GROWTH - Prabhu Bank Reports/14thAR.pdf · Annual Report of the Bank for the Year ended 30th Ashad...

SMART & PROFITABLE

GROWTH

14th ANNUAL REPORT2014-15

Dear Shareholders,

It is my privilege to welcome you all to the 14th Annual General Meeting of Prabhu Bank Limited. At the outset, I thank all of you for your esteemed presence in this meeting and your continued trust and unwavering patronage extended to the Bank all year around, which enabled the Bank to progress over the year. I believe that you all have received the Annual Report of the Bank for the Year ended 30th Ashad 2072 and you have already read the report. Before I profile the performance of the Bank, I would like to touch upon the macro environment in which Bank performed during the fiscal year 2071-72.

Nepal's economy grew only by 3.9% in the fiscal year 2071-72 compared to 6% the previous year. This was as a result of several factors including delayed monsoon and the disastrous earthquake. Aftermath calculation of the earthquake, as per National Planning Commission depicted the loss of ($ 7 B) Rs. 706 Billion of which 57.8% was in social sectors followed by 25.2% in agricultural sector, 9.5% infrastructure and 7.5% in other sectors. This has not only severely impacted the growth rate of the nation but also resulted in increasing the percentage of people below the poverty line. As per , the 2.5% of population below poverty line has now increased to 3%.

According to a recent report brought out by Nepal Rastra Bank, Nepal received Rs. 550 billion in remittance during last fiscal year, ending Ashad 2072, which is an increase of Rs.120 billion from Rs. 430 billion the previous year. The rise in remittance income boosted the country’s foreign exchange reserve and put the country’s overall Balance of Payment (BoP) into surplus. The gross foreign exchange reserve reached Rs. 670 billion in Ashad 2072, up from Rs. 540 billion recorded last year. For a country with around Rs. 600 billion of annual budget, remittance has been a major source of foreign currency.

Performance of the Bank

During the year, Bank had to operate in a challenging socio-political environment, marked by higher inflation, natural calamities and blockade. Against this back drop, I am happy to report that Bank has recorded markedly healthy performance.

The Key financial highlights for the year 2071-72 can be summarized as under:

1. The total gross business of Bank grew from Rs. 2324 crore to Rs. 2968 crore recording a growth rate of 27.69% over the previous year.

2. Total deposits grew from Rs. 3253 crore to Rs. 4214 crore registering a growth rate of 29.57% over the previous year.

3. Bank had achieved net profit of Rs. 102 crore during the year against the net loss of Rs 13.71 crore posted during the previous year.

4. The Capital & Reserves has improved from Rs. (85) crore to Rs. 48 crore owing to plough back of profits during the year.

5. Net Interest Income grew by 111.72% to 154.38 crore from 73 crore reported in 2070/71.

6. The Capital Adequacy Ratio is 10.61%, which is above the NRB mandated level of 10%, indicating a stable capital position of the Bank.

7. The Book value per share has improved from Rs. 56.70 to Rs. 115.11 and the market capitalization is above Rs. 1117 crores as on 30 Ashad, 2072.

8. The earnings per share (EPS) on fully diluted basis is Rs. 31.73 per Equity share of Rs.100.00 as on 30 Ashad, 2072.

9. As on Ashad 30, 2072 the ratio of gross non-performing assets (NPA) to gross advances

MESSAGE FROM

has decreased from 15% to 7.33%. The net NPA ratio stood at 1.93% vis-a-vis 5.86% as on Ashad 30, 2071.

10. The number of branches after the merger reached 112 and the number of ATM is 109 with the customer base of 690,000 plus.

Although this is a remarkable performance against the backdrop of dismal political, social and economic environment, we know that we have a long journey ahead of us. To further close the gap between our results and our ambitions, we will continue to review our business areas to identify opportunities to increase value creation for customers and shareholders alike. The coming year will be another year of transition and change as the Bank continues the transformation set out in its Strategic Plan. The

bank shall continue to foster the professionalization and robustness of its management practices and, more generally, its drive to ensure that it is competitive and sustainable in all that it does.

I am confident that with the implementation of our short term and medium term plan, the bank will continue to deliver excellent results thereby augmenting its rise in the Nepalese financial market and will establish itself as one of the leading brands in the industry.

I am again counting on your encouragement and support; along with the guidance of our regulators and the contribution from the entire Prabhu team.

I would like to thank you again for your gracious presence in this event.

CHAIRMAN

Dear Shareholders,

It is my privilege to welcome you all to the 14th Annual General Meeting of Prabhu Bank Limited. At the outset, I thank all of you for your esteemed presence in this meeting and your continued trust and unwavering patronage extended to the Bank all year around, which enabled the Bank to progress over the year. I believe that you all have received the Annual Report of the Bank for the Year ended 30th Ashad 2072 and you have already read the report. Before I profile the performance of the Bank, I would like to touch upon the macro environment in which Bank performed during the fiscal year 2071-72.

Nepal's economy grew only by 3.9% in the fiscal year 2071-72 compared to 6% the previous year. This was as a result of several factors including delayed monsoon and the disastrous earthquake. Aftermath calculation of the earthquake, as per National Planning Commission depicted the loss of ($ 7 B) Rs. 706 Billion of which 57.8% was in social sectors followed by 25.2% in agricultural sector, 9.5% infrastructure and 7.5% in other sectors. This has not only severely impacted the growth rate of the nation but also resulted in increasing the percentage of people below the poverty line. As per , the 2.5% of population below poverty line has now increased to 3%.

According to a recent report brought out by Nepal Rastra Bank, Nepal received Rs. 550 billion in remittance during last fiscal year, ending Ashad 2072, which is an increase of Rs.120 billion from Rs. 430 billion the previous year. The rise in remittance income boosted the country’s foreign exchange reserve and put the country’s overall Balance of Payment (BoP) into surplus. The gross foreign exchange reserve reached Rs. 670 billion in Ashad 2072, up from Rs. 540 billion recorded last year. For a country with around Rs. 600 billion of annual budget, remittance has been a major source of foreign currency.

Performance of the Bank

During the year, Bank had to operate in a challenging socio-political environment, marked by higher inflation, natural calamities and blockade. Against this back drop, I am happy to report that Bank has recorded markedly healthy performance.

The Key financial highlights for the year 2071-72 can be summarized as under:

1. The total gross business of Bank grew from Rs. 2324 crore to Rs. 2968 crore recording a growth rate of 27.69% over the previous year.

2. Total deposits grew from Rs. 3253 crore to Rs. 4214 crore registering a growth rate of 29.57% over the previous year.

3. Bank had achieved net profit of Rs. 102 crore during the year against the net loss of Rs 13.71 crore posted during the previous year.

4. The Capital & Reserves has improved from Rs. (85) crore to Rs. 48 crore owing to plough back of profits during the year.

5. Net Interest Income grew by 111.72% to 154.38 crore from 73 crore reported in 2070/71.

6. The Capital Adequacy Ratio is 10.61%, which is above the NRB mandated level of 10%, indicating a stable capital position of the Bank.

7. The Book value per share has improved from Rs. 56.70 to Rs. 115.11 and the market capitalization is above Rs. 1117 crores as on 30 Ashad, 2072.

8. The earnings per share (EPS) on fully diluted basis is Rs. 31.73 per Equity share of Rs.100.00 as on 30 Ashad, 2072.

9. As on Ashad 30, 2072 the ratio of gross non-performing assets (NPA) to gross advances

has decreased from 15% to 7.33%. The net NPA ratio stood at 1.93% vis-a-vis 5.86% as on Ashad 30, 2071.

10. The number of branches after the merger reached 112 and the number of ATM is 109 with the customer base of 690,000 plus.

Although this is a remarkable performance against the backdrop of dismal political, social and economic environment, we know that we have a long journey ahead of us. To further close the gap between our results and our ambitions, we will continue to review our business areas to identify opportunities to increase value creation for customers and shareholders alike. The coming year will be another year of transition and change as the Bank continues the transformation set out in its Strategic Plan. The

bank shall continue to foster the professionalization and robustness of its management practices and, more generally, its drive to ensure that it is competitive and sustainable in all that it does.

I am confident that with the implementation of our short term and medium term plan, the bank will continue to deliver excellent results thereby augmenting its rise in the Nepalese financial market and will establish itself as one of the leading brands in the industry.

I am again counting on your encouragement and support; along with the guidance of our regulators and the contribution from the entire Prabhu team.

I would like to thank you again for your gracious presence in this event.

It is my honor to welcome you all to the 14th Annual General Meeting of this Bank.

I would like to thank you all for your support and confidence in the Bank and Prabhu team, which I believe has been the single most critical factor in the remarkable performance of this bank. I would also like to congratulate you on the achievements made by the Bank in the previous year.

We believe that good governance is central to everything a bank does. Corporate governance is an age old concept which provides for a set of transparent relationships between an institutions management, its board, shareholders and other stakeholders. Corporate governance is gaining centre stage in the recent times due to failure of corporate and wide dissatisfaction among the people with the way corporate works and hence became a widely discussed topic worldwide. Corporate Governance is now recognised as a paradigm for improving competitiveness and enhancing efficiency and thus improving investors’ confidence. Prabhu Bank is committed to upholding a high degree of good governance standards in the Bank.

Banking business involves a trade-off between risk and return. We realize that a fine balance between risk and return ensures long term stability, continuity and prosperity. Bank has various risk management committees in place to manage and control all facets of risk arising out of different areas of banking business. These committees identify, assess, mitigate, control and monitor risk strictly in line with the policy frameworks for each areas of business. An independent risk monitoring structure has been established for better control and mitigation of risk which is supported by formulation and implementation of appropriate policies and guidelines in the bank.

We have successfully completed another merger in the last year. I am happy to inform you that, post merger Prabhu Bank Limited has established itself as one of the renowned banks in our industry. Like in any other institution, Merger & Acquisition has brought a challenge in the form of management of human resources. We have put in a lot of effort to integrate the members from different institutions with different

background and cultures. At the same time, we are focussed on attracting, motivating and retaining qualitative resources in the Bank. Training and human resource development has been a key focus area in the previous year and shall remain in the forefront this year, as well.

Technology is an area which Prabhu bank believes is going to give us a competitive advantage in the long term. We are committed to invest and adopt new technologies; to not only deliver our product and services more efficiently but also to model our product and services in the future. We believe in the potential of the technology to reach the unbanked population of the country and equip them with tools to facilitate the use of financial products and services.

It is my pleasure to share with you all that, your bank has been actively engaged in social and charitable events. We have participated and supported functions and projects aimed at serving national priorities, promoting rural development, enhancing entrepreneurship, spearheading financial outreach objective and supporting local communities. The bank and the Prabhu team contributed financially to help support the earthquake victims. Prabhu team was there in several locations to directly distribute basic necessities in the immediate aftermath of the earthquake. We are committed to continue to engage in such social activities in the forthcoming days as well.

Before I conclude, I would like to assure you again that Bank has laid appropriate plan, policies and strategies to achieve growth with quality and profitability. Five year Strategic Plan 2016-2021 has been formulated to provide a blueprint to take the Bank forward. We believe it shall prepare the Bank to meet the threats and challenges while at the same time, enable better use of the Bank's strengths to capitalize on the opportunities.

I would like to thank you again for your invaluable presence in this event. I take this opportunity to make a commitment, on behalf of Prabhu team, that we shall make all efforts to continue to deliver excellent results and strive towards making this Bank as one of the premier financial institution in the country.

Message From

CEO

MANAGEMENT TEAM

MR. TARA MANANDHAR(Deputy Chief Executive Officer)

MR. ASHOK KHADGI(Chief General Administration Officer)

MR. RAJ GOPAL RAJBHANDARI(Chief Project Officer)

MR. ASHOK SHERCHAN(Cheif Executive Officer)

MR. MANIRAM POKHAREL(Chief Marketing Officer)

MR. BHOLA PRASAD PATHAK(Chief Recovery Officer)

MR. BHESH RAJ KHATIWADA(Chief Credit Officer)

MR. SACHIN JUNG RAYAMAJHI(Chief Operating Officer)

