Interim Financial Statements

As of 16th October 2020 (30th Ashwin 2077)

 
Interim Financial Report | Q1 FY 2020 - 21 1
 
 
  
 
A. Condensed Consolidated Statement of Financial Position
NPR in 000

Group Bank

Assets Immediate Immediate

This Quarter This Quarter
Previous Year Previous Year
Ending Ending
Ending Ending
Cash and Cash Equivalent 13,423,717 19,410,428 13,397,518 19,371,810
Due from Nepal Rastra Bank 5,803,175 5,448,851 5,803,175 5,448,851
Placement with Banks and FIs 9,501,395 10,230,579 9,501,395 10,230,579
Derivative Financial Instruments 12,670,890 10,859,598 12,670,890 10,859,598
Other Trading Assets 29,622 196,695 - -
Loans and Advances to Banks and Fis 9,692,552 5,836,368 9,692,552 5,836,368
Loans and Advances to Customers 157,196,024 148,231,388 157,196,024 148,231,388
Investment Securities 35,446,025 33,709,040 35,158,798 33,471,813
Current Tax Assets - 283,017 - 283,017
Investment in Subsidiaries - - 78,000 78,000
Investment in Associates 126,276 126,276 80,000 80,000
Investment Property 8,219 8,219 8,219 8,219
Property and Equipment 1,327,776 1,330,452 1,316,349 1,318,391
Goodwill and Intangible Assets 68,162 72,415 67,554 71,750
Deferred Tax Assets 1,476 - - -
Other Assets 3,233,920 2,477,467 3,204,168 2,431,477
Total Assets 248,529,228 238,220,794 248,174,642 237,721,261
Liabilities
Due to Banks and FIs 3,513,539 2,228,861 3,513,539 2,228,861
Due to Nepal Rastra Bank 665,890 53,286 665,890 53,286
Derivative Financial Instruments 12,446,186 10,764,203 12,446,186 10,764,203
Deposits from Customers 195,916,742 190,795,945 196,151,871 190,806,470
Borrowings - - - -
Current Tax Liabilities 159,588 4,325 158,207 -
Provisions - - - -
Deferred Tax Liabilities 1,377,103 1,320,937 1,377,103 1,320,923
Other Liabilities 5,147,932 4,936,897 4,842,608 4,705,490
Debt Securities Issued 2,050,959 2,040,548 2,050,959 2,040,548
Subordinated Liabilities - - - -
Total Liabilities 221,277,938 212,145,001 221,206,362 211,919,781
Equity
Share Capital 10,097,497 10,097,497 10,097,497 10,097,497
Share Premium 74 74 74 74
Retained Earnings 4,382,485 3,169,652 4,251,044 3,042,237
Reserves 12,620,162 12,661,672 12,619,664 12,661,672
Total Equity Attributable to
Equity Holders 27,100,218 25,928,895 26,968,279 25,801,481
Non Controlling Interest 151,073 146,897 - -
Total Equity 27,251,291 26,075,793 26,968,279 25,801,481
Total Liabilities and Equity 248,529,228 238,220,794 248,174,642 237,721,261

Interim Financial Report | Q1 FY 2020 - 21 2

 
  
 

B. Condensed Consolidated Statement of Profit or Loss

NPR in 000

Group Bank

Particulars Current Year Previous Year Corresponding Current Year Previous Year Corresponding
Upto This Upto This Upto This Upto This
This Quarter This Quarter This Quarter This Quarter
Quarter (YTD) Quarter (YTD) Quarter (YTD) Quarter (YTD)

Interest Income 3,991,274 3,991,274 4,275,916 4,275,916 3,983,194 3,983,194 4,266,630 4,266,630
Interest Expense 2,408,726 2,408,726 2,347,754 2,347,754 2,409,179 2,409,179 2,348,031 2,348,031
Net Interest Income 1,582,548 1,582,548 1,928,162 1,928,162 1,574,015 1,574,015 1,918,600 1,918,600
Fees and Commission Income 418,432 418,432 450,877 450,877 400,816 400,816 448,563 448,563
Fees and Commission Expense 46,582 46,582 75,631 75,631 45,887 45,887 75,631 75,631
Net Fees and Commission Income 371,850 371,850 375,247 375,247 354,929 354,929 372,932 372,932
Net Interest, Fees and Commission
Income 1,954,398 1,954,398 2,303,409 2,303,409 1,928,944 1,928,944 2,291,532 2,291,532
Net Trading Income 121,519 121,519 127,335 127,335 120,118 120,118 127,335 127,335
Other Operating Income 70,347 70,347 99,455 99,455 70,293 70,293 91,463 91,463
Total Operating Income 2,146,264 2,146,264 2,530,199 2,530,199 2,119,355 2,119,355 2,510,330 2,510,330
Impairment Charge/ (Reversal) for Loans and
Other Losses (275,990) (275,990) 61,363 61,363 (275,990) (275,990) 61,363 61,363
Net Operating Income 2,422,254 2,422,254 2,468,836 2,468,836 2,395,345 2,395,345 2,448,967 2,448,967
Personnel Expenses 582,552 582,552 596,039 596,039 576,042 576,042 591,087 591,087
Other Operating Expenses 285,592 285,592 217,456 217,456 278,475 278,475 208,350 208,350
Depreciation & Amortization 58,612 58,612 44,184 44,184 57,760 57,760 43,258 43,258
Operating Profit 1,495,498 1,495,498 1,611,158 1,611,158 1,483,069 1,483,069 1,606,272 1,606,272
Non-Operating Income 150 150 1,412 1,412 150 150 1,412 1,412
Non-Operating Expense 4,223 4,223 2,560 2,560 4,223 4,223 2,560 2,560
Profit Before Income Tax 1,491,426 1,491,426 1,610,010 1,610,010 1,478,996 1,478,996 1,605,124 1,605,124
Income Tax Expense 447,014 447,014 483,003 483,003 443,284 443,284 481,537 481,537
Current Tax 446,980 446,980 483,003 483,003 443,284 443,284 481,537 481,537
Deferred Tax 34 34 - - - - - -
Profit /(Loss) For the Period 1,044,412 1,044,412 1,127,007 1,127,007 1,035,712 1,035,712 1,123,587 1,123,587

 
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C. Statement of Comprehensive Income

NPR in 000

Group Bank

Particulars Previous Year Previous Year

Current Year Corresponding Current Year Corresponding
Upto This Upto This Upto This Quarter Upto This Quarter
This Quarter This Quarter This Quarter This Quarter
Quarter (YTD) Quarter (YTD) (YTD) (YTD)
Profit /(Loss) For the Period 1,044,412 1,044,412 1,127,007 1,127,007 1,035,712 1,035,712 1,123,587 1,123,587
Other Comprehensive Income
a) Items that will not be reclassified to profit
or loss
- Gains/(losses) from investment in equity
instruments measured at fair value 187,266 187,266 37,504 37,504 187,266 187,266 37,504 37,504
- Gains/(loss) on revaluation - - - - - - - -
- Actual gain/(loss) on defined benefit plans - - - - - - - -
- Income tax relating to above items (56,180) (56,180) - - (56,180) (56,180) - -
Net other comprehensive income that will
not be reclassified to profit or loss 131,086 131,086 37,504 37,504 131,086 131,086 37,504 37,504
b) Items that may be reclassified to profit or
loss
- Gains/(losses) on cash flow hedge
- Exchange gains/(losses) (arising from
translating financial assets of foreign
operation)
- Income tax relating to above items
Net other comprehensive income that may
be reclassified to profit or loss - - - - - - - -
c) Share of other comprehensive income of
associate accounted as per equity method
Other comprehensive income for the period
(net of income tax) 131,086 131,086 37,504 37,504 131,086 131,086 37,504 37,504
Total Comprehensive Income 1,175,498 1,175,498 1,164,511 1,164,511 1,166,799 1,166,799 1,161,090 1,161,090
- - - - - - - -
Profit Attributable To:

Interim Financial Report | Q1 FY 2020 - 21 4

 
  
 
Equity holders of the Bank 1,171,322 1,171,322 1,162,869 1,162,869 1,166,799 1,166,799 1,161,090 1,161,090
Non - controlling interest 4,176 4,176 1,642 1,642 - - - -

Basic Earnings Per Share 40.59 49.08 40.26 48.93

Annualized Basic Earnings Per Share 40.59 49.08 40.26 48.93
Diluted Earnings Per Share 40.59 49.08 40.26 48.93

D. Ratios as per NRB Directive

Group Bank

Particulars Previous Year Previous Year

Current Year Corresponding Current Year Corresponding
This Upto This This Upto This This Upto This This Upto This
Quarter Quarter (YTD) Quarter Quarter (YTD) Quarter Quarter (YTD) Quarter Quarter (YTD)
Capital Fund to RWA 12.89 12.29 12.59 12.20
Non-Performing Loan (NPL) to Total Loan (As per NRB Directive) 0.65 0.65 0.65 0.65
Total Loss Loan Provision to Total NPL (As per NRB Directive) 245.31 245.91 245.31 245.91
Costs of Funds 4.99 6.20 4.99 6.20
Credit to Deposit Ratio (As per NRB Directive) 73.48 74.09 73.48 74.09
Base Rate (As per NRB Directive) 6.68 7.94 6.68 7.94
Interest Rate Spread (As per NRB Directive) 3.97 4.45 3.97 4.45

Interim Financial Report | Q1 FY 2020 - 21 5

 
  
 

E. Condensed Consolidated Statement of Changes in Equity

NPR 000
Group
Attributable to equity holders of the Bank

Total Equity
Controlling
Equalisation

Revaluation
Fair Value
Regulatory

Interest
Exchange
Particulars

Non-
Retained
General
Premium

Reserve

Reserve

Reserve
Reserve

Reserve

Reserve
Earning
Capital

Share
Share

Other

Total
Balance at Shrawan 01, 2076 9,011,845 74 6,435,500 539,600 903,759 2,252,624 - 3,860,780 309,876 23,314,059 145,250 23,459,308
Profit for the period 3,568,641 - 3,568,641 20,848 3,589,489
Other Comprehensive Income - - - - - 1,024,571 - - - 1,024,571 - 1,024,571
Total Comprehensive Income - - - - - 1,024,571 - 3,568,641 - 4,593,212 20,848 4,614,060
Contributions from and distributions to owners - - - - - - - - - -
Share issued - - - - - - - - - -
Share based payments - - - - - - - - - -
Dividends to equity holders 1,085,652 - - - - - - (3,064,027) - (1,978,375) - (1,997,575)
Bonus share issued 1,085,652 - - - - - - (1,085,652) - - - -
Cash dividends paid - - - - - - - (1,978,375) - (1,978,375) (19,200) (1,997,575)
Other - - 714,000 76,300 383,264 - - (1,195,742) 22,178 0 - 0.00
Total contributions by and distributions 1,085,652 - 714,000 76,300 383,264 - - (4,259,770) 22,178 (1,978,375) (19,200) (1,997,575)
Balance at Ashadh end 2077 10,097,497 74 7,149,500 615,900 1,287,023 3,277,195 - 3,169,652 332,054 25,928,895 146,897 26,075,793
Balance at Shrawan 01, 2077 10,097,497 74 7,149,500 615,900 1,287,023 3,277,195 - 3,169,652 332,054 25,928,895 146,897 26,075,793
Profit for the period 1,040,236 - 1,040,236 4,176 1,044,412
Other Comprehensive Income 131,086 - - 131,086 131,086
Total Comprehensive Income - - - - - 131,086 - 1,040,236 - 1,171,322 4,176 1,175,498
Contributions from and distributions to owners - -
Share issued - - - - - - - - 0 - 0 -
Share based payments - - - - - - - - 0 - 0 -
Dividends to equity holders - - - - - - - - 0 - - -
Bonus share issued - - - - - - - - 0 - 0
Cash dividends paid - - - - - - - - 0 - - -
Other - - 208,000.00 14,800.00 (347,027.13) - - 172,596.93 (48,370) - - -
Total contributions by and distributions - - 208,000 14,800 (347,027) - - 172,597 (48,370) - - -
Balance at Ashwin end 2077 10,097,497 74 7,357,500 630,700 939,996 3,408,281 - 4,382,485 283,685 27,100,218 151,073 27,251,291

 
Interim Financial Report | Q1 FY 2020 - 21 6
 
 
  
 
Bank
Attributable to equity holders of the Bank

Equalisation

Revaluation
Fair Value
Regulatory
Exchange
Particulars

Retained
General
Premium

Reserve

Reserve

Reserve
Reserve

Reserve

Reserve
Earning
Capital

Share
Share

Other

Total
Balance at Shrawan 01, 2076 9,011,845 74 6,435,500 539,600 903,759 2,252,624 - 3,735,334 309,876 23,188,612
Profit for the period - - 3,566,673 - 3,566,673
Other Comprehensive Income - - - - - 1,024,571 - - - 1,024,571
Total Comprehensive Income - - - - - 1,024,571 - 3,566,673 - 4,591,244
Contributions from and distributions to owners -
Share issued -
Share based payments -
Dividends to equity holders 1,085,652 - - - - - - (3,064,027) - (1,978,375)
Bonus share issued 1,085,652 - - - - - - (1,085,652) - -
Cash dividends paid - - - - - - - (1,978,375) - (1,978,375)
Other - - 714,000 76,300 383,264 - - (1,195,742) 22,178 0
Total contributions by and distributions 1,085,652 - 714,000 76,300 383,264 - - (4,259,770) 22,178 (1,978,375)
Balance at Ashadh end 2077 10,097,497 74 7,149,500 615,900 1,287,023 3,277,195 - 3,042,237 332,054 25,801,481
Balance at Shrawan 01, 2077 10,097,497 74 7,149,500 615,900 1,287,023 3,277,195 - 3,042,237 332,054 25,801,481
Profit for the period 1,035,712 - 1,035,712
Other Comprehensive Income 131,086 - - 131,086
Total Comprehensive Income - - - - - 131,086 - 1,035,712 - 1,166,799
Contributions from and distributions to owners -
Share issued - - - - - - - - - -
Share based payments - - - - - - - - - -
Dividends to equity holders - - - - - - - - - -
Bonus share issued - - - - - - - - - -
Cash dividends paid - - - - - - - - - -
Other - - 208,000 14,800 (347,027) - - 173,095 (48,867) -
Total contributions by and distributions - - 208,000 14,800 (347,027) - - 173,095 (48,867) -
Balance at Ashwin end 2077 10,097,497 74 7,357,500 630,700 939,996 3,408,281 - 4,251,044 283,187 26,968,279

