jflif{s k|ltj]bg @)&^÷&& ANNUAL REPORT 2019-2020 Driving commerce and prosperity through our unique diversity 34th ANNUAL GENERAL MEETING Friday, 8 January 2021 Standard Chartered 2 Annual Report 2019 - 2020 Annual Report 2019-2020 Driving commerce and prosperity through our unique diversity 34th ANNUAL GENERAL MEETING Friday, 8 January 2021 ABOUT STANDARD CHARTERED BANK Standard Chartered Bank Nepal hotels as well as the development Limited has been in operation in organizations segment comprising Nepal since 1987 when it was of embassies, aid agencies, bilateral initially registered as a joint venture entities, multilateral entities, operation. We are an integral part non-government organizations of Standard Chartered Group and international non-government having an ownership of 70.21% in Never settle organizations. The Bank has the company with 29.79% shares > Simplify pioneered "client-focused" products owned by the Nepalese public. The > Continuously improve & innovate and services and aspires to continue Bank is the only international bank > Learn from your successes its leadership in introducing new currently operating in Nepal. and failures products. It is the first bank in Nepal to implement the Anti- Money Our heritage and values are Laundering policy and to apply the expressed in our brand promise, ‘Know Your Customer’ procedure on Here for good. Our operations all the customer accounts. reflect our purpose, which is to drive commerce and prosperity The Bank believes in delivering through our unique diversity. shareholder value in a socially, We offer banking services that help ethically and environmentally people and companies prosper Better together responsible manner. Standard across Asia, Africa, Europe, the > See more in others Chartered, throughout its long Americas and the Middle East. > How can I help? history, has played an active role in > Build for the long supporting those communities in We have been operating in these term which its customers and staff live. markets for more than 160 years, supporting better lives by providing Launched in 2003, the Bank’s banking where and when it matters Global Community Program Strategy most. We place a particular focus focused on health and education on supporting customers who trade, with Seeing is Believing (SiB) as the operate or invest across our unique flagship program. In 2018, the Bank footprint. What sets us apart is our achieved its ambitious target to diversity – of people, cultures and raise USD100 million globally under networks. Do the right thing SiB two years ahead of schedule. In Nepal, we continued to support We are present in 59 markets > Live with integrity all existing SiB commitments until and serve clients in a further 85. > Think client December 2020. Standard Chartered PLC is listed on > Be brave, be the the London and Hong Kong Stock change In May 2019, the Bank’s new Global Exchanges as well as the Bombay Community Program Strategy and National Stock Exchanges in “Futuremakers by Standard India. With 15 points of representation Chartered” was launched in Nepal and 535 local staff, Standard subsequent to the global launch Our Valued Behaviours demand that Chartered Bank Nepal Limited is in January 2019. This initiative we do things differently, for us to serving its clients and customers focuses on empowering the next succeed. Only then will we realise through a strategic domestic generation to learn, earn and our potential and truly be Here for network. In addition, the global grow. There are three pillars to the good. network of Standard Chartered strategy: education, employability Group enables the Bank to provide and entrepreneurship. It builds truly international banking services on the success of our current in Nepal. Standard Chartered Bank community programs while Nepal Limited offers a full range of growing our ambition to ensure banking products and services to a that we are reaching more young wide range of clients and customers people across our markets. The representing individuals, mid-market Bank is also actively engaged local corporates, multinationals, with the communities in raising Facebook.com/StandardCharteredNP large public-sector companies, awareness around Financial Literacy, www.sc.com/np government corporations, airlines, Environment, Health and Education. WHAT'S INSIDE THIS REPORT STRATEGIC REPORT 06 Performance Highlights 07 Operational Overview 08 Report of the Board Of Directors 12 Chief Executive Officer's Report CORPORATE GOVERNANCE 18 Our Approach to Corporate Governance 28 Additional Information 30 Board of Directors 32 Management Team 36 Schedule- 15 40 Driving Digital Transformation 42 Sustainability: Being a responsible company 46 Better Together with our People 49 Branch and ATM Network FINANCIAL STATEMENTS 50 Independent Auditor's Report & NOTES 54 Consolidated Statement of Financial Position 56 Consolidated Statement of Profit & Loss Account 57 Consolidated Statement of Other Comprehensive Income 58 Consolidated Statement