Annual Report 2007-2008 (ENG) - 20100603063436

Annual Report 2007-08 |
We put in conscious effort to live up to our corporate slogan We make your life easier
- Sanjay Bahadur Shah Chairman
From Left: Sanjay Bahadur Shah- Chairman, Radhesh Pant- Managing Director
We believe that our satisfied customers make the basis of our success in generating good returns to shareholders, providing attractive incentives to employees and serving the community through stronger Corporate Social Responsibility (CSR) endeavour
- Radhesh Pant Managing Director
| Annual Report 2007-08
CONTENTS
Message | 1 Chairmans Statement | 2 Board of Directors | 4 Directors Report | 8 Our Team | 17 Management Team | 18 Branch Managers | 19 Chief Business Officer | 20 Chief Operating Officer | 22 Chief Information Officer | 24 Central Logistics & Specialized Asset Management | 26 Finance, Corporate Affairs, Treasury & Accounts / Company Secretary | 28 Internal Audit and Compliance | 30 Credit Risk Management | 32 Human Resource | 34 Corporate Communication | 36 Financial Statements | 39 Auditors Report | 40 Financial Report | 41
ANNUAL REPORT 2007-08
COVER STORY
6 5 1
T eamwork is the ability to work together towards a common goal .

All of us at BOK look up to our customers and value their needs while we work together as a team creating a family oriented working environment with our synergetic efforts to provide immaculate services to address our customers need .
1. Manish Pandey - Business Bank 2. Rizma Rajkarnikar - Clearing & Collection 3. Ganesh Lamsal - Branch Operations 4. Ishwori Rai - Jawalakhel Branch 5. Naresh Das - Business Bank Customer 6. Kalpana Karki - Griha Laxmi Bachat Khata Account Holder
| Annual Report 2007-08
MESSAGE
BOK continues to distinguish itself as an efficient, competitive, safe and a top quality financial institution
ith fourteen years of presence, Bank of Kathmandu (BOK) has become a prominent name in Nepal.
Furthermore, BOKs continuous quest to seek the state-of-the-art technology has given impetus to several new products including BOK Click, SMS banking and provided a secure banking platform. To diversify its lending and to cater to the growing market need, BOK is focusing more on Consumer and Small and Medium Enterprises (SME) lending, and in providing services to the rural population through wholesale Micro lending. Living up to its corporate slogan We make your life easier, BOK continues to distinguish itself as an efficient, competitive, safe and a top quality financial institution.
BOKs relentless pursuit for excellence is attributed to the dedication of its employees, superior customer service and assurance for its shareholders. With a branch network of 23 branches and 6 service counters across Nepal, BOK is committed more than ever, in providing diversified and attractive products & services.
Sanjay Bahadur Shah

Chairman
Radhesh Pant
Managing Director
ChAIRMANS STATEMENT
I believe that the bank has been successful in achieving satisfactory returns for the shareholders
Respected Shareholders, On behalf of the Board of Directors, I would like to welcome all the shareholders, representatives from various regulatory authorities, auditors of the bank and advisors to the fourteenth Annual General Meeting of Bank of Kathmandu Limited. I believe that the bank has been successful in achieving satisfactory returns for the shareholders and further improving its national and international image and business growth in this fiscal year in the midst of political instability and intense market competition. The bank remains committed in increasing shareholders value and would like to state that your bank has become an important pillar of the national financial economy and has been able to win the hearts of its customers for which, the credit goes to respected shareholders who constantly adviced & suggested us for the betterment of the bank. Business Growth It is my pleasure to inform you that the total Loans & Advances has increased by 31.50 percent over the previous fiscal year reaching NPR 12.75 billion while deposits have increased by 27.81 percent reaching NPR 15.83 billion. Though transportation disruptions and insecurity continued to affect business growth, the bank was able to attain remarkable growth rates of 28.36 percent in operating profit and 37.79 percent in net profit (NPR 361 million). The bank had 16 branches as of July 2007; with the opening of 7 new branches in the reporting fiscal year, the bank now has
Comparative Business Growth (In Billion)

Jul-07 Jul-08
6 4 2 0 8 6 4 2 0 Loans & Advances Deposit NPR 9.69 billion as of July 07 NPR 12.39 billion as of July 07 Increase by 31.50%
Increase by 27.81%
(July 2007 & July 2008)
a total of 23 branches and 6 service counters across the country. The customers can also use the remittance product of the bank, BOK Money Transfer with 250 agency locations across the country for sending and receiving money. Though the Nepali Rupee deppreciated by 6.25 percent over US Dollar in the reporting period, the bank increased forex revenues by 16 percent earning NPR 93.8 million in the fiscal year. Total assets increased from
2 | Annual Report 2007-08
NPR 14.58 billion by 21.54 percent reaching NPR 17.72 billion at the fiscal year end 2007/08. Likely, in part of off-balance exposure the bank made a significant growth of approximately 42 percent reaching NPR 3.04 billion in the year end (July 2007). Thus the bank is able to increase its business & return continually over the years and customers can expect further improvement in services through the introduction of technological products like; Internet banking(BOK Click), SMS banking, Utility payment and ATMs. Increase in Profit (NPR in Million)
(before loan loss provision)
Operating Profit Net Profit
During the reporting period, your bank has: Opened seven new branches in Tatopani, Ghorahi, Tulsipur, Surkhet, Jumla, Balaju and Attaria. The four storey building undertaken as a non-banking asset in Balaju Industrial Estate has been utilized as a new branch in the first floor, while the remaining floors are being used as a training center of the bank and storage area for the branches located in Kathmandu Valley. BOK Money Transfer, a quick money transfer service has been expanded to 250 locations in Nepal, using an internet platform. The bank has made a leap in its IT system by successfully upgrading to the seventh version of FINACLE Software having even more features and has further enhanced its Disaster Recovery Setup and Network. The bank has setup ATM services in possibly the highest location of the world, Namche Bazzar. In the current fiscal year, your bank has: Introduced VISA Debit Card Commenced Internet banking services Business Plans
600 470
56%
60%
FY 2006/07
FY 2007/08
Non Performing Assets have been reduced from 2.51 percent in the previous year to 1.86 percent in this fiscal year, while the bank has been able to effectively reduce total loan loss provision to total loan from 3.04 percent to 2.24 percent in this fiscal year. Likewise, cost to income ratio in this FY has increased by 24.05 percent. Non Performing Assets
2.51% to 1.86%
(From July 2007 to July 2008)
In the process of further strengthening the bank and making it capable and competitive in the coming years, the following short and long term plans have been envisioned : Establish at least six new branches in the current fiscal year Install and operate additional 25 ATMs in the banks branches and other locations Introduce credit card services Special focus on Development Finance Immediate plans are to make optimum utilization of funds and assets, effective monitoring of activities, minimization of risks in lending and investments, extension of services and introduction of new products to suit the demands of the customers. In addition to this, improve its IT infrastructure and take maximum advantage, extend relations with international and national banks plus financial institution and strengthen management. Long term plans of expanding the banks network to provide more accessibility to the common people, promote the bank as a healthy competitor in the free global market, and become professional and a good corporate citizen by abiding to the national and international rules and regulations. Lastly, I would like to express my sincere gratutide to all respected shareholders, Government of Nepal, Nepal Rastra Bank, Company Registrar Office, Nepal Security Board, Nepal Stock Exchange, various organizations, Directors, employees, auditors, and advisors of the bank for their continous assistance and support and hope to continue receiving the same support in the coming days too. Thank You.
The bank has been able to bring down the weighted average interest spread to 4.35 percent in the reporting period; down from 4.04 percent in FY 2006/07 and 3.64 percent in FY 2005/06. Interest expense on deposit was also effectively managed at 2.78 pecent in the reporting period. The above facts show the bank is heading towards the progress in its activities and returns. Achievements & Returns: From the 20 percent of net profit made in the year, NPR 72.3 million has been set aside in the General Reserve, NPR 2.5 million in Exchange Fluctuation Reserve, NPR 28.57 million in Bond Redemption Reserve while NPR 22.15 million has not been distributed, thus retained. Respected shareholders, I hope that this AGM will approve the proposal of distributing 40 percent bonus shares and 2.11percent cash dividends from the profit of this fiscal year as committed in the previous Annual General Meeting. NPR 12.7 million to be deducted from the proposed bonus shares as 5 percent tax deduction at source [TDS] has been provisioned as cash dividends. I would like to inform all shareholders regarding the facility to open savings account with zero balance is available for this year too.
Sanjay Bahadur Shah Chairman
BOARD OF DIRECTORS
Sanjay Bahadur Shah Chairman

Radhesh Pant Managing Director

Sitaram Thapaliya Director
Rita Malla Director
Balram Neupane Director
Representative National Investment Company (P) Ltd
Bishnu Prasad Banjade Director
Representative Nepal Remittance (P) Ltd.
Sudarshan Raj Poudyal Professional Director
Santa Bar Singh Thapa Director

Annual Report 2007-08 | 7
DIRECTORS REPORT
Fourteenth Annual General Meeting
he Directors of Bank of Kathmandu would like to invite you to the fourteenth Annual General Meeting to present the Directors Report and the audited financial statement of FY 2007/08, for your approval. In the FY 2007/08, the country has undergone historic political shifts with the end of Monarchy and the establishment of the Federal Democratic Republic of Nepal. The decade long conflict and insurgency has affected all economic sectors of Nepal including the financial sector. Your bank (BOK) nevertheless was able to overcome the obstacles and grow steadily towards its goals, as a result of its strong foundation, built over the past fourteen years. It gives us immense pleasure to inform all shareholders on the progress, achievements, future plans, and objectives of the bank. The Board of Directors, representing the shareholders of the bank, would like to take permission to present the detailed report on the banks activities in FY 2007/08.
Non-Performing Loans
2.51% 1.86%
Credit Management
With an increase of 31.50 percent over the previous fiscal year, loans and advances reached NPR 12.75 billion in FY 2007/08. This compares to an increase by 29.45 percent in FY 2006/07 and 21.40 percent in FY 2005/06. Prioritizing lending activities towards small businesses and retail consumers, the bank has been able to sustain its growth. In addition, effective management of the loan portfolio has resulted in a reduction of non-performing loans from 2.51 percent to 1.86 percent, and provision on loans and advances from 3.04 percent to 2.24 percent. Total Loans & Advances (In NPR Billion)
FY 2006/07
FY 2007/08
Total Provision to Total Loans & Advances
3.04% 2.24%
FY 2006/07 Growth by 31.50% NPR 9.69
FY 2007/08
NPR 12.75
Provision for Loss on Corporate Loans 2.08%
FY 2006/07
FY 2007/08
Corporate and Business Loans A considerable slow-down in the industrial sector contributed to the decline in wholesale lending. Nevertheless, your bank has continued to focus on the corporate sector by advancing fewer but qualitative 8 | Annual Report 2007-08
July 2008
syndicated loans. With establishment of newer commercial banks in the market, there has been considerable pressure on the interest rate, thereby promoting unhealthy competition amongst the players. However, your bank has stayed away from unhealthy competition in interest rates and continues to work under a sound management and positive market principles to promote sustainable growth in corporate business. Micro Finance Loan Majority of population of Nepal still lack the access to formal financial services and if we are to contribute towards the overall economic development of the country , banks and other financial institutions have
Consumer Financing (In Billion)
2.42 1.95
July 2007
July 2008
Deprived Sector Finance (In Million)
Deposit Management
With more number of financial institution entering the market, there was a competition amongst the commercial bank for deposits thus resulting in higher interest rates. Despite this your banks deposit grew by 27.81 percent in the reporting period in comparison to a growth of 18.15 percent in the previous year; reaching a total of NPR 15.83 billion. During the reporting period, your bank as per the needs of the customers has devised various innovative products like, Foreign Employment Savings Account; 24 Carat Fixed Deposit Account, Hello Savings Account and Share Plus Account. These products have contributed significantly to enhance the overall deposit portfolio of the bank. Deposit (In Billion)
60.30
16.50 July 2007 July 2008
Note: Loans & advances extended to micro finance agencies working directly with disadvantages communities from the rural areas.
to concentrate on Micro Financing. Your Bank through Development Credit Unit has been addressing the credit needs of low income strata, people from disadvantaged communities and youths seeking self employment. With strategic alliances with local cooperatives and micro finance institutions in 17 districts of 11 zones, your bank has initiated and established various micro credit initiatives in rural Nepal. Amongst others, your bank has supported some successful Micro Financing Programs including; pollution-free electric vehicle (Safa tempos)for women, bio gas units, herb distillation equipments, rickshaws financing to Terai communities, etc.
15.83 12.39
July 2007 Deprived Sector Lending Rs 355,060,465 requirment by NRB Deprived Sector Lending of the Rs 517,389,128 bank as on Mid July 08#
#Note: including wholesale lending & investment
July 2008
Consumer Financing The improvement in living standards and the recent transformation of the lifestyle of Nepalese households has provided financial institutions with added avenues and opportunities in terms of retail lending. Dedicated in making life easier, your bank offers consumer loans such as hire purchase loan, housing loan (construction, and renovation as well as outright purchase of land and building), education loan (for Nepal and abroad) and festivity/personal loan. These loans are payable in equated monthly installment against future income. With an increment of around 25.00 percent over the previous year, consumer financing now totals NPR 2.40 billion which accounts for approximately 19.00 percent of total lending portfolio of the bank.. Your bank in coordination with the government has drafted the Foreign Employment Loan Policy and became the first bank to provide foreign employment loans mainly to youths from marginalized communities and people with fragile economic background. It is our pleasure to inform you that the bank now has 23 branches covering all five development regions, giving people access to modern and reliable banking services. Products such as Sajilo Bachat Khata, a savings account, with any branch banking facility and all other banking Annual Report 2007-08 |
services are guaranteed to provide customers from the small towns and peri-urban areas a different perspective in availing banking services. Furthermore, the banks non interest bearing deposits account marked a growth of 25.75 percent and interest bearing deposits account marked a growth of 28.17 percent in the reporting period.
91 Days Treasury Bills Avg. Weighted Int Rate 4.21% 364 Days Treasury Bills Avg. Weighted Int Rate 5.49%
6.45 4.82
6.47
Foreign Exchange Management

Following the policy guidelines, the management has made prudent and calculated risks of assets and liabilities in foreign currencies. Transaction limit has been set for each & total exposure of foreign currency and a clear authority has been set to perform the transactions. Various hedging techniques and tools are applied from time to time to manage the open foreign currency position of the bank. Sound information system is in place to safeguard against foreign currency fluctuations. Through the Income from foreign Exchange (In Million)
3.28 0 3.04
4.67
5.79 3.86 4.07
5.13
2.14
Jul/Aug
3.03
Feb/Mar Apr/May
Aug/Sep Sep/Oct Oct/Nov Nov/Dec
Dec/Jan Jan/Feb
Mar/Apr
May/Jun
Jun/Jul
FY 2007/08
Source: Monetary Policy 2065, Nepal Rastra Bank
institutions have occurred in large part due to deficient liquidity resulting from adverse circumstances. Liquidity management involves forecasting funding requirements and maintaining sufficient capacity to meet the needs and accommodate fluctuations in asset and liability levels due to changes in our business operations or unanticipated events. The bank has been investing in Treasury Bills and Government bonds issued by the Government of Nepal. During the reporting period, weighted average interest rate of 91 days treasury bills increased from 2.44 percent to 4.21 percent and weighted average interest rate of one year Treasury Bills increased from 3.50 percent to 5.49 percent. The bank adopted various dynamic investment strategies through which it has been successful in attaining maximum return on its portfolio. A portion of foreign currency deposits has been invested in secured international instruments and bonds thereby diversifying the investments and safeguarding the bank from potential interest rate risks with multiple sources of revenue.
93.8
80.8
FY 2006/7
FY 2007/08
Foreign Exchange Income Source

Revaluation Transactions
Capital Management
Respected shareholders, following the assurance made in the last AGM, the Directors would like to propose to distribute 40 percent bonus shares from this years profit, in order to meet the banks capital requirement as stipulated by NRB. The bank has issued seven year debenture at 6.00 percent (to end in 2012) worth NPR 20 million to support business growth. Appropriate funds are being set aside annually in the Bond Redemption Reserve for maturity. We would also like to inform all shareholders that the bank has been complying the BASEL II directives of the NRB under Capital Adequacy framework. Capital Fund (In Million)
11%
89%
appropriate use of spot and forward transactions and simple derivatives, the bank has been able to make reasonable profits from its foreign currency transaction despite a 6.25 percent depreciation of Nepali Rupees over the US Dollar. In the reporting period, the bank was able to make earnings of NPR 93.8 million, an increase by 16 percent over the previous fiscal year (NPR 80.8 million).
Core Capital Capital Fund
Liquidity Management
Efficient management of Liquidity implies that the bank has access to immediate cash in the amount and at the time needed at a reasonable cost, whereby attenuating the liquidity risk of the bank. On the other hand maintaining excess liquidity to minimize liquidity risk is also not advisable as it hampers the profitability of the bank. Most failures of financial 0 | Annual Report 2007-08
960
1640 1290 1310
July 2007
July 2008
National Economy and Banking Environment

Provisional national Gross Domestic Product (GDP) for the first nine months of the reporting period estimates GDP growth at 4.70 percent; an improvement over the GDP growth rates of the last few years. The agriculture sector which accounts for 32.00 percent of the National GDP recorded a 5.65 percent increase, positively impacting the national GDP. A staggering 7.70 percent inflation was recorded in the reporting period, attributable mainly to the three time hikes in fuel prices resulting in a spiraling effect on food and other commodities The world economy is going through a recession with growth projections as low as 3.70 percent and 3.80 percent for 2008 and 2009 respectively. While all the developed countries are going into a recession, the US economy particularly estimated to grow at a mere 0.50 percent in 2008 and 0.60 percent in 2009 in comparison to 3.60 percent in 2004 and 2.10 percent in 2007. The deepening financial crisis and the recession in the US economy has created a downward spiraling effect in all the major economies around the world. Economic growth of the two neighboring countries, China (9.20 percent) and India (11.40 percent) were very encouraging in 2007 but considering the world wide recession, growth rates are expected to be lower than the previous years. Financial highlights of the Reported Period and Current Year Major Achievements / Results Title 2003/04 2004/05 2005/06
In comparison to the previous fiscal year, loans and deposits have increased by 31.50 percent and 27.81 percent respectively as a result of which net profits after taxes has increased by 37.79 percent, a demonstration of the banks ability to optimize its fund utilization.
GDP Growth Rate % (Production Price)
4.7 3.7 3.1 3.2
4.7
2003/04
2004/05
2005/06
2006/07
2007/08
Source: Economic Survey 2007/08, Finance Ministry, Government of Nepal
Rs. in Million
2006/07
2007/08
Compared to previous year

