Annual Report 2015/16 - بانک سامان · PDF fileshould be noted that Saman Bank has won...

Annual Report 2015/16

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Table ofContents

Saman Bank

In 2015/16

Saman Bank at a Glance

Main Financial Items ........................................................................

Credit Rating ....................................................................................

Board of Directors Report ...............................................................

Statement by CEO .............................................................................

Retail Banking ..................................................................................

Corporate Banking ...........................................................................

International Banking ......................................................................

Premium Banking ............................................................................

Investment .......................................................................................

Retail and Syndicated Loans ............................................................

Electronic Banking ...........................................................................

Human Capital ..................................................................................

Social Responsibilities .....................................................................

Risk Management ............................................................................

Corporate Governance .....................................................................

Inspection .........................................................................................

Anti-Money laundering .....................................................................

Compliance ......................................................................................

Organizational Chart ........................................................................

Financial Report

Independent Auditor and Legal Inspector Report ............................

Group Consolidate Financial Statements .........................................

Saman Bank (Public Joint Stock company) Financial Statements ...........

Explanatory Notes ............................................................................

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Anual Report 2015/16

Unit 2015-2016 2014-2015 2013-2014

Net Profit IRR billion 503 1,011 2,043

Total Assets IRR billion 258, 717 228,083 200,326

Total Loans IRR billion 127 ,500 118 ,111 97 ,783

Total Liabilities IRR billion 247 ,990 217,313 190,194

Shareholders' equity IRR billion 10 ,727 10,770 10,132

Return on Assets Percent 0.2٪ 0.5٪ 1.2٪

Return on Equity Percent 5٪ 9.7٪ 21.4٪

Cost-Income ratio Percent 91.3٪ 85.36٪ 69.36٪

Total deposits IRR billion 211,347 179,592 158,151

Paid capital IRR billion 8,000 6,588 6,588

Number of Customers 1000 persons 2,383 2,040 1,928

Number of ATMs Device 1,303 1,208 1,006

Number of POS Device 204,000 195,309 160,403

Deposits absorbed per day IRR billion 107 178 178

Deposits per branch ratio IRR billion 1,493 1,251 1,069

Loans per branch ratio IRR billion 892 815 697

Total deposits Number ofCustomers

2013-142013-142014-15

2014-152015-16

2015-16

Main Financial Items Table 1

Main Financial Items

6 7


Credit RatingCredit rating is a process of studying and assessing bank performance transparency, investment risk, competitive advantages, financial position, possible accessibility to internal and external capital markets, receiving or granting syndicated loans and ability to meet obligations. Since 2013, we have started cooperation with Capital Intelligence Ratings Institute (CI). It is one of the most professional institutes of credit rating in the Middle East and Africa and assesses annually many banks around the world.

On the Way of ProgressDuring 2015/16, the credit rating process of Bank was started by the CI and they ranked Saman bank in the “B” category of credit rating. They also promoted our future position view from “Stable” to “Positive”. The CI believes that successful business plan and retail financing and banking are factors of this positive rating. It is noteworthy that the CI has promoted Iran credit rating from “B” to “B+” in terms of repayment of long-term foreign and domestic obligations.

Seyed Ahmad Taheri BehbahaniThe CEO

8 9


Our Rank in IranAmong Top 50 Iranian Companies

As an important scientific, research-based and educational institution, the Iranian Industrial Management Institution has ranked top Iranian companies during the last 17 years based on 28 different measures such as sales and revenues. The process of ranking top 100 companies is performed in terms of output oriented measures and Saman Bank is subject to this assessment and ranking every year providing detailed documents. In the 2015/16, Saman Bank is in the 29th place among the 100 companies based on 2014-2015 financial data, improving 5 steps compared with previous year.

This assessment is an important and applicable tool for understanding the general position of Iranian companies. The following figure illustrates that Saman Bank has secured an appropriate growth among Iranian companies regarding economic consequences of domestic recession and international sanctions during the last 5 years. Although banks are extremely affected by environmental economic situations, this achievement and growth has been attained through reliance on a targeted strategy and directing resources to valuable markets in order to control economic situations.

Rank in top 50 companies Figure 1

Saman Bank Rank among top 50 Iranian Companies60

50

40

30

20

10

0

56

36

29

44

34

29

2010 2011 2012 2013 2014 2015

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Board of Directors Report The 2015/16 had an important characteristic for us as the last year of the Bank five-year strategic plan. It was necessary to focus our attempts on finalizing and concluding executive plans and predetermined objectives. The plan was started in 2011-2012 and had four strategies including: to be the first choice of target customers, international banks and talented and committed work force and achieving the maximum share of market among private banks in foreign currency transactions and operations. It is noteworthy that during the 2015/16, new regulations were passed establishing some restrictions on the banking system including Saman Bank. The law on Removal of Limitations from Competitive Production, withholding loans predicted in the annual budget regulations extending to private banks, restrictive regulations on interest rate of loans and deposits (specifically the maximum interest rate was determined by participating contracts expected rates and notified to Banks for the first time after passing the law on Interest-free Banking Operations), restrictive regulations on revenue recognition and determining attorneys’ fee and similar restrictions has led to increase expenses and reduce revenue opportunities in the banking business environment. Success in the (nuclear) negotiation created new hopes for an open economic environment. But in practice, due to limitations on the banking system of the country, there were a deep recession in the economic environment so that in the second half of the 2015/16, a plan for getting out of recession was introduced by the country economic officials. Therefore, achievement of bank in any planned strategy needed much effort in planning and executing procedures. However, in the last year we attempted to adapt our abilities and capacities with the needs and capacities of customers and the market in order to provide complete and up-to-dated services and products.

Regarding the need for developing information technology in our society, we have had always a focus on developing infrastructures and application of new E-banking technologies. On the other hand, considering technology, we attempted to eliminate traditional procedures and methods and make evolution in services provided to customers. This consideration has been achieved by changing physical decoration of branches, customer turnover styles and grouping customers, optimizing work and office task processes, defining specialized services and products for customers and extending international service capacities. The statistical reviews on the customers’ satisfaction index show a promotion from 78 to 85 percent and for the customers’ loyalty index a promotion from 81 to 86 percent is achieved. It should be noted that Saman Bank has won the Statue for Popular Bank in the last year based on votes of 25000 banking customers which selected Saman bank as their first choice to open an account.

In terms of financial structures and cost management, although the Central Bank of Iran (CBI) helped reduce the cost of money by entering to inter-banking market at the ending months, limitations and unfair competition specifically by non-authorized financial institutions led to significant restrictions for banks in common revenue areas for the first 8 months of the year. It is noteworthy that despite the general inflation, fees and commissions rates of banks are determined by the CBI and has been constant in the last 4 years and the banks were not allowed to increase the rates. On the other hand, the high costs of absorbing and keeping deposits as a result of the CBI regulations on loans interest rates, led to reduce the bank revenues. However we tried to continue the strategic plan strongly. Since determining the reasonable business direction is the most important achievement of any strategic plan, this achievement was attained in Saman Bank and we were able to increase the efficiency of the bank during the last year as a result of continuing the strategic plan.

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Despite the annual increase in the wages by the law on work force, we could decrease total administrative and general expenses significantly, however increasing expenses related to Deposit Guarantee Fund and acceptors commissions in the last three months of the year led to bank failure in controlling operational expenses and an increase in total administrative and general expenses comparing with previous year.

In the area of income from fees and commissions which was made by foreign currency operations, we experienced a 47 percent growth rate and we had 49 percent growth rate for income from investments in different areas.

Our five-year performance in the strategic plan of being the first choice of foreign banks as well as our readiness to comply with international standards and regulations helped us be one of the first banks accepted by international banks and we started our negotiations to expand relationships with international banks after the Joint Comprehensive Plan of Action (JCPOA) was reached. We have had a good role in becoming the first choice of correspondents and corporate customers. We have been successful in attracting domestic big companies and providing services to foreign companies operating in Iran. One of the most important achievements of implementing our strategic plan was optimizing services provided by branches through reducing the customers’ waiting time and providing consulting and professional services.

Continuing the view of adapting and conforming executive policies and procedures to international standards and regulations, during 2015/16 we made fundamental changes in compliance and Anti-money laundering (AML) divisions and optimized and adapted our standards to international standards of foreign correspondents using international consultants. In this area we always follow two basic goals: appropriate performance in terms of profit or loss and compliance with international AML standards. Our vision is to invite an international big audit firm to help comply with AML international standards and catch necessary certifications.

From another view, the 2015/16 is the year of releasing sanctions and recession for Iran economy. In one side we faced economic recession and significant decrease in oil prices and on the other side we observed positive indications of expanding relationships with international banks and companies in the Iranian market.

The final achievement in nuclear negotiations at the end of last year made a mental relaxation among economic participants and brought stability to the market so that the CI credit rating institute promoted the bank rank from “stable” to “positive” position in terms of financial and international capabilities. The economic growth of Iran has been predicted as 4.4 percent by the International Monetary Fund and the World Bank, similarly, the CBI has predicted this rate more than 5 percent.

Business environment and indications of domestic efforts to join the world economy has created many fears and hopes and Managing these fears and hopes needs understanding the circumstance and trying to make smart decisions according to up-to-dated banking standards and participating actively and effectively in the Iran and the world banking markets.

The main Iranian economic policy in recent years has been enhancing domestic capacities in order to face with

uncertain economic conditions. As an economic institution, we acknowledged having a serious role and tried to play an appropriate role in this area. In terms of revenue making, two important indices of resistance economy are revenue diversity and reducing dependency to oil oriented revenues. We tried to provide non-oil export supporting tools to domestic manufacturers and exporters in order to improve the country revenues from exporting activities consistent with resistance economy policies. In the last year, Saman bank has acted in favor of policies issued by the Supreme Leader about resistance economy and governmental and the CBI economic policies. These actions include granting loans about IRR 20,000 billion to small and medium sized entities, granting interest-free marriage loans to the youth, granting interest-free loans to the dependents of Imam Khomeini Relief Foundation and Welfare Organization, granting financing loans to import fundamental commodities (food and pharmaceutical products) and agency of the National Development Fund and financing 30 percent of capital market transactions through granting loans to correspondents which led to an improvement in the capital market.

The economic situations after two difficult periods of recession created many problems for Iranian manufacturers and merchants. Therefore, we faced promptly the effects of these conditions as an economic intermediate between investors and lenders. Understanding the circumstance, we tried to protect manufacturers and merchants considering the principle of bank benefits. But it is obvious that in the business environment of the country in which most of economic activities and industries face with reduced profitability and termination, as an economic and intermediate institution, bank cannot continue revenue making and profitability trends without any effects of economic recession. The reason is that in this situation, granting healthy loans, collecting receivables and selling collaterals owned are difficult and time consuming processes considering these items as sources of revenues. However we planned appropriately and assigned credit rating tasks to Hafez Saman Iranian Co. which had a brilliant performance in the last year. Following up the receivables, most of the bank receivables are decided and sufficient provisions has been considered. Our vision is to sell collateral properties generating cash to provide liquidity for the bank operational cycles.

Our main plan in the 2016-2017 is to increase common revenues on one side and manage costs to optimize branch structures and bank balance sheet on the other side. Considering implementation of the JCPOA and related facilities, we have some infrastructural and business plans which are based on optimizing bank operations through optimizing performance of branches, developing E-banking services on mobile apps and web and providing services to international cards, revising processes of providing services to customers, developing new products and services, entering to new markets of corporate banking and big customers. We also have an important plan to open agency offices in two European countries and considering international relationships, for the next year, we have decided to prepare our financial statements in accordance with the CBI standards for internal purposes as well as IFRS based financial statements for international purposes.

Approaching the 18th anniversary of the bank establishment and using the experience of executing a statistically successful five-year strategic plan, we have decided to provide two developed three-year strategic plans for future years considering the Saman Bank in the 1400 year. The main elements and objectives of the new strategic plans will be to develop new market services in corporate banking, optimizing branches, fundamental changes in IT areas consistent with global trends, expanding international relationships in E-banking and business areas. We also intend to increase the bank capital in the way of implementing the strategic plan which will need cooperation of all esteemed shareholders.

Saman Bank Board of Directors

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Vali Zarrabieh

Chairman

Mr. Vali Zarrabieh was a member of the founding board of Saman bank in 1999. He attained diverse executive and managing experiences from 1999 to 2009 and was appointed as the CEO in 2010 and as the Chairman in 2013 by the General Meeting of Shareholders. Mr. Zarrabieh has been member of the board of directors in Saman E-Payment Co. and Saman Brokerage Co. previously. He holds a Master Degree in Finance with a subfield of financing and assessing financial institutions from the Cass Business School of London. He has also graduated in MBA with a subfield of strategy from Manchester Business School.

Ahmad Mojtahed

Vice Chairman

Dr. Mojtahed joined Saman Bank as Executive Vice President in Research and Planning as well as Chairman of the Board of the Iranian Credit Bureau and Rating Company in 2010. He has acted as the Chairman of the Board of Directors in Saman Bank since 2012 and as Vice Chairman since 2013. Before joining Saman Bank, Dr. Mojtahed has acted as the Head of the Monetary and Banking Research Academy (MBRA), Advisor to the Governor of the Central Bank of Iran and to the Minister of Economic Affairs and Finance. He holds a Ph.D Degree in Economics from University of Iowa, USA and acts as a researcher and professor at Allameh Tabatabaei University.

Farideh Geraminejad

Member of the Board

Ms. Farideh Geraminejad was appointed as a member of Saman Bank’s Board of Directors by the General Meeting of Shareholders in 2013. Before this appointment she served as Saman’s International Banking Director. She worked at Tejarat Bank from 1977 to 2009, serving as Head of Treasury and Brokers Relationships Office. Ms. Geraminejad has graduated in General Linguistics from the University of Tehran.

Member of the Board

The Board of Directors

Pension Fund of National Copper Industry of IRAN

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Statement by CEOThe 2015/16 year ended while we witnessed final conclusion of nuclear agreements between Iran and the P5+1 countries after years of challenging and discussing on nuclear issues and limitations imposed by international sanctions. Simultaneously, this led to opportunities for extending political interactions with other countries and optimism to future economic transactions between Iran and other countries were found. However, the fall of oil prices reduced significantly the country revenues and led to problems such as decreased economic growth. In the last year, the government introduced the policies for getting out of recession and simulation of demands. Similarly, the CBI followed policies such as reducing rates of banks’ legal deposits and reducing maximum rate of loans and deposits in order to safe economic growth and reduce the inflation. On the other hand, the law on Governmental Budget for the 2016/17 emphasizes on continuance of descending inflation and banking interest rates, homogenization of foreign currency rates and getting out of recession through investing in construction projects and attracting foreign investments.

In the operational areas, important achievements have been attained during 2015/16 by the bank including achievements in foreign currency area. The bank has opened letters of credit, drafts and foreign currency pay orders up to $ 3,234 million and the revenue from foreign currency transactions reached IRR 1,226 billion. In the Rial area, one of the most important achievement is our participation in the inter-banking market as a net lender, therefore we never experienced Red Situation in 2015/16 similar to previous year. Consistent with Resistance Economy Policies, we also granted different loans to small, medium and big sized entities to protect industries and businesses. In terms of collecting debts, the bank collected IRR 3,930 billion. So a significant success was reached. We experienced an18 percent growth in resources comparing to the previous year so that the bank deposit resources reached to amount of IRR 211,347 billion at the end of the year. The bank had a good performance in absorbing inexpensive resources up to IRR 1,313 billion.

A set of actions and tasks were conducted during the 2015/16 consistent with the vision of the bank to be the first choice of target customers, correspondents and talented work force, as well as using an approach to make customers loyal through easiness, speed and trust. These actions include extending electronic banking and international relationships, enhancing risk management, and social and philanthropic activities which yielded valuable results. Some of the most important activities performed in the reporting year include developing the “inquiry system for letters of guarantee”, introducing the new Samanak app for “mobile operating systems”, “holding a conference on AML”, “increasing number of correspondents to 338 banks in 67 countries” and “signing an agreement of cooperation between the bank and Italian SACE Export Guarantee Co.”

Achievements such as “promoting the bank credit rank by the CI”, “winning the statue for Popular Bank in the 2nd Festival of Popular Banks”, “seizing the first place in opening accounts by customers”, “winning the statute of Golden Cedar for the social campaign of Low Water”, “promoting 5 steps and winning the 29th place among top 50 companies of the country” are results of my colleagues managed efforts in Saman Bank. Absolutely, these achievements and efforts form a strong basis for further achievements in the future.

We open 2016/17 year expecting the JCPOA to provide opportunities for commercial trades, attracting foreign investors, economic growth and getting out of recession. Considering the vision, the plan and budget of Saman bank has been developed and communicated to divisions. There are important points in the key plans and goals such as: “the need for selling collateral properties of bank”, “the need for increasing inexpensive and on-demand deposits share”, “collecting outstanding and doubtful receivables”, “reducing temporary interest rates of deposits”, increasing commission income basis”, “ marketing for new customers in the foreign credit areas”, “the need for revising expense structures of the bank and enhancing efficiency” to meet stakeholders’’ expectations namely “shareholders”, “personnel”, “customers”, “monitoring institutions” and “the society as a whole”. It is obvious that meeting these expectations need much more efforts and intelligent planning on a timely basis and my colleagues in Saman Bank will do their best to meet the expectations.

Saman Bank succeeded to open an amount of $ 3,234 billion letters of credit, drafts and foreign currency pay orders leading revenuesaz from foreign currency transactions to reach the amount of IRR 1,226 billion during 2015/16.

Good Luck AllSeyed Ahmad Taheri Behbahani

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Retail Banking Saman Bank is a leading, dynamic and well-known brand in the banking market of Iran. With a correct view and analysis, we have always tried to match our capabilities and capacities to the needs and capacities of customers and the market in order to provide complete and up-to-dated products and services. Consistent with this view, we tried to abandon traditional procedures and methods, changing our process of providing services to the customers. The effects of these efforts can be seen in physical decoration of branches and customer turnover style, grouping customers, optimizing forms and administrative processes, defining specialized products and services for customers and expanding Rial, credit and foreign exchange capacities.

Mazyar FozuniHead of Retail Banking Division

In the strategic view of Saman Bank, retail banking is a service area to customers who deal with the bank through retail deposits and loans. These customers receive services through branches or electronic portals of the bank. Therefore, values they expect include service providing speed and diversity of products. In this regard, in 2015/16, the executive programs of Saman bank were aimed at three main areas to render speedy and qualified services to target customers.

Optimizing Processes and Services

One of our main concerns in 2015/16 was revising and re-engineering the process of opening deposit accounts and providing deposit services to the customers. This concern was addressed for short-term and current deposit accounts. We also revised existing products and changed them in accordance with customers’ expectations such as Win card as a banking deposit tool based on electronic cards which was aimed at encouraging people to use smart cards for daily banking affairs. Additionally, in order to achieve the Trust Principle as a mission of the bank, we developed Trust Funds in terms of quantity and quality for customers to benefit from up-to-dated and secured services. One of our key tasks performed in 2015/16 was optimizing the system of commissions by considering customers’ usage of bank services. In this regard, we tried to prevent additional commissions attributable to customers so that they could select commissions to pay on the basis of services received.

Optimizing Performance of Branches

The bank plan for optimizing branches was focused on three goals including: enhanced accessibility, improved efficiency and optimized spaces. In this regard, based on studies and customers’ feedbacks, we changed location of 9 branches and finished developing and renewing projects of 2 branches.

2,382,9042,040,552

1,806,845

1,379,270

1,045,127863,504792,038645,566

Number of Customers Growth Figure 2

2010-20112008-2009 2011-20122009-2010 2012-2013 2013-2014 2014-2015 2015-2016

Number of customers

Deposit Resources Growth Table 3

Year Deposit Balances Rls (B)

2013-2014 158,151

2014-2015 179,592

2015-2016 211,347

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Optimizing Infrastructures

One of our man plans in 2015/16 was to optimize and enhance the Total Banking Software of Saman Bank and now Faranegin Software, an advanced total banking software, is installed in all branches and necessary learning materials have been provided to the staff. Another infrastructure accomplishment we have reached is changing the system for Chamber of Clearance for all branches from “Clear” to “Chakavak” according to the latest amendments of CBI holding related learning courses for the staff.

We Awarded our Customers

Win deposit (Win card) is one of our most popular products in 2015/16 which was an exclusive product among other competitors and aimed at encouraging people to use electronic banking systems of Saman and other banks. In this way, we granted an amount of IRR 51 billion to 2,468 customers who had used their Win card more than the others. Introducing this product, 70 sale assistants in our branches could absorb more than 68000 Win deposit accounts up to IRR 150 billion.

We were Leading in Banking-Insurance Services

The growing sales of insurance products in Saman branches continued during 2015/16 and led to increase in non-shared incomes absorbing new banking resources through life and non-life insurance sales commission. The growth of non-shared incomes from insurance sales commission and income from life and non-life insurance sales commission is illustrated in the figures:

Insurance Premiums Sold at Saman Bank (IRR billion) Figure 4

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200

150

100

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84

160

200200

2012-2013 2013-2014 2014-2015

Non-shared Income of Insurance Sales Commission (IRR billion) Figure 3

70

60

50

40

30

20

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20

Monthly Growth Trend

linear (Monthly Growth Trend)

Life Insurance Premium Sold

Non - Life Insurance Premium Sold

40

53

57

2012-2013 2013-2014 2014-2015 2015-2016

2015-2016

Looking AheadConsidering the importance of branches in customers’ relationship and selling products and services, we have a wide range of plans for the future. For new customer attracting and deposit absorbing, we will focus on absorbing retail deposits up to IRR 119,601 billion. For reduction in rates of legal deposits, we will try to reduce the cost of IRR term deposits to 12%. In the case of marketing and enhancing current deposits, we will focus on absorbing foreign customers’ deposits in Rials and other currencies. For optimizing activities and structures of our branches, our plans will address efficiency and profitability of branches, improving branch structures to reach target customers and enhancing quality of our services. In the insurance area, we attend to increase consultancy points and services provided to customers as well as increasing insurance premiums sold. For expanding our sales, we have decided to focus on international card as well as increasing sales commission from forwarding customers. to the Saman Brokerage Co. we will also increase issuance of letters of guarantee and credit as well as banking and importing drafts.

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Corporate Banking Since 2011, one of our main visions in the five-year strategic plan was to become the first choice of medium and big sized (domestic and foreign) entities to make international transactions. We initiated this plan by establishing a professional division called Corporate Banking Division. In 2015/16 as the last year of the plan, we reached significant parts of our goals and now big (domestic and foreign) companies perform transactions through Saman Bank services.

Alireza Ma’arefat Head of Corporate Banking Division

We believe that in the business and competition environment, customized services and providing financial service is a value added feature. Therefore, we have always tried to create value in this field and make it a competitive advantage. In 2015/16 while economic sanctions were predominant, one of the most activities of corporate banking in Saman bank was to facilitate international business and establish mutual connections between Iranian and foreign companies. Additionally, Saman bank played an effective role in reducing overdue and outstanding loans as well as protecting innovative entities through emphasizing on cash flows of companies and extension of loans for companies returning to their manufacture cycle after modifying their debt structures.

Saman Corporate Banking, Leader of Businesses in Industrial and Commercial Areas

We have always tried to support manufacturing, industry and business sectors. In this regard, we focused on pharmaceutical products and essential goods so that significant efforts in corporate banking division relates to these areas. All foreign currency transactions amounts reach $. 2,5 billion of which 45 percent equal to $ 1,1 billion belongs to food and pharmaceutical products and 22 percent equal to $ 537 billion belongs to industrial areas.

In the field of granting loans and issuing letters of guarantee, we followed similar policies and allocated IRR 55,000 billion for loans granted through corporate banking of which 22 percent was allocated to food and pharmaceutical companies and 15.5 percent to industrial companies. Additionally, we issued letters of guarantee up to IRR 4,700 billion of which 56 percent 2,630billion was allocated to pharmaceutical products, food and industrial areas.

Agency Bank of National Development Fund

Saman affirmative performance in the international areas led to an important achievement to be the agent of National Development Fund of Islamic Republic of Iran and provide a wide range of Rial and foreign currency services to customers. This was an action for supporting economic participants in industrial mine, tourism and agriculture sectors through granting inexpensive Rial and foreign currency loans. In 2015/16 we could allocate credit lines up to $ 28 billion to Iranian companies. Furthermore, Saman bank has been agent for granting Rial loans through National Development Fund and played an important role in granting inexpensive resources of the Fund to companies taking them out of recession without creating additional inflation. In this regard, loans were allocated to manufacturing companies such as Zagros and Kavian Petrochemical and Aria Diesel Motors Co. up to IRR 400 billion.

Enhancing Efficiency by New Technologies

Since customers’ needs are fundamental principles to us, we tried to develop Saman Corporate Net Bank considering existing demands, international experiences and new technologies. In the first step, we succeeded to render services for credible international and domestic companies.

24-Hours Support of Customers

One of our main plans is to allocate a corporate banking service to each customer in order to provide 24-hours advisory and executive support services.

Chosen by the Greats

One of the main elements of our five-year strategic plan is to become the first-choice of medium and big sized entities. Based on our plans, great international and domestic companies such as Mihan Dairy Products, Iran Nestlé, BAT Pars, JTI, Golrang Group, Turkish Airlines, Maf Pars Hyper Market (Hyperstar), Everest Modern Pars, KLM Airlines, Air France etc. started and continued cooperation with Saman Bank and using our services.

Looking AheadOur achievements in the last five years in service providing to companies has led to new plans and strategies for the 2016/17. We intend to increase income from commissions related to letters of guarantees, develop total corporate banking software, discover new markets, attract new customers, and expand services in the field of oil, gas and petrochemical for the next year. We have planned to grant new loans by IRR 7,963 billion as well as follow up debts reducing overdue debts to IRR 1,101 billion. We have planned to reach amount of IRR 8,400 billion for issued letters of guarantee and $ 1,500 billion for letters of credit, drafts and export pay orders. We also aim at achieving $ 3,006 billion for letters of credit, drafts and import pay orders. In the field of marketing and making new corporate customers of food, pharmaceutical products, transportation, oil and petrochemical industries, we intend to attract 10 foreign and 20 domestic companies absorbing new current deposits up to IRR 1,000 billion.

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International Banking We have commenced extensive plans and efforts since 2011 in favor of the bank strategy to become the first-choice of international banks for effective brokerage and mutual cooperation in order to expand international transactions achieving the most shares of international markets among other private banks in the field of foreign currency exchanges. We never gave up these plans, even in the problematic conditions resulting from economic sanctions. In these years we focused on two visions mentioned above and provided extended and valuable plans and services in the field of import and export activities.

Looking at the Future, the Past Experience as a Platform

Saman’s past experiences and relationships as well as the positive signals of the JCPOA agreement were good news for us about new competitions in foreign currency services. Therefore, we made all our technical and executive capabilities ready to start the competition. After the final agreement and implementation of JCPOA at the beginning of 2016, we were able to expand relationships with correspondents in different countries namely Italy, Belgium, Turkey, France, Spain and the Czech Republic through developing necessary backgrounds and structures. As a result, we increased our correspondents from 253 in 60 countries to 338 in 67 countries in a short period of time.

Maintaining Market Shares in Depressed Economic Conditions

Iran economic experienced a recession in 2015/16. Despite the JCPOA agreements and facilities of international payments, this condition affected Saman Bank activities through reducing imports to the country. However, based on statistical information provided by the CBI, market share of Saman Bank increased from 12.61 in 2014/15 to 14.14 in 2015/16. This is an important achievement of 2015/16. In spite of constraints on imports and exports, Saman Bank could maintain and increase market share in 2015/16.

Saman International Reputation

Saman bank has been a pioneer in foreign exchange, international services and relationship with correspondent banks. In this regard, Saman bank concluded an agreement with Italian SACE Export Guarantee Co. in 2015/16. According to this agreement, cooperating with the company, Saman Bank will be able to grant short-term, mid-term and long-term loans after obtaining permission of the CBI.

Active International Engagement

In addition to expanding relationships with correspondent banks, we had a variety of programs for engaging in international events and expanding relationships with international traders and merchants. These programs involve membership of international Chambers of Commerce which led to expanded relationships with Iranian and foreign merchants. We also contributed to hold different international events in 2015/16 such as Commercial Meeting of Iran and Europe attended by superior economic authorities of the countries. In the last year, Chairman of Saman Bank attended and lectured in Euro Finance Week-the most important annual banking and financial conferences in the Europe- describing Iran and Saman Bank economic capacities.

Hassan DehghanizadehSupervisor of International Banking Division

Comparing Foreign exchange performance of Saman Bank for 2014/15 with 2015/16 Table 3

Growth rate (%)2014-2015 (U$)2015-2016 (U$)Type of sevices

-631,396,202,956518,183,546Import letters of credit

-3520,432,47313,376,366Forex letters of guarantee

-73,835,947,9633,585,331,590Imported payment orders

-274,463,985,8103,267,209,900Exported payment orders

246,267,97747,113,779Forex drafts

3235,508,31946,980,685Student forex currency

1341,485,80346,780,120Passenger forex currency

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Professional in Food and Pharmaceutical Products

In 2015/16 Saman Bank played a critical role in facilitating imports especially essential goods and pharmaceutical products. In this regard, Saman Bank granted $ 394 billion to applicants through the BCP bank for importing essential goods and pharmaceutical products. This amount is about 10 percent of total foreign currency services provided. Saman specialty in Food and pharmaceutical products contributed to import 25 percent of total food and 35 percent of total pharmaceutical products to the country.

Looking AheadConsidering expanded relationships with international banks after the JCPOA agreement as well as increase in issuance of letters of credit, we expect foreign exchange transactions to grow in 2016/17 specially a dramatic increase in letters of export credit. In addition, by signing the SACE agreement and financial contracts with European, Japanese, Korean and Indian Banks, we expect a significant growth of short-term, mid-term and long-term loans. Based on obtained licenses, we have acting plans for opening agency offices in three European countries and set goals for granting foreign currency loans up to $ 500 million.

Premium Banking Based on the five-year strategic plan, our premium banking services are provided to two groups of customers. Offering special products and services, we tried to be the first-choice of target customers in this field namely Samanian and Special Samanian. Our main efforts in this field are focused on providing new and different solutions for banking affairs and making the life and work more comfortable and enjoyable. Being a pioneer in this field, one of our main programs is to offer premium services to customers according to their lifestyle.

Our premier and private customers have limitations in performing their banking and even daily affairs due to their job and social positions. So we are committed to support them having an easier life through developing special services. We are always seeking products and services to address their concerns giving them more opportunities for enjoying life and business. We succeeded to design and develop new services to these customers as well as optimizing existing services in 2015/16.

Portfolio Management

In order to provide financial advisory services to premier customers as well as creating an appropriate opportunity to manage investments, we introduced portfolio management service. In a Private Portfolio Management, cooperating with other professional companies of the Saman Group, Saman Bank invests and monitors the customers’ capital legally and transparently in the capital market based on amount of investment, interests and tolerable risks. The customers are not required to attend directly in the market and they can assign these tasks to our professionals.

Reza Heidari Head of Private / Premiere Banking

28 29


Advisory Services for Customers

Having premier customer offices, branches and skilled staff, we provided investment advisory services to more than 50 premier customers in branches and more than 150 premier customers by telephone tools.

Insuring Customers

One of our premium services for premier customers is rendering full package of insurance services. Such services in 2015/16 include designing insurance services and managing Samanian health insurance claims. We issued 7,278 insurance contracts to premier customers including 5,079 health insurance, 1,632 car insurance, 111 Tadbir insurance, 389 travel insurance and 67 home insurance contracts.

Saman Life Services

In this field, we provide more than usual banking services considering customers welfare. In 2015/16 we provided different services of this type such as 4,050 CIP & Transfer requests, booking 1,626 flight tickets, tours and hotels in Iran and foreign countries as well as issuing foreign currency cards and international driving licenses.

Our New Products for the Customers

In 2015/16, we implemented many programs to develop new services for the customers. Opening new Premium Banking Office in Mashhad, we tried to expand our services in the east of the country. We developed new finance and banking services such as the Boursa and professional economic analytical reports and concluded the structures of portfolio management, coin and gold, fixed income bonds and risky investment services. Money delivering and collecting certain funds is another service we provided. Online travel insurance through Saman Bank website and designing special liability insurance are services we rendered in 2015/16.

Preferred Bank

Assuming the quantity and deposit growth rate as a measure of popularity and attractiveness for the customers, it should be noted that the figures show our success in terms of number of premier and private customers in 2015/16.

45,151 48,562 48,116 46,917 48,211

50,214

49,878

Mar

Mar

Apr

Apr

Mey

Mey

Jun

Jun

Jul

Jul

Aug

Aug

Sep

Sep

Oct

Oct

Nov

Nov

Dec

Dec

Jan

Jan

Feb

Feb

54,696 53,121 53,682 54,674 55,917

5٫265 5٫470 5٫423 5٫266 5٫640 5٫709 5٫832

6٫434 6٫055 6٫281 6٫392 6٫503

Premier Customer’s resources and quantity growth in 2015/16 Figure 5

60,000

50,000

40,000

30,000

20,000

10,000

-

8,000

6,000

4,000

2,000

-

Premier Customers` Resources

Number of Premier Customers

30 31


17,468

237 254

334 324 319 312

74

20,297 20,571 21,38623,261 22,389 22,650

Private Customer’s resources and quantity growth in 2015/16 Figure 6

Looking AheadWe will continue with a variety of programs in 2016/17 for premier and private customers. Our goals and programs for premier and private customers include attracting foreign customers and improving quality and quantity of services particularly asset management services. Other programs include Real Estate management, Farda university insurance, expanding services and website of Saman Reservation Center, developing Application Management Portal, developing Customers’ Club etc. we intend to increase our deposits of premium banking to IRR 21.886 billion and plan for attracting 500 foreign customers.

Investment One of our main concerns in investment division is to consider market needs and provide new services to customers consistent with international markets. Holding this approach in 2015/16 and monitoring market changes after implementation of the JCPOA agreement, we succeeded to expand investment activities as well as innovative visions to investments for the first time. We tried to prepare necessary structures of executive and advisory services for foreign investors interested in Iranian markets.

Our Profitable Portfolio

One of main activities of Saman Bank is portfolio management of investments in securities and exchange market. The Bank investments portfolio involves assets like shares of stocks, investment units of fixed income funds, mutual funds and Islamic treasury bonds. The investment portfolio structure is illustrated in figure 7:

We also acquired treasury bonds issued by the government with more than 25 percent return considering possibility of reduced banking and inter-banking interest rates in the future

.

Dr. Yousefali SharifiHead of Investment Division

Saman Bank Portfolio Structure as at March, 19, 2016 Figure 7

26,000

21,000

16,000

11,000

6,000

1,000

300

150

0

253 238 280 283 291

33/53%

3/86%1/79% 2/11%

45/50%

13/21%

Mar

Mar

Apr

Apr

Mey

Mey

Jun

Jun

Jul

Jul

Aug

Aug

Sep

Sep

Oct

Oct

Dec

Dec

Jan

Jan

Feb

Feb

Number of Customers

Number of Customers

Stocks

Cash and Cash equiavlant

Fix income titles

Joint Investment Funds Department

Islamic treasury bills (ITB)

Credits

Copmarative of Private Customers’ Resources- Rials and Forex

32 33


Fiscal year Cost Average During the Year Total Profit or Loss

Rial (m) Growth (%) Rial (m) Growth (%) Rial (m)

2013-2014 1,435,227 - 719,281 - 467,670

2014-2015 1,235,746 (14) 1,498,038 108 (266,921)

2015-2016 1,139,604 (8) 924,998 (38) 144,472

20/00

15/00

10/00

5/00

0/00

- 5/00

-10/00

-15/00

Saman portfolio value was equal to IRR 922 billion at the beginning of the year and increased by IRR 1.192 billion until end of the year. Consistent with value reducing policy in the previous year, the portfolio structure changed and shares of leading industries increased resulting in profitability and mitigating losses for the ending months.

Regulations and Frameworks

We always care about compliance with requirements of regulations issued by regulatory bodies. In this regard, we transferred 28 percent of Saman Kish Electronic Payment Co. ownership to Refah Bank at the end of 2014/15 according to the law on Removal of Limitations from Competitive Production. In the first months of 2015/16, we reduced Saman Bank ownership in the company to 65 percent. In addition, according to the CBI regulations for investments, we planned selling Saman shares of stock in the Stock Market through Saman Brokerage Co. and Saman Exchange Co.

Saman Bank portfolio return compared with Market indices is illustrated in the following figures from 2013/14 to 2015/16:

Mar

ch-2

012

Apri

l-20

12

May

-201

2

June

-201

2

July

-201

2

Augu

st-2

012

Sept

embe

r-20

12

May

-201

3

June

-201

4

Janu

ary-

2013

Febr

uary

-201

4

Oct

ober

-201

3

Sept

embe

r-20

13

Oct

ober

-201

4

Oct

ober

-201

2

June

-201

3

July

-201

4

Febr

uary

-201

3

Mar

ch-2

014

Nov

embe

r-20

13

Nov

embe

r-20

14

Nov

embe

r-20

12

July

-201

3

Augu

st-2

014

Mar

ch-2

013

Apri

l-20

14

Dec

embe

r-20

13

Dec

embe

r-20

14

Febr

uary

-201

5

Dec

embe

r-20

12

Augu

st-2

013

Sept

embe

r-20

14

Apri

l-20

13

May

-201

4

Janu

ary-

2014

Janu

ary-

2015

Saman Bank Investment Portfolio Indicators Table 4

Comparing Saman Portfolio Performance with Market Performance from 2013/14 to 2015/16 Figure 8

Serving the Foreign Investors

Saman Bank as a trustee, delivers services to interested foreign investors by means of:

• Performing registration processes in Stock Exchange Market and obtaining Exchange code;

• Opening Rial and For-ex accounts for the customers;

• Safekeeping assets or securities such as bonds, mutual fund investment units etc;

• Performing processes of selling and buying assets for the customers;

• Calculating and reporting net value of customers’ assets periodically;

• Attendance in annual general and extraordinary meetings of companies as agency service for the customers;

• Performing dividend receiving, capital increase etc. processes.

Portfolio Performance Bourse Index

34 35


Consulting Foreign Investors

As a result of our capabilities in fore-ex and domestic executive capacities, we started serving international companies interested in Iran markets for the first time. Consistent with this, our consultancy services for developing business and investment in Iran include the following:

Saman Bank Investment in Saman Group Companies

Saman group consists of companies established or acquired partly by Saman Bank from 2003 to 2014 to meet its own and customers’ needs. These 13 companies are directed independently under supervision of Saman Bank.

• Providing optimized strategy for allocating assets

• Consulting business mergers and combinations

• Consulting Private Equity

• Consulting Joint Ventures

Looking AheadOne of our plans for income from commissions and fees relates to income from investment services aiming at IRR 255 billion. We also have an important project for a 100% growth rate in building infrastructures and obtaining licenses for rendering investment services.

