Annual Report 2011/12. A Class Institution Licensed by Nepal Rastra Bank

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1 A Class Institution Licensed by Nepal Rastra Bank Annual Report 2011/12

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3 CONTENTS Our Mission 4 Capital Structure 4 Shareholding Pattern 4 Profile 4 Chairman s Message 7 Message from CEO 10 Message from Brand Ambassador 13 Financial Highlight 14 Board of Directors 16 Directors Report 17 Corporate Social Responsibility/Loyalty Programs 22 Management Team 26 Our Business 28 Training/Development/Sports 30 Products and Services 31 Sanima s footprints across the country 32 Auditor Report 33 Financial Statements 34

4 Our Mission To provide customer-focused banking and financial solutions in a simplified manner and to add value to stakeholder interests. Capital Structure Authorised Capital: Rs. 2,100 million Issued Capital: Rs. Rs.2, 016 million Paid-up Capital: Rs. 2,016 million Shareholding Pattern Promoters: 70 % General Public: 30 % Profile Sanima Bank Limited (Sanima) started its banking journey in 2004 as a national level B class development bank. The Bank is promoted by prominent and dynamic non-resident Nepali (NRN) businessmen. Taking corporate governance as its top priority aside from being customer-oriented, Sanima has been able to establish itself as an A class commercial bank of the country. The vision of the bank is optimum mobilization of resources for national development. Sanima has progressively continued to be profitable since its operation. Sanima believes that the customer is king and pledges to deliver products and services in a customized and simplified manner. Ever since its inception, Sanima has offered a wide range of products and services best suited to customers needs. Dedicated and hospitable professional employees are our strength and they have been able to win the hearts of customers and stakeholders by ensuring high standards of quality service and corporate governance. In line with extending our reach to every citizen of the country, we have today 22 full fledged branches across the country. Our expansion plan is underway to have more footprints in different parts of the country. Sanima has always taken the initiative for the wellbeing of the society in which it operates and has been contributing to different sectors like health, employment, and education. We assure our commitment to give continuation to such a noble cause.

5 Consistency in performance is what we aim for, and this is why Sanima is a bank you can depend on. Annual Report 2011/12 5

6 Dear Shareholders, It is with immense pleasure that I welcome you all to the 8th Annual General Meeting of Sanima Bank Limited (Sanima) on behalf of the Board of Directors and myself. The Bank has completed eight years of its operation. Despite the unfavorable situation in the financial sector, the Bank has been able to achieve success. For this achievement, I would like to thank all our stakeholders. With continuous net profits since the beginning of our operations, we have continued to expand our area of functioning as well as our branches in this fiscal year too. Now, the Bank has 22 branches and more than 72,000 customers throughout the country. The Bank has opened its new branch at Butwal (trading hub) in this fiscal year and will be providing banking services from Baneshwor and Teku shortly. We have been providing banking services to our customers from remote areas like Khandbari of Sankhuwasabha and Myanglung of Terhathum where banking access to the people is very low. The same will be continued in the coming days as well. Despite the tough competitive banking environment and the ongoing entry of new banks and financial institutions, we have been able to establish ourselves as a commercial bank, thereby increasing our deposits, risk assets, and profit. During Fiscal Year 2068/69, we could register a net profit of Rs million. It has been proposed to provide 5.50 % cash dividend out of the net profit to shareholders. We have set up our own independent internal audit department which reports directly to the Audit Committee. Our statutory auditor is CSC & Co. We have ensured an environment where our internal audit can work independently and our Audit Committee is committed to implement feedbacks and suggestions pro- 6 Sanima Bank

7 Chairman s Message Despite the tough competitive banking environment and the ongoing entry of new banks and financial institutions, we have been able to establish ourselves as a commercial bank, thereby increasing our deposits, risk assets, and profit. vided independently by the auditors. The Bank s success can be attributed to due attention paid by the Bank in the area of corporate governance and financial discipline. Sanima s management is well aware of the need to make its operations more participative, dynamic, and scientific. To strengthen the morale of our valuable employees, we also ensure increase in remuneration and benefits in line with the market median. Regardless of having strong policies for commencing new commercial banks/upgradation, in FY 2068/69, Sanima was able to receive the operating license from Nepal Rastra Bank and came into operation as an A class commercial bank from Falgun 3, Being in a tough competitive banking environment, but where there is immense potential for growth, Sanima, in order to enhance its capabilities, has executed necessary skill development policies to groom its existing staff besides recruiting qualified and competent personnel. For global exposure, Sanima has tied up with 35 international financial institutions which has had a positive impact in trade finance, remittance, and other transactions. Also, I would like to bring to your notice that Sanima is providing full fledged services from its own advanced and highly facilitated building, Alakapuri, at Naxal, Kathmandu. The Bank has introduced different deposit and lending products to develop all round diversification and has been giving due importance to mobilizing perpetual resources for sustainable development. Sanima is always concerned for the betterment and upliftment of the society/community where it exists and operates, and has been carrying out different CSR activities contributing to various social sectors. Sanima has donated a photocopy machine (facilitated with scanner and printer) to Nandi Higher Secondary Annual Report 2011/12 7

