AUDITED FINANCIAL

STATEMENTS OF
SIDDHARTHA BANK LIMITED

ANNUAL REPORT 2022-23 159

160 SIDDHARTHA BANK LIMITED
ANNUAL REPORT 2022-23 161
Consolidated Statement of Financial Position As on 16 July, 2023 In NPR
GROUP BANK
NOTE CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Assets
Cash and cash equivalent 4.1 11,571,313,935 7,936,444,278 11,554,080,479 7,928,989,024
Due from Nepal Rastra Bank 4.2 9,000,713,492 5,730,448,535 9,000,713,492 5,730,448,535
Placements with Bank and Financial Institutions 4.3 5,011,346,934 320,313,255 5,011,346,934 320,313,255
Derivative financial instruments 4.4 17,320,155 19,694,323 17,320,155 19,694,323
Other trading assets 4.5 109,407,897 158,762,749 - -
Loan and advances to B/FIs 4.6 5,170,773,907 6,403,394,142 5,170,773,907 6,403,394,142
Loans and advances to customers 4.7 184,019,363,443 178,597,694,694 184,009,571,040 178,587,363,232
Investment securities 4.8 62,728,867,192 57,591,637,732 62,480,476,034 57,368,161,732
Current tax assets 4.9 267,328,784 357,997,989 263,764,947 364,410,286
Investment in subsidiaries 4.10 - - 51,000,000 51,000,000
Investment in associates 4.11 - - - -
Investment property 4.12 654,537,489 213,307,612 654,537,489 213,307,612
Property and equipment 4.13 3,579,515,879 3,111,858,718 3,548,089,446 3,077,068,355
Goodwill and Intangible assets 4.14 167,612,308 73,722,348 166,000,283 71,490,971
Deferred tax assets 4.15 - - - -
Other assets 4.16 4,073,870,027 4,220,999,837 4,050,241,119 4,191,382,045
Total Assets 286,371,971,442 264,736,276,211 285,977,915,326 264,327,023,511
Liabilities
Due to Bank and Financial Institutions 4.17 11,613,657,572 7,234,641,506 11,613,657,572 7,234,641,506
Due to Nepal Rastra Bank 4.18 288,453,474 24,965,102,753 288,453,474 24,965,102,753
Derivative financial instruments 4.19 23,887,253 19,359,606 23,887,253 19,359,606
Deposits from customers 4.20 223,307,001,273 191,156,475,501 223,654,669,691 191,550,643,583
Borrowing 4.21 7,312,480,160 1,022,800,000 7,312,480,160 1,022,800,000
Current Tax Liabilities 4.9 - - - -
Provisions 4.22 - - - -
Deferred tax liabilities 4.15 489,092,725 222,407,228 501,929,292 239,223,287
Other liabilities 4.23 5,968,405,789 6,468,899,300 5,613,687,917 6,034,819,684
Debt securities issued 4.24 11,662,559,000 11,662,559,000 11,662,559,000 11,662,559,000
Subordinated Liabilities 4.25 - - - -
Total liabilities 260,665,537,246 242,752,244,893 260,671,324,359 242,729,149,419
Equity
Share capital 4.26 14,089,980,190 12,524,426,835 14,089,980,190 12,524,426,835
Share premium - - - -
Retained earnings 756,129,848 1,449,435,635 663,610,438 1,359,868,481
Reserves 4.27 10,639,410,976 7,795,961,806 10,553,000,339 7,713,578,776
Total equity attributable to equity holders 25,485,521,014 21,769,824,276 25,306,590,967 21,597,874,092
Non-controlling interest 220,913,182 214,207,041 - -
Total equity 25,706,434,196 21,984,031,317 25,306,590,967 21,597,874,092
Total liabilities and equity 286,371,971,442 264,736,276,211 285,977,915,326 264,327,023,511
Contingent liabilities and commitment 4.28 47,603,411,987 41,754,325,228 47,603,411,987 41,154,325,228
Net assets value per share 180.88 173.82 179.61 172.45

Pramesh Shrestha Manoj Kumar Kedia Narendra Kumar Agrawal As per our report of even date
HEAD STRATEGY AND FINANCE CHAIRMAN Rahul Agrawal
CA. Sunir Kumar Dhungel
Dinesh Shanker Palikhe
PARTNER
Rameshwar Prasad Bashyal Ankit Kedia
FOR S.A.R. ASSOCIATES
OFFICIATING CHIEF EXECUTIVE OFFICER Mina Kumari Sainju
CHARTERED ACCOUNTANTS
DIRECTORS
DATE: OCTOBER 11, 2023
PLACE: KATHMANDU, NEPAL
ANNUAL REPORT 2022-23 165
Consolidated Statement of Profit or Loss For the year ended July 16, 2023 In NPR
GROUP BANK
NOTE CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Interest income 4.29 27,709,848,736 20,715,578,288 27,670,966,196 20,677,563,975

Interest expense 4.30 19,478,276,795 14,078,362,586 19,486,423,098 14,080,716,460
Net interest income 8,231,571,941 6,637,215,702 8,184,543,098 6,596,847,515
Fee and commission income 4.31 1,816,905,447 1,704,680,993 1,693,079,336 1,505,592,323
Fee and commission expense 4.32 374,228,787 326,458,189 347,458,421 285,888,969
Net fee and commission income 1,442,676,660 1,378,222,804 1,345,620,915 1,219,703,354
Net interest, fee and commission income 9,674,248,601 8,015,438,506 9,530,164,013 7,816,550,869
Net trading income 4.33 188,745,057 374,739,285 191,735,761 442,926,681
Other operating income 4.34 355,030,167 550,365,770 336,328,302 532,489,900
Total operating income 10,218,023,824 8,940,543,561 10,058,228,076 8,791,967,450
Impairment charge/(reversal) for loans and other losses 4.35 1,187,561,177 607,471,211 1,187,561,177 607,471,211
Net operating income 9,030,462,647 8,333,072,350 8,870,666,900 8,184,496,238
Operating expense
Personnel expenses 4.36 2,896,297,115 2,728,708,275 2,852,235,828 2,685,015,444
Other operating expenses 4.37 934,306,821 843,452,137 917,442,986 827,855,831
Depreciation & Amortisation 4.38 456,879,613 414,531,687 448,006,336 405,072,283
Operating Profit 4,742,979,098 4,346,380,251 4,652,981,749 4,266,552,680
Non operating income 4.39 13,471,787 9,143,224 13,471,787 8,609,620
Non operating expense 4.40 101,194,542 16,694,239 101,194,542 16,694,239
Profit before income tax 4,655,256,344 4,338,829,236 4,565,258,995 4,258,468,061
Income tax expense 4.41
Current Tax 1,436,635,657 1,442,397,950 1,412,442,144 1,396,816,319
Deferred Tax (10,533,501) (62,252,228) (13,954,496) (40,812,300)
Profit for the period 3,229,154,188 2,958,683,514 3,166,771,347 2,902,464,042
Profit attributable to:
Equity holders of the Bank 3,198,586,596 2,931,135,973 3,166,771,347 2,902,464,042
Non-controlling interest 30,567,592 27,547,541 - -
Profit for the period 3,229,154,188 2,958,683,514 3,166,771,347 2,902,464,042
Earnings per share
Basic earnings per share 22.70 20.80 22.48 20.60
Diluted earnings per share 22.70 20.80 22.48 20.60

Pramesh Shrestha Manoj Kumar Kedia Narendra Kumar Agrawal As per our report of even date
HEAD STRATEGY AND FINANCE CHAIRMAN Rahul Agrawal
CA. Sunir Kumar Dhungel
Dinesh Shanker Palikhe
PARTNER
Rameshwar Prasad Bashyal Ankit Kedia
FOR S.A.R. ASSOCIATES
OFFICIATING CHIEF EXECUTIVE OFFICER Mina Kumari Sainju
CHARTERED ACCOUNTANTS
DIRECTORS
DATE: OCTOBER 11, 2023
PLACE: KATHMANDU, NEPAL

166 SIDDHARTHA BANK LIMITED

Consolidated Statement of Other Comprehensive Income For the year ended July 16, 2023 In NPR
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Profit for the year 3,229,154,188 2,958,683,514 3,166,771,347 2,902,464,042

Other comprehensive income, net of income tax
a) Items that will not be reclassified to profit or loss
Gains/(losses) from investments in equity instruments measured
at fair value 797,272,994 (2,128,408,147) 795,411,336 (2,128,408,147)
Gains/(losses) on revalution - - - -
Actuarial gains/(losses) on defined benefit plans 126,790,334 (165,352,051) 126,790,334 (165,352,051)
Income tax relating to above items (277,218,998) 696,056,000 (276,660,501) 696,056,000
Net other comprehensive income that will not be reclassified to 646,844,330 (1,597,704,199) 645,541,169 (1,597,704,199)
profit or loss
b) Items that are or may be reclassified to profit or loss
Gains/(losses) on cash flow hedge - - - -
Exchange gains/(losses) (arising from translating financial assets
of foreign operation) - - - -
Income tax relating to above items - - - -
Reclassify to profit or loss - - - -
Net other comprehensive income that are or may be reclassified to
profit or loss - - - -
c) Share of other comprehensive income of associate accounted
as per equity method - - - -
Other comprehensive income for the year, net of income tax 646,844,330 (1,597,704,199) 645,541,169 (1,597,704,199)
Total comprehensive income for the year 3,875,998,518 1,360,979,315 3,812,312,516 1,304,759,844
Total comprehensive income attributable to:
Equity holders of the Bank 3,844,792,377 1,333,431,774 3,812,312,516 1,304,759,844
Non-controlling interest 31,206,141 27,547,541 - -
Total comprehensive income for the period 3,875,998,518 1,360,979,315 3,812,312,516 1,304,759,844

Pramesh Shrestha Manoj Kumar Kedia Narendra Kumar Agrawal As per our report of even date
HEAD STRATEGY AND FINANCE CHAIRMAN Rahul Agrawal
CA. Sunir Kumar Dhungel
Dinesh Shanker Palikhe
PARTNER
Rameshwar Prasad Bashyal Ankit Kedia
FOR S.A.R. ASSOCIATES
OFFICIATING CHIEF EXECUTIVE OFFICER Mina Kumari Sainju
CHARTERED ACCOUNTANTS
DIRECTORS
DATE: OCTOBER 11, 2023
PLACE: KATHMANDU, NEPAL

ANNUAL REPORT 2022-23 167

Consolidated Statement of Cash Flows For the year ended July 16, 2023 In NPR
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

CASH FLOWS FROM OPERATING ACTIVITIES

Interest received 24,011,447,835 13,815,904,111 24,015,818,342 13,816,278,117
Fees and other income received 1,821,241,417 1,717,688,903 1,693,079,336 1,505,592,323
Dividend received - - - -
Receipts from other operating activities 297,042,639 501,155,696 296,979,153 499,642,801
Interest paid (18,307,250,295) (13,572,192,042) (18,318,104,403) (13,467,768,526)
Commission and fees paid (374,228,787) (326,458,189) (347,458,421) (285,888,969)
Cash payment to employees (2,178,465,601) (2,874,233,941) (2,134,404,314) (2,830,541,110)
Other expense paid (1,038,207,594) (863,371,356) (1,018,637,527) (844,550,070)
Operating cash flows before changes in operating assets 4,231,579,613 (1,601,506,816) 4,187,272,166 (1,607,235,434)
and liabilities

(Increase)/Decrease in operating assets
Due from Nepal Rastra Bank (3,270,264,958) 2,010,193,457 (3,270,264,958) 2,010,193,457
Placement with bank and financial institutions (4,691,033,679) 2,988,395,110 (4,691,033,679) 2,988,395,110
Other trading assets 7,052,159 59,193,992 - -
Loan and advances to bank and financial institutions 1,232,620,235 (375,532,139) 1,232,620,235 (375,532,139)
Loans and advances to customers (7,050,459,803) (20,537,447,279) (7,050,998,862) (20,537,864,943)
Other assets 290,599,104 4,251,809,497 291,661,293 4,251,087,119
(13,481,486,941) (11,603,387,362) (13,488,015,970) (11,663,721,396)
Increase/(Decrease) in operating liabilities
Due to bank and financial institutions 4,379,016,066 (482,369,738) 4,379,016,066 (482,369,738)
Due to Nepal Rastra Bank (24,676,649,279) 19,105,195,843 (24,676,649,279) 19,105,195,843
Deposit from customers 32,150,525,772 10,717,550,978 32,104,026,108 10,626,634,259
Borrowings 6,289,680,160 1,022,800,000 6,289,680,160 1,022,800,000
Other liabilities (1,004,295,084) 749,490,347 (923,855,120) 1,029,887,225
Net cash flow from operating activities before tax paid 7,888,370,308 17,907,773,251 7,871,474,132 18,031,190,758
Income taxes paid (1,486,372,740) (1,675,050,853) (1,455,141,889) (1,634,007,759)
Net cash flow from operating activities 6,401,997,568 16,232,722,399 6,416,332,242 16,397,183,000

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investment securities (4,281,149,683) (17,758,908,704) (4,316,902,966) (17,671,276,109)
Receipts from sale of investment securities - - - -
Purchase of property and equipment (884,747,013) (2,045,426,473) (879,857,019) (1,876,681,451)
Receipt from the sale of property and equipment 2,574,664 4,915,101 2,574,664 19,255,161
Purchase of intangible assets (136,264,340) (14,609,102) (136,264,340) (14,609,102)
Receipt from the sale of intangible assets - - - -
Purchase of investment properties - - - -
Receipt from the sale of investment properties - - - -
Interest received 3,608,718,975 2,012,606,585 3,566,556,553 1,975,109,359
Dividend received 148,892,796 430,310,175 147,805,630 428,905,175
Net cash used in investing activities (1,541,974,601) (17,371,112,418) (1,616,087,478) (17,139,296,966)

168 SIDDHARTHA BANK LIMITED

 GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

CASH FLOWS FROM FINANCING ACTIVITIES

Receipt from issue of debt securities - 4,000,000,000 - 4,000,000,000
Repayment of debt securities - (500,000,000) - (500,000,000)
Receipt from issue of subordinated liabilities - - - -
Repayment of subordinated liabilities - - - -
Receipt from issue of shares - - - -
Dividends paid (132,397,545) (162,217,244) (82,397,545) (82,217,244)
Interest paid (1,168,318,695) (502,941,983) (1,168,318,695) (612,947,934)
Other receipt/payment (21,198,093) (17,102,477) (21,198,093) (168,078,149)
Net cash from financing activities (1,321,914,333) 2,817,738,297 (1,271,914,333) 2,636,756,672
Net increase (decrease) in cash and cash equivalents 3,538,108,634 1,679,348,278 3,528,330,432 1,894,642,706
Cash and cash equivalents at July 17, 2022 7,936,444,278 6,198,805,271 7,928,989,024 5,976,055,588
Effect of exchange rate fluctuations on cash and 96,761,024 58,290,729 96,761,024 58,290,729
cash equivalents held
Cash and cash equivalents at July 16, 2023 11,571,313,935 7,936,444,278 11,554,080,479 7,928,989,024

Pramesh Shrestha Manoj Kumar Kedia Narendra Kumar Agrawal As per our report of even date
HEAD STRATEGY AND FINANCE CHAIRMAN Rahul Agrawal
CA. Sunir Kumar Dhungel
Dinesh Shanker Palikhe
PARTNER
Rameshwar Prasad Bashyal Ankit Kedia
FOR S.A.R. ASSOCIATES
OFFICIATING CHIEF EXECUTIVE OFFICER Mina Kumari Sainju
CHARTERED ACCOUNTANTS
DIRECTORS
DATE: OCTOBER 11, 2023
PLACE: KATHMANDU, NEPAL

ANNUAL REPORT 2022-23 169

Consolidated Statement of Changes in Equity For the year ended July 16, 2023

SHARE SHARE GENERAL EXCHANGE

CAPITAL PREMIUM RESERVE EQUALISATION
RESERVE

Balance at July 16, 2021 10,962,299,198 - 3,219,181,780 31,125,658

Adjustment/Restatement - - - -
Adjusted/Restated balance at July 16, 2021 10,962,299,198 - 3,219,181,780 31,125,658
Comprehensive income for the year
Profit for the year - - - -
Other comprehensive income, net of tax
Gains/(losses) from investments in equity instruments
measured at fair value - - - -
Gains/(losses) on revaluation - - - -
Actuarial gains/(loss) on defined benefit plans - - - -
Gains/(losses) on cashflow hedge - - - -
Exchange gains/(losses)
(arising from translating financial assets of foreign operation) - - - -
Total comprehensive income for the year - - - -
Transfer to reserve during the year - - 587,059,707 14,572,682
Transfer from reserve during the year - - - -
Transactions with owners, directly recognised in equity
Share issued - - - -
Share based payments - - - -
Dividends to equity holders - - - -
Bonus shares issued 1,562,127,636 - - -
Cash dividend paid - - - -
Other - - - -
Total contributions by and distributions 1,562,127,636 - - -
Balance at July 16, 2022 12,524,426,834 - 3,806,241,487 45,698,341
Balance at July 17, 2022 12,524,426,834 - 3,806,241,487 45,698,341
Adjustment/Restatement - - - -
Adjusted/Restated balance at July 16, 2022 12,524,426,834 - 3,806,241,487 45,698,341
Comprehensive income for the year
Profit for the year - - - -
Other comprehensive income, net of tax
Gains/(losses) from investments in equity instruments
measured at fair value - - - -
Gains/(losses) on revaluation - - - -
Actuarial gains/(loss) on defined benefit plans - - - -
Gains/(losses) on cashflow hedge - - - -
Exchange gains/(losses)
(arising from translating financial assets of foreign operation) - - - -
Total comprehensive income for the year - - - -
Transfer to reserve during the year - - 636,535,794 24,190,256
Transfer from reserve during the year - - - -
Transactions with owners, directly recognised in equity
Share issued - - - -
Share based payments - - - -
Dividends to equity holders - - - -
Bonus shares issued 1,565,553,357 - - -
Cash dividend paid - - - -
Other - - - -
Total contributions by and distributions 1,565,553,357 - - -
Balance at July 16, 2023 14,089,980,191 - 4,442,777,281 69,888,596

170 SIDDHARTHA BANK LIMITED

 In NPR
GROUP
ATTRIBUTABLE TO EQUITY HOLDERS OF THE BANK
REGULATORY FAIR VALUE REVALUATION RETAINED OTHER TOTAL NON-CONTROLLING TOTAL
RESERVE RESERVE RESERVE EARNING RESERVE INTEREST EQUITY

643,992,682 2,686,056,366 - 1,913,477,937 1,129,750,959 20,585,884,580 225,859,500 20,811,744,080

- - - (9,372,357) - (9,372,357) - (9,372,357)
643,992,682 2,686,056,366 - 1,904,105,580 1,129,750,959 20,576,512,222 225,859,500 20,802,371,722

- - - 2,931,135,974 - 2,931,135,974 27,547,540 2,958,683,513

- (1,489,885,703) - - - (1,489,885,703) - (1,489,885,703)

- - - - - - - -
- - - - (115,746,436) (115,746,436) - (115,746,436)
- - - - - - - -

- - - - - - - -
- (1,489,885,703) - 2,931,135,974 (115,746,436) 1,325,503,835 27,547,540 1,353,051,375
253,134,801 - - (1,776,060,230) 921,293,041 - - -
(48,972,726) (18,498,527) - 75,399,193 (17,102,477) (9,174,537) - (9,174,537)

- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - (1,562,127,636) - - - -
- - - (123,017,244) - (123,017,244) (39,200,000) (162,217,244)
- - - - - - - -
- - - (1,685,144,880) - (123,017,244) (39,200,000) (162,217,244)
848,154,757 1,177,672,136 - 1,449,435,636 1,918,195,087 21,769,824,277 214,207,039 21,984,031,315
848,154,757 1,177,672,136 - 1,449,435,636 1,918,195,087 21,769,824,277 214,207,039 21,984,031,315
- - - - - - - -
848,154,757 1,177,672,136 - 1,449,435,636 1,918,195,087 21,769,824,277 214,207,039 21,984,031,315

- - - 3,198,586,596 - 3,198,586,596 30,567,592 3,229,154,188

- 557,452,547 - - - 557,452,547 638,549 558,091,096

- - - - - - - -
- - - - 88,753,234 88,753,234 - 88,753,234
- - - - - - - -

- - - - - - - -
- 557,452,547 - 3,198,586,596 88,753,234 3,844,792,377 31,206,141 3,875,998,518
626,716,716 - - (2,807,194,718) 1,519,751,951 - - -
(88,753,234) - - 88,753,234 (21,198,093) (21,198,093) - (21,198,093)

- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - (1,065,553,357) (500,000,000) - - -
- - - (107,897,545) - (107,897,545) (24,500,000) (132,397,545)
- - - - - - - -
- - - (1,173,450,902) (500,000,000) (107,897,545) (24,500,000) (132,397,545)
1,386,118,241 1,735,124,683 - 756,129,847 3,005,502,179 25,485,521,016 220,913,179 25,706,434,195

ANNUAL REPORT 2022-23 171

Consolidated Statement of Changes in Equity For the year ended July 16, 2023

SHARE SHARE GENERAL EXCHANGE

CAPITAL PREMIUM RESERVE EQUALISATION
RESERVE

Balance at July 16, 2021 10,962,299,198 - 3,191,648,969 31,125,658

Adjustment/Restatement - - - -
Adjusted/Restated balance at July 16, 2021 10,962,299,198 - 3,191,648,969 31,125,658
Comprehensive income for the year
Profit for the year - - - -
Other comprehensive income, net of tax
Gains/(losses) from investments in equity instruments
measured at fair value - - - -
Gains/(losses) on revaluation - - - -
Actuarial gains/(loss) on defined benefit plans - - - -
Gains/(losses) on cashflow hedge - - - -
Exchange gains/(losses)
(arising from translating financial assets of foreign operation) - - - -
Total comprehensive income for the year - - - -
Transfer to reserve during the year - - 584,192,514 14,572,682
Transfer from reserve during the year - - - -
Transactions with owners, directly recognised in equity
Share issued - - - -
Share based payments - - - -
Dividends to equity holders - - - -
Bonus shares issued 1,562,127,636 - - -
Cash dividend paid - - - -
Other - - - -
Total contributions by and distributions 1,562,127,636 - - -
Balance at July 16, 2022 12,524,426,833 - 3,775,841,483 45,698,341
Balance at July 17, 2022 12,524,426,833 - 3,775,841,483 45,698,341
Adjustment/Restatement - - - -
Adjusted/Restated balance at July 16, 2022 12,524,426,833 - 3,775,841,483 45,698,341
Comprehensive income for the year
Profit for the year - - - -
Other comprehensive income, net of tax
Gains/(losses) from investments in equity instruments
measured at fair value - - - -
Gains/(losses) on revaluation - - - -
Actuarial gains/(loss) on defined benefit plans - - - -
Gains/(losses) on cashflow hedge - - - -
Exchange gains/(losses)
(arising from translating financial assets of foreign operation) - - - -
Total comprehensive income for the year - - - -
Transfer to reserve during the year - - 633,354,269 24,190,256
Transfer from reserve during the year - - - -
Transactions with owners, directly recognised in equity
Share issued - - - -
Share based payments - - - -
Dividends to equity holders - - - -
Bonus shares issued 1,565,553,357 - - -
Cash dividend paid - - - -
Other - - - -
Total contributions by and distributions 1,565,553,357 - - -
Balance at July 16, 2023 14,089,980,189 - 4,409,195,752 69,888,596

172 SIDDHARTHA BANK LIMITED

 BANK
ATTRIBUTABLE TO EQUITY HOLDERS OF THE BANK
REGULATORY FAIR VALUE REVALUATION RETAINED OTHER TOTAL NON-CONTROLLING TOTAL
RESERVE RESERVE RESERVE EARNING RESERVE INTEREST EQUITY

643,992,682 2,686,056,366 - 1,808,628,800 1,078,054,653 20,401,806,326 - 20,401,806,326

- - - (9,372,357) - (9,372,357) - (9,372,357)
643,992,682 2,686,056,366 - 1,799,256,443 1,078,054,653 20,392,433,969 - 20,392,433,969

- - - 2,902,464,042 - 2,902,464,042 - 2,902,464,042

- (1,489,885,703) - - - (1,489,885,703) - (1,489,885,703)

- - - - - - - -
- - - - (115,746,436) (115,746,436) - (115,746,436)
- - - - - - - -

- - - - - - - -
- (1,489,885,703) - 2,902,464,042 (115,746,436) 1,296,831,904 - 1,296,831,904
253,134,801 - - (1,772,906,318) 921,006,321 - - -
(48,972,726) (18,498,527) - 75,399,193 (17,102,477) (9,174,537) - (9,174,537)

- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - (1,562,127,636) - - - -
- - - (82,217,244) - (82,217,244) - (82,217,244)
- - - - - - - -
- - - (1,644,344,880) - (82,217,244) - (82,217,244)
848,154,757 1,177,672,136 - 1,359,868,481 1,866,212,062 21,597,874,092 - 21,597,874,091
848,154,757 1,177,672,136 - 1,359,868,481 1,866,212,062 21,597,874,092 - 21,597,874,092
- - - - - - - -
848,154,757 1,177,672,136 - 1,359,868,481 1,866,212,062 21,597,874,092 - 21,597,874,092

- - - 3,166,771,347 - 3,166,771,347 - 3,166,771,347

- 556,787,935 - - - 556,787,935 - 556,787,935

- - - - - - - -
- - - - 88,753,234 88,753,234 - 88,753,234
- - - - - - - -

- - - - - - - -
- 556,787,935 - 3,166,771,347 88,753,234 3,812,312,516 - 3,812,312,516
626,716,716 - - (2,803,831,723) 1,519,570,481 - - -
(88,753,234) - - 88,753,233.80 (21,198,093) (21,198,093) - (21,198,093)

- - - - - - - -
- - - - - - - -
- - - - - - - -
- - - (1,065,553,357) (500,000,000) - - -
- - - (82,397,545) - (82,397,545) - (82,397,545)
- - - - - - - -
- - - (1,147,950,902) (500,000,000) (82,397,545) - (82,397,545)
1,386,118,241 1,734,460,071 - 663,610,437 2,953,337,683 25,306,590,970 - 25,306,590,969

ANNUAL REPORT 2022-23 173

Notes to the
Financial Statements

1. BANK Subsidiary
The principal activities of the Subsidiary are to provide merchant/
1.1 GENERAL investment banking services that include management of public
Siddhartha Bank Limited (hereinafter referred to as “the Bank”) offerings, portfolio management, underwriting of securities,
is a limited liability publically listed company domiciled in and fund management of mutual fund schemes, depository
Nepal. The registered office of the Bank is situated at Naxal, participant’s service under Central Depository Service (CDS) and
Kathmandu, Nepal. The Bank carries out commercial banking administration and record keeping of securities of its clients.
activities and other financial services in Nepal under the license
from Nepal Rastra Bank (NRB), the Central Bank of Nepal, as “Ka
Class” (Class A) licensed financial institution. The Bank is listed on
Nepal Stock Exchange. 2. BASIS OF PREPARATION

1.2 FINANCIAL STATEMENTS 2.1. STATEMENT OF COMPLIANCE

The Financial Statements of the Bank for the year ended on July The Financial Statements of the Bank which comprises
16, 2023 comprises Statement of Financial Position, Statement components mentioned above have been prepared in accordance
of Profit or Loss, Statement of Other Comprehensive Income, with Nepal Financial Reporting Standards comprising of Nepal
Statement of Changes in Equity, Statement of Cash Flows and Financial Reporting Standards and Nepal Accounting Standards
Notes to the Financial Statements. (hereafter referred as NFRS), laid down by the Institute of
Chartered Accountants of Nepal and in compliance with the
1.3 PRINCIPAL ACTIVITIES AND OPERATIONS requirements of the Companies Act, 2006.

Bank 2.2. REPORTING PERIOD AND APPROVAL OF

The principal activities of the Bank are to provide full-fledged FINANCIAL STATEMENTS
commercial banking services including agency services, trade
finance services, card services and e-commerce products and A) Reporting Period
services to its customers through its strategic business units, The Bank follows the Nepalese financial year based on the
branches, extension counters, ATMs and network of agents. Nepalese calendar. The corresponding dates for the English
calendar are as follows:
Ownership of Subsidiary as at July 16, 2023

SUBSIDIARY PRINCIPAL ACTIVITIES JULY 16, 2023 JULY 16, 2022

Siddhartha Management of public 51% holding 51% holding

Capital offerings, portfolio
Limited management, under-
writing of securities,
management of mutual
fund schemes

174 SIDDHARTHA BANK LIMITED

RELEVANT FINANCIAL STATEMENT NEPALESE CALENDAR DATE/PERIOD ENGLISH CALENDAR DATE/PERIOD
Statement of Financial Position 31 Ashad,2080 16th July, 2023
Statement of Profit or Loss 01 Shrawan, 2079 to 31 Ashad, 2080 17 July, 2022 to 16th July 2023
th

Statement of Other Comprehensive Income 01 Shrawan, 2079 to 31 Ashad, 2080 17th July, 2022 to 16th July 2023
Statement of Cash flows 31 Ashad, 2080 16th July, 2023
Statement of changes in Equity 01 Shrawan, 2079 to 31 Ashad, 2080 17 July, 2022 to 16th July 2023
th

B) Responsibility for Financial Statements 2.4.2 Fair Value of Financial Instruments

The Board of Directors is responsible for the preparation and Where the fair values of financial assets and financial liabilities
presentation of Financial Statements of Siddhartha Bank Limited recorded in the statement of financial position can be derived
as per the provisions of the Companies Act, 2006. from active markets, they are derived from observable market
data. However, if this is not available, judgment is required to
C) Approval of Financial Statements by Directors establish fair values. The valuation of financial instruments is
The accompanied Financial Statements have been authorized by described in more detail in Note 3.4.
the Board of Directors vide its resolution dated October 11, 2023
and recommended for its approval by the Annual General Meeting 2.4.3 Impairment of Financial Assets – Loans and
of the shareholders. Advances
The Bank reviews its individually significant loans and advances
2.3. FUNCTIONAL AND PRESENTATION CURRENCY at each statement of financial position date to assess whether
The Financial Statements of the Bank are presented in Nepalese an impairment loss should be recorded in the income statement.
Rupees (NPR), which is the currency of the primary economic In particular, judgment of the management is required in the
environment in which the Bank operates. Financial information estimation of the amount and timing of future cash flows when
are presented in Nepalese Rupees and has been shown in actual determining the impairment loss.
figure, unless otherwise stated.
These estimates are based on assumptions about a number of
2.4. USE OF ESTIMATES, ASSUMPTIONS AND factors and actual results may differ, resulting in future changes
JUDGMENTS to the impairment allowance.
The preparation of Financial Statements in conformity with Nepal
Financial Reporting Standards (NFRS) requires the management Loans and advances that have been assessed individually and
to make judgments, estimates and assumptions that affect the found to be not impaired and all individually insignificant loans
application of accounting policies and the reported amounts of and advances are then assessed collectively, in groups of assets
assets, liabilities, income and expenses. Actual results may differ with similar risk characteristics, to determine whether provision
from these estimates. should be made due to incurred loss events for which there is
objective evidence, but the effects of which are not yet evident.
Estimates and underlying assumptions are reviewed on an The collective assessment takes in to account data from the loan
ongoing basis. Revisions to accounting estimates are recognized portfolio such as levels of arrears, credit quality, portfolio size
in the period in which the estimate is revised and in any future etc. and judgments based on current economic conditions.
periods affected.
2.4.4 Impairment of Financial Sssets at Fair Value
The most significant areas of estimation, uncertainty and critical through OCI
judgments in applying accounting policies that have most The Bank reviews its debt securities classified as financial
significant effect in the Financial Statements are as follows: assets at fair value through OCI, at each reporting date to assess
whether they are impaired. Objective evidence that a debt
2.4.1 Going Concern security that has been classified as financial assets at fair value
The Directors have made an assessment of the Bank’s ability through OCI is impaired includes among other things significant
to continue as a going concern and are satisfied that it has the financial difficulty of the issuer, a breach of contract such as a
resources to continue in business for the foreseeable future. default or delinquency in interest or principal payments etc. The
Furthermore, the Board is not aware of any material uncertainties Bank also records impairment charges on equity investments
that may cast significant doubt upon Bank’s ability to continue classified as financial assets at fair value through OCI where
as a going concern and they do not intend either to liquidate or there is significant or prolonged decline in fair value below their
to cease operations of it. Therefore, the Financial Statements cost. The determination of what is ‘significant’ or ‘prolonged’
continue to be prepared on the going concern basis. requires judgment.

ANNUAL REPORT 2022-23 175

2.4.5 Taxation 2.4.10 Classification of Investment Properties
The Bank is subject to income tax and judgment is required Management requires using its judgment to determine whether
to determine the total provision for current, deferred and a property qualifies as an investment property. The Bank has
other taxes due to the uncertainties that exist with respect developed criteria so it can exercise its judgment consistently.
to the interpretation of the applicable tax laws, at the time of A property that is held to earn rentals or for capital appreciation
preparation of these Financial Statements. or both and which generates cash flows largely independently
of the other assets held by the Bank is accounted for as
Deferred tax assets are recognized in respect of tax losses to investment properties. On the other hand, a property that is
the extent that it is probable that future taxable profit will be used for operations or in the process of providing services or
available against which the losses can be utilized. Judgment is for administrative purposes and which do not directly generate
required to determine the amount of deferred tax assets that can cash flows as a standalone assets are accounted for as property,
be recognized, based upon the likely timing and level of future plant and equipment. The Bank assesses on an annual basis
taxable profits, together with future tax planning strategies. the accounting classification of its properties taking into
consideration the current use of such properties.
2.4.6 Defined Benefit Plans
The cost of the defined benefit obligations and the present value 2.5. CHANGES IN ACCOUNTING POLICIES
of their obligations are determined using actuarial valuations. There are no changes in accounting policies and methods of
computation since the publication of annual financial statements
The actuarial valuation involves making assumptions about for the year ended on July 16, 2023, unless otherwise indicated.
discount rates, future salary increments, mortality rates and
possible future pension increments if any. Due to the long term 2.6. NEW STANDARDS IN ISSUE BUT NOT YET
nature of these plans, such estimates are subject to uncertainty. EFFECTIVE
All assumptions are reviewed at each reporting date. There have been amendment to the Standards issued by IASB and
applicability of the new Standards have been notified for IFRS.
In determining the appropriate discount rate, management But, the amendments and new standards become applicable
considers the interest rates of Nepal government bonds with only when ASB-Nepal pronounces them. The new Standards
maturities corresponding to the expected duration of the issued but not yet effective up to the date of issuance of the
defined benefit obligation. The mortality rate is based on publicly financial statements are set out below. The Bank will adopt these
available mortality tables. Future salary increment and pension standards when they become effective.
increment are based on expected future salary increment rates
of the Bank. a) IFRS 9- Financial Instruments
IFRS 9 recommends the assessment of impairment based on
2.4.7 Fair Value of Property, Plant and Equipment more timely recognition of expected credit losses and entities
The freehold land and buildings of the bank are presented at cost. are required to account for expected credit losses from the initial
Since the property, plant and equipment are not reflected at fair recognition of financial instruments and it lowers the threshold
value, no revaluation has been carried at the reporting date. for recognition of full life time expected losses by aligning
financial accounting treatment with risk management activities.
2.4.8 Useful Life-time of the Property, Plant and
Equipment IFRS 9 has become effective from 1 January 2018. However, in
The Bank is following the cost model for recognition of Property, NFRS-09, impairment calculation model similar to NAS-38 has
Plant and Equipment. The Bank reviews the residual values, been retained via carve-outs. If NFRS-09 is revised to replace
useful lives and methods of depreciation of property, plant and existing incurred loss model with expected credit loss model,
equipment at each reporting date. Judgment of the management it will have an effect on impairment calculation of the Bank’s
is exercised in the estimation of these values, rates, methods and financial assets.
hence they are subject to uncertainty.
b) IFRS 15- Revenue from contracts with customers
2.4.9 Commitments and Contingencies IFRS 15 replaces IAS 18 Revenue and IAS 11 Construction
All discernible risks are accounted for in determining the Contracts. Financial instruments, leases and insurance contracts
amount of all known liabilities. Contingent liabilities are possible are out of scope and so this Standard is not expected to have a
obligations whose existence will be confirmed only by uncertain significant impact on the Bank.
future events or present obligations where the transfer of
economic benefit is not probable or cannot be reliably measured. 2.7. NEW STANDARDS AND INTERPRETATION NOT
Contingent liabilities are not recognized in the Statement of ADOPTED
Financial Position but are disclosed unless they are remote. The financial statements of the Bank have been prepared in
accordance with Nepal Financial Reporting Standards (NFRS)
to the extent applicable and as issued by Accounting Standards
Board-Nepal.

