16t

h Annual

Report
2019/20
Financial Highlights

Deposit (NPR. In Billion) Loans and Advances (NPR. In Billion)

93.69
110.10
92.28 83.44
79.18 69.24
58.23 51.84
46.42 40.90

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

As at Mid July As at Mid July

Investments (NPR. In Billion) Total Assets (NPR. In Billion)

18.71 126.31
16.96 109.06
13.17 91.82
10.73 70.00
9.16 55.96

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

As at Mid July As at Mid July

Shareholders Fund (NPR. In Billion) Net Interest Income (NPR. In Million)

12.82
11.99 4,208.70 4,189.69
10.79
3,015.52
9.06
2,242.12
5.35 1,722.30

2016 2017 2018 2019 2020 2015/16 2016/17 2017/18 2018/19 2019/20

As at Mid July Fiscal Year

Operating Profit (NPR. In Million) Net Profit (NPR. In Million)

3,224.90 2,285.10
2,529.85 1,697.50 1,776.26
1,998.10 2,415.20 1,304.10
1,478.50 996.05

2015/16 2016/17 2017/18 2018/19 2019/20 2015/16 2016/17 2017/18 2018/19 2019/20

Fiscal Year Fiscal Year

Financial Highlights

Non Performing Loans (%) CAR (%)

15.57
0.450 12.41 13.19 13.00
12.36

0.019 0.030 0.080

0.010

2016 2017 2018 2019 2020 2016 2017 2018 2019 2020

As at Mid July As at Mid July

ROE (%) DPS (%) No. of Branches No. of ATM

78 81
22.69 23.20 16.09 74 79
18.67
16.00
74
21.05 47 53 69
15.79 14.39 13.60
14.00 46
40

2016 2017 2018 2019 2020

2015/16 2016/17 2017/18 2018/19 2019/20
Fiscal Year As at Mid July

Composition of Income Composition of Expenses

Interest Interest

Forex Personnel

Others 1% Income Tax

Others
3% 7%

91% 6% 67%
15%
 Contents

S.N. Particulars Page No.

1 Profile 1
2 Chairman's Speech 2
3 Director's Report 3
4 Additional Disclosures as per section 109 of the Companies Act, 2063 11
5 Disclosure Related to Sub Rule (2) of Rule 26 as per annexure
15 of Securities Registration and Issuance Regulation, 2073 13
6 Independent Auditor's Report 15
7 Consolidated Statement of Financial Position 19
8 Consolidated Statement of Profit or Loss 20
9 Consolidated Statement of Other Comprehensive Income 21
10 Consolidated Statement of Cash Flows 22
11 Consolidated Statement of Changes in Equity 23
12 Notes to the Financial Statements and Significant Accounting Policies 25
13 Disclosures and Additional Information 80
14 Comparision-Unaudited and Audited Financial Statements of FY 2018/19 95
15 Capital Adequacy 96
16 Sanima Capital's Financial Statements 105
Profil

Sanima is a leading commercial bank in Nepal, promoted by

prominent Non-Resident Nepali’s (NRNs) that commenced Sanima recognizes that in the capacity of a commercial bank, it is
operations in 2004 as a National Level Development Bank. Since an inevitable part of the society’s economic organ and it draws on
February 2012, Sanima has upgraded to an "A" Class Commercial societal resources for day to day functioning. The bank is a trustee
Bank with its registered office at 'Alakapuri', Naxal, Kathmandu, of public money in addition to being a corporate body. Therefore,
Nepal. apart from its core objectives, the bank has certain obligations to
contribute to society as a whole. Sanima believes in creating
Sanima is committed to provide one window financial societal impact through replicable, sustainable and scalable CSR
solutions to various customer segments and to achieve a healthy programmes.
level of growth in profitability, consistent with the bank's risk
appetite. The Bank has displayed dedication towards maintaining
the highest level of ethical standards, professional integrity,
corporate governance and regulatory compliance. Consequently,
Sanima is perceived as a strong and reliable player in the banking
industry. Sanima has always been committed to meet customer
expectations in all areas of its business through continuous
improvement.

Sanima Bank offers a wide range of banking products and

financial services to corporate and retail customers through 83
full-fledged branches and 16 extension counters spread across the
geography of Nepal. The bank is actively exploring alternative
channels and also expects to add more branches in the coming
days.
Capital Structure NPR
Authorized Capital 9,000,000,000
Issued Capital 8,801,380,984
Paid Up Capital 8,801,380,984
 Annual Report 2019/20
Chairman's
Speech
Respected Shareholders,
It gives me immense pleasure to welcome our shareholders and guests
joining us in person as well as virtually to the 16th Annual General
Meeting of Sanima Bank Limited. The outspread of COVID-19
around the world has affected the Nepalese economy. This has resulted
in unfavorable variances on the performances of our bank as well in the
Fiscal Year 2019/20.
Government of Nepal imposed a nation-wide lock down to combat the
Corona Virus pandemic starting from Chaitra 11, 2076. Although the
lockdown has been lifted, there are signs of sluggishness in the
economy. Banking sector is one of the highly affected sectors due to
pandemic. The pandemic has adversely affected the Bank's performance
due to reduced fee and commission income as well as minimal
realization of accrued interest. There has been a spike in risk level in the
Bank with the deterioration in the asset quality. In addition to this,
interest income has shrank due to the interest rebate of NPR 400 million
provided to the borrowers in line with the directives issued by Central
Bank. Besides this, bank has set aside around NPR 800 million for Loan
Loss Provisioning.
Despite huge competition in the banking industry, Sanima Bank has been
able to maintain successful identity in financial sector while efficiently
managing both cost and capital. For this achievement, I would like to
thank all shareholders, customers, well-wishers, employees, other
stakeholders and all associated organizations for their valuable
contribution.
The Bank (inclusive of Sanima Capital) has generated net profit of
NPR One Billion Seven Hundred Sixty Six Million Nine Hundred Eighty
Six Thousand in fiscal year 2019/20, a decline by 22.28% on y-o-y
basis. It has been proposed to distribute 10% stock dividend and 3.60%
cash dividend from the retained earnings.
As banking plays a crucial role at the heart of the economy and in Thank
you!
Binaya Kumar Shrestha
Chairman November
13, 2020
2
the lives of individuals, we remain committed in Nepal’s economic
growth by supporting our clients and customers in various ways. On
the corporate social responsibility front, Sanima Bank has been
contributing to deprived communities through activities in the areas of
health & education and is also aiming to extend continuity to the same.
The bank shall continuously focus on Technology, Human Resource
Management, Risk Management, Enhanced Customer Satisfaction etc. to
grow in a strong and sustainable manner.
Achievement and activities of the bank till date have been
disclosed in detail in the ‘Annual Report of Board of Directors’. We
remain focused on improving our service to our clients, generating
strong returns for our investors and contributing even more to the
communities in which we operate. However, we are not in a position
to assess the impact of COVID-19 on national economy yet. Despite
of the fact that pandemic has hindered the economic prosperity and
development activities in the country, we are hopeful that soon after
the impact of the pandemic is over, industries, business, trade,
agriculture and overall economy will prosper.
I express my sincere gratitude to all our shareholders and guests for your
continued support and cooperation. I would like to extend my heartfelt
gratitude to all the stakeholders, Government Entities, Nepal Rastra Bank,
Securities Board, Office of Company Registrar, Nepal Stock Exchange
Limited, External Auditors, Media and all well- wishers for their valuable
suggestions, feedbacks and continued support. I look forward to
continuous guidance from the Board of Directors, dedication and hard
work from our staff members, and valuable advice, trust & support
from all our shareholders and stakeholders.
Once again, I welcome you all to this 16th Annual General Meeting and
wish you prosperity and progress.
 Annual Report

Director’s Report
Respected Shareholders, B. Country's Macroeconomic Situation

Sanima is performing well under proper guidance aligned with Initially, Central Bureau of Statistics had estimated GDP growth
appropriate strategy and has continued to provide reasonable returns of 2.28 percent in FY 2019/20 due to the impact of COVID-19 in
to the shareholders. The Bank’s position has been upgrading in overall economy. With the end of Fiscal Year, it is estimated to
terms of financial indicators and we are making efforts to be in the be around zero percent as compared to 7% in the previous year. In
frontline. The Bank has been able to generate profit since its inception order to control and prevent the outspread of COVID-19 around the
and despite of various adversities in the banking sector, it has been country, production and distribution process has been obstructed
able to strengthen its business. The outspread of COVID-19 around which has shrunk the economy as a whole. Share of agriculture,
the world has affected the Nepalese banking industry as well. As a industry and service sectors in GDP stands 27.65 percent, 14.27
result, the Bank could not achieve targeted profit in FY 2019-20. The percent and 58.08 percent respectively in 2019/20. During
Bank has been expanding its business as well as delivering services review year, Gross Domestic Saving to Gross Domestic Product
to its customers in a convenient way amidst the unfavorable situation stands 18.1 percent.
created in the country.
Credit and Deposit
A. Synopsis of Financial Performance
In the review year, credit from Banks and Financial
NPR In Million Institutions increased by 12 percent compared to a growth of
Mid July Mid July 19.4 percent in the previous year. Similarly, deposit
Details Change (%)
2020 2019
collection increased by 18.7 percent compared to a growth of 18
Net Loans and Advances 93,695 83,439 12.29
percent in the previous year.
Investments 18,708 16,959 10.31
Deposit 110,096 92,284 19.30 Share of Institutional deposit in total deposit of Banks and
Profit/ Loss FY 2019/20 FY 2018/19 Change (%)
Financial Institutions stood at 44.3 percent as compared to
45.3 percent in previous year. Share of demand, saving, and fixed
Net Interest Income 4,190 4,209 (0.45)
deposits in total deposits stood at 10 percent, 31.9 percent and
Operating Profit 2,530 3,225 (21.55) 48.6 percent respectively in mid-July 2020. Such shares were
Net Profit 1,776 2,258 (21.34) 9.7 percent, 32.8 percent, and 46.3 percent respectively a
Other Details FY 2019/20 FY 2018/19 Change (%) year ago.
Stock and Cash Dividend 1,197 1,684 (28.94)
In the mid July 2020, 65.7 percent against the collateral of
CAR (%) 13.00 13.19 (0.19)
land and building and 13 percent against the collateral of
Non-Performing Loan (%) 0.45 0.08 0.37 current assets (such as agricultural and nonagricultural products
of the total outstanding credit of the Banks and Financial
During the review year, loans and advances of the bank Institutions. Such ratios were 64.4 percent and
increased by 12.29 percent whereas deposit mobilization 13.5 percent respectively a year ago.
increased by 19.30 percent, operating profit decreased by
21.55 percent and net profit decreased by 21.34 percent. During the review year, loans to agriculture sector increased by
Demand of loan went gradually down after outspread of 16.7 percent, industrial production sector increased by 11.5
COVID-19 around the country. The bank has provided interest percent, construction sector increased by 12.3 percent,
rebate of around NPR 400 million to the customers as per the wholesale and retail sector increased by 7.7 percent, service
direction of Central Bank. Similarly, there has been adverse industry sector increased by 22.1 percent and transportation,
impact in non-interest income due to very low economic communication and public sector increased by 18.6
activities. Bank has set aside additional loan loss provision of percent.
around NPR 800 million due to the impact in asset quality.
Term loan extended by Banks and Financial Institutions
increased by 27.7 percent, overdraft increased by 7.2

3 www.sanimabank.co
 Annual Report
percent, trust receipt (import) loan increased by 8.7 percent,
demand and working capital loan increased by 14 percent, real
estate loan (including residential personal home loan) increased
by 8.1 percent, margin nature loan increased by 11 percent
and hire purchase loan decreased by 3.8 percent in the
review year.
Import Export
In the review period, merchandise imports decreased by
15.6 percent to NPR 1,196.8 billion compared to an increase
of 13.9 percent in the previous year.
Commodity-wise, import of palm oil, Crude soyabean oil,
chemical fertilizers, edible oil, computer & parts and related
products has increased. However, imports of petroleum products,
transportation equipment and parts, M.S. Billet, gold, other
machineries and parts, and related products has decreased.
In the review period, merchandise exports increased by 0.6 percent
to NPR 97.71 billion compared to an increase of
19.4 percent in the previous year.
Commodity-wise, export of palm oil, Ayurveda Medicine,
herbs, plastic utensils, fruits and related products has
increased. However, zinc sheet, wire, polyester yarn and threads,
ready-made garments, woolen carpet, and related products has
decreased.
Total trade deficit compressed by 16.8 percent to NPR
1,099.09 billion in review year compared to an increase of
13.5 percent in the previous year. Trade deficit to Gross Domestic
Production (GDP) ratio is 29.2 percent. The export-import ratio
increased marginally to 8.2 percent in the review year from
6.8 percent in the corresponding period of the previous year.
Foreign Exchange Reserve
Based on the imports of current fiscal year, the foreign
exchange holdings of the banking sector is sufficient to cover
the prospective merchandise imports for 14.4 months and
merchandise and services imports for 12.7 months. Gross foreign
exchange reserves as on mid-July 2020 was NPR 1,401.84
billion which stood at NPR 1,038.92 billion in the previous
year.
Remittance
4 www.sanimabank.co
In the review year, decrease in number of Nepalese workers
migrated for foreign employment by 20.5 percent as compared
to decrease by 32.6 percent in the previous year. Remittance is
decreased by 0.5 percent to NPR 875.03 billion in the review
period which was increased by 16.5 percent in the previous
year.
Current Account and BOP Position
Current account marked a deficit by 87.9 percent to NPR
32.06 billion in the review year which was NPR 265.36
billion in previous year. Capital transfer amounted to NPR
14.21 billion in the review year which was NPR 15.46 billion in
the previous year. Similarly, Balance of Payments (BOP) remained
at a surplus of NPR 282.41 billion in the review year compared
to deficit of NPR 67.4 billion in the previous year.
Inflation
In the FY 2019/20, the average consumer price inflation stood at
6.15 percent compared to 4.64 percent a year ago. In the review
year, wholesale price inflation stood at 4.78 percent as compared
to 6.02 percent in the previous year.
Interest Rate
The weighted average 91-day Treasury bills rate decreased to
1.27 percent in mid-July 2020 from 4.97 percent a year ago.
The weighted average inter-bank transaction rate among
commercial banks decreased to 0.35 percent in mid-July 2020
from 4.52 percent a year ago.
The weighted average deposit rate and lending rate of
commercial banks stood at 6.01 percent and 10.11 percent
respectively in mid-July 2020. Such rates were 6.60 percent and
12.13 percent respectively in previous year. Similarly, average
base rate of commercial banks decreased to 8.50 percent in mid-
July 2020 from 9.57 percent a year ago.
Capital Market
The NEPSE index increased by 8.21 percent and stood at
1,362.4 points in mid-July 2020 which had increased by 3.8
percent and remained at 1,259.0 points in the corresponding
period of the previous year. Securities market capitalization
increased by 14.37 percent on y-o-y basis and reached NPR
1,792.76 billion in mid July 2020 against an increase of 9.2
percent to NPR 1,567.5 billion a year ago. The ratio of market
capitalization to GDP stood at
 Annual Report

47.6 percent in mid-July 2020 compared to 45.3 percent a year increased from NPR 55.89 billion to NPR 126.24 billion.
ago. Of the total 212 companies listed in Nepal Stock Exchange Similarly, net worth of the bank has increased from NPR
Limited in mid July 2020, the number of banks and financial 5.40 billion to NPR 12.84 billion during the said period.
institutions (including insurance companies) stood at 147
followed by 19 manufacturing and processing industries, 33 b. Profit/Loss Statement of Previous Five Years
hydropower companies, and 4 hotels, trading institutions and
other sectors each and 5 of other divisions. The number of listed Fiscal Year NPR In Million
companies as at mid July 2019 was 215. Particulars
2015/16 2016/17 2017/18 2018/19 2019/20
Interest Income 3,263 5,044 8,129 10,770 11,484
(Source: Nepal Rastra Bank)
Interest Expenses 1,540 2,795 5,090 6,547 7,275
Net Interest
C. Financial Summary Income 1,723 2,250 3,039 4,223 4,208

Commission and
89 155 678 748 653
a. Financial Position of Previous Five Years: Discounts
NPR In Million Other Operating
235 348 26 67 48
Income
Capital and Mid July Exchange
Fluctuation Income 154 194 282 374 400
Liabilities 2016 2017 2018 2019 2020
Total Operating
Share Capital 4,711 8,001 8,001 8,001 8,801 Income 2,200 2,947 4,025 5,413 5,310
Reserves and Employee Expenses 259 345 608 912 964
Funds 682 1,093 2,808 4,023 4,043
Other Operating
Debenture and Expenses 330 429 498 663 736
Bonds 370 370 370 1,725 1,725
Exchange
Borrowings 3,282 611 359 1,319 86 Fluctuation Loss - - - - -
Deposits 46,344 57,754 79,139 92,140 109,922 Operating Profit
before Provision 1,611 2,173 2,919 3,838 3,610
Bills Payables - - - - - for Possible
Income Tax Loss
Liabilities - - 70 23 -
Provision for
Possible Losses 135 133 247 227 797
Other Liabilities 502 2,126 1,085 1,799 1,667
Total Capital Operating Profit 1,477 2,041 2,672 3,611 2,813
and Liabilities 55,891 69,955 91,831 109,030 126,244
Non-Operating
Income/Expense 71 45 0.2 (4) (0.4)
Assets
Provision Written
Cash Balance 688 908 1,082 1,435 1,757 Back 16 3 8 9 -
Balance with Profit from
NRB 2,575 5,265 5,610 2,781 5,326
Regular 1,564 2,089 2,680 3,616 2,813
Balances Operations
with Bank and Profit/Loss from
Financial 150 741 465 637 3,277
Extra ordinary - (0) - - -
Institutions activities
Money at Call and Net Profit after
Short Notice - - 600 770 - considering all 1,564 2,089 2,680 3,616 2,813
activities
Investments 10,652 9,097 13,142 16,981 18,702 Provision for Staff
Bonus 142 186 271 364 284
Loans Advances
and Bill Purchase 40,455 51,265 69,243 83,439 93,695 Provision for
Income Tax 421 569 721 979 762

Fixed Assets 655 727 948 1,229 1,243 Net Profit/(Loss) 1,000 1,333 1,688 2,274 1,767
Non-Banking
Assets - - - - -
(Figures includes Sanima Capital and figures after FY
Other Assets 716 1,952 741 1,757 2,244
2017/18 are presented as per Nepal Financial Reporting
Total Assets 55,891 69,955 91,831 109,030 126,244
Standards (NFRS).)

During the previous four years, total assets of the bank have During the last four years, net profit has increased from NPR

5 www.sanimabank.co
 Annual Report
1 Billion to NPR 1 Billion 767 Million.
D. Infrastructure
1. Branch expansion
The Bank has been continuously expanding its branch network
from east to west. The Bank has been operating from 83
branches & 16 extension counters till the date of preparation
of this report. In FY 2019/20 the bank has established five new
branches outside valley at Bauniya, Bhalwari, Taplejung,
Kohalpur and Chandrapur and two extension counters. Further,
bank has established 13 extension counters inside valley. The
Bank has planned to continue its network expansion on a selective
basis inside and outside valley during the fiscal year 2020/21.
2. Information Technology
The bank has a policy to automate and digitize all its business
processes. IT risk in banking industry is identified as a major risk; to
mitigate which, the bank has been implementing various security
measures. Apart from this, the bank has planned to adopt new
technologies in E-Banking sector while optimally utilizing its
resources.
Furthermore, the Bank has implemented the following measures to
enhance Information Technology during FY 2019/20;
a. The Bank has extended its ATM network and is
facilitating customers from 81 ATM booths and has
planned to extend the service in various business
locations and new branches.
b. The Bank has implemented E-Payment solution through NCHL
Connect IPS and planned to implement corporate payment
system as well. Additionally, customers can now perform
“NCHL self-registration” service.
c. The Bank has planned to implement Bank XP Solution in
order to upgrade Mobile Banking service.
d. The Bank is focusing on digitization of documents.
e. The Bank has redesigned its website to make it
handicapped-friendly and displayed in both English and
Nepali language.
f. The Bank has automated internal approval system in order
to perform paperless banking transactions.
g. The Bank has implemented Automated Reporting System in
Internal Audit Department for fast and speedy reporting.
h. The Bank has implemented MIS for generating real time
reports at a click.
6 www.sanimabank.co
i. The Bank has adopted “Work from Home” culture to
reduce the outspread of COVID wherever possible.
E. Human Resource Development
As on mid July 2020, 1,072 staff's are working in Sanima
Bank.The Bank has been adopting a policy for managing staff
appropriately as per its requirement. In order to develop and upgrade
skills of its human resource, the Bank has marked participation of all
employees in various seminars, in-house and external trainings.
Staff have already participated in various skill based training,
seminar and conference within and outside the country. On
headcount basis, 3,406 staff's were provided in-house training
and 885 staff's were provided external training in various
topics. During the review year, 66 staff's have participated in
international trainings and seminars in person where 357 staffs
have participated international trainings via webinar. Employee
remuneration has been hiked in line with the increment in the
profit and market scenario, a part from this; staff’s perk has been
increased by considering inflation as well.
F. Remittance
In order to provide better and more reliable remittance
services and to serve a wide array of customers living in Nepal
and abroad, the Bank has started its own remittance service
"Sanima Xpress".
With continuous effort to expand its services, the Bank has
entered into an agreement with “Galaxia International Services
Inc” of America and “Hana Ez Service” of KEB Hana Bank
situated in Korea in the review year to facilitate customers
through remittance service. With this, Nepalese staying in
America and Korea can remit money easily and safely via
Sanima Xpress. Bank has been providing remittance service in
collaboration with 6 companies from Dubai, 2 from South
Korea, 2 from UK, 2 from America, 1 each from Malaysia,
Australia, Singapore, 1 bank from India and Xpress Money
services around the globe. The bank aims to broaden its reach by
building additional relations in remittance sector.
G. Industrial and Business Relationship
Bank has been maintaining an excellent industrial and business
relationship, nationally and internationally. The Bank is
committed towards putting continuous efforts to strengthen
the relationship with its experienced and skillful staff and
customers at all levels. We are pleased
 Annual Report
to announce that a wide range of business customers of Nepalese
market are banking with us. The Bank has also been successful
in maintaining excellent international trade relationship with
Banks in India, China, Japan, America, Europe, Australia, Dubai,
Korea and so on.
H. Corporate Social Responsibility
Corporate Social Responsibility has been prioritized as a long-
standing commitment at Sanima Bank. The Bank’s contribution
to the social sector with special focus on education and health
sectors has benefited the deprived category. Continuing the trend,
in the review year deserving students with low income source
studying in grade XI & XII are benefiting with our scholarship
program through outside valley branches.
Details of Corporate Social Responsibility activities
conducted via Head Office and various branches of the Bank
during the review year are as follows:
1. Sanima Bank has contributed NPR 18.8 million to Nepal
Government for treatment and control of corona virus
(COVID-19) which also contains contributions from the
Bank employees amounting to NPR 3.3 million.
2. In collaboration with local bodies, Sanima bank has donated
ration to COVID-19 impacted from different places of
Kathmandu.
3. Sanima Bank has provided financial support of NPR 1
million to “Teach For Nepal” to support 2 fellows of
"Teach For Nepal".
4. Amarsingh Branch, Pokhara, has supported mid-day lunch
for the students of Kalika Madhyamik Vidhyalaya in order
to provide nutrition to the needy students at school.
5. Naxal Branch has donated books (literature, G.K, Novels)
to the students of Grade 4 to 10 of Shree Tangaal
Madhyamik Vidhyalaya.
6. Hetauda Branch conducted water distribution program for
pilgrims of Pashupati temple at Hetauda during the month
of Shrawan.
7. Himali Branch, Bajura, conducted Financial Literacy
program at Dhim Basti, Bajura. More than 300 local
people had participated on the program.
8. Kalaiya Branch conducted "Health Camp" during
Gadhimai festival to provide basis health checkup facilities
to the pilgrims.
9. On the occasion of 15th Anniversary of Sanima Bank, Head
office along with 16 branches had organized
7 www.sanimabank.co
blood donation program with partnership to Red Cross
Society.
10. Myanglung Branch, Tehrathum, has distributed
stationery items in Shree Himalaya Ma. Bi., Shree
Janata Adharbhut Bidhyalaya, Shree Sharada
Aadharbhut Bidhyalaya and Shree Kalika Adharbhut
Bidhyalaya of Myanglung Municipality ward no. 4. More than
160 students were directly benefited through this program.
11. Tulsipur Branch has successfully conducted “Sanitary and
Dust Bin Distribution Program" at Tulsipur airport.
12. Tikapur branch, Kailali, has distributed 50 sets of school
uniform to the underprivileged students of Shree Karnali
Madhyamik Vidhyalaya, Tikapur Kailali.
13. Sanima Bank has supported Bird Conservation Nepal
(BCN) to place Bird Feeders at various places of
Kanthmandu Valley.
14. Sanima bank has supported Help Nepal Network to
reconstruct a Rajkuleshwor Lower Secondary School in
Dolakha which came down crumbling due to devastating
earthquake back in April 2015.
15. Damak branch has provided financial support to
construct Shivagunj Bahumukhi Campus at Jhapa.
16. Sanima Bank has supported Karuna Foundation Nepal to
provide assistive support device to the needy disabled persons
residing in Province 1.
17. Sanima Bank in partnership with Women Entrepreneurs
Association of Nepal’s (WEAN) had conducted training
program to make hand sanitizer.
I. Corporate Governance
At Sanima, Corporate Governance has been considered integral
to sustainable growth of the Bank. Various committees and
sub-committees are actively functioning in the Bank as
prescribed by Nepal Rastra Bank. The committees are highly
committed and focused to mitigate and manage various risks
through the implementation of Corporate Governance. The Bank
is committed through time to deepen long-term relationship with
regulatory authorities, customers and all stakeholders through
Corporate Governance.
J. Grievance Handling
The Bank has handled all 11 grievances received from
customers during fiscal year 2019/20, as per the provisions
under Clause 9 of Directive 20 of Unified Directive 2077
issued by the central bank.
 Annual Report
K. Internal Control System
The Bank has adequate internal control framework and
processes in place in managing risks and in controlling its
business and financial activities while reducing risks which
can cause loss, ensure compliance with prevailing laws and
regulations. Both the Audit committee and Risk Management
sub-committee have been taking appropriate actions to control
and mitigate overall risks after reviewing relevant reports on a
regular basis. Similarly, Board of Directors have been
analyzing the effectiveness of internal control system by
reviewing the reports issued by external auditor and regulators
(on inspection) and implementing appropriate actions for effective
internal control. Apart from this, several committees of the Bank
such as Management committee, Assets- Liabilities Management
committee, Risk Management committee, Internal Audit
department, Compliance department and Integrated Risk
Management Department are also actively involved for the
effectiveness of Internal Control System.
L. Board Committees
a. Risk Management Committee
Composition of Risk Management Committee, remuneration,
allowances and facilities received by them and details of the
functions performed;
Members of the committee:
Director
Mr. Balaram Parajuli Coordinator
Director
Mr. Tuk Prasad Poudel Member
Representative
Mr. Raju Krishna Shrestha Member
Operation Department
Chief, Risk Management Department
Mr. Bobby Singh Gadtaula Member Secretary
No remuneration has been provided to coordinator and director
member of the committee except sitting fees of NPR 12,000
per meeting. Risk Management Committee had met eight times
during the financial year 2019/20 and payment of NPR 172,000
in total has been made as sitting fees.
8 www.sanimabank.co
Bank has been issuing various directives for risk
identification, assessment, review, control & effective risk
management. The committee has implemented Board approved
risk management strategy after identifying Bank’s Risk Appetite
and Tolerance Limit to cope with Inherent Material Risk
associated with the bank. Such policy and procedure has been
reviewed & updated from time to time, reported associated risk
to senior management, discussed with Risk Management
committee and the Board on the issued report every quarter. The
committee has also been complying all the obligations defined
under NRB Directives.
b. Anti-Money Laundering committee
Composition of Anti-Money Laundering committee,
remuneration, allowances and facilities received by them and
details of the functions performed;
Members of the committee:
Director
Mr. Bharat Kumar Pokhrel Coordinator
Director
Mr. Mahesh Ghimire Member
Head Risk Management Department
Mr. Bobby Singh Gadtaula Member
Head Compliance Department
Mr. Buddhi Sagar Subedi Member Secretary
No remuneration has been provided to coordinator and director
members of the committee except sitting fees of NPR 12,000 per
meeting. Risk Management Committee had met four times
during the financial year 2019/20 and payment of NPR 84,000 in
total has been made as sitting fees.
The Committee has been reporting to the Board regarding
adequacy and effectiveness of existing risks identification and
risk management system associated with Money Laundering
and also recommending for developing robust system, after
comprehensive study and discussion. Further, the committee has
been complying all the obligations defined under NRB
Directives.
c. Employee Service Facility Committee
Composition of Employee Service Facility Committee,
 Annual Report

remuneration, allowances and facilities received by them and
details of the functions performed;
Members of the committee:
Director
Mr. Mahesh Ghimire Coordinator
Chief Executive Ofiicer
Mr. Bhuvan Kumar Dahal Member
Head Treasury & Finance
Mr. Bibhor Jha Member
Head Human Resource
Mr. Narayan Prasad Khatiwada Member Secretary
No remuneration has been provided to coordinator and director
members of the committee except sitting fees of NPR
12,000 per meeting. Employee Service Facility Committee had
met seven times during the financial year 2019/20 and payment
of NPR 96,000 in total has been made as sitting fees. The
committee has been performing its responsibility in compliance
with directive no. 6 issued by the Central Bank.
In the review year, the committee discussed and
recommended management and Board of Directors for
developing necessary policies & guidelines regarding Employee
appraisal and promotion, Employee retention, Anti-Bribery and
Corruption and Whistle Blowing, Employees salary and
bonus, Employee loan service and other employee services.
No remuneration has been provided to coordinator and director
members of the committee except sitting fees of NPR
12,000 per meeting. Audit Committee had met seventeen
times during the financial year 2019/20 and payment of NPR
409,000 in total has been made as sitting fees. The committee is
performing its responsibility in compliance with directive no. 6
issued by the Central Bank. The committee has performed the
following functions in the review year.
 The committee has reviewed overall financial position,
internal control system, audit plans and procedures and
internal audit observations of the Bank periodically and
also issued necessary directions to management and also
provide suggestions to Board of Directors.
 The committee has reviewed whether the bank has
complied with all prevailing laws, directives issued by
the Central Bank and disclosed in the report issued.
 The committee has developed comprehensive audit plan
and conducted internal audit accordingly.
 The committee has reviewed adherence on regularity,
parsimony and effectiveness of the bank and
recommended to the Board accordingly.
 The committee has reviewed quarterly financial
performances of the bank and presented to the Board of
Directors.
 The committee has reviewed the audit calender & audit plan
prepared by Internal Audit Department.
M. Achievement of Current Fiscal Year and Future
Prediction

d. Audit Committee Sanima Bank has been able to generate operating profit & net
profit of NPR 589 million and NPR 371 million respectively
Composition of Audit Committee, remuneration, allowances and in the first two months of current fiscal year. Similarly, in the
facilities received by them, details of the functions coming years, our efforts will be focused on a balanced growth
performed; guided by the core principles of liquidity & capital and managing
risks in a disciplined way. The Bank shall continuously focus to
Members of the committee are as follows: solicit individual & other deposits, retail banking and providing a
complete financial solution in current year as well. However,
Director we are not in a position to assess the impact of COVID-19 on
Mr. Tuk Prasad Poudel Coordinator national economy yet. Despite that the pandemic has hindered
the economic prosperity and development activities in the country,
Director we are hopeful that soon after the impact of the pandemic is over,
Ms. Gayatri Thapa Member industries, business, trade, agriculture and overall economy will
prosper..
Head Internal Audit
Mr. Niraj Dhakal Member Secretary

9 www.sanimabank.co
 Annual Report

N. Changes in Board of Directors P. Appointment of Auditor

Mr. Uttam Kumar Bhattarai has resigned after his
appointment as chairman in Public Service Commission of
Province 1 and the vacant position has been fulfilled with an
appointment of Mr. Balaram Parajuli for next four years by
Board of Directors.
O. Issuance of Debenture
The bank has plans to issue additional debentures in this fiscal
year for business enhancement.
M/s S.R. Pandey & Co., Chartered Accountants has been
appointed as statutory auditor for FY 2019/20.
Lastly, on behalf of the Board of Directors, I would like to extend
my heartfelt gratitude to all the stakeholders, Government
Entities, Nepal Rastra Bank, Securities Board, Office of Company
Registrar, Nepal Stock Exchange Limited, External Auditors,
Media and all well-wishers for their valuable suggestions,
feedbacks and continued support. We expect similar support,
suggestions and cooperation in the coming days ahead.

Thank you!
On behalf of Board of Directors Binaya
Kumar Shrestha Chairman
November 13, 2020

1 www.sanimabank.co
 Annual Report
Additional Disclosures as per section 109 of the Companies Act, 2063
a) Impacts caused on the transactions of the Company,
if any, from National and International Situation:
Banking business is influenced by country's political and
economic situation, Government and regulator policies, rules and
regulations, business competition, country's diplomatic and
economic relationship with international market, overall economic
indicators, etc. Banking business is impressed by the factors as
disclosed in 'country's macroeconomic situation' section of
Board of Directors report.
b) Response of Board of Directors on remarks made, if
any, in the Audit Report
The Board has directed management to improve/implement the
general observations stated in the preliminary audit report. The
Bank is committed to improve the same.
c) Dividend
It is proposed for the distribution of 10% of Paid up capital as
Stock dividend amounting to NPR 880,138,098.40 and 3.60% of
Paid of Capital as Cash dividend (including tax on dividend)
amounting to NPR 316,849,715.42 from the retained earnings at
the end of the year 2019/20.
d) Details of shares forfeited (number of shares, face
value, amount received by the Company prior to
forfeiture, amount received by the Company after
putting such forfeited shares into subscription and
the amount refunded on account of refunded shares
The Bank has not forfeited any shares till date.
e) Progress of transactions of the company and its
subsidiary company in the previous financial year
and review of the situation existing at the end of that
financial year
Progress of business transactions of the company during current
year was disclosed in the Directors Report and attached
financial statements.
f) Main transactions carried out by the company and
its subsidiary company during the financial year and
any important change in the business of the company
during the period:
1 www.sanimabank.co
Bank and its subsidiary have operated banking business and
merchant banking business as defined by prevailing acts, rules
and regulations. No major changes in business activities have
been observed in the review period.
g) Information furnished to the company by its principal
shareholders during the previous year
During the previous year, no such information provided.
h) Details of the shareholding taken by the Directors
and officials of the company in the previous financial
year and, in the event of their involvement in share
transaction of the company, details of information
received by the company from them in that respect
During the previous year, no such information provided.
i) Details of disclosure made about the personal
interest of any Director and his/her close relative in
any agreements related with the company during the
previous financial year
During the fiscal year, no such information has been made
available to the Bank.
j) Buyback of shares of the company, reasons thereof
for buy back, number of shares bought back, face
value of the shares and the amount paid during the
buy back
The Bank has not bought back any share.
k) Whether or not there is an internal control system,
and if there is any such system, details there of :
Disclosed in the 'Board of Director Report'.
l) Details of Operating Expenses of the previous year
Operating expenses of the previous year is depicted below:
i) Staff Expenses NPR 1,234,689,274
(Including Staff Bonus)
ii) Other Operating Expenses NPR 728,240,360
m) Composition of Audit Committee, remuneration,
allowances and facilities received by them, details
 Annual Report

of the functions performed by that committee and of NPR In '000

suggestions, if any, made by that committee. Chief Executive Other Chief
Particulars
Officer Officials
Disclosed in the 'Board of Director Report'. Salary, allowances and other
14,615 38,242
benefits
n) Amount, if any, outstanding and payable to the Detailed report on salary have been included in Annual
company by any Director, managing Director, Chief financial statements.
Executive, substantial shareholder or his/her close
relative, or by any firm company, corporate body, in • Facilities have been provided as per Employees Bylaws and
which he/she is involved Bonus as per the Bonus Act.