8 School of Nagpokhari, Naxal. To mark its 7th Annual Day, Sanima provided food and clothing to the children of Nepal Children s Organization besides carrying out a blood donation program, free health camp, and eye treatment and dental checkup programs from its different branches. To provide meaningful contribution to the poor/under-privileged people in education, health and employment sectors, Sanima, through a recommendation committee at the local level from its 14 branches outside the valley (Khandbari, Myanglung, Damak, Belbari, Inaruwa, Biratnagar, Narayanghat, Bhandara, Nepalgunj, Birgunj, Butwal, Pokhara, Naubise, and Dhading), has selected two of the most eligible candidates from each branch. The 28 students thus nominated have been awarded the Sanima Scholarship for higher secondary level education in colleges of their own choice and in the interested faculty. The scholarships provide reimbursement for colleges fees and books and stationeries along with a monthly stipend of NPR 2,000. Similarly, Sanima has been providing free eye treatment by tying up with Tilganga Eye Hospital in Kathmandu, Ramlal Golcha Eye Hospital in Biratnagar, Butwal Lion Eye Hospital in Butwal, and Himalayan Eye Hospital in Pokhara. Also, Sanima has started providing self employment trainings to 5 youth each through Dhading, Naubise, Myanglung, Khandbari, Belbari, Damak, Inaruwa, and Bhandara branches. Sanima also supported the community police and locals of Naxal, Kathmandu, with NPR 150,000 for cleaning and planting trees in Narayanchaur (opposite of Alakapuri ). Sanima is commited to continue such contributions in the coming days as well. Prerequisites required for sustainable banking business such as customer-oriented service, enhancement of loan quality, economy in operating expenses, corporate governance, etc., will be continued as always. I express my sincere gratitude to all our shareholders and guests for your kind presence and look forward for your continued support and cooperation. We would like to assure that your suggestions and recommendations will be guiding factors for us which shall be given due consideration as appropriate. I look forward for continued directions from the Board of Directors, dedication and hard work from our staff members, and valuable advice and support from all our shareholders and stakeholders. I once again welcome you all to this 8th Annual General Meeting. Thank you. Jibanath Lamichhane Chairman 8 Sanima Bank

9 A solid foundation is what makes Sanima a strong and reliable bank. Annual Report 2011/12 9

10 Message from CEO We shall focus on distinguishing ourselves as a secure market player and provider of quality services. With immense pleasure and great pride, I would like to announce that we have achieved a triumph in operating ourselves as an A class commercial bank despite the tough banking scenario and competitive market. Looking back to the past eight years, Sanima has been able to be in profitable operation with good corporate governance and now has a large base of satisfied customers. This has been possible due to the incredible support we have received from our valuable customers, stakeholders, promoters, shareholders, dedicated staff, and each and every person directly/indirectly associated with the Bank. I am truly grateful for their unwavering support and trust. Moving in a bigger way, we have offered a wide range of products and services, enhanced facilities, extended 10 Sanima Bank

11 networks, and qualified and hospitable human resources. We have introduced our own remittance service, set up a separate department for trade finance, and have already started bullion business. In due course, we will be extending our reach in business areas like Baneshwor and Teku in Kathmandu. Being a commercial bank, we continue to ensure well diversified portfolios whether it s in deposits or in our risk assets. We shall also focus on distinguishing ourselves as a secure market player and provider of quality services to all our customers in the spirit of our slogan Strong and Reliable. We consider our staff as our prime asset and give high value to selection, training, and development of skilled staff force. Sanima is actively participative when it comes to serving society as it believes that the existence of any financial organization depends highly upon the society/community where it operates. Being a responsible member of society, Sanima has been organizing various CSR programs, thus contributing to different sectors of society. I would like to reiterate my commitment on behalf of the management team to take this Bank to even greater stature in the days to come. Thank you. Kumar Lamsal CEO Annual Report 2011/12 11

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13 Message from Brand Ambassador Honorable Ma-Ha Jodi Mr. Madan Krishna Shrestha and Mr. Hari Bansha Acharya, popularly known as Ma-Ha Jodi, is the most famous duo of the Nepali film and theatre industry who have been contributing to the field of Nepal s performing arts since the last three decades. The talented duo have not limited themselves to only acting, but have also displayed their prowess in direction and production, as well as in the musical field and in script writing. Ma-Ha is an evergreen role model for partnership, as has been proven by their professional relationship which has lasted successfully for many years. First of all, we would like to take this opportunity to congratulate Sanima Bank for its upgradation into a commercial bank. Taking such a big leap is of course not a one-day work. Seven years of continuous hard work has finally been reaped and thus Sanima has proven itself to be a Strong and Reliable bank. Furthermore, the Bank is promoted by Non-Resident Nepalese. An experienced and highly qualified management team, the warm and welcoming behavior of the staff, a range of diversified and unique products, and a highly modern and spacious corporate building of its own are the main attractions of Sanima. With its up-gradation, the Bank is likely to come face-to-face with both opportunities and challenges. New working areas as well as business will increase accordingly, and we truly believe that Sanima will be successful in its endeavors. We feel glad to be associated with Sanima Bank as its Brand Ambassador and wish it continued success. Madan Krishna Shrestha Hari Bansha Acharya Annual Report 2011/12 13

14 Financial Highlight Composition of Deposit Composition of Income 0% 4% 1% 0% 16% Current Call 4% Fees Commssion & Discount Other opera ng Income 49% 31% Saving FD Margin 95% Exchange Fluctua on Interest Income Composition of Expenses 15% 8% Interest Expenses Sta Expenses Other opera ng Expenses 77% 14 Sanima Bank

15 All figures in 000 s NRs 47,056 64,395 74, , ,581 2,880,871 4,417,504 5,760,495 6,356,737 81, , ,346 11,178, , ,584 21,486 57,760 85, , ,770 2,533,377 4,036,986 5,145,849 6,436, , , , ,653 9,641,286 2,105, / / / / /12 Growth in Profit 2007/ / / / /12 Growth in Loans and Advances 2007/ / / / /12 Growth in Investment 2007/ / / / /12 Growth in Reserve and Surplus 2007/ / / / /12 Growth in Deposit 2007/ / / / /12 Growth in Net Interest Income Annual Report 2011/12 15

