Nabil Bank - Financials - 18-19 PDF

NABIL Bank Limited
Consolidated Statement of Financial Position

At 31 Asar 2076 (July 16, 2019)
NPR NPR
Group Bank
Particulars Note 2076 Asar 31 2075 Asar 32 2076 Asar 31 2075 Asar 32 2074 Asar 31
Assets
Cash and Cash Equivalents 4.1 12,593,161,161 8,232,272,053 12,479,697,526 7,952,350,362 7,167,160,590
Shambhu Prasad Poudyal 12,479,697,526
Due from Nepal Rastra Bank 4.2 6,191,827,829 7,372,284,966 6,191,827,829 7,372,284,966 Board5,924,569,696
Chairman 6,191,827,829
Placement with Banks and FIs 4.3 11,078,728,915 10,160,281,391 11,078,728,915 10,160,281,391 20,514,704,893 11,078,728,915
Derivative Financial Instruments 4.4 8,539,057,559 8,304,029,016 8,539,057,559 8,304,029,016 32,655,375 8,539,057,559
Other Trading Assets 4.5 46,179,820 74,553,065 - - - -
Loans and Advances to Banks and FIs 4.6 6,058,492,754 4,565,790,022 6,058,492,754 4,565,790,022 3,322,322,011 6,058,492,754
Loans and Advances to Customers 4.7 127,500,242,971 109,059,364,929 127,500,242,971 109,059,364,929 89,149,019,312 127,500,242,971
Dayaram Gopal Agrawal
Investment Securities 4.8 25,547,072,689 18,535,082,865 25,303,072,689 18,388,082,865 15,318,133,850 25,303,072,689
Board Member
Current Tax Assets 4.9 142,892,979 52,616,977 137,518,681 40,375,485 52,981,114 137,698,152
Investment in Subsidiaries 4.10 - - 78,000,000 78,000,000 78,000,000 78,000,000
Investment in Associates 4.11 126,092,661 79,586,485 80,000,000 40,000,000 40,000,000 80,000,000
Investment Property 4.12 8,218,665 8,218,665 8,218,665 8,218,665 - 8,218,665
Property and Equipment 4.13 1,066,909,996 1,007,737,716 1,051,792,074 986,260,054 790,964,877 1,051,792,074
Goodwill and Intangible Assets 4.14 42,295,162 50,871,454 41,400,858 50,334,872 Nirvana61,414,455
Chaudhary 41,400,858
Deferred Tax Assets 4.15 4,027,480 4,032,755 - - Board Member - -
Other Assets 4.16 2,629,503,532 2,116,699,515 2,590,770,943 2,070,723,670 1,565,934,955 2,590,770,943
Total Assets 201,574,704,173 169,623,421,874 201,138,821,464 169,076,096,297 144,017,861,128 201,139,000,935
Liabilities
Due to Banks and FIs 4.17 1,419,042,125 1,168,664,933 1,419,042,125 1,168,664,933 4,504,662,142 1,419,042,125
Due to Nepal Rastra Bank 4.18 88,474,781 32,518,035 88,474,781 32,518,035 Upendra13,385,000
Poudyal 88,474,781
Derivative Financial Instruments 4.19 8,335,072,510 8,357,869,304 8,335,072,510 8,357,869,304 Board Member - 8,335,072,510
Deposits from Customers 4.20 162,910,477,681 134,571,083,275 162,953,999,572 134,810,669,677 117,436,362,752 162,953,999,572
Borrowings 4.21 - - - - - -
Current Tax Liabilities 4.9 - - - - - -
Provisions 4.22 - - - - - -
Deferred Tax Liabilities 4.15 851,536,738 803,757,997 851,536,738 803,757,997 1,041,889,905 853,331,452
Other Liabilities 4.23 4,510,791,924 3,770,454,309 4,302,083,345 3,256,259,046 4,022,377,425 4,296,699,202
Malay Mukherjee
Debt Securities Issued 4.24 - 60,000,000 - 60,000,000 Board 300,000,000
Member -
Subordinated Liabilities 4.25 - - - - - -
Total Liabilities 178,115,395,759 148,764,347,853 177,950,209,071 148,489,738,992 127,318,677,224 177,946,619,642
Equity
Share Capital 4.26 9,011,845,400 8,043,221,000 9,011,845,400 8,043,221,000 8,043,221,000 9,011,845,400
Share Premium 74,000 74,000 74,000 74,000 74,000 74,000
Retained Earnings 3,860,780,222 3,378,185,005 3,735,333,814 3,254,810,800 933,253,771 3,738,065,025
Udaya Krishna Upadhyay
Reserves 4.27 10,441,359,179 9,288,251,505 10,441,359,179 9,288,251,505 7,722,635,133
Board Member 10,442,396,868
Total Equity Attributable to Equity
23,314,058,801 20,709,731,510 23,188,612,393 20,586,357,305 16,699,183,904 23,192,381,293
Holders
Non Controlling Interest 145,249,613.00 149,342,511.00 - - - -
Total Equity 23,459,308,414 20,859,074,021 23,188,612,393 20,586,357,305 16,699,183,904 23,192,381,293
as per our report of even date
Total Liabilities and Equity 201,574,704,173 169,623,421,874 201,138,821,464 169,076,096,297 144,017,861,128 201,139,000,935
Contingent Liabilities and Commitments 4.28 58,644,136,338 50,711,732,515 58,644,136,338 50,711,732,515 30,633,157,660
Net Assets Value per share 258.70 257.48 257.31 255.95 207.62
- - - - - -
Prabhu Ram Bhandary

Managing Partner
Date - November 3, 2019 Sujit Pokharel Anil Keshary Shah Joshi & Bhandary
Place - Kathmandu, Nepal Manager Finance Chief Executive Officer Chartered Accountants
NABIL Bank Limited
Consolidated Statement of Profit or Loss
For the year ended 31 Asar 2076 (July 16, 2019)
NPR
Group Bank
Particulars Note 2076 Asar 31 2075 Asar 32 2076 Asar 31 2075 Asar 32 2076 Asar 32
Interest Income 4.29 15,289,060,280 11,386,498,070 15,243,779,866 11,349,866,659 Shambhu Prasad Poudyal 15,248,099,767
Interest Expense 4.30 8,082,279,035 5,082,715,741 8,084,526,137 5,087,807,629 Board Chairman 8,084,526,137
Net Interest Income 7,206,781,245 6,303,782,329 7,159,253,729 6,262,059,030 7,163,573,630
Fee and Commission Income 4.31 1,343,268,002 1,134,958,025 1,291,005,348 1,057,425,592 1,291,005,348
Fee and Commission Expense 4.32 70,541,782 57,112,212 64,461,059 49,084,330 64,461,059
Net Fee and Commission Income 1,272,726,220 1,077,845,813 1,226,544,289 1,008,341,262 1,226,544,289
Dayaram Gopal Agrawal
Net Interest, Fee and Commisson Income 8,479,507,465 7381628141 8,385,798,018 7,270,400,292 8,390,117,919
Board Member
Net Trading Income 4.33 445,430,302 378,402,637 448,342,715 390,652,248 448,342,715
Other Operating Income 4.34 485,708,226 552,538,957 494,669,764 558,796,879 494,669,763
Total Operating Income 9,410,645,993 8,312,569,736 9,328,810,497 8,219,849,418 9,333,130,397
Impairment Charge/ (Reversal) for Loans and Other Lossess
4.35 409,029,451 176,174,513 405,174,417 175,858,290 387,879,216
Net Operating Income 9,001,616,542 8,136,395,223 8,923,636,080 8,043,991,129 Nirvana Chaudhary 8,945,251,181
Operating Expense Board Member
Personnel Expenses 4.36 1,970,589,691 1,750,872,088 1,949,609,706 1,727,709,299 1,956,257,366
Other Operating Expenses 4.37 803,003,510 562,581,862 777,203,005 539,398,944 770,474,983
Depreciation & Amortisation 4.38 174,501,273 129,418,108 170,172,587 123,921,386 170,172,587
Operating Profit 6,053,522,067 5,693,523,165 6,026,650,782 5,652,961,500 6,048,346,246
Non Operating Income 4.39 23,515,763 23,009,104 17,009,587 11,188,226 Upendra Poudyal 17,009,587
Board Member
Non Operating Expense 4.40 2,341,155 6,805,448 2,341,155 6,805,448 3,086,796
Profit Before Income Tax 6,074,696,675 5,709,726,821 6,041,319,214 5,657,344,278 6,062,269,037
Income Tax Expense 4.41
Current Tax 1,826,367,879 1,700,969,293 1,810,174,997 1,682,470,240 1,818,489,365
Deferred Tax (7,704,090) (12,167,591) (7,709,365) (7,018,912) (9,733,635)
Malay Mukherjee
Profit for the Year 4,256,032,886 4,020,925,119 4,238,853,581 3,981,892,950 4,253,513,306
Board Member
Profit Attributable to:

Equity-holders of the Bank 4,240,925,784 4,000,375,699 4,238,853,581 3,981,892,950
Non-Controlling Interest 15,107,102 20,549,420 - -
Profit for the Year 4,256,032,886 4,020,925,119 4,238,853,581 3,981,892,950 3,981,892,950.35 -
Udaya Krishna Upadhyay
Board Member
Earnings per Share
Basic Earnings per Share 50.77 52.34 50.57 51.84
Diluted Earnings per Share 50.77 52.34 50.57 51.84 as per our report of even date
Prabhu Ram Bhandary

Managing Partner
Date - November 3, 2019 Sujit Pokharel Anil Keshary Shah Joshi & Bhandary
Place - Kathmandu, Nepal Manager Finance Chief Executive Officer Chartered Accountants
NABIL Bank Limited
Consolidated Statement of Comprehensive Income
NPR
Group Bank
Particulars Note 2076 Asar 31 2075 Asar 32 2076 Asar 31 2075 Asar 32
Profit / (loss) for the year 4,256,032,886 4,020,925,119 4,238,853,581 3,981,892,950
Other Comprehensive Income (net of income tax)
a) Items that will not be reclassified to profit or loss:
Gains/(losses) from investment in equity instruments measured at fair value 256,717,327 (164,537,239) 256,717,327 (164,537,239)
Gains/(losses) on revaluation - - - -
Actuarial gains/(losses) on defined benefit plans (71,756,975) 80,840,745 (71,756,975) 80,840,745
Less: Income tax expense relating to above items (55,488,106) 25,108,948 (55,488,106) 25,108,948
Net other comprehensive income that will not be reclassified to profit or loss 129,472,246 (58,587,546) 129,472,246 (58,587,546)
b) Items that are or may be reclassified to profit or loss:
Gains/(losses) on cash flow hedge - - - -
Exchange gains/(losses)(arising from translating financial assets of foreign operation) - - - -
Income tax relating to above items - - - -
Reclassify to profit or loss - - - -
Net other comprehensive income that are or may be reclassified to profit or loss - - - -
c) Share of other comprehensive income of associate accounted as per equity method - - - -
Other Comprehensive Income for the year (net of income tax) 129,472,246 (58,587,546) 129,472,246 (58,587,546)
Total Comprehensive Income for the year 4,385,505,132 3,962,337,573 4,368,325,827 3,923,305,404
Total Comprehensive Income attributable to:

Equity-Holders of the Bank 4,370,398,030 3,941,788,153 4,368,325,827 3,923,305,404
Non-Controlling Interest 15,107,102 20,549,420 - -
Total Comprehensive Income for the year 4,385,505,132 3,962,337,573 4,368,325,827 3,923,305,404
- -
Sujit Pokharel Anil Keshary Shah Shambhu Prasad Poudyal Dayaram Gopal Agrawal Nirvana Chaudhary
Manager Finance Chief Executive Officer Board Chairman Board Member Board Member
Prabhu Ram Bhandary

Managing Partner
Date - November 3, 2019 Upendra Poudyal Malay Mukherjee Udaya Krishna Upadhyay
Joshi & Bhandary
Place - Kathmandu, Nepal Board Member Board Member Board Member
Chartered Accountants
NABIL Bank Limited
Consolidated Statement of Changes in Equity
NPR
Group
Attributable to Equity-Holders of the Bank
Non-Controlling Total Group
Share Share General Exchange Regulatory Fair Value Revaluation Other
Particulars Retained Earning Total Interest Share Equity
Capital Premium Reserve Equalisation Reserve Reserve Reserve Reserve
Balance at Shrawan 01, 2074 (16-Jul-2017) 8,043,221,000 74,000 4,790,500,000 363,600,000 - 2,188,098,104 - 1,038,145,227 380,437,029 16,804,075,360 143,193,091.00 16,947,268,451
Comprehensive Income for the FY 2074-75 (2017-18) :
Profit for the year 4,000,375,699 4,000,375,699 20,549,420.00 4,020,925,119
Other Comprehensive Income (net of tax) - - - - - (115,176,068) - - 56,588,522 (58,587,546) - (58,587,546)
Gains/(losses) from investment in equity instruments measured at fair value - - - - - (115,176,068) - - - (115,176,068) (115,176,068)
Gains/(losses) on revaluation - - - - - - - - - - -
Actuarial gains/(losses) on defined benefit plans - - - - - - - - 56,588,522 56,588,522 56,588,522
Gains/(losses) on cash flow hedge - - - - - - - - - - -
Exchange gains/(losses)(arising from translating financial assets of foreign operation) - - - - - - - - - - -
Total Comprehensive Income for the year - - - - - (115,176,068) - 4,000,375,699 56,588,522 3,941,788,153 20,549,420.00 3,962,337,573
Transfer to Reserves during the year - - 797,000,000 84,500,000 726,915,250 - - (1,663,007,462) 54,592,212 - -
Transfer from Reserves during the year - - - - - - - 2,671,541 (38,803,544) (36,132,003) (36,132,003)
Transactions with Owners, directly recognized in Equity : - -
Right Share Issued - - - - - - - - - - -
Share Based Payments - - - - - - - - - - -
Dividend to Equity-Holders - -
Bonus Shares Issued - - - - - - - - - - -
Cash Dividend Paid - - - - - - - - - - (14,400,000.00) (14,400,000)
Other - - - - - - - - - - -
Total Contributions by and Distributions - - 797,000,000 84,500,000 726,915,250 - - (1,660,335,921) 15,788,668 (36,132,003) (14,400,000.00) (50,532,003)
Balance at Asar 32, 2075 (16-Jul-2018) 8,043,221,000 74,000 5,587,500,000 448,100,000 726,915,250 2,072,922,036 - 3,378,185,005 452,814,219 20,709,731,510 149,342,511.00 20,859,074,021
- - - - (0) 0 - - - -
Balance at Shrawan 01, 2075 (17-Jul-2018) 8,043,221,000 74,000 5,587,500,000 448,100,000 726,915,250 2,072,922,036 - 3,378,185,005 452,814,219 20,709,731,510 149,342,511.00 20,859,074,021
Comprehensive Income for the FY 2075-76 (2018-19) : (88,518,371.18)
Profit for the year 4,240,925,784 4,240,925,784 15,107,102.00 4,256,032,886
Other Comprehensive Income (net of tax) - - - - - 179,702,129 - - (50,229,882) 129,472,247 - 129,472,247
Gains/(losses) from investment in equity instruments measured at fair value - - - - - 179,702,129 - - - 179,702,129 179,702,129
Gains/(losses) on revaluation - - - - - - - - - - -
Actuarial gains/(losses) on defined benefit plans - - - - - - - - (50,229,882) (50,229,882) (50,229,882)
Gains/(losses) on cash flow hedge - - - - - - - - - - -
Exchange gains/(losses)(arising from translating financial assets of foreign operation) - - - - - - - - - - -
Total Comprehensive Income for the year - - - - - 179,702,129 - 4,240,925,784 (50,229,882) 4,370,398,031 15,107,102.00 4,385,505,133
Transfer to Reserves during the year - - 848,000,000 91,500,000 176,843,663 - - (1,159,732,199) 43,388,536 - -
Transfer from Reserves during the year - - - - - - - 136,096,772 (136,096,772) - -
Transactions with Owners, directly recognized in Equity : - -
Share Issued - -
Share Based Payments - -
Dividend to Equity-Holders - -
Bonus Shares Issued 968,624,400 (968,624,400) - -
Cash Dividend Paid (1,766,070,740) (1,766,070,740) (19,200,000.00) (1,785,270,740)
Other - -
Total Contributions by and Distributions 968,624,400 - 848,000,000 91,500,000 176,843,663 - - (3,758,330,567) (92,708,236) (1,766,070,740) (19,200,000.00) (1,785,270,740)
Balance at Asar 31, 2076 (16-Jul-2019) 9,011,845,400 74,000 6,435,500,000 539,600,000 903,758,913 2,252,624,165 - 3,860,780,222 309,876,101 23,314,058,801 145,249,613.00 23,459,308,414
9,011,845,400 74,000 6,435,500,000 539,600,000 903,758,913 2,252,624,165 - 3,860,780,222.00 309,876,101 23,314,058,801 145,249,613 23,459,308,414
- - - - - - - - - - - -
Sujit Pokharel Anil Keshary Shah Shambhu Prasad Poudyal Dayaram Gopal Agrawal Nirvana Chaudhary Upendra Poudyal Malay Mukherjee Udaya Krishna Upadhyay Prabhu Ram Bhandary
Manager Finance Chief Executive Officer Board Chairman Board Member Board Member Board Member Board Member Board Member Managing Partner
Joshi & Bhandary
Date - November 3, 2019
Chartered Accountants
Place - Kathmandu, Nepal
NABIL Bank Limited
Consolidated Statement of Changes in Equity
NPR
Bank
Attributable to Equity-Holders of the Bank
Share Share General Exchange Regulatory Fair Value Revaluation Retained Other
Particulars Total
Capital Premium Reserve Equalisation Reserve Reserve Reserve Earning Reserve
Balance at Shrawan 01, 2074 (16-Jul-2017) 8,043,221,000 74,000 4,790,500,000 363,600,000 - 2,188,098,104 - 933,253,771 380,437,029 16,699,183,904
Comprehensive Income for the FY 2074-75 (2017-18) : -
Profit for the year 3,981,892,950 3,981,892,950
Other Comprehensive Income (net of tax) - - - - - (115,176,068) - - 56,588,522 (58,587,546)
Gains/(losses) from investment in equity instruments measured at fair value (115,176,068.00) - (115,176,068)
Gains/(losses) on revaluation -
Actuarial gains/(losses) on defined benefit plans - 56,588,522 56,588,522
Gains/(losses) on cash flow hedge -
Exchange gains/(losses)(arising from translating financial assets of foreign operation) -
Total Comprehensive Income for the year - - - - - (115,176,068) - 3,981,892,950 56,588,522 3,923,305,404
Transfer to Reserves during the year 797,000,000 84,500,000 726,915,250 - - (1,663,007,462) 54,592,212 -
Transfer from Reserves during the year 2,671,541 (38,803,544) (36,132,003)
Transactions with Owners, directly recognized in Equity : -
Right Share Issued -
Share Based Payments -
Dividend to Equity-Holders -
Bonus Shares Issued -
Cash Dividend Paid -
Other -
Total Contributions by and Distributions - - 797,000,000 84,500,000 726,915,250 - - (1,660,335,921) 15,788,668 (36,132,003)
Balance at Asar 32, 2075 (16-Jul-2018) 8,043,221,000 74,000 5,587,500,000 448,100,000 726,915,250 2,072,922,036 - 3,254,810,800 452,814,219.00 20,586,357,305
Balance at Shrawan 01, 2075 (17-Jul-2018) 8,043,221,000 74,000 5,587,500,000 448,100,000 726,915,250 2,072,922,036 - 3,254,810,800 452,814,219 20,586,357,305
Comprehensive Income for the FY 2075-76 (2018-19) :
Profit for the year 4,238,853,581 4,238,853,581
Other Comprehensive Income (net of tax) - - - - - 179,702,129 - - (50,229,882) 129,472,247
Gains/(losses) from investment in equity instruments measured at fair value 179,702,129 179,702,129
Gains/(losses) on revaluation -
Actuarial gains/(losses) on defined benefit plans (50,229,882) (50,229,882)
Gains/(losses) on cash flow hedge -
Exchange gains/(losses)(arising from translating financial assets of foreign operation) -
Total Comprehensive Income for the year - - - - - 179,702,129 - 4,238,853,581 (50,229,882) 4,368,325,828
Transfer to Reserves during the year 848,000,000 91,500,000 176,843,663 (1,159,732,199) 43,388,536.00 -
Transfer from Reserves during the year 136,096,772 (136,096,772.00) -
Transactions with Owners, directly recognized in Equity : -
Right Share Issued -
Share Based Payments -
Dividend to Equity-Holders -
Bonus Shares Issued 968,624,400 (968,624,400) -
Cash Dividend Paid (1,766,070,740) (1,766,070,740)
Other -
Total Contributions by and Distributions 968,624,400 - 848,000,000 91,500,000 176,843,663 - - (3,758,330,567) (92,708,236) (1,766,070,740)
Balance at Asar 31, 2076 (16-Jul-2019) 9,011,845,400 74,000 6,435,500,000 539,600,000 903,758,913 2,252,624,165 - 3,735,333,814 309,876,101 23,188,612,393
9,011,845,400 74,000 6,435,500,000 539,600,000 903,758,913 2,252,624,165 - 3,735,333,814 309,876,101.0 23,188,612,393 as per our report of even date
- - - - - - - - - -
Sujit Pokharel Anil Keshary Shah Shambhu Prasad Poudyal Dayaram Gopal Agrawal Nirvana Chaudhary Upendra Poudyal Malay Mukherjee Udaya Krishna Upadhyay
Manager Finance Chief Executive Officer Board Chairman Board Member Board Member Board Member Board Member
Prabhu Ram Bhandary
Managing Partner
Date - November 3, 2019 Joshi & Bhandary
NABIL Bank Limited
Consolidated Statement of Cash Flows
NPR
Group Bank
Particulars 2076 Asar 31 2075 Asar 32 2076 Asar 31 2075 Asar 32
CASH FLOWS FROM OPERATING ACTIVITIES: Shambhu Prasad Poudyal
Interest Received 15,025,511,711 11,257,059,416 14,980,231,296 11,220,428,004 Board Chairman
Fees and other income received 1,436,220,641 1,167,900,142 1,388,153,241 1,093,658,857
Dividend received - - - -
Receipts from other operating activities 903,779,526 850,176,885 891,364,634 843,577,749
Interest paid (8,082,364,541) (5,058,390,195) (8,084,611,643) (5,063,482,082)
Commission and fees paid (63,961,059) (48,584,330) (64,461,059) (49,084,330)
Cash payment to employees (1,821,099,446) (1,622,669,969) (1,799,147,196) (1,593,375,108) Dayaram Gopal Agrawal
Other expense paid (811,925,389) (577,915,192) (779,544,160) (546,204,392) Board Member
Operating cash flows before changes in operating assets and liabilities 6,586,161,443 5,967,576,757 6,531,985,113 5,905,518,698
(Increase)/Decrease in operating assets

Due from Nepal Rastra Bank 1,180,457,137 (1,447,715,270) 1,180,457,137 (1,447,715,270)
Nirvana Chaudhary
Placement with bank and financial institutions (918,447,524) 10,354,423,502 (918,447,524) 10,354,423,502
Board Member
Other trading assets 25,460,832 (28,105,867) - -
Loan and advances to bank and financial institutions (1,507,780,538) (1,256,028,294) (1,507,780,538) (1,256,028,294)
Loan and advances to customers (18,634,742,748) (19,945,416,615) (18,634,742,748) (19,945,416,615)
Other assets (738,430,509) (8,765,677,770) (742,188,387) (8,776,162,356)
Increase/ (Decrease) in operating liabilites

Upendra Poudyal
Due to bank and financial institutions 250,377,192 (3,335,997,209) 250,377,192 (3,335,997,209)
Board Member
Due to Nepal Rastra Bank 55,956,746 19,133,035 55,956,746 19,133,035
Deposit from customers 28,331,394,406 17,338,457,981 28,143,329,895 17,374,306,925
Borrowings - - - -
Other Liabilities (528,383,833) 9,060,161,200 (223,454,062) 8,894,958,329
Net cash flow from operating activities before tax paid 14,102,022,604 7,960,811,450 14,135,492,824 7,787,020,745
Income taxes paid (1,915,603,881) (1,890,519,750) (1,907,318,193) (1,875,868,658)
Net cash flow from operating activities (A) 12,186,418,723 6,070,291,700 12,228,174,631 5,911,152,087 Malay Mukherjee
Board Member
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (6,717,146,628) (3,217,509,934) (6,628,146,628) (3,233,509,934)
Receipts from sale of investment securities - - - -
Purchase of property and equipment (229,944,418) (323,835,709) (229,901,134) (318,045,341)
Receipt from the sale of property and equipment 14,613,171 18,514,952 11,463,171 17,364,418
Purchase of intangible assets (6,711,299) (4,343,668) (6,216,359) (3,804,668) Udaya Krishna Upadhyay
Receipt from the sale of intangible assets - - - - Board Member
Purchase of investment properties - (8,218,665) - (8,218,665)
Receipt from the sale of investment properties - - - -
Interest received - - - -
Dividend received 76,965,329 118,275,656 95,039,253 127,841,566
Net cash used in investing activities (B) (6,862,223,845) (3,417,117,368) (6,757,761,697) (3,418,372,624)
CASH FLOWS FROM FINANCING ACTIVITIES

Receipt from issue of debt securities - - - -
Repayment of debt securities (60,000,000) (240,000,000) (60,000,000) (240,000,000)
Receipt from issue of subordinated liabilities - - - -
Repayment of subordinated liabilities - - - -
Receipt from issue of shares - - - -
Dividends paid (903,026,318) (1,457,415,821) (882,786,318) (1,442,235,821)
Interest paid (279,452) (25,353,870) (279,452) (25,353,870)
Other receipt/payment - - - -
Net cash from financing activities ( C) (963,305,770) (1,722,769,691) (943,065,770) (1,707,589,691)
Net increase (decrease) in cash and cash equivalents 4,360,889,108 930,404,641 4,527,347,164 785,189,772
Cash and cash equivalents at Shrawan 01 (beginning of the year) 8,232,272,053 7,301,867,412 7,952,350,362 7,167,160,590
Effect of exchange rate fluctuations on cash and cash equivalents held - -
Cash and cash equivalents at Asar end (end of the year) 12,593,161,161 8,232,272,053 12,479,697,526 7,952,350,362
- - - -
12,593,161,161 8,232,272,053.00 12,479,697,526 7,952,350,362.00 Prabhu Ram Bhandary
Date - November 3, 2019 Sujit Pokharel Managing Partner
Anil Keshary Shah
Place - Kathmandu, Nepal Manager Finance Joshi & Bhandary
Chief Executive Officer
NABIL Bank Limited
Statement of distributable profit or loss
(As per NRB Regulations)
NPR
Bank
Particulars 2076 Asar 31 2075 Asar 32
Opening balance in retained earnings 3,254,810,800 933,253,771
Net profit / (loss) as per statement of profit or loss 4,238,853,581 3,981,892,950
Less: appropriations (-) / contributions (+):
a. General reserve (848,000,000) (797,000,000)
b. Foreign exchange fluctuation fund (91,500,000) (84,500,000)
c. Capital redemption reserve (Debenture Redemption Reserve) - (12,000,000)
d. Corporate social responsibility fund (42,388,536) (39,818,930)
e. Employees' training fund 3,265,383 2,671,541
f. Investment adjustment reserves 128,059,376 (1,773,282)
f. Others: (2,730,923,127) (1,000,000)
- Contingent reserve (1,000,000) (1,000,000)
- Cash dividend (1,766,070,740) -
- Bonus share (968,624,400) -
- CSR Expenses routed through SoPL 4,772,013 -
Profit or (loss) before regulatory adjustment 3,912,177,477 3,981,726,050
Regulatory adjustment :
a. Interest receivable (-)/previous accrued interest received (+) (81,372,944) (663,364,515)
b. Short loan loss provision in accounts (-)/reversal (+) - -
c. Short provision for possible losses on investment (-)/reversal (+) - -
d. Short loan loss provision on Non Banking Assets (-)/reversal (+) - (8,218,665)
e. Deferred tax assets recognised (-)/ reversal (+) - -
f. Goodwill recognised (-)/ impairment of Goodwill (+) - -
g. Bargain purchase gain recognised (-)/resersal (+) - -
h. Acturial loss recognised (-)/reversal (+) (95,470,719) (55,332,070)
i. Other (+/-) - -
Total Adjustment in Regulatory Reserve (176,843,663) (726,915,250)
Total Distributable profit 3,735,333,814 3,254,810,800
NABIL Bank Limited
Notes to Consolidated Financial Statements
4.1 Cash and Cash Equivalent

NPR
Group Bank
Cash in Hand 2,566,035,682 6,297,188,921 2,566,035,682 6,297,188,921
Balances with BFIs (Domestic BFIs) 107,640,347 361,897,562 94,176,712 281,975,871
Money at Call and Short Notice 5,966,262,615 - 5,966,262,615 -
Other 3,953,222,517 1,573,185,570 3,853,222,517 1,373,185,570
Total 12,593,161,161 8,232,272,053 12,479,697,526 7,952,350,362
4.2 Due from Nepal Rastra Bank

NPR
Group Bank
Statutory Balances with NRB 5,764,260,468 7,372,284,966 5,764,260,468 7,372,284,966
Securities purchased under Resale Agreement - - - -
Other Deposit and Receivable from NRB 427,567,361 - 427,567,361 -
Total 6,191,827,829 7,372,284,966 6,191,827,829 7,372,284,966
4.3 Placements with Banks and Financial Instutions

NPR
Group Bank
Placement with Domestic BFIs 1,315,399,561 - 1,315,399,561 -
Placement with Foreign BFIs 9,763,329,354 10,160,281,391 9,763,329,354 10,160,281,391
Less: Allowances for Impairment - - - -
Total 11,078,728,915 10,160,281,391 11,078,728,915 10,160,281,391
Placement with BFIs with original maturities within 90 days was NPR 1,059,913,449 at 2076 Asar 31.
NABIL Bank Limited
4.4 Derivative Financial Instruments

NPR
Group Bank
Held for Trading 8,539,057,559 8,304,029,016 8,539,057,559 8,304,029,016
Interest Rate Swap - - - -
Currency Swap - - - -
Forward Exchange Contracts 8,539,057,559 8,304,029,016 8,539,057,559 8,304,029,016
Others - - - -
Held for Risk Management - - - -
Forward Exchange Contracts - - - -
Others - - - -
Total 8,539,057,559 8,304,029,016 8,539,057,559 8,304,029,016
4.5 Other Trading Assets

