Annual Report 2015/16
Table of Contents
Saman Bank at a Glance Main Financial Items ...... 5 Credit Rating ...... 7 Board of Directors Report ...... 11 Statement by CEO ...... 16 Retail Banking ...... 18 Corporate Banking ...... 22 International Banking ...... 24 Premium Banking ...... 27 Saman Bank Investment ...... 31 Retail and Syndicated Loans ...... 38 In 2015/16 Electronic Banking ...... 42 Human Capital ...... 45 Social Responsibilities ...... 48 Risk Management ...... 50 Corporate Governance ...... 55 Inspection ...... 63 Anti-Money laundering ...... 64 Compliance ...... 65 Organizational Chart ...... 66
Financial Report Independent Auditor and Legal Inspector Report ...... 70 Group Consolidate Financial Statements ...... 76 Saman Bank (Public Joint Stock company) Financial Statements ...... 82 Explanatory Notes ...... 87
2 Anual Report 2015/16
Main Financial Items
Main Financial Items Table 1
Unit 2015-2016 2014-2015 2013-2014
Net Profit IRR billion 503 1,011 2,043
Total Assets IRR billion 258, 717 228,083 200,326
Total Loans IRR billion 127 ,500 118 ,111 97 ,783
Total Liabilities IRR billion 247 ,990 217,313 190,194
Shareholders' equity IRR billion 10 ,727 10,770 10,132
Return on Assets Percent 0.2٪ 0.5٪ 1.2٪
Return on Equity Percent 5٪ 9.7٪ 21.4٪
Cost-Income ratio Percent 91.3٪ 85.36٪ 69.36٪
Total deposits IRR billion 211,347 179,592 158,151
Paid capital IRR billion 8,000 6,588 6,588
Number of Customers 1000 persons 2,383 2,040 1,928
Number of ATMs Device 1,303 1,208 1,006
Number of POS Device 204,000 195,309 160,403
Deposits absorbed per day IRR billion 107 178 178
Deposits per branch ratio IRR billion 1,493 1,251 1,069
Loans per branch ratio IRR billion 892 815 697
2015-16 Number of 2015-16 2014-15 Total deposits Customers 2014-15 2013-14 2013-14
5 Anual Report 2015/16
Credit Rating
Credit rating is a process of studying and assessing bank performance transparency, investment risk, competitive advantages, financial position, possible accessibility to internal and external capital markets, receiving or granting syndicated loans and ability to meet obligations. Since 2013, we have started cooperation with Capital Intelligence Ratings Institute (CI). It is one of the most professional institutes of credit rating in the Middle East and Africa and assesses annually many banks around the world.
Seyed Ahmad Taheri Behbahani The CEO
On the Way of Progress
During 2015/16, the credit rating process of Bank was started by the CI and they ranked Saman bank in the “B” category of credit rating. They also promoted our future position view from “Stable” to “Positive”. The CI believes that successful business plan and retail financing and banking are factors of this positive rating. It is noteworthy that the CI has promoted Iran credit rating from “B” to “B+” in terms of repayment of long-term foreign and domestic obligations.
6 7 Anual Report 2015/16
Our Rank in Iran Among Top 50 Iranian Companies
As an important scientific, research-based and educational institution, the Iranian Industrial Management Institution has ranked top Iranian companies during the last 17 years based on 28 different measures such as sales and revenues. The process of ranking top 100 companies is performed in terms of output oriented measures and Saman Bank is subject to this assessment and ranking every year providing detailed documents. In the 2015/16, Saman Bank is in the 29th place among the 100 companies based on 2014-2015 financial data, improving 5 steps compared with previous year.
This assessment is an important and applicable tool for understanding the general position of Iranian companies. The following figure illustrates that Saman Bank has secured an appropriate growth among Iranian companies regarding economic consequences of domestic recession and international sanctions during the last 5 years. Although banks are extremely affected by environmental economic situations, this achievement and growth has been attained through reliance on a targeted strategy and directing resources to valuable markets in order to control economic situations.
Rank in top 50 companies Figure 1
Saman Bank Rank among top 50 Iranian Companies 60
56 50 44 40
36 34 30
29 29 20
10
0 2010 2011 2012 2013 2014 2015
8 9 Anual Report 2015/16
Board of Directors Report
The 2015/16 had an important characteristic for us as the last year of the Bank five-year strategic plan. It was necessary to focus our attempts on finalizing and concluding executive plans and predetermined objectives. The plan was started in 2011-2012 and had four strategies including: to be the first choice of target customers, international banks and talented and committed work force and achieving the maximum share of market among private banks in foreign currency transactions and operations. It is noteworthy that during the 2015/16, new regulations were passed establishing some restrictions on the banking system including Saman Bank. The law on Removal of Limitations from Competitive Production, withholding loans predicted in the annual budget regulations extending to private banks, restrictive regulations on interest rate of loans and deposits (specifically the maximum interest rate was determined by participating contracts expected rates and notified to Banks for the first time after passing the law on Interest-free Banking Operations), restrictive regulations on revenue recognition and determining attorneys’ fee and similar restrictions has led to increase expenses and reduce revenue opportunities in the banking business environment. Success in the (nuclear) negotiation created new hopes for an open economic environment. But in practice, due to limitations on the banking system of the country, there were a deep recession in the economic environment so that in the second half of the 2015/16, a plan for getting out of recession was introduced by the country economic officials. Therefore, achievement of bank in any planned strategy needed much effort in planning and executing procedures. However, in the last year we attempted to adapt our abilities and capacities with the needs and capacities of customers and the market in order to provide complete and up-to-dated services and products.
Regarding the need for developing information technology in our society, we have had always a focus on developing infrastructures and application of new E-banking technologies. On the other hand, considering technology, we attempted to eliminate traditional procedures and methods and make evolution in services provided to customers. This consideration has been achieved by changing physical decoration of branches, customer turnover styles and grouping customers, optimizing work and office task processes, defining specialized services and products for customers and extending international service capacities. The statistical reviews on the customers’ satisfaction index show a promotion from 78 to 85 percent and for the customers’ loyalty index a promotion from 81 to 86 percent is achieved. It should be noted that Saman Bank has won the Statue for Popular Bank in the last year based on votes of 25000 banking customers which selected Saman bank as their first choice to open an account.
In terms of financial structures and cost management, although the Central Bank of Iran (CBI) helped reduce the cost of money by entering to inter-banking market at the ending months, limitations and unfair competition specifically by non-authorized financial institutions led to significant restrictions for banks in common revenue areas for the first 8 months of the year. It is noteworthy that despite the general inflation, fees and commissions rates of banks are determined by the CBI and has been constant in the last 4 years and the banks were not allowed to increase the rates. On the other hand, the high costs of absorbing and keeping deposits as a result of the CBI regulations on loans interest rates, led to reduce the bank revenues. However we tried to continue the strategic plan strongly. Since determining the reasonable business direction is the most important achievement of any strategic plan, this achievement was attained in Saman Bank and we were able to increase the efficiency of the bank during the last year as a result of continuing the strategic plan.
10 11 Anual Report 2015/16
uncertain economic conditions. As an economic institution, we acknowledged having a serious role and tried to play an appropriate role in this area. In terms of revenue making, two important indices of resistance economy are revenue diversity and reducing dependency to oil oriented revenues. We tried to provide non-oil export supporting tools to domestic manufacturers and exporters in order to improve the country revenues from exporting activities consistent with resistance economy policies. In the last year, Saman bank has acted in favor of policies issued by the Supreme Leader about resistance economy and governmental and the CBI economic policies. These actions include granting loans about IRR 20,000 billion to small and medium sized entities, granting interest-free marriage loans to the youth, granting interest-free loans to the dependents of Imam Khomeini Relief Foundation and Welfare Organization, granting financing loans to import fundamental commodities (food and pharmaceutical products) and agency of the National Development Fund and financing 30 percent of capital market transactions through granting loans to correspondents which led to an improvement in the capital market.
The economic situations after two difficult periods of recession created many problems for Iranian manufacturers and merchants. Therefore, we faced promptly the effects of these conditions as an economic intermediate between investors and lenders. Understanding the circumstance, we tried to protect manufacturers and merchants considering the principle of bank benefits. But it is obvious that in the business environment of the country in which most of economic activities and industries face with reduced profitability and termination, as an economic and intermediate institution, bank cannot continue revenue making and profitability trends without any effects of economic recession. The reason is that in this situation, granting healthy loans, collecting receivables and selling collaterals owned are difficult and time consuming processes considering these items as sources of revenues. However we planned appropriately and assigned credit rating tasks to Hafez Saman Iranian Co. which had a brilliant performance in the last year. Following up the receivables, most of the bank receivables are decided and sufficient provisions has been considered. Our vision is to sell collateral properties generating cash to provide liquidity for the Despite the annual increase in the wages by the law on work force, we could decrease total administrative and bank operational cycles. general expenses significantly, however increasing expenses related to Deposit Guarantee Fund and acceptors Our main plan in the 2016-2017 is to increase common revenues on one side and manage costs to optimize branch commissions in the last three months of the year led to bank failure in controlling operational expenses and an structures and bank balance sheet on the other side. Considering implementation of the JCPOA and related increase in total administrative and general expenses comparing with previous year. facilities, we have some infrastructural and business plans which are based on optimizing bank operations through In the area of income from fees and commissions which was made by foreign currency operations, we experienced a optimizing performance of branches, developing E-banking services on mobile apps and web and providing services 47 percent growth rate and we had 49 percent growth rate for income from investments in different areas. to international cards, revising processes of providing services to customers, developing new products and services, entering to new markets of corporate banking and big customers. We also have an important plan to open agency Our five-year performance in the strategic plan of being the first choice of foreign banks as well as our offices in two European countries and considering international relationships, for the next year, we have decided to readiness to comply with international standards and regulations helped us be one of the first banks accepted prepare our financial statements in accordance with the CBI standards for internal purposes as well as IFRS based by international banks and we started our negotiations to expand relationships with international banks after the financial statements for international purposes. Joint Comprehensive Plan of Action (JCPOA) was reached. We have had a good role in becoming the first choice th of correspondents and corporate customers. We have been successful in attracting domestic big companies and Approaching the 18 anniversary of the bank establishment and using the experience of executing a statistically providing services to foreign companies operating in Iran. One of the most important achievements of implementing successful five-year strategic plan, we have decided to provide two developed three-year strategic plans for future our strategic plan was optimizing services provided by branches through reducing the customers’ waiting time and years considering the Saman Bank in the 1400 year. The main elements and objectives of the new strategic plans providing consulting and professional services. will be to develop new market services in corporate banking, optimizing branches, fundamental changes in IT areas consistent with global trends, expanding international relationships in E-banking and business areas. We also Continuing the view of adapting and conforming executive policies and procedures to international standards intend to increase the bank capital in the way of implementing the strategic plan which will need cooperation of all and regulations, during 2015/16 we made fundamental changes in compliance and Anti-money laundering (AML) esteemed shareholders. divisions and optimized and adapted our standards to international standards of foreign correspondents using international consultants. In this area we always follow two basic goals: appropriate performance in terms of profit or loss and compliance with international AML standards. Our vision is to invite an international big audit firm to help comply with AML international standards and catch necessary certifications. Saman Bank Board of Directors From another view, the 2015/16 is the year of releasing sanctions and recession for Iran economy. In one side we faced economic recession and significant decrease in oil prices and on the other side we observed positive indications of expanding relationships with international banks and companies in the Iranian market.
The final achievement in nuclear negotiations at the end of last year made a mental relaxation among economic participants and brought stability to the market so that the CI credit rating institute promoted the bank rank from “stable” to “positive” position in terms of financial and international capabilities. The economic growth of Iran has been predicted as 4.4 percent by the International Monetary Fund and the World Bank, similarly, the CBI has predicted this rate more than 5 percent.
Business environment and indications of domestic efforts to join the world economy has created many fears and hopes and Managing these fears and hopes needs understanding the circumstance and trying to make smart decisions according to up-to-dated banking standards and participating actively and effectively in the Iran and the world banking markets.
The main Iranian economic policy in recent years has been enhancing domestic capacities in order to face with
12 13 Anual Report 2015/16
The Board of Directors
Vali Zarrabieh Ahmad Mojtahed Farideh Geraminejad Pension Fund of National Copper Industry of IRAN Chairman Vice Chairman Member of the Board Member of the Board Mr. Vali Zarrabieh was a member of the founding board Dr. Mojtahed joined Saman Bank as Executive Vice Ms. Farideh Geraminejad was appointed as a of Saman bank in 1999. He attained diverse executive President in Research and Planning as well as member of Saman Bank’s Board of Directors by the and managing experiences from 1999 to 2009 and was Chairman of the Board of the Iranian Credit Bureau and General Meeting of Shareholders in 2013. Before this appointed as the CEO in 2010 and as the Chairman Rating Company in 2010. He has acted as the Chairman appointment she served as Saman’s International in 2013 by the General Meeting of Shareholders. Mr. of the Board of Directors in Saman Bank since 2012 Banking Director. She worked at Tejarat Bank from Zarrabieh has been member of the board of directors and as Vice Chairman since 2013. Before joining 1977 to 2009, serving as Head of Treasury and Brokers in Saman E-Payment Co. and Saman Brokerage Co. Saman Bank, Dr. Mojtahed has acted as the Head of Relationships Office. Ms. Geraminejad has graduated in previously. He holds a Master Degree in Finance with a the Monetary and Banking Research Academy (MBRA), General Linguistics from the University of Tehran. subfield of financing and assessing financial institutions Advisor to the Governor of the Central Bank of Iran and from the Cass Business School of London. He has to the Minister of Economic Affairs and Finance. He also graduated in MBA with a subfield of strategy from holds a Ph.D Degree in Economics from University of Manchester Business School. Iowa, USA and acts as a researcher and professor at Allameh Tabatabaei University.
14 15 Anual Report 2015/16
Saman Bank succeeded to open an amount of $ 3,234 billion letters of credit, drafts and foreign currency pay orders leading revenuesaz from foreign currency transactions to reach the amount of IRR 1,226 billion during 2015/16.
A set of actions and tasks were conducted during the 2015/16 consistent with the vision of the bank to be the first choice of target customers, correspondents and talented work force, as well as using an approach to make customers loyal through easiness, speed and trust. These actions include extending electronic banking and international relationships, enhancing risk management, and social and philanthropic activities which yielded valuable results. Some of the most important activities performed in the reporting year include developing the “inquiry system for letters of guarantee”, introducing the new Samanak app for “mobile operating systems”, “holding a conference on AML”, “increasing number of correspondents to 338 banks in 67 countries” and “signing an agreement of cooperation between the bank and Italian SACE Export Guarantee Co.”
Achievements such as “promoting the bank credit rank by the CI”, “winning the statue for Popular Bank in the 2nd Festival of Popular Banks”, “seizing the first place in opening accounts by customers”, “winning the statute of Golden Statement by CEO Cedar for the social campaign of Low Water”, “promoting 5 steps and winning the 29th place among top 50 companies The 2015/16 year ended while we witnessed final conclusion of nuclear agreements between Iran and the P5+1 of the country” are results of my colleagues managed efforts in Saman Bank. Absolutely, these achievements and countries after years of challenging and discussing on nuclear issues and limitations imposed by international efforts form a strong basis for further achievements in the future. sanctions. Simultaneously, this led to opportunities for extending political interactions with other countries and We open 2016/17 year expecting the JCPOA to provide opportunities for commercial trades, attracting foreign optimism to future economic transactions between Iran and other countries were found. However, the fall of oil investors, economic growth and getting out of recession. Considering the vision, the plan and budget of Saman prices reduced significantly the country revenues and led to problems such as decreased economic growth. In bank has been developed and communicated to divisions. There are important points in the key plans and goals the last year, the government introduced the policies for getting out of recession and simulation of demands. such as: “the need for selling collateral properties of bank”, “the need for increasing inexpensive and on-demand Similarly, the CBI followed policies such as reducing rates of banks’ legal deposits and reducing maximum rate deposits share”, “collecting outstanding and doubtful receivables”, “reducing temporary interest rates of deposits”, of loans and deposits in order to safe economic growth and reduce the inflation. On the other hand, the law on increasing commission income basis”, “ marketing for new customers in the foreign credit areas”, “the need for Governmental Budget for the 2016/17 emphasizes on continuance of descending inflation and banking interest rates, revising expense structures of the bank and enhancing efficiency” to meet stakeholders’’ expectations namely homogenization of foreign currency rates and getting out of recession through investing in construction projects and “shareholders”, “personnel”, “customers”, “monitoring institutions” and “the society as a whole”. It is obvious that attracting foreign investments. meeting these expectations need much more efforts and intelligent planning on a timely basis and my colleagues in In the operational areas, important achievements have been attained during 2015/16 by the bank including Saman Bank will do their best to meet the expectations. achievements in foreign currency area. The bank has opened letters of credit, drafts and foreign currency pay orders up to $ 3,234 million and the revenue from foreign currency transactions reached IRR 1,226 billion. In the Rial area, one of the most important achievement is our participation in the inter-banking market as a net lender, therefore we Good Luck All never experienced Red Situation in 2015/16 similar to previous year. Consistent with Resistance Economy Policies, Seyed Ahmad Taheri Behbahani we also granted different loans to small, medium and big sized entities to protect industries and businesses. In terms of collecting debts, the bank collected IRR 3,930 billion. So a significant success was reached. We experienced an18 percent growth in resources comparing to the previous year so that the bank deposit resources reached to amount of IRR 211,347 billion at the end of the year. The bank had a good performance in absorbing inexpensive resources up to IRR 1,313 billion.
16 17 Anual Report 2015/16
Retail Banking Saman Bank is a leading, dynamic and well-known brand in the banking market of Iran. With a correct view and Optimizing Processes and Services analysis, we have always tried to match our capabilities and capacities to the needs and capacities of customers and the market in order to provide complete and up-to-dated products and services. Consistent with this view, One of our main concerns in 2015/16 was revising and re-engineering the process of opening deposit accounts we tried to abandon traditional procedures and methods, changing our process of providing services to the and providing deposit services to the customers. This concern was addressed for short-term and current deposit customers. The effects of these efforts can be seen in physical decoration of branches and customer turnover accounts. We also revised existing products and changed them in accordance with customers’ expectations such style, grouping customers, optimizing forms and administrative processes, defining specialized products and as Win card as a banking deposit tool based on electronic cards which was aimed at encouraging people to use services for customers and expanding Rial, credit and foreign exchange capacities. smart cards for daily banking affairs. Additionally, in order to achieve the Trust Principle as a mission of the bank, we developed Trust Funds in terms of quantity and quality for customers to benefit from up-to-dated and secured services. One of our key tasks performed in 2015/16 was optimizing the system of commissions by considering Mazyar Fozuni customers’ usage of bank services. In this regard, we tried to prevent additional commissions attributable to Head of Retail Banking Division customers so that they could select commissions to pay on the basis of services received.
Deposit Resources Growth Table 3 In the strategic view of Saman Bank, retail banking is a service area to customers who deal with the bank through retail deposits and loans. These customers receive services through branches or electronic portals of the bank. Year Deposit Balances Rls (B) Therefore, values they expect include service providing speed and diversity of products. In this regard, in 2015/16, the 2013-2014 158,151 executive programs of Saman bank were aimed at three main areas to render speedy and qualified services to target customers. 2014-2015 179,592 2015-2016 211,347
Optimizing Performance of Branches Number of Customers Growth Figure 2 The bank plan for optimizing branches was focused on three goals including: enhanced accessibility, improved Number of customers efficiency and optimized spaces. In this regard, based on studies and customers’ feedbacks, we changed location of 9 branches and finished developing and renewing projects of 2 branches. 2,382,904 2,040,552 1,806,845 1,379,270 1,045,127 863,504 792,038 645,566
2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016
18 19 Anual Report 2015/16
Optimizing Infrastructures Non-shared Income of Insurance Sales Commission (IRR billion) Figure 3 One of our man plans in 2015/16 was to optimize and enhance the Total Banking Software of Saman Bank and 70 now Faranegin Software, an advanced total banking software, is installed in all branches and necessary learning 57 materials have been provided to the staff. Another infrastructure accomplishment we have reached is changing the 60 system for Chamber of Clearance for all branches from “Clear” to “Chakavak” according to the latest amendments 53 of CBI holding related learning courses for the staff. 50 40 40 Monthly Growth Trend
We Awarded our Customers 30 linear (Monthly Growth Trend) 20 Win deposit (Win card) is one of our most popular products in 2015/16 which was an exclusive product among other 20 competitors and aimed at encouraging people to use electronic banking systems of Saman and other banks. In this way, we granted an amount of IRR 51 billion to 2,468 customers who had used their Win card more than the others. 10 Introducing this product, 70 sale assistants in our branches could absorb more than 68000 Win deposit accounts up 0 to IRR 150 billion. 2012-2013 2013-2014 2014-2015 2015-2016
We were Leading in Banking-Insurance Services Insurance Premiums Sold at Saman Bank (IRR billion) Figure 4 The growing sales of insurance products in Saman branches continued during 2015/16 and led to increase in non-shared incomes absorbing new banking resources through life and non-life insurance sales commission. The 250 200 growth of non-shared incomes from insurance sales commission and income from life and non-life insurance sales 200 commission is illustrated in the figures: 200 160 Life Insurance Premium Sold 150 Non - Life Insurance Premium Sold 100 84
50
0 2012-2013 2013-2014 2014-2015 2015-2016
Looking Ahead
Considering the importance of branches in customers’ relationship and selling products and services, we have a wide range of plans for the future. For new customer attracting and deposit absorbing, we will focus on absorbing retail deposits up to IRR 119,601 billion. For reduction in rates of legal deposits, we will try to reduce the cost of IRR term deposits to 12%. In the case of marketing and enhancing current deposits, we will focus on absorbing foreign customers’ deposits in Rials and other currencies. For optimizing activities and structures of our branches, our plans will address efficiency and profitability of branches, improving branch structures to reach target customers and enhancing quality of our services. In the insurance area, we attend to increase consultancy points and services provided to customers as well as increasing insurance premiums sold. For expanding our sales, we have decided to focus on international card as well as increasing sales commission from forwarding customers. to the Saman Brokerage Co. we will also increase issuance of letters of guarantee and credit as well as banking and importing drafts.
20 21 Anual Report 2015/16
Agency Bank of National Development Fund
Saman affirmative performance in the international areas led to an important achievement to be the agent of National Development Fund of Islamic Republic of Iran and provide a wide range of Rial and foreign currency services to customers. This was an action for supporting economic participants in industrial mine, tourism and agriculture sectors through granting inexpensive Rial and foreign currency loans. In 2015/16 we could allocate credit lines up to $ 28 billion to Iranian companies. Furthermore, Saman bank has been agent for granting Rial loans through National Development Fund and played an important role in granting inexpensive resources of the Fund to companies taking them out of recession without creating additional inflation. In this regard, loans were allocated to manufacturing companies such as Zagros and Kavian Petrochemical and Aria Diesel Motors Co. up to IRR 400 billion.
Enhancing Efficiency by New Technologies
Since customers’ needs are fundamental principles to us, we tried to develop Saman Corporate Net Bank considering existing demands, international experiences and new technologies. In the first step, we succeeded to render services for credible international and domestic companies.
24-Hours Support of Customers
One of our main plans is to allocate a corporate banking service to each customer in order to provide 24-hours advisory and executive support services.
Corporate Banking Chosen by the Greats One of the main elements of our five-year strategic plan is to become the first-choice of medium and big sized Since 2011, one of our main visions in the five-year strategic plan was to become the first choice of medium entities. Based on our plans, great international and domestic companies such as Mihan Dairy Products, Iran Nestlé, and big sized (domestic and foreign) entities to make international transactions. We initiated this plan by BAT Pars, JTI, Golrang Group, Turkish Airlines, Maf Pars Hyper Market (Hyperstar), Everest Modern Pars, KLM establishing a professional division called Corporate Banking Division. In 2015/16 as the last year of the plan, Airlines, Air France etc. started and continued cooperation with Saman Bank and using our services. we reached significant parts of our goals and now big (domestic and foreign) companies perform transactions through Saman Bank services.
Alireza Ma’arefat Looking Ahead Head of Corporate Banking Division Our achievements in the last five years in service providing to companies has led to new plans and strategies for the 2016/17. We intend to increase income from commissions related to letters of guarantees, develop total corporate banking software, discover new markets, attract new customers, and expand services in the field of We believe that in the business and competition environment, customized services and providing financial service oil, gas and petrochemical for the next year. We have planned to grant new loans by IRR 7,963 billion as well is a value added feature. Therefore, we have always tried to create value in this field and make it a competitive as follow up debts reducing overdue debts to IRR 1,101 billion. We have planned to reach amount of advantage. In 2015/16 while economic sanctions were predominant, one of the most activities of corporate banking in IRR 8,400 billion for issued letters of guarantee and $ 1,500 billion for letters of credit, drafts and export pay Saman bank was to facilitate international business and establish mutual connections between Iranian and foreign orders. We also aim at achieving $ 3,006 billion for letters of credit, drafts and import pay orders. In the field companies. Additionally, Saman bank played an effective role in reducing overdue and outstanding loans as well as of marketing and making new corporate customers of food, pharmaceutical products, transportation, oil and protecting innovative entities through emphasizing on cash flows of companies and extension of loans for companies petrochemical industries, we intend to attract 10 foreign and 20 domestic companies absorbing new current returning to their manufacture cycle after modifying their debt structures. deposits up to IRR 1,000 billion.
Saman Corporate Banking, Leader of Businesses in Industrial and Commercial Areas
We have always tried to support manufacturing, industry and business sectors. In this regard, we focused on pharmaceutical products and essential goods so that significant efforts in corporate banking division relates to these areas. All foreign currency transactions amounts reach $. 2,5 billion of which 45 percent equal to $ 1,1 billion belongs to food and pharmaceutical products and 22 percent equal to $ 537 billion belongs to industrial areas.
In the field of granting loans and issuing letters of guarantee, we followed similar policies and allocated IRR 55,000 billion for loans granted through corporate banking of which 22 percent was allocated to food and pharmaceutical companies and 15.5 percent to industrial companies. Additionally, we issued letters of guarantee up to IRR 4,700 billion of which 56 percent 2,630billion was allocated to pharmaceutical products, food and industrial areas.
22 23 Anual Report 2015/16
International Banking Comparing Foreign exchange performance of Saman Bank for 2014/15 with 2015/16 Table 3 We have commenced extensive plans and efforts since 2011 in favor of the bank strategy to become the first-choice of international banks for effective brokerage and mutual cooperation in order to expand Type of sevices 2015-2016 (U$) 2014-2015 (U$) Growth rate (%) international transactions achieving the most shares of international markets among other private banks in the Import letters of credit 518,183,546 1,396,202,956 -63 field of foreign currency exchanges. We never gave up these plans, even in the problematic conditions resulting from economic sanctions. In these years we focused on two visions mentioned above and provided extended and Forex letters of guarantee 13,376,366 20,432,473 -35 valuable plans and services in the field of import and export activities. Imported payment orders 3,585,331,590 3,835,947,963 -7
-27 Hassan Dehghanizadeh Exported payment orders 3,267,209,900 4,463,985,810 Supervisor of International Banking Division Forex drafts 47,113,779 46,267,977 2
Student forex currency 46,980,685 35,508,319 32 Looking at the Future, the Past Experience as a Platform Passenger forex currency 46,780,120 41,485,803 13
Saman’s past experiences and relationships as well as the positive signals of the JCPOA agreement were good news for us about new competitions in foreign currency services. Therefore, we made all our technical and executive capabilities ready to start the competition. After the final agreement and implementation of JCPOA at the beginning of 2016, we were able to expand relationships with correspondents in different countries namely Italy, Belgium, Turkey, Saman International Reputation France, Spain and the Czech Republic through developing necessary backgrounds and structures. As a result, we Saman bank has been a pioneer in foreign exchange, international services and relationship with correspondent increased our correspondents from 253 in 60 countries to 338 in 67 countries in a short period of time. banks. In this regard, Saman bank concluded an agreement with Italian SACE Export Guarantee Co. in 2015/16. According to this agreement, cooperating with the company, Saman Bank will be able to grant short-term, mid-term Maintaining Market Shares in Depressed Economic Conditions and long-term loans after obtaining permission of the CBI.
Iran economic experienced a recession in 2015/16. Despite the JCPOA agreements and facilities of international payments, this condition affected Saman Bank activities through reducing imports to the country. However, based on Active International Engagement statistical information provided by the CBI, market share of Saman Bank increased from 12.61 in 2014/15 to 14.14 in In addition to expanding relationships with correspondent banks, we had a variety of programs for engaging in 2015/16. This is an important achievement of 2015/16. In spite of constraints on imports and exports, Saman Bank international events and expanding relationships with international traders and merchants. These programs involve could maintain and increase market share in 2015/16. membership of international Chambers of Commerce which led to expanded relationships with Iranian and foreign merchants. We also contributed to hold different international events in 2015/16 such as Commercial Meeting of Iran and Europe attended by superior economic authorities of the countries. In the last year, Chairman of Saman Bank attended and lectured in Euro Finance Week-the most important annual banking and financial conferences in the Europe- describing Iran and Saman Bank economic capacities.
24 25 Anual Report 2015/16
Professional in Food and Pharmaceutical Products
In 2015/16 Saman Bank played a critical role in facilitating imports especially essential goods and pharmaceutical products. In this regard, Saman Bank granted $ 394 billion to applicants through the BCP bank for importing essential goods and pharmaceutical products. This amount is about 10 percent of total foreign currency services provided. Saman specialty in Food and pharmaceutical products contributed to import 25 percent of total food and 35 percent of total pharmaceutical products to the country.
Premium Banking Based on the five-year strategic plan, our premium banking services are provided to two groups of customers. Offering special products and services, we tried to be the first-choice of target customers in this field namely Samanian and Special Samanian. Our main efforts in this field are focused on providing new and different solutions for banking affairs and making the life and work more comfortable and enjoyable. Being a pioneer in Looking Ahead this field, one of our main programs is to offer premium services to customers according to their lifestyle.
Considering expanded relationships with international banks after the JCPOA agreement as well as increase in issuance of letters of credit, we expect foreign exchange transactions to grow in 2016/17 specially a dramatic increase in letters of export credit. In addition, by signing the SACE agreement and financial Reza Heidari contracts with European, Japanese, Korean and Indian Banks, we expect a significant growth of short-term, Head of Private / Premiere Banking mid-term and long-term loans. Based on obtained licenses, we have acting plans for opening agency offices in three European countries and set goals for granting foreign currency loans up to $ 500 million.
Our premier and private customers have limitations in performing their banking and even daily affairs due to their job and social positions. So we are committed to support them having an easier life through developing special services. We are always seeking products and services to address their concerns giving them more opportunities for enjoying life and business. We succeeded to design and develop new services to these customers as well as optimizing existing services in 2015/16.
Portfolio Management
In order to provide financial advisory services to premier customers as well as creating an appropriate opportunity to manage investments, we introduced portfolio management service. In a Private Portfolio Management, cooperating with other professional companies of the Saman Group, Saman Bank invests and monitors the customers’ capital legally and transparently in the capital market based on amount of investment, interests and tolerable risks. The customers are not required to attend directly in the market and they can assign these tasks to our professionals.
26 27 Anual Report 2015/16
Advisory Services for Customers Preferred Bank
Having premier customer offices, branches and skilled staff, we provided investment advisory services to more than Assuming the quantity and deposit growth rate as a measure of popularity and attractiveness for the customers, it 50 premier customers in branches and more than 150 premier customers by telephone tools. should be noted that the figures show our success in terms of number of premier and private customers in 2015/16.
