B.I.N.BANK (JOINT-STOCK COMPANY)

Transcription

1 B.I.N.BANK (JOINT-STOCK COMPANY) Independent Accountants Review Report Interim Consolidated Financial Statements 6 months Ended (Unaudited)

2 B.I.N.BANK (JOINT-STOCK COMPANY) TABLE OF CONTENTS Page STATEMENT OF MANAGEMENT S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1 INDEPENDENT ACCOUNTANTS REVIEW REPORT 2 INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 JUNE : Interim consolidated income statement 3 Interim consolidated balance sheet 4 Interim consolidated statement of changes in equity 5 Interim consolidated statement of cash flows 6-7 Notes to the interim consolidated financial statements 8-40

3 B.I.N BANK (JOINT-STOCK COMPANY) STATEMENT OF MANAGEMENT S RESPONSIBILITIES FOR THE PREPARATION AND APPROVAL OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 JUNE The following statement, which should be read in conjunction with the independent accountants responsibilities stated in the report of the independent accountants set out on page 2, is made with a view to distinguishing the respective responsibilities of management and those of the independent accountants in relation to the interim consolidated financial statements of B.I.N.BANK (Joint-Stock Company) (the Bank ). Management is responsible for the preparation of interim consolidated financial statements that present fairly the financial position of the Bank at, the results of its operations, cash flows and changes in equity for the six months then ended, in accordance with International Financial Reporting Standards ( IFRS ). In preparing the interim consolidated financial statements, management is responsible for: Selecting suitable accounting principles and applying them consistently; Making judgments and estimates that are reasonable and prudent; Stating whether IFRS have been followed, subject to any material departures disclosed and explained in the interim consolidated financial statements; and Preparing the consolidated financial statements on a going concern basis, unless it is inappropriate to presume that the Bank will continue in business for the foreseeable future. Management is also responsible for: Designing, implementing and maintaining an effective and sound system of internal controls, throughout the companies consolidated in these interim financial statements; Maintaining proper accounting records that disclose, with reasonable accuracy at any time, the financial position of the Bank, and which enable them to ensure that the interim consolidated financial statements of the Bank comply with IFRS; Maintaining statutory accounting records in compliance with legislation and accounting standards of the Russian Federation; Taking such steps as are reasonably open to them to safeguard the assets of the Bank; and Detecting and preventing fraud and other irregularities. The interim consolidated financial statements as at and for the six months then ended were authorized for issue on 25 September by the Bank s Board of Directors. On behalf of the Board: President Chairman of the Board Mikail Osmanovich Shishkhanov Chief Accountant Sergey Evguenievich Lvov 25 September 25 September Moscow Moscow 1

4 ZAO Deloitte & Touche CIS Business Center Mokhovaya 4/7 Vozdvizhenka St., Bldg. 2 Moscow, Russia Tel: +7 (495) Fax: +7 (495) INDEPENDENT ACCOUNTANTS REVIEW REPORT To the Shareholders and Board of Directors of B.I.N.BANK (Joint-Stock Company): We have reviewed the accompanying interim consolidated balance sheet of the B.I.N.BANK (Joint-Stock Company) (the Bank ) as at and the related interim consolidated income statement, interim consolidated statement of cash flows and interim consolidated statement of changes in equity for the six months then ended. These financial statements are the responsibility of the Bank s management. Our responsibility is to issue a report on these interim consolidated financial statements based on our review. We conducted our review in accordance with International Standard on Review Engagements. This Standard requires that we plan and perform the review to obtain moderate assurance as to whether the consolidated financial statements are free of material misstatement. A review is limited primarily to inquiries of Bank s personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim consolidated financial statements do not presented fairly, in all material respects, the financial position of the Bank as at and the results of its operations, cash flow and changes in equity for the six months then ended, in accordance with International Financial Reporting Standards. Without qualifying our report we would like to draw your attention to Note 1 to the interim consolidated financial statements. The Bank renders services to several groups of companies operating in the oil industry and real estate management, which results in a significant concentration of operations and assets in those industries. 25 September Moscow Member of Deloitte Touche Tohmatsu

5 B.I.N.BANK (JOINT-STOCK COMPANY) INTERIM CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTH PERIOD ENDED 30 JUNE Notes 6 months ended () (unaudited) 6 months ended () (unaudited) Interest income 4,27 1,934,958 1,494,612 Interest expense 4 (1,225,505) (938,593) NET INTEREST INCOME BEFORE PROVISION FOR IMPAIRMENT LOSSES ON INTEREST BEARING ASSETS 709, ,019 Provision for impairment losses on interest bearing assets 5 (333,006) (131,373) NET INTEREST INCOME 376, ,646 Net gain on assets held-for-trading 6 11,082 15,367 Net gain on foreign exchange operations 7 134, ,145 Fee and commission income 8 831, ,589 Fee and commission expense 8 (113,283) (26,646) Other income 41,485 18,167 NET NON-INTEREST INCOME 905, ,622 OPERATING INCOME 1,281, ,268 OPERATING EXPENSES 9, 27 (1,130,777) (730,717) OPERATING PROFIT 151,032 43,551 Provisions for other transactions 5 22,086 (343) PROFIT BEFORE INCOME TAX 173,118 43,208 Income tax expense 10 (94,202) (26,284) NET PROFIT 78,916 16,924 Attributable to: Minority interest 61,386 12,261 Equity holders of the parent company 17,530 4,663 EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT (RUR) On behalf of the Board: President Chairman of the Board Mikail Osmanovich Shishkhanov Chief Accountant Sergey Evguenievich Lvov The notes on pages 8 to 40 form an integral part of these consolidated financial statements. The Independent Accountants Review Report is on page 2. 3

6 B.I.N.BANK (JOINT-STOCK COMPANY) INTERIM CONSOLIDATED BALANCE SHEET AS AT 30 JUNE Notes (RUR 000) (unaudited) (RUR 000) ASSETS Cash and balances with the Central Bank of the Russian Federation 12 3,764,925 3,362,359 Precious metals 13 26,699 24,899 Loans and advances to banks 15 7,487,104 9,863,716 Assets held-for-trading , ,280 Loans and advances to customers, less allowance for impairment losses 16, 27 32,805,956 23,349,111 Investments available-for-sale 18 13,184 10,500 Fixed assets, less accumulated depreciation , ,633 Current income tax assets ,881 Other assets ,023 65,002 TOTAL ASSETS 45,388,618 37,827,381 LIABILITIES AND EQUITY LIABILITIES Deposits from banks 21 2,600,195 1,366,212 Customer accounts 22, 27 26,439,960 26,365,879 Debt securities issued 23 9,451,205 3,287,644 Other provisions 5, 28-22,086 Other liabilities 24 56,081 6,209 Total liabilities 38,547,441 31,048,030 EQUITY Share capital 25 4,959,052 4,959,052 Share premium 25 2,500,594 2,500,594 Accumulated deficit (1,046,461) (1,063,991) Equity attributable to the equity holders of the parent 6,413,185 6,395,655 Minority interest 427, ,696 Total equity 6,841,177 6,779,351 TOTAL LIABILITIES AND EQUITY 45,388,618 37,827,381 On behalf of the Board President Chairman of the Board Mikail Osmanovich Shishkhanov Chief Accountant Sergey Evguenievich Lvov The notes on pages 8 to 40 form an integral part of these financial statements. The Independent Accountants Review Report is on page 2. 4

7 B.I.N.BANK (JOINT-STOCK COMPANY) INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTH PERIOD ENDED 30 JUNE Attributable to the equity holders of the parent Share capital Share premium Accumulated deficit Total Minority interest Total equity Balance at ,584,052 1,125,594 (1,312,528) 3,397, ,409 3,776,527 Dividends declared (unaudited) (13,285) (13,285) Net profit for the period (unaudited) - - 4,663 4,663 12,261 16,924 Balance at (unaudited) 3,584,052 1,125,594 (1,307,865) 3,401, ,385 3,780,166 Balance at 4,959,052 2,500,594 (1,063,991) 6,395, ,696 6,779,351 Dividends declared (unaudited) (17,090) (17,090) Net profit for the period (unaudited) ,530 17,530 61,386 78,916 Balance at (unaudited) 4,959,052 2,500,594 (1,046,461) 6,413, ,992 6,841,177 On behalf of the Board President Chairman of the Board Mikail Osmanovich Shishkhanov Chief Accountant Sergey Evguenievich Lvov The notes on pages 8 to 40 form an integral part of these financial statements. The Independent Accountants Review Report is on page 2. 5