NPR
Group Bank
Treasury Bills - - - -
Government Bonds - - - -
NRB Bonds - - - -
Domestic Corporate Bonds - - - -
Equities 21,125,953 61,463,815 - -
Other(Mutual Fund) 25,053,867 13,089,250 - -
Total 46,179,820 74,553,065 - -
Pledged - - - -
Not pledged 46,179,820 74,553,065 - -
NABIL Bank Limited
4.6 Loans and Advances to BFIs

NPR
Group Bank
Loans to Micro-Finance Institutions 6,119,689,651 4,611,909,113 6,119,689,651 4,611,909,113
Other - - - -
Less: Allowances for Impairment (61,196,897) (46,119,091) (61,196,897) (46,119,091)
Total 6,058,492,754 4,565,790,022 6,058,492,754 4,565,790,022
4.6.1 Allowances for Impairment

Balance at Shrawan 01 (start of the year) 46,119,091 33,558,808 46,119,091 33,558,808
Impairment Losss for the year:
Charge for the year 15,077,806 12,560,283 15,077,806 12,560,283
Recoveries/Reversal - - - -
Amount Written Off - - - -
Balance at Asar end (end of the year) 61,196,897 46,119,091 61,196,897 46,119,091
4.7 Loans and Advances to Customers

NPR
Group Bank
Loans and Advances measured at Amortized Cost 129,633,914,304 110,803,461,239 129,633,914,304 110,803,461,239
Less: Impairment Allowances (2,133,671,333) (1,744,096,310) (2,133,671,333) (1,744,096,310)
Collective Impairment (1,219,929,406) (1,108,822,933) (1,219,929,406) (1,108,822,933)
Individual Impairment (913,741,927) (635,273,377) (913,741,927) (635,273,377)
Net Amount 127,500,242,971 109,059,364,929 127,500,242,971 109,059,364,929
Loans and Advances measured at FVTPL - - - -
Total 127,500,242,971 109,059,364,929 127,500,242,971 109,059,364,929
Note - Collective Impairment reflect loan loss provision against loans graded pass and allocated 1% loss provision and Individual impairment reflect loan loss provision
against all other loans, ccategorized as per NRB Directive 2/075.
NABIL Bank Limited
4.7.1: Analysis of Loans and Advances - By Product

NPR
Group Bank
Products:
Term Loans 19,693,105,384 15,881,370,014 19,693,105,384 15,881,370,014
Overdraft 15,474,993,916 15,939,379,760 15,474,993,916 15,939,379,760
Trust Receipt/Import Loans 11,003,470,337 10,543,451,344 11,003,470,337 10,543,451,344
Demand and other Working Capital Loans 43,154,164,420 33,041,727,629 43,154,164,420 33,041,727,629
Personal Residential Loans 10,070,352,469 8,455,236,712 10,070,352,469 8,455,236,712
Real Estate Loans 4,953,253,721 3,864,261,962 4,953,253,721 3,864,261,962
Margin Lending Loans 855,082,830 2,232,316,721 855,082,830 2,232,316,721
Hire Purchase Loans 2,658,174,311 2,670,115,833 2,658,174,311 2,670,115,833
Deprived Sector Loans 7,318,202,852 5,584,733,241 7,318,202,852 5,584,733,241
Bills Purchased 175,329,595 154,749,939 175,329,595 154,749,939
Staffs Loans 2,523,034,852 2,353,957,387 2,523,034,852 2,353,957,387
Other 8,876,982,948 7,674,699,871 8,876,982,948 7,674,699,871
Sub-Total 126,756,147,635 108,396,000,414 126,756,147,635 108,396,000,414
Interest Receivable on loans and advances to Customers 744,095,336 663,364,515 744,095,336 663,364,515
Grand Total 127,500,242,971 109,059,364,929 127,500,242,971 109,059,364,929
- -
4.7.2: Analysis of Loans and Advances - By Currency

NPR
Group Bank
Nepalese Rupee 119,995,395,858 102,479,676,409 119,995,395,858 102,479,676,409
Indian Rupee - 794,585 - 794,585
United States Dollar 7,461,758,305 6,572,500,022 7,461,758,305 6,572,500,022
Great Britain Pound 17,034,066 800,910 17,034,066 800,910
Euro 26,054,742 5,593,003 26,054,742 5,593,003
Japanese Yen - - - -
Chinese Yuan - - - -
Other - - - -
Grand Total 127,500,242,971 109,059,364,929 127,500,242,971 109,059,364,929
- -
NABIL Bank Limited
4.7.3: Analysis of Loans and Advances - By Collateral

NPR
Group Bank
Secured
Moveable/Immoveable Assets 112,997,416,544 96,711,490,504 112,997,416,544 96,711,490,504
Gold and Silver - -
Guarantee of Domestic BFIs - -
Government Guarantee - -
Guarantee of International Rated Bank - -
Collateral of Export Document 181,289,107 222,724,515 181,289,107 222,724,515
Collateral of Fixed Deposit Receipt 824,330,809 631,079,559 824,330,809 631,079,559
Collatereal of Government Securities 13,322,185 9,044,276 13,322,185 9,044,276
Counter Guarantee - -
Personal Guarantee 461,727 1,723,401 461,727 1,723,401
Other Collateral 13,238,630,809 11,228,729,565 13,238,630,809 11,228,729,565
Subtotal 127,255,451,181 108,804,791,820 127,255,451,181 108,804,791,820
Unsecured 244,791,790 254,573,109 244,791,790 254,573,109
Grand Total 127,500,242,971 109,059,364,929 127,500,242,971 109,059,364,929
- -
4.7.4: Allowance for Impairment NPR

Group Bank
Specific Allowance for Impairment
Balance at Shrawan 01 (start of year) 635,273,377 717,035,600 635,273,377 717,035,600
Impairment Loss for the year 278,468,550 (81,762,223) 278,468,550 (81,762,223)
Charge for the year - - - -
Recoveries/Reversals during the year 278,468,550 (81,762,223) 278,468,550 (81,762,223)
Write-Offs - - - -
Exchange Rate Variance on Foreign Currency - - - -
Other Movement - - - -
Balance at Asar end (end of year) 913,741,927 635,273,377 913,741,927 635,273,377
Collective Allowances for Impairment
Balance at Sharawan 01 (start of year) 1,108,822,933 863,530,556 1,108,822,933 863,530,556
Impairment Loss for the year 111,106,473 245,292,377 111,106,473 245,292,377
Charge/(Reversal) for the year 111,106,473 245,292,377 111,106,473 245,292,377
Exchange Rate Variance on Foreign Currency - - - -
Other Movement - - - -
Balance at Asar end (end of year) 1,219,929,406 1,108,822,933 1,219,929,406 1,108,822,933
Total Allowances for Impairment 2,133,671,333 1,744,096,310 2,133,671,333 1,744,096,310
NABIL Bank Limited
-
4.8 Investment Securities
NPR
Group Bank
Investment Securities measured at Amortized Cost 21,639,623,652 15,056,326,217 21,395,623,652 14,909,326,217
Investment in Equity measured at FVTOCI 3,907,449,037 3,478,756,649 3,907,449,037 3,478,756,649
Total 25,547,072,689 18,535,082,865 25,303,072,689 18,388,082,865
4.8.1: Investment Securities measured at Amortized Cost NPR

Group Bank
Debt Securities 110,000,000 75,000,000 - -
Government Bonds 15,891,576,428 11,753,659,679 15,891,576,428 11,753,659,679
Government Treasury Bills 5,504,047,224 3,155,666,538 5,504,047,224 3,155,666,538
Nepal Rastra Bank Bonds - - - -
Nepal Rastra Bank Deposit Instruments - - - -
Other 134,000,000 72,000,000 - -
Less: Specific Allowances for Impairment - - - -
Total 21,639,623,652 15,056,326,217 21,395,623,652 14,909,326,217
There were no Investment Securities measured at amortised cost with original maturity up to 90 days at 2076 Asar 31.
4.8.2: Investment in Equity measured at FVTOCI NPR

Group Bank
Equity Instruments
Quoted Equity Securities 2,961,254,062 2,786,871,608 2,961,254,062 2,786,871,608
Unquoted Equity Securities 461,199,893 362,330,194 461,199,893 362,330,194
Mutual fund units 484,995,082 329,554,847 484,995,082 329,554,847
Total 3,907,449,037 3,478,756,649 3,907,449,037 3,478,756,649
NABIL Bank Limited
4.8.3 Information relating to investment in equities
Presented below are information relating the the Group's investments in equities and mutual funds classified as FVTOCI investments.
NPR
2076 Asar 31 2075 Asar 32 Fair Valuation
Securities
Cost Fair Value Cost Fair Value Hierarchy
1. Investments in equitiy instruments - Quoted 168,951,294 2,961,254,062 166,269,494 2,786,871,608
1.1 Rural Microfinance Development Centre Ltd. - ordinary shares promoter 50,720,000 257,697,791 50,720,000 231,435,281 Level 3 - Adjusted MTM
[779,721 units @ NPR 100 paid up, including 272,521 units bonus shares]
1.2 Nirdhan Utthan Bank Ltd. - ordinary shares promoter 16,711,200 473,983,395 16,711,200 480,934,400 Level 3 - Adjusted MTM
[1,127,190 units @ NPR 100 paid up, including 960,078 units bonus shares]
1.3 Nirdhan Utthan Bank Ltd. - ordinary shares converted public - 449,270,610 - 455,861,248 Level 1 - MTM
[534,210 units @ NPR 100 paid up]
1.4 Chhimek Laghubitta Bikas Bank Ltd. - ordinary shares promoter 24,377,900 489,345,475 24,377,900 382,832,864 Level 3 - Adjusted MTM
[1,030,201 units @ NPR 100 paid up, including 786,422 units bonus shares]
1.5 Chhimek Laghubitta Bikas Bank Ltd. - ordinary shares converted public - 364,604,300 - 285,243,373 Level 1 - MTM
1.6 Deprosc Laghubitta Bikas Bank Ltd. - ordinary shares promoter 43,044,794 263,037,235 43,044,794 248,398,125 Level 3 - Adjusted MTM
1.7 Deprosc Laghubitta Bikas Bank Ltd. - ordinary shares converted public - 195,257,680 - 184,391,250 Level 1 - MTM
1.8 Sanakisan Bikas Bank Ltd. - ordinary shares promoter 9,561,600 113,108,724 9,561,600 110,722,580 Level 3 - Adjusted MTM
1.9 Swabalamban Laghubitta Bikas Bank Ltd. - ordinary shares promoter 12,490,500 330,765,313 12,490,500 374,993,360 Level 3 - Adjusted MTM
1.10 Nepal Grameen Bikas Bank Ltd. - ordinary shares promoter 8,045,300 14,481,540 5,363,500 16,439,128 Level 3 - Adjusted MTM
[80,453 units @ NPR 100 paid up, including Nil bonus shares]
1.11 Mahila Sahayatra Microfinance Bittiya Sanstha Ltd. - ordinary shares promoter 4,000,000 9,702,000 4,000,000 15,620,000 Level 3 - Adjusted MTM
NABIL Bank Limited
NPR
Securities
2. Investments in equitiy instruments - Unquoted 9,820,381 461,199,893 10,027,119 362,330,194

2.1 Karja Suchana Kendra Ltd. 1,235,500 28,343,637 1,235,500 33,913,274 Level 3 - Equity Valuation
2.2 National Banking Training Institute Ltd. 1,200,000 4,978,078 1,200,000 3,773,760 Level 3 - Equity Valuation
[12,000 units @ NPR 100 paid up, including Nil units bonus shares]
2.3 Nepal Clearing House Ltd. 2,500,000 7,863,138 2,500,000 4,836,300 Level 3 - Equity Valuation
2.4 Visa Inc. - Class C Common Stock - 243,127,045 - 187,311,519 Level 3 - Adjusted MTM
[6,166 units @ USD 0.0001 paid up]
2.5 MasterCard Incorporated - Class B Common Stock - 169,408,041 - 124,698,821 Level 3 - Adjusted MTM
[11,140 units @ USD 0.0001 paid up]
2.6 SWIFT Investment (denominated in €) 4,884,881 7,479,954 5,091,619 7,796,521 Level 3 - Equity Valuation
[13 units @ EUR 125 paid up]
NABIL Bank Limited
NPR
Securities
3. Investments in Mutual Fund Units 510,642,840 484,995,082 341,142,840 329,554,847

3.1 Nabil Balance Fund 2 [16,800,000 units @ NPR 10 paid up] 168,000,000 168,000,000 - - Level 1 - MTM
3.2 NMB Sulav Investment Fund 1 [1,304,998 units @ NPR 10 paid up] 13,049,980 14,120,078 13,049,980 15,659,976 Level 1 - MTM
3.3 NIBL Samridhi Fund 1 [1,738,912 units @ NPR 10 paid up] 17,389,120 16,102,325 17,389,120 17,649,957 Level 1 - MTM
3.4 Laxmi Value Fund - Scheme 1 [1,286,443 units @ NPR 10 paid up] 12,864,430 13,121,719 12,864,430 13,186,041 Level 1 - MTM
3.5 Global IME Sammunat Scheme 1 [2,373,293 units @ NPR 10 paid up] 23,732,930 19,888,195 23,732,930 20,813,780 Level 1 - MTM
3.6 Nabil Equity Fund [17,500,000 units @ NPR 10 paid up] 175,000,000 163,275,000 175,000,000 172,550,000 Level 1 - MTM
3.7 NMB Capital Hybrid Fund L-1 [1,261,921 units @ NPR 10 paid up] 12,619,210 12,657,068 12,619,210 12,228,014 Level 1 - MTM
3.8 NIBL Pragati Fund [856,177 units @ NPR 10 paid up] 8,561,770 6,369,957 8,561,770 7,705,593 Level 1 - MTM
3.9 Laxmi Equity Fund [2,924,792 units @ NPR 10 paid up] 29,247,920 22,316,163 29,247,920 23,690,815 Level 1 - MTM
3.10 Siddartha Equity Fund [967,748 units @ NPR 10 paid up] 9,677,480 9,764,577 9,677,480 9,251,671 Level 1 - MTM
3.11 Sanima Equity Fund [2,400,000 units @ NPR 10 paid up] 24,000,000 22,560,000 24,000,000 22,944,000 Level 1 - MTM
3.12 Citizen Mutual Fund [1,000,000 units @ NPR 10 paid up] 10,000,000 10,180,000 10,000,000 9,280,000 Level 1 - MTM
3.13 NIC Asia Growth Fund [500,000 units @ NPR 10 paid up] 5,000,000 5,140,000 5,000,000 4,595,000 Level 1 - MTM
3.13 NIBL Sahabhagita Fund [150,000 units @ NPR 10 paid up] 1,500,000 1,500,000 - - Level 1 - MTM
Total investment securities at FVTOCI 689,414,515 3,907,449,037 517,439,453 3,478,756,649
Unit count of shares and mutual fund units presented in the above table are as of July 16, 2019. Cost and fair values presented are actual at respective reporting date.
Nepal Grameen Bikas Bank Ltd. has not declared and distributed dividend in the last three years.
NABIL Bank Limited
4.9 Current Tax Assets

NPR
Group Bank
Current Tax Assets
Current year Income Tax Assets 142,892,979 52,616,977 137,518,681 40,375,485
Tax Assets of Prior Periods - - - -
Current Tax Liabilities
Current year Income Tax Liabilities - - -
Tax Liabilities of Prior Periods - - - -
Total 142,892,979 52,616,977 137,518,681 40,375,485
NABIL Bank Limited
4.10 Investment in Subsidiaries

NPR
Group Bank
Investment in Quoted Subsidiaries - - - -
Investment in Unquoted Subsidiaries - - 78,000,000 78,000,000
Total Investment - - 78,000,000 78,000,000
Less: Impairment Allowances - - - -
Net Carrying Amount - - 78,000,000 78,000,000
4.10.1: Investment in Quoted Subsidiaries NPR

Bank
Cost Fair Value Cost Fair Value
None - - - -
Total - - - -
4.10.2: Investment in Unquoted Subsidiaries NPR

Bank
Cost Fair Value Cost Fair Value
Nabil Investment Banking Ltd. 78,000,000 78,000,000 78,000,000 78,000,000
(1,040,000 ordinary shares @ NPR 100 paid up including 260,000 unit bonus shares)
Total 78,000,000 78,000,000 78,000,000 78,000,000
4.10.3: Information relating to Subsidiaries of the Bank

Percentage of Ownership held by Bank
2076 Asar 31 2075 Asar 32
Nabil Investment Banking Ltd. 52% 52%
Total 52% 52%
4.10.4: Non Controlling Interest of the Subsidiaries NPR

Group
2076 Asar 31 2075 Asar 32
NABIL Investment Banking Ltd.
Equity Interest held by NCI (%) 48 48
Profit / (loss) allocated during the year 15,107,102 20,549,420
Accumulated Balances of NCI as on Asar end (end of year) 145,249,613 149,342,511
Dividend Paid to NCI 19,200,000 14,400,000
NABIL Bank Limited
4.11 Investment in Associates

NPR
Group Bank
Particulars 2076 Asar 31 2075 Asar 32 2074 Asar 31 2076 Asar 31 2075 Asar 32 2074 Asar 31
Investment in Quoted Associates 126,092,661 - - 80,000,000 - -
Investment in Unquoted Associates - 79,586,485 67,765,608 - 40,000,000 40,000,000
Total Investment 126,092,661 79,586,485 67,765,608 80,000,000 40,000,000 40,000,000
Less: Impairment Allowances - - - - - -
Net Carrying Amount 126,092,661 79,586,485 67,765,608 80,000,000 40,000,000 40,000,000
4.11.1: Investment in Quoted Associates NPR

Group Bank
2076 Asar 31 2075 Asar 32 2076 Asar 31 2075 Asar 32
Particulars Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
NADEP Laghubitta Bittiya Sanstha Ltd. 80,000,000 126,092,661 - - 80,000,000 126,092,661 - -
(920,000 ordinary shares @ NPR 100 paid up including 120,000 unit bonus shares)
Total 80,000,000 126,092,661 - - 80,000,000 126,092,661 - -
Note - Asociate company obtained listing in the year 2075/76 and is recognized at cost in the Bank's separate financial statements and at fair value (equity method) in the Group's financial statements.
4.11.2: Investment in Unquoted Associates NPR

Group Bank
2076 Asar 31 2075 Asar 32 2076 Asar 31 2075 Asar 32
Particulars Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
NADEP Laghubitta Bittiya Sanstha Ltd. - - 40,000,000 79,586,485 - - 40,000,000 79,586,485
(400,000 ordinary shares @ NPR 100 paid up)
Total - - 40,000,000 79,586,485 - - 40,000,000 79,586,485
4.11.3: Information relating to Associates of the Bank

Group Bank
% of Ownership held by Group % of Ownership held by Bank
1. NADEP Laghubitta Bittiya Sanstha Ltd. 25% 25% 25% 25%
4.11.4: Equity Value of Associates NPR

Group
1. NADEP Laghubitta Bittiya Sanstha Ltd. 126,092,661 79,586,485
NABIL Bank Limited
4.12 Investment Properties

NPR
Group Bank
Investment Properties measured at Fair Value
Balance as on Shrwawan 01 (start of year) - - - -
Addition/(Disposal) during the year - - - -
Net Changes in fair value during the year - - - -
Adjustment/Transfer - - - -
Net Amount - - - -
Investment Properties measured at Cost
Balance as on Shrwawan 01 (start of year) 8,218,665 - 8,218,665 -
Addition/(Disposal) during the year - 8,218,665 - 8,218,665
Net Changes in fair value during the year - - - -
Adjustment/Transfer - - - -
Net Amount 8,218,665 8,218,665 8,218,665 8,218,665
Total 8,218,665 8,218,665 8,218,665 8,218,665
NABIL Bank Limited
4.13 Property and Equipment

NPR
Group
Leasehold Computer & Furniture & Equipment & Total Asar end Total Asar end
Particulars Land Building Vehicles Machinery
Properties Accessories Fixtures others 2076 2075
Cost
Balance as on Asar end 2074 240,542,149 316,531,248 51,007,545 220,578,947 310,803,136 129,586,726 - 372,103,087 1,641,152,838
Addition during the year - - 70,676,041 32,158,762 94,814,700 35,064,739 - 97,469,252 330,183,494
Acquisition - - 70,676,041 32,158,762 94,814,700 35,064,739 - 97,469,252 330,183,494
Capitalization - - - - - - - - -
Disposal during the year - - (3,490,973) (15,894,538) (39,776,614) (2,182,152) - (17,305,549) (78,649,826)
Adjustment/Revaluation - - - - - - - - -
Addition during the Year - - 30,240,416 32,957,330 93,913,100 20,905,446 - 51,928,124 229,944,417
Acquisition - - 30,240,416 32,957,330 93,913,100 20,905,446 - 51,928,124 229,944,417
Balance as on Asar end 2076 240,542,149 316,531,248 143,329,274 257,325,713 422,562,979 180,357,161 - 442,473,544 2,003,122,069 1,892,686,506
Depreciation and Impairment

Balance as on Asar end 2074 - 110,920,643 20,533,143 175,591,973 139,671,856 98,836,806 - 289,157,841 834,712,262
Depreciation charge for the year - 10,280,530 11,494,960 13,706,065 42,096,614 10,048,870 - 26,731,066 114,358,106
Impairment for the year - - - - - - - - -
Disposals - - (3,482,403) (15,284,357) (27,103,418) (2,006,383) - (16,245,016) (64,121,577)
Adjustment - - - - - - - - -
As on Asar end 2075 - 121,201,173 28,545,701 174,013,681 154,665,051 106,879,293 - 299,643,890 884,948,790

Disposals - - (5,103,754) (12,014,392) (28,978,823) (2,843,549) - (59,009,882) (107,950,399)
Adjustment - - - - - - - - -
As on Asar end 2076 - 130,967,677 46,798,469 181,587,865 174,408,665 119,419,169 - 283,030,227 936,212,073 884,948,790
Net book value of Capital Work in Progress
As on Asar end 2075 240,542,149 195,330,075 89,646,911 62,829,490 211,176,170 55,590,020 - 152,622,900 1,007,737,716
As on Asar end 2076 240,542,149 185,563,571 96,530,805 75,737,848 248,154,314 60,937,992 - 159,443,317 1,066,909,996
NABIL Bank Limited
4.13 Property and Equipment

NPR
Bank
Leasehold Computer & Furniture & Equipment & Total Asar end Total Asar end
Particulars Land Building Vehicles Machinery
Properties Accessories Fixtures others 2076 2075
Cost
Addition during the year - - 66,257,653 30,541,510 92,614,700 32,688,141 - 95,943,337 318,045,340
Acquisition - - 66,257,653 30,541,510 92,614,700 32,688,141 - 95,943,337 318,045,340
Addition during the Year - - 30,240,416 32,923,014 93,913,100 20,905,446 - 51,919,157 229,901,133
Acquisition - - 30,240,416 32,923,014 93,913,100 20,905,446 - 51,919,157 229,901,133
Balance as on Asar end 2076 240,542,149 316,531,248 131,956,082 250,115,042 413,740,679 173,285,834 - 437,040,953 1,963,211,988 1,848,420,708
Depreciation and Impairment

As on Asar end 2074 - 110,920,643 15,542,239 171,534,924 134,516,855 95,736,951 - 286,635,619 814,887,230
Disposals - - (3,482,403) (15,284,357) (24,795,544) (1,956,391) - (16,245,016) (61,763,711)
Adjustment - - - - - - - - -
As on Asar end 2075 - 121,201,173 22,302,004 169,468,264 149,320,087 103,218,818 - 296,650,308 862,160,654

Disposals - - (5,103,754) (12,014,392) (26,791,378) (2,843,549) - (59,009,882) (105,762,954)
Adjustment - - - - - - - - -
As on Asar end 2076 - 130,967,677 39,899,443 176,154,328 169,397,104 115,304,713 - 279,696,648 911,419,914 862,160,654
Net book value of Capital Work in Progress -
As on Asar end 2075 240,542,149 195,330,075 84,517,416 60,198,552 203,299,834 52,179,169 - 150,192,858 986,260,054
As on Asar end 2076 240,542,149 185,563,571 92,056,639 73,960,714 244,343,575 57,981,121 - 157,344,305 1,051,792,074
NABIL Bank Limited
4.14 Goodwill and Intangible Assets

NPR
Group
Software Total Asar Total Asar
Particulars Goodwill Other
Purchased Developed end 2076 end 2075
Cost :
Balance as on Asar end 2074 76,476,515 76,476,515
Addition during the year 4,343,669 4,343,669
Acquisition 4,343,669 4,343,669
Capitalization - -
Disposal during the year (1,709,770) (1,709,770)
Adjustment/Revaluation - -
Balance as on Asar end 2075 79,110,414 79,110,414
-
Addition during the Year -
Acquisition 6,711,299 6,711,299
Capitalization - -
Disposal during the year (2,991,675) (2,991,675)
Adjustment/Revaluation - -
Balance as on Asar end 2076 82,830,038 82,830,038 79,110,414
Amortisation and Impairment

As on Asar end 2074 14,888,728 14,888,728
Amortisation charge for the year 15,060,002 15,060,002
Impairment for the year - -
Disposals (1,709,770) (1,709,770)
Adjustment - -
As on Asar end 2075 28,238,960 28,238,960
Amortisation charge for the year 15,287,591 15,287,591
Impairment for the year - -
Disposals (2,991,675) (2,991,675)
Adjustment - -
As on Asar end 2076 40,534,876 40,534,876 28,238,960
Capital Work in Progress (Net Book Value) - - -
As on Asar end 2075 50,871,454 50,871,454

As on Asar end 2076 42,295,162 42,295,162
NABIL Bank Limited
4.14 Goodwill and Intangible Assets

NPR
Bank
Software Total Asar Total Asar
Particulars Goodwill Other
Purchased Developed end 2076 end 2075
Cost
Balance as on Asar end 2074 - 74,758,583 - - 74,758,583
Addition during the year - 3,804,669 - - 3,804,669 3,804,669
Acquisition - 3,804,669 - - 3,804,669 3,804,669
Capitalization - - - - - -
Disposal during the year - (1,709,770) - - (1,709,770) (1,709,770)
Adjustment/Revaluation - - - - - -
Balance as on Asar end 2075 - 76,853,482 - - 76,853,482 76,853,482
Addition during the Year - 6,216,359 - - 6,216,359

Acquisition - 6,216,359 - - 6,216,359
Capitalization - - - - -
Disposal during the year - (2,991,675) - - (2,991,675)
Adjustment/Revaluation - - - - -
Balance as on Asar end 2076 - 80,078,166 - - 80,078,166 76,853,482
Amortisation and Impairment

As on Asar end 2074 - 13,344,128 - - 13,344,128
Amortisation charge for the year - 14,884,251 - - 14,884,251
Impairment for the year - - - -
Disposals - (1,709,770) - - (1,709,770)
Adjustment - - - - -
As on Asar end 2075 - 26,518,610 - - 26,518,610
Amortisation charge for the year - 15,150,373 - - 15,150,373
Impairment for the year - - - - -
Disposals - (2,991,675) - - (2,991,675)
Adjustment - - - - -
As on Asar end 2076 - 38,677,308 - - 38,677,308 26,518,610
Capital Work in Progress (Net Book Value) - - - - -
As on Asar end 2075 - 50,334,872 - - 50,334,872

As on Asar end 2076 - 41,400,858 - - 41,400,858
NABIL Bank Limited
4.15 Deferred Tax

NPR
Subsidiary Bank
Previous FY 2074-75 Previous FY 2074-75
Net Deferred Tax
Particulars Deferred Tax Deferred Tax Deferred Tax Deferred Tax Net Deferred Tax
Assets
Assets Liabilities Assets Liabilities Assets /(Liabilities)
/(Liabilities)
Deferred tax on temporary differences on following items
Loans and Advances to BFIs - - -
Loans and Advances to Customers - - - - -
Investment Properties - - - -
Investment Securities 2,995,828 - 2,995,827.90 - (888,395,158.70) (888,395,158.70)
Property and Equipment 234,731 - 234,730.50 - (15,782,449.80) (15,782,449.80)
Employees' Defined Benefit Plan 264,311 - 264,311.10 98,753,522.70 (2,043,663.30) 96,709,859.40
Lease Liabilities - - - - - -
Provisions - - - - -
Other Temporary Differences 537,886 - 537,885.60 3,709,752.30 - 3,709,752.30
Deferred tax on temporary differences 4,032,755 - 4,032,755 102,463,275 (906,221,272) (803,757,997)
Deferred tax on carry forward of unused tax losses - -
Deferred tax due to changes in tax rate - -
Net Deferred Tax Asset (Liabilities) as on year end of 2075 4,032,755 (803,757,996.80)
Deferred Tax (Asset)/ Liabilities as on year end of 2074 (1,115,924) (835,885,857)
Origination/(Reversal) during the year (5,148,679) (32,127,861)
Deferred Tax expense (income) recognized in profit or loss (5,148,679) (7,018,912)

Deferred Tax expense (income) recognized in OCI (25,108,948)
Deferred Tax expense (income) recognized directly in Equity
Note - Deferred tax is calculated on a stand alone basis for the Bank and the Subsidiary and has not been netted off at a Group Level.
NABIL Bank Limited
4.15 Deferred Tax

NPR
Subsidiary Bank
Current FY 2075-76 Current FY 2075-76
Net Deferred Tax
Particulars Deferred Tax Deferred Tax Deferred Tax Deferred Tax Net Deferred Tax
Assets
Assets Liabilities Assets Liabilities Assets /(Liabilities)
/(Liabilities)
Deferred tax on temporary differences on following items
Loans and Advances to BFIs - - - - - -
Loans and Advances to Customers - - - - - -
Investment Properties - - - - - -
Investment Securities 2,128,692 - 2,128,692 - (965,410,357) (965,410,357)
Property and Equipment - (382,497) (382,497) - (13,933,197) (13,933,197)
Employees' Defined Benefit Plan 246,022 - 246,022 141,675,279 (19,529,405) 122,145,873
Lease Liabilities 645,716 - 645,716 1,794,714 - 1,794,714
Provisions - - - - - -
Other Temporary Differences - - - 3,866,229 - 3,866,229
Deferred tax on temporary differences 3,020,429 (382,497) 2,637,932 147,336,222 (998,872,959) (851,536,738)
Deferred tax on carry forward of unused tax losses 1,389,548 - 1,389,548 - - -
Deferred tax due to changes in tax rate - - - - - -
Net Deferred Tax Asset / (Liabilities) as on year end of 2076 4,027,480 (851,536,738)
Deferred Tax Asset/ (Liabilities) as on Shrawan 01, 2075 4,032,755 (803,757,997)
Origination / (Reversal) during the year 5,275 47,778,741
Deferred Tax expense (income) recognized in profit or loss 5,275 (7,709,365)