Insuring Customers Premier Customer’s resources and quantity growth in 2015/16 Figure 5
One of our premium services for premier customers is rendering full package of insurance services. Such Premier Customers` Resources services in 2015/16 include designing insurance services and managing Samanian health insurance claims. We 60,000 54,696 issued 7,278 insurance contracts to premier customers including 5,079 health insurance, 1,632 car insurance, 50,214 53,121 53,682 54,674 50,000 55,917 111 Tadbir insurance, 389 travel insurance and 67 home insurance contracts. 49,878 40,000 45,151 48,562 48,116 46,917 48,211 Saman Life Services 30,000 20,000 In this field, we provide more than usual banking services considering customers welfare. In 2015/16 we provided different services of this type such as 4,050 CIP & Transfer requests, booking 1,626 flight tickets, tours and hotels in 10,000
Iran and foreign countries as well as issuing foreign currency cards and international driving licenses. - Jul Oct Apr Jan Jun Feb Sep Dec Nov Aug Mar Mey Our New Products for the Customers
In 2015/16, we implemented many programs to develop new services for the customers. Opening new Premium Number of Premier Customers Banking Office in Mashhad, we tried to expand our services in the east of the country. We developed new finance and 8,000 banking services such as the Boursa and professional economic analytical reports and concluded the structures 6٫434 6٫055 6٫281 6٫392 6٫503 of portfolio management, coin and gold, fixed income bonds and risky investment services. Money delivering and 6,000 5٫832 5٫709 5٫640 5٫266 5٫423 5٫470 5٫265 collecting certain funds is another service we provided. Online travel insurance through Saman Bank website and 4,000 designing special liability insurance are services we rendered in 2015/16. 2,000
- Jul Oct Apr Jan Jun Feb Sep Dec Nov Aug Mar Mey
28 29 Anual Report 2015/16
Private Customer’s resources and quantity growth in 2015/16 Figure 6
Copmarative of Private Customers’ Resources- Rials and Forex
26,000 23,261 22,389 22,650 21,386 20,297 20,571 21,000 17,468
16,000
11,000
6,000
1,000 Jul Oct Apr Jan Jun Feb Sep Dec Aug Mar Mey
Number of Customers 334 324 319 312 300
237 253 254 238 280 283 291
150 Number of Customers
74
0 Jul Oct Apr Jan Jun Feb Sep Dec Aug Mar Mey Investment
One of our main concerns in investment division is to consider market needs and provide new services to customers consistent with international markets. Holding this approach in 2015/16 and monitoring market changes after implementation of the JCPOA agreement, we succeeded to expand investment activities as well as innovative visions to investments for the first time. We tried to prepare necessary structures of executive and advisory services for foreign investors interested in Iranian markets. Looking Ahead
We will continue with a variety of programs in 2016/17 for premier and private customers. Our goals and Dr. Yousefali Sharifi programs for premier and private customers include attracting foreign customers and improving quality Head of Investment Division and quantity of services particularly asset management services. Other programs include Real Estate management, Farda university insurance, expanding services and website of Saman Reservation Center, developing Application Management Portal, developing Customers’ Club etc. we intend to increase our deposits of premium banking to IRR 21.886 billion and plan for attracting 500 foreign customers. Our Profitable Portfolio
One of main activities of Saman Bank is portfolio management of investments in securities and exchange market. The Bank investments portfolio involves assets like shares of stocks, investment units of fixed income funds, mutual funds and Islamic treasury bonds. The investment portfolio structure is illustrated in figure 7:
We also acquired treasury bonds issued by the government with more than 25 percent return considering possibility of reduced banking and inter-banking interest rates in the future
. Saman Bank Portfolio Structure as at March, 19, 2016 Figure 7
13/21%
Stocks Cash and Cash equiavlant 45/50% Fix income titles 33/53% Joint Investment Funds Department Islamic treasury bills (ITB) Credits 3/86% 1/79% 2/11%
30 31 Anual Report 2015/16
Saman portfolio value was equal to IRR 922 billion at the beginning of the year and increased by IRR 1.192 billion until Regulations and Frameworks end of the year. Consistent with value reducing policy in the previous year, the portfolio structure changed and shares of leading industries increased resulting in profitability and mitigating losses for the ending months. We always care about compliance with requirements of regulations issued by regulatory bodies. In this regard, we transferred 28 percent of Saman Kish Electronic Payment Co. ownership to Refah Bank at the end of 2014/15 according to the law on Removal of Limitations from Competitive Production. In the first months of 2015/16, we Saman Bank Investment Portfolio Indicators Table 4 reduced Saman Bank ownership in the company to 65 percent. In addition, according to the CBI regulations for investments, we planned selling Saman shares of stock in the Stock Market through Saman Brokerage Co. and Saman Exchange Co. Fiscal year Cost Average During the Year Total Profit or Loss
Rial (m) Growth (%) Rial (m) Growth (%) Rial (m)
2013-2014 1,435,227 - 719,281 - 467,670 Serving the Foreign Investors 2014-2015 1,235,746 )14( 1,498,038 108 )266,921( Saman Bank as a trustee, delivers services to interested foreign investors by means of: 2015-2016 1,139,604 )8( 924,998 )38( 144,472 • Performing registration processes in Stock Exchange Market and obtaining Exchange code; • Opening Rial and For-ex accounts for the customers; Saman Bank portfolio return compared with Market indices is illustrated in the following figures from 2013/14 to 2015/16: • Safekeeping assets or securities such as bonds, mutual fund investment units etc; • Performing processes of selling and buying assets for the customers; Comparing Saman Portfolio Performance with Market Performance from 2013/14 to 2015/16 Figure 8 • Calculating and reporting net value of customers’ assets periodically; 20/00 • Attendance in annual general and extraordinary meetings of companies as agency service for the customers; 15/00 Performing dividend receiving, capital increase etc. processes. 10/00 •
5/00
0/00
- 5/00
-10/00
-15/00 July-2012 July-2014 July-2013 May-2012 May-2013 May-2014 April-2012 April-2013 April-2014 June-2012 June-2014 June-2013 March-2012 March-2013 March-2014 August-2012 August-2013 August-2014 October-2012 October-2013 October-2014 January-2013 January-2014 January-2015 February-2014 February-2013 February-2015 December-2012 December-2013 December-2014 November-2012 November-2013 November-2014 September-2012 September-2013 September-2014
Portfolio Performance Bourse Index
32 33 Anual Report 2015/16
Consulting Foreign Investors Saman Bank Investment in Saman Group Companies
As a result of our capabilities in fore-ex and domestic executive capacities, we started serving international Saman group consists of companies established or acquired partly by Saman Bank from 2003 to 2014 to meet its own companies interested in Iran markets for the first time. Consistent with this, our consultancy services for developing and customers’ needs. These 13 companies are directed independently under supervision of Saman Bank. business and investment in Iran include the following:
• Providing optimized strategy for allocating assets Financial Performance of Saman Group Companies in 2015-16 Table 5 Consulting business mergers and combinations • Company Name Main Activity Capita Rial (B) Saman Bank’ Ownership Net Profit or Loss Consulting Private Equity • IRR billion % Rial (M) • Consulting Joint Ventures Saman Kish Electronic Electronic payment-systems supplier 900 65 313 ,748 Payment
Saman Satellite 69 Communications Data transfer & satellite telecommunications 154 49 ,923 (Direct & Indirect) Group(Saman SCG)
Foreign exchange & money-order Saman Exchange 219 96 169 ,589 services
Saman Insurance Insurance services 618 15 277 ,970
Shares & bonds trade, market making,
Saman Brokerage investment, listing,& 30 64 3 ,635 admission-advisory services
Hafez Saman Iranian Credit Credit rating, debt collection 24 99 24 ,531 Scoring
Saman Processing Design, development,& support of core 100 100 13 ,418 (Pardazeshgaran) banking-based products & tools
Import, design, production, support,& 100 Tondar Nour Softwares (Indirect through Saman (Subordinate to Saman development of hardware products, 2 ,7 Processing) 4 ,166 Processing) esp. banking-card readers
Management,& organisation of Looking Ahead Aftab Tejarat Saman 0,1 15 6 ,027 servicing activities One of our plans for income from commissions and fees relates to income from investment services aiming at IRR 255 billion. We also have an important project for a 100% growth rate in building infrastructures and 33 Kardan Investment Investment, finance 1,280 543 ,932 obtaining licenses for rendering investment services. (Direct & Indirect)
27 Adonis (Subordinate to ITC, electronics,& computer 150 (Indirect through Saman 82 ,582 Saman Processing) Processing)
Atieh Andishan Sepehr Investment in TSE-listed& 0.01 100 2 ,687 Shargh non-listed companies
34 35 Anual Report 2015/16
Saman Kish Electronic Payment Company Hafez Saman Iranian Credit Scoring Company
This Company was founded in 2003 to supply electronic systems including ATMs, Registered in 2007, the Hafez Saman Iranian Credit Rating Company started operations in the internet-banking kiosks, POS solutions and develop computer and telecommunication field of credit rating under an Experian Co. license. The Hafez Saman Iranian Credit Rating structures and offer electronic commerce services. As the first provider of online-payment System was established in Saman Bank branches providing credit reporting tools about services in the country, Saman Kish played a critical role in establishing Saman Bank as a individuals and companies since 2011. In 2013 the company established a debt collecting leading in electronic banking during its first decade of operation. Major achievements of this division concluded new contracts of managing Saman Bank’s properties and following company during the last year include obtaining 35th place in ranking of Nilson Reports among up debts for Saman Bank and Saman Exchange Co. In the reporting year, the company 150 top e-payment companies around the world, winning the three-stared National Award concluded credit rating contracts with Modiran Khodro, Saipa and Hami Iranian Consultancy of Organizational Excellence, obtaining 296 ranking place among 500 top Iranian companies, companies. and obtaining Information Security Management Certificate ISO27001:2013. Saman Processing Company
Saman Satellite Communications Group The Saman Processing Company was created in 2010 to design, develop and support Core banking-based products and tools required by the Bank. The Saman Processing This company started operations in 2004 providing data transfer, satellite Company also designs and develops comprehensive business systems, business procedure telecommunications, and satellite teleports. In 2015-16, this Company succeeded to obtain re-engineering systems (BPR) and management advisory services related to managing and 90% of total demands for satellite telecommunications making the largest market share utilization of modern banking technologies and automation and operating administration since its establishment. systems. In 2015/16, the company obtained the first rank of High Council of Informatics.
Saman Exchange Company Tondar Noor Software Company As the first foreign exchange company to be registered in Iran as a subsidiary of a privately owned bank, Saman Exchange was founded in 2004 to develop banking and financial services Established in 1990, Tondar Noor was registered with the Companies Register Office in 1994. including foreign currency exchange and transfer and related advisory services. The net profit In 2010, ownership of Tondar Noor was transferred to Saman Processing Company. This of the company increased from IRR 34 billion to IRR 170 billion during the last year due to Company operates in the field of import, design, production, support, and development of growth in foreign currency transfers, reduced financial expenses and growing non-operating hardware products, especially banking-card readers. incomes from collecting prior years’ debts.
Aftab Tejarat Saman Servicing Company
Saman Insurance Company Aftab Tejarat Saman Servicing Company was established in 2011 to supply Saman Bank with administration and overseeing all human resources services. Now this company is In 2004, Saman Insurance Company was established after obtaining its license from Iranian responsible for a portion of the Bank’s logistics services including technical affairs, repairs, Central Insurance Organization. Now, this company provides a complete set of insurance maintenance, and branch utilities. services. In 2015/16, Saman Insurance company obtained the 210th ranking among 500 large Iranian companies from the Industrial Management Institution, C ranking in Risk Management from the Professional Insurance Association, “Optimal” or “level 1” ranking among insurance companies of Central Insurance Organization for three consecutive years. Adonis Electronic Services Company
Adonis Electronic Services was established by Saman Bank in 2012 to provide sale and after-sale services for electronic systems, particularly ATMs. Pasargad and Mellat banks Saman Brokerage Company later joined as shareholders. Adonis is a subordinate company to the Saman Processing Company. Since Saman Bank owns 100% of the shares of Saman Processing Company, it Saman Brokerage Company was originally established in 1993 as Kerishchi Brokerage also owns 24.2% of Adonis indirectly. Company, the first brokerage firm in Iran. This company was renamed to Saman Brokerage Company in 2006 when Saman Bank purchased 49% of its shares. The company provides brokerage services such as listed stocks and securities, portfolio management, Kardan Investment Company market-making, and investment and listing advisory services. Regarding foreign policy and nuclear negotiation successes in 2015/16, Saman Brokerage has established international Saman Bank established Kardan Investment in 2013 with cooperation of Tejarat and Middle division and developed the English language website. East Bank, after obtaining related license from the Higher Council of Stock Exchanges and agreement of the CBI. The purpose of Kardan is conducting investment, corporate finance, and lending services. Kardan Investment benefits from the competitive advantage of three commercial banks that serve as its main shareholders and from its extensive international-finance knowledge and experience. Consequently, the Company is in a strong position to offer excellent customer service and to pave the way for international corporations into the Iranian markets.
36 37 Anual Report 2015/16
2015/16 was a difficult year for the Bank in terms of credits in business fields. Constraints due to economic sanctions faced management of small and business entities with liquidity crisis and lack of working capital so that most of the entities failed to pay their obligations leading to a slow flow of liquidity in the country and the Bank. Understanding the economic conditions as well as cooperating with the CBI as the policy setting body, Saman Bank tried to manage its resources best supporting small and medium sized entities and helping them collect debts and get out of crisis. Saman Bank has special programs for marriage, Relief Foundation and Welfare Organization loans.
Providing Working Capital for Small and Medium Sized Entities
One of our main priorities in 2015/16 was to grant short-term (up to one year) loans to supply working capital of small and medium sized entities in all economic sectors such as mercantile, service, housing, agriculture and mines. According to the CBI Directive, financing small and medium sized entities in order to help them get out of recession became a priority for Saman Bank. Financing an amount of IRR 15,752 billion for small entities (those with less than 50 employees) as well as financing an amount of IRR 3,555 billion for medium sized entities (those with more than 50 and less than 100 employees) is results of our services in the Retail and Syndicated Credit area.
Variety of Loans Granted
We design different credit products based on customers’ needs to enable them continuing their operations without concerns. In 2015/16 we provided our credit products in the areas such as granting loans for work offices, housing Retail and Syndicated Loans materials, equipment and providing credit lines to all customers. Consistent with our priorities, we served brokerages and financial intermediates to support market participants Optimum allocating of Bank resource to new markets and efforts to enhance effectiveness of retail and particularly Securities Exchange market by granting IRR 135,000 billion equal to 28.7 percent of total securities syndicated loans needed a professional view which became a fundamental priority of the bank in the last five trades. Therefore, we played a critical role in financing participants of the capital market. years. Based on this goal, we tried to have an active role in targeted markets through establishing retail and syndicated division. The professional view to the credit market led to a precise understanding and quick and We also continued financing POS solutions holders to increase electronic services. In this field, we granted loans purposeful responding to the targeted markets. more than IRR 700 billion with competitive and below market rates to POS holders.
Reza Shirin Goharian Head of Retail and Syndicated Loans
38 39 Anual Report 2015/16
Interest-Free Loans Tendency Active in Following and Collecting Debts
We helped and supported the youth marriage through providing an amount of IRR 50,000 billion interest-free IIn terms of debt collecting, we have performed a wide range of activities such as obtaining permissions from the (Quard Hassan) loans to 1982 dependents of Imam Khomeini Relief Foundation and Welfare Organization Board of Directors for extension of customer’s loans in accordance with the CBI directives on collecting non-current in 2015/16. We also allocated an amount of IRR 60,000 million and IRR 30,000 million interest-free loans to debts in order to reduce debts and increase bargaining power of branches in relationships with indebted customers. dependents of Imam Khomeini Relief Foundation and Welfare Organization respectively. Therefore, we extended loans for deserving customers to help them get out of temporary problems.
We also revised the structure of debt follow up division and established a concentrated office for following up debts resulting in improvements. Our professional approach to debt follow up led to continuous and effective following up debt, identification and planning for resolving problems in particular areas or branches, training the staff and assistants to improve the process of debt following.
As a result of our follow up using the above approach, we reduced overdue and outstanding debts in Retail and Syndicated Credit area from IRR 1.639 billion in March, 2015 to IRR 598 billion in February 2016. The descending trend is illustrated in the following figure:
Debt trends in 2015/16 Figure 9
4,000 3,767 3,500
3,000 3,396 2,553 2,500 2,955 2,500 2,692 2,291 2,057 2,444 2,000 overdue 1,639 1,500 1,689
1,000
500 598
0 July-2015 May-2015
Active in Issuing Letters of Credit, Foreign Currency Pay Orders and Letters of Guarantees April-2015 June-2015 March-2015 August-2015 October-2015 January-2016 February-2016 December-2015 November-2015 One of our best achievements in Retail and Syndicated Credit area is performing an amount of $ 900 billion foreign September-2015 currency transactions through foreign currency branches. This amount is equal to 28 percent of total foreign currency transactions amount of the Bank and 55 percent of total letters of credits and pay orders issued by the bank. In 2015/16, issuing an amount of IRR 2,925 billion letters of guarantee, we succeeded to cover 40 percent of total performance of the Bank in issuing letters of guarantee increasing the bank’s income from commissions. Looking Ahead
Emphasize on Continuous Improvement of Processes Studying on different syndicates and markets from 2014 to 2015, we succeeded to identify targeted syndicates with the most return on investment and the lowest risk in their business. We intend to attract In the field of credits, we require ourselves to optimize working processes in accordance with the customers’ needs owners of these businesses in 2016/17 through our branches and grant purposeful loans to retail and and market conditions. Holding this view in 2015/16, we revised internal credit rating process of consuming and syndicated areas. Therefore, we have allocated an amount of IRR 7.700 billion for granting loans to professional individuals in Saman Bank. Relying on trained staff and electronic infrastructures, we reviewed and individuals and companies (small and medium sized entities) in targeted markets. In order to reduce credit revised the existing credit processes to facilitate credit affairs. risk and optimal allocation of resources, we intend to change the credit process aiming at reducing credit risk and non-current debt, identification of other low risk syndicates capable of expanded relationships with the Bank, automation of reception, credit rating and granting process through the Total Loan Generation Software. One of our important activities finishing in 2016/17, is the project of concentrating customers’ credit rating process and automating foreign currency credit process. Our goals in 2016/17 include granting an amount of IRR 11.095 billion new loans, collecting an amount of IRR 2.100 billion of overdue debts, issuing an amount of IRR 5.600 billion letters of guarantee and opening an amount of $ 2.003 billion letters of credit, drafts and foreign currency pay orders.
In addition, considering the importance of exchange between money and capital markets in the economy and our goal to increase Saman bank’s share of market, we intend to finish the project of membership in the Clearance Chambers of Securities Exchange and Central Securities Depository of Iran (CSDIRAN) as representative of brokerage companies active in Securities Exchange and setting up Portfolio Management System approved by the Securities Exchange Organization.
40 41 Anual Report 2015/16
Mobile Banking is a Priority
We have always tried to follow the global trend of banking technologies. Therefore, we developed an appropriate executive and investment capacity for mobile banking. Holding this approach in 2015/16, we succeeded to upgrade and provide our new Samank (a banking app). We also issued a software hub called Samanyar in accordance with global standards by which we will provide all our banking applications to the customers. Our apps are developed for Electronic Banking different operating systems. Iranian people know Saman as the leading Bank in developing electronic banking tools. This is as a result of significant investments in this area from its establishment. In order to synchronize with technology Winning the Stared Quality Certificate improvements as well as respond to customers’ needs continuing leadership among our rivals; we set a th principle to be the first-choice of branch customers focusing on electronic banking services in our strategic We won the Stared Quality Certificate in the 5 ICT National Quality Award on Electronic Banking. This award is plan five years ago. This approach led to develop non-attending services through digital portals increasing established by the Iran’s Ministry of Communication and Information Technology. It is held annually to select and peoples’ accessibility levels. Stability of electronic services through different channels needs continuous introduce top companies in communication and Information Technology in accordance with the National Model for efforts to achieve international standards keeping the desired level of quality and continuous enhancing of Quality Assessment. hardware and software. In addition to the Trust principle in the Bank’s Mission statement, we always focus on security in banking systems and act to achieve defined goals. New Banking Services for Businesses
One of our executive programs in reported year was to increase flexibility of Saman Bank for providing new banking Abbasmirza Nayeri services to different companies based on electronic banking solutions. To do this, we performed a variety of tasks Head of Electronic Banking including rendering school smart cards services, developing website for money transfer and statement, developing ATM detailed reports, developing BANKSA service and linking with four software companies in the field of online trading, automatic and online debit service for Irancell credit sim cards, direct debit service for Irancell constant sim cards and ID payment services. Consistent with the removal policy of cash from our lives, we also set up Cashless Devices Available Everywhere rendering all ATMs’ services to customers except for cash delivering with much less costs compared with ATMs. Increase in availability and customers’ easiness is one of our key goals and we succeeded to prepare necessary Effects of New Regulation on our Performance basis for this goal in terms of quantity and quality aspects in 2015/16. Based on statistics, by the end of last year, number of users is as follows: 782,072 for Net Bank, 453,301 for Samanak app and 837,730 for Telephone According to the CBI directive on payment of commission to e-payment companies by the banks on POSs Bank. Number of POS solutions is 201,000 and we have 1,303 ATMs. Our efforts led to obtain the first rank in transactions, banks are required to pay 1% of transaction amount (from IRR 500 to 2500) for services, equipping number of out of branch ATMs among Iranian banks and the second rank in ratio of transactions to number of and improving infrastructures. Considering 201,000 active Saman bank’s POSs, this directive made an amount POSs among e-payment service providers. These achievements show our vision to accessibility of Saman Bank of IRR 204 billion for the last three months of reporting year. Constraints imposed by the CBI on credit cards and services to the customers in terms of quantity and quality and rendering high quality services and continuous requirement of MAKNA code (a code issued by the Center for Control and Monitoring Credits) led to 95% decrease in support of users. issuing credit cards comparing to the previous year.
42 43 Anual Report 2015/16
Effects of Economic Recession on Electronic Banking Services
Economic recession and decrease in welfare budgets in 2015/16 led to decrease in demands for gift and benefit cards by organization and companies granting gifts and benefits to their employees through these cards. This led to 21% decrease in sales of gift cards and 35% decrease in sales of benefit cards comparing to the previous year.
Comparing Benefit and Gift cards issued in 2014-15 and 2015-16 Figure 10
No. of Benefit cards No. of Gift cards
200,000 1,500,000 117,723 1,017,236 1,000,000 803,938 100,000 76,776 500,000
- - 2015 2016 2015 2016
Looking Ahead
In 2016/17 we will plan and act to change the Net Bank version. Additionally, we intend to increase accessibility to online banking portals through enhancing network and hardware infrastructures. We have decided to perform effective tasks in mobile banking to improve electronic banking services. For the next years, we have a wide range of plans such as optimizing POS network participating with Saman E-payment company, developing smart schools network, developing mobile based services in Samanyar hub, increasing services available through ATMs, developing Net bank services, installing cashless devices, setting up Auto Cash Receiving Machines, setting up Cash Recycler Machines, increasing number of ATMs, developing new electronic cardless services, developing ID payment services through electronic portals.
One of our main plans in 2016/17 is to increase the per capita income from ATMs commissions up to IRR 450 million through service quality changes and physical movements. We will also install 100 new ATMs.
Human Capital
During the last five years, our main Human Resource strategy has been to become the first-choice of talented employees. For this purpose, we had to adapt our quality level to international standards. Hence, establishing process management system in the mid five-year plan, we succeeded to obtain the ISO 9001:2008 Quality Management Certification from TUV NORD of Germany in 2015/16 and pass related audit period successfully.
Fereshteh Zarrabieh Head of Human Capital
44 45 Anual Report 2015/16
Human Capital International Training Cooperation
In 2015/16, 75 new colleagues joined us and our staff number reached to 2475 people. In order to employ new staff, Saman Academy is responsible for designing and implementing bank’s needed executive long-term and professional we perform merit-based, professional and human capital interviews among volunteer and selected applicants. short-term courses. Cooperating with Grenoble University, in 2015/16 the Master Degree course in International Additionally, in order to identify the most competent staff for organizational positions, new tools such as assessment Management was finished by 22 employees. In order to access international knowledge and professional banking focus were used in the process of job promoting. It should be noted that consistent with aligning human capital skills, Saman Academy has implemented professional courses cooperating with well-known institutes and processes with assessment focus in designing and implementing merit-based interviews, the Merit Charter has been professors of banking and management described in the following table: developed. Professional Training Courses held Table 5 Number of Saman employees in the last eight years Figure 11 Course Title Location Holder Facilitated BY 3000 2425 2509 2475 New Methods of Management and Leadership Paris, France FNEGE 2500 2231 1952 Performance Management and Control Saman Academy FNEGE Fredric Bertrand Prof. 2000 1618 1454 1506 1500 Credit Analysis Saman Academy EUROMONEY Prof. Serge Vidal
1000 Key Factors for Risk Management In Banking Saman Academy FNEGE Prof. George Chappatteau
500 Anti-Money Laundering Saman Academy FNEGE Prof. George Chappatteau
0 Professional Banking Courses of RBA Saman Academy RBA 2008 2009 2010 2011 2012 2013 2014 2015
Organizational Culture Number of Saman employees at the end of year by educational degrees Figure 12 In 2015/16 some actions have been performed in the field of enhancing, communicating and encouraging 8 - 0/3 % 104 -4/2 % organizational culture which includes optimizing the Merit Charter through holding attending and non-attending training courses, encouraging an appropriate culture in the Bank and contributing to its establishment by feedbacks Dimloma and below 245 - 9/8 % received, training and other organizational tools (defining and implementing administrative expense management Associate Degree project to improve profitability), implementing 5S in the Bank in order to create stylish and arranged working places Bachelor Degree and developing a common and comprehensive disciplinary system. 1590 - 62/4 % Master Degree 528 - 21/3 % Ph.D
Training and Development Looking Ahead
Human capital division cooperating with Saman Academy planned and implemented merit-based (behavioral) We have planned number of projects for human capital in the next year. We intend to revise the Quality training courses in order to institutionalize organizational culture, creating a common understanding and Control System ISO 9001 based on the 2015 version, implement and finish the 5S project, rank organizational communicating accepted behaviors as well as enabling employees in desired skills. In order to enable the employees positions of office divisions and revise job position details of office divisions, hold professional training courses in professional areas and eliminating their lack of knowledge and skills due to changing conditions and market for retail banking and anti-money laundering, conclude a contract with a reputable international institute needs, the division also performed training needs assessment based on the bank’s goals and strategies, divisions for international exams and training international teachers of retail banking and finally implement the Total goals and job position details by department and individuals. Aiming at reducing costs and managing time, in 2015/16 Human Capital Software. we established non-attending (e-learning) structures leading to 100% decrease in holding expenses of periodical exams and 88% executive expenses of training courses. Our operating goals in the next year includes: revising and correcting the process of employment, planning for increase satisfaction with the compensation plan, improve employees’ loyalty and commitment, enhance employees’ general and professional knowledge, enhancing managers’ professional banking and Training Activities of Saman Bank in 2015-16 (Individual-Hour) Figure 13 non-banking knowledge, enhancing knowledge of employees engaged in compliance of internal regulations of the bank with international and anti-money laundering regulations, improving training management 60,000 process and its sub-processes, reducing the bank’s operational risk by correct documenting in branches, 52,353 50,000 reducing administrative expenses, revising and improving human capital processes, holding training courses 43,052 for organizational culture and behavior and merit-chart, trying to improve employees’ health by periodical 40,000 medical tests. 26,083 30,000
20,000
10,000 7,678
0 Branches Other Head Early in Tehran Provinese Office Employment
46 47 Anual Report 2015/16
Social Responsibilities Sport Sponsorship As a responsible company, we always commit to fulfill our social duties protecting the financially or socially One of our programs has been influencing the trend of a popular sport namely Volleyball since 2013 which was aimed weak people. In 2015/16, like previous years, the bank focused on social responsibility programs cooperating at 2016 Olympics Qualification. We continued our sponsoring of Iranian National Volleyball Team which resulted in with charities and supporting cultural, educational, health and sports affairs. reaching the 2016 Rio De Janeiro Olympics in early 2016.
Fereshteh Zarrabieh Charity Affairs Manager Looking Ahead
We have good programs in progress for the next year. We intend to finish civil activities of building a school Educational Participation and Support in Delfan village of Lorestan Province. We will start planning for building a 12 classed school. According to our contracts with charities, we intend to finance schooling, birthday and New Year expenses for 90 children One of the Social Responsibility areas focused by Saman Bank is to support children and teenagers preventing their dependent to the Children Charity Foundation. We will also finance bone marrow transplant surgery of 20 school dropout due to financial problems. In this regard, we financed schooling of 90 people (including 28 university children introduced by the Zanjireh Omid Charity. We will also cooperate with Behnam Deheshpour Charity students) through the Children Foundation and a number of university students through Sepehr Charity. We to finance equipment and New Year expense of children as well as financing 10 students dependent to the also finished the project of building a six-classed school in Rahdar village of Boushehr Province with an amount Arasteh Charity. of IRR 12 billion direct investment of the Bank.
Health and Medical Support
Cooperating with the Zanjireh Omid Charity, in 2015/16, Saman Bank financed heart surgery expenses for 50 children, charity market affairs, medical equipment purchase for the children health-care center and orthopedic division. In the reporting year, Saman Bank also paid for New Year clothing of children by Behnam Deheshpour Charity, establishing IMRT services in Radiation Oncology division of Shoahadaye Taajrish Hospital. We also financed daily expenses of some under six years aged children dependent to Sepehr Charity. Other activities in this field include paying expenses of bone marrow transplant surgery of a teenager come down with blood cancer through Nikan Mamout Charity.
48 49 Anual Report 2015/16
Risk Management Chart in Saman Bank
Risk management office is responsible for developing and monitoring risk management policies. In order to manage risks effectively, Saman Bank has developed a risk management chart by establishing a High Risk Committee and a Risk Office illustrated in the following figure. As a subordinate to the Deputy Monitoring, the Risk office is responsible for executing the Risk Committee Directives.
Risk Management Chart Figure 14
Board of Directors
High Risk Committee Top Management
Deputy Monitoring
Risk Office
The High Risk Committee monitors existence, accuracy and adequacy of policies and procedures of manage, control and response to risks affecting the bank activities. The committee is mainly responsible for monitoring internal control compliance with the CBI framework, execution of the Committee and the Board Directives about risks as well as monitoring the Capital Adequacy Ratio level and improving reputability of the bank. The results and outputs of the committee actions are communicated to the Board of Directors through Monitoring and Guidance Reports.
The Risk Office has been established to serve as an executive power of the High Risk Committee to comply with the CBI requirements and prepare conditions for implementing the Basel Committee guidance as well as identifying and reporting the major financial risks emphasized by the Basel Committee including Credit, Liquidity, Operational and Market risks to the Risk Committee, CEO and related Committees. According to the chart, the Risk office is subordinate to the Deputy Monitring. This office performs plans to achieve goals on the basis of the High Risk Committee directives.
Saman Main Strategies of Risk Management
• To comply with Capital Adequacy requirements in accordance with standards issued by the monitoring bodies. • To comply with Liquidity Ratio requirements in accordance recommendations issued by the monitoring bodies. Risk Management • Defining the Optimal Credit Portfolio and plan for achievement. In order to reach the best results and the most benefits for the stakeholders, we pay high attention to identify • To comply with Foreign Currency Positions in accordance with standards issued by the monitoring bodies. and analyze potential risks of business. We have an effective look to risk management in Saman Bank and • To price loans based on risks. focused our attempts on two main policies including compliance with the CBI procedures and approaches as well as enhancing to comply with Basel II controlling level. • Enhancing infrastructures for operational risk management in accordance with the Basel Committee advanced approach.
Morteza Hosseininejad Risk Management Office Supervisor
50 51 Anual Report 2015/16
Incidents Identification and Risk Assessment
Identifying incidents which impact the bank’s achievement to strategic goals, include identifying credit and operational risk incidents in accordance with Risk Management Framework. In 2015/16, as an important achievement initiated in previous years, the risk office employed quantified and qualified approaches to risk assessment. Some new issues are addressed in the next sections.
Liquidity Risk
Liquidity risk means the possibility of a credit institute failure to finance repayment of liabilities and obligations and increase of assets; based on the definition, the most important actions performed for liquidity risk management are as follows: • Extracting Static and Dynamic Liquidity Gap for main foreign currencies using market approach; • Calculating Liquidity Coverage Ratio (LCR) in accordance with Basel III; • Preparing Liquidity Report using market approach; • Performing Crisis and Sensitivity Test; • Monitoring Rial resource changes to manage resource risk; • Net Stable Funding Ratio (NSFR); • Monitoring foreign currency resource changes to manage resource risk; Estimation of applicable resources for future time periods to plan resource usage; • Operational Risk • Analysing resources according to RFM approach. Operational risk means such risk as resulting from improper and inadequate processes and methods, internal individuals and systems or occurrence of the events external to a credit institution. Therefore, the most important measures to take in terms of operational risk may be defined as follows: Credit Risk • Analysing operational risks of Rial loans as well as identifying main operational risk factors; Credit risk is defined as possibility of financial loss as a result of the counterparty failure to repay their liabilities • Estimation of operational loss of Rial loans; fully or partly on a timely basis. According to the definition, the most important actions performed for credit risk • Calculating the necessary Capital for operational risk coverage in accordance with base index approach; management are as follows: • Designing and developing a database for operational losses; • Assessing loans credit quality and collaterals quality; • Analysing operational risks of foreign currency loans as well as identifying main operational risk factors; • Evaluating debt concentration and collected amounts; • Estimation of operational loss of foreign currency loans; • Calculating credit risk elements on the basis of Basel II agreement; • Identifying main internal and external operational incidents of collecting debts. • Calculating necessary Capital for covering credit risk on the basis of Basel II agreement; Reviewing and improving the system of customer credit rating in case of credit cards. • Saman Risk Indices Status Liquidity Risk Indices Market Risk There are indices monitored periodically including: Ratio of liquid assets and equivalents to total deposits, the Market risk or value exposed to market risk is defined as the risk of uncertainty in revenues from trading portfolio maximum range of fluctuation for the ratio, maximum individual ceiling in the inter-banking market, maximum of a financial institute as a result of changes in the market conditions including asset prices, interest rates, market total ceiling in the inter-banking market, focus on banks credit rating system and their credit ranges in the inter- volatility and liquidity. According to the definition, the most important actions performed for market risk management banking market, maximum deposit absorbed from an individual, concentration indices and policies of reducing are as follows: concentration of deposits, maximum tolerable volatility of items in balance sheet and profit or loss statement, maximum tolerable ratio for individual foreign currency volatilities and total volatility, maximum tolerable range of Assessing the Bank Stock Portfolio; • volatility for the above ratios, maximum acceptable amount for obligations of each individual foreign bank and total • Continuous monitoring of foreign currencies fluctuation ranges and considering profit or loss from foreign foreign banks. currencies fluctuations in calculating the portfolio return. Considering past experiences of the International Banking Committee from the 2007 Crisis leading to liquidity ratio requirements of the Basel Committee, the LCR has been cared by the bank. The LCR is calculated monthly in the bank and approved by the Committee of Assets and Liabilities and approximates assets ability to cover resource outflows for a 30 day period.
52 53 Anual Report 2015/16
Credit Risk Indices The main indices monitored periodically in this field include ratio of collaterals coverage and current amount exposed to risk. Other indicators monitored in this field consist of individual maximum ranges, related parties, concentrating, collateral concentrating, maximum ratio of syndicated loans, and assessing overdue, outstanding and doubtful debts and maximum tolerable rate for the bank.
