annual report 2016178 Annual Report 9 Date of capital increase Increase New capital Source of...

Contents

Saman Bank In 2016/17

Statement of the Board and the CEO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Key Figures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

About Saman Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Strategy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Saman’s position in the Securities and Exchange Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The Bank’s Legal Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

An Overview of Saman’s Operational and Financial Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Resource and Expense Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Major Achievements of Bank in Different Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Major Accolades and Achievements of Saman Bank and Saman Financial Group in 2016/17

Saman Financial Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Plans and Projects for 2017/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Report

Independent Auditor’s and Legal Inspector’s Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

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

Saman Bank In 2016/17

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4 5Annual Report

Statement of the Board and the CEO

Yesterday

The financial year 2016/17 was undoubtedly a challenging year for the Iranian banking system. Years of negotiations between Iran and the five world economic leaders (P5+1) finally reached a conclusion, and the signature of the JCPOA in winter 2016 heralded new hope for the Iranian economy. Although the gradual removal of sanctions re-established contact with the international banking system, it also brought to light the fact that it would be necessary to develop the technical, operational and infrastructural capacities required in order to comply with complex, strict standards and to be able to interact productively with international banks and institutions. The new conditions prompted us to pursue even more extensively and diligently our plans to achieve our key goal: “To become the first-choice banking partner for overseas banks.”

Domestically, the Central Bank of Iran (CBI) continued its policy of money supply control and inflation control throughout the year, which reduced interest rates more than once during the year. Although the reduced interest rates promised a positive impact on banks’ profitability, it coincided with the issuance of two separate circulars by the CBI, which adversely affected profits and severely reduced major parts of joint revenue sources. The first circular called for all government, government company and municipality accounts to be centralized within the CBI, and the second circular reduced the gap between interest paid on deposits and interest received from loans. It also stipulated that banks were to avoid paying interest on long-term deposits, simultaneously offering short-term loans to the same clients.

We should bear in mind that approximately 80 percent of the Iranian economy is controlled by the state, and the centralization of government accounts within the CBI means a smaller and more competitive money market for commercial banks, especially privately owned institutions. On the other hand, operational costs were borne by the banks under the existing inflation conditions, and the reduced gap between interest paid and interest gained represents a loss to the banks, which were also responsible for legal deposit costs. Banks experienced similar conditions in the non-joint-revenues section. The economic stagnation had reduced profit and blocked banks’

investments in other markets such as capital and housing markets. No improvement was recorded in fees and charges revenue, in spite of increased operational costs and infrastructural developments during the past five years.

In 2015, the CBI issued a circular stipulating that banks were to pay the costs of using POS systems in retail outlets, despite the major investment in e-commerce and e-payment development. This in itself was responsible for a high increase (IRR 1.064 billion) in our expenses.

Despite all of the above-mentioned challenges, the fact that we had planned with diligent foresight meant that Saman Bank was prepared and equipped to face the new conditions, to effectively manage the restrictions and utilize opportunities in the best possible manner. Our excellent management of resources and expenses, and our focus on our international capabilities enabled us to increase our foreign currency operations from $3.9 billion in 2015/16 to $5.8 billion in 2016/17. The role of the JCPOA in opening up the Iranian banking market and making it more competitive should not be ignored. In such a competitive market, we managed to improve our import market share of 13 percent to 15 percent.

As indicated above, we have invested heavily in our three key areas of business, based on our rigorous forecasts of future developments during the JPA and the start of JCPOA, and taking into account the need to expand our international banking capacities. These actions will continue well into 2017/18.

In order to improve productivity and efficiency, we implemented Enterprise Resource Planning (ERP) systems, purchased from a reputable developer, which facilitate the control and utilization of information in all sectors of the bank including financial, accounting, human resources, supply chain and customer services. ERP will enable us to develop and implement the infrastructure needed to prepare and manage our financial statements in line with IFRS standards, which we will certainly need in our interactions with domestic supervisory bodies as well as our international dealings.

6 7Annual Report

Today

Our goals for the current year include the launch of our innovative new corporate banking and personal banking systems. Thanks to our past investments, we can now develop our Internet banking systems independently. In 2016/17, we invested heavily in developing our mobile banking systems, launching our Mobile Virtual Network Operator (MVNO). The first series of SIM cards under the manufacturer’s brand, SamanTel, will soon enter the market. We intend to offer payment, insurance and value-added services (VAS) on these SIM cards.

Under our current policy, our programs focus on three major goals: cost management, expansion of international banking, and continued optimization of infrastructures. While working hard to increase the bank’s revenues, we strive to maintain our brilliant record with the CBI as a very active bank in the interbank market.

Another major goal that we strongly pursue is that of reducing the bank’s outstanding claims to the lowest possible level. Our previous investments, including the creation of Hafez Saman Iranian Credit Scoring Company, and the concentration of debt-collection activities have brought us closer to this goal.

In 2017/18, we will establish Saman Holding to create synergy in companies in which Saman Bank is a shareholder. We expect this to improve strategic management and increase revenues in those companies, thereby contributing to Saman’s revenues from its investment arm.

We have also managed to obtain authorization to increase our registered capital from IRR 8000 billion to IRR 12000 billion at the end of the financial year 2016/17. We will follow up on this to increase capital through liquidated claims and shareholders’ equity.

With the promise of improved international relations, Saman relies on its international reputation to develop its correspondent banking network through cooperation with major international banks in 2017/2018. We recently opened our representative office in Italy, and will soon open our office in Germany, both of which will further develop our international banking presence. We also signed a finance agreement with Exim Bank of India and are currently working toward establishing finance agreements with a number of European and Asian banks including Danske Bank in Denmark, Oberbank in Austria, and The Export-Import Bank of Korea in South Korea. Furthermore, we have signed agreements and memorandums of understanding with reputable export credit and insurance organizations such as SACE in Italy, and will continue to make the best use of any opportunity that should arise, in order to boost our international banking relations.

Saman Bank Board of Directors

Key Figures

2016/17 2015/16 2014/15

Unit Consolidated Bank Consolidated Bank Consolidated Bank

Key performance indicators during the year

Net revenue from lending and deposits IRR billion (7,663) (7,689) (662) (611) 2,090 2,082

Net revenue from fees and charges IRR billion (318) (514) 13 (28) 331 301

Total operating revenues IRR billion (3,134) (1,789) 2,097 1,255 4,751 4,230

Net profit (loss) IRR billion (1,882) 85 316 103 1,044 1,011

Key items in balance sheet

Lending and claims IRR billion 127,532 127,750 126,692 126,988 117,743 118,112

Total assets IRR billion 257,912 258,035 260,670 257,555 229,991 228,083

Total deposits IRR billion 17,107 17,098 21,806 21,885 21,652 21,695

Total debts IRR billion 34,685 31,977 56,965 53,768 60,157 57,634

Investors’ equity IRR billion 213,660 214,853 193,509 194,174 158,912 159,679

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

Shareholders’ equity IRR billion 9,567 11,205 10,196 9,614 10,922 10,770

Return Rate

Return on Asset Percenage (0.73) 0.03 0.12 0.04 0.45 0.44

Return on Net Worth (ROE) Percenage (19.67) 0.76 3.10 1.07 9.6 9.4

Performance per share

Number of shares 8,000,000,000 8,000,000,000 8,000,000,000 8,000,000,000 6,588,000,000 6,588,000,000

Basic earnings per share (IRR) Rls (m) (235) 11 42 14 138 133

Diluted earnings per share (IRR) Rls (m) (235) 11 40 13 137 132

Dividend per share (IRR) Rls (m) - - - - 80 80

Other information

Personnel Person 3,100 2,406 3,581 2,475 3,453 2,425

Number of branches - 137 - 141 - 145

(Adjusted)

Our next step toward joining the global banking network was to optimize e-banking equipment. In this regard, we have procured the latest software solutions and tailored these to suit our requirements.

The collective efforts of our colleagues across all departments have resulted in numerous awards and accolades for the Bank. Saman’s position improved five steps among the 100 superior companies in Iran, and it now stands in 24th place. Saman’s Customer Complaint system obtained ISO certification, and its Capital Intelligence credit rating improved. Saman was voted first-choice bank for retail banking by more than 50 thousand voters in the context of the “My Favorite Bank” annual festival, and was awarded the prestigious title of “My Favorite Bank.”

Tomorrow

Last year, we produced the bank’s Second 5-Year Strategic Plan, which defined three main areas of focus in Horizon 2021/22. These areas include:

• Development of mobile phone-based e-banking

• Development of corporate and international banking

• Creation of value chain and provision of comprehensive service for customers in target markets

Our vision for 2021/22 is to achieve recognition as a pioneering international bank. We aim to provide our full range of retail banking services and transactions via mobile e-banking, as well as to transform our branches into advice and consultation hubs where the bank meets its clients.

8 9Annual Report

Date of capital increase Increase New capital Source of increase

percentage IRR billion

29.08.2002 0 200 Liquidated claims and shareholders’ equity


14.10.2004 36.4 300 Shareholders’ equity




13.01.2010 100 1,800 Liquidated claims and shareholders’ equity and

denying rights of preference

20.03.2011 66.7 3,000 Liquidated claims and shareholders’ equity

19.03.2012 33.3 4,000 Shareholders’ equity

21.10.2012 64.7 6,588 Surplus of assets revaluation

09.03.2016 21 8,000 Shareholders’ equity and accumulated profit

Shareholder March 20,2017

Number of Shares Percentage

Pension Fund of National Iranian Copper Industries Company 624,530,308 7.81

Steel Industries Pension Fund 400,088,117 5.00

Mines and Metals Development Investment Company (Public Joint-Stock) 323,686,501 4.05

Mohammad Zarrabieh 315,266,280 3.94

Parsian Bank Financial Group Company (Private Joint-Stock) 244,163,829 3.05

Saman Investment Development Company 239,999,995 3.00

Havva Chayi Dehkhuyi 214,307,862 2.68

Vali Zarrabieh 201,660,057 2.52

Seyed Mehdi Ghafouri 181,316,669 2.27

Seyed Ahmad Akhavan Dastmalchi 166,800,291 2.09

Other individual shareholders 3,741,848,402 46.77

Other corporate shareholders 1,346,331,689 16.83

8,000,000,000 100

March 20, 2017 March 19, 2016

Number ofShareholders

Number ofShares

Percentage Number of

Shareholders Number of

SharesPercentage

Individual 4150 4,821,199,561 60.26 3501 4,787,934,738 59.85

Corporate 69 3,178,800,439 39.74 68 3,212,065,262 40.15

4219 8,000,000,000 100.00 3569 8,000,000,000 100.00

About Saman Bank

Saman began its official activity on September 2, 1999 as the first credit institution in post-revolutionary Iran under the name Saman Eghtesad. Saman Eghtesad was registered with the Corporate and Noncommercial Entities Register under number 154444, with an initial capital of IRR 11 billion.

In September 2002, Saman Eghtesad had accumulated sufficient capital to obtain a banking license from the Central Bank of the Islamic Republic of Iran. This opportunity allowed the institution to enter a new phase of its life as a privately owned bank.

Scope of Activities

The bank’s scope of activities is detailed in Article 3 of the Memorandum of Association. A summary is presented below:

• Opening and maintaining different types of bank accounts including current and savings accounts

• Accepting term deposits and issuing deposit certificates

• Providing loan and finance products within the framework of rules and regulations and the standards of non-usurious banking laws

• Operating in currency markets domestically and internationally

• Administering all types of credit instruments including documentary letters of credit

• Issuing L /C and different types of checks

• Issuing and trading bonds

• Partnership and investment

• Any other banking and business activity allowed under relevant rules and regulations

Capital

At the time of registration, the bank’s capital was IRR 200 billion (divided into 200 million shares, each of IRR 1,000 nominal value) which has subsequently increased, as follows:

Shareholder Structure

The list of Saman shareholders as at the end of the financial year 2016/17 is presented in the following table.

Individual and corporate share ratio:

Corporate 39.74 Individual 60.26

10 11Annual Report

Saman extended its 5-year customer-centric strategic plan initiated in 2010 for the financial year 2016/17.

Our Vision

• To serve as the first choice in Iranian banking for target customers, which include:

- In-branch customers for electronic-banking services in physical bank locations;

- Private (VIP) and Premier Customers;

- Large- and medium-sized businesses (domestic and international) for international transactions.

• To operate as the first-choice banking partner for overseas banks;

• To maintain the bank’s position as a first-choice employer for the most talented banking professionals;

• To secure the largest market share of international transactions amongst privately owned Iranian banks.

Our Mission and Values

Saman Bank strives to create real added value for its customers and to encourage their loyalty through the consistent delivery of quality services that are defined by convenience, reliability, and respect of social values.

To these ends, we introduced and continue to uphold the following values:

• Customer-centric culture

• Human capital

• Transparency

• Organisational culture

Our Strategic Goals

Our Vision and Mission Statements guide us in our pursuit of the following objectives:

• To classify customers and to tailor organizational structures and procedures to their needs;

• To maximize customer loyalty;

• To increase non-joint revenues;

• To enhance operational efficiency through improved procedures and increased internal control and supervision;

• To expand the investment portfolio;

• To improve risk management;

• To boost the profitability of branch operations.

Strategy Statement

12 13Annual Report

Saman’s position in Securities and Exchange Organization

The Bank’s Legal Environment

According to notification number 90-851 dated November 16, 2011 by Iran Fara Bourse, Saman was listed in the Banks and Credit Institutions group as the 49' stock symbol (29' company in the first market) and was assigned the stock symbol “ZeSaman.” On June 07, 2013, Saman Bank’s listing was transferred to the main market of the Iran Stock Exchange as per IFB’s letter no. 91/03/3035.

The following laws and regulations are the most important rules governing Saman’s activities:

• The Monetary and Banking Act of Iran ratified in 1972 and its subsequent amendments;

• The Law for Usury (Interest) Free Banking ratified in 1983;

• The Law annexing two notes to Article 15 of the Law for Usury (Interest) Free Banking as amended in 1997;

• The Law permitting the Establishment of Privately-Owned Banks passed in 2000;

• The Law regulating Non-Regulated Money Market passed in 2004;

• The Anti Money Laundering Act passed in 2007;

• The Banking Regulations Act passed in 1979;

• Law adjusting Bank Loan Interests to the Return Rate in Different Economic Sectors, passed in 2006;

• Law banning Bank Borrowers from leaving the Country passed in 1980;

• The Cheques Act passed in 2003;

• The Direct Taxation Act passed in 1987;

• The By-Law on Enforcing Legally-Binding Documents;

• Article 34 of the Registration Act as amended;

• Commercial Code passed in 1932 and its subsequent amendments;

• E-Commerce Law passed on 25th January 2004;

• Negotiable Instruments Market Law passed on 22 November 2005;

• By-laws and guidelines circulated by the Central Bank of Iran;

• By-laws and guidelines circulated by the Securities and Exchange Organization;

• Supervision packages and policies of the CBI, which act as guidelines for the bank’s operations and other legal activities during the reported year;

• General policies adopted under Article 44 of the Constitution;

• Monetary and Banking Act;

• Law requiring issuance of national identification number and postal code to all citizens;

• Approvals by Money and Credit Council;

• Saman’s Articles of Association.

14 15Annual Report

20/03/2017

IRR billion PercentagePercentage

Increase (decrease) comparedwith previous year

Assets

Cash 31,495 12.21 (36.20)

Due from banks and other credit institutions 9,676 3.75 (24.60)

Loans and advances to customers 127,750 49.51 0.60

Investment in stocks and securities 2,778 1.08 (14.23)

Due from subsidiaries and affiliates 3,579 1.39 247.29

Other accounts receivable 5,946 2.30 (5.20)

Tangible fixed assets 3,613 1.40 0.53

Intangible assets 4,301 1.67 4.41

Legal deposit 23,036 8.93 9.01

Other assets 45,862 17.77 54.91

Total 258,035 100 0.19

Liabilities

Due to banks and other credit institutions 5,475 2.12 (79.75)

Customer deposits 17,098 6.63 (21.87)

Dividends payable 52 0.02 (66.58)

Debt instruments - 0.00 0.00

Income tax provision - 0.00 0.00

Other debts and provisions 8,813 3.42 106.47

Provision for employee termination benefits 537 0.21 29.59

Total liabilities before investment accounts equity 31,977 12.39 (40.53)

Investment accounts equity 214,853 83.27 10.65

Total liabilities 246,830 95.66 (0.45)

Shareholders’ equity

Share capital 8,000 3.10 0.00

Ongoing capital increase - 0.00 0.00

Legal reserve 1,537 0.60 0.83

Assets revaluation surplus 1,507 0.58 223,120.85

Retained earnings 161 0.06 80.50

Total equity 11,205 4.34 16.55

Total liabilities and equity 258,035 100 0.19

19/03/2016 20/03/2015


Increase (decrease) comparedwith previous year

IRR billion

Assets

Cash 49,362 19.17 13.80 43,376

Due from banks and other credit institutions 12,834 4.98 7.39 11,950

Loans and advances to customers 126,988 49.31 7.52 118,112

Investment in stocks and securities 3,239 1.26 32.45 2,445

Due from subsidiaries and affiliates 1,031 0.40 (13.13) 1,186

Other accounts receivable 5,652 2.19 231.54 1,705

Tangible fixed assets 3,594 1.40 7.01 3,359

Intangible assets 4,120 1.60 6.69 3,861

Legal deposit 21,131 8.20 8.30 19,512

Other assets 29,606 11.50 31.13 22,577

Total 257,555 100 12.92 228,083

Liabilities

Due to banks and other credit institutions 27,042 10.50 (5.96) 28,755

Customer deposits 21,885 8.50 0.88 21,695

Dividends payable 157 0.06 (15.49) 186

Debt instruments - 0.00 0.00 1,000

Income tax provision - 0.00 0.00 -

Other debts and provisions 4,269 1.66 (25.14) 5,702

Provision for employee termination benefits 415 0.16 39.93 296

Total liabilities before investment accounts equity 53,768 20.88 (6.71) 57,635

Investment accounts equity 194,174 75.39 21.60 159,679

Total liabilities 247,941 76.21 14.09 217,314

Shareholders’ equity

Share capital 8,000 3.11 21.43 6,588

Ongoing capital increase - 0.00 (100) 318

Legal reserve 1,524 0.59 5.21 1,448

Assets revaluation surplus 1 0.00 0.00 1

Retained earnings 89 0.03 (96.30) 2,414

Total equity 9,614 3.73 (10.72) 10,769

Total liabilities and equity 257,555 100 12.92 228,083

An Overview of Saman’s Operational and Financial Performance

Balance sheet

16 17Annual Report

20/03/2017


Increase (decrease) compared withprevious year

Revenues

Interest income 24,259 63.49 (22.22)

Fee and commission income 1,329 3.48 19.10

Net investment profit (loss) 5,030 13.16 739.95

Net foreign currency transactions profit (loss) 1,385 3.62 6.84

Other incomes 6,207 16.24 83.64

Total income 38,209 100 1.67

Expenses

Interest paid on deposits (31,948) 83.80 0.46

Fees and commissions expenses (1,843) 4.83 61.10

General and administrative expenses (3,586) 9.41 9.18

Doubtful dues expenses (300) 0.79 (60.83)

Financial expenses (2) 0.00 (96.98)

Depreciation (445) 1.17 5.33

Total expenses (38,124) 100 1.72

Profit (loss) before tax 85 (17.60)

Income tax

Net profit (loss) 85

Income Statement Information

19/03/2016 20/03/2015


Increase (decrease) compared withprevious year

IRR billion

Revenues

Interest income 31,190 83 13.35 27,517

Fee and commission income 1,116 2.97 0.88 1,106

Net investment profit (loss) 599 1.59 (38.63) 976

Net foreign currency transactions profit (loss) 1,296 3.45 48.69 872

Other incomes 3,380 8.99 80.00 1,878

Total income 37,581 100 16.18 32,348

Expenses

Interest paid on deposits (31,802) 84.85 25.03 (25,435)

Fees and commissions expenses (1,144) 3.05 42.04 (805)

General and administrative expenses (3,285) 8.76 14.26 (2,875)

Doubtful dues expenses (766) 2.04 (51.85) (1,591)

Financial expenses (59) 0.16 (77.59) (264)

Depreciation (423) 1.13 15.30 (367)

Total expenses (37,478) 100 19.60 (31,337)

Profit (loss) before tax 103 (89.84) 1,011

Income tax

Net profit (loss) 103 1,011

18 19Annual Report

2016/17 2015/16

Percentage Percentage

Capital adequacy ratio 7 8

Lending to deposits ratio 55.54 59.36

Lending to total assets ratio 49.51 49.31

Total expenditure to total revenue ratio 99.78 99.73

Debt ratio 12 12

Assets return ratio 0.03 0.04

Return on capital ratio 1.1 1.28

Total deposits to total assets ratio 89.15 83.07

Total deposits to capital ratio 2875.32 2674.30

Loan interest to total revenues ratio 63.49 83.00

Dividend to total expenditures ratio 83.80 84.85

Doubtful dues expense to total expenditures ratio 1 2.04

2016/17 2015/16

IRR billion IRR billion

Deposit per branch ratio 1,661 1,507

Lending per branch ratio 922 894

Net profit per branch ratio 1 1

Deposit per average employee size ratio 95 86

Lending per average employee size ratio 53 51

Net profit per average employee size ratio 0,035 0,041

2016/17 2015/16

Amount Percentage from Total Amount Percentage from Total


Demand deposits – IRR 9,266 4.03 10,445 4.88

Saving deposits and similar accounts- IRR 541 0.24 555 0.26

Term deposits – IRR 197,056 85.67 178,319 83.35

Foreign currency deposits 22,448 9.76 23,677 11.07

Other deposits- IRR 714 0.31 948 0.44

230,025 100 213,944 100

2016/17 2015/16

Amount Percentage from Total Amount Percentage from Total


Interest-bearing deposits 212,927 92.57 192,059 89.77

Non-interest-bearing deposits 17,098 7.43 21,885 10.23

230,025 100 213,944 100

2016/17 2015/16 2014/15 2013/14 2012/13

IRR billion IRR billion IRR billion IRR billion IRR billion

Total deposits 230,025 213,944 182,144 160,880 107,033

Percentage change to previous year 7.52 17.46 13.22 50.31 27.79

2016/17 2015/16 2014/15 2013/14 2012/13


Saman Bank Deposits 230,025 213,944 182,144 160,880 107,033

Total Banking System Deposits 12,728,364 10,619,015 8,192,761 6,844,166 4,977,262

Percentage of Saman’s Share of Total Deposits 1.81 2.01 2.22 2.35 2.15

Resource and Expense Analysis

Deposits

Key performance indicators for attracting deposits (in Iranian and foreign currencies) are as follows:

Key Performance Indicators

Key performance indicators for the years 2016/17 and 2015/16 are shown in the following table:

Interest-bearing versus Non-interest-bearing Deposits

Saman Bank Deposits compared with the Iranian Banking System’s Total Deposits

Comparison Table of Deposits

Deposits

250,000

200,000

150,000

100,000

50,000

2012/13 2013/14 2014/15 2015/16 2016/17

20 21Annual Report

2016/17 2015/16

AmountPercentage from Total

Amount Percentage from Total


Installment sale loan 6,652 5.2 4,801 3.8

Joala (commission-based contract) loan 7,505 5.9 3,402 2.7

Ijara (Lease ending with Ownership ) loan 2,089 1.6 2,093 1.6

Qard al-hasan (Interest-free) loan 764 0.6 141 0.1

Mudaraba (trust financing contract) loan 11,991 9.4 13,511 10.6

Diminishing Musharaka (co-ownership) loan 86,278 67.5 89,776 70.7

Debt purchase 5,658 4.4 4,869 3.8

Foreign currency loan 4,786 3.7 5,038 4.0

Letters of Credit issued 1,345 1.1 2,062 1.6

Letters of Guarantee issued 536 0.4 1,233 1.0

Others 148 0.1 61 0.0

127,750 100 126,988 100

2016/17 2015/16 2014/15 2013/14 2012/13


Total Lending 127,750 126,988 118,112 103,095 76,224


Types of Deposit 2016/17 2015/16

IRR billion Percentage from

TotalIRR billion

Percentage fromTotal

Short-term investment deposits 13,636 42.68 13,194 41.49

One-year investment deposits 13,386 41.90 12,032 37.83

Two-year investment deposits 12 0.04 677 2.13

Three-year investment deposits 14 0.04 19 0.06

Four-year investment deposits 15 0.05 15 0.05

Five-year investment deposits 4,342 13.59 5,204 16.36

Deposit certificates 1 0.004 129 0.41

Termed deposits of banks and other credit institutions 141 0.44 40 0.13

Foreign currency deposits 401 1.25 491 1.54

31,948 100 31,802 100

Types of Loan 2016/17 2015/16

IRR billion Percentage from

TotalIRR billion

Percentage fromTotal

Installment sale loan 819 3.65 224 0.76

Joala (commission-based contract) loan 486 2.17 384 1.31

Ijara (Lease ending with Ownership ) loan 87 0.39 900 3.07

Mudaraba (trust financing contract) loan 1,910 8.52 3,858 13.15

Diminishing Musharaka (co-ownership) loan 17,188 76.67 21,113 71.96

Debt purchase 910 4.06 990 3.37

Penalty clause 536 2.39 681 2.32

Foreign currency loans 83 0.37 222 0.76

Others 401 1.79 967 3.30

22,420 100 29,338 100

2016/17 2015/16 2014/15 2013/14 2012/13


Saman Bank Lending 127,750 126,988 118,112 103,095 76,224

Total Banking System Lending 9,866,616 7,916,102 6,739,744 5,719,260 4,390,642

Percentage of Saman’s Share of Total Lending 1.29 1.60 1.75 1.80 1.74

Lending

The following is a summary of Samans performance indicators for lending:

Interest paid to investment deposits

Revenue from Lending

Revenues earned from loans granted in financial years 2016/17 and 2015/16 are as follows:

The interest paid on investment deposits by type of deposit in the years 2016/17 is as follows:

Comparison Table of Lending

Lending

Saman Bank Lending compared with the Iranian Banking System’s Total Lending

140,000

120,000

100,000

80,000

60,000

40,000

20,000

2012/13 2013/14 2014/15 2015/16 2016/17

22 23Annual Report

2016/17 2015/16 2014/15 2013/14 2012/13

Number 1,458 1,308 1,224 1,006 804


2016/17 2015/16 2014/15 2013/14 2012/13

Number 1,384,438 1,742,387 2,010,187 1,570,922 1,003,959

Percentage change to previous year (20.54) (13.32) 27.96 56.47 (62.46)

2016/17 2015/16 2014/15 2013/14 2012/13

Number 203,311 201,027 195,308 159,462 107,123

Percentage change to previous year 1.14 2.93 22.48 48.86 (5.44)

2016/17 2015/16 2014/15 2013/14 2012/13

Person Person Person Person Person

Net Bank 859,332 780,333 683,845 570,238 431,383

Samanak 559,461 453,379 344,496 231,741 97,450

Telephone Bank 863,763 836,264 789,270 712,431 601,747

Total 2,282,556 2,069,976 1,817,611 1,514,410 1,130,580

Percentage change to previous year 10.27 13.88 20.02 33.95

Electronic Banking

• Number of ATMs increased to 1458 units;

• ATM network optimised by relocating 127 ATM units;

• Samanak (Saman mobile app) publicity campaign planned and executed;

• Online money transfer services (moving money between accounts in the bank or between banks through SATNA and PAYA systems) and online statements developed;

• Top-up service for all phone operators made available through ATM and e-shop;

• Cash acceptor and cash recycler units commissioned and operated;

• Technical documents developed for monitoring system of ATMs and pay-in machines.

5-Year Comparison Table of ATM Numbers

5-Year Comparison Table of Card Reader Numbers

5-Year Comparison Table of Debit and Credit Card Numbers

5-Year Comparison Table of Virtual Banking Customer Numbers

Number of Card Readers

Number of ATMs

Number of Debit and Credit Cards

Number of Virtual Banking Customers

250,000

200,000

150,000

100,000

50,000

1600

1400

1200

1000

800

600

400

200

Major Achievements of Bank in Different Areas

2012/13 2013/14 2014/15 2015/16 2016/17

2012/13 2013/14 2014/15 2015/16 2016/17

2,500,000

2,000,000

1,500,000

1,000,000

500,000

2012/13 2013/14 2014/15 2015/16 2016/17

2,500,000

2,000,000

1,500,000

1,000,000

500,000

2012/13 2013/14 2014/15 2015/16 2016/17

24 25Annual Report

Corporate Banking

• Claims reduced for IRR 1,734 billions (compared with similar period in 2015/16);

• Foreign currency operations increased to USD 3,800 millions;

• New loans paid in the amount of IRR 31,000 billions;

• Different types of letters of guarantee worth IRR 4,253 billions issued;

• Express banking kiosks launched in KLM and Air France offices.

Premier and Private Banking

• Offered discounted tour, travel and CIP services to Premium Customers;

• Issued 11,832 insurance policies including complementary health insurance, third-party and comprehensive car insurance, and travel insurance policies;

• Developed Farda University Fee Insurance Package and sold 2200 policies;

• Increased the number of stores and service centers offering exceptional services to Premium Customers;

• Launched the second project of the Customers’ Club called “Memorable Journey” and awarded 33 prizes of IRR 10 million to 500 million to Premium Customers;

• Designed and implemented an incentivization program for Premium Customers called “Samanian 4-Star Festival”;

• Launched private banking offices in Tabriz and in Sarv branch, Tehran;

• Offered financial and investment services (including portfolio management as well as Amin, Novin and Yekom Venture Capital Funds);

• Designed and introduced Mobasher Bours (stock market operators’ service) for the administration of customers’ portfolios.

Attracted new customers and increased resources during the year

Beginning of the Year End of the Year


Number of Premium Customers 6,600 6,831

Number of VIP Customers 309 368

Total 6,909 7,199

Beginning of the Year End of the Year


Resources of Premium Customers (IRR billion) 57,153 57,745

Resources of VIP Customers (IRR billion) 22,485 29,463

Total 79,638 84,208

Retail Banking• Optimized branch network by relocating poorly functioning branches;

• Establishing City Centre branch in Isfahan;

• Expanded ATM support network;

• Considerably increased zero-cost resources in 2016/17;

• Regularly met with branch managers and supervisors to boost performance and responsiveness;

• Increased number of branches offering foreign currency services to businesses from 34 to 39.

Microcredit and SME Loans

During the reported year, various small and medium-sized enterprises and trading units were categorized based on their business size, credit records and assessed risks. Specific lending limits were set for each group of selected enterprises, and each branch was assigned a selected list of trades to attend to their credit needs.

Since the beginning of the year, the credit reference obtained from Hafez Saman Iranian Credit Scoring Company has served as one of the main criteria when assessing new loan applications. In collaboration with Saman Processing Co. we developed a special credit system to organize lending to sole traders. The final version of this system was delivered at the end of the year and was introduced for pilot use.

The bank issued hundreds of small loans as part of their social responsibility scheme. 6,271 marriage loans (interest-free) totaling IRR 651,921 million were paid to eligible newly-wed couples. Low-income families in receipt of benefits from Imam Khomeini Relief Committee received IRR 54,485 million in the form of 424 interest-free loans, and 81 other interest-free loans, amounting to IRR 8,256 million, were awarded to those covered by the State Welfare Organization. Loan applications by small and medium-sized enterprises introduced by the Business Development Committee were admitted and processed as requested by the Central Bank.

26 27Annual Report

2016/17 2015/16 2014/15 2013/14 2012/13

USD thousand USD thousand USD thousand USD thousand USD thousand

Import Letters of Credit 502,813.68 518,183.54 1,396,202.95 1,189,815.53 3,361,706.09

Import Bills of Exchange 291,961.49 47,113.77 46,267.97 284,308.07 553,234.48

Letters of Guarantee 32,147.71 13,376.36 20,432.47 12,520.93 21,692.63

Incoming International Money Orders 1,749,914.42 3,585,331.59 3,835,947.96 1,457,038.19 2,232,541.01

Outgoing International Money Orders 4,793,457.63 3,267,209.90 4,463,985.81 4,574,919.04 3,496,265.21

Cost Price Mean Capital Profit(Loss)

IRR billionpercentage change to

previous yearIRR billion

percentage change to previous year

IRR billion

2013/14 1,435 - 719 - 468

2014/15 1,236 (14) 1,498 108 (267)

2015/16 1,140 (8) 925 (38) 144

2016/17 576 (49) 1,632 76 139

International Banking

• As the international sanctions were lifted, Saman’s International Banking Department focused its efforts on expanding its correspondent banking network, liaising with around 40 new foreign banks and opening accounts with 22 more. Our current correspondent banking network includes around 300 banks all over the world.

• The JCPOA and its subsequent agreements have enabled previously sanctioned banks to re-enter the international banking market. In spite of this, Saman managed to acquire a 10 percent share of the overall foreign currency operations in the Iranian banking system, as shown by the CBI data.

• Saman surpassed its set target for revenue from currency transactions and generated IRR 1,385 billion (6 percent over the approved target) during the reported year.

• Foreign currency operations during the past five years are summarized in the following table:Major activities in the area of foreign investment during the reported year include:

• The design of a mechanism to offer custodian services to international investors;

• Banking services for international customers;

• Investment consultancy for international investors.

Investment and assemblies affairs

2016/17 was a challenging year for the Tehran Stock Exchange.Government policies on inflation control alongside liquidity cash, the Trump shock, and the reduction in the global price of metals are among the factors which influenced the Iranian capital market. The overall effect was that the TSE Index dropped 4.89 percent during the year.

Portfolio management is one of the important activities of Saman’s Investment Department. The bank’s portfolio in 2016/17 comprised of shares, fixed-income funds, mutual funds and Islamic treasury bills. Due to the higher return rate of Islamic treasury bills compared with other investment options, and the reduced bank and interbank interest rates, Saman deemed it wise to invest. As a result, our investment in Islamic treasury bills increased considerably and the annual mean capital increased from IRR 924 billion at the start of the year to IRR 1,631 billion at the end. The reduced cost price of Saman’s portfolio at the end of the year is due to the sale of Islamic treasury bills.

The following diagram shows the structure of Saman’s investment portfolio at the end of 2016/17:

Some key performance indicators of Saman’s investment portfolio are presented in the following table:

Shares of Stock

Receivables

Cash and cash Equivalents

Mutual fund units

Fixed-income securities

20%

9%

4%

6%

61%

28 29Annual Report

Inspection and Compliance

• Organizing EURO MONEY (KYC and anti-money-laundering) training course for compliance officers, taught by international instructors;

• Planning and coordinating courses on financial crime prevention and compliance by International Compliance Association (ICA) for the bank’s compliance officers and anti-money-laundering inspectors;

• Updating the bank’s compliance procedures based on the latest international standards;

• Preparing standards and bilingual documentation on compliance procedures to be audited by EDO and EY companies. There has been 70 percent progress in the audit process underway by these companies;

• Design, analysis and implementation of Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) solutions;

• Procurement of OMNIEnterprise anti-money-laundering and compliance software from INFRASOFT based on the assessment of our needs and requirements;

• Adjustments and modifications toward better control of lending operations in branches (operating-system errors, access levels and software modifications);

• Designing BOOTSTRAP 3-based and JQUERY-based user-friendly interface for fraud detection software in order to provide easier access to different sections. Also, designing and developing the second version of smart control software in foreign currency, Iranian currency, loans, and customer sections;

• Employing control rules on foreign currency transactions aimed at facilitating control and minimizing the need for physical inspection as well as saving financial resources;

• Controlling a large group of operational accounts including debtors' accounts, fines, interbank checks, customer savings and so on in order to prevent and control fraudulent activities;

• Designing rules and enforcing necessary controls to monitor incomplete or outdated customer information for the purpose of fraud prevention or detection.

Financial Management

• In spite of the reduced interest rate on deposits, and while most of the other commercial banks experienced a negative balance in their Central Bank’s account, Saman did not experience cash shortfall and its account was not negative even for a single day. Saman responded to all monetary needs of its customers nonstop during the year through SATNA, PAYA and SHETAB operations;

• During the reported year, Saman was a depositor in the interbank market for 344 days and became a receiver of deposits only for 22 days due to exceptional market conditions;

• The revenue from the interbank market in 2016/17 amounts to IRR 1,354 billion. Proposals for investment in other sectors are submitted to the Assets and Debts Committee. All investments need to be approved by the Investment Department;

• The “Liquidity Management Project” was introduced to develop and execute a new business model involving the use of self-service express banking machines;

• The operational program for 2017/18 was devised and circulated;

• Managerial reports in the areas of deposits, cost price, and branch profitability records were prepared and submitted;

• Any deviation from budget and program in the bank and its branches was properly reported.

30 31Annual Report

Corporate Governance

Board of Directors

Vali Zarrabieh, ChairmanMr. Zarrabieh, also a board member in Saman Electronic Payment Company, Hafez Saman Iranian Credit Scoring Company, and Saman Processing Company, served as the first Deputy CEO of Saman Bank and was appointed as CEO in June 2010. In 2013, he was elected Chairman of the Board. Mr. Zarrabieh holds a master’s degree in finance from the CASS Business School of London, specializing in corporate finance and valuation, as well as an MBA from Manchester Business School, UK, specializing in strategy.

Executive CommitteeMembers of the Committee: The CEO, Deputy CEO (in CEO’s absence) and the senior vice presidents

Head of the Committee: The CEO

Secretary of the Committee: Mr. Hosein Vaez Ghamsari

Objectives of the Committee:

• According to Article 3 of the Bank’s Articles of Association, the Executive Committee is responsible for

approving all procedures regarding the operations and transactions within the scope of activities of the bank.

• It is also responsible for the control of the approved plan and budget.

• The Executive Committee is responsible for establishing limits of power and determining decision-making

processes for the bank’s executive departments and teams.

• The Executive Committee is also responsible for the administration and supervision of the performance of all

executive departments and subordinate companies.

• Decision-making in all executive matters in dealing with third parties is the responsibility of the Executive

Committee as set out in Article 84 of the bank’s Articles of Association.

Strategy and Budget CommitteeMembers of the Committee: Chairman of the Board, one member of the Board, Senior Advisor to the Board, CEO or Deputy CEO, VP Financial and Planning, VP IT (if warranted by the subject at hand)

Secretary of the Committee: Dr. Reza Aghababaei

Objectives of the Committee: To ensure the bank’s survival and profitability through aligning its organizational structure and strategies with the desired status and its objectives, mission and vision.

Audit CommitteeMembers of the Committee: Chairman of the Board, one member of the Board, three advisors to the Board

Secretary of the Committee: Mr. Javad Goharzad

Objectives of the Committee: To help the Board oversee the efficiency of the internal control system, financial reporting processes, and proper functioning of accounting systems and financial controls to ensure accurate financial statements as well as full compliance with relevant laws and regulations, supervisory requirements and the bank’s policies.

Ahmad Mojtahed, Vice ChairmanA former Head of the Monetary and Banking Research Academy (MBRA) and Advisor to the Governor of the Central Bank of Iran and to the Minister of Economic Affairs and Finance, Dr. Mojtahed joined Saman in March 2010 as Vice President in Plan and Development as well as Chairman of the Board of the Iranian Credit Bureau and Credit Scoring Company. He was elected Chairman of Saman Bank’s Board of Directors in September 2012, serving as the Vice Chairman since March 2013. With a PhD in Economics from Iowa State University, USA, Dr. Mojtahed also enjoys a successful academic career as a researcher and professor at Allameh Tabatabaei University.

Farideh Geraminejad, Member of the boardBefore joining the board, Ms. Geraminejad served as Saman’s International Banking Director. She worked at Tejarat Bank from 1977 to 2009 and her latest position was the Head of Treasury and Correspondent Relations. Ms. Geraminejad holds a bachelor’s degree from the University of Tehran.

Gholamreza Khalil Arjmandi, Member of the boardMr. Gholamreza Khalil Arjomandi has been working as a board member and vice president of finance and investment in Saderat Bank, Shahr Bank and TOSE Credit Institute since 2007. Also in his background, he has been a board member in Securities and Exchange Organization as well as chairman of Audit Committee in that organization. He is a board member in Saman Bank since June 2016.He holds a DBA degree and a Ph.D. in Economics. He is also a member of the faculty of Islamic Azad University and managing director in charge of "Eghtesad e Khalagh" journal

Board Meetings

During the reported year, the Board met 69 times (minimum one meeting per week) and adopted decisions on major issues within the bank.

Executive Compensation

• The Board of Directors approves the CEO’s salary, benefits and bonuses.

• The Annual General Meeting approves bonuses for the Board of Directors in compliance with the provisions of the Commercial Code. The Board decided at the reported year’s AGM not to take any bonus.

Board Committees

32 33Annual Report

Risk CommitteeMembers of the Committee: Three members of the Board (Chairman, Vice Chairman and one member), Risk Senior Advisor to the Board

Secretary of the Committee: Manouchehr Dabirian

Objectives of the Committee: To oversee that the risk management policies and processes are all up-to-date and correctly observed, to supervise implementation of policies and directives adopted by the Committee and the Board, to ensure that a desirable level of capital adequacy ratio is maintained, and to adopt necessary measures to preserve and further improve the bank’s reputation.

Human Resources Development and Compensation CommitteeMembers of the Committee: Chairman of the Board, one member of the Board, Senior Advisor to the Board, CEO or Deputy CEO, Human Resources Director (with no voting right)

Secretary of the Committee: Ms. Fereshteh Zarrabieh

Objectives of the Committee: To plan for recruitment, development, training, and maintaining human capital in order to create sustainable value toward fulfillment of the bank’s objectives and policies.

