NMB Annual Report 2020-21 ENGLISH

Representative (Proxy) Form
The Board of Directors Date: ……………………………….
NMB Bank Ltd.,
Subject: Appointment of Representative
Dear Sir,
I/We, .............................................................................................................................. resident of ...............................................................

district .................................... rural/metro/sub-metro/municipality ward number ............ being a Shareholder of NMB Bank Ltd.
hereby appoint Mr./Ms. ................................................................................................................. resident of ………….…………… district
………….…………… rural/metro/sub-metro/ municipality ward number ............ as my/our proxy/authorize to represent/vote on
my/our behalf at the 26th Annual General Meeting being held on Thursday, January 6, 2022.
Appointed Representative: Applicant:
Signature Specimen: Signature:
Shareholder No. / Demat Account No.: Full Name:
Address:
Shareholder Number:
Demat Account Number:
Share Quantity:
P.S. This application must be submitted to the registered office of the Bank at least 48 hours prior to the commencement of Annual General Meeting. The representative
(proxy) form shall be cancelled in case more than one representative name is found to be mentioned.
Entrance
NMB Bank Ltd.,

Babarmahal, Kathmandu
Issued to participate in 26th Annual General Meeting
Shareholder's Name : _____________________________________________ Total Share No.: ____________________________
Shareholder's Introduction/BOID No.: _________________________________ Shareholder's Signature: _____________________
__________________
Company Secretary
Note: Reprsentative are requested to bring this card along with him/her to participate in the meeting.
Annual Report 2020/21
Table of Contents
Page No.
th
Notice about 26 Annual General Meeting 2
Chairman’s Statement 4
CEO's Message 6
Director’s Report 9
Annex-15 of Securities Registration and Issue Regulation, 2016 21
Financial Highlights 23
Independent Auditor’s Report 29
Consolidated Financial Statements 35
Notes to the Consolidated Financial Statements 51
Significant Accounting Policies to the Consolidated Financial Statements 95
Additional Disclosures to the Consolidated Financial Statements 107
Basel Disclosures 137
Corporate Social Responsibility (CSR) 143
Latest Debenture Issue - Projected vs Actual of Statement of Profit or Loss 144
Latest Debenture Issue - Projected vs Actual of Statement of Financial Position 145
Horizontal Analysis 146
Vertical Analysis 148
Amendments to the MOA & AOA 150
Approval of Nepal Rastra Bank for Publishing Annual Report & Distribution of Dividend 151
Replies to the Instructions Received from Central Bank 152
www.nmbbanknepal.com 1
Notice about 26th Annual General Meeting
The 428th Board Meeting of the Bank held on 29 November 2021, has decided to conduct 26th Annual General Meeting
in the following date, venue and time to discuss upon the following agenda. This notice is published to inform all our
esteemed shareholders regarding the Annual General Meeting as per Clause 67 of Company Act, 2006.
1. Date, Venue and Time of the Annual General Meeting

Date : Thursday, 6 January, 2022
Venue : Tribhuvan Army Officer’s Club, Tundikhel, Kathmandu
Time : 10:30 A.M.
2. Agenda of the Meeting

A. General Agenda
 To approve the annual report of FY 2020/21 presented by the Board of Directors,
 To approve the Auditor’s report for FY 2020/21 including Balance Sheet, Profit & Loss Statement, Cash
Flow Statement, and other financial reports (including consolidated financial details of subsidiary
companies- NMB Capital Limited, and NMB Laghubitta Bittiya Sanstha Limited),
 To appoint and decide upon the remuneration of the Auditor for fiscal year 2020/21 in compliance
with the Clause 111 of Company Act, 2006 and Clause 63 of Bank and Financial Institution Act 2016,
(existing Auditor MS. Dev Associates, and KMU and Associates, Chartered Accountants jointly are
eligible for reappointment)
 To approve the distribution of 3.30 percent cash dividend (including tax on bonus and cash dividend)
amounting NPR 538,756,708.14 on the existing paid-up capital of NPR 16,325,960,852.66 as proposed
by the Board of Directors.
B. Special Agenda
 To approve the increment in the existing issued capital of the Bank from NPR 16,325,960,852.66 (in
words: Rupees Sixteen Billion Three Hundred Twenty Five Million Nine Hundred Sixty Thousand Eight
Hundred Fiy Two and 66/100 only) to NPR 18,366,705,959.24 (in words: Rupees Eighteen Billion
Three Hundred Sixty Six Million Seven Hundred Five Thousand Nine Hundred Fiy Nine and 24/100
only),
 To approve the distribution of 12.50 percent bonus share of existing paid-up capital amounting to NPR
2,040,745,106.58 (in words: Rupees Two Billion Forty Million Seven Hundred Forty Five Thousand One
Hundred Six and 58/100 only) to adjust the effect of proposed increment in issued capital,
 To approve the amendments of Section 6 (b), and (c) of the Memorandum of Association of the Bank
aer the issuance of bonus shares,
 To approve the amendment of Article 32.1.b.i of the Articles of Association of the Bank,
 To provide authority to the Board of Directors or provide power of attorney to the designated authority
by the Board of Directors to carry out or cause to carry out tasks related to amendment in the
Memorandum of Association and Article of Association of the Bank such as record keeping, making
minor changes, certification of the documents, registration and receipt of acknowledgement of the
record.
C. Miscellaneous
By Order
Company Secretary
2 www.nmbbanknepal.com
Notice about 26th Annual General Meeting
Additional Information about the Annual General Meeting (AGM)
 Share register shall remain closed on 2078/09/05 B.S. (20/12/2021 A.D.) for the purpose of this AGM. Shareholders
registered in the shareholders register book because of the transactions conducted in Nepal Stock Exchange
before 20 December 2021 can participate in the AGM, cast vote, and are entitled to receive bonus share and cash
dividend.
 Shareholders are requested to contact the headoffice of the Bank at Babarmahal, Kathmandu to receive
information related to the Annual General Meeting including Board of Directors’ Report if required. Further, all
the details are also kept on the Bank’s website www.nmbbanknepal.com.np
 Shareholders attending the AGM must be present in the AGM venue and sign the attendance register that will be
made available from 9:30 A.M. onwards. The shareholders interested in participating at the AGM are required to
bring either an original copy of Share Certificate or Demat account details and original document(s) proving their
identity along with them.
 Due to contagious Covid 19 coronavirus, the shareholders are requested to attend the meeting using masks,
gloves, and other necessary safety measures. In case of the restrictions imposed by the concerned authority to
prevent the spread of Covid 19, arrangements shall be made for the shareholders to attend the meeting through
video conferencing (virtual) technology.
 Shareholders willing to nominate proxy to attend the AGM, shall register proxy form at the Bank’s head office
Babarmahal, Kathmandu, at least 48 hours before the AGM commences.
 Only existing shareholders of the Bank shall be nominated proxy.
 In case of minor or insane shareholders, person registered as his/her guardian in the share register book shall be
entitled to take part or appoint a proxy in the AGM. In case of joint shareholdings, only the unanimously selected
representative or the partner whose name appears first in the serial order of the share register book can attend
the AGM.
 Any issue or query raised in the AGM shall be responded by Chairman or any other dignitaries as permitted by the
Chairman.
 If any shareholder has any issues or queries about the Bank, shareholders are requested to send it in writing to
the Bank’s registered office at least 7 days before the AGM commences. However, such issues or queries will not
be tabled for discussion as agenda in the AGM.
 The shareholders participating in the AGM are requested to carry only the documents related to the meeting and
avoid carrying bags or other materials.
NOTE: For shareholders’ convenience, Annual Report has been uploaded in Bank’s website (https://www.
nmbbanknepal.com.np) wherein shareholders can browse and access the report online.
Chairman's Statement
On behalf of the Board of Directors, I take this opportunity to

express my sincere gratitude and warm welcome to all the
esteemed shareholders, representatives from regulatory
bodies, auditor, legal advisors, distinguished invitees,
journalists, ladies and gentlemen to the 26th Annual General
Meeting of NMB Bank Limited.
I am honored to be present amongst the shareholders

whose faith and support has enabled the Bank move
towards continuous progress for the last 26 years. I take this
opportunity to assure everyone that through this support and
cooperation of our shareholders and well-wishers, the Bank
will continue its journey towards steady and sustainable
progress in the future as well.
It is well-known that NMB Bank Ltd., commenced

unified operations post-acquisition of erstwhile Kanchan
Development Bank Ltd. from August 23, 2020. Currently, the
Bank has been providing service to its customers through
201 branches, 9 extension counter, and 138 ATMs across the
country. .
The global pandemic of COVID-19 has caused difficulties to the overall industries, businesses, and banking
sector of the country. However, the policies adopted by the regulatory body to safeguard the economy
has brought some relief to the business sector. Despite the mounting challenges to the economy due to
COVID-19, the Bank has managed to scale up its business and achieve good financial results during the
review period. During the review year, the Bank’s deposits increased to NPR 166.45 Billion, while loans and
advances grew to NPR 158.04 Billion i.e. a growth of 23.47% in deposits and 29.78% in loans and advances
as compared to previous fiscal year.
The agenda to distribute 15.80% dividend i.e. 12% bonus share and 3.50% cash dividend (including the
bonus share and cash dividend tax provision) on existing paid-up capital of NPR 16,325,960,852.66 to the
shareholders from reserve fund and distributable profit of the fiscal year 2020/21 is placed for approval in
the Annual General Meeting.
The Bank has achieved the goals pursuant to its vision and continuously putting effort in moving ahead
remaining in line with its strategic plan for achieving sustainable business expansion and profitability
in the long run. The Bank has highly prioritized the balanced growth in credit and deposit, expansion
of credit investment in small and medium enterprises for economic development of local communities
thereby supporting country’s vision of “Prosperous Nepal” along with formulation of programs and policies
that emphasizes the protection of environment in its credit investments. . With the plan to expand our
investment in the priority sectors and support the overall development of the country, we aspire to build
on our strengths and efficacies while always striving to offer a fair return to our valued shareholders. The
foreign equity partner of the Bank “Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden
N.V. (FMO)” has been providing technical assistance and human resource development for its overall
capacity enhancement. The Bank is committed to provide fast and hassle-free service to its customers and
we assure a complete honesty while moving ahead in achieving the goals of the Bank.
NMB Bank has always been at the forefront in accommodating the changes in the financial markets.
The Bank has been involved in various activities with the aim of improving the financial condition of the
country by exploring potential opportunities in the financial sectors in cooperation with the domestic and
international organizations. Further, the Bank has also been working hard to enhance the capacity of its
employees.
NMB Bank is committed to take its banking services to all walks of life for which it has been diversifying
its business. The Bank has expanded its investment in industrial and agricultural sectors that contribute
towards employment generation in the country to remain in line with the strategy of increasing credit
investment in the productive sector. The Bank has been offering Women Entrepreneurship Loan with an
objective of empowering women interested to operate own business and be self-reliant. Likewise, the
Bank has also been providing various loan facilities targeted to youths returning from foreign employment
as part of government’s self-employment campaign.
The Bank line with its strategy of adopting sustainable banking practices has been increasing investment in business that seeks to
reduce the greenhouse gas emissions thus reducing the environmental and social risks. We are confident that this initiative will enable
the Bank to contribute to sustainable development goals. The debts obtained from various foreign banks and financial institutions and
the support from lender groups in supporting sustainable development are testament to the Bank’s sustainable initiative. Consequently,
it will also support in the sustainable development of the ongoing projects in the country. This noble initiative of the Bank is honored
with “Green Deal of the Year” award by Singapore based internationally renowned Asian Banking and Finance Magazine.
NMB Bank is committed to provide easy and simple banking solutions to the customers all over the country by expanding its digital
services by implementing a cutting-edge technologies while ensuring digital security and privacy of its customers’ data. The Bank
for the first time in Nepal introduced Video Know-Your Customer (VKYC) service, artificial intelligence (AI) enabled Loan Service, and
multifaceted Omni Channel platform to facilitate a true digital experience to its customers thus revolutionizing the digital journey of
Nepalese banking industry. These new endeavors of the Bank in the domestic market is recognized “True Digital Initiative” by Edgever
Systems Ltd., a wholly-owned subsidiary company of multinational information technology company “Infosys”.
Founded in 1888 A.D., The Financial Times is a renowned institution in global financial markets that annually selects the best
banks in terms of their work capability, strategy, technology and digitization, customer oriented products and services, sustainable
development focus, etc. and honors one bank as “Bank of the Year” award from each country. The Financial Times on 1st December
2021, awarded the Bank for the first time in the history of Nepalese banking industry by the prestigious “Bank of the Year 2021-Asia”.
With this recognition as the Best Bank in Asia, the Bank has been able to strongly establish itself in the global financial markets and
lead the country’s financial sector in international front. Being the first bank in Nepal to receive such international feat has transformed
us to be more responsible in our future endeavors. In achieving the accolade of the Best Bank in Asia for the year 2021, the Bank
was also conferred as “Bank of the Year 2021-Nepal”. This is the fourth time in last five years that the Bank was honored with this
esteemed award. The Bank dedicates these prestigious honors to all its shareholders whose continuous suggestions and invaluable
support helped the Bank to improve and strengthen.
Finally, I would like to offer my gracious appreciation to the respected shareholders, regulatory bodies, media, and customers who
always show deep interest in our activities and provide generous feedback for improvement, prosperity, and progress. Likewise, my
heartfelt gratitude the banks and financial institutions, other associations, Board of Directors and staff of the Bank for their invaluable
support and confidence.
Thank you.
Pawan Kumar Golyan

Chairman
Date: January 6, 2022
CEO's Message
The year 2020/21 proved to be yet another challenging and

eventful year for Nepalese banking industry marred by
COVID-19 pandemic, and the urgent need for quick economic
recovery. The Bank in this unconventional times registered
overall a good performance despite the economic and health
challenges. The achievements and the accolades that the
Bank received during the period has yet again emboldened
our journey to become the most preferred Bank in Nepal.
Our persistent effort towards sustainable financing and
untiring approach for digitization and governance standards
was recognized with the prestigious “Bank of the Year 2021-
Asia” for the first time in the history of Nepalese Banking by
the Financial Times, London.
Our Performance
 The Bank during the review fiscal year recorded a sound
financial performance with a consistent balance sheet
growth, profitability well above the industry average,
capital adequacy within the threshold prescribed by the
central bank of Nepal, and promising other key financial indicators signifying a healthy growth despite
the difficult conditions imposed by COVID-19.
 Along with its financial performance, the Bank was also able to create differentiation in the market by
focusing more on sustainable banking practices.
 The Bank for its green and sustainable endeavours was awarded by “Green Deal of the Year-2021” by
Singapore based Asian Banking and Finance Magazine.
External Business Environment/Outlook

 The national economy in the aermath of COVID-19 registered a 4.01% GDP growth during the fiscal
year 2020/21 aer a contraction of 2.09% in the preceding fiscal year.
 Amid the quickly recovering economy and the recent endorsement of the proposal by The United
Nations General Assembly to graduate Nepal to the status of a middle-income country from the
category of Least Developed Country by 2026, we see endless possibilities in the country to live up to
the expectations of becoming a middle-income nation by the stipulated timeframe.
 Whilst the country is moving towards larger economy, the banking industry is frequently overshadowed
by volatility in liquidity resulting to a mismatch in deposit mobilization and credit demand, thus
creating a funding gap in the market.
 The variability in financial market is also attributed by the insufficient internal resources and/or lack
of optimum resource utilization per se.
 The ongoing and frequent liquidity crisis & fluid political situation is expected to pose a downside risk
to an overall economic growth.
 The country in the first few months of the running fiscal year has already observed a pressure in
key macro indicators where widening trade deficit due to rapidly increasing input volume, stagnant
remittance, and an increasing trend in inflation are key causes of concern.
 The overall liquidity situation of the country is expected to remain tight in the short run.
 To address the liquidity problem in the long-run, the banking sector needs to focus on structural
issues such as balancing assets liability mismatch, diversify the liability sources, develop bond
market, and create a local hedging market.
Our Response to COVID-19

 Although the threat of COVID-19 is still lurking around with different recurring variants creating havoc
globally, the Bank has been successful in building the resilience against COVID-19 crisis with the
challenges effectively being managed so far.
 We innovate to seize the opportunities within the challenges posed by the COVID-19 especially in
digital banking space to provide alternate digital channels to stay connected with our customers
during pandemic and thereaer.
 In the times of unprecedented change and an era that demands persistent customer-centric
innovation, the Bank’s drive to embrace innovative business models, and drive customer-centric
value streams was recognized by Edgeverve, India with the award of “Customer Journey Reimagination” during Infosys Finacle
Innovation Awards 2021.
 The Bank to ensure an uninterrupted essential services to public effectively implemented Business Continuity Plan (BCP) with
health and safety of all the stakeholders at the topmost priority.
 Various health safety measures were adopted to secure the well-being of bank’s staff and their families during the trying times
such as oxygen cylinders to in-house emergency patients, insurance against COVID-19, isolation facility in government approved
hotels to staff, etc.
 The Bank also supported the Government of Nepal and other public institution by providing medical supplies and financial
contributions to fight against COVID-19 as a part of its corporate social responsibility.
 We believe that the impact of the pandemic to our country’s economy and its aershocks post-pandemic will reecho for some
years that could disorient the economy if all the sectors do not come together respecting other’s existence. NMB to avoid this
scenario has been wholeheartedly supporting to rebuild the economy.
 Post pandemic and the start of new normal, we felt that our customers had been facing a complex business situation and
required innovative banking solutions; to address which the Bank launched various first of its kind products like video know your
customer (VKYC) service, digital auto loan, and artificial intelligence (AI) based lending products.
Our Approach to Climate Change & Environmental Issues

 Nepal witnessed unpredictable torrential rains and heavy flash floods in different parts of the country with people living
in Melamchi and Manang bearing a huge loss of human life and financial properties along with various incidents of glacier
meltdowns in Himalayan regions during the year.
 The climate change risk has become one of the major risks for the banks as well. In order to avoid and minimize such events risk,
NMB has been consistently focusing on investment in sustainable business.
 The Bank has been able to expand its business and achieve desired outcomes in terms of both financial and non-financial growth
as we continue to seek sustainability and responsible banking practices in all our internal and external endeavours.
 Aligning with country’s vision of self-reliant Nepal and achieving all sustainable development goals, the Bank has prioritized and
focused its investments towards the upliment of productive and real economy sectors.
 We believe that our commitment is not just towards the profit but also towards the sustainability of the backbone of the real
economy including Agriculture, Energy, Tourism, and Education.
 As a joint venture of FMO Netherland and the sole member bank of Global Alliance for Banking on Values (GABV) in Nepal, NMB
is the first and only Bank in the industry to bring in foreign debt from renowned international groups including International
Finance Corporation (IFC), CDC Group Plc, OPEC Fund for International Development, Swiss Investment Fund for Emerging
Markets (SIFEM), etc.
 With its association to such international investment and lending groups, NMB as of date is the most sought aer names amongst
foreign investors seeking for an investment opportunity based upon sustainability in Nepal.
 The collaboration with such international partners has not only helped us to source offshore financing in priority sectors to invest
in SME, MSME, Energy and Agriculture but also has enabled us to build expertise on Environmental and Social Risk Management
(ESRM), Green Financing, and Issuance of Local Power Bond.
 Through our partnership with international lending community, we see endless possibilities to unleash Nepal and grow potential
in sectors like Agriculture, Energy, Tourism, etc. to cater not only to the local demand but also cater to an ever-increasing
demand in South Asian region as a whole
 In our journey to become the most sustainable bank in Nepal, we extend our support to Nepal government’s initiative to become
net zero emission country by 2045 and increasing the share of clean energy in the country’s energy demand to 15 percent as per
the declaration in 26th Conference of Parties (COP26) of the UN Framework Convention on Climate Change (UNFCCC) in Glasgow,
United Kingdom.
 While we understand a huge funding gap in terms of local resources availability to achieve the aforementioned climate targets,
the Bank with its international networking and influence as one of the leading banks in Nepal will play a crucial role to facilitate
sourcing of offshore funds to invest in climate change adaptation and mitigation, and fully cooperate by committing the investment
in energy related projects.
Our Priorities
Our aim is to become the most preferred partner to our stakeholders.
 The Bank will continue to focus on sustainable business investing in initiatives to combat against climate change adaptation and
mitigation.
 We will seek to fully implement ESRM policy as per the international standard so as to create an enabling environment to
facilitate Foreign Direct Investments (FDIs) in the country.
 Diversification of funding sources will be ensured through issuance of green bonds, energy bonds, etc. to both domestic and
international markets remaining in line with the regulatory guidelines of the central bank of Nepal.
 The Bank understands that digital engagement with its customers is imperative for its future growth and shall continue to
prioritize investment for digitization of its banking products and processes to become a truly digital bank and to achieve the
following:
 Shorten the service turnaround time for customers and other stakeholders and to achieve customer delight
 Create a strong delivery channels to reach out to large unbanked and underbanked population of Nepal to ensure financial
inclusion
 Ensure system security, data privacy, and resilience of the Bank’s technology platform
 We will build the most conducive workplace environment and empower staff to become the first choice employer
 Deliver superior financial performance to ensure consistent and better return to our investors
 Ensure a high standard of corporate governance and risk management practices to build the Bank’s image as a "Prudent and
Trustable Bank"
 We aim to leverage on our digital capabilities and a wide range of financial products and services to create values to our customers
and ensure most convenient services to them.
Amidst the market opportunities and prevailing challenges, we believe that the banking industry has lot more to deliver and grow.
However, the growth will also incorporate the merger and acquisition of financial institutions as the consolidation in industry is
inevitable. The increase in compliance and other regulatory costs with ever-growing challenge and need to tackle risks of money
laundering and terrorism financing are also expected to push financial institutions towards consolidation. The digitalization of the
services coupled with customers’ growing service expectations will change the way of doing business. Understanding the unavoidable
changes manifested by a paradigm shi in doing business and critically analysing each behavioural change, NMB is all poised to set
the standards and seize every opportunity in the market.
I humbly believe that our year-on-year success is the key-result of all the hard works, patience and determination exerted by our
staff who together truly forms the most dynamic and energetic team force. I would like to extend my sincere gratitude to FMO and all
our foreign partners. I also take this opportunity to personally extend my heartfelt thanks to our Chairman Mr. Pawan Kumar Golyan
and all board members for their relentless guidance in making NMB not only one of the best commercial banks of the country but
making it the best bank of Asia. Finally, my sincere thanks to the esteemed shareholders, Nepal Rastra Bank, Ministry of Finance,
partner organizations, Securities Board of Nepal, and all other regulatory bodies for their invaluable suggestions to our continuous
improvement and business growth. With your constant trust and solidarity, we aspire to grow collectively for many years into the
future.
Thank you.
Sunil K.C.
Chief Executive Officer
Director's Report
Respected Shareholders,
On behalf of the Board of Directors, I extend my warm welcome and greetings to all the shareholders,
representatives of various regulatory authorities, auditor, legal advisors, distinguished invitees, journalists,
representatives of different institutions, and all other stakeholders for your honourable presence in the
26th Annual General meeting of NMB Bank Limited.
We trust that the Annual Report of the Bank including Statement of Financial Positions, Statement of
Comprehensive Income and Statement of Cash Flow for the FY 2020/21 have been received by all. I now,
with the permission of this revered Annual General Meeting, would like to present the directors report
pursuant to the Company Act, 2006, Clause 109 (4), comprising of the Bank’s financial progress, summary
of the country’s economy, challenges faced by the banking industry, and the achievements of the Bank
during the review period.
1. Key Financial Performance for the Fiscal Year 2020/21

Deposit Collection: During the review year, the Bank’s deposit grew by 23.47% from NPR 134.81 Billion
to NPR 166.45 Billion in which the share of institutional deposit remained at 32.33%. Of the Bank’s total
deposit portfolio including the deposit in foreign currency during the review period, the composition of
current deposit, fixed deposit, saving deposit, call deposit, and other deposit remained at 5.95%, 49.26%,
31.92%, 9.62%, and 3.25% respectively. The Bank has managed to mobilize institution deposit within the
threshold as prescribed by Nepal Rastra Bank.
Loans and Advances: During the fiscal year 2020/21, the Bank grew its risk assets portfolio from NPR
121.78 Billion to NPR 158.04 Billion thereby managing a growth of 29.78% as compared to FY 2019/20.
During the review period, the composition of loans disbursed by the Bank remained as following:
S.N. Descirption As on Mid-July 2021
1 Real Estate Loan 2.87%

2 Home Loan 8.08%
3 Margin Lending 2.47%
4 Term Loan 26.32%
5 Overdra Loan 10.28%
6 Trust Receipt/Import Loan 4.61%
7 Demand and Other Working Capital Loan 17.23%
8 Hire Purchase Loan 3.25%
9 Other Loan 24.89%
As guided by Nepal Rastra Bank through its Unified Directive to sanction loan in recommended sectors, the
Bank has maintained loan exposure proportions as: Energy-8.00%, Agriculture-11.10%, Tourism-3.70%,
and Small and Micro Enterprises: 11.29%
 Investment: The Bank increased its investment by 15.97% to take its total investment portfolio of
NPR 15.37 Billion in the previous year to NPR 17.83 Billion during the fiscal year 2020/21. Out of
total investment, the Bank invested NPR 1.16 Billion in organizations’ shares (including investment in
subsidiary companies), NPR 15.46 Billion in Nepal Government Bonds and Treasury Bills, NPR 714.40
Million in Agriculture Bond and NPR 491.20 Million in Bonds of Foreign Banks.
 Operating Expense: During the fiscal year 2020/21, Other Operating Expenses (including fee and
commission expenses) reached NPR 1.26 Billion i.e. a decrement of 1.86% from NPR 1.29 Billion
in the previous fiscal year. The staff expense (excluding bonus) during the review period increased
by 20.74% from NPR 1.38 Billion to NPR 1.66 Billion. The increase in operating expense however,
remained within the pre-approved budget.
 Income: The Total Operating Income of the Bank increased by 7.45% i.e. from NPR 6.90 Billion in the
previous fiscal year to NPR 7.42 Billion in the review year. During the review period, the Net profit
increased by 58.29% than preceding fiscal year from NPR 1.71 Billion to NPR 2.71 Billion. The Bank
during the review period witnessed an increase of 2.99% in the Net Interest Income whereby the Bank
earned NPR 5.66 Billion as compared to NPR 5.49 Billion in the last fiscal year. Foreign Exchange Income decreased by 5.22% and
reached NPR 455.1 Million.
 Capital Fund, Credit Deposit, Base Rate and Liquidity Ratio: The Bank maintained a sound Capital Fund during the reviewed
fiscal year, as a result of which the capital adequacy ratio remained at 15.08%; above the stipulated requirement of at least 11%
by Nepal Rastra Bank. Likewise, the Credit to Core Capital plus Deposit (CCD) Ratio was efficiently managed and remained at
77.06%. Liquidity ratio also remained within the prescribed limit and stood at 27.52%. Base rate of the Bank at the end of review
period was 7.33%.
 Non-Performing Asset: The increase in bad-debts due to the impact of COVID19 pandemic that had resulted to increase in NPA
to 2.68% in the FY 2019/20 has been improved to 2.27% at the end of review period due to interest collection and recovery. The
Bank has been focusing on debt recovery efforts and credit risk management, thus expects to reduce the NPA in future as well.
 Debentures: The details of the debentures issued by the Bank as of review period is per the following:
Particulars Issued Date Maturity Date Interest Rate Value (NPR in Million)
NMB Energy Bond 2036 3 June 2021 1 June 2036 4.00% 1,500
NMB Debenture 2031 25 May 2021 24 May 2031 8.50% 2,000
NMB Debenture 2029 12 April 2019 11 April 2029 10.00% 1,685
The Bank’s key financial performance during the review period: (figures in thousand)
Fiscal Year Fiscal Year Incremental Percentage
S.N. Particulars
2020/21 2019/20 Volume change (%)
1 Total Deposit 166,453,802 134,810,383 31,643,418 23.47
2 Total Loans and Advances 158,043,919 121,778,070 36,265,849 29.78
3 Total Investment (Including Subsidiaries) 17,826,051 15,371,244 2,454,807 15.97
4 Paid Up Capital 16,325,961 13,950,987 2,374,974 17.02
5 Capital Adequacy Ratio (%) 15.08 15.08 - 0.00
Fiscal Year Fiscal Year Incremental Percentage

S.N. Particulars
2020/21 2019/20 Volume change (%)
1 Net Interest Income 5,660,659 5,496,220 164,439 2.99
Commission and Discount and Other Operating
2 1,529,616 1,129,735 399,881 35.40
Income
3 Foreign Exchange Income 455,135 480,196 (25,061) (5.22)
4 Total Operating Income 7,416,358 6,902,194 514,164 7.45
5 Total Operating Expenses (including staff expenses) 2,923,748 2,662,139 261,609 9.83
6 Operating Profit 3,821,017 2,450,274 1,370,743 55.94
7 Net Profit 2,711,074 1,712,777 998,297 58.29
 Bank’s Jurisdiction and Branch Network: The Bank has been providing banking facilities and services to its customers
through 201 branches, 9 extension counters and 138 ATMs across the country. The number of branches located in each province
are as follows:
Province 1 : 30 branches
Province 2 : 27 branches
Bagmati Province : 51 branches
Gandaki Province : 38 branches
Lumbini Province : 32 branches
Karnali Province : 03 branches
Sudur Paschim Province : 20 branches
In order to provide banking facilities at the doorstep of the people living in remote areas of the country, the Bank has been
providing branchless banking services in Bhaktapur, Dolakha. Ilam, Jhapa, Kapilvastu, Kaski, Morang, Nawalpur, Ramechhap,
Rasuwa, Saptari, Sunsari, and Udayapur. The Bank intends to expand its branchless banking facilities in other remote area in
future as well.
 Representative Office outside Nepal and its progress: The Representative office established at Lebuh Pasarbesar
in Kualalumpur, Malaysia has been assisting as a point of contact for expansion of trade and remittance business. With
this establishment, the Representative office has helped to foster the growth of trade business between two countries and
communicate the information on Nepalese economy and available financial services to Nepalese people in Malaysia. This office
has been playing pivotal role to connect and garner the relationships with the Malaysian corporates and business houses and
enhance trade businesses with other foreign establishments.
2. Impact of Domestic and World Economic Outlook On Bank’s Performance
 Global Economic Situation

 The world economy contracted by 3.2 percent in 2020 and is projected to expand by 6 percent in 2021 according to the
International Monetary Fund (IMF). It was expanded by 2.8 percent in 2019.
 In 2020, the advanced economies contracted by 4.6 percent, and the emerging and developing economies contracted by 2.1
percent. The IMF, for 2021 has projected the advanced economies to expand by 5.6 percent, and emerging and developing
economies to grow by 6.3 percent. The growth rate of developed economies, and emerging and developing economies
stood 1.6 percent and 3.7 percent respectively in 2019.
 Among neighbouring countries, the IMF estimates the Chinese economy to have expanded by 6.0 percent in 2019 and
2.3 percent 2020. Likewise, it has estimated the Indian economy to contract by 7.3 percent in 2020 as compared to the
expansion of 4.0 percent in 2019. Economic growths for China and India are projected to remain at 8.1 percent and 9.5
percent respectively in the year 2021.
 The price of petroleum products dropped by 32.7 percent in 2020. It is projected to increase by 56.6 percent in 2021.
 Revenue mobilization in most of the countries has been affected by the COVID-19. On the other hand, the increase in public
expenditure has raised the ratio of public debt to gross domestic product globally. Such as ratio reached 97.3 percent in
2020 compared to 83.7 percent in 2019.
 Domestic Economic Situation
 The path of economic development and prosperity with social justice have been obstructed by the COVID-19 pandemic as
the economic activities have been largely affected by recurring waves of the virus. Though exports have improved well,
there has been pressure on the balance of payments due to a widening trade deficit driven by increasing imports. Foreign
exchange reserve is in a comfortable position and inflation is within the target.
 Refinancing and subsidized loan facilities, together with monetary and regulatory easing, aimed to support economic
recovery by minimizing the impact of COVID-19, have expanded the flows of credit in the economy. The business operating
cost has remained at a lower level even during the pandemic because of the low lending rate at a single digit.
 The recovery of the hard-hit sectors including the tourism is expected to prolong due to continuation of infection. To speed
up the economic recovery by minimizing the impact of the pandemic, it is necessary to provide regulatory easing and
concessions, on the other hand, likely adverse impact on financial and external sector stability needs also to be considered
cautiously.
Overall Economic Situation
 Economic Growth
– The Central Bureau of Statistics (CBS) has estimated the Nepalese economy to grow by 4.01 percent in FY 2020/21
compared to the contraction of 2.09 percent in FY 2019/20. However, maintaining this level of growth rate is challenging
due to the second wave of the pandemic that reappeared in the fourth quarter of the year.
– The ration of gross domestic savings and gross national savings to GDP are estimated at 6.6 percent and 31.4 percent
respectively in FY 2020/21. Such ratios were 6.3 percent and 32.6 percent respectively in the previous year.
– The ratio of gross fixed capital formation to GDP is estimated at 27.3 percent in FY 2020/21 compared to 28.4 percent
in the previous year.
– Average consumer inflation stood 3.60 percent in FY 2020/21 compared to the target of 7.0 percent. On a y-o-y basis,
inflation remained 4.19 percent in Mid-June to Mid-July 2021.
 Foreign Trade, Remittance, and Balance of Payment
– Merchandise exports increased by 44.4 percent to NPR 141.12 Billion in FY 2020/21 and imports increased by 28.7
percent to NPR 1,539.84 Billion. Merchandise trade deficit widened by 27.3 percent in the review year. Remittance
inflows increased by 9.8 percent to NPR 961.05 Billion.
– The current account deficit and Balance of Payment (BOP) surplus stood at NPR 333.67 Billion and NPR 1.23 Billion
respectively in FY 2020/21.
– Gross foreign exchange reserves of the banking system stood NPR 1,399.03 Billion (USD 11.75 Billion) in Mid-July
2021.
– Nepalese currency vis-à-vis the USD appreciated 1.12 percent in Mid-July 2021 with the busing rate of USD at NPR
119.04.
(Source: Monetary Policy for 2021/22, NRB)
Despite the contraction in overall economic growth following the emergence of COVID-19 in the FY 2019/20 and subsequent
scenarios in the review year, the availability of vaccines and mobilization of economic sector has supported the increase in credit
investment putting a pressure liquidity situation of the country. The declining inflow of remittances has also further exerted
pressure on liquidity in the banking sector that could potentially impact the strategic business expansion of the bank.
3. The Board of Directors’ opinion on the achievements of current fiscal year
and future plans
Following are the main financial highlights of the Bank as on Mid October 2021 for the running fiscal year:
S.N. Particulars NPR (in Thousand)

1 Total Deposit 175,666,032
2 Total Loans and Advances 172,818,799
3 Total Investment (Including Subsidiaries) 20,924,013
4 Net Interest Income 1,422,055
5 Commission, Discount and other Operating Income 813,011
6 Foreign Exchange Income 121,045
7 Net Operating Income 2,285,835
8 Total Operating Expenses (including staff expenses) 627,122
9 Operating Income 1,470,068
10 Net Profit 1,044,437
11 Paid Up Capital 16,325,961
12 Reserves and Funds 8,658,399
13 Capital Adequacy Ratio 14.48%
Future Plans:
 The Bank shall continue to focus on sustainable banking initiatives and increase its investment in sustainable sectors as per its
strategic plan. In addition, it will also align its operations and businesses to reduce greenhouse gas emissions and move towards
carbon-neutrality.
 The Bank as its key strategic objective has placed top priority to the effective expansion of digital banking services and shall
continue to implement modern technologies and improvise operational procedures moving ahead.
 The service standard shall be raised to provide a greater customer experience
 A balanced deposit and credit growth shall be prioritized.
 Strategies have been adopted to increase the size of retail, agricultural, and small and micro credit enterprises loan portfolio
while continuing to improve the quality of credit. The bank will pay special attention to increase the credit investment in productive
sector.
 The process of obtaining additional debts from foreign banks and financial institutions as per the Directives issued by Nepal
Rastra Bank has been expedited for the effective management of funding sources.
 The Bank shall pay special attention to increase the transaction size of its subsidiaries.
 The existing programs conducted under the corporate social responsibility of the Bank shall be continued.
4. Industrial and Professional Relations

On the foundation of transparency and professionalism, the Bank has developed an amiable and professional relationships with all its
stakeholders. The Bank firmly believes that such relationships will be pivotal for its sustainable future growth and success.
5. Changes in the Board of Directors

In the review year, Director Late Rajendra Kafle representing Employees Provident Fund retired from the service on 21 August 2020.
Director Kafle was replaced by Mr. Jeevan Kumar Katwal as a representative of Employees Provident Fund and appointed as the
Director of this Bank who took oath of office and secrecy on 4 September 2020. As the four-year tenure of independent Director Pradip
Raj Pandey ended on 30 October 2021, the post of independent director is currently vacant.
6. Significant Issues Affecting Business

The major risks and challenges that holds the potential to significantly impact the bank in future are detailed as below:
 Impact on the income and profitability of the Bank due to contraction observed in the investment sector
 Risks inherent in the credit investments and non-funded services provided by the Bank
 Challenges in interest rates management of both deposits and loans due to volatility in liquidity situation.
 Risk due to increasing competition and lack of skilled human resources.