From Left to Right

BRANCH NETWORK

Badegaun Branch Thaiba-1, Godawari, Lalitpur

Baneshwor Branch Basuki Marg-10, Old Baneshwor, Kathmandu

Bhaisepati Branch Sainbu-04, Bhaisepati, Lalitpur

Bhaktapur Branch Suryabinayak, Bhaktapur

Boudha Branch Near Boudha Stupa , Boudha Bazar

Durbarmarg Branch Durbarmarg, Kathmandu

Gongabu Branch Near Samakhusichwok, Gongabu, Kathmandu

Gwarko Branch Gwarko, Lalitpur

Jorpati Branch Jorpati-3, Kathmandu

Kalanki Branch Kalanki, Kathmandu

Kalimati Branch Him Basera Building, Kalimati, Kathmandu

Kantipath Branch Mountain Plaza, Kantipath, Kathmandu

Kapan Branch Kapan, Kathmandu

Kausaltar Branch Kausaltar Chowk, Kausaltar -15, Bhaktapur

Khichapokhari Branch Peoples Plaza, Khichapokhari, Kathmandu

Koteshwor Branch Tinkune, Kathmandu-35

Kumaripati Branch Kumaripti Lalitpur

Lainchour Branch Prabhu Complex, Lainchour, Kathmandu

Lalitpur Branch Jawalakhel Chowk, Lalitpur

Lazimpat Branch* Lazimpat, Kathmandu

Maharajgunj Branch Chakrapath, Maharajgunj, Kathmandu

Main Branch Babarmahal, Kathmandu

Mangalbazar Branch Tangal, Mangalbazaar, Lalitpur

New Baneshwor Branch Devkota sadak, New Baneswor, Kathmandu

Newroad Branch New Road Gate, New Road, Kathmandu

Patan Branch Gabahal, Patan

Putalisadak Branch Putalisadak, Kathmandu

Satdobato Branch Way to chapagaun, Tutepani-14 Lalitpur

Shankhamul Branch Shankhamul, Kathmandu

Sinamangal Branch Opposite Airport Golden Gate, Kathmandu

Sinamangal Branch Sinamangal-9, (Side by KMC), Kathmandu

Sukedhara Branch Sukedhara, Kathmandu

Sundhara Branch Bagdurbar, Sundhara, Kathmandu

Swayambhu Branch Swayambhu Chowk, Kathmandu

Thamel Branch Narsingh Chowk, Thamel-29, Kathmandu

Thimi Branch Sankhadhar Chowk-13, Naya Thimi, Bhaktapur

INSIDE VALLEY BRANCHES

OUTSIDE VALLEY BRANCHES

Abu Khaireni Branch Chisapani Tole, Abu Khaireni, Tanahu

Amarpath Branch Amarpath Chowk, Butwal, Rupandehi

Amarsingh Chowk Branch Amarsingh Chowk, Pokhara

Bagar Branch Bagar, Near PN Campus, Pokhara, Kaski

Baglung Branch Hallan Chwok, Baglung Bazar, Baglung

Banepa Branch Banepa-6, Banepa Buspark, Kavre

Bardaghat Branch Bardaghat-4, Nawalparasi

Bardibas Branch Bardibas, Mahottari

Battar Branch Batatr,Bidur Nagarpalika-4,Nuwakot

Belbari Branch New Belbari Bazar, Belbari, Morang

Beni Branch Beni Municipality-06,Beni,Myagdi

Benighat Branch Benighat-8 Dhading

Besisahar Branch Besisahar, Lamjung

Bhairahawa Branch Barmeli Tole, Bhairahawa

Bharatpur Branch Choubiskothi, Bharatpur, Chitwan

Bhojpur Branch Bhojpur

Biratnagar Branch Jaljala Chowk, Biratnagar, Morang

Birauta Branch Birauta, Kaski

Birgunj Branch Adarshanagar, Birgunj, Parsa

Birtamode Branch Kakarvitta Road, Birtamode-06, Jhapa

Burtibang Branch Burtibang-1, Burtibang Bazar ,Baglung

Butwal Branch Milan Chowk, Butwal

Dailekh Branch Dekendra Chowk, Naya Bazar,Dailekh

Damak Branch Damak Municipality-10, Damak, Jhapa

Damauli Branch Vyas-10, Safa Sadak, Damauli, Tanahun

Darbang Branch Darbang Bazar-1 Myagdi

Dhading Branch Neelakantha - 3, Dhadingbesi

Dhangadi Branch Godawari Road, Dhangadhi-3, Kailali

Dharan Branch Mahendra Path, Dharan, Sunsari

Dharke Branch Naubise VDC-1, Dharke Bazaar, Dhading

Dolakha Branch Bhimeshwor-10, Charikot Bajar, Dolakha

Gadeuli Branch Piple-7,Gadeuli, Chitwan

Gajuri Branch Gajuri Bazar, Gajuri, Dhading

Galkot Branch Hatiya-3, Jeep Park

Gaur Branch Gaur, Rautahat

Ghorahi Branch Ghorahi-11, Damodar Chowk, Dang

Gopigunj Branch Gopigunj Nawalparasi

Gorkha Branch Gorkha - 1, Bank Road, Gorkha

Guleriya Branch Guleriya - 06, Bardiya, Nepal

Hariwon Branch Hariwon-9, Sarlahi

Hetauda Branch Kantirajpath Hetauda-3, Makawanpur

Illam Branch Illam Municipality, Illam

Inaruwa Branch Inaruwa, Sunsari

Itahari Branch Itahari-01, Dharan Road, Sunsari

Jaleshwor Branch Mahendra Chowk, Jaleshwor, Mahottari

Janakpur Branch Bhanu Chowk, Janakpur, Dhanusha

Jomsom Branch Jomsom Airport Gate, Marpha-5, Mustang

Kakarvitta Branch Kakarbhitta, Jhapa

Kalaiya Branch Hospital Road, Bharatchowk, Kalaiya

Kawasoti Branch Kawasoti Bazar, Nawalparasi

Khadichour Branch Khadichour

Khaireni Branch Devdaha-6, Khaireni Chock, Rupandehi

Kohalpur Branch Kohalpur, Banke

Kusma Branch Kushma Bazar, Parbat

Lahan Branch Lahan-8, Siraha

Mahadevbesi Branch Tharke-3, Mahadevbesi, Dhading

Mahendranagar Branch Bhim Datta-18, Mahendra Nagar, Kanchanpur

Manigram Branch Manigram Chowk - Rupandehi

Mirchaiya Branch Katari Chowk, Mirchaiya, Siraha

Muktinath Counter Branch Ranipauwa, Muktinath, Nepa

Narayanghat Branch Bharatpur-3, Main Road, Narayangarh, Chitwan

Neejgadh Branch Neejgadh-08, Bara, Nepal

Nepalgunj Branch Surkhet Road, Nepalgunj

Palpa Branch Makhan Tole, Tansn-4, Palpa

Panchkhal Branch Panchkal

Parasi Branch Ramgram - 3, Parasi, Nawalparasi

Pathari Branch Loktantra chowk, Pathari Bazar, Morang

Pokhara Branch Infront of Padma Narshing Home, Pokhara

Rajbiraj Branch Main Road, Rajbiraj-3, Siraha

Rampur Branch Rampur, Chitwan

Sandikharka Branch Sandikharka, Arghakhachi

Sauraha Branch Bachhauli-02, Sauraha, Chitwan

Simara Branch Simara, Bara

Siraha Branch Hemnarayan Chowk, Siraha

Surkhet Branch Birendranagar Municipality, Surkhet

Tamghas Branch Tamghas, Gulmi

Tandi Branch Ratnanagar-02, Tandi , Chitwan

Tulsipur Branch Tulsipur 5, KA Line Dang, Rapti

Walling Branch Walling, Syangja

NATIONWIDE ATM NETWORK

Bardaghat-4, NawalparasiAmarpath Branch, Amarpath, ButwalSauraha Branch-1, Bachhauli-2, Sauraha, ChitwanBagar Branch, Near PN Campus, Pokhara, KaskiBanepa Branch, Banepa, KavrereBhairahawa Branch, BhairahawaBeni Branch, Beni, MyagdiBiratnagar Branch-1, Jaljala Chowk, Biratnagar, NepalBirgunj Branch-1, Birgunj, Parsa Birtamode Branch, Hikkola Chowk, BirtamodeSauraha Branch-2, Sauraha ChitwanDamak Branch-1, Damak, JhapaDhading Branch, Dhadingbesi,DhadingDharan Branch-1, Chatachowk, DharanNear Dhulikhel Medical College, Dhulikhel, KavreTandi Branch, Ganga Plaza, Sauraha Chowk, ChitwanGhorahi Branch, Ghorahi, DangGuleriya Branch, Guleriya, KailaliHetauda Branch, Hetauda, MakawanpurKalaiya Branch, Hospital Road, Kalaiya-8, BharatchowkPokhara Branch-1, Infront of Padma Narshing Home, PokharaBharatpur Branch, Choubiskothi, Bharatpur, ChitwanItahari Branch, Itahari, SunsariItahari Branch-2, Itahari-01, Dharan Road, SunsariJanakpur Branch-1, Janakpur, DhanushaKhaireni Branch, Devdha Municipality-7, Rupandehi

Lakeside, Pokhara, KaskiMahendranagar Branch, Mahendranagar, KanchanpurManigram Branch, Manigram Chowk, RupandehiButwal Branch, Milanchowk, ButwalDamak Branch-2, Damak, JhapaNarayangarh Branch, Narayangarh, ChitwanNear Rampur Agriculture Campus, Rampur, ChitwanTandi Branch-2,Near Sauraha Chowk, Tandi Bazar, ChitwanNepalgunj Branch, Dhambojhi, Nepalgunj BankeNIPL lounge, Mahendra Chowk BiratnagarHetauda Branch-2, Om bhawan, Hetauda-3, MakawanpurPokhara Branch, Sabhagriha Chowk, PokharaCharikot Branch, DolakhaInfront of Gyanu Plaza Hotel, Dhangadi, KailaliJomsom Airport Gate ,Marpha V.D.C Ward No-5, MustangParasi Branch, Ramgram-3, Parasi, NawalparasiTandi Branch-1, Tandi, ChitwanPalpa Branch, Tansen Bazar, PalpaTulsipur Branch, Tulsipur, DangKawasoti Branch-1, Thanachock,NawalparasiDamauli Branch, Damauli Bazar, TanahuNew Road, PokharaMilan Chowk, BhairahawaShaidchowk, ChitwanMain Road, Adarsa Nagar, BirgunjSanihat Biratnagar

Outside Valley

Kalanki Branch-1, Kalanki Chowk-14, KathmanduKathmandu In-Front of Asia Publication, Baghbazar, KathmanduBattisputali, Near Bajeko Sekuwa, Battisputali, KathmanuBhatbhateni Super Store Maharajgunj, Kathmandu NepalBhatbhateni Super Store, Koteshwor, Kathmandu NepalDillibazar, Pipakbot KathmanduDurbarmarg ATM Lounge Hotel De Annapurna GateGongabu Branch-1, Gongabu, KathmanduSwayambhu Branch, Swayambhu, KathmanduJain Mandir near NLIC City Centre Kamalpokhari, KathmanduJhamsikhel Near St. Marie School LalitpurJorpati Branch, Jorpati, KathmanduKalanki Branch-2, Kalanki, KathmanduKalimati Branch, Kalimati, KathmanduGongabu Branch-2,Kathmandu-29, Gongabu, KathmanduKaushaltar Branch, Kaushaltar, KathmanduKupondole ATM Lounge, Kupondole, LalitpurNear LRI School Kalanki, KathmanduNewroad Branch-2, Mahalaxmi Complex, New Road, KathmanduMaharajgunj Branch, Maharajgunj, KathmanduMangalbazar Branch, Mangalbazar, LalitpurKantipath branch, Mountain Plaza, KathmanduBoudha Branch, Near Boudha Stupa , Boudha BazarPokhara Branch-2, Near Grand Hotel, PokharaNear Photo concern, Newroad, KathmanduNear Roadhouse Cafe, Jhamsikhel, LalitpurNear Suraj Arcade Newroad, KathmanduKumaripati Branch, Near United College, Kumaripti LalitpurATM lounge, Near Royal Thai Resturant New Baneshwor KathmanduNewroad Branch-1, Newroad Gate, KathmanduPrabhu Complex, Opposite to DDC, Lainchour, KathmanduPurano Baneshwor Near APEX CollegePutalisadak ATM lounge Century Commercial Bank KathmanduBhaisepati Branch,Sainbu-04, Bhaisepati,LalitpurThimi Branch, Sankhadhar Chowk-13, Naya Thimi, BhaktapurSatdobato Branch, Satdobato, LalitpurInside the KMC Teaching Hospital, Sinamangal, KathmanduSinamangal Branch-2, Opposite to Airport Golden Gate, KathmanduSukedhara Branch, Sukedhara, KathmanduSuryabinayak Branch, Suryabinayak, BhaktapurBadegaun Branch, Thaiba-1, Godawari , LalitpurThamel ATM lounge, Thamel Near Prabhu Bank Thamel BranchThamel Branch, Thamel, KathmanduTribhuvan International Airport ArrivalTribhuvan International Airport DepartureUnited ATM Lounge Kantipath Near NachGharATM-1, Babarmahal,Prabhu Building, KathmanduATM-2, Babarmahal,Prabhu Building, KathmanduATM-3, Babarmahal,Prabhu Building, KathmanduBhatbhateni Super Market Bhatbhateni, Naxal, Kathmandu NepalBlue Bird Complex Tripureshwor, Kathmandu NepalChabhil ATM Lounge, Chabahil, KathmanduGhumti Banking, Mobile BusATM 1 - Khichapokhari Peoples Plaza KhichapokhariATM 2 - Khichapokhari Peoples Plaza KhichapokhariNear Kathmandu Engineering College, Kalimati, KathmanduNear Kist Medical College Gwarko, LalitpurKoteshwor Branch, Koteshwor, Kathmandu NepalSankhu Branch, Sankhu, BhaktapurSankhamul Branch, Sankhamul, KathmanduNT Building Tripureshwor, KathmanduKamaladi,KathmanduGabahal,LalitpurSanepa, LalitpurGongabu,KathmanduChaunni, Maitri School GateThamel, KathmanduBalkhu Tarkari Bazar, BalkhuNewroad, Kathmandu

Inside Valley

Habib American Bank, New YorkSwift Code: HANY US 33

MashreqBank PSC, New YorkSwift Code: MSHQ US 33

Standard Chartered Bank, New YorkSwift Code: SCBL US 33

USDUSD

EUR

EUR

GBP

GBP

USD

USD Standard Chartered Bank, Frankfurt am MainSwift Code: SCBL DE FX

Mashreq Bank, LondonSwift Code: MSHQ GB 2L

EUR

Standard Chartered Bank, LondonSwift Code: SCBL GB 2L

Mashreq Bank, LondonSwift Code: MSHQ GB 2L

GBP

INTERNATIONAL CORRESPONDENT BANKS

INR

INR

INRINR

USDAUD

JPY

HDFC Bank Ltd, Mumbai Swift Code: HDFC IN BB

Yes Bank, MumbaiSwift Code: YESB IN BB

Standard Chartered Bank, MumbaiSwift Code: SCBL IN BB

The Ratnakar Bank Ltd, Mumbai Seift Code: RATN IN BB

INR USD Kookmin Bank, South KoreaSwift Code: CZNB KR SE

JPY The Bank of Tokyo-Mitsubishi UFJ Ltd, TokyoSwift Code: BOTK JP JT

AUD Commonwealth Bank of Australia, SydneySwift Code: CTBA AU 2S

16 PRABHU BANK Annual Report 2015/16

BALANCE SHEETAs at 31 Ashad 2072 (16 July 2015)

CAPITAL & LIABILITIES SCHEDULE CURRENT YEAR PREVIOUS YEAR

1. Share Capital 1 3,208,885,224 2,000,000,000 2. Reserves and Funds 2 484,825,417 (851,067,535)3. Debentures & Bonds 3 - - 4. Borrowings 4 24,830,500 - 5. Deposit Accounts 5 42,143,974,357 19,835,165,830 6. Bills Payable 6 28,034,993 22,596,853 7. Proposed Dividend - - 8. Income Tax Liabilities - - 9. Other Liabilities 7 619,575,265 199,117,039 Total 46,510,125,756 21,205,812,188

ASSETS SCHEDULE CURRENT YEAR PREVIOUS YEAR

1. Cash Balance 8 1,706,103,750 788,033,479 2. Balance with Nepal Rastra Bank 9 5,985,954,364 899,490,631 3. Balance with Banks/Financial Institutions 10 1,623,937,329 272,472,950 4. Money at Call and Short Notice 11 1,000,775,000 100,000,000 5. Investments 12 4,512,975,553 5,808,373,547 6. Loans, Advances and Bills Purchased 13 27,726,157,429 10,884,398,688 7. Fixed Assets 14 1,728,634,242 1,353,249,172 8. Non-Banking Assets 15 - - 9. Other Assets 16 2,225,588,089 1,099,793,720 Total 46,510,125,756 21,205,812,186

Contingent Liabilities Schedule 17 Directors' Declaration Schedule 29 Capital Adequacy Table Schedule 30 (Ka 1) Principal Indicators Schedule 31 Principal Accounting Policies Schedule 32 Notes to Accounts Schedule 33

Lekh Bahadur Pun Ashok Sherchan Rishi Ram Gautam Dahkshya Poudel (Suvas) Head Finance Chief Executive O cer Professional Director Director

Kusum Lama Ambika Sharma Pushpa Bahadur Pradhan Devi Prakash BhattachanDirector Director Director Chairman

As per our report of even date

CA Shyam KarkiShyam Karki & Co.Chartered Accountants

KathmanduDate:- 2015-12-22

Schedules 1 to 17, 32 and 33 form integral part of this Balance Sheet

17PRABHU BANK Annual Report 2015/16

Lekh Bahadur Pun Ashok Sherchan Rishi Ram Gautam Dahkshya Poudel (Suvas) Head Finance Chief Executive Officer Professional Director Director





Profit and loSS accountFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

PARTICULARS SCHEDULE CURRENT YEAR PREVIOUS YEAR

1. Interest Income 18 2,814,822,885 1,865,017,651 2. Interest Expenses 19 1,270,986,361 1,135,845,477 Net Interest Income 1,543,836,524 729,172,174 3. Commission & Discount 20 70,339,243 67,329,373 4. Other Operating Incomes 21 189,821,047 87,393,671 5. Exchange Fluctuation Income 22 88,922,594 33,612,714 Total Operating Income 1,892,919,409 917,507,932 6. Staff Expenses 23 495,229,206 272,923,078 7. Other Operating Expenses 24 539,479,488 358,664,929 8. Exchange Fluctuation Loss 22 - - Operating Profit Before Provision for Possible Loss 858,210,715 285,919,925 9. Provision for Possible Losses 25 677,811,188 994,356,744 Operating Profit 180,399,527 (708,436,819)10. Non - Operating Income/Expenses 26 24,787,467 66,797,469 11. Possible Loss Provision Written Back 27 1,809,630,806 222,718,325 Profit from Regular Activities 2,014,817,800 (418,921,026)12. Income/Expense from Extra-Ordinary Activities 28 (468,378,990) - Profit from All Activities 1,546,438,810 (418,921,026)13. Provision for Staff Bonus 140,585,346 - 14. Provision for Tax Expense 387,608,090 (128,915,546) Current Year 69,713,680 157,534,247 Previous Years - 14,159,335 Deferred Tax 317,894,410 (300,609,128)Net Profit /(Loss) 1,018,245,374 (290,005,479)

Schedules 18 to 28 and 32 and 33 form integral part of this Profit and Loss Account

Lekh Bahadur Pun Ashok Sherchan Rishi Ram Gautam Dahkshya Poudel (Suvas) Head Finance Professional Director Director





PROFIT AND LOSS APPROPRIATION ACCOUNTFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

PARTI CULARS SCHEDULE CURRENT YEAR PREVIOUS YEAR

Income 1. (JJ\T\SH[LK�7YVÄ[�\W�[V�7YL]PV\Z�@LHY - -

Transferred from Prabhu Bikas Bank Ltd. 39,580,116

Transferred frVT�.H\YP�:OHURLY�+L]� Bank Ltd. 70,042,082

Transferred from Zenith Finance Ltd. 27,691,830

2. Current @LHY�Z�7YVÄ[ 1,018,245,374 -

3. Exchange Fluctuation Fund - -

��0U]LZ[TLU[�(KQ\Z[TLU[�9LZLY]L� - 149,172

Total 1,155,559,402 149,172 Expenses 1. (JJ\T\SH[LK�3VZZ�\W[V�7YL]PV\Z�@LHY 979,164,914 689,036,550

