 1. Increase in Loan Loss Provision 97,740,505

- 2. Increase in Provision for Investment 1,600,000

5,242,891 3. Provision for Non-banking Assets

- 4. Provision against other assets -

89,695,764 TOTAL 99,340,505

Schedule 4.25

GAIN/LOSS FROM NON-OPERATING ACTIVITIESFrom 17 July 2007 to 15 July 2008

Schedule 4.26


- 1. Gain/loss on sale of Investment -

(1,504,805) 2. Gain/Loss on Sale of Assets/NBA (11,954)

253,920 3. Dividend 751,032

a. Commercial banks -

b. Rural development banks

c. Financial institutions -

d. Body corporate -

1. Subsidiary companies -

2. Others -

4. Subsidy received from NRB -

a. Comensation of branch loss -

b. Interest compensation -

c. Exchange counters -

2,566,096 5. Others 3,780,209

1,315,211 TOTAL GAIN 4,519,287

WRITE BACK FROM PROVISION FOR POSSIBLE LOSSFrom 17 July 2007 to 15 July 2008


795,224 1. Write-back from Loan Loss Provision 18,998,727

10,891,433 2. Write-back from provision for NBA 397,500

- 3. Write-back from provision for Investment 804,840

- 4. Write-back from other provision -

11,686,657 TOTAL 20,201,067

Schedule 4.27


2007/2008

63

Schedule 4.28PROFIT/LOSS FROM TRANSACTION OF EXTRA-ORDINARY NATURE

From 17 July 2007 to 15 July 2008


Rs. Particulars Rs.

- 1. Recovery of Loss Loan -

- 2. Expenses for Retirement Package -

795,224 3. Write off of Bad Loan 18,998,727

- 4. Other Income/Expenses -

795,224 TOTAL 18,998,727

DETAILS OF LOAN WRITTEN OFFFor the Fiscal Year 2007/08

Schedule 4.28(ka)

LOANS TO DIRECTORS, CEO, PROMOTERS, EMPLOYEE AND SHAREHOLDERS HOLDING MORE THAN 1% SHARE

As on 15 July 2008

Schedule 4.29

Upto previous year This year recovery Addition this OutstandingName of the borrower Principal Interest Principal Interest Year Principal InterestA. Directors

B. Chief Executive

C. Promoters

D. Employee

E. Shareholders

Holding more than 1% share 9729606 5112 175546 9554050 Nil

TOTAL 9729606 5112 175546 9554050

Details of Loans & Advances including Bills Purchased & Discounted provided to Directors,CEO, Promoters , Employee and Shareholders holding more than 1% shares( included in total loans & advances) and their undivided family members or company in which such family members are the Managing Agent or Guarantor of such company is as under -

Note : The above Loans have been written off as per the NRB Directives as full provision were made for these loans for more than five years.

Amount Basis of Action taken

Written off Nature of valuation Sanctioning to Recover

S.No. Type of Loan & Amount security of security Authority/Level the Loan Remarks

1. Working Capital 15243916 from loan loss provision

2 Project Finance

3 Fixed Term Loan

4 Personal Loan

5 Others 3754811 from loan loss provision

TOTAL 18998727


2007/2008

64

TABLE OF RISK WEIGHTED ASSETSAshadh 2065

Schedule 4.30

( Rs. in ‘000)