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F. Condensed Consolidated Statement of Cash Flows

NPR 000
Group Bank

Particulars Corresponding Corresponding

Upto This Upto This
Previous Year Upto Previous Year Upto
Quarter Quarter
This Quarter This Quarter

CASH FLOWS FROM OPERATING ACTIVITIES:

Interest Received 3,896,708 4,121,542 3,888,628 4,112,257
Fees and other income received 355,621 486,787 339,479 473,015
Dividend received - - - -
Receipts from other operating activities 180,497 212,570 178,969 210,838
Interest paid (2,343,847) (2,324,038) (2,344,300) (2,323,761)
Commission and fees paid (45,762) (75,631) (45,887) (75,631)
Cash payment to employees (423,920) (737,355) (411,709) (732,946)
Other expense paid (290,607) (249,453) (282,698) (210,910)
Operating cash flows before changes in operating assets and
1,328,691 1,434,422 1,322,484 1,452,861
liabilities

(Increase)/Decrease in operating assets

Due from Nepal Rastra Bank (354,324) 78,730 (354,324) 78,730
Placement with bank and financial institutions 729,184 (1,062,818) 729,184 (1,062,818)
Other trading assets 168,475 - - -
Loan and advances to bank and financial institutions (3,895,135) (342,598) (3,895,135) (342,598)
Loan and advances to customers (8,604,577) (8,049,705) (8,604,577) (8,049,705)
Other assets (2,569,037) (3,383,918) (2,584,041) (3,265,165)

Increase/ (Decrease) in operating liabilites

Due to bank and financial institutions 1,284,677 (1,415,647) 1,284,677 (1,415,647)
Due to Nepal Rastra Bank 612,605 620,347 612,605 620,347
Deposit from customers 5,120,796 10,040,871 5,345,401 10,040,871
Borrowings - - - -
Other Liabilities 2,063,231 1,334,749 1,983,930 1,296,200
Net cash flow from operating activities before tax paid (4,115,415) (745,567) (4,159,797) (646,924)
Income taxes paid (325,115) 209,983 (318,474) 212,380
Net cash flow from operating activities (A) (4,440,530) (535,584) (4,478,271) (434,544)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of investment securities (1,497,264) 1,294,958 (1,447,264) 1,224,958
Receipts from sale of investment securities - - - -
Purchase of property and equipment (50,744) (22,611) (50,583) (22,611)
Receipt from the sale of property and equipment - - - -
Purchase of intangible assets (1,298) (1,980) (1,298) (1,980)
Receipt from the sale of intangible assets - - - -

 
Interim Financial Report | Q1 FY 2020 - 21 8
 
 
  
 
Purchase of investment properties - - - -
Receipt from the sale of investment properties - - - -
Interest received - - - -
Dividend received 11,592 9,372 11,592 9,372
Net cash used in investing activities (B) (1,537,714) 1,279,739 (1,487,554) 1,209,739

CASH FLOWS FROM FINANCING ACTIVITIES

Receipt from issue of debt securities - - - -
Repayment of debt securities - - - -
Receipt from issue of subordinated liabilities - - - -
Repayment of subordinated liabilities - - - -
Receipt from issue of shares - - - -
Dividends paid (8,466) 1,317,191 (8,466) 1,317,191
Interest paid - - - -
Other receipt/payment - - - -
Net cash from financing activities ( C ) (8,466) 1,317,191 (8,466) 1,317,191

Net increase (decrease) in cash and cash equivalents (5,986,711) 2,061,346 (5,974,292) 2,092,386

Cash and cash equivalents at Shrawan 01 (beginning of the year) 19,410,428 12,593,161 19,371,810 12,479,698
Effect of exchange rate fluctuations on cash and cash equivalents held
Cash and cash equivalents at Ashwin end 13,423,717 14,654,507 13,397,518 14,572,084

Interim Financial Report | Q1 FY 2020 - 21 9

 
  
 

G. Statement of Distributable Profit or Loss

NPR in 000
Details about the Distributable Profit
Net profit for the period end Ashwin 2077 quarter 1,035,712
1. Appropriations
1.1 Profit required to be appropriated to (173,933)
a. General Reserve (208,000)
b. Capital Redemption Reserve -
c. Exchange Fluctuation Fund (14,800)
d. CSR Fund 49,860
e. Employees Training Fund -
f. Other (992)
1.2 Profit required to be transferred to Regulatory Reserve 347,027
a. Transferred to Regulatory Reserve -
b. Transferred from Regulatory Reserve 347,027
Net profit for the period end Ashwin 2077 quarter available for distribution 1,208,807

Notes:

 Figures presented above may vary with the audited figures if instructed by the banking regulator and / or statutory auditors.
 Group Financial Statements include Nabil Bank Ltd. (Parent Co.) and Nabil Investment Banking Ltd. (Subsidiary Co.).
 All inter-company transactions and outstanding balances among Group Companies are excluded in Group Financial Statements.
 The Bank has applied alternative treatment in the Carve-out issued by the Institute of Chartered Accountants of Nepal with respect to the
following:
a. The Bank has not restated the figures relating to corresponding quarter of the previous year.
b. The Bank has measured impairment loss on Loans and Advances at the higher of amount derived as per norms prescribed by Nepal
Rastra Bank for loan loss provision and the amount determined as per Para 63 of NAS 39.
c. The Bank has not factored fees and points paid or received on loans and advances in the application of effective interest rate. These
have been recognized directly in the Statement of Profit and Loss.
 Loans and Investments are presented net of impairment charges and includes interest accruals and staff loans. Likewise, deposits include
accrued interest payables.
 Personnel Expenses includes provision for staff bonus which has been calculated in line with the provisions in Bonus Act.
 Figures are regrouped /rearranged/restated wherever necessary for consistent presentation and comparison.

Interim Financial Report | Q1 FY 2020 - 21 10

 
  
 

H. Notes to the Interim Financial Statements

1. Basis of preparation
The consolidated financial statements of the Group have been prepared in accordance with Nepal
Financial Reporting Standards 2013 (NFRS) developed by the Accounting Standards Board along
with the carve outs, Nepal (ASBN) and pronounced for application by the Institute of Chartered
Accountants of Nepal (ICAN) on September 13, 2013 along with the carve outs opted for by the
Institute in NFRS implementation.

2. Statement of Compliance with NFRSs

These financial statements comply with the requirements of the Nepal Financial Reporting Standards
2013 (NFRS), Companies Act, 2006 and amendments thereto and also provide appropriate
disclosures required under regulations of the Securities Exchange Board of Nepal (SEBON).

