p r o f i l e In the pursuit of sustainable growth, Sanima has 27 fullfledged

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2 p r o f i l e SANIMA, promoted by prominent and dynamic Non-Resident Nepalese (NRNs) Businessmen, commenced its operation in 2004 as a National Level Development Bank with the vision to mobilize resources for National Development. Sanima received the operating License from Nepal Rastra Bank to function as an A Class Commercial Bank and has achieved the triumph to establish itself as a Strong & Reliable Commercial Bank in Nepal. In the pursuit of sustainable growth, Sanima has 27 fullfledged branches within and outside the Kathmandu Valley and has further plans to expand its reach in the various part of the country. Sanima provides one window financial solutions to the customers with the wide range of Products and Services. Sanima not only offers readymade products and services, but also offers customized services to better suit the needs of the individual customer. 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.

3 i n s i d e Capital Structure 2 Vision / Mission 3 Chairman s Message 4 CEO s Message 6 Board of Directors 8 Director s Report 9 Message from Brand Ambassador 16 Management Team 18 Our Business 20 Corporate Social Responsibility 23 Audit Report 26 Financial Statements 27

4 c a p i t a l s t r u c t u r e authorized CaPital IN NPR 2,250,000,000 issued CaPital IN NPR 2,217,600,000 Paid-uP CaPital IN NPR 2,217,600,000 s h a r e h o l d e r s ' p a t t e r n 51% 49% promoters General public

5 ANNUAL REPORT 2012/13 3 V i s i o n To be a trusted and leading bank in Nepal m i s s i o n We will continuously be innovative and keep up with changes to satisfy investors, staffs, customers, regulators and the people of the community we serve.

6 c h a i r m a n s m e s s a G e

7 ANNUAL REPORT 2012/13 5 Dear Stakeholders, I would like to welcome all the respected shareholders and guests to the 9 th Annual General Meeting of Sanima Bank on behalf of Board of Directors and myself. With continuous net profits since the beginning of the operation, it has been able to earn NPR 305 Millions net profit in the current fiscal Year 2012/13. Out of the net profit, it is proposed to distribute % bonus share and cash dividend to its shareholders. Having realized a need for Corporate Social Responsibility (CSR), Sanima has been extending its support in the sectors of education, employment & health and has aimed for its continuity in future. Sanima bank is running in the 10 th year of its establishment, 9 th year of its operation and 2 nd year of operation as a commercial bank. As we all know, it had been able to establish itself as 32 nd commercial bank in the country and introduce itself as a successful financial institution even among tough competition in the industry. I would like to express my sincere thanks to all the shareholders, customers, wellwishers, and other stakeholders for the same. Achievements and activities of Sanima till date have been explained in detail in the directors' report. Being a chairman of the bank, I would like to assure that in next 10 years Sanima will establish itself as one of the major players in the market and set its goal to provide higher return to shareholders. For the same, attention will be paid on fulfillment of required manpower, technology, service, risk management etc. I express my sincere gratitude to all our shareholders and guests for your kind presence and looking forward for your continued support and well wishes. We would like to assure that your suggestions and advices will be considered positively and be guiding factors for us. I look forward for continued guidance from the Board of Directors, dedication and hard work from our staff members and valuable advice and support from all stakeholders. With expectation of providing higher returns in the coming years ahead, I once again welcome you all. Thank you Binaya Kumar Shrestha Chairman

8 m e s s a G e f r o m c e o

9 ANNUAL REPORT 2012/13 7 Dear Stakeholders, Right from the beginning, the bank has been committed to good corporate governance, quality customer service and maintaining sound financial position. As a result, the bank has been recognized as a reliable and strong player in the banking industry. It gives me an immense pleasure to state that Sanima has the lowest non-performing loan in the industry & one of the highest capital adequacy ratios, two key parameters to measure a bank s strength. In the days ahead, our focus will be on enhancing customer service standard by leveraging technology with smiling staff, expanding distribution network, introduction of additional customer friendly products, further beefing up risk management system so as to remain always a trusted & strong financial partner. I thank you very much for your patronage & support till date and expect the same in our journey ahead. With warm regards, Bhuvan Kumar Dahal Chief Executive Officer

10 8 SANIMA BANK LTD b o a r d o f d i r e c t o r s Mr. Binaya Kumar Shrestha CHAIRMAN Mr. Tuk Prasad Poudel DIRECTOR Dr. Subarna Das Shrestha DIRECTOR Mr. Shamba Lama DIRECTOR (PUBLIC) Mr. Mahesh Ghimire DIRECTOR (PUBLIC) Mr. Bharat Bahadur Thapa DIRECTOR (PROFESSIONAL)

11 ANNUAL REPORT 2012/13 9 d i r e c t o r s r e p o r t Respected Shareholders, It gives us an immense pleasure to inform you all that Sanima has been able to increase the business strength and revenue by fully operating as a commercial bank in this fiscal year. We believe the bank will be able to deliver better returns through its performance and right strategy. Though Sanima was established as the youngest commercial bank, it stands in the middle amongst, and our effort will be continued for better positioning. S n a p s h o t o f L a s t Y e a r s P e r f o r m a n c e Achievements of FY 2013/14: FisCal Year 2011/12 FisCal Year 2012/13 Change % credit (net) 9,531,504 15,093, investment 2,105,770 3,848, deposit 11,178,734 17,789, operating profit 189, , net profit 121, , bonus share and cash dividend (%) during the year 2012/13, the loan and advances of commercial banks increased by 18.6 percent whereas deposit mobilization increased by 17.4 percent. thus, our loans, deposits, operating income and net profit figures have increased significantly compared to overall industry.

12 10 SANIMA BANK LTD CountrY s economic Condition the Gdp was believed to grow by 3.6 percent in the review year 2012/13 compared to a growth of 4.9 percent in the previous year. the growth performance of service sector has improved whereas the agriculture and industrial sector has witnessed sluggish growth in the review year. in the review year, the agriculture sector was expected to grow by 1.3 percent whereas the non-agriculture sector was expected to expand by 5.0 percent which grew by 5.0 percent and 4.2 percent respectively in the previous year. in 2012/13, the ratio of total consumption to Gdp was estimated to 90.7 percent and the ratio of saving to Gdp was estimated to 9.3 percent. such ratios were 88.5 percent and 11.5 percent respectively in the previous year. in the review year, the ratio of gross investment to Gdp was estimated at 37.8 percent compared to 34.9 percent in the previous year. in the review year, merchandise imports surged by 20.6 percent (16.5 percent in the previous year) and merchandise exports went up by 3.6 percent (15.4 percent in the previous year). similarly, the workers for foreign employment registered a growth of 17.9 percent (8.4 percent in the previous year) compared to the previous year. remittances rose by 20.9 percent to rs billion in the review year compared to an increase of 41.8 percent in the previous year. the overall bop recorded a surplus of rs billion owing to such remittance growth. the gross foreign exchange reserves increased by 21.4 percent to rs billion in mid-july such reserve had increased by 61.5 percent in the previous year. inflation the annual average consumer price inflation stood at 9.9 percent (8.3 percent in previous year) in the review period. the price index of food and beverages group increased by 9.6 percent whereas the index of non-food and services group increased by 10.0 percent causing the overall consumer price inflation to rise in comparison with previous year. interest rates thought the interest rates in the money market have experienced the fluctuations in the short term, overall movement is not seen. the weighted average 91-day treasury bill rate and inter-bank rate among commercial banks remained same as of mid-july of previous year. the weighted average 91-day treasury bill rate stood at 1.19 percent in mid-july 2013 from 1.15 percent a year ago. in mid-july 2013, the weighted average inter-bank rate among commercial banks remained at 0.86 percent. in the review period, the weighted average deposit and lending rates of commercial banks remained at 5.25 percent and percent respectively. moreover, the average base rate of commercial banks remained at 9.83 percent in mid-july (source: nepal rastra bank)

13 ANNUAL REPORT 2012/13 11 review of FinanCial Position and operational results (Rs. in 000 ) CaPital & liabilities 2008/ / / / /13 share capital 805, ,400 2,016,000 2,016,000 2,217,600 reserves and funds 64,395 74, , , ,431 debentures and bonds borrowings 506, , ,000 88,250 1,480,126 deposit liabilities 4,417,505 5,760,496 6,356,737 11,178,734 17,789,328 bills payables proposed and payable dividend 2,021 80, , ,880 10,610 income tax liabilities other liabilities 50,050 71,428 98, , ,434 total Capial and liabilities 5,845,136 7,238,558 9,363,380 13,722,465 21,976,529 cash balance 79,913 79, , , ,962 balance with nrb 528,846 84, ,975 1,005,250 1,283,546 balance with banks/financial institutions 24,056 64,621 52, ,615 88,992 money at call and short notice 370,817 1,017,183 1,049, ,420 investments 530, , ,983 2,105,770 3,848,052 loans advances and bills purchase 3,992,090 5,092,099 6,371,324 9,531,505 15,093,073 fixed assets 229, , , , ,489 non-banking assets other assets , , , ,005 total assets 5,845,136 7,238,558 9,363,380 12,822,466 21,976,539 in the last five years, net assets of the bank have increased from rs billion to rs billion. similarly, net worth of the bank has increased from rs billion to rs billion. (Rs. in 000 ) PartiCulars 2065/ / / / /70 interest income 358, ,644 1,038,456 1,172,200 1,678,789 interest expenses 235, , , ,616 1,023,257 net interest income 122, , , , ,532 commission and discount 4,251 3,908 4,949 11,251 23,667 other operating income 25,564 30,740 34,805 44,618 68,853 exchange fluctuation income 8,479 5, ,237 total operating income 160, , , , ,291 employees expenses 24,287 42,845 55,835 79,989 99,776 other overhead expenses 38,020 66,997 84, , ,730 exchange fluctuation loss operating Profit Before Provision for Possible loss 98, , , , ,784 provision for possible losses 19,944 11,351 13,272 52,492 57,846 operating Profit 78, , , , ,938 non-operating income/expenses ,571 provision Written-back 10, ,161-19,675 Profit from regular operations 89, , , , ,184 profit/loss from extra-ordinary activities net Profit after considering all activities 89, , , , ,184 provision for staff bonus 8,122 12,539 22,222 17,328 43,744 provision for income tax 23,469 39,661 67,001 51, ,379 this Year's 24,368 37,134 67,105 51, ,195 previous Year's - 2, ,530 deferred tax expense/(income) (600) (486) (346) net Profit/(loss) 57,759 85, , , ,061 in the past five years, net profits have increased from 57.7 million to rs. 305 million.

14 12 SANIMA BANK LTD infrastructure developments BranCh expansion in fiscal Year 2012/13, the bank has expanded its branch network at new baneshwor and teku. similarly, in the current fiscal Year 2013/14, the bank has expanded three branches outside valley (hetauda, Ghorahi and dhangadi) as well. currently, the bank is operating with 27 branches including a branch at the head office. the bank will give continuity to branch expansion in future as well. atm services customers can withdraw freely from over 1,100 atms of sct network and can transact through over 1,350 pos terminals. to increase its network and cover a wider area, the bank has already started a feasibility study of using atm cards of international network. information technology for the purpose of managing risks associated with expansion of business and for the purpose of fulfilling the need for advanced and scientific data analysis and mis, installation of advance core banking system has been started. human resource at the end of fiscal year 2012/13, the total number of staffs was 231 (two hundred and thirty-one). furthermore, in order to develop and train its current human resource, the bank has initiated various internal and external trainings. We also aim to provide international level training, seminars and workshops to the management level employees. it is assumed to have a positive impact on the work performance and motivation of employees. the salary and allowances provided to employees shall be increased along with the increment in profits and market scenario. We would like to inform you all that feasibility is being carried out for the enhancement of performance based incentive scheme. industrial and Business relationship sanima has maintained an excellent industrial and business relation in national and international areas. similarly, efforts shall be continuously made to deepen the relationship with our experienced and capable staffs of all level. all kinds of available customers in the industry are associated with sanima. it has also been able to maintain excellent relationship with banks of india, china, america, europe, australia, dubai, Korea etc. sanima aims to expand its network in remittance sector.

15 ANNUAL REPORT 2012/13 13 CorPorate social responsibility having felt the need for corporate social responsibility, sanima bank has especially contributed to the needy in the sectors of education, employment and health. education sanima has been providing scholarship to two students for higher secondary level (plus two) from each of the branches outside valley. in this year bank has provided scholarship to 28 students from its 14 branches outside valley. along with bearing all the cost associated with institutes and stipend of npr 2,000 per month for two years, the bank has been contributing the total cost of npr 40,000 per student on an average. last year, sanima made expenses of around npr 1.2 million under this programme. to continue scholarship programme this year as well, 62 students from 17 branches outside valley will be rewarded with sanima scholarship. employment With an objective to provide employment opportunity to youth for their career development, we have provided trainings to five most needy candidates in their selected institutions from rural based branches. in this year we have spent rs. 20 thousand each for providing self employment training from rural based branches to 35 youths. the bank has spent rs 7 lakh this fiscal year for same purpose. health on the basis of recommendation of the branches outside Kathmandu valley, the bank has borne all the cost associated with free eye operation of 67 eye patients. under this programme, the bank has made expenses of around nepalese rs. 600,000. under corporate social responsibility activities, bank has made expenses of around npr 2.5 million in the sectors of education, employment & health on behalf of financially poor people which is 2 % of net profit of fiscal year 2011/12. in order to continue these contributions in the days ahead, sanima has approved npr 6.3 million for current fiscal year which is also 2% of fiscal year 2012/13. CorPorate governance We have considered corporate Governance as an integral part for the long-term success of our overall system. as guided and specified by nepal rastra bank, various committees and sub-committees have been functioning properly in the bank. they are highly committed for risk management by following the corporate governance. We are always trying our best to deepen the long-term relationship with regulatory authority, customers and stakeholders by corporate governance.