Company Name Main Activity Capita Rial (B) Saman Bank’ Ownership Net Profit or Loss

IRR billion % Rial (M)

Saman Kish Electronic Payment

Electronic payment-systems supplier 900 65 313 ,748

Saman Satellite Communications Group(Saman SCG)

Data transfer & satellite telecommunications 15469

(Direct & Indirect)49 ,923

Saman ExchangeForeign exchange & money-order

services219 96 169 ,589

Saman Insurance Insurance services 618 15 277 ,970

Saman Brokerage

Shares & bonds trade, market making,

investment, listing,&

admission-advisory services

30 64 3 ,635

Hafez Saman Iranian Credit Scoring

Credit rating, debt collection 24 99 24 ,531

Saman Processing (Pardazeshgaran)

Design, development,& support of core

banking-based products & tools100 100 13 ,418

Tondar Nour Softwares (Subordinate to Saman Processing)

Import, design, production, support,&

development of hardware products,

esp. banking-card readers

2 ,7

100 (Indirect through Saman

Processing) 4 ,166

Aftab Tejarat SamanManagement,& organisation of

servicing activities0,1 15 6 ,027

Kardan Investment Investment, finance 1,28033

(Direct & Indirect) 543 ,932

Adonis (Subordinate to Saman Processing)

ITC, electronics,& computer 15027

(Indirect through Saman Processing)

82 ,582

Atieh Andishan Sepehr Shargh

Investment in TSE-listed&

non-listed companies0.01 100 2 ,687

Financial Performance of Saman Group Companies in 2015-16 Table 5

36 37


Saman Kish Electronic Payment Company

This Company was founded in 2003 to supply electronic systems including ATMs, internet-banking kiosks, POS solutions and develop computer and telecommunication structures and offer electronic commerce services. As the first provider of online-payment services in the country, Saman Kish played a critical role in establishing Saman Bank as a leading in electronic banking during its first decade of operation. Major achievements of this company during the last year include obtaining 35th place in ranking of Nilson Reports among 150 top e-payment companies around the world, winning the three-stared National Award of Organizational Excellence, obtaining 296 ranking place among 500 top Iranian companies, and obtaining Information Security Management Certificate ISO27001:2013.

Saman Exchange Company

As the first foreign exchange company to be registered in Iran as a subsidiary of a privately owned bank, Saman Exchange was founded in 2004 to develop banking and financial services including foreign currency exchange and transfer and related advisory services. The net profit of the company increased from IRR 34 billion to IRR 170 billion during the last year due to growth in foreign currency transfers, reduced financial expenses and growing non-operating incomes from collecting prior years’ debts.

Saman Insurance Company

In 2004, Saman Insurance Company was established after obtaining its license from Iranian Central Insurance Organization. Now, this company provides a complete set of insurance services. In 2015/16, Saman Insurance company obtained the 210th ranking among 500 large Iranian companies from the Industrial Management Institution, C ranking in Risk Management from the Professional Insurance Association, “Optimal” or “level 1” ranking among insurance companies of Central Insurance Organization for three consecutive years.

Saman Brokerage Company

Saman Brokerage Company was originally established in 1993 as Kerishchi Brokerage Company, the first brokerage firm in Iran. This company was renamed to Saman Brokerage Company in 2006 when Saman Bank purchased 49% of its shares. The company provides brokerage services such as listed stocks and securities, portfolio management, market-making, and investment and listing advisory services. Regarding foreign policy and nuclear negotiation successes in 2015/16, Saman Brokerage has established international division and developed the English language website.

Saman Satellite Communications Group

This company started operations in 2004 providing data transfer, satellite telecommunications, and satellite teleports. In 2015-16, this Company succeeded to obtain 90% of total demands for satellite telecommunications making the largest market share since its establishment.

Hafez Saman Iranian Credit Scoring Company

Registered in 2007, the Hafez Saman Iranian Credit Rating Company started operations in the field of credit rating under an Experian Co. license. The Hafez Saman Iranian Credit Rating System was established in Saman Bank branches providing credit reporting tools about individuals and companies since 2011. In 2013 the company established a debt collecting division concluded new contracts of managing Saman Bank’s properties and following up debts for Saman Bank and Saman Exchange Co. In the reporting year, the company concluded credit rating contracts with Modiran Khodro, Saipa and Hami Iranian Consultancy companies.

Saman Processing Company

The Saman Processing Company was created in 2010 to design, develop and supportCore banking-based products and tools required by the Bank. The Saman ProcessingCompany also designs and develops comprehensive business systems, business procedure re-engineering systems (BPR) and management advisory services related to managing and utilization of modern banking technologies and automation and operating administration systems. In 2015/16, the company obtained the first rank of High Council of Informatics.

Tondar Noor Software Company

Established in 1990, Tondar Noor was registered with the Companies Register Office in 1994. In 2010, ownership of Tondar Noor was transferred to Saman Processing Company. This Company operates in the field of import, design, production, support, and development of hardware products, especially banking-card readers.

Aftab Tejarat Saman Servicing Company

Aftab Tejarat Saman Servicing Company was established in 2011 to supply Saman Bank with administration and overseeing all human resources services. Now this company is responsible for a portion of the Bank’s logistics services including technical affairs, repairs, maintenance, and branch utilities.

Adonis Electronic Services Company

Adonis Electronic Services was established by Saman Bank in 2012 to provide sale and after-sale services for electronic systems, particularly ATMs. Pasargad and Mellat banks later joined as shareholders. Adonis is a subordinate company to the Saman Processing Company. Since Saman Bank owns 100% of the shares of Saman Processing Company, it also owns 24.2% of Adonis indirectly.

Kardan Investment Company

Saman Bank established Kardan Investment in 2013 with cooperation of Tejarat and Middle East Bank, after obtaining related license from the Higher Council of Stock Exchanges and agreement of the CBI. The purpose of Kardan is conducting investment, corporate finance, and lending services. Kardan Investment benefits from the competitive advantage of three commercial banks that serve as its main shareholders and from its extensive international-finance knowledge and experience. Consequently, the Company is in a strong position to offer excellent customer service and to pave the way for international corporations into the Iranian markets.

38 39


Retail and Syndicated Loans Optimum allocating of Bank resource to new markets and efforts to enhance effectiveness of retail and syndicated loans needed a professional view which became a fundamental priority of the bank in the last five years. Based on this goal, we tried to have an active role in targeted markets through establishing retail and syndicated division. The professional view to the credit market led to a precise understanding and quick and purposeful responding to the targeted markets.

Reza Shirin GoharianHead of Retail and Syndicated Loans

2015/16 was a difficult year for the Bank in terms of credits in business fields. Constraints due to economic sanctions faced management of small and business entities with liquidity crisis and lack of working capital so that most of the entities failed to pay their obligations leading to a slow flow of liquidity in the country and the Bank. Understanding the economic conditions as well as cooperating with the CBI as the policy setting body, Saman Bank tried to manage its resources best supporting small and medium sized entities and helping them collect debts and get out of crisis. Saman Bank has special programs for marriage, Relief Foundation and Welfare Organization loans.

Providing Working Capital for Small and Medium Sized Entities

One of our main priorities in 2015/16 was to grant short-term (up to one year) loans to supply working capital of small and medium sized entities in all economic sectors such as mercantile, service, housing, agriculture and mines. According to the CBI Directive, financing small and medium sized entities in order to help them get out of recession became a priority for Saman Bank. Financing an amount of IRR 15,752 billion for small entities (those with less than 50 employees) as well as financing an amount of IRR 3,555 billion for medium sized entities (those with more than 50 and less than 100 employees) is results of our services in the Retail and Syndicated Credit area.

Variety of Loans Granted

We design different credit products based on customers’ needs to enable them continuing their operations without concerns. In 2015/16 we provided our credit products in the areas such as granting loans for work offices, housing materials, equipment and providing credit lines to all customers.

Consistent with our priorities, we served brokerages and financial intermediates to support market participants particularly Securities Exchange market by granting IRR 135,000 billion equal to 28.7 percent of total securities trades. Therefore, we played a critical role in financing participants of the capital market.

We also continued financing POS solutions holders to increase electronic services. In this field, we granted loans more than IRR 700 billion with competitive and below market rates to POS holders.

40 41


Interest-Free Loans Tendency

We helped and supported the youth marriage through providing an amount of IRR 50,000 billion interest-free (Quard Hassan) loans to 1982 dependents of Imam Khomeini Relief Foundation and Welfare Organization in 2015/16. We also allocated an amount of IRR 60,000 million and IRR 30,000 million interest-free loans to dependents of Imam Khomeini Relief Foundation and Welfare Organization respectively.

Active in Issuing Letters of Credit, Foreign Currency Pay Orders and Letters of Guarantees

One of our best achievements in Retail and Syndicated Credit area is performing an amount of $ 900 billion foreign currency transactions through foreign currency branches. This amount is equal to 28 percent of total foreign currency transactions amount of the Bank and 55 percent of total letters of credits and pay orders issued by the bank. In 2015/16, issuing an amount of IRR 2,925 billion letters of guarantee, we succeeded to cover 40 percent of total performance of the Bank in issuing letters of guarantee increasing the bank’s income from commissions.

Emphasize on Continuous Improvement of Processes

In the field of credits, we require ourselves to optimize working processes in accordance with the customers’ needs and market conditions. Holding this view in 2015/16, we revised internal credit rating process of consuming and professional individuals in Saman Bank. Relying on trained staff and electronic infrastructures, we reviewed and revised the existing credit processes to facilitate credit affairs.

Active in Following and Collecting Debts

IIn terms of debt collecting, we have performed a wide range of activities such as obtaining permissions from the Board of Directors for extension of customer’s loans in accordance with the CBI directives on collecting non-current debts in order to reduce debts and increase bargaining power of branches in relationships with indebted customers. Therefore, we extended loans for deserving customers to help them get out of temporary problems.

We also revised the structure of debt follow up division and established a concentrated office for following up debts resulting in improvements. Our professional approach to debt follow up led to continuous and effective following up debt, identification and planning for resolving problems in particular areas or branches, training the staff and assistants to improve the process of debt following.

As a result of our follow up using the above approach, we reduced overdue and outstanding debts in Retail and Syndicated Credit area from IRR 1.639 billion in March, 2015 to IRR 598 billion in February 2016. The descending trend is illustrated in the following figure:

overdue

Debt trends in 2015/16 Figure 9

Looking AheadStudying on different syndicates and markets from 2014 to 2015, we succeeded to identify targeted syndicates with the most return on investment and the lowest risk in their business. We intend to attract owners of these businesses in 2016/17 through our branches and grant purposeful loans to retail and syndicated areas. Therefore, we have allocated an amount of IRR 7.700 billion for granting loans to individuals and companies (small and medium sized entities) in targeted markets. In order to reduce credit risk and optimal allocation of resources, we intend to change the credit process aiming at reducing credit risk and non-current debt, identification of other low risk syndicates capable of expanded relationships with the Bank, automation of reception, credit rating and granting process through the Total Loan Generation Software. One of our important activities finishing in 2016/17, is the project of concentrating customers’ credit rating process and automating foreign currency credit process. Our goals in 2016/17 include granting an amount of IRR 11.095 billion new loans, collecting an amount of IRR 2.100 billion of overdue debts, issuing an amount of IRR 5.600 billion letters of guarantee and opening an amount of $ 2.003 billion letters of credit, drafts and foreign currency pay orders.

In addition, considering the importance of exchange between money and capital markets in the economy and our goal to increase Saman bank’s share of market, we intend to finish the project of membership in the Clearance Chambers of Securities Exchange and Central Securities Depository of Iran (CSDIRAN) as representative of brokerage companies active in Securities Exchange and setting up Portfolio Management System approved by the Securities Exchange Organization.

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

0

Mar

ch-2

015

June

-201

5

Sept

embe

r-20

15

Dec

embe

r-20

15

Apri

l-20

15

July

-201

5

Oct

ober

-201

5

Janu

ary-

2016

May

-201

5

Augu

st-2

015

Nov

embe

r-20

15

Febr

uary

-201

6

1,639

2,057 2,2912,500

2,444

2,5532,955

3,767

3,396

2,692

1,689

598

42 43


Electronic Banking Iranian people know Saman as the leading Bank in developing electronic banking tools. This is as a result of significant investments in this area from its establishment. In order to synchronize with technology improvements as well as respond to customers’ needs continuing leadership among our rivals; we set a principle to be the first-choice of branch customers focusing on electronic banking services in our strategic plan five years ago. This approach led to develop non-attending services through digital portals increasing peoples’ accessibility levels. Stability of electronic services through different channels needs continuous efforts to achieve international standards keeping the desired level of quality and continuous enhancing of hardware and software. In addition to the Trust principle in the Bank’s Mission statement, we always focus on security in banking systems and act to achieve defined goals.

Abbasmirza Nayeri Head of Electronic Banking

Available Everywhere

Increase in availability and customers’ easiness is one of our key goals and we succeeded to prepare necessary basis for this goal in terms of quantity and quality aspects in 2015/16. Based on statistics, by the end of last year, number of users is as follows: 782,072 for Net Bank, 453,301 for Samanak app and 837,730 for Telephone Bank. Number of POS solutions is 201,000 and we have 1,303 ATMs. Our efforts led to obtain the first rank in number of out of branch ATMs among Iranian banks and the second rank in ratio of transactions to number of POSs among e-payment service providers. These achievements show our vision to accessibility of Saman Bank services to the customers in terms of quantity and quality and rendering high quality services and continuous support of users.

Mobile Banking is a Priority

We have always tried to follow the global trend of banking technologies. Therefore, we developed an appropriate executive and investment capacity for mobile banking. Holding this approach in 2015/16, we succeeded to upgrade and provide our new Samank (a banking app). We also issued a software hub called Samanyar in accordance with global standards by which we will provide all our banking applications to the customers. Our apps are developed for different operating systems.

Winning the Stared Quality Certificate

We won the Stared Quality Certificate in the 5th ICT National Quality Award on Electronic Banking. This award is established by the Iran’s Ministry of Communication and Information Technology. It is held annually to select and introduce top companies in communication and Information Technology in accordance with the National Model for Quality Assessment.

New Banking Services for Businesses

One of our executive programs in reported year was to increase flexibility of Saman Bank for providing new banking services to different companies based on electronic banking solutions. To do this, we performed a variety of tasks including rendering school smart cards services, developing website for money transfer and statement, developing ATM detailed reports, developing BANKSA service and linking with four software companies in the field of online trading, automatic and online debit service for Irancell credit sim cards, direct debit service for Irancell constant sim cards and ID payment services. Consistent with the removal policy of cash from our lives, we also set up Cashless Devices rendering all ATMs’ services to customers except for cash delivering with much less costs compared with ATMs.

Effects of New Regulation on our Performance

According to the CBI directive on payment of commission to e-payment companies by the banks on POSs transactions, banks are required to pay 1% of transaction amount (from IRR 500 to 2500) for services, equipping and improving infrastructures. Considering 201,000 active Saman bank’s POSs, this directive made an amount of IRR 204 billion for the last three months of reporting year. Constraints imposed by the CBI on credit cards and requirement of MAKNA code (a code issued by the Center for Control and Monitoring Credits) led to 95% decrease in issuing credit cards comparing to the previous year.

44 45


Effects of Economic Recession on Electronic Banking Services

Economic recession and decrease in welfare budgets in 2015/16 led to decrease in demands for gift and benefit cards by organization and companies granting gifts and benefits to their employees through these cards. This led to 21% decrease in sales of gift cards and 35% decrease in sales of benefit cards comparing to the previous year.

Comparing Benefit and Gift cards issued in 2014-15 and 2015-16 Figure 10

Looking AheadIn 2016/17 we will plan and act to change the Net Bank version. Additionally, we intend to increase accessibility to online banking portals through enhancing network and hardware infrastructures. We have decided to perform effective tasks in mobile banking to improve electronic banking services. For the next years, we have a wide range of plans such as optimizing POS network participating with Saman E-payment company, developing smart schools network, developing mobile based services in Samanyar hub, increasing services available through ATMs, developing Net bank services, installing cashless devices, setting up Auto Cash Receiving Machines, setting up Cash Recycler Machines, increasing number of ATMs, developing new electronic cardless services, developing ID payment services through electronic portals.

One of our main plans in 2016/17 is to increase the per capita income from ATMs commissions up to IRR 450 million through service quality changes and physical movements. We will also install 100 new ATMs.

Human Capital During the last five years, our main Human Resource strategy has been to become the first-choice of talented employees. For this purpose, we had to adapt our quality level to international standards. Hence, establishing process management system in the mid five-year plan, we succeeded to obtain the ISO 9001:2008 Quality Management Certification from TUV NORD of Germany in 2015/16 and pass related audit period successfully.

Fereshteh Zarrabieh Head of Human Capital

200,000

100,000

-

1,500,000

1,000,000

500,000

-

117,723

No. of Gift cardsNo. of Benefit cards

76,776803,938

1,017,236

2015 20152016 2016

46 47


1454

52,353

26,083

43,052

7,678

1506

2008

Branches in Tehran

Other Provinese

Head Office

Early Employment

2009

2010

2011

2012

2013

2014

2015

1618

1952

22312425 2509 2475

528 - 21/3 %

245 - 9/8 %

104 -4/2 %8 - 0/3 %

1590 - 62/4 %

Human Capital

In 2015/16, 75 new colleagues joined us and our staff number reached to 2475 people. In order to employ new staff, we perform merit-based, professional and human capital interviews among volunteer and selected applicants. Additionally, in order to identify the most competent staff for organizational positions, new tools such as assessment focus were used in the process of job promoting. It should be noted that consistent with aligning human capital processes with assessment focus in designing and implementing merit-based interviews, the Merit Charter has been developed.

Training and Development

Human capital division cooperating with Saman Academy planned and implemented merit-based (behavioral) training courses in order to institutionalize organizational culture, creating a common understanding and communicating accepted behaviors as well as enabling employees in desired skills. In order to enable the employees in professional areas and eliminating their lack of knowledge and skills due to changing conditions and market needs, the division also performed training needs assessment based on the bank’s goals and strategies, divisions goals and job position details by department and individuals. Aiming at reducing costs and managing time, in 2015/16 we established non-attending (e-learning) structures leading to 100% decrease in holding expenses of periodical exams and 88% executive expenses of training courses.

International Training Cooperation

Saman Academy is responsible for designing and implementing bank’s needed executive long-term and professional short-term courses. Cooperating with Grenoble University, in 2015/16 the Master Degree course in International Management was finished by 22 employees. In order to access international knowledge and professional banking skills, Saman Academy has implemented professional courses cooperating with well-known institutes and professors of banking and management described in the following table:

Organizational Culture

In 2015/16 some actions have been performed in the field of enhancing, communicating and encouraging organizational culture which includes optimizing the Merit Charter through holding attending and non-attending training courses, encouraging an appropriate culture in the Bank and contributing to its establishment by feedbacks received, training and other organizational tools (defining and implementing administrative expense management project to improve profitability), implementing 5S in the Bank in order to create stylish and arranged working places and developing a common and comprehensive disciplinary system.

Number of Saman employees in the last eight years Figure 11

Training Activities of Saman Bank in 2015-16 (Individual-Hour) Figure 13

Number of Saman employees at the end of year by educational degrees Figure 12

Professional Training Courses held Table 5

Course Title Location Holder Facilitated BY

New Methods of Management and Leadership Paris, France FNEGE

Performance Management and Control Saman Academy FNEGE Fredric Bertrand Prof.

Credit Analysis Saman Academy EUROMONEY Prof. Serge Vidal

Key Factors for Risk Management In Banking Saman Academy FNEGE Prof. George Chappatteau

Anti-Money Laundering Saman Academy FNEGE Prof. George Chappatteau

Professional Banking Courses of RBA Saman Academy RBA

Looking AheadWe have planned number of projects for human capital in the next year. We intend to revise the Quality Control System ISO 9001 based on the 2015 version, implement and finish the 5S project, rank organizational positions of office divisions and revise job position details of office divisions, hold professional training courses for retail banking and anti-money laundering, conclude a contract with a reputable international institute for international exams and training international teachers of retail banking and finally implement the Total Human Capital Software.

Our operating goals in the next year includes: revising and correcting the process of employment, planning for increase satisfaction with the compensation plan, improve employees’ loyalty and commitment, enhance employees’ general and professional knowledge, enhancing managers’ professional banking and non-banking knowledge, enhancing knowledge of employees engaged in compliance of internal regulations of the bank with international and anti-money laundering regulations, improving training management process and its sub-processes, reducing the bank’s operational risk by correct documenting in branches, reducing administrative expenses, revising and improving human capital processes, holding training courses for organizational culture and behavior and merit-chart, trying to improve employees’ health by periodical medical tests.

3000

2500

2000

1500

1000

500

0

60,000

50,000

40,000

30,000

20,000

10,000

0

Dimloma and below

Associate Degree

Bachelor Degree

Master Degree

Ph.D

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Social Responsibilities As a responsible company, we always commit to fulfill our social duties protecting the financially or socially weak people. In 2015/16, like previous years, the bank focused on social responsibility programs cooperating with charities and supporting cultural, educational, health and sports affairs.

Fereshteh ZarrabiehCharity Affairs Manager

Educational Participation and Support

One of the Social Responsibility areas focused by Saman Bank is to support children and teenagers preventing their school dropout due to financial problems. In this regard, we financed schooling of 90 people (including 28 university students) through the Children Foundation and a number of university students through Sepehr Charity. We also finished the project of building a six-classed school in Rahdar village of Boushehr Province with an amount of IRR 12 billion direct investment of the Bank.

Health and Medical Support

Cooperating with the Zanjireh Omid Charity, in 2015/16, Saman Bank financed heart surgery expenses for 50 children, charity market affairs, medical equipment purchase for the children health-care center and orthopedic division. In the reporting year, Saman Bank also paid for New Year clothing of children by Behnam Deheshpour Charity, establishing IMRT services in Radiation Oncology division of Shoahadaye Taajrish Hospital. We also financed daily expenses of some under six years aged children dependent to Sepehr Charity. Other activities in this field include paying expenses of bone marrow transplant surgery of a teenager come down with blood cancer through Nikan Mamout Charity.

Sport Sponsorship

One of our programs has been influencing the trend of a popular sport namely Volleyball since 2013 which was aimed at 2016 Olympics Qualification. We continued our sponsoring of Iranian National Volleyball Team which resulted in reaching the 2016 Rio De Janeiro Olympics in early 2016.

Looking AheadWe have good programs in progress for the next year. We intend to finish civil activities of building a school in Delfan village of Lorestan Province. We will start planning for building a 12 classed school. According to our contracts with charities, we intend to finance schooling, birthday and New Year expenses for 90 children dependent to the Children Charity Foundation. We will also finance bone marrow transplant surgery of 20 children introduced by the Zanjireh Omid Charity. We will also cooperate with Behnam Deheshpour Charity to finance equipment and New Year expense of children as well as financing 10 students dependent to the Arasteh Charity.

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Risk Management In order to reach the best results and the most benefits for the stakeholders, we pay high attention to identify and analyze potential risks of business. We have an effective look to risk management in Saman Bank and focused our attempts on two main policies including compliance with the CBI procedures and approaches as well as enhancing to comply with Basel II controlling level.

Morteza HosseininejadRisk Management Office Supervisor

Risk Management Chart in Saman Bank

Risk management office is responsible for developing and monitoring risk management policies. In order to manage risks effectively, Saman Bank has developed a risk management chart by establishing a High Risk Committee and a Risk Office illustrated in the following figure. As a subordinate to the Deputy Monitoring, the Risk office is responsible for executing the Risk Committee Directives.

The High Risk Committee monitors existence, accuracy and adequacy of policies and procedures of manage, control and response to risks affecting the bank activities. The committee is mainly responsible for monitoring internal control compliance with the CBI framework, execution of the Committee and the Board Directives about risks as well as monitoring the Capital Adequacy Ratio level and improving reputability of the bank. The results and outputs of the committee actions are communicated to the Board of Directors through Monitoring and Guidance Reports.

The Risk Office has been established to serve as an executive power of the High Risk Committee to comply with the CBI requirements and prepare conditions for implementing the Basel Committee guidance as well as identifying and reporting the major financial risks emphasized by the Basel Committee including Credit, Liquidity, Operational and Market risks to the Risk Committee, CEO and related Committees. According to the chart, the Risk office is subordinate to the Deputy Monitring. This office performs plans to achieve goals on the basis of the High Risk Committee directives.

Saman Main Strategies of Risk Management

• To comply with Capital Adequacy requirements in accordance with standards issued by the monitoring bodies.

• To comply with Liquidity Ratio requirements in accordance recommendations issued by the monitoring bodies.

• Defining the Optimal Credit Portfolio and plan for achievement.

• To comply with Foreign Currency Positions in accordance with standards issued by the monitoring bodies.

• To price loans based on risks.

• Enhancing infrastructures for operational risk management in accordance with the Basel Committee

advanced approach.

Risk Management Chart Figure 14

Board of Directors

Top Management

High Risk Committee

Deputy Monitoring

Risk Office

52 53


Incidents Identification and Risk Assessment

Identifying incidents which impact the bank’s achievement to strategic goals, include identifying credit and operational risk incidents in accordance with Risk Management Framework. In 2015/16, as an important achievement initiated in previous years, the risk office employed quantified and qualified approaches to risk assessment. Some new issues are addressed in the next sections.

Liquidity Risk

Liquidity risk means the possibility of a credit institute failure to finance repayment of liabilities and obligations and increase of assets; based on the definition, the most important actions performed for liquidity risk management are as follows:

• Extracting Static and Dynamic Liquidity Gap for main foreign currencies using market approach;

• Calculating Liquidity Coverage Ratio (LCR) in accordance with Basel III;

• Preparing Liquidity Report using market approach;

• Performing Crisis and Sensitivity Test;

• Monitoring Rial resource changes to manage resource risk;

• Net Stable Funding Ratio (NSFR);

• Monitoring foreign currency resource changes to manage resource risk;

• Estimation of applicable resources for future time periods to plan resource usage;

• Analysing resources according to RFM approach.

Credit Risk

Credit risk is defined as possibility of financial loss as a result of the counterparty failure to repay their liabilities fully or partly on a timely basis. According to the definition, the most important actions performed for credit risk management are as follows:

• Assessing loans credit quality and collaterals quality;

• Evaluating debt concentration and collected amounts;

• Calculating credit risk elements on the basis of Basel II agreement;

• Calculating necessary Capital for covering credit risk on the basis of Basel II agreement;

• Reviewing and improving the system of customer credit rating in case of credit cards.

Market Risk

Market risk or value exposed to market risk is defined as the risk of uncertainty in revenues from trading portfolio of a financial institute as a result of changes in the market conditions including asset prices, interest rates, market volatility and liquidity. According to the definition, the most important actions performed for market risk management are as follows:

• Assessing the Bank Stock Portfolio;

• Continuous monitoring of foreign currencies fluctuation ranges and considering profit or loss from foreign currencies fluctuations in calculating the portfolio return.

Operational Risk

Operational risk means such risk as resulting from improper and inadequate processes and methods, internal individuals and systems or occurrence of the events external to a credit institution. Therefore, the most important measures to take in terms of operational risk may be defined as follows:

• Analysing operational risks of Rial loans as well as identifying main operational risk factors;

• Estimation of operational loss of Rial loans;

• Calculating the necessary Capital for operational risk coverage in accordance with base index approach;

• Designing and developing a database for operational losses;

• Analysing operational risks of foreign currency loans as well as identifying main operational risk factors;

• Estimation of operational loss of foreign currency loans;

• Identifying main internal and external operational incidents of collecting debts.

Saman Risk Indices StatusLiquidity Risk Indices

There are indices monitored periodically including: Ratio of liquid assets and equivalents to total deposits, the maximum range of fluctuation for the ratio, maximum individual ceiling in the inter-banking market, maximum total ceiling in the inter-banking market, focus on banks credit rating system and their credit ranges in the inter-banking market, maximum deposit absorbed from an individual, concentration indices and policies of reducing concentration of deposits, maximum tolerable volatility of items in balance sheet and profit or loss statement, maximum tolerable ratio for individual foreign currency volatilities and total volatility, maximum tolerable range of volatility for the above ratios, maximum acceptable amount for obligations of each individual foreign bank and total foreign banks.

Considering past experiences of the International Banking Committee from the 2007 Crisis leading to liquidity ratio requirements of the Basel Committee, the LCR has been cared by the bank. The LCR is calculated monthly in the bank and approved by the Committee of Assets and Liabilities and approximates assets ability to cover resource outflows for a 30 day period.

54 55


Credit Risk IndicesThe main indices monitored periodically in this field include ratio of collaterals coverage and current amount

exposed to risk. Other indicators monitored in this field consist of individual maximum ranges, related parties,

concentrating, collateral concentrating, maximum ratio of syndicated loans, and assessing overdue, outstanding

and doubtful debts and maximum tolerable rate for the bank.

Market Risk IndicesThe main indices monitored periodically in this field include calculating value exposed to risk of stock and foreign

currency portfolio. Other indicators monitored in this field consist of defining tolerable limits and alarms for

market volatilities, resolving solutions, related responsible officials and necessary executive actions.

Operational Risk IndicesNecessary capital for operational risk coverage is calculated by the Base Index Method. Furthermore, operational

risk in credit area is monitored and reviewed by identifying indices and assessing instances of operational risk and

determining resources exposed to operational risk.

Control ActivitiesIn order to manage risks effectively in Saman Bank, a set of controlling activities have been defined in each

working level. The Internal Auditing and Monitoring division periodically tests risk management activities in terms

of compliance with the standard framework and provides necessary feedbacks. The High Risk Committee and Risk

Office are responsible for periodical revising of credit rating systems.

Information and CommunicationA most important pillar of efficient risk management is availability of sufficient information in financial and

operational areas. Therefore, in Saman Bank a systematic framework for collecting information and receiving

reports from the concentrated banking system and divisions has been developed.

MonitoringContinuous monitoring of identified risks and assuring their consistency with tolerable levels of the bank are

necessary for effectiveness of risk management system. Continuous monitoring leads to early identification

and timely correction of deficiencies in risk management framework. Hence, the cycle of identifying, assessing,

controlling and monitoring is strongly followed in Saman Bank to achieve an efficient system of risk management.

Looking AheadWe will establish subordinate committees for managing and reporting risks to the High Risk Committee, continuing our executive actions of risk management in the next year. We will try to improve effectiveness of risk management at bank level through implementing Total Risk Management System. We will focus on those elements of risks management which need improvements. We also intend to develop a Database for operational loss making incidents to collect and record loss data in all business lines.

Corporate Governance Dear Saman Bank ShareholdersWe have implemented effective Corporate Governance mechanisms in Saman Bank in accordance with principles and recommendations of the Basel Committee and CBI procedures and practices. Corporate Governance defines the relationships among the Board of Directors, managers, shareholders and all other stakeholders. This mechanism defines a framework for developing organization’s goals and determining tools for goals achievement and monitoring performance. Beyond the various cultural, legal and economic structures of countries, the four fundamental pillars of corporate governance are equity, transparency, accountability and responsibility. Considering the critical role of banks in financial intermediation, possible effects of inefficient corporate governance, and the need for protection of depositors’ and other stakeholders’ funds, corporate governance has a great importance for Saman Bank.

Vali ZarrabiehChairman

Corporate Governance StructureGeneral Meeting of Shareholders

The general meeting of shareholders is held each year and provides an opportunity for shareholders to review financial statements and other reports of the board, independent auditor and legal inspector report. Each year, the full performance report of the bank is prepared and issued for all stakeholders as “Annual Report” in Persian and English languages. The board of directors is responsible for protecting shareholders’ rights in accordance with existing regulations and appropriate polices. These rights include:

• Attend and vote in general meeting of shareholders;

• Accessibility to the bank information on a timely and continuous basis;

• Acquisition and registration of shares and transferring shares;

• Benefit from the company profits.

According to the developed arrangements, the board of directors behaves all shareholders similarly. Processes and practices of holding the general meeting bring an equal opportunity for all shareholders.

56 57


The Board of DirectorsThe bank board of directors is composed of five primary members elected by the general meeting of shareholders for two years. In the first meeting of the board members, chairman and vice chairman are determined. The board meetings are formalized by attendance of four members. Practicable and efficient policies in responding to and reducing conflict of interests are of great importance to Saman Bank. Hence, there are transparent procedures to respond various conflicts of interests available for the management. Transactions between the bank and board members or companies in which they are shareholders or managers are instances of conflicts of interests. These transactions are reviewed and approved by the board members without participation of the beneficiary member. These transactions are disclosed in the financial statements clearly and completely without any exception and auditors inspect these transactions precisely in terms of compliance with legal requirements. Then results are communicated to shareholders and their votes are obtained. Granting any kind of loans to related parties is in accordance with the CBI directives and under close monitoring of internal and independent auditors. Additionally, details of these transactions are provided to the CBI inspectors periodically.

The board is informed of loans granted to the top managers and will approve it if necessary considering the bank’s health and safety policies. According to the Commercial law articles, the beneficiary manager is not participated in the approving of loans granted to related parties.

Authorities and Responsibility of the Board

According to the Basel Committee principles and CBI recommendations, Saman bank follows these principles in setting policies and practices for corporate governance:

Independent Auditor

The annual general meetings of Saman Bank chose the reputable independent auditors approved by the Iranian Association of Certified Accountants (IACPA) and the CBI. The High Audit Committee helps improve accessibility of auditors to documents and information they need ensuring that fair and real performance of the Bank is reflected in the financial statements.

The shareholders have selected Sokhane Hagh Audit firm since 2012 as the bank’s independent auditor and legal inspector. Sokhane Hagh is a reputable audit firm particulary specialized in banking and insurance areas trusted by the Stock Exchange Organization. The firm performs independent auditor and legal inspector functions and provide other professional task such as audit committee membership, internal auditing of banks, insurance and investment:

Consistent with the Basel and CBI recommendations in order to establish corporate governance in the bank, the following committees have been developed to perform functions determined by the board.

The board is in charge of strategic responsibilities including risk management, corporate governance, and the bank’s values as well as revising these responsibilities periodically.

The board has the full authority for establishing an appropriate strategic system and can ensure implementation of policies and mechanisms of the strategic system considering the structure, business and risks of the bank. This system is adequately clear to all stakeholders.

Top manager of the bank can ensure compliance of bank activities with business strategies, risk tolerable levels and the board policies.

Monitoring bodies on three areas of corporate governance, risk management and internal control are established having authority, independence and necessary resources as well as accessibility to the board members.

The bank’s risks are identified and managed appropriately considering operational structure and expanding activities and internal and external changes. There are distinct paths of reporting for related departments to the board about identified risk.

The board and management can use effectively the findings of internal and independent auditors.

The board monitors designing and performance of compensation system and ensures its compliance with expectations through periodical revisions.

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Strategic Committees Figure 15

Independent Auditor

Board of Directors

CEO

High Audit Committe

High Risk Management Committee

High Committee of

Strategy and Budget

High Committee of Human Capital Development and

Compensation

Internal Auditing and

Monitoring

General Meeting of

Shareholders

58 59


High Committee of Strategy and BudgetThe main functions of this committee include setting long-term goals, and strategic, operational and budget planning. Other duties include approving the strategies and the organizational chart. These functions are set consistent with the banks approved strategies. Two non-executive members and a consultant of the board act in this committee.

High Audit CommitteeAccording to the Basel recommendation on audit committee role as an element of efficient corporate governance, the High Audit Committee of Saman Bank was established in 2007. The current Saman Bank Audit Committee is made up of one non-executive member of the board and two certified international auditing and accounting professionals specializing in banking. The main goal of Audit Committee establishment is assuring the board about effectiveness of the internal-control system. This committee provides its consultancy recommendations based on reports prepared by the Internal Auditing and Monitoring Division. It should be noted that the committee is responsible for protecting independence of monitoring divisions. These reports are prepared on the basis of internal control framework and assessment of bank’s operations effectiveness in achieving operational goals. According to the Stock Exchange Organization Instructions, the board has been required to express an opinion on the effectiveness of internal controls since 2013. This requirement emphasizes on importance of enhancing Internal Audit and High Audit committee.

High Risk Management CommitteeOne of the most important roles of this committee is ensuring the existence, accuracy and adequacy of policies and processes of managing, controlling and responding to different risks of bank’s activities. This committee monitors the above activities as well as emphasizing on the bank’s reputation and popularity, monitoring the capital adequacy and executing policies of the committee and the board in risk area. Two non-executive members of the board and the risk office manager are members of this committee.

High Committee of Human Capital Development and CompensationThis committee is established to plan for selecting, developing, successor training, training employees and maintenance human capital. This committee is expected to create stable value to the bank consistent with goals and policies of the bank. Other functions of this committee include approval of employee instruction and directives, salary payment mechanisms, and setting policies in employee evaluation and bonus plans.

Internal Auditing and MonitoringInternal Auditing and Monitoring is an executive power of High Audit Committee charged with responsibility of holding a systematic and efficient approach to assess corporate governance and enhance risk management and control in the bank. As stated in article 2 of the charter of High Audit committee, this committee is established to help perform monitoring role of the board an enhancing this role to ensure the following:

Effectiveness of corporate governance mechanisms, risk management and internal control procedures, financial reporting health, effectiveness of internal audit, independence of external auditors and effectiveness of independent auditing as well as compliance with laws, regulations and requirements.

In order to perform functions, the board has provided necessary resources for the committee without any exceptions. Saman Bank approach to internal auditing includes the related instructions such as those of the CBI, recommendations of Basel Committee, Stock Exchange Organizations (SEO), and the COSO about internal controls as well as international internal auditing standards. This approach addresses the recommendations of the COSO and SEO about risk assessment as well as ensuring achievements of internal and operational auditing goals in the form of standard processes as one of the five elements of internal control. This approach has other advantages such as strategic management of audit operations, planning on the basis of risk and activity model enhancing effectiveness and economic efficiency.

The bank top management is fully knowledgeable about importance of internal audit function as a key element of internal control activities which leads to effective risk management. Hence, the top management pays attention to informing other divisions of internal audit role and its value as well as importance of timely and efficient application of its findings when responding to the bank’s problems.

Enhancing internal auditors’ independence in reporting processes to the High Audit Committee and the board is important in Saman Bank maximizing quality of the reports. Internal auditors are participated in decision made about effectiveness of important internal control areas.

In accordance with the plans prepared by internal audit and monitoring management and approved by the high audit committee, these processes have had the most risk factor and materiality in risk assessment of the year ended March, 19, 2016:

• Service operations of retail and syndicated credits;

• Administrating and supporting credit services in retail and syndicated areas;

• Administrating and supporting services in retail and syndicated areas;

• Service operations of Corporate Banking;

• Knowledge Management;

• Process Management;

• Business Software Management;

• Financial Resources Management;

• Information Technology Management.

Consistent with the above and to perform comprehensive auditing of subordinate companies, the internal auditing and monitoring division prepared risk assessment worksheets for all activities of Saman Kish E-Payment, Saman Exchange, and Saman Satellite Communications companies.

For activities with the most level of risk and materiality, further investigation has been performed and related reports have been provided to divisions, high audit committee and the board respectively.

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Date of Register Previous Capital CapitalIncrease New Capital Increase

Percentage Source of Capital Increase

August 29 ,2002 200 Cash and Due Debts

November 27 ,2003 200 20 220 10 Cash and Due Debts

October 15 ,2004 220 80 300 36.36 Cash



October 8 ,2006 750 150 900 20 Cash and Due Debts

February 12 ,2010 900 900 1,800 100 Cash and Due Debts

March 19 ,2011 1,800 1,200 3,000 67.67 Cash and Due Debts

March 19 ,2012 3,000 1,000 4,000 33.33 Cash

October 22 ,2012 4,000 2,588 6,588 64.7 Re-assessment of Assets

March 9 ,2016 6,588 1,412 8,000 21.43 Cash and Due Debts

Capital StructureOur activities started in 1999 with an initial capital of IRR 200 billion including 200 million shares of IRR 1,000 each. This capital has been increased several times during 1999 to 2011 to reach IRR 8,000 billion including 8,000 shares of IRR 1,000 each. The last capital increase was completed at ….(DATE).