No such information has been made available to the Bank.
o) Amount of remuneration, allowances and facilities
paid to the Directors, Managing Director, Chief
Executive and Officials
Board of Directors has been benefitted by fees, allowances and
other facilities as depicted below:
Sitting fees of NPR 13,000 and NPR 12,000 per Board
meeting is being provided to Chairman and other Board
members respectively. Apart from this, maximum of NPR
12,000 is being provided to board members for newspaper,
magazine, periodicals, telephone, internet and other services
on monthly basis. No any other facility has been provided
except as mentioned.
p) Amount of dividends remaining unclaimed by
shareholders
Amount of unclaimed dividend amounts to NPR 94,227,474.
q) Details of sale and purchase of properties pursuant
to Section 141
The Bank has not purchased any properties pursuant to this section.
r) Details of transactions carried on between the
associated companies pursuant to Section 175
Such information has been disclosed in point number 7 “Related
Party Disclosures” of annexure 5 "Disclosures and Additional
Information" of this Annual Report.

During fiscal year 2019/20, NPR 2,618,000 has been paid to s) Any other matter to be mentioned in the Board of
board of directors, after deduction of applicable tax as per Directors’ report under Companies Act, 2063 and
prevailing laws. other prevailing laws:

Salary, allowances and benefits paid to Chief Executive and Nil

Officials

1 www.sanimabank.co
 Annual Report

Disclosure Related to Sub Rule (2) of Rule 26 as per annexure 15 of

Securities Registration and Issuance Regulation, 2073
1. Report of the Board of Directors: Disclosed in the
“Director’s Report” part of this report.
2. Auditor’s Report: Disclosed in the appropriate part of this
Report and Financial Statements.
3. Audited Financial Reports: Disclosed in the appropriate
part of this Report and Financial Statements.
b. The Bank has not noticed any law suit filed by or against the
promoter or director of the Bank involving statutory
regulations or criminal offence.
c. The Bank has not noticed any information regarding law
suit, if any, filed against the promoter and director for
committing economic crimes.
5. Analysis of stock performance of the Body Corporate

4. Legal Proceedings: a. Management’s view on the performance of the

stock of the body corporate:
a. No mentionable law suits have been filed by the Bank or
against the Bank, except for regular law suit in normal The Bank’s share price is guided by the market
course of banking business. operations of the capital market.

b. High, low and closing price of the stocks of the Bank, during each quarter of the preceding year along
with total volume of trading shares and number of days traded are depicted below:
No. of Trading Total no. of Total no. of
Quarter Max. Price Min. Price Last Price
Days Transactions Shares Traded
First 361 300 305 63 4,370 1,229,710
Second 350 300 343 59 3,073 866,645
Third 437 303 324 47 9,856 3,055,779
Fourth 344 287 330 14 1,106 317,560
(Source: Nepal Stock Exchange)

6. Problems and Challenges  Challenge to maintain the defined interest spread.

a. Internal Problems and Challenges c.Strategy

 Diversification of Income sources
 Increase in Non-Performing Loan
 Continuation of regular operating expenses despite decline
in Income
b. External Problems and Challenges
 Non recovery of principal and interest of loans, lower
remittance, lower Non Interest Income and unfavorable
economic condition due to outspread of COVID-19 around
the world.
 Rigorous competition between Banks and Financial
Institutions.
 Imbalance between increasing demand for loans and
deposits collection.
 Challenges observed in the domain of Information
Technology.
 Demand of loan not increased as expected.
 Implementation of appropriate strategy to manage risk
arising due to COVID-19.
 Diversification of deposits and risk assets.
 Exploration of new avenues for revenue generation and
deposits mobilization.
 Development of advance technological services.
 Capital Increment.
 Development of more robust system for overall risk
management.
7. Corporate Governance
Bank fully adheres to all the relevant policies and provisions of
the Banks and Financial Institutions Act, 2073, directives,
circulars and notification circulated by the Central Bank.
Corporate Governance has been always prioritized and all the
relevant policies, provisions and directives have been

1 www.sanimabank.co
 Annual Report
compiled with no compromise.
Audit committee has been formed for the effective
implementation of internal control system. The said
committee has been analyzing the effectiveness of internal
control system by reviewing the reports issued by external
auditor and regulators (on inspection) and implementing
appropriate actions and advising management for effective
internal control.
Apart from this, several committees of the Bank such as
1 www.sanimabank.co
Management Committee (MANCOM), Assets- Liabilities
Management Committee (ALCO), Risk Management Committee
and Credit Review Committee are also actively involved for
making banking business effective, reliable and scientific and also
for intervening strategies on need basis.
The Bank is continuously adhering all directions of Nepal Rastra
Bank, directions and recommendations stated in NRB inspection
report and independent auditor's report. Board of Directors and
management of the Bank are committed to improve further by
adhering corporate governance fully.
 Annual Report

1 www.sanimabank.co
 Annual Report

1 www.sanimabank.co
 Annual Report

1 www.sanimabank.co
 Annual Report

1 www.sanimabank.co
 Annual Report

Consolidated Statement of Financial Position

As on 15th July 2020
Amount In NPR
Group Bank
Note Current Year Previous Year Current Year Previous Year
Assets
Cash and cash equivalent 4.1 5,255,810,829 4,779,994,808 5,190,299,845 4,636,422,437
Due from Nepal Rastra Bank 4.2 5,325,683,135 2,781,194,462 5,325,683,135 2,781,194,462
Placement with Bank and Financial Institutions 4.3 2,896,086,670 827,701,829 2,827,086,670 827,701,829
Derivative financial instruments 4.4 40,221,461 85,066,888 40,221,461 85,066,888
Other trading assets 4.5 531,492,829 572,651,015 443,453,005 484,421,811
Loan and advances to B/FIs 4.6 2,844,211,678 2,020,420,376 2,844,211,678 2,020,420,376
Loans and advances to customers 4.7 90,850,351,390 81,418,905,928 90,850,351,390 81,418,860,580
Investment securities 4.8 15,051,957,196 13,642,937,700 15,018,419,486 13,611,190,018
Current tax assets 4.9 5,741,277 - 4,201,081 -
Investment in susidiaries 4.10 - - 250,000,000 250,000,000
Investment in associates 4.11 - - - -
Investment property 4.12 - - - -
Property and equipment 4.13 1,182,156,083 1,157,047,779 1,177,211,496 1,150,520,679
Goodwill and Intangible assets 4.14 61,286,608 71,489,746 60,545,750 70,319,347
Deferred tax assets 4.15 24,629,090 15,595,267 25,565,110 14,774,571
Other assets 4.16 2,174,412,368 1,656,746,810 2,253,731,045 1,713,594,966
Total Assets 126,244,040,615 109,029,752,608 126,310,981,152 109,064,487,965
Liabilities
Due to Bank and Financial Instituions 4.17 3,275,974,837 3,694,458,442 3,275,974,837 3,694,458,442
Due to Nepal Rastra Bank 4.18 86,292,488 1,018,919,629 86,292,488 1,018,919,629
Derivative financial instruments 4.19 - - - -
Deposits from customers 4.20 107,076,174,929 89,229,715,732 107,250,202,687 89,373,729,162
Borrowing 4.21 - - - -
Current Tax Liabilities 4.9 - 22,537,584 - 24,771,881
Provisions 4.22 32,478,077 27,401,007 32,428,917 27,174,446
Deferred tax liabilities 4.15 - - - -
Other liabilities 4.23 1,204,391,821 1,287,811,266 1,122,765,289 1,211,174,346
Debt securities issued 4.24 1,724,712,000 1,724,712,000 1,724,712,000 1,724,712,000
Subordinated Liabilities 4.25 - - - -
Total liabilities 113,400,024,152 97,005,555,660 113,492,376,218 97,074,939,905
Equity
Share capital 4.26 8,801,380,984 8,001,255,440 8,801,380,984 8,001,255,440
Share premium - - - -
Retained earnings 1,218,215,653 1,785,963,624 1,197,037,733 1,751,506,637
Reserves 4.27 2,824,419,826 2,236,977,884 2,820,186,217 2,236,785,982
Total equity attributable to equity holders 12,844,016,463 12,024,196,948 12,818,604,934 11,989,548,059
Non-controlling interest
Total Equity 12,844,016,463 12,024,196,948 12,818,604,934 11,989,548,059
Total Liabilities and Equity 126,244,040,615 109,029,752,608 126,310,981,152 109,064,487,965
Contingent liabilities and commitment 4.28 27,316,773,904 21,935,734,478 27,316,773,904 21,935,734,478
Net assets value per share 145.93 150.28 145.64 149.85

As Per our report of even date

Bhuvan Dahal Binaya Kumar Shrestha Directors Sudarshan Raj Pandey, FCA
Chief Executive Officer Chairman Tuk Prasad Poudel Senior Partner
S.R. PANDEY & Co. Chartered
Gayatri Thapa
Accountants
Bibhor Jha Bharat Kumar Pokhrel
Head-Finance & Treasury Mahesh Ghimire
Date: October 13, 2020 Balaram Parajuli
Place: Naxal, Kathmandu

1 www.sanimabank.co
 Annual Report

Consolidated Statement of Profit or Loss

For the year ended 15th July 2020
Amount In NPR
Group Bank
Note Current Year Current Year Previous Year
Interest income 4.29 11,483,569,745 10,769,806,579 11,469,725,229 10,757,980,831
Interest expense 4.30 7,275,228,305 6,546,642,459 7,280,030,928 6,549,283,717
Net interest income 4,208,341,440 4,223,164,120 4,189,694,300 4,208,697,114
Fee and commission income 4.31 732,367,210 823,224,244 698,255,710 785,119,601
Fee and commission expense 4.32 79,809,476 74,987,742 78,530,474 73,254,193
Net fee and commission income 652,557,734 748,236,502 619,725,237 711,865,408
Net interest, fee and commission income 4,860,899,174 4,971,400,622 4,809,419,537 4,920,562,522
Net trading income 4.33 419,886,042 415,633,736 420,657,825 392,824,856
Other operating income 4.34 28,854,789 25,588,656 59,729,789 44,231,715
Total operating income 5,309,640,005 5,412,623,014 5,289,807,151 5,357,619,093
Impairment charge/(reversal) for loans and other losses 4.35 797,024,603 218,238,049 797,024,603 218,238,049
Net operating income 4,512,615,402 5,194,384,965 4,492,782,548 5,139,381,043
Operating expense
Personnel expenses 4.36 1,247,906,254 1,275,258,347 1,234,689,274 1,259,767,735
Other operating expenses 4.37 578,349,731 521,747,039 572,705,791 515,552,094
Depreciation & Amortisation 4.38 157,333,449 141,045,082 155,534,569 139,165,799
Operating Profit 2,529,025,968 3,256,334,497 2,529,852,914 3,224,895,415
Non operating income 4.39 1,409,962 3,361,023 1,409,962 2,087,168
Non operating expense 4.40 1,766,238 6,999,259 1,520,491 6,826,064
Profit before income tax 2,528,669,692 3,252,696,261 2,529,742,385 3,220,156,519
Income tax expense 4.41
Current Tax 758,890,029 974,884,742 751,726,953 957,816,576
Deferred Tax 2,793,586 4,244,691 1,750,908 4,272,437
Profit for the year 1,766,986,077 2,273,566,828 1,776,264,524 2,258,067,506
Profit attributable to:
Equity holders of the Bank 1,766,986,077 2,273,566,828 1,776,264,524 2,258,067,506
Non-controlling interest - - - -
Profit for the year 1,766,986,077 2,273,566,828 1,776,264,524 2,258,067,506
Earnings per share
Basic earnings per share 20.08 28.42 20.18 28.22
Diluted earnings per share 20.08 28.42 20.18 28.22

As Per our report of even date

Bhuvan Dahal Binaya Kumar Shrestha Directors Sudarshan Raj Pandey, FCA
Chief Executive Officer Chairman Tuk Prasad Poudel Senior Partner
S.R. PANDEY & Co. Chartered
Gayatri Thapa
Accountants
Bibhor Jha Bharat Kumar Pokhrel
Head-Finance & Treasury Mahesh Ghimire
Date: October 13, 2020 Balaram Parajuli
Place: Naxal, Kathmandu

2 www.sanimabank.co
 Annual Report

Consolidated Statement of Other Comprehensive Income

For the year ended 15th July 2020

Amount In NPR
Group Bank
Note Current Year Previous Year Current Year Previous Year
Profit for the year 1,766,986,077 2,273,566,828 1,776,264,524 2,258,067,506
Other comprehensive income, net of income tax
a) Items that will not be reclassified to profit or loss

Gains/(losses) from investments in equity instruments measured at fair

value 10,706,722 (3,232,218) 8,916,694 (2,691,832)

Gain/(losses) on revalution
Actuarial gains/(losses) on defined benefit plans (50,131,419) 105,782,417 (50,721,516) 106,372,514
Income tax relating to above items 11,827,409 (30,765,060) 12,541,447 (31,104,205)

Net other comrehensive income that will not be reclassified to

profit or loss (27,597,288) 71,785,139 (29,263,376) 72,576,477

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 comrehensive income that are or may be reclassified

to profit or loss - - - -

c) Share of other comprehensive income of associate accounted

as per equity method - - - -

Other comprehensive income for the year, net of income tax (27,597,288) 71,785,139 (29,263,376) 72,576,477
Total comprehensive income for the year 1,739,388,789 2,345,351,967 1,747,001,149 2,330,643,983
Total comprehensive income attributable to:
Equity holders of the Bank 1,739,388,789 2,345,351,967 1,747,001,149 2,330,643,983
Non-controlling interest - - - -
Total comprehensive income for the year 1,739,388,789 2,345,351,967 1,747,001,149 2,330,643,983

As Per our report of even date

Bhuvan Dahal Binaya Kumar Shrestha Directors Sudarshan Raj Pandey, FCA
Chief Executive Officer Chairman Tuk Prasad Poudel Senior Partner
S.R. PANDEY & Co. Chartered
Gayatri Thapa
Accountants
Bibhor Jha Bharat Kumar Pokhrel
Head-Finance & Treasury Mahesh Ghimire
Date: October 13, 2020 Balaram Parajuli
Place: Naxal, Kathmandu

2 www.sanimabank.co
 Annual Report

Consolidated Statement of Cash Flows

For the year ended 15th July 2020 Amount In NPR
Group Bank
Current Year Previous Year Current Year Previous Year
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 10,892,589,020 10,497,673,151 10,880,956,054 10,481,920,342
Fees and other income received 730,708,952 830,800,086 695,298,092 789,276,131
Dividend received 2,308,438 319,619 - -
Receipts from other operating activities 423,544,758 415,482,631 423,536,083 415,482,631
Interest paid (7,281,196,956) (6,351,480,965) (7,285,999,579) (6,350,195,161)
Commission and fees paid (81,001,852) (74,987,742) (78,530,474) (73,254,193)
Cash payment to employees (1,198,160,676) (1,297,991,116) (1,184,176,256) (1,288,926,416)
Other expense paid (566,241,905) (516,100,343) (560,732,861) (506,799,351)
Operating cash flows before changes in operating assets and liabilities 2,922,549,780 3,503,715,322 2,890,351,060 3,467,503,983
(Increase)/Decrease in operating assets
Due from Nepal Rastra Bank (2,544,488,673) 2,826,977,386 (2,544,488,673) 2,826,977,386
Placement with bank and financial institutions (2,068,384,842) (8,545,318) (1,999,384,842) (178,545,318)
Other trading assets 40,877,100 (53,635,213) 47,169,477 (4,706,575)
Loan and advances to bank and financial institutions (823,791,302) (375,196,972) (823,791,302) (375,196,972)
Loans and advances to customers (10,228,468,429) (14,038,916,012) (10,228,515,413) (14,038,964,869)
Other assets 78,625,759 (826,657,744) 78,486,903 (826,149,945)
Increase/(Decrease) in operating liabilities
Due to bank and financial institutions (418,483,605) 2,347,499,402 (418,483,605) 2,347,499,402
Due to Nepal Rastra Bank (932,627,141) 659,969,622 (932,627,141) 659,969,622
Deposit from customers 17,846,459,197 11,380,335,676 17,876,473,526 11,524,349,106
Borrowings - - - -
Other liabilities (75,452,348) 267,986,219 (134,033,674) 111,235,705
Net cash flow from operating activities before tax paid 3,796,815,497 5,683,532,369 3,811,156,316 5,513,971,524
Income taxes paid (788,912,511) (924,705,484) (782,450,823) (916,293,600)
Net cash flow from operating activities 3,007,902,985 4,758,826,884 3,028,705,493 4,597,677,924
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (1,407,229,468) (4,197,746,243) (1,407,229,468) (4,197,746,243)
Receipts from sale of investment securities - - - -
Purchase of property and equipment (188,238,260) (416,155,545) (187,834,785) (415,830,648)
Receipt from the sale of property and equipment 6,094,836 16,189,423 5,609,399 16,189,423
Purchase of intangible assets - (21,967,769) - (21,967,769)
Receipt from the sale of intangible assets 9,773,597 - 9,773,597 -
Purchase of investment properties - - - -
Receipt from the sale of investment properties - - - -
Interest received 2,641,479 - - -
Dividend received 24,578,501 2,994,020 52,060,821 21,994,020
Net cash used in investing activities (1,552,379,315) (4,616,686,114) (1,527,620,436) (4,597,361,217)
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt from issue of debt securities - 1,354,712,000 - 1,354,712,000
Repayment of debt securities - - - -
Receipt from issue of subordinated liabilities - - - -
Repayment of subordinated liabilities - - - -
Receipt from issue of shares - - - -
Dividends paid (916,849,285) - (884,349,285) (1,120,175,762)
Interest paid - (192,353,655) - (192,353,655)
Other receipt/payment (62,858,364) (1,056,404,948) (62,858,364) 63,770,813
Net cash from financing activities (979,707,650) 105,953,397 (947,207,650) 105,953,397
Net increase (decrease) in cash and cash equivalents 475,816,020 248,094,167 553,877,407 106,270,104
Cash and cash equivalents at Sawan 1, 2076 4,779,994,808 4,531,900,641 4,636,422,437 4,530,152,334
Effect of exchange rate fluctuations on cash and cash equivalents held - - - -
Cash and cash equivalents at period end 5,255,810,829 4,779,994,808 5,190,299,845 4,636,422,437

As Per our report of even date

Bhuvan Dahal Binaya Kumar Shrestha Directors Sudarshan Raj Pandey, FCA
Chief Executive Officer Chairman Tuk Prasad Poudel Senior Partner
S.R. PANDEY & Co.
Gayatri Thapa
Chartered Accountants
Bibhor Jha Bharat Kumar Pokhrel
Head-Finance & Treasury Mahesh Ghimire
Date: October 13, 2020 Balaram Parajuli
Place: Naxal, Kathmandu

2 www.sanimabank.co
 Annual Report

Consolidated Statement of changes in equity

For the year ended 15th July 2020 Amount In NPR
Group
Attributable to equity holders of the Bank
Non-
Exchange controlling Total equity
Share General Regulatory Fair value Revaluation Retained Other
Share Capital equalisation Total interest
premium reserve reserve reserve reserve earning reserve
reserve
Balance at 16th July 2018 8,001,255,440 - 1,172,044,000 9,507,098 337,775,191 (6,861,239) - 1,156,659,737 138,466,714 10,808,846,940 - 10,808,846,940
Restatement (20,533)
Restated Opening Balance 8,001,255,440 - 1,172,044,000 9,507,098 337,775,191 (6,861,239) - 1,156,639,204 138,466,714 10,808,826,406 - 10,808,826,406
Comprehensive income for the year
Profit for the year 2,273,566,828 2,273,566,828 - 2,273,566,828
Other comprehensive income, net of tax (2,262,553) - 74,047,692 71,785,139 - 71,785,139
Gains/(losses) from investments in equity
(2,262,553) (2,262,553) (2,262,553)
instruments measured at fair value
Gains/(losses) on revalution - -
Atuarial gains/(losses) on defined benefit plans
74,047,692 74,047,692 74,047,692
Gains/(losses) on cash flow hedge -
Exchange gains/(losses) (arising from
translating financial assets of foreign -
operation)
Total comprehensive income for the year - - - - - (2,262,553) - 2,273,566,828 74,047,692 2,345,351,967 - 2,345,351,967
Transfer to reserve during the period - - 451,613,501 4,368,573 - - - (531,563,258) 75,581,184 (0) (0)
Transfer from reserve during the year period - - - (8,496,613) - - 8,496,613 (8,805,664) (8,805,664) (8,805,664)
Transactions with owners, directly
- -
recognised in equity
Share issued - -
Share based payments - -
Dividends to equity holders - -
Bonus shares issued - -
Cash dividend paid (1,120,175,762) (1,120,175,762) (1,120,175,762)
Other (1,000,000) (1,000,000) (1,000,000)
Total contributions by and distributions - - 451,613,501 4,368,573 (8,496,613) (2,262,553) - 629,324,421 140,823,212 1,215,370,542 - 1,215,370,542
Balance at 16th July 2019 8,001,255,440 - 1,623,657,501 13,875,671 329,278,578 (9,123,792) - 1,785,963,624 279,289,925 12,024,196,948 - 12,024,196,948
Balance at 17th July 2019 8,001,255,440 - 1,623,657,501 13,875,671 329,278,578 (9,123,792) - 1,785,963,624 279,289,925 12,024,196,948 - 12,024,196,948
Restatement - -
Restated Opening Balance 8,001,255,440 - 1,623,657,501 13,875,671 329,278,578 (9,123,792) - 1,785,963,624 279,289,925 12,024,196,948 - 12,024,196,948
Comprehensive income for the year
Profit for the year 1,766,986,077 1,766,986,077 - 1,766,986,077
Other comprehensive income, net of tax 7,494,705 - (35,091,993) (27,597,288) - (27,597,288.46)
Gains/(losses) from investments in equity
7,494,705 7,494,705 7,494,705
instruments measured at fair value
Gains/(losses) on revalution
Atuarial gains/(losses) on defined benefit plans
(35,091,993) (35,091,993) (35,091,993)
Gains/(losses) on cash flow hedge
Exchange gains/(losses) (arising from
translating financial assets of foreign
operation)
Total comprehensive income for the year - - - - - 7,494,705 - 1,766,986,077 (35,091,993) 1,739,388,789 - 1,739,388,789
Transfer to reserve during the period - - 357,413,154 2,420,002 218,108,675 - - (648,777,585) 70,835,754 - -
Transfer from reserve during the year period - - - - - - - 143,366 (33,738,354) (33,594,989) (33,594,989)
Transactions with owners, directly
- -
recognised in equity
Share issued - -
Share based payments - -
Dividends to equity holders - -
Bonus shares issued 800,125,544 (800,125,544) - -
Cash dividend paid (884,349,285) (884,349,285) (884,349,285)
Other (1,625,000) (1,625,000) (1,625,000)
Total contributions by and distributions 800,125,544 - 357,413,154 2,420,002 218,108,675 7,494,705 - (567,747,972) 2,005,407 819,819,515 - 819,819,515
Balance at 15th July 2020 8,801,380,984 - 1,981,070,655 16,295,674 547,387,253 (1,629,087) - 1,218,215,653 281,295,332 12,844,016,463 - 12,844,016,463

As Per our report of even date

Bhuvan Dahal Binaya Kumar Shrestha Directors Sudarshan Raj Pandey, FCA
Chief Executive Officer Chairman Tuk Prasad Poudel Senior Partner
S.R. PANDEY & Co. Chartered
Gayatri Thapa
Accountants
Bibhor Jha Bharat Kumar Pokhrel
Head-Finance & Treasury Mahesh Ghimire
Date: October 13, 2020 Balaram Parajuli
Place: Naxal, Kathmandu

2 www.sanimabank.co
 Annual Report

Bank
Attributable to equity holders of the Bank
Non-
Exchange controlling Total equity
Share General Regulatory Fair value Revaluation Retained Other
Share Capital equalisation Total interest
premium reserve reserve reserve Reserve earning reserve
reserve
Balance at 16th July 2018 8,001,255,440 - 1,172,044,000 9,507,098 335,644,839 (5,714,127) - 1,136,681,538 138,466,714 10,787,885,501 - 10,787,885,501
Restatement
Restated Opening Balance 8,001,255,440 - 1,172,044,000 9,507,098 335,644,839 (5,714,127) - 1,136,681,538 138,466,714 10,787,885,501 - 10,787,885,501
Comprehensive income for the year
Profit for the year 2,258,067,506 2,258,067,506 - 2,258,067,506
Other comprehensive income, net of tax (1,884,282) - 74,460,760 72,576,477 - 72,576,477
Gains/(losses) from investments in equity
(1,884,282) (1,884,282) (1,884,282)
instruments measured at fair value
Gains/(losses) on revalution
Atuarial gains/(losses) on defined benefit plans
74,460,760 74,460,760 74,460,760
Gains/(losses) on cash flow hedge
Exchange gains/(losses) (arising from
translating financial assets of foreign
operation)
Total comprehensive income for the year - - - - - (1,884,282) - 2,258,067,506 74,460,760 2,330,643,983 - 2,330,643,983
Transfer to reserve during the period 451,613,501 4,368,573 - (523,066,646) 75,581,184 8,496,613 8,496,613
Transfer from reserve during the year period (8,496,613) - (8,805,664) (17,302,276) (17,302,276)
Transactions with owners, directly
- -
recognised in equity
Share issued - -
Share based payments - -
Dividends to equity holders - -
Bonus shares issued - - -
Cash dividend paid (1,120,175,762) (1,120,175,762) (1,120,175,762)
Other - -
Total contributions by and distributions - - 451,613,501 4,368,573 (8,496,613) (1,884,282) - 614,825,099 141,236,280 1,201,662,558 - 1,201,662,558
Balance at 16th July 2019 8,001,255,440 - 1,623,657,501 13,875,671 327,148,226 (7,598,409) - 1,751,506,637 279,702,993 11,989,548,059 - 11,989,548,059
Balance at 17th July 2019 8,001,255,440 - 1,623,657,501 13,875,671 327,148,226 (7,598,409) - 1,751,506,637 279,702,993 11,989,548,059 - 11,989,548,059
Restatement
Restated Opening Balance 8,001,255,440 - 1,623,657,501 13,875,671 327,148,226 (7,598,409) - 1,751,506,637 279,702,993 11,989,548,059 - 11,989,548,059
Comprehensive income for the year
Profit for the year 1,776,264,524 1,776,264,524 - 1,776,264,524
Other comprehensive income, net of tax - - - - - 6,241,685 - (35,505,061) (29,263,376) - (29,263,376)
Gains/(losses) from investments in equity
6,241,685 6,241,685 6,241,685
instruments measured at fair value
Gains/(losses) on revalution
Atuarial gains/(losses) on defined benefit plans
(35,505,061) (35,505,061) (35,505,061)
Gains/(losses) on cash flow hedge
Exchange gains/(losses) (arising from
translating financial assets of foreign
operation)
Total comprehensive income for the year - - - - - 6,241,685 - 1,776,264,524 (35,505,061) 1,747,001,149 - 1,747,001,149
Transfer to reserve during the period 355,253,499 2,420,002 218,108,675 (646,401,964) 70,619,788 - -
Transfer from reserve during the year period 143,366 (33,738,354) (33,594,988) (33,594,988)
Transactions with owners, directly
- -
recognised in equity
Share issued - -
Share based payments - -
Dividends to equity holders - -
Bonus shares issued 800,125,544 (800,125,544) - -
Cash dividend paid (884,349,285) (884,349,285) (884,349,285)
Other - -
Total contributions by and distributions 800,125,544 - 355,253,499 2,420,002 218,108,675 6,241,685 - (554,468,904) 1,376,373 829,056,875 - 829,056,875
Balance at 15th July 2020 8,801,380,984 - 1,978,911,000 16,295,674 545,256,901 (1,356,724) - 1,197,037,733 281,079,366 12,818,604,934 - 12,818,604,934

As Per our report of even date

Bhuvan Dahal Binaya Kumar Shrestha Directors Sudarshan Raj Pandey, FCA
Chief Executive Officer Chairman Tuk Prasad Poudel Senior Partner
S.R. PANDEY & Co. Chartered
Gayatri Thapa
Accountants
Bibhor Jha Bharat Kumar Pokhrel
Head-Finance & Treasury Mahesh Ghimire
Date: October 13, 2020 Balaram Parajuli
Place: Naxal, Kathmandu

2 www.sanimabank.co
 Annual Report

Sanima Bank Ltd

Notes to the Financial Statements
Year ended 15th July 2020

1. BANK As on 15th July 2020 and comparative period, bank has not
identified any associates.
1.1 General
2. BASIS OF PREPARATION
Sanima Bank Limited (hereinafter referred to as “The Bank”) is a
public limited company, incorporated on 30th June 2004 as per 2.1. Statement of Compliance
the then Companies Act 1964 of Nepal, and domiciled in Nepal.
The Bank obtained license from Nepal Rastra Bank on 26th The Financial Statements of Bank for the year ended 15 th July,
November 2004 and operated the banking business from 6th 2020 comprising Statement of Financial Position, Statement of
December 2004. The Bank obtained license to operate as “A” Comprehensive Income, Statement of Changes in Equity, Statement
class financial institution under the Bank and Financial of Cash Flows and Notes to the Financial Statements (including
Institutions Act, 2006 on 13th February 2012. The registered office Significant Accounting Policies), have been prepared in accordance
of the Bank is located at Alakapuri Building, Naxal, Kathmandu, with Nepal Financial Reporting Standards (hereafter referred as
Nepal. The Bank is listed in Nepal Stock Exchange Limited for NFRS), laid down by the Institute of Chartered Accountants of
public trading of stocks. Nepal and in compliance with the requirements of all applicable
laws and regulations.
1.2 Principal Activities and Operations
2.2. Reporting Period and Approval of Financial
Bank Statements
The Bank has prepared the financial statements in accordance
The principal activities of the Bank are to provide full-fledged
with NFRS depicting financial performance for FY 2019/20 and
commercial banking services including, agency services, trade
financial position of 15th July 2020 and the comparatives of
finance services, card services, e-commerce products and services,
FY 2018/19.
remittance and bullion trading services to its customers through
its strategic business units, branches, extension counters, ATMs
The accompanied Financial Statements have been authorized
and network of agents.
by the Board of Directors vide its resolution dated 13th
Subsidiary and Associates October 2020 and recommended for its approval by the Annual
General Meeting of the shareholders.
Ownership as on:
2.3. Functional and Presentation Currency
Subsidiary Principal Activities 15th July 16th July
2020 2019
The Financial Statements of Bank and Group are presented in
Provides merchant/investment
banking services such Nepalese Rupees (Rs.), which is the currency of the primary
as Management of public economic environment in which the Bank operates. There was no
offerings, portfolio change in Bank’s presentation and functional currency during the
management, underwriting of
Sanima securities, management of
period under review.
Capital mutual fund schemes, 100% 100%
Limited depository participant's 2.4. Use of Estimates, Assumptions and Judgments
service under Central
Depository Service (CDS) and
administration and record keeping The preparation of Financial Statements in conformity with
of securities of its clients Nepal Accounting Standards requires the management to make
judgments, estimates and assumptions that affect the application
Sanima
Share brokerage and dealership of accounting policies and the reported amounts of assets,
Securities 100% 100% liabilities, income and expenses. Actual results may differ due
services
Limited
to these estimates.