16 Board of Directors Chairman Jibanath Lamichhane 2. Director Binay Kumar Shrestha 3. Director Ram Krishna Shah 4. Director Dr. Biswo Poudel 5. Director Shamba Lama 6. Director Mahesh Ghimire 7. Director Bharat Kumar Pokhrel 8. Company Secretary Rudra Banjara 16 Sanima Bank

17 Directors Report Dear Shareholders, We are pleased to greet our shareholders at this 8th Annual General Meeting and take this opportunity to present the report, together with the Balance Sheet, Profit and Loss Account, and Cash Flow Statement for Fiscal Year 2011/12 and Auditor s Report for necessary discussion and approval. Snapshot of Last Year s Performance A. Country's Economic Condition According to the preliminary estimates of the Central Bureau of Statistics, the real gross domestic product (GDP) at basic price grew by 4.6 percent in FY 2011/12 compared to 3.8 percent last year. In the review year, the growth rates of agriculture and non-agriculture sector are estimated at 4.9 percent and 4.3 percent respectively. In the previous year, agriculture and non-agriculture sectors grew by 4.5 percent and 3.4 percent respectively. Total consumption to GDP ratio is estimated to have dropped to 90.0 percent in FY 2011/12 compared to 91.4 percent in the previous year. Likewise, total investment to GDP is estimated to have increased marginally to 32.8 percent in the review year compared to 32.5 percent in the previous year. The macroeconomic indicators of the country remained satisfactory in FY 2011/12. Economic growth remained higher in comparison to the past two years. Inflation stood at lower level and the government revenue mobilization remained higher than the previous year. Budget deficit is within the desired limit. Export growth remained higher compared to previous year and import growth also remained at desired level. Despite the high trade deficit, current account surplus remained at higher level and BOP surplus reached a historical level, leading to remarkable increase in foreign exchange reserve. A positive sign has been seen in the sluggish share market and real estate transactions. Increased deposit mobilization of BFIs has put an end to liquidity crunch in the banking system. The declining trend in the lending rates is creating a favorable environment for investment. A provision has been made whereby licensed A, B and C class BFIs could establish a subsidiary company with at least 51 percent ownership for mutual fund or merchant banking activities after ap- proval from Nepal Stock Exchange Ltd. and following existing policy provisions on investment. NRB has been using open market operations as the main instrument to manage liquidity in the banking system. Liquidity is managed through open market operations on the basis of liquidity indicated by weekly liquidity monitoring and forecasting framework. NRB mopped up net liquidity of Rs billion through open market operations in FY 2011/12 of which Rs billion was mopped up through outright sale auction and Rs billion was injected through repo auction. The average inflation rate during 10 months of FY 2011/12 had stood at 7.8 percent as compared to the annual average inflation rate of 9.6 percent in the previous year. The y-o-y inflation in mid-june of 2012 remained at 9.9 percent as against 8.8 percent during the same period of the previous year. As a result, the average inflation rate during the 11 months of 2011/12 has stood at 8 percent. In the review period, the inflation rate of food as well as non-food and services groups remained at 9.9 percent. Such rates were 14.3 percent and 4.3 percent respectively during the same period of the previous year. The overall balance of payments (BOP) recorded its highest ever surplus of Rs billion during the eleven months of FY 2011/12 due to the noteworthy improvement in the external sector transactions. The overall BOP had witnessed a deficit of Rs million during the corresponding period of the previous year. The overall BOP surplus stood at its historic high during the review period mainly due to the improvement in world economic outlook, high surplus (Rs billion) in the current account arising from the amelioration in merchandise exports and inflows of remittances due to the depreciation of Nepalese rupee against the US dollar and surplus in the net services coupled with the substantial surplus (Rs billion) in the capital account. Despite an im- Annual Report 2011/12 17

18 provement in the merchandise exports due to the persistent depreciation of Nepalese currency vis-à-vis US dollar during the review period, trade deficit could not be checked as expected due to an increase in the import volume and price of petroleum products and raw materials. Total trade deficit during the 11 months of FY 2011/12 reached Rs billion. The share of India in total trade deficit stood at 64.4 percent. Review of Financial Position and Operational Results Although the political instability still prevalent in the country has led to lack of opportunities and tough competition, the Bank has been able to achieve significant growth in terms of deposit, lending and diversification of portfolio. It is well known that the Bank has been able to earn net profits since its inception and has always operated taking into consideration the overall concern of its stakeholders. We believe this has been clearly depicted in the summarized table presented below. Deposit Collection In this fiscal year, the liquidity in the market eased somehow although the competition among the financial institutions remained tough in the market. The Bank has been able to increase total deposits to Rs. 11,178,734,000 with a growth of 76 percent over last year s deposits. In this fiscal year, the Bank mainly concentrated on the diversification of its deposit portfolio, changing its focus to opening of new accounts thus collecting deposits from individual depositors. As a result, at the end of the review period, the proportion of individual depositors was 56 percent of the total deposit portfolio. With the same objective, the Bank launched various new products and services besides re-featuring its existing products and simplifying its services. A new saving scheme, Sanima Commitment Saving Scheme, with its own unique features was launched in this fiscal year. Similarly, the service of unlimited free withdrawals from ATM of SCT Network has become more popular among customers and has resulted in a larger increment of accounts. Loans and Advances During this fiscal year, the total loans and advances have increased by 50 percent and reached Rs. 9,641,286,449. The Bank has always focused on lending to small and medium scale enterprises, the deprived sector, areas of national importance and service oriented industries, with the belief that growth in these sectors leads to overall growth of the nation. As per the directives given by Nepal Rastra Bank, the Bank has a portfolio of Rs. 219,232,154 in the deprived sector lending. At the end of Fiscal Year 2011/12, the portfolio of Real Estate Loan is percent and the portfolio of Real Estate and Housing Loan is percent. Credit to Capital plus Deposit Ratio of the Bank is percent. All the ratios mentioned above are well below the guidelines set by Nepal Rastra Bank. Sanima has always thrived on managing a balanced portfolio of loans and advances due to which it has always been able to manage its Non Performing Assets (NPA) at low levels. This proves the efficiency of bank in managing credit risk. The Bank has always focused in the hydropower sector which has a direct impact on the nation s development. At this moment, the Bank would like to emphasize that it will continue Major Financial Indicators Rs. in thousands S.N. Particulars F.Y. F.Y. F.Y. F.Y. F.Y. Increase 2007/ / / / /12 % 1 Paid Up Capital 384, , ,400 2,016,000 2,016, Reserve & Surplus 47,056 64,395 74, , , Deposits 2,880,871 4,417,504 5,760,495 6,356,737 11,178, Investment 508, , , ,653 2,105, Loans and Advances 2,533,377 4,036,986 5,145,849 6,436,185 9,641, Net Operating Income 98, , , , , Net Operating Expenses 43,834 62, , , , Operating Profit 33,604 78, , , ,613 (21) 9 Net Profit 21,486 57,759 85, , ,770 (22) 18 Sanima Bank