Market Risk Indices The main indices monitored periodically in this field include calculating value exposed to risk of stock and foreign currency portfolio. Other indicators monitored in this field consist of defining tolerable limits and alarms for market volatilities, resolving solutions, related responsible officials and necessary executive actions.
Operational Risk Indices Necessary capital for operational risk coverage is calculated by the Base Index Method. Furthermore, operational risk in credit area is monitored and reviewed by identifying indices and assessing instances of operational risk and determining resources exposed to operational risk.
Control Activities In order to manage risks effectively in Saman Bank, a set of controlling activities have been defined in each working level. The Internal Auditing and Monitoring division periodically tests risk management activities in terms Corporate Governance
of compliance with the standard framework and provides necessary feedbacks. The High Risk Committee and Risk Dear Saman Bank Shareholders Office are responsible for periodical revising of credit rating systems. We have implemented effective Corporate Governance mechanisms in Saman Bank in accordance with principles and recommendations of the Basel Committee and CBI procedures and practices. Corporate Governance defines the relationships among the Board of Directors, managers, shareholders and all other Information and Communication stakeholders. This mechanism defines a framework for developing organization’s goals and determining tools A most important pillar of efficient risk management is availability of sufficient information in financial and for goals achievement and monitoring performance. Beyond the various cultural, legal and economic structures of countries, the four fundamental pillars of corporate governance are equity, transparency, accountability and operational areas. Therefore, in Saman Bank a systematic framework for collecting information and receiving responsibility. Considering the critical role of banks in financial intermediation, possible effects of inefficient reports from the concentrated banking system and divisions has been developed. corporate governance, and the need for protection of depositors’ and other stakeholders’ funds, corporate governance has a great importance for Saman Bank. Monitoring Continuous monitoring of identified risks and assuring their consistency with tolerable levels of the bank are Vali Zarrabieh Chairman necessary for effectiveness of risk management system. Continuous monitoring leads to early identification and timely correction of deficiencies in risk management framework. Hence, the cycle of identifying, assessing, controlling and monitoring is strongly followed in Saman Bank to achieve an efficient system of risk management. Corporate Governance Structure General Meeting of Shareholders
The general meeting of shareholders is held each year and provides an opportunity for shareholders to review financial statements and other reports of the board, independent auditor and legal inspector report. Each year, the full performance report of the bank is prepared and issued for all stakeholders as “Annual Report” in Persian Looking Ahead and English languages. The board of directors is responsible for protecting shareholders’ rights in accordance with existing regulations and appropriate polices. These rights include: We will establish subordinate committees for managing and reporting risks to the High Risk Committee, continuing our executive actions of risk management in the next year. We will try to improve effectiveness • Attend and vote in general meeting of shareholders; of risk management at bank level through implementing Total Risk Management System. We will focus on • Accessibility to the bank information on a timely and continuous basis; those elements of risks management which need improvements. We also intend to develop a Database for Acquisition and registration of shares and transferring shares; operational loss making incidents to collect and record loss data in all business lines. • • Benefit from the company profits. According to the developed arrangements, the board of directors behaves all shareholders similarly. Processes and practices of holding the general meeting bring an equal opportunity for all shareholders.
54 55 Anual Report 2015/16
The Board of Directors Independent Auditor
The bank board of directors is composed of five primary members elected by the general meeting of The annual general meetings of Saman Bank chose the reputable independent auditors approved by the shareholders for two years. In the first meeting of the board members, chairman and vice chairman are Iranian Association of Certified Accountants (IACPA) and the CBI. The High Audit Committee helps improve determined. The board meetings are formalized by attendance of four members. Practicable and efficient accessibility of auditors to documents and information they need ensuring that fair and real performance of the policies in responding to and reducing conflict of interests are of great importance to Saman Bank. Hence, there Bank is reflected in the financial statements. are transparent procedures to respond various conflicts of interests available for the management. Transactions between the bank and board members or companies in which they are shareholders or managers are instances The shareholders have selected Sokhane Hagh Audit firm since 2012 as the bank’s independent auditor and of conflicts of interests. These transactions are reviewed and approved by the board members without legal inspector. Sokhane Hagh is a reputable audit firm particulary specialized in banking and insurance participation of the beneficiary member. These transactions are disclosed in the financial statements clearly and areas trusted by the Stock Exchange Organization. The firm performs independent auditor and legal inspector completely without any exception and auditors inspect these transactions precisely in terms of compliance with functions and provide other professional task such as audit committee membership, internal auditing of banks, legal requirements. Then results are communicated to shareholders and their votes are obtained. Granting any insurance and investment: kind of loans to related parties is in accordance with the CBI directives and under close monitoring of internal and independent auditors. Additionally, details of these transactions are provided to the CBI inspectors periodically. Strategic Committees Figure 15 The board is informed of loans granted to the top managers and will approve it if necessary considering the bank’s health and safety policies. According to the Commercial law articles, the beneficiary manager is not participated in the approving of loans granted to related parties. General Meeting of Independent Auditor Shareholders
Authorities and Responsibility of the Board Board of Directors According to the Basel Committee principles and CBI recommendations, Saman bank follows these principles in setting policies and practices for corporate governance:
• The board is in charge of strategic responsibilities including risk management, corporate governance, and the High Committee of Human High Committee of High Risk Management High bank’s values as well as revising these responsibilities periodically. Capital Development and Strategy and Budget Compensation Committee Audit Committe • The board has the full authority for establishing an appropriate strategic system and can ensure implementation of policies and mechanisms of the strategic system considering the structure, business and Internal Auditing and risks of the bank. This system is adequately clear to all stakeholders. CEO Monitoring • Top manager of the bank can ensure compliance of bank activities with business strategies, risk tolerable levels and the board policies. • Monitoring bodies on three areas of corporate governance, risk management and internal control are established having authority, independence and necessary resources as well as accessibility to the board members. Consistent with the Basel and CBI recommendations in order to establish corporate governance in the bank, • The bank’s risks are identified and managed appropriately considering operational structure and expanding the following committees have been developed to perform functions determined by the board. activities and internal and external changes. There are distinct paths of reporting for related departments to the board about identified risk. • The board and management can use effectively the findings of internal and independent auditors. • The board monitors designing and performance of compensation system and ensures its compliance with expectations through periodical revisions.
56 57 Anual Report 2015/16
Internal Auditing and Monitoring Internal Auditing and Monitoring is an executive power of High Audit Committee charged with responsibility of holding a systematic and efficient approach to assess corporate governance and enhance risk management and control in the bank. As stated in article 2 of the charter of High Audit committee, this committee is established to help perform monitoring role of the board an enhancing this role to ensure the following:
Effectiveness of corporate governance mechanisms, risk management and internal control procedures, financial reporting health, effectiveness of internal audit, independence of external auditors and effectiveness of independent auditing as well as compliance with laws, regulations and requirements.
In order to perform functions, the board has provided necessary resources for the committee without any exceptions. Saman Bank approach to internal auditing includes the related instructions such as those of the CBI, recommendations of Basel Committee, Stock Exchange Organizations (SEO), and the COSO about internal controls as well as international internal auditing standards. This approach addresses the recommendations of the COSO and SEO about risk assessment as well as ensuring achievements of internal and operational auditing goals in the form of standard processes as one of the five elements of internal control. This approach has other advantages such as strategic management of audit operations, planning on the basis of risk and activity model enhancing effectiveness and economic efficiency.
The bank top management is fully knowledgeable about importance of internal audit function as a key element of internal control activities which leads to effective risk management. Hence, the top management pays attention to informing other divisions of internal audit role and its value as well as importance of timely and efficient application of its findings when responding to the bank’s problems. High Committee of Strategy and Budget Enhancing internal auditors’ independence in reporting processes to the High Audit Committee and the board is important in Saman Bank maximizing quality of the reports. Internal auditors are participated in decision made The main functions of this committee include setting long-term goals, and strategic, operational and budget about effectiveness of important internal control areas. planning. Other duties include approving the strategies and the organizational chart. These functions are set consistent with the banks approved strategies. Two non-executive members and a consultant of the board act in In accordance with the plans prepared by internal audit and monitoring management and approved by the high this committee. audit committee, these processes have had the most risk factor and materiality in risk assessment of the year ended March, 19, 2016: High Audit Committee • Service operations of retail and syndicated credits; According to the Basel recommendation on audit committee role as an element of efficient corporate • Administrating and supporting credit services in retail and syndicated areas; governance, the High Audit Committee of Saman Bank was established in 2007. The current Saman Bank Audit Committee is made up of one non-executive member of the board and two certified international auditing • Administrating and supporting services in retail and syndicated areas; and accounting professionals specializing in banking. The main goal of Audit Committee establishment is • Service operations of Corporate Banking; assuring the board about effectiveness of the internal-control system. This committee provides its consultancy recommendations based on reports prepared by the Internal Auditing and Monitoring Division. It should be • Knowledge Management; noted that the committee is responsible for protecting independence of monitoring divisions. These reports • Process Management; are prepared on the basis of internal control framework and assessment of bank’s operations effectiveness in • Business Software Management; achieving operational goals. According to the Stock Exchange Organization Instructions, the board has been required to express an opinion on the effectiveness of internal controls since 2013. This requirement emphasizes • Financial Resources Management; on importance of enhancing Internal Audit and High Audit committee. • Information Technology Management. High Risk Management Committee Consistent with the above and to perform comprehensive auditing of subordinate companies, the internal auditing and monitoring division prepared risk assessment worksheets for all activities of Saman Kish One of the most important roles of this committee is ensuring the existence, accuracy and adequacy of policies E-Payment, Saman Exchange, and Saman Satellite Communications companies. and processes of managing, controlling and responding to different risks of bank’s activities. This committee monitors the above activities as well as emphasizing on the bank’s reputation and popularity, monitoring the For activities with the most level of risk and materiality, further investigation has been performed and related capital adequacy and executing policies of the committee and the board in risk area. Two non-executive members reports have been provided to divisions, high audit committee and the board respectively. of the board and the risk office manager are members of this committee. High Committee of Human Capital Development and Compensation This committee is established to plan for selecting, developing, successor training, training employees and maintenance human capital. This committee is expected to create stable value to the bank consistent with goals and policies of the bank. Other functions of this committee include approval of employee instruction and directives, salary payment mechanisms, and setting policies in employee evaluation and bonus plans.
58 59 Anual Report 2015/16
Capital Structure Capital by Shareholders Table 8 Our activities started in 1999 with an initial capital of IRR 200 billion including 200 million shares of IRR 1,000 each. This capital has been increased several times during 1999 to 2011 to reach IRR 8,000 billion including 8,000 Shareholders Classification No. of Shares Percentage Nationality shares of IRR 1,000 each. The last capital increase was completed at ….(DATE). Pension Fund of National Copper Industry of IRAN Legal Registered Companies 624,530,308 7.81 Iranian
Capital changes Rls (b) Table 7 Pension Fund of Protecting Steel Industry Employees Legal Registered Companies 400,088,117 5.00 Iranian
Mines & Metals Development Investment Co. Legal Registered Companies 323,686,501 4.05 Iranian Capital Increase Date of Register Previous Capital New Capital Source of Capital Increase Increase Percentage Mr. Mohammad Zarrabieh Individual Person 315,266,280 3.94 Iranian August 29 ,2002 200 Cash and Due Debts Ms. Hava Chaee Deh Khoee Individual Person 240,847,267 3.01 Iranian
November 27 ,2003 200 20 220 10 Cash and Due Debts Parsian Bank Financial Group Co. Legal Registered Companies 244,163,829 3.05 Iranian
Saman Investment Co. Legal Registered Companies 239,999.995 3.00 Iranian October 15 ,2004 220 80 300 36.36 Cash Mr. Vali Zarrabieh Individual Person 201,656,802 2.52 Iranian
November 7 ,2005 300 300 600 100 Cash and Due Debts Mr. Seyed Mahdi Ghafoori Individual Person 181,316,669 2.27 Iranian
Mr. Seyed Ahmad Akhavan Dastmalchi Individual Person 166,800,291 2.09 Iranian November 16 ,2005 600 150 750 25 Cash and Due Debts Other Natural Persons Less than 2% Individual Person 3,682,047,429 46.02 Iranian
October 8 ,2006 750 150 900 20 Cash and Due Debts Other Legal Persons Less than 2% Legal Registered Companies 1,379,596,512 17.24 Iranian
8,000,000,000 100 February 12 ,2010 900 900 1,800 100 Cash and Due Debts
March 19 ,2011 1,800 1,200 3,000 67.67 Cash and Due Debts Capital by Number of Shareholders Table 9
March 19 ,2012 3,000 1,000 4,000 33.33 Cash No. of shares No. of Shareholders Private ShareHolders Percentage More than 1 Million 446 - 97.62
October 22 ,2012 4,000 2,588 6,588 64.7 Re-assessment of Assets 500000-1000000 123 - 1.08 250000-500000 113 - 0.5
100000-250000 197 - 0.4 March 9 ,2016 6,588 1,412 8,000 21.43 Cash and Due Debts Below 100000 2,690 - 0.4
Capital Held by the Board and CEO The board consists of five members with two years membership period extendable by approval of the general meeting of shareholders.
Capital Held by the Board and CEO Table 10
Name Shareholde’s status Beginning Date Ending Date Executive Status
Vali Zarrabieh Shareholder/Chairman 06-Feb-14 07-Feb-16 Executive
Ahmad Mojtahed Shareholder/Vice Chairman 07-Feb-14 08-Feb-16 Non-Executive
Farideh Geraminejad Shareholder/Board Member 08-Feb-14 09-Feb-16 Non-Executive
Pension Fund of National Copper Industry Shareholder/Board Member 09-Feb-14 10-Feb-16 Non-Executive of IRAN
Seyyed Ahmad Taheri Behbahani Shareholder/CEO 30-Apr-13
60 61 Anual Report 2015/16
Board Members Attendance in the Meetings
Board Members Attendance in the Meetings Table 11
Name Position Attendance Status Comments
Vali Zarrabieh Chairman 58/65 7 indirect attendance
Ahmad Mojtahed Vice Chairman 60/65 5 indirect attendance
Farideh Geraminejad Board Member 57/65 8 indirect attendance
Represantative Not approved Pension Fund of National Copper Industry of IRAN Board Member - by CBI
Inspection Main Issues Addressed by the Board in the Reporting Year Top management support and emphasize on accuracy and acting in implementation of internal controls as well • Approval of Financial Statements of Bank and the Saman Group; as monitoring the banking processes health, helped us succeed in most of our plans for developing inspecting infrastructures. • Permission for issuing information to enhance transparency and general system of information issuance according to the CBI opinion; It would definitely be said that inspection in Saman Bank has become a division with high capacity and technical ability acting its inherent functions and missions in accordance with international standards. • Approval and revision to the operational instructions in different areas such as transaction instructions;
• Performance evaluation of bank regarding the five-year strategic plan and determining the basis for the second Siamak Shahbazzadeh strategic plan; Head of Inspection • Analysing the bank’s environment and risk developing strategic policies according to the environment; • Planning and policy making for international affairs after the JCPOA agreement; Saman Bank inspection division acts under supervision of the CEO and is monitored by Deputy Monitoring. This • Reviewing and verification of the high committees (include strategic, auditing, risk, human capital development division is responsible for monitoring executive processes and auditing of operational, managerial and supporting and compensation); processes. During 2015/16, inspection has performed a variety of activities in related field such as: • Revision and approval of executive committees’ identifications in accordance with internal and external conditions; • Cooperating with the CBI and SEO to comply with laws and regulations notified; • Finishing the first phase of systematic studying of directives; • Implementation of a part of fraud detection project; • Modifying organizational structure of the bank to enhance monitoring bodies (compliance and AML divisions); • Implementation of RTAC and RTCC systems for online monitoring of some bank’s headings; • Trying to attract foreign investors, international banks and correspondents; • Finishing the first phase of classifying and quantifying case of non-compliance; • Matching investments with the Law on Removal of Limitations from Competitive Production and the CBI directives; • Providing complete information about security recommendations to customers in the fields of identifying information theft, forgery and fraud preventing, react to hackers, social engineering etc.; • Cost management and optimal allocation of resources; • Changing and modifying the attending inspection processes; • Monitoring and following up the process of collecting debts as well as providing appropriate solutions; • Establishing special telephone numbers and e-mails to receive non-compliance reports; • Monitoring and controlling the process of selling collaterals, considering the shareholders’ interests (shareholders and depositors); • Developing and uploading checklists on the portal for managers and users in different areas. • Deciding about issues stated in transaction committee in accordance with the transaction instruction; • Reviewing, approving and controlling the loans granted to big customers and related parties/beneficiaries.
Total Bonuses Paid to the Board Members Looking Ahead • The attendance fee of a meeting paid to each board member in 16/2015 is IRR 15 million. Consistent with the executive programs, the inspection office has planned new programs for the next year which include revision of non-compliance schemes and ensuring their accuracy, implementing new analyzed • According to the decision made by general meeting of shareholders in 16/2015 no dividend were approved and no schemes and testing them with real data as well as revision and correction (if necessary) of risk allocation processes. performance bonus was paid to the board.
62 63 Anual Report 2015/16
Training and Expanding International Standards
We held the “International Conference on AML” in Iran to provide new knowledge about AML and informing the banking system of practical solutions and international and domestic laws and regulations. This Conference was held by attendance of managers and experts of risk offices in Banks and economic institutions emphasizing on law-acceptance and AML in Iranian Banking sector as well as compliance with Iranian AML regulations along with a training workshop. Georges Chappotteau, Professor of the Sorbonne University, specialized in AML, operational risk management, compliance and internal control, was the main lecturer of this Conference.
Compliance
Expanding bank’s international activities needs an independent division from other monitoring, operational and risk management units. The compliance division is established for compliance of financial and banking processes with the highest standards and processes of banking as well as full consistency to applicable laws and regulations of internal and foreign financial monitoring bodies. The main function of this division is to minimize the risk of compliance and international transactions.
The most important activities of this division are as follows:
• Regarding importance of AML in international areas after the JCPOA agreement, Saman Bank has focused on monitoring customers and their foreign currency transactions requiring employees in compliance and AML division to comply with international regulations about customers’ identifying, beneficiaries, and origin of funds and assets as well as implementing standard processes and international along with internal regulations about foreign Anti-Money Laundering currency pay orders and letters of credit. Anti-money laundering (AML) has been important in the bank’s defined internal goals since establishment. We • Establishing compliance staff in business divisions including retail banking and related units and corporate started to implement AML programs since 1999 in accordance with the CBI regulations. Compliance and AML and international banking to control foreign currency transfers and domestic and foreign letters of credit on division is responsible for compliance of banking processes with AML regulations issued by the CBI and the Financial continuous basis to cover compliance risks; Information Unit (FIU). • reviewing all banking services in terms of compliance with domestic and international regulations considering Consistent with the above, international standards on AML, Controls and Combating the Financing of Terrorism are Iran economic policies in the Post-JCPOA and executing monitor activities on the customers at international level, considered. The main activities of AML division are: searching customers identifications in black lists issued by European Union, United Nations and the OFAC; • Establishing new work flows when rendering foreign currency services such as pay orders and guarantees as well • Holding training courses of AML in form of attending and non-attending aiming at informing employees with as monitoring identifying indicators and reporting suspicious items to the FIU; directives, regulations, responding to AML tricks, identification of customers and identity cards and documents • Providing annual report (based on quarterly issued reports) to the board or High Risk Committee of the bank at the security factors as well as performing related inquires; end of the year as well as providing a summarized report of compliance status with banking laws and regulations • Investigating, review and express opinion to suspicious cases, extract and report suspicious cases using the AML in the financial statements cooperating with the bank monitoring bodies as a division for preparing compliance software; reports to the CBI and other monitoring bodies; • Answering inquiries of STR to the FIU; • Reviewing, studying and updating continuously laws and regulations, goals, policies, practices, directives and related instructions to identify any changes as well as limitations on implementation of these regulations in • Sending daily CTR reports to the FIU; divisions and perform necessary actions to identify and eliminate the possible limitations; Establishing the portal for collecting CTR reports; • • Developing and maintaining compliance system of bank as well as identifying needs regarding laws and • Sending reports of project management system to the Ministry of Economic and Financial Affairs; regulations governing the Banking system and other internal regulations and compliance with defined processes in the operational and ethical chart of the bank. • Establishing the software for customer identifying in two levels: Initial identification (Due Diligence) and Detailed identification (Enhanced Due Diligence) using the Risk-Based Assessment approach and classifying the • Analysing applicant’s financial activities and its compliance with origin and sources of income they state, identifying customers; equal beneficiaries, type of goods transacted in terms of usage in case of international transactions and reviewing financial and credit background of customers; • Active monitoring of compliance with laws and instruction, developing directives, controlling performance of branches and cooperating with monitoring bodies and eliminating gaps in AML; • Classifying and identifying risky customers and monitoring all financial transactions with them particularly the Political Exposed Persons (PEPs). • Modifying internal processes and upgrading the AML software in accordance with the CBI announcements; • Setting policies and directives related to financial non-compliances and implementing the Organizational Loyalty Project in order to achieving the most compliance with AML regulations; • Implementing the compliance project and setting policies of international activities as well as using experienced and skilled experts for investigating international transactions precisely; • Cooperating and participating with International Division in order to achieve international relationship goals of the bank through active management of relationship with correspondents in accordance with international standards, AML and regulations on Combating the Financing of Terrorism.
64 65 Anual Report 2015/16
Executive Managers
Seyed Ahmad Taheri Behbahani; CEO
Mr. Taheri Behbahan has more than 50 years experience in banking industry and has been the CEO of Saman Bank Legal
Office since 2014. He has acted as Senior Executive Advisor to the Board since 2012. His previous activities include: CEO
Legal office of Eghtesad Novin Bank, CEO of Sharjah Bank of UAE, CEO of Iran Overseas Investment Bank in London and Head
Colateral Properties of Melli Bank branch network in the Persian Gulf, Dubai, and Abu Dhabi. Mr. Taheri Behbehani holds a Bachelor’s Degree in English Language and Literature from Shiraz University.
Reza Aghababaei; Credit
Dr. Reza Aghababaei has functioned as an Executive Banking Manager in Saman Bank since September 2014. He Monitoring Security Protection Inspection Risk office has worked with Saman Bank for many years in different managerial positions, including Director of Planning and Protection and and Electronic Data Information Security Research, Director of Investment Affairs, Director of Corporate Banking, and Executive Retail Banking Manager. He holds a Ph.D in Economic with a subfield of Economic Development from University of Tehran. High Audit Committee Reza Esfandyari; Legal Human Capital Development and Compensation Committee IT Executive Board Mr. Esfandyari has been working as an Executive Legal Manager since August 2013. Previously, he served as Legal Managing Area Executing Customer Care Quality Support Public Relation and Advisor to the CEO of Saman Bank. Mr. Esfandyari holds a Master Degree in Private Law. Improvement and AML Division Compliance and Mekameh Ebrahimi; Banking
Ms. Mekameh Ebrahimi has been working as an Executive Banking Manager since August 2015 .She holds a Ph.D in Social Science from Boston Unevrsity of USA. CEO Division International
International Mahdi Gharahi; Operations Board of Directors
Mr. Gharahi was appointed as Executive Operations Manager in 2013. Prior to this, he served as managerial and executive positions including Director of IT affairs, CEO of Sasan, Tondar Nour and Laleh Computer Companies and manager of Procedures and Practices in Ministry of Defense. Mr. Gharahi holds a Bachelor Degree in Theology and Philosophy from University of Tehran. Banking
Saman Organizational Chart at a Glance Figure 16 Javad Goharzad; Director of Internal Auditing and Monitoring Retail Banking Private Banking and Monitoring Human Capital Internal Auditing Premier Customer Electronic Banking Corporate Banking Marketing and sales Mr. Goharzad acts as Director of the Internal Auditing and Monitoring Division since 2008. He was previously the
Executive Committees Independent Auditor and legal inspector of Saman Bank since establishment until 2008. He has experiences in different managerial positions, partnership in audit firms, independent auditor of listed companies and banks and financial institutions. Mr Goharzad holds a Master Degree in Accounting from the Islamic Azad University. High Committee of Strategy and Budget High Risk Committee Credit Retail Loans Debt Follow up Credit Expertise Corporate Loans Syndicated Loans Credit ranking and Budget Finance Treasury Investment Finance and Finance and Planning General Meeting and Research, Plan and Budget of Subsidiaries
66 67 Divisions Heads (Middle Managers)
Iman Arastoo, Marketing and sales Master Degree in Business Administration, Allameh Tabataei University.
Hamid Tahamtan, Legal Master Degree in Oil and Gas Law, University of Tehran.
Seyed Morteza Hosseininejad, Research, Plan and Budget Master Degree in Economics, Shahid Beheshti University.
Reza Heidari, Private/ Premiere Banking Master’s Degree in Economics, University of Tehran.
Ghassem Sarkhosh, Finance and Treasury Master’s Degree in Business Administration, Shahid Beheshti University.
Mehrdad Salman Nouri, Information Technology Bachelor’s Degree in Computer Engineering, Islamic Azad University.
Yousefali Sharifi, Investments Post-PhD in Financial Mathematics, Connecticut University, USA. Siamak shahbazizade Khiavi, Inspection Finacial Master’s Degree in Economics, University of Tehran. Reza Shirin Goharian, Retail and Syndicated Loans Report Master’s Degree in Business Administration, Islamic Azad University.
Fereshteh Zarrabieh, Human Capital MBA (with a subfield of marketing strategy), Industrial Management Institute.
Marzieh Azizi, Improvement and Quality Bachelor’s Degree in Accounting, Shariati College.
Maziar Fozouni, Retail Banking Bachelor’s Degree in Accounting, Islamic Azad University.
Pooran Gilasi Saghez, Secretary to the Board Bachelor’s Degree in Computer Engineering, University of Tehran.
Alireza Ma’arefat, Corporate Banking Bachelor’s Degree in Economic Science, University of Mazandaran.
Zibandeh Mohtadi Haghighi, Finance Master’s Degree in Accounting, Islamic Azad University.
Mansour Momeni, Public Relations and Customer Care Bachelor’s Degree in Chemistry, Arak University.
Abbasmirza Nayeri, Electronic Banking
Master Degree in Business Administration, Allameh Tabataei University.
68 Finacial Report
Independent Auditor & Legal Inspector Report 5- Cases of non-compliance with the directives issued by I.R.I. Central Bank having an impact on such information as stated in the Financial Statements and explanatory notes are as follows: to Annual Ordinary General Meeting of Shareholders of Saman Bank (Public joint stock company) 5-1- Directive on “classification of credit institutions assets and procedure for calculating provision for debts” and its further Amendments and, consequently, inadequacy of the provision allotted for Report on Financial Statements long-term debts.
5-2- Directive no. 94/258020 dated Nov. 30, 2015 on non-recognition of income of doubtful debts interest. Introduction 5-3- Non allocation of provision for membership fee with Deposits Guaranty Fund for 2014-2015 and 1- Our Firm has audited the consolidated financial statements of Saman Group & Bank (Public joint 2015-2016 fiscal years. stock company) including the balance sheets of investment deposit operations as at March. 19, 2016, Profit & Loss Account, Variation in Shareholders’ Equity as well as the Cash Flow Statement for the 5-4- Requirement for presentation of some explanatory notes according to the notified financial fiscal year ended on the date above, along with the Explanatory Notes 1 to 66 hereto attached. statements.
Responsibility of the Board of directors for financial statements 6- Situation of foreign currency accounts with Central Bank is as follows: 2- The Board of directors of the Bank shall be responsible for preparing the financial statements according to accounting standards and requirements of I.R.I. Central Bank. Such responsibility includes 6-1- According to the items stated in the Bank’s books (Notes 10-1-1), the Bank considers to design, implementation and maintenance of internal controls for setting up these statements in such a be entitled to collect the following amounts. Meanwhile the situation of the reciprocal accounts manner to ensure that there is no significant misstatement due to fraud or error. is not yet finalized and as per the Directive no. 256646 dated Dec. 16, 2014 such finalization will occur upon the completion and issue of the foreign currency special audit report (currently going through the final steps). Independent Auditor & Legal Inspector Responsibility
3- Our responsibility is to issue an opinion on such statements as audited according to audit standards. Amount Such standards require our firm to observe professional practices and plan and conduct the audit Foreign currency at rate Amount required by Bank through the letter no. 210/92/M/013678 dated Feb. 26, 2014 in such a manner to reasonably ensure that there is no significant misstatement in the Financial Reference 462,679,859/11 Statements. Exchange 140,214,007/53 Audit includes implementation of procedures to obtain audit evidence regarding the amounts and Market - other information disclosed in the financial statements. Opting for auditing procedures depends on Rate of loans - the auditor’s judgment such as evaluation of risks of significant misstatement due to fraud or error. Total 602,893,866/64 To evaluate such risks, internal controls related to preparing and providing of financial statements for designing suitable auditing procedures and not intended to issue an opinion on the efficiency of such internal controls, are verified. Audit includes also the suitability of the accounting policies used and 6-2- Account created titled “Forward-purchase of foreign currency from Central Bank” for reasonability of the accounting estimations by the board of directors as well as the assessment of the documentary credits provided under the Directive no. 60/1015 dated Dec. 7, 2013 stated under Note financial statements as a whole. 10-1-1 to Financial Statements is as follows:
Our firm believes that the auditing evidence gathered is sufficient and appropriate for issuing a qualified Currency Amount Rate (Rls) Amount – Rls (M) opinion on the financial statements. Euro 99,491,724/88 33,935 3,376,252 AED 36,834,377 /48 8,234 303,294 Our firm is also held, as the Legal Inspector, to report to the general meeting of shareholders any cases of non compliance with legal requirements provided under the Amendment of Commercial Code and CNY 24,142,410 /16 4,655 112,383 the provisions of the Articles of association of the Bank, Iran monetary & banking Laws, interest-free KRW 52,416,788/566 26 1,350,309 banking operations, requirements of I.R.I. Central Bank and other required issues. TRL 78,719 /68 10,551 831 Total 5,143,069 Basis for Qualified Opinion It should be mentioned that regarding such Directive, an amount of IRR 2,450 billion is reflected 4- Separation of the investment deposit accounts equity from the liabilities and shareholders’ equity, under Note 24-3 to Financial Statements as IRR equivalent of the above amounts as debts to Central presentation of investment deposit accounts performance as a financial statements and change in Bank. Central Bank has not responded to the confirmation requested on the funds for the above shareholders’ equity as well as certain explanatory Notes are in addition to the items required under forward-purchase of foreign currency (even regardless of the subject matter of such advance payment), accounting standards. therefore we are not able to determine the financial effects as long as we have not received Central Bank’s response or establish a logical relation with debts to Central Bank.
70 71 Finacial Report
7- Results obtained from the confirmations requested on debts of other banks and credits institutions IRR 1,460 billion are returned to Saman Bank’s account but, on the same day, an amount of IRR 2,346 provided under Note 10 to Financial Statements are as follows: billion is withdrawn in the same way (Finally, IRR 2,833 billion). It should be reminded that Central Bank, as its usual practice, has claimed a performance bond of IRR 3,554 billion on the debit balance of the Amount of confirmation Amount as per Responses Amount as per Responses current account by March. 19, 2016 on its usual rate at 34%. The result of such claim is not yet reflected requested received not received in the accounts. Therefore, it is required to follow up such matter with the monetary authorities for final
Rls (m) Rls (m) Rls (m) determination. Foreign currency deposit with foreign banks 32,804,369 30,530,607 2,273,762
Foreign currency long term deposit with 125,533 31,653 93,880 foreign banks 11- Financial situation of Saman Bank’s entering to documentary credit transaction with the group Total 32,929,902 30,562,260 2,367,642 called Aria amounts to IRR 5,040 billion (IRR 4,541 billion debts of Saderat Bank + IRR 499 billion debts of Industry & Mine Bank) described under Note 10-2-2 to Financial Statements (Heading: Documentary Regarding the above, our firm will not be able to determine possible adjustments on Financial credit debt purchase & debt discount). Legal proceedings by the Bank to recover such the debts Statements in the absence of responses to the confirmations requested. of Industry & Mine Bank resulted in the remittance of an amount of IRR 666 billion (IRR 499 billion principle claim + IRR 167 billion accrued interest and cost) to date. Debts of Saderat Bank include 8- In addition to grant of such usual loans in banking industry as required and emphasized under 18 LCs amounting to IRR 4,541 billion. For the time being, separate legal actions are taken for 6 thereof. Art. 23 of Law on removal of limitations from competitive production and promotion of Iran financial According to the documents available, 4 first instance decisions in favor of Saman Bank amounting system as well as Art. 16 of General Budget Act 2013-2014, during the fiscal year the Bank has to IRR 640 billion are rendered (IRR 1,065 billion principal claim + IRR 640 billion interest, penalties proceeded with extending, re-extending and renewing balances of granted loans. Despite that no and proceedings fee, on which the amount of IRR 130 billion remains unpaid). It should be mentioned specific information is prepared on the amount of current loans paid and extended balances, the that separate legal actions are taken for 14 other LCs amounting to IRR 3,476 billion (principal claim). general image of the loans granted by the Bank and its comparison to the configuration of the last year Meanwhile, despite blocking of IRR 1,575 billion of listed stocks, such issue is not yet determined. in the usual form of categorization of the monetary and banking authority is as follows:
March 19,2016 March 19,2015 Growth Trend compared to the last year 12- As per Note 51-1 to Financial Statements, during the fiscal year 50 items of owned properties of the Amount Percentage Amount Percentage Amount Percentage Bank are sold as follows against considerations at a book value of IRR 6,140 billion: Rls (b) % Rls (b) % Rls (b) % Current loans (including interest received) 115 79 107 76 8 3 Amount – Rls(b) % Overdue loans (including performance bonds) 2 1 1 1 1 - Cash received 494 5 Outstanding loans 3 2 7 5 )4( )3( Exchange with expert assessed property 1,777 20 Doubtful loans 25 18 25 18 - - Accounts receivable 3,513 39 Total long-term 30 21 33 24 )3( )3( Using of loans 3,220 36 Total 145 100 140 100 5 - 9,004 100
8-1- Results obtained from categorization within the Directive 2823 dated Feb. 24, 2007 (and its and IRR 2,864 billion earned from the difference recognized as non-operational profit carried further Amendments) indicate an amount of IRR 17,041 billion from doubtful loans to current loans. into the accounts. It is to be noted that such results include the assignment of the goodwill of the under-construction project in Karaj. In such case, even if we consider the value of the properties exchanged as cash, the economic interests of 75% of the price of transaction (at IRR 6,753 billion) to the Qualified opinion Bank in the upcoming fiscal years shall be deemed as contingent and no profit may be allocated by relying 9- Our firm believes that, except for the effects of items stated in (4), (5), (6-1) and (8) and possible effects on such results. of items mentioned in (6-2) and (7) hereunder, the financial position of Saman Group & Bank (Public joint 13- As regards the tax situation of the Bank, described under Note 30-2 to Financial Statements, the stock company) as at March. 19, 2016 and their financial performance and cash flows for the fiscal year following shall be considered: ended on the above date are fairly reflected, according to accounting standards, from all material aspects. 13-1- Taxable income of 2012-2013 is notified at IRR 1,891 billion by the 1st Instance Tax Settlement Board resulting in a tax claim of IRR 473 billion. Bank has paid IRR 158 billion thereon but no reserve Emphasis of Matters is provided for the rest in the accounts. Bank has protested the same before the Revision Board. Shareholders’ attention is drawn on (10) to (13) below. Our opinions has not been modified as a result of Meanwhile, the final decision on such objection is not yet issued. items 10 to 13: 13-2- For the operations of the fiscal year 2015-2016, no amount is provided for tax reserve in the 10- As explained under Note 9-4-2 to Financial Statements, I.R.I. Central Bank has debited the accounts. account no. 26200/50 held by Saman Bank with Central Bank through a notice dated March. 5, 2012 13-3- Taxes for the fiscal years 2005-2006, 2006-2007, 2007-2008 and 2008-2009 are paid to the tax at an amount of IRR 4,866 billion for difference of exchange rate according to the decision no. 47698/ authority for a total amount of IRR 555 billion. However, the Bank has protested such assessments and T/M/90-34030 dated Jan. 8, 2012 of 5-member Work Group for organizing of foreign currency issues. issue of final tax notices. The matter is pending with the Court, Board provided under Art. 251-BIS and Thereafter, on Mar. 17, 2012 an amount of IRR 2,919 billion and on March. 18,2012 another amount of Tax High Council. Meanwhile, no final decision on such objection is yet issued.
