· Schedules Current Year Rs. Previous Year Rs. 1. Interest Income 18 2,018,505,630 1,678,789,938...

Schedule Current Year Rs. Previous Year Rs.1 Share Capital 1 2,550,240,000 2,217,600,0002 Reserves and Funds 2 283,157,025 206,431,1283 Debentures and Bonds 3 - -4 Borrowings 4 898,267,865 1,480,125,5305 Deposit Liabilities 5 24,873,849,358 17,789,328,9156 Bills Payables 6 - -7 Proposed Cash Dividend 17,507,368 10,610,5268 Income Tax Liabilities9 Other Liabilities 7 753,964,168 272,443,653

29,376,985,784 21,976,539,752

Schedule Current Year Rs. Previous Year Rs.1 Cash Balance 8 538,387,165 312,962,0062 Balance with NRB 9 2,811,039,229 1,283,546,3483 Balance with Banks/Financial Institutions 10 162,487,861 88,992,3274 Money at Call and Short Notice 11 - 364,420,0005 Investments 12 3,715,502,824 3,848,052,4346 Loans Advances and Bills Purchase 13 20,371,443,968 15,093,072,8497 Fixed Assets 14 502,235,767 469,488,8268 Non-Banking Assets 15 - -9 Other Assets 16 1,275,888,970 516,004,961

29,376,985,784 21,976,539,752

Contingent Liabilities ScheduleDirectors' Declaration ScheduleStatement of Capital Fund ScheduleStatement of Risk Weighted Assets SchedulePrincipal Indicators SchedulePrinciple Accounting Policies ScheduleNotes to Accounts ScheduleStatement of Loan taken by Promotors Schedule

ScheduleSchedule

Schedules 1 to 17, 32, 33, 34 & 35 form integral parts of the Balance Sheet.

Tuk Prasad Poudel Subarna Das ShresthaDirector Director

Unaudited Financial Highlights certified by Internal Auditor

Chief Financial Officer Chief Executive Officer Chairman

(A)

Saroj Guragain Bhuvan Dahal Binaya Kumar Shrestha

As per our report of even date

Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co.Director Director Director Chartered Accountants

Date : 3rd Sep 2014 (18 Bhadra 2071)Place : Kathmandu

Total Capital Liabilities

1729

Assets

Total Assets

343332

35

30(Ka 1)30 (Kha, Ga, Gha, Nga)

Sanima Bank LimitedBalance Sheet as on July 16, 2014 (Ashadh 32, 2071)

Capital & Liabilities

31

Comparision Between Unaudited and Audited Financials

Shashi Satyal Managing Partner

Schedules Current Year Rs. Previous Year Rs.

1. Interest Income 18 2,018,505,630 1,678,789,938

2. Interest Expenses 19 1,199,787,864 1,023,257,441

818,717,766 655,532,497

3. Commission and Discount 20 39,824,742 23,667,788

4. Other Operating Income 21 85,437,840 68,853,461

5. Exchange Fluctuation Income 22 146,889,410 27,237,310

1,090,869,758 775,291,056

6. Employees Expenses 23 134,381,010 99,776,288

7. Other Overhead Expenses 24 206,382,340 158,730,263

8. Exchange Fluctuation Loss 22 - - 750,106,408 516,784,505

9. Provision for Possible Losses 25 95,212,477 57,846,414

654,893,931 458,938,092

10. Non-operating Income/Expenses 26 21,565,934 2,571,005

11. Provision Written-Back 27 1,527,112 19,675,442

677,986,977 481,184,539

12. Profit/Loss from extra-ordinary activities 28 (308,370) -

677,678,607 481,184,539

Sanima Bank LimitedProfit and Loss Account

For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071)

Particulars

Net Interest Income

Operating Profit Before Provision for Possible Loss

Net Profit after considering all activities

Profit from Regular Operations

Operating Profit

Total Operating Income

677,678,607 481,184,539

13. Provision For Staff Bonus 61,607,146 43,744,049

14. Provision For Income Tax 188,475,856 132,379,358

This Year's 183,428,099 129,195,320

Previous Year's 1,774,809 3,530,994

Deferred Tax Expense/(Income) 3,272,948 (346,955)

427,595,604 305,061,132

Schedule No. 18 to 28, 32, 33, 34 & 35 form integral part of this Profit and Loss Account.

Shashi Satyal

Net Profit after considering all activities


Net Profit/(Loss)

Saroj Guragain Bhuvan Dahal Binaya Kumar ShresthaChief Financial Officer Chief Executive Officer Chairman


Director Director Director Chartered Accountants


Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co. Managing Partner

Schedules Current Year Rs. Previous Year Rs.

1 Accumulated Profit up to the Last Year(Restated) 27,166,558 6,203,6852 Current Year's Profit 427,595,604 305,061,1323 Exchange Fluctuation Fund - -

454,762,162 311,264,817

1 Accumulated Loss up to the Last Year - -2 This Year's Loss - -3 General Reserve 85,535,283 61,012,2264 Contingent Reserve - -5 Institutional Development Fund - -6 Dividend Equalization Fund - -7 Employee Related Reserves Funds - -8 Proposed Dividend 17,507,368 10,610,5269 Proposed Issue of Bonus Shares 332,640,000 201,600,00010 Special Reserve Fund - -11 Exchange Fluctuation Fund 539,976 858,01412 Capital Redemption Reserve Fund - -13 Capital Adjustment Fund - -14 Deferred Tax Reserve - 346,95515 Investment Adjustment Reserve (9,800,000) 9,800,000

426,422,627 284,227,72215 Accumulated Profit/(Loss) (A-B) 28,339,535 27,037,095

Date : 3rd Sep 2014 (18 Bhadra 2071)

Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co.




Sanima Bank LimitedProfit and Loss Appropriation Account


Particulars

Total (B)

Expenses

Place : Kathmandu



Income

Total (A)

Current Year Rs. Previous Year Rs.(a) Cash flow from Operating Activities 558,748,159 472,427,9101 Cash Received 2,295,352,616 1,794,403,306

1.1 Interest Income 2,005,237,673 1,675,505,7991.2 Commission and Discount Income 39,824,742 23,667,7881.3 Income from Foreign Exchange Transaction 144,729,506 23,805,2521.4 Recovery of Written-off Loans - -1.5 Other Incomes 105,560,695 71,424,4662 Cash Payment 1,736,604,457 1,321,975,396

2.1 Interest Expenses 1,245,186,788 979,231,5512.2 Staff Expenses 143,059,418 99,113,6012.3 Office Overhead Expenses 150,170,448 109,952,9782.4 Income Tax Paid 198,187,803 133,677,2652.5 Other Expenses

893,372,725 (683,264,897)(Increase)/Decrease of Current Assets (5,724,959,760) (8,089,619,221)

1 (Increase)/Decrease in Money at Call and Short Notice 364,420,000 (364,420,000)2 (Increase)/Decrease in Short-term Investments 33,824,123 (1,829,959,780)3 (Increase)/Decrease in Loans and Advances and Bills Purchase (5,372,226,484) (5,606,888,281)4 (Increase)/Decrease in Other Assets (750,977,398) (288,351,159)

Increase/(Decrease) of Current Liabilities 6,618,332,484 7,406,354,3241 Increase/(Decrease) in Deposits Liabilities 7,084,520,443 6,608,622,1892 Increase/(Decrease) in Certificate of Deposits - -3 Increase/(Decrease) in Short-term Borrowings (929,697,595) 937,650,0004 Increase/(Decrease) in Other Liabilities 463,509,636 (139,917,865)

(b) Cash flow from Investment Activities 24,292,855 65,617,3391 (Increase)/Decrease in Long-Term Investment 98,895,488 94,826,8952 (Increase)/Decrease in Fixed Assets (88,958,832) (39,221,690)3 Interest Income From Long-Term Investment 13,221,491 10,012,1344 Dividend Income 1,134,709 -5 Others

(c) Cash flow from Financing Activities 347,839,931 454,225,5301 Increase/(Decrease) in Long-Term Borrowings (Bonds, Debentures etc.) - -2 Increase/(Decrease) in Share Capital - -3 Increase/(Decrease) in Other Liabilities - -4 Increase/(Decrease) in Refinance/Facilities From Nepal Rastra Bank 347,839,931 454,225,530

(d) Income/Expenses from change in Exchange Rate in Cash and Bank Balances2,159,904 3,432,058

(e) This Year's Cash Flow from All Activities 1,826,413,573 312,437,940(f) Opening Balance of Cash and Bank Balances 1,685,500,681 1,373,062,741(g) Closing Balance of Cash and Bank Balances 3,511,914,255 1,685,500,681

3,511,914,255(0.55)


Shashi SatyalManaging Partner

Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co.


Place : KathmanduDate : 3rd Sep 2014 (18 Bhadra 2071)

Cash Flow Before Working Capital Activities

Particulars

Sanima Bank LimitedCash Flow Statement




In Rs.

Particulars Share Capital AccumulatedProfit/Loss

General ReserveFund

Capital ReserveFund Share Premium Exchange

Fluctuation FundDeferred Tax

ReserveOther Reserve and

Fund Total Amount

Opening Balance as at 16 July 2013 2,217,600,000 27,037,095 154,964,717 - 10,563,747 2,658,767 851,802 10,355,000 2,424,031,128Deferred Tax Adjustments 129,463 (851,802) (722,339)Restated Balance as at 16 July 2013 2,217,600,000 27,166,558 154,964,717 - 10,563,747 2,658,767 - 10,355,000 2,423,308,789Current Year's Net Profit - 427,595,604 - - - - - - 427,595,604General Reserve - (85,535,283) 85,535,283 - - - - - -Proposed Bonus Share 332,640,000 (332,640,000) - - - - - - -Porposed Dividend - (17,507,368) - - - - - - (17,507,368)Exchange Fluctuation Fund - (539,976) - - - 539,976 - - -Deferred Tax Assets - -Investment Adjustment Reserve - 9,800,000 - - - - - (9,800,000) -Closing Balance 2,550,240,000 28,339,535 240,500,000 - 10,563,747 3,198,743 - 555,000 2,833,397,025




Sanima Bank LimitedStatement of Changes in Equity

Financial Year 2013/14 (2070/71)



Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co. Director Director Director Chartered Accountants

Schedule 1

In Rs.Current Year Previous Year

11.1 2,250,000,000 2,100,000,000

a) 22,500,000 Ordinary Shares of Rs. 100 each 2,250,000,000 2,100,000,000b) …………. Non-redeemable Preference Shares of Rs. … each - -c) …………. Redeemable Preference Shares of Rs. ….. each - -

1.2 2,217,600,000 2,016,000,000a) 22,176,000 Ordinary Shares of Rs.100 each 2,217,600,000 2,016,000,000b) …………. Non-redeemable Preference Shares of Rs. …. each - -c) …………. Redeemable Preference Shares of Rs. ……. each - -

1.3 2,217,600,000 2,016,000,000a) 22,176,000 Ordinary Shares of Rs.100 each 2,217,600,000 2,016,000,000b) …………. Non-redeemable Preference Shares of Rs. …. each - -c) …………. Redeemable Preference Shares of Rs. ……… each

1.4 Proposed Bonus Share 332,640,000 201,600,0001.5 Calls in Advance - -

2,550,240,000 2,217,600,000

% Amount Amount %1 100 2,217,600,000 2,016,000,000 1001.1 - -1.2 - -1.3 - -1.4 - -1.5 5.04 111,665,897 107,119,400 5.311.7 94.96 2,105,934,103 1,908,880,600 94.691.6 - -2 Foreign Ownership - - - -

100 2,217,600,000 2,016,000,000 100

Particulars

National OwnershipGovernment of Nepal

Individuals

Sanima Bank LimitedShare Capital and Ownership

As on July 16, 2014

Issued Capital

Paid up Capital

Share CapitalAuthorized Capital

Previous Year

Particulars

Others

Current Year

Total

Other License InstitutionsOther Entities/ Organizations

Foreign Institutions"A" Class Licensed Institutions

Total (1.3+1.4+1.5)

In Rs. S. No Name of Share Holder No of Share % Current Year1 Arun Kumar Ojha 3,104,640 14.00 310,464,0002 Tek Raj Niraula 1,929,240 8.70 192,924,0003 Jiba Nath Lamichhane 1,386,000 6.25 138,600,0004 Dr. Niraj Govinda Shrestha 1,386,000 6.25 138,600,0005 Binaya Kumar Shrestha 1,114,300 5.02 111,430,0006 Ghana Shyam Thapa 1,107,370 4.99 110,737,0007 Dr. Birendra Prasad Mahato 1,039,500 4.69 103,950,0008 Khem Raj Lamichhane 871,650 3.93 87,165,0009 Jai Ganesh Investment Company Pvt. Ltd 799,800 3.61 79,980,00010 Ram Krishna Shah 696,300 3.14 69,630,00012 Dilip Shrestha 220,999 1.00 22,099,90011 Dinesh Mani Shrestha 205,963 0.93 20,596,30013 Shamba Lama 161,469 0.73 16,146,90014 Geeta Chhetri 149,000 0.67 14,900,000

Total 14,172,231 63.91 1,417,223,100

Schedule 2


1 240,500,000 154,964,7172 - -3 - -4 - -5 - -

5.1 Contingent Reserve - -5.2 Institution Development Fund - -5.3 Dividend Equalization Fund - -5.4 Special Reserve Fund - -5.5 Assets Revaluation Reserve - -5.6 Deferred Tax Reserve - 851,8025.7 Other Free Reserves - -5.8 Other Reserve Funds - -5.9 Share Premium 10,563,747 10,563,7475.10 Investment Adjustment Reserve 555,000 10,355,000

6 28,339,535 27,037,0957 3,198,743 2,658,767

283,157,025 206,431,128

Sanima Bank LimitedList of Share holders holding Share Capital of 0.5% or More

Particulars

Reserve and SurplusAs on July 16, 2014

Capital Redemption ReserveCapital Adjustment Fund

Sanima Bank Limited

Exchange Equalization FundAccumulated Profit/(Loss)

Total

General Reserve FundCapital Reserve Fund

Other Resevers

Schedule 3


1 - -- -- -

2 - -- -- -

3 - -- -

Schedule 4


A.1 Nepal Government - -2 Nepal Rastra Bank 802,065,460 454,225,5303 Repo Obligation - -4 Inter Bank and Financial Institutions 96,202,405 1,025,900,0005 Other Organized Institutions - -6 Others - -

898,267,865 1,480,125,530B. - -

1 Banks - -2 Others - -

- -898,267,865 1,480,125,530

………………

Particulars

……………. Percent Bond/Debentures of Rs. ………… eachIssued on …………… and Matured on …………..(Outstanding Balance of Redemption Reserve Rs. …………….)

Sanima Bank LimitedBorrowings

Particulars……………. Percent Bonds/Debentures of Rs. ………… each

(Outstanding balance of Redemption Reserve Rs. …………….)Issued on …………… and Matured on …………..

