Rastriya Banijya Bank Limited: Interim Financial Statements
Rastriya Banijya Bank Limited: Interim Financial Statements
SECOND QUARTER
OF
FINANCIAL YEAR 2076/77
Rastriya Banijya Bank Limited
Condensed Consolidated Statement of Financial Position
As on 2076 Poush End (14 January 2020)
Amount is Rs.
Group Bank
Particulars
This Quarter Ending Immediate Previous Year Ending This Quarter Ending Immediate Previous Year Ending
Assets
Cash and cash equivalent 9,941,865,090 8,202,478,030 9,933,567,602 8,194,978,236
Due from Nepal Rastra Bank 11,788,441,665 12,359,997,257 11,788,441,665 12,359,997,257
Placement with Bank and Financial Institutions 272,160,000 373,490,000 272,160,000 373,490,000
Derivative financial instruments. - - - -
Other trading assets - - - -
Loan and advances to B/FIs 4,300,955,200 4,537,605,600 4,300,955,200 4,537,605,600
Loans and advances to customers 147,897,991,689 142,022,875,931 147,897,991,689 142,022,875,931
Investment securities 44,240,177,046 40,260,548,334 44,171,277,683 40,181,642,944
Current tax assets 2,063,326,522 2,428,488,970 2,063,326,522 2,425,828,777
Investment in subsidiaries - - 200,000,000 200,000,000
Investment in associates 97,858,000 131,441,537 97,858,000 97,858,000
Investment property 114,812,504 114,812,504 114,812,504 114,812,504
Property and equipment 1,258,522,464 1,128,281,073 1,251,594,821 1,124,034,040
Goodwill and Intangible assets 58,419,655 44,782,227 58,419,655 44,603,617
Deferred tax assets 310,881,658 500,436,244 310,881,658 389,021,830
Other assets 2,627,971,551 14,343,155,238 2,623,925,389 14,343,429,145
Total Assets 224,973,383,044 226,448,392,946 225,085,212,388 226,410,177,881
Liabilities
Due to Bank and Financial Institutions 1,761,974,271 7,860,034,385 1,761,974,271 7,860,034,385
Due to Nepal Rastra Bank 287,067,423 352,044,206 287,067,423 352,044,206
Derivative financial instruments - - - -
Deposits from customers 194,780,168,107 189,140,853,862 194,901,927,399 189,255,335,577
Borrowing 60,338,621 60,687,258 60,338,621 60,687,258
Current Tax Liabilities - - - -
Provisions 292,493,506 355,873,853 292,493,506 355,873,853
Deferred tax liabilities - - - -
Other liabilities 4,889,183,639 6,941,468,574 4,887,414,036 6,940,399,014
Debt securities issued - - - -
Subordinated Liabilities - - - -
Total liabilities 202,071,225,567 204,710,962,138 202,191,215,256 204,824,374,293
Equity
Share capital 9,004,795,700 9,004,795,700 9,004,795,700 9,004,795,700
Share premium - - - -
Retained earnings 1,415,172,635 1,806,085,133 1,407,012,290 1,394,490,944
Reserves 12,482,189,142 10,926,549,975 12,482,189,142 11,186,516,944
Total equity attributable to equity holders 22,902,157,477 21,737,430,808 22,893,997,132 21,585,803,588
Non-controlling interest - - - -
Total equity 22,902,157,477 21,737,430,808 22,893,997,132 21,585,803,588
Total liabilities and equity 224,973,383,044 226,448,392,946 225,085,212,388 226,410,177,881
Contingent liabilities and commitment 16,687,947,874 12,079,154,596 16,687,947,874 12,079,154,596
Net assets value per share 254.33 241.40 254.24 239.71
Page 2
Rastriya Banijya Bank Limited
Condensed Consolidated Statement of Profit or Loss
For the Second Quarter of FY 2076/77 ended on 2076 Poush End (14 January 2020)
Amount is Rs.
