Contents

Saman In 2016/17

Statement of the Board and the CEO ...... 4

Key Figures ...... 7

About ...... 8

Strategy Statement ...... 10

Saman’s position in the Securities and Exchange Organization ...... 12

The Bank’s Legal Environment ...... 12

An Overview of Saman’s Operational and Financial Performance ...... 14

Resource and Expense Analysis ...... 19 Major Achievements of Bank in Different Areas ...... 22 Saman Bank Corporate Governance 30 ...... In 2016/17 Risk Analysis ...... 40

Major Accolades and Achievements of Saman Bank and Saman Financial Group in 2016/17 42

Saman Financial Group ...... 43

Plans and Projects for 2017/18 ...... 44

Financial Report

Independent Auditor’s and Legal Inspector’s Report ...... 46

Group Consolidate Financial Statements ...... 50

Saman Bank (Public Joint Stock Company) Financial Statements ...... 56

Explanatory Notes ...... 63 Statement of the Board and the CEO

Yesterday investments in other markets such as capital and housing markets. No improvement was recorded in fees and The financial year 2016/17 was undoubtedly a challenging year for the Iranian banking system. Years of charges revenue, in spite of increased operational costs and infrastructural developments during the past five years. negotiations between and the five world economic leaders (P5+1) finally reached a conclusion, and the signature of the JCPOA in winter 2016 heralded new hope for the Iranian economy. Although the gradual In 2015, the CBI issued a circular stipulating that were to pay the costs of using POS systems in retail outlets, removal of sanctions re-established contact with the international banking system, it also brought to light the despite the major investment in e-commerce and e-payment development. This in itself was responsible for a high fact that it would be necessary to develop the technical, operational and infrastructural capacities required in increase (IRR 1.064 billion) in our expenses. order to comply with complex, strict standards and to be able to interact productively with international banks and institutions. The new conditions prompted us to pursue even more extensively and diligently our plans to Despite all of the above-mentioned challenges, the fact that we had planned with diligent foresight meant that achieve our key goal: “To become the first-choice banking partner for overseas banks.” Saman Bank was prepared and equipped to face the new conditions, to effectively manage the restrictions and utilize opportunities in the best possible manner. Our excellent management of resources and expenses, and our focus Domestically, the (CBI) continued its policy of money supply control and inflation control on our international capabilities enabled us to increase our foreign currency operations from $3.9 billion in 2015/16 throughout the year, which reduced interest rates more than once during the year. Although the reduced interest to $5.8 billion in 2016/17. The role of the JCPOA in opening up the Iranian banking market and making it more rates promised a positive impact on banks’ profitability, it coincided with the issuance of two separate circulars competitive should not be ignored. In such a competitive market, we managed to improve our import market share of by the CBI, which adversely affected profits and severely reduced major parts of joint revenue sources. The first 13 percent to 15 percent. circular called for all government, government company and municipality accounts to be centralized within the CBI, and the second circular reduced the gap between interest paid on deposits and interest received from loans. It also As indicated above, we have invested heavily in our three key areas of business, based on our rigorous forecasts stipulated that banks were to avoid paying interest on long-term deposits, simultaneously offering short-term loans of future developments during the JPA and the start of JCPOA, and taking into account the need to expand our to the same clients. international banking capacities. These actions will continue well into 2017/18.

We should bear in mind that approximately 80 percent of the Iranian economy is controlled by the state, and the In order to improve productivity and efficiency, we implemented Enterprise Resource Planning (ERP) systems, centralization of government accounts within the CBI means a smaller and more competitive money market for purchased from a reputable developer, which facilitate the control and utilization of information in all sectors of the commercial banks, especially privately owned institutions. On the other hand, operational costs were borne by bank including financial, accounting, human resources, supply chain and customer services. ERP will enable us the banks under the existing inflation conditions, and the reduced gap between interest paid and interest gained to develop and implement the infrastructure needed to prepare and manage our financial statements in line with represents a loss to the banks, which were also responsible for legal deposit costs. Banks experienced similar IFRS standards, which we will certainly need in our interactions with domestic supervisory bodies as well as our conditions in the non-joint-revenues section. The economic stagnation had reduced profit and blocked banks’ international dealings.

4 Annual Report 5 Our next step toward joining the global banking network was to optimize e-banking equipment. In this regard, we have procured the latest software solutions and tailored these to suit our requirements.

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

Today

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

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

Another major goal that we strongly pursue is that of reducing the bank’s outstanding claims to the lowest possible level. Our previous investments, including the creation of Hafez Saman Iranian Credit Scoring Company, and the concentration of debt-collection activities have brought us closer to this goal. Key Figures In 2017/18, we will establish Saman Holding to create synergy in companies in which Saman Bank is a shareholder. We expect this to improve strategic management and increase revenues in those companies, thereby contributing to Saman’s revenues from its investment arm. (Adjusted) 2016/17 2015/16 2014/15 We have also managed to obtain authorization to increase our registered capital from IRR 8000 billion to IRR 12000 Unit Consolidated Bank Consolidated Bank Consolidated Bank billion at the end of the financial year 2016/17. We will follow up on this to increase capital through liquidated claims and shareholders’ equity. Key performance indicators during the year

With the promise of improved international relations, Saman relies on its international reputation to develop its Net revenue from lending and deposits IRR billion (7,663) (7,689) (662) (611) 2,090 2,082 correspondent banking network through cooperation with major international banks in 2017/2018. We recently Net revenue from fees and charges IRR billion (318) (514) 13 (28) 331 301 opened our representative office in Italy, and will soon open our office in Germany, both of which will further develop our international banking presence. We also signed a finance agreement with Exim Bank of India and are currently Total operating revenues IRR billion (3,134) (1,789) 2,097 1,255 4,751 4,230 working toward establishing finance agreements with a number of European and Asian banks including Danske Net profit (loss) IRR billion (1,882) 85 316 103 1,044 1,011 Bank in Denmark, Oberbank in Austria, and The Export-Import Bank of Korea in . Furthermore, we have Key items in balance sheet signed agreements and memorandums of understanding with reputable export credit and insurance organizations Lending and claims IRR billion 127,532 127,750 126,692 126,988 117,743 118,112 such as SACE in Italy, and will continue to make the best use of any opportunity that should arise, in order to boost our international banking relations. Total assets IRR billion 257,912 258,035 260,670 257,555 229,991 228,083 Total deposits IRR billion 17,107 17,098 21,806 21,885 21,652 21,695 Total debts IRR billion 34,685 31,977 56,965 53,768 60,157 57,634 Tomorrow Investors’ equity IRR billion 213,660 214,853 193,509 194,174 158,912 159,679 Last year, we produced the bank’s Second 5-Year Strategic Plan, which defined three main areas of focus in Horizon Paid capital IRR billion 8,000 8,000 8,000 8,000 6,588 6,588 2021/22. These areas include: Shareholders’ equity IRR billion 9,567 11,205 10,196 9,614 10,922 10,770 • Development of mobile phone-based e-banking Return Rate • Development of corporate and international banking Return on Asset Percenage (0.73) 0.03 0.12 0.04 0.45 0.44 • Creation of value chain and provision of comprehensive service for customers in target markets Return on Net Worth (ROE) Percenage (19.67) 0.76 3.10 1.07 9.6 9.4 Performance per share Our vision for 2021/22 is to achieve recognition as a pioneering international bank. We aim to provide our full range of 8,000,000,000 8,000,000,000 8,000,000,000 8,000,000,000 6,588,000,000 6,588,000,000 retail banking services and transactions via mobile e-banking, as well as to transform our branches into advice and Number of shares consultation hubs where the bank meets its clients. Basic earnings per share (IRR) Rls (m) (235) 11 42 14 138 133 Diluted earnings per share (IRR) Rls (m) (235) 11 40 13 137 132 Dividend per share (IRR) Rls (m) - - - - 80 80 Saman Bank Board of Directors Other information Personnel Person 3,100 2,406 3,581 2,475 3,453 2,425 Number of branches - 137 - 141 - 145

6 Annual Report 7 Date of capital increase Increase New capital Source of increase percentage IRR billion

29.08.2002 0 200 Liquidated claims and shareholders’ equity

27.11.2003 10 220 Liquidated claims and shareholders’ equity

14.10.2004 36.4 300 Shareholders’ equity

7.03.2005 100 600 Liquidated claims and shareholders’ equity

16.11.2005 25 750 Liquidated claims and shareholders’ equity

08.10.2006 20 900 Liquidated claims and shareholders’ equity

Liquidated claims and shareholders’ equity and 13.01.2010 100 1,800 denying rights of preference

20.03.2011 66.7 3,000 Liquidated claims and shareholders’ equity

19.03.2012 33.3 4,000 Shareholders’ equity

21.10.2012 64.7 6,588 Surplus of assets revaluation

09.03.2016 21 8,000 Shareholders’ equity and accumulated profit

Shareholder Structure

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

Shareholder March 20,2017

Saman began its official activity on September 2, 1999 as the first credit institution in post-revolutionary Iran under the Number of Shares Percentage name Saman Eghtesad. Saman Eghtesad was registered with the Corporate and Noncommercial Entities Register Pension Fund of National Iranian Copper Industries Company 624,530,308 7.81 under number 154444, with an initial capital of IRR 11 billion. Steel Industries Pension Fund 400,088,117 5.00 In September 2002, Saman Eghtesad had accumulated sufficient capital to obtain a banking license from the Central Mines and Metals Development Investment Company (Public Joint-Stock) 323,686,501 4.05 Bank of the Islamic Republic of Iran. This opportunity allowed the institution to enter a new phase of its life as a Mohammad Zarrabieh 315,266,280 3.94 privately owned bank. Financial Group Company (Private Joint-Stock) 244,163,829 3.05 Saman Investment Development Company 239,999,995 3.00 Havva Chayi Dehkhuyi 214,307,862 2.68 Scope of Activities Vali Zarrabieh 201,660,057 2.52 Seyed Mehdi Ghafouri 181,316,669 2.27 The bank’s scope of activities is detailed in Article 3 of the Memorandum of Association. A summary is presented below: Seyed Ahmad Akhavan Dastmalchi 166,800,291 2.09 • Opening and maintaining different types of bank accounts including current and savings accounts Other individual shareholders 3,741,848,402 46.77 • Accepting term deposits and issuing deposit certificates Other corporate shareholders 1,346,331,689 16.83 • Providing loan and finance products within the framework of rules and regulations and the standards of non-usurious 8,000,000,000 100 banking laws • Operating in currency markets domestically and internationally • Administering all types of credit instruments including documentary letters of credit Individual and corporate share ratio: • Issuing L /C and different types of checks March 20, 2017 March 19, 2016 Issuing and trading bonds Number of Number of Number of Number of • Percentage Percentage • Partnership and investment Shareholders Shares Shareholders Shares Individual • Any other banking and business activity allowed under relevant rules and regulations 4150 4,821,199,561 60.26 3501 4,787,934,738 59.85 Corporate 69 3,178,800,439 39.74 68 3,212,065,262 40.15 4219 8,000,000,000 100.00 3569 8,000,000,000 100.00

Capital

At the time of registration, the bank’s capital was IRR 200 billion (divided into 200 million shares, each of IRR 1,000 nominal value) which has subsequently increased, as follows: Corporate 39.74 Individual 60.26

8 Annual Report 9 Strategy Statement

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

Our Vision and Mission Statements guide us in our pursuit of the following objectives: Our Vision • To classify customers and to tailor organizational structures and procedures to their needs; • To maximize customer loyalty; • To serve as the first choice in Iranian banking for target customers, which include: To increase non-joint revenues; - In-branch customers for electronic-banking services in physical bank locations; • To enhance operational efficiency through improved procedures and increased internal control and supervision; - Private (VIP) and Premier Customers; • To expand the investment portfolio; - Large- and medium-sized businesses (domestic and international) for international transactions. • • To improve risk management; • To operate as the first-choice banking partner for overseas banks; • To boost the profitability of branch operations. • To maintain the bank’s position as a first-choice employer for the most talented banking professionals; • To secure the largest market share of international transactions amongst privately owned Iranian banks.

Our Mission and Values

Saman Bank strives to create real added value for its customers and to encourage their loyalty through the consistent delivery of quality services that are defined by convenience, reliability, and respect of social values. To these ends, we introduced and continue to uphold the following values: • Customer-centric culture • Human capital • Transparency • Organisational culture

10 Annual Report 11 Saman’s position in Securities and Exchange Organization

According to notification number 90-851 dated November 16, 2011 by Iran Fara Bourse, Saman was listed in the • By-laws and guidelines circulated by the Securities and Exchange Organization; Banks and Credit Institutions group as the 49' stock symbol (29' company in the first market) and was assigned the • Supervision packages and policies of the CBI, which act as guidelines for the bank’s operations and other legal stock symbol “ZeSaman.” On June 07, 2013, Saman Bank’s listing was transferred to the main market of the Iran activities during the reported year; Stock Exchange as per IFB’s letter no. 91/03/3035. • General policies adopted under Article 44 of the Constitution; • Monetary and Banking Act; • Law requiring issuance of national identification number and postal code to all citizens; • Approvals by Money and Credit Council; The Bank’s Legal Environment • Saman’s Articles of Association.

The following laws and regulations are the most important rules governing Saman’s activities: • The Monetary and Banking Act of Iran ratified in 1972 and its subsequent amendments; • The Law for Usury (Interest) Free Banking ratified in 1983; • The Law annexing two notes to Article 15 of the Law for Usury (Interest) Free Banking as amended in 1997; • The Law permitting the Establishment of Privately-Owned Banks passed in 2000; • The Law regulating Non-Regulated Money Market passed in 2004; • The Anti Money Laundering Act passed in 2007; • The Banking Regulations Act passed in 1979; • Law adjusting Bank Loan Interests to the Return Rate in Different Economic Sectors, passed in 2006; • Law banning Bank Borrowers from leaving the Country passed in 1980; • The Cheques Act passed in 2003; • The Direct Taxation Act passed in 1987; • The By-Law on Enforcing Legally-Binding Documents; • Article 34 of the Registration Act as amended; • Commercial Code passed in 1932 and its subsequent amendments; • E-Commerce Law passed on 25th January 2004; • Negotiable Instruments Market Law passed on 22 November 2005; • By-laws and guidelines circulated by the Central Bank of Iran;

12 Annual Report 13 An Overview of Saman’s Operational and Financial Performance

Balance sheet

20/03/2017 19/03/2016 20/03/2015

Percentage Percentage IRR billion Percentage Increase (decrease) compared IRR billion Percentage Increase (decrease) compared IRR billion with previous year with previous year

Assets Assets Cash 31,495 12.21 (36.20) Cash 49,362 19.17 13.80 43,376

Due from banks and other credit institutions 9,676 3.75 (24.60) Due from banks and other credit institutions 12,834 4.98 7.39 11,950 Loans and advances to customers 127,750 49.51 0.60 Loans and advances to customers 126,988 49.31 7.52 118,112 Investment in stocks and securities 2,778 1.08 (14.23) Investment in stocks and securities 3,239 1.26 32.45 2,445 Due from subsidiaries and affiliates 3,579 1.39 247.29 Due from subsidiaries and affiliates 1,031 0.40 (13.13) 1,186 Other accounts receivable 5,946 2.30 (5.20) Other accounts receivable 5,652 2.19 231.54 1,705 Tangible fixed assets 3,613 1.40 0.53 Tangible fixed assets 3,594 1.40 7.01 3,359 Intangible assets 4,301 1.67 4.41 Intangible assets 4,120 1.60 6.69 3,861 Legal deposit 23,036 8.93 9.01 Legal deposit 21,131 8.20 8.30 19,512 Other assets 45,862 17.77 54.91 Other assets 29,606 11.50 31.13 22,577 Total 258,035 100 0.19 Total 257,555 100 12.92 228,083

Liabilities Liabilities Due to banks and other credit institutions 5,475 2.12 (79.75) Due to banks and other credit institutions 27,042 10.50 (5.96) 28,755 Customer deposits 17,098 6.63 (21.87) Customer deposits 21,885 8.50 0.88 21,695 Dividends payable 52 0.02 (66.58) Dividends payable 157 0.06 (15.49) 186 Debt instruments - 0.00 0.00 Debt instruments - 0.00 0.00 1,000 Income tax provision - 0.00 0.00 Income tax provision - 0.00 0.00 - Other debts and provisions 8,813 3.42 106.47 Other debts and provisions 4,269 1.66 (25.14) 5,702 Provision for employee termination benefits 537 0.21 29.59 Provision for employee termination benefits 415 0.16 39.93 296 Total liabilities before investment accounts equity 31,977 12.39 (40.53) Total liabilities before investment accounts equity 53,768 20.88 (6.71) 57,635 Investment accounts equity 214,853 83.27 10.65 Investment accounts equity 194,174 75.39 21.60 159,679 Total liabilities 246,830 95.66 (0.45) Total liabilities 247,941 76.21 14.09 217,314 Shareholders’ equity Shareholders’ equity Share capital 8,000 3.10 0.00 Share capital 8,000 3.11 21.43 6,588 Ongoing capital increase - 0.00 0.00 Ongoing capital increase - 0.00 (100) 318 Legal reserve 1,537 0.60 0.83 Legal reserve 1,524 0.59 5.21 1,448 Assets revaluation surplus 1,507 0.58 223,120.85 Assets revaluation surplus 1 0.00 0.00 1 Retained earnings 161 0.06 80.50 Retained earnings 89 0.03 (96.30) 2,414 Total equity 11,205 4.34 16.55 Total equity 9,614 3.73 (10.72) 10,769 Total liabilities and equity 258,035 100 0.19 Total liabilities and equity 257,555 100 12.92 228,083

14 Annual Report 15 Income Statement Information

20/03/2017 19/03/2016 20/03/2015 Percentage Percentage IRR billion Percentage Increase (decrease) compared with IRR billion Percentage Increase (decrease) compared with IRR billion previous year previous year

Revenues Revenues Interest income 24,259 63.49 (22.22) Interest income 31,190 83 13.35 27,517 Fee and commission income 1,329 3.48 19.10 Fee and commission income 1,116 2.97 0.88 1,106 Net investment profit (loss) 5,030 13.16 739.95 Net investment profit (loss) 599 1.59 (38.63) 976 Net foreign currency transactions profit (loss) 1,385 3.62 6.84 Net foreign currency transactions profit (loss) 1,296 3.45 48.69 872 Other incomes 6,207 16.24 83.64 Other incomes 3,380 8.99 80.00 1,878 Total income 38,209 100 1.67 Total income 37,581 100 16.18 32,348 Expenses Expenses Interest paid on deposits (31,948) 83.80 0.46 Interest paid on deposits (31,802) 84.85 25.03 (25,435) Fees and commissions expenses (1,843) 4.83 61.10 Fees and commissions expenses (1,144) 3.05 42.04 (805) General and administrative expenses (3,586) 9.41 9.18 General and administrative expenses (3,285) 8.76 14.26 (2,875) Doubtful dues expenses (300) 0.79 (60.83) Doubtful dues expenses (766) 2.04 (51.85) (1,591) Financial expenses (2) 0.00 (96.98) Financial expenses (59) 0.16 (77.59) (264) Depreciation (445) 1.17 5.33 Depreciation (423) 1.13 15.30 (367) Total expenses (38,124) 100 1.72 Total expenses (37,478) 100 19.60 (31,337) Profit (loss) before tax 85 (17.60) Profit (loss) before tax 103 (89.84) 1,011 Income tax Income tax Net profit (loss) 85 Net profit (loss) 103 1,011

16 Annual Report 17 Resource and Expense Analysis

Key Performance Indicators Deposits

Key performance indicators for the years 2016/17 and 2015/16 are shown in the following table: Key performance indicators for attracting deposits (in Iranian and foreign currencies) are as follows:

2016/17 2015/16 2016/17 2015/16

Percentage Percentage Amount Percentage from Total Amount Percentage from Total Capital adequacy ratio 7 8 IRR billion IRR billion Lending to deposits ratio 55.54 59.36 Demand deposits – IRR 9,266 4.03 10,445 4.88 Lending to total assets ratio 49.51 49.31 Saving deposits and similar accounts- IRR 541 0.24 555 0.26 Total expenditure to total revenue ratio 99.78 99.73 Term deposits – IRR 197,056 85.67 178,319 83.35 Debt ratio 12 12 Foreign currency deposits 22,448 9.76 23,677 11.07 Assets return ratio 0.03 0.04 Other deposits- IRR 714 0.31 948 0.44 Return on capital ratio 1.1 1.28 230,025 100 213,944 100 Total deposits to total assets ratio 89.15 83.07 Total deposits to capital ratio 2875.32 2674.30 Loan interest to total revenues ratio 63.49 83.00 Interest-bearing versus Non-interest-bearing Deposits Dividend to total expenditures ratio 83.80 84.85 2016/17 2015/16 Doubtful dues expense to total expenditures ratio 1 2.04 Amount Percentage from Total Amount Percentage from Total IRR billion IRR billion

2016/17 2015/16 Interest-bearing deposits 212,927 92.57 192,059 89.77

IRR billion IRR billion Non-interest-bearing deposits 17,098 7.43 21,885 10.23 Deposit per branch ratio 1,661 1,507 230,025 100 213,944 100 Lending per branch ratio 922 894 Net profit per branch ratio 1 1 Deposit per average employee size ratio 95 86 Comparison Table of Deposits Lending per average employee size ratio 53 51 2016/17 2015/16 2014/15 2013/14 2012/13 Net profit per average employee size ratio 0,035 0,041 IRR billion IRR billion IRR billion IRR billion IRR billion Total deposits 230,025 213,944 182,144 160,880 107,033 Percentage change to previous year 7.52 17.46 13.22 50.31 27.79

Deposits

250,000

200,000

150,000

100,000

50,000

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

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

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

IRR billion IRR billion IRR billion IRR billion IRR billion Saman Bank Deposits 230,025 213,944 182,144 160,880 107,033 Total Banking System Deposits 12,728,364 10,619,015 8,192,761 6,844,166 4,977,262 Percentage of Saman’s Share of Total Deposits 1.81 2.01 2.22 2.35 2.15

18 Annual Report 19 Lending Interest paid to investment deposits

The following is a summary of Samans performance indicators for lending: The interest paid on investment deposits by type of deposit in the years 2016/17 is as follows:

2016/17 2015/16 Types of Deposit 2016/17 2015/16 Percentage Percentage Percentage from Percentage from Amount Amount IRR billion IRR billion from Total from Total Total Total IRR billion IRR billion Short-term investment deposits 13,636 42.68 13,194 41.49 Installment sale loan 6,652 5.2 4,801 3.8 One-year investment deposits 13,386 41.90 12,032 37.83 Joala (commission-based contract) loan 7,505 5.9 3,402 2.7 Two-year investment deposits 12 0.04 677 2.13 Ijara (Lease ending with Ownership ) loan 2,089 1.6 2,093 1.6 Three-year investment deposits 14 0.04 19 0.06 Qard al-hasan (Interest-free) loan 764 0.6 141 0.1 Four-year investment deposits 15 0.05 15 0.05 Mudaraba (trust financing contract) loan 11,991 9.4 13,511 10.6 Five-year investment deposits 4,342 13.59 5,204 16.36 Diminishing Musharaka (co-ownership) loan 86,278 67.5 89,776 70.7 Deposit certificates 1 0.004 129 0.41 Debt purchase 5,658 4.4 4,869 3.8 Termed deposits of banks and other credit institutions 141 0.44 40 0.13 Foreign currency loan 4,786 3.7 5,038 4.0 Foreign currency deposits 401 1.25 491 1.54 Letters of Credit issued 1,345 1.1 2,062 1.6 31,948 100 31,802 100 Letters of Guarantee issued 536 0.4 1,233 1.0 Others 148 0.1 61 0.0 127,750 100 126,988 100 Revenue from Lending Revenues earned from loans granted in financial years 2016/17 and 2015/16 are as follows:

Types of Loan 2016/17 2015/16 Comparison Table of Lending Percentage from Percentage from IRR billion IRR billion Total Total 2016/17 2015/16 2014/15 2013/14 2012/13 Installment sale loan 819 3.65 224 0.76 IRR billion IRR billion IRR billion IRR billion IRR billion Joala (commission-based contract) loan 486 2.17 384 1.31 Total Lending 127,750 126,988 118,112 103,095 76,224 Ijara (Lease ending with Ownership ) loan 87 0.39 900 3.07 Percentage change to previous year 0.60 7.52 14.57 35.25 13.85 Mudaraba (trust financing contract) loan 1,910 8.52 3,858 13.15 Diminishing Musharaka (co-ownership) loan 17,188 76.67 21,113 71.96 Lending Debt purchase 910 4.06 990 3.37

140,000 Penalty clause 536 2.39 681 2.32

120,000 Foreign currency loans 83 0.37 222 0.76

100,000 Others 401 1.79 967 3.30

80,000 22,420 100 29,338 100

60,000

40,000

20,000

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

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

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

IRR billion IRR billion IRR billion IRR billion IRR billion Saman Bank Lending 127,750 126,988 118,112 103,095 76,224 Total Banking System Lending 9,866,616 7,916,102 6,739,744 5,719,260 4,390,642 Percentage of Saman’s Share of Total Lending 1.29 1.60 1.75 1.80 1.74

20 Annual Report 21 5-Year Comparison Table of ATM Numbers

2016/17 2015/16 2014/15 2013/14 2012/13 Number 1,458 1,308 1,224 1,006 804 Percentage change to previous year 11.47 6.86 21.67 25.12 20.36

Number of ATMs

1600

1400

1200

1000

800

600

400

200

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

5-Year Comparison Table of Debit and Numbers

Major Achievements of Bank in Different Areas 2016/17 2015/16 2014/15 2013/14 2012/13 Number 1,384,438 1,742,387 2,010,187 1,570,922 1,003,959 Percentage change to previous year (20.54) (13.32) 27.96 56.47 (62.46) Electronic Banking Number of Debit and Credit Cards • Number of ATMs increased to 1458 units; 2,500,000 • ATM network optimised by relocating 127 ATM units; 2,000,000 • Samanak (Saman mobile app) publicity campaign planned and executed; 1,500,000 Online money transfer services (moving money between accounts in the bank or between banks through SATNA • 1,000,000 and PAYA systems) and online statements developed; 500,000 • Top-up service for all phone operators made available through ATM and e-shop; • Cash acceptor and cash recycler units commissioned and operated; 2012/13 2013/14 2014/15 2015/16 2016/17 • Technical documents developed for monitoring system of ATMs and pay-in machines. 5-Year Comparison Table of Virtual Banking Customer Numbers 5-Year Comparison Table of Card Reader Numbers 2016/17 2015/16 2014/15 2013/14 2012/13 2016/17 2015/16 2014/15 2013/14 2012/13 Person Person Person Person Person Number 203,311 201,027 195,308 159,462 107,123 Net Bank 859,332 780,333 683,845 570,238 431,383 Percentage change to previous year 1.14 2.93 22.48 48.86 (5.44) Samanak 559,461 453,379 344,496 231,741 97,450 Telephone Bank 863,763 836,264 789,270 712,431 601,747 Total 2,282,556 2,069,976 1,817,611 1,514,410 1,130,580 Number of Card Readers Percentage change to previous year 10.27 13.88 20.02 33.95 250,000

200,000 Number of Virtual Banking Customers 150,000 2,500,000 100,000 2,000,000 50,000 1,500,000

2012/13 2013/14 2014/15 2015/16 2016/17 1,000,000

500,000

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

22 Annual Report 23 Corporate Banking • Claims reduced for IRR 1,734 billions (compared with similar period in 2015/16); • Foreign currency operations increased to USD 3,800 millions; • New loans paid in the amount of IRR 31,000 billions; • Different types of letters of guarantee worth IRR 4,253 billions issued; • Express banking kiosks launched in KLM and Air offices.

Premier and • Offered discounted tour, travel and CIP services to Premium Customers; • Issued 11,832 insurance policies including complementary health insurance, third-party and comprehensive car insurance, and travel insurance policies; • Developed Farda University Fee Insurance Package and sold 2200 policies; • Increased the number of stores and service centers offering exceptional services to Premium Customers; • Launched the second project of the Customers’ Club called “Memorable Journey” and awarded 33 prizes of IRR 10 million to 500 million to Premium Customers; • Designed and implemented an incentivization program for Premium Customers called “Samanian 4-Star Festival”; • Launched private banking offices in and in Sarv branch, ; • Offered financial and investment services (including portfolio management as well as Amin, Novin and Yekom Retail Banking Venture Capital Funds); Optimized branch network by relocating poorly functioning branches; • Designed and introduced Mobasher Bours (stock market operators’ service) for the administration of customers’ • portfolios. • Establishing City Centre branch in ; • Expanded ATM support network; Attracted new customers and increased resources during the year • Considerably increased zero-cost resources in 2016/17; Regularly met with branch managers and supervisors to boost performance and responsiveness; Beginning of the Year End of the Year •

IRR billion IRR billion • Increased number of branches offering foreign currency services to businesses from 34 to 39. Number of Premium Customers 6,600 6,831 Number of VIP Customers 309 368 Microcredit and SME Loans Total 6,909 7,199 During the reported year, various small and medium-sized enterprises and trading units were categorized based on their business size, credit records and assessed risks. Specific lending limits were set for each Beginning of the Year End of the Year group of selected enterprises, and each branch was assigned a selected list of trades to attend to their IRR billion IRR billion credit needs. Resources of Premium Customers (IRR billion) 57,153 57,745 Since the beginning of the year, the credit reference obtained from Hafez Saman Iranian Credit Scoring Resources of VIP Customers (IRR billion) 22,485 29,463 Company has served as one of the main criteria when assessing new loan applications. In collaboration Total 79,638 84,208 with Saman Processing Co. we developed a special credit system to organize lending to sole traders. The final version of this system was delivered at the end of the year and was introduced for pilot use.

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

24 Annual Report 25 Investment and assemblies affairs

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

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

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

Shares of Stock 20%

Receivables

Cash and cash Equivalents 9% Mutual fund units 61% Fixed-income securities 4% 6%

Some key performance indicators of Saman’s investment portfolio are presented in the following table: International Banking Cost Price Mean Capital Profit(Loss) As the international sanctions were lifted, Saman’s International Banking Department focused its efforts on • percentage change to percentage change to IRR billion IRR billion IRR billion expanding its correspondent banking network, liaising with around 40 new foreign banks and opening accounts previous year previous year with 22 more. Our current correspondent banking network includes around 300 banks all over the world. 2013/14 1,435 - 719 - 468 • The JCPOA and its subsequent agreements have enabled previously sanctioned banks to re-enter the 2014/15 1,236 (14) 1,498 108 (267) international banking market. In spite of this, Saman managed to acquire a 10 percent share of the overall foreign currency operations in the Iranian banking system, as shown by the CBI data. 2015/16 1,140 (8) 925 (38) 144 2016/17 576 (49) 1,632 76 139 • Saman surpassed its set target for revenue from currency transactions and generated IRR 1,385 billion (6 percent over the approved target) during the reported year. Foreign currency operations during the past five years are summarized in the following table: • Major activities in the area of foreign investment during the reported year include: • The design of a mechanism to offer custodian services to international investors; 2016/17 2015/16 2014/15 2013/14 2012/13 • Banking services for international customers; USD thousand USD thousand USD thousand USD thousand USD thousand Import Letters of Credit 502,813.68 518,183.54 1,396,202.95 1,189,815.53 3,361,706.09 • Investment consultancy for international investors. Import Bills of Exchange 291,961.49 47,113.77 46,267.97 284,308.07 553,234.48 Letters of Guarantee 32,147.71 13,376.36 20,432.47 12,520.93 21,692.63 Incoming International Money Orders 1,749,914.42 3,585,331.59 3,835,947.96 1,457,038.19 2,232,541.01 Outgoing International Money Orders 4,793,457.63 3,267,209.90 4,463,985.81 4,574,919.04 3,496,265.21

26 Annual Report 27 Inspection and Compliance • Organizing EURO MONEY (KYC and anti-money-laundering) training course for compliance officers, taught by international instructors; • Planning and coordinating courses on financial crime prevention and compliance by International Compliance Association (ICA) for the bank’s compliance officers and anti-money-laundering inspectors; • Updating the bank’s compliance procedures based on the latest international standards; • Preparing standards and bilingual documentation on compliance procedures to be audited by EDO and EY companies. There has been 70 percent progress in the audit process underway by these companies; • Design, analysis and implementation of Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD) solutions; • Procurement of OMNIEnterprise anti-money-laundering and compliance software from INFRASOFT based on the assessment of our needs and requirements; • Adjustments and modifications toward better control of lending operations in branches (operating-system errors, access levels and software modifications); • Designing BOOTSTRAP 3-based and JQUERY-based user-friendly interface for fraud detection software in order to provide easier access to different sections. Also, designing and developing the second version of smart control software in foreign currency, Iranian currency, loans, and customer sections; • Employing control rules on foreign currency transactions aimed at facilitating control and minimizing the need for physical inspection as well as saving financial resources; • Controlling a large group of operational accounts including debtors' accounts, fines, interbank checks, customer savings and so on in order to prevent and control fraudulent activities; • Designing rules and enforcing necessary controls to monitor incomplete or outdated customer information for the purpose of fraud prevention or detection.

Financial Management • In spite of the reduced interest rate on deposits, and while most of the other commercial banks experienced a negative balance in their Central Bank’s account, Saman did not experience cash shortfall and its account was not negative even for a single day. Saman responded to all monetary needs of its customers nonstop during the year through SATNA, PAYA and SHETAB operations; • During the reported year, Saman was a depositor in the interbank market for 344 days and became a receiver of deposits only for 22 days due to exceptional market conditions; • The revenue from the interbank market in 2016/17 amounts to IRR 1,354 billion. Proposals for investment in other sectors are submitted to the Assets and Debts Committee. All investments need to be approved by the Investment Department; • The “Liquidity Management Project” was introduced to develop and execute a new business model involving the use of self-service express banking machines; • The operational program for 2017/18 was devised and circulated; • Managerial reports in the areas of deposits, cost price, and branch profitability records were prepared and submitted; • Any deviation from budget and program in the bank and its branches was properly reported.

28 Annual Report 29 Corporate Governance Board Meetings During the reported year, the Board met 69 times (minimum one meeting per week) and adopted decisions on major issues within the bank. Board of Directors

Executive Compensation Vali Zarrabieh, Chairman • The Board of Directors approves the CEO’s salary, benefits and bonuses. Mr. Zarrabieh, also a board member in Saman Electronic Payment The Annual General Meeting approves bonuses for the Board of Directors in compliance with the provisions of Company, Hafez Saman Iranian Credit Scoring Company, and Saman • the Commercial Code. The Board decided at the reported year’s AGM not to take any bonus. Processing Company, served as the first Deputy CEO of Saman Bank and was appointed as CEO in June 2010. In 2013, he was elected Chairman of the Board. Mr. Zarrabieh holds a master’s degree in finance from the CASS Business School of , specializing in corporate finance and valuation, as well as an MBA from Manchester Business School, UK, Board Committees specializing in strategy.

Executive Committee Members of the Committee: The CEO, Deputy CEO (in CEO’s absence) and the senior vice presidents Ahmad Mojtahed, Vice Chairman Head of the Committee: The CEO A former Head of the Monetary and Banking Research Academy (MBRA) and Advisor to the Governor of the Central Bank of Iran and to the Secretary of the Committee: Mr. Hosein Vaez Ghamsari Minister of Economic Affairs and Finance, Dr. Mojtahed joined Saman Objectives of the Committee: in March 2010 as Vice President in Plan and Development as well as Chairman of the Board of the Iranian Credit Bureau and Credit Scoring • According to Article 3 of the Bank’s Articles of Association, the Executive Committee is responsible for Company. He was elected Chairman of Saman Bank’s Board of Directors approving all procedures regarding the operations and transactions within the scope of activities of the bank. in September 2012, serving as the Vice Chairman since March 2013. With a PhD in Economics from Iowa State University, USA, Dr. Mojtahed also • It is also responsible for the control of the approved plan and budget. enjoys a successful academic career as a researcher and professor at • The Executive Committee is responsible for establishing limits of power and determining decision-making Allameh Tabatabaei University. processes for the bank’s executive departments and teams. • The Executive Committee is also responsible for the administration and supervision of the performance of all executive departments and subordinate companies. • Decision-making in all executive matters in dealing with third parties is the responsibility of the Executive Farideh Geraminejad, Member of the board Committee as set out in Article 84 of the bank’s Articles of Association. Before joining the board, Ms. Geraminejad served as Saman’s International Banking Director. She worked at from 1977 to 2009 and her latest position was the Head of Treasury and Correspondent Strategy and Budget Committee Relations. Ms. Geraminejad holds a bachelor’s degree from the University of Tehran. Members of the Committee: Chairman of the Board, one member of the Board, Senior Advisor to the Board, CEO or Deputy CEO, VP Financial and Planning, VP IT (if warranted by the subject at hand) Secretary of the Committee: Dr. Reza Aghababaei Objectives of the Committee: To ensure the bank’s survival and profitability through aligning its organizational structure and strategies with the desired status and its objectives, mission and vision.

Gholamreza Khalil Arjmandi, Member of the board Mr. Gholamreza Khalil Arjomandi has been working as a board member and vice president of finance and investment in Saderat Bank, Shahr Audit Committee Bank and TOSE Credit Institute since 2007. Also in his background, he has Members of the Committee: Chairman of the Board, one member of the Board, three advisors to the Board been a board member in Securities and Exchange Organization as well as chairman of Audit Committee in that organization. He is a board member Secretary of the Committee: Mr. Javad Goharzad in Saman Bank since June 2016.He holds a DBA degree and a Ph.D. in Objectives of the Committee: To help the Board oversee the efficiency of the internal control system, financial Economics. He is also a member of the faculty of Islamic Azad University reporting processes, and proper functioning of accounting systems and financial controls to ensure accurate and managing director in charge of "Eghtesad e Khalagh" journal financial statements as well as full compliance with relevant laws and regulations, supervisory requirements and the bank’s policies.

30 Annual Report 31 Risk Committee Members of the Committee: Three members of the Board (Chairman, Vice Chairman and one member), Risk Senior Advisor to the Board Secretary of the Committee: Manouchehr Dabirian Objectives of the Committee: To oversee that the risk management policies and processes are all up-to-date and correctly observed, to supervise implementation of policies and directives adopted by the Committee and the Board, to ensure that a desirable level of capital adequacy ratio is maintained, and to adopt necessary measures to preserve and further improve the bank’s reputation.

Human Resources Development and Compensation Committee Members of the Committee: Chairman of the Board, one member of the Board, Senior Advisor to the Board, CEO or Deputy CEO, Human Resources Director (with no voting right) Secretary of the Committee: Ms. Fereshteh Zarrabieh Objectives of the Committee: To plan for recruitment, development, training, and maintaining human capital in order to create sustainable value toward fulfillment of the bank’s objectives and policies.

Internal Audit and Control

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

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

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

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

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

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

32 Annual Report 33 Senior Executive Team Division Heads

Full Name Position Highest Academic Qualification Year Joined Saman Bank

Seyed Ahmad Taheri Behbahani; CEO Ehsan Turkman Finance Master’s Degree 2016 With over half a century of experience in the banking industry, Mr. Taheri Behbahani has held the position of CEO of Saman since 2013. He was employed since 2011 as Senior Executive Advisor to the Board. His career Hamid Tahamtan Legal and Contracts Master’s Degree 2013 highlights in managerial, advisory and executive positions include CEO of Eghtesad Novin (EN) Bank, CEO of Marketing and Product Seyed Morteza Hosseininejad Master’s Degree 2003 Bank of Sharjah, CEO of Iran Overseas.Investment Bank in London, and the regional manager of Bank Melli Development Iran branches in the Persian Gulf, Dubai and . Mr. Taheri Behbahani holds a bachelor’s degree in 2014 English language and literature from University. Davoud Souri Saman Academy PhD Siamak ShahbazzadehKhiavi Inspection and Compliance Master’s Degree 2003

Reza ShirinGoharian Microcredit and SME Lending Master’s Degree 2001 Reza Aghababaei; Deputy CEO Marzieh Azizi Quality and Improvement Bachelor’s Degree 2003

Mr. Reza Aghababaei has held the position of Deputy CEO since July 2016. He has been with Saman Bank for Khodarahm Ghasemian Yadegari Anti-Money-Laundering Master’s Degree 2016 many years in different managerial and executive positions including Executive VP for Lending, Director of Planning and Research, Director of Investment Affairs, Director of Corporate Banking, VP for Retail Banking and Pooran Gilasi Saghez Corporate Secretary Master’s Degree 2009 VP, Banking. Mr. Aghababaei holds a doctorate degree in economic development from the University of Tehran. Mohammad Hassan Dowlati Logistics Master’s Degree 2003

Loghman Rahmanpour Retail Banking Master’s Degree 2016

Javad Goharzad; Director of Internal Audit and Control Ghassem Sarkhosh Investments Master’s Degree 1999

Mr. Javad Goharzad has held the position of Director of the Internal Audit and Control Unit since 2007 and Fereshteh Zarrabieh Human Resources Master’s Degree 2003 reports to the Board of Directors. He holds a master’s degree in accounting from Islamic Azad University. Mr. Goharzad is a certified accountant and auditor and a member of numerous professional bodies, including Mohammad Farrokhipour Corporate Banking Bachelor’s Degree 2002 the Iranian Association of Certified Public Accountants (IACPA), the Iranian Institute of Certified Accountants 2003 (IICA), the Institute of Internal Auditors (IIA) and the Iranian Association of Official Experts (IAOE). Maziar Fozouni Premium and Private Banking Bachelor’s Degree Public Relations and Mansoor Momeni Bachelor’s Degree 2006 Customer Care Reza Isfandyari; Executive VP Legal Abbas Mirza Nayyeri Electronic Banking Bachelor’s Degree 2007

Mr. Isfandyari has held the position of Executive VP Legal since August 2013. His former position was Legal Hasan Dehghanizadeh International Banking Bachelor’s Degree 2006 Advisor to the CEO of Saman Bank. He holds a master’s degree in private law.

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

Mostafa Zarghami; VP Banking and Marketing Saman Bank shareholders always utilize the services of reputable, respected chartered accountants trusted by the Central Bank of Iran as independent auditors. Senior management fully appreciates the crucial role Mr. Mostafa Zarghami was appointed VP for Banking and Marketing in November 2016. He had previously that these professionals play in ensuring the credibility of Saman’s reputation and the good standing of its worked in similar executive positions in Saman and other banks. operations.

The bank’s Audit Committee works hard to increase the reach and effectiveness of independent auditors, and it ensures that the bank’s financial statements present a fair and accurate picture of its performance. Hosein Vaez Ghamsari; VP Financial and Planning In 2016/17, Saman Bank’s shareholders selected the chartered accountancy practice Azmoon Pardaz Iran Mr. Hosein Vaez Ghamsari was appointed VP for Financial and Planning in June 2016. He holds a master’s Mashhood as its independent auditor. degree in financial management. Azmoon Pardaz Iran Mashhood is one of the leading professional auditing firms specializing in banking and insurance and is recognized by the Tehran Stock Exchange and the Central Bank of Iran. The practice provides professional auditing and advisory services in assurance, investment and internal audit. Aliakbar Namdari; VP Information Technology Mr. Aliakbar Namdari was appointed VP for Information Technology in March 2017. He holds a master’s degree in computer engineering – hardware from Sharif University of Technology.

34 Annual Report 35 The following table shows the structure of organizational positions during the past three years:

2016/17 2015/16 2014/15

Members of the Board of Directors 4 4 5 Senior Advisors and Inspectors 23 18 16 Executive Directors 27 27 27 Deputy Executive Directors 11 12 12 Division Heads 25 28 29 Deputy Division Heads 22 31 40 Unit Managers 95 94 199 Experts 408 379 438 Regional Managers 10 10 10 Branch Managers 146 143 147 Branch Deputy Managers 184 186 191 Bank Clerks 1101 1178 1033 Administration Staff 354 360 367 Total Personnel and the Members of the Board of Directors 2410 2479 2514

Training and Development

The key training courses offered during 2016/17 were as follows: • RB1 • ICA • MIM2 • AML • Virtual training courses

Human Capital Title of the Course Number of Participants , 2016/17 Man-hour, 2016/17 Professional non-banking courses 451 8440

Professional banking courses 2026 37699 The bank’s human capital structure during the past three years is presented in the following table: Behavioral courses 1025 14032

General courses 1135 20685 PhD Master’s Bachelor’s Associate Diploma & Lower Subtotal Total General English 160 4770 Female 0 109 130 13 252 Staff 784 Virtual training courses 2924 26808 Male 5 152 200 175 532 2016/17 Total 7721 112434 Female 1 150 371 12 534 Line 1622 Male 1 202 772 113 1088 7 613 1473 313 2406 2406 Major accomplishments in the Human Capital Department in 2016/17: Female 1 100 147 13 261 Staff 754 Periodical evaluation of all personnel; Male 5 122 207 159 493 • 2015/16 Full establishment of workplace organization system in the bank; Female 1 129 412 14 556 • Line 1721 Implementation of human resources software; Male 1 177 824 163 1165 • 8 528 1590 349 2475 2475 • Provision and review of postal ID for staff units based on the current organizational chart; Female 0 98 163 17 278 • Issue of multi-purpose personnel cards; Staff 843 Male 4 111 229 221 565 • Improvement in the renewal procedure for employment contracts; 2014/15 Female 1 107 419 14 541 Introduction of and conversion to electronic signature and electronic communications. Line 1666 • Male 1 129 838 157 1125 6 445 1649 409 2509 2509

36 Annual Report 37 Subsidiaries Division VP Finance & Planning Finance Division Investments & VP Banking & Marketing Development Division e-Banking Division Marketing&Product Premier & Private Retail Banking Banking Division • Trading • SME Credit • Passive Defense • Disciplinary • International Banking • Corporate Credit • Assets and Debts Executive Committees: Passive defense Secretariat of Strategy and Budgeting Legal & Contracts Risk Committe Support Division NPLs & Debt Committee Collection VP Legal Human Capital Division Internal Audit Division Foreclosed Assets VP Procurement Procurements Management AML Division Division Organisational Structure Major activities in the area of social responsibility Organizational Chart-Level 1

Donations to the Child Foundation; • Board of Directors • Donations to the Arasteh Charity; Deputy CEO CEO Corporate Banking Remedial Services Project Finance

Donations to The Chain of Hope (La Chaîne de L’Espoir); SME Division Department • Department Division • Donations to the Behnam Daheshpour Charity; VP Credit • Construction of a four-room school in Bahu Kalat, Sistan and Baluchestan; Risk Department • Construction of a one-room school in Cheshmeh Zoleykha village, Delfan City, Lorestan Province;

• Nikcharge Campaign; Corporate Secretary Process Management Software Solutions • Sponsor of new work by renowned composer Loris Tjeknavorian; & Quality Control ICT Division Sponsor of Azim Gheychisaz, the acclaimed Iranian climber, for his latest ascent (8000-meter summit in the Division Customer Care Division • VP ICT Human Capital Development and Public Relations &

Himalayas); Compensation High Committee Executive Board

• 24 hourse banking services offered to pilgrims travelling to during Arba’een rituals for 20 days; Audit Committee • Sponsor of a pioneering online concert information platform; Sponsor of Euromoney Conference; International Business

International Banking

• Development Division

• Investment in Ajabshir Steel Factory, which employs more than 300 local steel workers. VP International Division Security Department Information Security Compliance Division VP Supervision

38 Annual Report 39 Meetings of the Subordinate Workgroups on Credit Risk and Operational Risk The Subordinate Workgroups on Credit Risk and Operational Risk are specialist and executive workgroups created in 2016 to provide expert reports and improvement proposals to the Risk Committee. They are responsible for monitoring operational risk and credit risk management through risk detection, measurement and control.