27.47% 2.48% 28.6% 7.7%
This year till Oct/Nov
Operating Income Operating Expenses Operating Profit Net Profit after taxes
440 4 06 28
4 4 60 40
77 77 400 202
677 208 46 262
86 26 602 6
0 20 -
Key Portfolio Indicators Title 2003/04 2004/05 2005/06 2006/07 2007/08 to previous year
60 ,84 2,748 87
Rs. in Million
Compared
This year till Oct/Nov
Capital Deposit Loans & Advances Fixed Property (Net)
464 7,742 6,008 84
464 8,4 6,82
464 0,48 7,48
60 2,8 ,64 2
0% 27.8% .0% 20.6%
60 6,02 2,0 406
Major Indicators: Title 2003/04 2004/05 2005/06 2006/07 2007/08 Compared to previous year
Net Profit/ Operating Income Operating Expense/ Operating Income Return on Equity Return on Assets Permanent Employees Branches
2.0% 0.4% .60% .4% 24 8
27.24% 2.6% .40% .42% 2
.0% 0.68% 24.0% .6% 2
8.70% 0.72% 26.8% .80% 2 6
4.8% 0.24% 26.0% 2.04% 226 2
8.0% -.6% .% .7% 86.78% 4.7%
Your bank has been progressing well despite of various adversities, which is indicated by increase in the profit after tax by 37.79% during the reported period vis--vis the preceding year.
Business Relationships
BOK Money Transfer With a network of over 250 agents in 51 districts, BOK Money Transfer is gaining popularity in the domestic remittance arena . The network of local financial institutions and agencies can be used by customers for both domestic and foreign money transfer. It has served as an important network for extending the banks services beyond the reach of the banks branch network and has assisted deposit growth as a result of higher accessibility. Correspondent Banking and Payment Mechanisms The foreign remittance market in Nepal has been steadily growing over the last few years with the increasing number of youths going abroad for foreign employment and studies abroad. Easy availability of financing for foreign employment and abroad Studies from financial institutions have been instrumental in the development of this market. With the aim of facilitating the customers, the bank has entered into agreements with corresponding banks in key countries and major international remittance companies such as Money Gram, Xpress Money Service, Placid Express, Nepal Remit, Al-Moosa, Al Fardan Money Exchange, Money Exchange SA (Spain), Alu-Kkas, EZ Remit, Janata Express, National Exchange, Wallstreet Money Exchange, Instant Cash and many others to extend the coverage of the banks remittance services. Special arrangements have been made with banks in India and China that have presence in major cities and major boarders such as Lhasa, China facilitating remittance and trade. International Relations The bank has SWIFT Correspondent Banking Relationship with 205 banks, maintaining relationships with all major banks around the globe. To promote international trade, the bank is working in partnership with International Finance Corporation (IFC), a member of the World Bank Group (WB) under their Global Trade Finance Program (GTFP). Under this program, IFC offers confirming banks partial or full guarantees covering payment risk for our trade related transactions to the extent of United States Dollars Two Million. This facility provided has enhanced the banks confirmation capacity in Letters of Credit (LC), Guarantees and other International Financial Instruments and has helped customers in their International Trade activities. The bank is also working with IFC South Asia Enterprise Development Facility (SAEDF), a World Bank Group focusing on the needs of small and medium enterprises (SME) to reduce poverty through SME development and with the objective of introducing capacity building programs and partnering to extend loans to SMEs through local banks. Consultant has already been appointed for the speedy implementation of the project. Likely; special resolution was passed through thirteenth AGM regarding the capital tie up between the bank & IFC. However, detailed homework is yet to be carried out to draft the partnership details between the bank and IFC with regard to future equity investment in bank and technical support. Furthermore, the bank has been continuously searching for avenues whereby it can further strengthen business growth and goodwill in the international financial market.
Dr. Yadav Prasad Pant. We express our sincere heartfelt condolence in the AGM, recalling his vision for the bank and his commitment to the development of the bank from the very beginning.
Factors Affecting the Bank

a. Risks emanating from excessive competition as a result of increase in the number of banks and financial institutions. b. Risks from extending credit facilities e.g. long-term, medium-term, working capital loans and non-funded facilities like letters of credit and guarantees. c. Risks from fluctuation in the interest rates. d. Risk from changes in policies related to commercial banks by the government of Nepal and Nepal Rastra Bank. e. Risks from unexpected changes in monetary and fiscal policy by the government of Nepal and Nepal Rastra Bank. f. Risks from fluctuation in foreign exchange rates. g. Risks from the changes in interest rates of deposits and loans. h. Risks from delays in recovery of loan and advances. i. Risks from the impact of the global economic recession in the local market. j. Risk from the volatility in the capital markets. k. Risks from the fluctuations in the economic environment of the country. The bank has sufficient built-in provisions against possible losses on loans and advances, investments, exchange fluctuations, etc made through careful internal calculations and NRB guidelines.
Response of the Board to the Audit Report

Except for general comments, there are no major issues in the Audit Report for FY 2007/08. The Board of Directors have duly noted the comments and have made necessary arrangements for improving them.
Return to the Shareholders

Profit on total assets increased by 13.37 percent in the reporting period due to better recovery of bad loans, reduction in interest expenses, extension of branches, diversification in the loan portfolio and improvement in management information systems. Despite the challenges presented by the slowdown in the economy and financial market, your bank has been able to increase net profit after tax by 37.79 percent in FY 2007/08 in comparison to the previous fiscal year. The bank aims to reduce the percentage of Non Performing Loans from 2.51 percent to 1.86 percent in the fiscal year. The bank has set aside 20.00 percent from the profit, amounting to NPR 72.30 million in the General Reserve, NPR 2.50 million in Exchange Equalization Fund, NPR 28.60 million for Bond Redemption Reserve and NPR 22.10 million as Retained Earnings. Approximately NPR 106.7 million was set aside in the Capital Adjustment Reserve up to the last fiscal year, however no addition has been made to this reserve in this fiscal year. Furthermore, no distribution has been made to the shareholders in the last fiscal year. Respected shareholders, as committed in the last AGM and the current proposal, we seek your approval to distribute 40.00 percent bonus shares and 2.11 percent cash dividend (NPR 12.70 million which amounts for 5.00 percent of advance tax adjusted in the cash dividend portion) from the afore mentioned Capital Adjustment Reserves. We would like to inform you that the bank continues to provide all respected shareholders with the facility to open a savings account in your bank at no minimum deposit requirement as in the past.
Board of Directors
During the reporting period, there has been no change in the structure and members of the Board of Directors. The Board of Directors consist of four representatives from the general public, one Professional Director as per bank and financial institution act, and three from promoters group. On 14th November 2007, the bank had to face a great loss with the demise of a national personality and Founding Chairperson of Bank of Kathmandu,
Share Ownership Structure

Bank of Kathmandu Ltd. Market Share Price in NPR
Maximum Minimum 200 2000 00 000
ct t/N ov an b un r/A pr p/O ec Ju l/A ug Au g/S e n/F e Fe b/M ay Ap r/M
Internal Control System

The banks Audit Committee comprises of four Directors representing the shareholders. The Internal Audit Department is steered by the Audit Committee and is responsible for internal audits of the bank. The Operation Navigation Committee looks after the operational risks of the bank. For the day today operation , an authority list for the employees has been set to manage the risk. The Compliance Department ensures the conformity of internal and external policies, and whether rules and regulations are being followed. Thus it can be said that the bank has sufficient internal rules and regulations for maintaining control and takes due care to timely inform all staffs on any changes in the rules and regulations.
ul n/J
c/J
ar
/D
y/J
Provision for Possible Losses (In Million)
Se
Oc
Ma
Ja
No v
Ma
De
Ju
82 38 FY 2006/07 FY 2007/08
Promoter 42%
Public 58%
Achieving the banks objectives is largely dependent on managing the loan portfolio by evaluating the risks involved, Credit Risk Management department has been given the task to closely analyze, monitor and control all lending activities. Effective and efficient management of the inherent risks has enabled the bank to secure reasonable profit for its shareholders. Interest Suspense Account (In Million)
[ The bank has not forfeited any shares during the FY ]
Review of the progress made by the bank and its subsidiary companies in the previous fiscal year
The bank does not have any subsidiary company and as regards to the progress of the bank in the last fiscal year, please refer to Section 1 and 3 above.
16.50
14.80
July 2007
July 2008
Transactions and important changes made by the Bank and its subsidiary companies during the reported period
The bank does not have any subsidiary company and as regards to the progress of the bank in the last fiscal year, please refer to Section 1.
Operational Expenditure
Operational expenditure in this fiscal year has increased by 25.48 percent vis--vis an increase in operating profit by 28.36 percent over the previous fiscal year. Opening of 7 new branches in the reporting year contributed to the increase but the bank has nevertheless been able to maintain expenditure to income ratio at approximately 30.00 percent. At the end of the reporting period, your bank has 23 operational branches. An efficient central accounting system, managing of regular activities through contract mechanism and the system of centrally approving expenses has allowed the bank to regulate its expenditure at desired levels. Majority of the administrative purchases are being made centrally to allow the newly set up branches to focus on their core activities. The system has definitely allowed us to save costs and promote standardization.
Information made available to the company by the Banks shareholders during previous financial year.
The shareholders have not provided any information to the bank during the reporting period.
Description and information of the share ownership taken by the directors and officials of the bank during the reporting period.
The banks Directors and officials have not taken any shares and have not provided any such information during the reporting period. Information made available with regard to personal interest of the directors or immediate relatives related to agreements with the bank None
Composition of Profit (in Million)

600
400 290 360 51% 2005/06
470
Description of buy-back of shares

None
56%
44% 2003/04
39% 2004/05
60%
2006/07
2007/08
Operating Profit Net Profit as a % of Operating Profit
Audit Committee
The bank has an Audit Committee comprising of four members from the Board of Directors.. The committee supervises the entire control mechanism of the bank and the standard of compliance with applicable laws, policies and directives. Furthermore, the committee reviews the internal audit reports, provides suggestions and also monitors the overall activities on a continuous basis. The committee also has the task to ensure the banks management is adhering to all the existing acts, laws, rules and regulations and directives. Mr. Sitaram Thapaliya is the Coordinator of the committee and the three members are: Ms. Rita Malla, Mr. Balram Neupane and Mr. Bishnu Prasad Banjade. The Coordinator and the Members of the committee receives NPR 8,000 per meeting and 20 meetings were conducted in the reporting period.
Transactions with Subsidiary Companies

The bank does not have any parent or subsidiary companies.
Information Technology
International standard banking software, Finacle forms the backbone of the banks operations providing flexibility in maintaining a central database and making anywhere banking possible. The bank has successfully upgraded the entire system to the newer version of Finacle, Finacle 7.0.17 and has made a leap in its IT system with the installation of Disaster Recovery Setup. Furthermore, various Network Enhancements were carried out in the reporting period. Embracing technology is the key to making progress in todays competitive era. Substantial investments thus made in network management and its auxiliary systems and management information system have proven to become profitable investments for the bank. The bank is shifting to a paper-less environment thereby promoting efficiency and effectiveness amongst employee. Furthermore, with a view of providing world class banking services to its customers, e-banking has already been adopted and implemented. Thus customers can easily avail internet banking (BOK Click) and SMS banking facilities from any of our branches. The bank is using a centralized database system whereby all branches across the country are connected via VSAT communications and other technological solutions. This has enabled the bank to provide efficient operational framework and flexibility in monitoring & controlling tasks. Connectivity is being secured by Data Encryption/Decryption technology whereby preventing data intrusion and security risk. Disaster Recovery Site safeguards the fully computerized system from any risks and communication backup system (Radio Modem and Fiber Optical Line) is on standby to ensure uninterrupted service and operations.
Payments due from Directors, Managing Director, Promoters or their close relatives or their related entities.
None.
Remuneration, allowances and facilities of the Directors and Managing Director

We would like to inform you that the remuneration and facilities of the Managing Director is determined by the Board of Directors. The allowances and facilities of the Directors as stated in Articles of Association are as follows:
Designation
Chairman
Remuneration
-
Stipend
NPR 0,000 per meeting NPR 66,000 month and NPR 8,000 per meeting
Benefits
Vehicle and related costs (driver, maximum of 400 ltrs of fuel and maintenance) Regular facilities of employees, utility expenses, under accommodation cook, helper, gardener, security guard and vehicle, driver, fuel and maintenance. None
Managing Director
NPR 4,000 per Month
human Resource Management

The increase in number of branches has proportionately increased the demand for human resource. In the reporting period, the bank has given permanent status to 80 of the 180 contractual staffs, selected through internal competition and individual performance. Competent and hardworking drivers and Messengers have also been confirmed to a permanent status. Retaining and keeping them in line with the banks vision and maintaining loyalty among competent and dedicated employees has Staff Composition
Female Male
Directors
NPR 8,000 meeting per
All Directors are entitled to accommodation, food and other expenses as approved by the AGM during official visits within or outside the country. In addition, the Directors receive NPR 5,000 as Communication expenses and NPR 5,000 as Business Promotion expenses per month.
Uncollected Dividends
Dividends distributed to shareholders for the fiscal years 2001/02, 2002/03, 2003/04, 2004/05, 2005/06, 2006/07 but yet to be collected amounted to NPR 20,106,270.22 at the end of the reporting period.
Description of Purchase and Sale of Bank Property

In the reporting period, the bank has owned & is using the four storey building located inside the Balaju Industrial Estate by operating a new branch. The ground floor of the building is used exclusively for branch operation and the remaining floors are used as training premises and storage facility for the bank.
63% 42%
58%
37%
FY 2006/07
FY 2007/08
become a challenge in todays dynamic work environment. A Management Information System has been implemented to improve the efficiency of departments. The bank has been encouraging the culture of multi tasking among bank staffs and provides different career development opportunities for outstanding employees. Furthermore, the bank also provides internship platform for college students. Recruitment of young graduates every year has helped to develop culture, knowledge base and inject new energy and perspective to the bank.
experience in the banking sector. It is expected that the bank will benefit duly from his expert guidance and advice. Safeguarding of the General Shareholders and Depositors Interests and Rights The bank maintains a firm view towards protecting the rights and interests of its shareholders and the depositors. The bank has been making timely disclosure of the banks activities, investments, details on asset and liability management and various other operational and non-operations aspects of the bank. The bank has been conducting Annual General Meetings within the stipulated time frames. Form an effective Audit Committee A system of check and balance is being maintained by the Audit Committee which comprises of four Directors from the Board representing the general public shareholders. The committee looks after the overall well being and growth of the bank by reviewing the audit reports conducted by the internal and external auditors and provides the management with suggestions and recommendations. Avoid Related Party Transactions Sufficient systems and procedures have been devised to check related party transactions. Audit by internal and external auditors and NRBs regular inspection has been instrumental in discouraging such activities. Maintain high compliance standards The banks policy and procedures have been developed in line with the existing rules and regulations and the Compliance Department and Audit Department monitors its implementation. Develop and implement effective policies Clear policies, line of authorities and job responsibilities have been formulated to direct and control affairs of the management and provide ease in overall operation. Participation of Directors in Strategic Planning The banks decisions have proved to be fruitful as a result of the participation of the Directors in business promotion, short and long term planning and thereafter the development of strategic plans.
Compliance Standard
Compliance has always been the foremost priority, thus regular internal and external Audit complemented by our internal compliance department ensures the bank is following all the rules, regulations and directives issued by the various regulatory authorities. Directives issued by NRB in the reporting period regarding BASEL II seeks to address risks associated with banks and financial institutions in terms of its capital requirements vis. a viz. the riskiness of its assets portfolio The directives specifically instruct banks to meet capital requirement standards at any particular time after October 2008. With all the major preparations behind us, your bank has already commenced training and development of Management Information System in this regard. Also a strict compliance of this standard has been delegated to the banks management and employees via various internal circulars and policies. We would like to bring to your notice that the bank has been conducting internal trainings at regular intervals using internally available resources and calling on external experts on a need basis. Such trainings have been helpful in creating awareness of the various rules and regulations and instigate strict compliance for the same.
Corporate Governance
Good corporate governance is crucial for any organization, more so for the banking sector, due to the nature of its stakeholders and the role it plays in the nations economy. Good corporate governance extends beyond the
Professional 1
Public 4 Promoter 3
Expansion of Services
The bank has expanded its branch network covering all the five development regions. At the end of the reporting period, the bank has a total of 23 branches and 6 service counters in addition to the 250 BOK Money Transfer agents providing remittance services. All the branches & service counters are under a single network facilitating central accounting and anywhere branch banking facility. To make optimum utilization of its central database system and to maintain the pace of growth, the bank is planning to further extend its network inside Kathmandu Valley and the Eastern region in the coming year. Branches
purview of simply adhering to the rules and regulation, developing a strong culture inside the organization where good corporate governance thrives. Your bank remains committed on promoting good corporate governance at all levels inside the organization. Majority of the Directors in the Board are General Shareholders 58.00 percent of the shares are held by the general shareholders and are represented by four members in the Board of Directors. Your bank stands out as the only bank in Nepal to have majority of general shareholders in the Board of Directors. Adequate representation of the banks general shareholders has ensured the safeguarding of the interests of the general shareholders and the banks interests in general. Appointment of a Professional Director Following stipulations of the Bank and Financial Institution Act 2006, the bank has appointed a Professional Director selected from the list of experts published by Nepal Rastra Bank, the Central Bank of Nepal. Mr. Sudarshan Raj Poudel, the Professional Director of the bank has years of
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July 2008
ATM Service With the commencement of ATM Service in 2003 in partnership with STC, your bank now has a total of 12 ATMs spread all over the Country. Six new ATM counters in Kathmandu Valley and six new ATM counters outside the valley (Pokhara, Nepalgunj, Butwal, Ghorahi, Surkhet and Namche Bazaar) were opened in the reporting period. 25 new ATM service stations will be opened in the banks branches and other locations in current fiscal year. With ATM at Namche Bazaar now fully operational, ATM service from one of the highest Location of the world. The bank has also been able to successfully launch VISA Debit Card, in partnership with VISA, allowing customers to avail POS (Point Of Sale) services in over two hundred thousand (2 Lakh) locations in Nepal and India to purchase goods and services. The card safeguards customers from risk of theft and at the same time provides accessibility to cash at any given moment. With establishment of Card Centre, a new department established in the current fiscal year, plans are already underway for commencement of Credit Card services.
Continue extending the banks network for market accessibility and thereby promoting access to finance. Identify opportunities for lending in the small & medium sized business segment which comparatively provides a higher rate of return and reduce the banks dependency on corporate loans. Strengthen the image of the bank to become a true caring corporate citizen by contributing to the welfare of the society and the nation at large. Take optimum advantage of the newly installed software for improving the quality of services and introduce new products in the market. Develop essential policies and procedures based on the directives of NRB with regard to capital adequacy and compliance to BASEL II accord.
Respected Shareholders, Last but not the least, we would like to inform you that we remain committed towards fulfilling the responsibility you have entrusted upon us to the best of our ability. We hope that we will receive the same trust and support from all the shareholders as we have in the past and are able to achieve even better returns in the future.
Corporate Social Responsibility

