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jflif{s k ltj]bg @)& &&ANNUAL REPORT 2019-2020Driving commerce and prosperitythrough our unique diversity34th ANNUAL GENERAL MEETINGFriday, 8 January 2021

2Standard CharteredAnnual Report 2019 - 2020

Annual Report 2019-2020Driving commerce and prosperitythrough our unique diversity34th ANNUAL GENERAL MEETINGFriday, 8 January 2021

ABOUT STANDARD CHARTERED BANKStandard Chartered Bank NepalLimited has been in operation inNepal since 1987 when it wasinitially registered as a joint ventureoperation. We are an integral partof Standard Chartered Grouphaving an ownership of 70.21% inthe company with 29.79% sharesowned by the Nepalese public. TheBank is the only international bankcurrently operating in Nepal.Our heritage and values areexpressed in our brand promise,Here for good. Our operationsreflect our purpose, which is todrive commerce and prosperitythrough our unique diversity.We offer banking services that helppeople and companies prosperacross Asia, Africa, Europe, theAmericas and the Middle East.We have been operating in thesemarkets for more than 160 years,supporting better lives by providingbanking where and when it mattersmost. We place a particular focuson supporting customers who trade,operate or invest across our uniquefootprint. What sets us apart is ourdiversity – of people, cultures andnetworks.We are present in 59 marketsand serve clients in a further 85.Standard Chartered PLC is listed onthe London and Hong Kong StockExchanges as well as the Bombayand National Stock Exchanges inIndia.Our Valued Behaviours demand thatwe do things differently, for us tosucceed. Only then will we realiseour potential and truly be Here /npNever settle Simplify Continuously improve & innovate Learn from your successesand failuresBetter together See more in others How can I help? Build for the longtermDo the right thing Live with integrity Think client Be brave, be thechangeWith 15 points of representationand 535 local staff, StandardChartered Bank Nepal Limited isserving its clients and customersthrough a strategic domesticnetwork. In addition, the globalnetwork of Standard CharteredGroup enables the Bank to providetruly international banking servicesin Nepal. Standard Chartered BankNepal Limited offers a full range ofbanking products and services to awide range of clients and customersrepresenting individuals, mid-marketlocal corporates, multinationals,large public-sector companies,government corporations, airlines,hotels as well as the developmentorganizations segment comprisingof embassies, aid agencies, bilateralentities, multilateral entities,non-government organizationsand international non-governmentorganizations. The Bank haspioneered "client-focused" productsand services and aspires to continueits leadership in introducing newproducts. It is the first bank in Nepalto implement the Anti- MoneyLaundering policy and to apply the‘Know Your Customer’ procedure onall the customer accounts.The Bank believes in deliveringshareholder value in a socially,ethically and environmentallyresponsible manner. StandardChartered, throughout its longhistory, has played an active role insupporting those communities inwhich its customers and staff live.Launched in 2003, the Bank’sGlobal Community Program Strategyfocused on health and educationwith Seeing is Believing (SiB) as theflagship program. In 2018, the Bankachieved its ambitious target toraise USD100 million globally underSiB two years ahead of schedule.In Nepal, we continued to supportall existing SiB commitments untilDecember 2020.In May 2019, the Bank’s new GlobalCommunity Program Strategy“Futuremakers by StandardChartered” was launched in Nepalsubsequent to the global launchin January 2019. This initiativefocuses on empowering the nextgeneration to learn, earn andgrow. There are three pillars to thestrategy: education, employabilityand entrepreneurship. It buildson the success of our currentcommunity programs whilegrowing our ambition to ensurethat we are reaching more youngpeople across our markets. TheBank is also actively engagedwith the communities in raisingawareness around Financial Literacy,Environment, Health and Education.

WHAT'S INSIDE THIS REPORTSTRATEGIC REPORTCORPORATE GOVERNANCEFINANCIAL STATEMENTS& NOTES06Performance Highlights07Operational Overview08Report of the Board Of Directors12Chief Executive Officer's Report18Our Approach to Corporate Governance28Additional Information30Board of Directors32Management Team36Schedule- 1540Driving Digital Transformation42Sustainability: Being a responsible company46Better Together with our People49Branch and ATM Network50Independent Auditor's Report54Consolidated Statement of Financial Position56Consolidated Statement of Profit & Loss Account57Consolidated Statement of Other Comprehensive Income58Consolidated Statement of Changes in Equity60Consolidated Statement of Cash Flow62Notes to the Consolidated Financial Statement104 Statement of Distributable Profit & Loss127 Unaudited Financial Results (Fourth Quarter)130 Comparison Unaudited & Audited Financial Statements133 Key Indicators134 Nepal Rastra Bank's Approval & Directions135 Five Years Financial Summary138 Branch Managers5