8 B.I.N.BANK (JOINT-STOCK COMPANY) INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIOD ENDED 30 JUNE No 6 months ended tes (unaudited) 6 months ended (unaudited) CASH FLOW FROM OPERATING ACTIVITIES: Profit before income tax 173,118 43,208 Adjustments for: Provision for impairment losses on interest bearing assets 333, ,373 Provision for impairment losses on other transactions (22,086) 343 Fair value discounting of loans to customers 62,949 (81,388) Depreciation 41,822 35,161 Change in interest accruals, net 118,468 27,866 Net unrealized gain on effect of foreign exchange rates changes (28,288) (34,841) Operating profit before changes in operating assets and liabilities 678, ,722 Changes in operating assets and liabilities (Increase)/decrease in operating assets: Minimum reserve deposit with the Central Bank of the Russian Federation (268,762) 34,230 Loans and advances to banks 2,193,639 (543,876) Precious metals (1,800) 4,217 Assets held-for-trading 60,847 (613,096) Loans and advances to customers (10,079,119) (4,633,225) Other assets (50,005) (21,207) Increase/(decrease) in operating liabilities: Deposits from banks 1,276,318 (28,087) Customer accounts 259,965 3,946,935 Other liabilities 32,858 (1,827) Cash outflow from operating activities before taxation (5,897,070) (1,734,214) Income tax paid (77,559) (14,425) Net cash outflow from operating activities (5,974,629) (1,748,639) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed and intangible assets (150,565) (25,408) Proceeds on sale of fixed and intangible assets 2,653 7,541 (Purchase of)/proceeds from disposal of investments, net (2,684) 4,646 Net cash outflow from investing activities (150,596) (13,221) 6

9 B.I.N.BANK (JOINT-STOCK COMPANY) INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTH PERIOD ENDED 30 JUNE (continued) Notes 6 months ended 6 months ended CASH FLOWS FROM FINANCING ACTIVITIES: Debt securities issued 6,380, ,329 Dividends paid (76) - Net cash inflow from financing activities 6,380, ,329 Effect of foreign exchange rates changes on cash and cash equivalents (59,036) (32,666) NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 196,041 (1,242,197) CASH AND CASH EQUIVALENTS, beginning of the period 12 4,293,754 3,893,123 CASH AND CASH EQUIVALENTS, end of the period 12 4,489,795 2,650,926 Interest received and paid by the Bank during the 6 months ended amounted to RUR 1,887,746 thousand and RUR 1,009,887 thousand, respectively. Interest received and paid by the Bank during the 6 months ended amounted to RUR 1,493,440 thousand and RUR 826,870 thousand, respectively. On behalf of the Board President Chairman of the Board Mikhail Osmanovich Shishkhanov Chief Accountant Sergey Evguenievich Lvov The notes on pages 8 to 40 form an integral part of these financial statements. The Independent Accountants Review Report is on page 2. 7

10 B.I.N.BANK (JOINT-STOCK COMPANY) NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTH PERIOD ENDED 30 JUNE 1. ORGANISATION B.I.N.BANK (Joint Stock Company) (the JSC B.I.N.BANK ) was incorporated in the Russian Federation with head office in Moscow in JSC B.I.N.BANK holds General License of the Central Bank of the Russian Federation (the CBR ) No and renders a complete package of banking services to corporate clients engaged in various industries as well as to individuals. The registered office of JSC B.I.N.BANK is located at: 5a Grodnenskaya St., Moscow, , Russian Federation. JSC B.I.N.BANK has 21 branches in the Russian Federation and 7 representative offices. JSC B.I.N.BANK is a parent company of the banking group (the Bank ) which includes the following enterprise consolidated in the financial statements: Name Country of incorporation Proportion of ownership interest and voting power/(effective control) of JSC B.I.N.BANK as of Proportion of ownership interest and voting power/(effective control) of JSC B.I.N.BANK as of JSCB Vyatka-Bank Russian Federation 4.98% (90.03%) 4.98% (90.03%) Joint-Stock Commercial Bank Vyatka-Bank (JSCB Vyatka-Bank ) that is engaged in banking activities within the Russian Federation. The financial statements of JSCB Vyatka-Bank were consolidated into the Bank s financial statements beginning 1 January Though JSC B.I.N.BANK does not own control over JSCB Vyatka-Bank through direct holding it has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The Bank provides services to several groups of companies, which operate mostly in the oil industry and real estate management. As of and the loans issued to such companies constituted 30% and 43% of the total loan portfolio (Note 16), respectively. The deposits from such companies constituted 5% and 18% of the total amount of customer accounts as of and, respectively (Note 22). Thus, there is a significant concentration of operations and assets in respect of such companies. 8

11 As at and, the following shareholders owned more than 4% of the outstanding shares in the Bank. Legal shareholders: OJSC GNK Nafta Moscow 19.99% 19.99% LLC Trade Vest 19.99% 19.99% OJSC Business Center Zubarevsky 11.92% 11.92% CJSC IK Nordfest 11.92% 11.92% OJSC Garant Invest 5.96% 5.96% CJSC IK Uran Invest 5.93% 5.93% CJSC IK Ami Invest 5.90% 5.90% OJSC IK Nadezhnost 3.23% 3.23% LLC Spetspromavtomatika 2.96% 2.96% CJSC PFK BIN 2.96% 2.96% CJSC Chaika Plaza 2.96% 2.96% CJSC Rossiysky Neftyanoy Export 2.93% 2.93% Other 3.35% 3.35% Total 100% 100% Ultimate shareholders: Shishkhanov Mikail Osmanovich 64.57% 64.57% Kerimov Suleiman Abusaidovich 19.99% 19.99% Gutseriev Sait-Salam Safarbekovich 6.19% 6.19% Other 9.25% 9.25% 100% 100% 2. BASIS OF PRESENTATION Accounting basis These consolidated financial statements of the Bank have been prepared in accordance with International Financial Reporting Standards ( IFRS ). These financial statements are presented in thousands of Russian Roubles ( RUR ), unless otherwise indicated. These financial statements have been prepared under the historical cost conversion, except for the revaluation of certain financial instruments and according to International Accounting Standard 29 Financial Reporting in Hyperinflationary Economies ( IAS 29 ). The Bank applied IAS 29 since its incorporation. The economy of the Russian Federation is not considered hyperinflatory from 1 January IAS 29 is ceased to be applied since that date. The Bank maintains its accounting records in accordance with Russian law. These financial statements have been prepared from the Russian statutory accounting records and have been adjusted to conform with IFRS. These adjustments include certain reclassifications to reflect the economic substance of underlying transactions including reclassifications of certain assets and liabilities, income and expenses to appropriate financial statements caption. 9

12 Equity as at and and profit for the six months then ended are reconciled between Russian Accounting Standards and IFRS as follows: 6 months ended () 6 months ended () Equity Profit Equity Profit Russian Accounting Standards (unaudited) JSC B.I.N. BANK 7,812, ,378 4,385, ,838 JSCB Vyatka-Bank 372,411 13, ,021 11,752 8,184, ,679 4,753, ,590 Provision for impairment losses on interest bearing assets (205,264) 33,735 (406,079) (125,038) Provisions for other transactions - 22,086 (44,405) (343) Effect of accrued interest, net (597,461) (177,164) (256,953) 59,276 Amortization of discount on debt securities (383,502) (99,387) (234,906) (89,836) Current income tax expense 2,135 2,135 22,658 (26,284) Adjustment to the value of fixed assets due to inflation, difference in depreciation rates, finance lease (41,804) (38,544) 34,778 (18,267) Effect of consolidation of JSCB Vyatka-Bank (15,592) - (15,592) - Operating expenses (102,150) (80,143) (83,510) (89,068) Other 262 (17,481) 11,091 8,894 International Financial Reporting Standards 6,841,177 78,916 3,780,166 16,924 The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates that are particularly susceptible to change relate to the provisions for impairment losses and the fair value of financial instruments. Key assumptions Key assumptions concerning the future and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year include: Loans to customers, less allowance for impairment losses 32,805,956 Loans to customers are measured at amortised cost/ cost less allowance for impairment losses. The estimation of allowance for impairment losses involves an exercise of judgement. It is impracticable to assess the extent of the possible effects of key assumptions or other sources of uncertainty on these balances at the balance sheet date. Taxation is discussed in Note 26. Since the results of the Bank operations closely relate to and depend on changing market conditions, the results of the Bank operations for the interim period are not necessarily indicative of the results for the year. 10