16 14 SANIMA BANK LTD internal Control system a structure has been designed to regulate the financial activities of bank by complying with the existing laws and directives of nepal rastra bank. audit committee and other committee of risk management have been studying reports regularly and imposing required control accordingly. similarly, board of directors has been over viewing the effectiveness of internal control system by reviewing the reports issued by external audit and regulators (on inspection). apart, several committees of bank management such as management committee, assetsliabilities management committee, risk management committee, internal audit department and compliance are also actively involved for the effectiveness of internal control system. achievement & Future PrediCtion of Current FisCal Year sanima has been able to generate operation profit & net profit of npr103 million & npr 65.3 million respectively in the first two months of current fiscal year. similarly, in the coming year, our effort will be on balanced growth guided by core principles, liquidity & capital and managing risk in a disciplined way. our focus will be definitely on individual deposit mobilization, retail banking and complete financial solution. We hope that overall achievement of this year will be better though we are in tough market competition. Changes in Board of directors and election a. in this fiscal year, dr. bishwonath poudel has resigned from the post of director citing his personal reasons, which has been approved by the board of directors. the bank would like to thank dr. poudel for his contribution during his tenure. in addition to this, a change has been made in the structure of board of directors by decreasing the number of directors of promoters group from 4 to 3. b. since the tenure of directors in board representing promoter shareholders is going to be expired, it has been decided to elect directors for coming four years from promoters group to represent in board. c. out of 70 % shares held by promoters, 51 % are still held by the promoters and the remaining shares have been converted to public as follows:

17 ANNUAL REPORT 2012/13 15 PreVious share new share holding Pattern holding Pattern promoters 70% 51% public 30% 49% d. during the conversion of promoter s shares into public, no. of directors representing promoters group in board has been reduced to 3 from 4. PreVious structure of new structure of Board of directors Board of directors promoters 4 3 public 2 2 professional expert 1 1 total 7 6 appointment of Chartered accountants m/s csc & co., was appointed as an external auditor in the fiscal year 2012/13 for the purpose of statutory of the bank. according to the provision specified in section no, 111 of company act 2063, m/s csc & co., has been involved in auditing of sanima bank for 3 continuous years and we are sincerely thankful for the valuable suggestion they provided to us. similarly, as mandated by section no. 165 (Gha) of company act & recommended by audit committee, it is proposed for an appointment of auditor. at last, i would like to extend my heartfelt thanks to shareholders, customers, staffs, nepal government s affiliates, nepal rastra bank, security board, office of company registrar, nepal stock exchange limited, external auditor, media personalities & well-wishers on behalf of board of directors for all of yours valuable suggestions and continued support. sincerely thanks, on behalf of the board of directors Binaya Kumar shrestha Chairman

18 16 SANIMA BANK LTD We congratulate Sanima Bank m e s s a G e f r o m b r a n d a m b a s s a for entering into successful 10 th year of Establishment. First of all, we would like to take this opportunity to congratulate Sanima Bank for entering into the 10 th year of establishment. Nine years of continuous hard work has finally been reaped and thus Sanima has proven itself to be a Strong & Reliable Bank. Furthermore, the Bank is promoted by Prominent And Dynamic Non-Resident Nepalese.

19 ANNUAL REPORT 2012/ madan Krishna shrestha - haribansha acharya d o r ( h o n o r a b l e m a h a J o d i ) Experienced and highly qualified management team, warm and welcoming behavior of the staff, diversified and unique products, and a modern and highly advanced building, are the main attractions of Sanima. We feel glad to be associated with Sanima Bank as its Brand Ambassador and wish it for the continued success.

20 18 SANIMA BANK LTD m a n a G e m e n t t e a m From left to right: tej bahadur chand (DCEO) pawan Kumar acharya (CPFO) nischal raj pandey (CCRO) sujeet dhakal (CRLO)

21 ANNUAL REPORT 2012/13 19 From left to right: bhuvan Kumar dahal (CEO) raju Krishna shrestha (DCOO) bobby singh Gadtaula (COO) saroj Guragain (CFO)

22 20 SANIMA BANK LTD o u r b u s i n e s s To provide one window financial solutions to our customers with a wide range of products and services is our only 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 Strong & Reliable, we assure to provide all kinds of financial solution as a key player in this financial market. 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 products include simple and easy savings like "sanima sulav savings", high earning savings like "sanima bishesh bachat Khata", and customized products like "sanima naari savings, sanima sr. citizen saving, sanima shareholders account etc. 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. DEPOSIT ACCOUNTS Sanima Sulav Savings Sanima Naari Savings Sanima Senior Citizens Savings Sanima Muna Savings Sanima Prime Savings Sanima Premium Savings Sanima Shareholders Savings Sanima Bishesh Bachat Khata Sanima Salary Account Sanima Fixed Deposits

23 ANNUAL REPORT 2012/13 21 Business lending 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 attentive for the customers service should there arise the need for any expert financial advice. retail lending consumer 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). 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 co-lead bank. the bank has proper monitoring mechanisms in place to enable prompt actions that ensure successful implementation and operation of projects under consortium financing. ancillary services the bank is also offering various ancillary services. bank has introduced 365 days banking from its head office to provide the banking facilities throughout the year even in saturday and public holidays. similarly, it has been providing following ancillary services and in its process to bring new services. loans ancillary services sanima home loan sanima auto loan sanima small Business growth loan sanima Woman entrepreneur loan sanima livestock loan sanima education loan sanima hire Purchase loan sanima Project Financing sanima Margin lending sanima Business loan sanima tractor loan micro Finance loan sanima gold loan sms banking sanima debit card sanima ibanking sanima safe deposit locker facilities utility bill payments remittance services foreign exchange transactions any branch banking system sanima 365 days banking sanima mobile money

24 22 SANIMA BANK LTD We are always working to continuously improve products, services and processes to anticipate and exceed the needs of our customers.

25 ANNUAL REPORT 2012/13 23 c o r p o r a t e s o c i a l r e s p o n s i b i l i t Y / l o Y a l t Y p r o G r a m s 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 to address 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 following 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 do same.

26 Free Eye Treatment / Blood Donation sanima scholarship PrograM eligible students who are unable to manage fees for their higher secondary level education are awarded sanima s scholarships. scholarship-holder students are reimbursed for full tuition fees, books and stationeries, provided with a monthly stipend of npr 2,000 per student. students can join colleges of their own choice and in the interested faculty. currently, this program is being provided from all the branches outside Kathmandu valley. Free eye treatment 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, 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 travelling allowances. self-employment trainings With an objective to provide employment opportunity to youth for their career development, we have provided trainings to five most needy candidates from each rural based branches, namely Khandbari, myanglung, damak, belbari, inaruwa, dhading, naubise, bhandara, hetauda, Ghorahi and dhangadi. these trainings are 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 10 th year of establishment, we organized blood donation programs from our branches outside and inside the Valley.the programs were held successfully with the full support and participation of the locals. many customers, staffs and other donated their blood, making the event meaningful. 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.

27 ANNUAL REPORT 2012/13 25 CustoMer loyalty PrograM With due respect to our customers for their valuable support and belief in us, we distributed gifts to mark the auspicious occasions of father s day and teej. Gifts to Senior Citizens Gifts to Nari Account Holder

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29 ANNUAL REPORT 2012/13 27 Balance Sheet as on July 15, 2013 (Ashadh 31, 2070) capital And liabilities schedule current YeAr rs Previous YeAr rs 1. Share Capital 1 2,217,600,000 2,016,000, Reserves and Funds 2 206,431, ,580, Debentures and Bonds Borrowings 4 1,480,125,530 88,250, Deposit Liabilities 5 17,789,328,915 11,180,706, Bills Payables Proposed and Payable Dividend 10,610, ,880, Income Tax Liabilities 9. Other Liabilities 7 272,443, ,048,893 total capital liabilities 21,976,539,752 13,722,466,141 Assets schedule current YeAr rs Previous YeAr rs 1. Cash Balance 8 312,962, ,197, Balance with NRB 9 1,283,546,348 1,005,249, Balance with Banks/Financial Institutions 10 88,992, ,615, Money at Call and Short Notice ,420, Investments 12 3,848,052,434 2,105,770, Loans Advances and Bills Purchase 13 15,093,072,849 9,531,504, Fixed Assets ,488, ,044, Non-Banking Assets Other Assets ,004, ,083,888 total Assets 21,976,539,752 13,722,466,141 Contingent Liabilities 17 Directors' Declaration 29 Statement of Capital Fund 30 (a 1) Statement of Risk Weighted Assets 30 (b, c, d, e) Principal Indicators 31 Principle Accounting Policies 32 Notes to Accounts 33 Statement of Loan taken by Promotors 34 Comparision Between Unaudited and Audited Financials 35 Unaudited Financial Highlights certified by Internal Auditor (A) DATE: Sep 5, 2013 (Bhadra 20, 2070) PLACE: Kathmandu

30 28 SANIMA BANK LTD Profit and Loss Account For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) PArticulArs schedules current YeAr rs. Previous YeAr rs. 1. Interest Income 18 1,678,789,938 1,172,200, Interest Expenses 19 1,023,257, ,616,780 net interest income 655,532, ,583, Commission and Discount 20 23,667,788 11,251, Other Operating Income 21 68,853,461 42,947, Exchange Fluctuation Income 22 27,237,310 - total operating income 775,291, ,782, Employees Expenses 23 99,776,288 79,987, Other Overhead Expenses ,730, ,192, Exchange Fluctuation Loss ,238 operating Profit before Provision for Possible loss 516,784, ,427, Provision for Possible Losses 25 57,846,414 52,492,738 operating Profit 458,938, ,934, Non-operating Income/Expenses 26 2,571, , Provision Written-Back 27 19,675,442 - Profit from regular operations 481,184, ,612, Profit/Loss from extra-ordinary activities net Profit after considering all activities 481,184, ,612, Provision For Staff Bonus 43,744,049 17,328, Provision For Income Tax 132,379,358 51,514,761 This Year's 129,195,320 51,892,481 Previous Year's 3,530, ,909 Deferred Tax Expense/(Income) (346,955) (486,629) net Profit/(loss) 305,061, ,769,566 Schedule No. 18 to 28, 32, 33, 34 & 35 form integral part of this Profit and Loss Account. DATE: Sep 5, 2013 (Bhadra 20, 2070) PLACE: Kathmandu

31 ANNUAL REPORT 2012/13 29 Profit and Loss Appropriation Account For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) PArticulArs schedules current YeAr rs. Previous YeAr rs. Income 1. Accumulated Profit up to the Last Year 6,203,685 20,709, Current Year's Profit 305,061, ,769, Exchange Fluctuation Fund - - total (A) 311,264, ,479,227 Expenses 1. Accumulated Loss up to the Last Year This Year's Loss General Reserve 61,012,226 24,353, Contingent Reserve Institutional Development Fund Dividend Equalization Fund Employee Related Reserves Funds Proposed Dividend 10,610, ,880, Proposed Issue of Bonus Shares 201,600, Special Reserve Fund Exchange Fluctuation Fund 858, Capital Redemption Reserve Fund Capital Adjustment Fund Deferred Tax Reserve 346, , Investment Adjustment Reserve 9,800, ,000 total (b) 284,227, ,275, Accumulated Profit/(Loss) (A-B) 27,037,095 6,203,685 DATE: Sep 5, 2013 (Bhadra 20, 2070) PLACE: Kathmandu

32 30 SANIMA BANK LTD Cash Flow Statement For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) PArticulArs current YeAr rs. Previous YeAr rs. (a) cash flow from operating Activities 472,427, ,037, cash received 1,794,403,306 1,211,429, Interest Income 1,675,505,799 1,151,904, Commission and Discount Income 23,667,788 11,251, Income from Foreign Exchange Transaction 23,805,252 2,976, Recovery of Written-off Loans Other Incomes 71,424,466 45,296,951 2 cash Payment 1,321,975, ,391, Interest Expenses 979,231, ,639, Staff Expenses 99,113,601 75,868, Office Overhead Expenses 109,952, ,487, Income Tax Paid 133,677,265 57,396, Other Expenses cash Flow before Working capital Activities (683,264,897) 1,093,002,228 (increase)/decrease of current Assets (8,089,619,221) (3,571,888,915) 1 (Increase)/Decrease in Money at Call and Short Notice (364,420,000) 1,049,936,449 2 (Increase)/Decrease in Short-term Investments (1,829,959,780) (1,341,761,852) 3 (Increase)/Decrease in Loans and Advances and Bills Purchase (5,606,888,281) (3,205,101,454) 4 (Increase)/Decrease in Other Assets (288,351,160) (74,962,057) increase/(decrease) of current liabilities 7,406,354,324 4,664,891,143 1 Increase/(Decrease) in Deposits Liabilities 6,608,622,189 4,821,996,971 2 Increase/(Decrease) in Certificate of Deposits Increase/(Decrease) in Short-term Borrowings 937,650,000 (121,750,000) 4 Increase/(Decrease) in Other Liabilities (139,917,865) (35,355,829) (b) cash flow from investment Activities 65,617,339 (8,132,450) 1 (Increase)/Decrease in Long-Term Investment 94,826, ,402,498 2 (Increase)/Decrease in Fixed Assets (39,221,690) (159,348,537) 3 Interest Income From Long-Term Investment 10,012,134 5,813,589 4 Dividend Income Others (c) cash flow from Financing Activities 454,225,530 (448,000,000) 1 Increase/(Decrease) in Long-Term Borrowings (Bonds, Debentures etc.) Increase/(Decrease) in Share Capital Increase/(Decrease) in Other Liabilities (Share Premium) Increase/(Decrease) in Refinance/Facilities From Nepal Rastra Bank 454,225,530 (448,000,000) (d) Income/Expenses from change in Exchange Rate in Cash and Bank Balances 3,432,058 (3,151,433) (e) This Year's Cash Flow from All Activities 312,437, ,756,139 (f) Opening Balance of Cash and Bank Balances 1,373,062, ,306,602 (g) Closing Balance of Cash and Bank Balances 1,685,500,681 1,373,062,741