176 SIDDHARTHA BANK LIMITED

2.8. DISCOUNTING existing relationships. Such amounts are generally recognized
When the realization of assets and settlement of obligation in profit or loss. Transactions costs, other than those associated
is for more than one year, the Bank considers the discounting with the issue of debt or equity securities, that the Bank incurs
of such assets and liabilities where the impact is material. in connection with a business combination are expensed as
Various internal and external factors have been considered for incurred.
determining the discount rate to be applied to the cash flows of
company. b. Non-Controlling Interest (NCI)
The group presents non-controlling interests in its consolidated
The Bank has a policy to treat share/debenture issue expenses statement of financial position within equity, separately from the
up to 1% of share/debentures issue price as immaterial thus the equity of the owners of the parent. The group attributes the profit
same has not been considered in computation of fair value of or loss and each component of other comprehensive income to
share/debenture. the owners of the parent and to the non-controlling interests. The
proportion allocated to the Siddhartha Bank and non-controlling
Discount rate for the valuation of employee benefits viz. gratuity interests are determined on the basis of present ownership
and leave encashment is based on Yield to Maturity (YTM) interests.
available on government bonds having similar term to decrement-
adjusted estimated term of liabilities. The group also attributes total comprehensive income to the
owners of the Bank and to the non-controlling interests even
3. SIGNIFICANT ACCOUNTING POLICIES if this results in the non-controlling interests having a deficit
balance.
The accounting policies set out below have been applied
consistently to all periods presented in these Financial c. Subsidiaries
Statements, unless otherwise indicated. Subsidiaries are entities that are controlled by the Bank. The
Bank is presumed to control an investee when it is exposed or has
3.1 BASIS OF MEASUREMENT rights to variable returns from its involvement with the investee
The Financial Statements of the Bank have been prepared on the and has the ability to affect those returns through its power over
historical cost basis, except for the following material items in the investee. At each reporting date the Bank reassesses whether
the Statement of Financial Position: it controls an investee if facts and circumstances indicate that
there are changes to one or more elements of control mentioned
n Financial assets at fair value above.
n Liabilities for defined benefit obligations are recognized at
the present value of the defined benefit obligation less the fair The Financial Statements of Subsidiaries are fully consolidated
value of the plan assets. from the date on which control is transferred to the Bank and
n Financial assets and financial liabilities held at amortized cost continue to be consolidated until the date when such control
are measured using a rate that is a close approximation of ceases. The Financial Statements of the Bank’s Subsidiaries
effective interest rate. are prepared for the same reporting year as per the Bank, using
consistent accounting policies.
3.2 BASIS OF CONSOLIDATION
The acquired identifiable assets, liabilities are measured at their
a. Business Combinations and Goodwill cost at the date of acquisition. After the initial measurement, the
Business combinations are accounted for using the acquisition Bank continues to recognize the investments in subsidiaries at
method as per the requirements of Nepal Financial Reporting cost.
Standard - NFRS 03 (Business Combinations). The Bank measures
goodwill as the fair value of the consideration transferred The subsidiary of the Bank viz. Siddhartha Capital Limited has
including the recognized amount of any non-controlling interest been incorporated in Nepal.
in the acquiree, less the net recognized amount (generally fair
value) of the identifiable assets acquired and liabilities assumed, d. Loss of Control
all measured as of the acquisition date. When the excess is When the Bank loses control over a Subsidiary, it derecognizes
negative, a bargain purchase gain is immediately recognized in the assets and liabilities of the former subsidiary from the
the profit or loss. consolidated statement of financial position. The Bank
recognizes any investment retained in the former subsidiary at
The Bank elects on a transaction-by transaction basis whether its fair value when control is lost and subsequently accounts for
to measure non-controlling interest at its fair value, or at its it and for any amounts owed by or to the former subsidiary in
proportionate share of the recognized amount of the identifiable accordance with relevant NFRSs. That fair value shall be regarded
net assets, at the acquisition date. The consideration transferred as the fair value on initial recognition of a financial asset in
does not include amounts related to the settlement of pre- accordance with relevant NFRS or, when appropriate, the cost

ANNUAL REPORT 2022-23 177

on initial recognition of an investment in an associate or joint transaction costs that are directly attributable to acquisition or
venture. The Bank recognizes the gain or loss associated with the issue of such financial instruments except in the case of such
loss of control attributable to the former controlling interest. financial assets and liabilities at fair value through profit or loss,
as per NFRS-9. Transaction costs in relation to financial assets
e. Special Purpose Entity (SPE) and financial liabilities at fair value through profit or loss are dealt
An entity may be created to accomplish a narrow and well-defined with the Statement of Profit or Loss.
objective (e.g. to effect a lease, research and development
activities or a securitization of financial assets). Such a special CLASSIFICATION AND SUBSEQUENT MEASUREMENT
purpose entity (‘SPE’) may take the form of a corporation, trust, OF FINANCIAL INSTRUMENTS
partnership or unincorporated entity. SPEs often are created with
legal arrangements that impose strict and sometimes permanent Classification and Subsequent Measurement of
limits on the decision-making powers of their governing board, Financial Assets
trustee or management over the operations of the SPE. Examples At the inception, a financial asset is classified into one of the
of SPEs include entities set up to effect a lease, a securitization following:
of financial assets, or R&D activities. Nepal Financial Reporting
Standard 10 - Consolidated Financial Statement is applicable in (a) Financial assets at fair value through profit or loss
relation to consolidation of special purpose entity. i. Financial assets held for trading
ii. Financial assets designated at fair value through
The Bank does not have any special purpose entity as of July 16, profit or loss
2023.
(b) Financial assets at amortized cost
f. Transaction elimination on consolidation (c) Financial assets at fair value through OCI
In consolidating a subsidiary, the group eliminates full intra-
group assets and liabilities, equity, income, expenses and cash The subsequent measurement of financial assets depends on
flows relating to transactions between the subsidiary and the their classification.
bank (profits or losses resulting from intra-group transactions
that are recognized in assets, such as inventory and fixed assets, (a) Financial Assets at Fair Value through Profit or Loss
are eliminated in full).
A financial asset is classified as fair value through profit or loss
3.3 CASH AND CASH EQUIVALENTS if it is held for trading or is designated at fair value through profit
Cash and Cash Equivalents include cash in hand, balances with or loss.
banks and money at call and at short notice. These are subject to
insignificant risk of changes in their fair value and are used by the (a) (i) Financial Assets Held for Trading
Bank in the management of short term commitments. Financial assets are classified as held for trading if they are
acquired principally for the purpose of selling or repurchasing
Details of the Cash and Cash Equivalents are given in Note 4.1 to in the near term or holds as a part of a portfolio that is managed
the Financial Statements. together for short-term profit or position taking. This category
also includes derivative financial instruments entered into by
3.4 FINANCIAL ASSETS AND FINANCIAL LIABILITIES Bank that are not designated as hedging instruments in hedge
relationships.
Initial Recognition
Financial assets held for trading are recorded in the Statement
a. Date of Recognition of Financial Position at fair value. Changes in fair value are
All financial assets and liabilities are initially recognized on the recognized in ‘Net trading income’. Dividend income is recorded
trade date, i.e. the date on which the Bank becomes a party to the in ‘Net trading income’ when the dividend is realized.
contractual provisions of the instrument. This includes ‘regular
way trades’. Regular way trade means purchases or sales of Bank evaluates its held for trading asset portfolio, other than
financial assets that required delivery of assets within the time derivatives, to determine whether the intention to sell them in
frame generally established by regulation or convention in the the near future is still appropriate. When Bank is unable to trade
market place. these financial assets due to inactive markets and management’s
intention to sell them in the foreseeable future significantly
b. Recognition and Initial Measurement of Financial changes, the Bank may elect to reclassify these financial assets.
Instruments Financial assets held for trading include instruments such as
The classification of financial instruments at the initial government securities and equity instruments that have been
recognition depends on their purpose and characteristics and acquired principally for the purpose of selling or repurchasing in
the management’s intention in acquiring them. All financial the near term.
instruments are measured initially at their fair value plus

178 SIDDHARTHA BANK LIMITED

(a) (ii) Financial Assets Designated at Fair Value at amortized cost using a rate that closely approximates effective
through Profit or Loss interest rate, less allowance for impairment. Within this category,
Bank designates financial assets at fair value through profit or loans and advances to the customers have been recognized at
loss in the following circumstances: amortized cost using the method that very closely approximates
effective interest rate method. The amortization is included in
n Such designation eliminates or significantly reduces ‘Interest Income’ in the Statement of Profit or Loss. The losses
measurement or recognition inconsistency that would arising from impairment are recognized in ‘Impairment charge /
otherwise arise from measuring the assets. reversal for loans and other losses’ in the Statement of Profit or
n The assets are part of a group of Financial assets, financial Loss.
liabilities or both, which are managed and their performance
evaluated on a fair value basis, in accordance with a (c) Financial assets at fair value through OCI
documented risk management or investment strategy. Financial assets at fair value through OCI include equity and debt
n The assets contain one or more embedded derivatives that securities. Equity Investments classified as ‘Financial assets at
significantly modify the cash flows that would otherwise have fair value through OCI’ are those which are neither classified as
been required under the contract. ‘Held for Trading’ nor ‘Designated at fair value through profit or
loss’. Debt securities in this category are intended to be held for
Financial assets designated at fair value through profit or loss an indefinite period of time and may be sold in response to need
are recorded in the Statement of Financial Position at fair value. for liquidity or in response to changes in the market conditions.
Changes in fair value are recorded in ‘Net gain or loss on financial
instruments designated at fair value through profit or losses’ in After initial measurement, financial assets at fair value through
the Statement of Profit or Loss. Interest earned is accrued under OCI are subsequently measured at fair value. Unrealized gains
‘Interest income’, using the effective interest rate method, while and losses are recognized directly in equity through ‘Other
dividend income is recorded under ‘Net trading income’ when the comprehensive income / expense’ in the ‘Fair value reserve’.
right to receive the payment has been established. Where Bank holds more than one investment in the same
security, they are deemed to be disposed of on a first-in-first-out
The Bank has not designated any financial assets upon initial basis. Interest earned whilst holding financial assets at fair value
recognition as designated at fair value through profit or loss. through OCI is reported as ‘Interest income’ using the effective
interest rate. Dividend earned whilst holding financial assets at
(b) Financial Assets at amortized cost fair value through OCI are recognized in the Statement of Profit
Financial assets at amortized cost are non-derivative financial or Loss as ‘other operating income’ when the right to receive
assets with fixed or determinable payments and fixed maturities the payment has been established. The losses arising from
which the Bank has the intention and ability to hold to maturity. impairment of such investments are recognized in the Statement
After the initial measurement, financial assets at amortized cost of Profit or Loss under ‘Impairment charge for loans and other
are subsequently measured at amortized cost using the effective losses’ and removed from the ‘Fair value reserve’.
interest rate, less impairment. The amortization is included in
‘Interest income’ in the Statement of Profit or Loss. The losses Financial assets at fair value through OCI that are monetary
arising from impairment of such investments are recognized in securities denominated in a foreign currency – translation
the Statement of Profit or Loss. differences related to changes in the amortized cost of
the security and other changes in the carrying amount are
Loans and Advances from Customers recognized in other comprehensive income.
Loans and receivables include non-derivative financial assets
with fixed or determinable payments that are not quoted in an In the normal course of business, the fair value of a financial
active market, other than: instrument on initial recognition is the transaction price (that is,
the fair value of the consideration given or received). In certain
n Those that the Bank intends to sell immediately or in the circumstances, however, the fair value will be based on other
near term and those that the Bank, upon initial recognition, observable current market transactions in the same instrument,
designates as fair value through profit or loss. without modification or repackaging, or on a valuation technique
n Those that the Bank, upon initial recognition, designates as whose variables include only data from observable markets, such
financial assets at fair value through OCI as interest rate yield, option volatilities and currency rates. When
n Those for which the Bank may not recover substantially all of such evidence exists, the Bank recognizes a trading gain or loss
its initial investment through contractual cash flows, other on inception of the financial instrument, being the difference
than because of credit deterioration. between the transaction price and fair value.

Loans and Advances mainly represent loans and advances to When unobservable market data have a significant impact on the
customers, Banking and Financial Institutions. After initial valuation of financial instruments, the entire initial difference in
measurement, loans and receivables are subsequently measured fair value from the transaction price as indicated by the valuation
model is not recognized immediately in the income statement.

ANNUAL REPORT 2022-23 179

Instead, it is recognized over the life of the transaction on an (b) Financial Liabilities At Amortized Cost
appropriate basis, when the inputs become observable, the Financial instruments issued by Bank that are not classified
transaction matures or is closed out, or when the Bank enters as fair value through profit or loss are classified as financial
into an offsetting transaction. liabilities at amortized cost, where the substance of the
contractual arrangement results in Bank having an obligation
Classification and Subsequent Measurement of either to deliver cash or another financial asset to another Bank,
Financial Liabilities or to exchange financial assets or financial liabilities with another
Bank under conditions that are potentially unfavorable to the
At the inception, Bank determines the classification of its Bank or settling the obligation by delivering variable number of
financial liabilities. Accordingly financial liabilities are classified Bank’s own equity instruments.
as:
The share/debenture issue expenses up to 1% of total amount of
(a) Financial liabilities at fair value through profit or loss share/debenture being issued shall be expensed off in the year
of issue of such share/debenture. After initial recognition, such
i. Financial liabilities held for trading financial liabilities are subsequently measured at amortized cost
ii. Financial liabilities designated at fair value through using the effective interest rate method. Within this category,
profit or loss deposits and debt instruments with fixed maturity period have
been recognized at amortized cost using the method that
(b) Financial liabilities at amortized cost very closely approximates effective interest rate method. The
amortization is included in ‘Interest Expenses’ in the Statement of
(a) Financial Liabilities at Fair Value through Profit or Loss. Gains and losses are recognized in the Statement
Profit or Loss of Profit or Loss when the liabilities are derecognized.
Financial Liabilities at fair value through profit or loss include
financial liabilities held for trading and financial liabilities Reclassification of Financial Instruments
designated upon initial recognition as fair value through profit
or loss. Subsequent to initial recognition, financial liabilities at 3.4.3. (a) Reclassification of Financial Instruments ‘At
fair value through profit or loss are measured at fair value and fair value through profit or loss’
changes therein are recognized in profit or loss. Bank does not reclassify derivative financial instruments out of
the fair value through profit or loss category when it is held or
i. Financial Liabilities Held for Trading issued.
Financial liabilities are classified as held for trading if they are
acquired principally for the purpose of selling or repurchasing Non-derivative financial instruments designated at fair value
in the near term or holds as a part of a portfolio that is managed through profit or loss upon initial recognition are not reclassified
together for short-term profit or position taking. This category subsequently out of fair value through profit or loss category.
includes derivative financial instrument entered into by Bank
that are not designated as hedging instruments in hedge Bank may, in rare circumstances reclassify financial
relationships. instruments out of fair value through profit or loss category if
such instruments are no longer held for the purpose of selling
ii. Financial Liabilities Designated at Fair Value or repurchasing in the near term notwithstanding that such
through Profit or Loss financial instruments may have been acquired principally for the
Bank designates financial liabilities at fair value through profit or purpose of selling or repurchasing in the near term. Financial
loss at following circumstances: assets classified as fair value through profit or loss at the initial
recognition which would have also met the definition of ‘Loans
n Such designation eliminates or significantly reduces and Receivables’ as at that date is reclassified out of the fair value
measurement or recognition inconsistency that would through profit or loss category only if Bank has the intention
otherwise arise from measuring the liabilities. and ability to hold such asset for the foreseeable future or until
n The liabilities are part of a group of Financial assets, financial maturity.
liabilities or both, which are managed and their performance
evaluated on a fair value basis, in accordance with a The fair value of financial instruments at the date of
documented risk management or investment strategy reclassification is treated as the new cost or amortized cost
n The liability contains one or more embedded derivatives that of the financial instrument after reclassification. Any gain or
significantly modify the cash flows that would otherwise have loss already recognized in respect of the reclassified financial
been required under the contract. instrument until the date of reclassification is not reversed to the
Statement of Profit or Loss.

180 SIDDHARTHA BANK LIMITED

If a financial asset is reclassified, and if Bank subsequently 3.4.3. (c) Reclassification of Financial assets at
increases its estimates of the future cash receipts as a result amortized cost
of increased recoverability of those cash receipts, the effect of As a result of a change in intention or ability, if it is no longer
that increase is recognized as an adjustment to the effective appropriate to classify an investment as financial assets at
interest rate from the date of the change in estimate rather than amortized cost, Bank may reclassify such financial assets as
an adjustment to the carrying amount of the asset at the date of financial assets at fair value through OCI and re-measure them
change in estimate. at fair value. Any difference between the carrying value of the
financial asset before reclassification and fair value is recognized
3.4.3. (b) Reclassification of ‘Financial assets at fair in equity through other comprehensive income.
value through OCI’
Bank may reclassify financial assets out of financial assets at De-recognition of Financial Assets and Liabilities
fair value through OCI category as a result of change in intention
or ability or in rare circumstances that a reliable measure of fair 3.4.4. (a) De-recognition of Financial Assets
value is no longer available. Bank derecognizes a financial asset (or where applicable a part of
financial asset or part of a group of similar financial assets) when:
A financial asset classified as financial assets at fair value
through OCI that would have met the definition of loans and n The rights to receive cash flows from the asset have expired;
receivables at the initial recognition may be reclassified out of or
financial assets at fair value through OCI category to the loans n Bank has transferred its rights to receive cash flows from the
and receivables category if Bank has the intention and ability to asset or
hold such asset for the foreseeable future or until maturity. n Bank has assumed an obligation to pay the received cash
flows in full without material delay to a third party under a
The fair value of financial instruments at the date of ‘pass-through’ arrangement and either Bank has transferred
reclassification is treated as the new cost or amortized cost substantially all the risks and rewards of the asset or it has
of the financial instrument after reclassification. Difference neither transferred nor retained substantially all the risks and
between the new amortized cost and the maturity value is rewards of the asset, but has transferred control of the asset.
amortized over the remaining life of the asset using the effective
interest rate. Any gain or loss already recognized in Other On de-recognition of a financial asset, the difference between
Comprehensive Income in respect of the reclassified financial the carrying amount of the asset (or the carrying amount
instrument is accounted as follows: allocated to the portion of the asset derecognized) and the sum
of the consideration received (including any new asset obtained
i) Financial assets with fixed maturity less any new liability assumed) and any cumulative gain or loss
Gain or loss recognized up to the date of reclassification that had been recognized in other comprehensive income is
is amortized to profit or loss over the remaining life of the recognized in profit or loss.
investment using the effective interest rate. If the financial
asset is subsequently impaired, any previous gain or loss When Bank has transferred its rights to receive cash flows from
that has been recognized in other comprehensive income is an asset or has entered into a pass-through arrangement and
reclassified from equity to profit or loss. has neither transferred nor retained substantially all of the risks
and rewards of the asset nor transferred control of the asset,
ii) Financial assets without fixed maturity the asset is recognized to the extent of the Bank’s continuing
Gain or loss recognized up to the date of reclassification involvement in the asset. In that case, Bank also recognizes an
is recognized in profit or loss only when the financial asset associated liability. The transferred asset and the associated
is sold or otherwise disposed of. If the financial asset is liability are measured on a basis that reflects the rights and
subsequently impaired, any previous gain or loss that obligations that Bank has retained.
has been recognized in other comprehensive income is
reclassified from equity to profit or loss. When Bank’s continuing involvement that takes the form of
guaranteeing the transferred asset, the extent of the continuing
If a financial asset is reclassified, and if Bank subsequently involvement is measured at the lower of the original carrying
increases its estimates of future cash receipts as a result of amount of the asset and the maximum amount of consideration
increased recoverability of those cash receipts, the effect of received by Bank that Bank could be required to repay.
that increase is recognized as an adjustment to the effective
interest rate from the date of the change in estimate rather than 3.4.4. (b) De-recognition of Financial Liabilities
an adjustment to the carrying amount of the asset at the date of A financial liability is derecognized when the obligation under the
change in estimate. liability is discharged or cancelled 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

ANNUAL REPORT 2022-23 181

are substantially modified, such an exchange or modification Fair Value Measurement
is treated as de-recognition of the original liability and the ‘Fair value’ is the price that would be received to sell an asset or
recognition of a new liability. paid to transfer a liability (exit price) in an orderly transaction
between market participants at the measurement date in the
The difference between the carrying value of the original financial principal or, in its absence, the most advantageous market to
liability and the consideration paid is recognized in profit or loss. which the Bank has access at that date. The fair value of liability
reflects its non-performance risk. When available, the Bank
3.4.4 (c) Repurchase and Reverse Repurchase measures the fair value of an instrument using the quoted price
Agreements in an active market for that instrument (Level 01 valuation). A
Securities sold under agreement to repurchase at a specified market is regarded as active if transactions for the asset or
future date are not de-recognized from the Statement of liability take place with sufficient frequency and volume to
Financial Position as the Bank retains substantially all of the risks provide pricing information on an ongoing basis on an arm’s
and rewards of ownership. The corresponding cash received is length basis.
recognized in the Statement of Financial Position as a liability
with a corresponding obligation to return it, including accrued If there is no quoted price in an active market, then the Bank
interest under ‘Securities sold under repurchase agreements’, uses valuation techniques that maximize the use of relevant
reflecting the transaction’s economic substance to the Bank. observable inputs and minimize the use of unobservable inputs.
The difference between the sale and repurchase prices is treated The chosen valuation technique incorporates all of the factors
as interest expense and is accrued over the life of the agreement that market participants would take into account in pricing a
using the effective interest rate. When the bank has the right transaction. Valuation techniques include using recent arm’s
to sell or re-pledge the securities, the Bank reclassifies those length transactions between knowledgeable, willing parties (if
securities in its Statement of Financial Position as ‘Financial available), reference to the current fair value of other instruments
assets held for trading’ pledged as collateral or ‘Financial assets that are substantially the same, discounted cash flow analyses
at fair value through OCI’ pledged as collateral, as appropriate. and option pricing models. Inputs to valuation techniques
reasonably represent market expectations and measures of the
Conversely, securities purchased under agreements to resell risk-return factors inherent in the financial instrument. The Bank
at future date are not recognized in the Statement of Financial calibrates valuation techniques and tests them for validity using
Position. The consideration paid, including accrued interest, is prices from observable current market transactions in the same
recorded in the Statement of Financial Position, under “Reverse instrument or based on other available observable market data.
repurchase agreements’ reflecting the transaction’s economic Assets and long positions are measured at a bid price; liabilities
substance to the Bank. The difference between the purchase and short positions are measured at an ask price. Where the Bank
and resale prices is recorded as ‘Interest income’ and is accrued has positions with offsetting risks, mid-market prices are used
over the life of the agreement using the effective interest rate. If to measure the offsetting risk positions and a bid or asking price
securities purchased under agreement to resell are subsequently adjustment is applied only to net open position as appropriate.
sold to third parties, the obligation to return the securities is
recorded as a short sale within ‘Financial liabilities held for The best evidence of the fair value of a financial instrument
trading’ and measured at fair value with any gains or losses at initial recognition is normally the transaction price - i.e. the
included in ‘Net trading income’. fair value of the consideration given or received. If the Bank
determines that the fair value at initial recognition differs from
Offsetting of Financial Instruments the transaction price and the fair value is evidenced neither by a
Financial assets and financial liabilities are offset and the net quoted price in an active market for an identical asset or liability
amount presented in the Statement of Financial Position when (Level 01 valuation)nor based on a valuation technique that uses
and only when Bank has a legal right to set off the recognized only data from observable markets (Level 02 valuation), then the
amounts and it intends either to settle on a net basis or to realize financial instrument is initially measured at fair value, adjusted to
the asset and settle the liability simultaneously. Income and defer the difference between the fair value at initial recognition
expenses are presented on a net basis only when permitted under and the transaction price. Subsequently, that difference is
NFRSs or for gains and losses arising from a group of similar recognized in profit or loss on an appropriate basis over the life
transaction such as in trading activity. of the instrument but not later than when the valuation is wholly
supported by observable market data or the transaction is closed
Amortized Cost Measurement out.
The Amortized cost of a financial asset or liability is the amount
at which the financial asset or liability is measured at initial Fair values reflect the credit risk of the instrument and include
recognition, minus principal repayments, plus or minus the adjustments to take account of the credit risk of the Bank entity
cumulative amortization using the effective interest method of and the counterparty where appropriate. Fair value estimates
any difference between the initial amount recognized and the obtained from models are adjusted for any other factors, such as
maturity amount, minus any reduction for impairment. liquidity risk or model uncertainties; to the extent that the Bank
believes a third-party market participant would take them into
account in pricing a transaction.
182 SIDDHARTHA BANK LIMITED
The fair value of a demand deposit is not less than the amount losses that have not yet been incurred). The carrying amount of
payable on demand, discounted from the first date on which the the asset is reduced through the use of an allowance account and
amount could be required to be paid. the amount of the loss is recognized in the income statement.
Interest income continues to be accrued on the reduced
A fair value measurement of a non-financial asset takes into carrying amount and is accrued using the rate of interest used to
account a market participant’s ability to generate economic discount the future cash flows for the purpose of measuring the
benefits by using the asset in its highest best use or by selling impairment loss.
it to another market participant that would use the asset in its
highest and best use. If a loan has a variable interest rate, the discount rate for
measuring any impairment loss is the current rate closely
The Bank recognizes transfers between levels of the fair value approximates effective interest rate. If the Bank has reclassified
hierarchy as of the end of the reporting period during which the trading assets to loans and advances, the discount rate for
change has occurred. measuring any impairment loss is the new closely approximates
effective interest rate determined at the reclassification date.
Impairment of Financial Assets The calculation of the present value of the estimated future cash
Bank assesses at each reporting date, whether there is any flows of a collateralized financial asset reflects the cash flows
objective evidence that a financial asset or group of financial that may result from foreclosure less costs for obtaining and
assets not carried at fair value through profit or loss is impaired. selling the collateral, whether or not foreclosure is probable.
A financial asset or group of financial assets is deemed to be
impaired if and only if there is objective evidence of impairment 3.4.5. (a) (i) Individually Assessed Financial Assets
as a result of one or more events, that have occurred after the The criteria used to determine whether there is objective
initial recognition of the asset (an ‘incurred loss event’) and that evidence of impairment include and not limited to:
loss event (or events) has an impact on the estimated future cash
flows of the financial asset or group of financial assets that can n Known Cash Flow difficulties experienced by the borrowers:
be reliably estimated. n Past due contractual payments of either principal or interest;
n Breach of loan covenants or conditions;
Evidence of impairment may include: indications that the n The probability that the borrower will enter bankruptcy or
borrower or a group of borrowers is experiencing significant other financial reorganization; and
financial difficulty; the probability that they will enter bankruptcy n A significant downgrading in credit rating by an external credit
or other financial reorganization; default or delinquency in rating agency.
interest or principal payments; and where observable data
indicates that there is a measurable decrease in the estimated If there is objective evidence that an impairment loss on
future cash flows, such as changes in arrears or economic financial assets measured at amortized cost has been incurred,
conditions that correlate with defaults. the amount of the loss is measured by discounting the
expected future cash flows of a financial asset at its original
3.4.5. (a) Impairment of Financial Assets carried at effective interest rate and comparing the resultant present
Amortized Cost value with the financial asset’s current carrying amount. The
For financial assets carried at amortized cost, such as amounts impairment allowances on individually significant accounts
due from banks, held to maturity investments etc., Bank first are reviewed more regularly when circumstances require. This
assesses individually whether objective evidence of impairment normally encompasses re-assessment of the enforceability
exists for financial assets that are individually significant of any collateral held and the timing and amount of actual
or collectively for financial assets that are not individually and anticipated receipts. Individually assessed impairment
significant. In the event Bank determines that no objective allowances are only released when there is reasonable and
evidence of impairment exists for an individually assessed objective evidence of reduction in the established loss estimate.
financial asset, it includes the asset in a group of financial Interest on impaired assets continues to be recognized through
assets with similar credit risk characteristics such as collateral the unwinding of the discount.
type, past due status and other relevant factors and collectively
assesses them for impairment. However, assets that are Loans together with the associated allowance are written off
individually assessed for impairment and for which an impairment when there is no realistic prospect of future recovery and all
loss is or continues to be recognized are not included in a collateral has been realized or has been transferred to the
collective assessment of impairment. Bank. If, in a subsequent year, the amount of the estimated
impairment loss increases or decreases because of an event
If there is an objective evidence that an impairment loss has been occurring after the impairment was recognized, the previously
incurred, the amount of the loss is measured as the difference recognized impairment loss is increased or reduced by adjusting
between the assets’ carrying amount and the present value of the allowance account. If a future write off is later recovered,
estimated future cash flows (excluding future expected credit the recovery is credited to the impairment charges for loans and
other losses.

ANNUAL REPORT 2022-23 183

When impairment losses are determined for those financial which point they are removed from the group.
assets where objective evidence of impairment exists, the
following common factors are considered: Bank uses the following method to calculate historical loss
experience on collective basis:
n Bank’s aggregate exposure to the customer;
n The viability of the customer’s business model and their After grouping of loans on the basis of homogeneous risks, the
capacity to trade successfully out of financial difficulties and Bank uses net flow rate method. Under this methodology the
generate sufficient cash flows to service debt obligations; movement in the outstanding balance of customers into default
n The amount and timing of expected receipts and recoveries; categories over the periods is used to estimate the amount of
n The extent of other creditors ‘commitments ranking ahead of, financial assets that will eventually be irrecoverable, as a result of
or pari-pasu with the Bank and the likelihood of other creditors the events occurring before the reporting date which the Bank is
continuing to support the company; not able to identify on an individual loan basis.
n The realizable value of security and likelihood of successful
repossession; Under this methodology, loans are grouped into ranges according
to the number of days in arrears and statistical analysis is used
to estimate the likelihood that loans in each range will progress
3.4.5. (a) (ii) Collectively Assessed Financial Assets through the various stages of delinquency and ultimately prove
Impairment is assessed on a collective basis in two irrecoverable.
circumstances:
Current economic conditions and portfolio risk factors are also
n To cover losses which have been incurred but have not yet evaluated when calculating the appropriate level of allowance
been identified on loans subject to individual assessment; and required to cover inherent loss. These additional macro and
n For homogeneous groups of loans that are not considered portfolio risk factors may include:
individually significant.
n Recent loan portfolio growth and product mix
Incurred but not yet identified impairment n Unemployment rates
Individually assessed financial assets for which no evidence of n Gross Domestic Production (GDP) Growth

loss has been specifically identified on an individual basis are n Inflation

grouped together according to their credit risk characteristics n Interest rates

for the purpose of calculating an estimated collective loss. This n Changes in government laws and regulations

reflects impairment losses that the bank has incurred as a result n Property prices

of events occurring before the reporting date, which the Bank n Payment status

is not able to identify on an individual loan basis and that can be But, the amount of provision to be created against Loans and
reliably estimated. Advances shall be higher of the following two amounts:

These losses will only be individually identified in the future. As i) Impairment calculated as per Impairment Assessment
soon as information becomes available which identifies losses on Methodology as described above or,
individual financial assets within the group, those financial assets ii) Loan Loss Provision calculated as per the provisions of Unified
are removed from the group and assessed on an individual basis Directives issued by Nepal Rastra Bank.
for impairment.
3.4.5. (a) (iii) Reversal of Impairment
The collective impairment allowance is determined after taking If the amount of an impairment loss decreases in a subsequent
into account: period and the decrease can be related objectively to an event
occurring after the impairment was recognized, the excess
n Historical Loss Experience in portfolios of similar credit risk; is written back by reducing the financial asset Impairment
and allowance account accordingly. The write-back is recognized in
n Management’s experienced judgment as to whether current the Statement of Profit or Loss.
economic and credit conditions are such that the actual level
of inherent losses at the reporting date is like to be greater or 3.4.5. (a) (iv) Write-off of Financial Assets Carried At
less than that suggested by historical experience. Amortized Cost
Financial assets (and the related impairment allowance accounts)
Homogeneous groups of Financials Assets are normally written off either partially or in full, when there is
Statistical methods are used to determine impairment losses no realistic prospect of recovery. Where there is no realistic
on a collective basis for homogenous groups of financial assets. prospect of recovery. Where financial assets are secured, this
Losses in these groups of financial assets are recorded on an is generally after receipt of any proceeds from the realization of
individual basis when individual financial assets are written off, at security.