13 Functional currency The functional currency of these financial statements is the Russian Roubles ( RUR ). 3. SIGNIFICANT ACCOUNTING POLICIES Basis of consolidation The consolidated financial statements include the financial statements of subsidiary where JSC B.I.N.BANK has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. All significant transactions between JSC B.I.N.BANK and the subsidiary, as well as the relevant balances have been eliminated. The effective ownership interest of JSC B.I.N.BANK and its proportion of voting power in the subsidiary of the Bank as of and are presented in Note 1. On acquisition, the assets and liabilities and contingent liabilities of a subsidiary are measured at their fair values at the date of acquisition. Any excess of the cost of acquisition over the fair values of the identifiable net assets acquired is recognised as goodwill. Any deficiency of the cost of acquisition below the fair values of the identifiable net assets acquired (i.e. discount on acquisition) is credited to profit and loss in the period of acquisition. The minority interest is stated at the minority s proportion of the fair values of the assets and liabilities recognised. Subsequently, any losses applicable to the minority interest in excess of the minority interest are allocated against the interests of the parent. The results of subsidiaries acquired or disposed off during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Bank. Recognition and measurement of financial instruments The Bank recognizes financial assets and liabilities on its balance sheet when it becomes a party to the contractual obligation of the instrument. Regular way purchase and sale of the financial assets and liabilities are recognized using settlement date accounting. Regular way purchases of financial instruments that will be subsequently measured at fair value between trade date and settlement date are accounted for in the same way as for acquired instruments. Financial assets and liabilities are initially recognized at fair value plus, in the case of a financial asset or financial liability not at fair value through profit or loss transaction costs that are directly attributable to acquisition or issue of the financial asset or financial liability. The accounting policies for subsequent re-measurement of these items are disclosed in the respective accounting policies set out below. Cash and cash equivalents Cash and cash equivalents include cash on hand, unrestricted balances on correspondent and time deposit accounts with the Central Bank of the Russian Federation with original maturity within 90 days, advances to banks in countries included in the Organization for Economic Co-operation and Development ( OECD ), except for margin deposits for operations with plastic cards, which may be converted to cash within a short period of time and Government debt securities classified as assets held-for-trading. For purposes of determining cash flows, the minimum reserve deposit required by the Central Bank of the Russian Federation is not included as a cash equivalent due to restrictions on its availability. Precious metals Assets and liabilities denominated in precious metals are translated at the current rate computed based on the second fixing of the London Bullion Market rates using the RUR/USD exchange rate effective at the date. Changes in the bid prices are recorded in net gain/(loss) on operations with precious metals in other income. 11

14 Loans and advances to banks In the normal course of business, the Bank maintains advances or deposits for various periods of time with other banks. Loans and advances to banks with a fixed maturity term are subsequently measured at amortized cost using the effective interest method. Those that do not have fixed maturities are carried at amortized cost calculated based on expected maturity. Amounts due from credit institutions are carried net of any allowance for impairment losses. Assets held-for-trading Assets held-for-trading represent assets acquired principally for the purpose of selling them in the near term, or it is a part of portfolio of identified financial instruments that are managed together and for which there is evidence of a recent and actual pattern of short-term profit-taking. Assets held-for-trading are initially recorded and subsequently measured at fair value. The Bank uses quoted market prices to determine fair value for the Bank s asset held-for-trading. Fair value adjustment on asset held-for-trading is recognized in profit and loss for the period. Reverse repurchase agreements The Bank enters into purchase and sale back agreements ( reverse repos ) in the normal course of its business. Reverse repos are utilized by the Bank as an element of its treasury management and trading business. A repo is an agreement to transfer a financial asset to another party in exchange for cash or other consideration and a concurrent obligation to reacquire the financial assets at a future date for an amount equal to the cash or other consideration exchanged plus interest. These agreements are accounted for as financing transactions. Assets purchased under reverse repos are recorded in the consolidated financial statements as cash placed on deposit which is collaterized by securities and other assets. Derivative financial instruments The Bank enters into derivative financial instruments to manage currency and liquidity risks and such financial instruments are held primarily for trading purposes. Derivatives entered into by the Bank are forwards agreements. Derivative financial instruments are initially recorded and subsequently measured at fair value. Fair values for subsequent measurement are obtained from the interest rates model. Most of the derivatives the Bank enters into are of a short-term and speculative nature. The results of the valuation of derivatives are reported in assets (aggregate of positive market values) or liabilities (aggregate of negative market values), respectively. Both positive and negative valuation results are recognized in the profit and loss for the year in which they arise under net gain on foreign exchange operations for foreign currency derivatives. Originated loans Loans originated by the Bank are financial assets that are created by the Bank by providing money directly to a borrower or by participating in a loan facility. Loans granted by the Bank with fixed maturities are initially recognized in accordance with the policy stated above. The difference between the nominal amount of consideration given and the amortized cost of loans issued at lower than market terms is recognized in the period the loan is issued as initial recognition adjustment discounting using market rates at inception and included in profit and loss as losses on origination of assets. Subsequently, the carrying amount of such loans is adjusted for amortization of the losses on origination and the related income is recorded as interest income within profit and loss using the effective interest method. Loans to customers that do not have fixed maturities are carried at amortized cost calculated based on expected maturities. Loans to customers are carried net of any allowance for impairment losses. Write off of loans and advances Loans and advances are written off against allowance for impairment losses in case of uncollectibility of loans and advances, including through repossession of collateral. Loans and advances are written off after management has exercised all possibilities available to collect amounts due to the Bank and after the Bank has sold all available collateral. The decision on writing off bad debt against allowance for impairment losses for all major, preferential, unsecured and insider loans should necessarily be confirmed with a procedural 12

15 document of judicial or notary bodies certifying that at the time of the decision the debt could not be repaid (partially repaid) with the debtor s funds. Impaired loans Once a financial asset or a group of similar financial assets has impaired (partly impared), interest income is thereafter recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. Allowance for impairment losses The Bank establishes an allowance for impairment losses of financial assets when there is objective evidence that a financial asset or group of financial assets is impaired. The allowance for impairment losses is measured as the difference between carrying amounts and the present value of expected future cash flows, including amounts recoverable from guarantees and collateral, discontinued at the financial asset s original effective interest rate, for financial assets which are carried at amortised cost. If in a subsequent period the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed by adjusted an allowance account. For financial assets carried at cost the allowance for impairment losses is measured as the difference between the carrying amount of the financial asset and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment losses are not reversed. The determination of the allowance for impairment losses is based on an analysis of the risk assets and reflects the amount which, in the judgment of management, is adequate to provide for losses incurred. Provisions are made as a result of an individual appraisal of risk assets for financial assets that are individually significant, and an individual or collective assessment for financial assets that are not individually significant. The change in the allowance for impairment losses is charged to profit and the total of the allowance for impairment losses is deducted in arriving at assets as shown in balance sheet. Factors that the Bank considers in determining whether it has objective evidence that an impairment loss has been incurred include information about the debtors or issuers liquidity, solvency and business and financial risk exposures, levels of and trends in delinquencies for similar financial assets, national and local economic trends and conditions, and the fair value of collateral and guarantees. These and other factors may, either individually or taken together, provide sufficient objective evidence that an impairment loss has been incurred in a financial asset or group of financial assets. It should be understood that estimates of losses involve an exercise of judgment. While it is possible that in particular periods the Bank may sustain losses, which are substantial relative to the allowance for impairment losses, it is the judgment of management that the allowance for impairment losses is adequate to absorb losses incurred on the risk assets. Investments available-for-sale Investments available-for-sale represent debt and equity investments that are intended to be held for an indefinite period of time. Such securities are initially recorded at fair value. Subsequently the securities are measured at fair value, with such remeasurement recognized directly in equity, plus accrued coupon income recognized in consolidated profit or loss for the period as interest income on investment securities. The Bank uses quoted market prices to determine the fair value for the Bank s investments available-for-sale. If such quotes do not exist, management estimation is used. Dividends received are included in dividend income in the consolidated income statement. Non-marketable securities that do not have fixed maturities are stated at cost, less allowance for impairment (if any) unless there are other appropriate and workable methods of reasonably estimating their fair value. Allowance for impairment is recognized in consolidated profit or loss for the period. 13

16 When there is objective evidence that such securities have been impaired, the cumulative loss previously recognized in equity is removed from equity and recognized in profit and loss for the period. Reversals of such impairment losses on debt instruments, which are objectively related to events occurring after the impairment, are recognized in profit and loss for the period. Reversals of such impairment losses on equity instruments are not recognized in profit and loss. Fixed assets Fixed assets, acquired after 1 January 2003 are carried at historical cost less accumulated depreciation and any recognised impairment loss. Fixed assets, acquired before 1 January 2003 are carried at historical cost restated for inflation less accumulated depreciation and any recognised impairment loss. Depreciation on assets under construction and those not placed in service commences from the date the assets are ready for their intended use. Depreciation of fixed assets is charged on the carrying value of fixed assets and is designed to write off assets over their useful economic lives. It is calculated on a straight line basis at the following annual prescribed rates: Buildings 2% Furniture and equipment 15-25% The carrying amounts of fixed assets are reviewed at each balance sheet date to assess whether they are recorded in excess of their recoverable amounts, and where carrying values exceed this estimated recoverable amount, assets are written down to their recoverable amount. An impairment is recognized in the respective period and is included in operating expenses. After the recognition of an impairment loss the depreciation charge for fixed assets is adjusted in future periods to allocate the assets revised carrying value, less its residual value (if any), on a systematic basis over its remaining useful life. Taxation Income tax expense represents the sum of the current and deferred tax expense. The current tax expense is based on taxable profit for the year. Taxable profit differs from net profit as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Bank s current tax expense is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and interests in joint ventures, except where the Bank is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the consolidated income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. The Russian Federation also has various other taxes, which are assessed on the Bank s activities. These taxes are included as a component of operating expenses in the consolidated income statement. 14

