6 PART ONE 8 EN BANK OVERVIEW 9 FINANCIAL HIGHLIGHTS 10 CEO'S MESSAGE TO THE 2012 GENERAL MEETING 11 FACTS AND FIGURES 14 BACKGROUND 16 INTERNATIONAL CREDIT RATING 17 ACHIEVEMENTS 19 STRATEGY & STRATEGIC OBJECTIVES 19 2013 OUTLOOK 20 GROUP STRUCTURE 23 COMPOSITION OF SHAREHOLDERS 24 BOARD OF DIRECTORS 26 EXECUTIVE TEAM 28 A GLANCE AT IRANIAN ECONOMY AND BANKING SYSTEM 33 BUSINESS PROFILE 34 RETAIL BANKING 35 CORPORATE BANKING 5 36 ELECTRONIC BANKING 38 INTERNATIONAL BANKING 42 PRIVATE BANKING 43 CORPORATE GOVERNANCE 45 CONTROLS & ACCOUNTING POLICIES 45 AUDITORS 46 ANTI-MONEY LAUNDERING PROCEDURES 47 RISK MANAGEMENT 52 EN BANK COMMITTEES 56 HUMAN RESOURCE AND TRAINING 58 SOCIAL AND CULTURAL ACTIVITIES 61 CONTEMPORARY ART 63 BOOKS 63 FILMS 63 EDUCATION 63 PHILANTHROPY 64 BRANCH NETWORK 66 TEHRAN BRANCH NETWORK 69 PROVINCIAL BRANCH NETWORK 74 PART TWO 76 FINANCIAL STATEMENTS

PART 1 7 EN BANK OVERVIEW

EN Bank’s Main Branch Financial Highlights EN Bank was established in August 2001 as the first privately-owned bank in the Islamic Republic of Iran with the aim of offering a wide range of retail, commercial, and international banking services within the context of the usury-free banking system. The following tables represent financial highlights and key ratios of EN Bank for the financial years 2010 through 20121:

Year Ended March 20, 2012 Year Ended March 20, 2011 Year Ended March 20, 2010

IRR USD IRR USD IRR USD million thousand million thousand million thousand Total assets 176,136,329 14,339,846 136,310,828 13,132,064 111,745,298 11,318,272 Net income 4,489,772 408,458 3,002,672 290,001 2,149,898 216,418 Operating income 8,124,764 739,152 6,490,954 626,903 5,272,173 530,720 Shareholders’ equity 13,334,557 1,085,611 9,848,712 948,816 7,148,365 744,723 Total deposits 150,959,813 12,290,142 115,432,344 11,120,650 96,966,922 9,821,424 Total loans 122,391,883 9,964,331 97,915,059 9,433,050 83,953,949 8,503,388 Paid-in capital 8,000,000 651,307 5,500,000 529,865 3,000,000 303,859

Key Ratios % Year Ended March 20, 2012 Year Ended March 20, 2011 Year Ended March 20, 2010 Expenses/Operating income 40.20 49.37 54.53 Net income/Operating income 55.26 46.26 40.78 Return on equity 40.4 36.9 35.4 Return on assets 2.9 2.42 2.02 Deposits/Loans 123.34 117.89 115.5 9

1 The Iranian financial year runs from March 21st of each year to March 20th of next year. In this report, the year 2012 corresponds to the period March 21, 2011 through March 20, 2012. CEO’s Message to the 2012 General Meeting On behalf of the Board of Directors, I am honored to present the EN Bank’s Annual Report for the Financial Year 2011-12.

The year under review was a challenging and money laundering committee and compliance determining year for the Iranian Economy in department to be in line with recent CBI policies. general and for the banking sector in particular. EN Bank capital increased from USD 550 million to The turbulent economic conditions, induced by the 800 million. global economic crisis and recessionary climate These are concrete indications of the Bank’s presented fresh challenges to the Iranian economy. dedication to protect the interests of our On the domestic front, rising inflationary pressures, shareholders. unemployment rate, undesirable investment To fulfill our commitments, the following strategies climate, devaluation of national currency etc., were defined and performed accordingly: imposed severe conditions to the banking sector. Firstly, to increase specially designed product and Notwithstanding these concerns, your Bank service options while carrying out our common continued to perform well in FY 2011-12 and the banking activities. Secondly, to adopt a high quality following progresses were successfully achieved: customer-oriented approach for services rendered. Thirdly, to motivate and support the ongoing 50% annual increase in net profits of the EN Group development of employees via effective career shows greater integration of our subsidiaries in progression and performance management systems. providing services and products to EN Bank clients. Fourthly, to ensure that both internal and external 24.9% increase in credit facilities granted, together customers are fully aware of our banking identity. with a 30.7% increase in deposits. Finally, to provide high quality banking services Our tier one capital ratio increased to 35.4%, its through our wide network of branches. best level since the introduction of Basel Capital By strengthening and expanding the aforementioned Framework. strategies, we firmly believe that EN Bank’s 45% increase in total bank’s capital. efficiency will be enhanced in the upcoming year, Taking fiduciary duty, accountability, commitment making it one of the most profitable banks in the and transparency into account, EN Bank is at the sector. Our business strategies and organization forefront of corporate governance. To this effect, have been shaped in line with this expectation. So, this year a Supreme Council of strategic planning we are committed to increase our share in all fields, was set up to closely review and monitor corporate to maintain and expand the level of profitability and governance. efficiency. To improve the existing internal and external In the end, I would like to wholeheartedly control systems based on Basel Guidelines and thank anyone who worked with dedication and Rules recommended by the Central Bank of the contributed to such prosperity and to express my Islamic Republic of Iran (CBI), our internal auditing gratitude to our precious shareholders, for their committee restructured itself with the mission trust and support and wish you all a fruitful and of acting as a service provider not only to the profitable year. management but also to the organization as a Kind Regards, whole. Chief Executive Officer A new guideline was put into effect by our anti- Facts and Figures

Year Ended Year Ended Year Ended March 20, 2012 March 20, 2011 March 20, 2010

Employees 2,662 2,356 2,113

Branches 233 243 228

ATMs 746 670 670

Customers 2,389,579 2,391,609 3,777,404

Net Income (m. IRR) 4,489,772 3,003,000 2,149,898 11 Total Assets (m. IRR) 176,136,329 136,310,828 111,745,298

Total Deposits (m. IRR) 150,959,813 115,432,344 96,966,922

Paid-In Capital (m. IRR) 8,000,000 5,500,000 3,000,000

Shareholder’s Equity 13,334,557 8,910,286 7,148,365

Ordinary Shares Outstanding 8,000,000,000 5,500,000,000 4,000,000,000

Nominal Value per Share - IRR 1,000 1,000 1,000

Market Capitalization (m. IRR) 24,392,000 18,320,500 8,202,000

Earnings per Share (EPS)– IRR 561 546 717

Ordinary Share Dividend– IRR 300 465 450

Return on Equity (%) 40.4 34.9 35.4 Amounts in Iranian Rials (IRR) except where stated. Total Assets (IRR million) Net Income (IRR million)

Shareholder’s Equity (IRR million) Return on Equity (%)

Total Deposits (IRR million) Total Loans (IRR million) Branches Number of ATM

243

233

228

Our vision Our vision is guided and underpinned by the following key aspirations: ೽೽ to become a bank of choice in the Iranian Banking Sector; ೽೽ to become a learning bank for innovative solutions with a unique position; ೽೽ to become a full financial service provider; ೽೽ to emerge as a conglomerate holding offering a diverse pool of financial instruments and banking services.

Our Mission 13 As a dynamic and aggressive team, we are committed to making our utmost effort towards accomplishing the following goals; ೽೽ to provide the highest level of professional service standards to our clients by being a client- focused and value-driven leading privately-owned bank; ೽೽ to meet the rising expectations, needs and desires of our customers; ೽೽ to extend our operation with a strong corporate culture combined with knowledge, expertise and skills; ೽೽ to employ the state-of-the-art technology to fulfill our shareholders’ expectations; ೽೽ to maintain our integrity and progress towards creating value, sharing trust and practicing ethical behavior; ೽೽ to move from conventional banking system towards modern and advanced electronic banking faster than earlier; ೽೽ to achieve superior returns and rewards for our shareholders and stakeholder; ೽೽ to act as a one-stop service provider for almost all types of banking and financial activities; ೽೽ to enter emerging internal and external markets, in particular, with focus on selected areas; ೽೽ To deliver a highly profitable performance with the aim of maximizing revenues and minimizing costs towards a consistent and sustainable growth while bringing benefits to all parties concerned specifically our shareholders and customers; ೽೽ to screen the highly qualified university graduates and banking veterans for recruitment.

Our key pillars Innovation, creativity, inspiration, teamworking and solid corporate culture.

Our core values are: Integrity and ethical behavior, customer satisfaction, commitment to excellence and service quality and customer trust. Background Established in August 2001, EN Bank was the reality, the primary goal of this gigantic effort first private sector bank to be licensed in the was to establish a bank which would facilitate Islamic Republic of Iran in 1979. Pursuant to the financing for the private sector, as well as rules of law authorizing the establishment of offering the most advanced and sophisticated privately-owned banks and credit institutions, banking services... EN Bank commenced its operations in Since its inception, EN Bank has offered a compliance with the regulatory framework wide range of services based on efficient and under the supervision of the Central Bank of responsive business model, in keeping with the Islamic Republic of Iran (CBI). With an initial modern times. More over, it has established or capital of USD 30 million, EN Bank has acted invested in subsidiary and affiliated companies, as a keystone, fostering a new and dynamic to allow for provision of a wide array of approach in the Iranian banking industry. financial services to meet the growing needs The Bank’s founding shareholders were major and demands of its expanding customer-base. companies from the industrial, construction The foundation of the Bank’s business model, is and investment sectors. They were confident still mainly focused around corporate sector. about the success of their new enterprise, EN Bank was listed on the Tehran Stock Exchange given their long-time history of serving in (TSE) on February 4, 2004, with capital increase various sectors of industries in the country. In during multiple stages as detailed below:

Registered Date of Capital Previous Capital Amount of Increase New Capital % Increase )IRR million( )IRR million( )IRR million( Feb. 19, 2012 5,500,000 2,500,000 8,000,000 45.45

Jan. 08, 2011 4,000,000 1,500,000 5,500,000 37.5

May 26, 2010 3,000,000 1,000,000 4,000,000 33

July 12, 2009 2,500,000 500,000 3,000,000 20

June 13, 2008 2,000,000 500,000 2,500,000 25

June 13, 2006 1,000,000 1,000,000 2,000,000 100

Dec. 5, 2005 500,000 500,000 1,000,000 100 15 International Credit Rating EN Bank has been the first private sector bank in Iran to be rated by an international credit rating agency. The table below presents our latest ratings in September 2010 by a highly reputable credit agency, Capital Intelligence:

Foreign Currency Long-Term -BB Short-Term B Financial Strength -BB Support 4 Outlook Foreign Currency Stable Financial Strength Stable Achievements International Achievements Landmark achievements during the Best Bank in Iran course of the given year are listed Each year, the Euromoney Magazine below: selects the top banks in different countries for their overall activities. EN Bank has been selected for the second year running as the Best Bank in Iran.

Bank of the Year for Iran EN Bank has managed to receive the prestigious recognition by The Banker, as Bank of the Year for Iran, for the past three years, as a result of adopting effective strategies, employing qualified human resources, applying new methods of management and benefiting from modern methods of international banking.

Being a Member of ABA Board of Directors EN Bank elected as member of the Board of Directors of the Asian Bankers Association (ABA) in 2010, a first for an Iranian Bank.

Observer Member of IFSB EN Bank was elected as an observer of the Islamic Financial Services Board due to its high creditworthiness.

Capital Intelligence Certificate for 2008-2009 Issuance of Rating Assessment Certificate for 2008-2009 by Capital Intelligence, a globally–known rating agency. National Achievements EN Bank Supports of Iran Thalassemia Charity Association In coincidence with the 10th inaugural anniversary of EN Bank, ten Thalassemia Treatment Centers (TTCs) were equipped by necessary water cooling systems throughout Iran.

EN Bank Supports of Mahak Charity For fulfilling social activities, EN Bank, on behalf of its shareholders allocated the specific amounts to the Mahak Charity for providing its publication requirements.

Participation and Support of Ra’ad Rehabilitation Goodwill Complex EN Bank, on behalf of its shareholders, actively participated in Ra’ad Charity Market and supported it by allocating the specific amounts for humanitarian aids.

EN Bank Donations to Somali Muslims In line with humanitarian aids and contributions, EN Bank staffs donated their one-day’s salary to the afflicted people of Somali.

Participation and Receipt of a Reward from National Productivity Festival For the second consequent year, EN Bank participated in Banks, credit institutions and other financial organization sector of the National Productivity Festival and was nominated and elected as the pioneer bank of Iran.

The 5thGlobal Electronic Banking Conference EN Bank, as the winner of E-bank 2011 Prize was nominated as the best Internet Banking System by the Juri of conference secretariat and received its award from the deputy of Information Technology Organization. Strategy & Strategic Objectives EN Bank strives to outmaneuver its competitors by by accepting the power of strategic thinking and constantly diversifying and improving its portfolio of inexhaustible capabilities of human capital, EN Bank customized products and services. For this purpose, will create new strategic opportunities for both its the Bank has set its strategies in the form of a customers and shareholders. rolling three-year plan, which is repeatedly subject Rapid product delivery places much emphasis to revision and modification and being tailored on technology, coupled with the expansion of a to the needs of its business model and customer national branch network to accomplish the goals set expectations. EN Bank aims to become a one- in the bank’s strategic planning. The key elements stop service provider, offering all types of banking of such strategic thinking can be summarized as services under one umbrella. On the other hand, follows:

೽೽ To develop a corporate culture with great emphasis on an efficient organizational structure underpinned by corporate governance which can effectively monitor the bank’s operations. ೽೽ To evolve from the first privately-owned bank in Iran to the “Best Bank” in Iran, ultimately designed to have a dynamic presence at local, regional and international levels. ೽೽ To employ cutting-edge technologies to expand the bank’s network of services, chiefly focusing on electronic delivery channels such as internet banking, telephone banking and mobile banking. ೽೽ To strengthen the Bank’s capital base and improve other key ratios to maintain solid financial position. 19 ೽೽ To extend the scope of international banking services available to its customers. ೽೽ To optimize the growth of the portfolio of subsidiary companies within EN Group. ೽೽ To improve the efficiency of its risk management system by employing the most modern software solutions. ೽೽ To place great emphasis on productivity improvement and on diversified sources of profit. ೽೽ To explore new products and services with huge growth potential. ೽೽ To target new opportunities across different sectors, as well as provision of services not yet offered by competitors.

Considering these strategic factors, EN Bank has of the strategic planning have been reflected in a witnessed a period of rapid growth, consolidating very significant expansion in the Bank’s asset-base its position as one of the pioneering banks among and a considerable increase of its market share in its peers in the private banking sector. The results both customer loans and deposits.

2013 Outlook Key operational goals planned for 2013 at EN Bank have been set as follows: ೽೽ Growth of total deposits to IRR million 150,000,000 ೽೽ Plan to establish 20 branches and 4 sub branches in Tehran. ೽೽ Plan to establish 41 branches in different provinces. ೽೽ Increase in number of bank’s ATM to 766. ೽೽ Increase in number of bank’s POS to 67,000. Group Structure In an effort to expand the pool of products and services available to its customers, EN Bank has established several subsidiaries spanning an expansive spectrum of financial services, from insurance services to investment banking and brokerage services. The list of EN Group subsidiary companies is provided in the table below:

Holding (%)

Novin Payment Company 95.25 1

Islamic Regional Cooperation Bank (Iraq) 63.20 2

Novin Foreign Exchange Services Company 98 3

EN Bank Leasing Company 60 4

Novin Investment Company 34.34 5

Novin Support Services Company 60 6

Sarmayegozari Omran Tose Paydar Iranian Co. 67 7

Novin Insurance Company 19.90 8

EN Bank Brokerage House 39.99 9

Chemibaft Company 27.84 10

Eghtesad Novin Investment Company 48 11

Eghtesad Novin Khadamat Rayan Company 67 12

Rah-e Eghtesade Novin Company 67 13

Olga General Trading & Engineering Co. (Iraq) 100 14 A brief overview of EN Group entities Novin Insurance Company 2006 as part of the EN family of companies. (Public Joint Stock) The company is engaged in arranging for Established in 2005, Novin Insurance hire/lease purchases of vehicles, real estates, Company offers a wide range of professional, consumer durables, office equipment, transportation and engineering insurance heavy machinery, airplanes, ships and boats, services in response to its customers’ demands computer hardware and software and medical and requirements. and hospital equipment, based on the borrowers’ credit ratings and the type and Novin Foreign Exchange Services value of collaterals so secured. Company (Private Joint Stock) Novin Exchange offers foreign exchange and Rah-e Eghtesad Novin Company wire transfer services to individuals and busi- (Private Joint Stock) nesses. This company was basically founded to render services in areas of customer credit rating and Novin Payment Company assessment of feasibility and technical aspects (Private Joint Stock) of projects. It also acts as the back office for Established in 2006, Novin Payment Company all financial operations for EN Group, including provides electronic payment services and arranging tax payments on behalf of the Group, 21 is primarily engaged in the production, negotiating appraisal agreements and making procurement and sale of various payment any other payments deemed necessary. In cards, ATM equipment and POS machines. addition, the company records customer account data on a daily basis and conducts periodic Novin Support Services Company reviews of EN Bank’s loan portfolio, while (Private Joint Stock) reporting on the status of its credit facilities. This company is responsible for providing and overseeing logistical services required Novin Investment Bank for the EN Bank family of companies. Its main (Private Joint Stock) responsibilities include: (a) purchasing, leasing Novin Investment Bank (NIB) was established or renting of properties for branches, as well on April 7, 2009, with a capital sum of 1,000 as provision of the necessary maintenance billion rials. Main activities for NIB include services; (b) handling cash deliveries to investing in shares of other companies branches and the like; and (c) staffing and (listed and non-listed), buying and selling outfitting of ATM machines. In summary, of securities, entering into partnerships for the company is logistically responsible for construction projects and provision of services ensuring that a branch is properly furnished related to mutual funds. It also aims to with all necessary facilities prior to starting its diversify its portfolio to include shares listed on operation. It also handles all employee issues international stock exchanges. relating to salaries and benefits, as well as employee welfare programs. Eghtesad Novin Investment Company (Public Joint Stock) EN Bank Leasing Company Established in 2006, Eghtesad Novin (Private Joint Stock) investment Company offers its customers an In order to help the bank with the commercial alternative funding resource in the capital and consumer finance demands of its client markets for financing of projects. This company base, a leasing company was established in provides underwriting and corporate advisory services to clients who intend to become EN Bank Brokerage House listed on the stock exchange. It is also active in (Private Joint Stock) private equity and venture capital operations Established in 2004, this brokerage firm has across various sectors and is constantly seeking been very active in the capital markets for investors for different projects. Other corporate market-making and trading of shares on the advisory services such as mergers and Tehran Stock Exchange. Being a close affiliate acquisitions or restructuring of companies are of EN Bank, with a strong presence in the also provided. The company’s capital amounts brokerage industry, En Bank Brokerage House to 200 billion rials. assists EN Bank customers with their investment portfolios. The company’s future plans include possible offering of e-trading services and OTC services for unlisted companies.

