Sanima Bank Limited Balance Sheet as on July 16, 2014 (Ashadh 32, 2071)

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4 Sanima Bank Limited Balance Sheet as on July 16, 2014 (Ashadh 32, 2071) Capital & Liabilities Schedule Current Year Rs. Previous Year Rs. 1 Share Capital 1 2,550,240,000 2,217,600,000 2 Reserves and Funds 2 283,157, ,431,128 3 Debentures and Bonds 3 4 Borrowings 4 898,267,865 1,480,125,530 5 Deposit Liabilities 5 24,873,849,358 17,789,328,915 6 Bills Payables 6 7 Proposed Cash Dividend 17,507,368 10,610,526 8 Income Tax Liabilities 9 Other Liabilities 7 753,964, ,443,653 Total Capital Liabilities 29,376,985,784 21,976,539,752 Assets Schedule Current Year Rs. Previous Year Rs. 1 Cash Balance 8 538,387, ,962,006 2 Balance with NRB 9 2,811,039,229 1,283,546,348 3 Balance with Banks/Financial Institutions ,487,861 88,992,327 4 Money at Call and Short Notice ,420,000 5 Investments 12 3,715,502,824 3,848,052,434 6 Loans Advances and Bills Purchase 13 20,371,443,968 15,093,072,849 7 Fixed Assets ,235, ,488,826 8 Non-Banking Assets 15 9 Other Assets 16 1,275,888, ,004,961 Total Assets 29,376,985,784 21,976,539,752 Contingent Liabilities Directors' Declaration Statement of Capital Fund Statement of Risk Weighted Assets Principal Indicators Principle Accounting Policies Notes to Accounts Statement of Loan taken by Promotors Comparision Between Unaudited and Audited Financials Unaudited Financial Highlights certified by Internal Auditor Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule Schedule (Ka 1) 30 (Kha, Ga, Gha, Nga) (A) Schedules 1 to 17, 32, 33, 34 & 35 form integral parts of the Balance Sheet. Saroj Guragain Bhuvan Dahal Binaya Kumar Shrestha Chief Financial Officer Chief Executive Officer Chairman As per our report of even date Tuk Prasad Poudel Director Subarna Das Shrestha Director Shashi Satyal Managing Partner Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co. Director Director Director Chartered Accountants Date : 3rd Sep 2014 (18 Bhadra 2071) Place : Kathmandu

5 Sanima Bank Limited Profit and Loss Account For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedules Current Year Rs. Previous Year Rs. 1. Interest Income 18 2,018,505,630 1,678,789, Interest Expenses 19 1,199,787,864 1,023,257,441 Net Interest Income 818,717, ,532, Commission and Discount 20 39,824,742 23,667, Other Operating Income 21 85,437,840 68,853, Exchange Fluctuation Income ,889,410 27,237,310 Total Operating Income 1,090,869, ,291, Employees Expenses ,381,010 99,776, Other Overhead Expenses ,382, ,730, Exchange Fluctuation Loss 22 Operating Profit Before Provision for Possible Loss 750,106, ,784, Provision for Possible Losses 25 95,212,477 57,846,414 Operating Profit 654,893, ,938, Non-operating Income/Expenses 26 21,565,934 2,571, Provision Written-Back 27 1,527,112 19,675,442 Profit from Regular Operations 677,986, ,184, Profit/Loss from extra-ordinary activities 28 (308,370) - Net Profit after considering all activities 677,678, ,184, Provision For Staff Bonus 61,607,146 43,744, Provision For Income Tax 188,475, ,379,358 This Year's 183,428, ,195,320 Previous Year's 1,774,809 3,530,994 Deferred Tax Expense/(Income) 3,272,948 (346,955) Net Profit/(Loss) 427,595, ,061,132 Schedule No. 18 to 28, 32, 33, 34 & 35 form integral part of this Profit and Loss Account. Saroj Guragain Bhuvan Dahal Binaya Kumar Shrestha Chief Financial Officer Chief Executive Officer Chairman As per our report of even date Tuk Prasad Poudel Director Subarna Das Shrestha Director Shashi Satyal Managing Partner Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co. Director Director Director Chartered Accountants Date : 3rd Sep 2014 (18 Bhadra 2071)

6 Sanima Bank Limited Profit and Loss Appropriation Account For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedules Current Year Rs. Previous Year Rs. Income 1 Accumulated Profit up to the Last Year(Restated) 27,166,558 6,203,685 2 Current Year's Profit 427,595, ,061,132 3 Exchange Fluctuation Fund Total (A) 454,762, ,264,817 Expenses 1 Accumulated Loss up to the Last Year 2 This Year's Loss 3 General Reserve 85,535,283 61,012,226 4 Contingent Reserve 5 Institutional Development Fund 6 Dividend Equalization Fund 7 Employee Related Reserves Funds 8 Proposed Dividend 17,507,368 10,610,526 9 Proposed Issue of Bonus Shares 332,640, ,600, Special Reserve Fund 11 Exchange Fluctuation Fund 539, , Capital Redemption Reserve Fund 13 Capital Adjustment Fund 14 Deferred Tax Reserve - 346, Investment Adjustment Reserve (9,800,000) 9,800,000 Total (B) 426,422, ,227, Accumulated Profit/(Loss) (A-B) 28,339,535 27,037,095 Saroj Guragain Bhuvan Dahal Binaya Kumar Shrestha Chief Financial Officer Chief Executive Officer Chairman As per our report of even date Tuk Prasad Poudel Director Subarna Das Shrestha Director Shashi Satyal Managing Partner Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co. Director Director Director Chartered Accountants Date : 3rd Sep 2014 (18 Bhadra 2071) Place : Kathmandu

7 Sanima Bank Limited Cash Flow Statement For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Current Year Rs. Previous Year Rs. (a) Cash flow from Operating Activities 558,748, ,427,910 1 Cash Received 2,295,352,616 1,794,403, Interest Income 2,005,237,673 1,675,505, Commission and Discount Income 39,824,742 23,667, Income from Foreign Exchange Transaction 144,729,506 23,805, Recovery of Written-off Loans 1.5 Other Incomes 105,560,695 71,424,466 2 Cash Payment 1,736,604,457 1,321,975, Interest Expenses 1,245,186, ,231, Staff Expenses 143,059,418 99,113, Office Overhead Expenses 150,170, ,952, Income Tax Paid 198,187, ,677, Other Expenses Cash Flow Before Working Capital Activities 893,372,725 (683,264,897) (Increase)/Decrease of Current Assets (5,724,959,760) (8,089,619,221) 1 (Increase)/Decrease in Money at Call and Short Notice 364,420,000 (364,420,000) 2 (Increase)/Decrease in Short-term Investments 33,824,123 (1,829,959,780) 3 (Increase)/Decrease in Loans and Advances and Bills Purchase (5,372,226,484) (5,606,888,281) 4 (Increase)/Decrease in Other Assets (750,977,398) (288,351,159) Increase/(Decrease) of Current Liabilities 6,618,332,484 7,406,354,324 1 Increase/(Decrease) in Deposits Liabilities 7,084,520,443 6,608,622,189 2 Increase/(Decrease) in Certificate of Deposits 3 Increase/(Decrease) in Short-term Borrowings (929,697,595) 937,650,000 4 Increase/(Decrease) in Other Liabilities 463,509,636 (139,917,865) (b) Cash flow from Investment Activities 24,292,855 65,617,339 1 (Increase)/Decrease in Long-Term Investment 98,895,488 94,826,895 2 (Increase)/Decrease in Fixed Assets (88,958,832) (39,221,690) 3 Interest Income From Long-Term Investment 13,221,491 10,012,134 4 Dividend Income 1,134,709-5 Others (c) Cash flow from Financing Activities 347,839, ,225,530 1 Increase/(Decrease) in Long-Term Borrowings (Bonds, Debentures etc.) 2 Increase/(Decrease) in Share Capital 3 Increase/(Decrease) in Other Liabilities 4 Increase/(Decrease) in Refinance/Facilities From Nepal Rastra Bank 347,839, ,225,530 (d) Income/Expenses from change in Exchange Rate in Cash and Bank Balances 2,159,904 3,432,058 (e) This Year's Cash Flow from All Activities 1,826,413, ,437,940 (f) Opening Balance of Cash and Bank Balances 1,685,500,681 1,373,062,741 (g) Closing Balance of Cash and Bank Balances 3,511,914,255 1,685,500,681 3,511,914,255 (0.55) Saroj Guragain Bhuvan Dahal Binaya Kumar Shrestha Chief Financial Officer Chief Executive Officer Chairman As per our report of even date Tuk Prasad Poudel Director Subarna Das Shrestha Director Shashi Satyal Managing Partner Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co. Director Director Director Chartered Accountants Date : 3rd Sep 2014 (18 Bhadra 2071) Place : Kathmandu

8 Share Capital Accumulated Profit/Loss Sanima Bank Limited Statement of Changes in Equity Financial Year 2013/14 (2070/71) General Reserve Fund Capital Reserve Fund Share Premium Exchange Fluctuation Fund Deferred Tax Reserve Other Reserve and Fund Total Amount Opening Balance as at 16 July ,217,600,000 27,037, ,964,717-10,563,747 2,658, ,802 10,355,000 2,424,031,128 Deferred Tax Adjustments 129,463 (851,802) (722,339) Restated Balance as at 16 July ,217,600,000 27,166, ,964,717-10,563,747 2,658,767-10,355,000 2,423,308,789 Current Year's Net Profit - 427,595, ,595,604 General Reserve - (85,535,283) 85,535,283 Proposed Bonus Share 332,640,000 (332,640,000) - Porposed Dividend - (17,507,368) (17,507,368) Exchange Fluctuation Fund - (539,976) - 539,976 - Deferred Tax Assets Investment Adjustment Reserve - 9,800,000 - (9,800,000) - Closing Balance 2,550,240,000 28,339, ,500,000-10,563,747 3,198, ,000 2,833,397,025 Saroj Guragain Bhuvan Dahal Binaya Kumar Shrestha Chief Financial Officer Chief Executive Officer Chairman As per our report of even date Tuk Prasad Poudel Director Subarna Das Shrestha Director Shashi Satyal Managing Partner Shamba Lama Mahesh Ghimire Bharat Bahadur Thapa TR Upadhya & Co. Director Director Director Chartered Accountants Date : 3rd Sep 2014 (18 Bhadra 2071) Place : Kathmandu

9 Sanima Bank Limited Share Capital and Ownership As on July 16, 2014 Schedule 1 Current Year Previous Year Share Capital Authorized Capital 2,250,000,000 2,100,000,000 a) 22,500,000 Ordinary Shares of Rs. 100 each 2,250,000,000 2,100,000,000 b). Non-redeemable Preference Shares of Rs. each c). Redeemable Preference Shares of Rs... each 1.2 Issued Capital 2,217,600,000 2,016,000,000 a) 22,176,000 Ordinary Shares of Rs.100 each 2,217,600,000 2,016,000,000 b). Non-redeemable Preference Shares of Rs.. each c). Redeemable Preference Shares of Rs.. each 1.3 Paid up Capital 2,217,600,000 2,016,000,000 a) 22,176,000 Ordinary Shares of Rs.100 each 2,217,600,000 2,016,000,000 b). Non-redeemable Preference Shares of Rs.. each c). Redeemable Preference Shares of Rs. each 1.4 Proposed Bonus Share 332,640, ,600, Calls in Advance Total ( ) 2,550,240,000 2,217,600,000 Current Year Previous Year % Amount Amount % 1 National Ownership 100 2,217,600,000 2,016,000, Government of Nepal 1.2 Foreign Institutions 1.3 "A" Class Licensed Institutions 1.4 Other License Institutions 1.5 Other Entities/ Organizations ,665, ,119, Individuals ,105,934,103 1,908,880, Others 2 Foreign Ownership Total 100 2,217,600,000 2,016,000,