Carve-outs in NFRS

The ICAN, on recommendation from ASBN, has issued following carve-outs in the implementation of
NFRS at licensed banks and financial institutions and has also prescribed alternative treatments
explained below:

a) NAS 39 – “Financial Instruments: Recognition and Measurements”

Carve out from the requirement to determine impairment loss on financial assets – loans and
advances by adopting the ‘Incurred Loss Model’ as specified in para 63 of NAS 39 unless the
reporting entity is a bank or a financial institution registered as per Bank and Financial Institutions
Act 2073. Such entities shall measure impairment loss on loans and advances at the higher of:

- amount derived as per norms prescribed by Nepal Rastra Bank for loan loss provisioning; and

- amount determined as per para 63 of NAS 39 adopting Incurred Loss Model

The Group has adopted this mandatory treatment. As a result of this treatment, the Group has
recognized impairment loss on loans and advances at the higher of the amount derived as per
prudential norms specified in NRB directive no. 2/75 and the amount derived from incurred loss
model as specified in para 63 of NAS 39.

The Group has recognized impairment loss on other financial assets measured at amortized cost in
accordance with para 63 of NAS 39.

b) NAS 39 – “Financial Instruments: Recognition and Measurements”

Carve out from the requirement to incorporate all fees and points paid or received under
contractual terms of a financial instrument in the calculation of ‘Effective Interest Rate’ for the

 
Interim Financial Report | Q1 FY 2020 - 21 11
 
 
  
 
financial instrument as specified in para 9 of NAS 39 unless it is immaterial or impracticable to
determine such fees and points reliably.

The Group has adopted this alternative treatment. As a result of this alternative treatment, the
Group has excluded the full amount of upfront loan management fees or commission received on
loans and advances in the calculation of effective interest rate for the loan. The upfront fees and
commission are recognized as income in the same period the loan is approved. The Group has
assessed that this election is justifiable in line with the principal of cost and benefit of adopting
certain provisions in NFRS.

c) NAS 39 – “Financial Instruments: Recognition and Measurements”

Carve out from the requirement to recognize interest income on a financial asset or a group of
similar financial assets, which has been written down as a result of an impairment loss, by applying
the rate of interest used to discount the asset’s future cash flows for the purpose of measuring its
impairment loss as specified in para AG 93 of NAS 39. As a result of this alternative treatment,
interest income on such impaired financial asset are allowed to be calculated by applying the
original effective interest rate to the gross carrying amount of a financial asset unless the financial
asset is written off either partially or fully.

The Group has adopted this alternative treatment. As a result of this alternative treatment, the
Group has recognized interest income on impaired financial asset by applying the original
effective interest rate to the gross carrying amount of a financial asset unless the financial asset is a
credit impaired financial asset. The Group has adopted this alternative treatment considering the
practical difficulty in the application of para AG 93 of NAS 39.

3. Use of estimates, assumptions and judgments

Preparation of financial statements in conformity with NFRS required the Group’s management to
make critical judgments, estimates and assumptions such that could potentially have a material impact
on the reported financial figures. These affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses.

On an ongoing basis the management reviews these estimates and underlying assumptions to ensure
that they continue to be relevant and reasonable. Revisions to accounting estimates are recognized
prospectively.

The most significant areas of assumptions and estimation applied in the application of accounting
policies that have the most significant effect on the amounts recognized in the financial statements are
listed hereinafter and their description follows:

- Fair value of financial instruments

- Classification of financial assets and financial liabilities
- Impairment losses on financial assets

Interim Financial Report | Q1 FY 2020 - 21 12

 
  
 
- Impairment losses on non-financial assets
- Useful economic life of property and equipment
- Taxation and deferred tax
- Defined benefit obligations
- Provisions for liabilities, commitments and contingencies

4. Changes in accounting policies

The Group has consistently applied the accounting policies for all periods reported in the financial
statements. There were no changes in accounting policy in the reporting period.

5. Significant accounting policies

The Group has applied the accounting policies set out below consistently to all periods presented in
the accompanying financial statements unless specifically stated otherwise.

i. Basis of measurement
Financial Statements of the Group have been prepared on historical cost convention, except for the
following:

- Other Trading Assets (investment in mutual funds) and Investment Securities (investment in equity
instruments) are measured at fair value under NFRS 9 ‘Financial Instrument’.

- Investment Property (land and building acquired as non banking assets) are measured at fair value
under NAS 40 ‘Investment Property’.

- Liabilities for employee defined benefit obligations and liabilities for long service leave are
measured at fair value under NAS 19 ‘Employee Benefits’.

ii. Basis of consolidation

The Group’s financial statements comprise consolidation of the financial statements of the Bank and
those of the following entities:

a. The Subsidiary, in accordance with NFRS 10 – “Consolidated Financial Statements” inclusive of the
alternative treatment prescribed on carve-out in NFRS; and

b. The proportionate share of the profit or loss and net assets of the Associate Company in
accordance with NAS – 28 “Investments in Associates and Joint Ventures” inclusive of the
alternative treatment prescribed on carve-out in NFRS.

iii. Investment in subsidiary

The Group has recognized Nabil Investment Banking Ltd. as a Subsidiary company in which the Bank
held 52% controlling interest at the report date. There has been no change in the Bank’s holding in the
Subsidiary for the reporting period and the previous comparative period.

iv. Investment in Associate

Interim Financial Report | Q1 FY 2020 - 21 13

 
  
 
The Group has recognized NADEP Laghubitta Bittiya Sanstha Ltd. as an Associate company in which
the Bank held 25% equity interest at the report date. There has been no change in the Bank’s holding
in the Associate for the reporting period and the previous comparative period.

v. Cash and cash equivalents

Cash and cash equivalent comprise of the total amount of cash-in-hand, balances with other bank and
financial institutions, money at call and short notice, and highly liquid financial assets with original
maturities of three months or less from the acquisition date that are subject to an insignificant risk of
changes in their fair value, and are used by the licensed institution in the management of its short term
commitments. Restricted deposits are not included in cash and cash equivalents. These are measured
at amortized cost and presented as a line item on the face of consolidated Statement of Financial
Position (SoFP).

vi. Financial assets and financial liabilities

Financial assets refer to assets that arise from contractual agreements on future cash flows or from
owning equity instruments of another entity. Since financial assets derive their value from a contractual
claim, these are non physical in form and are usually regarded as being more liquid than other
tangible assets. Common examples of financial assets are cash, cash equivalents, bank balances,
placements, investments in debt and equity instruments, derivative assets and loans and advances.

Financial liabilities are obligations that arise from contractual agreements and that require settlement
by way of delivering cash or another financial asset. Settlement could also require exchanging other
financial assets or financial liabilities under potentially unfavorable conditions. Settlement may also be
made by issuing own equity instruments. Common examples of financial liabilities are due to banks,
derivative liabilities, deposit accounts, money market borrowings and debt capital instruments.

The contractual agreements, generally referred to as financial instruments, are characterized by the
existence of counterparties and the contract terms give rise to a financial asset to one counterparty and
a corresponding financial liability or equity instrument to the other counterparty.