of Changes in Equity 60 Consolidated Statement of Cash Flow 62 Notes to the Consolidated Financial Statement 104 Statement of Distributable Profit & Loss 127 Unaudited Financial Results (Fourth Quarter) 130 Comparison Unaudited & Audited Financial Statements 133 Key Indicators 134 Nepal Rastra Bank's Approval & Directions 135 Five Years Financial Summary 138 Branch Managers 5 6 0.32 1.98 2015-16 2015-16 2015-16 1,292 NPL/Total Loan NPL/Total Return onTotal Profit After Tax After Profit Assets (In%) 1.84 (NPR Million) 1,550 2016-17 0.19 2016-17 2016-17 (In %) 0.18 2.61 2017-18 2017-18 2017-18 2,190 0.15 2,435 2018-19 2018-19 2.61 2018-19 PERFORMANCE HIGHLIGHTS 0.44 1.71 2019-20 2019-20 2019-20 1,987 56.88 2015-16 2015-16 7,524 2015-16 3,600 Total Credit toDeposit Credit Total Equity (NPRMillion) Total Shareholders Shareholders Total Per Share (NPR) Per Share 62.20 Market Value Ratio (In%) 2016-17 2016-17 11,864 2016-17 2,295 66.45 2017-18 2017-18 13,926 2017-18 755 14,927 682 2018-19 70.11 2018-19 2018-19 645 2019-20 56.75 2019-20 15,102 2019-20 267.53 16.38 2015-16 2015-16 2015-16 45.96 Earning PerShare Capital Adequacy Net Worth Per Net Worth Share (NPR) Share 296.18 21.08 35.49 2016-17 Ratio (In%) 2016-17 2016-17 (NPR) 173.82 2017-18 2017-18 22.99 2017-18 27.33 19.69 2018-19 186.32 2018-19 2018-19 30.39 188.51 18.51 24.81 2019-20 2019-20 2019-20 Standard Chartered Annual Report 2019 - 2020 OPERATIONAL OVERVIEW Standard Chartered has continued to deliver consistent, diverse and sustained growth while investing to underpin future momentum and building balance sheet resilience. FINANCIAL HIGHLIGHTS Operating Income Operating Profit Total Assets NPR. 4,973m NPR. 2,847m NPR.116,438m Capital Adequacy Return on Equity Dividend 18.51% 15.15% 11.84% NON-FINANCIAL HIGHLIGHTS Points of Representation Employees 15 535 OPERATIONAL HIGHLIGHTS > Impact on performance due to pandemic > Disciplined and proactive approach to risk situation leading to the extended lockdown. management in Retail Banking and Corporate, Commercial and Institutional Banking. > Higher loan loss provisions on regulatory basis and loss of income momentum caused the net > Diverse, liquid, well capitalised and robust profit lower over last year. balance sheet composition. > Conscious decision to invest to underpin future > Strong market capitalisation of ~ NPR. 52 Billion growth in both the businesses. reflecting high shareholder confidence. Jitender Arora Chairman REPORT OF THE BOARD OF DIRECTORS In the course to recovery with resilience, agility and empathy Performance highlights performance in the Financial 16.85 percent and 1.66 percent Year 2076-77 despite challenges respectively with an overall ratio of The challenges we face amidst the posed by Covid-19. Our timely 18.51 percent. Our capital position global pandemic has tested our intervention last year in a Strategy is more than adequate to meet resilience and ability to adapt to and Refresh enabled the Bank to deliver our business needs and exceeds perform in the new normal. We are sustainable growth and income while international norms and Nepal pleased to report that we have been managing cost and capital. The level Rastra Bank’s capital adequacy largely successful so far. Thanks to of profits earned is after making requirement under the Basel III the commitment of our colleagues, contributions through interest reliefs capital accord. trust of our clients and our financial to clients impacted by Covid-19 and resilience to external shocks, my providing for potential deterioration belief that we can withstand this in credit portfolios in compliance crisis and emerge stronger has with regulatory requirements. strengthened. Bank contribution to Govt Exchequer Despite extended interruptions we Fiscal Fiscal Increase were successful in continuing with Year Year 2076-77 2075-76 NPR 850m our operations without disruptions Net Profit NPR 1.99 NPR 2.43 (18.11%) which was only possible due to our billion billion values, conduct, culture, robust Earnings NPR 24.81 NPR 30.39 (18.36%) Exchange processes and risk framework. Our per share operational resilience has helped Loans to NPR 54.96 NPR 53.70 2.36% Fluctuation Reserve us maintain continuity in services Customers billion billion (gross) without compromising health and NPR 41m Customer NPR 95.02 NPR 75.73 25.47% safety protocols through new ways Deposits billion billion of working including split operations and work from home models. General Reserve I believe that when this crisis is Net Profit over, we will be able to look back NPR 397m and be proud of the manner our 2076-77 NPR 1.99 billion organisation stood strong. While we continue to proactively 2075-76 NPR 2.43 billion Regulatory Reserve respond by serving our clients and playing our part in limiting NPR 36m economic impacts of the pandemic The Bank has contributed NPR in communities, we also remain 850 million to the Government Exchequer on account of corporate focused in delivering our strategic Cash Dividend priorities.