Group Bank
Current Year Previous Year Current Year Previous Year
Particulars
Upto this Upto this Upto this Upto this
This Quarter This Quarter This Quarter This Quarter
Quarter(YTD) Quarter(YTD) Quarter(YTD) Quarter(YTD)
Interest income 4,680,011,397 8,728,155,427 3,516,019,528 7,235,530,528 4,679,042,020 8,726,427,384 3,515,266,853 7,234,385,853
Interest expense 1,883,685,061 3,660,516,896 1,164,768,434 2,274,191,434 1,886,306,873 3,665,801,311 1,168,023,311 2,280,694,311
Net interest income 2,796,326,336 5,067,638,532 2,351,251,094 4,961,339,094 2,792,735,147 5,060,626,074 2,347,243,542 4,953,691,542
Fees and commission income 32,649,303 359,990,546 12,804,361 365,903,361 32,328,328 358,756,901 11,865,692 364,317,692
Fees and commission expense 35,797,726 69,788,531 23,974,074 85,365,074 35,797,726 69,788,531 23,974,074 85,365,074
Net fee and commission income (3,148,424) 290,202,015 (11,169,713) 280,538,287 (3,469,399) 288,968,370 (12,108,382) 278,952,618
Net interest, fee and commission income 2,793,177,912 5,357,840,546 2,340,081,381 5,241,877,381 2,789,265,748 5,349,594,443 2,335,135,160 5,232,644,160
-
Net trading income 18,061,148 33,832,060 13,801,051 27,602,101 18,061,148 33,832,060 13,801,051 27,602,101
Other operating income 316,050,138 379,743,373 266,207,556 262,945,506 313,238,665 377,261,900 266,325,566 263,173,516
Total operating income 3,127,289,198 5,771,415,980 2,620,089,988 5,532,424,988 3,120,565,561 5,760,688,404 2,615,261,777 5,523,419,777
Impairment charge/(reversal) for loans and
360,539,914 201,308,782 (387,300,055) (135,603,055) 360,539,914 201,308,782 (388,145,482) (136,448,482)
other losses
Net operating income 2,766,749,283 5,570,107,197 3,007,390,043 5,668,028,043 2,760,025,646 5,559,379,621 3,003,407,259 5,659,868,259
Operating expense
Personnel expenses 943,432,859 1,793,344,050 866,362,158 1,718,366,158 941,613,495 1,789,750,465 864,976,274 1,715,139,274
Other operating expense 295,914,097 588,875,056 185,824,030 407,787,030 291,343,579 583,272,140 185,841,087 406,572,087
Depreciation & Amortisation 70,093,512 120,945,235 101,723,209 101,723,209 70,093,512 120,945,235 100,608,571 100,608,571
Operating Profit 1,457,308,815 3,066,942,858 1,853,480,646 3,440,151,646 1,456,975,061 3,065,411,783 1,851,981,327 3,437,548,327
Non operating income 91,885,243 90,991,596 (6,741,928) 11,362,072 88,660,968 90,991,596 (6,741,928) 11,362,072
Non operating expense - - - - - - - -
Share of profit of associates - - - - - - - -
Profit before income tax 1,549,194,058 3,157,934,453 1,846,738,718 3,451,513,718 1,545,636,029 3,156,403,378 1,845,239,399 3,448,910,399
Income tax expense 463,690,808 946,921,013 554,353,408 1,038,948,408 463,690,808 946,921,013 554,353,408 1,038,948,408
Current Tax 463,690,808 946,921,013 554,353,408 1,038,948,408 463,690,808 946,921,013 554,353,408 1,038,948,408
Deferred Tax - - - - - - - -
Profit for the period 1,085,503,250 2,211,013,440 1,292,385,310 2,412,565,310 1,081,945,221 2,209,482,365 1,290,885,991 2,409,961,991
Page 3
Rastriya Banijya Bank Limited
Condensed Consolidated Statement of Comprehensive Income
For the Second Quarter of FY 2076/77 ended on 2076 Poush End (14 January 2020)
Amount is Rs.
Group Bank
Current Year Previous Year Current Year Previous Year
Particulars
Upto this Upto this Upto this Upto this
This Quarter This Quarter This Quarter This Quarter
Quarter(YTD) Quarter(YTD) Quarter(YTD) Quarter(YTD)
Profit/Loss for the period 1,085,503,250 2,211,013,440 1,292,385,310 2,412,565,310 1,081,945,221 2,209,482,365 1,290,885,991 2,409,961,991
Total Comprehensive Income 1,264,789,913 2,390,300,103 1,292,385,310 2,412,565,310 1,261,231,884 2,388,769,028 1,290,885,991 2,409,961,991
Basic earnings per share 56.18 53.09 57.41 53.58 56.02 53.06 57.34 53.53
Diluted earnings per share 56.18 53.09 57.41 53.58 56.02 53.06 57.34 53.53
Profit attributable to:
Equity holders of the Bank 1,264,789,913 2,390,300,103 1,292,385,310 2,412,565,310 1,261,231,884 2,388,769,028 1,290,885,991 2,409,961,991
Non-controlling interest - - - - - - - -
Total 1,264,789,913 2,390,300,103 1,292,385,310 2,412,565,310 1,261,231,884 2,388,769,028 1,290,885,991 2,409,961,991
Page 4
Rastriya Banijya Bank Limited
Significant Ratios
up to the Second Quarter ended on 2076 Poush End (14 January 2020) as per NRB Directives
Group Bank
Current Year Previous Year Corresponding Current Year Previous Year Corresponding
Particulars
Upto this Upto this Upto this Upto this
This Quarter This Quarter This Quarter This Quarter
quarter(YTD) quarter(YTD) quarter(YTD) quarter(YTD)
Capital Fund to RWA 13.15% 11.73% 13.15% 11.73%
Non-performing loan(NPL) to total loan 4.77% 3.40% 4.77% 3.40%
Total loan loss provision to Total NPL 95.45% 99.79% 95.45% 99.79%
Cost of Funds 4.05% 3.01% 4.05% 3.01%
Credit to Deposit Ratio (Calculated as per NRB
Directives) 72.66% 69.24% 72.66% 69.24%
Base Rate 6.60% 5.60% 6.60% 5.60%
Interest Rate Spread 5.53% 4.78% 5.53% 4.78%
Page 5
Rastriya Banijya Bank Limited
Condensed Consolidated Statement of Changes in Equity
For the Second Quarter of FY 2076/77 ended on 2076 Poush End (14 January 2020)
Group
Attributable to equity holders of the Bank Amount in Rs.