Sanima Bank LimitedDebentures and Bonds

As on July 16, 2014

Foreign

Total (A+B)

Total

Total

Local

Total (1+2+3)

As on July 16, 2014

Schedule 5


1 Non-Interest Bearing AccountsA. Current Deposits 730,964,907 499,131,7891. Local Currency 724,956,904 495,007,2371.1 Nepal Government1.2 "A" Class Licensed Institutions 16,199,756 11,011,6181.3 Other Licensed Financial Institutions 18,737,975 6,717,5761.4 Other Organized Institutions 591,635,419 403,791,3161.5 Individuals 98,383,754 73,486,7261.6 Others2. Foreign Currency 6,008,002 4,124,5522.1 Nepal Government - -2.2 "A" Class Licensed Institutions - -2.3 Other Licensed Financial Institutions 84,302 1,138,9392.4 Other Organized Institutions 5,910,232 2,976,0232.5 Individuals 13,468 9,5902.6 Others - -B. Margin Deposits 103,389,259 57,482,4641 Employee Guarantees - -2 Guarantee Margin 34,016,759 26,428,3013 Letters of Credit Margin 69,372,500 31,054,164C. Others 146,439,045 6,950,0001. Local Currency 143,643,554 6,950,0001.1 Financial Institutions - -1.2 Other Organized Institutions 143,504,929 550,0001.3 Individuals 138,625 6,400,0002. Foreign Currency 2,795,491 -2.1 Financial Institutions - -2.2 Other Organized Institutions - -2.3 Individuals 2,795,491 -

980,793,211 563,564,253

Sanima Bank LimitedDeposits

As on July 16, 2014

Particulars

Total of Non-Interest Bearing Accounts 980,793,211 563,564,2532 Interest Bearing Accounts - -A. Savings Deposits 8,009,972,786 4,311,870,3351. Local Currency 7,949,279,073 4,280,070,9671.1 Organized Institutions 77,962,988 9,807,4331.2 Individuals 7,871,316,085 4,270,263,5341.3 Others - -2. Foreign Currency 60,693,713 31,799,3682.1 Organized Institutions2.2 Individuals 60,693,713 31,799,3682.3 Others - -B. Fixed Deposits 9,443,811,175 9,242,145,2721. Local Currency 8,189,586,611 9,096,185,4721.1 Organized Institutions 5,294,606,516 6,327,350,7891.2 Individuals 2,894,980,095 2,768,834,6841.3 Others - -2. Foreign Currency 1,254,224,564 145,959,8002.1 Organized Institutions 1,254,224,564 143,850,0002.2 Individuals - 2,109,8002.3 Others - -C. Call Deposits 6,439,272,186 3,671,749,0541 Local Currency 6,420,053,382 3,668,477,2431.1 "A" Class Licensed Institutions -1.2 Other Licensed Institutions 2,863,670,887 1,053,485,1341.3 Other Organized Institutions 3,421,116,353 2,446,443,0251.4 Individuals 135,266,142 168,549,0841.5 Others - -2. Foreign Currency 19,218,803 3,271,8122.1 "A" Class Licensed Institutions - -2.2 Other Licensed Institutions - -2.3 Other Organized Institutions 19,218,803 3,271,8122.4 Individuals2.5 Others - -D. Certificate of Deposit - -1. Organized Institutions - -2. Individuals - -3. Others - -

23,893,056,147 17,225,764,66224,873,849,358 17,789,328,915

Total of Interest Bearing AccountsTotal Deposit (1+2)

Total of Non-Interest Bearing Accounts

Schedule 6

In Rs.Particulars Current Year Previous Year

1 Local Currency - -2 Foreign Currency - -

Total - -

Schedule 7


1 Pension/Gratuity Fund - 8,678,4072 Employees Provident Fund - -3 Employees Welfare Fund - -4 Provision for Staff Bonus 61,649,104 43,744,0495 Interest Payable on Deposits 11,590,638 56,907,6136 Interest Payable on Borrowings 1,974,774 2,056,7227 Unearned Discount and Commission 11,754,345 3,039,4418 Sundry Creditors 24,385,256 10,413,9349 Branch Adjustment Account - -10 Deferred Tax Liability 2,421,146 -11 Dividend Payable 8,482,634 12,580,81412 Others

TDS Payable 19,784,756 22,522,045Provision for expenses 19,901,713 14,458,735Audit fee payable 508,500 400,000Others

Gold Security Margin 495,682,435 -Forward Contract Payables 21,064,524 10,757,155Others 74,764,344 86,884,737

753,964,168 272,443,653

Sanima Bank LimitedBills Payable

As on July 16, 2014

Total

As on July 16, 2014

Particulars

Sanima Bank LimitedOther Liabilities

Schedule 8

In Rs.Previous Year

1 306,778,2112 6,183,795

312,962,006

Schedule 9

In Rs.

IndianCurrency Convertible Total

1 Nepal Rastra Bank 2,805,283,077 - 5,756,152 - 2,811,039,229 1,283,546,348a) Current Account 2,805,283,077 - 5,756,152 5,756,152 2,811,039,229 1,283,546,348b) Other Account - - - - - -

Total

Foreign CurrencyParticulars Local Currency

Sanima Bank LimitedCash Balance

As on July 16, 2014

Current YearParticulars

As on July 16, 2014

Current Year

Sanima Bank Limited

538,387,165Foreign CurrencyLocal Currency (including coin) 532,850,978

5,536,187

Balance with Nepal Rastra Bank

Previous Year

Schedule 10

In Rs.

Indian Currency Convertible Total

1 Local Licensed Institutions 52,782,000 - - - 52,782,000 55,786,870a) Current Account 52,782,000 - - - 52,782,000 53,365,343b) Other Account - - - - - 2,421,5272 Foreign Banks - 42,992,125 66,713,736 109,705,861 109,705,861 33,205,458a) Current Account - 42,992,125 66,713,736 109,705,861 109,705,861 33,205,458b) Other Account - - - - - -

52,782,000 42,992,125 66,713,736 109,705,861 162,487,861 88,992,328

Note: Total Balance for which the confirmations are received from the respective licensed institutions is Rs.199,052,518.86 and the differences are subsequently beingreconciled.

Previous Year

Sanima Bank LimitedBalance with Banks/Financial Institutions

As on July 16, 2014

Total

Particulars Local CurrencyForeign Currency

Current Year

Schedule 11


1 - -2 - 364,420,000

- 364,420,000

Schedule 12

In Rs.

Trading Other1 Nepal Government Treasury Bills 1,800,626,479 1,800,626,479 3,355,486,2252 Nepal Government Savings Certificates - - -3 Nepal Government Other Bond - 333,392,562 333,392,562 94,870,1094 Nepal Rastra Bank Bonds - - - -5 Foreign Bonds/Debenture - - - -6 Local Licensed Institutions - 252,838 252,838 422,8387 Foreign Banks - 1,521,035,623 1,521,035,623 385,038,5008 Origanized Insrtitutions Shares 47,537,722 12,910,438 60,448,160 12,657,6009 Corporate Bonds and Debentures - - - -10 Other Investments - - - -

47,537,722 3,668,217,940 3,715,755,662 3,848,475,272- 252,838 252,838 422,838

47,537,722 3,667,965,102 3,715,502,824 3,848,052,434

Sanima Bank LimitedMoney at Call and Short Notice

As on July 16, 2014

Previous Year

Sanima Bank LimitedInvestments

As on July 16, 2014

ParticularsLocal CurrencyForeign Currency

Current Year

Total

Total InvestmentProvision

Net Investment

ParticularsPurpose

In Rs.Cost Price Market Price Provision Current Year Previous Year

1 Investment in Shares 53,046,153 127,290,560 114,719 60,448,160 12,657,6001.1 Nepal Clearing House Company Ltd. - - -

23206 Ordinary Shares of Rs 100 Paid up each 2,302,600 - - 2,302,600 2,302,6001.2 Sanima Mai Hydro Ltd. - - - - -

100000 Ordinary Shares of Rs.100 Paid up each 10,000,000 79,500,000 - 10,000,000 10,000,0001.3 Sanima Life Insurance Co. Ltd.

350000Ordinary Shares of Rs.1 Paid up each (Face ValueRs 100) 350,000 350,000 350,000

1.4 Sanima Foundation - - -Shares of Rs. Paid up each 5,000 - - 5,000 5,000

1.5 Rural Micro Finance Development Centre14738 Ordinary Share Shares of Rs. 100 paid up each 7,187,838 12,391,593 - 12,391,593 -

1.6 Nepal Telcom21160 Ordinary Share Shares of Rs. 100 Paid up each 13,877,690 13,762,972 114,719 13,762,972 -

1.7 Nabil Balance Fund-11372420 Ordinary Share Shares of Rs. 10 Paid up each 19,323,025 21,635,995 - 21,635,995 -

2 Investment in Debentures and Bonds - - - - -53,046,153 127,290,560 114,719 60,448,160 12,657,600

3 Provision for Loss - - - - -3.1 Provision Up to Previous Year - -3.2 Additions This Year - - -

- - -53,046,153 127,290,560 114,719 60,448,160 12,657,600

Companies 1.2, 1.5, 1.6, 1.7 are listed in stock exchange.

Schedule 12 (A)

Sanima Bank LimitedInvestment in Shares, Debentures and Bonds

As on July 16, 2014

Companies mentioned in 1.1, 1.2, 1.3 & 1.4 have not declared the dividend in last three years.

Net Investment

Total Investment

Particulars

Total Provision

Companies mentioned 1.3 & 1.4 is not yet in operation and no share certificate have been issued.

Broker Commission @0.85% has been adjusted in Mark to Market Price.

In Rs.

Description Cost PriceLast Market

Price (A)Current Market

Price (B)

Current YearProfit/(Loss) (A-

B)Previous YearProfit/(Loss) Remarks

1. Treasury Bills of Governement of Nepal - - - - -2. Saving Bonds of Government of Nepal - - - - -3. Other Bonds of Government of Nepal - - - - -4. Bonds of Nepal Rastra Bank - - - - -5. Foreign Bonds - - - - -6. Shares of Local Licensed Institutions - - - - -7. Debenture and Bonds of Local Licensed Institutions - - - - -8. Share, Debenture and Bonds of Local Organized Institutions 40,388,553 40,388,553 47,790,560 7,402,006 -9. Investment in Foreign Banks (Placement) - - - - -10. Interbank Lending - - - - -11. Other Investment - - - - -Total Investment 40,388,553 40,388,553 47,790,560 7,402,006 -

In Rs.

Description Cost Price (A)

CumulativeLoss Upto This

Year (B)Current Year

Loss (C)

Current YearProfit/(Loss) (A-

B-C)Previous YearProfit/(Loss) Remarks

1.Treasury Bills of Governement of Nepal 1,800,626,479 - - - -2. Saving Bonds of Government of Nepal - - - - -3. Other Bonds of Government of Nepal 333,392,562 - - - -4.Bonds of Nepal Rastra Bank - - - - -5. Foreign Bonds - - - - -6. Shares of Local Licensed Institutions - - - - -7. Debenture and Bonds of Local Licensed Institutions - - - - -8. Share, Debenture and Bonds of Local Organized Institutions - - - - -9. Investment in Foreign Banks (Placement) 1,521,035,623 - - - -10. Other Investment - - - - -Total Investment 3,655,054,664 - - - -

Schedule 12.3


FundAdjustment

Amount (B-A) Profit/(Loss)1.Treasury Bills of Governement of Nepal - - - - -2. Saving Bonds of Government of Nepal - - - - -3. Other Loan Bonds of Government of Nepal - - - - -4. Loan Bonds of Nepal Rastra Bank - - - - -5. Foreign Loan Bonds - - - - -6. Shares of Local Licensed Institutions - - - - -7. Debenture and Bonds of Local Licensed Institutions - - - - -8. Share, Debenture and Bonds of Local Organized Institutions 12,657,600 - 79,500,000 (9,800,000) -9. Investment in Foreign Banks (Placement) - - - - -10. Other Investment 252,838 - - - -Total Investment 12,910,438 - 79,500,000 (9,800,000) - -

Sanima Bank LimitedHeld for TradingAs on July 16, 2014

Schedule 12.1

Held to MaturityAs on July 16, 2014

Schedule 12.2

Available for SaleAs on July 16, 2014

Description Cost PriceLast Market

Price (A)Current Market

Price (B) Remarks

Schedule 13

In Rs.

Insured Uninsured1 Performing Loan - 818,113,830 19,573,034,030 - 20,391,147,860 - 225,670,500 225,670,500 20,616,818,360 15,244,039,149

1.1 Pass Loan - 818,113,830 19,573,034,030 - 20,391,147,860 - 225,670,500 225,670,500 20,616,818,360 15,244,039,1492 Non-Performing Loan - - 3,582,854 - 3,582,854 - - - 3,582,854 4,135,581

2.1 Restructured - - - - - - - - - -2.2 Substandard - - 613,908 - 613,908 - - - 613,908 2,806,8022.3 Doubtful - - 1,427,953 - 1,427,953 - - - 1,427,953 -2.4 Bad - - 1,540,994 - 1,540,994 - - - 1,540,994 1,328,779

(A) - 818,113,830 19,576,616,884 - 20,394,730,715 - 225,670,500 225,670,500 20,620,401,214 15,248,174,7303 Loan Loss Provision - 8,181,138 238,519,403 - 246,700,541 - - - 246,700,541 155,101,881

3.1 Pass - 8,181,138 236,110,955 - 244,292,094 - 2,256,705 2,256,705 246,548,799 153,071,4023.2 Restructured - - - - - - - - - -3.3 Substandard - - 153,477 - 153,477 - - - 153,477 701,7013.4 Doubtful - - 713,976 - 713,976 - - - 713,976 -3.5 Bad - - 1,540,994 - 1,540,994 - - - 1,540,994 1,328,779

(B) - 8,181,138 238,519,403 - 246,700,541 - 2,256,705 2,256,705 248,957,246 155,101,8814 Provisioning up to Previous Year - 5,707,215 149,394,666 - 155,101,881 - - - 155,101,881 109,781,615

4.1 Pass - 5,420,065 147,651,336 - 153,071,402 - - 153,071,402 96,667,3604.2 Restructured - - - - - - - - - -4.3 Substandard - - 701,701 - 701,701 - - - 701,701 10,698,0034.4 Doubtful - - - - - - - - - 929,1034.5 Bad - 287,149 1,041,629 - 1,328,779 - - - 1,328,779 1,487,149

(C) - 5,707,215 149,394,666 - 155,101,881 - - - 155,101,881 109,781,615(D) - - 1,357,112 - 1,357,112 - - - 1,357,112 -(E) - 2,473,924 90,481,849 - 92,955,772 - 2,256,705 2,256,705 95,212,477

- 2,473,924 89,124,737 - 91,598,660 - 2,256,705 2,256,705 93,855,365 45,320,265- 809,932,692 19,338,097,482 - 20,148,030,174 - 223,413,795 223,413,795 20,371,443,968 15,093,072,849

Sanima Bank LimitedClassification of Loans and Bills Purchased and Provisioning

As on July 16, 2014

Loans

Current YearOthers

DomesticDeprived

Bills Purchased/Discounted

Previous YearParticulars TotalForeign TotalDomestic Foreign

Net Loan (A-B)

Total Loan

Total Provisioning

Total Previous Year's ProvisionWritten Back From Previous Year

Changes in This YearAdditional Provision in this year

Schedule 13 (A)


(A) 20,620,401,214 15,248,174,7301 Movable/Immovable Assets 18,773,088,635 14,091,713,8072 Guarantee of Local Licensed Institutions - -3 Government Guarantee - -4 Internationally Rated Bank Guarantee - -5 Export Documents - -6 Fixed Deposit Receipts - -

a) Own Fixed Deposit Receipt 135,566,602 98,976,032b) Fixed Deposit Receipt of Other Licensed Institutions - -

7 Government Bonds - -8 Counter Guarantee - -9 Personal Guarantee 3,584,964 4,606,05110 Other Securities 1,708,161,013 1,052,878,840

(B) Unsecured - -20,620,401,214 15,248,174,730

Sanima Bank LimitedLoans, Advances and Bills Purchased Security wise

Total

As on July 16, 2014

ParticularsSecured

Schedule 14

In Rs.