2 www.sanimabank.co
 Annual Report
Estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized
in the period in which the estimate is revised and in any future
periods affected.
The most significant areas of estimation, uncertainty and critical
judgments in applying accounting policies that have most
significant effect in the Financial Statements are as follows:
2.4.1 Going Concern
The Directors have made an assessment of Bank’s ability to
continue as a going concern and satisfied that it has the
resources to continue in business for the foreseeable future.
Furthermore, 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. Therefore, the Financial Statements are continued
to be prepared on the going concern basis.
2.4.2 Fair Value of Financial Instruments
Where the fair values of financial assets and financial
liabilities recorded in the statement of financial position can be
derived from active markets, they are derived from observable
market data. However, if this is not available, judgment is
required to establish fair values. The valuation of financial
instruments is described in more detail in Notes.
2.4.3 Impairment of Financial Assets – Loans and
Advances
The Bank review their individually significant loans and
advances at each statement of financial position date to assess
whether an impairment loss should be recorded in the income
statement. The bank has conducted objective evidence test for
individual impairment through different parameters like
inability to meet loan agreements, substantial drop in profits/
turnover, significant adverse cash flows, significant adverse net
worth situation, problematic borrower financial position, etc. In
particular, Judgment of the management is required in the
estimation of the amount and timing of future cash flows while
determining the impairment loss.
These estimates are based on assumptions about a number of
factors and actual results may differ, resulting in future changes
to the impairment allowance.
2 www.sanimabank.co
Loans and advances of top 50 customers have been assessed
individually and found to be not impaired and all
individually insignificant loans and advances are then assessed
collectively, in groups of assets with similar risk characteristics,
to determine whether provision should be made due to incurred
loss events for which there is objective evidence, but the effects of
which are not yet evident. The bank has segregated risk assets into
five groups with similar risk characteristics i.e. home loan, auto loan,
personal loan, short term loan and long term loan for collective
impairment assessment. The collective assessment takes in to account
data from the loan portfolio such as levels of arrears, credit quality,
portfolio size etc. and judgments based on current economic
conditions as per Para 63 of NAS 39. Also the collective
assessment takes into account the past sixty months data for PD
computation and five years data for loss given default (LGD)
computation. Collective impairment assessment on loans and
advances is derived from product of PD and LGD.
The impairment loss on loans and advances as per NAS 39 is
NPR 927.44 Million (NPR 135.67 Million in previous year) and as
per the norms prescribed by Nepal Rastra Bank for loan loss
provision is NPR 1,833.13 Million (NPR 1,036.11 Million in
previous year) in total. The impairment loss on loans and
advances to BFIs as per paragraph 63 of NAS 39 is NPR 27.87
Million (NPR 3.14 Million in previous year) and as per the
norms prescribed by Nepal Rastra Bank for loan loss provision is
NPR 28.50 Million (NPR 20.20 Million in previous year).
Loans and advances have been impaired as the higher of amount
derived as per the norms prescribed by Nepal Rastra Bank for loan
loss provision and amount determined as per paragraph 63 of
NAS 39, as per Carve-out pronounced on 20th September
2018.
The impairment loss on loans and advances is disclosed in Note
4.6 and 4.7 to the financial statements.
2.4.4 Impairment of Investments measured through OCI
Bank reviews its investments classified as available for sale, at
each reporting date to assess whether they are impaired. Objective
evidence that an available for sale debt security is impaired
includes among other things significant financial difficulty of the
issuer, a breach of contract such as a default or delinquency in
interest or principal payments etc. Bank also records impairment
charges on available for sale equity investments where there is
significant or prolonged decline
 Annual Report
in fair value below their cost. The determination of what is
‘significant’ or ‘prolonged’ requires judgment. Bank generally
treats ‘significant’ as 20% and ‘prolonged’ as greater than six
months. In addition, Bank evaluates, among other factors, historical
share price movements, duration and extent up to which the fair
value of an investment is less than its cost.
2.4.5 Taxation
Bank is subject to income tax and judgment is required to
determine the total provision for current, deferred and other
taxes due to the uncertainties that exist with respect to the
interpretation of the applicable tax laws, at the time of
preparation of these Financial Statements.
Deferred tax assets are recognized in respect of impairment
allowances which will be recovered in the foreseeable future tax
losses to the extent that it is probable that future taxable profit
will be available against which the losses can be utilized.
Judgment is required to determine the amount of deferred tax
assets that can be recognized, based upon the likely timing and
level of future taxable profits, together with future tax planning
strategies.
Details on deferred tax assets/liability are disclosed in Note
4.15 to the financial statements.
2.4.6 Defined Benefit Plans
The cost of the defined benefit obligations and the present value of
their obligations are determined using actuarial valuations.
The actuarial valuation involves making assumptions about
discount rates, future salary increases, mortality rates and
possible future liability increases if any. Due to the long term nature
of these plans, such estimates are subject to uncertainty. All
assumptions are reviewed at each reporting date.
In determining the appropriate discount rate, management
considers the average interest rates of Nepal government bonds with
maturities of five years or more. The mortality rate is based on
publicly available mortality tables. Future salary increases are based
on expected future salary increase rates of Bank and attrition rate are
based on the past period’s attrition rates.
2.4.7 Fair Value of Property, Plant and Equipment
The freehold land and buildings of the bank are not reflected at
fair value and no revaluation has been carried at the
reporting date.
2 www.sanimabank.co
2.4.8 Useful Life-time of the Property, Plant and Equipment
Bank reviews the residual values, useful lives and methods of
depreciation of property, plant and equipment at each reporting
date. Judgment of the management is exercised in the estimation
of these values, rates, methods and hence they are subject to
uncertainty.
a) Fixed Assets
Fixed assets except land are stated at acquisition cost less
accumulated depreciation. Acquisition cost includes
expenditures that are directly attributable to the acquisition of
the assets.
Assets with a value less than Rs. 10,000 are charged off as a
revenue expense irrespective of its useful life in the year of
purchase.
Leasehold improvements are capitalized at cost and
amortized over the lease period or ten years whichever is earlier.
The amount of amortization is charged as revenue expenses.
b) Computer Software
Acquired computer software licenses are capitalized on the
basis of cost incurred to acquire and bring to use the specific
software and are amortized over their useful life estimated as 5
years from the date of acquisition or over the period of the license,
whichever is less.
2.4.9 Commitments and Contingencies
All discernible risks are accounted for in determining the amount
of all known liabilities. Contingent liabilities are possible
obligations whose existence will be confirmed only by uncertain
future events or present obligations where the transfer of
economic benefit is not probable or cannot be reliably measured.
Contingent liabilities are not recognized in the Statement of
Financial Position but are disclosed unless they are remote.
2.4.10 Provisions for Liabilities and Contingencies
The Bank faces legal claims against it in the normal course of
business. Management has made judgments as to the likelihood
of any claim succeeding in making provisions. The time of
concluding legal claims is uncertain, as is the amount of possible
outflow of economic benefits.
 Annual Report
2.5. Changes in Accounting Policies
The bank has changed its accounting policies, wherever
required, to ensure compliance with NFRS. Detailed
accounting policies are mentioned in Note 3. The effect of
change in accounting policy at the date of transition has been
given to the retained earnings (and reserves, if applicable).
2.6. New Standards in issue but not yet effective
There are no standards which have been issued but not yet
effective up to the date of issuance of the financial
statements.
2.7. New standards and interpretation not adapted
All the standards and interpretation which have been issued for
implementation have been adopted.
2.8. Discounting
The fair value of debt securities shall be determined by
discounting by the future cash flows by the coupon interest rate.
The Bank has a policy to treat share/debenture issue expenses up to
1% of share/debentures issue price as immaterial. Considering
those expenses as immaterial and impracticable to determine
reliably, same has not been considered in computation of
effective interest rate as per Carve-out (optional) pronounced on
20th September 2018.
Employee benefits has been determined by considering discount
rate as the average yield on corporate bonds issued during
the period.
2.9. Responsibility for Financial Statements
The Board of Directors is responsible for the preparation and
presentation of Financial Statements of Sanima Bank Limited as
per the provisions of the Companies Act, 2006.
2.10.Presentation of Financial Statements
The financial statements have been presented as per NAS 01
(Presentation of Financial Statements).
2.11.Materiality and Aggregation
In compliance with Nepal Accounting Standard - NAS 01
(Presentation of Financial Statements), each material class
2 www.sanimabank.co
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.
2.12.Comparative Information
The Financial Statement of the Bank provides comparative
information in respect of previous periods. The accounting policies
have been consistently applied by Bank with those of the
previous financial year in accordance with NAS 01 Presentation
of Financial Statements, except those which had to be changed
as a result of application of the new NFRS. Further,
comparative information is reclassified wherever necessary to
comply with the current presentation.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied
consistently to all periods presented in these Financial
Statements, and deviations if any have been disclosed
accordingly.
3.1. Basis of Measurement
The Financial Statements of Bank have been prepared on the
historical cost basis, except for the following material items in
the Statement of Financial Position:
 Liabilities for defined benefit obligations are
recognized at the present value of the defined benefit
obligation less the fair value of the plan assets.
 Unquoted investments available for sale are measured
through OCI.
3.2. Basis of consolidation
a. Business Combinations and Goodwill
Business combinations are accounted for using the
acquisition method as per the requirements of Nepal
Accounting Standard - NFRS 3 (Business Combinations). The
 Annual Report
Bank measures goodwill as the fair value of the consideration
transferred including the recognised amount of any non-
controlling interest in the acquiree, less the net recognised
amount (generally fair value) of the identifiable assets acquired and
liabilities assumed, all measured as of the acquisition date. When
the excess is negative, a bargain purchase gain is immediately
recognised in the profit or loss.
The Bank elects on a transaction-by transaction basis whether
to measure non-controlling interest at its fair value, or at its
proportionate share of the recognised amount of the identifiable
net assets, at the acquisition date. The consideration
transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts are generally recognised
in profit or loss. Transactions costs, other than those associated
with the issue of debt or equity securities, that the Bank incurs in
connection with a business combination are expensed as
incurred.
b. Non-controlling interest (NCI)
Non-controlling interest (NCI), also known as minority interest,
is an ownership position whereby a shareholder owns less than
50% of outstanding shares and has no control over decisions.
Non-controlling interests are measured at the net asset value
of entities and do not account for potential voting rights.
For each business combination, the Group elects to measure any
non-controlling interest in the acquiree at fair value.
Changes in group interest in subsidiary that do not result in the
loss of control are accounted for transactions of owners in the
capacity of owners. Adjustments to non-controlling interest are
based on proportionate amount of net assets of subsidiary.
c. Subsidiaries
Subsidiaries are entities that are controlled by the Bank. The Bank is
presumed to control an investee when it is exposed or has rights
to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over
the investee. At each reporting date the Bank reassesses whether it
controls an investee if facts and circumstances indicate that there
are changes to one or more elements of control mentioned
above.
The Financial Statements of Subsidiaries are fully
consolidated (except stated otherwise) from the date on
2 www.sanimabank.co
which control is transferred to the Bank and continue to be
consolidated until the date when such control ceases. The
Financial Statements of the Bank’s Subsidiaries are prepared for
the same reporting period as per the Bank, using consistent
accounting policies.
The cost of acquisition of a Subsidiary is measured as the
fair value of the consideration, including contingent
consideration, given on the date of transfer of title. The
acquired identifiable assets, liabilities are measured at their fair
values at the date of acquisition. Subsequent to the initial
measurement, the Bank continues to recognize the investments
in Subsidiaries at cost.
When a Subsidiary is acquired or sold during the year,
operating results of such Subsidiary is included from the date of
acquisition or to the date of disposal.
All Subsidiaries of the Bank have been incorporated in Nepal.
d. Loss of Control
Upon the loss of control, the Bank derecognizes the assets and
liabilities of the Subsidiary, any non-controlling interests and other
components of equity related to the subsidiary. Any surplus or
deficit arising on the loss of control is recognized in the
Statement of Profit or loss.
If the Bank retains any interest in the previous Subsidiary, then
such interest is measured at fair value at the date that control
is lost. Subsequently it is accounted for as equity-accounted
investee or in accordance with the Bank’s accounting policy for
financial instruments depending on the level of influence
retained.
e. Special Purpose Entity (SPE)
A special purpose vehicle/entity is a "bankruptcy-remote entity"
that a parent company uses to isolate or securitize assets and it
often holds this off-balance sheet. Some also call this a
"bankruptcy-remote entity" or "variable interest entities" since its
operations are limited to the acquisition and financing of specific
assets as a method of isolating risk. A special purpose
vehicle/entity is a subsidiary company with an asset/liability
structure and legal status that makes its obligations secure, even
if the parent company goes bankrupt.
Group does not have any SPE.
 Annual Report
f. Transaction elimination on consolidation
Intra group balances and transactions, any unrealized income and
expenses arising from intra group transactions, are eliminating
in preparing the consolidated financial statements. Unrealized
gains/losses arising from transactions with equity accounted
investees are eliminated against the investments to the extent of
group interest of investee.
3.3. Cash and cash equivalent
Cash and Cash Equivalents include cash in hand, balances with
banks, placements with banks and money at call and at short notice
with maturity less than three months.
Details of the Cash and Cash Equivalents are given in Note
4.1 to the Financial Statements.
3.4. Financial Assets and financial liabilities
a. Recognition
All financial assets and liabilities are initially recognized on the
trade date, i.e. the date that Bank becomes a party to the
contractual provisions of the instrument. This includes ‘regular
way trades’. Regular way trade means purchases or sales of
financial assets that required delivery of assets within the time
frame generally established by regulation or convention in the
market place.
The classification of financial instruments at the initial
recognition depends on their purpose and characteristics and the
management’s intention in acquiring them.
b. Classification and Measurement
Financial Assets
All financial instruments are measured initially at their fair value
plus transaction costs that are directly attributable to acquisition
or issue of such financial instruments except in the case of
such financial assets and liabilities at fair value through profit
or loss, as per the Nepal Accounting Standard - NAS 39
(Financial Instruments: Recognition and Measurement).
Transaction cost in relation to financial assets and financial
liabilities at fair value through profit or loss are dealt with the
Statement of Profit or Loss.
3 www.sanimabank.co
At the inception, a financial asset is classified into one of the
following:
a. Financial assets at fair value through profit or loss
i. Financial assets held for trading
ii. Financial assets designated at fair value through profit or
loss
b. Financial Assets at amortized cost
c. Financial assets at fair value through OCI
The subsequent measurement of financial assets depends on
their classification.
Financial Assets at Fair Value through Profit or Loss
A financial asset is classified as fair value through profit or
loss if it is held for trading or is designated at fair value through
profit or loss.
i. Financial Assets Held for Trading
Financial assets are classified as held for trading if they are
acquired principally for the purpose of selling or repurchasing
in the near term or holds as a part of a portfolio that is managed
together for short-term profit or position taking. This category
also includes derivative financial instruments entered into by Bank
that are not designated as hedging instruments in hedge
relationships as defined by Nepal Accounting Standards NAS 39
(Financial Instruments: Recognition and Measurement).
Financial assets held for trading are recorded in the Statement
of Financial Position at fair value. Changes in fair value are
recognized in ‘Net trading income’. Dividend income is
recorded in ‘Net trading income’ when the right to receive the
payment has been established.
Bank evaluates its held for trading asset portfolio, other than
derivatives, to determine whether the intention to sell them in the
near future is still appropriate. When Bank is unable to trade
these financial assets due to inactive markets and management’s
intention to sell them in the foreseeable future significantly
changes, Bank may elect to reclassify these financial assets.
Financial assets held for trading include instruments such as
government securities and equity instruments that have
 Annual Report
been acquired principally for the purpose of selling or
repurchasing in the near term.
ii. Financial Assets Designated at Fair Value
through Profit or Loss
Bank designates financial assets at fair value through profit or
loss in the following circumstances:
 Such designation eliminates or significantly reduces
measurement or recognition inconsistency that would
otherwise arise from measuring the assets
 The assets are part of a group of Financial assets, financial
liabilities or both, which are managed and their
performance evaluated on a fair value basis, in accordance
with a documented risk management or investment
strategy
 The asset contains one or more embedded derivatives that
significantly modify the cash flows that would
otherwise have been required under the contract.
Financial assets designated at fair value through profit or loss
are recorded in the Statement of Financial Position at fair
value. Changes in fair value are recorded in ‘Net gain or loss on
financial instruments designated at fair value through
profit or losses’ in the Statement of Profit or Loss. Interest
earned is accrued under ‘Interest income’, using the effective
interest rate method, while dividend income is recorded under
‘Other operating income’ when the right to receive the payment
has been established.
The Bank has not designated any financial assets upon initial
recognition as designated at fair value through profit or loss.
iii. Financial Assets measured at amortized cost
Held to Maturity Financial Assets are non-derivative
financial assets with fixed or determinable payments and fixed
maturities which the Bank has the intention and ability to hold to
maturity. After the initial measurement, held to maturity
financial investments are subsequently measured at amortized
cost using the effective interest rate, less impairment. The
amortization is included in ‘Interest income’ in the Statement of
Profit or Loss. The losses arising from impairment of such
investments are recognized in the Statement of Profit or
Loss.
3 www.sanimabank.co
The Amortized cost of a financial asset or liability is the
amount at which the financial asset or liability is measured at
initial recognition, minus principal repayments, plus or minus
the cumulative amortization using the effective interest method
of any difference between the initial amount recognized and the
maturity amount, minus any reduction for impairment.
Loans and Receivables from Customers
Loans and receivables include non-derivative financial assets
with fixed or determinable payments that are not quoted in an
active market, other than:
 Those that the Bank intends to sell immediately or in the
near term and those that the Bank, upon initial
recognition, designates as fair value through profit or loss
 Those that the Bank, upon initial recognition,
designates as available for sale
 Those for which the Bank may not recover substantially all of
its initial investment through contractual cash flows, other
than because of credit deterioration.
After initial measurement, loans and receivables shall be
subsequently measured at amortized cost using the effective
interest rate, less allowance for impairment. The amortization
shall be included in ‘Interest Income’ in the Statement of Profit
or Loss. The losses arising from impairment are recognized in
‘Impairment charge / reversal for loans and other losses’ in the
Statement of Profit or Loss.
However, Bank has a policy to treat loan administration fees up to
1% of loan amount as immaterial. Considering those fees as
immaterial and impracticable to determine reliably, same has not
been considered in computation of effective interest rate as per
Carve-out (optional) pronounced on 19th August 2020.
Staff Loans measured at fair value
The bank has a policy to provide home loan, hire purchase loan and
home loan tied up with insurance to employees at subsidized
interest rate. The Bank has measured the staff loans at fair value.
The bank is considering average cost of fund (7.15%) as fair
market interest rate for deriving fair value of staff loans
though the loans are provided to staffs at interest rate of 4%
(Hire Purchase) and 5% (Home loan). Difference of book value
with fair value of loans has been shown as prepaid employee
benefits.
 Annual Report
Financial Assets measured at fair value through OCI
Financial assets measured through OCI include equity and debt
securities. Equity Investments classified as ‘Fair value through OCI’
are those which are neither classified as ‘Held for neither
Trading ’nor ‘Designated. Debt securities in this category are
intended to be held for an indefinite period of time and may be
sold in response to needs for liquidity or in response to changes in
the market conditions.
After initial measurement, available for sale financial
investments are subsequently measured at fair value. Unrealized
gains and losses are recognized directly in equity through ‘Other
comprehensive income / expense’ in the ‘Fair value reserve’.
When the investment is disposed of the cumulative gain or
loss previously recognized in equity is recognized in the
Statement of Profit or Loss under ‘Other operating income’. Where
Bank holds more than one investment in the same security, they
are deemed to be disposed off on a first-in-first-out basis.
Interest earned whilst holding ‘Financial investments at fair
value through OCI’ is reported as ‘Interest income’ using the
effective interest rate. Dividend earned whilst holding ‘Financial
investments at fair value through OCI’ are recognized in the
Statement of Profit or Loss as ‘other operating income’ when
the right to receive the payment has been established. The losses
arising from impairment of such investments are recognized in
the Statement of Profit or Loss under ‘Impairment charge for
loans and other losses’ and removed from the ‘Available for sale
reserve’.
Financial Liabilities
At the inception, Bank determines the classification of its
financial liabilities. Accordingly financial liabilities are
classified as:
a. Financial liabilities at fair value through profit or loss
i. Financial liabilities held for trading
ii. Financial liabilities designated at fair value through
profit or loss
b. Financial liabilities at amortized cost
Financial Liabilities at Fair Value through Profit or Loss
Financial Liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities
designated upon initial recognition as fair value through profit or
loss. Subsequent to initial recognition, financial liabilities at fair
value through profit or loss are measured
3 www.sanimabank.co
at fair value and changes therein are recognized in profit or
loss.
(i) Financial Liabilities Held for Trading
Financial liabilities are classified as held for trading if they
are acquired principally for the purpose of selling or
repurchasing in the near term or holds as a part of a portfolio
that is managed together for short-term profit or position taking.
This category includes derivative financial instrument entered
into by Bank that are not designated as hedging instruments in
hedge relationships as defined by Nepal Accounting Standard -
NAS 39 (Financial Instruments: Recognition and Measurement).
(ii) Financial Liabilities Designated at Fair Value
through Profit or Loss
Bank designates financial liabilities at fair value through profit
or loss at following circumstances:
 Such designation eliminates or significantly reduces
measurement or recognition inconsistency that would
otherwise arise from measuring the liabilities.
 The liabilities are part of a group of Financial assets,
financial liabilities or both, which are managed and their
performance evaluated on a fair value basis, in accordance
with a documented risk management or investment
strategy
 The liability contains one or more embedded
derivatives that significantly modify the cash flows that
would otherwise have been required under the contract.
Financial Liabilities At Amortized Cost
Financial instruments issued by Bank that are not classified as
fair value through profit or loss are classified as financial
liabilities at amortized cost, where the substance of the
contractual arrangement results in Bank having an obligation
either to deliver cash or another financial asset to another
Bank, or to exchange financial assets or financial liabilities
with another Bank under conditions that are potentially
unfavorable to the Bank or settling the obligation by delivering
variable number of Bank’s own equity instruments.
After initial recognition, such financial liabilities are
subsequently measured at amortized cost using the effective
interest rate method. Amortization is included in
 Annual Report
‘Interest Expenses’ in the Statement of Profit or Loss. Gains and
losses are recognized in the Statement of Profit or Loss when the
liabilities are derecognized.
Reclassification
(i) Reclassification of Financial Instruments ‘At fair
value through profit or loss’,
Bank does not reclassify derivative financial instruments out of
the fair value through profit or loss category when it is held
or issued.
Non-derivative financial instruments designated at fair value
through profit or loss upon initial recognition is not reclassified
subsequently out of fair value through profit or loss category.
Bank may, in rare circumstances reclassify financial
instruments out of fair value through profit or loss category if
such instruments are no longer held for the purpose of selling
or repurchasing in the near term notwithstanding that such
financial instruments may have been acquired principally for the
purpose of selling or repurchasing in the near term. Financial
assets classified as fair value through profit or loss at the initial
recognition which would have also met the definition of ‘Loans and
Receivables’ as at that date is reclassified out of the fair value
through profit or loss category only if Bank has the intention
and ability to hold such asset for the foreseeable future or until
maturity.
The fair value of financial instruments at the date of
reclassification is treated as the new cost or amortized cost of
the financial instrument after reclassification. Any gain or loss
already recognized in respect of the reclassified financial
instrument until the date of reclassification is not reversed to the
Statement of Profit or Loss.
If a financial asset is reclassified, and if Bank subsequently
increases its estimates of the future cash receipts as a result of
increased recoverability of those cash receipts, the effect of that
increase is recognized as an adjustment to the effective interest
rate from the date of the change in estimate rather than an
adjustment to the carrying amount of the asset at the date of
change in estimate.
(ii) Reclassification of ‘Financial Assets measured at
fair value through OCI’
Bank may reclassify financial assets out of available for sale
category as a result of change in intention or ability or in
3 www.sanimabank.co
rare circumstances that a reliable measure of fair value is no
longer available.
The fair value of financial instruments at the date of
reclassification is treated as the new cost or amortized cost of the
financial instrument after reclassification. Difference between
the new amortized cost and the maturity value is amortized
over the remaining life of the asset using the effective interest
rate. Any gain or loss already recognized in Other Comprehensive
Income in respect of the reclassified financial instrument is
accounted as follows:
1. Financial assets with fixed maturity :
Gain or loss recognized up to the date of reclassification is
amortized to profit or loss over the remaining life of the
investment using the effective interest rate. If the financial asset
is subsequently impaired, any previous gain or loss that has been
recognized in other comprehensive income is reclassified from
equity to profit or loss.
2. Financial assets without fixed maturity :
Gain or loss recognized up to the date of reclassification is
recognized in profit or loss only when the financial asset is sold
or otherwise disposed of. If the financial asset is
subsequently impaired, any previous gain or loss that has
been recognized in other comprehensive income is reclassified
from equity to profit or loss.
If a financial asset is reclassified, and if Bank subsequently increases
its estimates of future cash receipts as a result of increased
recoverability of those cash receipts, the effect of that increase is
recognized as an adjustment to the effective interest rate from the
date of the change in estimate rather than an adjustment to the
carrying amount of the asset at the date of change in
estimate.
(iii) Reclassification of ‘Financial Instruments
amortized at cost’
As a result of a change in intention or ability, if it is no
longer appropriate to classify an investment as amortized at cost,
Bank may reclassify such financial assets as at fair value
through OCI and re- measured at fair value. Any difference between
the carrying value of the financial asset before reclassification
and fair value is recognized in equity through other
comprehensive income.
However, if Bank were to sell or reclassify more than an
insignificant amount of held to maturity investments before
 Annual Report
maturity [other than in certain specific circumstances
permitted in Nepal Accounting Standard - NAS 39 (Financial
Instruments: Recognition and Measurement)], the entire
category would be tainted and would have to be reclassified
as ‘Investment measured at fair value through OCI’.
Furthermore, Bank would be prohibited from classifying any
financial assets as ‘Held to Maturity’ during the following two
years. These reclassifications are at the election of management
and determined on an instrument by instrument basis.
c. Derecognition
Derecognition of Financial Assets
Bank derecognizes a financial asset (or where applicable a part
of financial asset or part of a group of similar financial assets)
when:
 The rights to receive cash flows from the asset have
expired; or
 Bank has transferred its rights to receive cash flows from
the asset or
 Bank has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a
‘pass-through’ arrangement and either Bank has
transferred substantially all the risks and rewards of the
asset or it has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred
control of the asset.
On derecognition of a financial asset, the difference between
the carrying amount of the asset (or the carrying amount
allocated to the portion of the asset derecognized) and the sum of
the consideration received (including any new asset obtained less
any new liability assumed) and any cumulative gain or loss that
had been recognized in other comprehensive income is
recognized in profit or loss.
When Bank has transferred its rights to receive cash flows from
an asset or has entered into a pass-through arrangement and has
neither transferred nor retained substantially all of the risks and
rewards of the asset nor transferred control of the asset, the asset is
recognized to the extent of the Bank’s continuing involvement in
the asset. In that case, Bank also recognizes an associated liability.
The transferred asset and the associated liability are measured on a
basis that reflects the rights and obligations that Bank has retained.
When Bank’s continuing involvement that takes the form
3 www.sanimabank.co
of guaranteeing the transferred asset, the extent of the
continuing involvement is measured at the lower of the
original carrying amount of the asset and the maximum
amount of consideration received by Bank that Bank could be
required to repay.
Derecognition of Financial Liabilities
A financial liability is derecognized when the obligation under
the liability is discharged or cancelled or expired. Where an
existing financial liability is replaced by another from the same
lender on substantially different terms or the terms of an existing
liability are substantially modified, such an exchange or
modification is treated as derecognition of the original liability
and the recognition of a new liability.
The difference between the carrying value of the original
financial liability and the consideration paid is recognized in
profit or loss.
Offsetting of Financial Instruments
Financial assets and financial liabilities are offset and the net
amount presented in the Statement of Financial Position when
and only when Bank has a legal right to set off the recognized
amounts and it intends either to settle on a net basis or to
realize the asset and settle the liability simultaneously. Income
and expenses are presented on a net basis only when permitted
under NFRSs or for gains and losses arising from a group of
similar transaction such as in trading activity.
d. Determination of fair value
‘Fair value’ is the price that would be received to sell an
asset or paid to transfer a liability (exit price) in an orderly
transaction between market participants at the measurement
date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes
place either:
 In the principal market for the asset or liability or
 In the absence of principal market, in the most
advantageous market for asset or liability.
All assets and liabilities for which fair value is measured or
disclosed in the financial statements are categorized within the
fair value hierarchy, described as follows, based on the lowest
level input that is significant to the fair value measurement as
a whole:
 Annual Report
 Level 1 - Valuation technique using quoted
market price: financial instruments with quoted
prices for identical instruments in active markets.
 Level 2 - Valuation technique using
observable inputs: financial instruments 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 3 – Valuation technique with significant
unobservable inputs: financial instruments valued
using valuation techniques where one or more
significant inputs are unobservable.
Level 1
When available, the Bank measures the fair value of an
instrument using quoted prices in an active market for that
instrument or dealer price quotations (assets and long positions
are measured at a bid price, liabilities and short positions are
measured at an asking price), without any deduction for
transaction costs.
A market is regarded as active if quoted prices are readily and
regularly available and represent actual and regularly occurring
market transactions on an arm’s length basis.
Level 2
If a market for a financial instrument is not active, then the Bank
establishes fair value using a valuation technique. Valuation
techniques include using recent arm’s length transactions
between knowledgeable, willing parties (if available),
reference to the current fair value of other instruments that are
substantially the same, discounted cash flow analysis and option
pricing models. The chosen valuation technique makes maximum
use of market inputs, relies as little as possible on estimates
specific to the Group, incorporates all factors that market
participants would consider in setting a price, and is consistent
with accepted economic methodologies for pricing financial
instruments. Inputs to valuation techniques reasonably represent
market expectations and measures of the risk-return factors
inherent in the financial instrument. The Bank calibrates
valuation techniques and tests them for validity using prices
from observable current market transactions in the same
instrument or based on other available observable market data.
3 www.sanimabank.co
The best evidence of the fair value of a financial instrument at
initial recognition is the transaction price, i.e. the fair value
of the consideration given or received, unless the fair value
of that instrument is evidenced by comparison with other
observable current market transactions in the same instrument,
i.e. without modification or repackaging, or based on a valuation
technique whose variables include only data from observable
markets. When transaction price provides the best evidence of
fair value at initial recognition, the financial instrument is
initially measured at the transaction price and any difference
between this price and the value initially obtained from a
valuation model is subsequently recognised in profit or loss on
an appropriate basis over the life of the instrument but not later
than when the valuation is supported wholly by observable market
data or the transaction is closed out.
Level 3
Certain financial instruments are recorded at fair value using
valuation techniques in which current market transactions or
observable market data are not available. Their fair value is
determined using a valuation model that has been tested against
prices or inputs to actual market transactions and using the Bank’s
best estimate of the most appropriate model assumptions. Models
are adjusted to reflect the spread for bid and ask prices to
reflect costs to close out positions, credit and debit valuation
adjustments, liquidity spread and limitations in the models. Also,
profit or loss calculated when such financial instruments are first
recorded (day 1 profit or loss) is deferred and recognised only
when the inputs become observable or on de- recognition of the
instrument.
Fair values reflect the credit risk of the instrument and
include adjustments to take account of the credit risk of the Bank
entity and the counterparty where appropriate. Fair value
estimates obtained from models are adjusted for any other
factors, such as liquidity risk or model uncertainties; to the
extent that the Group believes a third-party market participant
would take them into account in pricing a transaction.
Assets and Liabilities Recorded at Fair Value
A description of how fair values are determined for assets and
liabilities that are recorded at fair value using valuation
techniques is summarized below which incorporates the bank’s
estimate of assumptions that a market participant would make
when valuing the instruments.
 Annual Report
Derivative financial Instruments
Derivative financial instruments such as forward foreign
exchange contracts are valued using a valuation technique with
market observable inputs (Level 2). The most frequently applied
valuation technique is forward pricing model which incorporates
various inputs including foreign exchange spot and forward
premiums.
Financial Investments measured at fair value
through OCI
Quoted equities, Quoted Mutual Funds classified as financial
investments measured at fair value through OCI are valued using
quoted market prices in the active markets as at the reporting
date (Level 1).
Foreign Quoted Debt Securities classified as financial
investments measured at fair value through OCI are valued using
market rate published by the Stock exchange in which the
Securities is listed (Level 1).
Unquoted equities, classified as financial investments measured
at fair value through OCI are valued using a valuation technique
with market observable inputs (Level 2). The most frequently
applied valuation technique is proxy pricing which incorporates
the inputs of market price of similar market instruments.
e. Impairment
At each reporting date, Bank assesses whether there is any
objective evidence that a financial asset or group of financial
assets not carried at fair value through profit or loss is impaired.
A financial asset or group of financial assets is deemed to be
impaired if and only if there is objective evidence of
impairment as a result of one or more events, that have
occurred after the initial recognition of the asset (an ‘incurred
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.
Objective evidence of impairment may include: indications that
the borrower or a group of borrowers is experiencing significant
financial difficulty; the probability that they will enter
bankruptcy or other financial reorganization; default or
delinquency in interest or principal payments; and where
observable data indicates that there is a measurable decrease in
the estimated future cash flows, such as
3 www.sanimabank.co
changes in arrears or economic conditions that correlate with
defaults.
Impairment of Financial Assets carried at
Amortized Cost
For financial assets carried at amortized cost, such as
amounts due from banks, held to maturity investments etc., Bank
first assesses individually whether objective evidence of
impairment exists for financial assets that are individually
significant or collectively for financial assets that are not
individually significant. In the event Bank determines that no
objective evidence of impairment exists for an individually
assessed financial asset, financial assets in a group with similar
credit risk characteristics are collectively assesses for
impairment. However, assets that are individually assessed
for impairment and for which an impairment loss is or
continues to be recognized are not included in a collective
assessment of impairment.
Impairment of loans and advances (financial assets measured
at amortized cost) has been determined as per the directive of
Nepal Rastra Bank.
Reversal of Impairment
If the amount of an impairment loss decreases in a
subsequent period and the decrease can be related objectively
to an event occurring after the impairment was recognised, the
excess is written back by reducing the financial asset
impairment allowance account accordingly. The write-back is
recognized in the Statement of Profit or Loss.
Write-off of Financial Assets measured at Amortized
Cost
Financial assets (and the related impairment allowance accounts)
are normally written off either partially or in full, when there is
no realistic prospect of recovery. Where financial assets are
secured, this is generally after receipt of any proceeds from the
realization of security.
Impairment of Rescheduled Loans and Advances
Where possible, the Bank seeks to restructure loans rather
than to take possession of collateral. This may involve
extending the payment arrangements and the agreement of new
loan conditions. Once the terms have been renegotiated, any
impairment is measured using the
 Annual Report
original EIR as calculated before the modification of terms and
the loan is no longer considered past due. Management continually
reviews renegotiated loans to ensure that all criteria are met and
that future payments are likely to occur. The loans continue to be
subject to an individual impairment assessment, calculated as per
the central bank’s directive.
Collateral Valuation
The Bank seeks to use collateral, where possible, to mitigate
its risks on financial assets. The collateral comes in various
forms such as cash, securities, letters of credit/guarantees, real
estate, receivables, inventories, other non-financial assets and
credit enhancements such as netting agreements. The fair value
of collateral is generally assessed, at a minimum, at inception
and based on the guidelines issued by the central bank (Nepal
Rastra Bank). Non-financial collateral, such as real estate, is valued
based on data provided by third parties such as independent valuator
and audited financial statements.
Collateral Repossessed or Where Properties have
Devolved to the Bank
The Bank’s policy is to determine whether a repossessed asset is
best used for its internal operations or should be sold. The
immovable property acquired by foreclosure of collateral from
defaulting customers, or which has devolved on the Bank as
part settlement of debt, has not been accounted for as an
investment property or as part of the assets of the Bank in
accordance with directions issued by the Nepal Rastra Bank.
Collateral repossessed are considered as Non-Banking Assets,
are the assets obtained as security for loans & advances
subsequently taken over by the Bank in the course of loan
recovery. Such assets are valued at fair market value or total
amount due from the borrower, whichever is lower and the
balance loan remaining is charged to profit and loss account in the
same year. Provision for possible losses on non-banking assets
equal to the takeover value is made in the year of takeover by a
charge to the Income Statement.
Impairment of Financial Assets measured at fair
value through OCI
For financial investments measured at fair value through OCI,
Bank assesses at each reporting date whether there is objective
evidence that an investment is impaired.
3 www.sanimabank.co
In the case of debt instruments, Bank assesses individually whether
there is objective evidence of impairment based on the same
criteria as financial assets carried at amortized cost. However,
the amount recorded for impairment is the cumulative loss
measured as the difference between the amortized cost and the
current fair value, less any impairment loss on that investment
previously recognised in the Income Statement. Future interest
income is based on the reduced carrying amount and is
accrued using the rate of interest used to discount the future
cash flows for the purpose of measuring the impairment loss.
If, in a subsequent period, the fair value of a debt instrument
increases and the increase can be objectively related to a
credit event occurring after the impairment loss was
recognised, the impairment loss is reversed through the Income
Statement.
In the case of equity investments classified as fair value through
OCI, objective evidence would also include a ‘significant’ or
‘prolonged’ decline in the fair value of the investment below
its cost. Where there is evidence of impairment, the cumulative
loss measured as the difference between the acquisition cost and
the current fair value, less any impairment loss on that
investment previously recognised in profit or loss is removed
from equity and recognized in the Statement of profit or loss.
However, any subsequent increase in the fair value of an
impaired available for sale equity security is recognised in
other comprehensive income.
Bank writes-off certain financial investments measured at fair
value through OCI when they are determined to be
uncollectible.
Impairment of Non-Financial Assets
The Bank assesses at each reporting date whether there is an
indication that an asset may be impaired. If any indication exists, or
when annual impairment testing for an asset is required, the
Bank estimates the asset’s recoverable amount. An asset’s
recoverable amount is the higher of an asset’s or the fair value of the
Cash Generating Units (CGU) fair value less costs to sell and its
value in use. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset is considered impaired and is
written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre–tax discount rate
that reflects current market assessments of
 Annual Report
the time value of money and the risks specific to the asset. In
determining fair value less costs to sell, an appropriate
valuation model is used.
3.5. Trading Assets
Financial assets such as government securities, equity etc. held for
short term with an intention to trade have been classified as
trading assets. Trading assets are measured at fair value with any
changes in fair value being recognised in Profit or Loss.
3.6. Derivative assets and derivative liabilities
Derivative financial instruments such as forward foreign
exchange contracts are valued using a valuation technique with
market observable inputs. The most frequently applied
valuation technique is forward pricing model which incorporates
various inputs including foreign exchange spot and forward
premiums.
3.7. Property and
Equipment Recognition
Property, plant and equipment are tangible items that are held for
use in the production or supply of services, for rental to others or
for administrative purposes and are expected to be used during
more than one period. The Bank applies the requirements of the
Nepal Accounting Standard - NAS 16 (Property, Plant and
Equipment) in accounting for these assets. Property, plant and
equipment are recognised if it is probable that future economic
benefits associated with the asset will flow to the entity and the
cost of the asset can be measured reliably measured.
Measurement
An item of property, plant and equipment that qualifies for
recognition as an asset is initially measured at its cost. Cost
includes expenditure that is directly attributable to the
acquisition of the asset and cost incurred subsequently to add to,
replace part of an item of property, plant & equipment. The
cost of self-constructed assets includes the cost of materials and
direct labor, any other costs directly attributable to bringing the
asset to a working condition for its intended use and the costs of
dismantling and removing the items and restoring the site on
which they are located. Purchased software that is integral to
the functionality of
3 www.sanimabank.co
the related equipment is capitalized as part of computer
equipment. When parts of an item of property or equipment have
different useful lives, they are accounted for as separate items
(major components) of property, plant and equipment.
Cost Model
Property and equipment is stated at cost excluding the costs of
day–to–day servicing, less accumulated depreciation and
accumulated impairment in value. Such cost includes the cost of
replacing part of the equipment when that cost is incurred, if
the recognition criteria are met.
Revaluation Model
The Bank has not applied the revaluation model to the any class
of freehold land and buildings or other assets. Such properties
are carried at a previously recognised GAAP Amount.
On revaluation of an asset, any increase in the carrying amount
is recognised in ‘Other comprehensive income’ and accumulated
in equity, under capital reserve or used to reverse a previous
revaluation decrease relating to the same asset, which was charged
to the Statement of Profit or Loss. In this circumstance, the
increase is recognised as income to the extent of previous
write down. Any decrease in the carrying amount is
recognised as an expense in the Statement of Profit or Loss
or debited to the Other Comprehensive income to the extent of
any credit balance existing in the capital reserve in respect
of that asset.
The decrease recognised in other comprehensive income reduces
the amount accumulated in equity under capital reserves. Any
balance remaining in the revaluation reserve in respect of an
asset is transferred directly to retained earnings on retirement
or disposal of the asset.
Subsequent Cost
The subsequent cost of replacing a component of an item of property,
plant and equipment is recognised in the carrying amount of the
item, if it is probable that the future economic benefits
embodied within that part will flow to the Bank and it can be
reliably measured. The cost of day to day servicing of
property, plant and equipment are charged to the Statement of
Profit or Loss as incurred.
 Annual Report