Islamic Regional Cooperation Bank - IRCB (Pri- The Bank’s headquarters is located in: vate Joint Stock) Building No. 59, 17th Avenue The Islamic Regional Cooperation Bank (IRCB) Quarter No. 929, Al Masbah commenced its activities in Iraq in April 2007, with a Baghdad, Iraq capital of 25 billion Iraqi Dinars. The Bank’s capital at present stands at 100 billion Iraqi Dinars, equivalent IRCB Rating to USD 85,000,000. The Bank’s main objective is to In 2009, The IRCB gained an A2 credit rating facilitate trade and banking activities between the from the Central Bank of Iraq, based on the two countries of Iran and Iraq. international rating Existing branches include Baghdad (main standards, CAMEL. branch), Karbala, Najaf, Suleymaniye, Basra and Erbil.

International banking Services offeredby the IRCB ೽೽ Import and export documentary letters of credit (LCs) ೽೽ Import and export letters of guarantee (LGs) ೽೽ Bid bonds ೽೽ Performance bonds ೽೽ Documentary bills for collection ೽೽ Loans in foreign currencies ೽೽ Foreign currency current accounts ೽೽ Foreign currency deposit accounts ೽೽ Foreign exchange transactions ೽೽ International transfers

Domestic banking services offered by the IRCB ೽೽ Current accounts ೽೽ Savings accounts ೽೽ Term deposits Composition of Shareholder

EN Bank shareholders include a number of major industrial groups, construction groups and investment companies, as well as natural persons and legal entities as listed below:

Holding (%)

1 Iran Construction Investment Company 9.5

2 Samaneh Stratus Investment Company 8.9

3 Behshahr Industrial Group Construction Company 8.8

4 Behpakhsh Company 8.7

5 Javanan Housing Company 8.5

6 Behshahr Group Investment Company 7.3

7 Tehran Renovation and Construction Company 6.9 23

8 Sugar Management Company 5.6

9 Behpak Industrial Company 5.7

10 Novin Housing Company 3.8

11 Other Legal Entities (89) 22.3

4 12 Natural Persons (9,062) Board of Directors

Bahram Fathali Chairman

Seyed Abdolhossein Sabet Vice Chairman

Seyed Mohammad Sadr HashemiNejad Board Member

Ali Manavi Rad, Ph.D Board Member EN Bank’s Board of Directors

MEMBER Title UNIVERSITY DEGREE Institute of Chartered Bahram Fathali Chairman Accountants in England & MA Accounting & Finance Wales (ICAEW) Management Training Center MA Management Seyed Abdolhossein Sabet Vice Chairman Allameh Tabatabaei University BA Management Seyed Mohammad Sadr Ashford University BA Business Administration Board Member Hashemi Nejad Tabriz Technical University BSc Civil Engineering London University PhD Economics Oxford University MA Economic Development Ali Manavi Rad Board Member Tehran University MA International Law Higher School of Business BA Business Administration

EN Bank’s Board of Directors Executive Team Mohammad Hashem Botshekan, Ph.D Chief Executive Officer (CEO) Mr. Hosein Sabeti Vice CEO. International Affairs

Mr. Alireza Pouyan Shad Mr. Hamid Tehranfar Vice CEO. Director Retail Banking Credits & Collections

Mr. Masoud Mehrdadfar Mr. Mohammad Akherati Vice CEO. Director Corporate Banking Tehran Branch Network Mr. Ali Akbar Haddad Zadegan Mr. Ali Hosseini Vice CEO. Director Administration Provincial Branch Network Mr. Afshin Karimi Mr. Fardin Qoreishi Vice CEO. Director Finance Legal Affairs Ms. Zahra Mir Hosseini Ms. Azar Mohassesi Vice CEO. Director IT Inspection

Ms. Farideh Zoalfaghari Director Mr. Alireza Lashgari Pour International Affairs Director Mr. Hossein Darvishha Training 27 Director Mr. Reza Iranitabar Private Banking Director Mr. Mojtaba Shirvani Harandi Risk Director Mr. Karim Nikoukar Investment Affairs Head Mr. Hossein Vahhabi Public Relations Director Marketing & Corporate Banking Offices Affairs A Glance at Iranian economy and banking system The Iranian economic system is a combination industry, and, over the past 5 years, the of a centrally planned economy, public authorities have placed emphasis on the ownership of oil and other large industries local production of domestic consumption- and small market-based ventures/enterprises. oriented goods such as home appliances, It is also a diversified economy with over 40 cars, agricultural products, pharmaceuticals, industries directly involved in the Tehran Stock power and petrochemicals, etc. Currently the Exchange. However, most of the country’s government is striving to privatize some of exports are oil and gas, accounting for a these industries and, so far, some successes majority of government revenue in 2010. have been achieved. Accordingly, in recent Interestingly, Iran is one of the few major times, the government enforced the rationing economies which has maintained positive of oil products which, in conjunction with the growth in the aftermath of the 2008 global results from a combination of price controls financial crisis. and subsidies, particularly on food and energy, Today, Iran possesses a good manufacturing has continued to burden the economy.

Key Economic Indicators (%) Description 2010 2011 2012(Till 20th March) Gross Domestic With oil 4.3 6.5 Not Available Product Growth (GDP) Without oil 5.2 7.3 5.1 Inflation rate 10.8 12.4 21.5 Liquidity growth 23.9 25.2 19.4 Source: Central Bank of the Islamic Republic of Iran

The global economic recession has led to the the Iranian economy as well. The table below increase of high risk assets in the international illustrates the growth of monetary and credit banking system and a jump in the past-dues variables across the country during the years and a drop in the liquidity of banks. The 2011- Feb. 2012 as reflected in the CBI’s latest recessionary conditions will adversely affect report.

Monetary and Credit Variables (IRR billion) Growth )%( Description 2012 2012 2011 2010 2011 )Till 20th March( )Till 20th Feb( Banknotes and coins 225,155 212,855 21.9 17.1 -5.5 Demand deposits 533,561 622,631 11.3 30.3 16.7 Money 757,716 835,487 14.5 25.9 10.1 Total deposits in the private sector banking 2,723,718 3,177,672 24.1 25.9 16.7 Quasi-money (non-demand deposits) 2,190,157 2,555,041 27.5 24.9 16.7 Liquidity 2,948,587 3,390,528 23.9 25.2 15 Source: Central Bank of the Islamic Republic of Iran Iranian Banking System The Iranian banking system operates on the system is currently lower than that of their Islamic rules and principles which were ratified state-owned counterparts, they are poised to by the Parliament under the title of “Usury-Free play an important role in forming, activating Banking System Law” in 1983. Thus the banking and transforming the banking environment system and monetary structure are supervised in Iran. Currently, in addition to the seven by the Central Bank of the Islamic Republic of government- owned commercial bank s Iran (CBI). Following the Islamic Revolution (Bank Melli Iran, Bank Refah, Bank Sepah, in 1979, privately-owned banks were Bank Mellat, Bank Saderat, Bank Tejarat and nationalized, by 2001 when the first license Post Bank) and the four specialized banks was issued for establishment of a privately- (Exports Development Bank of Iran, Bank owned bank. This was followed by establishing of Industry and Mines, Bank Keshavarzi and 5 more privately-owned banks competing with Bank Maskan), there are about 14 banks in the 10 state-owned banks. All banks were the private sector where most of them came state-owned due to a series of amalgamations into existence within the past two years in of about 37 banks operating in Iran before the view of a new interpretation of article 44 of Islamic Revolution. Although in 2007, as a part the Constitution. of the privatization program, some of the state- Among many reforms in the banking system owned banks were planned for privatization. including changes in the foreign exchange This process is now underway, with Bank policy in compliance with international Tejarat, Bank Mellat and Bank Saderat whereby banking standards. In recognition of the it is partially or wholly accomplished. Basel II guidelines, the CBI is reviewing a One of the most significant steps taken by comprehensive risk management policy to CBI was licensing privately-owned banks be gradually and surely implemented in all in an effort to increase competition and Iranian banks. Additionally, the CBI has issued diversification in the banking industry across an anti-money laundering directive to all the country. The growth of private sector Iranian banks with respect to the measures 29 banks is mainly due to introduction of new that all banks should adopt to ensure against products and services as well as efforts made attempts of money-laundering activities by towards customer satisfaction. Although potential customers based on the “know your these banks’ contribution to the financial customer-related principles”. The performance of National Banking System in 2011-2012 During the past three years, some changes in the It is worth mentioning that Iranian Banks banking competitive environment have greatly could raise funds via two types of deposit affected the performance of the national banking account: Gharzolhassaneh (Usury-free) account system. The decisions made by the government and investment deposit accounts. The latter on the profit rates and listing of some state banks quality for profit sharing but the former are on the Tehran Stock Exchange are among the naturally attractive to banks owing to their important events during this period. low cost. Banks normally provide funding to Additionally, since the banking rules are enforced their corporate customers through conclusion under the supervision of the CBI, all banks shall of participation or civil partnership contracts have to comply with the requirements set down or constant profit contracts. Given the profit within a regulatory framework. Based on CBI limit set on the constant profit contracts in statistics in its latest report in Feb. 2012, the the form of directives by the CBI, thus the bulk national banking system has achieved growth of corporate lending by private sector banks rates in various sectors in Feb. 2012. happens in the form of civil partnership where During the same time period, the national the level of maneuverability is fairly high. Retail banking system achieved growth rates of 17.8% lending chiefly occurs in the form of hire or in total assets, 15% in total liquidities and -15% in lease purchase to buy consumer durables. total loans and deposits in the government sector. The comparative table below illustrates the Time deposits have grown 16.7% in all banks and breakdown of loans granted by banks and credit credit institutions, 19.6% and 17.6% in state and institutions based on Islamic Contracts (Sharia privately owned banks, respectively. principles)

Breakdown of Loans Granted by Banks and Credit Institutions based on Islamic Contracts (Sharia principles) (Amount Expressed in Billion Iranian Rial (IRR))

Private Banks and Credit Banks and Credit Institutions Commercial Banks Specialized Banks Institutions Description Feb.2012 Growth Share Feb.2012 Growth Share Feb.2012 Growth Share Feb.2012 Growth Share

Gharzolhassaneh 168,521 40.9 5 55,191 41.7 7.7 34,094 73.4 3.5 79,235.6 30 4.8 (profit-free loans)

Mudarabah 124,782 -1.5 3.7 34,451 -0.6 4.8 5,213 -31.5 0.5 85,118.3 0.8 5.1

Salaf 13,943 -35.7 0.4 6,588 -53.8 0.9 6,583 -0.9 0.7 771.9 -2.1 0.0 Civil partnership 1,197,844 9.7 35.7 131,413 12.9 18.3 316,074.8 -5.2 32.7 750,356.6 16.8 45 Jealeh 144,550 9.7 4.3 72,670 18.4 10.1 15,313.4 5.7 1.6 56,566 1.3 3.4 Sales by installment 995,421 10.3 29.7 203,319 -2 28.3 504,123.2 25.3 52.2 287,979.3 -1.6 17.3

Hire purchase 20.575 -9 0.6 6,468 -0.4 0.9 4,291 -1.3 0.4 9,815.8 -16.6 0.6 (leasing contracts) Legal partnership 68,175 52.1 2 11,826 3.3 1.6 5,352.8 13.8 0.6 50,996.8 78 3.1 Direct investment 27,212 39.7 0.8 4,919.8 -12.6 0.7 2,255.5 7.2 0.2 20,036.8 70.7 1.2 Other 590,104 39.7 17.6 191,887.9 44 26.7 73,299.5 28.4 7.6 324,916.6 40.1 19.5 Total 3,351,131 15.4 100 718,737.5 14.1 100 966,600.3 13.4 100 1,665,793.7 17.2 100

Source: Central Bank of the Islamic Republic of Iran

As the table above demonstrates the highest related to Salaf contracts. Among the privately- share of loans is related to the Sales by owned banks, the highest growth rate is installment, the highest growth rate for the related to Gharzolhassaneh (interest free first quarter of 2012, 35.7 is related to civil loans) and the highest reduction is related to partnership and the highest reduction is the Salaf contracts. 31 Interest Rates Since all banking transactions are conducted in accordance with Islamic principles, there is no fixed interest rate table per se. Investment deposits can be placed for any period from six months to five years. Further, the “rate of return” from deposits in both state-owned and private commercial banks would be annually revised and determined by the Money and Credit Council for which the CBI is responsible. However, during the given period (2011-2012) the rates set by the CBI for customers’ deposits were enforceable by both privately-owned banks and state banks. Interest rates1 paid on customers’ deposits are shown in the tables below:

State Banks Previous Year New Rates Description )2011( )Till 20th March 2012( 5-year term 17 20 4-year term 16 19-20 3-year term 15 19 2-year term 14.5 17.5-19 One-year term 14 17 Special short term 8-11 10-15 Regular short term 6 7 Source: Central Bank of the Islamic Republic of Iran

Privately-Owned Banks and Credit Institutions Previous Year New Rates Description )2011( )Till 20th March 2012( 5-year term 17 20 4-year term 16 19-20 3-year term 15 19 2-year term 14.5 18-16 One-year term 14 17-18 Special short term 8-11 10-15 Regular short term 6 7-10 Source: Central Bank of the Islamic Republic of Iran

Currently, the rule for granting loans, based on the return has been on a declining path underlining CBI directive, is 15% of the base capital (Tier I + Tier the government’s attempt to reduce inflation, II). However, all banks may grant loans up to 20% promote private sector activity, and fuel creation of their base capital upon approval of the CBI. of new jobs through loan facilities to “quick-yield Generally speaking in recent years, the rate of projects”.

1 Calculated on an “on account” basis. Business Profile

Untitled Oil on Canvas 30 x 30 cm Artist: Adel Younesi EN Bank’s Art Gallery Retail Banking

EN Bank is currently operating a network of (short, medium and long term deposits) which 233 branches across the country: one of the demonstrates the customer’s confidence and largest networks amongst Iranian private trust in the Bank and serves as a yardstick to sector banks with an annual growth rate of measure its success in capturing a sizeable about 30.7% in the number of deposit accounts share of the deposit market in the country. Corporate Banking Investment banking is an integral part of our corporate banking services, focusing on offering a full range of services to corporate and institutional clients. Our corporate management teams are tasked with in-depth understanding and management of the sectors in which our clients operate, with the aim of adding value through detailed industry knowledge and design of structured financial solutions. Clients are appointed sector-based client service teams which comprise account managers and product and industry specialists, in order to be able to devise the most suitable customized financial solutions. Each team supports the client’s operations, ensuring a full understanding of their business and financial needs. 35 EN Bank corporate teams, charged with providing structured financial solutions, are mainly entrusted with the following eight sectors: ೽೽ Telecommunications ೽೽ Automotive ೽೽ Healthcare ೽೽ Consumer brands Dana Energy ೽೽ Industrial Project - Onshore ೽೽ Energy and utilities Drilling Platform ೽೽ Transport and logistics Financed by EN ೽೽ Metals and minerals Bank

Lobby of the Chamran Grand Chamran Grand Hotel - Shiraz Hotel - Shiraz Financed by EN Bank Electronic Banking The emergence of new technologies, in particular, Bank’s efforts for creation of value for its growing the information and communication technology, customer base. As shown in the table and graphs has reshaped the way banks operate in the below, EN Bank has achieved a remarkable design and provision of banking services. For EN growth in the number of electronic banking users Bank, electronic banking is at the heart of the during the past three years:

Year Ended March 20, 2012 Year Ended March 20, 2011 Year Ended March 20, 2010

Internet Banking Users 220,856 159,243 101,728

Telephone Banking Users 337,425 302,169 251,840

SMS Banking Users 1,128,618 689,745 605,748

Mobile Banking Users 188,099 126,679 50,170 Internet Banking Telephone Banking

220,856 337,425 302,169 159,243 251,840

101,728 37

SMS Banking Mobile Banking Users

1,128,618

689,745 605,748 International Banking International banking holds a key position for determined to optimize the range of value- EN Bank’s customers and shareholders alike added services it offers in the international and has played a significant role in generating banking area, providing its customers with revenue for the bank over the past years. full support and guidance to more assured Over the past years, EN Bank has been international trading. International banking services offered at EN Bank Documentary letters of credit (import & export) Letters of guarantee Documentary bills for collection Trade finance Project financing Syndicated loans International payment orders Foreign exchange services Foreign currency accounts Loans in foreign currencies Refinance Issuance of customers account certificate Foreign exchange deposits The Year under Review During the financial year 2012, international banking at EN Bank saw yet another successful year. Amongst the main activities carried out in international banking during this year, the following could be highlighted: ೽೽ Establishment of a specialized branch of EN Bank dedicated to exports ೽೽ Issuance of a high volume of sight and deferred payment letters of credit ೽೽ Issuance of letters of guarantee ೽೽ Processing of import documentary bills for collection ೽೽ Allocation of funds from the Foreign Exchange Reserve Fund ೽೽ Use of refinance credit lines (domestic and international), which have proved essential for Iranian importers ೽೽ Granting various import and export trade finance facilities As large domestic corporations comprise a major segment of our customer-base, we are highly active in financing for their import and export requirements, supported either through EN Bank financial resources or through the CBI (Central Bank of the Islamic Republic of Iran). This has resulted in the increased number of documentary letters of credit issued by EN Bank to gain a top position among the Iranian private banks. We have seen a highly successful year in trade financing through EN Bank foreign exchange reserves, in a large part compensating for the shortage in trade financing through foreign banks. A significant trend with regard to imports has grown through the requests by major international retailers for the sale of their goods through EN Bank trade finance facilities, chiefly due to the international reputation of the Bank. 2012 International Banking Transactions Summary Description Volume (USD) Money Transfer (Received) 3,834,301,591 Money Transfer (Paid) 3,349,866,741 Letters of credit (import | export) 2,899,910,183 809,648,246 Letters of guarantee 193,685,282 Documentary bills for collection 846,003,970 Foreign Exchange Term Deposits Foreign Exchange Saving Account 498,815,022 Foreign Exchange None Interest Bearing Account Forex transactions 212,801,642 Amount of Import L/Cs (USD) 3,500,000,000

3,000,000,000

2,500,000,000

2,000,000,000

1,500,000,000

1,000,000,000

500,000,000

Amount of Documentary collections (USD)

Amount of L/Gs (USD) Amount of Export L/Cs (USD)

Money Transfer (received) (USD)

4,200,000,000

4,100,000,000

4,000,000,000

3,900,000,000

3,800,000,000

3,700,000,000

3,600,000,000

Money Transfer (Paid) (USD)

4,000,000,000

3,500,000,000

3,000,000,000

2,500,000,000

2,000,000,000

1,500,000,000

1,000,000,000

500,000,000

0 Bank FX Treasury EN Bank FX treasury plays a prominent role in USD 2,809 million in the primary market and the Bank’s foreign exchange transactions. The more than USD 2,700 million in the secondary treasury has handled transactions in excess of market in the year ended 20th March 2012.

