consolidated balance sheet highlights - bank … report/annual report 2009...consolidated balance...

Consolidated Balance Sheet Highlights

Chairman’s Statement

Board of Directors

Senior Management Team

BSI Organizational Chart

Iran at a Glance

Achievements

History

Iranian Banking System

Islamic Banking in Iran

Mission and Vision

Privatization

Corporate & Commercial Banking Projects

International Banking

Technological Infrastructures; Electronic Banking

Human Resources

Risk Management

Highlights of BSI Success in International and National Arena

Financial Performance

Financial Statements

Excerpts from the Auditors’ Report

BSI Subsidiaries & Branches Abroad

International Network

Contact Persons

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20.03.2009 20.03.200820.03.2010

Bank Saderat Iran GroupConsolidated Balance Sheet Highlights

*USD/RLS exchange rate as of 20.03.2009 and 20.03.2010 is 9723 and 9866 respectively.

million USD*billion RISmillion USD*billion RISmillion USD*billion RIS

43,062386,26342,148409,80948,754481,010Assets

39,697356,08239,306382,17345,734451,214Liabilities

29,589265,41328,060272,82931,899314,714Customer Deposits

24,437219,19625,034243,41030,398299,905Loans to Customers

3,36530,1812,84227,6363,02029,796Shareholders' EquityIncome Statement Highlights

2,99926,8973,31532,2333,90938,569Net Interest Income

1,24311,1548488,2481,02110,076Non-Interest Income

4,24238,0514,16340,4814,93148,645Operating Income

(2,588)(23,217)(2,435)(23,676)(3,026)(29,859)Operating Expenses

1,65414,8341,72816,8051,90418,787

(936)(8,393)(1,016)(9,874)(1,259)(12,423)Others Expenses

(513)(4,606)(417)(4,059)(253)(2,495)Provisions

(35)(310)(40)(387)(31)(307)Income Tax

1701,5252562,4853613,563

Key Ratios

61%58.5%61.4%Expenses/Income

4%6.1%7.3%

5%9.0%12.0%Return on Equity

0.4%0.6%0.7%Return on Assets

82.6%89.2%95.3%Loans / Deposits

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Chairman’s Statement

On the 58th anniversary of the bank, I would like to seize the opportunity and express my deepest gratitude to BSI customers, shareholders, and staff.

Last year, BSI underwent dramatic changes, the first and greatest of which was a transfer from public to private ownership considering its own requirements.

Privatization was a new experience for BSI, which had however been privately run before the revolution. After banks were nationalized, their policy making system was assigned to the government and banks had little authority over decision-making. Private management and policy making for the bank will be a great change.

Having the largest overseas branch network within the Iranian banking system, BSI has been able to extensively develop its international banking relations in line with facilitating money and trade exchanges. To maintain BSI’s commanding presence, the Board of Directors has implemented a thorough and meaningful strategy.

The bank’s long-term programme is aimed at creating a superior bank. Hence,

developing modern technology, going beyond boundaries of time and place; obtaining access to the newest services for customers; creating a better share price for the shareholders; and having committed and innovative human resources, are considered as a five-year perspective for BSI.

In other words, in the next five years, BSI will gain advantage in the following five fields: rate of return on equity, market share, electronic services, organizational innovation, and human resource development.

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The bank’s long-term programme results from a collaborative effort to anticipate the bank’s future operations. It is a long-term perspective, with a revision possibility in special cases along with implementing the best guidelines to reach the goals set in the programme. In this regard, we view supervision and follow-up as the pillars of a dynamic organization and the relevant units will present functions, objectives and achievement in a timely manner.

BSI has now the largest international network within Iranian banking system with 21 overseas branches, 3 Regional Offices, 2 independent banks (Bank Saderat PLC, London and Bank Saderat Tashkent), and 3 Joint-Venture Banks (Future Bank, Bahrain; Arian Bank, Afghanistan and Honor Bank, Belarus).

With the highest number of branches in the country, BSI naturally possesses a large number of customers. Our bank has equipped all its branches with Real-Time Online System (SEPEHR), has opened more than 36 million online accounts, has issued 12.6

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million electronic and credit cards, and has 2845 mobile and fixed ATMs and 255,000 POS. Our customers have welcomed our new services including SATNA, internet banking, mobile banking, POS , etc. Quality and quantity improvement of new services in our bank is what our managers and staff aspire to.

The following deposits comparative table is a quick glance at BSI performance in attracting resources and granting loans which reflects the staff commitment and effort:

I would like to express my sincere gratitude to all the people who contributed to the bank’s development within the Iranian banking system and all those who continue to believe in Bank Saderat Iran after 58 years. I wish to assure our shareholders that BSI, as a privatized bank, is ready to meet the challenges and grasp new opportunities to develop.

Yours sincerely Seyed Mohammad Jahromi Chairman & Managing Director

Description 20.03.200920.03.2010

Deposits Comparative Table

Billion RLSBillion RLS44,57146,436Interest-free Current Account

26,26528,544Interest-free Saving Account

77,23693,835Short-term Deposits

59,20090,926Long-term Deposits

- 9,455Other Deposits207,272269,196Total

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Iran at a Glance

Iranian Economy during the year 2009

The widespread financial crisis which manifested itself since mid 2007, continued through 2008 & 2009 to confront this financial crisis, broad and relatively coordinated measures were adopted by the main and influential global economic centers.

In late 2009, nearly two and half years after the start of the crisis, apparently the first signs of the effect of the political measures appeared. Especially in the first quarter of the current year, some signals are perceived showing the return of stability and economic growth in a number of major countries involved in the economic crisis.

Although Iranian economy was partly away from the first round effects of the global financial crisis due to the poor communication of its financial institutions and capital market with the international markets, the crisis extension to the real economy sectors caused Iranian economy to be meaningfully affected by the crisis.

The decline in the price of the crude oil and other raw and intermediate materials in the global market were the main influential sources of the global economic crisis which, with a few months delay, affected Iranian economy, mainly the performance of the macroeconomic variables in 20 March 2010.

In 20 March 2010, the world primary energies1 consumption reached 11.2 billion tons crude oil equivalent, with about 1.3% decline in comparison with 20 March 2009. Of this amount 10.5 billion tons oil equivalent was related to non-OPEC countries and 0.7 billion tons oil equivalent to OPEC member countries. In the review year, the highest amount of the world primary energies consumption was related to crude oil (34.8%) and the lowest to nuclear energy (5.5%).

In 20 March 2010, Iran’s primary energies consumption was over 204.8 million tons oil equivalent, showing about 4.9% increase in comparison with 20 March 2009.

1. Includes crude oil, natural gas, coal, nuclear energy and hydroelectricity.

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Real Economy Sector DevelopmentsEnergy

In 20 March 2010, Iran’s average crude oil production, in the framework of the production quotas defined by OPEC, reached 3.6 million barrel per day (mb/d). In this year, the Iran’s average crude oil export, with 13.3% decline in comparison with the preceding year, fell to 2.1 mb/d. However, export of oil products increased by 12.3% to 109 k b/d.

AgricultureConsidering the increase in production and the improvement of agriculture sector in 20

March 2010, it is anticipated that the value-added of this sector would see considerable increase too.

At the end of 2009, the net balance of facilities granted by banks and credit institutions to the public and non-public applicants of the agriculture sector amounted to Rls 249.2 trillion, showing 13% growth in comparison with the end of the previous year. Of this amount, the shares of Bank Keshavarzi and commercial banks were 49.4 and 50.1 percent respectively and only 0.5% was the share of non-governmental banks.

In this year, the share of the net balance of facilities granted to the agriculture sector was 12.9% of total net balance of facilities granted by the banks and credit institutions.

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Industries & Mining

In 20 March 2010, the producer price index in Industry sector reached 171.7, showing 3% rise compared with the previous year.

At the end of 2009 in Tehran Stock Exchange, the share price index of manufacturing companies (industrial index) indicated 56% rise in comparison with the end of 2008. The growth of general index in the same period was 57.4%.

In 20 March 2010, Iran’s industrial exports amounted to 32.6 million tons in terms of weight and $16.6 billion in terms of value, showing 35.2 and 12.8% growth respectively in comparison with the previous year. In this year, the share of industrial exports in total non-oil exports reached 77.6% in terms of value.

Construction and HousingFacilities Granted to Housing Sector

At the end of 2009, the net balance of facilities granted by the banks and credit institutions to non-public housing sector increased by 20.4% to Rls. 402.6 trillion

in comparison with the end of 2008. Moreover, based on the report released by Bank Maskan in 20 March 2010, Rls. 81.6 trillion facilities (excluding profit receivables) were paid in the form of 477.6 k contracts, showing 88.3 and 43% growth respectively compared with the previous year.

At the end of the review year, Facilities granted by Bank Maskan in the form of civil partnership and installment sale amounted to Rls. 43.2 and 34.7 trillion, indicating 198.7 and 27.8% increase respectively in comparison with the previous year. The considerable rise in civil partnership facilities granted by Bank Maskan was due to Bank Maskan’s high participation in granting facilities to Mehr housing project.

Transportation

In 20 March 2010, Rls. 34.6 trillion was approved for the implementation of acquisition of capital assets projects in the road and transportation sector, indicating 67.7% rise compared with the approved figure for the previous year. In this year, about 78.3% of the approved figures were achieved.

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Financial Sector DevelopmentsGovernment Budget and Finance

The Budget law of 20 March 2010, as the last budget law of the 4th five-year plan (2005-2009), was compiled within the framework of the Twenty-Year Vision Plan, trans-sectoral , sectoral and provincial documents, general policies of Article 44 of the Islamic Republic of Iran’s constitution, and macro - policies of the country.

According to the charts of the budget law of 20 March 2010, the total sum of revenues, disposal of capital assets, and disposal of financial assets amounted to Rls. 892,132.8 billion and the total sum of expenses, acquisition of capital assets, and acquisition of financial assets amounted to Rls. 977,132.8. To establish the balance between the two figures, Rls. 85,000 billion was deducted from the total sum of expenditures as “the reduction in allocation during the budget execution”. Out of the total resources of the government budget, the share of revenues, disposal of capital assets, and disposal of financial assets were 51,19,30% respectively. Expenses, acquisition of capital assets , and acquisition of financial assets accounted

for 60.5%, 29.1%, 10.4% of the approved budget uses respectively .

Money and CreditLiquidity and its Determinants

During 20 March 2010, liquidity had a growth equal to 23.9%, showing 8% point rise in comparison with the previous year. During this year, the net foreign assets of the banking system grew by Rls. 121 trillion, accounting for 6.4% points of liquidity growth. This growth was due to Rls. 92.7 trillion rise in net foreign assets of the Central Bank (accounting for 4.9% points of liquidity growth) and Rls. 28.3 trillion rise in net foreign assets of banks and credit institutions (accounting for 1.5% points of liquidity growth).

During 20 March 2010, net domestic assets of the banking system grew by Rls. 333.6 trillion, causing the 17.5% points rise in liquidity.

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Assets Market DevelopmentsStock Exchange

Tehran Stock Exchange indexes have had a rising trend during the first six months of the year beginning from 20 March 2009 despite the drop-off tendency of its previous six months period. Meanwhile after the decrease in November and December, index ascending process has been continued to the end of the year.

In the year ended 20 March 2010 Stock Exchange market observed wide presence of the dealers as well as index increase resulted from global market improvement, price increase of raw materials, admission of some other companies to Stock Exchange Market based on article 44 of Constitutional Law, recession of the internal competitor markets especially money and housing market and the diversity of finance instruments.

Participation Bonds

In the year ended 20 March 2010, participation bonds equal to Rls.17,696/8 billion have been sold from the total issued Rls.17,700 billion.

FX Transactions in Inter-Bank Market:

FX transactions of inter- bank market in the year ended 20 March 2010 were equal to 53,343 million dollars (USD, Euro, AED and other currencies),showing 5.5% decrease comparing to the previous year. The increasing process of secondary market share from total inter-bank market continued and reached 71.3%. Cash transactions have been increased due to the spread of international limitations and transaction simplicity in secondary market.