Derecognition depreciation are reviewed, and adjusted if appropriate, at each

The carrying amount of an item of property, plant and
equipment is derecognized on disposal or when no future
economic benefits are expected from its use. The gain or loss
arising from de-recognition of an item of property, plant and
equipment is included in the Statement of Profit or Loss when the
item is derecognized. When replacement costs are recognized in
the carrying amount of an item of property, plant and equipment,
the remaining carrying amount of the replaced part is
derecognized. Major inspection costs are capitalized. At each
such capitalization, the remaining carrying amount of the
previous cost of inspections is derecognized. The gain or losses
arising from derecognition of an item of property, plant and
equipment is included in profit or loss when the item is
derecognized.
Depreciation
Depreciation is calculated by using the straight line method on
cost or the reducing balance method on carrying value of property,
plant & equipment other than freehold land.
The depreciable amount of an item of property, plant and
equipment is allocated on systematic basis over its useful life
and is depreciated as follows:
Useful Life Depreciation
Nature of Asset
(in Years) Rate
Building 50 5 recognised as part of the cost of an intangible asset at a later
Furniture 10 25
financial year end.
Capital Work in Progress
These are expenses of capital nature directly incurred in the
construction of buildings, major plant and machinery and system
development, awaiting capitalization. Capital work-in-progress
would be transferred to the relevant asset when it is available
for use, i.e. when it is in the location and condition necessary
for it to be capable of operating in the manner intended by
management. Capital work-in- progress is stated at cost less any
accumulated impairment losses.
3.8. Intangible
Assets
Recognition
An intangible asset is an identifiable non-monetary asset without
physical substance, held for use in the production or supply of
goods or services, for rental to others or for administrative
purposes. An intangible asset is recognised if it is probable that
the future economic benefits that are attributable to the asset
will flow to the entity and the cost of the asset can be measured
reliably. An intangible asset is initially measured at cost.
Expenditure incurred on an intangible item that was initially
recognised as an expense by the Bank in previous annual
Financial Statements or interim Financial Statements are not
date.

Office Equipment 10 25 Computer Software

Vehicles 7 20
Cost of purchased licenses and all computer software costs
Computers 7 25 incurred, licensed for use by the Bank, which are not
Plant and Machinery 10 15 integrally related to associated hardware, which can be clearly
identified, reliably measured, and it’s probable that they will
10 Years or Lease period lead to future economic benefits, are included in the Statement of
Leasehold Assets
whichever is less Financial Position under the category ‘Intangible assets’ and
carried at cost less accumulated amortization and any
Depreciation on assets acquired during the year is computed on a accumulated impairment losses.
proportionate basis from date of purchase or put to use,
whichever is earlier. Goodwill

Changes in Estimates
The asset’s residual values, useful lives and methods of
Goodwill, if any that arises upon the acquisition of Subsidiaries is
included in intangible assets. Goodwill is measured at initial
recognition in accordance with Note. Goodwill is measured at cost
less accumulated impairment losses.

3 www.sanimabank.co
 Annual Report
Subsequent Expenditure
Expenditure incurred on software is capitalized only when it is
probable that this expenditure will enable the asset to generate
future economic benefits in excess of its originally assessed
standard of performance and this expenditure can be measured
and attributed to the asset reliably. All other expenditure is
expensed as incurred.
Amortization of Intangible Assets
Intangible Assets, except for goodwill, are amortized on a
straight–line basis in the Statement of Profit or Loss from the date
when the asset is available for use, over the best of its useful
economic life based on a pattern in which the asset’s economic
benefits are consumed by the bank. Amortization methods, useful
lives, residual values are reviewed at each financial year end and
adjusted if appropriate. The Bank assumes that there is no
residual value for its intangible assets.
Acquired computer software licenses are capitalized on the
basis of cost incurred to acquire and bring to use the specific
software and are amortized over their useful life estimated as 5
years from the date of acquisition or over the period of the license,
whichever is less.
Derecognition of Intangible Assets
The carrying amount of an item of intangible asset is
derecognized on disposal or when no future economic benefits
are expected from its use. The gain or loss arising on de
recognition of an item of intangible assets is included in the
Statement of Profit or Loss when the item is derecognized.
3.9. Investment Property
Properties held to earn rental and or capital appropriation are
recognised as investment property. Such properties are measured
at cost.
3.10. Income Tax
As per Nepal Accounting Standard- NAS 12 (Income Taxes)
tax expense is the aggregate amount included in determination
of profit or loss for the period in respect of current and
deferred taxation. Income Tax expense is recognised in the
statement of Profit or Loss, except to the extent it relates to items
recognised directly in equity or
4 www.sanimabank.co
other comprehensive income in which case it is recognised in
equity or in other comprehensive income.
Current Tax
Current tax assets and liabilities consist of amounts expected to be
recovered from or paid to Inland Revenue Department in respect
of the current year, using the tax rates and tax laws enacted or
substantively enacted on the reporting date and any adjustment to
tax payable in respect of prior years.
Deferred Tax
Deferred tax is provided on temporary differences at the
reporting date between the tax bases of assets and liabilities and
their carrying amounts for financial reporting purposes. Deferred
tax liabilities are recognised for all taxable temporary
differences except:
 Where the deferred tax liability arises from the initial
recognition of goodwill or of an asset or liability in a
transaction that is not a business combination, and at the
time of transaction, affects neither the accounting profit
nor taxable profit or loss.
 In respect of taxable temporary differences associated with
investments in subsidiaries, where the timing of the
reversal of the temporary differences can be
controlled and is probable that the temporary
differences will not reverse in the foreseeable future.
 Deferred tax assets are recognised for all deductible
temporary differences, carried forward unused tax credits
and unused tax losses (if any), to the extent that it is
probable that the taxable profit will be available against
which the deductible temporary differences, carried
forward unused tax credits and unused tax losses can be
utilized except:
 Where the deferred tax asset relating to the deductible
temporary differences arising from the initial
recognition of an asset or liability in a transaction that
is not a business combination, and at the time of transaction,
affects neither the accounting profit nor taxable profit or
loss.
 In respect of deductible temporary differences
associated with investments in Subsidiaries, deferred tax
assets are recognised only to the extent that it is probable
that the temporary differences will reverse
 Annual Report
in the foreseeable future and taxable profit will be
available against which the temporary difference will be
utilized.
The carrying amount of deferred tax assets is reviewed at
each reporting date and reduced to the extent that it is probable
that sufficient profit will be available to allow the deferred tax
asset to be utilized. Unrecognized deferred tax assets are
reassessed at each reporting date and are recognised to the extent
that it has become probable that future taxable profit will allow
the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates
that are expected to apply in the year when the asset is realized
or the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the reporting
date.
Current and deferred tax assets and liabilities are offset only to the
extent that they relate to income taxes imposed by the same
taxation authority.
3.11. Deposits, debt securities issued and
subordinated liabilities
Deposits, debt securities issued and subordinated liabilities have
been measured at amortized cost. Bank has a policy to treat debt
securities issue expenses up to 1% of debt securities issue
price as immaterial thus the same has not been considered in
computation of fair value of debt securities.
3.12. Provisions
A provision is recognised if, as a result of a past event, the Bank
has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic
benefits will be required to settle the obligation.The amount
recognised is the best estimate of the consideration required to
settle the present obligation at the reporting date, taking in to
account the risks and uncertainties surrounding the obligation
at that date. Where a provision is measured using the cash flows
estimated to settle the present obligation, its carrying amount is
determined based on the present value of those cash flows. A
provision for onerous contracts is recognized when the expected
benefits to be derived by the Bank from a contract are lower than
the unavoidable cost of meeting its obligations under the
contract. The provision is measured as the present value of
4 www.sanimabank.co
the lower of the expected cost of terminating the contract and the
expected net cost of continuing with the contract.
Before a provision is established, the Bank recognizes any
impairment loss on the assets associated with that contract. The
expense relating to any provision is presented in the Statement of
Profit or Loss net off any reimbursement.
3.13. Revenue Recognition
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to Bank and the revenue can be
reliably measured. The following specific recognition criteria must
also be met before revenue is recognised.
Interest Income
For all financial instruments measured at amortized cost, interest
bearing financial assets classified as measured at fair value
through OCI and financial instruments designated at fair value
through profit or loss, interest income or expense is recorded
using the EIR. EIR is the rate that exactly discounts estimated
future cash payments or receipts through the expected life of
the financial instrument or a shorter period, where appropriate, to
the net carrying amount of the financial asset or financial
liability.
The calculation takes into account all contractual terms of the
financial instrument (for example, prepayment options) and
includes any fees or incremental costs that are directly
attributable to the instrument and are an integral part of the
EIR, but not future credit losses. The carrying amount of the
financial asset or financial liability is adjusted if the bank
revises its estimates of payments or receipts. The adjusted
carrying amount is calculated based on the original EIR and the
change in carrying amount is recorded as ’Interest income’ for
financial assets and ’Interest and similar expense’ for financial
liabilities. However, for a reclassified financial asset for which
the bank subsequently increases its estimates of future cash
receipts as a result of increased recoverability of those cash
receipts, the effect of that increase is recognised as an adjustment to
the EIR from the date of the change in estimate.
Bank has a policy to treat loan administration fees up to
1% of loan amount as immaterial. Considering loan
administration and other fees as immaterial and impracticable
to determine reliably, same has not been included in
computation of effective interest rate as per Carve-out
(optional) pronounced on 19th August 2020.
 Annual Report
Accrued interest income of 15th July 2020 of NPR 440.98
million, realized till 16th September 2020 has been factored in
computation in Regulatory Reserve in line with regulator’s
guidelines.
10% rebate amounting to NPR 25.98 million and 2%
discount amounting to NPR 374.81 million on interest
income has been provided to the eligible borrowers for
prescribed period amidst the COVID 19 pandemic as per the
NRB guidelines.
Accrued interest income of non-performing loans has been
recognised as per Guideline on Recognition of Interest Income
2019.
Fee and Commission Income
Fees earned for the provision of services over a period of time
are accrued over the period, which include service fees and
commission income. Loan commitment fees for loans that are
likely to be drawn down and other credit related fees are
deferred (together with any incremental costs) and recognised as
an adjustment to the EIR on the loan.
Dividend Income
Dividend income is recognized when the right to receive
payment is established.
Net Trading Income
Net Trading Income includes all gains and losses from
changes in fair value and related capital gain/loss and
dividend from financial assets ‘Held for Trading’.
Net income from other financial instrument measured
at fair value through Profit or Loss
Net income from other financial instrument measured at fair
value through Profit or Loss includes all gains/(losses) arised
from the revaluation of financial instrument at fair value.
3.14. Interest expense
For all financial liabilities measured at amortized cost,
interest expense is recognised using the EIR. EIR is the rate that
exactly discounts estimated future cash payments through the
expected life of the financial liabilities or a shorter period,
where appropriate, to the net carrying
4 www.sanimabank.co
amount of the financial liability.
3.15. Employee Benefits
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan
under which the Bank makes fixed contribution into a
separate Bank account (a fund) and will have no legal or
constructive obligation to pay further contributions even if the
fund does not hold sufficient assets to pay all employee benefits
relating to employee services in the current and prior periods as
defined in Nepal Accounting Standards – NAS 19 (Employee
Benefits).
The contribution payable by the employer to a defined
contribution plan in proportion to the services rendered to
Bank by the employees and is recorded as an expense under
‘Personnel Expense’ as and when they become due. Unpaid
contribution are recorded as a liability under ‘Other Liabilities’
in Notes 4.23.
Bank contributed 10% of the salary of each employee to the
Employees’ Provident Fund. The above expenses are identified as
contributions to ‘Defined Contribution Plans’ as defined in Nepal
Accounting Standards – NAS 19 (Employee Benefits).
Defined Benefit Plans
A defined benefit plan is a post-employment benefit plan other
than a defined contribution plan. Accordingly, staff gratuity and
leave encashment has been considered as defined benefit plans as
per Nepal Accounting Standards – NAS 19 (Employee Benefits).
(a) Gratuity
An actuarial valuation is carried out every year to ascertain the
full liability under gratuity.
Bank’s obligation in respect of defined benefit obligation is
calculated by estimating the amount of future benefit that
employees have earned for their service in the current and prior
periods and discounting that benefit to determine its present
value, then deducting the fair value of any plan assets to determine
the net amount to be shown in the Statement of Financial
Position. The value of a defined benefit asset is restricted to the
present value of any economic benefits available in the form of
refunds from the plan or reduction
 Annual Report
on the future contributions to the plan. In order to calculate the
present value of economic benefits, consideration is given to any
minimum funding requirement that apply to any plan in Bank.
An economic benefit is available to Bank if it is realizable during
the life of the plan, or on settlement of the plan liabilities.
Bank determines the interest expense on the defined benefit liability
by applying the discount rate used to measure the defined benefit
liability at the beginning of the annual period. The discount rate is
the average yield on government bonds issued during the period
having maturity of five years or more.
The increase in gratuity liabilities attributable to the services
provided by employees during the year ended 15 th July, 2020
(current service cost) has been recognised in the Statement of
Profit or Loss under ‘Personnel Expenses’ together with the net
interest expense. Bank recognizes the total actuarial gain/(loss) that
arises in computing Bank’s obligation in respect of gratuity in
other comprehensive income during the period in which it
occurs.
The demographic assumptions underlying the valuation are
retirement age (58 years), early withdrawal from service and
retirement on medical grounds.
(b)Unutilized Accumulated Leave
Bank’s liability towards the accumulated leave which is
expected to be utilized beyond one year from the end of the
reporting period is treated as other long term employee benefits.
Bank’s net obligation towards unutilized accumulated leave is
calculated by discounting the amount of future benefit that
employees have earned in return for their service in the current
and prior periods to determine the present value of such
benefits. The discount rate is the average yield on government
bonds issued during the period having maturity of five years or
more. The calculation is performed using the Projected Unit
Credit method. Net change in liability for unutilized accumulated
leave including any actuarial gain and loss are recognized in the
Statement of Profit or Loss under ‘Personnel Expenses’ in the
period in which they arise.
3.16. Leases
3.17. Foreign currency translation
The determination of whether an arrangement is a lease, or it
contains a lease, is based on the substance of the arrangement
and requires an assessment of whether the fulfillment of the
arrangement is dependent on the use of a specific asset or
assets and the arrangement conveys a
4 www.sanimabank.co
right to use the asset.
Finance Lease
Agreements which transfer to counterparties substantially all the
risks and rewards incidental to the ownership of assets, but not
necessarily legal title, are classified as finance lease. When Bank is
the lessor under finance lease, the amounts due under the leases,
after deduction of unearned interest income, are included in,
‘Loans & receivables from other customers’, as appropriate.
Interest income receivable is recognised in ‘Net interest income’
over the periods of the leases so as to give a constant rate of
return on the net investment in the leases.
When Bank is a lessee under finance leases, the leased assets are
capitalized and included in ‘Property, Plant and Equipment’ and
the corresponding liability to the lessor is included in ‘Other
liabilities’. A finance lease and its corresponding liability are
recognized initially at the fair value of the asset or if lower, the
present value of the minimum lease payments. Finance charges
payable are recognised in ‘Interest expenses’ over the period of
the lease based on the interest rate implicit in the lease so as to give
a constant rate of interest on the remaining balance of the
liability.
Operating Lease
All other leases are classified as operating leases. When acting
as lessor, Bank includes the assets subject to operating leases
in ‘Property, plant and equipment’ and accounts for them
accordingly. Impairment losses are recognized to the extent
that residual values are not fully recoverable and the carrying
value of the assets is thereby impaired.
When Bank is the lessee, leased assets are not recognized on the
Statement of Financial Position. Rentals payable and receivable
under operating leases are accounted for on a straight-line basis
over the periods of the leases and are included in ‘Other operating
expenses’ and ‘Other operating income’, respectively.
The bank has recognized lease payments under operating lease as
an expense on the straight line basis over the lease term.
All foreign currency transactions are translated into the
 Annual Report
functional currency, which is Nepalese Rupees, using the
exchange rates prevailing at the dates when the transactions were
affected.
Monetary assets and liabilities denominated in foreign currencies
at the reporting date are translated to Nepalese Rupees using the
spot foreign exchange rate ruling at that date and all
differences arising on non-trading activities are taken to
‘Other Operating Income’ in the Statement of Profit or Loss.
The foreign currency gain or loss on monetary items is the
difference between amortized cost in the functional currency at
the beginning of the period, adjusted for effective interest and
payments during the period, and the amortized cost in
foreign currency translated at the rates of exchange prevailing
at the end of the reporting period.
Non-monetary items in a foreign currency that are measured
in terms of historical cost are translated using the exchange
rates as at the dates of the initial transactions. Non-monetary items
in foreign currency measured at fair value are translated using
the exchange rates at the date when the fair value was
determined.
Foreign exchange differences arising on the settlement or
reporting of monetary items at rates different from those which
were initially recorded are dealt with in the Statement of Profit or
Loss. However, foreign currency differences arising on
available-for-sale equity instruments are recognized in other
comprehensive income.
3.18. Financial guarantee and loan commitments
Contingent Liabilities are possible obligations whose
existence will be confirmed only by uncertain future events or
present obligations where the transfer of economic benefits
is not probable or cannot be reliably measured as defined in
the Nepal Accounting Standard- NAS 37 (Provisions,
Contingent Liabilities and Contingent Assets).
To meet the financial needs of customers, the Bank enters into
various irrevocable commitments and contingent liabilities.
These consist of financial guarantees, letter of credit and other
undrawn commitments to lend. Letters of credit, guarantees
and acceptances commit the Bank to make payments on
behalf of customers in the event of a specific act, generally
related to the import or export of goods. They carry a
similar credit risk to loans. Operating lease commitments of the
Bank (as a lessor and as a lessee) and pending legal claims
against
4 www.sanimabank.co
the Bank too form part of commitments of the Bank.
Contingent liabilities are not recognised in the Statement of
Financial Position but are disclosed unless they are remote. But
these contingent liabilities do contain credit risk and are
therefore form part of the overall risk of the Bank.
Financial guarantees are initially recognised in the Statement
of Financial Position (within ‘other liabilities’) at fair value,
being the premium received. Subsequent to initial recognition,
the Bank’s liability under each guarantee is measured at the
higher of the amount initially recognised less cumulative
amortization recognised in the Statement of Profit or Loss, and the
best estimate of expenditure required to settle any financial
obligation arising as a result of the guarantee.
Any increase in the liability relating to the financial
guarantees is recorded in the Statement of Profit or Loss under
‘Impairment Charges for Loans & other losses’. The premium
received is recognised in the Statement of Profit or Loss under ‘Net
fees and commission income’ on a straight line basis over the life
of the guarantee.
3.19. Share capital and reserves
Share capital and reserves have been treated as equity instrument
as per NAS 32 representing the net assets of the entity. Bank has a
policy to treat share/debenture issue expenses upto 1% of issue
amount as immaterial. Thus, same has not been deducted from
capital/debenture and has been charged to profit or loss of
relevant period.
3.20. Earnings per share including diluted
Bank presents basic and diluted Earnings per share (EPS) data
for its ordinary shares. Basic EPS is calculated by dividing the
profit and loss attributable to ordinary equity holders of Bank by
the weighted average number of ordinary shares outstanding
during the period. Diluted EPS is determined by adjusting both
the profit and loss attributable to the ordinary equity holders and
the weighted average number of ordinary shares outstanding, for
the effects of all dilutive potential ordinary shares, if any.
3.21. Segment Reporting
The bank has identified its geographical segments on the basis of
business activities in 7 different provinces of the country.
 Annual Report
Management monitors the operating results of its segments
separately for the purpose of making decisions about resource
allocation and performance assessment. Segment performance is
evaluated based on operating profits or losses which, in certain
respects, are measured differently from operating profits or losses
in the consolidated financial statements. Income taxes are
managed on a group basis and are not allocated to operating
segments. Transfer prices between operating segments are on an
arm’s length basis in a manner similar to transactions with third
parties.
4 www.sanimabank.co
3.22. Dividend on Ordinary Shares
Dividend on ordinary shares are recognised as liability and
deducted from equity when they are approved by the Annual
General Meeting of shareholders. Interim Dividends are deducted
from equity when they are declared and no longer at the
discretion of the Bank. Dividend proposed for the year after
reporting date and before the authorization of financial
statements has been disclosed in notes as non- adjusting event.
 Annual Report

4.1Cash and cash equivalent

Group Bank
Current Year Previous Year Current Year Previous Year
Cash in hand 1,756,515,440 1,435,466,780 1,756,515,440 1,435,466,780
Balances with B/FIs 3,276,512,029 651,151,940 3,265,001,044 645,579,569
Money at call and short notice - 769,949,308 - 769,949,308
Other 222,783,361 1,923,426,780 168,783,361 1,785,426,780
Total 5,255,810,829 4,779,994,808 5,190,299,845 4,636,422,437

Cash and cash equivalent- Other

Placement with maturity upto 3 months
ST.CH.Bank Singapore 168,783,361 319,856,807 168,783,361 319,856,807
Axis Bank Dubai - 881,814,881 - 881,814,881
Nepal Investment Bank Ltd. - 33,012,488 - 33,012,488
Axis Bank Singapore - 550,742,604 - 550,742,604
Gandaki Bikas Bank Ltd. 5,000,000 20,000,000 - -
Garima Bikas Bank Ltd. 20,000,000 - - -
Jyoti Bikas Bank Ltd. 10,000,000 - - -
Lumbini Bikas Bank Ltd. 19,000,000 - - -
Kailash Bikas Bank Ltd. - 40,000,000 - -
Muktinath Bikas Bank Ltd. - 25,000,000 - -
Om Development Bank Ltd. - 30,000,000 - -
Shangrila Development Bank Ltd. - 23,000,000 - -
Total 222,783,361 1,923,426,780 168,783,361 1,785,426,780

4.2Due from Nepal Rastra Bank

Group Bank
Current Year Previous Year Current Year Previous Year
Statutory balances with NRB 5,239,426,474 2,768,182,555 5,239,426,474 2,768,182,555
Securities purchased under resale agreement - - - -
Other deposit and receivable from NRB 86,256,660 13,011,906 86,256,660 13,011,906
Total 5,325,683,135 2,781,194,462 5,325,683,135 2,781,194,462

4.3Placements with Bank and Financial Instituitions

Group Bank
Current Year Previous Year Current Year Previous Year
Placement with domestic B/FIs 69,000,000 - - -
Placement with foreign B/FIs 2,827,086,670 827,701,829 2,827,086,670 827,701,829
Less: Allowances for impairment - - - -
Total 2,896,086,670 827,701,829 2,827,086,670 827,701,829

4 www.sanimabank.co
 Annual Report

4.4Derivative financial instruments

Group Bank
Current Year Previous Year Current Year Previous Year
Held for trading
Interest rate swap - - - -
Currency swap - - - -
Forward exchange contract - - - -
Others - - - -
Held for risk management
Interest rate swap - - - -
Currency swap - - - -
Forward exchange contract 40,221,461 85,066,888 40,221,461 85,066,888
Other - -
Total 40,221,461 85,066,888 40,221,461 85,066,888

4.5Other trading assets

Group Bank
Current Year Previous Year Current Year Previous Year
Teasury bills - - - -
Government bonds 370,295,779 407,063,913 370,295,779 407,063,913
NRB Bonds - - - -
Domestic Corporate bonds - - - -
Equities 161,197,050 165,587,102 73,157,226 77,357,898
Other - - - -
Total 531,492,829 572,651,015 443,453,005 484,421,811
Pledged - - - -
Non-pledged 531,492,829 572,651,015 443,453,005 484,421,811
Government bonds includes interest receivable amount on National Saving Bonds amounting NPR 7,475,779 at current year and
NPR 7,703,913 at previous year end.

4 www.sanimabank.co
 Annual Report

Information relating to investment in equities

Group Bank
Current Year Previous Year Current Year Previous Year
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
Investment in quoted equity
Nepal Doorsanchar Company Ltd. 47775
shares of Rs.100 each (Bank) 48275 31,595,084 31,477,834 31,595,084 33,304,029 31,182,743 31,151,808 31,182,743 32,959,089
shares of Rs.100 each (Group)
Hydroelectricity Investment and Development Company Ltd. 160342
shares of Rs. 100 each 14,576,600 21,229,521 14,576,600 25,698,894 14,576,600 21,229,521 14,576,600 25,698,894
Nabil Equity Fund
844878 units of Rs. 10 each (Bank) 8,505,100 7,899,550 8,505,100 7,899,550 8,448,780 7,847,240 8,448,780 7,847,240
850510 units of Rs. 10 each (Group)
Global IME Sammunat Scheme
47466 units of Rs. 10 each 474,660 405,426 474,660 395,975 474,660 405,426 474,660 395,975
Laxmi Equity Fund
116991 units of Rs. 10 each 1,169,910 1,021,394 1,169,910 888,624 1,169,910 1,021,394 1,169,910 888,624
Mithila Micro Finace Ltd.
82 units of Rs. 100 each - 66,529 - 30,089 - 66,529 - 30,089
Siddhartha Equity Fund
250000 units of Rs. 10 each 2,500,000 2,488,750 2,500,000 2,511,149 2,500,000 2,488,750 2,500,000 2,511,149
Citizen Mutual Fund-1 200000
units of Rs. 10 each 2,000,000 2,002,946 2,000,000 2,026,838 2,000,000 2,002,946 2,000,000 2,026,838
Nabil Balance Fund-2 250000
units of Rs. 10 each 2,500,000 2,463,863 2,500,000 2,500,000 2,500,000 2,463,863 2,500,000 2,500,000
Citizen Mutual Fund 1 (CMF-11) 250000
units of Rs. 10 each 2,500,000 2,488,750 2,500,000 2,500,000 2,500,000 2,488,750 2,500,000 2,500,000
Sunrise Mutual Fund (SFMF)
200000 units of Rs. 10 each 2,000,000 1,991,000 - - 2,000,000 1,991,000 - -
Agriculture Development Bank
2120 Shares of Rs. 100 each 826,719 812,528 619,530 610,739 - - - -
Century Commercial Bank Ltd.
1500 Shares of Rs. 100 each 256,463 246,386 341,951 352,407 - - - -
Nepal Bank Ltd., 251291 Shares of Rs. 100 each 61,183,920 62,289,887 61,183,920 73,090,311 - - - -
NMB Bank Ltd. 953 Shares of Rs. 100 each 311,102 376,639 - 380 - - - -
Nepal Investment Bank Limited, 337 shares of Rs. 100 each 82,777 144,593 1,344,578 1,915,275 - - - -
Citizen Bank International Limited, 6987 shares of Rs. 100 each 1,872,157 1,307,645 2,140,104 1,729,080 - - - -
NMB Hybrid Fund L-1 7887 units of Rs. 10 each 78,870 74,589 78,870 78,751 - - - -
NIBL Pragati Fund, 8577 units of Rs. 10 each 85,770 69,588 85,770 63,526 - - - -
Nepal SBI Bank Limited, 4 shares of Rs. 100 each - 1,732 - 1,401 - - - -
Samata Microfinance Bittiya Sanstha Limited 2
shares of Rs. 100 each 200 1,314 - - - - - -
Nepal Life Insurance Co. Ltd., 1262 shares of Rs. 100 each 810,814 1,582,964 1,196,304 1,670,113 - - - -
Forward Community Microfinance Bittiya Sanstha Ltd. 541
shares of Rs. 100 each 747,503 861,166 747,503 540,708 - - - -
Om Development Bank Ltd.
1035 shares of Rs. 100 each in previous year - - 311,102 202,977 - - - -
Shangrila Development Bank Ltd., 29 shares of Rs. 100 each 7,475 4,071 7,475 4,590 - - - -
Gandaki Bikas Bank Limited, 2535 shares of Rs. 100 each 756,542 507,242 756,542 545,096 - - - -
Janata Bank Nepal Ltd.
216 shares of Rs. 100 each in previous year - - 50,642 46,016 - - - -
Chhimek Laghubitta Bikas Bank Limited
2048 shares of Rs. 100 each 1,744,675 2,222,275 1,212,159 1,151,893 - - - -
Sana Kisan Bikas Bank Ltd, 2445 shares of Rs. 100 each 2,375,137 3,166,631 440,902 404,862 - - - -
Nirdhan Utthan Bank Limited 250
shares of Rs. 100 each 236,353 252,608 236,353 167,443 - - - -
First Micro Finance Development Bank Ltd. 1049
shares of Rs. 100 each 518,890 579,575 518,890 334,861 - - - -
Nabil Bank Limited, 3387 shares of Rs. 100 each 2,313,672 2,579,395 2,313,672 2,408,314 - - - -
Swabalamban Laghubitta Bittiya Sanstha Limited 2799
shares of Rs. 100 each 2,487,394 3,435,637 2,711,282 2,109,713 - - - -
Life Insurance Co. Nepal, 290 shares of Rs. 100 each 329,369 383,964 386,156 402,978 - - - -
Chilime Hydro Power
1 share of Rs. 100 each in previous year - 396 - 519 - - - -
Bank of Kathmandu Ltd., 3180 shares of Rs.100 each 794,620 693,286 - - - - - -
Garima Bikas Bank Limited, 1500 shares of Rs.100 each 328,873 332,995 - - - - - -
Global IME Bank Limited
3194 shares of Rs.100 each 969,872 759,931 - - - - - -
Machhapuchhre Bank Limited
7350 shares of Rs.100 each 1,607,276 1,609,724 - - - - - -
Mahalaxmi Bikas Bank Ltd., 2000 shares of Rs.100 each 422,398 364,353 - - - - - -
Muktinath Bikas Bank Ltd., 2428 shares of Rs.100 each 609,065 754,127 - - - - - -
NIC Asia Bank Ltd., 1500 shares of Rs.100 each 571,337 825,767 - - - - - -
11% NIC Asia Debenture 082/83, 150 units of Rs.1000 each 154,552 156,791 - - - - - -
Prime Commercial Bank Ltd., 1000 shares of Rs.100 each 273,082 253,853 - - - - - -
Prabhu Bank Limited, 4300 shares of Rs.100 each 997,557 984,550 - - - - - -
10.50% SBL Debenture 2082 25
units of Rs.1000 each 25,027 25,286 - - - - - -
Total 151,600,813 161,197,050 142,505,058 165,587,102 67,352,693 73,157,226 65,352,693 77,357,898