Non-
Share Exchange Regulatory Fair Value Revaluation
Particulars Share Capital General Reserve Capital Reserve Retained Earning Other Reserve Total controlling Total Equity
Premium Equalisation Reserve Reserve Reserve
Interest
Balance as at Shrawan 1, 2076 9,004,795,700 - 8,178,908,597 97,319,666 6,726,597,250 481,195,653 860,893,657 77,183,784 1,806,085,133.00 (5,495,548,631) 21,737,430,809 - 21,737,430,809
Adjustment/Restatement - - - - - - - - (404,964,919.12) - (404,964,919) - (404,964,919)
Adjusted Restated Balance at
9,004,795,700 - 8,178,908,597 97,319,666 6,726,597,250 481,195,653 860,893,657 77,183,784 1,401,120,213.88 (5,495,548,631) 21,332,465,889 - 21,332,465,889
Shrawan 1, 2076
Comprehensive Income for the year -
Profit for the year - - - - - - - - 2,211,013,439.77 - 2,211,013,440 - 2,211,013,440
Other Comprehensive income, net of
- - - - - - - - - - - - -
tax
- Gains/(losses) from investments in
- - - - - - 439,253,631 - - - 439,253,631 - 439,253,631
equity instruments measured at fair value
- Gains/(losses) on revaluation - - - - - - - - - - - - -
- Actuarial Gains/(losses) on defined
- - - - - - - - - - - - -
benefit plans
- Gains/(losses) on cash flow hedge - - - - - - - - - - - - -
- Exchange gains/(losses) arising from
translating financial assets of foreign - - - - - - - - - - - - -
operation
- - - - - - - - - -
Total comprehensive income for the
- - - - - - - - - - - - -
year
Transfer to reserve during the year - - 441,896,473 - 720,340,290 - - - (1,194,525,706.65) 32,288,944 (0) - (0)
Transfer from the reserve during the
- - - - (78,140,172) - - - 78,140,172.00 - - - -
year
Page 6
Rastriya Banijya Bank Limited
Statement of Changes in Equity
For the period ended 2076 Poush End (FY 2076/77)
Bank
Attributable to equity holders of the Bank Amount in NPR
Non-
Share Exchange Regulatory Fair Value Revaluation
Particulars Share Capital General Reserve Capital Reserve Retained Earning Other Reserve Total controlling Total Equity
Premium Equalisation Reserve Reserve Reserve
Interest
Balance as at Shrawan 1, 2076 9,004,795,700 - 8,178,908,597 97,319,666 6,726,597,250 481,195,653 1,120,860,625 77,183,784 1,394,490,944 (5,495,548,631) 21,585,803,588 - 21,585,803,588
Adjustment/Restatement - - - - - - - - - - - -
Adjusted Restated Balance at
9,004,795,700 - 8,178,908,597 97,319,666 6,726,597,250 481,195,653 1,120,860,625 77,183,784 1,394,490,944 (5,495,548,631) 21,585,803,588 - 21,585,803,588
Shrawan 1, 2076
Comprehensive Income for the year -
Profit for the year - - - - - - - - 2,209,482,365 - 2,209,482,365 - 2,209,482,365
Other Comprehensive income, net of
- - -
tax
- Gains/(losses) from investments in
- - - - - - 179,286,663 - - - 179,286,663 - 179,286,663
equity instruments measured at fair value
- Gains/(losses) on revaluation - - - - - - - - - - - - -
- Actuarial Gains/(losses) on defined
- - - - - - - - - - - - -
benefit plans
- Gains/(losses) on cash flow hedge - - - - - - - - - - - -
- Exchange gains/(losses) arising from
translating financial assets of foreign - - - - - - - - - - - -
operation
Page 7
Rastriya Banijya Bank Limited
Consolidated Statement of Cash Flow Statement
For the Period ended on 2076 Poush End (From 2076 Shrawan 01 to 2076 Poush End)
Group Bank
Corresponding Corresponding
Up to Up to
Particulars Note Previous Year up to Previous Year up to
This Quarter This Quarter
This Quarter This Quarter
Net increase (decrease) in cash and cash equivalents 1,739,387,060 720,422,579 1,738,589,365 719,730,963
Cash and cash equivalents at Shrawan 1 8,202,478,030 28,352,742,315 8,194,978,237 28,333,121,095
Cash and cash equivalent acquired from merger - - - -
Effect of exchange rate fluctuations on cash and cash
- - - -
equivalents held
Cash and cash equivalents at Ashadh end 2076 9,941,865,090 29,073,164,894 9,933,567,602 29,052,852,058
Page 8
G. Notes to Interim Financial Statements
1. Basis of preparation
The interim financial statements of the Bank have been prepared in accordance with the Nepal
Financial Reporting Standards(NFRS) adopted by Accounting Standard Board of Nepal.