33 In Rs Statement of Changes in Equity Financial Year 2012/13 (2069/70) PArticulArs share capital AccumulAted GenerAl capital share exchange deferred other total ProFit/loss reserve reserve Premium FluctuAtion tax reserve Amount Fund Fund Fund reserve And Fund Opening Balance as at 16 July ,016,000,000 6,203,685 93,952,490-10,563,747 1,800, , ,000 2,129,580,523 restated balance as at 16 July ,016,000,000 6,203,685 93,952,490-10,563,747 1,800, , ,000 2,129,580,523 Current Year's Net Profit - 305,061, ,061,132 General Reserve - (61,012,226) 61,012, Proposed Bonus Share 201,600,000 (201,600,000) Porposed Dividend - (10,610,526) (10,610,526) Exchange Fluctuation Fund - (858,014) , Deferred Tax Assets (346,955) 346,955 - Investment Adjustment Reserve - (9,800,000) ,800,000 - closing balance 2,217,600,000 27,037, ,964,717-10,563,747 2,658, ,802 10,355,000 2,424,031,128 ANNUAL REPORT 2012/13 31

34 32 SANIMA BANK LTD Share Capital and Ownership As on July 15, 2013 schedule 1 In Rs PArticulArs current YeAr rs. Previous YeAr rs. 1 Share Capital 1.1. Authorized Capital 2,100,000,000 2,100,000,000 a) 21,000,000 Ordinary Shares of Rs. 100 each 2,100,000,000 2,100,000,000 b). Non-redeemable Preference Shares of Rs. each - - c). Redeemable Preference Shares of Rs... each Issued Capital 2,016,000,000 2,016,000,000 a) 20,160,000 Ordinary Shares of Rs.100 each 2,016,000,000 2,016,000,000 b). Non-redeemable Preference Shares of Rs.. each - - c). Redeemable Preference Shares of Rs.. each Paid up Capital 2,016,000,000 2,016,000,000 a). 20,160,000 Ordinary Shares of Rs.100 each 2,016,000,000 2,016,000,000 b).. Non-redeemable Preference Shares of Rs.. each - - c). Redeemable Preference Shares of Rs. each 1.4. Proposed Bonus Share 201,600, Calls in Advance - - total ( ) 2,217,600,000 2,016,000,000 Share Ownership As on July 15, 2013 PArticulArs current YeAr Previous YeAr % Amount Amount % 1. national ownership 100 2,016,000,000 2,016,000, Government of Nepal Foreign Institutions "A" Class Licensed Institutions Other License Institutions Other Entities/ Organizations ,119,400 96,457, Individuals ,908,880,600 1,919,542, Others Foreign ownership total 100 2,016,000,000 2,016,000,

35 ANNUAL REPORT 2012/13 33 List of Share holders holding Share Capital of 0.5% or More In Rs s. no name of share holder no of share % current YeAr 1. Arun Kumar Ojha 2,822, ,240, Tek Raj Niraula 1,798, ,840, Jiba Nath Lamichhane 1,260, ,000, Dr. Niraj Govinda Shrestha 1,260, ,000, Binaya Kumar Shrestha 1,013, ,300, Ghana Shyam Thapa 1,006, ,670, Dr. Birendra Prasad Mahato 945, ,500, Khem Raj Lamichhane 794, ,400, Jai Ganesh Investment Company Pvt. Ltd 756, ,600, Ram Krishna Shah 633, ,300, Dinesh Mani Shrestha 329, ,990, Dilip Shrestha 327, ,760, Shamba Lama 146, ,679, Ma Naba Durga Bhawani Investment Pvt. Ltd 130, ,059,200 total 13,223, ,322,338,200 Reserve and Surplus As on July 15, 2013 schedule 2 In Rs PArticulArs current YeAr Previous YeAr 1. General Reserve Fund 154,964,717 93,952, Capital Reserve Fund Capital Redemption Reserve Capital Adjustment Fund Other Resevers Contingent Reserve Institution Development Fund Dividend Equalization Fund Special Reserve Fund Assets Revaluation Reserve Deferred Tax Reserve 851, , Other Free Reserves Other Reserve Funds Share Premium 10,563,747 10,563, Investment Adjustment Reserve 10,355, , Accumulated Profit/(Loss) 27,037,095 6,203, Exchange Equalization Fund 2,658,767 1,800,753 Total 206,431, ,580,523

36 34 SANIMA BANK LTD Debentures and Bonds As on July 15, 2013 schedule 3 In Rs PArticulArs current YeAr Previous YeAr 1. Percent Bonds/Debentures of Rs. each - - Issued on and Matured on (Outstanding balance of Redemption Reserve Rs..) Percent Bond/Debentures of Rs. each - - Issued on and Matured on (Outstanding Balance of Redemption Reserve Rs..) Total (1+2) - - Note : Particulars of securities shall be disclosed in case the Debentures/Bonds are issued with assigned securities. Borrowings As on July 15, 2013 schedule 4 In Rs PArticulArs current YeAr Previous YeAr A.Local 1. Nepal Government Nepal Rastra Bank 454,225, Repo Obligation - 4. Inter Bank and Financial Institutions 1,025,900,000 88,250, Other Organized Institutions Others - - total 1,480,125,530 88,250,000 B. Foreign Banks Others - - total - - total (A+b) 1,480,125,530 88,250,000

37 ANNUAL REPORT 2012/13 35 Deposits As on July 15, 2013 schedule 5 In Rs PArticulArs current YeAr Previous YeAr 1 non-interest bearing Accounts A. current deposits 499,131, ,569, Local Currency 495,007, ,922, Nepal Government 938, "A" Class Licensed Institutions 11,011,618 7,193, Other Licensed Financial Institutions 6,717, ,477, Other Organized Institutions 403,791, ,983, Individuals 73,486,726 37,328, Others 2. Foreign Currency 4,124, , Nepal Government "A" Class Licensed Institutions Other Licensed Financial Institutions 1,138, Other Organized Institutions 2,976, , Individuals 9,590 8, Others - - b.margin deposits 57,482,464 21,925, Employee Guarantees Guarantee Margin 26,428,301 15,393, Letters of Credit Margin 31,054,164 6,532,000 c.others 6,950,000 1,972, Local Currency 6,950,000 1,972, Financial Institutions Other Organized Institutions 550,000 1,872, Individuals 6,400, , Foreign Currency Financial Institutions Other Organized Institutions Individuals - - total of non-interest bearing Accounts 563,564, ,467, Interest Bearing Accounts - - A. savings deposits 4,311,870,335 3,554,886, Local Currency 4,280,070,967 3,534,372, Organized Institutions 9,807,433 3,453, Individuals 4,270,263,534 3,530,918, Others - - Contd...Deposits

38 36 SANIMA BANK LTD Contd...Deposits PArticulArs current YeAr Previous YeAr 2. Foreign Currency 31,799,368 20,514, Organized Institutions 2.2. Individuals 31,799,368 20,514, Others - - b.fixed deposits 9,242,145,272 5,453,987, Local Currency 9,096,185,472 5,425,571, Organized Institutions 6,327,350,789 2,974,218, Individuals 2,768,834,684 2,451,353, Others Foreign Currency 145,959,800 28,416, Organized Institutions 143,850, Individuals 2,109,800 28,416, Others - - c.call deposits 3,671,749,054 1,775,364, Local Currency 3,668,477,243 1,772,675, "A" Class Licensed Institutions 16, Other Licensed Institutions 1,053,485, ,184, Other Organized Institutions 2,446,443, ,125, Individuals 168,549, ,349, Others Foreign Currency 3,271,812 2,688, "A" Class Licensed Institutions Other Licensed Institutions Other Organized Institutions 3,271,812 2,688, Individuals 2.5. Others - - d. certificate of deposit Organized Institutions Individuals Others - - Total of Interest Bearing Accounts 17,225,764,662 10,784,239,486 Total Deposit (1+2) 17,789,328,915 11,180,706,726

39 ANNUAL REPORT 2012/13 37 Bills Payable As on July 15, 2013 schedule 6 In Rs PArticulArs current YeAr Previous YeAr 1. Local Currency Foreign Currency - - total - - Other Liabilities As on July 15, 2013 schedule 7 In Rs PArticulArs current YeAr Previous YeAr 1. Pension/Gratuity Fund 8,678,407 8,015, Employees Provident Fund - 81, Employees Welfare Fund Provision for Staff Bonus 43,744,049 17,328, Interest Payable on Deposits 56,907,613 14,464, Interest Payable on Borrowings 2,056, , Unearned Discount and Commission 3,039, , Sundry Creditors 10,413,934 18,369, Branch Adjustment Account Deferred Tax Liabilities Dividend Payable 12,580,814 3,237, Others 135,022, ,357,819 total 272,443, ,048,893 Cash Balance As on July 15, 2013 schedule 8 In Rs PArticulArs current YeAr Previous YeAr 1. Local Currency (including coin) 306,778, ,384, Foreign Currency 6,183,795 2,812,840 total 312,962, ,197,727

40 38 SANIMA BANK LTD Balance with Nepal Rastra Bank As on July 15, 2013 schedule 9 PArticulArs local currency ForeiGn currency current YeAr Previous YeAr indian currency convertible total 1. nepal rastra bank 1,281,974,762-1,571,586-1,283,546,348 1,005,249,544 a) Current Account 1,281,974,762-1,571,586 1,571,586 1,283,546,348 1,005,249,544 b) Other Account Balance with Banks/Financial Institutions As on July 15, 2013 schedule 10 PArticulArs local currency ForeiGn currency current YeAr Previous YeAr indian currency convertible total 1. Local Licensed Institutions 53,365,343-2,421,527 2,421,527 55,786,870 86,815,807 a) Current Account 53,365, ,365,343 86,155,640 b) Other Account - - 2,421,527 2,421,527 2,421, , Foreign Banks - 7,097,094 26,108,364 33,205,458 33,205,458 24,799,663 a) Current Account - 7,097,094 26,108,364 33,205,458 33,205,458 24,799,663 b) Other Account Total 53,365,343 7,097,094 28,529,891 35,626,985 88,992, ,615,471 Note: Total Balance for which the confirmations are received from the respective licensed institutions is Rs.132,486,601 and the difference are subsequently reconciled. Money at Call and Short Notice As on July 15, 2013 schedule 11 In Rs PArticulArs current YeAr Previous YeAr 1. Local Currency Foreign Currency 364,420,000 - total 364,420,000 -

41 ANNUAL REPORT 2012/13 39 Investments As on July 15, 2013 schedule 12 In Rs PArticulArs PurPose current YeAr Previous YeAr trading other 1. Nepal Government Treasury Bills 3,355,486,225 3,355,486,225 1,910,564, Nepal Government Savings Certificates Nepal Government Other Bond - 94,870,109 94,870,109 96,500, Nepal Rastra Bank Bonds Foreign Bonds/Debenture Local Licensed Institutions - 422, ,838 7,572, Foreign Banks - 385,038, ,038,500 88,250, Organized Institutions Shares - 12,657,600 12,657,600 10,455, Corporate Bonds and Debentures Other Investments total investment - 3,848,475,272 3,848,475,272 2,113,342,387 Provision - 422, ,838 7,572,132 net investment - 3,848,052,434 3,848,052,434 2,105,770,255

42 40 SANIMA BANK LTD Investment in Shares, Debentures and Bonds As on July 15, 2013 schedule 12(a) In Rs PArticulArs cost Price market Price Provision current YeAr Previous YeAr 1. investment in shares 12,657, ,657,600 10,455, Nepal Clearing House Company Ltd Ordinary Shares of Rs 100 Paid up each 2,302, ,302, , Sanima Mai Hydro Ltd Ordinary Shares of Rs.100 Paid up each 10,000, ,000,000 10,000, Sanima Life Insurance Co. Ltd Ordinary Shares of Rs.1 Paid up each (Face Value Rs 100) 350, , , Sanima Foundation Ordinary Shares Shares of Rs. 1 Paid up each 5, ,000 5, investment in debentures and bonds Co. (Pvt. Ltd./Ltd.) % Debentures/Bonds of Rs.. each total investment 12,657, ,657,600 10,455, Provision for loss Provision Up to Previous Year Additions This Year total Provision net investment 12,657, ,657,600 10,455,000 Note : Above companies have not declared the dividend in last three years.