Price Trend

Price index of consuming goods and services and producer price index had a rising trend during 2006 to 2008 but a severe falling trend in 2009. In this period, price index of consuming goods and services decreased from 25.4% to 10.8% and producer price index from 20.9% to 7.4% comparing to the previous year. Price index for export goods in the year ended 20 March 2009 had a 6.8% decrease compared to the previous year. The mentioned index had been raised 22.1% in the previous year.

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2009(Nine Months)

20082007Million USD

48,38982,40381,567Oil & Gas

15,08418,88616,101Others

63,473101,28997,668Total Exports

47,43770,19958,240Total Imports

16,03731,09039,428Trade Balance

(8,095)(8,549)(7,475)Net Services

372362642Net Money Transfers

8,31422,90332,594Current Account Balance

Source: Central Bank of Iran (9 Months)

Balance of Payment

Divider 1

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History

To attract maximum liquidity and develop the economy, BSI founders established a bank on the basis of a customer-centered principle for the first time in the country; therefore BSI was established on September 6, 1952 with Rials 20 million in share capital 50% of which was paid in cash and launched its operation on November 13, 1952 with a staff of thirteen.

From the very beginning, BSI endeavored to encourage innovation in banking services and respect customers and managed to attract a large amount of liquidity in a short period of time and, more importantly, to reconcile people to the banking system by realizing the phrases ”BSI at people’s service” and “customer is right”.

The first BSI overseas branch was established in Hamburg, Germany in 1961, which was followed by opening other overseas branches. Now BSI has the full or partial ownership of 4 independent overseas banks (Tashkent 100%, PLC London 100%, Future Bank Bahrain 33%, and Arian Bank Afghanistan 50%).

The BSI network amounts to 21 banking units in Europe and Asia.

With 3,300 active branches and share capital of Rials 16,803 billion, BSI runs the largest banking network in Iran. In 2000, BSI started offering electronic online services, and is now the leader in the number of online branches, ATM machines, POS machines and issued debit cards across the Iranian banking system.

With more than half a century of banking experience, a deep sense of obligation to its basic principle and a full implementation of usury free Islamic banking, BSI, as a credible popular bank, attempts to maintain its top position among its rivals through following the lead of international banking and customer–centered principles and offering quality banking services.

In addition BSI has a leading role in achieving customers’ satisfaction and developing our Islamic country.

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The Iranian Banking System

Over recent years, banking activities have become very diverse and the banking industry has experienced impressive developments thanks to developments in IT and new banking methods. Nowadays, banking services are not restricted to offering loans and taking deposits, but involve a wide array of financial transactions. Banking may generally be categorized as wholesale banking, retail banking, and comprehensive banking.

Offering financial services and products to customers is the bank’s main mission. A bank’s success depends on its good relationship with its customers and the management of data.

A rapidly-growing banking sector and the importance of money and capital markets in the country’s economy in 1950s necessitated establishing comprehensive rules governing the monetary system and banking operations.

On May 28, 1960, the Iran Monetary and Banking Statute Bill was announced to the Government under the title of “The Country’s Monetary and Banking Law”

after it was passed by Parliament Common Commissions. The bill was proposed to be brought into effect for five years as a pilot scheme. By appointing the first Central Bank governor on August 9, 1960, the Iranian Central Bank was formalized.

An independent bank was thus established to oversee transactions and guide the banking and monetary system. Therefore the Central Bank’s operations were officially separated from those of Bank Melli Iran.

After the Islamic Revolution and the necessity to establish the Islamic economic system in Iran, the Usury-free Banking Operation Law was passed to omit usury from banking operation and reconcile juridical standards with the banking system in light of the concept of usury in Islamic jurisdiction and the contents of fourth article of the Constitution, stating that all rules should comply with Islamic standards. Before nationalization, the banking network consisted of 36 banks. Based on the Banks Merger Plan, officially implemented in November 1979, the banking network (except the Central Bank) included 3 specialized banks (Maskan, Keshavarzi, Industries and Mines) and 6 commercial

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banks (Melli, Sepah, Mellat, Tejarat, Saderat, Refah Kargaran).

The Export Development Bank was founded as a specialized bank on July 10, 1991. According to Credit and Money Council approvals in 1992 and 2000, non-banking Credit Institutes and private banks were authorized to begin their operation respectively. Along with these banks, a Ministry of Communications and IT’s affiliate, “Post Bank” offers some banking services too.

The Usury-free Banking Operations Bill was presented to the cabinet by the Ministry of Finance and Economic Affairs on May 5, 1982, passed by the Parliament in September 1983, and approved by the Guardian Council. This law requires that allocating resources and granting facilities by banks are performed in terms of Islamic contracts.

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Islamic Banking in Iran

The First Step to Islamizing the Banking System

After the Islamic Revolution, the necessity to set up an Islamic economic system was seen as a major requirement.

The most important action would be eradicating usury from the banking system so that an economy based on fairness could be developed. Therefore, in 1979, steps were taken for Islamizing the banking system. These steps can be summarized as omitting interest and initiating commissions in the banking system, founding an Islamic bank, and developing Qardh Al Hassaneh Funds.

Interest Omission and Initiation of Commission

One of the main requirements to omit interest and usury from our economy and to reconcile it with principles of an Islamic economy is developing a system through which investments take place based on real social needs rather than maximize shareholders’ dividends.

The system is required to steer the society’s material and immaterial resources towards meeting the basic

needs, using methods other than the interest rate.

For this reason, the Credit and Money Council approved a number of changes in the bank’s interest rate structure in its 392nd session dated December 24, 1979, which were put into action in March 1980:

1-The minimum possible guaranteed profit for the deposits

2-To specify commissions and the minimum possible guaranteed profit for the loans and other credit facilities

In 1982, a Usury-free Banking Operations Bill was presented to the Islamic Parliament for omitting interest and reconciling banking transactions with Islamic standards.

The bill was ultimately passed on August 30, 1984. According to this law, the banking system was aimed at setting up a justice-based credit and money system, characterized by a proper money and credit circulation, especially money value maintenance, keeping equilibrium in the balance of payments, facilitating commercial exchanges and offering services legally delegated to the banks.

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To secure banking transactions and capital return related to banking facilities, the law considers the entire contracts made between the bank and its customers as indispensable documents subject to the executive procedures of official documents.

The granted facilities in the form of Islamic Contracts are:

1- Qardh Al Hassaneh2- Modharebeh3- Legal Partnership4- Civil Partnership5- Direct Investment6- Installment Sale7- Lease to Own

8- Salaf9- Jo’aaleh10- Mozare’eh11- Mosaghat12- Debt Purchase13- Guarantees

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Mission and VisionThe BSI mission is to build lasting relationships with its clients by giving

quality financial services. The Bank also aims to consolidate its position as a large international financial group which meets all its customers’ financial needs. For this purpose, leadership in domestic markets, public policies, and global reach are taken into consideration.

By definition, a successful organization is the one that has a vivid picture of the future and clarifies its assets whether cash or non-cash; therefore the BSI 5-year plan is to depict its future perspective and to prescribe exactly what will be achieved; so, BSI’s vision, mission, operational and leading plan , ratified by board of directors is as follows:

The leading plans include those KPIs that the bank is looking for in future. Such goals lead to key KPIs in all banking areas such as profitability, return on capital, technology, productivity, etc.

BSI 5-year Overview

Superior in Market Share

Superior in Stock Holder Yield

Rate

Superior in Developing

Human Resources

Superior in Organizational

Innovation

Superior in Giving Electronic

Services

BSI

Market KPI

FinancialKPI

ITKPI

GrowthKPI

ProcessKPI

BSILeading areas

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Privatization

BSI introduction meetings were held on June 3rd, 5th, and 7th 2009 in Dubai, London and Tehran respectively prior to offering its stock. Upon Ministry of Finance and Economic Affairs’ approval to sell BSI stock, 6% was sold on June 9, 2009, 5% was assigned to BSI staff, 40% to Provincial Investment Co and the remaining 49% stayed with the government.

6% of BSI stock, equal to 1,008,180,000 shares, was offered by the Tehran Stock Exchange and was sold only 6 minutes after being offered.

BSI share capital is Rls 16,803 billion and after offering its stock, BSI was portrayed as the largest private bank and the second largest stock company in Iran.

%Number of sharesDescriptionNo.

406,721,200,000Provincial Investment Co1

38.126,405,303,600Islamic Republic of Iran Government 2

13.412,253,282,300Legal Entity3

5840,150,000BSI staff4

3.47583,064,100Real Entity5

10016,803,000,000Total

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Picture

Corporate & Commercial Banking Projects

Sugar Cane and Subsidiary Industries Development Company

This project was developed with the purpose of making the country self-sufficient in sugar and providing part of the country’s industrial and nutritional requirements with the following units:

1) Seven units for the sugar cane industry covering 84,000 hectares of farmland (each unit 12,000 hectares) for producing 7 million tons of sugar.

2) Seven 100,000-ton units for producing raw sugar.

3) Four 175,000-ton factories for refining sugar (producing white refined sugar).

4) Seven 100,000-ton units for producing livestock food.

5) One 100,000-ton unit for industrial boards.

6) One 30,000-square meter unit for alcohol.

7) One 10,000-ton unit for leavens. 8) Four units for producing paper.

Heiran Tourist Centre The aim of this project is building a

cable car between Fandoghloo (Ardebil province) and Heiran (Gilan province) plus restaurant, coffee shop and parking lot.

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Zabol Cement Industry The project aims to produce 1 million

tons of gray cement per annum in Zabol from Sistan & Baluchistan province. The syndicated project was funded by Bank Saderat Iran, Industries and Mines Bank, and Bank Mellat.

Perlit Asia Casting IndustryThe project was developed to establish

parts-casting unit (mostly autos) with the annual capacity of 40,000 tons in Saveh which doubled compared with the previous year.

Abyek Cement Located in Abyek, Qazvin, the

project aims at reconstructing some parts of factory equipment to help continue its activity and increase its 16,500-ton capacity per day. The factory can produce gray cement, Portland types1, 2, and 5 and Grouting.

Yazd Industrial and Construction Steel Roll

The project produces low alloy steel plate with the capacity of 200,000 tons annually, girders with the capacity of 500,000 tons, steel hasp with the capacity of 20,000 tons and liquid oxygen and nitrogen amounting to 110 and 150 square meters per hour in Yazd province.

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International Banking

BSI overseas activity started with Hamburg Branch in Germany in 1962 and now it has the largest International Foreign Network in Iran, having 21 Branches, 3 Regional Offices, 2 independent banks, 3 Joint Venture Banks and 122 domestic F/X branches.

Overseas Branches:

The total number of staff working at overseas branches and offices is 777, of whom 701 were local and 76 were dispatched.

BSI overseas branches are now engaging in all kinds of banking activities such as granting various banking facilities, opening L/Cs, issuing letter of guarantees, and money transfers. All follow anti-money laundering and Basel II regulations according to their homeland banking rules.

BSI overseas branches take full advantage of their potential with respect to the following factors:

A wide variety of banking services and facilities tailored to customers’ needsWell-designed regulated systemQuick decision-makingFlexibility in the bank’s policy-makings considering the change in economic

conditions and international financial markets

Bank Saderat PLC, London Bank Saderat TashkentIndependent Banks:

Future Bank Bahrain Honor Bank, Belarus Arian Bank Afghanistan

Joint Venture Banks:

Persian Gulf Germany Lebanon

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It is notable that total profit earned by the overseas network rose to USD 203 million by the end of 2009, an increase of 4% compared with the preceding year. By far, the overseas network has led to a positive result so that its income constitutes a major part of the total profit across the BSI group. This process of profitability is predicted to continue in the year to come.

To improve in profitability and international activity, BSI is expanding its overseas network. Together with Bank Refah Kargaran and Export Development Bank, BSI established Honor Bank in Belarus with a 37% share. The bank is also planning to open a joint venture in Syria and agencies in China, Brazil, and Indonesia.

The operations of some major BSI overseas units are as follows:

Bank Saderat PLC, London

The post–tax profit of Bank Saderat PLC achieved in the year to December 2009 was EUR 16,388,846 a reduction of 18.8% on the figure achieved in 2008, but nevertheless a very creditable result in the prevailing economic environment.

The post-tax return on equity reduced to 10.1% compared with 12.4% in 2008.