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

• Gathering relevant statistics and information via various methods including market research, software solutions, rules and regulations, and past records, to determine the risk-evaluation model; • Identifying different types of business-related risks, effective variables and items susceptible to different types of risks; • Designing and updating risk-evaluation models with the use of information and statistics, effective variables, guidelines of the Basel Committee and the Central Bank of Iran; • Identifying, determining and updating evaluation indicators for different types of risks including market risk, operational risk, liquidity risk, and credit risk; • Providing analytical reports regarding different types of risks including market risk, operational risk, Risk Analysis liquidity risk, and credit risk; • Calculating the capital required to cover credit, market, and operational risks, and preparing necessary reports; Risk management is the process of identifying, assessing and controlling potential risks related to the nature of • Analyzing credit concentration risks based on economic sector, geographical location, maturity, market banking activities. The purpose of risk management is to reasonably ensure the fulfillment of objectives based on the type, type of lending agreement, and so on, in order to verify compliance with credit limits set internally bank’s approved strategies. In line with risk objectives, the department measures risk indexes and tolerance levels, and by the CBI; and defines the risk appetite as a major element in corporate governance and the bank’s strategy. • Preparing reports on entry and exit surveys, economic cost of money, age analysis of deposits, age analysis of The key activities to ensure effective risk management are as follows: receivables and loans and currency market risk in order to determine currency risk, liquidity gap risk and other types of risks; • Liquidity surplus/shortfall forecasts on major currencies and reporting on foreign currency liquidity gap; Risk Committee Meetings • Updating and standardizing collateral-related information throughout the bank; The Risk Committee is a strategic committee that reports to the Board of Directors. The outcomes of its findings are presented to the board in the form of supervisory and advice reports. The Risk Committee was established to comply with • Disclosing risk-management information based on the requirements of the Central Bank of Iran and as per the internal control structure required by the Central Bank of Iran and to ensure that appropriate and sufficient managerial clause 63 of the financial statements template of the CBI. policies and procedures are in place to monitor and control various risks involved in banking operations. The Risk Commit- tee supervises the enforcement of risk policies approved by the Committee and the board and places special emphasis on the protection and enhancement of the bank’s reputation, as well as attaining optimal capital adequacy ratio. Capital adequacy In compliance with the Basel I Accord, and in order to protect depositors and ensure the integrity of the country’s During 2016/17, the Risk Committee undertook the following initiatives: financial systems, the Central Bank of Iran requires that all banks operating under its regulations have a minimum • Review of risk-control strategies capital adequacy ratio of eight percent. • Study of reports received on risk management Saman Bank’s Basel I capital adequacy ratio was calculated as 7% for 2016/17. • Study of risk-control-related proposals

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

• The committee decided that a plan for precautionary measures should be developed to confront liquidity shortage in critical conditions; • Necessary measures were approved to improve the bank’s capital adequacy structure in view of capital increase and the collateral system; • The list of duties and specifications of the Risk Committee was assessed against the bylaws approved by the Central Bank of Iran to ensure full compliance; • Approval was granted for the creation of subordinate workgroups on credit risk and operational risk; • The list of duties of the Resources and Expenditures Committee was analyzed; • The committee supervised the risk appetite of the bank’s operations.

40 Annual Report 41 Saman Financial Group

Companies in Saman Financial Group

Bank’s Net Profit Capital Ownership Net Profit (Loss) in (Loss) in (direct or indirect) 2016/17 2015/16

IRR billion IRR billion IRR billion

Saman Exchange Co. 219 96.46 229 170

Saman Electronic Payment Co. 1800 43.04 811 314

Hafez Saman Iranian Credit Scoring Co. 24 99.15 42 25

Saman Satellite Communication Co. 200 61.85 71 50

Saman Processing Co. 100 100 14 13 Major Accolades and Achievements of Saman Bank and Saman Financial Group in 2016/17 Saman Brokerage Co. 50 64 9 4

• Obtained ISO certification for its customer complaint procedure by TUV NORD IRAN Company in 2016/17; • Progressed five steps – currently in 24' place among the 100 superior companies of Iran; Tondar Noor Co. 3 100 1 4 • Capital Intelligence promoted Saman Bank’s credit rating (in the second review term, CI confirmed credit score B in financial strength rating (FSR) and currency transactions as in the first review term; nevertheless, it promoted the overall credit rating of the bank by one level); Atieh Andishan Sepehr Shargh 0,01 100 22 3 • Iranian National Quality Prize awarded to Saman by National Iranian Standard Institute; • Voted first-choice bank for retail banking and awarded the title of “My Favorite Bank” at the “My Favorite Bank” annual festival. Atieh Andishan Sepehr Mehr 0,01 100 1 30

Atieh Andishan Sepehr Shargh 0,01 100 (90) 0 Service Development Co.

Kardan Finance Co. 2000 33.33 595 530

Adonis Co. 300 24.19 39 79

Saman Insurance Co. 618 14.84 685 278

Aftab Tejarat Saman Co. 0.1 15 10 6

42 Annual Report 43 Based on the approval dated June 24, 2017 by the Tehran Stock Exchange Admission Board, Saman Electronic Payments Co. has been admitted to the TSE. Since December 5, 2017, Saman Electronic Payments Co. is listed as the 520' company admitted to the TSE in the Computing Section, IT & Software Group, Industry Code 722008, symbol SEP.

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

Plans and Projects for 2017/18

Our major plans and approaches for 2017/18 are as follows: 1- To amend and improve the assets structure through: • Debt collection • Sale of surplus assets and unwanted properties • Development of new loan products for microcredit and SME lending

2- To amend and improve the debt structure (deposits and shareholders’ equity) by: • Increasing the share of current and low-cost deposits • Reducing the cost price of term deposits • Increasing Bank’s capital

3- To boost channel productivity and human resources productivity, and to reduce expenses by: • Budgeting items of current expenditures Finacial • Monitoring the capital budget with an emphasis on return • Improving the productivity of the ATM network Report • Increasing branch operations’ profitability • Using integrated software for business operations and support

4- To continue to provide foreign-currency operations and improve fee-earning services such as:: • Issuing letters of guarantee •Opening letters of credit, drafts and money orders • Sale of insurance products • Increasing foreign currency transactions

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

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

7- Profit division

44 Annual Report 45 Independent Auditor’s and Legal Inspector’s Report 6- Presentation of investment deposit performance and statement of changes in equity as one of fundamental financial statements, which have been instructed by I.R.I. Central Bank directives, and To Annual ordinary General Meeting of Shareholders also presentation of cash flow statement in three categories, have not been anticipated as mandatory Saman Bank (Public Joint Stock Company) by accounting standards. 7- Considering the content of note number 26 of financial statements, the Bank’s corporation tax for the Report on the Financial Statements years 1384 (2002) to 1393 (2011) have not yet been finalized, It is necessary for the sum of Rls. 1,238 billions tax differences for the mentioned years to be transferred to prior year adjustments and on the other hand the tax prepayment balance of Rls. 924 Billions to be removed from heading “other assets” Introduction and tax payable of Rls. 314 Billions to be reflected in the heading of corporation tax provision. 1- Our Firm has audited the consolidated financial statements of Saman Group & Bank (Public joint stock Company) 8- Under the heading of “other Accounts Receivable” (Note 15-2 to the financial statements) an amount including the balance sheets as at March 20,2017 and statement of investment deposit performance, Profit and of Rls. 1,700 Billions and Rls. 750 Billions stated to be “debtors for sale of assets” related to sale Loss Account, statement of comprehensive income, statement of changes in shareholders’ equity as well as the of property in “zafar” and “khodro sazi Arg Diesel Bam factory” in the prior years for which there is Cash flow Statement for the fiscal year then ended together with the Explanatory Notes 1 to 63 hereto attached. no adequate evidence on the collectability of these. Hence it has not been possible to determine the possible effect of these on the financial statements. Responsibility of the Board of directors for financial statements Qualified opinion 2- The Board of directors of the Bank shall be responsible for preparing the financial statements according to accounting standards. Such responsibility includes design, implementation and 9- Our firm believes that, except for the effects of items stated in above clauses 4 to 7 and possible maintenance of internal controls for setting up these statements in such a manner to ensure that effects of items mentioned in clause 8, the financial position of Saman Group & Bank (Public joint there is no significant misstatement due to fraud or error. stock company) as at March 19, 2017 and their financial performance and cash flows for the fiscal year then ended are true and fair, according to accounting standards, from all material aspects. Responsibility of auditor and legal inspector Emphasis of Matters 3- Our responsibility is to express an opinion on these financial statements based on our conducted audit in accordance with Auditing Standards. (Shareholders' attention is drawn on clauses 10 to 11 below. Our opinions has not been qualified as a result of items 10 to11): Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material 10- As explained under Note 10-3-2 to Financial Statements although procedures relating to collection misstatement. An audit involves performing procedures to obtain audit evidence about the amounts of receivables from Banks Saderat Iran and Pasargad for the amounts of Rls. 3,226 and 937 Billions and disclosures in the financial statements. The procedures selected depends on the auditor’s have take place, but there has been no concrete results. judgment, including the assessment of the risks of material misstatement of financial statements, 11- As explained in Note 10-2 to the financial Statements, the amount of Rls. 5,464 Billions under the whether due to fraud or error. heading of dues from Central Bank of Iran relating to forward purchase of foreign currency subject In making those risk assessments, internal control relevant to company’s preparation of the financial of circular No. 60/1015 M dated 1392.09.16 has been accounted for in the intercompany Accounts of statements in order to design audit procedures that are appropriate in circumstances, but not for that Bank from this amount a figure of USD 363,241,619 is confirmed by Central Bank of Iran and its’ the purpose of expressing an opinion on the effectiveness of the company’s financial statements, is remaining Balance together with the excess drawing of Rls. considered. An audit also includes evaluating the appropriateness of accounting policies used and 2,833 Billions, being subject of Note 9-4-2 to the financial Statements (known as overnight reasonableness of accounting estimates made by directors, as well as evaluating the presentation of drawings) and the related contingent liabilities determination is subject to the special audit result the financial statements. and confirmation by Central Bank of Iran. Additionally, as explained in Note 22-3 to the financial We believe that the audit evidence we have obtained is sufficient and appropriate to express opinion statements, settlement of an amount of Rls. 2,789 Billions due to the Central Bank of Iran, which on the financial statements. has been taken out of customers’ Accounts, being the difference between foreign currency rates mobadelei and official rates is subject to the result of the same special audit.Despite preparation Our responsibility as the legal inspector, is to report on non-compliance with legal requirements as and presentation of the said special report, the method of settling these balances are not per the amended commercial code of Iran and Bank’s Articles of Association and legal regulatory announced. requirements of banking activities to the shareholders ordinary General Meeting. Other Matters Paragraphs Basis of qualified opinion 12- Financial statements of the Bank for the year ended 19.03.2016 was examined by another audit firm 4- Explanations on financial facilities and dues from persons and the method of calculation of interest (IACPA member firm) and the related audit report with qualifications was issued on 25th June 2016. and related charges together with anticipated provisions according to I.R.I. Central Banks’s circulars are explained in Notes 8-4 to 8-7 and 11 of the financial statements. Report on other legal responsibilities Since the complete information on procedures especially regarding the collection of mentioned Report on other responsibilities of Legal Inspector receivables are not made accessible to this firm, it has not been possible for us to carry out the normal reviews and investigations on determining the minimum necessary provision and also 13- Noncompliance matters with some of the monetary and banking laws and regulations together with related reflection of the effects of the same in the Accounts. circulars over the banking operations and mandatory bylaws for the banking system for the period under 5- The situation regarding sale of part of collateralized properties and 15% of subsidiary company’s review by our firm have been submitted to the Central Bank of Iran under a separate letter by this firm. shares (Pardakht electronic Saman company) have been disclosed in notes 46 and 35-2 to the financial statements. Since recognition of the profit from the above mentioned operation have not been according to Accounting standards, it seems there are adjustments necessary to be done to the Accounts.

46 Financial Report 47 14- Situation of noncompliance with the legal requirements provided under Partial Amendment of Commercial 19- Regarding the Report on compliance with Internal Control Requirements related to financial reporting Code and Articles of association of the Bank is as follows: regulations as related to the implementation and assessment of internal controls as provided under the checklist of Stock Exchange organization, the Bank's internal audit reports on assessment of the internal audit established therein and their efficiency for reasonably ensuring of compliance with accounting Amended Articles of standards in preparation of financial statements are examined by our firm and there is no significant case Commercial code Association clause of ineffective implementations of such controls. Registration of ordinary general meeting minutes in company Registrar 106 45 Election of Board of directors’ member after termination of previous board 107 65 20- Regarding Non Compliance with “Administrative Health promotion & Anti-corruption Law” the following Completion of Board of Directors’ members in number 107 67 66 & should be reported: Preparation of Board of directors’ minutes 123 77 • The Article 17 “p” of the executory bylaw regarding preparation of the list of excess properties and it Financial statements’ preparation to the Auditors & legal inspector in 3 months after the year end - 105 submission to the Central Bank of Iran after auditor’s confirmation is not complied with, hence it has not Distribution of 10% of profit for the year 1394 (2016) 90 110 been possible to carry out clauses “A” & “B” of Article 16 compliance check. Payment of dividends within 4 months from approval date (previous year’s profits - 111 • Article 3 of the executory bylaw clause “B” item 1 of clause “t” of Article 17 in respect of submission of list of Compliance with ownership of Bank’s shares ceiling - 7 Repossessed (confiscated) properties to the Central bank of Iran for 3 months intervals.

Compliance with capital Adequacy ratio - 116 & 115 • Article of the executory bylaw, item 21 regarding opening of special Account if requested by the receiver of the loan facilities. Holding Annual General Meeting within the period stipulated in the Articles of Association 138 & 89 31 • Article 47 regarding agricultural loan facilities to the extent determined by the Central Bank.

15- Transactions mentioned under Note 61 to Financial Statements, including all the transactions performed 21- The detailed calculation of the difference between final interest and on Account payment of interest on during the fiscal year subject to Art. 129 of Partial Amendment of Commercial Code, are reported by invested deposits as per disclosed methods of invested deposit, performance, in compliance with circular the board of directors to our Firm and verified. Such transactions are performed in compliance with the number 126331 dated 19.12.1387 and letter number 94/69383 dated 20.04.1394 of Central Bank of Iran have provisions of the said article on obtaining of the board's consent and absence of the director concerned in been reviewed by our firm. In this review no other noncompliance are observed except occasional extra voting, and our firm believes that such transactions, having special conditions, should be brought to the interests paid over & above the approved rates. A. G M. of shareholders for proper decisions.

22- In compliance with Article 33 of AML, Anti–money laundering by auditors, Bank has implemented the 16- We have examined the report of the board on the operations and general situation of the Bank, provided regulations, guidelines and intelligent information systems & check lists declared and auditing standards under Art. 232 of Partial Amendment of Commercial Code, to be presented to the general meeting have been examined by our firm and except customer’s classification according to their risks. of shareholders and in view of such examination, we can confirm that there is no significant case of inconsistency between the information therein and the documents and instruments provided by the board.

Report on other legal and regulatory responsibilities of Auditor Azmoon Pardaz Iran mashhood Audit Firm (IACPAs) 17- The Annual membership fee for deposits guarantee fund have been calculated and manner of Receipt of th such membership based on the Articles of Amended bylaws for such deposits (subject of circular number Date: 27 August 2017 M. Babaei Rahni F. shahdadfard 68469/96 dated 7th khordad 1396 in relation to Directive number 22196/t53725 h dated 30th Ordibehesht (871546) (800267) 1396 of council of ministers) and except for Article 10 of the above mentioned bylaws in respect of the delay in payment of subscriptions for the years 1393 and 1394, no other cases have been observed.

18- Following Articles of executory bylaws for disclosure of information in respect of listed companies in the Securities & Exchange organization have not been complied with as follows: • clauses 1 & 2 of Article 7 regarding timely issue of Audited annual financial statements of the holding company and the group consolidated accounts. • Submission of Board of Directors’ Report & Auditor’s Report on it within at least 10 days before ordinary general meeting and maximum 4 months from the year end of company. • Article 10 in relation to submission of minutes for ordinary & extra ordinary meeting within maximum of 10 days, to companies Registrar. • Clause 3 of Article 7 regarding submission of unaudited interim financial statements for period of 3, 6 and 9 maximum 30 days from end of 3 months periods. • Clause 4 of Article 7 regarding submission of 6 monthly audited financial statements maximum 75 days of end of 6 monthly financial period. • Article 8 regarding disclosure of Advertisement for attending general meeting at least 10 days prior to the date of general meeting. • Article 9 regarding immediate disclosure of general meeting decisions.

48 Financial Report 49 Group Consolidate Financial Statment Saman Bank (Public Joint Stock Company) Consolidated Balance sheet For the fiscal year ended March 20, 2017 (Restated) Liabilities and shareholders' equity Note March 20, 2017 March 19, 2016 (Restated) Rls (m) Rls (m) Note March 20, 2017 March 19, 2016 Liabilities Rls (m) Rls (m) Due to banks and other credit istitutions 22 5,750,470 27,672,186 Assets Customers' deposits 23 17,106,563 21,806,467 Cash 9 32,024,604 50,716,771 Dividends payable 24 59,311 196,733 Due from banks and other credit institutions 10 9,676,029 12,833,651 Advances received 25 7,847 41,979 Due from the government 0 0 Debt securities 0 0 Loans granted to and amounts due from governmental entities 0 0 Provision for income tax 26 171,440 Loans granted to and amounts due from non-governmental entities 11 127,532,285 126,691,865 115,879 Provisions and other liabilities 27 11,081,141 6,610,288 Investments in shares and other securities 12 1,052,921 1,531,394 Provisions for employees' termination and pension benefits 28 563,793 466,334 Long-term investments in affiliates 13 1,790,987 624,175 Total liabilities before investment depositors' equity 34,685,004 56,965,427 Due from subsidiaries and affiliates 14 587,333 82,198 Other accounts recievable 15 7,469,868 6,833,437 Investment depositors' equity 29 213,659,740 193,508,582 Orders and prepayments 16 30,494 40,809 Total liabilities 248,344,744 250,474,009 Inventory (materials and goods) 17 318,453 145,360 Tangible fixed assets 18 4,142,137 6,109,443 Shareholders' equity Intangible assets 19 4,296,269 4,128,134 Share capital 30 8,000,000 8,000,000 Statutory deposits 20 23,035,684 21,131,325 Ongoing capital increase 0 0 Other assets 21 45,954,431 29,801,528 Shares premium reserve 0 0 Parent company's shares held by subsidiaries (10) (1,685) Legal reserve 31 1,577,976 1,595,889 Other reserves 0 0 Assets revaluation reserve 32 1,507,147 675 Difference in foreign exchange rates 0 0 Retained earnings (1,703,324) 56,816 Treasury shares 0 0

Parent company total shareholders' equity 9,381,789 9,651,695 Minority interest 33 184,962 544,386

Total liabilities and shareholders' equity 257,911,495 260,670,090 Total assets 257,911,495 260,670,090 Bank's obligations for LCs 54-1 4,321,019 5,201,012 Customers' obligations for LCs 54-1 4,321,019 5,201,012 Bank's obligations for LGs issued 54-2 5,056,859 6,938,318 Customers' obligations for LGs issued 54-2 5,056,859 6,938,318 Bank's other obligations 54-3 20,301,828 7,163,495 Customers' other obligations 54-3 20,301,828 7,163,495 Managed funds and similar items 54-4 1,168,077 1,165,874 Managed funds and similar items 54-4 1,168,077 1,165,874

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

50 Financial Report 51 Conolidate Statement of profit & Loss of the parent company For the fiscal year ended March 20, 2017 ) (Restated) 0 0 0 0 0 0 0 0 0 0 0 0 0

34

1,675 Total 1,675

equity

Rls (m)

Note 2017 2016 104,062

9,380,114 1,506,472 9,651,661 1,882,115 9,381,789

(

shareholers' Rls (m) Rls (m)

Income from loans granted and deposits in other banks and debt securituies 34 24,223,702 31,084,107 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Interest expenses on deposits 40 (31,886,274) (31,745,950) 0

Rls (m) shares

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

) ) ) Fee and commission incomes 41 1,343,367 1,115,156 0 0 0 0 0 0 0 0 0 0 0 0 0 0

34

56,782 Fee and commission expenses 42 (1,102,536) 29,041 (1,661,114) Rls (m) (29,041)

151,016 (

1,674,283 1,882,115 earnings Retained

( ( (1,703,324)

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

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Income from sales and services rendered 43 57,931,416 41,119,595 rates Rls (m) in foreign Cost of sales and services rendered 44 (56,688,318) (39,901,118) exchange Difference

1,243,098 1,218,477

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

675 Net profit (loss) from investments 35 2,228,036 230,773 Rls (m) Assets reserve 1,506,472 1,507,147 1,507,147

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

Other operating incomes 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

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

reserves

Net other incomes and expenses 46 6,148,166 3,422,912 ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Administrative and general expenses 47 (3,894,230) (3,562,222) Legal 29,041 46,954 Rls (m) 29,041

(

reserve 1,595,889 1,548,935 1,577,976 Expenses for doubtful debts 48 (304,240) (807,669)

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

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

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

"Profit before calculating group share from incomes earned by affiliates" (1,769,635) 441,518 (10) 1,685 1,675 1,685 1,675

( ( Rls (m)

Parent 2016-2017 subsidiaries Group share from incomes earned by affiliates 14 183,409 174,597 company's

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

Income return tax 26 (247,397) (166,053) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Net profit (loss) (1,833,623) 450,062 Rls (m) Shares reserve

premium Minority interest from net profit 48,499 133,611 Earnings per share (EPS) (Rls.) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

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

Ongoing increase

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

The accompanying notes are an integral part of these financial statements. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Rls (m) Capital 8,000,000 8,000,000 8,000,000

51 31 32

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

Note March 20, 2017 March 19, 2016 Rls (m) Rls (m) Net Group Profit (Loss) (1,882,116) 316,458 Assets revaluation reserve 32 1,507,147 675 Difference in exchange rates for offshore transactions 0 0 Comprehensive income for fiscal year (374,969) 317,133 Prior years' adjustments 51 34 (849,856) Consolidated adjustments 151,016 0 Comprehensive income recognized from reporting date of previous fiscal year (223,919) (532,723)

The accompanying notes are an integral part of these financial statements. Consolidated statement of changes in shareholders' equity For the fiscal year ended March 20, 2017 Purchase of shares Parent company's shares held by subsidiaries Increase in unregistered capital Increase in registered capital Total comprehensive incomes Total other comprehensive incomes Tax for other comprehensive incomes Difference in foreign exchange rates Other comprehensive incomes (losses) after tax deduction Capital increase Sale of shares Assets revaluation reserve Balance as at March 21, 2016 Treasury shares Purchase of treasury shares Net profit Sale of treasury shares Prior years' adjustments Distribution and allocation Legal reserve Consolidated adjustments Other reserves Dividend per share Approved dividend Balance as at March 20, 2017

52 Financial Report 53

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

(Restated) 0 0 0 0 0 0 0 0 0 0 0 0

Total equity

12,813 94,267 Rls (m) Operating activities Note 2017 2016 639,755 849,856

316,458 (532,675) ( (

9,651,695

10,184,370 10,717,768

shareholers' Rls (m) Rls (m)

Cash received for Interest and late payment penalty on loans granted 16,541,336 22,327,180 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Interest on debt securities 203,303 0 Rls (m) shares Treasury

Fees and commissions 1,343,367 1,115,156

) Interest on deposits 1,649,989 1,873,776 ) ) ) Profit from investments 2,411,446 405,370 0 0 0 0 0 0 0 0 0 0 0 0 0

Other operating incomes 59,228,546 41,287,812 56,816 Rls (m)

100,218 639,755 316,458 849,856

( ( ( 1,000,000 2,330,187 earnings Retained 1,796,789 (1,739,973)

( Other incomes 620,299 542,661

Cash payment for 0 0 Interest on deposits (31,886,274) (31,745,950) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Fees and commissions (1,661,114) (1,102,536) rates Rls (m) in foreign exchange Difference

Other operating expenses (60,753,909) (43,627,122) Financial expenses (111,316) (257,583)

Income tax (678,608) (664,585) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Net cash outflow from operating activities befor changes in assets (9,845,821) 675 675 (13,092,935) 675

Rls (m) Assets reserve

revaluation Cash flows from changes in operating assets and liabilities

Net increase (decrease) in liabilities Due to banks and other credit institutions (21,921,716) 297,329 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Customers' deposits (4,699,905) 154,730 Other Rls (m)

reserves Debt securities 0 (1,000,000) Operating portion of provisions and other liabilities 4,510,185 (1,144,094) Investment depositors' equity 20,151,158 34,596,373 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Net (increase) decrease in assets 0 0 Legal Rls (m) 100,218

100,218

reserve

1,495,671 1,595,889 1,495,671

Due from banks and other cerdit institutions 3,157,621 (883,585)

Principal amounts due from the government 0 0

Principal loans granted to and amounts due from governmental entities 0 0 ) ) Principal loans granted to and amounts due from non-governmental entities 4,988,652 (2,065,541) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

12,813 12,813 14,498 14,498

(1,685) Investment in shares and other securities (688,340) (579,591) Rls (m)

Parent ( ( 2015-2016 subsidiaries company's

shares held by Due from subsidiaries and affiliates (505,135) 56,778 Other accounts receivable (636,431) (3,840,899) Statutory reserve (1,904,360) (1,619,062)

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Operating portion of other assets (10,804,309) (4,078,881) Rls (m) Shares reserve Cash flows from changes in assets and operating liabilities (8,352,580) 19,893,557 premium

Net cash inflow (outflow) from operating activities (21,445,515) 10,047,736 )

Investing activities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Funds paid for acquisition of tangible fixed assets (1,415,282) (1,419,499)

Rls (m) capital 317,733 317,733 317,733

(317,733)

( Ongoing

increase Proceeds received from sale of tangible fixed assets 3,157,432 6,560

Funds paid for acquisition of intangible assets (221,058) (325,894)

Funds paid for acquisition of intangible assets 1,291,811 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Funds paid for acquisition of non-operating real estates 0 0 Rls (m) Capital 1,412,000 6,588,000 Proceeds received for acquisition of non-operating real-estates 0 0 6,588,000 1,412,000 8,000,000

Net cash (outflow) from investing activities 2,812,903 (1,738,833) Net cash outflow before financing activities (18,632,612) 8,308,903 31 51 32 Financing activities Note Cash from capital increase 0 94,270 Treasury shares transactions 0 0 Funds from shares premium 0 0 Financial facilities received 66,825,000 27,655,000 Repayment of principal financial facilities (66,825,000) (29,405,000) Dividends paid (137,419) (661,159) Net cash inflow (outflow) from financing activities (137,419) (2,316,889) Net cash increase (decrease) (18,770,031) 5,992,014 Cash at the beginning of the year 50,716,771 43,595,603 Effects of changes in forex exchange rates 77,864 1,129,154 Cash at year end 32,024,604 50,716,771 Non-cash transactions 53 9,030,828 15,939,314 Capital increase Treasury shares Purchase of treasury shares Sale of treasury shares Distribution and allocation Legal reserve Other comprehensive incomes (losses) after tax deduction Assets revaluation reserve Difference in foreign exchange rates Tax for other comprehensive incomes Total other comprehensive incomes Total comprehensive incomes Increase in registered capital Increase in unregistered capital Parent company's shares held by subsidiaries Purchase of shares Sale of shares Other reserves Balance as at March 21, 2015 Net profit Prior years' adjustments Dividend per share Approved dividend Balance as at March 20, 2016 Consolidated adjustments

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

54 Financial Report 55 Saman Bank (Public Join Stock Company) Financial Statements

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

(Restated) (Restated) Note March 20, 2017 March 19, 2016 Liabilities and shareholders' equity Note March 20, 2017 March 19, 2016 Rls (m) Rls (m) Rls (m) Rls (m) Assets Liabilities Cash 9 31,494,714 49,362,165 Due to banks and other credit istitutions 22 5,475,289 27,042,210 Due from banks and other credit institutions 10 9,676,029 12,833,651 Customers' deposits 23 17,098,373 21,885,077 Due from the government - 0 0 Dividends payable 24 52,482 157,034 Loans granted to and amounts due from governmental entities - 0 0 Debt securities 0 0 Loans granted to and amounts due from non-governmental entities 11 127,750,201 126,987,987 Provision for income tax 26 0 0 Investments in shares and other securities 12 2,777,793 3,238,567 Provisions and other liabilities 27 8,813,301 4,268,653 Due from subsidiaries and affiliates 14 3,578,946 1,030,522 Provisions for employees' termination and pension benefits 28 537,311 414,634 Other accounts receivable 15 5,945,744 5,651,666 Total liabilities before investment depositors' equity 31,976,756 53,767,608 Tangible fixed assets 18 3,613,037 3,593,857 Intangible assets 19 4,301,189 4,119,563

Statutory deposit 20 23,035,684 21,131,325 Investment depositors' equity 29 214,853,049 194,173,795 Other assets 21 45,861,562 29,606,051 Total liabilities 246,829,805 247,941,403

Shareholders' equity Share capital 30 8,000,000 8,000,000 Ongoing capital increase 0 0 Shares premium reserve 0 0 Legal reserve 31 1,536,568 1,523,868 Other reserves 0 0 Assets revaluation reserve 32 1,507,147 675 Difference in foreign exchange rates 0 0 Retained earnings 161,379 89,408

Total assets 258,034,899 257,555,354 Treasury shares 0 0 Customers' obligations for LCs 54-1 4,321,019 5,220,610 Total shareholders' equity 11,205,094 9,613,951 Customers' obligations for LGs issued 54-2 5,129,944 7,079,288 Total liabilities and shareholders' equity 258,034,899 257,555,354 Customers' other obligations 54-3 20,301,828 7,163,495 Bank's obligations for LCs 54-1 4,321,019 5,220,610 Managed funds and similar items 54-4 1,168,077 1,165,874 Bank's obligations for LGs issued 54-2 5,129,944 7,079,288 Bank's other obligations 54-3 20,301,828 7,163,495 Managed funds and similar items 54-4 1,168,077 1,165,874

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

56 Financial Report 57 Statement of the investment deposits performance of parent company For the fiscal Statement of profit & lose of the parent company for the fiscal year ended March 20, 2017 year ended March 20, 2017

Note 2017 2016 Note March 20, 2017 March 19, 2016 Rls (m) Rls (m) Rls (m) Rls (m) Profit sharing incomes Net profit (loss) 84,666 102,745 Income from loans granted 34 21,806,820 28,160,995 Assets revaluation reserve 32 1,507,147 675 Income from deposits and debt securities 34-2 1,586,430 1,524,322 Difference in exchange rates for offshore transactions 0 0 Net profit (loss) from investments 35 5,029,559 598,793 Comprehensive income for fiscal year 1,591,813 103,420 Total profit-sharing incomes 28,422,809 30,284,110 Prior years' adjustments 51 0 (744,994) Bank's share from profit-sharing incomes 36 - - Comprehensive income recognized from the reporting date of previous fiscal year 1,591,813 (641,574) Depositors' share from profit-sharing incomes before fees 28,422,809 30,284,110 Deposits management fee 37 (3,910,522) (3,782,601) Depositors' share from profit-sharing incomes 24,512,287 26,501,509 Interest on statutory deposit/investment deposits 36-3 215,922 196,005 Compensation of expenses related to depositors' free resource surplus to profit-sharing uses 38 6,801,974 3,797,639 Final interest accrued on investment deposits 31,530,183 30,495,153 Provisional interest paid on investment deposits 39 (31,547,401) (31,310,605) Differential in interests payable (surplus of interest paid) to depositors (17,218) (815,452)

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

Saman Bank (Public Joint Stock Company) Statement of profit & Loss of the parent company (Restated) Note 2017 2016 Rls (m) Rls (m) Income from loans granted and deposits in other banks and debt securities 34 24,258,896 31,190,333 Interest expenses on deposits 40 (31,947,915) (31,801,511) Net income from loan interests and deposits in other banks (7,689,019) (611,178)

Fee and commission incomes 41 1,329,183 1,116,022 Fee and commission expenses 42 (1,843,131) (1,144,070) Net incomes from fees and commissions (513,948) (28,048)

Net profit (loss) from investments 35 5,029,559 598,793 Net profit (loss) from foreign currency exchanges/transactions 45 1,384,565 1,295,870 Other operating incomes 0 0 Total operating incomes (1,788,843) 1,255,437

Net other incomes and expenses 46 6,206,557 3,379,801 Administrative and general expenses 47 (3,586,051) (3,284,674) Expenses for doubtful debts 48 (300,000) (765,960) Financial expenses 49 (1,788) (59,192) Deprecciation/amortization expenses 50 (445,209) (422,667) Profit (loss) before income tax 84,666 102,745 Income return tax 26 0 0 Net profit (loss) 84,666 102,745

Earning per shares (EPS) - (Rls.) Basic earnings per share (Rls.) 56-1 11 14 Diluled earnings per share (Rls.) 56-2 11 13

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

58 Financial Report 59

) )

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total Total 84,671 equity

94,267 Rls (m) equity

Rls (m) 102,751 640,000 744,994

(545,733)

( ( 10,159,684 9,613,951 1,506,472 9,613,951 10,801,927

11,205,094

11,205,094

shareholders' shareholders'

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

shares shares Treasury Treasury

)

) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

75,413 89,408 Rls (m) Rls (m)

89,408 84,671 102,751 640,000 744,994 174,079 ( (12,700) (12,700) 161,379

( (

1,000,000 earnings Retained 2,447,064 earnings Retained 1,804,821 (1,715,413)

(

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

rates rates Rls (m) Rls (m) in foreign exchange in foreign exchange Difference

Difference

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

675 675 675 675

Rls (m) Rls (m) Assets Assets reserve reserve

1,507,147 1,506,472 1,507,147 revaluation

revaluation

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Other Other Rls (m) Rls (m)

reserves reserves

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Legal Legal 75,413 Rls (m) 75,413 Rls (m)

12,700 12,700

reserve

reserve 1,536,568 1,448,455 1,448,455 1,523,868 1,523,868 1,523,868

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

2015 - 2016 Rls (m) 2016 - 2017 Rls (m) Shares Shares reserve

reserve

premium premium

)

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Rls (m) Rls (m) capital 317,733 capital 317,733 317,733

(317,733)

( Ongoing

Ongoing increase

increase

0 0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Rls (m) Capital Rls (m) Capital 1,412,000 6,588,000 6,588,000 1,412,000 8,000,000

8,000,000 8,000,000 8,000,000

31 33 51 31 33 51 Note Note Other comprehensive incomes (losses) after tax deduction Difference in foreign exchange rates Tax for other comprehensive incomes Total other comprehensive incomes Total comprehensive incomes Increase in registered capital Increase in unregistered capital Capital increase Assets revaluation reserve Treasury shares Purchase of treasury shares Sale of treasury shares Distribution and allocation Legal reserve Other reserves Dividend per share Approved dividend Balance as at March 20, 2017 Balance as at March 19, 2016 Net profit Prior years' adjustments Other comprehensive incomes (losses) after tax deduction Difference in foreign exchange rates Tax for other comprehensive incomes Total other comprehensive incomes Total comprehensive incomes Increase in registered capital Increase in unregistered capital Treasury shares Purchase of treasury shares Sale of treasury shares Distribution and allocation Legal reserve Capital increase Assets revaluation reserve Other reserves Dividend per share Approved dividend Net profit Balance as at March 20, 2015 Prior years' adjustments Balance as at March 19, 2016 statement of changes in shareholders' equity For Parent Company the fiscal year ended March 20, 2017

60 Financial Report 61 Statement of cash flows for the parent company For the fiscal year ended March 20, 2017 Explanatory Notes

(Restated)

Note 2017 2016 1- Introduction of the Bank Rls (m) Rls (m) Operating activities 1-1- Background Cash received for By virtue of the license No. H/1745 of July 24, 1999 granted by the Central Bank of I. R. of Iran, Saman Bank was Interest and late payment penalty on loans granted 16,590,758 22,455,278 registered with Tehran Department of Companies and Non-Commercial Entities Registration under No. 154444 Interest on debt securities 203,303 0 on September 1, 2009 and was listed with Tehran Stock Exchange/Iran Farabourse on November 16, 2011 thus, Fees and commissions 1,329,183 1,116,022 the Bank has been put on the official list of prices which prevail on Tehran Stock Exchange/Iran Farabourse since Interest on deposits 1,635,761 1,851,904 June 6, 2012. The Bank is headquartered in Tehran, of No. 1543, Tarkeshdouz St. , Parkway Intersection, Vali-asr Profit from investments 1,234,904 598,793 Ave., Tehran, Iran. The Bank’s Economic Code is 4111-1166-8595. Other operating incomes 1,288,353 168,217 Other incomes 679,050 513,417 Cash payment for 0 0 1-2- Bank’s main activities Interest on deposits (31,947,915) (31,801,511) The Bank has been licensed with the main objectives of performing authorized banking operations and activities Fees and commissions (1,843,131) (935,878) (operations and transactions which are not prohibited for banks under the prevalent rules) under article 3 of Other operating expenses (3,763,374) (4,140,498) the Articles of Association/Constitution and in accordance with the regulation No. 92/377538 of March 13, 2014 Financial expenses (1,788) (59,192) as approved by the Central Bank of I. R. of Iran. By extension, the bank’s main activities include: open various Income tax (609,043) (480,641) accounts such as savings accounts, free-interest deposit accounts, short-term or long-term investment deposit Net cash outflow from operating activities befor changes in operating assets and liabilities (15,203,939) (10,714,089) accounts; issue various banking credit cards or other authorized cards and other similar accounts; receive Cash flows from changes in operating assets and liabilities facilities and credit lines; grant loans in the form of applicable contracts and agreements; make fund transfers; Net increase (decrease) in liabilities conduct all transactions or foreign exchange transfers/money orders; open letters of credit and carry out all Due to banks and other credit institutions (21,566,922) 36,949 related affairs; issue banking letters of guarantee and certificates of deposit; trade (buy and sell) participation Customers' deposits (4,786,705) 190,143 bonds and other securities; conduct all operations related to purchase and sale of shares; safe custody services; Debt securities 0 (1,000,000) carry out transactions in gold and silver; act as a broker or agent for participation bonds and for interbank Operating portion of provisions and other liabilities 4,544,647 (1,433,353) operations and other credit institutions; provide insurance coverage for banking affairs; cash management Investment depositors' equity 20,679,253 34,494,860 for customers; open branches and expand the banking network inside and ouside the country; to conduct and Net (increase) decrease in assets 0 0 carry out all operations and activities in line with the objectives set and defined for the bank in the context of the Due from banks and other cerdit institutions 3,024,216 (883,585) prevalent rules and regulations... Principal amounts due from the government 0 0 Principal loans granted to and amounts due from governmental entities 0 0 1-3- Number of Branches Principal loans granted to and amounts due from non-governmental entities 5,066,859 (1,993,155) Investment in shares and other securities 4,255,428 (793,449) The number of branches during the year is listed below Due from subsidiaries and affiliates (2,548,425) 155,697 Other accounts receivable 307,274 (5,015,532) 2017 2016 Statutory reserve (1,904,359) (1,619,060) Year end Average Year end Average Operating portion of other assets (10,586,910) (3,326,342) Cash flows from changes in assets and operating liabilities (3,515,644) 18,813,173 Branch Branch Branch Branch Net cash inflow (outflow) from operating activities (18,719,583) 8,099,084 Branches in Tehran province 84 84 84 84

Investing activities Branches in other provinces 50 52 54 55 Funds paid for acquisition of tangible fixed assets (597,692) (597,563) Branches in free zones 3 3 3 3 Proceeds received from sale of tangible fixed assets 401,374 3,137 Overseas branches 0 0 0 0 Funds paid for acquisition of non-operating real estates 0 0 Proceeds received for acquisition of non-operating real-estates 0 0 137 139 141 142 Funds paid for acquisition of intangible assets (235,024) (321,755) Funds paid for sale of intangible assets 1,291,811 0 • Average means, the monthly average of the reporting period. Net cash (outflow) from investing activities 860,469 (916,181) 1-4- Employment status Net cash outflow before financing activities (17,859,114) 7,182,903 The number of bank’s employees (headcount) during the fiscal year was as follows: Financing activities Cash from capital increase 0 94,270 Group Parent Company Treasury shares transactions 0 0 2017 2016 2017 2016 Funds from shares premium 0 0 Financial facilities received 66,825,000 27,655,000 Year end Average Year end Average Repayment of principal financial facilities (66,825,000) (29,405,000) No. of No. of No. of No. of No. of No. of Dividends paid (104,549) (668,775) Employees Employees Employees Employees Employees Employees Net cash inflow (outflow) from financing activities (104,549) (2,324,505) Central headquarters and district head offices 1478 1,408 784 754 754 794 Net cash increase (decrease) (17,963,633) 4,858,398 Branches in Tehran Province 1008 1,128 1008 1,026 1,064 1,032 Cash at the beginning of the year 49,362,165 43,376,114 Effects of changes in forex exchange rates 96,212 1,127,653 Branches in other provinces 581 1,008 581 598 624 626 Cash at year end 31,494,714 49,362,165 Branches in free zones 33 37 33 33 33 34 Non-cash transactions 53 9,030,828 15,939,314 Overseas branches 0 0 0 0 0 0

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

The accompanying notes are an integral part of these financial statements. • Average means, the monthly average of the reporting period.

62 Financial Report 63 2- Basis of preparing financial statements 7- Change in accounting policies

The existing financial statements have been prepared on the basis of accounting standards and in accordance with The bank has used and presented in its financial statements the accounting policies and methods set forth in note 8 applicable rules and regulations of the Central Bank of I. R. Iran. in pursuance of common practice stability for all periods so reported.