17 Deposits from banks and customers Customer and bank deposits are initially recognized at fair value. Subsequently amounts due are stated at amortized cost and any difference between net proceeds and the redemption value is recognized in the consolidated income statement over the period of the borrowings using the effective interest method. Debt securities issued Debt securities issued represent promissory notes, bonds and loan participation notes issued by the Bank. They are accounted for according to the same principles used for customer and bank deposits. Other provisions Other provisions are recognized when the Bank has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. Financial guarantees and letters of credit Financial guarantees and letters of credit issued by the Bank provide for specified payments to be made to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due under the original or modified terms of a debt instrument. Such financial guarantees and letters of credits are initially recognized at fair value. Subsequently they are measured at the higher of (a) the amount recognized as provision and (b) the amount initially recognized less, where appropriate, cumulative amortization of initial premium revenue received over the financial guarantee or letter of credit. Share capital and share premium Contributions to share capital, made before 1 January 2003 are recognized at their cost restated for inflation. Contributions to share capital, made after 1 January 2003 are recognized at cost. Share premium represents the excess of contributions over the nominal value of the shares issued. Gains and losses on sales of treasury stock are charged or credited to share premium. Dividends on ordinary shares are recognized in equity as a reduction in the period in which they are declared. Dividends that are declared after the balance sheet date are treated as a subsequent event under International Accounting Standard 10 Events after the Balance Sheet Date ( IAS 10 ) and disclosed accordingly. Retirement and other benefit obligations In accordance with the requirements of the Russian legislation pension system provides for calculation of current payments by the employer as a percentage of current total disbursements to staff. Such expense is charged in the period the related salaries are earned. Upon retirement all retirement benefit payments are made by pension funds selected by employees. The Bank does not have any pension arrangements separate from the State pension system of the Russian Federation. In addition, the Bank has no post-retirement benefits or other significant compensated benefits requiring accrual. Recognition of income and expense Interest income and expense are recognized on an accrual basis using effective interest method. Interest income also includes income earned on investments in securities. Other income is credited to profit and loss when the related transactions are completed. Loan origination fees, if significant, are deferred (together with related direct costs) and recognized as an adjustment to the loan s effective yield. Commission incomes/expenses are recognized on an accrual basis. Foreign currency translation Monetary assets and liabilities denominated in foreign currencies are translated into RUR at the appropriate spot rates of exchange ruling at the balance sheet date. Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the transaction. Profits and losses arising from these translations are included in net gain on foreign exchange operations. Rates of Exchange The exchange rates at period end used by the Bank in the preparation of the financial statements are as follows: 15

18 RUR/USD RUR/EUR Offset of financial assets and liabilities Financial assets and liabilities are offset and reported net on the balance sheet when the Bank has a legally enforceable right to set off the recognized amounts and the Bank intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. In accounting for a transfer of a financial asset that does not qualify for derecognition, the Bank does not offset the transferred asset and the associated liability. Fiduciary activities The Bank provides depositary services to its customers that include transactions with securities on their depo accounts. Assets accepted and liabilities incurred under the fiduciary activities are not included in the Bank s financial statements. The Bank accepts the operational risk on these activities, but the Bank s customers bear the credit and market risks associated with such operations. Reclassifications Certain reclassifications have been made to the financial statements as at to conform to the presentation as at. Nature of reclassification Balance sheet caption as per previously issued report Balance sheet caption as per the current report Reclassification of deposit received within issue of loan participation notes 706, ,532 Customer accounts Debt securities issued 4. NET INTEREST INCOME Net interest income comprises: 6 months ended 6 months ended Interest income Interest on loans and advances to customers 1,748,184 1,121,232 Interest on loans and advances to banks 169, ,107 Interest on debt securities 79,854 56,885 Fair value discounting of loans to customers (62,949) 81,388 Total interest income 1,934,958 1,494,612 Interest expense Interest on customer accounts (852,914) (521,797) Interest on debt securities issued (290,709) (203,184) Interest on deposits from banks (81,882) (213,612) Total interest expenses (1,225,505) (938,593) Net interest income before provision for impairment losses on interest bearing assets 709, ,019 16

19 5. ALLOWANCE FOR IMPAIRMENT LOSSES, OTHER PROVISION The movements in allowance for impairment losses on interest earning assets were as follows: Loans and advances to banks Loans and advances to customers Total , ,274 (Recovery)/provision for the period (87) 131, , , ,647-1,023,623 1,023,623 Provision for the period - 333, ,006-1,356,629 1,356,629 The movements in allowances for impairment losses on off-balance sheet transactions and other assets were as follows: Other assets Guarantees and other commitments Total ,224 44,224 Provision for the period ,405 44,567-22,086 22,086 Recovery of provision for the period - (22,086) (22,086) Allowances for losses on assets are deducted from the related assets. Provisions for guarantees and other commitments are recorded in liabilities. 6. NET GAIN ON ASSETS HELD-FOR-TRADING For the 6 months ended and, net gain on assets held-for-trading of RUR 11,082 thousand and RUR 15,367 thousand, respectively, represents net gain on debt securities. 7. NET GAIN ON FOREIGN EXCHANGE OPERATIONS Net gain on foreign exchange operations comprise: 6 month ended 6 month ended Foreign exchange operations, net 142, ,576 Translation differences, net (7,731) (30,431) Total net gain on foreign exchange operations 134, ,145 17

20 8. FEE AND COMMISSION INCOME AND EXPENSE Fee and commission income and expense comprise: 6 months ended 6 months ended Fee and commission income: Organization of financing for clients 465,589 42,739 Settlement operations 149,237 67,637 Cash operations 148,595 60,567 Guarantees issued 27,178 21,047 Documentary operations 13,774 15,385 Other operations 27,409 29,214 Total fee and commission income 831, ,589 Fee and commission expense: Settlement operations (88,234) (6,930) Cash operations (17,083) (6,360) Documentary operations (221) (6,296) Other operations (7,745) (7,060) Total fee and commission expense (113,283) (26,646) 9. OPERATING EXPENSES Operating expenses comprise: 6 months ended 6 months ended Staff costs 470, ,385 Operating lease 129, ,550 Unified social tax 83,483 56,314 Advertising and marketing expenses 68,066 42,876 Taxes, other than income tax 65,288 40,938 Depreciation and amortization 41,822 35,161 Repairs and maintenance expense 40,609 15,674 Professional services 33,661 14,005 Donations 33,506 4,610 Deposits insurance 30,078 - Telecommunication services 28,387 12,214 Security costs 26,631 22,998 Transportation and business trip expenses 11,132 5,846 Stationery and other office expenses 6,276 4,336 Other 61,650 39,810 Total operating expenses 1,130, , INCOME TAXES The Bank provides for taxes based on the statutory tax accounts maintained and prepared in accordance with the Russian statutory tax regulations which may differ from International Financial Reporting Standards. During the 6 months ended and, the Russian tax rate for corporations profits other than on state securities was 24% rate. The tax for interest income on state securities was 15%. 18

21 The Bank is subject to certain permanent tax differences due to non-tax deductibility of exchange losses and other expenses and tax-free regime under local tax regulations. Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. Temporary differences as of and relate mostly to different methods of income and expense recognition as well as to recorded values of certain assets. Temporary differences as of and comprise: Deferred assets: Loans and advances to customers 366, ,839 Debt securities issued 266, ,154 Total deferred assets 632, ,993 Deferred liabilities: Fixed and intangible assets (101,447) (153,856) Assets held-for-trading (77) (22,263) Total deferred liabilities (101,524) (176,119) Net deferred assets 530, ,874 Deferred income tax assets at the statutory tax rate (24%) 127,421 95,970 Less: valuation allowance (127,421) (95,970) Net deferred tax assets - - Relationships between tax expenses and accounting profit for the six months ended and are explained as follows: 6 months ended 6 months ended Profit before income tax 173,118 43,208 Statutory tax rate 24% 24% Tax at the statutory income tax rate 41,548 10,370 Tax effect on income taxed at different rates (2,360) (2,668) Tax effect of permanent differences 23,563 60,445 Change in valuation allowances 31,451 (41,863) Income tax expense 94,202 26,284 Current income tax expense 94,202 26, EARNINGS PER SHARE 6 months ended 6 months ended Net profit for the year attributable to equity holders of the parent () 17,530 4,663 Weighted average number of ordinary shares 17,075,000 10,200,000 Basic earnings per share attributable to equity holders of the parent (RUR)

22 12. CASH AND BALANCES WITH THE CENTRAL BANK OF THE RUSSIAN FEDERATION Balances with the Central Bank of the Russian Federation 780, ,728 Cash in vault 2,984,586 2,464,631 Total cash and balances with the Central Bank of the Russian Federation 3,764,925 3,362,359 The balances with Central Bank of Russian Federation as at and include RUR 780,339 thousand and RUR 807,849 thousand, respectively, which represents the minimum reserve deposits required by the CBR. Cash and cash equivalents as at and and for the purposes of the statement of cash flows are comprised of the following: Cash and balances with the CBR 3,764,925 3,362,359 1,795,954 Trading securities 545, , ,458 Loans and advances to banks in OECD countries 1,255,967 1,188, ,807 5,566,406 5,101,603 3,318,219 Less minimum reserve deposits and foreign currency deposits with the CBR (1,076,611) (807,849) (667,293) Total cash and cash equivalents 4,489,795 4,293,754 2,650, PRECIOUS METALS As at and precious metals are represented by gold bullion in vault. 20