The Directors were able to pay dividends totaling EUR 20.9m in 2009 and a further dividend of EUR 9m was paid following the Annual General Meeting held in March 2010.

The Bank continues to exercise tight control over its mainly Sterling expenses, which are expressed in Euros for the purpose of the annual accounts. The Bank’s expenses reduced by 6.7% in 2009 as compared with 2008.

A provision of EUR 138.8k was raised during the year under review against a doubtful debt; however the Bank was also able to write back EUR 94k of provisions relating to impaired loans. At the end of 2009, provisions against impaired loans totaled EUR 4K.

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Under the ILAS (Individual Liquidity Adequacy Standards) regime, banks are required to carry out an Individual Liquidity Adequacy Assessment (ILAA) of the type and quality of liquidity resources held against the sources of liquidity risk that could occur under relevant stress scenarios. Bank Saderat PLC has completed its ILAA and anticipates that the strong liquidity levels held throughout the banking crisis will continue to be maintained going forward.

Also during 2009, in accordance with the Payment Services Directive, which derived from European legislation covering relationships between banks and their customers, the FSA introduced changes to the Conduct of Business Regime. In compliance with the Banking Conduct of Business Sourcebook, and in common with all other FSA regulated banks, BSPLC prepared and issued to all customers a leaflet containing its terms and conditions. BSPLC continues to support wholeheartedly the initiative to treat customers fairly.

We as always, are entirely confident in the anti-money laundering and counter- terrorist financing systems and controls employed by the Bank.

Specialist consultants have updated the Bank’s Manual for Preventing Financial Crime, and have provided comprehensive training for all members of staff. All staff are required to follow the Bank’s best practice procedures which comply with the risk-based approach required by the Regulator.

Bank Saderat PLC, a UK Bank, complies fully with FSA regulations, Anti-Money Laundering and counter-terrorist financing regulations, international banking practices and standards, and the laws of England and Wales.

BSI Paris Branch in 2009

Bank Saderat Iran Paris Branch has undergone significant changes in 2009 to comply with the regulatory requirements of the Basel II committee regarding the capital adequacy ratio, and local requirements. On February 1, 2009, all the refinancing transactions of documentary credits have been assigned to Head Office, and from that date, revenues from these activities took shape in the form of commissions paid by Head Office. This resulted in transferring 0.85% of revenues to BSI- Tehran and

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led to the reduction of profit in 2009. Other revenues for the branch came

from discounts on drafts and letters of credit within the documentary credit activities.

The profit was achieved in the context of a financial crisis which did not spare the French economy. France was coping with recession, although a slight economic recovery of 0.3% was signaled for the 4th quarter of 2009.

Total assets at December 31, 2009 were 336.7 M€ compared to 797.8 M€ at December 31, 2008.

In 2010, the branch expects to achieve a better performance compared with

2009, by increasing the volume of its transactions and reasonably diversifying its activities.

Expectations in the Euro-zone economy remain highly uncertain and the Euro has strongly depreciated against the US Dollar over a long period .With the severe economy crisis in Greece and its possible extension to other countries within the Euro-zone, the French authorities have imposed drastic control over public expenditures.

Within this economic environment, perspectives for the Branch for 2010 remain quite moderate.

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BSI Branches in Germany

Business year 2009/2010 closed and net profit more than doubled to EUR 24 million. Profit before tax showed a growth of 117% compared with the previous year.

Net commission income increased to EUR 7.6 million (compared with 5.8 million in the previous year), while administrative expenses increased to EUR 5.4 million (compared with EUR 5.2 million in the previous year) due to office building renovations and employment of new staff.

Due to increasing customers’ credits and discount of export proceeds, total assets increased by about 89% to EUR 1,251.2 million, and business volume by

94% to EUR 1,376.2 million.

Operating capital increased by EUR 5 million to EUR 73.7 million, together with subordinated loans (EUR 19,6 million) .

Cash on hand (including account with Central Bank) amounted to EUR 178.4 million (compared with EUR 75.1 million in the previous year) on 20 March 2010.

Cash with banks contains balances from current accounts, clearing balance and time deposits with domestic as well as foreign banks in the amount of EUR 114 million.

Customers’ loans and overdrafts amounted to EUR 786.4 million (compared with EUR 355.7 million in the previous year). Liabilities to non-customers amounted to EUR 1,018.9 million, dominated by current accounts and deposits of BSI Head Office and branches (EUR 500.8 million) held with us and Central Bank of Iran (EUR 317.3 million).

Liabilities to customers (deposits) amounted to EUR 83.2 million (compared with EUR 59.7 million in the previous year).

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BSI Branches in the U.A.E

Bank Saderat Iran is one of the largest retail and commercial banks in the Middle East. In the United Arab Emirates, we have 8 branches which are very active in offering various banking services to the residents, national expatriate businessmen as well as the individual clients.

Based on the most recent information produced by the Emirates Bankers Association of the United Arab Emirates, Bank Saderat Iran, is ranked 4th by Net Profit among all foreign banks in the Emirates.

The Bank is mostly involved in trade finance especially the trade between the United Arab Emirates and the Islamic Republic of Iran.

Likewise, many Iranian businessmen tend to export goods to Iran from other parts of the world and they approach the Bank Saderat Group for services related to their business and banking activities and value our good position for efficient and fast service offered to customers.

In 2009 the total profit of BSI, Dubai was close to AED.411 millions. Comparing with other banks, with equity of 1,717 million (comprising capital 850 million, legal reserve 302 million and retained profit 569 million, plus 300 million subordinated from Head Office) Bank Saderat Iran, Dubai is one of the most successful banks in generating income and achieving return on assets.

38

Operational and Financial Review

Despite the current recession, the bank’s net profit remains the same as in 2008, around AED 411 million in 2009. The upward trend in profit has continued. During recent years, the profit has been increasing continuously, in 2008 the profit before provision & tax was AED 596 million which increased to AED 700 million in 2009. The main reason for this increase in profit was the increase in fund based revenue. Through prudent management of the balance sheet the Bank has made an increase in net interest income. Net interest income rose from AED 540 million in 2008 to AED 632 million in 2009 almost 17%.

Loans and Advances to customers increased from 6,376 million in 2008 to 6,818 million in 2009 almost 7%. The increase represents all the categories of advances, mainly in trade finance i.e. Trust Receipt, Payment Against Documents, Overdrafts, Cheque and L/C Discounted. The major portion is income from financing and refinancing which was introduced in 2003. Also the Import L/C and export L/C business increased considerably, the progress continued in line with the bank’s policy and risk management criteria with the objective of preparing for compliance with

900

800

700

600

500

400

300

200

100

0

2008

2009

Net Profit BeforeProvision & Tax

Interest Income

In M

illio

n A

ED

39

Basel-II. The end of the year’s lending ratio to customers’ deposits was almost 98%. At December 31, 2009, the Risk Assets Ratio was 13.8%.

The following table summarizes the bank’s operation results at the overseas units:

7,000

6,900

6,800

6,700

6,600

6,500

6,400

6,300

6,200

6,100

2008

2009

Advances to Customers

2009 to 2010 Growth (%)

20.3.2009Million US$

20.3.2010Million US$

Million USD

33%6,0928,106Total Assets

88%5951,121Total Shareholders’ Equity

4%195203

76%56%

(Revised)

In M

illio

n A

ED

40

Technological InfrastructuresElectronic Banking

Having the largest banking network in Iran, BSI has started developing its online real-time banking system in the form of SEPEHR Project since 2000 to offer essential and timely services to its customers. Now, all our branches offer various online services.

The SEPEHR Project goals are: to strengthen the banking system’s executive authority, to provide day and night services, to accelerate banking operations, to offer diversified quality services, to minimize carrying banknotes, to have access to updated information for quick decision-making, to develop more controller tools, to adapt with international banking and new banking standards in order to reduce customers’ physical presence at the branches and prevent wasting their time and money.

The SEPEHR system can provide worthwhile quality services simultaneously all over the country, using terrestrial and support satellite telecommunication network (VSAT) and computer technology. This is key to electronic commerce, the IT community, and the ultimate development within the banking industry.

In moving from traditional to more modern banking, the BSI network was greatly affected by the SEPEHR Project, which by adding subsystems and new capabilities, has developed into one of the greatest online real time banking systems in the country. According to the latest statistics cited by Central Bank of Iran, BSI ranks as the first bank in terms of the number of POS machines and transactions, ATM transactions, centralized accounts, centralized mechanized branches and telephone bank customers in Iran and, in some instances, in the Middle East.

41

2008(no.)

2009(no.)

2007(no.)

2006(no.)Description

All BranchesAll Branches3,2302,784 Online branches

2,8391,9191,6571,482ATM machines

254,850171,39492,70120,029POS machines

5,3864,9204,7193,005Pin Pad machines

119,65659,52621,48610,665Issued credit cards

36,247,36222,369,69418,068,98314,289,896Online accounts (current, saving, short-term, long-term)

124,73875,99131,1953,189Internet banking customers

7951378724 branches

The following table shows the highlights of new banking services during the period 2006-2009:

9,000,000

8,000,000

7,000,000

6,000,000

5,000,000

4,000,000

3,000,000

2,000,000

1,000,000

0

2008

2009

2008 2009

Debit Card

42

3,000

2,500

2,000

1,500

1,000

500

0

2008

2009

2008 2009

ATM

80,000

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

2008

2009

20092008

Credit Card

43

300,000

250,000

200,000

150,000

100,000

50,000

0

2008

2009

2008 2009

POS

Cheque Guarantee Card- A Good Substitute for Cash

To encourage rivalry within the banking system, BSI suggested “Cheque Guarantee Card Plan” with the purpose of offering a cost-effective and different banking service. The main goals of the plan are: to stimulate domestic demand in line with production growth, to help improving the recession-hit economy, to manage the financing chain, to replace cash by commercial documents, to develop electronic tools in commercial transactions, and to introduce new banking services.

“Cheque Guarantee Card” is characterized by raising circulating capital of institutes, managing liquidity through commercial documents, promoting the institutes’ products, and keeping a balance between supply and demand of goods and services.

Some of the advantages of “Cheque Guarantee Card” are: transferability, being easily cashable, any-time-and-place usage, acceptability in all economic institutions and high security in transactions, follow-up ability and possibility of managing institutions’ cash in transit through a virtual system.

44

Human resources

It is obvious that although human society has progressed and moved toward information technology, human beings play a role as the most important capital of each society. BSI as the largest banking network of the country having more than 30,000 employees is proud of following the motto “customer orientation” and is always at Iranian services.

Workforce Breakdown by Educational Level (Feb 2010)

Workforce Breakdown by Age (Feb 2010)

Workforce Breakdown by Work Experience (Feb 2010)

Educationdegree

Underdiploma Diploma Associate

degreeBachelordegree M.A PhD Total

Percentage 7.12 47.17 11.69 32.39 1.61 0.02 100

Under 25 year old

26-35 year old

35-45 year old

More than 45 year old TotalAge

Percentage 1.68 32.18 42.81 23.33 100

Less than 5 year

5 to 10 years

10 to 15 years

15-20 years

20 to 25 years

25 to 30 years

More than 30 years

TotalLength of service

Percentage 19.5 12.31 5.29 21.86 36.88 4.58 0.03 100

45

Welfare Department has been established to:

Provide health insurance for the staff Grant loans to the staffProvide welfare services such as restaurants, hotels and sport clubsConnect with insurance companies about different kinds of insurances such as movable

and immovable properties insurance, life insurance, cash in transit insurance etc.Make profitable investments such as stocks, bonds etc. for saving and future funds

Welfare Department has also provided sports facilities for the staff. The sports include: volleyball, aerobics, badminton, football, chess, yoga, martial arts, mountain climbing, bodybuilding, table tennis and swimming .

46

Risk Management

Risk Management has developed through diverse banking services, intense competition, innovation and market development. Risk Management, therefore adopts a variety of tools, methods and risk operating procedures within the bank.

As the mediators for attracting and offering resources, banks always face different kinds of risks such as credit risk, market risk, liquidity risk, operational risk and so on. Hence ignoring risk management may make the banks suffer enormous expenses and lead them to bankruptcy or serious financial crises. As a result, establishing risk management system, as a management tool, is essential for a bank to ensure authentic activity and reduced vulnerability and to prevent potential loss to the shareholders’ equity and other assets. This can be achieved through investigation, identification, analysis, proper decision and intelligent management.