2. Statement of Compliance
The financial statements were prepared in accordance with Nepal Financial Reporting Standards
(NFRS) read along with the approved carve-outs and in the format as per Directive No. 4 of
NRB Directives, 2076. Historical cost convention was used for financial statement recognition
and measurement except otherwise required by NFRS. Where, other method(s), other than
historical costs, such as fair value has been applied, these have been disclosed in accordance with
the applicable reporting framework. The adoption of NFRS for preparation of financial
statements was brought in effect from fiscal year 2074/75.
The amounts of financial statements were presented in Nepalese Rupees (NPR) being the
functional currency of the Bank. The figures were rounded to the nearest rupee except where
indicated otherwise.
The financial statements comprise the Statement of Financial Position, Statement of Profit or
Loss, Statement of Other Comprehensive Income, the Statement of Changes in Equity, the
Statement of Cash Flows and the Notes to the Accounts.
The financial statements have been prepared on accrual basis of accounting in accordance with
Nepal Financial Reporting Standards (NFRS) and as published by the Accounting Standards
Board (ASB) Nepal and pronounced by The Institute of Chartered Accountants of Nepal
(ICAN). The interim financial statements have been prepared based on the circular
no.19/075/076 issued by NRB on 2075/11/14 and are NFRS compliant. The Bank has opted
carve-outs on NFRSs as issued by The Institute of Chartered Accountants of Nepal on 2018
September 20.
3. Use of Estimates, assumptions and judgments
The Bank, under NFRS, is required to apply accounting policies to most appropriately suit its
circumstances and operating environment. Further, the Bank is required to make judgments in
respect of items where the choice of specific policy, accounting estimate or assumption to be
followed could materially affect the financial statements. This may later be determined that a
different choice could have been more appropriate. It is also required to make estimates and
assumptions that will affect the assets, liabilities, disclosure of contingent assets and liabilities,
and profit or loss as reported in the financial statements. The Bank applies estimates in preparing
and presenting the financial statements and such estimates and underlying assumptions are
reviewed periodically. The revision to accounting estimates are recognized in the period in which
the estimates are revised, and are applied prospectively.
The accounting policies as explained in Section 3 herein were consistently applied to all the
years presented except otherwise stated. They were further included in the relevant notes for
each item of the financial statements, and the effect and nature of the changes, if any, were
Page 9
disclosed. The accounting estimates were appropriately disclosed in the relevant sections of the
Notes wherever the estimates have been applied along with the nature and effect of changes of
accounting estimates, if any.
The accounting policies are to be applied consistently. Changes in accounting policies, if any, are
to be disclosed with the financial impact to the extent possible. When polices are not guided by
the reporting framework, NFRS, other reporting standards and generally accepted accounting
principles are to be followed.
Page 10
interests are based on a proportionate amount of the net assets of the subsidiary. No adjustments
are made to goodwill and no gain or loss is recognised in profit or loss.
The Bank does not have any NCI as on reporting date.
c. Subsidiaries
Subsidiaries are the entities controlled by the Bank. The Bank controls an entity if it is exposed,
or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee. The Financial Statements of subsidiaries
are included in the Consolidated Financial Statements from the date that control commences
until the date that control ceases.