3- Basis of consolidation 8- Summary of significant accounting policies

3-1- The bank consolidated financial statements aggregate the assets and liabilities of the bank and of the 8-1- Investments subsidiaries qualifying for consolidation upon elimination of inter-group transactions and balances as well as the unrealized profit and loss from intergroup transactions. The list of group companies and their 8-1-1- Method of valuation activities has been described in Note 14.2.3. Long-term investments are valuated at cost price upon deduction of any accumulated loss in each item of 3-2- As to the acquisition of subsidiaries during the given period, the results of their operations are consolidated investment and the current quickly marketable investments are valuated at market price and other current as of the date they are effectively controlled by the bank. As regards the subsidiaries transferred to the investments are valuated at lower of cost price and net sales value of each item of investment. bank, the results of their operations are consolidated until the date of their possession. 3-3- The bank shares acquired by the subsidiaries are recorded at cost price in their accounts. Such shares 8-1-2- Method of income recognition are deducted from the shareholders’ equity and reflected in the financial statements under the heading of The incomes earned from investments in subsidiary and affiliated companies are recognized at the time of “parent company held by subsidiaries”. approving profit (dividends) by the investee company shareholders’ general meeting (by the approval date of 3-4- The fiscal year of subsidiaries ends on December 21 of each year and their operations are consolidated financial statements) and the incomes from other long-term and current investments are recognized at the in the same manner. Nonetheless, in the case any event occurs up to the reporting date of the bank’s time of approving profit (dividends) by the investee company’s shareholders’ general meeting (by the balance financial statements which might substantially affect the consolidated financial statements in their entirety, sheet date). the effect thereto would be reflected in accounts by making the required adjustments in the items of the The table below contains a summary of valuating and recognizing incomes earned from investments in the financial statements of subsidiaries. parent company and group companies. 3-5- Atieh Alborz Company was not consolidated in the financial statements of the fiscal year ending March 20, 2017, due to its lack of operations or a future plan to be either transferred or dissolved. The adjustments so Group Parent Company required have been made in the financial statements. Method of valuation 3-6- Upon transfer of a portion of Saman Electronic Payment Company’s shares at the end of the reporting Long-term investments period, this company became an affiliate of the bank. Thus, the results of its operations were consolidated Investment in subsidiaries qualified for Cost-price (less reserve for accumulated value in the financial statements by the date of its transfer and the balance of its investment was also reflected in Qualified for consolidation the note to the invetment in affiliates by using the net worth method. consolidation impairment in each item of investment) Cost-price (less reserve for accumulated value Upon expansion of Atieh Andishan Sepehr Shargh Company business activities during the fiscal year Investment in affiliated companies Net worth 3-7- impairment in each item of investment) ending March 20, 2017, this company’s operations were also reflected in the bank’s consolidated financial Cost-price (less reserve for accumulated vslue Cost-price (less reserve for accumulated value statements. Other Long-term investments impairment in each item of investment) impairment in each item of investment) 4- Operating and reporting currency unit Current investments Lower of cost price and net sales value of Lower of cost price and net sales value of Investment in marketable securities aggregate investments aggregate investments The items in the financial statements have been measured by using Rial as the currency unit in the main economic Lower of cost price and net sales value of each Lower of cost price and net sales value of each environment where Saman Bank has been operating. Such items have been presented in Iranian million rials Other current investments (shortened to Rls. M.) for better understanding and comprehensibility unless otherwise expressly stated in financial item of investment item of investment statements and/or in the relevant explanatory notes. Method of income recognition

At the time of approving profit by the investee Investment in subsidiaries qualified for Qualified for recognition company’s shareholders’ general meeting 5- Using judgment and estimates consolidation (until the approval date of financial statements)

At the time of approving profit by the investee In preparing the present financial statements, the Bank management have used, made and adopted judgments, Investment in affiliated companies Net worth method company’s shareholders’ general meeting (by estimates, and assumptions in determining the amounts recognized in the financial statements. Arguably, the actual the approval date of financial statements) results may vary from such estimates. However, the estimates and assumptions are based on historical records and the management board will continuously review them by comparing with actual events. The key areas used by the At the time of approving profit by the investee At the time of approving profit by the investee management in their judgement and estimates are as follows: Other Long-term investments company’s shareholders’ general meeting (by company’s shareholders’ general meeting (by the balance sheet date) the balance sheet date) 5-1- In preparing the bank financial statements, no particular judgement and estimate have been used.

6- Basis for measurement

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

64 Financial Report 65 8-2- Tangible Fixed Assets Income and late penalties on loans granted and fees Method of recognition Interest on loans granted 8-2-1- Except for land and buildings, the tangible fixed assets are recorded in accounts on the basis of cost. The expenditures incurred for renovation and major repairs that will substantially increase the capacity or the Current Accrual / Cash useful life of fixed assets or will fundamentally improve the output quality are regarded as capital expenditures Overdue Accrual / Cash and will be depreciated/amortized over the remaining useful life of related assets. The expenditures incurred Outstanding Accrual / Cash for minor repairs and maintenance out of the assets initial valuated performance standards for the purpose of Doubtful Accrual / Cash protection or recovery of the expected economic benefits of commercial unit are regarded as current expenses at the time of occurrence and recorded in the profit and loss account of the given period. Late payment penalties Current Accrual / Cash 8-2-2- Land and buildings are reflected in accounts on the basis of revaluation. The revaluation rotation Overdue Accrual / Cash period will be five years under the prevailing accounting standards which should be made by independent experts/appraisers (of the Judiciary). Outstanding Accrual / Cash Doubtful Cash 8-2-3- Depreciations of tangible fixed assets are calculated and recorded in accounts under the provisions of Commission Fees the Depreciation Rules subject of amended article 151 of Direct Taxation Law and on the basis of the following rates and methods: Commission Fees from LGs issued Cash Commission Fees from other banking services Cash Assets Depreciation rate Depreciation method Commission Fees from loans granted on interest-free accounts Cash Buildings and installations 7 &12% Declining line Furniture, fixtures, computer hardware and devices 3, 5 & 10 years Straight line Royalty on operating license 10 years Straight line 8-5- In applying the provisions of the Usury-Free Banking Law ratified on August 30, 1983 and the executive Motor vehicles 25 & 35% Declining line regulations and by-laws thereto and in view of the directive No. 94/69643 of June 10, 2015 issued by the POS terminals 5 years Straight line Central Bank of I. R. of Iran, the profit-sharing income, uses of shared resources and depositors’ share from the profit-sharing income should be calculated and the results thereof should be reported in the statement of ATM machines 10 years Straight line investment deposits performance. Technical equipment, satelite and hub 4 &10 years and 20% Straight and declining line Costs for branch improvement and refurbishments 3 years Straight line 8-6- Classification of loans granted (loan portfolios) Tools 1 & 4 years Straight line Pursuant to the Directive for Classification of Assets owned by credit institutions adopted by the Money and Credit Equipment and fixtures in rented buildings 2 years Straight line Council (subject of the directive No. MB/2823 of February 25, 2007 issued by the Central Bank of Iran) and with regard to time factors and delay in payments as described below, the customers’ financial situation and status of related industry, the loan facilities granted by the bank shall be evaluated and classified into one of the following 8-2-4- For the fixed assets acquired and used during the month, depreciation will be calculated at the time of four categories: purchase and recorded in accounts. When each item of depreciable assets, upon availability for operation is not utilized for sometime on the grounds of work stoppage or shut-down, the rate of depreciation for such period 8-6-1- Current category (maximum up to 2 months as of the maturity date and/or the date of payment will be equivalent to 30% of the rate which has been reflected in the above-mentioned table. interruption) 8-6-2- Overdue category (2 to 6 months as of the maturity date and/or the date of payment interruption) 8-3- Intangible assets 8-6-3- Outstanding category ( 6 to 18 months as of the maturity date and/or the date of payment interruption) 8-3-1- Intangible assets (except for goodwill of business place) are entered in accounts at cost. Computer software packages used for operational and administrative purposes are depreciated on a straight line basis 8-6-4- Doubtful category (over 18 months as of the maturity date and/or the date of payment interruption) over 3 years. For other intangible assets no depreciation/amortization is computed. The management has not passed any judgment on the financial statements beyond the context of the aforesaid 8-3-2- The goodwill is entered in accounts on the basis of revaluation. The rotation period of revaluation directive. will be 5 years under the prevailing accounting standards which should be made by independent experts/ appraisers (of the Judiciary). Subject to the directive No. MB/2946 of March 6, 2007 issued by the Central Bank, 8-7- Provision for doubtful debts the goodwill will not be depreciated. However, upon a value impairment test at the end of each financial year, the required provision will be calculated if it is deemed necessary. Pursuant to the regulations governing the procedures for calculation of provisions for credit Institutions, as approved by the Money and Credit Council (subject of the directive No. 91/21270 of April 20, 2012 issued by the 8-3-3- For that group of intangible assets with indefinite use and without change in their return (having Central Bank of I. R. of Iran), provisions for the loan facilities granted are to be calculated and entered in accounts indefinite useful lifecycle) no depreciation will be calculated. as follows: 8-7-1- General provision 8-4- Recognizing incomes from the loan facilities granted, fees and late payment penalties General provision which is equivalent to one and half (1.5%) percent of the total loans balance at the end of On the strength of the resolution adopted by the Money and Credited Council at its 1044 session of July 16, 2005 each year will be calculated except for the balance of the loans for which specific provision has been covered. which was notified under the directive No. 772/MB of July 18, 2005 by the Central Bank of I. R. Iran, the income 8-7-2- Specific provision earned from the loans granted should be recognized on the basis of accrual system. Accordingly, by virtue of the directive No. 94/258020 of November 30, 2015 no accrual income has been recognized for the category of doubtful Specific provision relative to the balances of overdue, outstanding and doubtful accounts will be calculated debts. Thus on the basis of the accrual system, the method of recognizing the banks incomes is described as as described below upon deduction of the updated value of collaterals in each loan category by exercising the follows: predetermined rates:

66 Financial Report 67 Loan category Percentage for calculation 8-11- Traesury shares/stock Balance of overdue loans 10 Under the provision of the Law governing the Removal of Barriers of Competitive Production Barriers and Balance of outstanding loans 20 Enhancement of Financial System and on the strength of the executive regulations adopted by the Stock Exchange Supreme Council, the bank shall be allowed to acquire 10 percent of its own shares. The treasury shares are to Balance of doubtful loans 50 - 100 be reported on the basis of cost price on the acquisition date. Any type of differential resulting from purchase and sale of treasury shares is reflected in the shareholders’ equity section. 8-7-3-The loans with the passage of 5 years or more of their maturity for repayment of the principal amounts and interests thereto are required to have 100% specific provision (without considering the value of collaterals). 8-12- Taxation The management has not passed any judgment on the financial statements beyond the context of the aforesaid The Bank’s income tax is calculated at the year-end and when the financial statements are presented in directive. accordance with the Iranian Direct Taxation Law. The Bank is required to submit income tax return to related authorities within four months after the end of the fiscal year and pay at least 10% of its declared tax along with the income tax return. The tax authorities will assess the bank’s revenues and expenditures and issue the tax 8-8- Provision for employees’ termination benefits assessment notice no later than 15 months after the income tax return has been submitted. The Bank may The employees’ termination benefits are calculated and entered in accounts on the basis of the last month’s fixed protest against the tax assessment along with partial payment of the tax amount levied. The tax offences will also salary and benefits for each year of their service records. be included once the income tax has been finalized and as a common practice there is a difference between the amount declared and the amount assessed which, upon payment of the tax, will be entered in the prior years’ 8-9- Provision for employee’s pension benefits adjustments and then accounts will be restated. The bank’s employees are under the social security coverage and thus no provision for their retirement pension has been entered in accounts. 8-13- Goodwill The accounting policy for acquisition of units will take place on the basis of purchase method. The surplus cost of 8-10- Foreign currency translation acquiring investment in subsidiaries qualified for consolidation and in affiliated companies qualified for net worth method for group shares is recognized as goodwill out of the fair net value of their recognizable assets at the 8-10-1- Country-wide domestic accounts time of acquisition and will be amortized over 10 years. The goodwill derived from acquisition of affiliates will be Monetary items in foreign currency are translated at the official exchange rate (as announced by the Central recorded in the consolidated balance sheet as part of the book value for long-term investments in the affiliated Bank) at the balance sheet date and non-monetary items recorded in foreign currency at historical cost companies. are converted at the rate prevailing on the date the transaction is conducted. The differences arising out of settlement or translation of foreign currency monetary items are recognized as income or expense for the 8-14- “Other items” in the notes to financial statements given period and then entered in the profit and loss statement. Considering the number of items used for certain accounts, some items in every note have been reported under 8-10-2- Subject to the statement of foreign currency parity in the indirect method, the foreign exchange rates the heading of “Other”. The items which are entered in accounts under the title of “other” include insignificant or in rial are as follows. less important items in terms of content and may be up to 10% of the total amount which come under such note. Notably, the number of items under this heading has also been disclosed. No Type of Currency Exchange rate at Balance sheet date (in Rls) 1 US Dollar 32,420 2 Euro 34,851 3 Pound 40,191 9- Cash 4 UAE Dirham 8,827 5 Canadian Dollar 24,263 Group Parent Company 6 Turkish Lira 8,945 Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 7 Australian Dollar 24,963 Rls (m) Rls (m) Rls (m) Rls (m) 8 Japanese Yen 287/72 Cash in hand - Rial 1,596,955 1,182,452 1,586,147 1,182,094 9 Swiss Franc 32,481 Cash in hand - forex 9-3 1,091,497 935,647 1,080,935 927,525 10 Chinese Yuan 4,702 Foreign currencies with brokers 405,856 739,720 0 0 Cash in transit - Rial 1,201 27,941 1,202 996 11 S. Korean Won 28/7 Cash in transit - Forex 0 0 0 0 12 Indian Rupee 496

13 Omani Rial 84,184 Demand deposits with CBI (unrestricted) 9-4 4,171,647 2,478,732 4,171,647 2,478,732

Deposits with other banks and credit institutions 9-5 24,757,448 45,352,279 24,654,783 44,772,818 8-10-3- Offshore banking transactions accounts (unrestricted) The assets and liabilities of overseas branches are translated at foreign exchange rate at the balance sheet 32,024,604 50,716,771 31,494,714 49,362,165 date and the incomes and related expenses are translated at the foreign exchange rate prevailing on the transaction profit date. All differences resulting from such conversions are recognized in the statement of comprehensive proft and loss and are classified under the heading of “shareholders’ equity” in the balance sheet. Additionally, the differences in translation of monetary items which inherently form a portion of net 9-1- The cash amounts in rials and foreign currencies with the bank branches up to the limit of Rls. investment in offshore banking transactions are recognized in the statement of comprehensive profit and 2,358,703/- have been put under sufficient insurance coverage against possible accidents and loss and classified and titled under shareholders’ equity” in the balance sheet until when the investment is risks arising from theft and fire. transferred. 9-2- The bank’s cash amounts in transit in rials and foreign currencies have received sufficient insurance

68 Financial Report 69 coverage up to the limit of Rls. 480,435/- million for each time of shipment against possible risks and 9-4-2-3-The Association for Private Banks also made a written protest against the CBI’s action (the damages. withdrawal) on March 7, 2012. 9-3- The cash foreign currencies owned by the parent company were converted on March 20, 2017 at the 9-4-2-4-Considering the measures taken and by virtue of the notification dated March 17, 2012, the Central exchange rates announced by the Central Bank of Iran whereby the balances at the balance sheet date were Bank of Iran repaid in two stages 90% of its withdrawals totaling the amount of Rls. 4,379 billion. However, as follows: once more the amount of Rls. 2,346 billion was withdrawn from Saman Bank’s account by the Central Bank on March 18, 2012 (apparently on the strength of a decree approved by the Council of Ministers).

March 20, 2017 March 19, 2016 9-5- The deposits with other banks and credit institutions (unrestricted) Currency Type Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials

Rls (M) Rls (M) Group Parent Company US Dollar 19,235,342/83 32,420 623,609 12,935,464/22 30,240 391,168 Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Euro 11,582,646/69 34,851 403,666 13,872,587/07 33,935 470,766 Rls (M) Rls (M) Rls (M) Rls (M) UK Pound 222,281/18 40,191 8,934 152,079/59 43,089 6,552 Demand deposits with other local banks -Rls. (unrestricted) 9-5-1 103,935 115,862 62,107 103,996 UAE Dirham 5,064,209 8,827 44,703 7,166,705 8,234 59,012 Term deposits with other local banks - Rls.(unrestricted) 9-5-1 5,984,353 9,993,199 6,390,728 9,808,289 Turkish Lyra 2,615 8,945 23 2,615 10,551 27 Demand deposits with other foreign banks - Forex (unrestricted) 9-5-2 15,689,210 32,806,945 15,689,210 32,806,945 1,080,935 927,525 Term deposits with other foreign banks - Forex (unrestricted) 9-5-3 901,464 125,533 901,464 125,533

Term deposits with other local banks - Forex (unrestricted) 9-5-4 496,972 427,984 29,760 45,300 9-4- The demand deposits with the Central Bank of Iran (CBI) (unrestricted) Demand deposits with other local banks - Forex (unrestricted) 9-5-5 1,581,514 1,882,756 1,581,514 1,882,755 24,757,448 45,352,279 24,654,783 44,772,818 Note March 20, 2017 March 19, 2016 Rls (M) Rls (M) Demand deposits with CBI - Forex (unrestricted) 9-4-1 344 335 9-5-1-The demand deposits and term deposits with other local banks in Rial (unrestricted) related to Saman Demand deposits with CBI - Rial (unrestricted) 9-4-2 4,171,303 2,478,397 Bank (Parent Company) break down as follows: Demand deposits with Central Banks of other countries 0 0 March 20, 2017 March 19, 2016 4,171,647 2,478,732 Name of Bank Demand Term Total Demand Term Total Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 9-4-1- The current forex deposits with the Central Bank of Iran (CBI) were as follows: Refah 0 705,831 705,831 0 3,786 3,786 Melli 13,374 112,428 125,802 68,171 2,997,491 3,065,662 March 20, 2017 March 19, 2016 Tejarat 10 5,032 5,042 37 8,315 8,352 Currency Type Forex amount Exchange rate Amount in Rls. Forex amount Exchange rate Amount in Rials Saderat 9,299 16,830 26,129 11,480 32,483 43,963 Rls (M) Rls (M) Sepah 18,589 5,434 24,023 5,750 30,374 36,124 US Dollar 7,634 32,420 247 7,634 30,240 230 Maskan 1,265 0 1,265 5 1,642 1,647 Euro 2,782 34,851 97 3,073 33,935 105 Keshavarzi (Agricultural) 0 1,977 1,977 53 1,005,776 1,005,829 Indian Rupee 1 496 0 1 453 0 Post bank 19,570 700,000 719,570 18,350 0 18,350 S. Korea Won 27 29 0 27 26 0 Mellat 0 22,739 22,739 150 1,828,259 1,828,409 Omani Rial 1 84,184 0 1 78,546 0 Pasargad 0 1,200,000 1,200,000 0 50 50 344 335 Gardeshgari 0 0 0 0 1,000,000 1,000,000 Sina 0 1,000,007 1,000,007 0 32 32 9-4-2-The rial-denominated current account with the Central Bank under No. 26200/5 is used for settlement Ansar 0 920,000 920,000 0 1,200,000 1,200,000 of rial-denominated interbank transactions including the adjustment of statutory deposit balance, settlement Dey 0 700,081 700,081 0 73 73 of documents exchanged through the clearing house, operations performed by SATENA, PAYA and SHETAB and… payment systems. The balance of this account as per the bank books on March 20, 2016 was in amount of Middle East 0 369 369 0 8 8 Rls. 4,172 billion. As reflected in the CBI’s statement, the balance of this account was debited in the amount of Ayandeh 0 0 0 0 1,200,000 1,200,000 Rls. 1,339 billion. The discrepancy was due to: Sarmaye 0 0 0 0 500,000 500,000 9-4-2-1-Following the problems which arose in the wake of the foreign currency exchange rates in 2011 in Parsian 0 500,000 500,000 0 0 0 the country, Saman Bank was selected to act as a distributing partner for foreign currency allocation. For Melal Credit Institution 0 500,000 500,000 0 0 0 this purpose, Saman Bank organized an action plan and managed this function within the framework of the commitments and arrangements so undertaken. 62,107 6,390,728 6,452,835 103,996 9,808,289 9,912,285 9-4-2-2-On March 5, 2012, the Central Bank of Iran withdrew the amount of Rls. 4,866 billion from the said current accounts under code 1006 (without considering the inadequacy of the account balance) allegedly being the differential between the free market exchange rate and the official exchange rate of the foreign currencies delivered to banks subject of a five-member team’s approval. Despite the protest raised by Saman Bank against such withdrawal, the matter has not yet been settled.

70 Financial Report 71 9-5-2-The foreign currency demand deposits with other foreign banks (unrestricted) all belong to Saman 9-5-5- Foreign currency demand deposits with local banks all belong to the parent company and are listed Bank (parent company) and are listed below by a breakdown of currency type: below by a breakdown of currency type:

March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Currency type Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials Currency type Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials Rls (M) Rls (M) Rls (M) Rls (M) US Dollar 4,278,688/28 32,420 138,715 3,645,933/28 30,240 110,253 US Dollar 35,610,827/05 32,420 1,154,503 33,821,535/10 30,240 1,022,763 Euro 347,344,430/90 34,851 12,105,300 358,406,397/95 33,935 12,162,521 Euro 2,076,353/83 34,851 72,363 9,192,966/25 33,935 311,963 UK Pound 262,796/99 40,191 10,562 262,690/24 43,089 11,319 UK Pound 4,232,792/57 40,191 170,120 4,232,792/57 43,089 182,387 UAE Dirham 39,456,682/34 8,827 348,284 38,939,656/87 8,234 320,629 UAE Dirham 1,618,198/36 8,827 14,284 1,633,198/36 8,234 13,448 Swiss Franc 13,397,878/57 32,481 435,176 60,688,632/11 30,933 1,877,281 Australian Dollar 12,748 24,963 319 12,748 22,966 293 Chinese Yuan 59,804,598/77 4,702 281,201 164,727,974/30 4,655 766,808 Japanese Yen 590,590,636 287/72 169,925 1,307,255,798 269/19 351,901

Turkish Lira 21,532,650/18 8,945 192,610 126,532,242/80 10,551 1,335,041 1,581,514 1,882,755 Japanese Yen 678,357,174 288 195,177 19,972,485,686 269 5,376,393 S. Korea Won 9,986,928,764 29 286,625 10,673,363,786 26 274,957 9-6- The deposits with banks which have restrictions on their withdrawal (time and other restrictions) have been Omani Rial 10,802,923/27 84,184 909,434 91,215,839/28 78,546 7,164,640 classified under the heading of “Due from banks”. Indian Rupee 1,584,930,813/03 496 786,126 7,521,196,747/69 453 3,407,103 15,689,210 32,806,945 10- Due from banks and credit institutions

9-5-3-The foreign currency term deposits with foreign banks all belong to the parent company and are listed Parent Company below by a breakdown of currency type: Note March 20, 2017 March 19, 2016 Rls (M) Rls (M) March 20, 2017 March 19, 2016 Due from CBI 10-2 5,473,375 8,131,047 Currency type Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials Due from other banks and credit institutions 10-3 4,202,655 4,702,604 Rls (M) Rls (M) 9,676,030 12,833,651 Euro 2,766,480 34,851 96,414 2,766,480 33,935 93,880 Turkish Lira 90,000,000 8,945 805,050 3,000,000 10,551 31,653 10-1-The deposits with banks which do not have restrictions on their withdrawal have been classified under the 901,464 125,533 heading of “cash”.

9-5-4-The foreign currency term deposits with local banks belong to the parent company and are listed below 10-2- Due from Central Bank of Iran by a breakdown of currency type: Parent Company March 20, 2017 March 19, 2016 Note March 20, 2017 March 19, 2016 Currency type Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials Rls (M) Rls (M) Rls (M) Rls (M) Demand deposit with CBI - rial (restricted) 0 0 Indian Rupee 60,000,000 496 29,760 100,000,000 453 45,300 Demand deposit with CBI - forex (restricted) 0 0 29,760 45,300 Demand deposit with Central Banks of other countries (restricted) 0 0 Interest receivable on statutory deposit 0 0 Other amounts due (3 items) 10-2-1 5,473,374 8,131,047

5,473,374 8,131,047

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

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

72 Financial Report 73 March 20, 2017 10-3-1- The balance of this account is settled through the clearing house for banking instruments no later than two working days as the case may be. Currency Preferential exchange rate Official exchange rate Total type Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials Forex amount Forex rate Amount in Rials 10-3-2- The amount of Rls. 4,159,555/- million out of “other amounts due” is related to Saderat Bank and Rls (M) Rls (M) Rls (M) Passargad Bank and breaks down as follows: Euro 62,716,454/42 34,851 2,185,731 36,614,837/46 34,851 1,276,063 99,331,291/88 34,851 3,461,794 Balance of facilities UAE Dirham 34,270,705/10 8,827 302,507 2,563,672/38 8,827 22,629 36,834,377/48 8,827 325,137 2017 2016 Chinese Yuan 0 4,702 0 24,142,410/16 4,702 113,517 24,142,410/16 4,702 113,517 Interest Type Type Type of Forex S. Korean Won 52,416,788,566 29 1,504,361 2,040,050,208/00 29 58,549 54,456,838,774 29 1,562,914 Name of bank rate Maturity Rls (M) Rls (M) of currency of contract collateral amount Turkish Lira 78,719/68 8,945 704 0 8,945 0 78,719/68 8,945 704 (percentage)

3,993,303 1,470,758 5,464,066 Amounts in Rls.

Factoring Saderat Rial 21 April 23, 2011 LC documents 0 275,316 275,316 (discount) It is further added that owing to the follow-up actions by the bank management and by the issuance date of the Factoring Saderat Rial 21 October 21, 20111 LC documents 0 0 249,681 financial statements, an agreement was reached between the representatives of the CBI’s Office of Statistics and (discount) Factoring Forex Obligations and representatives of Saman Bank to the effect that the Central Bank agreed to provide the Saderat Rial 21 April 27, 2011 LC documents 0 260,009 260,009 (discount) amount of $ 363 million as listed below. Accordingly, on the strength of the letter No. 256646 of December 16, Factoring Saderat Rial 21 August 1, 2011 LC documents 0 300,300 300,300 2014, the Central Bank has made the settlement of forex debts due subject to the performance of a special audit (discount) Factoring of foreign currency by an independent auditor for the years 2012 and 2013. In pursuance of this demand, Sokhane- Saderat Rial 21 June 28, 2011 LC documents 0 261,214 261,214 hagh Auditting Services and Institute performed an audit as requested by CBI and then Saman Bank submitted (discount) Factoring Saderat Rial 21 June 28, 2011 LC documents 0 260,000 260,000 the completed audit report containing the detailed list of the assets and liabilities as well as forex resources used (discount) Factoring covering the years 2012 and 2013 to the CBI Deputy for Foreign Exchange Affairs under the letters No. 95.31969 of Saderat Rial 21 April 25, 2011 LC documents 0 50,370 50,370 March 18, 2017 and No. 95.31972 of March 18, 2017. (discount) Factoring Saderat Rial 21 May 24, 2011 LC documents 0 320,576 320,576 (discount) Factoring Amounts in dollar Saderat Rial 21 May 10, 2011 LC documents 0 240,387 240,387 (discount) Amount requested by Data entered by Saman bank on website of Factoring Exchange rate Saman bank under Saderat Rial 21 May 10, 2011 LC documents 0 240,463 240,463 Statistics Information Department Post-control (discount) letter no. Factoring Total registered obligations Saderat Rial 21 May 4, 2011 LC documents 0 260,971 260,971 210/92/M/013678 Due from CBI (discount) amount of February 25, 2014 Factoring Saderat Rial 21 April 28, 2011 LC documents 0 239,990 239,990 Preferential exchange rate 462,679,859 750,600,608 563,176,118 301,954,123 (discount) Factoring Saderat Rial 21 March 9, 2011 LC documents 0 242,399 242,399 Official exchange rate 140,214,008 170,080,338 150,154,772 43,187,252 (discount) Factoring Current exchange rate 0 0 0 18,100,244 Saderat Rial 21 April 23, 2011 LC documents 0 274,708 274,708 (discount) Loan interest rate 0 955,547 461,132 0 3,226,703 3,476,384 602,893,867 921,636,493 713,792,022 363,241,619 Amounts in forex Factoring Pasargad Euro 12.81 October 5, 2012 LC documents 15,766,893 549,491 535,049 (discount) 10-2-1-2- The balance of this account amounting to Rls. 9,308/- million is mainly related to non-payment Factoring Pasargad Euro 12.81 September 29, 2012 LC documents 5,000,000 174,255 169,675 of a portion of the statutory deposit for depreciation of the exchange rate as provided in the 2011 Policy and (discount) Factoring Regulatory Rules adopted by the CBI. Pasargad Euro 12.81 October 3, 2012 LC documents 6,000,000 209,106 203,610 (discount) 932,852 908,334 10-3- Due from other banks and credit institutions 4,159,555 4,384,718 General provision 10-3-2-1 0 0 Parent Company for doubtful debts Note March 20, 2017 March 19, 2016 Specific provision 10-3-2-2 0 0 Rls (M) Rls (M) for doubtful debts Payment of checks issued by other banks 10-3-1 43,094 184,475 4,159,555 4,384,718 Facilities granted to other banks and credit institutions 0 0 Demand deposits with other local banks and credit institutions - rial (restricted) 0 0 Demand deposits with other local banks and credit institutions - forex (restricted) 0 0 Term deposits with other local banks and credit institutions - rial (restricted) 0 0 Term deposits with other local banks and credit institutions - forex (restricted) 0 0 Demand deposits with foreign banks - forex (restricted) 0 0 Term deposits with foreign banks - forex (restricted) 0 0 Other amounts due 10-3-2 4,159,561 4,518,129

4,202,655 4,702,604

74 Financial Report 75 Saderat Bank In order to protect the interests and rights of Saman Bank and seek compensation from the guaranteed amounts In line with the policy of expanding banking services aimed at providing finance for its customers in the areas and force the two banks of Saderat and Industry and Mine to fulfill their obligations, Saman Bank has taken legal of rials and foreign currencies, mitigating the credit portfolio risks and maintaining the capital adequacy1 ratio, actions versus these two banks by claiming the collection of proceeds derived from 8 matured letters of credit Saman Bank included in its loan portfolio services the discount of the term letters of credit which other banks whereby 6 letters of credit are related to Bank Saderat and 2 letters of credit are related to Bank of Industry and opened and guaranteed their payments on due dates as of March 2011 (ending the Iranian calendar year). In Mine. For all of the 8 letters of credit, Saman Bank submitted a statement of claim to the trial court and requested the area of foreign currencies, discounts were made without recourse to the beneficiary by paying the amounts confiscation of the assets and property owned by the opening banks. Thus the court’s order resulted in the seizure so discounted into the beneficiary’s account (the discount applicant) in compliance with the appropriate rules of the assets which belong to Saderat Bank and Bank of Industry and Mine being equivalent to the amounts and standards and within the context of the regulations governing the forex letters of credit and uniform rules claimed by Saman Bank. Until the date of presenting financial statements, the court made its ruling on the two concerning the letters of credit. In the area of rials, Saman Bank discounted the locally-issued term letters cases, brought against the Bank of Industry and Mine in favor of Saman Bank which upon finality of decree and of credit (in rials) opened by the Iranian banks within the framework of the rules governing the local letters of issuance of a writ for execution of the court’s decision resulted in the collection of Rls. 666 billion comprising the credit (in rials) and applicable standards adopted by the Central Bank of Iran (uniform rules concerning the original amount for Rls 499 billion, late payment penalty, litigation costs and lawyer’s fee for the amount of Rls. letters of credit) without recourse as of 2010 and early periods of 2011 and paid the amounts so discounted into 167 billion. In pursuance of legal actions, Bank Saman brought and followed up claims against Bank Saderat for the beneficiary’s account (the discount applicant) in compliance with the appropriate rules and regulations. six letters of credit under three separate cases with the Bench No. 19 of Tehran Civil Courts with a description of: The discounts so described were performed along with the exercise of all necessary controls following the - Case No. 9009980227900567 remedy sought for the letter of credit No. 89/3446/0072 in the amount of 242,400 exchange of instruments in the letters of credit and after receipt of required confirmations (encoded Faxes from million rials; correspondent banks) regarding the authenticity of opened letters of credit as well as irrevocable commitments - Case No. 9009980227900569 remedy sought for the letter of credit No. 89/34469/0063 for the amount of 257,600 by the opening banks for payment of the proceeds derived from such discounts to Saman Bank on due dates and million rials; and in return for transfer of the beneficiary’s rights ( discount applicant). - Case No. 9109980227900613 remedy sought for four letters of credit under Nos. 90/3446/0029, 90/3446/0030, A number of companies made applications for discount of the letters of credit opened and guaranteed by other 90/3446/0023 and 90/3446/0024 in the amount of 807,183 million rials in total. banks which were processed in compliance with the foregoing standards and upon receipt of authorization from The court passed judgments in favor of Saman Bank and ordered Bank Saderat to pay the original amounts the bank’s credit committees. For the discount of forex-denominated letters of credit, all credit items were paid claimed and compensate for late payment penalties, litigation costs and lawyer’s fees based on legal rates. and settled on maturity dates by the banks which had opened and guaranteed such instruments. For the discounts of rial-denominated term letters of credit all items with the exception of a number of items connected with Amir After the court’s initial verdicts received finality in the Bench No. 12 of Tehran Provincial Court of Appeal Mansour Arya Group, were paid and settled by the opening banks in a normal way of business practices. For the (Revision), and upon the request made by Saman Bank, three writs of execution were issued for enforcement of discounting facilities provided for the companies affiliated to Amir Mansour Arya Group or for the companies the final judgements ( actions of debt collection) with description of: which were trading partners of this Group, except for two banks, Bank Saderat and Bank of Industry and Mine, all - Writ No. 9210420227900212 for the case No. 900998227900567; other banks including Pasargad Bank, Sepah Bank, Bank Melli and fulfilled their obligations and - Writ No. 9210420227900211 for the case No. 900980227900569; paid Saman Bank the committed amounts under 18 letters of credit totaling Rls. 2,136 billion on the due dates. - Writ No. 9210420227900208 for the case No. 910980227900613. Only the two banks of of Saderat and Industry and Mine failed to honor their obligations pledged against Saman Bank. The total discounts made and the amounts guaranteed to be paid in the letters of guarantee by these two After the above writs had been served, upon the request made by Bank Saderat, the head of Judiciary ordered the opening banks on the maturity dates were as follows: stay of execution for the writ No. 9210420227900212 and thus no money was collected. The Office of Judgments’ Enforcement of the relevant court bench made a calculation of the amounts due to be collected under the other two writs as follows: Company name LC opening bank Balance of Customer documents Company's ownership (first beneficiary) discounting applicant/ (Obligor to pay no. traded (percentage held) transferor of proceeds funds on maturity) (in billion rials) 1- Writ No. 921420227900208 Rls (M) Remedy sought (the principal amounts for four letters of credit): 807,183 Elit Co.- Anzali Free Trade 1305959 Saderat 761 Amir Reza Moujoudi (99) Litigation cost paid by Saman Bank 16,144 Staff cooperative Co. of National Iranian Industrial Fouladyar Iranian Trading-Industerial Co. 174667 Saderat 300 and Steel Group (55 of shares) Iran metal wastes Late payment penalty as of July 16, 2012 402,914 procurement and processing Co. (40 of shares) Difference in litigation cost 8,058 Foulad Iran Public Service Co.. 7778609 Saderat 521 Foulad Staff Pension Fund(99.7) Lawyer's fee 200 IMIDRO (50.5) & Provincial Investment 1,234,499 Khuzestan Steel Co. 13934 Saderat 807 Companies (30)

Saderat 1,350 2- Writ No. 921420227900211 Rls (M) Foulad Spadana Co. 1124386 Amir Reza Taremi (95) Remedy sought-principal amount 257,600 Industry & Mine 499 Litigation cost 5,152 Parsian Milad Hadid Co. 1124386 Saderat 802 Mohsen Karimian (60) Late payment penalty as of October 1, 2011 203,654

5,040 Difference in litigation cost 4,073 Lawyer's fee 200 Amounts collected by March 20, 2017 (1,814) 470,679 Final court decree against Bank Saderat (2,952)

Debt balance 274

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

76 Financial Report 77 Upon the sale of the pledged shares owned by Bank Saderat an amount totaling 1,574,697 million rials was

collected and delivered to Bank Saman under four checks. As the head of Judiciary issued an order for the stay

of execution, the remainder of the relief sought in the amount of Rls. 142 bilion has not been collected. Upon the 0 0

Net 9,214

Rls (M) 37,677 appeal made by the judgment debtor or losing party (namely Bank Saderat), the given cases are being examined 14,548

140,970

1,232,566 2,061,823 5,038,074 2,093,045 3,402,453 4,800,797 4,869,175

13,511,349 89,480,174

126,691,865

and reviewed by the Judiciary Deputy for Judicial and Supervisory Affairs under the provision of amended article March 19, 2016 18 of the Law for Formation of Public and Revolutionary Courts. Obviously, as soon as the effects resulting from the order for the stay of execution have been removed, the enforcement actions will be restarted to collect and 0 recover the remainder of the judgment debts. 0 Net 38,368 71,320 38,077 Rls (M) 535,648 764,288 1,345,084 4,786,321 2,088,736 7,504,761 6,651,517 Furthermore, the statement of claim for 13 letters of credit related to Bank Saderat under Nos. 90/3446/0010, 5,657,667 11,990,828 86,059,670 127,532,285 90/3446/0015, 90/3446/0016, 90/3446/0019, 90/3446/0021, 90/3446/0022, 90/3446/0017, 90/3446/0018,

90/3446/0027, 90/3446/0028, 90/3446/0031, 90/3446/0037 and 90/3446/0038 were submitted to the judicial ) ) ) ) ) ) ) ) ) authorities/law-courts which were referred to the benches No. 4, 19 and 14 for investigation and hearing. The first ) 0 0 0 0 0

court hearings were subjected to retrial due to the counter claim (July 7, 2012) made by Bank Saderat. Lastly, 13,478 35,369 64,006 16,320 58,183 27,913 Rls (M) 112,968 944,451 ( ( ( ( ( ( ( ( Provision 1,016,522 3,919,988

upon resumption of the court hearings and submissions of various evidentiary documents and memorials, the ( ( (6,209,198) case pertaining to the letter of credit no. 90/3446/0010 was adjudicated by the court bench No. 4 with a judgment Doubtful debt against Bank Saderat ordering this bank to pay the principal amount of 249, 681 million rials and amount of 7, 491 million rials - for litigation cost, lawyer’s fee as per the tariffs and late payment penalty, from the date the claim 0 0

was brought versus Saderat Bank until the collection date of these sums on the basis of inflation index rate as Total 38,368 71,320 51,555 Rls (M)

648,616 764,288

2,361,606 4,821,690 2,152,742 7,521,081 6,709,700 5,685,580

12,935,279 announced by the Central Bank of Iran in the amount of Rls. 262,450/- million. Reciprocally, Bank Saderat made 89,979,658

133,741,483 an appeal against this judgment with the court of appeal (Court of Revision). The Bench No. 18 of Tehran Appeal

Court upheld the initial court’s judgment in favor of Saman Bank. Upon the request made by Saman Bank lawyers, ) ) ) ) ) ) ) an enforcement writ was issued against Saderat Bank and an amount of Rls. 519,624/- million in total was ) 0 0 0 0 0 0 0

fee 281 ( 2,641 collected and credited in favor of Saman Bank. 7,523 20,723 ( ( Rls (M) 278,266 589,777 590,638 ( Deferred ( ( ( 3,782,045

( (5,271,894) interest and

Rls (M) ) ) ) ) ) Remedy sought (Principal amounnt) 249,682 ) 0 0 0 0 0 0 0 0 0

6,505 7,779 15,650 30,010 ( ( Late payment penalty as of July 17, 2012 262,450 Rls (M) ( ( interest 1,682,773 3,545,903 ( ( Unrealized (5,288,620)

Lawyer's fee 7,490 March 20, 2017

519,622 ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0

Group

In all cases, at the request of Saman Bank’s lawyers an attachment order was issued against Bank Saderat Rls (M) 282,681 accounts Amounts ( 3,726,079

( (4,008,760) Muzarabeh partnership received for

and joint civil

for the amounts inserted in the letters of credit for 11 of such items under Nos. 90/3446/0015, 90/3446/0021, 90/3446/0017, 90/3446/0037, 90/3446/0038, 90/3446/0018, 90/3446/0031, 90/3446/0028, 90/3446/0027,

90/3446/0019, 90/3446/0022 Judgements were issued against Bank Saderat enforcing this Bank to pay the

0 0 0 principal amounts and costs sustained in each case. 0

227

Rls (M) 23,526 23,679

245,730 139,168 567,617 275,236 192,347

4,640,027 4,649,926 receivable Balance of

11,201,444

21,958,927

late penalties Pasargad Bank

As regards the letters of credit of Pasargad Bank, this bank has filed a lawsuit versus the claims which is now

pending at Bench No. 7 of the Public Court of Law. 0 0 0 0

fee 840

1,333 1,775 5,916

Rls (M) interest 518,118 347,794 320,513 798,593 459,260

1,516,847 Balance of

10,524,518

14,495,507

recievable and

0 0

Rls (M) 38,368 86,184 28,895

401,553 764,288 interests

principal,

1,710,825 3,906,279 1,909,123 8,969,260 9,454,054 1,183,849 7,641,825 Balance of

unrealized

75,761,820

111,856,323 and deferred

The loans granted by the group are listed in following table: 11-1- Debtors of credit cards paid Debtors of LGs paid Murabahah (Sale contracts) Debtors of LCs paid Salaf (future contracts) Loans granted in forex Hire purchase Jealeh (service contracts) Estesna'a Sales by installments Other loans granted in rial Factoring Muzarabah (trade contracts) Interest free loan (Qarzolhasaneh) Civil partnership-(Mosharakat Madani) 11- Loans granted to and amounts due from non-governmental entities persons

78 Financial Report 79 11-3- Classification of Group loans granted to and amounts due from non-governmental entities/persons based on the regulations adopted by the Money and Credit Council (Note 8-6 to the financial statements) breaks 0 0 down as follows:

Net 9,214

37,677 14,548 Rls (M)

140,970

1,232,566 2,061,823 5,038,074 2,093,045 3,402,453 4,869,175 4,800,797

13,511,349 89,776,296

126,987,987

March 19, 2016 Group March 20, 2017 Current Overdue outstanding doubtful Total 0 0 Net 38,368 71,320 38,077 Rls (M) 535,648 764,288 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 1,345,084 4,786,321 2,088,736 7,504,761 5,657,668 6,651,517 11,990,828 86,277,585 127,750,201 Sales by installments 10,099,997 2,813 2,475 171,040 10,276,325

)

) Jealeh (service contracts) 7,764,152 67,738 968 1,649,260 9,482,118 ) ) ) ) ) ) ) ) Hire purchase 371,871 3,830 105 1,814,467 2,190,273 0 0 0 0 0

35,369 13,479 64,006 16,320 27,913 58,183

Rls (M) Salaf (future contracts) 25,336 0 0 28,858 54,194 112,968 944,451 ( ( ( ( ( ( ( ( Provision 1,016,523 3,923,307 ( ( (6,212,519) Doubtful debt Murabahah (Sale contracts) 86,771 0 0 480 87,251 Interest free loan (Qarzolhasaneh) 759,740 2,515 1,511 520 764,286 Muzarabah (trade contracts) 9,035,698 451,095 439,233 3,882,571 13,808,597 0 0

Total 38,368 71,320 51,556 Civil partnership-(Mosharakat Madani) 80,537,503 1,420,563 3,004,359 12,525,355 97,487,780 Rls (M)

648,616 764,288

2,361,607 4,821,690 2,152,742 7,521,081 5,685,581 6,709,700

12,935,279 90,200,892

133,962,720

Factoring 5,235,747 0 0 1,047,389 6,283,136 Other loans granted in rial 0 0 0 0 0 ) ) ) ) ) ) ) ) Estesna'a 0 0 0 0 0 0 0 0 0 0 0 0

fee 281 ( 2,641 7,523

20,723 Loans granted in forex 2,462,479 0 0 2,359,212 4,821,691 ( ( Rls (M) 278,266 589,777 590,638 ( Deferred ( ( ( 3,782,045

( (5,271,894) interest and Debtors of LCs paid 746,635 1,621,476 2,368,111 Debtors of LGs paid 338,008 310,608 648,616 ) ) ) ) ) ) Debtors for credit cards paid 38,367 0 0 0 38,367 0 0 0 0 0 0 0 0 0

6,505 7,779 15,650 30,010 117,502,304 1,948,554 3,448,651 25,411,236 148,310,745 ( ( Rls (M) ( ( interest 1,682,773 3,545,903 ( ( (5,288,620) Unrealized Less: March 20, 2017 Unrealized interest (5,288,617) (5,288,617) ) ) Deferred Interest and fee (195,884) (520,571) (4,555,435) (5,271,890) 0 0 0 0 0 0 0 0 0 0 0 0 0

Joint Civil partnership (3,726,078) 0 0 0 (3,726,078) Rls (M) 282,681 accounts Amounts ( 3,736,999

( (4,019,680) Muzarabeh partnership received for

and joint civil

Parent Company Amounts received for Muzarabah (trade contracts) (282,680) 0 0 0 (282,680) Net loans granted before deducting provision for

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

doubtful debts

0 0 0 0

General provision for doubtful debts (1,776,443) (1,776,443) 227

Rls (M) 23,526 23,679

245,730 139,168

567,617 275,236 192,347

4,640,027 4,649,926 receivable Balance of

11,201,444

21,958,927

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

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

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

0 0 0 0

840

1,333 1,775 5,916

Rls (M) Balance and fee 518,118 347,794 320,513 459,260 798,593

of interest 1,516,847 recievable

10,539,547 14,510,536

0 0

38,368 Rls (M) 86,184 28,896

401,553 764,288 interests

principal,

1,710,826 3,906,279 1,909,123 8,969,260 1,183,850 7,641,825 9,454,054 Balance of

unrealized

75,978,945

112,073,451

and deferred

The loans granted by the parent company are listed in following table:

Debtors of credit cards paid Debtors of LGs paid Debtors of LCs paid Murabahah (Sale contracts) Loans granted in forex Salaf (future contracts) Estesna'a Hire purchase Other loans granted in rial Jealeh (service contracts) Factoring Muzarabah (trade contracts) Sales by installments Interest free loan (Qarzolhasaneh) Civil partnership-(Mosharakat Madani)

11-2-

80 Financial Report 81 11-4- Classification of the parent company loans granted to and amounts due from non-governmental 11-5- Provision for doubtful debts of the parent company breaks down as follows: entities/persons based on the regulations adopted by the Money and Credit Council (Note 8-6 to the financial statements) breaks down as follows: March 20, 2017 March 19, 2016

