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EBL AR Eng. 066/23

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EBL AR Eng. 066/23 CHAIRMAN’S NOTE TO SHAREHOLDERS I am glad to report to you the following important points: opportunities for upgrading of their skills – both through our "In-house" training programmes, but also 1. CONSISTENCY IN PERFORMANCE: sending our employees to courses conducted by the The Bank has been pursuing Policy of not only to Staff College of Punjab National Bank. increase in profit from year to year but consistency in 4. Outlook for the Current Financial Year (and the next its performance. The Bank has been able to reward its five years): shareholders from year to year, consistently and with high returns. Inspite of the severe recession in the largest economies of the world, the economy boom in China and India is Similarly, the payment of bonus to our loyal and continuing – albeit at slower rates. Since our economy hardworking employees have gone up from Rs.6.59 is closely linked with India, the world recession has not Crore to Rs.8.91 Crore. affected our economy directly. The income tax payment has gone up from Rs.21.69 However, there is apprehension that inward remittance crores to Rs.27.69 crores. may slow down as the employment opportunities 2. ANOMALY: where our immigrant workers are working are affected by the recession. Anomaly as well as distortion is taking place in the banking scenario in the country. On the one hand there The most important thing for the country is political is tendency of higher interest on deposits, because stability and the law and order situation. There has several new banks are trying to attract deposits by been hardly any investment in the industrial sector offering higher rates of interest. because of the prevailing law and order situation on the one hand and uncertainties connected with the political At the same time the three largest banks in the country, situation. God willing, if situation improve, there are who have no Capital Adequacy are offering loans vast possibilities of major economic gain such as below the market rates. through large hydro electric projects, as well as Your Bank has always taken a policy of giving loans to possibilities of investment in industries in Nepal parties with minimal or no risk. This has resulted, catering to not only to Nepalese market but also to the consistently our NPA being the lowest in the country. vast Indian market. But with the aforesaid anomaly and distortion our 5. IN CONCLUSION: spread is under pressure and is narrowing. We have taken the policy decision inspite of the narrowing I would like to thank the Nepal Rastra Bank for spread, we shall endeavor to make this up by higher extending assistance and guidance from time to time. volumes of business on the one hand and continuing The contribution by our joint venture partner, PNB has to concentrate on quality lending. been equally helpful. My colleagues in the Board have also rendered advice 3. TRAINING: for better running of your Bank. I would also like to A bank’s wealth is not just the physical infrastructure thank our hardworking and sincere employees. of buildings, system and its clients. The most important is the quality of service rendered by its employees. It B. K. SHRESTHA has been the policy of your Bank to continuously CHAIRMAN upgrade the skills of our employees by providing 1 BOARD OF DIRECTORS’ REPORT TO THE 15th ANNUAL GENERAL MEETING OF SHAREHOLDERS OF THE BANK Ladies and Gentlemen: Rs. In crore It gives me great pleasure to welcome you to the 15th Annual Paid up Equity Capital (ordinary shares) 63.88 Proposed bonus share 19.16 General Meeting (AGM) of the Bank. I have the privilege of Share Premium 1.48 presenting the Balance Sheet as at 31st Ashadh 2066 (15th July, Capital Adjustment Reserve 28.41 2009), the Profit & Loss Account and Cash Flow Statement of Debenture Redemption Reserve* 12.00 the Bank for the year ending on that date and the Auditors’ Capital Redemption Reserve** 14.00 report made there on. Accumulated Profit 8.24 1. REVIEW OF THE OPERATING ACTIVITIES OF YOUR BANK Other Free Reserve 2.52 Total 149.69 & GENERAL ECONOMIC ENVIRONMENT OF THE COUNTRY (Please refer Annexure 1):- *This reserve is for redemption of 6% debenture of Rs. 30 crore on its’ due date. A. Review of the operating activities : **This reserve is against the redeemed 9% Preference I have pleasure to present the five years’ financial Share as per legal requirement. performance of your Bank. Other Major Performance: Total shareholders’ fund has gone up during the last a) Business : five years from Rs.99.79 crore