This Year Weight WeightedBALANCE SHEET ITEMS (in % ) Previous Year Amount value

Cash Balance 0.00 534997 - 822989 -

Gold ( Tradable) -

Balance with Nepal Rastra Bank 0.00 1178198 - 1080915 -

Investments in Government Securities 0.00 3614541 - 3237978 -

Investments in NRB Bonds/Development Bonds 0.00 1090091 - 1583627 -

Advance against own Fixed Deposit Receipts 0.00 271543 - 258296 -

Advance against Government Securities 0.00 56910 - 46539 -

Interest Receivable on Govt. Securities 0.00 19944 - 33731 -

Balance with local banks & financial institutions 20 34409 6882 47827 9565

Advance against other bank’s Fixed Deposit Receipts 20 294280 58856 141383 28277

Balance with Foreign Banks 20 643816 128763 716241 143248

Money at Call & Short Notice 20 - - 346,000 69,200

Advance against guarantee of International Rated Banks 20 - -

Other Investment made in International Rated Banks 20 260600 52120 138400 27680

Investment in shares, debentures & Bonds 100 19887 19887 101152 101152

Other Investments ( Foreign banks) 100 0 0

Loans, advances & bills purchased 100 13459953 13459953 18390214 18390214

Fixed Assets 100 170097 170097 360512 360512

Other Assets (Less Advance Tax) 100 196588 196588 340890 340890

Interest Receivable other than Interest on Govt. Securities 100 6128 6128 1594 1594

TOTAL (A) 21851983 14099274 27648288 19472332

OFF BALANCE SHEET ITEMS Bills Collection 0.00 60613 - 77762 -

Forward Exchange Contracts 10 31340 3,134 7596 760

Letter of credits with maturity less than 6 months 20 1355800 271160 2056005 411201

Guarantee against counter guarantee of

International rated foreign bank 20 19178 3836 0

Letter of credits with maturity more than 6 months 50 295095 147548 79441 39721

Bid Bond 50 67624 33812 123469 61735

Performance Bond 50 467699 233850 821507 410754

Advance payment guarantee 100 54519 54519 62851 62851

Financial guarantee 100 18793 18793 77785 77785

Other guarantee 100 - 16,582 16,582

Irrevocable loan commitment 100 - -

Contingent liabilities agaist Income Tax 100 0 0

Other contingent liabilities (Acceptance & Endorsement) 100 110811 110811 486159 486159

TOTAL (B) 2481472 877462 3809157 1567547

Total Risk Weighted Assets (A+B) 14976737 21039879


2007/2008

65

CAPITAL ADEQUACY TABLEAshadh 2065

Schedule 4.30

Rs. in ‘000

Ashadh 2064 Ashadh 2065

Total Risk Weighted Assets { As per schedule 4.30 (ka)} 14976737 21039879

A. Core Capital1) Paid up share capital 378,000 491,400

2) Share Premium 6,427 206,427

3) Non redeemable / Convertible Preference Share 140,000 340,000

4) General reserves Fund 232,848 323,091

5) Accumulated Profit 130,547 83,750

6) Deferred Tax Reserve - 9,445

7) Capital Redemtion Reserve - 60,000

8) Capital Adjustment Funds 170,100 220,100

9) Other Free Reserve 13,226 19,226

10) Proposed Bonus Share 113,400 147,420

11) Debenture Redemption Fund

LESS

- Goodwill - -

- Amount of Investments in excess of limit - -

- Fictitious Assets - -

- Share Investments in a financially interested company - -

- Investment in shares under Underwriting Arrangement (13,414) -

Total core capital 1171133 1900859

B. Supplementary capital1) Loan Loss Provision made against Good Loans 137506 185553

2) Assets Revaluation Reserve - -

3) Hybrid Capital Instruments - -

4) Subordinated Term Debt 300000 240000

5) Exchange Equalization Reserve 16968 20378

6) Additional Loan Loss Provision 49703 57666

7) Provision made against Investment in share 805 1600

Total supplementary capital 504982 505197

C. Total Capital Fund (A+B) 1676116 2406056

D. Capital to be maintained on the basis of Risk Weighted Assets :1. Capital Funds @ 11% 1647441 2314387

2. Core Capital @ 5.5% 823720 1157193

Excess / short of Capital

Total Capital Funds 28675 91669

Core Capital 347412 743666

Capital Adequacy Ratio % 11.19 11.44


2007/2008

66

Note : CRR have been calculated on the basis of year end figures.