With respect to the status, special structure, numerous branches inside and outside of the country, plentiful customers, long history and good reputation within the banking industry, BSI strives to maintain an efficient risk management system to maximize profit and to reduce potential losses. According to the new organizational chart approved by the Board of Directors, Risk Management Department has been established in BSI.

Some Steps Taken to Reduce Risks in BSIKYC (Know Your Customer).

A study into developing a customer–ranking system.

Developing “Special Customers Identification” project.

Preparing software program for ranking customers with assistance of credible

companies.

Assenting to Credit Assessment System, affirmed by Central Bank of Iran, which

has come into operation by Ranking Counseling Co.

Examining and implementing Basel II recommendations through standardizing

banking operations at international level.

47

Preparing new reporting forms for credit information to use in ranking program.Creating customers’ data bank.

Anti-Money Laundering

BSI Anti-Money Laundering Department officially started its operation on April 17, 1999. The department took remarkable steps toward fulfilling the bank’s senior management goals and implementing regulations regarding anti-money laundering in compliance with international organizational standards.

A summary of taken steps are as follows:

analyze customers’ activities.

anti-money laundering committee.

managing, executing and professional sections.

emphasized by BSI regulatory authority for precise recording and statistical analysis of the reports.

their names on BSI website.

all BSI correspondents and their replies were monitored.

48

Highlights of BSI Success in International and National Arena

International Arena:

Won “Best Islamic Financial Institutions Award” 2008 awarded by Global FinanceBest Islamic Bank in Iran in 2006 by Islamic Finance Institute.Won the Award for Best Debt House in Iran 2005 awarded by EUROMONEY

magazineAwarded the “Bank of the Year 2001-Iran” by The Banker magazine

National Arena

Ranked No.1 among Subsidiary Organizations of Ministry of Finance and

Economic Affairs in 2009

Best Electronic Bank in 2004

Second best Bank of Iran in 2003

Ranked No.1 in Offering Services in 2004

Ranked No.1 in Responsiveness

Most Preferred Bank in Islamic Banking

Chosen Bank by Ministry of Finance and Economic Affairs

Introduction of BSI’s Electronic Services as the better services in fourth

International Electronic Banking Conference and won “e- Bank” award for better

Electronic Services

50

FINANCIAL PERFORMANCE

BSI Group’s total assets increased by 17% from Rls 409,809 billion in 2008 to Rls 481,010 billion in 2009 . It mainly resulted from Due from banks & credit Institutions, Due from Government ,Facilities Granted and Claims from Private Sector.

BSI Group’s total liabilities increased by 18% from Rls 382,173 billion in 2008 to Rls 451,214 billion in 2009. It mainly resulted from Due to banks & credit Institutions, Saving & Term Investment Deposits.

BSI Group

500,000

400,000

300,000

200,000

100,000

0

2007

2008

2009

Total Assets

In B

illio

n R

LS

BSI Group

400,000

300,000

200,000

100,000

0

2007

2008

2009

Total liabilities

In B

illio

n R

LS

51

BSI Group’s operating income experienced a growth of 20%, from Rls 40,481 billion in 2008 to Rls 48,645 billion in 2009. Meanwhile operating expenses grew by 26% from Rls 23,676 billion to Rls 29,859 billion in 2009. The increase in operating expenses is mainly due to the payment of the depositors’ shares.

BSI Group

50,000

40,000

30,000

20,000

10,000

0

2007

2008

2009

Operating Income

In B

illio

n R

LS

BSI Group

30,000

25,000

20,000

15,000

10,000

5,000

0

2007

2008

2009

Operating Expenses

In B

illio

n R

LS

52

BSI Group

6,000

5,000

4,000

3,000

2,000

1,000

0

2007

2008

2009

Provisions

In B

illio

n R

LS

BSI Group

400

300

200

100

0

2007

2008

2009

Tax

In B

illio

n R

LS

53

BSI Groups profit resulted from banking operations, shows a growth of 43% in the year ended 20.March 2010 in comparison with the previous year.

BSI Group offers short- medium and long- term deposit accounts in both Rials as well as foreign currencies. Depositors include individuals, small, medium and large corporations. In 2009, customer deposits increased by 15% in value of accounts. At balance sheet date BSI Group held Rls 314,714 billion deposit accounts.

BSI Group

5,000

4,000

3,000

2,000

1,000

0

2007

2008

2009

Net Profit

In B

illio

n R

LS

BSI Group

400,000

300,000

200,000

100,000

0

2007

2008

2009

Customer Deposits

In B

illio

n R

LS

54

BSI Group

400,000

300,000

200,000

100,000

0

2007

2008

2009

Customer Loans

In B

illio

n R

LS

BSI offers different types of credit facilities all following the principles of Islamic, usury- free banking. Customers include individuals as well as corporations engaged across the entire spectrum of economic activities. The majority of loans are secured by some type of collateral including residential or commercial properties, share of companies listed on the Tehran Stock Exchange and other negotiable instruments.

In 2009, the volume of customer loans increased by 23 % to reach Rls 299,905 billion .

BSI Group

40,000

30,000

20,000

10,000

0

2007

2008

2009

Total Shareholders’ Equity

In B

illio

n R

LS

55

Deposits Received

At the balance sheet date, BSI had Rls 314,714 billion in deposits out of which Rials 144,732 billion were held in accounts with BSI Tehran and the rest in accounts with the provincial subsidiaries. The deposits are categorized into term deposits.Gharz-Al- Hassaneh (demand deposits, saving accounts) and other deposits.

On a Group level, demand deposits consist mainly of current account (69%) and Payment Orders on BSI (16 %) . In BSI Tehran current account constitute only 65% of the demand deposits and payment orders 17%. The balance is made up temporary creditors and transfers to the bank.

Other deposits on a Group level consist largely of Forex term deposits (64%) and advance payments under letters of credit (19%) . In BSI Tehran these two categories account for 78% and 13% respectively.

On a group level total deposits consist of demand deposits(23.8%), saving & similar deposits(9.6%),term deposits (58.7% ) and other deposits(7.9%).

Saving & similar deposits and term deposits show a growth of 15% , 35% respectively in the year ended 20.3.2010 in comparison with the previous year.

Term Deposits Demand Deposits Saving Deposits Other Deposits

200,000

150,000

100,000

50,000

0

BSI

Breakdown of Deposit Type

In B

illio

n R

LS Group

56

Inter-Bank loans

BSI Group has paid 73% of its loans to the services followed by loans to the Industry and Mine sector (22%), to the construction and housing sector (28%) and loans to the agriculture sector (23%).

Breakdown of Loans Granted by Contract Type

The facilities granted to the public sector consist 0.7% of total facilities, most of which is related to Jo’aleh (30%) ,Instalment Sale (28%), F/X facilities granted (24%) respectively according to the contracts.

The facilities granted to the private sector consist 87% of total facilities, most of which is related to Instalment Sale (30.4%), Civil Partnership (24%), Mozarebe (4.6%) respectively.

Meanwhile, 12% of total facilities granted is related to due under letters of credit and Forex Bills.

1 Year Deposits 2 Year Deposits 3 Year Deposits 4 Year Deposits 5 Year Deposits

70,000

60,000

50,000

40,000

30,000

20,000

10,000

0

BSIGroup

Breakdown of Term Investment Deposits

In B

illio

n R

LS

Industry & Mine

Agricultural ProductiveServices

InternalTrade

Export Import ConstructionHousing

200,000

150,000

100,000

50,000

0

20082009

Sector Allocaion & Tenor Breakdown

In B

illio

n R

LS

Total

58

Excerpts from the Auditors’ Report

1. The consolidated and non-consolidated balance sheets of Bank Saderat Iran (BSI) as of March 20, 2010 and the consolidated and non-consolidated profit and loss accounts and cash flow statements of BSI for the year ended at the same date, together with descriptive notes, have been audited by this organization. The Board of Directors of the Bank is responsible for the content of the financial statements and it is the responsibility of this organization to comment on the financial statements based on the performed audit and to report cases of non-compliance with monetary and Banking rules as well as regulations on usury-free banking, as stipulated in the Commercial Code as amended and the Bank’s articles of association.

2. The audit by this organization has been accomplished based on auditing standards. According to these standards, this organization has programmed and performed an optimized audit to reasonably ensure the non-existence of significant mistakes and distortions. The audit included random checks of evidence and documents supporting the figures in the financial statements. The audit also included inspection of accounting policies implemented, assessments made by the board of directors and inspection of the overall accounts presented. This organization believes the performed audit produced a reasonable base of opinion on the financial statements.

3. In the opinion of this organization the above-mentioned financial statements show that the consolidated and non-consolidated financial status of Bank Saderat Iran as of March 20, 2010 and the consolidated and non-consolidated results of its operations and cash flows for the fiscal year ended on the same date, are in all important aspects consistent with the accounting standards.

July 5,2010 Audit Organization Alireza Asadi- Mir Majid Vakil Zadian

59

Bank Saderat Iran Group

Consolidated Balance SheetAs at 20 March ,2010

20.03.2010

Note

20.03.2009

(Revised)

million USDbillion RISmillion USDbillion RISAssets:5765,6025115,0405Cash

4,65245,2315,04949,8186Due from Central Banks

2,19121,3022,67926,4297Due from banks & credit Institutions

2,29222,2842,94229,0218Due from Government

3103,0102202,1709Facilities granted & claims from public sector

21,759211,56126,431260,77010Facilities granted & claims from private sector

2,96628,8393,74736,96511Due under Letters of Credit & Forex Bills

1,19011,5728148,03412Participation bonds & other similar bonds

3223,1264264,19913Investments & participations

4874,7375095,024142,15020,9062,21321,829152,06620,0892,33623,05016Other assets

1,18811,5508788,66117Items in transit42,148409,80948,754481,010Total Assets

Liabilities:3,14730,6032,27422,43818Due to Central Bank

2,98629,0336,29562,10319Due to banks & credit institutions

7,22370,2257,61075,08320Demand deposits

2,70126,2653,05430,12721Saving & similar deposits

14,032136,43618,727184,76222Term investment deposits

4,10439,9032,50824,74223Other deposits

2,77827,0082,59025,54924Provision & other liabilities

2,33522,7002,67726,41025Due under letters of credit & Forex bills

39,306382,17345,734451,214Total liabilities

Shareholders’ equity:1,72816,8031,70316,80326Share capital

4284,1575085,01127Reserves

1281,2451261,245281771,7252001,977293793,6844804,735

2,84027,6143,01829,771Total bank's shareholders' equity22232530Minority interest

2,84227,6363,02029,796Total shareholders’ equity42,148409,80948,754481,010Total liabilities & shareholders' equity

2,07820,2013,29532,509Letters of credit

4,10239,8874,65345,908Letters of guarantee

1,31512,7901,33413,161Commitments

1,29012,5441,27412,570Managed & similar funds

*USD/RLS exchange rates as of 20.03.2009 and 20.03.2010 are 9723 and 9866 respectively.

60

20.03.2010

Note

20.03.2009


Consolidated Profit & Loss AccountFor the Year Ended 20 March, 2010

(Revised)

million USDbillion RISmillion USDbillion RIS

Income from joint investments: 1

2,42923,6163,05730,16231242332524832Other revenues

2,45323,8493,08230,410Sub-total(1,466)(14,256)(1,967)(19,406)

2019800Fees for management of investment deposits(1,446)(14,058)(1,967)(19,406)Net depositors’ share

1,0079,7911,11511,004Bank's fees & income from joint investmentsIncome from own investments:

9519,2439239,104332262,1943163,11834Fees & commission received1531,4921781,75535Other revenues

1,33012,9291,41713,977Sub-total2,33722,7202,53224,981Total banks' revenues

3603,5004314,25336Operating revenues of subsidiaries (359)(3,490)(429)(4,235)37Operating expenses of subsidiaries

110218Fees Sub-total2,33822,7302,53424,999Total bank's revenues & Operating revenues of subsidiaries

Expenses:(554)(5,388)(396)(3,910)38

00(175)(1,723)Surplus Paid to depositors(11)(108)(8)(76)39Commission paid

(1,433)(13,933)(1,512)(14,918)40General expenses(45)(433)(51)(508)41Other expenses

040442Net Other Operating Revenues & Expenses(2,042)(19,858)(2,142)(21,131)Total expenses

2952,8723923,868----Financial expenses0001Net other Incomes & non-operating expenses0001Sub-total

2952,8723923,869----

2952,8723923,869(40)(387)(31)(306)Tax2562,4853613,563

0004Minority interest -148-212EPS(RLS)

1- The bank’s investment resources are divided into “Joint Investments “and “Own Investments” to distinguish between tehran deposit funds on the one side and Gharz-Al-Hassaneh funds and its own equity on the other side.Further explanation can be found in the “bank-ing industry “section.

