NIC ASIA Bank Ltd.

Condensed Consolidated Statement of Financial Position

As on Quarter Ended 30th Ashwin 2080 (17th October 2023)
Amount in NPR
Group Bank
This Quarter Immediate Previous This Quarter Immediate Previous
Ending Year Ending Ending Year Ending
Assets
Cash and cash equivalent 32,214,790,251 24,355,126,124 27,921,668,956 20,245,563,442
Due from Nepal Rastra Bank 14,282,671,994 20,443,340,655 14,282,671,994 20,443,340,655
Placement with Bank and FinanciaI lnstitutions - - - -
Derivative financiaI instruments 3,554,855,670 2,965,528,168 3,554,855,670 2,965,528,168
Other trading assets 84,630,000 5,424,208 84,630,000 2,060,000
Loan and advances to B/Fls 5,818,274,741 6,065,542,341 9,718,277,849 9,966,477,947
Loans and advances to customers 311,539,435,808 279,811,812,242 294,094,123,692 261,772,031,449
lnvestment securities 63,630,777,780 34,787,925,429 63,230,322,636 34,321,039,813
Current tax assets - 275,203,356 - 192,105,650
lnvestment in subsidiaries - - 1,204,500,000 1,204,500,000
lnvestment in associates - - - -
lnvestment property 3,434,684,964 2,718,429,789 3,434,684,964 2,718,429,789
Property and equipment 4,200,128,213 5,374,957,345 4,090,882,534 5,279,760,580
Goodwill and lntangible assets 143,267,355 144,617,901 137,956,122 136,468,255
Deferred tax assets - - - -
Other assets 8,116,943,251 5,217,633,017 7,624,276,483 4,841,979,715
Total Assets 447,020,460,025 382,165,540,577 429,378,850,899 364,089,285,463
Liabilities
Due to Bank and Financial lnstitutions 15,422,825,295 17,132,593,622 15,835,211,845 3,972,661,638
Due to Nepal Rastra Bank - - - -
Derivative financiaI instruments 3,537,351,771 2,962,156,296 3,537,351,771 2,962,156,296
Deposits from customers 365,149,932,090 313,177,568,245 363,642,442,361 311,367,922,421
Borrowing 13,375,667,035 - - -
Current Tax liabilities 191,249,082 - 200,634,489 -
Provisions - - - -
Deferred tax liabilities 203,990,263 238,592,393 229,264,727 265,498,143
Other liabilities 6,019,913,599 6,194,705,161 5,061,375,907 5,398,514,132
Debt securities issued 10,732,277,965 10,731,576,978 10,732,277,965 10,731,576,978
Subordinated liabilities - - - -
Total Liabilities 414,633,207,101 350,437,192,694 399,238,559,065 334,698,329,607
Equity
Share capital 14,917,566,922 11,564,005,366 14,917,566,922 11,564,005,366
Share premium - - - -
Retained earnings (608,354,813) 4,065,198,016 (988,242,974) 3,534,225,906
Reserves 16,761,915,667 14,744,034,523 16,210,967,886 14,292,724,584
Total equity attributable to equity holders 31,071,127,775 30,373,237,905 30,140,291,834 29,390,955,856
Non-controlling interest 1,316,125,149 1,355,109,977 - -
Total equity 32,387,252,925 31,728,347,882 30,140,291,834 29,390,955,856
Total Liabilities and equity 447,020,460,025 382,165,540,577 429,378,850,899 364,089,285,463
 NIC ASIA Bank Ltd.
Condensed Consolidated Statement of Profit or Loss
For the Quarter Ended 30th Ashwin 2080 (17th October 2023)
Amount in NPR
Group Bank
Previous Year Previous Year
Current Year Current Year
Corresponding Corresponding
This Upto this Quarter This Upto this Quarter This Upto this Quarter This Upto this Quarter
Particulars Quarter (YTD) Quarter (YTD) Quarter (YTD) Quarter (YTD)
lnterest income 10,662,623,613 10,662,623,613 10,666,651,488 10,666,651,488 10,168,652,550 10,168,652,550 9,955,456,062 9,955,456,062
Interest expense 7,649,851,556 7,649,851,556 6,960,791,677 6,960,791,677 7,422,018,415 7,422,018,415 6,624,279,704 6,624,279,704
Net interest income 3,012,772,058 3,012,772,058 3,705,859,811 3,705,859,811 2,746,634,134 2,746,634,134 3,331,176,358 3,331,176,358
Fee and commission income 878,489,583 878,489,583 726,238,897 726,238,897 804,678,973 804,678,973 625,486,220 625,486,220
Fee and commission expense 91,816,321 91,816,321 52,518,295 52,518,295 74,634,767 74,634,767 52,496,920 52,496,920
Net fee and commission income 786,673,262 786,673,262 673,720,602 673,720,602 730,044,206 730,044,206 572,989,300 572,989,300
Net interest, fee and commission income 3,799,445,320 3,799,445,320 4,379,580,413 4,379,580,413 3,476,678,340 3,476,678,340 3,904,165,658 3,904,165,658
Net trading income 43,176,931 43,176,931 29,388,956 29,388,956 43,176,931 43,176,931 29,366,148 29,366,148
Other operating income 123,985,347 123,985,347 158,460,683 158,460,683 117,498,567 117,498,567 158,442,022 158,442,022
Total operating income 3,966,607,598 3,966,607,598 4,567,430,052 4,567,430,052 3,637,353,838 3,637,353,838 4,091,973,828 4,091,973,828
lmpairment charge/ (reversal) for loans and other losses 651,841,100 651,841,100 (127,208,762) (127,208,762) 644,307,412 644,307,412 (127,877,955) (127,877,955)
Net operating income 3,314,766,498 3,314,766,498 4,694,638,814 4,694,638,814 2,993,046,426 2,993,046,426 4,219,851,783 4,219,851,783
Operating expense
PersonneI expenses 1,081,722,483 1,081,722,483 1,382,981,266 1,382,981,266 948,804,758 948,804,758 1,230,620,519 1,230,620,519
Other operating expenses 422,655,180 422,655,180 522,579,700 522,579,700 356,215,905 356,215,905 321,679,452 321,679,452
Depreciation & Amortization 154,092,262 154,092,262 130,176,731 130,176,731 145,092,262 145,092,262 140,589,142 140,589,142
Operating Profit 1,656,296,573 1,656,296,573 2,658,901,118 2,658,901,118 1,542,933,502 1,542,933,502 2,526,962,670 2,526,962,670
Non operating income 5,752,464 5,752,464 12,101 12,101 5,206,688 5,206,688 - -
Non operating expense 135,791,641 135,791,641 17,277,845 17,277,845 132,546,195 132,546,195 17,277,845 17,277,845
Profit before income tax 1,526,257,395 1,526,257,395 2,641,635,373 2,641,635,373 1,415,593,995 1,415,593,995 2,509,684,824 2,509,684,824
lncome tax expense
Current Tax 439,144,808 439,144,808 792,490,612 792,490,612 405,210,132 405,210,132 752,905,447 752,905,447
Deferred Tax - - - - - - - -
Profit/(loss) for the period 1,087,112,587 1,087,112,587 1,849,144,761 1,849,144,761 1,010,383,862 1,010,383,862 1,756,779,377 1,756,779,377

Condensed Consolidated Statement of Comprehensive lncome

Profit/(loss) for the period 1,087,112,587 1,087,112,587 1,849,144,761 1,849,144,761 1,010,383,862 1,010,383,862 1,756,779,377 1,756,779,377
Other Comprehensive lncome (84,544,636) (84,544,636) (124,407,551) (124,407,551) (84,544,636) (84,544,636) (124,407,551) (124,407,551)
Total Comprehensive lncome 1,002,567,951 1,002,567,951 1,724,737,210 1,724,737,210 925,839,226 925,839,226 1,632,371,826 1,632,371,826
Basic earnings per share 28.60 62.76 26.58 59.62
Diluted earnings per share 28.60 62.76 26.58 59.62
Ajdusted earning per share 28.60 48.65 26.58 46.22
Profit attributable to:
Equity holders of the Bank 1,068,165,881 1,068,165,881 1,823,531,088 1,823,531,088 1,010,383,862 1,010,383,862 1,756,779,377 1,756,779,377
Non-controlling interest 18,946,706 18,946,706 25,613,673 25,613,673 - - - -
Total 1,087,112,587 1,087,112,587 1,849,144,761 1,849,144,761 1,010,383,862 1,010,383,862 1,756,779,377 1,756,779,377
 Group Bank
Current Year Previous Year Current Year Previous Year
Ratios as per NRB Directive
This Upto this Quarter This Upto this Quarter This Upto this Quarter This Upto this Quarter
Quarter (YTD) Quarter (YTD) Quarter (YTD) Quarter (YTD)
Capital fund to RWA 12.41% 13.23% 12.25% 13.05%
Non-performing loan (NPL) to total loan 1.92% 0.83% 1.37% 0.59%
Total loan loss provision to Total NPL 152.40% 325.81% 155.23% 305.82%
Cost of Funds 8.42% 8.29% 8.31% 8.18%
Credit to Deposit Ratio 82.52% 85.99% 80.89% 84.32%
Base Rate 10.66% 10.79% 10.56% 10.67%
Interest Rate Spread 4.15% 4.65% 3.99% 4.39%
Statement of Distributable Profit or Loss
Statement of Distributable Profit or Loss
For the Qtr end of Ashwin 2080
(As per NRB Regulation)

Amount in NPR
Bank
Previous Year
Current Year
Corresponding
Upto this Qtr YTD Qtr YTD
Net profit or (loss) as per statement of profit or loss 1,010,383,862 1,756,779,377
Appropriations:
a. General reserve 202,076,772 351,355,875
b. Foreign exchange fluctuation fund (193,611) 771,039
c. Capital redemption reserve 442,721,817 322,487,417
d. Corporate social responsibility fund 8,630,437 17,567,794
e. Employees' training fund - -
f. Other - -
- Deferred Tax reserve - -
- Investment Adjustment Reserve - -
-Sale of investment
Profit or (loss) before regulatory adjustment 357,148,447 1,064,597,252
Regulatory adjustment : (1,349,552,531) (704,168,634)
a. Interest receivable (-)/previous accrued interest received (+) (898,311,771) (439,698,699)
b. Short loan loss provision in accounts (-)/reversal (+) - -
c. Short provision for possible losses on investment (-)/reversal (+) - -
d. Short loan loss provision on Non Banking Assets (-)/resersal (+) (451,240,760) (264,469,936)
e. Deferred tax assets recognised (-)/ reversal (+) - -
f. Goodwill recognised (-)/ impairment of Goodwill (+) - -
g. Bargain purchase gain recognised (-)/resersal (+) - -
h. Acturial loss recognised (-)/reversal (+) - -
i. Other (+/-) - -
-Debt securities recognised at amortised cost - -
-Defined benefit obligation - -
-Fair value reserve
Net Profit or (loss) for the Qtr end Ashwin 2080 available for
(992,404,084) 360,428,618
distribution
Opening Retained Earning as on Shrawan 1* 3,534,225,906 3,427,074,085
Adjustment (+/-) (992,404,084) 360,428,618
Distribution
Bonus Share Issued 3,353,561,556 -
Cash Dividend Paid 176,503,240 -
Total Distributable profit or (loss) as on Qtr end date (988,242,974) 3,787,502,703
Annualised Distributable Profit/Loss per share - 42.10%
*Opening Retained Earning as on previous year corresponding quarter has been adjusted as per audited figure
 Group
Statement of Changes in Equity
For The Period (17th July 2023 to 17th Oct 2023) ended Ashwin 2080
Amount in NPR
Particulars Share Capital Share General Reserve Exchange Regulatory Fair Value Revaluation Retained Earning Other Reserve Total Non-controlling Total Equity
Premium Equalisation Reserve Reserve Reserve Interest

Balance as at Shrawan 1, 2079 11,564,005,366 - 4,798,683,072 48,086,024 1,393,984,928 393,224,784 - 4,122,569,563 3,483,217,585 25,803,771,322 1,330,223,610 27,133,994,932
Adjustment/Restatement - 41,254,010 186,180,875 227,434,885 (101,880,899) 125,553,986
Adjusted Restated Balance at Shrawan 1, 2079 11,564,005,366 - 4,798,683,072 48,086,024 1,393,984,928 393,224,784 - 4,163,823,573 3,669,398,459 26,031,206,207 1,228,342,711 27,259,548,918
Comprehensive Income for the year - - - - - - - - - - -
Profit for the year - - - - - - - 4,722,261,911 - 4,722,261,911 126,767,266 4,849,029,177
Other Comprehensive income, net of tax - - - - - - - - - - -
Gains/(losses) from investments in equity instruments
measured at fair value - - 3,651,361 - - 103,967,850 - 14,605,445 - 122,224,657 122,224,657
Gains/(losses) on revalution - - - - - - - - - - -
Actuarial gains/(loses) on defined benefit plans - - - - - - - - (19,185,401) (19,185,401) (19,185,401)
Gains/(losses) on cash flow hedge - - - - - - - - - - -
Exchange gains/(losses) (arising from translating
financial assets of foreign operation) - - - - - - - - - - -
Total comprehensive income for the year - - 3,651,361 - - 103,967,850 - 4,736,867,357 (19,185,401) 4,825,301,167 126,767,266 4,952,068,433
Transfer to reserve during the year - - 897,373,858 442,912 2,128,175,914 - - (4,468,925,514) 1,326,230,762 (116,702,068) (116,702,068)
Transfer from the reserve during the year - - - - - - - - - - -
Transactions with owners, directly recognized in equity - - - - - - - - - - -
Share issued - - - - - - - - - - -
Share based payments - - - - - - - - - - -
Dividends to equity holders: - - - - - - - - - - -
Bonus Shares issued - - - - - - - - - - -
Cash Dividend Paid - - - - - - - (366,567,400) - (366,567,400) (366,567,400)
Other - - - - - - - - - - -
Total contributions by and distributions:
Balance as at Ashadh End, 2080 11,564,005,366 - 5,699,708,291 48,528,936 3,522,160,842 497,192,634 - 4,065,198,016 4,976,443,820 30,373,237,906 1,355,109,977 31,728,347,882

Balance as at Shrawan 1, 2080 11,564,005,366 - 5,699,708,291 48,528,936 3,522,160,842 497,192,634 - 4,065,198,016 4,976,443,820 30,373,237,906 1,355,109,977 31,728,347,882
Adjustment/Restatement - - (221,691,494) - - - - (208,865,968) 321,329,336 (109,228,126) (57,931,534) (167,159,660)
Adjusted/Restated Balance at Shrawan 1, 2080 11,564,005,366 - 5,478,016,797 48,528,936 3,522,160,842 497,192,634 - 3,856,332,048 5,297,773,156 30,264,009,779 1,297,178,443 31,561,188,223
Comprehensive Income for the year - - - - - - - - - - -
Profit for the year - - - - - - - 1,068,165,881 - 1,068,165,881 18,946,706 1,087,112,587
Other Comprehensive income, net of tax - - - - - - - - - - -
Gains/(losses) from investments in equity instruments
measured at fair value - - - - - (84,544,645) - - - (84,544,645) (84,544,645)
Gains/(losses) on revalution - - - - - - - - - - -
Actuarial gains/(loses) on defined benefit plans - - - - - - - - - - -
Gains/(losses) on cash flow hedge - - - - - - - - - - -
Exchange gains/(losses) (arising from translating financial assets of
foreign operation) - - - - - - - - - - -
Total comprehensive income for the year - - - - - (84,544,645) - 1,068,165,881 - 983,621,237 18,946,706 1,002,567,942
Transfer to reserve during the year - - 202,076,772 (193,611) 1,349,552,531 - - - 451,352,254 2,002,787,946 2,002,787,946
Transfer from the reserve during the year - - - - - - - (2,002,787,946) - (2,002,787,946) (2,002,787,946)
Transactions with owners, directly recognized in equity - - - - - - - - - - -
Share issued - - - - - - - - - - -
Share based payments - - - - - - - - - - -
Dividends to equity holders: - - - - - - - - - - -
Bonus Shares issued 3,353,561,556 - - - - - - (3,353,561,556) - - -
Cash Dividend Paid - - - - - - - (176,503,240) - (176,503,240) (176,503,240)
Other - - - - - - - - - - -
Total contributions by and distributions: - (176,503,240)
Balance as at Ashwin End, 2080 14,917,566,922 - 5,680,093,570 48,335,325 4,871,713,373 412,647,989 - (608,354,813) 5,749,125,410 31,071,127,776 1,316,125,149 32,387,252,925
 NIC ASIA Bank Limited
Statement of Changes in Equity
For The Period (17th July 2023 to 17th Oct 2023) ended Ashwin 2080
Amount in NPR
Particulars Share Capital Share General Reserve Exchange Regulatory Fair Value Revaluation Retained Earning Other Reserve Total Non-controlling Total Equity
Premium Equalisation Reserve Reserve Reserve Interest

Balance as at Shrawan 1, 2079 11,564,005,366 - 4,576,991,578 48,086,024 1,393,984,928 393,224,784 - 3,427,074,085 3,439,780,013 24,843,146,779 24,843,146,779
Adjustment/Restatement - -
Adjusted Restated Balance at Shrawan 1, 2079 11,564,005,366 - 4,576,991,578 48,086,024 1,393,984,928 393,224,784 - 3,427,074,085 3,439,780,013 24,843,146,779 24,843,146,779
Comprehensive Income for the year - -
Profit for the year 4,444,769,821 4,444,769,821 4,444,769,821
Other Comprehensive income, net of tax - -
Gains/(losses) from investments in equity instruments
measured at fair value 3,651,361 103,967,850 14,605,445 122,224,657 122,224,657
Gains/(losses) on revalution - -
Actuarial gains/(loses) on defined benefit plans (19,185,401) (19,185,401) (19,185,401)
Gains/(losses) on cash flow hedge - -
Exchange gains/(losses) (arising from translating
financial assets of foreign operation) - -
Total comprehensive income for the year - - 3,651,361 - - 103,967,850 - 4,459,375,267 (19,185,401) 4,547,809,077 4,547,809,077
Transfer to reserve during the year 897,373,858 442,912 2,128,175,914 (4,352,223,446) 1,326,230,762 - -
Transfer from the reserve during the year - -
Transactions with owners, directly recognized in equity - -
Share issued - -
Share based payments - -
Dividends to equity holders: - -
Bonus Shares issued - -
Cash Dividend Paid - -
Other - -
Total contributions by and distributions: - - - - - - - - - - - -
Balance as at Ashadh End, 2080 11,564,005,366 - 5,478,016,797 48,528,936 3,522,160,842 497,192,634 - 3,534,225,906 4,746,825,375 29,390,955,856 - 29,390,955,856

Balance as at Shrawan 1, 2080 11,564,005,366 - 5,478,016,797 48,528,936 3,522,160,842 497,192,634 - 3,534,225,906 4,746,825,375 29,390,955,856 29,390,955,856
Adjustment/Restatement - -
Adjusted/Restated Balance at Shrawan 1, 2080 11,564,005,366 - 5,478,016,797 48,528,936 3,522,160,842 497,192,634 - 3,534,225,906 4,746,825,375 29,390,955,856 29,390,955,856
Comprehensive Income for the year - -
Profit for the year 1,010,383,862 1,010,383,862 1,010,383,862
Other Comprehensive income, net of tax - -
Gains/(losses) from investments in equity instruments
measured at fair value - (84,544,645) - (84,544,645) (84,544,645)
Gains/(losses) on revalution - -
Actuarial gains/(loses) on defined benefit plans - - -
Gains/(losses) on cash flow hedge - -
Exchange gains/(losses) (arising from translating
financial assets of foreign operation) - -
Total comprehensive income for the year - - - - - (84,544,645) - 1,010,383,862 - 925,839,217 925,839,217
Transfer to reserve during the year 202,076,772 (193,611) 1,349,552,531 451,352,254 2,002,787,946 2,002,787,946
Transfer from the reserve during the year (2,002,787,946) - (2,002,787,946) (2,002,787,946)
Transactions with owners, directly recognized in equity - -
Share issued - -
Share based payments - -
Dividends to equity holders: - -
Bonus Shares issued 3,353,561,556 (3,353,561,556) - -
Cash Dividend Paid (176,503,240) (176,503,240) (176,503,240)
Other - -
Total contributions by and distributions: 3,353,561,556 - - - - - - (3,530,064,796) - (176,503,240) - (176,503,240)
Balance as at Ashwin End, 2080 14,917,566,922 - 5,680,093,569 48,335,325 4,871,713,373 412,647,989 - (988,242,974) 5,198,177,628 30,140,291,833 - 30,140,291,834
 NIC ASIA Bank Limited
Consolidated Statement of Cash Flow Statement
For The Period (17th July 2023 to 17th Oct 2023) ended Ashwin 2080
Amount in NPR
Group Bank
Corresponding Corresponding
Previous Year Previous Year
Upto This Quarter Upto This Quarter
Upto This Upto This
Quarter Quarter
CASH FLOWS FROM OPERATING ACTIVITIES
Interest received 9,798,077,978 8,807,517,570 9,204,254,391 8,014,178,638
Fees and other income received 878,489,583 726,238,897 804,678,973 625,486,220
Dividend received - - - -
Receipts from other operating activities 44,764,742 33,808,783 37,732,186 33,755,213
Interest paid (7,649,851,556) (6,960,791,677) (7,422,018,415) (6,544,959,946)
Commission and fees paid (91,816,321) (52,518,295) (74,634,767) (52,496,920)
Cash Payment to Employees (1,081,722,483) (1,382,981,266) (948,804,758) (1,230,620,519)
Other expense paid (766,318,089) (622,199,075) (532,719,153) (435,641,515)
Operating cash flows before changes in operating assets
1,131,623,854 549,074,938 1,068,488,457 409,701,170
and liabilities
(Increase)/Decrease in Operating Assets (28,555,895,915) (6,610,067,175) (28,610,066,768) (6,619,119,977)
Due from Nepal Rastra Bank 6,160,668,661 (90,483,836) 6,160,668,661 (90,483,836)
Placement with bank and financial institutions - - - -
Other trading assets (79,205,792) 160,902,000 (82,570,000) 160,902,000
Loan and advances to bank and financial institutions 247,267,600 366,958,339 248,200,098 516,958,339
Loans and advances to customers (32,516,584,218) (9,093,610,627) (33,088,845,524) (9,593,569,470)
Other assets (2,368,042,167) 2,046,166,949 (1,847,520,004) 2,387,072,990

Increase/(Decrease) in operating liabilities 63,476,530,515 (2,495,802,291) 63,799,931,922 (1,226,707,016)

Due to bank and financial institutions (1,709,768,326) (1,481,861,353) 11,862,550,207 (1,338,336,535)
Due to Nepal Rastra Bank - (14,737,456,498) - (14,737,456,498)
Deposit from customers 51,972,363,845 14,953,284,882 52,274,519,940 15,010,799,445
Borrowings 13,375,667,035 - - -
Other liabilities (161,732,039) (1,229,769,323) (337,138,225) (161,713,427)
Net cash flow from operating activities before tax paid 36,052,258,453 (8,556,794,528) 36,258,353,611 (7,436,125,822)
Income taxes paid 337,053,833 246,391,525 (6,379,966) -
Net cash flow from operating activities 36,389,312,286 (8,803,186,053) 36,251,973,645 (7,436,125,822)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (28,963,630,403) 8,265,374,700 (29,030,060,874) 8,063,243,118
Receipts from sale of investment securities - - - -
Purchase of property and equipment 1,023,830,254 (191,919,240) 1,046,879,167 (175,701,393)
Receipt from the sale of property and equipment - - - -
Purchase of intangible assets (1,742,836) 5,567,710 (4,581,250) 2,271,252
Receipt from the sale of intangible assets - - - -
Purchase of investment properties (716,255,175) (419,793,549) (716,255,175) (419,793,549)
Receipt from the sale of investment properties - - - -
Interest received - 964,719,999 - 964,719,999
Dividend received 128,150,000 154,052,957 128,150,000 154,052,957
Net cash used in investing activities (28,529,648,160) 8,778,002,577 (28,575,868,131) 8,588,792,384

CASH FLOWS FROM FINANCING ACTIVITIES

Receipt from issue of debt securities - -
Repayment of debt securities - - - -
Receipt from issue of subordinated liabilities - - - -
Repayment of subordinated liabilities - - - -
Receipt from issue of shares - - - -
Dividends paid - - - -
Interest paid - - - -
Other receipt/payment - - - -
Net cash from financing activities - - - -

Net increase (decrease) in cash and cash equivalents 7,859,664,126 467,599,573 7,676,105,513.62 1,152,666,562
Cash and cash equivalents at Shrawan 1, 2080 24,355,126,124 32,029,869,045 20,245,563,442 27,591,988,416
Effect of exchange rate fluctuations on cash and cash
equivalents held
Cash and cash equivalents at Ashwin end 2080 32,214,790,251 32,497,468,618 27,921,668,956 28,744,654,978
1. Reporting Entity

NIC ASIA Bank Limited (“NICA” or “the Bank”) is a limited liability company domiciled in Nepal
which has been in operation in Nepal since 1998. The Bank is registered with the Office of
Company Registrar as a public limited company and carries out commercial banking activities
in Nepal under the license from Nepal Rastra Bank (Central Bank of Nepal) as Class “Ka”
licensed institution. The Bank registered, and corporate office are at Kathmandu, Nepal.

The Bank offers full commercial banking services of banking products and services including
loans and advances, deposits, trade finance, e-commerce services, bullion, etc. to wide range
of clients encompassing individuals, corporates, multinationals, large public sector companies,
government corporations, etc. as authorized by the Nepal Rastra Bank. The Bank is listed on
Nepal Stock Exchange and its stock symbol is “NICA”.

1.1 Subsidiaries

The Bank has three subsidiaries namely NIC ASIA Capital Limited and NIC ASIA
Laghubitta Bittiya Sanstha Limited

a. NIC ASIA Capital Limited is wholly owned subsidiary of the Bank and was
incorporated on 15th May 2016 as a public limited company as per the Companies
Act 2063 and licensed by Securities Board of Nepal under the Securities
Businessperson (Merchant Banker) Regulations, 2008 to provide merchant
banking and investment banking services.

b. NIC ASIA Laghubitta Bittiya Sanstha Limited is subsidiary with 57.75% holiding of
Bank and was incorporated on 25th July 2017 as a public limited company under
Companies Act, 2063 and licensed by Nepal Rastra Bank as “D” class financial
institution having registered office at Itahari, Nepal. The principle activities involved
extending banking products and services to the deprived sectors/communities.

“The Group” represents the Bank and its subsidiaries.

2. Basis of Preparation

The interim financial statements of the Bank have been prepared in accordance with Nepal
Financial Reporting Standards (NFRS): NAS 34 Interim Financial Reporting as published by the
Accounting Standards Board (ASB) Nepal and pronounced by The Institute of Chartered
Accountants of Nepal (ICAN).

The disclosures made in the condensed consolidated interim financial information have been
limited on the format prescribed by Nepal Rastra Bank Directive no. 4.

The interim financial statements comprise of:-

• Condensed Consolidated Statement of Financial Position
• Condensed Consolidated Statement of Profit or Loss and Condensed Consolidated
Statement of Other Comprehensive Income shown in a single statement
 • Condensed Consolidated Statement of Changes in Equity
• Condensed Consolidated Statement of Cash Flows
• Notes to the Interim Financial Statements and
• Ratios as per NRB Directive.

The interim financial statements do not include all of the information required for a complete set
of NFRS financial statements. However, selected explanatory notes are included to explain
events and transactions that are significant to an understanding of the changes in the Bank's
financial position and performance since the last annual financial statements.

Carve-Out - NFRS 9: Financial Instruments

(A) Carve- Out Pertaining to Impairment of Loans and Advances

Existing Provision

Recognition of expected credit losses General Approach

5.5.1 An entity shall recognize a loss allowance for expected credit losses on a financial asset
that is measured in accordance with paragraphs 4.1.2 or 4.1.2A, a lease receivable, a
contract asset or a loan commitment and a financial guarantee contract to which the
impairment requirements apply in accordance with paragraphs 2.1(g), 4.2.1(c) or 4.2.1(d).

5.5.2 An entity shall apply the impairment requirements for the recognition and measurement of
a loss allowance for financial assets that are measured at fair value through other
comprehensive income in accordance with paragraph 4.1.2A. However, the loss
allowance shall be recognized in other comprehensive income and shall not reduce the
carrying amount of the financial asset in the statement of financial position.

5.5.3 Subject to paragraphs 5.5.13–5.5.16, at each reporting date, an entity shall measure the
loss allowance for a financial instrument at an amount equal to the lifetime expected credit
losses if the credit risk on that financial instrument has increased significantly since initial
recognition.

5.5.4 The objective of the impairment requirements is to recognize lifetime expected credit
losses for all financial instruments for which there have been significant increases in credit
risk since initial recognition — whether assessed on an individual or collective basis —
considering all reasonable and supportable information, including that which is forward
looking.

5.5.5 Subject to paragraphs 5.5.13–5.5.16, if, at the reporting date, the credit risk on a financial
instrument has not increased significantly since initial recognition, an entity shall measure
the loss allowance for that financial instrument at an amount equal to 12-month expected
credit losses.
5.5.6 For loan commitments and financial guarantee contracts, the date that the entity becomes
a party to the irrevocable commitment shall be considered to be the date of initial
recognition for the purposes of applying the impairment requirements.

5.5.7 If an entity has measured the loss allowance for a financial instrument at an amount equal
to lifetime expected credit losses in the previous reporting period, but determines at the
current reporting date that paragraph 5.5.3 is no longer met, the entity shall measure the
loss allowance at an amount equal to 12-month expected credit losses at the current
reporting date.

5.5.8 An entity shall recognize in profit or loss, as an impairment gain or loss, the amount of
expected credit losses (or reversal) that is required to adjust the loss allowance at the
reporting date to the amount that is required to be recognized in accordance with this
Standard.

Determining significant increases in credit risk

5.5.9 At each reporting date, an entity shall assess whether the credit risk on a financial
instrument has increased significantly since initial recognition. When making the
assessment, an entity shall use the change in the risk of a default occurring over the
expected life of the financial instrument instead of the change in the amount of expected
credit losses. To make that assessment, an entity shall compare the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of initial recognition and consider
reasonable and supportable information, that is available without undue cost or effort, that
is indicative of significant increases in credit risk since initial recognition.

5.5.10 An entity may assume that the credit risk on a financial instrument has not increased
significantly since initial recognition if the financial instrument is determined to have low
credit risk at the reporting date (see paragraphs B5.5.22–B5.5.24).

5.5.11 If reasonable entity and supportable forward-looking information is available without

undue cost or effort, an entity cannot rely solely on past due information when determining
whether credit risk has increased significantly since initial recognition. However, when
information that is more forward looking than past due status (either on an individual or a
collective basis) is not available without undue cost or effort, an entity may use past due
information to determine whether there have been significant increases in credit risk since
initial recognition. Regardless of the way in which an entity assesses significant increases
in credit risk, there is a rebuttable presumption that the credit risk on a financial asset has
increased significantly since initial recognition when contractual payments are more than
30 days past due. An entity can rebut this presumption if the entity has reasonable and
supportable information that is available without undue cost or effort, that demonstrates
that the credit risk has not increased significantly since initial recognition even though the
contractual payments are more than 30 days past due. When an entity determines that
there have been significant increases in credit risk before contractual payments are more
than 30 days past due, the rebuttable presumption does not apply.
 Modified financial assets

5.5.11 If the contractual cash flows on a financial asset have been renegotiated or modified and
the financial asset was not derecognized, an entity shall assess whether there has been
a significant increase in the credit risk of the financial instrument in accordance with
paragraph 5.5.3 by comparing:
a) the risk of a default occurring at the reporting date (based on the modified
contractual terms); and
b) the risk of a default occurring at initial recognition (based on the original,
unmodified contractual terms).

Purchased or originated credit-impaired financial assets

5.5.14 At each reporting date, an entity shall recognize in profit or loss the amount of the change
in lifetime expected credit losses as an impairment gain or loss. An entity shall recognize
favorable changes in lifetime expected credit losses as an impairment gain, even if the
lifetime expected credit losses are less than the amount of expected credit losses that
were included in the estimated cash flows on initial recognition.

Simplified approach to trade receivables, contract assets and lease receivables

5.5.15 Despite paragraphs 5.5.3 and 5.5.5, an entity shall always measure the loss allowance
at an amount equal to lifetime expected credit losses for:
a) trade receivables or contract assets that result from transactions that are within the
scope of IFRS 15, and that:
i. do not contain a significant financing component in accordance with IFRS 15
(or when the entity applies the practical expedient in accordance with
paragraph 63 of IFRS 15); or
ii. contain a significant financing component in accordance with IFRS 15, if the
entity chooses as its accounting policy to measure the loss allowance at an
amount equal to lifetime expected credit losses. That accounting policy shall
be applied to all such trade receivables or contract assets but may be applied
separately to trade receivables and contract assets.
b) lease receivables that result from transactions that are within the scope of IFRS 16,
if the entity chooses as its accounting policy to measure the loss allowance at an
amount equal to lifetime expected credit losses. That accounting policy shall be
applied to all lease receivables but may be applied separately to finance and
operating lease receivables.

5.5.16 An entity may select its accounting policy for trade receivables, lease receivables and
contract assets independently of each other.
 Measurement of expected credit losses

5.5.17 An entity may shall measure expected credit losses of a financial instrument in a way
that reflects:
a) an unbiased and probability-weighted amount that is determined by evaluating a
range of possible outcomes;
b) the time value of money;
c) reasonable and supportable information that is available without undue cost or effort
at the reporting date about past events, current conditions and forecasts of future
economic conditions.

5.5.18 When measuring expected credit losses, an entity need not necessarily identify every
possible scenario. However, it shall consider the risk or probability that a credit loss occurs
by reflecting the possibility that a credit loss occurs and the possibility that no credit loss
occurs, even if the possibility of a credit loss occurring is very low.

5.5.19 The maximum period to consider when measuring expected credit losses is the
maximum contractual period (including extension options) over which the entity is exposed
to credit risk and not a longer period, even if that longer period is consistent with business
practice.

5.5.20 However, some financial instruments include both a loan and an undrawn commitment
component and the entity’s contractual ability to demand repayment and cancel the
undrawn commitment does not limit the entity’s exposure to credit losses to the contractual
notice period. For such financial instruments, and only those financial instruments, the
entity shall measure expected credit losses over the period that the entity is exposed to
credit risk and expected credit losses would not be mitigated by credit risk management
actions, even if that period extends beyond the maximum contractual period.

Alternative Treatment

a) Impairment and uncollectibility of financial assets measured at amortized cost

(1) An entity shall assess at the end of each reporting period whether there is any objective
evidence that a financial asset or group of financial assets measured at amortized cost is
impaired. If any such evidence exists, the entity shall apply paragraph 5 (given below) to
determine the amount of any impairment loss unless the entity is a bank or financial
institution registered as per Bank and Financial Institution Act, 2073. Such entities shall
measure impairment loss on loan and advances as higher of amount derived as per the
norms prescribed by Nepal Rastra Bank for loan loss provision and amount determined
as per paragraph 5 (given below) and shall apply paragraph 5 (given below) to measure
the impairment loss on financial assets other than loan and advances. The entity shall
disclose the impairment loss as per this carve-out and amount of impairment loss
determined as per paragraph 5 (given below).
(2) A financial asset or group of financial assets is impaired and impairment losses are
incurred if, and only if, there is objective evidence of impairment as a result of one or more
events that occurred after the initial recognition of the asset (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash flows of the financial asset
or group of financial assets that can be reliably estimated. It may not be possible to identify
a single, discrete event that caused the impairment. Rather the combined effect of several
events may have caused the impairment. Losses expected as a result of future events, no
matter how likely, are not recognized. Objective evidence that a financial asset or group
of asset is impaired includes observable data that comes to the attention of the holder of
the asset about the following loss events:

a. significant financial difficulty of the issuer or obligor;

b. a breach of contract, such as a default or delinquency in interest or principal
payments;
c. the lender, for economic or legal reasons relating to borrower’s financial difficulty,
granting to the borrower a concession that the lender would otherwise consider;
d. it becoming probable that the borrower will enter bankruptcy or other financial
reorganization;
e. the disappearance of an active market for that financial asset because of financial
difficulties; or
f. observable data indicating that there is measurable decrease in the estimated
future cash flows from a group of financial assets since the initial recognition of
those assets, although the decrease cannot yet be identified with the individual
financial assets in the group, including:
i. adverse changes in the payment status of borrowers in the group (eg an
increased number of delayed payments or an increased number of credit
card borrowers who have reached their credit limit and are paying the
minimum monthly amount); or
ii. national or local economic conditions that correlate with defaults on the
assets in the group (eg an increase in the unemployment rate in the
geographical area of the borrowers, a decrease in property prices for
mortgages in the relevant area, a decrease in oil prices for loan assets to
oil producers, or adverse changes in industry conditions that affect the
borrowers in the group).

(3) The disappearance of an active market because an entity’s financial instruments are no
longer publicly traded is not evidence of impairment. A downgrade of an entity’s credit
rating is not, of itself, evidence of impairment, although it may be evidence of impairment
when considered with other available information. A decline in the fair value of a financial
asset below its cost or amortized cost is not necessarily evidence of impairment (for
example, a decline in the fair value of an investment in a debt instrument that results from
an increase in the risk-free interest rate).

(4) In some cases, the observable data required to estimate the amount of an impairment loss
on a financial asset may be limited or no longer fully relevant to current circumstances.
For example, this may be the case when a borrower is in financial difficulties and there are
few available historical data relating to similar borrowers. In such cases, an entity uses its
 experienced judgement to estimate the amount of any impairment loss. Similarly, an entity
uses its experienced judgement to adjust observable data for a group of financial assets
to reflect current circumstances (see paragraph AG6 below). The use of reasonable
estimates is an essential part of the preparation of financial statements and does not
undermine their reliability.

(5) If there is objective evidence that an impairment loss on financial assets measured at
amortized cost has been incurred, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not been incurred) discounted at the financial
asset’s original effective interest rate (ie the effective interest rate computed at initial
recognition). The carrying amount of the asset shall be reduced either directly or through
use of an allowance account. The amount of the loss shall be recognized in profit or loss.

(6) An entity first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and individually or collectively for financial
assets that are not individually significant (see paragraph 2 above). If an entity determines
that no objective evidence of impairment exists for an individually assessed financial asset,
whether significant or not, it includes the asset in a group of financial assets with similar
credit risk characteristics and collectively assesses them for impairment. Assets that are
individually assessed for impairment and for which an impairment loss is or continues to
be recognized are not included in a collective assessment of impairment.

(7) If, in a subsequent period, the amount of the impairment loss decreases and the decrease
can be related objectively to an event occurring after the impairment was recognized (such
as an improvement in the debtor’s credit rating), the previously recognized impairment
loss shall be reversed either directly or by adjusting an allowance account. The reversal
shall not result in a carrying amount of the financial asset that exceeds what the amortized
cost would have been had the impairment not been recognized at the date the impairment
is reversed. The amount of the reversal shall be recognized in profit or loss.

Application Guidance

(This guidance is an integral part of the above provisions)

AG1. Impairment of financial asset measure at amortized cost is measured using the
financial instrument’s original effective interest rate because discounting at the current
market rate of interest would, in effect, impose fair value measurement on financial assets
that are otherwise measured at amortized cost. If the terms of a financial asset measured
at amortized cost are renegotiated or otherwise modified because of financial difficulties
of the borrower or issuer, impairment is measured using the original effective interest rate
before the modification of terms. Cash flows relating to short-term receivables are not
discounted if the effect of discounting is immaterial. If a financial asset measured at
amortized cost has a variable interest rate, the discount rate for measuring any impairment
loss under paragraph 63 is the current effective interest rate(s) determined under the
contract. As a practical expedient, a creditor may measure impairment of a financial asset
measured at amortized cost on the basis of an instrument’s fair value using an observable
market price. The calculation of the present value of the estimated future cash flows of a
collateralized financial asset reflects the cash flows that may result from foreclosure less
costs for obtaining and selling the collateral, whether or not foreclosure is probable.

AG2. The process of estimating impairment considers all credit exposures, not only those
of low credit quality. For example, if an entity uses an internal credit grading system it
considers all credit grades, not only those reflecting a severe credit deterioration.

AG3. The process for estimating the amount of an impairment loss may result either in a
single amount or in a range of possible amounts. In the latter case, the entity recognizes
an impairment loss equal to the best estimate within the range taking into account all
relevant information available before the financial statements are issued about conditions
existing at the end of the reporting period.

AG4. For the purpose of a collective evaluation of impairment, financial assets are grouped
on the basis of similar credit risk characteristics that are indicative of the debtors’ ability to
pay all amounts due according to the contractual terms (for example, on the basis of a
credit risk evaluation or grading process that considers asset type, industry, geographical
location, collateral type, past-due status and other relevant factors). The characteristics
chosen are relevant to the estimation of future cash flows for groups of such assets by
being indicative of the debtors’ ability to pay all amounts due according to the contractual
terms of the assets being evaluated. However, loss probabilities and other loss statistics
differ at a group level between (a) assets that have been individually evaluated for
impairment and found not to be impaired and (b) assets that have not been individually
evaluated for impairment, with the result that a different amount of impairment may be
required. If an entity does not have a group of assets with similar risk characteristics, it
does not make the additional assessment.

AG5. Impairment losses recognized on a group basis represent an interim step pending
the identification of impairment losses on individual assets in the group of financial assets
that are collectively assessed for impairment. As soon as information is available that
specifically identifies losses on individually impaired assets in a group, those assets are
removed from the group.

AG6. Future cash flows in a group of financial assets that are collectively evaluated for
impairment are estimated on the basis of historical loss experience for assets with credit
risk characteristics similar to those in the group. Entities that have no entity-specific loss
experience or insufficient experience, use peer group experience for comparable groups
of financial assets. Historical loss experience is adjusted on the basis of current observable
data to reflect the effects of current conditions that did not affect the period on which the
historical loss experience is based and to remove the effects of conditions in the historical
period that do not exist currently. Estimates of changes in future cash flows reflect and are
directionally consistent with changes in related observable data from period to period
(such as changes in unemployment rates, property prices, commodity.

AG7. As an example of applying paragraph AG6, an entity may determine, on the basis of
historical experience, that one of the main causes of default on credit card loans is the
 death of the borrower. The entity may observe that the death rate is unchanged from one
year to the next. Nevertheless, some of the borrowers in the entity’s group of credit card
loans may have died in that year, indicating that an impairment loss has occurred on those
loans, even if, at the year-end, the entity is not yet aware which specific borrowers have
died. It would be appropriate for an impairment loss to be recognized for these ‘incurred
but not reported’ losses. However, it would not be appropriate to recognize an impairment
loss for deaths that are expected to occur in a future period, because the necessary loss
event (the death of the borrower) has not yet occurred.

AG8. When using historical loss rates in estimating future cash flows, it is important that
information about historical loss rates is applied to groups that are defined in a manner
consistent with the groups for which the historical loss rates were observed. Therefore,
the method used should enable each group to be associated with information about past
loss experience in groups of assets with similar credit risk characteristics and relevant
observable data that reflect current conditions.

AG9. Formula-based approaches or statistical methods may be used to determine

impairment losses in a group of financial assets (eg for smaller balance loans) as long as
they are consistent with the requirements in paragraphs 5–7 and AG4–AG8. Any model
used would incorporate the effect of the time value of money, consider the cash flows for
all of the remaining life of an asset (not only the next year), consider the age of the loans
within the portfolio and not give rise to an impairment loss on initial recognition of a
financial asset.

Impairment Loss as per NFRS NPR 1,932,238,112

Impairment Loss as per norms of NRB NPR 644,307,412.25

The higher of two above i.e. NPR 644,307,412.25 has been taken in account for
impairment loss on loan and advances for the reporting period.
The carve out is not optional and has been provided for the FY 2021-22-18 to FY 2023-24.

(B) Carve- Out Pertaining to Effective Interest Rate

Existing Provision

Effective interest rate is the rate that discounts estimated future cash payments or receipts
through the expected life of the financial asset or financial liability to the gross carrying
amount of a financial asset or to the amortized cost of a financial liability. When calculating
the effective interest rate, an entity shall estimate the expected cash flows by considering
all the contractual terms of the financial instrument (for example, prepayment, extension,
call and similar options) but shall not consider the expected credit losses. The calculation
includes all fees and points paid or received between parties to the contract that are an
integral part of the effective interest rate (see paragraphs B5.4.1–B5.4.3), transaction
costs, and all other premiums or discounts. There is a presumption that the cash flows and
 the expected life of a group of similar financial instruments can be estimated reliably.
However, in those rare cases when it is not possible to reliably estimate the cash flows or
the expected life of a financial instrument (or group of financial instruments), the entity
shall use the contractual cash flows over the full contractual term of the financial instrument
(or group of financial instruments).

Alternative Treatment

Effective interest rate is the rate that exactly discounts estimated future cash payments or
receipts through the expected life of the financial instrument or, when appropriate, a
shorter period to the net carrying amount of the financial asset or financial liability. When
calculating the effective interest rate, an entity shall estimate cash flows considering all
contractual terms of the financial instrument (for example, prepayment, call and similar
options) but shall not consider future credit losses. The calculation includes all fees and
points paid or received, unless it is immaterial or impracticable to determine reliably,
between parties to the contract that are an integral part of the effective interest rate (see
paragraphs B5.4.1 – B5.4.3), transaction costs and all other premiums or discounts. There
is a presumption that the cash flows and the expected life of a group of similar financial
instruments can be estimated reliably. However, in those rare cases when it is not possible
to estimate reliably the cash flows or the expected life of a financial instrument (or group
of financial instruments), the entity shall use the contractual cash flows over the full
contractual term of the financial instrument (or group of financial instruments).

The carve out is optional and has been provided for the FY 2021-22 to 2023-24.
Accordingly, the bank has opted the carve out.

2.1 Reporting period and approval of financial statements

Reporting Period is a period from the first day of Shrawan (mid of July) of any year to the last
day of quarter end, i.e. Ashoj (mid of October), Poush (mid of January), Chaitra (mid of April)
and Asadh (mid of July) as per Nepali calendar.

Period Nepali Calendar English Calendar

Current Year Period 1st Shrawan 2080 to 17th July 2023 to
30th Ashwin 2080 17th Oct 2023
Previous Year Period 1st Shrawan 2079 to 17th July 2022 to
31st Ashwin 2079 17th Oct 2022

2.2 Functional and Presentation Currency

The interim financial statements are presented in Nepalese Rupees (NPR) which is the Bank's
functional currency. All financial information presented in NPR has been rounded to the nearest
rupee except where indicated otherwise. Mid-rate has been used in calculation of balance in
foreign currency.
3. Statement of Compliance with NFRSs

The interim financial statements have been prepared in accordance with Nepal Financial
Reporting Standards (NFRS): NAS 34 Interim Financial Reporting, as published by the
Accounting Standards Board (ASB) Nepal and pronounced by The Institute of Chartered
Accountants of Nepal (ICAN) and in compliance with BAFIA 2073, Unified Directives 2078
issued by Nepal Rastra Bank and all other applicable laws and regulations. The interim
condensed consolidated financial statements do not include all the information and disclosures
required in the annual financial statements

4. Use of estimates, assumptions and judgements

The Bank, under NFRS, is required to apply accounting policies to most appropriately suit its
circumstances and operating environment. Further, the Bank is required to make judgments in
respect of items where the choice of specific policy, accounting estimate or assumption to be
followed could materially affect the financial statements. This may later be determined that a
different choice could have been more appropriate.

The NFRS requires the Bank to make estimates and assumptions that will affect the assets,
liabilities, disclosure of contingent assets and liabilities, and profit or loss as reported in the
financial statements. The Bank applies estimates in preparing and presenting the financial
statements and such estimates and underlying assumptions are reviewed periodically. The
revision to accounting estimates are recognized in the period in which the estimates are revised
and are applied prospectively.

5. Changes in Accounting Policies

The Bank prepared the interim financial statements as per Nepal Financial Reporting Standard
(NFRS) by recognizing all assets and liabilities whose recognition was required by NFRS, not
recognizing the items of assets or liabilities which were not permitted by NFRS, and applying
NFRS in measurement of recognized assets and liabilities.

The accounting policies adopted while preparing these interim financial statements are
consistent with those applied in the Bank's annual financial statements.

6. Significant Accounting Policies

The accounting policies and methods of computation adopted in the preparation of the interim
financial statements are consistent with those adopted and disclosed in the Bank's annual
financial statements.

6.1 Basis of Measurement

The financial statements have been prepared on historical cost basis except for the
following material items in the statement of financial position:
 • Financial assets and liabilities are measured at fair value at its initial recognition.
Subsequent recognition of FVTOCI and FVTPL financial instruments are measured
at fair value. Investment property 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, less unrecognized past service cost and unrecognized actuarial
losses.

6.2 Basis of Consolidation

a) Non-Controlling Interest (NCI)

For each business combination, the Bank elects to measure any non-controlling
interests in the acquiree either:

• at fair value; or
• at their proportionate share of the acquire identifiable net assets, which are generally
at fair value.
Changes in the Bank's interest in a subsidiary that do not result in a loss of control are
accounted for as transactions with owners in their capacity as owners. Adjustments to
non-controlling interests are based on a proportionate amount of the net assets of the
subsidiary. No adjustments are made to goodwill and no gain or loss is recognized in
profit or loss.

b) Subsidiaries

Subsidiaries are the entities controlled by the Bank. The Bank controls an entity if it is
exposed, or has rights, to variable returns from its involvement with the investee and
has the ability to affect those returns through its power over the investee. The Financial
Statements of subsidiaries are included in the Consolidated Financial Statements from
the date that control commences until the date that control ceases.

The 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 line by line by adding the like items of assets, liabilities, equity,
income, expenses and cash flows of the parent with those of its subsidiary. The carrying
amount of the 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.
 c) Loss of Control

Upon the loss of control, the Bank derecognizes the assets and liabilities of the
subsidiary, carrying amount of non-controlling interests and the cumulative translation
differences recorded in equity related to the subsidiary. Further parent's share of
components previously recognized in Other Comprehensive Income (OCI) is reclassified
to profit or loss or retained earnings as appropriate. Any surplus or deficit arising on the
loss of control is recognized in the profit or loss. If the Group retains any interest in the
previous subsidiary, then such interest is measured at fair value at the date that control
is lost. Subsequently, it is accounted for as an equity-accounted investee or in
accordance with the Group's accounting policy for financial instruments depending on
the level of influence retained.

d) Transaction Elimination on Consolidation

All intra-group balances and transactions, and any unrealized income and expenses
(except for foreign currency transaction gains or losses) arising from intra-group
transactions are eliminated in preparing the consolidated financial statements.
Unrealized losses are eliminated in the same way as unrealized gains, but only to the
extent that there is no evidence of impairment.

6.3 Cash and Cash equivalent

Cash and cash equivalents include cash in hand, balances with BFIs, money at call &
short notice and highly liquid financial assets with original maturities of three months or
less from the acquisition dates that are subject to an insignificant risk of changes in their
fair value and are used by the Bank in the management of its short-term commitments.
Cash and cash equivalents are carried at amortized cost in the statement of financial
position.

6.4 Financial Assets and Financial Liabilities

a) Recognition

The Bank initially recognizes a financial asset or a financial liability in its statement of
financial position when, and only when, it becomes party to the contractual provisions of
the instrument. The Bank initially recognize loans and advances, deposits and debt
securities/ subordinated liabilities issued on the date that they are originated which is
the date that the Bank becomes party to the contractual provisions of the instruments.
Investments in equity instruments, bonds, debenture, Government securities, NRB bond
or deposit auction, reverse repos, outright purchase are recognized on trade date at
which the Bank commits to purchase/ acquire the financial assets. Regular way
purchase and sale of financial assets are recognized on trade date at which the Bank
commits to purchase or sell the asset.
b) Classification

I. Financial Assets

The Bank classifies the financial assets as subsequently measured at amortized cost or
fair value on the basis of the Bank's business model for managing the financial assets
and the contractual cash flow characteristics of the financial assets.
The two classes of financial assets are as follows;

i. Financial assets measured at amortized cost

The Bank classifies a financial asset measured at amortized cost if both of the
following conditions are met:

• The asset is held within a business model whose objective is to hold assets
in order to collect contractual cash flows and
• The contractual terms of the financial asset give rise on specified dates to
cash flows that are solely payments of principal and interest on the principal
amount outstanding.

ii. Financial asset measured at fair value

Financial assets other than those measured at amortized cost are measured
at fair value. Financial assets measured at fair value are further classified into
two categories as below:

• Financial assets at fair value through profit or loss.

Financial assets are classified as fair value through profit or loss (FVTPL)
if they are held for trading or are designated at fair value through profit or
loss. Upon initial recognition, transaction cost is directly attributable to the
acquisition are recognized in profit or loss as incurred. Such assets are
subsequently measured at fair value and changes in fair value are
recognized in Statement of Profit or Loss.

• Financial assets at fair value through other comprehensive income

Investment in an equity instrument that is not held for trading and at the
initial recognition, the Bank makes an irrevocable election that the
subsequent changes in fair value of the instrument is to be recognized in
other comprehensive income are classified as financial assets at fair value
though other comprehensive income. Such assets are subsequently
measured at fair value and changes in fair value are recognized in other
comprehensive income.
 II. Financial Liabilities

The Bank classifies its financial liabilities, other than financial guarantees and loan
commitments, as follows;

• Financial Liabilities at Fair Value through Profit or Loss

Financial liabilities are classified as fair value 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 are directly attributable to the
acquisition are recognized in Statement of Profit or Loss as incurred.
Except for particular liabilities designated as at FVTPL, the amount of the
change in the fair value that is attributable to changes in the liability’s credit
risk is recognized in Other Comprehensive Income.

• Financial Liabilities measured at amortized cost

All financial liabilities other than measured at fair value though profit or loss are
classified as subsequently measured at amortized cost using effective interest
rate method.

c) Measurement

i. Initial Measurement

A financial asset or financial liability is measured initially at fair value plus or minus,
for an item not at fair value through profit or loss, transaction costs that are directly
attributable to its acquisition or issue. Transaction cost in relation to financial assets
and liabilities at fair value through profit or loss are recognized in Statement of Profit
or Loss.

ii. Subsequent Measurement

A financial asset or financial liability is subsequently measured either at fair value or

at amortized cost based on the classification of the financial asset or liability.
Financial asset or liability classified as measured at amortized cost is subsequently
measured at amortized cost using effective interest rate method.

The amortized cost of a financial asset or financial liability is the amount at which the
financial asset or financial liability is measured at initial recognition minus principal
repayments, plus or minus the cumulative 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.

Financial assets classified at fair value are subsequently measured at fair value. The
subsequent changes in fair value of financial assets at fair value through profit or
loss are recognized in Statement of Profit or Loss whereas of financial assets at fair
 value through other comprehensive income are recognized in other comprehensive
income.

iii. Derecognition

Derecognition of Financial Assets

The Bank derecognizes a financial asset when the contractual rights to the cash
flows from the financial asset expire, or it transfers the rights to receive the
contractual cash flows in a transaction in which substantially all the risks and rewards
of ownership of the financial asset are transferred or in which the Bank neither
transfers nor retains substantially all the risks and rewards of ownership and it does
not retain control of the financial asset.

Any interest in such transferred financial assets that qualify for derecognition that is
created or retained by the Bank is recognized as a separate asset or liability. On
derecognition of a financial asset, the difference between the carrying amount of the
asset (or the carrying amount allocated to the portion of the asset transferred), and
the sum of (i) the consideration received (including any new asset obtained less any
new liability assumed) and (ii) any cumulative gain or loss that had been recognized
in other comprehensive income is recognized in profit or loss.

In transactions in which the Bank neither retains nor transfers substantially all the
risks and rewards of ownership of a financial asset and it retains control over the
asset, the Bank continues to recognize the asset to the extent of its continuing
involvement, determined by the extent to which it is exposed to changes in the value
of the transferred asset.

Derecognition of Financial Liabilities

A financial liability is derecognized when the obligation under the liability is

discharged or canceled or expired. Where an existing financial liability is replaced
by another from the same lender on substantially different terms, or the terms of an
existing liability are substantially modified, such an exchange or modification is
treated as a derecognition of the original liability and the recognition of a new liability.
On de-recognition of gain and loss on such instruments fair value movement till
preceding year is recognized in other comprehensive income and realized gain in
the reporting year to income statement based on the decision of Nepal Accounting
Standards Board, Nepal dated 20th October 2020

iv. Determination of Fair Value

Fair value is the amount for which an asset could be exchanged, or a liability settled,
between knowledgeable, willing parties in an arm's length transaction on the
measurement date. The fair value of a liability reflects its non-performance risk The
fair values are determined according to the following hierarchy:
 Level 1 fair value measurements are those derived from unadjusted quoted prices
in active markets for identical assets or liabilities.

Level 2 valuations are those with quoted prices for similar instruments in active
markets or quoted prices for identical or similar instruments in inactive markets and
financial instruments valued using models where all significant inputs are
observable.

Level 3 portfolios are those where at least one input, which could have a significant
effect on the instrument's valuation, is not based on observable market data.

When available, the Bank measures the fair value of an instrument using quoted
prices in an active market for that instrument. A market is regarded as active if quoted
prices are readily and regularly available and represent actual and regularly
occurring market transactions on an arm's length basis. If a market for a financial
instrument is not active, the Bank establishes fair value using a valuation technique.
Valuation techniques include using recent arm's length transactions between
knowledgeable, willing parties (if available), reference to the current fair value of
other instruments that are substantially the same, discounted cash flow analyses.
The best evidence of the fair value of a financial instrument at initial recognition is

the transaction price – i.e. the fair value of the consideration given or received.
However, in some cases, the fair value of a financial instrument on initial recognition
may be different to its transaction price. If such fair value is evidenced by comparison
with other observable current market transactions in the same instrument (without
modification) or based on a valuation technique whose variables include only data
from observable markets, then the difference is recognized in profit or loss on initial
recognition of the instrument. In other cases, the difference is not recognized in profit
or loss immediately but is recognized over the life of the instrument on an appropriate
basis or when the instrument is redeemed, transferred or sold, or the fair value
becomes observable. All unquoted equity investments are recorded at cost,
considering the non-trading of promoter shares up to the date of balance sheet, the
market price of such shares could not be ascertained with certainty. Hence, these
investments are recognized at cost net of impairment, if any.

v. Impairment

At each reporting date the Bank assesses whether there is any indication that an
asset may have been impaired. If such indication exists, the recoverable amount is
determined. A financial asset or a group of financial assets is impaired and
impairment losses are incurred if, and only if, there is objective evidence of
impairment as a result of one or more events occurring after the initial recognition of
the asset (a loss event), and that loss event (or events) has an impact on the
estimated future cash flows of the financial asset or group of financial assets that
can be reliably estimated.
The Bank considers the following factors in assessing objective evidence of
impairment:

• Whether the counterparty is in default of principal or interest payments.

• When a counterparty files for bankruptcy and this would avoid or delay discharge
of its obligation.
• Where the Bank initiates legal recourse of recovery in respect of a credit
obligation of the counterpart.
• Where the Bank consents to a restructuring of the obligation, resulting in a
diminished financial obligation, demonstrated by a material forgiveness of debt
or postponement of scheduled payments.
• Where there is observable data indicating that there is a measurable decrease
in the estimated future cash flows of a group of financial assets, although the
decrease cannot yet be identified with specific individual financial assets.
The Bank considers evidence of impairment for loans and advances and held-to
maturity investment securities at both a specific asset and collective level. All
individually significant loans and advances and held-to-maturity investment
securities are assessed for specific impairment. Those 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 internal and external indication observed.
In assessing collective impairment, the Bank uses statistical modelling of historical
trends of the probability of default, the timing of recoveries and the amount of loss
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, loss rates and the expected timing of
future recoveries are regularly benchmarked against actual outcomes to ensure 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 if there is objective evidence as a result
of one or more events that occurred after the initial recognition of the asset. The
amount of the loss is measured as the difference between the asset's carrying
amount and the deemed recoverable value of loan.

Loans and advances to customers with significant value (Top 50 borrowers and
borrowers classified as bad 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 of the borrower/past experience of
the bank. Assets that are individually assessed and for which no impairment exists
are grouped with financial assets with similar credit risk 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 purpose of collective assessment of impairment bank has
categorized assets in to six broad products as follows:

1. Term Loan
2. Auto Loan
3. Home Loan
4. Personal Loan
5. Working Capital Loan
6. Others

If, in a subsequent year, the amount of the estimated impairment loss increases or
decreases because of an event occurring after the impairment was recognized, the
previously recognized impairment loss is increased or reduced by adjusting the other
reserves and funds (impairment reserve) in other comprehensive income and
statement of changes in equity. If a future write–off is later recovered, the recovery
is credited to the 'Income Statement'.

As per Loan Loss Provision of Nepal Rastra Bank

Loan loss provisions in respect of non-performing loans and advances are based on
management's assessment of the degree of impairment of the loans and advances,
subject to the minimum provisioning level prescribed in relevant NRB guidelines.
Provision is made for possible losses on loans and advances including bills
purchased on the basis of classification of loans and advances, overdraft and bills
purchased in accordance with NRB directives

The Bank has measured impairment loss on loan and advances as the higher of
amount derived as per norms prescribed by Nepal Rastra Bank for loan loss
provision and amount determined as per paragraph 63 of NAS 39.

Impairment of investment in equity instrument classified as fair value

through other comprehensive income

Where objective evidence of impairment exists for financial assets measured at

FVTOCI except investment in equity instrument, the cumulative loss (measured as
the difference between the amortized cost and the current fair value, less any
impairment loss on that financial asset previously recognized in the statement of
profit or loss) is reclassified from equity and recognized in the profit or loss. A
significant or prolonged decline in the fair value of an equity security below its cost
is considered, among other factors in assessing objective evidence of impairment
for equity securities.
6.5 Trading Assets

Trading assets and liabilities are those assets and liabilities that the Bank acquires or
incurs principally for the purpose of selling or repurchasing in the near term or holds as
part of a portfolio that is managed together for short-term profit or position taking.

Trading assets and liabilities are initially recognized at fair value and subsequently
measured at fair value in the statement of financial position, with transaction costs
recognized in profit or loss. All changes in fair value are recognized as part of net trading
income in profit or loss as regarded as fair value through profit & loss account.

6.6 Derivatives Assets and Derivative Liabilities

Derivatives held for risk management purposes include all derivative assets and liabilities
that are not classified as trading assets or liabilities. Derivatives held for risk management
purposes are measured at fair value in the statement of financial position.

Considering the requirement of NAS 39 for qualification of hedge accounting and cost
benefits along with materiality, Bank has not adopted hedge accounting for certain
derivatives held for risk management.

6.7 Property and Equipment

i. Recognition and Measurement

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

initially recognized at cost, if, and only if:
• It is probable that future economic benefits associated with the item will flow to
the entity; and
• the cost of the item can be measured reliably.

Cost includes purchase price including any non-refundable taxes after deducting
volume rebates and trade discounts and such other costs that are incurred to bring
asset to location and condition to be operating in a manner intended by
management.

The cost of self-constructed assets includes the following:

• the cost of materials and direct labor;

• any other costs directly attributable to bringing the assets to a working condition
for their intended use;
• when the Bank has an obligation to remove the asset or restore the site, an
estimate of the costs of dismantling and removing the items and restoring the
site on which they are located;
 • Capitalized borrowing costs.

The Bank adopts cost model for entire class of property and equipment. Neither class
of the property and equipment are measured at revaluation model nor is their fair
value measured at the reporting date. The items of property and equipment are
measured at cost less accumulated depreciation and any accumulated impairment
losses.

Purchased software that is integral to the functionality of the related equipment is

capitalized as part of that equipment.

Subsequent expenditure is capitalized if it is probable that the future economic

benefits from the expenditure will flow to the Bank. Ongoing repairs and maintenance
to keep the assets in working condition are expensed as incurred. Any gain or loss
on disposal of an item of property and equipment (calculated as the difference
between the net proceeds from disposal and the carrying amount of the item) is
recognized within other income in profit or loss.

Assets with a value of less than NPR 10,000 are charged off to revenue irrespective
of their useful life in the year of purchase.

ii. Capital Work in Progress

Fixed assets under construction and cost of assets not ready for use are shown as
capital work in progress.

iii. Depreciation

Depreciation on other assets is calculated using the straight- line method to allocate
their cost to their residual values over their estimated useful life as per management
judgement as follows:

Group Useful Life (In years)

Computer 5
Metal Furniture 10
Office Equipment 10
Vehicle 10
Wooden Furniture 5
Building 50
Leasehold Lower of 15 years or Lease period

For depreciation purposes broken dates were considered as 1st of the month for
assets procured till 14th and 1st of next month for assets procured from 15th to the
end of the month.
 iv. De-recognition

The carrying amount of Property and Equipment shall be derecognized on disposal

or when no future economic benefits are expected from its use or disposal. The gain
or loss arising from the de-recognition of an item of property and equipment shall be
included in profit or loss when the item is derecognized except for sales and lease
back transaction. The gain shall not be classified as revenue.

Depreciation method, useful lives and residual value are reviewed at each reporting
date and adjusted, if any.

6.8 Intangible Assets/Goodwill

Goodwill

Any excess of the cost of acquisition over the fair values of the identifiable net assets
acquired in Business Combination is recognized as goodwill. Following initial recognition,
goodwill is measured at cost less any accumulated impairment losses.

Goodwill is reviewed for impairment annually, or more frequently, if events or changes in

circumstances indicate that the carrying value may be impaired.

Acquire Intangible Assets

Intangible assets are initially measured at fair value, which reflects market expectations of
the probability that the future economic benefits embodied in the asset will flow to the Bank
and are amortized on the basis of their expected useful lives.
Computer Software

Acquired computer software licenses are capitalized on the basis of the costs incurred to
acquire and bring to use the specific software. Costs associated with the development of
software are capitalized where it is probable that it will generate future economic benefits
in excess of its cost. Computer software costs are amortized on the basis of expected
useful life. Costs associated with maintaining software are recognized as an expense as
incurred.

At each reporting date, these assets are assessed for indicators of impairment. In the
event that an asset's carrying amount is determined to be greater than its recoverable
amount, the asset is written down immediately.

Software is amortized on a straight-line basis in profit or loss over its estimated useful life,
from the date that it is available for use. The estimated useful life of software for the current
and comparative periods is five years. Software assets with costs less than Rs. 10,000
are charged off on purchases as revenue expenditure.
 Amortization methods, useful lives and residual values are reviewed at each reporting date
and adjusted if appropriate.

6.9 Investment Property/ Non-Current Assets Held for Sale

Investment Property

Investment properties include land or land and buildings other than those classified as
property and equipment and non-current assets held for sale. Generally, it includes land,
land and building acquired by the Bank as non-banking assets but not sold as on the
reporting date.

The Bank holds investment property that has been acquired through enforcement of
security over the loans and advances.
Non-Current Assets Held for Sale
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
of their carrying amount and fair value less cost to sell when:
(i) their carrying amounts will be recovered principally through
sale;
(ii) 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 above.
6.10 Income Tax

Tax expenses comprise current and deferred tax. Current and deferred tax are recognized
in profit and loss except to the extent they relate to items recognized directly in equity or in
other comprehensive income.

Current tax
Current tax is the expected tax payable or recoverable on the taxable income or loss for
the year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years.

Deferred Tax

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

amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes.
 Deferred income tax is determined using tax rate applicable to the Bank as at the reporting
date which is expected to apply when the related deferred income tax asset is realized or
the deferred income tax liability is settled.

Deferred tax assets are recognized where it is probable that future taxable profit will be
available against which the temporary differences can be utilized.

6.11 Deposits, Debt securities issued and sub ordinated liabilities

Deposit

The bank accepts deposits form its customers under account current, term deposits and
margin accounts which allows money to be deposited and withdrawn by the account

holder. These transactions are recorded on the bank's books, and the resulting balance is
recorded as a liability for the Bank and represents the amount owed by the Bank to the
customer.

Debt securities issued

It includes debentures, bonds or other debt securities issued by the Bank. Deposits, debt
securities issued, and subordinated liabilities are initially measured at fair value minus
incremental direct transaction costs, and subsequently measured at their amortized cost
using the effective interest rate method, except where the Group designates liabilities at
fair value through profit or loss.

However, debentures issued by the bank are subordinate to the deposits from customer.

Subordinated Liabilities

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 bank does not
have any of such subordinated liabilities.

6.12 Provisions

The Bank recognizes a provision if, as a result of past event, the Bank has a present
constructive or legal obligation that can be reliability measured and it is probable that an
outflow of economic benefit will be required to settle the obligation.

A disclosure for contingent liability is made when there is a possible obligation or a present
obligation that may but probably will not require an outflow of resources. When there is a
possible obligation or a present obligation in respect of which the likelihood of outflow of
resources is remote, no provision or disclosure is made.
 A provision for onerous contract is recognized when the expected benefits to be derived
by the Bank from a contract are lower than the unavoidable cost of meeting its obligation
under the contract.

Provisions are reviewed at each reporting date and adjusted to reflect the current best
estimate. If it is no longer probable that an outflow of resources would be required to settle
the obligation, the provision is reversed. Contingent assets are not recognized in the
financial statements if it is not probable that the amount will be received. If it is probable,
then disclosure is given for the contingent asset. However, contingent assets are assessed
continually and if it is virtually certain that an inflow of economic benefits will arise, the
asset and related income are recognized in the period in which the change occurs.

6.13 Revenue Recognition

Revenue is the gross inflow of economic benefits during the period arising from the course
of the ordinary activities of an entity when those inflows result in increases in equity, other
than increases relating to contributions from equity participants. Revenue is recognized to
the extent it is probable that the economic benefits will flow to the Bank and the revenue
can be reliably measured. Revenue is not recognized during the period in which its
recoverability of income is not probable. The Bank's revenue comprises of interest income,
fees and commission, foreign exchange income, cards income, remittance income,
bancassurance commission, etc. and the bases of incomes recognition are as follows:

Interest Income

Interest income on available-for-sale assets and financial assets held at amortized cost
shall be recognized using the bank's normal interest rate which is very close to effective
interest rate using effective interest rate method.

For income from loans and advances to customers, initial charges are not amortized over
the life of the loan and advances as the income so recognized closely approximates the
income that would have been derived under effective interest rate method. The difference
is not considered material. The Bank considers that the cost of exact calculation of
effective interest rate method exceeds the benefit that would be derived from such
compliance. However, Bank have adopted the effective interest method on the Debentures
issued.

The effective interest method is a method of calculating the amortized cost of a financial
asset or a financial liability and of allocating the interest income or interest expense over
the relevant period. The effective interest rate is the rate that discounts estimated future
cash payments or receipts through the expected life of the financial instrument or, when
appropriate, a shorter period, to the net carrying amount of the financial asset or financial
liability. When calculating the effective interest rate, the Bank estimates cash flows
considering all contractual terms of the financial instrument (for example, prepayment
options) but does not consider future credit losses. As per the carve-out Notice issued by
ICAN, the calculation includes all fees paid or received between parties to the contract that
are an integral part of the effective interest rate, transaction costs and all other premiums
 or discounts unless it is immaterial or impracticable to determine reliably, between parties
to the contract that are an integral part of the effective interest rate, transaction costs and
all other premiums or discounts.

Loan

Gains and losses arising from changes in the fair value of financial instruments held at fair
value through profit or loss are included in the statement of profit or loss in the period in
which they arise. Contractual interest income and expense on financial instruments held
at fair value through profit or loss is recognized within net interest income.

Fees & Commission

Fees and commissions are recognized on an accrual basis when the service has been
provided or significant act performed whenever the benefit exceeds cost in determining
such value. Whenever, the cost of recognizing fees and commissions on an accrual basis
exceeds the benefit in determining such value, the fees and commissions are charged off
during the year.

Dividend Income

Dividend income are recognized when right to receive such dividend is established.
Usually this is the ex-dividend date for equity securities. Dividends are presented in net
trading income, net income from other financial instruments at fair value through profit or
loss or other revenue based on the underlying classification of the equity investment.

Net Trading Income

Net trading income comprises gains less losses related to trading assets and liabilities,
and includes all realized and unrealized fair value changes, interest, dividends and foreign
exchange differences.

Net Income from other financial instrument at fair value through profit and loss
statement

Net income from other financial instruments at fair value through profit or loss relates to
non-trading derivatives held for risk management purposes that do not form part of
qualifying hedge relationships and financial assets and liabilities designated at fair value
through profit or loss. It includes all realized and unrealized fair value changes, interest,
dividends and foreign exchange differences.

6.14 Interest Expenses

Interest expense on all financial liabilities including deposits are recognized in profit or loss
using effective interest rate method. Interest expense on all trading liabilities are
considered to be incidental to the Bank's trading operations and are presented together
with all other changes in fair value of trading assets and liabilities in net trading income.
6.15 Employees Benefits

a) Short Term Employee Benefits

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.

Short-term employee benefits include all the following items (if payable within 12
months after the end of the reporting period):

• wages, salaries and social security contributions,

• paid annual leave and paid sick leave,
• profit-sharing and bonuses and
• non-monetary benefits

b) Post-Employment Benefits

Post-employment benefit plan includes the followings;

Defined Contribution Plan

A defined contribution plan is a post-employment benefit plan under which the Bank
pays fixed contributions into a separate entity and has no legal or constructive
obligation to pay further amounts. Obligations for contributions to defined contribution
plans are recognized as personnel expenses in profit or loss in the periods during
which related services are rendered.

Contributions to a defined contribution plan that are due more than 12 months after
the end of the reporting period in which the employees render the service are
discounted to their present value.

All employees of the Bank are entitled to receive benefits under the provident fund, a
defined contribution plan, in which both the employee and the Bank contribute monthly
at a pre-determined rate of 10% of the basic salary. The Bank does not assume any
future liability for provident fund benefits other than its annual contribution.

Defined Benefit Plan

A defined benefit plan is a post-employment benefit plan other than a defined

contribution plan. The Bank's net obligation in respect of defined benefit plans is
calculated separately for each plan by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods. That
 benefit is discounted to determine its present value. Any unrecognized past service
costs and the fair value of any plan assets are deducted.

The Bank recognizes all actuarial gains and losses net of deferred tax arising from
defined benefit plans immediately in other comprehensive income and all expenses
related to defined benefit plans in employee benefit expense in profit or loss.

The Bank recognizes gains and losses on the curtailment or settlement of a defined
benefit plan when the curtailment or settlement occurs. The gain or loss on curtailment
or settlement comprises any resulting change in the fair value of plan assets, any
change in the present value of the defined benefit obligation, any related actuarial
gains and losses and any past service cost that had not previously been recognized.

Termination Benefits

Termination benefits are recognized as an expense when the Bank is demonstrably

committed, without realistic possibility of withdrawal, to a formal detailed plan to either
terminate employment before the normal retirement date, or to provide termination
benefits as a result of an offer made to encourage voluntary redundancy. Termination
benefits for voluntary redundancies are recognized as an expense if the Bank has
made an offer of voluntary redundancy, it is probable that the offer will be accepted,
and the number of acceptances can be estimated reliably. If benefits are payable more
than 12 months after the reporting date, then they are discounted to their present
value.

6.16 Foreign Currency Translation

The financial statements are presented in Nepalese Rupees (NPR).

Transactions in foreign currencies are initially recorded at the functional currency using
rate of exchange ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated at the functional currency rate of
exchange at the statement of financial position date.

Foreign exchange gains and losses resulting from the settlement of such transactions, and
from the translation at year-end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the statement of profit or loss.

Non-monetary assets and liabilities are translated at historical exchange rates if held at
historical cost, or year-end exchange rates if held at fair value, and the resulting foreign
exchange gains and losses are recognized in either the statement of profit or loss or other
comprehensive income depending on the treatment of the gain or loss on the asset or
liability.
6.17 Financial guarantee and loan commitment

Financial guarantees are contracts that require the 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 of a debt instrument. Loan commitments are firm
commitments to provide credit under pre-specified terms and conditions.

Loan commitment is the commitment where the Bank has confirmed its intention to provide
funds to a customer or on behalf of a customer in the form of loans, overdrafts, future
guarantees, whether cancellable or not, or letters of credit and the Bank has not made
payments at the reporting date, those instruments are included in these financial
statements as commitments.

6.18 Share Capital and Reserves

The Bank classifies capital instruments as financial liabilities or equity instruments in

accordance with the substance of the contractual terms of the instruments. Equity is
defined as residual interest in total assets of the Bank after deducting all its liabilities.
Common shares are classified as equity of the Bank and distributions thereon are
presented in statement of changes in equity.

Dividends on ordinary shares classified as equity are recognized in equity in the period in
which they are declared.

Incremental costs directly attributable to the issue of an equity instrument are deducted
from the initial measurement of the equity instruments considering the tax benefits
achieved thereon.

The reserves include retained earnings and other statutory reserves such as general
reserve, bond redemption reserve, foreign exchange equalization reserve, regulatory
reserve, investment adjustment reserve, staff training and development fund, CSR reserve
etc.

6.19 Earnings per share including diluted

The Bank presents basic and diluted earnings per share (EPS) data for its ordinary shares.
The basic EPS is calculated by dividing the profit or loss attributable to ordinary
shareholders of the Bank by the weighted average number of ordinary shares outstanding
during the period. Diluted EPS is determined by adjusting the profit or loss attributable to
ordinary shareholders and the weighted average number of ordinary shares outstanding
for the effects of all dilutive potential ordinary shares.

As there are no potential ordinary shares that would dilute current earning of equity
holders, basic EPS and diluted EPS are equal for the period presented.
If the number of ordinary or potential ordinary shares outstanding increases as a result of
a capitalization due to right share, bonus issue, the calculation of basic and diluted
earnings per share for all periods presented are adjusted retrospectively.
6.20 Operating Segment Information

The Bank is organized for management and reporting purposes into segments such as
Retail Banking, Corporate Banking, SME Banking, Deprived Sector Banking, Treasury,
Transaction Banking and Other Banking. 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.
 Segmental Information

A. Information about reportable segments (NPR in million)

Particulars Corporate Retail SME DSL Treasury TB Others Total
Revenue from External
1,384 4,403 2,997 919 902 208 209 11,022
Customers
Inter Segment Expenses/
47 (26) (17) - - - 0
Revenue (4)
Total Revenue 1,336 4,430 3,013 924 902 208 209 11,022
Interest Income 1,250 3,951 2,624 831 705 - 807 10,169
Interest Expenses 1,120 3,041 2,131 733 397 - - 7,422
Net Interest Income 131 911 492 98 308 - 807 2,747
Depreciation and
12 50 48 13 17 1 5 145
Amortization
Profit before Income Tax 34 501 364 88 265 12 150 1,416
Impairment charge/(reversal)
139 303 157 45 - - - 644
for loans and other losses
Segment Assets 33,935 137,611 132,422 35,363 89,886 195 17 429,429
Segment Liabilities 35,196 138,957 137,431 23,529 94,232 84 1 429,429

B. Reconciliation of reportable segments profit or loss (NPR in million)

Current Corresponding
Particulars
Quarter Previous Year Quarter
Total Profit before tax for reportable segments 1,010 1,757
Profit before tax for other segments - -
Elimination of inter segment profits - -
Elimination of discontinued operation - -
Unallocated amounts - -
-Other corporate expenses - -
Profit before tax 1,010 1,757

7. Concentration of Borrowings, Credits and Deposits

A. Concentration of Borrowings

Particulars Current Year Previous Year

Borrowings from 10 largest lenders -
Percentage of borrowings from ten largest lenders
-
to total depositors

B. Concentration of Credit Exposures

Particulars Current Year Previous Year

Total credits from twenty largest borrowers
a. Groupwise (related party) 12,209,670,355.45 14,664,309,578.66
 b. As per individual customer 12,209,670,355.45 14,664,309,578.66
Percentage of exposures to twenty largest
borrowers to Total Loans and Advances
a. Groupwise (related party) 4.02% 5.37%
b. As per individual customer 4.02% 5.37%

C. Concentration of Deposits

Particulars Current Year Previous Year

Total deposits from twenty largest depositors
a. Groupwise 80,801,955,191.27 59,253,368,535.42
b. As per individual customer 80,801,955,191.27 59,253,368,535.42
Percentage of deposits from twenty largest
depositors to Total Deposits
a. Groupwise 22.23% 19.23%
b. As per individual customer 22.23% 19.23%

8. Related Party Disclosures

I. Subsidiary Companies
Name Shareholding %
NIC ASIA Capital Limited 100.00
NIC ASIA Laghubitta Bittiya Sanstha Limited 57.75

II. Transactions with Subsidiaries

Amount (NPR in Million)
S No Particulars NIC Asia Capital NIC Asia Laghubitta
1 Share Registrar fee paid - -
2 Deposit received from subsidiaries 542.69 -
3 Loans to Subsidiary - 3,900
4 Interest paid to subsidiaries 14.11 -
5 Interest received from subsidiaries - 101.3
6 Reimbursement received - 3.93
7 Service Fee paid by subsidiary 0.91 -

9. Dividends paid (aggregate or per share) separately for ordinary shares and other shares

The bank has paid 30.53% dividend (bonus 30% and cash 1.53%) pertaining to FY 2079-80
during the reporting period.
10. Issues, repurchases and repayments of debt and equity securities

The bank has not issued any debt or equity securities during the reporting period.

11. Events after interim period

The Bank monitors and assesses events that may have potential impact to qualify as adjusting
and / or non-adjusting events after the end of the reporting period. All 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. There were no
material events that have occurred subsequent to date of Interim Financial Statements.

12. Effect of changes. in the composition of the entity during the interim period merger
including and acquisition
There are no merger or acquisitions transaction during the reporting period.