ANNUAL REPORT | 2017-18 ...for a better future Sunrise Plaza, Gairidhara Kathmandu Metropolitian City-2 TEL.: 01-4004560, 4004562, 4004563, 4004564 TOLL.: 16600 122444 FAX.: 01-4422475 SWIFT: SRBLNPKA E-MAIL: [email protected] www.sunrisebank.com.np Covering the period 16th July 2017 to 16th July 2018, this annual report comprehensively covers the performance of Sunrise Bank Limited and its subsidiary, Sunrise Capital, for the reporting period and includes among other matters; an analysis of the operational results, a review of the financial performance and an overview of the Bank’s corporate governance, risk management and compliance frameworks. The Report includes forward-looking statements, which relate to the possible future financial position and results of the operations of Sunrise Bank Limited. These statements by their nature involve an element of risk and uncertainty, as they relate to future events that are not predictable. However, we do not undertake to update or revise any of these forward-looking statements publicly, whether to reflect new information or future events or otherwise. 2 SUNRISE BANK LIMITED Our motto of "Rising to Serve" drives all the efforts of Sunrise Bank to emerge as market leader with a business that is founded on strong fundamentals supported by state-of- art banking technology, and motivated staffs whose skills are continuously enhanced. ANNUAL REPORT | 2017-18 ANNUAL REPORT | 2017-18 3 REPORT OBJECTIVES The consolidated as well as standalone financial statements, prepared in accordance with NFRS, remain the primary source of communication with stakeholders. The purpose is to show how we are working to improve every aspect of our business for the benefit of stakeholders. 4 SUNRISE BANK LIMITED Contents STRATEGIC REPORT An Overview 10 Financial Highlights & Review 14 Macroeconomic Outlook 16 CORPORATE GOVERNANCE Governance at a Glance 24 Board of Directors 26 Chairman's Statement 30 CEO’s Perception 32 Management Team 34 Department Heads 38 Corporate Governance 40 RISK REVIEW Board Level Committees 44 Risk Management Committees 47 CORPORATE SOCIAL RESPONSIBILITY Social Responsibilty 54 CSR Activities 56 HUMAN RESOURCE MANAGEMENT Human Resource 60 PRODUCTS & SERVICES Sunrise Swasthya Yojana 66 Technology Driven 70 Schemes 76 Corporate Banking 80 FINANCIAL STATEMENTS Director's Report 88 Auditor’s Report 97 Financial Statement 98 Disclosure 204 INVESTOR'S RELATIONSHIP Shareholder’s Information 210 Disclose under Rule 26 213 BANK'S PERFORMANCE Analysis 216 Remittance Network 220 Branch Network 223 ATM Lists 226 ANNUAL REPORT | 2017-18 5 EMBRACING INNOVATION Innovation has, is and will always be the cornerstone of our success. Itsupports our efforts to build tangible and intangible infrastructure and to integrate relevant economic, social and environmental issues into our strategic planning process and day-to-day operations. 6 SUNRISE BANK LIMITED ANNUAL REPORT | 2017-18 7 STRATEGIC REPORT GOVERNANCE RISK REVIEW CORPORATE RESPONSIBILITY HUMAN RESOURCE 8 SUNRISE BANK LIMITED PRODUCTS & SERVICES FINANCIAL STATEMENT INVESTOR'S RELATIONSHIP BANK'S PERFORMANCE Strategic Report Sunrise Bank’s secret of continued Equally important to our long-term success growth and success is it’s highly is our cost structure. Ongoing cost controls efforts are aimed at reducing our cost-to- diversified and well-balanced business income ratio, which, combined with top line model. Being among the preferred growth, are instrumental in meeting bottom banks in Nepal, we have always taken line targets. We have always understood that a proactive stance towards improving supporting our ambitious plans will most certainly depend how well we manage our strategic alignment to drive stronger capital requirements now and in the future. growth and deliver the highest returns Based on this premise, we are in the process on stakeholder value. to raise NPR 1 Bn through an unsecured, subordinated and redeemable debenture, In the year under review, we embraced a which will strengthen the Bank’s Tier II broader performance-driven strategy to capital by mid July 2019. transform all key business pillars and support services, and to sharpen their alignment We constantly question the status quo to with our vision to ‘Establish Sunrise Bank find new and better ways to do things. With as a lead bank in all places of our branch fresh eyes, we seek out new ways to meet locations and nation-wide’. At the heart of customer needs and help shape their own our strategy is the marriage of our corporate path, through innovative products, insightful goals with the aspirations of stakeholders, advice and invigorating attitude. In doing which prompted us to leverage on four key so, we have leveraged on innovation to build pivots; strengthen