बैंकको आ.व. २०८२/०८३ को संक्षिप्त आर्थिक विवरण तथा लेखापरीक्षकको प्रतिवेदनBank's FY 2082/083 Condensed Financial Statements & Auditor's Report

Condensed Financial Statements of the Bank for the FY 2082/083 Published for the Purpose of Section 84 (4) of the Companies Act, 2063

2. Investment Securities Valuation

Ref. Note no. 4.8 and accounting policies to the financial statements.

The Bank has total investment securities of Rs. 20,900,552,740 as at Ashad 32, 2083 classified into two different categories as investment securities measured at amortized cost and investment in equity measured at fair value through other comprehensive income, which in aggregate represent 18.49 % of the total assets of the Bank.

Classification of investment into different categories as investment securities measured at amortized cost and investment in equity measured at fair value through other comprehensive income warrant management judgement and it impacts on valuation of investment securities and impairment allowance.

We applied following procedures in respect of investment verification:

- Review of accounting policies adopted by the Bank based on Nepal Financial Reporting Standards and the Directives issued by NRB and compliance of the same.

- Evaluation of management's assessment to categorize investments classified into different categories as investment securities measured at amortized cost and investment in equity measured at fair value through other comprehensive income.

- Verification of valuation of investment on sampling basis in reference to its cost and quoted market price as the case may be.

- Loan loss provision made by the Bank is considered acceptable.

3. Impairment of Loans and Advances

As per NFRS 9, the Bank shall measure impairment loss on loans and advances, which is the higher of:

a) Amount derived as per norms prescribed by NRB for loan loss provisioning or

b) Amount determined as per para 5.5 of NFRS adopting the expected credit loss model.

As per the norms prescribed by NRB, provision at the prescribed rate shall be created on the loans and advances based on overdue status of loans and advances as well as utilization status of the facility, status of security etc. Hence, assessment of availability and accuracy of data for impairment under NRB provisioning norms is regarded as key audit matters.

Loan loss provision on loans and advances maintained at amortized cost is Rs. 77,328,049 which is higher of ECL Model and NRB regulatory provisions and the same has been disclosed in other disclosures. ECL model has been validated as per the NRB guidelines and ECL policy of the Bank.

This is a key audit matter due to:

- The involvement of significant management judgements, assumptions and level of uncertainty associated with estimating future cash flows to recover such loans and advances, and

- The materiality of the reported amount of expected credit losses.

Key areas of significant judgements, assumptions and estimates made by management in the assessment of expected credit losses for loans and advances include forward-looking macroeconomic scenarios.

Our audit approach included:

a. Reviewing the overdue status of loans and advances by obtaining data from the system and matching the same with NRB 2.2 report.

b. Sample credit files were reviewed for the purpose of assuring the utilization of loan & advances for the intended purpose, account movement and account turnover.

c. Assessed the alignment of the Bank's impairment policy with the NFRS 9, the computations and underlying methodology including responses to current economic conditions with its accounting policies, based on the best available information up to the date of our report.

d. Evaluated the design, implementation and operating effectiveness of controls over estimation of expected credit losses, which included assessing the level of oversight review and approval of impairment for expected credit losses, policies and procedures by the board and management.

e. Tested the completeness, accuracy and reasonableness of the underlying data used in the expected credit loss computations by agreeing details to relevant source documents and accounting records.

f. Evaluated the reasonableness of credit quality assessments and related stage classifications.

In addition to the above, the following procedures were performed:

g. For loans and advances assessed on an individual basis for impairment:

- Tested the arithmetical accuracy of the underlying individual impairment calculations.

4. Information Technology

Considering the nature, complexity and volume of business and transactions, the Bank has used different system including core banking system and management information system (MIS) based on information technology. Transactions of the Bank have been electronically carried out and its data and information of the Bank has been digitally stored. It has to ensure strong internal control relating to IT and MIS. Various reports including the financial statements are highly dependent on such digitally stored data and other related system.

We have considered this as a key audit matter as any lapses in the control system including input, processing and output or any wrong extractions of data may result in the wrong reporting of the data to the management, shareholders, and regulators.

We applied following procedures in respect of information technology:

- Review of control relating to the information system of the Bank whether it is as required by the relevant NRB guidelines.

- Understanding controls over input, processing and output of the existing IT system.

- Review of accuracy and correctness of information/ reports generated by the relevant system on sampling basis.

- Review of report of Information System Audit and implementation status of recommendations thereon.

Based on the above audit procedures performed, control over the information technology prevailing in the Bank has been considered adequate.