4 www.sanimabank.co
 Annual Report

4.6Loan and advances to B/FIs

Group Bank
Current Year Previous Year Current Year Previous Year
Loans to microfinance institutions 2,872,711,422 2,040,624,948 2,872,711,422 2,040,624,948
Other - - - -
Less: Allowances for impairment 28,499,744 20,204,571 28,499,744 20,204,571
Total 2,844,211,678 2,020,420,376 2,844,211,678 2,020,420,376

Product
Deprived sector loans 2,849,974,433 2,020,457,146 2,849,974,433 2,020,457,146
Sub total 2,849,974,433 2,020,457,146 2,849,974,433 2,020,457,146
Interest receivable 22,736,989 20,167,802 22,736,989 20,167,802
Grand total 2,872,711,422 2,040,624,948 2,872,711,422 2,040,624,948

4.6.1: Allowances for impairment

Balance at Sawan 1 20,204,571 16,499,580 20,204,571 16,499,580
Impairment loss for the year:
Charge for the year 8,295,173 3,704,992 8,295,173 3,704,992
Recoveries/reversal - - - -
Amount written off
Balance at Ashad end 28,499,744 20,204,571 28,499,744 20,204,571

4.7Loans and advances to customers

Group Bank
Current Year Previous Year Current Year Previous Year
Loan and advances measured at amortized cost 92,654,985,973 82,434,811,082 92,654,985,973 82,434,765,734
Less: Impairment allowances
Collective impairment 917,307,450 813,299,544 917,307,450 813,299,544
Individual impairment 887,327,133 202,605,609 887,327,133 202,605,609
Net amount 90,850,351,390 81,418,905,928 90,850,351,390 81,418,860,580
Loan and advances measured at FVTPL - - - -
Total 90,850,351,390 81,418,905,928 90,850,351,390 81,418,860,580

4 www.sanimabank.co
 Annual Report

4.7.1 : Analysis of loan and advances - By Product

Group Bank
Current Year Previous Year Current Year Previous Year
Product
Term loans 21,461,645,699 17,266,760,515 21,461,645,699 17,266,760,515
Overdraft 8,884,384,480 8,237,963,435 8,884,384,480 8,237,963,435
Trust receipt/Import loans 2,488,836,940 2,154,212,411 2,488,836,940 2,154,212,411
Demand and other working capital loans 16,933,579,461 14,527,383,644 16,933,579,461 14,527,383,644
Personal residential loans 6,271,728,325 5,873,119,844 6,271,728,325 5,873,119,844
Real estate loans 5,554,207,509 5,869,534,155 5,554,207,509 5,869,534,155
Margin lending loans 502,236,836 298,594,452 502,236,836 298,594,452
Hire purchase loans 4,391,244,960 4,928,578,940 4,391,244,960 4,928,578,940
Deprived sector loans 2,270,138,916 2,121,207,698 2,270,138,916 2,121,207,698
Bills purchased 87,623,614 5,903,043 87,623,614 5,903,043
Staff loans 1,025,610,168 751,106,479 1,025,610,168 751,061,131
Other 21,600,662,906 20,115,042,693 21,600,662,906 20,115,042,693
Sub total 91,471,899,812 82,149,407,309 91,471,899,812 82,149,361,961
Interest receivable 1,183,086,161 285,403,772 1,183,086,161 285,403,772
Grand total 92,654,985,973 82,434,811,082 92,654,985,973 82,434,765,734

4.7.2 : Analysis of loan and advances - By Currency

Group Bank
Current Year Previous Year Current Year Previous Year
Nepalese rupee 90,318,079,745 80,833,438,278 90,318,079,745 80,833,392,930
Indian rupee - - - -
United State dollar 2,336,906,228 1,539,228,000 2,336,906,228 1,539,228,000
Great Britain pound - - - -
Euro - 62,144,803 - 62,144,803
Japenese yen - - - -
Chinese yuan - - - -
Other - - - -
Total 92,654,985,973 82,434,811,082 92,654,985,973 82,434,765,734

5 www.sanimabank.co
 Annual Report

4.7.3 : Analysis of loan and advances - By Collateral

Group Bank
Current Year Previous Year Current Year Previous Year
Secured
Movable/immovable assets 90,075,379,274 80,547,812,510 90,075,379,274 80,547,812,510
Gold and silver 59,693,839 79,281,905 59,693,839 79,281,905
Guarantee of domestic B/FIs - - - -
Government guarantee - - - -
Guarantee of international rated bank - - - -
Collateral of export document 126,960,326 608,218,400 126,960,326 608,218,400
Collateral of fixed deposit receipt 375,316,610 529,882,841 375,316,610 529,882,841
Collateral of Governement securities - 1,100,000 - 1,100,000
Counter guarantee - - - -
Personal guarantee 1,871,751 27,513,505 1,871,751 27,513,505
Other collateral 2,015,764,174 641,001,921 2,015,764,174 640,956,573
Subtotal 92,654,985,973 82,434,811,082 92,654,985,973 82,434,765,734
Unsecured
Grant Total 92,654,985,973 82,434,811,082 92,654,985,973 82,434,765,734

4.7.4 : Allowances for impairment

Group Bank
Current Year Previous Year Current Year Previous Year
Specific allowances for impairment
Balance at Sawan 1 202,605,609 151,426,791 202,605,609 151,426,791
Impairment loss for the year:
Charge/(reversal) for the year 684,721,524 51,178,818 684,721,524 51,178,818
Write-offs - - - -
Exchange rate variance on foreign currency
- - - -
impairment
Other movement - - - -
Balance at Ashad end 887,327,133 202,605,609 887,327,133 202,605,609
Collective allowances for impairment
Balance at Sawan 1 813,299,544 649,945,188 813,299,544 649,945,188
Impairment loss for the year:
Charge/(reversal) for the year 104,007,907 163,354,356 104,007,907 163,354,356
Exchange rate variance on foreign currency
- - - -
impairment
Other movement - - - -
Balance at Ashad end 917,307,450 813,299,544 917,307,450 813,299,544
Total allowances for impairment 1,804,634,583 1,015,905,153 1,804,634,583 1,015,905,153

5 www.sanimabank.co
 Annual Report

4.8Investment securities
Group Bank
Current Year Previous Year Current Year Previous Year
Investment securities measured at amortized cost 14,317,180,062 12,933,242,288 14,317,180,062 12,933,242,288
Investment in equity measured at FVTOCI 734,777,134 709,695,412 701,239,424 677,947,730
Total 15,051,957,196 13,642,937,700 15,018,419,486 13,611,190,018

4.8.1 : Investment securities measured at amortized cost

Group Bank
Current Year Previous Year Current Year Previous Year
Debt securities - - - -
Government bonds 12,990,003,200 9,430,724,898 12,990,003,200 9,430,724,898
Government treasury bills 1,327,176,862 3,502,517,390 1,327,176,862 3,502,517,390
Nepal Rastra Bank bonds - - - -
Nepal Rastra Bank deposits instruments - - - -
Other - - - -
Less: specific allowances for impairment - - - -
Total 14,317,180,062 12,933,242,288 14,317,180,062 12,933,242,288

4.8.2 : Investment in equity measured at fair value through other comprehensive

income
Group Bank
Current Year Previous Year Current Year Previous Year
Equity instruments
Quoted equity securities 200,599,534 189,892,812 167,061,824 158,145,130
Unquoted equity securities 534,177,600 519,802,600 534,177,600 519,802,600
Total 734,777,134 709,695,412 701,239,424 677,947,730

5 www.sanimabank.co
 Annual Report

4.8.3 : Information relating to investment in equities

Group Bank
Current Year Previous Year Current Year Previous Year
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
Investment in quoted equity
Sanima Equity Fund 16900000 units of Rs.
10 each (Bank) 202,926,800 200,599,534 202,926,800 189,892,812 169,000,000 167,061,824 169,000,000 158,145,130
20292680 units of Rs. 10 each (Group)
Investment in unquoted equity
Sanima Life Insurance Co. Ltd. 2800000
280,000,000 280,000,000 280,000,000 280,000,000 280,000,000 280,000,000 280,000,000 280,000,000
shares of Rs. 100 each
Nepal Clearing House Company Ltd. 33103
2,302,600 2,302,600 2,302,600 2,302,600 2,302,600 2,302,600 2,302,600 2,302,600
shares of Rs. 100 each
Sanima Insurance Ltd.
100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000 100,000,000
1000000 shares of Rs. 100 each
Swet Ganga Hydropower and Construction
Ltd. 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000
500000 shares of Rs. 100 each
Sanima Middle Tamor Hydro Power Ltd.
64,000,000 64,000,000 50,000,000 50,000,000 64,000,000 64,000,000 50,000,000 50,000,000
640000 shares of Rs. 100 each
Mathillo Mailun Khola Jalvidhyut Ltd
37,500,000 37,500,000 37,500,000 37,500,000 37,500,000 37,500,000 37,500,000 37,500,000
375000 shares of Rs. 100 each
MDX Nepal Ltd.
375,000 375,000 - - 375,000 375,000 - -
3750 shares of Rs. 100 each
Total 737,104,400 734,777,134 722,729,400 709,695,412 703,177,600 701,239,424 688,802,600 677,947,730

4.9Current tax assets

Group Bank
Current Year Previous Year Current Year Previous Year
Current tax assets
Current year income tax assets 787,048,725 1,007,451,953 780,699,915 999,339,551
Tax assets of prior periods 2,961,938,439 1,966,300,052 2,956,204,608 1,956,865,057
Current tax liabilities
Current year income tax liabilities 762,269,398 973,129,676 751,726,953 957,816,576
Tax liabilities of prior periods 2,980,976,490 2,023,159,914 2,980,976,490 2,023,159,914
Total 5,741,277 (22,537,584) 4,201,081 (24,771,881)

5 www.sanimabank.co
 Annual Report

4.10 Investment in subsidiaries

Group Bank
Current Year Previous Year Current Year Previous Year
Investment in quoted subsidiaries
Investment in unquoted subsidiaries - - 250,000,000 250,000,000
Total investment - - 250,000,000 250,000,000
Less: Impairment allowances - - - -
Net carrying amount - - 250,000,000 250,000,000

4.10.1 : Investment in quoted subsidiaries

Group Bank
Current Year Previous Year Current Year Previous Year
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
…………………………….Ltd.
…………shares of Rs...............each
…………………………….Ltd.
…………shares of Rs...............each
……………………………….
Total

4.10.2 : Investment in unquoted subsidiaries

Group Bank
Current Year Previous Year Current Year Previous Year
Fair Fair
Cost Cost Cost Fair Value Cost Fair Value
Value Value
Sanima Capital .Ltd.
250,000,000 250,000,000 250,000,000 250,000,000
2,500,000 shares of Rs.100.each
Sanima Securities Ltd. - - - -
Total 250,000,000 250,000,000 250,000,000 250,000,000

5 www.sanimabank.co
 Annual Report

4.10.3 : Information relating to subsidiaries of the Bank

Group Bank
Percentage of ownership held Percentage of ownership held by the Bank
Current Year Previous Year Current Year Previous Year
Sanima Capital Ltd. 100% 100%

4.10.4 : Non controlling interest of the subsidiaries

Group Bank
Current Year Current Year
...Ltd …Ltd. …Ltd …Ltd. ...Ltd …Ltd. …Ltd …Ltd.
Equity interest held by NCI (%)
Profit/(loss) allocated during the year
Accumulated balances of NCI as on Ashad end……..
Dividend paid to NCI
Previous Year Previous Year
...Ltd …Ltd. …Ltd …Ltd. ...Ltd …Ltd. …Ltd …Ltd.
Equity interest held by NCI (%)
Profit/(loss) allocated during the year
Accumulated balances of NCI as on Ashad end……..
Dividend paid to NCI

4.11 Investment in associates

Group Bank
Current Year Previous Year Current Year Previous Year
Investment in quoted associates
Investment in unquoted associates
Total investment
Less: Impairment allowances
Net carrying amount

4.11.1 Investment in Quoted Associates

Group Bank
Current Year Previous Year Current Year Previous Year
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
…………………….Ltd.
……hares of Rs..............each
Total

5 www.sanimabank.co
 Annual Report

4.11.2 Investment in Unquoted Associates

Group Bank
Current Year Previous Year Current Year Previous Year
Cost Fair Value Cost Fair Value Cost Fair Value Cost Fair Value
…………………….Ltd.
……hares of Rs..............each
Total

4.11.3 Information Relating to Associates of the Bank

Group Bank
Percentage of ownership held Percentage of ownership held
Current Year Previous Year Current Year Previous Year
……………………….Ltd.
……………………….Ltd.
……………………….Ltd.
……………………….Ltd.
……………………….

4.11.4 Equity Value of Associates

Group Bank
Current Year Previous Year Current Year Previous Year
……………………….Ltd.
……………………….Ltd.
……………………….Ltd.
……………………….Ltd.
……………………….

4.12 Investment properties

Group Bank
Current Year Previous Year Current Year Previous Year
Investment properties measured at fair value
Balance as on Sawan 1, ……..
Addition/disposal during the year
Net changes in fair value during the year
Adjustment/transfer
Net amount
Investment properties measured at cost
Balance as on Sawan 1, ……..
Addition/disposal during the year
Adjustment/transfer
Accumulated depreciation
Accumulated impairment loss
Net amount
Total

5 www.sanimabank.co
 Annual Report

4.13 Property and

Equipment Amount In NPR
Group
Leasehold Computer & Furniture & Equipment
Particulars Land Building Vehicles Machinery Total
Properties Accessories Fixture & Others
Cost
As on 16th July 2018 210,336,100 139,364,847 216,612,700 173,124,261 211,310,801 117,011,681 102,648,294 155,723,409 1,326,132,094
Addition during the Year
Acquisition - - - 58,876 - - - - 58,876
Capitalization 218,991,070 - 17,569,178 27,414,685 76,778,400 10,546,516 10,752,229 22,313,514 384,365,592
Disposal during the year - - (2,998,280) (3,380,474) (25,175,304) (1,201,172) (80,275) (2,812,070) (35,647,574)
Adjustment/Revaluation - - (1,665,081) - - (352,439) - (9,335) (2,026,855)
Balance as on 16 July 2019
th
429,327,170 139,364,847 229,518,517 197,217,349 262,913,897 126,004,587 113,320,248 175,215,518 1,672,882,133

Addition during the Year

Acquisition - - 1,428,511 - - 713,210 - 1,057,589 3,199,310
Capitalization - - 41,691,404 29,524,280 51,229,750 15,399,893 8,140,822 29,002,424 174,988,574
Disposal during the year - - (11,569,432) (1,510,418) (8,534,300) (2,820,773) (563,870) (5,039,276) (30,038,069)
Adjustment/Revaluation - - - - - - - - -

Balance as on 15th July 2020 429,327,170 139,364,847 261,069,000 225,231,211 305,609,347 139,296,917 120,897,200 200,236,255 1,821,031,948

Depreciation and Impairment

As on 16th July 2018 - 39,442,259 64,675,178 68,770,049 85,887,475 65,996,813 40,240,197 77,714,255 442,726,225
Depreciation charge for the Year - 4,996,129 21,584,011 28,096,315 32,432,833 13,939,154 10,003,474 21,374,833 132,426,750
Impairment for the year - - - - - - - - -
Disposals - - (1,894,015) (3,056,651) (17,279,057) (987,341) (55,538) (2,325,171) (25,597,774)
Adjustment - - - - - - - - -
As on 16 July 2019
th
- 44,438,388 84,365,174 93,809,713 101,041,251 78,948,626 50,188,133 96,763,917 549,555,201
Impairment for the year - - - - - - - - -
Depreciation charge for the Year - 4,746,323 23,628,538 29,397,292 36,656,261 13,215,657 9,910,669 22,383,293 139,938,034

Disposals - - (6,280,191) (1,263,833) (5,884,791) (1,666,886) (434,832) (3,043,269) (18,573,802)

Adjustment - - - - - - - - -

As on 15 July 2020
th
- 49,184,711 101,713,521 121,943,172 131,812,721 90,497,397 59,663,970 116,103,941 670,919,432

Capital Work in Progress 2018 - 6,095,887 - - - - - - 6,095,887

Capital Work in Progress 2019 - 33,720,847 - - - - - - 33,720,847
Capital Work in Progress 2020 - 32,043,567 - - - - - - 32,043,567

Net Book Value

As on 16th July 2018 210,336,100 106,018,475 151,937,522 104,354,212 125,423,326 51,014,869 62,408,097 78,009,154 889,501,756

As on 16 July 2019
th
429,327,170 128,647,306 145,153,343 103,407,636 161,872,646 47,055,961 63,132,115 78,451,602 1,157,047,779

As on 15 July 2020
th
429,327,170 122,223,703 159,355,480 103,288,039 173,796,626 48,799,520 61,233,230 84,132,315 1,182,156,083

5 www.sanimabank.co
 Annual Report

Amount In NPR
Bank
Leasehold Computer & Furniture & Equipment
Particulars Land Building Vehicles Machinery Total
Properties Accessories Fixture & Others
Cost
As on 16th July 2018 210,336,100 139,364,847 212,890,061 171,558,921 207,335,301 116,642,757 102,648,294 153,832,240 1,314,608,521
Addition during the Year -
Acquisition -
Capitalization 218,991,070 17,500,300 27,414,685 76,778,400 10,342,722 10,752,229 22,313,514 384,092,921
Disposal during the year (2,998,280) (3,380,474) (25,175,304) (1,201,172) (80,275) (2,812,070) (35,647,574)
Adjustment/Revaluation (1,665,081) (352,439) (9,335) (2,026,855)
Balance as on 16th July 2019 429,327,170 139,364,847 225,727,000 195,593,132 258,938,397 125,431,868 113,320,248 173,324,349 1,661,027,012

Addition during the Year

Acquisition -
Capitalization 41,433,880 29,524,280 51,229,750 15,399,893 8,140,822 29,002,424 174,731,050
Disposal during the year (7,777,916) (1,510,418) (8,534,300) (2,268,394) (563,870) (3,193,269) (23,848,167)
Adjustment/Revaluation - -

Balance as on 15 July 2020

th
429,327,170 139,364,847 259,382,964 223,606,995 301,633,847 138,563,367 120,897,200 199,133,504 1,811,909,894

Depreciation and Impairment

As on 16th July 2018 - 39,442,259 63,885,918 68,130,777 84,452,116 65,828,870 40,240,197 76,877,978 438,858,116
Depreciation charge for the Year 4,996,129 21,208,049 27,861,722 31,924,805 13,861,550 10,003,474 21,111,109 130,966,839
Impairment for the year -
Disposals (1,894,015) (3,056,651) (17,279,057) (987,341) (55,538) (2,325,171) (25,597,774)
Adjustment -
As on 16 July 2019
th
- 44,438,388 83,199,952 92,935,848 99,097,864 78,703,079 50,188,133 95,663,917 544,227,180
Impairment for the year -
Depreciation charge for the Year 4,746,323 23,269,518 29,209,698 36,249,838 13,044,183 9,910,669 22,120,915 138,551,145
-
Disposals (5,083,373) (1,263,833) (5,884,791) (1,417,621) (434,832) (1,951,910) (16,036,359)
Adjustment -

As on 15 July 2020
th
- 49,184,711 101,386,097 120,881,713 129,462,910 90,329,641 59,663,970 115,832,923 666,741,966

Capital Work in Progress 2018 - 6,095,887 - - - - - - 6,095,887

Capital Work in Progress 2019 - 33,720,847 - - - - - - 33,720,847
Capital Work in Progress 2020 - 32,043,567 - - - - - - 32,043,567

Net Book Value

As on 16th July 2018 210,336,100 106,018,475 149,004,143 103,428,144 122,883,185 50,813,887 62,408,097 76,954,262 881,846,293

As on 16 July 2019
th
429,327,170 128,647,306 142,527,049 102,657,284 159,840,533 46,728,789 63,132,115 77,660,432 1,150,520,679

As on 15 July 2020
th
429,327,170 122,223,703 157,996,868 102,725,281 172,170,936 48,233,726 61,233,230 83,300,582 1,177,211,496

5 www.sanimabank.co
 Annual Report

4.14 Goodwill and Intangible

Assets Amount In NPR
Group
Software
Particulars Goodwill Other Total
Purchased Developed
Cost
As on 16th July 2018 - 24,039,000 2,096,856 - 26,135,856
Addition during the Year - - - - -
Acquisition - - - - -
Capitalization - 68,219,969 - - 68,219,969
Disposal during the year - - - - -
Adjustment/Revaluation - - - - -

Balance as on 16th July 2019 - 92,258,969 2,096,856 - 94,355,825

Addition during the Year - - - -

Acquisition - - - - -
Capitalization - 7,209,828 - - 7,209,828
Disposal during the year - - (40,256) - (40,256)
Adjustment/Revluation - - - - -

Balance as on 15 July 2020

th
- 99,468,796 2,056,600 - 101,525,396

Amortization and Impairment

As on 16th July 2018 - 13,740,661 507,086 - 14,247,747
Amortization charge for the Year - 8,198,961 419,371 - 8,618,332
Impairment for the year - - - - -
Disposals - - - - -
Adjustment - - - - -
As on 16th July 2019 - 21,939,622 926,457 - 22,866,079

Amortization charge for the Year - 16,983,424 411,992 - 17,395,416

Impairment for the year - - - - -
Disposals - - (22,707) - (22,707)
Adjustment - - - - -

As on 15th July 2020 - 38,923,046 1,315,742 - 40,238,788

Capital Work in Progress 2018 - 46,252,200 - - 46,252,200

Capital Work in Progress 2019 - - - - -
Capital Work in Progress 2020 - - - - -

Net Book Value

As on 16th July 2018 - 56,550,539 1,589,770 - 58,140,309

As on 16th July 2019 - 70,319,347 1,170,399 - 71,489,746

As on 15th July 2020 - 60,545,750 740,858 - 61,286,608

5 www.sanimabank.co
 Annual Report

Amount In NPR
Bank
Software
Particulars Goodwill Other Total
Purchased Developed
Cost
As on 16th July 2018 24,039,000 24,039,000
Addition during the Year -
Acquisition -
Capitalization 68,219,969 68,219,969
Disposal during the year -
Adjustment/Revaluation -
Balance as on 16th July 2019 - 92,258,969 - - 92,258,969

Addition during the Year

Acquisition -
Capitalization 7,209,828 7,209,828
Disposal during the year - -
Adjustment/Revluation -

Balance as on 15 July 2020

th
- 99,468,796 - - 99,468,796

Amortization and Impairment

As on 16th July 2018 13,740,661 13,740,661
Amortization charge for the Year 8,198,961 8,198,961
Impairment for the year -
Disposals -
Adjustment -
As on 16th July 2019 - 21,939,622 - - 21,939,622

Amortization charge for the Year 16,983,424 16,983,424

Impairment for the year -
Disposals -
Adjustment -

As on 15 July 2020
th
- 38,923,046 - - 38,923,046

Capital Work in Progress 2018 - 46,252,200 - - 46,252,200

Capital Work in Progress 2019 - - - -
Capital Work in Progress 2020 - - - - -

Net Book Value

As on 16th July 2018 - 56,550,539 - - 56,550,539

As on 16 July 2019
th
- 70,319,347 - - 70,319,347

As on 15 July 2020
th
- 60,545,750 - - 60,545,750

6 www.sanimabank.co
 Annual Report

4.15 Deferred Tax

Group Bank
Current Year Current Year
Net Deferred Net Deferred
Deferred Tax Deferred Tax Tax Assets/ Deferred Tax Deferred Tax Tax Assets/
Assets Liabilities Assets Liabilities
(Liabilities) (Liabilities)
Deferred tax on temporory differences on following items
Loan and Advance to B/FIs - - - - - -
Loans and advances to customers - - - - - -
Investment properties - - - - - -
Investment securities 1,420,870 - 1,420,870 2,441,654 - 2,441,654
Property & equipment - 12,006,500 (12,006,500) - 11,932,012 (11,932,012)
Employees' defined benefit plan 31,166,694 - 31,166,694 31,007,442 - 31,007,442
Lease liabilities 4,048,026 - 4,048,026 4,048,026 - 4,048,026
Provisions - - - - - -
Other temporory differences - - - - - -
Deferred tax on temporory differences 36,635,590 12,006,500 24,629,090 37,497,122 11,932,012 25,565,110
Deferred tax on carry forward of unused tax losses -
Deferred tax due to changes in tax rate -
Net Deferred tax asset/(liabilities) as on year end 24,629,090 25,565,110
Deferred tax (asset)/liabilities as on 17th July 2019 (15,595,267) (14,774,571)
Origination/(Reversal) during the year 9,033,823 10,790,539
Deferred tax expense/(income) recognised in profit or loss 2,793,586 1,750,908
Deferred tax expense/(income) recognised in other comprehensive
income (11,827,409) (12,541,447)

Deferred tax expense/(income) recognised in directly in equity - -

Previous Year Previous Year

Net Deferred Net Deferred
Deferred Tax Deferred Tax Tax Assets/ Deferred Tax Deferred Tax Tax Assets/
Assets Liabilities (Liabilities) Assets Liabilities (Liabilities)
Deferred tax on temporory differences on following items
Loan and Advance to B/FIs - - - - - -
Loans and advances to customers - - - - - -
Investment properties - - - - - -
Investment securities 3,910,197 - 3,910,197 3,256,461 - 3,256,461
Property & equipment - 12,319,742 (12,319,742) - 12,257,717 (12,257,717)
Employees' defined benefit plan 19,121,839 - 19,121,839 18,892,853 - 18,892,853
Lease liabilities 4,882,974 - 4,882,974 4,882,974 - 4,882,974
Provisions - - - - - -
Other temporory differences - - - - - -
Deferred tax on temporory differences 27,915,009 12,319,742 15,595,267 27,032,288 12,257,717 14,774,571
Deferred tax on carry forward of unused tax losses - -
Deferred tax due to changes in tax rate - -
Net Deferred tax asset/(liabilities) as on year end 15,595,267 14,774,571
Deferred tax (asset)/liabilities as on 17th July 2018 (50,605,018) (50,151,213)
Origination/(Reversal) during the year (35,009,751) (35,376,642)
Deferred tax expense/(income) recognised in profit or loss 4,244,691 4,272,437
Deferred tax expense/(income) recognised in other comprehensive
income 30,765,060 31,104,205

Deferred tax expense/(income) recognised in directly in equity - -

6 www.sanimabank.co
 Annual Report

4.16 Other assets

Group Bank
Current Year Previous Year Current Year Previous Year
Assets held for sale - - - -
Other non banking assets - - - -
Bills receivable - - - -
Accounts receivable 8,945,381 54,604,439 102,549,852 126,303,050
Accrued income 14,013,640 14,491,692 - -
Prepayments and deposit 87,060,798 99,459,207 86,788,644 99,242,100
Income tax deposit - - - -
Deferred employee expenditure 631,173,799 517,025,892 631,173,799 517,024,256
Other 1,433,218,750 971,165,580 1,433,218,750 971,025,560
Total 2,174,412,368 1,656,746,810 2,253,731,045 1,713,594,966

4.17 Due to Bank and Financial Institutions

Group Bank
Current Year Previous Year Current Year Previous Year
Money market deposits - - - -
Interbank borrowing - 300,000,000 - 300,000,000
Other deposits from BFIs 2,845,803,755 2,910,358,506 2,845,803,755 2,910,358,506
Settlement and clearing accounts - - - -
Other 430,171,082 484,099,936 430,171,082 484,099,936
Total 3,275,974,837 3,694,458,442 3,275,974,837 3,694,458,442

4.18 Due to Nepal Rastra Bank

Group Bank
Current Year Previous Year Current Year Previous Year
Refinance from NRB 86,292,488 1,018,919,629 86,292,488 1,018,919,629
Standing Liquidity Facility - - - -
Lender of last resort facility from NRB - - - -
Securities sold under repurchase agreements - - - -
Other payable to NRB - - - -
Total 86,292,488 1,018,919,629 86,292,488 1,018,919,629

6 www.sanimabank.co
 Annual Report

4.19 Derivative financial instruments

Group
Current Year Previous Year
Held for trading
Interest rate swap - -
Currency swap - -
Forward exchange contract - -
Others - -
Held for risk management - -
Interest rate swap - -
Currency swap - -
Forward exchange contract - -
Other - -
Total - -
Bank
Current Year Previous Year
- -
- -
- -
- -
- -
- -
- -
- -
- -
- -

4.20 Deposits from customers

Group Bank
Current Year Previous Year Current Year Previous Year
Institutions customers:
Term deposits 24,305,136,079 18,414,500,775 24,319,136,079 18,414,500,775
Call deposits 7,997,613,622 7,747,172,445 8,156,875,847 7,891,183,874
Current deposits 6,682,796,192 5,440,688,062 6,683,561,725 5,440,690,062
Other 1,010,463,948 993,244,989 1,010,463,948 993,244,989
Individual customers:
Term deposits 33,904,107,129 24,932,577,667 33,904,107,129 24,932,577,667
Saving deposits 32,730,414,963 30,977,444,549 32,730,414,963 30,977,444,549
Current deposits 383,768,569 665,856,298 383,768,569 665,856,298
Other 61,874,427 58,230,947 61,874,427 58,230,947
Total 107,076,174,929 89,229,715,732 107,250,202,687 89,373,729,162

4.20.1 : Currency wise analysis of deposit from customers

Group Bank
Current Year Previous Year Current Year Previous Year
Nepalese rupee 102,922,392,849 87,117,694,175 103,096,420,607 87,261,707,605
Indian rupee - - - -
United State dollar 4,073,079,974 2,062,608,988 4,073,079,974 2,062,608,988
Great Britain pound 58,562,852 40,412,095 58,562,852 40,412,095
Euro 17,003,131 6,370,163 17,003,131 6,370,163
Japenese yen - - - -
Chinese yuan - - - -
Other 5,136,123 2,630,312 5,136,123 2,630,312
Total 107,076,174,929 89,229,715,732 107,250,202,687 89,373,729,162

6 www.sanimabank.co
 Annual Report

4.21 Borrowing
Group Bank
Current Year Previous Year Current Year Previous Year
Domestic Borrowing
Nepal Government - - - -
Other Institutions - - - -
Other - - - -
Sub total - - - -
Foreign Borrowing
Foreign Bank and Financial Institutions - - - -
Multilateral Development Banks - - - -
Other Institutions - - - -
Sub total - - - -
Total - - - -

4.22 Provisions
Group Bank
Current Year Previous Year Current Year Previous Year
Provisions for redundancy - - - -
Provision for restructuring - - - -
Pending legal issues and tax litigation - - - -
Onerous contracts - - - -
Other 32,478,077 27,401,007 32,428,917 27,174,446
Total 32,478,077 27,401,007 32,428,917 27,174,446

4.22.1 : Movement in provision

Group Bank
Current Year Previous Year Current Year Previous Year
Balance at begining of the year 27,401,007 12,009,452 27,174,446 11,817,943
Provisions made during the year 24,848,972 27,248,752 24,316,644 26,374,516
Provisions used during the year (14,430,052) (9,070,530) (14,430,052) (9,070,530)
Provisions reversed during the year (5,341,849) (2,786,667) (4,632,121) (1,947,484)
Unwind of discount - - - -
Balance at Year end 32,478,077 27,401,007 32,428,917 27,174,446

6 www.sanimabank.co
 Annual Report

4.23 Other liabilities

Group Bank
Current Year Previous Year Current Year Previous Year
Liability for employees defined benefit
25,740,486 20,869,384 25,740,486 20,545,471
obligations
Liability for long-service leave 78,071,849 42,870,080 77,617,653 42,430,707
Short-term employee benefits 105,253 - - -
Bills payable 18,122,306 36,018,692 18,122,306 36,018,692
Creditors and accruals 94,106,992 44,006,334 92,438,995 43,147,627
Interest payable on deposit 1,832,218 5,331,072 1,832,218 5,331,072
Interest payable on borrowing 884,226 3,354,022 884,226 3,354,022
Liabilities on defered grant income - - - -
Unpaid Dividend 94,227,474 77,709,776 94,227,474 77,709,776
Liabilities under Finance Lease - - - -
Employee bonus payable 284,393,854 363,521,807 281,082,487 357,795,169
Other 606,907,163 694,130,098 530,819,444 624,841,809
Total 1,204,391,821 1,287,811,266 1,122,765,289 1,211,174,346

Unpaid Dividend
Details of dividends unpaid as on balance sheet date have been presented as under:
Dividend Payable of FY Current Year (Rs.) Previous Year (Rs.) Remarks
2070/2071 252,130 255,830
Bagmati Development Bank
2069/2070 6,990 126,830
2075/2076 45,259,920 -
2074/2075 48,344,915 71,961,350
2068/2069 149,452 2,205,254 Sanima Bank
2067/2068 150,345 1,641,452
2066/2067 63,722 1,519,059
Total 94,227,474 77,709,776

4.23.1 : Defined benefit obligations

The amounts recognised in the statement of financial position are as follows:
Group Bank
Current Year Previous Year Current Year Previous Year
Present value of unfunded obligations - - - -
Present value of funded obligations 219,068,509 137,247,761 219,068,509 136,338,538
Total present value of obligations 219,068,509 137,247,761 219,068,509 136,338,538
Fair value of plan assets 193,328,023 116,378,377 193,328,023 115,793,067
Present value of net obligations 25,740,486 20,869,384 25,740,486 20,545,471
Recognised liability for defined benefit
obligations 219,068,509 137,247,761 219,068,509 136,338,538

6 www.sanimabank.co
 Annual Report

4.23.2 : Plan assets

Plan assets comprise
Group Bank
Current Year Previous Year Current Year Previous Year
Equity securities - - - -
Government bonds - - - -
Bank deposit - - - -
Other 193,328,023 116,378,377 193,328,023 115,793,067
Total 193,328,023 116,378,377 193,328,023 115,793,067

4.23.3 : Movement in the present value of defined benefit obligations

Group Bank
Current Year Previous Year Current Year Previous Year
Defined benefit obligations at Shrawan 1 137,247,761 172,132,946 136,338,538 172,132,946
Actuarial losses 41,438,446 (107,218,567) 41,978,814 (107,930,595)
Benefits paid by the plan (5,825,434) (4,785,536) (5,055,453) (4,752,951)
Current service costs and interest 46,207,736 77,118,918 45,806,610 76,889,138
Defined benefit obligations at Ashad end 219,068,509 137,247,761 219,068,509 136,338,538

4.23.4 : Movement in the fair value of plan assets

Group Bank
Current Year Previous Year Current Year Previous Year
Fair value of plan assets at Shrawan 1 116,378,377 65,415,333 115,793,067 65,415,333
Opening balance adjustment 7,267,477 12,369,913 7,267,477 12,369,913
Contributions paid into the plan 73,184,721 39,219,043 73,770,031 38,633,733
Benefits paid during the year (3,502,552) (3,978,786) (3,502,552) (3,978,786)
Actuarial (losses) gains - - - -
Expected return on plan assets - 3,352,874 - 3,352,874
Fair value of plan assets at Ashad end 193,328,023 116,378,377 193,328,023 115,793,067

4.23.5 : Amount recognised in profit or loss

Group Bank
Current Year Previous Year Current Year Previous Year
Current service costs 45,687,145 85,799,801 44,601,394 85,672,127
Interest on obligation 2,337,378 7,707,783 2,295,928 7,737,049
Acturial (gain)/loss 26,730,546 (57,407,871) 26,947,001 (57,529,802)
Expected return on plan assets - - - -
Total 74,755,069 36,099,713 73,844,323 35,879,374

6 www.sanimabank.co
 Annual Report

4.23.6 : Amount recognised in other comprehensive income

Group Bank
Current Year Previous Year Current Year Previous Year
Acturial (gain)/loss 50,131,419 (105,782,417) 50,721,516 (106,372,514)
Total 50,131,419 (105,782,417) 50,721,516 (106,372,514)
Acturial gain or loss represents adjustments to acturial assumptions used to value the bank's defined benefit obligations. As expected
return on Plan assets is nil, no actuary gain/loss is recognised on Plan assets as per NAS 19.