As a true corporate citizen, the bank feels it is its duty to mobilize a portion of its earnings to help disadvantage members of the society. The bank has been mainly focusing its social activities in the area of education, health and environment. Some of the social initiatives supported by the bank in the reporting period are as follows: Financial assistance provided to children without access to formal education through Help to the Helpless Council, an NGO based in Dharan. Academic scholarships provided through Development and Equity for Women Empowerment. Supported the Second Annual Fund Raising Program organized by Nepal Childrens Organization for Bal Mandir Orphanage. Financial support to the Third CMS Abilities Cup organized by Hospital and Rehabilitation Center for Disabled Children for the treatment and rehabilitation of disabled children. Organized Seize the Future a Visionary Leadership Workshop for Hospital and Rehabilitation Center for Disabled Children (HRDC) to support the disabled children of Nepal. Supported Save the Children Kathmandu in its initiation to provide quality education in the Far Western Development region. Supported a computer training program for disabled children organized by Skill Development and Rehabilitation Center for the Disabled Nepal with the objective of creating self employment. Supported an orthopedic workshop for children and adults with disabilities in the Eastern region, organized by Community Based Rehabilitation (CBR), Biratnagar. Distributed clothes for flood victims in Banke through Hridaya Group. Supported Deep Prajwalan, a fund raising program for equitable justice and peace for rural women organized by TEWA. In partnership with Gaushala Traffic Office, the bank supported the campaign on Following Traffic Rules by posting banners in public transport vehicles.
....................................................................... Mr. Santa Bar Singh Thapa Director

Promoter Group
....................................................................... Mr. Sudarshan Raj Poudyal Director

Profesional Director
....................................................................... Mr. Bishnu Prasad Banjade Director

Public Group
(Representing Nepal Remittance P. Ltd.)
....................................................................... Mr. Balram Neupane Director

Public Group
(Representing National Investment Co. P. Ltd.)
....................................................................... Ms. Rita Malla Director

Public Group
....................................................................... Mr. Sitaram Thapaliya Director

Public Group
....................................................................... Mr. Radhesh Pant MD

Promoter Group
....................................................................... Mr. Sanjay Bahadur Shah Chairman

Promoter Group
Future Plans and Programs

The bank has given continuity to the following plans and programs with the objective to further improve the banks performance in the coming years: Mobilize funds at the optimum levels and introduce new products and services offering high returns. Establish the Bank as a Customer Oriented Bank by continuously improving on the quality of banking services to customers from across the country. Expansion of Card Services Debit Card, Pre-paid Card, Credit Card, etc.
OUR TEAM
Coming together is the beginning Being together is progress Working together is success
MANAGEMENT TEAM
1. Radhesh Pant Managing Director 2. Sabin Raj Shrestha Chief Business Officer 3. Uday Krishna Upadhyay Chief Operating Officer 4. Prabin Prakash Chhetri Chief Information Officer 5. Chetan Bar Singh Thapa Head Central Logistics & Specialized Asset Management 6. Kiran Bohara Head Central Operations 7. Manish Kumar Singh Head Finance, Corporate Affairs, Treasury & Accounts/Company Secretary 8. Ram Pratap Yadav Head Institutional Banking 9. Anand Pandey Head Business Bank 10. Dibya Chandra Shrestha Head Internal Audit and Compliance 11. Mishree Lal Prasad Yadav Head Legal 12. Anupa Rajbhandary Head Retail Bank 13. himani Pant Head Reconciliation & Treasury Back Office 14. Pranab Dabadi Head Card 15. Anil Ratna Tuladhar Head International Trade Operations 16. Bikas Khanal Head Credit Risk Management 17. Amit Bahadur Chand Head Corporate Credit 18. Raj Rimal Head Corporate Credit 19. Bigyan Ghimire Head Corporate Credit 20. Ganesh Lamsal Head Branch Operations 21. Shailee Joshi Head Accounting & Financial Analysis
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BRANCh MANAGERS
1. Girija Malla Kamal Pokhari 2. Ajupa Joshi Thamel 3. Thaman Bahadur Khatri New Road 4. Pravesh Raut Butwal 5. Ranjitsore Lal Malla Hetauda 6. Mahesh Mishra Nepalgunj (Regional) 7. Surendra Bahadur Shahi Dhangadi 8. Jit Bahadur Saru Pokhara 9. Sushma Maskey Biratnagar 10. Dipendra Budhathoki Birgunj & Amlekhgunj 11. Chiranjibi Bista Jawalakhel 12. Naresh Upadhyay Baskota Janakpur 13. Anjani Kumar Subedi Itahari 14. Surendra Prashad Madhikarmi Gongabu 15. Kalpana Pudasaini Kohalpur 16. Paban Pant Tatopani 17. Karna Bahadur Bhandari Surkhet 18. Chhabi Kumar Subedi Ghorahi 19. Rajendra Kumar Neupane Tulsipur 20. Praveen Shah Jumla 21. Meena Singh Balaju 22. Yagya Murti Pandit Attariya
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SABIN RAJ ShRESThA

Chief Business Officer
Our business development philosophy translates to each customer interface being an opportunity to add value
usiness environment in Nepal has had to face challenges since the late 90s as a result of political instability and not-so-conducive investment climate. The banking sector in particular has enjoyed relatively better days in comparison to other sectors, but sustaining growth has been a challenge considering the sluggish business scenario and the increasing number of financial institutions. Nevertheless, we in particular have been consistently registering double digit growth in business volume and profitability as a result of the dedication of the entire BOK team. To maintain present growth trends, we intend to increase outreach by investing in infrastructure, technology and most of all, what matters most - people. With the opening of five new branches in the reporting period, we now have 23 branches and 6 extension counters as of July 2008 and plan to open 10 more branches in various parts of the country within this fiscal year and 7 more in the subsequent year. The expansion strategy of
the bank will facilitate trade and payment through any branch in all the development regions and provide unbanked Nepalese access to modern banking products and services. Customers have always been at the centre of all our activities since the very beginning. Our business development philosophy translates to each customer interface being an opportunity to add value. The BOK team believes in long term relationship and we strive to take that extra mile to understand and meet customer needs. Branch Managers and the concerned staff are constantly taking stock of customer feedback on ways to improve our services. Our product portfolio over the years have undergone a change from generic products to specialized products based on demographics and utility. In order to meet the needs of the urban, peri-urban and rural population, we
hope to regionalise some of the products and services while maintaining standard real time banking to all the customers. We believe in change and continuous improvement. Product innovation has played a crucial role in our growth and we have been able to introduce value additions through investment in technology and by partnering with like-minded institutions. Our fast growing customer base in terms of deposits as well as lending in corporate, business and retail segments are a testament to our ability to consistently meet the expectations of our customers. On one side of our balance sheet, we are proud to have customers from different walks of lives who have built their trust on our wide array of deposit facilities. In the past, we only had core banking products like current, saving and fixed deposits. We today offer products to suit the needs of every segment of the society. In the coming days, we have plans to bring about more specific and customized products that would cater to the ever increasing need of the customers. On the other side of the balance sheet, majority of our asset is in the form of Corporate and Business lending, which has attained reasonable growth in volumes as a result of careful evaluation of project risk and return. BOK strongly supports ventures where the country has competitive advantages such as in renewable energy and tourism. In addition, we also believe in Nepalese entrepreneurship as being the engine of growth that is sustainable in the long run. That is why we have given special importance to the Micro, Small and Medium Enterprises (MSME) segment.
Retail lending today is also an important asset portfolio that has influenced the Nepalese living standard and accounts for approximately 20 percent of the total Loans and Advances. Financing needs of our customer is being facilitated through flexible terms on the basis of existing and potential income streams. We aim to constantly improve the product benefits to the customers who wish to avail housing loan, vehicle loan, education loan for both domestic and studies abroad, festivity loan and individual entrepreneurship loan. Establishment of a dedicated department for development financing has been another important milestone. With this initiative, the bank aims to meet the financing needs of the disadvantaged communities by supporting livelihood activities and providing customized banking solutions to the unbanked population. Corporate branding exercise has been a top priority over the past few years. The banks corporate identity and slogan have been well entrenched in our customers mind as a result of consistency in all communication channels. Careful planning at all stages of marketing campaigns have been instrumental in the success of our products and services. In the coming years, the marketing team will remain steadfast in working closely with the marketplace, customers and the communities we serve. Thus, it is our firm belief that we will be able to deliver even better results in years to come.
From left: Anand Pandey, Sipa Regmi, Amit B. Chand, Sabin R. Shrestha, Raj Rimal, Anupa Rajbhandary, Ram P. Yadav and Bigyan Ghimire
UDAY KRIShNA UPADhYAY

Chief Operating Officer
We have been able to continuously enhance our operating efficiencies by creating a secure, productive and responsive operating platform
ll operating systems re-engineering in BOK revolves around developing sound and efficient processes and procedures with the aim of making life easier for both our internal and external customers. It is our belief that an institution should be driven by systems and procedures and not by any individual. Hence, we have put in place appropriate systems, updated at regular intervals, to suit the changing market conditions which have enabled us to offer superior service delivery mechanism to our customers across branches, without having compromised on the associated risks and regulatory requirements. Over the years, BOK has been re-engineering its back-end processes to achieve enhanced operating efficiencies and put effective tools of checks
and controls internally in place by moving towards paperless environment with the help of sophisticated technologies and systems. Key operating functions are being centralized at the central office with some functions being taken care at the regional level to avoid over dependency and work overload at the central level. Centralization also avoids inconsistencies and helps maintain uniformity of service delivery across branches. Centralized environment can incorporate and implement frequent changes in external/ internal requirement at one go across all branches, as it only requires specialized training to the back-end team at the central or regional offices. This has allowed branches to concentrate on sales and service activities by focussing their energy and resources in maintaining better customer
relations and delivery of superior customer services. With the support of the robust Information Communication Technology (ICT) network and modern banking applications, all branches now work under a single central database allowing the regional and central office to take care of all backend processes. At the same time allowing regular monitoring and control over the operations and compliance to internal and external systems and associated rules and regulations. Central logistics ensures consistency in branch dcor and provides all Logistic/administrative support in maintaining uniform identity of the bank across the board. Human Resource takes care of timely recruitments and all training needs for the new branch employees. The Regional & Central Operations takes care of all back-end operations, enabling the newly opened branch to start operations with full range of services to its customers from day one. As we are rapidly expanding our reach to the semi-urban and rural interiors of the country to provide modern day banking services, to the unbanked population, we are also giving priority to recruit local youths in the
new branches, promoting employment at the local levels. The presence of a local team has also been beneficial to the bank in promoting a sense of ownership and stronghold of the branch in the community. The Bank considers training as an important risk management tool in addition to the risk management mechanism built into the system. We are thus providing regular training on general and task specific functions to employees as a capacity building measure to mitigate potential risks. Sky is the limit for good performers in BOK. On-going reinforcement of its performance based work culture in the recent past has resulted enhancing efficiencies as well as job satisfaction of the employees across the bank to a great extent. In summary, it can be rightly said that we have been able to continuously enhance our operating efficiencies by creating a secure, productive and responsive operating platform geared to deliver the customized needs of the modern day customers and in providing greater values to all our stakeholders.
Standing from left: Kiran Bohara, Anil R. Tuladhar, himani Pant, Ganesh Lamsal, Manoj Dahal and Sitting Uday K. Upadhyay
PRABIN PRAKASh ChhETRI

Chief Information Officer
We are confident that all investments and efforts to develop a robust ICT backbone will make life easier for our valued customers
he banking sector, in Nepal and globally, demands real time service without compromising on risks presented by the dynamics of domestic and global financial markets. Embracing technology and technology enabled operations and services have become the key to business process reengineering and meeting the high standards of services demanded by modern day customers and in achieving our goal communicated through our slogan We make your life easier. As BOK is moving towards becoming a complete Information Communication Technology (ICT) enabled banking service provider, our team has been continuously working to introduce ICT infrastructure backed by appropriate
ICT solutions in all banking operations and services. We are confident that all investments and efforts to develop a robust ICT backbone will make life easier for our valued customers. It is our pleasure to inform you that we have successfully upgraded to the 7th version of FINACLE, banking software developed by Infosys, India considered to be among the best globally. The application is highly efficient and equally reliable as it has been tested in live conditions to handle 2,000 branches and over 5 million customers. With the implementation of the Card Management System and SWITCH, the bank has significantly addressed problems associated with ATM services and now also offers
VISA/SCT Debit Cards through its own infrastructure. Credit Card services and International Debit Cards are also being introduced later this year. Recently, the bank has also enhanced the capability of its Internet Banking (BOK Click) system allowing BOK account holders to perform banking transactions from any location using the internet. In addition to the core banking applications, we are also continuously working in coordination with various departments to implement Management Information System and systems that facilitate decision making in areas of market analysis, risk management, operational efficiency. We are also planning to implement supporting applications such as Share Point, a Microsoft product for improving work flow, approval process and resource management. Developing a robust ICT network has been a priority in the last few years to support the rapidly expanding branch network, centralizing of all banking operations and logistics and anywhere branch banking services. All
branches, even the branch located in Jumla, operates under one secure central database connected by fiber or VSAT. Plan is underway to introduce a dual communication system to ensure uninterrupted 365 days banking services. Our team is in the process of adding voice communications in our network for interbank communications resulting in substantial savings on communication costs. The focus of the IT department has been to introduce system interfaces to raise the standard of our processes, more convenient transactions for the customers, better customer handling and an efficient back-office system for better control of activities. Some of the projects currently undertaken by the department are customization of FINACLE, SMS banking, upgrading to Share Point, introducing Credit Card services and establishing our own POS network. In the coming years, technology will drive improvement in BOKs systems and product offers and our bank is definitely technology ready to deliver appropriate banking solutions making life easier for our customers.
Standing from left: Narayan P. Ghimire, Pranab Dabadi, Bhushan R. Bajracharya, Bikram Shrestha and Sitting: Prabin P. Chhetri
ChETAN BAR SINGh ThAPA

head - Central Logistics & Specialized Asset Management
he Central Logistics department takes care of all the non-banking functions of the bank such as purchase of stationery and equipments, lease of branch buildings, design and construction, etc. in line with the annual expenditure plan. Centralizing the function of non-banking activities has helped to maintain corporate identity, increase productivity of the department and branches as they get to focus on core banking functions and maintaining financial discipline. Providing access to modern day banking services to the non-banked section of the community has been a priority in BOK. Identifying appropriate locations for establishing our new branches has thus been an important function of the department. We have thus been the first private sector bank to reach the remotest districts of Nepal such as Jumla.
In the present fiscal year, the department has undertaken a major responsibility to develop a state-of-the-art nine storey corporate building in Kamaladi. The new building has allocated more space for general customer service area, with luxurious priority customer rooms while centralizing presently scattered departments under a single roof. We have been exercising extreme caution to keep expenses within approved limits as a result of which the department was able to make substantial savings on expenses in the previous years. Global recession and increasing market inflation is bound to put even more pressure on the expense side but the department would like to reassure the shareholders and its customers of our commitment to maintain expenses within approved limits.
We are the first private sector bank to reach the remotest districts of Nepal such as Jumla
From left: Ekraj Rawal, Umesh R. Aryal and Chetan B. S. Thapa
MANISh KUMAR SINGh

head Finance, Corporate Affairs, Treasury & Accounts/Company Secretary
eveloping a strong capital base is essential not only for meeting central banks capital requirements but also to support the banks business growth and cushion any unforeseen loses beyond the banks control. Over the years, the bank has made adequate arrangements to meet all short and long term capital requirements through proper capital planning, finalized and approved by the Board of Directors, based on Business Expansion Strategy of the bank. The bank has achieved optimum returns on its investments year after year through efficient management of the investment portfolio, constant monitoring of market interest rates, and managing overall liquidity
requirement of the bank. Based on the liquidity and interest rate gap analysis, the bank has developed Asset and Liability Management strategies to ensure optimum liquidity and higher return from portfolio in order to contribute towards higher returns for shareholders. Adequate amount of funds are invested in government securities, as a buffer, to meet any unforeseen liquidity requirements. Foreign exchange transactions are attractive sources of revenue but entails substantial risks. Risks in foreign exchange transactions are managed with the help of Treasury Manual, foreign exchange position limits, appropriate dealing authorities and close monitoring of the foreign exchange market with the help of Financial Information Provider (Thompson Reuters in
The bank has been able to give optimum returns to its shareholders through efficient fund management
our case). Based on the liquidity profile of foreign currency deposits, the bank invests in suitable investment products (placements, bonds, etc) of sound foreign banks. Care is taken to ensure the investments are safe and provide reasonable returns. The bank has attained good growth in both deposits and loans and advances in the reporting period. Proper Asset Liability Management along
with proper Credit Management has resulted in a significant growth in Net Profit. The bank uses a centralized database system bringing all branches, even those as remote as Jumla under the same network on real time basis. The system supports the banks strategy in ensuring that all braches follow the same accounting practices.
From left: Niroj Thapa, Shailee Joshi, Ujjwal Gajurel, Manish K. Singh, Parmeshwar Pant and Niranjan Nakarmi
DIBYA ChANDRA ShRESThA