Capital changes Rls (b) Table 7

Capital Held by the Board and CEOThe board consists of five members with two years membership period extendable by approval of the general meeting of shareholders.

Capital by Shareholders Table 8

Capital by Number of Shareholders Table 9

Capital Held by the Board and CEO Table 10

Name Shareholde’s status Beginning Date Ending Date Executive Status

Vali Zarrabieh Shareholder/Chairman 06-Feb-14 07-Feb-16 Executive

Ahmad Mojtahed Shareholder/Vice Chairman 07-Feb-14 08-Feb-16 Non-Executive

Farideh Geraminejad Shareholder/Board Member 08-Feb-14 09-Feb-16 Non-Executive

Pension Fund of National Copper Industry

of IRANShareholder/Board Member 09-Feb-14 10-Feb-16 Non-Executive

Seyyed Ahmad Taheri Behbahani Shareholder/CEO 30-Apr-13

Shareholders Classification No. of Shares Percentage Nationality

Pension Fund of National Copper Industry of IRAN Legal Registered Companies 624,530,308 7.81 Iranian

Pension Fund of Protecting Steel Industry Employees Legal Registered Companies 400,088,117 5.00 Iranian

Mines & Metals Development Investment Co. Legal Registered Companies 323,686,501 4.05 Iranian

Mr. Mohammad Zarrabieh Individual Person 315,266,280 3.94 Iranian

Ms. Hava Chaee Deh Khoee Individual Person 240,847,267 3.01 Iranian

Parsian Bank Financial Group Co. Legal Registered Companies 244,163,829 3.05 Iranian

Saman Investment Co. Legal Registered Companies 239,999.995 3.00 Iranian

Mr. Vali Zarrabieh Individual Person 201,656,802 2.52 Iranian

Mr. Seyed Mahdi Ghafoori Individual Person 181,316,669 2.27 Iranian

Mr. Seyed Ahmad Akhavan Dastmalchi Individual Person 166,800,291 2.09 Iranian

Other Natural Persons Less than 2% Individual Person 3,682,047,429 46.02 Iranian

Other Legal Persons Less than 2% Legal Registered Companies 1,379,596,512 17.24 Iranian

8,000,000,000 100

No. of shares No. of Shareholders Private ShareHolders Percentage

More than 1 Million 446 - 97.62

500000-1000000 123 - 1.08

250000-500000 113 - 0.5

100000-250000 197 - 0.4

Below 100000 2,690 - 0.4

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Board Members Attendance in the Meetings

Name Position Attendance Status Comments

Vali Zarrabieh Chairman 58/65 7 indirect attendance

Ahmad Mojtahed Vice Chairman 60/65 5 indirect attendance

Farideh Geraminejad Board Member 57/65 8 indirect attendance

Pension Fund of National Copper Industry of IRAN Board Member -Represantative Not approved

by CBI

Board Members Attendance in the Meetings Table 11

• Approval of Financial Statements of Bank and the Saman Group;

• Permission for issuing information to enhance transparency and general system of information issuance according to the CBI opinion;

• Approval and revision to the operational instructions in different areas such as transaction instructions;

• Performance evaluation of bank regarding the five-year strategic plan and determining the basis for the second strategic plan;

• Analysing the bank’s environment and risk developing strategic policies according to the environment;

• Planning and policy making for international affairs after the JCPOA agreement;

• Reviewing and verification of the high committees (include strategic, auditing, risk, human capital development and compensation);

• Revision and approval of executive committees’ identifications in accordance with internal and external conditions;

• Cooperating with the CBI and SEO to comply with laws and regulations notified;

• Modifying organizational structure of the bank to enhance monitoring bodies (compliance and AML divisions);

• Trying to attract foreign investors, international banks and correspondents;

• Matching investments with the Law on Removal of Limitations from Competitive Production and the CBI directives;

• Cost management and optimal allocation of resources;

• Monitoring and following up the process of collecting debts as well as providing appropriate solutions;

• Monitoring and controlling the process of selling collaterals, considering the shareholders’ interests (shareholders and depositors);

• Deciding about issues stated in transaction committee in accordance with the transaction instruction;

• Reviewing, approving and controlling the loans granted to big customers and related parties/beneficiaries.

Main Issues Addressed by the Board in the Reporting Year

Total Bonuses Paid to the Board Members

• The attendance fee of a meeting paid to each board member in 16/2015 is IRR 15 million.

• According to the decision made by general meeting of shareholders in 16/2015 no dividend were approved and no

performance bonus was paid to the board.

Inspection Top management support and emphasize on accuracy and acting in implementation of internal controls as well as monitoring the banking processes health, helped us succeed in most of our plans for developing inspecting infrastructures.

It would definitely be said that inspection in Saman Bank has become a division with high capacity and technical ability acting its inherent functions and missions in accordance with international standards.

Siamak Shahbazzadeh

Head of Inspection

Saman Bank inspection division acts under supervision of the CEO and is monitored by Deputy Monitoring. This division is responsible for monitoring executive processes and auditing of operational, managerial and supporting processes. During 2015/16, inspection has performed a variety of activities in related field such as:

• Finishing the first phase of systematic studying of directives;

• Implementation of a part of fraud detection project;

• Implementation of RTAC and RTCC systems for online monitoring of some bank’s headings;

• Finishing the first phase of classifying and quantifying case of non-compliance;

• Providing complete information about security recommendations to customers in the fields of identifying information theft, forgery and fraud preventing, react to hackers, social engineering etc.;

• Changing and modifying the attending inspection processes;

• Establishing special telephone numbers and e-mails to receive non-compliance reports;

• Developing and uploading checklists on the portal for managers and users in different areas.

Looking AheadConsistent with the executive programs, the inspection office has planned new programs for the next year which include revision of non-compliance schemes and ensuring their accuracy, implementing new analyzed schemes and testing them with real data as well as revision and correction (if necessary) of risk allocation processes.

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Anti-Money Laundering

Anti-money laundering (AML) has been important in the bank’s defined internal goals since establishment. We started to implement AML programs since 1999 in accordance with the CBI regulations. Compliance and AML division is responsible for compliance of banking processes with AML regulations issued by the CBI and the Financial Information Unit (FIU).

Consistent with the above, international standards on AML, Controls and Combating the Financing of Terrorism are considered. The main activities of AML division are:

Training and Expanding International Standards

We held the “International Conference on AML” in Iran to provide new knowledge about AML and informing the banking system of practical solutions and international and domestic laws and regulations. This Conference was held by attendance of managers and experts of risk offices in Banks and economic institutions emphasizing on law-acceptance and AML in Iranian Banking sector as well as compliance with Iranian AML regulations along with a training workshop. Georges Chappotteau, Professor of the Sorbonne University, specialized in AML, operational risk management, compliance and internal control, was the main lecturer of this Conference.

Compliance

Expanding bank’s international activities needs an independent division from other monitoring, operational and risk management units. The compliance division is established for compliance of financial and banking processes with the highest standards and processes of banking as well as full consistency to applicable laws and regulations of internal and foreign financial monitoring bodies. The main function of this division is to minimize the risk of compliance and international transactions.

The most important activities of this division are as follows:

Holding training courses of AML in form of attending and non-attending aiming at informing employees with directives, regulations, responding to AML tricks, identification of customers and identity cards and documents security factors as well as performing related inquires;

Investigating, review and express opinion to suspicious cases, extract and report suspicious cases using the AML software;

Answering inquiries of STR to the FIU;

Sending daily CTR reports to the FIU;

Establishing the portal for collecting CTR reports;

Sending reports of project management system to the Ministry of Economic and Financial Affairs;

Establishing the software for customer identifying in two levels: Initial identification (Due Diligence) and Detailed identification (Enhanced Due Diligence) using the Risk-Based Assessment approach and classifying the customers;

Active monitoring of compliance with laws and instruction, developing directives, controlling performance of branches and cooperating with monitoring bodies and eliminating gaps in AML;

Modifying internal processes and upgrading the AML software in accordance with the CBI announcements;

Setting policies and directives related to financial non-compliances and implementing the Organizational Loyalty Project in order to achieving the most compliance with AML regulations;

Implementing the compliance project and setting policies of international activities as well as using experienced and skilled experts for investigating international transactions precisely;

Cooperating and participating with International Division in order to achieve international relationship goals of the bank through active management of relationship with correspondents in accordance with international standards, AML and regulations on Combating the Financing of Terrorism.

Regarding importance of AML in international areas after the JCPOA agreement, Saman Bank has focused on monitoring customers and their foreign currency transactions requiring employees in compliance and AML division to comply with international regulations about customers’ identifying, beneficiaries, and origin of funds and assets as well as implementing standard processes and international along with internal regulations about foreign currency pay orders and letters of credit.

Establishing compliance staff in business divisions including retail banking and related units and corporate and international banking to control foreign currency transfers and domestic and foreign letters of credit on continuous basis to cover compliance risks;

reviewing all banking services in terms of compliance with domestic and international regulations considering Iran economic policies in the Post-JCPOA and executing monitor activities on the customers at international level, searching customers identifications in black lists issued by European Union, United Nations and the OFAC;

Establishing new work flows when rendering foreign currency services such as pay orders and guarantees as well as monitoring identifying indicators and reporting suspicious items to the FIU;

Providing annual report (based on quarterly issued reports) to the board or High Risk Committee of the bank at the end of the year as well as providing a summarized report of compliance status with banking laws and regulations in the financial statements cooperating with the bank monitoring bodies as a division for preparing compliance reports to the CBI and other monitoring bodies;

Reviewing, studying and updating continuously laws and regulations, goals, policies, practices, directives and related instructions to identify any changes as well as limitations on implementation of these regulations in divisions and perform necessary actions to identify and eliminate the possible limitations;

Developing and maintaining compliance system of bank as well as identifying needs regarding laws and regulations governing the Banking system and other internal regulations and compliance with defined processes in the operational and ethical chart of the bank.

Analysing applicant’s financial activities and its compliance with origin and sources of income they state, identifying equal beneficiaries, type of goods transacted in terms of usage in case of international transactions and reviewing financial and credit background of customers;

Classifying and identifying risky customers and monitoring all financial transactions with them particularly the Political Exposed Persons (PEPs).

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Executive Managers

Seyed Ahmad Taheri Behbahani; CEO

Mr. Taheri Behbahan has more than 50 years experience in banking industry and has been the CEO of Saman Bank since 2014. He has acted as Senior Executive Advisor to the Board since 2012. His previous activities include: CEO of Eghtesad Novin Bank, CEO of Sharjah Bank of UAE, CEO of Iran Overseas Investment Bank in London and Head of Melli Bank branch network in the Persian Gulf, Dubai, and Abu Dhabi. Mr. Taheri Behbehani holds a Bachelor’s Degree in English Language and Literature from Shiraz University.

Reza Aghababaei; Credit

Dr. Reza Aghababaei has functioned as an Executive Banking Manager in Saman Bank since September 2014. He has worked with Saman Bank for many years in different managerial positions, including Director of Planning and Research, Director of Investment Affairs, Director of Corporate Banking, and Executive Retail Banking Manager. He holds a Ph.D in Economic with a subfield of Economic Development from University of Tehran.

Reza Esfandyari; Legal

Mr. Esfandyari has been working as an Executive Legal Manager since August 2013. Previously, he served as Legal Advisor to the CEO of Saman Bank. Mr. Esfandyari holds a Master Degree in Private Law.

Mekameh Ebrahimi; Banking

Ms. Mekameh Ebrahimi has been working as an Executive Banking Manager since August 2015 .She holds a Ph.D in Social Science from Boston Unevrsity of USA.

Mahdi Gharahi; Operations

Mr. Gharahi was appointed as Executive Operations Manager in 2013. Prior to this, he served as managerial and executive positions including Director of IT affairs, CEO of Sasan, Tondar Nour and Laleh Computer Companies and manager of Procedures and Practices in Ministry of Defense. Mr. Gharahi holds a Bachelor Degree in Theology and Philosophy from University of Tehran.

Javad Goharzad; Director of Internal Auditing and Monitoring

Mr. Goharzad acts as Director of the Internal Auditing and Monitoring Division since 2008. He was previously the Independent Auditor and legal inspector of Saman Bank since establishment until 2008. He has experiences in different managerial positions, partnership in audit firms, independent auditor of listed companies and banks and financial institutions. Mr Goharzad holds a Master Degree in Accounting from the Islamic Azad University.

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68

Divisions Heads (Middle Managers)

Iman Arastoo, Marketing and sales

Master Degree in Business Administration, Allameh Tabataei University.

Hamid Tahamtan, Legal

Master Degree in Oil and Gas Law, University of Tehran.

Seyed Morteza Hosseininejad, Research, Plan and Budget

Master Degree in Economics, Shahid Beheshti University.

Reza Heidari, Private/ Premiere Banking

Master’s Degree in Economics, University of Tehran.

Ghassem Sarkhosh, Finance and Treasury

Master’s Degree in Business Administration, Shahid Beheshti University.

Mehrdad Salman Nouri, Information Technology

Bachelor’s Degree in Computer Engineering, Islamic Azad University.

Yousefali Sharifi, Investments

Post-PhD in Financial Mathematics, Connecticut University, USA.

Siamak shahbazizade Khiavi, Inspection

Master’s Degree in Economics, University of Tehran.

Reza Shirin Goharian, Retail and Syndicated Loans

Master’s Degree in Business Administration, Islamic Azad University.

Fereshteh Zarrabieh, Human Capital

MBA (with a subfield of marketing strategy), Industrial Management Institute.

Marzieh Azizi, Improvement and Quality

Bachelor’s Degree in Accounting, Shariati College.

Maziar Fozouni, Retail Banking

Bachelor’s Degree in Accounting, Islamic Azad University.

Pooran Gilasi Saghez, Secretary to the Board

Bachelor’s Degree in Computer Engineering, University of Tehran.

Alireza Ma’arefat, Corporate Banking

Bachelor’s Degree in Economic Science, University of Mazandaran.

Zibandeh Mohtadi Haghighi, Finance

Master’s Degree in Accounting, Islamic Azad University.

Mansour Momeni, Public Relations and Customer Care

Bachelor’s Degree in Chemistry, Arak University.

Abbasmirza Nayeri, Electronic Banking

Master Degree in Business Administration, Allameh Tabataei University.

Finacial

Report

Finacial Report

70 71

Independent Auditor & Legal Inspector Reportto Annual Ordinary General Meeting of Shareholdersof Saman Bank (Public joint stock company)

Report on Financial Statements

Introduction

1- Our Firm has audited the consolidated financial statements of Saman Group & Bank (Public joint stock company) including the balance sheets of investment deposit operations as at March. 19, 2016, Profit & Loss Account, Variation in Shareholders’ Equity as well as the Cash Flow Statement for the fiscal year ended on the date above, along with the Explanatory Notes 1 to 66 hereto attached.

Responsibility of the Board of directors for financial statements

2- The Board of directors of the Bank shall be responsible for preparing the financial statements according to accounting standards and requirements of I.R.I. Central Bank. Such responsibility includes design, implementation and maintenance of internal controls for setting up these statements in such a manner to ensure that there is no significant misstatement due to fraud or error.

Independent Auditor & Legal Inspector Responsibility

3- Our responsibility is to issue an opinion on such statements as audited according to audit standards. Such standards require our firm to observe professional practices and plan and conduct the audit in such a manner to reasonably ensure that there is no significant misstatement in the Financial Statements.

Audit includes implementation of procedures to obtain audit evidence regarding the amounts and other information disclosed in the financial statements. Opting for auditing procedures depends on the auditor’s judgment such as evaluation of risks of significant misstatement due to fraud or error. To evaluate such risks, internal controls related to preparing and providing of financial statements for designing suitable auditing procedures and not intended to issue an opinion on the efficiency of such internal controls, are verified. Audit includes also the suitability of the accounting policies used and reasonability of the accounting estimations by the board of directors as well as the assessment of the financial statements as a whole.

Our firm believes that the auditing evidence gathered is sufficient and appropriate for issuing a qualified opinion on the financial statements.

Our firm is also held, as the Legal Inspector, to report to the general meeting of shareholders any cases of non compliance with legal requirements provided under the Amendment of Commercial Code and the provisions of the Articles of association of the Bank, Iran monetary & banking Laws, interest-free banking operations, requirements of I.R.I. Central Bank and other required issues.

Basis for Qualified Opinion

4- Separation of the investment deposit accounts equity from the liabilities and shareholders’ equity, presentation of investment deposit accounts performance as a financial statements and change in shareholders’ equity as well as certain explanatory Notes are in addition to the items required under accounting standards.

5- Cases of non-compliance with the directives issued by I.R.I. Central Bank having an impact on such information as stated in the Financial Statements and explanatory notes are as follows:

5-1- Directive on “classification of credit institutions assets and procedure for calculating provision for debts” and its further Amendments and, consequently, inadequacy of the provision allotted for long-term debts.

5-2- Directive no. 94/258020 dated Nov. 30, 2015 on non-recognition of income of doubtful debts interest.

5-3- Non allocation of provision for membership fee with Deposits Guaranty Fund for 2014-2015 and 2015-2016 fiscal years.

5-4- Requirement for presentation of some explanatory notes according to the notified financial statements.

6- Situation of foreign currency accounts with Central Bank is as follows:

6-1- According to the items stated in the Bank’s books (Notes 10-1-1), the Bank considers to be entitled to collect the following amounts. Meanwhile the situation of the reciprocal accounts is not yet finalized and as per the Directive no. 256646 dated Dec. 16, 2014 such finalization will occur upon the completion and issue of the foreign currency special audit report (currently going through the final steps).

6-2- Account created titled “Forward-purchase of foreign currency from Central Bank” for documentary credits provided under the Directive no. 60/1015 dated Dec. 7, 2013 stated under Note 10-1-1 to Financial Statements is as follows:

It should be mentioned that regarding such Directive, an amount of IRR 2,450 billion is reflected under Note 24-3 to Financial Statements as IRR equivalent of the above amounts as debts to Central Bank. Central Bank has not responded to the confirmation requested on the funds for the above forward-purchase of foreign currency (even regardless of the subject matter of such advance payment), therefore we are not able to determine the financial effects as long as we have not received Central Bank’s response or establish a logical relation with debts to Central Bank.

Amount

Foreign currency at rate Amount required by Bank through the letter no. 210/92/M/013678 dated Feb. 26, 2014

Reference 462,679,859/11

Exchange 140,214,007/53

Market -

Rate of loans -

Total 602,893,866/64

Currency Amount Rate (Rls) Amount – Rls (M)

Euro 99,491,724/88 33,935 3,376,252

AED 36,834,377 /48 8,234 303,294

CNY 24,142,410 /16 4,655 112,383

KRW 52,416,788/566 26 1,350,309

TRL 78,719 /68 10,551 831

Total 5,143,069

Finacial Report

72 73

7- Results obtained from the confirmations requested on debts of other banks and credits institutions provided under Note 10 to Financial Statements are as follows:

Amount of confirmation requested

Amount as per Responsesreceived

Amount as per Responsesnot received

Rls (m) Rls (m) Rls (m)

Foreign currency deposit with foreign banks 32,804,369 30,530,607 2,273,762

Foreign currency long term deposit withforeign banks

125,533 31,653 93,880

Total 32,929,902 30,562,260 2,367,642

Regarding the above, our firm will not be able to determine possible adjustments on Financial Statements in the absence of responses to the confirmations requested.

8- In addition to grant of such usual loans in banking industry as required and emphasized under Art. 23 of Law on removal of limitations from competitive production and promotion of Iran financial system as well as Art. 16 of General Budget Act 2013-2014, during the fiscal year the Bank has proceeded with extending, re-extending and renewing balances of granted loans. Despite that no specific information is prepared on the amount of current loans paid and extended balances, the general image of the loans granted by the Bank and its comparison to the configuration of the last year in the usual form of categorization of the monetary and banking authority is as follows:

8-1- Results obtained from categorization within the Directive 2823 dated Feb. 24, 2007 (and its further Amendments) indicate an amount of IRR 17,041 billion from doubtful loans to current loans.

Qualified opinion

9- Our firm believes that, except for the effects of items stated in (4), (5), (6-1) and (8) and possible effects of items mentioned in (6-2) and (7) hereunder, the financial position of Saman Group & Bank (Public joint stock company) as at March. 19, 2016 and their financial performance and cash flows for the fiscal year ended on the above date are fairly reflected, according to accounting standards, from all material aspects.

Emphasis of Matters

Shareholders’ attention is drawn on (10) to (13) below. Our opinions has not been modified as a result of items 10 to 13:

10- As explained under Note 9-4-2 to Financial Statements, I.R.I. Central Bank has debited the account no. 26200/50 held by Saman Bank with Central Bank through a notice dated March. 5, 2012 at an amount of IRR 4,866 billion for difference of exchange rate according to the decision no. 47698/T/M/90-34030 dated Jan. 8, 2012 of 5-member Work Group for organizing of foreign currency issues. Thereafter, on Mar. 17, 2012 an amount of IRR 2,919 billion and on March. 18,2012 another amount of

March 19,2016 March 19,2015 Growth Trend compared to the last year

Amount Percentage Amount Percentage Amount Percentage

Rls (b) % Rls (b) % Rls (b) %

Current loans (including interest received) 115 79 107 76 8 3

Overdue loans (including performance bonds) 2 1 1 1 1 -

Outstanding loans 3 2 7 5 (4) (3)

Doubtful loans 25 18 25 18 - -

Total long-term 30 21 33 24 (3) (3)

Total 145 100 140 100 5 -

IRR 1,460 billion are returned to Saman Bank’s account but, on the same day, an amount of IRR 2,346 billion is withdrawn in the same way (Finally, IRR 2,833 billion). It should be reminded that Central Bank, as its usual practice, has claimed a performance bond of IRR 3,554 billion on the debit balance of the current account by March. 19, 2016 on its usual rate at 34%. The result of such claim is not yet reflected in the accounts. Therefore, it is required to follow up such matter with the monetary authorities for final determination.

11- Financial situation of Saman Bank’s entering to documentary credit transaction with the group called Aria amounts to IRR 5,040 billion (IRR 4,541 billion debts of Saderat Bank + IRR 499 billion debts of Industry & Mine Bank) described under Note 10-2-2 to Financial Statements (Heading: Documentary credit debt purchase & debt discount). Legal proceedings by the Bank to recover such the debts of Industry & Mine Bank resulted in the remittance of an amount of IRR 666 billion (IRR 499 billion principle claim + IRR 167 billion accrued interest and cost) to date. Debts of Saderat Bank include 18 LCs amounting to IRR 4,541 billion. For the time being, separate legal actions are taken for 6 thereof. According to the documents available, 4 first instance decisions in favor of Saman Bank amounting to IRR 640 billion are rendered (IRR 1,065 billion principal claim + IRR 640 billion interest, penalties and proceedings fee, on which the amount of IRR 130 billion remains unpaid). It should be mentioned that separate legal actions are taken for 14 other LCs amounting to IRR 3,476 billion (principal claim). Meanwhile, despite blocking of IRR 1,575 billion of listed stocks, such issue is not yet determined.

12- As per Note 51-1 to Financial Statements, during the fiscal year 50 items of owned properties of the Bank are sold as follows against considerations at a book value of IRR 6,140 billion:

and IRR 2,864 billion earned from the difference recognized as non-operational profit carried into the accounts. It is to be noted that such results include the assignment of the goodwill of the under-construction project in Karaj. In such case, even if we consider the value of the properties exchanged as cash, the economic interests of 75% of the price of transaction (at IRR 6,753 billion) to the Bank in the upcoming fiscal years shall be deemed as contingent and no profit may be allocated by relying on such results.

13- As regards the tax situation of the Bank, described under Note 30-2 to Financial Statements, the following shall be considered:

13-1- Taxable income of 2012-2013 is notified at IRR 1,891 billion by the 1st Instance Tax Settlement Board resulting in a tax claim of IRR 473 billion. Bank has paid IRR 158 billion thereon but no reserve is provided for the rest in the accounts. Bank has protested the same before the Revision Board. Meanwhile, the final decision on such objection is not yet issued.

13-2- For the operations of the fiscal year 2015-2016, no amount is provided for tax reserve in the accounts.

13-3- Taxes for the fiscal years 2005-2006, 2006-2007, 2007-2008 and 2008-2009 are paid to the tax authority for a total amount of IRR 555 billion. However, the Bank has protested such assessments and issue of final tax notices. The matter is pending with the Court, Board provided under Art. 251-BIS and Tax High Council. Meanwhile, no final decision on such objection is yet issued.

Amount – Rls(b) %

Cash received 494 5

Exchange with expert assessed property 1,777 20

Accounts receivable 3,513 39

Using of loans 3,220 36

9,004 100

74 75


Other Matters Paragraphs

14- Financial statements of the subsidiaries consolidated with the Bank’s Financial Statements are audited by other audit firms agreed by Iran Certified Public Accountants Association. In view of the audit current practice, we have audited these accounts by using such financial statements as audited by other firms.

15- Foreign currency situation of the Bank as at the date of Balance Sheet (in 13 types of foreign contracts and assuming the acceptance of foreign currency accounts of performance of past foreign currency obligations by Central Bank) is explained under Note 63-5-5. Thus and based on the translation of such currencies to U$ at the notified rate (by Central Bank called the exchange rate) as at the date of Balance Sheet, the foreign currency situation of the Bank indicates an excess of assets over the (long) liabilities.

16- Any ex gratia grant shall be subject to the prior approval of the general meeting.

17- Regarding the distribution of profit, the general meeting of shareholders is requested to kindly consider the provisions of Art. 18 of Directive dated Jan. 31, 2009 of Stock Exchange Organization requiring that in case of significant adjustments in the Independent auditor/Company auditor report, the general meeting shall take into account such adjustments and deliberate on distribution of profit in view of the requirements provided under Art. 240 of Partial Amendment of Commercial Code.

Report on other legal duties Report on other duties of Legal Inspector

18- Situation of compliance with the legal requirements provided under Partial Amendment of Commercial Code and Articles of association of the Bank is as follows:

18-1- Company has failed to pay dividend amounting to IRR 157 billion as explained under Note 34 to Financial Statements within 8 months as provided under Art. 240 of Partial Amendment of Commercial Code.

18-2- Meetings of the board of directors from September 2015 to the end of the fiscal year and to date have been held and deliberating by 4 directors. Moreover, the term of office of the directors of the board was Mar. 7, 2016.

18-3- Provisions of Art. 142 of Partial Amendment of Commercial Code, issues requiring the board of directors to act by virtue of the resolution of the annual ordinary general meeting of shareholders dated July 15, 2015, for which no action is taken or the actions taken have led to no final result are as follows:

• Taking decision on allocation of profit by holding an ordinary general meeting in extraordinary by Sept. 22, 2015 at the latest (which took place on Mar. 15, 2016).

Report on Transactions subject to Art. 129 of Partial Amendment of Commercial Code

19- Transactions mentioned under Note 64 to Financial Statements, as all the transactions performed during the fiscal year subject to Art. 129 of Partial Amendment of Commercial Code, are reported by the board of directors to our Firm and verified. Such transactions are performed in compliance with the provisions of the said article on obtaining of the board’s consent and absence of the director concerned in voting, and our firm believes that such transactions are performed according to business appropriate conditions in line with the routine practices of the Bank.

Report on Report of the board of directors provided under Art. 232 of Partial Amendment of Commercial Code

20- We have examined the report of the board on the operations and general situation of the Bank, provided under Art. 232 of Partial Amendment of Commercial Code, to be presented to the general meeting of shareholders and in view of such examination, we can confirm that there is no significant case of inconsistency between the information therein and the documents and instruments provided by the board.

Report on Requirements of I.R.I. Central Bank

21- Report on compliance of the Bank’s operations with monetary & banking laws, banking operations and the relevant regulations as well as the directives of Central Bank for the fiscal year reported is prepared separately and provided for submittal to the relevant regulatory authorities.

Report on other legal and regulatory responsibilities of Independent Auditor

22- In application of AML, Anti-money Laundering Department, operating directly under the supervision of the Managing Director, has implemented the regulations, guidelines and intelligent information systems of Central Bank according to the guides of I.R.I. Central Bank in terms of identification of customers, investigation on bank suspicious operations, financial origins, setting up and required trainings. In our examination, we have not observed any significant case of non compliance with AML or the relevant regulations.

Report on Administrative Health Promotion & Anti-corruption Law

23- Compliance with the provisions of Para, (B) to Art. 3 of Administrative Health Promotion & Anti-corruption Law regarding recording of data of contracts executed at the Bank’s contracts website, provisions of Articles 21 & 22 of the said Law on recording of such financial and administrative software as used at Informatics High Council and ensuring of the authenticity thereof at the Council’s discretion as well as the provisions of Art. 25 of the above Law on anti-corruption and establishment of a mechanized virtual answering system for complaints are required.

Report on compliance with Internal Control Requirements related to Financial Reporting

24- Regarding such regulations as related to the implementation and assessment of internal controls as provided under the checklist of Stock Exchange Organization, the Bank’s internal audit reports on assessment of the internal audit established therein and their efficiency for reasonably ensuring of compliance with accounting standards in preparation of financial statements are examined by our firm and there is no significant case of ineffective implementations of such controls.

Sokhanehagh Audit & Management Services Firm: Sealed.

June 25, 2016

76 77


Saman Bank (Public Joint Stock Company) Consolidated Statement of Finacial Position at March 19.2016

(restated)

Liabilities & shareholders’ equity Note March 19,2016 March 19,2015

Rls (m) Rls (m)

Liabilities

Due to banks and other credit institutions 24 30,317,690 29,124,857

Customers' deposits 25 21,827,138 21,651,737

Dividends payable 26 187,071 218,139

Trade accounts and notes payable 27 1,129,580 1,487,482

Advances received 28 68,701 70,710

Debt Bonds in issue 29 - 1,000,000

Provision for income tax 30 168,611 193,255

Other provisions and liabilities 31 5,034,704 6,084,587

Provision for emplyees' termination benefits 32 466,334 326,615

Total liabilities 59,199,829 60,157,382

Investment deposits accounts equity

long-term investment deposit accounts 33 188,750,350 157,131,839

Interest payable to long- term investment deposits accounts 34 2,112,728 1,780,370

Total investment deposits accounts equity 190,863,078 158,912,209

Total liabilities and investment deposits accounts equity 250,062,907 219,069,591

Shareholders’ equity

Share capital 35 8,000,000 6,588,000

Ongoing capital increase - 317,733

Parent company’s shares held by subsidiaries (1,684) (14,498)

Legal reserve 36 1,597,389 1,496,547

Assets revaluation surplus: tangible &intangible 37 675 675

Retained earnings 1,215,715 2,235,139

Parent company total shareholders’equity 10,812,095 10,623,596

Minority's (Non-Controlling) interest 38 516,577 298,204

Total liabilities & shareholders’ equity 261,391,579 229,991,391

Bank’s LCs & drafts obligations 59-1 5,201,013 13,163,351

Bank’s LGs obligations 59-2 6,938,318 5,304,813

Other bank‘s obligations 59-3 7,161,151 6,795,356

Managed funds and similar items 59-4 1,165,874 512,246

(restated)

Note March 19,2016 March 19,2015

Rls (m) Rls (m)

Assets

Cash 9 49,598,568 43,595,604

Due from other banks and credit institutions 10 12,700,247 11,950,067

Loans granted to customers 11 127,203,747 117,743,174

Investment in stocks & securities 12 1,532,004 1,170,083

Long-term investment in affiliates 13 649,335 405,896

Due from subsidiaries & affiliates 14 67,820 138,977

Trade accounts & notes receivable 15 1,581,863 1,098,670

Other accounts receivable 16 5,991,185 1,893,872

Orders & prepayments 17 120,406 168,956

Inventories 18 145,361 117,395

Tangible fixed assets 19 6,093,809 5,556,336

Intangible assets 20 4,127,974 3,876,076

legal deposit 21 21,131,325 19,512,265

Other assets 22 30,313,408 22,610,690

Goodwill 23 134,527 153,330

Total assets 261,391,579 229,991,391

Customers’ LCs and drafts obligations 59-1 5,201,013 13,163,351

Customers’ LGs obligations 59-2 6,938,318 5,304,813

Other customers’ obligations 59-3 7,161,151 6,795,356

Managed funds & similar items 59-4 1,165,874 512,246

The accompanying notes are an integral part of the financial statements. The accompanying notes are an integral part of the financial statements.

78 79


Consolidated Statement of Profit and Loss For the fiscal year ended March19,2016 Consolidated Statement of changes in Equity For the fiscal year ended March19,2016

(restated)

Note 2016 2015


Income from loan interests & deposits 39 31,071,101 27,500,823

Cost of interests paid on deposits 45 (31,745,949) (25,411,208)

Net income from loan interests and deposits (674,848) 2,089,615

Income from Fees & commissions 46 1,131,268 1,119,766

Fee & commissions expenses 47 (1,123,373) (789,058)

Net income from fee and commissions 7,895 330,708

Income from sales & services rendered 48 41,115,257 29,844,373

Cost of sales and services rendered 49 (39,913,185) (28,825,770)

1,202,072 1,018,603

Net Profit or loss from investments 40 244,793 441,060

Net Profit or loss from foreign currency exchanges & transactions 50 1,297,386 870,656

Total operating income 1,542,179 1,311,716

Other Incomes 51 3,423,956 1,866,327

administrative & general expenses 52 (3,542,862) (3,041,134)

Doubtful loans expense 53 (407,669) (1,610,462)

Financial expenses 54 (257,583) (376,156)

Depreciation expenses 55 (452,040) (397,472)

Profit before group share from affiliates’ incomes 841,100 1,191,745

Group share from affiliates’ incomes 13 174,176 111,064

Profit before tax 1,015,276 1,302,809

Income tax 30 (166,053) (208,157)

Net profit 721,173 1,044,483

Profit allocated to Non-controling- interest 128,050 50,169

Base earnings per share 61-1 95 138

Diluted earnings per share – Diluted EPS 61-2 90 137

Since the components of the comprehensive income are limited to the profit (loss) of the fiscal year, the comprehensive income statement is not provided.The accompanying notes are an integral part of the financial statements.

2015-2016

Note ShareCapital

Ongoing Capitalincrease

Parent company’s

shares held by

subsidiaries

LegalResrve

Assets revaluation

surplus

RetainedEarnings

Total Shareholder’s

Equity

Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Balance at March 20, 2015 6,588,000 317,733 (14,498) 1,496,547 675 2,330,187 10,718,644

Net Profit - - - - - 721,173 721,173

Prior years’ adjustments 56 - - - - - (95,047) (95,047)

Total Comprehensiveincome for the year 6,588,000 317,733 (14,498) 1,496,547 675 2,956,313 11,344,770

Capital increase

Registered Capital increase 1,412,000 (317,733) - - (1,000,000) 94,267

Not registered Capital increase - - - -

Parent company’s shares heldby subsidiaries

Shares purchases - - - - - -

Shares Sales - - 12,814 - - - 12,814

Distribution

Legal reserve 36 - - 100,842 - (100,842) -

Other reserve

Stock dividend - - - - - -

Dividend approved 26 - - - - (639,756) (639,756)

1,412,000 (317,733) 12,814 100,842 - (1,740,598) (532,675)

Balance as at March 19, 2016 8,000,000 - )1,684( 1,597,389 675 1,215,715 10,812,095

80 81


Consolidated Statement of Profit and Loss For the fiscal year ended March19,2016 Consolidated Statement of Cash Flows For the fiscal year ended March19,2016(restated)

Note 2016 2015

Operating activities Rls (m) Rls (m) Rls (m)

Net cash inflow (outflow) from operating activities 57 9,600,855 (6,694,664)

Interest paid for financing

loan Interest paid (40,213) (523,001)

Dividends paid (639,756) (658,646)

Net cash inflow (outflow) from Interest paid for financing (679,968) (1,181,647)

Income tax

Income tax paid (including tax prepayments) (664,584) (327,992)

Investing activities

Funds paid for tangible fixed assets (1,403,870) (1,932,788)

Proceeds from sale of tangible fixed assets 6,557 128,676

Funds paid for intangible assets (329,461) (189,076)

Net cash inflow (outflow) from investing activities (1,726,774) (1,993,187)

Net cash inflow (outflow) before financing activities 6,529,529 (10,197,491)

Financing activities

Cash from capital increase 94,267 317,733

treasury bonds transactions

Proceeds from share premium

Loans received 27,655,000 69,795,000

Repayment of loans (29,405,000) (68,845,000)

Net cash inflow (outflow) from financing activities (1,655,733) 1,267,733

Net cash increase (decrease) 4,873,795 (8,929,758)

Cash at the beginning of the year 9 43,595,604 53,040,693

Realized foreign exchange movements 1,129,168 (515,331)

Cash at year-end 9 49,598,568 43,595,604

Non-cash transaction 58 15,939,315 12,290,412

The accompanying notes are an integral part of the financial statements.The accompanying notes are an integral part of the financial statements.

2014-2015

Note ShareCapital


Parent company’s

shares held by

subsidiaries

LegalResrve

Assets revaluation

surplus

RetainedEarnings


Equity


Balance at March 20, 2015 6,588,000 - (14,498) 1,331,313 675 2,460,167 10,365,657

Net Profit - - - - - 1,044,483 1,044,483

Prior years’ adjustments 56 - - - - - (445,631) (445,631)

Total Comprehensiveincome for the year 6,588,000 - (14,498) 1,331,313 675 3,059,019 10,964,509

Capital increase

Registered Capital increase - - - - - - -

Not registered Capital increase - 317,733 - - - - 317,733

Distribution

Legal reserve 36 - - 165,234 - (165,234) -

Other reserve - - - - - -



- 317,733 - 165,234 - (823,880) (340,913)

Balance as atMarch 19, 2015 6,588,000 317,733 )14,498( 1,496,547 675 2,235,139 10,623,596

82 83


(restated)

Note March19,2016 March19,2015

Rls (m) Rls (m)

Assets

Cash 9 49,362,166 43,376,114

Due from other banks & credit institutions 10 12,700,247 11,950,067

Loans granted to customers 11 127,499,869 118,111,683

Investment in stocks & securities 12 3,238,568 2,445,120

Due from subsidiaries & associated companies 14 1,030,523 1,186,220

Other accounts receivable 16 5,785,072 1,704,678

Tangible fixed assets 19 3,593,858 3,358,505

Intangible assets 20 4,119,563 3,861,394

legal deposit 21 21,131,325 19,512,265

Other assets 22 30,255,725 22,576,877

Total assets 258,716,916 228,082,923

Customers’ LCs & drafts obligations 59-1 5,220,611 13,163,351

Customers’ LGs obligations 59-2 7,079,289 5,348,318

Other customers’ obligations 59-3 7,161,151 6,795,356


Saman Bank (Public Joint Stock Company) Statement of Financial Position As at March19,2016

(restated)

Liabilities & shareholders’ equity Note March19,2016 March19,2015

Rls (m) Rls (m)

Liabilities

Due to other banks & credit institutions 24 29,687,714 28,755,259

Customers' deposits 25 21,933,900 21,694,932

Dividends payable 26 157,034 185,811

Debt securities in issue 29 - 1,000,000

Provision for income tax 30 - -

Other provisions & liabilities 31 4,268,654 5,702,007

Provision for staff termination benefits 32 414,634 296,307

Total liabilities 56,461,936 57,634,316

Investment deposits accounts equity

long-term investment deposit accounts 33 189,413,552 157,897,141

Interest payable to long- term investment deposits accounts 34 2,114,740 1,781,795

Total investment deposits accounts equity 191,528,292 159,678,936

Total liabilities & investment deposits accounts equity 247,990,228 217,313,252

Shareholders’ equity

Share capital 35 8,000,000 6,588,000


Legal reserve 36 1,523,868 1,448,456

Assets revaluation surplus: tangible &intangible 37 675 675

Retained earnings 1,202,145 2,414,807

Parent company total shareholders’equity 10,726,688 10,769,671

Total liabilities & shareholders’ equity 258,716,916 228,082,923

Bank’s LCs & drafts obligations 59-1 5,220,611 13,163,351

Bank’s LGs obligations 59-2 7,079,289 5,348,318

Other bank‘s obligations 59-3 7,161,151 6,795,356


The accompanying notes are an integral part of the financial statements.