2. Current @ear's Loss - 290,005,479

3. .LULYHS�9LZLY]L�-\UK 203,649,075 -

4. *VU[PUNLU[�9LZLY]L - -

5. 0UZ[P[\[PVU�+L]LSVWTLU[�-\UK - -

6. +P]PKLUK�,X\HSPaH[PVU�-\UK - -

7. ,TWSV`LLZ��9LSH[LK�-\UK - -

8. PrVWVZLK�+P]PKLUK - -

9. Proposed Bonus Share - -

��:WLJPHS�9LZLY]L�-\UK - -

11. Exchange Fluctuation Fund 589,804 272,057

��*HWP[HS�9LKLTW[PVU�9LZLY]L�-\UK - -

��0U]LZ[TLU[�(KQ\Z[TLU[�9LZLY]L 113,244,574 -

��+LMLYYLK�;H_�9LZLY]L - -

Total 1,296,648,367 979,314,086��(JJ\T\SH[LK�7YVÄ[��3VZZ� (141,088,965) (979,164,914)


caSh flow StatementFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

PARTICULARS CURRENT YEAR PREVIOUS YEAR

(A) CASH FLOW FROM OPERATION ACTIVITIES 5,519,893,635 (989,396,510) 1. Cash Receipts 3,111,386,029 2,139,884,174 1.1 Interest Income 2,767,125,327 1,838,567,552 1.2 Commission and Discount Income 70,339,243 67,329,373 1.3 Exchange Gain 84,009,251 32,524,488 1.4 Recovery of Write off Loan 91,161 - 1.5 Other Income 189,821,047 201,462,761 2. Cash Payments 2,359,636,790 1,813,578,708 2.1 Interest Expenses 1,265,568,089 1,144,223,986 2.2 Staff Expenses 432,611,096 257,198,849 2.3 Office Overhead Expenses 391,647,264 238,623,311 2.4 Payment of Income Tax 230,336,728 173,532,562 2.5 Other Expenses 39,473,613 - Cash Flow Before Working Capital Activities 4,768,144,395 (1,315,701,976) Decrease/(Increase) in Current Asset (4,702,645,345) (62,771,792) 1. Decrease/(Increase) in Money at Call and Short Notice (70,687,600) 97,850,000 2. Decrease/(Increase) in Other Short Term Investments 1,705,227,669 (3,166,576,257) 3. Decrease/(Increase) in Loans, Advances and Bills Purchased (7,038,293,831) 3,094,043,895 4. Decrease/(Increase) in Other Assets 701,108,418 (88,089,430) (Decrease)/Increase in Current Liabilities 9,470,789,740 (1,252,930,184) 1. (Decrease)/ Increase in Deposit/Liabilities 9,441,183,087 (1,257,859,499) 2. (Decrease)/ Increase in Certificate of Deposits - 3. (Decrease)/ Increase in Short Term Borrowings 21,705,500 (22,035,362) 4. (Decrease)/Increase in Other Liabilities 7,901,154 26,964,677 (B) Cash Flow From Investing Activities (353,801,230) 240,149,104 1. Decrease/(Increase) in Long Term Investments (200,000,000) 155,888,537 2. Decrease/(Increase) in Fixed Assets (191,342,702) (42,968,169) 3. Interest Income from Long Term Investments 12,754,005 22,359,215 4. Dividend Income 4,873,725 2,400,138 5. Others 19,913,742 102,469,382 (C) Cash Flow From Financial Sources 0 (673,931,362) 1. Increase /(Decrease) in Long Term Borrowings (1,497,875) 2. Increase /(Decrease) in Paid Up Capital - - 3. Increase /(Decrease) in Other Liabilities 0.00 - 4. Increase /(Decrease) in Refinance/facilities from Nepal Rastra Bank (672,433,487)(D) Income/Loss From change in exchange rate of Cash and Bank Balance 4,913,343 1,088,226 (E) Net Cash Flow of the Year 5,171,005,748 (1,422,090,542)(F) Transfer from merged institutions 2,184,992,635 (G) Opening Cash and Bank Balance 1,959,997,060 3,382,087,603 (H) Closing Cash and Bank Balance 9,315,995,443 1,959,997,060

Lekh Bahadur Pun Ashok Sherchan Rishi Ram Gautam Dahkshya Poudel (Suvas) Head Finance Chief Executive Officer Professional Director Director






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Share caPital and ownerShiPAs at 31 Ashad 2072 (16 July 2015)


1. Share Capital 1.1 Authorised Capital 10,000,000,000 10,000,000,000 a) 100,000,000 Ordinary Shares of Rs 100 each 10,000,000,000 10,000,000,000 (Previous year 100,000,000 Ordinary shares of Rs 100 each) b)…. Non-Redeemable Preference Shares of Rs _ each - c)….. Redeemable Preference Shares of Rs _ each - 1.2 Issued Capital 3,208,885,224 2,000,000,000 a) 32,088,852 Ordinary Shares of Rs 100 each 3,208,885,224 2,000,000,000 (Previous year 20,000,000 Ordinary shares of Rs 100 each) c)…...Redeemable Preference Shares of Rs _ each 1.3 Paid Up Capital 3,208,885,224 2,000,000,000 a) 32,088,852 Ordinary Shares of Rs 100 each 3,208,885,224 2,000,000,000 (Previous year 20,000,000 Ordinary shares of Rs 100 each) b)…….Non-Redeemable Preference Shares of Rs _ each - - c)…….Redeemable Preference Shares of Rs _ each - - 1.4 Proposed Bonus Share - - 1.5 Call in Advance - - Total (1.3+1.4+1.5) 3,208,885,224 2,000,000,000

SHARE OWNERSHIP THIS YEAR PREVIOUS YEAR % SHARE CAPITAL SHARE CAPITAL %

A. LOCAL OWNERSHIP 100 3,208,885,224 2,000,000,000 100 1.1 Government of Nepal - - - - 1.2 "A" Class Licensed Institutions - - - - 1.3 Other Licensed Institutions - - - - 1.4 Other Institutions 18.47 592,579,941 120,696,100 6.03 1.5 Individuals 81.53 2,616,305,283 1,879,303,900 93.97 1.6 Others - - - -B. Foreign Ownership - - - - Total 100 3,208,885,224 2,000,000,000 100

Schedule 1


ShareholderS holding equal to or more than 0.5% ShareS As at 31 Ashad 2072 (16 July 2015)

Schedule 1

SN Name Type Number of Amount % of Remarks shares held NPR Shareholding

1 Tara Kumari Thakali Bhattachan Promoter 2,343,525 234,352,500 7.30% Public 318,547 31,854,700 0.99% Total 2,662,072 266,207,200 8.30% 2 Nepal Investment Pvt. Ltd. Promoter 1,613,403 161,340,300 5.03% Public 500,715 50,071,500 1.56% Total 2,114,118 211,411,800 6.59% 3 Prabhu Investment Pvt. Ltd. Promoter 2,050,170 205,017,000 6.39% 4 Sulochana Shakya Promoter 1,150,234 115,023,400 3.58% Public - - 0.00% Total 1,150,234 115,023,400 3.58% 5 Nanda Sherchan Promoter 1,013,306 101,330,600 3.16% Public - - 0.00% Total 1,013,306 101,330,600 3.16% 6 Binod Thakali Promoter 641,054 64,105,400 2.00% Public 127,776 12,777,600 0.40% Total 768,830 76,883,000 2.40% 7 Sunil Shayka Promoter 675,592 67,559,200 2.11% 8 Shiva Kumar Shrestha Promoter 419,344 41,934,400 1.31% Public 48,656 4,865,600 0.15% Total 468,000 46,800,000 1.46% 9 S .Y. Housing and land Dev. Pvt. Ltd. Promoter 463,450 46,345,000 1.44% 10 Dilip Shakya Promoter 446,664 44,666,400 1.39% 11 Ambika Sharma Lamichhane Promoter 423,204 42,320,400 1.32% Public 9,731 973,100 0.03% Total 432,935 43,293,500 1.35% 12 Shamba Lama Promoter 425,741 42,574,100 1.33% 13 Mijas Bhattachan Public 364,049 36,404,900 1.13% 14 Suresh Prasad Chaudhary Promoter 322,591 32,259,100 1.01% Public 12,164 1,216,400 0.04% Total 334,755 33,475,500 1.04% 15 Achyutam Tamrakar Promoter 300,484 30,048,400 0.94% 16 Sonam Gyatso Promoter 297,777 29,777,700 0.93% Public 1,450 145,000 0.00% Total 299,227 29,922,700 0.93% 17 QED Investment Pvt. Ltd. Public 296,895 29,689,500 0.93% 18 Tara Prasad Bhattrai Promoter 210,574 21,057,400 0.66% 19 Uttam Prasad Panta Promoter 194,625 19,462,500 0.61% 20 Krishna Gopal Shrestha Public 184,786 18,478,600 0.58% 21 Sujata Shakya Public 176,882 17,688,200 0.55% 22 Lal Kumari Bhattachan Promoter 168,884 16,888,400 0.53%


reServe and fundSAs at 31 Ashad 2072 (16 July 2015)

Schedule 2


1. General Reserve Fund 459,489,912 98,468,449 2. Capital Reserve Fund 3,408,411 - 3. Capital Redemption Reserve - - 4. Capital Adjustment Fund - - 5. Other Reserves & Funds 161,787,723 28,990,399 a. Contingent Reserve - - b. Institution Development Fund - - c. Dividend Equalisation Fund - - d. Special Reserve Fund - - e. Assets Revaluation Reserve - - f. Deferred Tax Reserve 35,218,459 28,475,002 g. Other Free Reserves - - h. Other Reserves (Investment Adjustment Reserve) 126,569,264 515,397 6. Accumulated Profit/Loss (141,088,965) (979,164,914) 7. Exchange Fluctuation Fund 1,228,336 638,532 Total 484,825,417 (851,067,535)

deBenture & BondAs at 31 Ashad 2072 (16 July 2015)

Schedule 3


1. ….. Bond and Debenture - - Issued on ………Maturity on ……… - - Redemption Reserve - Rs……. - - 2. ……………… - - 3. ……………… - - Total (1+2+3) - -

BorrowingSAs at 31 Ashad 2072 (16 July 2015)

Schedule 4


A. Local 1. Government of Nepal - - 2. Nepal Rastra Bank - - 3. Repo Obligations - - 4. Inter-bank and Financial Institutions - - 5. Other Financial Institutions - - 6. Others - - Total - -B. Foreign 1. Banks 24,830,500 - 2. Others - - Total 24,830,500 - Total (A+B ) 24,830,500 -


dePoSit liaBilityAs at 31 Ashad 2072 (16 July 2015)

Schedule 5


1. Non-Interest Bearing Accounts A. Current Deposits 847,626,056 496,256,698 1. Local Currency 830,785,289 480,220,629 1.1 Government of Nepal - - 1.2 "A" Class Licensed Institutions 3,221,757 796,607 1.3 Other Licensed Financial Institutions 97,516,230 32,076,269 1.4 Other Organized Institutions 634,506,391 388,818,875 1.5 Individuals 95,540,911 58,528,878 1.6 Others - - 2. Foreign Currency 16,840,766 16,036,069 2.1 Government of Nepal - - 2.2 "A" Class Licensed Institutions 80,692 23,028 2.3 Other Licensed Financial Institutions - - 2.4 Other Organized Institutions 7,785,830 5,294,401 2.5 Individuals 8,974,245 10,718,640 2.6 Others - - B. Margin Deposits 166,481,106 69,837,038 1. Employees' Guarantee - - 2. Guarantee Margin 114,929,014 58,084,938 3. Letters of Credit Margin 51,552,092 11,752,100 C. Others 52,975,995 47,350,257 1. Local Currency - - 1.1 Financial Institutions - - 1.2 Other Organized Institutions 12,630,111 12,856,701 1.3 Individuals 40,345,884 34,493,556 2. Foreign Currency - - 2.1 Financial Institutions - - 2.2 Other Organized Institutions - - 2.3 Individuals - - Total of Non-Interest Bearing Accounts 1,067,083,156 613,443,993


dePoSit liaBilityAs at 31 Ashad 2072 (16 July 2015) Schedule 5


2. Interest Bearing Accounts A. Savings Deposits 24,642,842,884 13,617,720,518 1. Local Currency 24,621,822,617 13,604,626,425 1.1 Institutions - - 1.2 Individuals 24,610,901,703 13,604,042,337 1.3 Others 10,920,915 584,087 2. Foreign Currency 21,020,267 13,094,094 2.1 Institutions - - 2.2 Individuals 21,020,267 13,094,094 2.3 Others - - B. Fixed Deposits 7,700,634,534 3,592,862,561 1. Local Currency 6,898,389,534 3,570,339,842 1.1 Institutions 2,511,601,590 500,132,036 1.2 Individuals 4,386,787,944 3,070,207,806 1.3 Others - - 2. Foreign Currency 802,245,000 22,522,719 2.1 Institutions 802,245,000 22,522,719 2.2 Individuals - - 2.3 Others - - C. Call Deposits 8,733,413,782 2,011,138,758 1. Local Currency 8,692,635,334 1,961,450,636 1.1 "A" Class Licensed Institutions - - 1.2 Other Licensed Financial Institutions 3,176,433,619 400,706,791 1.3 Other Institutions 5,426,632,844 1,510,355,401 1.4 Individuals 89,568,872 50,388,444 1.5 Others - - 2. Foreign Currency 40,778,448 49,688,121 2.1 "A" Class Licensed Institutions - - 2.2 Other Licensed Financial Institutions - - 2.3 Other Institutions 40,778,448 49,688,121 2.4 Individuals - - 2.5 Others - - D. Certificate of Deposits - - 1. Institutions - - 2. Individuals - - 3. Others - - Total of Interest Bearing Accounts 41,076,891,201 19,221,721,837 Total Deposits (1+2) 42,143,974,357 19,835,165,830

continued......


BillS PayaBleAs at 31 Ashad 2072 (16 July 2015)

caSh BalanceAs at 31 Ashad 2072 (16 July 2015)

other liaBilitieSAs at 31 Ashad 2072 (16 July 2015)

Schedule 6

Schedule 8

Schedule 7


1. Local Currency 28,034,993 14,906,823 Managers Cheque 10,832,807 11,441,923 Good for Payment Payable 17,202,186 3,464,900 2. Foreign Currency - 7,690,029 Managers Cheque Payable GBP - 7,690,029 Total 28,034,993 22,596,853


1. Pension/Gratuity/Leave Fund 121,004,133 58,386,023 2. Employees' Provident Fund - - 3. Employees' Welfare Fund - - 4. Provision for Staff Bonus 140,585,346 - 5. Interest Payable on Deposits 17,706,565 12,289,746 6. Interest Payable on Borrowing 1,454 - 7. Unearned Discount and Commission 10,341,707 5,812,560 8. Sundry Creditors 143,946,578 77,818,101 9. Branch Adjustment Account 492,418 - 10. Deferred Tax Liability - - 11. Unpaid Dividend Payable 10,970,703 5,136,370 12. Others 174,526,363 39,674,238 a. Auction Deposit Payable 4,362,093 2,207,991 b. Retention Money Payable 6,400,464 24,772,993 c. Card Related Payable 19,019,240 11,578,838 d. Training Funds 1,114,777 1,114,415 e. TDS 37,572,702 - f. Provision for other assets 31,237,520 - g. NDB Related Payable 74,819,567 - Total 619,575,265 199,117,039


1. Local Currency ( Including Coins) 1,675,548,129 773,779,555 2. Foreign Currency 30,555,621 14,253,924 Total 1,706,103,750 788,033,479


BALANCE AT NEPAL RASTRA BANKAs at 31 Ashad 2072 (16 July 2015)

BALANCE WITH BANKS/FINANCIAL INSTITUTIONSAs at 31 Ashad 2072 (16 July 2015)

MONEY AT CALL AND SHORT NOTICEAs at 31 Ashad 2072 (16 July 2015)

Schedule 9

Schedule 10

Schedule 11

Particulars Local Currency Foreign Currency (In Equivalent NPR Current Year Previous Year

INR Convertible Total

1.Nepal Rastra Bank 5,838,019,617 - 147,934,747 147,934,747 5,985,954,364 899,490,631 a.Current Account 5,838,019,617 - 147,934,747 147,934,747 5,985,954,364 899,490,631 b.Other Account - - - - - -

Particulars Local Currency Foreign Currency (In Equivalent NPR Current Year Previous Year

INR Convertible Total 1. Local Licensed Institutions 132,415,568 - 2,975,576 2,975,576 135,391,145 37,829,601 a.Current Account 132,415,568 - 2,975,576 2,975,576 135,391,145 37,829,601 b.Other Account - - - - - - 2. Foreign Banks - 75,815,786 1,412,730,398 1,488,546,184 1,488,546,184 234,643,350 a.Current Account - 75,815,786 1,412,730,398 1,488,546,184 1,488,546,184 234,643,350 b. Other Account - - - - - - Total 132,415,568 75,815,786 1,415,705,975 1,491,521,761 1,623,937,329 272,472,950


1. Local Currency 950,000,000 100,000,000 2. Foreign Currency 50,775,000 Total 1,000,775,000 100,000,000


INVESTMENTSAs at 31 Ashad 2072 (16 July 2015)

Schedule 12

PARTICULARS PURPOSE CURRENT YEAR PREVIOUS YEAR

TRADING OTHERS

1. Nepal Government's Treasury Bills - 3,710,456,206 3,710,456,206 5,475,150,746 2. Nepal Government's Citizens Bonds - - - - 3. Nepal Government's Others Securities - 332,000,000 332,000,000 112,000,000 4. Nepal Rastra Bank Bonds - - - - 5. Foreign Securities - - - - 6. Domestic Licenced Institutions - 101,550,000 101,550,000 96,380,250 7. Foreign Banks - 152,325,000 152,325,000 96,300,000 8. Corporate Shares - 304,640,603 304,640,603 28,542,552 9. Corporate Bonds & Debentures - - - - 10. Other Investments - - - - Total Investment - 4,600,971,808 4,600,971,808 5,808,373,547 Less : Provision - 87,996,256 87,996,256 - Net Investment - 4,512,975,553 4,512,975,553 5,808,373,547


inveStmentS in ShareS, deBentureS and BondSAs at 31 Ashad 2072 (16 July 2015)

Schedule 12(Ka)

PARTICULARS COST PRICE MARKET VALUE PROVISION CURRENT YEAR PREVIOUS YEAR

1. Investment in Shares 293,867,954 302,644,347 (87,996,256) 304,640,603 28,542,552

1.1 Arun Valley Hydropower Company Ltd. - 733,700 -

2300 Ordinary Shares of Rs. 322.50 each 645,000 733,700

(Including 300 Bonus Shares ) 880,440 -

2760 Ordinary Shares of Rs. 100 each at par 230,000 880,440 -

(Including 460 Bonus Shares )