Primary Market’s Transactions USD Millions Buy Sell 2500

2,030 2000 1,617 1500 1,192 1000 649 500

Secondary Market’s Transactions USD Millions Buy Sell 8,000 41 7,043 7,000

6,000

5,000

4,000

3,000 2,660 2,000

1,000 39 14 0

Forex Transactions USD Millions 2011 2012 350 301 300

250 212 200

150

100

0 Forex Transaction Correspondent Banks Network Despite the existing restrictions with regard to Central Asia, Europe, Middle East and Southeast international banking, EN Bank has maintained Asia, to allow it to meet customer needs and extensive ties with a good number of banks in demands for import and export transactions.

Affiliation ೽೽ EN Bank holds a close relationship with the IDB (Islamic Development Bank) ೽೽ EN Bank is a member and shareholder of the ITFC (International Islamic Trade Finance Corporation)

Private Banking The high net worth investor segment has been situations to help affluent individuals and significantly growing in Iran, with no real providers their families to manage their wealth and of private banking services in the country until develop new sources of wealth for their future recently. Lack of such facilities in the Iranian generations. financial market has traditionally resulted in More than 10 to 15% of all EN Bank customers potential private banking customers to have to are considered eligible for private banking. manage their assets themselves, losing focus on To allow us to serve such a relatively large the management of their main businesses and proportion of our customer base, we are risking their wealth in unknown territories. currently offering private banking services at We at EN Bank are, therefore, proud as a selected branches across the country. pioneering bank to be the first entity in the Challenges Ahead Islamic Republic of Iran to provide private EN Bank has been the key player in the private banking services to our high net worth banking industry in Iran for the past three customers. years. However, competition is expected to gain Private banking encompasses personal one-to- momentum over the coming years as other one services that are tailor-made for the clients banks have begun to contemplate entering the possessing a certain level of wealth. It is an private banking realm in the country. attempt to find creative solutions to complicated Our main focus at present is placed on wealth management. While we have improved the services on offer and increased the number of our representative offices, we understand that the key to success is the ability to continuously enhance and adapt modern private banking products and services to local demands. Currently, there are no regulatory obstacles on the products we offer, as they are consistent with the Islamic Banking Regulations. The challenge is to familiarize potential customers with our private banking services. EN Bank Private Banking for the Iranians Living Abroad The Iranian expatriate population is growing into millions across the world, with estimated billions of dollars in total assets. Therefore, we are aiming to market our private banking services to our fellow citizens residing outside Iran. Corporate Governance

Untitled Oil on Clay and Straw 102 x 72 cm Artist: Parviz Kalantari EN Bank’s Art Gallery Corporate governance is a key success factor helping establish an organizational culture of at EN Bank as it clearly defines a roadmap for transparency and communication. achieving its financial objectives, while Corporate governance can reflect on the ensuring full compliance with all applicable distribution of responsibilities among laws and regulations and adherence to the managers, directors, shareholders, and other fundamental core values of the Bank, which stakeholders and will clarify decision-making rest on fair practice, accountability and procedures with regard to corporate affairs. transparency. Four main principles which underpin good A top governance priority for a fast-growing corporate governance are responsibility, financial organization such as EN Bank is accountability, fair practice and transparency. improved management communication across Effective corporate governance aims to provide the entire organizational structure. Periodic incentives and tools for the Board and reporting to the Board by the various management to pursue objectives which are operational units at the Bank will act in the interest of the Bank and its shareholders two-fold: assist the Board with its and should, in general, facilitate their effective decision-making processes and increase monitoring. It will bring about a number of discipline across the organization, while added benefits, including:

೽೽ Increasing the investor’s trust and reducing capital expenses ೽೽ Improving performance through an efficient organizational structure ೽೽ Limiting legal risk and liability for the Bank and all inter-departmental units ೽೽ Increasing operational and transactional efficiency ೽೽ Reducing identified risks ೽೽ Advancing toward sustainable development In Iran, all banks are mandated to meet specific requirements ratified by the CBI, on pertinent issues such as capital adequacy, legal reserves, foreign exchange transactions, risk management and anti money-laundering.

EN Bank CEO and Board Members Controls & Accounting Policies Internal Control and Audit Internal control and audit is periodically conducted to help the Bank accomplish its objectives by bringing systematic and disciplined approach to evaluating and improving the effectiveness of risk management, internal control and governance processes.

Internal audit is basically designed to maintain submitted to the senior officers in the Bank’s adequate control over financial reporting and Audit Committee for decision-making. EN Bank’s provide reasonable assurance in respect of the comprehensive internal control approach is based reporting process and preparation of financial on the CBI directives and COSO guidelines and statements. Internal audit reports will be regularly includes the following major elements:

೽೽ Internal environment: organization, human resources, and values based on ethical foundation and code of conduct ೽೽ Risk assessment: risk analysis and the method of managing various risks ೽೽ Information and communication: effective communications on a broader sense, resulting in the flow of information down, across and up the entity Major internal audits carried out during the period 2011-2012 can be summarized as follows: ೽೽ Inspection of branches along with the follow-up actions for removing the shortcomings reported ೽೽ Internal audit of branches, assisted by expert auditors ೽೽ Internal audit and inspection of the Head Office departments (e.g. Finance, IT, Public Relations), assisted by the Bank’s internal auditors ೽೽ Examination of the monthly financial accounts of branches; e.g. general ledgers, debit accounts, credit accounts, certified checks, turnover of specific accounts, etc. 45 ೽೽ Conducting offsite inspection and regular monitoring of daily operations of branches and staff Auditors Independent Auditors

Subject to the provisions of the Commercial Bank. Since the Bank is listed on the Tehran Code of IRI, one of the country’s leading Stock Exchange (TSE), the financial audit results independent firms of auditors, namely are also subject to the approval of the TSE. The Hoshiyar Behmand & Co., has been appointed independent auditors’ report is presented in to examine the full financial statements of EN Part Two of this Annual Report. Anti-Money Laundering Procedures

Pursuant to the directives issued by the Central Customer Identification Bank of the Islamic Republic of Iran (CBI) on In compliance with KYC (Know Your Customer) prevention of money laundering at all banks, principles, the Bank cannot render banking EN Bank has established a set of procedures to services to customers without initially safeguard against the bank being used for any ascertaining their identity at the time of opening money laundering activities. Accordingly, EN an account. EN Bank staff must ensure that all Bank has formulated its policies to ensure full the details provided are correct and conduct a identification of each and every customer as well periodic review of customer identification data as monitoring the type of banking activities they and supporting documentation every five years. engage in to pinpoint any suspicious activities or In case of any discrepancies or doubts about transactions. An anti-money laundering committee the veracity or validity of the credentials or has duly been established as the Bank’s watchdog. supporting documents, the Bank staff my refuse The committee must report any suspicious activity to provide any service to customers, unless the to the CBI and other relevant authorities. A brief prior approval of the Anti-Money Laundering overview of procedures implemented at all EN Committee has been obtained. Bank branches and departments to ensure full compliance with CBI anti-money laundering regulations is provided below:

Legal Entities With regard to corporate clients, branches must establish the identity of each client by requesting information such as: ೽೽ proof of identity, including legal name and registered address ೽೽ information regarding the structure, legal documentations and proof of the status of the entity ೽೽ details of business registration in the Official Gazette ೽೽ information on the nature and scope of business activities ೽೽ latest version of the articles of association ೽೽ details of financial resources, including the latest audited financial statements ೽೽ all information pertaining to management, founders, board of directors, major shareholders, auditors, legal and financial comptrollers, etc.

Correspondent Banking Reporting of Suspicious Banking Prior to establishing relations with Activities correspondent banks, EN Bank carries out a Staff at all branches must adhere to the KYC detailed research on the status and banking regulations as the basis for detection of any practices of potential candidates, with suspicious or out of the ordinary activities. regard to issues such as financial standing, Prompt reporting of all suspicious banking credit rating and observation of anti-money activities must be carried out in compliance laundering regulations. with anti-money laundering regulations. Risk Management Risk Management Fundamentals at EN Bank performance and reputation. EN Bank’s risk management strategy is based on The major risks associated with EN Bank’s business identification, analysis, evaluation, acceptance and are credit risk, market risk covering foreign exchange management of all financial and non-financial risks and interest rate, liquidity risk, operational risk and that could have a negative impact on the banks reputational risk.

EN Bank’s risk management policies have been developed to: ೽೽ identify and analyze these risks; ೽೽ set appropriate risk limits and controls; 47 ೽೽ monitor the risks and adherence to limits.

The risk management is not responsible its professional staff, sound risk management for eliminating risks that are embedded in policies and procedures and ongoing any banking business, but has to effectively investments in technology and training. manage these risks with the aim of earning The board of directors and senior management competitive returns over the degree of are involved in the establishment of all risk assumed risk. Risk is financially evaluated as processes and the periodic oversight and the potential impact on income and asset guidance of the risk management function. value, taking into consideration changes in The board of directors reviews and approves at political, economic and market conditions, least annually the bank’s key risk management and the creditworthiness of the Bank clients. policies. The risk management control process The risk management function relies on the is based on detailed policies and procedures competence, experience and dedication of that encompass:

೽೽ business line accountability for all risks taken. Each business line is responsible for developing a plan that includes adequate risk/return parameters as well as risk acceptance criteria; ೽೽ a credit function that understands, monitors and independently controls each credit relationship ensuring that the approval of appropriate authorities is obtained and a uniform risk management standard including risk ratings have been correctly assigned to each and every credit relationship; ೽೽ product and business policies, which are clearly understood, monitored and are in agreement with the overall credit policy and the board’s approved risk framework; ೽೽ the ongoing assessment of portfolio credit risk and approval of new products; and ೽೽ an integrated limit structure that permits management to control exposures and monitor the assumption of risk against predetermined approved tolerances. The risk management framework at EN Bank is based on the following main principles:

Reputation Regulatory Compliance The value of the EN Bank brand name lies EN Bank respects and complies with all in its hard-gained reputation. It is therefore related laws and regulations. imperative that all employees at EN Bank aim to safeguard the Bank’s reputation. Safeguarding Financial Strength Independent and Integrated EN Bank controls risks in order to limit the Monitoring effects of adverse events on the Bank’s Risk management is an organized process, assets, revenues and capital. comprising identification, measurement, monitoring and reporting of risk. For that Transparency in Risk Reporting reason, the Risk Management Unit at EN Bank Transparency in the reporting of the accepted acts independently from other units to ensure risks is critical, as it will help senior executives to integration of risk controls and processes. better understand the risks and to establishment a balance between risks and objectives.

Management Accountability Operational units at EN Bank accept the therefore, is responsible and accountable for active corresponding risk(s). Manager of each unit, management of related risks and outcomes.

Major Risk Management Activities at EN Bank ೽೽ Assisting senior management in drafting risk management strategies ೽೽ Assisting senior management in drafting internal risk management regulations ೽೽ Providing consultancy to senior management and Information Technology toward the establishment of a Risk Management Information System (RMIS) ೽೽ Devising appropriate procedures for risk measurement, monitoring and mitigation ೽೽ Forecasting various risk management scenarios ೽೽ Assessing suitability of risk measurement models and reporting the findings ೽೽ Regular risk assessment reporting ೽೽ Defining and continuous monitoring of key risk indicators and assisting senior management in establishing value limits for these indicators

Board’s Solutions for Coverage and Management of Risks Funding Risk ೽೽ Profiling of corporate customers and classification into high/low volatility ೽೽ Diversifying revenue resources and increasing the share of uncommon revenues ೽೽ Offering product-service portfolio incentives for attracting and maintaining long-term deposits ೽೽ Forecasting asset-liability input-output flow ೽೽ Establishment and improvement of structured processes for increasing resources, credit allocation and service offering intelligence ೽೽ Market accessibility assessment and identification of funding capacities ೽೽ Assessment and monitoring of financial resource concentration and reliance

Product & Service Quality Risk ೽೽ Adopting a quality–cost approach ೽೽ Establishing quality system, culture and management ೽೽ New product and service feasibility testing prior to offering

Foreign Exchange Risk ೽೽ Daily calculation and control of open foreign exchange position ೽೽ Observing legal limits for open foreign exchange position based on CBI regulations ೽೽ Measuring and monitoring of foreign exchange VaR (value at risk) ೽೽ Comprehensive assessment of foreign exchange market access and currency conversion ೽೽ Devising probable foreign exchange risk scenarios

Credit Risk and credit risk is managed by a thorough and This refers to the risk arising from the potential well-structured credit assessment process capacity that an obligor is either unwilling to complimented with appropriate collaterals honor his obligation or has become unable wherever necessary and continuous monitoring to meet such obligation, which will lead to of the advances at account and portfolio level. economic loss to the bank or the possibility Although the overall responsibility for identifying of losses associated with diminution in the and managing risks lies in the board, the creditworthiness of borrowers or counter parties. responsibility for managing the Bank’s credit Identification, measurement and management exposure has been entrusted to the management of risk are strategic priorities for the Bank credit committees.

The management credit committees shall review and decide on the following: ೽೽ the extent to which the bank should assume credit risk, taking into account the capital base, the bank’s ability to absorb losses, the risk-reward ratio etc; ೽೽ the credit portfolio, including concentration trends, provisions, quality of portfolio and requirements vis-à-vis credit strategy and risk appetite; ೽೽ portfolio concentration limits against regulatory and internal limits set for counterparties, industry sectors, geographic regions, and classes of security; ೽೽ business strategies to ensure consistency with the banks business/growth plan and other asset/liability management considerations; ೽೽ adequacy of loan loss provisioning requirements; ೽೽ establishment of an authorization structure and limits for the approval and renewal of credit 49 facilities.

Detailed credit policies, procedures and and external auditors to ensure that a rigorous guidelines, proper segregation of duties, clear environment of checks and balances exist authorities matrix for credit approval and within the bank; periodic audit and examinations by internal

Product or Service Substitution Risk ೽೽ Striving to maintain customer satisfaction and observing good customer relations when offering services and products ೽೽ Carrying out market research, in addition to periodical assessment of customer satisfaction and utilizing the results in improving products and services ೽೽ Offering total and diverse product and service solutions ೽೽ Implementation of effective customer relationship management Liquidity Risk the bank not only under adverse conditions but also Liquidity risk is the risk of being unable to meet at sufficient levels to capitalize on opportunities for the banks cash commitments without having to business expansion. raise funds at unreasonable prices or sell assets Prudent liquidity controls ensure access to on a forced basis. It is measured by estimating the liquidity without unexpected cost benefit. banks potential liquidity and funding requirements The control framework also provides for the under different stress scenarios. The banks liquidity maintenance of a prudential buffer of liquid management policies and procedures are designed marketable assets and an adequately diversified to ensure that funds are available under all deposit base in terms of maturity profile and a circumstances to meet the funding requirements of number of counterparties.

The liquidity risk policies taken by EN Bank are as follows: ೽೽ Establishment of an asset-liability management (ALM) committee ೽೽ Maintaining suitable levels of liquidity ೽೽ Continuous monitoring of deposits for controlling the market and avoiding deposit flight ೽೽ Deposit variety creation and deconcentration of a single source of deposit ೽೽ Asset-liability gap monitoring and assessment ೽೽ Liquidity ratio monitoring

Regulatory Risk ೽೽ Readiness for changes in international regulations, such as financial sanctions or import/export limitations ೽೽ Conformity to corporate governance principles and increasing information transparency ೽೽ Continuous improvement and updating of procedures, regulations and contracts for compliance with new regulations ೽೽ Continuous compliance with international banking regulations, in particular, in foreign exchange ೽೽ Implementation of Basel II guidelines

Trade Risk ೽೽ Preventing theft and embezzlement within the Bank for mitigating reputation risk ೽೽ A well structured plan to reduce the size/amount of non-performing loans (NPLs) ೽೽ Detailed and continuous analysis of market and global economic conditions for prevention of trade risk and reduction in investments ೽೽ Detailed study of new markets which the Bank intends to enter or invest in ೽೽ Establishment of one or more remote IT centers for safekeeping of valuable information, such as IT system backups (for preventing the loss of all data in the event of natural hazards, such as earthquakes, floods, etc.)

Operational Risk management or through risk transfer mechanisms Operational risk is the risk of loss arising from such as insurance. inadequate or failed internal processes, people and systems or from external events. The bank Reputation risk has detailed policies and procedures that are This affects the bank’s ability to establish new regularly updated to ensure a robust internal relationships, provide services or consolidate control mechanism for the bank. The bank is closely the existing relationships. This risk may reviewing the various recommendations issued by expose the bank to litigation, financial loss, the Basel Committee on sound practices for the or a decline in its customer base. Reputation management and supervision of operational risk risk exposure is present throughout the for implementation. The bank continues to invest in organization and includes the responsibility risk management and mitigation strategies such as to exercise extreme caution in dealing with its a robust control infrastructure of business continuity customers and the community. Market risk This is the risk of losses arising from unexpected changes in financial indicators including interest rates, exchange rates, bonds,equities and commodity prices.