head Internal Audit and Compliance
he role of internal audit has been redefined over the years and is no longer only limited to fraud detection and compliance. Considered as one of the four pillars of Corporate Governance, our team of auditors serve as the centre of expertise for managing risks by demonstrating command in risk management and business process improvement. Our growing volume of business and geographical coverage demands an even stronger system for compliance to internal and external rules and regulations. At the operational level, we have established various policies, guidelines and authority levels which are regularly monitored for compliance. Regular monitoring helps in ensuring internal control are sound and operating effectively.
It is our concern to ensure, that risk management practices are effective and key risks are being managed at acceptable levels. As a result of our effective risk management practices, BOK has a very effective and efficient operations complying with rules and regulations of the bank and of the regulatory authorities. The task of managing risk is an on-going process and we will develop better systems and monitoring mechanisms though the use of ICT and applications that provide even better security to the shareholders and depositors of our bank.
BOK has a very effective and efficient internal control mechanism
From left: Jiva Nath Nepal and Dibya Chandra Shrestha
BIKAS KhANAL
head - Credit Risk Management
Our efforts in managing credit risks have been well rewarded
ending, an important function of a financial institution, is the key source of risk. Be it Corporate, SME or Retail, managing risks surfacing from lending activities takes centre-stage at both policy and operating level activities. The bank is exposed to credit risk at every stage of loans and advances. We closely watch the performance and activities related to loans and work together with the customers and other departments to identify and timely mitigate such risks. As a credit control function, our team of professionals ensure compliance in the documentation from the time of request for loan until its approval.
Besides evaluating individual loan requests, our team is regularly monitoring micro and macro economic indicators and market trends, vis-vis our credit portfolio, to mark a threshold to sectors with inherent risks. In addition to the guidelines of NRB, BOK has also imposed restrictions on certain sectors as a measure to avoid sectoral concentration. Credit Risk Management is a continuous process and we thus remain ever vigilant of micro and macro economic indicators and follow-up on individual accounts at the time of credit administration. Our team grades each individual accounts on four set parameters namely; industry,
business in question, financial performance of the business and account performance (in case of existing relationship) and use our techniques on assessing early warning signal to assist in identifying potential risks in individual accounts and identify appropriate risk mitigation strategy . These two approaches being adopted by BOK have been particularly effective in working with our customers to timely mitigate potential risks. The department remains committed in providing up-to-date information on credit risks arising from changes in the national economy and micro
economic environment as well as analysis of the banks credit portfolio on a regular basis to guide policy level decisions. Our efforts in managing credit risks have been well rewarded as bad loans have been consistently decreasing over the years. In the reporting period, we were able to reduce bad loans from 2.51 percent to 1.85 percent and hope to reduce it even further through more prudent vigilance.
Standing from left: Sitashma Shrestha, Sachin R. Tuladhar, Sitting from left: Snigdha Morbaita, Junita Paudyal and Bikas Khanal
AShISh BhATTARAI
head - human Resource
Satisfied employees are the foundation to the institutions bright future
eople provide the competitive advantage required for the success of any organisation. It is through their contribution that the bank has been able to achieve its goal. With the bank expanding rapidly in the recent time, recruitment has become an important activity and due vigilance is being maintained to ensure transparency and fairness in the recruitment and selection process. The bank has been hiring people at the local level from towns where the branches have been opened. Also with the objective of injecting new
managerial cadres, the bank has continued to hire management trainees every year. The bank has recently established a training centre in Balaju (Industrial District), with the aim of regularizing in-house training programs. The bank has been providing in-house training on general banking and customer service for all branches and is in the process of devising specialized training on banking. To make best use of the skills within the organization, priority is being given to in-house trainers, however for expertise unavailable
internally, it also outsources. While many of the training programs are skill specific, equal importance is given to developing people skills such as communication, leadership, interpersonal relations and team building. Maintaining high level of employee satisfaction is critical and to ensure their dedication and a positive feeling of equitable treatment, the bank has a system of evaluating individual performance so as to adopt a systematic approach in appraising and rewarding performance and identifying training needs of the employees. Performance based incentives, salary
increments and opportunities for participating in seminars / workshops and in sporting activities has been regularised. Satisfied employees are the foundation to the institutions bright future and it is our priority to create a professional and friendly working environment. All is not achieved, and BOK as a team is continuously working towards enhancing its care and support to every member of the family and in making their life easier.
From left: Anupama Darshini Sen, Anju Nakarmi and Ashish Bhattarai
ShREEYUKTA ThAPALIYA PANDEY

head Corporate Communication
As per our CSR commitment, we constantly endeavour to reach out to those that need most support
ustomers today have access to unparalleled information through various channels, which presents a major challenge for sellers to communicate with customers in the midst of all the clutter. Corporate Communication department at BOK takes up the challenge to communicate its corporate vision, market its products and services to present and potential customers and foster communication within the organization. We have taken up corporate branding a step forward in the last few years to establish BOKs corporate identify and corporate slogan in the mind of
our stakeholders. Marketing collaterals in all forms are consistent with our corporate brand guideline, as a result of which, all our employees, customers and stakeholders associate with our corporate logo, colors and slogan We make your life easier. Our department maintains a close relationship with all points of customer interface to get cues on the customer needs and thereafter provide important inputs to the product development team. In the process, we have always strived our best to provide value added features and benefits
that are in-line with their needs, lifestyle and utility to live up to our corporate slogan. The product portfolio at BOK receives the due attention from the Corporate Communication department with marketing campaigns targeted at particular market segments using the right message, appropriate media channels and supporting communication materials. Our strict adherence to consistency in corporate branding in all product marketing campaigns has not only enhanced our corporate branding activities but also created synergy in our marketing efforts resulting in a higher return on marketing investments. BOK believes that a true corporate citizen needs to think beyond the purview of the organizations functions and benefits. Corporate Social Responsibility is thus a top priority and the department has partnered with various NGOs and communities across the region to support need based social initiatives in health, education and environment with equal participation from the banks employees.
Over the years, the bank has made significant contributions to helping the poor and disadvantaged members of the society through direct intervention programs to add on to the various banking activities. In the last one year, we have closely worked with various NGOs such as Hospital and Rehabilitation Center for Disabled Children (HRDC), Community Based Rehabilitation (CBR)-Biratnagar, Skill Development and Rehabilitation Center for Disables-Nepal, Keta Keti Ashram-Bansbari, Help to Helpless Council-Dharan, Save the Children US in Far Western region, Development and Equity for Women in Empowerment-Nepal,Traffic PoliceGaushala, Naxal Yuva Manch-Nagpokhari to name a few. Our team understands upholding the corporate mission and vision and corporate slogan goes beyond corporate boundaries and will continue to live by the slogan We make your life easier for our customers and the society at large.
From left: Shreeyukta T. Pandey and Ummeed Shrestha
FINANCIAL STATEMENTS
Teamwork divides the task and multiplies the Success
AUDITORS REPORT TO ThE ShAREhOLDERS OF BANK OF KAThMANDU LIMITED
e have audited the accompanying Balance Sheet of the Bank Of Kathmandu Limited (hereinafter referred to as the Bank), as at Ashadh 31, 2065 (July 15, 2008) and the related Profit & Loss Account and Cash Flow Statement for the year then ended. These financial statements are the responsibility of the banks management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Nepal Standards of Auditing and relevant practices. Those standards and practices require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examination on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Based on our examination of the financial statements as afore said, we report that: 1. We have obtained all information and explanations required for the purpose of our audit. 2. The Balance Sheet, Profit & Loss Account and Cash Flow Statement thereto are presented in conformity with the formats prescribed by the Nepal Rastra Bank and are in agreement with the accounts maintained by the Bank. 3. The account and records of the Bank have been maintained as required by law and practice. 4. Returns received from the branch offices of the Bank are adequate for the purpose of our audit. 5. The capital fund and risk bearing fund of the bank are adequate considering the Directives issued by the Nepal Rastra Bank. 6. To the best of our information and according to the explanation given to us and from our examination of the books of accounts
of the Bank, we have not come across any case where the Board of Directors or any employees of the Bank have acted contrary to the provisions of law, or committed any misappropriation or caused any loss or damage to the Bank and violated Directives issued by the Nepal Rastra Bank or acted in a manner as would jeopardize the interest and security of the Bank and its depositors. 7. The business of the Bank has been conducted satisfactorily and found within its authority. 8. In our opinion and to the best of our information and according to the explanation given to us, the said accounts read together with the Significant Accounting Policies (Schedule 32) and Notes thereon (Schedule 33), give a true and fair view - in the case of Balance Sheet, of the state of affairs of the Bank as at Ashadh 31, 2065 (July 15, 2008), - in the case of Profit & Loss Account, of the profit of the Bank for the year ended on that date, and - in the case of Cash Flow Statement, the cash flows of the Bank for the year ended on that date.
Gopal P. Rajbahak, FCA For G. P. Rajbahak & Co. Chartered Accountants Date: September 17, 2008 Place: Kathmandu
BALANCE SHEET
AS AT JULY 15, 2008
Amt. in NPR
Capital and Liabilities

. Share Capital 2. Reserves and Surplus . Debentures and Bonds 4. Borrowings . Deposits 6. Bills Payables 7. Proposed and Dividend Payables 8. Income Tax Liabilities . Other Liabilities TOTAL CAPITAL AND LIABILITIES
Schedule
2 4 6
Current Year
60,4,00 78,2,488 200,000,000 00,000,000 ,8,77,7 ,76,24 2,804,204 -
Previous Year
60,4,00 0,,44 200,000,000 70,000,000 2,88,27,24 2,776,722 ,7,2 07,840,82 14,581,394,916
6,7, 17,721,925,187
Assets
. Cash Balance 2. Balance with Nepal Rastra Bank . Balance with Banks/Financial Institutions 4. Money at Call and Short Notice . Investments 6. Loans, Advances and Bills Purchase 7. Fixed Assets 8. Non Banking Assets . Other Assets TOTAL ASSETS
Schedule
8 0 2 4 6
Current Year
6,747,4 606,04,072 27,670,728 72,67,86 ,204,067,78 2,462,67,4 87,274, 42,78 4,46,08 17,721,925,187
Previous Year
2,042,72 88,4,84 2,6,28 2,278,628 2,2,4,866 ,,27,67 20,846, ,62,7 28,78,74 14,581,394,916
Contingent Liabilities Directors Declaration Statement of Capital Adequacy Statement of Risk Weighted Assets Principal Indicators Significant Accounting Policies Notes to Accounts
Schedule7 Schedule 2 Schedule 0 Schedule 0 (A) Schedule Schedule 2 Schedule

Schedules 1 to 17, 32 and 33 form an integral part of this Balance Sheet
......................................................... Manish Kumar Singh Head - Finance
......................................................... Radhesh Pant Managing Director
......................................................... Santa Bar Singh Thapa Director
......................................................... Sudarshan Raj Poudyal Director
......................................................... Bishnu Prasad Banjade Director
......................................................... Balram Neupane Director
......................................................... Rita Malla Director
......................................................... Sitaram Thapaliya Director
......................................................... Sanjay B. Shah Chairman
As per our report of even date ........................................................ Gopal P. Rajbahak, FCA G. P. Rajbahak & Co. Chartered Accountants Date: September 7, 2008 Place: Kathmandu
PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED ON JULY 15, 2008
Amt. in NPR
Particulars
. Interest Income 2. Interest Expenses Net Interest Income . Commission and Discount 4. Other Operating Income . Exchange Gain Total Operating Income 6. Employees Expenses 7. Other Operating Expenses 8. Exchange Loss Operating Profit before provision for possible losses . Provision for Possible Losses Operating Profit 0. Non Operating Income /(Loss) . Provision Written Back Profit from Ordinary Activities 2. Profit/(Loss) from extra-ordinary Activities Net profit after incorporating all Activities . Provision for Staff Bonus 4. Income Tax Expenses - Current Tax - Deferred Tax - Previous Years Additional Tax Net Profit/(Loss )
Schedule
8 20 2 22 2 24 22 2 26 27 28
Current Year
,04,7,874 47,4,42 616,614,442 2,4,82 2,67,724 ,76,0 862,962,787 0,60,20 70,480,08 601,879,959 8,48,48 563,441,461 80,748 6,82,0 626,085,159 (4,6,284) 580,688,875 2,78,88 66,402,08 62,,6 ,866,72 -
Previous Year
8,00,47 ,8,0 479,822,936 7,4,2 ,002,87 80,826,0 677,082,975 6,740,84 8,42,4 468,912,650 8,84,8 387,017,669 (2,77,84) 7,0,88 421,341,705 4,0 421,752,856 8,4,6 2,024,706 ,424,706 ,600,000 262,386,980
361,496,879
Schedules 18 to 28, 32 and 33 form an integral part of this Profit & Loss Account
As per our report of even date ........................................................ Gopal P. Rajbahak, FCA G. P. Rajbahak & Co. Chartered Accountants
PROFIT AND LOSS APPROPRIATION ACCOUNT

Amt. in NPR
Particulars INCOME
. Retained Profit upto Previous Year 2. Current Years Profit . Exchange Fluctuation Reserve 4. Transfer from Capital Adjustment Reserve . Adjustment of Deferred Tax Assets on initial adoption of Nepal Accounting Standard (NAS) - 0, Income Taxes Total
Current Year
7,,266 6,46,87 379,488,145 72,2,76 2,67,4 24,26,20 2,06,700 28,7,42 Total 357,331,959 22,6,86
Previous Year
8,2,4 262,86,80 ,26,2 281,995,441 2,477,6 20,628,260 2,02,60 60,4,0 28,7,42 264,004,175 7,,266
EXPENSES
. Loss up to Last Year 2. Current Years Loss . General Reserve 4. Contingent Reserve . Institutional Development Fund 6. Dividend Equalization Fund 7. Staff Related Reserves 8. Proposed Dividend . Proposed Bonus Shares 0. Special Reserves . Exchange Equalization Reserve 2. Capital Redemption Reserves . Capital Adjustment Fund 4. BOK Bond - 206 Redemption Reserve . Retained Profit/(Loss)
CASH FLOW STATEMENT

Amt. in NPR
Previous Year
1,196,283,528 957,415,138 77,06,64 7,4,2 72,774,74 4,0 (,26,07) ,002,87 664,951,336 ,8,0 6,740,84 8,42,4 7,600,000 292,463,802 (920,919,694) 4,768,70 88,2,860 (2,40,24,08) 46,6,74 1,824,739,421 ,0,68,0 76,8, (2,648,6)
Particulars
(A) CASH FLOW FROM OPERATING ACTIVITIES 1. Cash Receipts . Interest Income .2 Commission and Discount Income . Exchange Gain .4 Recovery of written off Loan . Non-Operating Income .6 Other Income 2. Cash Payments 2. Interest Expenses 2.2 Employee Expenses 2. Office Overheads 2.4 Exchange Loss 2. Income Tax Paid 2.6 Non-Operating Expenses 2.7 Other Expenses OPERATING CASH FLOW BEFORE WORKING CAPITAL ADJUSTMENTS CHANGES IN CURRENT ASSETS . Increase/(Decrease) in Money at Call and Short Notice 2. Increase/(Decrease) in Other Short Term Investments . Increase/(Decrease) in Loans, Advances and Bills Purchase 4. Increase/(Decrease) in Other Assets CHANGES IN CURRENT LIABILITIES . Increase/(Decrease) in Deposits 2. Increase/(Decrease) in Certificate of Deposits . Increase/(Decrease) in Short Term Borrowings 4. Increase/(Decrease) in Other Liabilities
Current Year
131,216,696 1,213,828,527 76,88,22 2,4,82 8,78,2 6,000 662,60 2,67,724 829,126,260 47,4,42 0,60,20 70,480,08 0,00,000 384,702,267 (2,795,185,864) 86,8,72 (20,,47) (,06,0,24) 28,48,74 2,541,700,293 ,444,80,0 (60,000,000) (27,0,22)
continued.........
Amt. in NPR
Previous Year
(617,614,646) (4,4,7) (20,0,7) 47,8,22 40,08 486,130 ,60,400 (,074,270) 8,051,839 587,206,851 728,697,090 1,315,903,941
Particulars
(B) CASH FLOW FROM INVESTING ACTIVITIES . Increase/(Decrease) in Long Term Investment 2. Increase/(Decrease) in Fixed Assets . Interest income from Long Term Investments 4. Dividend Income . Others (C) CASH FLOW FROM FINANCING ACTIVITIES . Increase/(Decrease) in Long Term Debt (Bonds, Debentures etc) 2. Increase/(Decrease) in Share Capital . Increase/(Decrease) in Other Liabilities 4. Increase/(Decrease) in Subsidies / Refinance from NRB (D) INCOME/ (EXPENSES) FROM FLUCTUATIONS IN EXCHANGE RATE (E) CURRENT YEARS CASH FLOW FROM ALL ACTIVITIES (A+B+C+D) (F) OPENING CASH & BANK BALANCE (G) CLOSING CASH & BANK BALANCE (E+F)
Current Year
(16,680,494) (7,720,77) (66,427,77) 7,,82 48,08 10,026,800 124,563,002 1,315,903,941 1,440,466,943
STATEMENT OF CHANGES IN EQUITY

Amt. in NPR
Particulars
6,695,154 ,26,2 17,991,266 6,46,87 (72,2,76) (2,4,44) (2,06,700) (28,7,42) 22,156,186 270,081,795 164,075 72,2,76 - 197,782,419 164,075 16,642,936 2,06,700 19,149,636 197,782,419 164,075 16,642,936
Share Capital
Retained Profit/(Loss)
General Reserve
Capital Reserve
Share Premium
Exchange Fluctuation Reserve
Other Reserves
157,552,847 157,552,847 24,26,20 28,7,42 427,380,796
Total
981,978,731 ,26,2 993,274,843 6,46,87 (2,67,4) 1,342,073,788
Opening Balance as at July 17, 2007 -
603,141,300
Changes in accounting policy
Adjustment of Deferred Tax Assets on initial) adoption of NAS - 0 (Income Taxes -
Restated Balance
603,141,300
Surplus on Revaluation of properties
Deficit on Revaluation of Investment
Net Gains & Losses not recognized in the income statement
Net profit for the period
Transfer to General Reserve
Proposed Dividend/Bonus
Issue of Share Capital
Deficit on revaluation of properties
Surplus on Revaluation of Investment
Capital Adjustment Fund
Transfer from Capital Adjustment Fund
BOK Bond Redemption Reserve
Closing Balance as at July 15, 2008
603,141,300
SCHEDULE 1 SHARE CAPITAL AND OWNERSHIP

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
1,000,000,000 ,000,000,000 606,173,300 606,7,00 603,141,300 60,4,00 -
Particulars . Share Capital

1.1 Authorized Capital A) 0,000,000 Ordinary Shares of NPR 00 each B) Non-redeemable Preference Shares C) Redeemable Preference Shares 1.2 Issued Capital A) 6,06,7 Ordinary Shares of NPR 00 each B) Non-redeemable Preference Shares C) Redeemable Preference Shares 1.3 Paid Up Capital A) 6,0,4 Ordinary Shares of NPR 00 each B) Non-redeemable Preference Shares C) Redeemable Preference Shares
Current Year
1,000,000,000 ,000,000,000 606,173,300 606,7,00 603,141,300 60,4,00 -
Note: Forfeited but not issued number of shares 4,505
SHARE OWNERSHIP
Share Capital
252,170,000 2,78,000 2,8,000 350,971,300 603,141,300
%
42% 2% 40% 58% 100%
Particulars
1. Promoter . Government of Nepal .2 Foreign Institutions . A class Licensed Institutions .4 Other Licensed Institutions . Other Institutions .6 Individuals .7 Others 2. General Public Total
%
42% 2% 40% 58% 100%
Share Capital
252,170,000 2,78,000 2,8,000 350,971,300 603,141,300
List of Shareholders holding more than 0.5% shares
S.N. Name of Shareholders