1.2 Asian Life Insurance Company Ltd. - - - 685,801 -

439 Ordinary Shares of Rs. 213.42 each 61,893 444,707 - - -

(Including 149 Bonus Shares )


1.3 Butwal Power Co.Ltd - - (1,996,255.71) 10,009,852 10,009,852

7593 Ordinary Shares of Rs. 1575.84 each 9,470,352 4,684,881 - - -

(Including 1,405 Bonus )

5395 Ordinary Shares of Rs. 100 each at par 539,500 3,328,715 - - -

1.4 Credit Information Centre Ltd. 6,652,020 470,100

8,208 Ordinary Shares of Rs. 100 each at par 470,100 470,100 - - -

(Including 3,507 Bonus)

11,664 Ordinary Shares of Rs. 530 each 6,181,920 6,181,920 - - -

(Including 8,664 Bonus)

1.5 First Micro Finance Dev Bank Ltd 30,000,000 15,000,000

300,000 Ordinary Shares of Rs. 100 each at par 30,000,000 30,000,000 -

1.6 ICRA Nepal Ltd - 760,000 760,000

7,600 Ordinary Shares of Rs. 100 each at par 760,000 760,000 -

1.7 Nabil Balance Fund -1 - 3,087,950 -

228,737 Ordinary Shares of Rs. 10 each 2,287,370 3,087,950

1.8 Nepal Clearing House - - - 3,005,600 2,302,600

30,056 Ordinary Shares of Rs. 100 each at par 3,005,600 3,005,600

1.9 Growmore Merchant Banker Ltd - - - 1,000,000 -

10,000 Ordinary Shares of Rs. 100 each at par 1,000,000 1,000,000 - - -

1.10 Kalika Micro Credit Development Bank Ltd - - - 98,236 -

82 Ordinary Shares of Rs. 100 each at par 8,200 98,236 - - -

1.11 Khanikhola Hydropower Company Ltd - - - 37,899,600 -


1.12 Life Insurance Corporation Nepal - - - 1,346,319 -

481 Bonus Shares only - 1,346,319 - - -

1.13 Laxmi Laghubitta Bittiya Sanstha Ltd. - - - 76,178 -


1.14 Mithila Laghu Bittiya Bikas Bank Ltd - - - 132,225 -


1.15 Nagbeli Laghu Bitta Bikas Bank Ltd. - - - 30,000 -


(Including 4 Bonus)

1.16 National Life Insurance Company Ltd. - - - 4,697,520 -

2,553 Ordinary Shares of Rs. 1335.59 each 3,409,769 4,697,520 - - -

1.17 Nepal Doorsanchar Company Ltd. - - - 32,944,800 -







continue..........

1,270 Ordinary Shares of Rs. 619.37 each 786,597 807,720 - - -





1.18 Riddhi Hydropower Company Ltd. - - - 41,715 -


(Including 9 Bonus)

1.19 Sana Kisan Bikas Bank Ltd. - - - 5,543,490 -


1.20 Siddhartha Investment Groth Scheme - 1 4,514,000 -

305,000 Ordinary Shares of Rs. 10 each 3,050,000 4,514,000

1.21 Siddhartha Equity Oriental Scheme - - - 1,801,158 -

176,931 Ordinary Shares of Rs. 10 each 1,769,310 1,801,158 - -

1.22 United Modi Hydropower Ltd. - - - 72,700,000 -

120,000 Ordinary Shares of Rs. 125 each 15,000,000 15,000,000 - - -



1.23 Gorkha Hydro Power Company - - - 75,900,000 -

759,000 Ordinary Shares of Rs. 100 each at par 75,900,000 75,900,000 (75,900,000)

1.24 Nepal Co-operative Society Ltd. - - - 10,000,000 -

100,000 Ordinary Shares of Rs. 100 each at par 10,000,000 10,000,000 (10,000,000) - -

1.25 General Insurance Company. - - 100,000 -

1000 Ordinary Shares of Rs. 100 each at par 100,000 100,000 (100,000)

2. Investment in Debentures and Bonds - - - - -

2.1 ……………………..

Total Investment 293,867,954 302,644,347 (87,996,256) 304,640,603 28,542,552

3. Provision for Loss

3.1 Upto Previous Year - - - 3,451,598 3,451,598

3.2 Adjustment This Year - - - 84,544,658 (3,451,598)

Total Provision - - - 87,996,256 -

Net Investment 293,867,954 (87,996,256) 216,644,347 28,542,552


held for tradingAs at 31 Ashad 2072 (16 July 2015)

held to maturityAs at 31 Ashad 2072 (16 July 2015)

Schedule12.1

Schedule12.2

PARTICULARS COST PRICE PREVIOUS CURRENT CURRENT YEAR'S LAST YEAR'S REMARKS MARKET MARKET PROFIT & LOSS PROFIT & LOSS VALUE (A) VALUE (B) (B-A)

1. Nepal Government's Treasury Bills - - - - - - 2. Nepal Government's Savings Bonds - - - - - - 3. Nepal Government's Others Securities - - - - - - 4. Nepal Rastra Bank Bonds/Securities - - - - - - 5. Foreign Bond/Securities - - - - - - 6. Share Investment - - - - - - Domestic Licenced Institutions - - - - - - 7. Corporate Bonds & Debentures - - - - - - 8. Corporate Shares,Bonds & Debentures - - - - - - 9. Foreign Banks Placement - - - - - - 10. Inter Bank Lending - - - - - - 11. Other Investments - - - - - - TOTAL INVESTMENT - - - - - -

PARTICULARS COST PRICE ACCUMULATED CURRENT CURRENT YEAR'S LAST YEAR'S REMARKS (A) LOSS (B) YEAR LOSS (C) PROFIT & LOSS PROFIT & LOSS (A-B-C)

1. Nepal Government's Treasury Bills 3,710,456,206 - - - - - 2. Nepal Government's Savings Bonds - - - - - - 3. Nepal Government's Others Securities 332,000,000 - - - - - 4. Nepal Rastra Bank Bonds/Securities - - - - - - 5. Foreign Bond/Securities - - - - - - 6. Share Investment - - - - - - Domestic Licenced Institutions - - - - - - 7. Corporate Bonds & Debentures - - - - - - 8. Corporate Shares,Bonds & Debentures - - - - - - 9. Foreign Banks Placement 152,325,000 - - - - - 10. Inter Bank Lending 101,550,000 - - - - - 11. Other Investments - - - - - - Total Investment 4,296,331,206 - - - - -


availaBle for SaleAs at 31 Ashad 2072 (16 July 2015)

Schedule12.3

PARTICULARS COST PRICE PREVIOUS CURRENT CURRENT YEAR'S LAST YEAR'S REMARKS MARKET MARKET PROFIT & LOSS PROFIT & LOSS VALUE (A) VALUE (B) (B-A)

1. Nepal Government's Treasury Bills - - - - - - 2. Nepal Government's Citizen Bonds - - - - - - 3. Nepal Government's Others Securities - - - - - - 4. Nepal Rastra Bank Bonds - - - - - - 5. Foreign Bond/Securities - - - - - - 6. Share Investment - - - - - - Domestic Licenced Institutions - - - - - - 7. Corporate Bonds & Debentures - - - - - - 8. Corporate Shares,Bonds & Debentures 293,867,954 291,871,698 302,644,347 10,772,649 - - 9. Foreign Banks Placement - - - - - - 10. Inter Bank Lending - - - - - - 11. Other Investments - - - - - - Total Investment 293,867,954 291,871,698 302,644,347 10,772,649 - -


CLA

SSIF

ICAT

ION

OF

LOA

NS,

AD

VAN

CES

AN

D B

ILLS

PU

RCH

ASE

D A

ND

PRO

VISI

ON

SA

s at

31 A

shad

2072 (16 J

uly

2015)

Sched

ule

1

3

LOAN

S AN

D AD

VANC

ES

BILL

S PU

RCHA

SED

AND

DISC

OUNT

ED

PAR

TICU

LARS

DOM

ESTI

C

FO

REIG

N

TOT

AL

LOC

AL

FOR

EIGN

T

OTAL

C

URRE

NT Y

EAR

PRE

VIOU

S YE

AR

DEPR

IVED

OTHE

RS

AD

VANC

ES

BILL

S

IN

SURE

D

UNI

NSUR

ED

P

URCH

ASED

&

DIS

COUN

TED

1.

Perfo

rmin

g Lo

an

1

,166

,072

1

,172

,099

,523

2

6,19

8,12

7,41

8

-

27,3

71,3

93,0

13

-

137

,161

,853

1

37,1

61,8

53

27,

508,

554,

865

10,

397,

004,

526

A

. P

ass

loan

s

1,1

66,0

72

1,1

49,1

61,9

80

23,9

41,4

22,1

25

-

2

5,0

91,7

50,1

78

-

1

37,1

61,8

53

137,1

61,8

53

25,2

28,9

12,0

30

10,3

97,0

04,5

26

B

. Wat

ch L

ist

2

2,9

37,5

43

2,2

56,7

05,2

93

2

,279,6

42,8

35

-

2

,279,6

42,8

35

2.

Non

Per

form

ing

Loan

-

1

0,80

4,19

2

2,1

55,0

96,6

69

-

2,1

65,9

00,8

61

9,0

60,0

00

-

9,0

60,0

00

2,1

74,9

60,8

61

3,3

35,5

70,5

45

2.1

. R

estruc

ture

d L

oan

-

-

-

-

-

-

-

-

-

2.2

Sub

Sta

ndar

d

-

2

,208,3

08

482,4

54,4

79

-

4

84,6

62,7

88

-

-

-

4

84,6

62,7

88

71,5

88,9

33

2.3

Doub

tful

-

3

,458,9

67

340,9

26,7

98

-

3

44,3

85,7

65

-

-

-

3

44,3

85,7

65

1,1

69,0

71,4

70

2.4

Loss

-

5,1

36,9

16

1,3

31,7

15,3

93

-

1

,336,8

52,3

09

9,0

60,0

00

-

9

,060,0

00

1,3

45,9

12,3

09

2,0

94,9

10,1

42

Tot

al L

oans

(A)

1,1

66,0

72

1,1

82,9

03,7

15

28,

353,

224,

087

-

29

,537

,293

,874

9

,060

,000

1

37,1

61,8

53

146

,221

,853

2

9,68

3,51

5,72

7 1

3,73

2,57

5,07

0 3

. Lo

an L

oss

Prov

isio

n

3.1

Pas

s Lo

ans

2

,915

11,4

91,6

20

252,3

32,9

88

-

2

63,8

27,5

23

-

1

,371,6

19

1,3

71,6

19

265,1

99,1

42

150,8

33,2

72

3.2

Wat

ch L

ist

4

58,7

51

52,3

14,4

04

5

2,7

73,1

55

-

5

2,7

73,1

55

3.3

. R

estruc

ture

d L

oan

-

-

-

-

-

-

-

-

-

-

3.4

Sub

Sta

ndar

d

-

5

52,0

77

120,6

22,7

32

-

1

21,1

74,8

09

-

-

-

1

21,1

74,8

09

17,8

97,2

33

3.5

Doub

tful

-

1

,729,4

84

170,5

69,3

99

-

1

72,2

98,8

82

-

-

-

1

72,2

98,8

82

584,5

35,7

35

3.6

Loss

-

5,1

36,9

16

1,3

31,7

15,3

93

-

1

,336,8

52,3

09

9,0

60,0

00

-

9

,060,0

00

1,3

45,9

12,3

09

2,0

94,9

10,1

42

Tot

al P

rovi

sion

s (B

) 2

,915

1

9,36

8,84

8

1,9

27,5

54,9

16

-

1,9

46,9

26,6

79

9,0

60,0

00

1,3

71,6

19

10,

431,

619

1

,957

,358

,297

2

,848

,176

,382

4

. Pr

ovis

ion

upto

Pre

viou

s ye

ar

4.1

Pas

s Lo

ans

-

7,0

87,5

96

143,7

45,6

76

-

1

50,8

33,2

72

-

-

-

1

50,8

33,2

72

180,2

72,7

69

4.2

Res

truc

ture

d L

oan

s

-

-

-

-

-

-

-

-

-

8

,750,0

00

4.3

Sub

Sta

ndar

d

-

1

34,6

24

17,7

62,6

09

-

1

7,8

97,2

33

-

-

-

1

7,8

97,2

33

25,9

99,5

40

4.4

Doub

tful

-

8

1,2

64

584,4

54,4

71

-

5

84,5

35,7

35

-

-

-

5

84,5

35,7

35

128,3

10,0

48

4.5

Loss

-

555,7

36

2,0

85,3

54,4

06

-

2

,085,9

10,1

42

9,0

00,0

00

-

9

,000,0

00

2,0

94,9

10,1

42

1,6

91,6

81,9

57

4.6

Additiona

l Loan

Loss

Pro

visi

on

-

-

-

-

-

-

-

-

-

Tot

al P

rovi

sion

upt

o Pr

evio

us y

ear (

C)

-

7,8

59,2

21

2,8

31,3

17,1

61

-

2,8

39,1

76,3

82

9,0

00,0

00

-

9,0

00,0

00

2,8

48,1

76,3

82

2,0

35,0

14,3

14

Writ

e ba

ck fr

om la

st y

ear p

rovi

sion

(D)

1,7

73,1

73,3

06

-

1,7

73,1

73,3

06

-

1,7

73,1

73,3

06

181

,194

,676

T

rans

ferre

d fro

m M

erge

d En

titie

s (E

) -

4

,928

,522

3

27,7

23,1

44

-

332

,651

,666

6

0,00

0

-

60,

000

3

32,7

11,6

66

Add

ition

al P

rovi

sion

dur

ing

this

yea

r (E)

2

,915

1

1,50

9,62

7

536

,699

,396

-

5

48,2

11,9

38

60,

000

1

,371

,619

1

,431

,619

5

49,6

43,5

57

994

,356

,744

N

et c

hang

e in

this

yea

r

2,9

15

16,

438,

149

(9

08,7

50,7

66)

-

(892

,309

,702

) 1

20,0

00

1,3

71,6

19

1,4

91,6

19

(890

,818

,083

) 8

13,1

62,0

68

N

et L

oan

(A-B

) 1

,163

,157

1

,163

,534

,867

2

6,42

5,66

9,17

1

-

27,5

90,3

67,1

95

-

135

,790

,234

1

35,7

90,2

34

27,

726,

157,

429

10,

884,

398,

688


SecuritieS againSt loanS, advanceS and BillS PurchaSedAs at 31 Ashad 2072 (16 July 2015)

Schedule 13(Ka)


(A) Secured 29,683,515,727 13,732,575,070 1. Collateral of Movable/Immovable Assets 28,390,381,058 12,718,174,301 2. Guarantee of Local Licensed Institutions - - 3. Guarantee of Government of Nepal 36,424,506 34,912,873 4. Guarantee of Internationally Rated Banks - - 5. Export Documents - - 6. Fixed Deposit Receipts 190,212,982 184,023,961 (a) Own FDR 190,212,982 184,023,961 (b) FDR of other Banks - - 7. Government Bonds - - 8. Counter Guarantees - - 9. Personal Guarantee 38,381,018 147,954,379 10. Other Securities 1,028,116,163 647,509,555 (B) Unsecured - - Total 29,683,515,727 13,732,575,070


fixed aSSetSAs at 31 Ashad 2072 (16 July 2015)

Schedule 14

PARTICULARS ASSETS CURRENT YEAR PREVIOUS YEAR BUILDING VEHICLES MACHINERY OFFICE EQUIPMENT OTHERS

1. At Cost a. Previous year's balance 644,696,733 119,091,455 179,665,517 251,822,261 50,322,266 1,245,598,231 604,365,956 b. Transfer from merged entities 106,284,175 40,262,416 73,876,571 137,541,767 25,994,453 383,959,383 c. Additions this year 20,951,115 55,265,936 3,376,872 15,460,969 10,836,095 105,890,988 702,900,650 d. Revaluation/Written back this year - - - - - - - e. This year sold - (28,749,573) (7,461,375) (13,865,886) (1,464,523) (51,541,358) (61,668,374) f. This year written off - - - - - - - Total Cost (a+b+c+d+e-f) 771,932,023 185,870,234 249,457,586 390,959,110 85,688,292 1,683,907,244 1,245,598,231 2. Depreciation a. Upto previous year 37,737,361 66,409,987 83,567,723 160,721,858 31,031,195 379,468,125 307,110,585 b. Transfer from merged entities 26,038,468 21,569,650 26,832,509 83,848,633 17,049,247 175,338,506 c. For this year 34,183,820 21,168,995 21,462,477 36,131,103 10,105,470 123,051,864 98,025,030 d. Depreciation on revaluation/written back - - - - - - - e. Depreciation adjustment/Written off - (17,037,579) (4,351,844) (10,656,374) (881,741) (32,927,538) (25,667,490)Total Depreciation (a+b+c+d+e) 97,959,649 92,111,053 127,510,865 270,045,220 57,304,171 644,930,958 379,468,125 3. Written Down Value (1-2) 673,972,374 93,759,181 121,946,721 120,913,890 28,384,121 1,038,976,287 866,130,107 4. Land - - - - - 578,023,998 399,521,945 5. Capital Construction( Capital WIP) - - - - - - 14,414,396 6. Leasehold Assets (net of amortisation) - - - - - 111,633,957 73,182,724 Total (3+4+5+6) 673,972,374 93,759,181 121,946,721 120,913,890 28,384,121 1,728,634,242 1,353,249,172