General General Specific provision Total Specific provision Total Parent Company provision provision March 20, 2017 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Current Overdue outstanding doubtful Total Balance at the beginning of the year 1,779,761 4,132,752 5,912,513 1,688,488 3,649,285 5,337,773 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Bad debts (Written-off) 0 0 0 0 (191,216) (191,216) Sales by installments 10,099,997 2,813 2,475 171,040 10,276,325 Provision for current year 0 300,000 300,000 91,273 674,686 765,959 Jealeh (service contracts) 7,764,152 67,738 968 1,649,260 9,482,118 Balance at the year-end 1,779,761 4,432,752 6,212,513 1,779,761 4,132,755 5,912,516 Hire purchase 371,871 3,830 105 1,814,467 2,190,273 Salaf (future contracts) 25,336 0 0 28,858 54,194 Murabahah (Sale contracts) 86,771 0 0 480 87,251 11-6- Loans granted by the parent company in foreign currency by a breakdown of Interest free loan (Qarzolhasaneh) 759,740 2,515 1,511 520 764,286 payment resources Muzarabah (trade contracts) 9,035,698 451,095 439,233 3,882,571 13,808,597 March 20, 2017 March 19, 2016 Civil partnership-(Mosharakat Madani) 80,769,659 1,420,563 3,004,359 12,525,355 97,719,936 Current Overdue Outstanding Doubtful Total Total Factoring 5,235,746 0 0 1,047,389 6,283,135 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Other loans granted in rial 0 0 0 0 0 Estesna'a 0 0 0 0 0 Local resources 2,462,478 0 0 2,288,268 4,750,746 4,965,833 Loans granted in forex 2,462,479 0 0 2,359,212 4,821,691 Forex reserve account 0 0 0 70,945 70,945 70,945 Debtors of LCs paid 746,634 1,621,476 2,368,110 National Development Fund 0 0 0 0 0 1,297 Debtors of LGs paid 338,006 310,608 648,614 Syndicated loans 0 0 0 0 0 0 Debtors for credit cards paid 38,366 0 0 0 38,366 2,462,478 0 0 2,359,213 4,821,691 5,038,075 117,734,455 1,948,554 3,448,651 25,411,236 148,542,896 Less: Unrealized interest (5,288,616) (5,288,616) 11-7- Loans granted to and amounts due from non-governmental entities/persons in Deferred Interest and fee (195,884) (520,570) (4,555,434) (5,271,888) terms of maturities and interest rates Joint Civil partnership (3,736,998) 0 0 0 (3,736,998) March 20, 2017 March 19, 2016 Amounts received for Muzarabah (trade contracts) (282,680) 0 0 0 (282,680) Over 24% 21 to 24% 18 to 21% 15 to 18% 12 to 15% 12% and less Total Total Net loans granted before deducting provision for 108,426,161 1,752,670 2,928,081 20,855,802 133,962,714 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) doubtful debts 2016 and before 16,537,786 3,512,439 1,915,465 631,649 3,205,887 2,725,691 28,528,917 27,632,649 General provision for doubtful debts (1,779,761) 0 0 0 (1,779,761) 2017 15,468,171 4,334,745 4,561,741 5,222,172 246,625 516,623 30,350,077 34,671,957 specific provision for doubtful debts (62,254) (41,326) (4,329,172) (4,432,752) 2018 7,304,539 10,226,683 4,739,548 25,457,068 841,275 2,206,701 50,775,814 47,589,809 Balance at March 20, 2017 106,646,400 1,690,416 2,886,755 16,526,630 127,750,201 2019 1,999,962 1,943,957 3,889,652 675,920 31,137 65,540 8,606,168 5,910,793 Balance at March 19, 2016 105,528,360 1,366,688 2,754,802 17,338,137 126,987,987 2020 2,515,896 643,760 24,224 1,400,541 51,133 74,626 4,710,180 8,883,015 2021 618,402 803,789 42,126 582,308 32,275 674,196 2,753,096 3,770,492 2022 and onward 356,215 128,567 9,650 1,849,196 420,263 5,474,556 8,238,447 4,441,785 44,800,971 21,593,940 15,182,406 35,818,854 4,828,595 11,737,933 133,962,699 132,900,500 March 19, 2016 61,136,372 48,941,338 9,812,257 1,649,754 4,547,196 6,813,583 132,900,500

82 Financial Report 83 )

)

) ) ) ) 11-8- Loans granted to and amounts due from non-governmental entities/persons ) ) ) 0 0 0 by a breakdown of the type of collateral Total 300,000 306,573 282,681 Rls (M) ( ( ( 5,912,513 6,212,513 3,059,597 3,736,999 17,075,470 ( ( ( ( 31,322,518 36,469,447 22,222,399 286,382,522 (

282,951,317 126,987,987 127,750,201 104,944,152 101,512,947 (

)

2017 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Rls (M) cards 9,214 9,214 credit 97,715 of paid

38,365 38,365

(

126,866 Rls (M)

Debtors Deposit 5,461,491 )

) )

)

Participation bonds and other debt securities guaranteed by the government 0 0 0 0 0 0 0 0 0

68,746 of paid 13,357 112,966 112,966 (

535,648 401,551 302,452 247,063 Rls (M) ( (

2,370,402

letters of 1,728,871 1,232,568 1,043,082 Debtors

guarantee Participation bonds and other debt securities guaranteed by other banks 6,761 (

) ) )

Banking letters of guarantee 6,295 ) 0 0 0 0 0 0 0 0

Letters of credit transacted 3,363,844 3,405 credit ( of paid

556,189 657,286 104,502 Rls (M) letters of

8,049,486

1,016,521 1,016,521

Debtors 7,231,647 2,061,824 1,345,082 2,522,156 1,704,317

( ( (

)

Shares listed on the stock exchange 2,044,870 )

) ) 0 0 0 0 0 0 0 0

Land, buildings and machinary 37,748,240 forex 35,367 35,367 Loans 554,178 ( ( 915,411 441,738 Rls (M)

( 8,677,153

8,537,839 5,038,076 4,786,322 4,045,592 3,906,278 1,027,851 granted in (

Checks and promissary notes 69,314,756 Binding/irrevocable contracts 7,981,353

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

in rial loans Other

Rls (M)

Other 8,035,104 granted

133,962,714 )

0 0 0 0 0 0 0 0 0 0 0 0 0 0

Free

Unsecured loans and claims (without security) 0 93,665

( 716,980 140,970 764,285 140,970 764,285 Rls (M)

interest

133,962,714

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Rls (M) Exchange) Estesna'e 11-8-1- The information for the year 2015 could not be provided since the detailed description of collaterals (Contracts of was not available. )

)

0 0 0 0 0 0 0 0 0 0

ncluded the accrued and cash interests aand the amounts collected consisted of the the of consisted collected amounts the aand interests cash and accrued the ncluded 625 (Sale 2,989

3,432 1,068 45,977 ( 79,176 37,052 70,251 37,677 71,319 (

Rls (M) contracts) Murabahah

)

) ) ) 0 0 0 0 0 0 0 0

4,309 27,913 27,913 ( 287,570 ( ( 121,879 468,724 586,294 958,490 Rls (M) (

4,869,177 5,657,667 4,428,366 5,099,286

Factoring )

)

) ) ) ) )

0 0 0 0 0

Civil 300,000 Rls (M) ( 3,623,307 3,923,307 3,059,597 3,736,999 13,753,132 ( ( ( ( 77,583,128 72,196,906 89,776,298 86,277,590 18,876,074 16,618,048 21,740,990 254,165,954 (

248,779,732 (

partnership

) )

) ) ) ) 0 0 0 0 0 0

944,451 944,451 306,573 282,681 Rls (M) ( ( ( ( 5,776,550 2,064,284 3,379,178 9,448,564 7,051,192 5,313,809 2,917,246 6,166,771 ( (

13,511,349 11,990,831

Murabahah ) )

0 0 0 0 0 0 0 0 0 0 0

1,773 Salaf Salaf 13,479 13,479

26,254 26,254 14,548 38,074 23,526 25,299 (future (future ( (

Rls (M) contracts)

)

) )

) 0 0 0 0 0 0 0 0

8,755 Hire 64,006 64,006 ( 35,309 73,712 104,571 ( (

216,191 281,148 Rls (M) (

1,940,857 1,871,595 2,093,042 2,088,737 puchase

)

)

) ) 0 0 0 0 0 0 0 0

16,320 16,320 246,198 ( ( (service (service 459,612 299,442 512,856 Jealeh Jealeh Rls (M) ( 6,804,604

2,959,158 7,008,226 3,402,450 7,504,762 contracts) ( 10,853,672

)

) ) ) 0 0 0 0 0 0 0 0

86,213 58,183 58,183 192,136 ( ( ( 139,576 768,906 822,269 Rls (M) (

4,719,401 1,360,168 5,887,433 4,800,794 6,651,519 Sales by by Sales

installments installments

11-9- Turnover of loans granted to and amounts due from non-governmental entities/persons collected portion of accrued and cash interests during the period. The interest on loans included the granted and late payment penalty. amount increased during period i Principal loan amounts Balance at March 19, 2016 Effect of forex exchange rates during the period Effect of forex exchange rates during the period Granted during the year Collected during the year Balance at March 20, 2017 Interest on loans granted Balance at March 19, 2016 Increased during the year Collected during the year Balance at March 20, 2017 Provision for doubtful debts Balance at March 19, 2016 Increased during the year Bad debts (written-off) during the year Balance at March 20, 2017 Amounts received for Muzarabeh(trade contracts) Balance at March 19, 2016 Balance at March 20, 2017 Joint civil partnership account Balance at March 19, 2016 Balance at March 20, 2017 Net loans granted Balance at March 19, 2016 Balance at March 20, 2017

•

84 Financial Report 85 )

)

11-11- Loans granted to and amounts due from non-governmental entities/personsby a breakdown of customer type 0 0 Total Rls (M) 4,428,545 6,558,161 11,812,099 (

14,829,406 11,493,222 36,469,447 21,958,918 31,322,524 14,510,529 19,829,302 (

March 20, 2017 March 19, 2016

Provision for Provision for 0 0 0 0 0 0 0 0 0 0 0 0 Gross amount Net Gross amount Net

doubtful debts doubtful debts cards credit of paid

Rls (M) Debtors

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

0 0 0 0 Natural customers 35,664,829 (649,016) 35,015,813 37,450,179 (649,017) 36,801,162 of paid 1,333 1,333 68,746

Rls (M)

13,357 letters of (

247,062 302,451 301,118 245,729 Debtors

guarantee

Legal customers 95,214,917 (5,563,497) 89,651,420 92,936,331 (5,263,499) 87,672,832

of ) Personnel 3,082,968 0 3,082,968 2,513,993 0 2,513,993 0 0 0 0

3,405 133,962,714 (6,212,513) 127,750,201 132,900,503 (5,912,516) 126,987,987 ( of credit Rls (M) 104,502 657,285 417,020 556,188 139,168 139,168 518,117

paid letters Debtors

) )

0 0 forex Loans Rls (M)

256,176 298,002 11-12- Loans granted by the Group to the affiliated companies are as follow 173,102 915,409 430,867 596,983 268,635 567,616 347,793 granted in ( (

1,027,850

0 0 0 0 0 0 0 0 0 0 0 0 Group

in rial loans Other

Rls (M) granted March 20, 2017 March 19, 2016

0 0 0 0 0 0 0 0 0 0 0 Interest Provision for 0

Current Non-current Total Net Free

rates doubtful debts Rls (M) interest

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

0 0 0 0 0 0 0 0 0 0 0 0

Related parties

Rls (M) Exchange) Estesna'e (Contracts of Adonis Co. 18-24 93,220 0 (1,399) 91,821 69,826

)

Saman Kish Electronic )

18 83,703 0 (1,256) 82,447 0 0 0 0 Payment Co. 266 625 625 493 840 227 (Sale (

2,724 2,939 1,067 ( Rls (M)

contracts) 176,923 0 (2,655) 174,268 69,826 Murabahah

)

)

0 0 8,020 33,140 Rls (M)

254,430 ( 484,379 950,470 459,259 (

Factoring 3,943,986 4,428,365 5,099,285 4,640,026

11-13- Loans granted by the parent company to subsidiaries and affiliates are as follows )

)

0 0 Parent Company Civil

Rls (M) March 20, 2017 March 19, 2016 2,942,020 8,471,333 3,738,723 10,144,869 (

12,213,082 10,404,741 18,876,074 21,740,990 10,539,546 11,201,444 partnership (

Provision for )

Interest Current Non-current Total Total ) doubtful debts 0 0 Group companies Percentage Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 831,916 ( 1,063,782 1,350,772 4,083,954 5,313,810 6,166,770 1,229,856 1,397,886 1,516,846 4,649,924 (

Murabahah Saman Kish Electronic Payment Co. 0 0 0 0 181,780

Saman Satellite Communications Co. 18 43,077 0 (647) 42,430 15 0 0 0 0 0 0

Salaf Salaf (future (future 1,775 1,775 1,775 Saman Pardazeshgaran Co. (Processing) 0 0 0 0 9,694 Rls (M)

25,301 23,526 23,526

contracts)

Saman Brokerage Co. 15-18 111,153 0 (1,668) 109,485 27,616 )

) 0 0 Sepehr Mehr 22 67,003 0 (1,006) 65,997 77,015 312 Hire ( 8,443 3,963 5,916 ( Rls (M)

10,396 63,316

216,193 281,150 212,230 275,234 puchase

Other related perties )

)

Adonis Co. 18-24 93,220 0 (1,399) 91,821 69,826 0 0 32,389 (service (service Jealeh Jealeh Rls (M) 77,775 213,810 (

221,667 459,615 512,858 312,655 146,960 320,512 192,346 contracts) Saman Kish Electronic Payment Co. 18 83,703 0 (1,256) 82,447 0 (

) 398,156 0 (5,976) 392,180 365,946

)

0 0 464 162 (

85,750 Rls (M) 23,980 23,678 (

744,926 139,578 822,270 139,416 798,592 Sales by by Sales

installments installments 11-10- Turnover of interests accrued on the loans granted to and amounts due from non-governmental entities/persons Collected during the year Increased during the year Collected during the year Interests on loans granted Balance at March 19, 2016 Balance at March 20, 2017 Interest receivable on loans granted Balance at March 19, 2016 Effect of foreign exchange rate during the period Late penalties for loans granted Balance at March 19, 2016 Increased during the year Effect of foreign exchange rate during the period Balance at March 20, 2017 Balance at March 20, 2017

86 Financial Report 87 12- Investments in shares and other securities 12-1- Parent company’s investments in quickly marketable shares are as follows: 12-1-1- Current investments in quickly marketable shares

Group March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Number of Net sale Net sale Origin Investment Cost Cost Note Current Long-term Total Current Long-term Total shares value value Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Percentage Rls (M) Rls (M) Rls (M) Rls (M) Investment in quickly marketable Shares of listed companies 401,219 84,942 486,161 634,690 84,929 719,619 shares Isfahan Mubarakeh Steel Mill Purchase 16,456,434 0.02 20,072 22,948 9,604 8,789 Iran Construction Investment Co. Purchase 8,911,790 0.82 33,259 21,318 37,620 40,272 Investment in other shares/stocks 12-2 0 422,896 422,896 0 251,387 251,387 Iran Telecommunication Purchase 4,899 0.00 15 11 144 144 Investment in other securities 11,730 132,134 143,864 473,257 87,131 560,388 Purchase 19,277,199 0.19 33,306 19,422 31,871 30,506 412,949 639,972 1,052,921 1,107,947 423,447 1,531,394 Shomal Drilling Co. Purchase 2,171,445 0.08 11,492 7,227 71,537 54,607 MAPNA Purchase 7,377,750 0.07 59,265 55,508 54,781 65,184 Azar Ab Purchase - - 0 0 4,995 5,241 Purchase 6,852,952 0.014 13,448 7,494 15,828 15,208 Parent company Iranian Leasing Purchase 29,493,077 2.95 56,198 45,214 58,791 44,356 March 20, 2017 March 19, 2016 Sepah Investment Purchase - - 0 0 52,753 31,093 Note Current Long-term Total Current Long-term Total Saderat Bank Purchase 11,600,000 0.020 12,884 10,389 12,884 12,192 Passargad Bank Purchase - - 0 0 56,603 33,676 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Tooka Foulad Investment Co. Purchase 43,522,499 1.67 58,654 52,206 37,945 37,962 Investment in quickly marketable 12-1 397,384 84,942 482,326 634,050 84,929 718,979 Tooka Foulad Investment Co. - rights issue Purchase 6,750,000 - 2,346 1,235 0 0 shares Purchase 14,920,000 0.29 35,268 26,254 44,007 58,259 Investment in other shares/stocks 12-2 0 2,166,433 2,166,433 0 1,975,654 1,975,654 Sahand Tire Manufacturing (Lastik) Purchase - - 0 0 4,871 4,061 Investment in other securities 12-3 0 129,034 129,034 458,903 85,031 543,934 Kharazmi Investment Purchase 30,000,000 0.24 42,158 23,871 60,327 55,871 397,384 2,380,409 2,777,793 1,092,953 2,145,614 3,238,567 Tooka Transport Purchase 8,998,711 2.73 19,935 25,498 28,865 32,161 Tractor Manufacturing Co. Purchase - - 0 0 3,268 3,000 Fajr Petrochemical Co. Purchase - - 0 0 8,228 7,894 Piazar Agro-Industry Co. Purchase - - 0 0 1,911 1,653 Oil Industry Purchase 1,000,000 - 2,504 1,783 0 0 Mines and Metals Investment Development Co. Purchase - - 0 0 10,851 5,786 Alborz Insurance Purchase - - 0 0 1,313 1,150 Purchase 3,154,455 - 10,291 8,135 24,895 35,850 Shahed Investment Purchase - - 0 0 2,705 2,817 Iran Khodro Investment Development Co. Purchase 500,000 0.02 2,388 1,745 9,533 10,659 Mobin Petrochemical Co. Purchase - - 0 0 2,059 1,975 Bahman Investment Co. Purchase - - 0 0 2,742 2,794 Mellat Leasing Purchase - - 0 0 0 0 Ansar - Rights issue Purchase 6,481 - 7 4 0 0 Shiraz Petrochemical Co. - Urine salaf Purchase 2,000 - 14,037 16,159 0 0 Informatic services Purchase 144,757 0.005 2,702 2,723 0 0 430,229 349,144 650,931 603,160 Shares of listed companies on Farabourse (OTC) Tooka Rail Purchase 19,186,128 0.96 50,318 40,161 30,248 29,387 Tooka Refractory Industries Purchase - - 0 0 1,007 916 Shahid Civil and Development Co. Purchase - - 0 0 129 133 Damavand Power Generation Purchase - - 0 0 223 241 Khavarmianeh Life Insurance Purchase 200,000 - 100 98 100 197 Tehran Housing Purchase - - 0 0 0 0 Alhavi Pharmaceutical Co. Purchase 1,277,010 0.35 6,204 5,366 0 0 Taliseh Nemouneh Purchase 189,860 0.27 1,628 1,674 0 0 A.S.P. Purchase 932,047 0.12 1,120 926 0 0 59,370 48,225 31,707 30,874 489,599 397,369 682,638 634,034 Added (Less) Cost price adjustment (92,215) 0 (48,588) 0 397,384 397,369 634,050 634,034

88 Financial Report 89 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

value Rls (M) Market 0

247 18,917 Rls (M) 111,769 130,933 Market value

)

3 5 (

50 30 10 75 10 March 19, 2016

500 490 155 101 -

value 2,674 6,140 3,243 7,975 9,315

Rls (M)

40,567 15,050 96,600 68,400 251,387

182,987 Net book

March 19, 2016 0 247 4,704 value 79,978 84,929 Rls (M) Net book 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

value Rls (M) Market

0

260 ent.

25,894

Rls (M) 106,724 132,878

0 0 0 0 5 5

60 75 10

490 490 155 101 Market value

value 2,674 6,140 3,243 7,975 9,315 68,400

Rls (M)

15,050 96,600 422,896

354,496 212,108 Net book

0

260 4,704 value 79,978 84,942 Rls (M) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Net book value Rls (M) impairment Accumulated

)

0

0 0

316

( (316)

value Rls (M) 0 0 0 5 5

60 75 10

490 490 155 101 Cost -

impairment 2,674 6,140 3,243 7,975 9,315

Rls (M)

Accumulated 15,050 96,600 68,400 422,896

354,496 212,108

0 575 March 20, 2017 Cost 4,703 79,978 85,256 - Rls (M) 0 0 6 0 0 0 0 3 1 0 48 49 15 15 2.5 0.8 0.1 0.03 0.02 99.9 March 20, 2017 Investment percentage

Group

0

shares 0 0 0 0 309,535

49 9,120,859

480 490 Number of 13,208,418

1,520 9,990 shares

70,000 75,100

321,082 189,522

2,672,000 6,195,000 1,241,665 Number of

15,050,000 15,950,000 22,304,000

126,307,834 119,191,532

0 0.54 4.59 2.28

Investment percentage Percentage

Origin Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Purchase Establishment Establishment 0 Purchase and ownership Origin Purchase Purchase Purchase Investments in other shares by this bank all include long-term investments while current are practically non-exist Investments in other shares are as follows: 12-2-1- 12-2-2- Long-term investment in other shares 12-1-2- Long-term investments in quickly marketable shares 12-2- Plastiran Hamedan Glass Works Shares of companies listed on the stock exchange Iran Pump Manufacturing Co. Shares of companies listed on Farabourse Co. (OTC) Middle Easht Arian Roll Added: Segal Software Co. Persian Gulf Trading Co. Aftab Tejarat Saman Co. Sarv Zarrin Atlas Iran Energy Exchange Information Services Co. Stock Exchange Co. Iran Farabourse Iran Credit Rating Co. Saman Insurance Kish Cell Pars Iran Investment Co. Tosee Omid Atieh Andish Co. Central Securities Depository and Settlement Co. Shaparak Electronic Payment Co. Saman Investment Development Co. Atieh Alborz Trading Development Samaneh Kish Electronic Development Co. Atieh Andishan Sepehr Shargh Information Technology Investment prepayment in C.I.P. shares (Iranian Pars Technology)

90 Financial Report 91 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

value Rls (M) Market 12-2-3- Particulars of Saman Bank subsidiary and affiliated companies are as follows:

Invesment Domiciale Auditing firm Main activities

5 percentage 10 March 19, 2016 105 3,243 4,565 7,975 9,315 value 35,700 27,762 96,600 15,050 68,400 46,405 Rls (M) 214,625 408,533 112,529 789,859 134,973 Net book 1,975,654 1,907,254 Parent Group Company Subsidiaries 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

value Saman Brokerage Co. Tehran 64 64 Sokhan Hagh Investment, brokerage and Rls (M) Market

Providing information on scoring and credit Hafez Saman Iranian Credit Scoring Co. Tehran 99.15 99.15 Sokhan Hagh rating services

5 Scientific and research activities in computer, 10

105 Tondar Noor Tehran 100 0 Sokhan Hagh 3,243 4,565 7,975 9,315 value 40,561 96,600 15,050 68,400 46,405 development and sale of software Rls (M) 207,217 214,625 649,208 112,529 587,147 103,473 Net book 2,166,433 2,098,033

Saman Exchange Co. Tehran 96.46 96.46 Azmoon Pardaz Trading types of foreign currency

Providing services for data transfer, Saman Satelite Communication Co. Tehran 61.85 48.08 Azmoon Pardaz ) ) communication and satellite telecommunication

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

8,331 8,331 value ( ( (8,331) Rls (M) Design, development and support of core Pardazeshgaran Saman Tehran 100 100 Sokhan Hagh

impairment banking-based products, applications and tools Accumulated

Atieh Andishan Sepehr Shargh Co. Tehran 100 99.7 Bayat Rayan Provision of technical and engineering services

Atieh Andishan Sepehr Shargh

Ajabshir 100 0 Bayat Rayan Production of iron ingots from iron scrappings Services Development" 5

10

105 Cost

3,243 4,565 7,975 9,315 Rls (M)

40,561 96,600 15,050 68,400 54,736

207,217 214,625 649,208 112,529 587,147 103,473

2,174,764

2,106,364 Provision of technical and engineering services,

Atieh Andishan Sepehr Mehr Co. Tehran 100 0 Bayat Rayan purchase and sale of all authorized goods and commodities Affiliates March 20, 2017 2 0 6 1 0 3 1 64 15 96 15 32 48 28 99

100 100 Investment, subscription, securities Kardan Investment Bank Tehran 33.3 32.3 Tadvin & Co. underwriting Investment percentage

Saman Electronic Payment Co. Tehran 43.04 27.8 Sokhan Hagh Provision of E-payment services

Provision of services in IT, computer devices,

Adonis Electronic Services Co. Tehran 24.19 0 Mokhtar & Co. Parent Company

electronic and telecommunication equipment 1,500 9,970 shares

874,999 321,082

4,566,000 Number of

31,999,000 21,125,000 15,050,000 96,155,556 49,000,000 15,950,000 22,304,000

121,982,834 119,191,532 646,666,400 500,998,179 100,000,000

12-3- Investments in other securities by the parent company are as follows:

Issuer Origin Type of security Interest rate 2017 2016

Percentage Rls (M) Rls (M) Origin Purchase Purchase Purchase Purchase Purchase Purchase Purchase Government and state-run corporations Establishment Establishment Establishment Establishment Establishment Establishment Establishment Establishment Government Purchase Islamic treasury bonds - 0 458,902 Purchase and ownership Purchase and ownership

Banks - - - 0 0 Other companies and mutual funds Novin Saman Fixed-Income Fund Establishment Privileged investment unit 19 15,000 15,000 Ordinary and privileged Saman Joint Venture Fund - Yekom Establishment 15,000 15,000 investment unit Agah Charity Fund - Yekom Establishment Privileged investment unit 2,500 2,500 Amin Saman Mutual Fund Establishment Privileged investment unit 16 10,000 10,000 Iran Capital Market Development Mutual Fund Establishment Ordinary investment unit 35,000 35,000 Aghigh Mutual Fund Ordinary investment unit 0 4,998 Nik-Andishan Honar Charity Mutual Fund Purchase Ordinary investment unit 2,534 2,534

Negin Saman Fixed-Income Fund Establishment Privileged investment unit 18 49,000 0 (in the formation process)

129,034 543,934 Middle East Bank Stock Exchange Co. Saman Brokerage Co. Aftab Tejarat Saman Co. Iran Credit Rating Co. Added: Saman Exchange Co. Saman Insurance Co. Iran Energy Exchange Iran Investment Co. Kardan Investment Bank Saman Satelite Communication Co. Saman Electronic Payment Co. Central Securities Depository and Settlement Co. Hafez Saman Iranian Credit Scoring Co. Pardazeshgaran Saman Co. (Processing) Atieh Andishan Sepehr Shargh Co. Shaparak Electronic Payment Co. Investment prepayment in C.I.P. shares (Iranian Pars Technology)

92 Financial Report 93 14-2- The balance of the parent company’s amounts due from subsidiaries and affiliates based on the inter-group 13- Long-term investments in affiliated companies transactions consists of the following:

Group March 20, 2017 Provisional Assets and Provisional Iner-group Share of net Share of total Assets and Services amounts Dividends Dividends Goodwill investments amounts paid interest-free Total Name of subsidiary/affiliate investments sold purchased received recievable payable assets net assets purchased (on-account) loans (on-account) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Balance at the beginning of the year 624,175 0 624,175 Saman Exchange Co. 0 0 5,563 0 2,246 0 284,560 0 292,369 Hafez Saman Iranian Credit Scoring Asquisition during the year 828,809 121,363 950,172 0 0 0 0 24,913 0 54,532 0 79,445 Co. Partial payment of subscribed capital 235,775 0 235,775 Saman Kish Electronic 0 0 0 0 7,100 0 504,312 0 511,412 Share of profit in affiliates before goodwill depreciation 183,410 0 183,410 Payment Co. Dividends received or receivable during the year (190,492) 0 (190,492) Pardazeshgaran Saman 0 62,423 0 0 116,396 0 31,500 0 210,319 (processing Goodwil depreciation 0 (12,053) (12,053) Saman Brokerage Co. 0 0 0 0 358 0 4,799 0 5,157 1,681,677 109,310 1,790,987 Adonis Co. 0 0 2,025 0 29 0 0 0 2,054 Satelite Communication Co. 0 0 0 0 1,881 0 32,694 0 34,575 Atieh Andishan Sepehr Shargh 0 1,970,675 0 0 30 0 2,518 0 1,973,223 Atieh Andishan Sepehr Mehr 0 0 0 0 5,792 0 0 0 5,792 14- Amounts due from subsidiaries and affiliates Kardan Investment Bank 0 0 0 0 0 0 264,600 0 264,600 Atieh Andishan Sepehr Shargh 0 0 0 0 200,000 0 0 0 200,000 Services Development Group 0 2,033,098 7,588 0 358,745 0 1,179,515 0 3,578,946 Net transactions gain (loss) March 20, 2017 March 19, 2016 0 Doubtful debts Balance due Net Net provision March 19, 2016 Rls (M) Rls (M) Rls (M) Rls (M) Provisional Assets and Provisional Iner-group Assets and Services amounts Dividends Dividends Due from subsidiaries 73,868 0 73,868 71,677 investments amounts paid interest-free Total Name of subsidiary/affiliate investments sold purchased received recievable payable purchased (on-account) loans Due from affiliates 513,465 0 513,465 10,521 (on-account) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 587,333 0 587,333 82,198 Saman Exchange Co. 0 0 14,973 0 3,958 0 120,576 (84) 139,423 Hafez Saman Iranian Credit Scoring 0 0 806 0 79,486 0 19,830 0 100,122 Co. Parent company Saman Kish Electronic 0 0 227 0 48 0 596,005 0 596,280 March 20, 2017 March 19, 2016 Payment Co. Balance Doubtful debts Pardazeshgaran Saman Net Net 0 62,423 0 0 20,241 0 9,000 0 91,664 due provision (processing) Rls (M) Rls (M) Rls (M) Rls (M) Saman Brokerage Co. 47,273 0 0 0 13 0 14,335 0 61,621 Due from subsidiaries 2,800,881 0 2,800,881 1,020,001 Adonis Co. 0 3,408 2,064 0 5,048 0 0 0 10,520 Due from affiliates 778,065 0 778,065 10,521 Satelite Communication Co. 0 0 295 0 2,660 0 22,115 0 25,070 Atieh Andishan Sepehr Shargh 0 0 0 0 12 0 18 0 30 3,578,946 0 3,578,946 1,030,522 Atieh Andishan Sepehr Mehr 0 0 0 0 5,792 0 0 0 5,792 47,273 65,831 18,365 0 117,258 0 781,879 (84) 1,030,522 Net transactions gain (loss) 0 14-1- Considering the fact that the fiscal year of Group Companies will end on 21st December of each year (end of Azar based on the Iranian calendar year) namely three months earlier than the end of the bank’s fiscal year, the amounts due from subsidiaries have not been entirely eliminated in consolidated operations. Whereas such amounts do not affect the consolidated financial statements in their entirety, adjustments have not been therein made (in accordance with the accounting standards).

94 Financial Report 95 14-3- Pursuant to the directive adopted by the Money and Credit Council (Note 8-6), the amounts due from 15-1- The balances of dividends receivable excluding the dividends from subsidiaries and affiliates are as follows: subsidiary and affiliated companies are classified as follows: March 20, 2017 March 19, 2016 Parent company Rls (M) Rls (M) March 20, 2017 Companies listed on the stock exchange and Farabourse (OTC) Current Overdue Outstanding Doubtful debts Total Shomal Drilling Co. 32,905 29,840 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Housing Investment Co. 4,090 5,450 Due from subsidiaries 2,800,881 0 0 0 2,800,881 Chadormalou Co. 1 1,921 Due from affiliates 778,065 0 0 0 778,065 Mines and Metals Development Co. 6,880 9,947 Net amounts due from subsidiaries and affiliates 3,578,946 0 0 0 3,578,946 Barez Industrial Co. 3 1,069 before doubtful debts provision Bahman Group 2,366 12,558 Less: Tooka Foulad Investment 13,960 7,611 General provision for doubtful debts 0 0 0 0 0 Tamin Pharmaceutical Investment Co. 1 1,756 Specific provision for doubtful debts 0 0 0 0 0 Sepah Investment Co. 11,781 39,223 Balance at March 20, 2017 3,578,946 0 0 0 3,578,946 Behshahr Industries Development 0 4,065 Balance at March 20, 2016 1,030,522 0 0 0 1,030,522 Tooka Transport Co. 0 1,830 Rayan Saipa 27 1,317 National Development Investment Group 0 6,520 Isfahan Mobarakeh Steel Mill 4,003 8,920 Mapna Group 1,844 1,590 15- Other accounts receivable Iranian Leasing Co. 0 6,152 Ghadir Investment Co. 0 1,519 Saman Insurance Co. 62,347 1 Group Iran Pump Manufacturing Co. 2,850 2,850 March 20, 2017 March 19, 2016 Hamedan Glass Works 3,774 9,374 Balance Specific provision for General provision Central Securities Depository and Settlement Co. 1,914 1,914 Net Net due doubtful debts for doubtful debts Omid Investment Co. 2,172 0 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Kharazmi Investment Co. 10,439 0 Dividends receivable from companies 212,394 0 0 212,394 191,963 Tooka Rail 5,999 0 Temporary debtors 7,540,355 (268,163) (14,718) 7,257,474 6,641,474 Middle East Bank 8,925 0 7,752,749 (268,163) (14,718) 7,469,868 6,833,437 Sina Bank 3,373 0 Passargad Bank 2,986 0 Others 7,442 6,047 Parent company 190,082 161,474 Note March 20, 2017 March 19, 2016 Balance Specific provision for General provision Net Net due doubtful debts for doubtful debts Other companies

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Saman Aftab Tejarat 1,962 1,212 Dividends receivable from 15-1 192,044 0 0 192,044 165,696 Iran Investment Co. 0 3,010 companies 1,962 4,222 Temporary debtors 15-2 5,922,470 (154,052) (14,718) 5,753,700 5,485,970 Interest accrued on participation 192,044 165,696 0 0 0 0 0 bonds Amounts due from personnel 0 0 0 0 0

6,114,514 (154,052) (14,718) 5,945,744 5,651,666

96 Financial Report 97 Balances due by temporary debtors consist of the following: 15-2- )

) ) ) )

) ) ) March 20, 2017 March 19, 2016 786 ( Total 2,162 3,920

24,079 ( Rls (M) 930,453 101,676 607,315 244,755 213,681 994,434 ( 395,053 438,284

( ( ( (

8,020,344 3,380,631 1,149,133 5,967,147 Rls (M) Rls (M) 8,704,284 2,224,653 5,795,691 6,109,443 4,142,137

2,594,841 1,825,010

(

Items related to loans ) ) Litigation and debt collection costs 2,070,257 1,358,119 0 0 0 0

2,070,257 1,358,119 stock Capital Rls (M) 125,595 555,426 316,650 536,081 286,566 144,940 items in

125,595 144,940 114,856 114,856

( (

Items unrelated to loans ) ) Debtors for sale of assets 3,649,035 4,093,843 0 0 0 0

Debtors for sale of investments 0 0 26,268 84,534 27,114 capital Rls (M) 96,089 96,089

278,119 150,878 219,853 (

278,119 219,853

(

Orders and

Debtors for financial fraud (abuses) 0 0 prepayments

Other 34,408 34,008 ) 0 0 3,683,443 4,127,851 0 0

6,719

45,422 Rls (M)

535,731 104,914 142,328 498,317 535,731 498,317 550,458 550,458

Assets in (

5,753,700 5,485,970

process of completion

) Pursuant to the directive adopted by the Money and Credit Council (Note 8.6.) other accounts receivable of ) ) 15-3- 0 0 0 0 0 0 1 0

( and 6,295 4,905 the parent company are classified as follows: 6,487

72,653 15,400 23,862 32,370 ( ( Rls (M) 55,849 38,283 22,895 96,514

128,502 134,797

145,292 122,397

in leased buildings

improvement

Refurbishment March 20, 2017 ) ) Current Overdue Outstanding Doubtful Total ) ) ) ) ) 0 0

845 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 526 ( ( 5,095 12,977 23,284 75,207 22,907 34,528 ( Rls (M)

958,804 490,705 235,723 277,687 296,100 ( ( ( (

2,046,304 2,549,141 Furniture 1,087,500 1,318,271 1,216,838 2,686,373 1,230,870 1,469,535

Dividends receivable from companies 192,044 0 0 0 192,044 and fixtures Amounts due by the personnel 0 0 0 0 0 ) ) ) ) 0 0 Interest accrued on participation bonds 0 0 0 0 0 0 0

157 153 ( ( 1,238 2,799 2,162 1,463

81,562 26,240 10,102 19,545 14,592 14,326 94,907 ( ( Rls (M) 55,322 54,228 58,111 40,679 53,542

Vehicles

111,653

Temporary debtors 3,683,443 0 0 2,239,027 5,922,470

Net amounts due from subsidiaries and affiliates before doubt- ) ) ) )

3,875,487 0 0 2,239,027 6,114,514 ) ful debts provision 0 0 0 0 0

7,665 Group 18,446 24,816 16,817 27,168 18,982 (

Less: Rls (M) 91,286

100,292 939,243 ( ( 184,048

275,334

( 2,894,329 1,013,191 2,725,657 2,976,175

1,881,138 1,965,149 1,011,026

Equipment (

General provision for doubtful debts 0 0 0 (14,718) (14,718) Specific provision for doubtful debts 0 0 0 (154,052) (154,052) 0 0 0 0 0 0 0 0 0 0 0 0

Balance at March 20, 2017 3,875,487 0 0 2,070,257 5,945,744 7,835 2,449 2,416 8,970

21,670 21,670 Rls (M)

13,835 11,386 21,670 10,284 12,700

Balance at March 20, 2016 4,293,547 0 0 1,358,119 5,651,666 Installations ) ) ) ) ) ) ) ) 0 1

( 455 107 ( ( 49,519 14,240 59,646 65,904 12,713 Rls (M) 75,550

110,714 145,930 245,738 281,778 478,547 183,109 ( ( 891,827 956,788 988,218

205,468

( ( ( Buildings 1,037,757 1,162,256

1,063,768

16- Orders and prepayments ) ) ) 0 0 0 0 0 0 0 0 0 0

Group Land 2,463

12,329 61,735 21,587 16,000 ( Rls (M)

870,775 347,414 302,253 902,228 ( 870,775 902,228 901,654 901,654

(

March 20, 2017 March 19, 2016

Rls (M) Rls (M) Prepayments 11,196 30,607 Orders 19,298 10,202 30,494 40,809

17- Inventory (materials and goods)

Group

March 20, 2017 March 19, 2016 Rls (M) Rls (M) The cost price and accumulated depreciation of the Group tangible fixed assets are provided in table below: Inventory in stock 247,690 98,793 On going projects in the process of completion 70,763 46,567 18-1- 318,453 145,360 18- Tangible fixed assets Cost price Balance at March 21, 2015 Increase during the year Increase (decrease) from revaluation Increase (decrease) from revaluation Accumulated depreciation and accumulated value impairment Balance at March 21, 2015 Depreciation during the year and value impairment Depreciation during the year and value impairment Sold Transfers and other changes Balance at March 20, 2017 Sold Transfers and other changes Balance at March 19, 2016 Increase during the year Sold Transfers and other changes Balance at March 19, 2016 Sold Transfers and other changes Balance at March 20, 2017 Book value At March 21, 2015 At March 19, 2016 At March 20, 2017

98 Financial Report 99 18-3- The land and buildings owned by the bank, were revaluated in 2016-17 whereby the differential amounting

) ) ) )

) )

) to Rls. 214, 663/- million was classified as “Assets revaluation reserve” under the heading of shareholders’ ) 2 0

(

784 equity and further entered in the comprehensive statement of profit and loss. ( Total 5,580 3,918 ( ( Rls (M) 778,771 349,844 181,210 101,676 607,245 205,873 359,075 391,805

( ( ( (

1,054,945 4,484,067 1,125,564 3,358,503 3,593,857 3,613,037 5,277,242 5,077,710 1,483,853 1,664,205

) ) 18-4- The book value of revaluated land and buildings on the cost price basis is described as follows:

0 0 0 0

stock Capital Rls (M) 286,564 555,426 125,595 316,650 535,839 items in

125,595 145,182 115,096 115,096 145,182

( (

March 20, 2017 March 19, 2016 Based on Based on Based on cost price Based on cost price revaluation revaluation ) ) Rls (M) Rls (M) Rls (M) Rls (M) 0 0 0 0

Land 926,972 794,394 1,084,170 733,233 16,382 26,117 29,722 80,138 Rls (M) 90,272 90,272

157,633 ( (

157,633 103,612

103,612

prepayments Buildings 1,336,621 939,710 1,306,334 988,681 Orders and capital 2,263,593 1,734,104 2,390,504 1,721,914 ) 0 0 0 0 0

136

75,780 Rls (M)

478,113 106,473 478,113 447,420 447,556 447,556 447,420

Assets in (

process of completion

18-5- All tangible fixed assets excluding the motor vehicles have been insured with Saman Insurance Company up to the amount of Rls. 3, 106, 291/- million against possible risks and dangers arising from fire, floods and ) ) earthquake. It should further be noted that the motor vehicles have been put under body/average insurance ) 0 0 0 1 0 0 0 0

( coverage up to the amount of Rls. 72, 390/- million. 6,295 3,472 5,580

15,400 23,862 32,370 71,746 ( ( Rls (M) 55,324 37,758 22,896 95,607

127,070

145,293 133,365 122,397

improvement in leased buildings

Refurbishment and

) ) ) )

0 0 0 0 0 0

524 843 and ( ( 23,214 22,764 Rls (M) 224,971 267,374 285,584 499,208 905,626 fixtures ( (

1,923,128 Furniture 1,017,502 1,249,017 1,187,954 2,623,250 2,421,493 1,172,476 1,435,296

) ) 0 0 0 0 0 0 0 0

153 157 ( ( 16,949 73,111 12,940 12,526 10,102 23,888 Rls (M) 49,223 46,381 50,804 83,056 36,675 49,201

Vehicles

100,005

Parent company 0 0 0 0 0 0 0 0 0 0 0 0

2,449 2,416 7,835 8,970

21,670 Rls (M)

13,835 11,386 21,670 21,670 10,284 12,700

Equipment ) ) ) ) ) ) 0 1 0 0

( 107 455 ( ( 52,450 58,909 10,343 Rls (M) 44,611

478,543 102,824 875,968 245,738 281,778 183,109 116,469 759,499 819,869 895,096

939,707 988,680 168,811

( ( ( Buildings

) ) 0 0 0 0 0 0 0 0 0 0 0

Land 2,463

16,000 12,329 21,587 ( Rls (M)

701,779 347,414 302,253 701,779 733,232 794,393 794,393 733,232

(

The cost price and accumulated depreciation of the parent company’s tangible fixed assets are provided in table below: 18-2- Increase during the year Increase during the year Balance at March 20, 2017 Balance at March 19, 2016 Cost price Balance at March 21, 2015 Sold Transfers and other changes Sold Transfers and other changes Balance at March 19, 2016 Sold Transfers and other changes Balance at March 20, 2017 Sold Transfers and other changes Accumulated depreciation and accumulated value impairment Balance at March 21, 2015 Depreciation during the year and value impairment Depreciation during the year and value impairment Increase (decrease) from revaluation Increase (decrease) from revaluation Book value At March 21, 2015 At March 19, 2016 At March 20, 2017

100 Financial Report 101 19-2- The table of intangible assets of the parent company is as follows: 19- Intangible assets

Parent company Goodwill for 19-1- The table of intangible assets of group companies is as follows: Software Royalty to use public place and Software Total development sevice business Group Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Goodwill for Software Royalty to use public Cost price place and Software Total development sevice business Balance at March 21, 2015 3,730,604 110,481 0 20,307 3,861,392 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Increase during the year 284,889 35,823 0 1,047 321,759 Cost price In-company improvement 0 0 0 0 0 Balance at March 21, 2015 3,730,604 121,394 0 38,773 3,890,771 Increase (decrease) from revaluation 0 0 0 0 0 Increase during the year 284,889 38,017 0 1,056 323,962 Sold 0 0 0 0 0 In-company improvement 0 0 0 0 0 Transfers and other changes 0 0 0 0 0 Increase (decrease) from revaluation 0 0 0 0 0 Balance at March 19, 2016 4,015,493 146,304 0 21,354 4,183,151 Sold 0 0 0 0 0 Balance at March 21, 2016 4,015,493 146,304 0 21,354 4,183,151

Transfers and other changes 0 (8,123) 0 0 (8,123) Increase during the year 0 46,957 0 315 47,272 Balance at March 19, 2016 4,015,493 151,288 0 39,829 4,206,610 In-company improvement 0 0 0 0 0 Balance at March 21, 2016 4,015,493 151,288 0 39,829 4,206,610 Increase (decrease) from revaluation 1,291,808 0 0 0 1,291,808 Increase during the year 0 50,398 0 338 50,736 Sold (1,103,935) - 0 0 0 (1,103,935) In-company improvement 0 0 0 0 0 Transfers and other changes 0 0 0 (119) (119) Increase (decrease) from revaluation 1,291,808 0 0 0 1,291,808 Balance at March 20, 2017 4,203,366 193,261 0 21,550 4,418,177 Sold (1,103,935) 0 0 0 (1,103,935) Accumulated depreciation and accumulated Transfers and other changes 0 (12,839) 0 (2,897) (15,736) value impairment Balance at March 20, 2017 4,203,366 188,847 0 37,270 4,429,483 Balance at March 21, 2015 0 0 0 0 0 Depreciation during the year 0 63,588 0 0 63,588 Accumulated depreciation and accumulated value impairment Value impairment loss 0 0 0 0 0

Balance at March 21, 2015 0 3,065 0 13,899 16,964 Sold 0 0 0 0 0 Depreciation during the year 0 65,416 0 1,128 66,544 Transfers and other changes 0 0 0 0 0 Value impairment loss 0 0 0 0 0 Balance at March 19, 2016 0 63,588 0 0 63,588 Sold 0 0 0 0 0 Balance at March 21, 2016 0 63,588 0 0 63,588 Transfers and other changes 0 (5,032) 0 0 (5,032) Depreciation during the year 0 53,400 0 0 53,400 Value impairment loss 0 0 0 0 0 Balance at March 19, 2016 0 63,449 0 15,027 78,476 Sold 0 0 0 0 0 Balance at March 21, 2016 0 63,449 0 15,027 78,476 Depreciation during the year 0 55,565 0 2 55,567 Transfers and other changes 0 0 0 0 0 Value impairment loss 0 0 0 0 0 Balance at March 20, 2017 0 116,988 0 0 116,988 Sold 0 0 0 0 0 Book value Transfers and other changes 0 (829) 0 0 (829) At March 21, 2015 3,730,604 110,481 0 20,307 3,861,392 Balance at March 20, 2017 0 118,185 0 15,029 133,214 At March 19, 2016 4,015,493 82,716 0 21,354 4,119,563

Book value At March 20, 2017 4,203,366 76,273 0 21,550 4,301,189 At March 21, 2015 3,730,604 121,394 0 38,773 3,890,771 At March 19, 2016 4,015,493 87,839 0 24,802 4,128,134 At March 20, 2017 4,203,366 70,662 0 22,241 4,296,269 19-3- Goodwill for place of business was revaluated by the Judiciary’s official expert during the year 2016-17 and the differential thereof in the amount of Rls. 1, 291, 809/- million was classified as the assets revaluation reserve under the heading of shareholders’ equity and entered in the comprehensive profit and loss statement.