Land & Building Vehicles Machinery Office Equipment Others1 - - - - - - -

a. Previous Year Balance 136,632,803 56,259,307 26,912,504 143,218,139 - 363,022,753 337,641,872b. Addition This Year 2,569,622 39,918,064 4,868,570 24,643,561 - 71,999,818 29,378,395

c.Revaluation/Written BackThis Year - - -

d. This Year Sold (8,240,358) - (8,240,358) (3,997,514)e. This Year Written off (3,900) (2,883,990) - (2,887,890) -

139,202,425 87,933,114 31,781,074 164,977,710 - 423,894,322 363,022,7532 - - - - - - -

a. Up to Previous Year 10,296,004 23,106,020 9,194,203 62,976,891 - 105,573,118 67,409,491b. For This Year 6,402,415 11,303,034 2,902,746 23,746,159 - 44,354,353 40,855,741

c.Depreciation onRevaluation/Written Back - - -

d.Depreciation Adjustment/Reversal (3,998,354) (2,180,895) - (6,179,249) (2,692,114)

16,698,419 30,410,700 12,096,949 84,542,154 - 143,748,222 105,573,1183 122,504,006 57,522,414 19,684,125 80,435,556 - 280,146,101 257,449,6354 171,600,000 - - - - 171,600,000 171,600,0005 - - - - - - -6 - - - 50,489,666 50,489,666 40,439,192

294,104,006 57,522,414 19,684,125 80,435,556 50,489,666 502,235,767 469,488,826As per FTB 294,104,005.96 57,522,412.74 19,684,125.09 80,448,509.97 50,489,666.28 502,248,720

Total (3+4+5+6)

Current YearParticulars

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

Total Depreciation

Assets

LandCapitalization Construction(Pending Capitalization)Leasehold Assets

Previous Year

Sanima Bank LimitedFixed Assets

As on July 16, 2014

Book Value (WDV*) (1-2)

At Cost

Schedule 15

In Rs.

In Percantage In Amount- - - - - - -- - - - - - -- - - - - - -- - - - - - -- - - - - - -- - - - - - -- - - - - - -- - - - - - -- - - - - - -- - - - - - -

Grand Total - - - - - -

Previous YearRs.

Sanima Bank LimitedNon-Banking AssetsAs on July 16, 2014

Net Non-BankingAssets Current Year

Rs.

Loss ProvisionName and Address ofBorrower or Party

Date of Accept Non-Banking Assets

Total Amount of Non-Banking Assets Rs.

Schedule 16


1 4,991,029 2,991,7992 7,556,124 17,870,5953 41,353,074 30,992,138

(41,353,074) - (30,992,138)4 - -5 3,591,809 280,1526 117,493,369 77,247,9037 9,745,460 5,306,8348 - -9 - -10 - -11 4,279,508 7,751,69812 - -13 - 851,80214

198,187,803 159,719,217(183,428,099) (175,093,760)

40,225,713 26,041,952693,937,080 -232,229,859 -

Sanima Bank LimitedOther Assets

As on July 16, 2014

Stationery StockIncome Receivable on Investments

Particulars

Accrued Interest on Loan

OthersDeferred Tax Assets

Sundry Debtors

Custom DutyAdvances - Gold and Silver

Expenses Not Written off

Less : Interest Suspense Amount

Cash in Transit

Staff Loans and AdvancesPrepaid Expenses

Branch account

Commission Receivable

Drafts Paid without NoticeOther Transit items ( including cheques )

Advance TaxLess: Provision for Tax

Outward ClearingForward Contract Receivables 232,229,859 -

90,808,585 139,713,13556,270,729 253,323,633

1,275,888,970 516,004,961(1,275,888,970)

479,044,4221,754,933,392

Schedule 16 (A)In Rs.

Up to 1 Year 1 to 3 Years More Than 3Years

1 Accrued Interest on Loan 41,353,074 - - 41,353,074 30,992,1382 Drafts Paid without Notice - - - - -3 Branch Adjustment Account - - - - -4 Local and Foreign Agency A/Cs - - - - -

Current YearCurrent Year

Particulars

Outward ClearingOthers

Total

Previous Year

Forward Contract Receivables

Other Assets (Aditional Information)

Schedule 17


1 - -2 - -

a) Less than 6 months Maturity 805,599,041 276,637,493b) More than 6 months Maturity 88,037,478 -

3 - -4 - -

a) Bid Bonds 138,188,142 63,811,650b) Performance Bonds 1,112,917,901 551,583,725c) Other Guarantees/Bonds - -

5 - -6 - -7 11,572,278 -8 288,465,832 -9 - -10 2,459,148,916 1,772,722,56011 - -12 391,465,705 170,877,93513 - -14 - -15 9,502,780 10,935,621

- -5,304,898,073 2,846,568,984

Claims on Institution but not accepted by the Institution

Rediscounted Bills

Sanima Bank LimitedContingent LiabilitiesAs on July 16, 2014

Bills under Collection

Unpaid Shares in Investment

Particulars

Forward Exchange Contract Liabilities

Advance Payment GuaranteeFinancial Guarantee

Others

Counter Guarantee of Internationally Rated Banks

Total

Irrevocable Loan Commitments

Letters of Credit (Full Amount)

Contingent Liabilities on Income Tax

Unmatured Guarantees/Bonds

Underwriting CommitmentsAcceptance and Endorsements

Schedule 18

In Rs. Current Year Previous Year

A. 1,934,145,084 1,623,744,9711 Loans and Advances 1,478,692,264 1,222,868,1392 Overdraft 455,452,821 400,876,832

B 84,326,051 54,925,7971 Nepal Government Securities 67,488,000 49,533,572

a. Treasury Bills 54,692,459 39,947,388b. Development Bonds 12,795,541 9,586,184c. National Savings Certificates - -

2 Foreign Securities - -3 Nepal Rastra Bank Bond - -4 Debenture and Bonds - -5 On Interbank Placement 16,838,050 5,392,226

a. Bank and Financial Institutions 16,838,050 5,392,226b. Other Organizations - -

C - -1 Local Banks - -2 Foreign Banks - -

D 34,495 119,1701 Local Banks/Financial Institutions 34,495 119,1702 Foreign Banks - -

E - -1 Certificate of Deposits - -2 Inter-Bank Loan - -3 Others - -

2,018,505,630 1,678,789,938

Sanima Bank LimitedInterest Income


Particulars

Total

On Others

On Agency Balances

On Money at Call and Short Notice

On Loan, Advances and Overdraft

On Investment

Schedule 19


A. 1,175,363,493 1,009,370,5371 Fixed Deposits 692,759,190 653,642,169

1.1 Local Currency 684,426,566 650,010,2711.2 Foreign Currency 8,332,625 3,631,898

2 Savings Deposits 307,421,410 210,036,8462.1 Local Currency 306,601,277 209,726,0702.2 Foreign Currency 820,133 310,776

3 Call Deposits 175,182,893 145,691,5223.1 Local Currency 175,131,495 145,655,5183.2 Foreign Currency 51,397 36,004

4 Certificate of Deposits - -B 22,946,823 12,256,704

1 Debentures and Bonds - -2 Loan from Nepal Rastra Bank 21,482,958 3,172,2943 Inter Bank/Financial Institutions Borrowing 1,463,866 9,084,4104 Other Corporate Body - -5 Other Loans - -

C 1,477,548 1,630,200.681 Bond Premium w/o 1,477,548 1,630,200.682 ………………. -

1,199,787,864 1,023,257,441

Sanima Bank LimitedInterest Expenses


Particulars

Total

On Borrowings

On Deposit Liabilities

On Others

Schedule 20


A - -1 Local - -2 Foreign - -

B 29,566,019 17,718,1171 Letters of Credit 7,006,742 5,387,4992 Guarantee 11,759,297 6,821,3323 Collection Fee - -4 Remittance Fee 8,913,916 5,507,9865 Credit Cards - -6 Share Underwriting/Issues 1,880,394 -7 Government Transactions 5,670 1,3008 Agency Commission - -9 Exchange Income - -

C 10,258,723 5,949,671- -

39,824,742 23,667,788

Sanima Bank LimitedCommission and Discount


Total

Commission

ParticularsBills Purchase and Discount

Others

Schedule 21


1 Rental on Safe Deposit Lockers 983,010 696,2702 Issue and Renewals of Credit Cards - -3 Issue and Renewals of ATM Cards 1,271,282 888,2724 Telex/T.T. 1,689,022 623,0245 Service Charges 63,098,349 55,486,1346 Renewal Fees 3,157,597 1,757,4207 Others 15,238,580 9,402,341

85,437,840 68,853,461

Schedule 22


(A) Revaluation Gain 2,159,904 3,432,058(B) Trading Gain (Except Exchange Income) 144,729,506 23,805,252

146,889,410 27,237,310

Particulars

Total Income/(Loss)

Total

Sanima Bank LimitedOther Operating Income


Sanima Bank LimitedExchange Gain/Loss


Particulars

Schedule 23


1 Salary 64,214,338 48,880,5792 Allowances 37,118,490 25,765,4153 Contribution to Provident Fund 5,745,941 4,597,0704 Training Expenses 2,111,199 678,9505 Uniform - 52,7196 Medical - -7 Insurance 1,226,967 1,095,1008 Pension and Gratuity Provision 5,892,373 4,408,6509 Others 18,071,703 14,297,807

134,381,010 99,776,288Total

Particulars

Sanima Bank LimitedEmployee Expenses


Schedule 24


1 16,801,521 13,017,9692 6,118,048 4,597,5423 2,236,068 4,006,050

(a) Building 565,062 2,675,307(b) Vehicles 983,358 853,624(c) Others (Software) 687,648 477,119

4 12,100,628 9,305,7675 16,524,177 11,260,6896 4,185,387 2,612,8817 2,501,569 1,731,9248 6,049,671 4,116,6059 190,052 157,02910 13,846,914 10,958,79811 104,413 -12 - -13 1,989,813 1,076,619

(a) Meeting Fees 1,188,432 721,000(b) Other Expenses 801,381 355,619

14 827,860 481,48315 697,810 529,630

(a) Audit Fees 508,500 400,000(b) Other Expenses 189,310 129,630

16 1,527,007 836,83017 53,803,451 48,777,28518 - -19 - -20 - -21 3,569,709 2,634,19422 2,408,441 -23 18,507,617 13,689,70124 - -25 -26 42,392,187 28,939,265

26.1 Office Maintenance 550,803 597,03226.2 Vehicle Fuel & Tax 13,971,390 12,257,59426.3 Membership Fee 1,319,025 1,063,94226.4 Business Promotion Expense 9,684,432 5,440,17426.5 Human Resource Outsourcing 12,626,426 7,635,55926.6 Office Equipment Uncapitalised 478,987 359,86926.7 Miscellaneous 3,761,123 1,585,094

206,382,340 158,730,263

ParticularsHouse Rent

Insurance

Sanima Bank LimitedOther Overhead Expenses


Commission on Remittances

Share Issue Expenses

Total

Electricity and WaterRepair and Maintenance

Postage, Telex, Telephone, FaxOffice Equipment, Furniture and Fixture RepairTraveling Allowances and ExpensesStationery and PrintingPeriodicals and BooksAdvertisements

Expenses Relating to Board of Directors

Legal ExpensesDonations

Annual General Meeting ExpensesExpenses Relating to Audit

Security ExpensesCredit Guarantee PremiumCommission and DiscountOthers

Depreciation on Fixed Assets (Including Amortization)Amortization of Preliminary Expenses

Technical Services FeeEntertainmentWritten Off Expenses

Schedule 25


1 Increase in Loan Loss Provision 95,212,477 57,846,4142 Increase in Provison for Loss on Investment -3 Provision Against Non-Banking Assets - -4 Provision Against Other Assets - -

95,212,477 52,492,738

Schedule 26


1 Profit (Loss) on Sale of Investment - -2 Profit (Loss) on Sale of Assets 1,030,899 -3 Dividend 1,134,709 -4 Subsidies Received from Nepal Ratra Bank - -

a. Reimbursement of Losses of Specified Branches - -b. Interest Subsidy - -c. Exchange Counter - -

5 Others 19,400,326 2,571,00521,565,934 2,571,005

Schedule 27


1 Loan Loss Provision Written Back 1,357,112 12,526,1482 Provision against Non-Banking Assets Written Back - -3 Investment Provision Written Back 170,000 7,149,2944 Provision against Other Assets Written back - -

1,527,112 19,675,442

Total

Particulars

Sanima Bank LimitedProvision for Possible Losses


Particulars

Sanima Bank Limited

Total

Total Non-Operating Income (Loss)

Non-Operating Income/LossFor the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071)

Loss Provisions Written BackFor the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071)

Particulars

Sanima Bank Limited

Schedule 28

In Rs.Particulars Current Year Previous Year

1 Recovery of write off Loan - -2 Voluntary Retirement Scheme Expenses - -3 Loan Write-Off (4.28) (a) (308,370) -4 Others - -

(308,370) -Schedule 28 (a)

In Rs.

S.N. Types of Loan Written OffAmount Type of Security

Basis ofValuation of

Collateral

Loan Approved byName/

DesignationInitiation made for Recovery Remarks

1 Working Capital Loan - - - - - -2 Project Loan - - - - - -3 Fixed Capital Loan - - - - - -4 Personal Loan - - - - - -

5 Other Loan 308,370 PersonalGuarantee only NA

Tej Bahadur Chand,DGM, KumarLamsal, GM

Follow up letter has beenissued in regular interval ondifferent dates and 35 days loancall back notice has also beenpublished on national dailynewspaper. Continue efforts forrecovery of these loans havebeen putting on.

-

308,370 - - - - -


Sanima Bank Limited

Total Loan

Statement of Loans Written-OffFor the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071)

Income /Expenses from Extra-ordinary Activities

Sanima Bank Limited

Schedule 29

In Rs.