Deferred Tax expense (income) recognized in OCI - 55,488,106
Deferred Tax expense (income) recognized directly in Equity
Note - Deferred tax is calculated on a stand alone basis for the Bank and the Subsidiary and has not been netted off at a Group Level.
NABIL Bank Limited
4.16 Other Assets

NPR
Group Bank
Assets held for Sale - - - -
Other Non-Banking Assets - - -
Bills Receivable - - - -
Accounts Receivable 338,199,341 736,145,328 300,730,915 691,105,114
Accrued Income - - - -
Prepayments and Deposits 531,228,487 55,813,006 530,812,375 55,321,265
Income Tax Deposit - - - -
Deferred Employee Expenditure 1,738,276,409 1,312,396,513 1,738,276,409 1,312,396,513
Other Assets 21,799,294 12,344,668 20,951,244 11,900,778
Total 2,629,503,532 2,116,699,515 2,590,770,943 2,070,723,670
4.17 Due to Banks and Financial Institutions

NPR
Group Bank
Money Market Deposits - - -
Interbank Borrowing - - -
Other Deposits from BFIs - - -
Settlement and Clearing Accounts - - -
Other Deposits from BFIs 1,419,042,125 1,168,664,933 1,419,042,125 1,168,664,933
Total 1,419,042,125 1,168,664,933 1,419,042,125 1,168,664,933
4.18 Due to Nepal Rastra Bank

NPR
Group Bank
Refinance from NRB 88,474,781 32,518,035 88,474,781 32,518,035
Standing Liquidity Facility - - - -
Lender of Last Resort facility from NRB - - - -
Securities sold under repurchase agreements - - - -
Other Payable to NRB - - - -
Total 88,474,781 32,518,035 88,474,781 32,518,035
NABIL Bank Limited
4.19 Derivative Financial Instruments

NPR
Group Bank
Held for Trading
Forward Exchange Contracts 8,335,072,510 8,357,869,304 8,335,072,510 8,357,869,304
Others, - - - -
Held for Risk Management
Forward Exchange Contracts. - - - -
Others, - - - -
Total 8,335,072,510 8,357,869,304 8,335,072,510 8,357,869,304
NABIL Bank Limited
4.20 Deposits from Customers

NPR
Group Bank
Institutional Customers:
Term Deposits. 41,165,131,946 29,848,761,550 41,173,131,946 29,856,761,550
Call Deposits. 28,366,991,593 24,838,155,520 28,402,513,484 25,069,741,922
Current Deposits. 16,617,818,078 864,555,972 16,617,818,078 864,555,972
Others. 55,633,000 3,206,304,958 55,633,000 3,206,304,958
Individual Customers:
Term Deposits 23,784,355,402 15,163,369,478 23,784,355,402 15,163,369,478
Saving Deposits 49,871,916,859 44,142,481,139 49,871,916,859 44,142,481,139
Current Deposits 1,368,872,452 16,461,250,618 1,368,872,452 16,461,250,618
Others 1,679,758,351 46,204,040 1,679,758,351 46,204,040
Total 162,910,477,681 134,571,083,275 162,953,999,572 134,810,669,677
4.20.1: Currency wise analysis of deposit from customers

NPR
Group Bank
Nepalese Rupee 150,307,230,686 123,050,945,966 150,350,752,577 123,290,532,370
Indian Rupee - -
United States Dollar 11,355,477,472 10,181,685,122 11,355,477,472 10,181,685,122
Great Britain Pound 500,487,913 526,536,860 500,487,913 526,536,860
Euro 607,861,271 759,953,396 607,861,271 759,953,396
Japanese Yen 26,543,437 20,198,477 26,543,437 20,198,477
Chinese Yuan - - - -
Other 112,327,091 30,848,685 112,327,091 30,848,685
Total 162,909,927,870 134,570,168,506 162,953,449,761 134,809,754,910
Accrued interest payable 549,811 914,769 549,811 914,769
Total Customer deposit including accrued interest payable 162,910,477,681 134,571,083,275 162,953,999,572 134,810,669,679
-
NABIL Bank Limited
4.21 Borrowings
NPR
Group Bank
Domestic Borrowings
Nepal Government - - - -
Other Institutions - - -
Other - - - -
Sub Total - - - -
Foreign Borrowings
Foreign Banks and Financial Institutions - - - -
Multilateral Development Banks - - - -
Other Institutions - - - -
Sub Total - - - -
Total - - - -
4.22 Provisions
NPR
Group Bank
Provisions for Redundancy - - - -
Provisions for Restructuring - - - -
Pending Legal Issues and Tax Litigation - - - -
Onerous Contracts - - - -
Other - - - -
Total - - - -
4.22.1: Movement in Provision

NPR
Group Bank
Balance at Shrawan 01 (start of year) - - - -
Provisions made during the year - - - -
Provisions used during the year - - - -
Provisions reversed during the year - - - -
Unwind of Discount - - - -
Balance at Asar end (end of year) - - - -
NABIL Bank Limited
4.23 Other Liabilities

NPR
Group Bank
Liabilities for emloyees defined benefit obligations 85,704,771 72,233,603 85,704,771 72,233,603
Liabilities for long service leave 267,900,427 196,645,847 267,080,355 195,764,810
Short term employee benefits 51,414,900 - 51,414,900 -
Bills payable 632,235,477 703,780,045 632,235,477 703,780,045
Creditors and accruals 1,294,569,365 1,331,847,729 1,286,471,854 1,289,829,947
Interest payable on deposits - - - -
Interest payable on borrowing - - - -
Liabilities on defered grant income - - - -
Unpaid Dividend 1,072,369,537 185,647,235 1,072,369,537 185,647,235
Liabilities under Finance Lease - - - -
Employee bonus payable 676,438,944 634,747,327 671,257,690 628,593,809
Other Liabilities:
Proposed Cash Dividend Payable to Shareholders - - - -
Other Liabilities 430,158,503 645,552,523 235,548,761 180,409,597
Total 4,510,791,924 3,770,454,309 4,302,083,345 3,256,259,046
4.23.1: Defined Benefit Obligation

The amounts recognised in the statements of financials positions are as follows :
NPR
Group Bank
Present value of unfunded obligations - - - -
Present value of funded obligations 999,060,929 834,946,943 999,060,929 834,946,943
Total present value of obligations 999,060,929 834,946,943 999,060,929 834,946,943
Fair value of plan assets 913,356,158 762,713,340 913,356,158 762,713,340
Present value of net obligations 85,704,771 72,233,603 85,704,771 72,233,603
Recognised liability for defined benefit obligations 85,704,771 72,233,603 85,704,771 72,233,603
NABIL Bank Limited
4.23.2: Plan Assets

Plan assets comprise of the following:
NPR
Group Bank
Equity securities - - - -
Government bonds - - - -
Bank deposit - - - -
Other 913,356,158 762,713,340 913,356,158 762,713,340
Total 913,356,158 762,713,340 913,356,158 762,713,340
Actual return on plan assets - - - -
4.23.3: Movement in the present value of defined benefit obligations

NPR
Group Bank
Defined benefit obligations at Shrawan 1 (start of the year) 834,946,943 847,060,721 834,946,943 847,060,721
Actuarial losses 71,756,975 (80,840,745) 71,756,975 (80,840,745)
Benefits paid by the plan (37,813,890) (52,418,973) (37,813,890) (52,418,973)
Current service costs and interest 130,170,901 121,145,940 130,170,901 121,145,940
Defined benefit obligations at Asar end (end of year) 999,060,929 834,946,943 999,060,929 834,946,943
- - - -
4.23.4: Movement in the fair value of plan assets

NPR
Group Bank
Fair value of plan assets at Shrawan 1 (start of the year) 762,713,340 728,517,052 762,713,340 728,517,052
Contributions paid into the plan 188,456,708 86,615,261 188,456,708 86,615,261
Benefits paid during the year (37,813,890) (52,418,973) (37,813,890) (52,418,973)
Actuarial (losses) gains - - - -
Expected return on plan assets - - - -
Fair value of plan assets at Asar end (end of the year) 913,356,158 762,713,340 913,356,158 762,713,340
- - - -
NABIL Bank Limited
4.23.5: Amount recognised in profit or loss
NPR
Group Bank
Service costs 58,612,212 56,884,958 58,612,212 56,884,958
Interest on obligation 71,558,689 64,260,982 71,558,689 64,260,982
Expected return on plan assets - - - -
Total 130,170,901 121,145,940 130,170,901 121,145,940
- -
4.23.6: Amount recognised in other comprehensive income
NPR
Group Bank
Acturial (gain)/loss 71,756,975 (80,840,745) 71,756,975 (80,840,745)
Total 71,756,975 (80,840,745) 71,756,975 (80,840,745)

- - - -
4.23.7: Actuarial assumptions
Group Bank
Discount rate 9% 9% 9% 9%
Expected return on plan asset 0% 0% 0% 0%
Future salary increase 8% 8% 8% 8%
Withdrawal rate 5% 5% 5% 5%
NABIL Bank Limited
4.24 Debt securities issued

NPR
Group Bank
Debt securities issued designated as at fair value through profit or loss - - - -
Debt securities issued at amortised cost - 60,000,000 - 60,000,000
Total - 60,000,000 - 60,000,000
4.25 Subordinated Liabilities

NPR
Group Bank
Redeemable preference shares - - - -
Irredemable cumulative preference shares (liabilities component - - - -
Other - - - -
Total - - - -
NABIL Bank Limited
4.26 Share capital

NPR
Group Bank
Ordinary shares 9,011,845,400 8,043,221,000 9,011,845,400 8,043,221,000
Convertible preference shares (equity component only) - - - -
Irredemable preference shares (equity component only) - - - -
Perpetual debt (equity component only) - - - -
Total 9,011,845,400 8,043,221,000 9,011,845,400 8,043,221,000
4.26.1: Ordinary Shares

NPR
Bank
Authorized Capital 10,000,000,000 10,000,000,000
- 100,000,000 Ordinary Shares @ NPR 100 nominal value
Issued Capital 9,011,845,400 8,043,221,000
- 90,118,454 Ordinary Shares @ NPR 100 nominal value
Paid Up Capital 9,011,845,400 8,043,221,000
- 90,118,454 Ordinary Shares @ NPR 100 paid up
Total 9,011,845,400 8,043,221,000
4.26.2: Ordinary share ownership

NPR
Bank
Percent Amount Percent Amount
Domestic ownership 50.00 4,505,922,700 50.00 4,021,610,500
Nepal Government - - -
"A" class licensed institutions - - -
Other licensed intitutions - - -
Other Institutions 10.00 901,538,300 9.67 777,851,600
Public 40.00 3,604,241,300 30.00 2,413,187,500
Other 143,100 10.33 830,571,400
Foreign ownership 50.00 4,505,922,700 50.00 4,021,610,500
Total 100.00 9,011,845,400 100.00 8,043,221,000
- -
NABIL Bank Limited
4.26.2: Ordinary shareholders holding > 0.5% shares

NPR
Bank
Shareholder 2076 Asar 31
Percent Amount
1 NB International Limited 50.00 4,505,922,700
2 Rastriya Beema Co. Ltd. 9.67 871,445,500
3 Mr. Nirvana Kumar Chaudhary 0.89 80,158,300
4 Mr. Varun Chaudhary 0.85 76,420,700
5 Ms. Sarika Chaudhary 0.78 70,504,100
6 Nepal Trust Office 0.59 53,324,400
7 Mr. Rahul Chaudhary 0.59 53,254,200
8 Life Insurance Corporation (Nepal) Ltd. 0.52 46,474,000
NABIL Bank Limited
4.27 Reserves
NPR
Group Bank
Statutory general reserve 6,435,500,000 5,587,500,000 6,435,500,000 5,587,500,000
Exchange equilisation reserve 539,600,000 448,100,000 539,600,000 448,100,000
Corporate social responsibility reserve 77,435,453 39,818,930 77,435,453 39,818,929.50
Capital redemption reserve - - - -
Regulatory reserve 903,758,913 726,915,250 903,758,913 726,915,250
Investment adjustment reserve 4,884,881 132,944,257 4,884,881 132,944,257.00
Capital reserve 300,000,000 - 300,000,000 -
Assets revaluation reserve - - - -
Fair value reserve 2,252,624,165 2,072,922,036 2,252,624,165.00 2,072,922,035.96
Dividend equalisation reserve - - - -
Actuarial Gain / (Loss) on DBP (105,561,952) (55,332,070) (105,561,952) (55,332,070.00)
Special reserve 5,141,156 5,141,156 5,141,156 5,141,156.00
Other reserve 27,976,563 330,241,946 27,976,563 330,241,946.00
Total 10,441,359,179 9,288,251,505 10,441,359,179 9,288,251,505
4.27.1 Other Reserve break-up NPR

Group Bank
Special Contingency Fund 18,373,837 17,373,837 18,373,837 17,373,837
Debenture Redemption Reserve - 300,000,000 - 300,000,000
Interest Spread Reserve 2,578,000 2,578,000 2,578,000 2,578,000
Staff Training and Development Fund 7,024,726 10,290,109 7,024,726 10,290,109
Total 27,976,563 330,241,946 27,976,563 330,241,946
4.27.1.1 Movements in Staff Training and Development Fund NPR

Group Bank
Opening balance in reserve 10,290,109 12,961,650 10,290,109 12,961,650
Mandatory training expense budget for the year 32,973,465 27,970,680 32,973,465 27,970,680
Total amount available for training expenses 43,263,574 40,932,329 43,263,574 40,932,329
Less: Eligible training expenses incurred in the year (36,238,847) (30,642,220) (36,238,847) (30,642,220)
Closing balance in reserve 7,024,727 10,290,109 7,024,727 10,290,109
NABIL Bank Limited
4.28 Contingent liabilities and commitments

NPR
Group Bank
Contingent liabilities 57,129,879,636 49,648,979,513 57,129,879,636 49,648,979,513
Undrawn and undisbursed facilities - - - -
Capital commitment - - - -
Lease Commitment 1,514,256,703 1,062,753,002 1,514,256,703 1,062,753,002
Litigation - - - -
Total 58,644,136,338 50,711,732,515 58,644,136,338 50,711,732,515
4.28.1: Contingent Liabilities NPR

Group Bank
Acceptance and documentary credit 12,381,422,919 10,866,293,168 12,381,422,919 10,866,293,168
Bills for collection 560,252,770 496,073,287 560,252,770 496,073,287
Forward exchange contracts 8,335,072,510 8,357,869,304 8,335,072,510 8,357,869,304
Guarantees 22,377,219,215 17,488,819,173 22,377,219,215 17,488,819,173
Underwriting commitment - - - -
Other commitments 13,475,912,222 12,439,924,581 13,475,912,222 12,439,924,581
Total 57,129,879,636 49,648,979,513 57,129,879,636 49,648,979,513
4.28.2: Undrawn and undisbursed facilities

NPR
Group Bank
Undisbursed amount of loans - - - -
Undrawn limits of overdrafts - - - -
Undrawn limits of credit cards - - - -
Undrawn limits of letter of credit - - - -
Undrawn limits of guarantee - - - -
Total - - - -
NABIL Bank Limited
4.28.3: Capital commitments NPR

Group Bank
Capital commitments in relation to Property and Equipment - - - -
Approved and contracted for - - - -
Approved but not contracted for - - - -
Sub total - - - -
Capital commitments in relation to Intangible assets - - - -
Approved and contracted for - - - -
Approved but not contracted for - - - -
Sub total - - - -
Total - - - -
4.28.4: Lease commitments NPR

Group Bank
Operating lease commitments
Future minimum lease payments under non cancellable operating lease, where the bank is lessee
Not later than 1 year 163,403,605 145,325,417 163,403,605 145,325,417
Later than 1 year but not later than 5 years 605,417,507 434,784,556 605,417,507 434,784,556
Later than 5 years 745,435,591 482,643,029 745,435,591 482,643,029
Sub total 1,514,256,703 1,062,753,002 1,514,256,703 1,062,753,002
Finance lease commitments

Future minimum lease payments under non cancellable finance lease, where the bank is lessee -
Not later than 1 year - - - -
Later than 1 year but not later than 5 years - - - -
Later than 5 years - - - -
Sub total - - - -
Grand total - -
4.28.5: Litigation
The Bank is in dispute with Large tax Payers Office (LTPO) over
certain cases of additional tax demanded by LTPO over and above
NABIL Bank Limited
4.29 Interest Income

NPR
Group Bank
Cash and cash equivalent 190,352,554 53,487,899 170,668,876 34,380,595
Due from Nepal Rastra Bank 31,540,611 - 31,540,611 -
Placement with bank and financial institutions 345,838,279 292,154,087 345,838,279 292,154,087
Loan and advances to banks and financial institutions - - - -
Loans and advances to customers 14,006,254,407 10,253,785,456 14,006,254,407 10,253,785,456
Investment securities 733,358,258 643,546,603 707,761,522 626,022,495
Loan and advances to staff 129,984,912 110,023,128 129,984,912 110,023,128
Other Interest Income (Amortization of Deferred Employee Expenditure) (148,268,741) 33,500,898 (148,268,741) 33,500,898
Total interest income 15,289,060,280 11,386,498,070 15,243,779,866 11,349,866,659
Note: Interest income presented under loans and advances to customer is inclusive of interest income on loans and advances to BFIs.
4.30 Interest Expenses

NPR
Group Bank
Due to bank and financial institutions 1,194,590 13,818,191 1,194,590 13,818,191
Due to Nepal Rastra Bank - - - -
Deposits from customers 8,080,804,993 5,043,543,681 8,083,052,095 5,048,635,568
Borrowing - - - -
Debt securities issued 279,452 25,353,870 279,452 25,353,870
Subordinated liabilities - - - -
Other Charges - - - -
Total Interest expense 8,082,279,035 5,082,715,741 8,084,526,137 5,087,807,629
Note: Interest expense presented under deposits from customers also includes interst expense on deposits from BFIs.
NABIL Bank Limited
4.31 Fees and Commission Income

NPR
Group Bank
Loan administration fees 380,263,008 319,725,110 380,263,008 319,725,110
Service fees 29,631,473 29,081,724 29,631,473 29,081,724
Consortium fees - - - -
Commitment fees - - - -
DD/TT/Swift fees 38,098,106 36,134,594 38,098,106 36,134,594
Credit card/ATM issuance and renewal fees 297,762,679 209,370,498 297,762,679 209,370,498
Prepayment and swap fees - - - -
Investment and merchant banking fees 41,617,048 70,601,589 - -
Asset management fees - - - -
Brokerage fees - - - -
Remittance fees 91,408,505 100,299,039 91,408,505 100,299,039
Commission on letter of credit 129,164,628 116,350,667 129,164,628 116,350,667
Commission on guarantee contracts issued 173,465,979 134,004,004 173,465,979 134,004,004
Commission on share underwriting/issue 11,145,607 8,560,894 - -
Locker rental 14,865,433 13,755,424 14,865,433 13,755,424
Other fees and commision income 135,845,537 97,074,482 136,345,537 98,704,533
Total Fees and Commission Income 1,343,268,002 1,134,958,025 1,291,005,348 1,057,425,592
4.32 Fees and Commission Expense

NPR
Group Bank
ATM management fees 8,154,140 5,956,820 8,154,140 5,956,820
VISA/Master card fees - - - -
Guarantee commission - - - -
Brokerage - - - -
DD/TT/Swift fees 10,293,050 8,733,338 10,293,050 8,733,338
Remittance fees and commission 17,666,836 12,849,306 17,666,836 12,849,306
Other fees and commission expense 34,427,756 29,572,748 28,347,033 21,544,866
Total Fees and Commission Expense 70,541,782 57,112,212 64,461,059 49,084,330
NABIL Bank Limited
4.33 Net Trading income

NPR
Group Bank
Changes in fair value of trading assets (1,354,959) (17,851,741) - -
Gain/loss on disposal of trading assets (1,557,454) 5,602,130 - -
Interest income on trading assets - - - -
Dividend income on trading assets - - - -
Gain/loss foreign exchange transation 448,342,715 390,652,248 448,342,715 390,652,248
Other - - - -
Net trading income 445,430,302 378,402,637 448,342,715 390,652,248
4.34 Other Operating Income

NPR
Group Bank
Foreign exchange revauation gain 365,961,042 337,614,322 365,961,042 337,614,322
Gain/loss on sale of investment securities - 77,558,247 - 77,558,247
Fair value gain/loss on investment properties - - - -
Dividend on equity instruments 76,965,329 118,275,656 95,039,253 127,841,566
Gain/loss on disposal of property and equipment 3,054,716 3,986,702 2,116,271 3,651,389
Gain/loss on sale of investment property - - - -
Operating lease income - - - -
Gain/loss on sale of gold and silver 11,979,128 12,131,355 11,979,128 12,131,355
Locker rent - - - -
Other Operating Income 27,748,011 2,972,675 19,574,070 -
Total 485,708,226 552,538,957 494,669,764 558,796,879
NABIL Bank Limited
4.35 Impairment charge/(reversal) for loan and other losses

NPR
Group Bank
Impairment charge/(reversal) on loan and advances to BFIs 15,077,806 12,560,283 15,077,806 12,560,283
Impairment charge/(reversal) on loan and advances to customers 389,575,023 163,530,155 389,575,023 163,530,155
Impairment charge/(reversal) on financial Investment - - - -
Impairment charge/(reversal) on placement with BFIs - - - -
Impairment charge/(reversal) on property and equipment - - - -
Impairment charge/(reversal) on goodwill and intangible assets - - - -
Impairment charge/(reversal) on investment properties - - - -
Impairment charge/(reversal) on other assets 4,376,622 84,075 521,588 (232,148)
Total 409,029,451 176,174,513 405,174,417 175,858,290
4.36 Personnel Expenses

NPR
Group Bank
Salary 397,274,631 326,036,437 391,345,767 319,866,160
Allowances 601,860,079 489,158,838 594,493,584 481,316,822
Gratuity Expense 135,106,693 127,720,164 134,510,684 127,020,227
Provident Fund 39,858,021 32,603,420 39,142,551 31,957,328
Uniform 22,191,805 12,796,216 22,191,805 12,796,216
Training & development expense 36,311,971 30,791,587 36,238,847 30,642,220
Leave encashment 136,507,097 49,418,861 135,904,801 48,716,784
Medical 2,162,717 2,043,445 2,162,717 2,043,445
Insurance 11,046,823 8,265,442 10,578,253 7,808,349
Employees incentive 4,352,033 2,914,942 4,352,033 2,914,942
Cash-settled share-based payments - - - -
Pension expense - - - -
Finance expense under NFRS (148,268,741) 33,500,898 (148,268,741) 33,500,898
Other expenses related to staff 4,332,718 874,510 4,284,815 532,100
Prior period employee bonus 51,414,900 51,414,900
Subtotal 1,294,150,747 1,116,124,761 1,278,352,016 1,099,115,491
Employees bonus 676,438,944 634,747,327 671,257,690 628,593,809
Grand total 1,970,589,691 1,750,872,088 1,949,609,706 1,727,709,299
NABIL Bank Limited
4.37 Other Operating Expense

NPR
Group Bank
Directors' fee 2,822,970 3,556,000 2,410,822 3,030,000
Directors' expense 4,590,893 3,406,124 4,590,893 3,406,124
Auditors' remuneration 2,135,940 1,935,600 1,980,000 1,800,000
Other audit related expense - - - -
Professional and legal expense 16,644,156 8,225,379 15,946,503 8,197,129
Office administration expense 569,853,103 388,778,317 553,447,480 374,420,831
Operating lease expense 172,800,317 136,382,909 166,529,312 130,196,780
Operating expense of investment properties - - - -
Corporate social responsibility expense 4,772,013 - 4,772,013 -
Onerous lease provisions - - - -
Other Expenses 29,384,118 20,297,533 27,525,982 18,348,080
Total 803,003,510 562,581,862 777,203,005 539,398,944
4.38 Depreciation and Amortisation

NPR
Group Bank
Depreciation on property and equipment 159,213,682 114,358,106 155,022,214 109,037,135
Depreciation on investment property - - - -
Amortisation of intangible assets 15,287,591 15,060,002 15,150,373 14,884,251
Total 174,501,273 129,418,108 170,172,587 123,921,386
4.39 Non Operating Income

NPR
Group Bank
Recovery of loan written off 17,009,587 11,188,226 17,009,587 11,188,226
Other income (Share of profits of associates, net of taxes) 6,506,176 11,820,878 - -
Total 23,515,763 23,009,104 17,009,587 11,188,226
NABIL Bank Limited
4.37.1 Office Administration Expense

NPR
Group Bank
19% Water and Electricity 34,108,300 28,663,620 33,145,997 27,738,441
Repair and Maintenance
6% (a) Building 3,480,091 3,473,276 3,380,810 3,199,316
11% (b) Vehicle 4,233,313 3,739,381 4,054,686 3,666,498
-37% (c) Computer and Accessories 1,891,880 3,187,860 1,800,802 2,864,431
-11% (d) Office Equipment and Furniture 12,421,433 13,892,614 12,397,285 13,868,199
(e) Other - -
211% Insurance 38,244,553 12,420,113 38,073,810 12,244,337
39% Postage, Telex, Telephone, Fax 34,055,061 24,602,426 33,593,226 24,164,227
44% Printing, Stationery and Small Purchase 59,222,062 41,306,218 58,457,346 40,512,713
-13% Newspaper, Books and Journal 875,281 1,014,317 825,266 947,237
188% Advertisement 63,970,689 22,801,471 62,020,105 21,541,640
98% Donation 12,500 6,325 12,500 6,325
72% Security Expenses 117,980,751 68,754,205 117,280,049 68,255,073
8% Deposit and Loan Guarantee Premium 33,299,913 30,788,946 33,299,913 30,788,946
-13% Travel Allowance and Expenses 12,028,030 13,936,519 11,940,474 13,799,806
13% Customer Entertainment 4,938,386 4,375,267 4,938,386 4,375,267
44% Annual / Special General Meeting Expenses 2,394,029 1,659,765 2,376,882 1,646,801
#DIV/0! Other Expenses:
130% (a) Sponsorship 7,871,088 3,425,405 7,871,088 3,425,405
14% (b) Outsourced HR Services 51,299,941 44,353,393 41,889,488 36,818,773
23% (c) Fuel 20,080,462 16,408,937 19,632,430 15,967,309
38% (d) Janitorial and Cleaning 20,885,325 15,113,112 20,838,500 15,071,214
19% (e) Technical Service Fees 20,984,126 17,992,865 20,531,620 17,325,410
18% (f) Tea, Coffee and Snacks 11,100,381 9,637,339 10,739,683 9,125,474
32% (g) Vehicle Registration and Renewal 4,069,593 3,134,651 3,941,218 2,977,696
#DIV/0! (h) Software Subscription Charges 5,929,786 - 5,929,786 -
9% (i) Small Purchase 4,476,132 4,090,294 4,476,132 4,090,294
48% Total 569,853,103 388,778,317 553,447,480 374,420,831
NABIL Bank Limited
4.40 Non Operating Expenses

NPR
Group Bank
Loan written off 2,446,848 6,805,448 2,446,848 6,805,448
Redundancy provision - - - -
Expense of restructuring - - - -
Other expense (105,693) - (105,693) -
Total 2,341,155 6,805,448 2,341,155 6,805,448
4.41 Income Tax Expenses

NPR
Group Bank
Current tax expense - -
Current year 1,826,367,879 1,701,048,098 1,810,174,997 1,682,470,240
Adjustments for prior years - (78,805) - -
Deferred tax expense - - - -
Origination and reversal of temporary differences (7,704,090) (12,167,591) (7,709,365) (7,018,912)
Changes in tax rate - - - -
Recognition of previously unrecognised tax losses - - - -
Total income tax expense 1,818,663,789 1,688,801,701 1,802,465,632 1,675,451,327
NABIL Bank Limited
4.41.1: Reconciliation of tax expense and accounting profit of the Bank

NPR
Bank
Profit before tax stated in Statement of Profit or Loss 6,041,319,214 5,657,344,278
Add: Tax effect of expenses that are not deductible for tax purpose
Donation and CSR Expenses 4,772,013 6,325
Leave Provision - increase / (decrease) 71,315,545 6,947,779
Gratuity Provision (fair value changes through SoPL) - increase - 40,404,966
Loss on disposal of Fixed Assets 4,553,112 473,258
Capital nature expense charged on revenue 2,734,088 2,702,743
Liabilities under operating lease 5,982,381 -
Repairs disallowed as per IT Act (in excess of 7% of the block) - -
Excess Depreciation charged on Books 5,546,359 -
Provision on Accounts Receivable 521,588
Prior Period Employee Bonus 51,414,900
Less: Tax effect on exempt income

Provision written back on Other Assets - (232,148)
Deductible grauity expense paid from Gratuity Fund (4,339,783) (5,874,287)
Excess Depreciation charged as per Income Tax - (16,901,290)
Gain on disposal of Fixed Assets (6,669,382) (4,124,646)
Final Withholding Income - Meeting Fees (636,225) (679,255)
Final Withholding Income - Dividend (88,651,127) (71,833,591)
Gratuity Provision (fair value changes through SoPL) - decrease (53,946,024)
Taxable Income 6,033,916,658 5,608,234,132
Current Tax Expense @ 30% of taxable income 1,810,174,997 1,682,470,240
Deferrred Tax Expense/ (Income) (7,709,365) (7,018,912)
Total income tax expense 1,802,465,632 1,675,451,327
Effective tax rate 30% 30%
Nabil Bank Limited
Note to the Consolidated Financial Statements

For the year ended 31 Asar 2076 (at July 16, 2019)
1. Reporting entity
1.1. Corporate information
Nabil Bank Limited (hereinafter referred to as “the Bank”) is a public limited company domiciled in Nepal. It
was incorporated on May 11, 1984 under then Companies Act 1964 A.D. of Nepal. It is a class “A”
licensed commercial bank regulated under the Banks and Financial Institutions Act 2017 A.D. It commenced
banking operations on 12th July 1984 and has its registered head office in ‘Nabil Center’, Tindhara,
Durbarmarg, Kathmandu, Nepal. It is listed on the Nepal Stock Exchange.
1.2. Consolidated financial statements
The accompanying consolidated financial statements comprise the Bank (Parent Company) and its Subsidiary
(together referred to as the ‘Group’ and individually as ‘Group entities’) and the Group’s interest in its
associate company. The Bank is the ultimate parent of the Group.
1.3. Ownerships held by the Bank in subsidiary and associate companies
Ownership at
Name of Company Status Principal Activities
16-Jul-2019
Merchant Banker under license from Securities
Nabil Investment Banking Ltd. Subsidiary 52.00% Board of Nepal
Microfinance Institution under class “D” license