84 85


Statement of Profit and Loss For the fiscal year ended March19,2016

Statement of Investment Deposit Accounts Performance For the fiscal year ended March19,2016

(restated)

Statement of Changes in Equity For the fiscal year ended March19,2016

Note 2016 2015


Income from loan interests & deposits 39 31,177,327 27,516,921

Cost of interests paid on deposits 45 (31,801,511) (25,435,125)

Net income from loan interests and deposits (624,184) 2,081,796

Income from Fees & commissions 46 1,116,839 1,106,290

Fee & commissions expenses 47 (1,144,069) (805,448)

Net income from fee & commissions (27,230) 300,842

Net Profit or loss from investment 40 611,799 975,763

Net Profit or loss from foreign currency exchanges & transactions 50 1,295,870 871,523

Total operating income 1,907,669 1,847,286

Other Incomes 51 3,379,801 1,877,651

administrative & general expenses 52 (3,285,489) (2,874,766)

Doubtful loans expense 53 (365,959) (1,590,709)

Financial expenses 54 (59,191) (264,174)

Depreciation expenses 55 (422,666) (366,586)

Profit before tax 502,751 1,011,340

Income tax 30 - -

Net profit 502,751 1,011,340

Base earnings per share 61-1 66 133

Reduced earnings per share – diluted EPS 61-2 63 132

Since the components of the comprehensive income are limited to the profit (loss) of the fiscal year, the comprehensive income statement is not provided. The accompanying notes are an integral part of the financial statements.



2015-2016

Note Share

Capital

Ongoing

Capital

increase

Legal

Resrve

Assets

revaluation

surplus

Retained

Earnings

Total

Shareholder’s

Equity

Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Balance at March 20, 2015 6,588,000 317,733 1,448,456 675 2,447,064 10,801,928

Net Profit - - - - 502,751 502,751

Prior years’ adjustments 56 - - - - (32,258) (32,258)

Total Comprehensive income for the year 6,588,000 317,733 1,448,456 675 2,917,557 11,272,421

Capital increase

Registered Capital increase 1,412,000 (317,733) - - (1,000,000) 94,267

Not registered Capital increase - - - -

Distribution

Legal reserve 36... - - 75,412 - (75,412) -



1,412,000 (317,733) 75,412 - (1,715,412) (545,733)

Balance as at March 19, 2016 8,000,000 - 1,523,868 675 1,202,145 10,726,688

2014-2015

Note ShareCapital


LegalResrve

Assets revaluation

surplus

RetainedEarnings


Equity


Balance at March 20, 2014 6,588,000 - 1,296,755 675 2,589,944 10,475,374

Net Profit - - - - 1,011,340 1,011,340

Prior years’ adjustments 56 - - - - (375,976) (375,976)

Total Comprehensive income for the year 6,588,000 - 1,296,755 675 3,225,308 11,110,738

Capital increase

Registered Capital increase - - - - -

Not registered Capital increase - 317,733 - - - 317,733

Distribution -

Legal reserve 36 - - 151,701 - (151,701) -



- 317,733 151,701 - (810,501) (341,067)

Balance as at March 19, 2015 6,588,000 317,733 1,448,456 675 2,414,807 10,769,671

Note 2016 2015


Profit-sharing income

Income from loan interests 39 28,160,990 25,556,139

Income from Deposits 39-2 1,511,317 379,864

Net Profit or loss from investment 40 611,799 975,763

Total Profit-sharing income 30,284,106 26,911,766

Bank’s share of Profit-sharing income 41

Depositors' Share of resources surplus – from profit-sharing 43 3,797,640 -

Depositors' Share of resources surplus – from profit-sharing before fees 34,081,746 26,911,766

Less Fees 42 (3,782,601) (3,247,263)

Depositors' Share of profit-sharing 30,299,145 23,664,503

Interest on legal deposits 41 196,005 161,604

Compensation of expense related to depositors free resources surplus toprofit-sharing uses 43 - -

Final interest payable to depositors 30,495,150 23,826,107

Interest paid to investment deposit Accounts 44 (31,310,604) (24,608,101)

Differential between final and provisional interests accrued to depositors )815,454( )781,994(

86 87


Note 2016 2015

Operating activities Rls (m) Rls (m) Rls (m)

Net cash inflow (outflow) from operating activities 57 8,591,174 (7,753,156)

Interest paid for financing

loan Interest paid (40,213) (523,001)

Dividends paid (640,000) (658,800)

Net cash inflow (outflow) from Interest paid for financing (680,213) (1,181,801)

Income tax

Income tax paid (including tax prepayments) (480,641) (173,777)

Investing activities

Funds paid for tangible fixed assets (597,564) (842,393)

Proceeds from sale of tangible fixed assets 3,134 121,345

Funds paid for intangible assets (321,758) (226,388)

Net cash inflow (outflow) from investing activities (916,189) (947,436)

Net cash inflow (outflow) before financing activities 6,514,132 (10,056,170)

Financing activities

Cash from capital increase 94,267 317,733

treasury bonds transactions

Proceeds from share premium

Loans received 27,655,000 69,795,000

Repayment of loans (29,405,000) (68,845,000)

Net cash inflow (outflow) from financing activities (1,655,733) 1,267,733

Net cash increase (decrease) 4,858,399 (8,788,437)

Cash at the beginning of the year 9 43,376,114 52,679,015

Realized foreign exchange movements 1,127,653 (514,464)

Cash at year-end 9 49,362,166 43,376,114

non-cash transaction 58 15,939,315 12,290,412

Explanatory Notes to Financial StatementsFiscal Year ended on March 19, 2016

1- Introducing the Bank

1-1- Background

Saman Bank was registered under no. 154444 on Sept. 1st, 2008 with Tehran Department for Registration of Companies & Noncommercial Establishments upon the authorization no. H/1745 issued on July 24, 1999 by I.R.I. Central Bank, adhered to Tehran Stock Exchange/Iran OTC Market on Nov. 16, 2011 and is listed since June 6, 2012 therewith. Head office of the Bank is located at: 1534 corner Tarkeshdooz Alley, before Parkway Crossing, Vali Asr Ave, Tehran. Bank operates under the economic code 4111-1166-8595.

1-2- Main activities

Purpose of the Bank is performing of such banking authorized operations (operations and transactions not prohibited for banks under legislation) as provided under Art. 3 of Articles of association and the Regulations no. 92/377538 dated March. 13, 2014 of I.R.I. Central Bank. Purposes of the subsidiaries and affiliates are stated under Note 12-2-1.

1-3- Number of Branches

By March. 19, 2016, the bank’s branches are as follows as per the authorizations issued by Iranian monetary competent authorities:

March19,2016 March19,2015

Branch Branch

Branches in Tehran Province 82 82

Branches in other Province 58 61

Branches in Free Zones 3 2

143 145

1-4- Employment Status

Number of the Bank’s employees during the fiscal year is as follows:

2- Basis of Financial StatementsFinancial statements are prepared on the basis of accounting standards and regulations of I.R.I. Central Bank.

Group Mother Company

March.19, 2016 March.19, 2015 March.19, 2016 March.19, 2015

Person Person Person Person

Head Office & Administration Branch 1,919 1,844 754 816

Branches in Tehran Province 1,064 958 1,064 958

Branches in other Province 624 622 624 622

Branches in Free Zones 33 29 33 29

3,640 3,453 2,475 2,425


Statement of Cash Flows For the fiscal year ended March19,2016

88 89


3- Basis for Consolidation3-1- Consolidated financial statements reflect the results of the gathering of the items of the financial statements of the Bank and Subsidiaries subject to consolidation after suppressing of intergroup transactions and accounts and such profit and loss as not realized due to transactions between these companies.

3-2- As regards such subsidiaries as acquired during the fiscal year, their results are carried into Consolidated Profit & Loss Account as of the date on which they are effectively controlled by the Bank while for the subsidiaries assigned, such results end on the date of their assignments.

3-3- Bank’s shares acquired by the Subsidiaries are reflected in the accounts at their cost-prices and in Consolidated Balance Sheet as a debit item under the heading “Parent Company shares owned by Subsidiaries”.

3-4- Fiscal year of the subsidiaries ends on December 21st of each year and consolidated as so. Meanwhile, in case of any event prior to the date of the Mother Company’s financial statements not globally affecting the consolidated statements, the effects thereof are taken into consideration by making the required adjustments in the items of the financial statements of such subsidiaries.

3-5- Fiscal year of Saman bank Brokerage Co. and Saman Exchange Office Co. is changed from March. 20 to Dec. 21st of each year.

3-6- Financial statements of Sepehr Mehr Co. in the fiscal year 2015-2016 are consolidated with the Bank’s financial statements and those of the fiscal year 2014-2015 restated and presented.

4- Operations & Reporting currencyItems of Financial Statements are expressed in the currency of the economic environment of Saman Bank, that is to say IRR. Unless otherwise expressly stated under Notes, such items are expressed in IRR ml for better comprehension.

5- Using Judgments and EstimatesIn preparation of Financial Statements, Saman Bank’s Management have used judgments, appraisals and assumptions to determine the amounts recognized. Actual amounts may vary from such estimates. Such estimates and assumptions are based on historical records and the Management continuously revised them by comparing to actual events.

6- Bases of MeasurementMeasurement system in banking is the historical cost price system. Meanwhile for certain fix assets including lands and buildings on lands as well as goodwill re-evaluation method by independent experts is used.

7- Change in Accounting PoliciesBank has presented such accounting policies as stated under Note 8 by keeping a constant approach in the financial statements for all the periods reported.

8-1- Investments

8-2- Tangible Fixed Assets

8-2-1-Tangible fixed assets, save for land and building (Note 8-2-2), are recorded on the basis of the cost price including cash paid or fair value of other considerations assigned therefore at their date of acquisition. Cost of improvement and major repairs resulting in their capacity, effective life or yield quality are considered as capital cost and depreciated during the remaining effective life. Routine maintenance and minor repair cost intended to maintain their condition or repair such economic interests as expected by the Bank in comparison with the standard performance of the initial evaluation of such assets are identified as current cost at their occurrence and carried into Profit & Loss Account.

8-2-2- Land and building are reflected in the accounts according to re-valuations. Frequency period for re-evaluations are 5 years according to accounting standards to be conducted by independent experts (official experts to Justice).

8-2-3- Depreciation of tangible fixed assets is calculated according to their estimated effective life (and Regulation on depreciation provided under Amended Article 151 of Direct Taxation Act

Group consolidated Parent Co.

8-1-1- Mode of evaluation

Long-term investments

Investment in Subsidiaries subject toconsolidation

Subject to consolidation Cost-price (deducted by reserve for accumulated impairment

losses)

Investment in Affiliates Equity method Cost-p Cost-price (deducted by reserve for accumulated

impairment losses)

Other Long-term investments Cost-price (deducted by reserve

for accumulated impairmentlosses)

Cost-price (deducted by reserve for accumulated impairmentlosses)

Current investments

Marketable investments Minimum equity method and Net

sale value of total investmentsMinimum equity method and Net sale value of total investments

Other current investments Minimum equity method and Net

sale value of total investmentsMinimum equity method and Net sale value of total investments

8-1-2- Income recognition

Investment in Subsidiaries subject toconsolidation

Subject to consolidation At profit approval by general meeting of shareholders of invested

company (to the date of approval of financial statements)

Investment in Affiliates Equity method At profit approval by general meeting of shareholders of invested

company (to the date of approval of financial statements)

Other Long-term investments

At profit approval by general meeting of shareholders of

invested company (to the date ofbalance sheet)

At profit approval by general meeting of shareholders of investedcompany (to the date of balance sheet)

8- Summary of significant accounting policies

90 91


adopted in Feb. 11, 2002 and its further amendments) on the basis of the following rates and procedures:

8-2-4- Regarding such assets as acquired and operated during month, depreciation is calculated and carried into accounts as of the date of purchase. Whenever either of depreciable assets is not used for a while because of work breakdown or other reasons, its rate of depreciation will be 30% of such rates as indicated above.

8-3- Intangible Assets

8-3-1- Intangible assets (except Goodwill under Note 8-11) are recorded in the accounts on the basis of cost-price. Operational and administrative software is depreciated over 3 years in Straight Line method. No depreciation is considered for other intangible assets.

8-3-2- Bank’s goodwill reflected in the accounts according to re-valuations. Frequency period for re-evaluations are 5 years according to accounting standards to be conducted by independent experts (official experts to Justice). By virtue of the Directive 2946/MB dated March. 7, 2007of I.R.I. Central Bank, goodwill is not depreciated.

8-3-3- As regards intangible assets whose entitlement to use is unlimited and their yields remained unchanged (of indefinite effective life), they are not depreciated.

Asset Depreciation Rate Depreciation method

Building & Facilities 7 &12% Declining

Furniture, Fixtures, Computer hardware & devices 3, 5 & 10 years Straight Line

Operating license toll fee 10 years Straight Line

Vehicles 25% & 35% Declining

POS 5 years Straight Line

ATM 10 years Straight Line

Technical equipment, Satellite, Hub 4 & 10 years and 20% Straight Line & Declining

Branches Improvement & Renovation Cost 3 years Straight Line

Tools 1 & 4 years Straight Line

Equipment in leased buildings 2 years Straight Line

8-4- Recognition of Income from loans granted, Bank commissions and late penalties

By strength of the decision no. 1044 dated July 16, 2005 of Money & Credit Council and Directive 772/MB dated July 18, 2005 of I.R.I. Central Bank, profit of loans granted shall be recognized according to accrual method. Furthermore, by virtue of Directive 94/258020 dated Nov. 30, 2015, no accrual income is recognized for bad debts. Accordingly, the recognition methods for the Bank’s income are as follows:

8-5- Basis for determination of Depositors’ share in profit sharing income

In application of Law on Interest-free Banking Operations adopted on Aug. 30, 1983 and regulations and by-laws thereto and in view of Directive no. 94/69643 dated June 10, 2015 of I.R.I. Central Bank, the profit sharing income, uses of common resources and share of depositors shall be calculated and the results thereof reported in “Investment Deposit Accounts Performance Statement”.

8-6- Classification of loans granted

Loans granted by the Bank are evaluated and divided into the following categories on the basis of Directive on “classification of assets of credit institutions” (provided under Directive no. 2823/MB dated Feb. 24, 2007 of I.R.I. Central Bank) according to time and delay in payments, customer’s financial situation, industry or field of activity:

8-6-1- Current (at the latest, 2 months after due date or date of interruption of payment)

8-6-2- Overdue (2 to 6 months after due date or date of interruption of payment)

8-6-3- Outstanding (6 to 18 months after due date or date of interruption of payment)

8-6-4- Doubtful loans (more than 18 months after due date or date of interruption of payment)

• Management has not applied any judgment to Financial Statements beyond such framework as provided under the above Directive.

Profit & late penalties of loans granted, Bank commissions Recognition method

Profit of loans granted

Current Accrual/Cash

Overdue Accrual/Cash

Outstanding Accrual/Cash

Doubtful loans Accrual/Cash

late penalties

Current Accrual/Cash

Overdue Accrual/Cash

Outstanding Accrual/Cash

Doubtful loans Cash

Bank commissions

Income from commission for LG issued Cash

Income from commission for other bank services Cash

Income from commission for interest-free loans granted Cash

92 93


8-7- Provision for Doubtful Loans

Provision is considered for loans granted and carried into accounts as follows in compliance with “Guideline on Procedure for calculation of provision for loans in credit institutions” adopted by Money & Credit Council (provided under Directive no. 91/21270 dated Apr. 19, 2012 of I.R.I. Central Bank):

8-7-1- A general provision equal to 1.5% of total loans balance at the end of each year is calculated, except for the balance of loans for which a specific provision is allocated).

8-7-2- Specific provisions are calculated for overdue, outstanding and doubtful loans after deduction of updated value of collateral for each case and applying the following rates:

8-7-3- For loans with passed maturity payment dates of principals and interests more than 5 years, a specific provision equal to 100% (without considering the value of collaterals) is considered.

• Management has not applied any judgment to Financial Statements beyond such framework as provided under the above Directive.

8-8- Employees’ Termination Benefits

Employees’ termination benefits are calculated according to the last month fix salary and benefits for every year of service.

8-9- Foreign Exchange Translation

Foreign currency monetary items are recorded at the official rate (regulated by central bank) applicable as at the date of the balance sheet and non-monetary items at the historic cost price in the relevant foreign currency, converted at the official rate applicable at the date of transaction. Differences resulting from settlement or translation of monetary foreign currency items are recognized as the income or expense of the appropriate period and reported in Profit & Loss Statement as follows:

Category Provision rate %

Balance of overdue loans 10

Balance of outstanding loans 20

Balance of doubtful loans 50 to 100

No. Currency Rate as at the date of Balance Sheet (Rls)

1 U$ 30,240

2 Euro 33,935

3 GBP 43,089

4 AED 8,234

5 CAD 23,085

6 TRL 10,551

7 AUD 22,966

8 JPY 269/190

9 CHF 30,933

10 CNY 4,655

11 KRW 25/760

12 INR 453

8-10- Tax

Bank’s tax is calculated and carried into accounts at the end of the fiscal year and presentation of Financial Statements according to Iran Tax Act. Bank is required to fill and submit tax return to tax authorities for each fiscal year within 4 months after expiration of such year. Payment of 10% of the tax declared along with the tax return submittal is required. Upon examination and identification of accepted and rejected income and expenses, the tax officers will notify the notice of tax assessment within 15 months after the expiration of timeframe for submittal of tax return. Should the Bank protest the amount and procedure of assessment, it shall file an objection and pay a part of the tax assessed. Tax penalties are calculated as well and taken into consideration at their time.

8-11- Goodwill

Business entities combined of acquisition type are carried out on the basis of purchase method. Surplus of the cost price of investment acquisition in subsidiaries and affiliates subject to application of the net equity method on the Group’s share of net fair value of identifiable assets at their acquisition is recognized as goodwill and depreciated over 20 years. Goodwill resulted from acquisition of affiliates is reflected in Balance Sheet as a part of “Book value of long-term investment in Affiliates.

8-12- Free Zone Entities

Bank’s entities incorporated and established in free zones are subject to Regulations on I.R.I. Free Zones Monetary & banking Operations Executive Guideline adopted in September 2000 by Money & Credit Council and Executive Guideline on separation of FZ Branches accounts and financial statements (297/MB dated June 25, 2001).

8-13- Other Items under Notes to Financial Statements

Considering the number of items constituting account balances, some of the items in every note is reported as “Other”. Such items include less important items in terms of content and can be up to 10% of the total account balance. Moreover, the number of such items is disclosed.

8-14- Restated Items & Classification Adjustments

Figures in the comparative financial statements of 2014-2015 are restated according to such procedure as notified by Central Bank.

9- Cash Group Parent Co.

Note March19,2016 March19,2015 March19,2016 March19,2015

Rls (m) Rls (m) Rls (m) Rls (m)

Cash in hand (rials) 9-1 1,182,452 1,181,249 1,182,094 1,180,555

Cash in hand (foreign currency) 9-2 935,525 695,443 927,526 691,427

Revolving funds 123 722 - -

Cash in transit (rials) 995 764 995 764

Central bank – current accounts (rials) NotLimitated

9-4 2,478,732 1,778,289 2,478,732 1,778,289

Other banks and credit institutions – currentaccounts (rials) Not Limitated

9-5 45,000,741 39,939,137 44,772,819 39,725,079

49,598,568 43,595,604 49,362,166 43,376,114

94 95


9-1- Cash in hand is kept at Treasury, branches and ATMs in form of bills and coins. Cash in hand with Branches is used for daily transactions and according to the operations performed, the balances are checked and counted at the end of each working day and recorded in accounts. ATMs proceed with automatic payment of money after feeding. Maximum cash balance on an ATM is IRR 400 ml. On Mar. 19, 2016, the Bank operates 1308 ATMs.

9-2- Foreign currency in hand belonging to Saman Bank (Parent company) is translated on Mar. 19, 2016, at such day rate as notified by I.R.I Central Bank and the balance thereof is as follows as at the date of Balance Sheet:

9-3- Cash in hand and in way are insured by Saman Insurance Co. (Public Held) against possible risks of theft, fire, explosion, thunder, accident, funds car-ramming, etc.

9-4- Demand deposits with Central Bank (Not limited)

9-4-1- Foreign currency current deposit with Central Bank is as follows:

March 19,2016 March 19,2015

Forex amount Exchange rate Amount Forex amount Exchange rate Amount

Rls (m) Rls (m)

US Dollar 12,935,464.22 30,240 391,168 7,106,525/91 27,994 198,940

Euro 13,872,587.07 33,935 470,766 14,249,097/66 30,156 429,696

UK Pound 152,079.59 43,089 6,553 194,379/59 41,699 8,105

UAE Dirham 7,166,705 8,234 59,011 7,172,297 7,622 54,668

Turkish Lira 2,615 10,551 28 1,615 10,879 18

927,526 691,427

March 19,2016 March 19,2015

Forex amount Exchange rate Amount Forex amount Exchange rate Amount

Rls (m) Rls (m)

US Dollar 7,634 30,240 231 3,470,815 27,994 97,162

Euro 3,073 33,935 104 8,698,119 30,156 262,300

UAE Dirham - 8,234 - 2,250,411 7,622 17,153

Indian Rupee 1 453 - 1 449 -

South Korean won 27 26 - 27 25 -

Omani Rial 1 78,546 - 1 72,709 -

335 376,615


Rls (m) Rls (m)

Short-term forex with CBI deposits – forex (Not Limitated) 9-4-1 335 376,615

Current account with CBI (Not Limitated) 9-4-2 2,394,611 1,240,104

Governmental deposit accounts 9-4-3 83,786 161,570

2,478,732 1,778,289

9-4-2- IRR current account with Central Bank no. 26200/5 used for clearance of interbank IRR operations such as adjustment of legal deposit balance, clearance of instruments exchange at Chamber of Clearance, operations of SATNA, PAYA, SHETAB, etc. systems. Balance of the above account as at March. 19, 2016 amounts to IRR 2.394 billion according to the Bank’s books while Central Bank’s books show a total debit balance of IRR 459 billion. Such inconsistency is due to the following:

9-4-2-1- As result of certain foreign currency problems in 2011-2012, Saman Bank was appointed as the colleague bank for currency distribution and agreed to plan and run the executive operations within the obligations and agreements concluded.

9-4-2-2- On Mar. 5, 2012, Central Bank withdrew the amount of IRR 4.866 billion as the difference between the price of the foreign currency delivered to banks and the free market price and the rate fixed under the decision of 5-memer board under code 1006 on the said accounts (without considering the inadequacy of the balances). Despite the objections made in this respect, The Bank had no response.

9-4-2-3- Private Banks Association protested such approach in writing on March. 7, 2012.

9-4-2-4- In view of the actions taken, as per the notice of Central Bank dated March. 17, 2012 returned 90% of the amount withdrawn, IRR 4.379 billion, but once again on March. 18, 2012 debited the Bank for IRR 2.346 billion (apparently on the basis of a decision taken by the Cabinet).

9-4-3- By virtue of the agreement dated May 17, 2009 and in application of Para. (Z) Art.10 of Iran Monetary & Banking Act (bill of law amending Iran Monetary & banking act adopted by Iran Revolution Council on Mar. 18, 2007) as the representative of I.R.I. Central Bank, Saman Bank is required, while opening current interest-free deposit accounts for State bodies, whenever such accounts have a balance to deposit with Central Bank prior to 2 p.m. of the same day an amount equivalent to the balances of such State accounts (of the previous day).

9-5- Demand deposits with other banks & credit institutions (not limited)

Group Parent Co.



Other Local banks – current accounts-rials (Not Limitated) 9-5-1 98,740 48,204 103,996 45,612

Other Local banks – term deposits -rials (Not Limitated) 9-5-1 10,014,090 1,641,205 9,808,289 1,614,681

Other Foreign banks – current accounts-forex (Not Limitated) 9-5-2 32,806,946 32,180,272 32,806,946 32,180,272

Other Foreign banks – term deposits-forex (Not Limitated) 9-5-3 125,533 844,956 125,533 844,956

Other Local banks – term deposits-forex (Not Limitated) 9-5-4 72,678 2,597,421 45,301 2,412,479

Other Local banks – current accounts-forex (Not Limitated) 9-5-5 1,882,754 2,627,079 1,882,754 2,627,079

45,000,741 39,939,137 44,772,819 39,725,079

96 97


9-5-1- Demand and Term deposits with other local banks- IRR (not limited) related to Saman Bank (Parent entity) are as follows:

9-5-2- Foreign currency demand deposits with foreign banks- foreign currency (not limited) totally related to Saman Bank (Parent entity) are as follows according to currency:

March 19,2016 March 19,2015

Name of bank Current Term Total Current Term Total


Refah - 3,786 3,786 - 16,964 16,964

Melli 68,172 2,997,492 3,065,664 16,794 171,665 188,459

Tejarat 37 8,315 8,352 260 5,008 5,268

Saderat 11,481 32,484 43,965 4,020 36,665 40,685

Sepah 5,746 30,369 36,115 23,803 16,938 40,741

Maskan 6 1,642 1,648 - 7,138 7,138

Keshavarzi 53 1,005,777 1,005,830 704 2,640 3,344

Postbank 18,350 - 18,350 - - -

Mellat 150 1,828,259 1,828,409 30 7,520 7,550

Pasargad - 51 51 - 46 46

Gardeshgari 1 1,000,000 1,000,001 1 - 1

Sina - 32 32 - 30 30

Ansar - 1,200,000 1,200,000 - 600,000 600,000

Dey - 73 73 - 750,067 750,067

khavarmiane - 9 9 - - -

Ayandeh - 1,200,000 1,200,000 - - -

Sarmaye - 500,000 500,000 - - -

103,996 9,808,289 9,912,285 45,612 1,614,681 1,660,293

March 19,2016 March 19,2015

Currency type Forex amount Exchange rate Amount Forex amount Exchange rate Amount

Rls (m) Rls (m)

US Dollar 3,645,933/28 30,240 110,253 3,645,948/28 27,994 102,065

Euro 358,406,397/95 33,935 12,162,521 170,315,587/26 30,156 5,136,037

UK Pound 262,690/24 43,089 11,319 499,009/87 41,699 20,808

UAE Dirham 38,939,656/87 8,234 320,629 31,107,090/13 7,622 237,098

Swiss Franc 60,688,632/11 30,933 1,877,281 240,535,036/61 28,220 6,787,899

Chinese Yuan 164,727,974/30 4,655 766,809 222,247,851/30 4,519 1,004,338

Turkish Lira 126,532,242/80 10,551 1,335,042 38,357,502/41 10,879 417,291

Japanese Yen 19,972,485,686/00 269.19 5,376,393 21,891,809,824/00 232.47 5,089,189

South Korean WON 10,673,363,786/00 25.76 274,957 156,231,255,582/00 25/07 3,916,249

Omani Rial 91,215,839/28 78,546 7,164,639 83,033,945/67 72,709 6,037,315

Indian Rupee 7,521,196,747/69 453 3,407,103 7,643,614,471/36 449 3,431,983

32,806,946 32,180,272

9-5-3- Foreign currency term deposits with foreign banks totally related to Parent Company are as follows according to currency:

9-5-4- Foreign currency term deposits with local banks totally related to Parent Company are as follows according to currency:

9-5-5- Foreign currency demand deposits with local banks totally related to Parent Company are as follows according to currency:

10- Due from Banks & Credit institutions

March 19,2016 March 19,2015


Rls (m) Rls (m)

Euro 2,766,480 33,935 93,880 2,766,480 30,156 83,426

Turkish Lira 3,000,000 10,551 31,653 70,000,000 10,879 761,530

125,533 844,956

March 19,2016 March 19,2015


Rls (m) Rls (m)

Euro - - 80,000,000 30,156 2,412,479

Indian Rupee 100,000,000 453 45,301 - - -

45,301 2,412,479

March 19,2016 March 19,2015


Rls (m) Rls (m)

US Dollar 33,821,535/10 30,240 1,022,763 38,847,138/87 27,994 1,087,487

Euro 9,192,966/25 33,935 311,963 35,273,930/96 30,156 1,063,721

UK Pound 4,232,792/57 43,089 182,387 4,232,792/57 41,699 176,503

UAE Dirham 1,633,198/36 8,234 13,448 1,633,198/36 7,622 12,448

Australian Dollar 12,748/00 22,966 293 12,748/00 21,646 276

Japanese Yen 1,307,255,798/00 269/19 351,900 1,233,036,940/00 232 286,644

1,882,754 2,627,079

Parent Co.


Rls (m) Rls (m)

Due from Central Bank of Iran 10-1 8,131,046 7,314,279

Due from other banks & credit institutions 10-2 4,569,201 4,635,788

12,700,247 11,950,067

98 99


10-1- Due from Central Bank:

10-1-1- Balance of this account for forward-purchase of foreign currency from Central Bank for such documentary credits as provided under Directive no. M60/1015 dated Sept. 7, 2013 of I.R.I Central Bank is as follows according to currency:

It should be mentioned that follow-ups by Saman Bank to date resulted in an agreement between the representatives of Foreign Currency Statistics & Debts Department of Central Bank and Saman Bank according to which Central Bank agreed to provide 363 U$ ml as follows. Furthermore, as per the letter no. 256646 dated Dec. 16, 2014, Central Bank subjected the settlement of foreign currency debts to a foreign currency special audit for 2011-2012 and 2012-2013 by the independent auditor of the Bank (Foreign currency financial statements and breakdown of uses as well as foreign currency resources, assets and liabilities for 2011-2012 and 2012-2013 have been prepared and submitted to the auditor).

10-1-2- Other foreign currency debts of Central Bank is related to the payment of foreign currency debts of ICA in 2014-2015 to Lufthansa and Turkish Airlines by the Bank as per the letters received from Foreign Currency Division of Central Bank under no. 1186 & 3806. Such sums are cleared at “base rate” on Apr. 20, 2016 as per the letter of International Department of Central Bank under no. 95/639 dated Apr. 4, 2016.

March 19,2015

Currency type Preferential exchange rate Official/transactional rate Total

Forex amount Exchangerate Amount Forex amount Exchange

rate Amount Forex amount Exchangerate Amount


Euro 62,716,454/42 33,935 2,128,283 36,775,270/46 33,935 1,247,969 99,491,724/88 33,935 3,376,252

UAE Dirham 34,270,705/10 8,234 282,185 2,563,672/38 8,234 21,109 36,834,377/48 8,234 303,294

Chinese Yuan - 4,655 - 24,142,410/16 4,655 112,383 24,142,410/16 4,655 112,383

South KoreanWON 52,416,788,566 26 1,350,309 - 26 - 52,416,788,566/00 26 1,350,309

Turkish Lira 78,719/68 10,551 831 - 10,551 - 78,719/68 10,551 831

3,761,607 1,381,461 5,143,068

Amount in Dollers

RateAmount requested by

the Bank

Date entered by the Bank Amount accepted as commitment Registered total

amount

CBI’s obligation

Preferential exchange rate (subsidized) 462,679,859 750,600,608 563,176,118 301,954,123

Official exchange rate (transactional) 140,214,008 170,080,338 150,154,772 43,187,252

Current exchange rate - - - 18،100،244

Loan interest rate - 955,547 461,132 -

602,893,867 921,636,493 713,792,022 363,241,619

10-1-3- Other debts of Central Bank mainly regard the failure to pay a part of the legal deposit for reducing such rate as regulated under the policy & regulatory package of 2010-2011 of I.R.I. Central Bank.

10-2- Due from Banks & Credit Institutions

10-2-1- Balance of the said account is cleared within two working days as per case through Bank Instruments Clearance Chamber.

10-2-2- Loans granted to other banks and credit institutions are as follows:

Balance

Name of bank Type of contract Interest rate Forex amount Currency type March19,2016 March19,2015

Rls (m) Rls (m)

Saderat Receivable discount 21/00 3,476,390,085,800 Rial 3,476,390 3,476,390

Pasargad Receivable discount 12/81 26,766,893 Euro 908,335 807,183

4,384,725 4,283,573

Parent Co.


Rls (m) Rls (m)

Purchase of forex from CBI 10-1-1 5,143,068 4,658,000

Other claims due from CBI – forex 10-1-2 2,978,420 2,646,744

Other claims due from CBI 10-1-3 9,558 9,535

8,131,046 7,314,279

Parent Co.


Rls (m) Rls (m)

Interbank paid checks 10-2-1 184,477 352,215

Due from other bank for Loans granted 10-2-2 4,384,725 4,283,573

4,569,202 4,635,788

100 101


Saderat Bank:

Saderat Bank in view of its mission to finance its customers in the fields of foreign currency and IRR in order to reduce the credit portfolio risk and maintain capital adequacy rate, added a new service to its loans grantable package since winter 2011, which includes the discounting of letter of credits opened by banks and payment of relevant amount on maturity dates1. In the field of foreign currency, discounts were made and resulting funds remitted to the beneficiary’s account (discount applicant) without right of recourse to beneficiaries, in compliance with relevant requirements and guidelines and within regulations governing foreign currency credits and letter of credit unified regulations. In the field of IRR, since winter 2011, local term letter of credits (IRR) opened by Iranian banks were remitted to the beneficiary’s account within the regulations governing local letter of credits (IRR) and the executive framework set by Central Bank (unified regulations on letter of credits) without right of recourse to beneficiaries in compliance with the relevant requirements and guidelines. Such discounts were made in compliance with and application of all the required controls upon transaction of the documents stated under the LC and obtaining of required approvals (coded fax from agent banks) on authenticity of opened LCs and unconditional without reserve obligation of opening bank to reimburse the revenues of such credits on maturity dates against the assignment of the beneficiary’s rights (discount applicant) to Saman Bank.

Different companies had applied for discounting letter of credits opened and secured by other banks which was satisfied upon going through the above process and obtaining of approvals from the Bank’s credit bodies. In the field of discount of foreign currency LCs, in all the case the credit funds were paid and cleared on due dates by opening and securing banks. In the field of IRR term LCs, all the credit funds were normally paid and cleared except for cases related to Amir Mansour Aria Group companies. For such cases and companies party to agreements with Amir Mansour Aria Group companies, except for Saderat and Industry & Mine Banks, all the other banks including Pasargad Bank, Sepah Bank, Melli Bank and Maskan Bank which had secured the payment of 18 LCs for a total amount of IRR 2,136 billion paid their obligations to Saman Bank on due dates. Only two banks, Saderat and Industry & Mine, failed to perform their obligations. All the discounts made and the relevant amounts opened and secured by these two banks are as follows:

1- Inc calculation of capital adequacy rate, capital of the assets guaranteed by local banks are harmonized at a risk rate lower than that for assets secured by real estate mortgages

Company (Primary beneficiary/Discount applicant/(Revenues assignor

CCN/ Customer

No

Credit opening bank (Obligor to pay

funds on due date)

Balance of transacted

letters (Rls) (b) Company’s owenrship

Anzali FZ Elite 1305959 Saderat Bank 761 Amirreza Mojoudi (holding 99% of shares)

Iranain Fouladyar Trade &

industrial Co.174667 Saderat Bank 300

National Iran Industry & Steel Group Employees Cooperative (holding 55% of shares) Iran Metal Waste

Proceurement & Processing Co. (holding 40% of shares)

Iran Steel General Services Co. 7778609 Saderat Bank 521 Fund for Protection & Retirement of Steel Employees

(holding 99.7% of shares)

Khuseztan Steel Co. 13934 Saderat Bank 807 Iran Mines & Minerals Development & Renovation Org. (holding 50.5% of shares)Province Investment

Companies (holding 40% of shares)

Spadana Foulad Fam Co. 1124386

Saderat Bank 1,350

Amir Ramezani Taromi (holding 95% of shares) Industry & Mine

Bank 499

Milad Hadid Parsian Co. 1124386 Saderat Bank 802 Mohesn Karamian (holding 60% of shares)

5,040

Collected by March20,2016 (1,564)

Collateral shares (1,575)

Debt Balanace 1,901

In order to protect interests and rights of Saman Bank and for the purpose of claiming the revenues secured and obligation of Saderat and Industry & Mine Banks to perform their obligations, Saman Bank brought legal actions for claim of revenues of 6 matured LCs of which regarded Saderat Bank and 2 Industry & Mine Bank. In all 8 cases, Saman Bank filed petitions with the relevant forum for seizure of assets of the opening banks at such amount as sought which resulted in issue of a writ of attachment of their assets and enforcement of the writ. Therefore, the judicial authority has seized the assets of Iran Saderat and Industry & Mine Banks for an equivalent of the amounts claimed.

To date hereof, two of the claims against Industry & Mine Bank have resulted, upon becoming final in favor of Saman Bank and issue of writ of enforcement, in collection of IRR 666 billion, IRR 499 billion for principal claim and IRR 167 billion for damages for delay, proceedings and attorney fee. Following the judicial actions initiated against Iran Saderat Bank before 19th Division of Tehran Civil Court for collection of 6 LCs through 3 separate cases; case 9009 980 227 900 567 subject claim of LC no. 89/3446/0072 at IRR 257,624,727,729, case 9009 980 227 900 569 subject claim of LC no. 89/34469/0063 at IRR 257,600,466,200, and case 9 109 980 227 900 613 subject claim of 4 LCs no. 90/3446/0029, 90/3446/0030, 90/3446/0023 and 90/3446/0024 at a total amount of IRR 807.182.696.200, the Court condemned Saderat Bank to pay to Saman Bank the principal amounts of the relief sough in addition to damages for delay, proceedings and attorney fee on the basis of the legal tariffs. Once such decisions became final by Division 12th of Tehran Province Appeal Court and upon application for issue of writ of enforcement, 3 writs of enforcement were issued against Saderat Bank:

Writ of enforcement no. 9 210 420 227 900 212 for the case 9009 98 227 900 567, no. 9 210 420 227 900 211 for the case 9009 802 279 005 69 and no. 9 210 420 227 900 208 for the case 910980227900613. Upon the notifications of the writs, Saderat Bank requested the Head of Judiciary who stopped the enforcement of the writ no. 9 210 420 227 900 212 and no amount was collected therefore. For the two other writs, Tehran Court Enforcement Office calculated the amounts collectable as follows:

1- Wirt of enforcement no. 921 420 227 900 208 Rls (m)

Principal relief sough (principal amounts of 4 LCs) 807,183

Proceedings fee paid by Saman Bank 16,144

Damages for delay as of July 15, 2012 402,914

Difference of proceedings fee 8,058

Attorney fee 200

1,234,499

2- Wirt of enforcement no. 921 420 227 900 211 Rls (m)

Principal relief sough 257,600

Proceedings fee 5,152

Damages for delay as of Oct. 1st, 2011 203,654

Difference of proceedings fee 4,073

Attorney fee 200

470,679

102 103


By selling collateral shares belonging to Saderat Bank at different dates, a total amount of IRR 1.574.696.593.230 was collected and handed over to the Bank through 4 cheques. The rest, IRR 142 billion, is not collected yet due to the order of stopping by Head of Judiciary. The above judicial cases are under examination at Judicial & Supervisory Division of Judiciary according to the provisions of Amended Art. 18 of Law on formation of public & revolutionary courts at the request of Saderat Bank. It is understood that upon cancellation of order for stopping of enforcement operations, Saderat Bank will be prosecuted for paying the rest.