Statement of Financial Position

As on 32nd Ashad 2083

Group Bank

Notes 32 Ashad 2083 32 Ashad 2082 32 Ashad 2083 32 Ashad 2082

4.1 2,952,082,037 3,166,029,248 2,951,515,401 3,165,470,476

4.2 4,068,883,377 3,778,537,693 4,068,883,377 3,778,537,693

Consolidated Statement of Other Comprehensive Income

For the year ended 32nd Ashad 2083

Group Bank

Particulars 2082-83 NPR 2081-82 NPR 2082-83 NPR 2081-82 NPR

Profit for the period 1,730,343,082 1,284,625,365 1,743,008,360 1,247,692,141

The proxy form must be registered at the regional office of the Development Bank located at Sabhagrihachowk, Pokhara, at least 48 hours before the commencement of the meeting, i.e., by 10:30 AM on Ashwin 24, 2083. When appointing a proxy, only a shareholder of the Development Bank can be appointed. A proxy cannot be given to any person other than a shareholder of the Development Bank, nor can a shareholder split their shares and appoint more than one proxy. Any proxy given in such a manner shall be void. If a shareholder who has already appointed a proxy attends the meeting in person and signs the attendance register, the said proxy shall automatically be cancelled.

5. In the case of minor shareholders or those of unsound mind, only the person whose name is registered as the guardian in the shareholder register shall be entitled to participate, discuss, appoint a proxy, and vote in the meeting in the capacity of a guardian.

6. In the case of joint shareholders, the person whose name is listed first in the shareholder register, or the person appointed from among themselves by the unanimous consent of the joint shareholders, shall be entitled to participate, discuss, appoint a proxy, and vote in the meeting.

7. For the convenience of the shareholders, the attendance register will be opened at the meeting venue from 9:30 AM on the day of the Annual General Meeting. Every shareholder participating in the Annual General Meeting must be present at the meeting venue and sign the attendance register.

8. If shareholders deem it necessary to discuss any matter under the 'Miscellaneous' agenda, they must submit written information about the topic they wish to present to the central office of the Development Bank in Baluwatar, Kathmandu, during office hours at least 7 (seven) days prior to the meeting. If a public holiday falls 7 (seven) days prior, such written information may also be submitted on the first day the office opens after the public holiday. Any matter for which prior written information has not been provided shall not be discussed or decided upon in the meeting.

9. If any further information is required regarding the Annual General Meeting, please contact the central office of this Development Bank in Baluwatar, Kathmandu, at Phone No. 01-4545425.