 Possible risks due to fluctuations in exchange rate during foreign currency transactions.
 The risks arising from the country’s political and other external reasons that has impact on imports and exports resulting in non-
payment of loans and interest.
 Possible risks resulting from changes in economic, monetary and fiscal policies of the nation.
 Risks resulting from the sluggishness of the international economic and financial sectors that could have a ripple effect on the
Nepalese market.
 A lack of proper database and advance technology in the country to prevent money laundering.
7. Significant Observation in the Audit Report and Subsequent Response from

the Board
As stated by the auditor of the Bank to mandatorily audit the amount saved from swap ratio during the merger in accordance with
the “Banks and Financial Institutions Merger and Acquisition Regulations, 2073” issued by Nepal Rastra Bank, the statement of the
same has been attached to this report. There is no observation mentioned in the Audit Report that could significantly affect the Bank’s
business.
8. Recommended Amount for Dividend Payment

With the approval of Nepal Rastra Bank, the Bank has proposed the agenda in the Annual General Meeting with recommendation
for distributing 15.80 percent Dividend (12.50 percent Stock Dividend and 3.30 percent Cash Dividend including Tax) on the existing
Paid Up Capital (NPR 16,325,960,852.66) of the Bank to be distributed from the capital reserves, and retained earnings to all the
shareholders maintained on the date of book closure.
9. Details of Shares Forfeited by the Bank

No shares were forfeited during the review year.
10. Performance of the Company and its Subsidiaries, and Review of the
Existing Status
The performance progress of the Bank is mentioned in the first section whereas the performance of its subsidiaries- namely NMB
Capital and NMB Laghubitta Bittiya Sanstha are mentioned in section 25(a) of the Director’s report
11. Major Changes made by the Company and its Subsidiaries Resulting to
Significant Changes in the Company’s Business
NMB Capital Ltd., a 100 percent subsidiary of NMB, has been acting as Share Registrar of the Bank, for the service of which the
subsidiary company was paid NPR 1 Million in the review period. At the end of the review year, the bank account of NMB Capital Ltd.
maintained at this bank had deposit of NPR 299.3 Million. NMB Capital was paid interest of NPR 7.41 Million by the Bank in the FY
2020/21.
An employee of the Bank has been working in the capacity of the Chief Executive Officer of the subsidiary NMB Capital Ltd. The Bank
received NPR 2.58 Million as building rent and NPR 2.4 Million as administrative and other services fee from NMB Capital as per the
agreement.
The deposit, loans and investments of the Bank in its subsidiary companies NMB Capital Ltd. and NMB Laghubitta Bittiya Sanstha Ltd.
as on Mid-July 2021 are summarized as below:
(NPR in thousands)
S.N. Descirption NMB Capital Ltd. NMB Laghubitta Bittiya Sanstha
1 Investment 200,000 172,488
2 Call, Current, and Fixed Deposit 299,304 7,316
3 Loans & Advances - 1,000,000
4 Interest Expenses in Deposit 7,413 -
5 Loan Interest Income - 56,275
6 Office Rental by NMB Capital Ltd. 2,586 -
7 Payment against Management Service 2,400 -
S.N. Descirption NMB Capital Ltd. NMB Laghubitta Bittiya Sanstha
8 Payment against Share Registrar Works of NMB Bank 1,000 -
9 Debenture Trustee Fee Payment to NMB Capital 100 -
10 Dividend Payment Fee to NMB Capital 1,450 -
11 NMB-50 (Seed Fund) 177,017 -
12 NMB Hybrid Fund-1 (Seed Fund) 152,619 -
13 NMB-50 Dividend Payment 8,851 -
14 NMB Hybrid Fund-1 Dividend Payment 12,210 -
15 NMB Capital Ltd. FY 2019/20 Dividend Payment 40,000 -
12. Information provided by the Basic Shareholders to the Bank

During the review period, no information was received other than the regular information to be provided as per the prevailing law.
13. Details of Share Ownership of the Directors and Officials and the
Information Received by the Company in relation to their share transactions
during the review period:
In the review fiscal year, none of the directors and officials have been involved in the company’s stock trading. The details of their share
ownership are listed below:
S.N. Name Designation Share Ownership

1. Mr. Pawan Kumar Golyan Chairman 1,508,206
Mr. Nico Klaas Gerardus Pijl
2. Director -
(representative from FMO, Netherlands)
Mr. Jeevan Kumar Katwal
3. Director 1,365
(representative from Employees Provident Fund)
4. Mr. Yogendra Lal Pradhan Director 1,488,090
5. Mr. Uttam Bhlon Director 197,307
6. Mr. Shirish Kumar Murarka Director 36,573
7. Mr. Pradeep Raj Pandey Independent Director -
8. Mr. Sunil K.C. Chief Executive Officer 5,862
9. Mr. Pradeep Pradhan Chief Operating Officer 30,307
10. Mr. Sudesh Upadhyaya Chief Business & Strategy Officer 5,188
11. Mr. Govind Ghimire Chief Business Officer -
12. Mr. Shabnam Limbu Joshi Chief Human Resource Officer -
13. Mr. Sharad Tegi Tuladhar Chief Risk Officer -
14. Mr. Pramod Kumar Dahal Chief Audit, AML/CFT & Company Secretary 361
15. Mr. Navin Manandhar Chief Finance Officer -
16. Mr. Roshan Regmi Head-Retail Banking -
14. Information on the Directors relatives’ involvement in the Bank’s

contracts
Disclosure not required as there was no such agreement.
15. Details of own shares purchased by the Bank

None.
16. Internal control system

With utmost priority from the Board of Directors to safeguard the interest of the creditors, the internal control system of the Bank
and its functioning have been made more effective to ensure sound and safe operation by formulating necessary rules, policies and
procedures for inherent and potential risk management. Abiding by the prevailing law and directive issued by Nepal Rastra Bank, four
committees viz. Audit Committee, Risk Management Committee, Assets Laundering Prevention Committee, and Human Resources
Service Committee have been formulated by the Board of Directors. These committees discusses various risks in detail and updates
the same to the Board of Directors. For effective risk management and prevention, various activities are being carried out at the
management level of the Bank by its Management Committee, Credit Risk Committee, Assets Liability Committee, Human Resources
Recruitment Committee, Information Technology Committee, and Corporate Governance Committee.
In addition, the Risk Management Department of the Bank, independently undertakes the task of effectively controlling and managing
the risk along with the periodic review of the actions taken in the area of risk control. The department has significantly contributed
to maintain the institutional governance at the Bank through meticulous monitoring of the activities to ensure full compliance of the
prevailing law and directives issued by Nepal Rastra Bank.
Effective internal controls are the foundation of safe and sound banking therefore NMB Bank Ltd. has designed and enforced system
of operational and financial internal control that safeguards bank’s resources, produce reliable financial reports and comply with rules
and regulations of the country. Effective internal control also reduces errors/irregularities with timely reviews and mitigations. The
business strategies and the important policies as approved by the Board of Directors have been adopted by the senior management for
risk management activities. The Bank has also been strengthening its internal control system by providing various types of trainings
to its employees to effectively manage risks.
 Risk Management
For agile performance through proper risk management, the Bank has prepared and implemented a robust risk management
framework for identification, measurement, monitoring, management, control and reporting of the potential risks that the
organization may have to face. The Board of Directors also annually reviews the approved and implemented Risk Management
Framework to deal with underlying material risks of special importance to the Bank.
The Board of Directors has also been identifying the risk appetite for the Bank and the extent to which it wants to bear the risk to
determine the overall risk strategy. The Board has effectively managed the risks by categorizing them into assets risk, operational
risk, liquidity risk, market risk, interest rate risk, foreign exchange risk, and other risks. In addition to the management level
committee, following committees have also been constituted at the Board level for risk management and effective internal
control system of the Bank.
 Committees formed at the level of Board of Directors
– Audit Committee
Details related to it are mentioned in section 18 of this Director’s report
 Risk Management Committee
A risk management committee under the coordination of a Non-Executive Director have been set up at the Bank. The coordinator
of the Audit Committee has been appointed as a member of the Risk Management Committee where Head of Compliance
Department and Chief Operating Officer are the members and Head of Risk Management Department is the Principal Member
Secretary. The committee regularly assemble for the meeting to discuss on the risks identified by the management level risk
committee, the immediate implications on the Bank’s strategy including capital fund, liquidity position, credit to deposit ratio,
risk appetite, etc. due to major changes in the directives issued by Nepal Rastra Bank and the changes in monetary policy. In each
quarter, any potential risk in relation to the stress testing is discussed and the information is submitted to the Board of Directors
for review. In the review year, the Risk Management Committee held 7 meetings accounting total expenditure of NPR 208,000.
 Human Resources (HR) Service Committee
Under the coordination of one Non-Executive Director, HR Service Committee has been constituted from 20 December 2020
consisting of another Board Director as member. The committee also consists of the Chief Executive Officer, and the Chief
Finance Officer as members, and Chief Human Resources Officer as the Member Secretary. Bylaws on the service provision of the
employees, policies related to the employees and succession planning, employees’ salary allowance and organizational structure
are discussed in this committee. In the review year, the HR Service Committee held 10 meetings accounting total expenditure of
NPR 176,000.
 Assets Laundering Prevention Committee
Assets Laundering Prevention Committee has been constituted under the coordination of a Non-Executive Director, another
Director member from the Board, Head of Compliance Department and Chief Risk Officer as members and Chief AML as Member
Secretary. The Committee has made special efforts to oversee and control the risks by ensuring that laws pertaining to money
laundering and prevailing directive issued by Nepal Rastra Bank are fully complied. In the review year, the Assets Laundering
Prevention Committee held 5 meetings accounting total expenditure of NPR 80,000.
17. Details of Total Management Expenditure of the last Fiscal Year

During the review period, the staff expenses and office operating expenses amounted NPR 2.92 Billion.
18. List of Audit Committee members, their remuneration, allowances and
facilities, details of the work done by the Committee and the details of any
suggestions made by the Committee
Under the coordination of one Non-Executive Director, Audit Committee has been constituted with an additional Non-Executive
Director as member and Head of Internal Audit Department as Principal Member Secretary as per the direction of Nepal Rastra Bank.
Following are the Audit Committee members:
Mr. Jeevan Kumar Katwal (Director) - Coordinator

 Mr. Shirish Kumar Murarka (Director) - Member
 Mr. Pramod Kumar Dahal (Head-Internal Audit Department) - Member Secretary
(Note: Coordinator Late. Rajendra Kafle representing Employees Provident Fund retired from his service on 21 August 2020 who was
replaced by Mr. Jeevan Kumar Katwal (representative of Employees Provident Fund) as coordinator from 20 December 2020)
The Audit Committee has been performing its functions complying with the instructions by Nepal Rastra Bank. Each report received
from the auditor is discussed and reviewed in the Audit Committee with necessary instructions for improvement. The Audit Committee
discusses and reviews each report received by the Auditor to identify all the risk areas and ensures that the risks are addressed before
a periodic submission of the report to the Board of Directors. The Board is regularly receiving suggestions from the Audit Committee.
During the review year, the Audit Committee held 6 meetings to which its members excluding Member Secretary were remunerated
incurring the total expenditure of NPR 176,000.
All the members of the Committee formed at the level of Board of Directors were remunerated NPR 16,000 allowance per meeting
except the Member Secretary.
19. Details of any payments yet to be made to the Directors, Chairman,

Chief Executive Officer, Basic Shareholders or their close relatives or their
associated companies
None
20. Details of remuneration to the Directors, Chief Executive Officer and

Senior Management Staff
Detailed in section 33 of additional disclosures of this report.
21. Information of Undeclared Dividend by the shareholders

Out of the total dividend distributed by the Bank upto 15 July 2021, NPR 194,220,962 remains unclaimed by the shareholders of
which NPR 2,740,526 is with the Bank and remaining NPR 191,480,436 is with the share registrar NMB Capital Ltd. The uncollected
dividends of the shareholders before FY 2012/13 have been deposited in the Investor Protection Fund. The Bank publishes a notice in
the newspaper to collect the dividends each year in the newspaper and updates the same in the Bank’s website as well.
22. Details of Fixed Assets purchased/sold pursuant to Clause 141 of the

Company Act 2006
During the review period there was no purchase/sale of fixed asset.
23. Details of the transactions with related companies pursuant to Clause 175
of Company Act 2006
Detailed in section 11 of this report.
24. Any other information to be disclosed in the Director’s Report as per

Company Act 2006 and prevailing law
Required information has been provided in the relevant section of this annual report.
25. Other Essential Information

A) Subsidiary Companies and its Progress
NMB Capital Ltd.
NMB Capital Ltd.; established with a capital investment of NPR 200 Million is a wholly owned subsidiary company of the Bank.
Licensed by Securities Board of Nepal (SEBON), NMB Capital has been managing the process of issuing primary shares, further
public offerings, and right shares of various companies along with other investment plans and portfolio management targeted
towards general public as well as institutional clients adhering to the prevailing policies and rules issued by concerned authorities.
In the fiscal year 2020/21, the net profit of the company stood at NPR 108.20 million.
The company during the review period, registered two mutual fund schemes in the SEBON i.e. (i) an open-end mutual fund
scheme viz. NMB Saral Bachat Fund-E and (ii) a closed-end mutual fund scheme viz. NMB Sulav Investment Fund-2. In addition,
it completed the issuance of one debenture, four primary shares, one right-share, three auction. Similarly, the agreement entered
in the review year to issue and distribution of one additional debenture and right share have been executed during the running
fiscal year. It has been working as a fund manager and depository for ‘NMB Hybrid Fund L-1’ and planning manager for ‘NMB-50’
issued by NMB Bank Ltd. The company has submitted a plan to the SEBON and moving ahead for public issuance of eight primary
shares by the end of the running fiscal year. The company has been providing share registrar services to 18 companies at the end
of the review year.
STATEMENT OF FINANCIAL POSITION

15 July 2021 (NPR) 15 July 2020 (NPR)
Assets
Cash and Cash Equivalents 511,355,658.83 1,129,850,768.15
Investment Securities measured at Fair Value through P/L 17,460.00 9,900.00
Investment in Equity measured at Fair Value through OCI 48,457,500.00 37,520,000.00
Investment Securities measured at Amortized Cost 252,912,636.42 229,268,084.23
Other Financial Assets 36,012,035.44 23,239,824.33
Other Assets - -
Property & Equipment 7,862,504.40 9,615,925.74
Intangible Assets 1,922,648.39 819,227.40
Current Tax Assets 1,251,461.66 939,074.49
Deferred Tax Assets 3,188,000.84 5,665,560.44
Total Assets 862,979,905.98 1,436,928,364.78
Liabilities
Dues to Public 397,685,671.59 990,915,038.71
Other Financial Liabilities 41,680,507.89 92,183,663.04
Other Liabilities 23,461,873.23 20,327,556.22
Current Tax Liabilities - -
Deferred Tax Liabilities - -
Other Provisions 8,528,001.22 13,658,095.00
Total Liabilities 471,356,053.93 1,117,084,352.97
Equity
Share Capital 200,000,000.00 200,000,000.00
Retained Earnings 169,093,177.89 108,398,512.28
Other Reserves 22,530,674.16 11,445,499.53
Total Equity 391,623,852.05 319,844,011.81
Total Liabilities and Equity 862,979,905.98 1,436,928,364.78
STATEMENT OF PROFIT OR LOSS
15 July 2021 (NPR) 15 July 2020 (NPR)
Income
Income from Merchant Banking Activities 116,149,214.39 19,251,132.03
Income from Mutual Fund operations 54,412,750.00 49,764,019.98
Interest Income 783,421.05 20,519,858.62
Other Income 67,371,743.58 68,151,574.02
Net gain/(loss) on financial investments Held for Trading 7,560.00 3,900.00
Total Income 238,724,689.02 157,690,484.65
Expense
Personnel Expense 42,414,657.88 34,594,111.98
Interest Expense - -
Depreciation on Property and Equipment 4,021,428.34 3,991,326.14
Amortization of Intangible Assets 479,286.01 315,880.20
Other Operating Expenses 38,713,227.40 16,431,797.11
Total Expenses 85,628,599.63 55,333,115.43
Profit Before Tax from Continuing Operations 153,096,089.39 102,357,369.22
Income Tax Expenses 45,928,826.82 30,706,040.77
Deferred Tax Expenses/(Income) 1,020,292.73 2,351,825.61
Profit For the Year 108,187,555.30 74,003,154.06
NMB Laghubitta Bittiya Sanstha Ltd.

NMB Laghubitta Bittiya Sanstha Ltd. is a subsidiary microfinance company of NMB Bank. It has a paid-up capital of NPR 539.84
Million of which NMB Bank, other individual promoters, and general public have share ownerships of 51%, 19%, and 30%
respectively. The head office of the company is in Pokhara Metropolitan City Ward No 25, Milanchowk, Hemja, Kaski. It has 136
branches spread in 62 hilly districts of the country. The company as on Mid-July 2021 has NPR 5.02 Billion risk assets exposure
and NPR 1.67 Billion deposit portfolio.
Balance Sheet
FY 2020/21 (NPR) FY 2019/20 (NPR)
Capital & Liabilities
1. Share Capital 655,862,862 539,804,825
2. Reserve and Funds 242,159,508 168,223,975
3. Debentures and Bonds - -
4. Borrowings 2,795,616,200 2,301,841,701
5. Deposits 1,673,811,820 1,469,152,795
6. Proposed Dividend 6,108,318 4,536,175
7. Income Tax Liabilities - -
8. Other Liabilities 79,150,921 41,535,191
Total Liabilities 5,452,709,629 4,525,094,662
1. Cash Balance 3,218,520 130,155
2. Balance with Nepal Rastra Bank 30,000,000 16,030,000
3. Balance with Banks/Financial Institutions 225,937,032 4,251,618
4. Money at Call and Short Notice 121,402,539 280,052,331
5. Investments 2,000,000 2,000,000
6. Loans, Advances and Bills Purchased 5,021,513,056 3,584,171,733
7. Fixed Assets 27,203,307 20,442,680
8. Non-Banking Assets - -
9. Other Assets 21,435,175 20,161,756
Total Assets 5,452,709,629 4,525,094,662
Profit and Loss Account

Particulars FY 2020/21 (NPR) FY 2019/20 (NPR)
Interest Income 719,527,697 592,589,687
Interest Expenses 249,078,643 313,413,805
Net Interest Income 470,449,054 279,175,883
Commission ,Discount and other operating income 111,229,656 82,985,186
Exchange Fluctuation Income - -
Total Operating Income 581,678,710 362,161,069
Staff Expenses 162,373,320 155,172,948
Other Operating Expenses 79,888,872 58,472,776
Exchange Fluctuation Loss - -
Operating Profit Before Provision for Possible Loss 339,416,588 148,515,345
Provision for Possible Losses 626,510,277 149,500,439
Operating Profit (287,093,689) (985,094)
Non-operating Income/Loss 1,292,951 1,906,401
Loss Provision Written-Back 598,693,713 94,673,412
Profit from Regular Operations 312,892,973 95,594,719
Profit/Loss from extra-ordinary activities - -
Net Profit aer considering all activities 312,892,973 95,594,719
Staff Bonus Provision 31,289,297 9,559,472
Provision for Income Tax Provision 83,990,637 25,424,567
Current Year’s Tax Provision 84,881,347 25,893,374
Previous Year’s Tax Provision - -
Current Year Deferred Tax (Income)/Expenses (890,711) (468,807)
Net Profit/Loss 197,613,039 60,610,679
B) Corporate Social Responsibility

A Corporate Social Responsibility (CSR) Committee has been constituted under the coordination of the Chief Executive Officer
of the Bank with Chief Business & Strategy Officer, Chief Business Officer, and Head-Finance & Planning as members, and
Head-Corporate Social Responsibility as Principal Secretary. During the year under review, the Bank as part of its CSR activity
distributed various items to the flood victims of Sindhupalchowk and Manang districts. The Bank also distributed essential items
for clean drinking water and sanitation in different places of the country. Under the CSR, the Bank covered COVID-19 treatment
and prevention expenses for the employees to safeguard them against the epidemic and distributed necessary items including
hand sanitizers and layered-masks for their protection from the virus. Moreover, the Bank also provided various financial and
non-financial assistances to differently-abled people, students from remote areas, COVID isolation centers, and traffic police. The
Bank during the review year contributed NPR 26.63 Million under corporate social responsibility.
C) Human Resources:
The Bank considering the needs of committed and productive staff for the successful implementation of future plans and its overall
growth has paid special attention to the development and management of its employees. The Bank believes that empowered
employees are the source of happy customers and has made considerable investment in its staff capacity development and
effective management through various internal and external training programs. During the review period, most of the employees
received internal training while 223 employees received external training. 60 employees participated in trainings and seminars
outside the country.
In the review year, the number of committed employees increased to 1744 of which 665 are female and 1,079 are male employees.
At present, there are 19 employees completing more than 15 years of service period, 249 employees with more than 10 years of
service, and 374 employees having worked for more than 5 years in the Bank.
D) Arrangements for Grievance Handling:
Mr. Sudesh Upadhyaya, Chief Business and Strategy Officer who is also a member of the Bank’s management team has been
appointed as Grievance Handling Officer for hearing grievances of customers and the general public. Also, an online portal
have been developed on the Bank’s website for grievance handling. In the review year, the Bank received 778 complaints and
grievances through its branch offices, head office, hotline, and call-centre. All the grievances other than those related to loan
recovery that follows legal procedures have been resolved in time.
E) Board of Directors Meeting and Conduct:
The meeting of Board of Directors has been held regularly as per the existing acts and policies. During the review period, 19
board meetings were held to which the Chairman of the Board was remunerated NPR 18,000 and other board members were
remunerated NPR 16,000 per meeting.
All the Board officials have been complying the conducts mentioned in Section 6(1) of Unified Directive 2020.
F) Management Team:
Mr. Sunil KC has been leading the Bank and its Management Team as the Chief Executive Officer. With a banking experience over
30 years, he currently leads the management Team consisting of the following staff members:
Pradeep Pradhan Chief Executive Internal Audit
Sharad Tegi Tuladhar Chief Policy (Risk) and Environment and Social
Shabnam Limbu Joshi Chief Support Officer
Sudesh Upadhyaya Chief Business and Strategy Officer
Govind Ghimire Chief Business Officer
Shreejesh Ghimire Chief Investment Officer
Navin Manandhar Chief Risk Officer
Pramod Dahal Chief Operating Officer and Company Secretary
Roshan Regmi Head Retail Banking
Binay Dahal Head Business & Planning (States)
G) Recognitions
Bank of the Year 2021-Asia: The Bank in the running fiscal year has been conferred with the “Bank of the Year 2021-Asia” and
“Bank of the Year 2021-Nepal” awards by the Financial Times, London. The Bank in last five years has been honoured four times
as the “Bank of the Year” award for Nepal and the first time as “Bank of the Year-Asia” for the year 2021. However, it is also the
first time in the history of Nepalese banking industry to receive such international acclaimed award by a Nepalese bank.
Other Honours: Asian Banking and Finance Magazine published by the Charlton Media Group based in Singapore honoured the
Bank by “Green Deal of the Year 2021” under Corporate and Investment Banking Awards category during the running fiscal year.
Similarly, in the running fiscal year, “Edgeverve”, a wholly-owned subsidiary company of the Indian Multinational Information
Technology Company “Infosys Limited” awarded NMB Bank by “True Digital Initiative” in its annual Infosys Innovation Awards
ceremony. The Bank was conferred by the said award for the year 2021 in recognition of its endeavours related the information
technology under “Customer Re-imagination Journey” category.
Acknowledgement
The contribution and support by the esteemed shareholders towards the progress and prosperity of this Bank has enabled NMB to
be honoured with Bank of the Year Asia award. On behalf of the Board of Directors, I would like to express my sincere gratitude to all
esteemed shareholders, representatives from various regulatory bodies, stakeholders, customers, Management team and the entire
staff for supporting the Bank to achieve remarkable financial results and reach new milestones year aer year.
Thank You.
Pawan Kumar Golyan

Chairman
Date: Thursday, 6 January, 2022
FY 2020/21
Annex-15 of Securities Registration and Issue Regulation, 2016

(Details related to clause 26.2)
1. Director’s Report
Director’s report is included in the annual report of FY 2020/21.
2. Auditor’s Report
Auditor’s report is included in the annual report of FY 2020/21.
3. Audited Financial Statements
Audited financial statements are included in the annual report of FY 2020/21.
4. State of Legal Proceedings
i) If any lawsuit has been filed by or against the organization within the quarterly period:
33 lawsuits related to debt collection, income tax and banking property were being reviewed in various courts during the
last financial year,
ii) If any lawsuit was filed by or against the founder or director of the organization for disobeying the prevailing rules or
committing a criminal offense:
Not in the information of this Bank.
iii) If any lawsuit has been file against founder or director for financial offence:
Not in the information of this Bank.
5. Analysis of organization’s share transactions and progress:
i) Management’s perception regarding the trading of organization’s shares in the securities market:
The fluctuations in share trading are determined by the open market and are in line with the values and norms of the same
ii) The maximum, minimum and final value of the Bank’s shares in each quarter of the previous financial year as well as the
total number and days of transactions.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
Maximum Value 499 505 485 472
Minimum Value 400 379 400 395
Last Value 408 444 437 440
Number of Transactions 32,642 43,115 47,582 63,304
Days of Transactions 64 58 59 65
6. Problems and Challenges:

i) Internal Problems and Challenges: The lack of skilled human resources in the banking sector, the challenge of managing
operating risks along with an increase in number of branches and transactions, the challenges imposed by the COVID-19
pandemic towards operations of branches and daily banking activities including health safety of frontline staff are considered
as internal problems and challenges by the Bank.
ii) External Problems and Challenges: The non-recovery of loan and interest due to COVID-19 pandemic, unstable liquidity
condition, decrease in remittance, stagnation of economic activities due to low government expenditure, deficit in investment
sector for expansion of business, increasing unhealthy competition in banking sector are considered as external problems
and challenges by the Bank. In such context, the bank’s lending and interest rates will be affected that will in turn affect the
bank’s profitability and consequently impacting the distribution of dividends in a negative way.
iii) Strategies Adopted by Management: In order to reduce the health risk of the employees due to COVID-19 pandemic, the
Bank continued to provide its service with minimum number staff by complying all safety standard protocols and also
facilitated the work from home to the staff. The Bank also provided educational trainings on digital banking to its employees
to provide services through digital platforms. Necessary strategies were adopted by the Bank for cost reduction and
management. In addition, the Bank has paid special attention to increase investment in the productive sector, agriculture
sector, and small and micro-enterprise sector thus improving the quality of its risk assets portfolio. The Bank has placed
emphasis on new areas of income, management of passive debts and diversifying risk assets. The Bank also has made
various effective training arrangements to make its skilled human resources more robust and efficient.
7. Corporate Governance
Details on the steps taken by the management of the Bank for the promotion of corporate governance:
i) The policies adopted by the Board of Directors have been implemented.
ii) Various committees formed at the management level (such as Assets and Liability Committee, Human Resources
Recruitment Committee, Credit Risk Management Committee, Corporate Governance Committee, etc.) are active.
iii) In order to organize internal control mechanism, the Audit Committee has been meeting regularly to review and implement
the suggestions given by the internal auditors in the regular audit report.
iv) The Risk Management Committee has been meeting regularly to discuss the issues such as stress testing, adequacy of
policies and rules, operational risk, etc. and following the instructions received for management.
v) Discussions are being held from time to time by the Assets Laundering Prevention Committee emphasizing on customer
identification process and issues related to this area.
vi) Various internal policies, rules and guidelines have been formulated and implemented to manage banking transactions and
minimize operational risks.
vii) Full compliance of the directives and guidelines on good governance issued by the regulator bodies including Nepal Rastra
Bank, Securities Board, and Company Registrar’s Office.
viii) In order to maintain good governance within the Bank, a Corporate Governance Committee has been constituted and the
decisions of the governance issues discussed in the meeting have been implemented. The Chief Executive officer has been
given the responsibility for maintaining Corporate Governance in the Bank.
Financial Highlights
Consolidated
Financial Statements
NMB Bank Limited
Consolidated Statement of Financial Position

As at 31 Asar, 2078 (15 July, 2021)
Price in Rs.
Group NMB
As at As at As at As at
Particulars Note 31 Asar 2078 31 Asar 2077 31 Asar 2078 31 Asar 2077
Assets
Cash and cash equivalent 4.1 14,442,664,482 12,261,847,651 13,887,370,526 11,098,349,234
Due from Nepal Rastra Bank 4.2 19,248,505,528 15,271,028,507 19,218,505,528 15,249,998,507
Placement with Bank and Financial 4.3 2,717,148,715 3,304,233,792 2,717,148,715 3,304,233,792
Institutions
Derivative financial instruments 4.4 17,161,392,134 10,066,295,972 17,161,392,134 10,066,295,972
Other trading assets 4.5 2,677,460 266,899,900 2,660,000 266,890,000
Loan and advances to B/FIs 4.6 5,194,470,677 4,665,864,579 5,194,470,677 4,665,864,579
Loans and advances to customers 4.7 155,112,819,977 118,325,756,270 151,014,123,921 115,668,472,666
Investment securities 4.8 17,756,933,069 15,267,544,132 17,453,562,933 14,998,756,047
Current tax assets 4.9 99,225,763 68,254,607 92,745,534 61,460,881
Investment in susidiaries 4.10 - - 372,487,600 372,487,600
Investment in associates 4.11 - - - -
Investment property 4.12 97,942,260 79,648,242 97,942,260 79,648,242
Property and equipment 4.13 1,773,075,389 1,785,246,156 1,741,914,965 1,755,794,235
Goodwill and Intangible assets 4.14 121,066,412 127,274,848 112,540,746 125,848,936
Deferred tax assets 4.15 252,197,566 270,086,640 249,009,565 264,421,080
Other assets 4.16 2,243,621,977 1,502,480,835 2,230,983,328 1,473,393,132
Total Assets 236,223,741,410 183,262,462,132 231,546,858,432 179,451,914,903
Liabilities
Due to Bank and Financial Instituions 4.17 1,964,515,728 3,150,014,840 1,964,515,728 3,150,014,840
Due to Nepal Rastra Bank 4.18 7,597,982,045 4,832,501,544 7,597,982,045 4,832,501,544
Derivative financial instruments 4.19 17,127,036,376 10,008,212,670 17,127,036,376 10,008,212,670
Deposits from customers 4.20 165,856,477,862 132,285,880,304 164,489,285,837 131,660,368,354
Borrowing 4.21 9,239,426,200 4,718,151,701 7,443,810,000 3,416,310,000
Current Tax Liabilities 4.9 - - -
Provisions 4.22 1,703,106 2,125,593 - -
Deferred tax liabilities 4.15 14,658,368 14,876,185 - -
Other liabilities 4.23 4,239,911,418 4,327,967,972 3,686,459,641 3,169,287,821
Debt securities issued 4.24 5,293,994,350 2,279,834,432 5,293,994,350 2,279,834,432
Subordinated Liabilities 4.25 - - - -
Total liabilities 211,335,705,453 161,619,565,241 207,603,083,977 158,516,529,660
Equity
Share capital 4.26 16,325,960,853 13,950,987,467 16,325,960,853 13,950,987,467
Share premium 37,216,210 157,383,680 - 120,167,470
Retained earnings 2,868,079,150 1,978,984,957 2,515,343,348 1,737,219,751
Group NMB
As at As at As at As at
Reserves 4.27 5,190,173,864 5,183,064,720 5,102,470,254 5,127,010,555
Total equity attributable to equity 24,421,430,077 21,270,420,824 23,943,774,455 20,935,385,243
holders
Non-controlling interest 466,605,880 372,476,067 - -
Total equity 24,888,035,957 21,642,896,891 23,943,774,455 20,935,385,243
Total liabilities and equity 236,223,741,410 183,262,462,132 231,546,858,432 179,451,914,903
Contingent liabilities and 4.28 128,674,294,920 109,216,197,944 128,673,744,920 109,215,647,944
commitment
Net Assets Value per share 149.59 152.47 146.66 150.06
As per our attached report of even date.
_______________ _______________ ____________________ ___________________

Sunil KC Pawan Kumar Golyan Krishna Prasad Acharya, FCA Rajnish Dahal, FCA
CEO Chairman Managing Partner Managing Partner
For, K.M.U. & Assoicates For, Dev Associates
Chartered Accountants Chartered Accountants
_______________ _______________ _______________ _______________

Nico Pijl Jeevan Kumar Katwal Yogendra Lal Pradhan Uttam Bhlon
Director Director Director Director
_______________ _______________ _______________

Sirish Kumar Murarka Pradeep Raj Pandey Mridul Parajuli
Director Director Head Finance & Planning
Date : 29th October, 2021

Place: NMB Bhawan, Babarmahal, Kathmandu
NMB Bank Limited
Consolidated Statement of Profit or Loss

for the year ended 31 Asar, 2078 (15 July, 2021)
Price in Rs.
Group NMB
Year ended Year ended Year ended Year ended
Interest income 4.29 14,673,638,809 15,048,722,089 13,983,693,533 14,442,972,567
Interest expense 4.30 8,508,425,030 9,148,040,628 8,323,034,232 8,946,752,652
Net interest income 6,165,213,779 5,900,681,461 5,660,659,301 5,496,219,915
Fee and commission income 4.31 1,476,831,413 1,060,673,551 1,177,641,945 914,369,723
Fee and commission expense 4.32 138,024,766 107,917,283 138,024,766 107,917,283
Net fee and commission income 1,338,806,647 952,756,268 1,039,617,179 806,452,440
Net interest, fee and commission income 7,504,020,426 6,853,437,729 6,700,276,480 6,302,672,355
Net trading income 4.33 364,115,874 384,157,101 364,108,314 384,157,101
Other operating income 4.34 370,035,244 218,071,990 351,973,665 215,364,793
Total operating income 8,238,171,544 7,455,666,821 7,416,358,459 6,902,194,249
Impairment charge/(reversal) for 4.35 410,226,959 1,681,992,262 382,410,393 1,627,165,235
loans and other losses
Net operating income 7,827,944,585 5,773,674,559 7,033,948,066 5,275,029,014
Operating expense
Personnel expenses 4.36 2,330,248,399 1,848,456,013 2,089,704,278 1,647,497,921
Other operating expenses 4.37 960,618,793 998,158,904 853,748,763 935,573,915
Depreciation & Amortisation 4.38 279,716,356 252,419,899 269,478,145 241,683,371
Operating Profit 4,257,361,037 2,674,639,743 3,821,016,879 2,450,273,807
Non operating income 4.39 40,364,736 20,419,110 39,071,786 18,512,709
Non operating expense 4.40 15,212,626 33,981,887 15,212,626 33,981,887
Profit before income tax 4,282,513,147 2,661,076,966 3,844,876,039 2,434,804,629
Income tax expense 4.41
Current Tax 1,316,433,283 782,188,888 1,185,623,109 725,589,473
Deferred Tax expense/(Income) (53,276,748) 92,660 (51,820,778) (3,561,365)
Profit for the period 3,019,356,613 1,878,795,417 2,711,073,708 1,712,776,521
Group NMB
Profit attributable to:
Equity holders of the Bank 2,923,139,410 1,840,191,493 2,711,073,708 1,712,776,521
Profit for the period 3,019,356,613 1,878,795,417 2,711,073,708 1,712,776,521
Earnings per share
Basic earnings per share (BEPS) 17.96 13.56 16.66 11.18
Diluted earnings per share (DEPS) 17.96 13.56 16.66 11.18
_______________ _______________ ____________________ ___________________

_______________ _______________ _______________ _______________

_______________ _______________ _______________


NMB Bank Limited
Consolidated Statement of Other Comprehensive Income

For the year ended 31 Asar, 2078 (15 July, 2021)
Price in Rs.
Group NMB
Particulars 31 Asar 2078 31 Asar 2077 31 Asar 2078 31 Asar 2077
Profit for the year 3,019,356,613 1,878,795,417 2,711,073,708 1,712,776,521
Other comprehensive income, net of income tax
a) Items that will not be reclassified to
profit or loss
- Gains/(losses) from investments in equity 276,262,436 52,109,520 265,324,936 49,113,520
instruments measured at fair value
- Gains/(losses) on revalution - - - -
- Atuarial gains/(losses) on defined benefit (14,949,414) (25,087,954) (15,697,646) (25,672,352)
plans
- Income tax relating to above items 78,393,907 8,106,470 (74,888,187) (7,032,350)
Net other comprehsive income that will 182,919,115 18,915,096 174,739,103 16,408,817
not be reclassified to profit or loss
b) Items that are or 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 - - - -
- Reclassify to profit or loss - - - -
Net other comprehsive income that are - - - -
or may be reclassified to profit or loss
c) Share of other comprehensive income - - - -
of associate accounted as per equited
method
Group NMB
Other comprehensive income for the 182,919,115 18,915,096 174,739,103 16,408,817
period, net of income tax
Total comprehensive income for the 3,202,275,728 1,897,710,513 2,885,812,811 1,729,185,338
period
Total comprehensive income attributable
to:
Equity holders of the Bank 3,105,809,439 1,858,804,081 2,885,812,811 1,729,185,338
Total comprehensive income for the 3,202,275,728 1,897,710,513 2,885,812,811 1,729,185,338
period
_______________ _______________ ____________________ ___________________