184 SIDDHARTHA BANK LIMITED

3.4.5. (a) (v) Impairment of Rescheduled Loans and impairment loss. If, in a subsequent period, the fair value of a
Advances debt instrument increases and the increase can be objectively
Where possible, the Bank seeks to restructure loans rather than related to a credit event occurring after the impairment loss
to take possession of collateral. This may involve extending was recognized, the impairment loss is reversed through the
the payment arrangements and the agreement of new loan Statement of Profit or Loss.
conditions. Once the terms have been renegotiated, any
impairment is measured using the original EIR as calculated In the case of equity investments classified as financial
before the modification of terms and the loan is no longer assets at fair value through OCI, objective evidence would also
considered past due. Management continually reviews include a ‘significant’ or ‘prolonged’ decline in the fair value
renegotiated loans to ensure that all criteria are met and that of the investment below its cost. Where there is evidence of
future payments are likely to occur. The loans continue to be impairment, the cumulative loss measured as the difference
subject to a criteria are met and that future payments are likely between the acquisition cost and the current fair value, less
to occur. The loans continue to be subject to an individual or any impairment loss on that investment previously recognized
collective impairment assessment, calculated using the loan’s in Statement of Profit or Loss is removed from equity and
original effective interest rate (EIR). recognized in the Statement of Profit or Loss. However, any
subsequent increase in the fair value of an impaired equity
3.4.5. (a) (vi) Collateral Valuation security that is classified as financial assets at fair value through
The Bank seeks to use collateral, where possible, to mitigate OCI is recognized in other comprehensive income.
its risks on financial assets. The collateral comes in various
forms such as cash, securities, letters of credit/guarantees, real Bank writes-off certain financial assets at fair value through OCI
estate, receivables, inventories, other non-financial assets and when they are determined to be uncollectible.
credit enhancements such as netting agreements. The fair value
of collateral is generally assessed, at a minimum, at inception 3.5 TRADING ASSETS
and based on the guidelines issued by the Nepal Rastra Bank. One of the categories of financial assets at fair value through
Non-financial collateral, such as real estate, is valued based on profit or loss is “held for trading” financial assets. All financial
data provided by third parties such as independent valuator and assets acquired or held for the purpose of selling in the short
audited financial statements. term or for which there is a recent pattern of short term profit
taking are trading assets.
3.4.5. (a) (vii) Collateral Legally Repossessed or Where
Properties have Devolved to the Bank 3.6 DERIVATIVES ASSETS AND DERIVATIVE
Legally Repossessed Collateral represents Non-Financial Assets LIABILITIES
acquired by the Bank in settlement of the overdue loans. The A derivative is a financial instrument whose value changes
assets are initially recognized at fair value when acquired. The in response to the change in an underlying variable such as
Bank’s policy is to determine whether a repossessed asset is an interest rate, commodity or security price, or index; that
best used for its internal operations or should be sold. The requires no initial investment, or one that is smaller than would
proceeds are used to reduce or repay the outstanding claim. The be required for a contract with similar response to changes in
immovable property acquired by foreclosure of collateral from market factors; and that is settled at a future date.
defaulting customers, or which has devolved on the Bank as part
settlement of debt, has not been occupied for business use. Forward contracts are the contracts to purchase or sell a specific
quantity of a financial instrument, a commodity, or a foreign
3.4.5. (b) Impairment of Financial assets at fair value currency at a specified price determined at the outset, with
through OCI delivery or settlement at a specified future date. Settlement is at
For financial assets at fair value through OCI, Bank assesses at maturity by actual delivery of the item specified in the contract,
each reporting date whether there is objective evidence that an or by a net cash settlement.
investment is impaired.
All freestanding contacts that are considered derivatives for
In the case of debt instruments, Bank assesses individually accounting purposes are carried at fair value on the statement of
whether there is objective evidence of impairment based on financial position regardless of whether they are held for trading
the same criteria as financial assets carried at amortized cost. or non-trading purposes. Changes in fair value on derivatives
However, the amount recorded for impairment is the cumulative held for trading are included in net gains/ (losses) from financial
loss measured as the difference between the amortized cost instruments in fair value through profit or loss on financial
and the current fair value, less any impairment loss on that assets/ liabilities at fair value through profit or loss.
investment previously recognized in the Statement of Profit or
Loss. Future interest income is based on the reduced carrying
amount and is accrued using the rate of interest used to
discount the future cash flows for the purpose of measuring the

ANNUAL REPORT 2022-23 185

3.7 PROPERTY, PLANT AND to–day servicing, less accumulated depreciation and accumulated impairment in value. Such
EQUIPMENT cost includes the cost of replacing part of the equipment when that cost is incurred, if the
recognition criteria are met.
Recognition
Property, plant and equipment are Revaluation Model
tangible items that are held for The Bank has not applied the revaluation model to the any class of freehold land and buildings
use in the production or supply of or other assets. Such properties are carried at a previously recognized GAAP Amount.
services, for rental to others or
for administrative purposes and On revaluation of an asset, any increase in the carrying amount is recognized in ‘Other
are expected to be used during comprehensive income’ and accumulated in equity, under revaluation reserve or used to
more than one period. The Bank reverse a previous revaluation decrease relating to the same asset, which was charged to the
applies the requirements of the Statement of Profit or Loss. In this circumstance, the increase is recognized as income to
Nepal Accounting Standard - NAS the extent of previous write down. Any decrease in the carrying amount is recognized as an
16 (Property, Plant and Equipment) expense in the Statement of Profit or Loss or debited to the Other Comprehensive income to
in accounting for these assets. the extent of any credit balance existing in the revaluation reserve in respect of that asset.
Property, plant and equipment
are recognized if it is probable The decrease recognized in other comprehensive income reduces the amount accumulated
that future economic benefits in equity under revaluation reserves. Any balance remaining in the revaluation reserve in
associated with the asset will flow to respect of an asset is transferred directly to retained earnings on retirement or disposal of
the entity and the cost of the asset the asset.
can be measured reliably measured.
Subsequent Cost
Measurement The subsequent cost of replacing a component of an item of property, plant and equipment
An item of property, plant and is recognized in the carrying amount of the item, if it is probable that the future economic
equipment that qualifies for benefits embodied within that part will flow to the Bank and it can be reliably measured. The
recognition as an asset is initially cost of day to day servicing of property, plant and equipment are charged to the Statement of
measured at its cost. Cost includes Profit or Loss as incurred.
expenditure that is directly
attributable to the acquisition Depreciation
of the asset and cost incurred Depreciation is calculated by using the straight line method on cost or valuation of the
subsequently to add to, replace Property & Equipment other than freehold land and leasehold properties. Depreciation on
part of an item of property, plant& leasehold properties is calculated by using the straight line method on cost or valuation of
equipment. The cost of self- the property. The rates of depreciations are given below:
constructed assets includes the
cost of materials and direct labor,
ASSET CATEGORY RATE OF DEPRECIATION PER ANNUM (%)
any other costs directly attributable AS OF JULY 16, 2023 AS OF JULY 16, 2022
to bringing the asset to a working
condition for its intended use Buildings 50 years 50 years
and the costs of dismantling and Vehicles 10 years 10 years
removing the items and restoring Office Equipment 7 years 7 years
the site on which they are located. Furniture & Fixtures-Wooden 10 years 10 years
Purchased software that is integral Furniture & Fixtures-Metal 7 years 7 years
to the functionality of the related Furniture & Fixtures-Plastic 5 years 5 years
equipment is capitalized as part of Battery 3 years 3 years
computer equipment. When parts Computer hardware 7 years 7 years
of an item of property or equipment Leasehold Properties Lease term Lease term
have different useful lives, they are
Sign Board/Mats and Carpets 2 Years 2 Years
accounted for as separate items
(major components) of property,
plant and equipment.
Changes in Estimates
Cost Model The methods of depreciation are reviewed, and adjusted if appropriate, at each financial year
Property and equipment is stated end.
at cost excluding the costs of day–

186 SIDDHARTHA BANK LIMITED

Capital Work in Progress 3.8 GOODWILL AND INTANGIBLE ASSETS
These are expenses of capital nature
directly incurred in the construction Recognition
of buildings, major plant and An intangible asset is an identifiable non-monetary asset without physical substance, held for
machinery and system development, use in the production or supply of goods or services, for rental to others or for administrative
awaiting capitalization. Capital purposes. An intangible asset is recognized if it is probable that the future economic benefits
work-in-progress would be that are attributable to the asset will flow to the entity and the cost of the asset can be
transferred to the relevant asset measured reliably. An intangible asset is initially measured at cost. Expenditure incurred on
when it is available for use, i.e. when an intangible item that was initially recognized as an expense by the Bank in previous annual
it is in the location and condition Financial Statements or interim Financial Statements are not recognized as part of the cost
necessary for it to be capable of of an intangible asset at a later date.
operating in the manner intended
by management. Capital work-in- Computer Software & Licenses
progress is stated at cost less any Cost of purchased licenses and all computer software costs incurred, licensed for use by the
accumulated impairment losses. Bank, which are not integrally related to associated hardware, which can be clearly identified,
reliably measured, and it’s probable that they will lead to future economic benefits, are
Borrowing Costs included in the Statement of Financial Position under the category ‘Intangible assets’ and
Borrowing costs directly attributable carried at cost less accumulated amortization and any accumulated impairment losses.
to the acquisition, construction
or production of an asset that Subsequent Expenditure
necessarily takes a substantial Expenditure incurred on software is capitalized only when it is probable that this expenditure
period of time to get ready for its will enable the asset to generate future economic benefits in excess of its originally assessed
intended use or sale are capitalized standard of performance and this expenditure can be measured and attributed to the asset
as part of the cost of an asset. All reliably. All other expenditure is expensed as incurred.
other borrowing costs are expensed
in the period in which they occur. Goodwill is measured at cost less accumulated impairment losses.
Borrowing costs consist of interest
and other costs that the Bank incurs
Amortization of Intangible Assets
in connection with the borrowing of
Intangible Assets, except for goodwill, are amortized on a straight–line basis in the Statement
funds.
of Profit or Loss from the date when the asset is available for use, over the best of its useful
economic life based on a pattern in which the asset’s economic benefits are consumed by
De-recognition the bank. Amortization methods, useful lives, residual values are reviewed at each financial
The carrying amount of an item of year end and adjusted if appropriate. The Bank assumes that there is no residual value for its
property, plant and equipment is intangible assets.
derecognized on disposal or when
no future economic benefits are ASSET CATEGORY PERIOD OF AMORTIZATION
expected from its use. The gain or AS OF JULY 16, 2023 AS OF JULY 16, 2022
loss arising from de-recognition Software Useful life or 7 years, whichever Useful life or 7 years, whichever
of an item of property, plant and is lower is lower
equipment is included in the
Statement of Profit or Loss when De-recognition of Intangible Assets
the item is derecognized. When The carrying amount of an item of intangible asset is derecognized on disposal or when
replacement costs are recognized no future economic benefits are expected from its use. The gain or loss arising on de
in the carrying amount of an item of recognition of an item of intangible assets is included in the Statement of Profit or Loss when
property, plant and equipment, the the item is derecognized.
remaining carrying amount of the
replaced part is derecognized. Major 3.9 INVESTMENT PROPERTY
inspection costs are capitalized. Investment property is property (land or a building or part of a building or both) held (by the
At each such capitalization, the owner or by the lessee under a finance lease) to earn rentals or for capital appreciation or
remaining carrying amount of the both but not for sale in the ordinary course of business.
previous cost of inspections is
derecognized. Measurement
Investment property is accounted for under Cost Model in the Financial Statements.
Accordingly, after recognition as an asset, the property is carried at its cost, less impairment
losses. If any property is reclassified to investment property due to changes in its use,
fair value of such property at the date of reclassification becomes its cost for subsequent
accounting.

ANNUAL REPORT 2022-23 187

De-recognition temporary differences arising from the initial recognition
Investment properties are derecognized when they are of an asset or liability in a transaction that is not a business
disposed of or permanently withdrawn from use since no future combination, and at the time of transaction, affects neither
economic benefits are expected. Transfers are made to and from the accounting profit nor taxable profit or loss.
investment property only when there is a change in use. When the
use of a property changes such that it is reclassified as Property, n In respect of deductible temporary differences associated
Plant and Equipment, its fair value at the date of reclassification with investments in Subsidiaries, deferred tax assets
becomes its cost for subsequent accounting. are recognized only to the extent that it is probable that
the temporary differences will reverse in the foreseeable
3.10 INCOME TAX future and taxable profit will be available against which the
As per Nepal Accounting Standard- NAS 12 (Income Taxes) tax temporary difference will be utilized.
expense is the aggregate amount included in determination of
profit or loss for the period in respect of current and deferred The carrying amount of deferred tax assets is reviewed at each
taxation. Income Tax expense is recognized in the statement of reporting date and reduced to the extent that it is probable that
Profit or Loss, except to the extent it relates to items recognized sufficient profit will be available to allow the deferred tax asset to
directly in equity or other comprehensive income in which case be utilized. Unrecognized deferred tax assets are reassessed at
it is recognized in equity or in other comprehensive income. The each reporting date and are recognized to the extent that it has
Management periodically evaluates positions taken in tax returns become probable that future taxable profit will allow the deferred
with respect to situations in which applicable tax regulation tax asset to be recovered.
is subject to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be paid to tax Deferred tax assets and liabilities are measured at the tax rates
authorities. that are expected to apply in the year when the asset is realized or
the liability is settled, based on tax rates (and tax laws) that have
Current Tax been enacted or substantively enacted at the reporting date.
Current tax assets and liabilities consist of amounts expected
to be recovered from or paid to Inland Revenue Department Current and deferred tax assets and liabilities are offset only to
in respect of the current year, using the tax rates and tax laws the extent that they relate to income taxes imposed by the same
enacted or substantively enacted on the reporting date and any taxation authority.
adjustment to tax payable in respect of prior years.
3.11 DEPOSITS, DEBT SECURITIES ISSUED AND
Deferred Tax SUBORDINATED LIABILITIES
Deferred tax is provided on temporary differences at the Deposits, debt securities issued and subordinated liabilities are
reporting date between the tax bases of assets and liabilities and the Bank’s sources of funding. Deposits include non-interest
their carrying amounts for financial reporting purposes. Deferred bearing deposits, saving deposits, term deposits, call deposits
tax liabilities are recognized for all taxable temporary differences and margin deposits. The estimated fair value of deposits with
except: no stated maturity period is the amount repayable on demand.
The fair value of fixed interest bearing deposits is considered as
n Where the deferred tax liability arises from the initial the interest receivable on these deposits plus carrying amount
recognition of goodwill or of an asset or liability in a of these deposits. The fair value of debt securities issued is
transaction that is not a business combination, and at the also considered as the carrying amount of these debt securities
time of transaction, affects neither the accounting profit nor issued. Sub-ordinated liabilities are liabilities subordinated,
taxable profit or loss. at the event of winding up, to the claims of depositors, debt
n In respect of taxable temporary differences associated securities issued and other creditors.
with investments in subsidiaries, where the timing of the
reversal of the temporary differences can be controlled and is 3.12 PROVISIONS
probable that the temporary differences will not reverse in the A provision is recognized if, as a result of a past event, the
foreseeable future. Bank has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic
Deferred tax assets are recognized for all deductible temporary benefits will be required to settle the obligation. The amount
differences, carried forward unused tax credits and unused tax recognized is the best estimate of the consideration required to
losses (if any), to the extent that it is probable that the taxable settle the present obligation at the reporting date, taking in to
profit will be available against which the deductible temporary account the risks and uncertainties surrounding the obligation
differences, carried forward unused tax credits and unused tax at that date. Where a provision is measured using the cash flows
losses can be utilized except: estimated to settle the present obligation, its carrying amount
is determined based on the present value of those cash flows. A
n Where the deferred tax asset relating to the deductible provision for onerous contracts is recognized when the expected

188 SIDDHARTHA BANK LIMITED

benefits to be derived by the Bank from a contract are lower value of security is insufficient to cover payment of principal
than the unavoidable cost of meeting its obligations under the and accrued interest
contract. The provision is measured as the present value of the f. Overdrafts and other short term facilities which have not
lower of the expected cost of terminating the contract and the been settled after the expiry of the loan and even not renewed
expected net cost of continuing with the contract. Provision is within 12 months of the expiry, irrespective of the net
not recognized for future operating losses. realizable value of collateral

Before a provision is established, the Bank recognizes any Following above criterias, the Bank has created interest suspense
impairment loss on the assets associated with that contract. The of NPR 109,864,097 as of July 16, 2023.
expense relating to any provision is presented in the Statement
of Profit or Loss net of any reimbursement. The Bank has collected NPR 301,178,129/- up to July 31, 2023
which has been deducted while calculating the amount of
3.13 REVENUE RECOGNITION interest accrual to be suspended.
Revenue is recognized to the extent that it is probable that the
economic benefits will flow to Bank and the revenue can be Fee and Commission Income
reliably measured. The following specific recognition criteria Fees earned for the provision of services over a period of time
must also be met before revenue is recognized. are accrued over that period. These fees include Service fees,
commission income. Loan syndication fees are recognized
Interest Income as revenue when the syndication has been completed and the
For all financial assets measured at amortized cost, interest Bank retained no part of the loan package for itself, or retained
bearing financial assets classified as financial assets at fair value a part at the same effective interest rate as for the other
through OCI and financial assets designated at fair value through participants. Portfolio and other management advisory fees and
profit or loss, interest income is recorded using the rate that service distribution fees are recognized based on the applicable
closely approximates the EIR because the bank considers that contracts, usually on a time apportionment basis. However,
the cost of exact calculation of effective interest rate method income from LC issuance is recognized at the time of issuance of
exceeds the benefit that would be derived from such compliance. letter of credit.
EIR is the rate that exactly discounts estimated future cash
payments or receipts through the expected life of the financial Dividend Income
instrument or a shorter period, where appropriate, to the net Dividend income is on equity instruments are recognized in the
carrying amount of the financial asset or financial liability. statement of profit and loss within other income when the Bank’s
right to receive payment is established.
When a receivable is impaired, the Bank reduces the carrying
amount to its recoverable amount, being the estimated future Net Trading Income
cash flow discounted at the original effective interest rate of the Net trading income comprises gains less losses relating to
instrument, and continues unwinding the discount as interest trading assets and liabilities, and includes all realized interest,
income. Interest income on impaired loans is recognized using dividend and foreign exchange differences as wells as unrealized
the original closely approximate EIR. changes in fair value of trading assets and liabilities.

However, interest accrual is suspended and are not recognized Net Income from other financial instrument at fair
as Interest income in the Statement of Profit or Loss in following value through Profit or Loss
circumstances: Trading assets such as equity shares and mutual fund are
recognized at fair value through profit or loss. No other financial
a. Loans where there is reasonable doubt about the ultimate instruments are designated at fair value through profit or loss.
collectability of principal or interest The bank has no income under the heading net income from
b. Loans against which individual impairment as per carve out of other financial instrument at fair value through profit or loss.
NFRS 9 has been made
c. Loans where contractual payments of principal and/or 3.14 INTEREST EXPENSE
interest are more than 3 months in arrears and where the “net For financial liabilities measured at amortized cost using the
realizable value” of security is insufficient to cover payment of rate that closely approximates effective interest rate, interest
principal and accrued interest expense is recorded using such rate. EIR is the rate that exactly
d. Loans where contractual payments of principal and/or interest discounts estimated future cash payments or receipts through
are more than 12 months in arrears, irrespective of the net the expected life of the financial instrument or a shorter period,
realizable value of collateral where appropriate, to the net carrying amount of the financial
e. Overdrafts and other short term facilities which have not asset or financial liability.
been settled after the expiry of the loan and even not renewed
within 3 months of the expiry, and where the net realizable

ANNUAL REPORT 2022-23 189

3.15 EMPLOYEE BENEFITS has been considered as defined benefit plans as per Nepal
Employee benefits include: Accounting Standards – NAS 19 (Employee Benefits).

n Short-term employee benefits such as the following, if n Gratuity

expected to be settled wholly before twelve months after the In compliance with Labor Act, 2017, provision is made in the
end of the annual reporting period in which the employees account year of service, for gratuity payable to employees who
render the related services: joined bank on a permanent basis.
i. Wages, salaries and social security contributions;
ii. Paid annual leave and paid sick leave; An actuarial valuation is carried out every year to ascertain the
iii. Profit sharing and bonuses, and full liability under gratuity.
iv. Non-monetary benefits (such as medical care, housing,
cars and free or subsidized goods or services) for current Bank’s obligation in respect of defined benefit obligation is
employees; calculated by estimating the amount of future benefit that
employees have earned for their service in the current and
Short term employee benefits are measured on an undiscounted prior periods and discounting that benefit to determine its
basis and are expensed as the related service is provided. A present value, then deducting the fair value of any plan assets
liability is recognized for the amount expected to be paid under to determine the net amount to be shown in the Statement
short term cash bonus or profit sharing plans if the Bank has of Financial Position. The value of a defined benefit asset is
present legal or constructive obligation to pay this amount restricted to the present value of any economic benefits available
as a result of past service provided by the employee and the in the form of refunds from the plan or reduction on the future
obligation can be estimated reliably. contributions to the plan. In order to calculate the present value
of economic benefits, consideration is given to any minimum
n Post-employment benefits, such as the following: funding requirement that apply to any plan in Bank. An economic
i. Retirement benefits (e.g.: pensions, lump sum payments on benefit is available to Bank if it is realizable during the life of the
retirement); and plan, or on settlement of the plan liabilities.
ii. Other post-employment benefits such as post-employment
life insurance and post-employment medical care; Bank determines the interest expense on the defined benefit
n Other long term employee benefits and liability by applying the discount rate used to measure the
n Termination benefits defined benefit liability at the beginning of the annual period to
the defined benefit liability at the beginning of the annual period.
The discount rate is the yield at the reporting date on government
3.15.1. Post employments benefits bonds that have maturity dates approximating to the terms of
Bank’s obligations.
Defined Contribution Plans
A defined contribution plan is a post-employment benefit plan The increase in gratuity liabilities attributable to the services
under which an Bank pays fixed contribution into a separate Bank provided by employees during the year ended 16th July, 2023
(a fund) and will have no legal or constructive obligation to pay (current service cost) has been recognized in the Statement
further contributions if the fund does not hold sufficient assets of Profit or Loss under ‘Personnel Expenses’ together with the
to pay all employee benefits relating to employee services in net interest expense. Bank recognizes the total actuarial gain
the current and prior periods, as defined in Nepal Accounting and loss that arises in calculating Bank’s obligation in respect
Standards – NAS 19 (Employee Benefits). of gratuity in other comprehensive income during the period in
which it occurs.
The contribution payable by the employer to a defined
contribution plan in proportion to the services rendered to Bank The demographic assumptions underlying the valuation are
by the employees and is recorded as an expense under ‘Personnel retirement age (60 years), early withdrawal from service and
expense’ as and when they become due. Unpaid contribution is retirement on medical grounds.
recorded as a liability under ‘Other Liabilities’.
3.15.2. Other long term employee benefits
Bank contributed 10% on the salary of each employee to the Other long term employee benefits are all employee benefits
Employees’ Provident Fund. The above expenses are identified as other than short term employee benefits, post-employment
contributions to ‘Defined Contribution Plans’ as defined in Nepal benefits and terminal benefits. Accordingly, leave encashment
Accounting Standards – NAS 19 (Employee Benefits). plan of the Bank has been considered as Other Long Term
Employee Benefits as per Nepal Accounting Standards – NAS 19
Defined Benefit Plans (Employee Benefits).
A defined benefit plan is a post-employment benefit plan other
than a defined contribution plan. Accordingly, staff gratuity n Unutilized Accumulated Leave
BBank’s liability towards the accumulated leave which is expected

190 SIDDHARTHA BANK LIMITED

to be utilized beyond one year from the end of the reporting corresponding lease liabilities. Each lease payment is allocated
period is treated as other long term employee benefits. Bank’s net between a reduction of the liability and an interest expense. The
obligation towards unutilized accumulated leave is calculated by interest expense is charged to the Statement of Profit or Loss
discounting the amount of future benefit that employees have over the lease period to produce a constant periodic rate of
earned in return for their service in the current and prior periods interest on the remaining balance of the liability for each period.
to determine the present value of such benefits. The discount The right-of-use asset is depreciated over the remaining lease
rate is the yield at the reporting date on government binds term on a straight line basis.
that have maturity dates approximating to the terms of Bank’s
obligation. The calculation is performed using the Projected Unit The Bank transitioned into NFRS 16 in accordance with the
Credit method. Net change in liability for unutilized accumulated modified retrospective approach, therefore previous year
leave including any actuarial gain and loss are recognized in the comparative figures are not restated. Additionally, the definition
Statement of Profit or Loss under ‘Personnel Expenses’ in the of a lease under NAS 17 and its related interpretation has been
period in which they arise. retained.

3.16 FINANCE AND OPERATING LEASES The Bank has applied incremental borrowing rate of 7.5%.
The determination of whether an arrangement is a lease or it Management has applied judgement and formed assumptions
contains a lease, is based on the substance of the arrangement in relation to assessing the incremental borrowing rate.
and requires an assessment of whether the fulfillment of the Management has formed its judgements and assumptions based
arrangement is dependent on the use of a specific asset or on historical experience, internal and external data points.
assets and the arrangement conveys a right to use the asset.
3.17 FOREIGN CURRENCY TRANSACTIONS,
3.16.1 Finance Lease TRANSLATION AND BALANCES
Agreements which transfer to counterparties substantially all the All foreign currency transactions are translated into the
risks and rewards incidental to the ownership of assets, but not functional currency, which is Nepalese Rupees, using the
necessarily legal title, are classified as finance lease. When Bank exchange rates prevailing at the dates when the transactions
is the lessor under finance lease, the amounts due under the were affected.
leases, after deduction of unearned interest income, are included
in ‘Loans to & receivables from other customers’, as appropriate. Monetary assets and liabilities denominated in foreign currencies
Interest income receivable is recognized in ‘Net interest income’ at the reporting date are translated to Nepalese Rupees using the
over the periods of the leases so as to give a constant rate of spot foreign exchange rate ruling at that date and all differences
return on the net investment in the leases. arising on non-trading activities are taken to ‘Other Operating
Income’ in the Statement of Profit or Loss. The foreign currency
When Bank is a lessee under finance leases, the leased assets gain or loss on monetary items is the difference between
are capitalized and included in ‘Property, plant and equipment’ amortized cost in the functional currency at the beginning of the
and the corresponding liability to the lessor is included in ‘Other period, adjusted for effective interest and payments during the
liabilities’. A finance lease and its corresponding liability are period, and the amortized cost in foreign currency translated
recognized initially at the fair value of the asset or if lower, the at the rates of exchange prevailing at the end of the reporting
present value of the minimum lease payments. Finance charges period.
payable are recognized in ‘Interest expenses’ over the period of
the lease based on the interest rate implicit in the lease so as to Non-monetary items in a foreign currency that are measured in
give a constant rate of interest on the remaining balance of the terms of historical cost are translated using the exchange rates
liability. as at the dates of the initial transactions. Non-monetary items in
foreign currency measured at fair value are translated using the
3.16.2 Operating Lease exchange rates at the date when the fair value was determined.
All leases except for financial leases are classified as operating
leases. When acting as lessor, Bank includes the assets subject Foreign exchange differences arising on the settlement or
to operating leases in ‘Property, plant and equipment’ and reporting of monetary items at rates different from those
accounts for them accordingly. Impairment losses are recognized which were initially recorded are dealt with in the Statement of
to the extent that residual values are not fully recoverable and the Profit or Loss. However, foreign currency differences arising on
carrying value of the assets is thereby impaired. available-for-sale equity instruments are recognized in other
comprehensive income. Forward exchange contracts are valued
When Bank is the lessee, leased assets are not recognized on the at the forward market rates ruling on the reporting date.
Statement of Financial Position.
3.18 FINANCIAL GUARANTEE AND LOAN COMMITMENT
From FY 2021-22, the Bank has transitioned from NAS-17 and has A financial guarantee contract is a contract that requires the
applied NFRS-16 for accounting of leases. All previously classified issuer to make specified payments to reimburse the holder for a
operating leases are now recognized as right-of-use assets with loss it incurs because a specified debtor fails to make payment

ANNUAL REPORT 2022-23 191

when due. Financial guarantee contracts may have various legal n for which discrete financial information is available.
forms, such as a guarantee, some types of letter of credit, etc. Not every part of an entity is necessarily an operating segment
Where the bank has confirmed its intention to provide funds or part of an operating segment. For example, a corporate
to a customer or on behalf of a customer in the form of loans, headquarters or some functional departments may not earn
overdrafts, etc. whether cancellable or not and the bank had not revenues or may earn revenues that are only incidental to the
made payments at the reporting date, those instruments are activities of the entity and would not be operating segments. For
included in these financial statements as commitments. the purposes of this NFRS, an entity’s post-employment benefit
plans are not operating segments.

3.19 SHARE CAPITAL AND RESERVES

The bank has identified the key segments of business on
Share capital and reserves are different classes of equity claims.
the basis of nature of operations that assists the Executive
Equity claims are claims on the residual interest in the assets
Committee of the bank in decision making process and to
of the entity after deducting all its liabilities. Changes in equity
allocate the resources. It will help the management to assess the
during the reporting period comprise income and expenses
performance of the business segments. The business segments
recognized in the statement of financial performance; plus
identified are Banking (including loan, deposit and trade
contributions from holders of equity claims, minus distributions
operations), Payment solutions (Cards), Remittance, Treasury
to holders of equity claims.
and Micro Banking. All operations between the segments
are conducted on pre-determined transfer price. Treasury
3.20 EARNINGS PER SHARE
department acts as the fund manager of the Bank.
Bank presents basic and diluted Earnings per share (EPS) data for
its ordinary shares. Basic EPS is calculated by dividing the profit
and loss attributable to ordinary equity holders of Bank by the
3.22 EMPLOYEE BONUS
Employee bonus shall be calculated at the rate of 10% of Profit
weighted average number of ordinary shares outstanding during
before bonus and tax.
the period. Diluted EPS is determined by adjusting both the
profit and loss attributable to the ordinary equity holders and the
weighted average number of ordinary shares outstanding, for the 3.23 DIVIDEND ON ORDINARY SHARES
effects of all dilutive potential ordinary shares, if any. Dividend on ordinary shares are recognized as a liability and
deducted from equity when they are approved by the Bank’s
Earnings per share is calculated and presented in consolidated shareholders. Interim Dividend is deducted from equity when
statement of profit or loss. they are declared and no longer at the discretion of the Bank.
Dividend for the year that is approved after the reporting date is
disclosed as an event after the reporting date.
3.21 SEGMENT REPORTING
An operating segment is a component of an entity:
3.24 CASH FLOW STATEMENT
n that engages in business activities from which it may earn The cash flow statement has been prepared whereby gross cash
revenues and incur expenses (including revenues and receipts and gross cash payments of operating activities, finance
expenses relating to transactions with other components of activities and investing activities have been recognized.
the same entity),
n whose operating results are regularly reviewed by the entity’s 3.25 COMPARATIVE FIGURES
chief operating decision maker to make decisions about The comparative figures and phrases have been rearranged
resources to be allocated to the segment and assess its wherever necessary to conform to the current year’s
performance, and presentation.

192 SIDDHARTHA BANK LIMITED

Cash and Cash Equivalent 4.1
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Cash in hand 3,797,711,214 4,229,051,566 3,797,711,214 4,229,050,703

Balances with B/FIs 7,773,602,721 3,206,807,095 7,756,369,265 3,199,352,704
Money at call and short notice - 500,585,616 - 500,585,616
Other - - - -
Total 11,571,313,935 7,936,444,278 11,554,080,479 7,928,989,024

Due from Nepal Rastra Bank 4.2

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Statutory balances with NRB 8,879,504,444 5,648,028,535 8,879,504,444 5,648,028,535

Securities purchased under resale agreement - - - -
Other deposit and receivable from NRB 121,209,048 82,420,000 121,209,048 82,420,000
Total 9,000,713,492 5,730,448,535 9,000,713,492 5,730,448,535

Other deposit and receivable from NRB includes investments made as money market maker including accrued interest receivable.

Placements with Bank and Financial Institutions 4.3

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Placement with domestic B/FIs - - - -

Placement with foreign B/FIs 5,011,346,934 320,313,255 5,011,346,934 320,313,255
Less: Allowances for impairment - - - -
Total 5,011,346,934 320,313,255 5,011,346,934 320,313,255

Derivative Financial Instruments 4.4

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Held for trading

Interest rate swap - - - -
Currency swap - - - -
Forward exchange contract 17,320,155 19,694,323 17,320,155 19,694,323
Others - - - -
Held for risk management
Interest rate swap - - - -
Currency swap - - - -
Forward exchange contract - - - -
Other - - - -
Total 17,320,155 19,694,323 17,320,155 19,694,323

ANNUAL REPORT 2022-23 193

Other Trading Assets 4.5
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Treasury bills - - - -
Government bonds - - - -
NRB Bonds - - - -
Domestic Corporate bonds - - - -
Equities 109,407,897 158,762,749 - -
Other - - - -
Total 109,407,897 158,762,749 - -
Pledged - - - -
Non-pledged 109,407,897 158,762,749 - -

Information relating to investment in quoted equity measured at fair value

through Statement of Profit or Loss 4.5.1
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

Asian Life Insurance Co. Limited 4,645,950 4,470,600 6,010,259 3,695,412 - - - -

6000 Ordinary Share of NPR 100 paid up
Chhimek Laghubitta Bikas Bank Limited 7,891,027 7,010,000 31,380,900 25,136,100 - - - -
7010 Ordinary Share of NPR 100 paid up
Century Commercial Bank Ltd. - - 255,648 193,431 - - - -
0 Ordinary Share of NPR 100 paid up
Citizen Investment Trust - - 745,005 628,750 - - - -
0 Ordinary Share of NPR 100 paid up
Global IME Bank Limited - 186 - 251 - - - -
1 Ordinary Share of NPR 100 paid up
Himalayan Everest Insurance Company Limited - - 1,744,195 1,109,160 - - - -
0 Ordinary Share of NPR 100 paid up
Himalayan Life Insurance Company Limited 638,494 397,488 638,494 394,886 - - - -
784 Ordinary Share of NPR 100 paid up
Janautthan Samudayic Laghubitta Bikas Bank - - 300 22,425 - - - -
0 Ordinary Share of NPR 100 paid up
Kumari Equity Fund - - 1,000,000 1,007,000 - - - -
0 units of NPR 10 paid up
Lumbini Bikas Bank Ltd. 1,954,079 2,065,000 - - - - - -
5000 Ordinary Share of NPR 100 paid up
Life Insurance Co. Nepal - - 14,633,861 10,867,200 - - - -
0 Ordinary Share of NPR 100 paid up
Nabil Bank Ltd. 1,179,146 810,718 - - - - - -
1353 Ordinary Share of NPR 100 paid up
Nepal Bangladesh Bank Limited - - 2,486,404 2,234,400 - - - -
5600 Ordinary Share of NPR 100 paid up
Ngadi Group Power Limited - - - 297 - - - -
1 Ordinary Share of NPR 100 paid up
Nepal Investment Bank Limited - - - 19,345 - - - -
73 Ordinary Share of NPR 100 paid up
Nepal Investment Bank Limited Promoter Share - - 740,775 618,375 - - - -
73 Ordinary Share of NPR 100 paid up
NIC ASIA Laghubitta Bittiya Sanstha Limited - - 1,400 13,758 - - - -
16 Ordinary Share of NPR 100 paid up
Neco Insurance Co. Ltd. - - 2,943,262 2,119,476 - - - -
3054 Ordinary Share of NPR 100 paid up
Nerude Laghubita Bikas Bank Limited - - 8,397,571 5,345,120 - - - -
6074 Ordinary Share of NPR 100 paid up

194 SIDDHARTHA BANK LIMITED

 GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

Nepal Life Insurance Co. Ltd. - - 2,513,964 1,618,749 - - - -

2167 Ordinary Share of NPR 100 paid up
National Life Insurance Co. Ltd. 1,786,077 1,833,090 28,406,461 15,105,860 - - - -
2842 Ordinary Share of NPR 100 paid up
NMB Microfinance Bittiya Sanstha Ltd. - - - 750 - - - -
1 Ordinary Share of NPR 100 paid up
NMB50 Mutual Fund 3,567,127 3,122,007 3,567,127 3,835,609 - - - -
297334 Ordinary Share of NPR 10 paid up
National Microfinance Bittiya Sanstha Ltd. - - 2,000 48,375 - - - -
25 Ordinary Share of NPR 100 paid up
Nepal Reinsurance Company Limited - - 3,195,750 1,712,550 - - - -
2330 Ordinary Share of NPR 100 paid up
Nirdhan Utthan Laghubitta 8,794,301 6,284,475 9,912,992 8,551,319 - - - -
Bittiya Sanstha Limited
8215 Ordinary Share of NPR 100 paid up
Premier Insurance Co. Ltd. - - 6,744,642 3,290,112 - - - -
466 Ordinary Share of NPR 100 paid up
Rasuwagadhi Hydropower Company Ltd. 2,304,515 2,100,000 - - - - - -
7000 Ordinary Share of NPR 100 paid up
RBB Mutual Fund 1 1,000,000 808,000 1,000,000 927,000 - - - -
100000 Ordinary Share of NPR 10 paid up
RMDC Laghubitta Bittiya Sanstha Ltd. 2,838,820 2,325,000 12,161,506 8,547,600 - - - -
3000 Ordinary Share of NPR 100 paid up
Sanima Equity Fund 1,462,916 1,180,000 1,462,916 1,275,000 - - - -
100000 units of NPR 10 paid up
Sagarmatha Lumbini Insurance Co. Ltd. 3,140,058 3,125,144 - - - - - -
4178 units of NPR 10 paid up
Standard Chartered Bank Limited - - 1,097,634 784,674 - - - -
0 Ordinary Share of NPR 100 paid up
Sunrise Bank Limited - - 1,965,662 1,103,724 - - - -
0 Ordinary Share of NPR 100 paid up
Sunrise First Mutual Fund 2,369,841 2,227,080 2,369,841 2,311,500 - - - -
201000 units of NPR 10 paid up
Shine Resunga Development Bank Ltd. 1,848,136 1,920,000 - - - - - -
5000 units of NPR 10 paid up
Siddhartha Investment Growth Scheme - 2 43,359,700 39,153,809 43,359,700 42,449,146 - - - -
4335970 units of NPR 10 paid up
Sanjen Jalavidhyut Co. Ltd. 2,303,120 2,078,300 - - - - - -
7000 Ordinary Share of NPR 100 paid up
Siddhartha Systematic Investment Scheme 22,722,530 22,500,000 11,985,025 10,012,500 - - - -
2500000 units of NPR 10 paid up
Sanima Large Cap Fund 500,000 446,000 500,000 466,000 - - - -
50000 units of NPR 10 paid up
Synergy Power Development Ltd. 3,296,217 2,501,000 - - - - - -
5000 Ordinary Share of NPR 100 paid up
Surya Jyoti Life Insurance Company Limited 3,440,561 3,050,000 4,972,283 2,616,894 - - - -
5000 Ordinary Share of NPR 100 paid up
United Insurance Company (Nepal) Limited - - 1,587,762 700,000 - - - -
0 Ordinary Share of NPR 100 paid up
121,042,618 109,407,897 207,783,338 158,762,749 - - - -