The Bank reassesses whether it has control if there are changes to one or more of the elements of
control. In preparing the consolidated financial statements, the financial statements are combined
line by line by adding the like items of assets, liabilities, equity, income, expenses and cash flows
of the parent with those of its subsidiary. The carrying amount of the parent’s investment in
subsidiary and the parent’s portion of equity of subsidiary are eliminated in full. All intra group
assets and liabilities, equity, income, expenses and cash flows relating to transactions between
entities of the group (such as interest income and technical fee) are eliminated in full while
preparing the consolidated financial statements.
d. Loss of Control
Upon the loss of control, the Bank derecognizes the assets and liabilities of the subsidiary,
carrying amount of non-controlling interests and the cumulative translation differences recorded
in equity related to the subsidiary. Further parent’s share of components previously recognized in
Other Comprehensive Income (OCI) is reclassified to profit or loss or retained earnings as
appropriate. Any surplus or deficit arising on the loss of control is recognized in the profit or
loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at
fair value at the date that control is lost. Subsequently, it is accounted for as an equity-accounted
investee or in accordance with the Group’s accounting policy for financial instruments
depending on the level of influence retained
e. Transaction Elimination on Consolidation
All intra-group balances and transactions, and any unrealized income and expenses (except for
foreign currency transaction gains or losses) arising from intra-group transactions are eliminated
in preparing the consolidated financial statements. Unrealized losses are eliminated in the same
way as unrealized gains, but only to the extent that there is no evidence of impairment
Page 11
5.4 Financial Assets and Financial Liabilities
a. Recognition
The Bank initially recognizes a financial asset or a financial liability in its statement of financial
position when, and only when, it becomes party to the contractual provisions of the instrument.
The Bank initially recognize loans and advances, deposits and debt securities/ subordinated
liabilities issued on the date that they are originated which is the date that the Bank becomes
party to the contractual provisions of the instruments. Investments in equity instruments, bonds,
debenture, Government securities, NRB bond or deposit auction, reverse repos, outright purchase
are recognized on trade date at which the Bank commits to purchase/ acquire the financial assets.
Regular way purchase and sale of financial assets are recognized on trade date at which the Bank
commits to purchase or sell the asset.
b. Classification
Financial Assets
The Bank classifies the financial assets as subsequently measured at amortized cost or fair value
on the basis of the Bank’s business model for managing the financial assets and the contractual
cash flow characteristics of the financial assets. The two classes of financial assets are as
follows;
1. Financial assets measured at amortized cost: a financial asset is measured at amortized
cost if the asset is held within a business model whose objective is to hold assets in order
to collect contractual cash flows and if the contractual terms of the financial asset give
rise on specified dates to cash flows that are solely payments of principal and interest on
the principal amount outstanding.
2. Financial assets measured at fair value: a financial asset other than those measured at
amortized cost are measured at fair value. They are further classified into two categories
as below:
a. Financial assets are measured at fair value through profit or loss if they are held
for trading or are designated at fair value through profit or loss. Upon initial
recognition, transaction cost are directly attributable to the acquisition are
recognized in profit or loss as incurred. Such assets are subsequently measured at
fair value and changes in fair value are recognized in Statement of Profit or Loss.
b. Financial assets are measured at fair value through other comprehensive income if
the Investment in an equity instrument that is not held for trading and at the initial
recognition, the Bank makes an irrevocable election that the subsequent changes
in fair value of the instrument is to be recognized in other comprehensive income
are classified as financial assets at fair value though other comprehensive income.
Such assets are subsequently measured at fair value and changes in fair value are
recognized in other comprehensive income.
Page 12
Financial Liabilities
The Bank classifies its financial liabilities, other than financial guarantees and loan
commitments, as follows:
Financial Liabilities at Fair Value through Profit or Loss: Financial liabilities are
classified at fair value through profit or loss if they are held for trading or are designated
at fair value through profit or loss. Upon initial recognition, transaction cost are directly
attributable to the acquisition are recognized in Statement of Profit or Loss as incurred.
Subsequent changes in fair value is recognized at profit or loss
Financial Liabilities measured at amortised cost: Financial liabilities other than those
measured at fair value though profit or loss are classified as subsequently measured at
amortized cost using effective interest method.
c. Measurement
Initial Measurement
A financial asset or financial liability is measured initially at fair value plus or minus, for an item
not at fair value through profit or loss, transaction costs that are directly attributable to its
acquisition or issue. Transaction cost in relation to financial assets and liabilities at fair value
through profit or loss are recognized in Statement of Profit or Loss.
Subsequent Measurement
A financial asset or financial liability is subsequently measured either at fair value or at
amortized cost based on the classification of the financial asset or liability. Financial asset or
liability classified as measured at amortized cost is subsequently measured at amortized cost
using effective interest rate method.
The amortized cost of a financial asset or financial liability is the amount at which the financial
asset or financial liability is measured at initial recognition minus principal repayments, plus or
minus the cumulative amortization using the effective interest method of any difference between
that initial amount and the maturity amount, and minus any reduction for impairment or
uncollectibility.