4.23.7 : Actuarial assumptions

Group Bank
Current Year Previous Year Current Year Previous Year
Discount rate 10%/10% 10%/10% 10% 10%
Expected return on plan asset 7%/0% 10%/0% 7% 10%
Future salary increase 11%/11% 10%/10% 11% 10%
Withdrawal rate (on the basis of past service)
0 to 4 years 15.52%/22.5% 12.75%/11.11% 15.52% 12.75%
4 to 8 years 8.19%/0% 16.06%/0% 8.19% 16.06%
8 to 12 years 2.53%/0% 6.54%/0% 2.53% 6.54%
more than 12 0%/0% 0%/0% 0% 0%
Assumptions of Bank and Sanima Capital has been separately disclosed in Group section.

4.24 Debt securities issued

Group Bank
Current Year Previous Year Current Year Previous Year
Debt securities issued designated as at fair
value through profit or loss - - - -
Debt securities issued at amortised cost 1,724,712,000 1,724,712,000 1,724,712,000 1,724,712,000
Total 1,724,712,000 1,724,712,000 1,724,712,000 1,724,712,000
The bank has issued 370,000 units of debentures with Rs. 1,000 unit price on 5th August 2015 having maturity period of 7 years
and 1,354,712 units of debentures with Rs. 1,000 unit price on 13th January 2019 having maturity period of 10 years.

4.25 Subordinated Liabilities

Group Bank
Current Year Previous Year Current Year Previous Year
Redeemable preference shares - - - -
Irredemable cumulative preference shares (liabilities
component) - - - -
Other - - - -
Total - - - -

6 www.sanimabank.co
 Annual Report

4.26 Share capital

Group Bank
Current Year Previous Year Current Year Previous Year
Ordinary shares 8,801,380,984 8,001,255,440 8,801,380,984 8,001,255,440
Convertible preference shares (equity
component only) - - - -
Irredemable preference shares (equity
component only) - - - -
Perpetual debt (equity component only) - - - -
Total 8,801,380,984 8,001,255,440 8,801,380,984 8,001,255,440

4.26.1 : Ordinary shares

Bank
Current Year Previous Year
Authorized Capital
90,000,000 Ordinary share of Rs. 100 each 9,000,000,000 9,000,000,000
Issued capital
88,013,809.84 Ordinary share of Rs. 100 each 8,801,380,984 8,001,255,440
Subscribed and paid up capital
88,013,809.84 Ordinary share of Rs. 100 each 8,801,380,984 8,001,255,440
Total 8,801,380,984 8,001,255,440

4.26.2 : Ordinary share ownership

Bank
Current Year Previous Year
Percent Amount Percent Amount
Domestic ownership
Nepal Government - - - -
"A" class licensed institutions - - - -
Other licensed intitutions - - - -
Other Institutions 12.78 1,124,437,300 12.01 960,625,000
Public 87.22 7,676,943,684 87.99 7,040,630,440
Other - - - -
Foreign ownership - - - -
Total 100.00 8,801,380,984 100.00 8,001,255,440

6 www.sanimabank.co
 Annual Report

Details of shareholders holding 0.50% or more shares:

Name of Shareholder No of Share Holding %
ARUN KUMAR OJHA 6,986,877 7.94
TEK RAJ NIRAULA 6,240,437 7.09
NIRAJ GOVINDA SHRESTHA 5,472,998 6.22
JIBA NATH LAMICHHANE 4,868,471 5.53
BINAYA KUMAR SHRESTHA 4,124,533 4.69
AMALA INVESTMENT PVT. LTD. 3,494,612 3.97
GHAN SHYAM THAPA 3,434,493 3.90
KHEM RAJ LAMICHHANE 3,164,946 3.60
EMPLOYEES PROVIDENT FUND 2,990,718 3.40
JAI GANESH INVESTMENT COMPANY PVT. LTD. 2,393,097 2.72
RAM KRISHNA SHAH 2,225,631 2.53
DILIP SHRESTHA 1,070,821 1.22
DINESH MANI SHRESTHA 673,035 0.76
GEETA CHHETRI 593,325 0.67
TULASI RAM DHAKAL 457,339 0.52

4.27 Reserves
Group Bank
Current Year Previous Year Current Year Previous Year
Statutory General Reserve 1,981,070,655 1,623,657,501 1,978,911,000 1,623,657,501
Exchange Equilisation Reserve 16,295,674 13,875,671 16,295,674 13,875,671
Corporate Social Responsibility Fund 19,994,523 35,610,900 19,778,557 35,610,900
Capital Redemption Reserve 264,285,715 211,428,572 264,285,715 211,428,572
Regulatory Reserve 547,387,253 329,278,578 545,256,901 327,148,226
Investment Adjustment Reserve 350,000 350,000 350,000 350,000
Capital Reserve - - - -
Assets Revaluation Reserve - - - -
Fair Value Reserve (1,629,087) (9,123,792) (1,356,724) (7,598,409)
Dividend Equalisation Reserve - - - -
Actuarial Gain/(Loss) (23,522,792) 11,569,201 (23,522,792) 11,982,269
Employee Training Fund - 143,366 - 143,366
Other Reserve
Capital Adjustment Reserve 20,187,887 20,187,887 20,187,887 20,187,887
Total 2,824,419,826 2,236,977,884 2,820,186,217 2,236,785,982
The bank has a Corporate Social Responsibility policy in line with Nepal Rastra Bank i.e. to create CSR reserve of 1% on Net Profit of current Fiscal
Year. Accordingly, in financial year 2076-77, the bank appropriated Corporate Social Responsibility Reserve of amount NPR 17,762,645.
CSR reserve fund Amount (Rs.)
Opening Balance as at Shrawan 1 2076 35,610,900
Less: CSR activities for FY 2076-77 (33,594,988)
Add: Reserve @1% on Net Profit 17,762,645
Closing Balance as at Ashad end 2077 19,778,557

6 www.sanimabank.co
 Annual Report

4.28 Contingent liabilities and commitments

Group Bank
Current Year Previous Year Current Year Previous Year
Contingent liabilities 13,458,023,263 14,675,306,811 13,458,023,263 14,675,306,811
Undrawn and undisbursed facilities 13,803,249,689 7,225,872,262 13,803,249,689 7,225,872,262
Capital commitment 55,500,952 34,555,404 55,500,952 34,555,404
Lease Commitment - - - -
Litigation - - - -
Total 27,316,773,904 21,935,734,478 27,316,773,904 21,935,734,478

4.28.1 : Contingent liabilities

Group Bank
Current Year Previous Year Current Year Previous Year
Acceptance and documentary credit 3,995,735,100 4,093,196,329 3,995,735,100 4,093,196,329
Bills for collection 37,381,445 47,631,304 37,381,445 47,631,304
Forward exchange contracts - - - -
Guarantees 9,360,286,233 10,471,144,278 9,360,286,233 10,471,144,278
Underwriting commitment - - - -
Other commitments 64,620,485 63,334,901 64,620,485 63,334,901
Total 13,458,023,263 14,675,306,811 13,458,023,263 14,675,306,811

4.28.2 : Undrawn and undisbursed facilities

Group Bank
Current Year Previous Year Current Year Previous Year
Undisbursed amount of loans 9,719,523,374 4,258,340,199 9,719,523,374 4,258,340,199
Undrawn limits of overdrafts 3,841,550,977 2,722,242,920 3,841,550,977 2,722,242,920
Undrawn limits of credit cards 242,175,338 245,289,143 242,175,338 245,289,143
Undrawn limits of letter of credit - - - -
Undrawn limits of guarantee - - - -
Total 13,803,249,689 7,225,872,262 13,803,249,689 7,225,872,262

7 www.sanimabank.co
 Annual Report

4.28.3 : Capital commitments

Capital expenditure approved by relevant authority of the bank but provision has not been made in financial statements
Group Bank
Current Year Previous Year Current Year Previous Year
Capital commitments in relation to
Property and Equipment
Approved and contracted for 28,472,470 18,737,199 28,472,470 18,737,199
Approved but not contracted for
Sub total 28,472,470 18,737,199 28,472,470 18,737,199
Capital commitments in relation to
Intangible assets
Approved and contracted for 27,028,482 15,818,206 27,028,482 15,818,206
Approved but not contracted for
Sub total 27,028,482 15,818,206 27,028,482 15,818,206
Total 55,500,952 34,555,404 55,500,952 34,555,404

4.28.4 : Lease commitments

Group Bank
Current Year Previous Year Current Year Previous Year
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

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

4.28.5 : Litigation
None

7 www.sanimabank.co
 Annual Report

4.29 Interest income

Group Bank
Current Year Previous Year Current Year Previous Year
Cash and cash equivalent 32,439,331 78,055,569 21,238,334 62,311,850
Due from Nepal Rastra Bank 33,228,355 5,976,361 33,228,355 5,976,361
Placement with bank and financial institutions 22,057,964 54,740,669 19,416,485 58,667,730
Loan and advances to bank and financial
245,611,969 169,850,233 245,611,969 169,850,233
institutions
Loans and advances to customers 10,260,622,838 9,704,835,510 10,260,622,838 9,704,835,510
Investment securities 734,972,044 518,302,644 734,972,044 518,302,644
Loan and advances to staff 153,967,860 235,840,893 153,965,819 235,831,803
Other 669,385 2,204,700 669,385 2,204,700
Total interest income 11,483,569,745 10,769,806,579 11,469,725,229 10,757,980,831

Interest income on loan and advances to

staff
Realised interest 66,274,618 50,317,170 66,272,577 50,308,080
Accrued interest 849,504 1,107,365 849,504 1,107,365
Finance expense under NFRS 86,843,738 184,416,357 86,843,738 184,416,357
Total 153,967,860 235,840,893 153,965,819 235,831,803

4.30 Interest expense

Group Bank
Current Year Previous Year Current Year Previous Year
Due to bank and financial institutions 28,266,087 40,107,005 28,266,087 40,107,005
Due to Nepal Rastra Bank 18,937,401 39,661,112 18,937,401 39,661,112
Deposits from customers 7,066,653,616 6,350,122,920 7,071,456,240 6,354,049,981
Borrowing - - - -
Debt securities issued 161,371,200 94,192,331 161,371,200 94,192,331
Subordinated liabilities - - - -
Other - 22,559,091 - 21,273,288
Total interest expense 7,275,228,305 6,546,642,459 7,280,030,928 6,549,283,717

7 www.sanimabank.co
 Annual Report

4.31 Fees and Commission Income

Group Bank
Current Year Previous Year Current Year Previous Year
Loan administration fees 196,148,451 245,042,333 196,148,451 245,042,333
Service fees 1,580,982 1,740,765 - -
Consortium fees 71,042,843 85,038,000 71,042,843 85,038,000
Commitment fees - 30,927,047 - 30,927,047
DD/TT/Swift fees 19,125,401 28,288,446 19,125,401 28,288,446
Credit card/ATM issuance and renewal fees 95,410,514 73,602,192 95,410,514 73,602,192
Prepayment and swap fees 25,903,423 9,155,487 25,903,423 9,155,487
Investment banking fees - - - -
Asset management fees 28,025,896 31,636,130 - -
Brokerage fees - - - -
Remittance fees 19,496,434 16,335,899 19,496,434 16,335,899
Commission on letter of credit 41,844,221 39,070,618 41,844,221 39,070,618
Commission on guarantee contracts issued 105,364,117 102,435,724 105,364,117 102,435,724
Commission on share underwriting/issue 315,000 1,289,811 - -
Locker rental 6,999,148 6,267,858 6,999,148 6,267,858
Other fees and commission income 121,110,781 152,393,934 116,921,158 148,955,997
Total fees and Commission Income 732,367,210 823,224,244 698,255,710 785,119,601

4.32 Fees and commission expense

Group Bank
Current Year Previous Year Current Year Previous Year
ATM management fees 3,075,198 13,492,866 3,075,198 13,492,866
VISA/Master card fees 63,302,069 53,872,105 63,302,069 53,872,105
Guarantee commission - - - -
Brokerage 504 213 - -
DD/TT/Swift fees 5,383,328 5,210,946 5,383,328 5,210,946
Remittance fees and commission 4,135,000 678,276 4,135,000 678,276
Other fees and commission expense 3,913,379 1,733,335 2,634,880 -
Total fees and Commission Expense 79,809,476 74,987,742 78,530,474 73,254,193

7 www.sanimabank.co
 Annual Report

4.33 Net trading income

Group Bank
Current Year Previous Year Current Year Previous Year
Changes in fair value of trading assets (12,895,377) 19,246,771 (6,200,671) 1,667,088
Gain/loss on disposal of trading assets 221,805 4,909,578 - -
Interest income on trading assets 31,886,370 32,302,668 31,886,370 32,302,668
Dividend income on trading assets 9,986,940 2,816,260 4,285,821 2,496,642
Gain/loss foreign exchange transation 390,686,304 356,358,458 390,686,304 356,358,458
Other - - - -
Net trading income 419,886,042 415,633,736 420,657,825 392,824,856
Interest income from National Saving Bond of Rs. 31.89 million is presented as net trading income.
Difference in fair value of trading assets as compared to previous year's value is recognised as net trading income. Fair value of
trading equities as at 15th July 2020 is Rs. 73.16 Million whose cost is Rs. 67.35 Million and as at 16th July 2019, fair value is
NPR
77.36 Million whose cost is Rs. 65.35 Million.

4.34 Other operating income

Group Bank
Current Year Previous Year Current Year Previous Year
Foreign exchange revauation gain 9,680,009 17,474,293 9,680,009 17,474,293
Gain/loss on sale of investment securities - - - -
Fair value gain/loss on investment properties - - - -
Dividend on equity instruments 16,900,000 497,378 47,775,000 19,497,378
Gain/loss on sale of property and equipment 2,274,780 7,260,044 2,274,780 7,260,044
Gain/loss on sale of investment property - - - -
Operating lease income - - - -
Gain/loss on sale of gold and silver - - - -
Locker rent - - - -
Other - 356,941 - -
Total 28,854,789 25,588,656 59,729,789 44,231,715

7 www.sanimabank.co
 Annual Report

4.35 Impairment charge/(reversal) for loan and other losses

Group Bank
Current Year Previous Year Current Year Previous Year
Impairment charge/(reversal) on loan and advances
8,295,173 3,704,992 8,295,173 3,704,992
to B/FIs
Impairment charge/(reversal) on loan and advances
788,729,430 214,533,174 788,729,430 214,533,174
to customer
Impairment charge/(reversal) on financial Investment
- (117) (117)

Impairment charge/(reversal) on placement with

- - - -
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 797,024,603 218,238,049 797,024,603 218,238,049

4.36 Personnel Expenses

Group Bank
Current Year Previous Year Current Year Previous Year
Salary 365,426,470 300,933,773 361,274,769 296,594,762
Allowances 341,502,724 291,232,509 337,649,618 287,199,182
Gratuity expense 30,434,689 60,121,254 29,800,082 60,032,789
Provident fund 36,650,885 30,363,340 36,235,715 29,910,476
Uniform 428,270 856,540 428,270 856,540
Training & development expense 15,065,864 16,737,055 14,986,368 16,663,115
Leave encashment 44,320,380 (24,021,541) 44,044,241 (24,153,415)
Medical 2,012,479 1,994,817 2,012,479 1,994,817
Insurance 7,015,513 6,371,114 6,920,166 6,277,736
Employees incentive - 11,160,275 - 11,160,275
Cash-settled share-based payments - - - -
Pension expense - - - -
Finance expense under NFRS 86,844,989 184,421,876 86,843,738 184,416,357
Other expenses related to staff 33,810,137 31,565,527 33,411,340 31,019,930
Subtotal 963,512,400 911,736,540 953,606,787 901,972,566
Employees bonus 284,393,855 363,521,807 281,082,487 357,795,169
Grand total 1,247,906,254 1,275,258,347 1,234,689,274 1,259,767,735

7 www.sanimabank.co
 Annual Report

4.37 Other operating expenses

Group Bank
Current Year Previous Year Current Year Previous Year
Directors' fee 2,674,000 2,126,000 2,618,000 2,056,000
Directors' expense 1,416,617 1,501,007 1,408,570 1,487,671
Auditors' remuneration 1,728,900 1,524,300 1,582,000 1,400,000
Other audit related expense - 112,314 - -
Professional and legal expense 3,292,128 2,200,549 3,263,045 2,171,722
Office administration expense 441,153,046 408,803,290 438,726,291 405,949,499
Operating lease expense 122,696,445 99,246,813 121,421,765 97,398,813
Operating expense of investment properties - - - -
Corporate social responsibility expense - - - -
Onerous lease provisions - - - -
Other 5,388,594 6,232,766 3,686,120 5,088,389
Total 578,349,731 521,747,039 572,705,791 515,552,094

4.37.1 : Office administration expenses

Group Bank
Current Year Previous Year Current Year Previous Year
Water and electricity 21,790,462 21,786,865 21,589,887 21,513,517
Repair and maintenance 34,873,236 24,875,139 34,785,783 24,797,956
a) Building 772,090 312,965 772,090 312,965
b) Vehicle 4,198,056 4,250,291 4,186,812 4,223,212
c) Computer and accessories 7,601,035 13,863,391 7,596,289 13,834,899
d) Office equipment and furniture 5,273,502 2,947,502 5,208,199 2,943,999
e) Other 17,028,553 3,500,990 17,022,393 3,482,882
Insurance 7,656,067 7,241,464 7,614,207 7,188,781
Postage, telex, telephone, fax 10,403,030 10,147,764 10,316,398 10,023,282
Printing and stationery 22,694,514 25,334,396 22,469,898 25,230,664
Newspaper, books and journals 288,400 348,869 273,858 336,970
Advertisement 56,568,933 49,843,834 56,414,034 49,510,636
Donation - - - -
Security expense 98,278,596 88,689,684 98,278,596 88,689,684
Deposit and loan guarantee premium 25,341,825 21,976,730 25,341,825 21,976,730
Travel allowance and expense 4,789,624 5,908,687 4,561,017 5,809,752
Entertainment 12,411,962 17,124,572 12,381,884 17,099,102
Annual/special general meeting expense 432,947 493,569 421,641 488,417
Other 145,623,449 135,031,717 144,277,263 133,284,008
a) Outsource expense 60,323,471 56,920,242 59,262,748 55,431,840
b) Branch connectivity and SMS service
29,676,201 19,750,039 29,676,201 19,750,039
charge
c) Fuel expense 13,838,450 15,071,521 13,756,346 14,896,319
d) Rate and tax 7,480,303 6,693,942 7,400,713 6,621,747
e) Office equipment (non-capitalized) 5,215,478 5,266,990 5,133,184 5,266,990
f) Other 29,089,547 31,328,984 29,048,072 31,317,073
Total 441,153,046 408,803,290 438,726,291 405,949,499

7 www.sanimabank.co
 Annual Report

4.38 Depreciation & Amortisation

Group Bank
Current Year Previous Year Current Year Previous Year
Depreciation on property and equipment 139,938,034 132,426,750 138,551,145 130,966,839
Depreciation on investment property - - - -
Amortisation of intangible assets 17,395,416 8,618,332 16,983,424 8,198,961
Total 157,333,449 141,045,082 155,534,569 139,165,799

4.39 Non operating income

Group Bank
Current Year Previous Year Current Year Previous Year
Recovery of loan written off - 692,572 - 692,572
Other income 1,409,962 2,668,451 1,409,962 1,394,595
Total 1,409,962 3,361,023 1,409,962 2,087,168

4.40 Non operating expense

Group Bank
Current Year Previous Year Current Year Previous Year
Loan written off 201,807 6,826,064 201,807 6,826,064
Redundancy provision - - - -
Expense of restructuring - - - -
Other expense 1,564,431 173,195 1,318,683 -
Total 1,766,238 6,999,259 1,520,491 6,826,064

4.41 Income tax expense

Group Bank
Current Year Previous Year Current Year Previous Year
Current tax expense
Current year 762,269,398 973,129,676 751,726,953 957,816,576
Adjustments for prior years (3,379,369) 1,755,066 - -
Deferred tax expense
Origination and reversal of temporary differences
2,793,586 4,244,691 1,750,908 4,272,437

Changes in tax rate - - - -

Recognition of previously unrecognised tax losses
- - - -

Total income tax expense 761,683,615 979,129,433 753,477,861 962,089,013

7 www.sanimabank.co
 Annual Report

4.41.1 : Reconciliation of tax expense and accounting profit

Group Bank
Current Year Previous Year Current Year Previous Year
Profit before tax 2,528,669,692 3,252,696,261 2,529,742,385 3,220,156,519
Tax amount at tax rate of 30% 767,863,408 981,508,878 758,922,715 966,046,956
Add: Tax effect of expenses that are not deductible
76,435,424 60,103,538 76,430,191 58,401,409
for tax purpose
Less: Tax effect on exempt income (84,316,474) (66,727,674) (83,625,954) (66,631,789)
Add/less: Tax effect on other items 1,701,257 4,244,691 1,750,908 4,272,437
Total income tax expense 761,683,615 979,129,433 753,477,861 962,089,013
Effective tax rate 30.1% 30.1% 29.8% 29.9%

7 www.sanimabank.co
 Annual Report

Statement of Distributable Profit or Loss

For the year ended 15th July 2020
(As per NRB Regulation)

Bank
Current Year Previous Year
Net profit or (loss) as per statement of profit or loss 1,776,264,524 2,258,067,506
Appropriations:
a. General reserve 355,253,499 451,613,501
b. Foreign exchange fluctuation fund 2,420,002 4,368,573
c. Capital redemption reserve 52,857,143 52,857,143
d. Corporate social responsibility fund 17,762,645 22,580,675
e. Employees' training fund - 143,366
f. Capital Adjustment Reserve - -
g. Investment Adjustment Reserve - -
h. Other - -

Profit or (loss) before regulatory adjustment 1,347,971,235 1,726,504,248

Regulatory adjustment :
a. Interest receivable (-)/previous accrued interest received (+) (174,397,904) (87,474,238)
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 (+) - -
e. Deferred tax assets recognised (-)/ reversal (+) (10,790,539) 35,376,642
f. Goodwill recognised (-)/ impairment of Goodwill (+) - -
g. Bargain purchase gain recognised (-)/resersal (+) - -
h. Acturial loss recognised (-)/reversal (+) (35,505,061) 62,478,491
i. Other (+/-) 2,584,829 (1,884,282)
Distributable profit or (loss) 1,129,862,560 1,735,000,860
Opening balance of retained earning 1,751,506,637 1,136,681,538
Less: Cash dividend paid and bonus share issued during the year (1,684,474,829) (1,120,175,762)
Add: Transfer from employee's training fund 143,366 -
Total Distributable Retained Earnings 1,197,037,733 1,751,506,637

7 www.sanimabank.co
 Annual Report

Sanima Bank Ltd

5. Disclosures & Additional Information
Year ended 15th July 2020

5.1 FINANCIAL RISK MANAGEMENT
Introduction and Overview
Risk is inherent in the Bank’s activities but is managed
through a process of ongoing identification, measurement and
monitoring, subject to risk limits and other controls. This
process of risk management is critical to the Bank’s continuing
profitability and each individual within the Bank is accountable
for the risk exposures relating to his or her responsibilities. The
Bank is mainly exposed to;
1. Credit Risk
2. Liquidity Risk
3. Market Risk
4. Operational Risk
Risk Management Framework
The Board of Directors has overall responsibility for the
establishment and oversight of the Bank’s risk management
framework. Chief Risk Officer (CRO), along with his team, is
responsible for overall risk management of the Bank which
includes managing, assessing, identifying, monitoring and
reducing pertinent global, macro and micro-economic level
business risks that could interfere with Banks objective and goals
and whether the Bank is in substantial compliance with its
internal operating policies and other applicable regulations
and procedures, external, legal, regulatory or contractual
requirements on a continuous basis. Further, CRO ensures
integration of all major risk in capital assessment process. The
Bank’s risk management policies are established to identify and
analyse the risks faced by the Bank, to set appropriate risk limits
and controls, and to monitor adherence to established limits.
Risk management policies and systems are reviewed annually
to reflect changes in market conditions, products and services
offered. The Bank , through its training and management
standards and procedures, continuously updates and maintains a
disciplined and constructive control environment, in which all
employees are assigned and made to understand their respective
roles and responsibilities. Risk Management structure is
depcited below:

Board of Directors

Risk Management Committee

Credit Risk Management

Chief Risk Officer

Risk Management
Integrated Risk Management

Credit Risk Reporting Market and Liquidity Risk

Operational Risk Treasury Mid Office

8 www.sanimabank.co
 Annual Report
5.1.1. Credit Risk
Risk is an inherent feature of any business and it drives an
entity towards income generation. Likewise, Risk
management objective of the Bank is to strike balance
between risk and return, and ensure optimum Risk-adjusted return on
capital. A reasonable level of return is essential for sustainability of
the business. However, taking higher risk in search of higher
earnings may have chances to result in failure of business.
Thus effective risk management is a must for business success.
Towards this end Sanima Bank has implemented robust risk
management architecture as well as policies and processes
approved by the Board of Directors. These encompass
independent identification, measurement and management of
risks across various facets of banking operation.
Board level risk management committee has been set up
under NRB Directive for ensuring/reviewing bank's risk
appetite are in line with the policies and CRO acts as member
secretary. CRO closely monitors and report on credit related
risks in RMC meeting.
Credit Risk Mitigation (CRM)
The Bank has extensive policy and guidelines to mitigate credit
risks. The Bank’s credit policy has strengthened minimizing
credit risk and provided support to make qualitative analysis
based on sound credit principles and procedures. Bank has a
policy to consider as security for pledge, hypothecated or
mortgage which have value considering physical control and
legal title. Bank has considered eligible CRM as prescribed by
Capital Adequacy standard. Collateral taken as Deposit with own
Bank, Deposit with other BFIs, National Saving & Development
Bonds, and Gold & Silver have been considered as CRM and
adjusted on overall risk weighted exposure on credit risk in line
with the standard.
The Bank has developed a risk assessment culture and has in
place the required reports for assessing concentration of risks.
Periodic performance reporting based on Balanced Scorecard, in
line with capital strength, to the Board is also in place. These
reports are periodically put up to the board. Board also reviews the
same and issues instructions, as appropriate, to the Bank’s
management.
8 www.sanimabank.co
Amount In NPR
Current Year Previous Year
Deposits with own bank 1,038,190,042 1,146,152,193
Deposit with other banks
- 18,262,044
and financial institutions
Securities issued by Nepal
Government and Nepal - -
Rastra Bank
Gold & Silver 91,915,483 79,241,905
Total 1,130,105,525 1,243,656,142
Collateral and other credit enhancements
The amount and type of collateral required depends on an
assessment of the credit risk of the counterparty. Guidelines are in
place covering the acceptability and valuation of each type of
collateral. The general creditworthiness of customers tends to be the
most relevant indicator of credit quality of a loan. However,
collateral provides additional security and the Bank generally
requests large borrowers to provide same. The Bank may take
collateral in the form of a first charge over real estate and
residential properties, floating charges over all corporate assets and
other liens and guarantees. The Bank’s policy is to pursue
timely realisation of the collateral in an orderly manner. The
proceeds are used to reduce or repay the outstanding claim. The
Bank generally does not use non-cash collateral for its own
operations.
Definition of Past Due
Bank consider that any amounts uncollected one day or more
beyond their contractual due date are ‘past due’.
Past due but not impaired loans
Past due but not impaired loans are those for which
contractual interest or principal payments are past due, but
the Bank believes that impairment is not appropriate on the
basis of the stage of collection of amounts owed to the Bank.
5.1.2. Market Risk
Market risk is the risk that the fair value or future cash flows of
financial instruments will fluctuate due to changes in market
variables such as interest rates, foreign exchange
 Annual Report
rates, commodity prices and equity prices. The bank
classifies exposures to market risk into either trading or non–
trading portfolios and manages each of those portfolios
separately.The bank has separate market risk management policy in
place as a guiding document.
Market Risks are discussed at Asset Liability Management
Committee (ALCO) of the Bank and even discussed at
respective division level on open position on daily basis. The
limits for open position are controlled, level wise which ensures in-
depth knowledge of the market and movement before taking
decision (by choice). The monthly reports on such aspects are well
discussed and dealt in ALCO. The committee ensures
functioning of the jobs in line with the policies and procedures
and suggests/recommends for necessary steps collectively to
address the risk on interest rate movement, exchange rate
movement and equity price changes. Most of the market
operations (investments) are done from the Treasury Front
Office which reports to the Chief Financial Officer and exposure
accounting including booking of income/expense is done from
Treasury Back Office which reports to the Chief Operating Officer.
The Bank assesses the open position on daily basis and calculates
risk exposure for allocation of required capital in line with Basel
provisions. Likely impact on earnings due to change in the
market condition and change in the standing of the counterparty
are well assessed periodically and necessary actions are taken as
appropriate. TFO is equipped with advanced dealing platform
for timely and effectively concluding the deals. Similarly the
unit is equipped with modern and advanced information system
on global news, market movements and any incidents so that
bank can manage and maintain the position favorably.
5.1.3. Liquidity Risk & Funding management
Liquidity risk is the risk that the Bank will encounter difficulties
in meeting its financial commitments that are settled by
delivering cash or another financial asset. Hence the bank may
be unable to meet its payment obligations when they fall due
under both normal and stress circumstances. To limit this risk,
management has arranged diversified funding sources in
addition to its core deposit base, and adopted
Contractual maturities & undiscounted cashflows of financial assets & liabilities.
On Up to
15 July 2020 Demand
3 months
Financial Assets
Cash & Cash Equivalent 1,756,515,440 3,433,784,405
8 www.sanimabank.co
a policy of continuously managing assets with liquidity in mind
and of monitoring future cash flows and liquidity on a daily
basis. The bank has formulated separate liquidity risk
management policy and developed internal control processes and
contingency plans for managing liquidity risk. This incorporates
an assessment of expected cash flows and the availability of
high grade collateral which could be used to secure additional
funding if required.
The Bank maintains a portfolio of highly marketable and diverse
assets assumed to be easily liquidated in the event of an
unforeseen interruption of expected cash flow. The Bank also
has committed lines of credit that could be utilized to meet
liquidity needs. Further, the Bank maintains a statutory deposit
with the Nepal Rastra Bank equal to approx. 3.17% of customer
local deposits. In accordance with the bank’s policy, the
liquidity position is assessed and managed under a variety of
scenarios, giving due consideration to stress factors relating to
both the market in general and specific to the Bank. The most
important of these is to maintain the required ratio of liquid
assets to liabilities, to meet the regulatory requirement . Liquid
assets consist of cash, short–term bank deposits and liquid debt
securities available for immediate sale. Further the Statutory
Liquidity Ratio of the Bank for the month of ended 15 th July is
as follows.
Statutory Liquidity Ratio
For the month ended 15th July 2020 20.14%
Analysis of financial assets and liabilities by
remaining contractual maturities
The table below summarises the maturity profile of the
undiscounted cash flows of the Bank’s financial assets and
liabilities as at 15th July 2020. Repayments which are
subject to notice are treated as if notice were to be given
immediately. However, the Bank expects that many customers
will not request repayment on the earliest date it could be
required to pay and the table does not reflect the expected
cash flows indicated by its deposit retention history.
Amount In NPR
3 to 12 More than
months 1 year Total
- - 5,190,299,845
 Annual Report

On Up to 3 to 12 More than
15 July 2020 Demand months 1 year Total
3 months
Due from NRB - 5,325,683,135 - - 5,325,683,135
Derivative Financial Assets - 40,221,461 - - 40,221,461
Due from Banks and Financial
Institutions - 1,395,436,718 1,431,649,952 - 2,827,086,670

Loans & Advances (Net) - 23,966,706,349 16,050,997,255 53,676,859,464 93,694,563,068

Investment Securities - 1,276,308,296 494,321,572 13,691,242,624 15,461,872,491
Investment in subsidiaries - - - 250,000,000 250,000,000
Total Undiscounted Assets 1,756,515,440 35,438,140,364 17,976,968,779 67,618,102,087 122,789,726,670
Financial Liabilities
Due to Bank and Financial
Instituions 168,500,423 2,627,303,332 480,171,082 - 3,275,974,837

Due to NRB - 33,657,933 52,634,555 - 86,292,488

Due to Customers 1,217,439,732 25,460,480,865 26,169,881,431 54,402,400,660 107,250,202,687
Debts Issued & Other Borrowed
Funds - - - 1,724,712,000 1,724,712,000

Other Financial Liabilities 94,227,474 113,277,744 - 103,358,139 310,863,358

Total Undiscounted Liabilities 1,480,167,629 28,234,719,875 26,702,687,067 56,230,470,799 112,648,045,370
Net Financial
Assets/(Liabilities) 276,347,811 7,203,420,489 (8,725,718,288) 11,387,631,288 10,141,681,300