ANNUAL REPORT 2022-23 195

Loan and Advances to B/FIs 4.6
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Loans to microfinance institutions 5,238,878,700 6,487,705,663 5,238,878,700 6,487,705,663

Other - - - -
Less: Allowances for impairment (68,104,793) (84,311,520) (68,104,793) (84,311,520)
Total 5,170,773,907 6,403,394,142 5,170,773,907 6,403,394,142

Allowances for Impairment 4.6.1

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Balance at Shrawan 1 84,311,520 79,379,352 84,311,520 79,379,352

Impairment loss for the year: -
Charge for the year 22,301,301 37,802,230 22,301,301 37,802,230
Recoveries/reversal (38,508,029) (32,870,061) (38,508,029) (32,870,061)
Amount written off - - - -
Balance at Ashadh end 68,104,793 84,311,520 68,104,793 84,311,520

Loans and Advances to Customers 4.7

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Loan and advances measured at amortized cost 188,921,209,016 182,295,772,363 188,911,416,613 182,285,440,901
Less: Impairment allowances
Collective impairment (2,904,799,011) (2,586,114,624) (2,904,799,011) (2,586,114,624)
Individual impairment (1,997,046,561) (1,111,963,045) (1,997,046,561) (1,111,963,045)
Net amount 184,019,363,443 178,597,694,694 184,009,571,040 178,587,363,232
Loan and advances measured at FVTPL - - - -
Total 184,019,363,443 178,597,694,694 184,009,571,040 178,587,363,232

Analysis of loan and Advances - By Product 4.7.1

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Product
Long Term Loans 79,965,370,303 57,602,960,091 79,965,370,303 57,602,960,091
Personal 25,842,189,886 24,028,949,470 25,842,189,886 24,028,949,470
Business 14,421,589,435 4,213,872,402 14,421,589,435 4,213,872,402
Working Capital 39,701,590,981 29,360,138,219 39,701,590,981 29,360,138,219
Overdraft (Personal) 3,282,391,436 4,980,917,765 3,282,391,436 4,980,917,765
Cash Credit Loan 23,860,881,669 27,361,567,911 23,860,881,669 27,361,567,911
Trust Receipt/Import Loan 3,977,400,980 3,790,353,429 3,977,400,980 3,790,353,429
Short Term Working Capital/Demand Loan 38,214,851,709 49,215,925,576 38,214,851,709 49,215,925,576
Personal Residential Loans 8,816,061,316 9,083,646,837 8,816,061,316 9,083,646,837
Real Estate Loans 5,955,601,918 5,641,787,596 5,955,601,918 5,641,787,596
Margin Lending Loans 4,088,177,663 4,059,573,627 4,088,177,663 4,059,573,627
Hire Purchase Loans 4,911,316,636 6,966,822,678 4,911,316,636 6,966,822,678
Deprived Sector Loans 5,223,252,424 5,785,889,408 5,223,252,424 5,785,889,408
Bills Purchased 133,224,840 40,000,000 133,224,840 40,000,000
Staff loans 1,945,795,623 1,883,322,354 1,936,003,220 1,872,990,892
Other 8,546,882,499 5,883,005,089 8,546,882,499 5,883,005,089
Total 188,921,209,015 182,295,772,363 188,911,416,613 182,285,440,901

196 SIDDHARTHA BANK LIMITED

Analysis of Loan and Advances - By Currency 4.7.2
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Nepalese rupee 187,669,524,196 180,826,369,736 187,659,731,794 180,816,038,274

Indian rupee - - - -
United State dollar 1,251,684,819 1,469,402,627 1,251,684,819 1,469,402,627
Great Britain pound - - - -
Euro - - - -
Japenese yen - - - -
Chinese yuan - - - -
Other - - - -
Total 188,921,209,015 182,295,772,363 188,911,416,613 182,285,440,901

Analysis of Loan and Advances - By Collateral 4.7.3

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Secured
Movable/immovable assets 176,210,916,024 169,241,549,239 176,210,916,024 169,241,549,239
Gold and silver - - - -
Guarantee of domestic B/FIs - - - -
Government guarantee 150,581,118 145,032,474 150,581,118 145,032,474
Guarantee of international rated bank - - - -
Collateral of export document 4,476,185,056 4,179,611,449 4,476,185,056 4,179,611,449
Collateral of fixed deposit receipt 2,207,222,384 2,463,565,415 2,207,222,384 2,463,565,415
Collateral of Governement securities 4,050,000 14,495,911 4,050,000 14,495,911
Counter guarantee - - - -
Personal guarantee 1,226,020,353 1,011,255,938 1,216,227,951 1,000,924,476
Other collateral 4,646,234,080 5,240,261,936 4,646,234,080 5,240,261,936
Subtotal 188,921,209,014 182,295,772,363 188,911,416,613 182,285,440,901
Unsecured - - - -
Grand Total 188,921,209,014 182,295,772,363 188,911,416,613 182,285,440,901

Allowances for Impairment 4.7.4

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Specific allowances for impairment

Balance at Shrawan 1 1,111,963,045 794,818,642 1,111,963,045 794,818,642
Impairment loss for the year:
Charge for the year 885,083,516 317,144,403 885,083,516 317,144,403
Recoveries/reversal during the year - - - -
Write-offs - - - -
Exchange rate variance on foreign currency impairment - - - -
Other movement - - - -
Balance at Ashadh end 1,997,046,561 1,111,963,045 1,997,046,561 1,111,963,045
Collective allowances for impairment
Balance at Shrawan 1 2,586,114,624 2,300,719,984 2,586,114,624 2,300,719,984
Impairment loss for the year:
Charge/(reversal) for the year 318,684,388 285,394,640 318,684,388 285,394,640
Exchange rate variance on foreign currency impairment - - - -
Other movement - - - -
Balance at Ashadh end 2,904,799,011 2,586,114,624 2,904,799,011 2,586,114,624
Total allowances for impairment 4,901,845,573 3,698,077,669 4,901,845,573 3,698,077,669

ANNUAL REPORT 2022-23 197

Investment Securities 4.8
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Investment securities measured at amortized cost 56,443,791,516 53,431,175,151 56,307,315,516 53,207,699,151

Investment in equity measured at FVTOCI 6,285,075,676 4,160,462,581 6,173,160,518 4,160,462,581
Total 62,728,867,192 57,591,637,732 62,480,476,034 57,368,161,732

Investment Securities Measured at Amortized Cost 4.8.1

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Debt securities 1,459,077,598 431,166,639 1,451,101,598 424,690,639

Government bonds 37,211,061,584 31,844,092,737 37,211,061,584 31,844,092,737
Government treasury bills 17,645,152,334 20,938,915,775 17,645,152,334 20,938,915,775
Nepal Rastra Bank bonds - - - -
Nepal Rastra Bank deposits instruments - - - -
Other 128,500,000 217,000,000 - -
Less: specific allowances for impairment - - - -
Total 56,443,791,516 53,431,175,151 56,307,315,516 53,207,699,151

Investment in Equity Measured at Fair Value through Other Comprehensive Income 4.8.2
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Equity instruments
Quoted equity securities 4,642,181,363 3,866,045,671 4,642,181,363 3,866,045,671
Unquoted equity securities 1,642,894,313 294,416,910 1,530,979,155 294,416,910
Total 6,285,075,676 4,160,462,581 6,173,160,518 4,160,462,581

198 SIDDHARTHA BANK LIMITED

Information Relating to Investment in Equities 4.8.3
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

Investment in quoted equity measured at fair

value through Other Comprehensive Income
Siddhartha Premier Insurance Limited 87,095,304 1,646,542,292 87,095,304 1,055,035,216 87,095,304 1,646,542,292 87,095,304 1,055,035,216
2115019 Ordinary Share of NPR 100 paid up
National Life Insurance Company Limited 8,080,526 7,614,870 8,080,526 5,484,962 8,080,526 7,614,870 8,080,526 5,484,962
11,806 Ordinary Share of NPR 100 paid up
NLG Insurance Company Limited 253,177 1,183,283 253,177 726,717 253,177 1,183,283 253,177 726,717
2,762 Promoter Share of NPR 100 paid up
Life Insurance Co. Nepal Limited 55,758,404 66,183,910 55,758,404 60,223,815 55,758,404 66,183,910 55,758,404 60,223,815
42,562 Ordinary Share of NPR 100 paid up
Butwal Power Company Limited 68,539,904 48,889,874 68,539,904 45,364,326 68,539,904 48,889,874 68,539,904 45,364,326
147,927 Ordinary Share of NPR 100 paid up
Nepal Lube oil Limited 1,080 540,009 1,080 417,966 1,080 540,009 1,080 417,966
2,069 Ordinary Share of NPR 100 paid up
Nepal Film Dev. Company Limited 569 18,326 569 18,515 569 18,326 569 18,515
539 Ordinary Share of NPR 100 paid up
Ridi Hydropower Development Company Limited 22,394 56,862 22,394 139,946 22,394 56,862 22,394 139,946
234 Ordinary Share of NPR 100 paid up
Chilime Hydro Power Limited 148,219,339 132,337,339 148,219,339 93,584,184 148,219,339 132,337,339 148,219,339 93,584,184
246,576 Ordinary Share of NPR 100 paid up
Sanima Mai Hydropower Limited 88,468,255 64,324,935 88,468,255 55,446,282 88,468,255 64,324,935 88,468,255 55,446,282
181,197 Ordinary Share of NPR 100 paid up
IGI Prudential Insurance Limited 27,830,453 24,528,000 27,830,453 14,777,532 27,830,453 24,528,000 27,830,453 14,777,532
43,800 Ordinary Shares of NPR 100 Paid up
Sagarmatha Lumbini Insurance Company Limited 25,288,245 24,219,492 25,288,245 14,449,914 25,288,245 24,219,492 25,288,245 14,449,914
32,379 Ordinary Share of NPR 100 paid up
Mero Microfinance Bittiya Sanstha Limited 34,378,500 193,908,000 34,378,500 347,519,250 34,378,500 193,908,000 34,378,500 347,519,250
858,000 Promoter Share of NPR 100 paid up
RMDC Laghubitta Bittiya Sanstha Limited 39,480,000 168,540,618 39,480,000 159,742,146 39,480,000 168,540,618 39,480,000 159,742,146
421,006 Promoter Share of NPR 100 paid up &
1 Ordinary Share of NPR 100 paid up
National Microfinance Limited 14,249,834 61,192,754 14,249,834 80,147,947 14,249,834 61,192,754 14,249,834 80,147,947
86,799 Promoter Share of NPR 100 paid up
Upper Tamakoshi Hydropower Limited 27,455,516 16,098,042 27,455,516 20,443,156 27,455,516 16,098,042 27,455,516 20,443,156
37,718 Ordinary Share of NPR 100 paid up
Global IME Samunat Scheme 48,358,815 44,099,237 48,358,815 45,793,600 48,358,815 44,099,237 48,358,815 45,793,600
4,579,360 units of NPR 10 each
Laxmi Equity Fund 30,795,127 26,060,039 30,795,127 26,902,438 30,795,127 26,060,039 30,795,127 26,902,438
2,717,418 units of NPR 10 each
Nabil Equity Fund 55,322,892 44,433,440 55,322,892 46,236,670 55,322,892 44,433,440 55,322,892 46,236,670
4,623,667 units of NPR 10 each
NIBL Pragati Fund 12,028,734 11,728,728 12,028,734 12,103,178 12,028,734 11,728,728 12,028,734 12,103,178
1,207,902 units of NPR 10 each
NMB Hybrid Fund -1 33,309,116 34,411,187 33,309,116 35,718,749 33,309,116 34,411,187 33,309,116 35,718,749
3,189,174 units of Rs 10 each
Sanima Equity Fund 118,981,977 100,847,697 118,981,977 108,966,791 118,981,977 100,847,697 118,981,977 108,966,791
8,546,415 units of NPR 10 each
Siddhartha Equity Fund 225,000,000 212,175,000 225,000,000 222,300,000 225,000,000 212,175,000 225,000,000 222,300,000
22,500,000 units of NPR 10 each
NIC Asia Growth Fund 47,546,212 36,079,621 47,546,212 39,095,022 47,546,212 36,079,621 47,546,212 39,095,022
3,506,280 units of NPR 10 each
Citizen Mutual Fund 7,817,576 7,377,089 7,817,576 6,920,936 7,817,576 7,377,089 7,817,576 6,920,936
786,470 units of NPR 10 each
Siddhartha Investment & Growth Scheme-2 210,000,000 189,630,000 210,000,000 205,590,000 210,000,000 189,630,000 210,000,000 205,590,000
21,000,000 units of NPR 10 each
Siddhartha Systematic Investment Scheme 45,445,000 45,000,000 23,970,000 20,025,000 45,445,000 45,000,000 23,970,000 20,025,000
5,000,000 units of NPR 10 each
Rasuwagadhi Hydropower Company Limited 25,717,825 15,890,100 25,717,825 14,459,991 25,717,825 15,890,100 25,717,825 14,459,991
52,967 Ordinary Share of NPR 100 paid up

ANNUAL REPORT 2022-23 199

 GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

Nabil Balanced Fund-2 52,470,478 37,230,952 52,470,478 45,607,916 52,470,478 37,230,952 52,470,478 45,607,916
4,230,790 units of NPR 10 each
NIBL Sahabhagita Fund 2,500,000 2,670,000 2,500,000 2,677,500 2,500,000 2,670,000 2,500,000 2,677,500
250,000 units of NPR 10 each
Citizen Mutual Fund-2 50,000,000 51,950,000 50,000,000 50,600,000 50,000,000 51,950,000 50,000,000 50,600,000
5,000,000 units of NPR 10 each
NIC Asia Balanced Fund 37,422,966 33,258,651 37,422,966 38,177,937 37,422,966 33,258,651 37,422,966 38,177,937
3,564,700 units of NPR 10 each
NMB 50 86,839,223 81,591,668 86,839,223 100,241,192 86,839,223 81,591,668 86,839,223 100,241,192
7,770,635 units of NPR 10 each
Sunrise First Mutual Fund 37,258,447 31,091,732 37,258,447 32,270,300 37,258,447 31,091,732 37,258,447 32,270,300
2,806,113 units of NPR 10 each
Himalayan Life Insurance Limited 21,826,082 18,662,670 21,826,082 18,535,175 21,826,082 18,662,670 21,826,082 18,535,175
36,810 Ordinary Share of NPR 100 paid up
Surya Jyoti Life Insurance Company Limited 31,904,462 29,706,390 31,904,462 18,846,513 31,904,462 29,706,390 31,904,462 18,846,513
48,699 Ordinary Share of NPR 100 paid up
Laxmi Unnati Kosh 20,007,058 18,786,573 20,007,058 19,126,692 20,007,058 18,786,573 20,007,058 19,126,692
2,000,700 units of NPR 10 each
NIBL Samriddhi Fund-II 10,000,000 9,110,000 10,000,000 8,670,000 10,000,000 9,110,000 10,000,000 8,670,000
1,000,000 units of NPR 10 each
Kumari Equity Fund 10,000,000 10,170,000 10,000,000 10,070,000 10,000,000 10,170,000 10,000,000 10,070,000
1,000,000 units of NPR 10 each
Sanima Large Cap Fund 10,000,000 8,920,000 10,000,000 9,320,000 10,000,000 8,920,000 10,000,000 9,320,000
1,000,000 units of NPR 10 each
NIC Asia Dynamic Debt Fund 1,000,000 1,110,000 1,000,000 1,071,000 1,000,000 1,110,000 1,000,000 1,071,000
100,000 units of NPR 10 each
RBB Mutual Fund-1 10,000,000 8,080,000 10,000,000 9,270,000 10,000,000 8,080,000 10,000,000 9,270,000
1,000,000 units of NPR 10 each
Kumari Dhanabriddhi Yojana 10,010,000 10,050,040 10,000,000 9,970,000 10,010,000 10,050,040 10,000,000 9,970,000
1,001,000 units of NPR 10 each
NABIL Balanced Fund-3 166,700 126,192 166,700 157,198 166,700 126,192 166,700 157,198
16,670 units of NPR 10 each
Sanima Reliance Life Insurance Limited 264,000,000 805,728,000 264,000,000 574,200,000 264,000,000 805,728,000 264,000,000 574,200,000
26,40,000 Promoter Shares of NPR 100 paid up
Nepal Infrastructure Development Bank Limited 100,000,000 163,864,000 100,000,000 179,600,000 100,000,000 163,864,000 100,000,000 179,600,000
10,80,000 Promoter Share of NPR 100 paid up
Hydroelectricity Investment and - 184 - - - 184 - -
Development Company Limited*
1 Ordinary Share of NPR 100 paid up
Sana Kishan Bikas Laghubitta - 1,798 - - - 1,798 - -
Bittiya Sanstha Limited*
2 Ordinary Share of NPR 100 paid up
Global IME Lagubitta Bittiya Sanstha Limited* - 1,061 - - - 1,061 - -
1 Ordinary Share of NPR 100 paid up
Mirmire Laghubitta Bittiya Sanstha Limited* - 709 - - - 709 - -
1 Ordinary Share of NPR 100 paid up
Global IME Balanced Fund 1 5,000,000 4,670,000 - - 5,000,000 4,670,000 - -
500,000 units of NPR 10 each
NIBL Growth Fund 10,000,000 10,640,000 - - 10,000,000 10,640,000 - -
1,000,000 units of NPR 10 each
NMB Sulav Investment Fund 2 25,000,000 24,975,000 - - 25,000,000 24,975,000 - -
2,500,000 units of NPR 10 each
NIC Asia Flexi Cap Fund** 20,000,000 20,340,000 - - 20,000,000 20,340,000 - -
2,000,000 units of NPR 10.17 each
Kumari Sunaulo Lagani Yojana 10,000,000 10,650,000 - - 10,000,000 10,650,000 - -
1,000,000 units of NPR 10 each
Nabil Flexi Cap Fund 10,000,000 9,900,000 - - 10,000,000 9,900,000 - -
1,000,000 units of NPR 10 each
Sanima Growth Fund 15,000,000 14,985,000 - - 15,000,000 14,985,000 - -
1,500,000 units of NPR 10 each
2,335,850,189 4,642,181,363 2,219,365,189 3,866,045,671 2,335,850,189 4,642,181,363 2,219,365,189 3,866,045,671

200 SIDDHARTHA BANK LIMITED

 GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

Investment in unquoted equity measured at fair

value through Other Comprehensive Income
Credit Information Center Limited 1,907,600 83,201,429 1,907,600 62,907,625 1,907,600 83,201,429 1,907,600 62,907,625
211,064 Promotor Shares of NPR 100 paid up
Nepal Clearing House Limited 179,402,600 245,374,515 179,402,600 144,895,823 179,402,600 245,374,515 179,402,600 144,895,823
962,253 Promotor Shares of NPR 100 paid up
National Banking Training Institute 1,834,860 7,272,835 1,834,860 6,484,395 1,834,860 7,272,835 1,834,860 6,484,395
18,349 Promotor Shares of NPR 100 paid up
ICRA Nepal Limited 760,000 6,986,650 760,000 4,771,850 760,000 6,986,650 760,000 4,771,850
27,360 Promotor Shares of NPR 100 paid up
Nepal Electronic Payment System Limited 15,000,000 23,412,000 15,000,000 15,433,500 15,000,000 23,412,000 15,000,000 15,433,500
150,000 Promotor Shares of NPR 100 paid up
Prabhu Capital Limited 4,500,000 4,906,560 4,500,000 4,620,150 4,500,000 4,906,560 4,500,000 4,620,150
45,000 Promotor Shares of NPR 100 paid up
SWIFT SC*** 6,105,167 6,105,167 5,303,566 5,303,566 6,105,167 6,105,167 5,303,566 5,303,566
7 Shares
NIC Asia Flexi Cap Fund** - - 20,000,000 20,000,000 - - 20,000,000 20,000,000
2,000,000 units of NPR 10 each
Avasar Equity Diversified Fund 1,000,000,000 1,000,000,000 - - 1,000,000,000 1,000,000,000 - -
1,000,000 units of NPR 1000 each
Avasar Equity Diversified Fund 50,000,000 50,000,000 - - - - - -
50,000 shares of NPR 1000 each
Siddhartha Investment & Growth Scheme-3 120,000,000 123,720,000 - - 120,000,000 123,720,000 - -
12,000,000 units of NPR 10 each
Siddhartha Investment & Growth Scheme-3 60,053,500 61,915,159 - - - - - -
6,005,350 units of NPR 10 each
Avasar Equity Limited 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000 30,000,000
300,000 units of NPR 100 each
1,469,563,727 1,642,894,313 258,708,626 294,416,910 1,359,510,227 1,530,979,155 258,708,626 294,416,910

* Bonus shares have been received in FY 2022-23 on shares which were already sold by the Bank before FY 2021-22.
** Investment in NIC Asia Flexi Cap Fund have been reclassed from “Investment in unquoted equity measured at fair value through Other Comprehensive Income”
to “Investment in quoted equity measured at fair value through Other Comprehensive Income” as the scrip has been listed in NEPSE during FY 2022-23.
*** The investment value of SWIFT SC has increased due to foreign exchange revaluation gain of NPR 801,601.

Current Tax Assets 4.9

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Current tax assets

Current year income tax assets 9,317,011,041 8,153,876,925 9,289,073,298 8,112,941,715
Tax assets of prior periods 253,345,083 143,345,083 253,345,083 143,345,083
Current tax liabilities
Current year income tax liabilities (1,424,265,088) (1,418,498,604) (1,399,891,181) (1,371,151,096)
Tax liabilities of prior periods (7,878,762,253) (6,520,725,416) (7,878,762,253) (6,520,725,416)
Total 267,328,784 357,997,989 263,764,947 364,410,286

Investment in Subsidiaries 4.10

BANK
CURRENT YEAR PREVIOUS YEAR

Investment in quoted subsidiaries - -

Investment in unquoted subsidiaries 51,000,000 51,000,000
Total investment 51,000,000 51,000,000
Less: Impairment allowances - -
Net carrying amount 51,000,000 51,000,000

ANNUAL REPORT 2022-23 201

Investment in Quoted Subsidiaries 4.10.1
The Bank has not made investment in quoted subsidiaries.

Investment in Unquoted Subsidiaries 4.10.2

BANK
CURRENT YEAR PREVIOUS YEAR

COST FAIR VALUE COST FAIR VALUE

Siddhartha Capital Limited 51,000,000 Not Listed 51,000,000 Not Listed

10,20,000 Promotor Shares of NPR 100 each
Total 51,000,000 - 51,000,000 -

Information Relating to Subsidiaries of the Bank 4.10.3

BANK
PERCENTAGE OF OWNERSHIP HELD BY THE BANK
CURRENT YEAR PREVIOUS YEAR

Siddhartha Capital Limited 51% 51%

Non Controlling Interest of the subsidiaries 4.10.4

GROUP
CURRENT YEAR PREVIOUS YEAR

Siddhartha Capital Limited Siddhartha Capital Limited

Equity interest held by NCI (%) 49% 49%
Profit/(loss) allocated during the year 31,206,141 27,547,541
Accumulated balances of NCI as on July 16, 2023 220,913,182
Accumulated balances of NCI as on July 16, 2022 214,207,041
Dividend paid to NCI 24,500,000 39,200,000

Investment in Associates 4.11

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Investment in quoted associates - - - -

Investment in unquoted associates - - - -
Total Investment - - - -
Less: Impairment allowances - - - -
Net Carrying amount - - - -
The Bank has not made investment in associates.

Investment in Quoted Associates 4.11.1

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

”…………………………………….Ltd.
…………shares of NPR …….each” - - - - - - - -
“…………………………………….Ltd.
…………shares of NPR …….each” - - - - - - - -
Total - - - - - - - -

202 SIDDHARTHA BANK LIMITED

Investment in Unquoted Associates 4.11.2
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR
COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE COST FAIR VALUE

“…………………………………….Ltd.
…………shares of NPR …….each” - - - - - - - -
“…………………………………….Ltd.
…………shares of NPR …….each” - - - - - - - -
Total - - - - - - - -

Information Relating to Associates of the Bank 4.11.3

GROUP BANK
PERCENTAGE OF OWNERSHIP HELD BY THE BANK PERCENTAGE OF OWNERSHIP HELD BY THE BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

…………………………………….Ltd. - - - -
…………………………………….Ltd. - - - -
…………………………………….Ltd. - - - -
…………………………………….Ltd. - - - -

Equity Value of Associates 4.11.4

GROUP
CURRENT YEAR PREVIOUS YEAR

…………………………………….Ltd. - -

…………………………………….Ltd. - -
Total - -

Investment Properties 4.12

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Investment properties measured at fair value

Balance as on July 17, 2022 - - - -
Addition/disposal during the year - - - -
Net changes in fair value during the year - - - -
Adjustment/transfer - - - -
Net amount - - - -
Investment properties measured at cost
Balance as on July 17, 2022 213,307,612 291,042,098 213,307,612 291,042,098
Addition/disposal during the year 441,229,877 (77,734,486) 441,229,877 (77,734,486)
Adjustment/transfer - - - -
Accumulated depreciation - - - -
Accumulated impairment loss - - - -
Net amount 654,537,489 213,307,612 654,537,489 213,307,612
Total 654,537,489 213,307,612 654,537,489 213,307,612

ANNUAL REPORT 2022-23 203

 Property and Equipments 4.13
GROUP
PARTICULARS LAND BUILDING LEASEHOLD COMPUTER VEHICLES FURNITURE MACHINERY EQUIPMENT TOTAL TOTAL
PROPERTIES & ACCESSORIES &FIXTURE & OTHERS JULY 16, 2023 JULY 16, 2022

Cost
As on July 16, 2021 244,811,658 72,708,832 693,417,276 332,756,479 158,397,330 168,307,153 - 506,235,618 1,841,490,847
Addition during the Year
Acquisition 117,952,906 190,924,628 73,397,809 47,123,187 15,989,903 22,414,207 - 43,504,052 267,524,034

204 SIDDHARTHA BANK LIMITED

Capitalization - - - - - - - - -
Disposal during the year - (10,371,461) (14,190,072) (7,110,949) (22,703,975) (2,806,912) - (12,055,018) (34,561,473)
Adjustment/Revaluation - - 2,002,624,281 - - - - - -
Balance as on July 16, 2022 362,764,564 253,261,998 2,755,249,293 372,768,717 151,683,259 187,914,448 - 537,684,651 4,621,326,931

Addition during the Year
Acquisition - - 499,576,651 33,035,945 3,500,000 30,825,904 - 108,936,037 675,874,537
Capitalization - 367,677,309 - - - - - - 367,677,309
Disposal during the year - (59,020) (8,973,242) (8,864,936) (1,984,600) (3,172,436) - (13,869,550) (36,923,782)
Adjustment/Revaluation - - 26,265,221 - - - - - 26,265,221
Balance as on July 16, 2023 362,764,564 620,880,287 3,272,117,924 396,939,726 153,198,659 215,567,917 - 632,751,139 5,654,220,216

Depreciation and Impairment
As on July 16, 2021 - 24,366,789 336,152,552 202,658,952 75,811,673 95,280,017 - 314,118,892 733,140,703
Depreciation charge for the Year - 1,007,749 280,481,021 32,974,294 11,757,827 15,333,795 - 47,924,972 188,064,127
Impairment for the year - - - - - - - - -
Disposals - (2,107,897) (6,552,510) (6,960,566) (13,058,492) (2,103,014) - (11,473,144) (23,983,659)
Adjustment - - 490,470,786 - - - - - -
As on July 16, 2022 - 23,266,641 1,100,551,848 228,672,680 74,511,008 108,510,799 - 350,570,720 1,886,083,696
Impairment for the year - - - - - - - - -
Depreciation charge for the Year - 4,786,084 288,885,415 37,137,341 12,065,866 17,367,690 - 54,242,836 414,485,233
Disposals - (23,917) (8,917,350) (8,699,768) (1,959,147) (2,873,459) - (13,700,257) (36,173,898)
Adjustment - - 7,216,531 - - - - - 7,216,531
As on July 16, 2023 - 28,028,808 1,387,736,445 257,110,253 84,617,728 123,005,029 - 391,113,299 2,271,611,562

Capital Work in Progress - 187,484,551 9,422,674 - - - - - 196,907,224 376,615,482

Net Book Value
As on July 16, 2022 362,764,564 606,610,838 1,654,697,445 144,096,037 77,172,250 79,403,649 - 187,113,931 3,111,858,718
As on July 16, 2023 362,764,564 780,336,029 1,893,804,154 139,829,473 68,580,931 92,562,887 - 241,637,840 3,579,515,879
 BANK
PARTICULARS LAND BUILDING LEASEHOLD COMPUTER VEHICLES FURNITURE MACHINERY EQUIPMENT TOTAL TOTAL
PROPERTIES & ACCESSORIES &FIXTURE & OTHERS JULY 16, 2023 JULY 16, 2022

Cost
As on July 16, 2021 244,811,658 72,708,832 677,902,625 321,840,665 148,304,734 166,537,634 - 498,688,882 2,035,488,417
Addition during the Year
Acquisition 117,952,906 190,924,628 39,334,521 46,560,073 15,989,903 22,414,207 - 43,504,052 267,342,621
Capitalization - - - - - - - - -
Disposal during the year - (10,371,461) (14,190,072) (7,110,949) (16,292,975) (2,806,912) - (12,055,018) (20,418,473)
Adjustment/Revaluation - - 2,002,624,281 - - - - - -
Balance as on July 16, 2022 362,764,564 253,261,998 2,705,671,355 361,289,789 148,001,663 186,144,929 - 530,137,915 4,547,272,213

Addition during the Year
Acquisition - - 499,576,651 31,785,295 - 30,740,476 108,902,121 671,004,543
Capitalization - 367,677,309 - - - - - 367,677,309
Disposal during the year (59,020) (8,973,242) (8,864,936) (1,984,600) (3,172,436) (13,869,550) (36,923,782)
Adjustment/Revaluation - - 26,265,221 - - - - - 26,265,221
Balance as on July 16, 2023 362,764,564 620,880,287 3,222,539,986 384,210,148 146,017,063 213,712,970 - 625,170,487 5,575,295,504

Depreciation and Impairment
As on July 16, 2021 - 24,366,789 328,257,330 192,453,815 71,185,731 93,530,240 - 306,861,465 1,016,655,370
Depreciation charge for the Year - 1,007,749 272,679,775 32,406,331 11,206,277 15,314,224 - 47,838,551 380,452,906
Impairment for the year - - - - - - - - -
Disposals - (2,107,897) (6,552,510) (6,960,566) (11,562,592) (2,103,014) - (11,473,144) (40,759,722)
Adjustment - - 490,470,786 - - - - - -
As on July 16, 2022 - 23,266,641 1,084,855,381 217,899,580 70,829,416 106,741,450 - 343,226,872 1,846,819,340
Impairment for the year - - - - - - - - -
Depreciation charge for the Year - 4,786,084 281,082,910 36,848,914 12,007,533 17,365,910 54,159,957 406,251,308
Disposals - (23,917) (8,917,350) (8,699,768) (1,959,147) (2,873,459) (13,700,257) (36,173,898)
Adjustment - - 7,216,531 - - - - - 7,216,531
As on July 16, 2023 - 28,028,808 1,364,237,472 246,048,726 80,877,803 121,233,901 - 383,686,572 2,224,113,282

Capital Work in Progress - 187,484,551 9,422,674 - - - - - 196,907,224 376,615,482

Net Book Value
As on July 16, 2022 362,764,564 555,277,196 1,633,326,278 143,390,209 77,172,246 79,403,479 - 186,911,044 3,077,068,355
As on July 16, 2023 362,764,564 780,336,029 1,867,725,187 138,161,422 65,139,260 92,479,069 - 241,483,914 3,548,089,446

ANNUAL REPORT 2022-23

* The Bank has transitioned from NAS 17 to NFRS 16 for accounting of leases from FY 2021-22. The adjustment of Right of Use lease assets have been disclosed under the heading of Leashold
Properties. As of 16 July 2023, the gross value of Right of Use lease assets is NPR 2,448,310,537 and corresponding accumulated depreciation is NPR 901,821,259. The written down value of RoU lease

205
assets as of July 16, 2023 is NPR 1,546,489,278. The depreciation expense for current year includes depreciation expense of RoU lease assets amounting to NPR 225,441,755.
Goodwill and Intangible Assets 4.14
GROUP
PARTICULARS GOODWILL SOFTWARE OTHER TOTAL TOTAL
PURCHASED DEVELOPED JULY 16, 2023 JULY 16, 2022

Cost
As on July 16, 2021 - 181,267,241 - - 181,267,241
Addition during the Year
Acquisition - 17,007,211 - - 17,007,211
Capitalization - - - - -
Disposal during the year - - - - -
Adjustment/Revaluation - - - - -
Balance as on July 16, 2022 - 198,274,452 - - 198,274,452

Addition during the Year
Acquisition - 136,284,340 - - 136,284,340
Capitalization - - - - -
Disposal during the year - - - - -
Adjustment/Revluation - - - - -
Balance as on July 16, 2023 - 334,558,792 - - 334,558,792

Amortization and Impairment
As on July 16, 2021 - 99,500,073 - - 99,500,073
Amortization charge for the Year - 25,052,031 - - 25,052,031
Impairment for the year - - - - -
Disposals - - - - -
Adjustment - - - - -
As on July 16, 2022 - 124,552,104 - - 124,552,104

Amortization charge for the Year - 42,394,380 - - 42,394,380
Impairment for the year - - - - -
Disposals - - - - -
Adjustment - - - - -
As on July 16, 2023 - 166,946,484 - - 166,946,484

Capital Work in Progress - - - - -

Net Book Value
As on July 16, 2022 - 73,722,348 - - 73,722,348
As on July 16, 2023 - 167,612,308 - - 167,612,308