By Order of the Board of Directors,

Anil Regmi

Company Secretary

Consolidated Statement of Cash Flows

As on 32nd Ashad 2083

Group 2082-83 NPR 2081-82 NPR Bank 2082-83 NPR 2081-82 NPR

Cash flows from operating activities
Interest Received	7,619,670,261	8,568,248,708	7,615,416,149	8,563,503,166
Fee and other income received	684,874,311	573,759,193	631,526,658	516,914,447
Dividend Received	52,081,125	21,960,766	51,180,057	21,556,019
Receipts from other operating activities	-	-	-	-
Interest paid	(3,790,007,184)	(4,847,627,922)	(3,781,674,122)	(4,836,933,002)
Commission and fee paid	(16,554,162)	(10,999,709)	(9,899,472)	(5,480,318)
Cash payments to employee	(1,183,281,714)	(895,744,992)	(1,155,911,610)	(877,000,220)
Other expense paid	(705,645,758)	(198,416,022)	(678,537,584)	(168,963,326)
Operating cash flows before change in operating assets and liabilities	2,661,136,879	3,211,180,022	2,672,100,076	3,213,596,766
(Increase)/Decrease in operating assets	(8,405,795,676)	(5,451,839,483)	(8,418,685,706)	(5,453,511,776)
Due from Nepal Rastra Bank	(290,345,685)	(28,920,226)	(290,345,685)	(28,920,226)
Placement with bank and financial institutions	-	-	-	-
Other Trading assets	-	-	-	-
Loan and advances to bank and financial institutions	1,214,766,398	(241,080,899)	1,214,766,398	(241,080,899)
Loan and advances to customer	(9,185,937,013)	(5,359,485,817)	(9,185,937,013)	(5,359,485,817)
Other Assets	(144,279,375)	177,647,459	(157,169,406)	175,975,166
Increase/(Decrease) in operating liabilities	7,178,116,949	6,708,727,948	7,182,385,468	6,639,320,227
Due to bank and financial institutions	(1,174,057,906)	782,696,499	(1,174,057,906)	782,696,499
Due to Nepal Rastra Bank	-	-	-	-
Deposits from customers	8,357,066,787	5,861,652,948	8,356,443,375	5,862,873,728
Borrowings	(17,567,556)	43,386,536	-	(6,250,000)
Other Liabilities	12,675,624	20,991,966	-	-
Net Cash flow from operating activities before tax paid	1,433,458,152	4,468,068,488	1,435,799,839	4,399,405,217
Income taxes paid	(667,441,235)	(267,788,311)	(665,312,123)	(261,830,234)
Net Cash flow from operating activities	766,016,918	4,200,280,177	770,487,716	4,137,574,984
Cash flows from investing activities
Purchase of investment securities	(722,080,597)	(3,572,718,259)	(756,363,566)	(3,465,326,430)
Receipts from sale of investment securities	25,754,970	38,380,764	25,754,970	38,380,764
Purchase of property and equipment	(101,329,538)	(1,585,479,614)	(100,173,717)	(1,585,189,395)
Receipt from sale of property and equipment	966,699	59,395,826	966,699	59,395,826
Purchase of intangible assets	-	-6333990.75	-	(5,495,760.90)
Receipt from sale of intangible assets	1,407,129	-	3,007,033	-
Purchase of investment properties	-	(461,244,166)	-	(461,244,166)
Receipt from the sale of investment properties	44,610,173	(1,279,971)	44,610,173	(1,279,971)
Interest received	-	-	-	-
Dividend received	-	-	-	-
Net cash used in investing activities	(750,671,164)	(5,529,279,411)	(782,198,408)	(5,420,759,132)
Cash flows from financing activities
Receipt from issue of debt securities	(380,661)	1,028,858	(380,661)	1,028,858
Repayment of debt securities	-	-	-	-
Receipt from issue of subordinated liabilities	-	-	-	-
Repayment of subordinated liabilities	-	-	-	-
Receipt from issue of shares	340,831,040	0	340,831,040	0
Dividend paid	(598,158,474)	(284,025,866)	(598,158,474)	(284,025,866)
Interest paid	-	-	-	-
Other receipt/payment	-	-	-	-
Net cash from financing activities	(257,708,095)	(282,997,009)	(257,708,095)	(282,997,009)
Net increase/(decrease) in cash and cash equivalents	(242,362,342)	(1,611,996,243)	(269,418,788)	(1,566,181,157)
Cash and Cash Equivalents at Shrawan	01,	2082	3,166,029,248	4,716,277,304	3,165,470,476	4,714,599,338
Effect of exchange rate fluctuations on cash and cash equivalents held	28,415,131	61,748,186	55,463,713	17,052,296
Closing Cash and Cash Equivalents at Ashad End,	2083	2,952,082,037	3,166,029,248	2,951,515,401	3,165,470,476

Statement of Distributable Profit or Loss

As on 32nd Ashad 2083 (As per NRB Regulation)

Particulars Bank
Current Year Previous Year
Net profit or (loss) as per statement of profit or loss	1,743,008,360	1,247,692,141
Appropriations:
a. General reserve	(351,444,851)	(249,506,565)
b. Foreign exchange fluctuation fund	(7,618,006)	(160,744)
c. Capital redemption reserve	(166,666,667)	(166,666,667)
d. Corporate social responsibility fund	(17,430,084)	(12,476,921)
e. Employees' training fund	(18,922,445)	(18,922,445)
f. Other -
Investment Adjustment Reserve -
Corporate social responsibility fund utilization	4,590,809	10,979,918
Employees' training fund utilization	17,366,708	9,648,011

Unrealised Gain on Investment in Associates -

Other Adjustment/restatement	14,715,896	159,316
Profit or (loss) before regulatory adjustment	1,217,499,720	820,746,043
Regulatory adjustment :
a. Interest receivable (-)/previous accrued interest received (+)	11,766,614	85,730,424

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 (-)/reversal (+)	22,626,073	(229,561,221)
e. Deferred tax assets recognised (-)/ reversal (+)	(6,934,554)	(53,918,056)

f. Goodwill recognised (-)/ impairment of Goodwill (+) -

g. Bargain purchase gain recognised (-)/resersal (+) -

h. Acturial loss recognised (-)/reversal (+)	(42,982,190)	(28,750,774)
i. Other (+/-)	3,597,114	2,590,485

Lease Payment -

Dividend Income from Associates -

Income Attributable from Associates -

Share Issued Expenses Directly Charged to equity -

Share Issued Expenses- Directly Charged to Equity- Tax Impact -

Gain on Disposal of Share Classified into OCI -

Current Tax on Gain on Disposal of Share Classified into OCI -

Distributable profit or (loss)	1,205,572,776	596,836,899
Opening Retained Earning as on Shrawan	599,214,090	286,403,056

Adjustment(+/-) -

Distribution
Bonus Share Issued	(340,831,040)	-
Cash Dividend Paid	(257,327,435)	(284,025,866)
Total Distributable Profit or (Loss) as on end Date	1,206,628,392	599,214,090
Annualised Distributable Profit/Loss per Share	20.04	10.55