Principal Interest Principal Interest Principal Interest(A) Directors - - - - - - -

1 - - - - - - -2 - - - - - - -

(B) Chief Executive - - - - - - -1 - - - - - - -2 - - - - - - -

(C) Promoters - - - - - - -- - - - - -

1. Biswa Nath Paudel 14,670,000 - 14,670,000 - - - -- ` - - - - -

(D) Employees - - - - - - -1 Ranjan Mainali 200,000 - - - 875,781 1,075,780.82 -2 Shailendra Neupane 455,000 - 45,000 - - 410,000 -3 Pramika Bista 440,000 - 440,000 - - - -4 Roshan Dhaurali 435,000 - 98,000 - - 337,000 -5 Binod Ojha 287,000 - 100,000 - - 187,000 -6 Aska Shrestha 532,000 - 442,000 - - 90,000 -7 Hem Raj Pandey 109,345 - 109,345 - - - -8 Prakash Baral 38,261 - - - 94,539 132,800 -9 Sunail Khatiwada 268,500 - - - - 268,500 -10 Bishal Bhattarai 45,000 - 45,000 - - - -11 Prem Bahadur Mahat 465,500 - - - 230,000 695,500 -12 Pralhad Chandra Niraula 75,000 - - - 170,000 245,000 -13 Hemanta Shrestha 177,000 - 86,500 - - 90,500 -14 Mahesh Kumar Niraula 206,433 - 36,433 - - 170,000 -15 Samir Sigdel 375,500 - 375,500 - - - -16 Manoj Kumar Ghimire 301,000 301,000 -17 Sumeena Shrestha 300,000 300,000 -18 Hitler Shrestha 650,000 650,000 -19 Rajiv Bogati 66,000 66,000 -20 Ambika Danuwar 100,000 100,000 -21 Pujan Baidhya 385,000 385,000 -22 Christina Nakarmi 150,000 150,000 -23 Narayan Pd Khatiwada 94,500 94,500 -

-(E) Shareholders - - - - - - -

1 - - - - - - -2 - - - - - - -

18,779,539 - 16,447,778 - 3,416,820 5,748,581 -

Current YearAdditions

Balance as of Ashad End

Note: All Above loans are against Fixed Deposit maintained with the Bank and GoldTotal

The Statement of amount, included under total amount of Bills Purchased and Discounted, Loans, Advances and Overdraft, provided to the Directors, Chief Executive, Promoters, Employees,Shareholders and to the individual members of their undivided family or against the guarantee of such persons or to the organizations or companies in which such individuals are managing agent,are as follows :

Sanima Bank LimitedStatement of Loans and Advances Extended to Directors/Chief Executive/Promoter/Employees and Shareholders

As on July 16, 2014

Name of Promoter/Director/Chief Executive Till Previous Year's Balance Current Year Recovery

Schedule 30 (Ka 1)

In Rs.1.1 RISK WEIGHTED EXPOSURES Current Year Previous Yeara Risk Weighted Exposure for Credit Risk 22,680,658,738 15,989,208,846b Risk Weighted Exposure for Operational Risk 833,090,952 575,777,637c Risk Weighted Exposure for Market Risk 334,302,709 348,935,567

Total Risk Weighted Exposures (a+b+c) 23,848,052,398 16,913,922,050Adjustments Under Pillar II -ALM policies & practices are not satisfactory, add 1% of net interest income to RWE (6.4 a 5)Add .....% of the total deposit due to insufficient Liquid Assets (6.4 a 6)Add RWE equivalent to reciprocal of capital charge of 2% of gross income (6.4 a 7) 155,132,505Overall risk management policies and precedures are not satisfactory. Add 2% of RWE (6.4 a 9) 476,961,048 338,278,441If desired level of disclosure requirement has not been achieved, Add .....% of RWE (6.4 a 10)Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 24,480,145,952 17,252,200,491

1.2 CAPITAL Current Year Previous YearCore Capital (Tier 1) 2,819,288,281 2,399,580,545

a Paid up Equity Share Capital 2,217,600,000 2,016,000,000b Irredeemable Non-cumulative preference shares - -c Share Premium 10,563,747 10,563,747d Proposed Bonus Equity Shares 332,640,000 201,600,000e Statutory General Reserves 240,500,000 154,964,717f Retained Earnings 28,339,535 27,037,095g Un-audited current year cumulative profit - -h Capital Redemption Reserve - -I Capital Adjustment Reserve - -j Dividend Equalization Reserves - -k Debenture Payment Reservel Deffered Tax Reserve - 851,802m Other Free Reserve - -n Less: Goodwill - -o Less: Fictitious Assets - -p Less: Investment in equity in licensed Financial Institutions - -q Less: Investment in equity of institutions with financial interests 10,355,000 10,355,000r Less: Investment in equity of institutions in excess of limits - -s Less: Investments arising out of underwriting commitments - -t Less: Reciprocal crossholdings

Sanima Bank Ltd.CAPITAL ADEQUACY TABLE

As on 16.07.2014 (Ashadh End 2071)

t Less: Reciprocal crossholdingsu Less: Purchase of land & building in excess of limit & utilizedv Less: Other Deductions - 1,081,816

Adjustments Under Pillar IILess: Shortfall in Provision (6.4 a 1)Less: Loans and Facilities extended to Related Parties and Restricted lending (6.4 a 2)

Supplementary Capital (Tier 2) 249,921,927 165,454,159a Cumulative and/or Redeemable Preference Share - -b Subordinated Term Debt - -c Hybrid Capital Instruments - -d General loan loss provision 246,168,184 152,440,391e Exchange Equalization Reserve 3,198,743 2,658,767f Investment Adjustment Reserve 555,000 10,355,000g Assets Revaluation Reserve - -h Other Reserves - -

Total Capital Fund (Tier I and Tier II) 3,069,210,208 2,565,034,704

1.3 CAPITAL ADEQUACY RATIOS Current Year Previous YearTier 1 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 11.52% 13.91%Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 12.54% 14.87%

Schedule 30 (Kha)

In Rs.

Book Value Specific Provision Eligible CRM Net Value Risk Weight Risk Weighted Exposuresa b c d=a-b-c e f=d*e Net Value Risk Weight Amount

Cash Balance 538,387,165 - 538,387,165 0% - 312,962,006 -Balance With Nepal Rastra Bank 2,811,039,229 - 2,811,039,229 0% - 1,283,546,348 -Gold - - 0% -Investment in Nepalese Government Securities 2,134,019,041 - 2,134,019,041 0% - 3,450,356,334 -All Claims on Government of Nepal 26,913,241 - 26,913,241 0% - 26,913,241 -Investment in Nepal Rastra Bank securities - - - 0% - - -All claims on Nepal Rastra Bank - - - 0% - - -Claims on Foreign Government and Central Bank (ECA 0-1) - - - 0% - - -Claims on Foreign Government and Central Bank (ECA -2) - - - 20% - - -Claims on Foreign Government and Central Bank (ECA -3) - - - 50% - - -Claims on Foreign Government and Central Bank (ECA-4-6) - - - 100% - - -Claims on Foreign Government and Central Bank (ECA -7) - - - 150% - - -Claims On BIS, IMF, ECB, EC and on MultilateralDevelopment Banks (MDB's) recognized by the framework - - - 0% - - -

Claims on Other Multilateral Development Banks - - - 100% - - -Claims on Public Sector Entity (ECA 0-1) - - 20% - - -Claims on Public Sector Entity (ECA 2) - - - 50% - - -Claims on Public Sector Entity (ECA 3-6) - - - 100% - - -Claims on Public Sector Entity (ECA 7) - - 150% - 1,910,000 2,865,000Claims on domestic banks that meet capital adequacy requirements 426,158,892 - 426,158,892 20% 85,231,778 721,023,232 144,204,646

Claims on domestic banks that do not meet capital adequacy requirements 14,069,740 252,838 - 13,816,902 100% 13,816,902 18,360,634 18,360,634Claims on foreign bank (ECA Rating 0-1) 424,302,583 - 424,302,583 20% 84,860,517 171,396,864 34,279,373Claims on foreign bank (ECA Rating 2) 144,300,000 - 144,300,000 50% 72,150,000 47,950,000 23,975,000Claims on foreign bank (ECA Rating 3-6) - - - 100% - - -Claims on foreign bank (ECA Rating 7) - - - 150% - - -Claims on foreign bank incorporated in SAARC region operating with abuffer of 1% above their respective regulatory capital requirement 1,062,138,900 - 1,062,138,900 20% 212,427,780 198,897,094 39,779,419Claims on Domestic Corporates 11,615,780,232 41,214,523 11,574,565,709 100% 11,574,565,709 9,259,557,462 9,259,557,462Claims on Foreign Corporates (ECA 0-1) - - - 20% - - -Claims on Foreign Corporates (ECA 2) - - - 50% - - -Claims on Foreign Corporates (ECA 3-6) - - - 100% - - -Claims on Foreign Corporates (ECA 7) - - - 150% - - -Regulatory Retail Portfolio (Not Overdue) 5,677,398,368 236,198,443 5,441,199,925 75% 4,080,899,943 3,630,688,418 2,723,016,314Claims Fullfilling all criterion of regulatory retail except granularity - - - 100% - - -

Claims secured by residential properties 1,145,622,688 - 1,145,622,688 60% 687,373,613 760,506,236 456,303,741Claims not fully secured by residential properties - - - 150% - - -Claims secured by residential properties (Overdue) - - 100% - 63,734,631 63,734,631Claims secured by Commercial real estate 307,955,508 - 307,955,508 100% 307,955,508 301,039,780 301,039,780Past due claims (except for claim secured by residential properties) 63,991,478 2,408,447 - 61,583,030 150% 92,374,545 7,233,285 10,849,928High Risk Claims 1,395,545,905 380,615 22,401,853 1,372,763,437 150% 2,059,145,155 712,448,103 1,068,672,155Investments in equity and other capital instruments of institutions listed inthe stock exchange 47,537,722 - 47,537,722 100% 47,537,722 - -Investments in equity and other capital instruments of institutions not listedin the stock exchange 2,302,600 - 2,302,600 150% 3,453,900 2,302,600 3,453,900

Current Year Previous YearA. Balance Sheet Exposures

As on 16.07.2014 (Ashadh End 2071)RISK WEIGHTED EXPOSURE FOR CREDIT RISK

Investments in equity and other capital instruments of institutions not listedin the stock exchange 2,302,600 - 2,302,600 150% 3,453,900 2,302,600 3,453,900Staff Loan Secured by residetial property 104,856,808 - 104,856,808 60% 62,914,085 63,096,309 37,857,786Interest Receivable / Claim on Govt. Securities 1,825,337 - 1,825,337 0% - 17,680,122 -Cash in Transit and other cash items in process of collection 90,808,585 - 90,808,585 20% 18,161,717 140,547,465 28,109,493Other Assets (as per attachment) 1,805,415,181 224,781,174 - 1,580,634,008 100% 1,580,634,008 763,088,075 763,088,075

29,840,369,204 227,823,074 299,814,819 29,312,731,311 20,983,502,883 21,955,238,240 14,979,147,336

B. Off Balance Sheet Exposures Gross Book Value Specific Provision Eligible CRM Net Value Risk Weight Risk Weighted Exposures Net Value Risk Weighted ExposuresRevocable Commitments - 0% - - -Bills Under Collection 11,572,278.00 11,572,278 0% - - -Forward Foreign Exchange Contract Liabilities - - 10% - - -LC Commitments With Original Maturity Up to 6 months DomesticCounterparty 805,599,041 - 33,810,927.36 771,788,114 20% 154,357,622.78 259,556,970.00 51,911,394Foreign Counterparty (ECA Rating 0-1) - - - 20% - - -Foreign Counterparty (ECA Rating 2) - - - 50% - - -Foreign Counterparty (ECA Rating 3-6) - - - 100% - - -Foreign Counterparty (ECA Rating 7) - - - 150% - - -LC Commitments With Original Maturity Over 6 months DomesticCounterparty 88,037,478.34 20,906,000.00 67,131,478 50% 33,565,739.17 - -Foreign Counterparty (ECA Rating 0-1) - - - 20% - - -Foreign Counterparty (ECA Rating 2) - - - 50% - - -Foreign Counterparty (ECA Rating 3-6) - - - 100% - - -Foreign Counterparty (ECA Rating 7) - - - 150% - - -Bid Bond, Performance Bond and Counter guarantee DomesticCounterparty 1,251,106,043 600,230,000 38,431,669.65 612,444,373 50% 306,222,186.68 587,632,717.93 293,816,359Foreign Counterparty (ECA Rating 0-1) - - - 20% - - -Foreign Counterparty (ECA Rating 2) - - - 50% - - -Foreign Counterparty (ECA Rating 3-6) - - - 100% - - -Foreign Counterparty (ECA Rating 7) - - - 150% - - -Underwriting commitments - - - 50% - - -Lending of Bank's Securities or Posting of Securities as collateral - - - 100% - - -Repurchase Agreements, Assets sale with recourse - - - 100% - - -Advance Payment Guarantee 391,465,705 5,805,379 385,660,325 100% 385,660,325.45 163,395,319.39 163,395,319Financial Guarantee - - 100% - -Acceptances and Endorsements 288,465,832 - 288,465,832 100% 288,465,831.50 - -Unpaid portion of Partly paid shares and Securities - - - 100% - - -Irrevocable Credit commitments (Short Term) 2,367,310,297 - 2,367,310,297 20% 473,462,059.34 1,311,833,212.11 262,366,642Irrevocable Credit commitments (Long Term) 91,838,620 - 91,838,620 50% 45,919,309.89 460,889,347.90 230,444,674Claims on foreign bank incorporated in SAARC region operating with abuffer of 1% above their respective regulatory capital requirement - - 20% - - -Other Contingent Liabilities 9,502,780 - 9,502,780 100% 9,502,780.30 8,127,120.85 8,127,121Unpaid Guarantee Claims - - 200% - - -TOTAL 5,304,898,073 600,230,000 98,953,976 4,605,714,097 1,697,155,855 2,791,434,688 1,010,061,510Total RWE for credit Risk Before Adjustment (A) +(B) 35,145,267,278 828,053,074 398,768,795 33,918,445,409 22,680,658,738 24,746,672,928 15,989,208,846

Adjustments under Pillar II Add: 10% of the loan and facilities in excess of Single Obligor Limits(6.4 a 3)Add: 1% of the contract (sale) value in case of the sale of credit withrecourse (6.4 a 4)Total RWE for Credit Risk (After bank's Adjustments of Pillar II)

Schedule 30(Ga)

Credit Exposures

Deposits withBank

Deposits with otherbanks/FI Gold Govt.& NRB Securities

G'tee ofGovt. ofNepal

Sec/G'tee ofotherSovereigns

G'tee of domesticbanks

G'tee ofMDBs

Sec/G'tee ofForeign Banks Total

(a) (b) (c) (d) (e) (f) (g) (h) (I)Balance Sheet ExposuresCash BalanceBalance With Nepal Rastra BankGoldInvestment in Nepalese Government SecuritiesAll Claims on Government of NepalInvestment in Nepal Rastra Bank securitiesAll claims on Nepal Rastra BankClaims on Foreign Government and Central Bank (ECA 0-1)Claims on Foreign Government and Central Bank (ECA -2) -Claims on Foreign Government and Central Bank (ECA -3) -Claims on Foreign Government and Central Bank (ECA-4-6) -Claims on Foreign Government and Central Bank (ECA -7) -Claims On BIS, IMF, ECB, EC and on MultilateralClaims on Other Multilateral Development Banks -Claims on Public Sector Entity (ECA 0-1) -Claims on Public Sector Entity (ECA 2) -Claims on Public Sector Entity (ECA 3-6) -Claims on Public Sector Entity (ECA 7) -

Claims on domestic banks that meet capital adequacy requirements -Claims on domestic banks that do not meet capital adequacyrequirements -Claims on foreign bank (ECA Rating 0-1) -Claims on foreign bank (ECA Rating 2) -Claims on foreign bank (ECA Rating 3-6) -Claims on foreign bank (ECA Rating 7) -

Claims on foreign bank incorporated in SAARC region operating with abuffer of 1% above their respective regulatory capital requirement -Claims on Domestic Corporates 41,214,523 41,214,523Claims on Foreign Corporates (ECA 0-1) -Claims on Foreign Corporates (ECA 2) -Claims on Foreign Corporates (ECA 3-6) -Claims on Foreign Corporates (ECA 7) -Regulatory Retail Portfolio (Not Overdue) 80,208,226 155,990,218 236,198,443

Claims Fullfilling all criterion of regulatory retail except granularity - -Claims secured by residential properties - -Claims not fully secured by residential properties -Claims secured by residential properties (Overdue) -Claims secured by Commercial real estate -

Past due claims (except for claim secured by residential properties) -High Risk Claims 21,343,853 1,058,000 22,401,853Investments in equity and other capital instruments of institutions listedin the stock exchange -Investments in equity and other capital instruments of institutions notlisted in the stock exchange -Other Assets (as per attachment) -Total 142,766,602 - 157,048,218 - - - - - - 299,814,819

ELIGIBLE CREDIT RISK MITIGANTSAs on 16.07.2014 (Ashadh End 2071)

In Rs.