NON BANKING ASSETSAs at 31 Ashad 2072 (16 July 2015)

Schedule 15

NAME & ADDRESS OF BORROWER DATE OF TOTAL LOSS PROVISION NET PREVIOUS YEAR ASSUMING NON BANKING NON BANKING NON BANKING ASSETS % AMOUNT ASSETS ASSETS

1. Sudip K.C. 29 Aug 2012 620,115 100% 620,115 - 620,115 Bhumi Danda Ward No. 4 -Kavrepalanchok - - - 2. Water Mark Solutions 12 Nov 2012 - - - - 18,727,500 Bishnu Budhanilkantha - - - - - - VDC Ward No 4 3. Ashok Prabha Shit Bhandar Pvt 12 July 2013 11,062,800 100% 11,062,800 - 11,062,800 Ward No 7-Inaruwa -Sunsari 4. Ashok Prabha Shit Bhandar Pvt 15 July 2013 - - - 15,330,000 Ward No 7-Arlau (Ramgadhwa)- Parsa 5. Hotel Big Sea 04 Nov 2014 22,000,000 100% 22,000,000 - - Nagarkot VDC Ward N0. 7 6. Sunita Kumari Shah 01 Jan 2015 21,500,000 100% 21,500,000 - - Madhyapur Thimi, Ward No. 16 7. Rajendra Trade Concern 06 Fab 2015 9,320,000 100% 9,320,000 - - Saukhel VDC, Ward No. 8 8. Tikendra Chaudhari 18 July 2016 8,081,260 100% 8,081,260 - - Kathar VDC-8, Chitwan 9. Min Bahadur Bhandari 18 July 2016 8,349,960 100% 8,349,960 - - Kathar VDC-8, Chitwan 10. Dil Kumari Sherchan (Gauchan) 18 July 2016 9,200,000 100% 9,200,000 - - Syuchartar VDC-4, Kathmandu 11. Ishwar Thakulla 18 July 2016 5,782,570 100% 5,782,570 - - Khairani VDC-3, Chitwan 12. Airtail Tours and Travels 18 July 2016 10,800,000 100% 10,800,000 - - Dhangadhi Municipality-2, Kailali Total 106,716,705 106,716,705 - 45,740,415


Kd,�Z��^^�d^�Έ��/d/KE�>�^d�d�D�EdΉAs at 31 Ashad 2072 (16 July 2015)

other aSSetSAs at 31 Ashad 2072 (16 July 2015)

Schedule 16(Ka)

Schedule 16


1. Stock of Stationery 9,985,504 9,619,025 2. Income Receivable on Investments 7,120,817 2,516,461 3. Accrued Interest on Loans 30,339,197 - Accrued Interest on Loans 507,165,554 - 455489520 Less: Interest Suspense 476,826,356 - (455489520) 4. Commision Receivables - - 5. Sundry Debtors 47,443,231 4,737,040 6. Staff Loans and Advances 406,864,035 328,954,024 7. Prepayments 984,901,934 17,974,689 8. Cash-in-Transit - - 9. Other Transit Items ( Including Cheques) - - 10. Drafts Paid Without Notice - - 11. Expenses not Written off 792,380 5,887,767 12. Branch Adjustment Accounts - - 13. Deferred Tax Asset 389,179,615 700,330,568 14. Others 348,961,376 29,774,145 a. Stock of Other Miscellaneous Items 72,943 28,675 b. Card Related Receivables 28,924,691 9,910,566 c. Advance Deposits 29,802,627 12,690,816 d. Advance Tax 165,211,537 4,588,489 e. Forward Contract Receivables 17,873,200 2,555,600 f. NDB Related Receivable 46,146,378 - g. Forex Del Receivable 60,930,000 - Total 2,225,588,089 1,099,793,720

PARTICULARS THIS YEAR PREVIOUS YEAR UPTO 1 YEAR 1 TO 3 YEARS ABOVE 3 YEARS TOTAL

1. Accrued Interest on Loans 166,829,418 323,291,856 17,044,280 507,165,554 455,489,520 2. Draft Paid Without Notice - - - - 3. Branch Adjustment Account 492,418 - - 492,418 - 4. Local/Foreign Agency Account 1,623,937,329 - - 1,623,937,329 -


contingent liaBilitieSAs at 31 Ashad 2072 (16 July 2015)

Schedule 17


1. Claims on Bank but not Accepted by the Bank - - 2. Letters of Credit (Full Amount) 762,165,088 139,151,584 a. Letter of Credit With Maturity Less than 6 Months 762,165,088 139,151,584 b. Letter of Credit With Maturity More than 6 Months - -3. Rediscounted Bills - -4. Unmatured Guarantees/Bonds 1,052,185,080 601,689,416 a. Bid Bonds 122,602,139 34,604,040 b. Performance Bonds 775,282,941 464,285,376 c. Other Guarantee/Bonds 154,300,000 102,800,000 5. Unpaid Shares in Investment - -6. Forward Exchange Contract Liabilities 1,035,810,000 240,750,000 7. Bills under Collection 32,391,498 30,319,135 8. Acceptances and Endorsements 56,046,592 8,806,589 9. Underwriting Commitments - -10. Irrevocable Loan Commitments 1,288,460,497 634,754,978 11. Guarantees issued against Counter Guarantee of In'lly Rated Foreign Banks - - 12. Advance Payment Guarantees 92,584,041 284,042,711 13. Financial Guarantees - -14. Contingent Liabilities on Income Tax 65,576,330 17,276,721 15. ………………….. - -Total 4,385,219,125 1,956,791,134


intereSt incomeFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

Schedule 18


A. On Loans, Advances and Overdrafts 2,652,232,597 1,778,558,423 1. Loans and Advances 1,912,747,238 1,053,896,320 2. Overdrafts 739,485,359 724,662,103 B. On Investment 32,470,864 65,347,892 1. Nepal Government Securities 30,327,854 64,246,257 a. Treasury Bills 16,277,214 40,981,298 b. Development Bonds 14,050,125 23,253,259 c. Citizen Savings Certificates 515 11,700 2. Foreign Securities - - a. ………………. - - b. ……………… - - 3. Nepal Rastra Bank Bonds - - 4. Debentures and Bonds - - 5. Interest on Interbank Placements 2,143,010 1,101,636 a. Bank/ Financial Institutions 2,143,010 1,101,636 b. Other Institutions - -C. On Agency Balances 8,921,121 118,298 1. Local Banks/Financial Institutions 8,561,679 - 2. Foreign Banks 359,442 118,298 D. On Money at Call and Short Notice 12,609,245 3,319,421 1. Local Banks/Financial Institutions 12,446,266 3,319,421 2. Foreign Banks 162,979 - E. On Others 108,589,059 17,673,617 1 Certificates of Deposit - - 2. Local Banks/Financial Institutions Loan - - 3 Others (Interest income on staff loan and Credit Card) 108,589,059 17,673,617 Total 2,814,822,885 1,865,017,651


intereSt exPenSeSFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

Schedule 19


A. On Deposit Liabilities 1,270,066,820 1,124,608,968 1. Fixed Deposits 377,831,420 420,596,848 1.1 Local Currency 367,778,880 418,902,086 1.2 Foreign Currency 10,052,540 1,694,762 2. Savings Deposits 745,538,011 630,868,126 2.1 Local Currency 745,258,103 630,670,035 2.2 Foreign Currency 279,909 198,091 3. Call Deposits 146,697,389 73,143,994 3.1 Local Currency 145,317,472 71,438,334 3.2 Foreign Currency 1,379,917 1,705,660 4. Certificate of Deposits - - B. On Borrowings 919,541 11,236,509 1. Debentures & Bonds - - 2. Loan from Nepal Rastra Bank - 11,003,314 3. Inter Bank/Financial Institutions Borrowings 919,541 154,916 4. Other Organized Institutions - - 5. Other Loans - 78,279 C. On Others - - 1 ……………… - - 2 ……………… - - Total 1,270,986,361 1,135,845,477

commiSSion and diScountSFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

Schedule 20


A. Bills Purchased and Discounted 49,887 1,258,500 1. Local 49,887 1,258,500 2. Foreign - - B. Commission 45,213,362 23,620,057 1. Letters of Credit 6,590,732 3,819,821 2. Guarantees 17,417,015 11,345,963 3. Collection Fees 510,919 335,183 4. Remittance Fees 20,285,769 8,073,181 5. Credit Cards 361,580 45,910 6. Share Underwriting /Issues - - 7. Government Transactions - - 8. E. Pra. Commission - - 9. Exchange Fee 47,348 - C. Others 25,075,994 42,450,816 Total 70,339,243 67,329,373


Staff exPenSeSFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

exchange gain/loSSFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

other incomeFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

Schedule 23

Schedule 22

Schedule 21


1. Rental on Safe Deposit Lockers 2,920,380 1,460,700 2. Issue and Renewal of Credit Cards 269,776 22,000 3. Issue and Renewal of ATM Cards 31,041,902 26,127,960 4. Telex/ T. T. 13,302,511 3,239,015 5. Service Charges 103,743,784 48,156,855 6. Renewal Fees 15,098,778 - 7. Others 23,443,916 8,387,141 Total 189,821,047 87,393,671


1. Revaluation Gain 4,913,343 1,088,226 2. Trading Gain (Except Exchange Fees) 84,009,251 32,524,488 Total 88,922,594 33,612,714


1. Salary 187,938,304 116,423,389 2. Allowances 187,672,405 98,136,460 3. Contribution to Provident Fund 18,201,342 11,214,002 4. Training Expenses 883,408 1,069,504 5. Uniform 95,119 6,358,667 6. Medical 21,842,198 12,437,404 7. Insurance 9,105,018 8,099,166 8. Pension ,Gratuity and Leave Provision 69,470,384 17,905,062 9. Others 21,028 1,279,424 Total 495,229,206 272,923,078


office overhead exPenSeSFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

Schedule 24


1.House Rent 77,575,983 51,592,926 2. Electricity and Water 41,360,900 33,243,411 3. Repairs and Maintenance 31,529,168 21,233,507 a. Building 1,799,357 - - b. Vehicles 2,616,425 - - c. Others (Office Equipments and Furnitures) 27,113,385 - - 4. Insurance 32,755,700 20,647,706 5. Postage, Telex, Telephone, Fax 26,713,082 14,634,968 6. Office Equipment 972,646 633,338 7. Travelling Allowance and Expenses 4,181,311 2,034,716 8. Printing and Stationery 22,792,623 13,280,941 9. Books and Periodicals 622,398 338,956 10. Advertisements 18,042,825 5,678,467 11. Legal Fees 383,981 534,207 12. Donations 12,563,086 48,500 13. Expenses Relating to Board of Directors 1,410,274 881,410 a. Meeting Fees 1,246,500 - - b. Other Expenses 163,774 - - 14. Annual General Meeting Expenses 1,550,220 217,747 15. Expenses Relating to Audit 1,001,505 1,302,673 a. Audit Fees 904,000 - - b. Other Expenses 97,505 - - 16. Bank Charges and Commission Expenses 4,012,107 2,044,723 17. Depreciation on Fixed Assets 144,293,356 115,930,156 18. Amortization of Preliminary Expenses - - 19. Share Issue Expenses - - 20. Technical Services Fees - - 21. Entertainment 412,650 604,866 22. Amortization Expenses 3,538,868 4,111,463 23. Security Expenses 55,246,494 32,980,159 24. Credit Guarantee Premium - - 25. Commission and Discount 606,662 - 26. Others Expenses 57,913,651 36,690,088 a. Other Fees and Taxes 7,740,514 9,353,148 b. Membership Fees 705,938 738,100 c. Board Sub- Committee Meeting Fees 540,750 290,000 d. Professional Fees/Expenses 2,679,081 656,623 e. ATM and Card Related Expenses 7,853,329 6,944,534 f. Fuel Expense 11,532,068 8,962,414 g. Business Promotion/Meeting/Conference 7,115,139 - h. Office Expense/Hospitality Expenses 2,140,864 1,679,876 i. E-Clearing Related Expenses 2,532,925 1,801,225 j Merger Related Expenses 7,786,577 3,342,073 k. Miscellaneous Expenses 7,286,465 2,922,096 Total 539,479,488 358,664,929


PROVISION FOR LOSSFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

nO n- Oper AƟŶg inc Ome/lO ssFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

LOSS PROVISION WRITTEN BACKFor the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

Schedule 25

Schedule 26

Schedule 27


1. Increase in Loan Loss Provision 549,643,557 994,356,744 2. Increase in Provision for Loss on Investment 1,996,256 - 3. Provision for Non Banking Assets 97,433,790 - 4. Provision for Other Assets 28,737,585 - Total 677,811,188 994,356,744


1. PrVÄ[��3VZZ��VU�:HSL�VM�0U]LZ[TLU[Z� - 1,944,228 2. PrVÄ[��3VZZ��VU�:HSL�VM�(ZZL[Z� 19,913,742 62,453,103 3. Dividend 4,873,725 2,400,138 4. Subsidies Received from Nepal Rastra Bank - -

�H��9LPTI\YZLTLU[�VM�3VZZLZ�VM�:WLJPÄLK�)YHUJOLZ� - - b. Interest Subsidy - - c. Exchange Counter - - d. …………. - -

5. Others - - Total 24,787,467 66,797,469


1. Loan Loss Provision Written Back 1,773,173,306 181,194,676 2. Provision against Non Banking Assets Written Back 36,457,500 38,072,051 3. Provision against Investment Written Back - 3,451,598 4. Provision against Other Assets Written Back - - Total 1,809,630,806 222,718,325


/E�KD�ͬΈ>K^^Ή�&ZKD��ydZ�KZ�/E�Zz�/d�D^For the period from 1 Shrawan 2071 to 31 Ashad 2072 (16 July 2014 to 16 July 2015)

Schedule 28


1. Recovery of Loan Written off 91,161 - 2. Voluntary Retirement Scheme Expenses (39,473,613) - 3. Loan Write Offs { Refer Schedule 4.28 (a)} (426,738,517) - 4. Other Expense/Income (2,258,021) - 5. ……….. - - Total (468,378,990) -


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STATEMENT OF LOANS & ADVANCES EXTENDED TO DIRECTORS/CHIEF EXECUTIVE/ PROMOTERS/EMPLOYEES AND SHAREHOLDERSAs at 31 Ashad 2072 (16 July 2015)

Schedule 29

The Statement of amount include under total amount of Bills purchases & Discounted ,Loans, Advances and Overdraft, provided to Directors, Chief

Executives,Promoters,Employees, Shareholders and to the individual member of their undivided family or against the guarantee of such persons or to the

Organisation or Companies in which such individuals are managing agent are as follows

NAME OF PROMOTER LAST YEAR'S BALANCE T HIS YEAR'S RECOVER T Y HIS YEAR'S BALANCE AS AT 31 ASHAD 2072/DIRECTOR/CHIEF EXECUTIVE PRINCIPAL INTEREST PRINCIPAL INTEREST ADDITIONS PRINCIPAL INTEREST

(A) Directors - - - - - - - 1 2 (B) Chief Executive - - - - - - - 1 2 (C) Promoters - - - - - - - 1 2 (D) Employees - - - - - - - 1 2 (E) Shareholders holding more than 1% Shares - - - - - - - 1 2 Total - - - - - - -


caPital adequacy taBleAs at 31 Ashad 2072 (16 July 2014 to 16 July 2015)

Schedule 30(Ka1)