6NPL/Total Loan(In %)Standard CharteredAnnual Report 2019 - 2020Total Credit to DepositRatio ( In %)Net Worth PerShare otal ShareholdersEquity (NPR 1.98Market ValuePer Share 44Return on TotalAssets (In %)2017-180.150.180.190.32Profit After Tax(NPR 02,4352,1901,9872,2951,5501,292PERFORMANCE HIGHLIGHTSEarning Per Share(NPR)Capital AdequacyRatio (In%)

OPERATIONAL OVERVIEWStandard Chartered has continued to deliver consistent,diverse and sustained growth while investing to underpinfuture momentum and building balance sheet resilience.FINANCIAL HIGHLIGHTSOperating IncomeOperating ProfitTotal AssetsNPR. 4,973mNPR. 2,847mNPR.116,438mCapital AdequacyReturn on EquityDividend18.51%15.15%11.84%NON-FINANCIAL HIGHLIGHTSPoints of RepresentationEmployees15535OPERATIONAL HIGHLIGHTS Impact on performance due to pandemicsituation leading to the extended lockdown. Disciplined and proactive approach to riskmanagement in Retail Banking and Corporate,Commercial and Institutional Banking. Higher loan loss provisions on regulatory basisand loss of income momentum caused the netprofit lower over last year. Diverse, liquid, well capitalised and robustbalance sheet composition. Conscious decision to invest to underpin futuregrowth in both the businesses. Strong market capitalisation of NPR. 52 Billionreflecting high shareholder confidence.

Jitender AroraChairman

REPORT OF THE BOARD OF DIRECTORSIn the course to recovery with resilience, agility and empathyPerformance highlightsThe challenges we face amidst theglobal pandemic has tested ourresilience and ability to adapt to andperform in the new normal. We arepleased to report that we have beenlargely successful so far. Thanks tothe commitment of our colleagues,trust of our clients and our financialresilience to external shocks, mybelief that we can withstand thiscrisis and emerge stronger hasstrengthened.Despite extended interruptions wewere successful in continuing withour operations without disruptionswhich was only possible due to ourvalues, conduct, culture, robustprocesses and risk framework. Ouroperational resilience has helpedus maintain continuity in serviceswithout compromising health andsafety protocols through new waysof working including split operationsand work from home models.I believe that when this crisis isover, we will be able to look backand be proud of the manner ourorganisation stood strong.While we continue to proactivelyrespond by serving our clientsand playing our part in limitingeconomic impacts of the pandemicin communities, we also remainfocused in delivering our strategicpriorities. In this endeavour, wehave been aptly supported by ourstatus as the only international andAAA rated Bank in Nepal alongwith resilient financial foundationson a solid capital base and liquidityposition. We aim to continue tomanage our Bank for the bestinterest of our shareholders, supportour clients and commit to helpall our stakeholders confront thischallenge.On behalf of the Board of Directors,I am pleased to report that StandardChartered Bank Nepal Limitedhas delivered another profitableperformance in the FinancialYear 2076-77 despite challengesposed by Covid-19. Our timelyintervention last year in a StrategyRefresh enabled the Bank to deliversustainable growth and income whilemanaging cost and capital. The levelof profits earned is after makingcontributions through interest reliefsto clients impacted by Covid-19 andproviding for potential deteriorationin credit portfolios in compliancewith regulatory reaseNet ProfitNPR 1.99billionNPR 2.43billion(18.11%)Earningsper shareNPR 24.81NPR 30.39(18.36%)Loans toCustomers(gross)NPR 54.96billionNPR 53.70billion2.36%CustomerDepositsNPR 95.02billionNPR 75.73billion25.47%16.85 percent and 1.66 percentrespectively with an overall ratio of18.51 percent. Our capital positionis more than adequate to meetour business needs and exceedsinternational norms and NepalRastra Bank’s capital adequacyrequirement under the Basel IIIcapital accord.Bank contribution toGovt ExchequerNPR 850mExchangeFluctuation ReserveNPR 41mGeneral ReserveNet Profit2076-77NPR 1.99 billion2075-76NPR 2.43 billionThe Bank has contributed NPR850 million to the GovernmentExchequer on account of corporatetax as compared to NPR. 1.04 billionlast year. The year 2076-77 hasbeen an exception to the historicaltrend of performance. The Boardrecommends a transfer of NPR. 41million to the Exchange FluctuationReserve NPR. 397 million to theGeneral Reserve Fund and NPR.36 million to Regulatory Reservesin accordance with statutory andregulatory requirements. Further, theBoard has proposed cash dividendof 4.84 percent and bonus sharesof 7 percent for which equivalentamount has been appropriatedfrom current year profits. Beforeappropriation of profits, Tier 1 andTier 2 Capital Adequacy Ratios wereNPR 397mRegulatory ReserveNPR 36mCash Dividend4.84%Making good progress onour Strategic PrioritiesOur purpose in Nepal includessupporting economic growth andprosperity leveraging on our globalnetwork, to support businessesand communities bounce backfrom economic impacts posedby Covid-19. Being the onlyinternational bank in Nepal, wewill also continue to contribute to9