Petition for 13 other LCs related to Saderat Bank no. 90/3446/0010, 90/3446/0015, 90/3446/0016, 90/3446/0019, 90/3446/0021, 90/3446/0022, 90/3446/0017, 90/3446/0018, 90/3446/0027, 90/3446/0028, 90/3446/0031, 90/3446/0037 and 90/3446/0038, are submitted to judicial authorities and referred to 4th, 19th and 14th Divisions. The first instance hearings were subject to retrial due to counterclaim by Saderat Bank. Finally, upon hearings and submittal of several conclusions, the case on LC no. 90/3446/0010 before 14th Division resulted in condemnation of Saderat Bank to pay IRR 249.681.328.000 for principal relief sough and IRR 7.490.839.840 for proceedings fee and attorney fee according to tariffs and damages for delay from the date of claim (July 16, 2012) to the date of actual collection according to such inflation rate as notified by Central Bank. Such decision was confirmed and became final in favor of Saman Bank by 18th Division of Tehran Province Appeal Court upon appeal by Saderat Bank and a writ of enforcement was issued against the latter upon the application of Saman Bank’s attorneys.

In all the cases, at the application of Saman Bank’s attorneys, writs of provision of relief sough against Saderat Bank for the amount of the LCs were issued of which 6 resulted in the attachment of Saderat Bank’ shares in listed companies for a total amount of IRR 1.581.597.264.000 and in 7 other cases, despite issue of writ of provision of relief sough, because of lack of identification of valuable marketable stocks such writ was not enforced. Saman Bank attempts to identify the assets and enforce these 7 writs.

11-

Loan

s G

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s

11-1

- Ta

ble

of G

roup

’s lo

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(m)

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(m)

Rls

(m)

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(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Sale

s by

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allm

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7,6

36,2

24

139

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1

63

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2,8

94,4

79

22,

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91,

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s – sh

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-

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-2-

Tabl

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par

ent C

ompa

ny’s

loan

s is

as

follo

ws:

11-3- Categorization of the Group’s loans granted to and due from non – governmental persons as per the guideline adopted by Money & Credit Council (under Note 8-6 to Financial Statements) is as follows:

Group

March19,2016

Current Overdue Outstanding Doubtful Total

Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Sales by installments 7,593,129 2,398 1,800 178,475 7,775,802

Jealeh (service contracts) 2,701,657 946 12,809 1,705,595 4,421,007

Hire purchase 419,499 315 326 1,817,200 2,237,340

Salaf (future contracts) 1,809 - - 28,859 30,668

Murabaha 40,415 - - - 40,415

Interest free loan 138,925 1,348 526 171 140,970

Muzarabah (trade contracts) 11,050,466 168,867 459,184 3,488,405 15,166,922

Civil partnership – (Mosharakat Madani) 83,842,912 1,469,859 2,846,608 12,448,530 100,607,909

Receivable discount/LCs discount 4,674,137 - - 1,047,390 5,721,527

Foreign currency loans – short & medium terms 2,497,204 - - 2,308,270 4,805,474

Debtors for paid letters of credit 681,803 - - 1,670,536 2,352,339

Debtors for paid letters of guarantee 1,112,057 - - 233,478 1,345,535

Debtors for paid credit cards 9,215 - - - 9,215

Debtors for long-term LCs & drafts 84,447 - - - 84,447

114,847,675 1,643,733 3,321,253 24,926,909 144,739,570

Less:

Fees & accrued interests 3,648,800 18,906 4,553 1,869 3,674,128

Deferred Interest 713,334 195,884 520,571 3,557,731 4,987,520

Joint Civil Partnership 3,059,597 - - - 3,059,597

Muzarabah – amounts received 306,573 - - - 306,573

Net Loan befor less provision for doubtful debts 7,728,304 214,790 525,124 3,559,600 12,027,818

General provision for doubtful debts - - - - (1,775,252)

Specific provision for doubtful debts - - - - (3,732,753)

107,119,371 1,428,943 2,796,129 21,367,309 127,203,747

Pare

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s by

inst

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7,6

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79

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(58,

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4,80

0,79

6 1

,307

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acts

) 3

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3

18,9

14

146

,960

- 6

93,6

26

302

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(1

6,32

0)3,

408,

710

2,5

16,4

89

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e pu

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se 2

,021

,145

3

,963

2

12,2

31

-

74,

336

5,9

54

(64,

006)

2,09

3,04

3 4

,211

,393

Sala

f (fu

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106 107


11-4- Categorization of the Parent Company’s loans granted to and due from non –governmental persons as per the guideline adopted by Money & Credit Council (under Note 8-6 to Financial Statements) is as follows:

11-5- Turnover of provision for doubtful loans of Parent Company is as follows::

March 19,2016 March 19,2015 Generalprovision

Specific provision

TotalGeneral

provision Specificprovision

Total


Balance at the beginning of year 1,703,206 3,803,335 5,506,541 1,468,570 2,447,262 3,915,832

Written off debts - (191,216) (191,216) - - -

Provision for current year 91,273 274,687 365,960 234,636 1,356,073 1,590,709

Balance at the end of year 1,794,479 3,886,806 5,681,285 1,703,206 3,803,335 5,506,541

11-6- Parent Company’s foreign currency loans granted according to resources paid:

11-7- Loans granted to and due from non-governmental persons according to maturity date and interest rate:

11-8- Group’s loans granted to Affiliates are as follows:

March 19,2016 March 19,2015

Rate Over 24% 24-21% 21-18% 18-15% 15-12% 15% & less Total Total

Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Overdue 18,616,893 2,629,880 2,332,131 36,573 3,374,309 2,902,107 29,891,893 28,986,136

March19, 2016 20,205,845 10,273,771 3,734,902 56,267 288,283 1,041,819 35,600,887 24,562,024

March19, 2017 15,978,736 31,523,711 57,309 1,593,733 544,493 347,605 50,045,587 52,251,037

March19, 2018 4,414,902 1,981,884 999,909 16,403 18,458 175,641 7,607,197 3,948,761

March19, 2019 3,420,366 2,360,007 5,068,430 13,742 56,938 227,834 11,147,317 7,141,897

March19, 2020 3,202,827 556,370 22,923 1,035 61,806 58,760 3,903,721 3,957,013

2021 & Therefater 890,869 898,976 228,916 21,979 650,837 4,152,023 6,843,600 14,803,066

66,730,438 50,224,599 12,444,520 1,739,732 4,995,124 8,905,789 145,040,202 135,649,934

Group


Other affilaiates Intrerest Rate Current Non Current Doubtfuprovision Total Total

% Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Adonis Co. 22&24 70,890 - (1,063) 69,827 21,324

70,890 - )1,063( 69,827 21,324

Parent Co.

March19,2016

Current Overdue Outstanding Doubtful Total


Sales by installments 7,593,129 2,398 1,800 178,475 7,775,802

Jealeh (service contracts) 2,701,657 946 12,809 1,705,595 4,421,007

Hire purchase 419,499 315 326 1,817,200 2,237,340

Salaf (future contracts) 1,809 - - 28,859 30,668

Murabaha 40,415 - - - 40,415

Interest free loan 138,925 1,348 526 171 140,970

Muzarabah (trade contracts) 11,050,466 168,867 459,184 3,488,405 15,166,922

Civil partnership – (Mosharakat Madani) 84,143,544 1,469,859 2,846,608 12,448,530 100,908,541

Receivable discount/LCs discount 4,674,137 - - 1,047,390 5,721,527

Foreign currency loans – short & medium terms 2,497,204 - - 2,308,270 4,805,474

Debtors for paid letters of credit 681,803 - - 1,670,536 2,352,339

Debtors for paid letters of guarantee 1,112,057 - - 233,478 1,345,535

Debtors for paid credit cards 9,215 - - - 9,215

Debtors for long-term LCs & drafts 84,447 - - - 84,447

115,148,307 1,643,733 3,321,253 24,926,909 145,040,202

Less:

Fees & accrued interests 3,648,800 18,906 4,553 1,869 3,674,128

Deferred Interest 713,334 195,884 520,571 3,557,731 4,987,520

Joint Civil Partnership 3,059,597 - - - 3,059,597

Muzarabah – amounts received 306,573 - - - 306,573

Net Loan befor less provision for doubtful debts 7,728,304 214,790 525,124 3,559,600 12,027,818

General provision for doubtful debts - - - - (1,779,762)

Specific provision for doubtful debts - - - - (3,732,753)

107,420,003 1,428,943 2,796,129 21,367,309 127,499,869

March 19,2016 March 19,2015

Current Overdue Outstanding Doubtful Total Total


Local resources 2,495,907 - - 2,237,326 4,733,233 3,520,221

Foreign currency provision account - - - 70,945 70,945 56,964

National Devlopment Fund 1,296 - - - 1,296 6,019

2,497,203 - - 2,308,271 4,805,474 3,583,204

108 109


11-9- Parent Company’s loans granted to Subsidiaries and Affiliates are as follows:

12- Investment in Stocks & Securities

Parent Co.


IntrerestRate

Current Non CurrentDoubtful

provisionTotal Total

Group Companies % Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Saman Kish Electronic Payment 22/0 184,548 - (2,768) 181,780 318,967

Saman Satellite Communications 22/5 16 - (.2) 16 7,382

Saman Pardazeshgaran 29/5 9,842 - (148) 9,694 9,224

Saman Brokerage 12/0 28,037 - (421) 27,616 21,695

Sepehr Mehr 22/0 78,189 (1,173) 77,016 11,241

Other related parties

Adonis 22&24 70,890 - (1,063) 69,827 21,324

371,522 - )5,573( 365,949 389,833

Group


Current Long term Total Current Long term Total


Long-term investments in marketable shares 634,688 84,930 719,618 851,630 82,101 933,731

Investments in other stocks 12-2 - 251,397 251,397 - 149,699 149,699

Investments in other securities 470,717 - 470,717 1,556 - 1,556

Investments in mutual funds - 90,272 90,272 - 85,097 85,097

1,105,405 426,599 1,532,004 853,186 316,897 1,170,083

Parent Co.


Current Long term Total Current Long term Total


Long-term investments in marketable shares 12-1 634,050 84,930 718,980 843,168 79,387 922,555

Investments in other stocks 12-2 - 1,975,654 1,975,654 - 1,440,068 1,440,068

Investments in other securities 12-3 458,903 - 458,903 - - -

Investments in mutual funds 12-4 - 85,031 85,031 - 82,497 82,497

1,092,953 2,145,615 3,238,568 843,168 1,601,952 2,445,120

Shares of Listed companies 4,111,879 0/02 10,852 5,787 50,220 31,061

Mining & Metals Devlopment Invesmnet 6,325,561 0/01 9,601 8,790 103,594 57,800

Esfahan Mobarakeh Steel 10,142,312 0/93 37,618 40,272 42,419 25,639

Iran Construction Investment 50,000 0/00 141 145 19,380 16,528

Iran Telecommunication 18,457,199 0/18 31,869 30,506 - -

Sina Bank 13,520,123 0/52 71,535 54,608 126,376 86,144

Haffari Shomal 6,915,400 0/07 54,779 65,185 77,082 72,072

MAPNA 1,000,000 0/10 4,995 5,242 - -

Azarab 1,000,000 0/03 1,313 1,150 - -

Alborz Insurance 7,800,000 0/05 24,895 35,850 37,017 39,154

Iran Khodro 6,572,362 0/02 15,829 15,208 - -

Mellat Bank 1,974,370 0/07 2,706 2,818 - -

Shahed Investment 30,508,715 3/05 58,791 44,356 43,706 35,690

Iranian Leasing 24,129,271 0/45 52,753 31,093 127,959 78,188

Sepah Investment 11,600,000 0/02 12,884 12,192 3,332 3,329

Saderat Bank 26,336,558 0/05 56,603 33,677 74,583 54,825

Pasargad Bank 27,575,512 1/38 37,946 37,963 34,032 34,482

Toka Steel Investment 18,940,000 0/37 44,008 58,260 16,099 14,988

Bahman Group 1,647,345 0/47 4,872 4,061 - -

Sahand Lastik 42,929,305 0/34 60,328 55,871 75,181 66,045

Kharazmi Investment 10,101,213 4/90 28,866 32,161 11,860 12,122

Toka Shipping 2,000,000 0/13 9,534 10,659 38,958 29,651

Iran Khodro Investment Development 500,000 0/004 2,060 1,975 - -

Mobin Petrochemicals 1,494,193 0/08 3,268 3,001 - -

Tractor Manufacturing 516,000 0/02 8,229 7,895 - -

Fajr Petrochemicals 730,000 0/97 1,912 1,654 - -

Piazar Agroindustry 1,975,713 0/07 2,742 2,794 - -

Bahman Investment - 0/00 - - 11,603 8,621

Behshahr Industries Development Investment - 0/00 - - 38,735 18,619

National Iran Copper Indiustries Co. - 0/00 - - 13,558 10,747

Khorasan Steel - 0/00 - - 18,591 16,944

Rena Investment - 0/00 - - 21,302 24,786

Rayan Saipa Leasing - 0/00 - - 9,707 7,715

Ghadir Investment - 0/00 - - 10,501 9,131

SAIPA - 0/00 - - 31,106 24,322

Iran Post bank - 0/00 - - 6,287 5,760

SAIPA Investment - 0/00 - - 6,617 2,328

Piranshahr Sugar - 0/00 - - 10,254 9,392

Housing Investment - 0/00 - - 12,937 8,421

March 19,2016 March 19,2015

Number of shares Investment Cost Net realizablevalue Cost Net realizable

value

% Rls (m) Rls (m) Rls (m) Rls (m)

12-1- Parent Company’s investment in marketable stocks

12-1-1- Current investment in marketable stocks is as follows:

110 111


12-2- Investment in other stocks including long-term investment separated as follows:

Group


Shares Cost Provision forimpairment

Net bookvalue

Net bookvalue


Saman Satellite Communication Co. 80 - - - -

Saman Exchange Office Co. 96/46 - - - -

Saman E-payment Co. 65/24 - - - -

Saman Insurance Co. 14/84 96,600 - 96,600 77,146

Saman Bank Brokerage Co. 63/998 - - - -

Clearance & Securities Central Deposit Co. 3/19 7,975 - 7,975 7,975

Iran Khodro card Services Co. - - - - 424

Iran Investment Co. 0/30 15,050 - 15,050 3,010

Iran Credit Rating Co. 6/42 3,243 - 3,243 3,243

Stock Exhange Co. 0/103 155 - 155 155

Iranian Hafez Saman Accreditation Co. 99/15 - - - -

Saman Processors Co. 100 - - - -

Sepehr Sharq Atiehandishan Co. 99/9 - - - -

Iran Energy Stock Exchange 1/031 6,141 - 6,141 6,141

Saman Aftab Tejarat 15 5 - 5 5

Middle-East Bank 1 40,567 - 40,567 40,567

Shaparak Card Payment Electronic Co. 1/31 9,315 - 9,315 9,315

Kardan Capital Financing Co.- Affiliate 32/92 - - - -

Saman Investment Dvelopment Co. 101 - 101 249

Omid Atieh Andishan Development 75 - 75 55

Kish System E-Commerce Development Co. - (3) (3) (3)

Atieh Alborz Trade Development - - - -

Sepehr Mehr Atieh Andishan - - - -

Sepehr Sharq Atieh Andishan Services Development 10 - 10 10

Sepehr Sharq Atieh Andishan IT 10 - 10 10

Pars Kish-cell 10 - 10 -

Iran OTC Market 30 - 30 30

Behnad bana Civil & Development 0 - - -

Information Co. 490 - 490 245

Sarv Zarrin Atlas 500 - 500 -

Segal Software Co. 2,673 - 2,674 1,072

Middle-East Arian Roll 50 - 50 50

183,000 (3) 182,997 149,699

Plus:

Investment advance payment in CIP shares (Iranian Pars Technology) 68,400 - 68,400 -

251,400 )3( 251,397 149,699

12-1-2- Long-term investment in marketable stocks is as follows:

March 19,2016 March 19,2015

Number ofshares Investment Cost Net realizable

value Cost Net realizablevalue

% Rls (m) Rls (m) Rls (m) Rls (m)Tamin Oil, Gas & Petrochemicals Investment - 0/00 - - 2,168 1,332

fars & Khuzestan Cement - 0/00 - - 5,795 5,140

Sea Shipping - 0/00 - - 1,686 759

Exir Pharmacy - 0/00 - - 8,709 7,766

Plasco Kar - 0/00 - - 230 232

650,929 603,173 1,091,584 819,733

Stocks of OTC Listed companies

Toka rail 11,713,239 0/59 30,249 29,388 - -

Tka Refactory Industries 200,000 0/28 1,008 916 - -

Shahed Civil & Development Co.Damavand Power Generation 50,000 0/004 129 133 - -

Damavand Power generation 3,000 0/001 223 242 - -

Middle-East Life Insurance 200,000 0/017 100 198 - -

Esfahan Metallurgy - 0/00 - - 45,741 19,935

Tehran Oil Refinery - 0/00 - - 6,560 2,065

Arian Economic Development - 0/00 - - 2,701 1,434

31,709 30,877 55,002 23,434

682,638 634,050 1,146,586 843,168

Plus (Less):

Cost-price adjustment (Reserve for devaluation)

(48,588) - (303,418) -

634,050 634,050 843,168 843,168

March 19,2016 March 19,2015

Investee Company Shares Shares Cost

Provision for

impairmentNet book

valueMarket value

Net book value

Market value

% Number of shares Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Pump Iran 2/28 7,524,709 4,704 4,704 18,917 4,704 15,401

Hamedan Glass 4/59 13,208,418 79,979 79,979 111,770 74,527 74,527

Plastiran 0/54 309,535 575 (328) 247 248 156 156

85,258 )328( 84,930 130,935 79,387 90,084

112 113


12-3- Parent Company’s investment in other securities is as follows:

12-2-1- Details of the Bank’s Subsidiaries and Affiliates are as follows:

12-3-1- Balance of equity participation bonds as at the date of Balance Sheet regards the Islamic Treasury Bills at a nominal value of IRR 1.000.000 on maturity date. In case of anticipated sale, the relevant profit (loss) will be recognized according to the market price as to the price on the date of purchase. Moreover, should the Bank keep such bonds till the maturity date the Bank’s profit will be the difference between the nominal value and the price of purchase.

Residence Investment% Auditing Firm Main activity

Group Parent Co.

Subsidiaies:

Saman Kish Electronic Payment Tehran 65/24 65/24 Bayat Rayan Provision of e-payment services

Saman Brokerage Tehran 64 64 Bayat Rayan Investment and brokerage & financial services

Hafez Samanian Iranian Credit Scoring Tehran 99/15 99/15 Bayat Rayan Provision of credit information & accreditationservices

Tondar Noor Tehran 100 0/00 Bayat Rayan Scientific & research activities in computer, software development and sale

Saman Exhchange Office Tehran 96/46 96/46 Bayat Rayan All kinds of foreign currency purchase & saleoperations

Saman Satellite Communications Tehran 80 48/08 Bayat Rayan Provision of services for data transfer, communication& satellite telecommunication

Saman Pardazeshgaran Tehran 100 100 Bayat Rayan Design, development and support of bank tools &applications

Sepehr Sharq Atieh Andishan Tehran 100 99/7 Bayat Rayan Provision of technical & engineering services

Sepehr Mehr Atieh Andishan Tehran 100 - Bayat Rayan Provision of technical & engineering services,pruchase and sale of all authorized merchandises

Atieh Alborz Trade Development Tehran 99/9 - Behzad Moshar

Affiliates:

Kardan Capital Financing Tehran 32/9 31/9 Tadvin & Co. Subscription and undertaking to subscribe andpurchase of securities within financial means

Adonis E-services Development Tehran 26/88 0/00 Mokhtar & Co. Manufacturing & provision of servics of computerelectornic, telecommunication & Itequipment

Issuer Type of security March 19,2016 March 19,2015

Rls (m) Rls (m)

Government Treasury Bonds 458,903 -

458,903 -

Type of security Date of purchase Number of bonds Bonds interest rate Bonds purchase price Total purchase price

% Rls (m) Rls (m)

Sep 11,2016 Feb21,2016 3,000 24/96 0,879 2,636

Oct12,2016

Feb20,2016 22,380 25/24 0,861 19,263

Feb21,2016 44,647 25/00 0,862 38,503

Feb22,2016 10,078 25/05 0,863 8,694

Nov 29,2016

Feb22,2016 50,000 24/87 0,839 41,965

Feb22,2016 400,000 25/10 0,838 335,215

Feb24,2016 15,000 24/56 0,842 12,629

545,105 458,903

Parent Co.


Shares Cost Provision forimpairment

Net bookvalue

Net bookvalue


Saman Satellite Communication Co. 48/08 112,529 - 112,529 90,365

Saman Exchange Office Co. 96/46 214,625 - 214,625 214,625

Saman E-payment Co. 65/24 789,859 - 789,859 528,902

Saman Insurance Co. 14/84 96,600 - 96,600 74,346

Saman Bank Brokerage Co. 64 27,762 - 27,762 27,762

Clearance & Securities Central Deposit Co. 3/19 7,975 - 7,975 7,975

Iran Khodro card Services Co. 0/00 - - - 424

Iran Investment Co. 0/30 15,050 - 15,050 3,010

Iran Credit Rating Co. 6/42 3,243 - 3,243 3,243

Stock Exhange Co. 0/07 105 - 105 105

Iranian Hafez Saman Accreditation Co. 99/15 54,736 (8,331) 46,405 29,550

Saman Processors Co. 100/00 134,973 - 134,973 90,999

Sepehr Sharq Atiehandishan Co. 99/70 10 - 10 10

Iran Energy Stock Exchange 0/76 4,566 - 4,566 4,566

Saman Aftab Tejarat 15/00 5 - 5 5

Middle-East Bank 0/89 35,700 - 35,700 35,700

Shaparak Card Payment Electronic Co. 1/31 9,315 - 9,315 9,315

Kardan Capital Financing Co.- Affiliate 31/92 408,532 - 408,533 319,166

Saman Investment Dvelopment Co. - - - -

Omid Atieh Andishan Development - - - -

Kish System E-Commerce Development Co. - - - -

Atieh Alborz Trade Development - - - -

Sepehr Mehr Atieh Andishan - - - -

Sepehr Sharq Atieh Andishan Services Development - - - -

Sepehr Sharq Atieh Andishan IT - - - -

Pars Kish-cell - - - -

Iran OTC Market - - - -

Behnad bana Civil & Development - - - -

Information Co. - - - -

Sarv Zarrin Atlas - - - -

Segal Software Co. - - - -

Middle-East Arian Roll - - - -

1,915,585 (8,331) 1,907,254 1,440,068

Plus:

Investment advance payment in CIP shares (Iranian Pars Technology) 68,400 - 68,400 -

1,983,985 )8,331( 1,975,654 1,440,068

114 115


12-4- Parent Company’s investment in Mutual funds is as follows:

13- Long-term investment in Affiliates:

14- Due from Subsidiaries & Affiliates:

March 19,2016 March 19,2015

Investment Number ofinvestment Units Cost Net Asset

Value(NAV) Cost

% Rls (m) Rls (m) Rls (m)

Saman Novin fixed-income Fund 50 15,000 15,000 15,132 15,000

Saman 1st Common Investment Fund 40 15,000 15,000 44,063 15,000

Agah Cahrity 1st Fund 50 2,500 2,500 4,610 2,500

Sman amin Investment Fund 50 10,000 10,000 10,175 10,000

Iran capital market Devlopment Investment Fund - 35,000 35,000 37,300 35,000

Aqiq Investment Fund - 984 4,997 5,603 4,997

Nik Andishan Honar Charity Investment Fund - 2,499 2,534 2,763 -

85,031 119,646 82,497

Group

Share of NetAssets Goodwill Share of

NetTotal Assets


Balance at the beginning of year 405,896 - 405,896

Partial payment of capital subscribed 90,767 - 90,767

Share in profit of Affiliates during year before goodwill depreciation 174,176 - 174,176

Dividend received or receivable during year (21,504) - (21,504)

649,335 - 649,335

Group


Balance Doubtfulprovision Net Net


Debts of Susbsidiaries 57,298 - 57,298 9,314

Debts of Affiliates 10,522 - 10,522 129,663

67,820 - 67,820 138,977

Parent Co.


Balance Doubtfulprovision Net Net


Debts of Susbsidiaries 1,020,001 - 1,020,001 1,073,157

Debts of Affiliates 10,522 - 10,522 113,063

1,030,523 - 1,030,523 1,186,220

14-1- In view that the fiscal year of Group companies expire on December 21st of each year and 3 months prior to the Bank’s fiscal year, debts of Subsidiaries to the Bank are not completely removed. Since such amount does not affect the Consolidated Financial Statements as a whole, adjustments are not applied (as per accounting standards).

14-2- Balance of due from subsidiaries and affiliates by transaction type is as follows:

March19,2016

Subsidiary/Affiliate Assets &

InvestmentsSold

Assets & Investments

purchased

Servicespruchased

On-accountreceived

On-accountpaid

Interest- free

betweencompanies

Dividendreceivable

Dividendpayable Total

Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Saman ExchangeOffice - - 14,973 - 3,957 - 120,577 (83) 139,424

Iranian Hafez SamanAccreditation - - 806 - 79,485 - 19,830 - 100,121

Saman Kish E-payment - - 227 - 46 - 596,005 - 596,278

Saman Processors - 62,423 - - 20,239 - 9,000 - 91,662

Saman BankBrokerage 47,273 - - - 13 - 14,336 - 61,622

Adonis - 3,409 2,065 - 5,048 - - - 10,522

Satellite Communication - - 296 - 2,661 - 22,116 - 25,073

Sepehr Sharq AtiehAndishan - - 12 - - - 18 - 30

Sepehr Mehr AtiehAndishan - - - - 5,792 - - - 5,792

47,273 65,832 18,379 - 117,241 - 781,882 )83( 1,030,523

Net Transactions Profit (Loss)

-

March19,2015

Subsidiary/Affiliate Assets &

InvestmentsSold

Assets & Investments

purchased

Servicespruchased

On-accountreceived

On-accountpaid

Interest- free

betweencompanies

Dividendreceivable

Dividendpayable Total


Saman ExchangeOffice - - 24,569 - 372 - 28,938 - 53,879

Iranian Hafez SamanAccreditation - - 1,216 - 251,545 - 3,966 - 256,727

Saman KishE-payment - - 358 - - - 626,295 - 626,653

Saman Processors - 26,308 - - 11,266 - 21,500 - 59,074

Saman BankBrokerage 746 - - - 13 - 42,559 - 43,318

Adonis - 39,258 - - 1,005 - - - 40,263

Satellite Communication - - 296 - - - 22,198 - 22,494

Sepehr Sharq AtiehAndishan - - 12 - - - 6,000 - 6,012

Sepehr Mehr AtiehAndishan - - - - 5,000 - - - 5,000

Kardan Capital Financing - - - - - - 72,800 - 72,800

746 65,566 26,451 - 269,201 - 824,256 - 1,186,220 Net Transactions Profit (Loss)

-

116 117


16- Other Accounts Receivable:

Group


Balance due Specific provision fordoubtful debts

General provision fordoubtful debts

Net Net


Dividends receivable 193,356 - - 193,356 114,857

Interest receivable from banks 133,501 - - 133,501 -

Temporary debtors 5,833,098 (154,052) (14,718) 5,664,328 1,779,015

6,159,955 )154,052( )14,718( 5,991,185 1,893,872

Parent Co.


Balance due Specific provision for

doubtful debts General provision for

doubtful debtsNet Net


Dividends receivable 16-1 165,697 - - 165,697 112,383

Interest receivable from banks 133,405 - - 133,405 -

Temporary debtors 16-2 5,654,740 (154,052) (14,718) 5,485,970 1,592,295

5,953,842 )154,052( )14,718( 5,785,072 1,704,678

15- Trade Accounts and Notes Receivable:

Group


Rls (m) Rls (m)

Accounts receivable (in rials) 952,893 856,098

Accounts receivable (foreign currencies) 767,822 345,051

Doubtful debt provisions (138,852) (102,479)

1,581,863 1,098,670

16-1- Balance of dividend receivable except for dividend of Subsidiaries and Affiliates:


Listed & OTC Market companies: Rls (m) Rls (m)

Iran Ceramic 524 524

Khuzestan Steel 89 89

Laab Iran 564 564

Haafari Shomal 29,839 15,624

Housing Investment 5,450 5,450

fanavarn Chemicals 12 8

Kharazami IT Development 13 13

Chador Maloo 1,920 1,920

Middle-East Mines & Mining Industries Development Investment 114 114

Mines & Metals Development Investment 9,947 8,779

Fars Chemicals 0/09 -

Barez Industry 1,069 2

Iran Ferro-Silicium 1 1

Iran Alliage Steel 0/45 -

Bahman Group 12,558 5,058

Toka Steel Investment 7,611 5,133

Tamin Pharmaceutical Investment 1,755 1,755

Sepah Investment 27,443 6,300

Absal 6 -

Iran Khodro 186 -

Irka Part Sanat 0/13 -

Iran Saderat Bank 423 -

Mellat Bank 45 -

Bahman Leasing 45 -

Shazand Petrochemicals 1 -

Maron Petrochemicals 4 -

Tractor Manufacturing 1 -

Arian Economic Development 318 -

Behshahr Industries Development 4,065 -

Toka Shipping 1,830 -

Informatic Services 360 -

Rayan SAIPA 1,317 -

Alborz Investment 1 -

Iran Khodro Investment 799 -

Pars Toosheh Investment 10 -

National Development Group Investment 6,520 -

Sarma Afarin 4 -

Esfahan Mobarakeh Steel 8,921 -

Khorasan Steel 221 -

MAPNA Group 1,590 2,869

Iranian Leasing 6,152 -

Ghadir Investment 1,519 2,829

Fars & Khuzestan Cement 341 -

Azar Ab 2 -

118 119


16-2- Temporary debtors include the following items:


Items related to loan Balance due Specific provisionfor doubtful debts

General provisionfor doubtful debts

Net Net


Proceedings fee & Recovery cost 1,526,882 (154,052) (14,718) 1,358,113 1,212,196

1,526,882 (154,052) (14,718) 1,358,113 1,212,196

Items not-related to loan

Employees Housing Cooperative 169,243 - - 169,243 169,243

Tehranpars 3rd Sq 2,781 - - 2,781 2,700

Azar Sport Complex - - - - 10,259

Construction of clinic & school in Varzaghan 30,282 - - 30,282 30,282

Alavi 42,779 - - 42,779 -

Hermes 130,848 - - 130,848 130,848

Retirement Fund 5,931 - - 5,931 18,721

Sale of Karaj Shopping Center Project 799,012 - - 799,012 -

Mad Khodro Diesel 750,000 - - 750,000 -

Saman Insurance 200,436 - - 200,436 -

Zafar 1,700,000 - - 1,700,000 -

Other (including 8 items) 296,547 - - 296,547 18,046

4,127,857 - - 4,127,857 380,099

5,654,739 )154,052( )14,718( 5,485,970 1,592,295

17- Orders & Prepayments

18- Inventories

GroupMarch19,2016 March19,2015

Rls (m) Rls (m)

PrePayments 118,937 163,625

Orders 1,469 5,331

120,406 168,956

GroupMarch19,2016 March19,2015

Rls (m) Rls (m)

Inventory in stock 98,794 94,020

Ongoing projects (in the process of completion) 46,567 23,375

145,361 117,395


Rls (m) Rls (m)


Piranshahr Sugar 118 604

Iran Construction Investment 697 1,387

Shahed Investment 528 -

National Iran Copper Industries 156 -

Tamin Oil & Gas Investment 156 -

Tehran Housing Investment 312 -

Saman Insurance 2 2

Iran Pump 2,850 3,603

Hamedan Glass 9,375 1,996

Fund Clearance & Securities Investment 1,914 -

Iran Sea Shipping - 247

Baghmisheh - 1,600

Iran Transfo - 25

Khark Petrochemicals - 78

Exir Pharmaceutics - 61

Tehran Cement - 1,170

Caspian - 6

Kharazmi Investment - 9,090

Persian Gulf Petrochameical Industries - 8,028

Total 161,475 112,371

Other companies

Saman Aftab Tejarat 1,212 12

Iran Investment 3,010 -

4,222 12

165,697 112,383

120 121


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122 123


19-3- except for vehicles, all the tangible fixed assets are insured by Saman Insurance Co. up to IRR ml 3.129.292 against possible risks. It should be noted that vehicles are covered with comprehensive insurance up to IRR 64.390 ml too.

19-4- Net Fixed asset to Capital & reserves ratio: By virtue of Resolution of the 1200th session of Money & credit Council dated May 19, 2015 and Directive no. 94/62147 dated June 1st, 2015 of I.R.I Central bank, the ratio of net fixed asset to shareholder’ equity shall not be more than 75% after deduction of accumulated profit plus unapproved profit.

March 19,2016

Rls (m) Rls (m)

Real Estates

Land 733,233

Buildings 988,682

Goodwill 4,015,494

Capital prepayments 551,032

Less Accumulated depreciation as at March 19,2016 (168,812)

Net Real estates 6,119,629

Balance of Colateral owned more than 2 years ago 4,458,257

Improvement in leased buildings 133,366

Less Accumulated depreciation as at March 19,2016 (95,609)

Net Improvement in leased buildings 37,757

Movable assets

Movable assets 2,671,406

Less Accumulated depreciation as at March 19,2016 (1,219,440)

Net Movable assets 1,451,966

Deposits paid 123,242

Intangible assets 82,717

205,959

Less:

Book value of Data Center servers (484,402)

For salable POS available at warehouse (15,417)

Total Net immovable & iovable assets 11,773,749

Less:

Re-assessment product (2,425,671)

9,348,078

Registered capital 5,575,004

Reserves 1,523,868

Capital & Reserves 7,098,872

Net Movable & immovabe assets-Capital & Reserves Ratio 131/68%

20- Intangible Assets

21- Legal Deposit

22- Other Assets

Group Parent Co.



Business key money 20-1 4,015,494 3,730,604 4,015,494 3,730,604

Software 83,705 114,343 82,717 110,482

Royalties 24,465 24,350 21,352 20,308

Others 4,310 6,779 - -

4,127,974 3,876,076 4,119,563 3,861,394

20-1- In application of Executive By-law Part (B) of Art. 78 of Budget Act 2011-2012, The Bank’s real estates (land, building, goodwill) were re-assessed in 2011-2012 and an amount of 1.980.567 ml recognized for surplus goodwill.

21-1- Statutory deposit with Central Bank as provided under Para. 3 to Art. 14 of Monetary & banking Act at such rates as regulated by Money & Credit Council are calculated and approved by Central Bank.

March 19,2016 March 19,2015

Rls (m) Rls (m)

Legal deposit- Main branches deposit 20,885,494 19,275,540

Legal deposit- FZ branches deposit 245,831 236,725

21,131,325 19,512,265

Group Parent Co.



Foreclosed collaterals 22-1 26,791,929 20,447,414 26,792,890 20,463,375

Income tax prepayment 1,168,264 690,654 1,156,015 675,375

Prepayments for leased branches 20,676 16,252 19,676 15,252

Prepayments for consultancy contracts 87,066 712,689 87,066 725,551

Advance deposits for leased branches 101,890 104,541 101,890 104,241

Tax stamp 3,782 3,529 3,782 3,529

Interim forex account 22-2 1,068,543 268,914 1,068,543 268,914

Interbank discrepancies of account 26200 7,632 16,309 7,632 16,309

Others 1,063,627 350,388 1,018,232 304,331

30,313,408 22,610,690 30,255,725 22,576,877

Finacial Report

124 125

22-1- Foreclosed collaterals

23- Goodwill

22-2- Balance of temporary debtors (foreign currency) mainly regard deposit obtaining from Central Bank for pharmaceutical foreign currency amounting to € 14,991,093 and debt of Central Bank for student foreign currency at reference rate in 2012-2013 amounting to U$ 18,484,610.

Turnover of goodwill as result of consolidation is as follows according to Note 8-11 (Accounting Policies):

Foreclosed collaterals are composed as follows:

Nature March 19,2015 Owned during the year transferred/sold March 19,2016


Movable assets

- - - -

Real Estates

Residential use 1,832,599 4,488,736 (137,970) 6,183,365

Commercial/Office use 13,856,078 3,684,127 (4,787,070) 12,753,135

factory 1,153,346 3,716,362 (630,804) 4,238,904

Land 3,621,352 164,783 (168,649) 3,617,486

20,463,375 12,054,008 (5,724,493) 26,792,890

20,463,375 12,054,008 (5,724,493) 26,792,890

Profit(Loss) From Sale 1,375,163 2,863,195

group

March 19,2016 March 19,2015

Rls (m) Rls (m)

Cost at the beginning of year 224,198 299,190

Additions 3,724 3,238

Adjustment - (78,230)

Cost at year-end 227,922 224,198

Accumulated Depreciation at the beginning of year (70,868) (40,723)

Depreciation for the year (22,527) (30,145)

Accumulated Depreciation at year-end (93,395) (70,868)

Book Value 134,527 153,330

24- Due to Banks & Other Credit Institutions

24-1- Central bank’s term foreign currency deposit is as follows:

24-1-1- It should be mentioned that an amount of € 87,868,393/95 on € 138,950,071/20 regards the credit funding for foreign currency debts to Lufthansa Airlines at € 14,732,812/95 and Turkish Airlines at € 73,035,581. Such amounts are cleared at reference rate as per the letter received from International Department of Central Bank under no. 95/639 dated Apr. 4, 2016 (as per Note 10-1-2- to Financial Statements).

Group Parent Co.