top line, enhance digital a fully integrated multi-channel banking capability, boost core capital and expand system that combines traditional and digital the bottom line. To grow the top line in channels, giving rise to an unprecedented 2018, we continued to orient ourselves level of customer convenience. Innovation more consistently toward both Retail and has helped us to simplify our procedures, SME customers in all core markets. At reduce organizational layers and delegate the same time, to strengthen our roots as more decision making powers to branches, a commercial bank, we adopted a two- enabling us to respond to customers’ needs pronged approach; firstly to increase our faster than ever before. Meanwhile, amidst penetration and capture market share in the growing risk of cyber security threats, selected retail segments and secondly to be we have begun to emphasize on innovation the first-mover to promote unique, as well to preserve both customer privacy and data as structured solutions to capture the Retail security. and Corporate segment. Hand-in-hand with this volume driven strategy we enhanced digital capabilities, for which our IT transformation programme became the key enabler. Our IT transformation programme also spearheads our efforts to differentiate ourselves from peers. Further, investments in digital technology were aimed at enhancing customer service, augmenting the risk management framework and improving employee productivity. ANNUAL REPORT | 2017-18 9 STRATEGIC REPORT GOVERNANCE RISK REVIEW CORPORATE RESPONSIBILITY HUMAN RESOURCE An Overview VISION You & Us. Together We Can Build. MISSION SUNRISE BANK LIMITED, a as CEO. This team of seasoned Establish Sunrise Bank as a lead leading financial institution, banking and management bank in all places of our branch was established as the 23rd professionals is dedicated locations and nationwide. commercial bank in Nepal on towards establishing an 12 October 2007. Its corporate institution determined to cater STRATEGY office is located at the Gairidhara to the needs of all categories of Our strategies are long-term Crossing, in Kathmandu. Sunrise clients. and our commitment towards Bank is driven by its motto corporate sustainability is absolute. "Rising to Serve" and offers Sunrise Bank’s continued growth innovative products and services and success is founded on a to all categories of clients. It highly diversified and well- also offers products that can balanced business model. The contribute towards the economic Bank has had balanced growth development needs of the throughout its first decade and country. is now poised to expand into new markets. The Bank's ever The Bank is continuously growing geographical coverage supervised by the Board of has enabled it to serve a OBJECTIVES Directors that has members spectrum of customer segments, The overall objective of the bank with extensive knowledge and including retail, middle market, is to contribute to nation building entrepreneurial experience. small and medium enterprises, and meeting the expectation of its The Chairman of the Bank, and large corporations. The Bank shareholders, depositors, customers Mr. Motilal Dugar is a business has been continuously upgrading and other stakeholders. The Bank leader with extensive interests in its services using state-of-art will make concerted efforts to both industry and the services Core Banking technology, while realize its goal by leading the sector. The management team remaining vigilant on risks and banking sector in every front with: comprises of five members risk management. with Mr. Ratna Raj Bajracharya n Expanding presence of the Bank within and outside the country, n Targeting under-served or The Bank serves a spectrum of customer segments, potential services like SMEs and including retail, large corporate, middle market, Small and retail businesses, n Reshaping and restructuring Medium Enterprises (SMEs) and Deprived Sectors. Sunrise bank's infrastructure and Bank’s continued growth and success is founded on a highly systems, diversified and well-balanced business model and a robust n Service provision through multi-channel environment. efficient and knowledgeable staffs supported by automated procedures, and Sunrise Bank keeps pushing its limits and continuously n High degree of compliance and endeavors to be a market leader, thanks to a strategy based risk management. on innovation and service differentiation 10 SUNRISE BANK LIMITED PRODUCTS & SERVICES FINANCIAL STATEMENT INVESTOR'S RELATIONSHIP BANK'S PERFORMANCE CORE OPERATIONAL VALUES HIGHLIGHTS SOUND CAPITAL STRUCTURE, The Bank remained a strong player in the by maintain minimum Capital Adequacy market throughout 2017/2018. The market requirement under BASEL – III and indicators for