23 14. ASSETS HELD-FOR-TRADING Interest rate to nominal % Interest rate to nominal % Government Bonds: Russian State Bonds (OFZ) 10-11% 543, % 548,945 Eurobonds of the Ministry of Finance of the Russian Federation (OVGVZ) 3% 1,833 3% 1, , ,621 Corporate Bonds: Bonds of OJSC Russneft 9% 147, Bonds of OJSC JFC 14% 10, ,082 - Promissory notes of financial institutions: Promissory notes of JSCB Nomos Bank 7% 44,879 8% 21,696 Promissory notes of JSCB MBRR 2% 29, Promissory notes of JSCB MDM Bank 2% 29,465 8% 4,992 Promissory notes of JSCB Vneshtorgbank - - 7% 87,111 Promissory notes of JSCB Sverbank Russia - - 7% 59,778 Promissory notes of JSCB Bank of Moscow - - 7% 38,881 Promissory notes of JSCB Gazprombank - - 7% 36,301 Promissory notes of JSCB Rosbank - - 8% 19,132 Promissory notes of JSCB Eurofinance Mosnarbank - - 8% 14,846 Promissory notes of JSCB Uralsib - - 8% 10,879 Promissory notes of JSCB Transcreditbank - - 7% 9,700 Promissory notes of JSCB Zenit - - 8% 9,388 Promissory notes of JSCB Rosselkhozbank - - 7% 4,986 Promissory notes of JSCB Impex Bank - - 8% 4, , ,659 Total assets held-for-trading 807, ,280 As at and included in assets held-for-trading is accrued interest income on debt securities amounting to RUR 15,469 thousand and RUR 15,029 thousand, respectively. Russian State Bonds (OFZ) are mid and long term discount state securities, nominated in Russian Roubles and issued by Ministry of Finance of the Russian Federation. Coupon rate is 10-11% to nominal. 21

24 15. LOANS AND ADVANCES TO BANKS Loans and advances to banks 5,905,883 5,666,289 Correspondent accounts with other banks 920,302 1,428,543 Loans under reverse repurchase agreements 660,919 2,768,884 Total loans and advances to banks, net 7,487,104 9,863,716 Movements in allowances for impairment losses on loans and advances to banks for the six months ended and are disclosed in Note 5. As at and included in loans and advances to banks is accrued interest income of RUR 53,593 thousand and RUR 63,417 thousand, respectively. As at and advances to banks included fixed amounts of RUR 52,829 thousand and RUR 57,958 thousand, respectively, placed with other banks as guarantee deposits on operations with plastic cards. As at and the Bank had loans and advances to 2 and 4 banks amounting to RUR 3,633,915 thousand and RUR 3,863,279 thousand, respectively, which individually exceeded 10% of the Bank s equity. As at and included in loans and advance to banks are deposits amounting to RUR 3,709,841 thousand and RUR 4,196,625 thousand placed by the Bank in 3 foreign subsidiary banks of the Russian Federation financial institutions (roszagranbanks), respectively, which represents a significant concentration forming, 49.5% and 42.4% of loans and advances to banks, respectively. Such banks are located in Austria, Germany and Switzerland. As at and the maximum credit risk exposure of loans and advances to banks amounted to RUR 7,487,104 thousand and RUR 9,863,716 thousand, respectively. As at and loans and advances to banks include securities purchased under repo agreements with banks secured by: Russian State Bonds (OFZ) 660,919 2,391,964 Bonds of Local Governments of Russian Federation - 231,920 Promissory notes of Russian companies - 48,650 Promissory notes of Russian banks - 96,350 Total loans under reverse repurchase agreements 660,919 2,768,884 As of and the fair value of securities pledged under repo agreements amounted to RUR 686,109 thousand and RUR 2,926,183 thousand, respectively. 22

25 16. LOANS AND ADVANCES TO CUSTOMERS Loans and advances to customers comprise: Originated loans 34,162,585 24,372,734 Less allowance for impairment losses (1,356,629) (1,023,623) Total loans and advances to customers, net 32,805,956 23,349,111 As at and included in loans and advances to customers is accrued interest income of RUR 148,034 thousand and RUR 154,387 thousand, respectively. Loans collateralized by pledge of securities 7,753,237 28,430 Loans collateralized by corporate guarantees 4,999,678 1,204,711 Loans collateralized by pledge of real estate and land 3,357,916 4,147,801 Loans collateralized by pledge of equipment 1,920,330 2,107,417 Loans collateralized by pledge of cars 1,381,862 - Loans collateralized by pledge of goods in turnover 788,125 1,073,018 Loans collateralized by pledge of rights of use 451,503 76,323 Loans collateralized by pledge of cash - 418,325 Unsecured loans 13,509,934 15,316,709 34,162,585 24,372,734 Less allowance for impairment losses (1,356,629) (1,023,623) Total loans and advances to customers, net 32,805,956 23,349,111 As of and included in unsecured loans were loans of RUR 3,996,678 thousand and RUR 1,394,475 thousand, respectively, issued to management companies in the oil sector. The principal activity of such companies is management of oil production and refining companies. As of and included in unsecured loans were loans of RUR 5,189,421 thousand and RUR 13,299,904 thousand, respectively, issued to companies, that own real estate. The principal operations of such companies consist of constructing and leasing out office and retail space. As of June and included in unsecured loans were loans of RUR 9,935,940 thousand and 12,742,515 thousand, respectively, on which the Bank has accepted as additional comfort shares/shares of stock of borrowers and guarantees of borrowers management/shareholders. Such shares/stock of shares and/or guarantees are not qualified as collateral. Movements in allowances for impairment losses on loans and advances to customers for the six months ended and are disclosed in Note 5. 23

26 Analysis by sector: Construction 6,053, ,004 Hotel business 3,760,017 73,839 Investing activities 3,562,223 1,573,427 Oil refinery products trade 3,512,181 1,451,332 Individuals 3,413,002 1,936,346 Retail trade 3,071,514 3,922,790 Manufacturing 2,493,333 2,496,402 Office property holding 2,199,432 3,338,501 Warehouse property holding 1,873,792 2,646,333 Supermarkets property holding 1,533,658 3,013,121 Oil production and refining 976,949 - Services 695,659 1,019,823 Production and marketing of soda 657, ,523 Agriculture 224, ,929 Government 26, ,889 Insurance - 93,124 Other 108,996 85,482 34,162,585 24,372,734 Less allowance for impairment losses (1,356,629) (1,023,623) Total loans and advances to customers, net 32,805,956 23,349,111 As of included in loans to customers operating in construction and hotel business are loans to 7 customers of RUR 7,381,546 thousand, that are holding companies of a construction and real estate company in Moscow and have ability to control operating and financial policies of this company. As of and the Bank had loans granted to 11 and 9 customers totaling 12,734,812 RUR thousand and RUR 8,665,329 thousand, respectively, with the exposure to one borrower exceeding 10% of the Bank s equity. As of and the maximum credit risk exposure of loans to customers amounted to RUR 34,162,585 thousand and RUR 24,372,734 thousand, respectively. 17. DERIVATIVE FINANCIAL INSTRUMENTS Nominal Nominal аmount Asset Liability amount Asset Liability Foreign currency contracts Forwards ,610 8,648 8,610 24

27 18. INVESTMENTS AVAILABLE-FOR-SALE Investments available-for-sale comprise: Equity securities (unquoted) 7,215 2,805 RF Government bonds 5,969 7,695 Total investments available-for-sale 13,184 10, FIXED ASSETS Buildings and other real estate Furniture and equipment Total At initial/indexed cost At , , ,975 Additions - 25,408 25,408 Disposals (5,690) (8,453) (14,143) At 117, , , , , ,873 Additions 68,015 82, ,565 Disposals - (8,670) (8,670) 191, , ,768 Accumulated depreciation , , ,945 Charge for the period 1,173 33,988 35,161 Eliminated on disposals (626) (5,976) (6,602) 30, , ,504 31, , ,240 Charge for the period 1,251 40,571 41,822 Eliminated on disposals - (6,017) (6,017) 32, , ,045 Net book value 159, , ,723 92, , ,633 25

28 20. OTHER ASSETS Other assets comprise: Prepayments and other debtors 112,054 63,186 Tax settlements, other than income tax 2,701 1,552 Others Total other assets 115,023 65, DEPOSITS FROM BANKS () () Time deposits 1,479,017 1,342,363 Syndicated loan 1,103,142 - Demand deposits 18,036 23,849 Total deposits from banks 2,600,159 1,366,212 As at and included in deposits from banks is accrued interest expense of RUR 30,796 thousand and RUR 7,909 thousand, respectively. During the 6 month ended the Bank received a syndicated loan from a pool of foreign banks in amount of USD 40,000 thousand bearing 8.5% interest per annum and maturing in April CUSTOMER ACCOUNTS Customer accounts comprise: () () Time deposits 18,966,157 15,650,773 Demand deposits 7,473,803 10,715,106 Total customer accounts 26,439,960 26,365,879 As at and included in customer accounts is accrued interest expense of RUR 511,998 thousand and RUR 409,267 thousand, respectively. 26