72 73 Anual Report 2015/16
Report on Report of the board of directors provided under Art. 232 of Partial Other Matters Paragraphs Amendment of Commercial Code 14- Financial statements of the subsidiaries consolidated with the Bank’s Financial Statements are audited by other audit firms agreed by Iran Certified Public Accountants Association. In view of the audit 20- We have examined the report of the board on the operations and general situation of the Bank, current practice, we have audited these accounts by using such financial statements as audited by other provided under Art. 232 of Partial Amendment of Commercial Code, to be presented to the general firms. meeting of shareholders and in view of such examination, we can confirm that there is no significant case of inconsistency between the information therein and the documents and instruments provided by 15- Foreign currency situation of the Bank as at the date of Balance Sheet (in 13 types of foreign contracts the board. and assuming the acceptance of foreign currency accounts of performance of past foreign currency obligations by Central Bank) is explained under Note 63-5-5. Thus and based on the translation of such currencies to U$ at the notified rate (by Central Bank called the exchange rate) as at the date of Balance Report on Requirements of I.R.I. Central Bank Sheet, the foreign currency situation of the Bank indicates an excess of assets over the (long) liabilities. 21- Report on compliance of the Bank’s operations with monetary & banking laws, banking operations 16- Any ex gratia grant shall be subject to the prior approval of the general meeting. and the relevant regulations as well as the directives of Central Bank for the fiscal year reported is prepared separately and provided for submittal to the relevant regulatory authorities. 17- Regarding the distribution of profit, the general meeting of shareholders is requested to kindly consider the provisions of Art. 18 of Directive dated Jan. 31, 2009 of Stock Exchange Organization requiring that in case of significant adjustments in the Independent auditor/Company auditor report, the general Report on other legal and regulatory responsibilities of Independent Auditor meeting shall take into account such adjustments and deliberate on distribution of profit in view of the 22- In application of AML, Anti-money Laundering Department, operating directly under the supervision requirements provided under Art. 240 of Partial Amendment of Commercial Code. of the Managing Director, has implemented the regulations, guidelines and intelligent information systems of Central Bank according to the guides of I.R.I. Central Bank in terms of identification of Report on other legal duties customers, investigation on bank suspicious operations, financial origins, setting up and required trainings. In our examination, we have not observed any significant case of non compliance with AML or Report on other duties of Legal Inspector the relevant regulations.
18- Situation of compliance with the legal requirements provided under Partial Amendment of Commercial Code and Articles of association of the Bank is as follows: Report on Administrative Health Promotion & Anti-corruption Law
18-1- Company has failed to pay dividend amounting to IRR 157 billion as explained under Note 34 to 23- Compliance with the provisions of Para, (B) to Art. 3 of Administrative Health Promotion Financial Statements within 8 months as provided under Art. 240 of Partial Amendment of Commercial & Anti-corruption Law regarding recording of data of contracts executed at the Bank’s contracts Code. website, provisions of Articles 21 & 22 of the said Law on recording of such financial and administrative software as used at Informatics High Council and ensuring of the authenticity thereof at the Council’s 18-2- Meetings of the board of directors from September 2015 to the end of the fiscal year and to date discretion as well as the provisions of Art. 25 of the above Law on anti-corruption and establishment of have been held and deliberating by 4 directors. Moreover, the term of office of the directors of the a mechanized virtual answering system for complaints are required. board was Mar. 7, 2016.
18-3- Provisions of Art. 142 of Partial Amendment of Commercial Code, issues requiring the board Report on compliance with Internal Control Requirements related to Financial of directors to act by virtue of the resolution of the annual ordinary general meeting of shareholders Reporting dated July 15, 2015, for which no action is taken or the actions taken have led to no final result are as follows: 24- Regarding such regulations as related to the implementation and assessment of internal controls as provided under the checklist of Stock Exchange Organization, the Bank’s internal audit reports on • Taking decision on allocation of profit by holding an ordinary general meeting in extraordinary by assessment of the internal audit established therein and their efficiency for reasonably ensuring of Sept. 22, 2015 at the latest (which took place on Mar. 15, 2016). compliance with accounting standards in preparation of financial statements are examined by our firm and there is no significant case of ineffective implementations of such controls. Report on Transactions subject to Art. 129 of Partial Amendment of Commercial Code
19- Transactions mentioned under Note 64 to Financial Statements, as all the transactions performed during the fiscal year subject to Art. 129 of Partial Amendment of Commercial Code, are reported by Sokhanehagh Audit & Management Services Firm: Sealed. the board of directors to our Firm and verified. Such transactions are performed in compliance with the provisions of the said article on obtaining of the board’s consent and absence of the director concerned June 25, 2016 in voting, and our firm believes that such transactions are performed according to business appropriate conditions in line with the routine practices of the Bank.
74 75 Anual Report 2015/16
Saman Bank (Public Joint Stock Company)
Consolidated Statement of Finacial Position at March 19.2016
(restated) (restated) Note March 19,2016 March 19,2015 Liabilities & shareholders’ equity Note March 19,2016 March 19,2015 Rls (m) Rls (m) Rls (m) Rls (m) Assets Liabilities Cash 9 49,598,568 43,595,604 Due to banks and other credit institutions 24 30,317,690 29,124,857 Due from other banks and credit institutions 10 12,700,247 11,950,067 Customers' deposits 25 21,827,138 21,651,737 Loans granted to customers 11 127,203,747 117,743,174 Dividends payable 26 187,071 218,139 Investment in stocks & securities 12 1,532,004 1,170,083 Trade accounts and notes payable 27 1,129,580 1,487,482 Long-term investment in affiliates 13 649,335 405,896 Advances received 28 68,701 70,710 Due from subsidiaries & affiliates 14 67,820 138,977 Debt Bonds in issue 29 - 1,000,000
Trade accounts & notes receivable 15 1,581,863 1,098,670 Provision for income tax 30 168,611 193,255 Other accounts receivable 16 5,991,185 1,893,872 Other provisions and liabilities 31 5,034,704 6,084,587 Orders & prepayments 17 120,406 168,956 Provision for emplyees' termination benefits 32 466,334 326,615 Inventories 18 145,361 117,395 Total liabilities 59,199,829 60,157,382 Tangible fixed assets 19 6,093,809 5,556,336 Investment deposits accounts equity Intangible assets 20 4,127,974 3,876,076 long-term investment deposit accounts 33 188,750,350 157,131,839 legal deposit 21 21,131,325 19,512,265 Interest payable to long- term investment deposits accounts 34 2,112,728 1,780,370 Other assets 22 30,313,408 22,610,690 Total investment deposits accounts equity 190,863,078 158,912,209 Goodwill 23 134,527 153,330 Total liabilities and investment deposits accounts equity 250,062,907 219,069,591 Shareholders’ equity Share capital 35 8,000,000 6,588,000 Ongoing capital increase - 317,733 Parent company’s shares held by subsidiaries )1,684( )14,498( Legal reserve 36 1,597,389 1,496,547 Assets revaluation surplus: tangible &intangible 37 675 675 Retained earnings 1,215,715 2,235,139 Parent company total shareholders’equity 10,812,095 10,623,596 Minority's (Non-Controlling) interest 38 516,577 298,204 Total liabilities & shareholders’ equity 261,391,579 229,991,391 Bank’s LCs & drafts obligations 59-1 5,201,013 13,163,351 Total assets 261,391,579 229,991,391 Bank’s LGs obligations 59-2 6,938,318 5,304,813 Customers’ LCs and drafts obligations 59-1 5,201,013 13,163,351 Other bank‘s obligations 59-3 7,161,151 6,795,356 Customers’ LGs obligations 59-2 6,938,318 5,304,813 Managed funds and similar items 59-4 1,165,874 512,246 Other customers’ obligations 59-3 7,161,151 6,795,356 Managed funds & similar items 59-4 1,165,874 512,246
The accompanying notes are an integral part of the financial statements. The accompanying notes are an integral part of the financial statements.
76 77 Anual Report 2015/16
Consolidated Statement of Profit and Loss For the fiscal year ended March19,2016 Consolidated Statement of changes in Equity For the fiscal year ended March19,2016
(restated) 2015-2016 Note 2016 2015 Parent Ongoing company’s Assets Total Share Legal Retained Rls (m) Rls (m) Rls (m) Note Capital shares revaluation Shareholder’s Capital Resrve Earnings Income from loan interests & deposits 39 31,071,101 27,500,823 increase held by surplus Equity subsidiaries Cost of interests paid on deposits 45 (31,745,949) (25,411,208) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Net income from loan interests and deposits (674,848) 2,089,615 Balance at March 20, 2015 6,588,000 317,733 )14,498( 1,496,547 675 2,330,187 10,718,644 Net Profit - - - - - 721,173 721,173 Income from Fees & commissions 46 1,131,268 1,119,766 Prior years’ adjustments 56 - - - - - )95,047( )95,047( Fee & commissions expenses 47 (789,058) (1,123,373) Total Comprehensive 6,588,000 317,733 )14,498( 1,496,547 675 2,956,313 11,344,770 Net income from fee and commissions 7,895 330,708 income for the year
Income from sales & services rendered 48 41,115,257 29,844,373 Capital increase Cost of sales and services rendered 49 (39,913,185) (28,825,770) Registered Capital increase 1,412,000 )317,733( - - )1,000,000( 94,267 1,202,072 1,018,603 Not registered Capital increase - - - - Parent company’s shares held Net Profit or loss from investments 40 244,793 441,060 by subsidiaries Shares purchases ------Net Profit or loss from foreign currency exchanges & transactions 50 1,297,386 870,656 Shares Sales - - 12,814 - - - 12,814 Total operating income 1,542,179 1,311,716 Distribution Legal reserve 36 - - 100,842 - )100,842( - Other Incomes 51 3,423,956 1,866,327 Other reserve administrative & general expenses 52 (3,542,862) (3,041,134) Stock dividend ------Doubtful loans expense 53 (407,669) (1,610,462) Dividend approved 26 - - - - )639,756( )639,756( Financial expenses 54 (257,583) (376,156) Depreciation expenses 55 (452,040) (397,472) 1,412,000 )317,733( 12,814 100,842 - )1,740,598( )532,675( Balance as at March 19, 2016 8,000,000 - )1,684( 1,597,389 675 1,215,715 10,812,095 Profit before group share from affiliates’ incomes 841,100 1,191,745 Group share from affiliates’ incomes 13 174,176 111,064 Profit before tax 1,015,276 1,302,809 Income tax 30 (166,053) (208,157) Net profit 721,173 1,044,483 Profit allocated to Non-controling- interest 128,050 50,169
Base earnings per share 61-1 95 138 Diluted earnings per share – Diluted EPS 61-2 90 137
Since the components of the comprehensive income are limited to the profit (loss) of the fiscal year, the comprehensive income statement is not provided.The accompanying notes are an integral part of the financial statements.
78 79 Anual Report 2015/16
Consolidated Statement of Profit and Loss For the fiscal year ended March19,2016 Consolidated Statement of Cash Flows For the fiscal year ended March19,2016 (restated) 2014-2015 Note 2016 2015 Parent Ongoing company’s Assets Total Operating activities Rls (m) Rls (m) Rls (m) Share Legal Retained Note Capital shares revaluation Shareholder’s Capital Resrve Earnings Net cash inflow (outflow) from operating activities 57 9,600,855 )6,694,664( increase held by surplus Equity subsidiaries Interest paid for financing Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) loan Interest paid )40,213( )523,001( Balance at March 20, 2015 6,588,000 - )14,498( 1,331,313 675 2,460,167 10,365,657 Dividends paid )639,756( )658,646( Net Profit - - - - - 1,044,483 1,044,483 Net cash inflow (outflow) from Interest paid for financing )679,968( )1,181,647( Prior years’ adjustments 56 - - - - - )445,631( )445,631( Income tax Total Comprehensive Income tax paid (including tax prepayments) )664,584( )327,992( 6,588,000 - )14,498( 1,331,313 675 3,059,019 10,964,509 income for the year Investing activities Funds paid for tangible fixed assets )1,403,870( )1,932,788( Capital increase Proceeds from sale of tangible fixed assets 6,557 128,676 Registered Capital increase ------Funds paid for intangible assets )329,461( )189,076( Not registered Capital increase - 317,733 - - - - 317,733 Net cash inflow (outflow) from investing activities )1,726,774( )1,993,187( Distribution Net cash inflow (outflow) before financing activities 6,529,529 )10,197,491( Legal reserve 36 - - 165,234 - )165,234( - Financing activities Other reserve ------Cash from capital increase 94,267 317,733 Stock dividend ------treasury bonds transactions Dividend approved 26 - - - - )658,646( )658,646( Proceeds from share premium - 317,733 - 165,234 - )823,880( )340,913( Loans received 27,655,000 69,795,000 Balance as atMarch 19, 2015 6,588,000 317,733 )14,498( 1,496,547 675 2,235,139 10,623,596 Repayment of loans )29,405,000( )68,845,000( Net cash inflow (outflow) from financing activities )1,655,733( 1,267,733 Net cash increase (decrease) 4,873,795 )8,929,758( Cash at the beginning of the year 9 43,595,604 53,040,693 Realized foreign exchange movements 1,129,168 )515,331( Cash at year-end 9 49,598,568 43,595,604 Non-cash transaction 58 15,939,315 12,290,412
The accompanying notes are an integral part of the financial statements. The accompanying notes are an integral part of the financial statements.
80 81 Anual Report 2015/16
Saman Bank (Public Joint Stock Company)
Statement of Financial Position As at March19,2016
(restated) (restated) Note March19,2016 March19,2015 Liabilities & shareholders’ equity Note March19,2016 March19,2015 Rls (m) Rls (m) Rls (m) Rls (m) Assets Liabilities Cash 9 49,362,166 43,376,114 Due to other banks & credit institutions 24 29,687,714 28,755,259 Due from other banks & credit institutions 10 12,700,247 11,950,067 Customers' deposits 25 21,933,900 21,694,932 Loans granted to customers 11 127,499,869 118,111,683 Dividends payable 26 157,034 185,811 Investment in stocks & securities 12 3,238,568 2,445,120 Debt securities in issue 29 - 1,000,000
Due from subsidiaries & associated companies 14 1,030,523 1,186,220 Provision for income tax 30 - - Other accounts receivable 16 5,785,072 1,704,678 Other provisions & liabilities 31 4,268,654 5,702,007 Tangible fixed assets 19 3,593,858 3,358,505 Provision for staff termination benefits 32 414,634 296,307 Intangible assets 20 4,119,563 3,861,394 Total liabilities 56,461,936 57,634,316 legal deposit 21 21,131,325 19,512,265 Investment deposits accounts equity Other assets 22 30,255,725 22,576,877 long-term investment deposit accounts 33 189,413,552 157,897,141 Interest payable to long- term investment deposits accounts 34 2,114,740 1,781,795 Total investment deposits accounts equity 191,528,292 159,678,936 Total liabilities & investment deposits accounts equity 247,990,228 217,313,252 Shareholders’ equity Share capital 35 8,000,000 6,588,000 Ongoing capital increase - 317,733 Legal reserve 36 1,523,868 1,448,456 Assets revaluation surplus: tangible &intangible 37 675 675 Retained earnings 1,202,145 2,414,807 Parent company total shareholders’equity 10,726,688 10,769,671 Total liabilities & shareholders’ equity 258,716,916 228,082,923 Total assets 258,716,916 228,082,923 Bank’s LCs & drafts obligations 59-1 5,220,611 13,163,351 Customers’ LCs & drafts obligations 59-1 5,220,611 13,163,351 Bank’s LGs obligations 59-2 7,079,289 5,348,318 Customers’ LGs obligations 59-2 7,079,289 5,348,318 Other bank‘s obligations 59-3 7,161,151 6,795,356 Other customers’ obligations 59-3 7,161,151 6,795,356 Managed funds & similar items 59-4 1,165,874 512,246 Managed funds & similar items 59-4 1,165,874 512,246
The accompanying notes are an integral part of the financial statements.
82 83 Anual Report 2015/16
Statement of Investment Deposit Accounts Performance For the fiscal year ended March19,2016 Statement of Changes in Equity For the fiscal year ended March19,2016
Note 2016 2015 2015-2016 Rls (m) Rls (m) Rls (m) Ongoing Assets Total Profit-sharing income Share Legal Retained Note Capital revaluation Shareholder’s Income from loan interests 39 28,160,990 25,556,139 Capital Resrve Earnings increase surplus Equity Income from Deposits 39-2 1,511,317 379,864 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Net Profit or loss from investment 40 611,799 975,763 Balance at March 20, 2015 6,588,000 317,733 1,448,456 675 2,447,064 10,801,928 Total Profit-sharing income 30,284,106 26,911,766 Net Profit - - - - 502,751 502,751 Bank’s share of Profit-sharing income 41 Prior years’ adjustments 56 - - - - )32,258( )32,258( Depositors' Share of resources surplus – from profit-sharing 43 3,797,640 - Total Comprehensive income for the year 6,588,000 317,733 1,448,456 675 2,917,557 11,272,421 Depositors' Share of resources surplus – from profit-sharing before fees 34,081,746 26,911,766 Less Fees 42 )3,782,601( )3,247,263( Capital increase Depositors' Share of profit-sharing 30,299,145 23,664,503 Registered Capital increase 1,412,000 )317,733( - - )1,000,000( 94,267 Interest on legal deposits 41 196,005 161,604 Not registered Capital increase - - - - Compensation of expense related to depositors free resources surplus to 43 - - profit-sharing uses Distribution Final interest payable to depositors 30,495,150 23,826,107 Legal reserve 36... - - 75,412 - )75,412( - Interest paid to investment deposit Accounts 44 )31,310,604( )24,608,101( Stock dividend ------Differential between final and provisional interests accrued to depositors )815,454()781,994( Dividend approved 26 - - - - )640,000( )640,000( 1,412,000 )317,733( 75,412 - )1,715,412( )545,733( The accompanying notes are an integral part of the financial statements. Balance as at March 19, 2016 8,000,000 - 1,523,868 675 1,202,145 10,726,688 Statement of Profit and Loss For the fiscal year ended March19,2016 (restated) 2014-2015 Note 2016 2015 Ongoing Assets Total Rls (m) Rls (m) Rls (m) Share Legal Retained Note Capital revaluation Shareholder’s Capital Resrve Earnings Income from loan interests & deposits 39 31,177,327 27,516,921 increase surplus Equity Cost of interests paid on deposits 45 )31,801,511( )25,435,125( Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Net income from loan interests and deposits )624,184( 2,081,796 Balance at March 20, 2014 6,588,000 - 1,296,755 675 2,589,944 10,475,374 Net Profit -- - - 1,011,340 1,011,340 Income from Fees & commissions 46 1,116,839 1,106,290 Prior years’ adjustments 56 -- - - )375,976( )375,976( Fee & commissions expenses 47 )1,144,069( )805,448( Total Comprehensive income for the year 6,588,000 - 1,296,755 675 3,225,308 11,110,738 Net income from fee & commissions )27,230( 300,842 Capital increase Net Profit or loss from investment 40 611,799 975,763 Registered Capital increase - - - - - Net Profit or loss from foreign currency exchanges & transactions 50 1,295,870 871,523 Not registered Capital increase - 317,733 - - - 317,733 Total operating income 1,907,669 1,847,286 Distribution - Legal reserve 36 -- 151,701 - )151,701( - Other Incomes 51 3,379,801 1,877,651 Stock dividend ------administrative & general expenses 52 )3,285,489( )2,874,766( Dividend approved 26 -- - - )658,800( )658,800( Doubtful loans expense 53 )365,959( )1,590,709( - 317,733 151,701 - )810,501( )341,067( Financial expenses 54 )59,191( )264,174( Balance as at March 19, 2015 6,588,000 317,733 1,448,456 675 2,414,807 10,769,671 Depreciation expenses 55 )422,666( )366,586( Profit before tax 502,751 1,011,340 Income tax 30 - - Net profit 502,751 1,011,340
Base earnings per share 61-1 66 133 Reduced earnings per share – diluted EPS 61-2 63 132
Since the components of the comprehensive income are limited to the profit (loss) of the fiscal year, the comprehensive income statement is not provided. The accompanying notes are an integral part of the financial statements. The accompanying notes are an integral part of the financial statements.
84 85 Anual Report 2015/16
Statement of Cash Flows For the fiscal year ended March19,2016 Explanatory Notes to Financial Statements Fiscal Year ended on March 19, 2016 Note 2016 2015 Operating activities Rls (m) Rls (m) Rls (m) Net cash inflow (outflow) from operating activities 57 8,591,174 )7,753,156( 1- Introducing the Bank Interest paid for financing loan Interest paid )40,213( )523,001( 1-1- Background Dividends paid )640,000( )658,800( Saman Bank was registered under no. 154444 on Sept. 1st, 2008 with Tehran Department for Net cash inflow (outflow) from Interest paid for financing )680,213( )1,181,801( Registration of Companies & Noncommercial Establishments upon the authorization no. H/1745 Income tax issued on July 24, 1999 by I.R.I. Central Bank, adhered to Tehran Stock Exchange/Iran OTC Market Income tax paid (including tax prepayments) )480,641( )173,777( on Nov. 16, 2011 and is listed since June 6, 2012 therewith. Head office of the Bank is located at: Investing activities 1534 corner Tarkeshdooz Alley, before Parkway Crossing, Vali Asr Ave, Tehran. Bank operates under the economic code 4111-1166-8595. Funds paid for tangible fixed assets )597,564( )842,393( Proceeds from sale of tangible fixed assets 3,134 121,345 Funds paid for intangible assets )321,758( )226,388( 1-2- Main activities Net cash inflow (outflow) from investing activities )916,189( )947,436( Purpose of the Bank is performing of such banking authorized operations (operations and transactions Net cash inflow (outflow) before financing activities 6,514,132 )10,056,170( not prohibited for banks under legislation) as provided under Art. 3 of Articles of association and the Financing activities Regulations no. 92/377538 dated March. 13, 2014 of I.R.I. Central Bank. Purposes of the subsidiaries Cash from capital increase 94,267 317,733 and affiliates are stated under Note 12-2-1. treasury bonds transactions Proceeds from share premium 1-3- Number of Branches Loans received 27,655,000 69,795,000 Repayment of loans )29,405,000( )68,845,000( By March. 19, 2016, the bank’s branches are as follows as per the authorizations issued by Iranian Net cash inflow (outflow) from financing activities )1,655,733( 1,267,733 monetary competent authorities: Net cash increase (decrease) 4,858,399 )8,788,437( March19,2016 March19,2015 Cash at the beginning of the year 9 43,376,114 52,679,015 Branch Branch Realized foreign exchange movements 1,127,653 )514,464( Branches in Tehran Province 82 82 Cash at year-end 9 49,362,166 43,376,114 Branches in other Province 58 61 non-cash transaction 58 15,939,315 12,290,412 Branches in Free Zones 3 2 143 145
1-4- Employment Status
Number of the Bank’s employees during the fiscal year is as follows:
Group Mother Company March.19, 2016 March.19, 2015 March.19, 2016 March.19, 2015 Person Person Person Person Head Office & Administration Branch 1,919 1,844 754 816 Branches in Tehran Province 1,064 958 1,064 958 Branches in other Province 624 622 624 622 Branches in Free Zones 33 29 33 29 3,640 3,453 2,475 2,425
2- Basis of Financial Statements Financial statements are prepared on the basis of accounting standards and regulations of I.R.I. Central Bank. The accompanying notes are an integral part of the financial statements.
86 87 Anual Report 2015/16
3- Basis for Consolidation 8- Summary of significant accounting policies 3-1- Consolidated financial statements reflect the results of the gathering of the items of the financial statements of the Bank and Subsidiaries subject to consolidation after suppressing of 8-1- Investments intergroup transactions and accounts and such profit and loss as not realized due to transactions between these companies. Group consolidated Parent Co.
3-2- As regards such subsidiaries as acquired during the fiscal year, their results are carried into 8-1-1- Mode of evaluation Consolidated Profit & Loss Account as of the date on which they are effectively controlled by the Bank while for the subsidiaries assigned, such results end on the date of their assignments. Long-term investments
Investment in Subsidiaries subject to Cost-price (deducted by reserve for accumulated impairment 3-3- Bank’s shares acquired by the Subsidiaries are reflected in the accounts at their cost-prices Subject to consolidation and in Consolidated Balance Sheet as a debit item under the heading “Parent Company shares consolidation losses) Cost-p Cost-price (deducted by reserve for accumulated Investment in Affiliates Equity method owned by Subsidiaries”. impairment losses) Cost-price (deducted by reserve 3-4- Fiscal year of the subsidiaries ends on December 21st of each year and consolidated as so. Cost-price (deducted by reserve for accumulated impairment Other Long-term investments for accumulated impairment losses) Meanwhile, in case of any event prior to the date of the Mother Company’s financial statements not losses) globally affecting the consolidated statements, the effects thereof are taken into consideration by Current investments making the required adjustments in the items of the financial statements of such subsidiaries. Minimum equity method and Net Marketable investments Minimum equity method and Net sale value of total investments 3-5- Fiscal year of Saman bank Brokerage Co. and Saman Exchange Office Co. is changed from sale value of total investments March. 20 to Dec. 21st of each year. Minimum equity method and Net Other current investments Minimum equity method and Net sale value of total investments 3-6- Financial statements of Sepehr Mehr Co. in the fiscal year 2015-2016 are consolidated with the sale value of total investments Bank’s financial statements and those of the fiscal year 2014-2015 restated and presented. 8-1-2- Income recognition
Investment in Subsidiaries subject to At profit approval by general meeting of shareholders of invested Subject to consolidation 4- Operations & Reporting currency consolidation company (to the date of approval of financial statements) At profit approval by general meeting of shareholders of invested Investment in Affiliates Equity method Items of Financial Statements are expressed in the currency of the economic environment of Saman company (to the date of approval of financial statements) Bank, that is to say IRR. Unless otherwise expressly stated under Notes, such items are expressed in IRR ml for better comprehension. At profit approval by general meeting of shareholders of At profit approval by general meeting of shareholders of invested Other Long-term investments invested company (to the date of company (to the date of balance sheet) balance sheet) 5- Using Judgments and Estimates In preparation of Financial Statements, Saman Bank’s Management have used judgments, appraisals and assumptions to determine the amounts recognized. Actual amounts may vary from such estimates. Such estimates and assumptions are based on historical records and the Management continuously 8-2- Tangible Fixed Assets revised them by comparing to actual events. 8-2-1-Tangible fixed assets, save for land and building (Note 8-2-2), are recorded on the basis of the cost price including cash paid or fair value of other considerations assigned therefore at their date of acquisition. Cost of improvement and major repairs resulting in their capacity, effective life 6- Bases of Measurement or yield quality are considered as capital cost and depreciated during the remaining effective life. Measurement system in banking is the historical cost price system. Meanwhile for certain fix assets Routine maintenance and minor repair cost intended to maintain their condition or repair such including lands and buildings on lands as well as goodwill re-evaluation method by independent experts economic interests as expected by the Bank in comparison with the standard performance of the is used. initial evaluation of such assets are identified as current cost at their occurrence and carried into Profit & Loss Account.
8-2-2- Land and building are reflected in the accounts according to re-valuations. Frequency 7- Change in Accounting Policies period for re-evaluations are 5 years according to accounting standards to be conducted by independent experts (official experts to Justice). Bank has presented such accounting policies as stated under Note 8 by keeping a constant approach in the financial statements for all the periods reported. 8-2-3- Depreciation of tangible fixed assets is calculated according to their estimated effective life (and Regulation on depreciation provided under Amended Article 151 of Direct Taxation Act
88 89 Anual Report 2015/16
adopted in Feb. 11, 2002 and its further amendments) on the basis of the following rates and 8-4- Recognition of Income from loans granted, Bank commissions and late procedures: penalties
Asset Depreciation Rate Depreciation method By strength of the decision no. 1044 dated July 16, 2005 of Money & Credit Council and Directive Building & Facilities 7 &12% Declining 772/MB dated July 18, 2005 of I.R.I. Central Bank, profit of loans granted shall be recognized Furniture, Fixtures, Computer hardware & devices 3, 5 & 10 years Straight Line according to accrual method. Furthermore, by virtue of Directive 94/258020 dated Nov. 30, 2015, no accrual income is recognized for bad debts. Accordingly, the recognition methods for the Bank’s Operating license toll fee 10 years Straight Line income are as follows: Vehicles 25% & 35% Declining POS 5 years Straight Line Profit & late penalties of loans granted, Bank commissions Recognition method ATM 10 years Straight Line Profit of loans granted Technical equipment, Satellite, Hub 4 & 10 years and 20% Straight Line & Declining Current Accrual/Cash Branches Improvement & Renovation Cost 3 years Straight Line Overdue Accrual/Cash Tools 1 & 4 years Straight Line Outstanding Accrual/Cash Equipment in leased buildings 2 years Straight Line Doubtful loans Accrual/Cash late penalties 8-2-4- Regarding such assets as acquired and operated during month, depreciation is calculated Current Accrual/Cash and carried into accounts as of the date of purchase. Whenever either of depreciable assets is not Overdue Accrual/Cash used for a while because of work breakdown or other reasons, its rate of depreciation will be 30% Outstanding Accrual/Cash of such rates as indicated above. Doubtful loans Cash Bank commissions 8-3- Intangible Assets Income from commission for LG issued Cash Income from commission for other bank services Cash 8-3-1- Intangible assets (except Goodwill under Note 8-11) are recorded in the accounts on the Income from commission for interest-free loans granted Cash basis of cost-price. Operational and administrative software is depreciated over 3 years in Straight Line method. No depreciation is considered for other intangible assets. 8-5- Basis for determination of Depositors’ share in profit sharing income
8-3-2- Bank’s goodwill reflected in the accounts according to re-valuations. Frequency period In application of Law on Interest-free Banking Operations adopted on Aug. 30, 1983 and regulations for re-evaluations are 5 years according to accounting standards to be conducted by independent and by-laws thereto and in view of Directive no. 94/69643 dated June 10, 2015 of I.R.I. Central Bank, experts (official experts to Justice). By virtue of the Directive 2946/MB dated March. 7, 2007of I.R.I. the profit sharing income, uses of common resources and share of depositors shall be calculated Central Bank, goodwill is not depreciated. and the results thereof reported in “Investment Deposit Accounts Performance Statement”.
8-6- Classification of loans granted 8-3-3- As regards intangible assets whose entitlement to use is unlimited and their yields remained unchanged (of indefinite effective life), they are not depreciated. Loans granted by the Bank are evaluated and divided into the following categories on the basis of Directive on “classification of assets of credit institutions” (provided under Directive no. 2823/MB dated Feb. 24, 2007 of I.R.I. Central Bank) according to time and delay in payments, customer’s financial situation, industry or field of activity:
8-6-1- Current (at the latest, 2 months after due date or date of interruption of payment)
8-6-2- Overdue (2 to 6 months after due date or date of interruption of payment)
8-6-3- Outstanding (6 to 18 months after due date or date of interruption of payment)
8-6-4- Doubtful loans (more than 18 months after due date or date of interruption of payment)
• Management has not applied any judgment to Financial Statements beyond such framework as provided under the above Directive.