_______________ _______________ _______________ _______________

_______________ _______________ _______________


42
NMB Bank Limited
Consolidated Statement of Changes in Equity

Group
Attributable to equity holders of the Group
Exchange Non-
www.nmbbanknepal.com
Equalisation Requlatory Fair Value Revaluation controlling
Particulars Share Capital Share Premium General Reserve Reserve Reserve Reserve Reserve Retained Earning Other Reserve Total Interest Total Equity
Balance at 16 July 2019 9,618,162,652 2,512,798,517 2,141,571,472 78,376,972 818,733,064 (5,092,298) - 1,961,722,547 485,599,547.7 17,611,872,473 165,396,616 17,777,269,088
Adjustment/Restatement - - - - - - - 45,433 - 45,433 - 45,433
Prir Period Taxes - - - - - - - - - - - -
Adjusted/Restated balance at 9,618,162,652 2,512,798,517 2,141,571,472 78,376,972 818,733,064 (5,092,298) - 1,961,767,979 485,599,548 17,611,917,905 165,396,616 17,777,314,521
17 July 2019
Comprehensive income for the year - - - - -
2019-20
Profit for the year - - - - - - - 1,840,191,493 - 1,840,191,493 38,603,924 1,878,795,417
Other comprehensive income, net of tax - - - - - - - - - - - -
Gain/(Loss) from Investment in Equity - - - - - 36,476,664 - - - 36,476,664 - 36,476,664
Instrument measured at Fair Value
Acturial Gain/(Loss) on defined benefit plans - - - - - - - - (17,864,076) (17,864,076) 302,509 (17,561,568)
Gain/(Loss) on Cash Flow Hedge - - - - - - - - - - - -
Exchange Gain/(Losss) (arising from - - - - - - - - - - - -
translating Financial Assets of Foreign
Operation)
Total comprehensive income for the year - - - - - 36,476,664 - 1,840,191,493 (17,864,076) 1,858,804,081 38,906,432 1,897,710,513
Transfer to reserves during the year - - 349,808,248 24,009,819 - - - (484,624,696) 126,007,129 15,200,499 14,307,408 29,507,907
General Reserve Fund - - 349,808,248 - - - - (349,808,248) - - - -
Debenture Redemption Reserve - - - - - - - (100,000,000) 100,000,000 - - -
Investment Adjustment Reserve - - - - - - - - - - - -
Exchange Fluctuation Fund - - - 24,009,819 - - - (24,009,819) - - - -
Other Reserve NMBCL - - - - - - - (599,631) 599,631 - - -
Customer Protection Fund - - - - - - - (309,115) 15,509,613 15,200,499 14,307,408 29,507,907
Regulatory Reserve - - - - - - - (7,400,315) 7,400,315 - - -
Actuary Adjustment- NMBMF - - - - - - - (1,497,569) 1,497,569 - - -
NMB Staff Relief Fund - - - - - - - (1,000,000) 1,000,000 - - -
Transfer from reserves during the year - - - - (397,927,896) (7,901,970) - 432,314,473 (28,850,498) (2,365,892) 287,682 (2,078,209)
Fair Value Reserve - Sale of Investment - - - - - (5,353,270) - 5,353,270 (1,000,000) (1,000,000) - (1,000,000)
Fair Value Adjustment NMBCL - - - - - (2,548,700) - 2,548,700 - - - -
Corporate Social Responsibility Fund - - - - - - - 25,288,779 (25,298,469) (9,690) 287,682 277,992
Deferred Tax Reserve NMBCL - - - - - - - 1,195,827 (2,552,029) (1,356,202) - (1,356,202)
Regulatory Reserve - - - - (397,927,896) - - 397,927,896 - - - -
NMB Staff Relief Fund - - - - - - - - - - - -
Transactions with owners, directly - - - - - - - - - - - -
recognised in equity
Share Issued - - - - - - - - - - - -
Share Issued 1,911,579,056 37,216,210 - - - - - - 603,656,544 2,552,451,810 154,831,345 2,707,283,155
Transfer from Merger - 28,614,713 543,946,962 39,523 463,327,760 (33,592,357) - (101,962,827) 2,740,113 903,113,885 - 903,113,885
Share based payments - - - - - - - - - - - -
Bonus Issue of NMBMF - - - - - - - 11,553,907 - 11,553,907 - 11,553,907
Dividends to equity holders - - - - - - - - - - - -
Bonus shares issued 2,421,245,759 (2,421,245,759) - - - - - (24,786,956) - (24,786,956) - (24,786,956)
Cash dividend paid - - - - - - - (1,655,468,416) - (1,655,468,416) (1,253,417) (1,656,721,833)
Total contributions by and distributions 4,332,824,815 (2,355,414,836) 543,946,962 39,523 463,327,760 (33,592,357) - (1,770,664,292) 606,396,657 1,786,864,231 153,577,928 1,940,442,159
Balance at 15 July 2020 13,950,987,467 157,383,680 3,035,326,681 102,426,313 884,132,928 (10,109,962) - 1,978,984,957 1,171,288,759 21,270,420,824 372,476,067 21,642,896,891
Balance at 15 July 2020 13,950,987,467 157,383,680 3,035,326,681 102,426,313 884,132,928 (10,109,962) - 1,978,984,957 1,171,288,759 21,270,420,824 372,476,067 21,642,896,891
Adjustment/Restatement - - - - - - - 6,092,512 - 6,092,512 - 6,092,512
Prior Period Taxes - - - - - - - (18,443,236) - (18,443,236) - (18,443,236)
Adjusted/Restated balance at 13,950,987,467 157,383,680 3,035,326,681 102,426,313 884,132,928 (10,109,962) - 1,966,634,233 1,171,288,759 21,258,070,100 372,476,067 21,630,546,166
16 July 2020
Comprehensive income for - - - - - - - - - - - -
the year 2020-21
Profit for the year - - - - - - - 2,923,139,410 - 2,923,139,410 96,217,203 3,019,356,613
Gain/(Loss) on revaluation - - - - - - - - - - - -
Acturial Gain/(Loss) on defined benefit plans - - - - - - - - (10,713,676) (10,713,676) 249,086 (10,464,590)
43
Operation)
44
Exchange Non-
Total comprehensive income - - - - - 193,383,705 - 2,923,139,410 (10,713,676) 3,105,809,439 96,466,289 3,202,275,728
for the year
Transfer to reserve during the year - - 563,846,416 22,756,770 86,341,288 - - (687,411,831) 16,841,132 2,373,774 (749,196) 1,624,578
Customer Protection Fund - - - - - - - (1,007,826) 932,392 (75,434) (1,040,780) (1,116,214)
Corporate Social Responsibility Fund - - - - - - - (1,007,826) 3,472,458 2,464,632 291,584 2,756,216
Regulatory Reserve - - - - 86,341,288 - - (97,160,043) 10,818,756 - - -
Actuary Adjustment- NMBCL - - - - - - - - (15,424) (15,424) - (15,424)
Transfer from reserve during the year - - - - - (7,656,250) - 509,082,673 (483,048,851) 18,377,572 - 18,377,572
Fair Value Reserve - Sale of Investment - - - - - - - 9,669,979 - 9,669,979 - 9,669,979
Debenture Redemption Reserve - - - - - - - 476,604,097 (476,604,097) - - -
Fair Value Adjustment NMBCL - - - - - (7,656,250) - 7,656,250 7,656,250 7,656,250 - 7,656,250
Other Reserve NMBCL - - - - - - - 3,352,347 - 3,352,347 - 3,352,347
Deferred Tax Reserve NMBCL - - - - - - - - (668,054) (668,054) - (668,054)
Regulatory Reserve - - - - - - - - - - - -
NMB Staff Relief Fund - - - - - - - - (1,632,950) (1,632,950) - (1,632,950)
Investment Adjustment Reserve - - - - - - - 11,800,000 (11,800,000) - - -
Share Issued 496,765,500 - - - - - - - 87,664,500 584,430,000 - 584,430,000
Transfer from Merger - - 93,188,370 - 56,790,314 (1,033,372) - (138,279,119) 214,511 10,880,703 - 10,880,703
Share Issue Expenses (net off taxes) - - - - - - - - - - - -
Bonus Share Issue of NMBMF - - - - - - - - - - - -
Bonus shares issued 1,878,207,886 (120,167,470) - - - - - (1,198,339,407) (603,656,544) (43,955,536) - (43,955,536)
Cash dividend paid - - - - - - - (506,746,807) (7,809,168) (514,555,975) (1,587,280) (516,143,255)
Total contributions by and distributions 2,374,973,386 (120,167,470) 93,188,370 - 56,790,314 (1,033,372) - (1,843,365,334) (523,586,701) 36,799,193 (1,587,280) 35,211,913
Balance at 15 July 2021 16,325,960,853 37,216,210 3,692,361,466 125,183,083 1,027,264,530 174,584,121 - 2,868,079,150 170,780,664 24,421,430,077 466,605,880 24,888,035,957
NMB
Attributable to equity holders of the Bank
Exchange Non-
Balance at 16 July 2019 9,618,162,652 2,512,798,517 2,123,306,659 78,376,972 818,733,064 (5,543,798) - 1,780,326,613 476,853,581 -
17,403,014,259 17,403,014,259
Adjustment/Restatements - -
Transfer to Capital Adjustment Fund - - - - - - - - - - - -
Adjusted/Restated balance at 9,618,162,652 2,512,798,517 2,123,306,659 78,376,972 818,733,064 (5,543,798) - 1,780,326,613 476,853,581 -
17 July 2019 17,403,014,259 17,403,014,259
Comprehensive income for the year - -
2019-20
Profit for the year - - - - - - - 1,712,776,521 - 1,712,776,521 - 1,712,776,521
Acturial Gain/(Loss) on defined benefit plans - - - - - - - - (17,970,646) (17,970,646) - (17,970,646)
Operation)
Total comprehensive income for the year - - - - - 34,379,464 - 1,712,776,521 (17,970,646) 1,729,185,338 - 1,729,185,338
Transfer to reserve during the year - - 343,625,958 24,009,819 - - - (468,635,777) 101,000,000 - - -
General reserve fund - - 343,625,958 - - - - (343,625,958) - - - -
Debenture redemption reserve - - - - - - - (100,000,000) 100,000,000 - - -
NMB Staff Relief Fund - - - - - - - - - - - -
Exchange fluctuation reserve - - - 24,009,819 - - - (24,009,819) - - - -
Regulatory Reserve - - - - - - - - - - -
Corporate social responsibility fund - - - - - - - - - - - -
Transfer from reserve during the year - - - - (397,927,896) (5,353,270) - 428,879,061 (26,597,894) (1,000,000) - (1,000,000)
Fair Value Reserve - Sale of Investment - - - - - (5,353,270) - 5,353,270 - - - -
Corporate Social Responsibility Fund - - - - - - - 25,597,894 (25,597,894) - - -
45
46
Exchange Non-
Regulatory Reserve - - - - (397,927,896) - - 397,927,896 - - - -
Share Issued 1,911,579,056 - - - - - - - 603,656,544 2,515,235,600 - 2,515,235,600
Transfer from Merger - 28,614,713 543,946,962 39,523 463,327,760 (33,592,357) (101,962,827) 2,740,113 903,113,885 - 903,113,885
Bonus shares issued 2,421,245,759 (2,421,245,759) - - - - - - - - - -
Cash dividend paid - - - - - - - (1,614,163,839) - (1,614,163,839) - (1,614,163,839)
Total contributions by and distributions 4,332,824,815 (2,392,631,047) 543,946,962 39,523 463,327,760 (33,592,357) - (1,716,126,666) 606,396,657 1,804,185,646 - 1,804,185,646
Balance at 15 July 2020 13,950,987,467 120,167,470 3,010,879,579 102,426,313 884,132,928 (10,109,962) - 1,737,219,751 1,139,681,697 - 20,935,385,243
20,935,385,243
- -
Balance at 15 July 2020 13,950,987,467 120,167,470 3,010,879,579 102,426,313 884,132,928 (10,109,962) - 1,737,219,751 1,139,681,697 20,935,385,243 - 20,935,385,243
Adjustment/Restatement - - - - - - - - - - - -
Prior Period Adjustments - - - - - - - (18,443,236) - (18,443,236) - (18,443,236)
Adjusted/Restated balance at 16 July 2020 13,950,987,467 120,167,470 3,010,879,579 102,426,313 884,132,928 (10,109,962) - 1,718,776,515 1,139,681,697 20,916,942,007 - 20,916,942,007
Comprehensive income for the year 2020-21 - - - - - - - - - - - -
Profit for the year - - - - - - - 2,711,073,708 - 2,711,073,708 - 2,711,073,708
Acturial Gain/(Loss) on defined benefit plans - - - - - - - - (10,988,352) (10,988,352) - (10,988,352)
Operation)
Total comprehensive income for the year - - - - - 185,727,455 - 2,711,073,708 (10,988,352) 2,885,812,811 - 2,885,812,811
Transfer to reserve during the year - - 543,689,886 22,756,770 86,341,288 - - (657,589,865) 4,801,922 - - -
Corporate Social Responsibility Fund - - - - - - - (3,168,972) 3,168,972 - - -
Customer Protection Fund - - - - - - - - - - - -
Deferred Tax Reserve - - - - - - - - - - - -
Regulatory Reserve - - - - 86,341,288 - - (86,341,288) - - - -
Transfer from reserve during the year - - - - - - - 498,074,076 (490,037,047) 8,037,029 - 8,037,029
Fair Value Reserve - Sale of Investment - - - - - - - 9,669,979 - 9,669,979 - 9,669,979
Debenture Redemption Reserve - - - - - - - 476,604,097 (476,604,097) - - -
Corporate Social Responsibility Fund - - - - - - - - - - - -
Investment Adjustment Reserve - - - - - - 11,800,000 (11,800,000) - - -
Transactions with owners, directly recognised - - - - - - - - - - - -
in equity
Transfer from Merger - - 93,188,370 - 56,790,314 (1,033,372) (138,279,119) 214,511 10,880,703 - 10,880,703
Share Issued 496,765,500 - - - - - - - 87,664,500 584,430,000 - 584,430,000
Share Issue Expenses (net off taxes) - - - - - - - - - - - -
Share based payments - - - - - - - - - - -
Bonus shares issued 1,878,207,886 (120,167,470) - - - - - (1,154,383,871) (603,656,544) - - -
Cash dividend paid - - - - - - - (462,328,095) - (462,328,095) - (462,328,095)
Total contributions by and distributions 2,374,973,386 (120,167,470) - - - - - (1,616,711,966) (515,992,044) 122,101,905 - 122,101,905
Balance at 15 July 2021 16,325,960,853 - 3,647,757,834 125,183,083 1,027,264,530 174,584,121 - 2,515,343,348 127,680,687 23,943,774,456 - 23,943,774,455
_______________ _______________ ___________________ _______________ _______________ _______________

Sunil KC Pawan Kumar Golyan Krishna Prasad Acharya, FCA Rajnish Dahal, FCA Nico Pijl Jeevan Kumar Katwal
CEO Chairman Managing Partner Managing Director Director Director
_______________ _______________ _______________ _______________ _______________

Yogendra Lal Pradhan Uttam Bhlon Sirish Kumar Murarka Pradeep Raj Pandey Mridul Parajuli
Director Director Director Director Head Finance & Planning
Date : 29th October, 2021 Place: NMB Bhawan, Babarmahal, Kathmandu
47
NMB Bank Limited
Consolidated Statement of Cash Flows

Price in Rs.
Group NMB
Year ended Year ended 31 Year ended Year ended 31
Particulars 31 Asar 2078 Asar 2077 31 Asar 2078 Asar 2077
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 14,087,645,495 13,217,436,688 13,687,650,502 12,797,705,258
Fees and other income received 1,461,045,486 1,068,912,882 1,160,784,982 936,303,627
Dividend received - 1,806,421 - -
Receipts from other operating activities 333,298,536 490,486,761 327,833,075 418,676,147
Interest paid (8,465,118,133) (9,401,931,213) (8,221,669,331) (9,158,482,410)
Commission and fees paid (138,074,594) (106,922,556) (138,074,594) (106,922,556)
Cash payment to employees (1,905,466,062) (1,778,834,680) (1,756,104,322) (1,637,293,487)
Other expense paid (916,602,988) (986,295,611) (829,010,391) (921,177,953)
Operating cash flows before changes in 4,456,727,741 2,504,658,692 4,231,409,921 2,328,808,626
operating assets and liabilities
(Increase)/Decrease in operating assets
Due from Nepal Rastra Bank (6,983,139,612) (3,014,721,068) (6,979,639,612) (3,011,221,068)
Placement with bank and financial (1,398,054,746) 1,481,768,552 (1,398,054,746) 1,481,768,552
institutions
Other trading assets 264,230,000 73,500,000 264,230,000 73,500,000
Loan and advances to bank and financial (381,073,487) (757,537,872) (381,073,487) (757,537,872)
institutions
Loans and advances to customers (31,836,492,477) (8,037,427,820) (31,386,070,687) (7,587,006,030)
Other assets (1,315,184,766) (134,371,976) (804,554,096) (158,214,212)
Total (41,649,715,089) (10,388,790,185) (40,685,162,629) (9,958,710,630)
Increase/(Decrease) in operating liabilities
Due to bank and financial institutions (1,088,748,611) 1,836,642,165 (1,245,176,351) 1,836,642,165
Due to Nepal Rastra Bank 3,705,451,294 939,970,793 3,705,451,294 939,970,793
Deposit from customers 26,374,654,268 9,440,895,311 26,210,327,743 9,813,589,836
Borrowings 4,353,379,019 274,129,019 4,027,500,000 (51,750,000)
Other liabilities 25,450,941 2,349,787,104 118,125,095 1,806,032,540
Net cash flow from operating activities 33,370,186,910 14,841,424,392 32,816,227,781 14,344,485,333
before tax paid
Income taxes paid (1,304,626,922) (800,706,041) (1,228,698,096) (740,000,000)
Net cash flow from operating activities (5,127,427,360) 6,156,586,858 (4,866,223,023) 5,974,583,329
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (4,650,641,675) (14,081,938,794) (4,616,059,622) (14,005,481,072)
Receipts from sale of investment securities 7,030,509,723 7,503,050,485 7,030,509,723 7,503,050,485
Purchase of property and equipment (131,330,386) (206,802,998) (129,680,386) (205,152,998)
Receipt from the sale of property and 32,666,124 17,948,481 30,912,703 14,393,463
equipment
Purchase of intangible assets (23,998,004) (37,404,083) (22,839,997) (37,349,497)
Receipt from the sale of intangible assets - 146,380 - -
Purchase of investment properties (17,798,518) - (17,798,518) -
Receipt from the sale of investment - 25,352,225 - 25,352,225
properties
Group NMB
Year ended Year ended 31 Year ended Year ended 31
Particulars 31 Asar 2078 Asar 2077 31 Asar 2078 Asar 2077
Investment in subsidiaries, associates & joint - - - -
ventures
Interest received 851,294,665 697,946,875 851,294,665 697,946,875
Dividend received 87,631,427 89,339,371 87,631,427 89,339,371
Net cash used in investing activities 3,178,333,357 (5,992,362,058) 3,213,969,995 (5,917,901,149)
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt from issue of debt securities 3,500,000,000 - 3,500,000,000 -
Repayment of debt securities (500,000,000) - (500,000,000) -
Receipt from issue of subordinated liabilities - - - -
Repayment of subordinated liabilities - - - -
Receipt from issue of shares 315,982,336 315,982,336 - -
Dividends paid (462,328,095) (1,614,163,839) (462,328,095) (1,614,163,839)
Interest paid - - - -
Other receipt/payment (627,345,822) 34,581,301 - -
Net cash from financing activities 2,226,308,419 (1,263,600,202) 2,537,671,905 (1,614,163,839)
Net increase (decrease) in cash and cash 277,214,416 (1,099,375,402) 885,418,878 (1,557,481,659)
equivalents
Cash and cash equivalents at the beginning 12,261,847,651 8,801,746,664 11,098,349,234 8,096,354,503
of the year
Cash and cash equivalents acquired from the 1,812,575,337 4,463,437,114 1,812,575,337 4,463,437,114
merger
Effect of exchange rate fluctuations on cash 91,027,079 96,039,275 91,027,079 96,039,275
and cash equivalents held
Cash and cash equivalents at the end of 14,442,664,482 12,261,847,651 13,887,370,526 11,098,349,234
the year
_______________ _______________ _______________ ___________________

_______________ _______________ _______________ _______________

_______________ _______________ _______________


NMB Bank Limited
Statement of Distributable Profit or Loss

(As per NRB Regulation)
Particulars As at 31 Asar 2078 As at 31 Asar 2077

Accumulated profit/(loss) up to last year 120,507,785 166,162,774
Adjustments/restatement/ reclassification (Including Acquisition) (156,722,355) -
Adjusted restated balance (36,214,571) 166,162,774
Income
Net profit or (loss) as per statement of profit or loss 2,711,073,708 1,712,776,521
Appropriations:
a. General reserve (543,689,886) (342,555,304)
b. Foreign exchange fluctuation fund (22,756,770) (24,009,819)
c. Capital redemption reserve 476,604,097 (100,000,000)
d. Corporate social responsibility fund (3,168,972) (17,127,765)
e. Employees' training fund - -
f. Investment Adjustment Reserve 11,800,000 -
Profit or (loss) befor regulatory adjustment 2,629,862,178 1,229,083,633
Regulatory adjustment:
a. Interest receivable (-)/previous accrued interest received (+) (108,952,206) 316,267,166
b. Short loan loss provision in accounts (-)/reversal (+) - -
c. Short provision for possible losses on investment (-)/reversal (+) -
d. Short loan loss provision on Non Banking Assets (-)/resersal (+) (2,129,008) 52,737,470
e. Deferred tax assets recognised (-)/ reversal (+) 20,773,151 3,470,988
f. Goodwill recognised (-)/ impairment of Goodwill (+) - -
g. Bargain purchase gain recognised (-)/resersal (+) - -
h. Acturial loss recognised (-)/reversal (+) (10,988,352) (17,970,646)
i. Other (+/-) - -
- Fair value of investment securities 14,955,128 43,422,918
- Others -
Total Adjustments (86,341,288) 397,927,896
Distributable profit or (loss) 2,543,520,890 1,793,174,302
NMB Bank Limited
Notes to Consolidated Financial Statements

4.1. Cash and Cash Equivalent
Group NMB
Particulars As at 31 Asar 2078 As at 31 Asar 2077 As at 31 Asar 2078 As at 31 Asar 2077
Cash in hand 4,186,789,240 3,746,171,345 4,183,569,620 3,745,462,626
Balances with B/FIs 2,125,937,178 2,864,080,528 1,573,862,842 1,701,290,830
Money at call and short notice 557,476,799 583,487,561 557,476,799 583,487,561
Other 7,572,461,264 5,068,108,217 7,572,461,264 5,068,108,217
Total 14,442,664,482 12,261,847,651 13,887,370,526 11,098,349,234
The fair value of cash is the carrying amount. Cash and cash equivalent comprise the total amount of cash-in-hand, balances with other
bank and financial institutions, money at call and short notice, treasury bills and placements having original maturity of three months
or less than three months.
Cash at vault is adequately insured for physical and financial risks. The amount of cash at vault is maintained on the basis of the
regulatory, liquidity and business requirements. Cash held in FCY is subject to risk of changes in the foreign exchange rates. These are
closely monitored, and risks, if identified, are promptly managed. The income on these assets is credited to statement of profit or loss
under interest income.
4.2. Due from Nepal Rastra Bank
Group NMB
Statutory balances with NRB 14,567,812,853 10,676,263,607 14,537,812,853 10,655,233,607
Securities purchased under resale agreement - - - -
Other deposit and receivable from NRB 4,680,692,675 4,594,764,901 4,680,692,675 4,594,764,901
Total 19,248,505,528 15,271,028,507 19,218,505,528 15,249,998,507
The fair value of balance with the central bank and other deposits at NRB is the carrying amount. Balance with the central bank is
principally maintained as a part of the regulatory cash reserve ratio required by the central bank. There are regulatory and liquidity
restrictions placed on the level of balance with the central bank. The other receivable from NRB is receivable of Li.Ka Accounts of
Government bodies. Due from Nepal Rastra Bank is subsequently also measured at amortised cost.
4.3. Placements with Bank and Financial Institutions
Group NMB
Placement with domestic B/FIs 238,599,375 - 238,599,375 -
Placement with foreign B/FIs 2,478,549,340 3,304,233,792 2,478,549,340 3,304,233,792
Less: Allowances for impairment - - - -
Total 2,717,148,715 3,304,233,792 2,717,148,715 3,304,233,792
These assets are measured at amortised costs. Risks associated with these assets are regularly assessed. These are interest bearing
advances and the income on these assets is credited to statement of profit or loss under interest income.
4.4. Derivative Financial Instruments
Group NMB
Held for trading
Interest rate swap - - - -
Currency swap 3,065,758,007 1,903,445,961 3,065,758,007 1,903,445,961
Forward exchange contract 13,775,484,127 8,132,529,610 13,775,484,127 8,132,529,610
Others 320,150,000 30,320,400 320,150,000 30,320,400
Held for risk management
Currency swap - - - -
Forward exchange contract - - - -
Other - - - -
Total 17,161,392,134 10,066,295,972 17,161,392,134 10,066,295,972
Derivatives are financial instruments that derive their value in response to changes in interest rates, financial instrument prices etc.
All derivatives are initially recognised and subsequently measured at fair value, with all trading gains or losses recognised in the
Statement of Profit or Loss under Net trading Income. Fair value is determined using the forward market rates ruling on the reporting
date.
4.5. Other Trading Assets

Group NMB
Teasury bills - - - -
Government bonds 2,660,000 266,890,000 2,660,000 266,890,000
NRB Bonds - - - -
Domestic Corporate bonds - - - -
Equities 17,460 9,900 - -
Other - - - -
Total 2,677,460 266,899,900 2,660,000 266,890,000
Pledged - - - -
Non-pledged 2,677,460 266,899,900 2,660,000 266,890,000
Citizens Saving Certificates are purchased by the bank under Market Maker Procedure, 2070 issued by the Nepal Rastra Bank. These
instruments are purchased and sold by the bank under market procedure without any intention to hold it till maturity. The fair value of
these CSCs generally approximates the carrying amount.
4.6. Loan and Advance to B/FIs

Group NMB
Loans to microfinance institutions 5,262,696,996 4,712,805,049 5,262,696,996 4,712,805,049
Other - - - -
Less: Allowances for impairment 68,226,319 46,940,471 68,226,319 46,940,471
Total 5,194,470,677 4,665,864,579 5,194,470,677 4,665,864,579
Loan and advances given to microfinance financial institutions as deprived sector lending is presented under this head aer
providing required impairment allowances. These assets are subsequently measured at amortised costs. Risks associated with these
assets are regularly assessed. These are interest bearing advances and the income on these assets is credited to statement of profit
or loss under interest income."
4.6.1. Allowances for Impairment
Group NMB
Balance at Sawan 1 46,940,471 34,147,985 46,940,471 34,147,985
Impairment loss for the year: - - - -
Charge for the year 19,555,270 7,151,814 19,555,270 7,151,814
Recoveries/reversal - - - -
Amount written off - - - -
Transfer from Merger 1,730,578 5,640,671 1,730,578 5,640,671
Balance at Asar end 68,226,319 46,940,471 68,226,319 46,940,471
The impairment on Loans and advances to BFI's carried forward from Erstwhile Kanchan Development Bank aer acquisition is NPR.
1,730,578.
4.7. Loans and Advances to Customers

Group NMB
Loan and advances measured at amortized cost 159,932,592,535 122,503,757,706 155,685,869,615 119,726,263,802
Less: Impairment allowances - -
Collective impairment 2,690,307,497 2,244,051,848 2,672,502,836 2,217,333,199
Individual impairment 2,129,465,061 1,933,949,588 1,999,242,857 1,840,457,937
Net amount 155,112,819,977 118,325,756,270 151,014,123,921 115,668,472,666
Loan and advances measured at FVTPL - - - -
Total 155,112,819,977 118,325,756,270 151,014,123,921 115,668,472,666
The sum of the outstanding amount of all loans and advances extended to the customers other than BFIs, bills purchased and
discounted and amortized cost of staff loans; less the amount of impairment allowances is presented under this head.
4.7.1. Analysis of Loan and Advances - By Product
Group NMB
Product
Term loans 41,591,757,391 32,441,966,009 41,591,757,391 32,441,966,009
Overdra 15,798,372,397 8,584,721,480 15,798,372,397 8,584,721,480
Trust receipt/Import loans 7,280,220,186 4,964,458,918 7,280,220,186 4,964,458,918
Demand and other working capital loans 25,918,370,400 21,431,276,850 25,918,370,400 21,431,276,850
Personal residential loans 12,775,535,269 13,040,550,906 12,775,535,269 13,040,550,906
Real estate loans 4,537,758,388 4,363,978,234 4,537,758,388 4,363,978,234
Margin lending loans 3,903,449,701 540,260,628 3,903,449,701 540,260,628
Hire purchase loans 5,138,106,798 5,307,059,684 5,138,106,798 5,307,059,684
Deprived sector loans 8,318,502,345 4,237,505,100 4,148,962,425 1,533,123,067
Bills purchased - - - -
Staff loans 1,533,044,729 818,934,123 1,528,390,863 814,680,837
Other 31,703,207,339 24,876,627,622 31,703,207,339 24,876,627,622
Sub total 158,498,324,943 120,607,339,553 154,324,131,157 117,898,704,235
Interest receivable 1,434,267,591 1,896,418,152 1,361,738,458 1,827,559,567
Grand total 159,932,592,535 122,503,757,706 155,685,869,615 119,726,263,802
4.7.2. Analysis of Loan and Advances - By Currency
Group NMB
Nepalese rupee 153,493,108,218 119,006,102,378 149,246,385,298 116,228,608,474
Indian rupee - - - -
United State dollar 6,420,403,307 3,477,759,306 6,420,403,307 3,477,759,306
Great Britain pound - - - -
Euro 19,081,009 19,896,022 19,081,009 19,896,022
Japenese yen - - - -
Chinese yuan - - - -
Other - - - -
Total 159,932,592,535 122,503,757,706 155,685,869,615 119,726,263,802
4.7.3. Analysis of Loan and Advances - By Collateral

Loans and advances to customers are backed by collateral securities to mitigate the default risk. The type of the collaterals
corresponding to the loans and advances to customers are given in the table below.
Group NMB
Secured
Movable/immovable assets 157,228,319,080 120,284,602,251 154,703,190,330 118,892,073,043
Gold and silver 128,955,689 - 128,955,689 336,629,474
Guarantee of domestic B/FIs 7,613,852 18,898,358 7,613,852 18,898,358
Government guarantee 87,191,907 89,125,832 87,191,907 89,125,832
Guarantee of international rated bank - - -
Collateral of export document - - -
Collateral of fixed deposit receipt 758,917,838 385,025,416 758,917,838 385,025,416
Collateral of Governement securities - 4,511,679 - 4,511,679
Counter guarantee - - - -
Personal guarantee - - - -
Other collateral 1,721,594,170 1,721,594,170 - -
Subtotal 159,932,592,535 122,503,757,706 155,685,869,615 119,726,263,802
Unsecured - - - -
Grant Total 159,932,592,535 122,503,757,706 155,685,869,615 119,726,263,802
4.7.4. Allowances for Impairment
Group NMB
Specific allowances for impairment
Balance at Sawan 1 1,933,949,588 438,116,822 1,840,457,937 386,943,898
Impairment loss for the year: - -
Charge for the year - -
Recoveries/reversal during the year 7,240,380 1,016,204,324 (29,490,173) 973,885,598
Write-offs - -
Exchange rate variance on foreign currency - - - -
impairment
Other movement (Transfer from Merger) 188,275,093 479,628,442 188,275,093 479,628,442
Balance at Asar end 2,129,465,061 1,933,949,588 1,999,242,857 1,840,457,937
Group NMB
Collective allowances for impairment
Balance at Sawan 1 2,244,051,848 1,002,624,810 2,217,333,199 977,833,534
Impairment loss for the year: - -
Charge/(reversal) for the year 383,431,309 648,508,948 392,345,297 646,581,575
Exchange rate variance on foreign currency - - - -
impairment
Other movement (Transfer from Merger) 62,824,341 592,918,090 62,824,341 592,918,090
Balance at Asar end 2,690,307,497 2,244,051,848 2,672,502,836 2,217,333,199
Total allowances for impairment 4,819,772,558 4,178,001,435 4,671,745,694 4,057,791,136
The impairment on Loans and advances carried forward from Erstwhile Kanchan Development Bank aer acquisition is
NPR. 251,099,434.
4.8. Investment Securities

Group NMB
Investment securities measured at 16,918,192,100 14,198,372,451 16,665,279,464 13,969,104,367
amortized cost
Investment in equity measured at FVTOCI 838,740,969 1,069,171,681 788,283,469 1,029,651,681
Total 17,756,933,069 15,267,544,132 17,453,562,933 14,998,756,047
"The Investments made by Bank in financial instruments has been presented under this account head in three categories i.e. investment
securities designated at fair value through profit or loss, investment securities measured at amortized cost and investment in equity
measured at fair value through other comprehensive income. The Treasury Bill with maturity greater than 91 days has been presented
under Investment Securities."
4.8.1. Investment Securities Measured at Amortized Cost
Group NMB
Debt securities 745,607,595 28,657,015 714,439,459 -
Government bonds 13,512,703,426 10,407,212,121 13,512,703,426 10,407,212,121
Government treasury bills 1,946,904,406 2,382,939,572 1,946,904,406 2,382,939,572
Nepal Rastra Bank bonds - - - -
Nepal Rastra Bank deposits instruments - - - -
Other Investments 712,976,673 1,379,563,742 491,232,173 1,178,952,673
Less: specific allowances for impairment - - - -
Total 16,918,192,100 14,198,372,451 16,665,279,464 13,969,104,367
The details of other investment as at 31 Asar 2078 are as follows:
Particulars Interest Rate Maturity Date Face Value (USD) Carrying Amount (NPR.)
1. Republic of Sri Lanka 4.69% 27-Jul-21 2,500,000 307,017,888
2. Republic of Sri Lanka 4.66% 27-Jul-21 1,500,000 184,214,285
Total 491,232,173
The investment on debt securities include investment on agricultural bond issued by Agriculture Development Bank Limited which is
also included in productive sector lending requirement as per NRB Directive.
4.8.2. Investment in Equity Measured at Fiar Value through Other Comprehensive Income
Group NMB
Equity instruments
Quoted equity securities 762,416,969 941,015,781 713,959,469 903,495,781
Unquoted equity securities 76,324,000 128,155,900 74,324,000 126,155,900
Total 838,740,969 1,069,171,681 788,283,469 1,029,651,681
NMB Bank Limited
Notes to Consolidated Financial Statements

For the year ended 31 Asar 2078
4.8.3. Information relating to Investment in Equities
Group NMB
As at 31 Asar 2078 As at 31 Asar 2077 As at 31 Asar 2078 As at 31 Asar 2077
Particulars Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
Investment in quoted equity - Units of NMB Only
NMB Hybrid Fund-1 (15,261,921 Units) 162,119,210 221,975,222 162,649,210 154,488,250 152,619,210 208,325,222 152,619,210 144,988,250
Laxmi Equity Fund - - 71,331,883 61,561,033 - - 71,331,883 61,561,033
NIC Asia Growth Fund - - 20,000,000 20,380,000 - - 20,000,000 20,380,000
Sanima Equity Fund - - 44,000,000 43,692,000 - - 44,000,000 43,692,000
Citizen Mutual Fund-I (73,135 Units) 731,348 920,038 30,000,000 30,180,000 731,348 920,038 30,000,000 30,180,000
Global IME Samunnat Scheme-1 (3,797,270 Units) 37,972,700 77,008,636 37,972,700 32,580,577 37,972,700 77,008,636 37,972,700 32,580,577
NIBL Samriddhi Fund I - - 7,909,730 7,848,146 - - 7,909,730 7,848,146
NIBL Samriddhi Fund II (500,000 Units) 5,000,000 5,405,000 - - 5,000,000 5,405,000 - -
Nabil Equity Fund - - 14,362,910 13,400,595 - - 14,362,910 13,400,595
NIBL Pragati Fund (1875 Units) 18,730 27,844 10,274,070 8,373,367 18,730 27,844 10,274,070 8,373,367
Siddhartha Equity Fund - - 9,677,480 9,677,480 - - 9,677,480 9,677,480
Citizens Mutual Fund-II (147,050 Units) 1,470,500 2,080,758 2,000,000 2,012,000 1,470,500 2,080,758 2,000,000 2,012,000
Sunrise Mutual Fund-I 1,000,000 1,600,000 6,000,000 6,000,000 - - 5,000,000 5,000,000
Sunrise BlueChip Fund (2,000,000 Units) 20,000,000 20,320,000 - - 20,000,000 20,320,000 - -
Prabhu Select Fund (1,000,000 Units) 10,000,000 10,140,000 - - 10,000,000 10,140,000 - -
Laxmi Unnati Kosh (14,350 Units) 143,500 181,097 - - 143,500 181,097 - -
Kumari Equity Fund (500,000 Units) 5,000,000 5,250,000 - - 5,000,000 5,250,000 - -
NABIL BALANCED FUND-2 - - 20,000,000 19,800,000 - - 20,000,000 19,800,000
NMB 50 (17,701,670 Units) 189,516,700 283,327,467 189,516,700 189,516,700 177,016,700 264,639,967 177,016,700 177,016,700
Nepal Doorsanchar Comapany Ltd. - - 38,045,756 34,062,620 - - 38,045,756 34,062,620
Api Power Company Ltd. - 2,015 - 540 - 2,015 - 540
Barun Hydropower Co. Ltd. - - 1,000 840 - - 1,000 840
Ridi Hydro Power Ltd. - - 38,600 40,572 - - 38,600 40,572
Butwal Power Company Ltd. - - 212,052,771 184,403,581 - - 212,052,771 184,403,581
57
58
Group NMB
Particulars Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
Sanima Mai Hydropower Ltd. - - 5,883,915 4,083,353 - - 5,883,915 4,083,353
CEDB Hydro Fund Ltd. - Promoter Shares (119,892 10,000,000 11,989,200 10,000,000 11,989,200 10,000,000 11,989,200 10,000,000 11,989,200
Units)
Shiva Shree Hydropower Ltd - Promoter Shares 10,000,000 10,000,000 - - 10,000,000 10,000,000 - -
(100,000 Units)
Chilime Hydropower Company Limited - - 1,894,758 1,810,502 - - 1,894,758 1,810,502
Jalvidhyut Lagani Tatha Bikash Company Ltd. - - - 61,579 - - - 61,579
Lumbini General Insurance Co. Ltd. - Promoter Shares 4,016,713 20,238,664 4,016,713 12,225,539 4,016,713 20,238,664 4,016,713 12,225,539
(61,144 Units)
Nepal Life Insurance Co. Ltd. - - 9,971,704 13,419,000 - - 9,971,704 13,419,000
Prabhu Insurance Company Limited (9 Units) - 8,640 - - - 8,640 - -
Sagarmatha Insurance Co. Ltd. - - 3,556,188 3,374,700 - - 3,556,188 3,374,700
Shikhar Insurance Co. Ltd. - - 6,144,908 6,114,000 - - 6,144,908 6,114,000
Premier Insurance Co. Ltd. (769 Units) - 899,730 - - - 899,730 - -
Himalayan General Insurance Co. Ltd (1 Units) - 768 - - - 768 - -
United Insurance Co. (Nepal) Ltd. - - 585,700 1,962,480 - - 585,700 1,962,480
NLG Insurance Company Limited (5 Units) - 500 - 5,400 - 500 - 5,400
Siddhartha Insurance Ltd. - - 2,197,428 1,566,000 - - 2,197,428 1,566,000
National Life Insurance Co. Ltd. - - 2,500,429 2,463,964 - - 2,500,429 2,463,964
Rural Microfinance Development Center Ltd. - - - 546,079 - - - 546,079
Laxmi Laghubitta Sanstha Limited - - - 6,070 - - - 6,070
Mero Micro Finance Bittiya Sanstha Ltd. (15 Units) 981 23,190 6,800 59,986 981 23,190 6,800 59,986
Mahila Sahayatra Microfinance Bittiya Sanstha Ltd. (2 - 2,518 2,000 16,720 - 2,518 2,000 16,720
Units)
NIC Asia Laghubittya Sanstha Ltd. - Promoter Shares 5,375,000 6,486,000 - - 5,375,000 6,486,000 - -
(64,860 Units)
Mero Microfinance Bittiya Sanstha Ltd. Promoter 37,023,000 69,999,900 37,023,000 59,859,800 37,023,000 69,999,900 37,023,000 59,859,800
Shares (699,999 Units)
Mirmire Microfinance Development Bank Ltd. - - 2,500 43,152 - - 2,500 43,152
Global IME Laghubitta Bittiya Sanstha Ltd.(1 Units) - 2,508 2,500 38,222 - 2,508 2,500 38,222
Womi Microfinance Bittiya Sanstha Ltd. - - 3,900 46,046 - - 3,900 46,046
Vijaya laghubitta Bittiya Sanstha Ltd. (4 Units) - 7,276 - 3,060 - 7,276 - 3,060
Citizen Investment Trust - - 288,273 371,484 - - 288,273 371,484
Soaltee Hotel Limited - - 721,759 389,620 - - 721,759 389,620
Samudayak Laghubitta Bittaya Sanstha Ltd. (Promoter 14,520,000 14,520,000 11,000,000 14,520,000 - - - -
Shares)
Kalika Microcredit Development Bank Ltd. - - - 10,725 - - - 10,725
Total 513,908,382 762,416,969 971,635,283 953,004,981 476,388,382 713,959,469 937,105,283 915,484,981
Investment in unquoted equity - Units of NMB Only
Nepal Stock Exchange Limited (716 Units) 5,000 71,600 5,000 71,600 5,000 71,600 5,000 71,600
Nepal Clearing House Limited (144,469 Units) 5,268,200 14,446,900 5,268,200 10,468,900 5,268,200 14,446,900 5,268,200 10,468,900
Credit Information Bureau Limited (28,055 Units) 216,000 2,805,500 216,000 2,126,200 216,000 2,805,500 216,000 2,126,200
Nepal Warehousing Company Ltd. (70,000 Units) 7,000,000 7,000,000 - - 7,000,000 7,000,000 - -
Nepal Finso Company Ltd. 2,000,000 2,000,000 2,000,000 2,000,000 - - - -
Prabhu Merchant Bank Ltd - - 1,500,000 1,500,000 - - 1,500,000 1,500,000
Mahalaxmi Life Insurance Co.Ltd (500,000 Units) 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000
Siddhartha Investment Growth Scheme - 2 - - 50,000,000 50,000,000 - - 50,000,000 50,000,000
Total 64,489,200 76,324,000 129,989,200 142,675,900 62,489,200 74,324,000 106,989,200 114,166,700
Grand Total 578,397,582 838,740,969 1,080,624,483 1,069,171,681 538,877,582 788,283,469 1,044,094,483 1,029,651,681
The face value of Mutual Fund is NPR 10 and face value of ordinary and promoter shares are NPR 100 per unit. Unless specified type of shares are ordinary shares.
Treasury bills, Government bonds and USD Bonds have been classified as financial assets held to maturity instrument as the Bank has intention and capacity to hold these instruments until their
maturity. These instruments are carried at amortised costs. These instruments are issued by the government. Bank considers that the fixed return on these bonds adequately compensates for
associated risks. Premiums paid on development Bonds are considered for the EIR calculation and the balance outstanding have been measured accordingly. Interest accrued on Development Bonds
and T-Bills are shown as part of the Investments.
None of the equity investments result in control or significant influence over the invested entities. These investments have been classified as available for sale assets. The movement in fair value of
these instruments has been adjusted through other comprehensive income.
The Bank has invested NPR 177,016,700 in NMB 50 and NPR 152,619,210 in NMB Hybrid Fund-1 as Seed Capital. For both Mutual Funds, the Bank is the Fund Sponsor while the Bank’s Subsidiary
NMB Capital Limited is the Fund Manager. These investment have been made as per the requirement of “Mutual Fund Regulation 2067” issued by the Securities Board of Nepal (SEBON) to invest seed
money by the Fund Sponsor/Manager. The cumulative net change in the fair value of financial assets measured at FVTOCI is recognized under fair value reserve heading.
59
4.9. Current Tax Assets
The advance deposited by the bank less tax liabilities are presented under this head:
Group NMB
Current tax assets
Current year income tax assets 1,369,701,004 948,694,757 1,232,410,602 780,007,909
Tax assets of prior periods 43,148,478 - 43,148,478 -
Total Current tax Assets 1,412,849,482 948,694,757 1,275,559,079 780,007,909
Current tax liabilities
Current year income tax 1,313,623,719 880,440,150 1,182,813,545 718,547,028
liabilities
Tax liabilities of prior periods - - - -
Total Current tax Liabilities 1,313,623,719 880,440,150 1,182,813,545 718,547,028
The movement of Advance tax as of Asar end 2078 is given below:
Particulars Amount (NPR)

A. Advance Income Tax carried forward from previous year 61,460,881
B. Advance Tax Instalments FY 2077/78 1,200,000,000
C. Tax Withheld by Withholder FY 2077/78 28,698,096
D. Transferred from Merger 3,712,506
E. Deposit for tax cases -
F. Provision for Income tax for FY 2077/78 1,182,813,545
G. Tax Audit Adjustments aer year end 18,312,403
Net Advance Tax (A+B+C-D-E-F-G) 92,745,535
4.10. Investment in Subsidiaries