Off Balance Sheet ExposuresForward Foreign Exchange Contract Liabilities -

LC Commitments With Original Maturity Up to 6 months (domestic) 33,810,927 33,810,927ECA Rating 0-1 -ECA Rating 2 -ECA Rating 3-6 -ECA Rating 7 -

LC Commitments With Original Maturity Over 6 months (domestic) 20,906,000 20,906,000ECA Rating 0-1 -ECA Rating 2 -ECA Rating 3-6 -

ECA Rating 7 -Bid Bond, Performance Bond and Counter Guarantee DomesticCounterparty 38,431,670 38,431,670ECA Rating 0-1 -ECA Rating 2 -ECA Rating 3-6 -ECA Rating 7 -Guarantee Invoked but yet not honoured -Underwriting commitments -

Lending of Bank's Securities or Posting of Securities as collateral -Repurchase Agreements, Assets sale with recourse (including repo/reverse repo) -Advance Payment Guarantee 5,805,379 5,805,379Financial Guarantee -Acceptances and Endorsements -Unpaid portion of Partly paid shares and Securities -Irrevocable Credit commitments (Short Term) -Irrevocable Credit commitments (Long Term) -Other Contingent Liabilities -Total 98,953,976 - - - - - - - - 98,953,976Grand Total 241,720,578 - 157,048,218 - - - - - - 398,768,795

Shedule 30 (Gha)

In Rs.

Year 1 (2010/11) Year 2 (2011/12) Year 3 (2012/13)Net Interest Income 355,456,322 418,583,608 655,532,497Commission and Discount Income 4,949,150 11,251,196 23,667,788Other Operating Income 34,805,648 44,618,555 68,853,461Exchange Fluctuation Income 157,502 (175,238) 27,237,310Addition / Deduction Interest Suspense during the period 12,541,981 8,330,653 371,471Gross income (a) 407,910,603 482,608,774 775,662,527 -Alfa (b) 15% 15% 15%Fixed Percentage of Gross Income [c=(a×b)] 61,186,590 72,391,316 116,349,379Capital Requirement for operational risk (d) (average of c) 83,309,095 57,577,764Risk Weight (reciprocal of capital requirement of 10%) in times (e) 10 10Equivalent Risk Weight Exposure [f=(d×e)] 833,090,952 575,777,637PILLAR-II ADJUSTMENTSIf Gross Income for all the last three years is negative (6.4 a 8)Total Credit and Investment (net of Specific Provision)Capital Requirement for operational risk (5%)Risk Weight (reciprocal of capital requirement of 10%) in times 10 10Equivalent Risk Weight Exposure [g]Equivalent Risk Weight Exposure [h=f+g] 833,090,952 575,777,637

Previous Years from 2013/07/15Particulars Previous Year

As on 16.07.2014 (Ashad End 2071)RISK WEIGHTED EXPOSURE FOR OPERATIONAL RISK

Schedule 30 (Nga)

In Rs.

S.No. Currency Open Position (FCY) Open Position (NPR) Relevant Open Position1 INR 390,172,556 624,568,719 624,568,719 687,634,7062 USD (349,482) (33,620,199) 33,620,199 2,471,8993 GBP 8,906 1,467,277 1,467,277 2,452,8684 EUR 29,693 3,868,421 3,868,421 4,332,7505 THB 7,250 21,134 21,134 -6 CHF 1,290 137,720 137,720 40,3567 AUD 29,346 2,640,706 2,640,706 129,2728 CAD 2,100 187,215 187,215 487,4219 SGD 5,282 408,061 408,061 -

10 JPY 1,104,000 1,035,000 1,035,000 148,49011 HKD 120 1,680 1,68012 DKK - - - -13 SEK - - - -14 SAR 12,379 309,413 309,413 61,48815 QAR 2,819 72,646 72,64616 AED 7,955 203,131 203,131 80,57317 MYR - - - -18 KRW 85,000 7,939 7,939 -19 CNY 3,643 56,157 56,157 31,310.00

.. - - -668,605,417 697,871,134

5% 5%33,430,271 34,893,557

10 10334,302,709 348,935,567

RISK WEIGHTED EXPOSURE FOR MARKET RISKAs on 16.07. 2014 (Ashadh End 2071)

Previous Year

Equivalent Risk Weight Exposure [e=(c×d)]

Total Open Position (a)Fixed Percentage (b)Capital Charge for Market Risk [c=(a×b)]Risk Weight (reciprocal of capital requirement of 10%) in times (d)

Current Year

Indicators FY 2066/67 FY 2067/68 FY 2068/69 FY 2069/70 FY 2070/711 Percent of Net Profit/Gross Income Percent 13.07 14.39 9.92 16.96 18.672 Earning Per Share Rs. 10.63 7.70 6.04 15.13 19.283 Market Value Per Share Rs. 497.00 497 225 260 6384 Price Earning Ratio Times 46.74 64.55 37.25 17.18 33.095 Dividend (Including Bonus) on Share Capital Percent 10.00 6.50 5.50 10.53 15.796 Cash Dividend on Share Capital Percent 10.00 6.50 5.50 0.53 0.797 Interest Income/Loan & Advances Percent 10.74 13.23 12.16 11.01 9.798 Staff Expenses/Total Operating Expenses Percent 39.01 39.84 34.50 38.60 39.449 Interest Expenses / Total Deposit and Borrowing Percent 6.43 9.74 6.69 5.31 4.6610 Exchange Gain/Total Income Percent 0.85 0.01 (0.01) 1.51 6.4111 Staff Bonus/Total Staff Expenses Percent 29.27 39.80 21.66 43.84 45.8512 Net Profit/Loan and Advances Percent 1.67 2.41 1.26 2.00 2.0713 Net Profit/Total Assets Percent 1.18 1.66 0.89 1.39 1.4614 Total Credit/Deposit Percent 89.33 101.25 86.25 85.72 82.9015 Total Operating Expenses/Total Assets Percent 0.93 0.90 1.69 1.18 1.1616 Adequacy of Capital Fund on Risk Weighted Assets

a) Core Capital Percent 15.56 27.54 19.82 13.91 11.52b) Supplementary Captial Percent 0.94 0.87 0.93 0.96 1.02c) Total Capital Fund Percent 16.51 28.41 20.74 14.87 12.54

17 Liquidity Percent 28.19 26.57 30.24 30.96 26.6818 Non-Performing Loan/Total Credit Percent 0.080 0.004 0.479 0.027 0.01719 Weighted Average Interest Rate Spread Percent 4.01 4.04 3.38 3.39 4.0120 Book Net-Worth Rs. 881,194,758 2,108,610,956 2,129,580,522 2,424,031,128 2,833,397,02521 Total Number of Shares Nos. 8,064,000 20,160,000 20,160,000 20,160,000 22,176,00022 Total Staff Nos. 149 197 232 231 31123 No. of Branches (incl. HO) Nos. 15 21 22 24 2824 Base Rate Percent - - - 10.04 8.2224 Return on Equity Percent 9.73 7.36 5.72 12.58 15.0925 Return on Assets Percent 1.18 1.66 0.88 1.39 1.4626 Total Assets to Shareholders Fund Times 8.21 4.44 6.44 9.03 10.30

Particulars

Sanima Bank limitedPrincipal Indicators

Schedule 31

1

Significant Accounting PoliciesSchedule 32

1. General Information

Sanima Bank Limited (“The Bank”) is a limited liability company domiciled inNepal. The registered office of the Bank is located at Alakapuri Building, Naxal,Kathmandu, Nepal.

The Bank has registered with the Office of the Company Registrar on 30th June2004 (16th Ashadh 2061), obtained license from Nepal Rastra Bank on 26th

November 2004 (11th Mangsir 2061) and came into operation from 6th

December 2004 (21st Mangsir 2061) to conduct banking business in Nepal. TheBank is listed in Nepal Stock Exchange Limited. Furthermore, the Bank hasobtained license to operate as ‘A’ class financial institution on 13th February2012 (1st Falgun 2068) and started operation as ‘A’ class financial institutionw.e.f. 15th February 2012 (3rd Falgun 2068) i.e. upgraded to ‘A’ class FinancialInstitution.

2. Approval of Financial Statements by Board of Directors

The accompanied financial statements have been adopted by the Board ofDirectors on its meeting held on 3rd September, 2014 (18th Bhadra 2071) andrecommended for its approval by the Annual General Meeting of theshareholders.

3. Basis of Preparation & Use of Estimate

The financial statements are prepared under historical cost conventionfollowing accrual basis of accounting except for interest income on loans andadvance which is accounted for on cash basis. The preparation of financialstatements in conformity with NAS and GAAP requires management to usecertain critical accounting estimates. It also requires management to exercisejudgment in process of developing and applying the Bank’s accounting policies.The Management believes that estimates and policies so applied arereasonable in the circumstances of the cases. All the formats of the financialstatements are in accordance with the NRB Directives.

4. Statement of Compliance

The financial statements has been prepared in accordance with NepalAccounting Standards (“NAS”) issued by the Nepal Accounting StandardsBoard except otherwise stated, Generally Accepted Accounting Principles(“GAAP”), Bank and Financial Institutions Act, 2063 (“BAFIA”) and otherrequirements of Directives, circulars and guidelines issued by NRB and inconformity with the Companies Act, 2063.

5. Significant Accounting Polices

The principal accounting policies applied by the Bank in the preparation ofthese financial statements are presented below. These polices have beenconsistently applied to all the years presented unless stated otherwise.

2

5.1. Interest Income

Interest income on loans and advances is recognized on cash basis as per theNepal Rastra Bank (NRB) Directives, although this practice is not inaccordance with NAS - 7 (Revenue), which prescribes the revenue to berecognized on accrual basis. Interest income on investments and on staff loansis accounted for on accrual basis.

5.2. Commission Income

Commission income is recognized on accrual basis over the period of contract.However, it is the practice of the Bank to recognize income on cash basis up toRs. 50,000 for service period of more than one financial year which is not inaccordance with NAS-7.

5.3. Dividend Income

Dividend on equity shares is recognized as income when the right to receivethe same is established. Cash dividends declared by resident companies arerecorded at net of withholding tax.

5.4. Foreign Exchange Transactions

Foreign currency transactions are recorded at the rate prevailing as on the dateof transaction. Difference between buying and selling rates of foreignexchange, at the time of transaction, is accounted for as "Trading Gain/Loss" atthe time of trading under “Exchange Gain/ (Loss)” in Schedule - 22

Foreign currency assets and liabilities as on balance sheet date are translatedinto Nepalese Rupees at the mid exchange rate prevailing on the BalanceSheet date and any difference arising out of such transaction is recognized as“Revaluation Gain/ (Loss)”. This is presented under “Revaluation Gain/ (Loss)”in Schedule – 22. 25 percent of revaluation gain is transferred to ExchangeFluctuation Fund through Profit and Loss Appropriation Account as required byNepal Rastra Bank Directives.

5.5. Interest Expense

Interest on deposit liabilities and borrowings is accounted for on accrual basisin functional currency.

5.6. Employment BenefitsThe Bank provides its employees with the following retirements benefits:

a. Provident fund:Provident fund contribution is recognized as expenses and deposited intothe approved retirement fund (Employee Provident Fund Office).

b. Accumulated Leave :

3

Accumulated leave payable to staff is recognized on accrual basis as perthe Employee Service Regulation of the Bank.

c. Gratuity:Gratuity liability of staff is accrued only after completion of a fixed period offull time employment with the Bank in accordance with the EmployeeService Regulation and is funded from current FY 2070-71.

Leave and gratuity liability is not made as per actuarial valuation as required byNAS-14 Employee Benefits.

5.7. Taxation

a) Current Income TaxProvision for income tax has been made on the basis of the Income Tax Act,2058 and amendments thereto.

b) Deferred Income Tax

Deferred taxes are accounted using the asset and liability method. Deferred taxassets and liabilities are recognized for the future tax consequencesattributable to temporary differences between the financial statement’s carryingamounts of existing assets and liabilities, and their respective tax bases.Deferred tax assets and liabilities are measured using tax rates expected toapply to taxable income in the years in which those temporary differences areexpected to be recovered or settled based on the laws that have been enactedor subsequently enacted by the reporting date. Deferred tax assets arising fromtemporary difference and unused tax losses are recognized to the extent thereis virtual certainty that sufficient future taxable income will be available againstwhich such deferred tax assets can be realized (according to NAS-09 “IncomeTaxes”).

5.8. Loans and Advances including Bills Purchased

a) Classification

Loans and advances, overdrafts and bills purchased include direct financeprovided to customers. These include overdrafts, term loans, consumer loansetc. All credit exposures are subject to regular review and are graded accordingto the level of credit risk and are classified as per NRB Directives. Loans andadvances, overdrafts and bills purchased are shown net of mandatoryprovisions as required by NRB Directives.

b) Loan Loss Provision

The provision for possible losses on loans, advances and bills purchased areprovided at the rates between 1 percent and 100 percent, according toclassification of such risk assets as per Nepal Rastra Bank Directives.

c) Write Off

4

Unrecoverable loans and advances are written off in accordance with the writeoff By-laws approved by the Board of Directors and NRB, without prejudice toBank’s right to recover such loans and advances.

d) Recovery from Written-Off Loans

Recovery from written-off loans in earlier as well as current year is recognizedas income in the year such amount is actually recovered from the borrower.

e) Interest Receivable

Interest accrued on loans and investments are recognized on daily basis on theoutstanding balances at the end of the day. Interest receivables on loans arestated at full value and are disclosed net of interest suspense under 'AccruedInterest on Loan' under 'Other Assets' in Schedule 16 of the FinancialStatement.

f) Recovery of Loan and Interest

Loan is recovered in the sequence of penal, interest and principal.

g) Staff Loans and Advances

The Bank has a policy to provide loans to its staff under Employment ServiceRegulations at a subsidized interest rate. These loans are presented under'Other Assets' in Schedule-16 as per NRB Directives.

5.9. Investments

Investments are classified as held for trading, held to maturity and available forsale in accordance with NRB Directives.

a. Held for Trading :Investments that are made for the purpose of generating profit from short termfluctuations in price are classified under this category. These investments aremarked to market on a daily basis and difference is reflected in the profit andloss account.

b. Held to Maturity:The investments made with positive intent and ability of the Bank to hold tillmaturity is classified as held to maturity investments. The held to maturityinvestments are valued at amortized cost i.e. the cost price less anyimpairments (if applicable). The impairments are included in the profit and lossaccount for the period.

c. Available for Sale:All other investments that are neither “held for trading” nor “held to maturity” areclassified under this category. These investments are marked to market on aregular basis and the difference is adjusted through reserves. 2% of investmentclassified as 'Available for Sale' is appropriated to Investment Adjustment

5

Reserve as required by NRB Directives. The reserve is considered as Tier 2Capital.