1.1 RISK WEIGHTED EXPOSURES CURRENT YEAR PREVIOUS YEAR

(a) Risk Weighted Exposure for Credit Risk 31,979,809,407 12,739,560,456 (b) Risk Weighted Exposure for Operational Risk 2,876,933,400 1,517,232,800 (c) Risk Weighted Exposure for Market Risk 222,045,088 53,751,190 Total 35,078,787,895 14,310,544,446 Adjustments under Pillar II Add: 3% of the total RWE due to non compliance to Disclosure Requirement(6.4a 10) Add:..% of the total deposit due to in sufficient Liquid Assets(6.4a 6) Add 3% of the Risk Weighted Exposure as per Supervisory Adjustment 1,052,363,637 429,316,333 Total Risk Weighted Exposures after Adjustment of Pillar II (a+b+c) 36,131,151,532 14,739,860,779 1.2 Capital Core Capital (Tier I) 3,409,501,807 1,127,044,313 (a) Paid up Equity Share Capital 3,208,885,224 2,000,000,000 (b) Irredeemable non-cumulative preference shares - - (c) Share Premium 3,408,411 - (d) Proposed Bonus Equity shares - - (e) Statutory General Reserves 459,489,912 98,468,449 (f) Retained Earnings (141,088,965) (689,036,550) (g) Current Year Profit and loss - (304,974,821) (h) Capital Reedemption Reserve - - (i) Capital Adjustment Reserve - - (j) Deferred Tax Reserve 35,218,459 28,475,002 (k) Dividend Equalisation Reserves - - (l) Debenture/Bond Redemption Reserve - - (m) Other Free Reserves - - (n) Less: Goodwill - - (o) Less:Fictitious Assets 311,634 5,887,767 (p) Less: Loans to parties prohibited by acts & Directives - - (q) Less:Investment in equity in licensed Financial institutions - - (r) Less: Investment in equity of institutions with vested interest - - (s) Less: Investment in equity of institutions in excess of limits 5,299,600 - (t) Less: Investments arising out of underwriting commitments - - (u) Less: Reciprocal crossholdings - - (v) Less: Purchase of Land & Building 150,800,000 - (w) Less: Other Deductions - -Adjustments under Pillar II - - Less: Shortfall in provisions (6.4a 1) - - Less: Loans to parties prohibited by acts & Directives(6.4a 2) - -Supplementary Capital (Tier II) 424,501,787 151,987,201 (a) Cumulative and/or Redeemable preference share - - (b) Subordinated Term Debt - - (c) Hybrid Capital Instruments - - (d) General loan loss provision 296,704,187 150,833,272 (e) Exchange Equalisation Reserve 1,228,336 638,532 (f) Investment Adjustment Reserve 126,569,264 515,397 (g) Asset Revaluation Reserve - - (h) Other Reserves - -Total Capital Fund (Tier I and Tier II) 3,834,003,594 1,279,031,514 1.3 Capital Adequacy Ratio - -Tier I Capital to Total RWE 9.44 7.65 Tier I and Tier II Capital to Total RWE 10.61 8.68


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30

Cla

im o

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31

Reg

ulat

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Ret

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%

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Cla

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riter

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re

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cept

gra

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10

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33

Cla

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red

by re

side

ntia

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34

Cla

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35

Cla

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Pas

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Inve

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Inve

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24

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Sta

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Inte

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Cas

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Al

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All o

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In

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C

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C

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Cla

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C

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C

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Cla

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Cla

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Cla

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C

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C

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Cla

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C

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R

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Cla

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R

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C

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C

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Uns

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C

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C

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Pa

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Inve

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not l

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d in

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ck e

xcha

nge

- -

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vest

men

ts in

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ity o

f ins

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ted

in s

tock

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hang

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er L

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& A

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and

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s in

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sit

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ctitio

us A

sset

s -

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s (a

s pe

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- -

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l

190,

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-

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s or

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Schedule 30 dRISK WEIGHTED EXPOSURE FOR OPERATIONAL RISKAs at 31 Ashad 2072 (16 July 2015)

YEAR 3 YEAR 2 YEAR 1 LAST YEAR NPRPARTICULARS FY 2070/71 FY 2069/70 FY 2068/69

Net Interest Income 1,301,801,429 1,392,700,978 1,483,792,514 -Commission & Discount Income 102,795,290 102,592,894 110,085,111 -Other Operating Income 160,214,607 168,158,742 171,338,101 -Exchange Fluctuation Income 44,479,599 44,376,344 83,464,806 -Additional/Deduction Interest Suspense during the period 253,033,611 225,137,084 109,895,696 -Gross Income(a) 1,862,324,536 1,932,966,042 1,958,576,228 -Alfa (b) 15% 15% 15% -Fixed Percentage of Gross Income[c=(a*b)] (c) 279,348,680 289,944,906 293,786,434 -Capital Requirement for operational risk(d) (average of c) 287,693,340 - - 151,723,280 Risk Weight(reciprocal of capital requirement of 10%) in times (e) 10 - - 10 Equivalent Risk Weight Exposure [f=(d*e)] 2,876,933,400 - - 1,517,232,800


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To

tal O

pen

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ition

(a)

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xed

Per

cent

age

(b)

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5%

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ital C

harg

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r M

arke

t R

isk

[c=(

a!b)

] -

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22,

204,

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ght

-

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(rec

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f cap

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rem

ent

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imes

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190


PrinciPal indicatorS Schedule 31

INDICATORS FY FY FY FY FY 2010/11 2011/12 2012/13 2013/014 2014/15

1. Net Profit/Gross Income Percent 6.38 13.82 (66.20) (33.23) 53.79 2. Earnings Per Share NPR 2.70 5.01 (40.23) (15.24) 31.73 3. Market Value Per Share NPR 155 121 137 207 348 4. Price Earning Ratio Ratio 57.41 24.14 (3.41) (0.07) 0.09 5. Dividend (including bonus) on Share Capital Percent - - - - - 6. Cash Dividend on Share Capital Percent - - - - - 7. Interest Income/Loans and Advances Percent 13.62 13.97 13.12 13.58 9.48 8. Staff Expenses/Total Operating Expenses Percent 39.92 43.50 44.15 43.21 47.86 9. Interest Expenses/ Total Deposits and Borrowings Percent 8.16 8.61 6.26 5.73 3.02 10. Exchange Gain/Total Income Percent 0.36 0.66 0.94 3.66 4.70 11. Staff Bonus/Total Staff Expenses Percent 4.38 5.97 - - 28.39 12. Net Profit /Loan and Advances Percent 0.40 0.67 (4.78) (2.22) 3.43 13. Net Profit /Total Assets Ratio 0.28 0.44 (3.43) (1.44) 2.19 14. Total Credit/Deposits Percent 85.00 74.08 80.57 69.23 70.43 15. Total Operating Expenses/Total Assets Percent 2.55 2.38 2.55 2.98 2.22 16. Capital Adequacy (On Risk Weighted Assets) a.Core Capital Percent 12.70 11.70 7.62 7.65 9.44 b. Supplementary Capital Percent 0.79 0.77 0.79 1.03 1.17 c. Total Capital Fund Percent 13.49 12.47 8.41 8.68 10.61 17. Liquidity (CRR) Percent 5.98 10.53 13.06 19.27 15.6918. Gross Non-Performing Credit /Total Credit Ratio 2.54 3.94 12.61 24.29 7.33 19. Weighted Average Interest Rate Spread Percent 4.19 3.45 5.05 4.46 4.84 20. Book Net Worth NPR'000 2,120,293 2,216,540 1,424,652 1,134,086 3,693,711 21. Number of Shares Number 20,000,000 20,000,000 20,000,000 20,000,000 32,088,852 22. Number of Staff Number 588 584 556 580 108323. Return on Equity NPR 2.52 4.47 (55.92) (0.27) 0.28 24. Book Value Per share NPR 106.01 110.83 71.23 56.70 115.1125. CCD Ratio (Credit /(Deposits+Core Capital) Ratio 74.95 66.45 75.43 65.83 66.45 26. Net Liquid Asset Ratio Ratio 21.11 30.32 29.96 39.04 34.2127. Base Rate Percent - - 10.09 8.67 7.63


SIGNIFICANT ACCOUNTING POLICIES Schedule 32

1. General InformationPrabhu Bank Ltd. ("the Bank") formally known as KIST Bank Ltd. is a limited liability company incorporated and operating in Nepal. The address of its registered office is G.P.O. Box 8975, Babarmahal, Kathmandu, Nepal. The Bank carries out commercial banking business in Nepal as class “A” financial institution under the Bank and Financial Institution Act, 2063.The Bank is listed in Nepal Stock Exchange Limited.

The accompanied financial statements have been approved for publication by the Board of Directors of the Bank in its meeting held on 22nd December, 2015.

2. Merger with Prabhu Bikas Bank Ltd., Gaurishankar Development Bank Ltd. and Zenith FinanceThe name of the Bank was changed to Prabhu Bank Ltd. subsequent to the merger of the Bank with three financial institutions namely Prabhu Bikas Bank Ltd. (PBBL), Gauris-hankar Development Bank Ltd. (GDBL) and Zenith Finance Ltd. (ZFL) on 30th Bhadra, 2071. As per the due diligence report from the auditors appointed for this purpose, the swap ratio of shares was determined as 97.31 (Kist), 107.31 (PBBL & GDBL) and 92.31 ZFL.

The accounts of the merged entities has been formally in-tegrated effective dated 30th Bhadra, 2071. The volume of the business, capital ratio as well as business network has improved significantly after merger.

3. Acquisition of Nepal Development Bank Ltd. (in Liq-uidation)Bank acquired Nepal Development Bank Ltd. (in Liquidation) with effect from 1st Chaitra, 2071, shares of NDB valued at Rs. 30 per share; and swap ratio of 6:1.

4. Statement of Compliance The financial statements have been prepared in accordance with Nepal Accounting Standards ("NAS") except otherwise stated, Generally Accepted Accounting Principles ("GAAP"), Bank & Financial Institutions Act 2063, Directives issued by Nepal Rastra Bank (Central Bank) and Company Act 2063.

5. Basis of Preparation The financial statements are presented in Nepalese Rupees and are prepared on historical cost basis. Preparation of fi-nancial statements in consistency with NAS and GAAP re-quires the use of certain critical accounting estimates and also requires management to exercise judgment in process of applying the Bank's accounting policies.

4. Interest IncomeInterest income on loans and advances are recognized on cash basis as prescribed by NRB Directives except interest accrued as of 31 Ashad 2072.This practice is not in accor-dance with NAS 7 (Revenue) which prescribes that the rev-

enue should be recognized on accrual basis. Interest income on investments and advances to staff (In-cluding loan to staff member under Employee Service By-laws) is recognized on accrual basis.

5. Commission Income Commission, fees and service charge income is recognized on accrual basis. However, it is the policy of the Bank to spread commission income over the tenure of contract, in case of Bank Guarantee having longer than one year tenure with commission amount in excess of Rs 50,000.

6. Dividend IncomeDividend on equity shares (net of withholding tax) are recog-nized on cash basis. When bonus shares are received, only numbers of shares are increased without changing the book carrying amount of shares.

7. Foreign Exchange TransactionsForeign currency assets and liabilities are translated into NPR at the mid-rate between the prevailing buying and selling rates of the Bank on the Balance Sheet date.Gain/ (loss) realized from the difference between buying and selling rates of Foreign Exchange is accounted for on a daily basis and shown as Trading Gain/ (Loss). Gain/(loss) arising due to fluctuation in exchange rates of dif-ferent foreign currencies is accounted for on a daily basis and shown as Revaluation Gain/ (Loss). 25% of such revaluation gain is transferred to Exchange Fluctuation Reserve through Profit and Loss Appropriation Account as per NRB directives.

8. Interest ExpenseInterest on deposit liabilities and borrowings are accounted for on accrual basis.

9. Loan Loss ProvisionAll credit exposures are classified as per NRB directives, into performing and non performing assets (NPAs”).Performing assets are further classified into Pass and Watch-list catego-ries. NPAs are further classified into sub–standard, doubt-ful and loss assets at rates prescribed by NRB. Provision is made for possible losses to cover the risks inherent in Bank's loan portfolio. Possible losses on loans and advances are provided at the rates ranging from 1% to 100% of the out-standing on the balance sheet date. Additional 20% provi-sion has been made on account of personal guarantee loans and third party collateral loans as required by Nepal Rastra Bank’s Directives.

10. Loan & Advances write offLoans and advances classified under “Loss” category and deemed irrecoverable are written off in the books as per Loan Write off By-laws of the Bank duly approved by Nepal Rastra Bank, without prejudice to Bank’s right to recovery. Provi-sions held for the loss accounts are written back immediately after the loans are written-off.


11. Loans and Advances including Bills PurchasedLoans and advances and bills purchased include overdrafts, term loans, working capital loans, consumer loans, SMEs loans and loans given to Deprived Sectors and other loans extended to customers as per the Bank's policy. These as-sets are graded as pass, watch-list, substandard, doubtful and loss assets as per NRB directives. Loans and advances are presented net of loan loss provisions.

12. Non Banking AssetsNon-Banking Assets are the assets obtained as security for loans & advances subsequently taken over by the Bank in the course of loan recovery. Such assets are valued at fair market value (Panchakrit Mulya) or total amount due from the borrower (including interest outstanding), whichever is lower as per NRB directives. While booking the NBA, interest out-standing shall be paid first, and the remaining amount shall be utilized to repay the principal outstanding. Provision for possible losses on non banking assets is made as per the directives of Nepal Rastra Bank.13. InvestmentsInvestments are classified into three categories “Held to Ma-turity”, “Held for Trading” and “Available for Sale” according to NRB guidelines.

A. Held to Maturity: Securities acquired by the Bank with the intention to hold till maturity is classified under “Held to Maturity”. Investments in Treasury Bills and Government Development Bonds and Investments in Inter Bank lending are stated under this cat-egory.

Investments under “Held to Maturity” categories are shown at acquisition cost. Wherever the purchase value is higher/lower than the face value, the premium/discount is subse-quently amortized over the period to maturity.

B. Held for Trading: The securities acquired by the Bank with an intention to trade by taking advantage of short-term price/ interest rate move-ments are classified under “Held for Trading”. These invest-ments are marked to market and differences reflected in the profit and loss account. However, the Bank does not have exposure under this category.

C. Available for Sale: All other investments neither “Held to Maturity” nor “Held for Trading” are classified under “Available for Sale". These in-vestments are accounted on marked to market on regular basis and the differences adjusted through reserves. Invest-ments in shares are shown at cost or market value, whichev-er is lower with additional provisions for possible diminution in value as estimated by the management on prudential basis.

Investments in shares have been classified as Available for Sale due to their undefined maturity. The investments clas-sified under this category not listed in the stock exchange,

are carried at cost at the Balance Sheet Accordingly 2% of the portfolio has been created towards value of the Invest-ment Adjustment Reserve from profit and loss appropriation account and has been included as part of supplementary capital.

All investments are subject to regular review according to the directives of Nepal Rastra Bank.

14. Fixed Assets and Depreciationa. Fixed assets are stated at cost less accumulated depre-

ciationb. Assets with a value of less than NPR 5,000 are charged

off to revenue in the year of purchase irrespective of their useful life.

c. Depreciation is charged to Profit & Loss Account on a Written-down-Value method over the estimated useful life of the relevant assets. For calculation of depreciation, assets put to use for more than six months in a F/Y are considered full value, three to six months at two third of the cost and less than three months at one third of the cost. The rates of depreciation is determined based on the estimated useful life are as follows:

NATURE OF ASSETS DEPRECIATION RATE (%)Buildings 5Vehicles 20Office Equipment 25Computers and Accessories 25Furniture and Fixtures 25Machinery Items (ATM, Generator ) 15

d. Leased assets and leasehold improvement is amortized on a straight-line basis using the rates determined with reference to the lease period or 10% whichever is higher.

e. Software applications purchased by the Bank and sys-tem development expenses are capitalized at acquisition cost and amortized over a period of five years from the date of acquisition.

f. Fixed Assets transferred from merged institutions have been regrouped as per Bank’s Policy.

15. Staff LoansLoans and advances granted to staff, as per Bank's Employ-ee Service Bylaws are presented under Other Assets as per NRB Directives.

16. Retirement BenefitsThe Bank has schemes of retirement benefits, viz Provident Fund and Gratuity. Periodic contributions made to Provident Fund are statutorily required as part of retirement benefits to its employees. The obligation of Bank is limited to such fixed contribution. The contributions are charged to Profit & Loss account on a monthly basis. Gratuity liability is a defined ben-efit obligation and is determined on accrual basis made at the end of the fiscal year. Provision for Gratuity is provided for the employees who have rendered minimum period of five years of continuous service. No provision is made for gratuity liabil-


ity of employees who have not completed minimum period of service of 5 years since the same cannot be quantified in the absence of actuarial valuation.

17. Staff Accumulated Leave The Bank is recognizing the accrued leave encashment as per the provisions of NAS-14, “Employee Benefits”. Provi-sion for unused accumulated leave is made on accrual basis determined by the management of the Bank, on the basis of leave balance as on Chaitra end, as per Bank’s policy.

18. Staff Bonus Provision for staff bonus is provided at 10% of net profit before tax (after charging the bonus) as per the Bonus Act, 2030.

19. Stationery StockStationery purchased are stated at cost and charged to rev-enue at the time of consumption.

20. Income TaxesIncome tax expense is the aggregate amount of current tax, deferred tax and previous year tax borne by the Bank. Provi-sion for taxation has been made with reference to profit for the financial year as per the provisions of Income Tax Act 2058 and amendments therein. Deferred tax adjustments comprise of changes in the deferred tax assets or liabilities during the financial year. Deferred Tax is recognized on a pru-dent basis for the future tax consequences of timing differ-ences between taxable income and accounting income. De-ferred tax assets and liabilities are measured using tax rates and tax laws prevailing at the balance sheet date. The impact of changes in deferred tax assets and liabilities is recognized in the profit and loss account.

21. Consolidation of accounts of merged entitiesThe financial statements of PBBL, GDBL and ZFL have been prepared and audited separately upto the date of merger i.e. 29th Bhadra, 2071. Assets and Liabilities, as appearing in their audited financial statements have been consolidated in the books of Prabhu Bank Ltd. as on the date of merger. Profit and Loss Account of the entitiy has been prepared separately as of the date and the balance, has been trans-ferred to retained earnings.

Fixed Assets of merged institutions are also accounted for at book value; i.e. net of depreciation.