61

20.03.2010 20.03.2009


Consolidated Statement of EarningsFor the Year Ended 20 March, 2010

Note

(Revised)


2562,4853613,563282764794,721Retained earnings at the beginning of the year

(63)(617)(105)(1,037)44Prior year adjustments(35)(341)3733,684Retained earnings at the beginning of the year - adjusted

2212,1447357,247

3513,412(72)(715)Consolidated year adjustments(101)(984)(77)(758)Legal reserve

(19)(185)(2)(15)Other reserves(72)(701)(104)(1,023)Dividend

(0)(1)(0)(1)Board Members' Bonus1581,541(255)(2,512)Sub-Total 3793,6854804,735Retained earnings at the end of the year

0204Minority Interest

20.03.2010 20.03.2009


Comprehensive Consolidated Statement of EarningsFor the Year Ended 20 March , 2010

Note


2562,4853613,5631817425244

2732,6593863,807(64)(618)(105)(1,037)44Prior year adjustments2102,0412812,770

(Revised)

62

20.03.2010 20.03.2009


Consolidated Cash Flow Statement For the Year Ended 20 March, 2010

(Revised)


Operating Activities:3,42833,3294384,317

Interest & dividends:(193)(1,875)(122)(1,205)

00(81)(804)Dividends paid to shareholders(193)(1,875)(204)(2,009)

Income tax:(35)(343)(88)(870)Paid income tax

Investment activities:5635,477(138)(1,360)Decrease (increase)in direct investments & legal participations

(218)(2,119)(201)(1,983)1051,021454444504,379(294)(2,899)

3,65035,490(148)(1,461)Sub Total

Financing Activities :(2,316)(22,522)8278,164

(19)(182)(25)(245)(2,335)(22,704)8037,919

1,31512,7866556,4589779,4972,25922,284Cash balance at the beginning of the year

2,29222,2832,91328,742Cash balance at the end of the year

63

20.03.2010

Note

20.03.2009

Bank Saderat Iran

Balance SheetAs at 20 March, 2010

*USD/RLS exchange rates as of 20.03.2009 and 20.03.2010 are 9723 and 9866 respectively.

million USD*billion RISmillion USD*billion RISAssets:2092,0281581,5615Cash

2,64425,7112,83727,9926Due from Central Banks1,31412,7791,97019,4407Due from banks & credit institutions1,31012,7351,86018,3538Due from Government

2602,5322662,6229Facilities granted & claims from public sector10,588102,94913,234130,56810Facilities granted & claims from private sector1,62315,7781,82718,02811Due under letters of credit & forex bills1,09210,6147747,63912Participation bonds & other similar bonds

6946,7467967,85113Investments & participations1,90218,4891,95719,30715Fixed assets1,30912,7311,67816,55316Other assets1,32112,8488318,20117Items in transit

24,266235,94028,189278,115Total assets

Liabilities:3,08229,9702,18721,58018Due to Central Bank2,13620,7675,63855,62519Due to banks & credit institutions3,48833,9093,67736,28120Demand deposits

8187,9539088,95921Saving & similar deposits5,90757,4328,11280,03122Term investment deposits3,66835,6621,97319,46123Other deposits1,53814,9551,53315,12124Provision & other liabilities1,18911,5601,44714,27225Due under letters of credit & forex bills

21,825212,20825,474251,330Total liabilities

Shareholders’ equity:1,72816,8031,70316,80326Share capital

2162,1012802,76727Reserves1281,2451261,24528

7977095940292892,8135105,030

2,44123,7322,71526,785Total shareholders’ equity24,266235,94028,189278,115Total liabilities & shareholders' equity1,13211,0111,78717,631Letters of credit2,20521,4372,53024,963Letters of guarantee

6956,7621,21712,006Commitments8848,5988788,661Managed & similar funds

(Revised)

64

Bank Saderat Iran

Profit & Loss AccountFor the Year Ended 20 March, 2010

20.03.2010

Note

20.03.2009

(Revised)

million USDbillion RISmillion USDbillion RISIncome from joint investments:

9749,4711,35813,39931

8791111032Other revenues

9829,5501,36913,509Sub-total

(576)(5,605)(875)(8,635)

880--Fees for management of investment deposits

(568)(5,525)(875)( 8 , 6 3 5 )Net depositors’ share

4144,0254,874Bank's income from joint investments

Income from own investments:

8818,5637397,29333for non-interest revenues1371,3301741,71234Received commission

1251,2128988035Other revenues

1,14211,1051,0029,885Sub-total

1,55615,1301,00214,759Total bank revenues

Expenses:

(580)(5,640)(398)(3,931)38

--(78)(771)

(7)(71)(5)(50)39Commission Paid

(510)(4,957)(606)(5,983)40General expenses

(12)(114)(17)(163)41Other expenses

(1,109)(10,782)(1,026)(10,898)Total expenses

4474,3483913,861

(14)(135)(5)(48)Tax

4334,2133863,813

-251-227EPS (RLS)

65

20.03.2010 20.03.2009Note

(Revised)

Bank Saderat Iran

Statement of EarningsFor the Year Ended 20 March, 2010

Bank Saderat Iran

Comprehensive Statement of EarningsFor the Year Ended 20 March, 2010

(Revised)

20.03.2010 20.03.2009Note


4334,2133863,8131413417170

4474,3474043,983(77)(753)(2)(18)44Prior year adjustments3703,5944023,965


4334,2133863,813686642872,830Retained earnings at the beginning of the year

(77)(753)(2)(17)44Prior year adjustments (9)(89)2852,813Retained earnings at the beginning of the year after adjustments

4244,1246726,626Dividend

(64)(621)(58)(572)Legal Reserve(71)(690)(104)(1,024)

(135)(1,311)(162)(1,596)Sub Total2892,8135105,030Retained earnings at the end of the year

66

Bank Saderat Iran

Cash Flow StatementFor the Year Ended 20 March, 2010

20.03.2010 20.03.2009

(Revised)


Operating Activities:

1,10910,7831,87118,460

Interest and Dividends :

(192)(1,869)(122)(1,205)

00(81)(803)Paid dividends to shareholders

(192)(1,869)(2040(2,008)Sub-Total

Income tax:

(42)(410)(78)(767)Paid income tax

Investment activities:

(76)(742)112 1,104Decrease / Increase in direct investments & legal participations

(141)(1,369)(158)(1,560)

9895146453

(119)(1,160)(0)(3)

7557,3441,58915,682Sub-Total

Financing activities :

1781,733(850)(8,390)

69675(3)(31)

2482,408(854)(8,421)

1,0039,7537367,261

8378,1401,81417,893Cash balance at the beginning of the year

1,84017,8932,55025,154Cash balance at the end of the year

67

1. Basis for Preparation of the Financial Statements

The Group’s consolidated financial statements as well as Bank Saderat Iran's have been prepared on a historical cost basis while the current values have also been applied if needed.

2. Significant Accounting Policies 2.1. 1. Investments

BSIGroupLong-term Investments:Cost price (after provision in case of a permanent decrease in the value of the investment)

Included in the consolidationInvestments in subsidiaries included in the consolidation

Cost price (after provision in case of a permanent decrease in the value of the investment)

Net worth



Other long-term investments

Current investment:Lower cost price and net market value of the whole investment

Lower cost price and net market value of the whole investmentsImmediate disposal investments

Lower cost price and net market value of each investment

Lower cost price and net market value of each investmentsOther current investments

Evaluation Method

At the time of approval of dividends by the GAM of the investee company

statements)

Included in the consolidationInvestments in subsidiaries included in the consolidation


statements)

Net worth


statements)

At the time of approval of dividends by the GAM of the investee company (until the balance sheet date)

Other Current & Long Term Investments

2.1.2. Revenue Recognition Method:

Bank Saderat Iran

Notes to the Financial StatementsFor the Year Ended 20 March, 2010

68

2.2. Tangible Fixed Assets

2.2.1. Tangible Fixed assets except land & building are recorded in the accounts at cost price. Renovation and substantial repairs, which significantly increase the capacity or useful life of the fixed assets, are considered as capital expenditures and are depreciated over the remaining useful life of such assets. Maintenance expenses and minor repairs , which are sustained to preserve the economic interests expected by trade units, are considered as current expenses, under profit & loss Account.

2.2.2. Land & building have duly been reflected in the accounts at revalued amounts.

2.2.3. With respect to decree number 1077 issued by the Monetary and Credit Council dated (17.2.2007) from 2006 the depreciation of fixed assets are calculated based on depreciation schedule pursuant to article 151 of the Direct Taxation Act. Some of the rates and methods of depreciation are set out as below:

Reducing Balance 7 %Building & equipments

Reducing Balance 25 %Motor vehicles

Straight line10 yearsFurniture & computer hardware

Straight line3 yearsComputer hardware (P.C)

Assets Depreciation Depreciation method

The depreciation of revalued buildings of the Bank at the end of 2004 is calculated with the depreciation schedule pursuant to Article 151 of the Direct Taxation Act at the rate of 3.5 percent and declining procedure.

2.3. Intangible Assets

Intangible Assets are recorded in the accounts at cost price. According to the Central Bank of Iran's Circular No.2946 dated 7.3.2007, goodwill cannot be depreciated.

The operational & administrative software is depreciated on the straight line basis within five years and for other Intangible Assets, no depreciation will be considered.

69

2.4. Recognition of Bank's Revenues from granted facilities, Commission & Penalties

According to the Central Bank of Iran's circular No,772 dated 18.7.2005, and with respect to decree No.1044 dated 16.7.2005 issued by the Monetary & Credit Council, the Bank's revenues are recognized on an accrual basis as follows:

2.5. Basis for assigning specifying Joint interest of depositors’ shares

In implementation of the Non-usury Banking Operation Act approved in 30.8.1984 and related regulations and also in line with the Central Bank of Iran Decree No.1799 dated 8.1.2004 all interest received from financial facilities , investment in stock exchange & Participation Bonds which is identified in line with bank's accounting regulations, are recognized as profit and the profit of depositor's share would be determined in proportion to utilizing their net resources in the mentioned activities.

2.6. Categorization of granted facilities

The facilities granted by the bank, which are in accordance with directive issued by the Monetary and Credit Council are categorized and evaluated according to the period of payment delayed, customer's credit report, situation and condition of the customer's activity, as shown below:

1) Current group (maximum up to two months after maturity date)2) Overdue group (between 2 to 6 months after maturity date)3) Outstanding group (between 6 to 18 months after maturity date)4) Doubtful group (more than 18 months after maturity date)

Based on the time period, balance of principal

Based on the time period, outstanding Delay penalties

At the time of issuing guarantees Issued guarantees commissions

In proportion to the offered services Other services commissions

Revenue Depreciation

70

2.7. Provision for Doubtful Debts

According to" Instruction for Calculation of Credit Institutes Provision for Debts" ratified by Money and Credit Council (circular No: 2823/MB dated 24.02.2007 issued by Central Bank of Iran), provision for doubtful debts is calculated as follows:

A) General provision is calculated since early 2006 based on Central Bank of Iran instruction equal to 1.5% total facilities balance with the exception of facilities balance included in specific provision.

B) Specific provision is calculated in proportion to balance of overdue, outstanding and doubtful facilities, after considering value of securities and enforcing relative coefficient, as follows:

a. Overdue Debts 10%

b. Outstanding Debts 20%

c. Doubtful Debts 50 To 100%

d. Advances which are overdue for 5 years or more 100%

2.8. Provision for Work Termination Benefits

Provision for employees' termination benefits is calculated and recorded based on each employee's most recent monthly base salary for each year of employment.