206 SIDDHARTHA BANK LIMITED

 BANK
PARTICULARS GOODWILL SOFTWARE OTHER TOTAL TOTAL
PURCHASED DEVELOPED JULY 16, 2023 JULY 16, 2022

Cost
As on July 16, 2021 - 178,361,161 - - 178,361,161
Addition during the Year
Acquisition - 14,609,102 - - 14,609,102
Capitalization - - - - -
Disposal during the year - - - - -
Adjustment/Revaluation - - - - -
Balance as on July 16, 2022 - 192,970,262 - - 192,970,262

Addition during the Year
Acquisition - 136,264,340 - - 136,264,340
Capitalization - - - - -
Disposal during the year - - - - -
Adjustment/Revluation - - - - -
Balance as on July 16, 2023 - 329,234,603 - - 329,234,603

Amortization and Impairment
As on July 16, 2021 - 96,859,915 - - 96,859,915
Amortization charge for the Year - 24,619,376 - - 24,619,376
Impairment for the year - - - - -
Disposals - - - - -
Adjustment - - - - -
As on July 16, 2022 - 121,479,292 - - 121,479,292

Amortization charge for the Year - 41,755,028 - - 41,755,028
Impairment for the year - - - - -
Disposals - - - - -
Adjustment - - - - -
As on July 16, 2023 - 163,234,320 - - 163,234,320

Capital Work in Progress - - - - - -

Net Book Value
As on July 16, 2022 - 71,490,971 - - 71,490,971
As on July 16, 2023 - 166,000,283 - - 166,000,283

ANNUAL REPORT 2022-23 207

Deferred Tax 4.15
GROUP BANK
CURRENT YEAR
CURRENT YEAR
DEFERRED TAX DEFERRED TAX NET DEFERRED DEFERRED TAX DEFERRED TAX NET DEFERRED
ASSETS LIABILITIES TAX ASSETS/ ASSETS LIABILITIES TAX ASSETS/
(LIABILITIES) (LIABILITIES)

Deferred tax on temporory differences on

following items
Loan and Advance to B/FIs - - - - - -
Loans and advances to customers - - - - - -
Investment properties - - - - - -
Investment securities - (732,586,429) (732,586,429) - (743,340,030) (743,340,030)
Property & equipment - (27,495,015.13) (27,495,015) - (21,603,155) (21,603,155)
Employees’ defined benefit plan 228,086,069 - 228,086,069 227,103,580 - 227,103,580
Lease liabilities 42,902,651 - 42,902,651 35,910,314 - 35,910,314
Provisions - - - - - -
Other temporary differences - - - - - -
Deferred tax on temporary differences 270,988,719 (760,081,444) (489,092,725) 263,013,894 (764,943,186) (501,929,292)
Deferred tax on carry forward of unused tax losses - - - - - -
Deferred tax due to changes in tax rate - - - - - -
Net Deferred tax asset/(liabilities) as on year end of FY 2022-23 (489,092,725) (501,929,292)
Deferred tax (asset)/liabilities as on July 17, 2022 222,407,228 239,223,287
Origination/(Reversal) during the year 266,685,497 262,706,005
Deferred tax expense/(income) recognised in
profit or loss (10,533,501) (13,954,496)
Deferred tax expense/(income) recognised in
other comprehensive income 277,218,998 276,660,501
Deferred tax expense/(income) recognised
in directly in equity - -

GROUP BANK
PREVIOUS YEAR
PREVIOUS YEAR
DEFERRED TAX DEFERRED TAX NET DEFERRED DEFERRED TAX DEFERRED TAX NET DEFERRED
ASSETS LIABILITIES TAX ASSETS/ ASSETS LIABILITIES TAX ASSETS/
(LIABILITIES) (LIABILITIES)

Deferred tax on temporory differences on

following items
Loan and Advance to B/FIs - - - - - -
Loans and advances to customers - - - - - -
Investment properties - - - - - -
Investment securities - (504,716,630) (504,716,630) - (504,716,630) (504,716,630)
Property & equipment 1,742,746 - 1,742,746 - (15,073,313) (15,073,313)
Employees’ defined benefit plan 260,355,190 - 260,355,190 260,355,190 - 260,355,190
Lease liabilities 20,211,466 - 20,211,466 20,211,466 - 20,211,466
Provisions - - - - - -
Other temporary differences - - - - - -
Deferred tax on temporary differences 282,309,402 (504,716,630) (222,407,228) 280,566,656 (519,789,943) (239,223,287)
Deferred tax on carry forward of unused tax losses - - - - - -
Deferred tax due to changes in tax rate - - - - - -
Net Deferred tax asset/(liabilities) as on year end of FY 2021-22 (222,407,228) (239,223,287)
Deferred tax (asset)/liabilities as on July 16, 2021 971,343,097 966,719,229
Origination/(Reversal) during the year (748,935,870) (727,495,942)
Deferred tax expense/(income) recognised in
profit or loss (62,252,228) (40,812,300)
Deferred tax expense/(income) recognised in
other comprehensive income (696,056,000) (696,056,000)
Deferred tax expense/(income) recognised in
directly in equity 9,372,357 9,372,357

208 SIDDHARTHA BANK LIMITED

Other Assets 4.16
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Assets held for sale - - - -

Other non banking assets - - - -
Bills receivable - - - -
Accounts receivable 634,967,969 461,795,177 634,962,740 440,603,870
Accrued income - - - -
Prepayments and deposit 125,636,281 751,413,086 105,566,018 733,658,314
Income tax deposit - - - -
Deferred employee expenditure 2,944,018,317 2,344,985,376 2,944,018,317 2,344,985,376
Other
1. Government Settlement Account 241,099,690 283,354,928 241,099,690 283,354,928
2. Others 128,147,770 379,451,270 124,594,354 388,779,557
Total 4,073,870,027 4,220,999,837 4,050,241,119 4,191,382,045

Due to Bank and Financial Institutions 4.17

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Money market deposits - - - -

Interbank borrowing 6,700,000,000 2,301,300,000 6,700,000,000 2,301,300,000
Other deposits from BFIs 4,913,657,572 4,933,341,506 4,913,657,572 4,933,341,506
Settlement and clearing accounts - - - -
Total 11,613,657,572 7,234,641,506 11,613,657,572 7,234,641,506

Due to Nepal Rastra Bank 4.18

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Refinance from NRB 288,453,474 5,265,102,753 288,453,474 5,265,102,753

Standing Liquidity Facility - 19,700,000,000 - 19,700,000,000
Lender of last report facility from NRB - - - -
Securities sold under repurchase agreements - - - -
Other payable to NRB - - - -
Total 288,453,474 24,965,102,753 288,453,474 24,965,102,753

Derivative Financial Instruments 4.19

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Held for trading

Interest rate swap - - - -
Currency swap - - - -
Forward exchange contract 23,887,253 19,359,606 23,887,253 19,359,606
Others - - - -
Held for risk management
Interest rate swap - - - -
Currency swap - - - -
Forward exchange contract - - - -
Other - - - -
Total 23,887,253 19,359,606 23,887,253 19,359,606

ANNUAL REPORT 2022-23 209

Deposits from Customers 4.20
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Institutions customers:
Term deposits 51,625,836,445 46,253,285,919 51,625,836,445 46,253,285,919
Call deposits 16,862,118,245 14,609,396,130 17,209,786,663 15,003,564,212
Current deposits 10,537,036,340 9,792,734,916 10,537,036,340 9,792,734,916
Other 979,802,001 4,163,142,664 979,802,001 1,744,261,972
Individual customers:
Term deposits 79,013,150,949 61,407,575,625 79,013,150,949 61,407,575,625
Saving deposits 59,144,364,609 53,335,284,310 59,144,364,609 53,335,284,310
Current deposits 3,126,446,889 1,521,083,022 3,126,446,889 1,521,083,022
Other 2,018,245,795 73,972,914 2,018,245,795 2,492,853,606
Total 223,307,001,273 191,156,475,501 223,654,669,691 191,550,643,583

Currency Wise Analysis of Deposit from Customers 4.20.1

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Nepalese rupee 218,205,479,042 189,844,893,611 218,553,147,460 190,239,061,693

Indian rupee - - - -
United State dollar 4,734,322,343 1,062,256,872 4,734,322,343 1,062,256,872
Great Britain pound 1,041,674 5,179,806 1,041,674 5,179,806
Euro 15,115,813 30,835,753 15,115,813 30,835,753
Japenese yen 6,614,442 9,405,660 6,614,442 9,405,660
Chinese yuan - - - -
Australian dollar 2,683,951 13,931,214 2,683,951 13,931,214
United Arab Emirated Dirham - - - -
Swiss franc 341,726,894 189,961,529.13 341,726,894 189,961,529
Canadian dollar 17,114 11,056.66 17,114 11,057
Total 223,307,001,273 191,156,475,501 223,654,669,691 191,550,643,583

Borrowing 4.21
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Domestic Borrowing
Nepal Government - - - -
Other Institutions - - - -
Other - - - -
Sub total - - - -
Foreign Borrowing
Foreign Bank and Financial Institutions 7,312,480,160 1,022,800,000 7,312,480,160 1,022,800,000
Multilateral Development Banks - - - -
Other Institutions - - - -
Sub total 7,312,480,160 1,022,800,000 7,312,480,160 1,022,800,000
Total 7,312,480,160 1,022,800,000 7,312,480,160 1,022,800,000

210 SIDDHARTHA BANK LIMITED

Provisions 4.22
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Provisions for redundancy - - - -

Provision for restructuring - - - -
Pending legal issues and tax litigation - - - -
Onerous contracts - - - -
Other - - - -
Total - - - -

Movement in provision 4.22.1

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Balance at Shrawan 1 - - - -
Provisions made during the year - - - -
Provisions used during the year - - - -
Provisions reversed during the year - - - -
Unwind of discount - - - -
Balance at Asar end - - - -

Other liabilities 4.23

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Liability for employees defined benefit obligations 293,508,627 392,571,650 293,508,627 392,571,650
Liability for long-service leave 466,778,269 478,577,108 463,503,306 475,278,984
Short-term employee benefits 6,290,018 6,507,762 4,725,589 4,901,287
Bills payable 48,674,480 45,008,070 48,674,480 45,008,070
Creditors and accruals 976,828,536 1,126,953,875 971,378,638 1,117,020,395
Interest payable on deposit 16,457,598 41,134,122 16,457,598 41,134,122
Interest payable on borrowing/debenture 529,161,798 470,236,976 529,161,798 470,236,976
Liabilities on defered grant income - - - -
Unpaid Dividend 90,034,441 100,781,262 90,034,441 100,781,262
Liabilities under Finance Lease - - - -
Employee bonus payable 517,250,705 482,084,856 507,250,999 473,163,118
Other
1. Lease liability as per NFRS 16 1,772,564,478 1,450,203,050 1,725,948,902 1,420,936,400
2. Others 1,250,856,839 1,874,840,567 963,043,538 1,493,787,418
Total 5,968,405,789 6,468,899,300 5,613,687,917 6,034,819,684

Defined Benefit Obligations 4.23.1

The amounts recognised in the statement of financial position are as follows:
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Present value of unfunded obligations - - - -

Present value of funded obligations 1,108,760,356 1,062,145,009 1,108,760,356 1,062,145,009
Total present value of obligations 1,108,760,356 1,062,145,009 1,108,760,356 1,062,145,009
Fair value of plan assets 815,251,729 669,573,359 815,251,729 669,573,359
Present value of net obligations 293,508,627 392,571,650 293,508,627 392,571,650
Recognised liability for defined benefit obligations 293,508,627 392,571,650 293,508,627 392,571,650

ANNUAL REPORT 2022-23 211

Plan Assets 4.23.2
Plan assets comprise:
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Equity securities - - - -
Government bonds - - - -
Bank deposit - - - -
Other 815,251,729 669,573,359 815,251,729 669,573,359
Total 815,251,729 669,573,359 815,251,729 669,573,359
Actual return on plan assets - - - -

Movement in the present value of defined benefit obligations 4.23.3

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Defined benefit obligations at Shrawan 1 1,062,145,009 770,212,381 1,062,145,009 770,212,381

Actuarial losses/(gains) (193,607,463) 112,953,244 (193,607,463) 112,953,244
Benefits paid by the plan (20,921,367) (23,694,710) (20,921,367) (23,694,710)
Current service costs and interest 261,144,177 202,674,094 261,144,177 202,674,094
Defined benefit obligations at Asar end 1,108,760,356 1,062,145,009 1,108,760,356 1,062,145,009

Movement in the fair value of plan assets 4.23.4

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Fair value of plan assets at Shrawan 1 669,573,358 494,844,567 669,573,358 494,844,567

Contributions paid into the plan 166,599,738 198,423,500 166,599,738 198,423,500
Benefits paid during the year (20,921,367) (23,694,708) (20,921,367) (23,694,708)
Actuarial losses/(gains) 66,817,129 52,398,807 66,817,129 52,398,807
Expected return on plan assets (66,817,129) (52,398,807) (66,817,129) (52,398,807)
Fair value of plan assets at Asar end 815,251,729 669,573,358 815,251,729 669,573,358

Amount recognised in profit or loss 4.23.5

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Current service costs 166,492,588 134,421,242 166,492,588 134,421,242

Interest on obligation 27,834,460 15,854,045 27,834,460 15,854,045
Expected return on plan assets - - - -
Total 194,327,048 150,275,287 194,327,048 150,275,287

Amount recognised in other comprehensive income 4.23.6

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Acturial (gain)/loss (126,790,334) 165,352,051 (126,790,334) 165,352,051

Total (126,790,334) 165,352,051 (126,790,334) 165,352,051

Actuarial assumptions 4.23.7

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Discount rate 10% 9% 10% 9%

Expected return on plan asset 0% 0% 0% 0%
Future salary increase 10% 10% 10% 10%
Withdrawal rate 5% 5% 5% 5%

212 SIDDHARTHA BANK LIMITED

Debt securities issued 4.24
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Debt securities issued designated as at fair value

through profit or loss - - - -
Debt securities issued at amortised cost 11,662,559,000 11,662,559,000 11,662,559,000 11,662,559,000
Total 11,662,559,000 11,662,559,000 11,662,559,000 11,662,559,000

Subordinated Liabilities 4.25

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Redeemable preference shares - - - -

Irredemable cumulative preference shares
(liabilities component) - - - -
Other - - - -
Total - - - -

Share capital 4.26

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Ordinary shares 14,089,980,190 12,524,426,835 14,089,980,190 12,524,426,835

Convertible preference shares (equity component only) - - - -
Irredemable preference shares (equity component only) - - - -
Perpetual debt (equity component only) - - - -
Total 14,089,980,190 12,524,426,835 14,089,980,190 12,524,426,835

Ordinary shares 4.26.1

BANK
CURRENT YEAR PREVIOUS YEAR

Authorized Capital
160,000,000 Ordinary shares of NPR 100 each 16,000,000,000 16,000,000,000
Issued capital
140,899,801 Ordinary shares of NPR 100 each 14,089,980,190 12,524,426,835
Subscribed and paid up capital
140,899,801 Ordinary shares of NPR 100 each 14,089,980,190 12,524,426,835
Calls in Advance - -
Total 14,089,980,190 12,524,426,835

Ordinary share ownership 4.26.2

BANK
CURRENT YEAR PREVIOUS YEAR
PERCENT AMOUNT PERCENT AMOUNT

Domestic ownership
Nepal Government - - - -
“A” class licensed institutions - - - -
Other licensed intitutions - - - -
Other Institutions - - - -
Public 49 6,904,090,293 49 6,136,969,149
Other 51 7,185,889,897 51 6,387,457,686
Foreign ownership - - - -
Total 100 14,089,980,190 100 12,524,426,835

ANNUAL REPORT 2022-23 213

Shareholders holding 0.5% or more share 4.26.3
BANK
NAME OF SHAREHOLDERS CURRENT YEAR PREVIOUS YEAR
PERCENT AMOUNT PERCENT AMOUNT

Prudential Investment Company Pvt Ltd 3.23% 455,323,800 3.23% 404,732,200

Narendra Kumar Agrawal 2.95% 415,732,600 2.95% 369,540,100
Ratan Lal Kedia 2.48% 349,770,300 2.48% 310,907,000
Savita Kedia 1.92% 271,209,200 1.92% 241,074,800
Chiranji Lal Agrawal 1.81% 255,130,800 1.81% 226,783,000
Pawan Kumar Agrawal 1.76% 248,409,400 1.76% 220,808,300
Subodh Todi 1.55% 218,369,900 1.53% 191,674,000
Ashok Kumar Bahety 1.49% 209,468,600 1.52% 190,969,000
Narpat Singh Jain 1.45% 205,006,400 1.45% 182,227,900
Deena Nath Kedia 1.41% 198,159,700 1.43% 178,961,000
Aditya Kedia 1.39% 196,024,200 1.38% 172,579,900
Mahabir Investment Pvt Ltd 1.37% 192,799,700 1.37% 171,377,500
Tushar Todi 1.28% 180,171,500 1.28% 160,152,400
Suresh Kumar Rungta 1.21% 170,392,800 1.21% 151,460,300
Madan Lal Kedia 1.08% 152,387,300 1.17% 146,100,500
Birendra Kumar Shah 0.99% 139,155,500 0.72% 90,460,000
Poonam Chand Agrawal 0.97% 136,455,700 0.97% 121,293,900
Binod Kumar Agrawal 0.94% 131,753,800 0.94% 117,114,500
Rajesh Kumar Kedia 0.88% 123,764,100 0.00% -
Bharat Kumar Todi 0.87% 123,016,000 0.87% 109,347,500
Raj Kumar Tibrewala 0.81% 113,664,400 0.81% 101,035,000
Binay Kumar Shah 0.77% 108,153,900 0.77% 96,136,900
Rajendra Kumar Agrawal 0.76% 107,113,100 0.75% 94,499,700
Shyam Sunder Agrawal 0.75% 105,316,700 0.75% 93,614,900
Suresh Kumar Kedia 0.72% 101,230,000 0.00% -
Keshari Chand Kucheria 0.67% 95,012,500 0.67% 84,455,500
Bimal Kumar Kedia 0.66% 92,635,000 0.00% -
Shashi Kala Agrawal 0.63% 89,298,800 0.63% 79,376,700
Manish Jain 0.63% 88,997,700 0.63% 79,109,100
Jagdish Kumar Agrawal 0.61% 86,451,100 0.61% 76,845,400
Shambhu Kumar Kandoi 0.59% 83,288,100 0.59% 74,033,900
Kavindra Bahadur Shrestha 0.59% 82,963,100 0.59% 73,745,000
Saroj Sharma 0.51% 72,548,300 0.52% 65,213,400

214 SIDDHARTHA BANK LIMITED

Reserves 4.27
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Statutory general reserve 4,442,777,281 3,806,241,487 4,409,195,752 3,775,841,482

Exchange equilisation reserve 69,888,596 45,698,341 69,888,596 45,698,341
Corporate social responsibility reserve 52,114,726 41,463,635 50,950,230 40,480,610
Capital redemption reserve 3,041,706,000 1,581,279,500 3,041,706,000 1,581,279,500
Regulatory reserve 1,386,118,237 848,154,756 1,386,118,237 848,154,756
Investment adjustment reserve 11,365,167 5,260,000 11,365,167 5,260,000
Capital reserve 51,000,000 51,000,000 - -
Assets revaluation reserve - - - -
Fair value reserve 1,735,124,683 1,177,672,136 1,734,460,071 1,177,672,136
Dividend equalisation reserve - - - -
Actuarial gain (223,677,703) (312,430,936) (223,677,703) (312,430,936)
Special reserve - - - -
Other reserve
1. Capital adjustment fund 19,427,832 519,427,832 19,427,832 519,427,832
2. Employee related reserve fund 53,566,155 32,195,055 53,566,155 32,195,055
Total 10,639,410,976 7,795,961,806 10,553,000,339 7,713,578,776

Contingent liabilities and commitments 4.28

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Contingent liabilities 27,844,594,032 31,654,992,004 27,844,594,032 31,054,992,004

Undrawn and undisbursed facilities 19,217,064,405 9,795,924,949 19,217,064,405 9,795,924,949
Capital commitment 178,550,699 121,162,349 178,550,699 121,162,349
Lease Commitment - - - -
Litigation 363,202,850 182,245,926 363,202,850 182,245,926
Total 47,603,411,987 41,754,325,228 47,603,411,987 41,154,325,228

Contingent liabilities 4.28.1

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Acceptance and documentary credit 14,148,717,123 15,714,720,035 14,148,717,123 15,714,720,035

Bills for collection 672,609,716 495,284,358 672,609,716 495,284,358
Forward exchange contracts - - - -
Guarantees 13,023,267,193 14,494,987,612 13,023,267,193 14,494,987,612
Underwriting commitment - 600,000,000 - -
Other commitments - 350,000,000 - 350,000,000
Total 27,844,594,032 31,654,992,004 27,844,594,032 31,054,992,004

Undrawn and undisbursed facilities 4.28.2

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Undisbursed amount of loans 13,195,439,041 4,018,111,470 13,195,439,041 4,018,111,470

Undrawn limits of overdrafts 4,217,953,784 4,982,898,226 4,217,953,784 4,982,898,226
Undrawn limits of credit cards 1,803,671,581 794,915,253 1,803,671,581 794,915,253
Undrawn limits of letter of credit - - - -
Undrawn limits of guarantee - - - -
Total 19,217,064,405 9,795,924,949 19,217,064,405 9,795,924,949

ANNUAL REPORT 2022-23 215

Capital Commitments 4.28.3
Capital expenditure approved by relevant authority of the bank but provision has not been made in financial statements.

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Capital commitments in relation to Property and Equipment

Approved and contracted for 176,520,466 97,419,549 176,520,466 97,419,549
Approved but not contracted for 2,030,233 23,742,800 2,030,233 23,742,800
Sub total 178,550,699 121,162,349 178,550,699 121,162,349
Capital commitments in relation to Intangible assets
Approved and contracted for - - - -
Approved but not contracted for - - - -
Sub total - - - -
Total 178,550,699 121,162,349 178,550,699 121,162,349

Lease commitments 4.28.4

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Operating lease commitments

Future minimum lease payments under non cancellable
operating lease, where the bank is lessee
Not later than 1 year - - - -
Later than 1 year but not later than 5 years - - - -
Later than 5 years - - - -
Sub total - - - -
Finance lease commitments
Future minimum lease payments under non cancellable
operating lease, where the bank is lessee
Not later than 1 year - - - -
Later than 1 year but not later than 5 years - - - -
Later than 5 years - - - -
Sub total - - - -
Total - - - -

Litigation 4.28.5
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Income Tax Litigation pertaining to Siddhartha Bank Limited:

FY 2010-11 7,822,518 7,822,518 7,822,518 7,822,518
FY 2011-12 2,870,498 2,870,498 2,870,498 2,870,498
FY 2012-13 3,751,963 3,751,963 3,751,963 3,751,963
FY 2013-14 5,567,747 5,567,747 5,567,747 5,567,747
FY 2014-15 9,420,571 9,420,571 9,420,571 9,420,571
FY 2015-16 8,753,627 8,753,627 8,753,627 8,753,627
FY 2016-17 10,159,224 10,159,224 10,159,224 10,159,224
FY 2017-18 22,188,194 22,188,194 22,188,194 22,188,194
FY 2018-19 180,956,925 - 180,956,925 -
Sub total 251,491,266 70,534,342 251,491,266 70,534,342
Income Tax Litigation pertaining to erstwhile Business
Universal Development Bank Ltd. (merged with the Bank):
FY 2013-14 91,909,268 91,909,268 91,909,268 91,909,268
FY 2014-15 19,351,677 19,351,677 19,351,677 19,351,677
FY 2015-16 450,639 450,639 450,639 450,639
Sub total 111,711,584 111,711,584 111,711,584 111,711,584
Total 363,202,850 182,245,926 363,202,850 182,245,926

216 SIDDHARTHA BANK LIMITED

STATUS OF THE INCOME TAX LITIGATION CASES AS ON THE REPORTING DATE

Income Tax Litigation pertaining to Status
Siddhartha Bank Limited:
FY 2010-11 Appeal filed in Supreme Court is withdrawn and petition filed in Large Tax Payer’s Office for settlement
FY 2011-12 Appeal filed in Supreme Court is withdrawn and petition filed in Large Tax Payer’s Office for settlement
FY 2012-13 Appeal filed in Supreme Court
FY 2013-14 Appeal filed in Supreme Court is withdrawn and petition filed in Large Tax Payer’s Office for settlement
FY 2014-15 Appeal filed in Revenue Tribunal
FY 2015-16 Appeal filed for Adminstrative Review in Inland Revenue Department
FY 2016-17 Appeal filed for Adminstrative Review in Inland Revenue Department
FY 2017-18 Appeal filed for Adminstrative Review in Inland Revenue Department
FY 2018-19 Appeal filed for Adminstrative Review in Inland Revenue Department
Income Tax Litigation pertaining Status
to erstwhile Business Universal
Development Bank Ltd. (merged
with the Bank):
FY 2013-14 Appeal filed in Revenue Tribunal
FY 2014-15 Appeal filed in Revenue Tribunal
FY 2015-16 Appeal filed in Revenue Tribunal is withdrawn and petition filed in Large Tax Payer’s Office for settlement

Interest income 4.29

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Cash and cash equivalent 75,337,582 89,526,788 75,337,582 89,526,788

Due from Nepal Rastra Bank - - - -
Placement with bank and financial institutions 63,286,800 36,959,144 26,292,159 481,697
Loan and advances to bank and financial institutions - - - -
Loans and advances to customers 23,789,567,514 18,468,171,578 23,789,567,514 18,468,171,578
Investment securities 3,615,148,813 1,995,452,134 3,614,351,539 1,994,806,361
Loan and advances to staff 166,508,028 125,468,644 165,417,403 124,577,551
Other - - - -
Total 27,709,848,736 20,715,578,288 27,670,966,196 20,677,563,975

Interest expense 4.30

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Due to bank and financial institutions - - - -

Due to Nepal Rastra Bank 725,028,919 738,885,290 725,028,919 738,885,290
Deposits from customers 17,016,000,913 12,374,708,849 17,026,855,021 12,380,291,284
Borrowing 451,515,097 89,708,932 451,515,097 89,708,932
Debt securities issued 1,168,318,695 761,825,002 1,168,318,695 761,825,002
Subordinated liabilities - - - -
Other 117,413,171 113,234,513 114,705,366 110,005,952
Total 19,478,276,795 14,078,362,586 19,486,423,098 14,080,716,460
Finance cost as per NFRS-16 (Leases) has been disclosed under “Other” heading of Interest expense.

ANNUAL REPORT 2022-23 217

Fees and Commission Income 4.31
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Loan administration fees 374,815,589 444,036,765 374,815,589 444,036,765

Service fees 132,539,094 145,567,521 79,636,863 64,568,149
Consortium fees - - - -
Commitment fees 6,950,532 5,116,507 6,950,532 5,116,507
DD/TT/Swift fees 29,441,395 30,908,776 29,441,395 30,908,776
Credit card/ATM issuance and renewal fees 373,059,083 326,634,891 373,059,083 326,634,891
Prepayment and swap fees 6,454,228 8,274,298 6,454,228 8,274,298
Investment banking fees 16,618,378 44,631,191 - -
Asset management fees 47,607,172 65,268,946 - -
Brokerage fees 6,279,703 7,762,811 - -
Remittance fees 93,893,687 71,524,119 93,893,687 71,524,119
Commission on letter of credit 196,499,334 162,566,310 196,499,334 162,566,310
Commission on guarantee contracts issued 189,439,461 142,483,581 189,439,461 142,483,581
Commission on share underwriting/issue - - - -
Locker rental 13,955,990 10,063,712 13,955,990 10,063,712
Other fees and commission income
1. ATM access fee 14,263,997 8,887,500 14,263,997 8,887,500
2. Agency Commission 51,229,061 33,575,555 51,229,061 33,575,555
3. Bills Purchased & Discounted commission 79,343,402 33,557,775 79,343,402 33,557,775
4. BankSmart Annual Fee 134,994,294 106,719,202 134,994,294 106,719,202
5. Annual Fees-Prepaid Cards 3,322,450 3,819,158 3,322,450 3,819,158
6. E-com related income 2,713,375 907,250 2,713,375 907,250
7. Late payment fees 29,539,686 39,933,825 29,539,686 39,933,825
8. Other miscellaneous fees and commission income 13,945,536 12,441,300 13,526,909 12,014,950
Total 1,816,905,447 1,704,680,993 1,693,079,336 1,505,592,323

Fees and commission expense 4.32

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

ATM management fees 43,189,904 34,463,936 43,189,904 34,463,936

VISA/Master card fees 178,739,988 148,037,388 178,739,988 148,037,388
Guarantee commission - - - -
Brokerage - - - -
DD/TT/Swift fees 11,495,233 12,038,507 11,495,233 12,038,507
Remittance fees and commission 15,849,695 11,275,213 15,849,695 11,275,213
Other fees and commission expense
1. ECC transaction fee 19,316,337 20,241,048 19,316,337 20,241,048
2. Card related expenses 30,762,284 9,252,656 30,762,284 9,252,656
3. Subscriptions & membership fees 6,589,107 5,545,412 6,589,107 5,545,412
4. Branchless Banking related expenses 9,190,331 9,048,116 9,190,331 9,048,116
5. Bank charges 9,990,817 3,415,627 9,990,817 3,415,627
6. ASBA fees & charges 5,914,437 16,152,350 5,914,437 16,152,350
7. IPS transaction fees & charges 14,679,901 14,532,863 14,679,901 14,532,863
8. Other miscellaneous fees and commission expenses 28,510,753 42,455,072 1,740,387 1,885,852
Total 374,228,787 326,458,189 347,458,421 285,888,969

218 SIDDHARTHA BANK LIMITED

Net trading income 4.33
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Changes in fair value of trading assets (2,992,278) (68,190,977) - -

Gain/loss on disposal of trading assets - - - -
Interest income on trading assets - - - -
Dividend income on trading assets - - - -
Gain/loss foreign exchange transaction 191,737,335 442,930,262 191,735,761 442,926,681
Other - - - -
Total 188,745,057 374,739,285 191,735,761 442,926,681

Other operating income 4.34

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Foreign exchange revaluation gain 96,761,024 58,290,729 96,761,024 58,290,729

Gain/loss on sale of investment securities - (10,458,530) - (10,458,530)
Fair value gain/loss on investment properties - - - -
Dividend on equity instruments 152,141,600 441,913,085 147,805,630 428,905,175
Gain/loss on sale of property and equipment 1,824,780 (2,812,504) 1,824,780 (2,812,504)
Gain/loss on sale of investment property 14,950,055 - 14,950,055 -
Operating lease income - - - -
Gain/loss on sale of gold and silver 13,911,115 10,873,789 13,911,115 10,873,789
Locker rent - - - -
Other
1. Rebate from Nostro Banks 15,864,074 15,458,221 15,864,074 15,458,221
2. Other miscellaneous operating income 59,577,520 37,100,979 45,211,625 32,233,020
Total 355,030,167 550,365,770 336,328,302 532,489,900

Impairment charge/(reversal) for loan and other losses 4.35

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Impairment charge/(reversal) on loan and advances (16,206,727) 4,932,169 (16,206,727) 4,932,169

to B/FIs
Impairment charge/(reversal) on loan and advances
to customer 1,203,767,904 602,539,042 1,203,767,904 602,539,042
Impairment charge/(reversal) on financial Investment - - - -
Impairment charge/(reversal) on placement with banks
and financial institutions - - - -
Impairment charge/(reversal) on property and equipment - - - -
Impairment charge/(reversal) on goodwill and
intangible assets - - - -
Impairment charge/(reversal) on investment properties - - - -
Total 1,187,561,177 607,471,211 1,187,561,177 607,471,211

ANNUAL REPORT 2022-23 219

Personnel Expense 4.36
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Salary 1,011,878,062 960,791,596 986,140,225 933,374,822

Allowances 785,856,276 744,291,352 783,167,714 741,960,639
Gratuity expense 226,423,351 152,991,277 224,223,822 150,275,287
Provident fund 99,169,144 93,920,646 97,701,087 92,631,104
Uniform 29,654,800 - 29,035,600 -
Training & development expense 28,888,964 10,687,033 28,888,964 10,687,033
Leave encashment 72,334,451 189,295,895 72,334,451 189,295,895
Medical 15,904,610 15,701,932 15,578,623 15,418,068
Insurance 19,667,052 16,508,623 19,285,068 16,235,613
Employees incentive - - - -
Cash-settled share-based payments - - - -
Pension expense - - - -
Finance expense under NFRS 84,076,843 57,972,522 83,790,181 57,740,731
Other expenses related to staff
1. Overtime expense 310,311 100,799 290,104 83,365
2. Staff recruitment expense 717,890 339,677 717,890 339,677
3. Others 4,164,657 4,022,067 3,831,101 3,810,092
Subtotal 2,379,046,410 2,246,623,419 2,344,984,829 2,211,852,326
Employees bonus 517,250,705 482,084,856 507,250,999 473,163,118
Total 2,896,297,115 2,728,708,275 2,852,235,828 2,685,015,444

Other operating expense 4.37

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Directors’ fee 1,688,000 1,577,000 1,688,000 1,577,000

Directors’ expense 2,598,724 2,601,907 2,598,724 2,601,907
Auditors’ remuneration 1,751,500 1,717,600 1,356,000 1,356,000
Other audit related expense 254,769 261,096 226,000 226,000
Professional and legal expense 4,160,541 7,188,272 3,728,041 6,996,172
Office administration expense 703,198,396 640,269,421 690,061,199 630,382,777
Operating lease expense* - - - -
Operating expense of investment properties - - - -
Corporate social responsibility expense - - - -
Onerous lease provisions - - - -
Other
1. Outsourcing expenses (driver, messenger & Others) 47,599,065 40,846,537 45,712,952 38,398,222
2. Fuel expenses 33,456,608 24,537,610 32,475,448 23,737,143
3. Share related expenses 5,934,068 5,752,195 5,934,068 5,752,195
4. Debenture related expenses 1,441,851 7,833,000 1,441,851 7,833,000
5. Rates & taxes 12,180,537 10,263,350 12,142,122 10,202,650
6. Software support expenses 49,051,813 13,740,054 49,051,813 13,740,054
7. Inaguration expenses 4,021,825 1,426,944 4,021,825 1,426,944
8. Non capitalized items 6,119,642 4,913,177 6,119,642 4,913,177
9. BankSmart expenses 30,350,436 26,051,453 30,350,436 26,051,453
10. Rental expenses 28,842,125 50,879,214 28,842,125 50,879,214
11. Other miscellaneous operating expenses 1,656,921 3,593,307 1,692,740 1,781,924
Total 934,306,821 843,452,137 917,442,986 827,855,831

* Operting lease expense is NIL as the total lease expense as per NFRS 16 is bifurcated into finance cost and depreciation. The finance cost is included in Note
4.30 : Interest expense and depreciation expense is included in Note 4.38: Depreciation and amortisation.

