avatar STANDARD CHARTERED PLC Finance, Insurance, And Real Estate

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    Standard Chartered Bank NepalLimited Contents Board of Directors............................... 3 Chairman's StateMENt.................... 4 Director's Report.......................;i.... 6 Auditor's REeport.................................... 11 Balance Sheet. . 12 Profit and Loss Account..................... 14 SCHEAULES......................n 16 Cash Flow Statement … 34 Significant Accounting Policies ……… 35 Notes to Accounts .............................. 37 A Management „43


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    Standard Chartered Bank Nepal Limited Board of Directors Mr. Christopher M, Low (Chairman) Standard Chartered Bank Chief Executive Officer, India Region Sujit Mundul (Director) Shantanu Mitra (Director) Standard Chartered Bank Standard Chartered Bank and General Manager Standard Chartered Bank NepalLimited Sanjeev Agrawal (Director) Niranjan K. Tibrewala (Director) Standard Chartered Bank Nepalese Public Shareholders Company Secretary Auditor Mrs. Rakhi Singh T.R. Upadhyay T.R. Upadhya & Co. Chartered Accountants Annual Report 2004 ©


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    Standard Chartered Bank NepalLimited CHAIRMAN'S STATEMENT Dear Shareholders, We have delivered another good performance for the year ending 15 July 2004 in spite of a challenging environment, both locally and internationally. Against the backdrop of a volatile political situation, challenging security conditions and an uncertain business environmentin the country, the Bank has succeeded in improving our business performance. We continue to deliver superior returns in keeping with our commitment to our shareholders, This has demonstrated the strength of our management, the motivation of our people and the resilience of our business. Our Performance Highlights NetProfit after Tax rose by 6.1% to Rs. 537.8 million compared to Rs. 506.9 million in the previous year. Deposits grew by 12.8% to Rs. 21.2 billion. Risk Assets increased to Rs.6.4billion (up 12.5%) and Priority & Deprived Sector Loans increased to Rs. 867.8 million (up 20.1%). The Balance Sheetsize stands at Rs. 23.6 billion, up by 13.1%. A Resilient Performance An increase this year in the net profit after tax of 6.1% over last year to Rs. 537.8 million was commendable considering the continued difficult conditions in the country, Earning per share was Rs. 143.55 as compared with Rs. 149.30 last year. Return on shareholders’ equity stood at 35.96% as compared to 37.03% last year on accountof increase in capital base. In accordance with statutory requirements, the Board recommends transfer of Rs. 70,183,200 to General Reserve Fund,Rs. 37,464,040 to Capital Adjustment Fund and Rs. 16,449,547 to Exchange Fluctuation Reserve from current year's profits. OurTier 1 and Tier 2 Capital Adequacy Ratios were 13.76% and 1.81% respectively with overall ratio at 15.57%. Ourcapital position is more than adequate and exceeds the current Nepal Rastra Bank's capital adequacy requirement of 11.00% and also exceeds the international norms. A Challenging Environment The financial year (FY) 2003/2004 continued to be a challenging year from the perspective of peace, security and development. In August 2003, the Maoists announced the end of the 7-month long cease-fire and this situation continues. The overall economic climate in the country has not been favourable for growth. However, some progress has been noted in the implementation of economic and legal reforms, accession to the World Trade Organization (WTO), the Poverty Reduction Growth Facility (PRGF) and the NDF 2004 meeting having resulted in a favourable outcome. According to the IMF, growth rates of South Asian countries are expected to be approximately 6.5% in 2004 compared to the actual growth rate of 7% in 2003. Nepalese economy in FY 2003/04 is estimated to have registered a growth rate of 3.6% against 2.7% in FY 2002/2003, agriculture and non-agriculture GDP are estimated to have grown by 3.7% and 3.3% corresponding to 2.5% and 2.7%growth rates registered by these sectors in FY 2002/2003. The favourable growth in the agricultural sector was mainly due to a good monsoon: During the fiscal year 2003/04, despite the fragile economic situation, regular expenditure increased by 4.9% as compared to 13.4% in the corresponding period, while development expenditure has gone up by 21.9% as compared to the sharp decline of 22.1% in the previous fiscal year. Revenue for the governmentincreased only by 10.7% to Rs. 62.3 billion compared to the rise of 11.5% in the previous year, The National Urban Consumer Price Index recorded an increase of 2.0% comparedto the rise of 6.1% during FY 2002/2003, The slow growth in the price index is mainly attributable to the strong supply of agricultural products during the fiscal year. The performance on the trade sector saw a decline from the previous year. Exports grew by 5.6% to Rs. 52.7 billion as comparedto the rise of 6.4% in the previous year. Exports to India increased by 18.2% while export to other countries, which had gone up by 23.8% in the previousfiscal year, declined by 8.6% during the period @ Annual Report 2004


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    Standard Chartered Bank Nepal Limited under review. On the other hand, total imports increased by 11.2% to NPR 139.1 billion compared to the rise of 15.8%in the previous year. The gross foreign exchange reserves of the banking system in Mid-July 2004 reached Rs. 129.9 billion, enough to cover merchandise imports of 11.2 months Throughthe period of FY 2003/2004, the Nepali Rupee appreciated by 0.80% against the US Dollar, consequent to a similar appreciation in the Indian Rupee (against USD) with which the Nepali Rupee hasa fixed parity of 1:1.6 During the current fiscal year(i.e. 2004/2005) the GDP is expected to grow at 3%, which will be lower than the precedingfiscal year due to the continuation of the internalstrife, and costs arelikely to escalate especially due to the steep rise in internationaloil prices. Corporate Governance There have beensignificant changes in the shareholding pattern of the Bank and in the Board sincelast year. On 25 May an Extraordinary General Meeting (EGM) was convenedat the requestof ourjoint venture partner Nepal Bank Limited. At this EGM the Articles and Memorandum of the Bank were amended. Subsequentto the reporting period Nepal Bank Limited, our promoter partner has divestedits entire (33.341%) shares held byit of our Bank. Out of total shares held by NBL, 8.341% share have been sold to the general public as per the provision of Memorandum of Association and Articles of Association of the Bank, 25% promoter's category share has been sold to Standard Chartered Bank, UK with the approval of Nepal Rastra Bank. The 186th Board Meeting of Standard Chartered Bank Nepal Ltd. held on 19 August 2004 unanimously approved the transter of Nepal Bank Limited's shares in the name of SCB UK. Now, the Standard Chartered Group holds 75%and the Nepalese public hold 25% shares in Standard Chartered Bank NepalLimited.In this regard, | thank the Nepal Rastra Bank and other regulatory authorities of Nepal for their continued support. Currently, Mr. Sujit Mundul, CEO Nepal, Mr. Shantanu Mitra, Mr. Sanjeev Agrawal and |, Christopher Low, represent the Standard Chartered Group on the Board of Standard Chartered Bank Nepal. Mr. Shantanu Mitra replaced Mr. David Proctor, with effect from 23 March 2004. Mr. Niranjan K. Tibrewala, Public Director was elected to the Board by a majority of the public shareholders on 8 January 2004 at the 17th Annual General Meeting of the Bank. The Board Members would like to thank Mr. Craig McAllister and Mr. Tulak B Ranafor their valuable contribution to the success of the Bank during this yeartill 19 August 2004. We also thank Nepal Bank Limited for their long partnership with us. They have been a valuable and committed partner for the past 18 years and played an important part in the Bank's development during this period. Our Stakeholders Stand Committed On behalf of the Board | would like to thank all our stakeholders for their commitment to Standard Chartered Bank Nepal. It is the efforts, dedication and managementdiscipline of our staff that has played a key role in making the Bank what weare today. Our shareholders are our constant source of encouragement and we are committed to continue to strive for greater performance to ensure them of a distinctive investment. Operating under the very high governance standards of the Standard Chartered Group helps us conduct our businessefficiently with a firm control on risks. We thank the Groupfor their continuous guidance and counsel in this area. His Majesty's Government, the Ministry of Finance and the Nepal Rastra Bank's continuousefforts to bring about improvementsin the country's banking and financial industry is noteworthy and their support has beena critical factor for the soundness of our business. Our customersare at the heart of our business and without them and their trust, we would not be the Bank we are today - Leading the Way in Nepal and aspiring to be the World's Best International Bank. . In conclusion - in 2004, we have achieved goodfinancial results and we are determined to deliver again in 2005. (ae Christopher M. Low Chairman Annual Report 2004 (E)


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    Standard Chartered Bank Nepal Limited DIRECTORS' REPORT The Directors presenttheir report together with the Balance Sheet and Statementof Profit and Loss for the year ended 15 July 2004, The report is in conformity with the provisions of the Company Act, 1997 and the provisions of the Nepal Rastra Bank. The Bank is pleased to announce that despite an unstable political situation, law-and order problems and negative business sentiments prevailing in the country during the year, your bank hasregistered an impressive growth of 13.10% on Balance Sheet size, 12:8% on Deposits and 12.5% on Risk Assets. Net Profit registered a growth of 6.1% during the yearto:'537.80M from Rs. 506.93M in the preceding year. In spite of the growth in risk assets during the year under review, the Bank's overall General Loan Loss Provision reduced by 7% from Rs. 304.33 Mto Rs. 283.62 M dueto effective credit risk management and recoveries of past dues. The ratio of Non-performing credit to total credit has come down fron 1.97% to 1.83%, which is amongst the bestin the industry. The provisions made are adequate lo cover all the potential credit losses of the Bank as of the balance sheet date. After appropriation to General Reserve Fund (Rs. 70.18 million), Capital Adjustment Fund (Rs. 37.46 million), transfer to Exchange Fluctuation Reserve (Rs. 16.45 million) and proposed dividend (Rs. 412.10 million), total retained earnings as at 15 July 2004 stood at Rs. 217.58 million, Wecontinue to support the “Priority Sector” industries of the country. “Priority Sector” (including Deprived Sector) lending stood at a level of Rs. 868M as at the close ofthis financial year. We also continue to direct our lending to assist lower income eamers classified by Nepal Rastra Bank as the “Deprived Sector". The Bank has been contributing significantly to the nation’s developmentby notonly lendingdirectly to these specific sectors but also by promoting and extending wholesale finance to a number of rural development banks and NGO's working in the field of micro finance. The Bank continues to provide loans to army pensioners to invest in income generation activities like farming, livestock, poultry, etc. Financial Results In Rs. 000's 15 July 2004 16 July 2003 % Change Operating Profit (Before Provisions and Tax) 797,109 717,493 11.1% Transfer to General Loan Loss Provision 23,517 2,339 905.4% Provision for Tax 235,798 208,222 13.2% NetProfit After Provision and Tax 587,800 506,932 6.1% Transfer lo Statutory Reserves 70,183 - — Transfer to Capital Adjustment Fund 37,464 33,955 10.3% Proposed Dividend 412,104 373,504 10.3% Higherinterest income from investments and better trading gains realised on foreign currency exchange contributed to the increase of our operating profit by 11.1% as compared to last year. Representation As at 15 July 2004 the Bank maintained 13 points of representation, 9 branches and 4 extension counters. Our 9 online, full service ATMs in Kathmandu and Pokhara continue to provide services to our customers. Owing to growing security concerns we have closed two of our branches at Argaun and Duhabi subsequentto the reporting period. Domestic and International Factors Affecting Business The Country has undergone a rough year, Whereas therest of the Asia region has recovered from the shocks of SARS and Iraq war, Nepal has been plagued by political uncertainty and mounting insurgency. Tourism, an important aspect of the economy, however has shown somesigns of rebound, despite the occasional ‘bandhs' and disruptions caused by the street protests of the agitating political parties. The impact of surging globaloil prices has not been felt in total by the economy, as the Government has beenreluctant to pass on the burden by way of price hikes in petroleum products. Business sentiment remains dampened. Despite the very difficult market conditions, we have managed to achieve better overall performance. The focus has been to emphasize on our prudent managementpractices, which include effective interestrisk management, cost managementand credit risk management The breakdownof peace talks with the Maoists and attendant ceasefire on two occasions has madethe security andpolitical situation in the Country fragile. The economy however has shown a certain amountof resilience in terms of GDP growth of 3.6%. There has been a huge build up ofliquidity in the Banking system as a result of incteased remittance flows with inadequate sterilisation measures by the Monetary authorities. The pressure on interest margins, continuing lack of safe investment opportunities, increasing level of Non Performing Assets andloanloss provisioning with not much growth in trade volumes, has meanta highly competitive environment leading to an adverse effect.on profitability of banks. It has been a tough challenge for your Bank's managementto keep a focus on growing the bottom line in this environment. © Annual Report 2004