NADEP Laghubitta Bittiya Sanstha Ltd. Associate 25.00%
from Central Bank
1.4. Subsidiary company
Nabil Investment Banking Limited (hereinafter referred to as “the Subsidiary”) is a public limited company
domiciled in Nepal. It was incorporated on February 07, 2010 under then Companies Act 2006 A.D. of
Nepal. It is a Merchant Banker licensed under the Securities Businessperson (Merchant Banker) Regulations,
2008 A.D. It commenced its commercial operations on May 26, 2010 and operates from its registered
office at Central Plaza, Narayanchaur, Naxal, Kathmandu, Nepal. The Subsidiary is not listed.
1.5. Principal activities of the Bank
Principal activities of the Bank comprise full-fledged commercial banking services including financial
intermediation, trade finance services, remittance, treasury, cards and e-banking, agency services and other
ancillary banking services to a diverse clientele encompassing individuals, corporates, multinationals, state
owned enterprises, public sector companies, developmental aid agencies, embassies, NGOs and INGOs.
1.6. Principal activities of the Subsidiary
Principal activities of the Subsidiary are issue management, portfolio management services, underwriting of
securities, securities trustee, registrar to shares, fund management and depository services, depository
participant services in a central depository services, corporate advisory services, allied support services, etc.
Page 1 of 72
Nabil Bank Limited
2. Basis of preparation
2.1. Statement of compliance
The consolidated financial statements of the Group have been prepared in accordance with Nepal Financial
Reporting Standards 2013 (NFRS) developed by the Accounting Standards Board, Nepal (ASBN) and
pronounced for application by the Institute of Chartered Accountants of Nepal (ICAN) on September 13,
2013. These financial statements comply with the regulations of Nepal Rastra Bank, requirements of the
Companies Act and also provide appropriate disclosures required under regulations of the Securities Board
of Nepal (SEBON).
Significant accounting policies followed by the Group in the preparation of financial statements for the
reporting period are given in Note 3.
2.1.1. Reporting pronouncements
The Accounting Standards Board of Nepal has developed NFRS 2013 by converging with International
Financial Reporting Standards 2012 (IFRS) as issued by the International Accounting Standards Board
(IASB). The Institute of Chartered Accountants of Nepal has pronounced implementation of NFRS.
Accordingly the accompanying financial statements for the year ended July 16, 2019 are prepared in
accordance with NFRS.
2.1.2. Carve-outs in NFRS
The ICAN, on recommendation from ASBN, has issued following carve-outs in the implementation of NFRS
at licensed banks and financial institutions and has also prescribed alternative treatments explained below:
a) NFRS 10 – “Consolidated Financial Statements”
Carve out from the requirement for a parent company to consolidate a subsidiary in its consolidated
financial statements using uniform accounting policies for like transactions and other events in similar
circumstances as specified in para 19 of NFRS 10 unless it is impracticable to do so. As a result of
this alternative treatment, subsidiaries are allowed to be presented in the consolidated financial
statements without adjustments to the subsidiary’s financial statements which are otherwise required
to achieve consistency in accounting policies between the Group entities.
The Group has adopted this alternative treatment only selectively. The Bank and the Subsidiary both
have adopted uniform accounting policy based on NFRS for like transactions and other events in
similar circumstances except that the Subsidiary has not recognized its defined benefit obligations as
per actuarial valuation method required under NAS 19 – “Employee Benefits”.
b) NAS 28 – “Investments in Associates and Joint Ventures”
Carve out from the requirement for a parent company to account for an associate in its consolidated
financial statements using uniform accounting policies for like transactions and other events in similar
circumstances as specified in para 35 of NAS 28 unless it is impracticable to do so. As a result of
this alternative treatment, associates are allowed to be presented in the consolidated financial
statements without adjustments to the associate’s financial statements which are otherwise required
to achieve consistency in accounting policies between the Group entities and associates.
Page 2 of 72
Nabil Bank Limited
The Group has adopted this alternative treatment. The Group’s associate company has prepared its
financial statements as per existing GAAP which is inconsistent with NFRS. As a result of this
alternative treatment, the Group has presented investment in associate in the consolidated financial
statements without adjustments to the associate’s financial statements. This treatment is required
because it is impracticable to translate the associate’s financial statements in uniformity with NFRS.
c) NAS 34 – “Interim Financial Reporting”
Carve out from certain disclosure requirements in the publication of interim quarterly financial
statements as specified in para 2 of NAS 34. As a result of this alternative treatment, the reporting
entity is not required to restate its corresponding previous interim period’s balances if it is impracticable
to restate.
The Group has adopted this alternative treatment and has prepared its interim financial reports in
formats prescribed by the Nepal Rastra Bank.
d) NAS 39 – “Financial Instruments: Recognition and Measurements”
Carve out from the requirement to determine impairment loss on financial assets – loans and
advances by adopting the ‘Incurred Loss Model’ as specified in para 63 of NAS 39 unless the
reporting entity is a bank or a financial institution registered as per Bank and Financial Institutions Act
2073. Such entities shall measure impairment loss on loans and advances at the higher of:
- amount derived as per norms prescribed by Nepal Rastra Bank for loan loss provisioning; and
- amount determined as per para 63 of NAS 39 adopting Incurred Loss Model
The Group has adopted this mandatory treatment. As a result of this treatment, the Group has
recognized impairment loss on loans and advances at the higher of the amount derived as per
prudential norms specified in NRB directive no. 2/75 and the amount derived from incurred loss
model as specified in para 63 of NAS 39.
The Group has recognized impairment loss on other financial assets measured at amortized cost in
accordance with para 63 of NAS 39.
e) NAS 39 – “Financial Instruments: Recognition and Measurements”
Carve out from the requirement to incorporate all fees and points paid or received under contractual
terms of a financial instrument in the calculation of ‘Effective Interest Rate’ for the financial instrument
as specified in para 9 of NAS 39 unless it is immaterial or impracticable to determine such fees and
points reliably.
The Group has adopted this alternative treatment. As a result of this alternative treatment, the Group
has excluded the full amount of upfront loan management fees or commission received on loans and
advances in the calculation of effective interest rate for the loan. The upfront fees and commission
are recognized as income in the same period the loan is approved. The Group has assessed that
this election is justifiable in line with the principal of cost and benefit of adopting certain provisions
in NFRS.
Page 3 of 72
Nabil Bank Limited
f) NAS 39 – “Financial Instruments: Recognition and Measurements”
Carve out from the requirement to recognize interest income on a financial asset or a group of
similar financial assets, which has been written down as a result of an impairment loss, by applying
the rate of interest used to discount the asset’s future cash flows for the purpose of measuring its
impairment loss as specified in para AG 93 of NAS 39. As a result of this alternative treatment,
interest income on such impaired financial asset are allowed to be calculated by applying the original
effective interest rate to the gross carrying amount of a financial asset unless the financial asset is
written off either partially or fully.
The Group has adopted this alternative treatment. As a result of this alternative treatment, the Group
has recognized interest income on impaired financial asset by applying the original effective interest
rate to the gross carrying amount of a financial asset unless the financial asset is a credit impaired
financial asset. The Group has adopted this alternative treatment considering the practical difficulty
in the application of para AG 93 of NAS 39.
2.2. Reporting period and approval of financial statements
The accompanying financial statements cover annual reporting period between July 17, 2018 and July 16,
2019 (the reporting period) and the status is reported as at the year-end date of July 16, 2019 (the report
date). These financial statements, inclusive of comparative figures for the year ended July 16, 2018 have
been approved and authorized for issue by the board of directors as per its decision dated November 3,
2019 and have recommended for its approval at the shareholders annual general meeting.
2.2.1. Responsibility for financial statements
The board of directors of the Bank is responsible for the preparation of financial statements of the Group and
the Bank which reflects a true and fair view of the financial position and performance of the Group and that
of the Bank. The board is of the view that the financial statements in its entirety have been prepared in
conformity with the prevailing financial reporting standards, regulations of the Nepal Rastra Bank and the
requirements of the Companies Act.
The board of directors acknowledges their responsibility for financial statements as set out in the ‘Statement
of Director’s Responsibility’ and in the certification on the statement of financial position.
These financial statements include the following components:
- Statement of Financial Position [SoFP] providing the information on the financial position of the
Group and the Bank as at the end of the reporting period;
- Statement of Profit or Loss [SoPL] and Statement of Other Comprehensive Income [SoCI] providing
the information on the financial performance of the Group and the Bank for the reporting period;
- Statement of Changes in Equity [SoCE] reporting all changes in the shareholders’ funds during the
reporting period of the Group and the Bank;
- Statement of Cash Flows [SoCF] providing the information to the users, on the ability of the Group
and the Bank to generate cash and cash equivalents and utilization of those cash flows; and
- Notes to the financial statements comprising significant accounting policies, other disclosures and
other explanatory information relevant to the study of financial statements.
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2.3. Functional and presentation currency
Consolidated financial statements are presented in Nepalese Rupees (NPR), the functional currency of Group
entities. Consolidated financial statements are prepared in the formats prescribed by Nepal Rastra Bank.
Assets and liabilities are generally presented in the order of liquidity in the statement of financial position.
Income and expenses are classified ‘by nature’ in the presentation of statement of profit or loss. Cash flows
from operations are derived using the direct method in the presentation of statement of cash flows.
2.4. Use of estimates, assumptions and judgments
Preparation of financial statements in conformity with NFRS required the Group’s management to make
critical judgments, estimates and assumptions such that could potentially have a material impact on the
reported financial figures. These affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses.
On an ongoing basis the management reviews these estimates and underlying assumptions to ensure that
they continue to be relevant and reasonable. Any revisions to accounting estimates are recognized
prospectively in the financial statements.
The most significant areas of assumptions and estimation applied in the application of accounting policies
that have the most significant effect on the amounts recognized in the financial statements are listed
hereinafter and their description follows:
- Fair value of financial instruments

- Classification of financial assets and financial liabilities
- Impairment losses on financial assets
- Impairment losses on non-financial assets
- Useful economic life of property and equipment
- Taxation and deferred tax
- Defined benefit obligations
- Provisions for liabilities, commitments and contingencies
Information about significant areas of estimation and critical judgments in applying accounting policies,
other than those stated above, and which have significant effects on the amounts recognized in the financial
statements are described in respective notes.
2.4.1. Fair value of financial instruments
Fair value of financial assets and financial liabilities, for which there is no observable market prices, are
determined using a variety of valuation techniques that include the use of statistical models. The Group
measures fair value using a fair value hierarchy that reflects the significance of input used in making
measurements. The use of fair value hierarchy is described in Note 5.1.7.
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2.4.2. Classification of financial assets and liabilities
Significant accounting policies of the Group provide scope for financial assets and financial liabilities to be
recognized under different accounting classifications. These are either measured at fair value or at amortized
cost and can be presented under any of the following accounting classifications based on specific
circumstances.
- Financial assets or financial liabilities subsequently measured at Amortized Cost; or
- Financial assets or financial liabilities designated as at Fair Value Through Profit or Loss (FVTPL); or
- Financial assets or financial liabilities subsequently measured at Fair Value Through Profit or Loss
(FVTPL); or
- Financial assets subsequently measured at Fair Value through Other Comprehensive Income
(FVTOCI).
Presentation and / or measurement of the amounts recognized in financial statements could be different for a
particular financial asset or financial liability under any two different accounting classifications. The Group’s
management exercise judgment in the application of appropriate accounting policy to achieve correct
accounting classifications for its financial assets and financial liabilities. Accounting policy relating to
classification of financial assets and financial liabilities is presented in Note 3.4.3 and the related
explanatory information is presented in Note 5.3.
2.4.3. Impairment losses on financial assets
Impairment loss on financial assets – loans and advances are determined at the higher of:
- Loan loss provision amount derived as prescribed in directive no. 02/75 of Nepal Rastra Bank; and
- Impairment loss amount determined as per Incurred Loss Model specified in para 63 of NAS 39.
There arise a need for the Group’s management to apply judgment and estimation in assessing and
determining the amount of impairment loss on financial assets measured at amortized cost. Some of the
areas that require management judgment and estimation are listed herein below:
- selection of appropriate impairment assessment tool;

- defining individually significant assets;
- designing impairment assessment questionnaire;
- estimating future recoverable cash flows on financial asset; and
- adjusting results of historical data analysis to incorporate the economic conditions and portfolio
factors that existed at the reporting date.
Exercise of judgment is an integral part of the impairment assessment process and the Group exercises its
experienced judgment to adjust observable data for a group of financial assets to reflect current
circumstances. The use of reasonable estimates is an essential part of the preparation of financial statements
and does not undermine their reliability.
The Group's policy in accounting for impairment of financial assets is explained in Note 3.4.8.
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2.4.4. Impairment losses on non-financial assets
At each reporting date, or more frequently if events or changes in circumstances necessitates, the Group
assesses whether there are indicators of impairment for a non-financial asset. Where any indication of
impairment exists, the Group makes an estimation of the asset’s recoverable amount.
The ‘recoverable amount’ of an asset is the greater of its ‘Value in Use’ and it’s ‘Fair Value’ less costs to sell.
In determining the ‘Value in use’, future cash flow estimates are discounted to their present value using a pre-
tax discount rate that reflects current market assessments of the time value of money and the risks specific to
the asset. In determining ‘Fair Value’ less cost to sell, an appropriate valuation model is used.
The whole impairment assessment exercise requires the management to make estimates of expected future
cash flows, appropriate discount rates and also select appropriate valuation model.
2.4.5. Useful economic life of property and equipment
Management judgment is exercised in the estimation of residual values, useful lives and methods of
depreciation of property and equipment. Management uses its experienced judgment in determining the
useful lives of property and equipment.
2.4.6. Taxation and deferred tax
The Group Entities are subject to income tax under Income Tax Act 2002 A.D. and amendments thereto, and
due to the potential differences that may exist between the Group Entities and the Income Tax Authorities
with regard to the interpretation of complex tax provisions, management judgment is required to determine
the total provision for current tax and deferred tax amounts.
Deferred tax assets are recognized in respect of tax losses to the extent that it is probable that future taxable
profit will be available against which such losses can be utilized. Judgment is required to determine the
amount of deferred tax assets that can be recognized, based upon the likely timing and level of future
taxable profits, together with future tax planning strategies. Additional disclosure on income tax is stated in
Note 3.10.
2.4.7. Defined benefit obligations
The Group recognizes following two types of employee liabilities as defined benefit obligations:
a) Gratuity Liability
b) Accumulated Leave Liability
The cost of the defined benefit obligations is determined using actuarial valuation from an independent
actuary. The actuarial valuation involves making assumptions about discount rates, expected rates of return
on assets, attrition rate, future salary increases, mortality rates, future pension increases, etc.
In determining the appropriate discount rate, management considers the interest rates of Nepal government
bonds with maturities corresponding to the expected duration of the defined benefit obligation as may be
available. The mortality rate is based on publicly available mortality tables. Future salary increases and
pension increases are based on expected future salary increase rates. The Group reviews actuarial
assumptions at each reporting date. Additional disclosure on employee benefits is stated in Note 3.15.
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2.4.8. Provisions for liabilities, commitments and contingencies
The Group receives legal claims in the normal course of business. Management has made judgments as to
the likelihood of any claim succeeding in making provisions. The time of concluding legal claims is uncertain,
as is the amount of possible outflow of economic benefits. Timing and cost ultimately depends on the due
processes in respective legal jurisdictions.
All discernible risks are accounted for in determining the amount of all known liabilities. Contingent liabilities
are possible obligations whose existence will be confirmed only by uncertain future events or present
obligations where the transfer of economic benefit is not probable or cannot be reliably measured.
Contingent liabilities are not recognized in the statement of financial position but are disclosed unless they
are remote. Additional disclosure on this is stated in Note 5.6.
2.5. Changes in accounting policies
The Group has consistently applied the accounting policies for all periods reported in the financial
statements. There were no changes in accounting policy in the reporting period.
2.6. New standards issued but not yet effective
The ASBN has not issued a new NFRS since the current version of NFRS were issued in September 2013.
However, the IASB has issued a number of new IFRS standards and interpretations, including amendments to
the existing IFRS, since the IFRS 2012 based on which NFRS 2013 have been developed.
2.7. New standards and interpretations not adopted
The updates on IFRS subsequent to 2012 become applicable when the ASBN incorporates them within the
NFRS. The Group has not adopted those standards.
2.8. Discounting
The Group determines amortized cost of a financial asset or a financial liability using the effective interest
rate. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
throughout the expected life of a financial asset or a financial liability to the net carrying amount of the
financial asset or liability. If expected life cannot be determined reliably, then the contractual life is used.
In case where the Group assesses that the transaction amount of a financial asset or a financial liability does
not represent its fair value, the related future cash flows are discounted at prevailing interest rate to
determine the initial fair value.
2.9. Going concern
The management has made an assessment of its ability to continue as a going concern and is satisfied that it
has the resources to continue in business for the foreseeable future. Furthermore, the management is not
aware of any material uncertainties that may cast significant doubt upon the Group’s ability to continue as a
going concern. Therefore, financial statements of the Group continue to be prepared on a going concern
basis.
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2.10. Offsetting
In the Statement of Financial Position, financial assets and financial liabilities are netted off only when there
is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net
basis, or to realize the assets and settle the liability simultaneously. Income and expenses are not netted off
in the Statement of Profit or Loss unless required or permitted by an accounting standard or interpretation
and as specifically disclosed in the Group’s accounting policy.
2.11. Materiality and aggregation
In the financial statements materiality and aggregation is dealt with in compliance with Nepal Accounting
Standard – NAS 1 “Presentation of Financial Statements” and within the scope of formats implemented by
Nepal Rastra Bank. Accordingly, each material class of similar items is presented separately and items that
are not similar in nature or function are also presented separately unless these are immaterial.
2.12. Rounding
The amounts in the financial statements are rounded off to the nearest Rupees, except where otherwise
indicated as permitted by NAS 1 – “Presentation of Financial Statements”.
2.13. Comparative information
Accounting policies are consistently applied across all periods reported. The presentation and classification
of financial figures relating to previous period are regrouped or reclassified where relevant to facilitate
consistent presentation and better comparability.
2.14. Events after the reporting date
Events after the reporting date are those events, favorable and unfavorable, that occur between the reporting
date and the date when the financial statements are authorized for issue.
All material and important events that occurred after the reporting date have been considered and
appropriate disclosures have been made in line with NAS 10 – “Events After the Reporting Period”.
Explanatory information on events after the reporting date is presented in Note 5.10.
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3. Significant accounting policies
The Group has applied the accounting policies set out below consistently to all periods presented in the
accompanying financial statements unless specifically stated otherwise.
Index of significant accounting policies is produced below for easy reference.
Principal
Accounting Policy Topic Additional Note Page No.
Note
3 Significant Accounting Policies
3.1 Basis of measurement
3.2 Basis of consolidation
3.3 Cash and cash equivalent 4.1
3.4 Financial assets and financial liabilities 5.3
3.5 Trading assets 4.5
3.6 Derivative assets and derivative liabilities 4.4, 4.19
3.7 Property and equipment 4.13
3.8 Goodwill and intangible assets 4.14
3.9 Investment property 4.12
3.10 Income Tax 4.41
3.11 Deposits, debt securities issued and subordinated liabilities 4.17, 4.20, 4.24, 4.25
3.12 Provisions 4.22
3.13 Revenue recognition 4.29, 4.31, 4.33, 4.34, 4.39
3.14 Interest expense 4.30
3.15 Employee benefits 4.23.1 to 4.23.7
3.16 Leases 4.28.4
3.17 Foreign currency transactions, translation and balances

3.18 Financial guarantee and loan commitment 4.28.1, 4.28.2
3.19 Share capital and reserves 4.26, 4.27
3.20 Earnings per share

3.21 Segment reporting 5.4
3.22 Impairment of Non-Financial Assets

3.23 Statement of cash flows
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3.1. Basis of measurement
Financial Statements of the Group have been prepared on historical cost convention, except for the
following:
- Investments in equity instruments presented in SoFP line items Other Trading Assets and Investment
Securities measured at fair value under NFRS 9 ‘Financial Instrument’.
- Land and buildings held as non banking assets presented in SoFP line item Investment Property
measured at fair value under NAS 40 ‘Investment Property’.
- Liabilities for employee defined benefit obligations and liabilities for long service leave presented in
SoFP line item Other Liabilities measured at fair value under NAS 19 ‘Employee Benefits’.
3.2. Basis of consolidation
The Group’s financial statements comprise consolidation of the financial statements of the Bank and those of
the following entities:
a. The Subsidiary, in accordance with NFRS 10 – “Consolidated Financial Statements” inclusive of the
alternative treatment prescribed on carve-out in NFRS (application of alternative treatment is stated in
point 2.1.2 (a) in the note to the consolidated financial statements); and
b. The proportionate share of the profit or loss and net assets of the Associate Company in accordance
with NAS – 28 “Investments in Associates and Joint Ventures” inclusive of the alternative treatment
prescribed on carve-out in NFRS (application of alternative treatment is stated in point 2.1.2 (b) in
the note to the consolidated financial statements).
3.2.1. Business combinations and goodwill
Business combinations are accounted for using the acquisition method when control is transferred to the
Group as required under NFRS 3 – “Business Combination”.
Applying the acquisition method requires:
- identifying the acquirer;

- determining the acquisition date;
- recognizing and measuring the identifiable assets acquired, the liabilities assumed and any non-
controlling interest in the acquire; and
- recognizing and measuring goodwill or a gain from a bargain purchase.
On the date of acquisition the Group recognizes goodwill to the extent that the aggregate of items listed
below exceeds the net amount of the identifiable assets acquired and the liabilities assumed, all measured in
accordance with NFRS 3, which in general is the fair value.
The aggregate of below items:
- the consideration transferred;

- the amount of any non-controlling interest in the acquire; and
- in case of business combination achieved in stages, the acquisition date fair values of the Group’s
previously held equity interest in the acquire.
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Where the amount calculated for goodwill results in a negative figure, it is accounted for as a gain from a
bargain purchase and is recognized in profit or loss, following the due process stated in NFRS 3.
3.2.2. Non - controlling interests (NCI)
Non-controlling interest represent the proportionate share of profit or loss and net assets of the subsidiaries
not owned directly or indirectly by the Group. The non-controlling interest is presented in the consolidated
statement of financial position within equity, separately from the equity attributable to the equity holders of
the Group. Non-controlling interest in the profit or loss of the Group is disclosed separately in the
consolidated statement of profit or loss.
A change in the ownership interest of a subsidiary without a loss of control is accounted for as equity
transactions. This in effect is the adjustment made in the carrying amounts of the controlling and non-
controlling interests to reflect the changes in their relative interests in the Subsidiary.
3.2.3. Investment in subsidiary
The Group has recognized Nabil Investment Banking Ltd. as a Subsidiary company in which the Bank held
52% controlling interest at the report date. There has been no change in the Bank’s holding in the Subsidiary
for the reporting period and the previous comparative period.
Subsidiaries are investees that are controlled by the Group. Control is achieved when the Group is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to affect the returns
of those investees through its power over the investee. Specifically, the Group controls an investee if, and
only if, the Group has all of the following:
- power over the investee;

- exposure or rights to variable returns from its involvement with the investee; and
- the ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights results in control. To support this
presumption, and when the Bank has less than a majority of the voting or similar rights of an investee, the
Bank considers all relevant facts and circumstances in assessing whether it has power over an investee,
including:
- the contractual arrangement with the other vote holders of the investee;
- rights arising from other contractual arrangements; and
- the Group’s voting rights and potential voting rights.
The Group reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the above.
The financial statements of subsidiaries are included in the consolidated financial statements from the date
that control commences until the date that control ceases. Where Subsidiaries have been sold or acquired
during the year, assets, liabilities, income and expenses of the said subsidiary are included in the
consolidated financial statements from the date the Group gains control until the date the Group ceases to
control the subsidiary.
When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income,
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expenses and cash flows relating to transactions between members of Group are eliminated in full on
consolidation.
There are no significant restrictions on the ability of the subsidiaries to transfer funds to the Bank in the form
of cash dividends or repayment of loans and advances.
3.2.4. Cost of acquisition
The cost of acquisition of a Subsidiary is measured as the fair value of the consideration, including
contingent consideration, given on the date of transfer of title. The acquired identifiable assets, liabilities and
contingent liabilities are measured at their fair values at the date of acquisition. Subsequent to the initial
measurement, the Bank continues to recognize the investments in Subsidiary at cost.
3.2.5. Loss of control
On loss of control over a Subsidiary, the Group derecognizes its assets and liabilities and any related NCI
and other components of equity. The resulting gain or loss is recognized in profit or loss.
Any interest retained in the former subsidiary is measured at fair value when control is lost. Subsequently, it
is accounted for as an Associate or in accordance with the Group’s Accounting Policy for financial
instruments depending on the level of influence retained.
3.2.6. Special purpose entity
There are no special purpose entities within the Group's holding structure.
3.2.7. Transactions eliminated on consolidation
The effect of all intra-group transactions and outstanding balances, including realized and unrealized income
and expenses are eliminated in the preparation of the Consolidated Financial Statements.
3.2.8. Investment in associate
The Group has recognized NADEP Laghubitta Bittiya Sanstha Ltd. as an Associate company in which the
Bank held 25% equity interest at the report date. There has been no change in the Bank’s holding in the
Associate for the reporting period and the previous comparative period.
Associates are those entities in which the Group has significant influence, but not control, over the variable
returns through the exercise of its power over the financial and operating policies of the investee. If an entity
holds, directly or indirectly i.e. through subsidiary, 20% or more of the voting power of the investee, it is
presumed that the entity has significant influence, unless it can be clearly demonstrated that this is not the
case.
Significant influence is usually evidenced in one or more of the following ways:
- representation on the board of directors or equivalent governing body of the investee;

- participation in policy-making processes, including participation in decisions about dividends or
other distributions;
- material transactions between the entity and its investee;
- interchange of managerial personnel ; or
- provision of essential technical information.
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Investments in associate entities are accounted for using the equity method (equity-accounted investees) and
are recognized initially at cost as required under the Nepal Accounting Standards – NAS 28 on
“Investments in Associates and Joint venture”. Accordingly, the group carries its associate investments at cost
plus post-acquisition changes in its share of the associate’s net assets, after adjustments to align the
accounting policies with those of the Group, wherever required.
The Group discontinues the use of the equity method from the date that it ceases to have significant influence
over an associate and accounts for any residual investments in accordance with the Group’s accounting
policy for financial instruments. Any disposal gain or loss is recognized in profit or loss.
At each reporting date, the Group determines whether there is objective evidence that the investment in the
associate is impaired. If there is such evidence, the Group calculates the amount of impairment as the
difference between the recoverable amount of the associate and its carrying value, which is charged to profit
or loss as net impairment charge / (reversal) for loans and other assets.
3.3. Cash and cash equivalent
Cash and cash equivalent comprise of the total amount of cash-in-hand, balances with other bank and
financial institutions, money at call and short notice, and highly liquid financial assets with original maturities
of three months or less from the acquisition date that are subject to an insignificant risk of changes in their
fair value, and are used by the group in the management of its short term commitments. Restricted deposits
are not included in cash and cash equivalents. These are measured at amortized cost and presented as a
line item on the face of consolidated Statement of Financial Position (SoFP).
3.4. Financial assets and financial liabilities
Financial assets refer to assets that arise from contractual agreements that result in future cash inflows or from
owning equity instruments of another entity. Since financial assets derive their value from a contractual claim.
These are non-physical in form and are usually regarded as being more liquid than other tangible assets.
Common examples of financial assets are cash, cash equivalents, bank balances, placements, investments in
debt and equity instruments, derivative assets and loans and advances.
Financial liabilities are obligations that arise from contractual agreements and that require settlement by way
of delivering cash or another financial asset. Settlement could also require exchanging other financial assets
or financial liabilities under potentially unfavorable conditions. Settlement may also be made by issuing own
equity instruments. Common examples of financial liabilities are due to banks, derivative liabilities, deposit
accounts, money market borrowings and debt capital instruments.
The contractual agreements, generally referred to as financial instruments, are characterized by the existence
of counterparties and the contract terms give rise to a financial asset to one counterparty and a
corresponding financial liability or equity instrument to the other counterparty.
The Group has applied NFRS 9 – “Financial Instruments” in the classification and measurement of its
financial instruments. Para 5.2.2 of NFRS 9 prescribes the application of impairment requirements in
paragraphs 58-65 and AG84-AG93 of NAS 39 to financial assets measured at amortized cost.
Accordingly, the Group has applied para 63 of NAS 39 and measured impairment loss on financial assets
measured at amortized cost following the incurred loss model.
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3.4.1. Date of recognition of financial instruments
All financial assets and financial liabilities are initially recognized in the Statement of Financial Position when
the entity becomes a party to the contractual provisions of the instrument. A regular way of purchase or sale
of financial assets is recognized on the trade date, which is the date on which the Group becomes a party to
the contractual provisions of the financial asset. Regular way trade means purchases or sales of financial
assets that required delivery of assets within the time frame generally established by regulation or convention
in the market place.
3.4.2. Initial recognition and measurement of financial instruments
All financial assets and financial liabilities are initially measured at fair value plus or minus, in the case of a
financial asset or financial liability not at fair value through profit or loss, transaction costs that are directly
attributable to the acquisition or issue of the financial asset or financial liability.
3.4.3. Classification and subsequent measurement of financial assets
Financial assets are classified based on how the asset is measured subsequent to its initial recognition as per
NFRS 9 – “Financial Instrument”. Accordingly, at the time of initial recognition, financial assets are classified
as:
- financial assets subsequently measured at amortized cost, and
- financial assets subsequently measured at fair value.
Classification and subsequent measurement of financial assets are arrived at on the basis of both the
following criteria:
- the entity’s business model for managing the financial assets, and
- the contractual cash flow characteristics of the financial asset.
Details on different classes of financial assets and financial liabilities recognized on the financial statements
are presented in Note 5.3.
3.4.3.1. Financial assets subsequently measured at amortized cost
Financial assets are measured at amortized cost when both of the following conditions are met:
i. Business model test
The objective of the Group's business model is to hold the financial asset to collect the contractual
cash flows (rather than to sell the instrument prior to its contractual maturity to realize its fair value
changes).
ii. Cash flow characteristics test
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Interest, for the purpose of contractual cash flow test, is the consideration for the time value of money and for
the credit risk associated with the principal amount outstanding during a particular period of time.
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All debt instruments that meet the above two conditions are subsequently measured at amortized cost
applying the effective interest rate (net of any write down for impairment), except when the Group
designates an instrument at fair value through profit or loss (FVTPL). At the reporting date the Group does not
have any financial assets designated as FVTPL.
All gains or losses on financial assets that are measured at amortized cost and are not part of a hedging
relationship are recognized in profit or loss (through amortization process) when the financial asset is
derecognized or impaired or reclassified to fair value. The amortization is presented as interest income and
any impairment loss is presented as impairment charge / (reversal) in profit or loss.
3.4.3.2. Financial assets subsequently measured at fair value
Financial assets are measured at fair value unless it is measured at amortized cost. Within the fair value
classification there are two sub-classifications as under:
i. Fair value through profit or loss (FVTPL)
ii. Fair value through other comprehensive income (FVTOCI)
For financial assets that are measured at FVTPL all related fair value changes (realized and unrealized gains
or losses) are recognized in the profit or loss except in the case of a financial asset held as part of a hedging
relationship. FVTPL classification is determined based on the investment motive where the related asset is
acquired principally for the purpose of selling or repurchasing in the near term or is held as part of a
portfolio that is managed together for short-term profit or position taking.
3.4.3.3. Investment in equity instruments measured at FVTOCI
The Group has irrevocably elected at initial recognition to measure certain investments in equity instruments
at FVTOCI. The election is made in respect of equity investments that are not held for trading. Only dividend
income arising on such investment is recognized in profit or loss.
Subsequent fair value changes (unrealized gains or losses) on equity investments irrevocably elected for
FVTOCI presentation is recognized in other comprehensive income. In the event such fair value changes is
realized upon sale of the investment it is not reclassified to profit or loss, rather it is recognized directly
within equity. The related taxes payable and the statutory employee bonus payable in respect of the realized
fair value changes upon sale of the investment is recognized through expense charge to profit or loss.
Details on financial investments measured at FVTOCI are presented in Note 5.1.7.2.
3.4.4. Classification and subsequent measurement of financial liabilities
Financial liabilities are classified based on how the liability is measured subsequent to its initial recognition
as per NFRS 9 – “Financial Instrument”. Accordingly, at the time of initial recognition, financial liabilities are
classified as:
- subsequently measured at FVTPL, or
- subsequently measured at amortized cost.
Details on different classes of financial assets and financial liabilities recognized on the financial statements
are presented in Note 5.3.
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3.4.4.1. Financial liabilities subsequently measured at FVTPL
A financial liability is classified as FVTPL if either it is held for trading or upon initial recognition it is
designated as FVTPL. A financial liability is held for trading if it is acquired principally for the purpose of
selling or repurchasing in the near term or held as a part of a portfolio that is managed together for short-
term profit or position taking.
All resulting fair value changes are recognized in profit or loss, except when a financial liability is
designated as FVTPL and the Group is required to present the effects of changes in the liability’s credit risk
on other comprehensive income. At the reporting date the Group does not have any financial liability
designated as FVTPL.
3.4.4.2. Financial liabilities subsequently measured at amortized cost
All other financial liabilities that are not classified as FVTPL are classified as subsequently measured at
amortized cost. The general substance of the contractual arrangement results in the Group having an
obligation:
- either to deliver cash or another financial asset to the holder; or