102 Financial Report 103 19-3-1- The book value of the revaluated goodwill for place of business on the cost price basis is described as follows: 21-1- Customers’ net debts for term LCs

March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Rls (M) Rls (M) Based on cost price Based on revaluation Based on cost price Based on revaluation Customers' net debts for term LCs - in rial 10,773 3,074 Rls (M) Rls (M) Rls (M) Rls (M) Customers' net debts for term LCs - in forex 475,209 108,808 Goodwill for place of business 1,695,925 4,203,366 2,139,705 4,015,493 485,982 111,882 1,695,925 4,203,366 2,139,705 4,015,493 Less: Advances and mid-payments received for term LCs - in rial (9,661) 0 Advances and mid-payments received for term LCs - in forex (3,132) (48,822) 20- Statutory deposit General provision for doubtful debts 0 0

473,189 63,059 March 20, 2017 March 19, 2016 Rls (M) Rls (M) Statutory deposit - deposits of mainland branches (rial) 22,782,959 20,885,494 21-2- Foreclosed collaterals Statutory deposit - deposits of mainland branches (forex) 0 0 The composition of the foreclosed collaterals balance breaks down as follows: Statutory deposit - deposits of free zones branches (rial) 252,725 245,831

Statutory deposit - deposits of free zones branches (forex) 0 0 Foreclosed during Sold/transferred during March 19, 2016 March 20, 2017 the year the year Statutory deposit with central banks of other countries (forex) 0 0 Rls (M) Rls (M) Rls (M) Rls (M) 23,035,684 21,131,325 Movable properties Furniture 0 0 0 0 20-1- The statutory deposits held with the Central Bank of Iran pursuant to paragraph 3 of article 14 of the Equipment 0 0 0 0 Monetary and Banking law has been calculated on the basis of the rates determined by the Money and Credit Council as approved by the Central Bank of Iran. Goods 0 0 0 0 Motor vehicles 0 0 0 0

0 0 0 0 21- Other assets Immovable properties

Residential properties 6,183,365 1,849,727 (2,664,682) 5,368,410 Group Parent company Business/Offiice properties 12,753,136 1,162,132 (3,616,326) 10,298,942 Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Factory/plant 4,238,904 512,304 (324,725) 4,426,483 Rls (M) Rls (M) Rls (M) Rls (M) Land 3,617,484 370,573 (28,649) 3,959,408 Customers' net debts for term LCs 21-1 473,189 63,059 473,189 63,059 26,792,889 3,894,736 (6,634,382) 24,053,243 Non-operating real estates 0 0 0 0 26,792,889 3,894,736 (6,634,382) 24,053,243 Foreclosed collaterals 21-2 24,011,632 26,791,928 24,053,243 26,792,889 Accumulated value impairement 0 0 Advance deposits for leased buildings 117,798 109,429 117,798 101,889 26,792,889 24,053,243 Debtors - persons/entities 21-3 10,422,778 0 10,422,778 0 Profit (loss) from sales 2,866,384 3,283,507 Notes/documents recievable 4,168,405 0 4,168,405 0

Tax prepayment 954,331 455,174 924,474 443,282 Assets insurance prepayment 0 0 0 0 21-2-1- The age of the balance of immovable foreclosed collaterals breaks down as follows Prepayment for leased branches 29,131 20,678 29,131 19,678

Inventory (supplies) 0 0 0 0 March 20, 2017 March 19, 2016 Items in transit 0 0 0 0 Rls (M) Rls (M) Gold and silver 0 0 0 0 Less than a year from the foreclosure date 1,105,167 6,335,850 Tax stamp 4,466 3,782 4,466 3,782 One year or two years from the foreclosure date 17,679,032 15,998,782 Prepayment for consultancy contracts 2,325,775 87,066 2,325,775 87,066 Over two years from the foreclosure date 5,269,044 4,458,257

Consolidated goodwill 45,718 129,562 0 0 24,053,243 26,792,889 Temporary debtors - forex 600,596 1,068,543 600,596 1,068,543

Discrepancies in interbank settlement for the 7,159 7,631 7,159 7,631 account 26200 21-2-2-The profit (loss) from the sale of foreclosed collaterals has been disclosed in the statement of profit and loss under the note No. 55. Other 2,793,453 1,064,676 2,734,548 1,018,232

45,954,431 29,801,528 45,861,562 29,606,051

104 Financial Report 105 21-3- Goodwill 22-1- The term foreign currency deposits of CBI are as follows: Details of goodwill from consolidated turnover under note (8-13 of significant accounting policies) are as follows: March 20, 2017 March 19, 2016 Currency Type Forex amount Exchange rate Amount in Rial Forex amount Exchange rate Amount in Rial Group Rls (M) Rls (M) March 20, 2017 March 19, 2016 Euro 30,126,172/57 34851 1,049,928 138,950,071.20 33,935 4,715,271 Rls (M) Rls (M) Swiss Franc 1,975,580/85 32481 64,168 27,329,991.06 30,933 845,398 Cost at the beginning of the year 220,704 216,980 1,114,096 5,560,669 Goodwill acquired during the year 0 3,724 Adjustments for secondary sales (149,730) 0

Cost at year-end 70,974 220,704 Accumulated depreciation at the beginning of the year (91,142) (69,336) 22-1-1- It is worth mentioning that the amount of 30, 126, 172.57/- Euros and the amount 1, 975, 580.85/- Depreciation during the year (4,440) (21,806) Swiss Francs have been deposited under the heading of BCP for the CBI’s forex deposits with us. Adjustments from secondary sales 70,326 0

Accumulated depreciation at year-end (25,256) (91,142) 22-2- The current foreign currency deposits of CBI are as follows: Book value 45,718 129,562 March 20, 2017 March 19, 2016 Currency Type Forex amount Exchange rate Amount in Rial Forex amount Exchange rate Amount in Rial 21-4- If the balance of items in transit remains in credit, it shall be reflected in the note to other liabilities. Rls (M) Rls (M) Euro 518,123 34,851.00 18,057 82,549,089 33,935 2,801,304 Omani Rial 0.00 84,184.00 0 87,011,073 78,546 6,834,371 22- Due to banks and other credit institutions Swiss Franc 320,591/38 32,481.00 10,413 42,710,031 30,933 1,321,149 Japanese Yen 0.00 28,7.72 0 18,848,848,488 269 5,073,921

28,470 16,030,745 Group Parent company Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Rls (M) Rls (M) Rls (M) Rls (M) 22-3- The balance of the said account consists of the amount of Rls. 2,461,053/- million which is related to Central Bank of Iran (CBI) the directive No. 60/1015 of December 7, 2013 issued by the CBI in respect of the differences in foreign Deposits in rial 0 0 0 0 exchange rates. Further, the amount of Rls. 226,621/- million is related to the student foreign exchange Term deposits in forex 22-1 1,114,096 5,560,669 1,114,096 5,560,669 quota and the amount of Rls. 92,466/- million is related to LC debts of Modiran Khodro and Ghovayeh Moharrekeh (Power Train). Demand deposits in forex 22-2 28,470 16,030,745 28,470 16,030,745 Debt for differences in foreign exchange rates 22-3 2,789,780 2,769,244 2,789,780 2,769,244 22-4- This account is related to Lufthansa and Turkish Airlines which was settled in the beginning of the year Debt for overdraft from current account 0 0 0 0 2016. Debt for foreign exchange reserves account 0 0 0 0 Facilities received in rial 0 0 0 0 22-5- The demand deposits of local banks in rials break down as follows: Facilities received in forex 0 0 0 0

Other 22-4 0 1,472,294 0 1,472,294 March 20, 2017 March 19, 2016 3,932,346 25,832,952 3,932,346 25,832,952 Rls (M) Rls (M)

Local banks and credit indtitutions Melli Bank 42 48 Dey Bank 300 301 Demand deposits in rial 22-5 342 980 342 980 Demand deposits in forex 22-6 618,466 896,177 618,466 896,177 Tosee Taavon (Cooperative Development) 0 631 Facilities received in rial 275,181 629,976 0 0 342 980 Facilities received in forex 0 0 0 0 Payment of checks issued by other banks 0 0 0 0 893,989 1,527,133 618,808 897,157

Foreign banks Demand deposits in rial 22-7 924,135 312,101 924,135 312,101 Demand deposits in forex 0 0 0 0 Debt for current account (overdraft) 0 0 0 0 924,135 312,101 924,135 312,101 5,750,470 27,672,186 5,475,289 27,042,210

106 Financial Report 107 22-6- The demand deposits of local banks in foreign currency break down as follows: 23-1- Demand deposits and similar deposits

March 20, 2017 March 19, 2016 Group Parent company Currency Type Forex amount Exchange rate Amounts in rial Forex amount Exchange rate Amounts in rial Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) US Dollar 8,183,356 32,420 265,305 10,722,105 30,240 324,237 Euro 9,149,375 34,851 318,865 16,209,487 33,935 550,069 Free-interest deposits in rial 7,513,709 8,574,317 7,530,060 8,649,717 UK Pound 166 40,191 7 166 43,089 8 Free-interest deposits in forex 648,669 858,521 648,669 858,521 Various bank checks sold 575,374 413,209 575,374 413,209 UAE Dirham 2,563,891 8,827 22,632 2,563,891 8,234 21,112 Customers' current accounts with overseas branches 0 0 0 0 Japanese Yen 2,728,184 288 785 2,721,684 269 732 Unclaimed balance in rial 54,495 33,918 54,495 33,918 Omani Rial 11,065 84,184 931 0 0 0 Unclaimed balance in forex 4,037 3,778 4,037 3,778 Indian Rupee 20,043,930 496 9,941 44,130 453 19 Interim credit accounts (temporary creditors) in rial 23-1-1 1,150,228 1,356,853 1,121,529 1,352,977 618,466 896,177 Interim credit accounts (temporary creditors) in forex 23-1-2 1,881,336 3,512,700 1,881,336 3,512,700 Drafts drawn on the bank in rial 0 0 0 0 22-7- The demand deposits of foreign banks in foreign currency break down as follows: Drafts drawn on the bank in forex 553,119 63,072 553,119 63,072

March 20, 2017 March 19, 2016 Unused managed cash in rial 15,915 26,497 15,915 26,497 Currency Type Forex amount Exchange rate Amounts in rial Forex amount Exchange rate Amounts in rial Unused managed cash in forex 0 0 0 0 Rls (M) Rls (M) Less: 0 0 0 0 US Dollar 0 32,420 0 518,195 30,240 15,670 Account for the bank's checks sold (unsettled) (31,297) (31,287) (31,297) (31,287) Euro 26,516,733 34,851 924,135 8,735,230 33,935 296,431 12,365,585 14,811,578 12,353,237 14,883,102

924,135 312,101 23-1-1- The items of interim credit accounts (temporary creditors) in rial of the Parent Company break down as follows:

22-8- The credit facilities in rial received from other banks are related to the group companies which are mainly Parent company from Pasargad Bank and Sepah Bank. March 20, 2017 March 19, 2016 Rls (M) Rls (M) For differences in preferential and official exchange rates 80,111 186,156 Customers' bearer cards' deposits 856,241 961,585 23- Customers’ deposits – Natural and legal persons Funds received for social security 35,055 46,882 Account for payment of utilities (telecommunication, gas, electricity, 7,909 17,192 water and telephone bills and municipal dues) Group Parent company Interest on matured coupons of bearer certificates of deposit (CDs) 1,959 2,100 Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Good performance guarantees by contractors 27,778 73,617 Rls (M) Rls (M) Rls (M) Rls (M) Advances for safe deposit boxes 35,861 13,464 Natural customers Nousazan Housing Project deposits 11,386 11,386 Demand deposits and similar deposits 23-1 3,845,822 3,661,486 3,857,208 3,672,873 Other items (23 items) 65,229 40,595 Savings deposits and similar deposits 23-2 620,481 540,323 620,481 540,323 Other deposits and advances 23-3 52,988 63,101 41,602 51,715 1,121,529 1,352,977 4,519,291 4,264,910 4,519,291 4,264,911 23-1-2- The items of interim credit accounts (temporary creditors) in foreign currency break down as follows: Legal customers Parent company Demand deposits and similar deposits 23-1 8,519,763 11,150,092 8,496,029 11,210,230 Note March 20, 2017 March 19, 2016 Savings deposits and similar deposits 23-2 1,287,043 1,725,959 1,287,877 1,726,086 Rls (M) Rls (M) Other deposits and prepayments 23-3 2,780,466 4,665,506 2,795,176 4,683,851 Rial-equivalent amount of foreign currency allocated for drafts and letters of 23-1-2-1 1,326,915 2,594,415 12,587,272 17,541,557 12,579,082 17,620,167 credit (LCs) 17,106,563 21,806,467 17,098,373 21,885,078 Local creditors - account for other branches in forex 23-1-2-1 545,213 823,747 Amounts received for documents inconsistent with LC terms 2,860 18,586 Temporary creditors - others (one item) 6,348 75,952

1,881,336 3,512,700

108 Financial Report 109 23-1-2-1- The amounts under this item are related to foreign currencies provided by the Central Bank of Iran for customers’ drafts and letters of credit which will remain in this account until when their uses are 25- Advances received specified to be paid thereafter. 23-2- Savings deposits and similar deposits – for natural and legal persons Group March 20, 2017 March 19, 2016

Group Parent company Rls (M) Rls (M) March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Advance received 7,847 41,979 Rls (M) Rls (M) Rls (M) Rls (M) 7,847 41,979 Free-interest deposits in rial 538,628 553,187 539,462 553,314 Free-interest deposits in forex 1,366,892 1,711,091 1,366,892 1,711,091 Savings deposits - overseas branches 0 0 0 0 26- Provision for income tax Free-interest deposits - for young people 0 0 0 0 Personnel savings account 0 0 0 0 26-1- Turnover of tax provision account breaks down as follows: Personnel pension fund 0 0 0 0 Group Parent company Savings deposits for housing project 0 0 0 0 March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Special unused free-interest deposits 2,004 2,004 2,004 2,004 Rls (M) Rls (M) Rls (M) Rls (M) 1,907,524 2,266,282 1,908,358 2,266,409 Balance at the beginning of the year 171,440 193,432 0 0 Tax provision for the year 247,397 166,052 0 0 23-3- Other deposits and advances Adjustment of income tax for previous year 0 0 0 0 Tax paid during the year (69,565) (188,044) 0 0 Group Parent company Consolidated adjustments (233,393) 0 0 0 March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 115,879 171,440 0 0 Rls (M) Rls (M) Rls (M) Rls (M) Tax prepayment 0 0 0 0 Cash deposits for LGs’ in rial 532,678 784,730 536,002 789,730 Balance at the year end 115,879 171,440 0 0 Cash deposits for LGs’ in forex 5,337 6,432 5,337 6,432 Cash advances received from customers for LCs in rial 177,537 158,224 177,537 158,224 Cash advances received from customers for LCs in forex 2,117,902 3,779,221 2,117,902 3,781,180 26-2- A summary statement of the Bank’s (parent company) tax position is as follows: 2,833,454 4,728,607 2,836,778 4,735,566 March 20, 2017 March 19, 2016 Tax

24- Dividends payable Fiscal Profit Taxable Tax Tax Provision Provision Method of tax Finalized Paid year declared income declared assesed balance balance assessment

Group Parent company Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 2011 1,514,946 641,210 160,303 691,346 336,621 336,631 0 0 Settled Rls (M) Rls (M) Rls (M) Rls (M) 2012 878,773 149,690 37,423 460,193 386,220 386,220 0 0 Settled Balance from prior years 196,733 218,139 157,034 185,812 2013 1,448,311 634,968 158,742 472,886 0 158,742 0 0 Settled Dividends approved 0 639,755 0 640,000 Dividends paid (137,422) (661,161) (104,552) (668,778) 2014 2,221,071 712,465 178,116 562,659 474,370 474,370 0 0 Settled

59,311 196,733 52,482 157,034 2015 1,011,340 2,279,151 0 606,664 386,377 386,377 0 0 Settled

Protest submitted to the 2016 102,751 0 0 0 0 0 0 0 Tax Revision Board.

24-1- A summary turnover of this account in the parent company is follows: 2017 84,671 0 0 0 0 0 0 0

Cash 0 0 Approved Balance at Dividend paid Capital increase Balance at dividend per from accrued dividend March 19, 2016 during 2016 March 20, 2017 share dividends Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 26-2-1- It is further noted that the tax levied and assessed for the year 2016 was amount of Rls. 1,138 billion Prior years 0 4,541,640 66,895 (39,295) 0 27,600 out of which the amount of Rls. 653 billion was related to the performance tax and the amount of Rls. 485 billion was related to the finalized tax. Upon the objection made by the bank the amount of Rls.547 billion was reduced Fiscal year ended March 20, 2015 80 640,000 90,139 (65,257) 0 24,882 by the Initial Tax Panel and the matter is still pending at the Tax Revision Board. For the finalized tax amount Fiscal year ended March 19, 2016 0 0 0 0 0 0 (real estates transfer), the enforcement writ of expert’s opinion has been issued. Nontheless, the bank has 157,034 (104,552) 0 52,482 recognized loss in the segment of sharing-profit activities and thus no provision thereupon has been recorded in accounts.

110 Financial Report 111 27-3- Other debts related to the parent company break down as follows: 27- Provisions and other liabilities March 20, 2017 March 19, 2016

Group Parent company Rls (M) Rls (M)

Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 Items in transit 4,282,306 829,654 Rls (M) Rls (M) Rls (M) Rls (M) Current deposits by central offices with branches 218,557 277,766 Notes payable 49,469 37,676 0 0 For cash penalties received for non-performance of forex obligations 62,490 233,140 Debts for term letters of credit in rial 11,675 22,679 11,675 22,679 Lawyer's/attorney's fee 259,602 102,186 Debts for term letters of credit in forex 27-1 498,225 78,001 498,225 78,001 Inter-branch accounts 241,950 67,826 Ijarah bonds payable 0 0 0 0 Contractual deductions for social security insurance 90,359 59,318 Facilities received from National Development Fund 0 0 0 0 Last statement for social security settlement 46,193 28,122 Interest and fees payable 0 0 0 0 Assets and warehousing 1,677 23,011 Insurance payable 0 0 0 0 Insurance of loan collaterals 9,697 11,215 Allowance for leave entitlement (unused) 0 0 0 0 Cash amounts received (from foreclosed collaterals) 25,873 8,273

Membership fee payable to Deposits Guarantee Fund 0 0 0 0 Employees' wages and salaries 5,648 4,887 Items in transit 0 0 0 0 Surplus cash in hand 2,300 1,893 Provision for expenses payable 27-2 2,591,288 1,798,926 2,340,392 1,566,383 Productivity allowance as decided by the Branch Division Affairs 1,471 1,471 Withholding taxes payable 22,480 79,253 8,690 4,856 Debt for sale of student forex quota 289 393 Other debts 27-3 7,908,004 4,593,753 5,954,319 2,596,734 Other items (23 items ) 705,907 947,579

11,081,141 6,610,288 8,813,301 4,268,653 5,954,319 2,596,734

27-1- The debts for term letters of credit in foreign currency all due by the parent company are as follows:

March 20, 2017 March 19, 2016 28- Provisions for employees’ termination and pension benefits Currency Type Forex amount Exchange rate Amounts in rials Forex amount Exchange rate Amounts in rial Rls (M) Rls (M) Group Parent company Euro 11,692,776 34,851 407,505 1,682,669 33,935 57,102 March 20, 2017 March 20, 2016 March 20, 2017 March 19, 2016 Chinese Yuan 2,306,342 4,702 10,845 0 0 0 Rls (M) Rls (M) Rls (M) Rls (M) S. Korean Won 2,589,273,835 29 74,313 1,719,950 4,655 8,007 Balance at the beginning of year 466,334 326,616 414,634 296,307 Indian Rupee 11,213,760 496 5,562 500,451,042 26 12,892 Paid during the year (37,674) (22,536) (28,240) (16,168) 498,225 78,001 Consolidated adjustments (34,097) 0 0 0 Provisions covered for the year 169,230 162,254 150,917 134,495

Balance at the year-end 563,793 466,334 537,311 414,634 27-2- The bank’s provisions for expenses and accounts payable break down as follows:

March 20, 2017 March 19, 2016 28-1- Since the employees are under the social security coverage, no provisions for their retirement pension Rls (M) Rls (M) benefits have been reflected in accounts. Purchase/acquisition of real estates 1,291,255 1,299,055 Rents payable 4,310 12,510 Interest payable on foreign currency deposits of banks 0 36,166 Provision for withholding tax 10,410 10,410 Other 999,718 172,803 Provision for expenses 0 0 Provision for personnel bonus and productivity allowance 5,245 5,245 Accounts payable for administrative expenses 29,454 30,194

2,340,392 1,566,383

112 Financial Report 113 29- Investment depositors’ equity 29-1-2- The long-term investment deposits in terms of maturity and interest rate

March 20, 2017 March 19, 2016 Group Parent company More than 19 to 22% 16 to 19 % 13 to 16% 10 to 13% 10% and less Total Total Note March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 22% Term investment deposits Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Long-term investment deposits 29-1 96,109,782 85,663,226 96,111,595 85,637,897 Matured 0 7,236 310 796 0 5,786 14,128 9,859 Short-term investment deposits 29-1 112,520,618 102,754,826 113,709,513 103,443,356 2017 0 1,928 343 224 0 0 2,495 400,100 Special short-term deposits 29-1 1,595,639 332,300 1,595,639 332,300 2018 76,012 5,083,630 7,065,238 64,311,656 0 0 76,536,536 16,359,888 Investment deposits received from banks and 2019 123,132 10,167,365 9,411 7,766,243 0 0 18,066,151 56,226,945 29-1 1,510,171 2,645,504 1,510,171 2,645,504 credit institutions 2020 59,244 1,194,826 10,521 13,581 0 0 1,278,172 11,132,750 211,736,210 191,395,856 212,926,918 192,059,057 2021 and onward 10,303 112,855 35,159 55,796 0 0 214,113 1,508,355

Interest payable on term investment deposits 268,691 16,567,840 7,120,982 72,148,296 0 5,786 96,111,595 85,637,897 2016 Long-term investment deposits 29-2 1,296,633 1,411,809 1,299,234 1,413,821 406,937 31,183,750 3,985,464 50,061,364 0 382 85,637,897 Short-term investment deposits 29-2 611,167 696,922 611,167 696,922 Special short-term deposits 29-2 15,730 3,995 15,730 3,995 29-1-3- Turnover of investment deposits in rial Investment deposits received from banks and 29-2 0 0 0 0 credit institutions Balance at Deposits taken Repayment of Balance at March March 19, 2016 during the year deposits 20, 2017 1,923,530 2,112,726 1,926,131 2,114,738 Long-term investment deposits Rls (M) Rls (M) Rls (M) Rls (M) 213,659,740 193,508,582 214,853,049 194,173,795 General certificates of deposit 0 0 0 0 Special certificates of deposits 0 0 0 0 29-1- The term investment deposits by a breakdown of rial and foreign currency One-year term 64,474,444 79,268,602 64,474,442 79,268,604 Two-year term 121,385 15,569 96,621 40,333 March 20, 2017 March 19, 2016 Three-year term 74,032 18,886 36,607 56,311 Rial Forex Total Rial Forex Total Four-year term 76,042 18,600 20,827 73,815 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Five-year term 20,891,995 63,110 4,282,572 16,672,533 Ordinary term investment deposits 99,348,791 15,870,895 115,219,686 92,348,534 13,740,327 106,088,861 Ordinary short-term investment deposits 92,347,662 26,227,063 19,272,011 99,302,714

Special short-term investment deposits 332,300 1,494,770 231,431 1,595,639 Special short-term investment deposits Investment deposits received from banks and credit institutions 870 45,262 58 46,074 Up to three months 22,845 0 22,845 34,387 0 34,387 178,318,730 107,151,862 88,414,569 197,056,023 More than three to six months 1,399,494 0 1,399,494 88,497 0 88,497 More than six months to one year 173,302 0 173,302 209,418 0 209,418

Long-term investment deposits General certificates of deposit 0 0 0 0 0 0 Special certificates of deposit 0 0 0 0 0 0 One-year term 79,268,602 0 79,268,602 64,474,444 0 64,474,444 Two-year term 40,331 0 40,331 121,383 0 121,383 Three-year term 56,310 0 56,310 74,030 0 74,030 Four-year term 73,815 0 73,815 76,042 0 76,042 Five-year term 16,672,533 0 16,672,533 20,891,995 0 20,891,995

197,056,023 15,870,895 212,926,918 178,318,730 13,740,327 192,059,057

29-1-1- The growth in the one-year-term deposits is due to the prohibition of more than one-year-term deposits under the directive No. 93/96593 of July 2, 2014. The balance of over one-year-term deposits is related to prior years’ deposits.

114 Financial Report 115 29-1-4- Turnover of investment deposits in forex 29-2- Interests payable on term investment deposits are as follows:

Balance at Balance at March Deposits taken Repayment of Balance at Balance at Group March 19, 19, 2016 during the year deposits March 20, 2017 March 20, 2017 Provisional Difference in 2016 Interest paid Balance at interest provisional Balance at during the Amount in Amount in Amount in Amount in Amount in March 19, 2016 during the and final March 20, 2017 Amount in rial year forex forex forex forex rial year interest Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Long-term deposits Short-term deposits 680,105 13,504,958 0 (13,587,871) 597,192 US Dollar 0 0 0 0 0 0 Special short-term deposits 3,995 130,924 0 (119,189) 15,730 Other foreign currencies 0 0 0 0 0 0 General certificates of deposit 0 1,222 0 (1,222) 0

Special and ordinary Special certificates of deposit 0 0 0 0 0 short-term deposits One-year term deposits 1,410,503 13,385,848 0 (13,995,641) 800,710 US Dollar 96,323,512 30,776,229 22,686,891 104,412,850 3,385,066 2,912,825 Two-year term deposits 143 12,403 0 (12,094) 452 Australian dollar 718 0 0 718 17 16 Three-year term deposits 118 13,742 0 (11,729) 2,131 Canadian dollar 61,993 0 1,720 60,273 1,462 1,431 Four-year term deposits 17 15,452 0 (13,714) 1,755 Euro 208,831,971 191,982,023 94,088,498 306,725,496 10,689,692 7,086,714 Five-year term deposits 1,028 4,341,224 0 (3,850,664) 491,588 UK Pound 16,923,939 1,387,491 2,344,423 15,967,007 140,940 139,351 Investment deposits received from banks 0 141,045 0 (141,045) 0 UAE Dirham 767,764 170,164 122,690 815,238 32,767 33,084 Foreign currency deposits 16,817 400,513 0 (403,358) 13,972 Japanese YEN 2,039,562,587 175,000 2,035,675,815 4,061,772 1,169 549,029 2,112,726 31,947,331 0 (32,136,527) 1,923,530 Swiss Franc 1,489 4,482,380 590,768 3,893,101 126,451 46 Turkish Lira 35,370,672 0 32,102,671 3,268,001 29,232 373,195 Chinese Yuan 1,000 0 0 1,000 4 4 Parent company Provisional Difference in Investment deposits Interest paid Balance at interest provisional Balance at received from banks and during the March 19, 2016 during the and final March 20, 2017 credit insurance year year interest US Dollar 1,982,747 0 1,982,747 0 0 59,958 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Euro 49,231,869 40,000,000 47,226,733 42,005,136 1,463,920 1,670,683 Short-term deposits 680,105 13,504,958 0 (13,587,871) 597,192 UAE Dirham 79,709,130 0 79,695,200 13,930 122 656,324 Special short-term deposits 3,995 130,924 0 (119,189) 15,730 UK Pound 1,326 0 0 1,326 53 57 General certificates of deposit 0 1,222 0 (1,222) 0 Korean WON 10,000,000,000 0 10,000,000,000 0 0 257,610 Special certificates of deposit 0 0 0 0 0 15,870,895 13,740,327 One-year term deposits 1,410,503 13,385,846 0 (13,995,641) 800,708 Two-year term deposits 143 12,401 0 (12,094) 450 Three-year term deposits 118 13,740 0 (11,729) 2,129 29-1-5- The composition of depositors of investment deposits breaks down as follows: Four-year term deposits 17 15,452 0 (13,714) 1,755

March 20, 2017 March 19, 2016 Five-year term deposits 3,040 4,341,813 0 (3,850,664) 494,189 Number Amount Number Amount Investment deposits received from banks 0 141,045 0 (141,045) 0 Depositor Rls (M) Depositor Rls (M) Foreign currency deposits 16,817 400,514 0 (403,358) 13,973 Deposits in rial 2,114,738 31,947,915 0 (32,136,527) 1,926,126 Legal persons 373,623 19,047,612 108,100 23,219,603 Natural persons 2,012,103 177,962,338 2,195,919 155,098,256 Investment deposits received from banks and credit institutions 6 46,074 7 872 29-2-1- Considering the provisional surplus interests paid to depositors in proportion to their shares 2,385,732 197,056,024 2,304,026 178,318,731 from the profit-sharing income as described in the statement of investment deposits performance under the circular No. 94/69383 of June 10, 2016, the procedure for calculating the share of each item of various Deposits in foreign currency investment deposits from the differential in provisional and final interests for the reporting fiscal year does not Legal persons 997 8,472,030 938 6,332,341 apply. Natural persons 48,410 5,934,767 46,338 4,763,352 Investment deposits received from banks and credit institutions 5 1,464,097 6 2,644,633

49,412 15,870,894 47,282 13,740,326 2,435,144 212,926,918 2,351,308 192,059,057

116 Financial Report 117 30- Share Capital 31- Legal reserve

The Bank’s initial capital was the amount of Rls. 200 billion (divided into 200 million shares at nominal value of 1,000 Group Parent company rials each) which was increased in several stages to the amount of Rls. 8,000 billion (divided into 8,000 million shares March 20, 2017 March 19, 2016 March 20, 2017 March 19, 2016 at nominal value of 1,000 rials each) at the end of fiscal year ended March 19, 2016 as described below: Rls (M) Rls (M) Rls (M) Rls (M)

Amount of capital New capital Source of Balance at the beginning of the year 1,595,889 1,495,671 1,523,868 1,448,455 Date of capital increase capital increase increase (in billions) (in billion) capital Increase Allocated during the year 29,041 100,218 12,700 75,412 Percentage Rls (M) Rls (M) Consolidated adjustments (46,954) 0 0 0 August 29, 2002 0 0 200,000 Accrued dividends due and cash contribution Balance at the year end 1,577,976 1,595,889 1,536,568 1,523,868 November 27, 2003 10 20,000 220,000 Accrued dividends due and cash contribution October 15, 2004 36.4 80,000 300,000 Cash contribution Subject to the provisions of paragraph A of article 33 of the Monetary and Banking Law and paragraph B March 7, 2005 100 300,000 600,000 Accrued dividends due and cash contribution 31-1- of article 58 of the articles of association, the legal reserve in the parent company is 15% and subject to November 16, 2005 25 150,000 750,000 Accrued dividends due and cash contribution the provisions of articles 140 and 238 of the Commercial Code Amendment ratified on March 15,1969, the October 8, 2006 20 150,000 900,000 Accrued dividends due and cash contribution legal reserve in the subsidiaries is 5% which will be deducted from relevant distributable profit and then Accrued dividends due, cash contribution transferred to the legal reserve account. In accordance with the said articles, such transfer to the legal January 13, 2010 100 900,000 1 800000 and waiver of rights issue reserve account is mandatory until when the balance of legal reserve in the bank reaches the amount of March 20, 2011 66.7 1,200,000 3,000,000 Accrued dividends due and cash contribution the bank’s capital and in the subsidiaries reaches 10% of the same company capital and then this process March 19, 2012 33.3 1,000,000 4,000,000 Shareholders’ cash contribution shall remain to be voluntary. The legal reserve will not be transferable to capital account and will not be distributed among the shareholders unless when the company is dissolved. The amounts entered in the October 21, 2012 64.7 2,588,000 6,588,000 Assets revaluation reserve balance sheet break down as follows: March 9, 2016 21 1,412,000 8,000,000 Cash contribution and retained earnings

Group 30-1- List of Saman Bank Shareholders more than 1%: March 20, 2017 March 19, 2016 Shareholders Classification Shares Percentage Nationality Rls (M) Rls (M) Saman Investment Development Co. Legal Registered Companies 719,999,995 9 Iranian Parent campany Fanavar Sarmayeh Notrika Legal Registered Companies 687,716,809 8.6 Iranian Saman Bank 1,536,568 1,523,868 Pension Fund of Protecting Steel Industry Employees Legal Registered Companies 400,088,117 5 Iranian Mr. Mohammad Zarrabieh Individual Person 305,266,280 3.82 Iranian Subsidiary companies Ms. Hava Chaee Deh Khoee Individual Person 214,211,112 2.68 Iranian Saman Satellite Communications Co. 6,663 8,346 Saman Kish Electronic Payment Co. 0 43,570 Mr. Vali Zarrabieh Individual Person 196,660,057 2.46 Iranian Saman Exchange Co. 25,122 14,075 Mr. Seyed Mahdi Ghafoori Individual Person 181,316,669 2.27 Iranian Saman Brokerage Co. 2,067 1,738 Mr. Seyed Ahmad Akhavan Dastmalchi Individual Person 166,800,291 2.09 Iranian Saman Pardazeshgaran Co. (Processing) 2,725 2,023 Mr. Ahmad Reza Zarrabieh Individual Person 123,349,619 1.54 Iranian Atiyeh Alborz Trade Development Co. 0 0 Pomp Iran Manufacturing Industries Legal Registered Companies 147,330,232 1.84 Iranian Iranian Hafez Saman Credit Bureau and Scoring Co. 4,157 1,595 Mr. Mostafa Tavakkol Harandi Individual Person 98,000,000 1.23 Iranian Sepehr Shargh Atiyeh Andishan 482 482 Iran & West Co. Legal Registered Companies 88,975,787 1.11 Iranian Sepehr Mehr Atiyeh Andishan 1 1 Other Legal Persons Less than 1% Legal Registered Companies 1,132,072,431 14.14 Iranian Tondar Nour 191 191 Other Natural Persons Less than 1% Individual Person 3,538,212,601 44.22 Iranian 1,577,976 1,595,889 8,000,000,000 100

30-1-1- The number of 193,018,363 shares out of those owned by other natural shareholders (equivalent to 2.41 percent of bank shares) belongs to the personnel. 32- Assets revaluation reserve

2017 2016

Assets Transferred, Assets revaluation Assets revaluation revaluation amortized and balance balance amount retired/Capital increase

Rls (M) Rls (M) Rls (M) Rls (M) March 19, 2012 2,588,675 2,588,000 675 675 March 20, 2017 1,506,472 0 1,506,472 0 4,095,147 2,588,000 1,507,147 675

118 Financial Report 119 32-1- Out of Rls. 1,506,473/- million, the amount of Rls. 1,291,809/- million is related to increase in goodwill

revaluation and the amount of Rls. 214,664/- million is related to increase in land and buildings revaluation

which have been disclosed in detail under notes 20-3 and 21-3. 0 Total 6,060 5,740 Rls (M)

92,292 14,551

848,350 224,209 819,864 390,053 900,223 989,587

3,858,092

21,061,313 29,210,334

33- Minority interest 0 0 0 0 0 0 0 0 0 0

Forex 6,258 Rls (M)

76,755 sharing)

139,230 222,243

(Non-profit

March 20, 2017 March 19, 2016 Rls (M) Rls (M)

Share of capital 129,800 391,404 0

Share of legal reserve 9,565 29,749 Total 6,060 5,740 Rls (M)

92,292 14,551

848,350 224,209 680,634 383,795 900,223 989,587

3,858,092

20,984,558 28,988,091

Share of retained earnings 45,597 123,233

184,962 544,386 2016

0 0 0 0 0 0 0 0 0 0

Rial Rls (M) 92,292 14,551 sharing

848,350 955,193

Non-profit

34- Incomes from loans granted, deposits in other banks and debt securities

0 0 0 0

6,060 5,740 Rls (M) Group 224,209 680,634 383,795 900,223 989,587

3,858,092

20,984,558 28,032,898

2017 2016 Profit-sharing

Non-profit Non-profit Note Profit-sharing Total Profit-sharing Total sharing sharing be reflected in the non-profit sharing column. 0 0

Total 4,671 Rls (M)

86,644 23,527

818,855 553,144 121,819 251,264 515,962 910,190

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 1,909,647

17,174,689 22,370,412

Income earned from loans granted 34-1 21,757,399 613,013 22,370,412 28,032,898 1,177,436 29,210,334

Income earned from deposits in 34-2 1,586,430 266,860 1,853,290 1,524,322 349,451 1,873,773 0 0 0 0 0 0 0 0 0 other banks 0

Forex Rls (M) 16,659 30,269 35,824 82,752 sharing

Total incomes earned from loans (Non-profit

23,343,829 879,873 24,223,702 29,557,220 1,526,887 31,084,107 Group granted and deposits in other banks

0 0

Total 4,671 Rls (M)

86,644 23,527

818,855 536,485 121,819 251,264 485,693 910,190

1,909,647

Parent company 17,138,865 22,287,660

2017 2016 2017

Non-profit Non-profit Note Profit-sharing Total Profit-sharing Total 0 0 0 0 sharing sharing 0 0 0 0 0

Rial Rls (M) 80,751 76,427 sharing

121,819 251,264 530,261

Non-profit Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Income earned from loans granted 34-1 21,806,820 613,013 22,419,833 28,160,995 1,177,436 29,338,431

Income earned from deposits in 34-2 1,586,430 252,633 1,839,063 1,524,322 327,580 1,851,902 0 0 0 other banks 0

4,671 Rls (M)

86,644 23,527

738,104 409,266 536,485 910,190

Total incomes earned from loans 1,909,647

17,138,865

21,757,399

23,393,250 865,646 24,258,896 29,685,317 1,505,016 31,190,333 Profit-sharing granted and deposits in other banks The items which are recognized as non-profit sharing under the directive for calculation and division of shared profit to •

34-1- Income from loans granted (Loan interest) Sales by instalments Other Jealeh (service contract) Late payment penalty for LGs paid Late payment penalties for debtors of LCs Late payment penalty for LGs paid Hire purchase contracts Muzaraba (trade contracts) Civil partnership Salaf (future contracts) Factoring Murabaha Estesna'a

120 Financial Report 121

)

0

0 0

Total 6,060 5,740 Total Rls (M)

14,551 92,292 Total 2016

224,208 848,350 390,053 900,223 819,864 989,587 Rls (M) 13,006 Rls (M) 13,006

206,980 3,858,092 Rls (M)

206,980 212,357

21,189,411 533,323 277,827

29,338,431 1,653,787 598,793 320,966 ( 1,873,773 1,631,916

1,851,902

)

0 0 0 0 0 0 0 0 0 0

0 0 0 Parent company 0 0 0

Forex 6,258

Rls (M)

76,755 sharing)

139,230 222,243 2017 Forex

(Non-profit

Forex

Rls (M) sharing) 43,615 Rls (M) sharing) Rls (M) 120,600 ( 120,600

120,600 (Non-profit

(Non-profit 5,073,174

1,753,173 1,341,605 3,731,569

5,029,559

)

0 0 0

Total

6,060 5,740 Total Rls (M)

14,551 92,292 Total

224,208 383,795 848,350 900,223 680,634 989,587 Rls (M) 13,006 Rls (M) 13,006

2016 206,980 3,858,092

206,980

21,112,656

29,116,188 1,533,187 Rls (M) 1,753,173 1,511,316

1,731,302

212,377 (50,036)

162,341 280,809

230,773 (

2016 2016 2016

Group

) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Rls (M) 21,871 Rls (M) 14,551 92,292 Rls (M) Rial

206,980

848,350 2017 228,851 206,980 955,193 206,980

Rial

33,575 Rial Rls (M) ( 162,905

2,261,611 2,098,706 2,228,036

Non-profitsharing Non-profitsharing Non-profitsharing

35-1 35-2 35-3 Note 0 0 0 0 0 0

0 0

6,060 5,740 Rls (M)

Rls (M) 13,006 Rls (M) 13,006 224,208 383,795 900,223 680,634 989,587

3,858,092 1,511,316

1,524,322 1,511,316 21,112,656 28,160,995 1,524,322

Profit-sharing Profit-sharing Profit-sharing

0 0

Total Total Total 4,671 Rls (M) 10,757 Rls (M)

86,644 23,526 Rls (M) 10,757

203,303 226,649

818,854 515,962 121,819 251,264 553,144 910,190

226,649 203,303

1,412,581 1,909,649 1,853,290 1,398,354 1,839,063

17,224,110

22,419,833

0 0 0 0 0 0 0 0 0 0 0 0

0

0 0 0

Forex Forex Forex Rls (M) 25,984

Rls (M) 25,984 25,984 sharing 25,984

sharing Rls (M) 30,269

16,659 35,824

82,752

sharing

Group Non-profit- Non-profit- Non-profit- Parent company Parent company

0 0

Total Total Total 4,671 Rls (M) 10,757 Rls (M)

86,644 23,526 Rls (M) 10,757

203,303 226,649

818,854 485,693 536,485 121,819 251,264 910,190

226,649 203,303

1,386,597 1,909,649 1,827,306 1,372,370 1,813,079

17,188,286

22,337,081

2017 2017 2017

0 0 0 0 0 0 0 0 0 0 0 0 0 0

Rial Rial Rial Rls (M) 14,227 Rls (M) 80,751 76,427 Rls (M) sharing

226,649

121,819 251,264 240,876 226,649 530,261 226,649

Non-profit- Non-profit- sharing Non-profit- sharing

0 0 0 0 0 0

4,671 Rls (M) 10,757 Rls (M)