Schedule 4.31MAIN INDICATORS

Particulars Indicator 2003/2004 2004/05 2005/06 2006/07 2007/081 Net Profit/Total Income % 18.3 19.9 22.2 21.6 24.2

2 Per share Earning ( after tax income) Rs. 45.58 54.22 62.78 78.42 91.82

3 Market price per share Rs. 680 870 1379 2430 3132

4 Price/Earning Ratio 14.93 16.04 21.97 30.99 34.11

5 Dividend on share- Bonus share % 20 30 30

6 Cash Dividend % 20 25 10 20

7 Interest Income/Loans & advances % 9.2 8.0 7.6 6.9 7.1

8 Employee expenses/Total operating expenses % 10.3 12.4 11.5 11.0 15.4

9 Interest expenses/Total on deposit&borrowing % 3.9 2.9 2.8 2.7 2.6

10 Exchange Income/total Income % 3.5 3.2 2.2 2.1 3.5

11 Staff bonus/total employee expenses % 48.2 46.3 48.7 52.8 41.7

12 Net Profit/Loans & advances % 2.4 2.2 2.3 2.1 2.4

13 Net Profit/Total Assets % 1.5 1.4 1.5 1.4 1.7

14 Total Loans &advances/Total Deposits % 75.6 78.2 73.4 77.4 78.6

15 Total operating expenses/total Assets % 6 4.1 3.9 3.6 3.7

16 Capital Adequacy Ratio:

a) Core Capital % 9.58 8.88 8.21 7.82 9.04

b) Supplementary Capital % 1.49 4.69 4.11 3.38 2.40

c) Total Capital Funds % 11.07 13.57 12.32 11.20 11.44

17 Cash Reserve Ratio (CRR) % 1.6 1.9 1.9 2.9 3.4

18 NPAs/Total Loans & advances % 1.7 1.63 1.27 0.80 0.68

19 Weighted Average Interest Rate Spread % 3.98 4.06 3.99 3.91 4.34

20 Book Networth ( Amount in Lacs) Rs. 5403 6926 8228 11066 15812

21 Total Shares Number 3150000 3150000 3780000 3780000 4914000

22 Total Employee Number 250 257 306 393 449

23 Others-

- Per Employee Business ( Rs. in Lakh) Rs. 566.6 700.3 782.3 821.1 954

- Employee expenses/Total Income % 6.2 7.1 6.7 6.3 8.5


2007/2008

67

Basis of preparation The financial statements of the Bank have been prepared in conformity with generally accepted accounting principles, well accepted banking norms/practices , Nepal Accounting Standards issued by Institute of Chartered Accountants of Nepal, provisions of Banks and Financial Institutions Act and directives issued by the Nepal Rastra Bank ( Central Bank ).

Fixed Assets, Depreciation and Amortizationa) Fixed assets are valued at cost of purchase /construction

plus expenses incurred which are incidental to such purchase/construction. Purchase of items of durable (capital ) nature costing Rs. 5,000 or less has been charged to Profit and Loss Account.

b) Depreciation on fixed assets has been calculated on reducing balance by applying the rates and method prescribed in the Schedule 2 of the Income Tax Act 2058 and charged to Profit & Loss Account.

c) Lease development expenses have been amortized in equal installment over the period of lease or 5 years whichever is longer. Accordingly, a sum of Rs. 72,24,161 has been amortized during the year.

d) Cost incurred for acquiring computer software in the year has been amortized in ten equal yearly installments. Installment of amortization of software purchased in the year has been charged to Profit and Loss Account for six months as the software was used partially from 29th February 2008. Accordingly Rs. 22,44,706 has been amortized.

Provision for Income TaxProvision for income tax of Rs. 20,74,68,187 has been made on the basis of self assessment as per the provisions of the Income Tax Act 2058 and Income Tax Rules 2059. Due consideration for interest suspense and loan loss provision allowed as per the Act has been taken. A sum of Rs. 94,45,115 on account of deferred tax has also been added to tax liability in addition to above.

InvestmentsInvestments made in shares of listed companies have been stated at cost or market price whichever is less. Shares which are not listed in the Stock Exchange are stated at cost. Investment made in Government Treasury Bills/Bonds are valued at cost. However, the excess of the cost over face value of long term government bond is being proportionately spread over the bond maturity period by adjusting it to the interest earning there from.

Revaluation/Exchange IncomeAssets and liabilities denominated in foreign currencies are revalued at the mid-rate on daily basis. The difference accruing from such revaluation has been accounted for in the Profit & Loss Account under „ Exchange Revaluation Gain/Loss‰. The net gain on exchange revaluation in the financial year is accounted for Rs.1,36,37,129 and a sum of Rs. 34,10,000 being 25% of the gain has been transferred to „Exchange Equalization Reserve‰ through Profit & Loss Appropriation Account as per NRB directive. Income arising through regular trading of convertible foreign currencies are accounted for in the Profit & Loss Account under „ Exchange Trading‰.