We believe that it is vitalto rightly position Nepalto attract investmentpost recovery in orderto collectively ride outthe economic impact ofCovid-19.Foreign Direct Investment inflowsby providing services to globalcorporates in the process of enteringthe country.This crisis has made the worldrealise the importance of digitalcapabilities and why it is aprerequisite for sustained growth.This year, we also have increasedour focus on digitising our businessoperations and building strongstrategic collaborations in responseto the changing digital habits inNepal.Our investment in enhancing ourinfrastructure and systems in thepast year has proved to be in theright direction as we have beenawarded the Best Consumer DigitalBank for 2020 in Nepal by GlobalFinance. We plan to further increaseour digital focus which we stronglybelieve will be in line with newmarket developments and provideenhanced client experiences. Lastly,we also have placed heightenedfocus in the areas of informationand cyber security, conduct andoperational efficiency in the wake ofnew operational challenges posedby the pandemic.Focus on governanceIn the current milieu, we haveexperienced that crisis increasesthe incidence of shocks that maycome in varying degrees fromeconomic downturns, impacts ofnew regulations, evolving societalissues and rapid technologicalchanges. Amidst such challenges,we continue to enhance our riskmanagement framework to achievesustainable growth targets and ourcapabilities to keep up with the10Standard CharteredAnnual Report 2019 - 2020evolving financial and cyber-crimerisks.As a Bank we are strict about goodconduct and instilling a culture ofethical behavior in all our employees.For this, we continue to invest inbuilding infrastructure and rollingout appropriate systems to ensurethat we continue to play a leadingrole in detecting and disruptingfinancial crime. We remain focusedon good behaviors, values andprinciples to enable us to makethe right decisions and exercisegood judgement for our clients andstakeholders.Besides complying with RiskManagement Guidelines andDirectives from Nepal Rastra Bank,the Bank follows Risk ManagementPrinciples and practices of StandardChartered Group which are in linewith the best international practices.The risk management processinvolves active engagement andparticipation from the Board rightdown to operational levels ensuringan effective system. The Bankrecognises principal risks in theareas of Credit, Market, Capital,Liquidity, Operations, Reputation,Compliance, Conduct, FinancialCrime and Information & CyberSecurity. These risks are managedthrough Risk Type Frameworks(RTF) and respective risk frameworkowners are appointed. Inaddition, apart from reviewing ourperformance and the execution ofour refreshed priorities, the Boardalso has focused on other issuessuch as diversity and inclusion,health and safety, and communitypartnership.Structure of our BoardMs. Karen De Alwis and Mr. AnirvanGhosh Dastidar represent StandardChartered Grindlays Australia in theBoard. Mr. Krishna Kumar Pradhanrepresents as an IndependentDirector and Mr. Bharat Kunwar,represents public shareholdersin the Board. I, Jitender Arora,am assuming the Chairman’s rolerepresenting Standard CharteredBank, U.K. in the Board of StandardChartered Bank Nepal Limited.As on the date of this report, theBoard is made up of the NonExecutive Chairman, one ExecutiveDirector and three Non-ExecutiveDirectors of which one is anIndependent Professional Directorand one is a Public Directorrepresenting General Publicshareholders as per the provisionsof the Bank and Financial InstitutionsAct and the Companies Act.The way forwardWe are optimistic that Nepal’seconomic recovery will be swiftsince effective policy measuresare underway. Nepal Rastra Bankand the Ministry of Finance areproviding frameworks to protectthe interest of all participants of thefinancial industry through monetaryand fiscal policies. These policiesgive a strong foundation for fasterrecovery despite downgrades onthe GDP growth forecast for currentfiscal year due to the prolongeddisruptions in the economicactivities.We believe that it is vital to rightlyposition Nepal to attract investmentpost recovery in order to collectivelyride out the economic impactof Covid-19. Nepal still has acomparatively lower Debt to GDPratio compared to other countriesand therefore the government mayhave the appetite to support revivalactivities further. This may add moreoptions to pursue effective policymeasures aiding a faster recoverysimilar to Nepal’s history of quickrebounds from past crises.When the whole world is strugglingwith reliable forecasts about howlong will it be before normalcy, weare focusing on the present andthings we can temperamentallycontrol. We, the Board along withthe Management team, are keen oninvesting on key projects and arepursuing opportunities that couldbenefit Nepal’s long-term economicgrowth including support to foreignbusinesses looking to enter themarket through business setup orinvestment, supporting policy levelinitiatives and driving global bestpractices in the Nepalese BankingSector.