90 91 Anual Report 2015/16
8-7- Provision for Doubtful Loans 8-10- Tax
Provision is considered for loans granted and carried into accounts as follows in compliance with Bank’s tax is calculated and carried into accounts at the end of the fiscal year and presentation of “Guideline on Procedure for calculation of provision for loans in credit institutions” adopted by Financial Statements according to Iran Tax Act. Bank is required to fill and submit tax return to tax Money & Credit Council (provided under Directive no. 91/21270 dated Apr. 19, 2012 of I.R.I. Central authorities for each fiscal year within 4 months after expiration of such year. Payment of 10% of the Bank): tax declared along with the tax return submittal is required. Upon examination and identification of accepted and rejected income and expenses, the tax officers will notify the notice of tax assessment 8-7-1- A general provision equal to 1.5% of total loans balance at the end of each year is within 15 months after the expiration of timeframe for submittal of tax return. Should the Bank calculated, except for the balance of loans for which a specific provision is allocated). protest the amount and procedure of assessment, it shall file an objection and pay a part of the tax assessed. Tax penalties are calculated as well and taken into consideration at their time. 8-7-2- Specific provisions are calculated for overdue, outstanding and doubtful loans after deduction of updated value of collateral for each case and applying the following rates: 8-11- Goodwill Category Provision rate % Balance of overdue loans 10 Business entities combined of acquisition type are carried out on the basis of purchase method. Surplus of the cost price of investment acquisition in subsidiaries and affiliates subject to Balance of outstanding loans 20 application of the net equity method on the Group’s share of net fair value of identifiable assets Balance of doubtful loans 50 to 100 at their acquisition is recognized as goodwill and depreciated over 20 years. Goodwill resulted from acquisition of affiliates is reflected in Balance Sheet as a part of “Book value of long-term investment in Affiliates. 8-7-3- For loans with passed maturity payment dates of principals and interests more than 5 years, a specific provision equal to 100% (without considering the value of collaterals) is considered. 8-12- Free Zone Entities
• Management has not applied any judgment to Financial Statements beyond such framework as Bank’s entities incorporated and established in free zones are subject to Regulations on I.R.I. Free provided under the above Directive. Zones Monetary & banking Operations Executive Guideline adopted in September 2000 by Money & Credit Council and Executive Guideline on separation of FZ Branches accounts and financial 8-8- Employees’ Termination Benefits statements (297/MB dated June 25, 2001).
Employees’ termination benefits are calculated according to the last month fix salary and benefits for every year of service. 8-13- Other Items under Notes to Financial Statements Considering the number of items constituting account balances, some of the items in every note is 8-9- Foreign Exchange Translation reported as “Other”. Such items include less important items in terms of content and can be up to 10% of the total account balance. Moreover, the number of such items is disclosed. Foreign currency monetary items are recorded at the official rate (regulated by central bank) applicable as at the date of the balance sheet and non-monetary items at the historic cost price in the relevant foreign currency, converted at the official rate applicable at the date of transaction. 8-14- Restated Items & Classification Adjustments Differences resulting from settlement or translation of monetary foreign currency items are Figures in the comparative financial statements of 2014-2015 are restated according to such recognized as the income or expense of the appropriate period and reported in Profit & Loss procedure as notified by Central Bank. Statement as follows:
No. Currency Rate as at the date of Balance Sheet (Rls) 9- Cash 1 U$ 30,240 2 Euro 33,935 Group Parent Co. 3 GBP 43,089 Note March19,2016 March19,2015 March19,2016 March19,2015 4 AED 8,234 Rls (m) Rls (m) Rls (m) Rls (m) 5 CAD 23,085 Cash in hand (rials) 9-1 1,182,452 1,181,249 1,182,094 1,180,555 6 TRL 10,551 Cash in hand (foreign currency) 9-2 935,525 695,443 927,526 691,427 7 AUD 22,966 Revolving funds 123 722 - - 8 JPY 269/190 Cash in transit (rials) 995 764 995 764 Central bank – current accounts (rials) Not 9 CHF 30,933 9-4 2,478,732 1,778,289 2,478,732 1,778,289 Limitated 10 CNY 4,655 Other banks and credit institutions – current 9-5 45,000,741 39,939,137 44,772,819 39,725,079 11 KRW 25/760 accounts (rials) Not Limitated 12 INR 453 49,598,568 43,595,604 49,362,166 43,376,114
92 93 Anual Report 2015/16
9-1- Cash in hand is kept at Treasury, branches and ATMs in form of bills and coins. Cash in 9-4-2- IRR current account with Central Bank no. 26200/5 used for clearance of interbank IRR hand with Branches is used for daily transactions and according to the operations performed, the operations such as adjustment of legal deposit balance, clearance of instruments exchange at balances are checked and counted at the end of each working day and recorded in accounts. ATMs Chamber of Clearance, operations of SATNA, PAYA, SHETAB, etc. systems. Balance of the above proceed with automatic payment of money after feeding. Maximum cash balance on an ATM is IRR account as at March. 19, 2016 amounts to IRR 2.394 billion according to the Bank’s books while 400 ml. On Mar. 19, 2016, the Bank operates 1308 ATMs. Central Bank’s books show a total debit balance of IRR 459 billion. Such inconsistency is due to the following: 9-2- Foreign currency in hand belonging to Saman Bank (Parent company) is translated on Mar. 19, 2016, at such day rate as notified by I.R.I Central Bank and the balance thereof is as follows as at the 9-4-2-1- As result of certain foreign currency problems in 2011-2012, Saman Bank was date of Balance Sheet: appointed as the colleague bank for currency distribution and agreed to plan and run the executive operations within the obligations and agreements concluded. March 19,2016 March 19,2015 9-4-2-2- On Mar. 5, 2012, Central Bank withdrew the amount of IRR 4.866 billion as the Forex amount Exchange rate Amount Forex amount Exchange rate Amount difference between the price of the foreign currency delivered to banks and the free market Rls (m) Rls (m) price and the rate fixed under the decision of 5-memer board under code 1006 on the said US Dollar 12,935,464.22 30,240 391,168 7,106,525/91 27,994 198,940 accounts (without considering the inadequacy of the balances). Despite the objections made in Euro 13,872,587.07 33,935 470,766 14,249,097/66 30,156 429,696 this respect, The Bank had no response. UK Pound 152,079.59 43,089 6,553 194,379/59 41,699 8,105 9-4-2-3- Private Banks Association protested such approach in writing on March. 7, 2012. UAE Dirham 7,166,705 8,234 59,011 7,172,297 7,622 54,668 Turkish Lira 2,615 10,551 28 1,615 10,879 18 9-4-2-4- In view of the actions taken, as per the notice of Central Bank dated March. 17, 2012 927,526 691,427 returned 90% of the amount withdrawn, IRR 4.379 billion, but once again on March. 18, 2012 debited the Bank for IRR 2.346 billion (apparently on the basis of a decision taken by the Cabinet). 9-3- Cash in hand and in way are insured by Saman Insurance Co. (Public Held) against possible 9-4-3- By virtue of the agreement dated May 17, 2009 and in application of Para. (Z) Art.10 of risks of theft, fire, explosion, thunder, accident, funds car-ramming, etc. Iran Monetary & Banking Act (bill of law amending Iran Monetary & banking act adopted by Iran 9-4- Demand deposits with Central Bank (Not limited) Revolution Council on Mar. 18, 2007) as the representative of I.R.I. Central Bank, Saman Bank is required, while opening current interest-free deposit accounts for State bodies, whenever such Note March 19,2016 March 19,2015 accounts have a balance to deposit with Central Bank prior to 2 p.m. of the same day an amount Rls (m) Rls (m) equivalent to the balances of such State accounts (of the previous day). Short-term forex with CBI deposits – forex (Not Limitated) 9-4-1 335 376,615 Current account with CBI (Not Limitated) 9-4-2 2,394,611 1,240,104 9-5- Demand deposits with other banks & credit institutions (not limited) Governmental deposit accounts 9-4-3 83,786 161,570
2,478,732 1,778,289 Group Parent Co. Note March19,2016 March19,2015 March19,2016 March19,2015 Rls (m) Rls (m) Rls (m) Rls (m) 9-4-1- Foreign currency current deposit with Central Bank is as follows: Other Local banks – current accounts-rials (Not Limitated) 9-5-1 98,740 48,204 103,996 45,612 Other Local banks – term deposits -rials (Not Limitated) 9-5-1 10,014,090 1,641,205 9,808,289 1,614,681 March 19,2016 March 19,2015 Other Foreign banks – current accounts-forex (Not Limitated) 9-5-2 32,806,946 32,180,272 32,806,946 32,180,272 Forex amount Exchange rate Amount Forex amount Exchange rate Amount Other Foreign banks – term deposits-forex (Not Limitated) 9-5-3 125,533 844,956 125,533 844,956 Rls (m) Rls (m) US Dollar 7,634 30,240 231 3,470,815 27,994 97,162 Other Local banks – term deposits-forex (Not Limitated) 9-5-4 72,678 2,597,421 45,301 2,412,479 Euro 3,073 33,935 104 8,698,119 30,156 262,300 Other Local banks – current accounts-forex (Not Limitated) 9-5-5 1,882,754 2,627,079 1,882,754 2,627,079 UAE Dirham - 8,234 - 2,250,411 7,622 17,153 45,000,741 39,939,137 44,772,819 39,725,079 Indian Rupee 1 453 - 1 449 - South Korean won 27 26 - 27 25 - Omani Rial 1 78,546 - 1 72,709 - 335 376,615
94 95 Anual Report 2015/16
9-5-1- Demand and Term deposits with other local banks- IRR (not limited) related to Saman Bank 9-5-3- Foreign currency term deposits with foreign banks totally related to Parent Company are as (Parent entity) are as follows: follows according to currency:
March 19,2016 March 19,2015 March 19,2016 March 19,2015 Name of bank Current Term Total Current Term Total Currency type Forex amount Exchange rate Amount Forex amount Exchange rate Amount Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Refah - 3,786 3,786 - 16,964 16,964 Euro 2,766,480 33,935 93,880 2,766,480 30,156 83,426 Melli 68,172 2,997,492 3,065,664 16,794 171,665 188,459 Turkish Lira 3,000,000 10,551 31,653 70,000,000 10,879 761,530 Tejarat 37 8,315 8,352 260 5,008 5,268 125,533 844,956 Saderat 11,481 32,484 43,965 4,020 36,665 40,685 Sepah 5,746 30,369 36,115 23,803 16,938 40,741 9-5-4- Foreign currency term deposits with local banks totally related to Parent Company are as Maskan 6 1,642 1,648 - 7,138 7,138 follows according to currency: Keshavarzi 53 1,005,777 1,005,830 704 2,640 3,344 Postbank 18,350 - 18,350 - - - March 19,2016 March 19,2015 Mellat 150 1,828,259 1,828,409 30 7,520 7,550 Currency type Forex amount Exchange rate Amount Forex amount Exchange rate Amount Pasargad - 51 51 - 46 46 Rls (m) Rls (m) Gardeshgari 1 1,000,000 1,000,001 1 - 1 Euro - - 80,000,000 30,156 2,412,479 Sina - 32 32 - 30 30 Indian Rupee 100,000,000 453 45,301 - - - Ansar - 1,200,000 1,200,000 - 600,000 600,000 45,301 2,412,479 Dey - 73 73 - 750,067 750,067 khavarmiane - 9 9 - - - Ayandeh - 1,200,000 1,200,000 - - - 9-5-5- Foreign currency demand deposits with local banks totally related to Parent Company are Sarmaye - 500,000 500,000 - - - as follows according to currency: 103,996 9,808,289 9,912,285 45,612 1,614,681 1,660,293 March 19,2016 March 19,2015 Currency type Forex amount Exchange rate Amount Forex amount Exchange rate Amount 9-5-2- Foreign currency demand deposits with foreign banks- foreign currency (not limited) totally Rls (m) Rls (m) related to Saman Bank (Parent entity) are as follows according to currency: US Dollar 33,821,535/10 30,240 1,022,763 38,847,138/87 27,994 1,087,487 Euro 9,192,966/25 33,935 311,963 35,273,930/96 30,156 1,063,721 March 19,2016 March 19,2015 UK Pound 4,232,792/57 43,089 182,387 4,232,792/57 41,699 176,503 Currency type Forex amount Exchange rate Amount Forex amount Exchange rate Amount UAE Dirham 1,633,198/36 8,234 13,448 1,633,198/36 7,622 12,448 Rls (m) Rls (m) Australian Dollar 12,748/00 22,966 293 12,748/00 21,646 276 US Dollar 3,645,933/28 30,240 110,253 3,645,948/28 27,994 102,065 Japanese Yen 1,307,255,798/00 269/19 351,900 1,233,036,940/00 232 286,644 Euro 358,406,397/95 33,935 12,162,521 170,315,587/26 30,156 5,136,037 1,882,754 2,627,079 UK Pound 262,690/24 43,089 11,319 499,009/87 41,699 20,808 UAE Dirham 38,939,656/87 8,234 320,629 31,107,090/13 7,622 237,098 Swiss Franc 60,688,632/11 30,933 1,877,281 240,535,036/61 28,220 6,787,899 Chinese Yuan 164,727,974/30 4,655 766,809 222,247,851/30 4,519 1,004,338 10- Due from Banks & Credit institutions Turkish Lira 126,532,242/80 10,551 1,335,042 38,357,502/41 10,879 417,291 Japanese Yen 19,972,485,686/00 269.19 5,376,393 21,891,809,824/00 232.47 5,089,189 Parent Co. Note March19,2016 March19,2015 South Korean WON 10,673,363,786/00 25.76 274,957 156,231,255,582/00 25/07 3,916,249 Rls (m) Rls (m) Omani Rial 91,215,839/28 78,546 7,164,639 83,033,945/67 72,709 6,037,315 Due from Central Bank of Iran 10-1 8,131,046 7,314,279 Indian Rupee 7,521,196,747/69 453 3,407,103 7,643,614,471/36 449 3,431,983 Due from other banks & credit institutions 10-2 4,569,201 4,635,788 32,806,946 32,180,272 12,700,247 11,950,067
96 97 Anual Report 2015/16
10-1- Due from Central Bank: 10-1-3- Other debts of Central Bank mainly regard the failure to pay a part of the legal deposit for reducing such rate as regulated under the policy & regulatory package of 2010-2011 of I.R.I. Parent Co. Central Bank. Note March19,2016 March19,2015 Rls (m) Rls (m) 10-2- Due from Banks & Credit Institutions Purchase of forex from CBI 10-1-1 5,143,068 4,658,000 Other claims due from CBI – forex 10-1-2 2,978,420 2,646,744 Parent Co. Other claims due from CBI 10-1-3 9,558 9,535 Note March19,2016 March19,2015 8,131,046 7,314,279 Rls (m) Rls (m) Interbank paid checks 10-2-1 184,477 352,215 Due from other bank for Loans granted 10-2-2 4,384,725 4,283,573 10-1-1- Balance of this account for forward-purchase of foreign currency from Central Bank for 4,569,202 4,635,788 such documentary credits as provided under Directive no. M60/1015 dated Sept. 7, 2013 of I.R.I Central Bank is as follows according to currency: 10-2-1- Balance of the said account is cleared within two working days as per case through Bank March 19,2015 Instruments Clearance Chamber. Currency type Preferential exchange rate Official/transactional rate Total Exchange Exchange Exchange Forex amount Amount Forex amount Amount Forex amount Amount 10-2-2- Loans granted to other banks and credit institutions are as follows: rate rate rate Rls (m) Rls (m) Rls (m) Balance Euro 62,716,454/42 33,935 2,128,283 36,775,270/46 33,935 1,247,969 99,491,724/88 33,935 3,376,252 Name of bank Type of contract Interest rate Forex amount Currency type March19,2016 March19,2015 UAE Dirham 34,270,705/10 8,234 282,185 2,563,672/38 8,234 21,109 36,834,377/48 8,234 303,294 Rls (m) Rls (m) Chinese Yuan - 4,655 - 24,142,410/16 4,655 112,383 24,142,410/16 4,655 112,383 Saderat Receivable discount 21/00 3,476,390,085,800 Rial 3,476,390 3,476,390 South Korean 52,416,788,566 26 1,350,309 - 26 - 52,416,788,566/00 26 1,350,309 Pasargad Receivable discount 12/81 26,766,893 Euro 908,335 807,183 WON 4,384,725 4,283,573 Turkish Lira 78,719/68 10,551 831 - 10,551 - 78,719/68 10,551 831 3,761,607 1,381,461 5,143,068
It should be mentioned that follow-ups by Saman Bank to date resulted in an agreement between the representatives of Foreign Currency Statistics & Debts Department of Central Bank and Saman Bank according to which Central Bank agreed to provide 363 U$ ml as follows. Furthermore, as per the letter no. 256646 dated Dec. 16, 2014, Central Bank subjected the settlement of foreign currency debts to a foreign currency special audit for 2011-2012 and 2012-2013 by the independent auditor of the Bank (Foreign currency financial statements and breakdown of uses as well as foreign currency resources, assets and liabilities for 2011-2012 and 2012-2013 have been prepared and submitted to the auditor).
Amount in Dollers
Rate Date entered by the Bank Amount requested by Amount accepted the Bank Registered total CBI’s obligation as commitment amount
Preferential exchange rate (subsidized) 462,679,859 750,600,608 563,176,118 301,954,123
Official exchange rate (transactional) 140,214,008 170,080,338 150,154,772 43,187,252 Current exchange rate - - - 18،100،244 Loan interest rate - 955,547 461,132 - 602,893,867 921,636,493 713,792,022 363,241,619
10-1-2- Other foreign currency debts of Central Bank is related to the payment of foreign currency debts of ICA in 2014-2015 to Lufthansa and Turkish Airlines by the Bank as per the letters received from Foreign Currency Division of Central Bank under no. 1186 & 3806. Such sums are cleared at “base rate” on Apr. 20, 2016 as per the letter of International Department of Central Bank under no. 95/639 dated Apr. 4, 2016.
98 99 Anual Report 2015/16
Saderat Bank: In order to protect interests and rights of Saman Bank and for the purpose of claiming the revenues secured and obligation of Saderat and Industry & Mine Banks to perform their obligations, Saman Bank Saderat Bank in view of its mission to finance its customers in the fields of foreign currency and IRR in brought legal actions for claim of revenues of 6 matured LCs of which regarded Saderat Bank and 2 order to reduce the credit portfolio risk and maintain capital adequacy rate, added a new service to its Industry & Mine Bank. In all 8 cases, Saman Bank filed petitions with the relevant forum for seizure of loans grantable package since winter 2011, which includes the discounting of letter of credits opened assets of the opening banks at such amount as sought which resulted in issue of a writ of attachment of 1 by banks and payment of relevant amount on maturity dates . In the field of foreign currency, discounts their assets and enforcement of the writ. Therefore, the judicial authority has seized the assets of Iran were made and resulting funds remitted to the beneficiary’s account (discount applicant) without right of Saderat and Industry & Mine Banks for an equivalent of the amounts claimed. recourse to beneficiaries, in compliance with relevant requirements and guidelines and within regulations governing foreign currency credits and letter of credit unified regulations. In the field of IRR, since winter To date hereof, two of the claims against Industry & Mine Bank have resulted, upon becoming final in 2011, local term letter of credits (IRR) opened by Iranian banks were remitted to the beneficiary’s account favor of Saman Bank and issue of writ of enforcement, in collection of IRR 666 billion, IRR 499 billion within the regulations governing local letter of credits (IRR) and the executive framework set by Central for principal claim and IRR 167 billion for damages for delay, proceedings and attorney fee. Following Bank (unified regulations on letter of credits) without right of recourse to beneficiaries in compliance with the judicial actions initiated against Iran Saderat Bank before 19th Division of Tehran Civil Court the relevant requirements and guidelines. Such discounts were made in compliance with and application for collection of 6 LCs through 3 separate cases; case 9009 980 227 900 567 subject claim of LC no. of all the required controls upon transaction of the documents stated under the LC and obtaining of 89/3446/0072 at IRR 257,624,727,729, case 9009 980 227 900 569 subject claim of LC no. 89/34469/0063 required approvals (coded fax from agent banks) on authenticity of opened LCs and unconditional without at IRR 257,600,466,200, and case 9 109 980 227 900 613 subject claim of 4 LCs no. 90/3446/0029, reserve obligation of opening bank to reimburse the revenues of such credits on maturity dates against 90/3446/0030, 90/3446/0023 and 90/3446/0024 at a total amount of IRR 807.182.696.200, the Court the assignment of the beneficiary’s rights (discount applicant) to Saman Bank. condemned Saderat Bank to pay to Saman Bank the principal amounts of the relief sough in addition to damages for delay, proceedings and attorney fee on the basis of the legal tariffs. Once such decisions Different companies had applied for discounting letter of credits opened and secured by other banks became final by Division 12th of Tehran Province Appeal Court and upon application for issue of writ of which was satisfied upon going through the above process and obtaining of approvals from the Bank’s enforcement, 3 writs of enforcement were issued against Saderat Bank: credit bodies. In the field of discount of foreign currency LCs, in all the case the credit funds were paid and cleared on due dates by opening and securing banks. In the field of IRR term LCs, all the credit Writ of enforcement no. 9 210 420 227 900 212 for the case 9009 98 227 900 567, no. 9 210 420 227 900 211 funds were normally paid and cleared except for cases related to Amir Mansour Aria Group companies. for the case 9009 802 279 005 69 and no. 9 210 420 227 900 208 for the case 910980227900613. Upon the For such cases and companies party to agreements with Amir Mansour Aria Group companies, except notifications of the writs, Saderat Bank requested the Head of Judiciary who stopped the enforcement for Saderat and Industry & Mine Banks, all the other banks including Pasargad Bank, Sepah Bank, Melli of the writ no. 9 210 420 227 900 212 and no amount was collected therefore. For the two other writs, Bank and Maskan Bank which had secured the payment of 18 LCs for a total amount of IRR 2,136 billion Tehran Court Enforcement Office calculated the amounts collectable as follows: paid their obligations to Saman Bank on due dates. Only two banks, Saderat and Industry & Mine, failed to perform their obligations. All the discounts made and the relevant amounts opened and secured by 1- Wirt of enforcement no. 921 420 227 900 208 Rls (m) these two banks are as follows: Principal relief sough (principal amounts of 4 LCs) 807,183 Proceedings fee paid by Saman Bank 16,144 Company (Primary Balance of CCN/ Credit opening beneficiary/Discount applicant/ transacted Damages for delay as of July 15, 2012 402,914 Customer bank (Obligor to pay Company’s owenrship )Revenues assignor letters (Rls) (b) No funds on due date) Difference of proceedings fee 8,058 Attorney fee 200 Anzali FZ Elite 1305959 Saderat Bank 761 Amirreza Mojoudi (holding 99% of shares) 1,234,499 Iranain Fouladyar Trade & National Iran Industry & Steel Group Employees 174667 Saderat Bank 300 Cooperative (holding 55% of shares) Iran Metal Waste industrial Co. Proceurement & Processing Co. (holding 40% of shares) 2- Wirt of enforcement no. 921 420 227 900 211 Rls (m) Fund for Protection & Retirement of Steel Employees Iran Steel General Services Co. 7778609 Saderat Bank 521 Principal relief sough 257,600 (holding 99.7% of shares) Proceedings fee Iran Mines & Minerals Development & Renovation 5,152 Khuseztan Steel Co. 13934 Saderat Bank 807 Org. (holding 50.5% of shares)Province Investment Damages for delay as of Oct. 1st, 2011 203,654 Companies (holding 40% of shares) Difference of proceedings fee 4,073
Saderat Bank 1,350 Attorney fee 200 Spadana Foulad Fam Co. 1124386 Amir Ramezani Taromi (holding 95% of shares) 470,679 Industry & Mine 499 Bank
Milad Hadid Parsian Co. 1124386 Saderat Bank 802 Mohesn Karamian (holding 60% of shares)
5,040
Collected by March20,2016 (1,564)
Collateral shares (1,575)
Debt Balanace 1,901
1- Inc calculation of capital adequacy rate, capital of the assets guaranteed by local banks are harmonized at a risk rate lower than that for assets secured by real estate mortgages
100 101 Anual Report 2015/16
By selling collateral shares belonging to Saderat Bank at different dates, a total amount of IRR 1.574.696.593.230 was collected and handed over to the Bank through 4 cheques. The
rest, IRR 142 billion, is not collected yet due to the order of stopping by Head of Judiciary.
The above judicial cases are under examination at Judicial & Supervisory Division of Judiciary
according to the provisions of Amended Art. 18 of Law on formation of public & revolutionary Net 15,097 91,110
217,866 900,287 690,571 138,598 997,393 1,307,289 2,516,489 4,211,393 3,253,726 3,583,204 1,702,244
13,886,208 84,231,699
courts at the request of Saderat Bank. It is understood that upon cancellation of order for 117,604,576 117,743,174 March19,2015 stopping of enforcement operations, Saderat Bank will be prosecuted for paying the rest.