43 ANNUAL REPORT 2012/13 41 Held for Trading As on July 15, 2013 schedule 12.1 In Rs description cost Price last current current YeAr Previous YeAr remarks market Price market Price ProFit/(loss) ProFit/(loss) 1. Treasury Bills of Governement of Nepal Saving Bonds of Government of Nepal Other Loan Bonds of Government of Nepal Loan Bonds of Nepal Rastra Bank Foreign Loan Bonds Shares of Local Licensed Institutions Debenture and Bonds of Local Licensed Institutions Debenture and Bonds of Local Organized Institutions Investment in Foreign Banks (Placement) Interbank Lending Other Investment Total Investment Held to Maturity As on July 15, 2013 schedule 12.2 In Rs description cost Price cumulative current YeAr current YeAr Previous YeAr remarks loss upto loss ProFit/(loss) ProFit/(loss) this YeAr 1.Treasury Bills of Governement of Nepal 3,355,486, Saving Bonds of Government of Nepal Other Bonds of Government of Nepal 94,870, Bonds of Nepal Rastra Bank Foreign Bonds Shares of Local Licensed Institutions Debenture and Bonds of Local Licensed Institutions Share, Debenture and Bonds of Local Organized Institutions Investment in Foreign Banks (Placement) 385,038, Other Investment Total Investment 3,835,394,

44 42 SANIMA BANK LTD Available for Sale As on July 15, 2013 schedule 12.3 In Rs description cost Price last current current YeAr Previous YeAr remarks market market Fund ProFit/(loss) Price Price AdJustment Amount 1.Treasury Bills of Governement of Nepal Saving Bonds of Government of Nepal Other Loan Bonds of Government of Nepal Loan Bonds of Nepal Rastra Bank Foreign Loan Bonds Shares of Local Licensed Institutions Debenture and Bonds of Local Licensed Institutions Share, Debenture and Bonds of Local Organized Institutions Investment in Foreign Banks (Placement) Other Investment 13,080, ,800, ,000 total investment 13,080, ,800, ,000 -

45 Classification of Loans and Bills Purchased and Provisioning As on July 15, 2013 schedule 13 PArticulArs loans bills PurchAsed & discounted current YeAr Previous YeAr domestic ForeiGn total domestic ForeiGn total deprived sector other insured uninsured 1. Performing Loan - 542,006,531 14,702,032,619-15,244,039, ,244,039,149 9,595,149, Pass Loan - 542,006,531 14,702,032,619-15,244,039, ,244,039,149 9,595,149, Non-Performing Loan - 287,149 3,848,431-4,135, ,135,581 46,137, Restructured Substandard ,806,802 42,792, Doubtful ,858, Bad - 287,149 1,041,629-1,328, ,328,779 1,487,149 (A) total loan - 542,293,680 14,705,881,050-15,248,174, ,248,174,730 9,641,286, Loan Loss Provision - 5,707, ,394, ,101, ,101, ,781, Pass - 5,420, ,651, ,071, ,071,402 96,667, Restructured Substandard , , ,701 10,698, Doubtful , Bad - 287,149 1,041,629-1,328, ,328,779 1,487,149 (b) total Provisioning - 5,707, ,394, ,101, ,101, ,781, Provisioning up to Previous Year - 1,991, ,777, ,768,816 12,799-12, ,781,615 64,861, Pass - 1,703,931 94,950,630-96,654,561 12,799-12,799 96,667,360 64,573, Restructured Substandard ,698,003-10,698, ,698, Doubtful , , , Bad - 287,149 1,200,000-1,487, ,487, ,149 (c) total Previous Year's Provision - 1,991, ,777, ,768,816 12,799-12, ,781,615 64,861,010 (d) Written back From Previous Year Changes in This Year - 3,716,134 41,616,930-45,333,064 (12,799) - (12,799) 45,320,265 44,920,605 net loan (A-b) - 536,586,465 14,556,486,384-15,093,072, ,093,072,849 9,531,504,834

46 44 SANIMA BANK LTD Loans, Advances and Bills Purchased Security wise As on July 15, 2013 schedule 13 (A) In Rs PArticulArs current YeAr Previous YeAr (A) Secured 15,248,174,730 9,641,286, Movable/Immovable Assets 13,946,525,537 9,149,848, Guarantee of Local Licensed Institutions Government Guarantee 4. Internationally Rated Bank Guarantee 5. Export Documents 6. Fixed Deposit Receipts - - a) Own Fixed Deposit Receipt 98,976,032 90,168,267 b) Fixed Deposit Receipt of Other Licensed Institutions Government Bonds - 2,790, Counter Guarantee Personal Guarantee 4,606,051 4,770, Other Securities 1,198,067, ,709,510 (B) Unsecured - - total 15,248,174,730 9,641,286,449

47 schedule 14 Fixed Assets As on July 15, 2013 In Rs PArticulArs Assets current YeAr Previous YeAr land & building vehicles machinery office equipment others 1 At Cost a. Previous Year Balance 136,316,886 47,394,956 24,559, ,370, ,641, ,337,641 b. Addition This Year 315,916 12,861,865 2,352,800 13,847,813-29,378, ,099,480 c. Revaluation/Written Back This Year d. This Year Sold - (3,997,514) - - (3,997,514) (1,650,000) e. This Year Written off (3,145,249) total cost (a+b+c-d-e) 136,632,803 56,259,307 26,912, ,218, ,022, ,641, Depreciation a. Up to Previous Year 3,654,823 18,390,614 6,353,010 39,011,045-67,409,491 40,224,369 b. For This Year 6,641,182 7,407,520 2,841,194 23,965,846-40,855,741 29,927,969 c. Depreciation on Revaluation/Written Back d. Depreciation Adjustment /Reversal - (2,692,114) - - (2,692,114) (2,742,846) total depreciation 10,296,004 23,106,020 9,194,203 62,976, ,573,118 67,409, Book Value (WDV*) (1-2) 126,336,799 33,153,287 17,718,301 80,241, ,449, ,232, Land 171,600, ,600, ,600, Capitalization Construction (Pending Capitalization) Leasehold Assets ,439,192 40,439,192 37,212,042 total ( ) 297,936,799 33,153,287 17,718,301 80,241,248 40,439, ,488, ,044,422 ANNUAL REPORT 2012/13 45

48 46 SANIMA BANK LTD Non-Banking Assets As on July 15, 2013 schedule 15 In Rs name And Address date of AccePt total Amount loss Provision net non- Previous YeAr rs. ofborrower non-banking of non-banking in in banking or PArtY Assets Assets rs. PercAntAGe Amount Assets current YeAr rs Grand total Other Assets As on July 15, 2013 schedule 16 In Rs PArticulArs current YeAr rs. Previous YeAr rs. 1. Stationery Stock 2,991,799 2,349, Income Receivable on Investments 17,870,595 24,970, Accrued Interest on Loan 30,992,138 30,620,667 Less : Interest Suspense Amount (30,992,138) - (30,620,667) 4. Commission Receivable Sundry Debtors 280, , Staff Loans and Advances 77,247,903 68,188, Prepaid Expenses 5,306,834 3,654, Cash in Transit Other Transit items ( including cheques ) Drafts Paid without Notice Expenses Not Written off 7,751,698 9,988, Branch account Deferred Tax Assets 851, , Other 403,704, ,254,944 total 516,004, ,083,888

49 ANNUAL REPORT 2012/13 47 Other Assets (Additional Statement) As on July 15, 2013 schedule 16 (A) In Rs PArticulArs this YeAr Previous YeAr up to 1 YeAr 1 to 3 YeAr Above 3 YeArs total 1. Accrued Interest on Loan 30,992, ,992,138 30,620, Drafts Paid without Notice Branch Adjustment Account Local and Foreign Agency A/Cs 49,769, ,430-49,989,410 35,378,881 Contingent Liabilities As on July 15, 2013 schedule 17 In Rs PArticulArs current YeAr Previous YeAr 1. Claims on Institution but not accepted by the Institution Letters of Credit (Full Amount) - - a) Less than 6 months Maturity 276,637,493 98,579,305 b) More than 6 months Maturity Rediscounted Bills Unmatured Guarantees/Bonds - - a) Bid Bonds 63,811,650 73,885,550 b) Performance Bonds 551,583, ,201,647 c) Other Guarantees/Bonds Unpaid Shares in Investment Forward Exchange Contract Liabilities Bills under Collection Acceptance and Endorsements Underwriting Commitments Irrevocable Loan Commitments 1,772,722, ,300, Counter Guarantee of Internationally Rated Banks Advance Payment Guarantee 170,877,935 82,860, Financial Guarantee Contingent Liabilities on Income Tax Capital Commitment net of Advance Payment Others 10,935, total 2,846,568,984 1,096,827,303

50 48 SANIMA BANK LTD Interest Income For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 18 In Rs PArticulArs current YeAr Previous YeAr A.On Loan, Advances and Overdraft 1,623,744,971 1,067,152, Loans and Advances 1,222,868, ,618, Overdraft 400,876, ,534,843 B. On Investment 54,925,797 73,251, Nepal Government Securities 49,533,572 59,436,999 a. Treasury Bills 39,947,388 54,049,360 b. Development Bonds 9,586,184 5,387,639 c. National Savings Certificates Foreign Securities - - a b Nepal Rastra Bank Bond Debenture and Bonds - - a. Financial Institutions - - b. Other Organizations On Interbank Placement 5,392,226 13,814,320 a. Bank and Financial Institutions 5,392,226 13,814,320 b. Other Organizations - - C. On Agency Balances Local Banks Foreign Banks - - D. On Money at Call and Short Notice 119,170 31,796, Local Banks/Financial Institutions 119,170 31,796, Foreign Banks - - E. On Others Certificate of Deposits Inter-Bank Loan Others - - total 1,678,789,938 1,172,200,388

51 ANNUAL REPORT 2012/13 49 Interest Expenses For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 19 In Rs PArticulArs current YeAr Previous YeAr A. On Deposit Liabilities 1,009,370, ,968, Fixed Deposits 653,642, ,282, Local Currency 650,010, ,425, Foreign Currency 3,631, , Savings Deposits 210,036, ,999, Local Currency 209,726, ,798, Foreign Currency 310, , Call Deposits 145,691,522 90,686, Local Currency 145,655,518 90,658, Foreign Currency 36,004 27, Certificate of Deposits - - B. On Borrowings 12,256,704 5,593, Debentures and Bonds Loan from Nepal Rastra Bank 79, Inter Bank/Financial Institutions Borrowing 12,177,112 5,593, Other Corporate Body Other Loans - - C. On Others 1,630,201 55, Bond Premium w/o 1,630,201 55, total 1,023,257, ,616,780 Commission and Discount For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 20 In Rs PArticulArs current YeAr Previous YeAr A. Bills Purchase and Discount Local Foreign - - B. Commission 17,718,117 8,678, Letters of Credit 5,387, , Guarantee 6,821,332 5,723, Collection Fee Remittance Fee 5,507,986 2,834, Credit Cards Share Underwriting/Issues Government Transactions 1,300 11, Agency Commission Exchange Income - - C. Others 5,949,671 2,572,443 total 23,667,788 11,251,196

52 50 SANIMA BANK LTD Other Operating Income For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 21 In Rs PArticulArs current YeAr Previous YeAr 1. Rental on Safe Deposit Lockers 696, , Issue and Renewals of Credit Cards Issue and Renewals of ATM Cards 888, , Telex/T.T. 623, , Service Charges 55,486,134 35,584, Renewal Fees 1,757, , Others 9,402,341 4,596,128 total 68,853,461 42,947,360 Exchange Gain/Loss For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 22 In Rs PArticulArs current YeAr Previous YeAr (A). Revaluation Gain 3,432,058 (3,151,433) (B). Trading Gain (Except Exchange Income) 23,805,252 2,976,194 total income/(loss) 27,237,310 (175,239) Employee Expenses For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 23 In Rs PArticulArs current YeAr Previous YeAr 1. Salary 48,880,579 38,866, Allowances 25,765,415 21,032, Contribution to Provident Fund 4,597,070 3,472, Training Expenses 678, , Uniform 52, Medical Insurance 1,095, , Pension and Gratuity Provision 4,408,650 4,132, Others 14,297,807 11,425,972 total 99,776,288 79,987,290

53 ANNUAL REPORT 2012/13 51 Other Overhead Expenses For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 24 In Rs PArticulArs current YeAr Previous YeAr 1. House Rent 13,017,969 12,027, Electricity and Water 4,597,542 3,769, Repair and Maintenance 4,006, ,401 (a) Building 2,675,307 45,608 (b) Vehicles 853, ,887 (c) Others (Software) 477, , Insurance 9,305,767 6,424, Postage, Telex, Telephone, Fax 11,260,689 9,829, Office Equipment, Furniture and Fixture Repair 2,612,881 1,794, Travelling Allowances and Expenses 1,731,924 1,302, Stationery and Printing 4,116,605 3,893, Periodicals and Books 157, , Advertisements 10,958,798 23,222, Legal Expenses - 96, Donations - 208, Expenses Relating to Board of Directors 1,076,619 1,100,086 (a) Meeting Fees 721, ,000 (b) Other Expenses 355, , Annual General Meeting Expenses 481, , Expenses Relating to Audit 529, ,242 (a) Audit Fees 400, ,000 (b) Other Expenses 129,630 97, Commission on Remittances 836,830 7, Depreciation on Fixed Assets (Including Amortization) 48,777,285 36,621, Amortization of Preliminary Expenses Share Issue Expenses Technical Services Fee Entertainment 2,634,194 2,100, Written Off Expenses - 4,754, Security Expenses 13,689,701 12,850, Credit Guarantee Premium Commission and Discount Others 28,939,265 28,176, Office Maintenance 597, , Vehicle Fuel & Tax 12,257,594 7,854, Membership Fee 1,063,942 1,710, Business Promotion Expense 5,440,174 10,478, Human Resource Outsourcing 7,635,559 5,630, Office Equipment Uncapitalised 359, , Miscelleneous 1,585,094 1,724,774 Total 158,730, ,192,535

54 52 SANIMA BANK LTD Provision for Possible Losses For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 25 In Rs PArticulArs current YeAr Previous YeAr 1. Increase in Loan Loss Provision 57,846,414 44,920, Increase in Provison for Loss on Investment - 7,572, Provision Against Non-Banking Assets Provision Against Other Assets - - total 57,846,414 52,492,738 Non-Operating Income/Loss For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 26 In Rs PArticulArs current YeAr Previous YeAr 1. Profit (Loss) on Sale of Investment Profit (Loss) on Sale of Assets Dividend Subsidies Received from Nepal Ratra Bank - - a. Reimbursement of Losses of Specified Branches - - b. Interest Subsidy - - c. Exchange Counter Others 2,571, ,396 total non-operating income (loss) 2,571, ,396 Loss Provisions Written Back For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 27 In Rs PArticulArs current YeAr Previous YeAr 1. Loan Loss Provision Written Back 12,526, Provision against Non-Banking Assets Written Back Investment Provision Written Back 7,149, Provision against Other Assets Written back - - total 19,675,442 -

55 ANNUAL REPORT 2012/13 53 Income /Expenses from Extra-ordinary Activities For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 28 In Rs PArticulArs current YeAr Previous YeAr 1. Recovery of write off Loan Voluntary Retirement Scheme Expenses Loan Write-Off (4.28) (a) Other Expenses/Income total - - Statement of Loans Written-Off For the period from July 16, 2012 to July 15, 2013 (shrawan 01, 2069 to Ashadh 31, 2070) schedule 28 (a) In Rs types of loan Written off type of basis of loan APProved initiation made remarks Amount security valuation by name/ For recovery of designation collateral 1. Working Capital Loan Project Loan Fixed Capital Loan Personal Loan Other Loan Total Loan Note : Particulars of loan written off during the fiscal year shall be mentioned in above.