19 to invest in projects having long term impact in the economic development of the nation. Profit Continuing its tradition of being able to earn net profits every year since its inception, Sanima has been able to achieve a net profit of Rs. 121,769,566 which is percent reduction over last year s net profit figure. Accepted reasons behind the stated reduction in the net profit are as follows: n n n n To convey the message of upgradation into A class commercial bank to general public and its stakeholders along with the purpose of brand promotion and brand image building, more promotional expenses incurred in this fiscal year over last year s promotional expenses. It is believed that these promotional activities will help the Bank to create its brand image in future directly or indirectly. The Bank has started operation from its own newly constructed building, this also led to increase in the Bank s operational cost to some extent. However, this has helped to create the perception of a strong bank thus building public confidence to transact with the Bank. Some additional provisions are to be made for deficit management. Business growth after being A class institution will be mainly reflected in the coming fiscal year. So, net profit figures seem to be less in this fiscal year. Capital, Reserve and Surplus The position of paid-up capital remained unchanged in this fiscal year. The total statutory and independent funds plus total reserve and surplus is Rs. 113,580,523. Net primary and supplementary capital are percent and 0.93 percent respectively. New directives issued by Nepal Rastra Bank related to capital adequacy have been followed in both the cases. Branch Expansion In Fiscal Year 2011/12, the Bank has expanded its branch network at Butwal, which is considered as major trading hubs of Nepal. The Bank is planning to open four new branches inside and outside Kathmandu Valley. Currently, the Bank is operating with 22 branches including a branch at the Head Office. The Bank will give continuity to branch expansion in future as well. ATM Services In order to facilitate 24-hours banking service, the Bank is operating a total of four Automatic Teller Machines (ATMs) at Nagpokhari and Chuchchepati in Kathmandu, Naubise in Dhading and Myanglung in Terhathum. The provision of free withdrawal service from all the ATMs using our debit cards has received an overwhelming response. With this, customers can withdraw freely from over 1,100 ATMs of SCT Network. To increase its network and cover a wider area, the Bank has already started a feasibility study of using ATM cards of VISA network. Human Resource A lack of efficient human resource has been felt due to opening of new banks as well massive network expansion by existing banks. This has also resulted in difficulty in appointing and developing efficient manpower. After the upgradation into A class Commercial Bank, the Bank sees this as more challenging and has already initiated a process of managing efficient human resource. At the end of fiscal year 2010/11, the total number of staff was 232 (two hundred and thirty-two). Furthermore, in order to develop and train its current human resource, the Bank has initiated various in-house and external trainings. The Bank has also formed a sub-committee comprising of non-executive directors for appointments, formulation of employee service regulations and increment in salary and allowances. In order to retain and motivate staff, the Bank has always sought ways to strengthen its employee retention policy and to provide appropriate increment of salary and allowances. Information and Technology The Bank has already upgraded to Pumori-IV from Pumori-III since Fiscal Year 2009/10 which has resulted in a more secure, user-friendly and advanced system. In addition to this, the Bank has always sought for customization and up-gradation of its information technology system for smooth and scientific daily operations. Furthermore, new services like electronic cheque clearing under Nepal Clearing House Limited and SWIFT for international payments and Letter of Credit (L/C) businesses have been implemented in the system. Industrial and business relationship Sanima is run by experienced bankers. There has been very smooth and cordial relationship between the management and the employees of the Bank which Annual Report 2011/12 19