2.9. Foreign Currency Exchange Rate

2.9.1. Local Units: Monetary items in foreign currency are exchanged at the exchange rate of the balance sheet date and non-monetary items in foreign currency are exchanged at the exchange rate of disposal date. The derived differences are recognized and recorded as revenues or expenses of the occurrence period.

2.9.2. Foreign Units: All monetary and non-monetary items (except for shareholders’ equity) of foreign units are exchanged at the exchange rate of the balance sheet date and shareholders’ equity is exchanged at the exchange rate of equity formation.

71

Profit and Loss figures are exchanged at the average rate of the fiscal year. The differences caused by conversion in financial statements are recognized and recorded as shareholders' equity.

2.10. Due from Government

Due from government is divided into two parts:

The first part consists of the obligations of the government, expected in the principles of granting facilities, which has been considered directly as government's debt and the second part, secured by the Organization of Management & Planning is overdue and classified as due from the government under following conditions:

A) Outstanding granted facilities resulted from failure of the borrower to repay the loan, non sufficiency of the related securities or ineffectiveness of the bank's actions to collect the loan.

B) Overdue granted facilities related to the execution of the plans relevant to the acquisition of the capital assets.

2.11. Obligations related to retirement benefits

Present value of the obligations related to retirement benefits relevant to the staff's services in the previous years (the retired and pensioners included in the retirement plan) is calculated based on actual assumptions.

3. Basis for Consolidation

3.1. Consolidated financial statements are derived from the financial statements of Bank Saderat Iran and its subsidiaries after deduction of intra-group transactions and uncertain profit and loss.

3.2. The operational outcomes of purchased subsidiaries and sold ones are involvedin the consolidated profit and loss statement from the time of such transfers.

72

3.3. The fiscal years of Ghadir Investment Company, Bank Saderat PLC and Bank Saderat Tashkent end on December 21 and December 31 respectively. The results are reflected in the consolidated accounts without any changes. In case of any significant changes in the accounts, they are reflected as adjustment in the accounts.

4. Consolidated Goodwill

Consolidated accounting of commercial entities is conducted by the purchase method. Surplus of cost price of attracting investments in consolidated companies to the group's share in the net fair value of their assessable assets and liabilities at the time of purchase is recognized as goodwill and depreciated on a straight line basis over 20 years. Goodwill which is derived from ownership of a subsidiary is reflected in the consolidated balance sheet as the book value of long-term investment.

5. Cash

6. Due from Central Banks

ConsolidatedBillion Rls Non - consolidated


March-20,2009March-20,2010March-20,2009March-20,2010

1,8921,4335,0464,634Cash in Rials10646424291Cash in Forex308212084Cash in Transit in Rials

--35Cash in Transit in Forex--926Cash with banks

2,0281,5615,6025,040Total


14,41615,67433,92137,493Statutory deposits2,1429,3962,1429,396Current accounts with other Central Banks3,4501,6133,4501,613Forex demand deposits with Central Bank5,2309995,230999Current accounts with Central Bank

462299462299Term deposits with other Central Bank11111515Advance payments for Forex

--113Others25,71127,99245,23149,818Total

73

7. Due from Banks and Credit Institutions

8. Due from Government

9. Facilities Granted and Claims from Public Sector




3,9667,8343,5187,518Forex deposit with other banks5,3686,9515,3516,877Foreign branches loans to Iranian banks

--5,7226,069Loans granted to foreign banks6153,4521,8793,877Demand deposits with local banks

2,3771,1142,3821,118Loans granted to local banks4881052,105987Clearing other banks' cheques

-0380-Term Deposits with Foreign Banks12,81419,45621,33726,446Sub-total

(35)(16)(35)(17)Doubtful debts provision12,77919,44021,30226,429Total



12,73518,35322,28429,021Due from Government 12,73518,35322,28429,021Total


2,1272,1642,6111,715Granted facilities (current) 14901490Overdue debts

121221Outstanding debts595834596841Doubtful debts

(340)(397)(348)(407)Doubtful debts provision2,5322,6223,0102,170Total

74

9.1. Facilities granted to public sector are categorized in following contracts :

10. Facilities Granted and Claims from Private Sector



8057221,016801Jo'aaleh646589953628Installment sale11395114338Civil partnership208243209243Interest receivable from facilities1137311473Hire purchase Loans95589561L/Cs paid debtors

81886481744Granted facilities in Forex42284228Qard-al-hasaneh

-1-13L/Gs paid debtors---0Modharebeh

2,8402,6733,3602,229Total(258)(17)(206)(17)(216)(213)(268)(212)(239)(279)(275)(285)2,1272,1642,6111,715Total



82,676110,578181,533231,440Facilities granted (current)1,8031,6544,8943,912Overdue debts

13,95614,68619,41918,726Outstanding debts 16,00415,73523,99425,209Doubtful debts

(11,490)(12,085)(18,279)(18,517)Doubtful debts Provision102,949130,568211,561260,770Total

75

10.1. Facilities granted to private sector are as follows:

11. Due under Letters of Credit & Forex Bills

12. Participation Bonds and other Similar Bonds



23,97414,81387,34277,851Installment sale 6,05325,85823,10461,268Civil partnership

502412742605Hire purchase6,6026,62111,79413,216Mozarebeh1,8271326,0101,538Salaf5,6244,7038,6716,765Jo'aaleh2,7383,92011,13716,066Qard-al-hasaneh7,94511,9878,0098,227Debt purchase3,1763,3095,9098,419L/Cs paid debtors

11279242419L/Gs paid debtors0000Housing loans (previously extended)

9,31810,4139,95411,389Granted facilities in Forex2,1675,0376,41513,438Interest receivable from facilities

339303434371Customers debt for foreign exchange difference10,83218,93610,83218,936Purchased documents & Bills7,5726,4927,5726,492Excess withdrawal5,1997,9205,2007,919Loan & credit

002,3913,035Loan & credit of Bank Saderat PLC93,980120,935205,758255,954Sub Total(5,850)(6,260)(16,708)(17,277)

(1)(3)(3)(3)Amounts received from Mozarebeh(539)(3,710)(1,536)(1,894)

(4,914)(384)(5,978)(5,340)82,676110,578181,533231,440




15,84218,07829,00337,242Due under acceptance the documents of L/Cs & F/X Term Bills

(64)(50)(164)(277)Provision for doubtful debts15,77518,02828,83936,965Total


10,2646,77111,1377,156Public sector participation bonds350868377867Private & public bonds (Foreign branches)

--111Debt securities bonds00570Private sector participation bonds

10,6147,63911,5728,034Total

76

13. Investments and Participations

14. Investment in Affiliated Companies

15. Tangible Fixed Assets



Cost Price AccumulatedDepreciationBillion Rls Book Value


3,6014,7363,5684,597Legal participations1,8691,944475567Stock & foreign participations

--5359Investment deposits116111226Direct investments

2,2082,208--Investment in BSI provincial banks 7,7948,8994,2185,229Sub-total

(1,048)(1,048)(1,092)(1,030)Provision for decrease in share value6,7467,8513,1264,199Total

March-20,2009March-20,2010

4,7445,057Investment in Ghadir Investment Company

(7)(33)Provision for decrease in share value4,7375,024Total

March-20,2009March-20,2010March-20,2010March-20,2010ConsolidatedMovable assets:

1,4341,7151,4643,178Furniture4244119164Vehicles43---Machineries

1,5191,7591,5833,342TotalImmovable assets:

6,0496,044-6,044Land9,1089,2281,78511,013Building

15,15715,2721,78517,057Total2,1522,134-2,134Goodwill1,8292,304-2,304Assets under completion

230346-346Orders & capital prepayments57-7Trusts

147-7Capital items in warehouse4,2304,79804,798Sub-total

20,90621,8293,36825,197Total

77

Table of cost price and accumulated depreciation of Fixed Assets of BSI (principal company) are as follows:

16. Other Assets


Consolidated Cost Price Book value Book valueAccumulatedDepreciation

Billion Rls March-20,2009March-20,2010March-20,2009March-20,2010

Movable assets:4274825381,020Furniture

10103141Vehicles4374925691,061Total

Immovable assets:5,5655,585-5,585Land8,6118,6231,74310,366Building

14,17614,2081,74315,951Total2,1382,12102,121Goodwill1,6102,216-2,216Assets under completion

128270-270Orders & capital prepayments3,8764,60704,607Total Goodwill and other

18,48919,3072,31221,619Total


--6,0015,448SATA's Due for Ghadir stocks sale3203593,7034,377

1,0571,4091,7312,5431,1847721,328809Receivable accounts

796580856643Tax advance payments8078150149Total store inventory

224116319116Difference of L/Cs exchange rate (Central Bank's Debt)

2810713107Overseas branches debtors1,5922,8603,1742,559

6665401624Possessory Collaterals 7,76210,6306,22410,205Others

13,10916,97623,90027,580Total Less:

(320)(359)(3,703)(4,377)(58)(64)(108)(153)Provisions for doubtful debts

12,73116,55320,08923,050Total

78

17. Items in transit

Billion Rls ( Revised )

March-20,2009March-20,2010

Debit items:3,5754,082Capital paid to foreign branches1,0441,072Loans & F/X credit to foreign branches2,0361,303Forex deposits with foreign branches2,3834,955Forex Term deposits with foreign branches

1153Loans & credit received from other foreign branches9,8198,579Demand deposits of other foreign branches4,4808,189Term deposits of other foreign branches

5450Inward payment Orders/Forex126193

5,3873,5841,8150

6702,9872,70213,544

10,70020,30818,75628,352Branches' Account53,34976,893Total debit items11,5508,661Final Balance

Credit items:2,6583,395Capital of foreign branches1,0421,0721,3941,3052,2936,935

110Loans & credit granted to other foreign branches10,0888,825Demand deposits with other foreign branches

4,5398,234Term deposits of other foreign branches101181

5,2843,318Forex term deposits of foreign branches 1,8150Finance by foreign branches

6702,9872,94712,397

10,81718,883Total Demand & Term deposits8,95719,302

028041,79968,231Total credit items

Consolidated

79

17.1. Items in transit are divided as follows:

Billion Rls ( Revised )

March-20,2009March-20,2010

Debit items:3,5644,082Capital paid to foreign branches1,0441,072Loans & credit to foreign branches2,0361,303Forex deposits with foreign branches2,7634,955Forex Term deposits with foreign branches

1153Loan & credit received from other foreign branches9,8198,579Demand deposits of other foreign branches4,4808,189Term deposits with other foreign branches

1661935,3473,5841,8150

6702,9872,7029,746

10,70016,51011,64111,531Branches' Account4,3810

0050,43956,274Total debit items12,8488,201Final Balance

Credit items:Capital of foreign branches

Forex demand deposits with foreign branches

Loan & credit granted to other foreign branchesDemand deposits with other foreign branches Term deposits of other foreign branches

Forex term deposits of foreign branchesFinance by foreign branches

Total demand & term depositsBranches' Account

Total credit items

3,3951,0721,3056,935

08,8258,234

1813,318

0482

4,8218,802

04,6454,860

48,073

2,6581,0421,3942,293

010,088

4,539101

5,2841,815

6712,947

10,81800

4,76037,592

Consolidated

80

18. Due to Central Bank

19. Due to Banks and Credit Institutions

20. Demand Deposits

21. Saving & Similar Deposits






16,52145,87821,67751,072Term deposits of banks4,1618,9554,1518,955Demand deposits of banks

247162,7231,849Loans & credits received from banks6176482227Others

20,76755,62529,03362,103Total


9,20710,8039,83911,662Facilities received from FX Reserve fund20,76010,77320,76010,773Facilities received from Central Bank

3443Due to Central Bank for difference of exchange rate29,97021,58030,60322,438Total


6,2717,53224,44828,544Interest Free Saving Deposits in Rials1,6771,4211,8071,571Interest Free Saving Deposits in Forex

561012Others7,9538,95926,26530,127Total


18,78523,71444,57351,607Current Interest Free Account 8,7396,33213,02811,975Payment orders on Bank Saderat Iran2,3423,5835,8016,782Sundry creditors3,0731,5714,7972,476Sold bank cheques

9701,0812,0262,242Others33,90936,28170,22575,082Total

81

22. Term Investment Deposits

23. Other Deposits

24. Provision and other Liabilities





25,52640,94359,20090,801Long-term deposits22,96933,15558,52382,342Short-term deposits

8,9375,93318,71311,619Others57,43280,031136,436184,762Total


31,14615,14531,55015,813Term deposits in Forex2,7942,4704,1904,580Advances received under Letters of Credit1,5461,7463,4263,884Cash deposits under Letters of Guarantee

176100737465Others35,66219,46139,90324,742Total


2,6873,0476,4396,800Retirement fund2,5589333,7183,357Provision for paid expenses

6279632,1992,3894486179231,457Provision for short-term & long-term deposits interest600499943752Tax provision203285609691Staff leave of absence 399206284303Funds received from sales of participation bonds469219469219Domestic creditors (foreign branches)

6,9648,35211,4249,581Others14,95515,12127,00825,549Total

82

25. Due under Letters of Credit & Forex Bills

The Bank’s Due under acceptance the documents of L/Cs for Rls.26,410 billion are related to the Deferred Payment L/Cs and Forex Bills , the documents of which have been delivered to the applicant and bank is liable to pay their funds at the maturity.