10 Sanima Bank Limited List of Share holders holding Share Capital of 0.5% or More S. No Name of Share Holder No of Share % Current Year 1 Arun Kumar Ojha 3,104, ,464,000 2 Tek Raj Niraula 1,929, ,924,000 3 Jiba Nath Lamichhane 1,386, ,600,000 4 Dr. Niraj Govinda Shrestha 1,386, ,600,000 5 Binaya Kumar Shrestha 1,114, ,430,000 6 Ghana Shyam Thapa 1,107, ,737,000 7 Dr. Birendra Prasad Mahato 1,039, ,950,000 8 Khem Raj Lamichhane 871, ,165,000 9 Jai Ganesh Investment Company Pvt. Ltd 799, ,980, Ram Krishna Shah 696, ,630, Dilip Shrestha 220, ,099, Dinesh Mani Shrestha 205, ,596, Shamba Lama 161, ,146, Geeta Chhetri 149, ,900,000 Total 14,172, ,417,223,100 Sanima Bank Limited Schedule 2 Reserve and Surplus As on July 16, 2014 Current Year Previous Year 1 General Reserve Fund 240,500, ,964,717 2 Capital Reserve Fund 3 Capital Redemption Reserve 4 Capital Adjustment Fund 5 Other Resevers 5.1 Contingent Reserve 5.2 Institution Development Fund 5.3 Dividend Equalization Fund 5.4 Special Reserve Fund 5.5 Assets Revaluation Reserve 5.6 Deferred Tax Reserve - 851, Other Free Reserves 5.8 Other Reserve Funds 5.9 Share Premium 10,563,747 10,563, Investment Adjustment Reserve 555,000 10,355,000 6 Accumulated Profit/(Loss) 28,339,535 27,037,095 7 Exchange Equalization Fund 3,198,743 2,658,767 Total 283,157, ,431,128

11 Sanima Bank Limited Debentures and Bonds As on July 16, 2014 Schedule 3 Current Year Previous Year 1. Percent Bonds/Debentures of Rs. each Issued on and Matured on.. (Outstanding balance of Redemption Reserve Rs..) 2. Percent Bond/Debentures of Rs. each Issued on and Matured on.. (Outstanding Balance of Redemption Reserve Rs..) 3 Total (1+2+3) Sanima Bank Limited Schedule 4 Borrowings As on July 16, 2014 Current Year Previous Year A. Local 1 Nepal Government 2 Nepal Rastra Bank 802,065, ,225,530 3 Repo Obligation 4 Inter Bank and Financial Institutions 96,202,405 1,025,900,000 5 Other Organized Institutions 6 Others Total 898,267,865 1,480,125,530 B. Foreign 1 Banks 2 Others Total Total (A+B) 898,267,865 1,480,125,530

12 Schedule 5 Sanima Bank Limited Deposits As on July 16, 2014 Current Year Previous Year 1 Non-Interest Bearing Accounts A. Current Deposits 730,964, ,131, Local Currency 724,956, ,007, Nepal Government 1.2 "A" Class Licensed Institutions 16,199,756 11,011, Other Licensed Financial Institutions 18,737,975 6,717, Other Organized Institutions 591,635, ,791, Individuals 98,383,754 73,486, Others 2. Foreign Currency 6,008,002 4,124, Nepal Government 2.2 "A" Class Licensed Institutions 2.3 Other Licensed Financial Institutions 84,302 1,138, Other Organized Institutions 5,910,232 2,976, Individuals 13,468 9, Others B. Margin Deposits 103,389,259 57,482,464 1 Employee Guarantees 2 Guarantee Margin 34,016,759 26,428,301 3 Letters of Credit Margin 69,372,500 31,054,164 C. Others 146,439,045 6,950, Local Currency 143,643,554 6,950, Financial Institutions 1.2 Other Organized Institutions 143,504, , Individuals 138,625 6,400, Foreign Currency 2,795, Financial Institutions 2.2 Other Organized Institutions 2.3 Individuals 2,795,491 - Total of Non-Interest Bearing Accounts 980,793, ,564,253 2 Interest Bearing Accounts A. Savings Deposits 8,009,972,786 4,311,870, Local Currency 7,949,279,073 4,280,070, Organized Institutions 77,962,988 9,807, Individuals 7,871,316,085 4,270,263, Others 2. Foreign Currency 60,693,713 31,799, Organized Institutions 2.2 Individuals 60,693,713 31,799, Others B. Fixed Deposits 9,443,811,175 9,242,145, Local Currency 8,189,586,611 9,096,185, Organized Institutions 5,294,606,516 6,327,350, Individuals 2,894,980,095 2,768,834, Others 2. Foreign Currency 1,254,224, ,959, Organized Institutions 1,254,224, ,850, Individuals - 2,109, Others C. Call Deposits 6,439,272,186 3,671,749,054 1 Local Currency 6,420,053,382 3,668,477, "A" Class Licensed Institutions Other Licensed Institutions 2,863,670,887 1,053,485, Other Organized Institutions 3,421,116,353 2,446,443, Individuals 135,266, ,549, Others 2. Foreign Currency 19,218,803 3,271, "A" Class Licensed Institutions 2.2 Other Licensed Institutions 2.3 Other Organized Institutions 19,218,803 3,271, Individuals 2.5 Others D. Certificate of Deposit 1. Organized Institutions 2. Individuals 3. Others Total of Interest Bearing Accounts 23,893,056,147 17,225,764,662 Total Deposit (1+2) 24,873,849,358 17,789,328,915

13 Sanima Bank Limited Bills Payable As on July 16, 2014 Schedule 6 Current Year Previous Year 1 Local Currency 2 Foreign Currency Total Sanima Bank Limited Other Liabilities As on July 16, 2014 Schedule 7 Current Year Previous Year 1 Pension/Gratuity Fund - 8,678,407 2 Employees Provident Fund 3 Employees Welfare Fund 4 Provision for Staff Bonus 61,649,104 43,744,049 5 Interest Payable on Deposits 11,590,638 56,907,613 6 Interest Payable on Borrowings 1,974,774 2,056,722 7 Unearned Discount and Commission 11,754,345 3,039,441 8 Sundry Creditors 24,385,256 10,413,934 9 Branch Adjustment Account 10 Deferred Tax Liability 2,421, Dividend Payable 8,482,634 12,580, Others TDS Payable 19,784,756 22,522,045 Provision for expenses 19,901,713 14,458,735 Audit fee payable 508, ,000 Others Gold Security Margin 495,682,435 - Forward Contract Payables 21,064,524 10,757,155 Others 74,764,344 86,884,737 Total 753,964, ,443,653

14 Sanima Bank Limited Cash Balance As on July 16, 2014 Schedule 8 Current Year Previous Year 1 Local Currency (including coin) 532,850, ,778,211 2 Foreign Currency 5,536,187 6,183,795 Total 538,387, ,962,006 Sanima Bank Limited Balance with Nepal Rastra Bank As on July 16, 2014 Schedule 9 Foreign Currency Local Currency Current Year Previous Year Indian Convertible Total Currency 1 Nepal Rastra Bank 2,805,283,077-5,756,152-2,811,039,229 1,283,546,348 a) Current Account 2,805,283,077-5,756,152 5,756,152 2,811,039,229 1,283,546,348 b) Other Account

15 Sanima Bank Limited Balance with Banks/Financial Institutions As on July 16, 2014 Schedule 10 Local Currency Foreign Currency Indian Currency Convertible Total Current Year Previous Year 1 Local Licensed Institutions 52,782,000-52,782,000 55,786,870 a) Current Account 52,782,000-52,782,000 53,365,343 b) Other Account - 2,421,527 2 Foreign Banks - 42,992,125 66,713, ,705, ,705,861 33,205,458 a) Current Account - 42,992,125 66,713, ,705, ,705,861 33,205,458 b) Other Account Total 52,782,000 42,992,125 66,713, ,705, ,487,861 88,992,328 Note: Total Balance for which the confirmations are received from the respective licensed institutions is Rs.199,052, and the differences are subsequently being reconciled.

16 Sanima Bank Limited Money at Call and Short Notice As on July 16, 2014 Schedule 11 Current Year Previous Year 1 Local Currency 2 Foreign Currency - 364,420,000 Total - 364,420,000 Sanima Bank Limited Investments As on July 16, 2014 Trading Other Current Year Schedule 12 Previous Year 1 Nepal Government Treasury Bills 1,800,626,479 1,800,626,479 3,355,486,225 2 Nepal Government Savings Certificates - 3 Nepal Government Other Bond - 333,392, ,392,562 94,870,109 4 Nepal Rastra Bank Bonds 5 Foreign Bonds/Debenture 6 Local Licensed Institutions - 252, , ,838 7 Foreign Banks - 1,521,035,623 1,521,035, ,038,500 8 Origanized Insrtitutions Shares 47,537,722 12,910,438 60,448,160 12,657,600 9 Corporate Bonds and Debentures 10 Other Investments Total Investment Provision Net Investment Purpose 47,537,722 3,668,217,940 3,715,755,662 3,848,475, , , ,838 47,537,722 3,667,965,102 3,715,502,824 3,848,052,434

17 Sanima Bank Limited Investment in Shares, Debentures and Bonds As on July 16, 2014 Cost Price Market Price Provision Current Year Previous Year 1 Investment in Shares 53,046, ,290, ,719 60,448,160 12,657, Nepal Clearing House Company Ltd Ordinary Shares of Rs 100 Paid up each 2,302,600 2,302,600 2,302, Sanima Mai Hydro Ltd Ordinary Shares of Rs.100 Paid up each 10,000,000 79,500,000-10,000,000 10,000, Sanima Life Insurance Co. Ltd Ordinary Shares of Rs.1 Paid up each (Face Value Rs 100) 350, , , Sanima Foundation - Shares of Rs. Paid up each 5,000 5,000 5, Rural Micro Finance Development Centre Ordinary Share Shares of Rs. 100 paid up each 7,187,838 12,391,593-12,391, Nepal Telcom Ordinary Share Shares of Rs. 100 Paid up each 13,877,690 13,762, ,719 13,762, Nabil Balance Fund Ordinary Share Shares of Rs. 10 Paid up each 19,323,025 21,635,995-21,635,995-2 Investment in Debentures and Bonds - Total Investment 53,046, ,290, ,719 60,448,160 12,657,600 3 Provision for Loss Provision Up to Previous Year 3.2 Additions This Year - Total Provision - Net Investment 53,046, ,290, ,719 60,448,160 12,657,600 Companies mentioned in 1.1, 1.2, 1.3 & 1.4 have not declared the dividend in last three years. Companies mentioned 1.3 & 1.4 is not yet in operation and no share certificate have been issued. Companies 1.2, 1.5, 1.6, 1.7 are listed in stock exchange. Broker has been adjusted in Mark to Market Price. Schedule 12 (A)

18 Sanima Bank Limited Held for Trading As on July 16, 2014 Last Market Current Market Current Year Profit/(Loss) (A- Previous Year Description Cost Price Price (A) Price (B) B) Profit/(Loss) 1. Treasury Bills of Governement of Nepal - 2. Saving Bonds of Government of Nepal - 3. Other Bonds of Government of Nepal - 4. Bonds of Nepal Rastra Bank - 5. Foreign Bonds - 6. Shares of Local Licensed Institutions - 7. Debenture and Bonds of Local Licensed Institutions - 8. Share, Debenture and Bonds of Local Organized Institutions 40,388,553 40,388,553 47,790,560 7,402, Investment in Foreign Banks (Placement) Interbank Lending Other Investment - Total Investment 40,388,553 40,388,553 47,790,560 7,402,006 - Held to Maturity As on July 16, 2014 Cumulative Loss Upto This Current Year Current Year Profit/(Loss) (A- Previous Year Description Cost Price (A) Year (B) Loss (C) B-C) Profit/(Loss) 1.Treasury Bills of Governement of Nepal 1,800,626, Saving Bonds of Government of Nepal - 3. Other Bonds of Government of Nepal 333,392,562 4.Bonds of Nepal Rastra Bank - 5. Foreign Bonds - 6. Shares of Local Licensed Institutions - 7. Debenture and Bonds of Local Licensed Institutions - 8. Share, Debenture and Bonds of Local Organized Institutions - 9. Investment in Foreign Banks (Placement) 1,521,035, Other Investment - Total Investment 3,655,054,664 Available for Sale As on July 16, 2014 Current Year Previous Year Schedule 12.1 Schedule 12.2 Remarks Remarks Schedule 12.3 Description Cost Price Last Market Price (A) Current Market Price (B) Fund Adjustment Amount (B-A) Profit/(Loss) Remarks 1.Treasury Bills of Governement of Nepal - 2. Saving Bonds of Government of Nepal - 3. Other Loan Bonds of Government of Nepal - 4. Loan Bonds of Nepal Rastra Bank - 5. Foreign Loan Bonds - 6. Shares of Local Licensed Institutions - 7. Debenture and Bonds of Local Licensed Institutions - 8. Share, Debenture and Bonds of Local Organized Institutions 12,657,600-79,500,000 (9,800,000) - 9. Investment in Foreign Banks (Placement) Other Investment 252,838 Total Investment 12,910,438-79,500,000 (9,800,000)