2 4 6 7 8 SHARDA SINGH DAMBER BAHADUR MALLA RANA BAHADUR SHAH RAMA DEVI PANT RITA MALLA NEPAL MENTHA PRODUCTS LTD. PREM BAHADUR SHRESTHA BHUBNESHWORI SHRESTHA BIJAY KRISHNA SHRESTHA
Paid-up Amount
2,77,800 2,42,700 ,0,200 7,78,00 ,,00 2,78,000 ,744,200 ,27,00 0,8,000 0,4,00 ,022,000 8,2,000 7,826,000 4,72,000 4,664,400 4,0,000 4,0,000 4,7,000 ,80,400 ,60,400 ,26,400 ,06,00 ,20,000 ,042,000 ,7,400 6,64,00 6,60,800 ,8,00 4,6,400 4,004,00 ,80,000 ,80,000 ,0,000
%
.4% .64% .20% 2.% 2.8% 2.2% .% .87% .82% .7% .0% .4% .0% 0.82% 0.77% 0.7% 0.7% 0.6% 0.6% 0.6% 0.% 0.% 0.4% 0.0% .8% .0% .02% 0.8% 0.72% 0.66% 0.6% 0.6% 0.%
Type
Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Promoter Public Public Public Public Public Public Public Public Public
0 ALOK SINGH ANJAY BAHADUR SHAH 2 AMBIKA SHAH NAMRATA SHARMA 4 PARATAP BAR SINGH THAPA SATYA NARAYAN MANANDHAR 6 GANESH KUMAR AGRAWAL 7 NIRMAL KUMAR AGRAWAL 8 GAURI SHRESTHA PARMESHWOR P. RAUNIYAR 20 DEEPAK KUMAR MALHOTRA 2 BHUPENDRA KARKI 22 SANTA BAR SINGH THAPA 2 SHREE BHANDARI 24 RAMESH NATH DHUNGEL 2 SHUBHAM INVESTMENT PVT. LTD. 26 NEPAL MENTHA PRODUCTS LTD. 27 GAURI SHRESTHA 28 CHOP NARAYAN SHRESTHA 2 HARATI INVESTMENT PVT.LTD. 0 DREAMS INVESTMENT PVT.LTD. DAMBAR BAHADUR MALLA 2 RITA MALLA ANJANA KUMARI AGRAWAL
SCHEDULE 2 RESERVES AND SURPLUS

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
197,782,419 164,075 106,672,221 50,880,627 0,880,627 17,991,266 16,642,936 390,133,544
Particulars
1. General Reserve 2. Proposed Bonus Share 3. Capital Reserves 4. Capital Redemption Reserve 5. Capital Adjustment Reserve 6. Other Reserves A) Contingent Reserve B) Institutional Development Fund C) Dividend Equalization Fund D) Special Reserves E) Assets Revaluation Reserve F) Other Free Reserves G) Bond Redemption Reserve 7. Retained Profit/(Loss) 8. Exchange Fluctuation Reserves Total
Current Year
270,081,795 241,256,520 164,075 106,672,220 79,452,056 7,42,06 22,156,186 19,149,636 738,932,488
SCHEDULE 3 DEBENTURES AND BONDS

AS AT JULY , 2008
Amt. in NPR
Previous Year
200,000,000
Particulars
6% BOK Bond - 206 of NPR ,000 each Issued on October 0, 200 and maturity at October 04, 202 (Balance of Redemption Reserve NPR 7,42,06) 2 .% Bond/Debentures of NPR..each Issued on and maturity at . (Balance of Redemption Reserve NPR.) .% Bond/Debentures of NPR..each Issued on and maturity at . (Balance of Redemption Reserve NPR.) Total (1+2+3)
Current Year
200,000,000
200,000,000
200,000,000
Note: No securities have been pledged for issue of BOK Bond.
SCHEDULE 4 BORROWINGS
AS AT JULY 15, 2008
Amt. in NPR
Previous Year
730,000,000 60,000,000 70,000,000 730,000,000
Particulars
(A) Local . Government of Nepal 2. Nepal Rastra Bank (Under Standing Liquidity Facility) . Repo Obligations 4. Inter Bank and Financial institutions . Other Organized Institutions 6. Others (B) Foreign . Banks 2. Other Total (A+B)
Current Year
100,000,000 00,000,000 100,000,000
SCHEDULE 5 DEPOSITS
AS AT JULY 15, 2008
Amt. in NPR
Previous Year
1,661,775,129 1,490,705,139 26,8,704 6,4,48 47,620,6 2,28,788 2,,870 22,0,80 171,069,990 60,44,00 0,2,87 169,040,753 ,7,07 ,247,66 27,171,742 27,171,742 27,7,742 1,857,987,624
Particulars
1. Non Interest-bearing accounts A. Current Deposits 1. Local Currency . Government of Nepal .2 A Class Licensed Institutions . Other Licensed Institutions .4 Other Organized Institutions . Individuals .6 Others 2. Foreign Currency 2. Government of Nepal 2.2 A Class Licensed Institutions 2. Other Licensed Institutions 2.4 Other Organized Institutions 2. Individuals 2.6 Others B. Margin . Employees Guarantee 2. Guarantee Margin . Letter of Credit Margin C. Other 1. Local Currency . Financial Institutions .2 Other Organized Institutions . Individuals 2. Foreign Currency 2. Financial Institutions 2.2 Other Organized Institutions 2. Individuals Total of Non-interest bearing accounts
Current Year
2,092,338,375 1,908,924,732 8,607,408 76,7,47 46,8,8 ,047,64,67 6,74,04 0,06,000 183,413,643 7,620,24 8,8,72 7,704 152,151,926 77,2,24 74,,402 91,846,124 91,846,124 ,846,24 2,336,336,425
continued.........
Amt. in NPR
Previous Year
5,527,292,363 5,298,797,635 22,48,0 4,8,487,07 47,82,226 228,494,728 07,22,244 2,72,484 3,037,170,561 2,216,461,386 ,62,00,7 404,070,807 80,00,000 820,709,175 682,88,07 7,87,00 1,966,476,746 1,927,398,657 ,7, 2,0,007 ,76,20,676 ,28,66 ,000 39,078,089 ,6,607 6,7,822 ,2,660 - 0,530,939,670 1 2,388,927,294 1
Particulars
2. Interest-bearing accounts A. Saving Deposits 1. Local Currency . Organized Institutions .2 Individuals . Others 2. Foreign Currency 2. Organized Institutions 2.2 Individuals 2. Others B. Fixed Deposits 1. Local Currency . Organized Institutions .2 Individuals . Others 2. Foreign Currency 2. Organized Institutions 2.2 Individuals 2. Others C. Call Deposits 1. Local Currency . A Class Licensed Institutions .2 Other Licensed Institutions . Other Organized Institutions .4 Individuals . Others 2. Foreign Currency 2. A Class Licensed Institutions 2.2 Other Licensed Institutions 2. Other Organized Institutions 2.4 Individuals 2. Others D. Certificate of Deposit . Organized Institutions 2. Individual . Others Total of Interest bearing accounts TOTAL DEPOSITS
Current Year
6,596,109,679 6,331,175,738 22,46,04 6,00,8,6 06,, 264,933,941 28,870,84 ,6,020 47,7 3,703,175,532 3,025,238,116 2,78,00,0 46,,2 ,07,000 677,937,416 ,464,40 78,472,66 3,198,116,163 3,095,885,581 2,702,007 774,,08 2,267,4,06 28,2,60 102,230,582 02,20,82 - 13,497,401,374 15,833,737,799
SCHEDULE 6 BILLS PAYABLES

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
7,64,6 8,082,86 25,776,722
Particulars
. Local Currency 2. Foreign Currency Total
Current Year
2,2,46 28,40,74 51,576,245
SCHEDULE 7 OTHER LIABILITIES

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
8,4,6 4,04,64 28,7 6,00,80 ,67,48 7,826,0 7,64,084
6,000 7,0,084
Particulars
. Pension/Gratuity Fund 2. Employees Provident Fund . Staff Welfare Fund 4. Provision for Staff Bonus . Interest Payable on Deposits 6. Interest Payable on Borrowings 7. Interest Payable on BOK Bond 206 8. Unearned Discounts and Commission . Sundry Creditors 0. Branch Adjustment Account . Others
a. Audit fee b. Others
Current Year
2,78,88 2,66,68 2,877 6,008,20 4,67,8 46,667,0 ,40,
60,000 8,800,
107,840,825
Total
161,733,151
SCHEDULE 8 CASH BALANCE

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
7,4,476 2,048,06 219,042,572
Particulars
. Local Currency (including coins) 2. Foreign Currency Total
Current Year
6,222,70 20,24,4 536,747,143
SCHEDULE 9 BALANCE WITH NEPAL RASTRA BANK

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
88,4,84 80,8, (7,086,078) 883,495,841
Particulars
. Nepal Rastra Bank a. Current Account b. Other Account Total
Local Currency INR

2,47,76 6,4,224 (4,027,46) 592,471,763 -
Foreign Currency Convertible

,77,0 ,77,0 -
Current Year Total

,77,0 ,77,0 606,04,072 60,076, (4,027,46) 606,049,072
13,577,309 13,577,309
SCHEDULE 10 BALANCE WITH BANKS/FINANCIAL INSTITUTIONS

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
48,443,328 48,44,28 164,922,200 64,22,200 213,365,528
Particulars
1. Local Licensed Institutions a. Current Account b. Other Account 2. Foreign Banks a. Current Account b. Other Account Total
Local Currency INR

85,113,500 8,,00 85,113,500
Note:
Foreign Currency Convertible

22,82 22,82 ,4,480 ,4,480 113,976,372
Current Year Total

22,82 22,82 22,04,6 22,04,6 85,636,392 8,66,2 212,034,336 22,04,6 297,670,728
8,80,86 8,80,86 98,580,856
212,557,228
As per the statements of related banks, the balance amount is NPR 1,074,948,720
Differences are near to the year-end transactions, which have been identified & subsequently reconciled .
SCHEDULE 11 MONEY AT CALL AND SHORT NOTICE

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
2,278,628 259,278,628
Particulars
. Local Currency 2. Foreign Currency Total
Current Year
72,67,86 72,679,836
SCHEDULE 12 INVESTMENTS
AS AT JULY 15, 2008
Amt. in NPR
Previous Year
,87,88,880 44,62,7 72,82,7 2,62,000 64,606,86 2,995,192,322 2,758,456 2,992,433,866
Particulars Trading
. Government Treasury Bills 2. Government Saving Bonds . Government Securities - Others 4. Nepal Rastra Bank Bonds . Foreign Securities 6. Local Licensed Institutions 7. Foreign Banks 8. Corporate Shares . Corporate Bonds and Debentures 0. Other Investments Total Investment Provision Net Investment - - -
Purpose Others
,28,8,67 82,07,748 7,4,8 28,24,00 8,74,78 3,206,826,174 2,758,456 3,204,067,718
Current Year
,28,8,67 82,07,748 7,4,8 28,24,00 8,74,78 3,206,826,174 2,758,456 3,204,067,718
SCHEDULE 12(A) INVESTMENTS IN SHARES, DEBENTURES AND BONDS

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
25,562,000 ,000,000 ,,000 ,600,000
Particulars
1. Investment in Shares . Central Region Rural Development Bank Ltd. 0,000 Ordinary Shares of NPR 00/- paid up .2 Rural Microfinance Development Centre Ltd. 70,70 Ordinary Shares of NPR 00/- paid up . Chhimek Bikash Bank Ltd 6,000 Ordinary Shares of NPR 00/- paid up & 2,200 bonus shares .4 Credit Information Bureau Ltd. 2, Ordinary Shares @ NPR 00/- paid up . Himalayan Distillery Ltd. 4,40 Ordinary Shares @ NPR 00/- paid up 2. Investment in Debentures and Bond 2. 4.7% USD Bond of State Bank of India, (face value USD,000,000 @ .0 for USD 00 per bond) maturing on December 08, 200. 2.2 7.7% Nepal Electricity Authority Power Bond 206, (face value NPR 6,8,000 @ at NPR ,000 per bond) maturing on Chaitra 4, 206 (March 27, 20).
Cost Price
28,324,500 ,000,000 7,07,000 ,600,000
Market Price
29,632,000 NA NA 6,28,000
Provision
1,341,400 -
,000 ,44,000 64,606,896 64,606,86
,2,00 ,44,000 85,734,578 68,74,78
NA ,44,000 68,727,750 68,727,70
,4,400 1,417,056 ,47,06
6,8,000
NA
90,168,896
3. Provision for Loss ,46,200 (67,744) . Up to previous year .2 Addition/Deduction this year
Total Investment
114,059,078
2,78,46 -
98,359,750

2,758,456

2,758,456 87,410,440
Total Provision Net Investment
2,758,456 111,300,622
Note : Following organizations have not declared dividend since last 3 years. (a) Himalayan Distillery Ltd. (b) Central Region Rural Development Bank Ltd.
SCHEDULE 13
CLASSIFICATION OF LOANS, ADVANCES & BILLS PURCHASE AND PROVISIONING

Amt. in NPR
AS AT JULY 15, 2008
Previous Year Priority Sector

Insured
41,704,061 4,704,06 730,805 70,80 42,434,866 04,260 82,70 286,961 9,350,780 274,865,914 31,694 4,2,07 2,2,4 ,62,84 2,044,0 ,44,80 ,44,80 2,044,0 ,62,84 6,27,2 284,535,350 ,,700 8,22,0 ,64 2,40,70 517,389,129 12,129,856,935 3,169,400 12,692,850,330 4,2,07 2,2,4 7,47, ,246,76 ,246,76 26,156,905 26,6 261,569 00,76,762 00,76,762 4,219,079 231,948,965 236,898,850 7,8,480 7,8,480 ,70,04 ,822,0,40 ,6,400 2,80,,000 26,6,0 28,74,68 28,714,368 287,44 287,144 513,170,049 11,897,907,970 3,169,400 12,455,951,480 26,156,905 28,714,368
Particulars Other Foreign Total Domestic Foreign Total

54,871,273 4,87,27 54,871,273 48,7 548,713
Loans & Advances Domestic

Uninsured *
Bill Purchased/Discounted
Current Year
9,450,805,704
1. Performing Loan
12,510,822,753 2,4,224,27 7,8,480 236,898,850 00,76,762 ,246,76 7,47, 12,747,721,603 24,0,462 ,44,80 2,044,0 ,62,84 6,27,2 285,084,062
,46,807,20
. Pass Loan
0,8,4
.2 Restructured Loan
243,296,250
2. Non-Performing Loan
,86,42
2. Sub-standard
6,76,08
2.2 Doubtful
66,86,82
2. Loss
9,694,101,954 (A) Total Loan
3. Loan Loss Provision
,6,0
. Pass
2,,82
.2 Restructured
,6,86
. Sub-standard
8,288,042
.4 Doubtful
60,7,07
. Loss
294,774,337 (B) Total Provisioning
4. Provision up to earlier year 0,44 2,66,8 2,268,083 - (1,981,122) (1,981,122) 42,47,04 (13,181,237) (13,181,237) 08,08,4 - 22,532,017 4,222,82 0,284,4 8,00,4 ,67,647 269,663,721 (47,123,950) 52,326,144 5,202,193 ,84,,02 ,6,86 2,2,0 0,470,76 ,4,602 87,2,78 - - 31,694 31,694 ,7,706 2,8,074 2,,82 ,6,86 8,288,042 60,7,07 294,463,821 (47,123,950) 37,195,479 (9,928,471) 2,408,4,80 00,64 100,964 - 160,605 160,605 2,8,6 20,2 209,552 - 77,592 77,592 28,427,22 0,6 310,516 - 238,197 238,197 4,22,6 ,6,0 2,,82 ,6,86 8,288,042 60,7,07 294,774,337 (47,123,950) 37,433,676 (9,690,275) 2,462,67,4
*Deprived Sector
70,84,087
4. Pass
20,24,46
4.2 Restructured
7,02,70
4. Sub-standard
4,402,8
4.4 Doubtful
6,244,2
4. Loss
229,618,343 (C) Total Provision Upto Last Year
(13,008,566) (D) Previous Years Provision Written back
78,164,560 (E) This years additional provision
65,155,994 (F) Net adjustment this year
,,27,67
Net Loan (A-B)
SCHEDULE 13(A)
SECURITY-WISE
LOANS, ADVANCES AND BILLS PURCHASE

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
9,694,101,954 7,87,62,068 6,78,247 2,42,000 7,270,6 ,8,467,86 24,62,60 888,84,86 ,86,26 60,700,7 9,694,101,954
Particulars
(A) Secured . Collateral of Movable/Immovable Assets 2. Guarantee of Local Licensed Institutions . Government Guarantee 4. Internationally Rated Bank Guarantee . Export Documents 6. Fixed Deposit Receipts a. Own F.D.R. b. F.D.R. of Other Licensed Institutions 7. Government Bonds 8. Counter Guarantee . Personal Guarantee 0. Other Securities (B) Unsecured TOTAL
Current Year
12,747,721,603 0,2,46,260 267,60,000 6,74,67 84,,80 7,8,77 786,42,084 27,276,468 76,27,40 12,747,721,603
SCHEDULE 14
FIXED ASSETS
Amt. in NPR
AS AT JULY 15, 2008
Previous Year Building

60,82,864 ,20,22 79,953,096 ,02,62 ,4,4 6,481,578 73,471,518 73,471,518 48,479,569 48,479,569 24,827,936 (4,,20) 8,644,088 - - 20,77,04 73,307,505 - (22,77) (6,08,2) 2,4,04 0,6,606 (2,0,00) 166,885,295 88,22,86 6,0,2 (,84,8) 103,289,071 63,596,224 63,596,224 4,6,88 8,02,60
Particulars Vehicles Machinery Office Equipments
Assets Others
6,787,7 4,08,04 20,825,805 ,82,8 2,04,86 11,867,687 8,958,118 46,814,992 26,,826 24,24, (77,40) (,668,) 55,773,110
Current Year
1. At Cost 270,2,6 7,47,06 (6,08,2) (2,6,776) 340,971,701 2,862,2 ,04,06 (4,,20) (,84,8) 146,466,272 194,505,429 145,953,732 46,814,992 26,,826 24,24, (77,40) (,668,) 387,274,153
8,4,774
a. Previous Year Balance
00,277,28
b. Addition during the Year
c. Revaluation/Write back during the year
(2,07,800)
d. Sale during the Year
(7,27,40)
e. Write off during the Year
270,219,162
Total Cost (a+b+c+d+e)
2. Depreciation
08,24,0
a. Up to Previous Year
27,08,8
b. For this Year
(7,,464)
c. Depreciation adjusted on sold assets
(,80,)
d. Depreciation on revaluation/write off
121,862,324
Total Depreciation
148,356,837
3. Written Down Value (1-2)
145,953,732
4. Land
5. Pending Capitalization
26,535,826
6. Leasehold Assets
2,44,44
a. Previous Year Balance
2,0,7
b. Addition during the Year
(,2,064)
c. Transfer to others (furniture)
(2,688,46)
d. Amortization
320,846,395
TOTAL (3+4+5+6)
SCHEDULE 15
NON BANKING ASSETS