- to exchange financial assets or financial liabilities with the holder under conditions that are
potentially unfavorable to the Group; or
- to settle the obligation by delivering variable number of own equity instruments.
After initial recognition, such financial liabilities are subsequently measured at amortized cost using the
effective interest rate method. Amortized cost is calculated by taking into account any discount or premium
on issuance and issuance costs that are an integral part of the effective interest rate.
The amortization is presented as interest expense in profit or loss. Gains or losses are also recognized in
profit or loss when the liabilities are derecognized.
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3.4.5. Reclassification of financial assets and liabilities
Reclassification of financial assets and liabilities are at the election of management and determined on an
instrument by instrument basis. Reclassification of financial assets is done if and only if the business model
objective for the financial asset changes so its previous model assessment would no longer apply.
NFRS 9 does not permit reclassification in the following cases:
- for equity investments measured at FVTOCI; and

- where the fair value option has been exercised in any circumstance for a financial asset or a
financial liability.
Where the Group’s management assesses a reclassification as appropriate, it is done prospectively from the
reclassification date which is defined as the first day of the first reporting period following the change in
business model. The Group does not restate any previously recognized gains, losses or interest.
Where financial asset is reclassified so that it is ‘measured at fair value’, its fair value is determined at the
reclassification date. Any gain or loss arising from the difference between the previous carrying amount and
fair value is recognized in profit or loss.
Where financial asset is reclassified so that it is ‘measured at amortized cost’, its fair value at the
reclassification date becomes its new carrying amount.
3.4.6. De-recognition of financial assets and financial liabilities
3.4.6.1. De-recognition of financial assets
The Group derecognizes a financial asset, or where applicable a part of financial asset or part of a group of
similar financial assets, when:
- the contractual rights to the cash flows from the financial asset expire; or
- the Group transfers the rights to receive the contractual cash flows in a transaction in which
substantially all risks and rewards of ownership of the financial asset are transferred; or
- the Group has assumed an obligation to pay the received cash flows in full without material delay to
a third party under a ‘pass-through’ arrangement and:
o either the Group has transferred substantially all the risks and rewards of the asset; or
o the Group has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset.
On de-recognition of a financial asset, the difference between the carrying amount of the asset (or the
carrying amount allocated to the portion of the asset derecognized) and the sum of the consideration
received (including any new asset obtained less any new liability assumed) and any cumulative gain or loss
that had been recognized in other comprehensive income is recognized in profit or loss. Any residual
interest in transferred financial assets that qualify for de-recognition that is created or retained by the Group
is recognized as a separate asset or liability.
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Where there is the Group’s continuing involvement that takes the form of guaranteeing the transferred asset,
the extent of the continuing involvement is measured at the lower of the original carrying amount of the asset
and the maximum amount of consideration received by the Group and which it could be required to repay.
3.4.6.2. De-recognition of financial liabilities
The Group derecognizes a financial liability when its contractual obligations are discharged or cancelled or
expired. Where an existing financial liability is replaced by another from the same lender on substantially
different terms or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as de-recognition of the original liability and the recognition of a new liability.
The difference between the carrying value of the original financial liability and the consideration paid is
recognized in profit or loss as a disposal gain or loss.
3.4.7. Fair value of financial assets and financial liabilities
‘Fair Value’ is the price that would be received on sell of an asset or paid for transfer of a liability in an
orderly transaction between market participants at the measurement date. Fair value measurement is based
on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- in the principal market for the asset or liability; or
- in the absence of principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use
when pricing the asset or liability, assuming that market participants act in their economic best interests.
A fair value measurement takes into account a market participant’s ability to generate economic benefits by
using the asset in its highest and best use or by selling it to another market participant that would use the
asset in its highest and best use.
Fair Value of non-financial assets such as land and building are derived based on reports of independent
professional property valuators.
Explanatory information on fair value measurement of assets and liabilities, along with the fair value
hierarchy adopted by the Group in determining the fair value of financial assets, is provided in Note 5.1.7.
3.4.8. Impairment of financial assets
The Group, at the end of each reporting period, assesses whether there is any objective evidence that a
financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is
impaired and impairment losses are incurred if, and only if, there is objective evidence of impairment as a
result of one or more events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial
assets that can be reliably estimated.
It may not be possible to identify a single, discrete event that caused the impairment. Rather the combined
effect of several events may have caused the impairment. Objective evidence of impairment includes
observable data such as following:
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- significant financial difficulty of the issuer or obligor;
- a breach of contract, such as a default or delinquency in interest or principal payments;
- it becoming probable that the borrower will enter bankruptcy or other financial reorganization;
- where observable data indicate that there is a measurable decrease in the estimated future cash
flows from a group of financial assets since the initial recognition of those assets, although the
decrease cannot yet be identified with the individual financial assets in the group, including adverse
changes in repayment patterns or economic conditions that correlate with defaults.
3.4.8.1. Impairment charge / (reversal) and write off
The amount of the loss is measured as the difference between the asset’s carrying amount and the present
value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at
the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial
recognition). The amount of the loss is recognized in profit or loss. The carrying amount of the asset is
reduced through the use of an impairment allowance account.
Subsequent reversal of impairment loss, due to factors such as an improvement in the debtor’s credit rating,
is recognized in profit or loss. The reversal shall not result in a carrying amount of the financial asset that
exceeds what the amortized cost would have been had the impairment not been recognized at the date the
impairment is reversed.
Financial assets (and the related impairment allowance accounts) are written off either partially or in full,
when there is no realistic prospect of recovery. Where financial assets are secured, this is after receipt of
any proceeds from the realization of security.
3.4.8.2. Impairment of individually significant loans
The Group provides due consideration to the following factors while determining impairment loss on
individually significant loans:
- aggregate exposure on the obligor;

- viability of the customer’s business model and their capacity to service debt obligations;
- amount and timing of expected repayments and recoveries;
- realizable value of collateral security and other credit mitigants;
- likely residual interest on liquidation or bankruptcy;
3.4.8.3. Collective impairment assessment
Statistical methods are used to determine impairment losses on a collective basis for homogenous portfolio of
loan assets. The Group applies “net flow rate” methodology to calculate historical loss experience on a
collective portfolio basis. Under this, loans are grouped into ranges according to the number of days in
arrears and statistical analysis is used to estimate the likelihood that loans in each range will progress
through the various stages of delinquency and ultimately turn into uncollectible. The loss rates are regularly
reviewed against actual loss experience.
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3.4.8.4. Impairment of rescheduled loans and advances
Where possible, the Bank seeks to restructure loans rather than to take possession of collateral. This may
involve extending the repayment arrangements and the agreement of new loan covenants. Once the terms
have been re-negotiated, any impairment is measured using the original EIR as calculated before the
modification of terms and the loan is no longer considered past due.
Management continually reviews renegotiated loans to ensure that all criteria are met and that future
payments are likely to occur. The loans continue to be subject to an individual or collective impairment
assessment, calculated using the loan’s original effective interest rate.
3.4.8.5. Loan loss provision determined as prescribed in directive no. 02/75 of Nepal Rastra Bank
There is a Carve out from the requirement to determine impairment loss on financial assets – loans and
advances by adopting the ‘Incurred Loss Model’ as specified in para 63 of NAS 39 unless the reporting
entity is a bank or a financial institution registered as per Bank and Financial Institutions Act 2073. Such
entities shall measure impairment loss on loans and advances at the higher of:
- amount derived as per directive no. 2/75 of Nepal Rastra Bank for loan loss provisioning
generally applying a fixed percentage of impairment allowance based on overdue period; and
- amount determined as per para 63 of NAS 39 adopting Incurred Loss Model
The Group has adopted this mandatory treatment. As a result of this treatment, the Group has recognized the
amount of impairment loss on loans and advances that has been derived as per prudential norms specified
in NRB directive no. 2/75 because this amount is higher than the amount determined from incurred loss
model as specified in para 63 of NAS 39 as stated in the table presented hereunder.
NPR
2076 Asar 31 2075 Asar 32
Gross Loans and Advances to Customer and BFIs (principal
132,486,473,766 112,398,048,449
amount, excluding staff loans, accrued interest and impairment)
Loss provision per NRB Directive – alternative 1 2,194,868,230 1,790,215,401
Impairment Loss per NFRS – alternative 2 718,893,091 409,166,082
Loss provision recognized in financial statements (higher of the
2,194,868,230 1,790,215,401
two alternative)
3.4.9. Loan to employees at below-market interest rate
The Group has a policy of providing loans to its employees at below-market interest rate. This asset is
bifurcated and recognized as two different elements viz. a prepaid employee benefit and a loan asset.
Initially fair value of employee loan is determined by discounting the future loan repayments using a market
rate of interest. This fair value is recognized as loan asset and any excess of the principal loan amount over
the fair value is recognized as deferred employee expenditure.
Deferred employee expenditure is amortized over the loan tenor with the amortization amount recognized as
interest income and a corresponding finance expense within the personnel expense.
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3.4.10. Repurchase and reverse repurchase agreements
Securities sold under agreement to repurchase at a specified future date are not derecognized from the
Statement of Financial Position as the Group retains substantially all of the risks and rewards of ownership.
There being an obligation to return the sales proceeds along with the interest component on a subsequent
buy-back event, it is recognized as a liability. This treatment reflects the transaction’s economic substance to
the Group. The difference between the sale and repurchase prices is recorded as interest expense and is
amortized over the life of the agreement using the effective interest rate.
Conversely, securities purchased under agreements to resell at future date are not recognized in the
Statement of Financial Position. The consideration paid, including accrued interest, is recorded in the
Statement of Financial Position as an asset, reflecting the transaction’s economic substance to the Group. The
difference between the purchase and resale prices is recorded as ‘Interest Income’ and is accrued over the
life of the agreement using the effective interest rate.
3.4.11. Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount presented in the Consolidated
Statement of Financial Position when the Group holds a legally enforceable right to offset the recognized
amounts and there is an intention to either settle on a net basis, or realize the assets and settle the liabilities
simultaneously.
Income and expenses are presented on a net basis only when permitted under NFRSs, or for gains and
losses arising from a group of similar transaction such as in the Group’s trading activity.
3.4.12. Amortized cost measurement
An ‘amortized cost’ of a financial asset or financial liability is the amount:
- at which the financial asset or liability is measured at initial recognition

- (minus) principal repayments
- plus / (minus) the cumulative amortization using the EIR method of any difference between the initial
amount and the maturity amount
- (minus) any reduction for impairment.
The Group calculates amortized cost of a financial asset or a financial liability using the effective interest
rate. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
throughout the expected life of a financial asset or a financial liability to the net carrying amount of the
financial asset or liability.
The effective interest method is a method of calculating the amortized cost of a financial instrument and of
allocating the interest income or interest expense over the relevant period. The amortized cost is calculated
by taking into account any discount or premium on acquisition that is an integral part of the effective interest
rate.
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3.5. Trading assets
Trading assets are those assets that are acquired principally for the purpose of selling in the near term, or
held as part of a portfolio that is managed together for short-term profit. It includes non derivative financial
assets such as bonds, treasury bills, equities, etc. held primarily for trading purpose. If a trading asset is a
debt instrument, it is subject to the same accounting policy applied to financial assets measured at amortized
cost. If a trading asset is an equity instrument, it is subject to the same accounting policy applied to financial
assets measured at FVTPL.
3.6. Derivative assets and derivative liabilities
Derivative assets and derivative liabilities (derivatives) create rights and obligations that have the effect of
transferring one or more of the financial risks inherent in an underlying primary financial instrument between
the parties to the instrument. However, they generally do not result in a transfer of the underlying primary
financial instrument on inception of the contract, nor does such a transfer necessarily take place on maturity
of the contract.
The value of a derivative changes with the change in value of the underlying. Examples of derivative are
forward, futures, options or swap contracts. The underlying could be specified interest rate, security price,
commodity price, exchange rate, price index, etc.
Derivative financial instruments meet the definition of a financial instrument and are accounted for as
derivative financial asset or derivative financial liability measured at FVTPL and corresponding fair value
changes are recognized in profit or loss. The Group has not designated derivative as a hedging instrument
in an eligible hedging relationship under NFRS 9 – “Financial Instrument” and has not applied hedge
accounting.
3.7. Property and equipment
Property and equipment are tangible items that are held for and used in the provision of services, for rental
to others, or for administrative purposes, and are expected to be used for more than one year period. The
Group applies NAS 16 – “Property, Plant and Equipment” in the accounting of property and equipments.
Additional information on property and equipment with a reconciliation of carrying amounts, accumulated
depreciation at the beginning and at the end of the periods is presented in Note 4.13.
3.7.1. Basis of recognition
Property and equipment are recognized if it is probable that future economic benefits associated with the
asset will flow to the Group and the cost of the asset can be reliably measured.
3.7.2. Basis of measurement
An item of property and equipment that qualifies for recognition as an asset is initially measured at cost.
Cost includes expenditure that is directly attributable to the acquisition of the asset and eligible subsequent
expenditure. Subsequent expenditure is capitalized only when it is probable that the future economic benefits
of the expenditure will flow to the Group. Ongoing repairs and maintenance are expensed off as incurred.
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3.7.3. Cost model
The Group applies the cost model to all property and equipments and records these at cost of purchase
together with any incidental expenses thereon, less accumulated depreciation and any accumulated
impairment losses. Cost also include the cost of replacing part of the equipment when the recognition criteria
are met.
3.7.4. Revaluation model
The Group does not apply revaluation model for any class of property and equipment.
3.7.5. De-recognition
The carrying amount of an item of property and equipment is derecognized upon disposal or when no future
economic benefits are expected from its use. Any gain or loss arising on de-recognition of an asset
(calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
recognized in profit or loss in the year the asset is derecognized.
When replacement costs are recognized in the carrying amount of an item of property and equipment, the
remaining carrying amount of the replaced part is derecognized.
3.7.6. Capital work-in-progress
These are expenses of a capital nature directly incurred in the construction of buildings and system
development, awaiting capitalization. These are stated in the Statement of Financial Position at cost less any
accumulated impairment losses. Capital work-in-progress is transferred to the relevant asset when it is
available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in
the manner intended by management.
3.7.7. Depreciation
The Group provides depreciation from the date the assets are available for use up to the date of disposal.
Assets are depreciated on a straight line basis over its estimated useful lives.
Class of Fixed Assets Estimated Useful Life

Freehold Building Up to 50 years
Motor Vehicles Up to 10 years
Metal Furniture Up to 10 years
Wooden Furniture & Fixture Up to 10 years
Information Technology Hardware Up to 15 years
Office Equipment Up to 10 years
Leasehold Assets Up to 10 years
Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale or the
date that the asset is de-recognized. Depreciation does not cease when the assets become idle or is retired
from active use unless the asset is fully depreciated. Depreciation methods, useful lives and residual values
are reassessed at each reporting date and adjusted if appropriate.
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3.7.8. Changes in estimates
The asset’s residual values, useful lives and methods of depreciation are reviewed, and adjusted if
appropriate, at each financial year end.
3.7.9. Pledge or title restriction
At the reporting date none of the Property and Equipment items were pledge as securities for liabilities, and
there were no any kind of restrictions on the Group’s title over any of the assets.
3.8. Goodwill and intangible assets
3.8.1. Goodwill
Goodwill that arises on the acquisition of Subsidiaries is initially measured at cost. Goodwill is measured at
the excess of the aggregate of the consideration transferred taken together with the amount recognized for
any non-controlling interests and any previous interest held, over the net identifiable assets acquired and
liabilities assumed.
Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses. At the
reporting date, the Group does not have intangible asset in the form of goodwill.
3.8.2. Intangible assets
Intangible assets are identifiable non-monetary asset without physical substance, which are held for and used
in the provision of services, for rental to others or for administrative purposes. An intangible asset appearing
in the Group’s books is computer software. The Group applies NAS 38 – “Intangible Assets” in accounting
for its intangible assets.
The Group recognizes an intangible asset when:
- the cost of the asset can be measured reliably;
- there is control over the asset as a result of past events (for example, purchase or self-creation); and
- future economic benefits (inflows of cash or other assets) are expected from the asset.
Intangibles can be acquired by separate purchase; as part of a business combination; by a government

grant; by exchange of assets; or by self-creation (internal generation). These are measured at cost less
accumulated amortization and any accumulated impairment losses.
Additional information on intangible assets with a reconciliation of carrying amounts, accumulated

amortization at the beginning and at the end of the periods is presented in Note 4.14.
3.8.3. Intangible assets with indefinite useful lives
Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually either
individually or at the Cash Generating Unit level as appropriate, when circumstances indicate that the
carrying value is impaired. The useful life of an intangible asset with an indefinite life is reviewed annually to
determine whether the ‘indefinite life assessment’ continues to remain valid. If not, the change in the useful
life assessment from indefinite to finite is made on a prospective basis. At the reporting date the Group does
not have intangible assets with indefinite useful lives.
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3.8.4. De-recognition of intangible assets
Intangible assets are de-recognized on disposal or when future economic benefits are no more expected
from their use. Gains or losses arising from de-recognition of an intangible asset are measured as the
difference between the net disposal proceed and the carrying amount of the asset. Such a gain or loss is
recognized in profit or loss.
3.8.5. Amortization and impairment of intangible assets
The useful lives of intangible assets are assessed as either finite or infinite. Except for goodwill other
intangible assets with finite lives are amortized on a straight line basis in profit or loss from the date when
the asset is available for use, over the estimated useful economic life.
Class of Intangible Assets Estimated Useful Life