19 Sanima Bank Limited Classification of Loans and Bills Purchased and Provisioning As on July 16, 2014 Schedule 13 Loans Bills Purchased/Discounted Domestic Current Year Previous Year Deprived Foreign Total Domestic Foreign Total Others Insured Uninsured 1 Performing Loan - 818,113,830 19,573,034,030-20,391,147, ,670, ,670,500 20,616,818,360 15,244,039, Pass Loan - 818,113,830 19,573,034,030-20,391,147, ,670, ,670,500 20,616,818,360 15,244,039,149 2 Non-Performing Loan 3,582,854-3,582,854-3,582,854 4,135, Restructured 2.2 Substandard 613, , ,908 2,806, Doubtful 1,427,953-1,427,953-1,427, Bad 1,540,994-1,540,994-1,540,994 1,328,779 (A) Total Loan - 818,113,830 19,576,616,884-20,394,730, ,670, ,670,500 20,620,401,214 15,248,174,730 3 Loan Loss Provision - 8,181, ,519, ,700, ,700, ,101, Pass - 8,181, ,110, ,292,094-2,256,705 2,256, ,548, ,071, Restructured 3.3 Substandard 153, , , , Doubtful 713, , , Bad 1,540,994-1,540,994-1,540,994 1,328,779 (B) Total Provisioning - 8,181, ,519, ,700,541-2,256,705 2,256, ,957, ,101,881 4 Provisioning up to Previous Year - 5,707, ,394, ,101, ,101, ,781, Pass - 5,420, ,651, ,071, ,071,402 96,667, Restructured 4.3 Substandard 701, , ,701 10,698, Doubtful - 929, Bad - 287,149 1,041,629-1,328,779-1,328,779 1,487,149 (C) Total Previous Year's Provision - 5,707, ,394, ,101, ,101, ,781,615 (D) Written Back From Previous Year 1,357,112-1,357,112-1,357,112 - (E) Additional Provision in this year - 2,473,924 90,481,849-92,955,772-2,256,705 2,256,705 95,212,477 Changes in This Year - 2,473,924 89,124,737-91,598,660-2,256,705 2,256,705 93,855,365 45,320,265 Net Loan (A-B) - 809,932,692 19,338,097,482-20,148,030, ,413, ,413,795 20,371,443,968 15,093,072,849

20 Sanima Bank Limited Schedule 13 (A) Loans, Advances and Bills Purchased Security wise As on July 16, 2014 Current Year Previous Year (A) Secured 20,620,401,214 15,248,174,730 1 Movable/Immovable Assets 18,773,088,635 14,091,713,807 2 Guarantee of Local Licensed Institutions 3 Government Guarantee 4 Internationally Rated Bank Guarantee 5 Export Documents 6 Fixed Deposit Receipts a) Own Fixed Deposit Receipt 135,566,602 98,976,032 b) Fixed Deposit Receipt of Other Licensed Institutions 7 Government Bonds 8 Counter Guarantee 9 Personal Guarantee 3,584,964 4,606, Other Securities 1,708,161,013 1,052,878,840 (B) Unsecured Total 20,620,401,214 15,248,174,730

21 Sanima Bank Limited Fixed Assets As on July 16, 2014 Schedule 14 Assets Current Year Previous Year Land & Building Vehicles Machinery Office Equipment Others 1 At Cost - a. Previous Year Balance 136,632,803 56,259,307 26,912, ,218, ,022, ,641,872 b. Addition This Year 2,569,622 39,918,064 4,868,570 24,643,561-71,999,818 29,378,395 c. Revaluation/Written Back This Year - d. This Year Sold (8,240,358) - (8,240,358) (3,997,514) e. This Year Written off (3,900) (2,883,990) - (2,887,890) - Total Cost (a+b+c-d-e) 139,202,425 87,933,114 31,781, ,977, ,894, ,022,753 2 Depreciation - a. Up to Previous Year 10,296,004 23,106,020 9,194,203 62,976, ,573,118 67,409,491 b. For This Year 6,402,415 11,303,034 2,902,746 23,746,159-44,354,353 40,855,741 c. Depreciation on Revaluation/Written Back - d. Depreciation Adjustment /Reversal (3,998,354) (2,180,895) - (6,179,249) (2,692,114) Total Depreciation 16,698,419 30,410,700 12,096,949 84,542, ,748, ,573,118 3 Book Value (WDV*) (1-2) 122,504,006 57,522,414 19,684,125 80,435, ,146, ,449,635 4 Land 171,600, ,600, ,600,000 5 Capitalization Construction - 6 (Pending Leasehold Capitalization) Assets - 50,489,666 50,489,666 40,439,192 Total ( ) 294,104,006 57,522,414 19,684,125 80,435,556 50,489, ,235, ,488,826 As per FTB 294,104, ,522, ,684, ,448, ,489, ,248,720

22 Sanima Bank Limited Non-Banking Assets As on July 16, 2014 Schedule 15 Name and Address of Date of Accept Non- Total Amount of Non- Loss Provision Net Non-Banking Previous Year Borrower or Party Banking Assets Banking Assets Rs. In Percantage In Amount Assets Current Year Rs. - Rs Grand Total

23 Sanima Bank Limited Other Assets As on July 16, 2014 Schedule 16 Current Year Previous Year 1 Stationery Stock 4,991,029 2,991,799 2 Income Receivable on Investments 7,556,124 17,870,595 3 Accrued Interest on Loan 41,353,074 30,992,138 Less : Interest Suspense Amount (41,353,074) - (30,992,138) 4 Commission Receivable 5 Sundry Debtors 3,591, ,152 6 Staff Loans and Advances 117,493,369 77,247,903 7 Prepaid Expenses 9,745,460 5,306,834 8 Cash in Transit 9 Other Transit items ( including cheques ) 10 Drafts Paid without Notice 11 Expenses Not Written off 4,279,508 7,751, Branch account 13 Deferred Tax Assets - 851, Others Advance Tax 198,187, ,719,217 Less: Provision for Tax (183,428,099) (175,093,760) Custom Duty 40,225,713 26,041,952 Advances - Gold and Silver 693,937,080 - Forward Contract Receivables 232,229,859 - Outward Clearing 90,808, ,713,135 Others 56,270, ,323,633 Total 1,275,888, ,004, ,044,422 1,754,933,392 (1,275,888,970) Other Assets (Aditional Information) Schedule 16 (A) Current Year More Than 3 Current Year Previous Year Up to 1 Year 1 to 3 Years Years 1 Accrued Interest on Loan 41,353,074 41,353,074 30,992,138 2 Drafts Paid without Notice - 3 Branch Adjustment Account - 4 Local and Foreign Agency A/Cs -

24 Sanima Bank Limited Contingent Liabilities As on July 16, 2014 Schedule 17 Current Year Previous Year 1 Claims on Institution but not accepted by the Institution 2 Letters of Credit (Full Amount) a) Less than 6 months Maturity 805,599, ,637,493 b) More than 6 months Maturity 88,037,478-3 Rediscounted Bills 4 Unmatured Guarantees/Bonds a) Bid Bonds 138,188,142 63,811,650 b) Performance Bonds 1,112,917, ,583,725 c) Other Guarantees/Bonds 5 Unpaid Shares in Investment 6 Forward Exchange Contract Liabilities 7 Bills under Collection 11,572,278-8 Acceptance and Endorsements 288,465,832-9 Underwriting Commitments 10 Irrevocable Loan Commitments 2,459,148,916 1,772,722, Counter Guarantee of Internationally Rated Banks 12 Advance Payment Guarantee 391,465, ,877, Financial Guarantee 14 Contingent Liabilities on Income Tax 15 Others 9,502,780 10,935,621 Total 5,304,898,073 2,846,568,984

25 Sanima Bank Limited Interest Income For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedule 18 Current Year Previous Year A. On Loan, Advances and Overdraft 1,934,145,084 1,623,744,971 1 Loans and Advances 1,478,692,264 1,222,868,139 2 Overdraft 455,452, ,876,832 B On Investment 84,326,051 54,925,797 1 Nepal Government Securities 67,488,000 49,533,572 a. Treasury Bills 54,692,459 39,947,388 b. Development Bonds 12,795,541 9,586,184 c. National Savings Certificates 2 Foreign Securities 3 Nepal Rastra Bank Bond 4 Debenture and Bonds 5 On Interbank Placement 16,838,050 5,392,226 a. Bank and Financial Institutions 16,838,050 5,392,226 b. Other Organizations C On Agency Balances 1 Local Banks 2 Foreign Banks D On Money at Call and Short Notice 34, ,170 1 Local Banks/Financial Institutions 34, ,170 2 Foreign Banks E On Others 1 Certificate of Deposits 2 Inter-Bank Loan 3 Others Total 2,018,505,630 1,678,789,938

26 Sanima Bank Limited Interest Expenses For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedule 19 Current Year Previous Year A. On Deposit Liabilities 1,175,363,493 1,009,370,537 1 Fixed Deposits 692,759, ,642, Local Currency 684,426, ,010, Foreign Currency 8,332,625 3,631,898 2 Savings Deposits 307,421, ,036, Local Currency 306,601, ,726, Foreign Currency 820, ,776 3 Call Deposits 175,182, ,691, Local Currency 175,131, ,655, Foreign Currency 51,397 36,004 4 Certificate of Deposits B On Borrowings 22,946,823 12,256,704 1 Debentures and Bonds 2 Loan from Nepal Rastra Bank 21,482,958 3,172,294 3 Inter Bank/Financial Institutions Borrowing 1,463,866 9,084,410 4 Other Corporate Body 5 Other Loans C On Others 1,477,548 1,630, Bond Premium w/o 1,477,548 1,630, Total 1,199,787,864 1,023,257,441

27 Schedule 20 Sanima Bank Limited Commission and Discount For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Current Year Previous Year A Bills Purchase and Discount 1 Local 2 Foreign B Commission 29,566,019 17,718,117 1 Letters of Credit 7,006,742 5,387,499 2 Guarantee 11,759,297 6,821,332 3 Collection Fee 4 Remittance Fee 8,913,916 5,507,986 5 Credit Cards 6 Share Underwriting/Issues 1,880,394-7 Government Transactions 5,670 1,300 8 Agency Commission 9 Exchange Income C Others 10,258,723 5,949,671 Total 39,824,742 23,667,788

28 Sanima Bank Limited Other Operating Income For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedule 21 Current Year Previous Year 1 Rental on Safe Deposit Lockers 983, ,270 2 Issue and Renewals of Credit Cards 3 Issue and Renewals of ATM Cards 1,271, ,272 4 Telex/T.T. 1,689, ,024 5 Service Charges 63,098,349 55,486,134 6 Renewal Fees 3,157,597 1,757,420 7 Others 15,238,580 9,402,341 Total 85,437,840 68,853,461 Sanima Bank Limited Exchange Gain/Loss For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedule 22 Current Year Previous Year (A) Revaluation Gain 2,159,904 3,432,058 (B) Trading Gain (Except Exchange Income) 144,729,506 23,805,252 Total Income/(Loss) 146,889,410 27,237,310

29 Sanima Bank Limited Employee Expenses For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedule 23 Current Year Previous Year 1 Salary 64,214,338 48,880,579 2 Allowances 37,118,490 25,765,415 3 Contribution to Provident Fund 5,745,941 4,597,070 4 Training Expenses 2,111, ,950 5 Uniform - 52,719 6 Medical 7 Insurance 1,226,967 1,095,100 8 Pension and Gratuity Provision 5,892,373 4,408,650 9 Others 18,071,703 14,297,807 Total 134,381,010 99,776,288