Internal Audit and Control

By adopting a systematic and effective approach, the Internal Audit and Control improves the efficiency of the bank’s governance system, risk management and control.

The senior management of Saman appreciate the importance of internal auditing as a key principle in corporate governance. With this in mind, they strive to ensure that all of the departments and units within the organization are fully aware of their roles and value, and make timely and effective use of internal audit findings to address any problems that may arise.

The bank’s approach to internal auditing is to ensure the effectiveness of internal controls and full compliance with international standards and relevant regulations such as the updated COSO Internal Control – Integrated Framework (2013 Framework) as well as those of the Central Bank of Iran (CBI), recommendations of the Basel Committee and the requirements of the Securities and Exchange Organization of Iran (SEO).

As the executive arm of the Audit Committee, the Internal Audit and Control Unit assesses the efficiency and effectiveness of operations, the reliability of financial reporting, and compliance with rules and regulations. Auditing reports are first discussed in the Audit Committee and then in the Board of Directors. Proper decisions are made by the Board, which are then circulated to the executive units. In special cases, internal auditors might be invited to actively participate in the decision-making process.

In order to safeguard the interests of the stakeholders and ensure the effectiveness of internal control in subordinate companies, internal auditing in Saman Group companies is also entrusted to the Internal Audit and Control Unit. In 2015/16, the Internal Audit and Control Unit reviewed all measures adopted by the management to address the recommendations of the previous year’s report (2014/15) and undertook the internal auditing of important activities of subordinate companies. The respective report was duly submitted to the senior management and the Audit Committee.

In 2015/16, the Internal Audit and Control Unit undertook the auditing of retail and SME banking, microcredit and SME lending, corporate banking, knowledge management, processes management, business solutions, financial resources and IT departments.

34 35Annual Report

Seyed Ahmad Taheri Behbahani; CEOWith over half a century of experience in the banking industry, Mr. Taheri Behbahani has held the position of CEO of Saman since 2013. He was employed since 2011 as Senior Executive Advisor to the Board. His career highlights in managerial, advisory and executive positions include CEO of Eghtesad Novin (EN) Bank, CEO of Bank of Sharjah, CEO of Iran Overseas.Investment Bank in London, and the regional manager of Bank Melli Iran branches in the Persian Gulf, Dubai and Abu Dhabi. Mr. Taheri Behbahani holds a bachelor’s degree in English language and literature from Shiraz University.

Reza Aghababaei; Deputy CEOMr. Reza Aghababaei has held the position of Deputy CEO since July 2016. He has been with Saman Bank for many years in different managerial and executive positions including Executive VP for Lending, Director of Planning and Research, Director of Investment Affairs, Director of Corporate Banking, VP for Retail Banking and VP, Banking. Mr. Aghababaei holds a doctorate degree in economic development from the University of Tehran.

Javad Goharzad; Director of Internal Audit and ControlMr. Javad Goharzad has held the position of Director of the Internal Audit and Control Unit since 2007 and reports to the Board of Directors. He holds a master’s degree in accounting from Islamic Azad University. Mr. Goharzad is a certified accountant and auditor and a member of numerous professional bodies, including the Iranian Association of Certified Public Accountants (IACPA), the Iranian Institute of Certified Accountants (IICA), the Institute of Internal Auditors (IIA) and the Iranian Association of Official Experts (IAOE).

Reza Isfandyari; Executive VP LegalMr. Isfandyari has held the position of Executive VP Legal since August 2013. His former position was Legal Advisor to the CEO of Saman Bank. He holds a master’s degree in private law.

Alireza Marefat; VP LendingMr. Alireza Marefat was appointed VP for Lending in November 2016. His previous position was Director of Corporate Banking. Mr. Marefat holds an MBA from Multimedia University, Malaysia.

Mostafa Zarghami; VP Banking and Marketing Mr. Mostafa Zarghami was appointed VP for Banking and Marketing in November 2016. He had previously worked in similar executive positions in Saman and other banks.

Hosein Vaez Ghamsari; VP Financial and Planning Mr. Hosein Vaez Ghamsari was appointed VP for Financial and Planning in June 2016. He holds a master’s degree in financial management.

Aliakbar Namdari; VP Information TechnologyMr. Aliakbar Namdari was appointed VP for Information Technology in March 2017. He holds a master’s degree in computer engineering – hardware from Sharif University of Technology.

Senior Executive Team Division Heads

Full Name Position Highest Academic Qualification Year Joined Saman Bank

Ehsan Turkman Finance Master’s Degree 2016

Hamid Tahamtan Legal and Contracts Master’s Degree 2013

Seyed Morteza Hosseininejad Marketing and Product

DevelopmentMaster’s Degree 2003

Davoud Souri Saman Academy PhD 2014

Siamak ShahbazzadehKhiavi Inspection and Compliance Master’s Degree 2003

Reza ShirinGoharian Microcredit and SME Lending Master’s Degree 2001

Marzieh Azizi Quality and Improvement Bachelor’s Degree 2003

Khodarahm Ghasemian Yadegari Anti-Money-Laundering Master’s Degree 2016

Pooran Gilasi Saghez Corporate Secretary Master’s Degree 2009

Mohammad Hassan Dowlati Logistics Master’s Degree 2003

Loghman Rahmanpour Retail Banking Master’s Degree 2016

Ghassem Sarkhosh Investments Master’s Degree 1999

Fereshteh Zarrabieh Human Resources Master’s Degree 2003

Mohammad Farrokhipour Corporate Banking Bachelor’s Degree 2002

Maziar Fozouni Premium and Private Banking Bachelor’s Degree 2003

Mansoor MomeniPublic Relations and

Customer Care Bachelor’s Degree 2006

Abbas Mirza Nayyeri Electronic Banking Bachelor’s Degree 2007

Hasan Dehghanizadeh International Banking Bachelor’s Degree 2006

Independent Audit

Saman Bank shareholders always utilize the services of reputable, respected chartered accountants trusted by the Central Bank of Iran as independent auditors. Senior management fully appreciates the crucial role that these professionals play in ensuring the credibility of Saman’s reputation and the good standing of its operations.

The bank’s Audit Committee works hard to increase the reach and effectiveness of independent auditors, and it ensures that the bank’s financial statements present a fair and accurate picture of its performance.In 2016/17, Saman Bank’s shareholders selected the chartered accountancy practice Azmoon Pardaz Iran Mashhood as its independent auditor.

Azmoon Pardaz Iran Mashhood is one of the leading professional auditing firms specializing in banking and insurance and is recognized by the Tehran Stock Exchange and the Central Bank of Iran. The practice provides professional auditing and advisory services in assurance, investment and internal audit.

36 37Annual Report

2016/17 2015/16 2014/15

Members of the Board of Directors 4 4 5

Senior Advisors and Inspectors 23 18 16

Executive Directors 27 27 27

Deputy Executive Directors 11 12 12

Division Heads 25 28 29

Deputy Division Heads 22 31 40

Unit Managers 95 94 199

Experts 408 379 438

Regional Managers 10 10 10

Branch Managers 146 143 147

Branch Deputy Managers 184 186 191

Bank Clerks 1101 1178 1033

Administration Staff 354 360 367

Total Personnel and the Members of the Board of Directors 2410 2479 2514

PhD Master’s Bachelor’s Associate Diploma & Lower Subtotal Total

2016/17

StaffFemale 0 109 130 13 252

784 Male 5 152 200 175 532

LineFemale 1 150 371 12 534

1622 Male 1 202 772 113 1088

7 613 1473 313 2406 2406

2015/16

StaffFemale 1 100 147 13 261

754 Male 5 122 207 159 493

LineFemale 1 129 412 14 556

1721 Male 1 177 824 163 1165

8 528 1590 349 2475 2475

2014/15

StaffFemale 0 98 163 17 278

843 Male 4 111 229 221 565

LineFemale 1 107 419 14 541

1666 Male 1 129 838 157 1125

6 445 1649 409 2509 2509

The bank’s human capital structure during the past three years is presented in the following table:

The following table shows the structure of organizational positions during the past three years:

Human Capital

Training and Development

The key training courses offered during 2016/17 were as follows:

• RB1

• ICA

• MIM2

• AML

• Virtual training courses

Title of the Course Number of Participants , 2016/17 Man-hour, 2016/17

Professional non-banking courses 451 8440

Professional banking courses 2026 37699

Behavioral courses 1025 14032

General courses 1135 20685

General English 160 4770

Virtual training courses 2924 26808

Total 7721 112434

Major accomplishments in the Human Capital Department in 2016/17:

• Periodical evaluation of all personnel;

• Full establishment of workplace organization system in the bank;

• Implementation of human resources software;

• Provision and review of postal ID for staff units based on the current organizational chart;

• Issue of multi-purpose personnel cards;

• Improvement in the renewal procedure for employment contracts;

• Introduction of and conversion to electronic signature and electronic communications.

38 39Annual Report

Major activities in the area of social responsibility

• Donations to the Child Foundation;

• Donations to the Arasteh Charity;

• Donations to The Chain of Hope (La Chaîne de L’Espoir);

• Donations to the Behnam Daheshpour Charity;

• Construction of a four-room school in Bahu Kalat, Sistan and Baluchestan;

• Construction of a one-room school in Cheshmeh Zoleykha village, Delfan City, Lorestan Province;

• Nikcharge Campaign;

• Sponsor of new work by renowned composer Loris Tjeknavorian;

• Sponsor of Azim Gheychisaz, the acclaimed Iranian climber, for his latest ascent (8000-meter summit in the Himalayas);

• 24 hourse banking services offered to pilgrims travelling to Iraq during Arba’een rituals for 20 days;

• Sponsor of a pioneering online concert information platform;

• Sponsor of Euromoney Conference;

• Investment in Ajabshir Steel Factory, which employs more than 300 local steel workers.

Organizational C

hart-Level 1

Organisational Structure

Corporate Secretary

Audit Comm

ittee

Hum

an Capital Developm

ent and

Compensation H

igh Comm

ittee

Public Relations &

Customer Care D

ivision

Executive Board

Risk Departm

ent

Internal Audit Division

Strategy and Budgeting

Comm

ittee

Risk Comm

itte

Hum

an Capital Division

AML D

ivision

Secretariat of Passive defense

Executive Comm

ittees:

• Assets and Debts

• Corporate Credit• International B

anking• D

isciplinary• Passive D

efense• SM

E Credit • Trading

Retail Banking

Division

Finance Division

Legal & Contracts

Support Division

NPLs &

Debt

Collection

Procurements

Division

Premier &

Private B

anking

e-Banking D

ivision Investm

ents &Subsidiaries D

ivisionForeclosed Assets

Managem

ent

Marketing&

ProductD

evelopment D

ivision

Board of D

irectors

CEO

Deputy CEO

VP Finance & Planning

VP Banking &

Marketing

VP LegalVP Procurem

entVP Credit

VP ICTVP International

VP Supervision

ICT Division

Corporate Banking

Division

Software Solutions

Remedial Services

Departm

ent

International Banking

Division

Compliance D

ivision

Information Security

Process Managem

ent&

Quality ControlD

ivision

SME D

ivision

Project FinanceD

epartment

International Business

Developm

ent Division

Security Departm

ent

40 41Annual Report

Risk management is the process of identifying, assessing and controlling potential risks related to the nature of banking activities. The purpose of risk management is to reasonably ensure the fulfillment of objectives based on the bank’s approved strategies. In line with risk objectives, the department measures risk indexes and tolerance levels, and defines the risk appetite as a major element in corporate governance and the bank’s strategy.

The key activities to ensure effective risk management are as follows:

Risk Committee MeetingsThe Risk Committee is a strategic committee that reports to the Board of Directors. The outcomes of its findings are presented to the board in the form of supervisory and advice reports. The Risk Committee was established to comply with the internal control structure required by the Central Bank of Iran and to ensure that appropriate and sufficient managerial policies and procedures are in place to monitor and control various risks involved in banking operations. The Risk Commit-tee supervises the enforcement of risk policies approved by the Committee and the board and places special emphasis on the protection and enhancement of the bank’s reputation, as well as attaining optimal capital adequacy ratio.

During 2016/17, the Risk Committee undertook the following initiatives:

• Review of risk-control strategies

• Study of reports received on risk management

• Study of risk-control-related proposals

In order to execute these initiatives, the Risk Committee convened eight meetings, the outcomes of which are summarized below:

• The committee decided that a plan for precautionary measures should be developed to confront liquidity shortage in critical conditions;

• Necessary measures were approved to improve the bank’s capital adequacy structure in view of capital increase and the collateral system;

• The list of duties and specifications of the Risk Committee was assessed against the bylaws approved by the Central Bank of Iran to ensure full compliance;

• Approval was granted for the creation of subordinate workgroups on credit risk and operational risk;

• The list of duties of the Resources and Expenditures Committee was analyzed;

• The committee supervised the risk appetite of the bank’s operations.

Risk Analysis

Meetings of the Subordinate Workgroups on Credit Risk and Operational RiskThe Subordinate Workgroups on Credit Risk and Operational Risk are specialist and executive workgroups created in 2016 to provide expert reports and improvement proposals to the Risk Committee. They are responsible for monitoring operational risk and credit risk management through risk detection, measurement and control.

Major Activities of the Risk, Statistics and Banking Information Unit with regard to Risk ManagementThe Risk, Statistics and Banking Information Unit carries out numerous detection and measurement activities to facilitate risk assessment for the Risk Committee. In so doing, it follows the guidelines of the Central Bank of Iran and the recommendations of the Basel Committee for the management of credit, liquidity, operational and market risks. The unit’s main activities are as follows:

• Gathering relevant statistics and information via various methods including market research, software solutions, rules and regulations, and past records, to determine the risk-evaluation model;

• Identifying different types of business-related risks, effective variables and items susceptible to different types of risks;

• Designing and updating risk-evaluation models with the use of information and statistics, effective variables, guidelines of the Basel Committee and the Central Bank of Iran;

• Identifying, determining and updating evaluation indicators for different types of risks including market risk, operational risk, liquidity risk, and credit risk;

• Providing analytical reports regarding different types of risks including market risk, operational risk, liquidity risk, and credit risk;

• Calculating the capital required to cover credit, market, and operational risks, and preparing necessary reports;

• Analyzing credit concentration risks based on economic sector, geographical location, maturity, market type, type of lending agreement, and so on, in order to verify compliance with credit limits set internally and by the CBI;

• Preparing reports on entry and exit surveys, economic cost of money, age analysis of deposits, age analysis of receivables and loans and currency market risk in order to determine currency risk, liquidity gap risk and other types of risks;

• Liquidity surplus/shortfall forecasts on major currencies and reporting on foreign currency liquidity gap;

• Updating and standardizing collateral-related information throughout the bank;

• Disclosing risk-management information based on the requirements of the Central Bank of Iran and as per clause 63 of the financial statements template of the CBI.

Capital adequacyIn compliance with the Basel I Accord, and in order to protect depositors and ensure the integrity of the country’s financial systems, the Central Bank of Iran requires that all banks operating under its regulations have a minimum capital adequacy ratio of eight percent.

Saman Bank’s Basel I capital adequacy ratio was calculated as 7% for 2016/17.

42 43Annual Report

• Obtained ISO certification for its customer complaint procedure by TUV NORD IRAN Company in 2016/17;

• Progressed five steps – currently in 24' place among the 100 superior companies of Iran;

• Capital Intelligence promoted Saman Bank’s credit rating (in the second review term, CI confirmed credit score B in financial strength rating (FSR) and currency transactions as in the first review term; nevertheless, it promoted the overall credit rating of the bank by one level);

• Iranian National Quality Prize awarded to Saman by National Iranian Standard Institute;

• Voted first-choice bank for retail banking and awarded the title of “My Favorite Bank” at the “My Favorite Bank” annual festival.

Major Accolades and Achievements of Saman Bank and Saman Financial Group in 2016/17

CapitalBank’s

Ownership (direct or indirect)

Net Profit (Loss) in2016/17

Net Profit (Loss) in 2015/16

IRR billion IRR billion IRR billion

Saman Exchange Co. 219 96.46 229 170

Saman Electronic Payment Co. 1800 43.04 811 314

Hafez Saman Iranian Credit Scoring Co. 24 99.15 42 25

Saman Satellite Communication Co. 200 61.85 71 50

Saman Processing Co. 100 100 14 13

Saman Brokerage Co. 50 64 9 4

Tondar Noor Co. 3 100 1 4

Atieh Andishan Sepehr Shargh 0,01 100 22 3

Atieh Andishan Sepehr Mehr 0,01 100 1 30

Atieh Andishan Sepehr Shargh

Service Development Co.0,01 100 (90) 0

Kardan Finance Co. 2000 33.33 595 530

Adonis Co. 300 24.19 39 79

Saman Insurance Co. 618 14.84 685 278

Aftab Tejarat Saman Co. 0.1 15 10 6

Saman Financial Group

Companies in Saman Financial Group

44 45Annual Report

Plans and Projects for 2017/18

Our major plans and approaches for 2017/18 are as follows:

1- To amend and improve the assets structure through:

• Debt collection

• Sale of surplus assets and unwanted properties

• Development of new loan products for microcredit and SME lending

2- To amend and improve the debt structure (deposits and shareholders’ equity) by:

• Increasing the share of current and low-cost deposits

• Reducing the cost price of term deposits

• Increasing Bank’s capital

3- To boost channel productivity and human resources productivity, and to reduce expenses by:

• Budgeting items of current expenditures

• Monitoring the capital budget with an emphasis on return

• Improving the productivity of the ATM network

• Increasing branch operations’ profitability

• Using integrated software for business operations and support

4- To continue to provide foreign-currency operations and improve fee-earning services such as::

• Issuing letters of guarantee

•Opening letters of credit, drafts and money orders

• Sale of insurance products

• Increasing foreign currency transactions

5- To design and develop five or more new products for deposit, lending and fee-earning services

6- The provisions of Article 129 were enforced in view of the explanatory notes on financial statements

7- Profit division

Based on the approval dated June 24, 2017 by the Tehran Stock Exchange Admission Board, Saman Electronic Payments Co. has been admitted to the TSE. Since December 5, 2017, Saman Electronic Payments Co. is listed as the 520' company admitted to the TSE in the Computing Section, IT & Software Group, Industry Code 722008, symbol SEP.

The profit forecast for 2016/17 is IRR billion 1,470 and profit per share is identified to be IRR 820. The company is evaluated at IRR billion 20,000 and the initial shares will be offered at the end of December.

Finacial Report

46 47Financial Report

Independent Auditor’s and Legal Inspector’s Report

To Annual ordinary General Meeting of Shareholders Saman Bank (Public Joint Stock Company)Report on the Financial Statements

Introduction

1- Our Firm has audited the consolidated financial statements of Saman Group & Bank (Public joint stock Company) including the balance sheets as at March 20,2017 and statement of investment deposit performance, Profit and Loss Account, statement of comprehensive income, statement of changes in shareholders’ equity as well as the Cash flow Statement for the fiscal year then ended together with the Explanatory Notes 1 to 63 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. 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.

Responsibility of auditor and legal inspector

3- Our responsibility is to express an opinion on these financial statements based on our conducted audit in accordance with Auditing Standards.

Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depends on the auditor’s judgment, including the assessment of the risks of material misstatement of financial statements, whether due to fraud or error.

In making those risk assessments, internal control relevant to company’s preparation of the financial statements in order to design audit procedures that are appropriate in circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s financial statements, is considered. An audit also includes evaluating the appropriateness of accounting policies used and reasonableness of accounting estimates made by directors, as well as evaluating the presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to express opinion on the financial statements.

Our responsibility as the legal inspector, is to report on non-compliance with legal requirements as per the amended commercial code of Iran and Bank’s Articles of Association and legal regulatory requirements of banking activities to the shareholders ordinary General Meeting.

Basis of qualified opinion

4- Explanations on financial facilities and dues from persons and the method of calculation of interest and related charges together with anticipated provisions according to I.R.I. Central Banks’s circulars are explained in Notes 8-4 to 8-7 and 11 of the financial statements.

Since the complete information on procedures especially regarding the collection of mentioned receivables are not made accessible to this firm, it has not been possible for us to carry out the normal reviews and investigations on determining the minimum necessary provision and also reflection of the effects of the same in the Accounts.

5- The situation regarding sale of part of collateralized properties and 15% of subsidiary company’s shares (Pardakht electronic Saman company) have been disclosed in notes 46 and 35-2 to the financial statements. Since recognition of the profit from the above mentioned operation have not been according to Accounting standards, it seems there are adjustments necessary to be done to the Accounts.

6- Presentation of investment deposit performance and statement of changes in equity as one of fundamental financial statements, which have been instructed by I.R.I. Central Bank directives, and also presentation of cash flow statement in three categories, have not been anticipated as mandatory by accounting standards.

7- Considering the content of note number 26 of financial statements, the Bank’s corporation tax for the years 1384 (2002) to 1393 (2011) have not yet been finalized, It is necessary for the sum of Rls. 1,238 billions tax differences for the mentioned years to be transferred to prior year adjustments and on the other hand the tax prepayment balance of Rls. 924 Billions to be removed from heading “other assets” and tax payable of Rls. 314 Billions to be reflected in the heading of corporation tax provision.

8- Under the heading of “other Accounts Receivable” (Note 15-2 to the financial statements) an amount of Rls. 1,700 Billions and Rls. 750 Billions stated to be “debtors for sale of assets” related to sale of property in “zafar” and “khodro sazi Arg Diesel Bam factory” in the prior years for which there is no adequate evidence on the collectability of these. Hence it has not been possible to determine the possible effect of these on the financial statements.

Qualified opinion

9- Our firm believes that, except for the effects of items stated in above clauses 4 to 7 and possible effects of items mentioned in clause 8, the financial position of Saman Group & Bank (Public joint stock company) as at March 19, 2017 and their financial performance and cash flows for the fiscal year then ended are true and fair, according to accounting standards, from all material aspects.

Emphasis of Matters

(Shareholders' attention is drawn on clauses 10 to 11 below. Our opinions has not been qualified as a result of items 10 to11):

10- As explained under Note 10-3-2 to Financial Statements although procedures relating to collection of receivables from Banks Saderat Iran and Pasargad for the amounts of Rls. 3,226 and 937 Billions have take place, but there has been no concrete results.

11- As explained in Note 10-2 to the financial Statements, the amount of Rls. 5,464 Billions under the heading of dues from Central Bank of Iran relating to forward purchase of foreign currency subject of circular No. 60/1015 M dated 1392.09.16 has been accounted for in the intercompany Accounts of that Bank from this amount a figure of USD 363,241,619 is confirmed by Central Bank of Iran and its’ remaining Balance together with the excess drawing of Rls.

2,833 Billions, being subject of Note 9-4-2 to the financial Statements (known as overnight drawings) and the related contingent liabilities determination is subject to the special audit result and confirmation by Central Bank of Iran. Additionally, as explained in Note 22-3 to the financial statements, settlement of an amount of Rls. 2,789 Billions due to the Central Bank of Iran, which has been taken out of customers’ Accounts, being the difference between foreign currency rates mobadelei and official rates is subject to the result of the same special audit.Despite preparation and presentation of the said special report, the method of settling these balances are not announced.

Other Matters Paragraphs

12- Financial statements of the Bank for the year ended 19.03.2016 was examined by another audit firm (IACPA member firm) and the related audit report with qualifications was issued on 25th June 2016.

Report on other legal responsibilities

Report on other responsibilities of Legal Inspector

13- Noncompliance matters with some of the monetary and banking laws and regulations together with related circulars over the banking operations and mandatory bylaws for the banking system for the period under review by our firm have been submitted to the Central Bank of Iran under a separate letter by this firm.


Amended Commercial code

Articles of Association clause

Registration of ordinary general meeting minutes in company Registrar 106 45

Election of Board of directors’ member after termination of previous board 107 65

Completion of Board of Directors’ members in number 107 67 & 66

Preparation of Board of directors’ minutes 123 77

Financial statements’ preparation to the Auditors & legal inspector in 3 months after the year end - 105

Distribution of 10% of profit for the year 1394 (2016) 90 110

Payment of dividends within 4 months from approval date (previous year’s profits - 111

Compliance with ownership of Bank’s shares ceiling - 7

Compliance with capital Adequacy ratio - 116 & 115

Holding Annual General Meeting within the period stipulated in the Articles of Association 138 & 89 31

15- Transactions mentioned under Note 61 to Financial Statements, including 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, having special conditions, should be brought to the A. G M. of shareholders for proper decisions.

16- 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 other legal and regulatory responsibilities of Auditor

17- The Annual membership fee for deposits guarantee fund have been calculated and manner of Receipt of such membership based on the Articles of Amended bylaws for such deposits (subject of circular number 68469/96 dated 7th khordad 1396 in relation to Directive number 22196/t53725 h dated 30th Ordibehesht 1396 of council of ministers) and except for Article 10 of the above mentioned bylaws in respect of the delay in payment of subscriptions for the years 1393 and 1394, no other cases have been observed.

18- Following Articles of executory bylaws for disclosure of information in respect of listed companies in the Securities & Exchange organization have not been complied with as follows:

• clauses 1 & 2 of Article 7 regarding timely issue of Audited annual financial statements of the holding company and the group consolidated accounts.

• Submission of Board of Directors’ Report & Auditor’s Report on it within at least 10 days before ordinary general meeting and maximum 4 months from the year end of company.

• Article 10 in relation to submission of minutes for ordinary & extra ordinary meeting within maximum of 10 days, to companies Registrar.

• Clause 3 of Article 7 regarding submission of unaudited interim financial statements for period of 3, 6 and 9 maximum 30 days from end of 3 months periods.

• Clause 4 of Article 7 regarding submission of 6 monthly audited financial statements maximum 75 days of end of 6 monthly financial period.

• Article 8 regarding disclosure of Advertisement for attending general meeting at least 10 days prior to the date of general meeting.

• Article 9 regarding immediate disclosure of general meeting decisions.

Azmoon Pardaz Iran mashhood Audit Firm

(IACPAs)

M. Babaei Rahni F. shahdadfard (871546) (800267)

Date: 27th August 2017

19- Regarding the Report on compliance with Internal Control Requirements related to financial reporting 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.

20- Regarding Non Compliance with “Administrative Health promotion & Anti-corruption Law” the following should be reported:

• The Article 17 “p” of the executory bylaw regarding preparation of the list of excess properties and it submission to the Central Bank of Iran after auditor’s confirmation is not complied with, hence it has not been possible to carry out clauses “A” & “B” of Article 16 compliance check.

• Article 3 of the executory bylaw clause “B” item 1 of clause “t” of Article 17 in respect of submission of list of Repossessed (confiscated) properties to the Central bank of Iran for 3 months intervals.

• Article of the executory bylaw, item 21 regarding opening of special Account if requested by the receiver of the loan facilities.

• Article 47 regarding agricultural loan facilities to the extent determined by the Central Bank.

21- The detailed calculation of the difference between final interest and on Account payment of interest on invested deposits as per disclosed methods of invested deposit, performance, in compliance with circular number 126331 dated 19.12.1387 and letter number 94/69383 dated 20.04.1394 of Central Bank of Iran have been reviewed by our firm. In this review no other noncompliance are observed except occasional extra interests paid over & above the approved rates.

22- In compliance with Article 33 of AML, Anti–money laundering by auditors, Bank has implemented the regulations, guidelines and intelligent information systems & check lists declared and auditing standards have been examined by our firm and except customer’s classification according to their risks.

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


(Restated)

Note March 20, 2017 March 19, 2016

Rls (m) Rls (m)

Assets

Cash 9 32,024,604 50,716,771

Due from banks and other credit institutions 10 9,676,029 12,833,651

Due from the government 0 0

Loans granted to and amounts due from governmental entities 0 0

Loans granted to and amounts due from non-governmental entities 11 127,532,285 126,691,865

Investments in shares and other securities 12 1,052,921 1,531,394

Long-term investments in affiliates 13 1,790,987 624,175

Due from subsidiaries and affiliates 14 587,333 82,198

Other accounts recievable 15 7,469,868 6,833,437

Orders and prepayments 16 30,494 40,809

Inventory (materials and goods) 17 318,453 145,360

Tangible fixed assets 18 4,142,137 6,109,443

Intangible assets 19 4,296,269 4,128,134

Statutory deposits 20 23,035,684 21,131,325

Other assets 21 45,954,431 29,801,528

Total assets 257,911,495 260,670,090

Customers' obligations for LCs 54-1 4,321,019 5,201,012

Customers' obligations for LGs issued 54-2 5,056,859 6,938,318

Customers' other obligations 54-3 20,301,828 7,163,495

Managed funds and similar items 54-4 1,168,077 1,165,874

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

Group Consolidate Financial Statment

Saman Bank (Public Joint Stock Company)

Consolidated Balance sheet For the fiscal year ended March 20, 2017


(Restated)

Liabilities and shareholders' equity Note March 20, 2017 March 19, 2016

Rls (m) Rls (m)

Liabilities Due to banks and other credit istitutions 22 5,750,470 27,672,186

Customers' deposits 23 17,106,563 21,806,467

Dividends payable 24 59,311 196,733

Advances received 25 7,847 41,979

Debt securities 0 0

Provision for income tax 26 115,879 171,440

Provisions and other liabilities 27 11,081,141 6,610,288

Provisions for employees' termination and pension benefits 28 563,793 466,334

Total liabilities before investment depositors' equity 34,685,004 56,965,427

Investment depositors' equity 29 213,659,740 193,508,582

Total liabilities 248,344,744 250,474,009

Shareholders' equity

Share capital 30 8,000,000 8,000,000

Ongoing capital increase 0 0

Shares premium reserve 0 0

Parent company's shares held by subsidiaries (10) (1,685)

Legal reserve 31 1,577,976 1,595,889

Other reserves 0 0

Assets revaluation reserve 32 1,507,147 675

Difference in foreign exchange rates 0 0

Retained earnings (1,703,324) 56,816

Treasury shares 0 0

Parent company total shareholders' equity 9,381,789 9,651,695

Minority interest 33 184,962 544,386

Total liabilities and shareholders' equity 257,911,495 260,670,090

Bank's obligations for LCs 54-1 4,321,019 5,201,012

Bank's obligations for LGs issued 54-2 5,056,859 6,938,318

Bank's other obligations 54-3 20,301,828 7,163,495



Conolidate Statement of profit & Loss of the parent company For the fiscal year ended March 20, 2017

Consolidated Comprehensive statement of profit & Loss For the fiscal year ended March 20, 2017

(Restated)

Note 2017 2016

Rls (m) Rls (m)

Income from loans granted and deposits in other banks and debt securituies 34 24,223,702 31,084,107

Interest expenses on deposits 40 (31,886,274) (31,745,950)

Net income from loan interests and deposits in other banks (7,662,572) (661,843)

Fee and commission incomes 41 1,343,367 1,115,156

Fee and commission expenses 42 (1,661,114) (1,102,536)

Net income from fees and commissions (317,747) 12,620

Income from sales and services rendered 43 57,931,416 41,119,595

Cost of sales and services rendered 44 (56,688,318) (39,901,118)

1,243,098 1,218,477

Net profit (loss) from investments 35 2,228,036 230,773

Net profit (loss) from foreign currency exchanges and transactions 45 1,374,995 1,297,371

Other operating incomes 0 0

Total operating incomes (3,134,190) 2,097,398

Net other incomes and expenses 46 6,148,166 3,422,912

Administrative and general expenses 47 (3,894,230) (3,562,222)

Expenses for doubtful debts 48 (304,240) (807,669)

Financial expenses 49 (111,316) (257,583)

Deprecciation/amortization expenses 50 (473,825) (451,318)

"Profit before calculating group share from incomes earned by affiliates" (1,769,635) 441,518

Group share from incomes earned by affiliates 14 183,409 174,597

Profit (loss) before income tax (1,586,226) 616,115

Income return tax 26 (247,397) (166,053)

Net profit (loss) (1,833,623) 450,062

Minority interest from net profit 48,499 133,611

Earnings per share (EPS) (Rls.)

Basic earnings per share (Rls.) 56-1 (235) 42

Diluled earnings per share (Rls.) 56-2 (235) 40


Rls (m) Rls (m)

Net Group Profit (Loss) (1,882,116) 316,458


Difference in exchange rates for offshore transactions 0 0

Comprehensive income for fiscal year (374,969) 317,133

Prior years' adjustments 51 34 (849,856)

Consolidated adjustments 151,016 0

Comprehensive income recognized from reporting date of previous fiscal year (223,919) (532,723)



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Operating activities Note 2017 2016

Rls (m) Rls (m)

Cash received for

Interest and late payment penalty on loans granted 16,541,336 22,327,180

Interest on debt securities 203,303 0Fees and commissions 1,343,367 1,115,156Interest on deposits 1,649,989 1,873,776Profit from investments 2,411,446 405,370Other operating incomes 59,228,546 41,287,812Other incomes 620,299 542,661

Cash payment for 0 0

Interest on deposits (31,886,274) (31,745,950)Fees and commissions (1,661,114) (1,102,536)Other operating expenses (60,753,909) (43,627,122)Financial expenses (111,316) (257,583)Income tax (678,608) (664,585)Net cash outflow from operating activities befor changes in assets (13,092,935) (9,845,821)

Cash flows from changes in operating assets and liabilitiesNet increase (decrease) in liabilitiesDue to banks and other credit institutions (21,921,716) 297,329Customers' deposits (4,699,905) 154,730Debt securities 0 (1,000,000)Operating portion of provisions and other liabilities 4,510,185 (1,144,094)Investment depositors' equity 20,151,158 34,596,373

Net (increase) decrease in assets 0 0 Due from banks and other cerdit institutions 3,157,621 (883,585)Principal amounts due from the government 0 0Principal loans granted to and amounts due from governmental entities 0 0Principal loans granted to and amounts due from non-governmental entities 4,988,652 (2,065,541)Investment in shares and other securities (688,340) (579,591)Due from subsidiaries and affiliates (505,135) 56,778Other accounts receivable (636,431) (3,840,899)Statutory reserve (1,904,360) (1,619,062)Operating portion of other assets (10,804,309) (4,078,881)Cash flows from changes in assets and operating liabilities (8,352,580) 19,893,557Net cash inflow (outflow) from operating activities (21,445,515) 10,047,736

Investing activitiesFunds paid for acquisition of tangible fixed assets (1,415,282) (1,419,499)Proceeds received from sale of tangible fixed assets 3,157,432 6,560Funds paid for acquisition of intangible assets (221,058) (325,894)Funds paid for acquisition of intangible assets 1,291,811 0Funds paid for acquisition of non-operating real estates 0 0Proceeds received for acquisition of non-operating real-estates 0 0Net cash (outflow) from investing activities 2,812,903 (1,738,833)Net cash outflow before financing activities (18,632,612) 8,308,903

Financing activitiesCash from capital increase 0 94,270Treasury shares transactions 0 0Funds from shares premium 0 0Financial facilities received 66,825,000 27,655,000Repayment of principal financial facilities (66,825,000) (29,405,000)Dividends paid (137,419) (661,159)Net cash inflow (outflow) from financing activities (137,419) (2,316,889)Net cash increase (decrease) (18,770,031) 5,992,014Cash at the beginning of the year 50,716,771 43,595,603

Effects of changes in forex exchange rates 77,864 1,129,154

Cash at year end 32,024,604 50,716,771

Non-cash transactions 53 9,030,828 15,939,314

Consolidated statement of cash flows the fiscal year ended March 20, 2017(Restated)



Saman Bank (Public Join Stock Company) Financial Statements

Balance sheet of the Parent Company For the fiscal year ended March 20, 2017

(Restated)


Rls (m) Rls (m)

Assets

Cash 9 31,494,714 49,362,165

Due from banks and other credit institutions 10 9,676,029 12,833,651

Due from the government - 0 0

Loans granted to and amounts due from governmental entities - 0 0

Loans granted to and amounts due from non-governmental entities 11 127,750,201 126,987,987

Investments in shares and other securities 12 2,777,793 3,238,567

Due from subsidiaries and affiliates 14 3,578,946 1,030,522

Other accounts receivable 15 5,945,744 5,651,666

Tangible fixed assets 18 3,613,037 3,593,857

Intangible assets 19 4,301,189 4,119,563

Statutory deposit 20 23,035,684 21,131,325

Other assets 21 45,861,562 29,606,051

Total assets 258,034,899 257,555,354

Customers' obligations for LCs 54-1 4,321,019 5,220,610

Customers' obligations for LGs issued 54-2 5,129,944 7,079,288

Customers' other obligations 54-3 20,301,828 7,163,495



(Restated)

Liabilities and shareholders' equity Note March 20, 2017 March 19, 2016

Rls (m) Rls (m)

Liabilities

Due to banks and other credit istitutions 22 5,475,289 27,042,210

Customers' deposits 23 17,098,373 21,885,077

Dividends payable 24 52,482 157,034

Debt securities 0 0

Provision for income tax 26 0 0

Provisions and other liabilities 27 8,813,301 4,268,653

Provisions for employees' termination and pension benefits 28 537,311 414,634

Total liabilities before investment depositors' equity 31,976,756 53,767,608

Investment depositors' equity 29 214,853,049 194,173,795

Total liabilities 246,829,805 247,941,403

Shareholders' equity

Share capital 30 8,000,000 8,000,000

Ongoing capital increase 0 0

Shares premium reserve 0 0

Legal reserve 31 1,536,568 1,523,868

Other reserves 0 0


Difference in foreign exchange rates 0 0

Retained earnings 161,379 89,408

Treasury shares 0 0

Total shareholders' equity 11,205,094 9,613,951

Total liabilities and shareholders' equity 258,034,899 257,555,354

Bank's obligations for LCs 54-1 4,321,019 5,220,610

Bank's obligations for LGs issued 54-2 5,129,944 7,079,288

Bank's other obligations 54-3 20,301,828 7,163,495




Statement of the investment deposits performance of parent company For the fiscal

year ended March 20, 2017 Statement of profit & lose of the parent company for the fiscal year ended March 20, 2017

Saman Bank (Public Joint Stock Company) Statement of profit & Loss of the parent company

Note 2017 2016

Rls (m) Rls (m)

Profit sharing incomes

Income from loans granted 34 21,806,820 28,160,995

Income from deposits and debt securities 34-2 1,586,430 1,524,322


Total profit-sharing incomes 28,422,809 30,284,110

Bank's share from profit-sharing incomes 36 - -

Depositors' share from profit-sharing incomes before fees 28,422,809 30,284,110

Deposits management fee 37 (3,910,522) (3,782,601)

Depositors' share from profit-sharing incomes 24,512,287 26,501,509

Interest on statutory deposit/investment deposits 36-3 215,922 196,005

Compensation of expenses related to depositors' free resource surplus to profit-sharing uses 38 6,801,974 3,797,639

Final interest accrued on investment deposits 31,530,183 30,495,153

Provisional interest paid on investment deposits 39 (31,547,401) (31,310,605)

Differential in interests payable (surplus of interest paid) to depositors (17,218) (815,452)

(Restated)

Note 2017 2016

Rls (m) Rls (m)

Income from loans granted and deposits in other banks and debt securities 34 24,258,896 31,190,333

Interest expenses on deposits 40 (31,947,915) (31,801,511)

Net income from loan interests and deposits in other banks (7,689,019) (611,178)

Fee and commission incomes 41 1,329,183 1,116,022

Fee and commission expenses 42 (1,843,131) (1,144,070)

Net incomes from fees and commissions (513,948) (28,048)


Net profit (loss) from foreign currency exchanges/transactions 45 1,384,565 1,295,870

Other operating incomes 0 0

Total operating incomes (1,788,843) 1,255,437

Net other incomes and expenses 46 6,206,557 3,379,801

Administrative and general expenses 47 (3,586,051) (3,284,674)

Expenses for doubtful debts 48 (300,000) (765,960)

Financial expenses 49 (1,788) (59,192)

Deprecciation/amortization expenses 50 (445,209) (422,667)

Profit (loss) before income tax 84,666 102,745

Income return tax 26 0 0

Net profit (loss) 84,666 102,745

Earning per shares (EPS) - (Rls.)