Software Up to 5 years
Intangible assets are assessed for impairment whenever there is an indication that the intangible asset may
be impaired. Expenditure on an intangible item that was initially recognized as an expense by the Group in
previous annual financial statements or interim financial statements are not recognized as part of the cost of
an intangible asset at a later date. Amortization methods, useful lives and residual values are reviewed at
each reporting date and adjusted if appropriate.
Goodwill and intangible assets with infinite useful lives such as license are not amortized, but are assessed
for impairment annually. The assessment of infinite life is reviewed annually to determine whether the infinite
life continues to be supportable.
3.8.6. Pledge or title restriction
At the reporting date none of the Intangible Asset items were pledge as securities for liabilities, and there
were no any kind of restrictions on the Group’s title over any of the assets.
3.9. Investment property
Investment properties are land or building or both other than those classified as property and equipment
under NAS 16 – “Property, Plant and Equipment”; and assets classified as non-current assets held for sale
under NFRS 5 – “Non-Current Assets Held for Sale & Discontinued Operations”. The Group has recognized
as investment property such land or land and building acquired by the Bank as non banking assets in course
of recovery of loans and advances to borrowers that have turned into chronic defaulters.
Non banking assets (only land and building) are initially recognized at cost. Subsequent to initial recognition
the Group has chosen to apply the cost model allowed by NAS 40 – “Investment Property” and since it is not
intended for owner-occupied use, a depreciation charge is not raised.
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3.10. Income Tax
Tax expense is the aggregate amount included in the determination of profit or loss for the period in respect
of current and deferred taxes. The Group applies NAS 12 – “Income Taxes” for the accounting of Income
Tax. Income tax expense is recognized in profit or loss, except to the extent it relates to items recognized
directly in equity or directly in other comprehensive income. Tax expense relating to items recognized
directly in other comprehensive income is recognized in the Statement of Other Comprehensive Income.
3.10.1. Current Tax
Current tax comprises the amount of income taxes payable (or recoverable) in respect of the taxable profit
(or tax loss) for the reporting period, and any amount adjusted to the tax payable (or receivable) in respect
of previous years. It is measured using tax rates enacted, or substantively enacted, at the reporting date.
The Group has determined tax provision for the reported period based on its accounting profit for that
period, and incorporating the effects of adjustments for taxation purpose as required under the Income Tax
Act 2002 A.D. (2058 B.S.) and amendments thereto, using a corporate tax rate of 30.00%.
The Group recognizes a current tax liability to the extent that the current tax expense for current and prior
periods remain unpaid. Conversely, a current tax asset is recognized if the tax paid in respect of current and
prior periods exceed the amount payable for those periods. Explanatory information on current tax
calculation is stated in Note 4.41.
3.10.2. Deferred Tax
Deferred tax is recognized at the reporting date in respect of temporary differences between the carrying
amounts of assets or liabilities for financial reporting purposes and the corresponding amounts used for
taxation purposes (i.e. tax base).
Deferred tax assets are recognized for all deductible temporary differences, carried forward unused tax
credits and carried forward unused tax losses (if any), to the extent that it is probable that future taxable
profits will be available against which they can be claimed. Deferred tax liabilities are the amounts of
income taxes payable in future periods in respect of taxable temporary differences.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that
it is no longer probable that the related tax benefit will be realized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to be applied to temporary
differences when they will be reversed, using tax rates enacted, or substantively enacted, at the reporting
date. Deferred tax income or expense relating to items recognized directly in equity is recognized in Other
Comprehensive Income. Explanatory information on deferred tax calculation is stated in Note 4.15.
3.11. Deposits, debt securities issued and subordinated liabilities
3.11.1. Deposits from customers and BFIs
The Group presents deposit accounts held by customers and those held by BFIs in the Bank under respective
line items in the face of the consolidated statement of financial position. These are classified as financial
liabilities measured at amortized cost.
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3.11.2. Debt securities issued
The Group presents debenture issued by the Bank under this line item. These are classified as financial
liabilities measured at amortized cost.
3.11.3. Subordinated liabilities
These comprise of liabilities subordinated to the claims of depositors, debt securities issued and other
creditors at the event of winding up. Items eligible for presentation under this line item include redeemable
preference share, subordinated notes issued, borrowings etc. These are subject to the same accounting
policies applied to financial liabilities measured at amortized cost. The Group does not have any
subordinated liabilities at the reporting date.
3.12. Provisions
The Group applies NAS 37 – “Provisions, Contingent Liabilities & Contingent Assets” in the accounting of
provisions.
3.12.1. Provision for restructuring
Provision for restructuring is recognized when the Group has approved a detailed and formal restructuring
plan, and the restructuring either has commenced or has been announced publicly. The Group does not
have any provision for restructuring at the reporting date.
3.12.2. Provisions for onerous contracts
A provision for onerous contracts is recognized when the expected benefits to be derived by the Group from
a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is
measured as the present value of the lower of the expected cost of terminating the contract and the expected
net cost of continuing with the contract. The Group does not have any onerous contracts at the reporting
date.
3.12.3. Other provisions
A provision is recognized if, as a result of a past event, the Group has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation.
The amount of Provisions are determined by discounting the expected future cash outflows at a pre-tax rate
that reflects current market assessments of the time value of money and the risks specific to the liability. The
unwinding of the discount is recognized as interest expense in profit or loss.
Before a provision is established, the Group recognizes any impairment loss on the assets associated with
that contract. The expense relating to any provision is presented in profit or loss net of any reimbursement.
3.13. Revenue recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and
the revenue can be measured reliably. The Group applies NAS 18 – “Revenue” in the accounting of
revenue, unless otherwise stated.
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3.13.1. Interest income
Interest income is recognized in profit or loss using the effective interest rate (EIR) method for all financial
assets measured at amortized cost. Interest income is earned on bank balances, investments in money market
and capital market instruments, loans and advances, etc.
EIR is the rate that exactly discounts estimated future cash receipts or cash payments through the expected
life of the financial asset to the net carrying amount of the financial asset. EIR method is a method of
calculating the amortized cost of a financial asset and of allocating the interest income over the relevant
period.
The Group has adopted the alternative treatment as provided by the Carve Out in NFRS implementation as
explained in Note 2.1.2 (e). Resultant of this the Group has excluded the full amount of upfront loan
management fees or commission received on loans and advances in the calculation of effective interest rate.
Nepal Rastra Bank has issued “Guideline on Recognition of Interest Income 2019” vide circular no. Bai. Bi.
Ni.Bi./Niti/Paripatra/KaKhaGa/01/076/77 for implementation in the financial statements of current
reporting period. This document has provided guidance on application of judgments in assessing the
collectability of interest on loans and advances and determining whether there is a need to recognize interest
suspense or to cease interest accrual. The bank has implemented this guideline and recognized interest
suspense and stopped interest accrual in qualifying accounts while determining the interest income for the
current reporting period. Explanatory information on interest income is stated in Note 4.29.
3.13.2. Fees and commission income
The Group earns fee and commission income on providing a diverse range of services to its customers. Such
income earned on services including account maintenance, remittance transactions, agency commissions,
e-commerce transactions, letter of credits, bank guarantees, loan management, etc. are recognized as the
related services are performed. Fee and commission earned for the provision of services over a period of
time are accrued over that period. Explanatory information on net fees and commission income is stated in
Note 4.31.
3.13.3. Dividend income
Dividend income is recognized when the right to receive income is established, which is the ex-dividend date
for quoted equity instruments and unit investments. In line with the requirements of the Income Tax Act 2002,
dividends received from domestic companies are recognized as final withholding income, while those
received in respect of unit investments in mutual funds and equity interest in foreign companies are
recognized in gross amounts and respective withholding taxes are recognized as tax receivables.
3.13.4. Net trading income
Trading income comprises of gains or losses relating to financial assets and liabilities held in the Group’s
trading books. The Group presents all accrued interest, dividend, unrealized fair value changes and disposal
gains or losses in respect of trading assets and liabilities under this head. The Group also presents foreign
exchange trading gains or losses arising on foreign exchange buy and sell transactions under trading
income. Explanatory information on net trading income is stated in Note 4.33.
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3.13.5. Other Operating Income
The Group presents income other than those presented under interest income, fees and commission income
and trading income under this heading. Income recognized here includes items such as foreign exchange
revaluation gain or loss; dividend on equity investments that are measured at FVTOCI; dividend from
subsidiary and associates; gain or loss on disposal of property and equipment; gain and loss on disposal of
investment property; and gain or loss on disposal of investment securities except for equity investments
measured at FVTOCI. Explanatory information on other operating income is stated in Note 4.34.
3.13.5.1. Foreign exchange revaluation gain / (loss)
Gains and losses arising from day-to-day revaluations of foreign currency denominated assets and liabilities,
exclusively due to the effect of changes in foreign currency exchange rates, are recognized in profit or loss
in the period in which they arise.
3.13.5.2. Gain / (loss) on disposal of property and equipment
Gain or loss on the disposal of property and equipment is determined on the difference between the asset’s
carrying amount on disposal date and the disposal proceeds, net of any disposal costs. This is recognized as
an item of Other Operating Income in the year in which significant risks and rewards incidental to the asset’s
ownership is transferred to the buyer.
3.14. Interest expense
Interest expense is recognized in profit or loss using the effective interest rate (EIR) method for all financial
liabilities measured at amortized cost. Interest expense is incurred on inter-bank borrowings, deposit from
customers, debenture issued, refinance borrowing, etc. Explanatory information on interest expense is stated
in Note 4.30.
3.15. Employee benefits
Employee benefits are all forms of consideration given by an entity in exchange for service rendered by
employees. The Group’s remuneration package includes both short term and long term benefits and
comprise of items such as salary, allowances, paid leave, accumulated leave, gratuity, provident fund and
annual statutory bonus.
The Group applies NAS 19 – “Employee Benefits” in accounting of all employee benefits and recognizes the
followings in its financial statements:
- a liability when an employee has provided service in exchange for employee benefits to be paid in
the future; and
- an expense when the Group consumes the economic benefit arising from service provided by an
employee in exchange for employee benefits.
Explanatory information on personnel expense is stated in Note 4.36.
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3.15.1. Short term employee benefits
These are employee benefits which fall due wholly within twelve months after the end of the period in which
the employees render the related service. This includes salary, allowances, medical insurance, statutory
bonus to employees, etc. These are measured on an undiscounted basis and are charged to profit or loss in
the period the services are received. Prepaid benefits on loans advanced to employees at below-market
interest rate are amortized over the full period of the loan.
3.15.2. Defined contribution plan (DCP)
DCPs are post-employment benefit plans under which an entity pays fixed contributions into a separate entity
(a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not
hold sufficient assets to pay all employee benefits relating to employee service in the current and prior
periods. The Group has one DCP in the form of ‘Provident Fund’.
Contributions by the Group to a DCP in proportion to the services rendered by its employees are recognized
as incurred in profit or loss in the same period. If there stands any payable to the DCP at the reporting date,
a corresponding liability is also recognized in the consolidated SoFP.
3.15.2.1. Description of DCP – Provident Fund
The Group entities contribute a fixed amount linked to the salary of individual employees on a monthly basis
to an approved provident fund managed by Nabil Bank Limited Retirement Fund (NRF). Related party
information on the Group’s dealings with NRF is stated in Note 5.7.5.
3.15.3. Defined benefit plans (DBP)
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group
has one DBP in the form of ‘Gratuity’.
3.15.3.1. Description of DBP – Gratuity
The Group has recognized gratuity obligations towards gratuity entitlement of individual employees and
meets the funding requirement to the related DBP which is managed by Nabil Bank Limited Retirement Fund
(NRF).
In case of the Bank, an actuarial valuation is carried out every year using the Projected Unit Credit Method
to ascertain the full liability under gratuity. The Projected Unit Credit Method involves estimating the amount
of future benefit that employees have earned in return for their service in the current and prior periods and
discounting the benefit amount to determine its present value.
The increase in gratuity liabilities attributable to the services provided by employees during the reporting
period i.e. current service cost (gratuity expense), together with the related finance charge are recognized as
personnel expense in profit or loss. Actuarial gains or losses are recognized in other comprehensive income.
In case of the Subsidiary, an actuarial valuation is not carried out considering the small organization
structure and hence actuarial gains or losses are not recognized. Instead the gratuity liability is fully funded
to the corresponding DBP to the extent of gratuity entitlement earned by the employees in the same period.
Employer’s contribution to DBP is recognized as gratuity expense in profit or loss.
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3.15.3.2. Recognition of Defined benefit obligation (DBO)
The net DBO comprises the present value of the defined benefit obligation, less past service cost not yet
recognized and less the fair value of plan assets out of which the obligations are to be settled directly. The
net DBO is recognized as a liability and presented as other liabilities in the consolidated SoFP.
In case where there is a net defined benefit asset, the value of any asset is restricted to the sum of any past
service cost not yet recognized and the present value of any economic benefits available in the form of
refunds from the plan or reductions in the future contributions to the plan.
In order to calculate the present value of economic benefits, consideration is given to any minimum funding
requirement that apply to the plan. An economic benefit is available to the Bank if it is realizable during the
life of the plan, or on settlement of the plan liabilities.
Explanatory information on DBOs, the related expenses, liabilities and details on actuarial valuations are
stated in Note 4.23.
3.15.4. Other long term employee benefits
The Group’s net obligation in respect of long term employee benefits, other than gratuity, is the amount of
future benefits that employees have earned in return for their service in the current and prior periods. That
benefit is discounted to determine its present value, and the fair value of any related assets is deducted. The
Group has recognized accumulated leave liability as other long term employee benefits.
The discount rate is the yield at the reporting date on current government bonds that have maturity dates
approximating to the terms of the employee benefit obligations, or if required adjusting those rate to
incorporate mismatches in respective maturities of the bond and the obligation.
3.15.4.1. Description of accumulated staff leave
The Group’s net obligation towards accumulated staff leave is determined using the Projected Unit Credit
Method. Net change in liability for accrued leave, including any actuarial gain and loss, are recognized in
profit or loss as staff expense.
3.15.5. Terminal benefits
Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of
those benefits and when the Group recognizes costs for a restructuring. If benefits are not expected to be
wholly settled within 12 months of the reporting date, then they are discounted. The Group does not have
any terminal benefit plan for the reporting period.
3.15.6. Change in estimate of employee bonus relating to prior period
On April 17, 2019 the honorable Labor Court, Kathmandu decided in a case relating to calculation of staff
bonus provision for FY 2016-17. The court ordered the bank to provide additional staff bonus of NPR
51,414,900 relating to the FY 2016-17 and also provide staff bonus by calculating the same in accordance
with the court’s decision in thereafter.
The Bank has recognized this event as a change in estimate under NAS 6 – Accounting Policies, Changes in
Accounting Estimates and Errors, and accounted for the incremental staff bonus provision in profit or loss for
FY 2018-19. This amount is presented as separate line item in Note 4.36 “Personnel Expenses”.
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3.16. Leases
The Group determines whether an arrangement is a lease (or it contains a lease) based on the substance of
the arrangement. It requires that under a leasing agreement the lessor must convey to the lessee, in return for
a payment or series of payments, the right to use an asset for an agreed period of time.
3.16.1. Lease Classification
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to
ownership. All other leases are classified as operating leases. Classification is made at the inception of the
lease.
Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather
than the form. Situations that would normally lead to a lease being classified as a finance lease include the
following:
- The lease transfers ownership of the asset to the lessee by the end of the lease term.
- The lessee has the option to purchase the asset at a price which is expected to be sufficiently lower
than fair value at the date the option becomes exercisable that, at the inception of the lease, it is
reasonably certain that the option will be exercised.
- The lease term is for the major part of the economic life of the asset, even if title is not transferred at
the inception of the lease,
- The present value of the minimum lease payments amounts to at least substantially all of the fair
value of the leased asset
- The lease assets are of a specialized nature such that only the lessee can use them without major
modifications being made
The Bank has applied NAS 17 – “Leases” in the accounting for leases. The lease payments under the
operating lease are recognized as an expense on a straight line basis over the lease term. In accordance
with the standard, spreading the total lease payments under the operating Lease on straight line basis over
the lease term is applied even if the payments are not made on such basis.
For the reporting period the Group did not have a finance lease in the capacity of the lessor or in the
capacity of a lessee and it also did not have an operating lease in the capacity of the lessor.
3.17. Foreign currency transactions, translation and balances
All foreign currency transactions are translated into the functional currency, which is Nepalese Rupees, using
the spot exchange rates prevailing at respective transaction dates. All foreign exchange gains and losses
resulting from the settlement of such transactions are recognized in profit or loss.
All monetary assets and liabilities denominated in foreign currencies are translated into the functional
currency by applying the year end exchange rates, and the resulting foreign exchange gains and losses are
recognized in profit or loss.
All non-monetary assets and liabilities held at historical cost are translated at historical exchange rates (rate
prevailing at transaction date), and those held at fair value are translated at year-end exchange rate. The
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resulting exchange gains and losses are recognized in profit or loss OR in other comprehensive income.
When gain or loss on a non-monetary item is recognized in other comprehensive income, any exchange
component of that gain or loss is also recognized in other comprehensive income. Similarly, when gain or
loss on a non-monetary item is recognized in profit or loss, any exchange component of that gain or loss is
also recognized in profit or loss.
3.18. Financial guarantee and loan commitment
Financial guarantees are contracts that require the Group to make specified payments to reimburse the
holder for a loss that it incurs because a specified debtor fails to make payment when it is due in accordance
with the terms of a debt instrument. Loan commitments are firm commitments to provide credit under pre-
specified terms and conditions.
Liabilities arising from financial guarantees or commitments to provide a loan at a below-market interest rate
are initially measured at fair value and the initial fair value is amortized over the life of the guarantee or the
commitment. The liability is subsequently carried at the higher of this amortized amount and the present
value of any expected payment to settle the liability when a payment under the contract has become
probable.
3.19. Share capital and reserves
Ordinary shares in the Bank are recognized at the amount paid per ordinary share. Nabil Bank Ltd.’s shares
are listed at Nepal Stock Exchange Ltd. The holders of ordinary shares are entitled to one vote per share at
general meetings of the bank and are entitled to receive the annual dividend payments. The Bank does not
have any other form of share capital (preference shares, convertible instruments, share based payments, etc.)
apart from the ordinary shares.
There are a number of statutory and non- statutory reserve headings maintained by the Group in order to
comply with regulatory framework and other operational requirements. The various reserve headings are
explained hereinafter:
3.19.1. General reserve
This is a statutory reserve under domestic banking regulations specified in NRB directive no. 4/75. The Bank
is required to appropriate a minimum 20% of current year’s net profit into this reserve heading each year
until it becomes double of paid up capital and thereafter a minimum 10% of profit each year. This reserve is
not available for distribution to shareholders in any form and requires specific approval of the central bank
for any transfers from this heading. There is no such statutory requirement for the Subsidiary.
3.19.2. Exchange equalization reserve
This is a statutory reserve under domestic banking regulations specified in NRB directive no. 4/75. The Bank
is required to appropriate 25% of current year’s total foreign exchange revaluation gain (except gain from
revaluation of Indian Currency) into this heading. There is no such statutory requirement for the Subsidiary.
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3.19.3. Fair value reserve
This is a non-statutory reserve and is a requirement in the application of accounting policy for financial
assets. NFRS 9 requires that cumulative net change in the fair value of financial assets measured at FVTOCI
is recognized under fair value reserve heading until the fair valued asset is de-recognized. Any realized fair
value changes upon disposal of the re-valued asset is reclassified from this reserve heading to retained
earnings. The Group has complied with this accounting policy application.
3.19.4. Asset revaluation reserve
This is a non-statutory reserve and is a requirement in the application of accounting policy for non-financial
assets such as property, equipment, investment property and intangible assets that are measured following a
re-valuation model. Revaluation reserve often serves as a cushion against unexpected losses but may not be
fully available to absorb unexpected losses due to the subsequent deterioration in market values and tax
consequences of revaluation. The Group does not have any amount to present under asset revaluation
reserve.
3.19.5. Capital reserve
This is a non-statutory reserve and represents the amount of all capital nature reserves such as the amounts
arising from share forfeiture, capital grants and capital reserve arising out of business combinations. Funds
in this reserve are not available for distribution of cash dividend but can be capitalized by issuing bonus
shares upon obtaining approval from the central bank. The Group has reclassified the balance in debenture
redemption reserve into capital reserve after full repayment of the corresponding debenture liability at
maturity.
3.19.6. Special reserve
This is a statutory reserve under domestic banking regulations specified in NRB circular 12/072/73. The
Bank is required to appropriate an amount equivalent to 100% of capitalized portion of interest income on
borrowing accounts where credit facility was rescheduled or restructured, resultant of the great earthquake
that struck the nation in April 2015. Fund in this account can be reclassified to retained earnings upon full
and final repayment of the credit facility. There is no such statutory requirement for the Subsidiary.
3.19.7. Capital redemption reserve
This is a non-statutory reserve created for making payment towards redeemable non-convertible preference
shares. The Group does not have any amount to present under capital redemption reserve.
3.19.8. Dividend equalization fund
This is a non-statutory reserve created for supporting the dividend payout policy by appropriating amounts
from current year’s profit to fund for future period’s payout. Fund in this heading is available for distribution
to shareholders upon approval of the board of directors and endorsement of the share holders’ general
meeting. The Group does not have any amount to present under dividend equalization fund.
3.19.9. Capital adjustment / equalization fund
This is a non-statutory reserve created by appropriating amounts from current year’s profit and by crediting
amounts for calls is advance towards raising capital. The Group does not have any amount to present under
capital adjustment / equalization fund.
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3.19.10. Corporate social responsibility fund
This is a statutory reserve under domestic banking regulations specified in NRB circular 11/073/74. The
Bank is required to appropriate an amount equivalent to 1% of net profit into this fund annually. The fund is
created towards funding the Bank’s corporate social responsibility expenditure during the subsequent year.
There is no such statutory requirement for the Subsidiary.
3.19.11. Investment adjustment reserve
This is a statutory reserve under domestic banking regulations specified in NRB directive no. 4/075 and
8/075. The Bank is required to maintain balance in this reserve heading which is calculated at fixed
percentages of the cost of equity investments that are not held for trading. Changes in this reserve
requirement are reclassified to retained earnings. There is no such statutory requirement for the Subsidiary.
3.19.12. Actuarial gain / loss reserve
This is a non-statutory reserve and is a requirement in the application of accounting policy for employee
benefits. NAS 19 requires that actuarial gain or loss resultant of the change in actuarial assumptions used to
value defined benefit obligations be presented under this reserve heading. Any change in this reserve
heading is recognized through other comprehensive income and is not an appropriation of net profit. The
Group has complied with this accounting policy application.
3.19.13. Regulatory reserve
This is a statutory reserve under domestic banking regulations specified in NRB directive no. 4/075. In the
transition to NFRS from previous GAAP the Bank is required to reclassify all amounts that are resultant of re-
measurement adjustments and that are recognized in retained earnings into this reserve heading. The
amount reclassified to this reserve includes re-measurement adjustments such as interest income recognized
against interest receivables; amount of deferred tax assets, actuarial loss recognized in other comprehensive
income, amount of goodwill recognized under NFRS, etc. Balance in this reserve is not regarded as free for
distribution of dividend. The Bank has complied with this regulatory requirement. There is no such statutory
requirement for the Subsidiary.
3.19.14. Other reserve fund
Contingent reserve
This is a non-statutory reserve and is created by the Bank towards meeting operational requirements. A fixed
amount is annually appropriated from net profit into this fund. Balance in this fund is utilized towards
providing financial support to employees for treatment of severe cases of life threatening ailments that are
not adequately covered under medical insurance policy. Amount paid to staff from this fund is re-classified to
retained earnings and is recognized as personnel expense in profit or loss. No such reserve is maintained by
the Subsidiary.
Debenture Redemption Reserve
This is a statutory reserve under domestic banking regulations specified in NRB directive no.16/075. The
Bank is required to maintain a redemption reserve in respect of borrowing raised through debenture
issuance. The Group has reclassified the balance in debenture redemption reserve into capital reserve after
full repayment of the corresponding debenture liability at maturity.
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Employees training and capacity development fund
This is a statutory reserve under domestic banking regulations specified in NRB circular 6/075. The Bank is
required to incur expenses towards employee training and development for an amount that is equivalent to
at least 3% of the preceding year’s total personnel expenses. Any shortfall amount in meeting this mandatory
expense requirement in the current year will have to be transferred to this reserve fund through appropriation
of net profit and the amount shall accumulate in the fund available for related expenses in the subsequent
year. Balance in this fund is directly reclassified to retained earnings in the subsequent year to the extent of
expenses made for employees training related activities.
3.20. Earnings per share
The Group calculates basic and diluted Earnings Per Share (EPS) data for its ordinary shares as required
under Nepal Accounting Standards – NAS 33 on “Earnings Per Share”. Basic EPS is calculated by dividing
the profit or loss that is attributable to ordinary shareholders of the Bank by the weighted average number of
ordinary shares outstanding during the reported period. Diluted EPS is calculated by adjusting the profit or
loss that is attributable to the ordinary shareholders of the Bank and the weighted average number of
ordinary shares outstanding adjusted for the effects of all dilutive potential ordinary shares, such as share
options granted to employees and hybrid capital instruments.
The Group does not hold any dilutive potential ordinary shares, and as such the Basic EPS is also the Diluted
EPS of the Group.
3.21. Segment reporting
The Group has disclosed information on operating segments to enable users of financial statements to
evaluate the nature and financial effects of the Group’s business activities and that of the economic
environment in which the Group operates. Detail information on the Group’s operating segment is presented
in Note 5.4.
3.22. Statement of cash flows
The Group has reported its cash flow statement applying the ‘Direct Method’ in accordance with NAS 07 –
“Statement of Cash Flows”. Application of the direct method in presenting cash flow statement discloses
major classes of gross cash receipts and gross cash payments, thereby provides information which may be
useful in estimating future cash flows of an entity.
‘Cash and Cash Equivalents’, as referred to in the statement of cash flows are the same as presented on the
face of the consolidated statement of financial position. ‘Cash Flows’ are inflows and outflows of cash and
cash equivalents.
The statement of cash flows reports cash flows during the period classified by operating, investing and
financing activities as defined hereunder:
- Operating Activities: are the principal revenue generating activities of the reporting entity and other
activities that are not classified as investing or financing activities.
- Investing Activities: are the acquisition and disposal of long-term assets and other long term
investments.
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- Financing Activities: are activities that result in changes in the size and composition of the
contributed equity and borrowed capital of the Group.
4. Schedules of explanatory information to financial statements
Following explanatory information relating to figures presented in the consolidated statement of financial
position and in the consolidated statement of profit or loss is presented in this section as per formats
prescribed in directive 4/075 of the Nepal Rastra Bank.
1. explanatory information prescribed in financial reporting format table 4.1 to table 4.41.1 (NRB
Unified directive no.4/075) are printed in excel worksheets enclosed.
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4.42 Statement of distributable profit or loss
Statement of distributable profit or loss is calculated in line with the requirement of NRB Unified directive no.
4/075.
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5. Disclosure and additional information
5.1. Risk management
Effective risk management has been the key to the bank’s success over the years and it is integral to the
bank’s long term business sustainability. The bank’s risk management objective is to strike balance between
risk and return towards delivering optimum risk-adjusted return on capital over a longer time horizon.
Towards achieving this objective the bank has implemented robust risk management architecture as well as
policies and processes approved by its board of directors. These encompass identification, measurement and
mitigation of risks across various facets of banking operations.
5.1.1. Risk Governance Framework

The bank follows three lines of defenses model in its risk governance framework. This model has been
effective in practical application of the principles of good risk governance in the identification, evaluation,
measurement, monitoring and mitigation of risks across all functional areas of the organization.
Bank’s Risk Governance Framework
The bank follows following principles to manage risks in the organization:

 Risk appetite and strategy: Establishment of risk appetite statement and strategy which articulates the
nature, type and level of risk the bank is willing to assume.
 Capital management: Capital management is driven by bank’s strategic objective and accounts for
the regulatory, economic and commercial environment in which bank operates.
 Governance and oversight: Proper governance and oversight through a clear, effective and robust
governance structure with well defined transparent and consistent lines of responsibility.
 Risk culture: Promotion of strong risk culture that support and provides appropriate standard and
incentive for professional and responsible behavior.
 Risk policies and process : Implementation of policies to ensure that risk management practices and
process are effective at all levels and execution of sound risk management process to actively
identify, measure, control, monitor and report risk inherent in all products activities, process, systems
and exposure .
 Risk management infrastructure: Ensure sufficient resources and systems infrastructures are in place
to enable effective risk management.
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5.1.2. Risk Management Framework
Nabil Bank manages risk through integrated risk management framework of the Bank. It is built upon the
principles of Basel Committee on Banking Supervision and follows the Risk Management Guideline issued by
Nepal Rastra Bank.
The main objectives of the framework are to:

 Establish common principles and standards for management and control of all risks.
 Provide a shared framework and language to improve awareness of risk management.
 Anticipate and mitigate risk events before they become a reality.
 Protect against possible losses.
 Integrate risk management in all levels of decision making.
 Ensure earnings stability.
 Provide clear accountability and responsibility for risk management
 Define the bank’s risk appetite and align the bank’s portfolios and business strategy accordingly.
 Maintain the bank’s capital adequacy and liquidity position.
 Further strengthen governance, controls and accountability across the organization.
Bank’s Risk Management Framework
Board of Directors
Committee Relating to
Money Laundering
Committee Relating to Staff
and Prevention
Services and Facilities
Risk Management Committee Audit Committee
Chief Executive Officer
ALCO
(Including CEO)
Liquidity Risk, Market
Risk, ALM
Chief Risk Officer
- Market Risk Credit Risk

- Operation Risk - Infrastructure Banking
- Compliance - Corporate Banking
- ISO - Mid Corp, SME and Micro
- Legal and Other Risk - Retail Banking
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5.1.3. Components in Risk Management Framework
The bank’s risk management framework has following components:
 Active Board and Senior Management Oversight

Board level control has been exercised on the management of risk across the bank. There is
presence of clear, effective and robust structure with well defined transparent and consistent lines of
responsibilities. Board level committees like Audit, Risk, AML Committee meets regularly to review
the risk profile and take decision accordingly.
 Policies and Procedures:

The Bank has implemented policies/procedures to ensure that risk management practices and
process are effective at all levels and execution of sound risk management process to actively
identify, measure, control, monitor and report risk inherent in all products activities, process, systems
and exposure.
 Risk Management Function

There are guidelines on key responsibilities and escalation and risk reporting model in the Bank.
Risk Management Committee (RMC) reports to the Board of the Bank for key risk areas on a periodic
basis.
 Appropriate Management Information System

Sound and effective management information system (MIS) is crucial for bank’s credit management.
Information generated by MIS helps Senior Management/Board to take decisions regarding risks,
credit portfolio decisions, and estimate capital requirements on a meaningful and timely basis. The
Bank has an effective MIS that helps senior management/board to take decisions regarding credit
risk management.
 Effective Internal Control and Limits

For the purpose of monitoring the risks with the risk appetite of the bank, approved risk limits are in
place. Internal controls are embedded on day-to-day business and are designed to ensure, to the
extent possible, that the banking activities are efficient and effective, information is reliable, timely
and complete and the bank is compliant with applicable laws and regulation.
 Risk Appetite and Risk Tolerance

In line with the Risk Appetite Statement and Risk Tolerance metric, responsibility matrix has been
developed for various risk areas and trigger level monitoring. The risk appetite statement considers
risk capacity, financial position, and strength of its core earnings. Risk appetite is set and approved
by the Board and is overseen on an ongoing basis.
The Bank has also set risk tolerance level for different risk aspect such triggers level sets risk
appetite of the Bank and the amount of uncertainty that Bank is willing to take. Risk Tolerance levels
are defined in quantitative aspects which also work as Key Risk Indicators which shall trigger
remedial measures in case such indicators are crossed.
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 Risk Culture
Risk culture covers awareness, attitude and behavior of staffs towards risk and risk management. The
Bank promotes strong risk culture that support appropriate standard for professional and responsible
behavior. The bank has defined three line of defense towards fostering risk culture across
organization: first (Branch/Strategic Business Units), second (Risk Units) and third (Internal Audit).
 Training
Training has been provided internally and externally as per need to enhance skill and knowledge in
the area of risk management for the officials of the bank.
5.1.4. Board Level Committees
For effective management and active oversight of risk, bank’s board of directors has constituted four board
level committees for oversight in specific risks areas. Each committee has its own standard operating
guideline which defines objectives, responsibilities and operating procedures of the committee. Brief
description of the committees is given below:
5.1.4.1. Risk Management Committee
The committee is constituted in line with the spirit of Risk Management Guidelines (RMG) of Nepal Rastra
Bank and the NRB Unified Directives. This committee highlights on risk governance and identifies the need of
a strong risk management framework, well defined risk management processes and effective risk assessment,
measurement and mitigation mechanism.
Member secretary of this committee is the bank’s Chief Risk Officer (CRO) who leads the risk management
function in the bank. Within the bank’s organization structure the CRO has direct reporting line to the
board’s Risk Management Committee and a dotted line to the CEO. This structure ensures an effective
independent risk management function with sufficient stature, independence, resources and a direct access
to the board.
The Committee oversees overall risk governance framework of the Bank. It ensures that proper risk
management policy and procedures are in place and effectively practiced at all levels within the Bank. In
doing so it assesses whether or not the Bank’s policies and procedures are adequate and implemented. It
also reviews the adequacy and effectiveness of Management Information System and Internal Control System
within the Bank.
The Committee, on an ongoing basis, defines and reviews risk appetite of the Bank in relation to overall
business risk with specific focus on credit risk, market risk, operation risk and liquidity risk. It advises the
board on overall risk tolerance levels of the bank throughout the strategic implementation process. By doing
so, it aims to achieve the following objectives:
 To ensure that the bank has developed and implemented proper risk management system as
required by directives and risk management guidelines of regulatory authority.
 To ensure adequacy and appropriateness of the bank’s risk management system.
Major roles and responsibilities of the Risk Management Committee are:

 To devise appropriate risk management system and procedures and obtain the board’s approval for
its implementation.
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 To keep the directors informed on the adequacy and appropriateness of existing risk identification
and risk management system and contribute in the systems development.
 To regularly review the level of risk inherent to business activities, risk tolerance capacity, risk
management strategy, policies and guidelines, and submit its observation reports to the board on
the adequacy of the same.
 To receive risk management report from the management on regular basis and discuss on the
methodology of risk assessment, evaluation, monitoring and control; and submit necessary inputs to
the board.
 To conduct regular discussion and analysis of capital adequacy corresponding to risk asset, Internal
Capital Adequacy Assessment Process (ICAAP), adequacy of systems and policies in line of business
strategy and risk tolerance and provide necessary inputs/suggestions to the board.
 To provide suggestions to the board for the development of policy and structures according to
central bank’s directives/ guidelines, bank’s internal thresholds, and national as well as international
best practices.
 To suggest the board on necessary policy formulation or decision process based on stress testing
results.
 To submit reports to the board with necessary suggestions after conducting analysis of the limit and
rationale of the authority delegated by the board.
 To submit reports to the board on the bank’s asset structure and status of asset mobilization,
anticipation of income from their mobilization, increase or decrease in their quality and the tasks
performed by Asset Liability Committee (ALCO).
 To study impact on financial position of the bank due to change in economy and submit the report
along with adequate mitigation strategies to the board.
5.1.4.2. Audit Committee
The Committee is constituted and it functions in compliance to the regulatory provisions of NRB Unified
Directives and the provisions of Sections 164 and 165 of Company Act 2063. The Committee’s role is
extensive and strongly supports the board in dealing with aspects of good corporate governance, internal
control, risks management, financial reporting, legal and regulatory compliance and ethical conduct of
business.
Member secretary of this committee is the bank’s Head of Internal Audit function. Within the bank’s
organization structure the Head of Internal Audit has direct reporting line to the board’s Audit Committee.
Internal Audit is conducted in line with the spirit of risk based audit. Internal Auditors and Statutory Auditors
have direct access to the Audit Committee.
The Audit Committee reviews and discusses a number of internal audit reports, statutory audit report and
regulator’s inspection report. The Committee updates the board of its actions by submitting copies of its
minutes, which are discussed at board meetings. It also provides recommendations for strengthening the
bank’s system of internal controls and its effectiveness in practice. The committee also invites members from
the bank’s senior management team for facilitating effective discussions on specific agenda on need basis.
Major responsibilities of the Audit Committee are:

 Reviewing the bank’s overall system of internal controls.
 Reviewing observations and recommendations made in audit reports issued by internal auditors,
statutory auditors and regulators.
 Reviewing the bank’s financial statements for accuracy and compliance in relation to prevailing
financial reporting standards and regulatory provisions.
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 Reviewing compliance in relation to the bank’s internal policy and prevailing regulatory and legal
provisions.
 Reviewing risk management systems and security position of the bank in respect of exposure to
credit risk, operations risk, market risk and other risks.
 Advising and recommending the board on management actions required for achieving the desired
level of effectiveness and compliance in response to above reviews.
 Recommending the board on appointing statutory auditor, auditor’s remuneration and reviewing that
the auditor’s actions in course of the bank’s audit, do not contravene with applicable laws and
provisions.
5.1.4.3. Anti Money Laundering (AML) Committee
The committee is constituted in line with the provision of directives of the Nepal Rastra Bank. The committee
oversees implementation of Assets (Money) Laundering Prevention Act, 2064, Assets (Money) Laundering
Prevention Rules, 2073, NRB Unified Directives and other legal and regulatory requirements related to
prevention of money laundering. The committee oversees risk arising from noncompliance of AML policies
and procedures based on national and international best practices.
Member secretary of this committee is the bank’s Head of AML and KYC, who reports to the CRO, thereby
ensuring independence of this function within the bank’s organization structure.
Major roles and responsibilities of the AML Committee are:

 To review AML/CFT related policies and programs and recommend its review/approval to the
board as required.
 To review the quarterly reports on implementation status of the AML/CFT framework in the bank.
 To provide feedback/recommendations to the board on issues pertaining to AML/CFT.
 To accomplish any other additional responsibilities that may be entrusted upon the committee from
time to time as per the requirement of prevailing laws, instructions/directions of the regulatory
authority or the bank’s board of directors.
 To make assessment of AML/KYC risk to the bank in national level perspective taking consideration
of events and factors happening in domestic and international markets.
5.1.4.4. Committee Relating to Staff Services and Facilities
The committee is constituted in line with the provision of directives of the Nepal Rastra Bank. The
committee’s roles and responsibilities are extensive and the committee strongly supports the board in
formulating policies, guidelines, rules relating to human resource function. The committee functions and
discharges its duties and responsibilities in compliance to regulatory requirements.
Major responsibilities of the Committee Relating to Staff Services and Facilities are:
 To assist the board in the formulation / update of human resource related policies.
 To conduct periodic study and analysis of remuneration structure of the bank vis.a.vis. industry.
 To recommend to the board revisions in pay scale within prevailing rules, guidelines.
 To review systems and processes covering job description, key performance indicators and
performance appraisal.
 To develop plan, policy and standard of manpower planning related functions such as recruitment
and selection, appointment, placement, remuneration, transfer, promotion, career development,
performance appraisal, reward & punishment and labor relations.
 To review employees bye-laws, organization structure and succession planning.
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5.1.5. Managing Credit Risk
Banking business in Nepal is exposed to credit risk to a much larger extent and the bank’s business is also
concentrated around its credit risk exposure. Bulk of the earnings is generated from credit related business,
be it in form of interest income, fee income or forex income. The bank operates in a dynamic economic
environment where the margin between performing assets and non-performing assets can often be very thin.
Therefore it is always a major threat that any of the bank’s credit exposure may experience default.
The bank’s objective in credit risk management is to minimize the risk and maximize the risk adjusted rate of
return by on-boarding and maintaining credit exposure within the acceptable parameters. The bank seeks to
achieve this objective through effective implementation of its Credit Policy and its Investment Policy within its
overall risk management structure. These policy documents guide on the do’s and the don’ts in business
generation. Any generation of risk assets and their impact on long term value generation is well deliberated
in every credit proposals. Risks and returns are properly weighed and risk mitigating measures are explicitly
spelled out.
The head of credit risk management function reports to the Chief Risk Officer, thereby ensuring the
independence of credit risk function from business generation. Risk division does not have any business level
targets, nor has any incentive for growth in business. The division oversees global, macro, micro and unit
level risk that arise out of daily business operation as well as out of changes in market conditions that affect
particular borrowing customers / counterparties.
The Bank’s credit functions are broadly categorized as Large and Corporate (including infrastructure
financing), SME and Retail credit. Credit Risk Division is manned with separate set of skills for analyzing
risks in these different credit functions and all of them report to the Chief Risk Officer. Besides, the Bank has
a system to check and analyze the health of credit portfolio minutely at each borrowing unit level irrespective
of size of the exposure on defined periodic manner. At all times this system ensures that any borrowing unit
showing smoke signal gets prompt doses of correction as deemed appropriate.
The Bank makes credit extension decision by assessing each business proposal thoroughly. It also ensures
that the inherent credit risks that are associated with the business are addressed appropriately through
coverage of better safety margin, additional collateral back up and lower exposure to keep the business at
low leverage.
There is separate Credit Administration and Support Division (CAS Division), which prepares security
documents and retains custody of same. This is a four eyes concept in verifying the security aspects in line
with the approved conditions. CAS Division is also independent to business division and it ensures, on an
ongoing basis, on the safety and going concern of the borrowers, through post relationship assessment.
Periodic review of all accounts under credit exposure is one of the prudent practices that the Bank follows in
order to take necessary steps to avert/minimize the risk. Quarterly on-site inspection of the borrower and
suggestion for timely corrective actions itself help protect borrowers as well. Besides, in case any borrower
face difficulties and pose a risk to the Bank in terms of fall in the value of assets, the Bank sets aside
adequate loan loss provision. Any business decision for credit exposure is taken only if it is vetted and
approved by the credit risk division. Business generation unit singly cannot take a credit exposure decision
except on instrument purchase where security is instrument itself and the loan gets settled once instrument is
realized.
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Bank has standardized Product Papers that stipulate proper governance and procedure for all credit
relationship. Similarly, periodic monitoring of business and annual review of credit relationship provides the
Bank a fair idea on whether or not to continue the relationship. Besides, periodic review of same by the
Internal Audit Department or Statutory Audit also assists in identifying the status of exposure/relationship in
line with guiding documents of the Bank. Any weaknesses on the part of the business of borrower and the
relationship strength are independently assessed by Internal Audit and the advice is taken positively for
necessary changes. Similarly, a separate division, Centralized Loan Administration Department (CLAD)
which has reporting lines to the COO and takes responsibility for exposure accounting, disbursement and
settlement.
Within the Credit Risk Management, processes are well defined where checking, control and independence
of the credit extension, risk assessment, review, monitoring and exposure accounting is fully complied with.
All such actions and processes are properly recorded, reported and discussed. These reports on need basis
and on a defined frequency are put to the oversight of Senior Management, Risk Management Committee
and the Board. Internal Audit Department of the Bank too takes up the matter on credit observations and
discusses the same at Audit Committee. Senior Management or the Board, on need basis, issue instructions
as appropriate.
5.1.6. Market Risk
Market Risks are discussed at Asset Liability Management Committee (ALCO) of the bank and even
discussed at respective division level on open position on daily basis. The limits for open position are
controlled level wise, which ensures in-depth knowledge of the market and movement before taking decision
(by choice). The monthly reports on such aspects are well discussed and dealt in ALCO.
ALCO ensures functioning of the jobs in line with the policies and procedures and suggests/recommends for
necessary steps collectively to address the risk on interest rate movement, exchange rate movement and
equity price changes.
Most of the market operations (investments) are done from the Treasury Front Office which directly reports to
the CEO and exposure accounting including booking of income/expense is done from Treasury Back Office
(TBO) which reports to the Chief Operating Officer.
Overall investment made and necessary analysis of the investments, including appropriate suggestions, are
issued from Treasury Middle Office (TMO) which reviews the portfolio periodically. TMO is independent
from other treasury units and reports to Chief Risk Officer. Any credit impairment in the investment books
are accounted for, for fair assessment of the portfolio.
The Bank assesses the open position on daily basis and calculates risk exposure for allocation of required
capital in line with Basel provisions. Likely impact on earnings due to change in the market condition and
change in the standing of the counterparty are well assessed periodically and necessary actions are taken
as appropriate.
TFO is equipped with advanced dealing platform for timely and effectively concluding the deals. Similarly,
the unit is equipped with modern and advanced information system on global news, market movements and
any incidents so that bank can manage and maintain the position favourably.
The Bank in line with Basel provisions calculates risk exposure and allocates sufficient capital/cushion for
perceived market risks.
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5.1.7. Operation Risk
Operations Risk that arises out of inefficient processes and people inside and outside the Bank is increasing
these days. Operation risk, market risk and other risks are discussed in the Asset Liability Management
Committee (Alco) in line with ALM Policy. Banking System (BS) is another area of concern and vulnerable to
threats from outside. Information and Technology Division in the Bank reviews and checks the security
aspects in line with IT Policy of the Bank. Bank has conducted an IS Audit of the Bank’s system and
suggestions given by the audit with respect to safety and security standards are being put in place.
Bank has separate division to oversee operation risk including Compliance of KYC and AML. The division is
headed by senior level staff with adequate access to the daily report, operational processes and right to
recommend the changes in the system and procedures. The head of operation risk directly reports to the
Chief Risk Officer. Bank has SIMs (Standing Instruction Manuals) for all businesses of the Bank. All the
activities are undertaken in line with the set criteria in the SIMs, policies and guidelines including Directives
and circulars from central bank. Similarly, daily functions at operations are independently reported through
separate reporting line other than business generation and credit risk where independence of checking and
control is complied with.
Processes are reviewed periodically so that their perfection can be weighed and any shortcoming can be
addressed. Most of the functions like line approval, bill payment, loan disbursement are centralized which
controls activities that can cause errors due to inadequate knowledge on the part of staff. Similarly,
awareness to the public is made on our services and products periodically by placing notices in the website
of the Bank, or in branches or publishing notices as appropriate. Staffs are given orientation on the job
including that of system of the Bank before they are placed for the job and are guided to follow the SIMs for
the job. Any staff for the first time in any job is put under the supervision of an experienced staff and is
allowed to work independently after attaining required skills. Bank has Whistle Blowing Policy to report to
senior or management directly on anyone’s suspicious conduct outside and inside the Bank. Skill
development and skill enhancement programs are conducted on periodic basis and staffs identified for the
program get the opportunity for training, seminar and workshop. Adequate numbers of trainings are
conducted and staffs required with training are given the opportunity for skill enhancement. Knowledge
sharing is one of the core methods of skill development. If a staff gets any training, s/he is encouraged to
share the same among the peers in the division/branch.
In operations, the Bank has put in place a maker and checker concept in which a transaction has to
compulsorily go through two individuals from a control standpoint with proper transaction right to capture
deviations, if any. Similarly MIS Reports are generated to check correctness of transactions and any errors
are promptly addressed and rectified. The activities of a personnel and division / branch can be viewed and
monitored centrally through an integrated system, which helps in minimizing the risk of misconduct, if any.
The Bank has an on-line replication Disaster Recovery Site (DRS) which captures the record of each
transaction that takes place at the Production Server. Both the sites (Production Server and Disaster Recovery
– Back up site) are housed in well-conditioned and high shock resistant buildings and are at different seismic
zone, far from each other. DRS is outsourced to a professionally managed company having expertise in the
sector. Drill is being done periodically and is being tested occasionally to assess the functioning of DRS.
Each desktop is implemented with Active Directory System (ADS) which does not allow user to take away the
data in devices like data traveler (pen drive) or bring in data for processing or any other purposes posing
threat to the repository. Similarly individual data in desk are also stored and backed up in periodic interval
at data center so that any loss of data in desktop can be retrieved from data center.
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The Bank has a separate Legal division which is adequately manned by qualified and experienced staff. All
legal agreements, deeds and documents including claims and charges are thoroughly studied prior to
making any decision involving such documents. Compliance with existing rules and regulations and business
practices practiced globally and locally are taken into account before arriving at the decision. Professional
services of experts are sought after wherever the Bank needs expert's opinion on pertinent issues.
The Bank in line with Basel provisions calculates risk exposure and allocates sufficient capital/cushion for
perceived operational risks.
5.1.8. Liquidity Risk
Liquidity risk is the Bank’s inability to meet its contractual and contingent financial obligations as they fall
due, without incurring unacceptable losses. The obligations could be both ‘On’ and ‘Off’ balance sheet. By
the inherent nature of its business model, banks are always vulnerable to liquidity and solvency problems
that can arise from mismatches in the tenor of its assets and liabilities.
The Bank’s primary liquidity risk management objective is to assess the funding requirement towards meeting
its obligations and to ensure that adequate funds are available at appropriate times, both under normal and
stressed conditions. Towards this the Bank has its ALCO functioning as the main platform for its liquidity risk
management. The ALCO reviews the liquidity risk management policies and procedures. Setting and
reviewing liquidity targets, reviewing liquidity concentrations, assessing default probability of liquid assets,
diversifying sources of funding and maturity of deposits, monitoring the liquidity impact of off-balance sheet
transactions are some of the primary jobs of the ALCO towards achieving effective asset liability
management.
The ALCO uses tools such as structural liquidity statements, interest rate risk monitoring tables, stress test
reports, liquidity profile of the Bank and that of the industry, liquidity ratio analysis, trend analysis and
forecasting in reviewing and managing the liquidity risk. Minutes of the ALCO meeting are discussed at the
board meetings to ensure senior oversight.
The Bank mitigates liquidity risk by maintaining adequate liquid assets towards meeting its short term and
predictable outflows. Liquid funds are parked in many institutions and instruments to achieve the required
diversification. Contingency funding arrangements are in place in the form of unutilized credit limits in inter-
bank market and the accessibility to the repo market. In normal circumstances the Bank operates with
adequate buffer liquidity over the regulatory required liquidity ratios and has been able to manage its
liquidity risk satisfactorily.
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5.1.9. Legal and compliance risk management
The Bank has a separate Legal division which is adequately manned by qualified and experienced staff. All
legal agreements, deeds and documents including claims and charges are thoroughly studied prior to
making any decision involving such documents. In case where the Bank needs expert’s opinion on
particular issue, experts from the industry are consulted.
Bank has a separate division to oversee operation risk including Compliance of KYC and AML. The division
is headed by senior level official with adequate access to the daily report, operational processes and right
to recommend the changes in the system and procedures. The head of Operation Risk, KYC / AML directly
reports to the Chief Risk Officer.
5.1.10. Fair value of financial assets and liabilities
5.1.10.1. Fair value hierarchy
All financial assets and financial liabilities for which fair value is measured or disclosed in the financial
statements are categorized within the following fair value hierarchy, which reflects the significance of the
inputs used in making the measurement, ranging from Level 1 inputs to Level 3 inputs.
Level 1
Fair value measurements are derived based on the input of unadjusted quoted market prices in an active
market, for identical instruments. These could be stock exchanges or dealer price quotations (assets and long
positions are measured at a bid price, liabilities and short positions are measured at an asking price),
without any deduction for transaction costs.
A market is considered as active if transactions for assets or liabilities take place with sufficient frequency
and volume to provide reliable pricing information on an arm’s length basis. The Group measures fair value
of an instrument at active market price without adjustment for factors such as transaction costs.
Level 2
Fair value measurements are derived based on observable inputs, which are either observed directly such as
in terms of prices or observed indirectly such as in terms of factors that are derived from prices. Such
observable inputs include:
- quoted prices for similar instruments in active markets;

- quoted prices for identical or similar instruments in inactive markets;
- financial instruments are valued using models where all significant inputs are observable.
If a market for a financial instrument is not active, then the Group establishes fair value using a valuation
technique. Valuation techniques include using recent arm’s length transactions between knowledgeable,
willing parties (if available), reference to the current fair value of other instruments that are substantially the
same, discounted cash flow analysis and option pricing models.
The chosen valuation technique makes maximum use of market inputs, relies as little as possible on estimates
specific to the Group, incorporates all factors that market participants would consider in setting a price, and
is consistent with accepted economic methodologies for pricing financial instruments.
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Inputs to valuation techniques reasonably represent market expectations and measures of the risk-return
factors inherent in the financial instrument. The Group calibrates valuation techniques and tests them for
validity using prices from observable current market transactions in the same instrument or based on other
available observable market data.
The best evidence of the fair value of a financial instrument at initial recognition is the transaction price, i.e.
the fair value of the consideration given or received, unless the fair value of that instrument is evidenced by
comparison with other observable current market transactions in the same instrument, i.e. without
modification or repackaging, or based on a valuation technique whose variables include only data from
observable markets.
When transaction price provides the best evidence of fair value at initial recognition, the financial instrument
is initially measured at the transaction price and any difference between this price and the value
subsequently obtained from a valuation model is subsequently recognized in profit or loss on an appropriate
basis over the life of the instrument but not later than when the valuation is supported wholly by observable
market data or the transaction is closed out.
Level 3
Fair value measurements are derived using valuation techniques in which current market transactions or
observable market data are not available. Under this, instruments are fair valued using valuation models
which have been tested against prices or inputs to actual market transactions and make use of the Group’s
best estimate of the most appropriate model assumptions. Unobservable inputs have a significant effect on
the instrument's value.
Valuation models are adjusted to reflect the spread for bid and ask prices to reflect costs to close out
positions, credit and debit valuation adjustments, liquidity spread and limitations in the models. Also, profit
or loss calculated when such financial instruments are first recorded (day 1 profit or loss) is deferred and
recognized only when the inputs become observable or on de- recognition of the instrument.
Valuation techniques include, among others, applying Net Present Value and Discounted Cash Flow Models
over similar instruments for which observable market prices exists and comparing the results.
Assumptions and inputs used in valuation models include risk-free and benchmark interest rates, risk
premiums in estimating discount rates, bond and equity prices, foreign exchange rates, expected price
volatilities and corrections.
Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of
counterparties involved where appropriate. Fair value estimates obtained from models are adjusted for any
other factors, such as liquidity risk or model uncertainties; to the extent that the Group assumes a third-party
market participant would take them into account in a pricing transaction.
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Nabil Bank Limited
5.1.10.2. Financial assets and liabilities measured at fair value
The Group carries the following financial instruments at fair value:
- derivative financial instruments

- trading assets (equities and mutual funds measured at FVTPL)
- equity investments measured at FVTOCI
Derivative financial instruments such as forward foreign exchange contracts are valued using forward pricing
model which incorporates various inputs (Level 2) including foreign exchange spot and forward premiums.
Investment in equity instruments and mutual funds are valued at closing market prices (Level 1) for quoted
securities. Where quoted securities are not frequently traded to guarantee a fair market value, those are
valued using observable market inputs taking reference price of similar securities (Level 2). Where the
securities are unquoted, those are valued at net worth per share (Level 3).
Information on financial instruments carried at fair value and their position in the fair value hierarchy is
presented below.
Group - at 16-Jul-2019 ( 2076 Ashadh 31) NPR
Level 1 Level 2 Level 3
Other Trading Assets 46,179,820 - -
- Equity instruments - quoted 21,125,953 - -
- Equity instruments - not quoted - - -
- Mutual Funds Units 25,053,867 - -
Equity Investments measured at FVTOCI 1,494,127,672 - 2,413,321,365
- Equity instruments - quoted 1,009,132,590 - 1,952,121,472
- Equity instruments - not quoted - - 461,199,893
Total 1,540,307,492 - 2,413,321,365
Bank - at 16-Jul-2019 ( 2076 Ashadh 31) NPR
Other Trading Assets - - -
- Equity instruments - quoted - - -
- Mutual Funds Units - - -
- Equity instruments - quoted 1,009,132,590 - 1,952,121,472
Total 1,494,127,672 - 2,413,321,365
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Group - at 16-Jul-2018 (2075 Ashadh 32) NPR

Other Trading Assets 74,553,065 - -

- Equity instruments - quoted 61,463,815 - -

- Equity instruments - quoted 925,495,871 - 1,861,375,737
Total 1,329,603,783 - 2,223,705,931
Bank - at 16-Jul-2018 (2075 Ashadh 32) NPR
Other Trading Assets - - -
- Equity instruments - quoted - - -
- Mutual Funds Units - - -
- Equity instruments - quoted 925,495,871 - 1,861,375,737
Total 1,255,050,718 - 2,223,705,931
5.1.10.3. Fair value determination of financial assets measured at FVTOCI
The Group has classified certain investments made in equity instruments and in mutual fund units as financial
assets measured at FVTOCI. Equity Instrument wise details of financial assets measured at FVTOCI is
presented in Note 4.8.3. Information for the Group and the Bank are the same because the Subsidiary has
not classified any financial assets at FVTOCI.
5.2. Capital management
Capital is crucial component in any business and even more so in case of banks. Hence, bank capital is
regulated so as to withstand the impact of adverse developments in its internal operations and its external
operating environment. Similarly, the Bank needs to maintain sufficient capital for business growth. The Bank
has adopted ICAAP and it follows Risk Management Guidelines while taking decision on any business.
Capital planning is an integral part of the Bank’s medium term strategic planning and annual budget
formulation process. Total risk weighted exposures for the projected level of business operations is
calculated, the required capital level is projected, and a plan is formulated to maintain the required capital.
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Nabil Bank Limited
Ever since its establishment 33 years ago, the Bank has been able to generate and retain substantial
earnings in order to ensure adequate capital formation, as required for its business growth. The Bank is well
capitalized and able to maintain the required capital through internal generation, and equally through other
means if needed.
5.2.1. Qualitative disclosures
The bank has not raised any capital through capital instruments.
5.2.2. Quantitative disclosures
5.2.2.1. Capital structure and capital adequacy
 Tier I Capital and a breakdown of its Components

NPR In full figure
Amount
Particulars Nabil Group
Tier 1 Capital (Core Capital) (CET1 +AT1)
Common Equity Tier 1 (CET 1)
9,011,845,400 9,011,845,400
a Paid up Equity Share Capital
74,000 74,000
b Equity Share Premium
- -
c Proposed Bonus Equity Shares
6,435,500,000 6,435,500,000
d Statutory General Reserves
3,735,333,814 3,860,780,222
e Retained Earnings
- -
f Un-audited current year cumulative profit/(Loss)
300,000,000 300,000,000
g Capital Redemption Reserve
- -
h Capital Adjustment Reserve
- -
i Dividend Equalization Reserves
- -
j Debenture Redemption Reserve
14,743,882 14,743,882
k Other Free Reserve
- -
l Less: Goodwill
(41,400,858) (41,865,896)
m Less: Intangible Assets
- -
n Less: Deferred Tax Assets
- -
o Less: Fictitious Assets
- -
p Less: Investment in equity in licensed Financial Institutions
(78,000,000) -
q Less: Investment in equity of institutions with financial interests
(10,171,700) -
r Less: Investment in equity of institutions in excess of limits
- -
s Less: Investments arising out of underwriting commitments
- -
t Less: Reciprocal crossholdings
- -
u Less: Purchase of land & building in excess of limit & unutilized
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- -
v Less: Cash Flow Hedge
- -
w Less: Defined Benefit Pension Assets
- -
x Less: Unrecognized Defined Benefit Pension Liabilities
- -
y Less: Other Deductions
Adjustments under Pillar II
- -
Less: Shortfall in Provision (6.4 a 1)
Less: Loans and Facilities extended to Related Parties and Restricted - -

lending (6.4 a 2)
19,367,924,538 19,581,077,608
Common Equity Tier 1 (CET 1)
- -
a Perpetual Non Cumulative Preference Share Capital
- -
b Perpetual Debt Instruments
- -
c Stock Premium
- -
Additional Tier 1 (AT1)
19,367,924,538 19,581,077,608
Tier 1 Capital (Core Capital) (CET1 +AT1)
 Tier II Capital and a breakdown of its Components

NPR In full figure
Amount
Particulars Nabil Group
- -
a Cumulative and/or Redeemable Preference Share
- -
b Subordinated Term Debt
- -
c Hybrid Capital Instruments
- -
d Stock Premium
1,314,687,350 1,314,687,350
e General loan loss provision
539,600,000 539,600,000
f Exchange Equalization Reserve
4,884,881 4,884,881
g Investment Adjustment Reserve
- -
h Assets Revaluation Reserve
18,373,837 18,373,837
i Other Reserves
1,877,546,068 1,877,546,068
Supplementary Capital (Tier II)
 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:
In July/August 2008 the Bank had issued “8.50% Nabil Bank Bond 2075” of face value NPR 1,000
per unit for NPR 300 million. The debentures had a maturity of 10 years from issue i.e. 2018 A.D. and
have already been redeemed. The bank has created debenture redemption reserve of the full value and
the Capital Redemption Reserve stands at NPR 300,000 thousands on reporting date.
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Amounts eligible to be reckoned as capital funds is the balance in debenture redemption reserve of
NPR 300 million and this is eligible for inclusion under Tier I Capital.
 Deductions from Capital:

The bank has deducted the following items in calculation of Tier I Capital Fund:
- NPR 41.40 million net book value of Software

- NPR 10.17 million equity investments in licensed MFIs in excess of regulatory ceiling
- NPR 78.00 million equity investments in subsidiary company.
 Total Qualifying Capital

NPR In full figure
Amount
Qualifying Capital Nabil Group
19,367,924,538 19,581,077,608
Core Capital (Tier 1 Capital)
1,877,546,068 1,877,546,068
Supplementary Capital (Tier II)
21,245,470,606 21,458,623,676
Total Capital Fund (Tier I and Tier II)
 Capital Adequacy Ratio

%
Capital Adequacy Ratios Nabil Bank Nabil Group
11.40% 11.51%
Common Equity Tier 1 Ratio
11.40% 11.51%
Core Capital Ratio – Tier I
12.50% 12.62%
Total Capital Ratio – Tier I + Tier II
 Summary of the bank’s internal approach to assess the adequacy of its capital to support current
and future activities, if applicable:
Nabil Bank adopts robust risk management framework. The bank’s policies and procedures that
guides on management of risk are approved by the Board of Directors. These documents guide on
independent identification, measurement and management of risks across various businesses.
The bank follows Internal Capital Adequacy Assessment Process (ICAAP) and Risk Management
Guideline while taking decision on any business. It has always taken note of ICAAP and has taken
steps accordingly in ensuring soundness of capital position and sustainability of the business. Bank’s
different committees like Audit Committee, Risk Management Committee review the business and risks
periodically and take account of stress test results, scenario analysis so as to align risk, return and
capital in sustainable manner.
While emanating businesses in the bank, principles of risk, return, capital charge and return against
capital consumption (charge) are taken into account. The bank also defines risk aspects, taking stock
of domestic economic scenario, and puts in place the system to minimize and remove such risk. The
risk appetite and approach towards risk taking is well discussed in management level and board
level. It is always aligned with the business, its return and capital.
Basel disclosures have been complied with, addressing the risks and adopting measures to minimize
their impact. Increasing complexities in risks, vulnerabilities of businesses and fast changing world
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with intense competition pose a threat to sustainability. The Bank, in order to address the varieties of
risk that keep coming out of business operations, has identified different risks and adopted different
measures to minimize them.
Capital planning is an integral part of the bank’s medium term strategic planning and annual budget
formulation process. Total risk weighted exposures for the projected level of business is calculated,
the required capital level is projected, and a plan is formulated to retain the required capital.
Ever since its establishment, the bank has been able to generate and retain substantial earnings in
order to ensure adequate capital formation, as required for its business growth. The bank is well
capitalized and able to maintain the required capital through internal generation, and equally
through capital markets if needed.
 Summary of the terms, conditions and main features of all capital instruments, especially in case of
subordinated term debts including hybrid capital instruments.
The bank has not raised any capital through hybrid capital instruments.
Information on the terms, conditions and main features of debenture issued by the Bank is stated in
the preceding Note 5.2.2.1.
5.2.2.2. Risk Exposure
 Risk weighted exposures for Credit Risk, Market Risk and Operational Risk
NPR In full figure
Amount
RISK WEIGHTED EXPOSURES Nabil Group
Risk Weighted Exposure for Credit Risk 153,435,774,508 153,546,343,414
Risk Weighted Exposure for Operational Risk 10,549,273,198 10,549,273,198
Risk Weighted Exposure for Market Risk 209,897,788 209,897,788
Add: 2% of the total RWE add by Supervisory Review 3,283,898,910 3,286,110,288
Add: 3% Capital Charge for Operational Risk 2,474,705,183 2,504,929,643
Total Risk Weighted Exposures (a+b+c) 169,953,549,587 170,096,554,331
 Risk weighted exposures under each 11 categories of Credit Risk

NPR In full figure
Risk Weighted Exposure
Categories of Credit Risk Nabil Group
1 Claims on Government and Central Bank - -
2 Claims on Other Financial Entities - -
3 Claims on Banks 5,705,013,902 5,705,620,996
4 Claims on Domestic Corporates and Securities Firms 94,331,479,278 94,331,479,278
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5 Claims on Regulatory Retail Portfolio 9,270,107,974 9,270,107,974
6 Claims secured by residential properties 6,789,731,299 6,789,731,299
7 Claims secured by Commercial real estate 193,754,986 193,754,986
8 Past due claims 685,930,176 685,930,176
9 High Risk claims 9,441,601,515 9,522,815,021
6,736,168,387 6,764,916,692
10 Other Assets
20,281,986,992 20,281,986,992
11 Off Balance Sheet Items
153,445,170,764 153,546,343,414
Total Credit Risk Weighted Exposure
 Total Risk Weighted Exposure calculation table

NPR In full figure
Amount
Risk Weighted Exposures Nabil Group
Credit Risk Exposure 153,435,774,508 153,546,343,414
Operational Risk Exposure 10,549,273,198 10,549,273,198
Market Risk Exposure 209,897,788 209,897,788
Adjustments under Pillar II

Add: 3% of the total RWE under Supervisory Review 3,283,898,910 3,286,110,288
Add: 3% Capital Charge for Operational Risk 2,474,705,183 2,504,929,643
Total Risk Weighted Exposures 169,953,549,587 170,096,554,331
Total Core Capital Fund 19,367,924,538 19,581,077,608
Total Capital Fund 21,245,470,606 21,458,623,676
Common Equity Tier 1 Capital to Total Risk Weighted Exposures 11.40% 11.51%
Total Tier 1 Capital to Total Risk Weighted Exposures 11.40% 11.51%
Total Capital Fund to Total Risk Weighted Exposure 12.50% 12.62%
 Amount of Non-Performing Assets (both Gross and Net)

NPR In full figure
Non-Performing Loans Gross Amount Loss Provision Net Amount
3,913,390 3,913,390 -
a Restructured and rescheduled
288,803,317 72,200,829 216,602,487
b Sub-Standard
45,932,829 22,966,414 22,966,414
c Doubtful
646,394,334 646,394,334 -
d Loss
Total 985,043,869 745,474,967 239,568,902
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Nabil Bank Limited
5.2.3. Compliance with external requirement
The Bank is subject to compliance requirement under NRB Directive No.1/075 which stipulated a minimum
Total Capital Adequacy Ratio (CAR) of 11.00%. The Bank complied with this requirement at all times during
the reporting period. Compliance position at the reporting date is presented hereunder:
Capital Parameter Requirement Nabil Bank

Minimum Common Equity Capital Ratio 4.50% 11.40%
Minimum Tier 1 Capital (Excluding conservation buffer) 6.00% 9.40%
Minimum Total Capital Excluding conservation buffer) 8.50% 10.50%
Minimum Total Capital (including conservation buffer) 11.00% 12.50%
Leverage Ratio 4.00% 7.25%
Page 59 of 72
Nabil Bank Limited
5.3. Classification of financial assets and financial liabilities
Financial assets and financial liabilities are measured on an ongoing basis either at fair value or at
amortized cost. The summary of significant accounting policies describes how different classes of financial
assets and financial liabilities are measured, and how income and expenses, including fair value gains and
losses, are recognized.
The following tables provide a reconciliation of the carrying amounts of financial assets and financial
liabilities presented in the consolidated statement of financial position and as per their classification in
accordance with NFRS 9.
Group – at 16-Jul-2019 (2076 Ashadh 31) NPR full figure
Measured at Fair Value Measured at

FVTPL FVTOCI Amortized Cost Total
Financial Assets :
Cash and Cash Equivalents - - 12,593,161,161 12,593,161,161
Due from Nepal Rastra Bank - - 6,191,827,829 6,191,827,829
Placement with BFIs - - 11,078,728,915 11,078,728,915
Derivative Financial Instruments 8,539,057,559 - - 8,539,057,559
Other Trading Assets 46,179,820 - - 46,179,820
Loans and Advances to BFIs - - 6,058,492,754 6,058,492,754
Loans and Advances to
Customers - - 127,500,242,971 127,500,242,971
Investment Securities - 3,907,449,037 21,639,623,652 25,547,072,689
Total Financial Assets 8,585,237,379 3,907,449,037 185,062,077,282 197,554,763,698
Financial Liabilities :
Due to BFIs - - 1,419,042,125 1,419,042,125
Due to Nepal Rastra Bank - - 88,474,781 88,474,781
Deposits from Customers - - 162,910,477,681 162,910,477,681
Debt Securities Issued - - - -
Subordinated Term Debt - - - -
Total Financial Liabilities 8,335,072,510 - 164,417,994,587 172,753,067,097
Bank – at 16-Jul-2019 (2076 Ashadh 31) NPR full figure

Financial Assets :
Other Trading Assets - - - -
Loans and Advances to Customers - - 127,500,242,971 127,500,242,971
Due to BFIs - - 1,419,042,125 1,419,042,125
Debt Securities Issued - - - -
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Nabil Bank Limited
Group – at 16-Jul-2018 (2075 Ashadh 32) NPR full figure

Financial Assets :
Other Trading Assets 74,553,065 - - 74,553,065
Due to BFIs - - 1,168,664,933 1,168,664,933
Debt Securities Issued - - 60,000,000 60,000,000
Bank – at 16-Jul-2018 (2075 Ashadh 32) NPR full figure

Financial Assets :
Other Trading Assets - - - -
Due to BFIs - - 1,168,664,933 1,168,664,933
Debt Securities Issued - - 60,000,000 60,000,000
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Nabil Bank Limited
5.4. Operating Segment Information for the Bank
5.4.1. General Information
(a) Factors that management used to identify the entity's reportable segments
The Bank has adopted “Management Approach” for identifying the operating segments i.e. seven segments
based on the geographic locations of its offices in the 7 provinces of the country. Interest earnings and
foreign exchange gains/losses generated while conducting businesses under different segments are reported
under the respective segment. Equity and Tax Expense are not allocated to the individual segments. For
segmentation purpose, all business transactions of offices and business units located in a particular province
are grouped together. All transactions between the units are conducted on arm's length basis, with intra unit
revenue and cost being nullified at the bank level.
(b) Description of the types of products and services from which each reportable segment derives its
revenues
The products and services offered by the Bank can be broadly divided into the following categories:
- Financial Intermediation: The core business of deposit mobilization and lending activities
along with other auxiliary banking services other than treasury, cards and trade finance
operations are reported under financial intermediation.
- Treasury Operations: The Bank's entire investment book and foreign currency operations
comes under treasury operations. Treasury is responsible for overall liquidity management,
open market operations and investment portfolio.
- Trade Finance Operations: The Bank's entire trade finance operations like LC, Guarantee are
handled by trade finance.
- Cards, e-banking and alternate channels: All the debit and credit card issuance, merchant
relationships, e-banking, m-banking and ATM management are reported here.
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Nabil Bank Limited
5.4.2. Information about profit or loss, assets and liabilities