30 Sanima Bank Limited Other Overhead Expenses For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedule 24 Current Year Previous Year 1 House Rent 16,801,521 13,017,969 2 Electricity and Water 6,118,048 4,597,542 3 Repair and Maintenance 2,236,068 4,006,050 (a) Building 565,062 2,675,307 (b) Vehicles 983, ,624 (c) Others (Software) 687, ,119 4 Insurance 12,100,628 9,305,767 5 Postage, Telex, Telephone, Fax 16,524,177 11,260,689 6 Office Equipment, Furniture and Fixture Repair 4,185,387 2,612,881 7 Traveling Allowances and Expenses 2,501,569 1,731,924 8 Stationery and Printing 6,049,671 4,116,605 9 Periodicals and Books 190, , Advertisements 13,846,914 10,958, Legal Expenses 104, Donations 13 Expenses Relating to Board of Directors 1,989,813 1,076,619 (a) Meeting Fees 1,188, ,000 (b) Other Expenses 801, , Annual General Meeting Expenses 827, , Expenses Relating to Audit 697, ,630 (a) Audit Fees 508, ,000 (b) Other Expenses 189, , Commission on Remittances 1,527, , Depreciation on Fixed Assets (Including Amortization) 53,803,451 48,777, Amortization of Preliminary Expenses 19 Share Issue Expenses 20 Technical Services Fee 21 Entertainment 3,569,709 2,634, Written Off Expenses 2,408, Security Expenses 18,507,617 13,689, Credit Guarantee Premium 25 Commission and Discount - 26 Others 42,392,187 28,939, Office Maintenance 550, , Vehicle Fuel & Tax 13,971,390 12,257, Membership Fee 1,319,025 1,063, Business Promotion Expense 9,684,432 5,440, Human Resource Outsourcing 12,626,426 7,635, Office Equipment Uncapitalised 478, , Miscellaneous 3,761,123 1,585,094 Total 206,382, ,730,263

31 Sanima Bank Limited Provision for Possible Losses For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Schedule 25 Current Year Previous Year 1 Increase in Loan Loss Provision 95,212,477 57,846,414 2 Increase in Provison for Loss on Investment - 3 Provision Against Non-Banking Assets 4 Provision Against Other Assets Total 95,212,477 52,492,738 Sanima Bank Limited Schedule 26 Non-Operating Income/Loss For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Current Year Previous Year 1 Profit (Loss) on Sale of Investment 2 Profit (Loss) on Sale of Assets 1,030,899-3 Dividend 1,134,709-4 Subsidies Received from Nepal Ratra Bank a. Reimbursement of Losses of Specified Branches b. Interest Subsidy c. Exchange Counter 5 Others 19,400,326 2,571,005 Total Non-Operating Income (Loss) 21,565,934 2,571,005 Sanima Bank Limited Schedule 27 Loss Provisions Written Back For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Current Year Previous Year 1 Loan Loss Provision Written Back 1,357,112 12,526,148 2 Provision against Non-Banking Assets Written Back 3 Investment Provision Written Back 170,000 7,149,294 4 Provision against Other Assets Written back Total 1,527,112 19,675,442

32 Income /Expenses from Extra-ordinary Activities For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Current Year Previous Year 1 Recovery of write off Loan 2 Voluntary Retirement Scheme Expenses 3 Loan Write-Off (4.28) (a) (308,370) - 4 Others (308,370) - S.N. Types of Loan Written Off Amount Type of Security Basis of Valuation of Collateral Schedule 28 Loan Approved by Name/ Designation Schedule 28 (a) Initiation made for Recovery Remarks 1 Working Capital Loan 2 Project Loan 3 Fixed Capital Loan 4 Personal Loan 5 Other Loan 308,370 Total Loan Sanima Bank Limited Sanima Bank Limited Statement of Loans Written-Off For the period from July 16, 2013 to July 16, 2014 (Shrawan 01, 2070 to Ashadh 32, 2071) Personal Guarantee only NA Tej Bahadur Chand, DGM, Kumar Lamsal, GM Follow up letter has been issued in regular interval on different dates and 35 days loan call back notice has also been published on national daily newspaper. Continue efforts for recovery of these loans have been putting on. 308,

33 Sanima Bank Limited Statement of Loans and Advances Extended to Directors/Chief Executive/Promoter/Employees and Shareholders As on July 16, 2014 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 : Name of Promoter/Director/Chief Executive Till Previous Year's Balance Current Year Recovery Current Year Balance as of Ashad End Principal Interest Principal Interest Additions Principal Interest (A) Directors (B) Chief Executive (C) Promoters - 1. Biswa Nath Paudel 14,670,000-14,670,000 - ` - (D) Employees - 1 Ranjan Mainali 200, ,781 1,075, Shailendra Neupane 455,000-45, ,000-3 Pramika Bista 440, ,000 4 Roshan Dhaurali 435,000-98, ,000-5 Binod Ojha 287, , ,000-6 Aska Shrestha 532, ,000 90,000-7 Hem Raj Pandey 109, ,345 8 Prakash Baral 38,261-94, ,800-9 Sunail Khatiwada 268, , Bishal Bhattarai 45,000-45, Prem Bahadur Mahat 465, , , Pralhad Chandra Niraula 75, , , Hemanta Shrestha 177,000-86,500 90, Mahesh Kumar Niraula 206,433-36, , Samir Sigdel 375, , Manoj Kumar Ghimire 301, , Sumeena Shrestha 300, , Hitler Shrestha 650, , Rajiv Bogati 66,000 66, Ambika Danuwar 100, , Pujan Baidhya 385, , Christina Nakarmi 150, , Narayan Pd Khatiwada 94,500 94, (E) Shareholders Total 18,779,539-16,447,778-3,416,820 5,748,581 - Note: All Above loans are against Fixed Deposit maintained with the Bank and Gold

34 Sanima Bank Ltd. CAPITAL ADEQUACY TABLE As on (Ashadh End 2071) Schedule 30 (Ka 1) 1.1 RISK WEIGHTED EXPOSURES Current Year Previous Year a Risk Weighted Exposure for Credit Risk 22,680,658,738 15,989,208,846 b Risk Weighted Exposure for Operational Risk 833,090, ,777,637 c Risk Weighted Exposure for Market Risk 334,302, ,935,567 Total Risk Weighted Exposures (a+b+c) 23,848,052,398 16,913,922,050 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% of gross income (6.4 a 7) 155,132,505 Overall risk management policies and precedures are not satisfactory. Add 2% of RWE (6.4 a 9) 476,961, ,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) 24,480,145,952 17,252,200, CAPITAL Current Year Previous Year Core Capital (Tier 1) 2,819,288,281 2,399,580,545 a Paid up Equity Share Capital 2,217,600,000 2,016,000,000 b Irredeemable Non-cumulative preference shares c Share Premium 10,563,747 10,563,747 d Proposed Bonus Equity Shares 332,640, ,600,000 e Statutory General Reserves 240,500, ,964,717 f Retained Earnings 28,339,535 27,037,095 g Un-audited current year cumulative profit h Capital Redemption Reserve I Capital Adjustment Reserve j Dividend Equalization Reserves k Debenture Payment Reserve l Deffered Tax Reserve - 851,802 m Other Free Reserve n Less: Goodwill o Less: Fictitious Assets p Less: Investment in equity in licensed Financial Institutions q Less: Investment in equity of institutions with financial interests 10,355,000 10,355,000 r Less: Investment in equity of institutions in excess of limits s Less: Investments arising out of underwriting commitments t Less: Reciprocal crossholdings u Less: Purchase of land & building in excess of limit & utilized v Less: Other Deductions - 1,081,816 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) Supplementary Capital (Tier 2) 249,921, ,454,159 a Cumulative and/or Redeemable Preference Share b Subordinated Term Debt c Hybrid Capital Instruments d General loan loss provision 246,168, ,440,391 e Exchange Equalization Reserve 3,198,743 2,658,767 f Investment Adjustment Reserve 555,000 10,355,000 g Assets Revaluation Reserve h Other Reserves Total Capital Fund (Tier I and Tier II) 3,069,210,208 2,565,034, CAPITAL ADEQUACY RATIOS Current Year Previous Year Tier 1 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 11.52% 13.91% Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 12.54% 14.87%

35 A. Balance Sheet Exposures RISK WEIGHTED EXPOSURE FOR CREDIT RISK As on (Ashadh End 2071) Schedule 30 (Kha) Current Year Previous Year Book Value Specific Provision Eligible CRM Net Value Risk Weight Risk Weighted Exposures a b c d=a-b-c e f=d*e Net Value Risk Weight Amount Cash Balance 538,387, ,387,165 0% - 312,962,006 - Balance With Nepal Rastra Bank 2,811,039,229-2,811,039,229 0% - 1,283,546,348 - Gold 0% - Investment in Nepalese Government Securities 2,134,019,041-2,134,019,041 0% - 3,450,356,334 - All Claims on Government of Nepal 26,913,241-26,913,241 0% - 26,913,241 - Investment in Nepal Rastra Bank securities - 0% - All claims on Nepal Rastra Bank - 0% - Claims on Foreign Government and Central Bank (ECA 0-1) - 0% - Claims on Foreign Government and Central Bank (ECA -2) - 20% - Claims on Foreign Government and Central Bank (ECA -3) - 50% - Claims on Foreign Government and Central Bank (ECA-4-6) - 100% - Claims on Foreign Government and Central Bank (ECA -7) - 150% - Claims On BIS, IMF, ECB, EC and on Multilateral Development Banks (MDB's) recognized by the framework - 0% - Claims on Other Multilateral Development Banks - 100% - Claims on Public Sector Entity (ECA 0-1) 20% - Claims on Public Sector Entity (ECA 2) - 50% - Claims on Public Sector Entity (ECA 3-6) - 100% - Claims on Public Sector Entity (ECA 7) 150% - 1,910,000 2,865,000 Claims on domestic banks that meet capital adequacy requirements 426,158, ,158,892 20% 85,231, ,023, ,204,646 Claims on domestic banks that do not meet capital adequacy requirements 14,069, ,838-13,816, % 13,816,902 18,360,634 18,360,634 Claims on foreign bank (ECA Rating 0-1) 424,302, ,302,583 20% 84,860, ,396,864 34,279,373 Claims on foreign bank (ECA Rating 2) 144,300, ,300,000 50% 72,150,000 47,950,000 23,975,000 Claims on foreign bank (ECA Rating 3-6) - 100% - Claims on foreign bank (ECA Rating 7) - 150% - Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement 1,062,138,900-1,062,138,900 20% 212,427, ,897,094 39,779,419 Claims on Domestic Corporates 11,615,780,232 41,214,523 11,574,565, % 11,574,565,709 9,259,557,462 9,259,557,462 Claims on Foreign Corporates (ECA 0-1) - 20% - Claims on Foreign Corporates (ECA 2) - 50% - Claims on Foreign Corporates (ECA 3-6) - 100% - Claims on Foreign Corporates (ECA 7) - 150% - Regulatory Retail Portfolio (Not Overdue) 5,677,398, ,198,443 5,441,199,925 75% 4,080,899,943 3,630,688,418 2,723,016,314 Claims Fullfilling all criterion of regulatory retail except granularity - 100% - Claims secured by residential properties 1,145,622,688-1,145,622,688 60% 687,373, ,506, ,303,741 Claims not fully secured by residential properties - 150% - Claims secured by residential properties (Overdue) 100% - 63,734,631 63,734,631 Claims secured by Commercial real estate 307,955, ,955, % 307,955, ,039, ,039,780 Past due claims (except for claim secured by residential properties) 63,991,478 2,408,447-61,583, % 92,374,545 7,233,285 10,849,928 High Risk Claims 1,395,545, ,615 22,401,853 1,372,763, % 2,059,145, ,448,103 1,068,672,155 Investments in equity and other capital instruments of institutions listed in the stock exchange 47,537,722-47,537, % 47,537,722 Investments in equity and other capital instruments of institutions not listed in the stock exchange 2,302,600-2,302, % 3,453,900 2,302,600 3,453,900 Staff Loan Secured by residetial property 104,856, ,856,808 60% 62,914,085 63,096,309 37,857,786 Interest Receivable / Claim on Govt. Securities 1,825,337-1,825,337 0% - 17,680,122 - Cash in Transit and other cash items in process of collection 90,808,585-90,808,585 20% 18,161, ,547,465 28,109,493 Other Assets (as per attachment) 1,805,415, ,781,174-1,580,634, % 1,580,634, ,088, ,088,075 29,840,369, ,823, ,814,819 29,312,731,311 20,983,502,883 21,955,238,240 14,979,147,336 B. Off Balance Sheet Exposures Gross Book Value Specific Provision Eligible CRM Net Value Risk Weight Risk Weighted Exposures Net Value Risk Weighted Exposures Revocable Commitments - 0% - Bills Under Collection 11,572, ,572,278 0% - Forward Foreign Exchange Contract Liabilities 10% - LC Commitments With Original Maturity Up to 6 months Domestic Counterparty 805,599,041-33,810, ,788,114 20% 154,357, ,556, ,911,394 Foreign Counterparty (ECA Rating 0-1) - 20% - Foreign Counterparty (ECA Rating 2) - 50% - Foreign Counterparty (ECA Rating 3-6) - 100% - Foreign Counterparty (ECA Rating 7) - 150% - LC Commitments With Original Maturity Over 6 months Domestic Counterparty 88,037, ,906, ,131,478 50% 33,565, Foreign Counterparty (ECA Rating 0-1) - 20% - Foreign Counterparty (ECA Rating 2) - 50% - Foreign Counterparty (ECA Rating 3-6) - 100% - Foreign Counterparty (ECA Rating 7) - 150% - Bid Bond, Performance Bond and Counter guarantee Domestic Counterparty 1,251,106, ,230,000 38,431, ,444,373 50% 306,222, ,632, ,816,359 Foreign Counterparty (ECA Rating 0-1) - 20% - Foreign Counterparty (ECA Rating 2) - 50% - Foreign Counterparty (ECA Rating 3-6) - 100% - Foreign Counterparty (ECA Rating 7) - 150% - Underwriting commitments - 50% - Lending of Bank's Securities or Posting of Securities as collateral - 100% - Repurchase Agreements, Assets sale with recourse - 100% - Advance Payment Guarantee 391,465,705 5,805, ,660, % 385,660, ,395, ,395,319 Financial Guarantee 100% Acceptances and Endorsements 288,465, ,465, % 288,465, Unpaid portion of Partly paid shares and Securities - 100% - Irrevocable Credit commitments (Short Term) 2,367,310,297-2,367,310,297 20% 473,462, ,311,833, ,366,642 Irrevocable Credit commitments (Long Term) 91,838,620-91,838,620 50% 45,919, ,889, ,444,674 Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their respective regulatory capital requirement 20% - Other Contingent Liabilities 9,502,780-9,502, % 9,502, ,127, ,127,121 Unpaid Guarantee Claims 200% - TOTAL 5,304,898, ,230,000 98,953,976 4,605,714,097 1,697,155,855 2,791,434,688 1,010,061,510 Total RWE for credit Risk Before Adjustment (A) +(B) 35,145,267, ,053, ,768,795 33,918,445,409 22,680,658,738 24,746,672,928 15,989,208,846 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)