Basic earnings per share (Rls.) 56-1 11 14

Diluled earnings per share (Rls.) 56-2 11 13




Rls (m) Rls (m)

Net profit (loss) 84,666 102,745


Difference in exchange rates for offshore transactions 0 0

Comprehensive income for fiscal year 1,591,813 103,420

Prior years' adjustments 51 0 (744,994)

Comprehensive income recognized from the reporting date of previous fiscal year 1,591,813 (641,574)



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Statement of cash flows for the parent company For the fiscal year ended March 20, 2017

(Restated)

Note 2017 2016

Rls (m) Rls (m)

Operating activitiesCash received forInterest and late payment penalty on loans granted 16,590,758 22,455,278Interest on debt securities 203,303 0Fees and commissions 1,329,183 1,116,022Interest on deposits 1,635,761 1,851,904Profit from investments 1,234,904 598,793Other operating incomes 1,288,353 168,217Other incomes 679,050 513,417Cash payment for 0 0Interest on deposits (31,947,915) (31,801,511)Fees and commissions (1,843,131) (935,878)Other operating expenses (3,763,374) (4,140,498)Financial expenses (1,788) (59,192)Income tax (609,043) (480,641)

Net cash outflow from operating activities befor changes in operating assets and liabilities (15,203,939) (10,714,089)

Cash flows from changes in operating assets and liabilitiesNet increase (decrease) in liabilitiesDue to banks and other credit institutions (21,566,922) 36,949Customers' deposits (4,786,705) 190,143Debt securities 0 (1,000,000)Operating portion of provisions and other liabilities 4,544,647 (1,433,353)Investment depositors' equity 20,679,253 34,494,860Net (increase) decrease in assets 0 0Due from banks and other cerdit institutions 3,024,216 (883,585)Principal amounts due from the government 0 0Principal loans granted to and amounts due from governmental entities 0 0Principal loans granted to and amounts due from non-governmental entities 5,066,859 (1,993,155)Investment in shares and other securities 4,255,428 (793,449)Due from subsidiaries and affiliates (2,548,425) 155,697Other accounts receivable 307,274 (5,015,532)Statutory reserve (1,904,359) (1,619,060)Operating portion of other assets (10,586,910) (3,326,342)Cash flows from changes in assets and operating liabilities (3,515,644) 18,813,173Net cash inflow (outflow) from operating activities (18,719,583) 8,099,084

Investing activitiesFunds paid for acquisition of tangible fixed assets (597,692) (597,563)Proceeds received from sale of tangible fixed assets 401,374 3,137Funds paid for acquisition of non-operating real estates 0 0Proceeds received for acquisition of non-operating real-estates 0 0Funds paid for acquisition of intangible assets (235,024) (321,755)Funds paid for sale of intangible assets 1,291,811 0Net cash (outflow) from investing activities 860,469 (916,181)Net cash outflow before financing activities (17,859,114) 7,182,903

Financing activities

Cash from capital increase 0 94,270Treasury shares transactions 0 0Funds from shares premium 0 0Financial facilities received 66,825,000 27,655,000Repayment of principal financial facilities (66,825,000) (29,405,000)Dividends paid (104,549) (668,775)Net cash inflow (outflow) from financing activities (104,549) (2,324,505)Net cash increase (decrease) (17,963,633) 4,858,398Cash at the beginning of the year 49,362,165 43,376,114 Effects of changes in forex exchange rates 96,212 1,127,653Cash at year end 31,494,714 49,362,165

Non-cash transactions 53 9,030,828 15,939,314


1-1- Background

By virtue of the license No. H/1745 of July 24, 1999 granted by the Central Bank of I. R. of Iran, Saman Bank was registered with Tehran Department of Companies and Non-Commercial Entities Registration under No. 154444 on September 1, 2009 and was listed with Tehran Stock Exchange/Iran Farabourse on November 16, 2011 thus, the Bank has been put on the official list of prices which prevail on Tehran Stock Exchange/Iran Farabourse since June 6, 2012. The Bank is headquartered in Tehran, of No. 1543, Tarkeshdouz St. , Parkway Intersection, Vali-asr Ave., Tehran, Iran. The Bank’s Economic Code is 4111-1166-8595.

1-2- Bank’s main activities

The Bank has been licensed with the main objectives of performing authorized banking operations and activities (operations and transactions which are not prohibited for banks under the prevalent rules) under article 3 of the Articles of Association/Constitution and in accordance with the regulation No. 92/377538 of March 13, 2014 as approved by the Central Bank of I. R. of Iran. By extension, the bank’s main activities include: open various accounts such as savings accounts, free-interest deposit accounts, short-term or long-term investment deposit accounts; issue various banking credit cards or other authorized cards and other similar accounts; receive facilities and credit lines; grant loans in the form of applicable contracts and agreements; make fund transfers; conduct all transactions or foreign exchange transfers/money orders; open letters of credit and carry out all related affairs; issue banking letters of guarantee and certificates of deposit; trade (buy and sell) participation bonds and other securities; conduct all operations related to purchase and sale of shares; safe custody services; carry out transactions in gold and silver; act as a broker or agent for participation bonds and for interbank operations and other credit institutions; provide insurance coverage for banking affairs; cash management for customers; open branches and expand the banking network inside and ouside the country; to conduct and carry out all operations and activities in line with the objectives set and defined for the bank in the context of the prevalent rules and regulations...

1-3- Number of Branches

The number of branches during the year is listed below

1-4- Employment status

The number of bank’s employees (headcount) during the fiscal year was as follows:

2017 2016

Year end Average Year end Average

Branch Branch Branch Branch

Branches in Tehran province 84 84 84 84

Branches in other provinces 50 52 54 55

Branches in free zones 3 3 3 3

Overseas branches 0 0 0 0

137 139 141 142

Group Parent Company

2017 2016 2017 2016

Year end Average Year end Average

No. of Employees

No. of Employees

No. of Employees

No. of Employees

No. of Employees

No. of Employees

Central headquarters and district head offices 1478 1,408 784 754 754 794

Branches in Tehran Province 1008 1,128 1008 1,026 1,064 1,032

Branches in other provinces 581 1,008 581 598 624 626

Branches in free zones 33 37 33 33 33 34

Overseas branches 0 0 0 0 0 0

3,100 3,581 2,406 2,411 2,475 2,486

• Average means, the monthly average of the reporting period.

• Average means, the monthly average of the reporting period.

1- Introduction of the Bank

Explanatory Notes


2- Basis of preparing financial statements

The existing financial statements have been prepared on the basis of accounting standards and in accordance with applicable rules and regulations of the Central Bank of I. R. Iran.

3- Basis of consolidation

3-1- The bank consolidated financial statements aggregate the assets and liabilities of the bank and of the subsidiaries qualifying for consolidation upon elimination of inter-group transactions and balances as well as the unrealized profit and loss from intergroup transactions. The list of group companies and their activities has been described in Note 14.2.3.

3-2- As to the acquisition of subsidiaries during the given period, the results of their operations are consolidated as of the date they are effectively controlled by the bank. As regards the subsidiaries transferred to the bank, the results of their operations are consolidated until the date of their possession.

3-3- The bank shares acquired by the subsidiaries are recorded at cost price in their accounts. Such shares are deducted from the shareholders’ equity and reflected in the financial statements under the heading of “parent company held by subsidiaries”.

3-4- The fiscal year of subsidiaries ends on December 21 of each year and their operations are consolidated in the same manner. Nonetheless, in the case any event occurs up to the reporting date of the bank’s financial statements which might substantially affect the consolidated financial statements in their entirety, the effect thereto would be reflected in accounts by making the required adjustments in the items of the financial statements of subsidiaries.

3-5- Atieh Alborz Company was not consolidated in the financial statements of the fiscal year ending March 20, 2017, due to its lack of operations or a future plan to be either transferred or dissolved. The adjustments so required have been made in the financial statements.

3-6- Upon transfer of a portion of Saman Electronic Payment Company’s shares at the end of the reporting period, this company became an affiliate of the bank. Thus, the results of its operations were consolidated in the financial statements by the date of its transfer and the balance of its investment was also reflected in the note to the invetment in affiliates by using the net worth method.

3-7- Upon expansion of Atieh Andishan Sepehr Shargh Company business activities during the fiscal year ending March 20, 2017, this company’s operations were also reflected in the bank’s consolidated financial statements.

4- Operating and reporting currency unit

The items in the financial statements have been measured by using Rial as the currency unit in the main economic environment where Saman Bank has been operating. Such items have been presented in Iranian million rials (shortened to Rls. M.) for better understanding and comprehensibility unless otherwise expressly stated in financial statements and/or in the relevant explanatory notes.

5- Using judgment and estimates

In preparing the present financial statements, the Bank management have used, made and adopted judgments, estimates, and assumptions in determining the amounts recognized in the financial statements. Arguably, the actual results may vary from such estimates. However, the estimates and assumptions are based on historical records and the management board will continuously review them by comparing with actual events. The key areas used by the management in their judgement and estimates are as follows:

5-1- In preparing the bank financial statements, no particular judgement and estimate have been used.

6- Basis for measurement

The prevalent measuring system in the bank is based on the historical cost price. However, for certain fixed assets including land, buildings thereon, and goodwill, the basis of revaluation method adopted by independent experts or appraisers has been applied.

7- Change in accounting policies

The bank has used and presented in its financial statements the accounting policies and methods set forth in note 8 in pursuance of common practice stability for all periods so reported.

8- Summary of significant accounting policies

8-1- Investments

8-1-1- Method of valuation

Long-term investments are valuated at cost price upon deduction of any accumulated loss in each item of investment and the current quickly marketable investments are valuated at market price and other current investments are valuated at lower of cost price and net sales value of each item of investment.

8-1-2- Method of income recognition

The incomes earned from investments in subsidiary and affiliated companies are recognized at the time of approving profit (dividends) by the investee company shareholders’ general meeting (by the approval date of financial statements) and the incomes from other long-term and current investments are recognized at the time of approving profit (dividends) by the investee company’s shareholders’ general meeting (by the balance sheet date).

The table below contains a summary of valuating and recognizing incomes earned from investments in the parent company and group companies.


Method of valuation Long-term investments

Investment in subsidiaries qualified forconsolidation

Qualified for consolidationCost-price (less reserve for accumulated value

impairment in each item of investment)

Investment in affiliated companies Net worthCost-price (less reserve for accumulated value


Other Long-term investments Cost-price (less reserve for accumulated vslue

impairment in each item of investment)Cost-price (less reserve for accumulated value


Current investments

Investment in marketable securities Lower of cost price and net sales value of

aggregate investments Lower of cost price and net sales value of

aggregate investments

Other current investments Lower of cost price and net sales value of each

item of investment Lower of cost price and net sales value of each

item of investment

Method of income recognition

Investment in subsidiaries qualified forconsolidation

Qualified for recognition At the time of approving profit by the investee

company’s shareholders’ general meeting(until the approval date of financial statements)

Investment in affiliated companies Net worth method At the time of approving profit by the investee company’s shareholders’ general meeting (by

the approval date of financial statements)

Other Long-term investments At the time of approving profit by the investee company’s shareholders’ general meeting (by

the balance sheet date)

At the time of approving profit by the investee company’s shareholders’ general meeting (by

the balance sheet date)


8-2- Tangible Fixed Assets

8-2-1- Except for land and buildings, the tangible fixed assets are recorded in accounts on the basis of cost. The expenditures incurred for renovation and major repairs that will substantially increase the capacity or the useful life of fixed assets or will fundamentally improve the output quality are regarded as capital expenditures and will be depreciated/amortized over the remaining useful life of related assets. The expenditures incurred for minor repairs and maintenance out of the assets initial valuated performance standards for the purpose of protection or recovery of the expected economic benefits of commercial unit are regarded as current expenses at the time of occurrence and recorded in the profit and loss account of the given period.

8-2-2- Land and buildings are reflected in accounts on the basis of revaluation. The revaluation rotation period will be five years under the prevailing accounting standards which should be made by independent experts/appraisers (of the Judiciary).

8-2-3- Depreciations of tangible fixed assets are calculated and recorded in accounts under the provisions of the Depreciation Rules subject of amended article 151 of Direct Taxation Law and on the basis of the following rates and methods:

8-2-4- For the fixed assets acquired and used during the month, depreciation will be calculated at the time of purchase and recorded in accounts. When each item of depreciable assets, upon availability for operation is not utilized for sometime on the grounds of work stoppage or shut-down, the rate of depreciation for such period will be equivalent to 30% of the rate which has been reflected in the above-mentioned table.

8-3- Intangible assets

8-3-1- Intangible assets (except for goodwill of business place) are entered in accounts at cost. Computer software packages used for operational and administrative purposes are depreciated on a straight line basis over 3 years. For other intangible assets no depreciation/amortization is computed.

8-3-2- The goodwill is entered in accounts on the basis of revaluation. The rotation period of revaluation will be 5 years under the prevailing accounting standards which should be made by independent experts/appraisers (of the Judiciary). Subject to the directive No. MB/2946 of March 6, 2007 issued by the Central Bank, the goodwill will not be depreciated. However, upon a value impairment test at the end of each financial year, the required provision will be calculated if it is deemed necessary.

8-3-3- For that group of intangible assets with indefinite use and without change in their return (having indefinite useful lifecycle) no depreciation will be calculated.

8-4- Recognizing incomes from the loan facilities granted, fees and late payment penalties

On the strength of the resolution adopted by the Money and Credited Council at its 1044 session of July 16, 2005 which was notified under the directive No. 772/MB of July 18, 2005 by the Central Bank of I. R. Iran, the income earned from the loans granted should be recognized on the basis of accrual system. Accordingly, by virtue of the directive No. 94/258020 of November 30, 2015 no accrual income has been recognized for the category of doubtful debts. Thus on the basis of the accrual system, the method of recognizing the banks incomes is described as follows:

Assets Depreciation rate Depreciation method

Buildings and installations 7 &12% Declining line

Furniture, fixtures, computer hardware and devices 3, 5 & 10 years Straight line

Royalty on operating license 10 years Straight line

Motor vehicles 25 & 35% Declining line

POS terminals 5 years Straight line

ATM machines 10 years Straight line

Technical equipment, satelite and hub 4 &10 years and 20% Straight and declining line

Costs for branch improvement and refurbishments 3 years Straight line

Tools 1 & 4 years Straight line

Equipment and fixtures in rented buildings 2 years Straight line

8-5- In applying the provisions of the Usury-Free Banking Law ratified on August 30, 1983 and the executive regulations and by-laws thereto and in view of the directive No. 94/69643 of June 10, 2015 issued by the Central Bank of I. R. of Iran, the profit-sharing income, uses of shared resources and depositors’ share from the profit-sharing income should be calculated and the results thereof should be reported in the statement of investment deposits performance.

8-6- Classification of loans granted (loan portfolios)

Pursuant to the Directive for Classification of Assets owned by credit institutions adopted by the Money and Credit Council (subject of the directive No. MB/2823 of February 25, 2007 issued by the Central Bank of Iran) and with regard to time factors and delay in payments as described below, the customers’ financial situation and status of related industry, the loan facilities granted by the bank shall be evaluated and classified into one of the following four categories:

8-6-1- Current category (maximum up to 2 months as of the maturity date and/or the date of payment interruption)

8-6-2- Overdue category (2 to 6 months as of the maturity date and/or the date of payment interruption)

8-6-3- Outstanding category ( 6 to 18 months as of the maturity date and/or the date of payment interruption)

8-6-4- Doubtful category (over 18 months as of the maturity date and/or the date of payment interruption)

The management has not passed any judgment on the financial statements beyond the context of the aforesaid directive.

8-7- Provision for doubtful debts

Pursuant to the regulations governing the procedures for calculation of provisions for credit Institutions, as approved by the Money and Credit Council (subject of the directive No. 91/21270 of April 20, 2012 issued by the Central Bank of I. R. of Iran), provisions for the loan facilities granted are to be calculated and entered in accounts as follows:

8-7-1- General provision

General provision which is equivalent to one and half (1.5%) percent of the total loans balance at the end of each year will be calculated except for the balance of the loans for which specific provision has been covered.

8-7-2- Specific provision

Specific provision relative to the balances of overdue, outstanding and doubtful accounts will be calculated as described below upon deduction of the updated value of collaterals in each loan category by exercising the predetermined rates:

Income and late penalties on loans granted and fees Method of recognition

Interest on loans granted

Current Accrual / Cash

Overdue Accrual / Cash

Outstanding Accrual / Cash

Doubtful Accrual / Cash

Late payment penalties

Current Accrual / Cash

Overdue Accrual / Cash

Outstanding Accrual / Cash

Doubtful Cash

Commission Fees

Commission Fees from LGs issued Cash

Commission Fees from other banking services Cash

Commission Fees from loans granted on interest-free accounts Cash


Loan category Percentage for calculation

Balance of overdue loans 10

Balance of outstanding loans 20

Balance of doubtful loans 50 - 100

8-7-3-The loans with the passage of 5 years or more of their maturity for repayment of the principal amounts and interests thereto are required to have 100% specific provision (without considering the value of collaterals).

The management has not passed any judgment on the financial statements beyond the context of the aforesaid directive.

8-8- Provision for employees’ termination benefits

The employees’ termination benefits are calculated and entered in accounts on the basis of the last month’s fixed salary and benefits for each year of their service records.

8-9- Provision for employee’s pension benefits

The bank’s employees are under the social security coverage and thus no provision for their retirement pension has been entered in accounts.

8-10- Foreign currency translation

8-10-1- Country-wide domestic accounts

Monetary items in foreign currency are translated at the official exchange rate (as announced by the Central Bank) at the balance sheet date and non-monetary items recorded in foreign currency at historical cost are converted at the rate prevailing on the date the transaction is conducted. The differences arising out of settlement or translation of foreign currency monetary items are recognized as income or expense for the given period and then entered in the profit and loss statement.

8-10-2- Subject to the statement of foreign currency parity in the indirect method, the foreign exchange rates in rial are as follows.

8-10-3- Offshore banking transactions accounts

The assets and liabilities of overseas branches are translated at foreign exchange rate at the balance sheet date and the incomes and related expenses are translated at the foreign exchange rate prevailing on the transaction profit date. All differences resulting from such conversions are recognized in the statement of comprehensive proft and loss and are classified under the heading of “shareholders’ equity” in the balance sheet. Additionally, the differences in translation of monetary items which inherently form a portion of net investment in offshore banking transactions are recognized in the statement of comprehensive profit and loss and classified and titled under shareholders’ equity” in the balance sheet until when the investment is transferred.

No Type of Currency Exchange rate at Balance sheet date (in Rls)

1 US Dollar 32,420

2 Euro 34,851

3 Pound 40,191

4 UAE Dirham 8,827

5 Canadian Dollar 24,263

6 Turkish Lira 8,945

7 Australian Dollar 24,963

8 Japanese Yen 287/72

9 Swiss Franc 32,481

10 Chinese Yuan 4,702

11 S. Korean Won 28/7

12 Indian Rupee 496

13 Omani Rial 84,184

8-11- Traesury shares/stock

Under the provision of the Law governing the Removal of Barriers of Competitive Production Barriers and Enhancement of Financial System and on the strength of the executive regulations adopted by the Stock Exchange Supreme Council, the bank shall be allowed to acquire 10 percent of its own shares. The treasury shares are to be reported on the basis of cost price on the acquisition date. Any type of differential resulting from purchase and sale of treasury shares is reflected in the shareholders’ equity section.

8-12- Taxation

The Bank’s income tax is calculated at the year-end and when the financial statements are presented in accordance with the Iranian Direct Taxation Law. The Bank is required to submit income tax return to related authorities within four months after the end of the fiscal year and pay at least 10% of its declared tax along with the income tax return. The tax authorities will assess the bank’s revenues and expenditures and issue the tax assessment notice no later than 15 months after the income tax return has been submitted. The Bank may protest against the tax assessment along with partial payment of the tax amount levied. The tax offences will also be included once the income tax has been finalized and as a common practice there is a difference between the amount declared and the amount assessed which, upon payment of the tax, will be entered in the prior years’ adjustments and then accounts will be restated.

8-13- Goodwill

The accounting policy for acquisition of units will take place on the basis of purchase method. The surplus cost of acquiring investment in subsidiaries qualified for consolidation and in affiliated companies qualified for net worth method for group shares is recognized as goodwill out of the fair net value of their recognizable assets at the time of acquisition and will be amortized over 10 years. The goodwill derived from acquisition of affiliates will be recorded in the consolidated balance sheet as part of the book value for long-term investments in the affiliated companies.

8-14- “Other items” in the notes to financial statements

Considering the number of items used for certain accounts, some items in every note have been reported under the heading of “Other”. The items which are entered in accounts under the title of “other” include insignificant or less important items in terms of content and may be up to 10% of the total amount which come under such note. Notably, the number of items under this heading has also been disclosed.

9- Cash

9-1- The cash amounts in rials and foreign currencies with the bank branches up to the limit of Rls. 2,358,703/- have been put under sufficient insurance coverage against possible accidents and risks arising from theft and fire.

9-2- The bank’s cash amounts in transit in rials and foreign currencies have received sufficient insurance


Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016

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

Cash in hand - Rial 1,596,955 1,182,452 1,586,147 1,182,094

Cash in hand - forex 9-3 1,091,497 935,647 1,080,935 927,525

Foreign currencies with brokers 405,856 739,720 0 0

Cash in transit - Rial 1,201 27,941 1,202 996

Cash in transit - Forex 0 0 0 0

Demand deposits with CBI (unrestricted) 9-4 4,171,647 2,478,732 4,171,647 2,478,732

Deposits with other banks and credit institutions(unrestricted)

9-5 24,757,448 45,352,279 24,654,783 44,772,818

32,024,604 50,716,771 31,494,714 49,362,165


March 20, 2017 March 19, 2016

Currency Type Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials

Rls (M) Rls (M)

US Dollar 19,235,342/83 32,420 623,609 12,935,464/22 30,240 391,168

Euro 11,582,646/69 34,851 403,666 13,872,587/07 33,935 470,766

UK Pound 222,281/18 40,191 8,934 152,079/59 43,089 6,552

UAE Dirham 5,064,209 8,827 44,703 7,166,705 8,234 59,012

Turkish Lyra 2,615 8,945 23 2,615 10,551 27

1,080,935 927,525


Rls (M) Rls (M)

Demand deposits with CBI - Forex (unrestricted) 9-4-1 344 335

Demand deposits with CBI - Rial (unrestricted) 9-4-2 4,171,303 2,478,397

Demand deposits with Central Banks of other countries 0 0

4,171,647 2,478,732

March 20, 2017 March 19, 2016

Currency Type Forex amount Exchange rate Amount in Rls. Forex amount Exchange rate Amount in Rials

Rls (M) Rls (M)

US Dollar 7,634 32,420 247 7,634 30,240 230

Euro 2,782 34,851 97 3,073 33,935 105

Indian Rupee 1 496 0 1 453 0

S. Korea Won 27 29 0 27 26 0

Omani Rial 1 84,184 0 1 78,546 0

344 335

coverage up to the limit of Rls. 480,435/- million for each time of shipment against possible risks and damages.

9-3- The cash foreign currencies owned by the parent company were converted on March 20, 2017 at the exchange rates announced by the Central Bank of Iran whereby the balances at the balance sheet date were as follows:

9-4- The demand deposits with the Central Bank of Iran (CBI) (unrestricted)

9-4-1- The current forex deposits with the Central Bank of Iran (CBI) were as follows:

9-4-2-The rial-denominated current account with the Central Bank under No. 26200/5 is used for settlement of rial-denominated interbank transactions including the adjustment of statutory deposit balance, settlement of documents exchanged through the clearing house, operations performed by SATENA, PAYA and SHETAB and… payment systems. The balance of this account as per the bank books on March 20, 2016 was in amount of Rls. 4,172 billion. As reflected in the CBI’s statement, the balance of this account was debited in the amount of Rls. 1,339 billion. The discrepancy was due to:

9-4-2-1-Following the problems which arose in the wake of the foreign currency exchange rates in 2011 in the country, Saman Bank was selected to act as a distributing partner for foreign currency allocation. For this purpose, Saman Bank organized an action plan and managed this function within the framework of the commitments and arrangements so undertaken.

9-4-2-2-On March 5, 2012, the Central Bank of Iran withdrew the amount of Rls. 4,866 billion from the said current accounts under code 1006 (without considering the inadequacy of the account balance) allegedly being the differential between the free market exchange rate and the official exchange rate of the foreign currencies delivered to banks subject of a five-member team’s approval. Despite the protest raised by Saman Bank against such withdrawal, the matter has not yet been settled.

9-4-2-3-The Association for Private Banks also made a written protest against the CBI’s action (the withdrawal) on March 7, 2012.

9-4-2-4-Considering the measures taken and by virtue of the notification dated March 17, 2012, the Central Bank of Iran repaid in two stages 90% of its withdrawals totaling the amount of Rls. 4,379 billion. However, once more the amount of Rls. 2,346 billion was withdrawn from Saman Bank’s account by the Central Bank on March 18, 2012 (apparently on the strength of a decree approved by the Council of Ministers).

9-5- The deposits with other banks and credit institutions (unrestricted)

9-5-1-The demand deposits and term deposits with other local banks in Rial (unrestricted) related to Saman Bank (Parent Company) break down as follows:



Rls (M) Rls (M) Rls (M) Rls (M)

Demand deposits with other local banks -Rls. (unrestricted) 9-5-1 103,935 115,862 62,107 103,996

Term deposits with other local banks - Rls.(unrestricted) 9-5-1 5,984,353 9,993,199 6,390,728 9,808,289

Demand deposits with other foreign banks - Forex (unrestricted) 9-5-2 15,689,210 32,806,945 15,689,210 32,806,945

Term deposits with other foreign banks - Forex (unrestricted) 9-5-3 901,464 125,533 901,464 125,533

Term deposits with other local banks - Forex (unrestricted) 9-5-4 496,972 427,984 29,760 45,300

Demand deposits with other local banks - Forex (unrestricted) 9-5-5 1,581,514 1,882,756 1,581,514 1,882,755

24,757,448 45,352,279 24,654,783 44,772,818

March 20, 2017 March 19, 2016

Name of Bank Demand Term Total Demand Term Total

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

Refah 0 705,831 705,831 0 3,786 3,786

Melli 13,374 112,428 125,802 68,171 2,997,491 3,065,662

Tejarat 10 5,032 5,042 37 8,315 8,352

Saderat 9,299 16,830 26,129 11,480 32,483 43,963

Sepah 18,589 5,434 24,023 5,750 30,374 36,124

Maskan 1,265 0 1,265 5 1,642 1,647

Keshavarzi (Agricultural) 0 1,977 1,977 53 1,005,776 1,005,829

Post bank 19,570 700,000 719,570 18,350 0 18,350

Mellat 0 22,739 22,739 150 1,828,259 1,828,409

Pasargad 0 1,200,000 1,200,000 0 50 50

Gardeshgari 0 0 0 0 1,000,000 1,000,000

Sina 0 1,000,007 1,000,007 0 32 32

Ansar 0 920,000 920,000 0 1,200,000 1,200,000

Dey 0 700,081 700,081 0 73 73

Middle East 0 369 369 0 8 8

Ayandeh 0 0 0 0 1,200,000 1,200,000

Sarmaye 0 0 0 0 500,000 500,000

Parsian 0 500,000 500,000 0 0 0

Melal Credit Institution 0 500,000 500,000 0 0 0

62,107 6,390,728 6,452,835 103,996 9,808,289 9,912,285


March 20, 2017 March 19, 2016

Currency type Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials

Rls (M) Rls (M)

US Dollar 4,278,688/28 32,420 138,715 3,645,933/28 30,240 110,253

Euro 347,344,430/90 34,851 12,105,300 358,406,397/95 33,935 12,162,521

UK Pound 262,796/99 40,191 10,562 262,690/24 43,089 11,319

UAE Dirham 39,456,682/34 8,827 348,284 38,939,656/87 8,234 320,629

Swiss Franc 13,397,878/57 32,481 435,176 60,688,632/11 30,933 1,877,281

Chinese Yuan 59,804,598/77 4,702 281,201 164,727,974/30 4,655 766,808

Turkish Lira 21,532,650/18 8,945 192,610 126,532,242/80 10,551 1,335,041

Japanese Yen 678,357,174 288 195,177 19,972,485,686 269 5,376,393

S. Korea Won 9,986,928,764 29 286,625 10,673,363,786 26 274,957

Omani Rial 10,802,923/27 84,184 909,434 91,215,839/28 78,546 7,164,640

Indian Rupee 1,584,930,813/03 496 786,126 7,521,196,747/69 453 3,407,103

15,689,210 32,806,945

March 20, 2017 March 19, 2016


Rls (M) Rls (M)

Euro 2,766,480 34,851 96,414 2,766,480 33,935 93,880

Turkish Lira 90,000,000 8,945 805,050 3,000,000 10,551 31,653

901,464 125,533

March 20, 2017 March 19, 2016


Rls (M) Rls (M)

Indian Rupee 60,000,000 496 29,760 100,000,000 453 45,300

29,760 45,300

9-5-2-The foreign currency demand deposits with other foreign banks (unrestricted) all belong to Saman Bank (parent company) and are listed below by a breakdown of currency type:

9-5-3-The foreign currency term deposits with foreign banks all belong to the parent company and are listed below by a breakdown of currency type:

9-5-4-The foreign currency term deposits with local banks belong to the parent company and are listed below by a breakdown of currency type:

March 20, 2017 March 19, 2016


Rls (M) Rls (M)

US Dollar 35,610,827/05 32,420 1,154,503 33,821,535/10 30,240 1,022,763

Euro 2,076,353/83 34,851 72,363 9,192,966/25 33,935 311,963

UK Pound 4,232,792/57 40,191 170,120 4,232,792/57 43,089 182,387

UAE Dirham 1,618,198/36 8,827 14,284 1,633,198/36 8,234 13,448

Australian Dollar 12,748 24,963 319 12,748 22,966 293

Japanese Yen 590,590,636 287/72 169,925 1,307,255,798 269/19 351,901

1,581,514 1,882,755

9-5-5- Foreign currency demand deposits with local banks all belong to the parent company and are listed below by a breakdown of currency type:

9-6- The deposits with banks which have restrictions on their withdrawal (time and other restrictions) have been classified under the heading of “Due from banks”.

10-1-The deposits with banks which do not have restrictions on their withdrawal have been classified under the heading of “cash”.

10-2- Due from Central Bank of Iran

10- Due from banks and credit institutions

Parent Company


Rls (M) Rls (M)

Due from CBI 10-2 5,473,375 8,131,047

Due from other banks and credit institutions 10-3 4,202,655 4,702,604

9,676,030 12,833,651

Parent Company


Rls (M) Rls (M)

Demand deposit with CBI - rial (restricted) 0 0

Demand deposit with CBI - forex (restricted) 0 0

Demand deposit with Central Banks of other countries (restricted) 0 0

Interest receivable on statutory deposit 0 0

Other amounts due (3 items) 10-2-1 5,473,374 8,131,047

5,473,374 8,131,047

10-2-1- Other amount due are as follows:

10-2-1-1- The balance of this account ammounting to Rls.5,464, 066/- million is related to the purchase of forex from the Central Bank of Iran for letters of credit under the directive No. M60/1015 of December 7, 2013 issued by the CBI and breaks down as follows:


It is further added that owing to the follow-up actions by the bank management and by the issuance date of the financial statements, an agreement was reached between the representatives of the CBI’s Office of Statistics and Forex Obligations and representatives of Saman Bank to the effect that the Central Bank agreed to provide the amount of $ 363 million as listed below. Accordingly, on the strength of the letter No. 256646 of December 16, 2014, the Central Bank has made the settlement of forex debts due subject to the performance of a special audit of foreign currency by an independent auditor for the years 2012 and 2013. In pursuance of this demand, Sokhane-hagh Auditting Services and Institute performed an audit as requested by CBI and then Saman Bank submitted the completed audit report containing the detailed list of the assets and liabilities as well as forex resources used covering the years 2012 and 2013 to the CBI Deputy for Foreign Exchange Affairs under the letters No. 95.31969 of March 18, 2017 and No. 95.31972 of March 18, 2017.

10-2-1-2- The balance of this account amounting to Rls. 9,308/- million is mainly related to non-payment of a portion of the statutory deposit for depreciation of the exchange rate as provided in the 2011 Policy and Regulatory Rules adopted by the CBI.

10-3- Due from other banks and credit institutions

March 20, 2017

Currency type

Preferential exchange rate Official exchange rate Total

Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials

Rls (M) Rls (M) Rls (M)

Euro 62,716,454/42 34,851 2,185,731 36,614,837/46 34,851 1,276,063 99,331,291/88 34,851 3,461,794

UAE Dirham 34,270,705/10 8,827 302,507 2,563,672/38 8,827 22,629 36,834,377/48 8,827 325,137

Chinese Yuan 0 4,702 0 24,142,410/16 4,702 113,517 24,142,410/16 4,702 113,517

S. Korean Won 52,416,788,566 29 1,504,361 2,040,050,208/00 29 58,549 54,456,838,774 29 1,562,914

Turkish Lira 78,719/68 8,945 704 0 8,945 0 78,719/68 8,945 704

3,993,303 1,470,758 5,464,066

Amounts in dollar

Exchange rate Amount requested by

Saman bank underletter no.

210/92/M/013678

of February 25, 2014

Data entered by Saman bank on website ofStatistics Information Department Post-control

obligations Total registered

amountDue from CBI

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

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

Current exchange rate 0 0 0 18,100,244

Loan interest rate 0 955,547 461,132 0

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

Parent Company


Rls (M) Rls (M)

Payment of checks issued by other banks 10-3-1 43,094 184,475

Facilities granted to other banks and credit institutions 0 0

Demand deposits with other local banks and credit institutions - rial (restricted) 0 0

Demand deposits with other local banks and credit institutions - forex (restricted) 0 0

Term deposits with other local banks and credit institutions - rial (restricted) 0 0

Term deposits with other local banks and credit institutions - forex (restricted) 0 0

Demand deposits with foreign banks - forex (restricted) 0 0

Term deposits with foreign banks - forex (restricted) 0 0

Other amounts due 10-3-2 4,159,561 4,518,129

4,202,655 4,702,604

10-3-1- The balance of this account is settled through the clearing house for banking instruments no later than two working days as the case may be.

10-3-2- The amount of Rls. 4,159,555/- million out of “other amounts due” is related to Saderat Bank and Passargad Bank and breaks down as follows:

Balance of facilities

2017 2016

Name of bank Type

of currency

Type

of contract

Interest

rate

(percentage)

MaturityType of

collateral

Forex

amountRls (M) Rls (M)

Amounts in Rls.

Saderat RialFactoring (discount) 21 April 23, 2011 LC documents 0 275,316 275,316

Saderat RialFactoring (discount) 21 October 21, 20111 LC documents 0 0 249,681


Saderat RialFactoring (discount) 21 August 1, 2011 LC documents 0 300,300 300,300

Saderat RialFactoring (discount) 21 June 28, 2011 LC documents 0 261,214 261,214

Saderat RialFactoring (discount) 21 June 28, 2011 LC documents 0 260,000 260,000


Saderat RialFactoring (discount) 21 May 24, 2011 LC documents 0 320,576 320,576





Saderat RialFactoring (discount) 21 March 9, 2011 LC documents 0 242,399 242,399


3,226,703 3,476,384

Amounts in forex

Pasargad EuroFactoring (discount) 12.81 October 5, 2012 LC documents 15,766,893 549,491 535,049

Pasargad EuroFactoring (discount) 12.81 September 29, 2012 LC documents 5,000,000 174,255 169,675

Pasargad EuroFactoring (discount) 12.81 October 3, 2012 LC documents 6,000,000 209,106 203,610

932,852 908,334

4,159,555 4,384,718

General provisionfor doubtful debts

10-3-2-1 0 0

Specific provisionfor doubtful debts

10-3-2-2 0 0

4,159,555 4,384,718


Saderat Bank

In line with the policy of expanding banking services aimed at providing finance for its customers in the areas of rials and foreign currencies, mitigating the credit portfolio risks and maintaining the capital adequacy1 ratio, Saman Bank included in its loan portfolio services the discount of the term letters of credit which other banks opened and guaranteed their payments on due dates as of March 2011 (ending the Iranian calendar year). In the area of foreign currencies, discounts were made without recourse to the beneficiary by paying the amounts so discounted into the beneficiary’s account (the discount applicant) in compliance with the appropriate rules and standards and within the context of the regulations governing the forex letters of credit and uniform rules concerning the letters of credit. In the area of rials, Saman Bank discounted the locally-issued term letters of credit (in rials) opened by the Iranian banks within the framework of the rules governing the local letters of credit (in rials) and applicable standards adopted by the Central Bank of Iran (uniform rules concerning the letters of credit) without recourse as of 2010 and early periods of 2011 and paid the amounts so discounted into the beneficiary’s account (the discount applicant) in compliance with the appropriate rules and regulations. The discounts so described were performed along with the exercise of all necessary controls following the exchange of instruments in the letters of credit and after receipt of required confirmations (encoded Faxes from correspondent banks) regarding the authenticity of opened letters of credit as well as irrevocable commitments by the opening banks for payment of the proceeds derived from such discounts to Saman Bank on due dates and in return for transfer of the beneficiary’s rights ( discount applicant).

A number of companies made applications for discount of the letters of credit opened and guaranteed by other banks which were processed in compliance with the foregoing standards and upon receipt of authorization from the bank’s credit committees. For the discount of forex-denominated letters of credit, all credit items were paid and settled on maturity dates by the banks which had opened and guaranteed such instruments. For the discounts of rial-denominated term letters of credit all items with the exception of a number of items connected with Amir Mansour Arya Group, were paid and settled by the opening banks in a normal way of business practices. For the discounting facilities provided for the companies affiliated to Amir Mansour Arya Group or for the companies which were trading partners of this Group, except for two banks, Bank Saderat and Bank of Industry and Mine, all other banks including Pasargad Bank, Sepah Bank, Bank Melli and Bank Maskan fulfilled their obligations and paid Saman Bank the committed amounts under 18 letters of credit totaling Rls. 2,136 billion on the due dates. Only the two banks of of Saderat and Industry and Mine failed to honor their obligations pledged against Saman Bank. The total discounts made and the amounts guaranteed to be paid in the letters of guarantee by these two opening banks on the maturity dates were as follows:

1. In calculating the capital adequacy ratio, the assets capital guaranteed or underwritten by local banks are weighted with a lower risk factor relative to other assets with immovable-backed houses/residentials.

Company name (first beneficiary) discounting applicant/

transferor of proceeds

Customer no.

LC opening bank (Obligor to pay

funds on maturity)

Balance of documents

traded (in billion rials)

Company's ownership (percentage held)

Elit Co.- Anzali Free Trade 1305959 Saderat 761 Amir Reza Moujoudi (99)

Fouladyar Iranian Trading-Industerial Co. 174667 Saderat 300 Staff cooperative Co. of National Iranian Industrial and Steel Group (55 of shares) Iran metal wastes procurement and processing Co. (40 of shares)

Foulad Iran Public Service Co.. 7778609 Saderat 521 Foulad Staff Pension Fund(99.7)

Khuzestan Steel Co. 13934 Saderat 807 IMIDRO (50.5) & Provincial Investment

Companies (30)

Foulad Spadana Co. 1124386

Saderat 1,350

Amir Reza Taremi (95)

Industry & Mine 499

Parsian Milad Hadid Co. 1124386 Saderat 802 Mohsen Karimian (60)

5,040

Amounts collected by March 20, 2017 (1,814)

Final court decree against Bank Saderat (2,952)

Debt balance 274

1- Writ No. 921420227900208 Rls (M)

Remedy sought (the principal amounts for four letters of credit): 807,183

Litigation cost paid by Saman Bank 16,144

Late payment penalty as of July 16, 2012 402,914

Difference in litigation cost 8,058

Lawyer's fee 200

1,234,499

2- Writ No. 921420227900211 Rls (M)

Remedy sought-principal amount 257,600

Litigation cost 5,152

Late payment penalty as of October 1, 2011 203,654

Difference in litigation cost 4,073

Lawyer's fee 200

470,679

In order to protect the interests and rights of Saman Bank and seek compensation from the guaranteed amounts and force the two banks of Saderat and Industry and Mine to fulfill their obligations, Saman Bank has taken legal actions versus these two banks by claiming the collection of proceeds derived from 8 matured letters of credit whereby 6 letters of credit are related to Bank Saderat and 2 letters of credit are related to Bank of Industry and Mine. For all of the 8 letters of credit, Saman Bank submitted a statement of claim to the trial court and requested confiscation of the assets and property owned by the opening banks. Thus the court’s order resulted in the seizure of the assets which belong to Saderat Bank and Bank of Industry and Mine being equivalent to the amounts claimed by Saman Bank. Until the date of presenting financial statements, the court made its ruling on the two cases, brought against the Bank of Industry and Mine in favor of Saman Bank which upon finality of decree and issuance of a writ for execution of the court’s decision resulted in the collection of Rls. 666 billion comprising the original amount for Rls 499 billion, late payment penalty, litigation costs and lawyer’s fee for the amount of Rls. 167 billion. In pursuance of legal actions, Bank Saman brought and followed up claims against Bank Saderat for six letters of credit under three separate cases with the Bench No. 19 of Tehran Civil Courts with a description of:

- Case No. 9009980227900567 remedy sought for the letter of credit No. 89/3446/0072 in the amount of 242,400 million rials;

- Case No. 9009980227900569 remedy sought for the letter of credit No. 89/34469/0063 for the amount of 257,600 million rials; and

- Case No. 9109980227900613 remedy sought for four letters of credit under Nos. 90/3446/0029, 90/3446/0030, 90/3446/0023 and 90/3446/0024 in the amount of 807,183 million rials in total.

The court passed judgments in favor of Saman Bank and ordered Bank Saderat to pay the original amounts claimed and compensate for late payment penalties, litigation costs and lawyer’s fees based on legal rates.

After the court’s initial verdicts received finality in the Bench No. 12 of Tehran Provincial Court of Appeal (Revision), and upon the request made by Saman Bank, three writs of execution were issued for enforcement of the final judgements ( actions of debt collection) with description of:

- Writ No. 9210420227900212 for the case No. 900998227900567;

- Writ No. 9210420227900211 for the case No. 900980227900569;

- Writ No. 9210420227900208 for the case No. 910980227900613.

After the above writs had been served, upon the request made by Bank Saderat, the head of Judiciary ordered the stay of execution for the writ No. 9210420227900212 and thus no money was collected. The Office of Judgments’ Enforcement of the relevant court bench made a calculation of the amounts due to be collected under the other two writs as follows:


Rls (M)

Remedy sought (Principal amounnt) 249,682

Late payment penalty as of July 17, 2012 262,450

Lawyer's fee 7,490

519,622

In all cases, at the request of Saman Bank’s lawyers an attachment order was issued against Bank Saderat for the amounts inserted in the letters of credit for 11 of such items under Nos. 90/3446/0015, 90/3446/0021, 90/3446/0017, 90/3446/0037, 90/3446/0038, 90/3446/0018, 90/3446/0031, 90/3446/0028, 90/3446/0027, 90/3446/0019, 90/3446/0022 Judgements were issued against Bank Saderat enforcing this Bank to pay the principal amounts and costs sustained in each case.