56 54 SANIMA BANK LTD Statement of Loans and Advances Extended to Directors/Chief Executive/Promoter/ Employees and Shareholders As on July 15, 2013 schedule 29 The Statement of amount, included under total amount of Bills Purchased and Discounted, Loans, Advances and Overdraft, provided to the Directors, Chief Executive, Promoters, Employees, Shareholders and to the individual members of their undivided family or against the guarantee of such persons or to the organizations or companies in which such individuals are managing agent, are as follows : In Rs name of Promoter/director/ till Previous YeAr's balance current YeAr recovery current YeAr balance As of AshAd end chief executive PrinciPAl interest PrinciPAl interest Additions PrinciPAl interest (A) directors (b) chief executive (c) Promoters Tuk Prasad Poudyal 570, , Biswa Nath Paudel 14,670,000 14,670, ` (d) employees Rudra Prasad Banjara 500, , Tej Bhadur Chand 988, , Kumari Bharati 200, , Ranjan Mainali , , Shailendra Neupane 455, , Pramika Bista 440, , Roshan Dhaurali 435, , Binod Ojha 287, , Aska Shrestha 532, , Hem Raj Pandey 109, , Prakash Baral 38,261 38, Sunil Khatiwada 268, , Bishal Bhattarai 45,000 45, Prem Bahadur Mahat 465, , Pralhad Chandra Niraula 75,000 75, Hemanta Shrestha 177, , Mahesh Kumar Niraula 206, , Samir Sigdel 375, , Sumeena Shrestha 100, ,000 (e) shareholders total 2,258,358-2,258,358-18,879,539 18,879,539 -

57 ANNUAL REPORT 2012/13 55 Stament of Capital Fund As on (Ashadh end 2070) schedule 30 (a1) In Rs 1.1 risk WeiGhted exposures current YeAr Previous YeAr a. Risk Weighted Exposure for Credit Risk 15,989,208,846 10,212,474,617 b. Risk Weighted Exposure for Operational Risk 575,777, ,768,186 c. Risk Weighted Exposure for Market Risk 348,935,567 9,732,586 total risk Weighted exposures (a+b+c) 16,913,922,050 10,636,975,389 Adjustments under Pillar ii - ALM policies & practices are not satisfactory, add 1% of net interest income to RWE (6.4 a 5) Add...% of the total deposit due to insufficient Liquid Assets (6.4 a 6) Add RWE equivalent to reciprocal of capital charge of 2-5% of gross income (6.4 a 7) Overall risk management policies and procedures are not satisfactory. Add 2% of RWE (6.4 a 9) 338,278,441 If desired level of disclosure requirement has not been achieved, Add...% of RWE (6.4 a 10) total risk Weighted exposures (After bank's adjustments of Pillar ii) 17,252,200,491 10,636,975, capital current YeAr Previous YeAr Core Capital (Tier 1) 2,399,580,545 2,113,208,367 a. Paid up Equity Share Capital 2,016,000,000 2,016,000,000 b. Irredeemable Non-cumulative preference shares - - c. Share Premium 10,563,747 10,563,747 d. Proposed Bonus Equity Shares 201,600,000 - e. Statutory General Reserves 154,964,717 93,952,490 f. Retained Earnings 27,037,095 6,203,685 g. Un-audited current year cumulative profit - - h. Capital Redemption Reserve I. Capital Adjustment Reserve - - j. Dividend Equalization Reserves - - k. Deffered Tax Reserve 851, ,847 l. Other Free Reserve - - m. Less: Goodwill - - n. Less: Fictitious Assets - - o. Less: Investment in equity in licensed Financial Institutions - - p. Less: Investment in equity of institutions with financial interests 10,355,000 10,355,000 q. Less: Investment in equity of institutions in excess of limits - - r. Less: Investments arising out of underwriting commitments - - s. Less: Reciprocal crossholdings t. Less: Purchase of land & building in excess of limit & utilized u. Less: Other Deductions 1,081,816 1,403,044 Adjustments under Pillar ii Less: Shortfall in Provision (6.4 a 1) Less: Loans and Facilities extended to Related Parties and Restricted lending (6.4 a 2) 2,258,358 supplementary capital (tier 2) 165,454,159 98,307,244 a. Cumulative and/or Redeemable Preference Share - - b. Subordinated Term Debt - - c. Hybrid Capital Instruments - - d. General loan loss provision 152,440,391 95,951,491 e. Exchange Equalization Reserve 2,658,767 1,800,753 f. Investment Adjustment Reserve 10,355, ,000 g. Assets Revaluation Reserve - - h. Deffered Tax Reserve 504,847 18,218 total capital Fund (tier i and tier ii) 2,565,034,704 2,211,515, capital AdequAcY ratios current YeAr Previous YeAr Tier 1 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 13.91% 19.87% Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 14.87% 20.79%

58 Statement of Risk Weighted Assets schedule 30 (b) As on (Ashadh end 2070) In Rs current YeAr Previous YeAr PArticulArs book value specific eligible net value risk risk WeiGhted net value risk WeiGhted Provision crm WeiGht exposure Amount a b c d=a-b-c e f=d*e A. balance sheet exposures Cash Balance 312,962, ,962,006 0% - 256,197,727 - Balance With Nepal Rastra Bank 1,283,546,348-1,283,546,348 0% - 1,005,249,544 - Gold - - 0% Investment in Nepalese Government Securities 3,450,356,334-3,450,356,334 0% - 2,007,065,255 - All Claims on Government of Nepal 26,913,241-26,913,241 0% - 51,628,380 - Investment in Nepal Rastra Bank securities % All claims on Nepal Rastra Bank % Claims on Foreign Government and Central Bank (ECA 0-1) % Claims on Foreign Government and Central Bank (ECA -2) % Claims on Foreign Government and Central Bank (ECA -3) % Claims on Foreign Government and Central Bank (ECA-4-6) % Claims on Foreign Government and Central Bank (ECA -7) % Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks (MDB's) recognized by the framework % Claims on Other Multilateral Development Banks % Claims on Public Sector Entity (ECA 0-1) % Claims on Public Sector Entity (ECA 2) % Claims on Public Sector Entity (ECA 3-6) % Claims on Public Sector Entity (ECA 7) 1,910,000-1,910, % 2,865, Claims on domestic banks that meet capital adequacy requirements 721,023, ,023,232 20% 144,204, ,349,316 26,669,863 Claims on domestic banks that do not meet capital adequacy requirements 18,783, ,838-18,360, % 18,360,634 44,404,198 44,404,198 Claims on foreign bank (ECA Rating 0-1) 171,396, ,396,864 20% 34,279, ,049,663 22,609,933 Claims on foreign bank (ECA Rating 2) 47,950,000-47,950,000 50% 23,975, Claims on foreign bank (ECA Rating 3-6) % Claims on foreign bank (ECA Rating 7) % Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement 198,897, ,897,094 20% 39,779,419 - Contd...Statement of Risk Weighted Assets -

59 Contd...Statement of Risk Weighted Assets In Rs current YeAr Previous YeAr PArticulArs book value specific eligible net value risk risk WeiGhted net value risk WeiGhted Provision crm WeiGht exposure Amount a b c d=a-b-c e f=d*e Claims on Domestic Corporates 9,279,697,654-20,140,193 9,259,557, % 9,259,557,462 5,283,146,672 5,283,146,672 Claims on Foreign Corporates (ECA 0-1) % Claims on Foreign Corporates (ECA 2) % Claims on Foreign Corporates (ECA 3-6) % Claims on Foreign Corporates (ECA 7) % Regulatory Retail Portfolio (Not Overdue) 3,757,602, ,913,896 3,630,688,418 75% 2,723,016,314 2,405,432,159 1,804,074,119 Claims Fullfilling all criterion of regulatory retail except granularity % Claims secured by residential properties 760,506, ,506,236 60% 456,303, ,249, ,749,938 Claims not fully secured by residential properties % Claims secured by residential properties (Overdue) 64,745,676 1,011,045-63,734, % 63,734, Claims secured by Commercial real estate 301,039, ,039, % 301,039, ,145, ,145,077 Past due claims (except for claim secured by residential properties) 7,650, ,600-7,233, % 10,849,928 83,023, ,535,675 High Risk Claims 728,931,948 1,232,844 15,251, ,448, % 1,068,672, ,912,813 1,207,369,220 Investments in equity and other capital instruments of institutions listed in the stock exchange % Investments in equity and other capital instruments of institutions not listed in the stock exchange 2,302, ,302, % 3,453,900 10,455,000 15,682,500 Staff Loan Secured by residential property 63,096,309-63,096,309 60% 37,857, Interest Receivable / Claim on Govt. Securities 17,680,122-17,680,122 0% Cash in Transit and other cash items in process of collection ,547,465 20% 28,109, Other Assets (as per attachment) 925,979, ,891, ,088, % 763,088, ,413, ,413,172 22,283,518, ,975, ,305,088 21,955,238,240 14,979,147,336 13,719,722,654 9,841,800,365 b. off balance sheet exposures Gross book specific eligible net value risk risk WeiGhted net value risk WeiGht value Provision crm WeiGht exposures Amount Revocable Commitments - 0% Bills Under Collection - - 0% Forward Foreign Exchange Contract Liabilities % LC Commitments With Original Maturity Up to 6 months Domestic Counterparty 276,637,493-17,080, ,556,970 20% 51,911, ,579, ,715,861 Foreign Counterparty (ECA Rating 0-1) % Foreign Counterparty (ECA Rating 2) % Contd...Statement of Risk Weighted Assets

60 Contd...Statement of Risk Weighted Assets In Rs b. off balance sheet exposures Gross book specific eligible net value risk risk WeiGhted net value risk WeiGht value Provision crm WeiGht exposures Amount Foreign Counterparty (ECA Rating 3-6) % Foreign Counterparty (ECA Rating 7) % LC Commitments With Original Maturity Over 6 months Domestic Counterparty % Foreign Counterparty (ECA Rating 0-1) % Foreign Counterparty (ECA Rating 2) % Foreign Counterparty (ECA Rating 3-6) % Foreign Counterparty (ECA Rating 7) % Bid Bond, Performance Bond and Counter guarantee Domestic Counterparty 615,395,375 27,762, ,632,718 50% 293,816, ,567, ,283,905 Foreign Counterparty (ECA Rating 0-1) % Foreign Counterparty (ECA Rating 2) % Foreign Counterparty (ECA Rating 3-6) % Foreign Counterparty (ECA Rating 7) % Underwriting commitments % Lending of Bank's Securities or Posting of Securities as collateral % Repurchase Agreements, Assets sale with recourse % Advance Payment Guarantee 170,877,935 7,482, ,395, % 163,395, ,785, ,785,901 Financial Guarantee % - (5,771,559.00) (5,771,559) Acceptances and Endorsements % Unpaid portion of Partly paid shares and Securities % Irrevocable Credit commitments (Short Term) 1,311,833,212-1,311,833,212 20% 262,366, ,300, ,660,144 Irrevocable Credit commitments (Long Term) 460,889, ,889,348 50% 230,444, Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement % Other Contingent Liabilities 10,935,621 2,808,500 8,127, % 8,127, Unpaid Guarantee Claims % total 2,846,568,984-55,134,296 2,791,434,688 1,010,061,510 1,073,462, ,674,252 total rwe for credit risk before Adjustment (A) +(b) 25,130,087, ,975, ,439,384 24,746,672,928 15,989,208,846 14,793,184,832 10,212,474,617 Contd...Statement of Risk Weighted Assets

61 Contd...Statement of Risk Weighted Assets In Rs b. off balance sheet exposures Gross book specific eligible net value risk risk WeiGhted net value risk WeiGht value Provision crm WeiGht exposures Amount Adjustments under Pillar ii Add: 10% of the loan and facilities in excess of Single Obligor Limits (6.4 a 3) Add: 1% of the contract (sale) value in case of the sale of credit with recourse (6.4 a 4) Total RWE for Credit Risk (After bank's Adjustments of Pillar II) Add: 1% of the contract (sale) value in case of the sale of credit with recourse (6.4 a 4) Total RWE for Credit Risk (After bank's Adjustments of Pillar II)

62 Eligible Credit Risk Mitigants schedule 30(c) As on (Ashadh end 2070) In Rs deposits Govt.& nrb G'tee of sec/g'tee of G'tee of deposits With other securities Govt. of other domestic G'tee of sec/g'tee of total credit exposures With bank banks/ Fi Gold nepal sovereigns banks mdbs ForeiGn banks a b c d e f g h i Balance Sheet Exposures Claims on Foreign Government and Central Bank (ECA -2) - Claims on Foreign Government and Central Bank (ECA -3) - Claims on Foreign Government and Central Bank (ECA-4-6) - Claims on Foreign Government and Central Bank (ECA -7) - Claims on Other Multilateral Development Banks - Claims on Public Sector Entity (ECA 0-1) - Claims on Public Sector Entity (ECA 2) - Claims on Public Sector Entity (ECA 3-6) - Claims on Public Sector Entity (ECA 7) - Claims on domestic banks that meet capital adequacy requirements - Claims on domestic banks that do not meet capital adequacy requirements - Claims on foreign bank (ECA Rating 0-1) - Claims on foreign bank (ECA Rating 2) - Claims on foreign bank (ECA Rating 3-6) - Claims on foreign bank (ECA Rating 7) - Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement - Claims on Domestic Corporates 20,140,193 20,140,193 Claims on Foreign Corporates (ECA 0-1) - Claims on Foreign Corporates (ECA 2) - Claims on Foreign Corporates (ECA 3-6) - Claims on Foreign Corporates (ECA 7) - Regulatory Retail Portfolio (Not Overdue) 64,971,839 61,942, ,913,896 Claims Fullfilling all criterion of regulatory retail except granularity - - Claims secured by residential properties - - Claims not fully secured by residential properties - Claims secured by residential properties (Overdue) - Claims secured by Commercial real estate - Past due claims (except for claim secured by residential properties) - High Risk Claims 14,670, ,000 15,251,000 Investments in equity and other capital instruments of institutions listed in the stock exchange - Investments in equity and other capital instruments of institutions not listed in the stock exchange - Other Assets (as per attachment) - total 99,782,032-62,523, ,305,088 off balance sheet exposures Contd... Eligible Credit Risk Mitigants