29 Analysis of customer accounts by industry: Analysis by sector: Individuals 15,849,654 13,555,368 Insurance and other financial services 4,407,878 3,878,740 Trade 2,869,310 2,066,667 Sale and lease of real estate, construction 798,469 1,269,946 Oil trading and transportation 602,082 3,771,519 Transport and communications 500,259 1,029,639 State authorities 451, ,861 Mechanical engineering 386, ,576 Agriculture 171,583 37,185 Other 401, ,378 Total customer accounts 26,439,960 26,365, DEBT SECURITIES ISSUED Debt securities issued consisted of the following: Loan participation notes on Eurobonds 6,309, ,532 Discount bearing promissory notes 2,362,826 1,906,680 Settlement promissory notes 434, ,110 Interest bearing promissory notes 344, ,899 Rouble-denominated bonds - 51,423 Total debt securities issued 9,451,205 3,287,644 In April 2004 the Bank placed a bonds issue with total nominal value of RUR 1,000,000 thousand at 101.8% of par, with interest paid at 14% of par per annum, maturing on 13 June. During the second half of 2004 the Bank made an early redemption of a portion of the bonds for RUR 636,757 thousand. During the year the Bank made an early redemption of a portion of the bonds for RUR 311,820 thousand. During the 6 months ended all bonds were fully redeemed. In May the Bank placed loan participation notes as part of Eurobonds public placement transaction with total nominal value of USD 200 million with interest paid at 9.5% of par per annum, maturing on 18 May Noteholders will have an option to require the Bank to redeem any note on 18 May 2007 at its principal amount together with accrued interest to this date. 27

30 24. OTHER LIABILITIES Payable to deposits insurance fund 22,414 - Dividends payable 17, Taxes payable, other than income tax 5,514 4,471 Salaries payable 3,268 - Others 7,571 1,438 Total other liabilities 56,081 6,209 As of and included in other liabilities are declared dividends totaling RUR 17,314 thousand and RUR 300 thousand, respectively, representing the Bank s liabilities to minority shareholders of JSCB Vyatka-Bank. 25. SHARE CAPITAL AND SHARE PREMIUM As at and share capital authorized, issued and fully paid comprised 17,075,000 ordinary shares with par value of RUR 200 each. All ordinary shares are of the same class and bear one vote. Share premium represents the excess of contributions received over the nominal value of shares issued. The Bank s distributable reserves are limited to the amount of its reserves as disclosed in its statutory accounts prepared under Russian accounting standards. 26. FINANCIAL COMMITMENTS AND CONTINGENCIES In the normal course of business the Bank is a party to financial instruments with off-balance sheet risk in order to meet the needs of its customers. These instruments, involving varying degrees of credit risk, are not reflected in the balance sheet. The Bank s maximum exposure to credit loss under contingent liabilities and commitments to extend credit, in the event of non-performance by the other party where all counterclaims, collateral or security prove valueless, is represented by the contractual amounts of those instruments. The Bank uses the same credit control and management policies in undertaking off-balance sheet commitments as it does for on-balance operations. The risk-weighted amount is obtained by applying credit conversion factors and counterparty risk weightings according to the principles employed by the Basle Committee on Banking Supervision. 28

31 As at and, the nominal or contract amounts and the risk weighted credit equivalents of instruments with off-balance sheet risks were: Nominal Amount () Riskweighted amount () Nominal Amount Riskweighted amount Contingent liabilities and credit commitments Guarantees issued and other similar commitments 2,144,589 2,144,589 3,298,260 3,298,260 Letters of credit and other transaction related contingent obligations 1,430, ,262 1,294, ,275 Commitments on credits and unused credit lines 2,421, ,061 1,481,862 74,093 Total contingent liabilities and credit commitments 5,996,902 3,587,912 6,074,671 4,019,628 As of the Bank had allowance for losses on off-balance sheet transactions totaling RUR 22,086 thousand. Movements in allowance for losses on off-balance sheet transactions for the 6 months ended and are disclosed in Note 5. Capital commitments The Bank had no material commitments for capital expenditures outstanding as of. Operating leases The Bank s future minimum rental payments under non-cancelable operating leases of buildings and land in effect at and are presented in the table below. () () Not later than one year 60, ,769 Later than one year but not later than five years 31,474 36,653 Later than 5 years 55,738 1,627 Total operating lease 147, ,049 Legal proceedings From time to time and in the normal course of business, claims against the Bank are received from counterparties. Management is of the opinion that no material unaccrued losses will be incurred and accordingly no provision has been made in these financial statements. Taxes Due to the presence in Russian commercial legislation, and tax legislation in particular, of provisions allowing more than one interpretation, and also due to the practice developed in a generally unstable environment by the tax authorities of making arbitrary judgment of business activities, if a particular treatment based on Management s judgment of the Bank s business activities was to be challenged by the tax authorities, the Bank may by assessed additional taxes, penalties and interest. Such uncertainty may relate to valuation of financial instruments, impairment provisions and market level for deals pricing. The Bank believes now that it has already complied with them, and therefore has not provided for in the financial statements. Tax years remain open to review by the tax authorities for three years. Fiduciary activities In the course of its operations the Bank provides depositary services to its customers. As of and, the Bank had customer securities in of 1,715,177,391 and 1,708,378,680 items, respectively, in its nominal holder s accounts. 29

32 Pensions and retirement plans Employees receive pension benefits in accordance with the laws and regulations of the Russian Federation. As at and the Bank was not liable for any supplementary pensions, post-retirement health care, insurance benefits, or retirement indemnities to its current or former employees. Operating environment The Bank's principal business activities are within the Russian Federation. Laws and regulations affecting business environment in the Russian Federation are subject to rapid changes and the Bank's assets and operations could be at risk due to negative changes in the political and business environment. 27. RELATED PARTY TRANSACTIONS Related parties or transactions with related parties, as defined by IAS 24 Related party disclosures, represent: (a) Enterprises that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with, the Bank (this includes holding companies, subsidiaries and fellow subsidiaries); (b) Associates enterprises in which the Bank has significant influence and which is neither a subsidiary nor a joint venture of the investor; (c) Individuals owning, directly or indirectly, an interest in the voting power of the Bank that gives them significant influence over the Bank; (d) Key management personnel, that is, those persons having authority and responsibility for planning, directing and controlling the activities of the Bank, including directors and officers of the Bank (also non-executive directors and close members of the families of such individuals); (e) Enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence. This includes enterprises owned by directors or major shareholders of the Bank and enterprises that have a member of key management in common with the Bank. (f) Parties with joint control over the Bank; (g) Joint ventures in which the Bank is a venture; and (h) Post-employment benefit plans for the benefit of employees of the Bank, or of any entity that is a related party to the Bank. JSCB BIN is a member of a group of entities jointly controlled by several shareholders that have common economic interests, mostly in the oil industry, banking, real estate management, and retail. 30

33 In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form. The Bank had the following transactions outstanding with related parties: Related party transactions Total category as per financial statements caption Related party transactions Total category as per financial statements caption Loans to customers, gross 643,850 34,162,585 1,648,372 24,372,734 - key management personnel of the entity or its parent 16, other related parties 626,873 1,604,127 - entities with joint control or significant influence over the entity - 44,245 Allowance for impairment losses (25,568) (1,356,629) (69,321) (1,023,623) - key management personnel of the entity or its parent (674) - other related parties (24,894) (67,463) - entities with joint control or significant influence over the entity - (1,858) Customer accounts 15,160 26,439,960 1,763,556 26,365,879 - key management personnel of the entity or its parent ,873 - parent 10,536 2,947 - other related parties 3,872 1,640,736 Guarantees issued and similar commitments 15,570 2,144, ,009 3,298,260 - key management personnel of the entity or its parent 13, parent 2, other related parties - 145,009 6 months ended Related party transactions Total category as per financial statements caption 6 months ended Related party transactions Total category as per financial statements caption Key management personnel compensation: short-term employee benefits 83, ,793 15, ,699 31

34 Included in the profit and loss account for the 6 months ended and are the following amounts, which arose due to transactions with related parties: 6 months ended Related party transactions Total category as per financial statements caption 6 months ended Related party transactions Total category as per financial statements caption Interest income 22,209 1,934,958 54,570 1,494,612 Operating expense 42,121 1,130, , , FAIR VALUE OF FINANCIAL INSTRUMENTS Estimated fair value disclosures of financial instruments are made in accordance with the requirements of IAS 32 Financial Instruments : Disclosure and Presentation and IAS 39 Financial Instruments: Recognition and Measurement. Fair value is defined as the amount at which the instrument could be exchanged in a current transaction between knowledgeable willing parties in an arm s length transaction, other than in forced or liquidation sale. As at and the fair value of financial assets and liabilities is presented in the table below: Carrying value Fair value Carrying value Fair value Cash and balances with the Central Bank of the Russian Federation 3,764,925 3,764,925 3,362,359 3,362,359 Loans and advances to banks 7,487,104 7,487,104 9,863,716 9,863,716 Assets held-for-trading 807, , , ,280 Investments available-for-sale 5,969 5,969 7,695 7,695 Deposits of banks 2,517,459 2,517,459 1,366,212 1,366,212 Customer accounts 26,522,696 26,522,696 26,365,879 26,365,879 Debt securities issued 9,451,205 9,451,205 3,287,644 3,287,644 As at and loans and advances to customers totaling RUR 32,805,956 thousand and RUR 23,349,111 thousand, respectively, net of allowance, are stated at amortized cost less allowance for impairment losses. The fair value of loans and advances to customers cannot be reliably measured as it is not workable. The Bank's management on a regular basis assesses losses from impairment of loans and advances to customers. As at and investments available-for-sale amounting to RUR 7,215 thousand and RUR 2,805 thousand, respectively, are stated at cost. The fair value of investments available-for-sale cannot be reliably measured as it is not workable. The Bank s management assesses losses from impairment of such assets on a regular basis. 32