Petition for 13 other LCs related to Saderat Bank no. 90/3446/0010, 90/3446/0015, Net 9,215 37,677 - 90/3446/0016, 90/3446/0019, 90/3446/0021, 90/3446/0022, 90/3446/0017, 90/3446/0018, 14,547 675,363 140,969 120,510 84,447 4,800,796 3,408,710 2,093,043 5,105,360 1,112,056 4,010,223 1,413,896 13,511,350 90,665,584 127,119,300 90/3446/0027, 90/3446/0028, 90/3446/0031, 90/3446/0037 and 90/3446/0038, are submitted to judicial authorities and referred to 4th, 19th and 14th Divisions. The first instance hearings ( 127,203,747 ( (
( ( ( ( ( ( ( ( were subject to retrial due to counterclaim by Saderat Bank. Finally, upon hearings and ( - - - - submittal of several conclusions, the case on LC no. 90/3446/0010 before 14th Division - - 58,183 16,320 64,006 27,913 13,478 944,451 795,251 256,640 112,968 ) ) ) ) ) Doubtful ) ) ) ) provision 3,218,797 resulted in condemnation of Saderat Bank to pay IRR 249.681.328.000 for principal relief 5,508,005 ) ) sough and IRR 7.490.839.840 for proceedings fee and attorney fee according to tariffs and
damages for delay from the date of claim (July 16, 2012) to the date of actual collection ) 5,508,005
according to such inflation rate as notified by Central Bank. Such decision was confirmed and ------became final in favor of Saman Bank by 18th Division of Tehran Province Appeal Court upon - 2,641 interest Deferred 404,549 appeal by Saderat Bank and a writ of enforcement was issued against the latter upon the 3,663,931 application of Saman Bank’s attorneys. 4,987,520
22,346 4,987,520
302,350 5,954 585,468
In all the cases, at the application of Saman Bank’s attorneys, writs of provision of relief 281 ------Group 2,788 6,441 sough against Saderat Bank for the amount of the LCs were issued of which 6 resulted 2,457 accrued 74,336 interests Fees and 693,626 2,894,479 in the attachment of Saderat Bank’ shares in listed companies for a total amount of 3,674,127 IRR 1.581.597.264.000 and in 7 other cases, despite issue of writ of provision of relief sough,
3,674,127 because of lack of identification of valuable marketable stocks such writ was not enforced. March19,2016 Saman Bank attempts to identify the assets and enforce these 7 writs. ------and Civil Amounts Muzarabah received by Partnership 3,366,170 3,059,597 3,366,170 306,573
------(interest due date) balance receivable receivable after late penalties 19,829,309 19,829,309 10,884,528 4,083,955 163 146,960 4,061,184 139,169 212,231
301,119
------625 balance Interest by due date) receivable (interest received 11,489,076 11,489,076 8,772,806 139,416 318,914 3,963 1,229,857 603,366
417,021 1,333 1,775
9,215 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) 28,892 39,790 84,447 Balance 140,970 125,614 809,604 233,478 Principle 7,636,224 3,955,132 2,021,145 9,853,111 1,056,978 4,805,474 1,670,536 80,950,574 113,336,737 113,421,184 11-1- Table of Group’s loans is as follows: Sales by installments Jealeh (service contracts) Hire purchase Salaf (future contracts) Murabaha Interest free loan Muzarabah (trade contracts) Civil partnership – (Mosharakat Madani) Receivable discount/LCs discount Foreign currency loans – short & medium terms Debtors for paid letters of credit Doubtful debts for letters of credit Debtors for paid letters of guarantee Debtors for paid credit cards Doubtful debts for paid LGs Debtors for long-term LCs & drafts 11- Loans Granted Customers
102 103 Anual Report 2015/16
11-3- Categorization of the Group’s loans granted to and due from non – governmental persons as per the guideline adopted by Money & Credit Council (under Note 8-6 to Financial Statements) is as follows:
Group Net 15,097 91,110
217,866 900,287 690,571 138,598
997,393 1,307,289 2,516,489 4,211,393 3,253,726 3,583,204 1,702,244 March19,2016
13,886,208 84,600,208
117,973,085 118,111,683 March19,2015 Current Overdue Outstanding Doubtful Total
Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Sales by installments 7,593,129 2,398 1,800 178,475 7,775,802 Net 9,215 37,677 - 84,447 14,547 675,363 140,969 120,510 4,800,796 3,408,710 2,093,043 5,105,360 1,112,056 4,010,223 1,413,896
13,511,350 90,961,705 Jealeh (service contracts) 2,701,657 946 12,809 1,705,595 4,421,007 127,415,422
Hire purchase 419,499 315 326 1,817,200 2,237,340 ( 127,499,869 ( (
( ( ( ( Salaf (future contracts) ( ( ( ( ( 1,809 - - 28,859 30,668 Murabaha - - - 40,415 - - 40,415 - - - - 58,183 16,320 64,006 27,913 13,478 944,451 795,251 256,640 112,968 ) ) ) ) ) Doubtful ) ) ) ) provision 3,223,306 5,512,516 Interest free loan 138,925 1,348 526 171 140,970 ) ) Muzarabah (trade contracts) 11,050,466 168,867 459,184 3,488,405 15,166,922 ) 5,512,515
Civil partnership – (Mosharakat Madani) 83,842,912 1,469,859 2,846,608 12,448,530 100,607,909
Receivable discount/LCs discount 4,674,137 - - 1,047,390 5,721,527 ------2,641 interest Deferred 404,549 Foreign currency loans – short & medium terms 2,497,204 - - 2,308,270 4,805,474 3,663,931 Debtors for paid letters of credit 681,803 - - 1,670,536 2,352,339 4,987,520
22,346 4,987,520 Debtors for paid letters of guarantee 1,112,057 - - 233,478 1,345,535 302,350 5,954 585,468
281 Debtors for paid credit cards 9,215 - - - 9,215 ------2,788 6,441 2,457 accrued 74,336 interests Fees and 693,626 Debtors for long-term LCs & drafts 84,447 - - - 84,447 Parent Co. 2,894,479 3,674,127 114,847,675 1,643,733 3,321,253 24,926,909 144,739,570
3,674,127 Less:
March19,2016 Fees & accrued interests 3,648,800 18,906 4,553 1,869 3,674,128 ------and Civil
Amounts Deferred Interest 713,334 195,884 520,571 3,557,731 4,987,520 Muzarabah received by Partnership Joint Civil Partnership 3,059,597 - - - 3,059,597 3,366,170 3,059,597 3,366,170
306,573 Muzarabah – amounts received 306,573 - - - 306,573
Net Loan befor less provision for doubtful debts 7,728,304 214,790 525,124 3,559,600 12,027,818 ------(interest due date) balance
receivable General provision for doubtful debts - - - - )1,775,252( receivable after late penalties Specific provision for doubtful debts - - - - )3,732,753( 19,829,309 19,829,309 10,884,528 4,083,955 163 146,960 4,061,184 139,169 107,119,371 1,428,943 2,796,129 21,367,309 127,203,747 212,231 301,119
------625 balance Interest by due date) receivable (interest received 11,493,226 11,493,226 8,776,956 139,416 318,914 3,963 1,229,857 603,366 417,021 1,333 1,775
9,215 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) 28,892 39,790 84,447 Balance 140,970 125,614 809,604 233,478 Principle 7,636,224 3,955,132 2,021,145 9,853,111 1,056,978 4,805,474 1,670,536 81,247,056 113,633,219 113,717,666 11-2- Table of parent Company’s loans is as follows: Sales by installments Jealeh (service contracts) Hire purchase Salaf (future contracts) Murabaha Interest free loan Muzarabah (trade contracts) Civil partnership – (Mosharakat Madani) Receivable discount/LCs discount Foreign currency loans – short & medium terms Debtors for paid letters of credit Doubtful debts for letters of credit Debtors for paid letters of guarantee Debtors for paid credit cards Doubtful debts for paid LGs Debtors for long-term LCs & drafts
104 105 Anual Report 2015/16
11-4- Categorization of the Parent Company’s loans granted to and due from non –governmental 11-6- Parent Company’s foreign currency loans granted according to resources paid: persons as per the guideline adopted by Money & Credit Council (under Note 8-6 to Financial Statements) is as follows: March 19,2016 March 19,2015 Current Overdue Outstanding Doubtful Total Total Parent Co. Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) March19,2016 Local resources 2,495,907 - - 2,237,326 4,733,233 3,520,221 Current Overdue Outstanding Doubtful Total Foreign currency provision account - - - 70,945 70,945 56,964 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) National Devlopment Fund 1,296 - - - 1,296 6,019 Sales by installments 7,593,129 2,398 1,800 178,475 7,775,802 2,497,203 - - 2,308,271 4,805,474 3,583,204 Jealeh (service contracts) 2,701,657 946 12,809 1,705,595 4,421,007 Hire purchase 419,499 315 326 1,817,200 2,237,340 11-7- Loans granted to and due from non-governmental persons according to maturity date and Salaf (future contracts) 1,809 - - 28,859 30,668 interest rate: Murabaha 40,415 - - - 40,415 Interest free loan 138,925 1,348 526 171 140,970 March 19,2016 March 19,2015 Muzarabah (trade contracts) 11,050,466 168,867 459,184 3,488,405 15,166,922 Rate Over 24% 24-21% 21-18% 18-15% 15-12% 15% & less Total Total Civil partnership – (Mosharakat Madani) 84,143,544 1,469,859 2,846,608 12,448,530 100,908,541 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Receivable discount/LCs discount 4,674,137 - - 1,047,390 5,721,527 Overdue 18,616,893 2,629,880 2,332,131 36,573 3,374,309 2,902,107 29,891,893 28,986,136 Foreign currency loans – short & medium terms 2,497,204 - - 2,308,270 4,805,474 March19, 2016 20,205,845 10,273,771 3,734,902 56,267 288,283 1,041,819 35,600,887 24,562,024 Debtors for paid letters of credit 681,803 - - 1,670,536 2,352,339 March19, 2017 15,978,736 31,523,711 57,309 1,593,733 544,493 347,605 50,045,587 52,251,037 Debtors for paid letters of guarantee 1,112,057 - - 233,478 1,345,535 March19, 2018 4,414,902 1,981,884 999,909 16,403 18,458 175,641 7,607,197 3,948,761 Debtors for paid credit cards 9,215 - - - 9,215 March19, 2019 3,420,366 2,360,007 5,068,430 13,742 56,938 227,834 11,147,317 7,141,897 Debtors for long-term LCs & drafts 84,447 - - - 84,447 March19, 2020 3,202,827 556,370 22,923 1,035 61,806 58,760 3,903,721 3,957,013 115,148,307 1,643,733 3,321,253 24,926,909 145,040,202 2021 & Therefater 890,869 898,976 228,916 21,979 650,837 4,152,023 6,843,600 14,803,066 Less: 66,730,438 50,224,599 12,444,520 1,739,732 4,995,124 8,905,789 145,040,202 135,649,934 Fees & accrued interests 3,648,800 18,906 4,553 1,869 3,674,128 Deferred Interest 713,334 195,884 520,571 3,557,731 4,987,520 Joint Civil Partnership 3,059,597 - - - 3,059,597 Muzarabah – amounts received 306,573 - - - 306,573 11-8- Group’s loans granted to Affiliates are as follows:
Net Loan befor less provision for doubtful debts 7,728,304 214,790 525,124 3,559,600 12,027,818 Group General provision for doubtful debts - - - - )1,779,762( March19,2016 March19,2015 Specific provision for doubtful debts - - - - )3,732,753( Doubtfu Other affilaiates Intrerest Rate Current Non Current Total Total 107,420,003 1,428,943 2,796,129 21,367,309 127,499,869 provision % Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Adonis Co. 22&24 70,890 - )1,063( 69,827 21,324 11-5- Turnover of provision for doubtful loans of Parent Company is as follows:: 70,890 - )1,063( 69,827 21,324
March 19,2016 March 19,2015 General Specific General Specific Total Total provision provision provision provision Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)
Balance at the beginning of year 1,703,206 3,803,335 5,506,541 1,468,570 2,447,262 3,915,832
Written off debts - )191,216( )191,216( - - - Provision for current year 91,273 274,687 365,960 234,636 1,356,073 1,590,709 Balance at the end of year 1,794,479 3,886,806 5,681,285 1,703,206 3,803,335 5,506,541
106 107 Anual Report 2015/16
11-9- Parent Company’s loans granted to Subsidiaries and Affiliates are as follows: 12-1- Parent Company’s investment in marketable stocks
Parent Co. 12-1-1- Current investment in marketable stocks is as follows: March19,2016 March19,2015 March 19,2016 March 19,2015 Intrerest Doubtful Current Non Current Total Total Net realizable Net realizable Rate provision Number of shares Investment Cost Cost value value Group Companies % Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) % Rls (m) Rls (m) Rls (m) Rls (m) Saman Kish Electronic Payment 22/0 184,548 - (2,768) 181,780 318,967 Saman Satellite Communications 22/5 16 - (.2) 16 7,382 Shares of Listed companies 4,111,879 0/02 10,852 5,787 50,220 31,061 Saman Pardazeshgaran 29/5 9,842 - (148) 9,694 9,224 Mining & Metals Devlopment Invesmnet 6,325,561 0/01 9,601 8,790 103,594 57,800 Saman Brokerage 12/0 28,037 - (421) 27,616 21,695 Esfahan Mobarakeh Steel 10,142,312 0/93 37,618 40,272 42,419 25,639 Sepehr Mehr 22/0 78,189 (1,173) 77,016 11,241 Iran Construction Investment 50,000 0/00 141 145 19,380 16,528 Other related parties Iran Telecommunication 18,457,199 0/18 31,869 30,506 - - Adonis 22&24 70,890 - (1,063) 69,827 21,324 Sina Bank 13,520,123 0/52 71,535 54,608 126,376 86,144 371,522 - )5,573( 365,949 389,833 Haffari Shomal 6,915,400 0/07 54,779 65,185 77,082 72,072 MAPNA 1,000,000 0/10 4,995 5,242 - - Azarab 1,000,000 0/03 1,313 1,150 - - 12- Investment in Stocks & Securities Alborz Insurance 7,800,000 0/05 24,895 35,850 37,017 39,154 Iran Khodro 6,572,362 0/02 15,829 15,208 - - Group Mellat Bank 1,974,370 0/07 2,706 2,818 - - Note March19,2016 March19,2015 Shahed Investment 30,508,715 3/05 58,791 44,356 43,706 35,690 Current Long term Total Current Long term Total Iranian Leasing 24,129,271 0/45 52,753 31,093 127,959 78,188 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Sepah Investment 11,600,000 0/02 12,884 12,192 3,332 3,329 Long-term investments in marketable shares 634,688 84,930 719,618 851,630 82,101 933,731 Saderat Bank 26,336,558 0/05 56,603 33,677 74,583 54,825 Investments in other stocks 12-2 - 251,397 251,397 - 149,699 149,699 Pasargad Bank 27,575,512 1/38 37,946 37,963 34,032 34,482 Investments in other securities 470,717 - 470,717 1,556 - 1,556 Toka Steel Investment 18,940,000 0/37 44,008 58,260 16,099 14,988 Investments in mutual funds - 90,272 90,272 - 85,097 85,097 Bahman Group 1,647,345 0/47 4,872 4,061 - - 1,105,405 426,599 1,532,004 853,186 316,897 1,170,083 Sahand Lastik 42,929,305 0/34 60,328 55,871 75,181 66,045 Kharazmi Investment 10,101,213 4/90 28,866 32,161 11,860 12,122 Toka Shipping 2,000,000 0/13 9,534 10,659 38,958 29,651
Parent Co. Iran Khodro Investment Development 500,000 0/004 2,060 1,975 - - Note March19,2016 March19,2015 Mobin Petrochemicals 1,494,193 0/08 3,268 3,001 - - Current Long term Total Current Long term Total Tractor Manufacturing 516,000 0/02 8,229 7,895 - - Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Fajr Petrochemicals 730,000 0/97 1,912 1,654 - - Long-term investments in marketable shares 12-1 634,050 84,930 718,980 843,168 79,387 922,555 Piazar Agroindustry 1,975,713 0/07 2,742 2,794 - - Investments in other stocks 12-2 - 1,975,654 1,975,654 - 1,440,068 1,440,068 Bahman Investment - 0/00 - - 11,603 8,621 Investments in other securities 12-3 458,903 - 458,903 -- - Behshahr Industries Development Investment - 0/00 - - 38,735 18,619 Investments in mutual funds 12-4 - 85,031 85,031 - 82,497 82,497 National Iran Copper Indiustries Co. - 0/00 - - 13,558 10,747 1,092,953 2,145,615 3,238,568 843,168 1,601,952 2,445,120 Khorasan Steel - 0/00 - - 18,591 16,944 Rena Investment - 0/00 - - 21,302 24,786 Rayan Saipa Leasing - 0/00 - - 9,707 7,715 Ghadir Investment - 0/00 - - 10,501 9,131 SAIPA - 0/00 - - 31,106 24,322 Iran Post bank - 0/00 - - 6,287 5,760 SAIPA Investment - 0/00 - - 6,617 2,328 Piranshahr Sugar - 0/00 - - 10,254 9,392 Housing Investment - 0/00 - - 12,937 8,421
108 109 Anual Report 2015/16
12-2- Investment in other stocks including long-term investment separated as follows:
March 19,2016 March 19,2015 Group Number of Net realizable Net realizable Investment Cost Cost March19,2016 March19,2015 shares value value Provision for Net book Net book Shares Cost % Rls (m) Rls (m) Rls (m) Rls (m) impairment value value Tamin Oil, Gas & Petrochemicals - 0/00 - - 2,168 1,332 % Rls (m) Rls (m) Rls (m) Rls (m) Investment Saman Satellite Communication Co. 80 - - - - fars & Khuzestan Cement - 0/00 - - 5,795 5,140 Saman Exchange Office Co. 96/46 - - - - Sea Shipping - 0/00 - - 1,686 759 Saman E-payment Co. 65/24 - - - - Exir Pharmacy - 0/00 - - 8,709 7,766 Saman Insurance Co. 14/84 96,600 - 96,600 77,146 Plasco Kar - 0/00 - - 230 232 Saman Bank Brokerage Co. 63/998 - - - - 650,929 603,173 1,091,584 819,733 Clearance & Securities Central Deposit Co. 3/19 7,975 - 7,975 7,975 Stocks of OTC Listed companies Iran Khodro card Services Co. -- - - 424 Toka rail 11,713,239 0/59 30,249 29,388 - - Iran Investment Co. 0/30 15,050 - 15,050 3,010 Tka Refactory Industries 200,000 0/28 1,008 916 - - Iran Credit Rating Co. 6/42 3,243 - 3,243 3,243 Shahed Civil & Development Co. 50,000 0/004 129 133 - - Damavand Power Generation Stock Exhange Co. 0/103 155 - 155 155 Damavand Power generation 3,000 0/001 223 242 - - Iranian Hafez Saman Accreditation Co. 99/15 - - - - Middle-East Life Insurance 200,000 0/017 100 198 - - Saman Processors Co. 100 - - - - Esfahan Metallurgy - 0/00 - - 45,741 19,935 Sepehr Sharq Atiehandishan Co. 99/9 - - - - Tehran Oil Refinery - 0/00 - - 6,560 2,065 Iran Energy Stock Exchange 1/031 6,141 - 6,141 6,141 Arian Economic Development - 0/00 - - 2,701 1,434 Saman Aftab Tejarat 15 5 - 5 5 Middle-East Bank 1 40,567 - 40,567 40,567 31,709 30,877 55,002 23,434 Shaparak Card Payment Electronic Co. 1/31 9,315 - 9,315 9,315 682,638 634,050 1,146,586 843,168 Kardan Capital Financing Co.- Affiliate 32/92 - - - - Plus (Less): Saman Investment Dvelopment Co. 101 - 101 249 Cost-price adjustment )48,588( - )303,418( - (Reserve for devaluation) Omid Atieh Andishan Development 75 - 75 55
634,050 634,050 843,168 843,168 Kish System E-Commerce Development Co. - )3( )3( )3(
Atieh Alborz Trade Development - - - - 12-1-2- Long-term investment in marketable stocks is as follows: Sepehr Mehr Atieh Andishan - - - - Sepehr Sharq Atieh Andishan Services Development 10 - 10 10 March 19,2016 March 19,2015 Sepehr Sharq Atieh Andishan IT 10 - 10 10 Provision Pars Kish-cell 10 - 10 - for Net book Market Net book Market Investee Company Shares Shares Cost impairment value value value value Iran OTC Market 30 - 30 30 % Number of shares Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Behnad bana Civil & Development 0 - - - Pump Iran 2/28 7,524,709 4,704 4,704 18,917 4,704 15,401 Information Co. 490 - 490 245 Sarv Zarrin Atlas 500 - 500 - Hamedan Glass 4/59 13,208,418 79,979 79,979 111,770 74,527 74,527 Segal Software Co. 2,673 - 2,674 1,072 Plastiran 0/54 309,535 575 )328( 247 248 156 156 Middle-East Arian Roll 50 - 50 50 85,258 )328( 84,930 130,935 79,387 90,084 183,000 )3( 182,997 149,699 Plus:
Investment advance payment in CIP shares (Iranian Pars Technology) 68,400 - 68,400 - 251,400 )3( 251,397 149,699
110 111 Anual Report 2015/16
Parent Co. 12-2-1- Details of the Bank’s Subsidiaries and Affiliates are as follows: March19,2016 March19,2015 Residence Investment% Auditing Firm Main activity Provision for Net book Net book Shares Cost impairment value value Group Parent Co. Subsidiaies: % Rls (m) Rls (m) Rls (m) Rls (m) Saman Kish Electronic Payment Tehran 65/24 65/24 Bayat Rayan Provision of e-payment services Saman Satellite Communication Co. 48/08 112,529 - 112,529 90,365 Saman Exchange Office Co. 96/46 214,625 - 214,625 214,625 Saman Brokerage Tehran 64 64 Bayat Rayan Investment and brokerage & financial services Provision of credit information & accreditation Saman E-payment Co. 65/24 789,859 - 789,859 528,902 Hafez Samanian Iranian Credit Scoring Tehran 99/15 99/15 Bayat Rayan services Saman Insurance Co. 14/84 96,600 - 96,600 74,346 Scientific & research activities in computer, software Tondar Noor Tehran 100 0/00 Bayat Rayan Saman Bank Brokerage Co. 64 27,762 - 27,762 27,762 development and sale
Clearance & Securities Central Deposit Co. 3/19 7,975 - 7,975 7,975 All kinds of foreign currency purchase & sale Saman Exhchange Office Tehran 96/46 96/46 Bayat Rayan Iran Khodro card Services Co. 0/00 - - - 424 operations Provision of services for data transfer, communication Iran Investment Co. 0/30 15,050 - 15,050 3,010 Saman Satellite Communications Tehran 80 48/08 Bayat Rayan & satellite telecommunication Iran Credit Rating Co. 6/42 3,243 - 3,243 3,243 Design, development and support of bank tools & Saman Pardazeshgaran Tehran 100 100 Bayat Rayan Stock Exhange Co. 0/07 105 - 105 105 applications Iranian Hafez Saman Accreditation Co. 99/15 54,736 )8,331( 46,405 29,550 Sepehr Sharq Atieh Andishan Tehran 100 99/7 Bayat Rayan Provision of technical & engineering services Saman Processors Co. 100/00 134,973 - 134,973 90,999 Provision of technical & engineering services, Sepehr Mehr Atieh Andishan Tehran 100 - Bayat Rayan pruchase and sale of all authorized merchandises Sepehr Sharq Atiehandishan Co. 99/70 10 - 10 10 Atieh Alborz Trade Development Tehran 99/9 - Behzad Moshar Iran Energy Stock Exchange 0/76 4,566 - 4,566 4,566 Affiliates: Saman Aftab Tejarat 15/00 5 - 5 5 Subscription and undertaking to subscribe and Middle-East Bank 0/89 35,700 - 35,700 35,700 Kardan Capital Financing Tehran 32/9 31/9 Tadvin & Co. purchase of securities within financial means Shaparak Card Payment Electronic Co. 1/31 9,315 - 9,315 9,315 Tehran Manufacturing & provision of servics of computer Adonis E-services Development 26/88 0/00 Mokhtar & Co. Kardan Capital Financing Co.- Affiliate 31/92 408,532 - 408,533 319,166 electornic, telecommunication & Itequipment Saman Investment Dvelopment Co. - - - - Omid Atieh Andishan Development - - - -
Kish System E-Commerce Development Co. - - - - 12-3- Parent Company’s investment in other securities is as follows: Atieh Alborz Trade Development - - - - Sepehr Mehr Atieh Andishan - - - - Issuer Type of security March 19,2016 March 19,2015 Sepehr Sharq Atieh Andishan Services Development - - - - Rls (m) Rls (m) Sepehr Sharq Atieh Andishan IT - - - - Government Treasury Bonds 458,903 - Pars Kish-cell - - - - 458,903 - Iran OTC Market - - - - Behnad bana Civil & Development - - - - Information Co. - - - - 12-3-1- Balance of equity participation bonds as at the date of Balance Sheet regards the Islamic Sarv Zarrin Atlas - - - - Treasury Bills at a nominal value of IRR 1.000.000 on maturity date. In case of anticipated sale, the relevant profit (loss) will be recognized according to the market price as to the price on the date of Segal Software Co. - - - - purchase. Moreover, should the Bank keep such bonds till the maturity date the Bank’s profit will Middle-East Arian Roll - - - - be the difference between the nominal value and the price of purchase. 1,915,585 )8,331( 1,907,254 1,440,068 Plus: Type of security Date of purchase Number of bonds Bonds interest rate Bonds purchase price Total purchase price
Investment advance payment in CIP shares (Iranian Pars Technology) 68,400 - 68,400 - % Rls (m) Rls (m) 1,983,985 )8,331( 1,975,654 1,440,068 Sep 11,2016 Feb21,2016 3,000 24/96 0,879 2,636 Feb20,2016 22,380 25/24 0,861 19,263 Oct12,2016 Feb21,2016 44,647 25/00 0,862 38,503 Feb22,2016 10,078 25/05 0,863 8,694 Feb22,2016 50,000 24/87 0,839 41,965 Nov 29,2016 Feb22,2016 400,000 25/10 0,838 335,215 Feb24,2016 15,000 24/56 0,842 12,629 545,105 458,903
112 113 Anual Report 2015/16
12-4- Parent Company’s investment in Mutual funds is as follows: 14-1- In view that the fiscal year of Group companies expire on December 21st of each year and 3 months prior to the Bank’s fiscal year, debts of Subsidiaries to the Bank are not completely March 19,2016 March 19,2015 removed. Since such amount does not affect the Consolidated Financial Statements as a whole, Number of Net Asset adjustments are not applied (as per accounting standards). Investment Cost Cost investment Units Value(NAV) % Rls (m) Rls (m) Rls (m) 14-2- Balance of due from subsidiaries and affiliates by transaction type is as follows: Saman Novin fixed-income Fund 50 15,000 15,000 15,132 15,000 March19,2016 Saman 1st Common Investment Fund 40 15,000 15,000 44,063 15,000 Interest- Assets & Assets & Agah Cahrity 1st Fund 50 2,500 2,500 4,610 2,500 Services On-account On-account free Dividend Dividend Subsidiary/Affiliate Investments Investments Total pruchased received paid between receivable payable Sman amin Investment Fund 50 10,000 10,000 10,175 10,000 Sold purchased companies Iran capital market Devlopment Investment Fund - 35,000 35,000 37,300 35,000 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Aqiq Investment Fund - 984 4,997 5,603 4,997 Saman Exchange - - 14,973 - 3,957 - 120,577 )83( 139,424 Nik Andishan Honar Charity Investment Fund - 2,499 2,534 2,763 - Office Iranian Hafez Saman 85,031 119,646 82,497 - - 806 - 79,485 - 19,830 - 100,121 Accreditation Saman Kish - - 227 - 46 - 596,005 - 596,278 E-payment Saman Processors - 62,423 - - 20,239 - 9,000 - 91,662
Saman Bank 13- Long-term investment in Affiliates: 47,273 - - - 13 - 14,336 - 61,622 Brokerage
Group Adonis - 3,409 2,065 - 5,048 - - - 10,522 Share of Net Share of Satellite Goodwill - - 296 - 2,661 - 22,116 - 25,073 Assets NetTotal Assets Communication Rls (m) Rls (m) Rls (m) Sepehr Sharq Atieh - - 12 - - - 18 - 30 Balance at the beginning of year 405,896 - 405,896 Andishan
Partial payment of capital subscribed 90,767 - 90,767 Sepehr Mehr Atieh - - - - 5,792 - - - 5,792 Andishan Share in profit of Affiliates during year before goodwill depreciation 174,176 - 174,176 Dividend received or receivable during year )21,504( - )21,504( 47,273 65,832 18,379 - 117,241 - 781,882 )83( 1,030,523 Net Transactions 649,335 - 649,335 Profit (Loss) -
March19,2015
Interest- 14- Due from Subsidiaries & Affiliates: Assets & Assets & Services On-account On-account free Dividend Dividend Subsidiary/Affiliate Investments Investments Total pruchased received paid between receivable payable Sold purchased Group companies March19,2016 March19,2015 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Doubtful Saman Exchange Balance Net Net - - 24,569 - 372 - 28,938 - 53,879 provision Office Rls (m) Rls (m) Rls (m) Rls (m) Iranian Hafez Saman - - 1,216 - 251,545 - 3,966 - 256,727 Accreditation Debts of Susbsidiaries 57,298 - 57,298 9,314 Saman Kish - - 358 - - - 626,295 - 626,653 Debts of Affiliates 10,522 - 10,522 129,663 E-payment 67,820 - 67,820 138,977 Saman Processors - 26,308 - - 11,266 - 21,500 - 59,074 Saman Bank 746 - - - 13 - 42,559 - 43,318 Brokerage
Parent Co. Adonis - 39,258 - - 1,005 - - - 40,263 March19,2016 March19,2015 Satellite - - 296 - - - 22,198 - 22,494 Doubtful Communication Balance Net Net provision Sepehr Sharq Atieh - - 12 - - - 6,000 - 6,012 Rls (m) Rls (m) Rls (m) Rls (m) Andishan
Debts of Susbsidiaries 1,020,001 - 1,020,001 1,073,157 Sepehr Mehr Atieh - - - - 5,000 - - - 5,000 Debts of Affiliates 10,522 - 10,522 113,063 Andishan Kardan Capital 1,030,523 - 1,030,523 1,186,220 ------72,800 - 72,800 Financing 746 65,566 26,451 - 269,201 - 824,256 - 1,186,220 Net Transactions Profit (Loss) -
114 115 Anual Report 2015/16
15- Trade Accounts and Notes Receivable: 16-1- Balance of dividend receivable except for dividend of Subsidiaries and Affiliates:
March19,2016 March19,2015 Group Listed & OTC Market companies: Rls (m) Rls (m) March19,2016 March19,2015 Iran Ceramic 524 524 Rls (m) Rls (m) Khuzestan Steel 89 89 Accounts receivable (in rials) 952,893 856,098 Laab Iran 564 564 Accounts receivable (foreign currencies) 767,822 345,051 Haafari Shomal 29,839 15,624 Doubtful debt provisions )138,852( )102,479( Housing Investment 5,450 5,450 1,581,863 1,098,670 fanavarn Chemicals 12 8 Kharazami IT Development 13 13 Chador Maloo 1,920 1,920 16- Other Accounts Receivable: Middle-East Mines & Mining Industries Development Investment 114 114 Mines & Metals Development Investment 9,947 8,779 Group Fars Chemicals 0/09 - March19,2016 March19,2015 Barez Industry 1,069 2 Balance due Specific provision for General provision for Net Net Iran Ferro-Silicium 1 1 doubtful debts doubtful debts Iran Alliage Steel 0/45 - Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Bahman Group 12,558 5,058 Dividends receivable 193,356 - - 193,356 114,857 Toka Steel Investment 7,611 5,133 Interest receivable from banks 133,501 - - 133,501 - Tamin Pharmaceutical Investment 1,755 1,755 Temporary debtors 5,833,098 )154,052( )14,718( 5,664,328 1,779,015 Sepah Investment 27,443 6,300 6,159,955 )154,052( )14,718( 5,991,185 1,893,872 Absal 6 - Iran Khodro 186 -
Irka Part Sanat 0/13 - Parent Co. Iran Saderat Bank 423 - Note March19,2016 March19,2015 Mellat Bank 45 - Specific provision for General provision for Balance due Net Net doubtful debts doubtful debts Bahman Leasing 45 - Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Shazand Petrochemicals 1 - Dividends receivable 16-1 165,697 - - 165,697 112,383 Maron Petrochemicals 4 - Interest receivable from banks 133,405 - - 133,405 - Tractor Manufacturing 1 - Temporary debtors 16-2 5,654,740 )154,052( )14,718( 5,485,970 1,592,295 Arian Economic Development 318 - 5,953,842 )154,052( )14,718( 5,785,072 1,704,678 Behshahr Industries Development 4,065 - Toka Shipping 1,830 - Informatic Services 360 - Rayan SAIPA 1,317 - Alborz Investment 1 - Iran Khodro Investment 799 - Pars Toosheh Investment 10 - National Development Group Investment 6,520 - Sarma Afarin 4 - Esfahan Mobarakeh Steel 8,921 - Khorasan Steel 221 - MAPNA Group 1,590 2,869 Iranian Leasing 6,152 - Ghadir Investment 1,519 2,829 Fars & Khuzestan Cement 341 - Azar Ab 2 -
116 117 Anual Report 2015/16
16-2- Temporary debtors include the following items:
March19,2016 March19,2015 March19,2016 March19,2015 Rls (m) Rls (m) Specific provision General provision Items related to loan Balance due Net Net Sepah Investment 11,781 27,443 for doubtful debts for doubtful debts Piranshahr Sugar 118 604 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Iran Construction Investment 697 1,387 Proceedings fee & Recovery cost 1,526,882 )154,052( )14,718( 1,358,113 1,212,196 Shahed Investment 528 - National Iran Copper Industries 156 - 1,526,882 )154,052( )14,718( 1,358,113 1,212,196 Tamin Oil & Gas Investment 156 - Items not-related to loan Tehran Housing Investment 312 - Employees Housing Cooperative 169,243 - - 169,243 169,243 Saman Insurance 2 2 Tehranpars 3rd Sq 2,781 - - 2,781 2,700 Iran Pump 2,850 3,603 Azar Sport Complex - - - - 10,259 Hamedan Glass 9,375 1,996 Construction of clinic & school in Varzaghan 30,282 - - 30,282 30,282 Fund Clearance & Securities Investment 1,914 - Alavi 42,779 - - 42,779 - Iran Sea Shipping - 247 Hermes 130,848 - - 130,848 130,848 Baghmisheh - 1,600 Retirement Fund 5,931 - - 5,931 18,721 Iran Transfo - 25 Sale of Karaj Shopping Center Project 799,012 - - 799,012 - Khark Petrochemicals - 78 Mad Khodro Diesel 750,000 - - 750,000 - Exir Pharmaceutics - 61 Saman Insurance 200,436 - - 200,436 - Tehran Cement - 1,170 Zafar 1,700,000 - - 1,700,000 - Caspian - 6 Other (including 8 items) 296,547 - - 296,547 18,046 Kharazmi Investment - 9,090 4,127,857 - - 4,127,857 380,099 Persian Gulf Petrochameical Industries - 8,028 5,654,739 )154,052( )14,718( 5,485,970 1,592,295 Total 161,475 112,371
Other companies Saman Aftab Tejarat 1,212 12 17- Orders & Prepayments Iran Investment 3,010 - Group 4,222 12 March19,2016 March19,2015 165,697 112,383 Rls (m) Rls (m) PrePayments 118,937 163,625 Orders 1,469 5,331 120,406 168,956
18- Inventories
Group March19,2016 March19,2015 Rls (m) Rls (m) Inventory in stock 98,794 94,020 Ongoing projects (in the process of completion) 46,567 23,375 145,361 117,395
118 119 Anual Report 2015/16 Balance at Balance at March19,2105 March19,2105 Value book - Rls (m) Value book - Rls (m) 733,234 701,779 447,420145,183 478,114 125,595 103,612 157,634 902,229 870,775 180,637521,903 318,386 144,942 524,292 125,353 Balance at Balance at March19,2106 March19,2106 - 96,516 38,282 56,565 36,677 46,379 49,222 95,609 37,758 55,324 205,471 956,787 892,561 168,812 819,871 759,500 year-end year-end 1,218,6611,011,029 1,293,328 1,965,148 1,066,075 1,617,060 2,594,857 5,246,327 4,588,305 2,594,857 6,093,809 5,556,336 1,182,764 1,260,401 1,031,337 Balance at 1,483,862 2,897,643 2,597,162 1,483,862 3,593,858 3,358,505 Balance at
) ) (
( (
( ( ( ( ( --- (1) 22,500 36,323 29,496 107 769 - - sold ) ) (153) 40,680 54,230 55,773 25,823 107 153 661 26,853 26,853 sold ) ) ) ) ( ) 921 ) 921 ( of assets of assets Depreciation Depreciation ( ) ( ( ( - - - 1 1 ) ) 301 185 ( ( ) ( ) 185 - - 1 1 ) ) Adjustments Adjustments - the year - Accumulated depreciation - Rls (m) Accumulated depreciation - Rls (m) the year Depreciation for .
Depreciation for
Group
- the Parent Co of year
- beginning the Balance at of year beginning Balance at 58,82394,910 15,012 25,790 7,790 15,043 902,229 134,798 71,938 24,579 180,637 521,903 144,942 year-end 1,162,258 143,4772,511,989 936,0932,976,177 62,102 569,742 283,219 467,110 118 7,841,184 1,762,052 859,843 8,688,666 1,762,052 859,843 Balance at
83,056 23,889 12,941 733,234 988,683133,367 116,469 71,747 52,451 23,863 447,420 145,183 103,612 year-end 2,443,165 913,462 269,825 138
4,381,505 1,125,567 359,080 136 5,077,720 1,125,567 359,080 136 Balance at
( ) ( (
( ( ( (
- - - - 1 ) ( ( 455 864 157 (
/sold ) ) ) 2,462 ( ( ( 29,654 Assets ) 33,593 ) ( - - - - transferred 455 843 157 /sold ) ) ) 2,462 3,917 Assets ) () 33,593 ( ( ( transferred ) ( ( - - - - - 15 () 3,917 789 804 ) ( ) ( ( ( 19,641 26,527 135,038 ) ) 182,010 ) Adjustments -) - - - - - 26,528 19,640 135,039 ) ) 181,207 ) ( ( Adjustments - -) 619,506 509,311 ) ) - -) 10,102 60,498 ) 499,209 509,311 ) ( ( Cost plus revalued amounts - Rls (m) Cost plus revalued amounts - Rls (m) - - Additions Transfers Additions Transfers
at the of year 44,50881,563 11,098 3,401 4,007 10,103 870,775 12,329128,503 21,587 6,295 318,386524,292 501,398 125,353 104,083 555,427 28,566 Balance beginning 1,036,038 112,4342,002,168 14,241 2,186,802 2,322 277,094 508,378 541,935 6,350,357 424,973 1,100,251 7,318,388 1,585,881 at the of year 73,111 701,779875,969 12,329127,071 102,825 21,588 10,344 6,296 478,114125,595 75,779 555,427 28,566 157,634 26,116 Balance beginning 1,944,799
3,722,729 121,450 541,243 4,484,072 778,772
Table of Parent Company’s tangible fixed assets cost-price & depreciation is as follows: Table of Group’s tangible fixed assets cost-price & depreciation is as follows: 19-2- 19-1- completion Land Buildings Improvement in leased buildings Machinery & office supplies Inventory Motor vehicles Capital prepayments Land Buildings Improvement in leased buildings Machinery and office supplies Equipment Fixtures and furniture Motor vehicles Capital prepayments Assets in the process of completion Inventory 19- Tangible fixed assets Assets in the process of
120 121 Anual Report 2015/16
19-3- except for vehicles, all the tangible fixed assets are insured by Saman Insurance Co. up to IRR ml 3.129.292 against possible risks. It should be noted that vehicles are covered with 20- Intangible Assets comprehensive insurance up to IRR 64.390 ml too. Group Parent Co. 19-4- Net Fixed asset to Capital & reserves ratio: By virtue of Resolution of the 1200th session of Money & credit Council dated May 19, 2015 and Directive no. 94/62147 dated June 1st, 2015 of I.R.I Note March19,2016 March19,2015 March19,2016 March19,2015 Central bank, the ratio of net fixed asset to shareholder’ equity shall not be more than 75% after Rls (m) Rls (m) Rls (m) Rls (m) deduction of accumulated profit plus unapproved profit. Business key money 20-1 4,015,494 3,730,604 4,015,494 3,730,604 Software 83,705 114,343 82,717 110,482 March 19,2016 Royalties 24,465 24,350 21,352 20,308 Rls (m) Rls (m) Others 4,310 6,779 - - Real Estates 4,127,974 3,876,076 4,119,563 3,861,394 Land 733,233 Buildings 988,682 20-1- In application of Executive By-law Part (B) of Art. 78 of Budget Act 2011-2012, The Bank’s real Goodwill 4,015,494 estates (land, building, goodwill) were re-assessed in 2011-2012 and an amount of 1.980.567 ml Capital prepayments 551,032 recognized for surplus goodwill. Less Accumulated depreciation as at March 19,2016 )168,812( Net Real estates 6,119,629 Balance of Colateral owned more than 2 years ago 4,458,257 21- Legal Deposit
Improvement in leased buildings 133,366 March 19,2016 March 19,2015 Less Accumulated depreciation as at March 19,2016 )95,609( Rls (m) Rls (m) Net Improvement in leased buildings 37,757 Legal deposit- Main branches deposit 20,885,494 19,275,540 Legal deposit- FZ branches deposit 245,831 236,725 Movable assets 21,131,325 19,512,265 Movable assets 2,671,406 Less Accumulated depreciation as at March 19,2016 )1,219,440( 21-1- Statutory deposit with Central Bank as provided under Para. 3 to Art. 14 of Monetary & Net Movable assets 1,451,966 banking Act at such rates as regulated by Money & Credit Council are calculated and approved by Central Bank. Deposits paid 123,242 Intangible assets 82,717 205,959 22- Other Assets Less: Book value of Data Center servers )484,402( Group Parent Co. For salable POS available at warehouse )15,417( Note March19,2016 March19,2015 March19,2016 March19,2015 Total Net immovable & iovable assets 11,773,749 Rls (m) Rls (m) Rls (m) Rls (m) Less: Foreclosed collaterals 22-1 26,791,929 20,447,414 26,792,890 20,463,375 Income tax prepayment 1,168,264 690,654 1,156,015 675,375 Re-assessment product )2,425,671( Prepayments for leased branches 20,676 16,252 19,676 15,252 9,348,078 Prepayments for consultancy contracts 87,066 712,689 87,066 725,551 Advance deposits for leased branches 101,890 104,541 101,890 104,241 Registered capital 5,575,004 Tax stamp 3,782 3,529 3,782 3,529 Reserves 1,523,868 Interim forex account 22-2 1,068,543 268,914 1,068,543 268,914 Capital & Reserves 7,098,872 Interbank discrepancies of account 26200 7,632 16,309 7,632 16,309 Net Movable & immovabe assets-Capital & Reserves Ratio 131/68% Others 1,063,627 350,388 1,018,232 304,331 30,313,408 22,610,690 30,255,725 22,576,877
122 123 Finacial Report
22-1- Foreclosed collaterals 24- Due to Banks & Other Credit Institutions Foreclosed collaterals are composed as follows: Group Parent Co. Nature March 19,2015 Owned during the year transferred/sold March 19,2016 Note March 19,2016 March 19,2015 March 19,2016 March 19,2015 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Movable assets Central Bank - - - - Long Term forex deposits – rial equivalent 24-1 5,560,669 3,098,815 5,560,669 3,098,815 Real Estates Demand deposits – forex 24-2 16,030,747 16,672,620 16,030,747 16,672,620 Residential use 1,832,599 4,488,736 (137,970) 6,183,365 Debt for exchange rate difference 24-3 2,769,245 2,419,474 2,769,245 2,419,474 Commercial/Office use 13,856,078 3,684,127 (4,787,070) 12,753,135 Debt for Lufthansa & Turkish Airlines 24-4 1,472,294 1,472,294 1,472,294 1,472,294 factory 1,153,346 3,716,362 (630,804) 4,238,904 Current Account to CBI - 4 - 4 Land 3,621,352 164,783 (168,649) 3,617,486 25,832,955 23,663,207 25,832,955 23,663,207 20,463,375 12,054,008 (5,724,493) 26,792,890 Local banks and institutions 20,463,375 12,054,008 (5,724,493) 26,792,890 Demand and Long term deposits – rials 24-5 1,849 5,605 1,849 5,605 Profit(Loss) From Sale 1,375,163 2,863,195 Long Term deposits – forex 24-6 325,826 316 325,826 316 Demand deposits – forex 24-7 896,176 783,652 896,176 783,652 22-2- Balance of temporary debtors (foreign currency) mainly regard deposit obtaining from Central Interbank deposits – rials - 1,750,000 - 1,750,000 Bank for pharmaceutical foreign currency amounting to € 14,991,093 and debt of Central Bank for Loans received 629,976 369,597 student foreign currency at reference rate in 2012-2013 amounting to U$ 18,484,610. 1,853,827 2,909,170 1,223,851 2,539,573 Foreign banks Demand deposits – forex 24-8 312,100 999 312,100 999 23- Goodwill Long Term deposits – forex 24-9 2,318,808 2,551,481 2,318,808 2,551,481 2,630,908 2,552,480 2,630,908 2,552,480 Turnover of goodwill as result of consolidation is as follows according to Note 8-11 (Accounting Policies): 30,317,690 29,124,857 29,687,714 28,755,259
group March 19,2016 March 19,2015 Rls (m) Rls (m) 24-1- Central bank’s term foreign currency deposit is as follows: Cost at the beginning of year 224,198 299,190
Additions 3,724 3,238 March 19,2016 March 19,2015 Adjustment - (78,230) Currency Forex amount Exchange rate Amount Forex amount Exchange rate Amount
Cost at year-end 227,922 224,198 Rls (m) Rls (m) Accumulated Depreciation at the beginning of year (70,868) (40,723) Euro 138,950,071.20 33,935 4,715,270 102,759,486.82 30,156 3,098,815 Depreciation for the year (22,527) (30,145) Swiss Franc 27,329,991/06 30,933 845,399 - -
Accumulated Depreciation at year-end (93,395) (70,868) 5,560,669 3,098,815 Book Value 134,527 153,330 24-1-1- It should be mentioned that an amount of € 87,868,393/95 on € 138,950,071/20 regards the credit funding for foreign currency debts to Lufthansa Airlines at € 14,732,812/95 and Turkish Airlines at € 73,035,581. Such amounts are cleared at reference rate as per the letter received from International Department of Central Bank under no. 95/639 dated Apr. 4, 2016 (as per Note 10-1-2- to Financial Statements).