63 Contd... Eligible Credit Risk Mitigants In Rs deposits Govt.& nrb G'tee of sec/g'tee of G'tee of deposits With other securities Govt. of other domestic G'tee of sec/g'tee of total credit exposures With bank banks/ Fi Gold nepal sovereigns banks mdbs ForeiGn banks a b c d e f g h i Forward Foreign Exchange Contract Liabilities - LC Commitments With Original Maturity Up to 6 months (domestic) 17,080,523 17,080,523 ECA Rating ECA Rating 2 - ECA Rating ECA Rating 7 - LC Commitments With Original Maturity Over 6 months (domestic) - ECA Rating ECA Rating 2 - ECA Rating ECA Rating 7 - Bid Bond, Performance Bond and Counter Guarantee Domestic Counterparty 27,762,657 27,762,657 ECA Rating ECA Rating 2 - ECA Rating ECA Rating 7 - Guarantee Invoked but yet not honoured - - Underwriting commitments - Lending of Bank's Securities or Posting of Securities as collateral - Repurchase Agreements, Assets sale with recourse (including repo/ reverse repo) - Advance Payment Guarantee 7,482,616 7,482,616 Financial Guarantee - Acceptances and Endorsements - Unpaid portion of Partly paid shares and Securities - Irrevocable Credit commitments (ShortTerm) - Irrevocable Credit commitments (LongTerm) - Other Contingent Liabilities 2,808,500 2,808,500 total 55,134, ,046, ,134,296 Grand total 154,916, ,569, ,439,384.45

64 62 SANIMA BANK LTD Risk Weighted Exposure For Operational Risk As on (Ashad end 2070) schedule 30(d) In Rs PArticulArs Previous YeArs From 2070 AshAd end Previous YeAr YeAr 1 (2066/67) YeAr 2 (2067/68) YeAr 3 (2068/69) Net Interest Income 216,346, ,456, ,583,608 Commission and Discount Income 3,908,315 4,949,150 11,251,196 Other Operating Income 30,740,447 34,805,648 44,618,555 Exchange Fluctuation Income 5,606, ,502 (175,238) Addition / Deduction Interest Suspense during the period 4,434,107 12,541,981 8,330,653 Gross income (a) 261,035, ,910, ,608,774 - Alfa (b) 15% 15% 15% Fixed Percentage of Gross Income [c=(a b)] 39,155,385 61,186,590 72,391,316 Capital Requirement for operational risk (d) (average of c) 57,577,764 41,476,819 Risk Weight (reciprocal of capital requirement of 10%) in times (e) equivalent risk Weight exposure [f=(d e)] 575,777, ,768,186 PillAr-ii AdJustments if Gross income for all the last three years is negative (6.4 a 8) Total Credit and Investment (net of Specific Provision) Capital Requirement for operational risk (5%) Risk Weight (reciprocal of capital requirement of 10%) in times Equivalent Risk Weight Exposure [g] equivalent risk Weight exposure [h=f+g] 575,777, ,768,186

65 ANNUAL REPORT 2012/13 63 Risk Weighted Exposure For Market Risk As on (Ashadh end 2070) schedule 30(e) In Rs current YeAr currency open Position open Position relevant open (FcY) (npr) Position Previous YeAr 1. INR 429,570, ,634, ,634,706 16,344, USD (25,776) (2,471,899) 2,471,899 3,072, EUR 34,720 4,332,750 4,332,750 45, GBP 16,995 2,452,868 2,452,868 2, CHF ,356 40, AUD 1, , , CAD 5, , , SGD JPY 155, , , YUN 2,000 31,310 31, SAR 2,400 61,488 61, QTR THB AED 3,080 80,573 80, MYR 16. SEK DKK HKD total open Position (a) 697,871,134 19,465,171 Fixed Percentage (b) 5% 5% capital charge for market risk [c=(a b)] 34,893, ,259 risk Weight (reciprocal of capital requirement of 10%) in times (d) equivalent risk Weight exposure [e=(c d)] 348,935,567 9,732,586

66 64 SANIMA BANK LTD Principal Indicators schedule 31 PArticulArs indicators FY 2065/66 FY 2066/67 FY 2067/68 FY 2068/69 FY 2069/70 1. Percent of Net Profit/Gross Income Percent Earning Per Share Rs Market Value Per Share Rs Price Earning Ratio Ratio Dividend (Including Bonus) on Share Capital Percent Cash Dividend on Share Capital Percent Interest Income/Loan & Advances Percent Staff Expenses/Total Operating Expenses Percent Interest Expenses / Total Deposit and Borrowing Percent Exchange Gain/Total Income Percent (0.01) Staff Bonus/Total Staff Expenses Percent Net Profit/Loan and Advances Percent Net Profit/Total Assets Percent Total Credit/Deposit Percent Total Operating Expenses/Total Assets Percent Adequacy of Capital Fund on Risk Weighted Assets a) Core Capital Percent % b) Supplementary Captial Percent % c) Total Capital Fund Percent % 17. Liquidity Percent Non-Performing Loan/Total Credit Percent Weighted Average Interest Rate Spread Percent Book Net-Worth Rs. 869,560, ,194,758 2,108,610,956 2,129,580,522 2,424,031, Total Number of Shares Nos. 7,667,658 8,064,000 20,160,000 20,160,000 20,160, Total Staff Nos Other

67 ANNUAL REPORT 2012/13 65 Significant Accounting Policies schedule GenerAl information Sanima Bank Limited ( The Bank ) is a limited liability company domiciled in Nepal. The address of its registered office is at Alkapuri Building, Naxal, Kathmandu, Nepal. The Bank has registered with the Office of the Company Registrar on 16 Ashad, 2061, obtained license from Nepal Rastra Bank on 11 Mangsir 2061 and came into operation from 21 Mangsir 2061 to conduct banking business in Nepal. The Bank is listed on Nepal Stock Exchange Limited. Furthermore, the bank has obtained license to operate as A class financial institution on 01 Falgun 2068 and started operation as A class financial institution w.e.f. 03 Falgun 2068 (i.e. upgraded to A class Financial Institution). The financial statements were authorized for issue by the Board of Directors and approved by the Central Bank of Nepal (Nepal Rastra Bank- NRB ). 2. summary of significant AccountinG Policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied throughout the period, unless otherwise stated. 3. statement of compliance The financial statements has been prepared in accordance with Nepal Accounting Standards ( NAS ) issued by the Nepal Accounting Standards Board except otherwise stated, Generally Accepted Accounting Principles ( GAAP ), Bank and Financial Institutions Act, 2063 ( BAFIA ) and other requirements of Directives, circulars and guidelines issued by NRB and in conformity with the Companies Act, Interest income on loans and advances is recognized on cash basis. Proposed Dividend and Extraordinary items (if any) are accounted for as required by NRB directive. 4. basis of PrePArAtion The financial statements are prepared under historical cost convention following accrual basis of accounting except otherwise stated. The preparation of financial statements in conformity with NAS and GAAP requires management to use certain critical accounting estimates. It also requires management to exercise judgment in process of developing and applying the Bank s accounting policies. The Management believes that estimates and policies so applied are reasonable in the circumstances of the cases. All the formats of the financial statements are in accordance with the NRB Directives. 5. interest income Interest income on loans and advances is recognized on cash basis as per the Nepal Rastra Bank Directive, although this practice is not in accordance with NAS - 7 (Revenue), which prescribes the revenue to be recognized on accrual basis. Interest income includes Rs 21,470,733 on loan and advance to National Priority Sector and is recognized as income by capitalizing the same under approval from Nepal Rastra Bank. Interest income on investments is accounted for on accrual basis. 6. commission income All the commission incomes are accounted for on accrual basis. However, it is the practice of the Bank to recognize income on cash basis up to Rs. 50,000 for service period of more than a financial year.

68 66 SANIMA BANK LTD 7. dividend income Dividend on equity shares will be recognized when the right to receive dividend is established. 8. ForeiGn exchange transactions Foreign currency transactions are recorded at the rate prevailing as on the date of transaction. Difference between buying and selling rates of Foreign Exchange, at the time of transaction, is accounted for as Trading Gain at the time of trading under Exchange Gain in Schedule - 22 Foreign currency assets and liabilities as on balance sheet date are translated into Nepalese Rupees at the mid exchange rate prevailing on the Balance Sheet date and any difference arising out of such transaction is recognized as Revaluation Gain. 25 percent of revaluation gain is transferred to Exchange Fluctuation Fund through Profit and Loss Appropriation Account as required by Nepal Rastra Bank Directives. 9. interest expense Interest on deposit liabilities and borrowings is accounted for on accrual basis. 10. loans And AdvAnces including bills PurchAsed Loans and advances, overdrafts and bills purchased include direct finance provided to customers. These include overdrafts, term loans, consumer loans etc. All credit exposures are subject to regular review and are graded according to the level of credit risk and are classified as per NRB Directives. Loans and advances, overdrafts and bills purchased are shown net of mandatory provisions as required by NRB Directives. 11. staff loans And AdvAnces Loans and advances granted to staff are shown under other assets Schedule loan loss Provision The provision for possible losses on loans, advances and bills purchased are provided at the rates between 1 percent to 100 percent according to classification of such risk assets as per Nepal Rastra Bank Directives. 13. Write off Unrecoverable loans and advances are written off in accordance with the write off By-laws approved by the Board of Directors and NRB, without prejudice to Bank s right to recover such loans and advances. 14. recovery of loan And interest Loan is recovered in the sequence of penal, interest and principal. 15. investments Investments are classified as held for trading, held to maturity and available for sale. a. held for trading : Investments that are made for the purpose of generating profit from short term fluctuations in price are classified under this category. These investments are marked to market on a daily basis and difference is reflected in the profit and loss account. b. held to maturity: The investments made with positive intent and ability of the Bank to hold till maturity is classified as held to maturity investments. The held to maturity investments are valued at amortized cost i.e. the cost price less any impairments (if applicable). The impairments are included in the profit and loss accounts for the period. Bonds are accounted for at cost including the unamortized bond premium.

69 ANNUAL REPORT 2012/13 67 c. Available for sale: All other investments that are neither held for trading nor held to maturity are classified under this category. These investments are marked to market on a regular basis and the difference is adjusted through reserves. All Investments are subject to regular review as required by Nepal Rastra Bank Directives. 2% of investment classified as Available for Sale is maintained as Investment Adjustment Reserve as required by NRB directive. Outstanding investment made in Capital Merchant Bank of Rs. 422,838 was matured last year and susceptible for recovery; therefore, such investment is shown in available for sale. 16. Fixed Assets And depreciation a. Fixed assets are stated at cost less accumulated depreciation and impairment losses. b. Assets with a value less than Rs. 5,000 are charged off as a revenue expense irrespective of its useful life in the year of purchase. c. Depreciation of fixed assets is calculated following the Diminishing Balance Method applying the rate as prescribed by Income Tax Act, d. Lease hold improvements are capitalized at cost and amortized over the lease periods or ten years whichever is earlier. The amount of amortization is charged to Profit and Loss Account. e. Depreciation on assets addition during the year shall be charged from date of purchase or put to use whichever is earlier. 17. non-banking Assets (nba) Non-Banking Assets is valued at lower of loan amount or fair market value of the assets acquired. Provisions for NBA will be made in accordance with the Nepal Rastra Bank Directives. 18. other Assets Other assets are shown net of other liabilities when party is same and bank has legal right to set off. 19. software expenses Acquired computer software licenses are capitalized on the basis of cost incurred to acquire and bring to use the specific software. The costs are amortized over their estimated useful lives which is considered 5 years. 20. deferred revenue expenditure Bank has a policy to recognize expenses having benefit of more than 1 year as deferred revenue expenditure and amortize same within a period of useful life or in 5 years if no specific useful life is mentioned 21. employee benefits a. Provident fund: Provident fund contribution is recognized as expenses and deposited into the approved retirement fund (Employee Provident Fund Office). b. Accumulated leave : Accumulated leave payable to staff is recognized on accrual basis as per the Employee Service Regulation of the Bank. c. Gratuity: Gratuity liability of staff is accrued only after completion of a fixed period of full time employment with the Bank in accordance with the Employee Service Regulation and is not funded. 22. stationery stock Stationery stock at the year end is accounted for at cost. For the purpose of valuation of the same FIFO method has been applied.

70 68 SANIMA BANK LTD 23. Provisions, contingent liabilities And contingent Assets The Bank creates a provision when there is a present obligation of the entity arising from past events, the settlements of which is expected to result in an outflow from the entity of resources embodying economic benefits and a reliable estimate can be made of the amount of the obligation. A disclosure for contingent liability is made when there is a present obligation that may or may not, require an outflow of resources. When there is a possible obligation or present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made in the financial statement. Contingent liabilities are shown in Schedule 17 Contingent assets are not recognized in the financial statements. However, contingent assets are assessed continually and if it is virtually certain that an economic benefit will arise, the assets and related income are recognized in the period in which the change occurs. 24. income tax Provision for income tax has been made on the basis of the Income Tax Act, 2058 and amendments thereto. 25. deferred tax Deferred taxes are accounted using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement s carrying amounts of existing assets and liabilities, and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled based on the laws that have been enacted or subsequently enacted by the reporting date. Deferred tax assets arising from temporary difference and unused tax losses are recognized to the extent there is virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realized (according to NAS- 09 Income Taxes ). 26. rounding off The Financial Statements are presented in Nepalese Rupees rounded to the nearest Rupee. Previous year amount has been regrouped/reclassified, wherever necessary to facilitate comparison.