35 29. REGULATORY MATTERS Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (as set forth in the table) of total and tier 1 capital (as defined) to risk weighted assets. The ratio was calculated according to the principles employed by the Basle Committee by applying the following risk estimates to the assets and off-balance sheet commitments net of allowances for losses: Estimate Description of position 0% Cash and balances with the Central Bank of the Russian Federation 0% State debt securities in Roubles 20% Loans and advances to banks for up to one year 50% Obligations and commitments on unused loans with the initial duration of over 1 year 100% Loans and advances to customers 100% Other assets 0% Standby letters of credit secured by customer funds Letters of credit and other contingent liabilities for settlement operations and commitments 50% on unused loans with the initial maturity of over 1 year 100% Guarantees issued and similar commitments As at the Bank s total capital and tier 1 capital amount for Capital Adequacy purposes amounted RUR 6,841,177 thousand with ratio of 17.7%. As at the Bank s total capital and tier 1 capital amount for Capital Adequacy purposes amounted RUR 6,779,351 thousand with ratios of 23.5%. 30. RISK MANAGEMENT POLICIES Management of risk is fundamental to the Bank s banking business and is an essential element of the Bank s operations. The main risks inherent to the Bank s operations are those related to credit exposures, liquidity and market movements in interest rates and foreign exchange rates. A description of the Bank s risk management policies in relation to those risks follows. The Bank manages the following risks: Liquidity risk Liquidity risk refers to the availability of sufficient funds to meet deposit withdrawals and other financial commitments associated with financial instruments as they actually fall due. The Assets and Liabilities Management Committee ( ALCO ) controls these types of risks by means of maturity analysis, determining the Bank s strategy for the next financial period. Current liquidity is managed by the Treasury Department, which deals in the money markets for current liquidity support and cash flow optimisation. In order to manage liquidity risk, the Bank performs daily monitoring of future expected cash flows on clients and banking operations, which is a part of assets/liabilities management process. The Management Board sets limits on the minimum proportion of maturing funds available to meet deposit withdrawals and on the minimum level on interbank and other borrowing facilities that should be in place to cover withdrawals at unexpected levels of demand. Cash flow interest rate risk Cash flow interest rate risk the risk that the future cash flow of a financial instrument will fluctuate because of changes in market interest rates. The ALCO also manages interest rate and market risks by matching the Bank s interest rate position, which provides the Bank with a positive interest margin. The Financial Department conducts 33

36 monitoring of the Bank s current financial performance, estimates the Bank s sensitivity to changes in interest rates and its influence on the Bank s profitability. The majority of the Bank s loan contracts and other financial assets and liabilities that bear interest are either variable or contain clauses enabling the interest rate to be changed at the option of the lender. The Bank monitors its interest rate margin and consequently does not consider itself exposed to significant interest rate risk or consequential cash flow risk. The following table presents an analysis of interest rate risk and thus the potential of the Bank for gain or loss. Effective average interest rates are presented by categories of financial assets and liabilities to determine interest rate exposure and effectiveness of the interest rate policy used by the Bank. RUR Other Other Currencies Currencies USD RUR USD ASSETS Assets held-for-trading 4.1% 3.0% - 8.7% 5.3% - Loans and advances to banks 6.2% 4.7% 3.1% 7.8% 5.2% 2.5% Loans to customers 10.4% 9.6% 8.2% 10.2% 9.4% 8.6% Investments available-for-sale 10.3% % - - LIABILITIES Deposits of banks - 8.2% 4.2% % Customer accounts 5.8% 5.2% 5.1% 6.4% 5.4% 5.3% Debt securities issued 6.8% 9.2% - 7.2% 8.5% 6.1% 34

37 The analysis of interest rate and liquidity risk on balance sheet transactions is presented in the following table: Up to 1 month 1 month to 3 months 3 month to 1 year 1 year to 5 years Over 5 years Maturity undefined 30 June Total ASSETS Assets held-for-trading 807, ,766 Loans and advances to banks 2,599,972-3,180, , ,566,802 Loans to customers, less allowance for impairment losses 3,300,868 5,117,901 11,201,679 11,822,487 1,363,021-32,805,956 Investments available-for-sale - - 5, ,969 Total interest bearing assets 6,708,606 5,117,901 14,388,257 12,608,708 1,363,021-40,186,493 Cash and balances with the Central Bank of the Russian Federation 2,688, ,076,611 3,764,925 Precious metals 26, ,699 Loans and advances to banks 920, ,302 Investments available-for-sale - - 7, ,215 Fixed assets, less accumulated depreciation , ,723 Current income tax assets Other assets 115, ,023 TOTAL ASSETS 10,458,944 5,117,901 14,395,710 12,608,708 1,363,021 1,444,334 45,388,618 LIABILITIES Deposits of banks 2,653-1,100, ,244 1,207,060-2,582,159 Customer accounts 2,257,131 3,673,739 8,051,961 3,608,444 1,374,882-18,966,157 Debt securities issued 36, ,202 1,534,016 6,772, ,017,178 Total interest bearing liabilities 2,296,286 4,347,941 10,686,179 10,653,146 2,581,942-30,565,494 Deposits of banks 18, ,036 Customer accounts 7,473, ,473,803 Debt securities issued 427, , ,027 Other liabilities 56, ,081 TOTAL LIABILITIES 10,271,992 4,347,941 10,686,179 10,659,387 2,581,942-38,547,441 Liquidity gap 186, ,960 3,709,531 1,949,321 (1,218,921) Interest sensitivity gap 4,412, ,960 3,702,078 1,955,562 (1,218,921) Cumulative interest sensitivity gap 4,412,320 5,182,280 8,884,358 10,839,920 9,620,999 Cumulative interest sensitivity gap as a percentage of total assets 9.7% 11.4% 19.6% 23.9% 21.2% 35

38 Up to 1 month 1 month to 3 months 3 month to 1 year 1 year to 5 years Over 5 years Maturity undefined 31 December Total ASSETS Assets held-for-trading 873, ,280 Loans and advances to banks 5,184, ,000 3,050, ,435,173 Loans to customers, less allowance for impairment losses 1,119,139 4,876,322 12,026,234 4,322,670 1,004,746-23,349,111 Investments available-for-sale - - 7, ,695 Total interest bearing assets 7,176,647 5,076,322 15,084,874 4,322,670 1,004,746-32,665,259 Cash and balances with the Central Bank of the Russian Federation 2,554, ,849 3,362,359 Precious metals 24, ,899 Loans and advances to banks 1,370,585-57, ,428,543 Investments available-for-sale - - 2, ,805 Fixed assets, less accumulated depreciation , ,633 Current income tax assets , ,881 Other assets - 65, ,002 TOTAL ASSETS 11,126,641 5,141,324 15,162,518 4,322,670 1,004,746 1,069,482 37,827,381 LIABILITIES Deposits of banks 9, ,604 1,043,922-1,342,363 Customer accounts 448,867 4,473,051 10,513, , ,650,773 Debt securities issued 326, , ,088 1,631, ,878,534 Total interest bearing liabilities 785,204 4,610,764 11,296,219 2,135,561 1,043,922-19,871,670 Deposits of banks 23, ,849 Customer accounts 10,715, ,715,106 Debt securities issued 79,423 4, ,094 7, ,110 Provisions , ,086 Other liabilities 6, ,209 TOTAL LIABILITIES 11,609,791 4,615,005 11,636,399 2,142,913 1,043,922-31,048,030 Liquidity gap (483,150) 526,319 3,526,119 2,179,757 (39,176) Interest sensitivity gap 6,391, ,558 3,788,655 2,187,109 (39,176) Cumulative interest sensitivity gap 6,391,443 6,857,001 10,645,656 12,832,765 12,793,589 Cumulative interest sensitivity gap as a percentage of total assets 16.9% 18.1% 28.1% 33.9% 33.8% Asset and liability maturity periods and the ability to replace interest liabilities at an acceptable cost when they mature are crucial in determining the Bank s liquidity and its susceptibility to fluctuation of interest rates and exchange rate. Time deposits of individuals are included based on term of deposit agreements. However such deposits can be redeemed earlier by customers request. Currently, a considerable part of customer deposits are repayable on demand. However, the fact that these deposits are diversified by the number and type of customers and the Bank s previous experience indicate that these deposits are a stable and long-term source of finance for the Bank. Currency risk Currency risk is defined as the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. The Bank is exposed to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The ALCO controls currency risk by management of the open currency position on the estimated basis of RUR value deviation and other macroeconomic indicators, which gives the Bank an opportunity to minimize losses from significant currency rates fluctuations toward its national currency. 36