At the maturity date, the due amount, is usually funded by the applicant and effected to beneficiary.

26. Share Capital

26.1. The name of Shareholders of Bank Saderat Iran are as follows:

March-20,2010Billion Rls March-20,2009

%Number of shares%Number of shares

4.38%736,496,8543.47%582,852,945Real Entity2.50%419,866,30313.41%2,253,810,212Legal Entity5.00%840,150,0005.00%840,150,000BSI Staff

48.12%8,085,286,84338.12%6,404,986,843Government of Islamic Republic of Iran40.00%6,721,200,00040.00%6,721,200,000Provincial Investment co.

100.00%16,803,000,000100.00%16,803,000,000Total

83

26.2. Capital Adequacy Ratio

According to regulations of Central Bank of Iran, Capital Adequacy Ratio must be minimum 8%. Capital Adequacy Ratio of BSI as of 20 March 2009 and 20 March 2010 is as follows:

27. Reserves



A) Main Capital2,2272,2272,2272,227Paid Capital2,1012,7673,9905,011Legal reserves & other reserves2,8315,0304,7194,7291,2451,2451,2451,245

7709401,7331,9779,17412,20913,91415,189Total main capital

B) Complementary Capital

1,4071,9784,0494,212Doubtful debts provisions (Maximum up to 1.25% Risk weighted Assets)

14,57614,57614,57614,576Fixed Assets revaluation Provision 15,98316,55418,62518,788Total Complementary capital

6,8094,3454,7113,598Less: Complementary capital surplus to main capital18,34824,41827,82830,379Total Main Capital & Complementary Capital (Capital Base)

1,9711,9711,9711,971Less: Investment in banks & subordinated credit institutions

16,37622,44725,85728,407Total Capital Base/Total Risk Weighted Assets*100=Capital adequacy ratio

9.08%10.05%7.98%7.12%Capital adequacy ratio(percent)



1,4462,1362,2973,197Legal reserve4514271,6561,610Other reserves204204204204Capital reserve

2,1012,7674,1575,011Total

84

28. Changes due to Foreign Exchanges Rate Unification

Forex adjustment due to fixed exchange rate in the amount of Rls 1,245 billion relates to the statutory balance exchange rate in early 2002 in accordance with Central Bank rules and regulations. After auditing, this amount was reflected in the shareholders' equity.

29. Exchange Rate Profit (Loss)

Adjustment for assets and liabilities in the amount of Rls 1,977 billion was made into shareholders' equity in accordance with Central Bank Decree No. 1844, approved on 19.01.2003.

30. Minority Interest

31. Profit and Compensation on Delay of Payment



5,4078,31714,33220,285Interest received from facilities1,8322,2604,8536,238Delay penalties received from facilities2,0872,6621,8742,729Interest from participation bonds

-82,412757Interest received from investments 145152145153Interest received from facilities granted to Banks

9,47113,39923,61630,162Total


March-20,2009March-20,2010

2019Share capital2501Reserves

2225Total

85

32. Other Revenues:Other revenues in the amount of Rls 247.7 billion relate to the prizes of statutory

deposits of Bank Saderat Iran Network, which were calculated and made in the accounts in accordance with the directive of the Central Bank of Iran at a rate of 1% on the average balance of statutory deposits during the year.

33. Profit & Compensation on Delay of Payment for Non- Interest Revenues:

34. Commission Received



215279419683Letters of credit414540414540International Division127163464520Guarantees223226223226Foreign branches & brokerage 227230208Payment Orders81930118SHETAB

103101103101Purchased and discounted L/Cs393713159Forex transactions29214235Fees on state accounts (Representation of CBI)385385Domestic Branches

112249300623Others1,3301,7122,1943,118Total



1,5211,1502,1172,074Non-interest revenue from other dues

190753190776Forex received revenue from facilities granted

98125626697Qharz-al hasaneh and compensation on delay of payment

--821598Bank Saderat PLC and Bank Saderat Tashkent’s revenues

732577732577Interest received from inter-bank loans

257346318346Interest received on paid letters of credit

1,0272681,07426847248042Prizes for other deposits

4,6914,0503,2853,726Others8,5637,2939,2439,104Total

86


35. Other Revenues

36. Operating Revenues of Subsidiaries

Operating revenues of subsidiaries in the amount of Rls.4,253 billion are mainly related to Sepehr exchange company in the amount of Rls.4,242 billion being sale of exchange in the form of payment order and according to reference rate of Central Bank of Iran or agreed rate to customer .

37. Operating Expenses of Subsidiaries

Cost price from presented services in the amount of Rls.4,235 billion is totally related to Sepehr Exchange Company.

38. Profit paid (except Depositors' Profit)

Profit paid (except Depositors’ Profit) in the amount of Rls 3,910 billion are as follows:


4741599424Disposal of movable & immovable assets

158146157146Miscellaneous revenues of foreign branches

81419137Properties & collateral evaluation

79697969Interest received from transactions in Forex (Foreign branches)

1692917Post, telegraph & phone

11513852Rental Income

676-680-Income resulted from FX transactions11389424960Others

1,2128801,4921,755Total



1,9321,2061,6021,4712,3001,6322,3001,5921,4089731,486847

-120--5,6403,9315,3883,910Total



87



1,8452,6866,3238,437Personnel expenses1,6531,7733,5513,986Administrative & public expenses

6177552,3161,493Provision for doubtful debts357409534642Depreciation4853601,209360Others

4,9575,98313,93314,918Total

39. Commission Paid

Commission paid in the amount of Rls. 76 billions is mainly including RLS 56 billion being commission paid for ATM,Pin Pad, POS & exchanged Iran's cheques through clearing system and Rls.20 billions commission paid by foreign branches.

40. General Expenses

41. Other ExpensesOther expenses in the amount of RLS 508 billion is mainly including RLS 479

billion being expenses of Qarz-al-hasaneh Prizes and RLS 28 billion Forex transactions.

42. Net other Operating Revenues and Expenses:

Net other operating revenues and expenses for RLS 4 billion is related to BSI Company & Sepehr Exchange Company as well as Bank Saderat PLC.

43. Interest Paid on Depositors



5,6058,63514,25619,406(5,526)(8,635)(14,058)(19,406)

8001980(80)0(198)0Attorney fees to apply investment deposits

0000Payable down payment difference balance in comparison


88

March-20,2010

The name of company Amount million RLS

Description

216,481Establish & supporting vast Banking System Network Market, presenting services related to using kind of systems such as ATM, POS and Credit Card, activation in computer, Electronics , Telecommunication and IT.

Board of Directors

Joint Member-

Iran Kish Credit card co.

44. Prior year Adjustments

45. Transactions with affiliated persons

45.1. Group transactions with related affiliated persons (except the companies which are included in consolidation) are as follows at reported year:

Billion Rls Group

(20)Operating Expenses(399)Personnel Expenses

(23)General Administrative Expenses(103)Tax(521)Others

(1,066)Total credit items21Interest & Commission Received

8Commission related to Government account maintenance 30Total debit items

(1,037)Total

89

45.2. Main Company transactions with affiliated company are as follows at reported year:

46.Bottom Line items

Company Relation AmountMillion RLS

Description

A-The companies included in consolidation

138,475Rental Income resulted from rental of BSI’s immovable properties to be used by the Provinces for one yearShareholder: BSIBSI Provinces

270,319Common charges of ProvincesShareholder: BSIBSI Provinces

B-Transactions included in 129 article amendment of Commercial Law

119,143Servicing, Repairing and maintenance of ATMs and computers , Installing extra ATMs

Board of Directors Joint Member-Mr.Hajizadeh (up to 22.09.2010)

Kharazmiadministrativemachinescompanies

8,241

Supporting and maintenance Traveler’s Cheque system, Supply comprehensive , system Human Resources com-prehensive System, Treasury comprehensive System and Swift System

Board of Directors Joint Member-Mr.Hajizadeh (up to 22.09.2010)

KharazmiProcessingCompany

March 20, 2010

Billion RlsF/X Amount (in Billion)

73875USD876GBP899CHF

151108SEK26925JPY( One Hundred)

20CAD4,0131,494AED

18,9791,396EUR3,702-Foreign Branches4,479-Others

32,509Total

90

46.3. Other Commitments

46.4. Managed funds and similar items:

Billion Rls March 20, 2010 March 20, 2009

36,34840,093Customers Commitments for issued Rial Guarantees

3,5395,815Customers Commitments for issued FX Guarantees

39,88745,908Total


2,1482,736Bank's Commitments for dealing concluded contracts

1,7963,590Bank's Commitments for concluded F/X contracts

8,8466,835Bank's Commitments for forward dealings

12,79013,161Total


4,4854,367Granted facilities from managed funds

8,0198,144Granted facilities from syndicated funds

3959Granted facilities from special Qarz-al-hasaneh deposits

12,54312,570Total

91

47. Open F/X Position

Open F/X Position of Domestic Branches are as follows:

48. Commitments48.1. Capital Commitments:

At the balance sheet date the bank's capital commitments stood on Rls. 251 billion related mainly to the purchase of properties and renewing branches and offices.

49. Contingent LiabilitiesAt the balance sheet date, the Bank had no significant contingent liabilities.

50. Post -Balance sheet events

On 29.5.2010 , 5% of BSI's shares (840,150,000 shares) were presented through Stock Exchange Company to Health Services Organization in order to cover the government's debts.