Amt. in NPR
AS AT JULY 15, 2008
Previous Year In %
July , 200 April 8, 2004 July , 200 August 2, 2000 April 22, 2004 July 4, 200 July 0, 200 July 0, 200 March 7, 2008 Grand Total ,2,000 278,42 722,8 60,70 5,595,272 40,400 24,68 00% 00% 00% 00% 00% 00% 7% 7% 2%
Name & Address of Borrower or Party
Taken over date
Total Amount of Non Banking Assets
Loss Provision In Amount

24,68 40,400 ,2,000 278,42 722,8 0,2 5,142,294
Current Year Net

42,78 452,978
24,68
Shree Manjushree Chimni Itta Bhatta
40,400
Anu Crafts
2,274,000
Unnat Industries Pvt. Ltd.
,62,000
The Gorkha Engineering & Service Intl Pvt. Ltd.
278,42
Biswas Readymade Garment
722,8
Durga Oil Mill
2,6,000
Jay Balaji Oil Ind. Pvt. Ltd. Jay Shiva Shakti Rice Mill Pvt. Ltd.
,4,000
Jay Balaji Oil Ind. Pvt. Ltd. Jay Shiva Shakti Rice Mill Pvt. Ltd.
Nepalgunj Engineering Auto Industries Pvt. Ltd.
(,,87)
Less : Provision
3,625,715
SCHEDULE 16 OTHER ASSETS

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
,4,80 ,464,2 7,40,004 (6,0,) ,,2 (,8,8) 2,02,08 8,70, 68,47,40 8,8,48 20,78, 2,,860 ,26,2 76,46,8 289,978,754
Particulars
. Stationery Stock 2. Income Receivable on Investments . Accrued Interest on Loan (Less: Interest Suspense) 4. Commission Receivable . Sundry Debtors (Less: Provision for loss) 6. Staff Loans and Advances 7. Prepayments 8. Cash in Transit . Other Transit items (including cheques) 0. Drafts paid without Notice . Expenses Not Written Off (Computer Software) 2. Branch Adjustment Account . Others (a) Advance tax (b) Deferred tax assets (c) Others TOTAL ,068,6 (,8,8) 4,78,6 (4,78,6)
Current Year
,402,20 2,2,828 7,2,64 ,74,872 ,880,07 20,48,07 24,428,4 28,, 2,24,728 7,42,8 2,000 154,346,018
SCHEDULE 16(A) OTHER ASSETS (Additional Statement)

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
7,40,004 17,490,004
Particulars Up to 1 Year
. Accrued Interest on Loan 2. Drafts paid without Notice . Branch Adjustment Account Total 6,207, 6,207,139
Current Year 1 to 3 Years Above 3 Years

,84,7 1,841,171 6,7,0 6,735,053
Total
4,78,6 14,783,363
SCHEDULE 17 CONTINGENT LIABILITIES

AS AT JULY 15, 2008
Amt. in NPR
Previous Year
2,676,7 ,27,02,7
,20,48,40 26,47,6 -
Particulars
. Claims against the Bank, not acknowledged as liabilities 2. Letter of Credit (Full amount)
a. Below 6 months b. Above 6 months . Rediscounted Bills
Current Year
2,886,7 ,84,876,7
,,86,077 44,80,86 -
7,4,420
4,02,080 0,22,40 -
4. Unmatured Guarantees/Bonds
a. Bid Bond b. Performance Bond c. Other Guarantee/Bonds
648,26,608
40,28,64 607,688,244 -
4,6,6 2,68,8 6,78,42 2,060,644 ,40,4 246,24,074 2,142,879,501
. Unpaid Shares in Investment 6. Forward Exchange Contracts Outstanding Liabilities 7. Bills Under Collection 8. Acceptances and Endorsements . Underwriting Commitments 0. Irrevocable Loan Commitments . Guarantee issued against Counter Guarantee of Internationally rated Banks 2. Advance Payment Guarantee . Financial Guarantee 4. Contingent Liabilities on Income Tax . Others TOTAL
86,46,02 4,,27 42,62,64 26,2,06 4,68,040 40,46,67 3,043,333,069
SCHEDULE 18 INTEREST INCOME

Amt. in NPR
Previous Year
645,651,315 474,47,47 7,0,840 112,363,921 08,0,200
6,444,876 4,4,24 -
Particulars
A. ON LOANS, ADVANCES AND OVERDRAFT . Loans and Advances 2. Overdraft B. ON INVESTMENT . Government Securities
a. Treasury Bills b. Development Bonds c. National Saving Certificates d. .
Current Year
887,298,870 67,,266 2,47,604 90,603,868 84,6,77
4,042,64 4,8,728 -
,,68
,,68 -
2. Foreign Securities
a. State Bank of India USD Bond b. ..
,00,08
,00,08 -
. Nepal Rastra Bank Bond 4. Debenture and Bonds

a. Financial Institutions b. Other Organizations
404,08
404,08
78,040 31,827,941 7,08,0 24,,0 29,160,770 27,6,22 ,7,247 819,003,947
. Interest on Inter Bank Lending C. ON AGENCY BALANCE . Local Banks 2. Foreign Banks D. ON MONEY AT CALL AND SHORT NOTICE . Local Banks 2. Foreign Banks E. ON OTHERS . Certificate of Deposits 2. Inter-Bank Loan . Others Total
2,2,2 20,935,481 4,626,008 6,0,47 35,319,655 24,2,886 0,,76 1,034,157,874
SCHEDULE 19 INTEREST EXPENSES

Amt. in NPR
Previous Year
320,002,705 129,167,788 6,704,48 2,46,0 121,063,171 6,72,470 4,270,70 69,771,746 6,08,7 7,20 - 19,178,306 2,000,000 ,,4 ,844,72 339,181,011
Particulars
A. ON DEPOSIT LIABILITIES 1. Fixed Deposits . Local Currency .2 Foreign Currency 2. Saving Deposits 2. Local Currency 2.2 Foreign Currency 3. Call Deposits . Local Currency .2 Foreign Currency 4 Certificate of Deposits B. ON BORROWINGS . Debentures and Bonds 2. Loan from Nepal Rastra Bank . Inter Bank/Financial Institutions Borrowing 4. Other Corporate Bodies . Other Loans C. ON OTHERS . .............. Total
Current Year
387,994,946 147,172,636 2,8,66 4,27,020 149,010,516 4,,2 ,87, 91,811,794 8,662,824 2,48,70 - 29,548,486 2,000,000 ,26,7 2,22, 417,543,432
SCHEDULE 20 COMMISSION AND DISCOUNT

Amt. in NPR
Previous Year
1,767,851 64,886 ,2,6 58,229,863 ,6, 8,47,8 ,27,866 24,28,6 2,46 8,26,7 37,433,415 97,431,129 62 | Annual Report 2007-08
Particulars
A. BILLS PURCHASED AND DISCOUNTED . Local Currency 2. Foreign Currency B. COMMISSION . Letter of Credit 2. Guarantee . Collection Fee 4. Remittance Fee . Credit Cards 6. Share Underwriting/Issues 7. Government Transaction 8. E.Pra. Commission . Exchange Fee (INR only) C. OTHERS Total
Current Year
1,458,209 4,826 2,8 67,353,494 6,,4 2,62,64 ,286,0 26,2, ,4 ,6,7 60,603,879 129,415,582
SCHEDULE 21 OTHER OPERATING INCOME

Amt. in NPR
Previous Year
47,00 ,78,08 ,47,4 ,8,6 19,002,897
Particulars
. Rent on Safe Deposit Lockers 2. Issue and Renewal of Credit Cards . Issue and Renewal of ATM Cards 4. Telex/T.T. . Service Charges 6. Renewal Fees 7. Others Total
Current Year
,40 ,082,6 ,887,74 ,68,86 23,167,724
SCHEDULE 22 EXCHANGE GAIN/LOSS

Amt. in NPR
Previous Year
8,0,8 72,774,74 80,826,013
Particulars
. Revaluation Gain 2. Trading Gain (Except INR Exchange Fee) Total Income/(Loss)
Current Year
0,026,800 8,78,2 93,765,039
SCHEDULE 23 EMPLOYEES EXPENSES

Amt. in NPR
Previous Year
,6,807 4,64,0 2,280,7 764,2 ,20,822 226,2 6,7,702 ,24,204 69,740,384
Particulars
. Salary 2. Allowances . Contribution to Provident Fund 4. Training Expenses . Uniform 6. Medical Expenses 7. Insurance 8. Gratuity Provision . Others TOTAL
Current Year
,222,0 22,42,06 2,6,424 80,424 2,6,47 424,64 4,78,8 ,27,04 90,601,920 Annual Report 2007-08 | 6
SCHEDULE 24 OTHER OPERATING EXPENSES

Amt. in NPR
Previous Year
,8,8 6,40,276 2,124,452
,,40 ,0,04 -
Particulars
. House Rent 2. Electricity and Water 3. Repairs and Maintenance
(a) Building (b) Vehicles (c) Others
Current Year
,7,077 6,76, 2,723,914
,42,40 ,7,004 6,00
4,6,608 2,,28 4,,68 ,622, ,26,64 48,727 ,267,7 ,7,4 40,47 2,890,969
2,64,000 24,6
4. Insurance . Postage, Telex, Telephone, Fax, Swift, Internet, V-Sat etc. 6. Office Equipment and Furniture - Repairs 7. Travelling Allowances and Expenses 8. Printing & Stationery . Periodicals and Books 0. Advertisement . Legal Expenses 2. Donations 13. Expenses Relating to Board of Directors
(a) Meeting Fees (b) Entertainment
4,486,4 ,72,8 4,66,7 7,,27 ,6,7 22, 7,02,28 ,,826 26,2 2,865,255
2,0,000 64,2
,, 615,000
6,000 40,000
4. Annual General Meeting Expenses 15. Expenses Relating to Audit

(a) Audit Fees (b) Other expenses
,447,02 650,000
80,000
470,000 4,7,44 ,74,488 ,40,2 4,76,8 ,77,4 ,46 2,44,7 20,935,764 6,74,8 ,0,022 ,848,87 ,242,028 TOTAL 170,480,908
2,706,80 ,27,7 ,82,76 0,86 8,748,048 608,672 ,,648 10,272,907 4,676,78 ,27,846 ,228,8 4,82 138,429,941
6. Commission on Remittance 7. Depreciation on Fixed Assets 8. Amortization of Preliminary Expenses (Computer Software) . Share Issue Expenses (Deferred) 20. Technical Service Fee 2. Entertainment 22. Written off Expenses 2. Security Expenses 24. Credit Guarantee Premium 2. Commission and Discount 26. Others (a) Fuel Expenses (b) Professional, Association & Other Consulting Fees etc. (c) Premises & Cleaning (d) Rates & Taxes
SCHEDULE 25 PROVISION FOR POSSIBLE LOSS

Amt. in NPR
Previous Year
78,64,60 ,70,42 81,894,981
Particulars
. Increase in Loan Loss Provision 2. Increase in Provision for Loss on Investment . Increase in Provision Against Non-Banking Assets 4. Increase in Provision Against Other Assets Total
Current Year
7,4,676 ,707 67, 38,438,498
SCHEDULE 26 NON-OPERATING INCOME/LOSS

Amt. in NPR
Previous Year
(,26,07) 40,08 -
Particulars
. Profit/(Loss) on Sale of Investment 2. Profit/(Loss) on Sale of Assets (includes profit on sale of NBA of NPR 60,000) . Dividend 4. Subsidies received from Nepal Rastra Bank
a. Reimbursement of losses of specified branches b. Interest Subsidy c. Exchange Counter
Current Year
662,60 48,08 -
Total Non-Operating Income/(Loss) 810,748
(2,779,849)
. Others
SCHEDULE 27 LOSS PROVISION WRITTEN BACK

Amt. in NPR
Previous Year
,008,66 2,47,7 67,744 37,103,885
Particulars
. Loan Loss Provision Written Back 2. Non Banking Assets Provision Written Back . Investment Provision Written Back 4. Other Assets Provision Written Back Total
Current Year
47,2,0 4,70,000 61,832,950
SCHEDULE 28
Amt. in NPR
PROFIT/LOSS FROM EXTRA ORDINARY ACTIVITIES

Particulars
. Recovery of Written off Loan 2. Voluntary Retirement Scheme Expenses . Loans Written-Off [28 (a)] 4. Other expenses/Income Total
Previous Year
Current Year
6,000 (4,402,284) (45,396,284)
4,0
411,150
SCHEDULE 28(A)
STATEMENT OF LOANS WRITTEN-OFF

Amt. in NPR
S.N.
Types of Loan
Personal Guarantees Personal Guarantees Prudent Practice Prudent Practice
Written off Amount
Type and Amount of Security
Basis of Valuation
Loan Approving Authority/Designation

EVP EVP -
Initiations made for recovery

Auction Notice Published, Black Listed Case Filed at DRT Auction Notice Published, Black Listed & Case Filed at DRT -
Remarks
.
Working Capital Loan
2,46,7
2.
Project Loan
.
Fixed Capital Loan
42,8,67
4.
Personal Loan
.
Other Loan
Total Loan
45,402,284
SCHEDULE 29
STATEMENT OF LOANS AND ADVANCES TO DIRECTORS/ CHIEF EXECUTIVE/ PROMOTER/ EMPLOYEES AND SHAREHOLDERS (HOLDING MORE THAN 1% SHARES)
AS AT JULY 15, 2008
The amount of Bills Purchased and Discounted, Loans, Advances and Overdraft, provided to the Directors, Chief Executive, Promoters, Employees, and Shareholders holding more than percent shares and to the individual members of their undivided family OR against the guarantee of such person OR to the organizations or companies in which such individuals are managing agent, is as follows:
Name of Promoter/ Director/Chief Executive Principal

- - - - 20,000 210,000
Previous Years Balance Interest
Current Year Recovery Principal Interest
Current Year Addition
Balance as at July 15, 2008 Principal Interest

20,080 209,080 -
** Loan Against Government Bond.
(A) Directors
. ....................................................................................
2. ....................................................................................
. ....................................................................................
(B) Chief Executive
. ....................................................................................
2. ....................................................................................
. ....................................................................................
(C) Promoters
. ....................................................................................
2. ....................................................................................
. ....................................................................................
(D) Employees
. Anil Ratna Tuladhar **
2. ....................................................................................
. ....................................................................................
(E) Shareholders holding more than 1%
. ....................................................................................
2. ....................................................................................
. ....................................................................................
Total
SCHEDULE 30 CAPITAL ADEQUACY

AS AT JULY 15, 2008
Amt. in NPR
Particulars
A) CORE CAPITAL . Paid Up Capital 2. Share Premium . Non-Redeemable Preference Shares 4. General Reserve Fund . Retained Profit/Loss 6. Capital Redemption Reserve 7. Capital Adjustment Reserve/Proposed Bonus Share 8. Other Free Reserves . Bond Redemption Reserve
Less: Goodwill Investment in excess of prescribed limit Fictitious Assets Investments in securities of companies with financial interest Investment arising out of Underwriting Commitment
Current Year
1,310,851,552 60,4,00 270,08,7 22,6,86 47,28,740 64,07 7,42,06
(2,072,600)
Previous Year
964,559,308 60,4,00 7,782,4 7,,266 06,672,22 64,07 0,880,627
(2,072,600)
B) SUPPLEMENTARY CAPITAL . General Loan Loss Provision 2. Asset Revaluation Reserve . Hybrid Capital Instruments 4. Unsecured Subordinated Term Debt . Exchange Fluctuation Reserve 6. Additional Loan Loss Provision 7. Investment Adjustment Reserve 8. Provision for Loss on Investment C) TOTAL CAPITAL FUND (A+B) D) Minimum Capital fund required to be maintained on the basis of Risk Weighted Assets Capital Fund (@ .00 Percent for this year) Core Capital (@ .0 Percent for this year) Capital Fund Excess by 0.93% Core Capital Excess by 4.07%
324,383,665 24,0,462 68,86,0 ,4,66 ,44,80 2,78,46 1,635,235,217
325,564,795 ,6,0 200,000,000 6,642,6 2,,82 2,78,46 1,290,124,103
,07,260,66 7,60,2 127,974,554 557,221,220
,24,88,7 62,440,66 165,242,765 402,118,639
SCHEDULE 30(A) Statement of Risk Weighted Assets

AS AT JULY 15, 2008
Amt. in NPR
On Balance Sheet Assets

Cash in Hand Gold (Tradable) Balance with Nepal Rastra Bank Investment in Government Bonds Investment in NRB Bonds Loan against own F.D. Receipt (secured) Loan against Government Bonds (Secured) Accrued Interest on Government Bonds Balance with domestic Licensed Banks & Financial Institutions Loan against other Banks F.D. receipt (secured) Balance with Foreign Banks Money at Call Loan against Guarantee of International Rated Banks Investments on International Rated Banks Investments on Share, Debenture & Bonds Other Investments Loan, Advances & Bills Purchase/Discount Fixed Assets Other Assets Net Other Interest Receivable (Gross Int. Receivable - Interest receivable on Govt. Bonds - Interest Suspense) Sub - Total (A) Off-Balance Sheet Items Bills for Collection Forward Exchange Contract L/C (Below 6 months maturity) Guarantee against International Bank Guarantee L/C (Over 6 months maturity) Bid Bonds Performance Bond Advance Payment Guarantee Financial Guarantee Other Guarantee Irrevocable Loan Commitment Contingent Liability for Tax Other Contingent Liability Sub - Total (B) Total (A+B)
R.W. %
0 0 0 0 0 0 0 0 20 20 20 20 20 20 00 00 00 00 00 00 0 0 20 20 0 0 0 00 00 00 00 00 00
Previous Year Amount R.W. Assets

2,042,72 88,4,84 2,2,04,2 24,62,60 ,86,26 2,0,687 48,44,28 888,84,86 64,22,200 2,278,628 2,42,000 67,8,07 2,62,000 8,22,7,04 20,846, 24,884,620 7,4,00 ,688,666 77,762,7 2,84,440 ,8,726 6,48,000 27,7,84 2,62,000 8,22,7,04 20,846, 24,884,620 7,4,00
R.W. %
0 0 0 0 0 0 0 0 20 20 20 20 20 20 00 00 00 00 00 00
Current Year Amount