36 ELIGIBLE CREDIT RISK MITIGANTS As on (Ashadh End 2071) Schedule 30(Ga) Deposits with Bank Deposits with other banks/fi G'tee of Govt. of Nepal Sec/G'tee of other Sovereigns G'tee of domestic banks G'tee of MDBs Sec/G'tee of Foreign Banks Gold Govt.& NRB Securities Total Credit Exposures (a) (b) (c) (d) (e) (f) (g) (h) (I) Balance Sheet Exposures Cash Balance Balance With Nepal Rastra Bank Gold Investment in Nepalese Government Securities All Claims on Government of Nepal 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 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 41,214,523 41,214,523 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) 80,208, ,990, ,198,443 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 21,343,853 1,058,000 22,401,853 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 142,766, ,048, ,814,819

37 Off Balance Sheet Exposures Forward Foreign Exchange Contract Liabilities - LC Commitments With Original Maturity Up to 6 months (domestic) 33,810,927 33,810,927 ECA Rating ECA Rating 2 - ECA Rating ECA Rating 7 - LC Commitments With Original Maturity Over 6 months (domestic) 20,906,000 20,906,000 ECA Rating ECA Rating 2 - ECA Rating ECA Rating 7 - Bid Bond, Performance Bond and Counter Guarantee Domestic Counterparty 38,431,670 38,431,670 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 5,805,379 5,805,379 Financial Guarantee - Acceptances and Endorsements - Unpaid portion of Partly paid shares and Securities - Irrevocable Credit commitments (Short Term) - Irrevocable Credit commitments (Long Term) - Other Contingent Liabilities - Total 98,953,976 98,953,976 Grand Total 241,720, ,048, ,768,795

38 Shedule 30 (Gha) RISK WEIGHTED EXPOSURE FOR OPERATIONAL RISK As on (Ashad End 2071) Previous Years from 2013/07/15 Year 1 (2010/11) Year 2 (2011/12) Year 3 (2012/13) Previous Year Net Interest Income 355,456, ,583, ,532,497 Commission and Discount Income 4,949,150 11,251,196 23,667,788 Other Operating Income 34,805,648 44,618,555 68,853,461 Exchange Fluctuation Income 157,502 (175,238) 27,237,310 Addition / Deduction Interest Suspense during the period 12,541,981 8,330, ,471 Gross income (a) 407,910, ,608, ,662,527 - Alfa (b) 15% 15% 15% Fixed Percentage of Gross Income [c=(a b)] 61,186,590 72,391, ,349,379 Capital Requirement for operational risk (d) (average of c) 83,309,095 57,577,764 Risk Weight (reciprocal of capital requirement of 10%) in times (e) Equivalent Risk Weight Exposure [f=(d e)] 833,090, ,777,637 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] 833,090, ,777,637

39 RISK WEIGHTED EXPOSURE FOR MARKET RISK As on (Ashadh End 2071) Schedule 30 (Nga) Current Year S.No. Currency Open Position (FCY) Open Position (NPR) Relevant Open Position Previous Year 1 INR 390,172, ,568, ,568, ,634,706 2 USD (349,482) (33,620,199) 33,620,199 2,471,899 3 GBP 8,906 1,467,277 1,467,277 2,452,868 4 EUR 29,693 3,868,421 3,868,421 4,332,750 5 THB 7,250 21,134 21,134-6 CHF 1, , ,720 40,356 7 AUD 29,346 2,640,706 2,640, ,272 8 CAD 2, , , ,421 9 SGD 5, , , JPY 1,104,000 1,035,000 1,035, , HKD 120 1,680 1, DKK 13 SEK 14 SAR 12, , ,413 61, QAR 2,819 72,646 72, AED 7, , ,131 80, MYR 18 KRW 85,000 7,939 7, CNY 3,643 56,157 56,157 31, Total Open Position (a) Fixed Percentage (b) Capital Charge for Market Risk [c=(a b)] Risk Weight (reciprocal of capital requirement of 10%) in times (d) Equivalent Risk Weight Exposure [e=(c d)] 668,605, ,871,134 5% 5% 33,430,271 34,893, ,302, ,935,567

40 Sanima Bank limited Principal Indicators Schedule 31 Indicators FY 2066/67 FY 2067/68 FY 2068/69 FY 2069/70 FY 2070/71 1 Percent of Net Profit/Gross Income Percent Earning Per Share Rs Market Value Per Share Rs Price Earning Ratio Times 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 Liquidity Percent Non-Performing Loan/Total Credit Percent Weighted Average Interest Rate Spread Percent Book Net-Worth Rs. 881,194,758 2,108,610,956 2,129,580,522 2,424,031,128 2,833,397, Total Number of Shares Nos. 8,064,000 20,160,000 20,160,000 20,160,000 22,176, Total Staff Nos No. of Branches (incl. HO) Nos Base Rate Percent Return on Equity Percent Return on Assets Percent Total Assets to Shareholders Fund Times

41 Significant Accounting Policies 1. General Information Schedule 32 Sanima Bank Limited ( The Bank ) is a limited liability company domiciled in Nepal. The registered office of the Bank is located at Alakapuri Building, Naxal, Kathmandu, Nepal. The Bank has registered with the Office of the Company Registrar on 30 th June 2004 ( 16 th Ashadh 2061), obtained license from Nepal Rastra Bank on 26 th November 2004 ( 11 th Mangsir 2061) and came into operation from 6 th December 2004 (21 st Mangsir 2061) to conduct banking business in Nepal. The Bank is listed in Nepal Stock Exchange Limited. Furthermore, the Bank has obtained license to operate as A class financial institution on 13 th February 2012 ( 1 st Falgun 2068) and started operation as A class financial institution w.e.f. 15 th February 2012 (3 rd Falgun 2068) i.e. upgraded to A class Financial Institution. 2. Approval of Financial Statements by Board of Directors The accompanied financial statements have been adopted by the Board of Directors on its meeting held on 3 rd September, 2014 (18 th Bhadra 2071) and recommended for its approval by the Annual General Meeting of the shareholders. 3. Basis of Preparation & Use of Estimate The financial statements are prepared under historical cost convention following accrual basis of accounting except for interest income on loans and advance which is accounted for on cash basis. 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. 4. 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, Significant Accounting Polices The principal accounting policies applied by the Bank in the preparation of these financial statements are presented below. These polices have been consistently applied to all the years presented unless stated otherwise. 1

42 5.1. Interest Income Interest income on loans and advances is recognized on cash basis as per the Nepal Rastra Bank (NRB) Directives, although this practice is not in accordance with NAS - 7 (Revenue), which prescribes the revenue to be recognized on accrual basis. Interest income on investments and on staff loans is accounted for on accrual basis Commission Income Commission income is recognized on accrual basis over the period of contract. 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 one financial year which is not in accordance with NAS Dividend Income Dividend on equity shares is recognized as income when the right to receive the same is established. Cash dividends declared by resident companies are recorded at net of withholding tax 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/Loss" at the time of trading under Exchange Gain/ (Loss) 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/ (Loss). This is presented under Revaluation Gain/ (Loss) in Schedule percent of revaluation gain is transferred to Exchange Fluctuation Fund through Profit and Loss Appropriation Account as required by Nepal Rastra Bank Directives Interest Expense Interest on deposit liabilities and borrowings is accounted for on accrual basis in functional currency Employment Benefits The Bank provides its employees with the following retirements 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 : 2

43 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 funded from current FY Leave and gratuity liability is not made as per actuarial valuation as required by NAS-14 Employee Benefits Taxation a) Current Income Tax Provision for income tax has been made on the basis of the Income Tax Act, 2058 and amendments thereto. b) Deferred Income 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 ) Loans and Advances including Bills Purchased a) Classification 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. b) Loan Loss Provision The provision for possible losses on loans, advances and bills purchased are provided at the rates between 1 percent and 100 percent, according to classification of such risk assets as per Nepal Rastra Bank Directives. c) Write Off 3

44 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. d) Recovery from Written-Off Loans Recovery from written-off loans in earlier as well as current year is recognized as income in the year such amount is actually recovered from the borrower. e) Interest Receivable Interest accrued on loans and investments are recognized on daily basis on the outstanding balances at the end of the day. Interest receivables on loans are stated at full value and are disclosed net of interest suspense under 'Accrued Interest on Loan' under 'Other Assets' in Schedule 16 of the Financial Statement. f) Recovery of Loan and Interest Loan is recovered in the sequence of penal, interest and principal. g) Staff Loans and Advances The Bank has a policy to provide loans to its staff under Employment Service Regulations at a subsidized interest rate. These loans are presented under 'Other Assets' in Schedule-16 as per NRB Directives Investments Investments are classified as held for trading, held to maturity and available for sale in accordance with NRB Directives. 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 account for the period. 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. 2% of investment classified as 'Available for Sale' is appropriated to Investment Adjustment 4

45 Reserve as required by NRB Directives. The reserve is considered as Tier 2 Capital. In case of investments unquoted within stipulated time frame prescribed by NRB Directives, Investment Adjustment Reserve is maintained to the extent of 100% of such investments. Treasury Bills being discounted instruments are disclosed at cost including the pro rata discount accreted for the holding period. All Investments are subject to regular review as required by Nepal Rastra Bank Directives Property, Plant and Equipment & Depreciation a) Fixed Assets Fixed assets except land are stated at acquisition cost less accumulated depreciation. Acquisition cost includes expenditures that are directly attributable to the acquisition of the assets. 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. Leasehold improvements are capitalized at cost and amortized over the lease period or ten years whichever is earlier. The amount of amortization is charged to revenue. b) Computer Software Acquired computer software licenses are capitalized on the basis of cost incurred to acquire and bring to use the specific software and are amortized over their useful life estimated as 5 years from the date of acquisition or over the period of the license, whichever is less. c) Depreciation Land is not depreciated. Depreciation on other fixed assets is calculated following the Diminishing Balance Method applying the rate prescribed by Income Tax Act, 2058 which is not in accordance with NAS-6 and is presented as follows: Nature of Asset Depreciation Rate Computers, Furniture & Fixtures 25% Vehicles 20% Plant & machinery 15% Building 5% Leasehold (useful life 10 years: amortized in 10 years 10% on straight line basis) 5