02Sight L/Cs debtors2937Term L/C debtors

22Stocks and Foreign Participations 1213Granted loans in F/X2437Others6791Total Assets

22F/X Current Deposits00F/X Saving Deposits

2425F/X Term Deposits5063Others7690(9)1Net Open F/X Position

(5)(6)Less: The Paid Capital to Foreign Branches , Stocks & ForeignParticipations

(14)(5)926Capital Base

(168%)(18%)Net Open F/X Position to Capital Base Ratio

92

Combination of Bank's Shareholders group in Real and Legal persons, separately and percentage of each group ownership are as follows:

Shareholders No of Stocks Percentage

3.47582,852,945Real Entity18.413,093,960,212Legal Entity

5840,150,000BSI Staff33.125,564,836,843Islamic Republic of Iran Government

406,721,200,000Provincial Investment Co.10016,803,000,000Total

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Europe

BANK SADERAT IRAN HAMBURG BRANCH NO . 635

DEICHSTRASSE 1120459 HAMBURG GERMANY P . O . BOX 112227Tel : 004940 370050Fax : 004940 373484SWIFT : BSIR DE HHWeb site :www.banksaderat.deE – mail : [email protected]: Mr. Mansour Tafazoli

BANK SADERAT IRAN FRANKFURT BRANCHNO .3408

FRIEDENS STRASSE 4,60311 FRANKFURT AM MAINGERMANY Tel :004969 209740Fax : 004969 252773SWIFT : BSIR DE FFWeb site:www.banksaderat.deE -mail :[email protected] General Manager: Mr. Mohammad Shamsaei

BANK SADERAT IRAN ATHENS BRANCHNO . 3400

25-29 PANEPISTIMIOU STR.10564 ATHENS GREECETel : 0030210 3249531, 3249577 , 3249490Fax :0030210 3251154SWIFT : BSIR GR AAE – mail: BSI3400 @ OTENET . GRManager: Mr . Manouchehr Bakhtiyari

BANK SADERAT IRAN REGIONAL OFFICE , DUBAI

AL-MAKTOUM ROADP.O.BOX 4182DEIRA , DUBAIUAETel:009714 6035240 – 6035230 -6035284Fax:009714 2215961 - 2270593SWIFT : BSIRAEADWeb site: www.banksaderat.aeE – mail : [email protected] [email protected] Assistant Manager : Mr.AbdolReza Shabahangi

BANK SADERAT IRAN PARIS BRANCH NO . 636

16,RUE DE LA PAIX 75002 PARIS FRANCETEL : 0033 14 4860250-4860290FAX : 0033 14 2616153SWIFT : BSIR FR PPE -mail : [email protected] site : www.bsiparis.comManager: Mr . Mahdi Nalaei

BANK SADERAT IRAN ALMAKTOUM BRANCH NO .2624

AL-MAKTOUM ROAD, P.O.BOX 4182DEIRA , DUBAIUAETel :009714 6035555 - 6035310Fax:009714 2234460SWIFT : BSIRAEADE –mail : [email protected]: Mr . Mehran Arjang

United Arab Emirates (UAE)

97

BANK SADERAT IRANMURSHID BAZAR BRANCHNO . 2898

MURSHID BAZAR P.O.BOX 4182DEIRA , DUBAI ,UAETel :009714 2264805 – 2265834 Fax : 009714 2266543SWIFT : BSIR AE AD MBZManager: Mr . Akbar Aliverdi

BANK SADERAT IRAN BUR DUBAI BRANCH NO . 2533

BANK SADERAT IRAN SHAYKH ZAYED BRANCHNO . 4350

AL FAHIDI ROAD P.O.BOX 4182DUBAI , UAETel :009714 3511110 - 3551332Fax :009714 3529415SWIFT : BSIR AE ADManager: Mr . Ferdous Zolfagharian

SHAYKH ZAYED ROAD P.O.BOX: 4182DUBAI , U.A.E.Tel :009714 3311187 - 3311069Fax :009714 3311027SWIFT : BSIR AE ADActing Manager: Mr . Abdolah Tajeddini

BANK SADERAT IRAN SHARJAH BRANCHNO . 2776

ALARODA ROADP.O.BOX 316SHARJAH , U.A.E Tel: 009716 5686290-5682070Fax : 009716 5680289SWIFT : BSIR AE ADManager: Mr . Ali Sanjari

BANK SADERAT IRAN ABU DHABI BRANCHNO . 2690

HAMDAN STR .P.O.BOX 700ABU DHABI , DUBAITel : 009712 6225155 - 6222061Fax : 009712 6225062SWIFT : BSIR AE ADActing Manager: Mr . Hooman Pourmohammad

BANK SADERAT IRAN AJMAN BRANCHNO . 2900

LIWARA STR.P.O.BOX 16AJMAN, DUBAITel: 009716 7422232 - 7422460Fax: 009716 7426190SWIFT: BSIR AE ADManager: Mr. Mohsen Assarzadeh

98

BANK SADERAT IRAN DOHA MAIN BRANCHNO . 2623

BANK SADERAT IRAN DOHA BRANCHNO . 4557

BANK SADERAT IRAN AL EIN BRANCHNO . 1741

AL AIN ROADP.O.BOX 1140AL EIN , ABU DHABI , U.A.ETel : 009713 7641557 - 7510200Fax :009713 7668875SWIFT : BSIR AE ADManager: Mr . Jasem Khalifi

GRAND HAMAD AVE.P.O.BOX 2256DOHA – QATAR Tel : 00974 44414646Fax : 00974 44430121SWIFT : BSIR QA QAE – mail : [email protected] Manager: Mr . Saeed Mirzaeian

SALWA ROAD ,P.O.BOX 2256DOHA – QATAR Tel : 00974 44510044 - 44510033Fax : 00974 44506054SWIFT : BSIR QA QAE – mail : [email protected]: Mr . Saeed Mirzaeian

BANK SADERAT IRAN MUSCAT BRANCH NO . 3409

P.O.BOX 1269 RUWIPOSTAL CODE 112SULTANATE OF OMANTel : 00968 24833923,24831669,24832006Fax : 00968 24836478SWIFT : BSIROMRXE – mail : [email protected] bsi [email protected]: Mr . Hossein Partovi

BANK SADERAT IRAN REGIONAL OFFICE , BEIRUT

3RD FLOOR- METCO CENTER -MAR ELIASFACING AL HELLOW BARRACKP.O.BOX 5126 BEIRUT , LEBANONTel : 00961 1 706912-13Fax : 00961 1 706910 EXT : 210Manager Tel : 00961 1 706915SWIFT : BSIR LB BEE – mail : info@bsi- lebanon.com [email protected] site :www.bsi-lebanon.comRegional Manager: Mr . Mohammad reza Estili

BANK SADERAT IRAN BEIRUT MAIN BRANCH NO : 637

1ST FLOOR, ROSE BLDG. VERDUN STREETP.O.BOX 5126 BEIRUT,LEBANONTel :00961 1 341067,347924,347936Fax : 00961 1 341067 EXT: 5-15SWIFT : BSIR LB BEE – mail : [email protected]

[email protected]: Mr. Mahdi Tadi

Middle East & Central Asia

99

BANK SADERAT IRAN ALGHOBEIRY BRANCHNO . 3528

BANK SADERAT IRAN BAALBACK BRANCHNO . 3418

BANK SADERAT IRAN BORJ AL BARAJNEH BRANCH NO . 4280

1 ST FLOOR ,JAWHARA BLDG . ABDALLAH EL HAJJE ST.,GHOBEIRY BLVD . GHOBEIRY – LEBANON Tel : 00961 1 542575 ,542417,542763Fax : 00961 1 542765SWIFT : BSIR LB BE E – mail : info@bsi- lebanon.com iranzad@bsi- lebanon.comManager: Mr. Hamid Iranzad

RAS ELAIN ST .NEXT TO THE POST OFFICE ,BAALBACK - LEBANON Tel : 00961 8 371841 , 373857-8Fax : 00961 8 373858 EXT: 116SWIFT : BSIR LB BEE – mail : info@bsi- lebanon.comManager: Mr. Hashem Hashemian Nejad

AL HOLOM BLDG.,MAIN ROAD,KAFAAT CROSS ROAD,MREYJEH,MAMOURALEBANONTel : 00961 1 471201-2Fax : 00961 1 471200 EXT: 26SWIFT : BSIR LB BEE – mail : info@bsi- lebanon.com m.mollaei@bsi- lebanon.com

Manager: Mr. Makki Mollaei

BANK SADERAT IRAN SAIDA BRANCH NO .4338

RIAD ELSOLOH ST.,MARTYRS SQ.SAIDA – LEBANONTel :00961 7 753835-753837Fax : 00961 7 753836SWIFT : BSIR LB BEE – mail : info@bsi- lebanon.com m.lavasani@bsi- lebanon.comContact Name: Mr.Mohammad jaafar Navaee Lavasani

BANK SADERAT IRAN ASHKHABAD BRANCH NO . 3260

BUILDING 181-A MAKHTOOMGHOLI AVE . ASHKHABAD – TURKMENISTAN Tel : 0099 312 346767- 343744Fax : 0099 312 342070E-mail:[email protected]: Mr . Hamid reza Sadri

100

HONOR BANKJOINT VENTURE

51 KLARA TSETKIN STR. 220004MINSK,REPUBLIC OF BELARUSTel: 00375 17 3062590-4Fax: 00375 17 3062591E-mail : [email protected]: HNRBBY2XManaging Director: Mr. Mousa Talebi Galin gheshlaghi

ARIAN BANK JOINT VENTURE HEAD OFFICE AND MAIN BRANCH

NO.56,TORABOZ KHAN STR.,SHAHR-E-NOWKABUL, AFGHANISTANTEL : 0093020 2203994-7FAX: 0093020 2204010E- MAIL: CEO@ARIAN-BANK .COM.AFSWIFT : AFABAFKACHIEF EXECUTIVE OFFICER : MR. Hassan Bahadori Manager: Mr. Asghar Atarodi

FUTURE BANK B.S.C ( C ) JOINT VENTURE

P.O.BOX : 785CITY CENTRE BLDG.199,ROAD 203,BLOCK 304,GOVERNMENT AVE.,MANAMAKINGDOM OF BAHRAINTel : 00973 17505000Fax : 00973 17 224402SWIFT : FUBBBHBMWeb site :www.FUTUREBANK.COM.BHE-mail : [email protected] Executive Officer & Board Member: Mr.Gholam Souri

ARIAN BANK JOINT VENTURE

HARAT BRANCH

GROUND FLOOROTAGH TEJARATBANKE KHOON ROADHARAT _ AFGHANISTANTel: 00930 40 226712 Telefax: 00930 40 226261E-mail: [email protected]: AFABAFKAManager: Mr.MohammadRahim Rahimzadeh

BANK SADERAT IRAN TASHKENT NO .4223

NO . 10, ANTOOAN CHEKHOF STR .TASHKENT 700060UZBEKISTAN Tel : 0099871 1401652 - 2521161Fax : 0099871 1401654 - 55SWIFT : BSIR UZ 22E- mail : [email protected] [email protected] site : www.saderbank.uzManaging Director: Mr . Siavosh Fathi

BANK SADERAT PLCNO . 634

5 LOTHBURY LONDON EC2R 7HDUKTel : 0044 20 76000133Fax : 0044 20 77963216SWIFT : BSPLGB2LE -mail : ENQUIRIES @SADERAT - PLC . COM Web site : www. saderat - PLC .comManaging Director: Mr. Shahrokh Iranzad

Subsidiaries

Joint Venture

101

List of Contact Persons of Bank Saderat Iran

BANK SADERAT IRAN

SEPEHR TOWER43. SOMAYEH AVE.P.O.BOX:15745-631 TEHRAN –IRAN

Email:[email protected]

CHAIRMAN & MANAGING DIRECTOR & BOARD MEMBERS:

DR. SEYED MOHAMMAD JAHROMI 0098(21)88307822 0098(21)88306095CHAIRMAN & MANAGING DIRECTOR

BOARD MEMBERS:

MR.MAHDI FATTAHI 0098(21)88826696 0098(21)88832815

DR.ASGHAR ABOLHASANI HASTIANI 0098(21)88836759 0098(21)88836018

MR.BAHMAN VAKILI 0098(21)88832402 0098(21)88306095

INTERNATIONAL AFFAIRS: DR. HOJATOLLAH SAYDI 0098(21)88307824 0098(21)88832752 DEPUTY MANAGING DIRECTOR INTERNATIONAL AFFAIRS

MR. MOHAMMAD YOUSEFI 0098(21)88834792 0098(21)88839546 MANAGER, FOREIGN DEPT.

MR.MOSTAFA POURJAVAD 0098(21)88834010 0098(21)88839539 ASST.MANAGER, FOREIGN DEPT.

MR.HAMIDREZA KHALAJZADEH 0098(21)88823618 0098(21)88832603ASST.MANAGER, FOREIGN DEPT.IN TREASURY OPERATIONS

MR.HASSAN HATAMI 0098(21)88836905 0098(21)88836909MANAGER, F/X OPERATIONS DEPT.

MR. MAHMOUD REZA GOSHADROO 0098(21)88836905 0098(21)88836909ASST. MANAGER, F/X OPERATIONS DEPT.

102

MR. ALIREZA ALAEE 0098(21)88836905 0098(21)88836909 ASST. MANAGER, F/X OPERATIONS DEPT.

MR.MAJID AHMADZADEH 0098(21)88834823 0098(21)88836452 MANAGER, F/X ACCOUNTS DEPT.

MR. SEIFOLLAH FARZANMEHR 0098(21)88834823 0098(21)88836452 ASST .MANAGER, F/X ACCOUNTS DEPT.

DEALING ROOM,S REUTERS DEALING CODE: BSIM

HEAD OFFICE SWIFT CODE: BSIR IR THHEAD OFFICE TELEX NUMBERS; 212352, 226648, SABK IR