Khafendra g Associares PAN 01-

Khafendra g AssociaresChartered Accountants

Firm Registration Number 222 (ICAN)PAN No.302401563

o Old Baneshwor - 10, Kathmandue kassociatesl [email protected] 01- 4467567

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the accompanying consolidated financial statements of Lumbini Bikas Bank Ltd(Bikas Bank), which comprise consolidated statement of financial position as at Ashad 31,2077 (J,:,ly

15,2020) and consolidated statement of profit or loss, consolidated statement of comprehensiveincome, consolidated statement of changes in equity and consolidated statement of cash flows forthe year then ended and a summary of significant accounting policies and notes to the consolidatedfinancial statemenLs.

ln our opiniory the accompanying consolidated financial statements give a true and fair view of the

consolidated financial position of the Bikas Bank as at Ashad 31, 2On (Jdy 75,2020), its consolidatedfinancial performance and its consolidated cash flows for the year then ended in accordance withNepal Financial Reporting Standards (NFRSs).

Basis for Opinion

We conducted our audit in accordance with Nepal Standards on Auditing (NSAs). Ourresponsibilities under those standards are further descdbed in the Auditor's Responsibilities for the

audit of the Consolidated Financial Statements section of our report. We are independent of the

Bikas Bank and we have fulfilled our other ethical responsibilities in accordance with the ICAN's

Handbook of the Code of Ethics for Professional Accountants. We believe that the audit evidence we

have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key Audit Matters are those matters that in our professional judgment were of most significance inthe audit of the consolidated financial statements of the current period. These matters were

addressed in the context of our audit of the consolidated financial statements as a whoie and

informing our opinion thereon and we do not provide a separate opinion on these matters. We have

determined the matters described below to be the Key Audit Matters to be communicated to the

shareholders.

S.

N.Key Audit Matters

.lInterest Recognition

interest Income of Bikas Bank has to be recognized on

accrual basis and following the Guideline on

Recognition of Interest Income, 2019 issued by NRB.

Even though accrual basis of income recognition is

prescribed in general, the guidelines requires

suspension of interest recognition on accrual basis forloans and advances where payment of principal

and/or interest are overdue for more than 12 months

whereas for loans and advances *,here payment o(

Our audit approach regarding

verification of process of interest

recognition included:

a. Obtaining clear understanding of

the process of accrual of interest

income on Ioans and advances inthe Core Banking Software of the

Bikas Bank.

b. For Fair valuation of coliateral,

9-

ci!

INDEPENDENT AUDITOR'S REPORTTO THE SHAREHOLDERS OF LUMBINI BIKAS BANK LIMITED

Auditors Response

I

Khafendra q AssociaresChartered Accountants

Frrm Regiskalion Number 222 (ICAN)PAN No. 302401563

o Old Baneshwor - 10, Kathmandua kassociatesl38@gmail come 01-4467567

principal and/or interest are overdue for more than 3

months but less than 12 months, interest recognitionon accrual basis is limited on the basis of result ofcollateral testing as specified. Given the lack of core

banking system capability to suspend recognition o(income on the basis of fair value of collateral andreview of fair value of collateral on regular basis,

manual intervention will be required in interestrecognition process and hence creates risk ofimproper application of the guidelines and

determination of the fat value of collateral. This may

in turn, have effect on recognition of interest income

of Bikas Bank. Thus, we have considered as KeyAudit Matter.

we relied on the latest available

engineer' s va.luation of the

collateral and have test check the

hair cut in fail value of collateralas per Guideline on Recognitionof lnterest lncome 2019.

c. Test check of interest income

recognized with arurual

computation.

2 Modified Audit Procedures Carried Out in Light ofCovid-l9 Outbreak:

Due to Covid -19 Pandemic nationwide lockdownand travel restrictions imposed by government duringthe period of our audit, we could not gather auditevidence in person/physically through discussions

and personal interactions with the officials at the

branches. We have identified such modified auditprocedures as a Key Audit Matter.

Our modified audit proceduresinclude:

a. We conducted verfication ofnecessary records and docurrrents

electronically in respect ofbranches wherever physical

access was not possible.

b. We made enquiries and gathered

necessary audit evidence throughtelephonic communications and

emails.

Other Information

Management is responsible for other information. The other information comprises the informationinduded in the Annual Report and Report of Board of Directors, but not included in the

consolidated financial statements and our auditor's report thereon.

Our opinion on the consolidated financial statements does not cover other information and we do

not express any forrr of assurance conclusion thereon.

Responsibilities of the Management and Those Charged with Govemance for the ConsolidatedFinancial Statements

Management is responsible for the preparation and fair presentation of the consolidated financia.l

statements in accordance with Nepal Financial Reporting Standards (NFRSs) and for such intemal

control as management determines is necessary to enable the preparation of consolidated financial

statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements. management is responsible for assessing the

Bikas Bank's ability to continue as a going concern, disclosing, as applicable matters reiated to going

concern and using the going concern basis of accounting udess management either intends to

liquidate the Bikas Bank or to cease operations or has no realistic alternative but to do so.

.a

Khafendra g AssociatesChartered Accountants

Firm Registration Number 222 (ICAN)PAN No.302401563

o Old Baneshwor - 10, Kathmandua kassociatesl [email protected] 01-4467567

Those charged with govemance are responsible for overseeing the Bikas Bank's financial repotting

Process.

Auditols Responsibilities for the Audit of the Consolidated Financial Statements

Our o$ectives are to obtain reasonable assurance about whether the consolidated financialstatements as a whole are free from material misstatemen! whether due to fraud or error and toissue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance

but is not a guarantee that an audit conducted in accordance w'ith NSAs will always detect a

material misstatement when it exists. Misstatements can arise from fraud or error and are

considered material if individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these consolidated financial

statements.

As part of an audit in accordance with NSAs, we exercise professional judgment and maintain

professional skepticism tfuoughout the audit. We also:

. Identify and assess the risks of material misstatement of the consolidated financial statements,

whether due to fraud or error, design and perform audit procedures responsive to those risks,

and obtain audit evidence that is sulficient and appropriate to provide a basis for our opinion.The risk of not detecting a material misstatement resulting from fraud is higher than for one

resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations or the override of internal control.

o Obtain an understanding of internal contol relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing an

opinion on the effectiveness of the Bikas Bank's internal control.

o Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

. Conclude on the appropriateness of management's use of the going concem basis of accounting

and based on the audit evidence obtained, whether a material uncertainty exists related to events

or conditions that may cast significant doubt on the Bikas Bank's ability to continue as a going

concerrl U we condude that a material uncertainty exists, we are required to draw attention inour auditor's report to the related disclosures in the consolidated financial statements or, if such

disclosures are inadequate to modify our opinion. Our conclusions are based on the audit

evidence obtained up to the date of our auditor's report. However, future events or conditions

may cause the Bikas Bank to cease to continue as a going concern.

o Evaluate the overall presentation, structure and content of the consolidated financial statements

induding the disdosures, and whether the consolidated financial statements represent the

underlying kansactions and events in a manner that achieves fair presentation.

We communicate with those charged with goverrance regarding among other matters, the planned

scope and timing of the audit and significant audit findings including any significant deficiencies in

intemal contol that we identify during our audit.

From the matters communicated with those charged with governance, we determine those matters

that were of most significance in the audit of the consolidated financial statement of the current

period and are therefore the key audit matters. We describe these matters in our auditor's report

Khafendra q AssociaresChartered Accountants

Firm Registration Number 222 (tCAN)PAN No.302401563

o Old Baneshwor - 10, Kathmanduo kassociatesl [email protected] 01-4467567

ur ess law and regulation precludes public disclosure about the matter or whery extremely rarecircumstances, we determine that a matter should not be cornmunicated in our audit report because

the adverse consequences of doing so would reasonably be expected to overweight the publicinterest benefits of such communications.

Report on Othet Legal and Regulatory Requirements

On the basis of our examination, we further report thah

1) We have obtained satisfactory information and explanations asked for, which to the best of ourknowledge and belief were necessary for the purpose of our audit.

2) The consolidated financial statements which include consoiidated statement of financial

position as at Ashad 31, 2077, the consolidated statement of profit or loss, consolidated

statement of cash flows, consolidated statement of changes in equity for the year then ended, a

summary of significant accounting policies and notes to the consolidated financial statements

are prepared in all material respect as per the procedure and format prescribed by Nepal Rastra

Bank and in agreement with the books of accounts maintained by the Bikas Bank and proper

books of account as required by the law have been kept.

3) The capital fund, risk bearing fund and the provision for possible impairment o{ assets of the

Bikas Bank are adequate as per the Directives issued by Nepal Rastra Bank.

4) The returns received from the branch offices of the Bikas Bank, though all the statements are

independently not audited, were adequate for the purpose of the audit.

5) We did not come across cases of accounting related fraud and the cases where the board ofdirectors or any director or any office bearer of the Bikas Bank has acted contrary to the

provisions of law or caused loss or damage to the Bikas Bank or committed any

misappropriation of its funds.

6) To the best of our information and according to the explanations given to us, in the course ofour audit, we observed that the loans have been written off as specified; the business of the

Bikas Bank was conducted satisfactorily, and the Bikas Bank's transactions were found to be

within the scope of its authority.

l!Kallmandu

NepalCA. Khagendra Bhattarai

For Khagendra & Associa

Chartered Accountants

UDIN No. 201209CA00138mE8dX

Date: 2077.08.23

Baneshwor, Kathmandu

Lnmbini Bikas Brnk Limir€d

Consolidated Statemfft of Financir l Position

As rtI Ashld 2077 (lSJuly 2020)

aanl

31st Ashrd 2077 3lst Ashrd 2076

C6sh and cash equivalent

Due ftom Nepal Rastra Bank

Placement with Bank atrd Financial lnsdiuliors

Derivalir€ fi nanciai instuments

Other t ading arse8

Loan and advances to B/FIS

[,o€ns and advances to customers

Inveslrnenl s€curiti€s

Curent tax ass€ts

Invcsrmeor iI subsidianes

Investment iD assocntes

Invesonetrl property

Prop€rty and equipment

Goodwiu and lntlngible ass€ls

Delened tax assets

Olher assets

4,811,555,106

1.300.360.398

4,125.966,766

832,739,821

4t4.2

43

4_5

4_6

47

48

4.9

4.10

4lt4t24.t3

4.14

4.t5

4.t6

1,008.80t,718

24,120,s24,314

t.936.473,817

I48,003,557

t,206,87,608

21,t44,418,517

r,666,989,837

109,783,096

483,295.906

54,t97,7 t8

314,659,956

3,328,740

408,866,853

54,292,581

322,691,t24

3,985,687

34,435,648

I17,0t0,979I t5,382,380

30.027J18,s17

3lst A.hrd 2m7 llst Ashxd 2m6

Lirbilitie!

llu€ to Bank and Financial Insliturion.

Due lo Nepal Rastm Bank

D€rivative fi nancial instrumenB

Deposits from customers

Borrowang

Cunent Tax Liabilities

Pror.isions

Def€ned &x liabilities

Other liabilities

Debt s€eurilies iss,red

Subordinaied Liabilities

4.17

418

4.19

420

4.21

4.9

4.15

423

4.24

415

t,176,164.4'/2

469,929.415

3,310,1t0,761

681,687, 2

28,058,819,721 21,496.404.627

331.099.S52306399,038

Tolallirbilities 10,052,60E.29' 25,819,298,.152

Equity

Share capital

Share premium

Rerained e.ntings

2,1t6,111.729

76.3t1

293_536.397

t.434,051,r 54

2,2lJ9 ,766,311

t4,"!72.683

522,O39.599

1 ,461 ,941 .4 70

1.:6

421

Totrl equiiy attribut ble to equitt holders ,t.443.97S,592 .1208,020,065

NoFconlrolling interesl

Toialrquil! 1.113,9r5.5): 4.208.020.06s

Total liabiliries and equily 34.496.581.390 30,0?7Jt8.517

Contingent liabililies and commilment

Nel ass€ts value per share

1 ,877 ,7 t5 ,145

161.60

2,t tl,6l r ,668

| 90.43

428

\As p€r our repo( oleven date

NawaEj BheddiHcad- Fmocc A@rrnt and rMsury Ch'cfExsrJti\e Cflicer Khag@dra Md As$ci.l6

Ch.nod A@urats

sisdel

@F4It.np Xn rxr .\.ha^n I hbin Krisltn. ShE$ha

3:1.496.581.890

Wdtu

,M/

Lumbini Bikas Brok LimitedConsolidated Statement of Profit or Loss

For the yerr ended 3l Ashad 2077 (15 July 2020)

Figwes in NPR

Brnk

lnter€st income

lnterest expense

l-ear endcd

Jl st Ashad 2077

Y€ir erded

3l st Ashad 2076Note

4.29

4.30

3,243,024,468

2,078,370,134

3,44t,5t4,532

2,29 t .1 60.7 58

Nel interest income I,164,654,334

Fee and commission income

Fee and commission expense

4.3 r

4.32

|9,187,194

3,363,472

140,049,584

3,070,861

Net f€€ and commission iocome 116,121,322 136,978,722

Net intcresl, fce and commission income t,266,178,095 1,30r,633,057

Net trading incofte

Other operating income

4.33

4.34

13,481

28,153,305

24,5t4

39,s49,084

Total operating income t,294,344,881 1,3,ll,206,654

lmpairment charge/(reversal) for loans and other losses 4.35

4.41

178,040,667 (r 03,755,835)

\ct opcrating income l,l16J04,214 |,411,962,1E9

0pemting expense

Personnel expenses

Other operating expenses

Depreciation & Amortization

4.36

4.31

4.38

324,049,733

212,72t,007

53,482,738

349,332,328

196.653.917

5t.t62,579

Op€rating Profit 526,050,737 8t7,813,665

Non operating incomc

Non operatin8 expense

4.39

4.40

13,700,688

1,298,t45

7,836,1r l503,564

Prolit before income ta\ 538,{53,280 855,116,212

lncome tax expense

Current Tax

IJefcrred Tax

159,892,456

154,529,27 |5,363,185

234,464,648

251 ,7 6't ,318(23.302,670)

Profit for the period 378,560,824

Profit attribut!ble to:

Equity holders of the Bank

Non-controlling interest

378,s60,824 620,681,564

Profil for thc period 17ri,560,82.1 620,68r,561

Earnings per share

Basic eamings per share

Diluted eamings per share

Na\ramj Bhandari

Head- Finance Account and Tr€sury

Naresh Singh Bohra

Chief Exe.uliYe Oflicer

13.94

13.94

28.38

28.38

As per our report ofeven date

Rrsal

Chairman

CA

Khagendra iari\

L *:Pmlap Kumar Acharr?

Director

hna Shreslha

Date 2077 08 23

Dire.tor

Sigdel

Drreclor

Keshav Khatiwada

Direclor

Chintamani Bhattara,

Dire.tor

I,149,753,17 4

620,681,s64

W @Chartered Accountanls

-4M

Lumbini Dikas Bank Limitcd

Consolidated Statement of Comprehensive Income

For the year ended 31 Ashad 2077 (15 July 2020)

Figures in NPR

Bank

\oteYear ended

3lst Ashad 2077

Year ended

3lst Ashad 2076

Profil for the year

Other comprehensive itrcome, ret ofincome trxr) Items thit will not be rechssified to Profit or loss

. CainV(losses) from Investrnents in equity instruments measured al fair value

. Gains(losses) on revaluation

. Actuarial gains(losses) on defined b€nefit plans

. lncome lax ielating to above items

NGt other compreheDsive ircome thst will not be reclassifi€d to profia or loss

b) Items thrt are or may be rechssified to profit or loss. Gains(losses) on cash flow hedge

. Exchange gains(losses) (arising from translating financial assets of foreign

operation). lncome tax relating to above items

. Reclassiry to profit or loss

Net other comprehensiv€ income that are or may be rechssified to profit orloss

c) Shrre ofotherco prehensive income oflssociate sccou[ted rs perequited

method

Other comprchensive income lor the pcriod, nct of income tax

Total comprehensive income for the year

Total comprehensivc income ettribufeble to:

Equity holders of the Bark

Non-contiolling interest

Total comprehensivc income for the period

178,560,82,1

241,091.235

620,681,s6,1

( 15,874,464)

(1,234,718)

5,132,7 55

3,652,060

(69,668,1l3)

t 75,081,182 (|,916,428)

70,r58,0s3.J6 51,726,176

245,,139,235 45,149,749

62

624,000,059

t2

666,431,312

621,Qqo,0sl 666,,t3 I ,31 2

As per our report of even date

RrsalNawaraj Bhandari

Head- Finance Account and Treasury

Naresh Sinsh Bohra

ChiefEx€cutive Ofiicer

AnJu K

Diffi e*

Pratap Kumar Acharya

Direclor

Chsnered

Chinlaman Bhattarai

Charrman

Drrector

Prabtn

Direclor

Shresrha Keshav Khati\rada

Director Direclor

#fr @

Datet 2017.08.23

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Olher Rescrves

l,umbini Bik s Brnk Limited

Chrrg$ in Oih€r Reserv€ ofthe Brtrk

2,224,754 22.3t1,886 363,000,867 r20,r 29.s 5.475,000

19.16t,t92\

1,527 ,633

89,t34,6J8

513.148,018

89,134,6s8

1,527,633

(9,761,192)

2,221,154 22,3t7,886 36f,,000,867 I t0,36n,J19 5,475,000 1,527,633 89,134,658 5')4.049,t t8

As at I st Shra*rn 2074

Reserve in Associates using equity Method

Actuarial Loss

Reserve transferred to retained eamingClosiog rs on lst Shrrwall 2074 after NFRS

Adjustment

Transfer to vanous reserves from rctained eaming

Transfer to retained eaming during the year

OCI Movement-Resene ln Assocrales usinS equity

oCI Movemedt on Actuanal Cain/loss

DTA on oclClosiog bslsfte ofOther reserte rs.t 32 Ashrd

2075 ,fter NFRS Adjustment

Transfer lo laflous reserves from relarned eaming

Transfer ro retained eaming dunng the y€ar

OCI Movement-Resewe in Assocrates using equity

oCI Movement on Actuarial Cain/loss

DTA on oCIClositrg belsrceofOther reserve ss st 3l Ashed

2076 rfter NFRS Adjuslmert

2,450,20i 2,996,788

( r,665,40r )

24.763,150

03,e42,229)

(341,524)

t02,457

30,210,143(95.507,629)

70,135,295

(341,524)

102,451

'to.135.295

2,150,205 3,556,141 47,08t,036 .361.000,867 16.526,091 s,.t75,000 1,288,566 159.269.9s3 598,6.t?,859

8,754,060

(5,65r,068)

6,206,816

12,734,921) (7,08t,036) ( 16,526,09t)

r4,960,876(31,995,1l5)

37,126,116(1.2t4,7r8)

3?0,4ts

51.726,176

(r,234.7r8)

370,4r5

5.55i,197 7,028,036 40,m0,000 l6l.ooo.867 5.475,000 424,264 216,9 ,r30 61Ii.,175..19.1

Tmnsfer to various reserves from relained eaming

Transfer !o.etained eaming during lhe year

Issue ofBonus Share

OCI Movement.Reserve rn Assocrales usrng €qurty

OCI Movement on Actuaflal Gain/loss

DTA/DTL on OCI{AdditionyReversalClosing b.lsocc ofOlhcr rcsarv. rs rt 3l Ashrd

2017

(5,s51.197)3,785.608

(7,028.016)3,785,608

(12,s79 ,233J(363.000,867)

70,358,053.84

3,652,060

(t,095,6t 8)

(363,000,867)

70,358,054

3,652.060

(1,095,618)

3,785,608 40,000,000 5.475,000 2,940,106 287,354,1lt3 339,595,497

(

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responsibililr_

Inlestm(4cAdjuslmetrl

lr:eo pitil'Rese*i

I

sneci"r Rcscrlc0(frried lnx I Acllarlalr.l:l

sair{loss)

RaSarve thitugliAsso.irl€-Equity

t,,:rotsi,.,

4 @::

)

LuDbitri Biln! Brnk LiDitedConsolidrtd Stlenent of c.sh flows

For the yelr.d.d ll Ashrd2077(lSJuty 2020)

3lsr Ashrd 207ri

CASH FLOWS FROM OPERATING ACTIYITIES

Fc.s atrd odFr income rcceircd

Divided recaived

Rcc.ipls from odler op€raring activities

Commission and tc€s p6rd

Cash pawent io emDloyees

OD.r.iiry .ah llo*s b.foE ctnces in oDentitrg .sets .nd li.biliti.s(Imrc.scyD.cras ir op...lios r$.tsDuc from N€pal Rastrn Bank

Placcment with bank and financial inslihrions

Olher tirding ass.ls

t,oan and adi€nc€s to bank ,nd financial inslitutions

Loans atrd adlznccs to cuslomcrs

Olhcr assets

3,tm,t64,951

140,049,5t4

12,873,163

3),296,556(2,078,3?0,84)

(3,0?0,861)

1245,598,542)

096.606.069)

l,cr! !d(Ihcr.!!.) in op.rrtitrr lilbilitidDuc lo bank a finarcia] institutions

Duc to Nepal Rastra Bant

Dcposn fioE cu{omeE

Bonowirgs

Olhcr liabilities

Net crlb flow fmm op€r.tinE rcliviti6 bcforc t r p.id

462,142,0i9

(467 ,620,s7',7\

E52,7JE,65t)

t39,4t1.244

t99,322,051

(1,136,130.754)

1,903,025

(194,791,197)

(1,992,454,1l0)

(41,509,216)

(2,133,346,289)

(21t,1s7,697)

6,562,419 ,096

(1,051,600,957)

681,68?,1t2

1,671,t61,055

847,065 (37,362,448)

1,2u,377,9U(t92,621,451)

{t72,7t9,886\(321,3.13,492)

Nel crsh flow from operatirq .ctivities 1,091,?56,513 (.196,ffi3,37E)

CASH FLOWS FROM INVf,STTNG ACTIVITIESPurchase of invcstrn€nt s€curities

Rec€ipts ftom sale of invesftcnt s€cuh€s

hmhas€ of prop€rty and €quipment

Rec€ipt 6om th€ sale ofpropeny and equipmert

Anchase of inransibl€ assers

R€c€ipl fiom th€ $le ofinransible ass€ts

furchase of investmenr propeni€s

Recoipl 6om lhe sale ofinvestment prop€rties

Dividend rEeivcd

(73,64E,300)

44.016,964

(44,280,368)

415,660

(435,500)

(76,390,7?0)

6,545,911

(30,020,379)

1,425,83?

(745,850)

(4,379,500)

9,795,719

(r95,504)

N.t cash used io irvestinq activities (?1.067,0.r8) (93,?68,906)

CASH FLOWS FROM FINANCTNG ACTIYITIESReceipt from jssuc ofd€bl secunlies

R.payment of d€bl s€curiti€s

Rcceipt lion issuc of subordinated liabilities

Rcpayment of subordiflated lirbilitiesReceipl fiom issue ofsltares

Dr,,lde ds paid

Ofier recetprpa) m€ni

36,998,090

(332,100,926)

Nel crsh from finrncitrg ,ctitiliar (r32,100,926) 36,998,090

Neti.cmse (decrelse) in crsh rnd c.!h equivrlents

Op.nins Cash and cash equival€nts

Derecosrition of Csh and cash equi!€lenr of Subsidiary

6E5,5E8,5J9

4,125,966,167

(ss2,83.1,t9,1)

4,6?8,800,161

mte fluctualaons on cash and cash equiwlentr h€ld

Crsh rnd c.sh equivalerts.l the eDd ofthe period {,811,555,.106 1,125,966,7 61

H6d- frecc Accoul and Trcasuy Ch'ef Execunte Omcs

4*:

C.4 r,has6.lra BhlttaaiKhag6d6 ud A5siar6

As pcr our repon of ewD date

\,,terf, frMY*-

,I

Olph

a(

,{rrcuot

Srgdd

t

3 ,2t8.145,715

|9,181,194I5,?10,668

r3,362,4t 1

(2,291,760,758)

(3,363,472)

(r96,6r9,342)(212.121 .007\

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D6ie.20',77 08 2l

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statements for the year ended 3lst Ashadh 2077

l.l.

t.2.

B.

D

Generel Informstion

Reporting Entity

Lumbini Bikas Bank Limited (hereinafter refened to as "The Development Bank") is a limited liabilitycompany incorporated in Nepal under Companies Act 2063.The registered omce ofthe bank is situated at

Dillibazzr, Kathmandu. The Bank carries out banking and olher financial activities under the license to

commence banking operations as a'B' Class financial institution fiom the Nepal Rastra Bank under the

Bank and Financial lnstitutions Act, 2073. The Bank's shares are listed on Nepal Stock Exchange Limited.

Muktinath Capital Limited is a public limited company incorporated in Nepal with the office of company

registrar as on 2nd February 2010 and received license from the Securities Board of Nepal on 27ft July

2010. The registered ofiice ofthe company is at Hattisar Marga, Kathmandu. The main objectives ofthecompany as licensed by the Securities Board of Nepal are issue manager, underwriter, share registrar,

portfolio manager and d€pository participant.

The Development Bank has share ownership of l9.75lo in Muktinath Capital Limited along with

representation ofone Board ofDirector fiom the Bank.

Nadep Laghubitta Bittiya Sanstha Limited

Nadep laghubitta Bittiya Sanstha Limited is a public limited company licensed as a "D" Class Financial

Institution by Nepal Rastra Bank. Its registered office is located at Dhading. It has been providing micro

loans targeted to members with low income or deprived sector.

The D€yelopment Bank has share ownership of l0% in Nadep Laghubitta Bittya Sanstha Limited along

with representation ofone Board ofDirsctor from the Bank.

Deprosc Laghubitta Bittiya Sarstha Limited

Deprosc Laghubitta Bittiya Sanstha Limited is a public Iimit€d company licensed as a "D" CIass Financial

lnstitution by Nepal Rastra Bank. tts registered office is located at Narayangadh, Chitwan. lt has been

providing micro loans targeted to members with low income or deprived sector.

The Development Bank has share ownership of 9.98% (Promoter Share) in DeProsc Laghubitta Bittiya

Sanstha Limited along with representation ofone Board ofDirector from the Bank.

Lumbini General Insurance Comptrty Limited

Lumbini General Insurance company Limited is a public limited company incoryorated under the

Companies Act, 2063 and operating as General [nsurance Company after obtaining licenses under

Insurance Act,2049. lts registered oflice is located at Gyaneshwor, Kathmandu.

The Development Bank has share ownership of 9.84p/o in Lumbini General lnsurance Company Limited

representation ofone Board olDir r from the Bank.

C

along wi th

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$la lc,

Associates

The Development Bank has four associates as given below:

Muktinath Capital Limiled (Former: Vibor Capital Limited)

4

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statements for the year ended 31st Ashadh 2077

1.3. Main Activities

The main activities of the Development bank include providing core banking facilities, agency services,

investment and treasury operations, card services and ecommerce services and facilities through variousbranches, strategic business units, extension counter, ATMS and network ofagencies.

, Basis ofPreparation

The financial statements of the Development Bank have been prepared on accrual basis of accounting inaccordance with Nepal Financial Reporting Standards (NFRS) as published by the Accounting Standards

Board (ASB) Nepal and pronounced by The Institute ofChartered Accountants ofNepal (ICAN).

The financial statements comprise the Statement of Financial Position, Statement of Profit or Loss and

Statement of Other Comprehensive Income shown in a single statement, the Statement of Changes inEquity, the Statement ofCash Flows and the Notes to the Accounts.

2.1. StatementofCompliance

The financial statements have been prepared in accordance with Nepal Financial Reporting Standards

(NFRS) and as published by the Accounting Standards Board (ASB) Nepal and pronounced by The

Institute of Chartered Accountants of Nepal ([CAN) and in the format issued by Nepal Rastra Bank in

Directive No. 4, 2077. The Financial Statements have also been prepared in accordance with the relevant

presentational requirements ofthe Company (First Amendment) Act,2063 ofNepal.

These policies have been consistently applied to all the years presented except otherwise stated

These financial statements for the year ended as on 3l't Ashadh,2077 arc preparcd under NFRS. The

Development Bank has been preparing statements under NFRS from the year ended on 3 I Ashadh, 2076.

2.2. ReportingPronouncements

The Development Bank has, for the prepamtion of financial statements, adopted the NFRS pronounced by

ICAN as effective on September 13,2013. The NFRS confirm, in all material respect, to Intemational

Financial Reporting Standards (IFRS) as issued by the Intemational Accounting Standards Board (IASB).

However, the Institute of Chanered Accountants ofNepal (ICAN) vide its notice dated 20 Seplember 2018

and another notice dated August 19,2020 (2077.05.03) has resolved that Carve-outs in NFRS with

Altemative Treatment and effectiye period shall be provided to th€ Bank and Financial lnstitutions

regulated by NRB on the specific recommendation of Accounting Standard Board (ASB). Details of carve

out provided are as follows:

a) NFRS l0 - Consolidated Financial Statements

A parent company shall prepare consolidated financial statements using uniform accounti

like transactions and other events in similar circumstances unless it is impracticable to do so.

ng policies for

b) NAS 28 - lnvestment in Associates and Joint Ventures

A parent company shall account for an associate in its consolidated financial statements using

accounting policies for like transactions and other events in similar circumstances unless it is i

to do so

The Development Bank has applied this

dated fi nancial statements

(

KalhmanduNepat

It

@

out for the equity accounti f its four Assoc in the


c) NAS 39 - Financial Instruments: Recognition and Measurement -Incuned Loss Model to measure

impairment loss on loans and advances

This is a mandatory cawe out for Banks and Financial Institutions registered under Banking and Financiallnstitution Acr,2073 which requires an entity to measure impairment allowance on loans and advances at

higher of amount determined as per regulatory norms prescribed by Nepal Rastra Bank and amountdetermined under Para 63-lncurred Loss Model.

The Development Bank has applied this carve out and recognized all its impairment allowance for lrcansand Advances based on norms prescribed under NRB Directive no. 0212077 being amount higher than theamount calculated under Incurred Loss Model.

d) NAS 39 Financial Instruments: Recognition and Measurement - Impracticability to determine transaction

cost ofall previous years which is a part ofeffectiye interest rate

This cawe out requires an entity to incorporate all fees and points paid or received under contractual terms

of a financial instrument in the calculation of effective interest rate for the financial instrument unless it is

immaterial or impracticable to determine such fees and points reliably.

The Development Bank has applied this carve out and has excluded the inclusion of the fees and

commissions received in the calculation ofthe effective interest rate on loans and advances.

e) NAS 39 - Financial Instruments: Recognition and Measuement - lmpracticability to determine intcrest

income on amortized cost

Once a financial asset or a group of similar financial assets has been written down as a result of an

impairment loss, interest income is thereafter recognized using the rate of interest used to discount the

future cash flows for the purpose of measuring the impairment loss. Inter€st income shall be calculated by

applying effective interest rate to the gross carrying amount ofa financial asset unless the financial asset is

written offeither partially or fully.

The Development Bank has applied this carye out and recognized interest income by applying the effective

interest rate to the gross carrying amount ofa financial assets.

2.3. Reporting Pe od and Approval ofFinancial Statements

The Development Bank follows the Nepalese financial year based on the Nepalese calendar. The reporting

period is from I't Shrawan 2076 and ending on 3l$ Ashadh2077 (i.e 176 July 2019 to l5n July 2020).

The financial statements for the year ended on 15 luly 202O (Ashadh 31, 2077) Ne approved by 378s

meeting of the Board of Directors held on 20771O8/23. The Board of Directors acknowledges the

responsibility of preparation of financial statements of the development bank. The approved financial

statements haye been recommended for approval by the shareholders in the 136 Annual General Meeting of

the Development bank,

Functional and Presentation Cunency

The financial statements are presenled in Nepalese Rupee ('NPR") which is also the functional currency as

this is the currency of the primary economic environment in which the Development Bank operates. All

ation presented in R has been rounded to the nearest rupe€ except wherc indicatedfinancial i

otherwise. Y,^

2.4.

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2.5. Use of Estimates, Assumptions and Judgments

The preparation of the financial statements in conformity with Nepal Financial Reporting Standards

requires the use of certain critical accounting estimates and judgments. It also requires management toexercise j udgrnent in the process ofapplying the Bank's accounting policies. The Development bank makes

certain estimates and assumptions regarding the future events. Estimates and judgments are continuously

evaluated based on historical experience and other factors, including expectations of future events that are

believed to be reasonable under the circumstances. Management believes that the estimates used in thepreparation ofthe financial statements are prudent and reasonable. Future results could differ fiom these

estimates. Any reyision to accounting estimates is recognized prospectively in cunent and future periods.

The accounting policies have been included in the rcleyant notes for each item of the financial statements

and the effect and nature ofthe changes, ifany, have been disclosed.

Disclosures of the accounting estimates have been included in the relevant sections of the notes wherever

the estimates have been applied along with the nature and effect ofchanges ofaccounting estimates, ifany.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying

amounts ofassets and liabilities within the next financial year primarily includes: -

a) Going Concem Basis

The Board of Directors is not aware of any material uncertainties that may cast significant doubt upon

Development Bank's ability to continue as a going concem and th€y do not intend to liquidate nor to cease

operations of it. Since, the Development Bank has resources and ability lo continue business for the

foreseeable future, the Financial Statements are continued to be prepared on the going concem basis.

While assessing entity's ability to continue as going concem, the Development Bank has taken into the

consideration of existing and anticipated effects of the COVID-19 pandemic and the govemment's relief

measures, its forecasts and sensitivities and projected coyenants compliances.

b) Useful life and residual value ofproperty, plant and equipment

c) Impairment ofproperty plant and equipment

At the end of each reporting period, the Development bank reviews the carrying amounts of its property,

plant and equipment to determine whether there is any indication that those assets have suffered an

impairment loss. If any such indication exists, the recoverable amount ofthe asset is estimated in order to

determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less

costs to sell and value in use. Value in use is usually determined on the basis ofdiscounted estimated future

cash flows. This involves management estimates on anticipated commodity prices, market demand and

supply, economic and regulatory environment, discount rates and other factors. Any subsequent changes to

cash flow to changes in the above tioned facrors could impact the carrying value ofassets

$4)

@

Management reviews the useful life and residual values of property, plant and equipment at least onca a

year. Such lives are dependent upon an assessment of both the technical life of the asse8 and also their

likely economic life, based on various intemal and external factors including relative efficiency and

operating costs. Accordingly, depreciable lives are reviewed annually using the best information available

to the Management.


ln the normal course of business, contingent liabilities may arise from litigation and other claims against

the DeYelopment Bank. Potential liabilities that are possible but not probable of crystallizing or are verydifficult to quantiry reliably are treated as contingent liabilities. Such liabilities are disclosed in the notes

but are not recognized.

e) Fair value measurements

Some assets and liabilities of the Development Bank are measured at fair value for financial reportingpurposes. The management determines the appropriate valuation techniques and inputs for fair value

measurements. In €stimating the fair value of an asset or a liability, the Development Bank uses market-

observable data to the extent it is available. Where Level I inputs are not available, the Development Bank

engages third party qualified valuator to perform th€ valuation. The management works closely with thequalified extemal valuator to establish the appropriale valuation techniques and inputs to the model.

f) Defined benefit plans

The cost of defined benefit plan and other post- employment benefits and the present value of such

obligations are determined using actuarial valuations. An actuarial valuation involves making various

assumptions that may differ from actual development in tho future. These include the determination ofthediscount rate, future salary escalations and mortality rates etc. Due to the complexities involved in the

valuation and its long term nature, a defined benefit obligation is highly sensitive to changes in these

assumptions. All assumptions are reviewed at each reporting date.

g) Recognition ofdeferred tax assets

Significant management judgrnent is required to determine the amount of deferred tax assets that can be

recognized, based upon th€ likely timing and the level of future taxable profits together with future tax

planning strategies. The Development Bank based its assumptions and estimates on parameters available

when the financial statements were prepared. Existing circumstances and assumptions about future

developments, how€ver, may change due to market changes or circumstances arising beyond the control ofthe Development Bank.

2.6. Changes in Accounting Policies

The accounting policies are applied consistently to by the Development Bank in all the periods presented in

the fi nancial statements.

Accounting policies are the specific principles, bases, conventions, rules and practices applied by the

Development Bank in preparing and presenting financial statements. The Development Bank is permitted

to change an accounting policy only if the change is required by a standard or interpretation or if it results

in providing reliable and more relevant information about the effects of transactions, other evcnts or

conditions on the entity's financial performance, or cash flows. There are no changes in the accounting

policies in the current fiscal year.

For the reporting of financial instruments, NAS 32 Financial Instruments- Presentation, NAS 39 Financial

Instruments - Recognition and Measurements and NFRS 7 Financial Instruments - Disclosures have been

applied t has been compl

}.

Ja &

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@

ed for classifi cation of Financial

d) Contingencies

2.1. New Standards in issue but not yet effective

I

I


A number ofnew standards and amendments to the existing standards and interpretations have been issued

by IASB after the pronouncements ofNFRS with varying effective dates. Those become applicable when

ASB Nepal incorporates them within NFRS.

2.8. Discounting

3 Signilicant Accounting Policies

The accounting policies set out below have been applied consistently unless otherwise stated

3.1. BasisofMeasurement

a)

These financial statements are prepared under historical cost convention except for certain material items

that have been measured at fair value as required by the relevant NFRS below:

Investment designated at fair value through other comprehensive income is measured at fair value.

The liability for defined benefit obligations is recognized as the present value of the defined benefit

obligation less the net total of the plan assets, plus unrecognized actuarial gains, Iess unrecognized past

service cost and unrecognized actuarial losses.

Financial assets and liabilities are initially recognized at fair value plus/minus fansaction cost except in

case offinancial assetv liabilities measured at Fair yalue through Profit or Loss statement.

b)

c)

3.2. BasisofConsolidation

a) Business Combination

Business combinations are accounted for using the acquisition method as at the acquisition date i.e. when

control is transferred to the Development Bank. Control is the power to govern the financial and operating

policies of an entity to obtain benefits from its activities. In assessing control, the Group takes into

consideration potential voting rights that curently are exercisable. The consideration transferred in a

business combination is measured at fair value, which is calculated as the sum ofthe ac4uisition-date fairvalues ofthe assets transferred by the Group, liabilities incuned by the Group ro the former owners oftheacquiree and the equity interests issued by the Group in exchange for control ofthe acquiree. Acquisition-

related costs are generally recognized in profit or loss as incurred.

b) Non-Controlling Interest

Non-controlling interests represent the equity in a subsidiary not attributable directly or indirectly to a

parent. Non-controlling interests are presented in the consolidated statement of financial position within

equity, separately from equity attributable to the equity shareholders of the Development Bank. Non-

controlling interests in the results ofthe Group are presented on the face ofthe consolidated statement

financial position and the consolidated statement of profit or loss and other comprehensive income as

allocation of the total profit or loss and total comprehensive income for th€ year between non-controll

interests and the equity shareholders ofthe Development Bank

For each business combination, the Development Bank elects to measue any non-controlling interests in

the acquiree either:

at fair value; or

uire identifiable net assets, whichat their onate share oft generally at fair value.

rcd l"

Discounting has been applied where assets and liabilities are non-cunent and the impact ofthe discountingis material.

I

d)

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statements for the vear ended 3lst Ashadh 2077

When group losses contol of subsidiary, the carrying amount ofany non-controlling interest in the formersubsidiary at the datc when control is lost (including component of other comprehensive incomeanributable to them) are derecognized.

c) Subsidiaries

Subsidiaries are entities controlled by the Group. The Group controls an entity if it is exposed, or has rights,

to variable retums from its involvement wilh the entity and has the ability to affeat those retums through its

power over the entity. The Group reassesses whether it still has control, ifthere are changes to one or more

of the elements of control. An investment in a subsidiary is consolidated into the consolidated financial

statements fiom the date that control commences until the date that control ceases.

The Development Bank reassesses, whether it has control, if there are changes to one or more of the

elements of control. In preparing the consolidated financial statements, the financial statements are

combined Iine by line by adding the like items ofassets, liabilities, equity, income, expenses and cash flows

ofthe parent with those of its subsidiary. The carrying amount ofthe parent's investment in subsidiary and

the parent's portion of equity of subsidiary are eliminated in full. All intra group assets and liabilities,

equity, income, expenses and cash flows relating to transactions between entities of the group (such as

interest income and technical fee) are eliminated in full while preparing the consolidated financial

statements.

The Dey€lopment Bank does not have any subsidiaries in the reporting date

Loss ofControl

When the Development Bank loses control of a subsidiary, it derecognizes the assets and liabilities of the

former subsidiary from the consolidated statement offinancial position. The Development Bank recognizes

any investment retained in the former subsidiary at its fair value when control is lost and subsequently

accounts for it and for any amounts owed by or to the former subsidiary in accordance with releyant

NFRSs. It is accounted for as an equity-accounted investee or in accordance with the Group's accounting

policy for financial instrumen* depending on the level of influence retained. That fair value shall be

regarded as the fair valus on initial recognition of a financial asset in accordance with NFRS 9 or, when

appropfiate, the cost on initial recognition of an investment in an associate or joint venture. Any gain or

loss associated with the loss ofcontrol attributable to the former controlling interest is also recognized.

e) Special Purpose Entity (SPE)

Special purpose entities (SPEs) are entities that are created to accomplish a narrow and well-defined

objectives. An SPE is consolidated if, based on an evaluation of the substance of its relationship with the

Development Bank and the SPE'S risks and rewards, the The Development Bank concludes that it controls

thE SPE.

The Development Bank does not have any Special Purpose Entity.

Transaction elimination on consolidation

tntra-group batances, transactions and any unrealized profit or loss arising from intra-group transactions are

eliminated i full in preparing the consolidated financial s

0

l>

(ff' t


g) Investment in Associates - Equity Accounting

An associate is an entity over which the Dcvelopment Bank has significant influences but not control orjoint control. This is generally the case where the Development Bank holds between 207o to 50% of thevoting rights or the Development Bank has power to participate in the financial ard operating policydecision of the investee.

The existence of significant influence by an entity is usually evidences in one or more of th€ followingways:

a. Representation ofboard ofdirectors or equivalent goveming body ofinvestee.

b. Participation in Policy making processes, including participation in decision about dividends orother distributions.

c. Material transaction between the entitv and investee etc.

Development Bank has measured the investment in associates using equity method of accounting in

consolidated statement of fi nancial statements.

An investment in an associates orjoint ventures is accounted for using the equity method fiom the date on

which the inyestee becomes an associate or joint venture. Under the equity method, an inv€stment in an

associate is initially recognized in the consolidated statement of Financial Position at cosl and adjusted

thereafter to recognize lhe Group's share of the profit or loss and other comprehensive income of the

associates orjoint ventures. When the Group's share oflosses ofan associates orjoint ventures exceeds the

Group's interest in that associate (which includes any long-term interests that, in substance, form part oftheGroup's net investment in the associate), the Croup discontinues recognizing its share of further losses.

Additional losses are recognized only to the extent that the Group has incurred legal or constructive

obligations or made payments on behalfofthe associates orjoint ventures.

3.3. Cash & Cash Equivalent

Cash and cash equivalent comprises cash in hand, balances with bank and financial institutions, money at

call and short notice, and highly liquid financial assets with original maturities ofthree months or less fiom

the acquisition date with insignificant risk of changes in their value which are held by the Development

Bank to meet short term cash commitments. Cash and cash equivalents are measured at amortized cost in

the Statement of Financial Position.

3.4. Financial Assets and Financial Liabilities

3.4.1 Recognition

Financial assets and financial liabilities are recognized when the Development Bank becomes a party to the

contract embodying the relat€d financial instruments. All financial assets, financial liabilities and financial

guarantee contracts are initially measured at transaction cost and where such values are different from tlle

fair value, at fair value. Transaction costs that are directly attributable to the acquisition or issue offinancial

assets and financial liabilities (other than financial assets and financial liabilities at fair value through

and loss) are added to or deducted fiom the fair value measured on initial recognition of financial

financial liability. Transaction costs directly attributable to the acquisition offinancial assets and fi

Iiabilities measured at fair value through profit and loss are immediately recognized in the sta

profit and loss.

The Development Bank initially recognizes loans and advances, deposits and debt securities issued on the

date that they are originated which s the date that the Development Bank becomes party to the contractual

/ns of the instruments , Govemment securities,provlsl estments in equity instruments, bonds, d

4


NRB bond or deposit auction, and reverse repos are recognized on date at which the Development Bankcommits to purchase/ acquire the financial assets.

3.4.2 Classification

Financial Assets

Financial assets at amonized cost

Financial assets are subsequently measured at amortized cost if these financial assets are held within a

business model whose objective is to hold these assets in order to collect contractual cash flows and the

contractual terms ofthe financial asset give rise on specified dates to cash flows that are solely payments ofprincipal and interest on the principal amount outstanding.

Financial assets at fair value through other comprehensive incomell.

lll

I

Financial ass€ts are measured at fair value through other comprehensive income ifthese financial assets are

held within a business model whose objective is to hold these assets in order to aollect contractual cash

flows or to sell these financial assets and the contractual terms ofthe financial asset give rise on specified

dates to cash flows that are solely payments of principal and interest on the principal amount outstanding-

The Development Bank in respect of equity investments (oth€r than in subsidiaries, associates and joint

ventures) which are nor held for trading has made an irrevocable eleclion to present in other comprehensive

income subsequent changes in the fair value of such equity instruments. Such an election is made by the

Development Bank on an instrument by instrument basis at the time of initial recognition of suoh equity

inv€stments.

Financial assets at fair value through profit or loss

Financial asset neither measured at amortized cost nor at fair value through other comprehensive income is

canied at fair yalue through the statement of profit and loss. Financial assets held for rading are also

designated at fair value through profit or loss.

B. Financial Liabilities

Financial liabilities at fair value through profit or loss

Financial liabilities are classified as fair yalue through profit or loss if they are held for trading or are

designated at fair value through profit or loss. Upon initial recognition, transaction costs, directly

attributable to the acquisition, are recognized in Statement of Profit or Loss as incurred. Subsequent

changes in fair value is recognized at the statement ofprofit or loss.

Financial liabilities measured at amortized cost

Financial liabilities other than those measured at fair value though profit or loss are classified and

at amortized cost using effective interest rate method.

3.4.3 Measurement

All financial assets, financial liabilities and financial guarantee contlaats are initially measured at

transaction cost and where such values are different from the fair value, at fair value. Transaction costs that

are directly aftributable to the acquisition or issue of financial assets and financial liabilities (other than

financial assets and financial liabili at fair value through profit and loss) are added to or deducted fiom

the fair (7a lue measu nln Transaction costs

thman

wrecognition f financial asset or fi al li

46

L


directly attributable to the acquisition offinancial assets and financial liabilities at fair value though profitand loss are immediately recognized in the statement ofprofit and loss.

Financial assets and liabilities designated at fair value through profit or loss are subsequently measured at

fair value with changes recognized at Statement of profit or loss whereas it is recognized at Statement ofOther Comprehensive Income for those financial insfuments designated at fair value through othercomprehensive income.

3.4.4 De-recognition

A. De-recognition of financial assets

If the Development Bank retains substantially all the risks and rewards of ownership of a transferred

financial asset, the Development Bank continues to recognize the financial ass€t and also recognizes a

collateralized borrowing for the proceeds received.

On de-recognition ofa financial assct in its entirety, the difference between the carrying amounts measured

at the date ofde-recognition and the consideration received is recognized in statement ofprofit or loss.

Gain on sale of Investment in equity Inyestment which was measured at fair value through comprehensive

income, the fair value movement till preceding year has been transferred from fair value reserve to relained

eamings (equity) through other comprehensive income and the gain realized in this reporting year has been

recognized through Statement ofprofit loss.

B De-recognition of fi nancial liability

expires. When an existing financial liability is replaced by another from thc same lender on substantial

different terms, or the terms of an existing liability are substantially modified, such an exchange

modification is treated as the de-recognition of the original liability and the reoognition of a new liabil

The difference in the respective carrying amounts is recognized in the statement ofprofit and loss.

3.4.5 Determination of Fair Value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly

transaction between market participants at the measurement date. The fair value measuremsnt is

the presumption that the transaction to sell the asset or

Kalhm.ndui'l

i)r ncipal market for the asset or liabili t)-.. or

transfer the liabili ty takes place either

n

The amortized cost of a financial asset or financial liability is the amount at which the financial asset orfinancial liability is measured at initial recognition minus principal repayments, plus or minus thecumulative amortization using the effective interest method of any difference between that initial amount

and the maturity amount, and minus any reduction for impairment or uncollectibility. The effective interestrate is the rate that exactly discouots future cash receipts or payments tkough the expected life of the

financial instrument, or where appropriate, a shoner period.

The Development Bank de-recognizes a financial ass€t only when the contractual righls to the cash flows

from the financial asset expire, or it transfers the financial asset and the hansfer qualifies for de-recognition

under NFRS 9.

If the Development Bank neither transfers nor retains substantially all the risks and rewards of ownership

and continues to conhol the transferred asset, the Development Bank recognizes its retained interest in the

assets and an associated liability for amounts it may have to pay.

A financial liability is derecognized when the obligation under the Iiability is discharged or cancelled or

k


ii) In the absence of a principal market, in the most adyantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the Development Bank. The fairvalue of an asser or a liability is measured using the assumptions that market paiicipants would use whenpricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability togenerate economic benefits by using the asset in its highest and best use or by selling it to another marketparticipant that would use the asset in its highest and best use,

The Development Bank uses valuation techniques that are appropriate in the circumstances and for whichsumcient data are available to measurc fair value, maximizing the use of relevant observable inputs and

minimizing lhe use ofunobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are

categorized within the fair value hierarchy, described as follows, based on the lowest level input that is

significant to the fair value measurement as a whole:

Leyel I -Quoted

(unadjusted) market prices in actiye markets for identical assets or liabilities

Level 2 -

Valuation techniques for which the lowest Ievel input that is significant to the fair value

measurement is directly or indirectly observable

Level 3 -

Valuation techniques for which the lowest level input that is significant to the fair value

measurement is unobservable

The Development Bank has determined the fair value of Inyestment in Equity Investment by considering

the active market price of equity share in case of quoted investment and net assets yalue of respectiye

companies for unquoted investment.

For the purpose of fair value disclosures, the Dev€lopment Bank has determined class€s of ass€ts and

Iiabilities on the basis ofthe nature, characteristics and risk ofthe asset or liability and the level ofthe fair

value hierarchy as explained above.

3.4.6 Impairment

At each reponing date, the Development Bank assesses whether there is any indication that an asset may

have been impaired. Ifsuch indication exists, the recoverable amount is determined. A financial asset or a

group of financial assets is impaired and impairment losses are incurred it and only if, there is objective

evidence of impairment as a result of one or more events occurring after the initial recognition ofthe asset

(a Ioss event), and that loss event (or events) has an impact on the estimated future cash flows of the

financial asset or group offinancial assets that can be reliably estimated.

The Development Bank considers the following factors in assessing objective evidence of impairment

Whether the counterpany is in default ofprincipal or interest payments.

When a counterparty files for bankruptcy and this would avoid or delay discharge of its obligation.

Where the Development Bank initiates legal recou.se of recovery in respect of a credit obligation

of the counterpart.

Where the Development Bank consents

diminished financial obligation, demonstrat

ofscheduled payments.

rly'here there is observable data indicating

future cash flows ofa group offinancial ass

specifi c individual fi nancial assets.

to a restructuring of the obligation, resulting in

ed by a material forgiveness of debt or postponem

that there is a measurable decrease in the estimat

ets, although the decrease cannot yet be identified with

The Development Bank considers evidence of impairment for loans and advances and held-to-maturity

investment i;ecur

ities at both speciflc and co individually signifi cant loans

KathmanduNepal

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Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Stetements for the vear ended 3lst Ashadh 2077

and held-to-maturity investment securities are assessed for specific impairment. Thosc found not to be

specifically impaired are then collectively assessed for any impairment that has been incurred but not yet

identified.

Loans and advances and held-to-maturity investment securities that are not individually significant are

collectively assessed for impairment by grouping together loans and advances and held-to-maturity

investment securities with similar risk characteristics. Impairment test is done on annual basis for trade

receivables and other financial assets based on the intemal and extemal indication observed.

In assessing collective impairment, the Development Bank uses historical trends of the probability ofdefault, the timing ofrecoveries and the amount ofloss incurred, adjusted for management's judgment as to

whether current economic and credit conditions are such that the actual losses are likely to be greater or

less than suggested by historical trends. Default rates, Ioss rates and th€ €xpected timing of future

recoveries are regularly benchmarked against actual outcomes to ensue that they remain appropriate.

Impairment losses on Assets measured at Amortized Cost as per NAS: 39

Financial assets carried at amortized cost (such as amounts due from Banks, loans and advances to

customers as well as held-to maturity investments is impaired, and impairment losses are recognized, only

ifthere is objective evidence as a result ofone or more events that occurred after tlte initial recognition ofthe asset. The amount ofthe loss is measued as the difference between the asset's carrying amount and the

deemed recoverable value ofloan.

Loans and advances to customers with significant value (covering at least 509'o of Total Non-Performing

Loans as per Nepal Rastra Bank Directive) are assessed for individual impairment test. The recoverable

value of loan is estimated on the basis of realizable value of collateral and the conduct ofthe borrower/past

experience ofthe Development Bank. Assets that are individually assessed and for which no impairment

exists are grouped with financial asscts with similar credit risk characteristics and collectively assessed for

impairment. The credit risk statistics for each group of the loan and advances are determined by

management prudently being based on the past experience. For the collective assessment of impairmenl ofloan, the Development Bank has categorized on the basis offollowing product.

Home Loan

Vehicle Loan

Personal Loan

Short Term Loan

Long Term Loan

Loan Loss Provision as per Nepal Rastra Bank

Loan loss provisions in respect of non-pedorming loans and advances are based on management's

assessment of the degree of impairment of the loans and advances, subject to the minimum provisioni

2

3

4

5

level prescribed in relevant NRB guidelines. Provision is made for possible losses on loans

including bills purchased at lyo to 1007o on the basis ofclassification ofloans and advances,

bills purchased in accordance with NRB directives.

and ad

As per the Carve out notice issued by ICAN, the Development Bank has measured impairment loss on loan

and advances as the higher ofamount de ved as per norrns prescribed by Nepal Rastra Bank for loan I

amount determined as per paragraph 63 ofNAS 39

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3.5. Trading Assets

Trading Assets are those assets that the Development Bank acquires principally for the purpose ofselling in

the short term, or holds as part ofa portfolio that is managed together for short t€rm profit. These asscts are

initially measured at cost and subs€quently at fair value with changes in profit or loss under "Net Trading

Income". Any transaction cost incurred are directly recognized in profit or loss.

3.6. Derivative Assets and Derivative Liabilities

A derivative is a financial instrument whose value changes in response to the change in an underlying

variable such as an interest rate, commodity or security price, or index; and that is settled at a future date.

Derivatives held for risk management purposes include all derivative assets and liabilities rhat are not

classified as trading assee or liabilities. Derivatives held for risk management purposes are measured at fairvalue in the statement offinancial position.

3.7. Property and Equipment

Recognition and Measurement

Recognition

Property, plant and equipment are tangible items that are held for use in th€ production or supply ofservices, for rental to others or for administrative purposes and are expected to be used during more than

one period.

The cost ofan item of property and equipment shall be recognized as an asset, initially recognized at cost,

if, and only if:

. it is probable that firture economic benefits associated with dre item will flow to the entity; and

. the cost ofthe item can be measured reliably.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-

constructed assets includes the following:

. the cost ofmaterials and direct labour;

. any other costs directly atributable to bringing the assets to a working condition for their intended use;

. when the Development Bank has an obligation to rcmove the asset or restore the site, an estimate ofthe costs of dismantling and removing the items and restoring the site on which they are located; and

. Capitaliz€d borrowing costs.

Measurement

Freehold land is carried at historical cost and is not depreciated. All other items of property, plant

equipment are staled at historical cost less accumulated depreciation and accumulated impairment losses, i

any. Historical cost includes expenditure that is directly attributable to the acquisition ofthe items.

Subsequent costs are included in the asset's carrying amount or recognized as a separate asset, as

appropriate, only when it is probable that future economic benefits associated with the item will flow to the

Development Bank and the cost of the ilem can be measured reliably. The carrying amount of any

component accounted for as a s€pamte asset are derecognized when replaced. All other repai$

are charged to profit and loss during the reporting iod in which they are incurred.

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The Development Bank identifies and determines cost of each component/ part ofthe asset separately, ifthe componenV part has a cost which is significant to the total cost of the asset having useful life that ismaterially different from that of the remaining asset. These components are depreciated over their usefulIives; the remaining asset is depreciated over the life ofthe principal asset.

Assets in the cowse of construction are capitalized in the assets under capital work in progress account(CWIP). At the point when an asset is operating at management's intended use, the cost of construction is

transferred to the appropriate category ofproperty, plant and equipment and depreciation gommences.

The residual values, useful lives and methods of depreciation of property, plant and equipment are

reviewed at each financial year end and adjusted prospectively, ifappropriate.

Depreciation

Depreciation is recognized so as to write off the aost of assets (other than freehold land and properties

under construction) less their residual values over their useful lives, using the straight line basis.

Depreciation is provided on the staight line method based on the estimated useful lives of the assets

determined by the management. Depreciation on additions to fixed assets is charged on pro-rata basis in the

year of purchase. The useful life of the assets and the corresponding ratcs at which the assets are

depreciated are as follows: -

Assets Value less than NPR 5,000/- per unit is charged to the profit and loss account irrespective oftheiruseful life in the year ofpurchase.

Changes in Estimates

The asset's methods ofdepreciation are reviewed, adjusted if appropriate, at each financial year end.

D. Derecognition

An item ofproperty, plant and equipment and any significant part initially recognized is derecognized upon

disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising

on derecognition of the asset (aalculated as the difference between the net disposal proceeds and the

carrying amount ofthe asset) is included in the statement ofprofit and loss when the asset is derecognized.

3.8. Goodwill/IntangibleAssets

Goodwill is the residual ofthe cost ofacquisition over the fair value ofthe identifiable net assets acqui

It is assessed for impaiment at the end of each reporting period. lt is measured at cost less accumu

impairment losses.

Intangible assets with finite useful lives that are acquired separately are caried at cost less accumulated

amortization and accumulated impairment losses. Intangi ble assets with indefinite useful lives are carried at

lated impairment losses.

Category of Asset Estimated useful lifeOf6ce Equipment 5 yearc

Fumiture Fi\1ure and Fitting 5 years

Vehicle 5 years

Computer, Printer and Accessories 5 years

ATM Machine 7 years

Freehold Premises 50 years

Earlier of 10 years or Lease Tenure

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Leasehold Assets

Computer software costs which are not integrally related to hardware are capitalized and recognized as

intangible assets based on materiality, accounting prudence and significant benefits expected to flow there

from for a period longer than one year.

Software is amortised on a staight line basis in profit or Ioss over its cstimated useful life, fiom the date

that it is available for use. The estimated useful life of software for the curent and comparative periods is

five years.

3,9, InvestmentProperty

An inyestment property is property held by the Development Bank to eam rentals or for capital

appreciation or both, rather than own-occupied. The investment property of the Development Bank solely

consists ofland or building acquired under the Non-Banking Assets.

The Development Bank has adopted a policy to measure the investment property in cost model. Anydepreciation and impairment in the subsequent period has been charged through the profit and loss account

in the reporting period.

3.10. Non-Current Assets-Held for sale:

3.11. Income Tax

Income tax on the profit or loss for lhe year comprises qufent taxes and deferred taxes. lncome tax is

recognized in the profit or loss statement except to the extent that it relates to items recognized directly to

equity or other comprehensive income.

a) Current Tax

Current tax is the expected tax payable on the taxable income for the year using tax rates at the balance

sheet date and any adjustment to tax payable in respect ofprevious years.

Income tax rates applicable to the Development Bank: 307o

b) Defened Tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets

liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred income tax

is determined using tax rcte appliaable to the Development Bank as at the reporting date which is expected

to apply when the related deferred income t"x asset is realized or the defened income tax liability is settled.

A defened tax asset is recognized only to the extent that it is probable that future taxable profits e'ill be

The carrying ount of deferred ta,\ assets is reviewed at

KathmanduNepal

avai lable nst which the asset can be util


Non-current assets (such as property) and disposal groups (including both the assets and liabilities of the

disposal groups) are classified as held for sale and measured at the lower oftheir carrying amount and fairvalue less cost to sell when:

(i) their carrying amounts will be recovered principally through sale;

(iD they are available-for-sale in their present condition; and

(iii) their sale is highly probable.

Immediately before the initial classification as held for sale, the carrying amounts of the assets (or assets

and liabilities in a disposal group) are measured in accordance with the applicable accounting policies

described ahove.

I


the end of each reporting period and reduced to the extent that it is no longer probable that sufficienttaxable profits will be available to allow all or part ofthe asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period inwhich the liability is settled or the asset realized, based on tax rates (and tax laws) that have been cnacted orsubstantively enaated by the end ofthe reporting period.

Deposits include non-interest bearing deposits, saving deposits, term deposits, call deposits and margin

deposits. The Development Bank presents the deposits held from customers and bank and financialinstitutions at amortized cost.

These transactions are recorded on the Development Bank's books, and the resulting balance is recorded as

a liability for the Development Bank and represents the amount owed by the Development Bank to the

customer.

Subordinated liabilities are those liabilities which at the event of winding up are subordinate to the claims

of depositors, debt securities issued and other creditors. The Development Bank does not have any ofsuchsubordinated liabilities and has not issued any debt security in the reporting period.

3.13. Provisions, contingent liability and contingent Assets.

Provisions are recognized when the Development Bank has a present obligation (legal or constructive) as a

result of a past event, it is probable that an outflow of resources embodying economic benefits will be

rcquired to settle the obligation and a reliable estimate can be made ofthe amount ofthe obligation.

When the Development Bank expects some or all of a provision to be reimbursed, for example, under an

insurance contract, the reimbursement is recognized as a separatc asset, but only when the reimbursement is

virtually certain.

The expense relating to a provision is presented in the statement of profit and loss net off any

reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate

that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in

the provision due to the passage of time is recognized as a finance cost,

A provision for onerous contracts is recognized when the expected benefits to be derived by the

Development Bank from a contract are lower than the unavoidable cost ofmeeting its obligations under the

conftact. The provision is measured at the present value ofthe lower ofthe expected cost of terminating the

conftact and the expected net cost of continuing with the contract. Before a provision is established, the

Development Bank recognizes any impairment loss on the assets associated with that contract.

A contingent liability is a possible obligation that arises from past events whose existence will be

confirmed by the occurrence or non-occurence of one or more uncertain future events beyond the cont.ol

of the Development Bank or a present obligation that is not recognized because it is not probable that an

outflow ofrcsources will be required to settle the obligation. A contingent liability also arises in extremely

rare cases where there is a liability that cannot be recognized because it cannot be measured reliably. Th

Development Bank does not recognize a contingent liability but discloses its existence in the standal

financial statements

vii. A contingent asset is a possible asset that arises from past eyents and whose existence will be confi

only by the occurrence or non-occurrence of one or more uncertain future events not wholly within

control oftP entity.

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3,12. Deposit, debt securities issued and subordinated liabilities

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3.14.


viii. Commitments include the amount of purchase order (net of advances) issued lo parties for completion of

tx.

assets.

Provisions, contingent liabilities, contingont assets and corrmitments are reviewed at each reporting period

Revenue Recognition

Revenue is the gross inflow of economic benefits during the period arising in the course of the ordinaryactivities of an entity when those inflows result in increases in equity, other than increases relating tocontributions from equity participants. It is measured at the fair value of the consideration received orreceivable. Revenue is recognized to lhe extent that it is probable that economic benefit will flow to the

Group and that the revenue can be reliably measured.

Revenue is not recognized during th€ period in which irs recoverability of income is not probable. The

Development Bank's revenue comprises of interest income, fees and commission, foreign exchange

income, cards income, remittance income etc. and the bases ofincomes recognition are as follows:

3.14.1 Interest Income

Interest income from a financial asset is recognized when it is probable that the economic benefits will flowto the Development Bank and the amount of income can be measured reliably. lnterest income is accrued

on a time basis, by r€ference to the principal outstanding and at the effective interest rate applicable, which

is the rate that exactly discounts estimated future cash receipts through the expected life of the financial

asset to that asset's net carrying amount on initial recognition.

The Development Bank has applied carve out under Para 9 ofNAS 39 and has not incorporated all the fees

and points paid or received under contractual terms of financial instrument in the calculation of the

effective interest rate to recognize the interest income. Hence, such fees have been directly recognized

under Profit or Loss under "Fee and Commission lncome"

The Development Bank has also applied carve out under AG-93 ofNAS 39 and recognized interest income

by applying the effective interest rate to the gross carrying amount ofa financial assets.

3.14.2 Fee and Commission Income

Fee and commission eamed for the provision of services over a period of time are recognized income in

cash basis at the time ofexecution ofsuch services.

3.14.3 Dividend Income

Dividend income (net of withholding taxes) from investments is recognized when the shareholder's right to

receive payment has been established (provided that it is probable that the economic benefits will flow to

the Group and the amount ofincome can be measured reliably).

3.14.4 Net Trading Income

It comprises gain or loss on tading assets, interest or diyidend income on trading assets and gains or losses

arising under settlement of foreign cunency transactions.

3.14.5 Net Income from Other Financial Instrument at Fair Value Through Profit or Loss

ges in fair value ofFinancial lnslruments designated at fair value through profit or lossIt includes chf

<>= $/


a

3.15. InterestExpenses

Interest Expenses include interest on deposits fiom customers, deposits fiom Bank and financialinstitutions and other interest bearing financial liabilities. lnterest expense is recognized in the profit or loss

using effeatiye interest rate for all the financial liabilities measured at amortized cost.

3.16. EmployeeBenelits

Employee benefits are all forms of consideration given by an entity in exchange for service rendered by

employees or for the termination of employment, Such benefits include short term, long t€rm, termination

and other long term benefits,

Short Term Employee Benefits

Shon term Employee Benefits include items such as following, if expected to be settled before twelvemonths aftor the end ofannual reporting period in which employee rendered the related services.

. Wages and salaries and Social Security contribution.

o Paid annual leave and paid sick leave

o Profit Sharing and Bonuses

. Non Monitory Benefits for cunent employees

Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the

related service is provided. A liability is also recognized for the amount expected to be paid under bonus

required by the Bonus Act, 2030 to pay the amount as a result of past service provided by the employee and

the obligation can be estimated reliably under short term employee benefits.

Under Defined Contribution plan the entity's legal and constructive obligation is limited to the amount that

it agrees to contribute to the fund.

Obligations for contribution to defined contribution plans are recognized as personnel expenses in profit or

loss in the periods during which related services are rendered. Contribution to a defined contribution plan

that are due more than l2 months after the end ofthe reporting period in which the employees render the

service are discounted to their present value.

Under this plan of provident ftrnd, the Development Bank pays pre-defined amounts to separate funds and

does not haye any legal or informal obligation to pay additional sums. Conributions to defined contribution

schemes (Provident fund) are charged to the profit or loss statement in the year to which they relate as the

Development Bank has no further defined obligations beyond monthly contributions. l0% of the Basic

Salary as Contributions to defined contribution schemes by the Development Bank along with same

contuibution from employees are deposited with Employees Provident Fund (Karmachari Sanchaya Ko"&4.r

and other approved retirement funds

B. Defined Benefit Plan GratuitY

Under defined benefit plans, the entity obligation is to provide the agleed benefits to current and former

employees. A defined benefit plan is a post-employment benefit plan other than a defined contribution plan,

efit plans is calculated separately for

b.

A.

ent Bank's net obligation inThe Devel opF

€

of defined h

Post-Employment Benefi ts Plan

Post- emplolrnent benefits plan ofthe Development Bank includes the followings.

Defined Contribution Plan - Provident Fund

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plan by estimating the amount of future benefit that employees have eamed in return for their service in the

cunent and prior periods. That benefit is discounted to determine its present value. Any unrecognized past

service costs and the fair value ofany plan assets are deducted.

The Development Bank provides for defined benefits in the form of gratuity. The liability or asset

recognized in the Statement of Financial Position in respect of defined benefit graruity plan is the present

value of defined benefit obligations at the end of the reporting period less fair value of plan assets. The

defined benefit obligation is calculated annually by actuaries through actuarial valuation using the projected

unit oedit method.

Th€ Development Bank recognizes the following changes in the defined benefit obligation to the profit or

loss statement:

- Service costs comprising current service costs and past-service costs

- lnterest expenses

The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit

obligation and fair value ofplan assets. This cost is included in employee benefit expenses in the statement

ofthe profit & loss.

Any changes in the liabilities over the year du€ to changes in assumptions or exp€rience within the scheme,

are recognized in other comprehensive income in the period in which they arise.

NAS 19 requires the exercise ofjudgment in relation to various assumptions including future pay rises,

inflation and discount rates and employee and pensioner demographics. The Development Bank determines

the assumptions in conjunction with its actuaries, and believes these assumptions to be in line with best

pmctice, but the application of different assumptions could have a significant effect on the amounts

reflected in the income statement, other comprehensive income and balance sheet. There may be also

interdependency between some of the assumptions.

The classification of the Development Bank's net obligation into current and non- curent is as p€r the

actuarial valuation report.

Cratuity is funded and deposited to a separate entity (Retirement Fund) towards meeting the gratuity

obligation.

Other long-term employment benefi ts

A liability is recognized for benefits accruing to employees in respect of wages and salaries, annual leave

and sick leave in the period the related service is rendered at the undiscounted amount of the benefits

expected to be paid in exchange for that service.

Compensated absences which are not expected to occur within twelve months after the end ofthe period in

which the employee renders the r€lated services are recognized as a liability at the present value of the

obligation as at the Balance sheet date determined based on an actuarial valuation.

The Development Bank regognizes the following changes in the defined benefit obligation to the profit or

loss statement:

vi.

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Sewice costs comprising current service costs and past-service costs

Interest expenses

Any changes in the liabilities over the year due to changes in assumptions or

scheme, fe recognized in profit or loss account in lhe period in which they arise.

experience within the

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3.17. Leases

The determination of whether an arrangement is (or contains) a lease is based on the substance of thearangement at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the

arrangement is dependent on the use ofa specific asset or assets and the arrangement conveys a right to use

the asset or assets, even ifthat right is not explicitly specified in an arrangement. A lease is classified at rhe

inception date as a finance lease or an operating lease.

A lease that transfers substantially all the risks and rewards incidental to ownership to the Group isclassified as a finance lease. A leased asset is depreciated over the useful life ofthe asset. However, ifthereis no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is

depreciated over the shorter ofthe estimated useful life ofthe asset and the lease term.

Finance leases are capitalized at the comm€ncement of the lease at the inception date fair value of the

leased asset or, at the present value ofthe minimum lease payments at the inception ofthe lease, whichever

is lower. Lease payments ar€ apportioned between finance charges and reduction ofthe lease liability so as

to achieve a constant rate of intercst on the remaining balance of the liability. Finance charges are

recognized in finance costs in the statement of profit and loss, unless they are directly attributable ro

qualirying assets, in which case they are capitalized in accordance with the Group's general policy on the

borrowing costs.

Operating lease payments are recognized as an expense in the statement ofprofit and loss on a straight-line

basis over the lease term unless anoth€r systematic basis is more representative ofthe time pattem oftheuser's benefit.

3,18. ForeignCurrencyTranslation

The functional currency of lhe Development Bank is determined on the basis of the primary economic

environment in which it operates which is Nepalese Rupee (NPR).

Initially transactions in currencies other than the entity's functional currency (foreign currencies) are

recognized at the rates of exchange prevailing at the dates ofthe transactions. At the end ofeach reporting

period, monetary assets and liabilities are denominated in foreign currencies are retranslated at the lates

prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies

are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items

that are measured in terms ofhistorical cost in a foreign cunency are not retranslated. Exchange differences

on monetary items are recognized in Statement ofProfit and Loss in the period in which they arise.

3.19. Financial Guarantee and Loan Commitments

Financial guarantees are contracts that require the Development Bank to make specified payments to

reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in

accordance with the terms ofa debt instrument. Loan commitments are firm commitments to provide credit

under pre-specified terms and conditions.

Loan commitment is the commitment where the Development Bank has confirmed its intention to proyide

firnds to a customer or on behalfofa customer in the form ofloans, overdrafts, future guarantees, whether

cancellable or not, or letters of credit and the Development Bank has not made

date, those instruments ar€ included in these financial statement as commitments.

payments at the report

3.20. Share Capital and Reserves

residual interest in the total assets of an entity after deducting all the liabilities. Incremental

attributable to the issue of an e educted fiom the initial m

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the equity instruments considering the tax benefits achieved thereon. The share capital of the Development

Bank includes the equity share capital with 5l % of Promoter and 49%o of the public. The Deyelopment

Bank has also maintained several stahrtory reseryes and fiee reserves which are presented in th€ statement

ofchanges in equity.

Regulatory R€serve against the uncollected interest income fiom loan customers has been created after

netting offincome tax and staffbonus provision for the purpose.

Dividends on ordinary shares are recognized as a liability and deducted fiom equity when they are

approved by the general meeting

3.21. Eamings per share

Basic earnings per share is computed by dividing the profit/ (loss) for the year by the weighted average

number of equity shares outstanding during the year. The weighted average number of equity shares

outstanding during the year is adjusted for treasury shares, bonus issue, bonus €lement in a rights issue toexisting shareholders, share split and reverse share split (consolidation ofshares).

Diluted eamings per share is computed by dividing the profi, (loss) for the y€ar as adjusted for dividend,

interest and other charges to expense or income (net of any attributable taxes) relating to the dilutivepotential equity shares, by the weighted average number of equity shares considered for deriving basic

eamings per share and the weighted average number of equity shares which could have been issued on the

conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only iftheir conversion to equity shares would decrease the net profit per share from continuing ordinary

operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period,

unless they have been issu€d at a later date.

3.22. SegmentReporting

Operating segment are those aomponents of an entity that engages in business activities which eams

revenue and incurs expenses, has discrete financial information and whose results are regularly reviewed by

lhe entity's chiefoperating decision maker.

The Deyelopment Bank has identified the key segments ofthe business on the basis of nature ofoperations

that assist the Development Bank in decision process and to allocate lhe resources. It will help the

management to assess the performance of the business segments that has been identified as below. The

business segments identified are Business Banking, Treasury and Remittance and Others. The segment

results that are reported include items directly attributable to a segment as well as those that can be

allocated on a reasonable basis. Unallocated items comprise mainly common assets, head office expenses,

and tax assets and liabilities. All opemtions between the segments are conducted on pre-determined transfer

price. Treasury Unit acts as the fund manager ofthe Development Bank.

4. Scheduled Forming part ofFinancial Statements

Schedules are attached with financial statements

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6,

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Lumbini Bikas Benk LirnitedNotcs to thc consolidatcd financial st&tcmcrt for the year cndcd 3lst -{shad 2077

4.1 Cash and cash eqoivalents

Particulars

Baok

As at3lst Ashad 2077

As at

3lst Ashad 2076

522,0t3,949

4,289,541 ,3s7

333,987,463

3 ,791 ,9 79,303

{.811,555J06 {.t2Total

4.2 Due from Nepal Rastra Bsnk

Particulars

Statutory balances \r ith NRB

Securities purchased under resale agreenrent

Other deposit and receivable from NRB

Total

4.J Placcments rvith Batlk and Financial Ilstitutions

PNrticIlars

Placemcnt with domestic B/FIS

Placement with tbreign B/Fls

lrss: Allowances for impaiment

Total

Cash in hand

Balances with B/FIS

Money at call and short notice

Other

Bank

As at

3lst Ashrd 2077

As rtSlst Ashad 2076

t,300,360.398 832.139,E21

r.300.360.398 832

Bank

As at

3lst Ashrd 2077 Slst Ashad 2076

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Lumbini Bikas Brnk Limited

Notes to the consolidated financial statement for the year ended Slst Ashad 2077

4.,1 Derivative fi nancial instrumcnts

Particulars

Held lor bading

lnterest rate sr ap

Currency swap

Forward exchange contract

Others

Held fot tisk mqnagemefit

Interest rate swap

Cunency swap

Forward exchange contract

Other

Total

4.5 Other trading assets

Particulars

Treasury bills

Govemment bonds

NRB Bonds

Domestic Corporate bonds

Equities

Other

Total

Pledged

Non-pledged

BankAs at

3lst Ashad 2077

Ta-a31st Ashad 2076

Bank

As at

3lst Ashad 2077

As at

31st Ashad 2076

€41,,:r. 'N

,-.

lor.|

,

\^/

Lumtrini Bikas Bank Limited

Notes to the consolidated financial statemert for the year ended 31st Ashad 2077

4-6 Loan and advances to B/FIS

Particulars

Loans to microfinance institutions

Other

Less: Allowances for impairment

Total

4.6.1 Allowances for impairment

Balance at Shrawan IImpairment loss for the year

Charge for the year

Recoveries/reversal

Amount wriften off

Balance at Ashad end

Particulars

Loan and advances measured at amortized cost

Less: lmpairment allolryances

Collective impairment

Individual impairment

Net amount

Loan and advances measured at FVTPL

Total

Particulars

Loans and advances to Customer

Loans and adYances to staff

Accrued lnterest

Total

lmpairment ( lncluding loans & advances to

BFIs )As per NRB Directive No. 2

As per NAS 39

Collective Impairment

Individual Impairment

Higher ofNRB Directive a;d NAS 39

Bank

As at

3lst Ashad 2077

As at

3lst Ashad 2076

t,018,991,287

10,189,569

1,218,320,74t

12,183,133

008 718

l2, t 83,133

( r,993,565)

I t37 608

8,235,201

3,947,932

10,189,569 12.183.t 33

BankAS at

3l st Ashad 2077

As at

31st Ashad 2076

25,070,086.446'7 49,562,t32

266,508,'789

483,053,343

24,320,524,314

2t,7 t3,946,4t7

569,527 ,90t

263,914,170

305,613,73 r

21,t44,418,517

21 521 l4

Bank

As at

3lst Ashad 2077

As at

3lst Ashad 2076

24,693,880,787

53,21 1,048

322 994 6t2

2 1

21,551,551

60,1

t02

2l 713

581,71t,034

182,996,707

83;7 59,577

99,23',7 ,130

58t,7 r 1,034

4\ 159.6

s/t,701

A*

4.7 Loans and advances to customers

21 ,144,418,517

7 59,751,701

199,889,951

98,133,990

101,755,961

Lumbini Bikas Bank Limited

Notes to the consolidated linancial statement for th€ year ended 31st Ashad 2077

4.7.1 Analysis of loan and adyances - By Product

Ban kParticulars As at

3lst Ashad 2077

As at

3l st Ashad 2076

Produc,

Term loans

C)verdraft

Trust receipt/Impon loans

Demand and other working capital loans

Personal residential loans

Real estate loatrs

Margin lending loans

Hire purchase loans

Deprived sector loans

Bills purchased

Staff loans

Other

Sub total

Interest receivable

Grand total

4.7.2 Analysis of loan and advances - By Currency

Particulars

Total

5,t32,246,568

4 ;7 36,7 43 ,07 3

979,755,833

2; 2,046,5t9

2,227,494,402

1,187,031,416

I ,482,81 5 ,392

1,423,095,699

53,211,048

4,812,65t,884

24.t747,091,835

4,591,955,161

4,853,6'78,303

339,913,003

2,234,768,386

1,863,280,738

920,883,850

1,684,106,4'19

I ,096,5'7 5 ,8',1 I

322 994 6| .71

60,166,220

3,966.389.358

21,611,711a69

102,229,048

Bank

As at

3lst Ashad 2077

As at

31st Ashad 2076

25,070,086,446 2t ,'7 t3 ,946 ,417

070 446 2l 713 17

:ffi

la$

Nepalese Rupee

Indian Rupee

United States Dollar

Great Britain Pound

Euro

Japanese Yen

Chinese Yuan

Other

25,070,086,446 21,713,946,417

4

w


Notes to the consolidat€d financial statement for the year ended 31st Ashad 2077

4.7.3 Analysis of loan and advances - By Collateral

Bank

Particulars As at

3lst Ashad 2077

As at

3lst Ashad 2076

Securud

Movable/immovable assets

Gold and silver

Guarantee of domestic B/Fls

Government guarantee

Guarantee of intemational rated bank

Collateral of export document

Collateral offixed deposit receipt

Collateral of Government securities

counter guarantee

P€rsonal guaranlee

Other collateral

Sublotal

Unsecured

Interest receivable

Grant Total

4.7.4 Allowances for impairment

Particulars

Sp€cific allowances for impairment

Opening Balance

Impairment loss for the year:

Charge for the year

Recoveries/reversal during the year

Write-offs

Exchange rate variance on foreign currency

impairment

Other movement

Closing Balance

Collective allowances for impairment

Opening Balance

Impairm€nt loss for the year:

Charge/(reversal) for the year

Exchange rate variance on foreign currency

impairment

Other movement

Closing Balance

Total allowances for impairment

As at

31st Ashad 2077

As at

31st Ashad 2076

23,035,605,916

58,t33,725

17,193,389

434,065,802

7 ,270,923

1,169,912

t,t9t,594,93124,7 45,034,597

2,057,238

322,994,612

20,1'70,691,950

t7,342,619

r7,193,388.90

463,657 ,57 6

1,323,281

937 ,7 s9,055

2l ,607 ,967 ,870

3,'.749,499

102,229,048

25,010,086,446 2l ,713,9 46,417

(

305,613,731

t77,439,612

483,053,343

263,914,170

2,594,619

266,508,789

149,562,132

460,r23,035

(154,s09,304)

305,613,731

215,482,157

48,43t,413

263,914,170

569,527,901

ffi/'t', L

i"4

Bank

4 I

Lunbini Bikas Bank Limited

Noles to the consolidated financial statement for th€ year ended Slst Ashad 2077

4.t Investmentsecurities

P&rticulsrs

Investment secu ties measured at amoniz€d cost

Investment in equity measured at FVTOCI

Total

4.8.1 Inv€slment securilies measured at amortized cost

PA rti. u la rs

Equity instruments

Quoted equity securities

Unquoted equitv securities

Total

t.936.473.8J7 1.66

Bank

Bank

As at

f,lst Ashad 2077

As at

3lst Ashad 2076

I ,367 ,807 .062

568,666,',t 7 5

| ,367 ,61I ,557

299,378,280

As at

3lst Ashad 2077

As at

3lst Ashad 2076

Debt securities

Govemment bonds

Govemment treasury bills

Nepal Rastra Bank bonds

Nepal Rastra Baok deposits instruments

0therLess: specific allowances for impairment

1.367 .807 .062

Total 1,167,807,062

4.8.2 lnvestm€nt in equity measured at fair value through other comprehensive income

Particulars

| ,367 ,6fi,557

1,367,6r1,55r

Bank

As at

3lst Ashad 2077

As rt3lst Ashrd 2076

554,2fi,597

14,455,178

290,998,180

8,380,100

56a,666,775 J99,37EJEQ

@ (

A

ire

I

Lumbini Bikrs Bank Limited

Notes to ihc consolidet.d finarcial st{tcmcnt for thc y.er.ndcd 3lsr Aslrsd 2077

,'igures in NPR

4.t.3 lnformation relating to investment in equitie.

Investrnala ilt quoted cquity

1.1 Api Pow.r Compsny Ltd.

1.2 Arun Ksb.li Powcr Ltd.

13 Asian Life lnsurrnce Co. Limited(10,595 ordinary shares ofNPR 100 paid up)

1.4 Bottl.rs Ncpal (Tcmi) Limitcd(500 odinary shares of NPR 100 paid ry)1.5 Brtwrl Power Company Limitcd(19,637 odirury shates of NPR 100 Wid up)

1.6 Chhimek Lrghubitt, Bik s Baok Limit d

( 7810 ordinary shares ofRs 100 paid upincluding 1666 bonw shares)

1.7 Chilime Hydropowcr Compeny LiDitcd(15,177 ordinary shores ofNPR 100 paid up including l4l I bonus

l.t Citiz., lDvcstmcot Trust( 15175 ordinory shores of Rs 100 paid lpincluding 2736 bonus

shares)

1.9 Civil Lrghubittr Bittiyr S.nslha Lad.

1.10 Evcrest Insursnce Co. Ltd.(l1,141 ordinary shares ofNPR l00widup)1,11 First Micro Finrnca Dcvalopment B.nk Ltd.(8,122 ordinary shares ofNPR 100 paid p)

l.l2 Forw.rd Community Microfirance Bittiya Sansthr Ltd,(3,109 ordinary shares of NPR 100 Wid up including 836 bonus share

)1.13 Globsl IME Laghubitta Bittiys Sansth. Ltd,

1.14 Gurins Life Insunnc€ Company Lld.

Q,589 otdinary shares ofNPR 100 paid up including 300 bonus

shores)

1.15 Himslsyrn G.Ircrrl Insur.me Co. Ltd(5,781 odinary sharet ofNPR 100 paid up)

1,16 llimalayan Power Prrtn€r Ltd.

l l? IME Cen.ral Insrr.nc. Ltd.

( 4197 ordinary shares ofRs 100 paid upincluding 237 bonus sharcs)

1,18 Jrlabidyut Lrgani T.th. Bikas Co. Ltd.(2 I 54 1 ordinary shares of Rs I 00 paid ry)1.19 NRN Lrgubitt! Bittiyr Srnsth. Limit.d

(50 ordihary sharcs ofNPR 100 paid up including I I bonus shares)

1.20 Lexmi Lrghubitt, Bittiys Sanstha Ltd.

1.21 Life Insuronce Co. Nepsl

(13,410 ordinary sharcs oINPR 10A paid up)

1.22 Mehilr Sshayetre Microfitrarce Bittiye Ssnsth. Ltd.

1.23 Nabil Equity trund

(563,251 tnits ofNPR l0 paid up)

1,24 Natioul Life Insuran.. Co. Ltd.( I 7,520 ordiwry shares of N P R I 00 wid up)

1.25 Nrtiorrl Mi.rofirtrtrc. Bittiys Sanstha Ltd.

.26 Nays Nepal Laghubitta Bikls Rank Ltd(5,308 ordinory shares of NPR 100 paid up

5,035,936

3,566,254

E,006,771

5,695,059

14,979,440

25,885.314

6,431,165

3,100,000

7,M9,683

8,5 t2,900

17,980,446

36,844,900

I,t49,750

?s 500

t.537,285

3,s66,254

8,006,771

5,695,059

250,250

55,460

2,441,625

3,,145,000

7,301,468

4,945,'t00

As rt3lst Ashad 2077

As rtllst Ashad 2076

Cost Fair Value Cost l'air Value

t4,979,440 19,614,087

25,885,314 24,763,655

6,310,237

3,461,954

4,794.639

4,590,092

4,507,7 r0

5,451,351

1,500

4,140292

6,456,884

4,794,639

1,600

550,898

8,880

2,306,070

4,t46,875

3,4t6,944

2.5,242

1,064,385550,898 r,203,835

2,6t5,021 2,423.496

1.842,483

2,615,02t

864,105

2,542,333

2,c24,400

328,860

1,517,6702.542,333

1,958,300

2.700

5,632,5r0

10,598,704

5,255,132

I t,888,858

2,864,953

41,500

1,958,300

2.700

3,468,101

32,370

14,345.836 17,835,300

2,709,116

16,485,409

2,000

5,632,510

t0,598,704

1,900

1,328,718

t,u9,573

18,336,000

9,102

s,255,132

10,249,200

42.920

<#*rk(.

\AN

68i

1,328.718 4,426,872

Bank

Bank

As at

3lst Ashed 20?7 Jlst Ashrd 2076

Cost Fsir lalue Cost Fair value1.27 Neco Insurstrce Co. Ltd.(7,0E6 ordinary shares ofNPR 100 paid up)

1,28 Ncprl Doonauchrr Comapany Limited(10,5 50 ordinary shares of NPR 100 paid q)1.29 Gram.en Bikes Lrghubitta Bittiyo Sansthr Ltd.(4,650 ordinory sharcs o[NPR 100 pord /p)lJ0 Neprl lltsurenc. Co. Ltd.

( 6916 ordinory shares ofRs 100 paid upincluding 329 bonus shares)

l3l Nepal Life Insurence Co. Ltd.(22420 otdinary sharcs ofRs 100 paid up)

lJ2 N€rud. Lrghubils Bikas Bank Limited(3,290 ordihary shores of NPR 100 paid up

inchding 329 bonus shares)

1.33 Ngedi Group Pow.r Ltd.

lJ4 Nirdhan Utthan Bink Limited

(4503 ordinary shores ofRs 100 paid upincluding 901 bonus shares)

l.J5 NLG Insurance Company Ltd,

( 9610 ordinory shares of Rs 100 paid upincluding 3604 bonus sharcs)

136 NMB Microlinanc. Bitliya SrNtha Ltd.

IJ7 Prrbhu lnsurrnce Ltd.

( 9006 ordinary shares of Rs I 00 paid upincluding 430 bonus shates)

l.3E Premier lnsuraDce Co. Ltd.

Q088 ordinary shares of Rs 100 paid up)

1.39 Prime Lifc ltrsur.ncc Corl,prny Lirrit.d( 21800 ordinary shares ofRs 100 paid upinctuding 2867 bonus

1.40 Prudentirl IDsurrnca Co. Ltd.

(3205 ordinary shares ofRs 100 paid upincludihg 1202 bonw shares)

l.4l Restriyr Beem{ Compeny Limit€d(l ordnary shares ofRs 100 paid up)

1.42 Ridi Hydropower Developmsnt Company Ltd.

l.4J Rural Microfinanc€ Dcvelopmcnt Centre Ltd.(11428 ordinary shares olRs 100 paid up)

1.44 Sagarmatha lnsurrnce Co. Ltd.

1.45 S{nr Kis.n Bikes Lrghubitt. Bittiyr Sensth{

( 2987 ordinary shares ofRs 100 paid upinclding 851 bonus sharcs)

1.46 Sanimr Mai llydropowcr Ltd.(995E ordinary shares ofRs 100 paid up)

1.4? Shikhrr Insursnce Co. Ltd.

( 4890 ordinary shares ofRs 100 Wid upincluding I ) 29 bonus shares)

1.48 Siddhrrthr lNurxnc. Ltd.(6080 otdirrary shares of Rs 100 peid up)

1.49 Soelte€ Hotel Limit€d

( 4601 odinary shores ofRs 100 paid upincludihg 600 bonus shares)

1.50 Summit Micro Finance Development Bank Ltd.

( 302 2 ordinary shares of Rs I 00 Wid upincluding 5 26 bonus shares)

l.5l Surya Lif. Insuranc€ CoInp{ny Limited

Q0392 ordinary shares olRs 100 paid up)

18,489,197

2,602,242

28,249,200

3.129,6t3

13,652,836

2,602,242

t6,596,420

1,546,300

270,@9

2,864,927

166,924

3,029,282

4.330,453

6,026,909

2,718,652

2,579,105

2,864,927 4,570,038

5,482,269 6,3t3,7',|0

3,229,492 4,277,850

2,220.124 r,580,065

622 9,199

4.290,276

6,910,250

2,s t 1,000

3,036,t24

4,330,453

6,026,909

2;178,652

2,576,801

3,t23,945

7,31 1,150

1,674,000

2,168,958

5,121,869 4,576,572

2,t00,544 r,l I 1,665

2,500

3,229,492

39,600

3,121,664

l,6l I,620

5,733,060

I,286.208

r 1,575,800

1,606,852

6,944,300

1,023,120

8,949,015

4,312,632 to,r 14,028

488,t22

13,000

4,312,632

575,037

560,272

7,261,250

14,850

8,477,325

2,250,600

2,962,500

2,913,981

6,123,76t

2.913,981

6,010,86r

2.217.985

2,899,731

4,938,155

962,744

4,934,079

962,7U

2.766,400

916,244

2,017.654

2.3|',|,568

3,tt6,087

2,220,634

4,982,910

3,526,400

708,517

2,342,050

9,135,616

2,3t7,568 t.272.960

3,920,107 6,810,816

\

K,re( [

.-

3,987.897

Bank

As ,tSlst Ashrd 2077

As atJlsl Ashad 2076

Cosl Fair value Cost Fair Yelue

1.52 Swabalsmben Laghubitls Bittiya Sansthe Limited

1.53 Swerojgsr Laghu Bittr Bikqs Bank Ltd

1,54 Synergy Porer Development Ltd.

1.58 Vijeya hghubitte Bittiya SBnsthe Ltd.

1.59 M.ro Microlimnc. Bittiyr Ssnsthe Ltd.(175 ordinary shares of Rs 100 paid up)

1.60 Asisn Lif. lnsursncc Co. Ltd.

Q promoter shares oINPR 100 wid up)

l.6l Rastriya Beema Cornpslty Limited(149 ordinary shares ofRs l00widup)1.62 Rurel Miarorillallce Davclopmc[t Centre Lld.

(12993 ordnnry shares ofRs 100 paid up)

1.63 Semrtr Microfinencc Bittiyr S{nsthr Ltd.( 92188 ordinary shares ofRs 100 paid upincluding 1390 bonus

1.64 Ev.rest lnsur{nc€ Co. Ltd.(6,636 pmmoter shares ofNPR l00paidup),.65 M.ro Microfinadc. Bittiy. Sinsthl Ltd.

(598598 ordinary shares ofRs I00 paid up)

1.66 INVEST-CITIZEN-MF II(2,000,000 units ofNPR t0 paid up)

1.67 INVEST. NMB NITTY(1,000,000 units ofNPR l0 paid up)

1.68 ltrv.st NIC ASIA BAL Fund(500,000 units ofNPR l0 paid up)

Sub Totsl

lnvestment in unquoted equity

1.1 G€n.rrl Insurrnc€ Comprny Napal Ltd. Promotcr Share

(35,000 pronotet shores ol NPR 100 paid up)

1,2 Karja Su.hana Kcddra(2,625 odinory shates of NPR 100 paid up)

l3 N€prl Cle!rinE House Ltd.

Q8,578 ordinary shares ofNPR 100 paid up)

1,4 N€p.l El..tronic Peyment Syst.m(NEPS) Promolcr

(10,000 promoter shares ol N PR 100 wid up)

1.5 N€pal Stock Erchangc(430 ordinary shares ofNPR 100 paid up)

Sub Totsl

Total

t 0,900

100

93,192

4,129,t37

r3,588,698

I I7,950

520

1,212,264

4,24t,711

30,422,U0

1,367,016

201,121,526

20,000,000

10,000,000

5,190,000

I,825,524

33,700

2,966,153

10,900

100

93.192

4,t29,137

654,350

2,M0,000

36,733

t,366,730

71,820

524

1,322,673

4,042,500

159,950

663,600

37,023,000

20,000,000

10,000,000

5,000,000

663,600

3?,023,000

20,000,000

663,600

46,046,000

20,000,000

3,500,000

54,000

2,38r,500

1,000,000

14,300

3,733,000

768,081

8,911,098

1,000,000

43,000

3,500,000

54,000

2,381,500.00

1,000,000.00

14,300

3,576,100

903,000

2,857,800.00

1,000,000.00

43,000

2.988.334 2,734,375

1,206,135

55,44061,600

20,000,000

2,401.524

20,000,000

3,019,200

J15,771,041 554,211,597 275,057,530 290,998,180

6.949.800 1d,455,178 6,9{9,800 E380,100

__.3221 _____s${55rJs _-_2npE)!_-___425J3@-

t

ed [!

4

l.S5 Siddhorthx Growth Sch.me

Q,000,000 units oINPR 10 paid up)

1.56 United lnsuratrce Co. (Nepsl) Ltd.(E160 otdinary shares of Rs l00Widup)1.57 Unitcd Modi Hydropower Ltd.

@

I

Lu(biDi Biltlr B.nl Limil.dNol6lo th. .orlolidlled ,i..ncirl ii.i.hot fo. tb. v.ir.Dded 3lsr Arhd 2077

4.10 lnv.stm.ntitsubsidirries

ll!r fthrd 2076

N.r.rrrying imourr

4.10J hvdtucnrh quo..d 3ob!idi.ri6

Equty intcrd ncu by NCI (',6)

Profit(lN) sltoclted duing th€ y@Aeumulatcd b8leces ofNcl as on Ashad c

Dividmd psid lo NCI

4.10.2 h!.stD.tri ir unquoted sul,sidisries

{.10.3 InfodrlioD r.bnng to tubiidilrid of lh. BmI

4.10.:l No!.o.trcllinp i.t 16r offt. sub3idiln6

3!rrtuhrd 20t5

3l.rAsb.d 2016

3lsr,\shrd 2076

As.t3l.ttuh.d 20?7 llsrAshad 2076

I

Z=*

& Arr!

lnYdttrqt h quor€d $bsidai6lnYcstn€nt m unquoted subsidrMd

Total invalan.Illtf,ss lmpaimdr allo*6c.s

4I

Lumbitri Bik s Brnk Limited

Notes to the cotrsolidat.d finrncirl st.tcmcnt for the vc.r cDdcd 3lst Ashrd 2077

Figures in NPR

4.ll ltrvcstmctrt in associet€s

I'articulars

lnvestmenl in quoled associales

Investment in unqooted associates

Totrl iovGstment

L€ss: lmpairment allowances

Net crrrying amount

4.11.1 Investmeot in quoted associstes

Particulers

Nadep tnghubitta Bifliya Sanstha Ltd. 368,000

Promoler shares ofRs. 100 each

D€prosc LrghuBitta Bikas Bank.

947,225 Promoler shares ofRs. 100 each

356,855 ordinary shares ofRs. 100 each

Lumbioi Geneml lnsumnce Co. Ltd.

t59,160 Promoter shares ofRs. 100 each

264,105 ordinary shares ofRs. 100 each

Total

Cosl Fair Value Cost Frir Valuc

32,000,000 126,224,000 32,000,000 32,000,000

46,4E5,168 719,t 84,855 46,485,168 271,055,188

77.456.555 314.66E.943 73.385.55s 166,98s,970

155.911.723 I,t60.077.798 151.E70.723 470.0.11J58

z:E<-tr>

B{n k

As at

3lst Ashsd 2077 3lst Ashrd 2076

44.1.21l.EE4

40,084.022

481,295,906

369,743.436

39,123,411

408S66,8s3

483.295.906 408,866,853

Bank

As rt3lst Ashrd 2077

As et

3lst Ashrd 2076

4

!g Asr

rad

.l.l L2 Intrslment in unquoted associites

Prrticulars

Muklinath Capilal Ltd.

(400,000 shares ofRs. 100 each)

Totrl

4.11.3 ltrlormrtiotr ralatitrg to..soci.t s ofth. B.nk

Bank

As al

31st Ash{d 2077 3lst AshAd 2076

Cosl lair valu. Cost Fair \'alue

40,000.000 40,000,000 40,000.000 40.000.000

40.000.000 10.000

B*flk

Percaotege of o$oership beld by the Brnk

As at

3lst Ash.d 2077

A3 rt

3lstAshrd 2076

Nadep taghubira Bittiya Sansrha Ltd.

Dcprosc hghuBitta Bikas Bank.

Lumbini General Insumnc€ Co. Ltd.

Muklinalh Capital Limited (former: Vibor

Capiral Ltd.)

4.11.4 Equity vrlue ofrssocietes

Perliculars

Nadep t ghubitta Bittiya Sanslha Ltd

Deprosc laghuBitta Bikas Bank.

Lumbini ceneral lnsurance Co. Ltd.

Muklinad| Capital Limited.

Totrl

10.00%

t2.g'to/o

9.84%

19.150/o

t0.N%

t2.97%

9.E4%

19.7svo

Bank

As .t3lst Ashrd 2077

As .t

3lst Ashrd 2076

63,957,950

238,467,032

140,786.902

40,084,022

483,29s,906 408,866,853

4 d#

i

&Ar

irdta

55,237,065

20r,848,21l

I12,658,160

39,123,4t7

/

w


Notes to the consolidated financial statement for the year ended 3lst Ashad 2077

4.12 InYestment properties

Investment properties measured at fair value

Balance as on Shrawan I

Additior/disposal during the year

Acquisition rhrough business combination

Net changes in fair value during the year

Adjustmenvtransfer

Net amount

lnvestment properties measured at cost

Balance as on Shrawan I

Addition/disposal during the year

Adiustment/transfer

Accumulated depreciation

Accumulated impairment loss

Net amount

Total

As at

3l st Ashad 2077

As at

3lst Ashad 2076

Bank

54,439,57 5

(241,797)

58,229,978

(3,790,402)

(r 46,9es)

54,197,7'.?8 54,292,58t

54,197,718 54,292,58t

-€

l:ltto

t

4 ,

ffi

Figwes in NPR

4.13 Property rnd Equipm.trt

B{r'k

Lrnd BuildingLersehold

Properties

Computcr &Acce$ories

Furoitur. &Firture

Equipmedt &Otbers

Vehiclcs

Cost

As on Shrrwsl l,2075

Addition durins the Year

Acquisirion

Capitaliz.tion

Disposal during th€ year

Adjuslment/Revalualion

49,694,582 137,429,571 106,142,223

33,700 3,5 r 0,44 r

(3,056.009)

26,118,424

4,077,009

(23,418)

5,474,800

(L79.329)

3,929,637

(432,228)

t,615,327

1259.77l')

|.319,466

(486,681)

30,020,380

(4,437,656)

46,221,711 29,203,661 20,866,581 42,550,507 45a,22126O

Rsl{nce as on Ashad end 2076 49,694,582 131,163,211 t06,596,655 J0,171,995 51,517,182 32,701.070 22,222,137 53,1,{3,093 481,1i09,985

Addilion during the Year

Acquisilion

Capilalization

Disposal during the year

Adjuslmenl/Revalualion

r.561,320 12.595,4@

(l?2,915)

4,880,283

(307,599)

2,376,180

(360,854)

7,&6.091

(161.272')

3.310.3E0

(732,EE7)

I1,910,7t4

(771,419)

,14,280,36t

\2,706,9461

Bal*oc. rs on Ashad cnd 2077 49,69.1,582 t39,024,591 I19,0t 9,139 34,144,679 5l-532,508 39,985,8E9 24,799,631 6.1,582.388 525.38J.106

Deprecirtion end Imprirmeot

As on Shrawsn I. 2075

I)epreciation charge for the Year

Impairmenl for the y6ar

Disposals

Ad.iustment

As on Ashad end 2076

Depreciation charge for the Year

Impairm€nt for the year

Disposals

Adjustmenl

4,231,212

2.112,t24

37,403,200

15.203.740

I t.006,418

4,8't4,181

18,495.447

10,402,180

r2,525,931

5,713,338

15,0s9,227

2.593,t62

16,716,847

8,319,010

I t5,444,28t

49,878,540

(3,0s0,453) (2r.430) (142,1171 (298,865) (259,?68) (429,327) (4,203,960)

- 7.009,337 49.556

- 2,79t.272 t5,07t,109 5,595.09? t0,066,9t4 6,199.676 2,163,38t 10,008,037 52.295,488

lt12.st3) (307.580) (360,845) (150.139) (732,88t) (766,541) (2,690,8;9)

9.n00,609 6{,.154,61 21,145,292 3a,1(t1,119 23,989,911 19,n23,122 31,8,18,025 210,723,451

(lrpital Work in Progress

254 6 139 3 t5 112 1

49,694582 130,453,934 57,040,167 14314,221

27 11 73t 5,t

22,161,111 14,760,667 4,829.517

15,070,729 l5,l

( #

30,?34,363948 5,776,5

Net Book Vrluc

As on Ash{d €nd 2075

As otr Ashid God 2076

As on Ashsd end 2077 ,19 a2 t2 ti1 t3

213 24 l"

Lumbini Bihs Bank Limited

Notes to lhc consolidrted finatr{i:rl statem.nt for the yerr ended 3lst Ashad 2077

Tot|tl

As on Ashsd end 207?

#A

Lumbini Eikes 83rk LimitedNotes to the consolidated finencial statenelt for tha year ended 3lst Ashad 2077

Figurcs in NPR

4,14 Goodwill and lntrngibte Assets

Cost

As on Shrawan l, 2075

Addition during the Year

Acquisition

Acquisition through business combination

Capitsl ization

Disposal during the ,,earAdjuslrnent/Revaluation

Balancr as on Ashad end 2076

Addilion during the Year

Acquisition

Acquisition through business combination

Capitalization

Disposal during the year

Adjustmen/Revaluation

Bolrnce as on Ashad rnd 2077

Amortization ard Imp!irmentAs on Shrawan l, 2075

Amortization charge for the Year

Impairmenl for the yeat

Disposals

Adjuslmenl

r{s on Ashsd end 2076

Amoflization charg€ for the Y€ar

lmpairment for the year

Disposals

Adjustment

As on Ashed end 2077

Cepitel \\'ork in Progress

llank

Soft$'areGoodwill Other 'fotal

Purchesed Developed

6,827,834

745,E50

6,821,834

745,t50

7.571.68J 7.573.68{

123)

435,500

(23\

8,009.t 61 8,009,t61

2.384.557

t,203,440

2,384,557

1,203,440

1.587,997 3.587.997

t,092,447

(23\

t,@2,447

(23\

- a.or0.a21 - - l.ea

Net Book Value

As on Ashrd end 2075

As on Ashrd end 2076

As on Ashad end 2077

@

4,443,217

3,9t5,6E7

3J28,740

A

4,443,217

3,965,6E7

JJ28.740

I

s

$W

Lombini Bihs BrDk Limited

Notes to thc consolidatcd tinanciql sistement forthe yerrended llsr Ashrd 2077

4.15 Deferred far Assc(s

As at llst Ashad 2077

t0,212,801

3.624.572 3,624,572

Deferred Trr Ase ts

LirbilitiesNet Deferred Tar

AssetY (Lirbilities)

D€f€.red (rr on t€mporrry dirl€rcnc€. on folowirg items

Loan and Advanc! to B/FIS

Loans a advances lo customen

lnvcstm.nl propcni.s

Investment s.cudti€s

Propcrty & cquipmcnl

Employ€.s' dcfined b€trcfi1 plan

t €as! liabilitics

Othcr lemporary di f lercnc€s

Deferr.d llx on t€mporiry diffcrlrc€t

Defened le\ on cany forward ofunused tax losscs

Dcfencd lE\ due to chanSes in ta-\ ral€

Nel D€ferred t.r a!.!.r(li!bilitica) o! on y.rr end of 2077

Deferred ley (asselyliabilities as on Shrawan l. 2076

Origin!.ion(R.vcral) during tt. yerr

73,783,780

5,288,048

(11 ,783 ,780)(5,288,048)

t0,232.803

t3,857,376 79,O11,828 (65,2t.r,453)

24,6t8,801 24,618,801

Deferr€d trx expenie/(income) r€cosriscd ln profiror bss

Defcrr.d lir crp.nse{income) recogniled in olh€r comprehcnsiv€ Incom.D€ferred trx erpensd(incone) recognised ln dir€ctly in equity

(40,595,6s0)

{34.435.648)?5,031,29E

5,361,185

69,666,1l3

3lst Ashrd 2076

Defcrred 'l at /\sscls Liabiliti6Nd Deferred Tlx

Assiy (Lirbilitie!)

Dcferred !.r on tcnpor.ry dlfferenc.s otr followiry items

Loan and Advance ro BnkLoans ,nd advances to customcrs

lnveslmeni prop€nies

Investmenl secuntics

Propcrty & equ,pmcnl

Employees' defined bencfit plan

Leasc liabiliiies

Other temporary difTerences

Defrrrud l{r on tenporary dilTerences

Deferred ta\ on carry forward of unused tax losscs

D€ferred rax due to changes in tax rale

Net Dererred trusser(lhbilltiB) on y.rr.rd of2076Def€ned iax (assel)4iabiliti€s as on Shrawan l, 207J

OriginitioD(Rwenrl) du.irg tbeye.r

ta&5,211,285

6,494,269

(5,21r,285)

(6,494,269)

8,589,7098,589,709

4,126,421

(\4,126,423

13,3t6,t32 I1,705,551 t.610,577

12,825,071 32,825,07r

(23,302,670)

34,435,648

(6,000.224)

(2E 435,425)

,

KalhmanduNepat

"*;*,s (s,132,7ss)

;E-Def.r.ed trx rrpense(income) re$gnbed in pmfil or loss

Deferred tlx expensd(income) recognis€d in othcr colDprehcnsive income

w-


Notes to the consolidated linancial statement for the y€ar ended 3lst Ashad 2077

4.16 Other assets

Particulars

Assets held for sale

Other non banking assets

Bills receivable

Accounts receivable

Accrued income

Prepayments and deposit

lncome tax deposit

Deferred employee expenditure

Othera. Stock

b. Gold coins

c. Cash in transit

Total

Bank

As at

31st Ashad 2077As at

3lst Ashad 2076

29,667 ,gss

r0,088,305

68,70r,863550 ?7d

6,373,484

6,3 14, t 06

24.161

35.217

30,322,539

10,091,407

6'7,582,551

2,826,285

6,188,197

6,t28,820

24,161

35,217

115,3E2,380 I t 7,010,979

grr1,;,:."X

.' ,\ €

r&Ar

,t

I

d

Llobali Bik r Br[Lihit d

Nor.r to rb. @lrolil.t d fiunci.l ri.r.adr for th. to, ad.d !r r Atnrd 207,

4-1, Du.ro B.nkrnd rinrncinl lNtirltiols

orh.r d.Dos,8 trom BFI!S.tlld. sdclcins.@unts

l,l t0,l r0,?61

4.r8 D!. ro N.p.lR$r.. B.al

,1.19 Dciwtir.finrn.n,lin.lruntnts

Sbndinr Liqudit F!c'lrtyt nd.rollatr.Don Ecdity liom NRB

Sduril'.s sold und.r rcpurchsc a8rem.nrt

68r,687,1l2

{-20 D.posikl om.$lom.r.

{-20.r C!ftu.t wis. mlysir of d.posi Lob.ustor.B

6,0lr,irrt,6472,88 I,089,171

2.699-531 .O13

408,739,650

D,125,150

riaT?Joc,emE,53t,985,368

6,746,142.,729

178,017,950

20.562.914

FoMd ercheg. s.lBcl

H.l.lld tist wt Nnt

F()lwd.x.hd8. @traci

9,'l)8.10tJ886,512,8?t,888

2,80t,829,610

407,725,i51

6r,614,436

r t 25oJl8,a35

10,122,29t.401

7 )6,22t.326181.139,508

jt,@,te!

24.054,319,723

24.054,127.261

92.455

21,496,1t7.a12

82,?55

$

i!!s#"4,8,0s8,819,723

G

.,.tcr!d

1,1.6,'61,1'7 Ut0,' t0,76t

459,929,1115 681,68t,1l!

I

,t.22.1 Mov.n.nr in Drovi3ion

t 23 Orh.r lirhilir;.r

Fo'.'rI B6k od rindcial lanitul'oBMultilardl D.v.loDm6r B{tr

P.onsiN fu rcdEdr,cyPrcvision fd .6rruotunng

Pcndina l.s.l isu6 $d lu hisrion

B.LN s .l sin*.. I

P.oYisDG mad. duanr lh. !@P,ovieoc !5!d donm fie t6Povisio.s teRcd dlnm rhc r@

B.hrc. u.l A.t!d Ed

Liabitiry for .mdor@. d.fincd b.Efir obl,s,rioB

Li.bihy for lmr..4ie lav.shon.l.m .mrlol@ b.n.fiB

lnl.Ei p.r.!|. on d.p6itlnr.ast pil.bl. on horowini

Li.bilili6 @da Fi@e l,eEmplolt. botrc palrbl.

Ottd. PEwim fd [email protected] exFn*b. Liabilili6 udd ODeBling taec Atrci@ ed birldina prcedd ATM lnd VISA p4€bt.

14,109)44

12,081,908

2,959.579

80,183,010

24,6J2364

15,154,142

1,OD,449

71,75t,291

t9,192,901 1.449,296

59,424,147

3t,258,9t0

26,443,222,

4,250,48t

t4t,oB,a1114,010,416

24.424454

14,610,560

It,566.050

2,156,445

249.667

4.222.115

2,076,1?0

1,241.412

I,89,671l.rl0,64t

.1.23.I D.6ncd b...fi t oblis. dons

Th. 160!.13 r.cog'i'.d i' rh. itlt.o.nt ollinrn.i.l

306,,199,0J4 t31

Pknl val!€ of tu.d.d oblrratontTotrt or*nl trle ol oblistio.r

Prc!..r v.h. oltr.i obliq.tio.sRror.ind l{bilny for d.fitr.d b.n.fii

rr4,663,1E0

4a,668J80

l6 016.016

24,6j2)6424,632)64

@

49,514.275

49,574.275

I t.4{/r,931

3{,t09J443.r,r(D34

>

)s

(

w,

orh4

A.rul rdum m pls .*l:I5,,1t1,931

t.104,253

16,0360r6

t,99,191

a.23., Movd@l i! th. pltot yrlc.oarl.fi,.d b.n.6t oblis.tiont

4,21.,1 Mov.frc.r i. th. f.i. vrlu€ otpl.n ssi.h

.1,13.5 Aoo!tri r.cognised in profil or los!

D.fild B...nI Oblilriior u.r Str.*ia t

B.n.fiL! D3,d bv rhc Dlacunenr FryE c6r5 Dd rnt 16lD.fo.d &&fir Oblitdion I ir A.h.d End

4,r,668,180

(3,r62,034)

(2,116,199)

10,644,7?3

19,414,275

39J?1.814

|,t65,247(5,95r,50t)

9.94L422

aa,66tJ3O

r.ir Y.l{. ofPLtr Ars.r B.r Shr*.n IC@rnburi$ 9.id inlo th. DleB.netus ,ard dunna 6. v.s

Exp.cr.d r.tum on de sslsr.ir V.lu. of nr, As.r .! .t Asi.d E.d

(2,015,701)

1,114,642

r5i6a,9Jt

(5,9t,5O3)(69,471)

1.A21,22O

t5to:r6,0t6

I6.016,016 20,235,710

Exr..t d rcruh on pl& eets

7,158,3E0

2,272,|61,c63,111

2,919,685

0_82r.2201

lllil.6 Am..l ft.orlb.i i! ons .oFtr.!dr. n.e.

Acn6rid (!.l!)46

a.At? A.ri.ri.l .s.plir!

4,161,502

3.652.060 1,23,t,7r8

3,632,G0 1.8.r,7r8

Exp..r.d r.rum on plm 6era./,

ar/.

,t.24 D.bl !6urili6 itr!.d

125 Suhordin,r.dl.iihilni.r

-ni-- ----Ai.-

DGbt s.cuflriB isued desisMr.d a at fair value $rcu8h

Dcbl suntie isued r1 anoniEd co,

R.dehstl. ,Efftnc. sh&6IGd..f,EUc qnul.r've prcf.r6c. shr6 (li.bilitie

4\dr

8,055,854

ffi

4.26.1 OrdiMryihr.!

Cotrvcnibl. pr€fddc. shlres (.quity

IrEd€ldrbl. prcfe..nce ilures (equity

P.rpetu i d.bl (cquity @npordr only)

3l .t Arhrd ,076

2.1 16,3t 1.129 2,209.16.313

50,000,000 Ordrmly she ofRs. 100 e.cb

5,mo!@,0005,000,000.000

27,153.1l, Ordimry sh&. ofRs l00c.ch2,7l6,itt,7292.1 t6,31 1,129

Sub.$iH rnd p.id up c.pit.lOrdinary shE ofRl l0o @ch

Tot.l

2,7 t6)t I ,729

2,716,31 t,729

2,7t6.ll t,729

5,Om,fix),0oo

5,000,000,000

2209,7f63152.209.166.315

2,[email protected])ta

2.209.766.313

2,209,766314

Reconcilirtion of the rrmb€r ofsh.rs outltrndine rt th. b€ei.rine rnd erd ofthe re.r

llB!le.! !s !t fi. besinnin! of tie vcuAdd: Issur ofbonu she duing th. y€&

Add: ksE ofndl shan dui.E lhc yeri

B.l.nc. !r rt ih. end ofrh. Y..r

[email protected]&.313

506,545,416

2.t13.242,669

t,7l63t 1.729

36,483,6,14

2409,76{5t3

P.r..nl Ahotrn(

'A" clas lims.d irslitutions

Olhd lice8ld institurions

Ofi.r

I0.51

89.49

245,102,M7

2,410,909,6E1

91890.32

202,1 ,20t.172,006,9?0,I I1.6:l

llrtA!h!d 2075

Percenr ,{hount

5t 0l48 99

r,3E5,5r3,030

r.130,?98,699

5l 0l48 99

l,l2?,]]8,6821.081621.63t

r00 2.209.766J lJ

d41fi] !.716J .

Lu6bini BikA 86nk Limited

Note! to the consotidar.d tinsnci.t r..r.h.nt ror rhey..r.nd€d 3l!t Arhrd 2Or7

Fi9.ta ia NPR

4.26.2 Ordi.rry rhtr€ oYn.Bhip

2.rl6,Jl1.729 2.209.7rt61t1

100 2.716,111.719 ll)O 2,209.166,313

J

m,

Lumbini Bikas Benk Limited

Notes Jo the consolidrtcd fin.n.ial stetoment for the year end0d 3lst Ashad 2077

BOTD/SH NO. Name ofShareholder Number ofShares hold Holding 7..rype

1301120000929415 Syakar Company h/t. Ltd 1,666,003 6.13 lnstitutional

1301250000229824 Chintamani Bhattarai 1,,041,,622 3.83 lndividual

1301010000339705 Prem Bahadur Shrestha 555,757 2.05 lndividual

1301060001038807 Mingma Dorje Sherpa 501,989 1.85 lndividual

1301520000022838 Mana Prasad Wagley 442,777 1.63 lndividual

1301250000082813 Sushil Raj Parajuli 477,147 1.51 lndividual

1301460000001638 Kanchha Gurung 398,385 r.47 lndividual

1301100000334400 Sudhir Prasad sharma 344,977 L.27 Individual

1301580000020869 Pushpa Jyoti Dhungana 281,276 1.06 Ind ividual

1301180000044311 Rajesh Kumar Agrawal 272,6Ls 1.00 lndividual

1301300000002345 Shrawan Kumar Agrawal 272,675 1.00 lndividual

1301010000146909 Vijay Kumar sarawagi 240,946 0.89 lndividual

1301250000085573 Ramji Prasad Bastola 237,1,45 0.85 lndividual

1301370000530001 Deepak sherchan 203,660 0.75 lndividual

42677 Shyamukapu lnternational t97,074 o.73 lnstitutional

1301280000076813 Shyam Kumar Chhetri 186,540 0.69 lndividual

1301010000339699 ShantiShrestha 184,324 0,68 lndividual

1301010000147030 Chiranjibi Lal Sarawagi 719,245 0.66 lndividual

1301370000112677 Ramesh Karmacharya 773,755 0.64 lndividual

1301310000002141 Binod Bahadur Shrestha 161,533 0.59 lndividual

1301100000339694 Mankaji Makaju 159,014 0.59 lndividual

730109000077 4'127 Harpal lnvestment Company Pw. Ltd 750,374 0,55 lnstitutional

1301250000060198 Bijay Bahadur Rajbhandary 145,118 0.53 Individual

1301250000017272 Shanker Ghimire 744,651 0.53 Individual

1301250000230540 Surya Raj Parajuli 142,472 0.52 lndividual

1301090000771256 Bil Bahadur Gurung 740,'708 0.52 lndividual

1301250000153603 Mohan Das Manandhar 735,224 0.50 lndividual

s

KAtl.

Shareholder holdinp more then 0.59/0

4 , *}-

(

\(sjY

Lumbini Bikss B.nk Limiaed

Notcs to the consolidrted firrncirl strtement for the vesr ended 3lsa Ashrd 2077

Bank

4.27 Rescrvcs

Prrliculars

statutory general reserve

Exchange equalization reserve

Corporate social rcsponsibility reserve

Capital redemption reserve

Regulatory resewe

lnvestrnent adjusknent rcserve

Capital resewe

Assets rcvaluation reserve

Fair value reserve

Dividend equalization reserve

Actuarial gaii./(loss)

Special reserve

Deferred Tax Reserve

Other reserve

'I otal

As at

3lst Ashad 2077

As st3lst Ashad 2076

720.291,742

848,105

3,785,608

201,153,656

40,000,000

172,162,t54

2,980;t05.7

5,475,000

644,519,57't

502,t527,028,036

166,224.583

40,000,000

363,000,867

t2,t 59,665

424,264

5,475,000

287 354 184 222,s47.327

4

tt$'

li

t.434.051.t54 t.4

I

\ E-w

;\

Lumbitri Bikrs Bank Limlted

Notes to theconsolidsted linrncirl statemenl for the yeererded 3lst Ashad 2077

tisurcs in NPR

1.28 Contingcnt lirbilities and commiltncnts

Particulsrs

B,nk

As rl3lsr Ash.d 2076

Conrrngent liabililies

Undm\ar and undisbursed facilities

Capital comnitment

kase Commitment

Litigation

99,870,000

I ,498,776.829

104,634,000

I,730,662,950

14,t73.776

264,894,539

13,420,179

264,894,539

lotal

4.28.1 Conliogenl liabilities

1.877.7!5.145 2,llJ.6l t,668

Bxnk

3lst Ash.d 2077

As at3lstAsh.d 2076

Acceptance and documentary credit

Bills for collection

Forward exchange contracts

Cuamntees

Under*riting commitnent

Other commitments

99,870,000 104,634,000

Tool

4.28.2 Undrano and undisbursed frcilities

Prriirulars

99,E70,000 l0{,63.t,000

Bank

t,498,776,829 I,730,662,9sO

Total t,498,176,A29 I,730,662,9S0

4.28.3 Crpitrlcommitmentj

Capital expenditure approved by relevant audorily ofthe bsnk but provision has not been m6de in financial slatements

Bank

Particuhrs

Undisbursed amount of loans

Undra\an limils of overdmft s

Undmrln limils ofcredlt cards

Undrawn limits of letter of credit

Undrawn limits of guaranter

Cspital commitmetrts in relrtio[ to Pmperty

rId Equipmel|tApproved and contracted for

Approved bu! no! contracted for

Sub Tot l

3lst Ashed 2077 3lst Ashad 2076

As rt3lst Ashsd 2077

As .t3lst Ashrd 2076

Capital commitments in relrtio[ to [nlrngiblc

Approved and contracted for

Approved bul nol contracted lbr

Sub Total

Tot3l

\\-a

KathmNep

Prrticulsrs

As rtSlst Ashrd 2077

4I @

Lumbini Bik s Bsnk Limit€d

Not.s to th€ cotrsolidrted firrncir l slrtement for the yerr end€d 3lst Ashad 2077

4.28.4 l-eas€ commitme.ts

Bank

Prrticulars

Opcrrting lG{sG commitments

Futurc nininun lease Wnents under non

cance able operatinA lea:e, wherc the bank is

Not lat€r than I year

lnter than I year but not later than 5 years

Later than 5 years

Sub Tot l

As .t3lsr Ashrd 2077 3lst Ashsd 2076

Flnrnce lerse commitm€ntiFutwe nini,nun lease payments undet noh

cancellable operuting lease. eherc tfu Bdnk is

Not later than I year

Later than I year but not later than 5 years

Later than 5 years

Sub ToirlGrrd Tot l

14,173,776

14,173,716

14113,176

13,420,t79

I3,,120,179

13,420.t 79

A

4.2&5 Litigation

The bankt litigations are generally related to rts ordinary course ofbusiness p€nding on variousjurisdiction Litigalions are

mainly in the naEre ofincome t4\ from the amended assessment oflhe development bank including merged entities in

previous fiscal year.

@

4

,

Lrmbini Bikas Btnk Limiled

Not6 to lhe consolidated lin{nci.l statement to r the vesr ed.d J lst A3h.d 20??

4.29 lnterest ircome

Tol.l interBl incone

4.30 hlerest etp.nse

Bank

I lst Ashrd 2077

Y€rr codcd

3lsl Ash.d 2076

Cash and cnsh e4uivatent

Due from Ncpal Rastra Bank

Placemeni with bdk and financial institutions

Lan and advarces to bark and financial insriturions

Larls and ad!"rE€s ro customers

toan snd ad!€nocs to slafrOrhcr

r93,504,799 t99,00t,023

383,562

124,880,512

2,839.997 .&469,097,941

9,663,166

t34,657,486

3,033,988,59J'7 t.554,547

?,809,105

1,4:11,51.1,532 1.2{1,02.1,{68

BarI

3lst Ashrd 2077 3lst Ashrd 20?6

Due ro ba} ard fillancial institutiom

Due lo Nepal Rdtra Bahk

Dcposits from customers

Borrowhg

Debl securitics issued

Subordinat d liabfiti.sOlher

ATMmdag.me fees

VlsA,Master oard fees

Cuarantee conmission

Brokerage

DD,.m/Sw,ft fces

Reminanca fecs and mmmission

Oth€r fees md comission exp.nse

Changes in fair valu€ oftrading ass€is

Gain4oss on disposal oftrading assels

lni€r€sl incom. on tradng assels

Dividend income on tmdif,g asseb -

cain4oss forcigrt exchang€ tralslaton

140,169,254

7,469,t58

2,1U.122,346

209,799,1E1

22.819.044

1,845,751,609

Tolal interBl erpense

4.Jl Fees !d Commission lncome

Total fe6,nd ComDissior l.(ome

4.32 Fecs rnd commission expense

,,rq,?60,?s8 ,.0

Bahk

3lst Ash.d 2077 SlstAs[.d 2076

I,oan admhislration fces

Commitner fc€s

DD/rVSwift f€es

Crcdit card/ATM iisuanca and rcncwal fc.sPrcpaymenr and swap facs

lnvestfrenl banking fees

Assal maDrgenent fe€s

Brokcnse fcc5

Commission on l€tler ofcr€dnCoftnission on 8trnarlce conlracts isu€dCommission on share underwridndrssue

Oltlcr f€6 ard comnission income

l0l,522,276

t,716,560

3,196,648

t21,169,828

2,580,262

2,021,372

I,l19,4084,757,167

t,571,018

973,116

4,2t9.2t5

1.103,972

s5e.;50

992.998

2,018.',748

735,350

982.557

ttr,787,7r{ t{0,0

Bank

3lsl Ashad 2077 3lsl Ash.d 2076

3,363,47) 1,070,861

Baok

/v

n lr1

Totll fe6 rnd Comrnission Elp€ose

.r.31 Nettr.dirq imomr A3lst Ash.d 2077 SlstAshrd 20?6

ll,48l 24.514

oincr d

Ner rrdirg i..o -

7.931,3n

3,163,4?' 3,070,8fl

t3.{8t 24,514

t l.l Orheroper.rinc in.ome

Lunbini Bikr! Brtrk Limited

Notes to lne corlolid.ted fiMncirl si.temcnt for the vcrr ended I lsr Ash.d 2077

3lst Ashad 2077

BrnL

3lst Ashrd 2076

Total

l.J5 InDairment cha.Erl(reye6il) fo.lorn sd otherlosses

Total

4.16 Pe6oonel Erpens6

Foreign €xohangc revaluation gain

Gain4oss on $1. ofinv€strnent s.cmli.sFair value giiMoss on invesunent proped€s

Dvidend on equity iNnuments

Gai os on salc ofproperty and equipment

GaiMoss on salc ofrnvestnefll prop€rty

Op€ratrng leas. incom€

Gain{oss on sale ofsold and silver

@sra. ln.me nom Insuraffa Claims

b. &hers

Sdary

Pmvidetrt fimd

Unifo.m

Trainirg & dcvelopment expense

Medical

Cash-s.nled sharc-bas€d pqme s

Finance exp€Ne unde. NFRS

O$€r exDeBcs r€lat€d Io staffSubtotrl

Jlst Ashid 2077 3lstAsh.d 2076

1,363,EI5

2,690.925

t 5,7t 0,668

399,6t2

(297,93s)

16,465,956

12,873,163

1,219,990

3,t03,925

6,163,9856,64?,056

t,321,229

1.321,229

t30,010

16,135,946

B.nk

Impai.mert chargd(relersal) on loan and adrnces to BfrlsImpaim€nt chargc.(reversal) on loan and ad!",ces to customer

Impaiment cbarsc.(rclrrsal) on fi Itarcial Invcsunenl

Impairoent chdgd(rewlsal) on plac.menl witn beks ad fi,'andal institutiom

lmpairneni chffgd(reve6al) on property and e4uipm€nt

Inpairment chargd(rc\qsal) oo soodwill aod intansible als€ls

Irnpairmeot chaard(rcversal) oo inveshcnl propenies

178,040,667 (102,129,959)

(1,625,877)

A.nl-Yw endE-

Jlst Ashad 2077

Y-r eorlrSlstAihid 2076

124,838,24t

r00,086,39t

9,270.t36

I1,294,761

6,227,871

8,4?8,873

113,765,649

93,42t,245

8,16t,602

10,2U,125

7,020,000

5,653,068

9,963,372

6rrd toLl

1,649,t08 2,194,749

2.316,202 3,492,271

264,22t,59t59,828,t42

25.1,116,0E2

95.0r6.246

3r{,01r,?33 llrJ3

4 -4*l

,l

28,153,J05 J9,5{9.08,1

178,040,66? (tm,7ffi

LumbiDi Aihs Bdk Liniaed

Not6 ao theconsolid.led linrr.irl stal.ment for tie y..r oded 3lsr Ashld 2077

4.37 Olter operitins erD€ns€

Parii(ulrrs

'Ioi{l

{.J7.1 (Xficc adminisrration qp€nsc

Jlst A!h{d 2077 llsl Ashad 2076

Auditors rernmenlion

Othcr audit relaled expense

Prof€ssional and l€aal exDss€

Otrc! administration €xp€ns€

Operatins leas. expcme

Opemting expense of invertne propenies

Corporale social respomibility cxpens€

Onercus lease provisions

Oth.rs

2,01s,200

2,015,581

2,100,000

425,000

1,930,037

t41,989,175

55.I|2,451

t.625,200

2,446,761

2, r00,000

350,000

3,176,290

13t,392,067

5r,69,66E

1,103.444 2,134,921

26,1t8 1,r29,004

,12,'21,00. | 96.65.1.9 t,

Baok

3lsl Ashrd 2077 3ls( Ashrd 2076

12._r38,48? 12,209,235

Repair ad maintenance(a) Buildins(b) vehicle(o) ComDulcr and a.ressories

(d) Otrce equipme and fimilure

lc) otrs

Postage, telex. lel€phon€, fax

Printin8 snd stadonery

N€wsDaDer. books and ioumals

D€Dosir and loan suarant@ D.€mium

T6rrl allowancc and €xp€nse

Amual/sD€cial g€n€r.l meeling epcnse

@era. ECC and other Bank chffE.sb. I emship cxpens€s

c Connectivity expense

€. Refrcshne ald guesl hospnality

f Cl€anins ard $nitariong Afiual mrintenance contraq exp€nse

ft. Re,aistntion and rencwal exp€ns€

i Ass€t wtita€n offexp.ns.j. Vehicle, prop€rty and otbe. cxp€nse

k. ofrc€ lupplies and srnall accessoncs

l. RTS and related expenre

m. Int.mel expe$e

n. Oth€r officc expem€

o. Other witcoff expeBs

D Other

6,t652,659,909

653,265

2,015,051

369,150

2.478.403

3,348,638

5,845,255

295,953

I1.823.256

2.432,481

4l,33s.Is{t,l0?,170

t70,700

8.440.59J

4.486,296

4,753,266

4,2l],tE53,987,58r

3,779,599

44,1U2,694,443

2,589,492

?25,0t8

1,400,395

2.942,429

10,550

1,653,t87

868;722

2.5t4.133

165,304

2,548,02',1

3,?9 t,098

7,409,398

372,939

13,382,951

46972,179

7,406,941

2,006.4E1

42,83t.046

6,436,759

1,442,t54

859,596

34,6%.36E

I,t60,24?

3 t 8,1E0

1.674,t89

4,736,920

4,532,246

2.1t9.374

1.302.397

1,880,256

47,848

1,625,007

2,1E3,09E

310,097

922,639

r,675,407

l,0ll,?09156 t53

@. <e,l

L

{.

Kg\TE

l{t,9E9, t75 t11,192,06?

Il

Lunlbini Bito! Be* Limited

Noi6 to th. coBolidrt€d li trcirl st te eD( for thc yerr.nded 3l!t Ash.d 20?7

D.Dre.irtion & Abonirrlioot.38

4.J9 Noo oD.6tiDq incoEe

llankliffiairllst Ashad 2077

Yd lrr3l3t Ash.d 2075

Depreciation on prop€rty ard cquipmenl

Dcpreciation on iolrstltrenl property

Anoniztion otr intangible ass€ts

94,801

t,o92,441

49,E7E,540

80,599

t,203,440

5 ,4

Bark

llsrAshrd 2077 3lst lshrd 2076

Recovery ofloan written off 1.056.854

12.64:r.831

7,836,1 tl

Toirl

4.40 Non op€rttins erp€nse

Bank

lisl Ash.d 2077 3llt Ash.d 2076

Redundancy provision

Exp€ns€ of rcsructruing

503,564

.l.,ll Income let erpos€

Totrl imome trr e4ense

,1.,1l.l Recodcilietior of ls erp.Ne rnd rccouDting profit

Jlst Ashad 2077 SlstAshrd 2076

1,298.115 503,564

Baak

Adiustments for prior ycfis

Dcfcrred a.r e4.rueOrisinalion ,rd rerrrs!! of tanporary diffcrences

ChangEs in tax mle

Recognidon of pr€viously unreoogised lax loss€s

15,a,529,r71

154,400,991

128,280

5J63,185

5,363,185

237,761,31E

243,',170,514

I1,996,804

113,302,670)(23,102,670)

Bank

3lstAsnrd 2076

Tax amounl at tax rat. of307o

Add: Ta'( efect ofcxpeos.s thal are not deductibl! for la-x purpos€

lrss: Tax €trect on excmpl income

AdMess: Tax cfrcct or other ilems

538,453,280

161,535,984

4,755,n6(8,061,297)

(3.700,53t.24)

855,146,212

256,541,864

3,098,6?2

(35,360,696)

31,4E5,479

Toral income t expcnsc r5J,529,271 757.767 3tA

2810./" 3014%

&^

,l

159.892,{56 23t,46r,61n

53..t8:,7JE 51,162,5?9

t3,?00,688 ?,8J6,il

1,298,145

(

&

Lumbini Bikts Bank LimitedStatement of Distributable Profit or Loss

For the year ended 31 Ashad 2077 (15 July 2020)(As pcr NRB ReBulatioD)

Figurcs in NPR

Ban k

As at

3l st Ashad 2077

As at

3lst Ashad 2076

Net profit or (loss) as per statement of prolit or loss

Aoorooriations:

a. Aeneral reseme

b. Foreign exchange lucluqtion fundc. Capitql redemplion reserve

d. Corporate social responsibility funde. Employees' taining fund

I Orher

g. Im'e s t me nl Adjust m e nl R€,se rve

Prolit or (loss) before regulatory edjustment

378,s60,824

75,712,165

345,954

3,785,608

620,681,564

124,136,313

3,471,895

3,100,992

298,717,098 189,972)64

Resulaton adiustment :

a. Interest recei'qble (-)/previous accrued intercsl rccebed (+)

b. Shon loan loss provision in accoun* (-)/reversal (+)

c. Short proision/or possible losses on investmen, (-)/rcvetsal (+)

d. Short loan loss provision on Non Banking Assets O/retersal (+)

e- Dejerred tat assels recognized (-)/ rewrsal (+)

f. Goodwill recognised O/ impairnent of Goodwill (+)

g. Bargain purchase gqin recognized O/reversal (+)

h. Actuarial loss recognized O/reversal (+)

i. Other (+/-)

(38,069,975)

19,662,464

5.363, t 85

(7.780,428)

( 14,104,3 r 9)

(44,s03,462)

(28,868;126)

(s2,070,se2)

(39,828,7 6 t \

(9s3,043)

Distributable prolit or (loss) 263,788,025 323,747,781

@N

l1.ou

w s/d

Lumlrini Bikas Bsnk LimitedStrt€m€nt ofTo.rl Distributrblc Profit or l-oss

For the yerr endcd 3l Ashrd 2077 (15 July 2020)(As p.r NRB Regul.tion)

Flgures ln NPR

Ba ok

Op€oing Ret.iocd ErrningsTransfer From Retained Earnings During the Year (for Distribution)

Transfer lo Retained Earnings duriq the Period

Net prolit or (loss) rs p€r stxt€tuetrt of prolit or loss

Approorlallods:

a, Geheral reserve

b. Foreign exchange Jluctwtion fundc. Capital redemptton resene

d. Corporale social responsibilily firde. Enp l qges' training fund

L Other

g. I N e s tme nt Adj ustme nl Re se ne

As xt31st Ashad 2077

As rtSlst Ashrd 2076

522,039,599(5 t7 .392.7 t0)

25,101,4E4

378,560,824

31,995,1 | 5

620,6&,564

174,684,691

124.136,3 t 375.112,t65

345,954

3,785,608 6,206,8t6

8,754,060

Tolrl Retrioed Esrnings before regulaton adiustmeot 32E,{65,470 688.:6{.lti2

Reoulalorv adlust nerrt :o. In ercst rcceivable (-)/previous accraed inletest received (+)

b. Sho loan loss provision in accounts ()/revrsal (+)

c. Shorl provisionlor possible losses on irNesment Oheversal (+)

d. Shott loan lost provition on Non Banking Assels (-)/reversal (+)

e. Deferred tax assets ftcogntzed e)/ reversal (+)

I. Goodwill recognised Cy inpairment ofcoodvtill (+)

& Bargih puchase gah rccogaized O/reversal (+ )

h. Actua al loss rccognked O/reversal (+)

t. Other (- -)

(38,069,975)

t9,662,464

5.363.185

(28,E6E,726)

(52,070,592)

(39,828,761)

(44,503,462)

(9s3,043)(7,180,428\

(14,104,319)

Tolsl Distributrble Profit or (Loss) 293,536,391 522,0t9,599

4II{r

nl!a:r

4>

dut,w


5. Disclosure and Additional lnformation

5.1. fusk Management

Effective fusk Management is an essential part of the High-Level Control framework. The overall riskmanagement system is reflected in the ongoing control environment, risk awareness and management style.Specific roles or responsibilities are assigned for leading and managing the intemal control environment

through the: Chairman, and the BOD, Risk Committee, Audit Committee, CEO and Senior Management,Risk Department, Compliance Department and Support Functions.

Development Bank has implemented the Risk Management policy and guideline to streamline the oyerall

risk management function ofthe Development Bank.

Board ofDirectors

lt.

The Chairman and Board of Directors has the overall responsibility of ensuring that adequate structures,

policies and procedures are in place for risk management and that they are properly implemented. BOD

approves the risk management policies and also sets limits by assessing the risk appetite, Tolerance, skills

available for managing risk and the risk bearing capacity. Sub-Committees ofth€ Board of Directors have

been constituted to oversee the various risk ofmanagement activities.

The BOD of the Development Bank has complied with all the code of conduct and corporate govemance

guidelines as per NRB Directives and applicable relevant policy and Acts.

Risk Management Committee

ul,

Pursuant to the NRB directive on corporate governance, the Development Bank has established Risk

Management Comminee with well-defined terms of reference in line the NRB directive. Risk Management

Committee (RMC), chaired by the one of the member of BOD periodically examines Credit Nsk, Market

Risk, Liquidity Risk, and Operation Risk of the Development Bank, oversee the sector portfolio/portfolio

diversification and advise the management to reyiew policy/process of the Development Bank. The

Committee review the current risk profile and assess potential impact on the activities ofthe Development

Bank or specific business, ensuring risks are identified, assessed, measured, mitigated, managed and

monitored within acceptable parameters; wh€re necessary, take appropriate remedial action.

CEO and Senior Management

The CEO and Senior management have ensured that Dcvelopment Bank have a strong risk management

culture with well-written policies, manuals and guidelines. Senior management review and reinforc€ the

risk management system,

Risk Department

Risk Department has responsibility for high level Bank policy and procedures exposures including

standards and reporting significant Risks and Corporate Govemance issues to Senior management

BOD

lntemal Audit and Compliance Depa(ment

..\?Yrtle5.Audit Department reviews the implementation and adherence to the policy as part of its audit acti 11,

a&/

,fd Aic

also works rvith the businesses and functions to prepare highJevel risk maps to help identify and manage--

all aspects ofrisk, including operational Risk and to help determine their Audit strateg)i.

Compliance Department of the Development Bank plays the vital roles on compliance of regulatory

requirements. Internal policies, procedures and guidelines are closely monitored by the compliance of

respective departments alone with

f compliance department.

A:l 4

t.

5.1.1 Credit tusk

Credit fusk is the risk of loss of principal or loss of a financial reward stemming from a borrower's failure

to repay a loan or otherwise meet a contractual obligation. The Credit Risk Monitoring and Reporting

Framework have been prepared in order to mitigate/minimize the credit risk of the Dey€lopment Bank

through appropriate monitoring and reporting tamework established within the Development Bank.

Credit Policy established fiamework for making inyestment and lending decisions and refled the

Development Bank's tolerance for the credit risk. The Development Bank's Credit Policies are stated and

defined in the Credit Policies Guidelines (CPG). The CPC states and defines the Development Bank's rules

and policies related to the Development Bank's lending activities, reflecting the Development Bank's credit

philosophy and culture. The CPC are updated at regular interyal to reflect changes in the economic outlook

and evolution ofthe Development Bank's loan portfolio.

The Development Bank measure, monitor and manage the credit risk for each borrower and also at the

portfolio level. The credit review assessment ofcapital adequacy, at a minimum, covers risk rating systems,

portfolio analysis/aggregation, large exposures and risk concentrations, The Development Bank has a

slructured and standardized credit approval process, which includes a well-established procedure ofcomprehensive credit appraisal.

Credit Risk Managemcnt is ultimately the responsibility ofthe Board of Directors. Hence Overall strategy

as well as significant policies has to be reviewed by the board regularly. Further, Senior Management is

responsible for implementing the Development Bank's credit risk management strategies and policies and

ensuring that procedures are put in place to manage and control credit sk and the quality of credit

portfolio in accordance with these policies.

5.1.2 Market Risk

Market risk is defined as the risk of losses resulting from movements in market prices that adversely affect

the value of on- and off-balance-sheet positions of financial institutions. It is the risk to a Development

Bank resulting from moyements in market prices, in particular, changes in interest rales, foreign exchange

rates and equity and commodity prices.

Risks adsing fiom the market are Foreign Exchange Risk, Interest Rate Risk and equity risk.

o Foreign Exchange Risk

Foreign exchange risk is the risk of losses arising from the movement of foreign currency exchange rates.

Development Bank has defined the measurement systems that take into account all the sources of foreign

exchange risk. It evaluates the effect of foreign exchange rcte changes on profitability and economic value

of assets and Iiabiliries.

. lnterest Rate Risk

Interest rate risk is the risk of negative effects on the financial result and capital of the bank caused by

change in interest rate. Development Bank have interest rate risk measurement system

effects ofrate changes on both eamings and economic values ofAssets.

s that assess the

5.1.3 Operational Risk

Operational risk is the risk of loss resulting from inadequate or failed intemal process, people and system

from extemal events.

Measuring the size and scope of a Development Bank's risk exposures is an integral part of risk

process. Development has placed a process for regular monitoring reporting of

,l F-


:\

s

wI

@

Lumbini Bikas Bank LimitedNotes to th€ Consolidated Financial Statements for the year ended 31st Ashadh 2077

operational risk profiles and material exposures to losses. lt offers the advantages of quickly detecting and

conecting deficiencies in the policies, processes and procedures for managing operational risk

The monitoring has been undertaken with the following scopes:

- Monitor assessment ofthe exposure to all types ofoperational risk faced by the Development Bank.

- An effective risk reporting has been designed in line with authorities.

- Establish early waming system for increasing risk of future losses.

5.1.4 Liquidity Risk

Liquidity risk is the risk that a financial institution loses its ability to fund its assets or to meet its

obligations as they come due without incurring unacceptable cost or losses. Furthermore, Liquidity risk is

the risk to an institution's financial condition or safety and soundness arising fiom is inability lwhether real

or perceived) to meet its contractual obligations.

Development Bank has Assets Liability Comminee (ALCO) for managing overall liquidity of the

Development Bank. Generally, the function of liquidity risk management is performed by ALCO and itcomprises ofsenior management from each key area ofthe Development Bank that assumes and manages

Iiquidity risk. The ALCO meeting has been held on a regular basis. ALCO's general responsibilities include

developing and maintaining appropriate Iiquidity risk management policies and procedures, optimizing the

structure of assets and liabilities, maintaining the stability of the deposit base, projecting cash flows and

evaluating the level of current assets, in terms ofliquidity ofthe branches, maintaining an emcient intemal

fund transfer mechanism, MIS reporting, Iimits and oversight programs. ALCO delegates day-to-day

operating responsibilities to the Development Bank's treasury department.

Risk Management Department, ALCO, Senior Management, BOD level Risk Management committee and

BOD regularly monitor the liquidity risk measurement practices. Regular management reports and risk

measures would be rhe source information of monitoring. Monitoring functions have ensured about the

relevancy and accuracy ofmeasurements and management practices

#-

I

"$4:;lo'

1

+a .lrI ccct.,f

4

Lumbini Bil(,s B*nk l_imitedNot.s to the Consolidrted Finerciel Stii.n.nrs for tbc yor cndcd 3lsr Ashed 207?

5.1.5 Frir vrluc of fiorlcirl Ds.tr rld fi rci.l ti.biliiict

Finarrcial atscts and liabilities for which fair value is measured or disclos€d in the financial statements are categooz€d within lhe fatr valuehielarchy, described as follo\rs:

L.vel I - Ouoted (unadiustcd) market Drices in activ€ markets for identtcal ass€ls or liabilitiesLlvcl 2 - Valuation techniqucs for which the lowest level inpur lhat is significanl to the fair value measur€ment is directly or indirectly

observable

Level 3 - Valuation technioues for which the lowest level inDut that is sisnificanl to the fair value measurement is unobservable

As rl Slst Ashrd 2077 Crrrying vrluc Lcvel I Level 2 L.vel 3

FiniBciil Asscts m.rsur€d rt FVTOCI

Investment Securities (Equity instruments)

-Quoted equity securities

-Unquoled equity securities

Fitrrnci.l rss.ts crr .d rt rmortizcd cost

Cash aod Cash Equivalents

Due iom N€pal Rasrm Bank

Plac€mcnt \rith Bank and Financial lnstitutions

Loans and Advanc€s to BFls

l,oans and Advahccs to Cuslomers

lnvestment Securities

other Assets

Tolrl Finrncisl Ass.ts

Finrrcial I-irbililies

Firrtrcial lirbilitics crrricd !t rmortizcd cost:

Due to Bank and Financial Institutions

Due to Nepal Rastra Bank

Deposits lrom Customers

Bonowings

Other Liabiliti€s

'I oral Iinan(irl I-iabiliries

r,008,80r.1t8

24.320.524,314

r.367,807.062

98,169,818

I ,008.80 I .? I 8

24,320,524,3t4

I ,367 ,801 ,6298,369,818

554.2t t.597

t4,455,1?8

4.811.555.306

t,300,360,398

554.21 I ,59"1

14,455,t?8

4,81r,555,306

r ,300,360,398

33,176,085,191 554,211,597 32,921,873,?9{

1,176,164.412

469,929,415

28,05E,E19,723

I ,t76,764,412

469,929,4t5

28.058,8t9,723

260,107.786 260,301,186

29,965,82 t,196 29,965,821,396

As rl3lst Ashrd 2075 C.rrying v.luc Ler.l I Le\ el .l

Finxn.irlA!s.tsFitllocirl Asscts mcrsurcd rt FVTOCI

Invest nent Secunties (Equity instruments)

-Quoted equity s€curities

-Unquoled equity securities

Fin.rcirl.ss€ts c.n'i.d .t . mortizcd cost

cash and C.sh Equiialents

Due from Nepal Rastm Bank

Placeme with Bank and Financial Institutions

Loans and Advances to BFIS

Inans and Advances to Customers

Investrnent Securities

other Assets

Tot.l Fiorncirl Ass.ls

Finrnrirl Lirbililies

Financirl lirbiliti.s (arri€d al amonized cosl:

I Liebilities

1,206.t 37.608

21,144,418,517

| .36t .807 ,062

1,206,r 17,608

21.144.418.5t1

I,361,801,062

290,998,180

8,380. t00

4,125,966,7 66

832,739,82t

290,998,180

2

4,125,966,766

832,119,821

8.180.100

9',7

286.112,E46

2 17! 9ll

9',7 905 90

29,071,3S3 I {.t

286.712.846

80

3.ll0.t t0.761

681,687,1t2

2t ,496,404,627

1 a

Dw lo Bank and Financial Institutions

Duc to Nepal tbstra Bank

Ocposils Fom Cwtomers

Bonowings

OhcrLiabilities

3,1l0.l t0,76r

681,687,1 t2

2t,496,4t)O,621

lor,l Fin,

\9

I 9t l

@

Level 2

&(, &


5.2. CapitalManagemert

Qualitative Disclosure

The Development Bank has formulated and implemented the "Intemat Capital Adequacy AssessmcnlProcess 2019" which has been approved by the Board ofDirectors.

"ICAAP Policy 2019" provides ths guidelines for the preparation of "lntemal Capital Adequacy

Assessment Process (ICAAP)" which set methodologies, techniques and procedures to assess the Capitaladequacy requirements in relation to the Development Bank's risk profile and effectiveness of its riskmanagement, control enyironment and strategic planning.

The Development Bank has set the Intemal Capital Adequacy Assessment Process (lCAAp) with the

following fu ndamental purposes.

Development of policy, practice, process and plan to meet the regulatory and economic capital under the

BASELJI Capital frameworks.

Strenglhen the governance and organizational effectiveness around risk and capital management,

lnform the board about the ongoing assessm€nt of Development Bank's risk profile, mitigation technique

being applied and estimated futuro capital requirement ofthe Development Bank.

Bring transparency on the capital assessment process by understanding the key drivers of capital

requirement including oversight for reviewing and validaring capital requirements.

Communicate and justift the regulatory authority about the procedure and methodology adopted for

ICAAP based on present and future risk profile ofthe Development Bank.

Support opportunities to identiry sub-optimd usage ofcapital across the organization.

Create the foundation and basis to have an informed view on capital requirements to state the Development

Bank's position on capital adequacy against regulatory capital requirements.

Ensuring the management exercises sound judgment and set adequata required capital for rnaterial risk

according with the overall risk.

Board and management shall jointly ensure that formality and sophistication of the risk management

processes are appropriate in light ofthe Development Bank's risk profile and business plan and shall put in

place credible and consistent policies and procedurcs to identiry measure and report all material risks that

the Development Bank faces. Board shall ensure that the Policy Framework is comprehensive for key

business and support functions, and establish a method for monitoring compliance ofthe same.

The Development Bank has followed Stress Testing Guidelines issued by the central bank in order to assess

ofthe vulnerability ofthe Development Bank under yarious stress situations typically, application of'\r*ratif' scenarios, especially in the problematic identification of low frequency but high severity events and

identiling expected and unexpected losses. It focuses on capturing the impact of large, but still plausible

events and understanding the overall risk profile in a coherent and consistent framework, including impact

analysis on eamings, solvency and liquidity.

Board shall be primarily responsible for ensuring the current and future capital needs ofthe Developmeot

Bank in relation to strategic objectives. Management shall review and understand the nature and level ofvarious risks that the Development Bank is confronting in the course of different business activities and

how this risk relates to capital levels and accordingly implement sound risk management fiamework

specifiing control measures to tackle each risk factor.

Board shall ensure that the ICAAP does not become mere compliance activity only but ens

ion into ongoing operations af nlannine.

ureits N

@-

q-

s':

rnte

@)


Paid Up Capital

The structure ofthe Share Capital ofthe Development Bank is as Follow:

. Authodzed capital ofNPR 5,000,000,000 represented by 50,000,000 ordinary share ofNpR 100 each.

. Issue Capital as of date of financial position is NPR 2,716,311,729 ordinary Share represented by

27,163,117 .29 ofNPR 100 each

. Paid up Capital as of date of Financial Position is NPR 2,716,3 I I ,729 ordinary share represented by27163117.29 ofNPR 100 each.

Particulars Fiscal Year Paid up CapitalShare Capital Up to 2073/74 2,O08,878,469

Right Share issue 2074/75 140,755,300

Right Share issue through auction 2074/75 23,648,900

Right Share issue through auction 207 s/76 3,64E3,644

Bonus Share of2074/15 & 2015/76 2076l',17 506,545,4r6

Total Share Capital 2,7 t 6,3tt,729

Regulatory Minimum paid up capital requirement

For the national level development bank, regulatory required minimum capital is NPR 2,500,000,000. the

paid up capital ofthe Development Bank stood at Rs 2,716,311,729 again$ the minimum required capital.

!-s

@

KathmanduNepal

A

2076/77

W


ll. Quantitative Disclosure

Capital Structure and Capital Adequacy

Tier t Capital and a Breakdown ofits comporentsi

I

A.

Amount NPR. "000"

Particulars Amount

a Paid up Equity Share Capital 2,7t6,312

b lrredeemableNon-cumulativ€preferenceshares

d Proposed Bonus Equity Shares

e Statutory General Reserves '120,292

f Retained Eamings 293,536

g Un-audited current year cumulative profit/(loss)

Capital Adjustment Reserve

jK

Dividend Equalization Reserves

C)ther Free Reserve 5,475

L Less: Goodwill

M Less: Deferred Tax Assets

N Less: Fictitious Assets

O Less: Investment in equity in licensed Financial lnstitutions

P Less: Investment in equity ofinstitutions with financial interests (40,000)

Q Less: Investment in equity ofinstitutions in excess oflimits

R Less: Inyestments arising out ofunderwriting commitments

S Less: Reciprocal crossholdings

T Less: Purchase ofland & building in excess oflimit and unutilized

U Less: Other Deductions

Total Tier I Capital

B, Tier 2 Capital and its Components

Particulars

(s,046)

3,690,645

Amount NPR. "000"Amount

:1

5z

a Cumulative and/or Redeemable Preference Share

h Subordinated Term Debt

c Hybrid Capital Instruments

d General loan loss provision 264,515

e Exchange Equalization Reserve 848

f Investment Adjustment Reserve

g Asset Revaluation Reserve

h Other Reserves

40,000

305,363

€

Total Tier 2 Capital

4

c SharePremium Z63t

h Capital Redemption Reserve

w


D

C Dctails of Subordinated Term Debt

The Development Bank has not issued any subordinated term debt

DeductioIIs from Capital

Investment in the equity of institutions with financial interest has been deducted from the Tier-lcapital.

Purchase ofLand and building in excess of limit and unutiliz€d has been deducted from the Tier-Icapital

E. Total qualifying capital

S.N. Particulars Amount in '000

l. Core Capital 3,690,645

305,3632. SupplementaryCapital

Total Capital Fund 3,996,009

Capital Adequacy Ratio

S.N.Particulan Percent (7o)

l. Tier I to Risk vy'eighted Exposure 13.llYo

2. Total Capital to fusk weighted Exposure 14.20o/o

G. Summary of adequacy of its capital to support current and future activities, if applicable:

Development Bank's current paid up capital amounts to Rs 2.716 Billion. The Development Bank complies

with the Capital Increment plan of NRB. The overall strategy of the Development Bank has been

formulated with the special consideration to the capital adequacy requirement according to BASEL-II.

H

The Development Bank has not raised any capital through hybrid capital instruments.

o

F

4r\Bler.

Summary of the terms, conditions and main features of all capital ilstruments, especially in case ofsubordinated term debts including hybrid capital instrumetrts.

6


2. Risk Exposures

Risk Weighted Exposures for Credit Rislg Market Risk and Operational Risk

S.N. Particulars Amount ir '000

x,ooa-,rg7

1,525,920

fusk Weighted Exposure foi Credit fuik

fusk Weighted Exposure for Operational Risk

Risk Weighted Exposure for Market Risk 8,9t0

Adjustments under Pillar Il

Add: 3% ofthe total RWE due to noncompliance to Disclosuii nequiremint (6.4 a l0)

Add: . . ..o/o of the total deposit due to insufficient Liquid Assets(6.4 a 6)

Total Risk Weighted Exposures (After Batrk's adjustments ofPillar II) 28,143,017

B. Risk Weighted Exposures for Credit Risk under each of I I categories of Crcdit Risk;

Particulars Amount (RWA)

II

I Claims on government & central bank

2 Claims on other official entities

5 Cl"i.rr * b-k" - 850,806

4

5

6

Claims on corporate & securities firms

Claims on regulatorl relail portlolio

Claims secured by resiainiiil properties

10,301,516

6,5 t3,036

1,934,134

7 Claims secured by commercial real state

8 Past due claims

9 High risk claims

764,335

3,OES,lS7

l0 Other assets

ll Off balance sheet items

|,564,730\'6tet r r,

Total Credit Risk Weighted Exposure

I,591,

26,608,

Total Risk Weighted Exposure Calculation Table

Risk Weighted Exposure for Credit Risk

Book valucSpccific

I'rovisionEligibleCRr\t

Net valueRisk

lVeightA. Balance Sheet Exposures

b C c

Cash Balance 522,011 522,014 0%

Balance With Nepal Rastra Bank 1,300,360 0%1.300,360

0%Gold

t,347,07 5 00/oInvestment in Nepalese Govemmenl Securities I,341,075

17,t93 0%All Claims on Govemment ofNepal 11.193

0%Inyestment in Nepal Rastra Bank securities

00/o,{11claims on Yepal Rastra Ptnk (

Risk $'eightedllx res

J>-

C.

i.

$/ 42


Claims on Foreign Govemment and Central Bank(ECA 0-l) 00/.

Claims on Foreign Govemment and Central Bank(ECA -2) 20vo

Claims on Foreign Govemment and Central Bank(ECA -3) 5iyoClaims on Foreign Govemment and Cenhal Bar*(ECA-4-6) r 00%Claims on Foreign Govemment and Central Bark(ECA -7) t50%Claims On BIS, IMF, ECB, EC and MDB'srecomized by the framework 0%

Claims on Other Multilateral Development Banks 100%

Claims on Domestic Public Sector Entities 100%

Claims on Public Sector Entity (ECA 0- l)

Claims on Public Sector Enrity (ECA 2)

Claims on Public Sector Entity (ECA 3-6) 100%

Claims on Public Sector Entify (ECA 7) t5ovo

Claims on domestic banks that meet capital

adequacy requirements 4,254,028 4,254,028 20vo

Claims on domestic banks thal do not meet capital

adequacy requirements 100%

Claims on foreign bank (ECA Rating 0-l)

Claims on foreign bank (ECA Rating 2) 50v"

Claims on foreign bank (ECA Ratine 3-6) r00%

Claims on foreim bank (ECA Ratine 7) 1500/0

Claims on foreign bank incoryorated in SAARCregion operating with a buffer of l7o above theirr€spective regulatory capital requirement 200/"

9. t 14.485 t00%Claims on Domestic Corporates 9,390,818 216,333

200/.Claims on Fo.eign Corporates (ECA 0-l)

50%Claims on Foreign Corporales (ECA 2)

100%Claims on Foreiplll Corporates (ECA 3-6)

1500/oClaims on Fo.eim Corporat€s (ECA 7)

I96,098 8,684,047 75%ReRulatory Retail Ponfolio (Not Overdue) 8,880,145

100%Claims fulfilling all criterion ofregularity retail

except granularily

3,115,150 60vol,r 15,150CIaims secured by residenlial properties

r50%Claims not fully secured by residential properties

43,837 100%54.860 I1,023Claims secured by residential propenies (Overdue)

, 100%(Claims secured by Qdmmercial re4.€slate

850,806

9 ll 5

513

1,869,090

43 837

:l5Oc0

c

A

200

500/"

20%

I

-t

t


Past due claims (except for claims secured byresidential 989,080 479 509 751 150% 35

088,187

r87 03t

4',t 1,119

42s

2t '7

7

083 179

25,0t6,141

H iph Risk claims 2,078,560 19,769 2,058,791 150%

Lending Againsl Securities (Bonds & Shares) 1,187,03 t 1.187,03 t r00%Investmenls in e{uity and other capital instruments

ofinstitutions listed in stock exchange 411,|9 47 t.tt9Investments in e{uity and other cE)ital instruments

ofinstitutions not listed in the stock exchange 6,950 6.950 ts0%

Staffloan secured by residential proDerty 42,4t4 42,414 50%

Interest Reccivable/claim on govemmcnl securities 20,7 32 20.132 00/.

Cash in hansit and other cash items in the process

of collecl ion 35 3i

Other Assets (as per attachment) 2,361.128 1,283,948 1,083,179 100%

TOTAL (A) 36,0{J,693 1,171,191 ,r92.200 33,777,999

Risk Weight€dIr sures

B. OIT Balance Sheet Exposures Book valur Specific

Provision

Eligibl€CRM

Net yalue RiskWeight

Revocable Commitments 0%

Bills Under Collection 0%

Forward Exchange Contract Liabilities t0%LC Commitments With Original Malurity Upto 6

months domestic countemarty

Foreign counlerDarty (ECA Ratine 0-l) 20%

Foreign counterpafiy (ECA Rating 2) 500h

100%Foreign counterparty (ECA Rating 3-6)

t50voForeign counterparty (ECA Rating 7)

LC Commitments With Original Maturity Over 6

months domestic counterDarly 5lvo

Foreim counterDar8 (ECA Ratins 0-l)

500hForeign counterparty (ECA Rating 2)

t00v"Foreign counlemarty (ECA Rating 3-6)

t50voForeim counterparty (ECA Rating 7)

9.763 90.108 500/o

Bid Bond, Performance Bond and Counter guarantee

domestic munterparty 99.870

Foreim counterparty (ECA Raling 0-l)

509?,Foreign counterparty (ECA Rating 2)

100%Foreign counlerparty (ECA Rating 3-6)

150%Foreign counterpady (ECA Rating 7)

\ 50%(Underuriting committ/ents n

7a

t,

4 054

I

to00/o

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statemeots for the year ended 31st Ashadh 2077

trnding of Bank's Sccurities or Posting of Securities

as collateral

ments under Pillar Il

Answer the tion SRP 6.4a 3 in SRP shcet

Aoswer the uestion SRP 6.4a 4 in SRP sheet

300

I,281.195

264,895

26 t87

2 181

c€+ts.

.,)

tcs r

€

1000/0

Repurchase Agreements, Assets sale with recourse t00%

Advance Payment Guaranteo 100%

Financial Guaranlee 100%

Acceptances and Endo6ements I00%

Unpaid portion ofPartly paid shares and Securities r00%

lrrevocable Credit commitments (short term) 1,499 1,499 20%

Inevocable Credit commitments (long term) 2,562.390 2,562,390 50%

Claims on foreign bar* incorporated in SAARCregion operating with a buffer of I 9/o above

their resDective requlalory capital requirement 20"/"

other Contingent Liabilities 264,895 264,895 100%

Unpaid Guarantee Claims 2000/o

TOTAL (B) 2,928,653 9,763 2,918,891

Total RWE for credit Risk Before Adjustment(A) +(B) 38,971;{6 1,114,491 501,962 36,696,890

36.696,89038,973Jt6 I,771,194 501.962

Total RWE for Credit Risk after BEnk's

adiustments under Pillar II

!

(

ffi

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statements for the year ended f,1st Ashadh 2077

Eligible Credit Mitigants

Deposits

withBank

)eposits

withother

bank,FI

GoldGovt.&

NRB

Securities

Gl€e ofGoi,t. ofNepal

S'tee ofdomest

ic

banks

Gtee ofMDBs

Sec/G'tee of Foreign

BanksTotalCreditexposures

(a) (b) (c) (d) (e) (0 (s) (h) (i)Balance Sheet Exposures

Claims on Foreigngovemment and CentrslBank (ECA -2)

Claims on ForeiSn

govemment and Central

Bank (ECA -3)

Claims on Foreigngovcmment and Centml

Bank (ECA4-6)

Cl8ims on Foreigngovemment and Central

Bank (ECA -7)

Claims on Other

Multilateml Development

Banks

Claims on Public Sector

Entity (ECA 0- I )Claims on Public sector

Entity (ECA 2)


Entity (ECA 36)


Entity (ECA 7)

Claims on domestic banks

that meet capital adequacy

requirements

Claims on domestic banks

that do not meet capilal

adeouacy requirements

Claims on foreign bank

(ECA Rating 0-l )

Clsims on foreign bank(ECA Ratins 2)


(ECA Rating 3-6)


(ECA RatinE 7)

Claims on for€ip bank

incorporated in SAARC

r€gion op€rating with a

bufler of l% above theirrespective regulatory

capital requirement

t 49,400149,400

Claims on DofteslicCorporates

Claims on Foreign

Corporat€s (ECA 0- I )

Claims on Foreign

Corporates (ECA 2)

Claims on Foreign

Corporates (ECA 3-6)

Claims on Foreign

Corporates (ECA 7)

| 43,?11I7,143Regulatory Relail Portfolio

(Not Overdue) 125869

4.

I

,P

&<

Sec/C'tee

of otherSovereigns

I

I

I

I


Claims tulfilling all

criterion of regularity retail

except granularity

Claims secured by

residential properties

Claims not fully secured

by residential prope(ies

Claims secured by

residential prop€rties

(Overdue)

C]aims secured by

Commercial R€al Estate

Past due claims (excepl forclaims s€cured by

residenhal prop€nies)

High Risk claims

188,189 188,389

L€nding Agahst Securities

(Bonds & Shares)

lnvestments in equity and

oth€r capital instruments ofinstitutiois lisled in stock

exchange

Investments in equity and

other capital instruments ofinstitutions nol listed in the

stock exchanSe

Oth€r Assels

I7,313 181.000Tolrl d63,658

Off Balance Sh€et Exposures

Forward Exchange

Contract Liabilities

LC Commitmenls wilhOriginal Marurity Upto 6

months domestic

counterpatty

Foreign counterparty

(ECA RatinS 0- I )

Foreign counterparty(ECA Rating 2)

ForeiSn counterparty(ECA Ra{ins 3-6)

ForeiSn counterparty(ECA Rating ?)

LC Commitments With

Original Maturity Over 6

months domestic

counterperty

Foreigrr counterparty(ECA Rating 0-l )

Foreign counterparty(ECA Rating2)

Foreign counterparty(ECA Ratins 3-6)


9.8499.849-

Bid Bond, Performance

Bond and Countergualanlee domestic

counterparty

L

4\

IA-


Foreign counterparty(ECA Rating 0- l )Foreign counterparty

(ECA Ranng 2)

Foreign counterparty

(ECA Ratins 3-6)


Undenrriting

Lending of Bank's

Securities or Posling ofSecurlies as collateral

Repurchase Agrecments,

Ass€ls sale with recours€

Advance Payment

Guarante€ 1,250 1,250

Financial Guarantea

Endorsements

Unpaid portion ofPadlypaid shar€s and Securities

Inevocable Creditcommitments (shon rcnh)

Irrevocable Credit

commitrircnls (long term)

Other Contingent

Liabilities

Ljnpaid Guarantee Claims

'Iotal

I I,099 r r,099

Grand Totrl 114,756 l7J1l 192,099

III

CurrencyOpen Posilion

(FCY) Open Position (NPR)Relevant open

PositionExchange Rate

United States Dollar t35 16,321 16,321

Euro 4.32 597t38.20 597

9Great Britain Pound (0.06) 153.00 (e)

Swiss Franc

Australian Dollar 0.89 84.98 76 76

Canadian Dollar 0.84 88.51 75 75

0.11 86.56 9 9Singapore Dollar

287 .19 t.t4 327 327Japanese Yen

Chinese Yuan

49Indian Rupee 30.37 L60

178Saudi Arabian fuyal 5.56 3 r.99 178

Qatari Riyal

Thai Baht

r3l r3t4.t I 31.80

.18/?"x 48Malaysian $nggitt.'t4

4

F

120.85

49

Emirati Diram

ii, Risk Weighted Exposure for Market Risk

N $/


South Korean Won

Swedish Kroner

Danish Kroner

Hong Kong Dollar

Kuwaiti Dinar

Bahraini Dinar

(a) Total Open Position 17,80t 17,801

(b) Fixed Percentage 50/"

(c) Capital Charge for Market Risk (:axb) 89r

(d) Risk Weight (reciprocal of capital requiremen! of 109/o) itr times l0

(e) Equivalent Risk Weight Exposure (:cxd) 8910

llt. Risk Weighted Exposure for Operational Risk

Details ofNon- Performing Assets

Amount ofNon-Performing Assets (both Gross and Net)

D.

Amount NPR. "000"

ParticularsFinancial Year

2073/07 4 207 4tO15 207 5/O7 6

Net lnterest Income 7 42,638 784,010 t,o94,773

Commission and Discount Income 1 L/.\ 8,863 10,123

88,498 110,326 t44,286

Exchange Fluctuation Income'721

Addition/Deduction in Interest Suspense during the period 3 2,878 8,867 18,41 I

Gross income (a) 87 t,460 912,7E1 1,267,593

AIfa (b) | 5Yo 15%

Fixed Percentage of Gross Income Ic=(axb)l 130,719 136.9t 8 190,139

Capital Requirement for operational risk (d) (average ofc) 152,592

Risk Weight (reciprocal of capital requirement of l07o) in times (e) 10

Equivalent Risk Weight Exposure If:(dxe)l 1,525,920

Loss Provision Net AmountGross AmoulrtNon-Performing Loans

a Restructured and rescheduled

38,200.1I152,800.44Sub-Standard

I t6,964.71 t t6,964.71233,929.42Doubtfulc

298,873.32 5,547 .87304,421.t9Lossd

2,37,112.9169t,t51.05 ,154,038.14Total

Soc/et,

csr

oftart.(l

4

-l

F

Other Operating Income

ls% |

I 14,600.33b

ffi

Lumbini Bilos B.rL Umii.dNotB to th. CoBolidrr.d Fir.D.irl St.t ments lor rhe yer.!dcd rlstArh.d 2077

5.J Cl.lrific.dotr otti..ncirl s.ts.nd li!.nci.l lirbilitid

Ai.tlt3t kh.d 2077

rdr v.h. through FdrV.lu. ti.oDgh

Ottlr Comgr.heuia.

Prolit or hi! lncome

Fir.Ni.lAstsCash ard Calh Equi!"lot5

Due f.om Nepal R-a$ra Bant

PlMcnt with Bdl and Finmcill Instilutions

Lod3 ed [email protected] to BFIS

t]ss od Adrec6 ro car@cB

4,EII,555,306

t,100,160,398

4,8U,555,306

I,300,360,198

568,666.775

I,mE,80t,7lE

24,320,524,311

| 367 ,aO7.062

9E,369,Et8

|,008,80t,7t8

21.320,524,311

|,936,473,A37

98,369,E1E

Torrl Finrncial ars.13

Toral l_i.rncial Liahiliries

Fipr.cirl Lirbiliti.rDue lo Bok ed Findcial Iddtur,ons

DE ro Ncpal Rana Bark

Deposits ftom CBtomeB

Othcr Liabil;li.s

1,t76,7U.172

469.929,4t5

28,058,819,723

t.t76.1U.112

469.929.415

28,058,819,721

260,107,786 260.t07,786

2r,e6s.821,396 29,96s,821,J96

As.t lkr Ashd 2076

F.ir v.lu. rhrough F.ir v.lo. tbrougn

Orher CompreheDsirc

Profir or t $ In.ode

C{h lnd Cash Equivrldls

Du. &om Ncpal Ratn Bank

Plcmar *irh B,L md Finmcid InslittrtioN

t ms md Ad6c.s to BFk

t os and Adveccs to Custom.rs

299.3?8,280

4,125,966,766

E32,739,421

4,t25,966,766

832,719,821

t.206,137,608

2t,t44,4t8,5t?

| .167,80?,062

1,206.117,608

21,144,418,5 r7

1,667.185.341

299,176,280 28,714,974,464 29,07

905.090 97.905

:t,t51,144Tot.l !inan.i{l Asstls

Doe ro Bdfi ed Finecial Inslitulio.s

Du€ io N.p.l Ratra Banl

Depos,b fiom CDstom.B

3.ll0,l10,76t

6Et,6E7,u2

2t.1 ,400,621

l.ll0.l t0.761

68t,68?,1I2

2t.4 .400.621

2E6,?t2,846 286,112,446

Tol.l Fi!.nci.l Lirbiliti6 25,174,911)45 25,771,9t1,146

4

- 56E,665,?75 lr,9o7ffi

( A.


I

5.4, OperatingSegmentlnformation

General information

An operating segment is a component oflhe Bank that engages in business activities from which it may eamrevenue and incur expenses, whose operating results are regularly reviewed by the Bank's chief operatingdecision maker and for which discrete financial information is available. The bank is operated centrally in asingle j urisdictional area with all policies and operations being controlled and directed from head office.

The Bank has identified its reportable segment into two i.e., Banking and Treasury & Remittance based onits core business units which actively forms a major part of the Bank's revenue source and align with itsprincipal business objectives.

Banking

The loans provided to all customers are classified under Banking. The interest income and other Ge incomesgenerated out ofsuch loans are revenue items ofthis segment. Expelses ofthis segment comprises ofinterestexpenses on deposits used for providing loans, pro-rated personnel expenses and operating oxpenses as wellas provision for loss created for such loans.

Treasury and Remittance

The balance lying with the banks invesled in govemmental bonds, treasury bills, placements and shares ofother organizations come under this segment. The interest income of bonds and bills, forex gains, dividend

income are revenue items of this segment. Expenscs of this segment comprises of interest expenses on

deposits used for making investments, forex losses, pro-mted personnel expenses and operating exp€nses as

well as provision for loss created for such investments. Remittance commission income from various

agencies along with related expenses are also the part ofthis segment.

c, Otber Componeuts (Unallocated)

All other revenues and expenses which cannot be classified to the above-mentioned segments fall under this

segnent. The income from sale ofassets, other fees and commission are revenue items ofthis segment. Un-

attributable personnel expenses, operating expenses and written offassets are expense items ofthis segment.

Business Banking, Treasury and Remittance comprise majority of bank's total revenue. Hence, these

operations are treated as reportable segments and the remaining are classified under other segment.

) Information about profit or loss, assets and liabilities

a

b.

(

otherCompotrents

(Unallocated) TotalParticulars BankingTreasury and

Remittance

115,872,017 27,888,898 3 .603 ,169,799

a. Revenues fiom extemal

customers 3,459,408,884

b. Inter Segment revenues

3 ,603,169 ,799c. Net Revenue 3,459,408,884 |5,872,017 27,888,898

3 ,441 ,514,532d. lnterest revenue 3,33 I ,259 ,025 I 10,255,507

7,469,158 2,291 ,7 60,7 58lnterest expense 2,284,291,600

| ,149,7 53 ,77 4f. Net interest revenue 1,046,96',7 ,425 102,786,348

|,719,917 4t3,962 53,482,738

g. Depreciation and

amofiization 5 | ,348,859

:'\ 19,954,156 538,453,280429,07 5,197 8e,410frffh. Segment profit /(loss) /

A.EIP

\

Lumbini Bikas Bank LimitedNotes to the Consolidated Finrncial Statements for the year ended 31st Ashadh 2077

I Entity's interest in the

profit or loss ofassociates accounted forusing equity method

J Other material non-cash

items

k. Impairment of assets

l. Segment assets 30,160 ,7 46,6s t 4,069,990,037 265,84',1,201 34,496,583,E89

m Segment liabilities 29,746,tog,259 34t,350 306,157,688 30,052,608,297

3 Measurement of operating segment profit or loss, assets and liabilities

(a) Segment Assets and Liability Explanation

Business Banking includes all Loan and advances provided to the customer and Bank and Financial

lnstitution, Investment propeties (related to NBA) and other assets are allocated on the basis of gross

revenue genemted by each reportable segment. Segment Liabilities of Banking includes deposit from

customer and BFIS and other liability allocated on the basis ofrevenue genemting ration ofeach segment.

Treasury segment assets includes Balance with NRB/other FI, Interbank Placements, investment in securities

and other organized institutions' shares, whereas segment liabilities comprise, due from central bank and so

on which are related to treasury functions.

(b) Scgment Profit or Loss Explanation

lnterest income on business banking includes interest income from total loan portfolio and lnterest expenses

includes interest expenses on deposit portfolio.

lnterest income on Treasury and remittance includes interest income from t}le development bond and call

deposit on BFIs, Interest expenses includes Interest expenses on borrowing from central bank and interbank

borrowing/pl acements.

Loan administration fee and service fee and their related expenses included in Business Banking Segment.

All other fee/revenue from extemal customerc not falling under above two segments are included on other

segment.

(c) Basis ofaccounting for sny transactiols between reportable segments,

There is no any identifiable inter-segmcnt reyenue in absence oftransfer pricing policy in the development

Bank.

(d) Nature ofatry differences between the measurements ofthe reportsble segmetrts' prolits or losses atrd

the entity's profit or loss b€fore income tax.

Not Applicable

Nature of any differences between the measurements of the reportable segments" ets and the

entitv's asset.

t l;

(e)

4

I

All other unallocated assets and liabilities have been presented under Others Segment consisting; but not

limited to Share capital, reserve, retained eamings, property and equipment, intangible assets, investment

properties, tax assets and liabilities, cash and cash equivalents.

w(

(f)

(c)


Not Applicable

Nature atrd effect ofany asymmetrical allocations to reportable segments.

The income. expense, asset and liabilities that are not identifiable to particular segment have been allocated

on the basis ofgross reyenue ofthe segment.

Recolciliations of reportable segment revenues, profit or loss, assets atrd lisbilities

ReveDue Amoutrt

Total revenues for reDortable segments 3,575,280,901

Other revenues 27,888,898

Elimination of intersegment revenues

3,603,169,799

Profit or loss

Total profit or loss for reportable segments 5t8,496,475

Other profit or loss

Elimination of intersegment profi ts

l9 956 805

Profit before income tax 538,453,280

A mou nt

34,230,736,688Total assets for reportable segments

Other assets

26s,847,201

34,496,583,889Entitv's assets

Liabilities A mou nt

Total liabilities for reportable segments 29,7 46,450,609

Unallocated liabilities 306,157,6E8

Entitv's Iiabilities 30,052,608,297

Informatior about products and services

Gross Revenue from each type ofproduct and services

Revenue

lnterest Income on Overdraft Loan

Interest Income on Demand Loan

Amount

| .058 ,292,225

254,433,978

lnterest Income on Term Loan

Interest Income on Home Loan

Interest Income on Educational Loan

Interest Income in Auto and Hire Purchase Loan

Interest Income on Other loan Product

and Commission-Banking

83],,t72,359

je\ssijsi-

3,44E,185

t90,423,248

475,102,832

449,171F ll

@

Entity's revenues

Amount

Unallocated amounts;

Assets

Unallocated amounts

Other liabilities


Other Write back and Non-Operating-Banking

lnterest Income in Development Bond

lnterest Income in Call Deposit and Placement

Other Revenue fiom Treasury Function

C)ther unallocated Income

Information sbout geographical areas

Net Revenue on the basis ofgeographical areas

r3,700,688

71,ssi,s17

t93,504,799

5,616,51I

27,888,898

(h)

Areas

(a.) Domestic

Province I 24t,787,069

Province 2 349,788,851

,it4.i;ia,iioBagmati

45E,9E8,910

56,030,010

Kamali 334,466

Sudurpaschim 1,264,723

(b.) Foreigr

Total

(D lnformation about major customers

No revenue from a single customer accounted for more than l0% during the reporting period

Share options and share based payment

The Bank does not have a policy for share options to its employees. Similarly, during the year the Bank has

not made any paymcnts or settlements by issuing new shares.

Contingent liabilities atrd commitment

The details amount regarding contingent liabilities and commitments have been disclosed under 4.2E "ln case

ofGood for payment cheque ofKuleshwor Branch, the Development Bank has settled the 60% ofthe amount

as per the separale agreement with the Chequeholder. Remaining 4070 amount will be paid only afier the

recovery from the offender. Hence, there is no any probable additional liability ofthe development bank tilldate.

Among the Cheque holder, Chandragiri Bachal Tatha fun Sahakari Sanstha Limited and Nayapati Bachat

Tatha Rin Sahakari Sanstha Limited have filed the case at Honorable Kathmandu District Court by claiming

the remaining 40olo amount.The Development Bank has filed for suspension of case filed by the plaintiffat

Honorable Kathmandu District Court which was registered in the court on 2074.04.29 and the Honorable

Kathmandu District Court has pass verdict ofsuspension ofthe case till the verdict of another case filed by

Government ofNepal at Honorable Supreme Court

The Prabhu Bank (Former: Bhaivab Finance Limited ) has filed the case at Honorable Kathmandu District

by claiming the amount fu Two Crore ich was supposed to be deposited but not accounted at

wor Branch ofthe Devel amount is related to the Good for Pay ent cheque and the

Gandaki

Lumbini

tr.ia

K Bank

Amount

5.6.

Court

I

5.7.

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statements for the vear ended 31st Ashadh 2077

development bank is in legal proceeding for the same in the supreme court too. Any probable additionalliability could not be established till the date ofFinancial Statements. "

Related Party Disclosures

a. EntityRelationships

Relationship RelatedParties

Muktinath Capital Limited (Former :Vibor Capital Limited)

Nadep Laghubitta Bittiya Sanstha LimitedAssociates

Deprosc Laghubitta Bittiya Sanstha Limited

b. Those charges with goverlaDce

Those charged with govemance ofthe Bank include members of Board of directors namely:

Name

Mr. Dasarath Risal

Mr. Chinta Mani Bhattarai

Chairman

Director

Mr. Keshav IGatiwada Director

Mr. Prabin Krishna Shrestha Director

Mr. Pratap Kumar Acharya Director

Dirlctor

Director

Mr. Ram Chandra Sigdel

Mrs. Anju Kumari Gupta

c. Key Management Personnel (excluding Directors)

Name Designation

Mr. Paban Dhakal Senior Deputy Chief Executive Officer

Mr. Umesh Regmi Deputy Chief Executive Offi cer

iz:#

$t@

otu

Lumbini General Insurance Company Limited

Designation

Mr. Naresh Singh Bohra ChiefExecutive Officer

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statements for the vear €nded flst Ashadh 2077

Related Party

Those Charged withGovemance

Nature oflransactions

Meeting Allowances

2076t77

2,019,200

2075/16

1,625,200

Telephone and Newspaper \,554,392 t,575,669

Travelling Expenses 2 t4,850 612,632

Chief Executive Officer Short term employee

benefits

9,739,742 6,908,067

Key Management Personnel

(excluding CEO and Directors)

Short term €mployeebenefits

12,3E6,405 5,256,237

Muktinath Capital Limited(Associates)

Registrar to Share and share

related other Expenses

72s,018 528,585

5.8.

5.9.

5.10.

d. Transactioos with related parties

Merger and Acquisition

The Bank has not entered into any merger or aaquisitior for the fiscal year ended on 15 July 2020

Additional disclosure of non-consolideted etrtities

There are no such entities which are required to be consolidated but not done during the year.

Everts ofter r€portirg date

The Bank monitors and assesses events that may have pot€ntial impact to quatiry as adjusting and/or non-

adjusting events after the end of the reporting period. Al1 adjusting events are adjusted in the books with

additional disclosures and non-adjusting material events are disclosed in the notes with possible financial

impact, to the extent ascertainable.

The Loan loss provision offifteen bonowers ofRs 33,734,035 which were settled after reporting period has

been written back and adjusted in the financial statements.

There are no material events except mentioned above that have occu

the signing ofthis financial statement as on 2077108/23.

subsequent to Ashad End 2077 till

A-

4

qr,

rflw


6. 0ther Explanatory Notes

Reseryes

Statutory General Reserve

Oeneral Reserve maintained pertains to the regulatory requirement of the Bank and Financial InstitutionsAcl, 2073. There is a regulatory requirement to set aside 20yo of the net profit to the general .eserve untilthe reserve is twice the paid up capital and thereafter minimum I O9lo ofthe net profit.

During the year the Development Bank has transferred Rs 75,?12,165 to the statutory general reserve.

Exchange equalization Reserve

Exchange equalization is maintained as per requirement ofNepal Rastra Bank Unified Directive. There is a

regulatory requirement to s€t aside 25yo of lhe foreign exchange revaluation gain on the translation offoreign currency to the reporting currency. The reserve is the accumulation ofsuch gains over the years.

During the year, the Development Bank has transferred Rs 345,954 to the Exchange Equalization Reserve

Corporate Social Responsibility Reserve

As per the NRB Directives, on the Corporate Social Responsibility, the Development Bank has allocated

lyo of the net profit of current fiscal year for CSR activities. The total amount of corporate social

responsibility reserve is NPR 3,785,60E and NPR 7,028,036 respectively for currenl year and previous

year.

Particulars 2016/11 2015/16

Opening as on Shrawan I 7,028,036 3,s56,141

Addition during the year 3,785,608 6,206,816

CSR expense during the year (from CSR

reserve)

(7,028,036) (2,734,921)

Closing as on Ashad End 3,785,608 7,028,036

Regulatory Reserve

As per the NRB Directive 4/077 Clause (3) the bank is required to credit an amount equal to the

adjustments made as per NFRS while preparing Opening Slatement of Financial Position and NFRS

compliant financial statements of succeeding years to the Regulatory Reserve The amount shall be

transferred from Retained Eaming to the Regulatory Reserve in the Statement of Changes in Equity.

Accordingly, the bank has credited the following amounts,

6,l

ll.

Il.

lv

As at 3l'r Ashad

2076

Transfer to

Reserve-2077

As at 3ld Ashad

2077

82,s73,436Accrued Interest Recognized as lncome (net ofstaff bonus and tax)

44,503,462 38,069,975

52,070,592Investment Properties (net of accumulated

depreciation and lncome Tax)

52,070,592

(5,363,18s) 34,465,576Deferred Tax Assets-Addition/(Reversal) 39,828,761

Fair Value Loss in InYestrnent

Equity/(Reversal)

ln 28,868,726 (t9,662,464) 9,206,262t{lo

953,043 7,780,428 8,733,471Actuarial Gain (Through Proiit or l-oss

Account )14, 104,319Other Regulatory Adjustment 14,104,319

34,929,013 201,153,656Total 166,221,583

1 €v

t,

Particulars

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statements for the year ended 3lst Ashadb 2077

Investment Adjustment Reserve

lnyestment adjustmeot reserve is created against the unquoted share investment.

Staff Training Development Fund

As per the NRB Directives 2077,6(6), the Development Bank shall spend 3yo of the total personnel

expenses (Salary & Allowances) of preceding year on Staff training and development. Further if suchamount could not be spent, short amount shall be credited to Staff training and development fund whichshall be spent in the next year. However, this provision is not mandatory for the Fy 2076/77.

Accordingly, the Development Bank has spent NPR 5,551,197 during FY 2075/16 from the allocatedreserve ofprevious fiscal years.

The Development Bank has not credited to Stafftraining and development fund for FY 2076/i7.

6.2. Impairmert

As per the Carve out notice issued by ICAN, the Development Bank has measured impairment loss on loan

and advances as the higher of amount derived as per norns prescribed by Nepal Rastra Bank for loan loss

provision and amount determined as per paragraph 63 ofNAS 39.

Pa rticu la rs 207 5/76

LLP as per NRB Directives (a) '159,7 5l,701 5El,71t,034Individual Impairment as per NFRS 98,133,990 99,237,130

Collective Impairment as per NFRS 101,755,961 83,7 59,577

Total Impairment as per NFRS (b) 199,889,9s1 t82,996,707

Impairment on Loan and Advaoces (Higher of a & b) 759,751,701 581,711,03,t

6.3. lnvestmenlProperties/Non-BankingAssets

Non-Banking Assets has been shown under the investment Properties. It has been recognized at Cost Less

Accumulated Depreciation (aggregated with the accumulated impairment losses). Details ofthe lny€stment

properties (at cost) are as follow;

6..1.

The Development Bank don't own any other non-banking Assets in the ng period

vl.

Name Of Borrower Date of Assuming

Non-Banking Assets

As at 3l't Ashad

2071

As at 3l"rAshad2076

Binod Shrestha 2070.03.3 t 8,800,000 8,800,000

Champadevi Foodhill Resort and Villas

P. Ltd2070.03.30 25,E76,s00 25,876,500

Original Planner 2072.03.31 1.00 1.00

Madhukar Yak Thumba 2072.03.24 t3,7 5'7,698 t3,7 57 ,698

Satya Suppliers 20'7 5.09.26 6,005,376 6,005,376'I'otal 54,439,s75 s4,439,575

cgr"

h

2016/77

OtherNon-Banking Assets

Non-Banking Assets (other than land and properties) has been shown under the Other Non-Banking Assets.

I

4


6,5. Accrued Interest income

Under NFRS compliant financial statements, inlerest income of loan and adyances is recognized on accrual

basis. In line with circular:l Fy 2076/77, Guideline on recognilion of Interest income, the DevelopmentBank has suspended interest ilcome on the following types ofloans:

I ll.

Loans where there is reasonable doubt about the ultimate collectability ofprincipal or interest

Loans where contractual payments ofprincipal and,/or interest are more than 3 months in arrears and where

the "n€t realizable value" ofsecurity is insufficient to cover payment ofprincipal and accrued intcrest;

Loans whsre contractual payments of principal and,/or interest are more than 12 months in arrears,

irrespective ofthe net realizable yalue ofcollateral;

Overdrafts and other short term facilities which have not been settled after the expiry ofthe loan and even

not renewed within 3 months ofthe expiry, and where the net realizable value of security is insufficient to

cover payment ofprincipal and accrued intercst;

Overdrafts and other short term facilities which have not been settled after the expiry ofthe loan and even

not renewed within l2 months ofthe expiry, irrespective ofthe net realizable value ofcollateral:

Details ofAccrued Interest Income are as follow:

Pa rticulars 2076171 207 5/16

Accrued lnterest Receivable 565,876,361 29t,779,356

lnterest Suspended,/l'{ot recognized (242,847,330) (r89 ,512,91 t)Recover Upto Ashwin End 2077 ( 191,960,084) (36,s29 ,6s9)Total Accrued Interest Recognized t3l,068,946 65,706,786

Accrued Interest Income up to Previous Year (65,706,786) (44,402,662\

Accrued Interest Income recognized this year 65,362,I60 21,304,124

6.6. Amortization of Staff Loan

The Development Bank has recognized the staff loan at amortized cost. The details of staff loan presented

at amortized cost are as follow.

Particula rs 2016/71

Book Value of Staff Loan 53,76t,821 63,637 ,968Prepaid Expenditure 550,',1'7 4 2,826,285

Amortized Cost of Staff Loan 53,2r 1,048 60,811,683

6.1. Earnings Per Share

The Development Bank measures eaming per share on the basis of the eaming attributable to the equity

shareholders for the period. The number ofshares is taken as the weighted average number of shares for lhe

relevant period as required by NAS 33.

4

ql.

a^

Particulars 2076117 2075t76

378,560,E24 620,681,564Earning Att butable to Equity Holder

Weighted Number of Equity Share 2't,t63,\17 21,870,941

13.9.t 28.3fliarnings Per Share

F

2015/76

Lumbini Bikas Bank LimitedNotes to the Consolidated Financial Statements for th€ year ended 3lst Ashadh 2077

6,E. Proposed Distributior (Dividend and Bonus Share)

The Board of directom in its 3786 meeting dated 2077108/23 has passed a resolution recommending fordistribution of bonus shares (stock dividend) of NPR 190,141,821.00 and cash dividend of NpR81,489,351.86 (including applicable taxes) fiom available Free Reserve.

Amount NPR

Particulars 2076/77 207 5/16Cash Dividend 81,489,351.86 388,044,532

Bonus Share (Stock Dividend) 190,t41,821.00 129,348,177

Total 271,63t,112.86 517,392,710

6.9. UnclaimedDividend

At the reporting date, unclaimed dividend over the years are as follow:

Particulars As at 3l'I Ashad 2077 As at 3l!t Ashad 2076

Unclaimed Dividend for more than 5 years 4,',|30,333 3,449,296

Not Collect€d up to 5 years 54.662,570

Total 59,392,903 3,449,296

6.10. Noo-PerformingAssets

The Development Bank's non-performing assets ratio stood at 2.690/o as at Ashad end 2077. The total non-

performing assets as at Ashad end 2077 is NPR 691,151,053 and loan loss provision related to non-

performing assets calculated as per NRB directives is NPR 454,038,141 which is 66.69 % of NPA.

Gross NPL to Gross Loan: 2.69Yo

Through the various circular, notice and directives, Nepal Rastra Bank has instructed to defer the

installment and interest payment of loans extended to professionVbusinesses that are affected by the

COVID-I9 pandemic. Bank and Financial institutions are also allowed to restruclure and reschedule loans

for hard-hit industries and business including tourism sector that need more tim€ to recover.

The gross NPA ofthe Development Bank would be 5.15%o, if no regulatory relaxation was provided during

the reporting time. The Total Loan Loss provision would be 917,774,321 against the ss

ision ofRs 758,735,084 as on Ashad end 2077.

I

Particulars This Year Previous Year

Change

Amou nt

Performing loans 25,02t,686,603 22,396,362,t28 2,625,324,475 1l.72yo

Nou-Performing Loans(NPL) 69t,151,053 373,502J65 317,6't8,688 8so/o

Res t ruc ture d/ re sc he du I e d

Substandard 152,800,44t 68,237,852 84,562,589 124Yo

DoubtJul 233,929,424 56,626,549 t77,302,875 3130

Loss 304,421,187 248,637,964 55,783,223

Gross Loans & Advances 25,7 12,837 ,655 22,769,861,493 2,942.973.162

Loan lo

220/.

)

MY


6.11. Concetrtration ofDeposits, Loans & Advances and Contingents

For the calculation of concentration, loans and adyances is total loans extended to the customers except

staff loans and interest accruals on loans and the deposits is total deposits fiom the customers excluding

interest payables.

Single Obligor Limit and Sector-wise Limit (Directiye No. 3) for both funded and non-funded are within

the limit as prescribed by NRB directives.

6.12.

6.13. Relief Measures in COVID-I9 Pandemic

Nepal Rastra Bank was announced the relief measures for the borrowers of all Banks and Financial

Institutions (BFIs) considering the impact caused by COVID-19 pandemic on tourism, industries,

businesses and other sectors ofNepal.

As per NRB directives, facilities such as the rebate/reduction of interest, extension of loan payment

schedule, restructuring and rescheduling of loans has been provided to all professions, industry and

businesses including tourism manufacturing, education, health, communication and entertainment that have

faced difiiculties in repaying the debt as a result ofthe measures taken to control the spread ofCOVID-19.

IIlterest Rebate and Concession

In compliance of Nepal Rasfta Bank Directives and Policy, the Development Bank has provided l0%

rebate on interest paid with in Chaitra End 2076. Accordingly, Interest rebate of Rs 3.089 Million was

proYided to our valued customers.

Further, Nepal Rastra Bank was instructed to banks and financial institutions to reduce the existing interest

rate for the period Baisakh l, 2077 to Ashad end 20'18 by 2yo to minimize the impact of COVID-I9 to the

borrowers. The Development Bank has reduced the existing interest rate by 2o/o of rolal 10,186 bonowers

on Rs 20.99 billion outstanding loan. The total interest rebate ftom the reduction of Interest rate was

97.28 Million upto Ashad end 2077.

Credit to Covid-19 aff€cted Business/Professioo

As per Circulars/Directives of Nepal Rastra Bank, additional working capital loan (10 to 20%)

provided for the operation and continuation of COVID-I9 affected businesses including tourism and

cottage, small and medium enterprises for payment of salaries to workers and empl of such sectors,

in the hard-hitand for providing opportunities to dev lop entrepreneurship to those who have I

Prrticulrrs

Loans & Advances and Bills Purchased Deposits & Borrowings

As at 3lst Ashrd

2077

.4.s at 3lst Ashad 2076 As at 3lstAshad 2077

As at 3lst Ashad

2076

Total Amount Outstanding 25,712,837,655 22,769,864,493 29,705,261,143 24,806,232,738

Highest Exposure ofaSingle Unit 4E1,772,623 454,896,234 1,482,132,010 602,900,000

Concentration of exposure 1.87% 2.00Yo 4.99Y. 2.43vo

sect

@>.

Interest Capitalization

As per the Nepal Rastra Bank Directives 2(39), the interest accrued on moratorium period ofLoan provided

to National Priorities sector like Hydro Electricity project is allowed to capitalize during the Period with

prior approval from the Nepal Rastra Bank. The Development Bank has capitalized the interest of Rs

56,029,272 duringFY 2076/77 with the approval llom Nepal Rastra Bank.

,


The Development Bank has extended such credit facilities of Rs 301.34 million to the total 404 affected

borrowers from this pandemic upto Ashad end2077.

The Development Bank has taken all the precautionary measures to protect our valued customers,

employees and all other stakeholder from the infectious COVID-I9 virus. The Development Bank has

complied with all the directives and policy related to COVID-19 pandemic issued by Nepal Rastra Bank on

time to lime.

6.14. Liability for employee defined Benefit Obligation

Liabilities relating to employees benefits like liabilities for defined benefit obligation gratuity and pension

fund, liabilities etc. were recognized on the basis ofActuarial Valuation.

4

Lumbini Bikas Bank LimitedCondensed Consolidated Statement of Financial Position (Utraudited)

As or Quarter Ended Jl Ashad 2077 (I5 Juty 2020)

Figures in NPR

Bank

This Quarter Ending Immediate Previous Year Ending

Assets

Cash and cash equivalent

Due from Nepal Rastra Bank

Placement with Bank and Financial lnstitutions

Derivative fi nancial instrumenls

Other trading assets

Loan and advances to B/Fls

Loans and advances to customers

lnvestnent securiti€s

Current tax assets

Investment in susidiaries

InYestment in associates

Investment property

Property and equipment

Goodwill and Intangible assets

Deferred tax assets

Other assets

4,81t ,s04,667

1,300.360.398

1,008,767,300

24,249,834,797

I ,761,636,516158,366,370

444,009,624

54,292,581

314,659,955

3,328,740

18,280,479

I13,323,338

4,125 ,966,7 66

832,739,821

| ,206,137 ,608

2l ,t44,418,51',1

I ,666,989,837

109,783,096

408,866,853

54,292,58t

322,691,,123

3,985,687

34.435.648

I17,010,979

Total Assets t4,238,364,765 30,027,318,517

This Quarter Ending Immediate Preyious Year Erding

LiabilitiesDue to Bank and Financial Institutions

Due to Nepal Rastra Bank

Derivative fi nancial instruments

Deposits from customers

Bonowing

Cunent Tax Liabilities

Provisions

Defened tax liabilities

Other liabilities

Debt securities issued

Subordinated Liabil ities

I ,t'7 6,7 64,472

469,929,4t5

28,058,819,723

308,173,566

3 ,310,110.7 62

681 ,68'7 ,t t2

21 ,496,400,62'1

331,099,952

Total liabilities 30,013,687,176 25,819,298,452

EquityShare capital

Share premium

Retained eamings

Reserves

2,116,3tI,729

76,3t2188.587,268

2,209,7 66,313

14,272,683<r,) o10 {oo

319 702.281 1,461 941..170

Total equity attributabl€ to equity holders 4 ,224,677 ,590 4,208,020,064

Non-controlling itrterest

Total equit} 4,224.677,590 4,208,020,064

Total liabi 765 30 7and l t1

\

I

I

W

Lumbini Bikas Brnk Limi(cdCondensed Consolidated St.temcnt of Profit or Loss (tJnsuditcd)

For rhe Quartcr Ended 3l Ashad 2077 (t5 July 2020)

Figurcs ln NPR

Bsnk

Current Year Previous Yerr Corresponding

This Q0srter

Upto This Qu.rtcr(YTD)

Upto ThisThis Quarter Ou.rter (YTD)

Interest income

Interest expense

796.E79,406

592,932,981

3,391,108,420

2,291,760,758

935,505,748

558,707,152

3 ,243,024,46A

2,078,370,134

Net interest incorne 20J,946,42s r,r0s347,662 376,798596 Lt64.654J34

Fee and commission inmme

Fee alrd mhmission expense

20,874,777

1.052,803

I I t,816,983

3,363,472

31,009,778

1,325,96 t

t40,049,584

3,070,861

Net fe€ and commission income

Net interest, fee end commission incomr

19,t21,974 ll5 11 t36,918,722

223,16t399 1,220,801,173 412,482,414 IJ01,633,057

Net trading income

Other operalinq income

(424)

18,138,903

13,481

41,535,105

8,838

19,632,2t5

24,5t4

39,549,084

Totel operating inrome 241,9O6,E11 1262349.160 432,t21.461 1J41.206,654

56,4E4,794

68,269.414

r4,595,06r

309,891,616

213,114.823

53,387.935

tt0,724,999

69.109.842

13,,{43,655

349,332J28

196,653,917

ation & Amonisalion

rrti ProfitNon operating income

51 162.579

115.258.232 480342,639 334,712,157 E47,Er3,665

r,056,854 (t5,265,182\ 7,836,11l

Non

Profit before income tlr l{98 t,15

l0l t.15 503 61

319

IDcome tax expense

Clrrent Tax

Deferred Tax

234,464,648

257,767,318

(23.302.670\

(43,569,697)

(43,569,697)

144,166,457

144,166,457

9'.7,06t,612

91,061,612

Profit for the period (101,6tt,535) 335,934,t92 222A98,911 620,681F6,1

Othcr comprehcnsiva incomc, net ofincome trxr) Items thrt will not bc rcclxssified to Profit or loss

. Cainv(losses) from lnvestments in equity instruments

measured at fair value. CainJ(losses) on revaluation. Actuarial gains/(losses) on defined benefit plans

. Income tax relating to abovc items

35,471.770

( I0.643.331) ()6.t55.t69)

53,850,564 (13,401,622) (1s,874,4U\

(t,234,718)

4,020.487

(t,234,7 t8\5,132,155

Nct other comprehensivc income thet will not be

rechssified (o profit or loss 2{.t1.t.139

b) Items thrt rra or nry ba rcclrscilied to profit or lols. Gainr(losses) on cash flow hedge. Exchange gainy(losses) (arising from trasalating

fmancial assets of foreign operation). Income t6x rclating to above items. Reclassify to profit or loss

Nat other comprchcnsivc incom€ that arc or may bc

raclassificd to profia or loss

c) Shrra of othar aompr.haItsiva income of associrtc

accoutrted xs par aquit€d mathod

Other comprcheosiva incoma for thc pcriod' net ofincomc trx

t7,314,400

42,148,839

31.07t.772

68,767,166

25 ,147 .168.45

14531Jr5

57,726,r't6

45,749,149

Total

4\

nsive ificome for the 59.5t9 404,702,05t 236,930,227 666,431,312

(

o$dra 4

'c4

Impairment charge/(rcvcrsal) for loans and other bsses 2,17.815.840 205.412,7.t6 (9j.927.18:) (103,755,835)

Net opcretins income (5.90E.96J) 1,056.9J7,01.1 52E,050.6.{t 1,.111,962,.189

Oper{ting €xp€nse

Personnel oxpenses

Olher opemting expms€s

17,695J95 (10,615,853) (11,976,42t)

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Rrtiokiltl:il:i:i:iitill::.Ndt.Irofit/Oross tnaijiiidrrll:t::llll:utl:,lltt li,r.,t,. . ir:,r:tl:talla:lai:alal:t:lpdicent.

2 llflrnings I'er Sharc (as pcr NAS .l.l - l-.arning per Share.l NPR

3 Markct Valuc Per Share NPR

4 Pricc Earning Ratio Ratio

5 Stock Dividcnd (Bonus Share) on Share Capilal Percent

6 Cash Dividcnd on Share Capital Percenl

7 Interest Income/Loans and Advances Percent

8 StalT Expcnses./ l'otal Expenses Pcrccnt

i..... 9 Interest Expenses/Total Deposils and Borrowings Percent

l0 lJxchange Gain/'lotal Income Percent

,r:t,:t::l:ltl'l':Stafl' Bonus,{'otal StallLjiiiionscs Percent

12lotrl (lrc(lil/l)eposils PeroeDt

'::::aatlli3 lbtal Operating Experi!661i<llal Assets Perccrt

14 (lar)ital A.leourcy (On Risk Wciqhted Asscts)

Core Capital Perccnt

Supplcmentary Capital Perccnt'fotal Capital fund Perceot

15 Cash Rcscrve Ratio (CRR) Perccnt

16 Net Profit /'Iotal Loan Perce[t

17 (lross Non-l'crlbrming CredirTotal (lrcdit Ratio

18 Weightcd Average lnteresl Rale Sfrerd Percenl

19 Rcturn on'lbtal Assets Percent

20 tlook Ncl Worth NPR

21 Base Ralc

22 Nurnbcr of Shares

23 Number of Staff

t'tr,tf iirIriE rrl-n lilf-frtErilf',firn'il-firB'tJ'-nrErE-,lr':r-3.9t03.]iiiltltl,llir',r.:, ., 27.35 . , l' $i!,l1]lallllia:tt::.,,,.r,,1 L57 I 8 ill,9trrir:::iiri.:.ir:,::: .,r. . 10.s5

17.27 1"1.24 8.71 ls.tg 28.38 t3.94

t55.00 I52.0U 77.90 t46 197 t8l8.97 8.ri2 8.95 9.61 6.91 r2.eq

0.00 0.oo 0.00 17.07 5.00 7.00

0.00 0.00 0.00 0.00 15.00 3.00

10.82 10."t5 14.00 t2.36 12.93 12.-10

12.26 1t.29 15.06 t3.()l ll.0{ ll.ll1.07. 5.95 7.65 9.63 9.37 7.71

0.00 0.00 0.00 0.03 (0.0 r ) 0.0,1

26.bq JJ.l{8 t2.36 16.4J 27.20 t8.46

72.96 72.e6 98.57 99.92 103,97 8fi.95

1.86 1.58 L87 0.09 0.0q L7t

13.12 12.82 14.88 15.8.t r5.2e 13.n9i,

0.81 r.01 l.l0 l.l5 1.2-< 1.099,

13.93 13.83 16.07 17.18

5.00 -s.10 5.i6 .1.38

4.1I 2.99 t.t2 r.78

2.50 1.eO 3.',79 3.34

4]2 4.29 4.89 4. 19

2.89 2.12 0.82 t.22

75.26 92.50 150.5 t 161.26

16.54 l4.20vo,1.05 .1.38

2.78 1.47

1.64 2.6\)

4.79..,:,:.:,:,1:::::'': :,.,,. 4.58

2.0'7 I .10

190:43':l:li]:i:]:l:':l]i.ll:r,l] :]i] 163.60

10_85 9.0 r 12.31 12.96 l I .02 9.92

e.170,741 q,170.741 20.088.785 21.732,8:7 22,091.663 27.163,117

I 16 l3 t 456 502 196 5 13.00

@ ?::

a

t/taxo{


As at 31 Ashad 2077 (15 July 2020)

Principal Indicators

Percent

No.

Khafendra g Associares PAN 01-

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