Particulars Province 1 Province 2 Province 3 Gandaki Province 5 Karnali Province 7 Total
1,867,517,573 1,900,354,189 11,317,045,089 839,833,193 1,295,787,157 19,349,787 254,920,293 17,494,807,280

Revenues from external
a customers
31,710,199 11,087,165 13,357,209,654 33,653,668 22,476,296 20,053,495 26,509,213 13,502,699,689
b Intersegment revenues
816,378,195 603,335,816 4,208,746,534 434,995,836 566,306,897 (16,690,661) 99,504,288 6,712,576,904
c Net Revenue
1,761,378,548 1,819,685,113 9,414,583,668 771,820,407 1,223,191,815 16,627,212 236,493,105 15,243,779,866
d Interest Revenue
(357,682,760) (167,917,159) (7,014,328,522) (226,455,728) (241,735,283) (12,789,542) (63,617,143) (8,084,526,137)
e Interest Expense
1,403,695,788 1,651,767,954 2,400,255,146 545,364,678 981,456,532 3,837,670 172,875,962 7,159,253,729
f Net Interest Revenue (b)

(9,355,926) (14,361,570) (104,247,116) (13,935,286) (14,337,041) (5,080,479) (8,855,170) (170,172,587)
g Depreciation and amortisation

816,378,195 603,335,816 4,208,746,534 434,995,836 566,306,897 (16,690,661) 99,504,288 6,712,576,904
h Segment profit/(loss)
Entity's interest in the profit or - - - - - - -

i loss of associates accounted for
using equity method
- - - - - - -
j Other material non-cash items

8,346,046,070 4,570,180,036 136,872,399,123 5,986,321,204 6,054,384,748 575,560,118 1,968,150,398 164,373,041,697
- Deposits
15,724,268,399 16,439,978,055 81,608,440,736 6,324,831,673 11,032,716,734 222,065,766 2,206,434,363 133,558,735,725
- Loans
(41,807,154) (49,853,307) (281,310,483) (11,588,898) (17,456,320) (1,786,266) (1,371,988) (405,174,417)
k Impairment of assets
16,679,752,138 17,558,274,927 145,813,304,372 6,788,828,789 11,531,496,891 331,334,143 2,435,830,204 201,138,821,464
l Segment assets
16,679,752,138 17,558,274,928 122,624,691,977 6,788,828,788 11,531,496,892 331,334,143 2,435,830,203 177,950,209,071
m Segment liabilities
5.4.3. Measurement of operating segment profit or loss, assets and liabilities
a Basis of accounting for any transactions between reportable segments:
Interest earnings and foreign exchange gains/losses generated while conducting businesses
under different segments are reported under the respective segment. Equity and Tax Expense are
not allocated to the individual segments. For segmentation purpose, all business transactions of
offices and business units located in a particular province are grouped together. All transactions
between the units are conducted on arm's length basis, with intra unit revenue and cost being
nullified at the bank level.
Nature of any differences between the measurements of the reportable segment's profits or
b
losses and the entity's profit or loss before income tax
None
Nature of any differences between the measurements of the reportable segment's assets and the
c entity's assets.
None
Nature of any changes from prior periods in the measurement methods used to determine
d reported segment profit or loss and the effect, if any,
The Bank previously used to have segmental division on the basis of business segment and
geographical segment. The same has now been changed to geographical segment on the basis
of points of representation present in 7 provinces of the country.
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Nabil Bank Limited
e Nature and effect of any asymmetrical allocations to reportable segments
None
5.4.4. Reconciliations of reportable segment revenues, profit or loss, assets and liabilities
a Revenue
Particulars Amount
30,997,506,969
Total Revenues for reportable segments
-
Other Revenues
(13,502,699,689)
Elimination of intersegment revenues
17,494,807,280
Entity's Revenues
Note:
b Profit or Loss
Particulars Amount
Total profit or loss for reportable segments 6,712,576,904
Other profit or loss (staff bonus) (671,257,690)
Elimination of intersegment profits
Unallocated amounts:
Profit before income tax 6,041,319,214
Note:
c Assets
Particulars Amount
201,138,821,464
Total assets for reportable segments
-
Other assets
Unallocated amounts
201,138,821,464
Entity's assets
Note:
d Liabilities
Particulars Amount
Total liabilities for reportable segments 177,950,209,071
Other liabilities -
Unallocated amounts
Entity's liabilities 177,950,209,071
Note:
Page 64 of 72
Nabil Bank Limited
5.4.5. Information about products and services
Particulars Amount
22,318,669,316
a From Financial Intermediation
8,025,094,895
b From Treasury Operations
302,630,607
c From Trade Finance Operations
351,112,151
d Cards, e-banking and alternate channels
5.4.6. Information about geographical areas
Particulars Amount
a Domestic 30,995,227,792
- Province 1 1,899,227,773
- Province 2 1,911,441,353
- Province 3 24,671,975,566
- Province 4 873,486,860
- Province 5 1,318,263,452
- Province 6 39,403,282
- Province 7 281,429,506
b Foreign 2,279,177
Total (a+b) 30,997,506,969
5.4.7. Information about major customers
There is no concentration in revenue generation of the Group or the Bank to such extent that the revenue
from a single external customer amounts to 10 percent or more of the Group’s or the Bank’s revenue.
5.5. Share options and share based payment
The Group did not have any share options or share-based payment transactions in the reporting period or
the earliest period presented in this financial statements.
5.6. Contingent liabilities and commitment
Contingent Liabilities are possible obligations whose existence will be confirmed only by uncertain future
events or present obligations where the transfer of economic benefits is not probable or cannot be reliably
measured. The Group applies NAS 37 – “Provisions, Contingent Liabilities and Contingent Assets” in
accounting of contingent liabilities and commitments.
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Nabil Bank Limited
To meet the financial needs of customers, the Group enters into various contracts that result in irrevocable
commitments and contingent liabilities to the Group. These consist of financial guarantees, letter of credit and
other undrawn commitments to lend. Guarantees, Letters of Credit and Acceptances under Letters of Credit
commits the Group to make payments on behalf of customers in the event of a specific act, generally related
to trade transactions and performance under contracts. They carry a similar credit risk to loans.
In the normal course of business, the Group makes various irrevocable commitments and incurs certain
contingent liabilities with legal recourse to its customers. Even though these obligations may not be
recognized on reporting date, they do contain credit risk and are therefore a part of the overall risk profile of
the Group. Accordingly they are disclosed unless remote. Explanatory information on the Group’s contingent
liabilities and commitments are given in Note 4.28.
5.7. Related parties disclosures
In the ordinary course of its business operation the Bank has conducted commercial transactions with parties
who are defined as related parties in NAS 24 - ‘Related Party Disclosures’. All those transaction were
conducted on an arm's length basis.
In considering each possible related party relationship, attention is directed to the substance of the
relationship and not merely the legal form.
5.7.1. List of related parties
S. No. Name of Related Party Relationship

1. Mr. Shambhu Prasad Poudyal Chairman, Board of Directors
2. Mr. Nirvana Kumar Chaudhary Member, Board of Directors
3. Mr. Pratap Kumar Pathak Member, Board of Directors
4. Mr. Virender Paul Dani Member, Board of Directors
5. Mr. Dayaram Gopal Agrawal Member, Board of Directors
6. Mr. Malay Mukherjee Member, Board of Directors
7. Mr. Upendra Prasad Poudyal Member, Board of Directors
8. Mr. Anil Keshary Shah Chief Executive Officer
9. Nabil Investment Banking Ltd. Subsidiary Company
10. NADEP Laghubitta Bittiya Sanstha Ltd. Associate Company
11. Nabil Bank Ltd. Retirement Fund Post Employment Benefit Plan
Page 66 of 72
Nabil Bank Limited
5.7.2. Key management personnel (KMP)
Key Management Personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the entity directly or indirectly. The Board of Directors and Chief Executive Officer
(CEO) of the bank are identified as KMP of the bank.
5.7.3 Transactions with Board of Directors

NPR
2019 2018
Board meeting fees/allowances 2,410,822 3,030,000
Travel, accommodation and other board expenses 4,590,893 3,406,124
Total 7,001,715.00 6,436,124
All board of directors are non-executive directors. The directors are entitled to meeting fees on attending
board and board committee meetings as well as monthly allowances to cover for expenses towards
communication and periodicals.
5.7.4 Transactions with Chief Executive Officer

NPR
Particulars 2019 2018
Short Term Employee Benefits 18,112,972 4,199,295
Gross Salary Payments 13,200,000 2,888,872
Other current benefits and payments 4,912,972 1,310,423
Post-employment benefits 1,701,704 139,415
Total 19,814,676 4,338,710
5.7.3. Transactions and agreements involving KMP and their Close Family Members (CFM)
CFMs of a KMP are those family members who may be expected to influence, or be influenced by, that KMP
in their dealings with the Group. They may include KMP’s spouse and children, children of the KMP’s spouse
and dependents of the KMP or of the KMP’s spouse. CFM are related parties to the Bank and the Group.
For the reported period there have been no payments or transactions with CFM of KMP except in the normal
course of banking business, both for the Bank and the Group.
5.7.4. Transactions with Subsidiary and Associate companies
Statement of Profit or Loss NPR

Transactions with Transactions with
Subsidiary Associate
Particulars 2019 2018 2019 2018
Interest Income - 1,709 23,947,375 14,467,795
Interest Expense 47,527,516 5,149,027 23,971,263 14,493,052
Other Income 857,103 1,630,500 - -
Other Expense 3,517,466 570,833 - -
Dividend Income (net) 19,760,000 14,820,000 - -
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Nabil Bank Limited
Statement of Financial Position NPR
Transactions with Subsidiary Transactions with Associate
Particulars 2019 2018 2019 2018

Total Assets - - 170,500,000 227,500,000
Loans and advances - - 170,500,000 227,500,000
Other receivables - - - -
Total Liabilities 44,976,530 113,601,669 2,960,020 20,761,300
Customer deposits 44,976,530 113,601,669 2,960,020 20,761,300
Other Payables - - - -
Commitments and Contingencies NPR
Transactions with Subsidiary Transactions with Associate

Particulars 2019 2018 2017 2019 2018
Undrawn Credit Limits - 7,600,000 7,600,000 - -
Other Contingencies - - -
Total - 7,600,000 7,600,000 - -
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Nabil Bank Limited
5.7.5. Transactions with post-employment benefit plan
The Group’s post employment benefit plan is managed by Nabil Bank Ltd. Retirement Fund. Following
transactions were conducted with the plan.
Statement of Profit or Loss NPR

Interest Income - -
Interest Expense 233,172,551 136,736,538
Other Income 4,972,663 3,572,342
Other Expense (gratuity and provident fund
contributions) 227,599,259 118,572,589
Statement of Financial Position NPR

Total Assets - -
Loans and advances - -
Other receivables - -
Total Liabilities 2,661,663,746 1,948,056,176
Customer deposits 2,661,663,746 1,907,851,716
Other Payables (debenture liabilities) - 40,205,000
Commitments and Contingencies NPR

Undrawn Credit Limits - -
Other Contingencies - -
Total - -
5.8. Merger and acquisition
The Group has not entered into any merger and acquisition activities in the reporting period and in the
comparative previous period.
5.9. Additional disclosures of non consolidated entities
The Group does not have any non consolidated entities to report for the reporting period and in the
comparative previous period.
Page 69 of 72
Nabil Bank Limited
5.10. Events after reporting date
5.10.1. Recognition of interest income on deferred cash basis
The Bank has not availed the facility in NRB Directive 4/075 that allows licensed institutions to recognize in
distributable profit for the year such interest income on loans and advance to customers that stood accrued at
year end but was subsequently recovered in cash within 15 days after the year-end date.
5.10.2. Proposed dividend
The 522nd meeting of the board of directors of the bank held on November 3, 2019 has recommended
distribution of 22% cash dividend and 12% stock dividend (bonus shares) for the annual period ending July
16, 2019 to be put up for approval at the upcoming shareholders annual general meeting of the Bank. The
equivalent amount thus recommended for distribution would be NPR 3,064,027,436 that includes NPR
1,982,605,988 in cash payout and NPR 1,081,421,448 in bonus shares.
Page 70 of 72
Nabil Bank Limited
5.11. Interim financial reports – unaudited for Q4
Printed in worksheets enclosed.
Page 71 of 72
Nabil Bank Limited
Condensed Consolidated Statement of Financial Position
As On Quarter Ended 31st Ashadh 2076
NPR in 000
Group Bank
Assets
Immediate Previous Year Immediate Previous Year
This Quarter Ending This Quarter Ending
Ending Ending
Cash and Cash Equivalent 13,040,548 8,232,272 12,926,711 7,952,350

Due from Nepal Rastra Bank 5,764,260 7,372,285 5,764,260 7,372,285
Placement with Banks and FIs 11,102,056 10,160,281 10,968,056 10,160,281
Derivative Financial Instruments 203,985 - 203,985 -
Other Trading Assets - 74,553 - -
Loans and Advances to Banks and Fis 6,058,493 4,565,790 6,058,493 4,565,790
Loans and Advances to Customers 129,284,327 109,059,365 129,284,327 109,059,365
Investment Securities 25,380,186 18,535,083 25,224,006 18,388,083
Current Tax Assets 130,613 258,454 130,613 246,380
Investment in Subsidiaries - - 78,000 78,000
Investment in Associates 127,718 79,586 80,000 40,000
Investment Property 8,219 8,219 8,219 8,219
Property and Equipment 1,067,815 1,007,738 1,051,792 986,260
Goodwill and Intangible Assets 41,401 50,871 41,401 50,335
Deferred Tax Assets - 4,033 - -
Other Assets 3,210,851 2,116,700 3,163,275 2,070,724
Total Assets 195,420,473 161,525,230 194,983,138 160,978,071
Liabilities
Due to Banks and FIs - 1,168,665 - 1,168,665
Due to Nepal Rastra Bank 88,475 32,518 88,475 32,518
Derivative Financial Instruments - 53,840 - 53,840
Deposits from Customers 164,329,835 134,571,083 164,373,042 134,810,670
Borrowings - - - -
Current Tax Liabilities - - - -
Provisions - - - -
Deferred Tax Liabilities 853,132 1,009,762 853,132 1,009,762
Other Liabilities 6,621,198 3,769,895 6,412,166 3,256,259
Debt Securities Issued - 60,000 - 60,000
Subordinated Liabilities - - - -
Total Liabilities 171,892,640 140,665,763 171,726,814 140,391,714
Equity
Share Capital 9,011,845 8,043,221 9,011,845 8,043,221
Share Premium 74 74 74 74
Retained Earnings 4,912,080 3,378,389 4,912,080 3,254,811
Reserves 9,458,974 9,288,252 9,332,324 9,288,252
Total Equity Attributable to Equity Holders 23,382,973 20,709,936 23,256,323 20,586,357
Non Controlling Interest 144,859 149,531 - -
Total Equity 23,527,832 20,859,467 23,256,323 20,586,357
Total Liabilities and Equity 195,420,473 161,525,230 194,983,138 160,978,071
- - - -
Nabil Bank Limited

Condensed Consolidated Statement of Profit or Loss
For the Quarter Ended 31st Ashadh 2076
Group Bank
Particulars
Current Year Previous Year Corresponding Current Year Previous Year Corresponding
Upto This Upto This Quarter Upto This Quarter Upto This Quarter
This Quarter This Quarter This Quarter This Quarter
Quarter (YTD) (YTD) (YTD) (YTD)
Interest Income 4,215,931 15,465,842 3,234,797 11,386,498 4,204,380 15,420,562 3,221,872 11,349,867
Interest Expense 2,277,758 8,082,279 1,525,469 5,082,716 2,278,438 8,084,526 1,529,592 5,087,808
Net Interest Income 1,938,172 7,383,563 1,709,328 6,303,782 1,925,942 7,336,035 1,692,280 6,262,059
Fees and Commission Income 484,499 1,642,358 332,686 1,133,797 474,502 1,621,063 305,641 1,053,292
Fees and Commission Expense 92,882 325,042 (158,196) 21,907 92,882 325,042 (158,942) 21,907
Net Fees and Commission Income 391,617 1,317,315 490,882 1,111,889 381,620 1,296,020 464,583 1,031,384
Net Interest, Fees and Commission Income 2,329,789 8,700,878 2,200,210 7,415,672 2,307,561 8,632,056 2,156,863 7,293,443
Net Trading Income 129,014 448,566 127,985 383,657 129,014 448,566 114,504 390,652
Other Operating Income 132,616 476,681 (17,393) 544,312 113,014 464,177 5,045 558,797
Total Operating Income 2,591,419 9,626,126 2,310,802 8,343,641 2,549,589 9,544,799 2,276,413 8,242,893
Impairment Charge/ (Reversal) for Loans and Other Losses (2,133) 387,879 166,715 175,858 (2,133) 387,879 166,715 175,858
Net Operating Income 2,593,551 9,238,247 2,144,088 8,167,782 2,551,722 9,156,920 2,109,698 8,067,034
Personnel Expenses 697,543 2,117,085 518,574 1,750,313 691,203 2,096,075 512,419 1,727,709
Other Operating Expenses 245,749 838,336 165,401 593,969 238,265 808,350 158,725 562,442
Depreciation & Amortization 48,057 174,396 41,830 129,418 47,412 170,173 36,333 123,921
Operating Profit 1,602,202 6,108,429 1,418,283 5,694,083 1,574,842 6,082,323 1,402,221 5,652,961
Non-Operating Income 8,263 17,010 6,863 23,009 8,263 17,010 (4,958) 11,188
Non-Operating Expense 2,432 3,192 1,919 6,805 2,432 3,192 1,919 6,805
Profit Before Income Tax 1,608,033 6,122,247 1,423,227 5,710,286 1,580,674 6,096,140 1,395,345 5,657,344
Income Tax Expense 487,945 1,821,325 521,152 1,688,969 477,563 1,801,959 506,217 1,675,451
Current Tax 487,945 1,821,325 521,152 1,701,136 477,563 1,801,959 513,236 1,682,470
Deferred Tax - - - (12,168) - - (7,019) (7,019)
Profit /(Loss) For the Period 1,120,088 4,300,922 902,075 4,021,318 1,103,111 4,294,181 889,127 3,981,893
- - 12,168 - (0) - 58,588
- - - 58,588 - - - -
Condensed Consolidated Statement of Comprehensive Income
Group Bank
Particulars Current Year Previous Year Corresponding Current Year Previous Year Corresponding
Profit /(Loss) For the Period 1,120,088 4,300,922 902,075 4,021,318 1,103,111 4,294,181 889,127 3,981,893
Other Comprehensive Income 250,886 126,044 (58,588) (58,588) 250,886 126,044 (58,588) (58,588)
Total Comprehensive Income 1,370,974 4,426,966 843,487 3,962,730 1,353,997 4,420,226 830,540 3,923,305
- - - - - - - -
Basic Earnings Per Share 47.73 50.00 47.65 49.51
Diluted Earnings Per Share 47.73 50.00 47.65 49.51
Profit Attributable To:

Equity holders of the Bank 1,362,825 4,412,249 837,106 3,941,992 1,353,997 4,420,226 830,540 3,923,305
Non - controlling interest 8,149 14,717 6,381 20,738 - - - -
Ratios as per NRB Directive
Group Bank
Particulars
Current Year Previous Year Corresponding Current Year Previous Year Corresponding
Capital Fund to RWA 12.78 13.08 12.71 13.00
Non-Performing Loan (NPL) to Total Loan (As per NRB Directive) 0.74 0.55 0.74 0.55
Total Loss Loan Provision to Total NPL (As per NRB Directive) 221.06 282.95 221.06 282.95
Costs of Funds 6.13 4.75 6.13 4.75
Credit to Deposit Ratio (As per NRB Directive) 72.90 74.68 72.90 74.68
Base Rate (As per NRB Directive) 8.09 7.78 8.09 7.78
Interest Rate Spread (As per NRB Directive) 4.43 5.05 4.43 5.05
Notes:
a. The Bank has not restated the figures relating to corresponding quarter of the previous year.
b. The Bank has measured impairment loss on Loans and Advances at the higher of amount derived as per norms prescribed by Nepal Rastra Bank for loan loss
provision and the amount determined as per Para 63 of NAS 39.
c. The Bank has not factored fees and points paid or received on loans and advances in the application of effective interest rate.
These have been recognized directly in the Statement of Profit and Loss.
Nabil Bank Limited
5.12. Comparison of unaudited and audited financial statements for Q4
Printed in worksheets enclosed.
Page 72 of 72
NABIL Bank Ltd
Comparision Unadudited and Audited Financial Statements
NPR
Statement of Financial Position Un-audited Audited Variance Reason For variance
Amount %
Assets
Cash and Cash Equivalents 12,926,710,795 12,479,697,526 (447,013,269) -3.46% Regrouping between Due to NRB and Cash and Cash Equivalent
Due from Nepal Rastra Bank 5,764,260,475 6,191,827,829 427,567,354 7.42% Regrouping between Due to NRB and Cash and Cash Equivalent
Placement with Banks and FIs 10,968,055,690 11,078,728,915 110,673,225 1.01% Gross up effect
Derivative Financial Instruments 203,985,049 8,539,057,559 8,335,072,510 4086.12% Gross up effect
Other Trading Assets - - - 0.00%
Loans and Advances to Banks and FIs 6,058,492,754 6,058,492,754 (0) 0.00%
Loans and Advances to Customers 129,284,327,492 127,500,242,971 (1,784,084,521) -1.38% Measurement of Deferred employee expenditure and increment in Impairment Loss provisioning
Investment Securities 25,224,006,434 25,303,072,689 79,066,255 0.31% FVTOCI investments updated per balance confirmation from investee companies
Current Tax Assets 130,612,682 137,518,681 6,905,999 5.29% Effect of changes in current tax expense
Investment in Subsidiaries 78,000,000 78,000,000 - 0.00%
Investment in Associates 80,000,000 80,000,000 - 0.00%
Investment Property 8,218,665 8,218,665 - 0.00%
Property and Equipment 1,051,792,074 1,051,792,074 (0) 0.00%
Goodwill and Intangible Assets 41,400,858 41,400,858 (0) 0.00%
Deferred Tax Assets - - - 0.00%
Other Assets 3,163,274,727 2,590,770,943 (572,503,784) -18.10% Regrouping, netting and fair value measurement effect
Total assets 194,983,137,694 201,138,821,464 6,155,683,770 3.16%
Capital and Liabilities

Due to Banks and FIs - 1,419,042,125 1,419,042,125 100.00% Regrouping between deposits from Customer and that from BFIs
Due to Nepal Rastra Bank 88,474,781 88,474,781 (0) 0.00%
Derivative Financial Instruments - 8,335,072,510 8,335,072,510 0.00% Gross up effect
Deposits from Customers 164,373,041,697 162,953,999,572 (1,419,042,125) -0.86% Regrouping between deposits from Customer and that from BFIs
Borrowings - - - 0.00%
Current Tax Liabilities - - - 0.00%
Provisions - - - 0.00%
Deferred Tax Liabilities 853,131,816 851,536,738 (1,595,078) -0.19% Remeasurements
Other Liabilities 6,412,165,955 4,302,083,345 (2,110,082,610) -32.91% Regrouping, netting and fair value measurement effect
Debt Securities Issued - - - 0.00%
Subordinated Liabilities - - - 0.00%
Share Capital 9,011,845,400 9,011,845,400 - 0.00%
Share Premium 74,000 74,000 - 0.00%
Retained Earnings 4,912,079,986 3,735,333,814 (1,176,746,172) -23.96% Appropriation to reserves from current year profit effected in Audited
Reserves 9,332,324,059 10,441,359,179 1,109,035,120 11.88% Appropriation to reserves from current year profit effected in Audited
Total Capital and Liabilities 194,983,137,694 201,138,821,464 6,155,683,770 3.16%
NABIL Bank Ltd
Comparision Unadudited and Audited Financial Statements
NPR
Statement of Profit or Loss Un-audited Audited Variance Reason For variance
Amount %
Particulars
Interest Income 15,420,561,519 15,243,779,866 (176,781,653) -1.15% Amortization of deferred employee expenditure and interest suspense recognition
Interest Expense 8,084,526,137 8,084,526,137 (0) 0.00%
Net Interest Income 7,336,035,381 7,159,253,729 (176,781,652) -2.41%
Fee and Commission Income 1,621,062,500 1,291,005,348 (330,057,152) -20.36% Regrouping effect
Fee and Commission Expense 325,042,229 64,461,059 (260,581,170) -80.17% Regrouping effect
Net Fee and Commission Income 1,296,020,271 1,226,544,289 (69,475,982) -5.36%
Net Interest, Fee and Commisson Income 8,632,055,653 8,385,798,018 (246,257,635) -2.85%
Net Trading Income 448,566,387 448,342,715 (223,672) -0.05% Regrouping effect
Other Operating Income 464,177,186 494,669,764 30,492,578 6.57% Regrouping effect
Total Operating Income 9,544,799,225 9,328,810,497 (215,988,728) -2.26%
Impairment Charge/ (Reversal) for Loans and Other Lossess 387,879,216 405,174,417 17,295,201 4.46% Incremental provision at instruction of statutory auditors
Net Operating Income 9,156,920,010 8,923,636,080 (233,283,930) -2.55%
Operating Expense - 0.00%
Personnel Expenses 2,096,074,698 1,949,609,706 (146,464,992) -6.99% Amortization of deferred employee expenditure
Other Operating Expenses 808,349,518 777,203,005 (31,146,513) -3.85% Regrouping effect
Depreciation & Amortisation 170,172,587 170,172,587 (0) 0.00%
Operating Profit 6,082,323,206 6,026,650,782 (55,672,425) -0.92%
Non Operating Income 17,009,587 17,009,587 (0) 0.00%
Non Operating Expense 3,192,489 2,341,155 (851,334) -26.67% Regrouping effect
Profit Before Income Tax 6,096,140,305 6,041,319,214 (54,821,091) -0.90%
Income Tax Expense
Current Tax 1,801,958,962 1,810,174,997 8,216,035 0.46% Update to income tax computation in line with income tax act
Deferred Tax - (7,709,365) (7,709,365) 0.00% Deferred tax income recognition
Profit/(loss) for the period 4,294,181,342 4,238,853,581 (55,327,761) -1.29%
Other Comprehensive income 126,044,490 129,472,246 3,427,756 2.72% Impact of updates to fair value changes in FVTOCI investments and impact of actuarial gain / (loss).
Total Comprehensive income 4,420,225,832 4,368,325,827 (51,900,004) -1.17%
Distributable Profits
Net profit/(loss) as per profit or loss 4,294,181,342 4,238,853,581 (55,327,761) -1%
Add/Less: Regulatory adjustment as per NRB Directive
Add: Interest receivable recognized income (109,885,855) (81,372,944) 28,512,911 -26% Interest suspense recognition
Add: Reversal of provision on loan accounts - - - 0%
Add: Reversal of deferred tax expense - - - 0%
Less: Actuarial loss recognized on DBOs - (95,470,719) (95,470,719) 100% Actuarial loss recognition per actuary's report
Less: Impairment charged under NFRS - - - 0%
Free profit/(loss) after regulatory adjustments 4,184,295,487 4,062,009,918 (122,285,569) -3%
Add : opening balance in retained earnings - 3,254,810,800
Less : Appropriations to reserves and dividends paid out (999,655,507) (3,581,486,904)
Total Distributable profit 3,184,639,980 3,735,333,814 550,693,834 17% Assessment of cummulative distributable profit

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NABIL Bank Limited

Consolidated Statement of Financial Position

Prabhu Ram Bhandary

Profit Attributable to:

Prabhu Ram Bhandary

Total Comprehensive Income attributable to:

as per our report of even date

Prabhu Ram Bhandary

(Increase)/Decrease in operating assets

Increase/ (Decrease) in operating liabilites

CASH FLOWS FROM FINANCING ACTIVITIES

4.1 Cash and Cash Equivalent

4.2 Due from Nepal Rastra Bank

4.3 Placements with Banks and Financial Instutions

4.4 Derivative Financial Instruments

4.5 Other Trading Assets

4.6 Loans and Advances to BFIs

4.6.1 Allowances for Impairment

4.7 Loans and Advances to Customers

4.7.1: Analysis of Loans and Advances - By Product

4.7.2: Analysis of Loans and Advances - By Currency

4.7.3: Analysis of Loans and Advances - By Collateral

4.7.4: Allowance for Impairment NPR

4.8.1: Investment Securities measured at Amortized Cost NPR

4.8.2: Investment in Equity measured at FVTOCI NPR

Notes to Consolidated Financial Statements

For the year ended 31 Asar 2076 (July 16, 2019)

4.8.3 Information relating to investment in equities

Notes to Consolidated Financial Statements

For the year ended 31 Asar 2076 (July 16, 2019)

4.8.3 Information relating to investment in equities

2. Investments in equitiy instruments - Unquoted 9,820,381 461,199,893 10,027,119 362,330,194

Notes to Consolidated Financial Statements

For the year ended 31 Asar 2076 (July 16, 2019)

4.8.3 Information relating to investment in equities

3. Investments in Mutual Fund Units 510,642,840 484,995,082 341,142,840 329,554,847

4.9 Current Tax Assets

4.10 Investment in Subsidiaries

4.10.1: Investment in Quoted Subsidiaries NPR

4.10.2: Investment in Unquoted Subsidiaries NPR

4.10.3: Information relating to Subsidiaries of the Bank

4.10.4: Non Controlling Interest of the Subsidiaries NPR

4.11 Investment in Associates

4.11.1: Investment in Quoted Associates NPR

4.11.2: Investment in Unquoted Associates NPR

4.11.3: Information relating to Associates of the Bank

4.11.4: Equity Value of Associates NPR

4.12 Investment Properties

4.13 Property and Equipment

Depreciation and Impairment

Impairment for the year - - - - - - - - -

4.13 Property and Equipment

Depreciation and Impairment

Impairment for the year - - - - - - - - -

4.14 Goodwill and Intangible Assets

Amortisation and Impairment

As on Asar end 2075 50,871,454 50,871,454

4.14 Goodwill and Intangible Assets