NMB
Investment in quoted subsidiaries 172,487,600 172,487,600
Investment in unquoted subsidiaries 200,000,000 200,000,000
Total investment 372,487,600 372,487,600
Less: Impairment allowances - -
Net carrying amount 372,487,600 372,487,600
4.10.1. Investment in Quoted Subsidiaries
NMB
As at 31 Asar 2078 As at 31 Asar 2077
Particulars Cost Fair Value Cost Fair Value
NMB Laghubitta Bittiya Sanstha Limited, 2,753,004 172,487,600 172,487,600 172,487,600 172,487,600
Promoter shares and 16 Ordinary Shares of Rs 100 each
fully paid up
Total 172,487,600 172,487,600 172,487,600 172,487,600
4.10.2. Investment in Unquoted Subsidiaries
NMB
NMB Capital Ltd., 2,000,000 Ordinary shares of 200,000,000 200,000,000 200,000,000 200,000,000
Rs 100 each fully paid up
Total 200,000,000 200,000,000 200,000,000 200,000,000
4.10.3. Information relating to Subsidiaries of the Bank
Percentage of Ownership held by the Bank

NMB Capital Limited 100% 100%
NMB Laghubitta Bittiya Sanstha Limited 51% 51%
4.10.4. Non Controlling Interest of the Subsidiaries
Group
Equity interest held by NCI (%) 49% 49%
Profit/(loss) allocated during the year 96,217,203 38,603,924

Accumulated balances of NCI as on year end 466,605,880 372,476,067
Dividend paid to NCI 2,222,726 1,253,417
4.11. Investment in Associates

The Bank do not have any investment in associates as of fiscal year end 2078.
Group NMB
Investment in quoted associates – – – –
Investment in unquoted associates – – – –
Total investment – – – –
Less: Impairment allowances – – – –
Net carrying amount – – – –
4.11.1. Investment in Quoted Associates
Group NMB
...................... Ltd. ...... shares of Rs. ...... each – – – –
………………………………. – – – –
Total – – – –
4.11.2. Investment in Unquoted Associates
Group NMB
………………………………. – – – –
Total – – – –
4.11.3. Information relating to Associates of the Bank
Group NMB
Percentage of Ownerhsip held by the Bank Percentage of Ownership held by the Bank
............................................ Ltd. – – – –
............................................ Ltd. – – – –
............................................ Ltd. – – – –
............................................ Ltd. – – – –
............................................ – – – –
4.11.4. Equity Value of Associates
Group
............................................ Ltd. – –
............................................ Ltd. – –
............................................ – –
Total – –
4.12. Investment Properties

Group NMB
Investment properties measured at fair value
Balance as on Sawan 1 79,648,242 102,915,862 79,648,242 102,915,862
Addition/disposal during the year 3,379,377 (23,267,620) 3,379,377 (23,267,620)
Net changes in fair value during the year - - - -
Transfer from Merger 14,914,641 - 14,914,641 -
Net amount 97,942,260 79,648,242 97,942,260 79,648,242
Investment properties measured at cost
Balance as on Sawan 1 - - - -
Addition/disposal during the year - - - -
Adjustment/transfer - - - -
Accumulated depreciation - - - -
Accumulated impairment loss - - - -
Net amount
As per NAS 40 ‘Investment Property’ (land and building acquired as non banking assets) are measured at fair value.
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 as non banking
assets.
Non banking assets (only land and building) are initially recognized at fair value, since it is not intended for owner-occupied use;
depreciation charge is not raised.
The details of Non-Banking Assets as of Asar end, 2078 are as follows:
Party's Name Date NBA is assumed Amount (NPR)

1. Guna Suppliers 16-Jul-15 4,508,880
2. Kamdhenu Mahila Dugdha Utpadak Ssl 16-Nov-17 785,000
3. Ankita Impex 4-Mar-18 13,936,000
4. Jalthal Live Stock P. Ltd 4-Sep-18 2,200,000
5. Factory Outlet And Clothing Store 18-Jun-18 15,530,000
6. China Hygienic Meat Pro & Sup P.Ltd 15-Jul-18 14,902,000
7. China Hygienic Meat Pro & Sup P.Ltd 9-Feb-18 6,612,125
8. Eastern Shoe Centre 1-Feb-19 4,041,500
9. Chandrakala Limbang 1-Feb-19 466,000
10. Mauni Traders 1-Mar-19 3,120,000
11. Ujjwal Trading & Supplier 9-Jan-19 4,650,384
12. Babu Rai 9-Jan-19 1,574,853
13. Rtc-Teechnology Nepal 13-Jan-19 72,000
14. Evergreen 8-Feb-19 3,745,000
15. Laxmi Trading Company 10-Jan-20 4,377,496
16. All Sport House 10-Jan-20 8,682,608
17. Niruta Gi Center 13-Mar-20 1,854,537
18. Sister's Fashion Collection 13-Jan-21 6,883,878
Total 97,942,260
64
4.13. Property and Equipment
Group
Computer & Furniture & Equipment &

Partiulcars Land Building Leasehold Accessories Vehicles Fixture Machinery Other Total
Cost
As on Sawan 1, 2076 824,071,405 170,396,453 266,472,358 208,626,222 368,042,299 108,255,877 399,161,745 116,457,908 2,461,484,267
Addition during the Year -
Acquisition 14,172,950 14,397,275 122,146,617 60,911,262 55,004,495 50,465,890 10,176,807 81,867,192 409,142,489
Capitalization - 412,351 39,552,113 24,958,070 92,511,695 9,723,938 34,521,071 4,448,978 206,128,215
Disposal during the year - - - (25,502) (33,884,900) - (59,890) (820) (33,971,112)
Adjustment/Revaluation - - - 12,903 (200) 12,598 - (166,607) (141,306)
Balance as on Asar end 2077 838,244,355 185,206,079 428,171,087 294,482,956 481,673,388 168,458,304 443,799,733 202,606,651 3,042,642,553
Acquisition 55,151,840 5,457,585 21,221,090 12,422,679 11,766,893 16,627,242 1,384,050 37,152,724 161,184,103
Capitalization - 16,018 28,837,045 24,980,913 50,680,770 10,536,983 20,556,900 5,908,527 141,517,155
Disposal during the year - - (65,130,334) (38,041,294) (35,732,655) (14,776,944) (29,136,391) (29,346,436) (212,164,054)
Adjustment/Revaluation - - - 12,903 (200) 12,598 - (166,607) (141,306)
Depreciation and Impairment -
As on Sawan 1, 2076 - 42,335,671 139,707,741 134,433,538 174,763,353 67,129,490 200,733,254 85,803,604 844,906,652
Depreciation charge for the Year - - 665,581 3,426,750 3,278,591 2,578,466 - 85,191 10,034,579
Impairment for the year - 4,290,963 32,669,209 28,636,121 68,528,976 10,673,167 49,610,913 13,612,212 208,021,560
Disposals - - - - (28,979,492) - (275,409) - (29,254,901)
Adjustment - 8,197,276 58,010,191 37,424,297 34,330,593 31,828,337 6,955,581 46,942,231 223,688,506
As on Asar end 2077 - 54,823,909 231,052,721 203,920,706 251,922,022 112,209,460 257,024,339 146,443,239 1,257,396,397
Depreciation charge for the Year - - 672,854 3,159,349 3,071,511 1,833,236 - 848,763 9,585,711
Disposals - - (36,070,738) (37,375,238) (35,051,004) (13,090,146) (28,356,004) (27,961,918) (177,905,049)
Adjustment - 569,890 8,003,949 5,414,619 4,132,111 6,965,346 638,927 14,765,369 40,490,210
As on Asar end 2078 - 59,852,339 238,430,299 208,548,798 299,020,420 121,508,154 278,763,907 153,839,145 1,359,963,063
Capital Work in Progress -
Net Book Value -
As on Asar end 2076 824,071,405 128,060,782 126,764,617 74,192,684 193,278,946 41,126,387 198,428,490 30,654,304 1,616,577,616
As on Asar end 2077 838,244,355 130,382,170 197,118,366 90,562,249 229,751,366 56,248,844 186,775,394 56,163,412 1,785,246,156
As on Asar end 2078 893,396,195 130,827,342 174,668,589 85,309,359 209,367,777 59,350,028 157,840,385 62,315,713 1,773,075,389
NMB

Cost
As on Sawan 1, 2076 824,071,405 170,396,453 257,384,573 187,184,309 344,671,417 84,366,953 399,161,745 115,672,877 2,382,909,732
Addition during the Year
Acquisition 14,172,950 14,397,275 122,146,617 60,911,262 55,004,495 50,465,890 10,176,807 81,867,192 409,142,489
Capitalization - 412,351 39,365,144 24,753,464 92,511,695 9,322,868 34,521,071 4,266,405 205,152,998
Disposal during the year - - - - (33,884,900) (59,890) (33,944,790)
Adjustment/Revaluation - - - - - - - -

Acquisition 55,151,840 5,457,585 21,221,090 12,422,679 11,766,893 16,627,242 1,384,050 37,152,724 161,184,103
Capitalization 16,018 28,791,935 18,483,170 50,680,770 8,027,467 20,556,900 3,124,126 129,680,386
Disposal during the year (65,130,334) (37,829,600) (35,701,900) (14,735,868) (29,136,391) (29,228,710) (211,762,804)
Adjustment/Revaluation
Depreciation and Impairment

As on Sawan 1, 2076 - 42,335,671 135,009,210 124,552,755 162,406,583 54,402,647 200,733,254 85,570,907 805,011,027
Depreciation charge for the Year - - - - - - - - -
Disposals - (28,979,492) (11,420) (28,990,912)
Adjustment - 8,197,276 58,010,191 37,424,297 34,330,593 31,828,337 6,955,581 46,942,231 223,688,506
As on Asar end 2077 - 54,823,909 225,688,610 190,613,173 236,286,661 96,904,151 257,024,339 146,125,350 1,207,466,193
65
66
Depreciation charge for the Year -
Impairment for the year 4,458,539 34,771,513 33,429,363 74,945,780 13,590,259 49,456,646 19,743,693 230,395,793
Disposals (36,070,738) (37,375,238) (35,051,004) (13,090,146) (28,356,004) (27,961,918) (177,905,049)
Adjustment 569,890 8,003,949 5,414,619 4,132,111 6,965,346 638,927 14,765,369 40,490,210
As on Asar end 2078 - 59,852,339 232,393,334 192,081,916 280,313,548 104,369,610 278,763,907 152,672,494 1,300,447,148
Capital Work in Progress
Net Book Value
As on Asar end 2076 824,071,405 128,060,782 122,375,362 62,631,554 182,264,834 29,964,306 198,428,490 30,101,971 1,577,898,704
As on Asar end 2077 838,244,355 130,382,170 193,207,724 82,235,863 222,016,045 47,251,560 186,775,394 55,681,123 1,755,794,235
As on Asar end 2078 893,396,195 130,827,342 171,385,691 73,843,369 204,734,922 49,704,942 157,840,385 60,182,120 1,741,914,965
4.14. Goodwill and Intangible Assets

Group
Soware
Particulars Goodwill Purchased Developed Other Total
Cost
As on Sawan 1, 2076 - 167,467,651 - - 167,467,651
Addition during the Year - - - - -
Acquisition - 22,933,450 - - 22,933,450
Capitalization - 37,948,997 - - 37,948,997
Disposal during the year - - - - -
Adjustment/Revaluation - - - - -
Balance as on Asar end 2077 - 228,350,098 - - 228,350,098
-
Acquisition - 11,464,713 - - 11,464,713
Capitalization - 27,761,704 - - 27,761,704
Adjustment/Revluation - - - - -
-
Amortization and Impairment -
As on Sawan 1, 2076 - 50,794,481 - - 50,794,481
Amortization charge for the Year - 34,363,759 - - 34,363,759
Impairment for the year - - - - -
Disposals - - - - -
Adjustment - 18,900,785 - - 18,900,785
As on Asar end 2077 - 104,059,025 - - 104,059,025
-
Disposals - - - - -
Adjustment (Acquistion) - 5,700,003 - - 5,700,003
As on Asar end 2078 - 149,493,878 - - 149,493,878
Capital Work in Progress 2,983,775 2,983,775
Net Book Value

As on Asar end 2076 - 116,673,171 - - 116,673,171
As on Asar end 2077 - 127,274,848 - - 127,274,848
As on Asar end 2078 - 121,066,412 - - 121,066,412
NMB
Soware
Particulars Goodwill Purchased Developed Other Total
Cost
As on Sawan 1, 2076 - 164,552,707 - - 164,552,707
Addition during the Year - - - - -
Acquisition - 22,933,450 - - 22,933,450
Capitalization - 37,349,497 - - 37,349,497
Adjustment/Revaluation - - - - -

Acquisition - 11,464,713 - - 11,464,713
Capitalization - 22,839,997 - - 22,839,997
Adjustment/Revluation - - - - -
Amortization and Impairment

As on Sawan 1, 2076 - 49,143,908 - - 49,143,908
Disposals - - - - -
Adjustment - 18,900,785 - - 18,900,785
As on Asar end 2077 - 101,970,493 - - 101,970,493

Disposals - - - - -
Acquistion - 5,700,003 - - 5,700,003
As on Asar end 2078 - 146,752,847 - - 146,752,847
Capital Work in Progress as on Asar end 2078 153,228 153,228
Net Book Value

As on Asar end 2076 - 115,408,800 - - 115,408,800
As on Asar end 2077 - 125,848,936 - - 125,848,936
As on Asar end 2078 - 112,540,746 - - 112,540,746
4.15. Deffered Tax
The creation of Deferred Tax Assets (DTA) and Deferred Tax Liabilities (DTL) has a bearing on the computation of capital adequacy ratio and banks’ ability to declare dividends. DTA represents
unabsorbed depreciation, difference between carrying amount as per books of accounts and tax including carry forward losses which can set-off against assets future taxable income which is
considered as timing difference. DTA has an effect of decreasing future income tax payments which indicates that they are prepaid income taxes and meet the definition of assets. DTA is deducted
from Tier I capital, if deferred tax reserve is included already thereon. Deferred tax (assets)/liabilities have been recognised as per the provision of Nepal Accounting Standard (NAS -09)
Group NMB
Year ended 31 Asar 2078 Year ended 31 Asar 2078
Net Deferred Net Deferred
Deferred Tax Deferred Tax Tax Assets Deferred Tax Deferred Tax Tax Assets
Particulars Assets Liabilities (Liabilities) Assets Liabilities (Liabilities)
Deferred tax on temporory differences on following items
Loan and Advance to B/FIs 20,467,896 20,467,896 - 20,467,896 20,467,896 -
Loans and advances to customers 1,401,523,708 1,423,282,448 (21,758,740) 1,401,523,708 1,401,523,708 -
Investment properties - - - - - -
Investment securities 2,622,500 78,565,758 (75,943,258) - 76,698,063 (76,698,063)
Property & equipment 563,708,898 567,726,355 (4,017,457) 552,133,079 556,336,713 (4,203,634)
Employees' defined benefit plan 171,584,565 - 171,584,565 162,582,022 - 162,582,022
Lease liabilities - - - - - -
Provisions 2,008,148 - 2,008,148 1,663,301 - 1,663,301
Deferred tax on temporory differences 2,161,915,715 2,090,042,456 71,873,258 2,138,370,006 2,055,026,380 83,343,625
Deferred tax on carry forward of unused tax losses 165,665,940 - 165,665,940 165,665,940 - 165,665,940
Deferred tax due to changes in tax rate - -
Net Deferred tax asset/(liabilities) as on 31 Asar 2078 237,539,198 249,009,565
Deferred tax (asset)/liabilities as on 31 Asar 2077 (255,210,455) (264,421,080)
Origination/(Reversal) during the year (17,671,257) (15,411,515)
Deferred tax expense/(income) recognised in profit or loss (53,276,748) (51,820,778)
Deferred tax expense/(income) recognised in other comprehensive income 78,393,907 74,888,187
Deferred tax expense/(income) recognised in directly in (7,445,902) (7,655,895)
equity (Merger/Recycling)
69
70
The opening deferred tax assets has been carried forward from Erstwhile Kanchan Development Bank from merger amounting NPR. 5,361,636. The Deferred Tax Liability created last year on profit
transferred to OCI has been reclassfied to Retained Earnings this year. The reconciliation is given below:
Recognized in
Particulars NMB DTA E-KDBL DTA Opening Total Pl/OCI DTL/DTA Recycling Closing Total
OCI Items 30,704,060 1,265,306 31,969,366 (74,888,187) 2,294,259 (40,624,562)
PL Items 233,717,020 4,096,330 237,813,350 51,820,778 289,634,128
Total 264,421,080 5,361,636 269,782,716 (23,067,409) 2,294,259 249,009,566
Group NMB
Year ended 31 Asar 2077 Year ended 31 Asar 2077
Net Deferred Net Deferred
Deferred Tax Deferred Tax Tax Assets Deferred Tax Deferred Tax Tax Assets
Particulars Assets Liabilities (Liabilities) Assets Liabilities (Liabilities)
Deferred tax on temporory differences on following items
Loan and Advance to B/FIs 14,082,141 14,082,141 - 14,082,141 14,082,141 -
Loans and advances to customers 1,217,337,341 1,237,994,917 (20,657,576) 1,217,337,341 1,217,337,341 -
Investment properties - - - - - -
Investment securities 3,518,836 1,139,314 2,379,523 - (128,381) 128,381
Property & equipment 590,664,368 570,625,755 20,038,613 582,270,257 564,492,951 17,777,306
Employees' defined benefit plan 94,645,032 - 94,645,032 88,170,326 88,170,326
Lease liabilities - - - - - -
Provisions 2,123,097 - 2,123,097 1,663,301 - 1,663,301
Deferred tax on temporory differences 1,922,370,816 1,823,842,127 98,528,689 1,903,523,366 1,795,784,052 107,739,314
Deferred tax on carry forward of unused tax losses 156,681,766 - 156,681,766 156,681,766 - 156,681,766
Deferred tax due to changes in tax rate - -
Net Deferred tax asset/(liabilities) as on 31 Asar 2077 255,210,455 264,421,080
Deferred tax (asset)/liabilities as on 31 Asar 2076 (65,559,281) (70,040,593)
Origination/(Reversal) during the year 189,651,174 194,380,487
Deferred tax expense/(income) recognised in profit or loss 92,660 (3,561,365)
Deferred tax expense/(income) recognised in other comprehensive income 8,106,470 7,032,350
Deferred tax expense/(income) recognised in directly in equity (197,850,302) (197,851,472)
4.16. Other Assets

Other Asset include accounts receivable, interest receivable, accrued income, prepayments, deposit, deferred employee benefits and
stationery stock details presented as follows:
Group NMB
Assets held for sale - - - -
Other non banking assets - - - -
Bills receivable - - - -
Accounts receivable 219,188,313 177,237,063 212,986,006 153,279,031
Accrued income 14,542,056 28,190,766 14,542,056 28,190,766
Prepayments and deposit 184,447,493 115,777,913 183,360,129 115,668,513
Income tax deposit 53,479,640 53,479,640 53,479,640 53,479,640
Deferred employee expenditure 1,516,191,950 1,085,590,826 1,516,191,950 1,085,590,826
Others:
Advance Gold and Silver 137,685,311 - 137,685,311 -
Stock of Stationery 40,600,976 37,789,991 38,953,896 37,184,357
Fuel Stock - - - -
Gold Markup 73,683,210 - 73,683,210 -
Others 3,803,029 4,414,637 101,130 -
Total 2,243,621,977 1,502,480,835 2,230,983,328 1,473,393,132
The provision outstanding as of Asar end 2078 of NMB includes IPO receivables of erstwhile Bank of Asia and deposit of capital
merchant finance amounting NPR. 5,544,336 and NPR. 2,763,544 respectively and are netted off with receivables and Cash and Cash
Equivalent respectively
4.17. Due to Bank and Financial Institutions

Group NMB
Money market deposits - - - -
Interbank borrowing - - - -
Other deposits from BFIs - - - -
Settlement and clearing accounts - - - -
Other deposits from BFIs 1,964,515,728 3,150,014,840 1,964,515,728 3,150,014,840
Total 1,964,515,728 3,150,014,840 1,964,515,728 3,150,014,840
4.18. Due to Nepal Rastra Bank

Group NMB
Refinance from NRB 3,609,019,770 548,002,033 3,609,019,770 548,002,033
Standing Liquidity Facility - - - -
Lender of last report facility from NRB - - - -
Securities sold under repurchase agreements - - - -
Other payable to NRB 3,988,962,275 4,284,499,510 3,988,962,275 4,284,499,510
Total 7,597,982,045 4,832,501,544 7,597,982,045 4,832,501,544
The Bank has an outstanding borrowing of NPR 3,609,019,770 (Schedule 4.18) from the Central Bank under Refinancing Facility
available to Financial Institutions. The other payable to NRB is payable of Li.Ka Accounts of Government bodies. Due to Nepal Rastra
Bank is subsequently measured at amortised cost.
4.19. Derivative financial instruments
Group NMB
Held for trading
Currency swap 3,042,929,732 1,929,216,805 3,042,929,732 1,929,216,805
Forward exchange contract 13,763,956,644 8,048,554,459 13,763,956,644 8,048,554,459
Others 320,150,000 30,441,406 320,150,000 30,441,406
Held for risk management - -
Currency swap - - - -
Forward exchange contract - - - -
Other - - - -
Total 17,127,036,376 10,008,212,670 17,127,036,376 10,008,212,670
Derivatives are financial instruments that derive their value in response to changes in interest rates, financial instrument prices etc.
Derivatives are categorised as trading unless they are designated as hedging instruments. All derivatives are initially recognised and
subsequently measured at fair value, with all trading gains or losses recognised in the Statement of Profit or Loss under Net trading
Income. Fair value is determined using the forward market rates ruling on the reporting date.
4.20. Deposits from customers

All deposits account other than deposit from bank and financial institutions (local and foreign bank and NRB)
Group NMB
Institutions customers:
Term deposits 39,159,171,452 33,198,582,895 39,159,171,452 33,198,582,895
Call deposits 14,135,854,620 9,938,961,813 14,442,474,414 10,782,602,657
Current deposits 9,407,236,787 8,115,763,797 9,407,236,787 8,115,763,797
Other 6,253,463,637 4,872,652,056 6,253,463,637 4,872,652,056
Individual customers:
Term deposits 42,304,426,856 36,753,374,336 42,304,426,856 36,753,374,336
Saving deposits 53,947,831,325 38,986,251,258 52,274,019,505 37,517,098,463
Current deposits 388,158,507 263,384,873 388,158,507 263,384,873
Other 260,334,680 156,909,276 260,334,680 156,909,276
Total 165,856,477,862 132,285,880,304 164,489,285,837 131,660,368,354
4.20.1. Currency wise analysis of deposit from customers
Group NMB
Nepalese rupee 161,359,045,739 126,800,932,313 159,991,853,713 126,175,420,362
Indian rupee - - - -
United State dollar 4,242,414,737 4,032,292,743 4,242,414,737 4,032,292,743
Great Britain pound 10,374,730 9,675,257 10,374,730 9,675,257
Euro 23,578,283 1,231,994,351 23,578,283 1,231,994,351
Japenese yen - - - -
Chinese yuan 212,405,078 198,010,966 212,405,078 198,010,966
Other 8,659,296 12,974,674 8,659,296 12,974,674
Total 165,856,477,863 132,285,880,305 164,489,285,837 131,660,368,354
4.21. Borrowing
The bank has offshore borrowing amounting USD 40 Mio. from International Financial Corporation(IFC), USD 6 Mio. from CDC Group,
London, USD 15 Mio. from Opec fund for International Development and NPR. 169.56 Mio. from Micro small and medium enterprises
bonds, S.A, Luxembourg.
Group NMB
Domestic Borrowing
Nepal Government - - - -
Other Institutions 1,795,616,200 1,301,841,701 - -
Other - - - -
Sub total 1,795,616,200 1,301,841,701 - -
Foreign Borrowing
Foreign Bank and Financial Institutions 5,655,060,000 3,416,310,000 5,655,060,000 3,416,310,000
Multilateral Development Banks 1,788,750,000 - 1,788,750,000 -
Other Institutions - - - -
Sub total 7,443,810,000 3,416,310,000 7,443,810,000 3,416,310,000
Total 9,239,426,200 4,718,151,701 7,443,810,000 3,416,310,000
4.22. Provisions
Group NMB
Provisions for redundancy - - - -
Provision for restructuring - - - -
Pending legal issues and tax litigation - - - -
Onerous contracts - - - -
Other 1,703,106 2,125,593 - -
Total 1,703,106 2,125,593 - -
4.22.1. Movement in provision
Group NMB
Balance at Sawan 1 2,125,593 73,556 - -
Provisions made during the year - 2,052,037 - -
Provisions used during the year - - - -
Provisions reversed during the year (422,488) - -
Unwind of discount - - - -
Balance at Asar end 1,703,106 2,125,593 - -
4.23. Other Liabilities
Group NMB
Liability for employees defined 122,644,988 113,307,933 104,982,941 95,134,118
benefit obligations
Liability for long-service leave 311,688,452 210,361,689 296,627,357 198,349,491
Short-term employee benefits 694,385 2,091,720 106,057 53,029
Bills payable 53,697,677 67,457,885 53,697,677 67,457,885
Creditors and accruals 2,509,586,717 2,865,580,074 2,057,113,935 1,769,190,932
Interest payable on deposit 549,324,600 599,471,919 549,324,600 599,471,919
Interest payable on borrowing 76,287,957 36,691,970 71,866,108 35,892,480
Liabilities on defered grant income - - - -
Unpaid Dividend 2,740,526 6,069,100 2,740,526 6,069,100
Liabilities under Finance Lease - - - -
Employee bonus payable 476,546,108 292,926,751 427,208,449 270,533,847
Others: - -
TDS Payable 123,602,701 127,784,903 121,673,291 125,790,318
Audit Fee Payable 1,258,075 1,484,075 1,118,700 1,344,700
Others 11,839,233 4,739,952 - -
Total 4,239,911,418 4,327,967,972 3,686,459,641 3,169,287,821
Audit Fee Payable of last year includes payable of audit fee of Erstwhile Om Development Bank also.
4.23.1. Defined benefit obligations

The defined-benefit obligation is calculated annually by an independent actuary using the projected unit method. The Bank operates a
defined contribution plan as provident fund contribution of its employees and defined benefit plan for the Gratuity payment requirement
under its staff rules. For defined contribution plan, the Bank pays contributions to an independently administered retirement fund
on a mandatory basis, and such amounts are charged to operating expenses. The Bank has no further payment obligations once
the contributions have been paid. For funded defined benefit plans, the liability recognised in the financial statement is the present
value of the defined benefit obligation less the fair value of plan assets. Such obligations are estimated on the basis of the actuarial
assumptions.
The amounts recognised in the statement of financial position are as follows:
Group NMB
Present value of unfunded obligations 352,848,719 257,601,675 325,753,811 230,785,294
Present value of funded obligations 523,572,672 394,047,064 512,771,171 394,047,064
Total present value of obligations 876,421,391 651,648,739 838,524,982 624,832,358
Fair value of plan assets 416,871,184 298,912,946 411,697,844 298,912,946
Present value of net obligations 435,215,214 325,919,412 426,827,138 325,919,412
Recognised liability for defined 876,421,391 651,648,739 838,524,982 624,832,358
benefit obligations
4.23.2. Plan assets
Group NMB
Plan assets comprise - - - -
Equity securities - - - -
Government bonds - - - -
Bank deposit 5,173,340
Other 411,697,844 298,912,946 411,697,844 298,912,946
Total 416,871,184 298,912,946 411,697,844 298,912,946
4.23.3. Movement in the present value of defined benefit obligations
Group NMB
Defined benefit obligations at Sawan 1 683,062,966 517,241,553 652,876,953 496,886,808
(including merger)
Actuarial losses 30,057,672 75,209,613 28,505,411 75,051,376
Benefits paid by the plan (17,516,228) (56,002,609) (12,761,560) (53,137,738)
Current service costs and interest 180,816,981 115,200,182 169,904,178 106,031,912
Defined benefit obligations at Asar end 876,421,391 651,648,739 838,524,982 624,832,358
4.23.4. Movement in the fair value of plan assets
Group NMB
Fair value of plan assets at Sawan 1 298,912,946 254,497,664 298,912,946 254,497,664
(including merger)
Contributions paid into the plan 100,504,135 59,445,250 95,134,118 59,445,250
Benefits paid during the year (7,193,638) (23,309,033) (6,737,987) (23,309,033)
Actuarial (losses) gains (6,536,333) 8,279,065 (6,423,012) 8,279,065
Expected return on plan assets 31,184,074 - 30,811,779 -
Fair value of plan assets at Asar end 416,871,184 298,912,946 411,697,844 298,912,946
4.23.5. Amount recognised in profit or loss
Group NMB
Current service costs 147,777,242 81,436,423 137,209,755 74,074,087
Interest on obligation 56,071,621 74,746,591 53,312,491 73,057,784
Expected return on plan assets (31,184,074) - (30,811,779) -
Total 172,664,789 156,183,014 159,710,467 147,131,871
4.23.6: Amount recognised in other comprehensive income
Group NMB
Acturial (gain)/loss 10,464,590 17,561,568 10,988,352 17,970,646
Total 10,464,590 17,561,568 10,988,352 17,970,646
4.23.7. Actuarial assumptions
Group NMB
Discount rate 9.00% 9.00% 9.00% 9.00%
Expected return on plan asset 9.00% - 9.00% -
Future salary increase 8.00% 7.00% 8.00% 7.00%
Withdrawal rate 16.00% 16.00% 16.00% 16.00%
The mortality table is considered as per Nepali Assured Lives Mortality (2009) issued by Beema Samiti.
There are no plan assets for the subsidiaries and the bank deposits the fund at the account maintained at CIT for gratuity payment as
per actuary report.
4.24. Debt securities issued
Group NMB
Debt securities issued designated as at fair - -
value through profit or loss
Debt securities issued at amortised cost 5,293,994,350 2,279,834,432 5,293,994,350 2,279,834,432
Total 5,293,994,350 2,279,834,432 5,293,994,350 2,279,834,432
The "7% NMB Debenture 2077" amounting to NPR 500 Million has matured in the fiscal year. The debenture has been presented
at amortized cost and includes NPR. 115,743,674 interest payable amount as on fiscal year end 2078. The details of outstanding
debentures are as follows:
Particulars Issued Date Expiry Date (BS) Rate Face Value (Mio.)
Energy Bond 20 Jestha 2078 20 Jestha 2093 4.00% 1,500
NMB Debenture 8.5% 11 Jestha 2078 11 Jestha 2088 8.50% 2,000
NMB Debenture 2085 29 Chaitra 2075 29 Chaitra 2085 10.00% 1,685
4.25. Subordinated Liabilities

The bank does not have any subordinate liabilities as on reporting date.
Group NMB
Redeemable preference shares - - - -
Irredemable cumulative preference shares - - - -
(liabilities component)
Other - - - -
Total - - - -
4.26. Share Capital
Group NMB
Ordinary shares 16,325,960,853 13,950,987,467 16,325,960,853 13,950,987,467
Convertible preference shares - - - -
(equity component only)
Irredemable preference shares - - - -
(equity component only)
Perpetual debt (equity component only) - - - -
Total 16,325,960,853 13,950,987,467 16,325,960,853 13,950,987,467
4.26.1. Ordinary shares
NMB
Authorized Capital
200,000,000 Ordinary share of Rs. 100 each 20,000,000,000 16,000,000,000
Issued capital
Subscribed and paid up capital
Total 16,325,960,853 13,950,987,467
The paid up share capital of the Bank has moved over the years as follows:
Cumulative Paid
Financial Year up Capital NPR Remarks
2006-07(2063-64 BS) 199,540,600 Issuance of 30% Bonus Shares
2007-08(2064-65 BS) 1,000,000,000 Issuance of 1:4 Right Shares
2008-09(2065-66 BS) 1,424,641,350 Issuance of 10% Bonus Shares and 30% Right Shares
2009-10(2066-67 BS) 1,651,650,000 Auction of 53,586.5 remaining right shares of FY 2008-09 and
public issue of 715,000 shares.
2010-11 (2067-68 BS) 2,000,000,000 Issuance of 10:21.09 right shares and auction of unsubscribed right shares.
2013-14 (2070-71 BS) 2,400,000,000 Issuance of 20% Bonus Shares
2015-16 (2072-73 BS) 4,154,559,320 Shares issued to shareholders of merged entities
2016-17 (2073-74 BS) 5,430,062,466 FMO’s additional investment of NPR 943,138,400
2017-18 (2074-75 BS) 7,603,290,634 Issuance of FPO
2018-19 (2075-76 BS) 9,618,162,652 Issuance of 15% Bonus Shares from FY 2073/74 and 10% Bonus Shares from FY 2074/75
2019-20 (2076-77 BS) 13,950,987,467 Issuance of 21% Bonus Shares from FY 2075/76 and addition of Capital from
merger with Erstwhile ODBL at SWAP ratio of 1:0.76
2020-21 (2077-78 BS) 16,325,960,853 Issuance of 13% Bonus Shares from FY 2076/77 and addition of Capital
from acquisition with Erstwhile KADBL at SWAP ratio of 1:0.85
Total fractional share is 93,624.52 as on Ashadh end 2078. Fraction share usually come from issue of bonus share and split of share
also.
4.26.2: Ordinary share ownership
NMB
Particulars Percent Amount Percent Amount
Domestic ownership 82.09 13,402,457,417 81.46 11,363,816,285
Nepal Government - - - -
"A" class licensed institutions - - - -
Other licensed intitutions - - - -
Other Institutions 10.48 1,710,231,733 11.42 1,593,733,511
Public 71.62 11,692,225,684 70.03 9,770,082,774
Other - - - -
Foreign ownership 17.91 2,923,503,436 18.54 2,587,171,182
Total 100.00 16,325,960,853 100.00 13,950,987,467
The details of shareholders holding shares above 0.5% as of Asar end 2078 are given below:
Shareholder's Name Share Units % holding

Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V. 22,353,015 13.69
Employees Provident Fund 9,022,868 5.53
Yong Lian Realty Sdn Bhd 6,882,018 4.22
Gayatri Investment And Management P. Ltd. 3,173,378 1.94
Nand Kishore Rathi 2,749,618 1.68
Dhananjaya Prasad Acharya 2,494,365 1.53
Sunil Kumar Goshali 1,690,655 1.04
Sushil Kumar Goshali 1,550,048 0.95
Pawan Kumar Golyan 1,508,206 0.92
Yogendra Lal Pradhan 1,488,090 0.91
Santosh Devi Murarka 1,297,086 0.79
Purushotam Lal Sanghai 1,187,948 0.73
Santosh Rathi 1,182,486 0.72
Balaram Neupane 882,915 0.54
Dinbandhu Agrawal 864,557 0.53
4.27. Reserves
Group NMB
Statutory general reserve 3,692,361,466 3,035,326,681 3,647,757,834 3,010,879,579
Exchange equilisation reserve 125,183,083 102,426,313 125,183,083 102,426,313
Corporate social responsibility reserve 28,417,988 24,394,685 27,110,737 23,390,919
Capital redemption reserve - - - -
Regulatory reserve 1,027,264,530 884,132,928 1,027,264,530 884,132,928
Investment adjustment reserve - 11,500,000 - 11,500,000
Capital reserve 87,664,500 603,656,544 87,664,500 603,656,544
Assets revaluation reserve - -
Fair value reserve 174,584,121 (10,109,962) 174,584,121 (10,109,962)
Dividend equalisation reserve - -
Debenture redemption reserve 23,395,903 500,000,000 23,395,903 500,000,000
Actuarial gain (80,412,611) (67,764,501) (79,793,480) (66,886,117)
Group NMB
Special reserve - - - -
Other reserves: - - - -
Deferred Tax Reserve - 11,445,500 - -
Capital Adjustment Fund 57,326,449 57,326,449 57,326,449 57,326,449
Staff Skill Development Fund 1,976,578 693,902 1,976,578 693,902
NMB Staff Relief Fund 10,000,000 10,000,000 10,000,000 10,000,000
Others 42,411,857 20,036,182 - -
Total 5,190,173,864 5,183,064,720 5,102,470,254 5,127,010,555
Other Reserves of NMB presented under Statement of change in equity includes debenture/capital redemption reserve, staff skill
development fund, capital adjustment fund, corporate social responsibility fund, investment adjustment reserve , actuarial gain/
losses, staff relief fund and Capital Reserve.
Staff Relief Fund amounting NPR. 10,000,000 has been set up with the objective to financially assisst staff at the time of their acute
financial difficulty of the nature of staff's own/spouse/children critical illness, permanent disability due to illness or destruction of
property due to natural calamity. The amount paid during the reporting period is NPR. 1.63 mio. The said reserve has been included
in Tier 2 Capital.
As per the requirement of NRB Merger bylaws, the difference of Swap Ratio Gain amounting to NPR 87.66 million from the merger
with erstwhile Kanchan Development Bank Limited has been transferred to Capital Reserve.
Regulatory reserve includes the amount that is allocated from profit or retained earnings fo the bank as per directive of NRB for the
purpose of implementation of NFRS and which shall not be regarded as free for distribution of dividend (cash as well as bonus shares).
The amount allocated to this reserve includes the following adjustments as per NFRS:
As at 31 Asar As at 31 Asar Transfer from Merger Transfer to Regulatory

Particulars 2078 (A) 2077 (B) Kanchan Dev. Bank Reserve (FY 2077/78)
Accrued Interest on Loans and Advances 636,757,862 492,537,377 35,268,278 108,952,206
recognized as Income
Provision of Non - Banking Assets 61,703,624 50,178,392 9,396,224 2,129,008
(Invesment Property)
Deferred Tax Assets 249,009,565 264,421,080 5,361,636 (20,773,151)
Actuary Losses 79,793,480 66,886,117 1,919,010 10,988,352
Fair value adjustment of Equity Shares - 10,109,962 4,845,166 (14,955,128)
Total 1,027,264,531 884,132,929 56,790,314 86,341,288
The bank has considered interest received up to 15 Bhadra 2078 amounting NPR. 125.53 Mio. as an income to Regulatory Reserve.
Aer change of Core Banking System, the interest on majority of risk assets portfolio are due as per English Calender due to which
approximately a fortnight’s interest income are also not realized as of fiscal year end 2078.
4.28. Contingent liabilities and commitments

Group NMB
Contingent liabilities 47,940,864,628 42,869,258,079 47,940,864,628 42,869,258,079
Undrawn and undisbursed facilities 80,442,929,940 66,135,471,847 80,442,929,940 66,135,471,847
Capital commitment 6,802,635 6,110,765 6,252,635 5,560,765
Lease Commitment - - - -
Litigation 283,697,717 205,357,253 283,697,717 205,357,253
Total 128,674,294,920 109,216,197,944 128,673,744,920 109,215,647,944
4.28.1. Contingent liabilities
Group NMB
Acceptance and documentary credit 27,978,304,465 21,057,495,997 27,978,304,465 21,057,495,997
Bills for collection 1,472,952,150 3,509,808,120 1,472,952,150 3,509,808,120
Forward exchange contracts - - - -
Guarantees 18,489,608,013 18,301,953,962 18,489,608,013 18,301,953,962
Underwriting commitment - - - -
Other commitments - - - -
Total 47,940,864,628 42,869,258,079 47,940,864,628 42,869,258,079
4.28.2. Undrawn and undisbursed facilities
Group NMB
Undisbursed amount of loans 10,399,922,950 9,307,661,920 10,399,922,950 9,307,661,920
Undrawn limits of overdras 10,171,745,294 7,082,681,029 10,171,745,294 7,082,681,029
Undrawn limits of credit cards 482,648,921 258,481,766 482,648,921 258,481,766
Undrawn limits of letter of credit 38,507,687,021 33,483,052,874 38,507,687,021 33,483,052,874
Undrawn limits of guarantee 20,880,925,754 16,003,594,259 20,880,925,754 16,003,594,259
Total 80,442,929,940 66,135,471,847 80,442,929,940 66,135,471,847
4.28.3 Capital commitments