20 also shares sound and mutually beneficial relationship with different business groups and individual customers by providing fast and simplified banking services. Sanima has been able to gain the trust and confidence from different social sectors and is always concerned about fulfilling those expectations. Changes in Board of Directors In this fiscal year, Dr. Jugal Bhurtel, Mr. Arun Kumar Ojha, and Dr. Niraj Govinda Shrestha have resigned from the post of Directors citing their personal reasons, which has been approved by the Board of Directors. The Bank would like to thank Dr. Jugal Bhurtel, Mr. Arun Kumar Ojha, and Dr. Niraj Govinda Shrestha for their contribution during their tenure. Mr. Binaya Kumar Shrestha, Dr. Biswo Poudel, and Mr. Ram Krishna Shah have been appointed as new members in the Board of Directors for the remaining period. The Bank would like to welcome all the new members. The same has been presented for ratification in this Annual General Meeting and it is believed that the same will be ratified. Remittance In order to provide better and more reliable remittance services and to serve a wide array of customers living in Nepal and abroad, the Bank has started its own remittance service in the name of Sanima X-press. For the same, the Bank has already appointed more than 300 agents in different locations of the country. In a continuous effort to expand its remittance services, the Bank has entered into agreements with Deniba International Exchange (UAE), Everest Money Limited (UK) and Economic Exchange Center (UAE). Such tieups have made our customers living in UAE and UK easier to send their money to Nepal in a more safe and convenient manner. The reach of this service will be made broader in future so that this service will be available from other countries as well. Upgradation As per the consent received from Nepal Rastra Bank, the Bank has started its operation as A class institution from February 15, This was a great achievement for us, the dream to become a commercial bank has been realized. This has also provided us both challenges and opportunities to present better returns to our stakeholders. The Bank is determined to become a strong, reliable bank of first choice for its stakeholders and the general public. Corporate Building "Alakapuri" The Bank has already started its operations from its own new building. The total cost for the construction of the building was around NPR Million. Corporate Governance The Bank has been operating by fully complying with the Bank and Financial Institution Act 2063 and directives of Nepal Rastra Bank. The primary focus of the Bank has always been good corporate governance and it has always complied with directives and circulars regarding corporate governance. The Bank has always complied with the Know Your Customer (KYC) and Anti Money Laundering (AML) directives. New directives related to capital adequacy as per Basel-II have been followed rigorously. The Bank has been following all the directions and suggestions given through Nepal Rastra Bank directives, onsite inspection and internal and external auditor reports. The Bank has also always striven for good corporate governance. Internal Control System An Audit Committee has been formed for implementation of extensive/internal control procedures. The committee looks into the suggestions and directions made by external and internal auditors and directs for its implementation too. The committee also suggests for making internal control procedures more stringent. Besides these, for the smooth operation of the Bank, the front and back offices have been segregated under internal control system. Finally, on behalf of the Board of Directors, I would like to express my heartfelt thanks to all shareholders, customers, employees, concerned institutions of Nepal Government, Nepal Rastra Bank, Nepal Stock Exchange Limited, Company Registrar s Office, Security Board, Internal Auditors, statutory auditors, journalists, and all others for their support and suggestions. We expect the same kind of help and suggestions in the upcoming days as well. Thank you, On behalf of the Board of Directors Jibanath Lamichane Chairman Date: 20 Sanima Bank

21 Sanima s strength lies in its ability to provide customized financial solutions to suit the need of each and every customer. Annual Report 2011/12 21

22 Corporate Social Responsibility/ Loyalty Programs Corporate Social Responsibility (CSR) has always been an integral part of Sanima. We are very much concerned for the development of the community/society where we work and are eager to make consistently meaningful contributions addressing their needs. As a social duty, this year too, we have served our community/society in different sectors like health, education and employment. Sanima believes that development of communities/societies ultimately means development of the country as a whole. As far as service to our customers is concerned, we have been carrying out several loyalty programs besides marking various occasions to show our appreciation for the valuable support and trust they have in us. Among others, the follwing CSR and loyalty programs have been conducted during this fiscal year: Corporate Social Responsibility Scholarship/Eye Treatment/Self-Employment Trainings With the intention of contributing in whatever way we can towards the development of society, Sanima has started providing Scholarships, Free Eye Treatments and Self Employment Trainings to poor/under-privileged students/people throughout the country from its branches outside the Valley. The main objective of this initiative is to help out those needy people who are financially unable to achieve these basic foundations of selfgrowth. n Sanima s Scholarship Program Eligible students who are unable to manage fees for their higher secondary level education are awarded Sanima s Scholarships. 28 students from 14 branches are reimbursed for full tuition fees and books and stationeries and provided with a monthly stipend of NPR 2,000 per student. Students can join colleges of their own choice and in the interested faculty. For the selection of the most deserving candidates, Recommendation Committees have been formed in each branch comprising of reputed and distinguished figures of the local community. Recommendations are based on a thorough examination of each applicant which includes a visit to their homes and individual interviews. Total cost borne for Sanima Scholarship this year is NPR Million and expected cost for next year is NPR Million. 22 Sanima Bank

23 n Free Eye Treatment & Self Employment Trainings We have tie-ups with several eye hospitals for providing free eye treatment to those people who are unable to bear the expenses. To name a few Tilganga Eye Hosptal in Kathmandu, Ramlal Golcha Eye Hospital in Biratnagar, Butwal Lion Eye Hospital in Butwal, Himalayan Eye Hospital in Pokhara and Tilganga Eye Hospital in Kathmandu. Along with the treatment expenses, patients referred to Tilganga Eye Hospital are also provided with stay and a travelling allowances. Similarly, with an objective to provide employment opportunity to youth for their career development, we are providing self employment trainings to five most needy candidates from our branches, namely Khandbari, Myanglung, Damak, Belbari, Inaruwa, Dhading, Naubise and Bhandara. Some of the branches have already started providing trainings available in local institute as per the candidate s interest along with the required materials, certification charges and daily lunch expenses. Blood Donation On the occasion of 8th Annual Day, we organized blood donation programs from our branches outside and inside the Valley, specifically, Damak, Belbari, Inaruwa, Biratnagar, Narayangarh, Butwal, Kumaripati, Chuchchepati and Suryabinayak. The programs were held successfully with the full support and participation of the locals. More than 522 people donated their blood, making the event meaningful. Annual Report 2011/12 23

24 Tree Plantation at Narayanchaur Sanima has supported Naxal Community Service Center with NPR 150, for cleaning and planting different flowering and non-flowering trees at Narayanchaur (opposite of Sanima Bank). Sanima has always been supportive of such noble acts. Customer Loyalty Program With due respect to our customers for their valuable support and belief in us for such a long period, we distributed gifts to mark the auspicious occasions of Father s Day and Teej. Gifts to Senior Citizens Gifts to Nari Account Holder 24 Sanima Bank