Accounting for Non-banking AssetsThe Bank has adopted a policy to take over the asset in the course of recovery of a loan at market value or the outstanding amount of loan whichever is less and same is stated at net of provisions made as per the requirements set by the NRB. The surplus or deficit arising on sale of such asset is adjusted in the Profit & Loss Account in the year of sale.

Recognition of Income a. Interest Income : Interest on loans and advances has been

taken to income on cash realization basis as per Nepal Rastra Bank Directive. However, interest accrued on investments made on Government Securities and foreign currency placement are taken to income on accrual basis. Interest accrued on Loans & Advances but not realized within the closing date of the financial year has been transferred to Interest Suspense account.

b. Commission received on account of LCs, Guarantees etc. has been taken to income on cash basis.

c. Dividend on investment is taken to income on cash basis.

Policy regarding Loan Loss Provision and Write off of un-recovered loanLoan Loss Provision is made on the basis of classification of loans & advances in accordance with the directives issued by the Nepal Rastra Bank. The Bank has a policy to write off unrecoverable loan after appraisal and due approval of the Board of Directors on case to case basis. While writing off the loan, only the balance of unrealized loans and advances remained after the adjustment of provisions made for the said loans and advances are charged to Profit & loss Account.

SIGNIFICANT ACCOUNTING POLICIESSchedule 4.32


2007/2008

68

Contingent liabilities under Letters of Credits( LCs) have been stated in the equivalent Rupees at the exchange rate applicable at the time of opening of the LCs

Provision for gratuity is made in the account for the employees who are eligible for gratuity payment as per the Bank’s Rules. However, for

the purpose of tax it is accounted for on cash payment basis.

Leave encashment payable to the employees are dealt on cash basis.

Staff bonus is provided at 10% ( after bonus provision , as per NRB directive) of net profit before tax.

(Rs. In Lacs)

Particulars Debit pending Credit pending

Less than 3 months 7.11 352.13

3 to 6 months 342.52 2074.63

More than 6 months 1862.87 4024.12

Amount in ‘000

Currency Ledger pending Statement pending Debit Credit Debit Credit

Sterling PoundUpto 1 year - 11.45 41.75 24.43More than 1 year to 3 years - 0.03 - 2.03More than 3 years - 2.61 - -US DollarUpto 1 year 227.83 1215.97 5517.48 510.38More than 1 year to 3 years - 13.69 6.96 7.48More than 3 years - 4.05 - 5.91EUROUpto 1 year 3.40 41.83 5.22 21.10More than 1 year to 3 years - 0.25 0.23 3.96More than 3 years - - - -Japanese YenUpto 1 year - - 14.00 394.00More than 1 year to 3 years - - 2.50 -More than 3 years - - - -Australian DollarUpto 1 year - - 25.92 2.18More than 1 year to 3 years - - - -More than 3 years - - - -Indian RupeeUpto 1 year 1582010.72 3123302.35 1994814.02 669649.31More than 1 year to 3 years 3583.63 3340.14 619.78 860.51More than 3 years 487.30 2524.41 5777.57 1382.88

Rs. In Lacs

Particulars This Year

Opening Balance 14,08,27

Disbursed during the year 92,39,75

Recovered during the year (87,64,38)

Inter-head Adjustment -

Closing ( Gross Loan & advances) 18,83,64

Reconciliation PositionBranch ReconciliationInter-branch transactions have been reconciled upto date. Outstanding amount pending adjustment are as under :Reconciliation of Agency Banks

NOTES TO ACCOUNT

Agency bank accounts have been reconciled up to date. The summary of the entries reconciled pending adjustment are as under-

Gross transactions of Loans & advances( as provided by the management):

Schedule 4.33


2007/2008

69

Change in Deposit Liabilities

Average Interest Spread Rate In the financial year 2007/08 the average yield rate on interest bearing assets works out to 7.22% ( previous year 6.98%). The average cost of deposit for the year works out to 2.82% ( previous year 3.07%). The average spread for the financial year stands at 4.4% ( previous year 3.91 %).