Capital expenditure approved by relevant authority of the bank but provision has not been made in financial statements
Group NMB
Capital commitments in relation to Property and Equipment
Approved and contracted for 6,802,635 6,110,765 6,252,635 5,560,765
Approved but not contracted for - -
Sub total 6,802,635 6,110,765 6,252,635 5,560,765
Capital commitments in relation to Intangible assets
Approved and contracted for - - - -
Approved but not contracted for - -
Sub total - - - -
Total 6,802,635 6,110,765 6,252,635 5,560,765
4.28.4. Lease commitments
Group NMB
Operating lease commitments
Future minimum lease payments under non cancellable operating lease, where the bank is lessee
Not later than 1 year - - - -
Later than 1 year but not later than 5 years - - - -
Later than 5 years - - - -
Sub total - - - -
Group NMB
Finance lease commitments
Future minimum lease payments under non cancellable operating lease, where the bank is lessee
Not later than 1 year - - - -
Later than 1 year but not later than 5 years - - - -
Later than 5 years - - - -
Sub total - - - -
Grand total - - - -
The bank has not applied NAS 17 as all its agreements are cancellable lease agreement. The lease agreement is non-cancelable only
for the period of 3-6 months as either lessor or lessee can give notice for the said period and cancel the contract without significant
penalties
4.28.5. Litigation
a. Contingent of Tax
The bank has filed appeals at Supreme Court, Revenue Tribunal or Inland Revenue Department based on the stage of appeal against
amended assessment orders of various fiscal years issued by Large Taxpayers Office. The detail of the cases are given below:
Fiscal Year Status Disputed Tax Amount

NMB Bank Limited
FY 2063-64 Appealed to Supreme Court on 2070.11.15 for which the final decision is pending 35,792,290
FY 2064-65 Appealed to Supreme Court on 2071.09.24 for which the final decision is pending 30,016,600
FY 2066-67 Appealed to Revenue Tribunal against the decision of IRD on 2075.02.08 for which the final 38,169,978
decision is pending
decision is pending
FY 2068-69 Decision from Revenue Tribunal received on 2078.01.05 and is in the process to appealed in 5,891,178
Supreme Court against the decision of Revenue Tribunal
decision is pending
decision is pending
decision is pending
FY 2072-73 Appealed to IRD against the decision of LTO on 2077.10.06 for which the final decision is 13,596,804
pending
FY 2073-74 Final order letter of Sec 102 was issued by LTO on 2078.03.31 which was received on 37,576,008
2078.04.13 and is in process to for administrative review in IRD against the decision of LTO
Total 200,456,974
Erstwhile Clean Energy Development Bank Limited
decision is pending
decision is pending
decision is pending
decision is pending
Fiscal Year Status Disputed Tax Amount
decision is pending
FY 2072-73 Appealed to IRD for Administrative review on 2077.11.20 for which decision is pending 83,565
Total 55,201,460
Erstwhile Prudential Finance Company Limited
FY 2065-66 Appealed to IRD for Administrative Review on 2070.07.29 for which the final decision is 5,659,272
pending
Total 5,659,272
Erstwhile Bhrikuti Development Bank Limited
FY 2071-72 Appealed to IRD for Administrative Review on 2076.04.07 for which final decision is pending 224,862
Total 224,862
Erstwhile OM Development Bank Limited
Various Years Decisions pending at various appelate authority previous fiscal year 5,043,705
FY 2072-73 Appealed to IRD for Administrative review on 2077.08.15 for which decision is pending 15,814,716
Total 20,858,421
Erstwhile OM Finance Limited
FY 2072-73 Decision from IRD has been received on 2078.03.25 and is in process to appealed to 1,312,453
Revenue Tribunal against the decision of IRD
Grand Total 283,697,717
Since decisions for these cases are pending, disputed tax amount of NPR 283,697,717 mentioned above has been disclosed as
contingent liability on Income Tax and no provision for additional liability has been made.
As of the fiscal year end 2077/78, self-Assessment Returns filed by NMB Bank Ltd. for FY 2074/75 to 2076/77, erstwhile Bhrikuti
Development Bank Ltd. for FY 2072/73, erstwhile Manaslu Bikas Bank for FY 2073/74, erstwhile OM finance for 2072/73, erstwhile
Kanchan Development Bank for 2073/74 to 2077/78 and Om Development Bank for 2073/74 to 2076/77 are yet to be reassessed by
Large Tax Payers Office.
b. In the second quarter of FY 2015/16, the Bank had purchased land with an area of 80 Annas (2,543 sq meter) for NPR 590 Million
in Kamaladi, Kathmandu. The land was bought through auction process involving four financial institutions. The previous owner of
property has filed case in Kathmandu District Court for repeal of auction process.
4.29. Interest income

"Interest income include interest income on loan and advance, investment securities except on those investment securities measure at
fair value through profit or loss, cash and cash equivalent, due from BFIs, loan and advances to staff, etc. Details presented as follows:
Group NMB
Cash and cash equivalent 11,622,024 1,580,681 11,664,190 35,149,953
Due from Nepal Rastra Bank - - - -
Placement with bank and financial 89,668,769 194,643,447 89,668,769 194,643,447
institutions
Loan and advances to bank and 248,378,638 457,196,556 304,653,162 457,196,556
financial institutions
Loans and advances to customers 13,350,867,567 13,600,017,918 12,628,297,896 13,023,073,302
Investment securities 756,741,862 626,305,260 733,049,568 563,931,081
Loan and advances to staff 200,537,849 140,904,138 200,537,849 140,904,138
Other 15,822,099 28,074,090 15,822,099 28,074,090
Total interest income 14,673,638,809 15,048,722,089 13,983,693,533 14,442,972,567
As per NRB Interest Income Recognition Guideline, the interest amount of NPR. 130,916,836 has been reversed and credited to
Interest Suspense during the reporting period.
4.30. Interest expense

Interest expenses include interest accrued on deposits collected and debt securities issued. Details presented as follows:
Group NMB
Due to bank and financial institutions 31,089,787 38,024,135 31,089,787 38,024,135
Due to Nepal Rastra Bank 45,315,382 21,444,624 45,315,382 21,444,624
Deposits from customers 7,915,434,666 8,469,829,909 7,869,085,081 8,484,734,463
Borrowing 308,803,427 414,844,655 169,762,214 198,652,125
Debt securities issued 207,781,769 203,897,305 207,781,769 203,897,305
Subordinated liabilities - - - -
Other - - - -
Total interest expense 8,508,425,030 9,148,040,628 8,323,034,232 8,946,752,652
4.31. Fees and Commission Income
Group NMB
Loan administration fees - - - -
Service fees 724,047,362 548,406,302 432,020,093 405,316,696
Consortium fees 22,153,544 14,074,520 22,153,544 14,074,520
Commitment fees 572,110 2,815,456 572,110 2,815,456
DD/TT/Swi fees 24,034,960 17,176,250 24,034,960 17,176,250
Credit card/ATM issuance and renewal fees 100,242,701 41,600,703 100,242,701 41,600,703
Prepayment and swap fees 11,021,137 16,505,304 11,021,137 16,505,304
Investment banking fees - - - -
Asset management fees - - - -
Brokerage fees - - - -
Remittance fees 28,660,830 17,769,538 28,660,830 17,769,538
Commission on letter of credit 84,384,564 70,367,397 84,384,564 70,367,397
Commission on guarantee contracts issued 205,905,890 173,388,655 205,905,890 173,388,655
Commission on share underwriting/issue - - - -
Locker rental 6,297,815 1,974,785 6,297,815 1,974,785
Other fees and commission income:
Bills Purchase and Discount - - - -
Collection Fee 7,329,117 9,001,833 7,329,117 9,001,833
Agency Commission 12,280,185 12,436,389 12,280,185 12,436,389
Others 249,901,199 135,156,418 242,739,000 131,942,197
Total fees and Commission Income 1,476,831,413 1,060,673,551 1,177,641,945 914,369,723
4.32. Fees and commission expense
Group NMB
ATM management fees 33,107,322 45,711,508 33,107,322 45,711,508
VISA/Master card fees 31,830,379 24,356,072 31,830,379 24,356,072
Guarantee commission - - - -
Brokerage - - - -
DD/TT/Swi fees 11,175,334 10,054,966 11,175,334 10,054,966
Remittance fees and commission - - - -
Other fees and commission expense 61,911,731 27,794,736 61,911,731 27,794,736
Total fees and Commission Expense 138,024,766 107,917,283 138,024,766 107,917,283
4.33. Net trading income

Group NMB
Changes in fair value of trading assets 7,560 - - -
Gain/loss on disposal of trading assets - - - -
Interest income on trading assets - - - -
Dividend income on trading assets - - - -
Gain/loss foreign exchange transation 364,108,314 384,157,101 364,108,314 384,157,101
Other - - - -
Net trading income 364,115,874 384,157,101 364,108,314 384,157,101
4.34. Other operating income

Group NMB
Foreign exchange revauation gain 91,027,079 96,039,275 91,027,079 96,039,275
Gain/loss on sale of investment securities 163,447,236 2,459,519 163,447,236 2,455,619
Fair value gain/loss on investment properties - - - -
Dividend on equity instruments 88,902,394 91,145,792 87,631,427 89,339,371
Gain/loss on sale of property and equipment (2,945,052) 9,439,585 (2,945,052) 9,439,585
Gain/loss on sale of investment property 495,500 2,084,605 495,500 2,084,605
Operating lease income - - 2,586,186 2,390,263
Gain/loss on sale of gold and silver 9,731,289 4,976,946 9,731,289 4,976,946
Other 19,376,799 11,926,267 - 8,639,128
Total 370,035,244 218,071,990 351,973,665 215,364,793
4.35. Impairment charge/(reversal) for loan and other losses

Group NMB
Impairment charge/(reversal) on loan and 19,555,270 7,151,814 19,555,270 7,151,814
advances to B/FIs
Impairment charge/(reversal) on loan and 390,671,689 1,673,663,414 362,855,123 1,620,467,174
advances to customer
Impairment charge/(reversal) on financial Investment - 1,630,787 - -
Impairment charge/(reversal) on placement with - (453,753) - (453,753)
banks and financial institutions
Impairment charge/(reversal) on property and - - - -
equipment
Impairment charge/(reversal) on goodwill and - - - -
intangible assets
Impairment charge/(reversal) on investment - - - -
properties
Total 410,226,959 1,681,992,262 382,410,393 1,627,165,235
4.36. Personnel Expense

Group NMB
Salary 687,841,510 628,711,999 608,197,151 549,995,858
Allowances 602,362,100 532,581,665 522,555,380 455,440,643
Gratuity expense 79,895,646 72,375,157 72,265,594 67,077,930
Provident fund 66,286,537 57,295,205 58,874,776 50,334,782
Uniform - - - -
Training & development expense 15,422,147 20,065,407 10,860,188 17,390,917
Leave encashment 179,541,914 159,476,821 170,222,163 153,328,829
Sick Leave Expenses 43,846,837 29,970,268 40,669,139 27,478,836
Leave Fare Expenses 88,540,499 76,589,203 82,777,290 73,274,888
Home Leave Expenses 47,154,578 52,917,350 46,775,734 52,575,105
Medical - - - -
Insurance 1,564,549 784,165 - -
Employees incentive 105,622,500 - 104,022,500 -
Cash-settled share-based payments - - - -
Pension expense - - - -
Finance expense under NFRS 96,133,269 56,797,451 96,133,269 56,797,451
Other expenses related to staff 20,069,805 28,901,783 19,364,809 26,597,664
Recruitment and Selection Expenses - - - -
Staff Welfare Expenses 20,069,805 28,901,783 19,364,809 26,597,664
Subtotal 1,854,739,976 1,556,989,653 1,662,495,830 1,376,964,074
Employees bonus 475,508,422 291,466,360 427,208,449 270,533,847
Grand total 2,330,248,399 1,848,456,013 2,089,704,278 1,647,497,921
4.37. Other operating expense
Group NMB
Directors' fee 2,763,605 3,081,700 1,840,605 2,212,400
Directors' expense 1,463,596 2,489,072 1,328,682 2,401,145
Auditors' remuneration 1,468,644 1,531,676 1,118,700 1,118,700
Other audit related expense 758,575 1,135,882 76,500 373,656
Professional and legal expense 8,540,398 9,886,320 4,570,416 5,580,140
Office administration expense 642,873,992 724,899,399 594,430,600 682,280,446
Operating lease expense 222,179,795 195,651,271 205,428,058 180,467,776
Operating expense of investment properties - - - -
Corporate social responsibility expense 26,628,276 42,728,640 26,628,276 42,725,660
Onerous lease provisions - - - -
Others 53,941,912 16,754,945 18,326,927 18,413,993
Total 960,618,793 998,158,904 853,748,763 935,573,915
4.37.1. Office administration expense
Group NMB
Water and Electricity 40,458,458 39,312,029 39,074,481 38,116,695
Repair and Maintenance
a) Building 247,890 919,943 247,890 919,943
b) Vehicles 5,155,470 4,731,141 4,877,870 4,503,925
c) Computer and Accessories 4,416,573 2,512,913 4,416,573 2,489,253
d) Office Equipment and Furniture 5,730,198 5,366,902 5,615,661 5,307,001
e) Others 3,935,403 5,414,717 3,503,774 4,128,539
Insurance 38,370,364 39,082,371 38,108,222 30,706,670
Postage, Telex, Telephone, Fax 79,386,102 78,559,687 76,381,144 75,768,102
Printing and Stationery 49,053,053 51,374,997 45,135,062 48,068,473
Newspaper, Books and Journols 87,632 618,408 61,673 569,582
Advertisements 46,149,668 125,971,482 45,669,017 123,565,253
Donations - 5,000 - -
Security Expenses 101,125,308 123,876,724 100,549,129 123,320,298
Deposit Guarantee Expenses 42,405,264 31,300,005 42,405,264 31,300,005
Travelling Allowances and Expenses 16,202,690 24,626,811 5,741,734 16,811,543
Entertainment - - - -
Annual/special general meeting Expenses 1,259,153 4,049,493 986,738 3,467,007
Others 208,890,766 187,176,777 181,656,370 173,238,157
Business Promotion 15,936,408 11,599,733 15,500,601 11,599,733
Membership Fee 13,191,508 11,352,487 12,270,458 10,139,437
Bank Charges and Commission 352,543 634,120 345,980 626,860
Rates and Taxes 11,266,191 9,021,402 9,434,053 8,262,801
IS Audit-Compliance Expenses 1,016,012 3,349,320 1,016,012 3,349,320
Dematerialization Expenses - 2,616,661 - 2,616,661
Issue And Surveillance Expenses 33,493,865 17,642,382 17,521,491 13,530,200
Merger Expenses 296,053 2,764,516 296,053 2,764,516
Group NMB
Office Expenses 59,347,707 63,350,029 58,538,374 62,575,372
Vehicle fuel 32,420,700 27,121,790 32,079,510 26,767,147
Outsource Staff Expenses 41,569,779 37,724,336 34,653,837 31,006,109
Total 642,873,992 724,899,399 594,430,600 682,280,446
4.38. Depreciation & Amortisation

"Depreciation is the systematic allocation of the depreciable amount of an asset over its useful life while amortization is the systematic
allocation of the depreciable amount of an intangible asset over its useful life. Depreciation and amortization include depreciation on
plant and equipment & amortization of intangible assets.
Group NMB
Depreciation on property and equipment 239,981,505 218,056,140 230,395,793 207,757,571
Depreciation on investment property - - - -
Amortisation of intangible assets 39,734,851 34,363,759 39,082,351 33,925,800
Total 279,716,356 252,419,899 269,478,145 241,683,371
4.39. Non operating income

"The incomes that have no direct relationship with the operation of transactions are presented as under.
Group NMB
Recovery of loan written off 39,071,786 18,512,709 39,071,786 18,512,709
Other income 1,292,951 1,906,401 - -
Total 40,364,736 20,419,110 39,071,786 18,512,709
4.40. Non operating expense

The expense that has no direct relationship with the operation of transactions are presented as under.
Group NMB
Loan written off 15,212,626 33,981,887 15,212,626 33,981,887
Redundancy provision - - - -
Expense of restructuring - - - -
Other expense - - - -
Total 15,212,626 33,981,887 15,212,626 33,981,887
4.41. Income tax expense
The bank has calculated Income Tax as per Income Tax Act, 2058.
Group NMB
Current tax expense 1,316,433,283 782,188,888 1,185,623,109 725,589,473
Current year 1,313,623,719 775,146,443 1,182,813,545 718,547,028
Adjustments for prior years 2,809,564 7,042,445 2,809,564 7,042,445
Deferred tax expense (53,276,748) 92,660 (51,820,778) (3,561,365)
Origination and reversal of temporary differences (53,276,748) 92,660 (51,820,778) (3,561,365)
Changes in tax rate - - - -
Recognition of previously unrecognised tax losses - - - -
Total income tax expense 1,263,156,535 782,281,548 1,133,802,331 722,028,108
4.41.1: Reconciliation of tax expense and accounting profit
Group NMB
Profit before tax 4,282,513,147 2,661,076,966 3,844,876,039 2,434,804,629
Tax amount at tax rate of 30% 1,284,753,944 798,323,090 1,153,462,812 730,441,389
Add: Tax effect of expenses that are not deductible 352,740,948 711,794,217 352,038,610 716,946,215
for tax purpose
Less: Tax effect on exempt income 13,037,121 14,873,820 13,037,121 14,873,820
Add/less: Tax effect on other items 361,138,233 712,961,939 358,661,970 710,485,676
Less: Tax effect of expenses allowed/Income that 326,539,440 684,588,436 324,063,177 682,112,173
are not allowed for tax purpose
Less: Tax effect of carried forward losses 34,598,793 28,373,503 34,598,793 28,373,503
Total income tax expense 1,263,319,538 782,281,548 1,133,802,331 722,028,108
Effective tax rate 29.50% 29.40% 29.49% 29.65%
NMB Bank Ltd.

Unaudited Financial Results (Quarterly)
Fourth Quarter ended of Fiscal Year 2020-21 (FY 2077/2078)
Rs. in '000'
Immediate Previous Year

Particulars This Quarter Ending Ending (Audited)
Assets
Cash and cash equivalent 12,433,017 11,098,349
Due from Nepal Rastra Bank 19,218,519 15,249,999
Placement with Bank and Financial Institutions 2,717,149 3,304,234
Derivative financial instruments 17,161,392 10,066,296
Other trading assets 2,660 266,890
Loan and advances to B/FIs 5,210,215 4,665,865
Loans and advances to customers 150,998,435 115,668,473
Investment securities 18,907,214 14,998,756
Current tax assets 98,487 61,461
Investment in susidiaries 372,488 372,488
Investment in associates - -
Investment property 97,942 79,648
Property and equipment 1,741,915 1,755,794
Goodwill and Intangible assets 112,949 125,849
Deferred tax assets 248,887 264,421
Other assets 2,224,721 1,473,393
Total Assets 231,545,990 179,451,915
Liabilities
Due to Bank and Financial Instituions 2,045,653 3,150,015
Due to Nepal Rastra Bank 7,597,982 4,832,502
Derivative financial instruments 17,127,036 10,008,213
Deposits from customers 164,408,149 131,660,368
Borrowing 7,443,810 3,416,310
Provisions - -
Deferred tax liabilities - -
Other liabilities 3,673,447 3,169,288
Debt securities issued 5,293,994 2,279,834
Subordinated Liabilities - -
Total liabilities 207,590,071 158,516,530
Equity -
Share capital 16,325,961 13,950,987
Share premium - 120,167
Retained earnings 2,247,129 1,737,220
Reserves 5,382,830 5,127,011
Total equity attributable to equity holders 23,955,919 20,935,385
Non-controlling interest - -
Total equity 23,955,919 20,935,385
Total liabilities and equity 231,545,990 179,451,915
Up to Corrosponding Previous
Particulars Up to this Quarter Year Quarter (Audited)
Interest income 14,001,572 14,442,973
Interest expense 8,323,034 8,946,753
Net interest income 5,678,537 5,496,220
Fees and Commission Income 1,176,850 914,370
Fees and commission expense 138,075 107,917
Net fee and commission income 1,038,776 806,452
Net interest, fee and commission income 6,717,313 6,302,672
Net trading income 364,108 384,157
Other operating income 359,349 215,365
Total operating income 7,440,771 6,902,194
Impairment charge/(reversal) for loans and other losses 382,355 1,627,165
Net operating income 7,058,416 5,275,029
Operating expense
Personnel expenses 2,096,709 1,647,498
Other operating expenses 858,510 935,574
Depreciation & Amortisation 269,070 241,683
Operating Profit 3,834,127 2,450,274
Non operating income 39,072 18,513
Non operating expense 15,213 33,982
Profit before income tax 3,857,986 2,434,805
Income tax expense -
Current Tax 1,179,090 725,589
Deferred Tax expense/(Income) (51,698) (3,561)
Profit for the period 2,730,594 1,712,777
Condensed Consolidated Statement of Comprehensive Income
Profit/Loss for the period 2,730,594 1,712,777

Other Comprehensive lncome 174,739 16,409
Total Comprehensive lncome 2,905,333 1,729,185
Statement showing Net Profit aer Regulatory Adjustments
Net Profit for the period ended 31 Asadh 2078 2,730,594

Profit required to be appropriated to statutory reserve (218,892)
Profit required to be transfer to Regulatory Reserve (176,909)
Net Profit for the period ended 31 Asar 2078 2,334,793
available for distribution
Up to Corrosponding
Ratios Upto This Quarter (YTD) Previous Year Quarter
Capital fund to RWA 15.09% 15.08%
Non performing loan (NPL) to toal loan 2.27% 2.68%
Total loan loss provision to Total NPL 131.88% 125.35%
Cost of Funds (YTD) 5.79% 6.99%
CCD Ratio 77.06% 72.68%
Base Rate 7.33% 8.95%
Average Interest Spread (Calculated as per NRB Directives) - 3.09% 4.05%
Last Month of Quarter
Up to Corrosponding
Ratios Upto This Quarter (YTD) Previous Year Quarter
Additional Informations:
Average Yield (YTD Average) 8.71% 10.67%
Return on Equity (Annualized) 12.01% 8.94%
Return on Assets (Annualized) 1.31% 1.09%
PE Ratio (Annualized) 26.22 31.45
Net-Worth per share (NPR) 146.74 150.06
Assets per share (NPR) 1,418.27 1,286.30
Liquidity Ratio (NLA) 27.52% 27.33%
92
NMB Bank Ltd.
Unaudited Financial Results (Quarterly)
Fourth Quarter ended of Fiscal Year 2020-21 (FY 2077/2078)
Rs. in '000'
Variance
As per unaudited As per Audited
Statement of Financial Position Financial Statement Financial Statement In Amount In % Reasons for Variance
Assets
Cash and cash equivalent 12,433,017 13,887,371 1,454,353 11.70% Due to re-classification from Investment Securities
Due from Nepal Rastra Bank 19,218,519 19,218,506 (14) 0.00% Due to change in Receivables
Placement with Bank and Financial Institutions 2,717,149 2,717,149 - 0.00%
Derivative financial instruments 17,161,392 17,161,392 (0) 0.00%
Other trading assets 2,660 2,660 - -
Loan and advances to B/FIs 5,210,215 5,194,471 (15,745) -0.30% Due to re-classification
Loans and advances to customers 150,998,435 151,014,124 15,689 0.01% Due to re-classification
Investment securities 18,907,214 17,453,563 (1,453,651) -7.69% Due to re-classification to cash and cash
equivalents
Current tax assets 98,487 92,746 (5,741) -5.83% Due to change in current tax
Investment in susidiaries 372,488 372,488 -
Investment in associates - - - -
Investment property 97,942 97,942 (0) 0.00%
Property and equipment 1,741,915 1,741,915 0 0.00%
Goodwill and Intangible assets 112,949 112,541 (409) -0.36% Due to change in amrotization
Deferred tax assets 248,887 249,010 123 0.05% Due to change in tax subsequently
Other assets 2,224,721 2,230,983 6,263 0.28% Due to re-classification
Total Assets 231,545,990 231,546,858 868 0.00%
Liabilities
Due to Bank and Financial Instituions 2,045,653 1,964,516 (81,137) -3.97% Due to re-classification
Due to Nepal Rastra Bank 7,597,982 7,597,982 0 0.00%
Derivative financial instruments 17,127,036 17,127,036 - 0.00%
Deposits from customers 164,408,149 164,489,286 81,137 0.05% Due to re-classification
Borrowing 7,443,810 7,443,810 - 0.00%
Current Tax Liabilities - - - 0.00%
Provisions - - - 0.00%
Deferred tax liabilities - - -
Other liabilities 3,673,447 3,686,460 13,013 0.35% Due to change in sundry creditor and
reclassification
Debt securities issued 5,293,994 5,293,994 (0.00) 0.00%
Subordinated Liabilities - - -
Total liabilities 207,590,071 207,603,084 13,013 0.01%
Equity - -
Share capital 16,325,961 16,325,961 0 0.00%
Share premium - - - 0.00%
Retained earnings 2,247,129 2,515,343 268,215 11.94% Due to change in profit, recognition of interest
income in retained earning till Bhadra 15, 2078
and non appropriation of Debenture redemption
reserve as per NRB Directives.
Reserves 5,382,830 5,102,470 (280,360) -5.21% Due to change in profit, recognition of interest
income in retained earning till Bhadra 15, 2078
and non appropriation of Debenture redemption
reserve as per NRB Directives.
Total equity attributable to equity holders 23,955,919 23,943,774 (12,145) -0.05%
Non-controlling interest - - -
Total equity 23,955,919 23,943,774 (12,145) -0.05%
Total liabilities and equity 231,545,990 231,546,858 868 0.00%
Variance (Rounded Off)

Statement of Profit or Loss Financial Statement Financial Statement In Amount In % Reasons for Variance
Interest income 14,001,572 13,983,694 (17,878) 0% Due to Interest Reversal (NRB Guidelines) and
booking of interest waiver as per NRB Directives
Interest expense 8,323,034 8,323,034 0 0%
Net interest income 5,678,537 5,660,659 (17,878) 0%
Fees and Commission Income 1,176,850 1,177,642 791 0% Due to booking of related fiscal year misc. income
Fees and commission expense 138,075 138,025 (50) 0% Due to booking of related fiscal year expenses
subsequently
Net fee and commission income 1,038,776 1,039,617 841 0%
Net interest, fee and commission income 6,717,313 6,700,276 (17,037) 0%
Net trading income 364,108 364,108 (0) 0%
93
94
Variance (Rounded Off)
Statement of Profit or Loss Financial Statement Financial Statement In Amount In % Reasons for Variance
Other operating income 359,349 351,974 (7,376) -2% Due to reclassification of Income (OCI gain on sale
of shares)
Total operating income 7,440,771 7,416,358 (24,412) 0%
Impairment charge/(reversal) for loans and other 382,355 382,410 55 0% Due to additional provision
losses
Net operating income 7,058,416 7,033,948 (24,468) 0%
Operating expense
Personnel expenses 2,096,709 2,089,704 (7,004) 0% Due to change in Staff Bonus and adjustment of
staff expense provision
Other operating expenses 858,510 853,749 (4,761) -1% Due to adjustment of provision
Depreciation & Amortisation 269,070 269,478 409 0% Due to change in amortization
Operating Profit 3,834,127 3,821,017 (13,110) 0%
Non operating income 39,072 39,072 - 0%
Non operating expense 15,213 15,213 (0) 0%
Profit before income tax 3,857,986 3,844,876 (13,110) 0%
Income tax expense - -
Current Tax 1,179,090 1,185,623 6,533 1% Due to change in Profit and Income Tax.
Deferred Tax expense/(Income) (51,698) (51,821) (123)
Profit for the period 2,730,594 2,711,074 (19,521) -1% Due to above reasons
Other Comprehensive Income 174,739 174,739 - 0%
Total Comprehensive Income 2,905,333 2,885,813 (19,521) -1%
Distributable Profit
Net profit/(loss) as per profit or loss 2,730,594 2,711,074 (19,521) -1%
Add/Less: Regulatory adjustments as per (395,801) (167,553) 228,248 58% Due to change in profit, recognition of interest
NRB Directive income in retained earning till Bhadra 15, 2078 and
non appropriation of Debenture redemption reserve
as per NRB Directives.
Profit/(loss) aer regulatory adjustments 2,334,793 2,543,521 208,728 9%
Significant Accounting Policies

Financial Year 16 July 2020 to 15 July 2021 (1 Shrawan 2077 to 31 Asar 2078)
1. General Information
1.1. Reporting Entity
NMB Bank Limited (hereinaer referred to as “the Bank”) is a limited liability company domiciled in Nepal. The registered office of the
Bank is G.P.O. Box 11543, Babar Mahal, Kathmandu, Nepal. The Bank has a primary listing in the Nepal Stock Exchange Limited, the
only Stock Exchange in Nepal.
The Bank carries out commercial banking activities in Nepal licensed under the Bank and Financial Institutions Act, 2006 as Class A
financial institution in May 2008 and has been operating in the Nepalese Financial market for over twenty five years.
1.2. Subsidiary
a. NMB Capital Ltd. (NMBCL) is a 100% subsidiary company of the Bank and was incorporated on September 17, 2010 as a public
limited company as per the Companies Act 2063. It is into Merchant and investment banking licensed by Securities Board of
Nepal under the Securities Businessperson (Merchant Banker) Regulations, 2008.
b. NMB Laghubitta Bittiya Sanstha Ltd. (NMBMF) is incorporated as a public limited company under Companies Act, 2063 and
licensed by Nepal Rastra Bank as “D” Class financial institution having Nation Wide working area to operate its microfinance
program under Bank and Financial Institution Act 2006. As at the Balance Sheet date, the bank holds 51% controlling interest in
the NMBMF.
The financial year of both of the subsidiaries is same as that of the Bank ending on July 15, 2021
1.3. “The Group” represents The Bank and the subsidiaries.
1.4. Approval of financial statement

The consolidated financial statements of the group for the year ended 15 July 2021 have been authorized by the Board of directors
dated 29 October, 2021 and have recommended for its approval by the forthcoming Annual General Meeting.
2. Summary of Significant Accounting Policies

The principal accounting policies applied in the preparation of the financial statements of the Bank are set out below. Unless otherwise
stated, these policies have been consistently applied to all the years presented herein.
2.1. Basis of preparation

The Consolidated Financial Statements have been prepared in accordance with the Nepal Financial Reporting Standard (NFRS) (except
NFRS 3) issued by the Nepal Accounting Standards Board (NASB) except otherwise stated in the format issued by Nepal Rastra Bank
in Directive No. 4 of NRB Directives, 2077 complying with the requirements of Companies Act 2063 and also provide appropriate
disclosures required under regulations of the Securities Exchange Board of Nepal (SEBON). The financial statements have been
prepared in accordance with the accrual basis.
The cash flow statement has been prepared using the direct method whereby operating profit is adjusted for effects of non-cash
transactions such as depreciation and loan losses. The cash flows are classified by operating, investing and financing activities.
The Group has opted for some certain carve outs which are briefly described in Notes to Accounts. As a consequence of carve out
adjustments, net profit would have been impacted.
In preparing the Consolidated Financial Statement, the financial statements of the Bank and the Subsidiary are combined line by line
by adding together Assets, Liabilities, Equity, Income and Expenses. The consolidated financial statements have been prepared in
accordance with Nepal Financial Reporting Standards 10 “Consolidated Financial Statements”.
Para 8 of NFRS 10 outlines three conditions to be fulfilled in order to establish control:

a) Power over the investee;
b) Exposure, or rights, to variable returns from its involvement with the investee; and
c) The ability to use its power over the investee to affect the amount of the investor’s returns
Non-Controlling Interest (NCI) refers to ownership of a company, which does not give the shareholder the control of the company.
2.2. Going Concern

The Board of Directors have made an assessment of Bank’s ability to continue as a going concern and are satisfied that it has the
resources to continue in business for the foreseeable future. Furthermore, the board is not aware of any material uncertainties that
may cast significant doubt upon Bank’s ability to continue as a going concern and they do not intend either to liquidate or to cease
operations of it. Hence, the Financial Statements are continued to be prepared on the going concern basis.
2.3. Responsibility for Financial Statements

As stated in paragraph 6 of NAS 01 “Presentation of Financial Statements” read along with Section 108(2) of the Company Act, 2006
the Board of Directors is responsible for the preparation of financial statements of the Bank. The Board of Directors acknowledges this
responsibility. The Financial statements include the following components:
a) Consolidated Statement of Financial Position(SOFP) stating the financial position of the Bank and the Group as at the end of
reporting period;
b) Consolidated Statement of Profit and Loss (SOPL) and Consolidated Statement of Other Comprehensive Income (SOCI) stating
the financial performance of the Bank and the Group for the reported period ended.
c) Consolidated Statement of Cash Flow Statement (SOCF) stating the ability of Bank and the Group to generate Cash and Cash
Equivalent.
d) Consolidated Statement of Changes in Equity (SOCE) stating all the changes in Equity of the Bank and the Group during the
reporting period.
e) Notes to the Consolidated Financial Statements comprising summary of Principal Accounting Policies and explanatory notes
that are of significant importance to the users of Financial Statements.
2.4. Reporting Period

The Bank follows the Nepalese financial year based on the Nepalese calendar. The corresponding dates for the English calendar are
as follows:
Relevant Financial Statement Nepalese Calendar Date/Period English Calendar Date/Period

Consolidated Statement of Financial Position 31 Ashad 2078 15 July 2021
Consolidated Statement of Profit/Loss 1 Shrawan 2077 to 31 Ashad,2078 16 July 2020 to 15 July 2021
Consolidated Statement of Other Comprehensive Income 1 Shrawan 2077 to 31 Ashad,2078 16 July 2020 to 15 July 2021
Consolidated Statement of Cash flow 1 Shrawan 2077 to 31 Ashad,2078 16 July 2020 to 15 July 2021
Consolidated Statement of Changes in Equity 1 Shrawan 2077 to 31 Ashad,2078 16 July 2020 to 15 July 2021
2.5. Foreign Exchange Transactions

Assets and liabilities denominated in foreign currencies as on the balance sheet date have been converted into local currency at mid-
point exchange rates published by Nepal Rastra Bank aer adjustment for effective trading rate.
Net difference arising from the conversion of foreign currency assets and liabilities is accounted for as revaluation gain/loss under
Exchange Gain in Schedule 4.34. 25% of such revaluation gain is transferred to Exchange Fluctuation Reserve through Statement of
Change in Equity as per NRB Directives.
Income realised from the difference between buying and selling rates of Foreign Exchange is accounted for as trading gains and shown
as “Gain/loss foreign exchange transaction” under “Net Trading Income” in Schedule 4.33
2.6. Functional and presentation currency

The Consolidated financial statements are presented in Nepalese Rupees (NPR), the functional currency of Group entities. The
Consolidated financial statements are prepared in the formats implemented by Nepal Rastra Bank and the assets and liabilities are
presented in the order of liquidity in the statement of financial position. The Income and expenses are classified ‘by nature’ in the
presentation of statement of profit or loss. All figures in the accounts have been rounded and consequently the sum of individual
figures may deviate from the presented sum figure. Furthermore, all percentages are subject to possible rounding differences.
2.7. Significant accounting judgements and estimates

As part of the process of preparing the financial statements in conformity with NFRS, the Bank’s management is required to make
certain judgements, estimates and assumptions that may affect the Bank’s profits, its financial position and other information presented
in the Annual Report. These estimates are based on available information and the judgements made by the Bank’s management.
Actual outcomes may deviate from the assessments made, and such deviations may at times be significant.
The Bank uses various valuation models and techniques to estimate the fair values of assets and liabilities. There are significant
uncertainties related to these estimates and these estimates are highly dependent on market data, such as the level of interest rates,
currency rates and other factors. The uncertainties related to these estimates are reflected mainly in the statement of financial position.
The bank undertakes continuous development in order to improve the basis for fair value estimates, with regard to both modelling
and market data. Changes in estimates resulting from refinements in assumptions and methodologies are reflected in the period in
which the enhancements are first applied. Judgements and estimates are also associated with impairment testing of loans and claims.
2.8. Change in Accounting Policies
The bank has changed its accounting policies when required, to ensure compliance with NFRS. The effect of change in accounting
policies at the date of transition has been given to the retained earnings (and reserves, if applicable)
2.9. Materiality and Aggregation

In compliance with Nepal Accounting Standard - NAS 01 (Presentation of Financial Statements), each material class of similar items
is presented separately in the Financial Statements. Items of dissimilar nature or functions too are presented separately unless they
are immaterial. Financial Assets and Financial Liabilities are offset and the net amount reported in the Statement of Financial Position
only when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or to
realize the assets and settle the liability simultaneously. Income and expenses are not offset in the Statement of Profit or Loss unless
required or permitted by an Accounting Standard.
2.10. New Standards in Issue but not yet effective

For the reporting of financial instruments, NAS 32 Financial Instruments, Presentation, NAS 39 Financial Instruments Recognition and
Measurements and NFRS 7 Financial Instruments – Disclosures have been applied. NRFS 9 has been complied for the classification of
Financial Instruments. A number of new standards and amendments to the existing standards and interpretations have been issued
by IASB aer the pronouncements of IFRS with varying effective dates. Those become applicable when ASB Nepal incorporates them
within NFRS.
The Institute of Chartered Accountants of Nepal (ICAN) has pronounced Nepal Financial Reporting Standards 2018 (NFRS 2018) on 11
Ashad 2077. Accordingly, some new standards have been introduced with amendment to existing standards.
2.11. NFRS 9 ‘Financial Instruments’-Impairment

IFRS 9 ‘Financial Instruments’ was issued by the IASB in July 2014 and effective internationally for the financials beginning on or aer
1 January 2018. Accounting Standard Board of Nepal endorsed NFRS 9 Financial Instruments with some exceptions, mainly in the
Impairment. Currently, Incurred Loss Model as specified in NAS 39 is used in FY 2077-78. However, with introduction of NFRS 2018,
NFRS 9 shall cover Expected Credit Loss Model which is in line with the IFRS 9 Financial Instruments. The requirement of NFRS 9 is
Expected Credit Loss Model.
Expected Credit Loss Model (ECL) of Impairment
The Expected Credit Loss (ECL) model is a forward-looking model. The ECL estimates are unbiased, probability-weighted, and include
supportable information about past events, current conditions, and forecasts of future economic conditions.
Under the general approach, NFRS 9 recognizes three-stage approach to measure expected credit losses and recognized interest
income.
12-month ECL – No significantly increased credit risk Financial

instruments that have not had a significant increase in credit
risk since initial recognition require, at initial recognition a
provision for ECL associated with the probability of default
events occurring within the next 12 months (12-month ECL). For
Stage 1 those financial assets with a remaining maturity of less than 12
months, a Probability of Default (PD) is used that corresponds to
the remaining maturity. Interest will be calculated on the gross
carrying amount of the financial asset before adjusting for ECL.
Lifetime ECL – Significantly increased credit risk in the event

of a significant increase in credit risk since initial recognition, a
provision is required for the lifetime ECL representing losses over
the life of the financial instrument (lifetime ECL). Interest income
will continue to be recognized on a gross basis.
Stage 2
Lifetime ECL – Defaulted Financial instruments that move into
Stage 3 once credit impaired and purchases of credit impaired
assets will require a lifetime provision. Interest income will be
calculated based on the gross carrying amount of the financial
asset less ECL.
Stage 3
The management is still assessing the potential impact on its financial statements, if Expected Credit Loss (ECL) model is introduced.
Stage 1 Stage 2 Stage 3

Nature 12 month expected credit loss Lifetime expected credit loss Lifetime expected credit loss
No significant risk since initial Significant credit risk since Credit impaired
Risk
recognition initial recognition (With objective evidence of impairment)
Nature Performing Underperforming Non-performing
Effective interest on gross Effective interest on gross Effective interest on Carrying amount less
Interest Revenue
carrying amount carrying amount ECL
2.12. NFRS-15: Revenue from contract with customers

NFRS 15 is a new standard for revenue recognition which overhauls the existing revenue recognition standards. The standard requires
the following five step model framework to be followed for revenue recognition:
 Identification of the contracts with the customer

 Identification of the performance obligations in the contract
 Determination of the transaction price
 Allocation of the transaction price to the performance obligations in the contract (as identified in step ii)
 Recognition of revenue when the entity satisfies a performance obligation.
The management is assessing the potential impact on its financial statements resulting from application of IFRS 15.
NFRS 15 Revenue from Contracts with Customers: The standard shall supersede existing NAS 18 Revenue and NAS 11 Construction
Contract
2.13. Basis for classification and measurement