Basel II compliance Basel II, which is now regarded as a testing ground for Iranian banks, is seriously contemplated at EN Bank, with pillar III risks regularly monitored under Basel II guidelines. The CBI is persistently encouraging Iranian banks to work toward full implementation of Basel II. In addition, we are taking appropriate measures toward Basel III compliance for 2011. Capital Adequacy Ratio Capital Adequacy Ratio (CAR) for EN Bank based on Basel II guidelines has been calculated as follows for the year ended March 20, 2012: CAR = 11.98%

Mandala(life’s circle) Oil on White and Yellow Gold Leaf 35 x 35 cm Artist: Shahla Habibi EN Bank’s Art Gallery EN Bank Committees As can be seen from the EN Bank organizational of Directors, and Executive Committees, which structure, the Bank has two sets of committees, report to the CEO. The list and membership Board Committees, which report to the Board structure of these committees are as follows:

Board Committees + Strategy Council

Committee Members Membership Structure Three Board Members CEO Strategy Officer appointed by the Board of Directors Supreme Steering Committee 8 Banking Affairs Officer appointed by the Board Economic Affairs Officer appointed by the Board of Directors Organizational Structure Officer Two Board Members Corporate Governance Com- CEO 5 mittee Corporate Governance Officer appointed by the Board of Directors Usury-Free Banking System Officer Two Board Members Audit Committee 5 Three External Financial Experts appointed by the Board of Directors Chairman CEO Deputy CEO. for Corporate Banking Collections Policy Committee 6 Deputy CEO. for Retail Banking Director for Legal Affairs Director for Specific Collections One Board Member Deputy CEO. for Retail Banking Deputy CEO. for Finance Anti-Money Laundering Com- 7 Deputy CEO. for International Affairs mittee Director for Legal Affairs Director for Internal Control & Audit Director for Structure & Systems Development Two Board Members Risk Committee 4 CEO or an EN Bank executive as appointed by the CEO One Senior Officers appointed by the Board of Directors Three Board Members Employees› Compensation 5 CEO Committee Deputy CEO. for Human Resources and logistics Executive Committees + Management Council ೽೽ Supreme Executive Committee ೽೽ Supreme Credit Committee ೽೽ Credit and Corporate Banking Rating Committee ೽೽ Area Credit Committee ೽೽ Policy Making & Collections Committee ೽೽ Assets – Liabilities Commission ೽೽ Transactions Commission ೽೽ Human Resources Committee ೽೽ Public Relations and Advertising Committee ೽೽ Corporate Banking Development Commission ೽೽ Retail Banking Development Commission ೽೽ Circular Committee ೽೽ Solutions Development & Banking Products Commission ೽೽ Private Banking Commission ೽೽ Legal Commission ೽೽ Information Technology (IT) Commission ೽೽ International Banking Commission ೽೽ Internal Control & Accounting Systems Committee ೽೽ Policy Making & Planning Commission ೽೽ Corporate Coordination & Synergy Commission

53 Specialized Committees

The three committees: Audit, Risk and Anti- Committee’s guidelines. The results of this Money Laundering are considered to be assessment have demonstrated that the Bank’s specialized committees to EN Bank corporate internal control and audit system are proven to governance whose functions are described be in compliance with the prevailing guidelines. below. Thus, the Bank has designed its corporate governance guidelines, with specific mandates Audit Committee prescribed for the Audit Committee, mapping The Audit Committee has a mandate to assist out the roles of the internal audit department, the Board in monitoring and making decisions external auditors, senior management and the on the bank’s financial conditions, its risk Board of Directors. Audit is typically designed to management and assessment processes, the create a systematic risk management strategy. adequacy of its governance and controls, and its reporting and accounting policies and Risk Committee procedures. In addition, it is in charge of all This specialized committee was established to compliance issues, as well as appraising of the provide assistance to the Board of Directors with efficiency of the internal control and audit. regard to risk management. The Risk Committee In recognition of the significance of the internal is mainly responsible for managing, regulating and control and audit, the Bank has dedicated its supervising the Bank’s risk policies and procedures resources to a project to implement an effective and monitoring of different types of risks. internal control and audit system, tested against Furthermore, it is in charge of approving all major benchmarks established by the COSO and Basel transactions in terms of the Bank’s risk portfolio.

EN Bank has different ongoing projects to improve its corporate governance, such as: ೽೽ design and development of a comprehensive risk management strategy and procurement of the requisite software systems ೽೽ development of internal controls with an emphasis on internal audit ೽೽ obtaining the bank’s credit rating through a reputable international rating agency ೽೽ design and implementation of a comprehensive audit system throughout the Bank’s branch network ೽೽ design and implementation of a comprehensive financial control system to monitor the Bank’s subsidiaries and branches ೽೽ establishment of a project management and control system

EN Bank realizes that commitment to Committee conducts regular investigations into excellence will promote a higher level of trust the identities of account holders and constantly and confidence, which will naturally lead to an upgrades the anti-money laundering guidelines increased customer base. To this end, EN Bank pursuant to the CBI and international directives. has implemented a banking policy emphasizing This Committee also defines the role of each the highest standards in provision of customer department, branch and employee in assessing services, as well as offering the highest level of and determining the compliance with anti- transparency in all its transactions at various money laundering guidelines and measures. To levels with its customers, shareholders, staff, achieve the highest standards, the Committee with the CBI acting as a regulatory authority. also supervises training programs to ensure that employees can detect any irregularities reported. Anti-Money Laundering Committee EN Bank is one of the first banks in Iran to have The Anti-Money Laundering was established communicated to all its branches the directives by virtue of the regulations of the CBI and of the CBI on Anti-Money Laundering measures the directives of the International Committee and is constantly monitoring that the stipulated of Supervision on Financial Institutions. The guidelines are adhered to in every detail. 55

Untitled Oil on Wood 122 x 91 cm Artist: Mehrdad Moheb-Ali EN Bank’s Art Gallery Human Resource and Training EN Bank management considers the development are offered as deemed appropriate, through of a well-trained and qualified personnel base problem-solving-based learning, action learning as a key success factor. To achieve this goal, the and e-learning. Additionally, various seminars, Bank seriously pursues the policy of recruiting conferences and workshops are organized university graduates. New recruits receive throughout the year, which will provide good pre-employment training, while on-the-job opportunities for our personnel to update their training programs help improve the skills and knowledge on banking and management-related competencies of employees. Training courses topics.

Indeed, the bank is committed to a continuous review of human resource development to ensure the best practical solutions in every particular area of market pressure and customer’s expectations. Thus: ೽೽ we train each employee to have a creative spirit and enough ability in an organizational setting. ೽೽ we implement the internal promotion scheme to help select people for managerial positions. ೽೽ we develop interpersonal skills, open-mindedness and cultural awareness. ೽೽ we have formed the Appointment Committee to launch a system based on meritocracy for selection of managers. ೽೽ we execute the appraisal scheme to evaluate the employees’ performance. ೽೽ we have put in special criteria for personnel on the basis of the ratings assigned to the branches.

To achieve the said goals, EN Bank has fine- improve the competency of every employee. The tuned its sources for employment and offers following tables show the employment status at comprehensive training programs so as to EN Bank:

Year Ended March 20 Female Male Total

2012 1,218 1,444 2,662

2011 1,289 1,067 2,356

2010 973 1,140 2,113

Employees in 2012 by Gender

Female 46% Male 54% Educational level of staff at EN Bank Year Ended Associated PhD & Master Bachelors Total March 20 Degree & Lower 2012 374 1,955 333 2,662 2011 238 1,849 269 2,356 2010 149 1,692 272 2,113

2012 Eductional Background at EN Bank

13% 14%

73% Phd & Masters Bachelors Higher Diploma & Lower

Training We place particular emphasis here at EN Bank on employee training and skill updates. Training programs are conducted in two phases as follows: ೽೽ Pre-employment Training Mainly for branch employees ೽೽ Post-employment Training For all employees

Hours of Emploee Training 57 300 284 271

250

200 196

150

100

0 2012 2011 2010

Pre-Employment Training This refers to the training program provided our rigorous hiring procedures and prior to mainly to branch staff upon selection following appointment to actual branches.

Pre-employment training activities carried out during the year ending March 20, 2012 are summarized as follows: ೽೽ Completion of a total of 284,000 man-hours of training shows 5% increase compared with last year ೽೽ Addition of new training subjects such as Foreign Exchange and Introduction to Insurance Services ೽೽ Review of teaching methods and curricula through regular class visits and monitoring of training materials ೽೽ Courses, workshops and teaching programs which are undertaken by our veterans (experienced colleagues or retires of banking sector) inside and outside the bank. Social and Cultural Activities

Untitled Oil on Cardboard 60 x 70 cm Artist: Mohammad Ehsai EN Bank’s Art Gallery 59 From art biennials to professional conferences, EN Bank has long been established as a promotional partner to many major events in the country. Recognizing the need to directly contribute to the communities we serve, EN Bank aspires to act as a bridge between the financial sector and the Iranian society as a whole, supporting a range of art and cultural events, professional development and sporting initiatives, to name but a few. We maintain a continuing commitment towards supporting Iranian arts and culture, ranging from sponsorship of major art exhibitions and expos, Untitled to coproduction of independent Oil on Canvas 70 x 50 cm movies and publication of books and Artist: Ahmad Esfandiari manuscripts by modern Iranian writers EN Bank’s Art Gallery and ancient Persian scholars. Contemporary Art Iranian modern arts have enjoyed great international recognition during recent years; with works by established artists proving highly popular at world-renowned auction houses, such as Christie’s, while nascent artists have been generating a buzz with curators in Europe, the Middle East and North America. This has helped further promote and expand the ever- flourishing artworks in Iran at major art exhibitions organized the year round through collaborative initiatives by a number of private art galleries or by public institutions.

Untitled Oil on Canvas 30 x 30 cm Artist: Adel Younesi EN Bank’s Art Gallery EN Bank is an avid patron of Iranian arts and artists. In addition to sponsoring major art events held at prestigious locations and smaller exhibitions organized at private galleries, we support Iranian artists by regularly purchasing artworks by well-known and up-and-coming talents alike. We take pride in our invaluable art collection, selected with great care and consideration over the years, now available for viewing on the Bank’s online art gallery.

Novin Art Collection The Novin Art Collection comprises an invaluable selection of contemporary Iranian artworks by well-known artists and up-and-coming talents. The pieces have been painstakingly handpicked by us over the years from art exhibitions, many of which we have proudly sponsored. The collection is available for viewing on the EN Bank online art gallery.

The Moon Gouash on Cardboard 15 x 50 cm Artist: Farah Osouli EN Bank’s Art Gallery Books Every year EN Bank publishes or supports the publication of a number of books in various fields, ranging from art, Iranian culture, poetry, and literature to economy and banking.

Films EN Bank has sponsored the production of various art-house Iranian movies by famous Iranian filmmakers, recent examples of which have been included as follows:

Heiran Directed by Shalizeh Arefpoor, Heiran has been selected for international film festivals, such as 63 the Toronto Film Festival and is the winner of 3 awards at Fajr International Film Festival.

Earthbound (Khak-e Ashna) Directed by the highly acclaimed director Bahman Farmanara and with a stellar cast such as Reza Kianian, Babak Hamidian, Bita Farahi and Nikoo Kheradmand, the film has received awards for best direction and music and best sound. Education In coincidence with the inauguration ceremony of the newly established Branch of EN Bank at Bushehr Providence, for the purpose of providing educational opportunities at deprived areas, a local school was also unveiled. Philanthropy EN Bank supports or donates to various national charities.

We are a patron of the Mahak Charity for children suffering from cancer and sponsor and take part in events such as An Evening with Mahak. We assist with fundraising efforts for Mahak and our staff regularly collect donations for the charity’s hospital. Branch Network

Untitled Mixed Media on Canvas 60 x 60 cm Artist: Hamidreza Jadid EN Bank’s Art Gallery 65 Tehran Branch Network

.No Branch Name City .No Branch Name City Ghadir North Sohrevardi 22 Tehran 1 Tel: +98 8870 7991 – 5 Tehran Tel: +98 8853 0830 - 4 Fax: +98 8855 4361 North Shiraz Behshahr Sub-Branch 23 Tel: +98 8804 8968-70 Tehran 2 Tehran Tel: +98 8871 5420 Fax: +98 8821 2692 EN Leasing Sub-Branch Ayatollah Kashani 3 Tel: +98 8871 4324 Tehran 24 Tel: +98 4400 0923-8 Tehran Fax: +98 8871 4324 Fax: +98 4400 0929 Fatemi Ayatollah Kashani Abfa Sub-Branch 25 Tehran 4 Tel: +98 8897 9483-9 Tehran Tel: +98 4495 3008-9 Fax: +98 8897 9488 Olympic Hotel Sub-Branch 26 Tehran Pasdaran Tel: +98 4413 4200 5 Tel: +98 2257 4586 Tehran Sadeghieh Fax: +98 2258 1130 27 Tel: +98 4426 8300 – 4 Tehran Heravi Day Market Sub-Branch Fax: +98 4426 8304 6 Tehran Tel: +98 2232 6277-9 Jomhouri North Kargar 28 Tel: +98 6659 3111-15 Tehran 7 Tel: +98 6694 4673 Tehran Fax: +98 6659 3113 Fax: +98 6694 4379 Zafar 29 Tehran Abfa North Kargar Sub-Branch Tel: +98 8887 7403-7 8 Tehran Tel: +98 6690 1948 Towhid Behpakhsh Sub-Branch 30 Tel: +98 6659 4571 – 4 Tehran 9 Tehran Tel: +98 6605 0435 Fax: +98 6659 4575 Africa Damavand Avenue 10 Tel: +98 8867 8290 – 4 Tehran 31 Tel: +98 7778 3817 – 23 Tehran Fax: +98 8887 3111 Fax: +98 7778 3824 Central Clinic Sub-Branch South Saadi 11 Tehran Tel: +98 8888 4425 32 Tel: +98 3398 2992 – 94 Tehran Shohada Square in Karaj Fax: +98 3311 8849 12 Tel: +98 2250 388 Karaj Rahahan-Residential Complex Fax: +98 2206 793 33 Tel: +98 4472 3010 Tehran Hafez Fax: +98 4472 3618 13 Tel: +98 6673 5186 Tehran Baharestan 34 Tehran Fax: +98 6670 0233 Tel: +98 3311 5544- 54 Bazaar Golshahr in Karaj 14 Tel: +98 3395 3231 – 2 Tehran 35 Tel: +98 0261 – 3534 060 Karaj Fax: +98 3393 4016 Fax: +98 0261-3534 010 Tehranpars Farmanieh 15 Tel: +98 7729 3430-1 Tehran 36 Tel: +98 2281 3172 – 4 Tehran Fax: +98 7773 2494 Fax: +98 2822 124 Niavaran Isar Mahallati Day Market Sub-Branch 37 Tehran 16 Tel: +98 2613 2126-7 Tehran Tel: +98 2246 8193 Fax: +98 2281 1000 Lavasani Day Market Sub-Branch Ghaemmagham 38 Tehran 17 Tel: +98 8832 4466 Tehran Tel: +98 2274 3177-8 Fax: +98 8832 4465 Pirouzi Saadat Abad 39 Tel: +98 3332 6770-1 Tehran 18 Tel: +98 2207 8417 Tehran Fax: +98 3332 6772 Fax: +98 2207 8420 Beheshti 40 Tel: +98 8853 6649-53 Tehran Parsian Hospital Sub-Branch 19 Tehran Fax: +98 8876 6504 Tel: +98 2207 2099 Abbas Abad Day Market Sub-Branch Tajrish 41 Tehran Tel: +98 8853 4160 20 Tel: +98 2274 6182 – 3 Tehran Resalat Fax: +98 2274 6181 42 Tehran Tel: +98 2233 1944 - 7 Tandis Sub-Branch Bina Eye Clinic Sub-Branch 21 Tehran 43 Tehran Tel: +98 2274 8322-4 Tel: +98 2233 1992-3 Tehran Branch Network

.No Branch Name City .No Branch Name City Keshavarz Blvd Central Day Market Branch 44 Tel: +98 8898 5460 – 1 Tehran 64 Tel: +98 5550 3356-8 Tehran Fax: +98 8896 3707 Fax: +98 5550 3359 Monirieh Farabi 45 Tel: +98 5536 3606 Tehran 65 Tel: +98 5542 5824 - 29 Tehran Fax: +98 5536 3727 Fax: +98 5542 5831 Dowlat Qazvin Street Abfa Sub-Branch 66 Tehran 46 Tel: +98 2276 5735 – 8 Tehran Tel: +98 5514 1104 Fax: +98 2276 5621 Saei Park Shariati 67 Tel: +98 8871 3279 Tehran 47 Tel: +98 2292 1530 – 1 Tehran Fax: +98 8870 9323 Fax: +98 2292 1543 Vanak Square Farjam 68 Tel: +98 8820 9439- 43 Tehran 48 Tel: +98 7727 3263 Tehran Fax: +98 8820 6648 Fax: +98 7719 1805 .Parvin Blvd Be›asat 69 Tel: +98 7729 6575 Tehran 49 Tel: +98 3361 3301 – 3 Tehran Fax: +98 7772 0996 Fax: +98 3361 3426 Gholhak Azadegan Day Market Sub-Branch 50 Tehran 70 Tel: +98 2263 0983 – 6 Tehran Tel: +98 5550 3336 Fax: +98 2263 0982 North Hengam Molasadra 51 Tel: +98 7719 6158-63 Tehran 71 Tel: +98 8806 5672 – 4 Tehran Fax: +98 7745 5146 Fax: +98 8805 2937 Naft Ostad Motahari 52 Tel: +98 2292 1728 - 9 Tehran 72 Tel: +98 8810 0205-6 Tehran Fax: +98 2292 1727 Fax: +98 8855 4942 South Bahar Sharif University of Technology 53 Tel: +98 8884 7326 Tehran 73 Tel: +98 6608 2676 – 81 Tehran 67 Fax: +98 8831 6887 Fax: +98 6600 7057 Ferdowsi Estil Bazaar 54 Tel: +98 6670 0100 – 4 Tehran 74 Tel: +98 6639 0020 Tehran Fax: +98 6670 2597 Fax: +98 6639 0021 North Africa Nabovvat Square 55 Tel: +98 22024 815 – 8 Tehran 75 Tel: +98 7792 5253 Tehran Fax: +98 2202 4819 Fax: +98 7794 0485 Amin Hozour Fereshteh 56 Tel: +98 3351 9844 – 8 Tehran 76 Tel: +98 2263 0352- 4 Tehran Fax: +98 3351 5967 Fax: +98 2263 0355 Abouzar Fallah Gheitarieh 57 Tel: +98 5578 7001 – 3 Tehran 77 Tel: +98 2268 6638-40 Tehran Fax: +98 5578 7004 Fax: +98 2267 1545 Nasr (Gisha) District Ziba Shahr 58 Tel: +98 8828 8589-92 Tehran 78 Tel: +98 4433 9003 – 5 Tehran Fax: +98 8826 9695 Fax: +98 4433 4968 .Esfandiar Blvd Bazaar Ahan 59 Tel: +98 8233 1434-48 Tehran 79 Tel: +98 6631 9001 – 5 Tehran Fax: +98 8865 1679 Fax: +98 6631 7017 Petropars Sub-Branch 60 Yaftabad Street Abfa Sub-Branch Tel: +98 2209 8130 80 Tehran Tel: +98 6624 3123 Sattarkhan 15th. West Khordad Street 61 Tel: +98 6655 4550 – 9 Tehran 81 Tel: +98 5562 4992 Tehran Fax: +98 6655 4554 Fax: +98 5560 7052 Dezaship 17th. Shahrivar 62 Tel: +98 2270 6203-13 Tehran 82 Tel: +98 3351 1845 – 7 Tehran Fax: +98 2270 6315 Fax: +98 3351 2157 Pole-Roomi Apadana 63 Tel: +98 2221 1105-6 Tehran 83 Tel: +98 8876 5056-8 Tehran Fax: +98 2221 5635 Fax: +98 8875 6956 Tehran Branch Network