46 Depreciation on assets acquired during the year is computed on a proportionate basis from date of purchase or put to use, whichever is later. Derecognition of assets: The gain or losses arising from derecognition of an item of property, plant and equipment is included in profit or loss when the item is derecognized Stationery Stock Stationery stock is valued at cost and expended as and when it is used for consumption on FIFO method Bullion Stock under consignment The Bank holds precious metals (gold and silver) in its possession arising from consignment transaction as a custodian. The risks and rewards (price risk) pertaining to the assets is vested with the consignor. Bank has purchased 108 KGs Silver which is shown under 'Other Assets' 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 are made in accordance with the Nepal Rastra Bank Directives Other Assets Other assets are shown net of other liabilities when party is same and the Bank has legal right to set off Borrowings Borrowings comprise of local and foreign currencies' inter-bank borrowing. Borrowings are recorded at the full value and recognized on the effective dates mentioned in the contract Deposits Deposits include local and foreign currencies' current deposits, savings deposits, call deposits, fixed deposits, margin deposits and other deposits of the customers held by the Bank. Deposits are stated at full value and are derecognized at the time of its withdrawal Unearned Income Unearned income comprises of income received in advance on account of LC/Guarantee Fees issued with a risk period of more than 1 year period and for fees with more than Rs. 50,000 and income from forward contract. 6

47 They are recognized as liability at the time of its receipt and are derecognized as and when income accrues and/or risk period expires and disclosed in Schedule 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 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. The expenses under operating leases are booked under 'Leasehold Assets' and written off in 10 years or term of lease, whichever is less Rounding Off and Regrouping/Reclassification 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. 7

48 Notes to Accounts 1. Equity 1.1. Paid-up equity capital Schedule 33 Paid up share capital of the Bank has increased from year to year as follows: Financial Year Paid up Share Remarks Capital (Rs.) 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 2070/71 2,550,240,000 15% Proposed bonus shares included Nepal Rastra Bank (NRB) has prescribed Rs. 2 billion as minimum paid-up equity share capital requirement for "A" class licensed commercial banks. The Bank is in full compliance with regulatory requirement General Reserve Section 44 of Bank and Financial Institutions Act 2006 requires the Bank to allocate at least 20% of the net profits of every year to General Reserve until it is twice the paid-up capital. The Bank has appropriated Rs. 85,535,283 i.e., 20% of the net profits to General Reserve in the current year Deferred Tax Reserve NRB Directive no. 4 requires licensed institutions to maintain Deferred Tax Reserve equivalent to the amount of Deferred Tax Asset. The Bank maintains equivalent reserve to the amount of deferred tax asset in compliance with regulatory requirements. The movement of deferred tax asset is presented in the table below: Current Year (Rs.) Previous Year (Rs.) Opening Balance 851, ,847 Deferred tax liability on temporary differences (3,272,948) 346,955 Closing Balance (Deferred Tax (2,421,146) 851,802 Liability) 1

49 1.4. Investment Adjustment Reserve (IAR) The Bank has maintained adequate reserve in compliance with NRB Directives 04/2070 and 08/2070 for investments categorized as 'Available for Sale'. The movement of IAR for the year is presented below: in Rs. Net Required Movement Investment Reserve Opening Balance 10,355,000 Shares of Local Organized Institution Listed 10,000, ,000 (9,800,000) Unlisted 355, ,000 - Exempted Securities 2,302,600 Closing Balance 555, % reserve had been created against the investment made in stocks of Sanima Hydropower Pvt. Ltd. The stocks got listed in NEPSE this fiscal year. Excessive reserve (Rs. 9,800,000) has been reversed Exchange Equalization Fund (EEF) Section 45 of BAFIA, requires at least 25% of revaluation gains of such profits (except gain from revaluation of Indian Currency) to be credited to the Exchange Equalization Fund. The Bank has appropriated Rs. 539,976 i.e., 25% of the revaluation gain to the Exchange Equalization Fund during the year. The movement in EEF is presented hereunder: Amount (Rs.) Opening Balance 2,658,767 of revaluation amount specified in Schedule ,976 Closing Balance 3,198, Proposed Bonus Share and Cash Dividend The Board of Directors has proposed Bonus shares at the rate of 15% and Cash dividend at the rate of 0.79% to be ratified by NRB and Annual General Meeting. 3. Unpaid Dividend As on balance sheet date total dividend payable amounts to Rs. 8,482, (PY Rs. 12,580,814) of which no amount is unpaid over five years. Details have been presented as under: Dividend Payable of FY Current Year (Rs.) Previous Year (Rs.) 2069/ /2069 3,720,439 6,461, /2068 2,748,971 3,754, /2067 2,013,223 2,364,282 Total 8,482,634 12,580,814 2

50 4. Reconciliation Status The Bank reconciles Inter Branch Transactions on daily basis. There are no unreconciled transactions under Inter-Branch Transactions on balance sheet date. Similarly, reconciliation of the local and foreign bank and financial institution accounts is conducted weekly/fortnightly/monthly. The differences identified are reviewed and reconciled and same is in the process of being reconciled. Rs 0000 Reconciliation Status Total Amount <3 months >3<9 months >9<12 months >12 months Branch Reconciliation Agency Accounts 8, , Loans and Advances 5.1. Sectoral Classification NRB has specified the maximum ceiling of lending to total real estate sector at 25% of gross loans and advances. The Banks' exposure to Real Estate sector grew by 2.9%. As at Balance sheet date, the real estate exposure of the Bank was 4.6%. The sectoral classification of loans and advances is presented in the table below Movement of Loans S. No Current Year Previous Year Change in Volume Rs 000 Changes (%) 1 Term Loan 3,420,567 2,620, , Overdraft 2,526,053 2,352, , Trust Receipt/Import Bills 570, ,921 57, Demand Loan/Working Capital Loan 4,828,747 3,795,090 1,033, Individual Residential Home Loan 1,147, , , (Upto Rs 100 Lakhs) 6 Real Estate Loan 931, ,658 26, Margin Lending Loan 459,056 43, , Hire Purchase Loan 1,621,150 1,280, , Deprived Sector Lending 809, , , Bills Purchase 223, , Others Products 3,872,932 2,250,344 1,622, Net Loans and Advances 20,411,444 15,093,073 5,318, The Bank's year-on-year Net Loans and Advances escalated by Rs. 5,318,371 thousands (35.2%), increasing the outstanding balance to Rs. 20,411,444 thousands. The major volume growth was achieved under term loans (30.6%), demand loans (27.2%) and other products (72%). 3

51 5.3. Summary of Loans and Advances Disbursed, Recovered and Principal and Interest Written-Off: Amount ('000) Opening Balance 15,248, Loans Disbursed 27,762, Loans Recovered 22,389, Principal Written off Interest Written off Closing Outstanding (Gross) 20,620, Concentration of Loans & Advances (Funded & Non Funded Facilities) Funded and non-funded facilities and sector wise loans are within the limits prescribed by NRB Directives. The details are presented below: Rs '000 Current Year Previous Year % NRs. NRs. Total Loans and Advances 20,620,401 15,248,175 Loans to Top 10 Borrower 3,693, ,159, Loans to Single Largest Borrower 507, , Current Year NRs. % Rs '000 Previous Year NRs. Total Non Funded Liabilities 2,845,749 1,073,846 Exposure to Top 10 Parties 957, , Exposure to Single Largest Party 159, , Deprived sector lending (DSL) NRB Directive 17 requires "A" class licensed institutions to lend at least 4.5 percent of their total outstanding loan and advances (including bills purchased and discounted) in deprived sector. The Banks' exposure in deprived sector lending is Rs 818,113,830 (PY Rs. 542,293,681) or 4.71% (PY 4.13%) against a requirement of 4.50%: 6. Deposit Liabilities 6.1. Movement of Deposits The movement of deposit liabilities is presented in the table below: Rs 000 Current Year Previous Year Change in NRs. NRs. Volume % Non Interest Bearing 980, , , Saving Deposit 8,009,973 4,311,870 3,698, Call Deposit 6,439,272 3,671,749 2,767, Fixed Deposit 9,443,811 9,242, , Total 24,873,849 17,789,329 7,052, % % 4

52 The Bank's year-on-year deposit liability increased by Rs. 7,052,334 thousands (39.8%), to reach Rs. 24,873,849 thousands Concentration of Deposits Deposits concentration is presented as under: Current Year NRs. % Rs '000 Previous Year NRs. % Total deposits 24,873,849 17,789,329 Deposits of Top 10 Parties Individual 380, , Institutional 4,177, ,252, Weighted Average Interest Rate Spread The weighted average interest rate spread as on balance sheet date is presented as under: Current year Previous year rate (%) rate (%) Average Rate of Return on Risk Assets & Investments Average Rate on Deposits and Borrowings Net Spread Staff Loans and Advances Loans to staffs are provided in line with Employee Service Regulation of the Bank. Loans extended to staff have increased during the year as more staff became eligible and have availed such facilities. The loans outstanding as at the balance sheet date are as under: Current Year (Rs.) Previous Year (Rs.) Employee O/D Loan 4,797,592 4,996,439 Housing Loan 111,323,932 70,942,771 Advances to staff 1,371,845 1,308,694 Total 117,493,369 77,247, Taxation a) Advance Tax Advance Tax Rs. 195,502,184 has been paid as additional tax liability for FY 2070/71. b) Income Tax The Bank has filed Income tax return under self assessment procedures from 2066/67 to 2069/70 which is yet to be reassessed by the tax authority. Any liability arising out of reassessment shall be provided for. 5

53 c) Current Tax Liability Reconciliation Reconciliation of profit as per financial statement is reconciled with taxable profit to compute tax liability as follows: Amount (Rs.) Profit before Bonus and Tax as per financial 677,678,607 Less: Bonus 61,607,146 Profit after Bonus 616,071,461 Add: Bond premium write off 1,477,548 Tax on OYVS 207,063 Gratuity Expenses 5,892,373 Provision for staff leave 4,309,307 Depreciation (incl amortization) as per Financial 53,803,451 65,689,741 Less: Bond premium w/o of matured bond 76,580 Gratuity paid 14,570,781 Leave Encashment 1,318,726 CMB written back 170,000 Depreciation as per Tax 52,032,509 Dividend 1,134,709 Gain on sale of Fixed Assets 1,030,899 70,334,204 Taxable profit 611,426,998 Income 30% 183,428,099 d) Deferred Tax Assets/ (Liability) Deferred tax assets and liabilities have been computed in accordance with NAS - 9, Income Taxes from 16 July 2014 and are attributable to the following: Rs. In '000 As per books Tax Temporary of accounts Base Difference Fixed Assets 280, ,466 21,680 Leasehold Assets and Computer Software 54,769 55,309 (540) Premium paid on Bond - 1,401 (1,401) Staff Gratuity Provision for Staff Leave (11,668) - (11,668) Net Temporary Difference 8,070 Deferred Tax Liability/(Assets) as at Ashad end 30% 2,421 Deferred Tax Liability/(Assets) till Ashad end 2070 (852) Deferred Tax Expense/(Income) for current year 3,273 6

54 10. Staff Housing Staff Housing Reserve required under the Labor Act 2048 has not been created as the Bank provides housing loan to its staff as per the Employee Service Regulation. 11. Gratuity The Bank has made an additional provision of Rs. 5,892,373 (PY Rs. 4,408,650) for gratuity liability in the current year. From the current year the gratuity liability is fully funded and deposited at Citizen Investment Trust (CIT). 12. Staff Leave Total leave liability as on 16 th July 2014 is Rs. 11,668,484. Bank has paid Rs. 1,318,726 (PY Rs. 2,956,286) as leave encashment to existing and to those staff who resigned during FY 2013/ Provision for Staff Bonus Staff bonus has been calculated and provided at 10 percent of net profit after making adjustments for loan loss provision including buffer provision of Rs. 40 million and staff bonus. 14. Interest Realization after Year End Bank has not utilized the facility given in NRB Directive 4/070 for accounting in income the interest on customer loans and advances which were due as at end of financial year and were collected within 15 days of end of financial year as this is not in accordance with prudent accounting practice and NAS. 15. Borrowing by the Bank against collateral of own Assets - NIL 16. Earnings Per Share, Share Price And Share Transaction Earnings Per Share (EPS) is calculated and disclosed as per NAS 26 as follows: Basic EPS Diluted EPS Net profit attributable to equity shareholders (Rs.) 427,595, ,595,604 Total Number of shares (No.) 22,176,000 22,176,000 Earnings Per Share (Rs.) Compared to last year, the EPS grew by Rs (PY by Rs. 9.09). The Bank has not issued preference share and debentures/bonds, thus, basic earnings per share and diluted earnings per share are same. The closing price of the share is Rs. 638 (PY Rs. 260). 17. Details Of Non Banking Assets The Bank has not taken possession of any assets taken as security against the loans and advances. 7