Financial assets are measured at initial recognition at fair value, and are classified and subsequently measured at fair value through
profit or loss (FVTPL), fair value through other comprehensive income (FVOCI) or amortized cost based on our business model for
managing the financial instruments and the contractual cash flow characteristics of the instrument.
The financial statements have been prepared on the historical cost basis, except for:
 As per NFRS 9 “Financial Instruments”, Investment Securities (investment in equity shares and mutual funds) are measured at
fair value.
 Derivative Financial Instruments are measured at fair value (FVTPL).
 Non-derivative financial instruments at fair value through profit or loss are measured at fair value
 Inventories are measured at cost or net realizable value whichever is lower.
 As per NAS 40 ‘Investment Property’ (land and building acquired as non banking assets) are measured at fair value.
 As per NAS 19 “Employee Benefits”, Liabilities for employee defined benefit obligations and liabilities for long service leave are
measured at fair value.
Financial assets at amortised cost

An investment is classified at “amortised cost” only if it is not designated as a FVTPL and both of the following criteria are met: the
objective of the Bank’s business model is to hold the assets in order to collect the contractual cash flows, and the contractual terms
of the financial assets must give rise on specified dates to cash flows that are only payments of principal and interest on the principal
amount outstanding.
Financial assets at fair value

If either of the two criteria above is not met, the asset cannot be classified in the amortised cost category and must be classified at
fair value.
Determination of fair value

The fair value of financial instruments, including derivative instruments that are traded in a liquid market, is the bid or offered closing
price on the balance sheet date. Where the fair values cannot be derived from active markets, they are determined using a variety
of valuation techniques which include the use of mathematical models. The input to these models is taken from observable market
data where possible. Fair values are measured using different valuation models and techniques. This process involves determining
future expected cash flows, which can then be discounted to the balance sheet date. The estimation of future cash flows for these
instruments is subject to assumptions on market data, the fair value estimate may therefore be subject to variations and may not be
realisable in the market. Under different market assumptions, the values could also differ significantly.
The Bank measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making
the measurements:
Level 1 Quoted market prices (unadjusted) in an active market for identical instruments.
Valuation techniques based on observable inputs, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
This category includes instruments valued using: quoted market prices in active markets for similar instruments,
Level 2
quoted prices for identical or similar instruments in markets that are considered less than active or other valuation
techniques where all significant inputs are directly or indirectly observable from market data.
Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and where the unobservable inputs have a significant effect
Level 3 on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar
instruments where significant unobservable adjustments or assumptions are required to reflect differences between
the instruments.
2.14. 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.
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
unfavourable conditions. Settlement may also be made by issuing own equity instruments.
2.15. Recognition and de-recognition of financial instruments

Financial instruments are recognised in the statement of financial position on a settlement date basis, except for derivative instruments,
which are recognized on a trade date basis.
A financial asset is derecognised when the contractual rights to the cash flows from the financial asset expire.
A financial liability is derecognised from the statement of financial position when the obligation specified in the contract is discharged,
cancelled or expires.
2.16. Business Combination

The Group accounts for business combinations using the acquisition method when control is transferred to the Group as per NFRS
3. The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. The
Bank has combined the business as per Merger and Acquisition Bylaws 2073 issued by central bank and has not followed NFRS 3
(details given in Notes).
2.17. Offsetting
A financial asset and a financial liability are offset and the net amount recognised only where there is a legal right to do so and the
intention is to settle on a net basis.
2.18. Cash and cash equivalents

Cash and cash equivalents comprise monetary assets and placements with original maturities of three months (91 Days) or less,
calculated from the date the acquisition and placements were made.
Cash and cash equivalents are classified as financial asset and are measured at amortized cost in SoFP.
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).
2.19. Impairment
 Impairment of financial assets
The Bank assesses at each reporting date whether there is objective evidence that a financial asset or group of financial assets
is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred if, and only if, there
is objective evidence of impairment as a result of one or more events occurring aer the initial recognition of the asset (a loss
event), and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial
assets that can be reliably estimated.
The Bank considers the following factors in assessing objective evidence of impairment:
 a significant financial difficulty of the issuer or obligor;
 a breach of contract, such as a default or delinquency in interest or principal payments;
 it becoming probable that the borrower will enter bankruptcy or other financial reorganization;
 Where observable data indicate that there is a measurable decrease in the estimated future cash flows from a group
of financial assets since the initial recognition of those assets, although the decrease cannot yet be identified with the
individual financial assets in the group, including adverse changes in repayment patterns or economic conditions that
correlate with defaults.
 Assets carried at amortised cost
Financial assets carried at amortised cost (such as amounts due from Banks, loans and advances to customers as well as held–
to–maturity investments are impaired, and impairment losses are recognized, only if there is objective evidence as a result of
one or more events that occurred aer the initial recognition of the asset. The amount of the loss is measured as the difference
between the asset’s carrying amount and the deemed recoverable value of loan.
The recoverable value of loan is estimated on the basis of realizable value of collateral (value of collateral is considered aer hair
cut prescribed by NRB) and the conduct of the borrower/past experience of the bank. Assets that are individually assessed and
for which no impairment exists are grouped with financial assets with similar credit risk statistics and collectively assessed for
impairment. The credit risk statistics for each group of the loan and advances are determined by management prudently being
based on the past experience.
Subsequent reversal of impairment loss, due to factors such as an improvement in the debtor’s credit rating, is recognized in
the statement of profit or loss. The reversal shall not result in a carrying amount of the financial asset that exceeds what the
amortized cost would have been had the impairment not been recognized at the date the impairment is reversed. Financial assets
(and the related impairment allowance accounts) are written off either partially or in full, when there is no realistic prospect of
recovery. Where financial assets are secured, this is generally aer receipt of any proceeds from the realization of security. If a
future write–off is later recovered, the recovery is credited to the ’Income Statement’.
At each reporting date the Bank assesses whether there is any indication that an asset may have been impaired. If such indication
exists, the recoverable amount is determined. For individual impairment, bank considers Top 50 loan clients and loans above
delinquency of 90 days.
For the purpose of collective assessment of impairment bank has categorized assets in to four broad products as follows:
1. OD Loan
2. Retail EMI
3. Working Capital
4. Term Loan
2.20. 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.
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.
2.21. Deposits from customers and BFIs and Debt Securities

These are classified as financial liabilities measured at amortized cost.
2.22. Revenue recognition

Revenue is recognized only when it is probable that the economic benefits associated with the transaction will flow to the entity. In
some cases, this may not be probable until the consideration is received or until an uncertainty is removed.
Revenue is derived substantially from banking business and related activities and comprises net interest income and non-interest
income. Income is recognised on an accrual basis in the period in which it accrues. The Group applies NAS 18 – “Revenue” in the
accounting of revenue, unless otherwise stated.
a. Net interest income
Interest income and expenses are recognised in profit or loss for all interest-bearing instruments on an accrual basis using
the effective interest method. The effective interest rate is the rate that exactly discounts the expected estimated future cash
payments and receipts through the expected life of the financial asset or liability. Where financial assets have been impaired,
interest income continues to be recognised on the impaired value, based on the original effective interest rate.
The interest income has been recognized as per NRB Guidelines on Interest Income Recognition.
b. Fees and commission income
Fees and commission income is generally recognised when the related services are provided or on execution of a significant act.
Fees charged for servicing a loan are recognised as revenue as the service is provided. However, as per the Carve out issued
by ICAN regarding the treatment of fee and commission in EIR rate, fees to be considered for EIR computation unless it is
impracticable to determine reliably.
c. Dividend Income
Dividend is recognised as income when the right to receive the dividend is established. For bonus shares, the numbers of shares
alone are increased without any change in the cost price of shares.
d. Net Trading Gain
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.
2.23. Interim Reports

Interim reports corresponding to the financial statements reported had been reported in accordance with the regulatory reporting
requirements. Those statements have been published.
2.24. Discounting
Discounting has been applied where assets and liabilities are non-current and the impact of the discounting is material.
2.25. Limitation of NFRS implementation

Wherever the information is not adequately available and the cost to develop the same would exceed the benefit derived, such
exception to NFRS implementation has been noted and disclosed in respective sections.
2.26. Significant changes from the policies adopted in the past

Significant changes from the accounting policies adopted under previous GAAP (erstwhile Nepal Accounting Standards and directives
issued by Nepal Rastra bank) and the adoption of NFRS has been disclosed in the respective segments, including the impact.
2.27. Property, plant and equipment (PPE) and Intangible Assets

a. Property, plant and equipment and Intangible assets (soware) are stated at cost less accumulated depreciation (Cost Model)
b. Land is not depreciated. Depreciation of others is charged to Statement of Profit and Loss on Straight Line method over the
useful life of those assets. The estimated useful life of the assets are as follows:
Assets Estimated Life Rate of Depreciation
Building 40 years 2.5%
Office equipment 7 years 14.28%
Computers 5 years 20%
Furniture & Fixtures 7 years 14.28%
Vehicles 5 to 7 years 20%/ 14.28%
Intangible Assets/soware 5 Years
c. Leasehold improvements are capitalised at cost and amortised over period of lease.
d. Intangible assets (soware) are capitalised and amortised over the life of assets determinable or best estimated.
e. Depreciation on property, plant and equipment sold or disposed off during the year is charged up to the date of sales and gain or
loss on the sales transaction is accounted for.
f. Soware costs are amortized over their estimated useful lives from the period of purchase (5 years).
g. Assets with a unit value of NPR 10,000 or less are expensed-off during the year of purchase irrespective of its useful life.
2.28. 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 as non banking
assets.
Non banking assets (only land and building) are initially recognized at fair value. Since it is not intended for owner-occupied use, a
depreciation charge is not raised.
2.29. Retirement Benefits

The Bank offers retirement benefits to its confirmed employee, mainly provident fund, gratuity and accumulated sick leave, all payable
at the time of separation from service.
a. Provident fund
Provident fund is recognised at the time of contribution to the fund which is independent to the Bank.
b. Gratuity
Provision for gratuity is made on the basis of actuarial valuation carried out by an Actuary as per the provisions of Nepal
Accounting Standards. At the time of separation from service, cash payments are made to the employees and the amount is
computed as per the Bank’s Policy.
c. Accumulated sick leave
Provision for accumulated sick leave is made on the basis of actuarial valuation carried out by an Actuary as per the provisions of
Nepal Accounting Standards. At the time of separation from service, cash payments are made to the employees and the amount
is computed as per the Bank’s Policy.
d. Accumulated home leave
Provision for accumulated home leave is made on the basis of actuarial valuation carried out by an Actuary as per the provisions
of Nepal Accounting Standards. At the time of separation from service or eligible accumulated leaves, cash payments are made
to the employees and the amount is computed as per the Bank’s Policy.
2.30. Operating Lease

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases.
The Group has applied NAS 17 – “Leases” and expense is recognized to Statement of Profit or Loss (SoPL) on straight line basis
considering adjusted incremental rent over the lease period.
The bank has not applied NAS 17 as all its agreements are cancellable lease agreement. The lease agreement is non-cancelable only
for the period of 3-6 months as either lessor or lessee can give notice for the said period and cancel the contract without significant
penalties.
2.31. Income Tax

a. Current Income Tax
Provision for current income tax is made in accordance with the provisions of the prevailing Income Tax Act, 2058 and Rules
framed there under.
b. Deferred Tax
Deferred tax is recognised on the differences between the carrying amount of assets and liabilities in the financial statements
and corresponding tax bases used in the computation provided on temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the financial statements. Deferred income tax is determined by using tax rates (and
laws) that have been enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is
realised or the deferred income tax liability is settled. Deferred tax assets are recognised where it is probable that future taxable
profit will be available against which the temporary differences can be utilised. Deferred tax related to temporary differences
in opening balances is credited or charged directly to equity and subsequent year differences are recognised in the income
statement together with the deferred gain or loss.
2.32. Segmental Reporting

An operating segment is a component of the bank that engages in business activities from which it earns revenues and incurs
expenses, including revenues and expenses that relating to transactions with any of the bank’s other components, whose operating
results are reviewed by the management to make decision about resource allocation to each segment and assess its performance.
The Bank is organised for management and reporting purposes into segments such as: Retail, SME & MSME, Corporate, Deprived,
Treasury and Others. Income tax is managed on a group basis and are not allocated to operating segments. All transactions between
segments are conducted on an arm’s length basis, with inter-segment revenue and costs being eliminated in “Others”. Support costs
are also allocated to Retail, Corporate, SME & MSME, Deprived, Treasury and others based on Management’s estimates of the benefits
accruing to these segments for the costs incurred.
2.33. Share capital and reserves

The Ordinary shares in the Bank are recognized at the amount paid per ordinary share. 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 various reserve
headings are explained hereinaer:
a. General reserve
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 aer 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.
b. Exchange equalization reserve
The Bank is required to appropriate 25% of current year’s total revaluation gain (except gain from revaluation of Indian Currency)
into this heading.
c. 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.
d. 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. The Bank
does not have any amount to present under asset revaluation reserve.
e. Capital Adjustment Fund
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 aer 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.
f. Corporate social responsibility fund
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. Balance in this fund is directly
reclassified to retained earnings in the subsequent year to the extent of payments made under corporate social responsibility
activities.
g. Investment adjustment reserve
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.
h. Actuarial gain / loss reserve
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.
i. Regulatory reserve
This is a non-free statutory reserve and is a requirement as prescribed in NRB directive. 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 aer staff bonus and tax, fair value gain (unrealized) of investment
securities and impairment on loan and advance as per NFRS against provision as per NRB Directive, amount equals to deferred
tax assets, actuary loss recognized in other comprehensive income, investment properties net off staff bonus and tax and amount
of goodwill/Bargain Gain recognized under NFRS.
j. Debenture Redemption Reserve
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 appropriate proportionately
full face value of debenture to the Debenture redemption reserve during the its life except for the issuance and redemption year.
However, if bonus share is issued from the amount which is to be appropriated to debenture redemption reserve for the debenture
which has more than full five fiscal years remaining to be matured, it is not necessary to make appropriation in such fiscal year
but such amount has to be proportionately be appropriated to the debenture redemption reserve during the remaining period
thereaer.
k. Employees training fund
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 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.
However as per NRB Directive 2078, no such reserve is required to be created.
2.34. Stationery
Stationery purchased are stated at cost and charged to revenue at the time of consumption.
2.35. Provisions, Contingent Liabilities and Contingent Assets

The Bank creates a provision when there is a present obligation as a result of past events that probably requires an outflow of resources
and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a
possible obligation or a present obligation that may, but probably will not, require an outflow of resources. When there is a possible
obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is
made.
Contingent assets are not recognised in the financial statements. However, contingent assets are assessed continually and if it is
virtually certain that an economic benefit will arise, the asset and related income are recognised in the period in which the change
occurs.
2.36. Events aer the Balance Sheet Date

Events aer the balance sheet date are those events, favourable and unfavourable, that occur between the balance sheet date and the
date when the financial statements are authorised for issue.
Appropriate adjustments in the financial statements and disclosures in notes to accounts have been made for all material and
significant events that have occurred between the balance sheet date and date when the financial statements have been authorised for
issue required as per Nepal Financial Reporting Standards (NFRS)
2.37. Government Grant

Government grant is recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the
related costs for which the grants are intended to compensate. Income approach is followed in recording grant income. Government
grants related to the assets including non-monetary grants at fair value is presented in the statement of financial position by setting
up Deferred Grant Income. Grants related to income are presented as part of profit or loss under other income.
3. Rounding off and Comparative Figures

The financial statements are presented in Nepalese Rupees, rounded off to the nearest rupee. Previous year’s figures have been
reclassified wherever necessary in order to facilitate comparison.
Addidtional Discolsures
1. Provision for Bonus
Provision for bonus has been calculated and provided at 10% of net profit before bonus and tax.
2. General Reserve
As per section 44 of the Banks and Financial Institutions Act 2063, 20% of the current year's net profit amounting NPR 543,689,886
has been transferred to General Reserve. The general reserve figures also includes 20% of profit on sale of shares transferred directly
to retained earnings in this fiscal year.
3. Exchange Fluctuation Reserve

As per Section 45 of the Banks and Financial Institutions Act, 2063 25% of the revaluation gain amounting to NPR 22,756,770 has been
transferred to Exchange Fluctuation Reserve.
4. Exchange Fluctuation Income

The Bank earned a total exchange fluctuation income of NPR 455 Mio out of which a gain of NPR 281.32 Million was generated through
NDF contracts transactions. Income realised from the difference between buying and selling rates of Foreign Exchange is accounted
for as trading gains and shown as “Gain/loss foreign exchange transaction" under "Net Trading Income" in Schedule 4.33 and income
realized through revaluation gain is shown under Foreign exchange revaluation gain in other operating income in schedule 4.34.
5. Investment Adjustment Reserve (IAR)

The investments are valued at fair value required as per NFRS. As per NRB Directive No. 8(3)(1), if securities are not listed within 3
years of date of investment, investment adjustment reserve should be created. During the year, CEDB Hydro Fund has been listed
and shares of Prabhu Capital has been sold. Hence, the opening Investment Adjustment Reserve of NPR 11.5 Mio and NPR 0.3 Mio
transferred from merger has been apportioned to retained earnings.
6. Debenture Redemption Reserve

As required by NRB directive, an amount equal to NPR 23,395,903 has been appropriated to Debenture Redemption Reserve during
the year. The total balance in Debenture Redemption Reserve as at 15 July 2021 is NPR 23,395,903.
Debenture – 1
Debenture Amount 1,684,505,000
Issued Date 12-Apr-19
Maturity Date 12-Apr-29
Beginning Year Excluding Issue Year 2019-20
Final Year Excluding Redemption Year 2027-28
No. of Years for Reserve Creation 9
Debenture Reserve per year 187,167,222.22
Current Year 2020-21
No. of Years for Reserve Creation till FY 2020-21 * Nil
Redemption Reserve required (A) Nil
Apportioned Reserve for 8 Years of FY 2019-20 (B) * 23,395,903
Total Reserve (A)+(B) 23,395,903
Reserve created till FY 2019-20 500,000,000
Redemption Reserve of Matured debenture (500,000,000)
Additional Reserve for this year 23,395,903
* As per NRB Directive No. 16(5)(2), the bank had not apportioned NPR. 187,167,222.22 for the each of fiscal year 2019-20 and FY 2020-21 and the amount of FY 2019-20 has
been apportioned proportionately for the remaining 8 years of life of the debenture while the amount of FY 2020-21 shall be apportioned from next fiscal year for remaining
7 years proportionately. Hence, per year additional amount of NPR. 23,395,903 of FY 2019-20 has also been apportioned to the reserve making the total redemption reserve
NPR. 23,395,903.
7. Corporate Social Responsibility (CSR) Fund

The bank has apportioned NPR. 27,110,737 /- as CSR fund which is equivalent to 1% of Net Profit of the year to be expensed out in
next fiscal year. The fund so created shall be used for CSR activities of the Bank in the next fiscal year as per bank’s CSR policy. The
detailed movement of reserve is given below:
Particulars NPR
A. Net profit for FY 2077/78 2,711,073,708
B. 1% of net profit appropriated to CSR fund 27,110,737
C. Opening CSR fund (Including from Acquisition) 23,941,765
D. CSR expense incurred for FY 2077/78 26,628,276
E. Closing CSR Reserve FY 2077/78 (B) 27,110,737
F. Net Movement (E-C) 3,168,972
8. Staff Skill Development (SSD) Fund

As per point 6(6) of NRB directive 2077, 3% of Total Salary and allowances expense of previous year has to be expensed for Staff Skill
Development in current fiscal year. If such amount cannot be expensed out in the current fiscal year, such deficit amount has to be
transferred to Staff Skill Development Fund. However, no such apportionment is required for fiscal year 2077/78. The amount as of
fiscal year end 2078 in the reserve is NPR. 1,976,578 which is transferred from merger and acquisition.
9. Regulatory Reserve
The movement in Regulatory Reserve from the year of implementation of NFRS is given below:
Particulars 2074/75 2075/76 2076/77 2077/78

Interest Receivables 222,679,176 591,317,341 492,537,377 636,757,862
Short loan loss provision - - - -
Short provision for possible losses on investment - - - -
short provision on NBA 59,774,627 102,915,862 50,178,392 61,703,624
Deferred Tax Assets 66,869,011 70,040,593 264,421,080 249,009,565
Goodwill - - - -
Gain on Bargain Purchase - - - -
Actuarial Loss Recognized 48,026,502 48,915,471 66,886,117 79,793,480
Fair Value Loss Recognized in OCI 7,057,296 5,543,798 10,109,962 -
Other - - - -
Total 404,406,612 818,733,064 884,132,929 1,027,264,531
The Regulatory reserve has also been transferred from Merger and Acquisition during the fiscal year 2076/77 and FY 2077/78 as
follows:
Erstwhile Om Development Bank Erstwhile Kanchan Development Bank

Particulars (FY 2076/77) (FY 2077/78)
Interest Receivables 217,487,203 35,268,278
Short provision on NBA - 9,396,224
Deferred Tax Assets 197,851,475 5,361,636
Actuarial Loss Recognized - 1,919,010
Fair Value Loss Recognized in OCI 47,989,082 4,845,166
Bargain Gain - -
Total 463,327,760 56,790,314
10. Disclosure Related to COVID 19
The SARS-CoV-2 virus responsible for COVID-19 had continued to spread across the globe and Nepal, which had contributed to a
significant decline and volatility in global and domestic financial markets and a significant decrease in global and local economic
activities. On March 11, 2020, the COVID-19 outbreak was declared a global pandemic by the World Health Organization. On March 24,
2020, the government announced first lockdown and subsequently another series of lockdown from 29 April 2021 as the second wave
of COVID 19 surged in the country. The extent to which the COVID-19 pandemic will impact the Bank’s results will depend on future
developments, which are highly uncertain.
The bank has provided several relaxations and concessions to customers as per NRB Directive. The following disclosures have been
made as per NRB’s requirements:
As of Ashad End 2078

Particulars No. of Customers Amount(NRs.)
Accrued Interst Received aer Ashad end 2078 till 15th Bhadra 2078 4305 125,535,176
Additional 0.3% Loan Loss Provision created on Pass Loan Portfolio 33,562 434,640,066
Extension of moratorium period of loan provided to Industry or Project Under Construction 3 1,206,135,456
Restructured/Rescheduled Loan with % Loan Loss Provision 911 5,473,366,033
Enhancement of working Capital Loan by 20% to COVID affected borrowers 784 934,479,620
Enhancement of Term Loan by 10% to COVID affected borrowers Nil
Expiry Date of Additional 20% Working Capital Loan (COVID Loan) extended for up to 1 year Nil
with 5% provisioning.
Expiry Date of Additional 10% Term Loan (COVID Loan) extended for up to 1 year with 5% Nil
provisioning.
Time Extension provided for repayment of Principal and Interest for up to two years as per Nil
Clause 41 of NRB Directives 2
The details pertaining to Refinance, Business Continuity and Subsidized loan is given below:
During FY 2077/78
Refinance Loan 782 3,609,019,770
Business Continuity Loan 1 100,000,000
As of Ashad End 2078

Subsidized Loan 4,048 7,150,052,563
11. Event aer reporting period

The The Board of Directors in its meeting dated 29 October 2021 has proposed the issue of 12.50% Stock Dividend and 3.30% Cash
Dividend (including for tax purpose) for each share held. The dividend shall be distributed from the distributable amount available as
on Asar end 2078 of NMB Bank Ltd on the paid up capital of NPR 16,325,960,852.66. This is to be approved at the forthcoming Annual
General Meeting of the Bank.
12. Unpaid Dividend

As on the balance sheet date, unpaid dividends amounts to NPR 2,740,526 and and unpaid dividend at Share Registrar NMB Capital is
NPR. 191,480,436 totalling NPR. 194,220,961. Subsequently the Bank deposits the unclaimed amounts in Investor’s Protection Fund
as required by the Companies Act. The Bank also publishes notice yearly in national daily newspaper urging investors to collect the
dividend.
13. Earnings per Share

Basic earnings per equity share are computed in accordance with NAS 26 Earnings per Share. Basic earnings per equity share are
computed by dividing net profit aer tax by the weighted average number of equity shares outstanding during the year. Bonus shares,
also known as scrip dividends, involve the issue of shares without any consideration. Since the bonus shares do not change the
resources available to the entity to earn a return for the shareholders (as in the case of shares issued for cash) the effect of change in
number of shares in the EPS calculation is cancelled for the year in which bonus issue takes place and as well as in the prior periods
presented. The EPS has also been restated in Principal Indicators.
The following table sets forth, for the periods indicated, the computation of earnings per share.
Particulars YE Ashad 2078 YE Ashad 2077

Weighted average no. of equity shares outstanding (Restated) 162,742,428 153,142,682
Net profit 2,711,073,708 1,712,776,521
Basic earnings per share 16.66 11.18
Nominal value per share 100 100
14. Principal Indicators

The principal indicators of the bank for the past 5 years are as follows:
S.No. Particulars Indicators FY 2073/74 FY 2074/75 FY 2075/76 FY 2076/77 FY 2077/778

1 Percent of Net Profit/Gross Income Percent 20.52 18.09 18.06 11.94 17.45
2 Earning Per Share (Restated for previous years) Rs. 22.24 21.86 18.79 11.18 16.66
3 Market Value Per Share Rs. 545 358 382 397 440
4 Price Earning Ratio Ratio 20.27 12.48 16.23 31.45 26.41
5 Dividend (including bonus) on Share Capital Percent 15.79 30.00 35.00 16.20 15.8
6 Cash Dividend on Share Capital Percent 0.79 20.00 14.00 3.20 3.30
7 Interest Income/Loan & Advances Percent 9.26 10.78 11.17 10.95 8.16
8 Staff Expenses/Total Operating Expenses Percent 55.03 58.09 61.52 58.32 65.04
9 Interest Expenses on Total Deposit and Percent 4.71 6.76 6.58 6.30 4.64
Borrowing
10 Exchange Gain/Total Assets Percent 0.24 0.27 0.32 0.27 0.20
11 Staff Bonus/Total Staff Expenses Percent 34.77 38.72 34.21 19.65 25.70
12 Net Profit/Loan and Advances Percent 2.34 2.43 2.42 1.38 1.68
13 Net Profit/Total Assets Ratio 1.69 1.65 1.67 0.95 1.17
14 Total Credit/Deposit Percent 85.50 90.46 94.61 92.31 96.69
15 Total Operating Expenses/Total Assets Percent 1.69 1.56 1.70 1.57 1.39
16 Adequacy of Capital Fund on Risk Weighted Assets
a) Core Capital Percent 12.39 14.78 13.11 13.00 11.42
b) Supplementary Captial Percent 1.22 0.97 2.35 2.08 3.66
c) Total Capital Fund Percent 13.61 15.75 15.45 15.08 15.08
17 Liquidity (CRR) Ratio 7.72 6.68 4.19 5.93 5.66
18 Non-performing credit/Total credit Percent 1.68 0.88 0.82 2.68 2.27
19 Base Rate Percent 10.12 10.70 9.86 8.95 7.33
20 Weighted Average Interest Rate Spread Percent 3.89 3.45 3.54 3.68 2.92
21 Return on assets Percent 1.82 1.80 1.83 1.09 1.32
22 Return on Equity Percent 16.49 13.54 13.32 8.94 12.08
23 Cost to Income Ratio Percent 36.71 36.90 35.01 37.98 38.70
24 Cost of Fund (YTD) Percent 5.06 7.46 7.26 6.99 5.79
25 Average Yield (YTD) Percent 8.95 10.91 10.80 10.67 8.71
26 Book Net-worth Rs. in '000 10,902,261 16,489,809 17,403,014 20,935,385 23,943,774
27 Total Shares Nos. in '000 64,618 76,033 96,182 139,510 163,260
28 Total Staff Number 918 1,080 1,120 1,654 1,744
29 No of Branches Number 80 110 110 160 181
30 No of ATMs Number 66 96 103 133 137
15. Loans and Advances Written Off
The Bank has written off loans and advances amounting to NPR 15,212,626 the details of which is as follows:
S.No. Name of Clients Facility Write off Date Principal

1 Devisthan Matshya Farm Overdra Loan 12-Apr-21 1,502,116
2 Guna Suppliers Overdra Loan 13-Apr-21 8,045,618
3 Krish Madhukar Construction Pvt..Ltd. Auto Loan 13-Apr-21 522,092
4 Radha Krishna Dugdha U.S.S.Ltd Term Loan 13-Apr-21 960,010
5 Santa Bahadur Gurung Term Loan 13-Apr-21 885,194
6 Sita Devi Shrestha Auto Loan 13-Apr-21 896,417
7 Padam Das Term Loan 13-Apr-21 77,161
8 Dichhya Cosmetic Term Loan 13-Apr-21 256,198
9 New Donbosco Academy Pvt. Ltd Overdra Loan 13-Apr-21 2,067,820
Total 15,212,626
However, the bank has also recovered amount NPR. 39,071,786 during the fiscal year from loan and interest write off amount of
previous fiscal years.
16. Other Assets Written Off

The Bank did not write off any balance on Other Assets.
17. Summary of Changes in Total Deposits during the year

The financial growth of Total Deposits during the year is given below:
Amount in NPR
Particulars FY End 2078 FY End 2077 Increase/(Decrease)

Term deposits 81,994,294,536 70,794,457,231 11,199,837,305
Call deposits 16,017,865,632 12,331,138,621 3,686,727,011
Current deposits 9,896,321,577 8,894,929,343 1,001,392,234
Saving deposits 53,131,675,653 38,313,557,101 14,818,118,552
Other 5,413,644,168 4,476,300,898 937,343,270
Total 166,453,801,566 134,810,383,194 31,643,418,372
Note: The Bank has acquired with Erstwhile Kanchan Development Bank Limited and started joint operation from 7th of Bhadra, 2077.
18. Concentration of Borrowing and Deposits

A. Concentration of Borrowings
Particulars FYE 2078 FYE 2077

Total Deposit from ten largest depositors 30,751,410,693 27,353,340,136
Percentage of Deposit from ten largest lenders to total depositors 18.46% 20.29%
B. Concentration of Credit exposures

Total exposures to twenty largest borrowers:
a. As per group (related party) 15,777,809,605 14,990,762,839
b. As per individual customer 13,245,571,739 12,128,152,508
Percentage of exposures to twenty largest borrowers to Total Loans and Advances:
a. As per group (related party) 9.98% 12.31%
b. As per individual customer 8.38% 9.96%
C. Concentration of Deposits

Total deposits from twenty largest depositors
a. Group-wise 39,475,968,071 35,823,411,478
b. As per individual customer 39,475,968,071 35,823,411,478
Percentage of deposits from twenty largest depositors to Total Deposits
a. Group-wise 23.72% 26.57%
b. As per individual customer 23.72% 26.57%
19. Agency Account

Particular Less than 1 Year More than 1 year less than 3 years More than 3 years Total
Agency Accounts 376,754,708 519,238 52,206 377,326,152
Inter branch - - - -
20. Capitalization of Interest

During the fiscal year, the Bank has recognised interest income of NPR 77,603,788 from capitalization of interest during moratorium
period of six separate projects. These capitalizations have been approved/mandated by the NRB.
S.No. Borrower Name Total Capitalization NRB Approval Date

1 Asian Hydropower Ltd. 28,239,224 2077/06/13
2 Sanima Middle Tamor Hydropower Ltd 17,903,335 2077/03/31
3 Myagdi Hydropower Ltd. 8,483,722 2077/05/18
4 Upper Hewa Khola Hydropower Co. Ltd. 6,525,468 2077/03/17
5 Upper Solu Hydro Electric Co. Ltd. 12,843,300 2072/06/07
6 Aashutosh Energy Pvt. Ltd. 3,608,739 2078/03/27
Total 77,603,788
For those projects beyond NRB approval date of interest capitalization, the same has been done as per NRB directive.
21. Classification of Assets and Liabilities based on Maturity (As per yearly
NRB Report)
1-7 8-30 31-90 91-180 181-270 271-365 More than
S.N. Particulars days days days days days days 1 year Total
Assets
1 Cash Balance 4,184 - - - - - - 4,184
2 Balance with Banks & FIs 16,671 - - - - - - 16,671
3 Investment in Foreign Banks 692 1,674 835 716 - - - 3,916
4 Call Money - - - - - - - -
5 Government Securities 3 - 1,779 1,029 193 387 13,342 16,732
6 Nepal Rastra Bank Bonds - - - - - - - -
7 Inter Bank & FI Lending 1,729 2,325 1,312 - - - - 5,366
8 Loans & Advances 6,268 8,971 31,658 24,414 13,107 2,815 70,812 158,044
9 Interest Receivable 106 106 - - - - - 212
10 Reverse Repo - - - - - - - -
11 Acceptance Receivable - - - - - - - -
12 Payments under S.No. 20,21 & 22 19,596 5,120 11,077 5,460 3,218 5,772 8,997 59,241
13 Others - - - - - - - -
Total (A) 49,248 18,196 46,660 31,618 16,518 8,974 93,150 264,366
Liabilities - - - - - - - -
14 Current Deposits 2,898 9,525 - - - - - 12,423
15 Saving Deposits (including call) 836 2,748 14,399 1,965 1,965 2,074 45,162 69,150
16 Fixed Deposits 2,845 11,218 11,932 18,188 12,283 13,536 11,992 81,994
17 Debentures/Bonds - - - - - - 5,178 5,178
18 Borrowings - 2,266 - 1,989 2,028 - 4,770 11,053
Call/Short Notice - - - - - - - -
Inter-bank/Financial Institutions - 1,789 - 170 716 - 4,770 7,444
Refinance - 477 - 1,819 1,313 - - 3,609
Others - - - - - - - -
19 Other Liabilities and Provisions 1,148 22 58 87 87 87 3,213 4,701
Sundry Creditors 153 - - - - - - 153
Bills Payable 52 - - - - - - 52
Interest Payable 914 - - - - - - 914
Provisions 23 - - - - - 672 695
Others 7 22 58 87 87 87 2,541 2,887
20 Acceptance Liabilities 290 445 1,001 279 35 - 32 2,082
21 Irrevocable Loan Commitment 12,219 - - - - - - 12,219
22 Letter of Credit/Guarantee 7,088 4,675 10,077 5,180 3,183 5,772 8,965 44,940
23 Repo - - - - - - - -
24 Payable under s.no.11 - - - - - - - -
25 Others - - - - - - - -
Total (B) 27,324 30,897 37,466 27,688 19,582 21,469 79,312 243,740
Net Financial Assets (A-B) 21,924 (12,701) 9,194 3,930 (3,064) (12,495) 13,838 20,626
Cumulative Net Financial Assets 21,924 9,223 18,417 22,347 19,283 6,788 20,626 0
22. Borrowing by the Bank against the collateral of own assets

Borrowing by the Bank against the collateral of own asset is NIL.
23. Transactions in Bullion

The Group deals in bullion (Gold/Silver) by holding stock on consignment basis on behalf of suppliers as per the arrangement. The
value of consignment as on balances sheet date is NPR 137,685,311 and has been reflected under “Advance Gold and silver” (Gold
Consignment)” in Schedule 4.16. Transaction of gold and silver are carried out as per the NRB Directives.
24. Capital Construction

There are no capital constructions (pending capitalization) as at the end of the current fiscal year.
25. Loan Impairment

The bank maintains an allowance for credit losses relating to on-balance sheet exposures of loans and advances.
Loans, which are individually significant (the threshold being selected to cover up top 50 files, files under 50% and 100% provision and
files with special asset management department), are assessed individually for objective indicators of impairment. A loan is considered
impaired when it is determined that bank will not be able to collect all amounts due according to the original contractual terms.
Credit exposures of individually significant loans are evaluated based on factors including the borrower’s overall financial condition,
resources and payment record, and where applicable, the realizable value of any collateral. If there is evidence of impairment leading
to an impairment loss, then the amount of the loss is determined as the difference between the carrying value of the loan, including
accrued interest, and the estimated recoverable amount. The estimated recoverable amount is measured as the present value of
expected future cash flows discounted at the loan’s original effective interest rate, including cash flows that may result from the
realization of collateral less costs to sell.
Loans which are not individually significant, or which are individually assessed and not determined to be impaired, are collectively
assessed for impairment. For the purposes of a collective evaluation of impairment, loans are grouped based on similar credit risk
characteristics, taking into account loan type, past due status and other relevant factors viz. OD Loan, Working Capital Loan, Term
Loan and Retail EMI. The collective impairment allowance is determined by reviewing factors including historical loss experience,
which takes into consideration historical probabilities of default, loss given default and exposure at default.
The impairment status as per para 63 of NAS 39 is given below:
Particulars Year ended 31 Asar 2078 Year ended 31 Asar 2077

a. Individual Impairment 1,103,332,419 1,367,004,736
b. Collective Impairment 381,542,398 1,588,364,853
Total 1,484,874,816 2,955,369,588
The Loss given default status (LGD) for impairment calculation purpose is given below:

OD Loan 12% 19%
Term Loan 6% 3%
Retail EMI 12% 19%
Working Capital Loan 5% 10%
26. Carve-outs in NFRS

Upon the recommendation from Accounting Standard Board-Nepal, the Institute of Chartered Accountants of Nepal (ICAN) has issued
following carve-outs for the implementation of NFRS and has prescribed alternative treatments as set out below:
a. NAS 39 – “Financial Instruments: Recognition and Measurements”
This is the 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 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
This is the mandatory carve out. Hence, 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 and the amount derived from incurred loss model as specified
in para 63 of NAS 39 as given below:
a. Impairment on Loan as per Para 63 1,484,874,816 2,955,369,588
b. Loan Loss Provision as per NRB 4,739,972,013 4,104,731,607
Higher of a and b 4,739,972,013 4,104,731,607
The Group has recognized impairment loss on other financial assets measured at amortized cost in accordance with para 63 of
NAS 39.
b. NFRS 3 – Business Combination
The acquirer shall account for and integrate into it books of account on joint operation date the total assets and liabilities (except
equity and all reserves) of acquiree at the value determined by applying same basis considered for determining restated value
for its adjusted net worth for the purpose of swap ratio as per NRB Merger and Acquisition Bylaws, the value so determined is
to be considered as fair value of the acquiree.
The value of purchase consideration transferred where consideration is equity share, its fair value shall be as determined as per
Due Diligence Report (DDA) which is prepared as per NRB Merger and Acquisition Bylaws. In the books of acquirer, the face value
of equity share as per Swap Ratio shall be booked as Share Capital and difference between the fair value of share (considered for
swap ratio) and face value of such ordinary equity shares shall be accounted as Share Premium/Capital Reserve.
During the fiscal year 2077/78, the bank had acquired erstwhile Kanchan Development Bank Limited (KDBL) and commenced
joint operations from 23 August 2020 (07 Bhadra 2077). Post-acquisition, KDBL shareholders had received 0.85 shares of NMB
for each share of KDBL (swap ratio of 85%).
Mergers and Acquisitions among Financial Institutions in the country are guided by Merger and Acquisition By-Laws 2019 (Fourth
Revision) issued by the Nepal Rastra Bank (NRB). Implementation of provisions mentioned in the By-Laws are mandatory and
binding for all Banks and Financial Institutions (BFIs).
Clause 9 (Kha) of the By-Laws spells out accounting treatment for business combinations. The clause states that when the sum
total of Paid-Up Capital of Financial Institutions involved in mergers/acquisition before merger is more than the Paid-Up Capital
aer merger/acquisition, the difference amount is recognized as Capital Reserve. Paid-Up Capital adjustments for mergers/
acquisitions are based on share swap ratio as per due diligence audit report duly approved by NRB. As per the calculation method
prescribed above, the difference amount in Paid-Up Capital amount before and that aer acquisition is NPR 87.66 Million and
hence has been recognized as Capital Reserve.
This treatment differs with the requirement of Nepal Financial Reporting Standards (NFRS) 3 Business Combination and Carve-
Outs issued by The Institute of Chartered Accountants of Nepal. The Bank has opted for accounting based on provisions of Merger
and Acquisition By-Laws as it is mandatory and binding for all BFIs to follow the By-Laws.
27. Risk Management