The Group has applied NFRS 9 – “Financial Instruments” in the classification and measurement of its
financial instruments. Para 5.2.2 of NFRS 9 prescribes the application of impairment requirements in
paragraphs 58-65 and AG84-AG93 of NAS 39 to financial assets measured at amortized cost.
Accordingly, the Group has applied para 63 of IAS 39 and measured impairment loss on financial
assets measured at amortized cost following the incurred loss model.

vii. Trading Assets

Trading assets are those assets that are acquired principally for the purpose of selling in the near term,
or held as part of a portfolio that is managed together for short-term profit. It includes non derivative
financial assets such as government bonds, NRB bonds, domestic corporate bonds, treasury bills,
equities, etc. held primarily for trading purpose. If a trading asset is a debt instrument, it is subject to
the same accounting policy applied to financial assets measured at amortized cost. If a trading asset is

Interim Financial Report | Q1 FY 2020 - 21 14

 
  
 
an equity instrument, it is subject to the same accounting policy applied to financial assets measured at
FVTPL.

viii. Derivative assets and derivative liabilities

Derivative assets and derivative liabilities (derivatives) create rights and obligations that have the effect
of transferring between the parties to the instrument one or more of the financial risks inherent in an
underlying primary financial instrument. However, they generally do not result in a transfer of the
underlying primary financial instrument on inception of the contract, nor does such a transfer
necessarily take place on maturity of the contract.

The value of a derivative changes with the change in value of the underlying. Examples of derivative
are forward, futures, options or swap contracts. The underlying could be specified interest rate,
security price, commodity price, exchange rate, price index, etc.

Derivative financial instruments meet the definition of a financial instrument and are accounted for as
derivative financial asset or derivative financial liability measured at FVTPL and corresponding fair
value changes are recognized in profit or loss. The Group has not designated derivative as a hedging
instrument in an eligible hedging relationship under NFRS 9 – “Financial Instrument” and has not
applied hedge accounting,

ix. Property and Equipment

Property and equipment are tangible items that are held for and used in the provision of services, for
rental to others, or for administrative purposes, and are expected to be used for more than one year
period. The Group applies NAS 16 – “Property, Plant and Equipment” in the accounting of property
and equipment.

Property and equipment are recognized if it is probable that future economic benefits associated with
the asset will flow to the Group and the cost of the asset can be reliably measured.

An item of property and equipment that qualifies for recognition as an asset is initially measured at
cost. Cost includes expenditure that is directly attributable to the acquisition of the asset and eligible
subsequent expenditure. Subsequent expenditure is capitalized only when it is probable that the future
economic benefits of the expenditure will flow to the Group. Ongoing repairs and maintenance are
expensed off as incurred.

The Group applies the cost model to all property and equipments and records these at cost of
purchase together with any incidental expenses thereon, less accumulated depreciation and any
accumulated impairment losses. Cost also includes the cost of replacing part of the equipment when
the recognition criteria are met.

The carrying amount of an item of property and equipment is derecognized upon disposal or when no
future economic benefits are expected from its use. Any gain or loss arising on de-recognition of an

Interim Financial Report | Q1 FY 2020 - 21 15

 
  
 
asset (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) is recognized in profit or loss in the year the asset is derecognized

x. Goodwill and intangible assets

Goodwill that arises on the acquisition of Subsidiaries is initially measured at cost, being the excess of
the aggregate of the consideration transferred and the amount recognized for non-controlling interests,
and any previous interest held, over the net identifiable assets acquired and liabilities assumed.

Subsequent to initial recognition, goodwill is measured at cost less accumulated impairment losses. For
the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit
from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to
those units.

At the reporting date, the Group does not have intangible asset in the form of goodwill, arising on
business combination.

Intangible assets are identifiable non-monetary asset without physical substance, which are held for
and used in the provision of services, for rental to others or for administrative purposes. The Group
applies NAS 38 – “Intangible Assets” in accounting for its intangible assets.

The Group recognizes an intangible asset when:

- the cost of the asset can be measured reliably;

- there is control over the asset as a result of past events (for example, purchase or self-creation); and

- future economic benefits (inflows of cash or other assets) are expected from the asset.

Intangibles can be acquired by separate purchase; as part of a business combination; by a

government grant; by exchange of assets; or by self-creation (internal generation). An intangible asset
appearing in the Group’s books is computer software.

xi. Investment Property

Investment properties are land or building or both other than those classified as property and
equipment under NAS 16 – “Property, Plant and Equipment”; and assets classified as non-current
assets held for sale under NFRS 5 – “Non-Current Assets Held for Sale & Discontinued Operations”.
The Group has recognized as investment property all land or land and building acquired by the Bank
as non banking assets in course of recovery of loans and advances to borrowers that have turned into
chronic defaulters.

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Non banking assets (only land and building) are initially recognized at cost. Subsequent to initial
recognition the Group has chosen to apply the cost model allowed by NAS 40 – “Investment Property”
and since it is not intended for owner-occupied use, a depreciation charge is not raised.

xii.Income Tax
Tax expense is the aggregate amount included in the determination of profit or loss for the period in
respect of current and deferred taxes. The Group applies NAS 12 – “Income Taxes” for the
accounting of Income Tax. Income tax expense is recognized in profit or loss, except to the extent it
relates to items recognized directly in equity or directly in other comprehensive income. Tax expense
relating to items recognized directly in other comprehensive income is recognized in the Statement of
Other Comprehensive Income.

xiii. Deposits, debt securities and subordinated liabilities

1. Deposits from customers and BFIs
The Group presents deposit accounts held by customers and those held by BFIs in the Bank
under respective line items in the face of the consolidated statement of financial position. These
are classified as financial liabilities measured at amortized cost.

2. Debt securities issued

The Group presents debenture issued by the Bank under this line item. These are classified as
financial liabilities measured at amortized cost.

3. Subordinated liabilities
These comprise of liabilities subordinated, at the event of winding up, to the claims of
depositors, debt securities issued and other creditors. Items eligible for presentation under this
line item include redeemable preference share, subordinated notes issued, borrowings etc.
These are subject to the same accounting policies applied to financial liabilities measured at
amortized cost. The Group does not have any subordinated liabilities at the reporting date.

xiv. Provisions
The Group applies NAS 37 – “Provisions, Contingent Liabilities & Contingent Assets” in the
accounting of provisions.

xv. Revenue Recognition

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the
Group and the revenue can be measured reliably. The Group applies NAS 18 – “Revenue” in the
accounting of revenue, unless otherwise stated.

1. Interest income

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Interest income are recognized in profit or loss using the effective interest rate (EIR) method for all
financial assets measured at amortized cost. Interest income is earned on bank balances,
investments in money market and capital market instruments, loans and advances, etc.

2. Fees and commission income

The Group earns fee and commission income on providing a diverse range of services to its
customers. Such income earned on services including account maintenance, remittance
transactions, agency commissions, e-commerce transactions, letter of credits, bank guarantees, loan
management, etc. are recognized as the related services are performed. Fee and commission
earned for the provision of services over a period of time are accrued over that period.