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    Standard Chartered Bank Nepal Limited Corporate & Institutional Business This has been a difficult year for our Corporate & Institutional customers. The focus has been to keep a close watch on the credit quality of our portfolio. With a slight resurgencein Tourism related industries, the Bank has been able to successfully restructure a significant problem exposure as well as see some improvementin thefinancial health of this sector. There has. been insignificant amountof fresh, provisioning even in thesedifficult times, which is a testimony to the quality of our credit portfolio. This isa result of the rigorous discipline with which active monitoring and discussions with customers have been carried out to mitigate the Bank's vulnerability on related exposures. The Bank has been able to capitalise on opportunities presented by international trade transactions undertaken by State owned enterprises. Bringing in the expertise of the Standard Chartered Groupin international trade, we have been able to again provide a structured solution to facilitate the sugar export of 9000 Metric Tonnes to European Union from Nepal, a deal of national importance: During this year we launched two products that will be a big value add to our corporate customers banking needs: Chequewriter and Quick Payment Services. Despite a very difficult trading environment, depressed rates in local market due to excessive liquidity and lack of good lending opportunities, your bank has been able to maintain revenues from this segment and reduce this year's provisioning requirement on non-performing assets. The Bank has been successful in nurturing a healthy risk asset portfolio with a relentless effort on maintaining sound credit quality and has demonstrated the ability to maintain ¡ts business levels amidst stiff competition. Consumer Banking In Consumer Banking we have continued to build market share and produced strong revenue growth, which is one of the major driving factors for the success of our Bank. It is our constant endeavor to understand our customers and bring to them products and services suitable to their needs. As a result of this, to meet the various personal financial needsje. for social obligations, for pursuing higher education, for purchase of consumer durables etc of salaried individuals & professionals we introduced a new product called Personal Loans, In order to cater to customers who receive inward remittances andto facilitate efficient receipt of their funds, we have entered into an agreement with CG Finco to: offer the Western Union Money Transfer from our franchise. Similarly we have been successfully helping our brave soldiers who fought and were taken prisoners in the Far Eastern War in managing the compensation given to them by the British Government. For the ease and safety for our customers we launched the Electronic Fund Transfer Point Of Sale facility by which now our customers need not carry cash and can make payments for their purchases by using their ATM cardsdirectly at 50 merchantoutlets in Kathmandu. Owing to the vast spread of our merchant network, our credit card acquiring business has performed’ satisfactorily. The number of credit cards issued by Us has seen a steady Increase: Our Home Banking service launchedlast year to provide services to our valued customers at their door step hasfinally taken full shape and is delighting customers in this target segment. Owing to the success and value add to our customers from our Xtra Banking, introduced in our Kantipath Branch in 2002, we have recently extended this service from our Lalitpur Branch. With customers Understanding the value and finding our real time, on line ATMs the most convenient for their transactions, transactions at our ATMs are consistently increasing. Our Home Loan product, which was introduced a few years back based on the need of our customers and the market, continues to be very well received by the market and the portfolio has been’ growing steadily, As’a result of our constant effort to improvise on our products, to meet our valued customers and the market's ever changing needs,in this year we launched a sub-product called Home Advantage. This product allows homeowners to take care of their variousfinancial needs by borrowing fram the Bank against the security of their homes. The Auto Loan product continues to grow at a steady andsatisfactory rate. To complementthe efforts by the Government to replace 20 years old taxis and two stroke tempos, we have financed around 500 taxis. Weaim to be the ‘Right Partner’ and believe we can succeed by helping our customers realize their goals and aspirations. Wewill continueto strive to provide truly international standard services to our customers for which, our aspiration is to meet and exceed our customer's expectations and to improve our services we havea well-structured process in place to respond to our customers’ feedback and complaints, which we truly value. In addition to introducing new products to suit the need of our wide range of customers, we will continue to support and drive our Auto Loan and Home Loan products. The safety and security of our customers and staff is very important for us. Owing to growing security concerns we have closed two of our branches at Argaun and Duhabi subsequent to the reporting period. We are however constantly looking for opportunities to grow our footprints in a sustainable and profitable manner in the days ahead, Know Your Customer In early March 2003 the Bank, as part of Standard Chartered Groupinitiative, launched the project to implement Know Your Customer (KYC) by developing new risk based standards relating to information that we need to maintain on dur customers. These standards werefirst implemented for rectifying deficiencies in the KYC data of our existing customers and embedded in the requirements of our new account opening procedures. Annual Report 2004 @


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    Standard Chartered Bank Nepal Limited The objective of this initiative was to understand the drivers of our customer's business that would enable us to develop highly customised andeffective solutions for them. It also links into the global drive to stampoutrisk of money laundering. Money laundering is the process by which banks are Used as vehicles to disguise or "launder" the proceeds ofcriminal activity, Such activities undermine a bank'sintegrity, damageits reputation, deter honest customers and expose a bank to severe sanctions. We have adopted policies and procedures designed to protect ourselves from doing business with customers involved in undesirable activities. Needless to mention that KYC had been difficult and challenging project, we achieved excellent results, despite the very low Anti Money Laundering (AML) awareness amongst our customers andlack of AML regulations in our country. Human Resources Wecould not be ‘The Best Bank’ without the mosttalented, dedicated and engaged people within the organization. Annually the Standard Chartered Group conducts The Gallup “Q12 survey” which measures staff engagement at work. In the survey conducted in October 2003 our Bank in Nepal was the second highest within Group, with a score of 4.43. A committed and engaged workforce is key for us to continue to be ‘The Best Bank’ in the country. Thus the management and the Groupcontinueto invest in programs and processesthat help in this regard. Apart from the many ongoing in-house trainings held amongst staff on a regular basis, there were 34 special learning programs(class room lectures and on the job work trainings); equivalent to 962 man days. Staff have been given opportunities to participate in other events of their interest, such as sports and community work. A team from the Bank has beenparticipating in a corporate cricket tournament, in February fourof our staff got the opportunity to participate in the Standard Chartered Mumbai Marathon. Because of the commitment exhibited by Smriti Gurung of the Credit Card department towards the community, she was given 3 months sabbatical leave to work wilh an NGOofher choice and she worked with Maiti Nepal. With a view to sharing best practices and to give ourstaff an opportunity to develop their skills and knowledge with a wider exposure, from this yearthe Bank started the "Exchange /Swap” program wherebyslaff from Nepal are sent to Group centres for a short term secondment, and in turn, the Bank gets senior officers from the Group to come and work here. This year Senior Managers of Credit Risk Management from Nepal and India swappedtheir positions for a few months. Such programs are expected to increase in the coming years. The Bank's recruitment and annual performance process and standards have been greatly enhanced. The Bank encourages and follows a strong “performance culture” for the development andretention ofits talented resources. High performers are recognized and rewarded appropriately. Spot awards and value certificates are awarded on a regular basis to staff making significant contributions and exhibiting exemplary behaviours. As at 15 July 2004,full time equivalent staff in the Bank totalled 317 as compared to 275 last years. The Bank provides equal opportunities to both genders: and our current male to female ratio is 51:49. Our focus continues to be on making Standard Chartered Bank Nepal an ‘Employer of Choice", Corporate Social Responsibility The Bank is committed to the communities and environmentin which we operate. The Bank believesin delivering shareholder value in a socially, ethically and environmentally responsible manner. Corporate Social Responsibility is the mainstay of our values. The Bank's focusin this area is in the field of health, education, youth and environment. * Living with HIV The Bankbelieves that we have both a moral duty and a business need to confront the worst pandemic the world has ever seen. Ignorance and discrimination are a real barrier to tackling the diseases in many countries, so the Bank has made education a priority. Our ‘Living with HIV’ a peer-to-peer education program was developed by the Group with this in mind and has been communicated to all employees of the Bank last year. On the World AIDS Day to:demonstrate our care and understanding for people suffering with HIV/AIDS and to spread awareness of this cause all the staff of the Bank wore a Red Ribbon and some of the staff visited Maiti Nepal and distributed clothes and food to women and children: To carry the inspiring stories of Social Volunteers Against AIDS (SOVAA)to a wider audience with a hope to generate greater understanding of AIDS, Standard Chartered Bank NepalLtd. formed a partnership with Save the Children UK and organized a photographic exhibition in February 2004. To give continuity to this communication, under this partnership Standard Chartered Bank NepalLtd. has displayed each of these photographic testimonies in its branches across the country. The Bank sponsored a charity concert by the Brigade of Gurkhas in December 2003andthe British Gurkhas committed to donate someof the proceeds for the Bank's HIV/AIDSinitiative. The Bank and the British Gurkhas Nepal have jointly set up a recreation room at the Maiti Nepal clinic with this fund so as to bring some joy in the life of the patients at the clinic especially those living with HIV/AIDS. Understanding that there is still much to do in the battle against the worst pandemic that the world has ever seen Standard Chartered decided to celebrate its own AIDS. Dayglobally, Standard Chartered AIDS Day on 24 June 2004. On this day our Bank took the initiative of spreading awareness by all staff wearing the Red Ribbon, and encouraging customers coming to © Annual Report 2004


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    Standard Chartered Bank Nepal Limited the Bank to wear the same. The Bank also used this opportunity to share information on HIV/AIDS and promote the importance of voluntary counselling & testing by sending out flyers with this information to all customers and staff through their statements, At Bhairahawa on this occasion the Bank donated a computer to Namuna Integrated Development an NGOthat focuses on promoting HIV/AIDS awareness and provides free counseling, for use in their library. * Seeing is Believing Out of the 45 million blind people in the world today, 80% of cases could be prevented or cured with right knowledge or treatment. One of the biggest causesof blindness, cataract can be treated by a very reasonably small amount of money. With this in mind Standard Chartered launched its ‘Seeing is Believing’ initiative globally last year. On the occasion of World Sight Day in 2003 a micro-surgical Eye Camp was conducted from 9th to 11th October 2003, by Tilganga Eye Centre (TEC) with the help of Nepal Red Cross Kavre Branch at Panauti, Kavre. Under Standard Chartered Bank Nepal's initiative ‘Seeing is Believing! for restoration of eyesight to needy people in the country, 138 cataract operations were conducted at this Camp byfinancial contributions from the employees of the Bank. The Bank participated in an eye camp in the second week of January '04 conducted by Tilganga Eye Center and the Rotary Club in Hetauda by sponsoring 287 lenses. With our contributions we wereinstrumentalis restoration of sight to 287 people. The Bank organized a Walkathon in March 04 for its ‘Seeing is Believing’ initiative. The staff of the Bank sought sponsors for their walk of 5 Kms from our Head Office at Naya Baneshwor to our Branch in Kantipath. The funds collected from this initiative will be used in the area of prevention of blindness. As the next phase of the ‘Seeing is Believing’ initiative the Standard Chartered Group has set itself a larget of restoration of sight to 1 million people by 2006. For this the Bank has to raise funds of more than USD 6 million. Youth & Education » VISCOSS-Nepal Under the Village School-College Students Scholarship Project - Nepal, (VISCOSS-Nepal) we have continued our scholarships to 15 needy and deserving students (including both boys & girls) of class 7 to class 10 of Shree Mahendra Shanti High School (SMSHS) in Balkot, Bhaktapur. * Kamlarni Scholarship Programme The Bank continues its sponsorship of education tor Tharu girls in the Dang district under the Kamlami Scholarship Programme being undertaken by UNWO and executed by an NGO, Friends of Needy Children. The Bank also sponsored a fund raising event organized by UNWOfor the education of underprivileged girls and women. » Donation of Computers The Bank has continued to support education for needy children by donation of computers to many needy organizations, especially to government schools where the financial condition of the school and the children is weak. 10 computers were donated to Sisneri Madhyamik Vidyalaya, 15 computers to Tal Barahi Secondary School, Pokhara and 3 computers to Bhutan Devi Madhyamik Vidyalaya, Hetauda. These schools were able to begin computer education in their schools only due to these computers donated by the Bank. The Bank also donated 5 computers to Patan Community Based Rehabilitation Organization. This NGO, dedicated for children with disability both physical and mental will use these computers for educational purposefor the physically disabled children, Sharing Best Practices * Workshop on Country Risk With the aim of sharing good practices and so as to help in the process of establishing a sound financial system in the country a very worthwhile initiative was taken by the Bank. A half-day workshop was organized for the Regulators in which Laurence Julius, Regional Manager of Country Risk, Standard Chartered Group shared his knowledge and expertise on Country Risk. Environment * Launch of the Green Circle Program Women Environment Preservation Committee (WEPCO), an NGO hastaken an initiative to involve private sector, with their active participation, to help effectively manage the issue of management of solid waste, which has led to environmental pollution, public health hazards and adverse effects on the urban economy by making cities unsuitable for tourists. This program encourages organizations to adoptthe practice of Reduce, Reuse and Recycle especially in the area of managing their waste paper. The Bank supported WEPCO for the launch of the Green Circle program, which is a worthwhileinitiative towards preservation of nature and environment. * Community Week The Bank dedicated one whole week in September 2003 to the community. During this week various activities were taken up by the Bank and the staff together to serve the community. Annual Report 2004 ©


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    Standard Chartered Bank Nepal Limited With our focus on youth and education and to share best practices, students from 2 governmentcolleges in Kathmandu and 4 colleges in Pokhara wereinvited for educational tours of the Bank, Similarly the Bank invited students from 4 colleges in Kathmandu to attend a workshop on HIV/AIDS, whereby our champions shared the Bank's education and awareness program ‘Living with HIV’ with them. Wetook this opportunity for caring for the old and destitute. With contributions from the Bank andstaff we took initiatives for orphans, street children and old and needy people. Donationsin the form of clothes and food were made to 2 orphanages. in Buddhanilkantha, warm clothes were distributed to all inmates at the Pashupati Old home, 200 street children were provided with food and 2 sewing machines were donated to the school for Bal Bhojan, Bal Sikshaa. Staff of the Bank personally visited all these places and donated these items, During this week some initiatives were also taken in the area of health. Staff in Kathmandu donated blood through Nepal Red Cross Society. The Biratnagar Branch organized a free dental and health camp for children at Duhabi, from which about 200 under-privileged and needy children benefited by receiving free check from some of the best doctors in that area and also received free medicines. Staff from our Pokhara Branch visited the Green Pasture Hospital, and spent some time with over 70 patients undergoing leprosy treatment and distributed to them some fruits, food and juice. The staff of the Hetauda Branch used this opportunity to visit patients at Hetauda Hospital and distributed biscuits, fruits and juice to them. Awards and Achievements ‘Best Presented Annual Report Award’ It is a matter of great pleasure and pride that the Annual Report of your Bank has won for the second consecutive year the award of the "Best Presented Accounts for the Financial Year 2002/2003". This is awarded by Institute of Chartered Accountants of Nepal (ICAN) with the objective to encourage the Nepalese corporatesto prepare financial statements giving maximum disclosures to information users. Prime Minister Mr. Sher Bahadur Deuba presented this award at the inauguration of a seminar organized by South Asian Federation of Accountants. ‘Top 10 Awards for Business Excellence’ — ‘Best Company — Financial Institutions’ In December 2003, it was a matter of great pride for your Bank to receive the award of ‘The Best Company-Financial Institutions’ from a leading business magazine ‘The boss' and for CEO Mr. Sujit Mundul to be awarded the award of the Top 5 CEOs, These were judged by a highly eminent and respectable panel of judges. At a special function organized by Speciality Media Pvt. Ltd to award the ‘Top Ten Awards for Business Excellence’ the then Prime Minister Surya Bahadur Thapa gave away these awards. This award is the first of its kind in Nepal andis a tribute to the spirit of entrepreneurship and business. Future Plans Nepal's economic growth is expected to remain stagnantin the fiscal year 2004/2005 due to the current problems continuing. Inflation is expected to increase mainly due to rise in international oil prices. Some improvementin the agriculture sector could be expected due to favourable monsoon. Tourism, a mainstay of the economy, which had shownsigns of improvement this year, could be affected as a result of continuing adverse publicity. The country is in the throes of political uncertainty with a growing insurgency problem. Hopes are being pinned on the current multiparty Government to initiate meaningful peace-talks as well as the long-pending developmentprograms.Till this happens, business confidence is expected to be low with new investments remaining scarce. Against this backdrop the economyis likely to witness a stagnantposition In this state of the economy, it would not only be very difficult for your Bank to grow the quality risk assets but also maintaining the high quality of your Bank's risk portfolio would be a challenging task. Our main objective would be to protect our revenue lines by providing solutions to our customers through value added andstructured products at competitive pricing. Wewill continue to drive our auto loan and home loan products, ATMs, debit cards etc, optimise returns on fixed rate investments and foreign exchange management, and keep the attention on maintenance of high portfolio quality and effective cost management. We remain committed to be ‘The Right Partner’ to all our stakeholders. We will continue to invest in our people, processes and systems so as to improve our quality of service in our endeavour to provide customer delight. For our communities we will be seen making a real difference with longer-term projects in this area. We will consciously drive and maintain our high level of governance. For our shareholders we shall drive to continue providing them with superior returns. Auditor T.R. Upadhya & Company, Chartered Accountants, appointed by the 17th Annual General Meeting of the Bank held on 8th January 2004 will retire as Auditor at the ensuing meeting andwill be eligible for reappointmentin accordance with the Bank andFinancialInstitutions Ordinance, 2061. Dividend/Bonus The Board hereby recommends payment of a cash dividend for the year ended 15 July 2004 at the rate of one hundred and ten rupees per share. @ Annual Report 2004


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    Standard Chartered Bank NepalLimited AUDITORS REPORT TO THE SHAREHOLDERS OF STANDARD CHARTERED BANK NEPALLTD. INDEPENDENT AUDITOR'S REPORT We have audited the accompanying Balance Sheet of Standard Chartered Bank Nepal Limited, as of 15 July 2004 (Corresponding to 31 Ashad, 2061), the related Profit and Loss Account and the Cash Flow Statement for the year then ended. Thesefinancial statements are the responsibility of the management of the Bank. Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted ouraudit in accordance with Nepal Standards on Auditing. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whetherthefinancial statementsarefree of material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As per the requirementof the Companies Act, 2053 and Bank and FinancialInstitution Ordinance, 2061 we also report that: a) we have obtained information and explanations, which, to the best of our knowledge andbelief, were necessary for the purpose of our audit; b) in our opinion, proper books of account as required by law have been kept by the Bankso far as appears from our examination of such books; €) in our opinion, the returns received from branches of the Bank were adequate for the purpose of the audit; d) in our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by this report have been preparedin the format prescribed by Nepal Rastra Bank and are in agreementwith the books of account maintained by the Bank; e) in our opinion, so far as appeared from our examination of the books, the Bank has maintained adequate capital funds and adequate provisions for possible impairment of assets in accordancewith the directives of Nepal Rastra Bank; f) in our opinion, so far as appeared from our examination of the books, the business of the Bank has been conductedsatisfactorily; g) to the bestof our information and according to explanations given to us and from our examination of the books of account of the Bank necessary for the purpose of our audit, we have not come across cases where Board of Directors or any employees of the Bank have acted contrary to the provisions of law, or committed any misappropriation or caused loss or damage to the Bank and violated any directives of Nepal Rastra Bankor acted in a mannerto jeopardisethe interest and security of the Bank,its depositors andinvestors. In our opinion, the financial statements presentfairly, in all material respects, the financial position of the Bank as of 15 July 2004 (Corresponding to 31 Ashad 2061), the results of operations and its cash flows for the year then ended in accordance with Nepal Accounting Standards, generally accepted accounting standards and comply with the provisions of the Companies Act, 2053 and Bank and Financial Institution Ordinance, 2061. T.R. Upadhyay For and on behalf of Kathmandu T.R. Upadhya & Co. Date : 14 September 2004 (Bhadra 29, 2061) Chartered Accountants Annual Report 2004 @)


  • Page 11

    Standard Chartered Bank Nepal Limited BALANCE SHEET as at 15 July 2004 (31 Ashad 2061) CAPITAL ANDLIABILITIES Schedule "hisYear Previous Year 1, Share Capital 1 374,640,400 339,548,800 2. Reserve and Funds 2 1,121,098,611 1,029,357,807 3. Loans and Borrowings 3 78,282,731 79,163,484 4. Deposit Accounts 4 21,161,441,728 18,755,634,837 5. Bills Payable 5 59,024,854 54,841,675 6. OtherLiabilities 6 847,571,466 652,423,419 Total Liabilities 23,642,059,790 20,910,970,022 Contingent Liabilities Schedule 14 Directors Declaration Schedule 23 Capital Adequacy Schedule 24 Key Indicators Schedule 25 Cash Flow Statement Schedule 26 Significant Accounting Policies Schedule 27 Notes to Accounts Schedule 28 Schedules 1 to 14, 27 & 28 form integral part of this Balance Sheet. Sujit Mundul Robert Green Rakhi Singh GM & Director Director Chief Financial Officer (Alternate to S. Mitra) Date: 14/09/2004 Kathmandu (D Annual Report 2004


  • Page 12

    Standard Chartered Bank Nepal Limited BALANCE SHEET as at 15 July 2004 (31 Ashad 2061) This Year Previous Year ASSETS Schedule Rs. Rs. 1. Cash Balance 7 187,704,879 198,755,114 2. Balance with Banks 8 1,835,458,770 1,913,549,922 3. Money at Call and Short Notice 9 2,218,599,500 1,657,909,750 4. Investments 10 11,360,328,402 10,216,199,007 5. Loans, Advances and Bills Purchased 11 6,410,242,081 5,695,823,521 6. Fixed Assets 12 | 136,234,158 191,710,641 | 7. Other Assets 13 1,493,492,000 1,637,022,067 Total Assets 23,642,059,790 20,910,970,022 As per our report of even date Niranjan K. Tibrewala T.R. Upadhyay Director for and on behalf of T.R. Upadhya & Co. Chartered Accountants Annual Report 2004 (B


  • Page 13

    Standard Chartered Bank Nepal Limited PROFIT AND LOSS ACCOUNT for the period 17 July 2003to 15 July 2004 (1 Shrawan 2060 to 31 Ashad 2061) EXPENSES Schedule: THEYear Previous: Yeat 1. Interest Expenses 15 275,809,176 255,153,942 2. Employees Expenses 16 134,685,130 128,327,977 3. Office Operating Expenses 17 279,693,607 311,972,858 4. Currency Exchange Loss 20 = - 5. Non-Operating Expenses 21 10,755,924 15,529,756 6. Bad Loans and Advances Written Off = - 7. Loan Loss Provision 23,516,644 2,339,564 B. Provision for Staff Bonus 85,954,748 76,083,762 9. Provision for Income Tax 235,792,615 208,222,370 10, Net Profit (Carried Down) 537,800,124 506,932,087 Total 1,584,007,968 1,504,562,316 Schedules 15 to 22, 27 & 28 form integral part of this Profit and Loss Account. PROFIT AND LOSS APPROPRIATION ACCOUNT for the period 17 July 2003 to 15 July 2004 (1 Shrawan 2060to 31 Ashad 2061) This Yı Previous Year EXPENSES Ean wa 1. Accumulated Loss up to Last Year = = 2. This Year's Loss = = 3. General Reserve Fund 70,183,200 = 4. Contingent Reserve = = 5. Bank Development Fund - - 6. Dividend Equalization Fund - - 7. Employees Related Funds = ~~ 8. Interim and Proposed Dividend 412,104,440 373,503,680 9. Issue of Bonus Share = = 10. Special Reserve Fund - - 11. Exchange Fluctuation Reserve 16,449,547 14,351,876 12. IncomeTax relating to Past Periods = - 13. Capital Adjustment Fund 37,464,040 33,954,880 14. Accumulated Profit 217,586,480. 215,987,583 Total 753,787,707 637,798,019 Sujit Mundul Robert Green Rakhi Singh GM & Director Director Chief Financial Officer (Alternate to S. Mitra) Date: 14/09/2004 Kathmandu (D Annual Report 2004


  • Page 14

    Standard Chartered Bank Nepal Limited PROFIT AND LOSS ACCOUNT for the period 17 July 2003 to 15 July 2004 (1 Shrawan 2060 to 31 Ashad 2061) INCOME Schedule ThisYear Previous Year Interest Income 18 1,042,175,628 1,001,359,505 . Commission and Discount 19 198,947,574 215,200,938 3. Currency Exchange Gain 20 273,050,040 232,522,033 4. Non-Operating Income 21 - - 5. Other Income 22 69,834,726 55,479,840 6. Net Loss (Carried Down) - - Total 1,584,007,968 1,504,562,316 PROFIT AND LOSS APPROPRIATION ACCOUNT for the period 17 July 2003 to 15 July 2004 (1 Shrawan 2060 to 31 Ashad 2061) This Year Previous Year INCOME Rs. Rs. 1. Accumulated Profit up to Last Year 215,987,583) 130,865,932 2. This Year's Profit 537,800,124 506,932,087 3. Accumulated Loss = = Total 753,787,707 637,798,019 As per our report of even date Niranjan K. Tibrewala T.R. Upadhyay Director for and on behalf of T.R. Upadhya & Co. Chartered Accountants Annual Report 2008


  • Page 15

    Standard Chartered Bank NepalLimited Schedule 1 : Share Capital and Ownership Previous Year PARTICULARS Rs. 1. Share Capital 1.1 Authorised Capital 339,548,800 a) 10,000,000 Ordinary Shares of Rs. 100 each 339,548,800 1.2 Issued Capital 339,548,800 a) 5,000,000 Ordinary Shares of Rs. 100 each Paid Up 339,548,800 1.3 Paid Up Capital 339,548,800 a) 3,746,404 Ordinary Shares of Rs. 100 each Paid Up E 339,548,800 Note: Out of above Paid Up Capital, Rs. 20,000,000 has been capitalised from retained earnings and Rs. 321,740,780 issued as bonus shares. Share Ownership SHARE CAPITAL PARTICULARS % ee5 zZ % Previous Year 1. Local Ownership 50.00% 187,320,200 | 50.00% 169,774,400 1.1 His Majesty's Government ee = = 1.2 Commercial Banks 33.34%|124,908,900 |33.34%| 113,209,000 1.3 Financial Institutions . o - x = - 1.4 Organized Institutions E E E = 1.5 General Public 16.66% | ) 16.66% 56,565,400 1.6 Others [yn = - 2. Foreign Ownership 50.00% | 487,320;200 50.00% 169,774,400 (Standard Chartered Grindlays Ltd, Australia) | LI Total 374,640,400 339,548,800 Note: 1. None of the General Public Shareholders hold more than 0.5% of the shares of the Bank individually. 2, Subsequent to the Balance Sheet date, shareholding structure of Commercial Banks and General Public under Local Ownership is changed to Commercial Banks as Nil and General Public as 25%. Further under Foreign Ownership, Standard Chartered Bank, UK has been added with 25% shareholding. © Annual Report 2004


  • Page 16

    Standard Chartered Bank Nepal Limited Schedule 2 : Reserve and Funds PARTICULARS This Year Previous Year Rs. Rs. 1. General Reserve Fund 749,280,800 679,097,600 2. Capital Reserve Fund = = 3. Share Premium = = 4. Other Reserve Fund 154,231,331 134,272,624 a) Contingency Reserve = - b) Bank Development Fund - - c) Dividend Equalization Fund = - d) Exchange Fluctuation Reserve 116,767,291 100,317,744 e) Special Reserve Fund - - f) Assets Revaluation Reserve - - g) Other Free Reserves - - h) Proposed Bonus Share/Capital Adjustment Fund 37,464,040 33,954,880 5. Accumulated Profit/(Loss) 217,586,480 215,987,583 Total 1,121,098,611 1,029,357,807 Schedule 3 : Loans and Borrowings This Year Previous Year PARTICULARS Rs. Rs. A) Local Banks, Financial and OtherInstitutions 1. His Majesty's Government - - 1.1 Earthquake affected sector reconstruction - - 2. Nepal Rastra Bank = = 2.1 Loan = - 2.2 Refinance = ~ 2.3 Deposit for Short Term = - 3. Inter Bank 64,748,100 28,143,358 3.1 Overdraft = = 3.2 Loan = = 3.3 Deposit for Short Term 64,748,100 28,143,358 4. Other Financial Institutions = = 5. Others - - Total (1+2+3+4+5) 64,748,100 28,143,358 B) Foreign Banks, Financial and OtherInstitutions 1. Banks 13,534,631 51,020,126 1.1 Overdrafts - - 1.2 Nostro & Agency Balance 13,534,631 51,020,126 1.3 Deposit for Short Term - - Total 13,534,631 51,020,126 Total (A+B) 78,282,731 79,163,484 Annual Report 2004 (D


  • Page 17

    Standard Chartered Bank NepalLimited Schedule 4 : Deposit Accounts Page 1 of 2 This Year Previous Year PARTICULARS Rs. Rs. 1. Non-Interest Bearing Accounts A) Current Deposits 5,816,935,767 5,768,621,422 1. Local Currency 3,720,327,419 3,844,637,476 1.1 His Majesty's Government 2,447,181 516,561 1.2 Commercial Banks 127,258,216 84,645,106 1.3 Financial Institutions 102,202,172 74,586,678 1.4 Other Institutions 3,029,797,088 3,125,422,444 1.5 Individuals 403,685,951 323,342,135 1.6 Others 54,936,811 236,124,552 2. Foreign Currency 2,096,608,348 1,923,983,946 2.1 His Majesty's Government - - 2.2 Commercial Banks 5,563,632 44,820,666 2.3 FinancialInstitutions =| = 2.4 OtherInstitutions 1,639,949,145 1,136,956,722 2.5 Individuals 266,791,636 504,074,807 2.6 Others 184,303,935 238,131,751 B) Margin Deposits 203,185,507 220,057,264 1. Employees Guarantee = = 2. Guarantee Margin 56,202,504 49,971,782 3. Letters of Credit Margin 117,056,214 170,085,482 4. Others | 29,926,789. - ©) Others = - 1. Local Currency = - 2. Foreign Currency - - Total of Non-Interest Bearing Accounts 6,020,121,274 5,988,678,686 @ Annual Report 2004


  • Page 18

    Standard Chartered Bank Nepal Limited Schedule 4 : Deposit Accounts (continued) Page 2 of 2 PARTICULARS This Year Previous Year Rs. Rs. 2. Interest Bearing Accounts A) Saving Deposits 12,771,825,999 10,633,161,815 1 Local Currency 10,254,715,903 8,679,246,933 1.1 Institutions 1,356,142,443 1,099,097,804 1.2 Individuals 8,818,614,979 7,499,264,290 1.3 Others 79,958,481 80,884,839 . Foreign Currency 2,517,110,096 1,953,914,882 2.1 Institutions 1,411,384,598 947,622,979 2.2 Individuals 1,072,500,364 974,226,288 2.3 Others 33,225,134 32,065,615 B) Fixed Deposits 1,428,495,296 1,948,596,294 1 Local Currency 560,210,601 885,680,789 1.1 Institutions 224,591,321 268,791,974 1.2 Individuals 326,451,266 606,395,503 1.3 Others 9,168,014 10,493,312 . Foreign Currency 868,284,695 1,062,915,505 2.1 Institutions 437,640,850 537,767,736 2.2 Individuals. 376,266,601 460,491,185 2.3 Others 54,377,244 64,656,584 o) Call Deposits 940,999,159 185,198,042 1. Local Currency 939,843,846 184,033,410 1.1 Commercial Banks 1.2 Financial Institutions 1.3 Other Institutions 939,431,976 183,633,536 1.4 Individuals 1.5 Others 411,870 399,874 . Foreign Currency ‚155,313 1,164,632 2.1 Commercial Banks 2.2 Financial Institutions 2.3 OtherInstitutions 2.4 Individuals 2.5 Others 1,155,313 1,164,632 D) Certificate of Deposit 1: Institutions 2. Individuals 3. Others Total of Interest Bearing Accounts 15,141,320,454 12,766,956,151 Total Deposits (1+2) 21,161,441,728 18,755,634,837 Annual Report 2004 (B


  • Page 19

    Standard Chartered Bank NepalLimited Schedule 5 : Bills Payable PARTICULARS Thiswear Previous Year 1. Local Currency 46,501,289 41,577,926 2. Foreign Currency 12,523,565 13,263,749 Total 59,024,854 54,841,675 Schedule 6 : OtherLiabilities PARTICULARS Pe Previous Year 1. Gratuity Fund (Provision) 60,116,824 62,208,296 2. Employees Provident Fund = - 3. Employees Welfare Fund — - 4. Provision for Statutory Staff Bonus 85,954,748. 76,083,762 5. Unpaid Dividend 10,725,045 9,472,674 6. Provision for Income Tax 8. Special Fee (Less Advance paid) (17,583,901) (111,530,583) 7. Interest Payable on Deposits 18,621,172 25,986,885 8. Interest Payable on) Borrowings ‚33,315 12,627 9. Unearned Discount and Commission 10,243,892 3,342,626 10. Proposed Dividend 412,104,440 373,503,680 11. Interest Suspense 146,598:548 121,643,526 12. Sundry Creditors 85,586,160 57,764,031 13. Branch Adjustment Account = = 14. Others (Provision for Expenses) 35,203,225 33,935,895 Total 847,571,466 652,423,419 €) Annual Report 2004


  • Page 20

    Standard Chartered Bank NepalLimited Schedule 7 : Cash Balance PARTICULARS ThisYear Pre Year 1. Local Currency (including coins) 154,213,809 153,177,074 2. Foreign Currency 33,491,070 45,578,040 Total 187,704,879 198,755,114 Schedule 8 : Balance with Banks Local Foreign Currency za Previous PARTICULARS Currency Rs. INR Rs. Foreign Currency Total Rs. Rs. = Year Rs. Rs. 1. Nepal Rastra Bank 1,516,431,309 -| 17,738,548) 17,738,548 1,534,169,857 1,141,097,161 a) Current Account 1,516,431,309 - 17,738,548 17,738,548 1,534,169,857 1,141,097,161 b) ‘Other Account = = = a Si = 2. Other Local Banks 21,500,780 = = =| 21,500,780 7,812,852 a) Current Account 21,500,780 = - -| 21,500,780 7,812,852 b) Other Account - - - - - - 3, Foreign Banks —| 47,622,509 232,165,624 279,788,133| 279,788,133| 164,639,909 a) Current Account =| 47,622,509| 232,165,624) 279,788,133| 279,788,133) 164,639,909 b) Other Account - - - - - = Total 1,537,932,089| 47,622,509| 249,904,172| 297,526,681 1,835,458,770 1,313,549,922 Note: Balance as per the confirmation and statementreceived from respective banks is Rs. 1,934,889,029 and the difference amounts are under reconciliation. Schedule 9 : Moneyat Call and Short Notice PARTICULARS a dl 4. Local Currency = = 2. Foreign Currency 2,218,599,500 1,657,909,750 Total 2,218,599,500 1,657,909,750 Annual Report 2004 €)


  • Page 21

    Standard Chartered Bank Nepal Limited Schedule 10 : Investments Purpose This Year Previous Year PARTICULARS z Trading Other Rs. Rs. 1. HMG Securities -| 7,948,217,402 7,948,217,402 6,581,348,507 a) Treasury Bills -| 6,130,452,978 6,130,452,978 4,438,520,390 b) Development Bonds =| 1,713,041,000 1,713,041,000 2,079,579,000 c) National Saving Bond = = = = d) Special Bonds - 104,723,424 104,723,424 63,249,117 2. Foreign Government Securities = - = = 3. Nepal Rastra Bank Bonds = - = - 4. Shares, Debentures and Bonds - 11,195,000 11,195,000 11,195,000 5. Other Investments —| 3,400,916,000 3,400,916,000 3,623,655,500 a) Certificate of Deposits - - = = b) Mutual Fund = - = = c) Local Banks - - = - d) Foreign Banks =| 3,370,916,000 3,370,916,000 3,137,355,500 e) Others - 30,000,000 30,000,000 486,300,000 Total Investment — 11,360,328,402 11,360,328,402 10,216,199,007 Provision = = = = Net Investment — 11,360,328,402 11,360,328,402 10,216,199,007 Schedule 10 (A) : Investment in Shares, Debentures and Bonds This Year Previous Year PARTICULARS Rs. Rs. 1. Investment in Shares 1.1 Eastern Region Rural Development Bank 30,000 Ordinary Shares of Rs. 100 each paid up 3,000,000 3,000,000 1.2 Far Western Region Rural Development Bank 1 7 30,000 Ordinary Shares of Rs. 100 each paid up 3,000,000 3,000,000 1.3 Rural Micro Finance Development Centre = i 51,950 Ordinary Shares of Rs. 100 each paid up 5,195,000 5,195,000 2. Investment in Debentures and Bonds = - Total Investment 11,195,000. 11,195,000 3. Provision for Loss Si - 3.1 Upto Previous Year 3.2 Adjustments this year increased/(decreased) = = Total Provision Note: None of the above Companies have declared and distributed dividend for more than 3 years. None of the above Sharesarelisted with the Nepal Stock Exchange Ltd. ED Annual Report 2004


  • Page 22

    Standard Chartered Bank Nepal Limited Schedule 11 : Classification of Loans, AdvancesandBills Purchased and Provisioning Advances Bills Purchased / Discounted Bons 5 This Previous PARTICULARS Priority Priority Year | Year feud] urinsurg) Oer [Forn] Tol (ir Uninsima] OMer Foreign Tol Rs. Rs. Rs. Rs. Rs. Rs. Rs. As. Rs. Rs. Rs. Rs. 1. Performing Loan j 14 Pass and Resti Loan [ross senen =| 38301578] - -| 3316048 645583575 sezreees| GAMEN) srseziasre 2 NonPerforming Loan 21 Subetandard - - 4+ - - = n = = af =| 76250 22 Deubittul =| 130,000,000 | =| 19089043, = = = = = 130.989.043 130.000.000 23 Loss =| 8281028] 112928099) =| 121.209.067| = = = = =| 121,200,067| 110898127 Total =| 067783476|5707ae5tal | 605569688] = =| 391604816495657588272523] 6693862311 6000.82 3 Loan Loss Provision. 31. Pass and estructu Lin -| mesa] seme] -| sassi - =| gatto] eases] ee Bra 32 Substandard - = 4 = aj 3 7 li - li 28195 33 Doubt =| orsono) wel -| vum - - =| - -| esse) son 34 Loss =| 8281028] 112928069) =) 121,208.067, 3 = - = -| 121209067 110,896,126 Provision =|itaoraoso!tsosorassi =| az —- =|)56)ZE) 200500200!)soso. 4 Provision up to Previous Year a 4: Pass and estruc Logo =| seen) ssstozz) | sel - =| ass) reiast) 1229919] stunten) sce 42 Substandard - Gi 1,783,135) = 1,763,135 = = = = - an 831450 43 Dodd =| 97500000 -| -| Ss - - - - =| ns) ema 44 Bad -| 7140826 1087552001 =| 110896126 = = - = -| 110,896,126) 13031421 Previous -| 1319805651 171,128558| sl zuge - =| 408068]BABE! 1229919 ae)MEER (0)Additions This Year =| {18.904.545)|_(1,487,10)] (5) [20371699] —- -| ra 27705 rn Loan(AB) =1 754,707,1275368,185.057 em = 1 3282888B4,107,009873698976,410.242,001 Schedule 12 : Fixed Assets Assets = Freehold a PARTICULARS Land and Office Others This Previous Buildings Vehicles Machinery| Equipment |(Leasehold)| Year Year Rs. Rs. Rs. Rs. Rs. Rs. Rs. 1. AtCost bi a) Previous Year Balance 59.662.280 29,948,200 ~| 287,023,260| 38,583,031 415,216/771| 261,873,568 b) Addition ThisYear 4,112,205} 5,880,000 =| 4,007,607 =| 10,999,812! 158,296,780 ©) RevaluationWritten-back this Year - - - - - + - 8) Sold ThisYear —| (2,324,336) —| (15,588,142) (4,953,578) e) Wiitten-off This Year - - -| (8,532,021) 8 2) - Total Cost (a+b+c+d+e) 60,774,485 33,503,864 =| 271,910,704| 38,298,480) 404,487,533) 415,216,771 2. Depreciation Li a) Upto Previous Year 7,011,686) 25,662,472 =| 164,897,923] 25,934,049 2 30] 160,807,222 b) ForThisYear 803,839| 2,661,938) =| 58,698,892| 4,037,618 67,606,871 ©) Depreciation on Revaluation'Written-back = - - =| a = d) Depreciation on Assets Sold/Written-off —| (2:924,336) —| (18,919,818) (210,888)| (21,455,042) (4,907,963) Total Depreciation (a+b+c+d) 7,818,525 26,000,074 | 204,676,997] 29,760,779 268,253,375) 223,506,130 3. Book Value (WDV)' (1-2) 52,958,960 7,503,790 -| 67,293,707] 8,537,701 196,234,188) 191,710,641 4, Capital Construction - - - - = 3 = (pending capitalisation) =" Total (3+4) 52,958,960 7,503,790 =| 67,233,707 8,537,701 196,234,158) 191,710,641 * Written Down Value Annual Report 2004 (E)


  • Page 23

    Standard Chartered Bank Nepal Limited Schedule 12 (A) : Securities against Loan, AdvancesandBills Purchased | This Year Previous Year PARTICULARS Rs. | Rs. A) Secured 6,693,862,311 6,000,162,639 1. Collateral of Movable/Immovable Assets 3,935,987,969 3,965,673,687 2. Guarantee of Local Banks and Financial Institutions = - 3. Guarantee of HMG = - 4. Guarantee of Internationally Rated Banks 345,381,500 126,840,933 5. Export Documents 36,665,168 60,280,326 6. Fixed Deposit Receipts a) Own FDR 99,280,420 112,881,430 b) FDR of other Banks 97,939,675 123,309,424 7. Government Bonds 1,161,642,357 683,669,023 8. Counter Guarantee = = 9. Personal Guarantee 5 = 10.Other Securities 1,016,965,222 927,507,816 B) Unsecured - - Total 6,693,862,311 6,000,162,639 Schedule 13 : Other Assets PARTICULARS udpeo Reevions Year 1. Stationery Stock = - 2. Income Receivable on Investments 144,159,375 104,783,639 3. Accrued Interest on Loan 146,566,546 121,643,526 4. Commission Receivable 180,929 519,070 5. Sundry Debtors & Capital Advances 38,892,257 27,931,187 6. Staff Loan and Advances 90,800,054 80,622,365 7. Prepayments 13,439,790 16,702,339 8. Cash in Transit = = 9. Other Transit Items (Including Cheques) 1,036,585,720 1,247,379,493 10. Drafts Paid without Notice - - 11. Expenses Not Written-off 21,962,957 37,186,073 12. Non-Banking Assets => = 13. Branch Adjustment Account - - 14. Others (Deposits Receivable) 904,372 254,375 Total 1,493,492,000 1,637,022,067 @ Annual Report 2004


  • Page 24

    Standard Chartered Bank Nepal Limited Schedule 13 (A) : Other Assets (Additional Statement) This Year (Rs.) Previous PARTICULARS Upto 1 1to3 |Above3 rotal Year Year Years Years en Rs. 1, Accrued Interest on Loans and Advances 53,851,358 89,061,328 3,653,860) 146,566,546) 121,643,526 2. Drafts Paid without Notice - - - = = 3. Branch Adjustment A/C - - =l e - Total 53,851,358 89,061,328) 3,653,860) 146,566,546) 121,643,526 Schedule 14 : Contingent Liabilities PARTICULARS Prauioga: Vent 1. Claims on Bank but not acknowledgedasliabilities by the Bank - 2. Letters of Credit (Full Amount) 1,295,389,559 a) Maturity period of less than 6 months 779,687,566 b) Maturity period of more than 6 months 231,022,041 515,701,993 3. Rediscounted Bills = - 4. Unexpired Guarantees/Bonds 499,456,280 530,360,406 a) Bid Bonds 8,414,785 12,548,430 b) Performance Bonds 491,041,495 517,811,976 5. Uncalled Amount on Investment in Shares = 6. Forward Exchange Contract Liabilities 143,021,535 7. Bills for Collection 101,402,062 8. Acceptance and Endorsements 406,283,936 9. Underwriting Commitments - - 10. Irrevocable Loan Commitments 2,091,000 295,323,999 11. Guarantee against Counter Guarantee of Internationally Rated Banks 865,433,013 1,434,915,299 12. Advance Payment Guarantee 20,723,120 17,033,115 13. Financial Guarantee 289,788,668 86,314,634 14. Income Tax 9,877,320 9,877,320 15. Others 32,071,684 17,616,762 Total 31,656,099 4,337,538,627 Annual Report 2004 (BH


  • Page 25

    Standard Chartered Bank Nepal Limited Schedule 15 : Interest Expenses This Year Previous Year PARTICULARS Rs. Rs. A) On Deposit Liabilities 256,706,269 244,427,303 1. Fixed Deposits 28,259,828 45,848,381 1.1 Local Currency 18,200,761 29,204,637 1.2 Foreign Currency 10,059,067 16,643,744 2. Savings Deposits 208,369,142 192,723,251 2.1 Local Currency 196,977,911 181,800,270 2.2 Foreign Currency 11,391,231 10,922,981 3. Call Deposits 20,077,299 5,855,671 3.1 Local Currency 20,068,739 5,242,222 3.2 Foreign Currency 8,560 613,449 4. Certificate of Deposits = - B) On Borrowings 15,533,433 10,701,639 1.. Overdrafts = = 2. Loans from Nepal Rastra Bank 2,572,573 2,785,130 3. Inter Bank Borrowings/Short Term Deposits 12,960,860 7,916,509 4. Other Loan and Refinances = = C) On Others 3,569,474 25,000 1. Premium on Development Bonds 25,000. 25,000 2. Others (Forwards) 3,544,474 = Total 275,809,176 255,153,942 Schedule 16 : Employees Expenses PARTICULARS TuleNene Bruids Year 1. Salary 87,684427 81,931,121 2. Allowances | 1,004,972 1,408,080 3. Contribution to Provident Fund 5,274,829 4,854,905 4, Training Expenses 1,948,380, 5,042,941 5. Uniform 1,091,197 996,831 6. Medical 2,398,086 1,890,285 7. Insurance = - 8. Provision for Gratuity 9,076,896 14,791,734 9. Other Personnel Expenses 7,972,872. 7,098,541 10. Employees Incentive 18,233,471 10,313,539 Total 134,685,130 128,327,977 € Annual Report 2004


  • Page 26

    Standard Chartered Bank Nepal Limited Schedule 17 : Office Operating Expenses This Year Previous Year PARTICULARS Rs. Rs. 1. House Rent and Office Rent 23,150,703 25,268,417 2. Electricity and Water 7,905,290 7,660,847 3. Repair and Maintenance 16,165,759 a) Building 4,195,328 6,275,411 b) Vehicles 1,035,319 983,008 c) Others 10,935,112 7,890,808 4. Insurance 5,808,922 5,554,468 5. Postage, Telex, Telephone, Fax 33,771,168 39,545,829 6. Repair on Office Equipment and Furniture 1,708,348 1,683,046 7. Travelling Allowances and Expenses 9,618,806 21,908,583 8. Stationery and Printing 11,749,594 15,785,244 9. Periodicals and Books 992,686 1,375,024 10. Advertisement 5,458,709 5,877,873 11. Legal Expenses 1,271,593 1,299,325 12. Donations 362,327 359,010 13. Expenses Relating to Board of Directors 160,095 a) Meeting Fees 58,000 92,500 b) Others 102,095 22,458 14. Annual General Meeting Expenses 2,498,160 1,298,470 15. Expenses Relating to Audit 521,398 a) Audit Fees 385,000 247,500 b) Others 136,398 192,079 16. Commission on Remittances = = 17. Depreciation on Fixed Assets 66,202,286 67,606,871 18. Amortization of Preliminary & Other Expenses 15,223,116 12,320,825 19. Share Issue Expenses = = 20. Technical Services Fees 17,588,235 17,729,411 21. Entertainment 1,746,565 2,155,708 22. Written-off Expenses 6,663,307 235,839 23. Security Expenses 7,103,891 5,934,565 24. Credit Guarantee Premium = = 25. Commission and Discount 903,845 9,359,967 26. Charges on Foreign Currency Notes 14,356,367 10,308,195 27. Office Equipment and Furniture (non Capitalised Items) 11,872,909 23,923,505 28. Others (Sundries) 6,109,838 6,595,219 29. IT Support Cost(including Licence Fees) 10,779,690 12,482,853, Total 279,693,607 311,972,858 Annual Report 2004 9)


  • Page 27

    Standard Chartered Bank Nepal Limited Schedule 18 : Interest Income PARTICULARS This Year Previous Year Rs. Rs. A) On Loan, Advances and Overdraft 558,006,372 563,505,758 1. Loan and Advances 488,378,563 461,953,877 2. Overdrafts 69,627,809 101,551,881 B) On Investment 380,441,660 303,543,873 1. HMG Securities 380,441,660 303,543,873 a) Treasury Bills 254,784,127 179,327,715 b) Development Bonds 120,628,771 122,356,206 c) National Savings Certificates d) Special Bonds 5,028,762 1,859,952 2. Foreign Securities Nepal Rastra Bank Bonds > 4. Debenture and Bonds a) Financial Institutions b) OtherInstitutions C) On Agency Balances 1,112,777 1,048,568 1. Local Banks 2. Foreign Banks 1,112,777 1,048,568 D) On Moneyat Call and Short Notice 35,312,571 65,129,412 1. Local Currency 2. Foreign Currency 35,312,571 65,129,412 E) OnOthers 67,302,248 68,131,894 1. Certificate of Deposits 2. Inter-Bank Loan 15,022,252 28,320,246 3. Others 52,279,996 39,811,648 Total 1,042,175,628 1,001,359,505 Schedule 19 : Commission and Discount This Year Previous Year PARTICULARS Rs. Rs. A) Bills Purchased and Discounted 7,030,263 2,257,066 1. Local 212,000 126,914 2. Foreign 6,818,263 2,130,152 B) Commission 130,716,261 152,452,250 1. Letters of Credit 28,075,345 25,024,044 2. Guarantees 28,492,644 33,231,140 3. Collection Fees 5,110,658 5,373,403 4. Remittance Fees 32,023,527 28,730,997 5. Credit Cards 32,071,268 53,947,016 6. Share Underwriting/Issues = = 7. Government Transactions = = 8. Agency Commission 700,000 339,025 9. Exchange Fees 4,242,819 5,806,625 C. Others 61,201,050 60,491,622 Total 198,947,574 215,200,938 €) Annual Roport 2004


  • Page 28

    Standard Chartered Bank Nepal Limited Schedule 20 : Currency Exchange Gain / Loss PARTICULARS Thisend rs Lo A) Revaluation Gain 65,798,188 57,407,503 B) Trading Gain (except Exchange Fees) 207,251,852 175,114,530 Total Income (Loss) 273,050,040 232,522,033 Schedule 21 : Non-Operating Income / Loss This Year Previous Year PARTICULARS Rs. Rs. 1. Profit (Loss) on Sale of Investment - 38,462 2. Profit (Loss) on Sale of Assets 1,213,244 854,386 3. Dividend - - a) Commercial Banks - - b) Rural Development Banks = = c) Financial Institutions - - d) OtherInstitutions = - 1) Subsidiary Companies = = 2) Others = - 4. Subsidies Received from Nepal Rastra Bank - - a) Reimbursement of Losses of Specified Branches = - b) Interest Subsidy - — ©) Exchange Counter - - 5. Others (11,969,168) (16,422,604) a) Special Fee (11,969,168) (21,466,547) b) Others - 5,043,943 Total Non Operating Income (Loss) (10,755,924) (15,529,756) Note: (-) indicates debit balance. Schedule 22 : Other Income This Year Previous Year PARTICULARS Rs. Rs. 1, Rental on Safe Deposit Lockers 1,230,980 1,268,029 2. Issue and Renewalsof Credit Cards 5,494,716 6,167,756 3. Issue and Renewals of ATM Cards 2,403,610 2,657,765 4. Telex TT. 10,655,504 8,904,752 5. Service Charges = n 6. Renewal Fees 1,083,000 732,000 7. Loan Loss Provision Written Back 43,303,846 30,400,602 8, Others 5,663,070 5,348,936 Total 69,834,726 55,479,840 Annual Report 2004 ©


  • Page 29

    Standard Chartered Bank Nepal Limited Schedule 23 : Statement of Loans & Advances Extendedto Directors / Chief Executive/ Promoter / Employees and Shareholders holding more than 1 percent shares as at 15 July 2004 (31 Ashad 2061) NAME OF PROMOTER / Last Year's Balance This Year Recovery this Year Balance as of Ashad end DIRECTOR / CHIEF EXECUTIVE Principal Interest Principal Interest Additions Principal Interest Rs. Rs. Rs. Rs. Rs. Rs. Rs. A) Directors = - - - - - - 8) Chief Executive 44,291 =| (44,291) - 22,320 22,320 - 1, Sujit Mundul 44,291 -| (44,291) = 22,320 22,320 ES C) Promoters - - - > - =| - D) Employees - - - = - = = E) Shareholders holding more than 1% Shares - - - - - - - Total 44,291 -| (44,291) -| 22,920 22,920 = Note: As perclause 6.3 of the Nepal Rastra Bank (The Central Bank of Nepal) Directive No. 6, loans given to executive officers and employees are as per the bankstaff rules and hence not disclosed above. Schedule 24 : Capital Adequacy Page 1 of 2 as at 15 July 2004 (31 Ashad 2061) PARTICULARS ThisaYear =s Year Previou A) Core Capital 1,378,971,720 1,268,588,863 1. Paid Up Capital 374,640,400 339,548,800 2. Share Premium - 3. Non-Redeemable Preference Share = = 4. General Reserve Fund 749,280,800 679,097,600 5. Accumulated Profit/Loss (upto previous FY) 130,865,932 6. Current Year Profit/Loss as per Balance Sheet 85,121,651 7. Capital Adjustment Fund/Proposed Bonus Share Capital 33,954,880 B) Supplementary Capital 181,183,932 196,260,736 „ Loan Loss Provision 64,416,641 95,942,992 osnoousun- . Exchange Equalization Reserve 116,767,291 100,317,744 . Assets Revaluation Reserve = = Hybrid Capital Instruments = = Unsecured Subordinated Term Debt = = . Interest Rate Fluctuation Fund - - . Other Free Reserves = = . Investment Adjustment Reserve = C) Total Capital Fund (A+B) 1,560,155,652| 1,464,849,599 D) Minimum Capital Fund required to be maintained on the basis of Risk Weighted Assets * Capital Fund (@ 11.0 Percent) 1,102,539,633 1,035,947,303 * Core Capital (@ 5.5 Percent) 551,269,816 517,973,652 * Total Capital Adequacy Ratio 15.57% 14.14% Capital Fund (Excess/Short) (@ 4.57 Percent Excess) 457,616,019 428,902,295, Core Capital (Excess/Short) (@ 8.26 Percent Excess) 827,701,904 750,615,212 © Annual Report 2004


  • Page 30

    Standard Chartered Bank Nepal Limited Schedule 24 : Table of Risk Weighted Assets Statement as at 15 July 2004 (31 Ashad 2061) Fair fe This Year Previous Year PARTICULARS Weightage ILE ‘Amount Riski We Amount RiskAa We Rs. Rs. Rs. A) On-Balance Sheet Assets 1, Cash Balance 0% 187,704,879 = 198,755,114 = 2. Gold (Tradable) 0% = = - = 3. Balance with Nepal Rastra Bank 0% 1,534,169,857 =| 1,141,097,161 = 4. Investmentin Government Securities 0% 7,948,217,402 =| 6,581,348,507 = 5. Investmentin NRB Bonds 0% - - - - 6, Fully Secured Loan against own Fixed Deposit Receipt 0% 99,280,420 = 112,881,430 - 7. Fully Secured Loan against GovernmentSecurities 0% 1,161,642,357 - 683,669,023 - 8, Balance with Domestic Banks and Financial Institutions 20% 4,300,156 7,812,852 1,562,570 9. Fully Secured FDR Loan against a Fixed Deposit Receipt of Other Banks. 20% 19,587,935 123,309,424 24,661,885 10. Balance with Foreign Banks 20% 164,639,909 32,927,982 11, Money at Call 20% 1,657,909,750 331,581,950 12. Loan against the Guarantee of Internationally Rated Banks 20% 126,840,933 25,368,187 13. Other Investments with Internationally Rated Banks 20% 3,370,916,000 674,183,200 3,137,355,500 627,471,100 14. Investment in Shares, Debentures and Bonds 100% 11,195,000 11,195,000 11,195,000 11,195,000 15. Other Investment 100% 30,000,000 30,000,000 486,300,000 486,300,000 18. Loan, Advances andBills Purchased/Discounted 100% 4,989,618,358 4,989,618,358 4,953,461,829 4,953,461,829 17. Fixed Assets 100% 404,487,533 404,487,533 415,216,771 415,216,771 18. All Other Assets 100% 1,493,492,000 1,493,492,000 1,637,022,067 1,637,022,067 Total (A) 24,193,933,394 8,195,618,009 21,438,815,270 8,546,769,341 B) Off-Balance SheetItems 1. Bills Collection 0% 148,428,012 = 101,402,062 = 2. Forward Foreign Exchange Contract 10% 163,441,353 16,344,135 143,021,535 14,302,154 3. Letters of Credit with Maturity of Less than 6 Months (Full Value) 20% 1,438,844,674 287,768,935 779,687,566 155,937,513 4. Guarantees Provided against Counter Guarantee of Internationally Rated Foreign Banks 20% 865,433,013 173,086,603 1,434,915,299 286,983,060 5. Letters of Credit with Maturity of more than 6 Months (Full Value) 50% 115,511,021 515,701,993 257,850,997 6. Bid Bonds 50% 4,207,393 12,548,430 6,274,215 7. Performance Bonds 50% 245,520,747 517,811,976 258,905,988 8. Advance Payment Guarantee 100% 20,723,120 | 17,033,115 17,033,115 9. Financial Guarantee 100% 289,788, 86,314,634 86,314,634 10. Other Guarantee 100% = i - = 11. Irrevocable Loan Commitment 100% 2,091,000 2,091,000 295,323,999 295,323,999 12. Contingent Liability in Respect of Income Tax 100% 9,877,320, 9,877,320 9,877,320 9,877,320 13, All Other ContingentLiabilities {including Acceptances & Endorsements) 100% 662,550,618 662,550,618 423,900,698 423,900,698 Total (B) 4,331,656,099 1,827,469,560 4,337,538,627 1,812,703,693 Total Risk Weighted Assets (A+B) 28,525,589,493 |10,023,087,569 25,776,353,897 10,359,473,034 Annual Report 2004 @)


  • Page 31

    Standard Chartered Bank Nepal Limited Schedule 25 : Key Indicators PARTICULARS indicators 1995/2000 2000/2001 2001/2002 2009/2003 200414008 1. Percent of Net ProfivGross Income Percent 28.62 25.92 33.12 33.71 133.95 2. Eaming Per Share Rs. 115.62 126.88 141.13 149.30 143.55, 3, Market Value Per Share Rs. 1,985.00 2,144.00 1,575.00 1,640.00 1,745.00 4. Price Eaming Ratio Ratio 1747 16.90 11.16 10.98 12.16 5. Dividend (including bonus) on Share Capital Percent 100.00 100.00 100.00 120.00 ‚110.00 6. Cash Dividend on Share Capital Percent 100.00 100.00 100.00 110.00 x 110.00 7. Interest Income/Loan & Advances Percent 12.00 10.22 10,31 10.11 n 883 8. Staff Expenses/Total Operating Expenses Percent 13.68 12.74 20.49 18.48 19.51. 9, Interest Expenses on Total Deposit and Borrowings Percent 2.85 277 1.82 1.35 1:30 10. Exchange Gain/Total Income Percent 11.45 12.92 15.77 15.46 17.24 11, Staff (Statutory) Bonus/Total Staff Expenses Percent 45.39 45.56 36.32 37.22 38.96 12. Net ProfiLoan:and Advances Percent 8.93 8.12 9.13 9.09 851 13. Net Profil Total Assets Percent + 236 2.26 2.60 2.42 227 14. Total Credit/Deposit Percent 37.99 36.82 35.97 31.99 31.63 15. Total Operating Expenses/Total Assets Percent 3.84 4.20 3.35 3,32 2.92 16. Adequacy of Capital Fund on Risk Weighted Assets a) Core Capital Percent 7.54 11.61 13.92 1225| 13.76 b) Supplementary Capital Percent 2.02 2,39 3.46 1.89 i 1.81 c) Total Capital Fund Percent 9.56 14.00 17.38 14.14 15.57 17. Liquidity (CRR) Percent 10:76 10,76 9.87 9.07 9.46 1B. Non-performing Credit/Total Credit Ratio 6.32 2.62 2.39 1.97 1,83 19. Weighted Average Interest Rate Spread Percent 4.41 4.65 4.19 4.11 376 20, Book Net-worth Rs. ‘000 1,014,844 1,112,020 1,235,475 1,368,907 1,495,739 21. Total Shares No. 3,395,488 3,395,488 3,395,488 3,395,488 3,746,404 22. Total Staff No. 264 256 243 275 263 23. Return on Shareholders’ Equity Percent 38.69 38.74 38.79 37.03 35.96 24. Book Value Per Share Rs. 298.88 327.50 363.86 403.15 399,25 25. Retum on Net Fixed Assets Percent 229.96 353.70 474.15 264.43 394.76 26.Total Interest Eamings to External Assets Percent 6.93 6.98 6.07 5.70 521 27. Total Costs to NetInterest Income & Other Income Percent 30.18 34.72 35,57 42.53 39.07 © Annual Report 2004


  • Page 32

    Standard Chartered Bank Nepal Limited Key Indicators (Definitions) ITEM DEFINITIONS Net Profit (NPAT) Net Profit After Tax Gross Income/ Total Income Total of Income side of the Profit & Loss Account (both are considered same) Earnings Per Share (EPS) NPAT / No. of Shares at the year end before Bonus proposed, if any Price Earning Ratio (PE ratio) Market Value of Share at end of the year / EPS Interest Income Interest Income on Loans & Advances. in Schedule 18 Loans and Advances Net Loans & Advances (excluding Bills) as per Schedule 11 Staff Expenses Employees Expenses as per Schedule 16 Total Staff Expenses Employees Expenses as per Schedule 16 + Staff Bonus Total Operating Expenses Interest Expenses + Employee Expenses + Office Operating Expenses + Exchange Loss Interest Expenses Interest Expenses as per Schedule 15 Total Deposit & Borrowings Loans + Borrowings + Deposits as per Schedule 3 & 4 Total Assets Total of Asset side of the Balance Sheet Total Credit Gross Loans & Advances + Bills as per Schedule 11 Total Deposits Deposits as per Schedule 4 Cash Reserve Ratio (CRR) Ratio as per NRBDirectives, calculated & intimated to NRB as on 15.07.2004 Non Performing Credit Gross Value of the Credit which fall in the categories Substandard + Doubtful + Loss Loans Weighted Average Interest Rate Spread As calculated under Schedule 28 (8) Book Net Worth / Shareholders’ Equity Share Capital & Reserves as per Schedule 1 & 2 Book Value Per Share Shareholders Equity / No. of Shares as at year end excluding Proposed Bonus,if any Total Costs Total Operating Expenses excluding Interest Expenses + Non Operating Expenses + Staff Bonus External Assets Moneyat Call & Investments + Loans & Advances & Bills Less provisions if any against the same Annual Report 2004 ©


  • Page 33

    Standard Chartered Bank Nepal Limited Schedule 26 : Cash Flow Statement Fiscal Year 17 July 2003 to 15 July 2004 (1 Shrawan 2060 to 31 Ashad 2061) This Year Previous Year PARTICULARS Rs. Rs. A) Cash Flow from Operations 264,606,107 334,397,276 1. Cash Receipts 1,501,666,525 1,531 ,401,069 1.1 Interest Income 1,002,799,892 1,059,288,778 1.2 Commission and Discount Income 199,285,716 215,471,020 1.3 Currency Exchange Gain 273,050,040 232,522,033 1.4. Non-Operating Income = = 1.5 Other Income 26,530,877 24,119,238 2. Cash Payments 1,237,060,418 1,197,003,793 2.1 Interest Expenses 283,154,201 268,205,200 2.2 Staff Expenses 136,776,601 123,702,902 2.3 Office Overhead Expenses 197,000,871 240,901,917 2.4 Currency Exchange Loss - - 2.5 Non-Operating Expenses 11,969,168 16,422,604 26 Other Expenses 608,159,577 547,771,170 B) Cash Flow From InvestmentActivity (2,763,527,365) (2,725,660,934) 1. Changes in Balance with Banks (521,908,848) (746,129,569) 2. Changes in Money at Call and Short Notice (560,689,750) 404,054,250 3. Changes in Investments (1,144,129,395) (1,081,755,827) 4. Changes in Loans, AdvancesandBills Purchased (694,631,358) (303,757,375) 5. Changes in Fixed Assets (9,512,559) (157,396,780) 6. Changes in Other Assets 167,344,545 (840,675,633) C) Cash Flow From FinancingActivities 2,487,871,023 2,332,174,262 1. Changes in Borrowings (880,753) (605,560,049) 2. Changes in Deposits 2,405,806,895 2,919,887,358 3. Changesin Bills Payable 4,183,179 3,441,677 4. Changes in OtherLiabilities 78,761,702 14,405,276 D) Net Cash Flow for the Year (11,050,235) (59,089,396) E) Opening Cash Balance 198,755,114 257,844,510 F) Closing Cash Balance 187,704,879 198,755,114 Schedules 1 to 22, 27 & 28 form integral part of this Cash Flow Statement. As per ourreport of even date Sujit Mundul Robert Green Rakhi Singh Niranjan K. Tibrewala T.R. Upadhyay GM & Director Director Chief Financial Officer Director for and on behalf of (Alternate to S. Mitra) T.R. Upadhya & Co. Chartered Accountants Date: 14/09/2004 Kathmandu €) Annual Report 2004


  • Page 34

    Standard Chartered Bank NepalLimited Schedule 27 : Significant Accounting Policies Fiscal Year 17 July 2003 to 15 July 2004 (1 Shrawan 2060 to 31 Ashad 2061) Basis of Preparation The financial statements (except where disclosed separately) have been prepared in conformity with the generally accepted accounting principles and other pronouncements to conform to The Companies Act, Commercial Banking Act, Bank & Financial Institutions Ordinance, the Directives of Nepal Rastra Bank (Central Bank) and the Circulars issued from time to time. ii) Interest Income Interest income on loans and advances are recognised on cash basis asperthe directive issued by Nepal Rastra Bank. Interest income on Investments are recognised on accrual basis. iii) Commission Income Income from usance export bills is accounted for on accrual basis whereas earnings from sightbills is accounted upfront for under Commission income. Commission exceeding Rs. 100,000 earned on guarantees covering more than a year is accounted for on accrualbasis over the period of the guarantee. iv) Foreign Exchange Transactions Assets and liabilities denominated in foreign currencies are translated at mid-point rates of exchange ruling at balance sheet date. Income realised from the difference between buying and selling rates of foreign currency is accounted for as trading gains on foreign exchange. Nettranslation differences arising from the translation of foreign currency assets and liabilities is accounted for as revaluation gain. As per the Directives of the Central Bank, 25% of the total revaluation gain amounting to Rs. 16,449,547 is transferred to Exchange Fluctuation Reserve by debit to Profit and Loss Appropriation Account, v) Interest Expense Interest on depositliabilities and borrowings from other banks are accounted for on accrual basis. vi) Loans and Advances, Overdraft and Bills Purchased Loans and advances, overdrafts and bills purchased include direct finance provided to customers such as bankoverdrafts, credit card, term loans, hire purchasesfinance and loansgiven to priority and deprived sectors. All loans are subject to regular review and graded according to the level of credit risk and classified as per the Central Bank's Directives. Loans and advances, overdraft andbills purchased are net of loan loss provisions. vii) Staff Loans Loans and advances tostaff granted in accordance with the staff loan schemeare reflected under Other Assets. viii) Loan Loss Provision Provision for possible losses has been made to cover doubtful loans and advances, overdraft, bills purchased. The level of loan loss provision is determined from 1% to 100% on the basisof classification of loans and advances, overdraft, bills purchased in accordance with the Directives of the Central Bank. Annual Report 2004 ED


  • Page 35

    Standard Chartered Bank Nepal Limited ix) Investments Investment in Treasury Bills, HMG Development Bonds and Special Bonds are those, which the bank purchased with the positive intent and ability to hold until maturity. Such securities are recorded at cost or at cost adjusted for amortisation of premiums or discounts. Certain investments held for strategic purpose are stated at cost and no mark up/down is made for any discrimination in their values. Premiums and discounts are capitalised and amortised from the date of purchase to maturity. All investments are subject to regular review according to the Directives of the Central Bank. x) Fixed Assets Premises, equipment, furniture and fixtures and vehicles are carried at cost less depreciation. xi) Non Capitalised Assets Vehicles, Equipment, Furniture andfixtures with a unit value of Rs. 400,000 or less and software costs with a unit value of Rs, 40,000,000 or less are expensedoff in the year of purchase. xii) Depreciation Assets other than freehold land are depreciated at rates based upon their expected useful lives of the assets, using the straight-line method. Costs on improvements and renovation of leasehold premises are depreciated over the balance lease period. xiii) Software Costs Software applications purchased by the bank, costing greater than Rs. 40,000,000, are amortised over a period ofthirty-six months from the month of purchase. xiv) Retirement Benefits The Bank has schemesof retirernent benefits namely provident fund and gratuity, Periodic provident fund contributions made to approvedretirement fund are charged to revenue. Provision for gratuity is made on accrual basis determined by the management on the basis of the personnel policies of the bank. xv) Stationery Stationery purchased for internal consumption is expended at the time of purchase. xvi) Provision for Taxation Provision for taxation has been made based on the prevailing Income Tax Act, 2058 and amendments thereto from time to time. xvii) Rounding off / Previous Years Figures All figures are rounded off to the nearest rupee. Where necessary, amounts shownfor the previous year have been reclassified to facilitate comparison. © Annual Report 2004


  • Page 36

    Standard Chartered Bank Nepal Limited Schedule 28 : Notes to Accounts Fiscal Year 17 July 2003 to 15 July 2004 (1 Shrawan 2060 to 31 Ashad 2061) 1. Provision for Bonus Provision for bonus has been calculated and provided for at 10% of netprofits after making adjustments for loan loss provision, Staff Housing Fund As the terms. of service of the staff has a provision for extending housing loans to the eligible staff, a separate housing fund has not been created as prescribed by the Labour Act 2048. Tax Settlement Outstanding Tax Office has completed the assessments ofreturns for the years 2000-2001 filed by the Bank under the self-assessment. Additional demand aggregating to Rs. 9,877,320 has been raised by the Tax Authorities. The Bank has disputed the:claims by tax authorities and has challenged the said order byfiling appeals first with the Revenue Tribunal and during the FY 2003-04 with Tax Settlement Commission. Pendingfinal decision the additional demand has not been provided for in the books during the year. Provision for Gratuity During the year, the bank has provided Rs. 9,076,896 (previous year Rs. 14,791,734) on account of gratuity. A sum of Rs. 11,168,367 (previous year Rs. 10,166,659) paid as gratuity during the year is out of the provisions there against. Reconciliation Status Figures in Rs. PARTICULARS Total Amount <3 Months >3<9 Months >9 Months Branch Adjustments Accounts - - = - Agency Accounts 497,266,722 494,342,799 2,923,923 = The reasons for differences are fully identified and are being addressed in regular course of business. 6. Summary of Loans and Advances disbursed, recovered and Principal and Interest Written-off Rs. in ‘000 PARTICULARS Amount Loans Disbursed 12,809,481 Loans Recovered 12,081,060 Loans Written-off 1,122 Interest Written-off = 7. Summary of Changesin Deposits Liabilities Figures in Rs. PARTICULARS Current Year Last Year Changes Current and Margin Accounts. 6,020,121,274 5,988,678,686 31,442,588 Saving Account 12,771,825,999 10,633,161,815 2,138,664,184 Call Deposits 940,999,159 185,198,042 755,801,117 Fixed Deposits 1,428,495,296 1,948,596,294 (520,100,998) Inter-Bank Deposits 78,282,731 79,163,484 (880,753) Annual Report 2004 €


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    Standard Chartered Bank Nepal Limited 8 Weighted Average Interest Spread PARTICULARS Rate % Average Rate of Credit and Investments 5.20 Average Rate on Deposits 1.44 Net Spread 3.76 9. Particulars of Amortised Expenses yet to be Expensed-off Rs.in ‘000 PARTICULARS Amount Software Costs 20,862 Licence Fees 1,101 Total 21,963 10. Summary of Concentration of Exposure Figures in Rs. . PARTICULARS LoansandBills & Advances Deposits & Borrowings Contingent Total Amount as on 15 July 2004 6,693,862,311 21,239,724,460 4,331,656,099 Highest exposure to single unit 503,870,650 1,952,580,999 378,071,987 Highest % of exposure to single unit 7.53% 9.19% 8.73% 11. Classification of Assets and Liabilities based on Maturity Figures in Million Rs. 1-90 91-180 181-270 271 Days Over PARTICULARS: Days Days Days -1Year 1 Year Toni a) Assets 1. Cash Balance 188 - - - - 188 2. Balance with Banks 1,835 - - - - 1,835 3. Investment in Foreign Banks 4,194 1,209 171 15 - 5,590 4. HMGSecurities 1,552 1,544 792 2,242 1,818 7,948 5. Nepal Rastra Bank Bonds = - - - - - 6. Inter Bank Lending 30 - - - - 30 7. Loans, Advances & Bills Purchased| 2,384 663 640 329 2,394 6,410 8. Other Assets 1,493 = = - 147 1,641 Total Assets 11,677 3,416 1,604 2,586 4,359 23,642 b) Liabilities 1. Borrowings 78 = - = = 78 2. Current Deposits 1,183 = = = 5,778 6,961 3. Saving Deposits - - - -| 12,772 12,772 4. Fixed Deposits 592 401 223 170 43 1,429 5. Debentures - + - - = - 6. Other Liabilities, Capital & Reserve 494 - 412 - 1,496 2,402 Total Liabilities 2,348 401 636 170 20,088 23,642 Net Financial Assets 9,329 3,015 968 2,416 (15,729) Cumulative Net Financial Assets 9,329 12,344 13,312 15,729 = 12. Borrowing by Bank against the collateral of own assets is nil. € Annual Report 2004


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    Standard Chartered Bank Nepal Limited Statement of Changes in Equity Fiscal Year 17 July 2003 to 15 July 2004 (1 Shrawan 2060 to 31 Ashad 2061) Share Share General Capital Exchange accumulated PARTICULARS Capital [Premium| Reserve |Aéiustment |Fluctuation profi ee Rs. Rs. Rs. Rs. Rs. Rs. Rs, Balance at 16 July 2003 339,548,800 = 679,097,600 33,954,880 100,317,744 215,987,583 1,368,906,607 Changes in Accounting Policy - - - - - - Restated Balance 339,548,800 = 679,097,600 33,954,880 100,317,744) 215,987,583 1,368,906,607 ‘Surplus on Revaluation of Properties = - - - - = - Deficit on Revaluation of Investments - = = = = a - Currency TranslationDifferences = = = - - - ‘Net Gains & Losses Not Recognised in the Income Statement = = = = = = = NetProfit for the Period = = = = —| 537:800,124 537,800,124 Transfer to General Reserve = =| 70,183,200 - =| (70,183,200) - Declaration of Dividend = = se = —| (412,104,440) (412,104,440) Issue of Share Capital 35,091,600 8 -| (33,954,880) = s 1,136,720 Deficit on Revaluation of Properties a - =| = = = = ‘Surpluson Revaluationof Investments: = - - = = = = Currency Translation Differences 5 - - =| 16,449,547) (16,449,547) - ‚Capital Adjustment Fund = = -| 37,464,040 =| (37,464,040) sj Balance at 15 July 2004 374,640,400 -| 749,280,800 37,464,040| 116,767,291| 217,586,480| 1,495,739,011 Nepal Rastra Bank's Approval and Direction Nepal Rastra Bank's approvalfor publication of financial statements as of 15th July, 2004 and the direction Extracts of the letter of approval (no. Bai.Su.Bi./Offsite/AGM/7/061 dated 2061/7/11 — 27th October 2004) for publication of the financial statements as of 15th July, 2004 are as follows: The Balance Sheet, Profit and Loss Account and the Schedulesrelating to the fiscal year 2003/04 submitted by SCBNL have been approved with intimation to initiate the process of publication of details of dividends unpaid for more than five years as required by Section 82(3) of the Bank and Financial Institutions Ordinance, 2004. Response from Nepal Rastra Bank Extracts of the letter (no. Bai.Su.Bi. Ofisite/AGM/11/061 dated 2061/7/25) with appreciation received by SCBNLafter publishing the details of dividends unpaid for more than five years on 30th October, 2004 in the course of ensuring compliance of the Direction received from Nepal Rastra Bank are as follows: We appreciate the approach of SCBNLinstrictly following the requirements of Bank and Financial Institutions Ordinance, 2004, directives issued by this Bank and other directives given from time to time. We expect thatin future also SCBNLwill fulfill compliance requirements as per the Act,laws and directions and also would like to inform you that SCBNLhascontributed well in maintaining high image of banking industry by following the directives. on time. Annual Report 2004 ©


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    Standard Chartered Bank Nepal Limited Profit after Tax NPRMillion 600 538 507 479 500 4 393 o 400- 300 200 100 0+ — 1999/2000 7 2000/2001 2001/2002 2002/2003 2003/3004 Total Shareholders! Equity NPR Million 1,496 1,369 1,235 £ 1,112 1,200 1,015 900 600 | 300 | | | 1 0+ - 1999/2000 2000/2001 2001/2002 | 2002/2003 @ Annual Report 2004


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    Standard Chartered Bank NepalLimited Return on Total Assets 4% 3% 2.60% 2.36% zin 242 2.27% 2% 1% 1999/2000 — 2000/2001 2001/2002 2002/2003 2003/2004 © Earning Per Share 180 149.30 141.13 143.55 199 126.88 115.62 120 90 \ 60 30 1999/2000 2000/2001 2001/2002 2002/2003 2003/2004 Annual Report 2004 (5)


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    Standard Chartered Bank NepalLimited Income by Type Commission Earnings 15% = a Site[peor Exchange Earnings 21% NetInterest Income 59% Application of Income Profit c/fd 0% Costs Dividend 32% — Loan Loss Provisions Capital Adjustment 2% Fund,Statutory & Income Tax Exchange Reserve 18% 9% € Annual Report 2004


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    Standard Chartered Bank Nepal Limited MANAGEMENT COMMITTEE Sujit Mundul Chief Executive Officer Aniruddha Bose Anju Sharma Diwakar Poudel Head — Client Relationships (CR) Head - Consumer Bank Head — Global Markets Rakhi Singh Sudesh Khaling Deepak Rajbhandary Chief Financial Officer! Head — Service Delivery & IT Head — Human Resources & Strategic Company Secretary Sourcing & Premises Management Madhu Sudan Agrawal Bina Rana Senior Manager — Credit Head — Corporate Affairs CLIENT RELATIONSHIPS (CR) Aniruddha Bose Head — Client Relationships Rajib Giri Gorakh Rana Sunil KC Arun Devkota Senior Relationship Manager Senior Relationship Manager Relationship Manager Relationship Manager Sanjeev Mishra Rajesh Khanal Michael Siddhi Bajracharya Relationship Manager Relationship Manager Manager — Business Development Anil K Shrestha Gopi Bhandary Relationship Manager — Development Organizations Relationship Manager & CEO's Representative - Biratnagar CONSUMERBANK (CB) Anju Sharma Head - Consumer Bank Keepa Khaling Sudhir Sharma Kishoree Manandhar Head — Secured Lending Head — Cards Services & Personal Loans Manager Credit — Consurmer Bank Neelam Sharma Surendra Rana Vishnu Manandhar Branch Manager — Kantipath Branch Manager — New Baneshwor Branch Manager — Lalitpur Resha Pradhan Sunil Pokharel Deepak KC Manager — UN Counter Branch Manager — Biratnagar Branch Manager - Pokhara Deepak Shrestha Probin Acharya Branch Manager — Hetauda Branch Manager — Bhairahawa OPERATIONS Sudesh Khaling Head — Service Delivery & IT Manindra Shrestha Pramod Bohara Mahesh Bajracharya Sujit Shrestha Manager — Trade Operations Manager — Central Operations Manager — Global Market Operations Manager — IT Pradip Shrestha Suvas Kansakar Purna Man Napit Keshav Tuladhar Manager — Card Operations Manager - Credit Risk Control Manager — Operation Risks Manager — Global Market Risks LEGAL & COMPLIANCE Shobha B Rana Bidya K. Adhikari Manager — Audit & Compliance Officer — Legal Annual Report 2004 @)


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    Standard Chartered Bank Nepal Limited Standard Chartered Bank Nepal Limited Branches, and ATM Sites: BRANCHES Naya Baneshwor Pokhara Head Office P.O. Box 8, Lakeside, Baidam P.O. Box 3990 Kathmandu, Nepal Pokhara, Nepal Tel: 977-1-4782333, 4783753 Fax: 977-1-4780762 Tel: 977-61-520102, 521746, 522805 Tix: 2532 SCBL NP SWIFT: SCBLNPKA Fax: 977-61-520318 Kantipath Hetauda P.O. Box 3990 Kantipath, Kathmandu, Nepal Bank Road, Hetauda-4, Makawanpur, Nepal Tel: 977-1-4228474, Fax: 977-1-4228692 Tel: 977-57-521230, 524972 Tix: 2736 SCBLKP NP Fax: 977-57-521230 Lalitpur Bhairahawa P.O. Box 14, Buddha Chowk P.O. Box 3990 Jawalakhel Colony, Burmeli Tole Lalitpur, Nepal Bhairahawa, Siddhartha Nagar Tel: 977-1-5540566, 5540544 Tel: 977-71-524029, Fax: 977-71-524039 Fax: 977-1-5523266 Biratnagar P.O. Box 201, Main Road, Biratnagar-3, Nepal Tel: 977-21-528983, Fax: 977-21-528982 Tix: 3037 SCBLBRT NP Standard Chartered 24 Hour ATM Sites KATHMANDU & LALITPUR Thamel Kantipath Kathmandu Guest House Standard Chartered Bank NepalLimited & Arcadia Building, Near Yin Yang Restaurant Naya Baneshwor New Road Standard Chartered Bank Nepal Limited Bishal Bazar Shop No. 88, Opposite Hotel Classic Durbar Marg Lalitpur Mercantile Office Near UNDP Complex, Pulchowk POKHARA Lakeside Lakeside Hotel Snowland Standard Chartered Bank Nepal Limited € Annual Report 2004


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