55 18. Details of Leasehold Assets Amortization Cost Price Amortized up to last year Written off during the year Amortized during the year Total Amortized Amount In Rs Net Book Value 71,861,984 13,931, ,677 6,598,402 21,372,318 50,489, Fixed Assets Used By Government in 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 had lodged a claim of Rs 28,000,000 on 23 rd September 2012 ( 7 th Ashoj 2069) with Kathmandu Valley Development Authority for compensation. Claims are accounted for on Cash basis. 8

56 20. Classification of Assets And Liabilities Based On Maturity Rs. in Millions S. N Days Days Days Days Over 1 Year Total Amount Assets 1 Cash Balance Balance with Banks & FIs 2,974 2,974 3 Investment in Foreign Banks 1, ,521 4 Call Money 5 Government Securities - 1, ,133 6 Nepal Rastra Bank Bonds 7 Inter Bank & FI Lending 8 Loans & Advances 5,948 2,541 1,794 1,624 8,713 20,620 9 Interest Receivable Reverse Repo 11 Receivables from other Institutions under Commitment 12 Payment to be made for facilities under s. no 20,21 & 22 1,380 1, , Others 91-8,674 8,765 Total Assets (A) 12,068 4,360 2,044 3,915 17,645 40,032 Liabilities 14 Current Deposits Saving Deposits 2,824-11,627 14, Fixed Deposits 2,928 1,362 1,833 2, , Debentures 18 Borrowings: (a) Call/Short Notice (b) Inter-bank/Financial Institutions (c) Refinance (d) Others Other Liabilities and Provisions (a) Sundry Creditors (b) Bills Payable (c) Interest Payable (d) Provisions (e) Others Payable to other institutions under Commitment 21 Unutilized Approved Facilities Letter of Credit/Guarantee (Net of Margin) 1,105 1, , Repo Payment to be made for facilities under S. 24 No Others 7,773 7,773 Total Liabilities (B) 7,930 3,739 1,987 3,267 20,423 37,347 Net Financial Assets (A-B) 4, (2,778) 2,685 Cumulative Net Financial Assets 4,138 4,758 4,815 5,463 2,685-9

57 21. Related Parties The Bank has entered into financial transactions with the following related parties where directors have financial interest. Related Party Nature of Relationship Nature of transaction Rs 000 Current Year 10 Previous Year Kantipur Television Pvt. Ltd Common Promoter Deposit Medicare Hospital & Research Centre Pvt. Ltd Common Promoter Deposit 12,354 26,792 Sanima Hydro & Engineering Pvt. Ltd. Common Promoter Deposit 1,906 6,973 Sanima Life Insurance Company Ltd** Common Promoter Deposit 2,470 2,405 Sanima Insurance Company Ltd** Common Promoter Deposit Sanima Foundation** Common Promoter Deposit Sanima Mai Hydro Power Ltd Common Promoter Deposit 25,333 17,923 Sanima Pvt. Ltd Common Promoter Deposit 764 1,727 Tamor Sanima Energy Pvt. Ltd. Common Promoter Deposit Khumbu Carpet Industries Common Promoter Deposit Sopan Multiple Common Promoter Deposit Fund for Hydro Investment Common Promoter Deposit 1,457 1,441 Sanima Hydro Power Pvt. Ltd Common Promoter Deposit Sanima Hydro & Engineering Pvt. Ltd Common Promoter Sanima Mai Hydro Power Ltd Rental Common Promoter 2,344 2,100 income Sanima Hydro Power Pvt. Ltd Common Promoter IPAAN Common Promoter Deposit Family Service Supermarket Pvt ltd Common Promoter Deposit 1 0 Bhrikuti Trading Common Promoter Deposit Sanima Mai Hydro Ltd. Common Promoter Investment 10,000 10,000 Sanima Life Insurance Co. Ltd. Common Promoter Investment Sanima Foundation Common Promoter Investment 5 5 **Pending grant of license from Insurance Board, the Companies have yet to commence operation. 22. Total of key management personnel compensation (Disclosure as per NAS-16): In Rs Details of Key Management Short Term Employee Benefits (FY 070/71) Post Employment Benefits Termination Benefits Share Based Payments Other Long Term Benefits Chief Executive Officer Other key management Personnel (AM- DCEO) 8,455,807 51,911, ,638 13,332,208 NIL NIL NIL NIL NIL NIL Remarks Other Key Management Personnel Include Deputy Chief Executive officer and other management team of assistant manager level & above

58 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. Vehicle facilities. Total no of Key Management Personnel (including CEO): Compensation to Board of Directors (BODs) All members of the Board are non-executive directors. Compensation to BODs and other related expenses are detailed below: Current Year (Rs.) Previous Year (Rs.) Meeting Fees 1,188, ,000 Other Expenses 801, ,619 Directors are eligible for allowance of Rs. 10,000 per month or on actual bill whichever is less, for covering newspaper, telephone, internet and other communication expenses. Directors are paid Rs. 8,000 per meeting while chairman is paid Rs. 10,000 per meeting. Other expenses include reimbursement of travelling and hotel expenses for branches visit and above mentioned allowances. 24. Risk Management Functions & BASEL II Disclosure Nepal Rastra Bank has directed the Banks to develop own internal policy, procedures and structures to manage all material risk inherent in business for assessing capital adequacy in relation to the risk profiles as well as strategies for maintaining capital levels. This includes basic requirements of having good governance, efficient process of managing all material risks and an effective regime for assessing and maintaining adequate capital. The Bank has various BODs approved risk management policies for proper governance. Restructuring of Organization Sanima Bank has restructured its organizational setup this very year and continuous steps are taken to reengineer the processes to cater with the various systematic and unsystematic risks. Appointment of CRO Chief Risk Officer (CRO), along with his team, is responsible for overall risk management of the bank which includes managing, assessing, identifying, monitoring and reducing pertinent global, macro and micro-economic level business risks that could interfere with Banks objective and goals and whether the Bank is in substantial compliance with its internal operating policies and other applicable regulations and procedurses, external, legal, regulatory or contractual requirements on a continuous basis. Further, CRO ensures integration of all major risk in capital assessment process. 11

59 Credit Risk Management Committee (CRMC) Board level CRMC has been set up under NRB Directive for ensuring/reviewing bank's risk appetite are in line with the policies and CRO acts as member secretary. CRO closely monitors and report on credit related risks in ALCO & RMC meeting. Operational Risk Board and senior management of the bank places high priority on effective operational risk management and adherence to sound operating controls. Policies/Guidelines explicitly supports the identification, assessment, control and reporting of key risks. Emphasizes on dual controls, Effective monitoring and internal reporting, Contingency and business continuity plans, High standards of ethics and integrity, Commitment to good corporate governance and Segregation of duties and clear lines of management responsibility, accountability and reporting. Market Risk Sanima has Market Risk Management Policy developed in line with Risk Management Guidelines issued by NRB to assess and actively manage all material market risks, wherever they arise throughout the bank and a capital charge is provided for such risks. Stress testing technique also covers the capital requirement on market shock. Foreign Currency peak position, interest rate risk, stock position is discussed in ALCO meetings on monthly basis. For interest risk management, appropriate assets and liability mismatch (GAP analysis) is measured as per policy so as to minimize sudden fall in NII. Investments in stock are revalued at the end of every month and Open positions in foreign currencies are monitored daily. Prompt Action is taken to keep open positions and foreign currency exchange risk to a minimum level. Regulatory limits too are ensured at all time. Adequate care is taken to ensure the maturity of deposits to match with assets maturity. Adequate liquidity is ensured even in stressed scenarios. Various ratios as per liquidity risk management policy are assessed. Treasury department plays the vital role for monitoring same and report to ALCO. Compliance Compliance officer has been entrusted with the responsibility of assessment, identification and reporting to CRO the Operational, Liquidity & Market Risk in conformity with risk management policies of Sanima. 12

60 Assets and Liability Committee (ALCO) The ALCO, chaired by Chief Executive Officer, ensures functioning of the banking business in line with the set procedures and processes and recommends for necessary steps to address the risk associated with liquidity, movement in interest rate, exchange rate and equity price and other risks. Stress Testing Stress Testing is a risk management technique used to evaluate the potential effects on an institution s financial condition, of a set of specified changes in risk factors, corresponding to exceptional but plausible events. The Bank conducts the stress test on quarterly basis and reports to senior management. Internal Capital Adequacy Assessment Process (ICAAP) The Bank has developed a comprehensive ICAAP document. The ICAAP has two major components; first is an internal process to identify measure, manage and report risks to which the bank is exposed or could be exposed in the future; and second is an internal process to plan and manage a bank s capital so as to ensure adequate capital. The Bank also conducts the stress test on quarterly basis and reports to senior management. The Bank in line with BASEL provisions and ICAAP document assesses risk exposures and allocated sufficient capital/cushion for perceived risks. The adequacy of capital is main agenda of any ALCO, Man- Com and board meetings. Maker-Checker Policy The Bank has adopted Maker-Checker Policy in all of the transactions. Each and every transaction is entered and authorized in CBS by two different individuals for better control and any deviations are closely monitored. The activities of any personnel can be monitored centrally through an integrated system which helps in minimizing the risk of misconduct Information Technology The Bank has maintained in-house cold site for disaster recovery. The disaster recovery site and production server site have been kept in well-maintained buildings. Periodic drill is conducted to assess the functioning of DRS. Also, the desktops are implemented with Active Directory System (ADS) which does not allow users to replicate or bring the data in/from any unauthorized removable devices. Internal Audit Internal audit of the Bank is independent from the management and directly reports to Audit Committee, a board level committee. Audit functions are carried out by experienced staffs and regular observations are being communicated to the related departments/branches/staffs. Audit committee holds its meeting at least once in a quarter. 13

61 Disclosure as per Bank s disclosure policy under the Capital Adequacy Framework of Nepal Rastra Bank A. Capital Structure and capital Adequacy Tier 1 Capital and Breakdown of its Components Amount (Rs.) a Paid up Equity Share Capital 2,217,600,000 b Irredeemable Non-cumulative preference shares - c Share Premium 10,563,747 d Proposed Bonus Equity Shares 332,640,000 e Statutory General Reserves 240,500,000 f Retained Earnings 28,339,535 g Un-audited current year cumulative profit - h Capital Redemption Reserves - i Capital Adjustment Reserves - j Dividend Equalization Reserves - k Debenture Redemption Reserves - l Deferred Tax Reserve - m Other Free Reserves - n Less: Goodwill - o Less: Fictitious Assets - p Less: Investment in equity of licensed Financial Institutions - q Less: Investment in equity of institutions with financial interests 10,355,000 r Less: Investment in equity of institutions in excess of limits - s Less: Investments arising out of underwriting commitments - t Less: Reciprocal crossholdings - u Less: Other Deductions - Total Tier 1 Capital 2,819,288,281 Tier 2 Capital and Breakdown of its Components Amount (Rs) a Cumulative and/or Redeemable Preference Share - b Subordinated Term Debt - c Hybrid Capital Instruments - d General loan loss provision 246,168,184 e Exchange Equalization Reserves 3,198,743 f Investments Adjustment Reserves 555,000 g Assets Revaluation Reserves - h Other Reserves - Total Tier 2 Capital 249,921,927 Details of Subordinated Term Debt: The Bank has not issued any Subordinate Term Debt. Deductions from Capital: The Bank has invested Rs 10,355,000/- in Sanima Hydro Power, Sanima Insurance and Sanima Foundation, which the bank has deducted from its core capital. Total Qualifying Capital: 14