25 You can rely on Sanima s welltrained staff to provide fast and simplified banking services. Annual Report 2011/12 25

26 Management Team From left to right 1. Kumar Lamsal Chief Executive Officer 2. Sarju Kumar Thapa Senior Relationship Manager 3. Sushil Ratna Bajracharya Head - Information Technology 4. Tej Bahadur Chand Deputy Chief Executive Officer 5. Samir Jung Rayamajhi Head - GS,BE & Remittance 6. Niraj Dhakal Head - Internal Audit 26 Sanima Bank

27 7. Saroj Guragain Head - Treasury, Finance & Planning 8. Bobby Singh Gadtaula Head - Central Operations 9. Rudra Banjara Company Secretary & Head - Share 10. Roshan Chandra Gautam Head-Liability Marketing 11. Santosh Koirala Head - Retail Banking 12. Sugat Manandhar Senior Relationship Manager 13. Pawan Kumar Acharya Head - Credit Risk & HR Annual Report 2011/12 27

28 Our Business To provide one window financial solutions to our customers with a wide range of products and services is only our motto. We believe in a mutually beneficial customer centric relationship and are committed to exceeding customer expectations in all areas of our business through consistent processes, innovations, and improvements. We endeavor to empower each of our employees so as to make them proactive in supporting continuous improvement. We are always working to continuously improve products, services and processes to anticipate and exceed the needs of our customers. Driven by our new slogan ;an clg ljzj;glo, (Strong and Reliable) we want our customers to perceive us as a strong bank that they can rely on for all their financial needs. We believe that this slogan has created a trustworthy and reliable image of the Bank in the customers mind. Deposits The Bank has introduced a variety of deposit products that are designed to suit the needs of a wide array of customers. Deposit schemes include simple and easy savings like Sanima Sulav Savings, high yield savings like Sanima Premium Savings, and specialized products like Sanima Naari Savings and Seniror Citizen. The Bank also offers attractive interest rates coupled with a good service package to tap institutional deposits too. Beside these, the Bank also has attractive returns for those willing to have their funds deposited in fixed terms deposits, with a wide option of terms and conditions. Business Banking A dedicated Business Banking Department takes care of the big corporate houses and serves them with customized products and services designed to cater to their needs. Our large capital base and rich experience of dealing with big projects gives Sanima the required lending strength for high volume credit. Sanima is ranked with a few premier banks in Nepal in terms of volume in hydropower project finance. Sanima, along with its sustained growth, looks forward to invest in numerous big projects in various sectors including hydropower and infrastructure development. Our Relationship Managers are always at the customers service should there arise the need for any expert financial advice. Retail Banking Retail Banking Department offers a broad range of products and services to meet the borrowing, wealth management and transaction needs of individuals and small businesses. Sanima Auto Loan and Sanima Home Loan are some of our popular products. Besides, Sanima is catering to the needs of hundreds of small and medium enterprises (SMEs) as well. We have also recently introduced Sanima Gold Loan, a fast and easy loan facility against gold. Consortium Financing This is another specialized lending activity of the Bank. The Bank has a history of engagement in consortium financing in the capacity as the Lead or Colead Bank. The Bank has proper monitoring mechanisms in place to enable prompt actions that ensure successful implementation and operation of projects under consortium financing. United Cement Pvt. Ltd, Naubise Dhading (A Clinkerisation Unit financed through consortium financing in which Sanima is one of the participating Banks) 28 Sanima Bank

29 Bhairabkunda small Hydropower Project, Sindhupalchowk (Hydropower Project of 3MW financed under consortium arrangement under the lead of Sanima) Shivam Cement Pvt. Ltd, Hatiya-4, Makawanpur (Financed under consortium in which Sanima is one of the participating Banks) Annual Report 2011/12 29

30 Training/Development/Sports In House Training Sanima Criket Team 30 Sanima Bank

31 Products and Services Deposit Accounts n Sanima Sulav Savings n Sanima Naari Savings n Sanima Senior Citizens Savings n Sanima Muna Savings n Sanima Prime Savings n Sanima Shareholders Savings n Sanima Fixed Deposits n Sanima Commitment Saving Loans n Sanima Home Loan n Sanima Auto Loan n Sanima Small Business Growth Loan n Sanima Hire Purchase Loan n Sanima Project Financing n Sanima Margin Lending n Sanima Business Loan n Sanima Education Loan n Sanima Tractor Loan n Micro Finance Loan n Sanima Gold Loan n Sanima Awasiya Ghaderi Karja Ancillary Services n SMS Banking n Sanima Debit Card n Sanima ibanking n Sanima Safe Deposit Locker Facilities n Utility Bill Payments n Remittance n Foreign Exchange Transactions n Any Branch Banking System n Travelers Cheque Annual Report 2011/12 31