The shareholders of then PBBL, GDBL and ZFL have been issued fully paid up shares of Prabhu Bank Ltd. calculated as per the share SWAP ratio.


NOTES TO ACCOUNTS Schedule 33

The following additional disclosures have been made taking into account the requirements of relevant ac-counting standards and the guidelines of Nepal Rastra Bank (NRB):

1. General Reserve20% of net profit i.e. NPR 203,649,075 has been transferred to General Reserve as required by NRB Directives. Following table shows the movement of General Reserve during the F/Y 2071-72:

PARTICULARS AMOUNT REMARKSTransferred from Last F/Y 98,468,449 Add: Transfer from merged entities Prabhu Bikas Bank Ltd. 93,850,943 Gaurishankar Development Bank Ltd. 34,465,281 Zenith Finance Ltd. 29,056,164 Add:Transfer from current year profit 203,649,075 Closing Balance in General Reserve 459,489,912

Amt in NRP

2. Exchange Fluctuation Reserve25% of revaluation gain i.e. NPR 589,804 is transferred to Exchange Fluctuation Reserve in the current year.

3. Deferred Tax Reserve Deferred Tax Reserve of NPR 35,218,459 appearing on the schedule-4.2, Reserves and Surplus has been calculated as below:

PARTICULARS AMOUNT REMARKSTransferred from Last F/Y 28,475,002 Balance from F/Y 2068-69Add: Transfer from merged entities Prabhu Bikas Bank Ltd. 4,962,870 Gaurishankar Development Bank Ltd. 1,678,167 Zenith Finance Ltd. 102,420 Closing Balance in Deferred Tax Reserve 35,218,459

Amt in NRP

During the F/Y 2069-70 and 2070-71, no amount was transferred to Deferred Tax Reserve as there was no profit available for transfer, but the amount of Deferred Tax was credited to Profit & Loss Account itself.

During the F/Y 2071-72, deferred tax assets decreased by NPR 317,894,410 which has been deb-ited to Profit & Loss Account, and no treatment given to Deferred Tax Reserve.

4. Investment Adjustment ReserveBank has set aside 2% Investment adjustment reserve of the investment portfolio under Available for Sale, and 100% has been set aside for investments which are not listed within two years of date of investment. NPR 113,244,574 transferred to Investment Adjustment Reserve

Amt in NRP

DETAILS INVESTMENT REQUIRED COST INVESTMENT RESERVE1. Listed Investments- 2% 85,850,734 1,717,0152. Unlisted Investments -2% 86,000,000 1,720,0003. Unlisted Investments-100% 112,359,600 112,359,6003. Exempted Investments 9,657,620 - Total 293,867,954 115,796,615 Total Required Reserve Reserve Maintained up to Last Year 2,552,041Increase (Decrease) InvestmentAdjustment Reserve 113,244,574


Exempted investments include investments in Karja Suchana Kendra Ltd and Nepal Clearing House Ltd. According to NRB Directives 8, investment adjustment reserve is not required to be maintained for these entities.*** Reserve Balance as on 31st Ashadh, 2071 NPR 515,397Transfer from merged entities:PBBL 6,167,098GDBL ZFL 1,000,000Less: Marked to Market adjustment 5,130,454Adjusted Reserve before appropriation 2,552,041

6. Deferred Tax Asset/ (Liability)Carrying amount of Assets and Liabilities, the temporary differences arise as on 31 Ashad 2072 as follows:

Amt in NRP

PARTICULARS BOOK TAX BASE DIFF TAX DEF. TAX CARRYING AMOUNT ASSET RATE ASSET AMOUNT /(LIABILITY) /(LIABILITY) Temporary Difference for: Provisional Gratuity/Leave- Retirement Benefits 121,004,133 - 121,004,133 0.30 36,301,240 Provision for investment impairment 1,996,256 - 1,996,256 0.30 598,877 Provision for Loan Written Off 486,256,553 - 486,256,553 0.30 145,876,966 Provision for Other Assets 28,737,585 - 28,737,585 0.30 8,621,276 Unclaimed Accumulated Loss - (98,103,554) 98,103,554 0.30 29,431,066 Provision for Non Banking Assets 106,716,705 - 106,716,705 0.30 32,015,012 Provision for Possible Loan Loss 1,957,358,297 1,513,824,449 443,533,848 0.30 133,060,154 2,702,069,530 1,415,720,895 1,286,348,635 385,904,591 Fixed Assets 1,150,610,244 1,159,301,867 8,691,623 0.30 2,607,487 Deferred Revenue Expenditure - - - 0.30 - Charge off premuim of Bond Invement 332,311,634 334,536,760 2,225,126 0.30 667,538 Total Deferred Tax Assets 1,482,921,878 1,493,838,627 10,916,749 3,275,025 Net Deferred Tax Assets / (Liabilities) 4,184,991,408 2,909,559,522 1,297,265,384 389,179,615 Deferred tax from income and expense from last year *** 707,074,025 Deferred Tax income/(Expenses) to be booked (317,894,410)

*** Previous years’ deferred tax assets and accumulated profit/loss is adjusted by NPR 14,846,456 for correction of opening figure of deferred tax assets.The impact of changes in the deferred tax asset is recognized in the Profit and Loss Account. De-ferred tax asset on balance sheet date is Rs. 389,179,615. However; the last year's corresponding figure for the same was Rs. 707,074,025 as deferred tax asset. As a result net decrease of Rs. 317,894,410 has been debited to Profit and Loss Account as deferred tax expenses.

7. Tax Liability ReconciliationThe relationship between tax expense and accounting profit is explained with reconciling figures as follows:


Profit after Staff Bonus before Tax 1,546,438,810 Less: Staff Bonus (140,585,346)Less: Loss C/F From three Institutions (114,454,147)Accounting Profit 1,291,399,317 Corporate tax rate @30% Corporate tax 387,419,795 Tax effect on permanent difference Add: Other Assets/Liability write off 677,406 Donation 738,926 Less: Dividend income 1,462,117 Restatement of Deferred Tax Reserve Trf. From merged*** (234,080)Total Accounting Tax Expenses 387,608,090 Total Accounting Tax Expenses in profit and loss account Current Tax Expenses 69,713,680 Deffered Tax Expenses 317,894,410 Prior period tax (merged three financial institutions) - Total Tax Expenses 387,608,090

8. Income Tax IssuesThe bank has filed tax returns with the Inland Revenue Office for the financial years up to 2070/71(2013/14) under self-as-sessment procedures. Inland Revenue office has completed assessment/reassessment of Bank's tax liability up to Finan-cial Year 2067/68 (2010/11).

The total disputed amount for FY 2063/64, 2064/65, 2065/66, 2066/67 and 2067/68 of Rs 65,576,330 have been disclosed as contingent liability on income tax under schedule 4.17.

One seventh of total Loss carried forward from merged entities of F/Y 2071-72 up-to Bhadra 29, 2071 NPR 114,454,147 has been adjusted with the taxable income of the Bank during F/Y 2071/72 for calculation of Income Tax Provision Account. Remaining loss amount shall be adjusted as per the provisions of Income Tax Act, 2058.

9. Recognition of Interest Income on deferred cash basisThe Bank has recognized interest income of NPR 30,373,016 received upto 15th Shrawan, 2072 on deferred cash basis.

10. Reclassification of Fixed AssetsFixed Assets transferred from merged entities are re-clas-sified to different asset headings as per the nature and the accounting policy of the Bank.

11. Related Parties DisclosuresFollowing are the related party and their transactions as defined in Nepal Accounting standard (NAS 16).

Key Management Personnel include members of the Board, Chief Executive Officer and other executives of the Bank. Following is a list of Board of Directors and CEO as at 31 Ashad 2072.Mr. Devi Prakash Bhattachan - ChairmanMr. PushpaBahadur Pradhan - DirectorMr. Ambika Sharma Lamichhane - DirectorMr. DakshyaPoudel - DirectorMs. Kusum Lama - DirectorMr. RishiramGautam - Professional DirectorMr. Ashok Sherchan - Chief Executive Officer

NATURE OF TRANSACTIONS AMOUNT (NPR)Meeting Fees Paid * 17,87,250

* Meeting fee include fee paid to board meeting as well board sub-committee.

Above head count does not include resigned management personnel and short term benefits as on balance sheet date.NPR 12,366,207 paid to Ex. CEO Mr. Kumar Lamsal.There are no transactions with Directors, Promoters and other key management personnel that have a conflict of interests with the Bank.

11. Paid up Share Capital EnhancementPaid up share capital of the Bank has moved over the years as fol-lows:Financial Raised Cumulative RemarksYear Capital Capital 2058/59 30 million 30 million Initial Paid up Capital2060/61 20 million 50 million Capital raised by Initial Public Offer (IPO)2062/63 50 million 100 million Capital raised by Issuance of 1:1Right (1st Right Share)2063/64 100 million 200 million Capital raised by Issuance of 1:1Right (2nd Right Share)2064/65 600 million 800 million Capital raised by Issuance of 1:3Right (3rd Right Share)2065/66 1200 million 2000 million Capital raised by Issuance of 1:1.5 Right (4th Right Share)2071/72 1208.89 million 3208.89 million Merger with PBBL, GDBL and ZFL (Details following)

*** Adjustment due to change in deferred tax assets/ liability recogni-tion principles. MANAGEMENT LEVEL NUMBER SHORT-TERM

EMPLOYEES BENEFITS THIS YEARChief Executive Officer 1 8,769,582Other Executive Officer # 6 19,152,332Total 7 27,921,914

Amt in NRP

Compensation to Key Management Level employees of the Bank

#Assistant General Manager and above


S.N. PARTICULARS AMOUNT (NPR) REMARKS1 Prabhu Bikas Bank Ltd. 765,964,000 Additional shares issued to the shareholders to adjust the difference arising from Swap Ratio2 Gaurishankar Development Bank Ltd. 211,921,300 3 Zenith Finance Ltd. 230,999,924

12. Unpaid DividendThe Bank’s dividend payable as at balance sheet date stands NPR 10,970,703, the details of which as follows

PARTICULARS KIST PBBL GDBL ZFL TOTAL F/Y 2061/62 15,500 15,500 F/Y 2062/63 8,500 8,500 F/Y 2063/64 43,035 43,035 F/Y 2064/65 472,768 560,350 1,033,118 F/Y 2065/66 1,739,231 556,300 272,684 2,568,215 F/Y 2066/67 2,639,974 230,113 2,870,087 F/Y 2067/68 1,487,031 850,484 2,337,515 F/Y 2068/69 2,094,734 2,094,734 Total 4,919,007 1,116,650 1,989,828 2,945,218 10,970,703

The Bank has published notice to the shareholders for unclaimed dividends more than five years period according to NRB Directives 16.

14. Reconciliation Status:

PARTICULARS TOTAL AMOUNT <3 MONTHS >3<9 MONTHS >9 MONTHSBranch adjustment Account 492 Agency Accounts 33,411 29,869 3,187 354

NRP in '000'

NRP in '000'

NRP in '000'

15. Summary of disbursement, recovery of Loans and principal and interest written off

16. Summary of Changes in Deposit Liabilities

PARTICULARS CURRENT YEAR PREVIOUS YEARBalance as on 32 Ashad 2071 (16 July 2014) 13,732,575 16,826,619Loan Disbursed during the year 34,236,125 27,539,185Recovered during the year 17,838,505 30,633,229Loans written off during the year 426,739 -Balance as on 31 Ashad 2072 (16 July 2015) 29,703,456 13,732,575Interest Write off during the year -

Particulars Current Year Previous Year Increase % of Growth Decrease Non Interest Bearing Deposits 1,067,083 613,444 453,639 73.95Savings Natured Account 24,642,843 13,617,721 11,025,122 80.96Call Deposits 8,733,414 2,011,139 6,722,275 334.25Fixed Deposits 7,700,635 3,592,863 4,107,772 114.33Total 42,143,974 19,835,166 22,308,808 112.47


17. Summary of concentration of exposure:

19. Classification of Assets and Liabilities based on Maturity

PARTICULARS LOANS AND DEPOSITS AND CONTINGENT ADVANCES BORROWINGS LIABILITYTotal Amount as on 16 July 2015 29,703,456 42,168,805 4,386,196Highest Exposure to a Single Unit 657,394 915,995 211,757Concentration of exposure to a single unit 2.21% 2.17% 4.83%

18. Weighted Average Interest Spread:The weighted average interest spread rate is calculated considering interest income on loan on cash basis and investment in all securities.

PARTICULARS RATE (%) FY 2071/72 FY 2070/71Average Rate of return from Advances and Investments 9.10 10.10Average cost of Deposits/Borrowings 4.26 5.64Net Interest Spread 4.84 4.46

S.N. PARTICULARS 1-90 91-180 181-270 271-365 OVER 1 TOTAL DAYS DAYS DAYS DAYS YEAR AMOUNTAssets 1 Cash Balance 1704.94 1704.942 Balance with Banks & FIs 1902.47 5707.42 7609.893 Investment in Foreign Banks 50.78 101.55 152.334 Call Money 1102.33 1102.335 Government Securities 3611.68 112.00 98.78 220.00 4042.466 Nepal Rastra Bank Bonds 7 Inter Bank & FI Lending 8 Loans & Advances 4503.00 4775.40 3117.71 3003.71 14303.64 29703.469 Interest Receivable 75.43 0.04 0.38 0.02 437.47 513.3510 Reverse Repo 11 Receivables from other Institutions under Commitment 12 Payment to be made for facilities under s.no 20,21 & 22 1155.85 559.66 886.04 402.09 248.77 3252.4213 Others 1625.32 113.07 4.71 7.89 1210.03 2961.02 Total Assets (A) 15681.02 5560.17 4158.40 3515.26 22127.33 51042.18 Liabilities 14 Current Deposits 983.84 33.30 33.30 16.65 1067.0815 Saving Deposits 7189.79 5240.05 20946.42 33376.2616 Fixed Deposits 1240.00 1663.11 1224.42 1823.79 1749.31 7700.6317 Debentures 18 Borrowings: 24.83 24.83 (a) Call/Short Notice (b) Inter-bank/Financial Institutions 24.83 24.83 (c) Refinance (d) Others 19 Other Liabilities and Provisions 424.41 17.06 5.40 6.70 569.83 1023.40 (a) Sundry Creditors 322.93 13.46 2.74 2.74 129.66 471.54 (b) Bills Payable 27.97 27.97


(c) Interest Payable 2.69 3.61 2.65 3.95 3.79 16.69 (d) Provisions 70.83 436.37 507.20 (e) Others 20 Payable to other institutions under Commitment 21 Unutilized Approved Facilities 322.12 64.42 644.23 257.69 1288.4622 Letter of Credit/Guarantee (Net of Margin) 833.73 495.24 241.81 144.40 248.77 1963.9623 Repo 24 Payment to be made for facilities under S.No 11 25 Others Total Liabilities (B) 11018.71 7513.18 2149.16 2249.23 23514.33 46444.62 Net Financial Assets (A-B) 4662.31 -1953.01 2009.23 1266.03 -1387.00 4597.57 Cumulative Net Financial Assets 4662.31 2709.30 4718.53 5984.57 4597.57

20. Borrowing by Bank against the collateral of own assets: Nil

21. Details of Capital paid in advance Calls in Arrears and Forfeited but not Issued: -Nil

22. Details of Non Banking Assets

PARTICULAR CURRENT YEAR (NPR) PREVIOUS YEAR (NPR)Opening Balance 45,740,415 83,812,466Addition during the year 97,433,790 -Settled during the year 36,457,500 38,072,051Closing Balance 106,716,705 45,740,415Total Provision 106,716,705 45,740,415Balance (Net of Provision) - -

23. Assets transferred from acquisition of Nepal Development Bank Ltd., in LiquidationTotal assets as valued by DDA and accepted by the Bank Rs. 163,990,822 and liabilities of Rs. 67,611,857, capital reserve of Rs. 378,965 was created, which shall be transferred to reserves after the completion of acquisition process. A liability fund of Rs. 96 million was created for payment to shareholders of NDB, in cash or with the shares of the Bank, at the option of the shareholders, after fit and proper test.

Out of Rs. 96 million payable, Rs. 29,880 thousand has already been paid and balance of Rs. 66,120 thousand as on the Balance Sheet Date.

Investment in Gorkha Hydropower Ltd. and Nepal Co-operative Society Ltd. has transferred to the Bank’s Books at Gross Value Rs. 85.90 million with 100% provision.

24. Rounding off/Previous Years FiguresPrevious year’s figures are regrouped or rearranged wherever necessary in order to facilitate com-parison. All figures are rounded off to the nearest rupee.


DISCLOSURE AS PER BASEL II

In order to comply with prudential floor prescribed by NRB, the Bank has computed and reported the capital adequacy position as per Basel II norms.