Pasargad Bank

As regards the letters of credit of Pasargad Bank, this bank has filed a lawsuit versus the claims which is now pending at Bench No. 7 of the Public Court of Law.

Upon the sale of the pledged shares owned by Bank Saderat an amount totaling 1,574,697 million rials was collected and delivered to Bank Saman under four checks. As the head of Judiciary issued an order for the stay of execution, the remainder of the relief sought in the amount of Rls. 142 bilion has not been collected. Upon the appeal made by the judgment debtor or losing party (namely Bank Saderat), the given cases are being examined and reviewed by the Judiciary Deputy for Judicial and Supervisory Affairs under the provision of amended article 18 of the Law for Formation of Public and Revolutionary Courts. Obviously, as soon as the effects resulting from the order for the stay of execution have been removed, the enforcement actions will be restarted to collect and recover the remainder of the judgment debts.

Furthermore, the statement of claim for 13 letters of credit related to Bank Saderat under Nos. 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 were submitted to the judicial authorities/law-courts which were referred to the benches No. 4, 19 and 14 for investigation and hearing. The first court hearings were subjected to retrial due to the counter claim (July 7, 2012) made by Bank Saderat. Lastly, upon resumption of the court hearings and submissions of various evidentiary documents and memorials, the case pertaining to the letter of credit no. 90/3446/0010 was adjudicated by the court bench No. 4 with a judgment against Bank Saderat ordering this bank to pay the principal amount of 249, 681 million rials and amount of 7, 491 million rials - for litigation cost, lawyer’s fee as per the tariffs and late payment penalty, from the date the claim was brought versus Saderat Bank until the collection date of these sums on the basis of inflation index rate as announced by the Central Bank of Iran in the amount of Rls. 262,450/- million. Reciprocally, Bank Saderat made an appeal against this judgment with the court of appeal (Court of Revision). The Bench No. 18 of Tehran Appeal Court upheld the initial court’s judgment in favor of Saman Bank. Upon the request made by Saman Bank lawyers, an enforcement writ was issued against Saderat Bank and an amount of Rls. 519,624/- million in total was collected and credited in favor of Saman Bank.

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eh)

764

,288

0

0 0

0 0

764

,288

076

4,28

8 1

40,9

70

Muz

arab

ah (t

rade

con

trac

ts)

7,6

41,8

25

1,5

16,8

47

4,6

49,9

26

(282

,681

) 0

(590

,638

) 1

2,93

5,27

9(9

44,4

51)

11,9

90,8

28 1

3,51

1,34

9

Civ

il pa

rtne

rshi

p-(M

osha

raka

t Mad

ani)

75,

978,

945

10,

539,

547

11,

201,

444

(3,7

36,9

99)

0(3

,782

,045

) 9

0,20

0,89

2(3

,923

,307

)86

,277

,585

89,

776,

296

Fact

orin

g 1

,183

,850

4

59,2

60

4,6

40,0

27

0(7

,779

)(5

89,7

77)

5,6

85,5

81(2

7,91

3)5,

657,

668

4,8

69,1

75

Oth

er lo

ans

gran

ted

in r

ial

0 0

0 0

0 0

0 0

0 0

Este

sna'

a 0

0 0

0 0

0 0

00

0

Loan

s gr

ante

d in

fore

x 3

,906

,279

3

47,7

94

567

,617

0

0 0

4,8

21,6

90(3

5,36

9)4,

786,

321

5,0

38,0

74

Deb

tors

of L

Cs

paid

1,7

10,8

26

518

,118

1

39,1

68

0(6

,505

) 0

2,3

61,6

07(1

,016

,523

)1,

345,

084

2,0

61,8

23

Deb

tors

of L

Gs

paid

401

,553

1

,333

2

45,7

30

0 0

0 6

48,6

16(1

12,9

68)

535,

648

1,2

32,5

66

Deb

tors

of c

redi

t car

ds p

aid

38,

368

0 0

0 0

0 3

8,36

8 0

38,3

68 9

,214

112

,073

,451

14,

510,

536

21,

958,

927

(4,0

19,6

80)

(5,2

88,6

20)

(5,2

71,8

94)

133

,962

,720

(6,2

12,5

19)

127

,750

,201

126

,987

,987

11

-2-

The

loan

s gr

ante

d by

the

pare

nt c

ompa

ny a

re li

sted

in th

e fo

llow

ing

tabl

e:11-3- Classification of Group loans granted to and amounts due from non-governmental entities/persons based

on the regulations adopted by the Money and Credit Council (Note 8-6 to the financial statements) breaks down as follows:

Group

March 20, 2017

Current Overdue outstanding doubtful Total

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

Sales by installments 10,099,997 2,813 2,475 171,040 10,276,325

Jealeh (service contracts) 7,764,152 67,738 968 1,649,260 9,482,118

Hire purchase 371,871 3,830 105 1,814,467 2,190,273

Salaf (future contracts) 25,336 0 0 28,858 54,194

Murabahah (Sale contracts) 86,771 0 0 480 87,251

Interest free loan (Qarzolhasaneh) 759,740 2,515 1,511 520 764,286

Muzarabah (trade contracts) 9,035,698 451,095 439,233 3,882,571 13,808,597

Civil partnership-(Mosharakat Madani) 80,537,503 1,420,563 3,004,359 12,525,355 97,487,780

Factoring 5,235,747 0 0 1,047,389 6,283,136

Other loans granted in rial 0 0 0 0 0

Estesna'a 0 0 0 0 0

Loans granted in forex 2,462,479 0 0 2,359,212 4,821,691

Debtors of LCs paid 746,635 1,621,476 2,368,111

Debtors of LGs paid 338,008 310,608 648,616

Debtors for credit cards paid 38,367 0 0 0 38,367

117,502,304 1,948,554 3,448,651 25,411,236 148,310,745

Less:

Unrealized interest (5,288,617) (5,288,617)

Deferred Interest and fee (195,884) (520,571) (4,555,435) (5,271,890)

Joint Civil partnership (3,726,078) 0 0 0 (3,726,078)

Amounts received for Muzarabah (trade contracts) (282,680) 0 0 0 (282,680)

Net loans granted before deducting provision fordoubtful debts

108,204,929 1,752,670 2,928,080 20,855,801 133,741,480

General provision for doubtful debts (1,776,443) (1,776,443)

specific provision for doubtful debts (62,254) (41,326) (4,329,172) (4,432,752)

Balance at March 20, 2017 106,428,486 1,690,416 2,886,754 16,526,629 127,532,285

Balance at March 20, 2016 105,232,238 1,366,688 2,754,802 17,338,137 126,691,865


11-4- Classification of the parent company loans granted to and amounts due from non-governmental entities/persons based on the regulations adopted by the Money and Credit Council (Note 8-6 to the financial statements) breaks down as follows:

Parent Company

March 20, 2017

Current Overdue outstanding doubtful Total


Sales by installments 10,099,997 2,813 2,475 171,040 10,276,325

Jealeh (service contracts) 7,764,152 67,738 968 1,649,260 9,482,118

Hire purchase 371,871 3,830 105 1,814,467 2,190,273

Salaf (future contracts) 25,336 0 0 28,858 54,194

Murabahah (Sale contracts) 86,771 0 0 480 87,251

Interest free loan (Qarzolhasaneh) 759,740 2,515 1,511 520 764,286

Muzarabah (trade contracts) 9,035,698 451,095 439,233 3,882,571 13,808,597

Civil partnership-(Mosharakat Madani) 80,769,659 1,420,563 3,004,359 12,525,355 97,719,936

Factoring 5,235,746 0 0 1,047,389 6,283,135

Other loans granted in rial 0 0 0 0 0

Estesna'a 0 0 0 0 0

Loans granted in forex 2,462,479 0 0 2,359,212 4,821,691

Debtors of LCs paid 746,634 1,621,476 2,368,110

Debtors of LGs paid 338,006 310,608 648,614

Debtors for credit cards paid 38,366 0 0 0 38,366

117,734,455 1,948,554 3,448,651 25,411,236 148,542,896

Less:

Unrealized interest (5,288,616) (5,288,616)

Deferred Interest and fee (195,884) (520,570) (4,555,434) (5,271,888)

Joint Civil partnership (3,736,998) 0 0 0 (3,736,998)

Amounts received for Muzarabah (trade contracts) (282,680) 0 0 0 (282,680)

Net loans granted before deducting provision fordoubtful debts

108,426,161 1,752,670 2,928,081 20,855,802 133,962,714

General provision for doubtful debts (1,779,761) 0 0 0 (1,779,761)

specific provision for doubtful debts (62,254) (41,326) (4,329,172) (4,432,752)

Balance at March 20, 2017 106,646,400 1,690,416 2,886,755 16,526,630 127,750,201

Balance at March 19, 2016 105,528,360 1,366,688 2,754,802 17,338,137 126,987,987

11-5- Provision for doubtful debts of the parent company breaks down as follows:

March 20, 2017 March 19, 2016

Generalprovision Specific provision Total General

provision Specific provision Total


Balance at the beginning of the year 1,779,761 4,132,752 5,912,513 1,688,488 3,649,285 5,337,773

Bad debts (Written-off) 0 0 0 0 (191,216) (191,216)

Provision for current year 0 300,000 300,000 91,273 674,686 765,959

Balance at the year-end 1,779,761 4,432,752 6,212,513 1,779,761 4,132,755 5,912,516

11-6- Loans granted by the parent company in foreign currency by a breakdown of

payment resources

March 20, 2017 March 19, 2016

Current Overdue Outstanding Doubtful Total Total


Local resources 2,462,478 0 0 2,288,268 4,750,746 4,965,833

Forex reserve account 0 0 0 70,945 70,945 70,945

National Development Fund 0 0 0 0 0 1,297

Syndicated loans 0 0 0 0 0 0

2,462,478 0 0 2,359,213 4,821,691 5,038,075

March 20, 2017 March 19, 2016

Over 24% 21 to 24% 18 to 21% 15 to 18% 12 to 15% 12% and less Total Total

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

2016 and before 16,537,786 3,512,439 1,915,465 631,649 3,205,887 2,725,691 28,528,917 27,632,649

2017 15,468,171 4,334,745 4,561,741 5,222,172 246,625 516,623 30,350,077 34,671,957

2018 7,304,539 10,226,683 4,739,548 25,457,068 841,275 2,206,701 50,775,814 47,589,809

2019 1,999,962 1,943,957 3,889,652 675,920 31,137 65,540 8,606,168 5,910,793

2020 2,515,896 643,760 24,224 1,400,541 51,133 74,626 4,710,180 8,883,015

2021 618,402 803,789 42,126 582,308 32,275 674,196 2,753,096 3,770,492

2022 and onward 356,215 128,567 9,650 1,849,196 420,263 5,474,556 8,238,447 4,441,785

44,800,971 21,593,940 15,182,406 35,818,854 4,828,595 11,737,933 133,962,699 132,900,500

March 19, 2016 61,136,372 48,941,338 9,812,257 1,649,754 4,547,196 6,813,583 132,900,500

11-7- Loans granted to and amounts due from non-governmental entities/persons in

terms of maturities and interest rates


2017

Rls (M)

Deposit 5,461,491

Participation bonds and other debt securities guaranteed by the government 0

Participation bonds and other debt securities guaranteed by other banks 6,761

Banking letters of guarantee 6,295

Letters of credit transacted 3,363,844

Shares listed on the stock exchange 2,044,870

Land, buildings and machinary 37,748,240

Checks and promissary notes 69,314,756

Binding/irrevocable contracts 7,981,353

Other 8,035,104

133,962,714

Unsecured loans and claims (without security) 0

133,962,714

11-8- Loans granted to and amounts due from non-governmental entities/persons

by a breakdown of the type of collateral

11-8-1- The information for the year 2015 could not be provided since the detailed description of collaterals was not available.

• The

inte

rest

on

loan

s in

clud

ed th

e in

tere

st o

n lo

ans

gran

ted

and

late

pay

men

t pen

alty

. The

am

ount

incr

ease

d du

ring

the

peri

od in

clud

ed th

e ac

crue

d an

d ca

sh in

tere

sts

aand

the

amou

nts

colle

cted

con

sist

ed o

f the

co

llect

ed p

ortio

n of

acc

rued

and

cas

h in

tere

sts

duri

ng th

e pe

riod

.

Sale

s by

in

stal

lmen

ts

Jeal

eh

(ser

vice

co

ntra

cts)

Hir

e pu

chas

e

Sala

f (f

utur

e co

ntra

cts)

Mur

abah

ahCi

vil

part

ners

hip

Fact

orin

gM

urab

ahah

(S

ale

cont

ract

s)

Este

sna'

e (C

ontr

acts

of

Exch

ange

)

Fre

ein

tere

st

Oth

er lo

ans

gra

nted

in r

ial

Loa

ns g

rant

ed in

fore

x

Deb

tors

of p

aid

lett

ers

ofcr

edit

Deb

tors

of p

aid

lett

ers

ofgu

aran

tee

Deb

tors

of p

aid

cre

dit

card

s

Tota

l

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Pri

ncip

al lo

an a

mou

nts

Bal

ance

at M

arch

19,

201

6 4

,719

,401

2

,959

,158

1

,940

,857

2

6,25

4 9

,448

,564

7

7,58

3,12

8 4

68,7

24

37,

052

0 1

40,9

70

0

4,0

45,5

92

2,5

22,1

56

1,0

43,0

82

9,2

14

104

,944

,152

Gra

nted

dur

ing

the

year

1,3

60,1

68

10,

853,

672

35,

309

0 3

,379

,178

2

48,7

79,7

32

121

,879

7

9,17

6

0 7

16,9

80

0

8,5

37,8

39

7,2

31,6

47

1,7

28,8

71

126

,866

2

82,9

51,3

17

Col

lect

ed d

urin

g th

e ye

ar(1

92,1

36)

(6,8

04,6

04)

(104

,571

) 0

(5,7

76,5

50)

(254

,165

,954

)(4

,309

)(4

5,97

7) 0

(93,

665)

0(8

,677

,153

)(8

,049

,486

)(2

,370

,402

)(9

7,71

5)(2

86,3

82,5

22)

Effe

ct o

f for

ex e

xcha

nge

rate

sdu

ring

the

peri

od 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0

Bal

ance

at M

arch

20,

201

7 5

,887

,433

7

,008

,226

1

,871

,595

2

6,25

4 7

,051

,192

72,1

96,9

06

586,

294

70,

251

0

764

,285

0 3

,906

,278

1

,704

,317

4

01,5

51

38,

365

101

,512

,947

Inte

rest

on

loan

s gr

ante

d

Bal

ance

at M

arch

19,

201

6 1

39,5

76

459

,612

2

16,1

91

1,7

73

5,3

13,8

09

18,

876,

074

4,4

28,3

66

625

0 0

0

1,0

27,8

51

556

,189

3

02,4

52

0 3

1,32

2,51

8

Incr

ease

d du

ring

the

year

768

,906

2

99,4

42

73,

712

23,

526

2,9

17,2

46

16,

618,

048

958

,490

3

,432

0

0

0 4

41,7

38

104

,502

1

3,35

7 0

22,

222,

399

Col

lect

ed d

urin

g th

e ye

ar(8

6,21

3)(2

46,1

98)

(8,7

55)

0(2

,064

,284

)(1

3,75

3,13

2)(2

87,5

70)

(2,9

89)

0 0

0(5

54,1

78)

(3,4

05)

(68,

746)

0(1

7,07

5,47

0)

Effe

ct o

f for

ex e

xcha

nge

rate

sdu

ring

the

peri

od 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0

Bal

ance

at M

arch

20,

201

7 8

22,2

69

512,

856

281

,148

2

5,29

9 6

,166

,771

2

1,74

0,99

0 5

,099

,286

1

,068

0 0

0

915

,411

6

57,2

86

247

,063

0

36,

469,

447

Prov

isio

n fo

r do

ubtf

ul d

ebts

Bal

ance

at M

arch

19,

201

6(5

8,18

3)(1

6,32

0)(6

4,00

6)(1

3,47

9)(9

44,4

51)

(3,6

23,3

07)

(27,

913)

0 0

0 0

(35,

367)

(1,0

16,5

21)

(112

,966

) 0

(5,9

12,5

13)

Incr

ease

d du

ring

the

year

0 0

0 0

0(3

00,0

00)

0 0

0 0

0 0

0 0

0(3

00,0

00)

Bad

deb

ts (w

ritte

n-of

f) du

ring

the

year

0 0

0 0

0 0

0 0

0 0

0 0

0 0

0 0

Bal

ance

at M

arch

20,

201

7(5

8,18

3)(1

6,32

0)(6

4,00

6)(1

3,47

9)(9

44,4

51)

(3,9

23,3

07)

(27,

913)

0 0

0 0

(35,

367)

(1,0

16,5

21)

(112

,966

) 0

(6,2

12,5

13)

Am

ount

s re

ceiv

ed fo

r M

uzar

abeh

(tra

de co

ntra

cts)

Bal

ance

at M

arch

19,

201

6 0

0 0

0(3

06,5

73)

0 0

0 0

0 0

0 0

0 0

(306

,573

)

Bal

ance

at M

arch

20,

201

7 0

0 0

0(2

82,6

81)

0 0

0 0

0 0

0 0

0 0

(282

,681

)

Join

t civ

il pa

rtne

rshi

p ac

coun

t

Bal

ance

at M

arch

19,

201

6 0

0 0

0 0

(3,0

59,5

97)

0 0

0 0

0 0

0 0

0(3

,059

,597

)

Bal

ance

at M

arch

20,

201

7 0

0 0

0 0

(3,7

36,9

99)

0 0

0 0

0 0

0 0

0(3

,736

,999

)

Net

loan

s gr

ante

d

Bal

ance

at M

arch

19,

201

6 4

,800

,794

3

,402

,450

2

,093

,042

1

4,54

8 1

3,51

1,34

9 8

9,77

6,29

8 4

,869

,177

3

7,67

7 0

140

,970

0

5,0

38,0

76

2,0

61,8

24

1,2

32,5

68

9,2

14

126

,987

,987

Bal

ance

at M

arch

20,

201

7 6

,651

,519

7

,504

,762

2

,088

,737

3

8,07

4 1

1,99

0,83

1 8

6,27

7,59

0 5

,657

,667

7

1,31

9 0

764

,285

0

4,7

86,3

22

1,3

45,0

82

535

,648

3

8,36

5 1

27,7

50,2

01

11

-9-

Tu

rno

ve

r o

f lo

an

s g

ran

ted

to

an

d a

mo

un

ts d

ue

fro

m n

on

-go

ve

rnm

en

tal

en

titi

es/p

ers

on

s


11

-10

- T

urn

ove

r o

f in

tere

sts

accru

ed

on

th

e l

oa

ns g

ran

ted

to

an

d a

mo

un

ts d

ue

fro

m n

on

-go

ve

rnm

en

tal

en

titi

es/p

ers

on

s

Sale

s by

in

stal

lmen

ts

Jeal

eh

(ser

vice

co

ntra

cts)

Hir

e pu

chas

e

Sala

f (f

utur

e co

ntra

cts)

Mur

abah

ahCi

vil

part

ners

hip

Fact

orin

gM

urab

ahah

(S

ale

cont

ract

s)

Este

sna'

e (C

ontr

acts

of

Exch

ange

)

Fre

ein

tere

st

Oth

er lo

ans

gra

nted

in r

ial

Loa

ns g

rant

ed in

fore

x

Deb

tors

of

pai

d le

tter

sof

cre

dit

Deb

tors

of p

aid

lett

ers

ofgu

aran

tee

Deb

tors

of p

aid

cre

dit

card

s

Tota

l

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Inte

rest

rec

eiva

ble

on lo

ans

gran

ted

Bal

ance

at M

arch

19,

201

6 1

39,4

16

312

,655

3

,963

1

,775

1

,229

,856

8

,471

,333

4

84,3

79

625

0

00

430

,867

4

17,0

20

1,3

33

0 1

1,49

3,22

2

Incr

ease

d du

ring

the

year

744

,926

2

21,6

67

10,

396

0 1

,350

,772

1

2,21

3,08

2 8

,020

2

,939

0

00

173

,102

1

04,5

02

00

14,

829,

406

Col

lect

ed d

urin

g th

e ye

ar(8

5,75

0)(2

13,8

10)

(8,4

43)

0(1

,063

,782

)(1

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7 11-11- Loans granted to and amounts due from non-governmental entities/personsby

a breakdown of customer type

11-12- Loans granted by the Group to the affiliated companies are as follow

11-13- Loans granted by the parent company to subsidiaries and affiliates are as follows

March 20, 2017 March 19, 2016

Gross amount Provision fordoubtful debts Net Gross amount Provision for

doubtful debts Net


Natural customers 35,664,829 (649,016) 35,015,813 37,450,179 (649,017) 36,801,162

Legal customers 95,214,917 (5,563,497) 89,651,420 92,936,331 (5,263,499) 87,672,832

Personnel 3,082,968 0 3,082,968 2,513,993 0 2,513,993

133,962,714 (6,212,513) 127,750,201 132,900,503 (5,912,516) 126,987,987

Group

March 20, 2017 March 19, 2016

Interest rates Current Non-current Provision for

doubtful debts Total Net

Percentage Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

Related parties

Adonis Co. 18-24 93,220 0 (1,399) 91,821 69,826

Saman Kish ElectronicPayment Co. 18 83,703 0 (1,256) 82,447 0

176,923 0 (2,655) 174,268 69,826

Parent Company

March 20, 2017 March 19, 2016

Interest Current Non-current Provision fordoubtful debts Total Total

Group companies Percentage Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

Saman Kish Electronic Payment Co. 0 0 0 0 181,780

Saman Satellite Communications Co. 18 43,077 0 (647) 42,430 15

Saman Pardazeshgaran Co. (Processing) 0 0 0 0 9,694

Saman Brokerage Co. 15-18 111,153 0 (1,668) 109,485 27,616

Sepehr Mehr 22 67,003 0 (1,006) 65,997 77,015

Other related perties

Adonis Co. 18-24 93,220 0 (1,399) 91,821 69,826

Saman Kish Electronic Payment Co. 18 83,703 0 (1,256) 82,447 0

398,156 0 (5,976) 392,180 365,946


12- Investments in shares and other securities

Group

March 20, 2017 March 19, 2016

Note Current Long-term Total Current Long-term Total


Investment in quickly marketableshares

401,219 84,942 486,161 634,690 84,929 719,619

Investment in other shares/stocks 12-2 0 422,896 422,896 0 251,387 251,387

Investment in other securities 11,730 132,134 143,864 473,257 87,131 560,388

412,949 639,972 1,052,921 1,107,947 423,447 1,531,394

Parent company

March 20, 2017 March 19, 2016

Note Current Long-term Total Current Long-term Total


Investment in quickly marketableshares

12-1 397,384 84,942 482,326 634,050 84,929 718,979

Investment in other shares/stocks 12-2 0 2,166,433 2,166,433 0 1,975,654 1,975,654

Investment in other securities 12-3 0 129,034 129,034 458,903 85,031 543,934

397,384 2,380,409 2,777,793 1,092,953 2,145,614 3,238,567

12-1- Parent company’s investments in quickly marketable shares are as follows:

12-1-1- Current investments in quickly marketable shares

Shares of listed companiesIsfahan Mubarakeh Steel Mill Purchase 16,456,434 0.02 20,072 22,948 9,604 8,789

Iran Construction Investment Co. Purchase 8,911,790 0.82 33,259 21,318 37,620 40,272

Iran Telecommunication Purchase 4,899 0.00 15 11 144 144

Sina Bank Purchase 19,277,199 0.19 33,306 19,422 31,871 30,506

Shomal Drilling Co. Purchase 2,171,445 0.08 11,492 7,227 71,537 54,607

MAPNA Purchase 7,377,750 0.07 59,265 55,508 54,781 65,184

Azar Ab Purchase - - 0 0 4,995 5,241

Bank Mellat Purchase 6,852,952 0.014 13,448 7,494 15,828 15,208

Iranian Leasing Purchase 29,493,077 2.95 56,198 45,214 58,791 44,356

Sepah Investment Purchase - - 0 0 52,753 31,093

Saderat Bank Purchase 11,600,000 0.020 12,884 10,389 12,884 12,192

Passargad Bank Purchase - - 0 0 56,603 33,676

Tooka Foulad Investment Co. Purchase 43,522,499 1.67 58,654 52,206 37,945 37,962

Tooka Foulad Investment Co. - rights issue Purchase 6,750,000 - 2,346 1,235 0 0

Bahman Group Purchase 14,920,000 0.29 35,268 26,254 44,007 58,259

Sahand Tire Manufacturing (Lastik) Purchase - - 0 0 4,871 4,061

Kharazmi Investment Purchase 30,000,000 0.24 42,158 23,871 60,327 55,871

Tooka Transport Purchase 8,998,711 2.73 19,935 25,498 28,865 32,161

Tractor Manufacturing Co. Purchase - - 0 0 3,268 3,000

Fajr Petrochemical Co. Purchase - - 0 0 8,228 7,894

Piazar Agro-Industry Co. Purchase - - 0 0 1,911 1,653

Oil Industry Purchase 1,000,000 - 2,504 1,783 0 0

Mines and Metals Investment Development Co. Purchase - - 0 0 10,851 5,786

Alborz Insurance Purchase - - 0 0 1,313 1,150

Iran Khodro Purchase 3,154,455 - 10,291 8,135 24,895 35,850

Shahed Investment Purchase - - 0 0 2,705 2,817

Iran Khodro Investment Development Co. Purchase 500,000 0.02 2,388 1,745 9,533 10,659

Mobin Petrochemical Co. Purchase - - 0 0 2,059 1,975

Bahman Investment Co. Purchase - - 0 0 2,742 2,794

Mellat Leasing Purchase - - 0 0 0 0

Ansar - Rights issue Purchase 6,481 - 7 4 0 0

Shiraz Petrochemical Co. - Urine salaf Purchase 2,000 - 14,037 16,159 0 0

Informatic services Purchase 144,757 0.005 2,702 2,723 0 0

430,229 349,144 650,931 603,160

Shares of listed companies onFarabourse (OTC)

Tooka Rail Purchase 19,186,128 0.96 50,318 40,161 30,248 29,387

Tooka Refractory Industries Purchase - - 0 0 1,007 916

Shahid Civil and Development Co. Purchase - - 0 0 129 133

Damavand Power Generation Purchase - - 0 0 223 241

Khavarmianeh Life Insurance Purchase 200,000 - 100 98 100 197

Tehran Housing Purchase - - 0 0 0 0

Alhavi Pharmaceutical Co. Purchase 1,277,010 0.35 6,204 5,366 0 0

Taliseh Nemouneh Purchase 189,860 0.27 1,628 1,674 0 0

A.S.P. Purchase 932,047 0.12 1,120 926 0 0

59,370 48,225 31,707 30,874

489,599 397,369 682,638 634,034

Added (Less)

Cost price adjustment (92,215) 0 (48,588) 0

397,384 397,369 634,050 634,034

March 20, 2017 March 19, 2016

Origin Number ofshares Investment Cost Net sale

value Cost Net salevalue

Percentage Rls (M) Rls (M) Rls (M) Rls (M)


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Domiciale Invesment percentage Auditing firm Main activities

GroupParent

Company

Subsidiaries

Saman Brokerage Co. Tehran 64 64 Sokhan Hagh Investment, brokerage and financial services

Hafez Saman Iranian Credit Scoring Co. Tehran 99.15 99.15 Sokhan Hagh Providing information on scoring and creditrating services

Tondar Noor Tehran 100 0 Sokhan Hagh Scientific and research activities in computer, development and sale of software

Saman Exchange Co. Tehran 96.46 96.46 Azmoon Pardaz Trading types of foreign currency

Saman Satelite Communication Co. Tehran 61.85 48.08 Azmoon Pardaz Providing services for data transfer,communication and satellite telecommunication

Pardazeshgaran Saman Tehran 100 100 Sokhan Hagh Design, development and support of corebanking-based products, applications and tools

Atieh Andishan Sepehr Shargh Co. Tehran 100 99.7 Bayat Rayan Provision of technical and engineering services

Atieh Andishan Sepehr SharghServices Development" Ajabshir 100 0 Bayat Rayan Production of iron ingots from iron scrappings

Atieh Andishan Sepehr Mehr Co. Tehran 100 0 Bayat Rayan Provision of technical and engineering services, purchase and sale of all authorized goods andcommodities

Affiliates

Kardan Investment Bank Tehran 33.3 32.3 Tadvin & Co. Investment, subscription, securitiesunderwriting

Saman Electronic Payment Co. Tehran 43.04 27.8 Sokhan Hagh Provision of E-payment services

Adonis Electronic Services Co. Tehran 24.19 0 Mokhtar & Co. Provision of services in IT, computer devices,electronic and telecommunication equipment

12-2-3- Particulars of Saman Bank subsidiary and affiliated companies are as follows:

12-3- Investments in other securities by the parent company are as follows:

Issuer Origin Type of security Interest rate 2017 2016

Percentage Rls (M) Rls (M)

Government and state-run corporations

Government Purchase Islamic treasury bonds - 0 458,902

Banks

- - - 0 0

Other companies and mutual funds

Novin Saman Fixed-Income Fund Establishment Privileged investment unit 19 15,000 15,000

Saman Joint Venture Fund - Yekom Establishment Ordinary and privileged

investment unit 15,000 15,000

Agah Charity Fund - Yekom Establishment Privileged investment unit 2,500 2,500

Amin Saman Mutual Fund Establishment Privileged investment unit 16 10,000 10,000

Iran Capital Market Development Mutual Fund Establishment Ordinary investment unit 35,000 35,000

Aghigh Mutual Fund Ordinary investment unit 0 4,998

Nik-Andishan Honar Charity Mutual Fund Purchase Ordinary investment unit 2,534 2,534

Negin Saman Fixed-Income Fund (in the formation process)

Establishment Privileged investment unit 18 49,000 0

129,034 543,934


Group

Share of netassets Goodwill Share of total

net assets


Balance at the beginning of the year 624,175 0 624,175

Asquisition during the year 828,809 121,363 950,172

Partial payment of subscribed capital 235,775 0 235,775

Share of profit in affiliates before goodwill depreciation 183,410 0 183,410

Dividends received or receivable during the year (190,492) 0 (190,492)

Goodwil depreciation 0 (12,053) (12,053)

1,681,677 109,310 1,790,987

13- Long-term investments in affiliated companies

14- Amounts due from subsidiaries and affiliates

Group

March 20, 2017 March 19, 2016

Balance due Doubtful debts

provisionNet Net


Due from subsidiaries 73,868 0 73,868 71,677

Due from affiliates 513,465 0 513,465 10,521

587,333 0 587,333 82,198

Parent company

March 20, 2017 March 19, 2016

Balance

due

Doubtful debts

provisionNet Net


Due from subsidiaries 2,800,881 0 2,800,881 1,020,001

Due from affiliates 778,065 0 778,065 10,521

3,578,946 0 3,578,946 1,030,522

14-1- Considering the fact that the fiscal year of Group Companies will end on 21st December of each year (end of Azar based on the Iranian calendar year) namely three months earlier than the end of the bank’s fiscal year, the amounts due from subsidiaries have not been entirely eliminated in consolidated operations. Whereas such amounts do not affect the consolidated financial statements in their entirety, adjustments have not been therein made (in accordance with the accounting standards).

14-2- The balance of the parent company’s amounts due from subsidiaries and affiliates based on the inter-group transactions consists of the following:

March 20, 2017

Name of subsidiary/affiliate Assets andinvestments sold

Assets and investments

purchased

Services purchased

Provisional amounts

received

(on-account)

Provisional amounts paid

(on-account)

Iner-group interest-free

loans

Dividendsrecievable

Dividendspayable

Total

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

Saman Exchange Co. 0 0 5,563 0 2,246 0 284,560 0 292,369

Hafez Saman Iranian Credit ScoringCo. 0 0 0 0 24,913 0 54,532 0 79,445

Saman Kish Electronic Payment Co. 0 0 0 0 7,100 0 504,312 0 511,412

Pardazeshgaran Saman (processing 0 62,423 0 0 116,396 0 31,500 0 210,319

Saman Brokerage Co. 0 0 0 0 358 0 4,799 0 5,157

Adonis Co. 0 0 2,025 0 29 0 0 0 2,054

Satelite Communication Co. 0 0 0 0 1,881 0 32,694 0 34,575

Atieh Andishan Sepehr Shargh 0 1,970,675 0 0 30 0 2,518 0 1,973,223

Atieh Andishan Sepehr Mehr 0 0 0 0 5,792 0 0 0 5,792

Kardan Investment Bank 0 0 0 0 0 0 264,600 0 264,600

Atieh Andishan Sepehr Shargh Services Development 0 0 0 0 200,000 0 0 0 200,000

0 2,033,098 7,588 0 358,745 0 1,179,515 0 3,578,946

Net transactions gain (loss) 0

March 19, 2016

Name of subsidiary/affiliate Assets andinvestments sold

Assets and investments

purchased

Services purchased

Provisional amounts

received

(on-account)

Provisional amounts paid

(on-account)

Iner-group interest-free

loans

Dividendsrecievable

Dividendspayable

Total

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

Saman Exchange Co. 0 0 14,973 0 3,958 0 120,576 (84) 139,423

Hafez Saman Iranian Credit ScoringCo.

0 0 806 0 79,486 0 19,830 0 100,122

Saman Kish Electronic Payment Co.

0 0 227 0 48 0 596,005 0 596,280

Pardazeshgaran Saman (processing)

0 62,423 0 0 20,241 0 9,000 0 91,664

Saman Brokerage Co. 47,273 0 0 0 13 0 14,335 0 61,621

Adonis Co. 0 3,408 2,064 0 5,048 0 0 0 10,520

Satelite Communication Co. 0 0 295 0 2,660 0 22,115 0 25,070

Atieh Andishan Sepehr Shargh 0 0 0 0 12 0 18 0 30

Atieh Andishan Sepehr Mehr 0 0 0 0 5,792 0 0 0 5,792

47,273 65,831 18,365 0 117,258 0 781,879 (84) 1,030,522

Net transactions gain (loss) 0


15- Other accounts receivable

Group

March 20, 2017 March 19, 2016

Balancedue

Specific provision fordoubtful debts

General provisionfor doubtful debts Net Net


Dividends receivable from companies 212,394 0 0 212,394 191,963

Temporary debtors 7,540,355 (268,163) (14,718) 7,257,474 6,641,474

7,752,749 (268,163) (14,718) 7,469,868 6,833,437

Parent company


Balancedue

Specific provision fordoubtful debts

General provisionfor doubtful debts Net Net


Dividends receivable fromcompanies 15-1 192,044 0 0 192,044 165,696

Temporary debtors 15-2 5,922,470 (154,052) (14,718) 5,753,700 5,485,970

Interest accrued on participationbonds 0 0 0 0 0

Amounts due from personnel 0 0 0 0 0

6,114,514 (154,052) (14,718) 5,945,744 5,651,666

Parent company

March 20, 2017

Current Overdue Outstanding Doubtful debts Total


Due from subsidiaries 2,800,881 0 0 0 2,800,881

Due from affiliates 778,065 0 0 0 778,065

Net amounts due from subsidiaries and affiliates before doubtful debts provision

3,578,946 0 0 0 3,578,946

Less:

General provision for doubtful debts 0 0 0 0 0

Specific provision for doubtful debts 0 0 0 0 0

Balance at March 20, 2017 3,578,946 0 0 0 3,578,946

Balance at March 20, 2016 1,030,522 0 0 0 1,030,522

14-3- Pursuant to the directive adopted by the Money and Credit Council (Note 8-6), the amounts due from subsidiary and affiliated companies are classified as follows:

15-1- The balances of dividends receivable excluding the dividends from subsidiaries and affiliates are as follows:

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Companies listed on the stock exchange and Farabourse (OTC)

Shomal Drilling Co. 32,905 29,840

Housing Investment Co. 4,090 5,450

Chadormalou Co. 1 1,921

Mines and Metals Development Co. 6,880 9,947

Barez Industrial Co. 3 1,069

Bahman Group 2,366 12,558

Tooka Foulad Investment 13,960 7,611

Tamin Pharmaceutical Investment Co. 1 1,756

Sepah Investment Co. 11,781 39,223

Behshahr Industries Development 0 4,065

Tooka Transport Co. 0 1,830

Rayan Saipa 27 1,317

National Development Investment Group 0 6,520

Isfahan Mobarakeh Steel Mill 4,003 8,920

Mapna Group 1,844 1,590

Iranian Leasing Co. 0 6,152

Ghadir Investment Co. 0 1,519

Saman Insurance Co. 62,347 1

Iran Pump Manufacturing Co. 2,850 2,850

Hamedan Glass Works 3,774 9,374

Central Securities Depository and Settlement Co. 1,914 1,914

Omid Investment Co. 2,172 0

Kharazmi Investment Co. 10,439 0

Tooka Rail 5,999 0

Middle East Bank 8,925 0

Sina Bank 3,373 0

Passargad Bank 2,986 0

Others 7,442 6,047

190,082 161,474

Other companies

Saman Aftab Tejarat 1,962 1,212

Iran Investment Co. 0 3,010

1,962 4,222

192,044 165,696


15-2- Balances due by temporary debtors consist of the following:

15-3- Pursuant to the directive adopted by the Money and Credit Council (Note 8.6.) other accounts receivable of the parent company are classified as follows:

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Items related to loans

Litigation and debt collection costs 2,070,257 1,358,119

2,070,257 1,358,119

Items unrelated to loans

Debtors for sale of assets 3,649,035 4,093,843

Debtors for sale of investments 0 0

Debtors for financial fraud (abuses) 0 0

Other 34,408 34,008

3,683,443 4,127,851

5,753,700 5,485,970

March 20, 2017

Current Overdue Outstanding Doubtful Total


Dividends receivable from companies 192,044 0 0 0 192,044

Amounts due by the personnel 0 0 0 0 0

Interest accrued on participation bonds 0 0 0 0 0

Temporary debtors 3,683,443 0 0 2,239,027 5,922,470

Net amounts due from subsidiaries and affiliates before doubt-ful debts provision

3,875,487 0 0 2,239,027 6,114,514

Less:

General provision for doubtful debts 0 0 0 (14,718) (14,718)

Specific provision for doubtful debts 0 0 0 (154,052) (154,052)

Balance at March 20, 2017 3,875,487 0 0 2,070,257 5,945,744

Balance at March 20, 2016 4,293,547 0 0 1,358,119 5,651,666

16- Orders and prepayments

17- Inventory (materials and goods)

Group

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Prepayments 11,196 30,607

Orders 19,298 10,202

30,494 40,809

Group

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Inventory in stock 247,690 98,793

On going projects in the process of completion 70,763 46,567

318,453 145,360

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96 3

,613

,037

18-3- The land and buildings owned by the bank, were revaluated in 2016-17 whereby the differential amounting to Rls. 214, 663/- million was classified as “Assets revaluation reserve” under the heading of shareholders’ equity and further entered in the comprehensive statement of profit and loss.

18-4- The book value of revaluated land and buildings on the cost price basis is described as follows:

18-5- All tangible fixed assets excluding the motor vehicles have been insured with Saman Insurance Company up to the amount of Rls. 3, 106, 291/- million against possible risks and dangers arising from fire, floods and earthquake. It should further be noted that the motor vehicles have been put under body/average insurance coverage up to the amount of Rls. 72, 390/- million.

March 20, 2017 March 19, 2016

Based on cost price Based on

revaluationBased on cost price

Based on

revaluation


Land 926,972 794,394 1,084,170 733,233

Buildings 1,336,621 939,710 1,306,334 988,681

2,263,593 1,734,104 2,390,504 1,721,914


19-1- The table of intangible assets of group companies is as follows:

Group

Goodwill for place andbusiness

Software Softwaredevelopment

Royalty to use publicsevice Total


Cost price

Balance at March 21, 2015 3,730,604 121,394 0 38,773 3,890,771

Increase during the year 284,889 38,017 0 1,056 323,962

In-company improvement 0 0 0 0 0

Increase (decrease) from revaluation 0 0 0 0 0

Sold 0 0 0 0 0

Transfers and other changes 0 (8,123) 0 0 (8,123)

Balance at March 19, 2016 4,015,493 151,288 0 39,829 4,206,610

Balance at March 21, 2016 4,015,493 151,288 0 39,829 4,206,610

Increase during the year 0 50,398 0 338 50,736


Increase (decrease) from revaluation 1,291,808 0 0 0 1,291,808

Sold (1,103,935) 0 0 0 (1,103,935)

Transfers and other changes 0 (12,839) 0 (2,897) (15,736)

Balance at March 20, 2017 4,203,366 188,847 0 37,270 4,429,483

Accumulated depreciation and accumulatedvalue impairment

Balance at March 21, 2015 0 3,065 0 13,899 16,964

Depreciation during the year 0 65,416 0 1,128 66,544

Value impairment loss 0 0 0 0 0

Sold 0 0 0 0 0

Transfers and other changes 0 (5,032) 0 0 (5,032)

Balance at March 19, 2016 0 63,449 0 15,027 78,476

Balance at March 21, 2016 0 63,449 0 15,027 78,476

Depreciation during the year 0 55,565 0 2 55,567


Sold 0 0 0 0 0

Transfers and other changes 0 (829) 0 0 (829)

Balance at March 20, 2017 0 118,185 0 15,029 133,214

Book value

At March 21, 2015 3,730,604 121,394 0 38,773 3,890,771

At March 19, 2016 4,015,493 87,839 0 24,802 4,128,134

At March 20, 2017 4,203,366 70,662 0 22,241 4,296,269

19- Intangible assets19-2- The table of intangible assets of the parent company is as follows:

19-3- Goodwill for place of business was revaluated by the Judiciary’s official expert during the year 2016-17 and the differential thereof in the amount of Rls. 1, 291, 809/- million was classified as the assets revaluation reserve under the heading of shareholders’ equity and entered in the comprehensive profit and loss statement.