86,644 23,526 Rls (M) 10,757

203,303

738,103 409,266 536,485 910,190

203,303

1,372,370 1,909,649 1,372,370

1,586,430 17,188,286

1,586,430

21,806,820

Profit-sharing Profit-sharing Profit-sharing

pation bonds and other debt 35- Net profit (loss) from investments 34-2- Income from deposits in other banks and debt securities Sales by instalments Jealeh (service contract) Late payment penalty for LGs paid Late payment penalties for debtors of LCs Late payment penalty for LGs paid Other Hire purchase contracts Muzaraba (trade contracts) Civil partnership Salaf (future contracts) Factoring Murabaha Estesna'a Interest on term deposits with other banks Interest on certificates of deposit, Earnings from fixed-income funds Interest on statutory deposit (share of bank and depositors) partici securities Profit (loss) realized on investments Dividends from shares of companies and mutual funds Profit (loss) from sales of companies' shares and mutual funds Total profit (loss) realized on investments Profit (loss) from increase (decrease) in investments value Net profit (loss) from increase (decrease) in investments value Net profit (loss) from investments Interest on statutory deposit (share of bank and depositors) Interest on term deposits with other banks Interest on certificates of deposit, securities Earnings from fixed-income funds

participation bonds and other debt

122 Financial Report 123 35-1- Dividends from companies and units of mutual funds in the parent company break down as follows: 2017 2016 forex forex Rial Rial (non-profit Total (non-profit Total 2017 2016 (profit-sharing) (profit-sharing) sharing) sharing) forex forex Rial Rial (non-profit Total (non-profit Total Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) (profit-sharing) (profit-sharing) sharing) sharing) Iranian Leasing Co. 5,797 0 5,797 6,152 0 6,152 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Ghadir Investment Co. 0 0 0 1,519 0 1,519 Satellite Communication Group 32,694 0 32,694 22,117 0 22,117 Bank Passargad 2,986 0 2,986 4,389 0 4,389 Saman Exchange Co. 212,216 0 212,216 120,578 0 120,578 Fars and Khouzestan Cement Co. 0 0 0 340 0 340 Saman Electronic Payment Co. 481,478 0 481,478 185,933 0 185,933 Azarab 74 0 74 1 0 1 Saman Insurance 62,348 0 62,348 14,837 0 14,837 Piransharh Sugar 0 0 0 191 0 191 Saman Brokerage Co. 4,801 0 4,801 1,537 0 1,537 I. R. of Iran Shipping Lines 0 0 0 93 0 93 Sepah Investment Co. 0 0 0 11,780 0 11,780 Central Securities Depository and Settlement Co. 831 0 831 1,914 0 1,914 Iran Construction Investment Co. 623 0 623 696 0 696 Iran Khodro Card Services 0 0 0 0 0 0 Tooka Foulad Investment Co. 6,348 0 6,348 2,478 0 2,478 Iran Investment Co. 0 0 0 15,684 0 15,684 Shahed Investment Co. 0 0 0 528 0 528 Iran Credit Rating Co. 3,212 0 3,212 5,139 0 5,139 Copper 0 0 0 155 0 155 Stock Exchange Co. 141 0 141 0 0 0 Ta'min Oil and Gas 0 0 0 156 0 156 Iranian Credit Bureau and Scoring Co. 34,704 0 34,704 19,832 0 19,832 Tehran Housing Investment Co. 0 0 0 311 0 311 Saman Pardazeshgara Co. (Processing) 1,002 0 1,002 9,000 0 9,000 Gharb Cement Co. 2 0 2 0 0 0 Sepehr Shargh Atieh Andishan Co. 2,502 0 2,502 0 0 0 Sahand Tire 628 0 628 0 0 0 Iran Energy Exchange 458 0 458 458 0 458 Iran Khak Chini 7 0 7 0 0 0 Aftab Tejarat Saman Co. 752 0 752 1,202 0 1,202 Iran Amlah Mining Co. 7 0 7 0 0 0 Middle East Bank 8,927 0 8,927 5,714 0 5,714 Khorasan Petrochemical Co. 4 0 4 0 0 0 Shaparak Electronic Payment Co. 0 0 0 11,978 0 11,978 Takin Co. 31 0 31 0 0 0 Kardan Investment Bank 427,374 0 427,374 16,566 0 16,566 Khorasan Pegah 30 0 30 0 0 0 Iran Fanavar Pars Investment Co. 9,000 0 9,000 2,400 0 2,400 Omid Investment Co. 2,172 0 2,172 0 0 0 Hamedan Glass Works 0 0 0 12,277 0 12,277 Kharazmi Investment Co. 10,439 0 10,439 0 0 0 Iran Pump Manufacturing Co. 0 0 0 1,003 0 1,003 Iran Telecommunication 922 0 922 0 0 0 Hamkaran System 15 0 15 0 0 0 Dividends from long-term investments 1,282,440 0 1,282,440 448,169 0 448,169 Tolid Darou Pharmaceutical Co. 6 0 6 0 0 0 Absal Co. 0 0 0 5 0 5 Parsian E-Commerce 4 0 4 0 0 0 Irankhodro 31 0 31 185 0 185 Tooka Rail 5,999 0 5,999 0 0 0 Irka Part Industry 0 0 0 0 0 0 Iran Kish Credit Card 17 0 17 0 0 0 Bank Saderat 0 0 0 423 0 423 Mapna Power Generation - Asalouyeh 8 0 8 0 0 0 Bank Mellat 0 0 0 45 0 45 Pakshoo Industrial Group 24 0 24 0 0 0 Bahman Leasing Co. 0 0 0 45 0 45 Ghasem Iran 9 0 9 0 0 0 Shazand Petrochemical Co. 67 0 67 1 0 1 Damavand Power Generation 24 0 24 0 0 0 Fanavaran Petrochemical Co. 0 0 0 4 0 4 Mobin Petrochemical Co. 300 0 300 0 0 0 Maroon Petrochemical Co. 0 0 0 3 0 3 Tooka Refractory Industry 285 0 285 0 0 0 Tractor Manufacturing Co. 802 0 802 1 0 1 Fajr Petrochemical Co. 516 0 516 0 0 0 Arian Economic Development 0 0 0 317 0 317 Sobhan Oncology 10 0 10 0 0 0 Behshahr Industry Development 0 0 0 4,065 0 4,065 Iran Transfo 37 0 37 0 0 0 Shomal Drilling Co. 3,065 0 3,065 14,214 0 14,214 7 0 7 0 0 0 Tooka Transport Co. 4,613 0 4,613 1,830 0 1,830 Oil Industrial Development Co. 600 0 600 0 0 0 Information Services 0 0 0 360 0 360 Bank Sina 3,373 0 3,373 0 0 0 Exir Pharmaceutical Co. 0 0 0 43 0 43 Mellat Insurance 874 0 874 0 0 0 Piazar Agro-Industry Co. Rayan Saipa 27 0 27 1,317 0 1,317 76 0 76 0 0 0 Alhavi Pharmaceutical Co. Alborz Investment Co. 0 0 0 0 0 0 26 0 26 0 0 0 Parsian Bank 2 0 2 0 0 0 Iran Khodro Investment Co. 0 0 0 799 0 799 Middle East Tide Water 15 0 15 0 0 0 Pars Tousheh Investment 0 0 0 9 0 9 A.S.P. 18 0 18 0 0 0 Mines and Metals Development Investment Co. 0 0 0 6,879 0 6,879 Sina Port and Marine Industry Development Co. 15 0 15 0 0 0 Tosee Meli Investment Group Co. 0 0 0 6,520 0 6,520 Ansar Bank 5 0 5 0 0 0 Sarma Afarin 0 0 0 4 0 4 Shahed Civil and Development Co. 11 0 11 0 0 0 Barez Industrial Co. 0 0 0 1,066 0 1,066 Hekmat Bank 2 0 2 0 0 0 Isfahan Mubarakeh Steel Co. 4,003 0 4,003 8,920 0 8,920 Other 0 0 0 0 0 0 Khorasan Foulad Co. 0 0 0 220 0 220 Dividend from short-term investments 59,165 0 59,165 85,154 0 85,154 Bahman Group 2,365 0 2,365 7,500 0 7,500 Profit from units of mutual funds 0 0 0 0 0 0 Mapna Group 1,844 0 1,844 1,590 0 1,590 Dividends from companies' shares and 1,341,605 units of mutual funds 0 1,341,605 533,323 0 533,323

124 Financial Report 125 35-2- Profit (loss) from sales of companies’ shares and units of mutual funds in the parent company: 35-2-1- In the early months of the year 2016 (about March), the bank owned 63% of shares in Saman Electronic Payment Co., out of which 15% was transferred to Saman Insurance Co., 5% to Sarmad 2017 2016 Andoukhtehsazan Farda Co. and 15% to Atieh Andishan Sepehr Shargh Co. for the amount of Rls. 4, 563/- billion in total. Of this total figure, the amount of Rls. 200/-billion was paid in cash, the amount of Rls. 435/- billion was Number of Net sale value Book value Profit (loss) Profit (loss) shares offset in exchange for real estate and residual balance would be received in instalments by the end of the year 1397 (March 20, 2019). Profit (loss) from sales of companies' shares - rial (profit-sharing) Share Rls (M) Rls (M) Rls (M) Rls (M) 35-3- Profit (loss) from increase (decrease) in investments value

Saman Electronic Payment Co. 633,704,954 4,537,327 742,673 3,794,654 0 2017 2016 Behshahr Industry Development Co. 0 0 0 0 (4,736) Number of Cost price Market value Profit (loss) Profit (loss) Iranian National Copper Industries 0 0 0 0 (24,219) shares Mines and Metals 4,111,879 5,640 10,851 (5,211) (26,586) Net profit (loss) from increase (decrease) in investments Share Rls (M) Rls (M) Rls (M) Rls (M) Isfahan Mubarakeh Steel Co. 68,369,127 90,256 84,798 5,458 (59,284) value - rial (profit-sharing)

Khorasan Steel Co. 0 0 0 0 (4,649) Mines and Metals Development Investment Co. 0 0 0 0 (5,063) Iran Construction Investment Co. 2,880,522 9,674 10,744 (1,070) (7,399) Isfahan Mubarakeh Steel Mill 16,456,434 20,069 22,948 2,879 (810) Iran Telecommunication Co. 2,050,000 4,426 5,151 (725) (2,725) Iran Construction Investment Co. 8,911,790 33,256 21,318 (11,938) 2,656 Rena Investment Co. 0 0 0 0 12,524 Iran Telecommunication Co. 4,899 12 11 (1) 3 Bank Tejarat 3,000,000 2,123 3,309 (1,186) 2,100 Bank Sina 19,277,199 33,303 19,422 (13,881) (1,361) Shomal Drilling Co. 11,348,678 44,642 60,045 (15,403) (30,698) Shomal Drilling Co. 2,171,445 11,489 7,227 (4,262) (16,925) Rayan Saipa Leasing Co. 2,481,522 8,136 7,656 480 10,025 Mapna Group 7,377,750 59,265 55,508 (3,757) 10,407 Mapna Group 0 0 0 0 3,362 Azarab 0 0 0 0 246 Ghadir Investment Co. 0 0 0 0 (2,495) Alborz Insurance 0 0 0 0 (164) Azarab 3,000,000 13,570 17,067 (3,497) 438 Iran Khodro 3,154,455 10,291 8,135 (2,156) 10,957 Iran Khodro 10,350,000 37,663 35,408 2,255 7,104 Bank Mellat 6,852,952 13,448 7,494 (5,954) (621) Saipa 2,000,000 2,521 2,988 (467) (2,497) Shahed Investment Co. 0 0 0 0 112 Bank Mellat 5,000,000 5,840 9,812 (3,972) 2,212 Iranian Leasing Co. 29,493,077 56,198 45,214 (10,984) (14,436) Tosee Meli Investment Group Co. 0 0 0 0 (5,026) Sepah Investment Co. 0 0 0 0 (21,661) Iranian Leasing Co. 2,199,048 3,207 4,235 (1,028) (2,084) Bank Saderat 11,600,000 12,884 10,389 (2,495) (693) Sepah Investment Co. 24,129,271 33,706 52,753 (19,047) (34,892) Passargad Bank 0 0 0 0 (22,927) Post Bank 0 0 0 0 (6,272) Tooka Rail 19,186,128 50,318 40,161 (10,157) (861) Passargad Bank 26,336,559 27,609 56,603 (28,994) (5,675) Tooka Foulad Investment Co. 43,522,499 58,654 52,206 (6,448) 17 Piranshahr Sugar Co. 0 0 0 0 (3,598) Tooka Foulad Investment Co. - Rights issue 6,750,000 2,346 1,235 (1,111) 0 Isfahan Steel Mill 150,000 379 374 5 (19,584) Bahman Group 14,920,000 35,268 26,254 (9,014) 14,251 Omid Investment Co. 4,000,000 5,805 8,183 (2,378) 0 Sahand Tire Manufacturing Co. 0 0 0 0 (811) Tehran Oil Refinary 0 0 0 0 (2,856) Kharazmi Investment Co. 30,000,000 42,158 23,871 (18,287) (4,457) Bahman Group 5,425,000 15,707 12,605 3,102 3,246 Tooka Transport Co. 8,998,711 19,935 25,498 5,563 3,295 Kharazmi Investment Co. 12,929,305 12,369 18,169 (5,800) 374 Iran Khodro Investment Development 500,000 2,388 1,745 (643) 1,125 Ta'min Oil, Gas & Petrochemical Co. 0 0 0 0 (3,673) Mobin Petrochemical Co. 0 0 0 0 (85) Fars - Khouzestan Cement 0 0 0 0 (1,782) Tractor Manufacturing Co. 0 0 0 0 (268) Hamedan Glass Works 0 0 0 0 3,446 Fajr Petrochemical Co. 0 0 0 0 (334) Barez Industrial Co. 0 0 0 0 (1,206) Tooka Refractory Industries 0 0 0 0 (92) Iran Khodro Investment Development Co. 2,000,000 11,284 9,533 1,751 (7,632) Piazar Agro-Industry Co. 0 0 0 0 (258) Plasco Kar 0 0 0 0 (1,329) Shahed Civil and Development Co 0 0 0 0 4 Khodro Diesel Co. 0 0 0 0 1,624 Damavand Power Generation Co. 0 0 0 0 18 Piazar Agro-Industry 7,674,752 26,073 20,313 5,760 0 Middle East Life Insurance 200,000 100 98 (2) 97 Mellat Insurance Co. 7,456,678 12,223 10,313 1,910 0 Bahman Investment Co. 0 0 0 0 51 Oil Industry Investment 3,500,000 7,298 8,766 (1,468) 0 Oil Industry 1,000,000 2,504 1,783 (721) 0 Data Processing Co. 2,333,973 8,621 6,385 2,236 0 Shiraz 1 Petrochemical Urine 2,000 14,037 16,159 2,122 0 Iran Khodro Card 0 0 0 0 1,304 Ansar - Rights Issue 6,481 7 4 (3) 0 Others 53,843,293 123,964 119,760 4,204 781 Alhavi Pharmaceutical Co. 1,277,010 6,204 5,366 (838) 0 900,274,561 5,050,063 1,318,494 3,731,569 (212,357) Talise Livestock Breeding 189,860 1,628 1,674 46 0 Profit (loss) from sales of mutual funds - rial (profit-sharing) 0 0 0 0 0 Informatic Services Co. 144,757 2,702 2,723 21 0 Profit (loss) from sales of companies' share - forex (non-profit sharing) 0 0 0 0 0 A.S.P. 932,047 1,120 926 (194) 0 Profit (loss) from sales of mutual funds - forex (profit-sharing) 0 0 0 0 0 Plastiran 309,535 575 260 (315) 0 900,274,561 5,050,063 1,318,494 3,731,569 (212,357) Adjustment of impairment loss reserves from previous year 0 0 0 48,915 326,415 490,159 397,629 (43,615) 277,827 Profit (loss) from increase (decrease) in investments value - forex (non-profit sharing) 0 0 0 0 0 490,159 397,629 (43,615) 277,827

126 Financial Report 127 36-2-2- Average investment deposits 36- Bank’s share from profit-sharing incomes 2017 2016 Bank’s share of sources from profit-sharing incomes is calculated as follows: Investment deposits Amount (average) Amount (average) Rls (M) Rls (M) 36-1- Bank’s share from profit-sharing incomes One-year term 68,536,213 54,701,759

Bank’s share of Two-year term 73,495 3,080,983 Bank's share of sources to total uses Profit-sharing Financial year sources from ratio (38-2) incomes Three-year term 66,513 81,554 profit-sharing incomes Four-year term 77,185 73,953 Percentage Rls (M) Rls (M) Five-year term 16,287,017 21,838,126 2016 0 30,284,106 0 2017 0 28,422,807 0 General certificates of deposit 0 0 Ordinary short-term deposits 96,139,447 80,930,664 Investment deposits received from banks and credit institutions 1,040,221 171,329 • Should the shared uses be less than the total free resources of investment deposits, the bank’s resources and accordingly its share from the profit-sharing incomes will drop to nil (zero-sum). Special short-term deposits 758,157 384,544 Average investment deposits 182,978,248 161,262,912

36-2- Distribution of shared resources and uses between the depositors and the bank 36-3- The interest on statutory deposit from investment deposits is as follows: 2017 2016 Average Rls (M) Rls (M) 2017 2016 Average shared uses (36-2-1) 130,350,703 126,086,695 53-week average Rls (M) Rls (M) Average balance of investment deposits (36-2-2) 182,978,252 161,262,915 53-week average Average statutory deposit of investment deposits 21,432,804 19,364,895 Less: Statutory deposit from investment deposits (21,432,804) (19,364,895) 53-week average Interest on statutory deposit (at one percent rate of average resources) 215,922 196,005

Free resources of investment deposits 161,545,448 141,898,020 Bank’s share of sources out of shared uses 31,194,745 (15,811,325) (Surplus free resources of investment deposits) 37- Deposits management fee

The bank share of resources out of the shared uses means the shared uses deducted from the free resources of • The bank’s management fee for the fiscal year 2016-2017 was calculated at the rate of 3% on the basis of the minutes investment deposits. Should the total free resources of investment deposits exceed the shared uses, the surplus dated September 25, 2016. thereof will be named the surplus free resources of investment deposits. Management fee = Fee rate x Average shared uses 3,910,522 = %3 x 130,350,703 36-2-1- Average shared uses

2017 2016 Items of shared uses Amount (average) Amount (average) 37-1- Stated management fee (MF) Rls (M) Rls (M) Stated MF Calculated MF Net uses related to loans 119,870,957 117,151,335 Rate (Percentage) Amounts in Rls (M) Rate (Percentage) Amounts in Rls (M) Net uses related to investment deposits with other banks 6,658,342 6,511,657 Ordinary short-term deposits 3 2,549,499 2.14 2,054,645 Net uses related to investment in shares and other securities 3,821,403 2,423,702 Special short-term deposits 3 20,042 2.14 16,203 Total uses related to shared operations 130,350,702 126,086,694 General certificates of deposit 3 0 2.14 0 One-year term 3 1,817,043 2.14 1,464,723 Two-year term 3 1,950 2.14 1,571 Three-year term 3 1,764 2.14 1,422 Four-year term 3 2,047 2.14 1,649 Five-year term 3 422,809 2.14 348,078

Investment deposits received from banks and credit 3 31,206 2.14 22,231 institutions

4,846,360 3,910,522

128 Financial Report 129 38- Compensation of expenses related to depositors' free resource surplus to 41- Fee and commission incomes profit-sharing uses

Group Parent company Pursuant to the directive No. 94/69383 of June 10, 2015 the expenses for depositors’ surplus resources are calculated as follows: Note 2017 2016 2017 2016 Rls (M) Rls (M) Rls (M) Rls (M) Profit-sharing incomes Surplus free resources of investment deposits to shared uses x Net fees for interest-free (Gharzolhasaneh) transactions 41-1 23,129 4,869 23,129 4,869 Average shared uses Fees for LCs opened 47,214 37,175 47,214 37,443 31,194,744 x (28,422,807/130,350,703) = 6,801,974 Fees for LCs issued 73,722 60,271 78,358 60,869 Forex transactions 58,801 52,161 58,801 52,161 Fees for managed funds 0 21 0 21 39- Provisional interests paid on investment deposits Banking drafts 144,945 122,075 126,125 122,075 Collaterals valuation 0 0 0 0

Group Parent company Processing customer's files 0 0 0 0 2017 2016 2017 2016 Credit cards subscription 17,673 51,742 17,673 51,742 Rls (M) Rls (M) Rls (M) Rls (M) Fees for Shetab Payment System 747,377 615,176 747,377 615,176 Interest on short-term deposits 13,443,317 13,053,603 13,504,958 13,108,509 Fees received from holders of special certificates of deposits 0 0 0 0 Interest on special short-term deposits 130,924 85,882 130,924 85,882 Fees from SMS (short banking messages) 67,706 61,856 67,706 61,856 Long-term deposits Sale of insurance services 60,868 52,561 60,868 52,561 One-year term 13,385,846 12,031,615 13,385,846 12,031,615 Other 101,932 57,249 101,932 57,249 Two-year term 12,401 676,650 12,401 676,650 1,343,367 1,115,156 1,329,183 1,116,022 Three-year term 13,740 19,244 13,740 19,244 Four-year term 15,452 15,446 15,452 15,446 Five-year term 4,341,813 5,203,195 4,341,813 5,203,850 41-1- Net fees for free-interest transactions are as follows: General certificates of deposit 1,222 129,197 1,222 129,197 2017 2016 Investment deposits received from banks and credit institutions 141,045 40,212 141,045 40,212 Rls (M) Rls (M) 31,485,760 31,255,044 31,547,401 31,310,605 Fees received for interest-free loans 23,945 5,685 Fees for prizes on interest-free deposits (816) (816) 40- Interest expenses on deposits Net fees for interest-free loans 23,129 4,869

Group Parent company Note 2017 2016 2017 2016 Rls (M) Rls (M) Rls (M) Rls (M) 42- Fee and commission expenses Interest on investment deposits in rial 40-1 31,485,760 31,255,044 31,547,401 31,310,605 Interest on special certificates of deposit 0 0 0 0 Group Parent company Interest on foreign currency deposits 400,514 490,906 400,514 490,906 2017 2016 2017 2016 31,886,274 31,745,950 31,947,915 31,801,511 Rls (M) Rls (M) Rls (M) Rls (M) Fees paid to Shetab Payment System 420,771 460,459 420,771 460,459

40-1- Reconciliation statement of provisional interests paid on investment deposits in Rial along with interest Fees paid to other banks 1,063,987 1,242 1,063,987 1,242 expenses incurred on investment deposits. Clearing house fees 0 0 0 0 2017 2016 Membership fees for deposits guarantee 0 208,192 0 208,192 Rls (M) Rls (M) Fees paid to brokers 121,569 3,466 121,569 3,466 Provisional interest paid on investment deposits (Note 39) 31,547,401 31,310,605 Fees paid to persons/entities 53,267 428,366 235,284 469,900

Plus (less): Differential in interest payable to depositors (surplus of interest paid to Other 1,520 811 1,520 811 (17,218) (815,452) depositors - brought from the statement of investment deposits performance) 1,661,114 1,102,536 1,843,131 1,144,070 Final interest accrued to investment deposits 31,530,183 30,495,153 Plus: Final interest paid to depositors (equivalent to surplus interest paid to depositors) 17,218 815,452

Interest on investment deposits in rial 31,547,401 31,310,605

130 Financial Report 131 43- Income from sales and services rendered 46-1- Profit (loss) from sale of fixed assets breaks down as follows: 2017 2016

Group Cost Book value Amount sold Profit (loss) Profit (loss) 2017 2016 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Land 302,253 302,253 691,742 389,489 0 Sales and services rendered 57,931,529 41,119,595 Buildings 281,777 212,922 644,881 431,960 0 Return from sales and reductions (in subsidiaries) (113) 0 Goodwill for place of business 1,103,935 1,103,934 2,526,486 1,422,551 0

57,931,416 41,119,595 Furniture and fixtures 0 0 0 0 0 Motor vehicles 0 0 0 0 0 Royalties 0 0 0 0 0 43-1- The income earned from sales and services rendered is mainly related to the foreign currency trading Installations 0 0 0 0 0 (sales) by the Saman Foreign Exchange Company. Assets in process of completion 0 0 0 0 0 Orders and capital prepayments 0 0 0 0 0 44- Cost price of sales and services rendered Capital items in stock 0 0 0 0 0 1,687,965 1,619,109 3,863,109 2,244,000 0 Group 2017 2016 46-2- The income from professional (loan processing) fees is related to the fees received from customers for due Rls (M) Rls (M) diligence and processing of their loans applications. Cost price of goods and services rendered 56,688,318 39,901,118 56,688,318 39,901,118 47- Administrative and general expenses

Group Parent company 45- Profit (loss) from foreign currency exchanges and transactions Note 2017 2016 2017 2016 Rls (M) Rls (M) Rls (M) Rls (M)

Group Parent company Personnel expenses 47-1 2,374,663 2,089,693 2,187,644 1,911,860 2017 2016 2017 2016 Other administrative expenses 47-2 1,519,567 1,472,528 1,398,407 1,372,814 Rls (M) Rls (M) Rls (M) Rls (M) 3,894,230 3,562,222 3,586,051 3,284,674 Profit from forex trading (buying & selling) 1,297,131 168,217 1,288,353 168,217 Profit (Loss) from foreign exchange translation 77,864 1,129,154 96,212 1,127,653 1,374,995 1,297,371 1,384,565 1,295,870 47-1- The personnel expenses break down as follows:

Group Parent company 2017 2016 2017 2016 Rls (M) Rls (M) Rls (M) Rls (M) 46- Net other incomes and expenses Salaries, wages and benefits 1,667,856 1,432,551 1,515,337 1,288,509 Social security insurance - employer's contribution 292,318 249,428 277,599 236,398 Group Parent company Employees' termination and pension benefits 160,284 142,474 150,919 134,498 Note 2017 2016 2017 2016 Business travels and allowances 37,252 21,974 35,831 20,017 Rls (M) Rls (M) Rls (M) Rls (M) Other 216,953 243,266 207,958 232,438

Profit (loss) from sale of tangible fixed and intangible assets 46-1 2,244,000 0 2,244,000 0 2,374,663 2,089,693 2,187,644 1,911,860 Profit (loss) from sale of foreclosed collaterals 3,283,866 2,880,251 3,283,508 2,866,384

Professional (loan processing) fees 46-2 181,129 319,636 181,129 320,220 Others 439,171 223,025 497,920 193,197 6,148,166 3,422,912 6,206,557 3,379,801

132 Financial Report 133 47-2- The administrative expenses break down as follows: 48-1- The specific expenses for doubtful debts incurred for the loans granted and the amounts due are calculated as follows: Group Parent company

2017 2016 2017 2016 2017 2016 Rls (M) Rls (M) Rls (M) Rls (M) Doubtful Doubtful debts Overdue Outstanding debts more than 5 Total Total Office rents 299,112 290,966 294,827 285,883 up to 5 years years Expenses for advertisement and marketing 189,547 382,296 182,731 375,196 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Purchase of contractual services 187,284 61,101 179,897 53,691 Balance of loans granted and non-current loans at Utilities: water and electricity 96,866 96,538 95,354 94,928 year-end Personnel transportation cost 14,670 12,057 13,195 10,836 Governmental entities 0 0 0 0 0 0 Office supplies and consummables 58,471 58,635 54,355 53,449 Non-governmental entities/persons 2,217,780 4,477,815 44,294,460 0 50,990,055 43,497,539 Automation expenses 49,539 50,843 49,834 51,674 Balance of other accounts receivable at year-end 0 0 0 0 0 0 Insurance espenses 86,651 116,129 64,301 95,125 Amounts due from subsidiary and affiliated companies 0 0 0 0 0 0 Auditing ans consulting fees 68,331 53,776 53,645 39,984 Other accounts receivable 0 0 0 0 0 0 Gifts, presents and prizes 2,490 4,294 2,032 4,000 2,217,780 4,477,815 44,294,460 0 50,990,055 43,497,539 Repairs and maintenance of tangible fixed-assets 45,784 22,868 44,383 21,132 Less: collaterals value by calculating risk factors Protocol and refreshment expenses 129,403 115,441 126,779 112,849 Savings and investment deposits (56,936) (10,488) (9,651) 0 (77,075) (80,780) Training and research 4,316 5,056 3,326 4,183 Participation bonds and other debt securities 0 0 0 0 0 (4,456) Transportation charges 6,266 2,947 3,208 2,947 guaranteed by the government and CBI Participation bonds and other debt securities Satellite communication expenses 12,114 26,536 12,114 26,536 0 (800) (800) 0 (1,600) 0 guaranteed by other banks Bonuses and remuneration for board members 0 19,200 0 19,200 Banking LGs 0 0 0 0 0 0 Attendance bonus for non-executive board members 0 0 0 0 LCs transacted 0 0 0 0 0 0 Other expenses 268,723 153,845 218,426 121,202 Shares listed on the stock exchange (1,031,477) 0 (43,337) 0 (1,074,814) (936,624) 1,519,567 1,472,528 1,398,407 1,372,814 Real estates (5,894,749) (2,179,662) (28,290,366) 0 (36,364,777) (25,019,346) Machinary (17,548) (44,818) (74,574) 0 (136,940) (196)

(7,000,710) (2,235,768) (28,418,728) 0 (37,655,206) (26,041,402) Base balance for calculating specific provision 793,095 2,242,045 8,118,172 0 Base factor for calculating specific 48- Expenses for doubtful debts 10 20 50 100-50 provision - percentage Specific provision for doubtful debts 79,309 448,409 4,059,086 0 4,586,804 4,286,804 Group Parent company Plus: specific provision for renewed and restructured 0 0 0 0 0 0 2017 2016 2017 2016 loans Less: Balance of provision for doubtful debts during Rls (M) Rls (M) Rls (M) Rls (M) (108,620) (203,253) (3,974,932) 0 (4,286,804) (3,520,844) the year Specific expenses for doubtful debts, loans and claims 304,240 715,293 300,000 674,686 Plus: written-off loans during the year 0 0 0 0 0 0 General expenses for loans and claims 0 92,376 0 91,274 Specific provision for doubtful debts, loans (29,311) 245,156 84,154 0 300,000 765,960 304,240 807,669 300,000 765,960 grantedcand amounts due

48-2- General expenses for the loans granted and amounts due are as follows:

2017 2016 Rls (M) Rls (M) Balance of amounts due from the government 0 0 Balance of loans granted to governmental entities 0 0 Balance of loans granted to non-governmental entities/persons 133,962,716 132,900,503 Balance of interim accounts (temporary debtors) related to loans 2,239,022 1,189,344 Balance of debts for term LCs 473,190 63,059 Amounts due from subsidiary and affiliated companies 3,578,946 1,030,522 Other accounts receivable 4,284,044 5,027,631 Less: Balance of loans granted and the amounts for which specific provision has been calculated (24,905,959) (20,579,100) Base balance for calculating general provision 119,631,959 119,631,959 Base factors for calculating general provision - (percentage) 1.5 1.5 General provision for loans granted and amounts due 1,794,479 1,794,479 Less: balance of general provision for loans granted and amounts due at year-end (1,794,479) (1,703,205) Plus: written loans during the year 0 0 General provision for loans granted and amounts due 0 91,274

134 Financial Report 135 49- Financial expenses

0 0 0 0 0 0 0 0 0 0 0 0 0 0 Group Parent company 0

Rls (M) 89,408

2017 2016 2017 2016 5,651,666 3,593,857

12,833,651 27,042,210 21,885,077 29,606,051

194,173,795 126,987,987

Rls (M) Rls (M) Rls (M) Rls (M) post-amendment Balance of financial

statements 2015-2016

Financial expenses of debt securities 0 49,863 0 49,863

Interest and late payment penalties on facilities received from Central Bank 1,788 9,329 1,788 9,329 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Interest on facilities received from other bank and credit institutions 0 0 0 0 Rls (M) 511,882 649,675

2,645,503 3,807,060

Late payment penalty paid 0 0 0 0 Late payment penalty for overdraft from current account with CBI 0 0 0 0

)

Consolidated financial expenses 109,528 198,391 0 0 adjustments nts presented for the previous fiscal year. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Parent company Rls (M) 48,822 133,405

111,316 257,583 1,788 59,192 133,404 Debit Credit (

1,112,737 2,645,504 3,807,062

Amendments and classified

49-1- T h e e x p e n s e s p a i d f o r S u k u k b o n d s w e r e r e l a t e d t o p r i o r y e a r s ’ b o n d s w h i c h w e r e s e t t l e d i n t h e b e g i n n i n g o f 2 0 1 5 .

the comparative financial statements have been amended amended been have statements financial the comparative

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

50- Depreciation/amortization expenses Rls (M) 1,202,145 5,785,071 3,593,857

12,700,247 29,687,714 21,933,899 30,255,726

191,528,292 127,499,869

pre-amendment Balance of financial

statements 2015-2016 Group Parent company 2017 2016 2017 2016

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

Tangible fixed assets depreciation 405,227 386,572 391,808 359,079 0 0 0

Rls (M) 56,816 41,979 82,198 40,809

544,386 171,440 624,175 Intangible assets depreciation 68,598 64,746 53,401 63,588 196,733

1,595,889 6,610,288 1,531,394 6,833,437 6,109,443 4,128,134

50,716,771 12,833,651 27,672,186 21,806,467 29,801,528

193,508,582 126,691,865

473,825 451,318 445,209 422,667 post-amendment Balance of financial

statements 2015-2016

0 0 0 0 0 0 0 0 0 0 0 0

51- Prior years’ adjustments 609

2,829 9,662 Rls (M)

27,809 25,159 79,596

511,881 134,527 511,880

2,645,504 1,575,583 1,581,862 7,106,901

Group Parent company Group

Note 2017 2016 2017 2016

adjustments 0 0 0 0 0 0 0 0 0 0 0 0

Rls (M) Rls (M) Rls (M) Rls (M) 161

1,499 Debit Credit Rls (M)

26,721 20,670 14,378 15,634

133,405 842,253

1,158,905 1,118,204 1,129,579 2,645,504 7,106,913

Amendments and classified

Accumulated effects of changes in accounting standards 51-1 0 0 0 0

Adjustment of errors 51-2 34 (849,856) 0 (744,994)

34 (849,856) 0 (744,994)

Rls (M) 68,700 67,820

516,578 168,610 649,334 187,071 134,527 120,406

1,597,388 1,215,721 5,034,705 1,129,579 1,532,003 1,581,862 5,991,184 6,093,809 51-1- In 2016-2017 no changes have been made in accounting standards compared to 2015-16. 4,127,973

49,598,567 12,700,246 30,317,690 21,827,137 30,313,408

190,863,078 127,203,746

pre-amendment Balance of financial

statements 2015-2016 51-2- The adjustment of errors includes the following items:

9 31 33 29 27 25 26 11 10 12 13 22 23 24 14 15 18 16 19 21

Group Parent company Note 2017 2016 2017 2016 Rls (M) Rls (M) Rls (M) Rls (M)

Prior years' adjusted income tax (177) (766,544) 0 (712,736) affiliates

Adjusted value added tax (VAT) 0 (4,543) 0 0 Adjusted withholding tax and prior years' interests 0 (988) 0 0 Adjusted insurance premiums 162 (49,218) 0 (32,258) Adjusted income 0 (1,108) 0 0 Other expenses 49 (27,455) 0 0 and restated. For this reason, some of the items so compared may not necessarily correspond with those in the financial stateme In order to provide a fair profile of the financial position and the results of operations, all relevant comparative items in in items comparative relevant all operations, of results the and position financial the of profile fair a provide to order In

34 (849,856) 0 (744,994) - Legal reserve Accumulated earnings Minority interest Cash Investment depositor's equity Reserves and other liabilities Trade accounts payable Advances received Tax income provision Due from banks and other credit Loans granted to and amounts due from non-governmental entities Investment in shares and other securities Long-term investment in affiliates Amounts due from subsidiaries and Due to banks and other credit institutions institutions Customers' deposits Dividends payable Trade accounts receivable Other accounts receivable Tangible fixed assets Orders and prepayments Intangible assets Other assets

51-3

136 Financial Report 137 52- Reconciliation statement of net profit

The reconciliation statement of net profit along with the net cash inflow from operating activities breaks down as follows: 0 0 0 0 0 0 0

Rls (M) 744,993 598,793 765,960

1,144,069 1,116,022 3,284,674 3,379,802

31,190,333 Group Parent company post-amendment Balance of financial

statements 2015-2016 2017 2016 2017 2016

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

Net profit (loss) (1,634,725) 482,504 84,666 102,745 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Rls (M) 13,006 13,006

Depreciation/amortization expense 509,243 955,483 445,209 422,667

Net increase (decrease) in provision for employees' termination and 97,458 139,719 122,677 118,327 pension benefits

) Net increase (decrease) in income tax payable (302,958) (187,868) 0 0 adjustments 0 0 0 0 0 0 0 0 0 0

Parent company 815 816 (

Profit (loss) from sale of non-operating real estates (2,244,001) 0 (2,244,001) 0 Rls (M) 13,006

712,736 400,000

Debit Credit 1,112,737 1,125,743 Profit (loss) from sale of tangible fixed and intangible assets (3,283,866) (2,880,252) (3,283,508) (2,866,385) Amendments and classified

Net increase (decrease) in financial expenses payable 0 0 0 0 Net profit (loss) from cash foreign currency translation (77,865) (1,129,155) (96,213) (1,127,654)

(6,936,714) (2,619,569) (4,971,170) (3,350,300)

0 0 0 0 0 0 0 Net increase (decrease) in operating liabilities

Rls (M) 32,257

611,799 365,960

Due to banks and other credit institutions (21,921,716) 297,329 (21,566,922) 36,951 1,144,069 3,285,489 3,379,801 1,131,267

31,177,327

pre-amendment Customers' deposits (4,699,905) 154,730 (4,786,705) 190,145 Balance of financial

statements 2015-2016 Debt securities 0 (1,000,000) 0 (1,000,000) Operating portion of provisions and other debts 4,183,035 (1,487,199) 4,544,647 (1,433,353)

Investment depositors' equity 20,151,158 34,596,373 20,679,253 34,494,860

(2,287,428) 32,561,233 (1,129,727) 32,288,603 Rls (M) 100218

174,597 133,611 849,856 230,773 807,669 451,318 Net (increase) decrease in operating assets

1,102,536 3,562,222 3,422,912 1,297,371 1,115,156

41,119,595 39,901,118 31,084,107

postamendment Due from banks and other credit institutions 3,157,621 (883,585) 3,024,216 (750,181) Balance of financial

statements 2015-2016 Amounts due from the government 0 0 0 0 Loans granted to and amounts due from governmental entities 0 0 0 0

Loans granted to and amounts due from non-governmental entities/persons (840,420) (8,948,692) (762,214) (8,876,306) 0 0 0 0 0 0 0 0

422 623 721

4,339 Rls (M)

12,067 20,837 13,006 52,015

Investment in shares and other securities (688,340) (579,591) 460,774 (793,449) Due from subsidiaries and affiliates (505,135) 56,778 (2,548,425) 155,697 Group

Other accounts receivable (636,431) (3,840,897) 307,274 (5,148,937)

adjustments

0 0 0 0 0 0 0 Statutory deposit (1,904,359) (1,619,060) (1,904,359) (1,619,060)

15

5,561 1,044 Rls (M)

19,361 14,019 16,111 Debit Credit

754,809 400,000

Operating portion of other assets (10,804,309) (4,078,881) (11,195,952) (3,806,983)

1,158,905 1,210,920

Amendments and classified

(12,221,373) (19,893,928) (12,618,686) (20,839,219)

Net cash inflow (outflow) from operating activities (21,445,515) 10,047,736 (18,719,583) 8,099,084

Rls (M) 95,047

128,050 244,792 174,175 100,841 407,669 452,039

3,542,861 3,423,956 1,123,373 1,297,386 1,131,267

41,115,256 39,913,185 31,071,101

pre-amendment 53- Non-cash transactions Balance of financial

statements 2015-2016 The major non-cash transactions during the year break down as follows:

47 43 44 35 46 42 15 45 34 41 48 50 Note Note March 20, 2017 March 20, 2016 Rls (M) Rls (M) in and

affiliates Assets acquisition in exchange for loans granted 53-1 3,540,105 11,214,008 Assets offset for loans granted 53-2 0 0 Restructured loans (to renew previous loans) 5,174,295 4,040,629 Exchange of assets 53-3 316,427 684,677 Capital increase from dividends accrued to shareholders 0 0 Capital increase from assets revaluation reserve 0 0

9,030,827 15,939,314 Prior years' adjustments Group share from income earned by Minority interest from net profit Administrative and general expenses Income from sales and services rendered Cost price of sales and services rendered Net profit (loss) from investments Net profit (loss) from forex exchanges Net other incomes and expenses Fee and commission expenses Income from loans granted and deposits transactions other banks Fee and commission incomes Legal reserve Accumulated earnings Expenses for doubtful debts Depreciation expenses

138 Financial Report 139 53-1- During the reporting year, the following assets have been foreclosed/acquired: 839 450 7,539 March 20, 2017 1,609 in rial 15,839 17,206 22,084 66,954 Rls (M) 476,744 186,528 678,643 307,173 279,594 551,868 234,966 Amount

1,687,980 4,066,084 4,301,050 Type of customer Debt amount at the Value of forclosed asset Amount paid/ Debt balance after Type of asset foreclosed relationship forclosure date appraised by expert debt remission foreclosure

Rls (M) Rls (M) Rls (M) Rls (M) 95,064 Residential properties Unrelated customer 3,297,991 2,034,759 0 2,494,413 50,255 4,316,500 5,663,120 5,352,161 4,696,934 5,595,650 15,199,774 48,434,152 65,328,330 16,990,431 599,512,534 563,699,383 232,708,562 Forex amount Business/office properties Unrelated customer 73,944 642,504 0 7,144 23,646,101,593

Shares Unrelated customer 0 0 0 0 Balance at the year end

1 2 2 5 4 4 2 1 2 2

35 26 33 12 Participation bonds Unrelated customer 0 0 0 0 11

Factory and equipment Unrelated customer 588 492,000 0 96,468 Number

Land Unrelated customer 645,369 370,842 0 478,846 ) 4,017,892 3,540,105 0 3,076,871 ) 0 31 56 871 107 318 ( 1,774 5,765 2,230 7,709 2,584 3,070 in rial 41,082 46,995 73,843 ( Rls (M) 122,371 290,256 Amount 287,186

the year

Effects of exchange

rate during

March 19, 2016 Type of customer Debt amount at the Value of forclosed asset Amount paid/ Debt balance after

Type of asset foreclosed 0 0 relationship forclosure date appraised by expert debt remission foreclosure 2,357 in rial 57,535 22,993 Rls (M) 392,374 260,855 214,876 215,001 736,114 Amount

1,350,444 7,263,026 2,848,758 1,261,131 2,102,896 1,727,866 16,983,998 Rls (M) Rls (M) Rls (M) Rls (M) 17,720,112 Residential properties Unrelated customer 7,665,988 4,488,737 0 3,576,806 Business/office properties Unrelated customer 1,563,123 2,844,127 44,953 51,049 0 0 Shares Unrelated customer 0 0 0 0 8,193,875 16,041,584 11,258,627 12,236,370 46,357,086 53,196,227 24,022,011 208,402,242 268,211,756 747,261,001 9,089,046,624 4,239,710,601 Forex amount

Participation bonds Unrelated customer 0 0 0 0 99,259,878,300 Factory and equipment Unrelated customer 7,986,328 3,716,362 0 4,271,131 0 0 0 0 2 3 3 8 1 2 3 0

Land Unrelated customer 19,111 164,782 0 556 37 22 36 Credited (cancelled) during the year

17,234,550 11,214,008 44,953 7,899,542 Number

53-2- During the fiscal year ended March 20, 2017, this bank did not offset any asset with the loans granted. 0 0 0 3,967 March 20, 2017 Rls (M)

68,902 26,857 906,219

545,757 260,736 991,512 172,393 241,819

7,387,925 3,068,481 1,530,717 2,232,937 15,625,784 16,532,003

During the reporting year, the following assets were exchanged:

53-3- Amount in rial

March 20, 2017 Type of party Type of asset Book value of Value of asset Difference in amount Type of asset transferred 0 0 0 relationship acquired asset transferred appraised by expert received/paid 15,659,728 14,653,904 54,148,235 68,745,969 19,272,646 13,789,525 211,986,045 210,870,353 840,466,562 9,084,904,558 3,086,123,853 Rls (M) Rls (M) Rls (M) Forex amount 106,915,743,728 Opened during the year Residential properties - - 0 0 0 1 4 4 2 0 0 1 9 0 0 Business/office properties - - 0 0 0 2 25 22 31 10

Shares Shareholder Residential properties 316,427 435,000 140,000 Number

Participation bonds - - 0 0 0

Factory and equipment - - 0 0 0 0

782

in rial 3,356 Rls (M)

32,274 15,550 10,610 44,564 15,867 50,640 37,552 61,790 Amount

411,924 571,027 777,930

Land - - 0 0 0

5,137,099 1,521,996 1,704,817 5,198,889

316,427 435,000 140,000

0

March 19, 2016 95,064 951,060

1,440,689 4,316,500 4,799,620

Type of party Type of asset Book value of Value of asset Difference in amount 2,279,400 7,408,625 44,850,349 21,704,704

122,669,732 139,503,001

Type of asset transferred 603,654,600

1,717,286,131 Forex amount

relationship acquired asset transferred appraised by expert received/paid 15,990,236,165

Rls (M) Rls (M) Rls (M) 2 1 3 5 2 2 4 2 3 3 0 Residential properties Unrelated customer Residential properties 80,000 40,000 40,000 18 41 24 38 Balance at the beginning of year

Business/office Number Business/office properties Unrelated customer 367,177 234,959 132,217 properties Shares Unrelated customer Shares 0 0 0 Participation bonds Unrelated customer Participation bonds 0 0 0

Factory and equip- The statement of obligations pledged by the parent company under letters credit in foreign currency breaks down as follows: Euro Swiss Franc Swedish Krona Turkish Lira Korean Won Japanese Yen Chinese Yuan UAE Dirham Indian Rupee Omani Rial Euro Korean Won Chinese Yuan Indian Rupee Japanese Yen Factory and equipment Unrelated customer 0 0 0 Type of currency ment Land Unrelated customer Land 237,500 188,250 49,250 The obligations for letters of credit (LCs) – in rial and forex

684,677 463,209 221,467 54-1-1- 54- Off-balance sheet items 54-1- Demand/call Term

140 Financial Report 141 54-1-2- The obligations pledged by the parent company under Rial-denominated letters of credit are as follows: 54-3- Other obligations pledged by the parent company break down as follows:

Balance at the beginning of Credited (cancelled) Parent company Opened during the year Balance at the year end the year during the year March 20, 2017 March 19, 2016 Number Rls (M) Number Rls (M) Number Rls (M) Number Rls (M) Rls (M) Rls (M) Obligations for participation bonds and other securities guaranteed 0 0 Demand/call 3 7,157 0 0 2 4,987 1 2,170 Obligations for credit cards 1,604,420 1,527,280 Term 3 14,556 7 58,326 3 55,083 7 17,799 Obligations for contracts in forex - foreign exchange reserve account 0 0 21,713 58,326 60,070 19,969 Obligations for syndicated contracts 0 0 Obligations for commodity loans guaranteed 0 0 54-2- The obligations under letters of guarantee issued in rial and foreign currency Obligations for contracts in rial 13,158,985 2,454,071 Obligations for contracts with the Management and Planning Organization 0 0 Group Parent company Obligations for amounts received from National Development Fund in rial 0 0 Note 2017 2016 2017 2016 Obligations for amounts received from National Development Fund in forex 0 0 Rls (M) Rls (M) Rls (M) Rls (M) Obligations for transactions in non-governmental sector 2,575,191 3,010,752 Issued LGs - in Forex 54-2-1 690,708 369,760 690,708 369,760 Obligations by borrowers/users for credit services 4,974 5,004 Issued LGs - in Rial 54-2-2 4,366,151 6,568,558 4,439,236 6,709,528 Obligations for drafts 2,958,258 166,388 5,056,859 6,938,318 5,129,944 7,079,288 20,301,828 7,163,495

54-2-1- The statement of obligations pledged by the parent company under the letters of guarantee in foreign currency breaks down as follows: 54-4- The managed funds and similar funds consist of the following: March 20, 2017 March 19, 2016 Parent company Amount in forex Amount in rial Amount in forex Amount in rial March 20, 2017 March 19, 2016 Rls (M) Rls (M) Rls (M) Rls (M) US Dollar 0 0 408,476 12,353 Loans granted out of managed funds 1,100,631 1,087,018 UK Pound 138,334 5,560 138,334 5,961 Unused managed funds 65,230 76,640 Canadian Dollar 2,370,000 57,504 2,370,000 54,712 Loans granted out of special interest-free deposits 179 179 Chinese Yuan 15,642,623 73,551 15,642,623 72,816 Unused special interest-free deposits 2,037 2,037 Euro 15,898,917 554,093 5,052,303 171,449 1,168,077 1,165,874 Indian Rupee 0 0 115,827,360 52,469 UAE Dirham 0 0 0 0 Canadian Dollar 0 0 0 0 54-5- The obligations created under letters of credit and letters of guarantee by a Turkish Lira 0 0 0 0 breakdown of collateral type Japanese YEN 0 0 0 0 Parent company S. Korean Won 0 0 0 0 March 20, 2017 March 19, 2016 690,708 369,760 Rls (M) Rls (M) Deposits 2,009,070 2,044,558 Participation bonds and other debt securities guaranteed by government and CBI 4,443 2,222 54-2-2- The obligations pledged by the bank under rial-denominated letters of guarantee are as follows: Participation bonds and other debt securities guaranteed by other banks 0 0

March 20, 2017 March 19, 2016 Banking LGs 646,555 248,821 Rls (M) Rls (M) Letters of credit transacted 0 0 Obligations for LGs and acceptances issued 4,439,236 6,709,528 Shares listed on the stock exchange 84,264 114,300 4,439,236 6,709,528 Land and buildings 859,537 990,497 Machinery 1,249 0 Checks and promissary notes 5,713,694 8,822,377 Other 80,036 77,123

9,398,848 12,299,898 Unpledged obligations 52,115 0 9,450,963 12,299,898

142 Financial Report 143 55- Capital obligations and contingent liabilities 59-1- Relationship between various business units and the key risks each unit is exposed to: Saman Bank has a strong determination to counter the business risks and environmental uncertainties. The key business segments impacted by financial risks include the retail banking division which is 55-1- There were no material capital obligations as at the balance sheet date. substantially affected by credit and liquidity risks and the corporate banking division which is influenced by various credit, liquidity and market risks. The operational risks may accordingly affect some areas of 55-2- There were no material contingent liabilities as at the balance sheet date. current activities of the units which will be surveyed and evaluated, by applying the common practices. SamanBank 56- Earnings per share (EPS)

Private International Corporate Retail 56-1- Basic earnings per shae banking banking banking banking The basic EPS is earned by dividing the dividends belonging to ordinary shareholders by the average weighted number of ordinary shares outstanding with the shareholders. The average weighted number of ordinary shares (basic) in the parent company consists of 8,000,000,000 shares. Credit risk Low Credit risk Low Credit risk Average Credit risk Low

56-2- Diluted earnings per share Market risk Low Market risk Average Market risk Low Market risk Low The diluted earnings per share is earned by dividing the dividends belonging to ordinary shareholders by the average weighted number of ordinary shares outstanding with the shareholders upon adjustment of dilution impact of all potential ordinary shares. The average weighted number of ordinary shares (diluted) in the parent company Liquidity risk Low Liquidity risk Low Liquidity risk Average Liquidity risk Low consists of 8,000,000,000 shares.