39 The Treasury Department performs daily monitoring of the Bank s open currency position with the aim to match the requirements of the CBR. The Bank s exposure to foreign currency exchange rate risk is presented in the table below: RUR USD USD 1 = RUR EUR EUR 1 = RUR Other currency Total ASSETS Cash and balances with the Central Bank of the Russian Federation 3,481, ,655 75,655 3,169 3,764,925 Precious metals ,699 26,699 Assets held-for-trading 805,933 1, ,766 Loans and advances to banks 2,325,416 4,520, ,232 14,428 7,487,104 Loans to customers, less allowance for impairment losses 25,553,998 5,239,096 1,964,320 48,542 32,805,956 Investments available-for-sale 13, ,184 Fixed assets, less accumulated depreciation 367, ,723 Current income tax assets Other assets 115, ,023 TOTAL ASSETS 32,662,961 9,965,612 2,667,207 92,838 45,388,618 LIABILITIES Deposits of banks 11,662 1,074,821 1,463,199 50,513 2,600,195 Customer accounts 20,051,320 5,131,126 1,249,584 7,930 26,439,960 Debt securities issued 2,774,104 6,663,621 13,480-9,451,205 Other liabilities 56, ,081 TOTAL LIABILITIES 22,893,167 12,869,568 2,726,263 58,443 38,547,441 OPEN BALANCE SHEET POSITION 9,769,794 (2,903,956) (59,056) 34,395 Derivative financial instruments and spot contracts Fair value of derivative financial instruments and spot contracts are included in the currency analysis presented above and the following table presents further analysis of currency risk by types of derivative financial instruments and spot contracts as at : RUR USD USD 1 = RUR EUR EUR 1 = RUR Other currency Total Payable on spot contracts (1,686,325) (896,541) (13,590) - (2,596,456) Receivable on spot contracts 877,189 1,604, ,851-2,596,413 NET SPOT POSITION (809,136) 707, ,261 - TOTAL OPEN POSITION 8,960,658 (2,196,124) 42,205 34,395 37

40 RUR USD USD 1 = RUR EUR EUR 1 = RUR Other currency 31 December Total ASSETS Cash and balances with the Central Bank of the Russian Federation 3,030, ,032 57,571 4,786 3,362,359 Precious metals ,899 24,899 Assets held-for-trading 871,643 1, ,280 Loans and advances to banks 4,129,872 5,027, ,873 20,297 9,863,716 Loans to customers, less allowance for impairment losses 20,235,770 1,498,485 1,560,559 54,297 23,349,111 Investments available-for-sale 10, ,500 Fixed assets, less accumulated depreciation 261, ,633 Current income tax assets 16, ,881 Other assets 62, ,408 65,002 TOTAL ASSETS 28,620,254 6,797,346 2,304, ,687 37,827,381 LIABILITIES Deposits of banks 21,901 3,104 1,285,108 56,099 1,366,212 Customer accounts 19,149,286 6,143,425 1,069,881 3,287 26,365,879 Debt securities issued 2,292, ,399 44,620-3,287,644 Provisions 22, ,086 Other liabilities 6, ,209 TOTAL LIABILITIES 21,492,107 7,096,928 2,399,609 59,386 31,048,030 OPEN BALANCE SHEET POSITION 7,128,147 (299,582) (95,515) 46,301 Derivative financial instruments and spot contracts Fair value of derivative financial instruments and spot contracts are included in the currency analysis presented above and the following table presents further analysis of currency risk by types of derivative financial instruments and spot contracts as at : RUR USD USD 1 = RUR EUR EUR 1 = RUR Other currency 31 December Total Payable on spot and derivative contracts (28,795) - - (8,610) (37,405) Receivable on spot and derivative contracts 8,648 28, ,435 NET SPOT AND DERIVATIVE FINANCIAL INSTRUMENTS POSITION (20,147) 28,787 - (8,610) TOTAL OPEN POSITION 7,108,000 (270,795) (95,515) 37,691 38

41 Price risk Price risk is the risk that the value of a financial instrument will fluctuate as a result of changes in market prices whether those changes are caused by factors specific to the individual security or its issuer or factors affecting all securities traded in the market. The Bank is exposed to price risks of its products which are subject to general and specific market fluctuations. The Bank manages price risk through periodic estimation of potential losses that could arise from adverse changes in market conditions and establishing and maintaining appropriate stop-loss limits and margin and collateral requirements. Fair value interest rate risk Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The Bank manages fair value interest rate risk through periodic estimation of potential losses that could arise from adverse changes in market conditions. The Department of Financial Control conducts monitoring of the Bank s current financial performance, estimates the Bank s sensitivity to changes in fair value interest rates and its influence on the Bank s profitability. Credit risk The Bank is exposed to credit risk which is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Risk management and monitoring is performed within set limits of authority, by the Credit Committees and the Bank s Management Board. Before any application is made by the Credit Committee, all recommendations on credit processes (borrower s limits approved, or amendments made to loan agreements, etc.) are reviewed and approved by the branch risk-manager or the Risk Management Department. Daily risk management is performed by the Head of Credit Departments and Branch Credit Divisions. The Bank structures the level of credit risk it undertakes by placing limits on the amount of risk accepted in relation to one borrower, or groups of borrowers, and to industry (and geographical) segments. Limits on the level of credit risk by a borrower and a product (by industry sector, by region) are approved monthly (quarterly) by the Management Board. The exposure to any one borrower including banks and brokers is further restricted by sub-limits covering on and off-balance sheet exposures which are set by the Credit Committee. Actual exposures against limits are monitored daily. Where appropriate, and in the case of most loans, the Bank obtains collateral and corporate and personal guarantees but a significant portion is personal lending, where no such facilities can be obtained. Such risks are monitored on a continuous basis and subject to annual or more frequent reviews. Commitments to extend credit represent unused portions of credit in the form of loans, guarantees or letters of credit. The credit risk on off-balance sheet financial instruments is defined as a probability of losses due to the inability of a counterparty to comply with the contractual terms and conditions. With respect to credit risk on commitments to extend credit, the Bank is potentially exposed to a loss in an amount equal to the total unused commitments. However, the likely amount of the loss is less than the total unused commitments since most commitments to extend credit are contingent upon customers maintaining specific credit standards. The Bank applies the same credit policy to the contingent liabilities as it does to the balance sheet financial instruments, i.e. the one based on the procedures for approving the grant of loans, using limits to mitigate the risk, and current monitoring. The Bank monitors the term to maturity of off balance sheet contingencies because longer term commitments generally have a greater degree of credit risk than short-term commitments. Geographical concentration The ALCO exercises control over the risk in the legislation and regulatory arena and assesses its influence on the Bank s activity. This approach allows the Bank to minimize potential losses from the investment climate fluctuations in the Russian Federation. The Bank s Management Board sets up country limits, which mainly applies to banks of the Commonwealth of Independent States and Baltic countries. 39

42 The geographical concentration of assets and liabilities is set out below: Russian Federation Other non-oecd countries OECD countries Total ASSETS Cash and balances with the Central Bank of the Russian Federation 3,764, ,764,925 Precious metals 26, ,699 Assets held-for-trading 807, ,766 Loans and advances to banks 2,436,577 3,741,731 1,308,796 7,487,104 Loans to customers, less allowance for impairment losses 32,155, ,334-32,805,956 Investments available-for-sale 13, ,184 Fixed assets, less accumulated depreciation 367, ,723 Current income tax assets Other assets 115, ,023 TOTAL ASSETS 39,687,757 4,392,065 1,308,796 45,388,618 LIABILITIES Deposits of banks 238,688 81,237 2,280,270 2,600,195 Customer accounts 26,153, ,164 20,656 26,439,960 Debt securities issued 3,141,496-6,309,709 9,451,205 Other liabilities 56, ,081 TOTAL LIABILITIES 29,589, ,401 8,610,635 38,547,441 NET POSITION 10,098,352 4,044,664 (7,301,839) Russian Federation Other non-oecd countries OECD countries Total ASSETS Cash and balances with the Central Bank of the Russian Federation 3,362, ,362,359 Precious metals 24, ,899 Assets held-for-trading 873, ,280 Loans and advances to banks 4,406,274 4,210,861 1,246,581 9,863,716 Loans to customers, less allowance for impairment losses 22,603, ,819-23,349,111 Investments available-for-sale 10, ,500 Fixed assets, less accumulated depreciation 261, ,633 Current income tax assets 16, ,881 Other assets 65, ,002 TOTAL ASSETS 31,624,120 4,956,680 1,246,581 37,827,381 LIABILITIES Deposits of banks 1,366, ,366,212 Customer accounts 23,604,867 2,606, ,575 26,365,879 Debt securities issued 2,581, ,532 3,287,644 Provisions 22, ,086 Other liabilities 6, ,209 TOTAL LIABILITIES 27,580,486 2,606, ,107 31,048,030 NET POSITION 4,043,634 2,350, ,471 40