Parent company

Goodwill for place andbusiness

Software Softwaredevelopment

Royalty to use publicsevice Total


Cost price

Balance at March 21, 2015 3,730,604 110,481 0 20,307 3,861,392

Increase during the year 284,889 35,823 0 1,047 321,759


Increase (decrease) from revaluation 0 0 0 0 0

Sold 0 0 0 0 0

Transfers and other changes 0 0 0 0 0

Balance at March 19, 2016 4,015,493 146,304 0 21,354 4,183,151

Balance at March 21, 2016 4,015,493 146,304 0 21,354 4,183,151

Increase during the year 0 46,957 0 315 47,272


Increase (decrease) from revaluation 1,291,808 0 0 0 1,291,808

Sold (1,103,935) - 0 0 0 (1,103,935)

Transfers and other changes 0 0 0 (119) (119)

Balance at March 20, 2017 4,203,366 193,261 0 21,550 4,418,177

Accumulated depreciation and accumulatedvalue impairment

Balance at March 21, 2015 0 0 0 0 0



Sold 0 0 0 0 0


Balance at March 19, 2016 0 63,588 0 0 63,588

Balance at March 21, 2016 0 63,588 0 0 63,588



Sold 0 0 0 0 0


Balance at March 20, 2017 0 116,988 0 0 116,988

Book value

At March 21, 2015 3,730,604 110,481 0 20,307 3,861,392

At March 19, 2016 4,015,493 82,716 0 21,354 4,119,563

At March 20, 2017 4,203,366 76,273 0 21,550 4,301,189


20-1- The statutory deposits held with the Central Bank of Iran pursuant to paragraph 3 of article 14 of the Monetary and Banking law has been calculated on the basis of the rates determined by the Money and Credit Council as approved by the Central Bank of Iran.

March 20, 2017 March 19, 2016

Based on cost price Based on revaluation Based on cost price Based on revaluation


Goodwill for place of business 1,695,925 4,203,366 2,139,705 4,015,493

1,695,925 4,203,366 2,139,705 4,015,493

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Statutory deposit - deposits of mainland branches (rial) 22,782,959 20,885,494

Statutory deposit - deposits of mainland branches (forex) 0 0

Statutory deposit - deposits of free zones branches (rial) 252,725 245,831

Statutory deposit - deposits of free zones branches (forex) 0 0

Statutory deposit with central banks of other countries (forex) 0 0

23,035,684 21,131,325

Group Parent company



Customers' net debts for term LCs 21-1 473,189 63,059 473,189 63,059

Non-operating real estates 0 0 0 0

Foreclosed collaterals 21-2 24,011,632 26,791,928 24,053,243 26,792,889

Advance deposits for leased buildings 117,798 109,429 117,798 101,889

Debtors - persons/entities 21-3 10,422,778 0 10,422,778 0

Notes/documents recievable 4,168,405 0 4,168,405 0

Tax prepayment 954,331 455,174 924,474 443,282

Assets insurance prepayment 0 0 0 0

Prepayment for leased branches 29,131 20,678 29,131 19,678

Inventory (supplies) 0 0 0 0

Items in transit 0 0 0 0

Gold and silver 0 0 0 0

Tax stamp 4,466 3,782 4,466 3,782

Prepayment for consultancy contracts 2,325,775 87,066 2,325,775 87,066

Consolidated goodwill 45,718 129,562 0 0

Temporary debtors - forex 600,596 1,068,543 600,596 1,068,543

Discrepancies in interbank settlement for theaccount 26200 7,159 7,631 7,159 7,631

Other 2,793,453 1,064,676 2,734,548 1,018,232

45,954,431 29,801,528 45,861,562 29,606,051

19-3-1- The book value of the revaluated goodwill for place of business on the cost price basis is described as follows:

20- Statutory deposit

21- Other assets

21-1- Customers’ net debts for term LCs

21-2- Foreclosed collaterals

The composition of the foreclosed collaterals balance breaks down as follows:

21-2-1- The age of the balance of immovable foreclosed collaterals breaks down as follows

21-2-2-The profit (loss) from the sale of foreclosed collaterals has been disclosed in the statement of profit and loss under the note No. 55.

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Customers' net debts for term LCs - in rial 10,773 3,074

Customers' net debts for term LCs - in forex 475,209 108,808

485,982 111,882

Less:

Advances and mid-payments received for term LCs - in rial (9,661) 0

Advances and mid-payments received for term LCs - in forex (3,132) (48,822)

General provision for doubtful debts 0 0

473,189 63,059

March 19, 2016 Foreclosed during the year

Sold/transferred during the year March 20, 2017


Movable properties

Furniture 0 0 0 0

Equipment 0 0 0 0

Goods 0 0 0 0

Motor vehicles 0 0 0 0

0 0 0 0

Immovable properties

Residential properties 6,183,365 1,849,727 (2,664,682) 5,368,410

Business/Offiice properties 12,753,136 1,162,132 (3,616,326) 10,298,942

Factory/plant 4,238,904 512,304 (324,725) 4,426,483

Land 3,617,484 370,573 (28,649) 3,959,408

26,792,889 3,894,736 (6,634,382) 24,053,243

26,792,889 3,894,736 (6,634,382) 24,053,243

Accumulated value impairement 0 0

26,792,889 24,053,243

Profit (loss) from sales 2,866,384 3,283,507

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Less than a year from the foreclosure date 1,105,167 6,335,850

One year or two years from the foreclosure date 17,679,032 15,998,782

Over two years from the foreclosure date 5,269,044 4,458,257

24,053,243 26,792,889


21-3- Goodwill

Details of goodwill from consolidated turnover under note (8-13 of significant accounting policies) are as follows:

21-4- If the balance of items in transit remains in credit, it shall be reflected in the note to other liabilities.

Group

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Cost at the beginning of the year 220,704 216,980

Goodwill acquired during the year 0 3,724

Adjustments for secondary sales (149,730) 0

Cost at year-end 70,974 220,704

Accumulated depreciation at the beginning of the year (91,142) (69,336)

Depreciation during the year (4,440) (21,806)

Adjustments from secondary sales 70,326 0

Accumulated depreciation at year-end (25,256) (91,142)

Book value 45,718 129,562




Central Bank of Iran (CBI)

Deposits in rial 0 0 0 0

Term deposits in forex 22-1 1,114,096 5,560,669 1,114,096 5,560,669

Demand deposits in forex 22-2 28,470 16,030,745 28,470 16,030,745

Debt for differences in foreign exchange rates 22-3 2,789,780 2,769,244 2,789,780 2,769,244

Debt for overdraft from current account 0 0 0 0

Debt for foreign exchange reserves account 0 0 0 0

Facilities received in rial 0 0 0 0

Facilities received in forex 0 0 0 0

Other 22-4 0 1,472,294 0 1,472,294

3,932,346 25,832,952 3,932,346 25,832,952

Local banks and credit indtitutions

Demand deposits in rial 22-5 342 980 342 980

Demand deposits in forex 22-6 618,466 896,177 618,466 896,177

Facilities received in rial 275,181 629,976 0 0

Facilities received in forex 0 0 0 0

Payment of checks issued by other banks 0 0 0 0

893,989 1,527,133 618,808 897,157

Foreign banks

Demand deposits in rial 22-7 924,135 312,101 924,135 312,101

Demand deposits in forex 0 0 0 0

Debt for current account (overdraft) 0 0 0 0

924,135 312,101 924,135 312,101

5,750,470 27,672,186 5,475,289 27,042,210

22- Due to banks and other credit institutions

22-1- The term foreign currency deposits of CBI are as follows:

22-1-1- It is worth mentioning that the amount of 30, 126, 172.57/- Euros and the amount 1, 975, 580.85/- Swiss Francs have been deposited under the heading of BCP for the CBI’s forex deposits with us.

22-2- The current foreign currency deposits of CBI are as follows:

22-3- The balance of the said account consists of the amount of Rls. 2,461,053/- million which is related to the directive No. 60/1015 of December 7, 2013 issued by the CBI in respect of the differences in foreign exchange rates. Further, the amount of Rls. 226,621/- million is related to the student foreign exchange quota and the amount of Rls. 92,466/- million is related to LC debts of Modiran Khodro and Ghovayeh Moharrekeh (Power Train).

22-4- This account is related to Lufthansa and Turkish Airlines which was settled in the beginning of the year 2016.

22-5- The demand deposits of local banks in rials break down as follows:

March 20, 2017 March 19, 2016

Currency Type Forex amount Exchange rate Amount in Rial Forex amount Exchange rate Amount in Rial

Rls (M) Rls (M)

Euro 30,126,172/57 34851 1,049,928 138,950,071.20 33,935 4,715,271

Swiss Franc 1,975,580/85 32481 64,168 27,329,991.06 30,933 845,398

1,114,096 5,560,669

March 20, 2017 March 19, 2016

Currency Type Forex amount Exchange rate Amount in Rial Forex amount Exchange rate Amount in Rial

Rls (M) Rls (M)

Euro 518,123 34,851.00 18,057 82,549,089 33,935 2,801,304

Omani Rial 0.00 84,184.00 0 87,011,073 78,546 6,834,371

Swiss Franc 320,591/38 32,481.00 10,413 42,710,031 30,933 1,321,149

Japanese Yen 0.00 28,7.72 0 18,848,848,488 269 5,073,921

28,470 16,030,745

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Melli Bank 42 48

Dey Bank 300 301

Tosee Taavon (Cooperative Development) 0 631

342 980


22-6- The demand deposits of local banks in foreign currency break down as follows:

22-7- The demand deposits of foreign banks in foreign currency break down as follows:

22-8- The credit facilities in rial received from other banks are related to the group companies which are mainly from Pasargad Bank and Sepah Bank.

March 20, 2017 March 19, 2016

Currency Type Forex amount Exchange rate Amounts in rial Forex amount Exchange rate Amounts in rial

Rls (M) Rls (M)

US Dollar 0 32,420 0 518,195 30,240 15,670

Euro 26,516,733 34,851 924,135 8,735,230 33,935 296,431

924,135 312,101

March 20, 2017 March 19, 2016

Currency Type Forex amount Exchange rate Amounts in rial Forex amount Exchange rate Amounts in rial

Rls (M) Rls (M)

US Dollar 8,183,356 32,420 265,305 10,722,105 30,240 324,237

Euro 9,149,375 34,851 318,865 16,209,487 33,935 550,069

UK Pound 166 40,191 7 166 43,089 8

UAE Dirham 2,563,891 8,827 22,632 2,563,891 8,234 21,112

Japanese Yen 2,728,184 288 785 2,721,684 269 732

Omani Rial 11,065 84,184 931 0 0 0

Indian Rupee 20,043,930 496 9,941 44,130 453 19

618,466 896,177




Natural customers

Demand deposits and similar deposits 23-1 3,845,822 3,661,486 3,857,208 3,672,873

Savings deposits and similar deposits 23-2 620,481 540,323 620,481 540,323

Other deposits and advances 23-3 52,988 63,101 41,602 51,715

4,519,291 4,264,910 4,519,291 4,264,911

Legal customers

Demand deposits and similar deposits 23-1 8,519,763 11,150,092 8,496,029 11,210,230

Savings deposits and similar deposits 23-2 1,287,043 1,725,959 1,287,877 1,726,086

Other deposits and prepayments 23-3 2,780,466 4,665,506 2,795,176 4,683,851

12,587,272 17,541,557 12,579,082 17,620,167

17,106,563 21,806,467 17,098,373 21,885,078

23- Customers’ deposits – Natural and legal persons

23-1- Demand deposits and similar deposits




Free-interest deposits in rial 7,513,709 8,574,317 7,530,060 8,649,717

Free-interest deposits in forex 648,669 858,521 648,669 858,521

Various bank checks sold 575,374 413,209 575,374 413,209

Customers' current accounts with overseas branches 0 0 0 0

Unclaimed balance in rial 54,495 33,918 54,495 33,918

Unclaimed balance in forex 4,037 3,778 4,037 3,778

Interim credit accounts (temporary creditors) in rial 23-1-1 1,150,228 1,356,853 1,121,529 1,352,977

Interim credit accounts (temporary creditors) in forex 23-1-2 1,881,336 3,512,700 1,881,336 3,512,700

Drafts drawn on the bank in rial 0 0 0 0

Drafts drawn on the bank in forex 553,119 63,072 553,119 63,072

Unused managed cash in rial 15,915 26,497 15,915 26,497

Unused managed cash in forex 0 0 0 0

Less: 0 0 0 0

Account for the bank's checks sold (unsettled) (31,297) (31,287) (31,297) (31,287)

12,365,585 14,811,578 12,353,237 14,883,102

23-1-1- The items of interim credit accounts (temporary creditors) in rial of the Parent Company break down as follows:

23-1-2- The items of interim credit accounts (temporary creditors) in foreign currency break down as follows:

Parent company

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

For differences in preferential and official exchange rates 80,111 186,156

Customers' bearer cards' deposits 856,241 961,585

Funds received for social security 35,055 46,882

Account for payment of utilities (telecommunication, gas, electricity,water and telephone bills and municipal dues) 7,909 17,192

Interest on matured coupons of bearer certificates of deposit (CDs) 1,959 2,100

Good performance guarantees by contractors 27,778 73,617

Advances for safe deposit boxes 35,861 13,464

Nousazan Housing Project deposits 11,386 11,386

Other items (23 items) 65,229 40,595

1,121,529 1,352,977

Parent company


Rls (M) Rls (M)

Rial-equivalent amount of foreign currency allocated for drafts and letters ofcredit (LCs) 23-1-2-1 1,326,915 2,594,415

Local creditors - account for other branches in forex 23-1-2-1 545,213 823,747

Amounts received for documents inconsistent with LC terms 2,860 18,586

Temporary creditors - others (one item) 6,348 75,952

1,881,336 3,512,700



March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016


Free-interest deposits in rial 538,628 553,187 539,462 553,314

Free-interest deposits in forex 1,366,892 1,711,091 1,366,892 1,711,091

Savings deposits - overseas branches 0 0 0 0

Free-interest deposits - for young people 0 0 0 0

Personnel savings account 0 0 0 0

Personnel pension fund 0 0 0 0

Savings deposits for housing project 0 0 0 0

Special unused free-interest deposits 2,004 2,004 2,004 2,004

1,907,524 2,266,282 1,908,358 2,266,409

23-1-2-1- The amounts under this item are related to foreign currencies provided by the Central Bank of Iran for customers’ drafts and letters of credit which will remain in this account until when their uses are specified to be paid thereafter.

23-2- Savings deposits and similar deposits – for natural and legal persons

23-3- Other deposits and advances

24-1- A summary turnover of this account in the parent company is follows:




Balance from prior years 196,733 218,139 157,034 185,812

Dividends approved 0 639,755 0 640,000

Dividends paid (137,422) (661,161) (104,552) (668,778)

59,311 196,733 52,482 157,034




Cash deposits for LGs’ in rial 532,678 784,730 536,002 789,730

Cash deposits for LGs’ in forex 5,337 6,432 5,337 6,432

Cash advances received from customers for LCs in rial 177,537 158,224 177,537 158,224

Cash advances received from customers for LCs in forex 2,117,902 3,779,221 2,117,902 3,781,180

2,833,454 4,728,607 2,836,778 4,735,566

Cash dividend per

share

Approved dividend

Balance at March 19, 2016

Dividend paid during 2016

Capital increase from accrued

dividendsBalance at

March 20, 2017


Prior years 0 4,541,640 66,895 (39,295) 0 27,600

Fiscal year ended March 20, 2015 80 640,000 90,139 (65,257) 0 24,882

Fiscal year ended March 19, 2016 0 0 0 0 0 0

157,034 (104,552) 0 52,482

24- Dividends payable

Group

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Advance received 7,847 41,979

7,847 41,979

26-1- Turnover of tax provision account breaks down as follows:

26-2- A summary statement of the Bank’s (parent company) tax position is as follows:

26-2-1- It is further noted that the tax levied and assessed for the year 2016 was amount of Rls. 1,138 billion out of which the amount of Rls. 653 billion was related to the performance tax and the amount of Rls. 485 billion was related to the finalized tax. Upon the objection made by the bank the amount of Rls.547 billion was reduced by the Initial Tax Panel and the matter is still pending at the Tax Revision Board. For the finalized tax amount (real estates transfer), the enforcement writ of expert’s opinion has been issued. Nontheless, the bank has recognized loss in the segment of sharing-profit activities and thus no provision thereupon has been recorded in accounts.




Balance at the beginning of the year 171,440 193,432 0 0

Tax provision for the year 247,397 166,052 0 0

Adjustment of income tax for previous year 0 0 0 0

Tax paid during the year (69,565) (188,044) 0 0

Consolidated adjustments (233,393) 0 0 0

115,879 171,440 0 0

Tax prepayment 0 0 0 0

Balance at the year end 115,879 171,440 0 0

March 20, 2017 March 19, 2016

Tax

Fiscalyear

Profitdeclared

Taxableincome

Tax declared

Taxassesed Finalized Paid Provision

balanceProvision balance

Method of tax assessment


2011 1,514,946 641,210 160,303 691,346 336,621 336,631 0 0 Settled

2012 878,773 149,690 37,423 460,193 386,220 386,220 0 0 Settled

2013 1,448,311 634,968 158,742 472,886 0 158,742 0 0 Settled

2014 2,221,071 712,465 178,116 562,659 474,370 474,370 0 0 Settled

2015 1,011,340 2,279,151 0 606,664 386,377 386,377 0 0 Settled

2016 102,751 0 0 0 0 0 0 0 Protest submitted to the Tax Revision Board.

2017 84,671 0 0 0 0 0 0 0

0 0

25- Advances received

26- Provision for income tax


27-1- The debts for term letters of credit in foreign currency all due by the parent company are as follows:

27-2- The bank’s provisions for expenses and accounts payable break down as follows:




Notes payable 49,469 37,676 0 0

Debts for term letters of credit in rial 11,675 22,679 11,675 22,679

Debts for term letters of credit in forex 27-1 498,225 78,001 498,225 78,001

Ijarah bonds payable 0 0 0 0

Facilities received from National Development Fund 0 0 0 0

Interest and fees payable 0 0 0 0

Insurance payable 0 0 0 0

Allowance for leave entitlement (unused) 0 0 0 0

Membership fee payable to Deposits Guarantee Fund 0 0 0 0

Items in transit 0 0 0 0

Provision for expenses payable 27-2 2,591,288 1,798,926 2,340,392 1,566,383

Withholding taxes payable 22,480 79,253 8,690 4,856

Other debts 27-3 7,908,004 4,593,753 5,954,319 2,596,734

11,081,141 6,610,288 8,813,301 4,268,653

March 20, 2017 March 19, 2016

Currency Type Forex amount Exchange rate Amounts in rials Forex amount Exchange rate Amounts in rial

Rls (M) Rls (M)

Euro 11,692,776 34,851 407,505 1,682,669 33,935 57,102

Chinese Yuan 2,306,342 4,702 10,845 0 0 0

S. Korean Won 2,589,273,835 29 74,313 1,719,950 4,655 8,007

Indian Rupee 11,213,760 496 5,562 500,451,042 26 12,892

498,225 78,001

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Purchase/acquisition of real estates 1,291,255 1,299,055

Rents payable 4,310 12,510

Interest payable on foreign currency deposits of banks 0 36,166

Provision for withholding tax 10,410 10,410

Other 999,718 172,803

Provision for expenses 0 0

Provision for personnel bonus and productivity allowance 5,245 5,245

Accounts payable for administrative expenses 29,454 30,194

2,340,392 1,566,383

27- Provisions and other liabilities 27-3- Other debts related to the parent company break down as follows:

28-1- Since the employees are under the social security coverage, no provisions for their retirement pension benefits have been reflected in accounts.

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Items in transit 4,282,306 829,654

Current deposits by central offices with branches 218,557 277,766

For cash penalties received for non-performance of forex obligations 62,490 233,140

Lawyer's/attorney's fee 259,602 102,186

Inter-branch accounts 241,950 67,826

Contractual deductions for social security insurance 90,359 59,318

Last statement for social security settlement 46,193 28,122

Assets and warehousing 1,677 23,011

Insurance of loan collaterals 9,697 11,215

Cash amounts received (from foreclosed collaterals) 25,873 8,273

Employees' wages and salaries 5,648 4,887

Surplus cash in hand 2,300 1,893

Productivity allowance as decided by the Branch Division Affairs 1,471 1,471

Debt for sale of student forex quota 289 393

Other items (23 items ) 705,907 947,579

5,954,319 2,596,734




Balance at the beginning of year 466,334 326,616 414,634 296,307

Paid during the year (37,674) (22,536) (28,240) (16,168)


Provisions covered for the year 169,230 162,254 150,917 134,495

Balance at the year-end 563,793 466,334 537,311 414,634

28- Provisions for employees’ termination and pension benefits




Term investment deposits Rls (M) Rls (M) Rls (M) Rls (M)

Long-term investment deposits 29-1 96,109,782 85,663,226 96,111,595 85,637,897

Short-term investment deposits 29-1 112,520,618 102,754,826 113,709,513 103,443,356

Special short-term deposits 29-1 1,595,639 332,300 1,595,639 332,300

Investment deposits received from banks andcredit institutions

29-1 1,510,171 2,645,504 1,510,171 2,645,504

211,736,210 191,395,856 212,926,918 192,059,057

Interest payable on term investment deposits

Long-term investment deposits 29-2 1,296,633 1,411,809 1,299,234 1,413,821

Short-term investment deposits 29-2 611,167 696,922 611,167 696,922

Special short-term deposits 29-2 15,730 3,995 15,730 3,995

Investment deposits received from banks andcredit institutions

29-2 0 0 0 0

1,923,530 2,112,726 1,926,131 2,114,738

213,659,740 193,508,582 214,853,049 194,173,795

29-1- The term investment deposits by a breakdown of rial and foreign currency

March 20, 2017 March 19, 2016

Rial Forex Total Rial Forex Total


Ordinary term investment deposits 99,348,791 15,870,895 115,219,686 92,348,534 13,740,327 106,088,861

Special short-term investment deposits

Up to three months 22,845 0 22,845 34,387 0 34,387

More than three to six months 1,399,494 0 1,399,494 88,497 0 88,497

More than six months to one year 173,302 0 173,302 209,418 0 209,418

Long-term investment deposits

General certificates of deposit 0 0 0 0 0 0

Special certificates of deposit 0 0 0 0 0 0

One-year term 79,268,602 0 79,268,602 64,474,444 0 64,474,444

Two-year term 40,331 0 40,331 121,383 0 121,383

Three-year term 56,310 0 56,310 74,030 0 74,030

Four-year term 73,815 0 73,815 76,042 0 76,042

Five-year term 16,672,533 0 16,672,533 20,891,995 0 20,891,995

197,056,023 15,870,895 212,926,918 178,318,730 13,740,327 192,059,057

29-1-1- The growth in the one-year-term deposits is due to the prohibition of more than one-year-term deposits under the directive No. 93/96593 of July 2, 2014. The balance of over one-year-term deposits is related to prior years’ deposits.

29- Investment depositors’ equity 29-1-2- The long-term investment deposits in terms of maturity and interest rate

29-1-3- Turnover of investment deposits in rial

March 20, 2017 March 19, 2016

More than22% 19 to 22% 16 to 19 % 13 to 16% 10 to 13% 10% and less Total Total


Matured 0 7,236 310 796 0 5,786 14,128 9,859

2017 0 1,928 343 224 0 0 2,495 400,100

2018 76,012 5,083,630 7,065,238 64,311,656 0 0 76,536,536 16,359,888

2019 123,132 10,167,365 9,411 7,766,243 0 0 18,066,151 56,226,945

2020 59,244 1,194,826 10,521 13,581 0 0 1,278,172 11,132,750

2021 and onward 10,303 112,855 35,159 55,796 0 0 214,113 1,508,355

268,691 16,567,840 7,120,982 72,148,296 0 5,786 96,111,595 85,637,897

2016 406,937 31,183,750 3,985,464 50,061,364 0 382 85,637,897

Balance atMarch 19, 2016

Deposits takenduring the year

Repayment ofdeposits

Balance at March20, 2017

Long-term investment deposits Rls (M) Rls (M) Rls (M) Rls (M)

General certificates of deposit 0 0 0 0

Special certificates of deposits 0 0 0 0

One-year term 64,474,444 79,268,602 64,474,442 79,268,604

Two-year term 121,385 15,569 96,621 40,333

Three-year term 74,032 18,886 36,607 56,311

Four-year term 76,042 18,600 20,827 73,815

Five-year term 20,891,995 63,110 4,282,572 16,672,533

Ordinary short-term investment deposits 92,347,662 26,227,063 19,272,011 99,302,714

Special short-term investment deposits 332,300 1,494,770 231,431 1,595,639

Investment deposits received from banks and credit institutions 870 45,262 58 46,074

178,318,730 107,151,862 88,414,569 197,056,023


29-1-4- Turnover of investment deposits in forex

29-1-5- The composition of depositors of investment deposits breaks down as follows:

Balance at March19, 2016

Deposits takenduring the year

Repayment ofdeposits



Balance at March 19,

2016

Amount in forex

Amount in forex

Amount inforex

Amount inforex Amount in rial Amount in

rial

Rls (M) Rls (M)

Long-term deposits

US Dollar 0 0 0 0 0 0

Other foreign currencies 0 0 0 0 0 0

Special and ordinaryshort-term deposits

US Dollar 96,323,512 30,776,229 22,686,891 104,412,850 3,385,066 2,912,825

Australian dollar 718 0 0 718 17 16

Canadian dollar 61,993 0 1,720 60,273 1,462 1,431

Euro 208,831,971 191,982,023 94,088,498 306,725,496 10,689,692 7,086,714

UK Pound 16,923,939 1,387,491 2,344,423 15,967,007 140,940 139,351

UAE Dirham 767,764 170,164 122,690 815,238 32,767 33,084

Japanese YEN 2,039,562,587 175,000 2,035,675,815 4,061,772 1,169 549,029

Swiss Franc 1,489 4,482,380 590,768 3,893,101 126,451 46

Turkish Lira 35,370,672 0 32,102,671 3,268,001 29,232 373,195

Chinese Yuan 1,000 0 0 1,000 4 4

Investment deposits received from banks andcredit insurance

US Dollar 1,982,747 0 1,982,747 0 0 59,958

Euro 49,231,869 40,000,000 47,226,733 42,005,136 1,463,920 1,670,683

UAE Dirham 79,709,130 0 79,695,200 13,930 122 656,324

UK Pound 1,326 0 0 1,326 53 57

Korean WON 10,000,000,000 0 10,000,000,000 0 0 257,610

15,870,895 13,740,327

March 20, 2017 March 19, 2016

Number Amount Number Amount

Depositor Rls (M) Depositor Rls (M)

Deposits in rial

Legal persons 373,623 19,047,612 108,100 23,219,603

Natural persons 2,012,103 177,962,338 2,195,919 155,098,256

Investment deposits received from banks and credit institutions 6 46,074 7 872

2,385,732 197,056,024 2,304,026 178,318,731

Deposits in foreign currency

Legal persons 997 8,472,030 938 6,332,341

Natural persons 48,410 5,934,767 46,338 4,763,352

Investment deposits received from banks and credit institutions 5 1,464,097 6 2,644,633

49,412 15,870,894 47,282 13,740,326

2,435,144 212,926,918 2,351,308 192,059,057

29-2-1- Considering the provisional surplus interests paid to depositors in proportion to their shares from the profit-sharing income as described in the statement of investment deposits performance under the circular No. 94/69383 of June 10, 2016, the procedure for calculating the share of each item of various investment deposits from the differential in provisional and final interests for the reporting fiscal year does not apply.

29-2- Interests payable on term investment deposits are as follows:

Group


Provisional interest

during theyear

Difference in provisional

and finalinterest

Interest paid during the

year



Short-term deposits 680,105 13,504,958 0 (13,587,871) 597,192

Special short-term deposits 3,995 130,924 0 (119,189) 15,730

General certificates of deposit 0 1,222 0 (1,222) 0

Special certificates of deposit 0 0 0 0 0

One-year term deposits 1,410,503 13,385,848 0 (13,995,641) 800,710

Two-year term deposits 143 12,403 0 (12,094) 452

Three-year term deposits 118 13,742 0 (11,729) 2,131

Four-year term deposits 17 15,452 0 (13,714) 1,755

Five-year term deposits 1,028 4,341,224 0 (3,850,664) 491,588

Investment deposits received from banks 0 141,045 0 (141,045) 0

Foreign currency deposits 16,817 400,513 0 (403,358) 13,972

2,112,726 31,947,331 0 (32,136,527) 1,923,530

Parent company


Provisional interest

during theyear

Difference in provisional

and finalinterest

Interest paid during the

year



Short-term deposits 680,105 13,504,958 0 (13,587,871) 597,192

Special short-term deposits 3,995 130,924 0 (119,189) 15,730

General certificates of deposit 0 1,222 0 (1,222) 0

Special certificates of deposit 0 0 0 0 0

One-year term deposits 1,410,503 13,385,846 0 (13,995,641) 800,708

Two-year term deposits 143 12,401 0 (12,094) 450

Three-year term deposits 118 13,740 0 (11,729) 2,129

Four-year term deposits 17 15,452 0 (13,714) 1,755

Five-year term deposits 3,040 4,341,813 0 (3,850,664) 494,189

Investment deposits received from banks 0 141,045 0 (141,045) 0

Foreign currency deposits 16,817 400,514 0 (403,358) 13,973

2,114,738 31,947,915 0 (32,136,527) 1,926,126


Date of capital increase capital increase Amount of capital increase (in billions)

New capital (in billion)

Source of capital Increase


August 29, 2002 0 0 200,000 Accrued dividends due and cash contribution

November 27, 2003 10 20,000 220,000 Accrued dividends due and cash contribution

October 15, 2004 36.4 80,000 300,000 Cash contribution

March 7, 2005 100 300,000 600,000 Accrued dividends due and cash contribution

November 16, 2005 25 150,000 750,000 Accrued dividends due and cash contribution

October 8, 2006 20 150,000 900,000 Accrued dividends due and cash contribution

January 13, 2010 100 900,000 1 800000 Accrued dividends due, cash contribution

and waiver of rights issue

March 20, 2011 66.7 1,200,000 3,000,000 Accrued dividends due and cash contribution

March 19, 2012 33.3 1,000,000 4,000,000 Shareholders’ cash contribution

October 21, 2012 64.7 2,588,000 6,588,000 Assets revaluation reserve

March 9, 2016 21 1,412,000 8,000,000 Cash contribution and retained earnings

30-1- List of Saman Bank Shareholders more than 1%:

Shareholders Classification Shares Percentage Nationality

Saman Investment Development Co. Legal Registered Companies 719,999,995 9 Iranian

Fanavar Sarmayeh Notrika Legal Registered Companies 687,716,809 8.6 Iranian

Pension Fund of Protecting Steel Industry Employees Legal Registered Companies 400,088,117 5 Iranian

Mr. Mohammad Zarrabieh Individual Person 305,266,280 3.82 Iranian

Ms. Hava Chaee Deh Khoee Individual Person 214,211,112 2.68 Iranian

Mr. Vali Zarrabieh Individual Person 196,660,057 2.46 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

Mr. Ahmad Reza Zarrabieh Individual Person 123,349,619 1.54 Iranian

Pomp Iran Manufacturing Industries Legal Registered Companies 147,330,232 1.84 Iranian

Mr. Mostafa Tavakkol Harandi Individual Person 98,000,000 1.23 Iranian

Iran & West Co. Legal Registered Companies 88,975,787 1.11 Iranian

Other Legal Persons Less than 1% Legal Registered Companies 1,132,072,431 14.14 Iranian

Other Natural Persons Less than 1% Individual Person 3,538,212,601 44.22 Iranian

8,000,000,000 100

30-1-1- The number of 193,018,363 shares out of those owned by other natural shareholders (equivalent to 2.41 percent of bank shares) belongs to the personnel.

The Bank’s initial capital was the amount of Rls. 200 billion (divided into 200 million shares at nominal value of 1,000 rials each) which was increased in several stages to the amount of Rls. 8,000 billion (divided into 8,000 million shares at nominal value of 1,000 rials each) at the end of fiscal year ended March 19, 2016 as described below:

30- Share Capital

31-1- Subject to the provisions of paragraph A of article 33 of the Monetary and Banking Law and paragraph B of article 58 of the articles of association, the legal reserve in the parent company is 15% and subject to the provisions of articles 140 and 238 of the Commercial Code Amendment ratified on March 15,1969, the legal reserve in the subsidiaries is 5% which will be deducted from relevant distributable profit and then transferred to the legal reserve account. In accordance with the said articles, such transfer to the legal reserve account is mandatory until when the balance of legal reserve in the bank reaches the amount of the bank’s capital and in the subsidiaries reaches 10% of the same company capital and then this process shall remain to be voluntary. The legal reserve will not be transferable to capital account and will not be distributed among the shareholders unless when the company is dissolved. The amounts entered in the balance sheet break down as follows:




Balance at the beginning of the year 1,595,889 1,495,671 1,523,868 1,448,455

Allocated during the year 29,041 100,218 12,700 75,412


Balance at the year end 1,577,976 1,595,889 1,536,568 1,523,868

Group

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Parent campany

Saman Bank 1,536,568 1,523,868

Subsidiary companies

Saman Satellite Communications Co. 6,663 8,346

Saman Kish Electronic Payment Co. 0 43,570

Saman Exchange Co. 25,122 14,075

Saman Brokerage Co. 2,067 1,738

Saman Pardazeshgaran Co. (Processing) 2,725 2,023

Atiyeh Alborz Trade Development Co. 0 0

Iranian Hafez Saman Credit Bureau and Scoring Co. 4,157 1,595

Sepehr Shargh Atiyeh Andishan 482 482

Sepehr Mehr Atiyeh Andishan 1 1

Tondar Nour 191 191

1,577,976 1,595,889

31- Legal reserve

2017 2016

Assets revaluation

amount

Transferred, amortized andretired/Capital increase

Assets revaluationbalance

Assets revaluationbalance


March 19, 2012 2,588,675 2,588,000 675 675

March 20, 2017 1,506,472 0 1,506,472 0

4,095,147 2,588,000 1,507,147 675

32- Assets revaluation reserve


March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Share of capital 129,800 391,404

Share of legal reserve 9,565 29,749

Share of retained earnings 45,597 123,233

184,962 544,386

Group

2017 2016

Note Profit-sharing Non-profitsharing Total Profit-sharing Non-profit

sharing Total


Income earned from loans granted 34-1 21,757,399 613,013 22,370,412 28,032,898 1,177,436 29,210,334

Income earned from deposits inother banks 34-2 1,586,430 266,860 1,853,290 1,524,322 349,451 1,873,773

Total incomes earned from loansgranted and deposits in other banks

23,343,829 879,873 24,223,702 29,557,220 1,526,887 31,084,107

Parent company

2017 2016

Note Profit-sharing Non-profitsharing Total Profit-sharing Non-profit

sharing Total


Income earned from loans granted 34-1 21,806,820 613,013 22,419,833 28,160,995 1,177,436 29,338,431

Income earned from deposits inother banks 34-2 1,586,430 252,633 1,839,063 1,524,322 327,580 1,851,902

Total incomes earned from loansgranted and deposits in other banks

23,393,250 865,646 24,258,896 29,685,317 1,505,016 31,190,333

32-1- Out of Rls. 1,506,473/- million, the amount of Rls. 1,291,809/- million is related to increase in goodwill revaluation and the amount of Rls. 214,664/- million is related to increase in land and buildings revaluation which have been disclosed in detail under notes 20-3 and 21-3.

