Namaste!

Dear Stakeholders,

Nabil Bank is delighted to continue to be ‘Your Bank @Your Service’.

With your support the fiscal year 2006/07 was truly an exceptional year for Nabil Bank, as we crossed the Rs. 1 billion milestone in Profit Before Bonus & Taxes,registering a growth of 11% over the pervious year. Impressive growth in size and volume of major components of the balance sheet, both deposits and loans, yet maintaining both the mixture and quality alongside, have further ascribed the year as remarkable. Needless to say, this achievement is a reflection of our success in continuously striving to surge ahead to be the Bank of 1st Choice of all our stakeholders, even amidst the uncertainty and instability that prevailed in the nation.

Despite optimistic hopes and anticipation for the year 2006/07, the country did not perform well economically, as instability and lawlessness seemed to increase and the political uncertainties continued. Bandhs, strikes and extortion in various parts of the country including Kathmandu valley crippled daily life on numerous instances over the year. At a time when our neighboring countries registered impressive economic growth, we have managed a meager growth of 2.5% in the year. Regardless of this, Nabil Bank experienced a successful year and delivered excellent results, and elucidating this to you our partner in this success, gives me immense pleasure.

As already indicated above, Nabil Bank registered a historic Rs. 1.09 billion profit before bonus and taxes and Rs.674 million profit after tax in the year 2006/07. The 100% cash dividend along with 40% stock dividend that the Bank has distributed this year was a record high in the annals of banking history in Nepal. This is in line with our commitment to increase paid-up capital of the Bank to a minimum of Rs. 1.6 billion by mid July 2013. Furthermore, 36% return on shareholders’ funds and 2.72% return on bank’s average assets denote superior rate of profitability and puts us amongst the highest in the banking sector of the nation. The Bank has doubled the size of its loan portfolio in 5 years. As at mid July 2007 our risk asset base had reached Rs.15.9 billion, from Rs.7.8 billion in mid July 2002. Despite such a huge growth of loan volumes, the Bank has been able to reduce NPL volume to Rs.178 million, just 1.12% of total loans, at mid July 2007 from Rs.557 million of mid July 2002. Similarly, the Bank has held loan loss provision double of NPL volume at mid July 2007. We believe that this is true vindication of the structural change we implemented in 2004 separating business generation and risk analysis and removing all conflict of interest therein. In terms of capital, the Bank continues to be strong and sound with our Capital Fund totaling NPR 2.3 billion and with our capital adequacy at 12.04%, which is well above international standard.

At this juncture when the nation is passing through a phase of transition, we at Team Nabil believe that just registering higher profits, yielding higher returns, strengthening the financials and enhancing the books of accounts, is not enough in our journey to achieve our mission to be Nepal’s Bank of 1st Choice. Therefore beyond these traditional parameters, the Bank has embarked on a journey to surge ahead together with the people of Nepal across the nation building new relationships of mutual benefit and playing the role of a catalyst in the economic growth of the nation. In our efforts of adding value towards building a ‘New Nepal’, the Bank has opened nine new Branches spanning the entire length of Nepal, from Mechi to Mahakali. We are proud of our now greater contribution towards the upliftment of the economy through our enhanced presence through the entire length of the nation, enabling us to provide the highest levels of financial products and services to various communities and different segments of the society.

With the opening of the nine branches, Nabil is now able to reach and service our customers from Mechi to Mahakali through the hills and terai through online connectivity via VSAT, Radio modems and fiber optics. This is a major step forward for banking in Nepal, as from now modern banking will not only be limited to the urban centers, but a larger part of the economically less privileged, remote and semi urban societies will have access to international standard banking. At Nabil we view this as a ‘marathon’ we have only just started, as the Bank plans to continue enhancing its branch network to meet the financial needs of the larger Nepali population. Today, amongst all private banks, Nabil has the largest Branch and ATM networks. We have always been a pioneer in launching innovative products and services to meet, if not exceed our customer’s requirements and now with our plans to extend our reach even further we will have the ability to truly deliver the very best banking products and services right across Nepal.

Nabil has earned strong market confidence, which is clearly reflected through the enormous growth in our share price. The share price that was NRs. 740 four years back has soared up to NRs.5,050 on 16th July 2007, the closing day of the fiscal year. Year end market capitalization was NRs. 24.8 billion, the highest in the banking industry. Currently Nabil’s shares are trading close to NPR 6,000. An achievement that we feel is comprehensive evidence that Nabil’s share is a true blue chip investment for our shareholders and a lucrative opportunity to those looking for investment.

The Bank has always felt responsible towards the betterment of the society and the community of which we are a part. In this regard, we continue our three pillars approach to great corporate citizenship through our partnerships in: Health, Education and Sports. In health our partnership with the Glaucoma Eye Center at the Tilganga Eye Hospital continues, in Education, the Bank has been associated with the Mary Ward School and is sponsoring the education of less privileged girl children of grades 8, 9 and 10. And in sports, our alliance with the Nabil Three Star football club is growing from strength to strength.

Nabil continues to be among the largest tax payers in the industry, with the payment of NRs. 321 million corporate taxes during 2006/07. The Bank’s contribution to the banking industry and the nation continues to be recognized by the community and the regulators. Federation of Nepalese Chamber of Commerce & Industry (FNCCI) has awarded the National Excellence Award to Nabil for its achievement and service as Commendations for Significant Achievement in Institutional Policy Planning & Commitment during the past year. It gives me immense pleasure to share with you that Central Bank has continuously upgraded our CAMEL rating through onsite inspections and regularly seek our views on crucial issues and policies.

In today’s business context where competition is getting more intense with the number of new banks and financial institutions increasing, one of the main strengths of our Bank is our ‘People’.The consistent achievements that Nabil recorded this year was possible due to the team effort put up by each and every individual member of the Nabil Team. The team which, comprises of highly skilled and talented individuals across the Bank, is proud to have amongst the very best banking professionals in our high performing synergistic team. Recognizing this fact, Nabil today is amongst the highest paymasters and most preferred employers in not only the industry but the nation. As always, the Bank is proud of and thankful to the high performing individuals that make up Team Nabil, and we are confident that we will continue to surge ahead together to greater heights of success in the days ahead.

Finally, I reiterate my sincere commitment to our Customers, Shareholders, Regulators, the Community and Staff, all our stakeholders that we continue to Surge Ahead by living our Values of being C.R.I.S.P. or Customer Focused, Result Oriented, Innovative, Synergistic and Professional everyday in everything we do. As always we remain ‘Your Bank @ Your Service’. I express my gratitude to all our stakeholders for your continued confidence and support, as we Surge Ahead to build on mutually beneficial partnerships as your Bank of 1st Choice.

Best Regards.


Anil Shah, Chief Executive Officer