124 125 Finacial Report
24-2- Central bank’s Demand foreign currency deposit is as follows: 24-7- Demand foreign currency deposits with Local banks are as follows:
March 19,2016 March 19,2015 March 19,2016 March 19,2015 Currency Forex amount Exchange rate Amount Forex amount Exchange rate Amount Currency Forex amount Exchange rate Amount Forex amount Exchange rate Amount Rls (m) Rls (m) Rls (m) Rls (m) Euro 82,549,089 33,935 2,801,304 - - US Dollar 10,722,104/77 30,240 324,236 15,939,077/42 27,994 446,198 Omani Rial 87,011,073 78,546 6,834,373 81,017,248 72,709 5,890,683 Euro 16,209,487/06 33,935 550,069 10,625,267/81 30,156 320,415 Swiss Franc 42,710,031 30,933 1,321,149 211,309,270 28,220 5,963,149 UK Pound 166/41 43,089 7 166/41 41,699 7 Japanese Yen 18,848,848,488 269 5,073,921 20,728,645,118 232 4,818,788 UAE Dirham 2,563,891/04 8,234 21,111 2,148,891/04 7,622 16,379 16,030,747 16,672,620 Japanese Yen 2,721,684 269/19 733 2,721,684 232/47 633 Indian Rupee 44,130/15 453 20 44,130/15 449 20
896,176 783,652 24-3- Balance of the above items includes IRR 2,450,158 ml related to Directive no. 60/1015 dated Dec, 7, 2013 of Central bank on difference of exchange rate, IRR 226,621 ml to student foreign currency and IRR 92,466 ml to LC debt of Modiran Khodro and Qovaye Moharekeh. 24-8- Demand foreign currency deposits with Local banks are as follows:
24-4- An amount of IRR 1,472,294 ml for IRR equivalent of foreign currency allocation at reference March 19,2016 March 19,2015 rate (Note 10-1-2- to Financial Statements) by Central Bank according to the letters no. 1186 & 3806 Currency Forex amount Exchange rate Amount Forex amount Exchange rate Amount from the customer (Lufthansa and Turkish Airlines) is cleared at reference rate as per the letter Rls (m) Rls (m) received from International Department of Central Bank under no. 95/639 dated Apr,4, 2016. US Dollar 518,195/35 30,240 15,670 30,909/59 27,994 865 24-5- Demand and long-term IRR deposits with Local banks are as follows: Euro 8,735,230/20 33,935 296,430 4,445/36 30,156 134
312,100 999 March 19,2016 March 19,2015 Name of bank Demand Long Term Total Demand Long Term Total 24-9- Demand foreign currency deposits with Local banks are as follows: Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Melli 48 - 48 250 - 250 March 19,2016 March 19,2015 Karafarin - 5 5 - 5 5 Currency Forex amount Exchange rate Amount Forex amount Exchange rate Amount Mellat - 1 1 - 1 1 Rls (m) Rls (m) Mehr Basijian Institution - 63 63 - 69 69 UAE Dirham 79,695,200/31 8,234 656,210 130,115,917/56 7,622 991,744 Tousae Credit Institution - 242 242 - 4,939 4,939 Euro 47,226,733 33,935 1,602,639 49,466,500 30,156 1,491,712 Dey 300 36 336 300 33 333 US Dollar 1,982,747 30,240 59,959 2,430,000 27,994 68,025 Middle East - 523 523 - 8 8 2,318,808 2,551,481 Tousae Taavon 631 - 631 - - - 979 870 1,849 550 5,055 5,605
24-6- Long-term foreign currency deposits with Local banks are as follows:
March 19,2016 March 19,2015 Currency Forex amount Exchange rate Amount Forex amount Exchange rate Amount Rls (m) Rls (m) Euro 2,005,135/93 33,935 68,044 5,135/93 30,156 155 UK Pound 1,326/25 43,089 57 1,326/25 41,699 55 UAE Dirham 13,930 8,234 115 13,930 7,622 106 South Korean won 10,000,000,000 26 257,610
325,826 316
126 127 Finacial Report
25- Customers’ Deposits 25-1-2- Items of foreign currency temporary creditors’ are as follows:
Group Parent Co. Parent Co. Note March 19,2016 March 19,2015 March 19,2016 March 19,2015 Note March 19,2016 March 19,2015
Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Central Bank IRR equivalent of foreign currency allotted for transfers, drafts & letter of credits 25-1-2-1 2,594,416 2,749,100 Demand/Call deposits and similar 25-1 14,772,040 11,311,247 14,871,716 11,332,046 Local creditors- Other branches account (foreign currency) 25-1-2-1 823,748 1,591,122 Interest-free deposits and similar items 25-2 2,266,282 3,314,653 2,266,409 3,323,133 funds received for documents inconsistent with LC terms 18,585 3,523 Other deposits 25-3 4,788,816 7,025,837 4,795,775 7,039,753 Temporary creditors- Other 75,951 134,697 21,827,138 21,651,737 21,933,900 21,694,932 3,512,700 4,478,443
25-1-2-1- Such amounts regard the foreign currency provided by Central Bank for drafts, credits 25-1- Demand & similar deposits and transfer letters of customers which are kept in the accounts until their uses are specified and will be paid thereafter. Group Parent Co. Note March 19,2016 March 19,2015 March 19,2016 March 19,2015 25-2- Interest free deposits & similar items Rls (m) Rls (m) Rls (m) Rls (m)
Non-interest bearing deposits – rials 8,490,561 3,795,647 8,565,961 3,798,644 Group Parent Co. Non-interest bearing deposits – forex 291,886 59,315 291,886 59,315 March 19,2016 March 19,2015 March 19,2016 March 19,2015 Certified checks sold 413,208 861,196 413,208 861,196 Rls (m) Rls (m) Rls (m) Rls (m) Non-interest bearing deposits by state-run institutions – rials 83,754 76,549 83,754 76,549 Free-interest (Qard Hassan) deposits – rials 553,186 440,699 553,313 441,766 Non-interest bearing deposits by state-run institutions – forex 566,634 509,057 566,634 509,057 Free-interest(Qard Hassan) deposits – forex 1,711,091 2,873,950 1,711,091 2,881,363 Balances not claimed – rials 33,918 23,163 33,918 23,163 Special unused interest – free deposits 2,005 4 2,005 4 Balances not claimed – forex 3,780 3,527 3,780 3,527 2,266,282 3,314,653 2,266,409 3,323,133 Interim credit accounts – rials 25-1-1 1,317,315 1,493,735 1,341,591 1,511,537 Interim credit accounts – forex 25-1-2 3,512,700 4,478,443 3,512,700 4,478,443 Drafts drawn on the bank – forex 63,073 19,837 63,073 19,837 25-3- Other deposits Unused managed cash 26,498 22,181 26,498 22,181 Group Parent Co. Less: March 19,2016 March 19,2015 March 19,2016 March 19,2015 Bank’s checks sold (but not settled) (31,287)(31,403)(31,287)(31,403) Rls (m) Rls (m) Rls (m) Rls (m) 14,772,040 11,311,247 14,871,716 11,332,046 Cash deposits for LGs’ – rials 784,730 525,609 789,729 528,737 Cash deposits for LGs’ – forex 6,432 12,589 6,432 12,589 25-1-1- Parent Company’s IRR temporary creditors are as follows: Cash advances received from customers for LCs – rials 158,225 727,019 158,225 727,019 Cash advances received from customers for LCs – forex 3,779,221 5,748,909 3,781,181 5,759,696 Parent Co. Cash advances received from customers for drafts – forex 48,822 326 48,822 326 March 19,2016 March 19,2015 Nousazan Housing Project deposit 11,386 11,386 11,386 11,386 Rls (m) Rls (m) 4,788,816 7,025,837 4,795,775 7,039,753 For difference between Preferential exchange rate and Official/transactional rate 186,155 291,224 Customers' anonymous cards deposit 961,584 972,862 Social Security deposit 46,882 85,126 Account for payment of telecommunication, gas, power, water, telephone bills & Municipality duties 17,192 4,077 Interest on matured vouchers of anonymous deposit certificates 2,100 3,272 Balances unclaimed - - Contractors' good performance guarantees 73,618 59,529 Deposits with Funds 13,464 7,896 Other items 40,595 87,551 1,341,591 1,511,537
128 129 Finacial Report
26- Dividends payable 30- Provision for Income Tax
Group Parent Co. 30-1- Turnover of tax provision account is as follows: Note March 19,2016 March 19,2015 March 19,2016 March 19,2015 Group Parent Co. Rls (m) Rls (m) Rls (m) Rls (m) March 19,2016 March 19,2015 March 19,2016 March 19,2015 Balance at beginning of year 218,139 123,816 185,811 116,609 Rls (m) Rls (m) Rls (m) Rls (m) Dividends approved 639,756 658,646 640,000 658,800 Balance at the beginning of the year 193,255 304,188 - 178,116 Dividends paid (670,740)(564,324)(668,693)(589,598) Tax provision for the year 166,053 208,157 - - 187,155 218,139 157,118 185,811 Tax paid during the year (190,698)(319,090) - (178,116) Less: 168,611 193,255 - - Dividends paid to subsidiaries and affiliates 14 (83) - (83) - 187,071 218,139 157,034 185,811 30-2- Summary tax situation of the Bank (Parent Company) is as follows:
27- Trade Accounts and Notes Payable March 19,2016 March 19,2015 Tax Declared Group Fiscal year/ Declared Declared Balance of Balance of Taxanle Notified Finalized Paid Mode of assessment March 19,2016 March 19,2015 period Profit Tax provision provision Income Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Trade accounts payable – rials 334,115 565,306 Referred to Court - - 63،434 63،434 71،925 10،197 40،789 243,069 2005-2006 Trade accounts payable – forex 795,465 922,176 1,129,580 1,487,482 Initiating examination by Board provided 2007-2008 490,374 - - 134,061 128,439 128,439 - - under Art. 251-Bis of Dirrect Taxation Act 28- Advances Received Initiating examination by Board provided - - 167،293 167،293 168،496 23،700 94،800 465,580 2008-2009 under Art. 251-Bis of Group Dirrect Taxation Act March 19,2016 March 19,2015 Refrred to Tax High - - 196،272 196،272 261،094 91،973 367،891 878,100 2009-2010 Rls (m) Rls (m) Council Advances received 68,701 70,710 Objection before - - 158،742 - 472،886 158،742 634،968 1,448,311 2012-2013 68,701 70,710 Revision board
Final notice issued - - 380،871 474،370 562،659 178،116 712،465 2,221,071 2013-2014
2014-2015 1,011,340 2,279,151 - 606,664 386,377 386,377 - - Final notice issued
29- Debt Bonds in issue 2015-2016 502,751 ------
Parent Co. March 19,2016 March 19,2015 30-2-1- Despite income tax for 2005-2006 is finalized and paid, the Bank protests the final tax paid. Rls (m) Rls (m) Gross real estate capital lease - 1,049,863 30-2-2- Final notices of income tax for 2007-2008 and 2008-2009 are issued and the Bank has paid Future rental costs - (49,863) the final tax in application of Art. 259 of Direct Taxation Act. Meanwhile, the Bank has protested and - 1,000,000 the matter is examined by the Bard provided under Art. 251-BIS of the said Act. 30-2-3- Final notice of income tax for 2009-2010 is issued and the Bank has paid the amount on May 19, 2013 in application of Art. 259 of Direct Taxation Act while objecting thereto Tax High Council.
130 131 Finacial Report
30-2-4- Bank’s income tax for 2012-2013 has been examined by Tax Affairs Administration and an 31-3- Other debts of Parent Company are as follows: amount of IRR 1,204,324 is assessed and notified to the Bank. Bank’s Management has protested such assessment on the basis of the decision no. 050110/T/23754 dated May 25, 2014 of the March 19,2016 March 19,2015 Cabinet according to which the amount of IRR 650 billion regarding the on surplus of revaluation Rls (m) Rls (m) as per notice no. 9185 dated Dec. 28, 2015 of Tax Dispute Settlement Board is accepted. Current deposit in branches 277,764 70,377 Nevertheless, the other items are protested by the Bank and on May 3, 2016 a petition is submitted Inter-branches account 67,827 21,635 to Revision Board. Debt of Student foreign currency Sale 394 53,868 attorney fees 102,187 107,115 31- Provisions & Other debts Local creditors- foreclosed collaterals 8,273 25,934 cash penalties for non performance of foreign currency obligations 233,138 194,279 Group Parent Co. IRR equivalent of local creditors- blocked for obtaining of collaterals - 314 Note March 19,2016 March 19,2015 March 19,2016 March 19,2015 Productivity bonus available with Divisions Managers 1,472 1,472 Rls (m) Rls (m) Rls (m) Rls (m) loans collaterals insurance 11,215 14,283 Non-trade notes payable 20,519 24,533 - - Cash exceeding sum 1,893 1,369
20,519 24,533 - - Cash exceeding sum- foreign currency - 60 Debt for term letters of credit – rials 22,680 21,204 22,680 21,204 Employees salaries 4,887 3,915 Debt for term letters of credit – forex 31-1 78,000 214,282 78,000 214,282 Warehouse & Assets 23,012 3,954 Provisions for expenses and accounts payable 31-2 1,681,655 2,620,803 1,566,382 2,540,458 Shetab clearance 829,653 1,297,018 Tax payable 162,640 58,885 4,857 13,221 Other items 1,035,020 1,117,249 Others 31-3 3,069,210 3,144,880 2,596,735 2,912,842 2,596,735 2,912,842 5,014,185 6,060,054 4,268,654 5,702,007 5,034,704 6,084,587 4,268,654 5,702,007 32-Provision for Employees’ Termination Benefits 31-1- Debt for term letter of credits- foreign currency regarding in whole Parent Company is as Group Parent Co. follows: March 19,2016 March 19,2015 March 19,2016 March 19,2015
March 19,2016 March 19,2015 Rls (m) Rls (m) Rls (m) Rls (m) Currency Forex amount Exchange rate Amount Forex amount Exchange rate Amount Balance at the beginning of year 326,615 216,494 296,307 197,003 Rls (m) Rls (m) Paid during the year (22,536)(22,441)(16,169)(16,432) Euro 1,682,669/29 33,935 57,102 7,105,784/96 30,156 214,282 Provision covered for the year 162,255 132,562 134,496 115,736 South Korean won 500,451,042/00 26 12,892 - - - 466,334 326,615 414,634 296,307 Chinese Yuan 1,719,950 /00 4,655 8,006 - - - 78,000 214,282 33- Long-term Investment Deposit Accounts
31-2- Bank’s provision for cost & accounts payable are composed of the followings: Group Parent Co. Note March 19,2016 March 19,2015 March 19,2016 March 19,2015 March 19,2016 March 19,2015 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Long-term investment deposits 33-1 85,663,224 76,440,358 85,637,895 76,442,347 Purchaase of Real Estates 1,299,055 2,313,336 Short-term investment deposits 33-1 102,754,826 80,306,985 103,443,357 81,070,298 Rent payable 12,510 17,434 Special short-term investment deposits 33-1 332,300 384,496 332,300 384,496 Interest payable to foreign currency deposits 36,167 68,368 188,750,350 157,131,839 189,413,552 157,897,141 Provision for withholding tax 10,409 10,409 Other 172,804 6,626
Provision for expense: Provision for personnel bonus and productvity fee 5,244 55,483 Administrative expenses payable 30,194 68,801 1,566,382 2,540,458
132 133 Finacial Report
33-1- Long-term investment deposit accounts according to IRR and foreign currency: 35- Share Capital
March 19,2016 March 19,2015 Saman Bank’s capital at incorporation mounted to IRR 200 billion (divided into 20 ml shares of IRR 1,000 each). Rial Forex Total Rial Forex Total The capital is increased at several steps as follows to reach IRR 8,000 billion (divided into 8,000 ml shares of IRR 1,000 each) as at the end of the fiscal year, that is to say Mar.19, 2016. Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Short-term investment deposits 92,347,662 11,095,694 103,443,356 69,301,637 11,768,661 81,070,298 Date of capital Percentage of Amount of New Source of capital increase Special short-term investment deposits increase capital increase capital increase capital
Three-months 34,388 - 34,388 146,992 - 146,992 August 29 ,2002 - - 200 Accrued dividends due and cash contributions Six-months 88,495 - 88,495 211,889 - 211,889 November 27 ,2003 10 20 220 Accrued dividends due and cash contributions Nine-months 209,417 - 209,417 25,616 - 25,616 October 15 ,2004 36.4 80 300 Cash contributions Long-term investment deposits November 7 ,2005 100 300 600 Accrued dividends due and cash contributions One-year term 64,474,442 - 64,474,442 43,899,318 - 43,899,318 November 16 ,2005 25 150 750 Accrued dividends due and cash contributions Two-year term 121,384 - 121,384 6,616,492 - 6,616,492 October 8 ,2006 20 150 900 Accrued dividends due and cash contributions Three-year term 74,031 - 74,031 92,497 - 92,497 February 12 ,2010 100 900 1800 Accrued dividends due, cash contribution and waiver of rights issue Four-year term 76,043 - 76,043 68,016 - 68,016 March 19 ,2011 66.7 1200 3000 Accrued dividends due and cash contributions Five-year term 20,891,995 - 20,891,995 25,766,023 - 25,766,023 March 19 ,2012 33.3 1000 4000 Shareholders’ cash contributions 178,317,858 11,095,694 189,413,552 146,128,480 11,768,661 157,897,141 October 22 ,2012 64.7 2588 6588 Assets revaluation surplus March 9 ,2016 21 1412 8000 Cash contributions and Accumulated Earnings 33-1-1- The reason for one-year deposits growth of 2015/16 compared with 2014/15 is the Directive No. 93/96593 dated July, 2. 2014 on “prohibition of more than one year depositing” and other more than one year balances relate to prior years’ deposits. 35-1- Shareholders as at the date of Balance Sheet are the followings:
March 19,2016 March 19,2015 34- Interest Payable to Long-term Investment Deposit Accounts Number of shares Shares Number of shares Shares % % Group 1% and more: Balance at Provisional interest Interest paid Balance at Pension Fund of National Copper Industry of IRAN 624,530,308 7.81 542,225,315 8.23 Interest payable on deposits – rials March 19,2015 during the year during the year March 19,2016 Pension Fund of Protecting Steel Industry Employees 400,088,117 5.00 329,472,571 5 Long-term deposits 1,283,824 18,115,625 (17,987,640) 1,411,810 Mines & Metals Development Investment Co. 323,686,501 4.05 281,266,036 4.27 Short-term deposits 472,100 13,108,509 (12,900,504) 680,105 Mr. Mohammad Zarrabieh 315,266,280 3.94 260,434,617 3.95 Special short-term deposits 3,151 85,882 (85,038) 3,995 Ms. Hava Chaee Deh Khoee 240,847,267 3.01 210,951,196 3.20 1,759,076 31,310,017 (30,973,182) 2,095,911 Parsian Bank Financial Group Co. 244,163,829 3.05 200,155,607 3.04 Interest payable on short-term deposits in forex 21,295 490,907 (495,384) 16,817 Saman Investment Co. 239,999.995 3.00 197,640,000 3 1,780,370 31,800,923 (31,468,566) 2,112,728 Mr. Vali Zarrabieh 201,656,802 2.52 166,064,379 2.52 Mr. Seyed Mahdi Ghafoori 181,316,669 2.27 149,314,279 2.27 Mr. Seyed Ahmad Akhavan Dastmalchi 166,800,291 2.09 137,360,042 2.09 Parent Co. Mr. Ahmad Reza Zarrabieh 128,349,619 1.60 105,695,913 1.60 Balance at Provisional interest Interest paid Balance at Mr. Mostafa Tavakkol Harandi 123,259,343 1.54 80,322,193 1.22 March 19,2015 during the year during the year March 19,2016 Interest payable on deposits – rials Iran Pump Manufacturing Industries 142,712,103 1.78 115,229,421 1.75 Long-term deposits 1,285,249 18,116,213 (17,987,640) 1,413,822 Hermes Asset Group Ltd 128,591,306 1.61 111,644,640 1.69 Short-term deposits 472,100 13,108,509 (12,900,504) 680,105 Iran & West Co. 79,822,466 1 67,800,000 1.03 Special short-term deposits 3,151 85,882 (85,038) 3,995 Sayeh Gostar Sarmayeh Investment co. - - 65,880,000 1 1,760,500 31,310,604 (30,973,182) 2,097,922 Other Legal Persons Less than 1% 1.028,470,637 12.85 704,687,724 10.70 Interest payable on short-term deposits in forex 21,295 490,907 (495,384) 16,817 Other Natural Persons Less than 1% 3,430,438,467 42.88 2,861,856,067 43.44 1,781,795 31,801,511 (31,468,566) 2,114,740 8,000,000,000 100 6,588,000,000 100
134 135 Finacial Report
35-1-1- 75,224,087 shares on the shares held by other real person shareholders (94% of the Bank’s 37- Assets revaluation Surplus: tangible and intangible shares) are held by the personnel. In the fiscal year ended on Mar. 20, 2012, in application of Executive By-law Part (B) of Art. 87 of Budget Act 2011-2012, The Bank’s tangible assets (land, building) and intangible assets (goodwill, business license) 36- Legal Reserve were re-assessed. Surplus of revaluation amounted to IRR 2,588,675 ml as at Oct. 21, 2012 on which an amount of IRR 2,588,000 was registered with Department for Registration of Companies and carried to the capital after having gone through legal formalities. Group Parent Co.