Financial assets classified at fair value are subsequently measured at fair value. The subsequent
changes in fair value of financial assets at fair value through profit or loss are recognized in
Statement of Profit or Loss whereas of financial assets at fair value through other comprehensive
income are recognized in other comprehensive income.
d. De-recognition
De-recognition of Financial Assets
The Bank derecognizes a financial asset when the contractual rights to the cash flows from the
financial asset expire, or it transfers the rights to receive the contractual cash flows in a
transaction in which substantially all the risks and rewards of ownership of the financial asset are
transferred or in which the Bank neither transfers nor retains substantially all the risks and
rewards of ownership and it does not retain control of the financial asset.
Page 13
On de-recognition of a financial asset, the difference between the carrying amount of the asset
(or the carrying amount allocated to the portion of the asset transferred) and the consideration
received (including any new asset obtained less any new liability assumed) shall be recognized in
profit and loss account.
In transactions in which the Bank neither retains nor transfers substantially all the risks and
rewards of ownership of a financial asset and it retains control over the asset, the Bank continues
to recognize the asset to the extent of its continuing involvement, determined by the extent to
which it is exposed to changes in the value of the transferred asset.
Page 14
technique whose variables include only data from observable markets, then the difference is
recognized in profit or loss on initial recognition of the instrument. In other cases the difference
is not recognized in profit or loss immediately but is recognized over the life of the instrument on
an appropriate basis or when the instrument is redeemed, transferred or sold, or the fair value
becomes observable.
All unquoted equity instruments are recorded at average of price determined as per Capitalised
Earning Method and Net Assets Value per share. Entities of which no data is whatsoever
available, valuation has been done at cost net of impairment if any.
f. Impairment
At each reporting date the Bank assesses whether there is any indication that an asset may have
been impaired. If such indication exists, the recoverable amount is determined. A financial asset
or a group of financial assets is impaired and impairment losses are incurred if, and only if, there
is objective evidence of impairment as a result of one or more events occurring after the initial
recognition of the asset (a loss event), and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that can be reliably
estimated.
The Bank considers the following factors in assessing objective evidence of impairment:
Page 15
management’s judgment as to whether current economic and credit conditions are such that the
actual losses are likely to be greater or less than suggested by historical trends. Default rates, loss
rates and the expected timing of future recoveries are regularly benchmarked against actual
outcomes to ensure that they remain appropriate.
Page 16
Policies Adopted
As per the NFRS Carve out, the Bank measured impairment loss on loan and advances as the
higher of amount derived as per norms prescribed by Nepal Rastra Bank for loan loss provision
and amount determined as per paragraph 63 of NAS 39.
c. Depreciation
Straight line method of depreciation on fixed assets is applied to allocate their cost to their
residual values over their estimated useful life as per management judgment, as follows:
Residual
Class of assets Revised useful life
Value
Computer up to 5 Years 1%
Vehicle up to 7 Years 5%
Assets costing less than Rs 2,000 are fully charged to profit loss account in the year of
purchase.
d. De-recognition
The carrying amount of Property and Equipment is derecognized on disposal or when no
future economic benefits are expected from its use or disposal. The gain or loss arising from
the de-recognition of an item of property and equipment is included in profit or loss when the
item is derecognized (unless on a sale & lease back). The gain shall is classified as revenue.
5.8 Intangible Assets
Page 18
Acquired Intangible Assets
Intangible assets are initially measured at fair value, which reflects market expectations of the
probability that the future economic benefits embodied in the asset will flow to the Bank, and are
amortized on the basis of their expected useful lives.
Computer software
Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire
and bring to use the specific software. Costs associated with the development of software are
capitalized where it is probable that it will generate future economic benefits in excess of its cost.
Computer software costs are amortized on the basis of expected useful life. Costs associated with
maintaining software are recognized as an expense as incurred.
At each reporting date, these assets are assessed for indicators of impairment. In the event that an
asset’s carrying amount is determined to be greater than its recoverable amount, the asset is
written down immediately. Amortization methods, useful lives and residual values are reviewed
at each reporting date and adjusted if appropriate.
Current Tax
Page 19
Current tax is the expected tax payable or recoverable on the taxable income or loss for the year,
using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax
payable in respect of previous years. Current tax payable also includes any tax liability arising
from the declaration of dividends.
Deferred Tax
Deferred tax is recognized in respect of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred income tax is determined using tax rate applicable to the Bank as at the reporting date
which is expected to apply when the related deferred income tax asset is realized or the deferred
income tax liability is settled.
Deferred tax assets are recognized where it is probable that future taxable profit will be available
against which the temporary differences can be utilized.
c. Subordinated Liabilities
Subordinated liabilities are those liabilities which at the event of winding up are subordinate to
the claims of depositors, debt securities issued and other creditors. The bank does not have any
of such subordinated liabilities.