3. Dividend income

Dividend income is recognized when the right to receive income is established, which is the ex-
dividend date for quoted equity instruments and unit investments. In line with the requirements of
the Income Tax Act 2002, dividends received from domestic companies are recognized as final
withholding income, while those received in respect of unit investments in mutual funds and equity
interest in foreign companies are recognized in gross amounts and respective withholding taxes
are recognized as tax receivables.

4. Net trading income

Trading income comprises of gains or losses relating to financial assets and liabilities held in the
Group’s trading books. The Group presents all accrued interest, dividend, unrealized fair value
changes and disposal gains or losses in respect of trading assets and liabilities under this head.
The Group also presents foreign exchange trading gains or losses arising on foreign exchange buy
and sell transactions under trading income.

5. Other Operating Income

The Group presents income other than those presented under interest income, fees and commission
income and trading income under this heading. Income recognized here includes items such as
foreign exchange revaluation gain or loss; dividend on equity investments that are measured at
FVTOCI; dividend from subsidiary and associates; gain or loss on disposal of property and
equipment; gain and loss on disposal of investment property; and gain or loss on disposal of
investment securities except for equity investments measured at FVTOCI.

6. Foreign exchange revaluation gain / (loss)

Interim Financial Report | Q1 FY 2020 - 21 18

 
  
 
Gains and losses arising from day-to-day revaluations of foreign currency denominated assets and
liabilities, exclusively due to the effect of changes in foreign currency exchange rates, are
recognized in profit or loss in the period in which they arise.

7. Gain / (loss) on disposal of property and equipment

Gain or loss on the disposal of property and equipment is determined on the difference between
the asset’s carrying amount on disposal date and the disposal proceeds, net of any incremental
disposal costs. This is recognized as an item of Other Operating Income in the year in which
significant risks and rewards incidental to the asset’s ownership is transferred to the buyer.

xvi. Interest Expense

Interest expense is recognized in profit or loss using the effective interest rate (EIR) method for all
financial liabilities measured at amortized cost. Interest expense is borne on inter-bank borrowings,
deposit from customers, debenture issued, refinance borrowing, etc.

xvii.Employee Benefits
Employee benefits are all forms of consideration given by an entity in exchange for service rendered
by employees. The Group’s remuneration package includes both short term and long term benefits and
comprise of items such as salary, allowances, paid leave, accumulated leave, gratuity, provident fund
and annual statutory bonus.

The Group applies NAS 19 – “Employee Benefits” in accounting of all employee benefits and
recognizes the followings in its financial statements:

- a liability when an employee has provided service in exchange for employee benefits to be paid in
the future; and

- an expense when the Group consumes the economic benefit arising from service provided by an
employee in exchange for employee benefits.

xviii. Leases
The Group determines whether an arrangement is a lease (or it contains a lease) based on the
substance of the arrangement. It requires that under a leasing agreement the lessor must convey to the
lessee, in return for a payment or series of payments, the right to use an asset for an agreed period of
time.

The Bank has applied NAS 17 – “Leases” in the accounting for leases. The lease payments under the
operating lease are recognized as an expense on a straight line basis over the lease term. In
accordance with the standard, spreading the total lease payments under the operating Lease on
straight line basis over the lease term is applied even if the payments are not made on such basis.

xix. Foreign currency transaction, translation and balances

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All foreign currency transactions are translated into the functional currency, which is Nepalese Rupees,
using the spot exchange rates prevailing at respective transaction dates. All foreign exchange gains
and losses resulting from the settlement of such transactions are recognized in profit or loss.

All monetary assets and liabilities denominated in foreign currencies are translated into the functional
currency by applying the year end exchange rates, and the resulting foreign exchange gains and
losses are recognized in profit or loss.

All non-monetary assets and liabilities held at historical cost are translated at historical exchange rates
(rate prevailing at transaction date), and those held at fair value are translated at year-end exchange
rate. The resulting exchange gains and losses are recognized in profit or loss OR in other
comprehensive income. When gain or loss on a non monetary item is recognized in other
comprehensive income, any exchange component of that gain or loss is also recognized in other
comprehensive income. Similarly, when gain or loss on a non monetary item is recognized in profit or
loss, any exchange component of that gain or loss is also recognized in profit or loss.

xx. Financial guarantee and loan commitment

Financial guarantees are contracts that require the Group to make specified payments to reimburse the
holder for a loss that it incurs because a specified debtor fails to make payment when it is due in
accordance with the terms of a debt instrument. Loan commitments are firm commitments to provide
credit under pre-specified terms and conditions.

Liabilities arising from financial guarantees or commitments to provide a loan at a below-market

interest rate are initially measured at fair value and the initial fair value is amortized over the life of the
guarantee or the commitment. The liability is subsequently carried at the higher of this amortized
amount and the present value of any expected payment to settle the liability when a payment under
the contract has become probable.

xxi. Share Capital and Reserves

Ordinary shares in the Bank are recognized at the amount paid per ordinary share. Nabil Bank Ltd.’s
shares are listed at Nepal Stock Exchange Ltd. The holders of ordinary shares are entitled to one vote
per share at general meetings of the bank and are entitled to receive the annual dividend payments.
The Bank does not have any other form of share capital (preference shares, convertible instruments,
share based payments, etc.) apart from the ordinary shares.

There are a number of statutory and non- statutory reserve headings maintained by the Group in order
to comply with regulatory framework and other operational requirements. The various reserve
headings are explained hereinafter:

1. General reserve

Interim Financial Report | Q1 FY 2020 - 21 20

 
  
 
This is a statutory reserve and is a compliance requirement of NRB directive no. 4/75 and
stipulations of BAFIA. The Bank is required to appropriate a minimum 20% of current year’s net
profit into this heading each year until it becomes double of paid up capital and then after a
minimum 10% of profit each year. This reserve is not available for distribution to shareholders in
any form and requires specific approval of the central bank for any transfers from this heading. The
Bank has consistently appropriated the required amount from each year’s profit into this heading.
There is no such statutory requirement for the Subsidiary.

2. Exchange equalization reserve

This is a statutory reserve and is a compliance requirement of NRB directive no. 4/75 and
stipulations of BAFIA. The Bank is required to appropriate 25% of current year’s total revaluation
gain (except gain from revaluation of Indian Currency) into this heading. The Bank has consistently
appropriated the required amount from each year’s profit into this heading. There is no such
statutory requirement for the Subsidiary.

3. Fair value reserve

This is a non-statutory reserve and is a requirement in the application of accounting policy for
financial assets. NFRS 9 requires that cumulative net change in the fair value of financial assets
measured at FVTOCI is recognized under fair value reserve heading until the fair valued asset is
de-recognized. Any realized fair value changes upon disposal of the re-valued asset is reclassified
from this reserve heading to retained earnings. The Group has complied with this accounting policy
application.

4. Asset revaluation reserve

This is a non-statutory reserve and is a requirement in the application of accounting policy for non-
financial assets such as property, equipment, investment property and intangible assets that are
measured following a re-valuation model. Revaluation reserves often serve as a cushion against
unexpected losses but may not be fully available to absorb unexpected losses due to the
subsequent deterioration in market values and tax consequences of revaluation. The Group does
not have any amount to present under asset revaluation reserve.