Note March 19,2016 March 19,2015 March 19,2016 March 19,2015


Central Bank

Long Term forex deposits – rial equivalent 24-1 5,560,669 3,098,815 5,560,669 3,098,815

Demand deposits – forex 24-2 16,030,747 16,672,620 16,030,747 16,672,620

Debt for exchange rate difference 24-3 2,769,245 2,419,474 2,769,245 2,419,474

Debt for Lufthansa & Turkish Airlines 24-4 1,472,294 1,472,294 1,472,294 1,472,294

Current Account to CBI - 4 - 4

25,832,955 23,663,207 25,832,955 23,663,207

Local banks and institutions

Demand and Long term deposits – rials 24-5 1,849 5,605 1,849 5,605

Long Term deposits – forex 24-6 325,826 316 325,826 316

Demand deposits – forex 24-7 896,176 783,652 896,176 783,652

Interbank deposits – rials - 1,750,000 - 1,750,000

Loans received 629,976 369,597

1,853,827 2,909,170 1,223,851 2,539,573

Foreign banks

Demand deposits – forex 24-8 312,100 999 312,100 999

Long Term deposits – forex 24-9 2,318,808 2,551,481 2,318,808 2,551,481

2,630,908 2,552,480 2,630,908 2,552,480

30,317,690 29,124,857 29,687,714 28,755,259

March 19,2016 March 19,2015

Currency Forex amount Exchange rate Amount Forex amount Exchange rate Amount

Rls (m) Rls (m)

Euro 138,950,071.20 33,935 4,715,270 102,759,486.82 30,156 3,098,815

Swiss Franc 27,329,991/06 30,933 845,399 - -

5,560,669 3,098,815

Finacial Report

126 127

24-2- Central bank’s Demand foreign currency deposit is as follows:

24-3- Balance of the above items includes IRR 2,450,158 ml related to Directive no. 60/1015 dated Dec, 7, 2013 of Central bank on difference of exchange rate, IRR 226,621 ml to student foreign currency and IRR 92,466 ml to LC debt of Modiran Khodro and Qovaye Moharekeh.

24-4- An amount of IRR 1,472,294 ml for IRR equivalent of foreign currency allocation at reference rate (Note 10-1-2- to Financial Statements) by Central Bank according to the letters no. 1186 & 3806 from the customer (Lufthansa and Turkish Airlines) is cleared at reference rate as per the letter received from International Department of Central Bank under no. 95/639 dated Apr,4, 2016.

24-5- Demand and long-term IRR deposits with Local banks are as follows:

24-6- Long-term foreign currency deposits with Local banks are as follows:

March 19,2016 March 19,2015


Rls (m) Rls (m)

Euro 82,549,089 33,935 2,801,304 - -

Omani Rial 87,011,073 78,546 6,834,373 81,017,248 72,709 5,890,683

Swiss Franc 42,710,031 30,933 1,321,149 211,309,270 28,220 5,963,149

Japanese Yen 18,848,848,488 269 5,073,921 20,728,645,118 232 4,818,788

16,030,747 16,672,620

March 19,2016 March 19,2015

Name of bank Demand Long Term Total Demand Long Term Total


Melli 48 - 48 250 - 250

Karafarin - 5 5 - 5 5

Mellat - 1 1 - 1 1

Mehr Basijian Institution - 63 63 - 69 69

Tousae Credit Institution - 242 242 - 4,939 4,939

Dey 300 36 336 300 33 333

Middle East - 523 523 - 8 8

Tousae Taavon 631 - 631 - - -

979 870 1,849 550 5,055 5,605

March 19,2016 March 19,2015


Rls (m) Rls (m)

Euro 2,005,135/93 33,935 68,044 5,135/93 30,156 155

UK Pound 1,326/25 43,089 57 1,326/25 41,699 55

UAE Dirham 13,930 8,234 115 13,930 7,622 106

South Korean won 10,000,000,000 26 257,610

325,826 316

24-7- Demand foreign currency deposits with Local banks are as follows:



March 19,2016 March 19,2015


Rls (m) Rls (m)

US Dollar 10,722,104/77 30,240 324,236 15,939,077/42 27,994 446,198

Euro 16,209,487/06 33,935 550,069 10,625,267/81 30,156 320,415

UK Pound 166/41 43,089 7 166/41 41,699 7

UAE Dirham 2,563,891/04 8,234 21,111 2,148,891/04 7,622 16,379

Japanese Yen 2,721,684 269/19 733 2,721,684 232/47 633

Indian Rupee 44,130/15 453 20 44,130/15 449 20

896,176 783,652

March 19,2016 March 19,2015


Rls (m) Rls (m)

US Dollar 518,195/35 30,240 15,670 30,909/59 27,994 865

Euro 8,735,230/20 33,935 296,430 4,445/36 30,156 134

312,100 999

March 19,2016 March 19,2015


Rls (m) Rls (m)

UAE Dirham 79,695,200/31 8,234 656,210 130,115,917/56 7,622 991,744

Euro 47,226,733 33,935 1,602,639 49,466,500 30,156 1,491,712

US Dollar 1,982,747 30,240 59,959 2,430,000 27,994 68,025

2,318,808 2,551,481

Finacial Report

128 129

25- Customers’ Deposits

Group Parent Co.



Central Bank

Demand/Call deposits and similar 25-1 14,772,040 11,311,247 14,871,716 11,332,046

Interest-free deposits and similar items 25-2 2,266,282 3,314,653 2,266,409 3,323,133

Other deposits 25-3 4,788,816 7,025,837 4,795,775 7,039,753

21,827,138 21,651,737 21,933,900 21,694,932

25-1- Demand & similar deposits

Group Parent Co.



Non-interest bearing deposits – rials 8,490,561 3,795,647 8,565,961 3,798,644

Non-interest bearing deposits – forex 291,886 59,315 291,886 59,315

Certified checks sold 413,208 861,196 413,208 861,196

Non-interest bearing deposits by state-run institutions – rials 83,754 76,549 83,754 76,549

Non-interest bearing deposits by state-run institutions – forex 566,634 509,057 566,634 509,057

Balances not claimed – rials 33,918 23,163 33,918 23,163

Balances not claimed – forex 3,780 3,527 3,780 3,527

Interim credit accounts – rials 25-1-1 1,317,315 1,493,735 1,341,591 1,511,537

Interim credit accounts – forex 25-1-2 3,512,700 4,478,443 3,512,700 4,478,443

Drafts drawn on the bank – forex 63,073 19,837 63,073 19,837

Unused managed cash 26,498 22,181 26,498 22,181

Less:

Bank’s checks sold (but not settled) (31,287) (31,403) (31,287) (31,403)

14,772,040 11,311,247 14,871,716 11,332,046

Parent Co.

March 19,2016 March 19,2015

Rls (m) Rls (m)

For difference between Preferential exchange rate and Official/transactional rate 186,155 291,224

Customers' anonymous cards deposit 961,584 972,862

Social Security deposit 46,882 85,126

Account for payment of telecommunication, gas, power, water, telephone bills & Municipality duties 17,192 4,077

Interest on matured vouchers of anonymous deposit certificates 2,100 3,272

Balances unclaimed - -

Contractors' good performance guarantees 73,618 59,529

Deposits with Funds 13,464 7,896

Other items 40,595 87,551

1,341,591 1,511,537

25-1-1- Parent Company’s IRR temporary creditors are as follows:

25-1-2- Items of foreign currency temporary creditors’ are as follows:

25-2- Interest free deposits & similar items

25-3- Other deposits

25-1-2-1- Such amounts regard the foreign currency provided by Central Bank for drafts, credits and transfer letters of customers which are kept in the accounts until their uses are specified and will be paid thereafter.

Parent Co.


Rls (m) Rls (m)

IRR equivalent of foreign currency allotted for transfers, drafts & letter of credits 25-1-2-1 2,594,416 2,749,100

Local creditors- Other branches account (foreign currency) 25-1-2-1 823,748 1,591,122

funds received for documents inconsistent with LC terms 18,585 3,523

Temporary creditors- Other 75,951 134,697

3,512,700 4,478,443

Group Parent Co.

March 19,2016 March 19,2015 March 19,2016 March 19,2015


Free-interest (Qard Hassan) deposits – rials 553,186 440,699 553,313 441,766

Free-interest(Qard Hassan) deposits – forex 1,711,091 2,873,950 1,711,091 2,881,363

Special unused interest – free deposits 2,005 4 2,005 4

2,266,282 3,314,653 2,266,409 3,323,133

Group Parent Co.



Cash deposits for LGs’ – rials 784,730 525,609 789,729 528,737

Cash deposits for LGs’ – forex 6,432 12,589 6,432 12,589

Cash advances received from customers for LCs – rials 158,225 727,019 158,225 727,019

Cash advances received from customers for LCs – forex 3,779,221 5,748,909 3,781,181 5,759,696

Cash advances received from customers for drafts – forex 48,822 326 48,822 326

Nousazan Housing Project deposit 11,386 11,386 11,386 11,386

4,788,816 7,025,837 4,795,775 7,039,753

Finacial Report

130 131

26- Dividends payable

27- Trade Accounts and Notes Payable

28- Advances Received

29- Debt Bonds in issue

Group Parent Co.



Balance at beginning of year 218,139 123,816 185,811 116,609

Dividends approved 639,756 658,646 640,000 658,800

Dividends paid (670,740) (564,324) (668,693) (589,598)

187,155 218,139 157,118 185,811

Less:

Dividends paid to subsidiaries and affiliates 14 (83) - (83) -

187,071 218,139 157,034 185,811

Group

March 19,2016 March 19,2015

Rls (m) Rls (m)

Trade accounts payable – rials 334,115 565,306

Trade accounts payable – forex 795,465 922,176

1,129,580 1,487,482

Parent Co.

March 19,2016 March 19,2015

Rls (m) Rls (m)

Gross real estate capital lease - 1,049,863

Future rental costs - (49,863)

- 1,000,000

Group

March 19,2016 March 19,2015

Rls (m) Rls (m)

Advances received 68,701 70,710

68,701 70,710

30- Provision for Income Tax

Group Parent Co.



Balance at the beginning of the year 193,255 304,188 - 178,116

Tax provision for the year 166,053 208,157 - -

Tax paid during the year (190,698) (319,090) - (178,116)

168,611 193,255 - -

March 19,2016 March 19,2015

Tax

Fiscal year/

period

Declared

Profit

Declared

Taxanle

Income

Declared

TaxNotified Finalized Paid

Balance of

provision

Balance of

provisionMode of assessment


2005-2006 243,069 40،789 10،197 71،925 63،434 63،434 - - Referred to Court

2007-2008 490,374 - - 134,061 128,439 128,439 - -

Initiating examination by Board provided

under Art. 251-Bis of Dirrect Taxation Act

2008-2009 465,580 94،800 23،700 168،496 167،293 167،293 - -

Initiating examination by Board provided

under Art. 251-Bis of Dirrect Taxation Act

2009-2010 878,100 367،891 91،973 261،094 196،272 196،272 - -Refrred to Tax High

Council

2012-2013 1,448,311 634،968 158،742 472،886 - 158،742 - -Objection before Revision board

2013-2014 2,221,071 712،465 178،116 562،659 474،370 380،871 - - Final notice issued

2014-2015 1,011,340 2,279,151 - 606,664 386,377 386,377 - - Final notice issued

2015-2016 502,751 - - - - - - -

30-1- Turnover of tax provision account is as follows:

30-2- Summary tax situation of the Bank (Parent Company) is as follows:

30-2-1- Despite income tax for 2005-2006 is finalized and paid, the Bank protests the final tax paid.

30-2-2- Final notices of income tax for 2007-2008 and 2008-2009 are issued and the Bank has paid the final tax in application of Art. 259 of Direct Taxation Act. Meanwhile, the Bank has protested and the matter is examined by the Bard provided under Art. 251-BIS of the said Act.

30-2-3- Final notice of income tax for 2009-2010 is issued and the Bank has paid the amount on May 19, 2013 in application of Art. 259 of Direct Taxation Act while objecting thereto Tax High Council.

Finacial Report

132 133

31- Provisions & Other debts

30-2-4- Bank’s income tax for 2012-2013 has been examined by Tax Affairs Administration and an amount of IRR 1,204,324 is assessed and notified to the Bank. Bank’s Management has protested such assessment on the basis of the decision no. 050110/T/23754 dated May 25, 2014 of the Cabinet according to which the amount of IRR 650 billion regarding the on surplus of revaluation as per notice no. 9185 dated Dec. 28, 2015 of Tax Dispute Settlement Board is accepted. Nevertheless, the other items are protested by the Bank and on May 3, 2016 a petition is submitted to Revision Board.

31-1- Debt for term letter of credits- foreign currency regarding in whole Parent Company is as follows:

31-2- Bank’s provision for cost & accounts payable are composed of the followings:

Group Parent Co.



Non-trade notes payable 20,519 24,533 - -

20,519 24,533 - -

Debt for term letters of credit – rials 22,680 21,204 22,680 21,204

Debt for term letters of credit – forex 31-1 78,000 214,282 78,000 214,282

Provisions for expenses and accounts payable 31-2 1,681,655 2,620,803 1,566,382 2,540,458

Tax payable 162,640 58,885 4,857 13,221

Others 31-3 3,069,210 3,144,880 2,596,735 2,912,842

5,014,185 6,060,054 4,268,654 5,702,007

5,034,704 6,084,587 4,268,654 5,702,007

March 19,2016 March 19,2015


Rls (m) Rls (m)

Euro 1,682,669/29 33,935 57,102 7,105,784/96 30,156 214,282

South Korean won 500,451,042/00 26 12,892 - - -

Chinese Yuan 1,719,950 /00 4,655 8,006 - - -

78,000 214,282

March 19,2016 March 19,2015

Rls (m) Rls (m)

Purchaase of Real Estates 1,299,055 2,313,336

Rent payable 12,510 17,434

Interest payable to foreign currency deposits 36,167 68,368

Provision for withholding tax 10,409 10,409

Other 172,804 6,626

Provision for expense:

Provision for personnel bonus and productvity fee 5,244 55,483

Administrative expenses payable 30,194 68,801

1,566,382 2,540,458

32-Provision for Employees’ Termination Benefits

33- Long-term Investment Deposit Accounts

31-3- Other debts of Parent Company are as follows:

March 19,2016 March 19,2015

Rls (m) Rls (m)

Current deposit in branches 277,764 70,377

Inter-branches account 67,827 21,635

Debt of Student foreign currency Sale 394 53,868

attorney fees 102,187 107,115

Local creditors- foreclosed collaterals 8,273 25,934

cash penalties for non performance of foreign currency obligations 233,138 194,279

IRR equivalent of local creditors- blocked for obtaining of collaterals - 314

Productivity bonus available with Divisions Managers 1,472 1,472

loans collaterals insurance 11,215 14,283

Cash exceeding sum 1,893 1,369

Cash exceeding sum- foreign currency - 60

Employees salaries 4,887 3,915

Warehouse & Assets 23,012 3,954

Shetab clearance 829,653 1,297,018

Other items 1,035,020 1,117,249

2,596,735 2,912,842

Group Parent Co.



Balance at the beginning of year 326,615 216,494 296,307 197,003

Paid during the year (22,536) (22,441) (16,169) (16,432)

Provision covered for the year 162,255 132,562 134,496 115,736

466,334 326,615 414,634 296,307

Group Parent Co.



Long-term investment deposits 33-1 85,663,224 76,440,358 85,637,895 76,442,347

Short-term investment deposits 33-1 102,754,826 80,306,985 103,443,357 81,070,298

Special short-term investment deposits 33-1 332,300 384,496 332,300 384,496

188,750,350 157,131,839 189,413,552 157,897,141

Finacial Report

134 135

33-1- Long-term investment deposit accounts according to IRR and foreign currency:

33-1-1- The reason for one-year deposits growth of 2015/16 compared with 2014/15 is the Directive No. 93/96593 dated July, 2. 2014 on “prohibition of more than one year depositing” and other more than one year balances relate to prior years’ deposits.

March 19,2016 March 19,2015

Rial Forex Total Rial Forex Total


Short-term investment deposits 92,347,662 11,095,694 103,443,356 69,301,637 11,768,661 81,070,298

Special short-term investment deposits

Three-months 34,388 - 34,388 146,992 - 146,992

Six-months 88,495 - 88,495 211,889 - 211,889

Nine-months 209,417 - 209,417 25,616 - 25,616

Long-term investment deposits

One-year term 64,474,442 - 64,474,442 43,899,318 - 43,899,318

Two-year term 121,384 - 121,384 6,616,492 - 6,616,492

Three-year term 74,031 - 74,031 92,497 - 92,497

Four-year term 76,043 - 76,043 68,016 - 68,016

Five-year term 20,891,995 - 20,891,995 25,766,023 - 25,766,023

178,317,858 11,095,694 189,413,552 146,128,480 11,768,661 157,897,141

34- Interest Payable to Long-term Investment Deposit Accounts

Group

Balance at

March 19,2015

Provisional interest

during the year

Interest paid

during the year

Balance at

March 19,2016Interest payable on deposits – rials

Long-term deposits 1,283,824 18,115,625 (17,987,640) 1,411,810

Short-term deposits 472,100 13,108,509 (12,900,504) 680,105

Special short-term deposits 3,151 85,882 (85,038) 3,995

1,759,076 31,310,017 )30,973,182( 2,095,911

Interest payable on short-term deposits in forex 21,295 490,907 (495,384) 16,817

1,780,370 31,800,923 )31,468,566( 2,112,728

Parent Co.

Balance at

March 19,2015

Provisional interest

during the year

Interest paid

during the year

Balance at

March 19,2016Interest payable on deposits – rials

Long-term deposits 1,285,249 18,116,213 (17,987,640) 1,413,822

Short-term deposits 472,100 13,108,509 (12,900,504) 680,105

Special short-term deposits 3,151 85,882 (85,038) 3,995

1,760,500 31,310,604 )30,973,182( 2,097,922Interest payable on short-term deposits in forex 21,295 490,907 (495,384) 16,817

1,781,795 31,801,511 )31,468,566( 2,114,740

35-1- Shareholders as at the date of Balance Sheet are the followings:

Saman Bank’s capital at incorporation mounted to IRR 200 billion (divided into 20 ml shares of IRR 1,000 each). The capital is increased at several steps as follows to reach IRR 8,000 billion (divided into 8,000 ml shares of IRR 1,000 each) as at the end of the fiscal year, that is to say Mar.19, 2016.

35- Share Capital

Date of capital increase

Percentage of capital increase

Amount of capital increase

New capital Source of capital increase

August 29 ,2002 - - 200 Accrued dividends due and cash contributions

November 27 ,2003 10 20 220 Accrued dividends due and cash contributions

October 15 ,2004 36.4 80 300 Cash contributions



October 8 ,2006 20 150 900 Accrued dividends due and cash contributions

February 12 ,2010 100 900 1800 Accrued dividends due, cash contribution and waiver of rights issue

March 19 ,2011 66.7 1200 3000 Accrued dividends due and cash contributions

March 19 ,2012 33.3 1000 4000 Shareholders’ cash contributions

October 22 ,2012 64.7 2588 6588 Assets revaluation surplus

March 9 ,2016 21 1412 8000 Cash contributions and Accumulated Earnings

March 19,2016 March 19,2015

Number of shares Shares Number of shares Shares

% %

1% and more:

Pension Fund of National Copper Industry of IRAN 624,530,308 7.81 542,225,315 8.23

Pension Fund of Protecting Steel Industry Employees 400,088,117 5.00 329,472,571 5

Mines & Metals Development Investment Co. 323,686,501 4.05 281,266,036 4.27

Mr. Mohammad Zarrabieh 315,266,280 3.94 260,434,617 3.95

Ms. Hava Chaee Deh Khoee 240,847,267 3.01 210,951,196 3.20

Parsian Bank Financial Group Co. 244,163,829 3.05 200,155,607 3.04

Saman Investment Co. 239,999.995 3.00 197,640,000 3

Mr. Vali Zarrabieh 201,656,802 2.52 166,064,379 2.52

Mr. Seyed Mahdi Ghafoori 181,316,669 2.27 149,314,279 2.27

Mr. Seyed Ahmad Akhavan Dastmalchi 166,800,291 2.09 137,360,042 2.09

Mr. Ahmad Reza Zarrabieh 128,349,619 1.60 105,695,913 1.60

Mr. Mostafa Tavakkol Harandi 123,259,343 1.54 80,322,193 1.22

Iran Pump Manufacturing Industries 142,712,103 1.78 115,229,421 1.75

Hermes Asset Group Ltd 128,591,306 1.61 111,644,640 1.69

Iran & West Co. 79,822,466 1 67,800,000 1.03

Sayeh Gostar Sarmayeh Investment co. - - 65,880,000 1

Other Legal Persons Less than 1% 1.028,470,637 12.85 704,687,724 10.70

Other Natural Persons Less than 1% 3,430,438,467 42.88 2,861,856,067 43.44

8,000,000,000 100 6,588,000,000 100

Finacial Report

136 137

Group Parent Co.



Balance at the beginning of year 1,496,547 1,331,313 1,448,456 1,296,755

Transfers from distributable profit 100,842 165,234 75,412 151,701

Balance at year-end 1,597,389 1,496,547 1,523,868 1,448,456

36-1- In compliance with the provisions of Para. (A) to Art. 33 of Monetary & Banking Act and Para. (B) to Art. 58 of Articles of association, in Parent Company 15% of the distributable profit and in Subsidiaries 5%, as provided under Articles 140 & 238 of Partial Amendment of Commercial Code shall be carried to the legal reserve. According to the above provisions, as long as the balance of the legal reserve of the Bank has not reached its capital the withdrawal shall be made and becomes optional thereafter. Such requirement is 10% of the capital for Subsidiaries. Legal reserve may not be carried to the corporate capital and shall be distributed to the shareholders only at dissolution. Such amount as stated in Balance Sheet is composed as follows:

Group

March 19,2016 March 19,2015

Rls (m) Rls (m)

Parent Company

Saman Bank 1,523,868 1,448,456

Subsidiaries Companies

Saman Satellite Communications 8,346 6,349

Saman Kish Electronic Payment 45,068 31,770

Saman Exhchange Office 14,074 5,895

Saman Brokerage 1,739 1,739

Saman Pardazeshgaran 2,023 1,419

Atieh Alborz Trade Development 1 1

Hafez Samanian Iranian Credit Scoring 1,595 379

Sepehr Sharq Atieh Andishan 481 347

Sepehr Mehr Atieh Andishan 1 1

Tondar Noor 191 191

1,597,389 1,496,547

35-1-1- 75,224,087 shares on the shares held by other real person shareholders (94% of the Bank’s shares) are held by the personnel.

36- Legal Reserve

37- Assets revaluation Surplus: tangible and intangible

38- Minority’s (non-controlling) interest

39- Income from Loans Interest & Deposits

In the fiscal year ended on Mar. 20, 2012, in application of Executive By-law Part (B) of Art. 87 of Budget Act 2011-2012, The Bank’s tangible assets (land, building) and intangible assets (goodwill, business license) were re-assessed. Surplus of revaluation amounted to IRR 2,588,675 ml as at Oct. 21, 2012 on which an amount of IRR 2,588,000 was registered with Department for Registration of Companies and carried to the capital after having gone through legal formalities.

March 19,2016 March 19,2015

Rls (m) Rls (m)

Revaluation Surplus 675 675

675 675

March 19,2016 March 19,2015

Rls (m) Rls (m)

Share from Capital 371,603 233,339

Share from Reserve 28,201 20,482

Share from retained eranings 116,773 44,383

516,577 298,204

Group


Profit-sharing

Non-profit sharing

TotalProfit-sharing

Non-profit sharing

Total


Income from loan interests 39-1 28,032,892 1,177,439 29,210,331 25,524,494 1,361,984 26,886,478

Income from Deposits 39-2 1,707,322 153,448 1,860,770 541,468 72,877 614,345

Total income from Loan interest and deposit 29,740,214 1,330,887 31,071,101 26,065,962 1,434,861 27,500,823

Parent Co.


Profit-sharing

Non-profit sharing

TotalProfit-sharing

Non-profit sharing

Total


Income from loan interests 39-1 28,160,990 1,177,439 29,338,429 25,556,140 1,361,984 26,918,124

Income from Deposits 39-2 1,707,322 131,576 1,838,898 541,468 57,329 598,797

Total income from Loan interest and deposit 29,868,312 1,309,015 31,177,327 26,097,608 1,419,313 27,516,921

Finacial Report

138 139

Gro

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224

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-

2

24,2

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(Non

-pro

fit

shar

ing)

Tota

lPr

ofit-

shar

ing

Non

-pr

ofit

shar

ing

Tota

l F

orex

-(N

on-p

rofit

sh

arin

g)To

tal

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Sale

s by

inst

allm

ents

224

,206

-

2

24,2

06

-

224

,206

9

5,39

5 -

9

5,39

5 -

9

5,39

5

Jeal

eh (s

ervi

ce c

ontr

acts

) 3

83,7

94

-

383

,794

6

,259

3

90,0

53

250

,048

-

2

50,0

48

-

250

,048

Hir

e-pu

rcha

se c

ontr

acts

900

,222

-

9

00,2

22

-

900

,222

6

33,2

68

-

633

,268

-

6

33,2

68

Muz

arab

ah (t

rade

con

trac

ts)

3,8

58,0

91

-

3,8

58,0

91

-

3,8

58,0

91

4,0

41,1

82

-

4,0

41,1

82

103

,751

4

,144

,933

Civ

il pa

rtne

rshi

p

(Mos

hara

katM

adan

i) 2

1,11

2,65

5 -

2

1,11

2,65

5 7

6,75

5 2

1,18

9,41

0 1

8,94

3,98

1 -

1

8,94

3,98

1 2

05,7

44

19,

149,

725

Sala

f (fu

ture

con

trac

ts)

6,0

59

-

6,0

59

-

6,0

59

-

-

-

-

-

LCs

disc

ount

/Dis

coun

t rec

eiva

ble

989

,587

-

9

89,5

87

-

989

,587

1

,161

,004

-

1

,161

,004

4

1,40

6 1

,202

,410

Mur

abah

a 5

,741

-

5

,741

-

5

,741

4

00

-

400

-

4

00

Late

pen

altie

s 6

80,6

35

-

680

,635

2

8,26

1 7

08,8

96

430

,862

-

4

30,8

62

45,

398

476

,260

late

pen

altie

s D

ebto

rs fo

r pa

id

lett

ers

of c

redi

t and

pai

d le

tter

s of

gu

aran

tee"

-

1,0

51,6

13

1,0

51,6

13

-

1,0

51,6

13

-

965

,685

9

65,6

85

-

965

,685

Oth

er -

1

4,55

1 1

4,55

1 -

1

4,55

1 -

-

-

-

-

28,

160,

990

1,0

66,1

64

29,

227,

154

111

,275

2

9,33

8,42

9 2

5,55

6,14

0 9

65,6

85

26,

521,

825

396

,299

2

6,91

8,12

4

39-

2-In

com

e fr

om d

epos

its

39-1

- In

com

e fr

om lo

ans

inte

rest

Finacial Report

140 141

Gro

upP

aren

t Co.

Not

eM

arch

19,

2016

Mar

ch 1

9,20

15M

arch

19,

2016

Mar

ch 1

9,20

15

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Acc

rued

Pro

fit (L

oss)

from

Inve

stm

ent

Com

pany

Div

iden

d40

-1 1

62,2

25

174

,381

5

33,3

22

733

,568

Pro

fit (L

oss)

from

sal

e of

com

pany

sha

re(2

12,3

57)

583,

027

(212

,357

)58

3,02

7

Tot

al A

ccru

ed P

rofit

(Los

s) fr

om In

vest

men

t(5

0,13

2) 7

57,4

08

320

,965

1

,316

,595

Pro

fit (L

oss)

res

ultin

g fr

om In

crea

se (d

ecre

ase)

in In

vest

men

t val

ue

Net

Pro

fit (L

oss)

from

Incr

ease

(dec

reas

e) to

Inve

stm

ent v

alue

40-2

280

,810

(3

11,2

32)

277

,828

(3

34,7

89)

Pro

fit (L

oss)

from

oth

er in

vest

men

t(Fun

ds)

14,

115

(5,1

16)

13,

006

(6,0

43)

Net

Pro

fit f

rom

inve

stm

ents

244

,793

4

41,0

60

611

,799

9

75,7

63

Par

ent C

o.

201

6

201

5

Pro

fit-

shar

ing

Non

-pro

fit

shar

ing

Tota

l

For

ex-

(Non

-pro

fit

shar

ing)

Tota

lP

rofit

-sh

arin

gN

on-p

rofit

sh

arin

gTo

tal

For

ex-

(Non

-pro

fit

shar

ing)

Tota

l

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Rls

(m)

Inte

rest

on

stat

utor

y de

posi

t (Sh

are

of B

nak

and

Dep

osito

rs)

196

,005

1

0,97

5 2

06,9

80

-

206

,980

1

61,6

04

9,9

98

171

,602

-

1

71,6

02

Pro

fit fr

om d

epos

its w

ith lo

cal b

anks

1,5

11,3

17

-

1,5

11,3

17

120

,601

1

,631

,918

3

79,8

64

-

379

,864

4

7,33

1 4

27,1

95

Pro

fit fr

om in

vest

men

t in

part

icip

atio

n bo

nds

-

-

-

-

-

-

-

-

-

-

1,7

07,3

22

10,

975

1,7

18,2

97

120

,601

1

,838

,898

5

41,4

68

9,9

98

551

,466

4

7,33

1 5

98,7

97

40-

Net

Pro

fit o

r Lo

ss fr

om in

vest

men

ts

March 19,2016 March 19,2015

Profit-sharing-Rls (m) Profit-sharing-Rls (m)

Saman Satellite Communications 22,116 22,198 Saman Exhchange Office 120,576 28,231

Saman Kish Electronic Payment 185,931 410,074

Saman Insurance 14,836 8,902

Saman Brokerage 1,536 10,560

Funds Clearance & Securities Central Deposit 1,914 957

Iran Khodro Card services - 28

Iran Investment 15,682 -

Iran Rating Co. 5,137 3,853

Stock Exchange - 35

Iranian Credit Information & Accreditation Co. 19,830 3,966

Saman Pardazeshgaran 9,000 13,500

Sepehr Sharq Atieh Andishan - 6,000

Iran Energy Market 457 152

Saman Aftab Tejarat 1,200 600

Middle-East Bank 5,712 5,370

Shaparak Card Payment E-payment Co. 11,979 11,090

Karadan Capital Financing 16,567 60,000

Iran Fanavar Pars Investment 2,400 -

Hamedan Glass 12,277 1,996

Iran Pump Manufacturing 1,003 2,508 Dividend of long-term investment 448,153 590,019

Absal 6 -

Iran Khodro 186 -

Irka Part Sanat 0 -

Saderat Bank 423 -

Mellat Bank 45 -

Bahman Leasing 45 -

Shazand Petrochemical 1 -

Fanavaran Petrochemicals 5 8

Maron Petrochemicals 4 -

Tractor Manufacturing 1 -

Arian Economic Development 318 318

Behshahr Industries Development 4,065 -

Haffari Shomal 14,215 14,074

Toka Shipping 1,830 -

Informatic Sevices 360 -

Exir Pharmaceuticals 43 61

Rayan SAIPA 1,317 -

Alborz Investment 1 -

Iran Khodro Investment 799 -

Pars Toosheh Investment 10 -

Mines & Metals Investment 6,880 8,779

National Development Group Investment 6,520 100

Sarma Afarin 4 -

Barez Industrial 1,067 2

Mobarakeh Steel 8,921 18,249

Khorasan Steel 221 369

Bahman Group 7,500 5,058

40-1- Companies dividend in Parent Company is composed as follows:

Finacial Report

142 143

2016 2015

Profit-sharing-Rls (m) Profit-sharing-Rls (m)

MAPNA Group 1,590 2,869 Iranian Leasing 6,152 -

Ghadir Investment 1,519 -

Pasargad Bank 4,389 -

Fars & Khuzestan Cement 341 750

Azar Ab 2 54

Pirnshahr Sugar 192 346

Iran Shipping Co. 93 247


Iran Construction Investment 697 1,387

Toka Steel Investment 2,478 -

Shahed Investment 528 -

Copper 156 3,240

Tamin Oil & Gas 156 4,577

Tehran Housing Investment 312 -

Behshahr Industries Development Investment - 976

Chador Maloo - 1,920

Iran Telecommunication - 6,548

Transfo - 25

Rayan SAIPA Leasing - 925

Tehran Cement - 1,170

Parsian Bank - 25 Iranian LEasing - 15

Darou Pakhsh Plants - 80

Kalsimin - 6

Post Bank - 450

SAIPA Investment - -

Iran Minerals Processing - 987

Allliage Steel - -

Baghmisheh - 1,600

Khark Petrochemicals - 78

Pasargad Bank - 8,058

Behshahr Industries - 125

Khuzestan Steel - 2,810 Kermanshah Petrochemical Industries - 380

Housing Investment - 2,002

Toka Investment - 5,133

Tehran Oil Refinery - 1,800

Iranol Oil - 23

Persian Gulf Petrochemical Industries - 8,028

Kharazmi Investment - 9,090

Middle-East Mines & Mine Industries Development - 114 Iran Leasing - 553

Jam Petrochemicals - 155

Behran Oil - 500

Tamin Pharmaceutical - 1,755 Hamkaran System - 256 Ferro-Silicium - 1 Takin Co. - 18 Kharazami IT Development - 13 Fars Chimia - -

Short-term investments dividend 85,169 143,549

Companies dividend 533,322 733,568

40-2- Net Profit or Loss resulting from increase (decrease) of value of investments in Parent Company:

2016 2015

Profit (Loss) resulting from Increase (decrease) in Investment value-Rial (Profit-sharing)

Number of share Cost Market value Profit(Loss) Profit(Loss)

Share Rls (m) Rls (m) Rls (m) Rls (m)

Mines & Metals Investment Development 4,111,879 10,852 5,787 (5,065) (19,159)

Esfahan Mobarakeh Steel 6,325,561 9,601 8,790 (812) (45,794)Iran Construction Investment 10,142,312 37,618 40,272 2,655 (16,780)Iran Telecommunication 50,000 141 145 4 (2,852)Sina Bank 18,457,199 31,869 30,506 (1,362) - Haffari Shomal 13,520,123 71,535 54,608 (16,927) (40,232)MAPNA 6,915,400 54,779 65,185 10,406 (5,010)Azar Ab 1,000,000 4,995 5,242 247 -Alborz Insurance 1,000,000 1,313 1,150 (163) -Iran Khodro 7,800,000 24,895 35,850 10,955 2,137 Mellat Bank 6,572,362 15,829 15,208 (621) - Shahed Investment 1,974,370 2,706 2,818 112 - Iranian Leasing 30,508,715 58,791 44,356 (14,435) (8,016)Sepah Investment 24,129,271 52,754 31,093 (21,661) (49,771)

Saderat Bank 11,600,000 12,885 12,192 (692) (3)Pasargad Bank 26,336,558 56,603 33,677 (22,926) (19,758)Toka Rail 11,713,239 30,249 29,388 (861) - Toka Steel Investment 27,575,512 37,946 37,963 17 450

Bahman Group 18,940,000 44,008 58,260 14,252 (1,111)Sahand Lastik 1,647,345 4,872 4,061 (810) - Kharazmi Investment 42,929,305 60,328 55,871 (4,457) (9,136)

Toka Shipping 10,101,213 28,866 32,161 3,295 264 Iran Khodro Investment Group 2,000,000 9,534 10,659 1,125 (9,307)Mobin Petrochemicals 500,000 2,060 1,975 (84) - Tractor Manufacturing 1,494,193 3,268 3,001 (268) - Fajr Petrochemicals 516,000 8,229 7,895 (334) -

Toka Refactory 200,000 1,008 916 (92) - Piazar Agro-industry 730,000 1,912 1,654 (258) - Shahed Civil & Development Co. 50,000 129 133 4 -

Damacand Power Generation 3,000 223 242 19 -

Middle-East Life Insurance 200,000 100 198 98 -

Bahman Investment 1,975,713 2,742 2,794 52 -

Behshahr Industries Development Investment - - - - (2,982)National Iran Copper Industries - - - - (20,117)Khorasan Steel - - - - (2,811)

Rena Investment - - - - (1,648)

Rayan SAIPA Leasing - - - - 3,484

Ghadir Investment - - - - (1,992)SAIPA - - - - (1,370)Iran Post Bank - - - - (6,784)SIAPA Investment - - - - (527)Arian Economic Investment - - - - (1,267)Piranshahr Sugar - - - - (4,288)

Esfahan Metallurgy - - - - (25,806)Housing Investment - - - - (862)Tehran Oil Refinery - - - - (4,496)Tamin Oil, Gas & Petrochemicl Investment - - - - (4,516)

Fars & Khuzestan Cement - - - - (836)Sea Shipping - - - - (655)Exir Pharmacy - - - - (927)Plasco Kar - - - - (943)Mashhad Ring Manufacturing - - - - 1 Iranian Hafez Saman Accreditation - - - - (25,186)Hamedan Glass - - - - (6,051)Plastiran - - - - (134)Adjustment of reserve for last year devaluation - - - 326,416 -

291,019,270 682,637 634,050 277,828 )334,789(

Finacial Report

144 145

2016 2015


Average use of Profit-sharing resources (41-2-1) 126,086,696 106,078,030 Average of 52 weeks

Average investment deposits balance (42-2-2) 161,262,915 129,890,528 Average of 52 weeks

Less: Legal desposit for investment deposits (19,364,895) (16,005,100) Average of 52 weeks

Investment deposits free resources 141,898,020 113,885,428

Bank share of use of Profit-sharing resources (Surplus of investment deposits free resources) )15,811,324( )7,807,398(

2016 2015

Use of Profit-sharing resources Amount(Average) Amount(Average)

Rls (m) Rls (m)

Net resources used for loans 117,151,336 101,430,425

Net resources used for Participation bonds 8,825 -

Net resources used for deposits with other banks 6,511,657 1,484,511

Net resources used for investments 2,414,878 3,163,094

Total resources used for Profit-sharing operations 126,086,696 106,078,030

41- Bank’s Share of Profit-Sharing IncomeBank’s share of profit-sharing income is calculated as follows:

41-1- Bank’s share of profit-sharing income

• Should the common uses of free resources be less than the total investment deposit, the Bank’s resources and, accordingly, the latter’s share of profit-sharing income will be null.

41-2- Distribution of common resources and uses between the depositors and the Bank:

Bank’s resources share of common uses means common uses deducted by investment deposits free resources. Should the total investment deposit free resources exceed the common uses the surplus thereof is called surplus of investment deposits free resources.

41-2-1- Average common uses:

Bank's resources to total uses (41-2) Profit-sharing Incomes Bank Share from profit-sharing

% Rls (m) Rls (m)

1.13 30,284,106 -

2016 2015

Investment Deposit Amount(Average) Amount(Average)

Rls (m) Rls (m)

One-year term 54,701,759 21,660,319

Two-year term 3,080,983 9,068,121

Three-year term 81,554 96,930

Four-year term 73,953 67,162

Five-year term 21,838,127 32,577,944

Deposit card - -

Short-term investment deposits 80,930,664 63,933,196

Long term deposit from other banks and credit institutions 171,330 2,157,985

Special short-term investment deposits 384,545 328,872

Investment Deposit Average 161,262,915 129,890,528

2016 2015

Rls (m) Rls (m)

Average balance of statutory deposit for investment deposits 19,364,895 16,005,100

Bonus on statutory deposit(1% Of average resources) 196,005 161,604

41-2-2- Average investment deposits accounts:

Bank’s fee for the fiscal year 2015-2016 is calculated according to a rate of 3% as per the minutes dated June 15, 2015:

43- Compensation of Expense Related to Depositors free Sources Surplus to Common uses As per the Directive no. 94/69383 dated June 10, 2015, compensation of expense related to depositors’ free sources surplus to common uses shall be calculated as follows:

Bank’s fee = fee rate x Average common uses

3,782,601 = 3% x 126,086,696

42- Bank’s fee

41-3- Bonus of legal deposit for investment deposits is as follows:

Investment Accounts surplus resources share of profit-sharing income

Average Profit-sharing uses Profit-sharing Incomes Investment Accounts surplus resources to

Average Profit-sharing uses


3,797,640 126,086,696 30,284,106 15,811,325

Finacial Report

146 147

44- Interest Paid to Investment Deposit Accounts

45-Cost of Interests Paid on Deposits

45-1- Reconciliation of on-account interest paid to investment deposits (IRR) with cost of interest on investment deposits

Group Parent Co.