71 ANNUAL REPORT 2012/13 69 Notes to Accounts schedule Provision For staff bonus Staff bonus has been calculated and provided at 10 percent of net profit, after making adjustment for loan loss provision and bonus. 2. staff housing Fund No staff housing fund has been created by the Bank as required under the Labour Act, However the Bank has provided housing loan facility to its employee as per employee service regulation of the Bank. 3. GenerAl reserve 20 percent of the net profit is transferred to General Reserves as per the requirement of BAFIA ProPosed bonus share And cash dividend Bonus share is provided at 10% and cash dividend % (i.e. Rs. 10,610,526) of Paid up Capital as proposed by the Board of Directors which is pending approval by NRB and Annual General Meeting. 5. unpaid dividend As on balance sheet date total dividend payable amounts to Rs. 12,580, of which no amount is unpaid over five years. 6. reconciliation status The Bank has carried out the reconciliation between Inter Branch Transactions on daily basis. However reconciliation of the local and foreign bank and financial institution accounts has been done on weekly/ fortnightly/ monthly basis. The difference has been identified, reviewed and reconciled and same has been or will be adjusted in due course of business. Rs 000 reconciliation status total Amount < 3 months >3<9 months >9 months Branch Reconciliation Agency Accounts 49,989 48,228 1,

72 70 SANIMA BANK LTD 7. summary of loans And AdvAnces disbursed, recovered And PrinciPAl And interest Written-oFF: Rs 000 PArticulArs Amount (rs.) Opening Balance 9,640,000 Loans Disbursed 19,289,000 Loans Recovered 13,681,000 Principal Written off - Interest Written off - closing outstanding 15,248, summary status of the deposit liabilities Rs 000 PArticulArs current YeAr Previous YeAr change rs. nrs. nrs. Current Deposit 540, , ,245 Margin Deposit 57,482 21,925 35,557 Saving Deposit 4,280,071 3,554, ,184 Call Deposit 3,668,482 1,775,348 1,893,134 Fixed Deposit 9,096,185 5,453,988 3,642,197 total 17,643,051 11,178,734 6,464, WeiGhted AverAGe interest rate spread PArticulArs rate (%) Average Rate of Return on LCY Earning Assets Average Rate on LCY Deposits and Borrowings 7.24 Net Spread PArticulArs of expenses Yet to be expensed-off Rs 000 PArticulArs capitalized Amortized balance Amount during the YeAr Amount Computer Software 9,283, ,613, ,669, Deferred Revenue Exp. 1,403, , ,081, total 10,686, ,934, ,751,697.54

73 ANNUAL REPORT 2012/ summary of concentration of exposure Funded and non-funded facilities and sector wise loans are within the limits prescribed by NRB Directives. Summary of concentration of exposures: Rs 000 PArticulArs loans & deposit & contingent AdvAnces borrowings liabilities Total Amount As On ( ) 15,248,175 19,308,671 1,073,846 Highest Exposure To Single Party 470,964 1,668,000 79,718 Highest Exposures To Single Party (in percentage) 3% 9% 7.42% 12. PAid up share capital Paid up share capital of the bank has been changed from year to year as follows: Rs 000 FinAnciAl YeAr PAid up share capital (rs.) remarks 2061/62 224,000,000 Opening Share Capital 2062/63 224,000, /64 320,000,000 Issue of 30% public shares. 2064/65 384,000,000 Issue of 5:1 right shares. 2065/66 805,165,800 Issue of 1:1 right and 5% bonus shares after issue of right. 2066/67 806,400,000 Public sale of 12,342 no. of unsubscribed right shares. 2067/68 2,016,000,000 Issue of 1:1.5 right shares. 2068/69 2,016,000, /70 2,217,600,000 10% Proposed bonus shares included 13. earnings Per share, share Price And share transaction Earnings Per Share is calculated and disclosed as per NAS 26 as follows Rs 000 PArticulArs basic earnings Per share diluted earnings Per share** Net profit attributable to equity shareholders (Rs.) 305,061, ,061,132 Weighted average number of shares outstanding (No.) 20,160,000 20,160,000 Earnings Per Share (Rs.) *Since the bank has not issued preference share and debentures/bonds, basic earnings per share and diluted earnings per share are same. The closing price of the share was Rs. 260.

74 72 SANIMA BANK LTD 14. classification of Assets And liabilities based on maturity Rs. in lacs s. n PArticulArs 1-90 days days days days over 1 YeAr total Assets 1. Cash Balance 3,130 3, Balance With Banks And Financial Institutions 13,725 13, Investment In Foreign Banks 6, ,439-7, Call Money Nepal Government Securities 10,756 6,375-16, , Nepal Rastra Bank Bonds Inter Bank/ Financial Institution Lending Loans And Advances 37,844 18,525 28,293 9,634 58, , Others 12,673 12,673 total Assets 83,693 24,900 28,293 27,597 59, ,488 liabilities 10. Current Deposits 390 5,638 6, Saving Deposits 38,164 7,876 12,119 20,604 1,073 79, Fixed Deposits 16,960 15,869 22,527 26,586 10,479 92, Debentures Borrowing 9,410 4, , Other Liabilities 14, ,476 total liabilities 79,866 29,051 35,187 47,310 17, ,604 Net Financial Assets 3,828 (4,151) (6,894) (19,714) 41,815 14,884 cumulative total Assets (5,123) (323) (7,218) (26,931) 14, details of non banking Assets The Bank has not taken possession of any assets taken as security against the loans and advances. 16. details of lease hold Assets AmortizAtion Rs 000 cost Price Amortized Amortized total net book up to last YeAr during the YeAr Amortized Amount value 62,846 17,420 4,987 22,407 40,439

75 ANNUAL REPORT 2012/ Fixed Assets used by Government For road expansion Government used total area ( Ana) of the Bank with original cost Rs. 14,323,404 for road expansion in front of its Alkapuri Building, Naxal, Kathmandu. The Bank has lodged a claim of Rs 28,000,000 on 7th Ashoj 2069 with Kathmandu Valley Development Authority for compensation. They are not account for. 18. detail of deferred revenue expenditure: The amortize expenses on deferred revenue expenditure and computer software is included in depreciation. 19. tax liability reconciliation Reconciliation of profit as per financial statement is reconciled with taxable profit to compute tax liability as follows: Rs 000 PArticulArs Amount Profit before tax as per Profit & loss Account 437,440 Add: Adjustments for Office equipment non capitalized 359 total 437,799 less: Adjustments for Provision for Investment(Tax Paid Last Year) 7,149 total 7,149 taxable Profit as per income tax Act, ,651 corporate income 30% 129, deferred tax Assets/ (liability) Deferred tax assets and liabilities have been computed in accordance with NAS - 9, Income Taxes from 15 July 2013 and are attributable to the following Rs 000 PArticulArs As Per books of Accounts tax base temporary difference Fixed Assets 257, ,798 12,625 Leasehold Assets & Software 48,191 46,299 1,892 Staff Gratuity (8,678) - (8,678) Provision For Staff Leave (8,678) - (8,678) net temporary differences (2,839) deferred tax liability/ (Asset) As At 15 July 30 percent (852) Deferred Tax Liability/ (Asset) Till 15 July 2012 (505) Deferred Tax Expense/ (Income) For Current Year (347)

76 74 SANIMA BANK LTD 21. Provision For GrAtuitY The Bank has provided for future payment of gratuity liability in full as per employee service regulation. As per Employee Service Regulation of SANIMA, in respect of employees who have completed 3 years of service and an additional provision of Rs. 4,408,650 has been made during the year. 22. Provision for Income Tax includes additional tax liability of Rs. 131,899,123 pertaining to FY 2069/70 and the total amount has been charged to Profit and Loss Account. 23. related PArties The Bank has entered into financial transactions with the following related parties where directors have financial interest. Rs 000 related PArtY nature of transaction current YeAr Previous YeAr Kantipur Television Pvt. Ltd Deposit Loan - - Medicare Hospital & Research Centre Pvt. Ltd Deposit 26,792 25,548 Sanima Hydro & Engineering Pvt. Ltd. Deposit 6,973 7,230 Sanima Life Insurance Company Ltd** Deposit 2,405 2,320 Sanima Insurance Company Ltd** Deposit Sanima Foundation Deposit Sanima Mai Hydro Power Ltd Deposit 17,923 69,245 Sanima Pvt. Ltd Deposit 1,727 1,204 Tamor Sanima Energy Pvt. Ltd. Deposit Khumbu Carpet Industries Deposit Sopan Multiple Deposit 12 Fund for Hydro Investment Deposit 1,441 1,510 Sanima Hydro Power Pvt. Ltd Deposit 295 Sanima Hydro Group Rental income 2, **Pending grant of license from Insurance Board the Companies have yet to commence operation The promoters have obtained the following advances from the Bank against the collateral of their fixed deposit maintained with the Bank: Rs 000 PArticulArs Amount outstanding As of 15 JulY 2012 Loan to Promoter Shareholders 14,670

77 ANNUAL REPORT 2012/ Total of key management personnel compensation (Disclosure as per NAS-16): Rs 000 details of chief executive other key key management officer management Personnel remarks Short Term Employee Benefits 7,929 12,159 Other Key Management Personnel Include Deputy Chief Executive officer and other management team of manager level & above Post Employment Benefits This Includes Provident Fund Contribution. Terminal Benefits 5,414 4,774 The Bank Has A Policy Of Payment Of Gratuity And Leave Encashment. Refer Note 21 And 27. Share Based Payments Nil Nil Other Long Term Benefits Nil Nil Additional information: a. Key management personnel are also eligible for the following benefits: 1. Benefits as per Employee Service Regulation of the Bank. 2. Bonus out of profit as per Bonus Act. 3. Housing loans and advances as per Housing Loan Scheme of the Bank. 4. Chief Executive Officer is entitled to the use of Bank s car. b. The Board of Directors was paid Rs. 721,000 meeting fee during the year. 24. operating lease commitment The Bank has taken various properties on cancellable long term lease. Since the Bank possesses the right to terminate the said lease before its maturity by giving a notice of specified period, the future liability the Bank is limited to lease payable for notice period only. 25. staff leave The Bank has accounted for staff leave liability to its confirmed employees on accrual basis. Total leave liability as on 15 July 2013 is Rs. 8,677,904. Bank has paid Rs. 2,956,286 as leave encashment to existing and to those staffs who resigned during FY 2012/13. Similarly, an additional provision of Rs. 619,000 has been made for staff leave liability which is charged to the profit and loss account.

78 76 SANIMA BANK LTD Capital Adequacy Disclosure 1. core capital And its components PArticulArs rs. a. Paid Up Equity Share Capital 2,016,000,000 b. Proposed Bonus Equity Share 201,600,000 c. Statutory General Reserve 154,964,717 d. Retained Earnings 27,037,095 e. Share Premium 10,563,747 f. Deffered Tax Reserve 851,802 g. Proposed Bonus Equity Share h. Un-audited Current year Cumulative Profit i. Less: Miscellaneous Expenditure not written off 1,081,816 j. Less: Investment in equity in licensed Financial Institutions 10,355,000 Adjustment under Pillar ii Less: Loans and Facilities extended to Related Parties and Restricted lending (6.4 a 2) core capital (tier 1) 2,399,580, supplementary capital And its components description rs. a. General Loan Loss Provision 152,440,391 b. Exchange Equalization Reserve 2,658,767 c. Investment Adjustment Reserve 10,355,000 supplementary capital (tier 2) 165,454,159 Detailed information about the term debts with information on the outstanding amount, maturity, and amount raised during the year and amount eligible to be reckoned as capital fund. NIL Deduction from Capital NIL 3. total qualifying capital PArticulArs rs. a. Core Capital (tier 1) 2,399,580,545 b. Supplementary Capital (tier 2) 165,454,159 total capital Fund (tier 1 & 2) 2,565,034,704 Capital Adequacy Ratio 14.87% Summary of the bank's internal approach to assess the adequacy of its capital to support current and future activities

79 ANNUAL REPORT 2012/13 77 The existing paid up capital of the Bank is NPR. 2,016,000,000 and Proposed bonus equity share is Rs. 201,600,000 and it is adopting simplified approach to assess the capital adequacy as specified by Nepal Rastra Bank. Summary of the terms, conditions and main features of all capital instruments, especially in case of subordinated term debts including hybrid capital instrument. All the capital of the banks are unconditional. The bank does not have any subordinated term debts. 4. risk WeiGhted exposure risk WeiGhted exposure rs. a. Risk Weighted Exposure for Credit Risk 15,989,208,846 b. Risk Weighted Exposure for Operational Risk 575,777,637 c. Risk Weighted Exposure for Market Risk 348,935,567 Adjustment Under Pillar II Add: 2% of the total RWE due to not sound risk management practice Requirement (6.4 a 9) 338,278,441 total risk Weighted exposures (after bank's adjustments of Pillar ii) 17,252,200, risk WeiGhted exposures under each of 11 categories of credit risk risk WeiGhted exposure rs. a. Claims on Government and Central Bank - b. Claims on Other Official Entities 2,865,000 c. Claims on Banks 260,599,072 d. Claims on Corporate and Securities Firms 9,259,557,462 e. Claims on Regulatory Retail Portfolio 2,723,016,314 f. Claims secured by residential properties 456,303,741 g. Claims secured by Commercial Real Estate 301,039,780 h. Past Due Claims 74,584,559 i. High Risk Claims 1,068,672,155 j. Other Assets 832,509,254 k. Off Balance Sheet Items 1,010,061,510 total risk Weighted Assets on credit 15,989,208, Amount of non-performing Assets (both Gross And net) loan classification Gross Amount Provision Amount net npa a. Restructured/Rescheduled loan b. Substandard Loan 2,806, ,701 2,105,102 c. Doubtful Loan d. Loss Loan 1,328,779 1,328,779 - total 4,135,581 2,030,479 2,105,102

80 78 SANIMA BANK LTD 7. npa ratio PArticulArs rs. Gross NPA to Gross Loan 0.03% Net NPA to Net Loan 0.03% 8. movement of nonperforming Assets Nonperforming assets up to previous Year was Rs. 46,137,366. This year the same has been decreased to NPR 4,135, movement of non PerForminG Assets loan classification AshAdh 069 AshAdh 070 movement a. Restructured/Rescheduled loan b. Substandard Loan 42,792, ,806, % c. Doubtful Loan 1,858, % d. Loss Loan 1,487, ,328, % 10. Write off of loans And interest suspense nil 11. movement in loan loss Provisions And interest suspense Loan loss provision and interest suspense up to previously Year was NPR 9,641,286,449 and NPR 30,620,667 respectively. In this year, Loan Loss Provision has been increased to NPR 15,248,174,730 and Interest Suspense has also been increased to NPR 30,992,138. movement in loan loss Provision loan classification AshAdh 069 AshAdh 070 movement a. Pass Loan 9,595,149,083 15,244,039, % b. Restructured/Rescheduled loan c. Substandard Loan 42,792,010 2,806, % d. Doubtful Loan 1,858, % e. Loss Loan 1,487,149 1,328, % total 9,641,286,449 15,248,174,730 movement in interest suspense PArticulAr AshAdh 069 AshAdh 070 movement a. Interest Suspense 30,620,667 30,992, % 12. Write off loan & interest suspense upto AshAdh end 2070: nil 13. detail of AdditionAl loan loss Provisions No additional loan loss provision made for Substandard Loan, Doubtful Loan & Loss Loan respectively. 14. segregation of investment PortFolio into held For trading, held to maturity And AvAilAble For sale category Out of total investment, NPR 3,835,394,834 is held to maturity category and NPR 13,080,438 are categorized as available for sale.

