SUMMARY OF COMPONENTS OF 19TH ANNUAL REPORT OF EVEREST BANK

LIMITED
An annual report is a comprehensive report on a company's activities throughout the preceding
year. Annual reports are intended to give shareholders and other interested people information
about the company's activities and financial performance. (Source: Wikipedia) The annual report
of any listed company needs to be made public and it helps internal and external users to make
decisions related to the company.
Annual report is prepared in a certain format and contains various elements like Directors
message, financial statements, significant accounting policies, etc. The components of 19 th
Annual Report of EBL are stated and summarized below:
1. At a Glance:
The report first begins with the bar diagrams of showing the data of previous years and the
current year regarding the deposits, loan and advances, investment, capital and reserves, net
worth, operating profit, etc. This part shows the annual changes in these areas in a concise
form. The names of members of Board of Directors and Management Team succeed it.
2. Chairmans Statement:
The annual report officially begins with the chairmans message. In this part, the Chairman
of EBL has written about the political and economic developments taking place all over the
world and how will it affect the economy and banking sector of Nepal. It also mentions why
the efforts of EBL to go for merger with other banks have not succeeded. It also mentions
how well the bank has been doing and how the earning per share has been rising. Basically,
the Chairmans message provides information on how the performance of the company was
on the last year.

3. Directors Report:
The Directors Report is the next part of the annual report. This is presented by the Board of
Directors of the company and contains Balance Sheet, P/L Account, Cash Flow Statement
and auditors report. In this section, performance review is done stating the banks
shareholders funds, other capital, deposits and loans and the data is compared to that of
previous fiscal year. Directors report also discusses the internal and external factors that
affect the companys performance such as changes in NRB directives, Nepal becoming a
member of SAFTA (South Asian Free Trade Area), etc. This part also consists of the
activities and future plans of the company. It explains the plans to further expand branches,
states how new technologies were introduced in operations in the previous year, what are
the changes in the Board of Directors, amendment in the Memorandum of Association,
declaration of dividend/bonus share, employee relations, corporate good governance,
acknowledgements, etc.

4. Balance Sheet:
The balance sheet shows the financial position of the bank. It shows how much asset the
bank has and also shows the liabilities and shareholders equity. The capital and liabilities
section contains the elements and the amounts the bank owes to others (shareholders,
depositors, lenders, etc.) like reserves, deposits payable, proposed cash dividend, income tax
liabilities, etc. The asset section consists of tangible or intangible elements that have positive
economic value, for example: cash in hand, fixed assets, balance with NRB, investments,
etc. All the assets and liabilities of previous year are stated side by side with the year before
in order to compare the financial positions of the two years.

5. Profit and Loss Account:

The profit and loss account ascertains the result of operating activities of the previous year. It
shows incomes from various operational and non operational activities, deducts operational
and non operational expenses from it and thus shows the net profit of the company. P/L
account helps the users to identify the net income, ratio of net income with total interest
income of the bank, and it helps the internal users of the bank to control indirect expenses
and improve the profitability of the company.

6. Profit Appropriation Account:

Profit appropriation account is also included in the annual report. It contains retained
earnings of the year before, profit for the year and other incomes to calculate the total
appropriation on which losses, reserves, proposed shares, etc. are deducted to find out the
total retained earnings of the year. This amount is retained by the company on order to
strengthen its financial position.

7. Statement of Changes in Equity:

This statement shows the movement of changes in equity of the bank due to dividend
declared, transfer to reserves, etc. which affect share capital, share premium, capital
adjustment fund, accumulated profit, deferred tax, etc.

8. Cash Flow Statement:

Cash flow statement is also included in the annual report of EBL. It shows the sectors that
generate cash and the areas that spend cash in order to calculate the net cash inflow of the
bank within the year. The statement specifically shows the cash generated from operating,
investing and financing activities and shows the impact of these activities on cash resources.
Cash flow statement helps the firms to manage resources in such a way that more amount of
cash is at hand for various purposes. It also helps the shareholders to make share related
decisions because no matter how high the income of a company may be it wont be able to
pay dividends unless there is sufficient cash.