5.12 Provisions
The Bank recognizes a provision if, as a result of past event, the Bank has a present constructive
or legal obligation that can be reliability measured and it is probable that an outflow of economic
benefit will be required to settle the obligation.
A disclosure for contingent liability is made when there is a possible obligation or a present
obligation that may but probably will not require an outflow of resources. When there is a
possible obligation or a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
Page 20
A provision for onerous contract is recognized when the expected benefits to be derived by the
Bank from a contract are lower than the unavoidable cost of meeting its obligation under the
contract.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If
it is no longer probable that an outflow of resources would be required to settle the obligation,
the provision is reversed. Contingent assets are not recognized in the financial statements.
However, contingent assets are assessed continually and if it is virtually certain that an inflow of
economic benefits will arise, the asset and related income are recognized in the period in which
the change occurs.
a. Interest Income
Interest income on FVTOCI assets and financial assets held at amortised cost shall be recognized
using the bank’s normal interest rate which is very close to effective interest rate using effective
interest rate method.
For income from loans and advances to customers, initial charges are not amortised over the life
of the loan and advances as the income so recognized closely approximates the income that
would have been derived under effective interest rate method. The difference is not considered
material. The Bank considers that the cost of exact calculation of effective interest rate method
exceeds the benefit that would be derived from such compliance.
The effective interest method is a method of calculating the amortised cost of a financial asset or
a financial liability and of allocating the interest income or interest expense over the relevant
period. The effective interest rate is the rate that discounts estimated future cash payments or
receipts through the expected life of the financial instrument or, when appropriate, a shorter
period, to the net carrying amount of the financial asset or financial liability. When calculating
the effective interest rate, the Bank estimates cash flows considering all contractual terms of the
financial instrument (for example, prepayment options) but does not consider future credit losses.
The calculation includes all fees paid or received between parties to the contract that are an
integral part of the effective interest rate, transaction costs and all other premiums or discounts.
The Bank recognizes the interest income on loans and advances as per Guideline on Recognition
of Interest Income, 2019 issued by Nepal Rastra Bank. The guideline requires bank to cease to
accrue interest in case of loan where contractual payments of principal and/or interest are more
than 12 months in arrears, irrespective of the net realizable value of collateral. Further, it also
requires the bank to cease accrual of interest income in case of loans where contractual payments
Page 21
of principal and/or interest are more than 3 months in arrears and where the “net realizable
value” of security is insufficient to cover payment of principal and accrued interest.
Gains and losses arising from changes in the fair value of financial instruments held at fair value
through profit or loss are included in the statement of profit or loss in the period in which they
arise. Contractual interest income and expense on financial instruments held at fair value through
profit or loss is recognized within net interest income.
c. Dividend Income
Dividend income are recognized when right to receive such dividend is established. Usually this
is the ex-dividend date for equity securities. Dividends are presented in net trading income, net
income from other financial instruments at fair value through profit or loss or other revenue
based on the underlying classification of the equity investment.
Page 22
service provided by the employee and the obligation can be estimated reliably under short term
employee benefits. The Bank provides bonus at 5% of Net Profit before tax. The Bank is a
wholly owned enterprise of Government of Nepal. The percentage of bonus which is to be
distributed by the Government owned enterprises has been determined by the Government of
Nepal at 5%.
Short-term employee benefits include all the following items (if payable within 12 months after
the end of the reporting period):
wages, salaries and social security contributions,
paid annual leave and paid sick leave,
profit-sharing and bonuses and
non-monetary benefits
b. Post-Employment Benefits
Post-employment benefit plan includes the followings;
Page 23
ii) Defined Benefit plan
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
The Bank’s net obligation in respect of defined benefit plans is calculated separately for each
plan by estimating the amount of future benefit that employees have earned in return for their
service in the current and prior periods. That benefit is discounted to determine its present value.
Any unrecognised past service costs and the fair value of any plan assets are deducted.
The Bank recognises all actuarial gains and losses net of deferred tax arising from defined
benefit plans immediately in other comprehensive income and all expenses related to defined
benefit plans in employee benefit expense in profit or loss.
The Bank recognises gains and losses on the curtailment or settlement of a defined benefit plan
when the curtailment or settlement occurs. The gain or loss on curtailment or settlement
comprises any resulting change in the fair value of plan assets, any change in the present value of
the defined benefit obligation, any related actuarial gains and losses and any past service cost
that had not previously been recognised.
The bank has pension plan to the permanent employees hired before 2050 B.S and gratuity plan
to employees enrolled after 2050 B.S. Employees are also entitled to receive retirement benefit
on endowment life insurance scheme and leave as per human resource by-laws of the Bank.