In case of investments unquoted within stipulated time frame prescribed byNRB Directives, Investment Adjustment Reserve is maintained to the extent of100% of such investments.

Treasury Bills being discounted instruments are disclosed at cost including thepro rata discount accreted for the holding period.

All Investments are subject to regular review as required by Nepal Rastra BankDirectives.

5.10. Property, Plant and Equipment & Depreciation

a) Fixed Assets

Fixed assets except land are stated at acquisition cost less accumulateddepreciation. Acquisition cost includes expenditures that are directlyattributable to the acquisition of the assets.

Assets with a value less than Rs. 5,000 are charged off as a revenue expenseirrespective of its useful life in the year of purchase.

Leasehold improvements are capitalized at cost and amortized over the leaseperiod or ten years whichever is earlier. The amount of amortization is chargedto revenue.

b) Computer Software

Acquired computer software licenses are capitalized on the basis of costincurred to acquire and bring to use the specific software and are amortizedover their useful life estimated as 5 years from the date of acquisition or overthe period of the license, whichever is less.

c) Depreciation

Land is not depreciated. Depreciation on other fixed assets is calculatedfollowing the Diminishing Balance Method applying the rate prescribed byIncome Tax Act, 2058 which is not in accordance with NAS-6 and is presentedas follows:

Nature of Asset Depreciation RateComputers, Furniture & Fixtures 25%Vehicles 20%Plant & machinery 15%Building 5%Leasehold (useful life 10 years: amortized in 10 yearson straight line basis)

10%

6

Depreciation on assets acquired during the year is computed on aproportionate basis from date of purchase or put to use, whichever is later.

Derecognition of assets: The gain or losses arising from derecognition of anitem of property, plant and equipment is included in profit or loss when the itemis derecognized.

5.11. Stationery Stock

Stationery stock is valued at cost and expended as and when it is used forconsumption on FIFO method.

5.12. Bullion Stock under consignment

The Bank holds precious metals (gold and silver) in its possession arising fromconsignment transaction as a custodian. The risks and rewards (price risk)pertaining to the assets is vested with the consignor. Bank has purchased 108KGs Silver which is shown under 'Other Assets'.

5.13. Non-Banking Assets (NBA)

Non-Banking Assets is valued at lower of loan amount or fair market value ofthe assets acquired. Provisions for NBA are made in accordance with theNepal Rastra Bank Directives.

5.14. Other Assets

Other assets are shown net of other liabilities when party is same and the Bankhas legal right to set off.

5.15. Borrowings

Borrowings comprise of local and foreign currencies' inter-bank borrowing.Borrowings are recorded at the full value and recognized on the effective datesmentioned in the contract.

5.16. Deposits

Deposits include local and foreign currencies' current deposits, savingsdeposits, call deposits, fixed deposits, margin deposits and other deposits ofthe customers held by the Bank. Deposits are stated at full value and arederecognized at the time of its withdrawal.

5.17. Unearned Income

Unearned income comprises of income received in advance on account ofLC/Guarantee Fees issued with a risk period of more than 1 year period and forfees with more than Rs. 50,000 and income from forward contract.

7

They are recognized as liability at the time of its receipt and are derecognizedas and when income accrues and/or risk period expires and disclosed inSchedule-7.

5.18. Provisions, Contingent Liabilities And Contingent Assets

The Bank creates a provision when there is a present obligation of the entityarising from past events, the settlements of which is expected to result in anoutflow from the entity of resources embodying economic benefits and areliable estimate can be made of the amount of the obligation.

A disclosure for contingent liability is made when there is a present obligationthat may or may not, require an outflow of resources. When there is a possibleobligation or present obligation in respect of which the likelihood of outflow ofresources is remote, no provision or disclosure is made in the financialstatement. Contingent liabilities are shown in Schedule 17

Contingent assets are not recognized in the financial statements. However,contingent assets are assessed continually and if it is virtually certain that aneconomic benefit will arise, the assets and related income are recognized inthe period in which the change occurs.

5.19. Operating Lease Commitment

The Bank has taken various properties on cancellable long term lease. Sincethe Bank possesses the right to terminate the said lease before its maturity bygiving a notice of specified period, the future liability the Bank is limited to leasepayable for notice period only.

The expenses under operating leases are booked under 'Leasehold Assets'and written off in 10 years or term of lease, whichever is less.

5.20. Rounding Off and Regrouping/Reclassification

The Financial Statements are presented in Nepalese Rupees rounded to thenearest Rupee. Previous year amount has been regrouped/reclassified,wherever necessary to facilitate comparison.

1

Notes to AccountsSchedule 33

1. Equity1.1. Paid-up equity capital

Paid up share capital of the Bank has increased from year to year as follows:

Financial Year Paid up ShareCapital (Rs.)

Remarks

2061/62 224,000,000 Opening Share Capital2062/63 224,000,000 -2063/64 320,000,000 Issue of 30% public shares.2064/65 384,000,000 Issue of 5:1 right shares.2065/66 805,165,800 Issue of 1:1 right and 5% bonus shares after

issue of right.2066/67 806,400,000 Public sale of 12,342 no. of unsubscribed

right shares.2067/68 2,016,000,000 Issue of 1:1.5 right shares.2068/69 2,016,000,000 -2069/70 2,217,600,000 10% Proposed bonus shares included2070/71 2,550,240,000 15% Proposed bonus shares included

Nepal Rastra Bank (NRB) has prescribed Rs. 2 billion as minimum paid-up equityshare capital requirement for "A" class licensed commercial banks. The Bank is infull compliance with regulatory requirement.

1.2. General Reserve

Section 44 of Bank and Financial Institutions Act 2006 requires the Bank toallocate at least 20% of the net profits of every year to General Reserve until it istwice the paid-up capital. The Bank has appropriated Rs. 85,535,283 i.e., 20% ofthe net profits to General Reserve in the current year.

1.3. Deferred Tax Reserve

NRB Directive no. 4 requires licensed institutions to maintain Deferred TaxReserve equivalent to the amount of Deferred Tax Asset. The Bank maintainsequivalent reserve to the amount of deferred tax asset in compliance withregulatory requirements.

The movement of deferred tax asset is presented in the table below:

Particulars Current Year (Rs.) Previous Year (Rs.)Opening Balance 851,802 504,847Deferred tax liability on temporarydifferences

(3,272,948) 346,955

Closing Balance (Deferred TaxLiability)

(2,421,146) 851,802

2

1.4. Investment Adjustment Reserve (IAR)

The Bank has maintained adequate reserve in compliance with NRB Directives04/2070 and 08/2070 for investments categorized as 'Available for Sale'. Themovement of IAR for the year is presented below:

in Rs.Particulars Net

InvestmentRequiredReserve

Movement

Opening Balance 10,355,000Shares of Local Organized InstitutionListed Securities @2% 10,000,000 200,000 (9,800,000)Unlisted Securities @100% 355,000 355,000 -Exempted Securities 2,302,600Closing Balance 555,000

100% reserve had been created against the investment made in stocks of SanimaHydropower Pvt. Ltd. The stocks got listed in NEPSE this fiscal year. Excessivereserve (Rs. 9,800,000) has been reversed.

1.5. Exchange Equalization Fund (EEF)

Section 45 of BAFIA, requires at least 25% of revaluation gains of such profits(except gain from revaluation of Indian Currency) to be credited to the ExchangeEqualization Fund. The Bank has appropriated Rs. 539,976 i.e., 25% of therevaluation gain to the Exchange Equalization Fund during the year. Themovement in EEF is presented hereunder:

Particulars Amount (Rs.)Opening Balance 2,658,767Reserve @25% of revaluation amount specified in Schedule 22 539,976Closing Balance 3,198,743

2. Proposed Bonus Share and Cash Dividend

The Board of Directors has proposed Bonus shares at the rate of 15% and Cashdividend at the rate of 0.79% to be ratified by NRB and Annual General Meeting.

3. Unpaid Dividend

As on balance sheet date total dividend payable amounts to Rs. 8,482,633.50 (PYRs. 12,580,814) of which no amount is unpaid over five years. Details have beenpresented as under:

Dividend Payable of FY Current Year (Rs.) Previous Year (Rs.)2069/2070 - -2068/2069 3,720,439 6,461,9622067/2068 2,748,971 3,754,5702066/2067 2,013,223 2,364,282

Total 8,482,634 12,580,814

3

4. Reconciliation Status

The Bank reconciles Inter Branch Transactions on daily basis. There are no un-reconciled transactions under Inter-Branch Transactions on balance sheet date.

Similarly, reconciliation of the local and foreign bank and financial institutionaccounts is conducted weekly/fortnightly/monthly. The differences identified arereviewed and reconciled and same is in the process of being reconciled.

Rs’ 0000Reconciliation Status Total

Amount<3 months >3<9

months>9<12

months>12

monthsBranch Reconciliation - - - -Agency Accounts 8,204.29 8,001.72 119.50 - 83.07

5. Loans and Advances

5.1. Sectoral Classification

NRB has specified the maximum ceiling of lending to total real estate sector at25% of gross loans and advances. The Banks' exposure to Real Estate sectorgrew by 2.9%. As at Balance sheet date, the real estate exposure of the Bankwas 4.6%. The sectoral classification of loans and advances is presented in thetable below.

5.2. Movement of LoansRs ’000

S.No Particulars

CurrentYear

PreviousYear

Change inVolume

Changes(%)

1 Term Loan 3,420,567 2,620,056 800,512 30.6

2 Overdraft 2,526,053 2,352,180 173,872 7.4

3 Trust Receipt/Import Bills 570,835 512,921 57,914 11.3

4 Demand Loan/Working Capital Loan 4,828,747 3,795,090 1,033,656 27.2

5Individual Residential Home Loan(Upto Rs 100 Lakhs) 1,147,464 797,179 350,285 43.9

6 Real Estate Loan 931,294 904,658 26,636 2.9

7 Margin Lending Loan 459,056 43,841 415,215 947.1

8 Hire Purchase Loan 1,621,150 1,280,216 340,934 26.6

9 Deprived Sector Lending 809,933 536,586 273,346 50.9

10 Bills Purchase 223,414 - 223,414 100.0

11 Others Products 3,872,932 2,250,344 1,622,587 72.1

Net Loans and Advances 20,411,444 15,093,073 5,318,371 35.2

The Bank's year-on-year Net Loans and Advances escalated by Rs. 5,318,371thousands (35.2%), increasing the outstanding balance to Rs. 20,411,444thousands. The major volume growth was achieved under term loans (30.6%),demand loans (27.2%) and other products (72%).

4

5.3. Summary of Loans and Advances Disbursed, Recovered and Principaland Interest Written-Off:

Particulars Amount ('000)Opening Balance 15,248,174.73Loans Disbursed 27,762,085.72Loans Recovered 22,389,550.87Principal Written off 308.37Interest Written off 87.41Closing Outstanding (Gross) 20,620,401.21

5.4. Concentration of Loans & Advances (Funded & Non Funded Facilities)

Funded and non-funded facilities and sector wise loans are within the limitsprescribed by NRB Directives. The details are presented below:

Rs '000

ParticularsCurrent Year % Previous Year %NRs. NRs.

Total Loans and Advances 20,620,401 15,248,175Loans to Top 10 Borrower 3,693,616 17.9 3,159,971 20.7Loans to Single Largest Borrower 507,412 2.46 468,121 3.07

Rs '000

ParticularsCurrent Year % Previous Year %NRs. NRs.

Total Non Funded Liabilities 2,845,749 1,073,846Exposure to Top 10 Parties 957,815 33.7 414,037 38.6Exposure to Single Largest Party 159,301 5.6 79,718 7.4

5.5. Deprived sector lending (DSL)

NRB Directive 17 requires "A" class licensed institutions to lend at least 4.5percent of their total outstanding loan and advances (including bills purchasedand discounted) in deprived sector. The Banks' exposure in deprived sectorlending is Rs 818,113,830 (PY Rs. 542,293,681) or 4.71% (PY 4.13%) against arequirement of 4.50%:

6. Deposit Liabilities

6.1. Movement of DepositsThe movement of deposit liabilities is presented in the table below:

Rs’000

ParticularsCurrent Year Previous Year Change in

Volume %NRs. NRs.Non Interest Bearing 980,793 563,564 417,229 74.0

Saving Deposit 8,009,973 4,311,870 3,698,102 85.8

Call Deposit 6,439,272 3,671,749 2,767,523 75.4

Fixed Deposit 9,443,811 9,242,145 201,666 2.2

Total 24,873,849 17,789,329 7,052,334 39.8

5

The Bank's year-on-year deposit liability increased by Rs. 7,052,334 thousands(39.8%), to reach Rs. 24,873,849 thousands.

6.2. Concentration of Deposits

Deposits concentration is presented as under:Rs '000

ParticularsCurrent Year

%Previous Year

%NRs. NRs.Total deposits 24,873,849 17,789,329Deposits of Top 10 PartiesIndividual 380,098 1.5 276,361 1.6Institutional 4,177,553 16.8 5,252,027 29.5

7. Weighted Average Interest Rate Spread

The weighted average interest rate spread as on balance sheet date is presentedas under:

ParticularsCurrent year

rate (%)Previous year

rate (%)Average Rate of Return on Risk Assets & Investments 9.89 10.13Average Rate on Deposits and Borrowings 5.88 6.74Net Spread 4.01 3.39

8. Staff Loans and Advances

Loans to staffs are provided in line with Employee Service Regulation of the Bank.Loans extended to staff have increased during the year as more staff becameeligible and have availed such facilities. The loans outstanding as at the balancesheet date are as under:

Particulars Current Year (Rs.) Previous Year (Rs.)Employee O/D Loan 4,797,592 4,996,439Housing Loan 111,323,932 70,942,771Advances to staff 1,371,845 1,308,694Total 117,493,369 77,247,904

9. Taxation

a) Advance TaxAdvance Tax Rs. 195,502,184 has been paid as additional tax liability for FY2070/71.

b) Income Tax

The Bank has filed Income tax return under self assessment procedures from2066/67 to 2069/70 which is yet to be reassessed by the tax authority. Any liabilityarising out of reassessment shall be provided for.

6

c) Current Tax Liability Reconciliation

Reconciliation of profit as per financial statement is reconciled with taxable profitto compute tax liability as follows:

Particulars Amount (Rs.)Profit before Bonus and Tax as per financial 677,678,607Less: Bonus 61,607,146Profit after Bonus 616,071,461Add:

Bond premium write off 1,477,548Tax on OYVS 207,063Gratuity Expenses 5,892,373Provision for staff leave 4,309,307Depreciation (incl amortization) as per Financial 53,803,451

65,689,741Less:

Bond premium w/o of matured bond 76,580Gratuity paid 14,570,781Leave Encashment 1,318,726CMB written back 170,000Depreciation as per Tax 52,032,509Dividend 1,134,709Gain on sale of Fixed Assets 1,030,899

70,334,204Taxable profit 611,426,998Income Tax @ 30% 183,428,099

d) Deferred Tax Assets/ (Liability)

Deferred tax assets and liabilities have been computed in accordance with NAS -9, Income Taxes from 16 July 2014 and are attributable to the following:

Rs. In '000

ParticularsAs per booksof accounts

TaxBase

TemporaryDifference

Fixed Assets 280,146 258,466 21,680Leasehold Assets and Computer Software 54,769 55,309 (540)Premium paid on Bond - 1,401 (1,401)Staff Gratuity - -Provision for Staff Leave (11,668) - (11,668)Net Temporary Difference 8,070Deferred Tax Liability/(Assets) as at Ashadend 2071 @ 30% 2,421Deferred Tax Liability/(Assets) till Ashad end2070 (852)Deferred Tax Expense/(Income) forcurrent year 3,273

7

10. Staff Housing

Staff Housing Reserve required under the Labor Act 2048 has not been createdas the Bank provides housing loan to its staff as per the Employee ServiceRegulation.