2016 2015 2016 2015


Interest paid on short-term deposits 13,052,540 9,881,216 13,107,446 9,904,474

Interest paid on special short-term deposits 85,882 19,303 85,882 19,303

Long Term Deposits: - - - -

Interest paid on one-year term deposits 12,031,614 4,642,046 12,031,614 4,642,084

Interest paid on two-year term deposits 677,712 1,718,265 677,712 1,718,265

Interest paid on three-year term deposits 19,244 21,735 19,244 21,735

Interest paid on four-year term deposits 15,446 13,630 15,446 13,630

Interest paid on five-year term deposits 5,203,194 7,305,049 5,203,850 7,305,670

Interest paid on CDs 129,197 459,939 129,197 459,939

Interest paid to banks 40,213 523,001 40,213 523,001

31,255,042 24,584,184 31,310,604 24,608,101

Group Parent Co.

Note 2016 2015 2016 2015


Interest paid to investment deposits-Rial 45-1 31,255,042 24,584,184 31,310,604 24,608,101

Interest paid to short-term forex deposits 490,907 827,024 490,907 827,024

31,745,949 25,411,208 31,801,511 25,435,125

2016 2015

Rls (m) Rls (m)

Provisional interest paid to Investment deposit accounts (Note 44) 31,310,604 24,608,101

Plus (Less): Difference of interest payable to depositors (surplus of interest paid to depositors)- carried from investment deposit accounts performance statement (815,454) (781,994)

Final interests accrrued onazaz investment deposit accounts 30,495,150 23,826,108

Plus: interest donated to deposit accounts (equivalent to surplus interest paid to deposit accounts) 815,454 781,994

IRR investment deposits benefit 31,310,604 24,608,101

46- Income from Fees & Commissions

47- Fee & Commissions expenses

48- Income from Sales and Services Rendered

Group Parent Co.

2016 2015 2016 2015


Letters of credit and drafts 37,175 81,269 37,443 81,269

Inter-bank payments (Shetab Payment System) 444,654 332,090 444,654 332,090

Letters of guarantee 60,272 64,840 60,870 65,057

Saman cards transactions on POS terminals - 8,717 - 8,717

Annual fees of credit cards transactions 40,878 209,764 40,878 209,764

Drafts issuing fees 122,073 145,136 122,073 145,136

Shetab cards issuance 170,522 122,930 170,522 122,930

Free-interest loans 5,685 1,617 5,685 1,617

Forex commission 52,160 43,670 52,160 43,670

Cards issuing fees 10,865 11,054 10,865 11,054

Managed funds 21 59 21 59

Commsission for SMS services 61,856 - 61,856 -

Commsission for Insurance service 52,562 48,145 52,562 48,145

Others 72,545 50,475 57,250 36,782

1,131,268 1,119,766 1,116,839 1,106,290

Group Parent Co.

2016 2015 2016 2015


Fees paid to brokers 3,466 1,684 3,466 1,684

Fees paid to banks 1,242 3,478 1,242 3,478

Fees paid to individuals 428,366 382,294 469,901 421,333

Fees paid for Shetab Payment System 460,457 378,726 460,457 378,726

Membership fee of Deposits Guaratny Fund 80,000 - 80,000 -

Others 149,842 22,876 129,003 227

1,123,373 789,058 1,144,069 805,448

Group

2016 2015

Rls (m) Rls (m)

Sales and services rendered 41,167,740 29,867,574

Return from sales and reductions (52,483) (23,201)

41,115,257 29,844,373

Finacial Report

148 149

Group Parent Co.

2016 2015 2016 2015


Profit of forex exchange 168,218 1,385,987 168,218 1,385,987

Profit (Loss) of forex translation 1,129,168 (515,331) 1,127,652 (514,464)

1,297,386 870,656 1,295,870 871,523

Group

2016 2015

Rls (m) Rls (m)

Cost price of goods and services rendered 39,913,185 28,825,770

39,913,185 28,825,770

Group Parent Co.

Note 2016 2015 2016 2015


Proceeds from sale of real estates 51-1 2,880,251 1,713,578 2,866,384 1,712,124

Professional fees by experts 309,060 65,593 309,643 65,748

Real estate appraisal (land and apartments) 10,576 28,516 10,576 28,516

Post, telegraph, telephone and Swifts 806 673 806 673

Insurance and loan monitoring fees 359 240 359 240

Others 222,904 57,727 192,033 70,350

3,423,956 1,866,327 3,379,801 1,877,651

49- Cost of Sales and Services Rendered

50- Net Profit (Loss) from Foreign Currency Exchanges & Transactions

51- Other Incomes

48-1- Income from services provided mainly regard foreign currency sold in Exchange Co.

49-1- Cost of income and services provided regards Note 48 to Financial Statements.

51-1- Income earned from real estates sold regards owned properties sold at a book value of IRR 6,140,454 ml and sale price of IRR 9,003,957 ml.

52- Administrative & General Expenses

52-1- Employees expenses are as follows:

52-2- Administrative expenses are as follows:

Group Parent Co.

Note 2016 2015 2016 2015


Personnel 52-1 2,084,699 1,736,094 1,911,035 1,633,632

Other expenses 52-2 1,458,163 1,305,040 1,374,454 1,241,134

3,542,862 3,041,134 3,285,489 2,874,766

Group Parent Co.

2016 2015 2016 2015


Salary & Job remuneration 676,041 521,588 571,485 460,005

New year gift, Bonus & other benefits 627,874 599,970 595,882 580,750

Social Secuirty charges- Bank's contribution 249,430 185,756 236,396 177,204

Overtime working 140,340 117,117 140,340 117,117

Termination benefits 142,473 121,188 134,496 115,736

Provident Fund (Bank's contribution) 23,109 16,580 23,109 16,580

Employees other expenses 225,432 173,895 209,327 166,240

2,084,699 1,736,094 1,911,035 1,633,632

Group Parent Co.

2016 2015 2016 2015


Rents 292,155 258,552 285,884 258,051

Advertisement expenses 387,501 178,256 380,452 170,516 Computer equipment, office furniture & vehicles repiar and maintenance expenses 61,894 129,326 53,692 123,706

Water, power, telephone, fax & data lines expenses 97,779 95,501 94,928 93,728

Urban commutation expenses 12,160 15,013 10,837 13,503

Administrative supplies & Consumables expenses 58,414 88,054 53,449 82,292

Automation expenses 50,875 90,780 51,674 90,794

Insurance premium & charges 98,278 104,697 95,125 101,973

Consultation fee 52,419 39,473 39,985 32,059

Employees launch expenses 1,440 1,256 - -

Gifts & Prizes 6,996 12,450 4,816 9,843

Building repair & maintenance expenses 22,245 39,997 21,132 38,258

Employees welfare services expenses 4 140 4 140

Out-of-city travel and mission expenses 21,973 1,631 20,015 -

Food and Kitchen expenses 110,277 107,646 107,594 105,297

Training & Seminar expenses 4,985 2,900 4,183 2,386

Transportation expenses 2,947 3,315 2,947 3,315

Satellite communication expenses 26,537 2,754 26,537 2,754

Other cost 149,284 133,299 121,200 112,519

1,458,163 1,305,040 1,374,454 1,241,134

Finacial Report

150 151

Group Parent Co.

2016 2015 2016 2015


Specific provision for doubtful debts 274,686 1,356,072 274,686 1,356,072

General provision for doubtful debts 132,983 254,390 91,273 234,637

407,669 1,610,462 365,959 1,590,709

2016 2015

Overdue Outstanding Doubtful Total Total


Balance as at March 19, 2016 1,643,733 3,321,252 24,926,909 29,891,895 33,269,708

Less: Value of cllaterals coefficient applied

Saving & Investment deposits 73,144 - 5,673 78,817 69,167

Governmental participating bonds - - - - -

Bank secured participation bods 920 - 3,656 4,576 4,570

Properties & Real estate 2,045,963 2,316,198 20,344,004 24,706,165 32,635,277

Listed companies shares 1,009,739 - 242,107 1,251,846 58,151

3,129,766 2,316,198 20,595,440 26,041,404 32,767,165

Balance basis for calculation of specific Provision (1,486,033) 1,005,054 4,331,469 3,850,490 (20,818)

Coefficient for calculation of specific Provision-% 10% 20% 50-100%

Provision for specific doubtful debts 62,255 41,326 3,783,224 3,886,805 3,803,335

Amount

Rls (m)

Loan Balance as at March 19, 2016 145,040,201

Less:

Balance of loans granted for which specific provision is considered 29,891,895

Balance basis for calculation of general Provision 115,148,306

Coefficient basis for calculation of general Provision-% 1/5

General Provision for doubtful debts of 2015-2016 1,794,479

General Provision for doubtful debts of 2014-2015 1,703,206

General doubtful debts expense 91,274

53- Doubtful Loans expense

53-1- The specific provision for doubtful loans is calculated as follows:

53-2- The general provision for doubtful loans of the fiscal year ended on Mar. 19, 2016 is calculated as follows:

56-1- In order to reflect an appropriate image of the financial position and performance, all relevant comparative items in the comparative financial statements are restated. Therefore, some of them may vary from those in Financial Statements of the last year.

Group Parent Co.

2016 2015 2016 2015


Interest paid on Sukuk bonds 49,863 200,000 49,863 200,000

Interest paid to CBI (rial-equivalent) 9,328 64,174 9,328 64,174

Financial expenses 198,392 111,982 -

257,583 376,156 59,191 264,174

Group Parent Co.

2016 2015 2016 2015


Prior year’s income tax (51,881) (384,095) (343,719)

Prior year’s withholding tax (307) (760)

insurance ammendments (49,562) (46,188) (32,258) (32,257)

Others 6,703 (14,588)

)95,047( )445,631( )32,258( )375,976(

Group Parent Co.

2016 2015 2016 2015


Tangible Fixed Assets Depreciation 387,287 358,975 359,078 329,293

Intangible Assets Depreciation 64,753 38,497 63,588 37,293

452,040 397,472 422,666 366,586

54- Financial Expenses

55- Depreciation Expenses

56- Prior year’s Adjustments

Finacial Report

152 153

Group Parent Co.

2016 2015 2016 2015


Profit before Tax 1,015,276 1,302,809 502,751 1,011,340

Depreciation Expense 956,206 723,554 422,666 366,586

Net increase in Provisions for staff termination benefits 139,719 110,121 118,327 99,304

Profit from sale of fixed assets (immovable) (2,880,251) (1,713,578) (2,866,384) (1,712,124)

Profit from sale movable assets - - - -

Financial expense 40,213 523,001 40,213 523,001

Net Profit (Loss) of forex translation (1,129,169) 515,331 (1,127,653) 514,464

)1,858,005( 1,461,238 )2,910,079( 802,571

Net increase )decrease( in operating liabilities

Due to other banks and credit institutions 2,942,834 (12,131) 2,682,455 (130,177)

Customer Deposit 175,401 (7,222,705) 238,967 (7,235,245)

Dividend Payable (31,068) 94,323 (28,777) 69,202

Debt Bonds (1,000,000) - (1,000,000) -

Provision for performance tax (190,698) (311,335) - (178,116)

Operational portion of provisions and other liabilities (1,306,657) 4,741,490 (1,433,352) 4,420,901

Long term Investment Deposit 31,618,512 28,291,683 31,516,411 28,676,453

Interests payable to Investment Deposit accounts 332,358 415,159 332,945 414,374

32,540,682 25,996,484 32,308,649 26,037,392

Net )increase( decrease in operating assets

Due from other banks and credit institutions (750,180) 521,138 (750,180) 521,138

Loan granted (9,460,573) (20,120,232) (9,388,186) (20,328,541)

Investment in shares and Bonds (605,360) 468,703 (793,448) 642,123

Due from subsidiaries and affiliates 71,157 14,853 155,697 (381,650)

Other account receivables (4,559,922) (778,831) (4,080,394) (666,316)

Statutory deposit with CBI (1,619,060) (4,049,920) (1,619,060) (4,049,920)

Operational portion ofother assets (4,157,883) (10,208,097) (4,331,823) (10,329,953)

)21,081,821( )34,152,386( )20,807,395( )34,593,119(

Net (increase) in operating assets 9,600,855 )6,694,664( 8,591,174 )7,753,156(

57- Reconciliation of Profit Before Tax

57-1- Loans granted for clearance of previous Loans are reported under “non-monetary transactions” (Note 58).

58- Non Monetary Transactions

Type of Asset Customer Relationship

Debt balance at ownership date

value of asset-expert assessment

paid amount/impunity

Debt balance after ownership


Housing units unrelated customer 7,665,988 4,488,736 - 3,576,807

Business offices unrelated customer 1,563,124 2,844,127 44,954 51,049

Factory and plants unrelated customer 7,986,329 3,716,362 - 4,271,132

Land unrelated customer 19,111 164,782 - 557

17,234,552 11,214,008 44,954 7,899,544

Type of Asset Relationship Type of Asset Book value of consideration transferred

value of asset-expert assessment

difference paid/received


Housing units unrelated customer Housing units 80,000 40,000 40,000

Business offices unrelated customer Business offices 367,177 234,959 132,218

Land unrelated customer Land 237,500 188,250 49,250

684,677 463,209 221,468

Main non-monetary transactions during the fiscal year are as follows:

58-1- During the fiscal year reported, the following assets are owned by the Bank:

58-2- During the fiscal year reported, the following assets are exchanged:

Note 2016 2015

Rls (m) Rls (m)

Preperty in exchange of loans 58-1 11,214,008 11,135,205

Exchange of assets 58-2 684,677 1,155,207

Extended Loans 4,040,630 -

15,939,315 12,290,412

155


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60- Capital Obligations & Contingencies

59-1-2- Parent Company’s obligations IRR letters of credits are as follows:

59-2- Obligations for LGs issued

60-1- Capital obligations are solely limited to cost of renovation and preparation of the branches leased and purchased.

60-2- As at the date of Balance Sheet, there is no significant contingent liability.

59-3- Other obligations

59-4- Managed Funds & Similar Items

March 19 , 2016 March 19 , 2015

Rls (m) Rls (m)

Balance at beginning of year 66,572 214,271

Issued in the fiscal year 52,559 518,705

Canceled during the fiscal year (97,417) (666,405)

Balance at end of year 21,714 66,572

Group Parent Co.

March 19 , 2016 March 19 , 2015 March 19 , 2016 March 19 , 2015


Obligations for LGs issued 6,938,318 5,304,813 7,079,289 5,348,318

6,938,318 5,304,813 7,079,289 5,348,318

Parent Co.

March 19 , 2016 March 19 , 2015

Rls (m) Rls (m)

Obligations for non-state sector transactions 3,010,752 2,142,419

Bills 166,389 6,596

Other 3,984,010 4,646,341

7,161,151 6,795,356

Parent Co.

March 19 , 2016 March 19 , 2015

Rls (m) Rls (m)

Loans granted from managed funds 1,087,016 441,331

Unused managed funds 76,641 70,698

Loans granted from special interest-free deposits 180 181

Unused Special interest-free deposits 2,037 36

1,165,874 512,246

156 157


Group Parent Co.

2016 2015 2016 2015


Number of shares 7,599,287,671 7,588,000,000 7,599,287,671 7,588,000,000

Major shares owned by subsidiaries (2,770,474) (13,284,731) - -

7,596,517,197 7,574,715,269 7,599,287,671 7,588,000,000

Net profit of financial year 721,173 1,044,483 502,751 1,011,340

Base EPS – Rls. 95 138 66 133

Group Parent Co.

2016 2015 2016 2015


Number of shares 8,000,000,000 7,647,824,658 8,000,000,000 7,647,824,658

Major shares owned by subsidiaries (3,054,022) (13,327,063) - -

7,996,945,978 7,634,497,594 8,000,000,000 7,647,824,658

Net profit of financial year 721,173 1,044,483 502,751 1,011,340

Base EPS – (Rls) 90 137 63 132

61- Earnings Per Share (EPS)

61-1- Basic EPS

EPS is calculated by dividing the profit belonging to ordinary shareholder to the average weighted number of ordinary shares held by the shareholders.

61-2- Diluted earnings per share (DEPS)

DEPS is calculated by dividing the profit belonging to ordinary shareholder to the average weighted number of ordinary shares held by the shareholders upon adjustment of dilution impact of all the potential ordinary shares.

62- Subsequent EventsNo significant event has occurred since the date of the balance sheet to the date of approval hereof affecting Financial Statements and requiring disclosure.

63-Describibg Bank RisksSaman bank has developed an appropriate and accepted framework of risk management. Saman bank is able to manage significant risks in banking industry by an activity based model. The information provided in this section is as a result of bank operation and reflects the effects of risk on balance sheet and profit and loss statements. Saman bank addresses main risks in accordance with risk management guidelines issued by Ball 2 Committee as follows:

• Credit Risk

• Liquidity Risk

• Market Risk

• Operational Risk

The above risks are concluded from bank activity model and risk management procedures. In this model, important events affecting bank goal achievement are identified. Risk management process uses expected loss and quantitative and qualitative indices to evaluate risks and updates evaluation models.

63-1-The relationship between business units and the principal risks that they are exposed to Saman bank is serious in responding to business risks and environmental uncertainty. The most important business units exposed to financial risks are retail banking and corporate banking which are affected by credit and liquidity risks. Operational risk is also affecting some aspects of these units which is evaluated.

Credit Risk Market Risk Operational Risk Liquidity Risk

Scores DepartmantFinancial

Departmant

InvestmentDepartmant

InvestmentDepartmant

all offices andDepartmantsBank Branches Bank Branches

FinancialDepartmant

InternationalDepartmant

InternationalDepartmant

Credit RatiingDepartmant

Saman Bank

158 159


63-2-The risk office is responsible for developing and monitoring risk management policies. Therefore, in order to manage risks effectively, there is a High Risk Committee (HRC) and risk office shown in the figure below. The risk office is a subset of deputy of monitoring and executes the HRC.

• Management is responsible for all accepted risks in Saman Bank

• The High Risk Committee always monitors management’s adequacy of policies and processes for controlling and responding to risks. Other important duties of the committee are to review internal controls and ensure that they are in accordance with CBI framework, to monitor implementation of the committee and board directives related to risk emphasizing on enhancing reputation of the bank and compliance with capital adequacy requirements. The consequence of the committee actions is monitoring and guidance reports provided to the board of directors. The HRC is a most effective element in risk management and seeks the following goals:

• Determination of risk appetite framework and desired capital adequacy ratio every 6 months and monitoring this process and preparing it for management approval along with setting key policies for keeping capital adequacy (as a risk appetite measure) in a desired level of 8 %.

• Approval of the annual report on risk management performance and provide it to the board for the purpose presentation in general meetings of shareholders.

• Approval of annual risk management plans in developing, improving and establishing systems for measurement and calculation of risk in the bank through provision of software and hardware facilities and human resources.

• Review the reports and evaluate calculations and measurement of significant risks quarterly and identification of improvable areas (emphasizing on policies set to manage and control risk, violations, involved people and units, feedback policies for violations, effectiveness of the policies) and informing the board of directors about results of evaluations and actions performed in this area.

The risk office has been created as an executive arm of the HRC aiming at meeting CBI requirements and providing facilities for executing the Ball committee guidelines. The office identifies main financial risks accepted by the Ball committee including credit, liquidity, operational and market risks and reports to the HRC, CEO and other interested committees. According to the organizational chart, the risk office is a subset of monitoring deputy. The office acts in accordance with HRC directives to achieve its defined goals.

Board ofDirectors

High RiskCommitte

MonitoringDeputy

CEO

Risk Office

63-3-Credit Risk

63-3-1- Definition of Credit Risk

Credit risk is the probability of financial loss if counterparty fails to meet its contractual obligations. Therefore, the good banking depends on designing and implementing of appropriate formal procedures for identification, assessment, monitoring and controlling of the credit risk. Credit policies provide a framework for loan granting and direct credit granting activities of the bank. Credit policies shall contain matters such as target markets, portfolio structure, pricing terms, limits structure, authority of granting loan, reporting exception cases. These activities shall be defined clearly, be in favor of precautionary policies of the bank and appropriate for size and complexity of bank activities. These policies should be designed and implemented according to internal and external factors such as market position of the bank, business location, staff abilities and technology.

These policies shall particularly define the objectives of the bank in portfolio structure, exposure limits of counterparty or a group of related parties, special economic industry or segments, geographical locations and special products. Banks shall be ensured that their internal exposure limits is consistent with precautionary ranges set by banking inspectors.

63-3-2-Credit Policies

The bank credit policies in loans and debts are as follows:

a) Loans: considering maximum limits, correcting loans portfolio based on time period and return.

b) Debts: reducing debt balances and investigating major debt items.

The most important plans and requirements of the bank are as follows:

• Setting quantitative objectives for loan granting and collecting debt, letters of guarantee and letter of credits.

• Define the authority levels of credit departments on granting loans and collecting debts.

• Install and implement monitoring systems of loan granting.

• Considering customer capability in granting loan.

• Establishing a controlling and monitoring system on reported information.

• Reducing loans and liabilities risk through requiring secure collaterals.

• Precisely accordance with executive directives on unit beneficiary, related parties and significant loans and liabilities.

• Holding meeting of recovery and collecting committees continuously in all levels to quickly determine debt cases of customers.

• Special consideration of overdue and outstanding debts and uncollected letters of credit and seizure guarantees and summarize and report their positions and provide recommendations.

• Monitoring activities for loans granted set by directives including site visits and progress checking by inspectors and other qualified persons and credit committee members.

63-3-3- Executive departments of credit risk management

The implementation area includes the bank as a whole particularly, the branches of bank, credit departments management, collecting outstanding debt office, credit committees and other credit units of the bank.

160 161


63-3-4-Authority limits of organizational levels for approving loans liabilities

An important element of credit risk management is to define exposure limits for counterparties or group of related parties. Since retail banking and corporate banking are separated in the bank, the basis for decision about approving loans and liabilities is made on three categories: large loans and liabilities, related parties loans and liabilities1, and small and medium loans and liabilities.

Large loans and liabilities

Large loans and liabilities decisions are based on identification of equal beneficiary2 . Examples of equal beneficiary are:

• People or companies individually

• People or companies having ownership relationships including:

- People and their dependents and their associated entities.

- Parent companies with their affiliates.

- Relation between affiliates of a parent company, if the percentage of ownership in these affiliates is more than 20% after multiplying their ownership percentages.

• Companies having managerial relationships including:

- Between a company and another company which have two-thirds of common directors.

- Between a company and another company which have a common chairman.

• People and companies having financial relationships including:

- Between a person and his dependents.

- Between a guarantor and guaranteed if the amount of the guarantee is at least 75% of the guarantor total income. The inverse relationship is only considered when the parties are involved in a mutual guarantee agreement.

- Between A and B parties if 50% of A income depends on B. The inverse relationship is not considered an equal beneficiary.

- All people having at least 20% of voting share of a company.

- People who have 50% common annual revenue source.

• People and companies with controlling relationships including:

- Relationship between a real person and his dependents and an associate company with at least 20% ownership.

- A company with at least 20% ownership in another company.

- A person or company being able to direct financial and operational policies of another company including dividend policies.

- A person or company being able to dismiss and appoint another company significant board of directors.

1-It means that the total granted loans and made liabilities to an equal beneficiary can be at least %10 of the base capital of the bank.

2-Equal beneficiary means an individual party or company and two or more people exposing the bank to risks through ownership, managing, financial and controlling relationships in such a way that problems of one can extend to others and lead to failing in repayment of loans and liabilities to the bank.

When identifying equal beneficiaries, corporate banking offices shall enter information about lenders in the bank databases.

There should be an approval by the Board of directors in case of granting loans and creating obligations in behalf of any equal beneficiary subject to large loans regulations. Therefore, if the customer meets all terms and conditions related to large loans, the loan and obligation should be authorized by the Board of directors.

• Large loans and obligation limits

- Any large loan and obligation provided to equal beneficiaries cannot be more than 20% of bank capital..

- The maximum limit of large loans and obligations is equal to eight times the bank capital.

- When loan requested by an equal beneficiary is more than limits in this instruction, bank can grant loans using common methods (such as Syndicate, Consortium or similar methods) considering related regulations.

Loans and obligation granted to Related Parties

Loans and obligation granted to related parties1 will be based on Identification of related parties. Such parties may be:

- Managers of credit institute including board of directors, CEO, deputy CEO and other executive managers.

- Independent Auditor (the firm and partners) and legal inspector of the credit institute.

- People and their dependents including: parents, spouse and children which have individually or totally at least 5% of the credit institute ownership.

- Parents, and dependents of the people mentioned in 1 and 2 above.

- A company which is owned by people mentioned in 1, 2, 3, and 4 above in such a way that the related parties can select at least one member of the company board.

- A company in which related parties mentioned in 1, 2, 3 and 4 above have a managerial positon (member of Board of directors, Executive Board, CEO and Deputy CEO).

- A company having at least 5% ownership of the credit institute.

- A company which is owned by the credit institute at least 10%.

- A company which is owned by the people mentioned in 8 above at least 20%.

• Related Parties loans and obligations limits

Loans and obligation granted to related parties will be based on Identification of related parties. Such parties may be:

- Individual limits: sum of net loans and obligations granted to anyone shall not be more than 3% of the bank capital.

- Overall Limits: sum of net loans and obligations granted to related parties shall not be more than 40% of the bank capital.

1- Related parties are people and companies who can affect or influence the bank decisions directly or indirectly through personal, ownership, managerial and monitoring relationships so that they can use the bank resources in order to achieve their own goals.

162 163


Loans and obligations granted to related parties shall be approved by the board of directors before granting/creating. Meetings of the board of directors for granting/creating loans to related parties are held in absence of the beneficiary.

• Corporate loans and liabilities:

Corporate Banking Committee (CBC) has the authority for making decision about granting loans and credits to customers up to IRR 800 billion and larger loans shall be approved by the board of directors.

Small and medium sized loans and liabilities

Small and medium sized loans and liabilities are dependent to customer type and their requested amount. Therefore, customers in this area are identified as follows:

• People: all people with any requested amount of loans.

• Companies: companies and their equal beneficiaries for requested amounts up to IRR 100 billion and equivalent currencies.

All branches are allowed to accept and assess credit requests only in the above range. If a credit request is more than the maximum limits, the request will be forwarded to corporate banking department by Small and medium sized credits department.

Regardless of the loan amount requested or used, providing any credit services to customers below will be the responsibility of the corporate banking department:

- Manufacturing companies with more than IRR 100 billion share of capital.

- Business and service companies with more than IRR 800 billion share of capital.

- Public sector companies and organizations.

- Subsidiaries of banks.

- Listed companies.

• Small and medium sized loans authorities:

Saman bank branches are different in terms of authority for granting credits as: super branches, class 1, class 2, class 3 and class 4 branches. The authority limit for approving and accepting mortgages in terms of type, combination and amount in each class of branches is in accordance with directive on “Saman bank granting small and medium sized loans” and later amendments to it.

All branches are required to bring customers’ applications to appropriate committees for making decision about granting loans and issuing letters of guarantees regarding regulations on credit authorities of branches and considering current liabilities and obligation of the customers. The committees making decision about granting of loans (Rial and other currencies), issuing letters of guarantees, opening letters of credits and registration order drafts include:

- Branches Credit Committee;

- Central Provinces Credit Committee;

- Internal Credit Committee;

- Small and medium sized Credit Committee.

Authorized Rial amounts by credit committees. Rls (m)

Authority in class 2 collaterals Authority in class 3 collaterals

Committee type Kind of Loans & LCs-Rial People Companies People Companies

Class 4 Branch credit committee

Loans-Rial 2,000 3,000 600 1,000

LGs and Local LCs-Rial 2,000 3,000 600 1,000


Loans-Rial 3,000 4,000 800 1,500

LGs and Local LCs-Rial 3,000 4,000 800 1,500


Loans-Rial 4,500 6,000 1,500 2,000

LGs and Local LCs-Rial 4,500 6,000 1,500 2,000


Loans-Rial 6,000 9,000 2,000 3,000


Super Branch credit committee

Loans-Rial 8,000 12,000 3,000 5,000


Central Provinces Credit Committee

Loans-Rial25% in addition to authority granted

to branches.

25% in addition to authority granted

to branches.LGs and Local LCs-Rial

Authorized amounts by higher committee. Rls (m)

Authority in class 1 & 2 collaterals Authority in class 3 collaterals

Committee Type People Companies People Companies

Internal Credit Committee 30,000 50,000 15,000 25,000

Small & medium sized Credit Committee 100,000

Authorized Currency amounts by branches & central provinces credit committees. Rls (m)

Authority in class 1 & 2 collaterals Authority in class 3 collaterals

Branch Type Forex liability type People Companies People Companies

Branches-Forex Demand letters of credit5,000

10,000 2,000 5,000

Second Class

Forex letters of guarantee & credit and refinance

4,000 6,000 1,500 2,000

Authority submitted to branches 5,000 15,00025% of letters of credit and 35% of forex drafts as collateral of forex liabilities.

Branches-Forex Demand letters of credit 7,500 12,000 3,000 7,000

First Class

Forex letters of guarantee & credit and refinance 6,000 9,000 2,000 3,000

25% of letters of credit & 35% of forex drafts as collateral of for ex liabilities. Authority submitted to branches 7,000 20,000

Demand letters of credit 10,000 15,000 4,500 10,000

Super Branches-Forex

Forex letters of guarantee & credit and refinance 8,000 12,000 3,000 5,000

25% of letters of credit & 35% of forex drafts as collateral of for ex liabilities. Authority submitted to branches 10,000 25,000

Central Provinces Credit Committee

25% more than submitted authority to branches in case of the above liabilities.

164 165


63-3-5-Methods of reducing Credit Risk

One of the methods of reducing credit risk is requiring collaterals regarding risk degree and debt liquidity. Types of collateral regarding risk degree are classified in three groups:

• First class collaterals: includes investment deposit and certificate of deposit issued by bank, participating bonds guaranteed by the government or banks, bearer certificates of deposit issued by other banks, letters of guarantee secured by internal and external banks (with approval of the international department manager).

• Second class collaterals: includes real estates (immovable properties) and listed companies shares (tradable in the main trading floor). It is noted that the real estates shall be in full ownership, worthy, tradable and have all necessary licenses.

• Third class collaterals: includes movable assets (warehouses certificates approved by manager of small and medium sized credits department) and binding contracts, promissory notes, checks and notes received.

In order to avoid risks related to collaterals, bank insures the collaterals against fire, explosion, thunder, flood and earthquake in behalf of bank and cost of the customer through Saman Insurance Co. The instruction of collateral insurance is as follows:

• Properties and collateral to be insured

- Housing units which its land and buildings are pledged as security to the bank.

- Manufacturing facilities including buildings and equipment and other properties related bank to transaction.

• Insurance amount and Insurance fee calculation

The insurance amount is preferred to be the real current value of properties (according to expert opinion) and insurance fee is calculated based on this value. In case of housing collaterals, annual insurance fee is calculated based on loan (principal plus interest) balances or assessed value of the collaterals whichever is less.

63-3-6- Customers credit rating process

This process consists of developing appropriate measures for credit granting, obtaining precise information from bank’s target market, obtaining complete understanding of the lender or the counterparty and determining the objective and source of the credit granted.

The process works as follows:

• Determining the nature and objective of the credit: the applicant’s business objective shall be accepted by the bank. It means a legal and non- speculative objective which is related to the applicant’s past activities. The bank shall also ensure that the loans are used in usual business activities of the applicant. The amount of loans shall be sufficient and reasonable relative to the applicant resources. With the growth of money-laundering activities, now understanding the objectives of applicants from lending must be clearly determined.

• Loan type: credit on checking account, consumption loan, working capital loan, long term loan, leasing, purchase on installment, credit card, real estates, business, mortgages, house building loans, debt discounts etc.

• Qualification for borrowing: the lender shall assess legal situation of the customer. Young people, the poor and retarded persons are not qualified for signing transactional contracts. In these cases, they should have representatives.

• Guarantees: if collateral is necessary, some factors shall be considered: adequacy, reliability of the collateral.

• Assessing the lender financial position: when analyzing customer financial position, ability to generate cash flows from operations in business activities, is an important factor. When assessing customer financial position, these factors are important: ability to repay, liquidity and capability to repay.

• Evaluating ability to repay: the lender shall obtain reasonable assurance about ability of the customer to meet their obligations when due.

• Profitability: expense of generating credit for the customer, the fee paid to employees for assessments, credit granting and monitoring, rent and other general expenses shall be recovered by return created on the credit granting (these items are usually collected as a prepayment). In fact, the profitability is assessed regarding the cost of capital.

• Continuous monitoring: the credit loans shall be monitored on a continuous basis. Determining risk domain and capital allocation along with preparing systematic reports by customers, segments, loans status etc…

Fundamental principles in opening a credit file

Since the credit granting process starts with creating a credit file in Saman Bank, there are fundamental principles which shall be considered as follows:

• Customer identification;

• Any access to customer credit files information shall be in accordance with Confidentiality policies of the bank;

• Bank shall ensure using the loan as the way declared by the customer;

• Before granting any credits, bank shall ensure filling and signing the related forms and legal documents by the applicant;

• Bank shall treat all credit requests in a fair and similar way;

• The loans granted by the bank shall not be concentrated in a particular industry;

• The bank shall require adequate collateral margin.

• Any instruction, directive and regulation approved shall be in accordance with the CBI regulations. Credit files shall contain:

- Proof of identification for applicant and guarantor

- A signed request form of credit

- Expert opinion on:

- The objective of credit

- Collaterals and guarantees

- Customer obligations

- General background

- Management

166 167


- Customer past relations with bank

- Financial position analyses

- Competitive status analyses

- Cash flow estimation

- Collateral and guarantee documents

- Credit transaction structure

- Audited financial statements

- Business licenses.

The overall credit rating process

• Branches are responsible for customer initial acceptance; preparing credit reports and rating, and performing inquiry from related organizations.

In addition to above reports, in case of advanced loans, all branches are required to visit customer’s location of operations, evaluating financial statements and preparing expert reports with a clear opinion. These items shall be documented in the customer files and provide a basis for decision.

• Credit committees are responsible for evaluating credit proposals received from branches, assessing customers’ credit scores, management of branches credit limits and provide credit opinions.

• Credit committees are responsible for approving credits in decision making departments regarding the amount of credit.

• The risk management department is responsible for providing an opinion on granted loans and updating the rating system, controlling and monitoring credit risk.

• Risk management duties in credit area are different from those of business and customer relationship departments.

• The principles of decision making about credit granting, controlling and reporting are valid in all circumstances.

63-3-7-credit quality analyses

Bank’s assets quality including loans and investment liabilities, type and amount of collaterals and their adequacy (the ratio of loans granted to updated value of collaterals) are illustrated in tables 63-3-7-1 and 63-3-7-2.

63-3-7-1- Analyzing loan and investments based on bank’s internal rating

It should be noted that customer rating system in Saman bank is being developed. Although the credit system has been designed, classification of bank customers by risk degree has not been performed yet.

One way of reducing credit risk is requiring collaterals in accordance with risk and liquidity degrees. Collaterals are classified into three classes based on risk degree:

• First class collaterals: includes investment deposit and certificate of deposit issued by bank, participating bonds guaranteed by the government or banks, bearer certificates of deposit

issued by other banks, letters of guarantee secured by internal and external banks (with approval of the international department manager).

• Second class collaterals: includes real estates (immovable properties) and listed companies shares (tradable in the main trading floor). It is noted that the real estates shall be in full ownership, worthy, tradable and have all necessary licenses.

• Third class collaterals: includes movable assets (warehouses certificates approved by manager of small and medium sized credits department) and binding contracts, promissory notes, checks and notes received.

In order to avoid risks related to collaterals, bank insures the collaterals against fire, explosion, thunder, flood and earthquake in behalf of bank and cost of the customer through Saman Insurance Co. The instruction of collateral insurance is as follows:

- Properties and collateral to be insured

- Housing units which its land and buildings are pledged as security to the bank.

- Manufacturing facilities including buildings and equipment and other properties related bank to transaction.

- Insurance amount and Insurance fee calculation

The insurance amount is preferred to be the real current value of properties (according to expert opinion) and insurance fee is calculated based on this value. In case of housing collaterals, annual insurance fee is calculated based on loan (principal plus interest) balances or assessed value of the collaterals whichever is less.

63-3-7-2- Analyzing credit quality of loans granted, obligations engaged and investments according to asset classifications

Loans granted to Banks Loans granted to Customers Obligations for LGs & LCs

2016 2015 2016 2015 2016 2015


Current - - 115,148,307 106,663,798 12,299,900 18,511,669

Overdue - - 1,643,733 1,349,664 - -

Outstanding - - 3,321,252 6,720,566 - -

Doutbful 4,384,725 4,283,573 24,926,909 20,915,905 - -

Gross Total 4,384,725 4,283,573 145,040,201 135,649,933 12,299,900 18,511,669

Impairement Provision - - - - - -

Net Book Value 4,384,725 4,283,573 145,040,201 135,649,933 12,299,900 18,511,669

168 169


63-3-7-3- Credit quality of participating bonds and similar items

63-3-7-4- Type and amount of collaterals received from customers

Governmental bonds and treasury notes 2016 2015

Rls (m) Rls (m)

Islamic treasury notes 458,903 -

458,903 -

Type of Collaterals 2016 2015

Loans granted to People Rls (m) Rls (m)

Cash 38,518 1,955

Participation/ Sokuk Bonds 5,138 4,238

marketable shares 231,005 142,766

Deposit 3,805,935 3,114,452

Real estates 37,087,117 32,325,862

Factry & equipment 68,070 100,108 Letter of Credit 36,065 27,631 Check 32,879,977 31,980,517 Promissory note 9,894,261 11,952,133

Binding Contract 5,863,352 981,769 Noraml Notes 16,136 22,562 Guarantee notes 7,181 8,702

Affidavit 2,862 2,110

Obligatory Document 81,735 98,683

Peace contract of rights 614 -

Power of Attorney 4,986 5,221 Bai Contract 177,096 8,921 Loans granted to Companies - Cash 75,230 4,655 Participation/ Sokuk Bonds 13,320 12,990 marketable shares 8,627,879 9,195,662 Deposit 4,365,583 1,222,044

Real estates 33,088,641 30,216,643

Factry & equipment 3,288,025 3,290,999 Letter of guarantee 482,166 4,306,122 Check 146,303,461 121,790,961 Promissory note 14,875,675 19,785,474

Binding Contract 15,929,808 23,346,201

Noraml Notes 6,000 5,065 Obligatory Document 92,419 117,122 Peace contract of rights 400 126,966 Bai Contract 1,419 1,419

317,350,074 294,199,953

2016 2015

Loans granted to Banks Rls (m) Rls (m)

Less than 50 % 4,384,725 4,283,573

51-70 % - -

71-90 - -

91-100 - -

More than 100 % - -

Loans granted to PeopleLess than 50 % 4,208,879 1,685,871

51-70 % 2,006,331 1,269,116

71-90 3,715,474 2,822,921 91-100 1,173,459 1,629,962

More than 100 % 38,395,443 38,656,170

Loans granted to Companies

Less than 50 % 3,070,488 1,818,007

51-70 % 5,571,676 1,643,391

71-90 3,595,777 4,900,222

91-100 1,392,528 1,728,362

More than 100 % 81,910,146 79,495,911

149,424,926 139,933,506

Loans Granted Invetments Obligation for LGs & LCs

2016 2015 2016 2015 2016 2015


Book value 149,424,925 139,933,505 3,238,568 2,445,120 12,299,900 18,511,669

Loans/liabilities by economic sector

Business 59,394,824 57,500,348 - - 12,299,900 18,511,669

Service 29,956,453 21,388,612 - - - -

Industrial 25,188,485 30,390,337 2,652,381 2,322,077 - -

Agricultural 823,780 838,026 - - - -

Housing 21,509,585 12,534,198 - - - -

Mining 971,975 928,574 - - - -

Other 7,195,099 12,069,837 - - - -

Banks 4,384,724 4,283,573 127,283 123,043 - -

149,424,925 139,933,505 2,779,664 2,445,120 12,299,900 18,511,669

63-3-7-5-Loans balances according to the ratio of loans balances (less provisions) to updated cash value of collaterals

63-3-8- Credit risk focus

In Saman bank, credit risk focus includes determining type, amount, nature and content of credit risk. Determining credit risk focus has two elements: target market and maximum share of credit market. To determine credit risk focus, Saman bank defines its target market in balance sheet and off balance sheet items annually by an operational plan. Saman bank defines its credit risk focus in these areas:

• Corporate banking

• Retail and middle banking

It should be noted that, the High Committee of Strategy and Budget is responsible for defining and revising economic segments including target and total amount of credir portfolio of the bank.