81 ANNUAL REPORT 2012/ risk management Function Risk management objective and policies in the area of credit, market and operational risk including following: Strategies and process; The structure and organization of the relevant risk management functions; The scope and nature of risk reporting and /or measurement systems; and Policies for hedging and/or mitigating risk and strategies, and processes for monitoring the continuing effectiveness of hedges/ mitigates risk management objective And Policies credit risk Credit risk management of the bank is focused on the inherent risk associated with the credit and the possibility of the non recovery of credit due to such risk and evaluating and minimizing such possibility of non- recovery. Relevant policy and processes are mentioned in the credit policy guidelines prepared by the bank and disseminated to concerned employees of the bank. Credit policy guideline discourages providing credit merely on the basis of reputation of the borrower and the practice of the competitor bank. credit policy guidelines also mention the high risk area and risk management guidelines. credit policy guidelines give emphasis on following area: Risk assessment: purpose of risk assessment is to determine the customer s ability to meet his obligation and inherent risk associated with the credit and minimizing such risk. risk grading: The bank classifies customer according to creditworthiness to focus attention on customer requiring increased supervision and remedial action. credit approval: Dual credit approval system is adopted in which credit recommended by sales person shall be independently assess risk by credit department and approved accordingly. Assets writing strategies: The bank has framed assets writing strategy within the broad framework of Credit Policy Guideline of the bank. The assets writing strategy of the bank has laid down the acceptance criteria for bank's business by setting country level risk triggers, containment actions, portfolio target and overall risk management strategy. market risk : The bank has Assets Liability Management Committee which periodically reviews the change in liquidity, interest rate and foreign exchange rates and impact of such changes and functions to minimize the risk arising out of such changes as well as investment function. Bank always tries to minimize foreign exchange risk exposure by squaring position of the foreign exchange on daily basis as far as possible. operational risk To minimize the operational risk the bank has prepared and implemented various procedures, guidelines and directives. Some of them are as follows: The bank has strong MIS system which helps to provide greater control over the day to day activities of the bank. Dual control system mechanism is adopted for recording every transaction Authority level of the each employees has been defined Executive committee meeting of the bank is conducted periodically to find out operational risk and minimize such risk. The bank has independent Internal Audit and Compliance department respectively which conduct the audit of activities performed by the various departments. Bank has an operational manual which helps to control day to day operational activities. Bank also adopted KYC guidelines. Type of eligible credit risk mitigates used and benefit obtained Credit risk mitigates used by the bank is deposit of the borrower within the bank, Government securities, Gold, cash margin and deposit with other banks and financial institutions having supervisory haircut of 20% for capital adequacy. Such mitigates has minimum impact on the capital adequacy of the bank.

82 80 SANIMA BANK LTD Schedule 34 Statements of Loans taken by promoters/ promoter group shareholders by pledging their promoter shares as collateral in other financial institutions As at 31 Ashad 2070 (15 July 2013) name of Promoters/Promoter share in the name of Promoter loan details remarks GrouP shareholders total number of PercentAGe to name of lending loan Amount number of shares shares total PAid up banks /FinAnciAl PledGed As capital institutions collateral 1. Saroswoti Bhattrai 45, NIC Asia Bank Limited 45, Jai Ganesh Investment Ltd 550, NMB Bank Limited 102, Ganesh Kumar Agrawal 11, Yeti Development Bank 1,698,940 11, Birendra Prasad Mahato 688, Janata Bank Limited 330, Jamuna Bhandari 16, Prabhu Bikas Bank 1,500,000 16, Dinesh Mani Shrestha 240, Global IME Bank Limited 6,700,000 87, Jai Ganesh Investment Ltd 550, ICFC Finance Limited 15,678, , Dilip Shrestha 238, ,812, , Ghanashyam Thapa 733, Machhapuchchhre Bank Limited 27,874, , Dinesh Mani Shrestha 240, ,000, , Anamika Shrestha 55, ,083

83 Comparison of Unaudited and Audited Financial Statement as of Fiscal Year 2069/70 (2012/2013) schedule 35 As on (Ashadh end 2070) Figures in Rs '000 As Per unaudited As Per Audited variance. PArticulArs FinAnciAl FinAnciAl in Amount in % reasons For variance statement statement 1. total capital and liabilities (1.1 to 1.7) 21,976,068 21,976, Paid Up Capital 2,016,000 2,217, , Reserve and Surplus 418, ,431 (212,099) (50.68) As per proposed bonus and cash dividend 1.3. Debenture and Bond Borrowings 1,480,126 1,480, Deposits (a+b) 17,782,716 17,789,329 6, a. Domestic Currency 17,597,223 17,597,223 (0) (0.00) b. Foreign Currency 185, ,156 (338) (0.18) 1.6. Proposed and Payable Dividend - 10,611 10,611 - As per proposed cash dividend 1.7. Income Tax Liability Other Liabilities 278, ,444 (6,252) (2.24) Regrouping some items 2. total Assets (2.1 to 2.7) 21,976,068 21,976, Cash & Bank Balance 1,685,501 1,685,501 (0) (0.00) 2.2. Money at Call and Short Notice 364, , Investments 3,848,052 3,848, Loans and Advances 15,093,073 15,093, a. Real Estate Loan 904, , Residential Real Estate Loan (Except Personal Home Loan up to Rs. 80 lacs) 202, , Business Complex & Residential Apartment Construction Loan 127, , Income Generating Commercial Complex Loan Other Real Estate Loan (Including Land Purchase and Plotting) 575, ,304 - b. Personal Home Loan of Rs. 80 Lacs or Less 797, ,179 - c. Margin Type Loan 43,841 43, d. Term Loan 2,620,056 2,620, e. Overdraft Loan/TR Loan/WC Loan 6,660,191 6,660,191 - f. Others 4,067,147 4,067, Fixed Assets 469, , Regrouping some item 2.6. Non Banking Assets Other Assets 515, , Profit and loss Account 3.1. Interest Income 1,678,790 1,678, Interest Expense 1,023,257 1,023,257 (0) (0.00) A. net interest income ( ) 655, ,532 (0) (0.00) 3.3. Fees, Commission and Discount 23,668 23, Other Operating Income 71,451 68,853 (2,598) (3.64) Regrouping CICL income 3.5. Foreign Exchange Gain/Loss (Net) 27,237 27, b. total operating income (A ) 777, ,291 2, Staff Expenses 99,776 99, Other Operating Expenses 161, ,730 (2,339) (1.45) Regrouping CICL expenses c. operating Profit before Provision (b ) 517, , Provision for Possible Losses 57,846 57, d. operating Profit (c.-3.8) 459, , Non Operating Income/Expenses (Net) 2,571 2, Write Back of Provision For Possible Loss 19,675 19, e. Profit from regular Activities (d ) 481, , Extraordinary Income/Expenses (Net) F. Profit before bonus and taxes (e ) 481, , Provision for Staff Bonus 43,768 43,744 (23) (0.05) Provision For Tax 132, ,379 (346) (0.26) Deffered tax calculation G. net Profit/(loss) (F ) 304, ,

84 82 SANIMA BANK LTD Unaudited Financial Results (Quarterly) As at 4th quarter ( 31st Ashad 2070) of the Fiscal Year 2069/70 schedule (a) In Rs PArticulArs As At 15th JulY th APril th JulY total capital and liabilities (1.1 to 1.7) 21,976,068 20,421,415 13,722, Paid Up Capital 2,016,000 2,016,000 2,016, Reserve and Surplus 418, , , Debenture and Bond Borrowings 1,480,126 1,511,028 88, Deposits (a+b) 17,782,716 16,178,206 11,178,734 a. Domestic Currency 17,597,223 15,974,433 11,126,467 b. Foreign Currency 185, ,773 52, Income Tax Liability Other Liabilities 278, , ,901 2 total Assets (2.1 to 2.7) 21,976,068 20,421,415 13,722, Cash & Bank Balance 1,685,501 2,499,674 1,373, Money at Call and Short Notice 364, Investments 3,848,052 2,498,682 2,105, Loans and Advances(Net) 15,093,073 14,201,738 9,531,505 a. Real Estate Loan 904, ,930 1,068, Residential Real Estate Loan (Except Personal Home Loan up to Rs. 100 lacs) 202, , , Business Complex & Residential Apartment Construction Loan 127,243 83,273 61, Income Generating Commercial Complex Loan - 4. Other Real Estate Loan (Including Land Purchase and Plotting) 575, , ,866 b. Personal Home Loan of Rs. 100 Lacs or Less 797, , ,822 c. Margin Type Loan 43,841 54, ,978 d. Term Loan 2,620,056 2,269,092 1,523,582 e. Overdraft Loan/TR Loan/WC Loan 6,660,191 6,531,422 4,042,081 f. Others 4,067,147 3,720,445 2,304, Fixed Assets 469, , , Non Banking Assets Other Assets 515, , , Profit and loss Account 4 quarters 3 quarters 4 quarters this Year this Year last Year 3.1. Interest Income 1,678,790 1,186,163 1,172, Interest Expense 1,023, , ,617 A. net interest income ( ) 655, , ,584

85 ANNUAL REPORT 2012/13 83 Contd...Unaudited Financial Results (Quarterly) 3.3. Fees, Commission and Discount 23,668 15,036 11, Other Operating Income 71,451 57,999 44, Foreign Exchange Gain/Loss (Net) 27,237 17,288 (175) b. total operating income (A ) 777, , , Staff Expenses 99,776 76,938 79, Other Operating Expenses 161, , ,864 c. operating Profit before Provision (b ) 517, , , Provision for Possible Losses 57,846 49,532 52,493 d. operating Profit (c.-3.8) 459, , , Non Operating Income/Expenses (Net) 2,571 1, Write Back of Provision For Possible Loss 19,675 19,591 - e. Profit from regular Activities (d ) 481, , , Extraordaniry Income/Expenses (Net) F. Profit before bonus and taxes (e ) 481, , , Provision for Staff Bonus 43,768 30,418 17, Provision For Tax 132,726 92,641 51,515 G. net Profit/(loss) (F ) 304, , , ratios As at 15th July th April th July Capital Fund to RWA (%) Non Performing Loan (NPL) to Total Loan (%) Total Loan Loss Provision to Total NPL (%) 3, , Cost of Fund after CRR (LCY) (%) Credit To Deposit Ratio (Calculated as per NRB Directives) (%) Base Rate (%)

86 84 SANIMA BANK LTD B R A N C H L I S T 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 - binod thapa 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 - naresh Pradhan Gongabu, ward No- 4 'Ga', Kathmandu Phone: , Fax: chapagaun branch manager - kishan khadka Chapagaun, ward No-4, Lalitpur Phone: , Fax: kalanki branch manager - satya kc Kalanki, ward No-14, Kathmandu Phone: , Fax: myanglung branch manager - suvash dhungana Bich Bazar, Myanglung-1, Terathum Phone: Fax: nepalgunj branch manager - Ankit khanal Dhamboji Chowk, Nepalgunj-1 Phone: Fax: khadbari branch manager - sanjay dewan Khandbari, Sankhhuwasabha Phone: Fax: biratnagar branch manager - Anish Pyakurel HanumanDas Road Biratnagar-8 Phone: ,521901/3 Fax: naubise branch manager - bhola raj Panta Sim Bazaar, Naubise-7 Dhading Phone: Fax: birgunj branch manager - kabindra Pal Link Road, Birgunj-10, Parsa Phone: /86, Fax: butwal branch manager - niraj simkhada Amarpath, Butwal-8, Rupandehi Phone: /98 Fax: new baneshwor branch manager - bishal dahal New Baneshwor, Kathmandu Phone: Fax: teku branch manager - Priti singh Teku, Kathmandu Phone: /9 Fax: hetauda branch manager - rameshwar khatiwada Parijat Path-4,Hetauda, Makwanpur Phone: / Fax: dhangadi branch manager - sajan shrestha Dhangadi-3,Kailali Phone: /82 Fax: Ghorahi branch manager - dilip kumar rana Ghorahi-11,Dang Phone: Fax:

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