11. Gratuity

The Bank has made an additional provision of Rs. 5,892,373 (PY Rs. 4,408,650)for gratuity liability in the current year. From the current year the gratuity liability isfully funded and deposited at Citizen Investment Trust (CIT).

12. Staff Leave

Total leave liability as on 16th July 2014 is Rs. 11,668,484. Bank has paid Rs.1,318,726 (PY Rs. 2,956,286) as leave encashment to existing and to those staffwho resigned during FY 2013/14.

13. Provision for Staff Bonus

Staff bonus has been calculated and provided at 10 percent of net profit aftermaking adjustments for loan loss provision including buffer provision of Rs. 40million and staff bonus.

14. Interest Realization after Year End

Bank has not utilized the facility given in NRB Directive 4/070 for accounting inincome the interest on customer loans and advances which were due as at end offinancial year and were collected within 15 days of end of financial year as this isnot in accordance with prudent accounting practice and NAS.

15. Borrowing by the Bank against collateral of own Assets - NIL

16. Earnings Per Share, Share Price And Share Transaction

Earnings Per Share (EPS) is calculated and disclosed as per NAS – 26 as follows:Particulars Basic EPS Diluted EPS

Net profit attributable to equity shareholders (Rs.) 427,595,604 427,595,604Total Number of shares (No.) 22,176,000 22,176,000Earnings Per Share (Rs.) 19.28 19.28

Compared to last year, the EPS grew by Rs. 4.15 (PY by Rs. 9.09). The Bank hasnot issued preference share and debentures/bonds, thus, basic earnings pershare and diluted earnings per share are same. The closing price of the share isRs. 638 (PY Rs. 260).

17. Details Of Non Banking Assets

The Bank has not taken possession of any assets taken as security against theloans and advances.

8

18. Details of Leasehold Assets AmortizationIn Rs

Cost Price Amortized upto last year

Written offduring the

year

Amortizedduring the

year

TotalAmortized

Amount

Net BookValue

71,861,984 13,931,239 842,677 6,598,402 21,372,318 50,489,666

19. Fixed Assets Used By Government in Road Expansion

Government used total area 0-3-0-3 (3.1875 Ana) of the Bank with original costRs. 14,323,404 for road expansion in front of its Alkapuri Building, Naxal,Kathmandu. The Bank had lodged a claim of Rs 28,000,000 on 23rd September2012 (7th Ashoj 2069) with Kathmandu Valley Development Authority forcompensation. Claims are accounted for on Cash basis.

9

20. Classification of Assets And Liabilities Based On MaturityRs. in Millions

S.N. Particulars 1-90

Days91-180Days

181-270Days

271-365Days

Over 1Year

TotalAmount

Assets

1 Cash Balance 538 - - - - 538

2 Balance with Banks & FIs 2,974 - - - - 2,974

3 Investment in Foreign Banks 1,088 241 96 96 - 1,521

4 Call Money - - - - - -

5 Government Securities - - - 1,875 258 2,133

6 Nepal Rastra Bank Bonds - - - - - -

7 Inter Bank & FI Lending - - - - - -

8 Loans & Advances 5,948 2,541 1,794 1,624 8,713 20,620

9 Interest Receivable 49 - - - - 4910 Reverse Repo - - - - - -

11Receivables from other Institutions under

Commitment - - - - - -

12Payment to be made for facilities under s.

no 20,21 & 22 1,380 1,578 154 320 - 3,43213 Others 91 - - - 8,674 8,765

Total Assets (A) 12,068 4,360 2,044 3,915 17,645 40,032

Liabilities

14 Current Deposits 213 - - - 650 863

15 Saving Deposits 2,824 - - - 11,627 14,451

16 Fixed Deposits 2,928 1,362 1,833 2,947 374 9,444

17 Debentures - - - - - -18 Borrowings: 99 800 - - - 898

(a) Call/Short Notice - - - - - -(b) Inter-bank/Financial Institutions - - - - - -(c) Refinance 2 800 - - - 802(d) Others 96 - - - - 96

19 Other Liabilities and Provisions 486 - - - - 486(a) Sundry Creditors 47 - - - - 47(b) Bills Payable - - - - - -(c) Interest Payable 14 - - - - 14

(d) Provisions 233 - - - - 233(e) Others 192 - - - - 192

20Payable to other institutions underCommitment - - - - - -

21 Unutilized Approved Facilities 275 - - - - 27522 Letter of Credit/Guarantee (Net of Margin) 1,105 1,578 154 320 - 3,157

23 Repo - - - - - -

24Payment to be made for facilities under S.No 11 - - - - - -

25 Others - - - - 7,773 7,773

Total Liabilities (B) 7,930 3,739 1,987 3,267 20,423 37,347Net Financial Assets (A-B) 4,138 620 57 648 (2,778) 2,685

Cumulative Net Financial Assets 4,138 4,758 4,815 5,463 2,685 -

10

21. Related Parties

The Bank has entered into financial transactions with the following related partieswhere directors have financial interest.

Rs ’000Related Party Nature of Relationship Nature of

transactionCurrent

YearPrevious

Year

Kantipur Television Pvt. Ltd Common Promoter Deposit 13 20

Medicare Hospital & Research Centre Pvt. Ltd Common Promoter Deposit 12,354 26,792

Sanima Hydro & Engineering Pvt. Ltd. Common Promoter Deposit 1,906 6,973

Sanima Life Insurance Company Ltd** Common Promoter Deposit 2,470 2,405

Sanima Insurance Company Ltd** Common Promoter Deposit 587 733

Sanima Foundation** Common Promoter Deposit 55 98

Sanima Mai Hydro Power Ltd Common Promoter Deposit 25,333 17,923

Sanima Pvt. Ltd Common Promoter Deposit 764 1,727

Tamor Sanima Energy Pvt. Ltd. Common Promoter Deposit 10 10

Khumbu Carpet Industries Common Promoter Deposit 0.19 0.18Sopan Multiple Common Promoter Deposit 13 12Fund for Hydro Investment Common Promoter Deposit 1,457 1,441Sanima Hydro Power Pvt. Ltd Common Promoter Deposit 745 295Sanima Hydro & Engineering Pvt. Ltd Common Promoter

Rentalincome 2,344 2,100Sanima Mai Hydro Power Ltd Common Promoter

Sanima Hydro Power Pvt. Ltd Common PromoterIPAAN Common Promoter Deposit 205 0Family Service Supermarket Pvt ltd Common Promoter Deposit 1 0Bhrikuti Trading Common Promoter Deposit 142 0Sanima Mai Hydro Ltd. Common Promoter Investment 10,000 10,000Sanima Life Insurance Co. Ltd. Common Promoter Investment 350 350Sanima Foundation Common Promoter Investment 5 5

**Pending grant of license from Insurance Board, the Companies have yet tocommence operation.

22. Total of key management personnel compensation (Disclosure as per NAS-16):In Rs

Details of KeyManagement

Chief ExecutiveOfficer

Other key managementPersonnel (AM- DCEO)

Remarks

Short TermEmployeeBenefits(FY 070/71) 8,455,807 51,911,223

Other Key ManagementPersonnel Include DeputyChief Executive officer andother management team ofassistant manager level &above

PostEmploymentBenefits

695,638 13,332,208

TerminationBenefits

NIL NIL

Share BasedPayments

NIL NIL

Other LongTerm Benefits

NIL NIL

11

Key management personnel are also eligible for the following benefits:1. Benefits as per Employee Service Regulation of the Bank.2. Bonus out of profit as per Bonus Act.3. Housing loans and advances as per Housing Loan Scheme of the Bank.4. Vehicle facilities.

Total no of Key Management Personnel (including CEO): 19

23. Compensation to Board of Directors (BODs)

All members of the Board are non-executive directors. Compensation to BODsand other related expenses are detailed below:Particulars Current Year (Rs.) Previous Year (Rs.)Meeting Fees 1,188,432 721,000Other Expenses 801,381 355,619

Directors are eligible for allowance of Rs. 10,000 per month or on actual billwhichever is less, for covering newspaper, telephone, internet and othercommunication expenses. Directors are paid Rs. 8,000 per meeting whilechairman is paid Rs. 10,000 per meeting. Other expenses include reimbursementof travelling and hotel expenses for branches visit and above mentionedallowances.

24. Risk Management Functions & BASEL II Disclosure

Nepal Rastra Bank has directed the Banks to develop own internal policy,procedures and structures to manage all material risk inherent in business forassessing capital adequacy in relation to the risk profiles as well as strategies formaintaining capital levels. This includes basic requirements of having goodgovernance, efficient process of managing all material risks and an effectiveregime for assessing and maintaining adequate capital. The Bank has variousBODs approved risk management policies for proper governance.

Restructuring of Organization

Sanima Bank has restructured its organizational setup this very year andcontinuous steps are taken to reengineer the processes to cater with the varioussystematic and unsystematic risks.

Appointment of CRO

Chief Risk Officer (CRO), along with his team, is responsible for overall riskmanagement of the bank which includes managing, assessing, identifying,monitoring and reducing pertinent global, macro and micro-economic levelbusiness risks that could interfere with Banks objective and goals and whether theBank is in substantial compliance with its internal operating policies and otherapplicable regulations and procedurses, external, legal, regulatory or contractualrequirements on a continuous basis. Further, CRO ensures integration of all majorrisk in capital assessment process.

12

Credit Risk Management Committee (CRMC)

Board level CRMC has been set up under NRB Directive for ensuring/reviewingbank's risk appetite are in line with the policies and CRO acts as membersecretary. CRO closely monitors and report on credit related risks in ALCO &RMC meeting.

Operational Risk

Board and senior management of the bank places high priority on effectiveoperational risk management and adherence to sound operating controls.

Policies/Guidelines explicitly supports the identification, assessment, controland reporting of key risks.

Emphasizes on dual controls, Effective monitoring and internal reporting, Contingency and business continuity plans, High standards of ethics and integrity, Commitment to good corporate governance and Segregation of duties and clear lines of management responsibility,

accountability and reporting.

Market Risk

Sanima has Market Risk Management Policy developed in line with RiskManagement Guidelines issued by NRB to assess and actively manage allmaterial market risks, wherever they arise throughout the bank and a capitalcharge is provided for such risks. Stress testing technique also covers the capitalrequirement on market shock. Foreign Currency peak position, interest rate risk,stock position is discussed in ALCO meetings on monthly basis.

For interest risk management, appropriate assets and liability mismatch (GAPanalysis) is measured as per policy so as to minimize sudden fall in NII.Investments in stock are revalued at the end of every month and Open positionsin foreign currencies are monitored daily. Prompt Action is taken to keep openpositions and foreign currency exchange risk to a minimum level. Regulatory limitstoo are ensured at all time.

Adequate care is taken to ensure the maturity of deposits to match with assetsmaturity. Adequate liquidity is ensured even in stressed scenarios. Various ratiosas per liquidity risk management policy are assessed. Treasury department playsthe vital role for monitoring same and report to ALCO.

Compliance

Compliance officer has been entrusted with the responsibility of assessment,identification and reporting to CRO the Operational, Liquidity & Market Risk inconformity with risk management policies of Sanima.

13

Assets and Liability Committee (ALCO)

The ALCO, chaired by Chief Executive Officer, ensures functioning of the bankingbusiness in line with the set procedures and processes and recommends fornecessary steps to address the risk associated with liquidity, movement in interestrate, exchange rate and equity price and other risks.

Stress Testing

Stress Testing is a risk management technique used to evaluate the potentialeffects on an institution’s financial condition, of a set of specified changes in riskfactors, corresponding to exceptional but plausible events. The Bank conducts thestress test on quarterly basis and reports to senior management.

Internal Capital Adequacy Assessment Process (ICAAP)

The Bank has developed a comprehensive ICAAP document. The ICAAP has twomajor components; first is an internal process to identify measure, manage andreport risks to which the bank is exposed or could be exposed in the future; andsecond is an internal process to plan and manage a bank’s capital so as to ensureadequate capital. The Bank also conducts the stress test on quarterly basis andreports to senior management. The Bank in line with BASEL provisions andICAAP document assesses risk exposures and allocated sufficient capital/cushionfor perceived risks. The adequacy of capital is main agenda of any ALCO, Man-Com and board meetings.

Maker-Checker Policy

The Bank has adopted Maker-Checker Policy in all of the transactions. Each andevery transaction is entered and authorized in CBS by two different individuals forbetter control and any deviations are closely monitored. The activities of anypersonnel can be monitored centrally through an integrated system which helps inminimizing the risk of misconduct

Information Technology

The Bank has maintained in-house cold site for disaster recovery. The disasterrecovery site and production server site have been kept in well-maintainedbuildings. Periodic drill is conducted to assess the functioning of DRS. Also, thedesktops are implemented with Active Directory System (ADS) which does notallow users to replicate or bring the data in/from any unauthorized removabledevices.

Internal Audit

Internal audit of the Bank is independent from the management and directlyreports to Audit Committee, a board level committee. Audit functions are carriedout by experienced staffs and regular observations are being communicated tothe related departments/branches/staffs. Audit committee holds its meeting atleast once in a quarter.

14

Disclosure as per Bank’s disclosure policy under the Capital AdequacyFramework of Nepal Rastra Bank

A. Capital Structure and capital Adequacy

Tier 1 Capital and Breakdown of its Components

Particulars Amount (Rs.)a Paid up Equity Share Capital 2,217,600,000b Irredeemable Non-cumulative preference shares -c Share Premium 10,563,747d Proposed Bonus Equity Shares 332,640,000e Statutory General Reserves 240,500,000f Retained Earnings 28,339,535g Un-audited current year cumulative profit -h Capital Redemption Reserves -i Capital Adjustment Reserves -j Dividend Equalization Reserves -k Debenture Redemption Reserves -l Deferred Tax Reserve -

m Other Free Reserves -n Less: Goodwill -o Less: Fictitious Assets -p Less: Investment in equity of licensed Financial Institutions -q Less: Investment in equity of institutions with financial interests 10,355,000r Less: Investment in equity of institutions in excess of limits -s Less: Investments arising out of underwriting commitments -t Less: Reciprocal crossholdings -u Less: Other Deductions -

Total Tier 1 Capital 2,819,288,281

Tier 2 Capital and Breakdown of its Components

Particulars Amount (Rs)a Cumulative and/or Redeemable Preference Share -b Subordinated Term Debt -c Hybrid Capital Instruments -d General loan loss provision 246,168,184e Exchange Equalization Reserves 3,198,743f Investments Adjustment Reserves 555,000g Assets Revaluation Reserves -h Other Reserves -

Total Tier 2 Capital 249,921,927

Details of Subordinated Term Debt:

The Bank has not issued any Subordinate Term Debt.

Deductions from Capital:

The Bank has invested Rs 10,355,000/- in Sanima Hydro Power, Sanima Insuranceand Sanima Foundation, which the bank has deducted from its core capital.