Capital Structure and Capital Adequacy:

SN PARTICULAR AMOUNT (NPR)a Paid Up Equity Share Capital 3,208,885,224 b Share Premium 3,408,411 c Statutory General Reserves 459,489,912 d Retained Earnings (141,088,965)e Unaudited current year cumulative profit - f Deferred Tax Reserve 35,218,459 Sub-total 3,565,913,041 g Less: Fictitious Assets 311,634 h Less: Investment in excess of limits 5,299,600 i Less: Purchase of Land & Building 150,800,000 Total Tier I Capital 3,409,501,807

SN PARTICULAR AMOUNT (NPR)a General loan loss provision 296,704,187 b Investment Adjustment Reserve 126,569,264 c Exchange Equalisation Reserve 1,228,336 Total Tier II Capital 424,501,787

SN PARTICULAR AMOUNT (NPR)a Fictitious Assets 311,634 b Investment in excess of limits 5,299,600 c Purchase of Land & Building 150,800,000 Total 156,411,234

SN PARTICULAR AMOUNT (NPR)a Core Capital (Tier I) 3,409,501,807 b Supplementary Capital (Tier II) 424,501,787 Total Capital Fund (Tier I and Tier II) 3,834,003,594


Risk Exposures

SN CATEGORIES AMOUNT (NPR)a Claims on government and central bank - b Claims on other official entities - c Claims on banks 1,516,718,398 d Claims on corporate and securities firms 13,072,347,200 e Claims on regulatory retail Portfolio 4,029,039,105 f Claims secured by residential properties 2,670,699,714 g Claims secured by commercial real estate 1,051,106,475 h Past due claims 1,714,244,017 i High risk claims 2,923,558,151 j Other Assets 3,852,413,872 k Off Balance-sheet items* 1,149,682,475 Total Risk Weighted Exposures 31,979,809,407

SN PARTICULAR AMOUNT (NPR)a Risk Weighted Exposure for Credit Risk 31,979,809,407 b Risk Weighted Exposure for Operational Risk 2,876,933,400 c Risk Weighted Exposure for Market Risk 222,045,088 Adjustments Under Pillar – II Add: 3% of the total RWE due to non compliance to Disclosure Requirement(6.4a 10) - Add:….% of the total deposit due to in sufficient Liquid Assets(6.4a 6) - Add: 3% of the RWA as per Supervisory Adjustment 1,052,363,637 Total Risk Weighted Exposures 36,131,151,532 Total Core Capital to Total Risk Weighted Exposure 9.44% Total Capital Fund to Total Risk Weighted Exposure 10.61%

SN PARTICULAR AMOUNT (NPR) PROVISION NET NPAa Restructured b Sub-standard 484,662,788 121,174,809 363,487,978 c Doubtful 344,385,765 172,298,882 172,086,882 d Loss 1,345,912,309 1,345,912,309 0 Total 2,174,960,861 1,639,386,000 535,574,861

SN PARTICULAR %a Gross NPA to Gross Loan & Advances 7.33%b Net NPA to Net Advances 1.93%


SN PARTICULAR THIS YEAR PREVIOUS YEAR MOVEMENTa Restructured b Sub-standard 484,662,788 71,588,933 413,073,854 c Doubtful 344,385,765 1,169,071,470 (824,685,705)d Loss 1,345,912,309 2,094,910,142 (748,997,833) Total 2,174,960,861 3,335,570,545 (1,160,609,684)

SN PARTICULAR AMOUNT (NPR)a Write off Loans during the Year 426,738,517b Write off Interest during the Year

SN PARTICULAR AMOUNT (NPR)a Held for Trading - b Held to Maturity 4,296,331,206 c Available for Sale 304,640,603 Total Investment 4,600,971,808

RISK MANAGEMENT FUNCTIONRisk is the integral component of Banking Operations. Prabhu Bank’s risk management ap-proach is based on framework of risk identification, risk measurement, risk mitigation and risk monitoring. The Bank has developed written down policies, manuals, standard operating procedures covering all areas of banking operations to conduct its business. Bank manage-ment put utmost priority on training and human skill enhancement to ensure higher standard of service delivery. It focuses on use of latest technology and in the meantime, proper implemen-tation of business continuity plan. Appropriate committees are formed to review the business and associated risks. Major three risks and risk management approaches adopted by the Bank are briefed below:

CREDIT RISKCredit Risk is the possible losses from the non-payment of interest and/or principal by Bor-rower or debtor as per the agreed terms of credit sanction. In order to ensure sound credit risk management system, credit risk management responsibilities in Prabhu Bank are shared to three distinct functions, namely relationship management, credit risk assessment and credit administration. There has been clear demarcation on the roles and responsibilities of the three functions.

SN PARTICULAR THIS YEAR PREVIOUS YEAR MOVEMENTa Loan Loss Provision 1,957,358,297 2,848,176,382 (890,818,085)b Interest Suspense 476,826,356 455,489,520 21,336,836


Credit Risk Assessment Department is independent department headed by Chief Credit Of-ficer, who is also the member secretary of Credit Risk Management Committee. Committee meets and discusses overall credit risk quarterly, and provides guidelines when it deems fit.

OPERATIONAL RISKOperational risk is the risk of loss resulting from inadequate internal procedure, breach of laid down procedures, incapable people and failure of system or adverse external disasters. Prabhu Bank aims to minimize the frequency and impact of unexpected operational loss by ensuring well defined operational manual and guidelines covering each type of activities, train the people to ensure smooth delivery of service, check and balance of authority delegation, comprehensive internal audit and follow up on audit remarks and business continuity plan for possible external disasters.

There is separate department for Operation Risk Management. Operational issues are reviewed by Operational Risk Management Committee periodically; head of the Operation Management Department is also the member secretary of Operation Risk Management Committee. Minutes of ORMC is submitted periodically to Comprehensive Risk Management Committee.

MARKET AND LIQUIDITY RISKMarket risk is the possible losses resulting from the change in interest rate, change in foreign currency exchange rates or price of commodity or investments. Market risks are arisen from rapidly changing external factors, thus highly sensitive in banking.

Market risk related issues are reviewed by ALCO (Asset Liability Management Committee) periodically.

The Bank believes on zero tolerance policy on compliance and high level of corporate gov-ernance. A full-fledged compliance department is formed headed by senior manager under direct supervision of Chief Executive to ensure compliance of regulatory requirements and internal policies.

The audit function is also independent from bank management, this unit focus in development of internal procedures and checks and control system/procedures. This unit's function is also independent and separate reporting lines, with audit function reporting directly to Board Level Audit Committee.

The bank has plans for risk diversification of its asset base so as to achieve a better portfolio risk mix and to protect/enhance the overall on its risk assets. For this purpose, the Bank has to focus in extending small and medium enterprises (SMEs) business, micro financing business, retail banking and side by side growing the business towards corporate banking and trade business. The strategic focus of mapping business is gradually reducing high risk assets and increasing low risk exposures.

In order to mitigate above risks, the Bank has started risk management function by imple-menting the long term strategic plan. One of the major objectives of the strategic plan is con-tinuously endeavoring for the managing the risks prudently and effectively and has developed various risk management policy, introduced risk rating /granting system in the Bank. The Bank has further prioritized risks management capability building as one of the core functions aiming to position of itself of as “Prudently Risk Managing Bank”.


Statement of loan and advance taken By Promoter / Shareholder of the grouP of Promoter from other Bank and financial inStitution againSt Pledging ShareAs on 31Ashad 2072(16 July 2015)

S.NO. PROMOTER'S/SHAREHOLDERS'S NAME

TOTAL SHARES

NUMBER OF SHARE

PLEDGE

LOAN AMOUNT

(RS.)

LENDING BANK % OF PLEDGESHARE ON

TOTAL SHARE

REMARKS

1 Hirendra man Pradhan 107043 97321 6,751,815.77 Prime Commercial Bank Limited 90.92

2 Uttam Prasad Panta 194625 38925 5,000,000.00 National Development Co-Operative Society Ltd

20.00

3 Suresh Prasad Chaudhari 322591 322591 21,298,465.35 Siddhartha Development Bank Ltd 100.00

4 Bharati Kumari Acharya 50602 50602 2,690,000.00 Shree Investment & Finance Company Ltd.

100.00

5 Tulsi Ram Pokhrel 19462 19462 6,735,647.32 Prime Commercial Bank Limited 100.00 Others Share also included

6 Ishwar Kuamr Pathak 38925 38925 2,000,000.00 Shree Investment & Finance Company Ltd.

100.00

7 Ram Chandra Bhandari 72984 72984 14,655,000.00 Everest Bank Ltd. 100.00 Loan provided against funded and non funded facilities, Limit

8 Durga Bahadur Khadka 29193 29193 2,066,216.29 International Development Bank Ltd 100.00

9 Manju Kumari KC 48656 48656 100.00

10 Nanda Raj Pokhrel 19462 19462 1,300,000.00 NMB Bank Ltd 100.00 Loanee Oriental Collage Pvt.Ltd, Loan Limit 50,00,000.00

11 Pancha Raj Shakya 9731 9731 675,167.70 Prime Commercial Bank Ltd 100.00

13 Sulochana Shakya 1150234 609176 44,690,032.51 Prime Commercial Bank Ltd. 52.96

14 Suvash Rijal 65199 65199 4,523,713.79 Prime Comercial Bank ltd. 100.00

15 Kamal Bahadur Kayastha 17029 4865 266,898.06 Siddhartha Development Bank Ltd 28.57

17 Krishna Maharjan 9731 9731 9,638,825.22 Primier Finance Ltd. 100.00 Bad Loan

18 Suraj Shakya 19462 19462 Primier Finance Ltd. 100.00

19 Mahendra Lal Maharjan 9731 9731 Primier Finance Ltd. 100.00

20 Dinesh Maharjan 9731 9731 Primier Finance Ltd. 100.00

21 Gajendra Bista 9731 9731 396,526.20 Prime Commercial Bank Ltd. 100.00

22 Gopal Kumar Shrestha 9731 9731 390,000.00 Sapana Multi Purpose co-Operative Society Ltd.

100.00

23 Manjit Naulakha 19462 19462 1,200,000.00 Shivasiddhi Saving & Credit Co-operative Ltd.

100.00

24 Priyanka Thapa 12164 12164 650,000.00 Nepal Housing & Merchant Finance Ltd.

100.00

25 Sunil Shakya 679952 401414 35,000,000.00 Prime Commercial Bank Ltd. 59.04

27 Nepal Investment Pvt.Ltd. 1613403 326091 13,307,911.73 NIC Asia Bank Ltd 20.21

480610 13,633,273.95 Prime Commercial Bank Ltd

28 Nanda Sherchan 1013306 944257 49,928,023.01 Prime Commercial Bank Ltd 93.19

29 Suman Narsingh Rajbhandari 9228 9228 517,202.72 NIC Asia Bank Ltd 100.00

30 Anju Sharma 3999 3999 30,937,832.00 Money Gram Saving & Credit Co-Operative Ltd

100.00

Schedule 34


31 Jagannath Prasad Lamichhane

15997 15997 100.00

32 Nabin Raj Lamichhane 3999 3999 100.00

33 Jitendra Bahadur KC 35426 35426 11,816,251.36 Jyoti Bikash Bank Ltd 100.00

34 Kamala Ghimire 12242 12242 100.00

35 Dipak Bhandari 52817 52817 8,205,000.00 Jyoti Bikash Bank Ltd 100.00

36 Mahesh Prasad Rijal 31994 31994 13,500,000.00 NIDC Capital Market Ltd. 100.00

37 Jiban Kumar Bista 6152 6152 1,200,000.00 Nepal Co-Operative Finance Ltd. 100.00

38 Tara Kumari Thakali 2343525 1171762 48,887,099.71 Prime Commercial Bank Ltd 49.99

39 Sandhaya Thapa 30746 30746 2,000,000.00 IME Cooperative Service Ltd 100.00

40 Utsav Khadka 40386 40386 1,976,295.43 Prime Commercial Bank Ltd 100.00

41 Shamba Lama 425741 212870 14,000,000.00 ICFC Finance Limited 50.00

42 Sonam Gyachho 297777 297777 17,500,000.00 ICFC Finance Limited 100.00

43 Baikuntha Paudel 38925 38925 2,200,000.00 Kasthamandap Development Bnak Ltd

100.00

Total 9608807 6245555 406,233,210.53


31 Jagannath Prasad Lamichhane

15997 15997 100.00

32 Nabin Raj Lamichhane 3999 3999 100.00

33 Jitendra Bahadur KC 35426 35426 11,816,251.36 Jyoti Bikash Bank Ltd 100.00

34 Kamala Ghimire 12242 12242 100.00

35 Dipak Bhandari 52817 52817 8,205,000.00 Jyoti Bikash Bank Ltd 100.00

36 Mahesh Prasad Rijal 31994 31994 13,500,000.00 NIDC Capital Market Ltd. 100.00

37 Jiban Kumar Bista 6152 6152 1,200,000.00 Nepal Co-Operative Finance Ltd. 100.00

38 Tara Kumari Thakali 2343525 1171762 48,887,099.71 Prime Commercial Bank Ltd 49.99

39 Sandhaya Thapa 30746 30746 2,000,000.00 IME Cooperative Service Ltd 100.00

40 Utsav Khadka 40386 40386 1,976,295.43 Prime Commercial Bank Ltd 100.00

41 Shamba Lama 425741 212870 14,000,000.00 ICFC Finance Limited 50.00

42 Sonam Gyachho 297777 297777 17,500,000.00 ICFC Finance Limited 100.00

43 Baikuntha Paudel 38925 38925 2,200,000.00 Kasthamandap Development Bnak Ltd

100.00

Total 9608807 6245555 406,233,210.53

S.N. PARTICULARS AS PER UNAUDITED AS PER AUDITED VARIANCE REASONS

FINANCIAL FINANCIAL FOR VARIANCE

STATEMENT STATEMENT AMOUNT IN %

1 Total Capital and Liabilities (1.1 to 1.7) 48,640,676 46,510,126 (2,130,551) (4) -

1.1 Paid up Capital 3,208,885 3,208,885 - - -

1.2 Reserves and Surplus 476,926 484,825 7,899 1.66 P/L Adjustment

1.3 Debentures and Bonds - - - - -

1.4 Borrowings 24,831 24,831 - - -

1.5 Deposits (a+b) 42,145,236 42,143,974 (1,262) (0.00) -

a. Domestic Currency 41,264,352 41,263,090 (1,262) (0.00) Current a/c adjustment

b. Foreign Currency 880,884 880,884 0 0.00 -

1.6 Income Tax Liabilities - - - - -

1.7 Other Liabilities 2,784,798 647,610 (2,137,188) (76.74) Due to LLP & other provision figure

reported in other liability in unaudited Financials

2 Total Assets (2.1 to 2.7) 48,640,676 46,510,126 (1,917,117) (8) -

2.1 Cash and Bank Balance 9,295,995 9,315,995 20,000 0.22 Regroup with loans & advances

2.2 Money at Call and Short Notice 1,000,775 1,000,775 - - -

2.3 Investments 4,587,499 4,512,976 (74,524) (1.62) Marked to Market & regroup with other assets

2.4 Loans and Advances 29,704,723 27,726,157 (1,978,565) (6.66) Netting of LLP figure reporting in audited

financial statement and increased Loan Loss Provision

2.5 Fixed Assets 1,729,462 1,728,634 (828) (0.05) Depreciation adjustment

2.6 Non Banking Assets 106,717 - 106,717 - Gross amount presented in unaudited

2.7 Other Assets 2,215,505 2,225,588 10,083 0.46 Regrouped and Income Tax Liability Increased

3 Profit and Loss Account

3.1 Interest Income 2,813,459 2,814,823 1,364 0.05 Int. income adjustment of investment.

3.2 Interest Expense 1,270,986 1,270,986 - - -

A. Net Interest Income (3.1-3.2) 1,542,472 1,543,837 1,364 0.09

3.3 Fees, Commission and Discount 70,339 70,339 - - -

3.4 Other Operating Income 189,821 189,821 - - -

3.5 Foreign Exchange Gain/Loss (Net) 88,923 88,923 - - -

B. Total Operating Income (A+ 3.3+3.4+3.5) 1,891,555 1,892,919 1,364 0.07

3.6 Staff Expenses 495,229 495,229 - - -

3.7 Other Operating Expenses 534,990 539,479 (4,489) (0.84) additional exp. Booked

C. Operating Profit Before Provision (B. - 3.6-3.7) 861,336 858,211 3,125 0.36

3.8 Provision for Possible Losses 677,398 677,811 (413) 0.06 Provision adjustment.

D. Operating Profit (C. - 3.8) 183,938 180,400 (3,538) 1.92

3.9 Non Operating Income/Expenses (Net) 24,787 24,787 - - -

3.10 Write Back of Provision for Possible Loss 1,821,005 1,809,631 11,374 0.63 Asjustment with LLP

E. Profit from Regular Activities (D.+3.9+3.10) 2,029,730 2,014,818 (14,912) 0.73

3.11 Extraordinary Income/Expenses (Net) (467,356) (468,379) 1,023 - additional other assets write-off

F. Profit before Bonus and Taxes (E.+3.11) 1,562,374 1,546,439 (13,889) 0.73

3.12 Provision for Staff Bonus (142,034) (140,585) (1,449) - Change in Profit

3.13 Provision for Tax (384,375) (387,608) (3,233) (0.84) Income Tax Liability increased

G. Net Profit/Loss (F. -3.12-3.13) 1,035,965 1,018,245 (17,720) 1.71 Due to additional Income Tax

comPariSon of unaudited and audited financial StatementAs at 31 Ashad 2072 (16 July 20150

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