to Rs. 262.00 crore Rs. In Crore consisting of the following: Particulars 2061/62 2065/66 (Rs. in Crore) (2004/05) (2008/09) 2061/62 2065/66 Total Deposit 10,09.76 33,32.29 Particulars (2004/05) (2008/09) Total Loans & Advances 7,90.00 2446.95 Paid Up Capital Ordinary Shares 31.50 63.88 Total Investment 2,12.89 5,94.84 Statutory General Reserve 12.61 45.08 Share Premium 0.64 1.48 b) Profitability : Capital Adjustment Reserve 9.45 28.41 Rs. In Crore Other Reserves 1.70 4.72 Particulars 2061/62 2065/66 Debenture Redemption Reserve - 12.00 (2004/05) (2008/09) Capital Redemption Reserve - 14.00 Total Income 85.89 2,56.53 Deferred Tax Reserve - 3.37 Operating Profit 37.52 1,07.35 Proposed Bonus Share 6.30 19.16 Profit before tax 25.27 89.13 Retained Profit 7.05 8.24 Net Profit after Tax 17.08 63.87 General Loan Loss & NBA Provision 30.54 61.66 Total Shareholders' Fund 99.79 262.00 The table shows consistent progress of the Bank over the Note : (1) Capital Adjustment Reserve, Debenture Redemption last five years. During the year being reported, your Bank Reserve and Capital Redemption Reserve are available has earned operating profit of Rs. 107.35 crore which is for distribution by way of Bonus shares to increase the 25.7% more than last year and has been able to post a capital. after tax net profit of Rs. 63.87 crore, which is 41.6 % higher than the last year. The total deposits have reached Out of the above shareholders funds the following Rs.3332 crore recording an annual growth of 39%. The Capital amounting to Rs. 149.69 crores including the loans and advances stood at Rs.2446 crore showing an Paid-Up Capital of Rs.63.88 crores can be used for annual growth of 39%. any purpose. The detail of Rs.149.69 crores is given Since we have still four years available for reaching the below: required figure of Rs. 200 crore, the Directors feel confident that even with the present trend of profit and available free reserves, the policy adopted by the Directors 2 regarding Dividend/Bonus Shares, there will be no Firstly the three largest banks in the country has no difficulty in reaching the figure of Rs. 200 crore by Ashadh positive Capital Adequacy and has been competing in the 2070. market with commercial banks in offering loans at much lower rates of interest. All the respected shareholders are certainly aware of the present situation prevailing in the country. The level and Secondly, due to several new banks coming into the trend of performance of your Bank even in such difficult market, the interest rates on deposits had gone up. time which has a direct impact on your worth of Naturally, if a Bank wishes not to take unacceptable risk, investments seems to be commendable. the spread of such a bank goes down. The key factor together with other management aspects, In the case of your Bank, the average spread has gone for this achievement, is the result of the continuing efforts down only marginally from 4.4% to 4.37%. The spread has made by the management for keeping the non-performing gone down in spite of the fact that the average yield on loans at lowest level. At this juncture, I would like to inform interest bearing assets improved from 7.22% to 7.89%. the respected shareholders that the level of non- Unfortunately, the cost of deposit has increased to 3.52% performing loans of your Bank is just 0.48% (previous year from 2.82%. 0.68%) of total gross loans and the net non performing The pressure on margins continues to increase. loan is minus 1.9%. Loan demand from private sector during the review period With increase in profit, the bonus provision at 10% , has slightly increased however, interest rates could not payable to the employees has also consistently gone up move upward. The Board is of the view that the banking to Rs. 891 lacs which was Rs. 659 lacs in the previous sector will be facing further severe challenges if the law year. and order situation is not improved, a firm view is not Likewise, the income tax payment also has gone up to Rs. taken by the concerned political parties regarding the role 27.69 crore for the year from Rs. 21.69 crore over the of private sector and the imbalance on development vis- previous year. a-vis revenue expenditure of the government continues in I’m glad to inform the shareholders that the operating the country. profit of your Bank during the first quarter ending Ashwin Nepal has entered into the South Asia Free Trade Area of the current Financial Year has reached at Rs. 29.17 (SAFTA), and has also joined Economic Cooperation crore which is 24.17% higher than the previous years’ (BIMST-EC).
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