9. Schedules:
This section further includes different tables showing details of various data like share
capital and shareholding of the company (showing authorized capital, paid up capital and
issued capital), detail of share ownership (local and foreign ownership), reserve and surplus
(general reserve, capital reserve, capital redemption reserve, capital adjustment reserve, etc.),
debentures and bond issued, loans taken by bank, deposit liabilities, bills payable, other
liabilities, cash in hand, balance with Nepal Rastra Bank, balance with other bank and
financial institutions, investments made by bank, securities held for trading, securities held
to maturity, loans and advances positioning, security wise details of loans, advances and bill
purchases, fixed assets, non-banking assets, other assets, contingent liabilities, details of
interest income and interest expenses, commission and discount, staff expenses, operating
expenses (rent, electricity, etc.) , provision of loss, details of loan written off, loans to
Directors, CEO, promoters, capital adequacy, risk weighted exposure for credit risk, risk
weighted exposure for operational risk, risk weighted exposure for market risk, etc. All these

tables help the users find all relevant information in detail which might not have been
possible from just financial statements.

10. Main Indicators:

There is also a table with title main indicators which present the comprehensive summary of
all relevant financial information of the bank and helps the users judge the overall financial
health of the company. It contains information such as per share earnings, market price per
share, capital adequacy ratio, etc. of five corresponding years to help the users find a pattern
in them and discern whether the financial health of the company is improving or
deteriorating over the years.

11. Significant accounting policies:

Annual report of EBL also states its accounting policies. This part contains general
information about the bank, basis of preparation (GAAP, Nepal Accounting Standards and
NRB provisions), how the valuation of fixed assets are done, which method of depreciation
is followed, how income tax is calculated, how are investment in other stocks valuated (at
cost price or market price), etc, It further explains how taxes are calculated, how interest
income is calculated (on accrual basis or cash basis), what are the provisions for employee
retirement benefit, based on what directives are the contingent liabilities aligned, etc.

12. Notes to Account:

Notes to accounts is stated in annual report to state the information that couldnt be fitted in
the income statement and balance sheet. This is done for the sake of clarity. This part in the

annual report of Everest Bank Limited contains dividends and proposed bonus shares,
reconciliation position, average interest spread rate, leasehold improvement and computer
software, convertible preferred share issued by the bank, exchange fluctuation reserve
maintained by the bank, etc. This part also shows the details of the loans and advances taken
by the promoters against the promoter shares. Also, the comparison of audited and unaudited
financial statements of the bank is done and the reasons for the differences in the amounts
stated in these statements are explained. For example, the other liabilities section of audited
financial statement of EBL is shown to be higher than that of unaudited statement and the
reason for it is given as issue of bonus share and cash dividend.

13. Disclosure Relating to Basel II Framework:

In this part of annual report, various information about the bank with reference to Basel-II
framework is disclosed. It comprises of information regarding Tier I and Tier II capital of the
bank. Further, this section reveals how the bank tries to manage the risks faced by it. It
mentions various strategies and processes followed by the bank to manage market risk,
credit risk and operational risk.

14. Branch Offices:

This section shows the map of Nepal indicating the branches of Everest Bank all over the
country. The expansion of branches of any bank depicts its financial prosperity and
willingness to reach out to a large number of customers.

15. Branch Managers and Offices:

The annual report also contains the location of different branches of the bank and their
respective managers with telephone numbers and email address. This helps the customers to
contact respective branches if they have any queries or problems regarding the services of
the bank. Moreover, it provides the users with the general idea regarding what types of
people manage the bank.

16. Department Head:

This section shows the head of different departments of the whole bank like head of credit
department, accounting department, human resource department and so on. This gives the
people the idea regarding who are the ultimate authorities regarding different operational
areas of the bank.

Thus, it can be inferred from the summary presented above that a bank or any other companies
publish annual report in order to provide the users with different kinds of financial and non
financial information, its strategies and plans for the future and activities carried out as well as
the investments it made over a fiscal year. These information are useful to the external users i.e.
shareholders and customers of the bank to make informed decision regarding whether to invest
and deposit in the respective bank or not. Also, internal users i.e. managers make use of annual
report in order to assess their activities and performance of previous year, set targets and prepare
strategies to achieve those targets. In conclusion, annual report consists of all the relevant and
disclosable information that are useful to all stakeholders of the company.
Submitted by:
Anisha Adhikari

KUSOM MBA spring 2015

Roll no.: 15301