5.1.4. Fair value of Financial instruments reporting date. For unquoted securities those are carried at cost.

Financial instruments are recorded at fair value. The
following is a description of how fair values are determined for
financial instruments that are recorded at fair value using
valuation techniques. These incorporate the bank’s estimate of
assumptions that a market participant would make when
valuing the instruments.
For all financial instruments where fair values are
determined by referring to externally quoted prices or
observable pricing inputs to models, independent price
determination or validation is obtained. In an inactive market, direct
observation of a traded price may not be possible. In these
circumstances, the Bank uses alternative market information to
validate the financial instrument’s fair value, with greater weight
given to information that is considered to be more relevant and
reliable. Financials assets measured at fair value (either through
PL or OCI), primarily consisting of quoted equities and quoted
mutual fund units, are valued using the quoted market price in
active markets as at the reporting date. If unquoted, those are
carried at cost.
Financial investments – Measured through OCI
Financials assets measured through OCI, primarily consist of
quoted equities and quoted mutual fund units, are valued using the
quoted market price in active markets as at the
5.1.5. Operational Risk
Operational risk is the risk of losses arising from failed
internal processes, systems failure, human error, fraud or
external events. When controls fail to perform, operational risks
can cause damage to reputation, have legal or regulatory
implications, or lead to financial loss. Strategic and Reputational
Risks are not covered in Operational Risk.
Effective operational risk management systems aims to
minimizing losses and customer dissatisfaction due to failure in
processes, focusing on flows in products and their design that can
expose the Bank to losses due to fraud, analyzing the impact
of failures in technology / system, developing plans to meet
external shocks that can adversely impact continuity in the
Bank’s operations. Bank has introduced a “comprehensive
operational risk monitoring and reporting framework” as well
as “output checking” at all branches covering all transactions
on daily basis to minimize operational risk.
One of the growing risks among others these days is
Operations Risk that arises out of inefficient processes and
people inside and outside the Bank. Asset Liability
Management Committee (Alco) is the management

8 www.sanimabank.co
 Annual Report
committee where operating risk, market risk and other risks are
discussed, in line with ALM Policy. Banking System (BS) is
another area of concern where it has witnessed growing threat
from outside. Information and Technology Division in the Bank
reviews and checks the security aspects in line with IT Policy of
the Bank. Bank has conducted an IS Audit of the Bank’s system
and suggestions given by the audit with respect to safety and
security standards are being put in place.
Bank has separate division under Integrated Risk
Management department to oversee operation risk . The division
is headed by senior level staff with adequate access to the
daily report, operational processes and right to recommend
the changes in the system and procedures. The head of
operation risk directly reports to the Chief Risk Officer. Bank has
SIMs (Standing Instruction Manuals) for all businesses of the
Bank. All the activities are undertaken in line with the set criteria
in the Standing Instruction Manual, policies and guidelines
including Directives and circulars from central bank (the
regulatory authority). Similarly daily functions at operations
are independently reported through separate reporting line other
than business generation and credit risk where independence
of checking and control is complied with. Processes are
reviewed periodically so that their perfection can be weighed and
any shortcoming can be addressed. Most of the functions like
line approval, bill payment, loan disbursement are centralized
which controls activities that can cause mistake due to
inadequate knowledge on the part of staff. Similarly awareness
to the public is made on our services and products periodically by
placing the notices in the website of the Bank, or in branches
or publishing notices as appropriate. Staffs are given orientation
on the job including that of system of the Bank before they
are placed for the job and are guided to follow the SIMs for the
job. Any staff for the first time in any job is put under the
supervision of an experienced staff and is allowed to work
independently after attaining required skills.
Bank has Whistle Blowing Policy to report to senior or
management directly on anyone’s suspicious conduct outside and
inside the Bank. Skill development and skill enhancement programs
are conducted on periodic basis and staffs identified for the program
get the opportunity for training, seminar and workshop. Adequate
numbers of trainings are conducted and staffs required with
training are given the opportunity for skill enhancement.
Knowledge sharing is one of the core methods of skill development.
If a staff gets any training, s/he is encouraged to share the same
among the peers in the
8 www.sanimabank.co
division/branch.
In operations, the Bank has put in place a maker and checker
concept in which a transaction has to compulsorily go through
two individuals from a control standpoint with proper
transaction right to capture deviations, if any. Similarly MIS
Reports are generated to check correctness of transactions and
any mistakes are promptly addressed and rectified. The activities
of a personnel and division / branch can be viewed and
monitored centrally through an integrated system, which
helps in minimizing the risk of misconduct, if any. The Bank
has an on-line replication Disaster Recovery Site (DRS) which
captures the record of each transaction that takes place at the
Production Server. Both the sites (Production Server and
Disaster Recovery
– Back up site) are housed in well-conditioned and high
shock resistant buildings and are at different seismic zone, far
from each other. DRS is outsourced to a professionally managed
company having expertise in the sector. Drill is being done
periodically and is being tested occasionally to assess the
functioning of DRS.
Each desktop is implemented with Active Directory System (ADS)
which does not allow user to take away the data in devices like
data traveler (pen drive) or bring in data for processing or
any other purposes posing threat to the repository. Similarly
individual data in desk are also stored and backed up in periodic
interval at data center so that any loss of data in desktop can be
retrieved from data center.
The Bank has a separate Legal division which is adequately manned
by qualified and experienced staff. All legal agreements,
deeds and documents including claims and charges are thoroughly
studied prior to making any decision involving such documents.
Compliance with existing rules and regulations and business
practices globally and locally are taken into account before
arriving at the decision. The cases where the Bank needs expert's
opinion on any of the issues the same is done through the expert in
the respective field.
5.1.6. Currency Risk
Currency risk arises as a result of fluctuations in the value of a
financial instruments due to changes in foreign exchange rates.
The Bank’s Board has set limits on positions by currency in
line with NRB directives (maximum position for all currency
excluding INR is 30% of core capital). In accordance with the
bank’s policy, positions are monitored on a daily basis and
also reviewed in ALCO meeting
 Annual Report

and hedging strategies are used to ensure positions are
maintained within established limits. Market risk
management policy and Treasury Manual of the bank are the
guiding documents for the management and mitigation of
currency risk.
The table below indicates the currencies to which the bank
had significant exposures as at 15 July 2020 and the effect to
the Gain/Loss in case of a market exchange rates up/drop by 5
%. The analysis calculates the effect of a reasonably possible
movement of the currency rate against the NPR, with all other
variables held constant, on the income statement (due to the
fair value of currency sensitive non–trading monetary assets
and liabilities) and equity (due to the change in fair value of
currency swaps and forward foreign exchange contracts used as
cash flow hedges). A negative amount in the table reflects a
potential net reduction in income statement or equity, while a
positive amount reflects a net potential increase. An equivalent
decrease in each of the below currencies against NPR would
have resulted in an equivalent but opposite impact.
major components; first is an internal process to identify,
measure, manage and report risks to which the bank is
exposed or could be exposed in the future; and second is an
internal process to plan and manage a bank’s capital so as to
ensure adequate capital. The Bank prepares the ICAAP report
annually complying with the NRB requirement. The report is
reviewed and analyzed by Risk Management Committee and
Board. The report is prepared as per BASEL III norms considering
various adverse scenarios. The Bank also conducts the stress
testing on thirty two different unfavorable scenarios on
quarterly basis and is reviewed by senior management, Risk
Management Committee and Board. The Bank in line with BASEL
provisions and ICAAP document assesses risk exposures and
allocated sufficient capital/cushion for perceived risks. The
adequacy of capital is main agenda of any ALCO, Man-Com and
Board meetings.
5.2.2. Quantitative disclosures
1 Capital structure and capital adequacy

Net Open Effect on the • Tier 1 Capital and a breakdown of its Components:
Currency Code Position exchange
(Liability) gain/(loss)
All Currencies 89,095,764 4,454,788

5.2. CAPITAL MANAGEMENT

The Bank's capital management policies and practices support its

business strategy and ensure that it is adequately capitalised to
withstand even in severe macroeconomic downturns. Sanima
Bank is a licensed institution that provides financial services.
Therefore it must comply with capital requirement of central
bank which is Nepal Rastra Bank. The Bank's capital consists of
Tier I capital and Tier II capital.

5.2.1. Qualitative disclosures

Nepal Rastra Bank has directed the Banks to develop own

internal policy, procedures and structures to manage all material
risk inherent in business for assessing capital adequacy in
relation to the risk profiles as well as strategies for maintaining
capital levels. This includes basic requirements of having good
governance, efficient process of managing all material risks and
an effective regime for assessing and maintaining adequate capital.
The Bank has various BODs approved risk management policies
for proper governance. The Bank has developed a comprehensive
ICAAP document which is subject to review every year. The
ICAAP has two
Particulars Amount (NPR)
Paid up Equity Share Capital 8,801,380,984
Share Premium -

8 www.sanimabank.co
 Annual Report
Proposed Bonus Equity Shares -
Statutory General Reserves 1,978,911,000
Retained Earnings 1,197,037,733
Un-audited current year cumulative profit -
Capital Redemption Reserves Fund 264,285,715
Capital Adjustment Reserves 20,187,887
Dividend Equalization Reserves -
Deferred Tax Reserve -
Less: Goodwill -
Less: Intangible Assets 60,545,750
Less: Fictitious Assets -
Less: Deferred Tax Assets -
Less: Investment in equity of licensed
-
Financial Institutions
Less: Investment in equity of institutions with
781,500,000
financial interests
Less: Investment in equity of institutions in
-
excess of limits
Less: Investments arising out of underwriting
-
commitments
Less: Purchase of Land & Building in excess
-
of limit & utilized

8 www.sanimabank.co
 Annual Report

• Total Qualifying Capital:

Particulars Amount (NPR)
Less: Reciprocal crossholdings -
Less: Other Deductions - Particulars Amount (Rs.)
Total Tier 1 Capital 11,419,757,569 Core Capital (Tier 1) 11,419,757,569
Supplementary Capital (Tier 2) 2,895,363,047
• Tier 2 Capital and Breakdown of its Components: Total Capital Fund 14,315,120,616

• Capital Adequacy Ratio:

Particulars Amount (NPR)
Cumulative and/or Redeemable Preference
Share
Subordinated Term Debt 1,502,712,000
Hybrid Capital Instruments
Stock Premium
General loan loss provision 1,376,005,373
Exchange Equalization Reserves 16,295,674
Investments Adjustment Reserves 350,000
Assets Revaluation Reserves
Special Reserve Fund
Total Tier 2 Capital 2,895,363,047
• Details of Subordinated Term Debt:
The Bank has issued “7% Sanima Debenture 2079” of face
value NPR 1,000 per unit of NPR 370,000,000 on 20th
Shrawan 2072 having maturity of 7 years from issue. The
bank has also issued "10% Sanima Debenture 2085" of face
value NPR 1,000 per unit of NPR 1,354,712,000 on 30th
Poush 2075. The bank has created debenture redemption
reserve as per the requirement of NRB, the balance of which
stands at NPR 264,285,715. As at the year end, the outstanding
amount of debenture is NPR 1,724,712,000 whereas NPR
1,502,712,000 is only eligible to be recognized as
supplementary Capital (Tier II).
• Deductions from Capital:
The Bank has invested NPR 250,000,000 in its merchant
banking subsidiary 'Sanima Capital', NPR 280,000,000 in
'Sanima Life Insurance', NPR 50,000,000 in Swet
Ganga Hydropower and Construction Ltd, NPR 6,400,000 in
Sanima Middle Tamor Hydro Power Ltd.
, NPR 37,500,000 in Mathillo Mailun Khola Jalvidhyut Ltd.
and NPR 100,000,000 in Sanima Insurance Co. Ltd.
Accordingly, NPR 781,500,000 has been deducted from Core
Capital.
The capital adequacy ratio of the bank as on 15th July,
-
2020 is 13.00%.
• Summary of the bank’s internal approach to
-
assess the adequacy of its capital to support current
- and future activities, if applicable:
Sanima Bank adopts healthy risk management framework. 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. The bank’s policies and procedures are approved by the
Board of Directors and these documents provide guidance on
independent identification, measurement and management of
risks across various businesses. Bank’s different committees
like Audit Committee, Risk Management Committee review the
business and risks periodically and take account of stress test
results, scenario analysis so as to align risk, return and capital in
sustainable manner.
The bank also defines risk aspects, considering domestic
economic scenario, and puts in place the system to minimize and
remove such risk. The risk appetite and approach towards risk
taking is well discussed in management level and board level. It
is always aligned with the business, its return and capital. Basel
disclosures have been complied with, addressing the risks and
adopting measures to minimize their impact. Increasing
complexities in risks, weakness of businesses and fast
changing world with intense competition pose a threat to
sustainability.
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 retain the required capital. The bank
is well capitalized and able to maintain the required capital
through internal generation,

8 www.sanimabank.co
 Annual Report

and equally through capital markets if needed.

Categories Amount (NPR)

• Summary of terms, conditions and main feature Past due claims 585,167,999
of all capital instrument, especially in case of High Risk claims 12,078,800,817
subordinated term debts including hybrid capital Other Assets 4,165,834,703
instrument: Off Balance Sheet Items 8,130,891,892
Total 99,649,955,042
The Bank has issued “7% Sanima Debenture 2079” of face
value NPR 1,000 per unit for NPR 370,000,000 on 20th • Total Risk Weight Exposures calculation Table:
Shrawan 2072 and “10% Sanima Debenture 2085” of face
value NPR 1000 per unit on 30th Poush 2075 for NPR RISK WEIGHTED EXPOSURES Amount (NPR)
1,354,712,000. The main features of these capital
Risk Weighted Exposure for Credit Risk 99,649,955,043
instruments are as follows:
Risk Weighted Exposure for Operational Risk
5,542,602,737
Instrument: 7% Sanima Debenture 2079 Risk Weighted Exposure for Market Risk 1,700,706,787
Interest Rate: 7% Maturity
period: 7 Years Add: 2% of the total RWE added by
1,049,300,000
Supervisory Review
Interest Payment Frequency: Half yearly
Add: RWE equivalent to reciprocal of capital
Instrument: 10% Sanima Debenture 2085 charge of 2% of Gross Income 2,137,865,291
Interest Rate: 10% Maturity Total Risk Weighted Exposures (After
period: 10 Years 110,080,429,858
Bank's adjustment of Pillar II)
Interest Payment Frequency: Half yearly
Total Core Capital 11,419,757,569
Total Capital 14,315,120,616
2 Risk exposures
• Amount of Non-Performing Assets (both Gross and Net):
• Risk weighted exposures for credit Risk, Market
Risk and Operational Risk:
In NPR
Gross Loan Loss
RISK WEIGHTED EXPOSURES Amount (NPR) Particulars Net NPL
Amount Provision
Risk Weighted Exposure for Credit Risk 99,649,955,043
Restructured - - -
Risk Weighted Exposure for Operational Risk
5,542,602,737 Sub-Standard 47,069,446 11,767,361 35,302,085
Doubtful 279,859,877 139,929,939 139,929,938
Risk Weighted Exposure for Market Risk 1,700,706,787
Loss 95,703,303 95,703,303 -
Total Risk Weighted Exposures (Before
106,893,264,567 Total 422,632,626 247,400,603 175,232,023
Bank's adjustment of Pillar II)

• Risk Weighted exposures under each 11 5.2.3. Compliance with external requirement
categories of Credit Risk:
The bank, at all times, has complied the externally imposed capital
requirements. In the capital adequacy calculation of 15th July
Categories Amount (NPR)
2020 (presented above), the bank has added 2% of total risk
Claims on Government and Central Bank -
weighted exposures to its risk weighted exposures as per the
Claims on Other Financial Entities - direction from Nepal Rastra Bank as part of supervisory
Claims on Banks 1,832,119,257 review.
Claims on Domestic Corporate and Securities
50,375,889,872
Firms 5.3. Classification of financial assets and financial
Claims on Regulatory Retail Portfolio & Other liabilities
16,015,274,506
Retail Portfolio
Claims secured by residential properties 3,960,957,547
Analysis of financial instruments by measurement basis- as at
Claims secured by Commercial real estate 15 July 2020
2,505,018,449

8 www.sanimabank.co
 Annual Report

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 shows the analysis of the carrying amounts of the financial assets and liabilities by category as
defined in NAS 39 :
Current Year (Amount In NPR)
Fair Value through Fair Value through
Amortized Cost Total
PL OCI
Financial Assets
Cash & Cash Equivalents - 5,190,299,845 - 5,190,299,845
Due from Nepal Rastra Bank - 5,325,683,135 - 5,325,683,135
Placement with Bank and
- 2,827,086,670 - 2,827,086,670
Financial Institutions
Derivative Financial Assets 40,221,461 - - 40,221,461
Loan and Advances to B/FIs - 2,844,211,678 - 2,844,211,678
Loans & Advances to Customers - 90,850,351,390 - 90,850,351,390
Other Trading Assets 443,453,005 - - 443,453,005
Investment Securities - 14,317,180,062 701,239,424 15,018,419,486
Investment in subsidiaries - 250,000,000 - 250,000,000
Other Financial Assets - - - -
Total Financial Assets 483,674,466 121,604,812,780 701,239,424 122,789,726,670
Financial Liabilities
Due to Bank and Financial
- 3,275,974,837 - 3,275,974,837
Institutions
Due to Nepal Rastra Bank - 86,292,488 - 86,292,488
Derivative financial instruments - - - -
Deposits from customers - 107,250,202,687 - 107,250,202,687
Borrowing - - - -
Debt securities issued 1,724,712,000 1,724,712,000
Other Financial Liabilities - 310,863,358 - 310,863,358
Total Financial Liabilities - 112,648,045,370 - 112,648,045,370

Previous Year (Amount In NPR)

Fair Value through Fair Value through
Amortized Cost Total
PL OCI
Financial Assets
Cash & Cash Equivalents - 4,636,422,437 - 4,636,422,437
Due from Nepal Rastra Bank - 2,781,194,462 - 2,781,194,462
Placement with Bank and
- 827,701,829 - 827,701,829
Financial Institutions
Derivative Financial Assets 85,066,888 - - 85,066,888
Loan and Advances to B/FIs - 2,020,420,376 - 2,020,420,376
Loans & Advances to Customers - 81,418,860,580 - 81,418,860,580
Other Trading Assets 484,421,811 - - 484,421,811
Investment Securities - 12,933,242,288 677,947,730 13,611,190,018
Investment in subsidiaries - 250,000,000 - 250,000,000
Other Financial Assets - - - -

8 www.sanimabank.co
 Annual Report

Fair Value through Fair Value through

Total Financial Assets
Financial Liabilities
Due to Bank and Financial
Institutions
Due to Nepal Rastra Bank
Derivative financial instruments
Deposits from customers
Borrowing
Debt securities issued
Other Financial Liabilities
Total Financial Liabilities
Amortized Cost
PL
569,488,700 104,867,841,972
- 3,694,458,442
- 1,018,919,629
- -
- 89,373,729,162
- -
1,724,712,000
- 228,537,368
- 96,040,356,600
Total
OCI
677,947,730 106,115,278,401
- 3,694,458,442
- 1,018,919,629
- -
- 89,373,729,162
- -
1,724,712,000
- 228,537,368
- 96,040,356,600

5.4. Segment wise information

1 The bank has identified its four segments (banking, treasury, card and remittance) based on the business activities that each unit is
engaged for the purpose of reviewing the operating result as well as to intervene business strategies. Management monitors the
operating results of its business units independently for the purpose of making decisions about resource allocations and performance
assessment. Segment performance is evaluated based on operating profits or losses which, in certain respects, are measured differently
as presented in financial statements. The bank has used Fund Transfer Pricing (FTP) method to recognize income/expense for inter segment
transactions. The segmental financial information summarized below:

2 The segmental information about profit or loss, assets and liabilities is presented below:

In NPR ‘000’
Particular Banking Treasury Card Remittance Total
Revenues from external
a 11,296,255 1,232,501 101,526 19,496 12,649,779
customers
b Intersegment revenues (409,804) 399,603 (925) 11,126 -
c Net Revenue 10,886,451 1,632,104 100,600 30,623 12,649,779
d Interest Revenue 10,709,221 754,389 6,115 - 11,469,725
e Interest Expense 7,071,456 208,575 - - 7,280,031
f Net interest revenue (b) 3,637,765 545,814 6,115 - 4,189,694
g Depreciation and amortisation 138,426 3,111 12,443 1,555 155,535
h Segment profit/(loss) 865,869 889,649 8,632 12,114 1,776,265
Entity's interest in the profit or
i loss of associates accounted for - - - - -
using equity method

j Other material non-cash items - - - - -

k Impairment of assets 1,833,134 - - - 1,833,134

l Segment assets 99,928,347 26,178,334 188,805 15,495 126,310,981
m Segment liabilities 112,895,312 516,464 83,028 (2,426) 113,492,376

9 www.sanimabank.co
 Annual Report

3 Measurement of operating segment profit or

Revenue from each type of product and services:
loss, assets and liabilities
c Remittance 19,496
(a) The bank has used Fund Transfer Pricing (FTP) method to d Banking 11,296,255
recognise income/expense for any transactions between Total Revenue 12,649,779
reportable segments.
(b) Reportable segment's profit or loss and the entity's profit 6 Information about geographical areas
or loss before income tax has been computed on similar
basis. Revenue from following geographical areas
(c ) Reportable segment's assets and the entity's assets has been
measured on similar basis. a Domestic 12,649,779
Province -1 1,006,034
4 Reconciliation of reportable segment revenues, Province -2 505,234
profit or loss, assets and liabilities:
Bagmati Province 10,190,378
Gandaki Province 293,061
(a) Revenue
Province -5 342,439
Total revenues for reportable
12,649,779 Karnali Province 83,959
segments
Other revenues - Sudurpashchim Province 228,674
Elimination of intersegment revenues - b Foreign -
Entity's revenue 12,649,779 Total 12,649,779

(b) Profit or Loss

7 Information about major customers
Total profit or loss for reportable
1,366,461
segments
Other Profit or loss - Revenue from any customers does not amounts to 10 percent
or more of the entity's revenue.
Elimination of intersegment Profit 409,804
Unallocated amounts: -
5.5. Share options and share based payments
Entity's profit 1,776,265
Assets The bank has no any share options and share based
(c )
Total Assets for reportable segments 126,310,981 payments.
Other assets -
Unallocated amounts: - 5.6. Contingent liabilities and commitment
Entity's Assets 126,310,981
Litigation is a common occurrence in the banking industry due to
the nature of the business undertaken. The Bank has formal
(d) Liabilities
controls and policies for managing legal claims. Once
Total Liabilities for reportable professional advice has been obtained and the amount of loss
113,492,376
segments reasonably estimated, the Bank makes adjustments to account for
Other Liabilities - adverse effects which the caims may have on its financial
Unallocated amounts: - standing. There were no pending litigation against the Bank as at
Entity's Liabilities 113,492,376 15th July 2020 which would have a material impact on the
Financial Statements.
5 Information about products and services
5.7. Related Party Disclosures
Revenue from each type of product and services:
The Bank has carried out transactions in the ordinary course
a Treasury 1,232,501
of business on an arm's length basis at commercial rates with
b Card 101,526 parties who are defined as related parties as per the Nepal
Accounting Standard - NAS 24 - ‘Related

9 www.sanimabank.co
 Annual Report

Party Disclosures’, except for the transactions that Key

Current Previous
Management Personnel (KMPs) have availed under schemes
Year Year
uniformly applicable to all staff at concessionary rates. Those
transactions include lending activities, acceptance of deposits, Off- Post-employment benefits 5,613 6,697
Balance Sheet transactions and provision of other banking and Other Allowances 1,550 2,874
finance services. Share Based Payment - -
Total 38,242 39,278
5.7.1. Parent and Ultimate Controlling Party
Grand Total 56,883 57,505

The Bank does not have an identifiable parent of its own.

5.7.2. Transactions with Key Managerial Personnel
(KMPs)
As per NAS 24 – Related Party Disclosures’, Key Management
Personnel are defined as those persons having authority and
responsibility for planning, directing and controlling the activities of
the entity. According to the definition a person cannot be
considered as a KMP unless such person have both the authority
and responsibility to carry out all the three activities mentioned in
the above definition, (i.e. planning, directing and controlling the
activities of the entity).
Accordingly the Board of Directors of the Bank and
Management Committee are considered as KMP of the Bank.
In addition to the above, the Bank has also provided non- cash
benefits such as fuel, medical benefits to KMP who are
employees of the Bank in line with the approved benefit plans of
the Bank. Employee Bonus has been provided as per prevailing
laws.
5.7.4. Transactions, Arrangements and Agreements
involving KMPs and Close Family Members (CFM)
CFMs of the KMP are those family members who may be
expected to influence, or to be influenced by, that individual in
their dealings with the entity. They may include individual’s
domestic partner and children, children of the individual’s
domestic partner and dependents of the individual or the
individual’s domestic partner.

5.7.3. Compensations of KMP 5.7.5. Loans & receivables to KMPS and their CFMs:
Amount In NPR '000 Amount In NPR '000
Current Previous Current Year Previous Year
Year Year
Closing Closing
To Directors: Limit Limit
Balance Balance
Sitting fees & expenses 4,027 3,544
Loans and
Total 4,027 3,544 163,112 142,763 113,342 108,095
Receivables
To CEO: Credit Cards 2,891 168 1,851 176
Short term employee benefits 12,012 11,836 166,004 142,931 115,193 108,271
Festival Allowance and payment against
1,882 1,622
annual leave 5.7.6.Deposits and Investments from KMPs and their
Post-employment benefits 721 712 CFMs:
Other Allowances - 514 Amount In NPR '000
Share Based Payment - - Current Year Previous Year
Total 14,615 14,684 Deposits & Investments 7,118 4,646
To Other Senior Management 7,118 4,646
Personnel:
Short term employee benefits 26,736 26,247 5.7.7. Transactions, Arrangements and Agreements
Festival Allowance and payment against involving Related Party Entities
4,344 3,460
annual leave Amount In NPR '000

9 www.sanimabank.co
 Annual Report

Related Nature of Nature of Current Previous interest/principal recovered till 16th September 2020, from
Party Relation Transaction Year Year internal source of fund of borrowers.
SLA Income 1,581 1,493
Sanima RTS Expense 450 350 5.9. Merger & Acquisition
Capital
Subsidiary Investment in
Ltd. (100% 250,000 250,000 No mergers and acquisitions have taken place during the year.
holding) Shares
Deposit 174,028 144,013
5.10. Additional disclosures of non-consolidated entities
The Bank has entered into Service Level Agreement with its
subsidiary (Sanima Capital Ltd.) to provide operational and Results of a subsidiary (Sanima Securities Ltd.) which was
technical assistance for a fee of Rs. 1.2 million for base year and incorporated lately during previous year has not been
annual increment of 10% on base year fee. consolidation by the Bank as no any transactions were
performed and also the capital was not injected till year end.
5.7.8. Interest Expense to KMP and their CFMs and Till the date of authorization of financial statements, the
Entities which are controlled and / or jointly controlled subsidiary has not come into operation. The Bank has no
by the KMPs or their CFMs substantial interest in other entities.
Amount In NPR '000
5.11. Earnings Per Ordinary Share
Current Year Previous Year
Earnings Per Share- Basic (NPR)
Interest Income 6,558 5,253
Interest Expenses 385 590 Basic earnings per share is calculated by dividing the net
profit for the year attributable to equity holders of the parent
5.7.9 Investment in mutual fund by the weighted average number of ordinary shares outstanding
during the year, as per the NAS 33 - Earnings per Share.
Bank has sponsored sanima equity fund by initial investment of
NPR 169 million (13%) with its subsidiary (Sanima Capital)
has total investment of NPR 202.93 million (15.61%). Current Year Previous Year
Similarly, Sanima equity fund has appointed Sanima Capital as a
fund manager with an annual fee 1.75% of net assets value Profit Attributable to
1,776,264,524 2,258,067,506
(NAV) managed and depository with an annual fee 0.5% of ordinary Shareholders
NAV.
Weighted average
number of Ordinary 88,013,810 80,012,554
5.8. Events after the reporting date Shares

Impairment loss on loans and advances as per NRB directive Basic Earnings per
20.18 28.22
Ordinary Share (NPR)
has been reassessed considering the overdue

Current Year Previous Year

Weighted average number of Ordinary Shares Weighted Weighted
Outstanding Outstanding
Average Average
Weighted average number of ordinary shares for Basic EPS
Number of Shares held at the beginning of the year 80,012,554 80,012,554 80,012,554 80,012,554
Add: Number of bonus shares issued during the year 8,001,255 8,001,255 - -
Add: Number of right shares issued during the year - - - -
Add: Due to Business Combination during the year - - - -
Number of Shares held as at the end of the year 88,013,810 88,013,810 80,012,554 80,012,554

9 www.sanimabank.co
 Annual Report

Earnings Per Share- Diluted (NPR)

Current Year Previous Year
The calculation of Diluted Earnings Per Share as at reporting date is Weighted average
number of ordinary
based on sum of profit attributable to equity holders of the Bank 88,013,810 80,012,554
shares used for
plus notional earning's from the possible dilution divided by the Diluted EPS
weighted average number of ordinary shares outstanding during the Diluted Earnings per
20.18 28.22
year, after adjustment for the effects of all potentially dilutive Ordinary Share (NPR)
weighted average number of ordinary shares.
5.12 Dividend
Current Year Previous Year
Profit Attributable to The Board of Directors of the Bank, vide board resolution dated
1,776,264,524 2,258,067,506
ordinary Shareholders 13th October 2020, has recommended the distribution of 10% of
Notional Earnings - - Paid up capital as Stock dividend amounting to NPR
Total Earnings 880,138,098.40 and 3.6% of Paid of Capital as Cash dividend
Attributable to
1,776,264,524 2,258,067,506 (including tax on dividend) amounting to NPR 316,849,715.42
ordinary Shareholders from the retained earnings at the end of the year 2019/20
Weighted average number which equates to a distribution of 13.6% dividend amounting
of Ordinary Shares used for
88,013,810 80,012,554 to NPR 1,196,987,813.82. During the year, Bank has paid 10%
Basic EPS
of paid up capital as Stock dividend amounting to NPR
Weighted average 800,125,544.00 and 11.05263% of paid up Capital as Cash
number of potential dividend (including tax on dividend) amounting to NPR
- -
ordinary shares 884,349,285.47 from the retained earnings at the end of the year
outstanding 2018/19 which equates to a distribution of 21.05263% dividend
amounting to NPR 1,684,474,829.47.

9 www.sanimabank.co
 Annual Report

Principal Indicators
Particulars Indicators FY 2015/16 FY 2016/17 FY 2017/18* FY 2018/19* FY 2019/20*
1 Percent of Net Profit/Gross Income Percent 26.63 22.84 18.55 18.86 14.04
2 Earning Per Share NPR 32.55 26.31 21.22 28.22 20.18
3 Market Value Per Share NPR 750 431 324 348 330
4 Price Earning Ratio Times 23.04 16.38 15.27 12.33 16.35
5 Dividend (Including Bonus) Percent 15.79 16.00 14.00 21.05 13.60
6 Cash Dividend Percent 0.79 - 14.00 11.05 3.60
7 Interest Income/Loan & Advances Percent 7.98 9.76 11.71 12.89 12.24
8 Staff Expenses/Total Operating Expenses Percent 44.09 44.55 61.61 63.38 60.48
Interest Expenses / Total Deposit and Borrowing
9 Percent 3.10 4.79 6.40 6.96 6.58

10 Exchange Gain/Total Income Percent 4.11 3.40 3.09 3.12 3.17

11 Staff Bonus/Total Staff Expenses Percent 54.72 54.94 31.01 28.40 22.77
12 Net Profit/Loan and Advances Percent 2.44 2.52 2.45 2.71 1.90
13 Net Profit/Total Assets Percent 1.78 1.86 1.85 2.07 1.41
14 Total Credit/Deposit Percent 88.10 89.03 87.45 90.42 85.10
15 Total Operating Expenses/Total Assets Percent 1.05 1.09 1.53 1.82 1.62
Adequacy of Capital Fund on Risk Weighted
16
Assets
a) Core Capital Percent 10.69 14.07 11.14 10.63 10.37
b) Supplementary Captial Percent 1.67 1.50 1.27 2.56 2.63
c) Total Capital Fund Percent 12.36 15.57 12.41 13.19 13.00
17 Liquidity Percent 24.24 26.08 24.72 22.87 24.01
18 Non-Performing Loan/Total Credit Percent 0.019 0.010 0.030 0.08 0.45
19 Weighted Average Interest Rate Spread Percent 4.63 4.26 4.66 4.35 3.47
20 Book Net-Worth NPR 5,352,251,266 9,060,833,497 10,787,885,501 11,989,548,059 12,818,604,934
21 Total Number of Shares Nos. 30,602,880 68,976,340 80,012,554 80,012,554 88,013,810
22 Total Staff Nos. 470 601 862 962 1,072
23 No. of Branches (including Head Office) Nos. 40 46 74 78 79
24 Base Rate Percent 6.07 10.20 9.91 9.45 8.62
25 Return on Equity Percent 22.69 14.39 18.67 23.20 16.09
26 Return on Assets Percent 1.78 1.86 1.85 2.07 1.41
27 Total Assets to Shareholders Fund Times 14.97 7.73 8.51 9.10 9.85
*Based on NFRS