33- Minority interest

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35-1- Dividends from companies and units of mutual funds in the parent company break down as follows:

2017 2016

Rial (profit-sharing)

forex (non-profit

sharing)Total Rial

(profit-sharing)

forex (non-profit

sharing)Total


Satellite Communication Group 32,694 0 32,694 22,117 0 22,117 Saman Exchange Co. 212,216 0 212,216 120,578 0 120,578

Saman Electronic Payment Co. 481,478 0 481,478 185,933 0 185,933

Saman Insurance 62,348 0 62,348 14,837 0 14,837

Saman Brokerage Co. 4,801 0 4,801 1,537 0 1,537

Central Securities Depository and Settlement Co. 831 0 831 1,914 0 1,914

Iran Khodro Card Services 0 0 0 0 0 0

Iran Investment Co. 0 0 0 15,684 0 15,684

Iran Credit Rating Co. 3,212 0 3,212 5,139 0 5,139

Stock Exchange Co. 141 0 141 0 0 0

Iranian Credit Bureau and Scoring Co. 34,704 0 34,704 19,832 0 19,832

Saman Pardazeshgara Co. (Processing) 1,002 0 1,002 9,000 0 9,000

Sepehr Shargh Atieh Andishan Co. 2,502 0 2,502 0 0 0

Iran Energy Exchange 458 0 458 458 0 458

Aftab Tejarat Saman Co. 752 0 752 1,202 0 1,202

Middle East Bank 8,927 0 8,927 5,714 0 5,714

Shaparak Electronic Payment Co. 0 0 0 11,978 0 11,978

Kardan Investment Bank 427,374 0 427,374 16,566 0 16,566

Iran Fanavar Pars Investment Co. 9,000 0 9,000 2,400 0 2,400

Hamedan Glass Works 0 0 0 12,277 0 12,277

Iran Pump Manufacturing Co. 0 0 0 1,003 0 1,003

Dividends from long-term investments 1,282,440 0 1,282,440 448,169 0 448,169

Absal Co. 0 0 0 5 0 5 Irankhodro 31 0 31 185 0 185

Irka Part Industry 0 0 0 0 0 0

Bank Saderat 0 0 0 423 0 423

Bank Mellat 0 0 0 45 0 45

Bahman Leasing Co. 0 0 0 45 0 45

Shazand Petrochemical Co. 67 0 67 1 0 1

Fanavaran Petrochemical Co. 0 0 0 4 0 4

Maroon Petrochemical Co. 0 0 0 3 0 3

Tractor Manufacturing Co. 802 0 802 1 0 1

Arian Economic Development 0 0 0 317 0 317

Behshahr Industry Development 0 0 0 4,065 0 4,065

Shomal Drilling Co. 3,065 0 3,065 14,214 0 14,214

Tooka Transport Co. 4,613 0 4,613 1,830 0 1,830

Information Services 0 0 0 360 0 360

Exir Pharmaceutical Co. 0 0 0 43 0 43

Rayan Saipa 27 0 27 1,317 0 1,317

Alborz Investment Co. 0 0 0 0 0 0

Iran Khodro Investment Co. 0 0 0 799 0 799

Pars Tousheh Investment 0 0 0 9 0 9

Mines and Metals Development Investment Co. 0 0 0 6,879 0 6,879

Tosee Meli Investment Group Co. 0 0 0 6,520 0 6,520

Sarma Afarin 0 0 0 4 0 4

Barez Industrial Co. 0 0 0 1,066 0 1,066

Isfahan Mubarakeh Steel Co. 4,003 0 4,003 8,920 0 8,920

Khorasan Foulad Co. 0 0 0 220 0 220

Bahman Group 2,365 0 2,365 7,500 0 7,500

Mapna Group 1,844 0 1,844 1,590 0 1,590

2017 2016

Rial (profit-sharing)

forex (non-profit

sharing)Total Rial

(profit-sharing)

forex (non-profit

sharing)Total


Iranian Leasing Co. 5,797 0 5,797 6,152 0 6,152 Ghadir Investment Co. 0 0 0 1,519 0 1,519

Bank Passargad 2,986 0 2,986 4,389 0 4,389

Fars and Khouzestan Cement Co. 0 0 0 340 0 340

Azarab 74 0 74 1 0 1

Piransharh Sugar 0 0 0 191 0 191 I. R. of Iran Shipping Lines 0 0 0 93 0 93 Sepah Investment Co. 0 0 0 11,780 0 11,780 Iran Construction Investment Co. 623 0 623 696 0 696

Tooka Foulad Investment Co. 6,348 0 6,348 2,478 0 2,478

Shahed Investment Co. 0 0 0 528 0 528

Copper 0 0 0 155 0 155

Ta'min Oil and Gas 0 0 0 156 0 156

Tehran Housing Investment Co. 0 0 0 311 0 311

Gharb Cement Co. 2 0 2 0 0 0

Sahand Tire 628 0 628 0 0 0

Iran Khak Chini 7 0 7 0 0 0

Iran Amlah Mining Co. 7 0 7 0 0 0

Khorasan Petrochemical Co. 4 0 4 0 0 0

Takin Co. 31 0 31 0 0 0

Khorasan Pegah 30 0 30 0 0 0Omid Investment Co. 2,172 0 2,172 0 0 0Kharazmi Investment Co. 10,439 0 10,439 0 0 0Iran Telecommunication 922 0 922 0 0 0Hamkaran System 15 0 15 0 0 0Tolid Darou Pharmaceutical Co. 6 0 6 0 0 0Parsian E-Commerce 4 0 4 0 0 0Tooka Rail 5,999 0 5,999 0 0 0Iran Kish Credit Card 17 0 17 0 0 0Mapna Power Generation - Asalouyeh 8 0 8 0 0 0Pakshoo Industrial Group 24 0 24 0 0 0Ghasem Iran 9 0 9 0 0 0Damavand Power Generation 24 0 24 0 0 0Mobin Petrochemical Co. 300 0 300 0 0 0Tooka Refractory Industry 285 0 285 0 0 0Fajr Petrochemical Co. 516 0 516 0 0 0Sobhan Oncology 10 0 10 0 0 0Iran Transfo 37 0 37 0 0 0Karafarin Bank 7 0 7 0 0 0Oil Industrial Development Co. 600 0 600 0 0 0Bank Sina 3,373 0 3,373 0 0 0 Mellat Insurance 874 0 874 0 0 0Piazar Agro-Industry Co. 76 0 76 0 0 0Alhavi Pharmaceutical Co. 26 0 26 0 0 0Parsian Bank 2 0 2 0 0 0Middle East Tide Water 15 0 15 0 0 0A.S.P. 18 0 18 0 0 0 Sina Port and Marine Industry Development Co. 15 0 15 0 0 0

Ansar Bank 5 0 5 0 0 0Shahed Civil and Development Co. 11 0 11 0 0 0Hekmat Bank 2 0 2 0 0 0Other 0 0 0 0 0 0

Dividend from short-term investments 59,165 0 59,165 85,154 0 85,154 Profit from units of mutual funds 0 0 0 0 0 0

Dividends from companies' shares andunits of mutual funds 1,341,605 0 1,341,605 533,323 0 533,323


35-2- Profit (loss) from sales of companies’ shares and units of mutual funds in the parent company:

Saman Electronic Payment Co. 633,704,954 4,537,327 742,673 3,794,654 0Behshahr Industry Development Co. 0 0 0 0 (4,736)

Iranian National Copper Industries 0 0 0 0 (24,219)

Mines and Metals 4,111,879 5,640 10,851 (5,211) (26,586)

Isfahan Mubarakeh Steel Co. 68,369,127 90,256 84,798 5,458 (59,284)

Khorasan Steel Co. 0 0 0 0 (4,649)

Iran Construction Investment Co. 2,880,522 9,674 10,744 (1,070) (7,399)

Iran Telecommunication Co. 2,050,000 4,426 5,151 (725) (2,725)

Rena Investment Co. 0 0 0 0 12,524

Bank Tejarat 3,000,000 2,123 3,309 (1,186) 2,100

Shomal Drilling Co. 11,348,678 44,642 60,045 (15,403) (30,698)

Rayan Saipa Leasing Co. 2,481,522 8,136 7,656 480 10,025

Mapna Group 0 0 0 0 3,362

Ghadir Investment Co. 0 0 0 0 (2,495)

Azarab 3,000,000 13,570 17,067 (3,497) 438

Iran Khodro 10,350,000 37,663 35,408 2,255 7,104

Saipa 2,000,000 2,521 2,988 (467) (2,497)

Bank Mellat 5,000,000 5,840 9,812 (3,972) 2,212

Tosee Meli Investment Group Co. 0 0 0 0 (5,026)

Iranian Leasing Co. 2,199,048 3,207 4,235 (1,028) (2,084)

Sepah Investment Co. 24,129,271 33,706 52,753 (19,047) (34,892)

Post Bank 0 0 0 0 (6,272)

Passargad Bank 26,336,559 27,609 56,603 (28,994) (5,675)

Piranshahr Sugar Co. 0 0 0 0 (3,598)

Isfahan Steel Mill 150,000 379 374 5 (19,584)

Omid Investment Co. 4,000,000 5,805 8,183 (2,378) 0

Tehran Oil Refinary 0 0 0 0 (2,856)

Bahman Group 5,425,000 15,707 12,605 3,102 3,246

Kharazmi Investment Co. 12,929,305 12,369 18,169 (5,800) 374

Ta'min Oil, Gas & Petrochemical Co. 0 0 0 0 (3,673)

Fars - Khouzestan Cement 0 0 0 0 (1,782)

Hamedan Glass Works 0 0 0 0 3,446

Barez Industrial Co. 0 0 0 0 (1,206)

Iran Khodro Investment Development Co. 2,000,000 11,284 9,533 1,751 (7,632)

Plasco Kar 0 0 0 0 (1,329)

Khodro Diesel Co. 0 0 0 0 1,624

Piazar Agro-Industry 7,674,752 26,073 20,313 5,760 0

Mellat Insurance Co. 7,456,678 12,223 10,313 1,910 0

Oil Industry Investment 3,500,000 7,298 8,766 (1,468) 0

Data Processing Co. 2,333,973 8,621 6,385 2,236 0

Iran Khodro Card 0 0 0 0 1,304

Others 53,843,293 123,964 119,760 4,204 781

900,274,561 5,050,063 1,318,494 3,731,569 (212,357)

Profit (loss) from sales of mutual funds - rial (profit-sharing) 0 0 0 0 0

Profit (loss) from sales of companies' share - forex (non-profit sharing) 0 0 0 0 0

Profit (loss) from sales of mutual funds - forex (profit-sharing) 0 0 0 0 0

900,274,561 5,050,063 1,318,494 3,731,569 (212,357)

2017 2016

Number ofshares Net sale value Book value Profit (loss) Profit (loss)

Profit (loss) from sales of companies' shares - rial (profit-sharing) Share Rls (M) Rls (M) Rls (M) Rls (M)

35-2-1- In the early months of the year 2016 (about March), the bank owned 63% of shares in Saman Electronic Payment Co., out of which 15% was transferred to Saman Insurance Co., 5% to Sarmad Andoukhtehsazan Farda Co. and 15% to Atieh Andishan Sepehr Shargh Co. for the amount of Rls. 4, 563/- billion in total. Of this total figure, the amount of Rls. 200/-billion was paid in cash, the amount of Rls. 435/- billion was offset in exchange for real estate and residual balance would be received in instalments by the end of the year 1397 (March 20, 2019).

35-3- Profit (loss) from increase (decrease) in investments value

Mines and Metals Development Investment Co. 0 0 0 0 (5,063)Isfahan Mubarakeh Steel Mill 16,456,434 20,069 22,948 2,879 (810)

Iran Construction Investment Co. 8,911,790 33,256 21,318 (11,938) 2,656

Iran Telecommunication Co. 4,899 12 11 (1) 3

Bank Sina 19,277,199 33,303 19,422 (13,881) (1,361)

Shomal Drilling Co. 2,171,445 11,489 7,227 (4,262) (16,925)

Mapna Group 7,377,750 59,265 55,508 (3,757) 10,407

Azarab 0 0 0 0 246

Alborz Insurance 0 0 0 0 (164)

Iran Khodro 3,154,455 10,291 8,135 (2,156) 10,957

Bank Mellat 6,852,952 13,448 7,494 (5,954) (621)Shahed Investment Co. 0 0 0 0 112

Iranian Leasing Co. 29,493,077 56,198 45,214 (10,984) (14,436)

Sepah Investment Co. 0 0 0 0 (21,661)

Bank Saderat 11,600,000 12,884 10,389 (2,495) (693)

Passargad Bank 0 0 0 0 (22,927)

Tooka Rail 19,186,128 50,318 40,161 (10,157) (861)

Tooka Foulad Investment Co. 43,522,499 58,654 52,206 (6,448) 17

Tooka Foulad Investment Co. - Rights issue 6,750,000 2,346 1,235 (1,111) 0

Bahman Group 14,920,000 35,268 26,254 (9,014) 14,251

Sahand Tire Manufacturing Co. 0 0 0 0 (811)

Kharazmi Investment Co. 30,000,000 42,158 23,871 (18,287) (4,457)

Tooka Transport Co. 8,998,711 19,935 25,498 5,563 3,295

Iran Khodro Investment Development 500,000 2,388 1,745 (643) 1,125

Mobin Petrochemical Co. 0 0 0 0 (85)

Tractor Manufacturing Co. 0 0 0 0 (268)

Fajr Petrochemical Co. 0 0 0 0 (334)

Tooka Refractory Industries 0 0 0 0 (92)

Piazar Agro-Industry Co. 0 0 0 0 (258)

Shahed Civil and Development Co 0 0 0 0 4

Damavand Power Generation Co. 0 0 0 0 18

Middle East Life Insurance 200,000 100 98 (2) 97

Bahman Investment Co. 0 0 0 0 51

Oil Industry 1,000,000 2,504 1,783 (721) 0

Shiraz 1 Petrochemical Urine 2,000 14,037 16,159 2,122 0

Ansar - Rights Issue 6,481 7 4 (3) 0

Alhavi Pharmaceutical Co. 1,277,010 6,204 5,366 (838) 0

Talise Livestock Breeding 189,860 1,628 1,674 46 0

Informatic Services Co. 144,757 2,702 2,723 21 0

A.S.P. 932,047 1,120 926 (194) 0

Plastiran 309,535 575 260 (315) 0

Adjustment of impairment loss reserves from previous year 0 0 0 48,915 326,415

490,159 397,629 (43,615) 277,827 Profit (loss) from increase (decrease) in investments value - forex (non-profit sharing)

0 0 0 0 0

490,159 397,629 (43,615) 277,827

2017 2016

Number ofshares Cost price Market value Profit (loss) Profit (loss)

Net profit (loss) from increase (decrease) in investments value - rial (profit-sharing) Share Rls (M) Rls (M) Rls (M) Rls (M)


Bank’s share of sources from profit-sharing incomes is calculated as follows:

• Should the shared uses be less than the total free resources of investment deposits, the bank’s resources and accordingly its share from the profit-sharing incomes will drop to nil (zero-sum).

• The bank share of resources out of the shared uses means the shared uses deducted from the free resources of investment deposits. Should the total free resources of investment deposits exceed the shared uses, the surplus thereof will be named the surplus free resources of investment deposits.

36-1- Bank’s share from profit-sharing incomes

36-2- Distribution of shared resources and uses between the depositors and the bank

Financial year Bank's share of sources to total uses ratio (38-2)

Profit-sharing incomes

Bank’s share ofsources from

profit-sharing incomes


2016 0 30,284,106 0

2017 0 28,422,807 0

2017 2016 Average

Rls (M) Rls (M)

Average shared uses (36-2-1) 130,350,703 126,086,695 53-week average

Average balance of investment deposits (36-2-2) 182,978,252 161,262,915 53-week average

Less: Statutory deposit from investment deposits (21,432,804) (19,364,895) 53-week average

Free resources of investment deposits 161,545,448 141,898,020

Bank’s share of sources out of shared uses (Surplus free resources of investment deposits)

31,194,745 (15,811,325)

36-2-1- Average shared uses

2017 2016

Items of shared uses Amount (average) Amount (average)

Rls (M) Rls (M)

Net uses related to loans 119,870,957 117,151,335

Net uses related to investment deposits with other banks 6,658,342 6,511,657

Net uses related to investment in shares and other securities 3,821,403 2,423,702

Total uses related to shared operations 130,350,702 126,086,694

36- Bank’s share from profit-sharing incomes

36-3- The interest on statutory deposit from investment deposits is as follows:

37-1- Stated management fee (MF)

36-2-2- Average investment deposits

2017 2016

Investment deposits Amount (average) Amount (average)

Rls (M) Rls (M)

One-year term 68,536,213 54,701,759

Two-year term 73,495 3,080,983

Three-year term 66,513 81,554

Four-year term 77,185 73,953

Five-year term 16,287,017 21,838,126

General certificates of deposit 0 0

Ordinary short-term deposits 96,139,447 80,930,664

Investment deposits received from banks and credit institutions 1,040,221 171,329

Special short-term deposits 758,157 384,544

Average investment deposits 182,978,248 161,262,912

2017 2016

Rls (M) Rls (M)

Average statutory deposit of investment deposits 21,432,804 19,364,895

Interest on statutory deposit (at one percent rate of average resources) 215,922 196,005

The bank’s management fee for the fiscal year 2016-2017 was calculated at the rate of 3% on the basis of the minutes dated September 25, 2016.

Management fee = Fee rate x Average shared uses3,910,522 = %3 x 130,350,703

Stated MF Calculated MF

Rate (Percentage) Amounts in Rls (M) Rate (Percentage) Amounts in Rls (M)

Ordinary short-term deposits 3 2,549,499 2.14 2,054,645

Special short-term deposits 3 20,042 2.14 16,203

General certificates of deposit 3 0 2.14 0

One-year term 3 1,817,043 2.14 1,464,723

Two-year term 3 1,950 2.14 1,571

Three-year term 3 1,764 2.14 1,422

Four-year term 3 2,047 2.14 1,649

Five-year term 3 422,809 2.14 348,078

Investment deposits received from banks and creditinstitutions 3 31,206 2.14 22,231

4,846,360 3,910,522

37- Deposits management fee


Pursuant to the directive No. 94/69383 of June 10, 2015 the expenses for depositors’ surplus resources are calculated as follows:


2017 2016 2017 2016


Interest on short-term deposits 13,443,317 13,053,603 13,504,958 13,108,509

Interest on special short-term deposits 130,924 85,882 130,924 85,882

Long-term deposits

One-year term 13,385,846 12,031,615 13,385,846 12,031,615

Two-year term 12,401 676,650 12,401 676,650

Three-year term 13,740 19,244 13,740 19,244

Four-year term 15,452 15,446 15,452 15,446

Five-year term 4,341,813 5,203,195 4,341,813 5,203,850

General certificates of deposit 1,222 129,197 1,222 129,197

Investment deposits received from banks and credit institutions 141,045 40,212 141,045 40,212

31,485,760 31,255,044 31,547,401 31,310,605


Note 2017 2016 2017 2016


Interest on investment deposits in rial 40-1 31,485,760 31,255,044 31,547,401 31,310,605

Interest on special certificates of deposit 0 0 0 0

Interest on foreign currency deposits 400,514 490,906 400,514 490,906

31,886,274 31,745,950 31,947,915 31,801,511

40-1- Reconciliation statement of provisional interests paid on investment deposits in Rial along with interest expenses incurred on investment deposits.

2017 2016

Rls (M) Rls (M)

Provisional interest paid on investment deposits (Note 39) 31,547,401 31,310,605

Plus (less): Differential in interest payable to depositors (surplus of interest paid todepositors - brought from the statement of investment deposits performance)

(17,218) (815,452)

Final interest accrued to investment deposits 31,530,183 30,495,153

Plus: Final interest paid to depositors (equivalent to surplus interest paid to depositors) 17,218 815,452

Interest on investment deposits in rial 31,547,401 31,310,605

38- Compensation of expenses related to depositors' free resource surplus to profit-sharing uses

39- Provisional interests paid on investment deposits

40- Interest expenses on deposits

41-1- Net fees for free-interest transactions are as follows:

2017 2016

Rls (M) Rls (M)

Fees received for interest-free loans 23,945 5,685

Fees for prizes on interest-free deposits (816) (816)

Net fees for interest-free loans 23,129 4,869


Note 2017 2016 2017 2016


Net fees for interest-free (Gharzolhasaneh) transactions 41-1 23,129 4,869 23,129 4,869

Fees for LCs opened 47,214 37,175 47,214 37,443

Fees for LCs issued 73,722 60,271 78,358 60,869

Forex transactions 58,801 52,161 58,801 52,161

Fees for managed funds 0 21 0 21

Banking drafts 144,945 122,075 126,125 122,075

Collaterals valuation 0 0 0 0

Processing customer's files 0 0 0 0

Credit cards subscription 17,673 51,742 17,673 51,742

Fees for Shetab Payment System 747,377 615,176 747,377 615,176

Fees received from holders of special certificates of deposits 0 0 0 0

Fees from SMS (short banking messages) 67,706 61,856 67,706 61,856

Sale of insurance services 60,868 52,561 60,868 52,561

Other 101,932 57,249 101,932 57,249

1,343,367 1,115,156 1,329,183 1,116,022


2017 2016 2017 2016


Fees paid to Shetab Payment System 420,771 460,459 420,771 460,459

Fees paid to other banks 1,063,987 1,242 1,063,987 1,242

Clearing house fees 0 0 0 0

Membership fees for deposits guarantee 0 208,192 0 208,192

Fees paid to brokers 121,569 3,466 121,569 3,466

Fees paid to persons/entities 53,267 428,366 235,284 469,900

Other 1,520 811 1,520 811

1,661,114 1,102,536 1,843,131 1,144,070

42- Fee and commission expenses

41- Fee and commission incomes

31,194,744 x (28,422,807/130,350,703) = 6,801,974

Profit-sharing incomes

Average shared usesSurplus free resources of investment deposits to shared uses x


Group

2017 2016

Rls (M) Rls (M)

Sales and services rendered 57,931,529 41,119,595

Return from sales and reductions (in subsidiaries) (113) 0

57,931,416 41,119,595

Group

2017 2016

Rls (M) Rls (M)

Cost price of goods and services rendered 56,688,318 39,901,118

56,688,318 39,901,118

43-1- The income earned from sales and services rendered is mainly related to the foreign currency trading (sales) by the Saman Foreign Exchange Company.


2017 2016 2017 2016


Profit from forex trading (buying & selling) 1,297,131 168,217 1,288,353 168,217

Profit (Loss) from foreign exchange translation 77,864 1,129,154 96,212 1,127,653

1,374,995 1,297,371 1,384,565 1,295,870


Note 2017 2016 2017 2016


Profit (loss) from sale of tangible fixed and intangible assets 46-1 2,244,000 0 2,244,000 0

Profit (loss) from sale of foreclosed collaterals 3,283,866 2,880,251 3,283,508 2,866,384

Professional (loan processing) fees 46-2 181,129 319,636 181,129 320,220

Others 439,171 223,025 497,920 193,197

6,148,166 3,422,912 6,206,557 3,379,801

43- Income from sales and services rendered

44- Cost price of sales and services rendered

45- Profit (loss) from foreign currency exchanges and transactions

46- Net other incomes and expenses

46-1- Profit (loss) from sale of fixed assets breaks down as follows:

46-2- The income from professional (loan processing) fees is related to the fees received from customers for due diligence and processing of their loans applications.

47-1- The personnel expenses break down as follows:


Note 2017 2016 2017 2016


Personnel expenses 47-1 2,374,663 2,089,693 2,187,644 1,911,860

Other administrative expenses 47-2 1,519,567 1,472,528 1,398,407 1,372,814

3,894,230 3,562,222 3,586,051 3,284,674

2017 2016

Cost Book value Amount sold Profit (loss) Profit (loss)


Land 302,253 302,253 691,742 389,489 0

Buildings 281,777 212,922 644,881 431,960 0

Goodwill for place of business 1,103,935 1,103,934 2,526,486 1,422,551 0

Furniture and fixtures 0 0 0 0 0

Motor vehicles 0 0 0 0 0

Royalties 0 0 0 0 0

Installations 0 0 0 0 0

Assets in process of completion 0 0 0 0 0

Orders and capital prepayments 0 0 0 0 0

Capital items in stock 0 0 0 0 0

1,687,965 1,619,109 3,863,109 2,244,000 0


2017 2016 2017 2016


Salaries, wages and benefits 1,667,856 1,432,551 1,515,337 1,288,509

Social security insurance - employer's contribution 292,318 249,428 277,599 236,398

Employees' termination and pension benefits 160,284 142,474 150,919 134,498

Business travels and allowances 37,252 21,974 35,831 20,017

Other 216,953 243,266 207,958 232,438

2,374,663 2,089,693 2,187,644 1,911,860

47- Administrative and general expenses


47-2- The administrative expenses break down as follows:


2017 2016 2017 2016


Office rents 299,112 290,966 294,827 285,883

Expenses for advertisement and marketing 189,547 382,296 182,731 375,196

Purchase of contractual services 187,284 61,101 179,897 53,691

Utilities: water and electricity 96,866 96,538 95,354 94,928

Personnel transportation cost 14,670 12,057 13,195 10,836

Office supplies and consummables 58,471 58,635 54,355 53,449

Automation expenses 49,539 50,843 49,834 51,674

Insurance espenses 86,651 116,129 64,301 95,125

Auditing ans consulting fees 68,331 53,776 53,645 39,984

Gifts, presents and prizes 2,490 4,294 2,032 4,000

Repairs and maintenance of tangible fixed-assets 45,784 22,868 44,383 21,132

Protocol and refreshment expenses 129,403 115,441 126,779 112,849

Training and research 4,316 5,056 3,326 4,183

Transportation charges 6,266 2,947 3,208 2,947

Satellite communication expenses 12,114 26,536 12,114 26,536

Bonuses and remuneration for board members 0 19,200 0 19,200

Attendance bonus for non-executive board members 0 0 0 0

Other expenses 268,723 153,845 218,426 121,202

1,519,567 1,472,528 1,398,407 1,372,814


2017 2016 2017 2016


Specific expenses for doubtful debts, loans and claims 304,240 715,293 300,000 674,686

General expenses for loans and claims 0 92,376 0 91,274

304,240 807,669 300,000 765,960

48- Expenses for doubtful debts

48-1- The specific expenses for doubtful debts incurred for the loans granted and the amounts due are calculated as follows:

48-2- General expenses for the loans granted and amounts due are as follows:

2017 2016

Overdue Outstanding Doubtful

debts up to 5 years

Doubtful debts more than 5

yearsTotal Total


Balance of loans granted and non-current loans atyear-end

Governmental entities 0 0 0 0 0 0

Non-governmental entities/persons 2,217,780 4,477,815 44,294,460 0 50,990,055 43,497,539

Balance of other accounts receivable at year-end 0 0 0 0 0 0

Amounts due from subsidiary and affiliated companies 0 0 0 0 0 0

Other accounts receivable 0 0 0 0 0 0

2,217,780 4,477,815 44,294,460 0 50,990,055 43,497,539

Less: collaterals value by calculating risk factors

Savings and investment deposits (56,936) (10,488) (9,651) 0 (77,075) (80,780)

Participation bonds and other debt securities guaranteed by the government and CBI 0 0 0 0 0 (4,456)

Participation bonds and other debt securities guaranteed by other banks 0 (800) (800) 0 (1,600) 0

Banking LGs 0 0 0 0 0 0

LCs transacted 0 0 0 0 0 0

Shares listed on the stock exchange (1,031,477) 0 (43,337) 0 (1,074,814) (936,624)

Real estates (5,894,749) (2,179,662) (28,290,366) 0 (36,364,777) (25,019,346)

Machinary (17,548) (44,818) (74,574) 0 (136,940) (196)

(7,000,710) (2,235,768) (28,418,728) 0 (37,655,206) (26,041,402)

Base balance for calculating specific provision 793,095 2,242,045 8,118,172 0

Base factor for calculating specific provision - percentage 10 20 50 100-50

Specific provision for doubtful debts 79,309 448,409 4,059,086 0 4,586,804 4,286,804

Plus: specific provision for renewed and restructuredloans 0 0 0 0 0 0

Less: Balance of provision for doubtful debts duringthe year (108,620) (203,253) (3,974,932) 0 (4,286,804) (3,520,844)

Plus: written-off loans during the year 0 0 0 0 0 0

Specific provision for doubtful debts, loansgrantedcand amounts due (29,311) 245,156 84,154 0 300,000 765,960

2017 2016

Rls (M) Rls (M)

Balance of amounts due from the government 0 0

Balance of loans granted to governmental entities 0 0

Balance of loans granted to non-governmental entities/persons 133,962,716 132,900,503

Balance of interim accounts (temporary debtors) related to loans 2,239,022 1,189,344

Balance of debts for term LCs 473,190 63,059

Amounts due from subsidiary and affiliated companies 3,578,946 1,030,522

Other accounts receivable 4,284,044 5,027,631

Less:

Balance of loans granted and the amounts for which specific provision has been calculated (24,905,959) (20,579,100)

Base balance for calculating general provision 119,631,959 119,631,959 Base factors for calculating general provision - (percentage) 1.5 1.5

General provision for loans granted and amounts due 1,794,479 1,794,479

Less: balance of general provision for loans granted and amounts due at year-end (1,794,479) (1,703,205)Plus: written loans during the year 0 0

General provision for loans granted and amounts due 0 91,274



2017 2016 2017 2016


Financial expenses of debt securities 0 49,863 0 49,863

Interest and late payment penalties on facilities received from Central Bank 1,788 9,329 1,788 9,329

Interest on facilities received from other bank and credit institutions 0 0 0 0

Late payment penalty paid 0 0 0 0

Late payment penalty for overdraft from current account with CBI 0 0 0 0

Consolidated financial expenses 109,528 198,391 0 0

111,316 257,583 1,788 59,192


2017 2016 2017 2016


Prior years' adjusted income tax (177) (766,544) 0 (712,736)

Adjusted value added tax (VAT) 0 (4,543) 0 0

Adjusted withholding tax and prior years' interests 0 (988) 0 0

Adjusted insurance premiums 162 (49,218) 0 (32,258)

Adjusted income 0 (1,108) 0 0

Other expenses 49 (27,455) 0 0

34 (849,856) 0 (744,994)


2017 2016 2017 2016


Tangible fixed assets depreciation 405,227 386,572 391,808 359,079

Intangible assets depreciation 68,598 64,746 53,401 63,588

473,825 451,318 445,209 422,667

49-1- The expenses paid for Sukuk bonds were related to prior years’ bonds which were settled in the beginning of 2015.


Note 2017 2016 2017 2016


Accumulated effects of changes in accounting standards 51-1 0 0 0 0

Adjustment of errors 51-2 34 (849,856) 0 (744,994)

34 (849,856) 0 (744,994)

51-1- In 2016-2017 no changes have been made in accounting standards compared to 2015-16.

51-2- The adjustment of errors includes the following items:

49- Financial expenses

50- Depreciation/amortization expenses

51- Prior years’ adjustments

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The reconciliation statement of net profit along with the net cash inflow from operating activities breaks down as follows:

The major non-cash transactions during the year break down as follows:


2017 2016 2017 2016


Net profit (loss) (1,634,725) 482,504 84,666 102,745

Depreciation/amortization expense 509,243 955,483 445,209 422,667

Net increase (decrease) in provision for employees' termination andpension benefits 97,458 139,719 122,677 118,327

Net increase (decrease) in income tax payable (302,958) (187,868) 0 0

Profit (loss) from sale of non-operating real estates (2,244,001) 0 (2,244,001) 0

Profit (loss) from sale of tangible fixed and intangible assets (3,283,866) (2,880,252) (3,283,508) (2,866,385)

Net increase (decrease) in financial expenses payable 0 0 0 0

Net profit (loss) from cash foreign currency translation (77,865) (1,129,155) (96,213) (1,127,654)

(6,936,714) (2,619,569) (4,971,170) (3,350,300)

Net increase (decrease) in operating liabilities

Due to banks and other credit institutions (21,921,716) 297,329 (21,566,922) 36,951

Customers' deposits (4,699,905) 154,730 (4,786,705) 190,145

Debt securities 0 (1,000,000) 0 (1,000,000)

Operating portion of provisions and other debts 4,183,035 (1,487,199) 4,544,647 (1,433,353)

Investment depositors' equity 20,151,158 34,596,373 20,679,253 34,494,860

(2,287,428) 32,561,233 (1,129,727) 32,288,603

Net (increase) decrease in operating assets

Due from banks and other credit institutions 3,157,621 (883,585) 3,024,216 (750,181)

Amounts due from the government 0 0 0 0

Loans granted to and amounts due from governmental entities 0 0 0 0

Loans granted to and amounts due from non-governmental entities/persons (840,420) (8,948,692) (762,214) (8,876,306)

Investment in shares and other securities (688,340) (579,591) 460,774 (793,449)

Due from subsidiaries and affiliates (505,135) 56,778 (2,548,425) 155,697

Other accounts receivable (636,431) (3,840,897) 307,274 (5,148,937)

Statutory deposit (1,904,359) (1,619,060) (1,904,359) (1,619,060)

Operating portion of other assets (10,804,309) (4,078,881) (11,195,952) (3,806,983)

(12,221,373) (19,893,928) (12,618,686) (20,839,219)

Net cash inflow (outflow) from operating activities (21,445,515) 10,047,736 (18,719,583) 8,099,084


Rls (M) Rls (M)

Assets acquisition in exchange for loans granted 53-1 3,540,105 11,214,008

Assets offset for loans granted 53-2 0 0

Restructured loans (to renew previous loans) 5,174,295 4,040,629

Exchange of assets 53-3 316,427 684,677

Capital increase from dividends accrued to shareholders 0 0

Capital increase from assets revaluation reserve 0 0

9,030,827 15,939,314

52- Reconciliation statement of net profit

53- Non-cash transactions


53-1- During the reporting year, the following assets have been foreclosed/acquired:

53-2- During the fiscal year ended March 20, 2017, this bank did not offset any asset with the loans granted.

53-3- During the reporting year, the following assets were exchanged:

March 20, 2017

Type of asset foreclosed Type of customerrelationship

Debt amount at theforclosure date

Value of forclosed assetappraised by expert

Amount paid/debt remission

Debt balance afterforeclosure


Residential properties Unrelated customer 3,297,991 2,034,759 0 2,494,413

Business/office properties Unrelated customer 73,944 642,504 0 7,144

Shares Unrelated customer 0 0 0 0

Participation bonds Unrelated customer 0 0 0 0

Factory and equipment Unrelated customer 588 492,000 0 96,468

Land Unrelated customer 645,369 370,842 0 478,846

4,017,892 3,540,105 0 3,076,871

March 19, 2016

Type of asset foreclosed Type of customerrelationship

Debt amount at theforclosure date

Value of forclosed assetappraised by expert

Amount paid/debt remission

Debt balance afterforeclosure


Residential properties Unrelated customer 7,665,988 4,488,737 0 3,576,806

Business/office properties Unrelated customer 1,563,123 2,844,127 44,953 51,049

Shares Unrelated customer 0 0 0 0

Participation bonds Unrelated customer 0 0 0 0

Factory and equipment Unrelated customer 7,986,328 3,716,362 0 4,271,131

Land Unrelated customer 19,111 164,782 0 556

17,234,550 11,214,008 44,953 7,899,542

March 20, 2017

Type of asset transferred Type of partyrelationship

Type of assetacquired

Book value of asset transferred

Value of asset appraised by expert

Difference in amountreceived/paid


Residential properties - - 0 0 0

Business/office properties - - 0 0 0

Shares Shareholder Residential properties 316,427 435,000 140,000

Participation bonds - - 0 0 0

Factory and equipment - - 0 0 0

Land - - 0 0 0

316,427 435,000 140,000

March 19, 2016

Type of asset transferred Type of partyrelationship

Type of assetacquired

Book value of asset transferred

Value of asset appraised by expert

Difference in amountreceived/paid


Residential properties Unrelated customer Residential properties 80,000 40,000 40,000

Business/office properties Unrelated customer Business/officeproperties 367,177 234,959 132,217

Shares Unrelated customer Shares 0 0 0

Participation bonds Unrelated customer Participation bonds 0 0 0

Factory and equipment Unrelated customer Factory and equip-ment 0 0 0

Land Unrelated customer Land 237,500 188,250 49,250

684,677 463,209 221,467

54-

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Balance at the beginning of the year Opened during the year Credited (cancelled)

during the year Balance at the year end

Number Rls (M) Number Rls (M) Number Rls (M) Number Rls (M)

Demand/call 3 7,157 0 0 2 4,987 1 2,170

Term 3 14,556 7 58,326 3 55,083 7 17,799

21,713 58,326 60,070 19,969

54-1-2- The obligations pledged by the parent company under Rial-denominated letters of credit are as follows:

54-2-1- The statement of obligations pledged by the parent company under the letters of guarantee in foreign currency breaks down as follows:

54-2-2- The obligations pledged by the bank under rial-denominated letters of guarantee are as follows:

54-2- The obligations under letters of guarantee issued in rial and foreign currency


Note 2017 2016 2017 2016


Issued LGs - in Forex 54-2-1 690,708 369,760 690,708 369,760

Issued LGs - in Rial 54-2-2 4,366,151 6,568,558 4,439,236 6,709,528

5,056,859 6,938,318 5,129,944 7,079,288

March 20, 2017 March 19, 2016

Amount in forex Amount in rial Amount in forex Amount in rial

Rls (M) Rls (M)

US Dollar 0 0 408,476 12,353

UK Pound 138,334 5,560 138,334 5,961

Canadian Dollar 2,370,000 57,504 2,370,000 54,712

Chinese Yuan 15,642,623 73,551 15,642,623 72,816

Euro 15,898,917 554,093 5,052,303 171,449

Indian Rupee 0 0 115,827,360 52,469

UAE Dirham 0 0 0 0

Canadian Dollar 0 0 0 0

Turkish Lira 0 0 0 0

Japanese YEN 0 0 0 0

S. Korean Won 0 0 0 0

690,708 369,760

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Obligations for LGs and acceptances issued 4,439,236 6,709,528

4,439,236 6,709,528

54-3- Other obligations pledged by the parent company break down as follows:

54-4- The managed funds and similar funds consist of the following:

54-5- The obligations created under letters of credit and letters of guarantee by a

breakdown of collateral type

Parent company

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Obligations for participation bonds and other securities guaranteed 0 0

Obligations for credit cards 1,604,420 1,527,280

Obligations for contracts in forex - foreign exchange reserve account 0 0

Obligations for syndicated contracts 0 0

Obligations for commodity loans guaranteed 0 0

Obligations for contracts in rial 13,158,985 2,454,071

Obligations for contracts with the Management and Planning Organization 0 0

Obligations for amounts received from National Development Fund in rial 0 0

Obligations for amounts received from National Development Fund in forex 0 0

Obligations for transactions in non-governmental sector 2,575,191 3,010,752

Obligations by borrowers/users for credit services 4,974 5,004

Obligations for drafts 2,958,258 166,388

20,301,828 7,163,495

Parent company

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Deposits 2,009,070 2,044,558

Participation bonds and other debt securities guaranteed by government and CBI 4,443 2,222

Participation bonds and other debt securities guaranteed by other banks 0 0

Banking LGs 646,555 248,821

Letters of credit transacted 0 0

Shares listed on the stock exchange 84,264 114,300

Land and buildings 859,537 990,497

Machinery 1,249 0

Checks and promissary notes 5,713,694 8,822,377

Other 80,036 77,123

9,398,848 12,299,898

Unpledged obligations 52,115 0

9,450,963 12,299,898

Parent company

March 20, 2017 March 19, 2016

Rls (M) Rls (M)

Loans granted out of managed funds 1,100,631 1,087,018

Unused managed funds 65,230 76,640

Loans granted out of special interest-free deposits 179 179

Unused special interest-free deposits 2,037 2,037

1,168,077 1,165,874


55-1- There were no material capital obligations as at the balance sheet date.

55-2- There were no material contingent liabilities as at the balance sheet date.

From the balance sheet date until the approval date of financial statement, there has been no material event which might have affected financial statements and required disclosures.

Saman Bank has no record of bad/written-off debts as at March 2017 ,20.

Saman Bank has devised and established a specialized and appropriate structure which is consistent with the accepted framework of risk management risk. This structure will enable the bank to manage the significant risks in banking industry within the context of a business model devised for banking activities and operations. The information provided in this section is rooted in the bank’s operations and reflects the effect of risks on the balance sheet and the statement of the profit and loss. The key risks which are chiefly addressed by the Saman Bank management in compliance with the risk management guidelines recommended by the Basel Committee (Basel II) are listed below:

• Credit risk

• Liquidity risk

• Market risk

• Operational risk

The foregoing risks emerge from the bank’s business model and the risk management mechanism. In the current model, attempt has been made to identify the events which may affect the level of the bank’s achieving its paramount goals within the framework of risk management. More notably in parallel with the risks evaluation, the bank’s risk management will take the anticipated loss index as well as the quantitative and qualitative models into account and will continuously develop and enhance its evaluation models and patterns.

56-1- Basic earnings per shae

The basic EPS is earned by dividing the dividends belonging to ordinary shareholders by the average weighted number of ordinary shares outstanding with the shareholders. The average weighted number of ordinary shares (basic) in the parent company consists of 8,000,000,000 shares.

56-2- Diluted earnings per share

The diluted earnings per share is earned by dividing the dividends belonging to ordinary shareholders by the average weighted number of ordinary shares outstanding with the shareholders upon adjustment of dilution impact of all potential ordinary shares. The average weighted number of ordinary shares (diluted) in the parent company consists of 8,000,000,000 shares.

55- Capital obligations and contingent liabilities

56- Earnings per share (EPS)

57- Post-balance sheet events

58- Bad (written-off) debts

59- A profile of the bank’s risks

59-1- Relationship between various business units and the key risks each unit is exposed to:

59-2- Framework and chart of risk management

Saman Bank has a strong determination to counter the business risks and environmental uncertainties. The key business segments impacted by financial risks include the retail banking division which is substantially affected by credit and liquidity risks and the corporate banking division which is influenced by various credit, liquidity and market risks. The operational risks may accordingly affect some areas of current activities of the units which will be surveyed and evaluated, by applying the common practices.

The risk management is responsible for developing and controlling the bank’s risk management policies. Thus in line with the policy of effective risk management, Saman Bank has devised and created a Risk Management System comprising the High or Senior Risk Committee and the Risk Department which have been shown in the diagram below. The Risk Department report to the Bank Deputy for Supervision and shall have to implement the decisions taken by the High Risk Committee.

Private

banking

International

banking

Corporate

banking

Retail

banking

SamanBank

Credit risk Low LowLow

Average

Average

Average

Average

Low LowLow

Low LowLow

Low LowLow

Credit risk Credit risk Credit risk

Market risk Market risk Market risk Market risk

Liquidity risk Liquidity risk Liquidity risk Liquidity risk

Operational risk Operational risk Operational risk Operational risk

Board of Directors

High Risk Committee

CEO

Risk Department

• At Saman Bank the responsibility for all accepted risk shall remain with the Board of Directors.

• The Bank’s High Risk Committee shall regularly monitor and measure the existence, accuracy and adequacy of the management policies and processes, control and encounter with various risks affecting the bank’s operations. Additionally, the High Risk Committee shall also have to ensure the compliance of the bank’s procedures for internal controls with the framework recommended by the Central Bank of Iran, to monitor implementation of the risk policies adopted by the Committee and the board of directors by concentrating on the consolidation and enhancement of bank reputation and position and to maintain a proper capital adequacy ratio as required. The outcome of the Committee’s actions shall be submitted to the bank’s board of directors under the title of “Guiding and Supervisory Reports”.

• The High Risk Committee, regarded as a key body which substantially affects the various risk management areas pursues the following goals:

- To measure the size of risk appetite and desired capital adequacy ratio every six months, monitor the process of this ratio and prepare it for approval by the board of directors along with the capital adequacy ratio (as a


determinant to measure the level of risk appetite) up to the desired level.

- To approve the annual report on the performance appraisal of the bank’s risk management system and prepare it for submission to the board of directors to be incorporated in the annual report addressing the shareholders’ general meeting.

- To approve the annual risk management plans concerning the development, improvement and implementation of the risk measurement, assessment and management systems in the bank which may include procurement of required hardware and software facilities and recruitment of human resources.

- To review reports and conduct periodic assessment on the calculation and measurement of the bank’s overall risks and identify the improved areas (with emphasise on the compliance with the approved policies for the risk control management, cases of non-compliance, departments and persons involved, feedback policies in respect of non-compliance and effectiveness of such policies) and provide information to the board of directors on the outcomes of the evaluation and measures taken in these areas.

• The Risk Department has been created to act as an executive arm of the High Risk Committee with the aim of fulfilling the requirements set forth by the Central Bank of Iran and preparing the grounds for execution of the guidelines recommended by the Basel International Committee. This department will identify the principal financial risks as accepted by the Basel Committee including credit, liquidity, market and operational risks and will report them to the High Risk Committee, the CEO, and other appropriate committees. The Risk Department reports to the Bank Deputy for Supervision as specified in the organization chart. More importantly, this Department performs its functions in compliance with the directives and instructions of the High Risk Committee towards accomplishment of its goals.

59-3 Credit risk

59-3-1- Definition of the credit risk

Credit risk is the likelihood of suffering loss arising from the counterparty’s failure to meet his contractual obligations with respect to the principal amounts and interests. That is the reason why the main component in banking operations will meaningfully be premised on the correct performance, design and implementation of written procedures and policies for identifying, assessing, monitoring and controlling the credit risk. The credit policies will provide a framework for financings and granting credit facilities by the bank. Obviously, the bank credit policies shall include the matters such as target markets, portfolio composition, pricing requirements, terms of reference, loan approving or sanctioning authorities, reporting procedures, the process relating to list of exclusions and … Such measures shall be clearly defined in line with the banks’ contingent procedures and shall be appropriate to the scale and complexities of banking operations.

More significantly, the credit policies shall be devised and implemented with a view to the internal and external factors such as the bank market position, business locations/areas, staff capabilities and technological advances.

Arguably, these policies shall particularly define the banks’ objectives in the areas of portfolio composition, exposure limits of the counterparty or a group of related parties, special industries or economic sectors, geographical locations and special products. In general, banks shall ensure that their internal exposure limits are consistent with any type of contingent limitations or scopes which have been determined by the banking inspectors (regulators).

59-3-2- Credit policies and procedures

Saman Bank credit policies covering loans, facilities and outstanding debts or claims due to this bank are described as follows:

A- Loans: to abide by the authorized sanctioning limits and amend the loans portfolio based on tenor and return.