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Argentine Square .Marzdaran Blvd 84 Tehran Tel: +98 8810 4148 - 9 105 Tel: +98 4425 2180 – 2 Tehran Fax: +98 4425 2184 Taleghani Taatr-e-Shahr 85 Tel: +98 7764 0998 – 9 Tehran 106 Tel: +98 6646 0013 Tehran Fax: +98 7763 1203 Fax: +98 6695 6740 Ekbatan Residential Complex Taleghani Avenue in Karaj 86 Tel: +98 4463 5991-2 Tehran 107 Karaj Fax: +98 4463 1805 Tel: +98 0261 - 2754146-8 .Pounak Blvd 7th. Tir Square 87 Tel: +98 4449 8276 – 80 Tehran 108 Tel: +98 8859 2438-40 Tehran Fax: +98 4449 9118 Fax: +98 8859 2442 Sardar Jangal Abfa Sub-Branch 88 Tehran Bani Hashem Street Tel: +98 4448 4420 109 Tel: +98 2231 1336-8 Tehran Iran Zamin Fax: +98 2230 3460 89 Tel: +98 8807 0840 Tehran Gowhar Dasht in Karaj 110 Karaj Fax: +98 8802 579 Tel: +98 0261-4405 520 Jannat Abad 90 Tehran Dibaji Intersection Tel: +98 4449 5320 - 2 111 Tel: +98 2257 8841 – 3 Tehran Fath 91 Tehran Fax: +98 2257 8840 Tel: +98 6618 4166 1st. Square Tehranpars Mofatteh Intersection 112 Tel: +98 7772 3248 – 9 Tehran 92 Tel: +98 8834 1636 -7 Tehran Fax: +98 7771 7513 Fax: +98 8834 1636 Ayat Intersection Shahr-e-Rey 113 Tel: +98 7795 8341 – 2 Tehran 93 Tel: +98 5597 4480 - 2 Tehran Fax: +98 7795 8276 Fax: +98 5590 2381 Shahid Rajaei Heart Hospital Afsarieh 94 Tehran 114 Tel: +98 2266 3134-6 Tehran Tel: +98 3365 7711-2 Fax: +98 2266 3219 Heravi Square Roodaki Street 95 Tel: +98 2296 7629-30 Tehran 115 Tel: +98 6689 3600-1 Tehran Fax: +98 2296 7635 Fax: +98 6683 3185 West Sarv Navab Street Abfa Sub-Branch 116 Tehran 96 Tel: +98 2236 9117 Tehran Tel: +98 6638 6272 Fax: +98 2236 7421 Khabarnegar 117 Tehran Moghaddas-e-Ardebili Tel: +98 7770 0297 97 Tel: +98 2201 6932-5 Tehran North Zarafshan Street 118 Tehran Fax: +98 2205 4148 Tel: +98 8857 8860 - 2 Madar Square Zaferanieh 98 Tel: +98 2291 5134 Tehran Tel: +98 2217 5244-7 Fax: +98 2291 5163 119 Fax: +98 2217 5246 Tehran .Ferdows Blvd South Ferdowsi 99 Tel: +98 4401 9268 – 9 Tehran 120 Tel: +98 3398 0640-2 Tehran Fax: +98 4401 9267 Fax: +98 3394 6708 Shahran Kala Bours Sub-Branch 121 Tehran 100 Tel: +98 4433 8841-4 Tehran Tel: +98 8838 3546 Fax: +98 4431 1154 Isaco Nazi Abad 122 Tel: +98 4490 8801 – 2 Tehran 101 Tel: +98 5535 3223-9 Tehran Fax: +98 4490 8803 Fax: +98 5535 3236 Islamshahr South Sohrevardi Islam- 123 Tel: +98 228-2378 121-5 shahr Tel: +98 8843 97127 Fax: +98 228-2378 125 102 Fax: +98 8843 7127 Tehran Chizar Square 103 Tel: +98 2269 4170-3 Tehran Fax: +98 2269 4172 2nd. Square Nirooye-Havaei 104 Tel: +98 7716 1683 – 4 Tehran Fax: +98 7742 9268 Provincial Branch Network

.No Branch Name City .No Branch Name City Sajjad Afif Abad 1 Tel: +98 511 765 8273 18 Tel: +98 711 629 0192 Fax: +98 511 764 0051 Fax: +98 711 626 2416 Ahmad Abad Maali Abad 2 Tel: +98 511 845 4362-7 19 Tel: +98 711 634 0491-3 Fax: +98 511 8454361 Fax: +98 711 623 0883 International Exhibition Sub-Branch Zand Street 3 Tel: +98 511 501 9401 20 Tel: +98 711 234 0300-4 Fax: +98 511 501 0741 Fax: +98 711 233 2169 Imam Khomeini .Edalat Blvd 4 Tel: +98 511 853 7713-16 21 Tel: +98 711 831 0547-51 Fax: +98 511 853 7712 Fax: +98 711 831 0550 Shiraz .Modarres Blvd Modarres 5 Tel: +98 511 224 4014-7 22 Tel: +98 711 727 5951-6 Fax: +98 511 224 4016 Fax: +98 711 727 5956 Airport Sub-Branch Mashhad Gaz Square 6 Tel: +98 511 340 0360-63 23 Tel: +98 711 226 3460-6 Fax: +98 511 340 0361 Fax: +98 711 226 3463 Taghi Abad Ghasre dasht 7 Tel: +98 511 846 1422-5 24 Tel: +98 711 234 6441 Fax: +98 511 846 2052 Fax: +98 711 234 1262 Imam Reza Pasdaran 25 8 Tel: +98 511 853 6691-7 Tel: +98 711 842 0002 Fax: +98 511 851 2750 Artesh Street .Moallem Blvd 26 Tel: +98 411 554 0891-6 9 Tel: +98 511 608 9326-30 Fax: +98 411 557 3411 Fax: +98 511 609 4546 Valiasr 27 Tel: +98 411 329 0414-17 Ghasem Abad 69 10 Fax: +98 411 329 0418 Tel: +98 511 661 4624 17th. Shahrivar Tabriz Azadi Square 28 Tel: +98 411 554 8127 11 Tel: +98 311 667 3893-4 Fax: +98 411 554 8128 Fax: +98 311 661 6347 Daraei Street 29 Tel: +98 411 526 5671-4 Towhid Fax: +98 411 526 5676 12 Tel: +98 311 628 3111-2 Masjed Kaboud Sub-Branch 30 Fax: +98 311 628 3113 Tel: +98 411 526 1819-21 Modarres Street Bozorgmehr Street 31 Tel: +98 781 333 9101 Lar 13 Tel: +98 311 268 3700-6 Fax: +98 781 333 9102 Fax: +98 311 265 9647 Imam Gerash 32 Tel: +98 782 222 4660 Gerash Shams Abadi Fax: +98 782 222 7769 14 Tel: +98 311 224 1300-4 Azadi Square Fax: +98 311 224 1301 Isfahan 33 Tel: +98 341 246 5771-2 Fax: +98 341 246 5768 Ferdowsi Street Jihad Sub-Branch 15 34 Kerman Tel: +98 311 223 7773-4 Tel: +98 341 247 5109-10 Chamran 35 Tel: +98 341 226 9234-5 Chahar Bagh Bala Isfaan Fax: +98 341 223 6447 16 Tel: +98 311 229 2741 Gharen Street Fax: +98 311 229 3821 36 Tel: +98 151 2213695-7 Fax: +98 151 221 3694 Sari .Vahid Blvd Kianpars 17 Tel: +98 311 628 0056-7 37 Tel: +98 611 337 9091-3 Fax: +98 311 628 9854 Fax: +98 611 337 9093 Provincial Branch Network .No Branch Name City .No Branch Name City Sajjad Afif Abad 1 Tel: +98 511 765 8273 18 Tel: +98 711 629 0192 Fax: +98 511 764 0051 Fax: +98 711 626 2416 Ahmad Abad Maali Abad 2 Tel: +98 511 845 4362-7 19 Tel: +98 711 634 0491-3 Fax: +98 511 8454361 Fax: +98 711 623 0883 International Exhibition Sub-Branch Zand Street 3 Tel: +98 511 501 9401 20 Tel: +98 711 234 0300-4 Fax: +98 511 501 0741 Fax: +98 711 233 2169 Imam Khomeini .Edalat Blvd 4 Tel: +98 511 853 7713-16 21 Tel: +98 711 831 0547-51 Fax: +98 511 853 7712 Fax: +98 711 831 0550 Shiraz .Modarres Blvd Modarres 5 Tel: +98 511 224 4014-7 22 Tel: +98 711 727 5951-6 Fax: +98 511 224 4016 Fax: +98 711 727 5956 Airport Sub-Branch Mashhad Gaz Square 6 Tel: +98 511 340 0360-63 23 Tel: +98 711 226 3460-6 Fax: +98 511 340 0361 Fax: +98 711 226 3463 Taghi Abad Ghasre dasht 7 Tel: +98 511 846 1422-5 24 Tel: +98 711 234 6441 Fax: +98 511 846 2052 Fax: +98 711 234 1262 Imam Reza Pasdaran 25 8 Tel: +98 511 853 6691-7 Tel: +98 711 842 0002 Fax: +98 511 851 2750 Artesh Street .Moallem Blvd 26 Tel: +98 411 554 0891-6 9 Tel: +98 511 608 9326-30 Fax: +98 411 557 3411 Fax: +98 511 609 4546 Valiasr 27 Tel: +98 411 329 0414-17 Ghasem Abad 10 Fax: +98 411 329 0418 Tel: +98 511 661 4624 17th. Shahrivar Tabriz Azadi Square 28 Tel: +98 411 554 8127 11 Tel: +98 311 667 3893-4 Fax: +98 411 554 8128 Fax: +98 311 661 6347 Daraei Street 29 Tel: +98 411 526 5671-4 Towhid Fax: +98 411 526 5676 12 Tel: +98 311 628 3111-2 Masjed Kaboud Sub-Branch 30 Fax: +98 311 628 3113 Tel: +98 411 526 1819-21 Modarres Street Bozorgmehr Street 31 Tel: +98 781 333 9101 Lar 13 Tel: +98 311 268 3700-6 Fax: +98 781 333 9102 Fax: +98 311 265 9647 Imam Gerash 32 Tel: +98 782 222 4660 Gerash Shams Abadi Fax: +98 782 222 7769 14 Tel: +98 311 224 1300-4 Azadi Square Fax: +98 311 224 1301 Isfahan 33 Tel: +98 341 246 5771-2 Fax: +98 341 246 5768 Ferdowsi Street Jihad Sub-Branch 15 34 Kerman Tel: +98 311 223 7773-4 Tel: +98 341 247 5109-10 Chamran Chahar Bagh Bala Isfaan 35 Tel: +98 341 226 9234-5 16 Tel: +98 311 229 2741 Fax: +98 341 223 6447 Fax: +98 311 229 3821 Gharen Street 36 Tel: +98 151 2213695-7 Fax: +98 151 221 3694 .Vahid Blvd Sari 17 Tel: +98 311 628 0056-7 Kianpars Fax: +98 311 628 9854 37 Tel: +98 611 337 9091-3 Fax: +98 611 337 9093 Provincial Branch Network .No Branch Name City .No Branch Name City Shariati Street Imam Street 38 Tel: +98 611 223 6199 57 Tel: +98 241 326 0461-2 Zanjan Fax: +98 611 220 2779 Fax:+98 241 326 0472 Ahvaz Taleghani Street Sama Bazaar 39 Tel: +98 611 292 3870 58 Tel: +98 772 726 2291-3 Asalooyeh Fax: +98 611 292 3869 Fax:+98 772 726 2293 Azadi Square Mokhaberat Intersection 40 Tel: +98 281 224 2071-5 59 Tel: +98 584 222 1555 Bojnourd Fax: +98 281 224 2076 Fax:+98 584 222 1636 Ghazvin Adl Square Shahid Nazari Street 41 Tel: +98 281 336 8500-4 60 Tel: +98 761 223 7694-8 Fax: +98 281 336 8504 Fax:+98 761 223 7699 Bandar Abbas Motahari Street Sub-Branch 61 42 Tel: +98 251 622 8860-3 Yazd Tel: +98 761 224 8564-5 Fax: +98 251 622 8864 Imam Street Alavi Street 62 Tel: +98 771 354 0521-26 43 Tel: +98 661 222 7750-7 Fax:+98 771 354 0527 Boushehr Baazar Fax: +98 661 222 7755 Khorram 63 Bahman Sub-Branch 22 Abad Tel: +98 771 253 4786-9 44 Tel: +98 661 324 2839 .Amin Blvd Fax: +98 661 324 2836 64 Tel: +98 251 290 8663 Qom Imam Street Fax:+98 251 290 8664 45 Tel: +98 861 221 3800-1 Arak Modarres Street Fax: +98 221 3806 65 Tel: +98 561 221 3591-5 Birjand Commercial Center Fax:+98 561 221 3595 46 Tel: +98 764 445 2510-17 Kish Imam Street Fax:+98 445 2511,18 66 Tel: +98 121 227 0984 Amol Nahar Khoran Street Fax:+98 121 229 0187 47 Tel: +98 171 553 3911-13 Tabarsi Street 71 Fax:+98 171 552 9217 Gorgan 67 Tel: +98 111 226 6550-3 Babol Sub-Branch Fax:+98 111 225 4510 48 Tel: +98 171 222 7508 .Pasdaran Blvd Ershad Square 68 Tel: +98 871 666 4611-14 Sanandaj 49 Tel: +98 831 825 7080-5 Kermanshah Fax:+98 871 662 3094 Fax:+98 831 823 0308 Shariati Street Seyghalan Square 69 Tel: +98 811 832 3117-18 Hamedan 50 Tel: +98 131 223 1091 Fax:+98 811 832 3119 th Fax:+98 131 225 0811 13 . Aban Rasht Golsar 70 Tel: +98 741 223 3558-9 Yasouj 51 Tel: +98 131 722 7620-1 Fax:+98 741 223 3557 Fax:+98 131 722 7617 Imam Hossein Street Sardaran Street 71 Tel: +98 773 423 1132-5 Borazjan 52 Tel: +98 441 224 9541-5 Fax:+98 773 423 1136 Fax:+98 441 224 9546 Khordad Square 15 Shahid Beheshti 72 Tel: +98 282 524 3861-7 Takestan Fax:+98 282 524 3868 53 Tel: +98 441 347 6570-6 Oroumieh Saat Square Fax:+98 441 347 6574 Bandar 73 Tel: +98 762 224 3713-20 Lengeh Valfajr Sub-Branch Fax:+98 762 224 3715 54 Tel: +98 441 337 5823 Basij Street Fax:+98 441 337 5822 74 Tel: +98 782 522 5066-9 Lamerd Fax:+98 782 522 5065 Saadi Street Takhti Street 55 Tel: +98 451 226 0900-905 75 Tel: +98 348 221 0306-7 Jiroft Fax:+98 451 225 2332 Fax:+98 348 221 9174 Ardebil Imam Khomeini Street .Motahari Blvd 56 Tel: +98 451 225 4409-10 76 Tel: +98 391 523 7166-9 Rafsanjan Fax:+98 225 4407 Fax:+98 391 523 7150 Provincial Branch Network .No Branch Name City .No Branch Name City Imam Street Boroujerd 77 Tel: +98 721 221 5972-4 Kazeroun 99 Tel: +98 662 351 3311 Boroujerd Fax:+98 721 221 5971 Fax:+98 662 351 2627 Shohada Square Meybod 78 Tel: +98 173 623 6480-6 Ali Abad 100 Tel: +98 352 772 5977-9 Meybod Fax:+98 173 623 6485 Fax:+98 352 772 5970 Shariati Street Marand 79 Tel: +98 255 221 7228 Saveh 101 Tel: +98 491 222 5013-5075 Marand Fax:+98 255 222 4916 Fax:+98 491 222 5033 Asad Abadi Street Chalous 80 Tel: +98 571 224 4701-5 Sabzevar 102 Tel: +98 191 222 3614 Chalous Fax:+98 571 224 4700 Fax:+98 191 221 5720 Ferdowsi Street Gonbad Kavous Gonbad 81 Tel: +98 551 224 6431-9 Neyshabour 103 Tel: +98 172 224 0901-5 Kavous Fax:+98 551 224 6438 Fax:+98 172 224 0905 Motahari Street Saghez 82 Tel: +98 581 224 2743 Ghouchan 104 Tel: +98 874 321 4122-5 Saghez Fax:+98 581 224 2749 Fax:+98 874 321 4120 Hafez Street Ghaen Tel: +98 381 334 4787 Shahrekord 105 Tel: +98 562 523 1101-5 Ghaen 83 Fax:+98 381 334 4590 Fax:+98 562 523 1103 .Taleghani Blvd Ghaem Shahr Ghaem 84 Tel: +98 242 523 2370-2 Abhar 106 Tel: +98 123 220 2644-5 Shahr Fax:+98 242 523 2369 Fax:+98 123 222 4335 Shariati Street Eilam 85 Tel: +98 541 322 4842 Zahedan 107 Tel: +98 841 338 1701-5 Eilam Fax:+98 541 323 8107 Fax:+98 841 333 4603 Imam Street Sirjan 86 Tel: +98 731 221 8731-5 Fasa 108 Tel: +98 345 422 8943,5 Sirjan Fax:+98 731 221 8734 Fax:+98 345 422 2420 Imam Street Golpayegan 87 Tel: +98 231 334 9201-8 Semnan 109 Tel: +98 372 325 0305-8 Golpayegan Fax:+98 231 334 9210 Fax:+98 372 322 2849 Jomhouri Street Najaf Abad 88 Tel: +98 192 423 2491-6 Tonekabon 110 Tel: +98 331 261 6200-2 Najaf Abad Fax:+98 192 423 2493 Fax:+98 331 263 4971 .Jomhouri Blvd Marvdasht 89 Tel: +98 341 245 8343 111 Tel: +98 728 334 3038-9 Marvdasht Fax:+98 341 244 3533 Kerman Fax:+98 728 334 3039 Jahad Jahrom 90 Tel: +98 341 247 5109-10 112 Tel: +98 791 223 4200-5 Jahrom Jomhouri Street Fax:+98 791 223 4204 91 Tel: +98 442 222 5900 Mahabad Miandoab Fax:+98 442 223 5100 113 Tel: +98 481 226 7871-3 Miandoab Nikbakht Street Fax:+98 481 226 7870 92 Tel: +98 335 522 7475-7 Mobarakeh Valiasr Square Fax:+98 335 522 7480 114 Tel: +98 461 225 0730-5 Khoy Dezfoul Fax:+98 461 225 0736 93 Tel: +98 641 222 4495 Dezfoul Khajeh Nasir Street Fax:+98 641 226 1280 115 Tel: +98 421 225 2620-3 Maragheh Marivan Fax:+98 421 225 2900 94 Tel: +98 875 325 0646 Marivan Imam Street Fax:+98 875 325 0746 116 Tel: +98 412 722 0071-5 Bonab Baneh Fax:+98 412 722 0073 95 Tel: +98 875 422 7533 Baneh Imam Street Fax:+98 875 422 4025 117 Tel: +98 122 621 0163-6 Nour Abadan Fax:+98 122 622 6483 96 Tel: +98 631 223 1348 Abadan Ferdowsi Street Fax:+98 631 223 1347 118 Tel: +98 312 527 6063-5 Shahin Shahr Kashan Fax:+98 312 527 6061 97 Tel: +98 361 446 9124 Kashan Moallem Street Fax:+98 361 446 9125 119 Tel: +98 671 223 2161-4 Behbahan Bandar Gonaveh Fax:+98 671 223 2164 Bandar 98 Tel: +98 772 322 3081-6 Lahijan Gonaveh 120 Lahijan Fax:+98 772 322 3083 Tel: +98 141 323 5001-3 73 PART 2 75 Financial Statements

Untitled Acrylic on Canvas 100 x 100 cm Artist: Gizella Varga Sinai EN Bank’s Art Gallery 77

79 EN Bank Consolidated Balance SheetAs at March 20, 2012 March 20, 2012 March 20, 2011 (Restated( March 20, 2012 March 20, 2011 (Restated( Note Rials Million US $ 000 Rials Million US $ 000 Note Rials Million US $ 000 Rials Million US $ 000 Assets Liabilities & Shareholders’ Equity Cash 5 3,081,357 250,864 1,633,237 157,345 Due to the central bank 16 3,860,949 314,333 3,240,480 312,185 Due from the Central Bank 6 18,769,292 1,528,071 17,545,537 1,690,321 Due to other banks & financial institutions 17 2,106,468 171,495 1,480,645 142,644 Due from other banks & financial institutions 7 11,676,614 950,632 6,684,363 643,966 Demand deposits 18 11,031,358 898,100 11,342,336 1,092,711 Islamic financing contracts 8 126,502,447 10,298,986 100,896,057 9,720,237 Non-interest bearing accounts 19 5,740,283 467,336 5,652,782 544,584 Participation bonds 9 8,192,357 666,967 1,403,620 135,224 Term deposits 20 128,984,791 10,501,082 95,157,735 9,167,412 Investments 10 2,773,037 225,762 1,200,177 115,624 Other deposits 21 6,314,360 514,073 3,487,495 335,982 Long term investment in subsidiaries & affiliates 11 1,020,002 83,042 1,029,154 99,148 Accounts payable-trade 672,225 54,728 222,079 21,395 Accounts & notes receivable-trade 153,302 12,481 1,920,811 185,049 Accounts payable-others 22 7,203,626 586,471 7,448,572 717,589 Accounts & notes receivable-others 12 1,949,502 158,715 297,352 28,647 Advances received 12,723 1,036 1,308 126 Inventories 6,175 503 9,674 932 Provision for income tax 23 1,006,343 81,930 1,358,055 130,834 Prepayments 37,106 3,021 65,738 6,333 Dividends payable 24 5,812 473 11 1 Provision for employees’ service termination Fixed tangible assets 13 2,989,689 243,401 2,753,141 265,235 110,885 9,028 75,405 7,264 benefits Intangible assets 2,440,965 198,727 2,338,948 225,332 Liabilities 167,049,823 13,600,083 129,466,903 12,472,727 Consolidated goodwill 14 24,645 2,006 26,157 2,520 Shareholders’ Equity Other assets 15 1,434,440 116,783 756,071 72,839 Capital 25 8,000,000 651,307 5,500,000 529,865 Legal reserve 26 2,222,149 180,913 1,531,640 147,557 General reserve 27 5,768 470 4,209 405 Currency translation-foreign subsidiaries 28 163,762 13,332 50,059 4,823 Currency adjustment - )29,371( - )387( Retained earnings 3,071,539 279,434 1,597,121 154,252 Parent Company Shareholders’ Equity 13,463,218 1,096,085 8,683,029 836,515 Minority Interest 29 537,889 43,791 410,105 39,509 Shareholders’ Equity 14,001,107 1,139,877 9,093,134 876,024 Total Assets 181,050,930 14,739,960 138,560,037 13,348,751 Total Liabilities & Shareholders’ Equity 181,050,930 14,739,960 138,560,037 13,348,751 Customers’ Commitments-Letters of Guarantee 21,822,540 1,776,646 15,134,088 1,458,005 Bank’s Commitments-Letters of Guarantee 21,822,540 1,776,646 15,134,088 1,458,005 Customers’ Commitments-Letters of Credit 14,996,752 1,220,936 7,571,627 729,444 Bank’s Commitments-Letters of Credit 14,996,752 1,220,936 7,571,627 729,444 Customers’ other Commitments 8,068,019 656,844 5,101,431 491,467 Bank’s other Commitments 8,068,019 656,844 5,101,431 491,467 Managed funds 29,157 2,374 30,679 2,956 Managed funds 29,157 2,374 30,679 2,956

The accompanying notes form an integral part of these financial statements "EN Bank Consolidated Income Statement For the Year ended March 20, 2012"

March 20, 2012 March 20, 2011 (Restated) Note Rials Million US $ 000 Rials Million US $ 000 Incomes Income from Islamic financing contracts 30 20,225,382 1,840,009 17,419,438 1,682,387 Income from participation bonds 31 526,196 47,871 416,395 40,216 Net income from investments 32 248,902 22,644 51,042 4,930 Income from deposits with banks 578,618 52,640 291,063 28,111 Bonus on statuary deposits 122,890 11,180 102,522 9,902 Commissions received 33 988,874 89,963 767,346 74,111 Net other incomes 34 506,244 46,056 617,133 59,603 Net profit (loss) on foreign exchange transactions 261,580 23,797 20,587 1,988 23,458,686 2,134,160 19,685,526 1,901,248 Less Interim share of income paid on Term Deposits 35 )15,183,134( )1,381,289( )12,813,751( )1,237,565( Final increment of share of income payable on Term Deposits 0 0 )281,398( )27,178( )15,183,134( )1,381,289( )13,095,149( )1,264,743( 8,275,552 752,870 6,590,377 636,505 Expenses General & Administrative expenses 36 )1,742,468( )158,521( )1,395,810( )134,809( Provision for doubtful debts 8 )1,007,421( )91,650( )1,412,458( )136,417( Interest paid on foreign currency deposits 35 )147,878( )13,453( )93,762( )9,056( Commissions paid )171,296( )15,584( )122,010( )11,784( Financing expenses )87,863( )7,993( )214,679( )20,734( Other expenses )10,090( )918( )47,750( )4,612( )3,167,016( )288,120( )3,286,469( )317,411( Group’s income before share from subsidiaries & affiliates 5,108,536 464,750 3,303,908 319,095 Group’s share from subsidiaries & affiliates profits 11 155,200 14,119 189,919 18,343 Group's profit before tax 5,263,736 478,870 3,493,827 337,437 81 Provision for income tax )500,664( )45,548( )377,328( )36,443( Group's net profit 4,763,072 433,322 3,116,499 300,995 Minority Interest 65,241 5,935 40,513 3,913 Base earning per share Rials 628 Rials 662 Earning per share Rials 587 Rials 559 The accompanying notes form an integral part of these financial statements "EN Bank Consolidated Statement of Retained Earnings For the Year ended March 20, 2012" March 20, 2012 March 20, 2011 (Restated) Note Rials Million US $ 000 Rials Million US $ 000 Net profit for the year 4,763,072 433,322 3,116,499 300,995 Retaind earnings-beginning of the year 2,609,127 237,366 1,954,310 188,749 Prior years’ adjustments 37 (977,788) (88,955) (1,155,286) (111,579) Adjusted retaind earnings-beginning of the year 1,631,339 148,411 799,024 77,171 Surplus net book value of assets over liabilities of merged 0 0 2,640 255 companies Profits available for appropriations 6,394,411 581,733 3,918,163 378,420 Appropriations of profits: Legal reserve (693,049) (63,050) (473,278) (45,710) General reserve (2,193) (200) (3,136) (303) Dividends (2,557,500) (232,669) (1,800,000) (173,846) Bonus-Board of Directors (11,560) (1,052) (10,410) (1,005) (3,264,302) (296,971) (2,286,824) (220,864) Retained earnings 3,130,109 284,762 1,631,339 157,556 Minority interest 29 (58,570) (5,328) (34,218) (3,305) Retained earnings-end of the year 3,071,539 279,434 1,597,121 154,252 The accompanying notes form an integral part of these financial statements "EN Bank Consolidated Comprehensive Income Statement For the year ended March 20, 2012" March 20, 2012 March 20, 2011 (Restated) Note Rials Million US $ 000 Rials Million US $ 000 Group's net income 4,763,072 433,322 3,116,499 300,995 Currency translation adjustments-Foreign Subsidiaries 28 178,486 16,238 8,871 857 Comprehensive profit for the year 4,941,558 449,559 3,125,370 301,851 Prior years’ adjustments 37 )977,788( )88,955( )1,155,286( )111,579( Comprehensive profit from previous year 3,963,770 360,605 1,970,084 190,273 Minority Interest from comprehensive profit 29 )128,014( )11,646( )32,443( )3,133( Comprehensive profit for the year 3,835,756 348,959 1,937,641 187,139 The accompanying notes form an integral part of these financial statements "EN Bank Consolidated Cash Flow Statement For the year ended March 20, 2012"

March 20, 2012 March 20, 2011 (Restated) Note Rials Million US $ 000 Rials Million US $ 000 Operating Activities: Net cash inflow from operating activities 38 2,564,183 233,277 7,198,861 695,273 Return on Investments & Financing costs: Dividends received 118,923 10,819 145,156 14,019 Dividends paid (67,669) (6,156) (310,264) (29,966) Financing costs (320,752) (29,180) (10,117) (977) Net cash outflow from return on investments & (269,498) (24,518) (175,225) (16,923) Financing costs Income Tax: Income tax payable (852,377) (77,545) (436,466) (42,154) Investing Activities: Acquisition of tangible fixed assets (394,640) (35,902) (643,661) (62,165) Acquisition of intangible assets (116,922) (10,637) (118,129) (11,409) Sale of fixed assets 5,756 524 1,268 122 Acquisition of investments (1,242,065) (112,997) (706,431) (68,228) Sale of investments 184,221 16,760 112,446 10,860 Net cash outflow from investing activities (1,563,650) (142,253) (1,354,507) (130,820) Net cash inflow prior to financing activities (121,342) (11,039) 5,232,663 505,376 Financing Activities: Proceeds from capital increase 15,970 1,453 10,278 993 Financing - received 1,826,195 166,139 1,855,191 179,176 Financing - repaid (509,815) (46,381) (1,508,119) (145,656) Net cash inflow (outflow) from Financing 1,332,350 121,211 357,350 34,513 Activities Net increase (decrease) in cash 1,211,008 110,172 5,590,013 539,889 Cash & cash equivalent at the beginning of the 11,306,270 1,028,591 5,716,257 552,082 year Cash & cash equivalent at the end of the year 12,517,278 1,138,763 11,306,270 1,091,971 Non-cash transactions 2,636,609 239,866 349,118 33,718 The accompanying notes form an integral part of these financial statements ( ( 1 479 ) 7,051 6,513 2,956 312,185 544,587 336,107 707,282 119,974 529,865 137,930 191,093 729,444 491,467 858,409 US $ 000 1,098,964 9,140,991 1,458,005 12,273,655 13,132,064

- 6 73,193 67,600 30,679 3,240,480 5,652,812 3,488,795 7,341,590 1,245,328 5,500,000 1,431,712 1,978,574 7,571,627 5,101,431 8,910,286 11,407,247 94,883,491 15,134,088 March 20, 2011 (Restated March Rials Million 127,400,542 136,310,828 ( 1

169 8,068 2,374 71,511 30,879 314,333 901,492 467,336 519,471 570,011 651,307 171,389 293,794 656,844 ) US $ 000 1,776,646 1,220,936 1,085,611 10,401,844 13,254,235 14,339,846

- 6 2,077 March 20, 2012 March 99,104 29,157 878,370 3,860,949 5,740,283 6,380,660 7,001,451 8,000,000 2,105,177 3,229,380 8,068,019 11,073,026 21,822,540 14,996,752 13,334,557 Rials Million 127,765,846 162,801,772 176,136,329 16 17 18 19 20 21 22 23 24 25 26 Note - - Liabilities & Shareholders’ Equity: Liabilities & Shareholders’ bank the central Due to & financial institu banks other Due to tions Demand deposits bearing accounts Non-Interest deposits Term deposits Other others payable- Accounts tax income for Provision payable Dividend service termi employees’ for Provision benefits nation Liabilities Equity: Shareholders’ Capital reserve Legal adjustment Currency earnings Retained Equity Shareholders’ Equity Liabilities & Shareholders’ Total of Commitments-Letters Bank’s Guarantee of Credit Commitments-Letters Bank’s Commitments other Bank’s funds Managed

) 83 2,956 79,399 71,698 133,137 577,353 135,224 189,108 658,199 164,575 729,444 491,467 US $ 000 1,690,321 9,433,050 1,458,005 13,132,064

30,679 824,163 744,225 1,381,962 5,992,925 1,403,620 1,962,943 6,832,110 1,708,284 7,571,627 5,101,431 17,545,537 97,915,059 15,134,088 March 20, 2011 ( Restated 20, 2011 ( March 136,310,828 Rials Million 2,374 129,370 926,140 666,967 214,339 392,794 215,289 186,803 115,741 656,844 1,528,071 9,964,331 1,776,646 1,220,936 US $ 000 14,339,846 EN Bank Balance Sheet As at March 20, 2012 March As at EN Bank Balance Sheet

March 20, 2012 March 29,157 1,589,052 8,192,357 2,632,728 4,824,692 2,644,399 2,294,501 1,421,651 8,068,019 18,769,292 11,375,774 21,822,540 14,996,752 Rials Million 122,391,883 176,136,329 5 6 7 8 9 10 12 13 15 Note Assets: Cash Bank the Central Due from & financial institutions banks other Due from Islamic financing contracts bonds Participation Investments receivable-others & notes Accounts assets tangible Fixed assets Intangible assets Other Assets Total of Guarantee Commitments-Letters Customers’ of Credit Commitments-Letters Customers’ other Commitments Customers’ funds Managed The accompanying notes form an integral part of these financial statements part of these financial an integral form notes The accompanying "EN Bank Income Statement For the year ended March 20, 2012" March 20, 2012 March 20, 2011 (Restated) Note Rials Million US $ 000 Rials Million US $ 000 Incomes Income from Islamic financing contracts 30 20,086,831 1,827,405 17,558,761 1,695,843 Income from participation bonds 31 521,176 47,414 385,482 37,230 Net investments income 32 760,244 69,163 487,502 47,083 Income from deposits with banks 561,189 51,054 291,063 28,111 Bonus on statuary deposits 122,890 11,180 102,522 9,902 Commissions received 33 989,774 90,045 770,737 74,439 Net profit (loss) on foreign exchange transactions 261,580 23,797 20,587 1,988 Net other incomes 34 8,046 732 2,201 213 23,311,730 2,120,791 19,618,855 1,894,809 Less Interim share of income paid on Term Deposits 35 )15,186,966( )1,381,638( )12,846,503( )1,240,729( Final increment of share of income payable on 0 0 )281,398( )27,178( Term Deposits )15,186,966( )1,381,638( )13,127,901( )1,267,906( 8,124,764 739,152 6,490,954 626,903 Expenses General & administrative expenses 36 )1,948,644( )177,278( )1,507,701( )145,615( Provision for doubtful accounts 8 )992,421( )90,286( )1,412,458( )136,417( Commissions paid )174,296( )15,857( )124,084( )11,984( Other expenses 0 0 )45,337( )4,379( Interest paid on foreign currency deposits 35 )147,878( )13,453( )93,762( )9,056( Financing expenses )2,973( )270( )21,044( )2,032( )3,266,212( )297,144( )3,204,386( )309,483( Profit before Tax 4,858,552 442,008 3,286,568 317,420 Provision for income tax )368,780( )33,550( )283,896( )27,419( Net profit 4,489,772 408,458 3,002,672 290,001

"EN Bank Statement of Retained Earnings For the year ended March 20, 2012" March 20, 2012 March 20, 2011 (Restated) Note Rials Million US $ 000 Rials Million US $ 000 Net profit for the year 4,489,772 408,458 3,002,672 290,001 Retained earnings-beginning of the year 2,917,000 265,375 2,377,015 229,575 Prior years’ adjustments 37 )938,426( )85,374( )1,142,712( )110,364( Adjusted retained earnings-beginning of the year 1,978,574 180,001 1,234,303 119,210 Profits available for appropriation 6,468,346 588,459 4,236,975 409,211

Legal reserve 26 )673,466( )61,269( )450,401( )43,500( Dividends 24 )2,557,500( )232,669( )1,800,000( )173,846( Bonus - Board of Directors )8,000( )728( )8,000( )773( )3,238,966( )294,666( )2,258,401( )218,119( Retained Earnings-end of the year 3,229,380 293,794 1,978,574 191,093 The accompanying notes form an integral part of these financial statements "EN Bank Cash Flow Statement For the year ended March 20, 2012"

March 20, 2012 March 20, 2011 (Restated) Note Rials Million US $ 000 Rials Million US $ 000 Operating Activities: Net cash inflow from operating activities 38 1,535,392 139,683 5,959,476 575,572 Return on investments & financing costs: Dividends received 123,296 11,217 128,062 12,368 Dividends paid )73,470( )6,684( )304,603( )29,419( Financing costs )2,972( )270( )21,044( )2,032( Net cash outflow from return on investments & 46,854 4,263 )197,585( )19,083( financing costs

Income tax: Income tax payable )735,738( )66,934( )391,195( )37,782( Investing activities: Acquisition of tangible fixed assets )764,495( )69,550( )523,518( )50,562( Acquisition of intangible assets )113,455( )10,322( )74,804( )7,225( Sale of fixed assets 3,958 360 1,226 118 Acquisition of investments )474,420( )43,160( )275,942( )26,651( Sale of investments 170,685 15,528 31,321 3,025 Net cash outflow from investing activities )1,177,727( )107,144( )841,717( )81,294( Net cash inflow prior to financing activities )331,219( )30,133( 4,528,979 437,413 Financing activities: Proceeds from Capital Increase 15,970 1,453 10,278 993 Financing- received 747,311 67,987 6,832,243 659,865 Financing- repaid )71,116( )6,470( )6,449,931( )622,941( Net cash inflow (outflow) from financing activities 692,165 62,970 392,590 37,917 Net increase (decrease) in cash 360,946 32,837 4,921,569 475,330 85 Cash & cash equivalent at the beginning of the year 10,363,784 942,848 5,442,215 525,615 Cash & cash equivalent at the end of the year 10,724,730 975,685 10,363,784 1,000,945 Non-cash transactions 4,464,471 406,156 208,315 20,119 The accompanying notes form an integral part of these financial statements

EN Bank Notes to the Consolidated Financial Statements For the year ended March 20, 2012 HISTORY EN group is composed of EN Bank (The parent company) and its subsidiaries and 1 affiliates. EN Bank, a Public Joint Stock Company obtained its operating license on 11 August 2001 from the Central Bank of Islamic Republic of Iran, registered under No.177132 on 13 August 2001 and commenced its operations as the first private bank in the Islamic Republic of Iran. The Bank’s shares were approved for listing on Tehran Stock Exchange (TSE) on 4 February 2004.