32 Sanima s footprints across the country Head Office Alakapuri, Naxal, Kathmandu G.P.O. Box: Phone: , , Fax: SWIFT: SNMANPKA sanima@sanimabank.com Damak Branch Manager -Phanindra Dahal Main Road, Ward No.13, Damak, Jhapa, Nepal Phone: Fax: Newroad Branch Manager -Prakash Karki KhichaPokhari, New Road, Kathmandu, Nepal Phone: , Fax: Dhadingbesi Branch Manager -Bishnu Lal Shrestha Bich Bazar, Dhadingbesi, Dhading Phone: Fax: Kumaripati Branch Manager -Bimal Bastola Kumaripati, Lalitpur Phone: , Fax: Pokhara Branch Manager-Bhabuk Tandukar New Road, Pokhara, Kaski, Nepal Phone: Fax: Narayangarh Branch Manager -Dinesh Gautam Pulchowk, Narayangarh, Chitwan, Nepal Phone: , Fax: Suryavinayak Branch Manager -Prabin Jonchhe Suryavinayak, Bhaktapur, Nepal Phone: , Fax: Chuchchepati Branch Manager -Romila Koirala Chuchchepati, Kathmandu, Nepal Phone: , Fax: Inaruwa Branch Manager-Bishal Ghimire Main Road, Inaruwa, Nepal Phone: Fax: Belbari Branch Manager-Lal Babu Shah Main Road, Ward No. 2, Belbari, Morang Phone: Fax: Bhandara Branch Manager -Dhal Bahadur Khadka Main Road, Ward No. 1, Bhandara, Chitwan Phone: Fax: Gongabu Branch Manager -Kavindra Pal Gongabu, ward No- 4 'Ga', Kathmandu Phone: , Fax: Chapagaun Branch Manager-Samik Dhungana Chapagaun, ward No-4, Lalitpur Phone: , Fax: Kalanki Branch Manager -Satya KC Kalanki, ward No-14, Kathmandu Phone: , Fax: Myanglung Branch Manager-Sanjay Dewan Bich Bazar, Myanglung-1, Terathum Phone: Fax: Nepalgunj Branch Manager -Ankit Khanal Dhamboji Chowk, Nepalgunj-1 Phone: Fax: Khadbari Branch Manager-Subash Rai Khandbari, Sankhhuwasabha Phone: Fax: Biratnagar Branch Manager-Sudip Kumar Halwai HanumanDas Road Biratnagar-8 Phone: /92/93 Fax: Naubise Branch Manager-Lok Bahadur Timalsina Sim Bazaar, Naubise-7 Dhading Phone: Fax: Birgunj Branch Manager-Narayan Prasad Khatiwada Link Road, Birgunj-10, Parsa Phone: /86, Fax: Butwal Branch Manager-Niraj Simkhada Amarpath, Butwal-8, Rupandehi Phone: /98 Fax: ATM Available at Head Office Naubise Branch Myanglung Branch Chuchchepati Branch Free withdrawals from over 1,100 ATMs and 1,341 POS terminals throughout the country in SCT Network by using Sanima Debit Card. Sanima Debit Card can be used all over India in ATMs of Punjab National Bank. 32 Sanima Bank

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34 Balance Sheet as on Ashad 31, 2069 (July 15, 2012) Capital & Liabilities Schedule Current Year Rs. Previous Year Rs. 1 Share Capital 4.1 2,016,000,000 2,016,000,000 2 Reserves and Funds ,580, ,690,956 3 Debentures and Bonds Borrowings ,250, ,000,000 5 Deposit Liabilities ,178,734,351 6,356,737,379 6 Bills Payables Proposed and Payable Dividend 110,880, ,040,000 8 Income Tax Liabilities 9 Other Liabilities ,021,267 98,912,538 Total Capital Liabilities 13,722,466,141 9,363,380,873 Assets Schedule Current Year Rs. Previous Year Rs. 1 Cash Balance ,197, ,095,662 2 Balance with NRB 4.9 1,005,249, ,975,202 3 Balance with Banks/Financial Institutions ,615,471 52,235,738 4 Money at Call and Short Notice ,049,936,449 5 Investments ,105,770, ,983,033 6 Loans Advances and Bills Purchase ,531,504,834 6,371,323,985 7 Fixed Assets ,044, ,072,445 8 Non-Banking Assets Other Assets ,083, ,758,359 Total Assets 13,722,466,141 9,363,380,873 Contingent Liabilities Schedule 4.17 Directors Declaration Schedule 4.29 Statement of Capital Fund Schedule 4.30 Statement of Risk Weighted Assets Schedule 4.30 (A) Principal Indicators Schedule 4.31 Principle Accounting Policies Schedule 4.32 Notes to Accounts Schedule 4.33 Statement of Loan taken by Promotors Schedule 4.34 Comparision Between Unaudited and Audited Financials Schedule 4.35 Unaudited Financial Highlights certified by Internal Auditor Schedule 4(A) Schedules 4.1 to 4.17, 4.32, 4.33, 4.34 & 4.35 form integral parts of the Balance Sheet. Saroj Guragain Kumar Lamsal Jibanath Lamichhane Head Finance & Treasury Chief Executive Officer Chairman As per our report of even date Binaya Kumar Shrestha Ram Krishna Shah Dr. Biswo Nath Poudel Director Director Director Shamba Lama Mahesh Ghimire Bharat Kumar Pokhrel Director Director Director L.D. Mahat Partner CSC & Co. Chartered Accountants Date : 05 October 2012 ( ) Place : Kathmandu 34 Sanima Bank