220 SIDDHARTHA BANK LIMITED

Office adminstration expense 4.37.1
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Water and electricity 52,653,437 46,712,530 51,776,670 45,857,074

Repair and maintenance
(a) Building 3,725,498 2,262,322 3,725,498 2,262,322
(b) Vehicle 7,375,649 6,975,381 7,375,649 6,975,381
(c) Computer and accessories 5,264,800 30,224,693 4,555,231 30,224,693
(d) Office equipment and furniture 7,233,908 6,720,250 7,233,908 6,720,250
(e) Other 16,163,554 12,474,201 15,608,725 12,220,542
Insurance 25,285,199 18,782,585 24,929,218 18,628,535
Postage, telex, telephone, fax 49,997,157 53,585,804 49,111,519 52,845,524
Printing and stationery 72,356,553 55,038,983 71,645,103 53,577,118
Newspaper, books and journals 1,148,707 1,083,741 1,102,382 1,040,324
Advertisement 37,147,710 32,289,368 32,619,995 32,820,856
Donations - - - -
Security expense 163,828,174 159,910,472 162,940,990 159,000,849
Deposit and loan guarantee premium 79,847,071 59,417,519 79,847,071 59,417,519
Travel allowance and expense 15,633,828 11,520,517 15,333,828 11,220,517
Entertainment - - - -
Annual/special genenral meeting expense 2,945,036 1,898,281 2,746,070 1,822,425
Other
1. Legal & Statutory Publication / Notice 1,860,294 1,612,914 1,860,294 1,612,914
2. Janitorial expenses 61,050,992 55,542,824 59,959,074 54,450,906
3. Business promotion and development expense 84,901,362 69,424,917 84,859,702 69,392,856
4. Other office expenses 14,779,467 14,792,120 12,830,273 10,292,173
Total 703,198,396 640,269,421 690,061,199 630,382,777

Depreciation & Amortisation 4.38

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Depreciation on property and equipment 414,485,233 389,479,656 406,251,308 380,452,906

Depreciation on investment property - - - -
Amortisation of intangible assets 42,394,380 25,052,031 41,755,028 24,619,376
Total 456,879,613 414,531,687 448,006,336 405,072,283

The “Depreciation on property and equipment” expense for current year includes depreciation expense on RoU lease assets amounting to NPR 221,440,582 calculated
as per NFRS-16 (Leases).

Non operating income 4.39

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Recovery of loan written off 13,471,787 8,609,620 13,471,787 8,609,620

Other income - 533,604 - -
Total 13,471,787 9,143,224 13,471,787 8,609,620

ANNUAL REPORT 2022-23 221

Non operating expense 4.40
GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Loan written off 1,174,376 1,200,005 1,174,376 1,200,005

Redundancy provision - - - -
Expense of restructuring - - - -
Other expense* 100,020,165 15,494,234 100,020,165 15,494,234
Total 101,194,542 16,694,239 101,194,542 16,694,239
* Loss at the time of booking investment properties (Non-Banking Assets) have been shown under other expense heading.

Income tax expense 4.41

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Current tax expense

Current year 1,424,084,694 1,416,732,727 1,399,891,181 1,371,151,096
Adjustments for prior years 12,550,963 25,665,222 12,550,963 25,665,222
1,436,635,657 1,442,397,950 1,412,442,144 1,396,816,319
Deferred tax expense
Origination and reversal of temporary differences (10,533,501) (62,252,228) (13,954,496) (40,812,300)
Changes in tax rate - - - -
Recognition of previously unrecognised tax losses - - - -
Total 1,426,102,156 1,380,145,722 1,398,487,648 1,356,004,019

Reconciliation of tax expense and accounting profit 4.41.1

GROUP BANK
CURRENT YEAR PREVIOUS YEAR CURRENT YEAR PREVIOUS YEAR

Profit before tax 4,655,256,344 4,338,829,236 4,565,258,995 4,258,468,061

Tax amount at tax rate of 30% 1,396,576,903 1,301,648,771 1,369,577,699 1,277,540,418
Add: Tax effect of expenses that are not deductible
for tax purpose 45,283,409 99,152,461 43,435,741 99,152,461
Less: Tax effect on exempt income (13,170,260) (5,541,783) (13,122,258) (5,541,783)
Add/less: Tax effect on other items (2,587,897) (15,113,726) (1,403,533) (15,147,077)
Total 1,426,102,156 1,380,145,722 1,398,487,648 1,356,004,019
Effective tax rate 30.63% 31.81% 30.63% 31.84%

222 SIDDHARTHA BANK LIMITED

Statement of distributable profit or loss For the year ended July 16, 2023 (As per NRB Regulation)
BANK
CURRENT YEAR PREVIOUS YEAR

Net profit or (loss) as per statement of profit or loss 3,166,771,347 2,902,464,042

Appropriations:
a. General reserve (633,354,269) (584,192,514)
b. Foreign exchange fluctuation fund (24,190,256) (14,572,682)
c. Capital redemption reserve (1,460,426,500) (860,426,500)
d. Corporate social responsibility fund (31,667,713) (29,024,640)
e. Employees’ training fund (21,371,100) (31,555,180)
f. Other
i) Investment Adjustment Reserve (6,105,167) -
ii) Transfer of realised gain/(loss) up to previous year on equities measured at fair value through
OCI sold/matured during the year from fair value reserve (Net of tax) - 26,426,467
Profit or (loss) before regulatory adjustment 989,656,341 1,409,118,992
Regulatory adjustments:
a. Interest receivable (-)/previous accrued interest received (+) (252,880,021) (137,388,365)
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 (+) (277,974,823) 48,972,726
e. Deferred tax assets recognised (-)/ reversal (+) (95,861,873) -
f. Goodwill recognised (-)/ impairment of Goodwill (+) - -
g. Bargain purchase gain recognised (-)/reversal (+) - -
h. Actuarial loss recognised (-)/reversal (+) 88,753,234 (115,746,436)
i. Other - -
Net Profit for the year ended on July 16, 2023 available for distribution 451,692,858 1,204,956,918
Opening Retained Earning as on July 17, 2022 1,359,868,480 1,799,256,443
Adjustment (+/-) - -
Distribution:
Bonus shares issued (1,065,553,356) (1,562,127,636)
Cash Dividend Paid (82,397,545) (82,217,244)
Total Distributable profit or (loss) as on July 16, 2023 663,610,438 1,359,868,481
Annualised Distributable Profit/Loss per share 4.71 10.86

ANNUAL REPORT 2022-23 223

5. DISCLOSURES AND ADDITIONAL appetite, enabling senior management to monitor the risk profile
INFORMATION and guide business activity to balance risk and return. This
reporting allows risks to be promptly identified and mitigated,
5.1. RISK MANAGEMENT
and drives a strong risk culture. The risk appetite is proposed
by the management and reviewed by the board level risk
5.1.1.a. Risk Management Framework
management committee. Responsibility for the approval of risk
All of the Bank’s activities involve, to varying degrees, the
appetite rests with the board of directors.
analysis, evaluation, acceptance and management of risks or
combinations of risks. The Bank has placed high importance to
5.1.1.c. Stress Testing
identification, assessment and well thought out handling of all
Stress Testing is a valuable risk management tool which tries to
the prominent risk that it faces or likely to face in execution of
quantify the size of potential losses under certain stress events.
its activities. An established risk governance framework ensures
A stress event is an exceptional but credible event to which a
oversight of and accountability for the effective management of
bank’s portfolio is exposed. As a part of its risk measurement
risk. It also provides for the compliance with Directive No. 5 of
mechanism, the Bank puts an emphasis on evaluating where
Unified Directives issued by Nepal Rastra Bank.
the Bank stands under stressful market conditions. It helps
to provide information on the kinds of conditions under which
Board and Board level committees ensures the strategies,
strategies or position, the Bank would be most vulnerable and
policies and process are in line with the risk appetite and
thus, strategies are devised such that such circumstance doesn’t
tolerance limits for effective management of the risk. Risk
arise and/or to ensure least impact upon the Bank from such
Management Committee of the Bank periodically reviews
scenarios even if they do occur.
risk reports and then reports to the Board accordingly. Audit
Committee reviews the internal and external inspection reports,
In conducting stress tests, the Bank gives special consideration
provides recommendations and feedback to the management
to instruments or markets where concentrations exist as such
regarding internal controls and compliance issues as appropriate.
positions may be more difficult to liquidate or offset in stressful
Likewise, management level committees such as Executive
situations. The Bank considers both historical market events as
Committee (EXCOM) and Asset Liability Management Committee
well as forward-looking scenarios and also considers worst case
(ALCO) are in place for ensuring the risk within the bank’s risk
scenarios in addition to more probable events. Ad hoc scenarios
blanket.
are also prepared reflecting specific market conditions and for
particular concentrations of risk that arise within the businesses.
Over the past years, the Bank has focused to strengthen the
For example, interest rate sensitivity is measured in terms of
risk management policies, procedure and systems. In order to
exposure to a one basis point increase in yields, whereas foreign
address the internal and external developments and challenges
exchange, commodity and equity sensitivities are measured in
effectively, an independent Integrated Risk Management
terms of the underlying values or amounts involved.
Department has been formed for overall risk management, with
sufficient stature, independence, resources and direct access
The stress testing methodology assumes that scope for
to the Board level Committee. Integrated Risk Management
management action would be limited during a stress event,
Department serves as the “Second Line” of defense in risk
reflecting the decrease in market liquidity that often occurs.
management/governance framework of the Bank. It ensures
Stress scenarios are regularly updated to reflect changes in risk
the implementation of the Bank’s risk management systems
profile and economic events. The ALCO has responsibility for
maintaining overall functioning and supervision of credit,
reviewing stress exposures and, where necessary, enforcing
operations and market risk departments and assesses the
reductions in overall market risk exposure. Regular stress test
position of Compliance & Legal Risk, Reputation Risk & Strategic
scenarios are applied to interest rates, credit spreads, exchange
Risk. It also monitors the execution of risk management policies
rates, commodity prices and equity prices. This covers all asset
and procedures of the Bank. Good Corporate Governance is
classes in the financial markets, banking and trading books.
an integral part of the Bank to safeguard the interest of its
Besides, the design and results of such stress tests are discussed
stakeholders.
in ALCO meeting and ensure that appropriate contingency plans
are in place.
5.1.1.b. Risk Appetite and Tolerance Limits
Risk appetite in the context of the Bank is defined as the level
The stress testing mechanism at SBL aims to address:
and nature of risk that the bank is willing to take for pursuing
its mission on behalf of its shareholders, subject to constraints
a) Concentration risk;
imposed by other stakeholders, such as debt holders, regulators,
b) Illiquidity of markets in stressed market conditions;
and customers. It provides a framework for strategic decision
c) One way markets;
making for the Bank. The Bank sets out the aggregated level and
d) Event and jump to default risks;
risk types it accepts in order to achieve its business objectives
e) Deep out of the money positions;
in the Risk Management Policy of the Bank. The Bank’s actual
f) Positions subject to the gapping of prices; and
performance is reported against approved risk profile and risk
g) Other Risks

224 SIDDHARTHA BANK LIMITED

The Bank’s stress tests are both of a quantitative and qualitative advanced techniques and develops other scenarios. The Bank
nature, incorporating both market risk and liquidity risk aspects uses both scenario analysis and sensitivity analysis to conduct
of market disturbances. Quantitative criteria identify plausible various stress simulations and its probable impact on risks
stress scenarios to which bank could be exposed. Qualitative and capital adequacy ratio. Sensitivity analysis is carried out
criteria emphasizes that two major goals of stress testing are to assess the impact of a move in one particular risk driver, the
to evaluate the capacity of the bank’s capital to absorb potential source of the shock not being identified, on the Bank’s financial
large losses and to identify steps the Bank can take to reduce its condition. Likewise, scenario tests consider the impact of
risk and conserve capital. This assessment is integral to setting simultaneous moves in a number of risk drivers, the stress event
and evaluating the Bank’s strategy and the results of stress being well defined.
testing are routinely communicated to senior management and,
periodically, to the Risk Management Committee and the Board. 5.1.2.a. Credit Risk
Credit risks are the risk associated with the probability of default
The Bank carries out stress testing in two broad areas based on of loan provided by the bank. Bank is exposed to credit risk to a
general scenarios and specific scenarios which are discussed much larger extent as the bank’s business is mainly concentrated
below: on booking of risk assets. Hence, the credit risks comprises of
the highest risk exposure of the bank. Management of the credit
A. General Scenarios: risks largely signifies the risk management of the bank as whole.
The Bank subjects its portfolios to a series of simulated stress
scenarios. The Bank stresses its portfolios with the shocks of n It is measured as the amount which could be lost if a customer
the magnitude experienced elsewhere, even when the Bank has or counterparty fails to make repayments. In the case of
never been exposed to those in the past. derivatives, the measurement of exposure takes into account
the current mark to market value to the Bank of the contract
The Bank has formulated stress testing framework where various and the expected potential change in that value over time
historical scenarios have been analyzed. The Bank carries out caused by movements in market rates;
stress testing in line with the stress testing framework on a n It is monitored within limits, approved by individuals within a
regular basis as prescribed by ALCO or NRB guidelines issued framework of delegated authorities. These limits represent
from time to time. the peak exposure or loss to which the Bank could be
subjected should the customer or counterparty fail to perform
B. Specific Scenarios to capture the specific its contractual obligations;
characteristics of portfolio: n It is managed through a robust risk control framework which
In addition to the above general scenarios, the Bank has also outlines clear and consistent policies, principles and guidance
developed its own stress tests which it identifies as most adverse for credit risk management.
based on the characteristics of its portfolio. The results are
reviewed periodically by Senior Management and are reflected 5.1.2.b. Credit Risk Management
in the policies and limits set by management and the Board of Credit Risk is most prominent risk amongst the other associated
Directors. risk for any Bank which is a probability of loss due to a borrower’s
failure to make payments. Credit Risk Management is a practice
Stress test scenarios are continually reviewed and updated of loss mitigating procedure by understanding the adequacy
to respond to changes in positions and economic events. The of bank’s capital and loan loss reserves at a given point of time.
Finance Department assess the likely impact of interest rate In order to prudently manage the credit risk of the bank during
movement and duration on existing portfolio as well as on fresh day to day functioning, the Bank adapts various risk mitigation
investment and the same is discussed in the ALCO meeting along measures.
with each fresh investment proposal.
The bank’s objective in credit risk management is to minimize
Results of Stress Testing the risk and maximize the risk adjusted rate of return by
The result of stress testing is communicated to Assets Liability onboarding and maintaining risk assets within the acceptable
Committee (ALCO) as well as Risk Management Committee parameters. The Bank has its own credit policy and credit related
(RMC) on regular basis. The same is also discussed in detail policies to manage the Credit Risk Management philosophy
with the Board of Directors. The report of stress testing is also that involves a continual measurement of probability of default/
shared with Nepal Rastra Bank as per the requirement of Unified loss; identification of possible risks and mitigations. In order to
Directives issued by Nepal Rastra Bank. manage and eliminate the credit risk, the Bank has a practice
of maintaining the best quality assets in its book. The Bank’s
Scenario Analysis and Sensitivity Analysis credit policy elaborates detailed procedures for proper risk
Scenario analysis and sensitivity analysis is conducted through management. The Bank has delegated credit approval limits
the model developed by Bank Supervision Department, Nepal to various officials to approve and sanction various amount
Rastra Bank. However, on need basis, the Bank also adopts other of credit request based on their individual expertise and risk
judgment capability. The Bank makes credit extension decision

ANNUAL REPORT 2022-23 225

by assessing each business proposal thoroughly. The credit impairment exists for an individually assessed financial asset,
application exceeding certain limit requires to be reviewed it includes the asset in a group of financial assets with similar
by Credit Risk Department (CRD) which act as an independent credit risk characteristics such as collateral type, past due status
control center in credit approval process performing independent and other relevant factors and collectively assesses them for
review of credit proposals. It also ensures that the inherent impairment. However, assets that are individually assessed for
credit risks that associated with the business are addressed impairment and for which an impairment loss is or continues
appropriately through coverage of better safety margin, to be recognized are not included in a collective assessment of
additional collateral back up and lower exposure to keep the impairment.
business at low leverage.
Impairment is assessed on a collective basis in two
Bank has standardized Product Papers, guidelines, procedure circumstances:
in place for proper governance for all credit relationship. The
provisions of Capital Adequacy Framework - 2015 have been n To cover losses which have been incurred but have not yet
complied in line to line basis to overcome the Credit Risk. been identified on loans subject to individual assessment; and
n For homogeneous groups of loans those are not considered
As a check and balance mechanism, each credit case requires individually significant.
at least dual approval. Regular monitoring of the credit portfolio
based on Sector, Product, NPA etc., ensures that the Bank does Incurred but not yet identified impairment
not run the risk of concentration of portfolio in a particular Individually assessed financial assets for which no evidence of
business sector a single borrower, or products. Similarly the loss has been specifically identified on an individual basis are
Bank also exercises controlled investment policy with adequately grouped together according to their credit risk characteristics
equipped resource looking after the investment decisions. for the purpose of calculating an estimated collective loss. This
reflects impairment losses that the bank has incurred as a result
The Bank has separate Central Credit Administration and Control of events occurring before the reporting date, which the Bank
Department (CCAC), which prepares security documents and is not able to identify on an individual loan basis and that can be
retains custody of same. This is a four eyes concept in verifying reliably estimated.
the security aspects in line with the approved conditions. CCAC
is also independent to business division and it ensures, on an These losses will only be individually identified in the future. As
ongoing basis, on the safety and going concern of the borrowers, soon as information becomes available which identifies losses on
through post relationship assessment. Periodic review of all individual financial assets within the group, those financial assets
accounts under credit exposure is one of the prudent practices are removed from the group and assessed on an individual basis
that the Bank follows in order to take necessary steps to mitigate for impairment.
the risk.
The collective impairment allowance is determined after taking
5.1.2.c. Impairment Assessment and Credit Risk into account:
Mitigation
The Bank creates impairment allowances for impaired loans n Historical Loss Experience in portfolios of similar credit risk;
promptly and appropriately. and
n Management’s experienced judgment as to whether current
Impairment Assessment Methodology economic and credit conditions are such that the actual level
of inherent losses at the reporting date is like to be greater or
a. Impairment of Financial Assets carried at less than that suggested by historical experience.
Amortized Cost
The Bank first assesses individually whether objective evidence
of impairment exists for financial assets that are individually Homogeneous groups of Financials Assets
significant. When an account is classified as default or when Statistical methods are used to determine impairment losses
the Bank no longer expect to recover the principle or interest on a collective basis for homogenous groups of financial assets.
due on a loan in full or in accordance with the original terms Losses in these groups of financial assets are recorded on an
and conditions, it is assessed for impairment. If exposures are individual basis when individual financial assets are written off, at
secured, the current net realizable value of the collateral will be which point they are removed from the group.
taken into account when assessing the need for an impairment
allowance. When the net present value of the collateral is Bank uses the following method to calculate historical loss
sufficiently adequate to cover the outstanding facilities, experience on collective basis:
impairment is not calculated for such cases.
After grouping of loans on the basis of homogeneous risks,
In the event Bank determines that no objective evidence of the Bank uses net flow rate method. Under this methodology,

226 SIDDHARTHA BANK LIMITED

the movement in the outstanding Impairment calculation by following the methodology described in Pt. 5.1.2.c
balance of customers into default above
categories over the periods is
used to estimate the amount of i) Firstly, top borrowers constituting 25% (approximately) of total funded exposure of the
financial assets that will eventually Bank is subjected to Individual Impairment Testing in each financial year i.e. FY 2021-22 and
be irrecoverable, as a result of FY 2022-23.
the events occurring before the
reporting date which the Bank is not ii) Loans and advances as filtered out following point-(i) were tested for individual impairment
able to identify on an individual loan including following criteria but not limited to:
basis.
n Known Cash Flow difficulties experienced by the borrowers:
Under this methodology, loans are n Past due contractual payments of either principal or interest;
grouped into ranges according n Breach of loan covenants or conditions;
to the number of days in arrears n The probability that the borrower will enter bankruptcy or other financial reorganization;
and statistical analysis is used to and
estimate the likelihood that loans in n A significant downgrading in credit rating by an external credit rating agency.
each range will progress through the n Bank’s aggregate exposure to the customer;
various stages of delinquency and n The viability of the customer’s business model and their capacity to trade successfully out
ultimately prove irrecoverable. of financial difficulties and generate sufficient cash flows to service debt obligations;
n The amount and timing of expected receipts and recoveries;
Current economic conditions n The extent of other creditors ‘commitments ranking ahead of, or pari-pasu with the Bank
and portfolio risk factors are also and the likelihood of other creditors continuing to support the company;
evaluated when calculating the n The realizable value of security and likelihood of successful repossession;
appropriate level of allowance
required to cover inherent loss.
These additional macro and portfolio As per the impairment testing conducted as per Pt. (ii), no loans and advances were identified
risk factors may include: as individually impaired in FY 2021-22 as well as FY 2022-23.

n Recent loan portfolio growth and iv) All loans and advances were then grouped into homogenous types such as home loans,
product mix working capital loans, term loans, etc. to calculate collective impairment.
n Unemployment rates
n Gross Domestic Production (GDP) v) Collective impairment was calculated following net flow rate method. Under this
Growth methodology, the movements in the outstanding balance of customers into default
n Inflation categories over the periods are used to estimate the amount of financial assets that will
n Interest rates eventually be irrecoverable, as a result of the events occurring before the reporting date
n Changes in government laws and which the Bank is not able to identify on an individual loan basis.
regulations
n Property prices vi) Collective impairment as per the method mentioned in Point (v) in FY 2021-22 and
n Payment status FY 2022-23 is shown below:
Amount (NPR)
But, the amount of provision to be
PARTICULARS 2021-22 2022-23
created against Loans and Advances
shall be higher of the following two Total Collective Impairment 611,947,928 747,390,433
amounts:
Write off of Loans and Receivables
Loans (and the related impairment allowance) are normally written off, either partially or in
i) Impairment calculated as
full, when there is no realistic prospect of recovery. Where loans are secured, this is generally
per Impairment Assessment
after receipt of any proceeds from the realization of security. In circumstances where the
Methodology as described in Point
realizable value of any collateral has been determined and there is no reasonable expectation
5.1.2.c above or,
of further recovery, write off may be earlier. During FY 2022-23, the Bank has written of credit
card loans amounting to NPR 1,174,376 related to 27 parties. The list of such parties along
ii) Loan Loss Provision calculated as
with written off amount is mentioned below:
per the provisions of Directive No. 2,
Unified Directives, 2079.

ANNUAL REPORT 2022-23 227

SN NAME OF THE BORROWER WRITTEN OFF AMOUNT (NPR) SN NAME OF THE BORROWER WRITTEN OFF AMOUNT (NPR)

1 Pradeep K.S Kanu 6,931 15 Dipendra Shamsher Kunwar 60,258

2 Niroj Shrestha 7,965 16 Namrata Shrestha 33,961
3 Durga Kumari Chaulagain 17,461 17 Pramod Kumar Khawas 59,105
4 Rupak Karki 22,681 18 Rahul Rai 86,336
5 Punam Thapa 25,082 19 Rajiv Pd. Shah Teli 60,791
6 Shivendra Kumar Verm 97,690 20 Roshani Khadka 60,812
7 Manoj Agrawal 24,701 21 Sagar Thapa 99,813
8 Khem B.B Thapa 40,350 22 Sarita Kumari Shrestha 24,531
9 Rajesh Kr Chhetri 47,666 23 Shyam Krishna Amaty 65,670
10 Mo. Wakil Halwai 26,262 24 Sudeep KC 83,743
11 Mukesh Kumar Sharma 57,853 25 Uttam Luitel 37,009
12 Arun Kumar Limbu 6,931 26 Lekh Nath Pokhrel 18,703
13 Achyut Sapkota 43,140 27 Deepak Raj Joshi 24,811
14 Bikash Shrestha 34,117 Total 1,174,376

Collateral Management removed from equity and recognized

The Bank seeks to use collateral, where possible, to mitigate its risks on financial assets. in the Statement of Profit or Loss.
The collateral comes in various forms such as cash, securities, letters of credit/guarantees, However, any subsequent increase
real estate, receivables, inventories, other non-financial assets and credit enhancements in the fair value of an impaired
such as netting agreements. The fair value of collateral is generally assessed, at a minimum, equity security that has been
at inception and based on the guidelines issued by the Nepal Rastra Bank. Non-financial classified as financial assets at fair
collateral, such as real estate, is valued based on data provided by third parties such as value through OCI is recognized in
independent valuator and audited financial statements. other comprehensive income. Bank
writes-off certain financial assets at
Credit Risk Mitigants availed under CRM fair value through OCI when they are
Types of eligible credit risk mitigants used and the benefits availed under CRM as at July 16, determined to be uncollectible.
2023 are as follows:
5.1.3.a. Liquidity Risk
PARTICULARS ELIGIBLE CRM ( NPR ‘000) Liquidity risk is the potential for
loss to a bank arising from either its
Deposit with Banks 3,399,210
inability to meet its obligations or to
Deposit with Other Banks/FIs -
fund increases in assets as they fall
Total 3,399,210 due without incurring unacceptable
cost or losses. Liquidity is the ability
b. Impairment of Financial assets at fair value through OCI of an institution to transform its
For financial assets at fair value through OCI, Bank assesses at each reporting date whether
assets into cash or its equivalent in a
there is objective evidence that an investment is impaired.
timely manner at a reasonable price
to meet its commitments as they fall
In the case of debt instruments, Bank assesses individually whether there is objective due. Liquidity risk is considered a
evidence of impairment based on the same criteria as financial assets carried at amortized major risk for banks. It arises when
cost. However, the amount recorded for impairment is the cumulative loss measured as the the cushion provided by the liquid
difference between the amortized cost and the current fair value, less any impairment loss assets are not sufficient enough
on that investment previously recognized in the Statement of Profit or Loss. Future interest to meet its obligation. In such a
income is based on the reduced carrying amount and is accrued using the rate of interest situation banks often meet their
used to discount the future cash flows for the purpose of measuring the impairment loss. If, liquidity requirements from market.
in a subsequent period, the fair value of a debt instrument increases and the increase can be Funding through market depends
objectively related to a credit event occurring after the impairment loss was recognized, the upon liquidity in the market and
impairment loss is reversed through the Statement of Profit or Loss. borrowing bank’s liquidity.

In the case of equity investments classified as financial assets at fair value through OCI, Liquidity risk is:
objective evidence would also include a ‘significant’ or ‘prolonged’ decline in the fair value of
the investment below its cost. Where there is evidence of impairment, the cumulative loss n Measured using maturity ladder
measured as the difference between the acquisition cost and the current fair value, less any analysis
impairment loss on that investment previously recognized in Statement of Profit or Loss is

228 SIDDHARTHA BANK LIMITED

n Monitored against the Bank’s liquidity risk management dealers and also monitors the liquidity position of the Bank. For
framework and overseen by Asset and Liability Management the purpose of proper check and control, the front dealing room
Committee. of treasury and the back office have different reporting line. The
n Managed on a stand-alone basis with no reliance on any middle office of the Bank is independent of Treasury function
related party or the Nepal Rastra Bank, unless this represents and report separately to ALCO and integrated risk management
routine established business as usual market practice. department.

5.1.3.b. Management of liquidity risk 5.1.4.c. Market Risk Assessment Methodology

The board has ensured that the bank has necessary liquidity Out of the various components of market risk, foreign exchange
risk management framework and bank is capable of confronting risk is the predominant risk in Nepal. Thus, a net open position
uneven liquidity scenarios. The bank has formulated liquidity approach has been adopted to measure the market risk exposure
policies, contingency funding planning which are recommended of the bank in aggregation and the capital requirement in
by senior management/ALCO and approved by the Board of commensurate of the same as set out by Capital Adequacy
Directors. The bank utilizes flow measures to determine its cash Framework issued by Nepal Rastra Bank.
position. A maturity ladder analysis estimates a bank’s inflows and
outflows and thus net deficit or surplus (GAP) over a time horizon. 5.1.5.a. Operational Risk
A maturity ladder is a useful device to compare cash inflows and Operational risks are risk of direct or indirect loss or damaged
outflows both on a day-to-day basis and over a series of specified reputation resulting from inadequate or failed internal processes,
time periods as presented in the NRB Ni.Fa.No.5.1 under NRB people and systems, or from external events. Operational risk has
Directives No. 5. always been inherent to the Bank and exists in all the activities
performed.
Liquidity of the bank is assessed, measured and maintained by
Treasury Department by ensuring minimal compliance with Nepal 5.1.5.b. Management of Operational Risk
Rastra Bank prescribed ratios such as CRR, SLR, and Credit to As a part of monitoring operational risks, the Bank has devised
Capital and Deposit Ratio and Liquidity Ratio. The department Standard Operating Procedures for various banking functions,
also maintains investments over and above the prescribed limit which are reviewed and revised time to time as per the business
to cope up with the unprecedented liquidity risks that the Bank is dynamics.
ever exposed to.
The Bank has adopted dual control mechanism in its all
5.1.4.a. Market Risk operational activities where each and every financial and non-
Market risks are the risk of losses in on-balance sheet and financial transaction is subject to approval from an authority
off-balance sheet positions arising from adverse movements in higher than the transaction initiator. Regular review meetings are
market prices. The major constituents of market risks are: conducted to assess the adequacy of risk monitoring mechanism
and required changes are made as and when felt necessary.
a) The risks pertaining to interest rate related instruments; Independent reconciliation unit is established to conduct daily
b) Foreign exchange risk (including gold positions) throughout reconciliation of all Nostro/agency accounts, Inter-Branch and
the bank; and Inter-Department account under direct supervision of Head
c) The risks pertaining to investment in equities and Finance & Accounts, Head Office. The Bank has strong MIS
commodities. in place to monitor the regular operational activities. In order
d) The risk pertaining to concentration and correlation factors in to have better focus on managing operational risks across
market transactions branches and to monitor them from Head Office level, the Bank
has independent Operations Risk Management Department and
5.1.4.b. Management of Market Risk Compliance Department working as second line of defense as per
The Board of Directors of the Bank approved the Market Risk risk management framework of the Bank. The Risk Management
management policy and framework of the Bank. As for the Committee of the Board regularly meets and reviews the risk
management and monitoring of market and liquidity risk, the management processes and risk position of the Bank.
Bank has an active Assets and Liability Management Committee
(ALCO) in place which meets regularly and takes stock of the 5.1.5.c. Operational Risk Assessment Methodology
Bank’s assets and liability position and profile of assets & Operational risks are assessed employing the Basic Indicators
liabilities, monitors risks arising from changes in exchange rates Approach as set out by Capital Adequacy Framework issued by
in foreign currencies, review GAP analysis and devise equity Nepal Rastra Bank. The Basic Indicators Approach assesses
investment strategies. All market risk components are managed operational risk in aggregation and is calculated by dividing
by treasury consisting of front office dealers with specific the operational risk capital charge by 11%. Bank assesses
dealing limits, treasury middle office to monitor, measure and the operational risk based on specific situation, historical
analyze risk related to treasury management and independent observations and internal assumption by tracking and recording
back office. The back office executes the deals made by the all relevant risk data of frequency, severity, operational losses

ANNUAL REPORT 2022-23 229

and other external factors. The Bank uses step by step risk management approach to monitor, assess, evaluate and design action plan to
mitigate risks in future.

5.1.6 Fair value of financial assets and liabilities

Fair value is a market-based measurement, not an entity specific measurement. For some assets and liabilities, observable market
transactions or market information might be available. For other assets and liabilities, observable market transactions and market
information might not be available. However, the objective of a fair value measurement in both cases is the same – to estimate the price at
which an orderly transaction to sell the asset or to transfer the liability would take place between market participants at the measurement
date under current market conditions (i.e. an exit price at the measurement date from the perspective of a market participant that holds
the asset or owes the liability).

Fair values are determined according to the following hierarchy:

Level-1 Inputs
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date. Held for trading investments and financial assets at fair value through OCI have been recorded using Level 1 inputs.

Level-2 Inputs
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or
indirectly. Such observable inputs include:

n Quoted price for similar instruments in active market

n Quoted price for identical or similar instruments in inactive market
n Financial instruments are valued using models where all significant inputs are observable

Level-3 Inputs
Level 3 inputs are unobservable inputs for the asset or liability. Fair value measurements are derived using valuation techniques in which
current market transactions or observable market data are not available. Under this, instruments are fair valued using valuation models
which have been tested against prices or inputs to actual market transactions and make use of the best estimates of the most appropriate
model assumptions. The Bank has used latest audited financial statements to arrive at book value for investment in unquoted shares.

5.2. CAPITAL MANAGEMENT

i. Qualitative Disclosures
Capital is very crucial component in a business. In case of Banks, sufficient capital needs to be maintained for business growth. Capital
management approach is driven by its desire to maintain a strong capital base to support the business growth and to meet the regulatory
capital requirements.

Capital planning is an integral part of the Bank’s strategic plan. The Bank has robust capital planning and management to meet its projected
growth over the upcoming years during the normal as well as stressed situations. The Bank ensures that adequate level of capital is
maintained at all times. The Bank is well capitalized and is able to maintain required capital through internal generation and also through
other sources, if required.

Main Features and Terms & Conditions of Capital Instruments

The Bank has raised capital to the tune of NPR 7,662,559,000 by issuing debentures qualified as subordinated term debt. The main features
and terms & conditions of the debentures outstanding as on July 16, 2023 are given below:

DEBENTURE NAME AMOUNT INTEREST RATE ISSUE DATE MATURITY DATE

SBL Debenture 2082 (Face Value NPR 1,000 per debenture) 2,162,559,000 10.50% 1-13-2019 1-12-2026
SBL Debenture 2083 (Face Value NPR 1,000 per debenture) 2,500,000,000 10.25% 9-12-2019 9-10-2026
SBL Debenture 2084 (Face Value NPR 1,000 per debenture) 3,000,000,000 8.50% 10-13-2020 10-12-2027
Total 7,662,559,000

230 SIDDHARTHA BANK LIMITED

Other Terms & Conditions

1. The debentures are redeemable at the time of maturity at face value.

2. Interest is payable on a semi-annual basis.

ii. Quantitative Disclosures

1. Capital structure and capital adequacy

n Tier 1 capital and a breakdown of its components

NPR in ‘000

S.N. PARTICULARS AMOUNT

Tier 1 Capital (Core Capital) (CET1+ AT1) 21,782,517

Common Equity Tier 1 (CET 1) 21,782,517
a Paid Up Equity Share Capital 14,089,980
b Equity Share Premium -
c Proposed Bonus Equity shares -
d Statutory General Reserves 4,409,196
e Retained Earnings 663,610
f Unaudited Current year Cumulative Profit/(Loss) -
g Capital Adjustment Reserve 19,428
h Debenture Redemption Reserve 3,041,706
i Less: Intangible Assets 166,000
j Less: Investment in equity of institutions with financial interests 275,403
k Less: Deferred tax Assets -
Additional Tier 1 (AT1) -

n Tier 2 capital and a breakdown of its components

NPR in ‘000

S.N. PARTICULARS AMOUNT

a Cumulative and/or Redeemable Preference Shares -

b Subordinated Term Debt 4,765,024
c Hybrid Capital Instruments -
d General Loan Loss Provision 2,353,768
e Investment Adjustment Reserve 11,365
f Assets Revaluation Reserve -
g Exchange Equalization Reserve 69,889
h Other Reserves -
Total Tier 2 Capital 7,203,045

n Subordinated Term Debt

1. The Bank also issued SBL Debenture 2082 in FY 2018-19 for NPR 2.16 billion with face value of NPR 1000. The salient features of SBL
Debenture 2082 are as follows:
n Maturity period: 7 Years

n Interest rate: 10.50% per annum

n Interest Payment frequency: Half Yearly

n Claim in case of liquidation: After depositors

n Debenture Redemption Reserve shall be created to redeem the bond at maturity.

n The debenture can be pledged with other banks and financial institution.

n Listed with Nepal Stock Exchange.

ANNUAL REPORT 2022-23 231

2. The Bank also issued SBL Debenture 2083 in FY 2019-20 for NPR 2.50 billion with face value of NPR 1000. The salient features of SBL
Debenture 2083 are as follows:
n Maturity period: 7 Years

n Interest rate: 10.25% per annum

n Interest Payment frequency: Half Yearly

n Claim in case of liquidation: After depositors

n Debenture Redemption Reserve shall be created to redeem the bond at maturity.

n The debenture can be pledged with other banks and financial institution.

n Listed with Nepal Stock Exchange.