6,747,4 606,04,072 2,,22, 7,8,77 27,276,468 ,28,0 8,66,2 786,42,084 22,04,6 72,67,86 267,60,000 ,048,2, 4,0,00 ,68,2,4 87,274, 0,08,440 4,07,727
R.W. Assets
7,27,278 7,284,27 42,406,867 4,,67 ,2,000 20,68,72 4,0,00 ,68,2,4 87,274, 0,08,440 4,07,727
14,867,631,598 9,324,393,732 2,68,8 4,6,6 ,20,48,40 2,060,644 26,47,6 4,02,080 0,22,40 ,40,4 246,24,074 87,46,7 2,142,879,500 ,4,64 246,07,086 4,62,2 ,27,68 2,,040 6,26,70 ,40,4 246,24,074 87,46,7 901,800,244 0 0 20 20 0 0 0 00 00 00 00 00 00
17,988,512,977 12,219,960,195 4,,27 86,46,02 ,,86,077 26,2,06 44,80,86 40,28,64 607,688,244 4,68,040 40,46,67 48,0,22 8,646,0 267,7,2 ,270,46 22,40,448 20,264,82 0,844,22 4,68,040 40,46,67 48,0,22
3,043,333,069 1,482,409,471
17,010,511,098 10,226,193,976
21,031,846,046 13,702,369,666
SCHEDULE 31 PRINCIPAL INDICATORS

Particulars
. Percent of Net Profit/Gross Income 2. Earning Per Share . Market Value Per Share 4. Price Earning Ratio . Dividend (including bonus) on Share Capital 6. Capital Adjustment Reserve 7. Cash Dividend on Share Capital 8. Interest Income/ Loan and Advances . Staff Expenses/ Total Operating Expenses 0. Interest Expenses/ Total Deposit & Borrowing . Exchange Gain/ Total Income 2. Staff Bonus/ Total Staff Expenses . Net Profit/ Loan and Advances 4. Net Profit/ Total Assets . Total Credit/ Deposit 6. Total Operating Expenses/ Total Assets 7. Adequacy of Capital Fund on Risk Weighted Assets
(a) Core Capital (b) Supplementary Capital (c) Total Capital Fund ( a + b ) Percent Percent Percent 10.08% 4.34% 14.42% 10.44% 1.61% 12.05% 10.14% 1.02% 11.16% 10.02% 1.00% 11.02% 10.71% 3.81% 14.52% 9.43% 3.18% 12.62% 9.57% 2.37% 11.93%
Indicators FY 01/02
Percent NPR NPR Ratio Percent Percent Percent Percent Percent Percent Percent Percent Percent Ratio Percent Percent .2% 2.00 24.00 26.6 0.00% 0.00% 0.26% .26% 4.8% 8.% .% 0.20% 0.% 8.44% 8.2%
FY 02/03
22.84% 7.72 8.00 .8 .00% 0.00% .00% 0.4% 0.% 4.% 0.60% 26.26% .8% .0% 78.6% 6.72%
FY 03/04
0.0% 27.0 2.00 7.20 0.00% 0.00% 0.00% 0.04% .7% .% 8.82% 42.% 2.26% .4% 77.6% .48%
FY 04/05
27.% 0.0 40.00 4.2 .00% 0.00% .00% 0.27% 0.8% 2.70% .4% 42.7% 2.6% .42% 68.87% .6%
FY 05/06
.% 4.67 80.00 .46 48.00% 0.00% 8.00% .8% 0.0% 2.74% 8.% 0.% 2.7% .6% 7.42% 4.%
FY 06/07 FY 07/08
8.7% 4.0 ,7.00 .6 20.00% 0.00% 20.00% 8.7% .08% 2.% 7.8% 4.8% 2.7% .80% 78.2% 4.2% 4.8% .4 2,0.00 .2 42.% 2.% 8.0% 2.64% 2.% 7.2% 8.27% 2.0% 2.04% 80.% 4.0%
8. Liquidity (CRR) . Non-performing credit/ Total Credit 20. Weighted Average Interest Rate Spread 2. Book Net-worth per share 22. Total Shares 2. Total Staff
Percent Ratio Percent NPR No. No.
.26% 8.% .80% 7.8 4,6,80 4
.8% 8.67% .% 2.2 4,6,80 8
7.% 6.66% .4% 28.8 4,6,80 67
7.6% 4.% .% 2.60 4,6,80 7
7.64% 2.72% .7% 20.67 4,6,80 77
8.02% 2.% 4.04% 64.68 6,0,4 7
7.7% .86% 4.% 222. 6,0,4 0
Principal Indicator Definition

Ratios
. Percent of Net Profit / Gross Income 2. Earning Per Share . Market Value Per Share 4. Price Earning Ratio . Dividend (including bonus) on Share Capital 6. Capital Adjustment Reserve 7. Cash Dividend on Share Capital 8. Interest Income / Loan and Advances . Staff Expenses / Total Operating Expenses 0. Interest Expenses / Total Deposit & Borrowing . Exchange Gain / Total Income 2. Staff Bonus / Total Staff Expenses . Net Profit / Loan and Advances 4. Net Profit / Total Assets . Total Credit / Deposit 6. Total Operating Expenses / Total Assets 7. Total Capital Fund 8. Liquidity (CRR) . Non-performing credit / Total Credit 20. Weighted Average Interest Rate Spread 2. Book Net-worth per share
Units
Percent NPR NPR Ratio Percent Percent Percent Percent Percent Percent Percent Percent Percent Ratio Percent Percent Percent Percent Ratio Percent NPR
Definition
Net Profit After Tax / Total Operating Income Net Profit After Tax / No. of Shares Traded Price at Nepal Stock Exchange Ltd at Year end Market Value Per Share / Earning Per Share Proposed Dividend (Cash + Bonus) / Paid up Share Capital Amount Transferred to Capital Adjustment Reserve / Paid Up Share Capital Proposed Cash Dividend / Paid up Share Capital Total Interest Income / Loans, Advance & Bills Purchase (Net) Total Staff Expenses / Total Operating Expenses Interest Expenses / Total Deposit & Borrowing Total Exchange Income / Total Income Provision for Staff Bonus / Total Staff Expenses Net Profit / Loans, Advances & Bills Purchase (Net) Net Profit After Tax / Total Assets Total Loans, Advances & Bills Purchase / Total Deposit Total Operating Expenses / Total Assets (Core+Supplementary Capital) / Total Risk Weighted Assets Average Cash at vault & NRB Balance / Average Deposit Total Non-performing Loan / Total Loans, Advances & Bills Purchase Weighted Average Yield - Weighted Average Cost Share Holders Equity / No of Share
SCHEDULE 32 SIGNIFICANT ACCOUNTING POLICIES

1. General Information
Bank of Kathmandu Limited (referred to as BOK or the Bank hereinafter) is a limited liability company domiciled in Nepal. Its registered office is at Kamalpokhari, Kathmandu, Nepal. The Bank is listed with Nepal Stock Exchange Ltd. and provides full commercial banking services as licensed by Nepal Rastra Bank (NRB). The accompanied financial statements have been approved for publication by the Board of Directors of the Bank in its meeting held on September 17, 2008.
4. Software Expenses
Expenses for software application incurred by the Bank are capitalized and are amortized over a period of five years from the date of acquisition.
5. Investments
Investment in Treasury Bills and Development Bonds, which the Bank intends to hold till maturity, are carried at cost; or at amortized cost, if purchased at a premium over the face value. Investment in shares, debenture and bonds are valued at cost / amortized cost (for purchased at discount over the face value) or market value, whichever is lower.
2. Basis of Preparation
The financial statements are presented in Nepalese rupees (NPR) and are prepared on historical cost convention basis by applying accrual basis of accounting except as otherwise stated and prepared in accordance with the Nepal Accounting Standards (NAS), Generally Accepted Accounting Principles (GAAP), Bank & Financial Institutions Act, 2063 (BAFIA), directives issued by Nepal Rastra Bank (NRB) and the Company Act, 2063.
6. Loans and Advances including Bills Purchased and Provision for Loan Loss
Loans and Advances including Bills Purchased are stated at net of provision made for loan loss. All loans, advances including bills purchased are disbursed to the customers as per the Banks policy. The outstanding loans, advances and bills purchased are classified into good, sub-standard, doubtful and bad in accordance with the directives issued by Nepal Rastra Bank and adequate provision as prescribed by the said directives has been made for Loan Loss.
3. Fixed Assets and Depreciation

Fixed assets are stated at cost less accumulated depreciation. Cost includes cost of acquisition including incidental expenses related to acquisition. Depreciation on fixed assets is charged to Profit & Loss Account on diminishing value method except in case of leasehold improvements which are depreciated on straight line method so as to amortize the cost of improvements over the period of the respective lease. The rates of depreciation adopted, which is in line with the rates prescribed by the Income Tax Act, 2058, are as follows:
7. Loan Write offs

The Bank has Loan Write off By-Laws, 2062 that provides guidelines for effective and transparent process for writing off non-performing assets. Specific non-performing asset that meets the write off guidelines are written off after the approval of the Board of Directors without prejudice to the Banks right of recovery.
8. Staff Loans and Advances

Loans and advances that are provided to the staff in accordance with the Banks policy are presented under Other Assets.
Nature of Assets
Building Vehicles Office Equipment Furniture & Fixtures
Depreciation Rate %
20 2 2
9. Non Banking Assets

Collateral securities acquired by the Bank during the process of recovery of loans are transferred to Non Banking Assets. Non Banking Assets are valued at lower of the principal outstanding or distress value of the assets acquired and is stated at net of provision made for such assets. Provision for Non Banking Assets is made in accordance with the directives issued by Nepal Rastra Bank.
Assets costing up to NPR 10,000 are charged directly to Profit & Loss Account.
10. Income Taxes

Provision for current tax is made with reference to the profit of the financial year based on the provision of the Income Tax Act, 2058. Deferred Tax is recognized and provided for timing differences between taxable income and accounting income. Deferred tax assets are not recognized unless there is virtual/reasonable certainty that there will be sufficient future taxable income available to realize such assets.
15. Dividend Income

Dividend on equity shares are recognized on cash basis at net of taxes.
16. Retirement Benefits

Periodic contributions for provident fund are charged to Profit & Loss Account and are contributed to an approved fund. Provision for gratuity for eligible staff is made on accrual basis and is funded to the approved fund, independent of the management of the Bank.
11. Foreign Exchange Transaction

Foreign currency assets and liabilities are translated at the buying rates as on the Balance Sheet date. Gain or loss realized on the foreign exchange transactions is recognized on the date of transaction and included under Exchange Gain/(Loss) as Trading Gain/(Loss). Gains or loss arising due to fluctuation in exchange rates of different foreign currencies is accounted for 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 the directives issued by Nepal Rastra Bank.
17. Staff Bonus

Provision for staff bonus is made as per the Bonus Act, 2030.
18. Contingent Liabilities

All letter of credit, bank guarantee and forward exchange contract liabilities have been shown in full amount as contingent liabilities in accordance with the directives issued by Nepal Rastra Bank. Besides above, all known liabilities wherever material are provided for and liabilities, which are material and whose future outcome cannot be ascertained with reasonable certainty, are treated as contingent and disclosed under contingent liabilities.
12. Interest Income

Interest income on loans and advances are recognized on cash basis as prescribed by NRB Directives, which however is not in accordance with the NAS that prescribes recognition of income on accrual basis. Interest income on investment is recognized on accrual basis.
19. Dividend and Proposed Bonus Shares

Dividend and proposed bonus shares are provided as proposed by the Board of Directors pending approval by NRB and Annual General Meeting.
13. Commission Income

Commission earned on services rendered for a period covering more than one financial year are recognized on accrual basis and proportioned over the period of transaction.
14. Interest Expenses

Interest on interest bearing deposit and borrowings is accounted for on accrual basis.
SCHEDULE 33 NOTES TO ACCOUNTS

1. Dividend and Proposed Bonus Shares
The Board of Directors has proposed cash dividend of 2.11% and bonus share of 40% per share.
b. Explanation of the relationship between tax expense and accounting profit

Amt. in NPR
Current Year
Accounting Profit Tax at the applicable rate of .0% Tax effect of expenses/income that are not deductible / included in determining taxable profit Donation Expenses Written Off Dividend Income Total Tax Expenses (includes deferred tax) 82,88 77,67 (46,68) 166,402,098 27,88,77 66,288,78
2. Staff housing Fund

Since the Bank has been extending housing loan to the employees under the Bank of Kathmandu Ltd. Employee By-laws, provision for staff housing as required by the Labour Act has not been made.
3. General Reserve
As required by the BAFIA, 20% of the current years net profit of NPR 72,299,376 has been transferred to General Reserve through Profit and Loss Appropriation Account.
8. Related Parties
Key Management Personnel Key Management Personnel of the Banks include Managing Director and members of the Board of Directors of the Bank, as follows: Mr. Sanjay Bahadur Shah - Chairman Mr. Sitaram Thapaliya - Director Mrs. Rita Malla - Director Mr. Sudarsan Raj Poudyal - Director Mr. Santa Bar Singh Thapa - Director Mr. Balram Neupane - Director; Representative of National Investment Co. Pvt. Ltd. Mr. Bishnu Prasad Banjade - Director; Representative of Nepal Remittance Pvt. Ltd. Mr. Radhesh Pant - Managing Director Compensation to Key Management Personnel of the Bank Short term employee benefits (including bonus) paid to the Managing Director amount to NPR 8,594,917 (Previous Year NPR 7,876,608) In addition to the above, a company vehicle and other amenities etc. have been provided to the Managing Director as per the terms of his appointment. Transaction with Key Management Personnel of the Bank The following provides transactions between the Bank and Key Management Personnel of the Bank during the year.
Amt. in NPR
4. Exchange Fluctuation Reserve

As required by NRB directive, 25% of Revaluation Gain of NPR 2,506,700 has been transferred to Exchange Fluctuation Reserve through Profit and Loss Appropriation Account.
5. Bond Redemption Reserve

NPR 28,571,429 has been appropriated through Profit & Loss Account to Bond Redemption Reserve on actual period basis. The balance of the reserve as on July 15, 2008 (Ashad 31, 2065) is NPR 79,452,056.
6. Depreciation and Amortization of Computer Software

Excess depreciation on fixed assets including leasehold improvements and amortization of computer software of NPR 565,185 and NPR 1,236,130 respectively that were charged during the previous financial years has been corrected in the current year by adjusting the depreciation and amortization charge of the current year.
7. Deferred Tax
a. Component of Deferred Tax Assets The component of Deferred Tax as on July 15, 2008 (Ashad 31, 2065) is as follows:
Amt. in NPR
Nature of Transaction
Meeting Fees Paid Allowance and other fees
Current Year
2,0,000 66,000
Current Year
Deferred Tax Asset On fiscal allowance of fixed assets On other temporary differences Deferred Tax Asset 4,728,6 2,700,768 7,42,8
Previous Year
4,278,28 7,07,84 ,26,2
9. Contingent Liability
Beneficiaries of the bank guarantees issued by the Bank have claimed NPR 25,886,575 (Previous Year NPR 21,676,575) which the Bank has not accepted as liability. There is a legal proceeding for the said claims with appropriate authority and the bank would provide and honour the claim on final disposal of the legal proceeding.
This year being the first year of adoption of Nepal Accounting Standard 09 Income Taxes issued by the Institute of Chartered Accountants of Nepal, NPR 11,296,112 representing deferred tax asset up to previous year ending on July 16, 2007 (Ashad 32, 2064) has been adjusted to the opening balance of retained earnings.
10. Reconciliation Status

Amt. in NPR
12. Summary of Changes in Deposit Liability

Amt. in NPR
Transaction
Branch Account Agency Account (Net)
Up to 1 year 1 to 3 years Above 3 years

74,88,8 (,66,08)
Total
Particulars
Government of Nepal Commercial Banks Financial Institutions Other Organizations Individuals Others Guarantees Margins LC Margins Total Deposits
Previous Year
26,8,70 66,472,40 208,0,44 ,,68,0 ,77,67,88 20,628,206 ,7,07 ,247,66 12,388,927,294
Current Year
8,607,407 202,08,4 2,44,64 7,02,,47 6,878,7,047 08,6,7 77,2,2 74,,402 15,833,737,799
Changes
6,77,704 ,608,7 72,24,470 ,42,478,76 ,08,62,0 7,67,6 2,,428 (8,248,24) 3,444,810,505
- 7,228,20
Differences of the transactions pending reconciliation has been identified and is being reconciled.
11. Statement of disbursement, recovery of loans and advances and principal and interest written off
Amt. in NPR
Opening Balance
,64,0,4
Disbursement
Recovery Written off

4,402,284
Closing Balance
2,747,72,60
,8,,2 28,482,0,0
In addition to the principal written off above, interest of NPR 4,330,404 has also been written off.
13. Weighted Average Interest Rate Spread

Amt. in NPR
Previous Year Average Deposit Interest Expenses

,80,6,847 ,072,4,670 ,6,0,47 2,64,07,2 ,72,77,26 Average Int. Rate 2,06,7 6,77,746 2,67,788 20,002,70 2.77%
Deposit and Interest Expenses Type of Account
Current Year Average Deposit Interest Expenses

2,07,24,046 6,220,068,67 2,,026,47 ,6,7,40 ,74,0,27 Average Int. Rate 4,00,6 ,8,74 47,72,66 87,4,46 2.78%
Current Saving Call Fixed Total
Previous Year Average Loan & Interest Income Investment

8,64,0,040 ,66,66,7 2,02,76,7 Average Int. Rate 4.04% 64,6, 7,2,62 8,00,47 6.8%
Loans & Investment and Interest Income Type of Account Current Year Average Loan & Investment
Loans Investments Total Spread ,476,87,00 ,02,472, 4,02,,6 Average Int. Rate
Interest Income
887,28,870 46,8,004 ,04,7,874 7.% 4.%
14. Classification of Assets and Liabilities based on Maturity

Particulars
Assets Cash Balance Bank Balance Investment in Foreign Banks Money at Call Government Bonds Placements in FIs NRB Bonds Corporate Bonds & Debentures Inter bank lending Loans & advances Total Financial Assets Liabilities Borrowings Current Deposits Saving Deposits Fixed Deposits Call Deposits Other Deposits Bonds Total Financial Liabilities Net Financial Assets Cumulative Net Financial Assets 00,000,000 ,46,82,06 4,00,,2 ,270,48,477 2,27,80,77 24,8,00 0,6,24,8 (2,40,2,2) (2,40,2,2) 24,047,26 24,047,26 ,24,666,72 (84,626,28) ,24,28 ,24,28 (0,44,6) (86,06,8) 804,0,7 804,0,7 8,48,4 (76,8,7) 6,6,26 ,6,6,440 840,2,47 80,4,446 200,000,000 4,72,482,702 ,82,28,2 ,0,62,27 6,747,4 0,7,800 772,84,8 72,67,86 72,76, ,70,6,240 8,028,0, ,28,74,2 ,28,74,2 0,480,62 0,480,62 ,08,8,02 ,4,828 ,62,2,860 206,700,000 82,07,748 8,74,78 4,60,228,60 ,74,700,
Amt. in NPR
Up to 90 Days
91 to 180 Days
181 to 270 Days
271 to 365 Days
Above 1 Year
Total
6,747,4 0,7,800 7,4,8 72,67,86 2,,22, 8,74,78 2,747,72,60 7,4,70,06 00,000,000 2,02,8,7 6,6,0,67 ,70,7,2 ,8,6,6 24,8,00 200,000,000 6,,77,7 ,0,62,27
15. Change in Accounting Policy