BASIS FOR PREPARATION OF FINANCIAL STATEMENTS The consolidated financial statements for the group and those pertaining to the 2 parent company have been prepared on historical cost basis and in certain circumstances current values have been used. BASIS FOR CONSOLIDATION The consolidated financial statements are the result of combining items of financial 3 statements of the EN Bank (public joint stock company) and its group of companies, consisting of 15 subsidiaries and 7 affiliates, which are subject to consolidation, after elimination of inter-group transactions and balances, and unrealized profit and/or loss thereof. In respect of subsidiaries acquired during the period under review, the result of their operations after their control effectively transferred to the parent company, and in the case of subsidiaries sold, the result of their operations up to the point of transfer, are included in the consolidated income statements. The stocks of parent company acquired by its subsidiaries are recorded at cost, and in consolidated balance sheet are classified as a reduction of stockholders’ equity, under title of “Shares of Parent Company Owned by Subsidiary Companies”. The financial year end for some of the subsidiaries, eligible for consolidation, falls prior to the financial year end of EN Bank. As a result, items mentioned in consolidated income statement, statement of retained earnings, comprehensive income statement and cash flow statement are related to different periods.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 4 4.1 Tangible Fixed Assets Tangible fixed assets are recorded at historical cost. Renovation and substantial repairs, which would significantly increase the capacity or useful life of the fixed assets, are considered as capital expenditures and are depreciated over the useful life of such assets. Expenses relating to regular maintenance and minor repairs, incurred to increase the expected economic benefit of an asset are considered as current expenses and are recorded in the profit and loss account. Depreciation of tangible fixed assets, based on the estimated useful life of such assets, is calculated in accordance with Depreciation Schedule of Article 151 of the Direct Taxation Act (‘’DTA’’), as follows:

Assets Depreciation Rates Depreciation Method Buildings 7% Declining Motor Vehicles 25% & 35% Declining Furniture, Fittings & Computer Hardware 3, 5 & 10 years Straight Line Electronic & Telecommunication Equipment 3 & 10 years Straight Line ATMs & POSs 5 & 10 years Straight Line Installations & Utilities 5,10 & 15 years & 20% Declining Computer Software 1, 3, 4 & 5 years Straight Line

Depreciation of an asset put in use will commence from the beginning of the month following such use. If, a depreciable asset that is ready for use is not utilized for any reason, the applicable depreciation rate for that period shall be equivalent to 30% of rates illustrated in the above table.

4.2 Investments Investments in shares of the investee companies are recorded at cost. The cost of investments sold, is calculated on weighted average basis, in accordance with the following valuation methods: Valuation Methods In Group’s Consolidated Accounts In Parent Company’s Account Long-term Investments Investments in subsidiaries, Consolidation Method CCost (less provision for permanent decrease eligible for consolidation in value of investments) Cost (less provision for permanent decrease Investments in affiliates Equity Method in value of investments) Cost (less provision for permanent de- Other long-term invest- Cost (less provision for permanent decrease crease ments in value of investments) in value of investments) Current Investments Lower of the cost or net realizable value of Lower of the cost or net realizable value of Marketable Investments investment portfolio as a whole investment portfolio Other Short-term invest- Lower of the cost or net realizable value of Lower of the cost or net realizable value of ments each investment item each investment item Methods of Income recognition: Investments in subsidiaries Upon approval of dividends by Investee’s Eligible for consolidation eligible for consolidation A.G.M (up to balance sheet date) Upon approval of dividends by Investee’s Investments in affiliates Equity method A.G.M (up to balance sheet date) Other long-term invest- Upon approval of dividends by Investee’s Upon approval of dividends by Investee’s ments & current invest- A.G.M (up to balance sheet date) A.G.M (up to balance sheet date) ments

4.3 Inventories Inventories are valued at the lower of cost or net realizable value. If the cost exceeds net realizable value, the difference will be recognized as a provision for decrease in the value of inventories. The cost of inventories is calculated in accordance with the 87 following methods:

Inventories Method POS Terminals Annual Weighted Average Parts & Equipment Moving Weighted Average Other Inventories Weighted Average

4.4 Income Recognition Income is recognized on an accrual basis regardless of time of realization.

4.5 Income Recognition for Lease contracts Operational lease income is recognized within the lease period by declining method.

4.6 Provision for Doubtful Debts Provision for doubtful debts is calculated on the basis of the Central Bank of Islamic Republic of Iran (C.B.I) circular no.2823 of 24/2/2007 as follows: A. General provision: 1.5% of net balance of loan facilities granted, excluding loan facilities in item “B” below, B. Special provision: Balances- outstanding (between 2-6 months): 10% Balances- overdue (between 6-18 months): 20% Balances-doubtful (after 18 months): 50% 4.7. Financing Expenses Financing expenses, except for any expenditure directly attributable to ‘’eligible assets’’ are recognized as expenses, as they incur.

4.8 Provision for Employees’ service termination benefits Provision for employees’ service termination benefits is calculated and recorded, based on one month of the latest basic salary for each year of services rendered.

4.9 Foreign Exchange Translation Foreign exchange items are recorded, at official exchange rate prevailing at balance sheet date, and non-monetary items are recorded at historical cost, translated at the exchange rate prevailing on the date of transaction. Any resulting difference shall be recognized as either income or expense for the year. Financial statements of independent foreign affiliates – All assets and liabilities of any independent foreign affiliate shall be translated at official exchange rate prevailing at balance sheet date and its income and expense items shall be recorded at the average rate during that period. All differences resulting from translation will be recorded under the shareholders’’ equity and reflected in the consolidated income statement. These differences shall be directly transferred to the ‘’statement of retained earnings’’ as and when the foreign affiliate is sold.

4.10 Provision for Income Tax Corporate income tax is calculated on the basis of declared taxable income, in accordance with the Iranian Direct Taxation Act, as amended and provided for. Any difference between the final tax due and the provision made, is paid in the period the tax assessments are finalized by the authorities.

4.11 Goodwill Consolidation is carried out at the point of making an acquisition by using the Purchase Method. The excess of the acquisition cost of any investment in subsidiaries eligible for consolidation and affiliates using the equity method, over the net fair value of assets and their identifiable liabilities at the date of acquisition, shall be recognized as goodwill and shall be amortized over 20 years, on a straight line basis. Goodwill arising from acquisition of an affiliate, shall be treated as part of the book value of the long-term investment shown in the consolidated balance sheet.

4.12 US Dollars Equivalent EN Bank’s accounting system, including its financial records and reporting system, is based on the local currency, the Iranian Rials. To simplify comparisons for the year ended March 20, 2012, the figures in the financial statements are also expressed in their US Dollar equivalent. As a general rule, two different exchange rates are used for computing the US Dollars equivalent, namely a Closing Rate for the balance sheet, and an Average Rate for all other statements. For the year ended March 20, 2012, the rates are as follows: For the balance sheet 1 US$= 12,283 Iranian Rials (year 2011, 10,380 Iranian Rials) For all other statements 1 US$= 10,992 Iranian Rials (year 2011, 10,354 Iranian Rials) The resulting currency adjustment in the balance sheet is shown as a separate item in the share holders’ equity. CASH 5 Cash represents the followings: Group Parent Company

20th March 2012 20th March 2011 20th March 2012 20th March 2011

Rials Million Rials Million Rials Million Rials Million

Cash - Iranian Rials 1,525,872 649,631 1,525,867 1,365,677

Cash-foreign currency 1,554,440 982,660 63,185 16,285

Coins, gold & other precious metals 598 227 0 0

Petty cash 447 719 0 0

3,081,357 1,633,237 1,589,052 1,381,962

DUE FROM THE CENTRAL BANK Amounts due from the Central Bank, relates entirely to the parent company and 6 represent the followings:

Parent Company

20th March 2012 20th March 2011

Rials Million Rials Million

Statutory deposits 14,096,730 11,076,743

)Current accounts (FX 4,345,225 6,468,306 89

Current account 326,945 488

Special deposit 392 0

18,769,292 17,545,537

6.1 The amount of 1,926,218 million rials, due to the announcements no. 23976 dated 15/12/1390 , 23727 dated 27/12/1390, 33424, 23476 dated 28/12/1390 respectively, for the fulfillment of the act no. 47698 t/m/90-34030 dated 18/10/1390 ratified by the five - member working committee of foreign currency affairs & Article 127 of the Constitutional Law and based on the CBI governor’s instruction dated 11/12/1390, has been taken into account as the debt and consequently, the letter of complaint no. 91100/2/15 dated 14/01/1390 has been sent to the Central Bank. DUE FROM OTHER BANKS & FINANCIAL INSTITUTIONS Amounts due from other banks & financial institutions represent current accounts 7 held with Iranian and foreign banks, payment of checks issued by other banks, net receivables due from other banks for SHETAB transactions, and balance of Clearing Room operations, as follows:

Group Parent Company 20th March 2012 20th March 2011 20th March 2012 20th March 2011 Rials Million Rials Million Rials Million Rials Million Payment of cheques issued by other banks 3,426,789 190,772 3,426,789 190,772 Deposits- Local currency 1,535,506 247,111 1,509,909 223,143 Balance of clearing room operations 164,188 1,798,384 164,188 1,798,384 Deposits-Foreign currencies 3,228,842 2,957,355 2,953,599 2,289,885 Net receivable from banks for 3,710 142,523 3,710 142,523 SHETAB transactions Facilities granted to banks 3,100,000 1,196,000 3,100,000 1,196,000 Loan and advances to foreign bank 217,579 152,218 217,579 152,218 11,676,614 6,684,363 11,375,774 5,992,925

ISLAMIC FINANCING CONTRACTS 8 The breakdown is as follows: Group Parent Company 20th March 2012 20th March 2011* 20th March 2012 20th March 2011* Rials Million Rials Million Rials Million Rials Million Islamic financing contracts 119,434,670 94,486,993 115,232,366 91,465,995 Due from customers-letters of credit & 13,718,539 13,115,454 13,718,539 13,115,454 guarantee Others 1,222,825 602,665 1,259,565 602,665 134,376,034 108,205,112 130,210,470 105,184,114 Less: deferred income )2,007,882( )2,450,771( )2,007,882( )2,450,771( Principal balance 132,368,152 105,754,341 128,202,588 102,733,343 Less :Provision for doubtful debts - General provision )2,569,592( )2,054,667( )2,569,592( )2,054,667( - Special provision )3,296,113( )2,803,617( )3,241,113( )2,763,617( 126,502,447 100,896,057 122,391,883 97,915,059 *= Restated

8.1 By virtue of the provisions of the Paragraph 9-2 of Facility and Related Parties Commitments Bylaw (Circular no. 89/173772 dated 10/08/1390 of Banking Studies and Regulations of the Central Bank of the Islamic Republic of Iran) if the total amount of related parties’ facilities and commitments in comparison with the total amount of unpaid capital and statutory reserves exceeds 25 percent, Bank is obliged to pay the equivalent of 12 percent annually. In this regard related bank’s facilities, due to the letter no. 91400/2/36 dated 04/02/1390 has been sent to the Central Bank. PARTICIPATION BONDS The participation bonds relates entirely to the parent company and the breakdown is 9 as follows:

Parent Company 20th March 2012 20th March 2011 Rials Million Rials Million Bonds in local currency 7,707,797 962,800

Bonds in foreign currency 484,560 440,820

8,192,357 1,403,620

INVESTMENTS 10 Investments consist of the followings: Group Parent Company 20th March 2012 20th March 2011 20th March 2012 20th March 2011 Rials Million Rials Million Rials Million Rials Million Shares Shares of listed companies 589,687 186,143 576,340 180,434 Shares of unlisted companies 359,124 360,259 2,056,388 1,874,310 948,811 546,402 2,632,728 2,054,744 Provision for devaluation of shares 0 )91,801( 0 )91,801( 91 Sub-total 948,811 454,601 2,632,728 1,962,943 Real estates 1,640,352 475,814 0 0 Special projects participations 57,287 120,249 0 0 Others 126,587 149,513 0 0 2,773,037 1,200,177 2,632,728 1,962,943

LONG TERM INVESTMENT IN SUBSIDIARIES AND AFFILIATES 11 The Group’s long term investment in subsidiaries and affiliates is as follows: Amounts, in Million Rials

Share of Net Assets Goodwill Share of Total Net Assets

Balance as at the beginning of the year 961,154 68,000 1,029,154 Consolidated Adjustments )702( 0 )702( Acquisition during the year 32,013 0 32,013 Profit received from EN Bank Affiliates Companies during the year (before 159,200 0 159,200 Goodwill Depreciation) Dividends received & receivable )195,663( 0 )195,663( Goodwill Depreciation 0 )4,000( )4,000( 956,002 64,000 1,020,002 11.1 Summary information about subsidiary and affiliated companies, including the nature of their activities and percentage of ownership by the Group and by the Parent Company is as follows:

Ownership % Name Domicile Group Parent Activity A) Subsidiaries - Khadamat Arzi Va Sarafi EN Co. Iran 98% 98% Foreign Exchange dealings - Pardakht Novin Arian Co. Iran 95.27% 95.25% Electronic payment service provider(PSP) - EN Leasing Co. Iran 94.3% 60% Leasing Services - Khadamat Mali Etebari Rah EN Co. Iran 98% - Banking Services consultancy - Islamic Cooperation Bank for Iraq 63.35% 63.2% Banking Services Investment (I.C.Bank) - Harim Aftab Kianpars Iran 86.75% - Manufacturing and Trading - Khadamat Va Poshtibani EN Co. Iran 94.3% 60% Support and logistic Services - Olga-Iraq Iraq 100% 100% - - Sarafi Beynolmelali Deniba. UAE 98% - Foreign Exchange Services - Sarmayegozari Omran Tose Paydar Iran 97.66% 67% Investment Iranian -Khadamat Bime EN. Iran 92.41% - Insurance Services -Khadamat Rayan EN. Iran 98.44% 67% System Design and Consultation -Modiriat Sarmaye EN. Iran 99.34% 67% Financial Services and Consultation -Modiriat Sarmaye Va Sakht Saze Iran 94.30% - Construction Farayand Arian B) Affiliates - Bime Novin Co. Iran 19.9% 19.9% Insurance Services - E.N.I General Trading Co. UAE 48.02% - Credit and financial Services - EN Bank Brokerage Co. Iran 39.998% 39.998% Stock Broker - Shimi Baft Co. Iran 27.84% 27.84% Manufacturing - EN Investment Co. Iran 48% 48% Investment - Tamin Sarmaye Novin Co. Iran 49.80% 34.34% Financing &investment bank - Khadamat Mali Rahbar Iranian Co Iran 23.57% - Financial Consultancy

11.2 Due to the decisions reached at the extra ordinary general meeting dated 2008/04/13 Tamin Sarmayeh Eghtesad Novin Co. regarding its dissolution, no special value has been exerted on investment in its share so, in preparing consolidated financial statements final value has been reflected. 11.3 Due to the fact that General Trading and Olga companies have not been active, their financial statements have not been prepared; moreover Islamic Cooperation Bank for Investment has been audited by domestic auditor and financial statements of Deniba international exchange is on the process of auditing. ACCOUNTS & NOTES RECEIVABLE- OTHERS 12 Accounts and notes receivable others are as follows: Group Parent Company 20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Dividend Receivable 83,790 49,115 54,082 41,641

Due from subsidiary & affiliate companies 301,105 184,526 4,627,597 6,767,653 Receivable participation bond, deposit 157,139 24,346 143,013 22,816 with banks Staff (Loans) 15,577 3,729 0 0

Receivables 2,855 2,453 0 0

Deposits 1,319 7,798 0 0

Bank Melli- Bahar- Tehran 1,358,500 0 0 0

Other persons 29,217 25,385 0 0

1,949,502 297,352 4,824,692 6,832,110

12.1 Debt balance of the Melli Bank, Bahar Branch, concerning the funds of 15 bank guarantees accounted for 1,365 billion rials, is due to providing foreign exchange contracts and related coins. It should be noted that, on request of the said individuals, in lieu of real and interest balance, a guarantee has been issued in favor of foreign exchange services subsidiary company and brokerage by the Melli Bank, Bahar Branch. 93 Meanwhile, Due to the management decision, on mid-January 2012, it has been requested to remit the funds of the issued guarantees to the company’s accounts but Melli Bank has refrained from remitting the funds to the related accounts. It should also be stated that due to the complaint raised by the Melli Bank against the managers of the above said Branch, the original guarantees, has been sent to the judicial authorities. In this regards & in accordance with the received approval from the Melli Bank, Bahar Branch, the authenticity of the issued guarantees has been approved by the bank and subsequently, the company has requested for the restoration of the original guarantees from the judicial authorities to collect the funds. 13 FIXED TANGIBLE ASSETS 13.1 The summary of cost, accumulated depreciation and book value of Group’s fixed tangible assets is as follows:

(Amounts in Million Rials)

Cost Accumulated Depreciation Book Value Adjustments Adjustments beg. of year beg. of year Disposals & Disposals & Disposals & Disposals & Balance at Balance at Balance at Balance at Balance at the end of the end of the end of

Additions Additions March 20

year year 2012 2011

Land 420,299 203,481 (10,748) 613,032 8 0 0 8 613,024 420,291 Buildings and 836,695 17,456 (16,736) 837,415 232,680 34,628 (4,690) 262,618 574,797 604,015 installations Motor Vehicles 13,073 5,825 (413) 18,485 5,587 1,608 (493) 6,702 11,783 7,486 Equipment, Fixtures & 762,635 259,442 (7,751) 1,014,326 276,162 115,291 (784) 390,669 623,657 486,473 Furniture 2,032,702 486,204 (35,648) 2,483,258 514,437 151,527 (5,967) 659,997 1,823,261 1,518,265 Assets in the process of 187,621 548,964 completion Purchase orders & capital 907,610 649,333 prepayments Inventory of capital items in 71,197 36,579 stock

2,989,689 2,753,141 13.2 The summary of cost, accumulated and book value of the parent company’s fixed tangible assets is as follows:

(Amounts in Million Rials)

Cost Accumulated Depreciation Book Value Adjustments Adjustments beg. of year beg. of year Disposals & Disposals & Balance at Balance at Balance at Balance at Balance at the end of the end of the end of

Additions Additions March 20

year year 2012 2011

Land 157,585 262,995 (1,981) 418,599 8 0 0 8 418,591 157,577

Buildings 520,240 273,853 (2,517) 791,576 200,143 66,330 (1,102) 265,371 526,205 320,097

677,825 536,848 (4,498) a1,210,175 200,151 66,330 (1,102) 265,379 944,796 477,674

Motor Vehicles 3,953 2,916 (156) 6,713 1,690 1,261 (123) 2,828 3,885 2,263 Equipments, 648,108 205,572 (1,180) 852,500 210,460 93,264 (600) 303,124 549,376 437,648 Fixtures & Fitting 652,061 208,488 (1,336) 859,213 212,150 94,525 (723) 305,952 553,261 439,911

1,329,886 745,336 (5,834) 2,069,388 412,301 160,855 (1,825) 571,331 1,498,057 917,585 1,099,768 768,007 Purchase orders & Capital 46,574 22,692 prepayments Inventory of capital items in 2,644,399 1,708,284 stock CONSOLIDATED GOODWILL The cost of acquisition of goodwill and the Group’s share of fair value of the net 14 assets and the book value of goodwill at the year end is as follows: (Amounts in Million Rials)

Group

Daniba FX co. Novin Arian (PSP) co. Farayand Arian co. Total Cost of assets acquired 27,832 30,938 32,086 90,856 Net fair value of asset (6,350) (22,500) (29,999) (58,849) 21,482 8,438 2,087 32,007 Group’s Share 0 (1,763) 0 (1,763) Consolidate goodwill 21,482 6,675 2,087 30,244 Accumulated depreciation(b/f) (2,686) (1,349) (52) (4,087) 18,796 5,326 2,035 26,157 Current year’s depreciation (1,074) (334) (104) (1,512) 17,722 4,992 1,931 24,645

OTHER ASSETS 15 The other assets are as follows: Group Parent Company 20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Rental deposits( Rented branches) 300,327 234,487 300,327 234,487 Others 1,134,113 521,584 1,121,324 509,738 95 1,434,440 756,071 1,421,651 744,225

DUE TO THE CENTRAL BANK Balances due to the Central Bank, relates entirely to the parent company and are as 16 follows: Parent Company 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Currency credit lines utilized 3,677,343 2,930,032 Purchases of currencies 183,606 310,448 3,860,949 3,240,480

DUE TO OTHER BANKS & FINANCIAL INSTITUTIONS 17 Balances due to other banks & financial institutions are as follows: Group Parent Company 20thMarch2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Credit facilities from local banks 1,980,062 1,355,112 - - Advances and loans from foreign banks 126,406 125,533 2,077 73,193 2,106,468 1,480,645 2,077 73,193 DEMAND DEPOSITS 18 Demand deposits, are composed of the followings: Group Parent Company 20thMarch2012 20thMarch2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million

Bank drafts& travelers cheques issued 4,611,985 2,566,970 4,611,985 2,566,970

Current A/C deposits 4,602,781 2,325,180 4,644,368 2,390,020

Current A/C deposits in foreign currency 1,816,592 6,450,186 1,816,673 6,450,257

11,031,358 11,342,336 11,073,026 11,407,247

NON-INTEREST BEARING DEPOSITS 19 Non-interest bearing deposits, are composed of the followings: Group Parent Company 20thMarch 20thMarch 20thMarch2011 20thMarch2012 2012 2011 Rials Million Rials Million Rials Million Rials Million Saving deposits and Saving deposits 2,186,367 2,283,040 2,186,367 2,283,070 (for home purchase) Saving deposits in foreign currency 3,553,916 3,369,742 3,553,916 3,369,742

5,740,283 5,652,782 5,740,283 5,652,812

TERM DEPOSITS 20 Term deposits, are composed of the followings: Interest Group Parent Company rates % 20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Long Term: 5 Year 15 65,846,089 53,859,111 65,846,089 53,859,111 1 Year 12.5 1,058,947 9,958,224 3,963,237 10,194,752 3 Year 14 703,097 2,244,709 703,097 2,244,709 2 Year 13 23,128,490 748,266 23,128,490 748,266 4 Year 14.5 491,449 235,839 491,449 235,839 91,228,072 67,046,149 94,132,362 67,282,677 Short Term: 1 month 6 33,639,604 25,232,854 30,839,918 25,279,894 3, 6, 9-Months 6-10 755,260 1,499,495 755,260 1,499,495 34,394,864 26,732,349 31,595,178 26,779,389 Total Term deposits (in Rials): 125,622,936 93,778,498 125,727,540 94,062,066

3,361,855 1,379,237 2,038,306 821,425 Term deposits in foreign currency 128,984,791 95,157,735 127,765,846 94,883,491 OTHER DEPOSITS 21 Other deposits, are composed of the followings: Group Parent Company 20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Advances-for letters of credit issued 2,060,584 1,806,620 2,126,884 1,807,920 Deposits-for letters of guarantee issued 4,253,776 1,680,875 4,253,776 1,680,875 6,314,360 3,487,495 6,380,660 3,488,795

ACCOUNTS PAYABLE –OTHERS 22 Accounts payable (others), are composed of the followings: Group Parent Company 20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Deferred letters of credit 2,174,316 2,886,482 2,174,316 2,886,482 Provision for accrued expenses 47,965 106,720 11,967 108,527 Share of income payable on term 1,892,198 1,151,386 1,894,066 1,151,386 deposits Others 3,089,147 3,303,984 2,921,102 3,195,195 7,203,626 7,448,572 7,001,451 7,341,590

PROVISION FOR INCOME TAX 97 23 Provision for income tax of the Group is as follows: Group 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Parent company 878,370 1,245,328 Subsidiaries 127,973 112,727 1,006,343 1,358,055 23.1 The summery of the provision of the parent company is as follow:

2011 2010 year

financial declared profit declared including income tax tax declared tax recognized tax final paid tax balance reserve previous reserve year 2007 1,247,684 759,944 170,987 393,231 344,618 344,618 51,817 2008 1,986,084 635,826 143,061 642,215 618,751 267,603 351,148 351,148 2009 2,397,496 1,100,437 247,598 779,641 806,117 647,427 558,604 558,604 2010 3,286,568 1,261,761 283,896 1,149,300 282,673 1,019 283,896 2011 4,858,552 1,735,458 368,780 368,780 1,279,551 1,245,465 (401,181) (137) 878,370 1,245,328 Tax prepayment

23.1.1 Performance Tax for the years 2001 to 2006 is final and has been paid and bank has received from national tax administration, the related settlement receipt.

23.1.2 Tax for the year 2007 has been paid based on final tax notice, objection has already made on the final tax notice and it is under consideration.

23.1.3 Performance tax recognition notice for the year 2008 has been notified on 15.06.2010 and regarding to the method of investigation and bank’s objection, the case has been referred to the preliminary tax dispute settlement board and the final tax notice has been advised on 08.04.2012. According to the final tax notice on the basis of IRR 2,563,874, taxable revenue which was IRR 576,871 has been claimed. In this connection objection has been made to the supreme tax council and ask the court to violate the vote and should request them to reconsider the case.

23.1.4 For the performance of the fiscal year 2009, according to the tax recognition notice the sum of IRR 3,465,070 taxable revenue has been recognized and the total amount of IRR 576,871 has been claimed as tax that in regard to the bank’s objection the case has been investigated in tax preliminary dispute settlement board and finally according to the final tax notice advised on 08.04.2012 on the basis of the amount of IRR 3,463,643 as taxable income the amount of IRR 779,319 has been claimed as tax. In this regard objection has been made to the supreme tax council and asks the court to violate the vote and should request them to reconsider the case. 23.1.5 For the performance of the financial year 2010, according to the tax recognition statement based on the sum of IRR 4,597,198 taxable revenue the total amount of IRR 1,149,300 has been claimed as tax. In regard to the method of investigation the objection has been made on the above mentioned recognition statement and the case is under consideration in tax dispute settlement board.

DIVIDENDS PAYABLE 24 Dividends payable is composed as follows: Group 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Parent Company: Balance at the beginning of the year 6 6 Payment to shareholders (73,470) (300,000) Dividends approved in previous year 2,557,500 1,800,000 Transfer for capital increase (2,484,030) (1,500,000) 6 6 Subsidiaries: EN Leasing Co. 5,806 5 5,812 11 99

CAPITAL The capital of EN Bank at the time of establishment was Rials 250 billion, divided 25 into 250 million ordinary shares with a nominal value of Rials 1,000 each fully paid up. According to the approval of Extra Ordinary General Meeting of the shareholders in 2005, the board of directors was granted the authority to increase the capital up to Rials 4,500 billion. Accordingly in year 2009, the capital was increased from Rials 2,500 billion to Rials 3,000 billion. Since then, pursuant to the same authorization, on November 01.2010, the share capital was increased from Rials 3,000 billion to Rials 4,000 billion. This increase was registered on May, 26.2010 and subsequently the share capital was increased to Rials 5,500 billion on January 08.2011 and to Rials 8,000 billion on February 20.2012. Furthermore, according to the resolution of EN Bank’s Extraordinary General Meeting, dated July 19th 2011, the capital of the bank will increase, in stages, to Rials 15,000 billion within the next 2 years, for which all the necessary approvals from the Central Bank of the Islamic Republic of Iran and those of Tehran Stock Exchange have been secured. LEGAL RESERVE Legal reserve for parent company (Bank) is equal to 15% of the annual net profit, 26 after deduction of any prior years’ losses. For each subsidiary the rate is 5% .Setting aside the legal reserve for both parent company and any subsidiary is mandatory until such time as the balance of the legal reserve reaches that of the share capital for the parent company, and 10% of the capital of the subsidiary concerned. The legal reserve cannot be transferred into company’s capital and it is not distributable to the shareholders till dissolution of the company.

20thMarch 2012 20thMarch 2011 Rials Million Rials Million Parent Company 2,105,177 1,431,712 Subsidiary Companies 116,972 99,928 2,222,149 1,531,640

GENERAL RESERVE The general reserve of Rials 5,768 million, relates to two of subsidiaries i.e. EN 27 Insurance services (Iranian Rials 179 Million) and Islamic Cooperation Bank for Investment (I.C.Bank) (Iranian Rials 5,589 Million).

CURRENCY TRANSLATION -FOREIGN SUBSIDIARIES All assets and liabilities of two independent foreign affiliates, (the Islamic 28 Cooperation Bank for Investment and DENIBA International Foreign Exchange Co.) have been translated and recorded in the financial statements at the exchange rates prevailing at balance sheet date, and the income and expense items were recorded at average rate of the year. The resultant exchange gain/loss is recognized and reflected in the stockholders’ equity section.

MINORITY INTERESTS 29 The minority interests in subsidiaries is as follows: Group

20thMarch 2012 20thMarch 2011

Rials Million Rials Million

Capital 360,125 360,013

Legal reserve 16,041 13,027

Other reserves 3,248 2,443

Retained earnings 58,570 34,218

437,984 409,701

Net assets 34,718 0

Surplus of Forex translation in independent foreign affiliates 65,187 404

537,889 410,105 INCOME FROM ISLAMIC FINANCING CONTRACTS 30 Islamic financing contracts, are composed as follows:

Group Parent Company

20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011

Rials Million Rials Million Rials Million Rials Million

Income from contracts 17,600,046 15,341,850 17,461,495 15,481,173

Default penalty receipts 1,444,722 1,438,089 1,444,722 1,438,089

19,044,768 16,779,939 18,906,217 16,919,262 Income from Foreign Exchange loan 1,180,614 639,499 1,180,614 639,499 & credit facilities

INCOME FROM PARTICIPATION BONDS The income from Bonds relates entirely to the parent company. Rials 491,715 million 31 of the income is from Bonds issued in Rials and the rest (Rials 34,481 million) is from Bonds issued in foreign currencies.

NET INCOME FROM INVESTMENTS The net income from investments, after writing off some Rials 91,801 million of prior 32 years’ provisions for reductions in value, is Rials 760,244 million for the parent company and Rials 248,902 million for the group. 101

COMMISSIONS RECEIVED 33 Commissions received in respect of various services are as follows: Group - year ended Parent Company- year ended 20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Letters of credit 115,328 113,371 115,328 113,371 Letters of guarantee 387,804 298,707 388,704 298,707 “SHETAB”(national switch) transactions 201,413 157,454 201,413 157,454 Buying & selling foreign currency 83,565 69,017 83,565 69,017 E-banking services 67,755 31,336 67,755 31,336 Other services 133,009 97,461 133,009 100,852 988,874 767,346 989,774 770,737 NET OTHER INCOME 34 Net other income is summarized as follows: Group - year ended Parent Company - year ended 20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Cost of providing for doubtful debts 0 (2,110) 0 0 Fire damaging (341) 0 (341) 0 Profit (loss) on sale of fixed assets 10,116 (9,170) (49) 343 Income from services rendered 482,637 635,895 0 0 Rental income 12 31 0 0 Net gain (loss) on FX transactions (15) 5 0 0 Other net income or (expenses) 13,835 (7,518) 8,436 1,858 506,244 617,133 8,046 2,201

INTERIM SHARE OF INCOME PAID ON TERM DEPOSITS 35 Summarized break-down of share of income paid on term deposits, is as follows: Interest rates Group - year ended Parent Company - year ended % 20thMarch 2012 20thMarch 2011 20thMarch 2012 20thMarch 2011 Rials Million Rials Million Rials Million Rials Million Long Term Deposits: 5 Year 15-20 10,728,931 8,099,976 10,728,931 8,099,976 1 Years 12.5-17 1,167,244 2,426,502 1,171,076 2,459,254 2 Years 13-19 216,944 116,711 216,944 116,711 3 Years 14-19 536,335 87,595 536,335 87,595 4Years 14.5-20 46,244 42,186 46,244 42,186 12,695,698 10,772,970 12,699,530 10,805,722 Short Term Deposits: 1 month 6-10 2,405,743 1,811,087 2,405,743 1,811,087 3,6, and 9 months 6-15 81,693 229,694 81,693 229,694 2,487,436 2,040,781 2,487,436 2,040,781 Total long term deposits(Rials) 15,183,134 12,813,751 15,186,966 12,846,503 Long term deposits 147,878 93,762 147,878 93,762 (Foreign Currencies) GENERAL & ADMINISTRATIVE EXPENSES The general and administrative expenses, including payroll, rentals, overhead costs, 36 and other operating expenses, for the year under review is Rials 1, 742,468 million for the group and Rials 1, 948, 644 million for the parent company.

PRIOR YEARS’ ADJUSTMENTS Prior Years’ adjustments mainly relate to income tax provisions, net other income and 37 miscellaneous expenses.

RECONCILIATION OF OPERATING PROFIT The summary of reconciliation of operating profit with net cash inflows from Operating 38 Activities is as follows:

Group Parent Company 20th March 2012 20th March 2011 20th March 2012 20th March 2011 Rials Million Rials Million Rials Million Rials Million Net profit before tax 5,263,736 3,493,827 4,858,552 3,286,568 Non-Cash items included in above 919,754 1,435,067 391,889 1,068,627 6,183,490 4,928,894 5,250,441 4,355,195 Net (increase) in operating liabilities 36,886,162 22,480,510 35,086,842 21,581,115 Net (increase) in operating assets (40,505,469) (20,210,543) (38,801,891) (19,976,834) Net cash inflow from operating activities 2,564,183 7,198,861 1,535,392 5,959,476 103

COMMITMENTS AND CONTINGENT LIABILITIES Commitments and contingent liabilities of the parent company and its subsidiaries is 39 as follows:

Company Nature of Contingent Liabilities or Commitments Million Rials Parent company: EN Bank Customer’s liabilities related to Nahal Saramayeh Iranian Funds 389,233 EN Bank Customer’s liabilities related to Armaghan Iranian Funds 1,289,233 EN Bank Customer’s liabilities related to Atiyeh Novin Funds 2,804,219 EN Bank Customer’s guarantees related to Sokouk Mahan 466,580 EN Bank Customer’s guarantees related to Sokouk Saman Bank 1,695,719 Subsidiaries: Guarantee promissory notes held with Novin Insurance Company as EN Insurance services Co. 1,000 collaterals

Contingent Liability in case of being audited by social security organization, income tax on real estate during the last periods, income 53,208 EN Support Services Co. taxes, tax on salaries, added values, and capital commitments remaining over the approved in-progress project contracts

EN Bank Leasing Co. Guarantee cheques held by others 3,071 Harim Aftab Kianpars Co. Capital commitments raised from execution of Kianpars project phase one 308 RELATED PARTY TRANSACTIONS The Commercial Code of Iran requires the Related Party Transactions to be disclosed 40 in the financial statements. Transactions falling within this category involving companies with a common director have all been conducted at arms-length and in normal business practice. Any transactions qualifying as such have been fully disclosed and reported to the shareholders by the management.

POST BALANCE SHEET EVENTS Except for the administrative procedures for increase of share capital up to Rials 41 8,000 billion, no significant post balance sheet date events, requiring an adjustment in the financial statements, have occurred.

CAPITAL ADEQUACY RATIO 42 The Capital Adequacy Ratio of the bank has been calculated as % 11.98

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