March 19,2016 March 19,2015 March 19,2016 March 19,2015 March 19,2016 March 19,2015 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Balance at the beginning of year 1,496,547 1,331,313 1,448,456 1,296,755 Revaluation Surplus 675 675 Transfers from distributable profit 100,842 165,234 75,412 151,701 675 675 Balance at year-end 1,597,389 1,496,547 1,523,868 1,448,456
36-1- In compliance with the provisions of Para. (A) to Art. 33 of Monetary & Banking Act and Para. 38- Minority’s (non-controlling) interest (B) to Art. 58 of Articles of association, in Parent Company 15% of the distributable profit and in Subsidiaries 5%, as provided under Articles 140 & 238 of Partial Amendment of Commercial Code March 19,2016 March 19,2015 shall be carried to the legal reserve. According to the above provisions, as long as the balance of Rls (m) Rls (m) the legal reserve of the Bank has not reached its capital the withdrawal shall be made and becomes Share from Capital 371,603 233,339 optional thereafter. Such requirement is 10% of the capital for Subsidiaries. Legal reserve may not be Share from Reserve 28,201 20,482 carried to the corporate capital and shall be distributed to the shareholders only at dissolution. Such Share from retained eranings 116,773 44,383 amount as stated in Balance Sheet is composed as follows: 516,577 298,204
Group March 19,2016 March 19,2015 39- Income from Loans Interest & Deposits Rls (m) Rls (m) Parent Company Group Saman Bank 1,523,868 1,448,456 Note March 19,2016 March 19,2015 Subsidiaries Companies Profit- Non-profit Profit- Non-profit Total Total Saman Satellite Communications 8,346 6,349 sharing sharing sharing sharing Saman Kish Electronic Payment 45,068 31,770 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Saman Exhchange Office 14,074 5,895 Income from loan interests 39-1 28,032,892 1,177,439 29,210,331 25,524,494 1,361,984 26,886,478 Saman Brokerage 1,739 1,739 Income from Deposits 39-2 1,707,322 153,448 1,860,770 541,468 72,877 614,345
Saman Pardazeshgaran 2,023 1,419 Total income from Loan interest and deposit 29,740,214 1,330,887 31,071,101 26,065,962 1,434,861 27,500,823 Atieh Alborz Trade Development 1 1 Hafez Samanian Iranian Credit Scoring 1,595 379
Sepehr Sharq Atieh Andishan 481 347 Parent Co. Sepehr Mehr Atieh Andishan 1 1 Note March 19,2016 March 19,2015 Tondar Noor 191 191 Profit- Non-profit Profit- Non-profit Total Total 1,597,389 1,496,547 sharing sharing sharing sharing Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Income from loan interests 39-1 28,160,990 1,177,439 29,338,429 25,556,140 1,361,984 26,918,124 Income from Deposits 39-2 1,707,322 131,576 1,838,898 541,468 57,329 598,797
Total income from Loan interest and deposit 29,868,312 1,309,015 31,177,327 26,097,608 1,419,313 27,516,921
136 137 Finacial Report
- - - - 400 4,571 400 Total Total Total 438,172 171,602 95,395 614,345 95,395 250,048 633,268 476,260 965,685 250,048 633,268 476,260 965,685 4,144,933 1,202,410 4,144,933 1,202,410 19,118,079 19,149,725 26,886,478 26,918,124
------47,331 47,331 sharing) Forex - 41,406 45,398 45,398 41,406 103,751 205,744 396,299 205,744 103,751 396,299 (Non-profit Forex - sharing) Forex - sharing) (Non-profit (Non-profit
-
-
- -
- - -
- - -
4,571 Total - - - - 390,841 171,602 400 567,014 400
Total Total 95,395 95,395 250,048 633,268 430,862 965,685 250,048 633,268 430,862 965,685 4,041,182 1,161,004 4,041,182 1,161,004 18,912,335 18,943,981 26,490,179 26,521,825
9,998 4,571 10,977 25,546 sharing 2015 ------Non-profit 2015 Non- 2015 965,685 965,685 965,685 sharing 965,685 Non-profit profit sharing
- - - -
------
379,864 161,604 541,468 400 ing - 400 95,395 250,048 633,268 430,862 95,395 4,041,182 1,161,004 250,048 633,268 430,862 18,912,335 25,524,494 4,041,182 1,161,004 Profit-shar 18,943,981
25,556,140
Profit-sharing Group
-
-
-
- Group 337
- Total Profit-sharing
206,980 Parent Co. 1,653,453 1,860,770 6,059 5,741 Total 14,551 224,206 390,053 900,222 989,587 708,896 3,858,091 1,051,613 6,059 5,741 Total 21,061,312 14,551 29,210,331 224,206 390,053 900,222 989,587 708,896 3,858,091 1,051,613
21,189,410 29,338,429 -
-
-
120,601
Forex 120,601 - sharing) - - - (Non-profit 6,259 76,755 28,261 - - - Forex 111,275 sharing) 6,259 76,755 28,261 (Non-profit Forex 111,275 sharing)
(Non-profit -
- - - - -
337 - -
- - - Total
206,980
1,532,852 1,740,169 6,059 5,741 Total
14,551 224,206 383,794 900,222 989,587 680,635 3,858,091 1,051,613 6,059 5,741 Total
20,984,557
14,551 29,099,056 224,206 383,794 900,222 989,587 680,635 3,858,091 1,051,613 21,112,655 29,227,154
337
10,975 21,535 32,847 2016
sharing Non-profit - - 2016 14,551 - - sharing 1,051,613 2016 14,551 Non-profit 1,066,164
sharing
1,051,613 1,066,164
Non-profit -
------
- Profit- 196,005 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) sharing
- - - - - 1,511,317
1,707,322
- - 6,059 5,741
- - 224,206 383,794 900,222 989,587 680,635 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)
3,858,091 6,059 5,741
20,984,557
28,032,892 224,206 383,794 900,222 989,587 680,635 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m)
3,858,091
21,112,655 Profit-sharing
28,160,990
Profit-sharing 39-1- Income from loans interest Sales by installments Jealeh (service contracts) Hire-purchase contracts Muzarabah (trade contracts) Civil partnership (MosharakatMadani) Salaf (future contracts) LCs discount/Discount receivable Murabaha Late penalties late penalties Debtors for paid letters of credit and paid guarantee" Other Interest on statutory deposit (Share of Bnak and Depositors) Profit from deposits with local banks Profit from investment in participation bonds Sales by installments Jealeh (service contracts) Hire-purchase contracts Muzarabah (trade contracts) Civil partnership (MosharakatMadani) Salaf (future contracts) LCs discount/Discount receivable Murabaha Late penalties late penalties Debtors for paid letters of credit and paid letters guarantee Other 39- 2-Income from deposits
138 139 Finacial Report
40-1- Companies dividend in Parent Company is composed as follows:
-
Total March 19,2016 March 19,2015 427,195 171,602 598,797 6,043 ) ( 733,568 Rls (m) 975,763 334,789 ) 583,027
1,316,595 Profit-sharing-Rls (m) Profit-sharing-Rls (m)
Saman Satellite Communications 22,116 22,198
- Saman Exhchange Office 120,576 28,231 47,331 47,331 Parent Co. Forex -
(
sharing)
Saman Kish Electronic Payment 185,931 410,074 (Non-profit Saman Insurance 14,836 8,902 13,006
277,828 320,965 533,322 Rls (m) 611,799 212,357 )
- Saman Brokerage 1,536 10,560 ( Funds Clearance & Securities Central Deposit 1,914 957 - Total 379,864 171,602 Iran Khodro Card services - 28 551,466 Iran Investment 15,682 -
Iran Rating Co. 5,137 3,853
5,116 )
( Stock Exchange - 35 Rls (m) 757,408 174,381 441,060 311,232 ) 583,027
2015 ( 9,998 9,998 Iranian Credit Information & Accreditation Co. sharing 19,830 3,966 Non-profit Saman Pardazeshgaran 9,000 13,500 Group
- Sepehr Sharq Atieh Andishan - 6,000
Iran Energy Market 457 152 Profit- 161,604 379,864 541,468 sharing
14,115 Saman Aftab Tejarat 1,200 600 50,132 )
162,225 280,810 Rls (m) 244,793 212,357 ) (
(
Middle-East Bank 5,712 5,370
March 19,2016 March 19,2015 March 19,2016 March 19,2015 Parent Co. Shaparak Card Payment E-payment Co. 11,979 11,090 - - -
Total Karadan Capital Financing 16,567 60,000 206,980 1,631,918 1,838,898 Iran Fanavar Pars Investment 40 -1 40 -2 2,400 - Note Hamedan Glass 12,277 1,996
- Iran Pump Manufacturing 1,003 2,508 - Dividend of long-term investment
120,601 448,153 590,019 Forex 120,601 sharing) (Non-profit
Absal 6 - - Iran Khodro 186 -
Total Irka Part Sanat 0 - 206,980 1,511,317 1,718,297 Saderat Bank 423 -
Mellat Bank 45 - Bahman Leasing 45 - 10,975 10,975 2016 sharing
Non-profit Shazand Petrochemical 1 - -
Fanavaran Petrochemicals 5 8
Maron Petrochemicals 4 - - - -
Profit- Tractor Manufacturing 1 - 196,005 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) sharing
1,511,317
1,707,322 Arian Economic Development 318 318 Behshahr Industries Development 4,065 - Haffari Shomal 14,215 14,074 Toka Shipping 1,830 - Informatic Sevices 360 - Exir Pharmaceuticals 43 61 Rayan SAIPA 1,317 - Alborz Investment 1 - Iran Khodro Investment 799 - Pars Toosheh Investment 10 - Mines & Metals Investment 6,880 8,779 National Development Group Investment 6,520 100 Sarma Afarin 4 - Barez Industrial 1,067 2 Mobarakeh Steel 8,921 18,249 Khorasan Steel 221 369 Profit (Loss) from sale of company share Profit (Loss) resulting from Increase (decrease) in Investment value Profit (Loss) from other investment(Funds) Accrued Profit (Loss) from Investment Company Dividend Total Accrued Profit (Loss) from Investment Net Profit (Loss) from Increase (decrease) to Investment value Net Profit from investments 40- Net Profit or Loss from investments Interest on statutory deposit (Share of Bnak and Depositors) Profit from deposits with local banks Profit from investment in participation bonds Bahman Group 7,500 5,058
140 141 Finacial Report
40-2- Net Profit or Loss resulting from increase (decrease) of value of investments in Parent Company:
2016 2015 2016 2015 Profit-sharing-Rls (m) Profit-sharing-Rls (m) Number of share Cost Market value Profit(Loss) Profit(Loss) MAPNA Group 1,590 2,869 Profit (Loss) resulting from Increase (decrease) in Share Rls (m) Rls (m) Rls (m) Rls (m) Iranian Leasing 6,152 - Investment value-Rial (Profit-sharing) Ghadir Investment 1,519 - Mines & Metals Investment Development 4,111,879 10,852 5,787 (5,065)(19,159) Pasargad Bank 4,389 - Esfahan Mobarakeh Steel 6,325,561 9,601 8,790 (812)(45,794) Fars & Khuzestan Cement 341 750 Iran Construction Investment 10,142,312 37,618 40,272 2,655 (16,780) Azar Ab 2 54 Iran Telecommunication 50,000 141 145 4 (2,852) Sina Bank 18,457,199 31,869 30,506 (1,362) - Pirnshahr Sugar 192 346 Haffari Shomal 13,520,123 71,535 54,608 (16,927)(40,232) Iran Shipping Co. 93 247 MAPNA 6,915,400 54,779 65,185 10,406 (5,010) Sepah Investment 11,781 27,443 Azar Ab 1,000,000 4,995 5,242 247 - Iran Construction Investment 697 1,387 Alborz Insurance 1,000,000 1,313 1,150 (163) - Iran Khodro 7,800,000 24,895 35,850 10,955 2,137 Toka Steel Investment 2,478 - Mellat Bank 6,572,362 15,829 15,208 (621) - Shahed Investment 528 - Shahed Investment 1,974,370 2,706 2,818 112 - Copper 156 3,240 Iranian Leasing 30,508,715 58,791 44,356 (14,435)(8,016) Tamin Oil & Gas 156 4,577 Sepah Investment 24,129,271 52,754 31,093 (21,661)(49,771) Tehran Housing Investment 312 - Saderat Bank 11,600,000 12,885 12,192 (692) (3) Pasargad Bank 26,336,558 56,603 33,677 (22,926)(19,758) Behshahr Industries Development Investment - 976 Toka Rail 11,713,239 30,249 29,388 (861) - Chador Maloo - 1,920 Toka Steel Investment 27,575,512 37,946 37,963 17 450 Iran Telecommunication - 6,548 Bahman Group 18,940,000 44,008 58,260 14,252 (1,111) Transfo - 25 Sahand Lastik 1,647,345 4,872 4,061 (810) - Rayan SAIPA Leasing - 925 Kharazmi Investment 42,929,305 60,328 55,871 (4,457)(9,136) Tehran Cement - 1,170 Toka Shipping 10,101,213 28,866 32,161 3,295 264 Parsian Bank - 25 Iran Khodro Investment Group 2,000,000 9,534 10,659 1,125 (9,307) Mobin Petrochemicals 500,000 2,060 1,975 (84) - Iranian LEasing - 15 Tractor Manufacturing 1,494,193 3,268 3,001 (268) - Darou Pakhsh Plants - 80 Fajr Petrochemicals 516,000 8,229 7,895 (334) - Kalsimin - 6 Toka Refactory 200,000 1,008 916 (92) - Post Bank - 450 Piazar Agro-industry 730,000 1,912 1,654 (258) - SAIPA Investment - - Shahed Civil & Development Co. 50,000 129 133 4 - Iran Minerals Processing - 987 Damacand Power Generation 3,000 223 242 19 - Allliage Steel - - Middle-East Life Insurance 200,000 100 198 98 - Baghmisheh - 1,600 Bahman Investment 1,975,713 2,742 2,794 52 - Khark Petrochemicals - 78 Behshahr Industries Development Investment - - - - (2,982) Pasargad Bank - 8,058 National Iran Copper Industries - - - - (20,117) Behshahr Industries - 125 Khorasan Steel - - - - (2,811) Khuzestan Steel - 2,810 Rena Investment - - - - (1,648) Kermanshah Petrochemical Industries - 380 Rayan SAIPA Leasing - - - - 3,484 Housing Investment - 2,002 Ghadir Investment - - - - (1,992) Toka Investment - 5,133 SAIPA - - - - (1,370) Tehran Oil Refinery - 1,800 Iran Post Bank - - - - (6,784) SIAPA Investment - - - - (527) Iranol Oil - 23 Arian Economic Investment - - - - (1,267) Persian Gulf Petrochemical Industries - 8,028 Piranshahr Sugar - - - - (4,288) Kharazmi Investment - 9,090 Esfahan Metallurgy - - - - (25,806) Middle-East Mines & Mine Industries Development - 114 Housing Investment - - - - (862) Iran Leasing - 553 Tehran Oil Refinery - - - - (4,496) Jam Petrochemicals - 155 Tamin Oil, Gas & Petrochemicl Investment - - - - (4,516) Behran Oil - 500 Fars & Khuzestan Cement - - - - (836) Sea Shipping - - - - (655) Tamin Pharmaceutical - 1,755 Exir Pharmacy - - - - (927) Hamkaran System - 256 Plasco Kar - - - - (943) Ferro-Silicium - 1 Mashhad Ring Manufacturing - - - - 1 Takin Co. - 18 Iranian Hafez Saman Accreditation - - - - (25,186) Kharazami IT Development - 13 Hamedan Glass - - - - (6,051) Fars Chimia - - Plastiran - - - - (134) Short-term investments dividend 85,169 143,549 Adjustment of reserve for last year devaluation - - - 326,416 - Companies dividend 533,322 733,568 291,019,270 682,637 634,050 277,828 (334,789)
142 143 Finacial Report
41- Bank’s Share of Profit-Sharing Income 41-2-2- Average investment deposits accounts:
Bank’s share of profit-sharing income is calculated as follows: 2016 2015 41-1- Bank’s share of profit-sharing income Investment Deposit Amount(Average) Amount(Average) Rls (m) Rls (m) Bank's resources to total uses (41-2) Profit-sharing Incomes Bank Share from profit-sharing One-year term 54,701,759 21,660,319 % Rls (m) Rls (m) Two-year term 3,080,983 9,068,121 1.13 30,284,106 - Three-year term 81,554 96,930 Four-year term 73,953 67,162 • Should the common uses of free resources be less than the total investment deposit, the Bank’s resources Five-year term 21,838,127 32,577,944 and, accordingly, the latter’s share of profit-sharing income will be null. Deposit card - - 80,930,664 63,933,196 41-2- Distribution of common resources and uses between the depositors and the Bank: Short-term investment deposits Long term deposit from other banks and credit institutions 171,330 2,157,985 384,545 328,872 2016 2015 Special short-term investment deposits 161,262,915 129,890,528 Rls (m) Rls (m) Rls (m) Rls (m) Investment Deposit Average Average use of Profit-sharing resources (41-2-1) 126,086,696 106,078,030 Average of 52 weeks Average investment deposits balance (42-2-2) 161,262,915 129,890,528 Average of 52 weeks 41-3- Bonus of legal deposit for investment deposits is as follows: Less: Legal desposit for investment deposits (19,364,895) (16,005,100) Average of 52 weeks Investment deposits free resources 141,898,020 113,885,428 2016 2015 Bank share of use of Profit-sharing resources (15,811,324) (7,807,398) Rls (m) Rls (m) (Surplus of investment deposits free resources) Average balance of statutory deposit for investment deposits 19,364,895 16,005,100 Bonus on statutory deposit(1% Of average resources) 196,005 161,604 Bank’s resources share of common uses means common uses deducted by investment deposits free resources. Should the total investment deposit free resources exceed the common uses the surplus thereof is called surplus of investment deposits free resources. 42- Bank’s fee
41-2-1- Average common uses: Bank’s fee for the fiscal year 2015-2016 is calculated according to a rate of 3% as per the minutes dated June 15, 2015:
2016 2015 Bank’s fee = fee rate x Average common uses Use of Profit-sharing resources Amount(Average) Amount(Average) 3,782,601 = 3% x 126,086,696 Rls (m) Rls (m) Net resources used for loans 117,151,336 101,430,425 Net resources used for Participation bonds 8,825 - 43- Compensation of Expense Related to Depositors free Sources Net resources used for deposits with other banks 6,511,657 1,484,511 Surplus to Common uses Net resources used for investments 2,414,878 3,163,094 As per the Directive no. 94/69383 dated June 10, 2015, compensation of expense related to depositors’ free Total resources used for Profit-sharing operations 126,086,696 106,078,030 sources surplus to common uses shall be calculated as follows:
Investment Accounts surplus resources Investment Accounts surplus resources to Average Profit-sharing uses Profit-sharing Incomes share of profit-sharing income Average Profit-sharing uses
Rls (m) Rls (m) Rls (m) Rls (m)
3,797,640 126,086,696 30,284,106 15,811,325
144 145 Finacial Report
44- Interest Paid to Investment Deposit Accounts 46- Income from Fees & Commissions
Group Parent Co. Group Parent Co. 2016 2015 2016 2015 2016 2015 2016 2015 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Interest paid on short-term deposits 13,052,540 9,881,216 13,107,446 9,904,474 Letters of credit and drafts 37,175 81,269 37,443 81,269 Interest paid on special short-term deposits 85,882 19,303 85,882 19,303 Inter-bank payments (Shetab Payment System) 444,654 332,090 444,654 332,090 Long Term Deposits: - - - - Letters of guarantee 60,272 64,840 60,870 65,057 Interest paid on one-year term deposits 12,031,614 4,642,046 12,031,614 4,642,084 Saman cards transactions on POS terminals - 8,717 - 8,717 Interest paid on two-year term deposits 677,712 1,718,265 677,712 1,718,265 Annual fees of credit cards transactions 40,878 209,764 40,878 209,764 Interest paid on three-year term deposits 19,244 21,735 19,244 21,735 Drafts issuing fees 122,073 145,136 122,073 145,136 Interest paid on four-year term deposits 15,446 13,630 15,446 13,630 Shetab cards issuance 170,522 122,930 170,522 122,930 Interest paid on five-year term deposits 5,203,194 7,305,049 5,203,850 7,305,670 Free-interest loans 5,685 1,617 5,685 1,617 Interest paid on CDs 129,197 459,939 129,197 459,939 Forex commission 52,160 43,670 52,160 43,670 Interest paid to banks 40,213 523,001 40,213 523,001 Cards issuing fees 10,865 11,054 10,865 11,054 31,255,042 24,584,184 31,310,604 24,608,101 Managed funds 21 59 21 59 Commsission for SMS services 61,856 - 61,856 - Commsission for Insurance service 52,562 48,145 52,562 48,145 Others 72,545 50,475 57,250 36,782 45-Cost of Interests Paid on Deposits 1,131,268 1,119,766 1,116,839 1,106,290
Group Parent Co. Note 2016 2015 2016 2015 47- Fee & Commissions expenses Rls (m) Rls (m) Rls (m) Rls (m) Interest paid to investment deposits-Rial 45-1 31,255,042 24,584,184 31,310,604 24,608,101 Group Parent Co. Interest paid to short-term forex deposits 490,907 827,024 490,907 827,024 2016 2015 2016 2015 31,745,949 25,411,208 31,801,511 25,435,125 Rls (m) Rls (m) Rls (m) Rls (m) Fees paid to brokers 3,466 1,684 3,466 1,684
45-1- Reconciliation of on-account interest paid to investment deposits (IRR) with cost of interest on Fees paid to banks 1,242 3,478 1,242 3,478 investment deposits Fees paid to individuals 428,366 382,294 469,901 421,333 Fees paid for Shetab Payment System 460,457 378,726 460,457 378,726 2016 2015 Membership fee of Deposits Guaratny Fund 80,000 - 80,000 - Rls (m) Rls (m) Others 149,842 22,876 129,003 227
Provisional interest paid to Investment deposit accounts (Note 44) 31,310,604 24,608,101 1,123,373 789,058 1,144,069 805,448
Plus (Less): Difference of interest payable to depositors (surplus of interest paid to depositors)- carried from (815,454)(781,994) investment deposit accounts performance statement Final interests accrrued onazaz investment deposit accounts 30,495,150 23,826,108 48- Income from Sales and Services Rendered Plus: interest donated to deposit accounts (equivalent to surplus interest paid to deposit accounts) 815,454 781,994 IRR investment deposits benefit 31,310,604 24,608,101 Group 2016 2015 Rls (m) Rls (m) Sales and services rendered 41,167,740 29,867,574 Return from sales and reductions (52,483)(23,201) 41,115,257 29,844,373
146 147 Finacial Report
48-1- Income from services provided mainly regard foreign currency sold in Exchange Co. 52- Administrative & General Expenses
49- Cost of Sales and Services Rendered Group Parent Co. Note 2016 2015 2016 2015 Rls (m) Rls (m) Rls (m) Rls (m) Group Personnel 52-1 2,084,699 1,736,094 1,911,035 1,633,632 2016 2015 Other expenses 52-2 1,458,163 1,305,040 1,374,454 1,241,134 Rls (m) Rls (m) Cost price of goods and services rendered 39,913,185 28,825,770 3,542,862 3,041,134 3,285,489 2,874,766 39,913,185 28,825,770 52-1- Employees expenses are as follows:
49-1- Cost of income and services provided regards Note 48 to Financial Statements. Group Parent Co. 2016 2015 2016 2015 50- Net Profit (Loss) from Foreign Currency Exchanges & Transactions Rls (m) Rls (m) Rls (m) Rls (m) Salary & Job remuneration 676,041 521,588 571,485 460,005 Group Parent Co. New year gift, Bonus & other benefits 627,874 599,970 595,882 580,750 2016 2015 2016 2015 Social Secuirty charges- Bank's contribution 249,430 185,756 236,396 177,204 Rls (m) Rls (m) Rls (m) Rls (m) Overtime working 140,340 117,117 140,340 117,117 Profit of forex exchange 168,218 1,385,987 168,218 1,385,987 Termination benefits 142,473 121,188 134,496 115,736 Profit (Loss) of forex translation 1,129,168 (515,331) 1,127,652 (514,464) Provident Fund (Bank's contribution) 23,109 16,580 23,109 16,580 1,297,386 870,656 1,295,870 871,523 Employees other expenses 225,432 173,895 209,327 166,240 2,084,699 1,736,094 1,911,035 1,633,632 51- Other Incomes 52-2- Administrative expenses are as follows: Group Parent Co. Note 2016 2015 2016 2015 Group Parent Co. Rls (m) Rls (m) Rls (m) Rls (m) 2016 2015 2016 2015 Proceeds from sale of real estates 51-1 2,880,251 1,713,578 2,866,384 1,712,124 Rls (m) Rls (m) Rls (m) Rls (m) Professional fees by experts 309,060 65,593 309,643 65,748 Rents 292,155 258,552 285,884 258,051 Real estate appraisal (land and apartments) 10,576 28,516 10,576 28,516 Advertisement expenses 387,501 178,256 380,452 170,516 Computer equipment, office furniture & vehicles repiar and maintenance 61,894 129,326 53,692 123,706 Post, telegraph, telephone and Swifts 806 673 806 673 expenses Insurance and loan monitoring fees 359 240 359 240 Water, power, telephone, fax & data lines expenses 97,779 95,501 94,928 93,728 Others 222,904 57,727 192,033 70,350 Urban commutation expenses 12,160 15,013 10,837 13,503 Administrative supplies & Consumables expenses 58,414 88,054 53,449 82,292 3,423,956 1,866,327 3,379,801 1,877,651 Automation expenses 50,875 90,780 51,674 90,794 Insurance premium & charges 98,278 104,697 95,125 101,973 51-1- Income earned from real estates sold regards owned properties sold at a book value of Consultation fee 52,419 39,473 39,985 32,059 IRR 6,140,454 ml and sale price of IRR 9,003,957 ml. Employees launch expenses 1,440 1,256 - - Gifts & Prizes 6,996 12,450 4,816 9,843 Building repair & maintenance expenses 22,245 39,997 21,132 38,258 Employees welfare services expenses 4 140 4 140 Out-of-city travel and mission expenses 21,973 1,631 20,015 - Food and Kitchen expenses 110,277 107,646 107,594 105,297 Training & Seminar expenses 4,985 2,900 4,183 2,386 Transportation expenses 2,947 3,315 2,947 3,315 Satellite communication expenses 26,537 2,754 26,537 2,754 Other cost 149,284 133,299 121,200 112,519 1,458,163 1,305,040 1,374,454 1,241,134
148 149 Finacial Report
53- Doubtful Loans expense 54- Financial Expenses
Group Parent Co. Group Parent Co. 2016 2015 2016 2015 2016 2015 2016 2015 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Specific provision for doubtful debts 274,686 1,356,072 274,686 1,356,072 Interest paid on Sukuk bonds 49,863 200,000 49,863 200,000 General provision for doubtful debts 132,983 254,390 91,273 234,637 Interest paid to CBI (rial-equivalent) 9,328 64,174 9,328 64,174 407,669 1,610,462 365,959 1,590,709 Financial expenses 198,392 111,982 - 257,583 376,156 59,191 264,174 53-1- The specific provision for doubtful loans is calculated as follows:
2016 2015 55- Depreciation Expenses Overdue Outstanding Doubtful Total Total Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Group Parent Co. Balance as at March 19, 2016 1,643,733 3,321,252 24,926,909 29,891,895 33,269,708 2016 2015 2016 2015 Less: Value of cllaterals coefficient applied Rls (m) Rls (m) Rls (m) Rls (m) Saving & Investment deposits 73,144 - 5,673 78,817 69,167 Tangible Fixed Assets Depreciation 387,287 358,975 359,078 329,293 Governmental participating bonds - - - - - Intangible Assets Depreciation 64,753 38,497 63,588 37,293 Bank secured participation bods 920 - 3,656 4,576 4,570 452,040 397,472 422,666 366,586 Properties & Real estate 2,045,963 2,316,198 20,344,004 24,706,165 32,635,277 Listed companies shares 1,009,739 - 242,107 1,251,846 58,151 3,129,766 2,316,198 20,595,440 26,041,404 32,767,165 56- Prior year’s Adjustments Balance basis for calculation of specific Provision (1,486,033) 1,005,054 4,331,469 3,850,490 (20,818) Group Parent Co. Coefficient for calculation of specific Provision-% 10% 20% 50-100% 2016 2015 2016 2015 Provision for specific doubtful debts 62,255 41,326 3,783,224 3,886,805 3,803,335 Rls (m) Rls (m) Rls (m) Rls (m) Prior year’s income tax (51,881)(384,095) (343,719) 53-2- The general provision for doubtful loans of the fiscal year ended on Mar. 19, 2016 is calculated as Prior year’s withholding tax (307) (760) follows: insurance ammendments (49,562)(46,188)(32,258)(32,257) Others 6,703 (14,588) Amount (95,047) (445,631) (32,258) (375,976) Rls (m) Loan Balance as at March 19, 2016 145,040,201 56-1- In order to reflect an appropriate image of the financial position and performance, all relevant Less: comparative items in the comparative financial statements are restated. Therefore, some of them may Balance of loans granted for which specific provision is considered 29,891,895 vary from those in Financial Statements of the last year. Balance basis for calculation of general Provision 115,148,306 Coefficient basis for calculation of general Provision-% 1/5 General Provision for doubtful debts of 2015-2016 1,794,479 General Provision for doubtful debts of 2014-2015 1,703,206 General doubtful debts expense 91,274
150 151 Finacial Report
57- Reconciliation of Profit Before Tax 58- Non Monetary Transactions Main non-monetary transactions during the fiscal year are as follows: Group Parent Co.
2016 2015 2016 2015 Note 2016 2015 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Profit before Tax 1,015,276 1,302,809 502,751 1,011,340 Preperty in exchange of loans 58-1 11,214,008 11,135,205 Depreciation Expense 956,206 723,554 422,666 366,586 Exchange of assets 58-2 684,677 1,155,207 Net increase in Provisions for staff termination benefits 139,719 110,121 118,327 99,304 Extended Loans 4,040,630 - Profit from sale of fixed assets (immovable) (2,880,251)(1,713,578)(2,866,384)(1,712,124) 15,939,315 12,290,412 Profit from sale movable assets - - - - Financial expense 40,213 523,001 40,213 523,001 Net Profit (Loss) of forex translation (1,129,169) 515,331 (1,127,653) 514,464 58-1- During the fiscal year reported, the following assets are owned by the Bank: (1,858,005) 1,461,238 (2,910,079) 802,571 Net increase (decrease) in operating liabilities Customer Debt balance at value of asset-expert paid Debt balance after Due to other banks and credit institutions 2,942,834 (12,131) 2,682,455 (130,177) Type of Asset Relationship ownership date assessment amount/impunity ownership Customer Deposit 175,401 (7,222,705) 238,967 (7,235,245) Rls (m) Rls (m) Rls (m) Rls (m) Dividend Payable (31,068) 94,323 (28,777) 69,202 Housing units unrelated customer 7,665,988 4,488,736 - 3,576,807 Debt Bonds (1,000,000)-(1,000,000)- Business offices unrelated customer 1,563,124 2,844,127 44,954 51,049 Provision for performance tax (190,698)(311,335) - (178,116) Factory and plants unrelated customer 7,986,329 3,716,362 - 4,271,132 Operational portion of provisions and other liabilities (1,306,657) 4,741,490 (1,433,352) 4,420,901 Land unrelated customer 19,111 164,782 - 557 Long term Investment Deposit 31,618,512 28,291,683 31,516,411 28,676,453 17,234,552 11,214,008 44,954 7,899,544 Interests payable to Investment Deposit accounts 332,358 415,159 332,945 414,374 32,540,682 25,996,484 32,308,649 26,037,392 58-2- During the fiscal year reported, the following assets are exchanged: Net (increase) decrease in operating assets Due from other banks and credit institutions (750,180) 521,138 (750,180) 521,138 Book value of consideration value of asset-expert difference paid/ Loan granted (9,460,573)(20,120,232)(9,388,186)(20,328,541) Type of Asset Relationship Type of Asset transferred assessment received Investment in shares and Bonds (605,360) 468,703 (793,448) 642,123 Rls (m) Rls (m) Rls (m) Due from subsidiaries and affiliates 71,157 14,853 155,697 (381,650) Housing units unrelated customer Housing units 80,000 40,000 40,000 Other account receivables (4,559,922)(778,831)(4,080,394)(666,316) Business offices unrelated customer Business offices 367,177 234,959 132,218 Statutory deposit with CBI (1,619,060)(4,049,920)(1,619,060)(4,049,920) Land unrelated customer Land 237,500 188,250 49,250 Operational portion ofother assets (4,157,883)(10,208,097)(4,331,823)(10,329,953) 684,677 463,209 221,468 (21,081,821) (34,152,386) (20,807,395) (34,593,119) Net (increase) in operating assets 9,600,855 (6,694,664) 8,591,174 (7,753,156)
57-1- Loans granted for clearance of previous Loans are reported under “non-monetary transactions” (Note 58).
152 153 Anual Report 2015/16 Rial 61,792 Rls (m)
5,137,106 59-1-2- Parent Company’s obligations IRR letters of credits are as follows:
March 19 , 2016 March 19 , 2015 Rls (m) Rls (m) 95,064 783 951,060 32,274 2,279,400 10,611 7,408,625 3,356 4,799,620 50,641 1,440,6894,316,500 44,565 15,867 21,704,704 1,704,818 44,850,349 1,521,997 Balance at beginning of year 66,572 214,271 603,654,600 15,551 139,503,001122,669,732 37,553 571,028 1,717,286,131 777,931 Forex amount 15,990,236,165 411,924 Issued in the fiscal year 52,559 518,705 Balance at the year end
Canceled during the fiscal year (97,417) (666,405) 18 41 24 38
Rls (m) Balance at end of year 21,714 66,572 2 4 5 1 2 2 - 3
23
176 59-2- Obligations for LGs issued 5,048 )3 1,938 25,435 78,053 83,078 22,752 28,998 32,599 25,435 415,266 ( 657,835 changes effects of
currency rate Group Parent Co. ) March 19 , 2016 March 19 , 2015 March 19 , 2016 March 19 , 2015 - - - Rial Rial Number 8,006 )- 3 1,588 ) Rls (m) Rls (m) Rls (m) Rls (m) 12,892 )- 2 Rls (m) 196,126 ) 259,205 ) 471,320 ) 217,025 3,344,096 ) 4,603,498 ) 1,205,561 ) 5,309,840 ) 9,394,716 ) ( 24,589,824 ) ( Obligations for LGs issued 6,938,318 5,304,813 7,079,289 5,348,318 6,938,318 5,304,813 7,079,289 5,348,318
- - - Forex 192,835 )( amount 5,779,468 )( 1,719,950 )( 24,566,864 )( 98,544,170 )( 59-3- Other obligations 500,451,042 )( 258,981,896 )( 303,711,757 )( 1,750,882,861 )( 11,721,500,731 )( 178,700,287,957 )(
Parent Co. ( ( ( ( Credit Turnover – during the year -(-(-(- - - ( 9 4 ( ( 1 ( 11 61 30 23 March 19 , 2016 March 19 , 2015
Rls (m) Rls (m) March 19,2016 Obligations for non-state sector transactions 3,010,752 2,142,419
- - - Bills 166,389 6,596 Rial Number Rls (m)
50,418/95 Other 3,984,010 4,646,341 4,704,514/06 16,175,280/36 7,161,151 6,795,356
- - - 59-4- Managed Funds & Similar Items 3,999,3507,408,625 18,616/97 3,356/11 152,087,223 1,104,105,642 28,442/87 13,974,847/60 147,448/62 21,700,697/00 1,704,502/95 Forex amount 122,740,168/05 4,165,187/60 168,430,645/54 784,044/65 1,270,784,839/50 342,082/57 5,288,977,324/44 2,395,906/73 74,981,296,571/00 1,931,593/18 Parent Co.
March 19 , 2016 March 19 , 2015 34 34 23 Rls (m) Rls (m)
1 Loans granted from managed funds 1,087,016 441,331
3 2 2 - - - Unused managed funds 76,641 70,698 - - - 2 3 3 291 Rial Number
2,194
13,929
622,853 167,446 144,039 963,546 202,966 Rls (m) 202,966
Loans granted from special interest-free deposits 180 181 4,319,501 3,000,751 3,659,264
12,893,814
Unused Special interest-free deposits 2,037 36 1,165,874 512,246 - - - 4,007/13 6,730,528 287,899/21
4,316,500/00 60- Capital Obligations & Contingencies 20,654,351/26 15,391,636/04 Forex amount 153,065,223/31 619,601,021/56 213,220,982/29 Balance at the year beginning Debit Turnover – during the year 8,149,809,538/10 119,709,227,550/60 60-1- Capital obligations are solely limited to cost of renovation and preparation of the branches
4 - - - 1 1 7 3 1 26 10 68 31 27 leased and purchased.
Number 60-2- As at the date of Balance Sheet, there is no significant contingent liability. Parent Company’s obligations statement for foreign currency letters of credits are as follows: Obligations for letters of credits Euro Swiss Franc Swedish Krona Turkish Lira Korean Won Japanese Yen Chinese Yuan Dirham Indian Rupee Omani Rial Euro Korean Won Chinese Yuan Indian Rupee Type of currency 59-1-1- 59-1- 59- Off-Balance Sheet Items Demand Term
154 155 Anual Report 2015/16
61- Earnings Per Share (EPS) The above risks are concluded from bank activity model and risk management procedures. In this model, important events affecting bank goal achievement are identified. Risk management process 61-1- Basic EPS uses expected loss and quantitative and qualitative indices to evaluate risks and updates evaluation models.
63-1-The relationship between business units and the principal risks that they are exposed to Group Parent Co. Saman bank is serious in responding to business risks and environmental uncertainty. The most 2016 2015 2016 2015 important business units exposed to financial risks are retail banking and corporate banking which Rls (m) Rls (m) Rls (m) Rls (m) are affected by credit and liquidity risks. Operational risk is also affecting some aspects of these Number of shares 7,599,287,671 7,588,000,000 7,599,287,671 7,588,000,000 units which is evaluated. Major shares owned by subsidiaries (2,770,474)(13,284,731) - - 7,596,517,197 7,574,715,269 7,599,287,671 7,588,000,000 Net profit of financial year 721,173 1,044,483 502,751 1,011,340 Saman Bank Base EPS – Rls. 95 138 66 133
EPS is calculated by dividing the profit belonging to ordinary shareholder to the average weighted Credit Risk Market Risk Operational Risk Liquidity Risk number of ordinary shares held by the shareholders. Investment all offices and Bank Branches Bank Branches Departmant Departmants 61-2- Diluted earnings per share (DEPS) Financial Financial Scores Departmant Departmant Departmant Group Parent Co.
2016 2015 2016 2015 International International Rls (m) Rls (m) Rls (m) Rls (m) Departmant Departmant Number of shares 8,000,000,000 7,647,824,658 8,000,000,000 7,647,824,658 Credit Ratiing Major shares owned by subsidiaries (3,054,022)(13,327,063) - - Departmant 7,996,945,978 7,634,497,594 8,000,000,000 7,647,824,658 Investment Net profit of financial year 721,173 1,044,483 502,751 1,011,340 Departmant Base EPS – (Rls) 90 137 63 132
DEPS is calculated by dividing the profit belonging to ordinary shareholder to the average weighted number of ordinary shares held by the shareholders upon adjustment of dilution impact of all the potential ordinary shares.
62- Subsequent Events No significant event has occurred since the date of the balance sheet to the date of approval hereof affecting Financial Statements and requiring disclosure.
63-Describibg Bank Risks Saman bank has developed an appropriate and accepted framework of risk management. Saman bank is able to manage significant risks in banking industry by an activity based model. The information provided in this section is as a result of bank operation and reflects the effects of risk on balance sheet and profit and loss statements. Saman bank addresses main risks in accordance with risk management guidelines issued by Ball 2 Committee as follows: • Credit Risk • Liquidity Risk • Market Risk • Operational Risk
156 157 Anual Report 2015/16
63-2-The risk office is responsible for developing and monitoring risk management policies. Therefore, 63-3-Credit Risk in order to manage risks effectively, there is a High Risk Committee (HRC) and risk office shown in the figure below. The risk office is a subset of deputy of monitoring and executes the HRC. 63-3-1- Definition of Credit Risk Credit risk is the probability of financial loss if counterparty fails to meet its contractual obligations. Therefore, the good banking depends on designing and implementing of appropriate formal procedures for identification, assessment, monitoring and controlling of the credit risk. Board of Credit policies provide a framework for loan granting and direct credit granting activities of the Directors bank. Credit policies shall contain matters such as target markets, portfolio structure, pricing High Risk terms, limits structure, authority of granting loan, reporting exception cases. These activities shall Committe be defined clearly, be in favor of precautionary policies of the bank and appropriate for size and CEO complexity of bank activities. These policies should be designed and implemented according to internal and external factors such as market position of the bank, business location, staff abilities Monitoring and technology. Deputy These policies shall particularly define the objectives of the bank in portfolio structure, exposure limits of counterparty or a group of related parties, special economic industry or segments, geographical locations and special products. Banks shall be ensured that their internal exposure Risk Office limits is consistent with precautionary ranges set by banking inspectors.
63-3-2-Credit Policies
The bank credit policies in loans and debts are as follows: • