All Banking Solutions, Cards, Internet & Mobile Banking

106 Pages·2013·3.33 MB·English

th
20
Annual Report
All Banking Solutions, Cards,
2012-2013 (2069-2070)
Internet & Mobile Banking
Rising with You towards New Horizons
With us,
You are always a winner
19th Annual General Meeting of Shareholders on 12th October 2012 at Kathmandu.
Our Dallu Branch, Kathmandu
Winners of CASA Campaign 2013 seen with management team of the Bank.
Our Durbar Marg Branch, Kathmandu
THE BOARD
OF DIRECTORS

TABLE OF CONTENTS
• Performance Indicators 4
• Annual Report of Board of Directors 5
o Review of the Fiscal Year 2069-70 5
• Economic Environment 5
• Banking Industry 7
• Recent Developments Impac(cid:415) ng Banking Business 8
o Measuring our Success 9
o Corporate Ci(cid:415) zenship 12
o Value Crea(cid:415) on and Alloca(cid:415) on 15
o Progress Report for the Current Year 16
o Changes in the Board of Directors 16
o Statutory Auditors 16
o Further Informa(cid:415) on and Disclosures 16
o Path Ahead 16
o Acknowledgement 17
o Addi(cid:415) onal disclosures 18
• Organiza(cid:415) onal Structure 21
• Management Team 22
• Head of Departments/ Units 23
• Human Resources and Industrial Rela(cid:415) ons 24
• General Ac(cid:415) vi(cid:415) es 24
• Business Promo(cid:415) on and Social Responsibility Ini(cid:415) a(cid:415) ves 24
• Products And Services 25
• Corporate Governance 30
• Our Network 32
• Risk Management 37
• Shareholders’ Informa(cid:415) on 38
• Five years’ fi nancial highlights 39
• Independent Auditor’s Report 40
• Financial Statements for the FY 2069-70 42-99
• Approval from Nepal Rastra Bank 100
PERFORMANCE INDICATORS
Deposit (Rs. in Billion) Advances (Rs. in Billion)
Deposits Advances
58.92 29.19
53.33 26.46
21.72
42.41 42.41 21.72
58.92 29.19
53.33 26.46
2067-68 2068-69 2069-70 2067-68 2068-69 2069-70
2067-68 2068-69 2069-70 2067-68 2068-69 2069-70
Total income (Rs. in Billion) Total Income Opera(cid:415) ng Profi t (Rs. in Million) Opera(cid:415) ng Profi t
2.20 1303.10
1.50
1.41 720.56
1.41 2.20
751.65 1303.10
720.56
1.50 751.65
2067-68 2068-69 2069-70 2067-68 2068-69 2069-70
2067-68 2068-69 2069-70 2067-68 2068-69 2069-70
Opera(cid:415) ng Profi t before Provision for Possible Loss
Net Profi t Investment (Rs. in Billion) Investment
Net profi t (Rs. in Million)
771.47 24.46 25.91
18.91
480.10 464.56 18.91
464.56 25.91
771.47
480.10 24.46
2067-68 2068-69 2069-70 2067-68 2068-69 2069-70
2067-68 2068-69 2069-70
2067-68 2068-69 2069-70
NPA Amount (Rs. in Million) NPA Amount NPA Gross (in %) NPA Gross (in%)
1.10
239.30
0.37%
108.69
143.85 239.30 143.85 0.54 1.10% 0.54%
108.69
0.37
2067-68 2068-69 2069-70 2067-68 2068-69 2069-70
2067-68 2068-69 2069-70 2067-68 2068-69 2069-70
4 Nepal SBI Bank Limited
REPORT OF
THE BOARD OF DIRECTORS
The Board of Directors of Nepal SBI Bank have Going forward, US economy is supposed to gain
pleasure in presen(cid:415) ng this Annual report together con(cid:415) nued trac(cid:415) on, even though a sustained pick-
with the audited Balance sheet and Profi t & up in euro area may take a while to materialize.
loss account for the year ended 31st Ashad 2070 Policy makers in the euro zone area have
(15.07.2013). reconfi rmed their commitment to resolu(cid:415) on of
the euro crisis by working on a common euro
area integra(cid:415) on framework. Growth in emerging
REVIEW OF THE FY 2069(cid:883)70 market and developing economies is projected at
5.3% in 2013 (vis-a-vis 5.1% in 2012). On the whole,
The Bank achieved substan(cid:415) al growth in profi ts an environment of progressively lower global tail
and marked improvement in effi ciency parameters risks and con(cid:415) nued structural reforms in various
during FY 2069-70(2012-13). The reported period economies is expected to favorably impact global
witnessed all round advancement in various growth outlook in 2013.
segments of business, backed by increased
network, improved market reach and strategic According to the IMF, the consumer infl a(cid:415) on of
product profi ling. The progress achieved appears developed countries is forecast to be 1.7 percent
encouraging, in the context of considerable in 2013 and 2.0 percent in 2014 compared to 2.0
challenges posed by global and local condi(cid:415) ons and percent in 2012. Similarly, consumer infl a(cid:415) on of
an intensely compe(cid:415) (cid:415) ve banking environment. emerging and developing economies is es(cid:415) mated
to be 5.9 percent in 2013 and 5.6 percent in 2014.
ECONOMIC ENVIRONMENT In India, infl a(cid:415) on is projected to remain at 10.8
percent in 2013 compared to 9.3 percent in 2012.
WORLD ECONOMY Infl a(cid:415) on in China is expected to remain at 3.0
The global economy entered the year with percent in 2013 compared to 2.6 percent in 2012.
reduced downside risks, as the US fi scal cliff and a
fl are up of the euro area crisis was averted. While Overall, high vola(cid:415) lity in global equity, currency
downside risks con(cid:415) nued to show receding trend, and commodity markets, emerging threat of rising
the major economy in terms of volume, i.e. the infl a(cid:415) on, sta(cid:415) c or deteriora(cid:415) ng consump(cid:415) on and
US, has already started exhibi(cid:415) ng the prospects employment pa(cid:425) ern in the developed countries
for an improvement in global growth rates. As remained the major areas of concern of the fi nancial
per the IMF forecast in World Economic Outlook, market players.
global economy is expected to grow by 3.3%
in 2013 (3.2% in 2012) and 4.0 percent in 2014. ECONOMIC ENVIRONMENT IN NEPAL
The US economy is es(cid:415) mated to increase by 1.9
percent in 2014 while the economy of Euro Zone The economic environment in Nepal has been
is likely to contract by 0.3 percent. The housing challenging for many years. Current poli(cid:415) cal, economic
sector in the US economy has made considerable scenario and other infrastructural issues made the
progress in suppor(cid:415) ng US economic condi(cid:415) ons. environment complex for business and industries.
Nepal SBI Bank Limited 5
Our country expects to post a real GDP growth rate other countries went up by 7.1 percent to USD
of 3.6 percent at basic price, as against 4.5 percent 2.15 billion compared to an increase of 7.9 percent
growth during the previous year. The growth in in the previous year. Imports from India increased
Agricultural sector showed a drop in growth rate at primarily due to more imports of petroleum
1.3 percent as against a growth of 5 percent during products, vehicles and spare parts, cement, rice
the previous year. Industry and service subsectors and chemical fer(cid:415) lizers, among others. Likewise,
are es(cid:415) mated to grow by 1.6 percent and 6 percent imports from other countries increased mainly on
respec(cid:415) vely as against a growth of 3 percent and account of more imports of telecommunica(cid:415) on
4.5 percent during the previous year. Improved equipment parts, silver, readymade garments, pipe
growth of the service sector in the review year is and pipe fi (cid:427) ngs and chemical fer(cid:415) lizers, among
due to the contribu(cid:415) on of trade, tourism, transport others.
and communica(cid:415) on sectors.
The country’s Balance Of Payment (BOP) recorded a
Annual average consumer infl a(cid:415) on on point-to- surplus of Rs. 68.94 billion during the review period,
point CPI, increased to 9.9 percent during FY 2069- as compared against surplus of Rs.131.63 billion in
70 (2012-13) as against 8.3 percent in previous year. the previous year. Although there was a huge trade
Infl a(cid:415) on was fuelled by a number of factors such defi cit, the current account recorded a surplus of
as decline in food produc(cid:415) on due to unfavorable Rs. 57.6 billion in the review period. The huge BOP
weather, weak supply situa(cid:415) on, energy crisis, surplus was mainly backed by remi(cid:425) ance infl ow,
devalua(cid:415) on of Nepalese currency with conver(cid:415) ble which crossed Rs.388.46 billion, thereby registering
foreign currencies and increase in the price of an increase of 21.3 percent. During 2069-70, in US
petroleum products. dollar terms, remi(cid:425) ance infl ow increased by 11.7
percent to US$ 4.93 billion. Remi(cid:425) ances contributed
On Foreign trade front, merchandise exports 22 percent of GDP, during the period.
went up by 3.6 percent to Rs.76.92 billion in the
review year, as against a growth of 15.4 percent The commitment of foreign direct investment
during the previous year. The growth of total increased in 2012-13. The number of joint venture
exports remained low in the review year due to projects and investment amount increased by
the slowdown in exports to both India and other 32.2 percent and 171.7 percent respec(cid:415) vely. Of
countries. Exports to India increased by 2.8 the 300 projects approved, largest numbers were
percent during the review year compared to from China (96), followed by India (37), South
the growth of 14.4 percent in the previous year. Korea (24), USA (22) and 121 from other countries.
Exports to other countries grew by 5.2 percent in Investments commitments from China, Bri(cid:415) sh
the review year as against 17.5 percent growth in Virgin Islands, UAE and Spain have been higher
the previous year. during the year.
Merchandise imports surged by 20.6 percent to The gross Foreign Exchange reserves increased by
Rs. 556.74 billion in the review year, as against 21.4 percent to Rs.533.30 billion in mid-July 2013
16.5 percent increase in the previous year. Imports from Rs.439.46 billion as of mid-July 2012. In US
from India increased by 22.6 percent during the dollar terms, foreign exchange reserves increased
review year compared to a growth of 14.3 percent by 12.6 percent to US$ 4.36 billion in mid-July 2013
in the previous year. In USD terms, imports from from the level of mid-July 2012.
6 Nepal SBI Bank Limited
The weighted average 91-day Treasury bills rate keeping projects of na(cid:415) onal pride at the center.
remained at 1.19 percent in mid-July 2013 as against
1.15 percent last year. Similarly, the weighted In the face of monetary stance of NRB and ensuing
average inter-bank rate among commercial banks elec(cid:415) on during the year, banking industry is expected
remained at 0.86 percent in mid-July 2013 which to confront pressure on interest spreads. The
was also at the same level in mid-July 2012. The concept of base rate was implemented by NRB with
liquidity posi(cid:415) on remained comfortable during the the objec(cid:415) ves of reducing the spread and making
major part of the year. lending rate more transparent and compe(cid:415) (cid:415) ve.
The ra(cid:415) o of saving to GDP during the year remained THE BANKING INDUSTRY
at 9.3 percent as compared to 11.5 percent in the NRB pursued the conducive policies for strengthening
previous year. In the review year, the ra(cid:415) o of gross the fi nancial system. The banking arena, however,
investment to GDP was es(cid:415) mated at 37.8 percent con(cid:415) nued to face s(cid:415) ff compe(cid:415) (cid:415) on with 31‘A’ class
compared to 34.9 percent in the previous year. commercial Banks, 86‘B’ class Development Banks,
59 ‘C’ class Finance Companies and ‘31’ other fi nancial
CDC (Credit to Domes(cid:415) c deposit and core capital) ra(cid:415) o intermediaries, which compete for a share in the
of commercial banks stood at 71.7 percent in mid- fi nancial market. Net interest margins came under
July 2013 compared to 70.1 percent in mid-July 2012. pressure, as a(cid:425) rac(cid:415) ve investment opportuni(cid:415) es
CDC ra(cid:415) o of development banks was 72.7 percent in dried up amidst liquidity in the market. Resultantly,
mid-July 2013 compared to 67.0 percent in mid-July yields on investments kept steadily declining. This
2012. The ra(cid:415) o for the fi nance companies remained warrants Banks to increasingly maintain the quality of
at 82.5 percent in mid-June 2013, compared to 78.9 assets at the highest order, concentrate on enhancing
percent in the mid-June of the previous year. CDC non-interest income, and effi ciently manage their
ra(cid:415) o of your Bank also rose from 73.30 percent to resources to achieve growth in profi tability levels.
75.18 percent as at the end of 2069-70.
Deposit mobiliza(cid:415) on of banks and fi nancial
A number of measures were taken by Nepal Rastra ins(cid:415) tu(cid:415) ons (BFIs) increased by 17.4 percent (Rs.
Bank (NRB) and the Govt. of Nepal to improve the 176.27 billion) in 2012/13. Such deposit mobiliza(cid:415) on
investment, monetary and economic condi(cid:415) on by had increased by 22.9 percent (Rs. 188.59 billion)
extending more focus to channeliza(cid:415) on of resources in the previous year. In the review year, deposit
into the produc(cid:415) ve sector. NRB has targeted mobiliza(cid:415) on of commercial banks and development
es(cid:415) mated growth of 5.5 percent in GDP during the banks increased by 17.9 percent and 27.1 percent
currents fi scal year. The central bank reiterated respec(cid:415) vely while deposit mobiliza(cid:415) on of fi nance
its stance to encourage and facilitate merger and companies decreased by 9.6 percent. In the previous
acquisi(cid:415) ons amongst banks. For ensuring fi nancial year, the deposit mobiliza(cid:415) on of commercial banks
stability, it proposes introduc(cid:415) on of the provisions and development banks had increased by 26.7
of BASEL III in a phased manner. Govt. of Nepal percent and 34.0 percent respec(cid:415) vely, whereas
declared the budget of Rs.517 bn. Highest priority deposit mobiliza(cid:415) on of fi nance companies had
has been given to energy and agriculture sector. decreased by 7.5 percent. The deposit mobiliza(cid:415) on
The budget has been formulated incorpora(cid:415) ng the of fi nance companies declined due to merger of 7
13th Three year Plan, with the objec(cid:415) ve of ridding fi nance companies with the development banks in
the country of load-shedding within three years by the review year.
Nepal SBI Bank Limited 7
During the review year, the loan and advances RECENT DEVELOPMENTS IMPACTING
of BFIs increased by 18.6 percent (Rs. 180.20 BANKING BUSINESS
billion) compared to a growth of 13.2 percent
(Rs. 112.78 billion) in the previous year. Loan and DECREASE IN CRR/LIQUIDITY OVERFLOW/ LOW
advances of commercial banks and development INTEREST IN GOVERNMENT SECURITIES
banks rose by 19.1 percent and 23.3 percent The central bank (Nepal Rastra Bank) through monetary
respec(cid:415) vely, whereas the loan and advances of policy 2070-71 and subsequent circular in this regard,
fi nance companies declined by 5.8 percent. During reduced Cash Reserve Ra(cid:415) o to 5 percent for ‘A’ Class
the review year, credit to private sector increased Banks, from 6 percent earlier. Commercial Banks will
by 20.8 percent (Rs. 161.92 billion) compared to be required to maintain 12 percent Statutory Liquidity
a rise of 12.2 percent (Rs. 84.86 billion) in the Ra(cid:415) o. On-line bidding system will be introduced in the
previous year. Of the credit fl ows to private sector, auc(cid:415) on of treasury bills and development bonds.
credit from commercial banks registered a growth
of 21.6 percent, development banks 28.3 percent MERGER AND ACQUISITION
and fi nance companies 1.3 percent. During 2012/13, merger ac(cid:415) vi(cid:415) es among BFIs further
accelerated. Two commercial banks merged with each
Of the total credit from BFIs, the credit to industrial other in 2012/13. Two development banks merged
produc(cid:415) on sector surged by Rs. 34.21 billion in the into one commercial bank. Similarly, by merging ten
review year compared to a growth of Rs. 27.29 development banks and twelve fi nance companies with
billion in the previous year. Similarly, credit to the each other, seven development banks and two fi nance
agriculture sector increased by Rs. 10.99 billion companies were formed. A(cid:332) er the implementa(cid:415) on
in the review year compared to an increase of of “Merger Bylaw, 2012”, 43 BFIs merged into 18
Rs. 10.52 billion in the previous year. Likewise, ins(cid:415) tu(cid:415) ons and 13 BFIs have received the le(cid:425) er of
credit to construc(cid:415) on sector increased by Rs. intent to merge into 5 ins(cid:415) tu(cid:415) ons. In addi(cid:415) on to this,
13.53 billion, to the wholesale and retail trade the NRB has already provided the le(cid:425) er of intent to
sector by Rs. 36.90 billion, and to transporta(cid:415) on, form one na(cid:415) onal level rural development bank by
communica(cid:415) ons and public services sector by Rs. merging 5 regional rural development banks.
7.75 billion during the review year. Credit fl ows to
these sectors had increased by Rs. 7.03 billion, Rs. DEPRIVED SECTOR AND PRODUCTIVE SECTOR
20.76 billion and Rs. 3.89 billion respec(cid:415) vely in the LENDING
previous year. The fi nancial market infrastructure The mandatory deprived sector lending target for
has improved substan(cid:415) ally in recent years reducing ‘A’ class commercial Bank has been increased to
systemic risks. 4.5 percent from 4 percent, Development Bank
to 4.0 percent and Finance companies to 3.5
At the end of Ashad 2070, branches of percent by end of upcoming fi scal year 2070-71.
commercial Banks, development Banks, finance This is part of NRB’s endeavor to gradually increase
companies and micro – finance institutions investment to deprived sector during next 2 years.
expanded to 1486, 764, 242 and 634 Demand for such lending will be increased by
respectively. This has significantly improved increasing credit limit, expanding credit base and
the public access to formal Banking channel, simplifying exis(cid:415) ng procedure. Commercial Banks
each branch approximately covers a population will have to maintain at least 12 percent credit fl ow
of 8475 on an average. to agriculture and energy sector by mid July 2015.
8 Nepal SBI Bank Limited