Operational risk Low Operational risk Low Operational risk Low Operational risk Average 57- Post-balance sheet events 59-2- Framework and chart of risk management From the balance sheet date until the approval date of financial statement, there has been no material event which The risk management is responsible for developing and controlling the bank’s risk management policies. Thus might have affected financial statements and required disclosures. in line with the policy of effective risk management, Saman Bank has devised and created a Risk Management System comprising the High or Senior Risk Committee and the Risk Department which have been shown in the diagram below. The Risk Department report to the Bank Deputy for Supervision and shall have to implement the decisions taken by the High Risk Committee. 58- Bad (written-off) debts

Saman Bank has no record of bad/written-off debts as at March 2017 ,20. Board of Directors

59- A profile of the bank’s risks High Risk Committee

CEO Saman Bank has devised and established a specialized and appropriate structure which is consistent with the accepted framework of risk management risk. This structure will enable the bank to manage the significant risks in banking industry within the context of a business model devised for banking activities and operations. The information Risk Department provided in this section is rooted in the bank’s operations and reflects the effect of risks on the balance sheet and the statement of the profit and loss. The key risks which are chiefly addressed by the Saman Bank management in compliance with the risk management guidelines recommended by the Basel Committee (Basel II) are listed below: • At Saman Bank the responsibility for all accepted risk shall remain with the Board of Directors. • Credit risk • The Bank’s High Risk Committee shall regularly monitor and measure the existence, accuracy and adequacy • Liquidity risk of the management policies and processes, control and encounter with various risks affecting the bank’s operations. Additionally, the High Risk Committee shall also have to ensure the compliance of the bank’s Market risk • procedures for internal controls with the framework recommended by the Central Bank of Iran, to monitor • Operational risk implementation of the risk policies adopted by the Committee and the board of directors by concentrating on The foregoing risks emerge from the bank’s business model and the risk management mechanism. In the current the consolidation and enhancement of bank reputation and position and to maintain a proper capital adequacy ratio as required. The outcome of the Committee’s actions shall be submitted to the bank’s board of directors model, attempt has been made to identify the events which may affect the level of the bank’s achieving its paramount under the title of “Guiding and Supervisory Reports”. goals within the framework of risk management. More notably in parallel with the risks evaluation, the bank’s risk • The High Risk Committee, regarded as a key body which substantially affects the various risk management management will take the anticipated loss index as well as the quantitative and qualitative models into account and areas pursues the following goals: will continuously develop and enhance its evaluation models and patterns. - To measure the size of risk appetite and desired capital adequacy ratio every six months, monitor the process of this ratio and prepare it for approval by the board of directors along with the capital adequacy ratio (as a

144 Financial Report 145 determinant to measure the level of risk appetite) up to the desired level. the large loans and debts; - To approve the annual report on the performance appraisal of the bank’s risk management system and • To regularly hold the meetings by Restructuring and Debt Collection Committees at various levels so as to prepare it for submission to the board of directors to be incorporated in the annual report addressing the take decisions on the customers’ outstanding debts as quickly as possible; shareholders’ general meeting. • To pay special attention to the reasons for growing overdue and outstanding debts, paid letters of - To approve the annual risk management plans concerning the development, improvement and credit, paid letters of guarantee by preparing a statement, filing a report and making necessary implementation of the risk measurement, assessment and management systems in the bank which may recommendations; include procurement of required hardware and software facilities and recruitment of human resources. • To conduct periodic inspections by the inspectors named in relevant directives and pay random visits to the - To review reports and conduct periodic assessment on the calculation and measurement of the bank’s loan business locations for monitoring their progress, and functionality by supervisors, credit committee overall risks and identify the improved areas (with emphasise on the compliance with the approved policies members and other competent authorities. for the risk control management, cases of non-compliance, departments and persons involved, feedback policies in respect of non-compliance and effectiveness of such policies) and provide information to the board 59-3-3- Executive units of credit risk management of directors on the outcomes of the evaluation and measures taken in these areas. The implementation areas will include across-the-board sectors (all departments and divisions) of the bank in The Risk Department has been created to act as an executive arm of the High Risk Committee with the aim • particular, branches, credit affairs division, debt collection office, credit committees and other credit units. of fulfilling the requirements set forth by the Central Bank of Iran and preparing the grounds for execution of the guidelines recommended by the Basel International Committee. This department will identify the principal financial risks as accepted by the Basel Committee including credit, liquidity, market and operational 59-3-4- Scope of powers at various organizational levels for sanctioning loans and liabilities risks and will report them to the High Risk Committee, the CEO, and other appropriate committees. The An important element of credit risk management is to specify the level of exposure for individual Risk Department reports to the Bank Deputy for Supervision as specified in the organization chart. More counterparties or a group of related counterparties. Considering the segregation of “Retail and SMEs Banking” importantly, this Department performs its functions in compliance with the directives and instructions of the and “Corporate Banking”, in Saman Bank, the prevalent criteria and standards for decision making on loans 2 High Risk Committee towards accomplishment of its goals. and liabilities will include the three areas of: “Large Loans and Obligations ”, “Related Parties, Loans and Obligations”, and “Retail and SMEs Loans and Obligations”. 59-3 Credit risk 59-3-1- Definition of the credit risk Large loans and liabilities: Loans and obligations in the area of corporate banking shall be based on customer due diligence (CDD) of a Credit risk is the likelihood of suffering loss arising from the counterparty’s failure to meet his contractual 3 obligations with respect to the principal amounts and interests. That is the reason why the main component in single borrower or beneficiary . The following persons will fall under the category of single beneficiary: banking operations will meaningfully be premised on the correct performance, design and implementation of • Natural or legal person independently written procedures and policies for identifying, assessing, monitoring and controlling the credit risk. The credit • The ownership relationships between the natural and legal persons which include the following: policies will provide a framework for financings and granting credit facilities by the bank. Obviously, the bank A natural person as well as his/her spouse and dependents with affiliates and their associates credit policies shall include the matters such as target markets, portfolio composition, pricing requirements, - terms of reference, loan approving or sanctioning authorities, reporting procedures, the process relating to list - A legal person/entity with affiliates and their associates of exclusions and … Such measures shall be clearly defined in line with the banks’ contingent procedures and - Affiliates and associates of a natural person or a legal entity having interrelationships provided that shall be appropriate to the scale and complexities of banking operations. multiplication of their ownership percentages in such units will be at least 20% More significantly, the credit policies shall be devised and implemented with a view to the internal and external • The managerial relationships between the legal entities which include the following: factors such as the bank market position, business locations/areas, staff capabilities and technological - A legal entity with other legal entity having at least two thirds of joint board members advances. - A legal entity with other legal entity having joint chairmanship of board of directors Arguably, these policies shall particularly define the banks’ objectives in the areas of portfolio composition, The financial relationships between a legal entity and a natural person which include the following: exposure limits of the counterparty or a group of related parties, special industries or economic sectors, • geographical locations and special products. In general, banks shall ensure that their internal exposure limits - A natural person with his/her spouse and dependents are consistent with any type of contingent limitations or scopes which have been determined by the banking - The obligor with obligee provided that the amount of guarantee comes up to at least 75% of the inspectors (regulators). obligor’s annual income or assets. The inverse relationship in this proportion may apply when these two parties have mutually agreed on counter guarantees 59-3-2- Credit policies and procedures - Partly (A) with party (B) provided that over 50% of the gross annual income of party (A) is funded by party (B). The inverse relationship of this proportion does not apply Saman Bank credit policies covering loans, facilities and outstanding debts or claims due to this bank are described as follows: - The persons who each holds at least 20% of shares or capital with a voting right in a legal entity A- Loans: to abide by the authorized sanctioning limits and amend the loans portfolio based on tenor and return. - The persons who earn over 50% of their gross annual income from the same income source B- Claims: To reduce the debt balance and review the records of large debts • The controlling relationships between a natural person and a legal entity include the following: Accordingly, the most significant plans and credit requirements of the bank are as follows: - A natural person as well as his/her spouse and dependents with a legal entity who has in any manner arranged the voting right of over 20% of such legal entities’ votes • To set the quantitative goals of the policy on loan facilities, debt collection, letters of guarantee and letters of credit; - A large entity with other legal entity who has in any manner arranged the voting right of over 20% of the To define the scope of powers or sanctioning authority of credit departments in granting loans and • 2. It means the total net loans granted and the liabilities so created to or for each single beneficiary which will add up to at least %10 of the bank collecting debts; base capital

• To install and implement the monitoring systems for granting loans; 3. Single borrower or beneficiary means a natural person or a legal person independently or two or more natural persons who may on the grounds • To measure the customers’ repayment capacity for receipt of loans; of enjoying ownership, managerial, financial or controlling relationships or otherwise place the bank exposed to risks (in a vulnerable position), in such a way that the problems pertaining to one of them can affect the other/others and this domino effect may result in the failure of repayment or • To establish a supervisory and controlling system over the quality of informational reports; default on the loan obligations. • To mitigate the risk of loans and commitments by receiving secure collaterals; • To comply strictly with the regulations governing the single borrower/beneficiary, related parties as well as

146 Financial Report 147 other legal entity’s votes 5 corporate customer up to the limit of Rls. 800 billion and the bank board of directors shall approve the - A natural person or a legal entity with other legal entity who has the power to direct and control the amounts of loans in excess of Rls. 800 billion. financial and operational policies including the decisions on the distribution of dividend or profit - A natural person or legal entity with other legal entity who has the power to appoint or dismiss the Retail and SMEs loans and liabilitie5: majority of board members of the entity in any manner arranged. The loans and obligations in the area of retail and SMEs banking shall be based on the type of customer and When single borrowers/beneficiaries are identified, the corporate banking offices shall enter the information the amount of requested loans. Thus, the prevailing criteria for identifying the retail and SMEs customer about the loan borrower in the bank’s statistics and database management system in the unit of the single include the following: beneficiary. • Natural persons: all natural persons over the age of 18 applying for any amount of loans and obligations. The loans to or obligations by any single borrower which may cause such loans and obligations to fall under • Legal entities: that group of legal entities that along with the relevant single beneficiaries make a request the category of “Large Loans and Liabilities” shall have to receive the approval of the bank board of directors. for loans and liabilities for the maximum amount of Rls 100 billion and/or its rial equivalent in foreign Therefore, if the customer meets the requirements for receipt of loans and obligations within the stipulated currencies. limits, he shall finally have to obtain the authorization from the board of directors. All branches are required to accept and consider the credit applications within the above mentioned limits and, where the amounts of such applications are in excess of the stipulated limits, they have to send them Limits of large loans and liabilities: to the Corporate Banking Department in coordination with the Retail and SMEs Banking Department. • The maximum total large loans to and obligations by ay single borrower shall not exceed 20% of the bank Regardless of the loan amounts being requested or used, any credit services to the following customers shall capital. be provided solely by the Corporate Banking Department: • The maximum total large loans and obligations will be eight times (eightfold) of the bank capital. • Manufacturing companies with a capital in excess of Rls. 100 billion • When the loan amount requested by a single borrower is more than the specified limit in the applicable • Trading and service companies with a capital in excess of Rls. 120 billion regulations, the bank may under the prevalent rules, apply the procedures for4 granting joint-loans (such as • State-run corporations and non-governmental public organizations syndicated, consortium or similar methods). • Related parties and bank’s subsidiaries and affiliates • Subsidiaries and affiliates to other banks Loans to and liabilities by related parties: 4 • Public joint-stock companies listed on the Stock Exchange Loans to and obligations by related parties will be based on the KYC of related parties. The following persons will fall under the category of related parties: Sanctioning bodies in Retail and SME Banking Department: • Directors of the credit institutions including board members, managing director (CEO), deputy managing director and other executive board members; In managing the retail and SME banking affairs, the branches of Saman Bank vary in terms of credit sanctioning authority, and are categorized into five classes: • Independent auditor (whether the auditing firm and copartner) and legal inspector of credit institution; Top Group Branches, Group I Branches, Group II Branches, Group III Branches and Group IV Branches. • A natural person and his family members including the father, the mother, the spouse and the children who The scope of credit sanctioning powers of each group for acceptance and approval of the types, components jointly or severally own at least 5% of shares in the credit institution; and amounts of collaterals shall be subject to the requirements set forth in a Saman Bank directive governing • The father, mother (parents), spouse and children of the related parties stated in items 1 and 2 above; “The Requirements for Granting Retail and SME Loans” and subsequent amendments and annexes thereof. • A legal entity whose capital or shares are owned by the related parties stated in items 1,2, 3 and 4 above For the purpose of approving credit loans and letters of guarantee and in compliance with the scope of in a manner that the said related parties have the authority to appoint at least one member of the board of credit sanctioning authority defined for branches, all the bank branches shall have to review and decide on directors in this legal entity; all the customers’ credit applications being consistent with the scope of delegated powers (by computing • A legal entity in which the related parties stated in items 1, 2, 3 and 4 above hold management positions the customer’s current debts and liabilities) at the commissions which are held at the various levels of bank (board member, executive board, managing director (CEO) and deputy managing director); organization. The commissions which are authorized to make decisions on granting loans in rials and foreign • A legal entity that directly holds at least 5% of shares in the credit institution; currencies, issuing letters of guarantee, opening letters of credit and entering orders for documentary drafts guaranteed by the bank include the following: • A legal entity in which at least 10% of its capital or shares is directly owned by the credit institution; • Branches Credit Commission • A legal entity in which at least 20% of its capital or shares is directly owned by the legal entities stated in item 8 above. • District Credit Commission (District head office) • Internal SME Credit Commission Limits of loans to and liabilities by related parties: • SME High Credit Commission • Individual limit: the total net loans to and obligations by each person shall not exceed 3% of the bank capital. • Group limit: the total net loans to and obligations by each related party shall not exceed 40% of the bank’s base capital. The bank board of directors shall approve the loans to and obligations by related parties prior to the grant of any loans or creation of any obligations. The board meetings for decision making on the grant of loans to or creation of obligations by the related parties shall be held without the presence of the related parties involved in this process.

Corporate loans and liabilities: The Corporate Banking Commission shall have the authority to sanction the loans and credit lines for each

5. SME or Business loans: means facilities granted to the intended trade union or guild for the purpose of providing working capital to run and 4. Related parties are natural and legal persons who have the power to directly and/or indirectly control the decisions taken in the bank or have expand the existing businesses or create new business ventures. significantly influenced in one way or another such as personal, ownership, managerial or supervisory relationships in a way that they may prefera- Retail loans: means the facilities granted to meet the consumer needs of customers such as home repairs and purchase of housing and consumer bly use the bank as their financial resources and thus the bank’s interests are overshadowed by the interests of the said persons. goods.

148 Financial Report 149 • The scope of sanctioning authority in rials delegated to credit commissions of branches and district head offices: • Scope of sanctioning authority delegated to SMEs credit commissions

Sanctioning authority of credit commissions (in million) Sanctioning authority for higher level credit committees beyond branches and district head offices (in million) Authority for the 2nd grade Authority for the 3rd grade collaterals collaterals Authority for the 1st and 2nd class Authority for the 3rd grade collaterals collaterals Type of Commission Type of loans and LCs in rial Natural persons Legal persons Natural persons Legal persons Type of Commission Natural persons Legal persons Natural persons Legal persons Loans in rial 2,000 3,000 600 1,000 Class IV Internal credit committees 30,000 50,000 15,000 25,000 Branch Credit Commission LGs and Internal LGs in rial 2,000 3,000 600 1,000 Retail and SME credit committees 100, 000 Class III Loans in rial 3,000 4,000 800 1,500 Branch Credit Commission LGs and Internal LGs in rial 3,000 4,000 800 1,500 59-3-5- Methods of reducing credit risk Class II Loans in rial 4,500 6,000 1,500 2,000 Branch Credit Commission LGs and Internal LGs in rial 4,500 6,000 1,500 2,000 One way of mitigating the credit risk is the collateral coverage with a view to the risk exposure and debt liquidity ratio. Considering the risk exposure, collaterals may be divided into three grades: Class I Loans in rial 6,000 9,000 2,000 3,000 Branch Credit Commission LGs and Internal LGs in rial 6,000 9,000 2,000 3,000 First grade collaterals and guarantees: First grade collateral of type I: includes the cash collateral in the short-term investment deposit in rial at Top Loans in rial 8,000 12,000 3,000 5,000 • the interim zero interest rate and without banking card (short-term investment deposit in rial coded 836 for Branch Credit Commission LGs and Internal LGs in rial 8,000 12,000 3,000 5,000 natural persons and 837 for legal persons). Loans in rials Twenty five (25%) beyond the Twenty five (25%) beyond the First grade collateral of type II: includes the cash collateral in the ordinary short-term investment deposits in rial. authoritydelegated to branches authoritydelegated to branches for • District Credit Commission LGs and Internal LGs in rial for any type of loans and obliga- any type of loans and obligations as • First grade collateral of type III: includes short-term investment deposits and special short-term deposits tions as described above described above in foreign currency, long-term investment deposits in rial (excluding Atieh Savings deposits), short-term investment deposits in rial and foreign currency at an interest rate higher than the ordinary rate, special short term investment deposits in rial and foreign currency, long-term registered and bearer certificates of The scope of sanctioning authority in foreign currencies delegated to credit commissions of branches and • investment deposits issued by Saman Bank, investment certificates of fixed income funds for which Saman district head offices: Bank is acting as the registrar or guarantor of the fund’s units. Sanctioning authority of foreign exchange branches and District Credit Commissions (in million) • First grade collateral of type IV: includes participation bonds issued by the CBI as well as the participation Authority for the 1st and 2nd Authority for the 3rd grade bonds issued by the state (governmental bonds). grade collaterals collaterals Second grade collaterals and guarantees Branches group Type of forex obligations Natural persons Legal persons Natural persons Legal persons include immovable properties and shares of companies listed on the stock exchange (excluding the shares Forex branch Sight LCs 5,000 10,000 2,000 5,000 of companies which are traded on the agreed basic market). The immovable properties which are introduced for loan security shall be real-estates or residential apartments or office buildings with six shares or parts of Forex LGs and term LCs and 4,000 6,000 1,500 2,000 refinance absolute ownership, valuable, easily marketable, uncontested and located in the municipal areas or bounds with a valid certificate of construction work completion. The mortgage of apartments used for business and Class II 25% of LCs and/or 35% forex drafts residential purposes with a maximum age of 25 years as well as the real estates (villas) used for business to guarantee fulfillment of forex To be decided by the branch 5,000 15,000 obligations and residential purposes without the age limit shall meet no impediment. Additionally, the valuation of collaterals should be conducted in compliance with the provision set forth in the last review under the Forex branch Sight LCs 7,500 12,000 3,000 7,000 directive No. 92-310-1599 covering the valuation of immovable properties. Third grade collaterals and guarantees Forex LGs, term LCs and refinance 6,000 9,000 2,000 3,000 the third guarantees means the guaranteed promissory notes received from customers. It should be noted Class I 25% of LCs and/or 35% forex drafts that the branches when accepting the promissory notes from customers shall fully and absolutely abide by to guarantee fulfillment of forex To be decided by the branch 7,000 20,000 the provision of last review under the directive No. 92-310-2232 covering the requirements for completion, obligations signature and receipt of guaranteed promissory notes.

Sight LCs 10,000 15,000 4,500 10,000 59-3-6 Customer’s credit scoring process Forex LGs, term LCs and refinance 8,000 12,000 3,000 5,000 The credit scoring or rating process shall include certain proper criteria used to evaluate, measure and obtain Top Forex Branch 25% of LCs and/or 35% forex drafts accurate information on the bank target market, borrower’s credit quality, counterparty’s credit goals, its to guarantee fulfillment of forex structure and funding sources for repayment. The sequence and priority in this process are described below: To be decided by the branch 10,000 25,000 obligations • Credit nature and goal: The applicant’s business objective shall be acceptable to the bank which means that it should be legal, non-speculative and consistent with the borrower’s track records. Additionally the bank District Credit Commission Twenty five (25%) beyond the authority delegated to branches for any type of loans and obligations as shall ensure that the credit facilities are used to finance the applicant’s normal business operations. The loan described above size shall also be adequate for the customer’s goal and shall sound reasonable relative to his available funds. More arguably, with the growth rate of laundering activities in the modern business world, it is highly essential to fully understand and determine the clarity of the purpose of the requested credit facilities. • Types of credit facilities: Such facilities may include: current account overdraft, hire purchase loan consumer lending loan, working capital loan, long-term loan, leasing loan, credit cards, real estate loan,

150 Financial Report 151 business loan, mortgage backed loan, building construction loan, retail loan, factoring, …. Overall credit scoring/rating process • Eligibility for borrowing: The lender shall consider the customer’s legal capacity. Arguably, the minor, the • The primary responsibility for receiving customers, allocating credit loans, preparing credit reports, poor and the mentally retarded persons do not have the capacity to enter into transactional agreements or assessing customer’s scores, making enquiries from the existing sites/databases and keeping the relevant contracts. Under such circumstances, they need the appointment of a guardian for their affairs. data and information shall remain with the branches. • Guarantees: Whenever a collateral security is needed, certain factors such as adequacy, capability, In addition to the said reports and records, all branches shall, for payment of business loans up to the limit credibility and authenticity of the collateral should be taken into account. of ten billion rials (like loans for enhancement of working capital, business expansion and/or business • Review of the borrower’s financial position: When a customer’s financial status is analyzed, it will creation) act for a site visit of the customer’s business location, receipt of financial statements and be highly important to review how his business operations have the capacity to generate sufficient cash preparation of a report on his financial position and then in the final analysis, prepare an expert report flows for fulfillment of his obligations. From among the various factors which may be used to measure a containing an express opinion on the customer’s credit file which will serve as a basis on which decisions customer’s financial standing, these items are worth mentioning: repayment capacity, liquidity, repayment are to be made as appropriate. willingness. • The responsibility for receiving the proposals made by branches, evaluating the customer’s scores/rates, • Repayment capacity forecast: The lender should obtain a reasonable assurance of the borrower’s ability to managing the credit limits assigned for branches and expressing opinion on the suggested credit shall rest service his obligations on the due date in future. with credit commissions. • Profitability: The expense of financing for the customer, the remuneration paid to employees with respect • The responsibility for sanctioning credits in the decision-making departments in respect of the credit size to credit assessment, credit grant and credit monitoring, rental costs and other general expenses shall shall remain with credit commissions. be covered (normally received as prepayment) by the return created on the loans granted. In reality, a • The responsibility for providing an independent opinion on the loans granted by designing and updating the comfortable profitability shall be measured by the capital expenses. scoring/rating system, controlling and monitoring the credit risk shall remain with the risk management • Continous monitoring: credit facilities should be constantly monitored through various methods and department. channels: risk exposure limit, capital allocation and periodic reports by the type of customer, borrowing • The functions assigned to the risk management department are segregated from the functions of the position, segment and... . business activity and customer relationship management in credit areas. Essential requirements for opening a credit file • The policies on decision-making, monitoring and reporting independently about the credit risk shall be valid under any circumstances. Since the process of granting loans in Saman Bank starts with submission of the customer’s application by filing credit records, it is essential to meet the following requirements in this initial process: • Customer’s CDD; 59-3-7- Analysis of credit quality • Access to customers’ credit records shall be subject to the confidentiality rules and policies which The bank assets quality including loans, liabilities/obligations, investments, type, amount and adequacy of the prevail in the bank; collaterals received (ratio of loans balance to updated value of collaterals) LTV in terms of credit risk profile have been illustrated in tables 59.3.7.1 and 59.3.7.2. • The bank shall have to ensure that the loans are used for the objective declared by the customer • The bank shall ensure that all appropriate forms and legal documents have been signed by the applicant prior to the loan allocation; 59.3.7.1. Analyzing credit quality of loans granted, obligations and investments based on the bank’s internal credit scoring/rating system • The bank shall treat credit applications on a fair and non-discriminatory basis; It should be noted that the customers’ scoring/rating system in Saman Bank is in the process of formation. The bank credit facilities shall be granted to various industrial sectors with a view to the non- • Although the credit system has been designed, classification of the bank’s customers by the degree of risk concentration principle; exposure has not been performed yet. • The bank shall maintain an appropriate collateral margin for various credit facilities; • Any type of regulation, by-law and directive shall be drafted and adopted in compliance with the 59.3.7.2. Table for analyzing the credit quality of the loans granted, obligations and investments applicable laws and rules of the Central Bank of Iran; based on the assets categories • The credit files shall contain the following items: - Proof of identification and verification for the customer and guarantors; Loans granted to banks Loans granted to customers Obligations under LGs and LCs - A signed copy of credit application 2017 2016 2017 2016 2017 2016 - The expert opinion including: Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) - The objective of loan facilities Current 0 0 108,426,153 105,489,381 9,450,963 12,299,898 - Collaterals and guarantees Overdue 0 0 1,752,674 1,507,318 0 0 - Customers’ obligations Outstanding 0 0 2,928,083 3,045,616 0 0 - General background information Doubtful 0 0 20,855,807 22,858,188 0 0 - Approval of relevant department or management Total gross amount 0 0 133,962,717 132,900,503 9,450,963 12,299,898 - Customer’s record/reputation with the bank Value inpairment reserve 0 0 (6,212,516) (5,912,516) 0 0 - Analysis of financial status Net book value 0 0 127,750,201 126,987,987 9,450,963 12,299,898 - Analysis of competitive position - Cash flows forecast - Documentation relevant to collaterals and guarantees - Credit transaction structure/arrangement - Audited financial statements - Business licenses legally issued

152 Financial Report 153 59.3.7.3. Credit quality of participation bonds, Islamic treasury bonds, Sukuk bonds, units of mutual funds 59.3.7.5. The balance of loans based on the ratio of loans balance (less provisions) to updated cash value of and similar items collaterals

Credit quality analysis 2017 2016 2017 2016 Rls (M) Rls (M) Rls (M) Rls (M) Issued by the government and Central Bank Loans granted to banks Project 0 0 Company 0 0 Less than 50% 0 0 Islamic treasury bonds 0 458,903 51 to 70% 0 0 458,903 0 71 to 90% 0 0 Issued by governmental corporations 91 to 100% 0 0 Project 0 0 Over 100% 0 0 Company 0 0 Loans granted to natural persons 0 0 .. 0 0 Less than 50% 2,779,767 3,685,028 0 0 51 to 70% 2,810,853 1,756,616 Issued by non-governmental corporations 71 to 90% 3,718,785 3,253,033 Project 0 0 91 to 100% 1,588,237 1,027,406 Company 0 0 .. 0 0 Over 100% 31,165,264 33,616,611 0 458,903 Loans granted to legal persons Less than 50% 3,599,886 2,688,324 59.3.7.4. Types and amounts of collaterals received from credit customers 51 to 70% 4,580,039 4,878,205 71 to 90% 3,015,186 3,148,234 Types of main collaterals 2017 2016 91 to 100% 1,090,037 1,219,209 Rls (M) Rls (M) Over 100% 73,402,147 71,715,321 Loans granted to natural persons 127,750,201 126,987,987 Cash 26,138 38,518 Participation/Sukuk bonds 5,475 5,137 Marketable securities (shares) 116,178 231,005 • In the calculation process, this amount is the updated mortgaged value of collaterals with respect to the liquidity Non-listed securities 0 0 factors specified in the directive for deposit-taking and assets classification. This table is to disclose the coverage of Deposits 4,541,438 3,805,934 collaterals in possession for the balance of customers’ debts. Real estate properties 58,876,267 37,087,117 Plant and equipment 66,233 68,069 Letters of guarantee 31,118 36,064 59-3-8- Credit risk concentration Checks/Cheques 38,106,060 32,879,977 Promissary note 7,571,833 9,894,261 The credit risk concentration in Saman Bank has been defined in a manner to reflect the type, nature and Binding/irrevocable contracts 8,891,570 5,863,352 content of credit risk. More significantly, the credit risk concentration will include the two components of Ordinary notes/documents 13,140 16,135 target market and maximum market share of credit portfolio. To this end, Saman Bank annually drafts Guaranteed notes 136,633 7,181 an operational program in which the target market covering the on-and off balance sheet items will be Affidavits 1,812 2,862 determined each year. Thus the bank will define its credit risk concentration in the following areas: Letters of commitment 83,000 81,735 • Corporate banking Conveyence of rights deed 9,275 614 Power of attorney 4,519 4,985 • Retail and SME banking Letter of intent for sale 175,975 177,095 Further it should be noted that the responsibility for defining and reviewing various economic sectors including Loans granted to legal persons 0 0 goals and total amounts of credit portfolio shall remain with the High Committee for Strategy and Budget. Cash 35,363 75,230 Participation/Sukuk bonds 27,640 13,320 Marketable securities (shares) 10,346,763 8,627,878 Non-listed securities 0 0 Deposits 6,878,314 4,365,583 Real estate properties 32,421,146 33,088,640 Plant and equipment 4,035,466 3,288,024 Letters of guarantee 83,323 482,166 Checks/Cheques 150,915,811 146,303,461 Promissary notes 13,435,795 14,875,675 Binding/irrevocable contracts 14,369,956 15,929,808 Ordinary notes/documents 0 6,000 Guaranteed notes 20,363 0 Affidavits 0 0 Letters of commitment 100,675 92,419 Conveyence of rights deed 400 400 Power of attorney 0 0 Letter of intent for sale 1,418 1,418 351,329,097 317,350,063

• Based on the written report filed by the bank’s expert, the said amount is the mortgaged value of all collaterals in possession.

154 Financial Report 155 59.3.8.1. Distribution table of loans and investments by economic sectors and their inland concentration 59.3.8.2. Distribution table of loans by participation, constant (fixed) profit contracts and type of customer

Loans granted Investments Obligations for LGs & LCs Loans granted during the year Loans balance at year-end 2017 2016 2017 2016 2017 2016 Amount Total percentage Amount Total percentage Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Book value 133,962,714 132,900,503 2,777,793 3,238,567 9,450,963 12,299,898 Natural customers 3,456,510 1.3 12,190,090 10.5 Cconstant (fixed) profit contracts Loans/liabilities by economic sector Legal customers 17,426,379 6.4 9,930,564 8.5

Industry 29,116,161 23,080,239 445,018 627,396 3,042,161 3,959,202 Non-constant profit contracts Natural customers 17,977,246 7 30,416,374 22 Housing 22,010,644 19,709,257 0 0 0 0 (including participation contracts) Legal customers 234,805,529 85.8 81,425,689 58.9 Commerce 51,015,086 54,423,545 0 0 5,951,401 7,745,415 273,665,664 133,962,717 Services 25,663,915 27,449,132 1,959,217 1,768,438 447,999 583,045 Agriculture 1,065,814 754,831 0 0 0 0 • The interest-free loans are to be classified under participation (non-constant profit) contracts. Banks 0 0 244,523 298,800 0 0 Mining 640,748 890,622 0 0 9,402 12,236 59-3-9- Procedures for managing non-current loans Other 4,450,346 6,592,877 129,035 543,933 0 0 The bank’s policy on the management of non-current claims is premised on preventive measures supported by collaterals and proper management with follow-up actions and debt collection procedure. Considering the 133,962,714 132,900,503 2,777,793 3,238,567 9,450,963 12,299,898 requirement set forth in the Law on the Elimination of Barriers to Competitive Production and Enhancement to National Financial System passed on April 21, 2015 by the Islamic Parliament and in compliance with the CBI’s directive No. 94/69383 governing the procedures for calculation and distribution of shared profit, banks shall Size of loans/degree of obligations onshore have to reform their assets structure and increase the share of income-generating assets through the sale and and offshore (inland & overseas) disposal of the foreclosed properties and assets and collection of debts. In order to improve its assets structure Inland 133,962,714 132,900,503 2,777,793 3,238,567 9,450,963 12,299,898 and achieve the targets set for collection of non-current debts, Saman Bank takes appropriate measures within the context of its own internally approved by-laws and procedures. To this end, where the follow-up actions Overseas 0 0 0 0 0 0 towards collection of the bank’s claims in the pending files (including movable and immovable properties and/ 133,962,714 132,900,503 2,777,793 3,238,567 9,450,963 12,299,898 or rights and privileges which will be held or put under the bank’s ownership) fail to collect debts at branch levels and credit departments, measures will primarily be taken by retail banking and corporate banking departments and, at a later stage, legal actions will be taken by the bank’s legal deputy. In performance of 59.3.8.1.1. Distribution of loans, obligations and investments by type of industry: operational and strategic actions and subject to the applicable laws and regulations, Saman Bank shall have to sell surplus and foreclosed assets and properties to collect its outstanding and doubtful debts. As has 2017 2016 been contemplated in the organizational structure, the credit departments shall be tasked with reducing the Rls (M) Rls (M) amounts of overdue debts and the bank’s legal deputy shall be responsible for collection of outstanding and Loan facilities doubtful debts. Automobile and auto parts 4,239,314 3,935,181 Collection of overdue loans will be performed under the time-frame and scheduled worked out by the VP Mining and metal industries 4,964,306 3,360,483 Credit Deputy and collection of overdue loan balance shall be the responsibility of the Retail and Corporate Petrochemical, chemical industries and oil products 6,798,623 5,389,236 Banking Department which all shall be pursued in the form of an annual target program based on the approved Foodstuffs and pharmaceuticals 9,794,676 7,764,192 follow-up standards. In pursuance of the objective set by the Board of Directors, the Retail and SMEs Credit Energy 2,282,707 2,040,293 Department shall collect the amount of Rls 2,100,000 million and the Corporate Credit Department shall collect the amount of Rls. 1,101,000 million out of the overdue loan balance in the an annually scheduled program. Contractual services 0 0 As a consequence, an aggregate amount in the range of Rls. 3,201,000 million should be collected out of the Telecommunication, computer and associated industries 0 0 overdue loan balance through the said two credit departments. Financial intermediary 0 0 Further, the responsibility for collecting outstanding and doubtful debts and sale of foreclosed or seized Others 1,036,535 590,854 collaterals and properties shall remain with the Bank Legal Deputy’s Office. A plan is already well under way Investments to collect the amount of Rls. 1,500,000 million of outstanding debts and the amount of Rls. 10,000,000 million of Automobile and auto parts 36,137 104,769 doubtful debts as well as selling the foreclosed collaterals for the amount Rls. 8,000,000 million. In aggregate, Mining and metal industries 156,370 58,944 an amount of Rls. 19,500,000 million of (non-current) past-due loans has been planned to be recovered by the Petrochemical, chemical industries and oil products 18,203 79,979 bank Legal Deputy’s office. Foodstuffs and pharmaceuticals 5,366 1,654 The procedures for collecting claims and debts by all credit departments and offices of deputies are governed Energy 7,227 64,720 by the applicable laws and regulations in the country adopted by the CBI as well as the bank’s internal by-laws Contractual services 22,244 43,223 and directives. As prescribed in the prevalent laws, requirements and the bank’s internal by-laws, the overall Telecommunication, computer and associated industries 2,735 145 procedures for collecting debts from sale of foreclosed properties and collaterals will sequentially entail and include calculation of mortgage debt, submission of documents, request for issuance of enforcement Financial intermediary 69,091 134,115 writ, service of enforcement writ, inquiry about property registration status, official expert’s appraisal report, Others 127,645 139,847 notification of official expert’s opinion, issuance of authorization prior to the notice of sale auction or bid, Obligations operating procedures for sale of foreclosed properties and liquidation of claims due to the bank. Where the Automobile and auto parts 347,815 452,662 mortgaged real estate is not sold at the sale auction, the bank shall have to take possession of six shares (the Mining and metal industries 211,996 275,901 entire portion) or partnership in the foreclosed mortgage put up for sale pursuant to the bank’s applicable rules Petrochemical, chemical industries and oil products 1,407,881 1,832,278 and on the strength of the permits or licenses issued for this purpose. Foodstuffs and pharmaceuticals 772,262 1,005,056 Energy 0 0 Debt collection plan for the year 2016-2017 Contractual services 0 0 Debt balance Collection forecast 2016-2017 Amounts collected in 2015-2016 Realized (Percentage) Telecommunication, computer and associated industries 0 0 30,808,453 13,000,000 6,891,969 53.02 Financial intermediary 0 0 Others 302,206 393,305 32,603,339 27,666,837

156 Financial Report 157 59.3.9.1. Distribution of non-current loans by economic sectors 59-4- Liquidity risk

Non-current loans balance Specific provision for doubtful debts Net loans and non-current claims Economic Sector 2017 2016 2017 2016 2017 2016 59-4-1- Definition of liquidity risk Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) The liquidity risk means the possibility of impairing or endangering the bank’s ability to provide funds for fulfillment of its obligations. Commerce 9,270,032 10,061,510 1,914,804 1,817,511 7,355,228 2,706,282 Services 1,654,501 1,733,038 87,089 79,299 1,567,412 165,626 Industry 10,884,491 10,584,310 1,765,965 1,543,340 9,118,526 1,465,784 59-4-2- Liquidity risk policies and processes Agriculture 2,857,564 4,010,117 535,613 504,652 2,321,951 1,688,166 The Saman Bank policy is typically to keep for each type of currency a cash buffer of at least 2% of the total Other 203,851 214,853 10,017 7,250 193,834 21,019 deposits of the same currency which is being reviewed not to slide lower than this percentage. Further in this arrangement, a limit has been set for transactions with other banks and there is strict control not to violate Housing and construction 0 0 0 0 0 0 such limit. Mining 1,044 671 94 131 950 (279) Banks 665,070 806,620 119,170 180,572 545,900 260,720 25,536,553 27,411,119 4,432,752 4,132,755 21,103,801 6,307,318 59-4-3- Executive units of liquidity risk management Saman Bank has strong belief in active management of liquidity risk. To this end, this bank has developed a coherent system to manage the liquidity risk. In this system, the Board of Directors, the Senior/High Risk 59.3.9.2. Balances of foreclosed assets Committee, the Resources and Consumption (ALCO) Committee, the Treasury Department and the Risk 2017 2016 Department will play the leading roles. Rls (M) Rls (M) Movable properties 0 0 59-4-4- Credit risk measurement method Residential real properties 5,368,409 6,183,364 In order to measure the liquidity risk, Saman Bank uses the existing financial ratios in Basel III which include Business/Office properties 10,298,942 12,753,136 NSFR (Necessary Stable Funding Ratio) and LCR (Liquidity Coverage Ratio). Additionally, the liquidity gap which Plant and Equipment 4,426,484 4,238,905 may exist between rial and foreign currencies shall be deployed for this purpose. Investments 0 0 Debt securities 0 0 59-4-5- Mechanism for controlling and monitoring liquidity risk Land 3,959,408 3,617,484 The responsibility for controlling and monitoring the liquidity risk in Saman Bank shall remain with the 24,053,243 26,792,889 Risk Department, Resources and Consumption Committee and Treasury Department. The Resources and Consumption Committee shall be responsible to the High Risk Committee and the Board of Directors and shall trace up the following matters: 59-3-10 Capital sum required for credit risk coverage • To review and control the financial ratios and indices and deviation from the budget with respect to the The amount of capital required for credit risk coverage will come up to Rls. 13,548,638 million which has been forecast of annual operating budget; calculated and presented in the table 59.3.10.1. • To take decisions on the amount and optimal pattern of usage or consumption including credit lines, 59.3.10.1 The table for calculating the capital required for credit risk coverage foreign currencies, investments, cash or cash equivalent whether in rial, or in foreign currency and In the table below, the capital to be used for credit risk coverage aims at achieving 8% for the capital interbank operations with a view to the level of impact on the bank profitability based on annual operating adequacy ratio. budget; (Allocated capital = 8% x Risk level) • To take decisions on the rates of funding and allocation of rial-denominated and foreign currency sources with respect to the needs, peers’ rates, international market rates and sanctioning authority of executive units to change such rates with a view to their effect on profitability based on the annual operating budget; 2017 • To take decisions on the solutions to liquidity coverage subject to the liquidity level approved by the High Type of asset Assets and liabilities Risk factor Risk level Allocated capital Strategy Committee and High Risk Committee; To determine inter-departmental interest rates; Rls (M) Percentage Rls (M) Rls (M) • To review and approve a contingency plan so as to face liquidity crisis with a view to the level of impact Due from other banks and credit institutions 28,858,640 20 5,771,728 461,738 • on the bank’s profitability, and where the decision-making goes beyond the scope of the commission’s Non-governmental participation bonds 0 100 0 0 authority, the relevant report shall be submitted to the High Strategy Commission and the Board of Investment in securities (shares) 2,648,759 100 2,648,759 211,901 Directors; Due from subsidiaries and affiliates 3,578,947 100 3,578,947 286,316 • To control the maturity dates of assets and liabilities, bank profitability trend, bank structure of expenses, Other accounts receivable 5,945,744 50 5,945,744 475,660 profit sharing and non-profit sharing ratios, rate of return on assets and shares, cost of money within the Hire purchase and housing loans 25,062,478 100 12,531,239 1,002,499 defined authority and its impact on the bank profitability based on the annual approved budget; Other loans granted and amounts due 89,061,354 100 89,061,354 7,124,908 • To review and decide on the amount of investment size in the capital and commodity markets; Other assets 47,930,014 100 47,930,014 3,834,401 • To review and analyze the bank investment portfolio and, in the case of any deviation from the approved Guarantee for participation bonds issued by non-governmental budget, provide appropriate solutions towards achieving the bank’s operational goals; 0 100 0 0 sector (risk factor 50%) • To control and monitor the rate of loan facilities and return on assets of various types (loans, investments, Obligations for LGs issued (conversion factor 20%) 5,129,945 100 1,025,989 82,079 interbank operations and…) based on the size established in the bank’s annual budget; Obligations for LGs issued (conversion factor 50%) 0 100 0 0 • To control and monitor the average cost rate of bank funding sources based on the amounts set in the Obligations for LCs issued (conversion factor 20%) 4,321,019 100 864,204 69,136 annual budget; Obligations for LCs issued (conversion factor 50%) 0 100 0 0 • To adopt proper policies to keep the profit margin of resources and uses appropriate to the rates 212,536,900 169,357,978 13,548,638 or amounts set in the annual budget and submit proposals and proper solutions to the High Strategy Commission; • To determine and approve the amount of annual contingent liquidity appropriate to the annual budget

158 Financial Report 159 and in compliance with the applicable laws and regulations and the recommendation made by the board of 59.4.5.3. Analyzing the maturity of assets and liabilities directors; The table below shows the maturity of the bank financial assets and liabilities based on the dates which • To ensure the control and maintenance of liquidity level in various circumstances; would possibly be claimed or settled. • To monitor interbank operations. The Treasury Department shall be responsible for the launch and execution of interbank operations. 2017 Without Less than 1 1 - 3 3 months to 1 - 5 More than 5 Book value specified month months 1 year years years maturity 59.4.5.1 Liquidity reserves Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) The table below shows the composition of bank liquidity reserves: Assets

2017 2016 Cash in hand 31,494,714 31,494,714 0 0 0 0 0 Due from banks and other credit Rls (M) Rls (M) 9,676,029 9,676,029 0 0 0 0 0 institutions Balance with CBI 4,171,647 2,478,732 Due from the government 0 0 0 0 0 0 0 Cash and balance with other banks 24,654,784 44,772,819 Loans granted to and amounts due Islamic treasury bonds 0 458,903 0 0 0 0 0 0 0 from governmental entities 28,826,431 47,710,454 Loans granted to and amounts due from 127,750,201 61,818,046 18,995,007 24,696,205 18,383,206 3,857,734 0 non-governmental entities/persons 59.4.5.2 Table of liquidity ratios Investments in shares and other 2,777,793 397,382 0 0 0 0 2,380,411 securities Beginning Max. during Min. during Mid-year Year-end Due from subsidiaries and affiliates 3,578,946 0 0 0 0 0 3,578,946 of the year the year the year Other accounts receivable 5,945,744 5,945,744 0 0 0 0 0 Percentage Percentage Percentage Percentage Percentage Tangible fixed assets 3,613,037 0 0 0 0 0 3,613,037 Cash and cash equivalent to total assets (1) 23 18 24 12 14 Intangible assets 4,301,189 0 0 0 0 0 4,301,189 Cash and cash equivalent to total deposits 23 17 24 11 13 Statutory deposit 23,035,684 354,433 354,433 672,958 1,646,427 20,007,431 0 Net cash assets to total deposits (2) 21 15 22 9 10 Other assets 45,861,562 22,006,592 1,833,333 8,250,000 13,053,243 0 718,394 Loan facilities to total deposits 51 52 54 50 51 258,034,899 131,692,940 21,182,773 33,619,163 33,082,876 23,865,165 14,591,977 Loan facilities to on-year term deposits and more 136 131 136 120 120 Liabilities and deposits Demand deposits to total deposits (3) 55 54 56 50 51

Due to banks and other credit (5,475,289) (2,966,977) 0 (2,508,312) 0 0 0 istitutions 1-Cash and cash equivalent means cash amounts, participation bonds and similar items with an active cash-traded market. Customers' deposits (17,098,373) (962,045) (962,046) (1,826,653) (4,468,977) (8,878,654) 0 2-Net cash assets means cash and cash equivalent, investment papers/certificates with an active cash-traded Dividends payable (52,482) 0 0 0 0 0 (52,482) market less bank deposits, issued debt securities, other loans and liabilities which will mature (fall due) by Debt securities 0 0 0 0 0 0 0 next month. Provision for income tax 0 0 0 0 0 0 0 3-Demand deposits include the deposits without any contractual maturity such as current accounts, savings Provisions and other liabilities (8,813,301) 0 0 0 0 0 (8,813,301) accounts and current interest-free accounts and … Provisions for employees' termination (537,311) 0 0 0 0 0 (537,311) and pension benefits

Investment depositors' equity (214,853,049) (4,407,490) (2,481,358) (4,711,294) (11,526,437) (191,726,470) 0

Total liabilities (246,829,805) (8,336,512) (3,443,404) (9,046,259) (15,995,414) (200,605,124) (9,403,094) Total shareholders' equity (11,205,094) (11,205,094) Total liabilities and shareholders' (258,034,899) (8,336,512) (3,443,404) (9,046,259) (15,995,414) (200,605,124) (20,608,188) equity

Gap 0 123,957,028 10 24,572,905 17,087,463 (176,739,959) (6,616,808) Accumulated gap 0 123,957,029 141,696,400 166,269,304 183,356,767 6,616,808 0 Gap to base capital ratio (percentage) 0 974 139 193 134 (1,388) (52) Accumulated gap to base capital 0 974 1113 1306 1440 52 0 ratio (percentage) Gap to effective base capital 0 1042 149 207 144 (1,486) (56) ratiov (Percentage) Accumulated gap to effective base 0 1042 1191 1398 1542 56 0 capital ratio (Percentage)

160 Financial Report 161 2016 59.4.5.4. Analyzing the contractual maturities of financial liabilities Without Less than 1 1 - 3 3 months to 1 - 5 More than 59.4.5.4.1. The table below shows the maturity of financial liabilities based on the maturity specified in Book value specified month months 1 year years 5 years maturity the contract.