3. The Bank also issued SBL Debenture 2084 in FY 2020-21 for NPR 3 billion with face value of NPR 1000. The salient features of SBL
Debenture 2084 are as follows:
n Maturity period: 7 Years

n Interest rate: 8.50% per annum

n Interest Payment frequency: Half Yearly

n Claim in case of liquidation: After depositors

n Debenture Redemption Reserve shall be created to redeem the bond at maturity.

n The debenture can be pledged with other banks and financial institution.

n Listed with Nepal Stock Exchange.

n Deductions from Capital:

The Bank has investments of NPR 51 million in the equity shares of Siddhartha Capital Limited, NPR 179.40 million in the equity shares
of Nepal Clearing House Limited, NPR 30 million in equity shares of Avasar Equity Limited and NPR 15 million in equity shares of Nepal
Electronic Payment Systems Limited which has been deducted from the core capital while computing capital adequacy.

n Total Qualifying Capital

NPR in ‘000
PARTICULARS AMOUNT

Common Equity Tier 1 (CET1) 21,782,517

Additional Tier 1 (AT1) -
Supplementary Capital (Tier 2) 7,203,045
Total Capital Fund 28,985,562

n Capital Adequacy Ratio

NPR in ‘000
PARTICULARS AMOUNT

Common Equity Tier 1 Ratio 9.37%

Core Capital Ratio - Tier 1 9.37%
Total Capital Adequacy Ratio (Tier 1 & Tier 2) 12.47%

n Internal approach of the Bank to assess capital adequacy

In order to be prepared for distressed economic environments, the Bank assesses the adequacy of its capital by incorporating various
potential scenarios and being responsive to changes in the economy, market, competitive or political landscape, or other external factors.

Following elements are taken into consideration while assessing capital adequacy of the Bank:

n Minimum capital requirements as per NRB

n Business growth prospects and risks
n Dividend policy
n Potential capital raising instruments such as equity, preference stocks, bonds, etc.
n Various stress scenarios
n Disposing of assets
n Others as considered necessary by the senior management

232 SIDDHARTHA BANK LIMITED

Risk exposures

n Risk weighted exposures for Credit Risk, Market Risk and Operational Risk
NPR in ‘000
PARTICULARS AMOUNT

Risk Weighted Exposure for Credit Risk 213,118,497

Risk Weighted Exposure for Operational Risk 9,904,181
Risk Weighted Exposure for Market Risk 392,261
Adjustments under Pillar II:
Add: 3% of Gross income of last FY due to supervisor is not satisfied with sound practice of 2,241,402
management of operational risk (6.4 a 7)
Add: 3% of the total RWE due to supervisor is not satisfied with the overall risk management 6,702,448
policies and procedures of the bank (6.4 a 9)
Total Risk Weighted Exposure (After Pillar II Adjustment) 232,358,788

n Risk Weighted Exposures under different categories of Credit Risk

NPR in ‘000

S.N. PARTICULARS RISK WEIGHTED EXPOSURE

1 Claims on Domestic Public Sector Entities -

2 Claims on domestic banks that meet capital adequacy requirements 1,453,244
3 Claims on domestic banks that do not meet capital adequacy requirements -
4 Claims on foreign bank (ECA 0-1) 1,251,391
5 Claims on foreign bank (ECA 2) 1,526,031
6 Claims on foreign bank (ECA 3-6) 1,052,853
7 Claims on foreign bank incorporated in SAARC region operating with a buffer of 1% above their
respective regulatory capital requirement 363,879
8 Claims on Domestic Corporates 104,840,860
9 Claim on Foreign Corporate (ECA 0-1) -
10 Claim on Foreign Corporate (ECA 2) -
11 Claims on Regulatory Retail Portfolio (not overdue) 31,018,082
12 Claims secured by residential properties 5,366,823
13 Claims secured by residential properties (overdue) 314,789
14 Claims Secured by Commercial Real Estate 97,213
15 Past due claims(except for claim secured by residential properties) 9,305,604
16 High Risk Claims 24,815,460
17 Lending against Shares(up to NPR 2.5 Million) 316,614
18 Trust Receipt Loans for Trading Firms 2,312,414
19 Investments in equity and other capital instruments of institutions listed in the stock exchange 2,266,905
20 Investment in Equity of Institution not listed in the Stock Exchange 1,806,079
21 Staff Loan secured by residential property 2,112,245
22 Cash in transit and other cash items in the process of collection 13,709
23 Other Assets 5,549,049
24 Off Balance Sheet Items 17,335,253
Total Risk Weighted Exposures under different categories of Credit Risk 213,118,497

n Total Risk Weighted Exposure calculation table

NPR in ‘000
PARTICULARS AMOUNT

Total Risk Weighted Exposures 232,358,788

Tier 1 Capital (Core Capital) ( CET1+AT1) 21,782,517
Total Capital Fund 28,985,562
Total Core Capital to Total Risk Weighted Exposures % 9.37%
Total Capital Fund to Total Risk Weighted Exposures % 12.47%

ANNUAL REPORT 2022-23 233

 Detail of on-balance sheet exposures

ON-BALANCE SHEET EXPOSURES BOOK VALUE SPECIFIC PROVISION ELIGIBLE CRM NET VALUE RISK WEIGHT RISK WEIGHTED
(A) (B) (C) (D)=(A)-(B)-(C) (E) EXPOSURES
(F)=(D)*(E)

Cash Balance 3,797,630,214 - - 3,797,630,214 0% -

Balance With Nepal Rastra Bank 8,879,504,444 - - 8,879,504,444 0% -
Gold - - - - 0% -

234 SIDDHARTHA BANK LIMITED

Investment in Nepalese Government Securities 54,037,334,615 - - 54,037,334,615 0% -
All claims on Government of Nepal 3,186,089,695 - - 3,186,089,695 0% -
Investment in Nepal Rastra Bank securities - - - - 0% -
All other claims on Nepal Rastra Bank - - - - 0% -
Claims on Foreign Government and Central Bank (ECA 0-1) - - - - 0% -
Claims on Foreign Government and Central Bank (ECA-2 ) - - - - 20% -
Claims on Foreign Government and Central Bank (ECA-3 ) - - - - 50% -
Claims on Foreign Government and Central Bank (ECA-4-6 ) - - - - 100% -
Claims on Foreign Government and Central Bank (ECA-7 ) - - - - 150% -
Claims on BIS,IMF, ECB, EC and on Multilateral Development - - - - 0% -
Banks(MDB’s) recognized by the framework
Claims on other Multilateral Development Banks - - - - 100% -
Claims on Domestic Public Sector Entities - - - - 100% -
Claims on Public Sector Entity (ECA 0-1) - - - - 20% -
Claims on Public Sector Entity (ECA 2) - - - - 50% -
Claims on Public Sector Entity (ECA3-6) - - - - 100% -
Claims on Public Sector Entity (ECA 7) - - - - 150% -
Claims on domestic banks that meet capital 7,266,220,124 - - 7,266,220,124 20% 1,453,244,025
adequacy requirements
Claims on domestic banks that do not meet capital - - - - 100% -
adequacy requirements
Claims on foreign bank (ECA 0-1) 6,256,953,488 - - 6,256,953,488 20% 1,251,390,698
Claims on foreign bank (ECA 2) 3,052,062,221 - - 3,052,062,221 50% 1,526,031,110
Claims on foreign bank (ECA 3-6) 1,052,852,934 - - 1,052,852,934 100% 1,052,852,934
Claims on foreign bank (ECA 7) - - - - 150% -
Claims on foreign bank incorporated in SAARC region operating 1,819,393,802 - - 1,819,393,802 20% 363,878,760
with a buffer of 1% above their respective regulatory
capital requirement
Claims on Domestic Corporates (Unrated) 80,826,141,750 295,301,129 444,968,456 80,085,872,165 100% 80,085,872,165
Claims on Domestic Corporates (A+ to A) 683,838,071 - - 683,838,071 80% 547,070,457
Claims on Domestic Corporates BBB+ & below 24,619,998,475 127,098,249 284,983,043 24,207,917,182 100% 24,207,917,182
Claim on Foreign Corporates (ECA 0-1) - - - 20% -
Claim on Foreign Corporates (ECA 2) - - - - 50% -
Claim on Foreign Corporates (ECA 3-6) - - - - 100% -
 ON-BALANCE SHEET EXPOSURES BOOK VALUE SPECIFIC PROVISION ELIGIBLE CRM NET VALUE RISK WEIGHT RISK WEIGHTED
(A) (B) (C) (D)=(A)-(B)-(C) (E) EXPOSURES
(F)=(D)*(E)

Claim on Foreign Corporates (ECA 7) - - - 150% -

Regulatory Retail Portfolio(Not Overdue) 42,883,040,834 66,253,522 1,459,344,295 41,357,443,017 75% 31,018,082,263
Claims fulfilling all criterion of regulatory retail except granularity - - - - 100% -
Claims secured by residential properties 8,968,048,517 23,342,816 - 8,944,705,701 60% 5,366,823,421
Claims not fully secured by residential properties - - - 150% -
Claims secured by residential properties (overdue) 358,706,277 43,917,413 - 314,788,864 100% 314,788,864
Claims secured by Commercial real estate 97,213,427 - - 97,213,427 100% 97,213,427
Past due claims (except for claim secured by residential properties) 8,131,618,181 1,927,882,330 - 6,203,735,852 150% 9,305,603,777
High Risk claims 16,670,351,636 126,711,543 - 16,543,640,093 150% 24,815,460,140
Lending against Shares(up to NPR 2.5 Million) 316,613,608 - - 316,613,608 100% 316,613,608
Lending against securities (bonds) - - - - 100% -
Trust Receipt Loans for Trading Firms 1,929,687,312 2,675,600 - 1,927,011,712 120% 2,312,414,055
Investments in equity and other capital instruments of 4,572,851,363 2,305,946,174 2,266,905,189 100% 2,266,905,189
institutions listed in the stock exchange
Investments in equity and other capital instruments of 1,301,522,640 97,470,013 - 1,204,052,627 150% 1,806,078,941
institutions not listed in the stock exchange
Staff Loan secured by residential property 4,224,489,712 - 4,224,489,712 50% 2,112,244,856
Interest Receivable/ Claim on Government Securities 939,079,304 - - 939,079,304 0% -
Cash In transit and other cash items in the process of collection 68,543,878 - - 68,543,878 20% 13,708,776
Other Assets 6,941,549,639 1,392,501,083 - 5,549,048,556 100% 5,549,048,556
Total 292,881,336,160 6,409,099,871 2,189,295,795 284,282,940,494 195,783,243,203

ANNUAL REPORT 2022-23

235
 Detail of off-balance sheet exposures

OFF-BALANCE SHEET EXPOSURES BOOK VALUE SPECIFIC PROVISION ELIGIBLE CRM NET VALUE RISK WEIGHT RISK WEIGHTED
(A) (B) (C) (D)=(A)-(B)-(C) (E) EXPOSURES
(F)=(D)*(E)

Revocable Commitments - - - - 0% -
Bills Under Collection 672,609,716 - - 672,609,716 0% -
Forward Exchange Contract Liabilities - - - - 10% -

236 SIDDHARTHA BANK LIMITED

LC Commitments With Original Maturity Up to 6 months
domestic counterparty 6,297,674,719 210,145,924 6,087,528,795 20% 1,217,505,759
foreign counterparty (ECA Rating 0-1) - - 20% -
foreign counterparty (ECA Rating 2) - - 50% -
foreign counterparty (ECA Rating 3-6) - - 100% -
foreign counterparty (ECA Rating 7) - - 150% -
L C Commitments With Original Maturity Over 6 months
domestic counterparty 4,063,040,869 - 435,569,438 3,627,471,431 50% 1,813,735,715
foreign counterparty (ECA Rating 0-1) - - - - 20% -
foreign counterparty (ECA Rating 2) - - - - 50% -
foreign counterparty (ECA Rating 3-6) - - - - 100% -
foreign counterparty (ECA Rating 7) - - - - 150% -
Bid Bond and Performance Bond and Counter guarantee
domestic counterparty 10,802,906,409 - 515,254,564 10,287,651,845 40% 4,115,060,738
foreign counterparty (ECA Rating 0-1) - - - - 20% -
foreign counterparty (ECA Rating 2) - - - - 50% -
foreign counterparty (ECA Rating 3-6) - - - - 100% -
foreign counterparty (ECA Rating 7) - - - - 150% -
Underwriting commitments - - - - 50% -
Lending of Bank’s Securities or Posting of Securities as collateral - - - - 100% -
Repurchase Agreements, Assets sale with recourse - - - - 100% -
Advance Payment Guarantee 2,050,725,614 - 38,276,000 2,012,449,614 100% 2,012,449,614
Financial Guarantee - - - - 100% -
Acceptances and Endorsements 3,788,001,535 - - 3,788,001,535 100% 3,788,001,535
Unpaid portion of partly paid shares & Securities - - - - 100% -
Irrevocable Credit Commitments (short term) 19,279,064,405 - 250,000 19,278,814,405 20% 3,855,762,881
Irrevocable Credit Commitments (long term) 16,600,000 - - 16,600,000 50% 8,300,000
Claims on foreign bank incorporated in SAARC region - - - - 20% -
operating with a buffer of 1% above their respective
regulatory capital requirement
Other Contingent Liabilities 363,202,850 - - 363,202,850 100% 363,202,850
Unpaid Guarantee Claims 91,035,169 - 10,418,000 80,617,169 200% 161,234,338
Total 47,424,861,288 - 1,209,913,926 46,214,947,361 17,335,253,431
 Eligible Credit Risk Mitigants

ON-BALANCE SHEET CREDIT EXPOSURES

DEPOSITS DEPOSITS WITH GOLD HMG/N & G’TEE OF SEC/G’TEE G’TEE OF G’TEE OF SEC/G’TEE OF TOTAL
WITH BANKS OTHER BANKS/FI NRB SEC. GOVT OF OTHER DOMESTIC MDBS FOREIGN
OF NEPAL SOVERIGNS BANKS BANKS

Claims in Foreign Government Securities (ECA-2) - - - - - - - - - -

Claims in Foreign Government Securities (ECA-3) - - - - - - - - - -
Claims in Foreign Government Securities (ECA 4-6) - - - - - - - - - -
Claims in Foreign Government Securities (ECA 7) - - - - - - - - - -
Claims on other Multilateral Development Banks - - - - - - - - - -
Claims on Domestic Public Sector Entities - - - - - - - - - -
Claims on Public Sector Entity (ECA 0-1) - - - - - - - - - -
Claims on Public Sector Entity (ECA 2) - - - - - - - - - -
Claims on Public Sector Entity (ECA 3-6) - - - - - - - - - -
Claims on Public Sector Entity(ECA 7) - - - - - - - - - -
Claims on domestic banks that meet capital - - - - - - - - - -
adequacy requirements
Claims on domestic banks that do not meet - - - - - - - - - -
capital adequacy requirements
Claims on foreign bank (ECA Rating 0-1) - - - - - - - - - -
Claims on foreign bank (ECA Rating 2) - - - - - - - - - -
Claims on foreign bank (ECA Rating 3-6) - - - - - - - - - -
Claims on foreign bank (ECA Rating 7) - - - - - - - - - -
Claims on foreign bank incorporated in SAARC - - - - - - - - - -
region operating with a buffer of 1% above their
respective regulatory capital requirement
Claims on Domestic Corporates 729,951,499 729,951,499
Claims on Foreign Corporates(ECA 0-1) - - - - - - - - - -
Claims on Foreign Corporates(ECA 2) - - - - - - - - - -
Claims on Foreign Corporates(ECA 3-6) - - - - - - - - - -
Claims on Foreign Corporates(ECA 7) - - - - - - - - - -
Regulatory Retail Portfolio (Not Overdue) 1,459,344,295 1,459,344,295
Claims fulfilling all criterion of regulatory - - - - - - - - - -
retail except granularity
Regulatory Retail Portfolio (Overdue) - - - - - - - - - -
Claims secured by residential properties - - - - - - - - - -
(with condition)
Claims secured by residential properties - - - - - - - - - -
(without condition)

ANNUAL REPORT 2022-23

Unsecured portion of claims secured by - - - - - - - - - -
residential properties

237
 ON-BALANCE SHEET CREDIT EXPOSURES
DEPOSITS DEPOSITS WITH GOLD HMG/N & G’TEE OF SEC/G’TEE G’TEE OF G’TEE OF SEC/G’TEE OF TOTAL
WITH BANKS OTHER BANKS/FI NRB SEC. GOVT OF OTHER DOMESTIC MDBS FOREIGN
OF NEPAL SOVERIGNS BANKS BANKS

Claims not fully secured by residential properties - - - - - - - - - -

Claims secured by residential properties (overdue) - - - - - - - - - -
Claims secured by Commercial real estate - - - - - - - - - -
Past due claims (except for claim secured by - - - - - - - - - -
residential properties)

238 SIDDHARTHA BANK LIMITED

High Risk Claims (Venture Capital, private equity - - - - - - - - - -
investments, personal loans & credit
card receivables)
Investments in equity of institutions not listed - - - - - - - - - -
in stock exchange
Investments in equity of institutions listed - - - - - - - - - -
in stock exchange
Other Assets - - - - - - - - - -
Total 2,189,295,795 - - - - - - - - 2,189,295,795

OFF-BALANCE SHEET CREDIT EXPOSURES

DEPOSITS DEPOSITS WITH GOLD HMG/N & G’TEE OF SEC/G’TEE G’TEE OF G’TEE OF SEC/G’TEE OF TOTAL
WITH BANKS OTHER BANKS/FI NRB SEC. GOVT OF OTHER DOMESTIC MDBS FOREIGN
OF NEPAL SOVERIGNS BANKS BANKS

Forward Exchange Contract Liabilities - - - - - - - - - -

LC Commitments With Original Maturity
Up to 6 months
domestic counterparty 210,145,924 210,145,924
foreign counterparty (ECA Rating 0-1) - - - - - - - - - -
foreign counterparty (ECA Rating 2) - - - - - - - - - -
foreign counterparty (ECA Rating 3-6) - - - - - - - - - -
foreign counterparty (ECA Rating 7) - - - - - - - - - -
LC Commitments With Original Maturity
Over 6 months
domestic counterparty 435,569,438 435,569,438
foreign counterparty (ECA Rating 0-1) - - - - - - - - - -
foreign counterparty (ECA Rating 2) - - - - - - - - - -
foreign counterparty (ECA Rating 3-6) - - - - - - - - - -
Bid Bond and Performance Bond and Counter
guarantee domestic counterparty
 OFF-BALANCE SHEET CREDIT EXPOSURES
DEPOSITS DEPOSITS WITH GOLD HMG/N & G’TEE OF SEC/G’TEE G’TEE OF G’TEE OF SEC/G’TEE OF TOTAL
WITH BANKS OTHER BANKS/FI NRB SEC. GOVT OF OTHER DOMESTIC MDBS FOREIGN
OF NEPAL SOVERIGNS BANKS BANKS

domestic counterparty 525,672,564 525,672,564

foreign counterparty (ECA Rating 0-1) - - - - - - - - - -
foreign counterparty (ECA Rating 2) - - - - - - - - - -
foreign counterparty (ECA Rating 3-6) - - - - - - - - - -
foreign counterparty (ECA Rating 7) - - - - - - - - - -
Underwriting commitments - - - - - - - - - -
Lending of Bank’s Securities or Posting of - - - - - - - - - -
Securities as collateral
Repurchase Agreements, Assets sale with - - - - - - - - - -
recourse(including repo/reverse repo)
Advance Payment Guarantee 38,276,000 38,276,000
Financial Guarantee - - - - - - - - - -
Acceptances and Endorsements
Unpaid portion of Partly paid shares and securities - - - - - - - - - -
Irrevocable Credit Commitments ( Short term) 250,000 250,000
Irrevocable Credit Commitments (long term) - - - - - - - - - -
Guarantee claimed not settled - - - - - - - - - -
Total 1,209,913,926 - - - - - - - - 1,209,913,926
Total credit risk mitigants 3,399,209,721 3,399,209,721

ANNUAL REPORT 2022-23

239
Details of Non-Performing Assets

n Amount of Non-Performing Assets (both Gross and Net)

NPR in ‘000

NON-PERFORMING ASSETS AMOUNT LOAN LOSS PROVISION NET NPL

Restructured/Rescheduled 2,144 268 1,876

Sub-Standard 1,143,879 280,805 863,074
Doubtful 1,821,757 900,900 920,857
Loss 864,017 815,074 48,943
Total 3,831,797 1,997,047 1,834,751

n Non-Performing Assets (%): 2.01 %

iii. Compliance with external requirement

The Bank is required to comply with the minimum Capital Adequacy Requirements of Nepal Rastra Bank. For the year ended July 16, 2023,
the Bank has complied with minimum Capital Adequacy Requirements by maintaining 12.47% capital adequacy ratio.

5.3. DEBENTURES ISSUED AS RESOURCES

Other than debentures worth NPR 7,662,559,000 issued for the purpose of capital management, the Bank has issued debenture of NPR
4,000,000,000 in FY 2021-22 for the purpose of resources eligible to count in CD ratio calculation. While issuing the debenture, the Bank
has incurred cost of NPR 6.79 million which is 0.17% of issued debenture.

The main features and terms & conditions of the new debenture amounting NPR 4 billion are as follows:

DEBENTURE NAME AMOUNT INTEREST RATE ISSUE DATE MATURITY DATE

SBL Debenture 2089 4,000,000,000 10.75% 2022-07-16 2032-07-15

(Face Value NPR 1,000 per debenture)

n Maturity period: 10 Years

n Interest rate: 10.75% per annum
n Interest Payment frequency: Half Yearly
n Debenture Redemption Reserve has not been created to redeem the bond at maturity as this debenture has been issued for the purpose
of resources only eligible to count for CD ratio and such reserve is not required as per NRB directive.
n The debenture can be pledged with other banks and financial institution.
n Listed with Nepal Stock Exchange.

5.4. CLASSIFICATION OF FINANCIAL ASSETS AND FINANCIAL LIABILITIES

Financial Assets
NFRS 9 requires financial assets to be classified in one of the following categories:

n Financial assets at fair value through profit or loss

n Financial assets at amortized cost
n Financial assets at fair value through OCI

Financial assets at fair value through profit or loss have two sub-categories:
n Financial asset that is designated on initial recognition as one to be measured at fair value with fair value changes in profit or loss.

n Held for trading

Financial Liabilities
NFRS 9 recognizes two classes of financial liabilities:

240 SIDDHARTHA BANK LIMITED

n Financial liabilities at fair value through profit or loss
3 Bullion Trading Income
n Other financial liabilities measured at amortized cost using the
4 Dividend Income on Investments
effective interest rate method
5 Forex Gain
The category of financial liability at fair value through profit or 6 IBT Income
loss has two sub-categories: 7 Rebate from Nostro Banks
8 Other Fees and Commission income
n Financial liability that is designated by the entity as a liability at (D) BANKING
fair value through profit or loss upon initial recognition
1 Income from Loan Products
n Held for trading
2 Income from Bills Purchase and Discounting
3 Income from issuance of Letter of Credit
4 Income from issuance of Bank Guarantee
5.5. OPERATING SEGMENT INFORMATION
5 Income from Document Collection
1. General Information 6 Income from Remittance
7 Income from Bancassurance
a. Factors used to identify the Bank’s reportable segments 8 Income from swift charges
The Bank has identified the key segments of business on 9 Forex Gain
the basis of nature of operations that assist the Executive
10 Profit/(loss) on sale of assets
Committee of the bank in decision making process and to
11 IBT Income
allocate the resources. It will help the management to assess
12 Income from other Banking Services
the performance of the business segments. The business
segments identified are Banking (including loans, deposits and
trade operations), Payment Solutions (Cards), Remittance, and
Treasury. Treasury Department acts as the fund manager of the
Bank.

b. Types of products and services from which each reportable

segment derives its revenues

(A) REMITTANCE SERVICES

1 Remittance fee and commission
2 IBT Interest Income
3 Forex Income
4 Other fees and commission
(B) CARD BUSINESS
1 Interchange Income (VISA/CUP/NEPS)
2 Credit Card
3 Debit Card
4 Prepaid Card
5 ATM Fees
6 Merchant Settlement Fees and commission
7 Other Fees and Commission
8 Forex Translation Gain
(C) TREASURY
1 Interest Income from placements and investments
2 Profit/(Loss) on sale of shares/bonds

ANNUAL REPORT 2022-23 241

 2. Information about profit or loss, assets and liabilities
FY 2022-23
In NPR

PARTICULARS PAYMENT SOLUTIONS REMITTANCE TREASURY MICROBANKING BANKING TOTAL

(a) Revenues from external customers 569,258,868 90,489,156 4,097,053,909 25,148,779,451 29,905,581,384
(b) Intersegment revenues 10,374,377 302,842,711 175,160,636 11,269,441,655 11,757,819,378
(c) Net Revenue 579,633,244 393,331,867 4,272,214,545 36,418,221,105 41,663,400,761

242 SIDDHARTHA BANK LIMITED

(d) Interest revenue 26,094,510 302,851,438 3,778,714,639 35,202,301,761 39,309,962,348
(e) Interest expense (35,763,842) (265,885,605) (2,699,914,083) (28,123,855,721) (31,125,419,250)
(f) Net interest revenue (9,669,332) 36,965,833 1,078,800,556 7,078,446,040 8,184,543,098
(g) Depreciation and amortization (1,969,966) (318,468) (170,255) (445,547,647) (448,006,336)
(h) Segment profit /(loss) 175,529,774 67,762,591 1,537,920,382 2,784,046,249 4,565,258,995
(i) Entity’s interest in the profit or loss of associates - - - - -
accounted for using equity method
(j) Other material non-cash items - - - - -
(k) Impairment of assets (1,253,804) - - (1,186,307,372) (1,187,561,177)
(l) Segment assets 608,085,477 3,511,705,727 18,085,543,851 263,772,580,272 285,977,915,326
(m) Segment liabilities (432,923,647) (3,443,943,137) (16,549,900,984) (265,551,147,560) (285,977,915,326)

FY 2021-22 In NPR

PARTICULARS PAYMENT SOLUTIONS REMITTANCE TREASURY MICROBANKING BANKING TOTAL

(a) Revenues from external customers 510,042,627 58,714,863 2,900,438,114 19,697,986,896 23,167,182,500
(b) Intersegment revenues - 177,847,015 117,096,723 7,311,956,820 7,606,900,558
(c) Net Revenue 510,042,627 236,561,878 3,017,534,837 27,009,943,715 30,774,083,057
(d) Interest revenue 45,363,229 177,847,015 2,137,403,774 25,857,619,810 28,218,233,829
(e) Interest expense (19,303,397) (131,320,059) (1,398,507,496) (20,072,255,363) (21,621,386,314)
(f) Net interest revenue 26,059,832 46,526,957 738,896,278 5,785,364,448 6,596,847,515
(g) Depreciation and amortization (1,922,013) (519,987) (158,075) (402,472,209) (405,072,283)
(h) Segment profit /(loss) 173,857,134 53,190,498 1,601,799,198 2,429,621,232 4,258,468,061
(i) Entity’s interest in the profit or loss of associates - - - - -
accounted for using equity method
(j) Other material non-cash items - - - - -
(k) Impairment of assets (7,691,769) - - (599,779,442) (607,471,211)
(l) Segment assets 523,184,157 2,260,282,588 26,910,594,269 234,632,962,497 264,327,023,511
(m) Segment liabilities (340,048,264) (2,203,877,119) (25,297,948,701) (236,485,149,427) (264,327,023,511)
3. Measurement of operating 4. Reconciliations
segment profit or loss, assets and
liabilities (a) Revenue

a. Basis of Accounting 2022-23 2021-22

All transactions between the Total revenues for reportable segments 41,663,400,761 30,774,083,057
reportable segments are accounted Other revenues - -
for using pre-determined transfer
Elimination of intersegment revenues (11,757,819,378) (7,606,900,558)
price.
Entity’s revenues 29,905,581,383 23,167,182,499

b. Nature of differences between

the measurements of the Note: Intersegment Revenue consists of following items:
reportable segments’ profits or 2022-23 2021-22
losses and the Bank’s profit or loss
before income tax Interest 11,638,996,448 7,540,669,854
There is no difference between the Vault Cash Incentive 118,822,930 66,230,704
measurement of the reportable Total 11,757,819,378 7,606,900,558
segments’ profit and the Bank’s
profit before income tax. (b) Profit or loss
2022-23 2021-22
c. Nature of differences between
the measurements of the Total profit or loss for reportable segments 4,565,258,995 4,258,468,061
reportable segments’ assets and Other profit or loss - -
the Bank’s asset Elimination of intersegment profits - -
There is no difference between the Unallocated amounts - -
measurement of the reportable Profit before income tax 4,565,258,995 4,258,468,061
segments’ assets and the Bank’s
asset. (c) Assets
2022-23 2021-22
d. Nature of any changes from
prior periods in the measurement Total assets for reportable segments 285,977,915,326 264,327,023,511
methods used to determine Other assets - -
reported segment profit or loss and Unallocated amounts - -
the effect, if any Entity’s assets 285,977,915,326 264,327,023,511
No changes are made in the
measurement methods used to (d) Liabilities
determine reported segment profit
2022-23 2021-22
or loss from prior periods.
Total liabilities for reportable segments 285,977,915,326 264,327,023,511
e. Nature and effect of any Other liabilities - -
asymmetrical allocations to Unallocated liabilities - -
reportable segments Entity’s liabilities 285,977,915,326 264,327,023,511
No asymmetrical allocations are
made to reportable segments.

ANNUAL REPORT 2022-23 243

5. Information about products and services
Revenue from each type of product and services described in point no. 1(b) above

2022-23 2021-22

(a) Remittance Services 393,331,867 236,561,878

1 Remittance fee and commission 47,063,056 29,902,091
2 IBT Interest Income 302,842,711 177,847,015
3 Forex Income 41,373,697 25,509,647
4 Other fees and commission 2,052,404 3,303,125
(b) Card Business 579,633,244 510,042,627
1 Interchange Income (VISA/CUP/NEPS) 80,221,552 71,432,746
2 Credit Card 23,348,984 81,349,262
3 Debit Card 129,919,328 111,181,676
4 Prepaid Card 6,510,254 6,458,278
5 ATM Fees 39,550,574 32,061,113
6 Merchant Settlement Fees and commission 62,072,535 38,984,384
7 Other fees, commission and miscellaneous income 234,920,277 163,848,625
8 Forex Income 3,089,739 4,726,544
(c) Treasury 4,272,214,545 3,017,534,837
1 Interest Income from placements and investments 3,778,714,639 2,137,403,774
2 Profit/(Loss) on sale of shares/bonds - (10,458,530)
3 Bullion Trading Income 10,529,069 7,688,701
4 Dividend Income on Investments 147,805,630 428,905,175
5 Forex Gain 130,908,450 314,529,094
6 IBT Income - 64,507,794
7 Rebate from Nostro Banks 15,864,074 15,458,221
8 Other Fees and Commission income 188,392,682 59,500,607
(d) Banking 36,418,221,105 27,009,943,715
1 Income from Loan Products 23,458,732,383 19,066,595,327
2 Income from Bills Purchase and Discounting 14,100,021 36,113,639
3 Income from issuance of Letter of Credit 131,290,748 102,873,086
4 Income from issuance of Bank Guarantee 191,048,586 147,889,645
5 Income from Document Collection 65,265,940 9,939,864
6 Income from Remittance 44,727,113 41,001,253
7 Income from Bancassurance 7,274,276 9,277,814
8 Income from swift charges 29,441,395 30,908,776
9 Forex Gain 113,124,899 156,850,028
10 Profit/(loss) on sale of assets 16,774,253 (2,802,760)
11 IBT Income 11,267,772,776 7,311,956,820
12 Income from other Banking Services 997,312,049 99,340,223
Total Revenue (including intersegment revenue) 41,663,400,761 30,774,083,057

244 SIDDHARTHA BANK LIMITED

6. Information about geographical areas
Geographical break down of total income of the Bank as reported in Pt. 4 (a) is as follows:

2022-23 2021-22

(a) Domestic 41,663,400,761 30,774,083,057

Koshi Province 3,466,518,910 2,550,876,942
Madhesh Province 3,534,307,795 2,636,683,807
Bagmati Province 27,141,919,196 20,056,745,501
Gandaki Province 2,496,829,531 1,814,913,586
Lumbini Province 3,629,720,863 2,629,837,060
Karnali Province 295,283,764 229,599,967
Sudurpaschim Province 1,098,820,701 855,426,193
(b) Foreign - -
Total 41,663,400,761 30,774,083,057

7. Information about major customers

None of the external customer of the Bank individually contributes 10% or more to the Bank’s revenue as at July 16, 2022 as well as July 16,
2023.

5.5. SHARE OPTIONS AND SHARE BASED PAYMENT

Share options is a contract that gives the holder the right, but not the obligation, to subscribe the Bank’s shares at a fixed or determinable
price for a specified period. A share-based payment is a transaction in which the bank receives goods or services either as consideration
for its equity instruments or by incurring liabilities for amounts based on the price of the entity’s shares or other equity instruments of the
entity.

The bank has not entered into any share option or share based payment contract during the reporting period.

5.6. CONTINGENT LIABILITIES AND COMMITMENT

Contingent Liabilities
Where the Bank undertakes to make a payment on behalf of its customers for guarantees issued, such as for performance bonds or as
irrevocable letters of credit as part of the Bank’s transaction banking business for which an obligation to make a payment has not arisen at
the reporting date, those are included in these financial statements as contingent liabilities.

Other contingent liabilities primarily include revocable letters of credit, bonds issued on behalf of customers to customs, for bids or offers
and income tax litigations.

Commitments
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 statement as commitments.

Explanatory information of contingent liabilities and commitments are given in Note No. 4.28 (including Note No. 4.28.1- 4.28.5).

5.7. RELATED PARTIES DISCLOSURES

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other
party in making financial or operational decisions and include major shareholders, subsidiary companies, associates, retirement funds,
directors and key management personnel and their close family members.

Banking transactions with the related parties are executed substantially on the same terms, including mark-up rates and collateral, as
those prevailing at the time for comparable transactions with unrelated parties and do not involve more than a normal risk.

ANNUAL REPORT 2022-23 245

5.7.1. Subsidiary
Transactions between the Bank and its subsidiary, Siddhartha Capital Limited, meet the definition of related party as defined under NAS-24
“Related Party Disclosures”.

TRANSACTIONS DURING THE YEAR 2022-23(NPR) 2021-22(NPR)

Call Deposits held by Siddhartha Capital Limited at Siddhartha Bank Ltd. 347,668,418 394,168,082
Interest earned by Siddhartha Capital Ltd. on deposits held at Siddhartha Bank Ltd. 10,854,108 5,582,436
Share RTS fee earned by Siddhartha Capital Ltd 793,796 801,344
DP related Income earned by Siddhartha bank 1,187,143 -
Investment in “Siddhartha Equity Fund” managed by Siddhartha Capital Limited 225,000,000 225,000,000
(Closing Balance at cost)
Investment in “Siddhartha Investment Growth Scheme-2” managed by Siddhartha 210,000,000 210,000,000
Capital Limited (Closing Balance at cost)
Investment in “Siddhartha Systematic Investment Scheme” managed by Siddhartha 45,445,000 23,970,000
Capital Limited (Closing Balance at cost)
Investment in “Siddhartha Investment Growth Scheme-3” managed by Siddhartha 120,000,000 -
Capital Limited (Closing Balance at cost)

All of the transactions mentioned above, except for the investments made and sum received from any of the mutual funds managed by
Siddhartha Capital Limited, have been eliminated upon consolidation.

5.7.2. Associates
The Bank considers an investee as its associate if the Bank can exercise significant influence in the financial and operating policy decisions
of the investee but does not have control or joint control of those policies.