5. Capital reserve

This is a non-statutory reserve and represents the amount of all capital nature reserves such as the
amounts arising from share forfeiture, capital grants and capital reserve arising out of business
combinations. Funds in this reserve are not available for distribution of cash dividend but can be
capitalized by issuing bonus shares upon obtaining prior approval from the central bank. The
Group does not have any amount to present under asset revaluation reserve.

6. Special reserve

Interim Financial Report | Q1 FY 2020 - 21 21

 
  
 
This is a statutory reserve and is a compliance requirement of NRB circular 12/072/73. The Bank
is required to appropriate an amount equivalent to 100% of capitalized portion of interest income
on borrowing accounts where credit facility was rescheduled or restructured, following the after
effects of the great earthquake that struck the nation in April 2015. Fund in this account can be
reclassified to retained earnings upon full and final repayment of the credit facility. There is no such
statutory requirement for the Subsidiary.

7. Capital redemption reserve

This is a non-statutory reserve created for making payment towards redeemable non-convertible
preference shares. The Group does not have any amount to present under asset revaluation
reserve.

8. Dividend equalization fund

This is a non-statutory reserve created for supporting the dividend payout policy by appropriating
amounts from current year’s profit to fund for future period’s payout. Fund in this heading is
available for distribution to shareholders upon approval of the board of directors and endorsement
of the share holders’ general meeting. The Group does not have any amount to present under asset
revaluation reserve.

9. Capital adjustment / equalization fund

This is a non-statutory reserve created by appropriating amounts from current year’s profit and by
crediting amounts for calls is advance towards raising capital. The Group does not have any
amount to present under asset revaluation reserve.

10. Corporate social responsibility fund

This is a statutory reserve and is a compliance requirement of NRB circular 11/073/74. The Bank
is required to appropriate an amount equivalent to 1% of net profit into this fund annually. The fund
is created towards funding the Bank’s corporate social responsibility expenditure during the
subsequent year. There is no such statutory requirement for the Subsidiary.

11. Investment adjustment reserve

This is a statutory reserve heading and is a compliance requirement of NRB directive no. 4/075
and 8/075. The Bank is required to maintain balance in this reserve heading which is calculated
at fixed percentages of the cost of equity investments that are not held for trading. Changes in this
reserve requirement are reclassified to retained earnings. The Bank has consistently appropriated
the required amount from each year’s profit into this heading. There is no such statutory
requirement for the Subsidiary.

12. Actuarial gain / loss reserve

Interim Financial Report | Q1 FY 2020 - 21 22

 
  
 
This is a non-statutory reserve and is a requirement in the application of accounting policy for
employee benefits. NAS 19 requires that actuarial gain or loss resultant of the change in actuarial
assumptions used to value defined benefit obligations be presented under this reserve heading. Any
change in this reserve heading is recognized through other comprehensive income and is not an
appropriation of net profit. The Group has complied with this accounting policy application.

13. Regulatory reserve

This is a statutory reserve and is a requirement in the application of accounting policy as

prescribed in NRB directive no. 4/075. In the transition to NFRS from previous GAAP the Bank is
required to reclassify all amounts that are resultant of re-measurement adjustments and that are
recognized in retained earnings into this reserve heading. The amount reclassified to this reserve
includes re-measurement adjustments such as interest income recognized against interest
receivables, difference in loan loss provision as per NRB directive and impairment on loan and
advance as per NFRS, amount equals to deferred tax assets, actual loss recognized in other
comprehensive income, amount of goodwill recognized under NFRS, etc. Balance in this reserve is
not regarded as free for distribution of dividend. The Bank has complied with this regulatory
requirement. There is no such statutory requirement for the Subsidiary.

14. Other reserve fund

Contingent reserve

This is a non-statutory reserve and is created by the Bank towards meeting operational
requirements. A fixed amount is annually appropriated from net profit into this fund. Balance in this
fund is utilized towards providing financial support to employees for treatment of severe cases of
life threatening ailments that are not adequately covered under medical insurance policy. Amount
paid to staff from this fund is re-classified to retained earnings and is recognized as personnel
expense in profit or loss. No such reserve is maintained by the Subsidiary.

Debenture Redemption Reserve

This is a statutory reserve and is a compliance requirement of NRB directive no.16/075. The Bank
is required to maintain a redemption reserve in respect of borrowing raised through debenture
issuance. As per the terms of NRB approval relating to the Bank’s debenture issuance, the Bank is
annually required to transfer 20% of the debenture’s face value to redemption reserve, starting from
the 6th year of the issue. The Subsidiary has not raised any borrowing through debenture issuance.

Employees training and capacity development fund

This is a statutory reserve and is a compliance requirement of NRB circular 6/075. The Bank is
required to incur expenses towards employee training and development for an amount that is
equivalent to at least 3% of the preceding year’s total personnel expenses. Any shortfall amount in

Interim Financial Report | Q1 FY 2020 - 21 23

 
  
 
meeting this mandatory expense requirement in the current year will have to be transferred to this
reserve fund through appropriation of net profit and the amount shall accumulate in the fund
available for related expenses in the subsequent year. Balance in this fund is directly reclassified to
retained earnings in the subsequent year to the extent of expenses made for employees training
related activities.

xxii. Earnings per Share

The Group calculates basic and diluted Earnings Per Share (EPS) data for its ordinary shares as
required under Nepal Accounting Standards – NAS 33 on “Earnings Per Share”. Basic EPS is
calculated by dividing the profit or loss that is attributable to ordinary shareholders of the Bank by the
weighted average number of ordinary shares outstanding during the reported period. Diluted EPS is
calculated by adjusting the profit or loss that is attributable to the ordinary shareholders of the Bank
and the weighted average number of ordinary shares outstanding adjusted for the effects of all dilutive
potential ordinary shares, such as share options granted to employees and hybrid capital instruments.

The Group does not hold any dilutive potential ordinary shares, and as such the Basic EPS is also the
Diluted EPS of the Group.

xxiii. Segment Reporting

The Group has disclosed information on operating segments to enable users of financial statements to
evaluate the nature and financial effects of the Group’s business activities and that of the economic
environment in which the Group operates.

xxiv. Statement of Cash Flows

The Group has reported its cash flow statement applying the ‘Direct Method’ in accordance with NAS
07 – “Statement of Cash Flows”. Application of the direct method in presenting cash flow statement
discloses major classes of gross cash receipts and gross cash payments, thereby provides information
which may be useful in estimating future cash flows of an entity.

6. Segmental Information
The Bank has adopted “Management Approach” for identifying the operating segments i.e. seven
segments based on the geographic locations of its offices in the 7 provinces of the country. Interest
earnings and foreign exchange gains/losses generated while conducting businesses under different
segments are reported under the respective segment. Shareholder's Equity in Segment Liabilities and
Tax Expense in Segment profit/ (loss) are not allocated to the individual segments. For segmentation
purpose, all business transactions of offices and business units located in a particular province are
grouped together. All transactions between the units are conducted on arm's length basis, with intra
unit revenue and cost being nullified at the bank level.