B- Claims: To reduce the debt balance and review the records of large debts

Accordingly, the most significant plans and credit requirements of the bank are as follows:

• To set the quantitative goals of the policy on loan facilities, debt collection, letters of guarantee and letters of credit;

• To define the scope of powers or sanctioning authority of credit departments in granting loans and collecting debts;

• To install and implement the monitoring systems for granting loans;

• To measure the customers’ repayment capacity for receipt of loans;

• To establish a supervisory and controlling system over the quality of informational reports;

• To mitigate the risk of loans and commitments by receiving secure collaterals;

• To comply strictly with the regulations governing the single borrower/beneficiary, related parties as well as

2. It means the total net loans granted and the liabilities so created to or for each single beneficiary which will add up to at least %10 of the bank base capital

3. Single borrower or beneficiary means a natural person or a legal person independently or two or more natural persons who may on the grounds of enjoying ownership, managerial, financial or controlling relationships or otherwise place the bank exposed to risks (in a vulnerable position), in such a way that the problems pertaining to one of them can affect the other/others and this domino effect may result in the failure of repayment or default on the loan obligations.

the large loans and debts;

• To regularly hold the meetings by Restructuring and Debt Collection Committees at various levels so as to take decisions on the customers’ outstanding debts as quickly as possible;

• To pay special attention to the reasons for growing overdue and outstanding debts, paid letters of credit, paid letters of guarantee by preparing a statement, filing a report and making necessary recommendations;

• To conduct periodic inspections by the inspectors named in relevant directives and pay random visits to the loan business locations for monitoring their progress, and functionality by supervisors, credit committee members and other competent authorities.

59-3-3- Executive units of credit risk management

The implementation areas will include across-the-board sectors (all departments and divisions) of the bank in particular, branches, credit affairs division, debt collection office, credit committees and other credit units.

59-3-4- Scope of powers at various organizational levels for sanctioning loans and liabilities

An important element of credit risk management is to specify the level of exposure for individual counterparties or a group of related counterparties. Considering the segregation of “Retail and SMEs Banking” and “Corporate Banking”, in Saman Bank, the prevalent criteria and standards for decision making on loans and liabilities will include the three areas of: “Large Loans and Obligations ”, “Related Parties, Loans and

Obligations”, and “Retail and SMEs Loans and Obligations”.

Large loans and liabilities:Loans and obligations in the area of corporate banking shall be based on customer due diligence (CDD) of a single borrower or beneficiary . The following persons will fall under the category of single beneficiary:

• Natural or legal person independently

• The ownership relationships between the natural and legal persons which include the following:

- A natural person as well as his/her spouse and dependents with affiliates and their associates

- A legal person/entity with affiliates and their associates

- Affiliates and associates of a natural person or a legal entity having interrelationships provided that multiplication of their ownership percentages in such units will be at least 20%

• The managerial relationships between the legal entities which include the following:

- A legal entity with other legal entity having at least two thirds of joint board members

- A legal entity with other legal entity having joint chairmanship of board of directors

• The financial relationships between a legal entity and a natural person which include the following:

- A natural person with his/her spouse and dependents

- The obligor with obligee provided that the amount of guarantee comes up to at least 75% of the obligor’s annual income or assets. The inverse relationship in this proportion may apply when these two parties have mutually agreed on counter guarantees

- Partly (A) with party (B) provided that over 50% of the gross annual income of party (A) is funded by party (B). The inverse relationship of this proportion does not apply

- The persons who each holds at least 20% of shares or capital with a voting right in a legal entity

- The persons who earn over 50% of their gross annual income from the same income source

• The controlling relationships between a natural person and a legal entity include the following:

- A natural person as well as his/her spouse and dependents with a legal entity who has in any manner arranged the voting right of over 20% of such legal entities’ votes

- A large entity with other legal entity who has in any manner arranged the voting right of over 20% of the

2

3


4. Related parties are natural and legal persons who have the power to directly and/or indirectly control the decisions taken in the bank or have significantly influenced in one way or another such as personal, ownership, managerial or supervisory relationships in a way that they may prefera-bly use the bank as their financial resources and thus the bank’s interests are overshadowed by the interests of the said persons.

4

corporate customer up to the limit of Rls. 800 billion and the bank board of directors shall approve the amounts of loans in excess of Rls. 800 billion.

Retail and SMEs loans and liabilitie5:The loans and obligations in the area of retail and SMEs banking shall be based on the type of customer and the amount of requested loans. Thus, the prevailing criteria for identifying the retail and SMEs customer include the following:

• Natural persons: all natural persons over the age of 18 applying for any amount of loans and obligations.

• Legal entities: that group of legal entities that along with the relevant single beneficiaries make a request for loans and liabilities for the maximum amount of Rls 100 billion and/or its rial equivalent in foreign currencies.

All branches are required to accept and consider the credit applications within the above mentioned limits and, where the amounts of such applications are in excess of the stipulated limits, they have to send them to the Corporate Banking Department in coordination with the Retail and SMEs Banking Department. Regardless of the loan amounts being requested or used, any credit services to the following customers shall be provided solely by the Corporate Banking Department:

• Manufacturing companies with a capital in excess of Rls. 100 billion

• Trading and service companies with a capital in excess of Rls. 120 billion

• State-run corporations and non-governmental public organizations

• Related parties and bank’s subsidiaries and affiliates

• Subsidiaries and affiliates to other banks

• Public joint-stock companies listed on the Stock Exchange

Sanctioning bodies in Retail and SME Banking Department:In managing the retail and SME banking affairs, the branches of Saman Bank vary in terms of credit sanctioning authority, and are categorized into five classes:

Top Group Branches, Group I Branches, Group II Branches, Group III Branches and Group IV Branches. The scope of credit sanctioning powers of each group for acceptance and approval of the types, components and amounts of collaterals shall be subject to the requirements set forth in a Saman Bank directive governing “The Requirements for Granting Retail and SME Loans” and subsequent amendments and annexes thereof.

For the purpose of approving credit loans and letters of guarantee and in compliance with the scope of credit sanctioning authority defined for branches, all the bank branches shall have to review and decide on all the customers’ credit applications being consistent with the scope of delegated powers (by computing the customer’s current debts and liabilities) at the commissions which are held at the various levels of bank organization. The commissions which are authorized to make decisions on granting loans in rials and foreign currencies, issuing letters of guarantee, opening letters of credit and entering orders for documentary drafts guaranteed by the bank include the following:

• Branches Credit Commission

• District Credit Commission (District head office)

• Internal SME Credit Commission

• SME High Credit Commission

5

5. SME or Business loans: means facilities granted to the intended trade union or guild for the purpose of providing working capital to run and expand the existing businesses or create new business ventures.Retail loans: means the facilities granted to meet the consumer needs of customers such as home repairs and purchase of housing and consumer goods.

other legal entity’s votes

- A natural person or a legal entity with other legal entity who has the power to direct and control the financial and operational policies including the decisions on the distribution of dividend or profit

- A natural person or legal entity with other legal entity who has the power to appoint or dismiss the majority of board members of the entity in any manner arranged.

When single borrowers/beneficiaries are identified, the corporate banking offices shall enter the information about the loan borrower in the bank’s statistics and database management system in the unit of the single beneficiary.

The loans to or obligations by any single borrower which may cause such loans and obligations to fall under the category of “Large Loans and Liabilities” shall have to receive the approval of the bank board of directors. Therefore, if the customer meets the requirements for receipt of loans and obligations within the stipulated limits, he shall finally have to obtain the authorization from the board of directors.

Limits of large loans and liabilities:• The maximum total large loans to and obligations by ay single borrower shall not exceed 20% of the bank

capital.

• The maximum total large loans and obligations will be eight times (eightfold) of the bank capital.

• When the loan amount requested by a single borrower is more than the specified limit in the applicable regulations, the bank may under the prevalent rules, apply the procedures for granting joint-loans (such as syndicated, consortium or similar methods).

Loans to and liabilities by related parties:Loans to and obligations by related parties will be based on the KYC of related parties. The following persons will fall under the category of related parties:

• Directors of the credit institutions including board members, managing director (CEO), deputy managing director and other executive board members;

• Independent auditor (whether the auditing firm and copartner) and legal inspector of credit institution;

• A natural person and his family members including the father, the mother, the spouse and the children who jointly or severally own at least 5% of shares in the credit institution;

• The father, mother (parents), spouse and children of the related parties stated in items 1 and 2 above;

• A legal entity whose capital or shares are owned by the related parties stated in items 1,2, 3 and 4 above in a manner that the said related parties have the authority to appoint at least one member of the board of directors in this legal entity;

• A legal entity in which the related parties stated in items 1, 2, 3 and 4 above hold management positions (board member, executive board, managing director (CEO) and deputy managing director);

• A legal entity that directly holds at least 5% of shares in the credit institution;

• A legal entity in which at least 10% of its capital or shares is directly owned by the credit institution;

• A legal entity in which at least 20% of its capital or shares is directly owned by the legal entities stated in item 8 above.

Limits of loans to and liabilities by related parties:• Individual limit: the total net loans to and obligations by each person shall not exceed 3% of the bank capital.

• Group limit: the total net loans to and obligations by each related party shall not exceed 40% of the bank’s base capital.

The bank board of directors shall approve the loans to and obligations by related parties prior to the grant of any loans or creation of any obligations. The board meetings for decision making on the grant of loans to or creation of obligations by the related parties shall be held without the presence of the related parties involved in this process.

Corporate loans and liabilities:The Corporate Banking Commission shall have the authority to sanction the loans and credit lines for each

4


Sanctioning authority of credit commissions (in million)

Authority for the 2nd gradecollaterals

Authority for the 3rd gradecollaterals

Type of Commission Type of loans and LCs in rial Natural persons Legal persons Natural persons Legal persons

Class IV Branch Credit Commission

Loans in rial 2,000 3,000 600 1,000

LGs and Internal LGs in rial 2,000 3,000 600 1,000

Class III Branch Credit Commission

Loans in rial 3,000 4,000 800 1,500

LGs and Internal LGs in rial 3,000 4,000 800 1,500

Class II Branch Credit Commission

Loans in rial 4,500 6,000 1,500 2,000

LGs and Internal LGs in rial 4,500 6,000 1,500 2,000

Class I Branch Credit Commission

Loans in rial 6,000 9,000 2,000 3,000


Top Branch Credit Commission

Loans in rial 8,000 12,000 3,000 5,000


District Credit Commission

Loans in rials Twenty five (25%) beyond the authoritydelegated to branchesfor any type of loans and obliga-

tions as described above

Twenty five (25%) beyond the authoritydelegated to branches for any type of loans and obligations as

described aboveLGs and Internal LGs in rial

Sanctioning authority of foreign exchange branches and District Credit Commissions (in million)

Authority for the 1st and 2ndgrade collaterals

Authority for the 3rd gradecollaterals

Branches group Type of forex obligations Natural persons Legal persons Natural persons Legal persons

Forex branch Sight LCs 5,000 10,000 2,000 5,000

Class II

Forex LGs and term LCs andrefinance

4,000 6,000 1,500 2,000

To be decided by the branch 5,000 15,000 25% of LCs and/or 35% forex drafts

to guarantee fulfillment of forexobligations

Forex branch Sight LCs 7,500 12,000 3,000 7,000

Class I

Forex LGs, term LCs and refinance 6,000 9,000 2,000 3,000

25% of LCs and/or 35% forex drafts to guarantee fulfillment of forex

obligationsTo be decided by the branch 7,000 20,000

Sight LCs 10,000 15,000 4,500 10,000

Top Forex Branch

Forex LGs, term LCs and refinance 8,000 12,000 3,000 5,000

25% of LCs and/or 35% forex drafts to guarantee fulfillment of forex

obligations To be decided by the branch 10,000 25,000

District Credit Commission Twenty five (25%) beyond the authority delegated to branches for any type of loans and obligations as described above

• The scope of sanctioning authority in rials delegated to credit commissions of branches and district head offices:

• The scope of sanctioning authority in foreign currencies delegated to credit commissions of branches and district head offices:

Sanctioning authority for higher level credit committees beyond branches and district head offices (in million)

Authority for the 1st and 2nd classcollaterals

Authority for the 3rd grade collaterals

Type of Commission Natural persons Legal persons Natural persons Legal persons

Internal credit committees 30,000 50,000 15,000 25,000

Retail and SME credit committees 100, 000

• Scope of sanctioning authority delegated to SMEs credit commissions

59-3-5- Methods of reducing credit risk

One way of mitigating the credit risk is the collateral coverage with a view to the risk exposure and debt liquidity ratio. Considering the risk exposure, collaterals may be divided into three grades:

First grade collaterals and guarantees:

• First grade collateral of type I: includes the cash collateral in the short-term investment deposit in rial at the interim zero interest rate and without banking card (short-term investment deposit in rial coded 836 for natural persons and 837 for legal persons).

• First grade collateral of type II: includes the cash collateral in the ordinary short-term investment deposits in rial.

• First grade collateral of type III: includes short-term investment deposits and special short-term deposits in foreign currency, long-term investment deposits in rial (excluding Atieh Savings deposits), short-term investment deposits in rial and foreign currency at an interest rate higher than the ordinary rate, special short term investment deposits in rial and foreign currency, long-term registered and bearer certificates of investment deposits issued by Saman Bank, investment certificates of fixed income funds for which Saman Bank is acting as the registrar or guarantor of the fund’s units.

• First grade collateral of type IV: includes participation bonds issued by the CBI as well as the participation bonds issued by the state (governmental bonds).

Second grade collaterals and guarantees

include immovable properties and shares of companies listed on the stock exchange (excluding the shares of companies which are traded on the agreed basic market). The immovable properties which are introduced for loan security shall be real-estates or residential apartments or office buildings with six shares or parts of absolute ownership, valuable, easily marketable, uncontested and located in the municipal areas or bounds with a valid certificate of construction work completion. The mortgage of apartments used for business and residential purposes with a maximum age of 25 years as well as the real estates (villas) used for business and residential purposes without the age limit shall meet no impediment. Additionally, the valuation of collaterals should be conducted in compliance with the provision set forth in the last review under the directive No. 92-310-1599 covering the valuation of immovable properties.

Third grade collaterals and guarantees

the third guarantees means the guaranteed promissory notes received from customers. It should be noted that the branches when accepting the promissory notes from customers shall fully and absolutely abide by the provision of last review under the directive No. 92-310-2232 covering the requirements for completion, signature and receipt of guaranteed promissory notes.

59-3-6 Customer’s credit scoring process

The credit scoring or rating process shall include certain proper criteria used to evaluate, measure and obtain accurate information on the bank target market, borrower’s credit quality, counterparty’s credit goals, its structure and funding sources for repayment. The sequence and priority in this process are described below:

• Credit nature and goal: The applicant’s business objective shall be acceptable to the bank which means that it should be legal, non-speculative and consistent with the borrower’s track records. Additionally the bank shall ensure that the credit facilities are used to finance the applicant’s normal business operations. The loan size shall also be adequate for the customer’s goal and shall sound reasonable relative to his available funds. More arguably, with the growth rate of laundering activities in the modern business world, it is highly essential to fully understand and determine the clarity of the purpose of the requested credit facilities.

• Types of credit facilities: Such facilities may include: current account overdraft, hire purchase loan consumer lending loan, working capital loan, long-term loan, leasing loan, credit cards, real estate loan,


business loan, mortgage backed loan, building construction loan, retail loan, factoring, ….

• Eligibility for borrowing: The lender shall consider the customer’s legal capacity. Arguably, the minor, the poor and the mentally retarded persons do not have the capacity to enter into transactional agreements or contracts. Under such circumstances, they need the appointment of a guardian for their affairs.

• Guarantees: Whenever a collateral security is needed, certain factors such as adequacy, capability, credibility and authenticity of the collateral should be taken into account.

• Review of the borrower’s financial position: When a customer’s financial status is analyzed, it will be highly important to review how his business operations have the capacity to generate sufficient cash flows for fulfillment of his obligations. From among the various factors which may be used to measure a customer’s financial standing, these items are worth mentioning: repayment capacity, liquidity, repayment willingness.

• Repayment capacity forecast: The lender should obtain a reasonable assurance of the borrower’s ability to service his obligations on the due date in future.

• Profitability: The expense of financing for the customer, the remuneration paid to employees with respect to credit assessment, credit grant and credit monitoring, rental costs and other general expenses shall be covered (normally received as prepayment) by the return created on the loans granted. In reality, a comfortable profitability shall be measured by the capital expenses.

• Continous monitoring: credit facilities should be constantly monitored through various methods and channels: risk exposure limit, capital allocation and periodic reports by the type of customer, borrowing position, segment and... .

Essential requirements for opening a credit file

Since the process of granting loans in Saman Bank starts with submission of the customer’s application by filing credit records, it is essential to meet the following requirements in this initial process:

• Customer’s CDD;

• Access to customers’ credit records shall be subject to the confidentiality rules and policies which prevail in the bank;

• The bank shall have to ensure that the loans are used for the objective declared by the customer

• The bank shall ensure that all appropriate forms and legal documents have been signed by the applicant prior to the loan allocation;

• The bank shall treat credit applications on a fair and non-discriminatory basis;

• The bank credit facilities shall be granted to various industrial sectors with a view to the non-concentration principle;

• The bank shall maintain an appropriate collateral margin for various credit facilities;

• Any type of regulation, by-law and directive shall be drafted and adopted in compliance with the applicable laws and rules of the Central Bank of Iran;

• The credit files shall contain the following items:

- Proof of identification and verification for the customer and guarantors;

- A signed copy of credit application

- The expert opinion including:

- The objective of loan facilities

- Collaterals and guarantees

- Customers’ obligations

- General background information

- Approval of relevant department or management

- Customer’s record/reputation with the bank

- Analysis of financial status

- Analysis of competitive position

- Cash flows forecast

- Documentation relevant to collaterals and guarantees

- Credit transaction structure/arrangement

- Audited financial statements

- Business licenses legally issued

Loans granted to banks Loans granted to customers Obligations under LGs and LCs

2017 2016 2017 2016 2017 2016


Current 0 0 108,426,153 105,489,381 9,450,963 12,299,898

Overdue 0 0 1,752,674 1,507,318 0 0

Outstanding 0 0 2,928,083 3,045,616 0 0

Doubtful 0 0 20,855,807 22,858,188 0 0

Total gross amount 0 0 133,962,717 132,900,503 9,450,963 12,299,898

Value inpairment reserve 0 0 (6,212,516) (5,912,516) 0 0

Net book value 0 0 127,750,201 126,987,987 9,450,963 12,299,898

Overall credit scoring/rating process

• The primary responsibility for receiving customers, allocating credit loans, preparing credit reports, assessing customer’s scores, making enquiries from the existing sites/databases and keeping the relevant data and information shall remain with the branches.

In addition to the said reports and records, all branches shall, for payment of business loans up to the limit of ten billion rials (like loans for enhancement of working capital, business expansion and/or business creation) act for a site visit of the customer’s business location, receipt of financial statements and preparation of a report on his financial position and then in the final analysis, prepare an expert report containing an express opinion on the customer’s credit file which will serve as a basis on which decisions are to be made as appropriate.

• The responsibility for receiving the proposals made by branches, evaluating the customer’s scores/rates, managing the credit limits assigned for branches and expressing opinion on the suggested credit shall rest with credit commissions.

• The responsibility for sanctioning credits in the decision-making departments in respect of the credit size shall remain with credit commissions.

• The responsibility for providing an independent opinion on the loans granted by designing and updating the scoring/rating system, controlling and monitoring the credit risk shall remain with the risk management department.

• The functions assigned to the risk management department are segregated from the functions of the business activity and customer relationship management in credit areas.

• The policies on decision-making, monitoring and reporting independently about the credit risk shall be valid under any circumstances.

59-3-7- Analysis of credit quality

The bank assets quality including loans, liabilities/obligations, investments, type, amount and adequacy of the collaterals received (ratio of loans balance to updated value of collaterals) LTV in terms of credit risk profile have been illustrated in tables 59.3.7.1 and 59.3.7.2.

59.3.7.1. Analyzing credit quality of loans granted, obligations and investments based on the

bank’s internal credit scoring/rating system

It should be noted that the customers’ scoring/rating system in Saman Bank is in the process of formation. Although the credit system has been designed, classification of the bank’s customers by the degree of risk exposure has not been performed yet.

59.3.7.2. Table for analyzing the credit quality of the loans granted, obligations and investments

based on the assets categories


59.3.7.3. Credit quality of participation bonds, Islamic treasury bonds, Sukuk bonds, units of mutual funds

and similar items

59.3.7.4. Types and amounts of collaterals received from credit customers

Credit quality analysis 2017 2016

Rls (M) Rls (M)

Issued by the government and Central Bank

Project 0 0

Company 0 0

Islamic treasury bonds 0 458,903

0 458,903

Issued by governmental corporations

Project 0 0

Company 0 0

.. 0 0

0 0Issued by non-governmental corporations

Project 0 0

Company 0 0

.. 0 0

0 458,903

Types of main collaterals 2017 2016

Rls (M) Rls (M)

Loans granted to natural personsCash 26,138 38,518 Participation/Sukuk bonds 5,475 5,137 Marketable securities (shares) 116,178 231,005 Non-listed securities 0 0Deposits 4,541,438 3,805,934 Real estate properties 58,876,267 37,087,117 Plant and equipment 66,233 68,069 Letters of guarantee 31,118 36,064 Checks/Cheques 38,106,060 32,879,977 Promissary note 7,571,833 9,894,261 Binding/irrevocable contracts 8,891,570 5,863,352 Ordinary notes/documents 13,140 16,135 Guaranteed notes 136,633 7,181 Affidavits 1,812 2,862 Letters of commitment 83,000 81,735 Conveyence of rights deed 9,275 614 Power of attorney 4,519 4,985 Letter of intent for sale 175,975 177,095 Loans granted to legal persons 0 0Cash 35,363 75,230 Participation/Sukuk bonds 27,640 13,320 Marketable securities (shares) 10,346,763 8,627,878 Non-listed securities 0 0Deposits 6,878,314 4,365,583 Real estate properties 32,421,146 33,088,640 Plant and equipment 4,035,466 3,288,024 Letters of guarantee 83,323 482,166 Checks/Cheques 150,915,811 146,303,461 Promissary notes 13,435,795 14,875,675 Binding/irrevocable contracts 14,369,956 15,929,808 Ordinary notes/documents 0 6,000 Guaranteed notes 20,363 0Affidavits 0 0Letters of commitment 100,675 92,419 Conveyence of rights deed 400 400 Power of attorney 0 0Letter of intent for sale 1,418 1,418

351,329,097 317,350,063

• Based on the written report filed by the bank’s expert, the said amount is the mortgaged value of all collaterals in possession.

59.3.7.5. The balance of loans based on the ratio of loans balance (less provisions) to updated cash value of

collaterals

• In the calculation process, this amount is the updated mortgaged value of collaterals with respect to the liquidity factors specified in the directive for deposit-taking and assets classification. This table is to disclose the coverage of collaterals in possession for the balance of customers’ debts.

59-3-8- Credit risk concentration

The credit risk concentration in Saman Bank has been defined in a manner to reflect the type, nature and content of credit risk. More significantly, the credit risk concentration will include the two components of target market and maximum market share of credit portfolio. To this end, Saman Bank annually drafts an operational program in which the target market covering the on-and off balance sheet items will be determined each year. Thus the bank will define its credit risk concentration in the following areas:

• Corporate banking

• Retail and SME banking

Further it should be noted that the responsibility for defining and reviewing various economic sectors including goals and total amounts of credit portfolio shall remain with the High Committee for Strategy and Budget.

2017 2016

Rls (M) Rls (M)

Loans granted to banks

Less than 50% 0 0

51 to 70% 0 0

71 to 90% 0 0

91 to 100% 0 0

Over 100% 0 0

Loans granted to natural persons 0 0

Less than 50% 2,779,767 3,685,028

51 to 70% 2,810,853 1,756,616

71 to 90% 3,718,785 3,253,033

91 to 100% 1,588,237 1,027,406

Over 100% 31,165,264 33,616,611

Loans granted to legal persons

Less than 50% 3,599,886 2,688,324

51 to 70% 4,580,039 4,878,205

71 to 90% 3,015,186 3,148,234

91 to 100% 1,090,037 1,219,209

Over 100% 73,402,147 71,715,321

127,750,201 126,987,987


59.3.8.1. Distribution table of loans and investments by economic sectors and their inland concentration

59.3.8.1.1. Distribution of loans, obligations and investments by type of industry:

Loans granted Investments Obligations for LGs & LCs

2017 2016 2017 2016 2017 2016


Book value 133,962,714 132,900,503 2,777,793 3,238,567 9,450,963 12,299,898

Loans/liabilities by economic sector

Industry 29,116,161 23,080,239 445,018 627,396 3,042,161 3,959,202

Housing 22,010,644 19,709,257 0 0 0 0

Commerce 51,015,086 54,423,545 0 0 5,951,401 7,745,415

Services 25,663,915 27,449,132 1,959,217 1,768,438 447,999 583,045

Agriculture 1,065,814 754,831 0 0 0 0

Banks 0 0 244,523 298,800 0 0

Mining 640,748 890,622 0 0 9,402 12,236

Other 4,450,346 6,592,877 129,035 543,933 0 0

133,962,714 132,900,503 2,777,793 3,238,567 9,450,963 12,299,898

Size of loans/degree of obligations onshoreand offshore (inland & overseas)

Inland 133,962,714 132,900,503 2,777,793 3,238,567 9,450,963 12,299,898

Overseas 0 0 0 0 0 0

133,962,714 132,900,503 2,777,793 3,238,567 9,450,963 12,299,898

2017 2016

Rls (M) Rls (M)

Loan facilities Automobile and auto parts 4,239,314 3,935,181

Mining and metal industries 4,964,306 3,360,483

Petrochemical, chemical industries and oil products 6,798,623 5,389,236

Foodstuffs and pharmaceuticals 9,794,676 7,764,192

Energy 2,282,707 2,040,293

Contractual services 0 0

Telecommunication, computer and associated industries 0 0

Financial intermediary 0 0

Others 1,036,535 590,854

Investments

Automobile and auto parts 36,137 104,769

Mining and metal industries 156,370 58,944

Petrochemical, chemical industries and oil products 18,203 79,979

Foodstuffs and pharmaceuticals 5,366 1,654

Energy 7,227 64,720

Contractual services 22,244 43,223

Telecommunication, computer and associated industries 2,735 145

Financial intermediary 69,091 134,115

Others 127,645 139,847

Obligations

Automobile and auto parts 347,815 452,662

Mining and metal industries 211,996 275,901

Petrochemical, chemical industries and oil products 1,407,881 1,832,278

Foodstuffs and pharmaceuticals 772,262 1,005,056

Energy 0 0

Contractual services 0 0

Telecommunication, computer and associated industries 0 0

Financial intermediary 0 0

Others 302,206 393,305 32,603,339 27,666,837

59.3.8.2. Distribution table of loans by participation, constant (fixed) profit contracts and type of customer

• The interest-free loans are to be classified under participation (non-constant profit) contracts.

59-3-9- Procedures for managing non-current loans

The bank’s policy on the management of non-current claims is premised on preventive measures supported by collaterals and proper management with follow-up actions and debt collection procedure. Considering the requirement set forth in the Law on the Elimination of Barriers to Competitive Production and Enhancement to National Financial System passed on April 21, 2015 by the Islamic Parliament and in compliance with the CBI’s directive No. 94/69383 governing the procedures for calculation and distribution of shared profit, banks shall have to reform their assets structure and increase the share of income-generating assets through the sale and disposal of the foreclosed properties and assets and collection of debts. In order to improve its assets structure and achieve the targets set for collection of non-current debts, Saman Bank takes appropriate measures within the context of its own internally approved by-laws and procedures. To this end, where the follow-up actions towards collection of the bank’s claims in the pending files (including movable and immovable properties and/or rights and privileges which will be held or put under the bank’s ownership) fail to collect debts at branch levels and credit departments, measures will primarily be taken by retail banking and corporate banking departments and, at a later stage, legal actions will be taken by the bank’s legal deputy. In performance of operational and strategic actions and subject to the applicable laws and regulations, Saman Bank shall have to sell surplus and foreclosed assets and properties to collect its outstanding and doubtful debts. As has been contemplated in the organizational structure, the credit departments shall be tasked with reducing the amounts of overdue debts and the bank’s legal deputy shall be responsible for collection of outstanding and doubtful debts.Collection of overdue loans will be performed under the time-frame and scheduled worked out by the VP Credit Deputy and collection of overdue loan balance shall be the responsibility of the Retail and Corporate Banking Department which all shall be pursued in the form of an annual target program based on the approved follow-up standards. In pursuance of the objective set by the Board of Directors, the Retail and SMEs Credit Department shall collect the amount of Rls 2,100,000 million and the Corporate Credit Department shall collect the amount of Rls. 1,101,000 million out of the overdue loan balance in the an annually scheduled program. As a consequence, an aggregate amount in the range of Rls. 3,201,000 million should be collected out of the overdue loan balance through the said two credit departments.Further, the responsibility for collecting outstanding and doubtful debts and sale of foreclosed or seized collaterals and properties shall remain with the Bank Legal Deputy’s Office. A plan is already well under way to collect the amount of Rls. 1,500,000 million of outstanding debts and the amount of Rls. 10,000,000 million of doubtful debts as well as selling the foreclosed collaterals for the amount Rls. 8,000,000 million. In aggregate, an amount of Rls. 19,500,000 million of (non-current) past-due loans has been planned to be recovered by the bank Legal Deputy’s office.The procedures for collecting claims and debts by all credit departments and offices of deputies are governed by the applicable laws and regulations in the country adopted by the CBI as well as the bank’s internal by-laws and directives. As prescribed in the prevalent laws, requirements and the bank’s internal by-laws, the overall procedures for collecting debts from sale of foreclosed properties and collaterals will sequentially entail and include calculation of mortgage debt, submission of documents, request for issuance of enforcement writ, service of enforcement writ, inquiry about property registration status, official expert’s appraisal report, notification of official expert’s opinion, issuance of authorization prior to the notice of sale auction or bid, operating procedures for sale of foreclosed properties and liquidation of claims due to the bank. Where the mortgaged real estate is not sold at the sale auction, the bank shall have to take possession of six shares (the entire portion) or partnership in the foreclosed mortgage put up for sale pursuant to the bank’s applicable rules and on the strength of the permits or licenses issued for this purpose.

Loans granted during the year Loans balance at year-end

Amount Total percentage Amount Total percentage

Rls (M) Rls (M)

Cconstant (fixed) profit contractsNatural customers 3,456,510 1.3 12,190,090 10.5

Legal customers 17,426,379 6.4 9,930,564 8.5

Non-constant profit contracts (including participation contracts)

Natural customers 17,977,246 7 30,416,374 22

Legal customers 234,805,529 85.8 81,425,689 58.9

273,665,664 133,962,717

Debt collection plan for the year 2016-2017

Debt balance Collection forecast 2016-2017 Amounts collected in 2015-2016 Realized (Percentage)

30,808,453 13,000,000 6,891,969 53.02


59.3.9.1. Distribution of non-current loans by economic sectors

59.3.9.2. Balances of foreclosed assets

Non-current loans balance Specific provision for doubtful debts Net loans and non-current claims

Economic Sector 2017 2016 2017 2016 2017 2016


Commerce 9,270,032 10,061,510 1,914,804 1,817,511 7,355,228 2,706,282

Services 1,654,501 1,733,038 87,089 79,299 1,567,412 165,626

Industry 10,884,491 10,584,310 1,765,965 1,543,340 9,118,526 1,465,784

Agriculture 2,857,564 4,010,117 535,613 504,652 2,321,951 1,688,166

Other 203,851 214,853 10,017 7,250 193,834 21,019

Housing and construction 0 0 0 0 0 0

Mining 1,044 671 94 131 950 (279)

Banks 665,070 806,620 119,170 180,572 545,900 260,720

25,536,553 27,411,119 4,432,752 4,132,755 21,103,801 6,307,318

2017 2016

Rls (M) Rls (M)

Movable properties 0 0

Residential real properties 5,368,409 6,183,364

Business/Office properties 10,298,942 12,753,136

Plant and Equipment 4,426,484 4,238,905

Investments 0 0

Debt securities 0 0

Land 3,959,408 3,617,484

24,053,243 26,792,889

59-3-10 Capital sum required for credit risk coverage

The amount of capital required for credit risk coverage will come up to Rls. 13,548,638 million which has been calculated and presented in the table 59.3.10.1.

59.3.10.1 The table for calculating the capital required for credit risk coverage

In the table below, the capital to be used for credit risk coverage aims at achieving 8% for the capital adequacy ratio.

(Allocated capital = 8% x Risk level)

2017

Type of asset Assets and liabilities Risk factor Risk level Allocated capital

Rls (M) Percentage Rls (M) Rls (M)

Due from other banks and credit institutions 28,858,640 20 5,771,728 461,738

Non-governmental participation bonds 0 100 0 0

Investment in securities (shares) 2,648,759 100 2,648,759 211,901

Due from subsidiaries and affiliates 3,578,947 100 3,578,947 286,316

Other accounts receivable 5,945,744 50 5,945,744 475,660

Hire purchase and housing loans 25,062,478 100 12,531,239 1,002,499

Other loans granted and amounts due 89,061,354 100 89,061,354 7,124,908

Other assets 47,930,014 100 47,930,014 3,834,401

Guarantee for participation bonds issued by non-governmentalsector (risk factor 50%) 0 100 0 0

Obligations for LGs issued (conversion factor 20%) 5,129,945 100 1,025,989 82,079

Obligations for LGs issued (conversion factor 50%) 0 100 0 0

Obligations for LCs issued (conversion factor 20%) 4,321,019 100 864,204 69,136

Obligations for LCs issued (conversion factor 50%) 0 100 0 0

212,536,900 169,357,978 13,548,638

59-4- Liquidity risk

59-4-1- Definition of liquidity risk

The liquidity risk means the possibility of impairing or endangering the bank’s ability to provide funds for fulfillment of its obligations.

59-4-2- Liquidity risk policies and processes

The Saman Bank policy is typically to keep for each type of currency a cash buffer of at least 2% of the total deposits of the same currency which is being reviewed not to slide lower than this percentage. Further in this arrangement, a limit has been set for transactions with other banks and there is strict control not to violate such limit.

59-4-3- Executive units of liquidity risk management

Saman Bank has strong belief in active management of liquidity risk. To this end, this bank has developed a coherent system to manage the liquidity risk. In this system, the Board of Directors, the Senior/High Risk Committee, the Resources and Consumption (ALCO) Committee, the Treasury Department and the Risk Department will play the leading roles.

59-4-4- Credit risk measurement method

In order to measure the liquidity risk, Saman Bank uses the existing financial ratios in Basel III which include NSFR (Necessary Stable Funding Ratio) and LCR (Liquidity Coverage Ratio). Additionally, the liquidity gap which may exist between rial and foreign currencies shall be deployed for this purpose.

59-4-5- Mechanism for controlling and monitoring liquidity risk

The responsibility for controlling and monitoring the liquidity risk in Saman Bank shall remain with the Risk Department, Resources and Consumption Committee and Treasury Department. The Resources and Consumption Committee shall be responsible to the High Risk Committee and the Board of Directors and shall trace up the following matters:

• To review and control the financial ratios and indices and deviation from the budget with respect to the forecast of annual operating budget;• To take decisions on the amount and optimal pattern of usage or consumption including credit lines, foreign currencies, investments, cash or cash equivalent whether in rial, or in foreign currency and interbank operations with a view to the level of impact on the bank profitability based on annual operating budget;• To take decisions on the rates of funding and allocation of rial-denominated and foreign currency sources with respect to the needs, peers’ rates, international market rates and sanctioning authority of executive units to change such rates with a view to their effect on profitability based on the annual operating budget;• To take decisions on the solutions to liquidity coverage subject to the liquidity level approved by the High Strategy Committee and High Risk Committee;• To determine inter-departmental interest rates;• To review and approve a contingency plan so as to face liquidity crisis with a view to the level of impact on the bank’s profitability, and where the decision-making goes beyond the scope of the commission’s authority, the relevant report shall be submitted to the High Strategy Commission and the Board of Directors;• To control the maturity dates of assets and liabilities, bank profitability trend, bank structure of expenses, profit sharing and non-profit sharing ratios, rate of return on assets and shares, cost of money within the defined authority and its impact on the bank profitability based on the annual approved budget;• To review and decide on the amount of investment size in the capital and commodity markets;• To review and analyze the bank investment portfolio and, in the case of any deviation from the approved budget, provide appropriate solutions towards achieving the bank’s operational goals;• To control and monitor the rate of loan facilities and return on assets of various types (loans, investments, interbank operations and…) based on the size established in the bank’s annual budget;• To control and monitor the average cost rate of bank funding sources based on the amounts set in the annual budget;• To adopt proper policies to keep the profit margin of resources and uses appropriate to the rates or amounts set in the annual budget and submit proposals and proper solutions to the High Strategy Commission;• To determine and approve the amount of annual contingent liquidity appropriate to the annual budget


59.4.5.1 Liquidity reserves

The table below shows the composition of bank liquidity reserves:

1-Cash and cash equivalent means cash amounts, participation bonds and similar items with an active cash-traded market.

2-Net cash assets means cash and cash equivalent, investment papers/certificates with an active cash-traded market less bank deposits, issued debt securities, other loans and liabilities which will mature (fall due) by next month.

3-Demand deposits include the deposits without any contractual maturity such as current accounts, savings accounts and current interest-free accounts and …

59.4.5.2 Table of liquidity ratios

2017 2016

Rls (M) Rls (M)

Balance with CBI 4,171,647 2,478,732

Cash and balance with other banks 24,654,784 44,772,819

Islamic treasury bonds 0 458,903

28,826,431 47,710,454

Beginningof the year Mid-year Max. during

the year Min. during

the year Year-end

Percentage Percentage Percentage Percentage Percentage

Cash and cash equivalent to total assets (1) 23 18 24 12 14

Cash and cash equivalent to total deposits 23 17 24 11 13

Net cash assets to total deposits (2) 21 15 22 9 10

Loan facilities to total deposits 51 52 54 50 51

Loan facilities to on-year term deposits and more 136 131 136 120 120

Demand deposits to total deposits (3) 55 54 56 50 51

and in compliance with the applicable laws and regulations and the recommendation made by the board of directors;• To ensure the control and maintenance of liquidity level in various circumstances;• To monitor interbank operations.

The Treasury Department shall be responsible for the launch and execution of interbank operations.

59.4.5.3. Analyzing the maturity of assets and liabilities

The table below shows the maturity of the bank financial assets and liabilities based on the dates which would possibly be claimed or settled.

2017

Book value Less than 1month

1 - 3months

3 months to1 year

1 - 5 years

More than 5years

Without specifiedmaturity

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

Assets

Cash in hand 31,494,714 31,494,714 0 0 0 0 0

Due from banks and other creditinstitutions 9,676,029 9,676,029 0 0 0 0 0

Due from the government 0 0 0 0 0 0 0

Loans granted to and amounts duefrom governmental entities 0 0 0 0 0 0 0

Loans granted to and amounts due fromnon-governmental entities/persons 127,750,201 61,818,046 18,995,007 24,696,205 18,383,206 3,857,734 0

Investments in shares and othersecurities 2,777,793 397,382 0 0 0 0 2,380,411

Due from subsidiaries and affiliates 3,578,946 0 0 0 0 0 3,578,946

Other accounts receivable 5,945,744 5,945,744 0 0 0 0 0

Tangible fixed assets 3,613,037 0 0 0 0 0 3,613,037

Intangible assets 4,301,189 0 0 0 0 0 4,301,189

Statutory deposit 23,035,684 354,433 354,433 672,958 1,646,427 20,007,431 0

Other assets 45,861,562 22,006,592 1,833,333 8,250,000 13,053,243 0 718,394

258,034,899 131,692,940 21,182,773 33,619,163 33,082,876 23,865,165 14,591,977

Liabilities and deposits

Due to banks and other creditistitutions (5,475,289) (2,966,977) 0 (2,508,312) 0 0 0

Customers' deposits (17,098,373) (962,045) (962,046) (1,826,653) (4,468,977) (8,878,654) 0

Dividends payable (52,482) 0 0 0 0 0 (52,482)

Debt securities 0 0 0 0 0 0 0

Provision for income tax 0 0 0 0 0 0 0

Provisions and other liabilities (8,813,301) 0 0 0 0 0 (8,813,301)

Provisions for employees' terminationand pension benefits (537,311) 0 0 0 0 0 (537,311)

Investment depositors' equity (214,853,049) (4,407,490) (2,481,358) (4,711,294) (11,526,437) (191,726,470) 0

Total liabilities (246,829,805) (8,336,512) (3,443,404) (9,046,259) (15,995,414) (200,605,124) (9,403,094)

Total shareholders' equity (11,205,094) (11,205,094)

Total liabilities and shareholders'equity (258,034,899) (8,336,512) (3,443,404) (9,046,259) (15,995,414) (200,605,124) (20,608,188)

Gap 0 123,957,028 10 24,572,905 17,087,463 (176,739,959) (6,616,808)

Accumulated gap 0 123,957,029 141,696,400 166,269,304 183,356,767 6,616,808 0

Gap to base capital ratio (percentage) 0 974 139 193 134 (1,388) (52)

Accumulated gap to base capital ratio (percentage)

0 974 1113 1306 1440 52 0

Gap to effective base capital ratiov (Percentage)

0 1042 149 207 144 (1,486) (56)

Accumulated gap to effective base capital ratio (Percentage)

0 1042 1191 1398 1542 56 0


2016


1 - 3months

3 months to1 year

1 - 5years

More than 5 years



Assets

Cash in hand 49,362,165 49,362,165 0 0 0 0 0

Due from banks and other creditinstitutions 12,833,651 12,833,651 0 0 0 0 0


Loans granted to and amounts duefrom governmental entities 0 0 0 0 0 0 0

Loans granted to and amounts due fromnon-governmental entities/persons 126,987,987 64,175,053 20,416,661 18,617,992 23,144,384 633,897 0

Investments in shares and othersecurities 3,238,567 804,012 0 458,902 0 0 1,975,653


Other accounts receivable 5,651,666 5,651,666 0 0 0 0 0



Statutory deposit 21,131,325 325,274 307,358 593,007 1,457,824 18,447,862 0

Other assets 29,606,051 3,818,932 533,479 7,201,967 17,957,796 0 93,877

257,555,354 136,970,753 21,257,498 26,871,868 42,560,004 19,081,759 10,813,472


Due to banks and other creditistitutions (27,042,210) (19,094,260) 0 (7,947,950) 0 0 0

Customers' deposits (21,885,077) (943,127) (764,308) (1,545,171) (3,850,437) (14,782,034) 0



Provision for income tax 0 0 0 0 0 0 0


Provisions for employees' terminationand pension benefits (414,634) 0 0 0 0 0 (414,634)

Investment depositors' equity (194,173,795) (4,455,020) (2,340,290) (4,443,615) (10,871,320) (172,063,550) 0

Total liabilities (247,941,403) (24,492,407) (3,104,598) (13,936,736) (14,721,757) (186,845,584) (4,840,321)


Total liabilities and shareholders'equity

(257,555,354) (24,492,407) (3,104,598) (13,936,736) (14,721,757) (186,845,584) (14,454,272)

Gap - 112,478,350 18,152,898 12,935,131 27,838,246 (167,763,823) (3,640,802)

Accumulated gap - 112,478,350 130,631,248 143,566,379 171,404,625 3,640,802 0


- 909.8 146.8 104.6 225.2 (1,357) (29.4)


- 909.8 1056.7 1161.3 1386.5 29.4 0

Gap to effective base capital ratiov (Percentage)

- 953.3 153.8 109.6 235.9 (1,421.8) (30.9)

Accumulated gap to effective base capital ratio (Percentage)

- 953.3 1107.1 1216.7 1452.7 30.9 0

59.4.5.4. Analyzing the contractual maturities of financial liabilities

59.4.5.4.1. The table below shows the maturity of financial liabilities based on the maturity specified in the contract.

59.4.5.4.2. The table below shows the maturity of forex-denominated financial liabilities based on the maturity specified in the contract.