In conclusionWe are optimistic that ourrefreshed balance sheet strategyand pandemic driven operationalchanges have further strengthenedour foundations and equipped us toseize business opportunities oncethe situation normalises. We havebuilt a robust digital infrastructure,restructured our operating models,refined our processes and redefinedour priorities for the current andpost Covid periods, which remainsfundamental to our growth strategy.We continue to stride aheadconfidently despite a challengingexternal environment. This crisishas reconfirmed that our persistentefforts over the years in maintaininga liquid balance sheet, strong capitalposition along with diverse and wellmanaged business portfolio hasbeen futuristic. Our past prioritisationin increasing the Bank’s resilienceto potential challenges or risks byintroducing advanced processes intoour existing systems has also beenhelpful in staying resilient duringthe crisis.The Bank is strongly and uniquelypositioned to take advantageof any ensuing opportunity. Wefirmly believe that the leadershipteam is on the right track andwith disciplined execution of ourstrategic priorities, we can boostour performance. The Boardwill continue to support themanagement team and maintainappropriate governance and riskoversight to deliver profitable returnsand sustainable growth.The manifestation of our values andpriorities can be seen in the positivefeedback we continue to receivefrom our clients and well-wishersduring this crisis. We are valued forour product and digital capabilitiesincluding our international presence.On behalf of the Board, I wouldlike to thank our clients for theircontinued loyalty, our employeesfor their dedication, commitmentand resilience through challengingtimes and our valued shareholdersfor your support, feedback andencouragement.The valuable support and guidancefrom the Ministry of Finance,Nepal Rastra Bank and otherregulatory bodies have also helpedus tremendously. We would liketo express our gratitude on theirefforts to elevate the standard of theNepalese financial sector.Thank you,JITENDER ARORAChairmanDate: Friday, 8 January 2021Kathmandu, Nepal11

Anirvan Ghosh DastidarCEO and Director

CHIEF EXECUTIVE OFFICER'S REPORTNavigating the new normalAs an international bank in Nepal,it has always been a privilege to bean ambassador representing thecountry in the global arena. Thisis now more relevant than ever asglobal interconnectedness will bean important need for the countryduring the recovery phase postCovid-19. Since the establishmentof our operations in Nepal, wehave been committed to economicdevelopment and continue tosupport strategic initiatives topromote prosperity in the country.Subdued economic growth,slowdown in business momentumand decline in financial activitieshave created extremely challengingoperating conditions since March2020. However, I am pleased toreport a profitable performancefor the FY 2019-20 and I amalso confident that our strongerfundamentals will help us growrapidly in future. Our profits wereadversely impacted by lowerrevenue and higher impairmentduring the latter half of the year. Dueto the trust that we have createdas being the only AAA rated safestcommercial Bank in the country,we were able to garner depositsfrom our clients which grew ata rapid rate. This coupled withour strengthened capital positionenabled us to build substantialreserves in the face of uncertaintyand economic headwinds.As businesses tend to operateat levels which are graduallyconverging to their pre-pandemiccapacity, we acknowledge thathelping clients recover from thiscrisis is an important aspect ofour purpose that contributes tothe prosperity of the country. Theway our colleagues are coping inthis crisis to serve clients to ensurecontinuity in operations validates thispurpose. We have come throughthis year with no major inci

Exchanges as well as the Bombay and National Stock Exchanges in India. Our Valued Behaviours demand that we do things differently, for us to . Exchange Fluctuation Reserve NPR 41m General Reserve NPR 397m Regulatory Reserve NPR 36m Cash Dividend . 2. Annual

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