From the current financial year, the Bank has adopted NAS 09 Income taxes and recognized deferred tax asset. Deferred tax asset up to the previous year of NPR 11,296,112 has been adjusted to the opening retained earning which has further been adjusted by charge to Profit & Loss Account of NPR 3,866,729 in the current year. Due to change in the accounting policy to recognize deferred tax, profit for the year has decreased by NPR 3,866,729 and retained earnings as at the balance sheet date has increase by NPR 7,429,383.
16. Summary of concentration of exposure

No balance sheet and off balance sheet transaction have been concentrated to a single person, firm, organization or to a particular sector. Detail of highest exposure to a single person or organization is as follows:
Amt. in NPR
Particulars
Loans & Advances Deposits Off Balance Sheet Items
Total Exposure
2,747,72,60 ,8,77,7 ,04,,06
Maximum concentration to a single customer

476,6, ,78,8,07 267,22,88
Percentage
.74% 8.7% 8.76%
Amt. in NPR
Opening Balance
2,4,02
Taken over during the year

60,70
Sold during the year

8,4,000
Closing Balance
,,272
17. Details of Non Banking Assets

Amt. in NPR
Opening Balance
8,8,48
Additions during the year

,26,08
Amortization during the year

,74,488
Closing Balance
24,428,4
18. Details of Software Application 19. The Bank has taken over the shares of himalayan Distillery Limited of NPR 13,414,000 under underwriting commitment. The Bank has provided 10% of the cost of the shares and remaining 90% has been deducted while calculating core capital. 20. The Bank has not pledged any of its assets for any loans or for issuing Bond. 21. The Bank has forfeited 4,505 number of shares and the same has not been issued. 22. Previous years figures have been regrouped or rearranged, wherever necessary in order to facilitate comparison. All figures are rounded off to the nearest rupee.
Disclosures under Basel II - Asadh 2065
A. Capital Structure & Capital Adequacy as per Basel II 1. Tier 1 Capital and Breakdown of its Components :
Amt. in NPR
SN
A 2 4 6 7
Particulars
Core Capital (Tier ) Paid Up Capital General Reserve Fund Cumulative Profit / Loss Capital Adjustment Reserve Other Free Reserve Bond Redemption Reserve Less: Investment arising out of Underwriting Commitment
Amount
,0,8,2 60,4,00 270,08,7 20,08,76 66,86,0 64,07 7,42,06 (2,072,600)
2. Tier 2 Capital and Breakdown of its Components

Amt. in NPR
SN
B 2 4
Particulars
Supplementary Capital (Tier 2) Loan Loss Provision on Pass Loan Unsecured Subordinated Term Debt Less: discounted for lesser tenure Exchange Fluctuation Reserve
Amount
2,7, 24,0,462 200,000,000 (,0,6) ,4,66
3. Detail information about the Subordinated Term Debts with information on the outstanding amount, maturity, amount raised during the year and amount eligible to be reckoned as capital funds:
Bond floated as Outstanding amount Amount raised during the year Maturity Date Amount to be reckoned as capital : Bank of Kathmandu Bond 206 (BOK Bond) : NPR 200,000,000 : NIL : Ashwin 8, 206 (October 04, 202) : NPR 68,86,0 **
** The eligible bond amount allotted for capital has been calculated on pro rata basis. The bank places NPR 28,571,429 annually on BOK Bond redemption reserve.
4. Total deductions from Capital

Amt. in NPR
SN
2
Particulars
From Core Capital Investment arising out of Underwriting Commitment From Supplementary Capital Discounted for lesser tenure on unsecured subordinated term debt TOTAL 78 | Annual Report 2007-08
Amount
2,072,600 ,0,6 43,086,299
5. Total Qualifying Capital

Amt. in NPR
SN
2
Particulars
Core Capital (Tier ) Supplementary Capital (Tier 2) TOTAL
Amount
,0,8,2 2,7, 1,623,026,951
6. Capital Adequacy Ratio:
10.61%
7. Summary of the banks internal approach to assess the adequacy of its capital to support current & future activities
Preparation of annual budget for risk weighted assets vis--vis capital fund Monitoring of risk weighted assets and capital fund at the periodic interval Preparing prospective drawdown and repayment plan of loans and advances Revision of asset deployment strategy as per the requirement Reporting of capital adequacy ratios on a periodic basis to Nepal Rastra Bank (NRB)
The bank prepares annual budget plan for risk weighted assets and closely monitors the actual against the budget. Prospective drawdown and repayments plans of loans and advances are watched to track the movement in the portfolio. Furthermore, bank keeps a close watch to changing business environment for strategy planning and revision in order to mitigate anticipated adverse impact on its risk assets portfolio. The bank computes capital adequacy ratios on a periodic basis to ensure sufficient coverage of its risk assets by the qualifying capital fund. Apart from above, the bank also prepares long term capital plans to support its future activities. The capital plan is assessed to ascertain that the financial result attained is in line with the capital plan devised. Based on the actual figures, if the bank feels that the figures could deviate significantly, the bank revises its long term plan. The bank also constantly monitors its Credit Deposit ratio in order to assess sources of funds and deployment of funds.
8. Summary of terms, conditions and main features of all capital instruments, especially in case of subordinated term debts including hybrid capital instruments
The bank has issued Bank of Kathmandu Bond, 2069 (BOK Bond) amounting to NPR 200 million as Subordinated Term Debt in Ashwin 2062. Bank has not pledged any securities while issuing BOK bond. The bond has the following features: Bond Validity Period Bond Maturity Date Coupon Interest Rate Interest Payment Period Interest Payment Timing : 7 year : Ashwin 18, 2069 (October 04, 2012) : 6% p.a. : Bi-annually (in every six months of Nepali Calendar) : Interest is paid on the 1st day of Magh and Shrawan.
BOK bond can be pledged with other banks and financial institutions to avail loan facility. BOK bond is listed with Nepal Stock Exchange Ltd. BOK Bond holders will have rights of claim only after the depositors in case of liquidation.
B. Risk Exposures 1. Risk Weighted Exposures for Credit Risk, Market Risk & Operational Risks
Amt. in NPR
RISK WEIGHTED EXPOSURES

a b c Risk Weighted Exposure for Credit Risk Risk Weighted Exposure for Operational Risk Risk Weighted Exposure for Market Risk
Amount
4,8,4,264 884,862, 87,,004
Total Risk Weighted Exposures (a+b+c) 15,290,608,779
2. Risk Weighted Exposures under each of 11 categories of Credit Risk

Amt. in NPR
SN
2 4 6 7 8 0
Particulars
Claims on government & central bank Claims on other official entities Claims on banks Claims on domestic corporate and securities firms Claims on regulatory retail portfolio Claims secured by residential properties Claims secured by commercial real estate Past due claims High risk claims Other assets Off balance sheet items TOTAL
Amount
47,760,6 ,6,087,22 ,0,866,884 64,060,88 ,0,82,740 22,777, 268,02,272 8,2,82 2,,22,7 14,318,431,264
3. Total Risk Weighted Exposures calculation table

Amt. in NPR
SN
2 4
Particulars
Total Risk Weighted Exposure Total Core Capital Fund (Tier ) Total Capital Fund (Tier & Tier 2) Total Core Capital to Total Risk Weighted Exposures Total Capital to Total Risk Weighted Exposures
Amount
,20,608,77 ,0,8,2 ,62,026, 8.7% 0.6%
4. Amount of NPAs
Amt. in NPR
SN
2 4
Loan Classification
Restructured/ Rescheduled Loan Substandard Loan Doubtful Loan Loss Loan TOTAL
Gross Amount
7,8,480 00,76,762 ,246,76 7,47, 312,497,330
Provision Held
,44,80 2,044,0 ,62,84 6,27,2 161,044,600
Net Amount
66,48,670 7,2,7 ,62,84 48,04 151,452,730
5. NPA Ratios
Gross NPA to Gross Advances: Net NPA to Net Advances: 2.4% .22%
6. Movement of Non-Performing Assets

Amt. in NPR
SN
2 4
Non Performing Loan

Restructured Loan Sub-Standard Loan Doubtful Loan Bad Loan Total
Opening Balance
0,8,4 ,86,42 6,76,08 66,86,82 347,294,745
Increment during the year

8,78,44 7,620,28 4,8,2 8,284,87 224,530,532
Reduction during the year

67,8,46 7,06,878 67,6,26 67,666,78 259,327,948
Closing Balance
7,8,480 00,76,762 ,246,76 7,47, 312,497,330
7. Write Off of Loans & Interest Suspense

Amt. in NPR
SN
2 4
Name
Himalayan T-Commerce Pvt. Ltd. Easy Pharmaceuticals Palanchowk Trading Potala Travels Nepal P. Ltd. Total
Principle
44,24,222 ,008,0 7,084 8,028 45,402,284
Interest
4,2,6 62,78 ,88 0 4,330,404
Total
48,44,2 ,07,708 84,22 8,7 49,732,688
8. Movement in Loan Loss Provision & Interest Suspense

i. Movement in Loan Loss Provision
Amt. in NPR
SN
2 4
Loan Loss Provision

Pass Restructured Sub-Standard Doubtful Bad Total
Opening Balance
,6,0 2,,82 ,6,86 8,288,042 60,7,07 294,774,337

0,87,872 4,848,680 26,0,074 24,7,6 24,784,6 112,332,227

8,8,682 ,826,720 ,82,68 68,24,482 122,022,501
Closing Balance
24,0,462 ,44,80 2,044,0 ,62,84 6,27,2 285,084,062
ii. Movement in Interest Suspense

Amt. in NPR
Particulars
Interest Suspense
Opening Balance
6,0,8

7,422,68

,6,864
Closing Balance
4,78,6
9. Types of eligible Credit Risk Mitigants (CRM) used and the benefits availed under CRM
Amt. in NPR
SN
2 4
Particulars
Deposits with Banks Deposits with other Banks/Financial institutions Govt. & NRB Securities Guarantee of Domestic Banks Guarantee of Foreign Banks TOTAL
Amount in NPR
28,,27 640,87,70 2,62,8 20,282,000 2,62,8 1,423,564,787
C. Risk Management Functions 1. Credit Risk Management (CRM)

The objective of Credit Risk Management is to identify, measure, monitor, manage and report credit risk to maximize a banks risk-adjusted rate of return by maintaining credit risk exposure within the acceptable parameters. Objectives/Functions of credit risk management: Identifying and Quantifying Risk: The bank currently adopts a risk rating technique where by all borrowers are judged based on the four major risks i.e. Industry Risk, Business Risk, Financial Risk and Account Performance Risk in a common form of matrix to arrive at a Credit Grade (CG). A second way out assessment is also carried out to see the Security Coverage (SC). A Risk Category is hence arrived with a combined result of CG and SC. This helps the bank to: Identify key credit risk areas of a particular borrower Watch the change in credit risks of a borrower more closely Adopt appropriate risk control mechanism Apply logical pricing based on risk as far as possible Build a clear, consistent reliable data on risk
Reporting of Risk: List of High Risk Customers is prepared on periodic basis. The bank has a separate circular specifically designed for handling of High Risk Customer. In event of customer falling under High Risk category, credit workshop between Relationship Officer and Risk Officer is conducted and specific strategies and action plans are developed. Action plan milestonesare monitored within approved timeframes.
2. Market Risk Management

Market risks basically arise due to changes in interest rates, fluctuation in foreign currency exchange rates and changes in equity and commodity prices. The bank has devised and implemented policies, guidelines and procedures which help to manage market risk. In order to minimize the risks that could arise from fluctuation in foreign exchange rates, the bank constantly monitors its foreign currency positions ensuring that the foreign currency position does not cross the limit set for each currency. Apart from above, the bank also applies various hedging techniques to manage its open currency position. Some of the techniques applied by the bank for minimizing foreign exchange risks are: Integrated mechanism of reporting open foreign currency position of the bank. Proactive trading in the Spot & Forward market to hedge open posi tions. Stop loss mechanism in the spot market to minimize the loss from intra-day trade. Use of simple derivatives to hedge open positions. Maintaining buffer for absorbing the unanticipated loss arising from dealing on foreign currencies. There is asset and liability management committee (ALCO) which manages interest rate risk in banking book with the help of asset and liability management guidelines. The committee focuses on: Constant monitoring of market interest rates and revising strategies accordingly. Efficient management of investment portfolio based on the demand and supply of the available funds. Maintaining appropriate level of liquid assets. Monitoring and Managing Liquidity Gap of different time interval.
Managing and Monitoring Credit Risk: Credit risk is managed with the help of Credit Control, Credit Administration and Credit Processing functions. Credit Control functions as risk managers to ensure compliance with inhouse policies and NRB directives. The bank has been following Credit Policy approved by the Board of Directors. The bank has devised credit circulars and various guidelines in the form of product papers which are in line with the Credit Policy. To ensure smooth process in approving credit proposals, appropriate authority is delegated at various levels. Credit Administration ensures that all legal documents pertaining to the business proposals are obtained and are updated. It also conducts physical inspection of customers projects & stock on regular intervals. Financial statements, stock and receivables statements are also collected and analyzed periodically. Credit Processing is responsible for credit disbursements, settlement of loans and providing credit reports to relationship managers. It furnishes reports on sector-wise distribution of loan portfolio, provides list of delinquent customers, watch list customers, large borrowers (availing funded facility of more than 10 million) and top 25 borrowers.
Investment in equity of financial institutions is not allowed and the fact that our share market predominantly operates in trading of shares of financial institutions, bank holds insignificant portfolio in equity investment. Since the bank neither trades in commodity nor takes position in commodity, commodity price fluctuation does not have any impact on Bank.
3. Operational Risk Management

The bank has been continuously putting efforts to strengthen the internal control mechanisms to mitigate operating risks. Operating procedures for all operating functions have been formulated and implemented. Internal Audit unit carries out compliance test at regular intervals. Apart from regular internal audit and compliance checks, Branch Operations cell carries out an independent checks and reviews in all the branches to ensure that standard procedures at all levels are implemented and no breaches of compliance are in existence across the branches as the Bank is firmly committed to the highest standards of governance and compliance. Various trainings/skill enhancement processes are conducted for the staffs at all levels in all the branches on an on-going basis to keep the operational risks at the lowest level possible by upgrading the level of skills of the employees. Besides, manpower assessment based on the dimension/scope of a branch/department/segment is carried out on a regular basis. The Bank has formulated and implemented its own Know Your Customer (KYC) standard & Anti Money Laundering (AML) policies based on the industry practice, prevailing laws and Nepal Rastra Bank Directives. In order to ensure the consistency and accuracy in processing a transaction and/or in getting information across the branches, most of the operational functions of the branches have been centralized at Head Office. To ensure and strengthen data & network security, comprehensive IT policies have been formulated and implemented. All aspects of access, password, network and data security have been well addressed in the policy document.
NEPAL RASTRA BANK APPROVAL AND DIRECTIONS:
Nepal Rastra Bank has approved to publish Financial Statement of the Bank for the Fiscal Year 2064/65 along with following directives: 1. Redemption reserve in full amount of the bond should be created at end of Ashad of the preceding year of maturity of the bond. 2. Comments made by auditor be rectified and notice of such rectification should be informed to Bank Supervision Department of Nepal Rastra Bank. Response from the Bank: 1. Bond Redemption reserve plan with plan to create full amount of reserve at the end of 2069 Ashad has already been submitted to Nepal Rastra Bank. 2. Comments made by Auditor will be rectified and the notice of such rectification will be sent to Bank Supervision Department of Nepal Rastra Bank.
NOTES

Annual Report 2007-2008 (ENG) - 20100603063436

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Annual Report 2007-08 | 

- Sanjay Bahadur Shah Chairman

| Annual Report 2007-08

ANNUAL REPORT 2007-08

T eamwork is the ability to work together towards a common goal .

| Annual Report 2007-08

Sanjay Bahadur Shah

Annual Report 2007-08 | 

Comparative Business Growth (In Billion)

(July 2007 & July 2008)

2 | Annual Report 2007-08

Operating Profit Net Profit

Sanjay Bahadur Shah Chairman

Annual Report 2007-08 | 

Sanjay Bahadur Shah Chairman

Radhesh Pant Managing Director

Sitaram Thapaliya Director

Rita Malla Director

Balram Neupane Director

Representative National Investment Company (P) Ltd

6 | Annual Report 2007-08

Bishnu Prasad Banjade Director

Representative Nepal Remittance (P) Ltd.

Sudarshan Raj Poudyal Professional Director

Santa Bar Singh Thapa Director

Total Provision to Total Loans & Advances

FY 2006/07 Growth by 31.50% NPR 9.69

Provision for Loss on Corporate Loans 2.08%

Consumer Financing (In Billion)

Deprived Sector Finance (In Million)

16.50 July 2007 July 2008

Foreign Exchange Management

5.79 3.86 4.07

Aug/Sep Sep/Oct Oct/Nov Nov/Dec

Foreign Exchange Income Source

Core Capital Capital Fund

1640 1290 1310

National Economy and Banking Environment

GDP Growth Rate % (Production Price)

4.7 3.7 3.1 3.2

Source: Economic Survey 2007/08, Finance Ministry, Government of Nepal

Compared to previous year

This year till Oct/Nov

440 4 06 28

4 4 60 40

77 77 400 202

677 208 46 262

86 26 602 6

 0 20 -

This year till Oct/Nov

Capital Deposit Loans & Advances Fixed Property (Net)

464 7,742 6,008 84

464 8,4 6,82 

464 0,48 7,48 

60 2,8 ,64 2

0% 27.8% .0% 20.6%

60 6,02 2,0 406

2.0% 0.4% .60% .4% 24 8

27.24% 2.6% .40% .42% 2 

.0% 0.68% 24.0% .6% 2 

8.70% 0.72% 26.8% .80% 2 6

4.8% 0.24% 26.0% 2.04% 226 2

Annual Report 2007-08 |

Annual Report 2007-08 |

Annual Report 2007-08 |

440 4 06 28

4 4 60 40

77 77 400 202

677 208 46 262

86 26 602 6

0 20 -

464 8,4 6,82

464 0,48 7,48

60 2,8 ,64 2

0% 27.8% .0% 20.6%

60 6,02 2,0 406

2.0% 0.4% .60% .4% 24 8

27.24% 2.6% .40% .42% 2

.0% 0.68% 24.0% .6% 2

8.70% 0.72% 26.8% .80% 2 6

4.8% 0.24% 26.0% 2.04% 226 2

8.0% -.6% .% .7% 86.78% 4.7%

Annual Report 2007-08 |

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NPR 4,000 per Month

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