Details of amount to be amortized Leasehold AssetsExpenses incurred for renovation and modification of the leased properties have been booked in Lease Development Expenses. The same is amortized in equal installment over a period of five years or the lease period which ever is longer. The balance in above account is as under-

Software (Finacle)

There is no over concentration of Assets and Liabilities of the Bank to an individual, a firm , a company or in a particular sector as specified by Nepal Rastra Bank ( 31.13% of total loan in single sector of economy and 9.89% of total deposit in single institution).

Loan Write offRs. 18,998,727 has been written off in the books as per the provision of NRB directives as 100% provision were made on these loans and remained outstanding for a period of more than 5 years.

( Rs. in lacs)

Types of deposit 16 July 2007 15 July 2008 Change %

a) Current 16740 24923 48.9b) Margin 2221 2214 -0.31c) Saving 90293 118839 31.6d) Fixed 56267 64462 14.6e) Call 15734 27806 76.7f) Others 608 1518 149.7

TOTAL 181863 239762 31.8

Particulars Amount Rs.

Balance upto last year 17,674,052Addition during this year 22,286,382

Total :- 39,960,434Amortized in this year 7,224,161

Balance yet to be Amortized 32,736,273


Balance upto last year -

Addition during this year 44,894,118

Total :- 44,894,118Amortized in this year 2,244,706

Balance yet to be Amortized 42,649,412

(Rs. in Lacs)

0-90 days 91-180 days 181-270 days 271-365 days Over 1 Year Total

Assets: Cash Balance 8,230 - - - - 8230Balance with Banks 20,294 - - - - 20294Investment in Foreign Banks 4,844 - - - - 4844HMG Securities 6,158 6,871 6,101 13,249 - 32379Nepal Rastra Bank Bonds/Other Bond - - - - 16,685 16685Inter-Bank Lending - - - - - 0Loans and Advances 115,549 26,012 23,532 18,620 4,652 188365

Total Assets 155,075 32,883 29,633 31,869 21,337 270797

Liabilities: Borrowings - - - - - - Current Deposit 24,358 - - - 4,298 28656Saving Deposits 11,884 - - - 106,955 118839Fixed Deposits/Call Deposit 17,783 29,115 16,888 13,520 14,962 92268Debentures - - - - 3,000 3000Total Liabilities 54,025 29,115 16,888 13,520 129,215 242763Net Financial Assets 101,050 3,768 12,745 18,349 (107,878) 28034

Cumulative Net Financial Assets 101,050 104,818 117,563 135,912 28,034

Table of the Liquidity Risks as on 15th July 2008, in the format prescribed by the Nepal Rastra Bank vide their Directive No.4 , ( as provided by the management) is as under


2007/2008

70

Bank has not availed any loan against encumbrance of its’ properties.

Othersa) The Bank is providing Housing Loan to the staff

members. Hence, no provision for „Housing Funds ‰ as prescribed by the Labor Act 2048 has been made.

b) Gratuity payable to employees as per the BankÊs Rules has been computed for the employees who have completed ( as on 15th July 2008) the service period of five years which is minimum period of entitlement of the gratuity.

c) Gratuity expense includes Rs. 3,602,633 paid to staff retired during the year.

d) Share premium of Rs. 20 crore received on issue of convertible preference share has been shown under „Share Premium‰ account.

e) Rs. 6 crore has been set aside ,through Profit & Loss Appropriation account, towards „Debenture Redemption Reserve‰ .

f) Deferred tax : Deferred tax assets amounting to Rs. 94,45,115 relating to the temporary difference between the financial and the taxation accounting relating to the provision for gratuity as per the requirement of Nepal Accounting Standard is created effective from this year.

g) Dividends : The amount of dividend proposed by Board of Directors for the year covered by the financial statements are as under :i. On ordinary shares : Proposed Bonus Share @ 30% Rs.14,74,20,000 Cash Dividend @ 20% Rs. 10,77,73,011 ** ii. On preference shares : Rs. 9.00 per share ( as per the

terms of preference of share issue).iii. On convertible preference shares @ 7% Rs.