Risk Management Structure
NMB Board is the ultimate authority to oversee overall risk management of the Bank by formulating risk management strategies,
defining risk appetite, and ensuring that the risk management policies, procedures and standards are adequate and is effectively
implemented in the Bank. Sound risk management system in the Bank is established robust risk management structure which
includes Board level Risk Management Committee,Audit committee, Human Resource committee and Asset Laundering prevention
committee; management level Asset & Liability Committee, Credit Risk Management Committee, Operational Risk Management
Committee, E&S (Environmental & Social) Committee, Credit Recovery Committee, Corporate Information Security Committee, Pricing
Committee, and Corporate Governance Committee. In this structure, new/revised policies & standards, reports on risk management,
portfolio analysis, stress testing, investment, liquidity, capital adequacy, industry/market analysis, and critical risk issues identified
are first reviewed by management level committee and then escalated to Risk Management Committee for review and decision.
Risk management structure in the bank's Organogram:
Risk Management system and structure of the Bank is driven by following principles
 Independent Role: The bank has Risk Management Function independent from risk taker. All management units report to the
Chief Risk Officer (CRO) who directly report to the board level Risk Management Committee.
 Risk Measurement: The Bank has prioritized to quantitatively measure various risk issues and arranged for their mitigation,
control and monitoring wherever possible. For quantitatively measuring these risks, the Bank has implemented new tools and
models such as Risk Register/, Credit Grading, etc..
 Risk Management as Shared Responsibility: The Bank has independent function for management of various risks which has
been driven by the shared responsibility of risk management units and various business units of the Bank. The risk governance
framework has adopted “three lines of defense” structure that includes three distinct units comprised of:
 Main Business Function
 Risk Management Department/Control units, and
 Internal Audit
The responsibilities of each line have been well defined and communicated across the various levels.
 Risk Management Structure: The Bank has appropriate risk management structure with clear demarcation of reporting line on
its organogram. It has been essential for establishing roles & responsibilities and accountability of various functions within the
Bank on risk management. The role of board of Directors in risk management has been more effective upon envisioning the risk
governance structure of the Bank.
 Continuous Improvement: The Bank has always been oriented for strengthening existing risk management system. As a part
of this, the Bank has recently implemented ISO 27001: 2013 standard. It has been expected to significantly improve information
security management system as well as support risk management system through various aspects.
In addition, the Bank as an active member of the Global Alliance for Banking on Values (GABV) strives for delivering sustainable
economic, social and environmental development with a focus on helping individuals fulfil their needs and build stronger communities.
Credit Risk Management in NMB Bank

Credit Risk refers to the potential loss due to failure of counterparty to meet its obligations in accordance with the terms specified
in the credit agreements. Credit Policy, Credit Risk Management Framework, Credit Process Manual, Product Papers and various
other credit related documents in place provides the firm foundation for a strong credit risk management environment in the bank by
defining clear roles and responsibilities of various functions and risk takers in Credit system. The Bank’s Credit Policy elaborates credit
standards and guideline for effective risk management. The Bank has delegated credit approval limits to various officials to approve and
sanction various amount of credit request based on their individual expertise and risk judgment capability. The key independent units
responsible for ensuring effective Credit Risk Management in the bank are Credit Risk Management Department, Credit Administration
Department, Control Department, Special Assets Management Department, various Business Units and Internal Audit.
A thorough analysis of the borrower and the industry in which the borrower operates is ensured prior extending credit facilities.
The Bank also has an internal credit risk rating procedure in place to categorize customers in different risk profiles and formulate
appropriate account strategies. The Bank primarily focuses on ensuring prudent financing requirements of the client and the client’s
capacity to repay the debt obligation on time.
Credit Risk Management Committee (CRMC) and Risk Management Committee (RMC) play a pivotal role in the credit risk management
of the Bank. The existing/probable credit risk issues are reviewed, necessary changes required in the credit system to mitigate such
risk are identified and required decisions are made as appropriate.
The Bank has a product wise and industry/sector wise portfolio and NPL thresholds to monitor the quality of loan portfolio and
manage the concentration risk. These thresholds are reviewed on periodical basis in CRMC and RMC in quarterly interval for required
actions/strategic decisions.
Market Risk and Operation Risk Management in NMB Bank:

Market and Operation Risk management in Nepalese Banks has been a newer challenge. In the times of volatility and fluctuations in
the market, NMB Bank needs to prove its determination by withstanding the market variations and achieve sustainability in terms of
growth as well as to have a stable share value. Hence, an essential component of enhanced risk management framework would be to
mitigate all the risks and rewards of the products and services offered by the bank.
NMB has passed through a monumental change aer the merger with four Development Banks and one Finance Company. NMB has
taken strategic focus on digitization and technological advancement to enhance banks services as well as risk management.
NMB ensures parity between risk and return and hence, management of risk by incorporating a set of systematic and professional
methods especially those defined by the Basel III becomes an essential requirement for us.
In the course of operations, the bank is invariably faced with different types of risks that may have a potentially negative effect on the
business. NMB Bank’s risk management approach includes risk identification, measurement and assessment, and minimizes impact
on the financial result and capital of the bank.
Asset & Liability Committee (ALCO) manages the overall asset and liability position of the Bank. It also ensures that the asset &
liability position, investment and liquidity are maintained at a desired level in compliance to NRB Directives. Risk monitoring is done
periodically-at least on monthly basis by Treasury, Market Risk and Finance Departments by conducting stress testing, GAP analysis
and preparing various reports.
Market risk includes interest rate and foreign exchange risk

Interest rate risk is the risk of negative effects on the financial result and capital of the bank as a result of changes in interest rates.
The bank’s products are mostly based on floating interest rate. Only fixed deposits are with fixed interest rate. In Nepalese local
market, short term movement in interest rate is negligible. Pricing Committee monitors the interest rate movement on regular basis.
Foreign exchange risk is the risk of negative effects on the financial result and capital of the bank caused by changes in exchange rates.
The foreign exchange risk of the bank is minimal as all the transactions are carried out on behalf of the customers against underlying
remittances and trade transactions.
Operational risk is the risk of negative effects on the financial result and capital of the bank caused by omissions in the work of
employees, inadequate internal control procedures and processes, inadequate management of information and other systems, and
unforeseeable external events.
NMB Bank has independent department to look aer operational risk wherein Operational Risk Management Committee meets on
monthly basis to discuss and plan the way forward to mitigate potential operational risk identified.
Bank has developed and adhered to Minimum Control Standards and Incident Reporting Guidelines along with Whistle Blowing Policy
to identify potential operational risks. Operational Risk Department independently assess each incident/event/cause to measure the
risk grade which is ultimately discussed/ analyzed further in Operational Risk Management Committee to put appropriate controls
in place. If required, the incident/event/cause along with the risk assessment, probability and impact is escalated further to Risk
Management Committee or the Board of the Bank. Apart from that, Operational Risk Unit conducts branch/ department visits to
monitor/ review the branches and departments and also to train/ create awareness on operational risk.
Liquidity Risk
Liquidity risk is the potential event where the Bank either does not have sufficient liquid financial resources available to meet all its
obligations as they fall due, or can only access these financial resources at excessive cost. The Liquidity Risk Framework governs
liquidity risk management and is managed by ALCO. In accordance with that policy, the Bank maintains a liquid portfolio of marketable
securities as a liquidity buffer.
E&S Risk
The Bank has successfully implemented a project for establishing a robust system for effective management of Environmental and
Social risk. The integration of E&S risk management system with Credit Risk Management system of the Bank is also completed. In
order to implement the system, the Bank has obtained technical support from FMO and CDC and also appointed a UK based company
Earth Active for expert support in developing Environmental and Social risk Management System (ESMS) and to strengthen E&S
capacity of the staffs.
The bank has Appointed E&S Officer for management of Environmental and Social risk.
Other Risk
Management of other risk such as Reputational, Legal & Compliance, Environmental and Social Risk Management and Human
Resource (HR) etc. is equally pertinent as the bank grows. The bank has separate department to oversee Legal & Compliance issues.
HR Department and Board level HR Committee is responsible for all HR functions and related risk management.
Internal Control
The Board and the management is committed in managing risks and in controlling its business and financial activities in a manner
which enables it to maximize profitable business opportunities, avoid or minimize risks which can cause potential loss or reputational
damage to the bank, ensure compliance with applicable laws and regulations and enhance resilience to external events. To achieve
this, bank has established set of policies and procedures for risk identification, risk evaluation, risk mitigation and control/monitoring.
The effectiveness of the Company’s internal control system is reviewed regularly by the Board, Risk Management Committee,
Management and Internal Audit.
The Internal Audit monitors compliance with policies/standards and the effectiveness of internal control structures across the Company
through its program of business/unit audits. The Internal Audit function is focused on the areas of greatest risk as determined by a
risk-based assessment methodology. Internal Audit reports are periodically forwarded to the Audit Committee. The findings of all
audits are reported to the Chief Executive Officer, department heads and branch managers for initiating immediate corrective measures
Fair value measurements are those derived from unadjusted
quoted prices in active markets for identical assets or liabilities.
Level 1
Valuations are those with quoted prices for similar instruments in

active markets or quoted prices for identical or similar instruments
in inactive markets and financial instruments valued using models
where all significant inputs are observable.
Level 2
Portfolios are those where at least one input, which could have
a significant effect on the instrument’s valuation, is not based on
observable market data.
Level 3
28. Categories of Financial Instruments and Fair Value Hierarchy

Assets and liabilities carried at fair value or for which fair values are disclosed have been classified into three levels according to the
observability of the significant inputs used to determine the fair values. Changes in the observability of significant valuation inputs
during the reporting period may result in a transfer of assets and liabilities within the fair value hierarchy. The Bank recognises
transfers between levels of the fair value hierarchy when there is a significant change in either its principal market or the level of
observability of the inputs to the valuation techniques as at the end of the reporting period.
Financial instruments are measured on an ongoing basis either at fair value or at amortized cost. The summary of significant accounting
policies describes how the classes of financial instruments are measured, and how income and expenses, including fair value gains
and losses, are recognized. The following table analyses the carrying amounts of the financial instruments by category as defined in
NAS 39 and by headings of the Statement of Financial Position.
The Hierarchy of fair value measurement is given below:
Fair value As at As at 31 Asar 2078 As at As at 31 Asar 2077

Hierarchy
Particulars (Level) Carrying Value Fair value Carrying Value Fair value
FVTPL
Other trading assets 3 2,660,000 2,660,000 266,890,000 266,890,000
Derivative financial instruments 1 17,161,392,134 17,161,392,134 10,066,295,972 10,066,295,972
Subtotal 17,164,052,134 17,164,052,134 10,333,185,972 10,333,185,972
FVTOCI
Quoted Equities 1 713,959,469 713,959,469 915,484,981 915,484,981
Unquoted Equities 3 74,324,000 74,324,000 114,166,700 114,166,700
Subtotal 788,283,469 788,283,469 1,029,651,681 1,029,651,681
Grand-Total 17,952,335,603 17,952,335,603 11,362,837,652 11,362,837,652
Amortised cost
Cash and cash equivalent 3 13,887,370,526 13,887,370,526 11,098,349,234 11,098,349,234
Due from Nepal Rastra Bank 3 19,218,505,528 19,218,505,528 15,249,998,507 15,249,998,507
Placement with BFI's 3 2,717,148,715 2,717,148,715 3,304,233,792 3,304,233,792
Loan and advances to B/FIs 3 5,194,470,677 5,194,470,677 4,665,864,579 4,665,864,579
Loans and advances to customers 3 151,014,123,921 151,014,123,921 115,668,472,666 115,668,472,666
Investment securities (except 3 16,665,279,464 16,665,279,464 13,969,104,367 13,969,104,367
equity instruments)
Subtotal 208,696,898,831 208,696,898,831 163,956,023,145 163,956,023,145
Total of Financial Assets 226,649,234,434 226,649,234,434 175,318,860,797 175,318,860,797
Fair value As at As at 31 Asar 2078 As at As at 31 Asar 2077

Hierarchy
Particulars (Level) Carrying Value Fair value Carrying Value Fair value
FVTPL/FVTOCI
Liability for employees DBO 3 104,982,941 104,982,941 95,134,118 95,134,118
Subtotal 104,982,941 104,982,941 95,134,118 95,134,118
Amortised cost
Due to Bank and Financial 3 1,964,515,728 1,964,515,728 3,150,014,840 3,150,014,840
Institutions
Due to Nepal Rastra Bank 3 7,597,982,045 7,597,982,045 4,832,501,544 4,832,501,544
Deposits from customers 3 164,489,285,837 164,489,285,837 131,660,368,354 131,660,368,354
Borrowing 3 7,443,810,000 7,443,810,000 3,416,310,000 3,416,310,000
Other liabilities 3 3,163,069,994 3,163,069,994 2,749,960,864 2,749,960,864
Debt securities issued 3 5,293,994,350 5,293,994,350 2,279,834,432 2,279,834,432
Subtotal 189,952,657,954 189,952,657,954 148,088,990,034 148,088,990,034
FVTPL
Derivative financial instruments 1 17,127,036,376 17,127,036,376 10,008,212,670 10,008,212,670
Subtotal 17,127,036,376 17,127,036,376 10,008,212,670 10,008,212,670
Total of Financial Liabilities 207,184,677,271 207,184,677,271 158,192,336,822 158,192,336,822
29. Capital Adequacy

The capital adequacy status as of 15 July 2021 is given below (NPR in thousand):
NMB Bank Limited
Capital Adequacy Table
2078 Ashad End (15 July 2021)
Particulars 2078 Ashad End 2077 Ashad End

1.1 Risk Weighted Exposures
a Risk Weighted Exposure for Credit Risk 177,479,698 136,389,233
b Risk Weighted Exposure for Operational Risk 8,731,236 6,932,979
c Risk Weighted Exposure for Market Risk 3,421,912 2,710,493
Total Risk Weighted Exposures (a+b+c) 189,632,846 146,032,705
Adjustments under Pillar II
Add : RWE equvalent to reciprocal of capital charge of 3 % of gross income. 2,036,878 2,075,662
Add : 2% of the the total RWE due to Supervisory add up 3,792,657 2,920,654
Add: 2% of total RWE, Desired level of disclosure requirement has not been achieved. - -
Total Risk Weighted Exposures (Aer Bank’s adjustments of Pillar II) 195,462,381 151,029,021
1.2 Capital
Tier 1 Capital (Core Capital) (CET1 +AT1) 22,317,905 19,630,215
a Paid up Equity Share Capital 16,325,961 13,950,987
b Irredeemable Non-cumulative preference shares - -
c Share Premium 87,665 723,824
d Proposed Bonus Equity Shares - -
e Statutory General Reserves 3,647,758 3,010,880
f Retained Earnings 2,515,343 1,737,220
g Un-audited current year cumulative profit/(Loss) - -
h Capital Redemption Reserve - -
i Capital Adjustment Reserve 57,326 57,326
Particulars 2078 Ashad End 2077 Ashad End
j Dividend Equalization Reserves - -
k Less: Deferred Tax Assets
l Other Free Reserve - -
m Debenture Redemption Reserve 23,396 500,000
n Less: Goodwill - -
o Less: Intangible Assets (115,371) (125,849)
p Less: Fictitious Assets - -
q Less: Investment in equity in licensed Financial Institutions - -
r Less: Investment in equity of institutions with financial interests (210,000) (210,000)
s Less: Investment in equity of institutions in excess of limits - -
t Less: Investments arising out of underwriting commitments - -
u Less: Reciprocal crossholdings - -
v Less: Purchase of land & building in excess of limit and unutilized (14,173) (14,173)
w Less: Other Deductions - -
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 II) 7,152,461 3,146,045
a Cumulative and/or Redeemable Preference Share - -
b Subordinated Term Debt 5,184,510 1,684,505
c Hybrid Capital Instruments - -
d General loan loss provision 1,832,768 1,337,614
e Exchange Equalization Reserve 125,183 102,426
f Investment Adjustment Reserve - 11,500
g Assets Revaluation Reserve - -
h Other Reserves 10,000 10,000
Total Capital Fund (Tier I and Tier II) 29,470,366 22,776,260
1.3 Capital Adequacy Ratios
Common Equity Tier 1 Capital to Total Risk Weighted Exposures
11.42 13.00
(Aer Bank’s adjustments of Pillar II)
Tier 1 Capital to Total Risk Weighted Exposures 11.42 13.00
Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures 15.08 15.08
Market Risk Exposures

2078 Ashad End 2077 Ashad End Relevant
S.No. Currency
Open Position (FCY) Open Position (NPR) Relevant Open Position Open Position
1 INR (4,638,565) (7,425,184) 7,425,184 5,707,197
2 USD 125.6 14,979 14,979 119,666
3 GBP (66.0) (10,912) 10,912 1,347
4 CHF (3.7) (484) 484 20,720
5 EUR (67.7) (9,539) 9,539 1,466
6 JPY (22,040.9) (23,887) 23,887 1,120
7 SEK (1.0) (14) 14 13
8 DKK (13.6) (257) 257 725
9 HKD (5.6) (86) 86 1,505
10 AUD (7.5) (668) 668 3,193
2078 Ashad End 2077 Ashad End Relevant

S.No. Currency
Open Position (FCY) Open Position (NPR) Relevant Open Position Open Position
11 SGD (12.8) (1,129) 1,129 4,148

12 KRW (1,667.0) (174) 174 472
13 AED (789.7) (25,640) 25,640 27,708
14 MYR (6.1) (173) 173 13,425
15 THB (97.7) (356) 356 1,185
16 QAR (393.8) (12,682) 12,682 14,869
17 CNY (61.8) (1,141) 1,141 1,185
18 CAD (4.5) (432) 432 340
19 SAR (37.3) (1,186) 1,186 42,305
20 KWD (0.0) (16) 16 -
21 BHD (0.0) (13) 13 1,096
Total Open Position (a) 7,528,950 5,963,685
Fixed Percentage (b) 5% 5%
Capital Charge for Market Risk [c=(a×b)] 376,448 298,184
Risk Weight (reciprocal of capital requirement of 10%) in times (d) 9.09 9.09
Equivalent Risk Weight Exposure [e=(c×d)] 3,421,912 2,710,493
Operation Risk Exposures
Years before 2078 Ashar End

Particulars 2074/75 2075/76 2076/77
Net Interest Income 2,904,014 5,469,754 5,758,195
Commission and Discount Income 794,250 1,205,938 956,286
Other Operating Income 164,962 211,407 217,052
Exchange Fluctuation Income 299,606 355,785 384,157
Addition/Deduction in Interest Suspense during the period (33,010) 368,638 153,608
Gross income (a) 4,129,822 7,611,523 7,469,298
Alfa (b) 15% 15% 15%
Fixed Percentage of Gross Income [c=(a×b)] 619,473 1,141,728 1,120,395
Capital Requirement for operational risk (d) (average of c) 960,532
Risk Weight (reciprocal of capital requirement of 10%) in times (e) 9.09
Equivalent Risk Weight Exposure [f=(d×e)] 8,731,236
If Gross Income for all the last three years is negative (6.4 a 8)
Total Credit and Investments (net of specific Provision)

Capital Requirement for Operational Risk (5%)
Risk Weight (reciprocal of capital requirement of 11% ) in times 10
Equivalent Risk Weight Exposure (g)
Equivalent Risk Weight Exposure (h= f + g) 8,731,236
124
Eligible Credit Risk Mitigants
Deposits Deposits with Govt.& NRB G’tee of Govt. Sec/G’tee of G’tee of G’tee of Sec/G’tee of
with Bank other Banks/FI Gold Securities of Nepal Other Sovereigns domestic banks MDBs Foreign Banks
S.No. Credit exposures (a) (b) (c) (d) (e) (f) (g) (h) (i) Total
Balance Sheet Exposures
1 Cash Balance - - - - - - - - - -
2 Balance With Nepal Rastra Bank - - - - - - - - - -
3 Gold - - - - - - - - - -
4 Investment in Nepalese Government Securities - - - - - - - - - -
5 All Claims on Government of Nepal - - - - - - - - - -
6 Investment in Nepal Rastra Bank securities - - - - - - - - - -
7 All claims on Nepal Rastra Bank - - - - - - - - - -
8 Claims on Foreign government and Central Bank (ECA -1) - - - - - - - - - -
11 Claims on Foreign government and Central Bank (ECA-4-6) - - - - - - - - - -
13 Claims on BIS, IMF, ECB, EC And Multilateral Development Banks - - - - - - - - - -
14 Claims on Other Multilateral Development Banks - - - - - - - - - -
15 Claims on Public Sector Entity (ECA 0-1) - - - - - - - - - -
16 Claims on Public Sector Entity (ECA 2) - - - - - - - - - -
17 Claims on Public Sector Entity (ECA 3-6) - - - - - - - - - -
18 Claims on Public Sector Entity (ECA 7) - - - - - - - - - -
19 Claims on domestic banks that meet capital adequacy - - - - - - - - - -
requirements
20 Claims on domestic banks that do not meet capital adequacy - - - - - - - - - -
requirements
21 Claims on foreign bank (ECA Rating 0-1) - - - - - - - - - -
22 Claims on foreign bank (ECA Rating 2) - - - - - - - - - -
23 Claims on foreign bank (ECA Rating 3-6) - - - - - - - - - -
24 Claims on foreign bank (ECA Rating 7) - - - - - - - - - -
25 Claims on foreign bank incorporated in SAARC region operating - - - - - - - - - -
with a buffer of 1% above their respective regulatory capital
requirement
Claims on Domestic Corporates - - - - - - - - - -
(Credit rating score equivalent to AAA)
(Credit rating score equivalent to AA+ to AA-)
Claims on Domestic Corporates - - - - - - - - 875,197 875,197
(Credit rating score equivalent to A+ to A-)
(Credit rating score equivalent to BBB+ & below)
26 Claims on Domestic Corporates (Unrated) 34,613 - - - - - - - - 34,613

27 Claims on Foreign Corporates (ECA 0-1) - - - - - - - - - -
28 Claims on Foreign Corporates (ECA 2) - - - - - - - - - -
29 Claims on Foreign Corporates (ECA 3-6) - - - - - - - - - -
30 Claims on Foreign Corporates (ECA 7) - - - - - - - - - -
31 Regulatory Retail Portfolio (Not Overdue) 173,064 - 80,949 - - - - - - 254,013
32 Claims fulfilling all criterion of regulatory retail - - - - - - - - - -
except granularity
33 Claims secured by residential properties - - - - - - - - - -
34 Claims not fully secured by residential properties - - - - - - - - - -
35 Claims secured by residential properties (Overdue) - - - - - - - - - -
36 Claims secured by Commercial real estate - - - - - - - - - -
37 Past due claims - - 4,083 - - - - - - 4,083
(except for claim secured by residential properties)
38 High Risk claims 545,954 - 41,495 - - - - - - 587,449
Lending against securities (bonds & shares) - - - - - - - - - -
39 Investments in equity and other capital instruments of - - - - - - - - - -
institutions listed in the stock exchange
40 Investments in equity and other capital instruments of - - - - - - - - - -
institutions not listed in the stock exchange
41 Other Assets (as per attachment) - - - - - - - - - -
Total 753,631 - 126,527 - - - - - 875,197 1,755,355
Off Balance Sheet Exposures
Forward Exchange Contract Liabilities - - - - - - - - - -
LC Commitments With Original Maturity Upto 6 months domestic - - - - - - - 850,964
counterparty 392,185 458,779
Foreign counterparty (ECA Rating 0-1) - - - - - - - - - -
125
126
Deposits Deposits with Govt.& NRB G’tee of Govt. Sec/G’tee of G’tee of G’tee of Sec/G’tee of
with Bank other Banks/FI Gold Securities of Nepal Other Sovereigns domestic banks MDBs Foreign Banks
S.No. Credit exposures (a) (b) (c) (d) (e) (f) (g) (h) (i) Total
Foreign counterparty (ECA Rating 2) - - - - - - - - - -
LC Commitments With Original Maturity Over 6 months domestic 769,504 - - - - - - 7,268,733 - 8,038,237
counterparty
Bid Bond, Performance Bond and Counter guarantee 19,774 - - - - - - - - 19,774
domestic counterparty
Foreign counterparty (ECA Rating 0-1) - - - - - - - - 60,502 60,502
Underwriting commitments - - - - - - - - - -
Lending of Bank’s Securities or Posting of - - - - - - - - - -
Securities as collateral
Repurchase Agreements, Assets sale with recourse - - - - - - - - - -
Advance Payment Guarantee 173,626 - - - - - - - - 173,626
Financial Guarantee 818 - - - - - - - - 818
Acceptances and Endorsements 68,716 - - - - - - - - 68,716
Unpaid portion of Partly paid shares and Securities - - - - - - - - - -
Irrevocable Credit commitments(Short Term) - - - - - - - - - -
Irrevocable Credit commitments(Long Term) - - - - - - - - - -
Claims on foreign bank incorporated in SAARC region operating - - - - - - - - - -
requirement
Other Contingent Liabilities - - - - - - - - - -
Total 1,424,622 - - - - - - 7,727,512 60,502 9,212,636
Total Credit Risk Exposure 2,178,253 - 126,527 - - - - 7,727,512 935,699 10,967,991
Credit Risk
2078 Ashad End Previous FY
Specific Risk Risk Weighted
Book Value Eligible CRM Net Value
Provision Weight Exposures
Risk Weighted
Assets (a) (b) (c) (d=a-b-c) (e) (f=d*e) Net Value Exposures
Balance Sheet Exposures
Cash Balance 4,183,570 - - 4,183,570 0% - 3,745,463 -
Balance With Nepal Rastra Bank 14,537,813 - - 14,537,813 0% - 10,655,234 -
Gold 137,685 - - 137,685 0% - - -
Investment in Nepalese Government Securities 16,732,232 - - 16,732,232 0% - 16,342,507 -
All Claims on Government of Nepal 5,880,973 - - 5,880,973 0% - 5,457,752 -
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-4-6) - - - - 100% - - -
Claims On BIS, IMF, ECB, EC and 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% - - -
Claims on domestic banks that meet capital adequacy
requirements 5,833,009 - - 5,833,009 20% 1,166,602 1,287,514 257,503
Claims on domestic banks that do not meet capital adequacy
requirements 2,764 - - 2,764 100% 2,764 2,764 2,764
Claims on foreign bank (ECA Rating 0-1) 1,464,971 - - 1,464,971 20% 292,994 1,964,889 392,978
Claims on foreign bank (ECA Rating 2) 599,813 - - 599,813 50% 299,907 1,132,609 566,305
Claims on foreign bank (ECA Rating 3-6) - - - - 100% - - -
Claims on foreign bank (ECA Rating 7) - - - - 150% - - -
127
128
Risk Weighted
Claims on foreign bank incorporated in SAARC region operating
requirement 3,514,070 - - 3,514,070 20% 702,814 3,930,433 786,087
Claims on Domestic Corporates
(Credit rating score equivalent to AAA) - - - - 80% - - -
Claims on Domestic Corporates (Credit rating score equivalent
to AA+ to AA-) - - - - 85% - - -
to A+ to A-) 4,375,984 - 875,197 3,500,787 90% 3,150,709 - -
to BBB+ & below) 7,766,469 - - 7,766,469 100% 7,766,469 - -
Claims on Domestic Corporates (Unrated) 91,829,338 - 34,613 91,794,725 100% 91,794,725 72,402,286 72,402,286
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) 19,018,610 - 254,013 18,764,597 75% 14,073,448 16,171,283 12,128,462
Claims fulfilling all criterion of regularity retail except granularity - - - - 100% - - -
Claims secured by residential properties 14,960,290 - - 14,960,290 60% 8,976,174 13,584,155 8,150,493
Claims not fully secured by residential properties - - - - 150% - - -
Claims secured by residential properties (Overdue) 834,088 149,663 - 684,425 100% 684,425 435,020 435,020
Claims secured by Commercial real estate 1,704,978 - - 1,704,978 100% 1,704,978 929,564 929,564
Past due claims (except for claims secured by residential
properties) 5,336,236 2,273,133 4,083 3,059,020 150% 4,588,530 1,242,849 1,864,274
High Risk claims 8,235,933 - 587,449 7,648,484 150% 11,472,726 12,014,823 18,022,234
Lending against securities (bonds & shares) 3,894,926 - - 3,894,926 100% 3,894,926 520,676 520,676
Investments in equity and other capital instruments of institutions
listed in stock exchange 643,501 249,406 - 394,095 100% 394,095 1,186,650 1,186,650
Investments in equity and other capital instruments of institutions 768,438 - - 768,438 150% 1,152,657 5,489 8,234
not listed in the stock exchange
Staff loan secured by residential property 2,268,304 - - 2,268,304 50% 1,134,152 1,700,038 850,019
Interest Receivable/claim on government securities 183,813 - - 183,813 0% - 156,742 -
Cash in transit and other cash items in the process of collection - - - - 20% - - -
Other Assets (as per attachment) 7,542,889 2,869,439 - 4,673,450 100% 4,673,450 2,450,907 2,450,907
TOTAL 222,250,696 5,541,640 1,755,355 214,953,701 157,926,544 167,319,646 120,954,453
Off Balance Sheet Exposures
Revocable Commitments - - - - 0% - - -
Bills Under Collection 1,472,952 - - 1,472,952 0% - 3,509,808 -
Forward Exchange Contract Liabilities 17,127,036 - - 17,127,036 10% 1,712,704 - -
LC Commitments With Original Maturity Upto 6 months domestic
counterparty 7,046,903 - 850,964 6,195,939 20% 1,239,188 2,108,327 421,665
Foreign counterparty (ECA Rating 0-1) - - - - 20% - - -
Foreign counterparty (ECA Rating 2) - - - - 50% - - -
LC Commitments With Original Maturity Over 6 months domestic
counterparty 18,849,314 - 8,038,237 10,811,076 50% 5,405,538 11,457,530 5,728,765
Bid Bond, Performance Bond and Counter guarantee domestic
counterparty 6,973,483 - 19,774 6,953,710 40% 2,781,484 5,412,876 2,706,438
Foreign counterparty (ECA Rating 0-1) 75,627 - 60,502 15,125 20% 3,025 44,076 8,815
Foreign counterparty (ECA Rating 2) - - - - 50% - 108,217 54,109
Foreign counterparty (ECA Rating 3-6) 153,404 - - 153,404 100% 153,404 - -
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 1,591,781 - 173,626 1,418,155 100% 1,418,155 1,664,114 1,664,114
Financial Guarantee 7,000 - 818 6,183 100% 6,183 5,133 5,133
Acceptances and Endorsements 2,082,087 - 68,716 2,013,372 100% 2,013,372 580,936 580,936
Unpaid portion of Partly paid shares and Securities - - - - 100% - - -
129
130
Risk Weighted
Irrevocable Credit commitments (short term) 12,993,709 - - 12,993,709 20% 2,598,742 10,016,993 2,003,399
Irrevocable Credit commitments (long term) - - - - 50% - - -
Claims on foreign bank incorporated in SAARC region operating 9,688,313 - - 9,688,313 20% 1,937,663 10,280,247 2,056,049
requirement
Other Contingent Liabilities 283,698 - - 283,698 100% 283,698 205,357 205,357
Unpaid Guarantee Claims - - - - 200% - - -
TOTAL 78,345,308 - 9,212,636 69,132,672 19,553,154 45,393,614 15,434,780
Total RWE for credit Risk 300,596,004 5,541,640 10,967,991 284,086,373 177,479,698 212,713,259 136,389,233
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 ( Aer Bank’s adjustments of Pillar II)
30. Operating Segments

a) General Information
The bank has identified its segments on the basis of geographical location as per provinces of the country. The bank supervises,
manages and controls its branch networks through regional demarcations. All the transactions have been done at the arm's
length prices between the segments with intra segment revenue and cost being eliminated at the Head Office. Interest earnings
and foreign exchange gains/losses generated while conducting businesses under different segments are reported under the
respective segment. Equity and Tax Expense 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.
b) Description of the types of products and services from which each reportable segment derives its revenues
The products and services offered by the Bank can be broadly divided into the following categories:
1. Retail Banking: Retail banking, also known as consumer banking, is the provision of services by a bank to the general public,
rather than to companies, corporations or other banks. Banking services which are regarded as retail include provision of
savings and transactional accounts, mortgages, personal loans, debit cards, and credit cards.
2. Corporate, SME & Institutional (except Retail): The corporate and institutional banking segment of banks typically serves
a diverse range of clients, ranging from small- to mid-sized local businesses with a few millions in revenues to large
conglomerates with billions in sales and offices across the country.
3. Treasury Unit – The unit has two divisions – Front and back treasury operations. It operates within the consideration of the
foreign exchange rules and regulations under the guidance of Nepal Rastra Bank (NRB) – central bank of Nepal. The major
functions are exchange rate updation, check foreign currency position, fund management, deal T-bills/ bond, interbank
placements, forward contract and other treasury research.
4. Trade Finance - The Bank's trade finance operations like LC, Guarantee etc are handled by trade finance.
5. Others
c) Information about profit or loss, assets and liabilities
Fig. in Mio.
SME &
Particulars Retail MSME Corporate Deprived Treasury Others Total
a Revenues from external customers 3,563 4,678 5,351 642 475 1,167 15,877
b Intersegment revenues 3,026 (2,238) (112) (425) 430 (682) -
c Net Revenue 537 6,916 5,464 1,067 45 1,849 15,877
d Interest Revenue 3,070 4,397 4,971 639 - 884 13,983
e Interest Expense 5,021 9 2,850 436 - 8 8,323
f Net Interest Revenue (b) 1,075 2,151 2,009 (221) 430 217 5,661
g Depreciation and amortization 58 89 88 (8) 33 9 269
h Segment profit/(loss) 1,337 1,291 839 (173) 506 44 3,844
i Entity's interest in the profit or loss
of associates accounted for using
equity method - Not Applicable
j Other material items - - - - - - -
OCI Items – Non Cash - - - - - 174 174
k Impairment of assets 947 1,420 2,154 219 - - 4,740
l Segment assets 28,897 43,817 60,554 8,449 36,212 53,618 231,547
m Segment liabilities 90,043 1,738 55,779 543 6,149 77,295 231,547
d) Measurement of operating segment profit or loss, assets and liabilities

 Basis of accounting for any transactions between reportable segments:
The Bank is organised for management and reporting purposes into segments such as: Retail, SME & MSME, Corporate,
Deprived, Treasury and Others. The Management monitors the operating results of its business units separately for the
purpose of making decisions about resource allocation and performance assessment. Income tax is managed on a group
basis and are not allocated to operating segments. All transactions between segments are conducted on an arm’s length
basis, with inter-segment revenue and costs being eliminated in “Others”. Support costs are also allocated to Retail,
Corporate, SME & MSME, Deprived, Treasury and others based on Management’s estimates of the benefits accruing to
these segments for the costs incurred.
i. Nature of any differences between the measurements of the reportable segment's profits or losses and the entity's
profit or loss before income tax
None
ii. Nature of any differences between the measurements of the reportable segment's assets and the entity's assets.
None
iii. Nature of any changes from prior periods in the measurement methods used to determine reported segment profit or
loss and the effect, if any,
The bank has segmental division based upon the business segment and geographical segment also.
IV. Nature and effect of any asymmetrical allocations to reportable segments
None
e) Reconciliations of reportable segment revenues, profit or loss, assets and liabilities
Particulars Amount (Fig in Mio.)
a Revenue
Total Revenues for reportable segments 19,334
Other Revenues -
Elimination of intersegment revenues 3,457
Entity's Revenues 15,877
b Profit or Loss
Total profit or loss for reportable segments 3,844
Other profit or loss -
Elimination of intersegment profits -
Unallocated amounts -
Profit before income tax 3,844
c Assets
Total assets for reportable segments 231,547
Other assets -
Entity's assets 231,547
d Liabilities
Total liabilities for reportable segments 231,547
Other liabilities -
Entity's liabilities 231,547
f) Information about products and services

Particulars NPR in Mio. (Fees Income)
Retail Banking 496
Corporate, SME & Institutional 662
Treasury 475
Trade Finance 24
Others -
Total 1657
g) Information about geographical areas

Particulars Revenue (NPR in Mio.)
a Domestic 15,877
- Province 1 1,699
- Province 2 839
- Bagmati 9,231
- Gandaki Province 1,689
- Province 5 1,593
- Karnali and Far Western Province 826
b Foreign -
Total (a+b) 15,877
h) Information about major customers

Information about the extent of its reliance on its major customers, if revenue from a single external customer amounts to 10
percent or more of the entity's revenue.
Not Applicable
31. Share options and share based payment

The Group does not have any share options or share-based payment transactions in the reporting period or in earlier period.
32. Merger and acquisition

During the fiscal year 2077/78, the bank has acquired Kanchan Development Bank Limited and commenced joint operations from 23
August 2020 (07 Bhadra 2077) as NMB Bank Limited.
Erstwhile KADBL (E-KADBL) was a B Class Licensed Financial Institution with head office at Mahendranagar with Paid -up Capital
of NPR 584.4 Mio. and had the Branch network in 5 districts viz. Kailali, Kanchanpur, Dadeldhura, Doti & Baitadi with total Deposit
mobilization of 6.67 Billion and Loan and Advances totalling 5.12 Billion. The bank has acquired KDBL as a part of its strategic intent
to expand the footprints in province 6 and 7 whereby reaching in every part of the country. E-KADBL has prepared audited financial
statements as of 6 Bhadra 2077 (22 August 2020). Assets and Liabilities of the merged entity as recognized in its audited balance
sheet has been recorded in the books of accounts of NMB Bank Limited as on the date of joint operation date being acquisition date
i.e., 06 Bhadra 2077 (23 August 2020). Profit and Loss account of the merged entity as of date of merger are prepared separately
and transferred to retained earnings of NMB Bank Limited. The bank has accounted merger related expenses in Merger expenses in
Schedule 4.37.1 at other operating expenses.
The change of equity of the bank due to the acquistion is as below:
% of voting equity interests Face Value of Consideration

Particulars Date of Acquisition acquired Transferred (In Full Figure)
Kanchan Development Bank Ltd. 23 August 2020 100% 496,765,500
Consideration Transferred
The Bank has issued 4,967,655 units of shares to shareholders of E-KADBL as purchase consideration on the basis of swap ratio of
0.85 shares of NMB Bank Ltd. for each share of E-KADBL recommended by an independent valuator in accordance with Merger and
Acquisition Bylaw 2073 issued by the Central Bank. The valuation has been done by Due Diligence Auditor taking Assets and Liabilities
and other necessary information as on 14 January 2020 (Poush end 2076).
Particulars NPR
Cash Nil
Fair Value of Equity shares issued of NMB Bank Ltd. 801,133,722
Fair value of other Tangible or Intangible assets Nil
Contingent consideration arrangement Nil
Fair Value of Consideration Transferred 801,133,722
Assets acquired and liabilities recognised at the date of acquisition
Particulars Fair Value (NPR)

Cash and cash equivalent 1,811,706,858
Due from Nepal Rastra Bank 356,445,216
Loan and advances to B/FIs 171,327,260
Loans and advances to customers 4,804,299,458
Investment securities 44,538,673
Current tax assets 3,712,506
Investment Property 14,914,641
Property and equipment 120,687,524
Goodwill and Intangible assets 5,764,711
Deferred tax assets 5,361,636
Other assets 10,037,804
Particulars Fair Value (NPR)
Total Assets 7,348,796,288
Due to Bank and Financial Institutions 140,814,062
Deposits from customers 6,524,305,830
Other liabilities 88,365,693
Total Liabilities 6,753,485,585
Net Assets Acquired 595,310,703
Mergers and Acquisitions among Financial Institutions in the country are guided by Merger and Acquisition By-Laws 2019 (Fourth
Revision) issued by the Nepal Rastra Bank (NRB). Implementation of provisions mentioned in the By-Laws are mandatory and binding
for all Banks and Financial Institutions (BFIs).
Clause 9 (Kha) of the By-Laws spells out accounting treatment for business combinations. The clause states that when the sum
total of Paid-Up Capital of Financial Institutions involved in mergers/acquisition before merger is more than the Paid-Up Capital aer
merger/acquisition, the difference amount is recognized as Capital Reserve. Paid-Up Capital adjustments for mergers/acquisitions are
based on share swap ratio as per due diligence audit report duly approved by NRB. As per the calculation method prescribed above,
the difference amount in Paid-Up Capital amount before and that aer acquisition is NPR 87.66 Million and hence has been recognized
as Capital Reserve.
This treatment differs with the requirement of Nepal Financial Reporting Standards (NFRS) 3 Business Combination and Carve-Outs
issued by The Institute of Chartered Accountants of Nepal. The Bank has opted for accounting based on provisions of Merger and
Acquisition By-Laws as it is mandatory and binding for all BFIs to follow the By-Laws.
33. Additional disclosures of non-consolidated entities