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 2017 Less than 1 1 - 3 3 months to 1 - 5 More than Without specified Book value Assets month months 1 year years 5 years maturity

Cash in hand 49,362,165 49,362,165 0 0 0 0 0 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M)

Due from banks and other credit Liabilities 12,833,651 12,833,651 0 0 0 0 0 institutions Due to banks and other credit istitutions (5,475,289) (272,390) (1,487,541) (818,989) 0 0 (2,896,369) Due from the government 0 0 0 0 0 0 0 Customers' deposits (17,098,373) 0 0 0 0 0 (17,098,373) Loans granted to and amounts due Debt securities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 from governmental entities Loans received from the National 0 0 0 0 0 0 0 Loans granted to and amounts due from Development Fund 126,987,987 64,175,053 20,416,661 18,617,992 23,144,384 633,897 0 non-governmental entities/persons Investment depositors' equity (214,853,049) (12,472,308) (11,551,202) (65,754,453) (9,855,401) 0 (115,219,685)

Investments in shares and other 3,238,567 804,012 0 458,902 0 0 1,975,653 (237,426,711) (12,744,698) (13,038,743) (66,573,442) (9,855,401) 0 (135,214,427) securities

Due from subsidiaries and affiliates 1,030,522 0 0 0 0 0 1,030,522 2016 Other accounts receivable 5,651,666 5,651,666 0 0 0 0 0 Less than 1 1 - 3 3 months to 1 - 5 More than Without specified Book value Tangible fixed assets 3,593,857 0 0 0 0 0 3,593,857 month months 1 year years 5 years maturity Intangible assets 4,119,563 0 0 0 0 0 4,119,563 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Liabilities Statutory deposit 21,131,325 325,274 307,358 593,007 1,457,824 18,447,862 0 Due to banks and other credit istitutions (27,042,210) (19,094,260) 0 (7,947,950) 0 0 0 Other assets 29,606,051 3,818,932 533,479 7,201,967 17,957,796 0 93,877 Customers' deposits (21,885,077) 0 0 0 0 0 (21,885,077) 257,555,354 136,970,753 21,257,498 26,871,868 42,560,004 19,081,759 10,813,472 Debt securities 0 0 0 0 0 0 0 Liabilities and deposits Loans received from the National 0 0 0 0 0 0 0 Development Fund Due to banks and other credit (27,042,210) (19,094,260) 0 (7,947,950) 0 0 0 Investment depositors' equity (194,173,795) (5,948,065) (1,740,197) (5,636,200) (75,961,202) 0 (104,888,131) istitutions (243,101,082) (25,042,325) (1,740,197) (13,584,150) (75,961,202) 0 (126,773,208) Customers' deposits (21,885,077) (943,127) (764,308) (1,545,171) (3,850,437) (14,782,034) 0 Dividends payable (157,034) 0 0 0 0 0 (157,034) Debt securities 0 0 0 0 0 0 0 59.4.5.4.2. The table below shows the maturity of forex-denominated financial liabilities based on the maturity specified in the contract. Provision for income tax 0 0 0 0 0 0 0 Provisions and other liabilities (4,268,653) 0 0 0 0 0 (4,268,653) 2017

Provisions for employees' termination Less than 1 3 months to More than Without (414,634) 0 0 0 0 0 (414,634) Book value 1 - 3 months 1 - 5 years and pension benefits month 1 year 5 years specified maturity

Investment depositors' equity (194,173,795) (4,455,020) (2,340,290) (4,443,615) (10,871,320) (172,063,550) 0 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Liabilities Total liabilities (247,941,403) (24,492,407) (3,104,598) (13,936,736) (14,721,757) (186,845,584) (4,840,321) Due to banks and other credit istitutions (2,685,169) (272,391) (1,487,542) (818,989) 0 0 (106,247) Total shareholders' equity (9,613,951) (9,613,951) Customers' deposits (6,577,292) 0 0 0 0 0 (6,577,292) Total liabilities and shareholders' (257,555,354) (24,492,407) (3,104,598) (13,936,736) (14,721,757) (186,845,584) (14,454,272) equity Debt securities 0 0 0 0 0 0 0 Loans received from the National Gap - 112,478,350 18,152,898 12,935,131 27,838,246 (167,763,823) (3,640,802) 0 0 0 0 0 0 0 Development Fund Accumulated gap - 112,478,350 130,631,248 143,566,379 171,404,625 3,640,802 0 Investment depositors' equity (15,884,873) (8,201,897) (1,320,909) (4,691,557) 0 0 (1,670,510) Accumulated gap to base capital - 909.8 146.8 104.6 225.2 (1,357) (29.4) (25,147,334) (8,474,288) (2,808,451) (5,510,546) 0 0 (8,354,049) ratio (percentage) Accumulated gap to base capital - 909.8 1056.7 1161.3 1386.5 29.4 0 ratio (percentage) 2016 Gap to effective base capital Less than 1 3 months to More than Without - 953.3 153.8 109.6 235.9 (1,421.8) (30.9) Book value 1 - 3 months 1 - 5 years ratiov (Percentage) month 1 year 5 years specified maturity Accumulated gap to effective base Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) - 953.3 1107.1 1216.7 1452.7 30.9 0 capital ratio (Percentage) Liabilities Due to banks and other credit istitutions (22,799,693) (12,215,115) 0 (7,947,951) 0 0 (2,636,627) Customers' deposits (9,936,776) 0 0 0 0 0 (9,936,776) Debt securities 0 0 0 0 0 0 0 Loans received from the National 0 0 0 0 0 0 0 Development Fund Investment depositors' equity (13,757,148) (4,078,065) (1,635,068) (5,062,065) 0 0 (2,981,950)

(46,493,617) (16,293,180) (1,635,068) (13,010,016) 0 0 (15,555,353)

162 Financial Report 163 59-4-6- Crisis contingency plan (liquidity stress test) investee company (whichever is lower); In order to test the liquidity crisis in Saman Bank, it is essential to identify the factors creating liquidity crisis • Deputy for Investment and Affiliates – for a transaction amount from 3 billion rials up to 30 billion rials in a and make scenarios based on the assumptions which result from the existing facts. To this end, the operational day and less than 5% of the investee company; plan for the stress test project is executed with the aim of studying and identifying the factors creating liquidity Investment Affairs Manager – for a transaction amount from 0.2 to 3 billion rials in a day; crisis in the bank by using the previous studies, determining the major risk factors, shock and its impact on the • assets and liabilities, designing the scenario in alignment with assets and liabilities, modeling the liquidity crisis • Investment expert – for a transaction amount up to the limit of 200 million rials in a ady. test based on the internal influential factors, predicting the possibility for emergence of liquidity crisis and maintaining an appropriate level of liquidity in response to cash outflows and avoiding the source funding with substantial expenses. During the recent financial crisis, the liquidity risk has been the main focus of attention Foreign currencies: in that, it has revealed how a crisis can accelerate the process of liquidity shortage in the market among • The International Division and, more professionally, the foreign exchange office are responsible for the banks and even hinder other large institutions from their operations. Previous to such financial crisis, decision-making on the authorized limits of transactions; there was no liquidity crisis test performed by any banks for the historical evidence did not indicate any sign of liquidity risk crisis on the grounds of liquidity events. As a general rule, in the banking industry, the inflow • In certain cases at the weekly commissions held at the International Division, the board chairperson and of sources should be consistent with the outflow of sources the failure of which may lead to three possible CEO will participate in decision-making process as deemed proper by the bank’s special and mega policies. scenarios to bring about liquidity shortage for the bank as follows: • Scenario 1: In this scenario it is assumed that the inflow and outflow of sources by depositors will take 59-5-3-Methods of measuring the market risk place in normal conditions. However, the collection of debts by or recovery of sources from the borrowers The bank trading portfolio is made up of two segments: will happen less quickly. As such, the borrowers will have the sources at their disposal for a longer period of • Shares/stocks time. • Foreign exchange open positions • Scenario 2: In this scenario it is assumed that outflow of sources by depositors will happen more quickly. As such, the inflow of new sources and return of sources by lenders will not cover the outflow of sources. To evaluate the market risk of shares, the value at-risk of total shares portfolio with a confidence level of 99% will be calculated. • Scenario 3: In this scenario, it is assumed that outflow of sources by depositors will increase and simultaneously return of sources by borrowers will slide out of normal conditions. Pursuant to Basel II requirements and the CBI’s evidence regarding the credit risk, the historical simulation method shall be employed to calculate the necessary capital to cover the risk of shares portfolio. Notably, as One of the most applicable ratios for testing the liquidity crisis is the LCR (Liquidity Coverage Ratio). To regards the foreign exchange market risk, the forex open position for the total portfolio as well as the degree define a hypothetical scenario regarding LCR, it will be imperative to exercise hypothetical shocks to the of positive/negative open position of each of the currencies and the amount of required capital for the forex risk inflow and outflow of assets and measure their impact on this ratio and crisis borderline. coverage and value-at-risk of foreign currency portfolio, the historical simulation method will also be used. The Under normal circumstances and considering the background, the liquidity ratios including LCR have never open position of a foreign currency will include the absolute value of the following items: reached the crisis borderline. Therefore, our scenario will be built on a hypothetical situation and not on A. the rial equivalent of the difference between forex assets and liabilities in any currency entered in the on- historical data. There are various assumptions which may influence the occurrence of crisis including the line accounts of balance sheet; external factors, such as changes in inflation rate, foreign currency translation, housing price indexes, blocking Shetab payment system by the CBI and... . B. the rial equivalent of the difference between the bank’s and customers’ obligations in any currency entered in the off-line accounts of balance sheet. The impact of each externally exogenous variable on the balance sheet ratios and increase in the claims ratio as well as decrease in the amounts of facilities and deposits will change the LCR (Liquidity Coverage Pursuant to the CBI’s directive, the authorized limit of open position for any of the currencies (positive or Ratio) and may ultimately approach the crisis borderline. negative) is maximum up to 10% of the bank base capital and the authorized limit of open position for all aggregate currencies (positive or negative) is maximum up to 30% of the bank base capital. 59-5- Market risk

59-5-1- Definition of market risk 59-5-4- Analyzing the value-at-risk investment in shares and other market-priced investments: Considering the historical simulation method and percentage of possible changes thereupon in the market The market risk or the market value at risk (VaR) may be defined as the risk probability of uncertainty in trading value, the level of value-at-risk for investment in shares and other market-priced investments have been portfolio revenues of a financial institution as a result of changes in market situation such as asset prices, illustrated in the table below: interest rates, market volatility and market liquidity. The market risk will probably arise when a financial institution is actively engaged in trading assets, liabilities and derivative instruments and not when such items 2017 2016 are held for long-term investments, financing and hedging purposes. Possible change Effect Possible Effect Type of investment in market price (1) on profit and loss (2) change in market price on profit and loss 59-5-2- Executive units charged with market risk management Percentage Rls (M) Percentage Rls (M) Saman Bank firmly believes in active management of market risk and, with this view in mind, it has devised Investment in marketable shares (-4.5 , 4.4) (1216) (-5.2 , 8.0) 7400 a coherent structure to actively manage such risks. In this structure, the board of directors, High Risk Committee, Resource Allocation Committee (ALCO), Investment Commission, Investment Affairs Manager, Investment in units of mutual funds (-1.9 , 2.3) 280 (-2.8 , 4.8) 878 International Division and Risk Department will play leading roles. The units and departments which are tasked with decision-making in the area of risk management are listed below: 1. Possible change in market price has been calculated for a 10-day period.

Shares: 2. Effect on profit and loss at market price has been calculated for a 10-day period. • Senior executive commission at the highest level – for a transaction amount in excess of 50 billion rials in a day or 10% of the investee company (whichever is lower); • Investment Commission – for a transaction amount up to the limit Rls. 50 billion in a day or 10% of the

164 Financial Report 165 Considering the historical simulation method and percentage of possible changes thereupon in the foreign

) ) ) exchange rate, the level of value-at-risk for investment in shares and other market-priced investments have been illustrated in the table below: 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Won 13.05 13.97 6,590,662,453 9,179,936,288 2,589,273,835

9,986,928,791 2,620,964,520 2017 2016 ( ( ( 67,064,752,085 54,456,858,774

46,717,721,982

South Korean 1,661,294,213,365

57,884,815,797

Possible change in Effect on profit and Possible change in Effect on profit and

) )

) market price (1) loss (2) market price loss 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1.23 1.32

11,065 Percentage Rls (M) Percentage Rls (M) ( 8,932,603 8,943,668 ( ( 10,802,924 10,802,924 2,018,622

1,859,256 Omani Rial

156,519,634,043

US Dollar (-0.02 , 0.32) (1,335) (-0.02 , 0.43) (1,967) ) )

) Euro (-1.86 , 2.27) 3,940 (-2.68 , 2.98) 9,718 ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1,000 UK Pound (-2.9 , 3.14) (322) (-2.49 , 2.58) 171 Yuan ( (0.14) (0.15) 2,306,342 4,762,601 90,146,033 92,453,375 Chinese ( 59,804,599 88,709,610 24,142,410

( (

31,626,018

(3,743,765)

(17,603,183,500) UAE Dirham (-0.04 , 0.33) 748 (-0.04 , 0.43) (375) ) )

) ) Japanese Yen (-2.89 , 3.39) 709 (-2.24 , 2.68) (0)

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Swiss Franc (-1.92 , 2.08) 435 (-2.71 , 3.41) 370 1.87 2.00 Indian 141,170 Rupee

20,043,930 11,213,760 11,213,760 ( ( 578,899,157

1,144,366,541 1,175,624,231

1,644,930,814 1,656,285,744 ( (

1,503,423,394 Canadian Dollar (-2.61 , 2.73) (2) (-2.63 , 2.73) (1) 480,661,514

238,408,110,706

Australian Dollar (-3.05 , 3.1) (1) (-3.67 , 3.58) (0) ) ) )

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Turkish Lira (-3.83 , 2.93) (2,337) (-3.57 , 3.50) (185)

7.28 7.80 2,615 78,720 50,255

4,701,044 3,268,001 7,969,045 ( ( ( 111,532,650 111,613,985 21,709,430

Indian Rupee (-1.39 , 1.4) 430 (-1.43 , 2.06) 160 103,644,940 Turkish Lira 927,103,991,610

Chinese Yuan (-1.02 , 0.82) 1 (-0.87 , 1.01) 137 ) )

) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Omani Rial (-0.28 , 0.41) 242 (-0.20 , 0.47) 337 718 ( 23,891 24,609 12,748 12,748 ( (

Dollar (11,871) (11,861) (296,086,642) Australian South Korean Won (-2.8 , 2.89) 3,513 (-2.61 , 2.73) 1

) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

175 ( 63,100 63,275 (0.01) (0.01)

( ( Possible change in market price has been calculated for a 10-day period. Dollar 1- (65,295) (63,275) Canadian

(1,535,229,921)

2- Effect on profit and loss at market price has been calculated for a 10-day period.

) ) ) )

) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

4,520 1.88 2.01 ( 59-5-6- Capital sum required for market risk coverage 1,831,232 3,893,101 8,025,025 2,296,172 1,989,141 ( ( ( ( 13,397,879 15,387,020 16,990,431 6,853,674

7,361,994

Swiss Franc 239,124,927,764

) ) ) ) Shares risk Forex risk

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total capital Yen 1.56 1.67 Required capital Required capital 218,556 4,061,772 2,728,184

3,793,084 Measurement method Value-at-risk Value-at-risk reserve for ( (

574,573,245 581,363,201 Japanese (30,417,615) ( (

reserve

1,268,947,810 reserve 1,272,959,450

691,596,249 198,986,072,659

market risk ) ) )

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

)

0 0 0 0 0 0 0 0 0 0 0 0 0 0 Historical simulation model 10,744 101,924 26,725 510,286 612,210

3.72 3.99 95,064 266,940

( 2,577,821 1,169,600 5,064,209 11,732,005 15,967,007 30,543,773 ( 41,074,881 36,940,749 84,249,439

( ( (

(21,452,818) 53,705,666

UAE Dirham 474,059,910,251

) )

) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

493 ( 1.20 1.29 92,968 815,238 908,699 ( 222,281 ( (

4,495,590 4,717,871 3,762,767

3,808,172 UK Pound

153,054,242,460

) ) ) )

)

0 0 0 0 0 0 0 0 0 0 0 0 0

Euro 18.30 19.59 1,339,753 18,575,675 11,582,647 99,925,640 53,786,313

108,315,539 117,291,850 306,725,496 550,908,560 ( 378,956,940 127,299,901 617,765,128

95,851,946 ( ( ( (

66,856,567

2,330,018,220,699

) )

) ) ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

(6.51) (6.97) 8,183,356 6,585,728 4,298,709 ( ( ( 19,235,343 39,897,150 19,669,662 19,118,782 97,920,937 104,412,850 123,480,643

US Dollar (30,647,032) ( ( (25,559,707) (828,645,708,072)

59-5-5- Analyzing the value-at-risk foreign exchange rate The position of assets and liabilities foreign currency obligations at year-end is shown in this table: Due from banks and other credit institutions Loans granted to and amounts due from governmental entities Loans granted to and amounts due from non-governmental entities/persons Investment in shares and other securities Due to banks and other credit institutions Cash in hand Due from the government Due from subsidiaries and affiliates Other accounts recievable Tangible fixed assets Intangible assets Statutory deposit Other assets Total forex assets Cusomers' deposits Dividends payable Debt securities Provision for performance tax Provisions and other liabilities Investment depositors' equity Total liabilities and investment depositors' equity Net assets (liabilities) as at March 20, 2017 Rial equivalent of open forex position Percentage of open forex position compared to base capital (percentage) Obligations for LCs opened Obligations for LGs issued Obligations for the amounts received from the National Development Fund Obligations for amounts received from the Forex Reserve Fund Percentage of open forex position compared to effective base capital (percentage) Net assets (liabilities) as at March 19, 2016

166 Financial Report 167 59-5-7- Analyzing the gap between the assets and liabilities sensitive to interest rates 2016 Less than 1 1 - 3 3 months to 1 1 - 5 More than Non-sensitive Book value month months year years 5 years to interest rate 2017 Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Less than 1 3 months to 1 More than 5 Non-sensitive Book value 1 - 3 months 1 - 5 years month year years to interest rate Assets

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Cash in hand 49,362,165 44,772,819 0 0 0 0 4,589,346 Assets 8.7% 9.63% 0%

31,494,714 23,849,734 805,050 0 0 0 6,839,930 Cash in hand Due from banks and other credit 12,833,651 4,569,252 0 0 0 0 8,264,399 4.57% 5.96% 4% 0 0 0 0% institutions 8% 22% 0% Due from banks and other credit 9,676,029 4,202,656 0 0 0 0 5,473,373 0 0 0 0 0 0 0 institutions Due from the government 9.6% 22% 0 0 0 0 0% Loans granted to and amounts due 0 0 0 0 0 0 0 from governmental entities 0 0 0 0 0 0 0 Due from the government Loans granted to and amounts due 126,987,987 67,785,949 33,799,799 162,727 12,836,695 12,402,817 0 Loans granted to and amounts due 0 0 0 0 0 0 0 from non-governmental entities/ 22% 23.56% 23.26% 24.50% 20.36% 11.72% 0 from governmental entities persons Loans granted to and amounts due 127,750,201 58,898,248 19,898,137 25,757,206 19,173,105 4,023,505 0 Investments in shares and other 3,238,567 0 0 0 0 0 3,238,567 from non-governmental entities/ securities 19% 21.4% 19.3% 19.1% 15.4% 12.0% persons Due from subsidiaries and affiliates 1,030,522 0 0 0 0 0 1,030,522 Investments in shares and other 2,777,793 0 0 0 0 0 2,777,793 securities Other accounts receivable 5,651,666 0 0 0 0 0 5,651,666

Due from subsidiaries and affiliates 3,578,946 0 0 0 0 0 3,578,946 Tangible fixed assets 3,593,857 0 0 0 0 0 3,593,857

Other accounts receivable 5,945,744 0 0 0 0 0 5,945,744 Intangible assets 4,119,563 0 0 0 0 0 4,119,563

Tangible fixed assets 3,613,037 0 0 0 0 0 3,613,037 Statutory deposit 21,131,325 11,962,093 191,466 620,125 8,026,983 330,658 0 Intangible assets 4,301,189 0 0 0 0 0 4,301,189 Other assets 29,606,051 0 0 0 0 0 29,606,051 Statutory deposit 23,035,684 13,606,090 1,249,677 7,113,702 1,066,215 0 0 257,555,354 129,090,113 33,991,265 782,852 20,863,678 12,733,475 60,093,971 Other assets 45,861,562 0 0 0 0 0 45,861,562 258,034,899 100,556,728 21,952,864 32,870,908 20,239,320 4,023,505 78,391,574 Liabilities and deposits Due to banks and other credit (27,042,210) (583,648) (4,666,611) (1,709,700) 0 0 (20,082,251) istitutions 0.45% 1.23% 3.40% 0 0 0% Liabilities and deposits 0.44% Customers' deposits (21,885,077) 0 0 0 0 0 (21,885,077) Due to banks and other credit (5,475,289) (272,390) (1,487,541) (818,989) 0 0 (2,896,369) 0 0 0 0 0 (157,034) istitutions 1.2% 1.74% 2.47% 2.9% 0 0 0.0% Dividends payable (157,034) 0 0 0 0 0 0 Customers' deposits (17,098,373) 0 0 0 0 0 (17,098,373) Debt securities 0 0 0 0 0 0 0 Dividends payable (52,482) 0 0 0 0 0 (52,482) Provision for performance tax 0 0 0 0 0 0 (4,683,287) Debt securities 0 0 0 0 0 0 0 Provisions and other liabilities (4,683,287) (108,721,456) (1,740,197) (5,636,200) (72,955,901) (3,005,301) (2,114,740) Provision for performance tax 0 0 0 0 0 0 0 (194,173,795) Investment depositors' equity 16.45% 4.78% 6.81% 20.3% 22.9% Provisions and other liabilities (9,350,612) 0 0 0 0 0 (9,350,612) 17.63% (247,941,403) (109,305,104) (6,406,808) (7,345,900) (72,955,901) (3,005,301) (48,922,389) (214,853,049) (125,765,863) (11,551,204) (65,754,450) (9,855,401) 0 (1,926,131) Total liabilities and deposits Investment depositors' equity 15.1% 12.64% 17.5% 18.4% 22.6% 0 0 Total shareholders' equity (9,613,951) (9,613,951) Total liabilities, deposits and Total liabilities and deposits (246,829,805) (126,038,253) (13,038,745) (66,573,439) (9,855,401) 0 (31,323,967) (257,555,354) (109,305,104) (6,406,808) (7,345,900) (72,955,901) (3,005,301) (58,536,340) shareholders' equity Total shareholders' equity (11,205,094) (11,205,094) Gap 19,785,008 27,584,455 (6,563,048) (52,092,223) 9,728,175 1,972,265 Total liabilities, deposits and (258,034,899) (126,038,253) (13,038,745) (66,573,439) (9,855,401) 0 (42,529,061) Accumulated gap 19,785,008 47,369,464 40,806,416 (11,285,807) (1,557,632) 414,634 shareholders' equity Gap (25,481,526) 8,914,118 (33,702,531) 10,383,920 4,023,506 36,399,824 Accumulated gap (25,481,526) (16,567,408) (50,269,939) (39,886,018) (35,862,513) 537,313 59-6- Operational risk

59-6-1- Definition of operational risk Operational risk is the risk arising from human error, inefficiency of internal processes, system failure and external events. The operational risk does not include reputation risk and legal risk.

59-6-2- Executive units of operational risk management Saman Bank has designed and developed a coherent framework in harmony with other departments/divisions of this bank so as to employ the scope of operational risk management in accordance with the CBI’s regulatory laws and in line with the best prevailing practice in banking industry and accordingly strives to ensure that operational risks are consistently and comprehensively identified, evaluated, measured and controlled. The

168 Financial Report 169 following departments or divisions are involved in this process: departments. The key measures taken in this area include identification of the processes bottleneck which is deemed to be a factor for creating operational risk (individuals, systems, processes and external events) and Risk Department: This department acts as an executive unit for operational risk, with the aim of identifying • development, review of amended and preventive by-laws related to the occurrence of operational adverse incidents. the resources exposed to operational risk and implementing the process of operational risk management at the level of organizational process. More importantly, the process of operational risk management is practiced in a unified approach which includes risk identification, risk assessment, risk indicators monitoring Mechanism for monitoring operational risk and further through risk mitigation plans in line with the risk appetite. As it stands, by receiving the periodic The bank’s operational risk position will be monitored so as to review the efficiency and effectiveness of and updated reports from other executive departments which are acting in this connection the operational controls as well as the effect of any new incident on the organization profile during the course of specified risk in the bank’s key processes is monitored, measured and evaluated. periods. During each period, the amount of resources exposed to operational risk, frequency and severity of • Quality Improvement Department: This department’s main functions are to design and document the the effect of risk factors, key risk indicators and further the degree of efficiency and effectiveness of current operational procedures, define and develop the kind of relationship with other organizational divisions with controls will be reviewed and monitored. respect to the operational processes, determine the monitoring indicators for evaluation and control as well as establishing an effective link between regulations and directives with the existing processes. This 59-6-7- The capital sum required for operational risk coverage structure has been devised and developed for standardization of processes and minimization of operational events or occurrences. The capital sum required for operational risk coverage at Saman Bank will be measured and gauged by using the base index method. The amount of capital exposed to operational risk is listed below: • Inspection Department: This department will perform periodic inspections of operational processes at branch levels in accordance with the prevailing directives, procedures and by-laws and then will file reports on the findings of such inspections. The contents of these reports will be used as the base data for analyzing amount of capital exposed to operational risk (Rls (M)) the operational events at branch levels. As such, the operational risk of branches will be assessed by the 2017 2016 type of events contemplated by the Basel Committee with respect to the number (frequency) of events and measurement method Rls (M) Rls (M) the severity of possible losses as reported by the Risk Department. Base index 172,000 321,500

59-6-3- Preventive measures from occurrence of human intentional and unintentional errors 59-7- Capital management In view of the fact that one of the effective factors which may result in operating losses is typically shaped up by individuals in an organization, Saman Bank has taken a series of actions as listed below to prevent the 59-7-1- Base capital occurrence of human intentional and unintentional events by its personnel: The bank base capital for the fiscal year ended March 20, 2017 was the amount of Rls. 12, 718,003/- million. • attempt to create culture and a transparent environment in which all employees, divisions and departments will be aware of performing their duties and responsibilities thoroughly with regard to the 2017 2016 adverse events of operational risk; Rls (M) Rls (M) • dissemination of a proper culture with regard to operational risk so as to institutionalize the enforcement A- Tier 1 capital of decent ethical standards; Capital less funds raised out of assets revaluation reserve 5,575,004 5,575,004 • planning to organize training courses to ensure that the staff members have sufficient knowledge and Legal reserve 1,536,569 1,523,868 expertise in their career path. Other reserves 0 0 Shares premium 0 0 59-6-4- Actions to confront a crisis Retained profit (loss) 161,379 1,202,145 To obtain assurance for maintaining the situation in times of crisis and/or returning to normal situation under Treasury shares 0 0 a well-defined plan in the shortest possible time aimed at minimizing the implications of crisis occurrence, 7,272,952 8,301,017 Saman Bank has designed a non-operating defense by-law. 0 0 B- Tier 2 capital 59-6-5- Method of assessing operational risk General provision for doubtful debts 1,779,761 1,788,907 Saman Bank employs the base index approach for inclusion of operational risk in its calculations related to Fixed assets revaluation reserve 3,932,144 2,425,671 capital adequacy ratio as required by the Basel II guidelines. Additionally, Saman Bank is currently striving to Reserve from shares revaluation 0 0 create and develop the structures required for assessing the operational risk by using an advanced calculation 5,711,905 4,214,578 method. To this end, the bank needs to identify and assess the operational risk in all working processes. The Less: addition of tier 2 capital to tier 1 capital 0 0 identification and assessment tools are listed below: Tier 2 capital 5,711,905 4,214,578 • Using the risk self-assessment method qualitatively through interaction with directors and operational Base capital prior to deductions 12,984,857 12,515,595 divisions of the bank; C- Deductions from base capital • Using the findings and collected data in connection with adverse operational risk events in the bank’s daily Investment in banks and secondary credit institutions - unconsolidated 0 0 operations which are derived from regular inspection and auditing; Investment in other banks and credit institutions (266,854) (152,885) • Using the risk key indicators in the important processes so as to conduct a survey of the operational risk trends. Base (regulatory) capital 12,718,003 12,362,710 Effective base capital 11,892,888 11,799,287 59-6-6- Mechanisms for controlling and monitoring operational risk Mechanism for controlling operational risk The effective base capital amounting to Rls.11,892,888/- million is used to calculate the contingency ratios until the approval date of financial statements. The bank’s new base capital shall also be fixed on the basis of approved Upon assessment of operational risk, the bank will determine which categories of risks it may accept or financial statements and endorsed by the Central Bank after any possible changes, modifications or deductions such control. The control of operational risk shall take place through full cooperation with respective executive as distribution of dividends among shareholders have been made in the financial statements by the general meeting.

170 Financial Report 171 59-7-3- Capital adequacy ratio (CAR)

The bank capital adequacy for the fiscal year ended March 20, 2017 is 6.50 percent.

0 0 0 0 0 0 0

Rls (M) 28,815

117,567 276,508 779,489 2017 2016 liabilities

9,868,602 7,713,420 1,486,643 1,147,474 2,694,633 6,815,594 assets and

13,781,239 90,074,577 20,481,015

155,265,576 Risk adjusted

Rls (M) Rls (M) Base capital 11,892,888 11,799,287 Total risk weighted assets and liabilities 183,774,774 155,265,576 2016 0 0 0 0 0 20 50 100 100 100 100 100 100 100 100 100 100 100 100 100 Capital adequacy ratio (Percentage) 6.5 8 Risk factor Percentage

59-7-4- Final Capital adequacy ratio after general meeting 0 0 0

The capital adequacy ratio in 2017, calculated with base capital in 2017, is 7 percent. Rls (M) 28,815

458,902 117,567 276,508 779,489 liabilities

7,713,420 1,486,643 1,147,474 2,694,633 6,815,594 2,109,620 assets and

49,343,012 27,562,477 93,773,152 20,481,015 21,131,325 10,609,779

2017 2016 Rls (M) Rls (M)

Base capital 12,718,003 12,362,710 0 0 0 0 0 0 0

Total risk weighted assets and liabilities 183,774,774 155,265,576 Rls (M) 768,132 376,872 644,250 100,727

5,771,728 7,914,226 1,287,595 1,338,912

14,396,751 93,278,388 45,390,001 10,125,287

2,381,905.0 183,774,774

and liabilities Capital adequacy ratio (Percentage) 7 8

Risk adjusted assets

59-7-4-1- The capital adequacy ratio after Banks capital increase to the amount of Rls. 12,000 billion under authorization granted by the centeral Bank.The CAR will be raised to 8.19 percent. 2017 0 0 0 0 0 0 20 50 100 100 100 100 100 100 100 100 100 100 100 100 Risk factor Percentage 59-7-5- Leverage ratio The leverage is the total shareholders’ equity to bank’s assets. The bank’s leverage ratio for the fiscal year

ended March 20, 2017 was 4%. 0 0 0 0

76,872 Rls (M) 2017 2016 768,132 644,250 100,727 liabilities

7,914,226 1,287,595 1,338,912 2,381,905 2,667,083 9,645,020 assets and

28,858,640 28,793,501 45,390,001 10,125,287 23,035,684

100,736,461 Rls (M) Rls (M) Total shareholders’ equity 11,205,094 9,613,951 Total assets 258,034,899 257,555,354 Leverage ratio (Percentage) 4 4

60- Operating sectors

60-1- The basis for division of sectors The business sectors in Saman Bank include collaborative banking (by proxy), interest free (Gharzolhasaneh) banking, international banking and electronic banking.

60-2- Information on reportable operating sectors The information related to each of the reportable sectors has been provided in the following table. The profit before tax for each sector is used to assess the performance of that sector. 59-7-2- Capital allocation The total risk weighted assets for the fiscal year ended March 20, 2017 are as follows: Due from the government Net fixed assets and goodwill Other assets Other liabilities Due from banks and other credit institutions Government participation bonds Non-government participation bonds Hire purchase and housing loans Other loans paid and amounts due Guarantee for participation bonds of non-governmental sector (Conversion factor 50%) Obligations for LGs issued (conversion factor of 20%) Obligations for LGs issued (conversion factor of 50%) Obligations for LCs issued (conversion factor of 20%) Obligations for LCs issued (conversion factor of 50%) Obligations for transactional contracts (conversion factor of 50%) Total risk weighted assets and liabilities Accounts receivable Investment in shares Cash in hand Statutory deposit Due from CBI

172 Financial Report 173 Collaborative Interest free International Other E-banking Total

banking banking banking activities

Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) Rls (M) 0 0 0 Total

Income from loans granted and deposits in other banks 23,393,254 0 865,650 0 0 24,258,904 Rls (M) 4,119,563 3,593,857 5,651,666 3,238,567 1,030,522

21,131,325 21,885,077 49,362,165 12,833,651 27,042,210

194,173,795 126,987,987 227,949,303 243,101,082

Interest expenses on deposits (31,547,403) 0 (400,514) 0 0 (31,947,917)

Net income from loan interest and deposits in other (8,154,149) 0 465,136 0 0 (7,689,013) banks 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Others Rls (M)

414,499 23,945 58,801 832,756 0 1,330,001 Fee and commission incomes (236,804) (816) (121,569) (1,484,758) 0 (1,843,947) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Fee and commission expenses 0 UAE

177,695 23,129 (62,768) (652,002) 0 (513,946) Rls (M)

Net income from fees and commissions 2016

Net profit (loss) from investments 0 0 0 0 5,029,559 5,029,559 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Iraq

Net profit (loss) from forex exchanges/transactions 0 0 0 1,384,565 0 1,384,565 Rls (M) Other operating incomes 0 0 0 0 6,206,557 6,206,557 items of liabilities and incomes on the basis of the the of basis the on incomes and liabilities of items

0 0 0 1,384,565 11,236,116 12,620,681

Net incomes earned outside the bank (7,976,454) 23,129 402,368 732,563 11,236,116 4,417,722 0 Iran - -

Net incomes from interbank sectors 0 0 0 0 0 0 Rls (M) 4,119,563 3,593,857 5,651,666 3,238,567 1,030,522

21,131,325 21,885,077 49,362,165 12,833,651 27,042,210

194,173,795 126,987,987 227,949,303 243,101,082

Total incomes from bank's operating sectors (7,976,454) 23,129 402,368 732,563 11,236,116 4,417,722 Expenses for doubtful debts of operating sector (300,000) 0 0 0 0 (300,000)

0

Other direct expenses attributable to operating sector 0 0 0 0 0 0 0

Profit (loss) of each sector before non-attributable 0 (8,276,454) 23,129 402,368 732,563 11,236,116 4,117,722 Total

general expenses Rls (M) 4,301,189 3,613,037 5,945,744 9,676,029 2,777,793 3,578,946 5,475,289

23,035,684 17,098,373 31,494,714

214,853,049 127,750,201 212,173,337 237,426,711

General expenses non-attributable to sectors (4,033,048) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Profit before tax 84,674 0 Others Rls (M)

• The non-rial transactions of collaborative banking and interest-free banking sectors are disclosed in the 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 international banking sector. 0 UAE 2017 Rls (M) • All non-rial transactions are disclosed in the international banking sector. 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Iraq Rls (M)

0 0 0 Iran Rls (M) 4,301,189 3,613,037 5,945,744 9,676,029 2,777,793 3,578,946 5,475,289

23,035,684 17,098,373 31,494,714

214,853,049 127,750,201 212,173,337 237,426,711

- 60-3- Geographical concentration of major items assets, liabilities and incomes In providing the geographical information, major items of assets are reported on basis their location and bank counterparty’s domicile/residence in various geographical regions. Liabilities Statutory deposit Intangible assets Tangible fixed assets Debt securities Due from government Other accounts receivable Customers' deposits Assets Cash in hand Currency Type Due from banks and other credit institutions Loans granted to and amounts due from governmental entities Loans granted to and amounts due from non-govern Investments in shares and other securities Due from subsidiaries and affiliates Due to banks and other credit istitutions Investment depositors' equity mental entities/persons Total assets Total liabilities

174 Financial Report 175 61-3- Transactions with related parties during the year are as follows:

61- Disclosure about related parties Is it liable to Gross Type of Name of related party Type of deal article 129 of Pricing method Amount profit Balance (due) Relationship Commercial March 20, 2017 Code? (loss)

61-1- Change of main shareholders (over one percent) Rls (M) Rls (M) Rls (M) During the fiscal year ended March 20, 2017, no natural or legal person entered the category of shareholders over JBM one percent by purchasing shares. Further, no natural or legal person exited from the category of shareholders Saman Bank's by-laws (Joint Board LGs issued and internal Pardazeshgaran Yes 12,883 - 11,594 over one percent by selling shares. Member) 1 item transactions (Processing) commission

LGs issued 61-2- Transactions with directors 26,397 3,077 24,136 14 items This bank has no record of transactions with its directors (the directors include the managing director/CEO, Saman Satelite Bank's by-laws and Co-Group Civil partnership No internal transac- Telecommunication tions commission members of board of directors and members of the executive board.) loan 43,077 0 43,077 1 item

Subsidiaries Loans - 6 items Bank's by-laws 131,943 14,111 67,004 Atieh Andishan and internal Co-Group No Sepehr Mehr LGs issued transactions 11,519 0 0 2 items commission

Atieh Andishan Bank's by-laws and Co-Group Sale of shares No internal transac- 1,970,676 0 1,970,676 Sepehr Shargh tions commission

Iranian Credit JBM Bank's by-laws Bureau and (Joint Board Debt collection and internal Yes 19,872 0 (3,312) Scoring Member) contract transactions commission

Loans - 310 items 5,152,233 18,183 111,153

LGs issued – 2 items Bank's by-laws Saman and internal 10,087 0 9,078 Co-Group No Brokerage transactions commission Lease contract 3 items 1,836 0 344

Contracts - 3 items 80,836 0 (13,196) Bank's by-laws Lease contract and internal Adonis Co-Group No Pasdaran/Shiraz transactions 140 0 - commission Civil partnership loan – 3 items 78,880 2,625 57,972 Affiliates Civil partnership loan – 6 items 785,496 22,176 83,703 Saman Kish JBM Bank's by-laws LGs issued – 19 items and internal Electronic (Joint Board Yes 201,938 0 177,729 transactions Payment Member) commission Service & Lease contracts - 6 items 158,544 0 255

LGs issued – 3 items 2,300 0 95 Bank's by-laws Aftab Tejarat and internal Other Cleaning services No 87,950 0 (7,793) Saman transactions Contracts commission 5 items 9,265 0 (1,031)

Contracts Other Bank's by-laws 258,244 0 105,366 5 items and internal related Behnad Bana Other No transactions parties LG issued – 1 item commission 6,268 0 -

Jaalah Contract (Swiss Franc) 424,746 806 - 5 items Bank's by-laws Kala Tejarat and internal Other LG issued – 1 item No Khalij Fars transactions 3,100 0 2,790 commission Civil partnership loan – 32 items 4,187,507 425,940 1,771,630.2

Insurance policies 79,545 0 (7,821) JBM Bank's by-laws Saman Sale of shares and internal (Joint Board Yes 1,944,000 0 1,141,000 Insurance transactions Member) commission LGs issued 14 items 14,972 0 -

176 Financial Report 177 61-4- Account balances of related parties with whom no transactions have been conducted during the year 63-2- Net fee on interest- free transactions as follows: Note 2017 2016 Adjustments Rls (M) Rls (M) Name of related party Type of Received (expenses of Balance (due) at Balance (due) at relationship (Paid) doubtful debts March 20, 2017 March 19, 2016 Fees received from interest-free loans 23,945 5,685 and …) Prizes on interest-free deposits (816) (816) Rls (M) Rls (M) Rls (M) Rls (M) Net fees on interest-free transactions 41-1 23,129 4,869 Saman Brokerage Co. Subsidiary 59,351 - 292,370 139,423 Atieh Andishan Sepehr Shargh Service Subsidiary (200,000) - 200,000 - Development Co. Kardan Investment Bank Affiliate - - 264,600 - 63-3- Classification of interest- free facilities based on the loan purpose:

The amount due is related to the dividend receivable. 2017 2016 Rls (M) Rls (M) Marriage 666,860 91,136 62- Accumulated earnings at year-end Relief (Emdad) Committee pensioners 79,418 36,531 Ordinary people 17,878 13,252 Staff members 132 53 Allocation of the year-end accumulated earnings are subject to the approval of the shareholders’ ordinary general meeting in the following cases: 764,288 140,972

Amount Rls (M) Legal duties Distribution of at least 10 percent of net profit earned in 2016-2017 under the provision of 8,467 article 90 of the Commercial Code Amendment Proposal by the board of directors The amount of dividend proposed by the board of directors 0

63- Performance of interest- free transactions for savings in rial (Gharzolhasaneh)

63-1- Status of balance of interest- free sources and uses

Note March 20, 2017 March 20, 2016

Rls (M) Rls (M) Interest-free sources Interest-free deposits in rial 539,461 553,313

Total interest-free sources 539,461 553,313

Uses of interest-free savings Loans granted and amounts due from persons Ordinary loans (764,156) (140,918) Staff loans (132) (54) Loans based on the privilage of law (Note) 0 0

Total uses of interest-free savings (764,288) (140,972)

Statutory deposit on sources of interest-free deposits (67,057) (51,888) Liquidity reserve on interst-free deposits (5%) (26,974) (27,666)

Surplus (shortage) of sources to uses of interest-free deposits (318,858) 332,787

178 Financial Report 179