1,11,23,288 *

*Dividend @ 7% provided for the proportionate days of 290 for this year as per the terms of the prospectus relating to the issue.

** Proposed cash dividend includes Rs. 94,93,011 on account of dividend tax on proposed bonus share.

Distribution of proposed dividend on ordinary shares is subject to obtainment of NRBÊs approval.h) Non-banking Assets (NBA): The position of the Non-banking Assets of the Bank is as

under :

i) Capital Adjustment Reserve : Rs. 50,000,000 has been transferred in this account through appropriation. The reserve is exclusively created for enhancing the BankÊs capital.

j) Figures of previous year have been regrouped/rearranged wherever necessary to make the same comparable with the current yearÊs figure.

k) Figures in the Financial Statements are stated in the nearest rupee.


Opening balance ( Gross Amount) 34,576,306

Addition during the year Nil

Disposed off during the Year (397,500)

Balance ( Gross) 34,178,806Total Provision (34,178,806)

Net NBA Nil


2007/2008

71

DISCLOSURE RELATING TO BASE-II FRAMEWORK (ADDITIONAL)

1. Capital Structure and Capital Adequacy Tier 1 capital and a breakdown of its components:

Core Capital (Tier 1) 1,560,859

a. Paid up Equity Share Capital 491,400

b. Proposed Bonus Equity Shares 147,420

c. Irredeemable Non-cumulative

Preference Shares

d. Share Premium 206,427

e. Statutory General Reserves 323,091

f. Retained Earnings 83,750

g. Reserve for Deferred Tax 9,445

h. Un-audited current year cumulative profit -

i. Capital Redemption Reserve 60,000

j. Capital Adjustment Reserve 220,100

k. Dividend Equalization Reserves -

l. Other Free Reserve 19,226

m. Less: Goodwill

n. Less: Fictitious Assets

o. Less: Shortfall in Provisions

p. Less: Loan to Parties Prohibited

by Acts and Directives

q. Less: Investment in Equity in licensed

Financial Institutions

r. Less: Investment in Equity of Institutions

with vested interests

s. Less: Investment in Equity of Institutions

with Excess of Limits

t. Less: Investments arising out oF underwriting commitments

u. Less: Reciprocal crossholdings

v. Less: Other Deductions

Tier 2 capital and a breakdown of its components:

Supplementary Capital (Tier 2) 787,531

a. Cumulative and/or

Redeemable Preference Share 340,000

b. Subordinated Term Debt 240,000

c. Hybrid Capital Instruments

d. General Loan Loss Provision 185,553

e. Investment Adjustments Reserve 1,600

f. Assets Revaluation Reserve -

g. Exchange Equalization Reserve 20,378

h. Other Reserves

Total Capital Fund (Tier I and II) 2,348,390

Detailed information about the Subordinated Term Debts with information on the outstanding amount, maturity, amount raised during the year and amount eligible to be reckoned as capital funds.

Deductions from capital : Nil Total qualifying capital : 2348390 thousand Capital adequacy ratio : 11.20% Summary of the bankÊs internal approach to assess the

adequacy of its capital to support current and future activities, if applicable:

Bank assesses the adequacy of capital on a regular basis taking into consideration of the present total risk exposure and expected future increase in this respect. Bank is aiming to maintain a proper mix of different types of capital so that there would not be undue pressure on dividend policy as well as inadequacy of total capital funds against the risk exposure. In addition to annual capitalization of profit through issue of bonus share, bank is setting aside certain amount towards „Capital Adjustment Reserve‰ for strengthening the total capital pool strong. In the past, bank has issued convertible preference hare of Rs. 20 crore at a premium of 100% convertible into ordinary share @ 20% in each third year and 7 years debenture of Rs. 30 crore

Summary of the terms, conditions and main features of all capital instruments, especially in case of subordinated term debts including hybrid capital instruments:

As of 15th July 2008, Bank has the following capital structure:

Paid up ordinary capital Rs. 49.14 crore

Convertible preference share Rs. 20.00 crore

Redeemable/Irredeemable

preference Share Rs. 14.00 crore

7 Years EBL Debenture Rs. 30.00 crore

The salient features of each instrument are as under:i) Redeemable/Irredeemable preference share of