2017


1 - 3months

3 months to1 year

1 - 5years

More than5 years



Liabilities

Due to banks and other credit istitutions (5,475,289) (272,390) (1,487,541) (818,989) 0 0 (2,896,369)

Customers' deposits (17,098,373) 0 0 0 0 0 (17,098,373)


Loans received from the National Development Fund 0 0 0 0 0 0 0

Investment depositors' equity (214,853,049) (12,472,308) (11,551,202) (65,754,453) (9,855,401) 0 (115,219,685)

(237,426,711) (12,744,698) (13,038,743) (66,573,442) (9,855,401) 0 (135,214,427)

2016


1 - 3months

3 months to1 year

1 - 5years

More than5 years



Liabilities

Due to banks and other credit istitutions (27,042,210) (19,094,260) 0 (7,947,950) 0 0 0




Investment depositors' equity (194,173,795) (5,948,065) (1,740,197) (5,636,200) (75,961,202) 0 (104,888,131)

(243,101,082) (25,042,325) (1,740,197) (13,584,150) (75,961,202) 0 (126,773,208)

2017

Book value Less than 1month 1 - 3 months 3 months to

1 year 1 - 5 years More than5 years

Withoutspecified maturity


Liabilities

Due to banks and other credit istitutions (2,685,169) (272,391) (1,487,542) (818,989) 0 0 (106,247)




Investment depositors' equity (15,884,873) (8,201,897) (1,320,909) (4,691,557) 0 0 (1,670,510)

(25,147,334) (8,474,288) (2,808,451) (5,510,546) 0 0 (8,354,049)

2016

Book value Less than 1month 1 - 3 months 3 months to

1 year 1 - 5 years More than 5 years

Withoutspecified maturity


Liabilities

Due to banks and other credit istitutions (22,799,693) (12,215,115) 0 (7,947,951) 0 0 (2,636,627)




Investment depositors' equity (13,757,148) (4,078,065) (1,635,068) (5,062,065) 0 0 (2,981,950)

(46,493,617) (16,293,180) (1,635,068) (13,010,016) 0 0 (15,555,353)


59-4-6- Crisis contingency plan (liquidity stress test)

In order to test the liquidity crisis in Saman Bank, it is essential to identify the factors creating liquidity crisis and make scenarios based on the assumptions which result from the existing facts. To this end, the operational plan for the stress test project is executed with the aim of studying and identifying the factors creating liquidity crisis in the bank by using the previous studies, determining the major risk factors, shock and its impact on the assets and liabilities, designing the scenario in alignment with assets and liabilities, modeling the liquidity crisis test based on the internal influential factors, predicting the possibility for emergence of liquidity crisis and maintaining an appropriate level of liquidity in response to cash outflows and avoiding the source funding with substantial expenses. During the recent financial crisis, the liquidity risk has been the main focus of attention in that, it has revealed how a crisis can accelerate the process of liquidity shortage in the market among the banks and even hinder other large institutions from their operations. Previous to such financial crisis, there was no liquidity crisis test performed by any banks for the historical evidence did not indicate any sign of liquidity risk crisis on the grounds of liquidity events. As a general rule, in the banking industry, the inflow of sources should be consistent with the outflow of sources the failure of which may lead to three possible scenarios to bring about liquidity shortage for the bank as follows:

• Scenario 1: In this scenario it is assumed that the inflow and outflow of sources by depositors will take place in normal conditions. However, the collection of debts by or recovery of sources from the borrowers will happen less quickly. As such, the borrowers will have the sources at their disposal for a longer period of time.

• Scenario 2: In this scenario it is assumed that outflow of sources by depositors will happen more quickly. As such, the inflow of new sources and return of sources by lenders will not cover the outflow of sources.

• Scenario 3: In this scenario, it is assumed that outflow of sources by depositors will increase and simultaneously return of sources by borrowers will slide out of normal conditions.

One of the most applicable ratios for testing the liquidity crisis is the LCR (Liquidity Coverage Ratio). To define a hypothetical scenario regarding LCR, it will be imperative to exercise hypothetical shocks to the inflow and outflow of assets and measure their impact on this ratio and crisis borderline.

Under normal circumstances and considering the background, the liquidity ratios including LCR have never reached the crisis borderline. Therefore, our scenario will be built on a hypothetical situation and not on historical data. There are various assumptions which may influence the occurrence of crisis including the external factors, such as changes in inflation rate, foreign currency translation, housing price indexes, blocking Shetab payment system by the CBI and... .

The impact of each externally exogenous variable on the balance sheet ratios and increase in the claims ratio as well as decrease in the amounts of facilities and deposits will change the LCR (Liquidity Coverage Ratio) and may ultimately approach the crisis borderline.

59-5- Market risk

59-5-1- Definition of market risk

The market risk or the market value at risk (VaR) may be defined as the risk probability of uncertainty in trading portfolio revenues of a financial institution as a result of changes in market situation such as asset prices, interest rates, market volatility and market liquidity. The market risk will probably arise when a financial institution is actively engaged in trading assets, liabilities and derivative instruments and not when such items are held for long-term investments, financing and hedging purposes.

59-5-2- Executive units charged with market risk management

Saman Bank firmly believes in active management of market risk and, with this view in mind, it has devised a coherent structure to actively manage such risks. In this structure, the board of directors, High Risk Committee, Resource Allocation Committee (ALCO), Investment Commission, Investment Affairs Manager, International Division and Risk Department will play leading roles. The units and departments which are tasked with decision-making in the area of risk management are listed below:

Shares:

• Senior executive commission at the highest level – for a transaction amount in excess of 50 billion rials in a day or 10% of the investee company (whichever is lower);

• Investment Commission – for a transaction amount up to the limit Rls. 50 billion in a day or 10% of the

investee company (whichever is lower);

• Deputy for Investment and Affiliates – for a transaction amount from 3 billion rials up to 30 billion rials in a day and less than 5% of the investee company;

• Investment Affairs Manager – for a transaction amount from 0.2 to 3 billion rials in a day;

• Investment expert – for a transaction amount up to the limit of 200 million rials in a ady.

Foreign currencies:

• The International Division and, more professionally, the foreign exchange office are responsible for decision-making on the authorized limits of transactions;

• In certain cases at the weekly commissions held at the International Division, the board chairperson and CEO will participate in decision-making process as deemed proper by the bank’s special and mega policies.

59-5-3-Methods of measuring the market risk

The bank trading portfolio is made up of two segments:

• Shares/stocks

• Foreign exchange open positions

To evaluate the market risk of shares, the value at-risk of total shares portfolio with a confidence level of 99% will be calculated.

Pursuant to Basel II requirements and the CBI’s evidence regarding the credit risk, the historical simulation method shall be employed to calculate the necessary capital to cover the risk of shares portfolio. Notably, as regards the foreign exchange market risk, the forex open position for the total portfolio as well as the degree of positive/negative open position of each of the currencies and the amount of required capital for the forex risk coverage and value-at-risk of foreign currency portfolio, the historical simulation method will also be used. The open position of a foreign currency will include the absolute value of the following items:

A. the rial equivalent of the difference between forex assets and liabilities in any currency entered in the on-line accounts of balance sheet;

B. the rial equivalent of the difference between the bank’s and customers’ obligations in any currency entered in the off-line accounts of balance sheet.

Pursuant to the CBI’s directive, the authorized limit of open position for any of the currencies (positive or negative) is maximum up to 10% of the bank base capital and the authorized limit of open position for all aggregate currencies (positive or negative) is maximum up to 30% of the bank base capital.

59-5-4- Analyzing the value-at-risk investment in shares and other market-priced investments:

Considering the historical simulation method and percentage of possible changes thereupon in the market value, the level of value-at-risk for investment in shares and other market-priced investments have been illustrated in the table below:

1. Possible change in market price has been calculated for a 10-day period.

2. Effect on profit and loss at market price has been calculated for a 10-day period.

2017 2016

Type of investment Possible changein market price (1)

Effect on profit and loss (2)

Possiblechange in market price

Effecton profit and loss

Percentage Rls (M) Percentage Rls (M)

Investment in marketable shares (-4.5 , 4.4) (1216) (-5.2 , 8.0) 7400

Investment in units of mutual funds (-1.9 , 2.3) 280 (-2.8 , 4.8) 878


59

-5-5

- A

na

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The

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at y

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this

tabl

e:

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0 0

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Due

from

ban

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ther

cre

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inst

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ns 3

9,89

7,15

0 3

78,9

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4,4

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41,

074,

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1,2

68,9

47,8

10

13,

397,

879

0 1

2,74

8 1

11,5

32,6

50

1,6

44,9

30,8

14

59,

804,

599

10,

802,

924

9,9

86,9

28,7

91

Due

from

the

gove

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0 0

0 0

0 0

0 0

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0

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ns g

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and

am

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gov

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0 0

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and

am

ount

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over

nmen

tal

entit

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pers

ons

19,

669,

662

127

,299

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0

1,1

69,6

00

3,7

93,0

84

1,9

89,1

41

0 0

0 1

1,21

3,76

0 4

,762

,601

0

2,6

20,9

64,5

20

Inve

stm

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n sh

ares

and

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curi

ties

0 0

0 0

0 0

0 0

0 0

0 0

0

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from

sub

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s an

d af

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tes

0 0

0 0

0 0

0 0

0 0

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0 0

0 0

0 0

0 0

0 0

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sets

0 0

0 0

0 0

0 0

0 0

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s 0

0 0

0 0

0 0

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0 0

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posi

t 0

0 0

0 0

0 0

0 0

0 0

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Oth

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9,11

8,78

2 9

9,92

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0 0

36,

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749

218

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0

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78,

720

141

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2

4,14

2,41

0 0

54,

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858,

774

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s 9

7,92

0,93

7 6

17,7

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4,7

17,8

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84,

249,

439

1,2

72,9

59,4

50

15,

387,

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0 1

2,74

8 1

11,6

13,9

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1,6

56,2

85,7

44

88,

709,

610

10,

802,

924

67,

064,

752,

085

Due

to b

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and

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stitu

tions

(8,1

83,3

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(108

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)(4

93)

(2,5

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21)

(2,7

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(2,2

96,1

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00

0(2

0,04

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0

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(92,

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(11,

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(574

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)(1

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)(1

75)

(23,

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(4,7

01,0

44)

(1,1

44,3

66,5

41)

(90,

146,

033)

(8,9

32,6

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(6,5

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(306

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(15,

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(123

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(908

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0,54

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81,3

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(8,0

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25)

(63,

275)

(24,

609)

(7,9

69,0

45)

(1,1

75,6

24,2

31)

(92,

453,

375)

(8,9

43,6

68)

(9,1

79,9

36,2

88)

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ass

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(liab

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s at

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7(2

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6,85

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53,

705,

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691

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7

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(6

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03,6

44,9

40 4

80,6

61,5

14(3

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,859

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57,

884,

815,

797

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f ope

n fo

rex

posi

tion

(828

,645

,708

,072

) 2

,330

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,220

,699

153

,054

,242

,460

474

,059

,910

,251

198

,986

,072

,659

239

,124

,927

,764

(1,5

35,2

29,9

21)

(296

,086

,642

)92

7,10

3,99

1,61

0 2

38,4

08,1

10,7

06(1

7,60

3,18

3,50

0) 1

56,5

19,6

34,0

43 1

,661

,294

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Per

cent

age

of o

pen

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sitio

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red

to b

ase

capi

tal (

perc

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ge)

(6.5

1) 1

8.30

1.2

0 3

.72

1.5

6 1

.88

(0.0

1)0

7.2

8 1

.87

(0.1

4) 1

.23

13.

05

Per

cent

age

of o

pen

fore

x po

sitio

n c

ompa

red

to e

ffec

tive

base

cap

ital

(per

cent

age)

(6.9

7) 1

9.59

1.2

9 3

.99

1.6

7 2

.01

(0.0

1)0

7.8

0 2

.00

(0.1

5) 1

.32

13.

97

Net

ass

ets

(lia

bilit

ies)

as

at M

arch

19,

201

6(3

0,64

7,03

2) 9

5,85

1,94

6 3

,762

,767

(21,

452,

818)

(30,

417,

615)

6,8

53,6

74(6

5,29

5)(1

1,87

1) 2

1,70

9,43

0 1

,503

,423

,394

31,

626,

018

2,0

18,6

22 4

6,71

7,72

1,98

2

Obl

igat

ions

for

LCs

open

ed 0

53,

786,

313

0 9

5,06

4 0

16,

990,

431

0 0

50,

255

578

,899

,157

0

0 0

Obl

igat

ions

for

LGs

issu

ed 0

1,3

39,7

53

0 0

0 0

0 0

0 0

0 0

0

Obl

igat

ions

for

the

amou

nts

rece

ived

from

the

Nat

iona

l Dev

elop

men

t Fun

d 0

0 0

0 0

0 0

0 0

0 0

0 0

Obl

igat

ions

for

amou

nts

rece

ived

from

the

Fore

x R

eser

ve F

und

0 0

0 0

0 0

0 0

0 0

0 0

0

Considering the historical simulation method and percentage of possible changes thereupon in the foreign exchange rate, the level of value-at-risk for investment in shares and other market-priced investments have been illustrated in the table below:

1- Possible change in market price has been calculated for a 10-day period.

2- Effect on profit and loss at market price has been calculated for a 10-day period.

2017 2016

Possible change inmarket price (1)

Effect on profit andloss (2)

Possible change inmarket price

Effect on profit andloss

Percentage Rls (M) Percentage Rls (M)

US Dollar (-0.02 , 0.32) (1,335) (-0.02 , 0.43) (1,967)

Euro (-1.86 , 2.27) 3,940 (-2.68 , 2.98) 9,718

UK Pound (-2.9 , 3.14) (322) (-2.49 , 2.58) 171

UAE Dirham (-0.04 , 0.33) 748 (-0.04 , 0.43) (375)

Japanese Yen (-2.89 , 3.39) 709 (-2.24 , 2.68) (0)

Swiss Franc (-1.92 , 2.08) 435 (-2.71 , 3.41) 370

Canadian Dollar (-2.61 , 2.73) (2) (-2.63 , 2.73) (1)

Australian Dollar (-3.05 , 3.1) (1) (-3.67 , 3.58) (0)

Turkish Lira (-3.83 , 2.93) (2,337) (-3.57 , 3.50) (185)

Indian Rupee (-1.39 , 1.4) 430 (-1.43 , 2.06) 160

Chinese Yuan (-1.02 , 0.82) 1 (-0.87 , 1.01) 137

Omani Rial (-0.28 , 0.41) 242 (-0.20 , 0.47) 337

South Korean Won (-2.8 , 2.89) 3,513 (-2.61 , 2.73) 1

59-5-6- Capital sum required for market risk coverage

Shares risk Forex risk

Measurement method Value-at-risk Required capitalreserve Value-at-risk Required capital

reserve

Total capital reserve for market risk


Historical simulation model 10,744 101,924 26,725 510,286 612,210


59-5-7- Analyzing the gap between the assets and liabilities sensitive to interest rates

2017

Book value Less than 1month 1 - 3 months 3 months to 1

year 1 - 5 years More than 5years

Non-sensitiveto interest rate


Assets

Cash in hand 31,494,714 23,849,734 805,050 0 0 0 6,839,930

4.57% 5.96% 4% 0 0 0 0%

Due from banks and other creditinstitutions

9,676,029 4,202,656 0 0 0 0 5,473,373

9.6% 22% 0 0 0 0 0%


Loans granted to and amounts duefrom governmental entities

0 0 0 0 0 0 0

Loans granted to and amounts duefrom non-governmental entities/persons

127,750,201 58,898,248 19,898,137 25,757,206 19,173,105 4,023,505 0

19% 21.4% 19.3% 19.1% 15.4% 12.0%

Investments in shares and othersecurities

2,777,793 0 0 0 0 0 2,777,793


Other accounts receivable 5,945,744 0 0 0 0 0 5,945,744



Statutory deposit 23,035,684 13,606,090 1,249,677 7,113,702 1,066,215 0 0

Other assets 45,861,562 0 0 0 0 0 45,861,562

258,034,899 100,556,728 21,952,864 32,870,908 20,239,320 4,023,505 78,391,574


Due to banks and other creditistitutions

(5,475,289) (272,390) (1,487,541) (818,989) 0 0 (2,896,369)

1.2% 1.74% 2.47% 2.9% 0 0 0.0%




Provision for performance tax 0 0 0 0 0 0 0


Investment depositors' equity(214,853,049) (125,765,863) (11,551,204) (65,754,450) (9,855,401) 0 (1,926,131)

15.1% 12.64% 17.5% 18.4% 22.6% 0 0

Total liabilities and deposits (246,829,805) (126,038,253) (13,038,745) (66,573,439) (9,855,401) 0 (31,323,967)


Total liabilities, deposits and shareholders' equity

(258,034,899) (126,038,253) (13,038,745) (66,573,439) (9,855,401) 0 (42,529,061)

Gap (25,481,526) 8,914,118 (33,702,531) 10,383,920 4,023,506 36,399,824

Accumulated gap (25,481,526) (16,567,408) (50,269,939) (39,886,018) (35,862,513) 537,313 59-6- Operational risk

59-6-1- Definition of operational risk

Operational risk is the risk arising from human error, inefficiency of internal processes, system failure and external events. The operational risk does not include reputation risk and legal risk.

59-6-2- Executive units of operational risk management

Saman Bank has designed and developed a coherent framework in harmony with other departments/divisions of this bank so as to employ the scope of operational risk management in accordance with the CBI’s regulatory laws and in line with the best prevailing practice in banking industry and accordingly strives to ensure that operational risks are consistently and comprehensively identified, evaluated, measured and controlled. The

2016


1 - 3 months

3 months to 1year

1 - 5 years

More than5 years

Non-sensitiveto interest rate


Assets

Cash in hand 49,362,165 44,772,819 0 0 0 0 4,589,346

8.7% 9.63% 0%

Due from banks and other creditinstitutions

12,833,651 4,569,252 0 0 0 0 8,264,399

8% 22% 0%

Due from the government0 0 0 0 0 0 0

Loans granted to and amounts duefrom governmental entities

0 0 0 0 0 0 0

Loans granted to and amounts duefrom non-governmental entities/persons

126,987,987 67,785,949 33,799,799 162,727 12,836,695 12,402,817 0

22% 23.56% 23.26% 24.50% 20.36% 11.72% 0

Investments in shares and othersecurities

3,238,567 0 0 0 0 0 3,238,567


Other accounts receivable 5,651,666 0 0 0 0 0 5,651,666



Statutory deposit 21,131,325 11,962,093 191,466 620,125 8,026,983 330,658 0

Other assets 29,606,051 0 0 0 0 0 29,606,051

257,555,354 129,090,113 33,991,265 782,852 20,863,678 12,733,475 60,093,971


Due to banks and other creditistitutions

(27,042,210) (583,648) (4,666,611) (1,709,700) 0 0 (20,082,251)

0.44% 0.45% 1.23% 3.40% 0 0 0%




Provision for performance tax 0 0 0 0 0 0 0


Investment depositors' equity(194,173,795) (108,721,456) (1,740,197) (5,636,200) (72,955,901) (3,005,301) (2,114,740)

17.63% 16.45% 4.78% 6.81% 20.3% 22.9%

Total liabilities and deposits (247,941,403) (109,305,104) (6,406,808) (7,345,900) (72,955,901) (3,005,301) (48,922,389)


Total liabilities, deposits and shareholders' equity (257,555,354) (109,305,104) (6,406,808) (7,345,900) (72,955,901) (3,005,301) (58,536,340)

Gap 19,785,008 27,584,455 (6,563,048) (52,092,223) 9,728,175 1,972,265

Accumulated gap 19,785,008 47,369,464 40,806,416 (11,285,807) (1,557,632) 414,634


following departments or divisions are involved in this process:

• Risk Department: This department acts as an executive unit for operational risk, with the aim of identifying the resources exposed to operational risk and implementing the process of operational risk management at the level of organizational process. More importantly, the process of operational risk management is practiced in a unified approach which includes risk identification, risk assessment, risk indicators monitoring and further through risk mitigation plans in line with the risk appetite. As it stands, by receiving the periodic and updated reports from other executive departments which are acting in this connection the operational risk in the bank’s key processes is monitored, measured and evaluated.

• Quality Improvement Department: This department’s main functions are to design and document the operational procedures, define and develop the kind of relationship with other organizational divisions with respect to the operational processes, determine the monitoring indicators for evaluation and control as well as establishing an effective link between regulations and directives with the existing processes. This structure has been devised and developed for standardization of processes and minimization of operational events or occurrences.

• Inspection Department: This department will perform periodic inspections of operational processes at branch levels in accordance with the prevailing directives, procedures and by-laws and then will file reports on the findings of such inspections. The contents of these reports will be used as the base data for analyzing the operational events at branch levels. As such, the operational risk of branches will be assessed by the type of events contemplated by the Basel Committee with respect to the number (frequency) of events and the severity of possible losses as reported by the Risk Department.

59-6-3- Preventive measures from occurrence of human intentional and unintentional errors

In view of the fact that one of the effective factors which may result in operating losses is typically shaped up by individuals in an organization, Saman Bank has taken a series of actions as listed below to prevent the occurrence of human intentional and unintentional events by its personnel:

• attempt to create culture and a transparent environment in which all employees, divisions and departments will be aware of performing their duties and responsibilities thoroughly with regard to the adverse events of operational risk;

• dissemination of a proper culture with regard to operational risk so as to institutionalize the enforcement of decent ethical standards;

• planning to organize training courses to ensure that the staff members have sufficient knowledge and expertise in their career path.

59-6-4- Actions to confront a crisis

To obtain assurance for maintaining the situation in times of crisis and/or returning to normal situation under a well-defined plan in the shortest possible time aimed at minimizing the implications of crisis occurrence, Saman Bank has designed a non-operating defense by-law.

59-6-5- Method of assessing operational risk

Saman Bank employs the base index approach for inclusion of operational risk in its calculations related to capital adequacy ratio as required by the Basel II guidelines. Additionally, Saman Bank is currently striving to create and develop the structures required for assessing the operational risk by using an advanced calculation method. To this end, the bank needs to identify and assess the operational risk in all working processes. The identification and assessment tools are listed below:

• Using the risk self-assessment method qualitatively through interaction with directors and operational divisions of the bank;

• Using the findings and collected data in connection with adverse operational risk events in the bank’s daily operations which are derived from regular inspection and auditing;

• Using the risk key indicators in the important processes so as to conduct a survey of the operational risk trends.

59-6-6- Mechanisms for controlling and monitoring operational risk

Mechanism for controlling operational risk

Upon assessment of operational risk, the bank will determine which categories of risks it may accept or control. The control of operational risk shall take place through full cooperation with respective executive

amount of capital exposed to operational risk (Rls (M))

2017 2016

measurement method Rls (M) Rls (M)

Base index 172,000 321,500

59-7- Capital management

59-7-1- Base capital

The bank base capital for the fiscal year ended March 20, 2017 was the amount of Rls. 12, 718,003/- million.

The effective base capital amounting to Rls.11,892,888/- million is used to calculate the contingency ratios until the approval date of financial statements. The bank’s new base capital shall also be fixed on the basis of approved financial statements and endorsed by the Central Bank after any possible changes, modifications or deductions such as distribution of dividends among shareholders have been made in the financial statements by the general meeting.

2017 2016

Rls (M) Rls (M)

A- Tier 1 capital Capital less funds raised out of assets revaluation reserve 5,575,004 5,575,004

Legal reserve 1,536,569 1,523,868

Other reserves 0 0

Shares premium 0 0

Retained profit (loss) 161,379 1,202,145

Treasury shares 0 0

7,272,952 8,301,017

0 0

B- Tier 2 capital

General provision for doubtful debts 1,779,761 1,788,907

Fixed assets revaluation reserve 3,932,144 2,425,671

Reserve from shares revaluation 0 0

5,711,905 4,214,578

Less: addition of tier 2 capital to tier 1 capital 0 0

Tier 2 capital 5,711,905 4,214,578

Base capital prior to deductions 12,984,857 12,515,595

C- Deductions from base capital

Investment in banks and secondary credit institutions - unconsolidated 0 0

Investment in other banks and credit institutions (266,854) (152,885)

Base (regulatory) capital 12,718,003 12,362,710

Effective base capital 11,892,888 11,799,287

departments. The key measures taken in this area include identification of the processes bottleneck which is deemed to be a factor for creating operational risk (individuals, systems, processes and external events) and development, review of amended and preventive by-laws related to the occurrence of operational adverse incidents.

Mechanism for monitoring operational risk

The bank’s operational risk position will be monitored so as to review the efficiency and effectiveness of controls as well as the effect of any new incident on the organization profile during the course of specified periods. During each period, the amount of resources exposed to operational risk, frequency and severity of the effect of risk factors, key risk indicators and further the degree of efficiency and effectiveness of current controls will be reviewed and monitored.

59-6-7- The capital sum required for operational risk coverage

The capital sum required for operational risk coverage at Saman Bank will be measured and gauged by using the base index method. The amount of capital exposed to operational risk is listed below:


59

-7-2

- C

ap

ita

l a

llo

ca

tio

n

The

tota

l ris

k w

eigh

ted

asse

ts fo

r th

e fis

cal y

ear

ende

d M

arch

20,

201

7 ar

e as

follo

ws:

2017

2016

ass

ets

and

liabi

litie

sR

isk

fact

or R

isk

adju

sted

ass

ets

and

liabi

litie

s a

sset

s an

dlia

bilit

ies

Ris

k fa

ctor

Ris

k ad

just

edas

sets

and

liabi

litie

s

Rls

(M

)P

erce

nta

ge

Rls

(M

)R

ls (

M)

Pe

rce

nta

ge

Rls

(M

)

Cas

h in

han

d 2

,667

,083

0

0 2

,109

,620

0

0

Sta

tuto

ry d

epos

it 2

3,03

5,68

4 0

0 2

1,13

1,32

5 0

0

Due

from

CB

I 9

,645

,020

0

0 1

0,60

9,77

9 0

0

Due

from

ban

ks a

nd o

ther

cre

dit i

nstit

utio

ns 2

8,85

8,64

0 20

5,7

71,7

28

49,

343,

012

20 9

,868

,602

Due

from

the

gove

rnm

ent

00

0 0

0 0

Gov

ernm

ent p

artic

ipat

ion

bond

s 0

0 0

458

,902

0

0

Non

-gov

ernm

ent p

artic

ipat

ion

bond

s 0

0 0

010

0 0

Inve

stm

ent i

n sh

ares

2,3

81,9

05

100

2,3

81,9

05.0

2,6

94,6

33

100

2,6

94,6

33

Acco

unts

rec

eiva

ble

10,

125,

287

100

10,

125,

287

6,8

15,5

94

100

6,8

15,5

94

Hir

e pu

rcha

se a

nd h

ousi

ng lo

ans

28,

793,

501

50 1

4,39

6,75

1 2

7,56

2,47

7 50

13,

781,

239

Oth

er lo

ans

paid

and

am

ount

s du

e 1

00,7

36,4

61

100

93,

278,

388

93,

773,

152

100

90,

074,

577

Net

fixe

d as

sets

and

goo

dwill

7,9

14,2

26

100

7,9

14,2

26

7,7

13,4

20

100

7,7

13,4

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er a

sset

s 4

5,39

0,00

1 10

0 4

5,39

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0,48

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0,48

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5

Gua

rant

ee fo

r pa

rtic

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bond

s of

non

-gov

ernm

enta

l sec

tor

(Con

vers

ion

fact

or 5

0%)

010

0 0

010

0 0

Obl

igat

ions

for

LGs

issu

ed (c

onve

rsio

n fa

ctor

of 2

0%)

768

,132

10

0 7

68,1

32

1,1

47,4

74

100

1,1

47,4

74

Obl

igat

ions

for

LGs

issu

ed (c

onve

rsio

n fa

ctor

of 5

0%)

76

,872

10

0 3

76,8

72

276

,508

10

0 2

76,5

08

Obl

igat

ions

for

LCs

issu

ed (c

onve

rsio

n fa

ctor

of 2

0%)

644

,250

10

0 6

44,2

50

779

,489

10

0 7

79,4

89

Obl

igat

ions

for

LCs

issu

ed (c

onve

rsio

n fa

ctor

of 5

0%)

100

,727

10

0 1

00,7

27

28,

815

100

28,

815

Obl

igat

ions

for

tran

sact

iona

l con

trac

ts (c

onve

rsio

n fa

ctor

of 5

0%)

1,2

87,5

95

100

1,2

87,5

95

1,4

86,6

43

100

1,4

86,6

43

Oth

er li

abili

ties

1,3

38,9

12

100

1,3

38,9

12

117

,567

10

0 1

17,5

67

Tota

l ris

k w

eigh

ted

asse

ts a

nd li

abili

ties

183

,774

,774

155

,265

,576

2017 2016

Rls (M) Rls (M)

Base capital 11,892,888 11,799,287

Total risk weighted assets and liabilities 183,774,774 155,265,576

Capital adequacy ratio (Percentage) 6.5 8

2017 2016

Rls (M) Rls (M)

Total shareholders’ equity 11,205,094 9,613,951

Total assets 258,034,899 257,555,354

Leverage ratio (Percentage) 4 4

2017 2016

Rls (M) Rls (M)

Base capital 12,718,003 12,362,710

Total risk weighted assets and liabilities 183,774,774 155,265,576

Capital adequacy ratio (Percentage) 7 8

59-7-3- Capital adequacy ratio (CAR)

The bank capital adequacy for the fiscal year ended March 20, 2017 is 6.50 percent.

59-7-5- Leverage ratio

The leverage is the total shareholders’ equity to bank’s assets. The bank’s leverage ratio for the fiscal year ended March 20, 2017 was 4%.

59-7-4- Final Capital adequacy ratio after general meeting

The capital adequacy ratio in 2017, calculated with base capital in 2017, is 7 percent.

59-7-4-1- The capital adequacy ratio after Banks capital increase to the amount of Rls. 12,000 billion under authorization granted by the centeral Bank.The CAR will be raised to 8.19 percent.

60-1- The basis for division of sectors

The business sectors in Saman Bank include collaborative banking (by proxy), interest free (Gharzolhasaneh) banking, international banking and electronic banking.

60-2- Information on reportable operating sectors

The information related to each of the reportable sectors has been provided in the following table. The profit before tax for each sector is used to assess the performance of that sector.

60- Operating sectors


Collaborativebanking

Interest freebanking

Internationalbanking E-banking Other

activities Total


Income from loans granted and deposits in other banks 23,393,254 0 865,650 0 0 24,258,904

Interest expenses on deposits (31,547,403) 0 (400,514) 0 0 (31,947,917)

Net income from loan interest and deposits in otherbanks

(8,154,149) 0 465,136 0 0 (7,689,013)

Fee and commission incomes 414,499 23,945 58,801 832,756 0 1,330,001

Fee and commission expenses(236,804) (816) (121,569) (1,484,758) 0 (1,843,947)

Net income from fees and commissions 177,695 23,129 (62,768) (652,002) 0 (513,946)

Net profit (loss) from investments 0 0 0 0 5,029,559 5,029,559

Net profit (loss) from forex exchanges/transactions 0 0 0 1,384,565 0 1,384,565

Other operating incomes 0 0 0 0 6,206,557 6,206,557

0 0 0 1,384,565 11,236,116 12,620,681

Net incomes earned outside the bank (7,976,454) 23,129 402,368 732,563 11,236,116 4,417,722

Net incomes from interbank sectors 0 0 0 0 0 0

Total incomes from bank's operating sectors (7,976,454) 23,129 402,368 732,563 11,236,116 4,417,722

Expenses for doubtful debts of operating sector (300,000) 0 0 0 0 (300,000)

Other direct expenses attributable to operating sector 0 0 0 0 0 0

Profit (loss) of each sector before non-attributablegeneral expenses

(8,276,454) 23,129 402,368 732,563 11,236,116 4,117,722

General expenses non-attributable to sectors (4,033,048)

Profit before tax 84,674

• The non-rial transactions of collaborative banking and interest-free banking sectors are disclosed in the international banking sector.

• All non-rial transactions are disclosed in the international banking sector.

60

-3-

Ge

og

rap

hic

al

co

nce

ntr

ati

on

of

ma

jor

ite

ms o

f a

sse

ts, li

ab

ilit

ies a

nd

in

co

me

s

In p

rovi

ding

the

geog

raph

ical

info

rmat

ion,

the

maj

or it

ems

of a

sset

s ar

e re

port

ed o

n th

e ba

sis

of th

eir

loca

tion

and

the

maj

or it

ems

of li

abili

ties

and

inco

mes

on

the

basi

s of

the

bank

cou

nter

part

y’s

dom

icile

/res

iden

ce in

var

ious

geo

grap

hica

l reg

ions

.

2017

2016

Curr

ency

Typ

eIr

anIr

aqU

AE

Oth

ers

Tota

lIr

anIr

aqU

AE

Oth

ers

Tota

l

Rls

(M

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ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Rls

(M

)R

ls (

M)

Ass

ets

Cas

h in

han

d 3

1,49

4,71

4 0

00

31,

494,

714

49,

362,

165

00

0 4

9,36

2,16

5

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from

ban

ks a

nd o

ther

cre

dit i

nstit

utio

ns 9

,676

,029

0

00

9,6

76,0

29

12,

833,

651

00

0 1

2,83

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1

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from

gov

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00

00

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00

0

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ns g

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and

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ount

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00

00

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s gr

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and

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ount

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127

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0

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127

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1

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87,9

87

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s 2

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ible

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212

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227

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0

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Liab

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s

Due

to b

anks

and

oth

er c

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t ist

itutio

ns 5

,475

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0

00

5,4

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89

27,

042,

210

00

0 2

7,04

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0

Cus

tom

ers'

dep

osits

17,

098,

373

00

0 1

7,09

8,37

3 2

1,88

5,07

7 0

00

21,

885,

077

Deb

t sec

uriti

es0

00

00

00

00

0

Inve

stm

ent d

epos

itors

' equ

ity 2

14,8

53,0

49

00

0 2

14,8

53,0

49

194

,173

,795

0

00

194

,173

,795

Tot

al li

abili

ties

237

,426

,711

00

0 2

37,4

26,7

11 2

43,1

01,0

820

00

243

,101

,082


61-1- Change of main shareholders (over one percent)

During the fiscal year ended March 20, 2017, no natural or legal person entered the category of shareholders over one percent by purchasing shares. Further, no natural or legal person exited from the category of shareholders over one percent by selling shares.

61-2- Transactions with directors

This bank has no record of transactions with its directors (the directors include the managing director/CEO, members of board of directors and members of the executive board.)

61- Disclosure about related partiesName of related party Type of

Relationship Type of dealIs it liable to article 129 of Commercial

Code?Pricing method Amount

Gross profit (loss)

Balance (due) March 20, 2017


Subsidiaries

Saman Pardazeshgaran

(Processing)

JBM (Joint Board

Member) LGs issued

1 itemYes

Bank's by-laws and internal transactionscommission

12,883 - 11,594

Saman Satelite Telecommunication Co-Group

LGs issued 14 items

No Bank's by-laws and

internal transac-tions commission

26,397 3,077 24,136

Civil partnership loan

1 item43,077 0 43,077

Atieh Andishan Sepehr Mehr

Co-Group

Loans - 6 items

No


131,943 14,111 67,004

LGs issued 2 items

11,519 0 0

Atieh Andishan Sepehr Shargh Co-Group Sale of shares No

Bank's by-laws andinternal transac-tions commission

1,970,676 0 1,970,676

Iranian Credit Bureau and

Scoring

JBM (Joint Board

Member) Debt collection

contractYes


19,872 0 (3,312)

Saman Brokerage

Co-Group

Loans - 310 items

No


5,152,233 18,183 111,153

LGs issued – 2 items 10,087 0 9,078

Lease contract 3 items 1,836 0 344

Affiliates

Adonis Co-Group

Contracts - 3 items

No


80,836 0 (13,196)

Lease contract Pasdaran/Shiraz 140 0 -

Civil partnershiploan – 3 items 78,880 2,625 57,972

Saman Kish Electronic Payment

JBM (Joint Board

Member)

Civil partnershiploan – 6 items

Yes


785,496 22,176 83,703

LGs issued – 19 items 201,938 0 177,729

Service & Leasecontracts - 6 items 158,544 0 255

Other relatedparties

Aftab Tejarat Saman

Other

LGs issued – 3 items

No


2,300 0 95

Cleaning services 87,950 0 (7,793)

Contracts 5 items 9,265 0 (1,031)

Behnad Bana Other

Contracts 5 items

No


258,244 0 105,366

LG issued – 1 item 6,268 0 -

Kala TejaratKhalij Fars

Other

Jaalah Contract(Swiss Franc)

5 items

No


424,746 806 -

LG issued – 1 item 3,100 0 2,790

Civil partnershiploan – 32 items 4,187,507 425,940 1,771,630.2

Saman Insurance

JBM (Joint Board

Member)

Insurance policies

Yes


79,545 0 (7,821)

Sale of shares 1,944,000 0 1,141,000

LGs issued 14 items 14,972 0 -

61-3- Transactions with related parties during the year are as follows:


61-4- Account balances of related parties with whom no transactions have been conducted during the year as follows:

The amount due is related to the dividend receivable.

Allocation of the year-end accumulated earnings are subject to the approval of the shareholders’ ordinary general meeting in the following cases:

Name of related party Type of relationship

Received (Paid)

Adjustments (expenses of

doubtful debts and …)

Balance (due) at March 20, 2017

Balance (due) at March 19, 2016


Saman Brokerage Co. Subsidiary 59,351 - 292,370 139,423

Atieh Andishan Sepehr Shargh Service Development Co. Subsidiary (200,000) - 200,000 -

Kardan Investment Bank Affiliate - - 264,600 -

Amount

Rls (M)

Legal duties

Distribution of at least 10 percent of net profit earned in 2016-2017 under the provision ofarticle 90 of the Commercial Code Amendment 8,467

Proposal by the board of directors

The amount of dividend proposed by the board of directors 0

63-1- Status of balance of interest- free sources and uses


Rls (M) Rls (M)

Interest-free sources

Interest-free deposits in rial 539,461 553,313

Total interest-free sources 539,461 553,313

Uses of interest-free savings

Loans granted and amounts due from persons

Ordinary loans (764,156) (140,918)

Staff loans (132) (54)

Loans based on the privilage of law (Note) 0 0

Total uses of interest-free savings (764,288) (140,972)

Statutory deposit on sources of interest-free deposits (67,057) (51,888)

Liquidity reserve on interst-free deposits (5%) (26,974) (27,666)

Surplus (shortage) of sources to uses of interest-free deposits (318,858) 332,787

62- Accumulated earnings at year-end

63- Performance of interest- free transactions for savings in rial (Gharzolhasaneh)

63-2- Net fee on interest- free transactions

63-3- Classification of interest- free facilities based on the loan purpose:

Note 2017 2016

Rls (M) Rls (M)

Fees received from interest-free loans 23,945 5,685

Prizes on interest-free deposits (816) (816)

Net fees on interest-free transactions 41-1 23,129 4,869

2017 2016

Rls (M) Rls (M)

Marriage 666,860 91,136

Relief (Emdad) Committee pensioners 79,418 36,531

Ordinary people 17,878 13,252

Staff members 132 53

764,288 140,972

annual report 2016178 Annual Report 9 Date of capital increase Increase New capital Source of...

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