The Bank does not exercise significant influence in the financial and operating policy decisions of any of its investees as at July 16, 2022
and July 16, 2023.

5.7.3. Directors and other Key Managerial Personnel (KMP)

Key Management Personnel and their immediate family members are also considered to be related parties for disclosure purpose as per
NAS-24 “Related Party Disclosures”.

As per Nepal Financial Reporting Standard (NAS 24) “Related Party Disclosures”, Key Management Personnel are those having authority
and responsibility for planning, directing and controlling the activities of the entity. The Bank considers the members of its Board, Chief
Executive Officer and all managerial level executives as Key Management Personnel (KMP) of the Bank.

Following is the list of Board of Directors and CEO bearing office at July 16, 2023.

Mr. Manoj Kumar Kedia Chairman

Mr. Narendra Kumar Agrawal Director
Mr. Rahul Agrawal Director
Mr. Dinesh Shanker Palikhe Director
Mr. Ankit Kedia Director
Mrs. Mina Kumari Sainju Independent Director
Mr. Sundar Prasad Kadel Chief Executive Officer

246 SIDDHARTHA BANK LIMITED

a. Compensation to the members of the Board 11, 2023 for the year ended July 16,
All members of the Board are non-executive directors and no executive compensation is paid 2023. Entire cash dividend will be
to the directors. Specific non-executive allowances paid to directors are as under: paid out of retained earnings.

Board Meeting fees NPR 1,688,000 In accordance with Nepal

Other benefits NPR 2,598,724 Accounting Standard - NAS 10
These allowances and benefits are approved by the Annual General Meeting of the Bank. (Events after the Reporting Period),
above proposed cash dividend has
b. Compensation to other KMP of the Bank not been recognized as a liability
as at the year end. The Bank will
NATURE OF TOTAL REMARKS
recognize the same as its liability
COMPENSATION COMPENSATION
(NPR) once the dividend is approved by
Short-term employee 350,564,214 Salary, PF and allowances of management level staff shareholders.
benefits (Management level staff comprises of all staff of
assistant manager level and above)
Above proposed bonus shares
Post employee benefits Nil has not been recognized in share
Other long-term benefits 21,565,055 Sick Leave and Annual Leave capital. The Bank will recognize
Terminal benefits 42,325,457 Gratuity benefits of eligible management staff the same as share capital once the
Share based payments Nil proposed bonus shares is approved
by shareholders in the Annual
5.8. MERGER AND ACQUISITION General Meeting.
The Bank has not entered into any merger or acquisition activity in FY 2022-23.
5.11. AVAILMENT OF CARVE-
5.9. ADDITIONAL DISCLOSURES OF NON-CONSOLIDATED ENTITIES OUTS NOTIFIED BY THE
Nepal Financial Reporting Standard (NAS 24) “Disclosure of Interests in Other Entities”, is INSTITUTE OF CHARTERED
applicable when an entity has interest in any of the following:
ACCOUNTANTS
OF NEPAL
n Subsidiaries
The Institute of Chartered
n Joint arrangements (joint operations or joint ventures)
Accountants of Nepal has notified
n Associates
2 carve-outs in NFRS which allows
n Unconsolidated structured entities
alternative treatment. Accordingly,
the Bank has availed following
carve-outs while preparing its
The Bank has already disclosed its interests in subsidiaries in 5.7. Related parties’
financial statements for FY 2022-23:
disclosures. The Bank does not have any interest in any form of joint arrangements,
associates or unconsolidated structured entities in reporting period and corresponding
a) Carve-Out : 1 - NFRS 9-Financial
previous year.
Instruments: Para 5.4 read
together with appendix A (Defined
5.10. EVENTS AFTER REPORTING PERIOD Terms) relating to Effective Interest
Events after the reporting date are those events, favorable and unfavorable, that occur
Rate
between the reporting date and the date the Financial Statements are authorized for issue.
As per NFRS-9, an entity shall
estimate cash flows considering
The Bank follows NAS-10 “Events after the Reporting Period” to account for and report the all contractual terms of the
events that have occurred after the reporting period. financial instrument (for example,
prepayment, call and similar options)
n Adjusting events after reporting period

The Bank has also availed the provision as provided by NRB directive that allows Banks to
consider interest recovery made till July 31, 2023 while calculating amount to be transferred
to regulatory reserve on account of interest income recognized on accrual basis but not
realized till July 16, 2023.

n Non-adjusting events after reporting period

The Board of Directors of the Bank has proposed the distribution of 4.21% of paid up capital
as cash dividend (including tax) amounting NPR 593,188,166 vide board meeting dated October

ANNUAL REPORT 2022-23 247

 Carve-out: 1 NFRS-9 Financial Instruments: Para 5.4 read together with appendix A (Defined Terms) relating to Effective Interest Rate
Carve-out: 2 NFRS-9 Financial Instruments: Para 5.5 Impairment

but shall not consider future credit losses while calculating the effective interest or received which are impracticable
rate. The calculation includes all fees and points paid or received between parties to to measure reliably while determining
the contract that are an integral part of the effective interest rate (see paragraphs effective interest rate.
B5.4.1-B5.4.3)
5.12. GENERAL RESERVE
The Carve-out states that the effective interest rate calculation shall include all fees and 20 percent of the profit after tax is
points paid or received, unless it is immaterial or impracticable to determine reliably. transferred to General Reserves as
per Section 44 of Banks and Financial
The Bank has availed this Carve-out and has not considered all fees and points paid Institutions Act 2073. In FY 2022/23, the
or received which are impracticable to measure reliably while determining effective Bank has transferred NPR 633,354,269
interest rate. to the General Reserve Fund from the
current year’s profit. Total General
b) Carve-out : 2- NFRS 9: Financial Instruments: Para 5.5 Impairment Reserve as at Balance Sheet date is NPR
As per the carve-out, an entity shall assess at the end of each reporting period 4,409,195,752.
whether there is any objective evidence that a financial asset or group of financial
assets measured at amortized cost is impaired. If there is objective evidence that an
impairment loss on financial assets measured at amortized cost has been incurred,
the amount of impairment 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 (i.e. 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 the Statement of
Profit or Loss.

The Carve-out requires Banks to measure impairment loss on loans and advances as
the higher amount derived as per norms prescribed by Nepal Rastra Bank for loan loss
provision and amount determined as per the incurred loss method described in above
paragraph.

The Bank has availed the Carve-out and has accordingly recognized impairment loss
on loans and advances as the higher amount derived as per norms prescribed by Nepal
Rastra Bank for loan loss provision and amount determined as per the incurred loss
method described in the first paragraph. The detail of impairment loss on loans and
advances are as follows:

PARTICULARS FY 2022-23 FY 2021-22

Total Loan loss provision as per norms prescribed by 4,969,950,366 3,782,389,189

Nepal Rastra Bank (NRB Directive No. 2)
Total Impairment as per Incurred loss model 747,390,433 611,947,928

As, Loan loss provision as per norms prescribed by Nepal Rastra Bank is higher in both
years, impairment loss on loans and advances is made accordingly.

The Bank has classified total loan loss provision mentioned above into 2 categories viz.
Individual Impairment and Collective Impairment. The Bank has classified provision on
loans having LLP rates of 1.30%, 5% and 21.30% as Collective Impairment and provision
on loans having LLP rates of 12.5%, 25%, 50% and 100% as Individual Impairment.
The Bank has availed this Carve-out and has not considered all fees and points paid

248 SIDDHARTHA BANK LIMITED

5.13. EXCHANGE FLUCTUATION FUND
25 percent of the revaluations gain on foreign exchange is transferred to exchange fluctuation fund as per Section 45 of Banks and
Financial Institutions Act 2073. In FY 2022-23, the Bank has transferred NPR 24,190,255 to Exchange Fluctuation Fund from the current
year profit. The balance in Exchange Fluctuation Fund stands at NPR 69,888,596 as on July 16, 2023.

PARTICULARS AMOUNT (NPR)

Opening balance as on July 16, 2022 (A) 45,698,341

Transfer to Exchange Fluctuation Fund in FY 2022-23 (B) 24,190,255
Closing balance as on July 16, 2023 (A+B) 69,888,596

Transfer made in Capital Redemption Reserve

5.15. CAPITAL ADJUSTMENT FUND

PARTICULARS AMOUNT (NPR)

Opening balance as on July 17, 2022 (A) 1,581,279,500

Transfer to Capital Redemption Reserve fund in FY 2022-23 (B) 1,460,426,500
Closing balance as on July 16, 2023 (A+B-C) 3,041,706,000

Amount (NPR)

DEBENTURES DEB 2082 DEB 2083 DEB 2084 TOTAL

FY 2019-20 360,426,500 - - 360,426,500

FY 2020-21 360,426,500 - - 360,426,500
FY 2021-22 360,426,500 500,000,000 - 860,426,500
FY 2022-23 360,426,500 500,000,000 600,000,000 1,460,426,500
FY 2023-24 360,426,500 500,000,000 600,000,000 1,460,426,500
FY 2024-25 360,426,500 500,000,000 600,000,000 1,460,426,500
FY 2025-26 - 500,000,000 600,000,000 1,100,000,000
FY 2026-27 600,000,000 600,000,000
Total 2,162,559,000 2,500,000,000 3,000,000,000 7,662,559,000

5.16. INVESTMENT ADJUSTMENT RESERVE

PARTICULARS AMOUNT (NPR)

Opening balance as on July 16, 2022 519,427,832

Bonus share issued from Capital Adjustment Fund for FY 2021-22 (500,000,000)
Closing balance as on July 16, 2023 19,427,832

Investment Adjustment Reserve has been created on investments classified as ‘financial assets at fair value through OCI’ that are not
listed in stock exchange except for investments in Credit Information Centre Limited, Nepal Clearing House Limited and National Banking
Training Institute as per Nepal Rastra Bank Directives. Total outstanding investment adjustment reserve as at Balance Sheet date is NPR
11,365,167.

ANNUAL REPORT 2022-23 249

 Amount (NPR)

PARTICULARS COST PRICE NPR % RESERVE INVESTMENT ADJUSTMENT RESERVE

Credit Information Center Limited 1,907,600 Exemption by NRB -

Nepal Clearing House Limited 179,402,600 Exemption by NRB -
National Banking Training Institute 1,834,860 Exemption by NRB -
ICRA Nepal Limited 760,000 100% 760,000
Nepal Electronic Payment System Limited 15,000,000 Exemption by NRB -
Prabhu Capital Limited 4,500,000 100% 4,500,000
SWIFT SC 6,105,167 100% 6,105,167
Total Investment 209,510,227 11,365,167

5.17. OTHER RESERVES

a. Employees Related Reserve Fund

As per NRB Unified Directives, the Bank is required to expend at least 3% of total salary and allowance expenses of previous year i.e. FY
2021-22 in employees training and development. If the required amount could not be spent for the purpose, employees related reserve
fund should be created for the shortfall amount. The Bank has created Employees Related Reserve Fund of NPR 21,371,100 for the shortfall
amount. As of Balance Sheet date, the Bank’s Employee Related Reserve Fund stands at NPR 53,566,155.

PARTICULARS AMOUNT (NPR)

Opening balance as on July 16, 2022 (A) 32,195,055

3% of Total Employee expenses for FY 2021-22 (B) 50,260,064
Actual Expense incurred in Employee training and development in FY 2022-23 (C) 28,888,964
Closing balance as on July 16, 2023 (A+B-C) 53,566,155

b. CSR Fund
As per NRB Unified Directives, the Bank has to transfer 1% of current year’s profit to CSR fund. Accordingly, the Bank has transferred NPR
31,667,713 to CSR Fund from net profit of FY 2022-23. As of Balance Sheet date, the Bank’s CSR fund stands at NPR 50,950,230.

PARTICULARS AMOUNT (NPR)

Opening balance as on July 16, 2022 40,480,610

1% of Net profit for FY 2022-23 to be transferred to CSR Fund 31,667,713
CSR expenses incurred out of CSR Fund in FY 2022-23 (21,198,093)
Closing balance as on July 16, 2023 50,950,230

250 SIDDHARTHA BANK LIMITED

The detail of province-wise and sector-wise expenditure made in CSR activities in FY 2022-23 is mentioned below:

PROVINCE SECTOR TOTAL

Koshi Education 216,000

Environment 51,825
Financial Literacy 404,061
Health 5,810,450
Wildlife Conservation 200,000
Koshi Province Total 6,682,336
Madhesh Education 20,330
Environment 70,000
Financial Literacy 340,649
Health 6,484,156
Madhesh Province Total 6,915,135
Bagmati Culture 181,600
Decent Work and Economic Growth 65,000
Education 486,220
Environment 1,211,981
Financial Literacy 550,626
Health 1,447,909
Sustainable Cities and Communities 48,188
Tourism 80,000
Bagmati Province Total 4,071,524
Gandaki Education 25,000
Environment 34,977
Financial Literacy 336,036
Health 145,000
Sustainable Cities and Communities 146,125
Tourism 201,000
Gandaki Province Total 888,138
Lumbini Education 154,700
Environment 138,368
Financial Literacy 355,436
Health 499,850
Lumbini Province Total 1,148,354
Karnali Culture 68,000
Education 54,000
Environment 10,000
Financial Literacy 313,036
Open Bank Account Program 62,100
Karnali Province Total 507,136
Sudurpashchim Culture 200,000
Education 100,000
Environment 234,760
Financial Literacy 385,716
Health 15,000
Tourism 50,000
Sudurpashchim Province Total 985,476
Grand Total 21,198,093

ANNUAL REPORT 2022-23 251

c. Regulatory Reserve
The Bank has transferred following amounts to Regulatory Reserve following NRB Directive No. 4 issued by Nepal Rastra Bank:
Amount (NPR)
FISCAL YEAR
INTEREST SHORT PROVISION FOR SHORT ACTUARIAL OTHER TOTAL
RECEIVABLE POSSIBLE LOSSES PROVISION LOSS RECOGNIZED
ON INVESTMENT ON NBA
2017-18 308,990,085 128,393,301 154,637,535 45,801,803 - 637,822,724
2018-19 (513,535) (128,393,301) (31,286,831) 112,188,330 - (48,005,337)
2019-20 1,812,174 - (37,287,825) 25,333,739 32,216,183 22,074,271
2020-21 (46,337,065) - 97,293,642 13,360,629 (32,216,183) 32,101,023
2021-22 137,388,364 (48,972,726) 115,746,435 204,162,073
2022-23 252,880,025 - 277,974,823 (88,753,234) 95,861,873 537,963,482
Total 654,220,048 - 412,358,618 223,677,702 95,861,873 1,386,118,237

5.18. FOREIGN CURRENCY BORROWING

The Bank has borrowed USD 55 million from the International Finance Corporation (IFC) on 13 April 2022 for a period of 3 years. The
loan provided by the IFC shall be used by the Bank for MSME and Climate Financing. In addition, the Bank shall also be using the loan
for increasing its portfolio in climate friendly projects which shall be financing of energy efficiency projects such as solar projects, low
carbon mobility projects such as electric vehicles, water efficiency projects, climate smart agriculture, manufacturing of energy efficient
appliances, etc.

Other than new foreign currency borrowing made during FY 2022-23, the Bank has also repaid USD 8 million borrowed from Standard
Chartered Bank Limited, Singapore during the year.

5.19. DUE TO NEPAL RASTRA BANK

As disclosed in Note 4.18: Due to Nepal Rastra Bank, there is significant decrement in FY 2022-23 in comparison to FY 2021-22. The major
reason for such decrement is outstanding amount of Standard Liquidity Facility (SLF) of NPR 19.70 billion taken from Nepal Rastra Bank at
the end of previous year which is nil in current year.

5.20. WEIGHTED AVERAGE INTEREST RATE SPREAD

PARTICULARS RATE (%)

Average Rate of return from loans and advances 11.90

Average Rate of interest on deposits 7.91
Net Spread 3.99

5.21. RECONCILIATION STATUS

The Bank reconciles branches and other agency accounts regularly. The difference has been identified, reviewed and reconciled and it has
been or will be adjusted in due course of business.
NPR in ‘000

RECONCILIATION STATUS LEDGER CREDIT STATEMENT CREDIT LEDGER DEBIT STATEMENT DEBIT

Less than 1 month 161,120 26,587 30,606 954,622

More than 1 month to less than 3 months 39 789 - -
More than 3 months to less than 9 months 5 1,018 - -
More than 9 months 3 - - 757
Total 161,167 28,394 30,606 955,379

252 SIDDHARTHA BANK LIMITED

5.22. DISCLOSURE OF NON-BANKING ASSETS
As at July 16, 2023, Non-Banking Assets assumed by Bank are as follows:

NAME & ADDRESS OF BORROWER/PARTY DATE OF ASSUMING OF TOTAL NON-BANKING BLACKLISTING BLACKLISTING
NON-BANKING ASSETS ASSETS NPR NUMBER DATE

Tej Bahadur Khadka 1999-07-06 30,000

Sumitra Devi Dhungel 2001-05-14 50,000
Binod Shrestha 2014-04-22 37,226,925 5419 2014-04-22
Ramesh Dhakal 2014-05-30 28,510,640 5567 2014-06-27
Hira Acharya 2014-05-30 25,267,023 5568 2014-06-27
Hari Dhital 2014-05-30 6,212,996 5569 2014-06-27
Nanda Lal Dhami-Narendra Kumar Paudel 2014-08-15 12,345,926 5722 2014-07-04
Sarita Lama 2014-08-15 11,822,579 5745 2014-07-07
H.A. Construction Pvt. Ltd 2015-07-21 1,884,614 6416 2015-05-27
K Saud Suppliers 2019-12-24 13,257,040 10561 2018-06-08
Hamro Saptagandaki Departmental Stores 2021-01-19 28,450,000 17449 2020-03-16
Narayani Engineering Pvt. Ltd. 2021-07-15 17,768,878 11188 2018-09-28
Narayani Engineering Pvt. Ltd. 2022-01-13 12,431,044 11188 2018-09-28
Trimurti Kastha Udhyog 2023-01-13 23,680,767 31561 2022-02-06
Pathivara Jewellers 2023-03-20 4,684,000 13959 2019-08-08
Om Hardware 2023-04-12 40,029,710 39910 2022-07-08
Sanjha Hardware 2023-04-12 9,551,816 39576 2022-07-06
Rajesh Kumar Shah 2023-04-12 5,813,504 59836 2023-03-23
Sanjha Kumari Sah 2023-04-12 5,811,891 59493 2023-03-19
Umesh Prasad Sah 2023-04-12 5,813,910 59494 2023-03-19
Suresh Prasad Sah 2023-04-12 9,308,108 51202 2022-12-19
Dilip Kumar Kesari 2023-04-13 3,836,001 35063 2022-04-25
Sun International Pvt Ltd 2023-04-13 9,083,999 35064 2022-04-25
Radico Metals Pvt Ltd 2023-04-23 25,370,000 35058 2022-04-25
Urlabari Auto Planet & Sagun Sun Chandi Pasal 2023-05-19 52,182,619 40349 2023-03-12
Trimurti Kasta Udhyog (Rabindra Raj Regmi) 2023-05-18 5,245,138 31561 2022-02-06
Raju Neupane and Riddhi Siddhi Electricals 2023-06-04 28,835,763 26868/26867 2021-10-01
Arom Traders 2023-06-12 36,358,215 64686 2023-05-04
Gausiya Galla Kharid Bikri Kendra 2023-06-15 28,306,791 62799 2023-04-18
New Kamana Suppliers 2023-06-19 22,047,450 66082 2023-05-17
Abin Krishna Shrestha 2023-06-22 4,556,961 65094 2023-05-09
Opinion Trading House 2023-07-10 12,373,489 56608 2023-02-10
Taslima Miya 2023-07-11 5,894,456 57886 2023-02-28
G & G Hardware Suppliers 2023-07-12 101,110,450 56375 2023-02-08
Uttam Kumar Upadhayaya 2023-07-15 3,755,891 70091 2023-06-16
Kameshwar Ray Yadav 2023-07-13 9,421,522 21258 2021-01-31
Yes Nirman Sewa 2023-07-13 6,207,371 36516 2022-05-25
Total 654,537,489

ANNUAL REPORT 2022-23 253

5.23. DISCLOSURE RELATED TO UNPAID DIVIDEND
The detail of unpaid dividend as of July 16, 2023 is as under:

FISCAL YEAR AMOUNT (NPR) The dividend payable for FY 2009-10 to FY 2013-14 are unpaid relating to shares pledged
and due to litigation ongoing in court.
2009-10 4,305,646
2010-11 1,849,563
5.24. DISCLOSURE RELATED TO INTEREST CAPITALIZATION
2011-12 1,152,880 The Bank has capitalized interest of NPR 329,215,059 during FY 2022-23. The borrower-
2012-13 1,296,990 wise detail of interest capitalized during the year is as follows:
2013-14 1,614,032
2017-18 27,388,123 BORROWER NAME 1ST 2ND 3RD 4TH TOTAL
QUARTER QUARTER QUARTER QUARTER CAPITALIZATION
2018-19 41,121,586
2019-20 11,305,621 Moonlight Hydro 4,007,568 4,870,728 5,398,980 5,423,139 19,700,415
Power Company
Total 90,034,441
Peoples Hydropower 27,881,985 29,091,105 34,894,299 - 91,867,390
Company Private
Limited
Nilgiri Khola Hydro 13,840,519 16,061,541 14,989,843 20,568,484 65,460,386
Power Company
Limited
Isuwa Energy 6,250,624 6,612,595 8,433,092 9,362,961 30,659,272
Private Limited
Mathillo Mailun 2,792,015 18,590,000 22,090,000 - 43,472,015
Khola Jalvidhyut
Limited
Multi Energy - 2,206,655 4,089,494 7,136,501 13,432,650
Development
Private Limited
Peoples Energy - 411,600 3,342,252 7,003,349 10,757,202
Limited
Samyukta Urja - 843,810 1,703,683 4,202,010 6,749,503
Private Limited
United Mewa - 671,615 2,512,099 5,268,923 8,452,637
Khola Hydropower
Private Limited
Him River Power - 7,960,000 21,201,491 9,502,097 38,663,588
Limited
Total 54,772,711 87,319,649 118,655,233 68,467,465 329,215,059

254 SIDDHARTHA BANK LIMITED

5.25. TAXATION ON MERGER SURPLUS
The Bank had merged with Business Universal Development Bank Limited during FY 2015-16 on a swap ratio
100:55.36 and had booked merger surplus. Subsequently, the surplus was distributed to shareholders as
bonus shares. However, the Bank has not provisioned for the tax liability of NPR 141,461,496 created as per
Section 27 of Finance Act, 2080 on account of tax not paid on surplus from mergers/ acquisitions till Fiscal
Year 2021-22.

The tax liability created as per Section 27 of Finance Act, 2080 has been contested by and the Bank is in
process of filing litigation against the same.

5.26. MEMBER OF IFC GLOBAL TRADE FINANCE PROGRAM

The Bank is a member of the International Finance Corporation (IFC) - a member of World Bank Group,
Global Trade Finance Program as an Issuing Bank. As an Issuing Bank, IFC shall provide the Bank the agreed
Confirmation Facility, which shall be used to enhance the Bank’s capacity to meet the trade finance needs of
various local enterprises as well as development projects of the country.

5.27. AGREEMENT WITH KFW DEVELOPMENT BANK

Siddhartha Bank Limited (SBL) has successfully implemented German government supported project entitled
“Sustainable Economic Development in Rural and Semi-Urban Areas – MSME Finance Phase II (SEDRA II)”. The
tripartite agreement between Ministry of Finance Nepal, Nepal Rastra Bank (NRB) and KfW Development Bank
under German Development and Finance Corporation, Germany was signed on 6 November 2020 to implement
the project however, the project was officially started from February 2021 and ended on Mid-July, 2023. The
project consisted of two components; refinancing facility of EUR 3 Million and Technical Assistance of EUR
0.5 Million.

The objective of the project was to improve access to loan financing for Micro, Small and Medium-sized
Enterprises (MSMEs) in rural and semi-urban areas with financing needs in the ‘Missing Middle’ segment.

5.28. COVID RELATED

The details of covid related loans, refinance loan and interest subsidized loan as of July 16, 2023 are as
follows:
PARTICULARS AS OF JULY 16, 2023
NO. OF CUSTOMERS AMOUNT (NPR)

Accrued Interest Received after Asadh end 2080 till 15 Bhadra 2080 - -
Additional 0.3% loan loss provision created on pass loan portfolio - -
Extension of moratorium period of loan provided to - -
industry or project under construction
Restructured/ rescheduled loan with 5% loan loss provision - -
Enhancement of working capital loan by 20% to COVID affected borrowers - -
Enhancement of term loan by 10% to COVID affected borrowers - -
Expiry date of additional 20% working capital loan - -
(COVID loan) extended for up to 1 year with 5% provisioning
Expiry date of additional 10% term loan (COVID loan) extended for - -
up to 1 year with 5% provisioning
Time extension provided for repayment of principal and interest for up - -
to two years as per clause 41 of NRB directives 2

PARTICULARS AS OF JULY 16, 2023

NO. OF CUSTOMERS AMOUNT (NPR)

Refinance Loan - -
Business Continuity Loan - -
Refinance Loan (SEDRA) 203 187,281,311

PARTICULARS AS OF JULY 16, 2023

NO. OF CUSTOMERS AMOUNT (NPR)

Interest subsidized Loan 3,890 6,150,870,745

ANNUAL REPORT 2022-23 255

 Comparison of Unaudited and Audited Financial Statements as of FY 2022-23

STATEMENT OF FINANCIAL POSITION AS PER UNAUDITED AS PER AUDITED VARIANCE REASONS FOR VARIANCE
FINANCIAL FINANCIAL
STATEMENT STATEMENT IN AMOUNT IN %

Assets
Cash and cash equivalent 11,560,996,090 11,554,080,479 (6,915,611) (0.06) Reclass of deposit balance after closure of nostro accounts
Due from Nepal Rastra Bank 9,000,713,492 9,000,713,492 - -
Placements with Bank and 5,011,346,934 5,011,346,934 - -

256 SIDDHARTHA BANK LIMITED

Financial Institutions
Derivative financial instruments 17,320,155 17,320,155 - -
Other trading assets - - - -
Loan and advances to B/FIs 5,170,773,907 5,170,773,907 - -
Loans and advances to customers 184,045,677,918 184,009,571,040 (36,106,878) (0.02) Effect of additional LLP and interest accrual reversal
Investment securities 62,672,975,991 62,480,476,034 (192,499,958) (0.31) Revaluation of investment in promoter shares of listed companies, unlisted
mutual funds and open ended mutual funds
Current tax assets 4,738,209 263,764,947 259,026,738 5,466.76 1. Reclass of advance tax paid upto previous year
2. Booking of additional income tax provision”
Investment in subsidiaries 51,000,000 51,000,000 - -
Investment in associates - - - -
Investment property 654,537,489 654,537,489 - -
Property and equipment 3,533,041,928 3,548,089,446 - - Additional lease asset booked
Goodwill and Intangible assets 166,000,283 166,000,283 - -
Deferred tax assets - - - -
Other assets 4,232,762,619 4,050,241,119 (182,521,500) (4.31) 1. Reclass of deposit balance after closure of nostro accounts
2. Effect of additional adjustment entries
3. Reclass of negative balances to Other liabilities
4. Reclass of advance tax paid upto previous year”
Total Assets 286,121,885,016 285,977,915,326 (143,969,690) (0.05)
 STATEMENT OF FINANCIAL POSITION AS PER UNAUDITED AS PER AUDITED VARIANCE REASONS FOR VARIANCE
FINANCIAL FINANCIAL
STATEMENT STATEMENT IN AMOUNT IN %

Liabilities
Due to Bank and Financial Institutions 11,613,657,572 11,613,657,572 - -
Due to Nepal Rastra Bank 288,453,474 288,453,474 - -
Derivative financial instruments 23,887,253 23,887,253 - -
Deposits from customers 223,654,669,691 223,654,669,691 - -
Borrowing 7,312,480,160 7,312,480,160 - -
Current Tax Liabilities - - - -
Provisions - - - -
Deferred tax liabilities 563,467,968 501,929,292 (61,538,676) (10.92) Recalculation of fixed assets tax base
Other liabilities 5,538,028,563 5,613,687,917 75,659,353 1.37 1. Reduction in Employee bonus provision due to additional
adjustment entries
2. Reclass of negative balances to Other liabilities”
Debt securities issued 11,662,559,000 11,662,559,000 - -
Subordinated Liabilities - - - -
Total liabilities 260,657,203,682 260,671,324,359 14,120,677 0.01
Equity
Share capital 14,089,980,190 14,089,980,190 - -
Share premium - - - -
Retained earnings 795,765,602 663,610,438 (132,155,164) (16.61) 1. Reduction in Net Profit due to additional LLP
2. Increment in amount to be transferred to Investment Adjustment
Reserve and Regulatory Reserve”
Reserves 10,578,935,542 10,553,000,339 (25,935,203) (0.25) 1. Reduction in Net Profit due to additional LLP
2. Increment in amount to be transferred to Investment Adjustment
Reserve and Regulatory Reserve
3. Revaluation of investment in promoter shares of listed companies,
unlisted mutual funds and open ended mutual funds”
Total equity 25,464,681,334 25,306,590,967 (158,090,367) (0.62)
Total liabilities and equity 286,121,885,016 285,977,915,326 (143,969,690) (0.05)

ANNUAL REPORT 2022-23

257
 STATEMENT OF PROFIT OR LOSS AS PER UNAUDITED AS PER AUDITED VARIANCE REASONS FOR VARIANCE
FINANCIAL FINANCIAL
STATEMENT STATEMENT IN AMOUNT IN %

Interest income 27,647,197,757 27,670,966,196 23,768,440 0.09 Additional adjustment entries

Interest expense 19,468,775,306 19,486,423,098 17,647,792 0.09 Reclass of cost related to external commercial borrowing
Net interest income 8,178,422,450 8,184,543,098 6,120,647 0.07
Fee and commission income 1,693,118,604 1,693,079,336 (39,268) (0.00) Additional adjustment entries
Fee and commission expense 326,740,302 347,458,421 20,718,118 6.34 Reclass of POS charge fee and additional PL adjustment entries

258 SIDDHARTHA BANK LIMITED

Net fee and commission income 1,366,378,301 1,345,620,915 (20,757,386) (1.52)
Net interest, fee and commission income 9,544,800,752 9,530,164,013 (14,636,739) (0.15)
Net trading income 191,736,074 191,735,761 - -
Other operating income 336,328,302 336,328,302 - -
Total operaing income 10,072,865,128 10,058,228,076 (14,637,052) (0.15)
Impairment charge/(reversal) for loans and other losses 1,127,707,852 1,187,561,177 59,853,325 5.31 Reclass of provision made for Prepaid Cards and additional LLP booked
Net operating income 8,945,157,276 8,870,666,900 (74,490,377) (0.83)
Personnel expenses 2,855,862,094 2,852,235,828 (3,626,265) (0.13) Reduction in Employee bonus provision due to additional PL adjustment entries
Other operating expenses 959,497,530 917,442,986 (42,054,545) (4.38) Reclass of POS charge fee, provision made for Prepaid Cards and cost related to
external commercial borrowing
Depreciation & Amortisation 444,005,164 448,006,336 4,001,172 0.90 Additional lease expense booked
Operating profit 4,685,792,489 4,652,981,749 (32,810,739) (0.70)
Non operating income 13,471,787 13,471,787 - -
Non operating expense 101,194,542 101,194,542 - -
Profit before tax 4,598,069,734 4,565,258,995 (32,810,739) (0.71) Reduction in profit due to additional LLP and adjustment entries
Income tax 1,407,957,992 1,398,487,648 (9,470,344) (0.67) Reduction in income tax expense due to additional LLP and adjustment entries
Profit /(loss) for the period 3,190,111,742 3,166,771,347 (23,340,395) (0.73)
Other comprehensive income 780,291,139 645,541,169 (134,749,971) (17.27) Revaluation of investment in promoter shares of listed companies
Total comprehensive income 3,970,402,882 3,812,312,516 (158,090,366) (3.98)
Distributable Profit
Net profit/(loss) as per profit or loss 3,190,111,742 3,166,771,347 (23,340,395) (0.73)
Add/Less: Regulatory adjustment as per NRB Directive (2,606,263,720) (2,715,078,489) (108,814,769) 4.18
Free profit/(loss) after regulatory adjustments 583,848,022 451,692,858 (132,155,164) (22.64)
Principal Indicators

PARTICULARS INDICATORS F.Y F.Y F.Y F.Y F.Y

2018-19 2019-20 2020-21 2021-22 2022-23

1. Net Profit/Total Income Percent 15.49% 12.48% 15.77% 12.53% 10.59%

2. Earning per share
Basic earning per share Rs. 23.07 19.55 22.79 20.60 22.48
Diluted earning per share Rs. 23.07 19.55 22.79 20.60 22.48
3. Market price per share Rs. 318.00 296.00 504.00 303.00 253.00
4. Price/Earning Ratio Ratio 13.79 15.14 19.35 13.07 11.26
5. Dividend on Bonus per share Percent 10.00% 12.00% 14.25% 12.50% 0.00%
6. Cash dividend Percent 15.26% 3.00% 0.75% 0.66% 4.21%
7. Interest Income/Loan and Advances Percent 11.14% 11.14% 8.18% 9.85% 12.34%
8. Employee expense/Total Operating Expenses Percent 60.64% 62.19% 63.88% 63.87% 62.48%
9. Interest Expenses/Total Deposit & Borrowing Percent 7.32% 7.28% 5.54% 6.73% 8.49%
10. Exchange Income/Total Income Percent 3.00% 2.68% 2.73% 2.16% 0.96%
11. Staff Bonus/ Total Employee Expenses Percent 21.70% 16.12% 19.55% 17.62% 17.78%
12. Net Profit/ Loan and Advances Percent 2.06% 1.65% 1.70% 1.54% 1.63%
13. Net Profit/ Total Assets Percent 1.49% 1.26% 1.25% 1.10% 1.11%
14. Total loans and advances/Total deposit Percent 89.65% 89.04% 90.60% 96.08% 84.94%
15. Total Operating Expenses/Total Assets Percent 1.84% 2.03% 1.62% 1.59% 1.60%
16. Capital Adequacy Ratio
a) Common Equity Tier 1 Capital Percent 10.11% 9.26% 8.52% 9.04% 9.37%
b) Core Capital Percent 10.11% 9.26% 8.52% 9.04% 9.37%
c) Supplementary Capital Percent 2.59% 3.91% 4.84% 3.96% 3.10%
d) Total Capital Fund Percent 12.70% 13.17% 13.36% 13.00% 12.47%
17. Cash Reserve Ratio (CRR) Percent 4.56% 5.03% 3.54% 3.23% 4.06%
18. NPAs/Total loan and advances Percent 0.75% 1.38% 1.00% 1.07% 2.01%
19. Base Rate Percent 10.57% 9.03% 7.16% 9.45% 9.91%
20. Weighted Average Interest Rate Spread Percent 3.72% 4.81% 3.70% 4.37% 3.99%
21. Book net worth (Rs. in billion) Rs. 15.03 16.01 20.40 21.59 25.31
22. Total Shares Nos. 88,876,045 97,877,671 109,622,992 125,244,268 140,899,802
23. Total employees (Permanent) Nos. 1,645 1,887 1,862 1,893 1,970
24. Others
Per employee business (Rs. in lakh) Rs. 1,413 1,462 1,896 2,035 2,147
Employee expense/Total Income Percent 11.59% 12.55% 13.08% 11.59% 9.54%
Number of branches (including extension counters) Nos. 159 186 189 190 196

ANNUAL REPORT 2022-23 259