Rs. 14.00 crore: These shares were issued with 9% fixed dividend. The nature of the preference share is Redeemable/Irredeemable. These shares can be redeemed on the option of the Bank only.

ii) Convertible Preference Shares of Rs. 20 crore: These share were issued at 100% premium with the terms and conditions of 7% fixed dividend on the face value of unconverted portion. These share are convertible into ordinary shares @ 20% on every third year.

iii) 6% EBL Debenture Rs. 30 crore: These debenture were issued for 7 years with a fixed interest of 6%. These are redeemable after expiry of itsÊ fixed period of seven years.


2007/2008

72

2. Risk Exposures Risk weighted exposures for Credit Risk, Market Risk

and Operational Risk. The Risk Weighted exposure as of 15th July is given below:

Particulars Amount (000)

1. Credit Risk 19,509,798

2. Market Risk 92,071

3. Operational Risk 1,372,994

TOTAL 20,974,862

Risk Weighted exposures under each of 11 categories of Credit Risk:

Risk weighted exposures under each of 11 categories of Credit Risk as of 15th July 2008 is given as under:

Particulars Amount (000)

1. Claims on government & Central Bank

2. Claims on other official entities

3. Claims on banks 1,091,352

4. Claims on corporate & securities firms

5. Claims on regulatory retail portfolio 2,901,255

6. Claims secured by residential properties 3,003,973

7. Claims secured by commercial real state 567,675

8. Past due claims 239,027

9. High risk claims -

10. Other assets 678,839

11. Off balance sheet items 2,596,889

Total risk weighted exposure calculation table: Enclosed as an Annexure:

Amount of NPAs (both Gross and Net) Rs. in Â000 Gross NPA : Rs. 127,311 Net NPA : Nil Restructure/Reschedule Loan 153,852 Substandard Loan 6,307 Doubtful Loan 746 Loss Loan 120,258 NPA Ratios

Gross NPA to gross advances 0.68% Net NPA to net advances (-) 2.02% Movement of Non Performing Assets:

Amount Rs. 000

Particulars Amount Provision

Opening balance 113,178 108,839

Addition during the year 14,133 13,369

Sold during the year – –

Balance as at 15 July 2008 127,311 122,208

Write off of Loans and Interest Suspense: Following loans have been written off during the year

2007/08:

Facility Loan Interest suspense Name of Party Type Write off wrtite off

Pinky Mala & Company OD 7981 5849

G.K. Store OD 1000 806

Deepak Food Traders OD 3284 2379

Deepak Food Traders TR 2300 1163

RND Chemicals OD 166 112

Unnat Industries OD 2730 2211

KBU Zenith OD 1538 1245

Raybot Spring Mineral Water OD - 25

Shiva Shakti Rice Mill OD - 67

TOTAL 18,999 13,857

Details of additional Loan Loss Provisions

Contents

BUSINESS REVIEW

Introduction 2

DIRECTORS’ REPORT 4

Review of the Operating Activities 5

General Economic Environment (Annexure I) 10

Everest Bank Limited - The Brand 11

Performance and Analysis 12

Corporate Governance 18

Board Members 20

Management Team 21

Branch Managers 22

Human Resources 24

Risk Management 26

I T (Information Technology) 28

Credit Control 30

Internal Affairs 32

Marketing- The crux of business development 34

Our store of Products and Services 36

Auditors Report 40

FINANCIAL STATEMENTS AND

NOTES TO ACCOUNTS

Balance Sheet 41

Profit & Loss Account 42

Profit & Loss Appropriation Account 43

Statement of Changes in Equity 44

Cash Flow Statement 45

Schedules 46

Significant Accounting Policies 67

Note to Accounts 68

Disclosure Relating to Base-II Framework (Additional) 71

T u n i n g f o r

P e r f e c t i o n

Annual Report

2007/2008

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Everest Bank Limited Annual Report · 7/14/2018 · EVEREST BANK LIMITED ANNUAL REPORT 2007/2008 2 Introduction Inception Everest Bank Limited was registered on November 17, 1992

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