The Group does not have any non-consolidated entities to report for the reporting period and in the comparative previous period.
34. Events aer the Balance Sheet Date

No circumstances have arisen since the Balance Sheet date which would require adjustments to or disclosure in the Financial
Statements other than those disclosed in the notes.
35. Related Party Disclosures

a) Board Member Allowances and Facilities
The Board of Directors has been paid meeting fees of NPR 1,212,000 during the fiscal year. There were 17 Board Meeting
conducted during the period.
As per 24th AGM held on Poush 24, 2076, the chairperson and other members of the Board are paid NPR. 18,000 and NPR.
16,000 respectively per meeting. The Meeting fees paid to different Board Level Committees are as follows:
Board Level Committees No of Meetings Meeting Allowance (NPR)
Audit Committee 6 176,000
Risk Management Committee 7 208,000
Human Resource Service Committee 10 160,000
Assets Laundering Prevention Committee 5 80,000
As per 23rd AGM held on Poush 26, 2075, monthly allowance of NPR 12,000 is being paid. The total amount paid as monthly
allowances to the board members during the fiscal year amounted to NPR 990,735
Existing members of the Board are:
Mr. Pawan Kumar Golyan Chairman (Represents Group – Promoter Shareholder)
Mr. Nico Klaas Geradus Pijl Member (Representative from FMO)
Mr. Jeevan Kumar Katwal Member (Representative from Employees Provident Fund)
Mr. Yogendra Lal Pradhan Member (Represents Group – Public Shareholder)
Mr. Uttam Bhlon Member (Represents Group – Public Shareholder)
Mr. Sirish Kumar Murarka Member (Represents Group – Public Shareholder)
Mr. Pradeep Raj Pandey Independent Director
b) Loans and Advances extended to Promoters

There are no such loans extended to promoters.
c) Compensation Details for Key Management Personnel
Key Management Personnel includes members of Executive Committee of the Bank.
S.No Particulars Amount
A Short Term Employee Benefits 59,931,143
B Post-Employment Benefits Nil
C Other Long Term Benefits Nil
D Termination Benefits (Gratuity and Sick Leave Encashment) Nil
E Share Based Payment Nil
Total of Key Management Personnel Compensation 59,931,143
The Salary and benefits paid to CEO is as follow:

Particulars Basic Salary Provident Fund Allowance Bonus & Welfare Other Perquisites Total Income
C.E.O 6,936,000 693,600 6,694,000 2,985,705 100,083 17,409,388
Key management personnel are also provided with the following benefits:
 Benefits as per the Employee Terms of Service By-laws,
 Bonus to staff as per the Bonus Act,
 Vehicle Fuel Expenses as per the Bank's Staff Vehicle Scheme.
Existing members of Executive Committee include:
 Mr. Sunil KC Chief Executive Officer
 Mr. Pradeep Pradhan Chief Audit Executive
 Ms. Shabnam Limbu Joshi Chief Support Officer
 Mr. Sharad Tegi Tuladhar Chief Policy (Risk) and E&S
 Mr. Sudesh Upadhyaya Chief Business & Strategy Officer
 Mr. Govind Ghimire Chief Business Officer
 Mr. Navin Manandhar Chief Risk Officer
 Mr. Pramod Dahal Chief Operating Officer
 Mr. Roshan Regmi Head Retail Banking
 Mr. Shreejesh Ghimire Chief Investment Officer
 Mr. Binay Dahal Head Business & Planning (Province)
d) Transaction with Subsidiaries
Amount in Thousand
S No Particulars NMB Capital NMB Laghubitta Bittiya Sanstha
1 Investment by NMB Bank Ltd. 200,000 172,488
2 Deposits in NMB Bank Ltd. 299,304 7,316
3 Borrowing from NMB Bank Ltd. - 1,000,000
4 Interest Payment by NMB Bank Ltd. 7,413 -
5 Interest Payment to NMB Bank Ltd. - 56,275
6 Rent Payment to NMB Bank Ltd. 2,586 -
7 Management Fee Payment to NMB Bank 2,400 -
8 Share Registrar Fee payment by NMB Bank 1,000 -
9 Debenture Trustee Fee payment by NMB Bank 100 -
10 Dividend Distribution Fee 1,450 -
11 Dividend Distribution of NMB Hybrid Fund L - 1 to NMB Bank 12,210 -
12 Dividend Distribution of NMB 50 to NMB Bank 8,851 -
13 Dividend Distribution by NMB Capital to NMB Bank 40,000 -
The intra-group related figures have been excluded for presentation of the financial statement of the Group.
Basel Disclosures
1. Capital Management
The bank assesses the impact of the new rules, if any on their capital adequacy through a comprehensive capital planning and
optimisation/mitigation process. The capital planning is an integral part of the Bank’s medium term strategic planning and annual
budget formulation process. Total risk weighted exposures for the projected level of business operations is calculated, the required
capital level is projected, and a plan is formulated to maintain the required capital.
The bank has not raised any capital through hybrid capital instruments till Asar End 2078.
Amounts in NRP thousand
2. Capital Structure and Capital Adequacy:

2.1. Tier 1 Capital and a breakdown of its Components:
S.No. Details Amount
1. Paid up Equity Share Capital 16,325,961
2. Share Premium 87,665
3. Proposed Bonus Equity Shares -
4. Statutory General Reserves 3,647,758
5. Retained Earnings 2,515,343
6. Debenture Redemption Reserve and Deferred Tax Reserve -
7. Capital Adjustment Reserve 57,326
8. Deferred Tax Assets -
9. Debenture Redemption Reserve 23,396
10. Less: Investment in equity of institutions with financial interest (210,000)
11. Less: Intangible Assets (115,371)
12. Less: Purchase of land & building in excess of limit and unutilized (14,173)
Total Core Capital 22,317,905
2.2. Tier 2 Capital and a breakdown of its Components:

S.No Details Amount
1. Subordinated Term Debt 5,184,510
2. General Loan Loss Provision 1,832,768
3. Exchange Equalization Reserve 125,183
4. Investment Adjustment Reserve -
5. Other Reserve 10,000
Total Supplementary Capital 7,152,461
2.3. Detailed information about the Subordinated Term Debts with information on the outstanding
amount, maturity, and amount rose during the year and amount eligible to be reckoned as capital
funds.
The Bank had also issued 10% NMB Debenture 2085” of NPR. 1,684,505,000 on 29 Chaitra 2075 with maturity on 29 Chaitra 2085,
“NMB Rinpatra 8.5% 2087/88” of NPR. 2,000,000,000 on 11 Jestha 2078 with maturity on 11 Jestha 2088 and “NMB Urja Rinpatra
(Energy Bond) 4% 2092/93” of NPR. 1,500,000,000 on 20 Jestha 2078 with maturity on 20 Jestha 2093.
To reflect the diminishing value of these instruments as a continuing source of strength, a cumulative discount (amortization) factor of
20% per annum will be applied for capital adequacy computations, during the last 5 years to maturity.
The amortized cost of debenture as on fiscal year end is NPR 5,293,994,350
The “7% NMB Debenture 2077” amounting to NPR 500 Million has matured in the fiscal year.
2.4. Deductions from Capital

Investment in equity shares of fully owned subsidiary company NMB Capital Ltd amounting to NPR 200,000,000 and CEDB Hydro Fund
amounting to NPR 10,000,000 has been deducted from Tier 1 Capital.
Similarly, the amount of deferred tax reserve has been separately credited to Regulatory reserve, which is not considered for the
purpose of capital ratios.
Intangible asset has also been deducted as per NRB Directive by NPR 115,371,293. The Purchase of land and building in excess of limit
and unutilized amounting to NPR 14,172,950 is also deducted from Capital.
2.5. Total Qualifying Capital

S.No Details Amount
1. Core Capital (Tier 1) 22,317,905
2. Supplementary Capital (Tier 2) 7,152,461
Total Capital Fund 29,470,366
2.6. Capital Adequacy Ratio

S.No Details Percentage
1. Tier 1 Capital to Total Risk Weighted Exposure 11.42%
2. Tier 1 and Tier 2 Capital to Total Risk Weighted Exposure 15.08%
2.7. Summary of the terms, conditions and main features of all capital instruments, especially in
case of subordinated term debts including hybrid capital instruments.
The capital instruments of the Bank include fully paid up Equity Shares and Debenture. Both are non-convertible. The main features of
Debenture have been mentioned under S.No 2.3 above.
3. Risk Exposures
3.1. Risk Weighted Exposures for Credit Risk, Market Risk and Operational Risk
S.No Risk Weighted Exposure Amount
a. Risk Weighted Exposure for Credit Risk 177,479,698
b. Risk Weighted Exposure for Operational Risk 8,731,236
c. Risk Weighted Exposure for Market Risk 3,421,912
Total Risk Weighted Exposures (a+b+c) 189,632,846
Add: RWE equivalent to reciprocal of capital charge of 3 % of gross income. 2,036,878
Add : 2% of the total RWE due to Supervisory add up 3,792,657
Total Risk Weighted Exposures (Aer Bank’s adjustments of Pillar II) 195,462,381
3.2. Risk Weighted Exposures under each of categories of Credit Risk

1. Claims on government and Central Bank NIL
2. Claims on other Official Entities NIL
3. Claims on Bank 1,169,365
4. Claims on Domestic Corporate and Securities Firms 102,711,903
5. Claims on Foreign Corporate 1,295,715
6. Claims on Regulatory Retail Portfolio 14,073,448
7. Claims fulfilling all criterion of regulatory retail except granularity NIL
8. Claims secured by Residential Properties (including staff) 10,110,326
9. Claims not fully secured by residential properties NIL
10. Claims secured by Residential Properties (Overdue) 684,425
11. Claims secured by Commercial Real Estate 1,704,978
12. Past Due Claims 4,588,530
13. High Risk Claims 11,472,726
14. Lending against securities (bonds & shares) 3,894,926
15. Investments 1,546,752
16. Other Assets 4,673,450
17. Off Balance sheet items 19,553,154
Total 177,479,698
3.3. Total Risk Weighted Exposure calculation table

a. Risk Weighted Exposure for Credit Risk 177,479,698
b. Risk Weighted Exposure for Operational Risk 8,731,236
c. Risk Weighted Exposure for Market Risk 3,421,912
1. Total Risk Weighted Exposure 189,632,846
Add: RWE equivalent to reciprocal of capital charge of 3 % of gross income. 2,036,878
Add : 2% of the total RWE due to Supervisory add up 3,792,657
Total Risk Weighted Exposures (Aer Bank’s adjustments of Pillar II) 195,462,381
2. Total Core Capital Fund (Tier 1) 22,317,905
3. Total Capital Fund ( Tier 1 & Tier 2) 29,470,366
4. Total Core Capital to Total Risk Weighted Exposures (%) 11.42%
5. Total Capital to Total Risk Weighted Exposures (%) 15.08%
3.4. Amount of Non-Performing Assets (NPAs)

S.No Category Gross Provision Net
1. Restructured/Rescheduled 54,526 6,816 47,710
2. Substandard 1,286,883 321,721 965,162
3. Doubtful 1,107,305 553,653 553,652
4. Loss 1,145,297 1,145,297 -
Total 3,594,011 2,027,487 1,566,524
The bank has merged with Kanchan Development Bank and started joint operation from 23 August 2020.
3.5. NPA Ratio

Gross NPA to Gross Advances: 2.27%
Net NPA to Net Advances: 1.02%
3.6. Movement of Non-Performing Assets

S.No Particulars Asar End 2077 Ashadh End 2078 Movement
1. Restructure/Reschedule Loan 107,169 54,526 52,643
2. Substandard 785,222 1,286,883 (501,661)
3. Doubtful 1,534,725 1,107,305 427,420
4. Loss 842,366 1,145,297 (302,931)
Total Non-Performing Loan 3,269,482 3,594,011 (324,529)
The bank has merged with Kanchan Development Bank and started joint operation from 23 August 2020.
3.7. Movement of Loan Loss Provision & Interest Suspense on loans & advances
S.No Category Asar End 2077 Ashadh End 2078 Movement
1. Pass 1,742,881 1,940,852 197,971
2. Watch List 521,392 799,878 278,486
3. Restructured 35,088 6,816 (28,272)
4. Substandard 196,213 318,577 122,364
5. Doubtful 766,790 549,642 (217,148)
6. Loss 842,367 1,124,208 281,841
Total Loan Provision 4,104,731 4,739,972 635,241
Accrued Interest Receivable (including staff) 1,846,318 1,376,257 (470,061)
*The accumulated loan loss provision carried forward aer merger with E-KADBL as on merger date is 252.83 Mio.
Aer change of Core Banking System, the interest on majority of risk assets portfolio are due as per English Calender due to which
approximately a fortnight’s interest income are not realized as of fiscal year end 2078.
As per NRB Interest Income Recognition Guideline, the interest amount of NPR. 130.9 Mio. has been reversed and credited to Interest
Suspense during the reporting period.
3.8. Details of Additional Loan Loss Provision

S.No Category Asar End 2078
1. Pass 108,084
2. Watch List 126,489
3. Restructured -
4. Substandard (3,144)
5. Doubtful (4,011)
6. Loss (21,089)
Total Additional Loan Loss Provision 206,330
3.9. Eligible Credit Risk Mitigants (CRM) availed

As per the provisions of the New Capital Adequacy Framework, the bank has claimed all the eligible credit risk Mitigants of NPR
10,967,991 thousands for Balance Sheet and Off Balance Sheet exposures and availed benefit thereof.
4. Compliance with external requirement

The bank is subject to compliance requirement under NRB Directive No.1/077 which has stipulated a minimum Total Capital Adequacy
Ratio (CAR) of 11.00%. The Bank complied with this requirement at all times during the reporting period. The compliance position at
the reporting date is given below:
Capital Parameter Requirement NMB Bank

Minimum Common Equity Capital Ratio 4.50% 8.92%
Capital Conversation Buffer 2.50% 2.50%
Minimum common equity plus capital conservation buffer 7.00% 11.42%
Minimum Tier 1 Capital (Excluding conservation buffer) 6.00% 11.42%
Minimum Total Capital (Excluding conservation buffer) 9.00% 11.42%
Minimum Total Capital (including conservation buffer) 11.00% 15.08%
Leverage Ratio 4.00% 7.58%
5. Summary of the Bank’s internal approach to assess the adequacy of its
capital to support current and future activities
The bank follows Internal Capital Adequacy Assessment Process (ICAAP) and Risk Management Guideline while taking decision on
any business. It has always taken note of ICAAP and has taken steps accordingly in ensuring soundness of capital position and
sustainability of the business.
Risk management is essential for well-being of the overall banking business. Credit, Market and Operational Risk are managed
independently at NMB Bank. Credit Risk Department reviews risk related to credit prior to disbursement of all loans, it is independent
of a loan approver. Credit Risk Management Committee meets once a month to review credit portfolio risk. Market risk is closely
monitored all time and managed through ALCO. Operational Risk Committee which meets once each month is a platform to assess/
monitor operational risk identified vides various units, branches. Effective implementation of process/controls is periodically reviewed
by an Operational Risk Unit. Operational Risk Unit also carries out assurance reviews of the units to evaluate control weakness,
recommends robust controls around the risk areas and monitors execution of control in an ongoing basis.
Audit Committee is formed as per the ‘Terms of Reference’ prescribed by NRB with 3 members. Coordinator of the committee is one
of the Non-Executive Directors with Head Internal Audit as its secretary. The committee reviews internal/external/NRB audit reports,
recommends stringent control process and escalates the audit observations to the Board. The Committee also reviews quarterly
unaudited financial reports of the Bank with recommendation to the Board. The committee selects and recommends External Auditor
to the Board based on financial and technical evaluations. Audit Committee is committed towards maintaining robust control system
hence monitors closure of risk issues raised by Internal/External/NRB auditors.
Risk Management Committee with view of ensuring better risk management in the bank and in line of NRB’s requirement is formed
with 5 members chaired by Non-Executive Director, Coordinator of Audit Committee, Head Operation, Head Credit Risk and Head
Compliance, & Operational Risk are the members of the committee. The committee reviews high risk issues escalated by operational
and credit risk committees (management level), deliberates on the risks and recommends to the Board if required. Stress testing/
Capital adequacy is also reviewed at the committee with recommendation to the Board. Revised/new NRB directives, Monetary Policy
with material impact on the Bank are also reviewed for its implications.
Corporate Social Responsibility (CSR)

The details of CSR done sectorwise is given below:
Particulars FY 2076/77 FY 2077/78

I. Education 1,337,122 593,014
II. Health 25,222,661 24,418,614
III. Disaster management 52,760 765,134
IV. Environmental protection 4,270,350 -
V. Income Generation 1,356,991 -
VI. Infrastructure 2,566,888 -
VII. Financial Literacy 2,055,345 450,000
VIII. Customer protection - 150,000
IX. Sustainable Development Goals 5,624,870 200,000
X. Open Your Bank Account 238,673 51,514
Total 42,725,660 26,628,276
The details of CSR done provincewise is given below:
Particulars 2076/77 2077/78

Province 1 4,343,001 2,414,161
Province 2 991,571 659,580
Bagmati 32,098,939 19,269,298
Gandaki 1,061,391 1,175,153
Lumbini 2,960,859 2,306,352
Karnali 516,087 153,221
Sudurpashchim 753,811 650,510
Total 42,725,660 26,628,276
Latest Debenture Issue - Projected vs Actual of Statement of Profit or Loss
NPR in thousand
Projected Actual Variance (%)

Reasons for Variance
Particulars FY 2020-21 FY 2020-21 FY 2020-21 (for more than 20% only)
Interest income 14,868,991 13,983,694 -6%
Interest expense 9,411,122 8,323,034 -13%
Net interest income 5,457,869 5,660,659 4%
Fee and commission income 1,425,026 1,177,642 -21% Mainly due to booking of lesser Fee
Income from Risk Assets
Fee and commission expense 102,000 138,025 26% Mainly due to increase in depositors
activities, this is increased.
Net fee and commission income 1,323,026 1,039,617 -27%
Net interest, fee and commission income 6,780,894 6,700,276 -1%
Net trading income 503,236 364,108 -38% Due to lesser volume in Forward
Contracts
Other operating income 343,908 351,974 2%
Total operating income 7,628,038 7,416,358 -3%
Impairment charge/(reversal) for loans and (352,920) 382,410 192% Impairment charge on loan has increased
other losses due to additional provision on performing
loan by NRB and COVID Impact
Net operating income 7,980,959 7,033,948 -13%
Operating expense
Personnel expenses 2,069,753 2,089,704 1%
Other operating expenses 917,548 853,749 -7%
Depreciation & Amortisation 269,875 269,478 -0%
Operating Profit 4,723,781 3,821,017 -24%
Non operating income 9,000 39,072 77% Due to recovery
Non operating expense 55,000 15,213 -262% No Additional Loan Written off
Profit before income tax 4,677,781 3,844,876 -22%
Income tax expense
Current Tax 1,403,334 1,185,623 -18%
Deferred Tax expense/(Income) (29,833) (51,821) 42% Due to increase in Deferred Tax Assets
Profit for the period 3,304,280 2,711,074 -22% Due to above reasons
Latest Debenture Issue - Projected vs Actual of Statement of Financial Position
NPR in thousand
Projected Actual Variance (%)

Reasons for Variance
Particulars FY 2020-21 FY 2020-21 FY 2020-21 (for more than 20% only)
Cash and cash equivalent 13,030,142 13,887,371 6%
Due from Nepal Rastra Bank 14,346,089 19,218,506 25% Due to increase in Balance of NRB
and Li.Ka Deposit
Placement with Bank and Financial Institutions 3,792,889 2,717,149 -40% Decrease in Foreign Placement
Derivative financial instruments 14,494,284 17,161,392 16%
Other trading assets 337,616 2,660 -12592% As a Market Maker, bond has been
traded
Loan and advances to B/FIs 5,734,519 5,194,471 -10%
Loans and advances to customers 145,671,814 151,014,124 4%
Investment securities 14,986,918 17,453,563 14%
Current tax assets 100,000 92,746 -8%
Investment in susidiaries 372,488 372,488 -0%
Investment in associates - -
Investment property 111,420 97,942 -14%
Property and equipment 1,692,257 1,741,915 3%
Goodwill and Intangible assets 124,669 112,541 -11%
Deferred tax assets 269,833 249,010 -8%
Other assets 1,464,117 2,230,983 34% Reclassification of Other Assets
and Other Liabilities
Total Assets 216,529,053 231,546,858 6%
Liabilities
Due to Bank and Financial Instituions 7,559,475 1,964,516 -285% Decrease in BFI’s Call Deposit
Due to Nepal Rastra Bank 6,152,006 7,597,982 19%
Derivative financial instruments 14,204,399 17,127,036 17%
Deposits from customers 151,861,397 164,489,286 8%
Borrowing 3,640,446 7,443,810 51% Granting of Offshore borrowing
process is ongoing
Provisions - -
Deferred tax liabilities - -
Other liabilities 3,562,125 3,686,460 3%
Debt securities issued 5,184,505 5,293,994 2%
Subordinated Liabilities - -
Total liabilities 192,164,353 207,603,084 7%
Equity
Share capital 16,325,961 16,325,961 -0%
Share premium - -
Retained earnings 3,209,092 2,515,343 -28% Mainly Due to Change in Profit
Reserves 4,829,648 5,102,470 5%
Total equity attributable to equity holders 24,364,701 23,943,774 -2%
Non-controlling interest - -
Total equity 24,364,701 23,943,774 -2%
Total liabilities and equity 216,529,053 231,546,858 6%
Horizontal Analysis
Statement of Financial Position
Amount in Rs.
15-Jul-21 2020 15-Jul-20 2019 16-Jul-19
Vs Vs
Particulars (Ashadh 31, 2078) 2021 (Ashadh 31, 2077) 2020 (Ashad 31, 2076)
ASSETS
Cash and cash equivalent 13,887,370,526 25% 11,098,349,234 37% 8,096,354,503
Due from Nepal Rastra Bank 19,218,505,528 26% 15,249,998,507 41% 10,829,181,584
Placement with Bank and Financial Institutions 2,717,148,715 -18% 3,304,233,792 52% 2,172,967,239
Derivative financial instruments 17,161,392,134 70% 10,066,295,972 17% 8,595,482,282
Other trading assets 2,660,000 -99% 266,890,000 -22% 340,390,000
Loan and advances to B/FIs 5,194,470,677 11% 4,665,864,579 41% 3,317,961,987
Loans and advances to customers 151,014,123,921 31% 115,668,472,666 31% 88,485,031,394
Investment securities 17,453,562,933 16% 14,998,756,047 45% 10,316,351,016
Current tax assets 92,745,534 51% 61,460,881 -
Investment in susidiaries 372,487,600 0% 372,487,600 50% 248,552,000
Investment in associates - - -
Investment property 97,942,260 23% 79,648,242 -23% 102,915,862
Property and equipment 1,741,914,965 -1% 1,755,794,235 11% 1,577,898,704
Goodwill and Intangible assets 112,540,746 -11% 125,848,936 9% 115,408,800
Deferred tax assets 249,009,565 -6% 264,421,080 278% 70,040,593
Other assets 2,230,983,328 51% 1,473,393,132 23% 1,201,873,611
Total Assets 231,546,858,432 29% 179,451,914,903 32% 135,470,409,573
LIABILITIES
Due to Bank and Financial Instituions 1,964,515,728 -38% 3,150,014,840 68% 1,875,151,251
Due to Nepal Rastra Bank 7,597,982,045 57% 4,832,501,544 51% 3,203,523,072
Derivative financial instruments 17,127,036,376 71% 10,008,212,670 18% 8,458,374,429
Deposits from customers 164,489,285,837 25% 131,660,368,354 36% 96,641,515,712
Borrowing 7,443,810,000 118% 3,416,310,000 -1% 3,468,060,000
Current Tax Liabilities - - 35,578,570
Provisions - - -
Deferred tax liabilities - - -
Other liabilities 3,686,459,641 16% 3,169,287,821 48% 2,145,955,868
Debt securities issued 5,293,994,350 132% 2,279,834,432 2% 2,239,236,412
Subordinated Liabilities -
Total Liabilities 207,603,083,977 31% 158,516,529,660 34% 118,067,395,314
EQUITY
Share capital 16,325,960,853 17% 13,950,987,467 45% 9,618,162,652
Share premium - 120,167,470 -95% 2,512,798,517
Retained earnings 2,515,343,348 45% 1,737,219,751 -2% 1,780,326,613
Reserves 5,102,470,254 -0% 5,127,010,555 47% 3,491,726,477
Total equity attributable to equity holders 23,943,774,455 14% 20,935,385,243 20% 17,403,014,259
Non-controlling interest -
Total equity 23,943,774,455 14% 20,935,385,243 20% 17,403,014,259
Total liabilities and equity 231,546,858,432 29% 179,451,914,903 32% 135,470,409,573
Horizontal Analysis
Statement of Profit or Loss
15-Jul-21 2020 15-Jul-20 2019 16-Jul-19
Vs Vs
Particulars (Ashadh 31, 2078) 2021 (Ashadh 31, 2077) 2020 (Ashad 31, 2076)
Interest income 13,983,693,533 -3% 14,442,972,567 30% 11,082,059,031
Interest expense 8,323,034,232 -7% 8,946,752,652 31% 6,838,038,085
Net interest income 5,660,659,301 3% 5,496,219,915 30% 4,244,020,946
Fee and commission income 1,177,641,945 29% 914,369,723 -9% 1,003,530,866
Fee and commission expense 138,024,766 28% 107,917,283 15% 93,955,270
Net fee and commission income 1,039,617,179 29% 806,452,440 -11% 909,575,596
Net interest, fee and commission income 6,700,276,480 6% 6,302,672,355 22% 5,153,596,542
Net trading income 364,108,314 -5% 384,157,101 9% 352,049,490
Other operating income 351,973,665 63% 215,364,793 2% 210,373,919
Total operating income 7,416,358,459 7% 6,902,194,249 21% 5,716,019,951
Impairment charge/(reversal) for loans 382,410,393 -76% 1,627,165,235 879% 166,272,634
and other losses
Net operating income 7,033,948,066 33% 5,275,029,014 -5% 5,549,747,317
Operating expense
Personnel expenses 2,089,704,278 27% 1,647,497,921 16% 1,415,793,493
Other operating expenses 853,748,763 -9% 935,573,915 32% 708,661,406
Depreciation & Amortisation 269,478,145 12% 241,683,371 37% 176,793,355
Operating Profit 3,821,016,879 56% 2,450,273,807 -25% 3,248,499,062
Non operating income 39,071,786 111% 18,512,709 8% 17,090,672
Non operating expense 15,212,626 -55% 33,981,887 93% 17,585,901
Profit before income tax 3,844,876,039 58% 2,434,804,629 -25% 3,248,003,833
Income tax expense
Current Tax 1,185,623,109 63% 725,589,473 -27% 994,167,044
Deferred Tax expense/(Income) (51,820,778) 1355% (3,561,365) 4% (3,439,237)
Profit for the period 2,711,073,708 58% 1,712,776,521 -24% 2,257,276,026
Vertical Analysis
Statement of Financial Position
15-Jul-21 15-Jul-20 16-Jul-19
Particulars (Ashadh 31, 2078) % (Ashad 31, 2077) % (Ashadh 32, 2076) %
ASSETS
Cash and cash equivalent 13,887,370,526 6% 11,098,349,234 6% 8,096,354,503 6%
Due from Nepal Rastra Bank 19,218,505,528 8% 15,249,998,507 8% 10,829,181,584 8%
Placement with Bank and Financial 2,717,148,715 1% 3,304,233,792 2% 2,172,967,239 2%
Institutions
Derivative financial instruments 17,161,392,134 7% 10,066,295,972 6% 8,595,482,282 6%
Other trading assets 2,660,000 0% 266,890,000 0% 340,390,000 0%
Loan and advances to B/FIs 5,194,470,677 2% 4,665,864,579 3% 3,317,961,987 2%
Loans and advances to customers 151,014,123,921 65% 115,668,472,666 64% 88,485,031,394 65%
Investment securities 17,453,562,933 8% 14,998,756,047 8% 10,316,351,016 8%
Current tax assets 92,745,534 0% 61,460,881 0% - 0%
Investment in susidiaries 372,487,600 0% 372,487,600 0% 248,552,000 0%
Investment in associates - 0% - 0% - 0%
Investment property 97,942,260 0% 79,648,242 0% 102,915,862 0%
Property and equipment 1,741,914,965 1% 1,755,794,235 1% 1,577,898,704 1%
Goodwill and Intangible assets 112,540,746 0% 125,848,936 0% 115,408,800 0%
Deferred tax assets 249,009,565 0% 264,421,080 0% 70,040,593 0%
Other assets 2,230,983,328 1% 1,473,393,132 1% 1,201,873,611 1%
Total Assets 231,546,858,432 100% 179,451,914,903 100% 135,470,409,573 100%
LIABILITIES
Due to Bank and Financial Instituions 1,964,515,728 1% 3,150,014,840 2% 1,875,151,251 1%
Due to Nepal Rastra Bank 7,597,982,045 3% 4,832,501,544 3% 3,203,523,072 2%
Derivative financial instruments 17,127,036,376 7% 10,008,212,670 6% 8,458,374,429 6%
Deposits from customers 164,489,285,837 71% 131,660,368,354 73% 96,641,515,712 71%
Borrowing 7,443,810,000 3% 3,416,310,000 2% 3,468,060,000 3%
Current Tax Liabilities - 0% - 0% 35,578,570 0%
Provisions - 0% - 0% - 0%
Deferred tax liabilities - 0% - 0% - 0%
Other liabilities 3,686,459,641 2% 3,169,287,821 2% 2,145,955,868 2%
Debt securities issued 5,293,994,350 2% 2,279,834,432 1% 2,239,236,412 2%
Subordinated Liabilities
Total Liabilities 207,603,083,977 90% 158,516,529,660 88% 118,067,395,314 87%
EQUITY
Share capital 16,325,960,853 7% 13,950,987,467 8% 9,618,162,652 7%
Share premium - 0% 120,167,470 0% 2,512,798,517 2%
Retained earnings 2,515,343,348 1% 1,737,219,751 1% 1,780,326,613 1%
Reserves 5,102,470,254 2% 5,127,010,555 3% 3,491,726,477 3%
Total equity attributable to equity 23,943,774,455 10% 20,935,385,243 12% 17,403,014,259 13%
holders
Non-controlling interest -
Total equity 23,943,774,455 10% 20,935,385,243 12% 17,403,014,259 13%
Total liabilities and equity 231,546,858,432 100% 179,451,914,903 100% 135,470,409,573 100%
Vertical Analysis
Statement of Profit or Loss
15-Jul-21 15-Jul-20 16-Jul-19
Particulars (Ashadh 31, 2078) % (Ashad 31, 2077) % (Ashadh 32, 2076) %
Interest income 13,983,693,533 100% 14,442,972,567 100% 11,082,059,031 100%
Interest expense 8,323,034,232 60% 8,946,752,652 62% 6,838,038,085 62%
Net interest income 5,660,659,301 40% 5,496,219,915 38% 4,244,020,946 38%
Fee and commission income 1,177,641,945 8% 914,369,723 6% 1,003,530,866 9%
Fee and commission expense 138,024,766 1% 107,917,283 1% 93,955,270 1%
Net fee and commission income 1,039,617,179 7% 806,452,440 6% 909,575,596 8%
Net interest, fee and commission 6,700,276,480 48% 6,302,672,355 44% 5,153,596,542 47%
income
Net trading income 364,108,314 3% 384,157,101 3% 352,049,490 3%
Other operating income 351,973,665 3% 215,364,793 1% 210,373,919 2%
Total operating income 7,416,358,459 53% 6,902,194,249 48% 5,716,019,951 52%
Impairment charge/(reversal) for loans 382,410,393 3% 1,627,165,235 11% 166,272,634 2%
and other losses
Net operating income 7,033,948,066 50% 5,275,029,014 37% 5,549,747,317 50%
Operating expense
Personnel expenses 2,089,704,278 15% 1,647,497,921 11% 1,415,793,493 13%
Other operating expenses 853,748,763 6% 935,573,915 6% 708,661,406 6%
Depreciation & Amortisation 269,478,145 2% 241,683,371 2% 176,793,355 2%
Operating Profit 3,821,016,879 27% 2,450,273,807 17% 3,248,499,062 29%
Non operating income 39,071,786 0% 18,512,709 0% 17,090,672 0%
Non operating expense 15,212,626 0% 33,981,887 0% 17,585,901 0%
Profit before income tax 3,844,876,039 27% 2,434,804,629 17% 3,248,003,833 29%
Income tax expense
Current Tax 1,185,623,109 8% 725,589,473 5% 994,167,044 9%
Deferred Tax expense/(Income) (51,820,778) -0% (3,561,365) -0% (3,439,237) -0%
Profit for the period 2,711,073,708 19% 1,712,776,521 12% 2,257,276,026 20%
150
Amendments to the MOA of the Bank presented as a special resolution in the 26th General Meeting dated 6 January 2022
Article/Section Existing Arrangement Proposed Arrangement Justification to the Amendment

On the MOA Side
The issued capital of the Bank will be NPR 16,325,960,852.66 (in
The issued capital of the Bank will be NPR 18,366,705,959.24 (in
words: Sixteen Billion Three Hundred Twenty Five Million Nine
words: Eighteen Billion Three Hundred Sixty Six Million Seven As per the proposal made on 26th
Hundred Sixty Thousand Eight Hundred Fiy Two and 66/100 only).
Hundred Five Thousand Nine Hundred Fiy Nine and 24/100 only). Annual General Meeting of the Bank
6(b) This capital is divided into 163,259,608.52 (in words: One Hundred
This capital is divided into 183,667,059.59 (in words: One Hundred to distribute 12.50% bonus share on
Sixty Three Million Two Hundred Fiy Nine Thousand Six Hundred
Eighty Three Million Six Hundred Sixty Seven Thousand Fiy Nine existing paid-up capital
Eight and 52/100) units of shares with face value of NPR 100 per
and 59/100) units of shares with face value of NPR 100 per share.
share.
As per the proposal made on 26th
The paid-up capital of the Bank will be NPR 16,325,960,852.66 The paid-up capital of the Bank will be NPR 18,366,705,959.24
Annual General Meeting of the Bank
6(c) (in words: Sixteen Billion Three Hundred Twenty Five Million Nine (in words: Eighteen Billion Three Hundred Sixty Six Million Seven
to distribute 12.50% bonus share on
Hundred Sixty Thousand Eight Hundred Fiy Two and 66/100 only). Hundred Five Thousand Nine Hundred Fiy Nine and 24/100 only).
existing paid-up capital
Amendments to the AOA of the Bank presented as a special resolution in the 26th General Meeting dated 6 January 2022
Article/Section Existing Arrangement Proposed Arrangement Justification to the Amendment

Kha-1. The two-way flight ticket or transportation expenses incurred Kha-1. The two-way flight ticket or transportation expenses
for the Directors visiting in the meeting of Board Directors from incurred by the Directors to attend the meeting of Board
other district of Nepal except for the district where the Bank has its Directors shall be reimbursed as per the actual bill and hotel
32-1-Kha-1 registered office and Hotel and food expenses as per Article 32-1- and daily travelling allowance as per Article 32-1-c-i and ii shall linguistic improvement is needed
c-i and ii will be reimbursed as per the actual bill for a maximum of be reimbursed for a maximum of three days. However, in case
three days. However, in case of the Director residing abroad, hotel of the Director residing abroad, hotel and food expenses will be
and food expenses will be reimbursed as per the actual bill. reimbursed as per the actual bill.
Reply to the Instructions Received by NMB Bank from
Nepal Rastra Bank Regarding the Dividend Declaration/Distribution
and Publication of Financial Statements of Fiscal Year 2020/21
1. All the remarks mentioned in the audit report have been rectified by giving
priority and arrangements shall be made to prevent the recurrence of such
incidents
2. Distribution of cash dividend and bonus shares of the promoter shareholders

who are not within the prescribed limit as per NRB Directive 10(1) shall be
blocked
3. Pursuant to Section 11 subsection 3 of Banks and Financial Institutions Act

2073 to obtain NRB’s approval prior to selling or pledging the promoter shares
by promoter shareholders holding more than 2 percent of the Bank’s paid-up
capital, the Bank shall stop distribution of bonus shares and cash dividend to
those who have pledged their promoter shares in other BFIs to obtain loan until
the approval is obtained from NRB or the share collateral is freed from other
BFIs aer loan settlement
NOTE
NOTE

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Representative (Proxy) Form

The Board of Directors Date: ……………………………….

NMB Bank Ltd.,

Subject: Appointment of Representative

I/We, .............................................................................................................................. resident of ...............................................................

Appointed Representative: Applicant:

Signature Specimen: Signature:

Shareholder No. / Demat Account No.: Full Name:

Demat Account Number:

NMB Bank Ltd.,

Issued to participate in 26th Annual General Meeting

Shareholder's Name : _____________________________________________ Total Share No.: ____________________________

Shareholder's Introduction/BOID No.: _________________________________ Shareholder's Signature: _____________________

1. Date, Venue and Time of the Annual General Meeting

2. Agenda of the Meeting

 To approve the annual report of FY 2020/21 presented by the Board of Directors,

Notice about 26th Annual General Meeting

Additional Information about the Annual General Meeting (AGM)

 Only existing shareholders of the Bank shall be nominated proxy.

On behalf of the Board of Directors, I take this opportunity to

I am honored to be present amongst the shareholders

It is well-known that NMB Bank Ltd., commenced

Pawan Kumar Golyan

Date: January 6, 2022

The year 2020/21 proved to be yet another challenging and

External Business Environment/Outlook

Our Response to COVID-19

Our Approach to Climate Change & Environmental Issues

1. Key Financial Performance for the Fiscal Year 2020/21

S.N. Descirption As on Mid-July 2021

1 Real Estate Loan 2.87%

Fiscal Year Fiscal Year Incremental Percentage

2. Impact of Domestic and World Economic Outlook On Bank’s Performance

 Global Economic Situation

S.N. Particulars NPR (in Thousand)

4. Industrial and Professional Relations

5. Changes in the Board of Directors

6. Signiﬁcant Issues Aﬀecting Business

 Risk due to increasing competition and lack of skilled human resources.

7. Signiﬁcant Observation in the Audit Report and Subsequent Response from

8. Recommended Amount for Dividend Payment

9. Details of Shares Forfeited by the Bank

12. Information provided by the Basic Shareholders to the Bank

S.N. Name Designation Share Ownership

14. Information on the Directors relatives’ involvement in the Bank’s

15. Details of own shares purchased by the Bank

16. Internal control system

17. Details of Total Management Expenditure of the last Fiscal Year

Mr. Jeevan Kumar Katwal (Director) - Coordinator

19. Details of any payments yet to be made to the Directors, Chairman,

20. Details of remuneration to the Directors, Chief Executive Oﬃcer and

21. Information of Undeclared Dividend by the shareholders

22. Details of Fixed Assets purchased/sold pursuant to Clause 141 of the

24. Any other information to be disclosed in the Director’s Report as per

25. Other Essential Information

STATEMENT OF FINANCIAL POSITION

NMB Laghubitta Bittiya Sanstha Ltd.

Proﬁt and Loss Account

B) Corporate Social Responsibility

Shareholder's Name : _________________ Total Share No.:

Shareholder's Introduction/BOID No.: _____________ Shareholder's Signature: _

_______ _ _____

_______ _ _ _______

_______ _ _________

_______ _ _____

_______ _ _ _______

_______ _ _________

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