Interim Financial Report | Q1 FY 2020 - 21 24

 
  
 

a. Information about reportable segments

NPR 000

Province 1 Province 2 Province 3 Gandaki

Current Quarter

Current Quarter

Current Quarter

Current Quarter
Corresponding

Corresponding

Corresponding

Corresponding
Previous Year

Previous Year

Previous Year

Previous Year
Quarter

Quarter

Quarter

Quarter
Particulars

Revenues from
external customers 307,427 461,859 280,711 511,163 3,305,361 3,315,557 257,832 205,697
Intersegment revenues 21,990 4,592 2,232 2,776 4,673,908 3,749,259 17,793 8,488
Segment profit (loss)
before tax 24,816 213,693 18,329 176,515 1,574,825 1,171,452 11,236 78,626
Segment assets 13,560,661 16,363,814 12,228,667 19,639,644 195,289,878 155,389,824 8,857,594 7,220,078
Segment liabilities 13,534,391 16,150,121 12,210,270 19,463,129 168,371,041 131,652,141 8,866,942 7,141,450

Province 5 Karnali Province 7 Total

g Previous

g Previous

g Previous

g Previous
Current

Correspondin

Correspondin
Quarter

Current
Quarter

Current

Correspondin
Quarter

Current

Correspondin
Quarter
Year Quarter

Year Quarter

Year Quarter

Year Quarter
Particulars

Revenues from
external customers 338,062 357,702 12,610 10,176 72,568 73,248 4,574,571 4,935,404
Intersegment revenues 6,238 4,753 11,857 5,705 17,543 7,543 4,751,560 3,783,117
Segment profit (loss)
before tax 15,937 124,039 2,949 (1,072) (4,762) 20,219 1,643,329 1,783,471
Segment assets 14,455,414 12,764,663 681,088 513,388 3,101,341 2,595,308 248,174,642 214,486,718
Segment liabilities 14,439,478 12,640,624 678,139 514,461 3,106,102 2,575,089 221,206,362 190,137,015

 
Interim Financial Report | Q1 FY 2020 - 21 25
 
 
  
 

b. Reconciliation of reportable segment profit or loss

NPR 000
Particulars Current Quarter Corresponding Previous
Total profit before tax for reportable segments 1,643,329 1,783,471
Profit before tax for other segments
Elimination of inter- segment profit
Elimination of discontinued operation
Unallocated amounts:
- Other corporate expenses 164,333 178,347
Profit before tax 1,478,996 1,605,124

7. Related parties disclosures

Group comprises of Nabil Bank Ltd. (the Bank) and Nabil Investment Banking Ltd. (Subsidiary).

Subsidiary is a Merchant Banker licensed under Securities Businessperson (Merchant Banker)

Regulation, First Amendment 2074 from the Securities Board of Nepal (SEBON).

All transactions between the Bank and Subsidiary are executed on arm’s length principle. Effects of
all inter-company transactions and outstanding balances are excluded in group statements.

Bank and Subsidiary have entered into a Service Level Agreement (SLA) under which the Bank
provides various operational supports to Subsidiary for an annual fee of NPR 500K.

Bank has appointed Subsidiary as its Registrar to Share and also the Fund Manager to Mutual Fund
Schemes under the Bank’s sponsorship.

Subsidiary held deposit balance of NPR 235.13 million in its accounts with the Bank. The Bank paid
interest of NPR 0.45 million and share registrar fees of NPR 0.19 million to the Subsidiary for the
reported period.

8. Dividends paid (aggregate or per share) separately for ordinary shares and other
shares

The Annual General Meeting of the Bank has approved 22% cash and 12% stock dividend out of
profits of FY 2018-19.
9. Issues, repurchases and repayments of debt and equity securities

The Bank is in the process of issuing debentures worth NPR 2 billion with interest at 10% with a
maturity period of 7 years. Laxmi Capital Market Limited has been assigned as the Issue Manager for
the issuance.

10. Events after reporting period

Events after the reporting date are those events, favorable and unfavorable, that occur between the
reporting date and the date when the financial statements are authorized for issue.

 
Interim Financial Report | Q1 FY 2020 - 21 26
 
 
  
 
There are no material events after reporting period affecting financial status of the bank as on Ashwin
end 2077.

11. Effect of changes in the composition of the entity during the interim period including
merger and acquisition

There are no merger and acquisition affecting changes in the composition of the entity during the
interim period as on Ashwin end 2077.

I. Management Analysis
 Management is focused on network expansion, organic volume growth, enhancement in efficiency,
diversification of portfolio, effective resource management and striking effective recovery.
 The Bank is persistently working on upgrading IT infrastructure, automating work processes, embracing
digitization, enhancing transaction security and improving internal control systems and risk
management practices.
 There are no such incidents during the period which might have negative impact on the reserve, profit
or cash flow position of the Bank.

J. Details Related to Legal Proceedings

Except in the regular course of business, there are no law-suits of material nature filed by or filed against
the Bank/promoters/directors on account of violation of prevailing laws or commission of criminal
offences or financial crime.

K. Analysis of Bank's shares transactions

 The market price of the Bank’s share is fully dependent on market movements and the Bank does not
comment on its share transactions.
 The Bank has complied with the prevailing disclosure norms and regulatory directives issued by
Securities Board of Nepal (SEBON) and Nepal Rastra Bank (NRB).
 Details of share transactions during the quarter:
Ordinary Shares

Maximum Price NPR 955

Minimum Price NPR 744
Closing Price NPR 860
Total Units Traded 2,315,116
Total Days Traded 64

L. Problems and Challenges

Internal:
- Challenge of normal operation of the organisation in light of the current pandemic whilst ensuring the safety
and security of the human resource pool.
- Challenge of coming up with new products/services which can be provided in the new normal and
exploring alternate channels of delivery.

External:
- The hit taken by the global economy is bound to impact the bank as well and the size of the impact cannot
be assessed at present.

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- Managing the impact on revenue generation while honouring our commitments in this pandemic scenario.
- Managing the impact of fluctuating interest rates.
- Possible impact of frugal spending by all stakeholders of the economy.

Bank's strategy to mitigate problems and challenges:

- Focused approach in operation with minimum possible resources without compromising on the quality of
service delivery while striving for organic growth.
- Prudent management of assets and liabilities.
- Effective management of cost through improved productivity and efficiency.
- Exploration of alternate business avenues and channels for maintaining the contribution from non-interest
income.
- Embracing digitization for remarkable improvement in product offerings and service delivery.
- Enhancing skill sets of staff for upgrading our service standard.

M. Corporate Governance
The Bank has a separate Governance Unit in place for continuous monitoring of governance issues within the
Bank. The Board of Directors, Audit Committee and Senior Management are committed to upholding good
corporate governance practices in the Bank. The Bank’s organization structure, internal control system and
management practices are designed keeping best corporate governance practices in mind.

N. Declaration by Chairman/CEO about the truthfulness of financials /

information
I, CEO of the Bank, take responsibility on the truthfulness of the information and particulars disclosed in this
report to the best of my knowledge. Further, I declare that the particulars mentioned in this report, to the best
of my knowledge, are true, fair and complete at the time of publication of this report and have not knowingly
concealed any material particulars and information for investors to take informed decisions.

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