5.16 Leases
Lease payments under an operating lease shall be recognized as an expense on a straight-line
basis over the lease term unless either:
(a) Another systematic basis is more representative of the time pattern of the user’s benefit even
if the payments to the lessors are not on that basis; or
(b) The payments to the lessor are structured to increase in line with expected general inflation
to compensate for the lessor’s expected inflationary cost increases. If payments to the lessor vary
because of factors other than general inflation, then this condition is not met.
Majority of lease agreements entered by the bank are with the clause of normal increment of 5%-
10% every two years which the management assumes are in line with the lessor’s expected
inflationary cost increases.
Page 24
5.17 Foreign Currency Translation
The financial statements are presented in Nepalese Rupees (NPR).
Transactions in foreign currencies are initially recorded at the functional currency rate of
exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the functional currency rate of exchange at the statement of
financial position date.
Foreign exchange gains and losses resulting from the settlement of such transactions, and from
the translation at year-end exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the statement of profit or loss.
Non-monetary assets and liabilities are translated at historical exchange rates if held at historical
cost, or year-end exchange rates if held at fair value, and the resulting foreign exchange gains
and losses are recognized in either the statement of profit or loss or shareholders’ equity
depending on the treatment of the gain or loss on the asset or liability.
Page 25
5.20 Earnings per share including diluted
The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares. The
basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the
Bank by the weighted average number of ordinary shares outstanding during the period. Diluted
EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding for the effects of all dilutive potential
ordinary shares.
6. Segment Reporting
The Bank’s segmental reporting is in accordance with NFRS 8 Operating Segments. Operating
segments are reported in a manner consistent with the internal reporting provided to the bank’s
management committee, which is responsible for allocating resources and assessing performance
of the operating segments. Bank has no practice of accounting intra segment revenue or
expenses. Income and expenses directly associated with each segment are included in
determining business segment performance.
Page 26
A. Information about Reportable Segments:
Current Quarter
Current Quarter
Current Quarter
Current Quarter
Corresponding
Corresponding
Corresponding
Corresponding
Previous Year
Previous Year
Previous Year
Previous Year
Quarter
Quarter
Quarter
Quarter
Particulars
Current Quarter
Current Quarter
Current Quarter
Corresponding
Corresponding
Corresponding
Corresponding
Previous Year
Previous Year
Previous Year
Previous Year
Quarter
Quarter
Quarter
Quarter
Particulars
Page 27
B. Information about Reportable Segments:
Corresponding
Particulars Current Quarter
previous year Quarter
The Bank identifies the following as the related parties under the requirements of
NAS 24.
Page 28
Devendra Raman Khanal, Deputy Executive Member, Management
Officer Committee
Member Secretary,
Bhola Nath Poudel, Senior Manager Management
Committee
The Chairperson and other members of the Board are paid NPR 4,000 per
meeting respectively for Board and Board Level Committees meeting.
In addition to the above meeting allowances, the Board Members have been
provided with a monthly allowance of NPR 2,000 for newspapers, NPR 2,500 for
telephone and for those directors who are not using transportation facility from
the Bank are provided with amount equivalent to 20 litre of fuel.
The Board of Directors have appointed Mr. Kiran Kumar Shrestha as Chief
Executive Officer of the Bank with effect from 2072/12/29 for the period of 4
years.
Name Designation
Kiran Kumar Shrestha, Chief Executive Officer Key Managerial Personnel
Kabi Raj Adhikari, Deputy Chief Executive Officer Key Managerial Personnel
Keshav Prasad Lamsal, Deputy Chief Executive
Key Managerial Personnel
Officer
Tek Raj Joshi, Deputy Executive Officer Key Managerial Personnel
Mahendra Prasad Awasthi, Deputy Executive
Key Managerial Personnel
Officer
Sarswati Adhikari, Deputy Executive Officer Key Managerial Personnel
Debesh Prasad Lohani, Deputy Executive Officer Key Managerial Personnel
Devendra Raman Khanal, Deputy Executive Officer Key Managerial Personnel
Bholanath Poudel, Senior Manager Member Secretary
Page 29
d. Transaction with Subsidiaries and Associates:
All transactions between the Bank and Subsidiary are executed on arm’s length principle. Effects
of all inter-company transactions and outstanding balances are excluded in group statements.
8. Dividends paid (aggregate or per share) separately for ordinary shares and other shares.
The bank has paid 12% cash dividend from distributable profit up to FY 2075/76 during the year.
Events after the reporting date are those events, favorable and unfavorable, that occur
between the reporting date and the date when the financial statements are authorized for issue.
There are no material events after reporting period affecting financial status of the bank as on
2076 Poush End.
11. Effect of changes in the composition of the entity during the interim period including
merger and acquisition.
There are no merger and acquisition affecting changes in the composition of the entity
during the interim period as on 2076 Poush End.
Page 30