63-3-8-1- Distribution of economic segments of loans and investments and their in land focus

170 171


63-3-8-1-1-Distribution of loans, obligations and investments by industry

63-3-8-2-Distribution of loans by contract and customer type

63-3-9-Managing noncurrent loans

The bank policy in managing noncurrent receivables has preventing approaches that means requiring collaterals and following up to collect receivables. According to Law on removal of limitations from competitive production and promotion of Iran financial system passed on April, 21, 2015, by the Parliament and directive No. 69383/94 of the CBI about calculation of profit sharing dividends, banks are required to modify their asset structure and improve revenue generating assets through selling of collaterals owned and collecting loans. Therefore, Saman bank acts in accordance with internal instructions to modify asset structure and follow up to collect its noncurrent receivables. Collecting noncurrent receivables may include taking ownership of real estates, properties and royalties pledged to the bank. If collecting of receivables at branch level is not possible, credit department and corporate banking will follow up the receivable, then Deputy Legal will follow up to collect the receivables in a legal way.

In accordance with operational and strategic actions and regulations, bank is required to

2016 2015

Rls (m) Rls (m)

Banks & credit institutes 91,584 82,476

Pharmaceutical - 759

Chemical - 8,421

Oil products - 2,065 Investments 89,758 159,141 Telecommunicate 145 16,528 Construction 43,223 35,031 Basic metals 46,753 141,583 Other financial 44,356 60,476 Extraction of metallic ores 5,787 31,061 Engineering 65,185 72,072 Oil Extraction 54,608 86,144 Cement, lime & plaster - 1,332

Transport, storage & communication 61,549 17,262

Sugar - 2,328 Food except for sugar 1,654 8,621

Car & parts 104,769 110,099

Plastics & rubber 4,061 7,766 Basic metals 5,242 -

Supply of electricity, gas, steam & hot water 10,112 -

Elactrical equipments 3,001 -

Non-metallic minerals 916 -

Insurance & Retirement 1,348 -

634,050 843,168

Loans balances at the end of year

Amount Percent

Rls (m) %

Exchange contractsPeople 11,085,794 7.6

Companies 9,111,594 6.3

Non-exchange contracts (including participating contracts)People 37,669,458 26

Companies 87,173,355 60.1

145,040,201

sell excess and collateral properties to collect outstanding and doubtful debts. According to organizational structure, credit departments are responsible for reducing overdue receivables and bank Deputy Legal is responsible for collecting outstanding and doubtful receivables.

Collecting overdue receivables shall be in accordance with Deputy Credit plans, retail credit committee and corporate banking are responsible for collecting outstanding receivables which is done to achieve goals determined in an annual plan. As stated in the goals of board of directors, retail credit committee and corporate banking managements are is responsible for collecting IRR 2,100,000 million and IRR 1,101,000 millions of overdue receivables respectively. Therefore, an amount of IRR 3,201,000 million of overdue receivables are collected by the two departments.

In case of collecting outstanding and doubtful receivables and selling collaterals, the Deputy Legal is responsible. It is planned to collect an amount of IRR 1,500,000 million of outstanding receivables and IRR 10,000000 million of doubtful receivables and to sell an amount of IRR 8,000,000 million of collaterals. Therefore, an amount of IRR 19,500,000 million of noncurrent loans will be collected by Deputy Legal.

The collecting of receivables in all departments shall be in accordance with regulations of the country, CBI and internal instructions and directives of the bank. In case of collecting receivables through selling of collaterals, the process is in accordance with current regulations and internal directives of bank and consists of calculating mortgage debt and sending documents, application for issuing an writ of enforcement, notify the enforcement, registration status inquiry, expert assessment report, issuing decision approvals before a meeting for auction, executive procedures to sell the property and liquidating the receivable.

2016 2015

Rls (m) Rls (m)

Non current loans balances at the beginning of year 28,986,135 33,756,865

Transferred to Noncurrent during the year 24,868,154 14,591,010

Liquidated during the year

Collected through Foreclosing ofcollaterals (11,214,927) (14,424,745)

Extended (4,040,630) -

Liquidated by cash (4,322,115) (653,422)

Receivable from Banks abd credit institutes (4,384,725) (4,283,573)

Non current l oans balances at the end of year 29,891,892 28,986,135

Collectiong Plan

Receivabl Balances Collecting plan for 2015-2016 Collected in 2015-2016

28,986,135 18,400,000 21,084,886

63-3-9-1-Noncurrent loans turnover

172 173


63-3-9-2-Distribution of noncurrent loans by economic sectors

63-3-9-3- Foreclosed asset balances

63-3-10- Necessary Capital for credit risk coverage

The capital amount needed for credit risk coverage is IRR 15.034.592 million. The related calculation is provided in table 63-3-10-1.

63-3-10-1- Calculation of necessary capital for credit risk coverage

In this table, capital used to cover credit risk is 8% to achieve capital adequacy goals.

(Capital donated= risk level * 8%)

Non current balances of loans granted Provision For doubtful loans Net value of noncurrent loans and

Non current loans by sector 2016 2015 2016 2015 2016 2015


Business 11,925,369 10,314,207 1,222,733 1,308,468 10,702,636 9,005,739

Services 4,062,850 3,002,005 659,380 491,715 3,403,470 2,510,290

Industrial 10,978,086 13,137,797 1,697,156 1,841,496 9,280,930 11,296,301

Agriculture 148,429 94,498 6,495 2,028 141,934 92,470

Other 696,343 1,178,489 239,116 123,459 457,227 1,055,030

2,080,470 1,259,138 61,925 36,169 2,018,545 1,222,969

Mining 345 - - - 345 -

Banks 4,384,725 4,283,573 - - 4,384,725 4,283,573

34,276,617 33,269,707 3,886,805 3,803,335 30,389,812 29,466,372

2016 2015

Rls (m) Rls (m)

Housing Real Estates 6,183,365 1,832,599

Office Real estates 12,753,136 13,856,078

Factory & equipment 4,238,905 1,153,346

Land 3,617,484 3,621,351

26,792,890 20,463,375

2016

Type of Asset Assets and Obligations Risk Factor Risk Impact Allcated Capital

Rls (m) % Rls (m) Rls (m)

Due from banks & other credit institutes 4,384,725 20 876,945 70,156

Non governmental participating bonds - 100 - -

Investment in stock 2,779,664 100 2,779,664 222,373

Accounts receivable 5,785,072 100 5,785,072 462,806

Hire purchase & housing loans 23,130,163 50 11,565,082 925,207

Other loans & receivables 121,910,038 100 121,910,038 9,752,803

Other Assets 30,255,726 100 30,255,726 2,420,458

Guarantee of non governmental participating bonds (subject to 50% factor) - 100 - -

Obligation for letters of guarantees issued (subject to 20% factor) 7,079,289 100 1,415,858 113,269

Obligation for letters of credit issued (subject to 20% factor) 5,220,611 100 1,044,122 83,530

200,545,288 175,632,507 14,050,601

63-4-Liquidity Risk

63-4-1- Definition

In this table, capital used to cover credit risk is 8% to achieve capital adequacy goals.

(Capital donated= risk level * 8%)

63-4-2- Liquidty risk policies

Saman bank policy is to keep cash buffer for each foreign currency at least 2% of the total related deposits. This buffer is always reviewed to keep at the desired level. There is also limits to transaction with other banks and there is a rigid control to prevent violations of the limits.

63-4-3- Executive departments of liquidity risk management

Saman bank believes in active management of liquidity risk. So there is a coherent system to manage liquidity risk. In this system, the most important role are played by the board of directors, high risk committee, resources and usage committee, treasury management and risk office.

63-4-4- Measuring liquidity risk

Saman bank uses Ball III ratios to measure liquidity risk including Net Stable Funding Ratio (NSFR) and Liquidity Coverage Ratio (LCR). Liquidity gap between Rial and other foreign currencies is another measure which is used.

NSFR=Necessary Stable Funding / Available Stable Funding

63-4-5- Procedures for controlling and monitoring Liquidity risk

The risk office, committee of resource and usage and treasury department are responsible for controlling and monitoring liquidity risk in Saman bank. The committee of resource and usage is responsible to the high risk committee and tracks these issues:

• Review and control measures and ratios and variances from annual operational budget

• Decision making about desired amount and structure of usages including credits, foreign currencies, investments, cash and equivalents in Rial and other currencies and interbank market regarding its effects on profitability of the bank considering annual operational budget.

• Decision making about rates of mobilization and allocation of Rial and for ex resources regarding needs, competitors’ rates, and international market rates. Also decision making about authorities of executive departments in changing the rates regarding its effects on profitability of the bank considering annual operational budget.

• Decision making about solutions for liquidity coverage in accordance with liquidity approved by the high strategy committee and high risk committee.

• Determining the interest rate between departments

• Review and approval of caution plan in response to liquidity crisis regarding its effects on the bank profitability. If these task are more than authority limits of the committee, the related report shall be provided to the strategy committee and the board of directors.

• Reviewing maturity dates of assets and liabilities, profitability trends, structure of the expenses, the profit-sharing and non-profit-sharing income ratios, rate of return on assets and shares, cost of money in the authority level and considering its effects on the bank profitability.

• Decision making about amount of investment in capital and commodity markets.

• Reviewing performance of investment portfolio of the bank and providing solutions to achieve operational goals in case of variations from budgets.

174 175


• Controlling and monitoring rate of loans and return on different assets of the bank (loans, investments, interbank market etc.) regarding budgeted rates.

• Controlling and monitoring cost of resources rates regarding budgeted rates.

• Applying appropriate policies to keep profit margin for resources and usages according to budgeted amounts in annual budget and providing solutions to the high strategy committee.

• Determine and approve cautionary annual liquidity level according to the budget, regulations and suggestion of board of directors.

• To ensure controlling and keeping of liquidity levels in different circumstances.

• Monitoring interbank activities.

Treasury management is responsible for executing aspects of interbank activities.

• Cash and equivalent includes cash, participating bonds and similar items for which there is an active market.

• Net liquid assets include cash and equivalent, investment securities for which there is an active market less banks’ deposits, issued debt securities, other borrowings and obligations matured within a month.

• Liquid deposits are those which do not have a binding maturity such as Qard Hassan, savings accounts etc.

63-4-5-1- Liquidity reserves

63-4-5-2- Liquidity ratios

2016 2015

Rls (m) Rls (m)

Cash balance in CBI 2,478,732 1,778,289

Cash balances in other banks 44,772,819 39,725,079

Treasury Bonds 458,903 -

47,710,454 41,503,369

Beginning of the year

Average during the year

Maximum during the year

Minimum during the year

End of the year

% % % % %

Liquid assets & equivalent to total assets (1) 32 28 46 17 22

Liquid assets & equivalent to total deposits 23 27 41 19 22

net liquid assets to total deposits 21 25 39 17 20

Loans to total deposits 56 49 56 39 52

Loans to deposits matured within one year or more 145 143 150 135 136

Demand deposits to total deposits (3) 15 23 33 14 14

2016

Book ValueLess than 1

Month1-3 Months

Between 3

months and

1 year

1-5 yearsMore than 5

years

without

identified

Maturity


Assets

Cash 49,362,166 49,362,166 - - - - -

Due from other banks & credit institutions 12,700,247 12,700,247 - - - - -

Due from government - - - - - - -

Loans & other receivables from public sector - - - - - - -

Loans & other receivables from non public sector 127,499,869 64,686,933 20,416,661 18,617,992 23,144,385 633,898 -

Investment in stocks & securities 3,238,568 804,012 - 458,902 - - 1,975,654

Due from subsidiaries & affiliates 1,030,523 - - - - - 1,030,523

Other Accounts receivable 5,785,072 5,785,072 - - - - -

Tangible Fxeds Assets 3,593,858 - - - - - 3,593,858

Intangible Assets 4,119,563 - - - - - 4,119,563

Legal Deposit 21,131,325 325,275 307,357 593,007 1,457,824 18,447,862 -

Other Assets 30,255,726 4,467,566 533,333 7,200,000 17,952,890 - 101,937

258,716,917 138,131,271 21,257,352 26,869,901 42,555,099 19,081,760 10,821,535

Liabilities

Due to other banks & credit institutions 29,687,714 21,739,763 - 7,947,951 - - -

customers' deposits 21,933,900 945,231 766,014 1,548,618 3,859,028 14,815,009 -

Dividends payable 157,034 - - - - - 157,034

Debt Bonds - - - - - - -

Provision for income tax - - - - - - -

Other provisions & liabilities 4,268,655 - - - - - 4,268,655

Provision for emplyees' termination benefits 414,634 - - - - - 414,634

long-term investment deposit accounts 189,413,552 2,308,043 2,308,054 4,382,408 10,721,575 169,693,472 -

Interest payable to long- term investment deposits accounts 2,114,740 2,114,740 - - - - -

Total Liabilities 247,990,229 27,107,778 3,074,068 13,878,977 14,580,602 184,508,482 4,840,323

Total shareholders’equity 10,726,688 10,726,688

Total Liabilities and shareholders’equity 258,716,917 27,107,778 3,074,068 13,878,977 14,580,602 184,508,482 15,567,011

Gap 111,023,493 18,183,284 12,990,924 27,974,497 (165,426,722) (4,745,476)

Retained Gap 111,023,493 129,206,777 142,197,701 170,172,198 4,745,476 -

Gap to Capital ratio 893.4% 146.3% 104.5% 225.1% (1331.2%) (38.2%)

Retained Gap to Capital ratio 893.4% 1039.7% 1144.3% 1369.4% 38.2% 0.0%

Capital 12,427,141 12,427,141

63-4-5-3- Below table shows maturity of the financial assets and liabilities of the bank by their probable liquidating date:

176 177


2015


Month1-3 Months

Between 3

months and

1 year


years

without

identified

Maturity


Assets

Cash 43,376,114 43,376,114 - - - -

Due from other banks & credit institutions 11,950,067 11,950,067 - - - -

Due from government - - - - - - -

Loans & other receivables from public sector - - - - - - -

Loans & other receivables from non public sector 118,111,682 61,209,114 17,717,080 19,794,926 19,390,563 - -

Investment in stocks & securities 2,445,120 1,005,052 - - - - 1,440,068


Other Accounts receivable 1,704,678 1,704,678 - - - - -



Legal Deposit 19,512,265 312,587 337,469 598,591 1,524,302 16,739,317 -

Other Assets 22,576,877 2,342,594 666,667 2,000,000 17,463,375 - 104,241

228,082,922 121,900,206 18,721,215 22,393,516 38,378,239 16,739,317 9,950,428

Liabilities


customers' deposits 21,694,932 824,407 737,628 1,562,035 4,555,936 14,014,926 -


Debt Bonds 1,000,000 - - 1,000,000 - - -



Provision for emplyees' termination benefits 296,307 - - - - - 296,307

long-term investment deposit accounts 157,897,141 2,052,663 2,368,457 3,947,429 9,473,828 140,054,764 -




Total Liabilities and shareholders’equity 228,082,922 27,763,512 3106085 12160076 14,029,764 154,069,690 16,953,795

Gap 94,136,694 15,615,131 10,233,440 24,348,475 (137,330,373) (7,003,367)

Retained Gap 94,136,694 109,751,825 119,985,265 144,333,740 (7,003,367) (14,115,035)

Gap to Capital ratio 757.5% 125.7% 82.3% 195.9% (1105.1%) (56.4%)

Retained Gap to Capital ratio 757.5% 883.2% 965.5% 1161.4% (56.4%) (113.6%)

Capital 12,332,122 12,332,122

63-4-5-4-Analyzing maturity of financial liabilities

63-4-5-4-1- Below table shows maturity of the financial liabilities of the bank by their contractual liquidating date:

63-4-5-4-2- Below table shows maturity of the forex financial liabilities of the bank by their contractual liquidating date:

2016


Month1-3 Months

Between 3

months and

1 year

1-5 yearsMore than

5 years

without

identified

Maturity


Liabilities


customers' deposits 21,933,900 - - - - - 21,933,900

Debt Bonds - - - - - - -

long-term investment deposit accounts 189,413,551 3,780,525 1,716,227 5,558,564 74,914,880 - 103,443,356


243,149,905 27,635,028 1,716,227 13,506,515 74,914,880 - 125,377,256

2015


Month1-3 Months

Between 3

months and

1 year

1-5 yearsMore than

5 years

without

identified

Maturity


Liabilities



Debt Bonds 1,000,000 - - 1,000,000 - - -

long-term investment deposit accounts 157,897,141 1,323,219 15,146,948 40,142,152 20,214,524 - 81,070,298


211,129,127 26,209,661 15,146,948 46,792,764 20,214,524 - 102,765,230

2016


Month1-3 Months

Between 3

months and

1 year

1-5 yearsMore than

5 years

without

identified

Maturity


Liabilities



Debt Bonds - - - - - - -

long-term investment deposit accounts 10,568,102 3,533,655 1,635,067 5,062,064 - - 337,316

Interest payable to long- term investment deposits accounts - - - - - - -

39,155,969 15,748,770 1,635,067 13,010,015 - - 8,762,117

178 179


63-4-6- Plan for responding to crisis (Liquidity stress testing)

In order to test liquidity crisis test in Saman bank, it is necessary to identify factors creating liquidity crisis and make scenarios based on current facts. The executive plan for liquidity crisis testing is performed through identification of factors creating liquidity crisis by studying previous literature, determining major risk factors, shocks and effect on assets and liabilities, developing scenarios in favor of assets and liabilities, modeling the liquidity crisis test on the basis of internal affecting factors, evaluating the probability of liquidity crisis and keeping an appropriate level of liquidity in response to cash outflows and preventing high expense cash .

Liquidity risk has been center of focus in last financial crises because it showed that how crisis can expand liquidity problems to other banks quickly and even stop big financial institutes. Before the crises, there were no liquidity stress testing plans in banks, because historical data did not show indication of liquidity risk crisis as a result of liquidity problems.

In the banking industry, the flow of resources should be consistent with outflows. Otherwise, there will be three scenarios which all of them lead to lack of liquidity.

• The first scenario: It is assumed that the resources inflow and outflow of depositors is in a normal situation. But the speed of collecting receivables is less. In this situation the lender will use the resources in a longer than usual period.

• The second scenario: It is assumed that outflow of resources by depositors is speedy. Therefore new resources inflow and collecting receivables from lenders will not cover the speedy outflow.

• The third scenario: It is assumed that resource outflow is growing and simultaneously return of resource pattern is not normal.

One of the common ratios used for liquidity crisis test is the LCR ratio. To make a scenario on the LCR, we should create supposed shocks on inflow and outflow of assets and follow their effects on the LCR and its crisis border line.

In the normal course and according to historical data, the liquidity ratios including LCR never have reached the crisis borderlines. Therefore, our scenario cannot be developed on the basis of historical data and we use a hypothetical future situation. There are different hypotheses affecting crisis including external factors such as inflation rate, for ex currency changes, housing prices index, blocking the Shetab network by the CBI etc.

The effect of each exogenous variable on balance sheet ratios and increase in receivables ratio as well as decrease in loans, deposits ratios will change liquidity coverage ratio and make it near to crisis.

2015


Month1-3 Months

Between 3

months and

1 year

1-5 yearsMore than

5 years

without

identified

Maturity


Liabilities



Debt Bonds - - - - - - -

long-term investment deposit accounts 11,123,255 3,086,449 2,184,709 5,646,122 - - 205,975

Interest payable to long- term invest-ment deposits accounts - - - - - - -

36,102,403 15,772,574 2,184,709 11,296,734 - - 6,848,386

63-5-Market Risk

63-5-1- Definition

The market risk or value exposed to market risk is defined as the probability of uncertainty in revenues from trading portfolio of a financial institute as a result of change in the market elements including asset prices, interest rates, and market and liquidity volatility. Market risks arises when a financial institute is actively trading assets, liabilities and derivatives and it is not probable when these items are trading for long-term investment, financing and hedging purposes.

63-5-2-Executive departments of managing market risk

Saman bank believes in active management of market risk. So there is a coherent system to manage the market risk. In this system, the most important role are played by the board of directors, high risk committee, resources and usage committee, high executive committee, investment committee, investment head officer, international head officer and the risk office.

Shares:

• The high executive committee in the top level-more than IRR 50 billion in a day or 10% of an investee company’s shares (whichever is less).

• Investment committee- transaction amount up to IRR. 50 billion in a day or 10% of an investee company’s share (whichever is less).

• Deputy investment and affiliates- transaction amount from IRR. 3 to 30 billion in a day or less than 5% of an investee company’s share.

• Investment head officer- transaction amount from IRR. .2 to 3 billion in a day.

• Investment expert- transaction amount up to IRR. 200 million in a day.

Foreign Currencies:

• International manager and foreign currency transactions office are responsible for decision making about transaction limits.

• It is possible to add some decisions on the basis of special and long term approaches by the chairman and CEO in the weekly committees held.

63-5-3-Measuring market risk

The transactional portfolio of the bank has two sections:

• Shares

• Open position of foreign currencies

To assess market risk, total value of shares exposed to risk will be calculated at 99% confidentiality level.

According to Ball II and the CBI regulations, the Historical Simulation method is used to calculate necessary capital to cover share portfolio risk.

The Historical Simulation method is used for calculation of foreign currency market risk, the open position of the portfolio as whole, the open positive/negative position of each currency, necessary capital to cover risk, and value of portfolio exposed to risk.

The open position of a foreign currency include the absolute value of items below:

- The Rial amount of difference between foreign currency assets and liabilities included in the balance sheet.

- The Rial amount of difference between bank and customers’ obligations in any currencies

180 181


included under the balance sheet.

According to the CBI instructions, the authorized open position for a foreign currency (positive or negative) is up to 10% of bank’s capital and authorized open position for foreign currencies as a whole (positive or negative) is up to 30% of bank’s capital.

63-5-4- Analyzing value of shares and other marketable investments exposed to risk

Regarding to historical simulation method and its ratio of probable changes on market value, the value of shares and other marketable investments exposed to risk is shown in the following table:

63-5-5- Analyzing value of foreign currency exchange exposed to risk

The status of foreign currency assets, liabilities and obligations s shown in the following table:

2016 2015

Investment Type Possible changes in market price (1)

Effects on profit or loss (2)

Possible changes in market price

Effects on profit or loss

% Rls (m) % Rls (m)

Investment in marktable shares (-5.2 , 8.0) 7,400 (-5.8 , 5.6) (4,737)

Investments in mutual funds (-2.8 , 4.8) 878 (-3.3 , 2.4) (810)

US Dollar Euro Pound

SterlingUAE

DirhamJapanese

YenSwiss Franc

Cash 12,935,464 13,872,587 152,079.59 7,166,705 - -

Due from other banks & credit institutions 37,475,314 397,160,543 4,495,483 40,572,855 21,279,741,484 60,688,632

- - - - - -

20,688,781 132,077,616 - 2,684,275 7,214,364 27,576,603

Investment in stocks & securities - - - - - -

Due from subsidiaries and affiliates - - - - - -

Other Accounts receivable - - - - - -

Tangible Fxeds Assets - - - - - -

Intangible Assets - - - - - -

Legal Deposit - - - - - -

Other Assets 19,118,782 202,780,776 - 36,940,749 - -

Total foreign currency assets 90,218,340 745,891,522 4,647,562 87,364,585 21,286,955,848 88,265,235

Due to other banks & credit institutions 13,223,047 295,675,746 1,493 82,273,021 18,851,570,172 70,040,022

Customers' deposits 7,020,104 137,062,460 115,539 9,331,532 426,240,704 11,264,360

Dividends payable - - - - - -

Debt Bonds - - - - - -

Provision for income tax - - - - - -

Other provisions & liabilities 4,298,709 6,786,729 - 288,910 - 105,691

LCs and drafts acceptance - 1,682,669 - - - -

Long-term investment deposit accounts 96,323,512 208,831,971 767,764 16,923,939 2,039,562,587 1,489

Total liabilities & foreign currency deposit account equity 120,865,372 650,039,576 884,796 108,817,403

21,317,373,463 81,411,561

Net Assets (liabilities) as at March 19,2016 (30,647,032) 95,851,946 3,762,767 (21,452,818) (30,417,615) 6,853,674

Foreign exchange long (short )926,766( 3,252,931 162,134 )176,596( )82( 212,005

Foreign currency open position to capital )7.52%( 26.40% 1.32% )1.43%( 0.00% 1.72%

Net Assets (liabilities) as at March 19,2015 )18,145,817( 68,146,830 3,597,951 )95,962,100( )405,797,721( 5,633,730

Obligation of opened LCs - 45,801,409 - 95,064 139,503,001 1,440,689

Obligation of issued LGs 408,476 5,052,303 138,334 - - - Obligation of amounts received from National Development Fund

- - - - - -

Canadian Dollar

Australian Dollar

Turkish Lira

Indian Rupee Chinese Yuan Omani

RialKorean

Won

Cash - - 2,615 - - - -

Due from other banks & credit institutions - 12,748 129,532,243 7,621,196,749 164,727,974 91,215,840 10,673,363,813

- - - - - - -

- - - - 1,719,950 - 400,360,834

Investment in stocks & securities - - - - - - -

Due from subsidiaries & affiliates - - - - - -

Other Accounts receivable - - - - - - -

Tangible Fxeds Assets - - - - - - -

Intangible Assets - - - - - - -

Legal Deposit - - - - - - -

Other Assets - - 78,720 - 24,142,410 - 52,416,788,566

Total foreign currency assets - 12,748 129,613,577 7,621,196,749 190,590,334 91,215,840 63,490,513,213 Due to other banks & credit institutions - - - 44,130 - 87,011,073 10,000,000,000

Customers' deposits 3,302 23,901 72,533,476 6,117,729,224 157,243,366 2,186,146 6,272,340,189

Dividends payable - - - - - - -

Debt Bonds - - - - - - -


Other provisions & liabilities - - - - - - -

LCs and drafts acceptance - - - - 1,719,950 - 500,451,042

Long-term investment deposit accounts 61,993 718 35,370,672 - 1,000 - -

Total liabilities and foreign currency deposit account equity 65,295 24,619 107,904,148 6,117,773,355 158,964,317 89,197,218 16,772,791,231

Net Assets (liabilities) as at March 19,2016 (65,295) (11,871) 21,709,430 1,503,423,394 31,626,018 2,018,622 46,717,721,982

Foreign exchange long (short )1,507( )273( 229,056 681,051 147,219 158,555 1,203

Foreign currency open position to capital )0.01%( 0.00% 1.86% 5.53% 1.19% 1.29% 0.01%

Net Assets (liabilities) as at March 19,2015 )65,504( )11,871( 32,840,149 140,569,644 )143,625,664( 2,012,691 78,951,900,892

Obligation of opened LCs - - 4,799,620 1,724,694,756 124,949,132 21,704,704 16,593,890,765

Obligation of issued LGs 2,370,000 - - 115,827,360 15,642,623 - -

Obligation of amounts received from National Development Fund - - - - - - -

182 183


Regarding to historical simulation method and its ratio of probable changes on market value, the value of shares and other marketable investments exposed to risk is shown in the following table

• The probable change in market price is calculated by a 10 days period

• The effects on profit or loss in market price is calculated by a 10 days period

63-5-6- Necessary capital for market risk coverage

2016 2015

Currency Type Possible changes in market price (1)

Effects on profit or loss (2)

Possible changes in market price

Effects on profit or loss

% Rls (m) % Rls (m)

US Dollar (-0/02 ، 0/43) (1,967) (47/0 ، 02/0-) (1,415)

Euro (-2/68 ، 2/98) 9,718 (23/1 ، 21/2-) (8,234)

Pound Sterling (-2/49 ، 2/58) 171 (60/1 ، 03/2-) 5

UAE Dirham (-0/04 ، 0/43) (375) (49/0 ، 04/0-) (2,036)

Japanese Yen (-2/24 ، 2/68) (0) (70/1 ، 22/2-) 2

Swiss Franc (-2/71 ، 3/41) 370 (49/2 ، 192/3-) 0

Canadian Dollar (-2/63 ، 2/73) (1) (90/1 ، 48/2-) 1

Australian Dollar (-3/67 ، 3/58) (0) (36/1 ، 25/2-) 4

Turkish Lira (-3/57 ، 3/50) (185) (79/0 ، 61/0-) (1,767)

Indian Rupee (-1/43 ، 20/6) 160 (46/1 ، 48/1-) 127

Chinese Yuan (-0/87 ، 10/1) 137 (9/2 ، 16/2-) 4

Omani Rial (-0/20 ، 0/47) 337 (61/0 ، 15/0-) 406

Korean Won (-2/61 ، 2/73) 1 (90/2 ، 07/3-) (317)

Share risk Currency risk

Measurement Method Value at risk Necessary Capital Value at risk Necessary Capital

Total Necessary Capital for Market risk


Historical Simulation Model 23,753 225,345 18,185 387,532 612,877

2016


Month1-3 Months

Between 3

months and

1 year


years

Non

sensitive

to ratesRls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Assets

Cash 49,362,166 44,772,819 - - - - 4,589,347

- 9/63% - - - - -

Due from other banks & credit institutions

12,700,194 4,569,253 - - - - 8,130,994

22% 22% - - - - -

Loans & other receivables from public sector

127,499,869 68,258,469 33,822,271 162,835 12,845,230 12,411,064 -

22% 23/6% 23/3% 24/5% 20/4% 11/7% -

Investment in stocks & securities 3,238,568 - - - - - 3,238,568


Other Accounts receivable 5,785,072 - - - - - 5,785,072



Legal Deposit 21,131,325 - - - - - 21,131,325

Other Assets 30,255,726 - - - - - 30,255,726

258,716,864 117,600,542 33,822,271 162,835 12,845,230 12,411,064 81,874,976

Liabilities

Due to other banks & credit institutions

29,687,714 583,649 4,666,611 1,709,699 - - 22,727,755

%4/0 %45/0 %1/23 %3/4 - -

Customers' deposits 21,933,900 - - - - - 21,933,900


Other provisions & liabilities 4,268,654 - - - - 4,268,654

long-term investment deposit accounts

189,413,552 107,223,881 1,716,227 5,558,564 71,950,976 2,963,905 -

%17/6 %16.50 %4.8 %6.8 %20.3 %22.9 -

Interest payable to long- term investment deposits accounts

2,114,740 - - - - - 2,114,740



Total Liabilities and shareholders’equity 258,302,283 107,807,530 6,382,838 7,268,263 71,950,976 2,963,905 61,928,771

Gap - 9,793,012 27,439,433 (7,105,428) (59,105,746) 9,447,159 19,946,205

Retained Gap - 9,793,012 37,232,445 30,127,017 (28,978,729) (19,531,570) 414,635

63-5-7- Analyzing the gap between assets and liabilities sensitive to interest rate

184 185


2015


Month1-3 Months

Between 3

months and 1

year


years

Non

sensitive

to ratesRls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)

Assets

Cash 43,376,114 39,725,079 - - - - 3,651,035

0.0% 4.59% - - - - -

Due from other banks & credit institutions

11,950,067 4,635,788 - - - - 7,314,279

22% 22% - - - - -

Loans & other receivables from public sector

118,111,682 43,134,977 42,489,615 208,113 16,416,933 15,862,045 -

21.03% 23.39% 27.17% 26.08% 19.18% - -

Investment in stocks & securities 2,445,120 - - - - - 2,445,120


Other Accounts receivable 1,704,678 - - - - - 1,704,678



Legal Deposit 19,512,265 - - - - - 19,512,265

Other Assets 22,576,877 - - - - - 22,576,877

228,082,922 87,495,844 42,489,615 208,113 16,416,933 15,862,045 65,610,373

Liabilities

Due to other banks & credit institutions 28,755,259 1,793 3,026,444 2,559,469 - - 23,167,554

0.57% 0.10% 2.41% 3.50% - - -

Customers' deposits 21,694,932 - - - - - 21,694,932


Debt Bonds 1,000,000 - - 1,000,000 - - -

20% - - 20% - - -


long-term investment deposit accounts 157,897,141 82,393,517 15,146,948 40,142,152 20,214,524 -

19.04% 15.38% 22.16% 22.37% 25% - -

Interest payable to long- term investment deposits accounts 1,781,795 - - - - - 1,781,795

Total Liabilities 217,016,946 82,395,310 18,173,392 43,701,621 20,214,524 - 52,532,099


Total Liabilities and shareholders’equity

227,786,616 82,395,310 18,173,392 43,701,621 20,214,525 - 63,301,769

Gap 5,100,535 24,316,223 (43,493,508) (3,797,591) 15,862,045 2,308,604

Retained Gap 5,100,535 29,416,758 (14,076,750) (17,874,342) (2,012,297) 296,307

63-6-Operational Risk

63-6-1-Definition

Operational risk is defined as loss of error or inefficiency of internal processes, people, system and external events. It does not include reputation and legal risk.

63-6-2-Executive departments of managing operational risk

Saman bank has developed a coherent process of operational risk management in accordance with the CBI regulations and the best practice in the banking industry as well as ensuring that operational risks are identified, assessed, measured and controlled on a reasonable and complete basis reacting to other departments. This process is as follows:

• The risk office: this is the executive operational risk department which aims at identifying resources exposed to operational risk and implementing operational risk management process in the organization process.

• Quality improvement division: This department designs and documents operational process of the bank, determines relations between departments, defines controlling and monitoring indices and links the directives and regulations to active processes. This structure is formed to standardize the processes and minimize the operational events.

• Inspection division: this department performs periodical inspections from branches in accordance with directives and instructions and prepares reports of the findings. These reports are a basis for analyzing operational event at branch level and assesse the operational risk of branches by event type required by the Ball committee regarding frequency and impact of the possible loss.

63-6-3-Preventing policies for intentional or unintentional human mistakes

Since people are a source of loss to organizations, Saman bank attempts to prevent from intentional or unintentional human mistakes.

Trying to create a clear culture and environment in which people are aware of their duties and responsibilities against loss making events related to operational risk.

To expand an appropriate culture about operational risks and institutionalize high ethical values.

Planning for training courses to ensure that the staff is sufficiently knowledgeable and experienced in field of working.

63-6-4-Figureing for responding to the crisis

There is a Passive Defense instruction developed in Saman bank in order to ensure keeping the normal situation, returning to normal situation programs, and minimizing consequences in case of crises occurring.

63-6-5-Measuring operational risk

Saman bank uses the Base Index approach consistent with Ball II in to include operational risk in its capital adequacy calculations. The bank is working to develop structures necessary in calculation of operational risk with new methods. Therefore, the bank needs identification and assessment of operational risk in all processes.

186 187


Capital exposed to operational risk. Rls (m)

Measurement Method 2016 2015

Base Index 321,500 438,450

Identification and assessment tools include:

• Using the self-risk assessment method in a qualitative manner involving managers and operational divisions.

• Using the findings and data of regular audit and inspection related to loss making events of operational risk.

• Using key indications of risk in the important processes of the bank in order to monitor operational risk trends.

63-6-6-Operational risk controlling and monitoring mechanism

• Operational risk controlling mechanism: after assessment of operational risk, the bank shall determine the risk classes to be accepted or controlled. Controlling the operational risk shall be done by cooperation of all related operational divisions. The most important action in this fields are identification of constraints creating operational risk (people, systems, processes and external events), developing /revising preventing and detecting instructions related to loss making events of operational risk.

• Operational risk monitoring mechanism: the operational risk position is monitored periodically to review the efficiency and effectiveness of controls and effects of any new event on the organization risk profile. After each period, resources exposed to operational risk, frequency and impact of risk factors, key indications of risk, and efficiency and effectiveness of established controls are reviewed.

63-6-7-Necessary capital for operational risk coverage

Necessary capital for operational risk coverage is evaluated by the Base Index method. The capital exposed to operational risk is as follow:

63-7- Capital Management

63-7-1-Capital

The capital of the bank is IRR. 12.362.709 million as at March, 19, 2016:

The capital basis for calculation of cautionary ratios is IRR 11,799,287 million at the date of approving the financial statements. The new capital of the bank will be validated by the CBI after considering any possible changes and deductions such as dividends.

2016 2015

Rls (m) Rls (m)

A) Main capital

Capital less Capital from reassessment 5,575,004 4,163,004


Legal reserve 1,523,868 1,448,456

Retained eranings 1,202,145 2,447,064

8,301,017 8,470,524

B) Additional Capital

General provision for debts & investments 1,788,907 1,703,206

Surplus on reassessment of tangible fixed assets 2,425,671 2,425,671

4,214,578 4,128,877

Less: Excess of additional capital to main capital - -

Additional Capital 4,214,578 4,128,877

Capital before deductions 12,515,595 12,599,401

C) Dduction from capital

nvestment in subsidiary banks & credit institutes - -

nvestment in other banks & credit institutes (152,885) (144,721)

(152,885) (144,721)

Capital 12,362,709 12,454,680

188 189


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2016 2015

Rls (m) Rls (m)

Capital 12,362,709 12,454,680

Total assets and liabilities weighted by risk 155,265,581 147,301,253

Capital Adequency Ratio(CAR) 8.0% 8.5%

2016 2015

Rls (m) Rls (m)

Total Assets 258,716,916 228,082,921

Total shareholders' equity 10,726,687 10,769,670

Leverage 24.12 21.18

63-7-3- Capital Adequacy Ratio

The Capital Adequacy Ratio of then bank is 8% as at March, 19, 2016.

63-7-4-Leverage

Leverage is calculated by dividing total assets to shareholders equity. The bank leverage is 24.12% as at March, 19, 2016.

Date post:	06-Feb-2018
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