9 www.sanimabank.co
 Annual Report

Comparision-Unaudited and Audited Financial Statements of FY 2019/20

NPR in '000
Statement of Financial Position As per As per Variance
unaudited Audited
Financial Financial Reasons for Variance
Assets In amount In %
Statement Statement
Cash and cash equivalent 5,190,300 5,190,300 - -
Due from Nepal Rastra Bank 5,325,683 5,325,683 - -
Placement with Bank and Financial Institutions 2,827,087 2,827,087 - -
Derivative financial instruments 40,221 40,221 - -
Other trading assets 443,453 443,453 - -
Loan and advances to B/FIs 2,655,930 2,844,212 188,282 7.09
Loans and advances to customers 90,566,104 90,850,351 284,247 0.31 Reclassification of assets head and change in LLP
Investment securities 15,018,419 15,018,419 - -
Current tax assets 40,802 4,201 (36,601) - Due to change in profit
Investment in susidiaries 250,000 250,000 - -
Investment in associates - - - -
Investment property - - - -
Property and equipment 1,159,093 1,177,211 18,119 1.56 Acquisition of additional fixed assets
Goodwill and Intangible assets 60,525 60,546 20 0.03 Additional amortization
Deferred tax assets 26,855 25,565 (1,290) (4.80) Deferred tax computation
Recognition of unpaid dividend as receivable from RTS and reclassification
Other assets 2,531,171 2,253,731 (277,440) (10.96) of assets head
Total Assets 126,135,643 126,310,981 175,338 0.14
Liabilities
Due to Bank and Financial Instituions 3,690,391 3,275,975 (414,416) (11.23) Reclassification of liabilities head
Due to Nepal Rastra Bank 86,292 86,292 - -
Derivative financial instruments - - - -
Deposits from customers 106,835,786 107,250,203 414,416 0.39 Reclassification of liabilities head
Borrowing - - - -
Current Tax Liabilities - - - -
Provisions 33,089 32,429 (660) (2.00) Reversal of provisions
Deferred tax liabilities - - - -
Due to recognition of unpaid dividend and change in actuarial valuation of
Other liabilities 1,018,582 1,122,765 104,184 10.23 employee benefits
Debt securities issued 1,724,712 1,724,712 - -
Subordinated Liabilities - - - -
Total liabilities 113,388,853 113,492,376 103,524 0.09
Equity
Share capital 8,801,381 8,801,381 - -
Share premium - - - -
Retained earnings 1,119,722 1,197,038 77,315 6.90
Reserves 2,825,687 2,820,186 (5,501) (0.19) Due to change in profit and regulatory adjustment
Total equity attributable to equity holders 12,746,790 12,818,605 71,815 0.56
Non-controlling interest - - - -
Total equity 12,746,790 12,818,605 71,815 0.56
Total Liabilities and Equity 126,135,643 126,310,981 175,338 0.14
Income heads reclassification and change in accrued interest income of bad
Interest income 11,495,494 11,469,725 (25,769) (0.22) loans
Interest expense 7,280,031 7,280,031 - -
Net interest income 4,215,463 4,189,694 (25,769) (0.61)
Income heads reclassification and change in accrued interest income of bad
Fee and commission income 694,967 698,256 3,289 0.47 loans
Fee and commission expense 75,948 78,530 2,582 3.40 Income heads reclassification & reversal of provision
Net fee and commission income 619,019 619,725 706 0.11
Net interest, fee and commission income 4,834,482 4,809,420 (25,062) (0.52)
Net trading income 388,771 420,658 31,886 8.20 Income heads reclassification
Other operating income 59,660 59,730 70 0.12
Total operaing income 5,282,913 5,289,807 6,894 0.13
Impairment charge/(reversal) for loans and other losses 883,459 797,025 (86,434) (9.78) Change in LLP
Net operating income 4,399,455 4,492,783 93,328 2.12
Operating expense
Personnel expenses 1,252,548 1,234,689 17,859 1.43 Change in actuarial valuation of employee benefits and staff bonus
Other operating expenses 572,275 572,706 (431) (0.08)
Depreciation & Amortisation 156,019 155,535 484 0.31 Additional adjustments
Operating profit 2,418,613 2,529,853 111,240 4.60
Non operating income 1,408 1,410 2 0.14
Non operating expense 1,520 1,520 - -
Profit before income tax 2,418,500 2,529,742 111,242 4.60
Income tax expense
Current Tax 715,126 751,727 36,601 5.12 Due to change in profit
Deferred Tax - 1,751 1,751  Deferred tax computation
Profit /(loss) for the period 1,703,374 1,776,265 72,891 4.28
Other comprehensive income (28,187) (29,263) (1,076) 4 Due to change in actuarial valuation of employee benefits
Total comprehensive income 1,675,187 1,747,001 71,815 4.29
Distributable Profit
Net profit/(loss) as per profit or loss 1,703,374 1,776,265 72,891 4.28
Appropriations:
Profit required to be appropriated to statutory reserves (412,986) (428,293) (15,308) 3.71 Due to change in profit
Profit required to be (transferred to)/reversed from Due to change in AIR, deferred tax and actuarial valuation of employee
Regulatory Reserve (237,698) (218,109) 19,589 (8.24) benefits
Profit/(loss) after Regulatory adjustments 1,052,691 1,129,863 77,172 7.33

9 www.sanimabank.co
 Annual Report

Capital Adequacy
15th July 2020
Form No. 1
NPR In million
Particulars Current Year Previous Year
a Common Equity Tier 1 Capital 11,419.76 10,770.22
b Tier 1 Capital 11,419.76 10,770.22
c Tier 2 Capital 2,895.36 2,594.20
d Total Capital 14,315.12 13,364.41
e Risk Weighted Exposures 110,080.43 101,286.28

Regulatory Ratios
a Leverage Ratio (Regulatory Requirement >= 4%) 8.03 8.56
b Common Equity Tier 1 to Risk Weighted Exposure Ratios 10.37 10.63
c Tier 1 to Risk Weighted Exposure Ratios 10.37 10.63
d Total Capital to Risk Weighted Exposure Ratio 13.00 13.19

9 www.sanimabank.co
 Annual Report

Capital Adequacy
15th July 2020 Form No. 1A
NPR In million
1. 1 RISK WEIGHTED EXPOSURES Current Year Previous Year
a Risk Weighted Exposure for Credit Risk 99,649.96 90,990.90
b Risk Weighted Exposure for Operational Risk 5,542.60 4,586.57
c Risk Weighted Exposure for Market Risk 1,700.71 1,595.03
Total Risk Weighted Exposures (Before adjustments of Pillar II) 106,893.26 97,172.50
Adjustments under Pillar II
ALM policies & practices are not satisfactory, add 1% of net interest
SRP 6.4a (5) - -
income to RWE
SRP 6.4a (6) Add....% of the total deposit due to insufficient Liquid Assets - -
Add RWE equvalent to reciprocal of capital charge of 2% of gross
SRP 6.4a (7) 1,049.30 1,198.60
income this year and 3% of gross income last year
SRP 6.4a (9) Add 2% of RWE this year and 3% of RWE last year 2,137.87 2,915.18
If desired level of disclosure requirement has not been achieved, Add
SRP 6.4a (10) - -
.....% of RWE
Total Risk Weighted Exposures (After Bank's adjustments of Pillar II) 110,080.43 101,286.28

1.2 CAPITAL Current Year Previous Year

(A) Tier 1 Capital [Core Capital (CET 1 + AT 1)] 11,419.76 10,770.22
Common Equity Tier 1 (CET 1) 11,419.76 10,770.22
a Paid up Equity Share Capital 8,801.38 8,001.26
b Equity Share Premium
c Proposed Bonus Equity Shares
d Statutory General Reserves 1,978.91 1,623.66
e Retained Earnings 1,197.04 1,751.51
f Unaudited current year cumulative profit/(loss) 0.00 0.00
g Capital Redemption Reserve 264.29 211.43
h Capital Adjustment Reserve 20.19 20.19
i Dividend Equalization Reserves
j Other Free Reserve
k Less: Goodwill
l Less: Intangible Assets 60.55 70.32
m Less: Deferred Tax Assets
n Less: Fictitious Assets
o Less: Investment in equity in licensed Financial Institutions
p Less: Investment in equity of institutions with financial interests 781.50 767.50
q Less: Investment in equity of institutions in excess of limits
r Less: Investments arising out of underwriting commitments
s Less: Reciprocal crossholdings
t Less: Purchase of land & building in excess of limit and unutilized
u Less: Cash Flow Hedge
v Less: Defined Benefits Pension Assets
w Less: Unrecognized Defined Benefit Pension Liabilities
x Less: Other Deductions

9 www.sanimabank.co
 Annual Report

Adjustments under Pillar II

SRP 6.4a(1) Less: Shortfall in Provision -
SRP 6.4a(2) Less: Loans & Facilities extended to related parties and restricted lending -
Additional Tier 1 (AT 1) - -
a Perpetual Non Cumulative Preference Share Capital
b Perpetual Debt Instruments
c Stock Premium

(B) Supplementary Capital (Tier 2) 2,895.36 2,594.20

a Cumulative and/or Redeemable Preference Share
b Subordinated Term Debt 1,502.71 1,576.71
c Hybrid Capital Instruments
d Stock Premium
e General Loan Loss Provision 1,376.01 1,003.26
f Exchange Equalization Reserve 16.30 13.88
g Investment Adjustment Reserve 0.35 0.35
h Assets Revaluation Reserve
i Other Reserves
Total Capital Fund (Tier I and Tier II) 14,315.12 13,364.41

Current Previous
1.3 CAPITAL ADEQUACY RATIOS
Month End Month End
Common Equity Tier 1 Capital to Total Risk Weighted Exposures (After Bank's adjustments of
10.37% 10.63%
Pillar II)
Tier 1 Capital to Total Risk Weighted Exposures(After Bank's adjustments of Pillar II) 10.37% 10.63%
Tier 1 and Tier 2 Capital to Total Risk Weighted Exposures(After Bank's adjustments of Pillar
13.00% 13.19%
II)

9 www.sanimabank.co
 Annual Report

Risk Weighted Exposure for Credit Risk

15th July 2020
Form No. 2
NPR In million
Specific (NPR In Risk Weighted
Book Value Net Value Risk Weight
A. Balance Sheet Exposures Provision million) Exposures
a b c d=a-b-c e f=d*e
Cash Balance 1,756.52 1,756.52 0% -
Balance With Nepal Rastra Bank 5,301.85 5,301.85 0% -
Gold - 0% -
Investment in Nepalese Government Securities 14,485.02 14,485.02 0% -
All Claims on Government of Nepal 26.91 26.91 0% -
Investment in Nepal Rastra Bank securities - 0% -
All claims on Nepal Rastra Bank - 0% -
Claims on Foreign Government and Central Bank (ECA 0-1) - 0% -
Claims on Foreign Government and Central Bank (ECA -2) - - 20% -
Claims on Foreign Government and Central Bank (ECA -3) - - 50% -
Claims on Foreign Government and Central Bank (ECA-4-6) - - 100% -
Claims on Foreign Government and Central Bank (ECA -7) - - 150% -
Claims On BIS, IMF, ECB, EC and MDB's recognized by the framework - 0% -
Claims on Other Multilateral Development Banks - - 100% -
Claims on Domestic Public Sector Entities - - 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 2,983.30 - 2,983.30 20% 596.66
Claims on domestic banks that do not meet capital adequacy requirements - - - 100% -
Claims on foreign bank (ECA Rating 0-1) 4,051.75 - 4,051.75 20% 810.35
Claims on foreign bank (ECA Rating 2) 62.87 - 62.87 50% 31.43
Claims on foreign bank (ECA Rating 3-6) - - - 100% -
Claims on foreign bank (ECA Rating 7) - - - 150% -
Claims on foreign bank incorporated in SAARC region operating with a buffer of 1%
1,968.38 - 1,968.38 20% 393.68
above their respective regulatory capital requirement
Claims on Domestic Corporates 50,376.13 0.24 50,375.89 100% 50,375.89
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) 21,776.73 423.03 21,353.70 75% 16,015.27
Claims fulfilling all criterion of regularity retail except granularity - - 100% -
Claims secured by residential properties 6,601.60 - 6,601.60 60% 3,960.96
Claims not fully secured by residential properties - - 150% -
Claims secured by residential properties (Overdue) - - 100% -
Claims secured by Commercial real estate 2,505.02 - 2,505.02 100% 2,505.02
Past due claims (except for claims secured by residential properties) 638.34 247.40 0.83 390.11 150% 585.17
High Risk claims 8,062.89 0.17 10.19 8,052.53 150% 12,078.80
Lending against securities (bonds & shares) 502.24 - 502.24 100% 502.24
Investments in equity and other capital instruments of institutions listed in stock
231.30 - 231.30 100% 231.30
exchange
Investments in equity and other capital instruments of institutions not listed in the stock
2.68 - 2.68 150% 4.02
exchange
Staff loan secured by residential property 1,390.28 1,390.28 50% 695.14
Interest Receivable/claim on government securities 226.29 226.29 0% -
Cash in transit and other cash items in the process of collection - - - 20% -
Other Assets (as per attachment) 7,189.83 4,456.70 - 2,733.14 100% 2,733.14
TOTAL (A) 130,139.92 4,704.27 434.29 125,001.37 91,519.06

1 www.sanimabank.co
 Annual Report

Specific Eligible Risk Weighted

B. Off Balance Sheet Exposures Book Value Net Value Risk Weight
Provision CRM Exposures
Revocable Commitments - 0% -
Bills Under Collection 37.38 37.38 0% -
Forward Exchange Contract Liabilities - - 10% -
LC Commitments With Original Maturity Upto 6 months domestic counterparty 1,469.47 71.14 1,398.33 20% 279.67
Foreign counterparty (ECA Rating 0-1) - - 20% -
Foreign counterparty (ECA Rating 2) - - 50% -
Foreign counterparty (ECA Rating 3-6) - - 100% -
Foreign counterparty (ECA Rating 7) - - 150% -
LC Commitments With Original Maturity Over 6 months domestic counterparty 2,156.62 161.31 1,995.31 50% 997.66
Foreign counterparty (ECA Rating 0-1) - - 20% -
Foreign counterparty (ECA Rating 2) - - 50% -
Foreign counterparty (ECA Rating 3-6) - - 100% -
Foreign counterparty (ECA Rating 7) - - 150% -
Bid Bond, Performance Bond and Counter guarantee domestic counterparty 7,021.26 361.65 440.18 6,219.43 50% 3,109.72
Foreign counterparty (ECA Rating 0-1) - - 20% -
Foreign counterparty (ECA Rating 2) - - 50% -
Foreign counterparty (ECA Rating 3-6) - - 100% -
Foreign counterparty (ECA Rating 7) - - 150% -
Underwriting commitments - - 50% -
Lending of Bank's Securities or Posting of Securities as collateral - - 100% -
Repurchase Agreements, Assets sale with recourse - - 100% -
Advance Payment Guarantee 2,162.02 23.19 2,138.83 100% 2,138.83
Financial Guarantee - - 100% -
Acceptances and Endorsements 369.64 - 369.64 100% 369.64
Unpaid portion of Partly paid shares and Securities - - 100% -
Irrevocable Credit commitments (short term) 4,083.73 - 4,083.73 20% 816.75
Irrevocable Credit commitments (long term) - - 50% -
Claims on foreign bank incorporated in SAARC region operating with a buffer of 1%
above - 20% -
their respective regulatory capital requirement
Other Contingent Liabilities 64.62 - 64.62 100% 64.62
Unpaid Guarantee Claims 177.01 - 177.01 200% 354.02
TOTAL (B) 17,541.75 361.65 695.82 16,484.28 8,130.89
Total RWE for credit Risk Before Adjustment (A) +(B) 147,681.67 5,065.92 1,130.11 141,485.65 99,649.96
Adjustments under Pillar II
SRP 6.4a(3) - Add 10% of the loans & facilities in excess of Single Obligor Limits to RWE -
SRP 6.4a(4) - Add 1% of the contract (sale) value in case of the sale of credit with recourse to
-
RWE
Total RWE for Credit Risk after Bank's adjustments under Pillar II 147,681.67 5,065.92 1,130.11 141,485.65 99,649.96

1 www.sanimabank.co
 Annual Report

Eligible Credit Risk Mitigants

15th July 2020
Form No. 3
NPR In million
Sec/
Deposits Govt.& G'tee of Sec/G'tee G'tee of G'tee
Deposits (NPR In G'tee of
with other NRB Govt. of of Other domestic of Total
Credit exposures with Bank million) Foreign
banks/FI Securities Nepal Sovereigns banks MDBs
Banks
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Balance Sheet Exposures
Claims on Foreign government and Central Bank (ECA -2)
Claims on Foreign government and Central Bank (ECA -3)
Claims on Foreign government and Central Bank (ECA-4-6)
Claims on Foreign government and Central Bank (ECA -7)
Claims on Other Multilateral Development Banks
Claims on Domestic Public Sector Entities
Claims on Public Sector Entity (ECA 0-1)
Claims on Public Sector Entity (ECA 2)
Claims on Public Sector Entity (ECA 3-6)
Claims on Public Sector Entity (ECA 7)
Claims on domestic banks that meet capital adequacy requirements
Claims on domestic banks that do not meet capital adequacy requirements
Claims on foreign bank (ECA Rating 0-1)
Claims on foreign bank (ECA Rating 2)
Claims on foreign bank (ECA Rating 3-6)
Claims on foreign bank (ECA Rating 7)
Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their
respective regulatory capital requirement
Claims on Domestic Corporates 0.24 - 0.24
Claims on Foreign Corporates (ECA 0-1)
Claims on Foreign Corporates (ECA 2)
Claims on Foreign Corporates (ECA 3-6)
Claims on Foreign Corporates (ECA 7)
Regulatory Retail Portfolio (Not Overdue) 332.39 90.65 423.03
Claims fulfilling all criterion of regularity retail except granularity
Claims secured by residential properties
Claims not fully secured by residential properties
Claims secured by residential properties (Overdue)
Claims secured by Commercial Real Estate
Past due claims (except for claims secured by residential properties) - 0.83 0.83
High Risk claims 9.75 0.44 10.19
Lending against securities (bonds & shares)
Investments in equity and other capital instruments of institutions listed in stock exchange
Investments in equity and other capital instruments of institutions not listed in the stock exchange
Other Assets (as per attachment)
Total 342.37 - 91.92 - - - - - - 434.29
Off Balance Sheet Exposures
Forward Exchange Contract Liabilities
LC Commitments With Original Maturity Upto 6 months domestic counterparty 71.14 71.14
Foreign counterparty (ECA Rating 0-1)
Foreign counterparty (ECA Rating 2)
Foreign counterparty (ECA Rating 3-6)
Foreign counterparty (ECA Rating 7)
LC Commitments With Original Maturity Over 6 months domestic counterparty 161.31 161.31
Foreign counterparty (ECA Rating 0-1)
Foreign counterparty (ECA Rating 2)
Foreign counterparty (ECA Rating 3-6)
Foreign counterparty (ECA Rating 7)
Bid Bond, Performance Bond and Counter guarantee domestic counterparty 440.18 - 440.18
Foreign counterparty (ECA Rating 0-1)
Foreign counterparty (ECA Rating 2)
Foreign counterparty (ECA Rating 3-6)
Foreign counterparty (ECA Rating 7)
Underwriting commitments
Lending of Bank's Securities or Posting of Securities as collateral
Repurchase Agreements, Assets sale with recourse
Advance Payment Guarantee 23.19 - 23.19
Financial Guarantee
Acceptances and Endorsements
Unpaid portion of Partly paid shares and Securities
Irrevocable Credit commitments (short term)
Irrevocable Credit commitments (long term)
Other Contingent Liabilities
Unpaid Guarantee Claims
Total 695.82 - - - - - - - - 695.82
Grand Total 1,038.19 - 91.92 - - - - - - 1,130.11

1 www.sanimabank.co
 Annual Report

Other Assets
Form No. 5
NPR In million
Specific
S.No. Assets Gross Amount Net Balance
Provision
1 Fixed Assets 1,177.21 - 1,177.21
2 Interest Receivable on Other Investment 4.38 4.38
3 Interest Receivable on Loan 760.59 760.59 -
4 Non Banking Assets - -
5 Reconciliation Account - -
6 Draft Paid Without Notice - -
7 Sundry Debtors 6.43 6.43
8 Advance payment and Deposits 4,996.45 3,696.10 1,300.35
9 Staff Loan and Advance 143.23 143.23
10 Stationery 23.48 23.48
11 Other 78.05 78.05
TOTAL 7,189.83 4,456.70 2,733.14

1 www.sanimabank.co
 Annual Report

Risk Weighted Exposure for Operational Risk

15th July 2020
Form No. 6
NPR In million

S. Fiscal Year Previous

Particulars
N. 2073/074 2074/075 2075/076 Year

1 Net Interest Income 2,242.12 2,939.05 4,024.28

2 Commission and Discount Income 155.19 185.96 785.12
3 Other Operating Income 300.55 519.16 63.22
4 Exchange Fluctuation Income 194.26 282.48 373.83
5 Addition/Deduction in Interest Suspense during the period 60.97 68.73 -
6 Gross income (a) 2,953.10 3,995.39 5,246.46
7 Alfa (b) 15% 15% 15%
8 Fixed Percentage of Gross Income [c=(a×b)] 442.96 599.31 786.97
9 Capital Requirement for operational risk (d) (average of c) 609.75 458.66
Risk Weight (reciprocal of capital requirement of 11%/10%)
10 9.09 10
in times (e)
11 Equivalent Risk Weight Exposure [f=(d×e)] 5,542.60 4,586.57

SRP 6.4a (8) Adjustments under Pillar II (If Gross Income for the last
three years is negative)
1 Total Credit and Investment (net of Specific Provision) of releted month - -
Capital Requirement for Operational Risk (5% of net credit and
2 - -
investment)
3 Risk Weight (reciprocal of capital requirement of 10%) in times 10 10
4 Equivalent Risk Weight Exposure (g) - -
5 Equivalent Risk Weight Exposure [h=f+g] 5,542.60 4,586.57

1 www.sanimabank.co
 Annual Report

Risk Weighted Exposure for Market Risk

15th July 2020
Form No. 7
NPR In NPR
Open Position (NPR In Open Position Relevant Open
S.No. Currency Previous Year
(FCY) million) (NPR) Position

1 INR 1.60 3,652,540,920 3,652,540,920 3,091,767,217

2,281,768,495.81
2 USD 191,392.30 120.55 23,072,342 23,072,342 60,486,872
3 GBP (10,539.31) 151.36 (1,595,230) 1,595,230 647,945
4 EUR 23,563.35 136.98 3,227,590 3,227,590 434,818
5 THB 125,350.00 3.79 475,077 475,077 119,321
6 CHF 15,230.00 128.10 1,950,963 1,950,963 695,844
7 AUD 94,851.50 84.51 8,015,426 8,015,426 1,232,861
8 CAD 21,849.71 88.73 1,938,616 1,938,616 1,158,521
9 SGD 114,819.57 86.61 9,943,949 9,943,949 9,094,333
10 JPY 17,403,021.00 1.12 19,543,593 19,543,593 12,950,496
11 HKD 59,960.00 15.57 933,577 933,577 177,126
12 DKK 73,550.00 18.54 1,363,617 1,363,617 114,506
13 SEK 28,160.00 13.23 372,416 372,416 118,334
14 SAR 120,422.00 32.15 3,870,965 3,870,965 3,482,885
15 QAR 62,575.00 33.15 2,074,048 2,074,048 1,077,468
16 AED 109,636.03 32.69 3,583,454 3,583,454 1,551,606
17 MYR 43,984.00 28.47 1,252,224 1,252,224 1,140,835
18 KRW 1,453,000.00 0.10 145,009 145,009 85,886
19 CNY 238,564.49 17.30 4,125,973 4,125,973 2,569,843
20 KWD 3,486.75 391.99 1,366,771 1,366,771 714,770
21 BHD 1,680.00 319.86 537,365 537,365 447,775
22 - - -
23 - - -
(a) Total Open Position 3,738,738,664 3,741,929,124 3,190,069,262
(b) Fixed Percentage 5% 5%
(c) Capital Charge for Market Risk (=a×b) 187,096,456 159,503,463
(d) Risk Weight (reciprocal of capital requirement of 11%/10%) in times 9.09 10.00
(e) Equivalent Risk Weight Exposure (=c×d) 1,700,706,787 1,595,034,631

1 www.sanimabank.co
 Annual Report

1 www.sanimabank.co
 Annual Report

1 www.sanimabank.co
 Annual Report

Sanima Capital
Statement of Financial Position
As on 15th July 2020 Amount In NPR.
Particulars Note Current Year Previous Year
Assets
Cash and cash equivalent 4.1 239,538,743 287,585,801
Due from Nepal Rastra Bank 4.2 - -
Placement with Bank and Financial Institutions 4.3 69,000,000 -
Derivative financial instruments 4.4 - -
Other trading assets 4.5 88,039,824 88,229,204
Loan and advances to B/FIs 4.6 - -
Loans and advances to customers 4.7 - 45,348
Investment securities 4.8 33,537,710 31,747,682
Current tax assets 4.9 1,540,196 2,234,297
Investment in susidiaries 4.10 - -
Investment in associates 4.11 - -
Investment property 4.12 - -
Property and equipment 4.13 4,944,587 6,527,100
Goodwill and Intangible assets 4.14 740,858 1,170,399
Deferred tax assets 4.15 - 820,696
Other assets 4.16 14,286,159 15,113,192
Total Assets 451,628,077 433,473,719
Liabilities
Due to Bank and Financial Instituions 4.17 - -
Due to Nepal Rastra Bank 4.18 - -
Derivative financial instruments 4.19 - -
Deposits from customers 4.20 - -
Borrowing 4.21 - -
Current Tax Liabilities 4.9 - -
Provisions 4.22 49,160 102,261
Deferred tax liabilities 4.15 936,020 -
Other liabilities 4.23 175,231,368 148,722,570
Debt securities issued 4.24 - -
Subordinated Liabilities 4.25 - -
Total liabilities 176,216,548 148,824,831
Equity
Share capital 4.26 250,000,000 250,000,000
Share premium - -
Retained earnings 23,308,271 36,587,339
Reserves 4.27 2,103,258 (1,938,451)
Total equity attributable to equity holders 275,411,529 284,648,888
Non-controlling interest - -
Total equity 275,411,529 284,648,888
Total liabilities and equity 451,628,077 433,473,719
Contingent liabilities and commitments 4.28 - -

As per our report on even date

Mandip Luitel Tej Bahadur Chand Arun Raut, FCA
Acting CEO Chairman Partner
S.R. Pandey & Co.
Directors Chartered Accountants
Nischal Raj Pandey Pawan
Kumar Acharya Saroj
Guragain
Rajendra Kafle Professional
Date: October 4, 2020 Independent
Place: Naxal, Kathmandu
Dr. Gopal Prasad Bhatta
Professional Independent

1 www.sanimabank.co
 Annual Report

Sanima Capital
Statement of Profit or Loss
For the year ending on 15th July 2020 Amount In NPR.
Particulars Note Current Year Previous Year
Interest income 4.29 18,647,140 15,752,809
Interest expense 4.30 - 1,285,803
Net interest income 18,647,140 14,467,006
Fee and commission income 4.31 36,142,771 39,947,345
Fee and commission expense 4.32 1,279,003 1,733,549
Net fee and commission income 34,863,768 38,213,796
Net interest, fee and commission income 53,510,908 52,680,802
Net trading income 4.33 (771,782) 22,808,880
Other operating income 4.34 - 356,941
Total operating income 52,739,126 75,846,624
Impairment charge/(reversal) for loans and other losses 4.35 - -
Net operating income 52,739,126 75,846,624
Operating expense
Personnel expenses 4.36 13,216,980 15,490,612
Other operating expenses 4.37 7,675,211 8,037,647
Depreciation & Amortisation 4.38 1,798,881 1,879,283
Operating Profit 30,048,054 50,439,082
Non operating income 4.39 - 1,273,856
Non operating expense 4.40 245,747 173,195
Profit before income tax 29,802,307 51,539,742
Income tax expense 4.41
Current Tax 7,163,076 17,068,166
Deferred Tax 1,042,678 (27,746)
Profit of the year 21,596,553 34,499,322
Basic earnings per share 8.64 13.80
Diluted earnings per share 8.64 13.80
As per our report on even date
Mandip Luitel Tej Bahadur Chand Arun Raut, FCA
Acting CEO Chairman Partner
S.R. Pandey & Co.
Directors Chartered Accountants
Nischal Raj Pandey Pawan
Kumar Acharya Saroj
Guragain
Rajendra Kafle Professional
Date: October 4, 2020 Independent
Place: Naxal, Kathmandu
Dr. Gopal Prasad Bhatta
Professional Independent

1 www.sanimabank.co
 Annual Report

Sanima Capital
Statement of Other Comprehensive Income
For the year ending on 15th July 2020 Amount In NPR.
Particulars Note Current Year Previous Year
Profit of the year ending on 15 July 2020
th
21,596,553 34,499,322
Other comprehensive income, net of income tax
a) Items that will not be reclassified to profit or loss
Gains/(losses) from investments in equity instruments measured at fair value 1,790,029 (540,386)
Gain/(losses) on revalution - -
Actuarial gains/(losses) on defined benefit plans 590,097 (590,097)
Income tax relating to above items (714,038) 339,145
Net other comrehensive income that will not be reclassified to profit or loss 1,666,088 (791,338)
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 comrehensive income that are or may be reclassified to profit or
- -
loss
c) Share of other comprehensive income of associate accounted as per
- -
equity method
Other comprehensive income for the period, net of income tax 1,666,088 (791,338)
Total comprehensive income of the year ending on 15th July 2020 23,262,641 33,707,984

Total comprehensive income attributable to:

Equity holders of the Company 23,262,641 33,707,984
Non-controlling interest - -
Total comprehensive income of the year ending on 15th July 2020 23,262,641 33,707,984

Profit attributable to:

the controlling entity 21,596,553 34,499,322
Non-controlling interest - -
Total 21,596,553 34,499,322

Earning per share

Basic earnings per share 8.64 13.80
Annualized Basic earnings per share 8.64 13.80
Diluted earnings per share (Annualized) 8.64 13.80
As per our report on even date
Mandip Luitel Tej Bahadur Chand Arun Raut, FCA
Acting CEO Chairman Partner
S.R. Pandey & Co.
Directors Chartered Accountants
Nischal Raj Pandey Pawan
Kumar Acharya Saroj
Guragain
Rajendra Kafle Professional
Date: October 4, 2020 Independent
Place: Naxal, Kathmandu
Dr. Gopal Prasad Bhatta
Professional Independent

1 www.sanimabank.co
 Annual Report

Sanima Capital
Statement of Cash Flows
For the year ending on 15th July 2020 Amount In NPR.
Current Year Previous Year
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 16,435,589 15,752,809
Fees and other income received 37,442,131 41,523,955
Dividend received 2,308,438 319,619
Receipts from other operating activities 8,675 -
Interest paid - (1,285,803)
Commission and fees paid (2,471,378) (1,733,549)
Cash payment to employees (13,984,420) (9,064,700)
Other expense paid (7,540,315) (9,300,992)
Operating cash flows before changes in operating assets and liabilities 32,198,720 36,211,340
(Increase)/Decrease in operating assets
Due from Nepal Rastra Bank - -
Placement with bank and financial institutions (69,000,000) 170,000,000
Other trading assets (6,292,377) (48,928,638)
Loan and advances to bank and financial institutions - -
Loans and advances to customers 46,984 48,857
Other assets 138,856 (507,798)
Increase/(Decrease) in operating liabilities
Due to bank and financial institutions - -
Due to Nepal Rastra Bank - -
Deposit from customers - -
Borrowings - -
Other liabilities 27,706,326 113,688,661
Net cash flow from operating activities before tax paid (15,201,491) 270,512,421
Income taxes paid (6,461,688) (8,411,884)
Net cash flow from operating activities (21,663,179) 262,100,537
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities - -
Receipts from sale of investment securities - -
Purchase of property and equipment (403,475) (324,897)
Receipt from the sale of property and equipment 485,437 -
Purchase of intangible assets - -
Receipt from the sale of intangible assets - -
Purchase of investment properties - -
Receipt from the sale of investment properties - -
Interest received 2,641,479 -
Dividend received 3,392,680 -
Net cash used in investing activities 6,116,121 (324,897)
CASH FLOWS FROM FINANCING ACTIVITIES
Receipt from issue of debt securities - -
Repayment of debt securities - -
Receipt from issue of subordinated liabilities - -
Repayment of subordinated liabilities - -
Receipt from issue of shares - -
Dividends paid (32,500,000) (20,000,000)
Interest paid - -
Other receipt/payment - -
Net cash from financing activities (32,500,000) (20,000,000)
Net increase (decrease) in cash and cash equivalents (48,047,058) 241,775,640
Cash and cash equivalents at the beginning of the period 287,585,801 45,810,161
Effect of exchange rate fluctuations on cash and cash equivalents held - -
Cash and cash equivalents at end of year 239,538,743 287,585,801
As per our report on even date
Mandip Luitel Tej Bahadur Chand Arun Raut, FCA
Acting CEO Chairman Partner
S.R. Pandey & Co.
Directors Chartered Accountants
Nischal Raj Pandey Pawan
Kumar Acharya Saroj
Guragain
Rajendra Kafle Professional
Date: October 4, 2020 Independent
Place: Naxal, Kathmandu
Dr. Gopal Prasad Bhatta
Professional Independent

1 www.sanimabank.co
 Annual Report

Sanima Capital
Statement of Changes in Equity
For the year ending on 15th July 2020
Amount In NPR.
Attributable to equity holders of the Capital
Non -
Exchange Controlling Total Equity
Share General Equalisation Regulatory Fair Value Revaluation Retained Other
Share Capital Premium Reserve Reserve Reserve Reserve Earning Reserve Total Interest
Reserve
Balance at 16th July 2018 250,000,000 - - - - - - 22,088,017 (1,147,113) 270,940,904 270,940,904
Profit for the year - - - - - - 34,499,322 - 34,499,322 - 34,499,322
Other comprehensive
income, net of tax - - - - - (378,270) - - (413,068) (791,338) - (791,338)
Total comprehensive income
for the year - - - - - (378,270) - 34,499,322 (413,068) 33,707,984 - 33,707,984
Transfer to reserve during the period
- - - - - (1,147,113) - - - (1,147,113) - (1,147,113)
Transfer from reserve during the
year period - - - - - - - - 1,147,113 1,147,113 - 1,147,113
Contributions from and
distributions to owners - - -
Share issued - - - - - - - - - - - -
Share based payments - - - - - - - - - - - -
Dividends to equity holders - - -
Bonus shares issued - - - - - - - - - - - -
Cash dividend paid - - - - - - - (20,000,000) (20,000,000) - (20,000,000)
Other - - - - - - - - - - - -
Total contributions by and
distributions - - - - - (1,525,383) - 14,499,322 734,045 13,707,984 - 13,707,984
Balance at 17th July 2019 250,000,000 - - - - (1,525,383) - 36,587,339 (413,068) 284,648,888 - 284,648,888
Balance at 17th July 2019 250,000,000 - - - - (1,525,383) - 36,587,339 (413,068) 284,648,888 - 284,648,888
Profit for the period ending
th
on 15 July 2020 - - - - - - 21,596,553 - 21,596,553 - 21,596,553
Other comprehensive
income, net of tax - - - - - 1,253,020 - - 413,068 1,666,088 - 1,666,088
Total comprehensive income
for the year - - - - - 1,253,020 - 21,596,553 413,068 23,262,641 - 23,262,641
Transfer to reserve during the period
- - - - - - - - - - - -
Reserve required by MB
Regulations - (2,159,655) 2,159,655 - - -
Corporate Social Responsibility
Reserve - (215,966) 215,966 - - -
Transfer from reserve during the year
period - - - - - - - - - - - -
Contributions from and
distributions to owners - - -
Share issued - - - - - - - - - - - -
Share based payments - - - - - - - - - - - -
Dividends to equity holders - - -
Bonus shares issued - - - - - - - - - - - -
Cash dividend paid/ declared
- - - - - - - (32,500,000) - (32,500,000) - (32,500,000)
Other - - - - - - - - - - -
Total contributions by and
distributions - - - - - 1,253,020 - (13,279,068) 2,788,689 (9,237,359) - (9,237,359)
Balance at 15th July 2020 250,000,000 - - - - (272,363) - 23,308,271 2,375,621 275,411,529 - 275,411,529

As per our report on even date

Mandip Luitel Tej Bahadur Chand Arun Raut, FCA
Acting CEO Chairman Partner
S.R. Pandey & Co.
Directors Chartered Accountants
Nischal Raj Pandey Pawan
Kumar Acharya Saroj
Guragain
Rajendra Kafle Professional
Date: October 4, 2020 Independent
Place: Naxal, Kathmandu
Dr. Gopal Prasad Bhatta
Professional Independent

1 www.sanimabank.co
 ‘Alkapuri’ Naxal, Kathmandu, Nepal
Phone: +977-1-5970033, Fax: +977-1-4428969
Email: sanima@sanimabank.com
www.sanimabank.com