Total Qualifying Capital:

15

Particulars Amount (Rs.)Core Capital (Tier 1) 2,819,288,281Supplementary Capital (Tier 2) 249,921,927Total Capital Fund 3,072,172,121

Capital Adequacy Ratio: 12.54%

B. Risk Exposures

Risk weighted exposures for credit Risk, Market Risk and Operational Risk:

RISK WEIGHTED EXPOSURES Amount (Rs.)Risk Weighted Exposure for Credit Risk 22,680,658,738Risk Weighted Exposure for Operational Risk 833,090,952Risk Weighted Exposure for Market Risk 334,302,709Total Risk Weighted Exposures 23,848,052,398

Risk Weighted exposures under each 11 categories of Credit Risk:

S.N. Categories Amount (Rs.)1 Claims on Government and Central Bank -2 Claims on Other Financial Entities -3 Claims on Banks 468,486,9774 Claims on Domestic Corporate and Securities Firms 11,574,565,7095 Claims on Regulatory Retail Portfolio & Other Retail Portfolio 4,080,899,9436 Claims secured by residential properties 687,373,6137 Claims secured by Commercial real estate 307,955,5088 Past due claims 92,374,5459 High Risk claims 2,059,145,155

10 Other Assets 1,712,701,43211 Off Balance Sheet Items 1,697,155,856

Total 22,680,658,738

Total Risk Weight Exposures calculation Table:

RISK WEIGHTED EXPOSURES Amount (Rs.)Risk Weighted Exposure for Credit Risk 22,680,658,738Risk Weighted Exposure for Operational Risk 833,090,952Risk Weighted Exposure for Market Risk 334,302,709Add: 2% of the total RWE for unsatisfactory overall risk managementpolicies and procedures 476,961,048Add: RWE equivalent to reciprocal of capital charge of 2% of grossincome 155,132,505Total Risk Weighted Exposures 24,480,145,952Total Core Capital to Total Risk Weighted Exposures 11.52%Total Capital to Total Risk Weighted Exposures 12.54%

Amount of Non-Performing Assets (both Gross and Net in Rs.):

Particulars Gross Amount Loan LossProvision Net NPL

Restructured - -Sub-Standard 613,908 153,477 460,431Doubtful 1,427,953 713,976 713,976Loss 1,540,994 1,540,994 -Total 3,582,854 2,408,447 1,174,407

16

NPA Ratios:

NPA Ratios %Gross NPA to Gross Advances 0.02Net NPA to Net Advances 0.01

Movement in Non Performing Assets:

Particulars Current Year Previous Year Change (%)Non Performing Assets (Volumes in Rs.) 3,582,854 4,135,581 -13.37%Non Performing Assets (%) 0.02 0.03 -42.08%

Write off Loans and Interest Suspense:

Particulars Amount (Rs.)Write off loans during the year 308,370.39Write off Interest Suspense year 87,405.28Total 395,775.67

Movement in Loan Loss Provision and Interest Suspense

Particulars Current Year (Rs) Previous Year (Rs) Change (%)Loan Loss Provision 246,168,184 155,101,881 58.71%Interest Suspense 41,353,074 30,992,138 33.43%

Details of Additional Loan Loss Provision during the year:

Particulars Amount (Rs)Pass 93,727,792Restructured -Sub-Standard 153,477Doubtful 713,976Loss 617,232Total 95,212,477

Segregation of Investment Portfolio:

Particulars Amount (Rs)Held for Trading 47,790,560Held to Maturity 3,655,054,664Available for sale 12,910,438Total Investment 3,715,755,662

Capital assessed above is sufficient to cover the present and future growth as perstrategic plan. We do not see future material risk expected to trigger effectingcapital adequacy.

C. Eligible Credit Risk Mitigants (CRM) as on 32nd Ashadh 2071 (16th July,2014)

Particulars Amount (Rs.)Deposits with Bank 241,720,578Gold 157,048,218Total 398,768,796

Schedule 34

Remarks

1 Jai Ganesh Investment Company Pvt. Ltd 605,904 2.73 NMB Bank Ltd. 51,488,426 302,000 2 Jai Ganesh Investment Company Pvt. Ltd 605,904 2.73 ICFC Finance Ltd. 39,550,820 203,504 3 Ganesh Kumar Agrawal 12,823 0.06 Yeti Dev. Bank Ltd. 1,694,408 11,658 4 Birendra Prasad Mahato 757,379 3.42 Janata Bank Ltd. - 330,000

5 Jamuna Bhandari 18,433 0.08 Prabhu Bikash Bank Ltd. 1,500,000 16,7586 Anamika Shrestha 60,591 0.27 Global IME Bank Ltd. 9,200,000 5,5087 Anamika Shrestha 60,591 0.27 Machhapuchchhre Bank Ltd. - 55,0838 Dinesh Mani Shrestha 205,962 0.93 Global IME Bank Ltd. 9,200,000 111,6369 Dinesh Mani Shrestha 205,962 0.93 Machhapuchchhre Bank Ltd. 30,000,000 92,565

10 Dilip Shrestha 220,999 1.00 Machhapuchchhre Bank Ltd. 28,500,000 201,70011 Ghanashyam Thapa 806,830 3.64 Machhapuchchhre Bank Ltd. 30,000,000 159,162

Total 3,561,378 16.06 201,133,654 1,489,574

Percentage tototal Paid up

Name of Lending Banks/Financial Institutions

Loan Amount Number of

Shares pledged

Sanima Bank LimitedStatements of Loans taken by promoters/ promoter group shareholders by pledging their promoter shares as collateral in other financial institutions

As at 32 Ashad 2071 (16 July 2014)

S. N. Name of Promoters/Promoter GroupShareholders

Share in the name of Promoter Loan Details Total Number of

Shares

Schedule 35

Figures in Rs '000

In Amount In %1 Total Capital and Liabilities (1.1 to 1.7) 29,402,804 29,376,986 (25,818) (0.09)

1.1 Paid Up Capital 2,217,600 2,550,240 332,640 -1.2 Reserve and Surplus 660,309 283,157 (377,152) (57.12)1.3 Debenture and Bond - - - -1.4 Borrowings 898,268 898,268 - -1.5 Deposits (a+b) 24,841,663 24,873,849 32,186 0.13

a. Domestic Currency 23,499,402 23,533,704 34,303 0.15 Regrouping some Accountsb. Foreign Currency 1,342,261 1,340,145 (2,116) (0.16) Regrouping some Accounts

1.6 Income Tax Liability - - - -1.7 Other Liabilities 784,963 771,472 (13,492) (1.72) Regrouping some Accounts

2 Total Assets (2.1 to 2.7) 29,402,804 29,376,986 (25,818) (0.09)2.1 Cash & Bank Balance 3,511,914 3,511,914 0 0.002.2 Money at Call and Short Notice - - -2.3 Investments 3,715,503 3,715,503 0 0.00

2.4 Loans and Advances 20,411,444 20,371,444 (40,000) (0.20)Buffer Loan Loss Provisionmade

a. Real Estate Loan 931,294 931,294 - -1. Residential Real Estate Loan (Except Personal Home Loanup to Rs. 10 Million) 136,114 136,114 - -2. Business Complex & Residential ApartmentConstruction Loan 161,458 161,458 - -3. Income Generating Commercial Complex Loan - - -4. Other Real Estate Loan (Including Land Purchase andPlotting) 633,723 633,723 -b. Personal Home Loan of Rs. 10 Million or Less 1,147,464 1,147,464 -c. Margin Type Loan 459,056 459,056 - -d. Term Loan 3,420,567 3,420,567 - -e. Overdraft Loan/TR Loan/WC Loan 7,925,634 7,925,634 -f. Others 6,527,428 6,527,428 -

2.5 Fixed Assets 502,236 502,236 0.00 0.002.6 Non Banking Assets - - - -

2.7 Other Assets 1,261,707 1,275,889 14,182 1.12

Writing off Deferred RevenueExpenditure & Regropuingother accounts

3 Profit and Loss Account3.1 Interest Income 2,018,506 2,018,506 - -3.2 Interest Expense 1,199,788 1,199,788 - -

A. Net Interest Income (3.1-3.2) 818,718 818,718 - -

3.3 Fees, Commission and Discount 40,458 39,825 (634) (1.57)Netting off RemittanceCommission

3.4 Other Operating Income 85,438 85,438 - -3.5 Foreign Exchange Gain/Loss (Net) 146,889 146,889 - -

B. Total Operating Income (A+ 3.3+3.4+3.5) 1,091,503 1,090,870 (634) (0.06)3.6 Staff Expenses 134,381 134,381 - -3.7 Other Operating Expenses 206,356 206,382 26 0.01

C. Operating Profit Before Provision (B. -3.6-3.7) 750,766 750,106 659 0.09Writing off Deferred RevenueExpenditure

3.8 Provision for Possible Losses 55,212 95,212 40,000 72.45Buffer Loan Loss Provisionmade

D. Operating Profit (C.-3.8) 695,553 654,894 40,659 5.853.9 Non Operating Income/Expenses (Net) 13,082 21,566 8,483 64.85 Regrouping some items

3.10 Write Back of Provision For Possible Loss 1,527 1,527 - -E. Profit from Regular Activities (D.+3.9+3.10) 710,163 677,987 32,176 4.53

3.11 Extraordinary Income/Expenses (Net) 8,482 (308) (8,790) - Regrouping some itemsF. Profit before Bonus and Taxes (E. +3.11) 718,644 677,679 40,966 5.70

3.12 Provision for Staff Bonus 65,331 61,607 (3,724) (5.70)Due to Buffer Loan LossProvision made

3.13 Provision For Tax 199,435 188,476 (10,959) (5.50)G. Net Profit/(Loss) (F. -3.12-3.13) 453,878 427,596 (26,283) (5.79)

Deferred tax adjustments

Reasons for Variance

Variance

Sanima Bank LimitedComparison of Unaudited and Audited Financial Statements as of Fiscal Year 2070/71 (2013/14)

S.N. Particulars

As perUnuditedFinancial

Statements

As per AuditedFinancial

Statements

Schedule (A)

Figures in Rs '000

16th July 2014 13th April 2014 15th July 20131 Total Capital and Liabilities (1.1 to 1.7) 29,402,804 24,944,549 21,976,540

1.1 Paid Up Capital 2,217,600 2,217,600 2,217,6001.2 Reserve and Surplus 660,309 527,254 206,4311.3 Debenture and Bond - - -1.4 Borrowings 898,268 1,139,402 1,480,1261.5 Deposits (a+b) 24,841,663 20,360,891 17,789,329

a. Domestic Currency 23,499,402 19,230,462 17,604,173b. Foreign Currency 1,342,261 1,130,429 185,156

1.6 Income Tax Liability - - -1.7 Other Liabilities 784,963 699,402 283,054

2 Total Assets (2.1 to 2.7) 29,402,804 24,944,549 21,976,5402.1 Cash & Bank Balance 3,511,914 1,537,648 1,685,5012.2 Money at Call and Short Notice - - 364,4202.3 Investments 3,715,503 3,383,204 3,848,0522.4 Loans and Advances(Net) 20,411,444 18,251,411 15,093,073

a. Real Estate Loan 931,294 848,483 904,6581. Residential Real Estate Loan (Except Personal Home Loan up to Rs.100 lacs) 136,114 188,382 202,1112. Business Complex & Residential Apartment Construction Loan 161,458 133,630 127,2433. Income Generating Commercial Complex Loan -4. Other Real Estate Loan (Including Land Purchase and Plotting) 633,723 526,471 575,304b. Personal Home Loan of Rs. 100 Lacs or Less 1,147,464 1,055,518 797,179c. Margin Type Loan 459,056 61,691 43,841d. Term Loan 3,420,567 2,857,361 2,620,056e. Overdraft Loan/TR Loan/WC Loan 7,925,634 8,172,553 6,660,191f. Others 6,527,428 5,255,805 4,067,147

2.5 Fixed Assets 502,236 498,399 469,4892.6 Non Banking Assets - - -2.7 Other Assets 1,261,707 1,273,886 516,005

3 Profit and Loss Account Upto 4th Quarter

This Year Upto 3rd Quarter

This Year Upto 4th Quarter

Last Year

3.1 Interest Income 2,018,506 1,469,490 1,678,7903.2 Interest Expense 1,199,788 890,369 1,023,257

A. Net Interest Income (3.1-3.2) 818,718 579,121 655,5323.3 Fees, Commission and Discount 40,458 29,012 23,6683.4 Other Operating Income 85,438 57,375 68,8533.5 Foreign Exchange Gain/Loss (Net) 146,889 115,126 27,237

B. Total Operating Income (A+ 3.3+3.4+3.5) 1,091,503 780,634 775,2913.6 Staff Expenses 134,381 101,447 99,7763.7 Other Operating Expenses 206,356 146,527 158,730

C. Operating Profit Before Provision (B. -3.6-3.7) 750,766 532,660 516,7853.8 Provision for Possible Losses 55,212 36,613 57,846

D. Operating Profit (C.-3.8) 695,553 496,047 458,9383.9 Non Operating Income/Expenses (Net) 13,082 8,182 2,571

3.10 Write Back of Provision For Possible Loss 1,527 1,219 19,675E. Profit from Regular Activities (D.+3.9+3.10) 710,163 505,448 481,185

3.1 Extraordaniry Income/Expenses (Net) 8,482 (308) -F. Profit before Bonus and Taxes (E. +3.11) 718,644 505,140 481,185

3.1 Provision for Staff Bonus 65,331 45,922 43,7443.1 Provision For Tax 199,435 138,395 132,379

G. Net Profit/(Loss) (F. -3.12-3.13) 453,878 320,823 305,061

16th July 2014 13th April 2014 15th July 20134.1 Capital Fund to RWA (%) 12.55 13.21 14.874.2 Non Performing Loan (NPL) to Total Loan (%) 0.02 0.05 0.034.3 Total Loan Loss Provision to Total NPL (%) 5,832.14 1,977.81 3,750.434.4 Cost of Fund after CRR(%) 6.29 6.57 7.244.5 Credit To Deposit Ratio (Calculated as per NRB Directives) (%) 75.20 78.96 73.984.6 Base Rate (%) 8.22 8.40 10.044.7 Interest Spread (as per NRB Directives) (%) 4.35 5.18 -

5 Additional Information5.1 Average Yield LCY (%) 10.44 10.67 11.49

5.4 Earning Per Share (Rs.) 20.47 19.41 15.11

5.5 Networth Per Share (Rs.) 129.78 123.78 113.20

5.6 Net Liquid Assets/Total Deposit (%) 26.71 21.05 27.26

5.7 Price Earning Ratio(%) 31.17 24.06 17.54

5.8 Total Assets per Share (Rs) 1,325.88 1,124.84 990.74

5.9 Return on Equity (%) 15.77 15.68 13.35

5.10 Return on Total Assets (%) 1.54 1.73 1.53

Figures are subject to change from supervisory authority and external auditor.

Previous period figures have been regrouped/rearranged where necessary.

Particulars

As atRatios4

S.N.

Unaudited Financial Results (Quarterly)As at 4th Quarter ( 32nd Ashad 2071) of the Fiscal Year 2070/71

As at

Sanima Bank Limited

· Schedules Current Year Rs. Previous Year Rs. 1. Interest Income 18 2,018,505,630 1,678,789,938...

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