62 Amount (Rs.) Core Capital (Tier 1) 2,819,288,281 Supplementary Capital (Tier 2) 249,921,927 Total Capital Fund 3,072,172,121 Capital Adequacy Ratio: 12.54% B. Risk Exposures Risk weighted exposures for credit Risk, Market Risk and Operational Risk: RISK WEIGHTED EXPOSURES Amount (Rs.) Risk Weighted Exposure for Credit Risk 22,680,658,738 Risk Weighted Exposure for Operational Risk 833,090,952 Risk Weighted Exposure for Market Risk 334,302,709 Total Risk Weighted Exposures 23,848,052,398 Risk Weighted exposures under each 11 categories of Credit Risk: S.N. Categories Amount (Rs.) 1 Claims on Government and Central Bank - 2 Claims on Other Financial Entities - 3 Claims on Banks 468,486,977 4 Claims on Domestic Corporate and Securities Firms 11,574,565,709 5 Claims on Regulatory Retail Portfolio & Other Retail Portfolio 4,080,899,943 6 Claims secured by residential properties 687,373,613 7 Claims secured by Commercial real estate 307,955,508 8 Past due claims 92,374,545 9 High Risk claims 2,059,145, Other Assets 1,712,701, Off Balance Sheet Items 1,697,155,856 Total 22,680,658,738 Total Risk Weight Exposures calculation Table: RISK WEIGHTED EXPOSURES Amount (Rs.) Risk Weighted Exposure for Credit Risk 22,680,658,738 Risk Weighted Exposure for Operational Risk 833,090,952 Risk Weighted Exposure for Market Risk 334,302,709 Add: 2% of the total RWE for unsatisfactory overall risk management policies and procedures 476,961,048 Add: RWE equivalent to reciprocal of capital charge of 2% of gross income 155,132,505 Total Risk Weighted Exposures 24,480,145,952 Total Core Capital to Total Risk Weighted Exposures 11.52% Total Capital to Total Risk Weighted Exposures 12.54% Amount of Non-Performing Assets (both Gross and Net in Rs.): Loan Loss Gross Amount Provision Net NPL Restructured Sub-Standard 613, , ,431 Doubtful 1,427, , ,976 Loss 1,540,994 1,540,994 - Total 3,582,854 2,408,447 1,174,407 15

63 NPA Ratios: NPA Ratios % Gross NPA to Gross Advances 0.02 Net NPA to Net Advances 0.01 Movement in Non Performing Assets: Current Year Previous Year Change (%) Non Performing Assets (Volumes in Rs.) 3,582,854 4,135, % Non Performing Assets (%) % Write off Loans and Interest Suspense: Amount (Rs.) Write off loans during the year 308, Write off Interest Suspense year 87, Total 395, Movement in Loan Loss Provision and Interest Suspense Current Year (Rs) Previous Year (Rs) Change (%) Loan Loss Provision 246,168, ,101, % Interest Suspense 41,353,074 30,992, % Details of Additional Loan Loss Provision during the year: Amount (Rs) Pass 93,727,792 Restructured - Sub-Standard 153,477 Doubtful 713,976 Loss 617,232 Total 95,212,477 Segregation of Investment Portfolio: Amount (Rs) Held for Trading 47,790,560 Held to Maturity 3,655,054,664 Available for sale 12,910,438 Total Investment 3,715,755,662 Capital assessed above is sufficient to cover the present and future growth as per strategic plan. We do not see future material risk expected to trigger effecting capital adequacy. C. Eligible Credit Risk Mitigants (CRM) as on 32 nd Ashadh 2071 (16 th July, 2014) Amount (Rs.) Deposits with Bank 241,720,578 Gold 157,048,218 Total 398,768,796 16

64 Sanima Bank Limited Statements of Loans taken by promoters/ promoter group shareholders by pledging their promoter shares as collateral in other financial institutions As at 32 Ashad 2071 (16 July 2014) Share in the name of Promoter Loan Details S. N. Name of Promoters/Promoter Group Total Number of Percentage to Name of Lending Banks Number of Loan Amount Shareholders Shares total Paid up /Financial Institutions Shares pledged 1 Jai Ganesh Investment Company Pvt. Ltd 605, NMB Bank Ltd. 51,488, ,000 2 Jai Ganesh Investment Company Pvt. Ltd 605, ICFC Finance Ltd. 39,550, ,504 3 Ganesh Kumar Agrawal 12, Yeti Dev. Bank Ltd. 1,694,408 11,658 4 Birendra Prasad Mahato 757, Janata Bank Ltd ,000 5 Jamuna Bhandari 18, Prabhu Bikash Bank Ltd. 1,500,000 16,758 6 Anamika Shrestha 60, Global IME Bank Ltd. 9,200,000 5,508 7 Anamika Shrestha 60, Machhapuchchhre Bank Ltd. - 55,083 8 Dinesh Mani Shrestha 205, Global IME Bank Ltd. 9,200, ,636 9 Dinesh Mani Shrestha 205, Machhapuchchhre Bank Ltd. 30,000,000 92, Dilip Shrestha 220, Machhapuchchhre Bank Ltd. 28,500, , Ghanashyam Thapa 806, Machhapuchchhre Bank Ltd. 30,000, ,162 Total 3,561, ,133,654 1,489,574 Schedule 34 Remarks

65 Sanima Bank Limited Comparison of Unaudited and Audited Financial Statements as of Fiscal Year 2070/71 (2013/14) Schedule 35 As per Figures in Rs '000 Unudited As per Audited Financial Financial Variance S.N. Statements Statements In Amount In % Reasons for Variance 1 Total Capital and Liabilities (1.1 to 1.7) 29,402,804 29,376,986 (25,818) (0.09) 1.1 Paid Up Capital 2,217,600 2,550, , Reserve and Surplus 660, ,157 (377,152) (57.12) Deferred tax adjustments 1.3 Debenture and Bond 1.4 Borrowings 898, , Deposits (a+b) 24,841,663 24,873,849 32, a. Domestic Currency 23,499,402 23,533,704 34, Regrouping some Accounts b. Foreign Currency 1,342,261 1,340,145 (2,116) (0.16) Regrouping some Accounts 1.6 Income Tax Liability 1.7 Other Liabilities 784, ,472 (13,492) (1.72) Regrouping some Accounts 2 Total Assets (2.1 to 2.7) 29,402,804 29,376,986 (25,818) (0.09) 2.1 Cash & Bank Balance 3,511,914 3,511, Money at Call and Short Notice Investments 3,715,503 3,715, Loans and Advances 20,411,444 20,371,444 (40,000) Buffer Loan Loss Provision (0.20) made a. Real Estate Loan 931, , Residential Real Estate Loan (Except Personal Home Loan up to Rs. 10 Million) 136, , Business Complex & Residential Apartment Construction Loan 161, , Income Generating Commercial Complex Loan - 4. Other Real Estate Loan (Including Land Purchase and Plotting) 633, ,723 - b. Personal Home Loan of Rs. 10 Million or Less 1,147,464 1,147,464 - c. Margin Type Loan 459, ,056 d. Term Loan 3,420,567 3,420,567 e. Overdraft Loan/TR Loan/WC Loan 7,925,634 7,925,634 - f. Others 6,527,428 6,527, Fixed Assets 502, , Non Banking Assets Writing off Deferred Revenue Expenditure & Regropuing 2.7 Other Assets 1,261,707 1,275,889 14, other accounts 3 Profit and Loss Account 3.1 Interest Income 2,018,506 2,018, Interest Expense 1,199,788 1,199,788 A. Net Interest Income ( ) 818, , Fees, Commission and Discount 40,458 39,825 (634) Netting off Remittance (1.57) Commission 3.4 Other Operating Income 85,438 85, Foreign Exchange Gain/Loss (Net) 146, ,889 B. Total Operating Income (A ) 1,091,503 1,090,870 (634) (0.06) 3.6 Staff Expenses 134, , Other Operating Expenses 206, , Writing off Deferred Revenue C. Operating Profit Before Provision (B ) 750, , Expenditure 3.8 Provision for Possible Losses 55,212 95,212 40, Buffer Loan Loss Provision made D. Operating Profit (C.-3.8) 695, ,894 40, Non Operating Income/Expenses (Net) 13,082 21,566 8, Regrouping some items 3.10 Write Back of Provision For Possible Loss 1,527 1,527 E. Profit from Regular Activities (D ) 710, ,987 32, Extraordinary Income/Expenses (Net) 8,482 (308) (8,790) - Regrouping some items F. Profit before Bonus and Taxes (E ) 718, ,679 40, Due to Buffer Loan Loss 3.12 Provision for Staff Bonus 65,331 61,607 (3,724) (5.70) Provision made 3.13 Provision For Tax 199, ,476 (10,959) (5.50) G. Net Profit/(Loss) (F ) 453, ,596 (26,283) (5.79)

66 Sanima Bank Limited Unaudited Financial Results (Quarterly) As at 4 th Quarter ( 32nd Ashad 2071) of the Fiscal Year 2070/71 Schedule (A) S.N. Figures in Rs '000 As at 16th July th April th July Total Capital and Liabilities (1.1 to 1.7) 29,402,804 24,944,549 21,976, Paid Up Capital 2,217,600 2,217,600 2,217, Reserve and Surplus 660, , , Debenture and Bond Borrowings 898,268 1,139,402 1,480, Deposits (a+b) 24,841,663 20,360,891 17,789,329 a. Domestic Currency 23,499,402 19,230,462 17,604,173 b. Foreign Currency 1,342,261 1,130, , Income Tax Liability Other Liabilities 784, , ,054 2 Total Assets (2.1 to 2.7) 29,402,804 24,944,549 21,976, Cash & Bank Balance 3,511,914 1,537,648 1,685, Money at Call and Short Notice 364, Investments 3,715,503 3,383,204 3,848, Loans and Advances(Net) 20,411,444 18,251,411 15,093,073 a. Real Estate Loan 931, , , Residential Real Estate Loan (Except Personal Home Loan up to Rs. 100 lacs) 136, , , Business Complex & Residential Apartment Construction Loan 161, , , Income Generating Commercial Complex Loan - 4. Other Real Estate Loan (Including Land Purchase and Plotting) 633, , ,304 b. Personal Home Loan of Rs. 100 Lacs or Less 1,147,464 1,055, ,179 c. Margin Type Loan 459,056 61,691 43,841 d. Term Loan 3,420,567 2,857,361 2,620,056 e. Overdraft Loan/TR Loan/WC Loan 7,925,634 8,172,553 6,660,191 f. Others 6,527,428 5,255,805 4,067, Fixed Assets 502, , , Non Banking Assets Other Assets 1,261,707 1,273, ,005 3 Profit and Loss Account Upto 4th Quarter This Year Upto 3rd Quarter This Year Upto 4th Quarter Last Year 3.1 Interest Income 2,018,506 1,469,490 1,678, Interest Expense 1,199, ,369 1,023,257 A. Net Interest Income ( ) 818, , , Fees, Commission and Discount 40,458 29,012 23, Other Operating Income 85,438 57,375 68, Foreign Exchange Gain/Loss (Net) 146, ,126 27,237 B. Total Operating Income (A ) 1,091, , , Staff Expenses 134, ,447 99, Other Operating Expenses 206, , ,730 C. Operating Profit Before Provision (B ) 750, , , Provision for Possible Losses 55,212 36,613 57,846 D. Operating Profit (C.-3.8) 695, , , Non Operating Income/Expenses (Net) 13,082 8,182 2, Write Back of Provision For Possible Loss 1,527 1,219 19,675 E. Profit from Regular Activities (D ) 710, , , Extraordaniry Income/Expenses (Net) 8,482 (308) - F. Profit before Bonus and Taxes (E ) 718, , , Provision for Staff Bonus 65,331 45,922 43, Provision For Tax 199, , ,379 G. Net Profit/(Loss) (F ) 453, , ,061 4 Ratios As at 16th July th April th July Capital Fund to RWA (%) Non Performing Loan (NPL) to Total Loan (%) Total Loan Loss Provision to Total NPL (%) 5, , , Cost of Fund after CRR(%) Credit To Deposit Ratio (Calculated as per NRB Directives) (%) Base Rate (%) Interest Spread (as per NRB Directives) (%) Additional Information 5.1 Average Yield LCY (%) Earning Per Share (Rs.) Networth Per Share (Rs.) Net Liquid Assets/Total Deposit (%) Price Earning Ratio(%) Total Assets per Share (Rs) 1, , Return on Equity (%) Return on Total Assets (%) Figures are subject to change from supervisory authority and external auditor. Previous period figures have been regrouped/rearranged where necessary.

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