35 Profit and Loss Account For the period from July 17, 2011 to July 15, 2012 (Shrawan 01, 2068 to Ashad 31, 2069) Particulars Schedules Current Year Rs. Previous Year Rs. 1. Interest Income ,172,200,388 1,038,456, Interest Expenses ,616, ,000,393 Net Interest Income 418,583, ,456, Commission and Discount ,251,196 4,949, Other Operating Income ,618,555 34,805, Exchange Fluctuation Income ,502 Total Operating Income 474,453, ,368, Employees Expenses ,987,290 55,835, Other Overhead Expenses ,863,729 84,325, Exchange Fluctuation Loss ,238 - Operating Profit Before Provision for Possible Loss 242,427, ,207, Provision for Possible Losses ,492,738 13,272,070 Operating Profit 189,934, ,935, Non-operating Income/Expenses , , Provision Written-Back ,161,002 Profit from Regular Operations 190,612, ,443, Profit/Loss from extra-ordinary activities Net Profit after considering all activities 190,612, ,443, Provision For Staff Bonus 17,328,433 22,222, Provision For Income Tax 51,514,761 67,001,354 This Year s 51,892,481 67,105,214 Previous Year s 108, ,779 Deferred Tax Expense/(Income) (486,629) (600,639) Net Profit/(Loss) 121,769, ,220,355 Schedule No to 4.28, 4.32, 4.33, 4.34 & 4.35 form integral part of this Profit and Loss Account. Saroj Guragain Kumar Lamsal Jibanath Lamichhane Head Finance & Treasury Chief Executive Officer Chairman As per our report of even date Binaya Kumar Shrestha Ram Krishna Shah Dr. Biswo Nath Poudel Director Director Director Shamba Lama Mahesh Ghimire Bharat Kumar Pokhrel Director Director Director L.D. Mahat Partner CSC & Co. Chartered Accountants Date : 05 October 2012 ( ) Place : Kathmandu Annual Report 2011/12 35

36 Cash Flow Statement For the period from July 17, 2011 to July 15, 2012 (Shrawan 01, 2068 to Ashad 31, 2069) Particulars Current Year Rs. Previous Year Rs. (a) Cash flow from Operating Activities 213,037, ,346,464 1 Cash Received 1,211,429,053 1,051,551, Interest Income 1,151,904,711 1,009,621, Commission and Discount Income 11,251,196 4,949, Income from Foreign Exchange Transaction 2,976,194 1,827, Recovery of Written-off Loans Other Incomes 45,296,951 35,153,306 2 Cash Payment 998,391, ,205, Interest Expenses 754,639, ,832, Staff Expenses 75,868,189 54,539, Office Overhead Expenses 110,487,169 64,766, Income Tax Paid 57,396,145 67,066, Other Expenses - Cash Flow Before Working Capital Activities 1,093,002,228 (892,268,662) (Increase)/Decrease of Current Assets (3,571,888,915) (1,512,251,066) 1 (Increase)/Decrease in Money at Call and Short Notice 1,049,936,449 (32,753,334) 2 (Increase)/Decrease in Short-term Investments (1,341,761,852) (154,843,353) 3 (Increase)/Decrease in Loans and Advances and Bills Purchase (3,205,101,454) (1,290,336,050) 4 (Increase)/Decrease in Other Assets (74,962,057) (34,318,329) Increase/(Decrease) of Current Liabilities 4,664,891, ,982,404 1 Increase/(Decrease) in Deposits Liabilities 4,821,996, ,242,017 2 Increase/(Decrease) in Certificate of Deposits Increase/(Decrease) in Short-term Borrowings (121,750,000) 110,000,000 4 Increase/(Decrease) in Other Liabilities (35,355,829) (86,259,613) (b) Cash flow from Investment Activities (8,132,450) (317,054,181) 1 (Increase)/Decrease in Long-Term Investment 145,402, (266,200,000) 2 (Increase)/Decrease in Fixed Assets (159,348,537.24) (55,128,351) 3 Interest Income From Long-Term Investment 5,813, ,274,171 4 Dividend Income Others (c) Cash flow from Financing Activities (448,000,000) 1,316,515,844 1 Increase/(Decrease) in Long-Term Borrowings (Bonds, Debentures etc.) Increase/(Decrease) in Share Capital - 1,209,600,000 3 Increase/(Decrease) in Other Liabilities (Share Premium) - 3,715,844 4 Increase/(Decrease) in Refinance/Facilities From Nepal Rastra Bank (448,000,000) 103,200,000 (d) Income/Expenses from change in Exchange Rate in Cash and Bank Balances (3,151,432.59) (1,670,431) (e) This Year s Cash Flow from All Activities 846,756, ,869,034 (f) Opening Balance of Cash and Bank Balances 526,306, ,437,569 (g) Closing Balance of Cash and Bank Balances 1,373,062, ,306,602 Saroj Guragain Kumar Lamsal Jibanath Lamichhane Head Finance & Treasury Chief Executive Officer Chairman As per our report of even date Binaya Kumar Shrestha Ram Krishna Shah Dr. Biswo Nath Poudel Director Director Director Shamba Lama Mahesh Ghimire Bharat Kumar Pokhrel Director Director Director L.D. Mahat Partner CSC & Co. Chartered Accountants Date : 05 October 2012 ( ) Place : Kathmandu 36 Sanima Bank

37 Statement of Changes in Equity Financial Year 2011/12 (2068/69) Particulars Share Capital Accumulated General Proposed Capital Share Exchange Deferred Other Reserve Total Profit/Loss Reserve Fund Bonus Share Reserve Fund Premium Fluctuation Fund Tax Reserve and Fund Amount Rs. Opening Balance as 2,016,000,000 10,629,661 69,598, ,563,747 1,800,753 18,218-2,108,610,956 at 17 July 2011 Adjustment for Changes in - 10,080, ,080,000 proposed dividend of last year due to supervisory instruction Restated Balance as 2,016,000,000 20,709,661 69,598, ,563,747 1,800,753 18,218-2,118,690,956 at 17 July 2011 Current Year s Net Profit - 121,769, ,769,566 General Reserve - (24,353,913) 24,353, Proposed Bonus Share Porposed Dividend - (110,880,000) (110,880,000) Exchange Fluctuation Fund Deferred Tax Assets (486,629) 486,629 - Investment Adjustment Reserve - (555,000) ,000 - Closing Balance 2,016,000,000 6,203,685 93,952, ,563,747 1,800, , ,000 2,129,580,523 Annual Report 2011/12 37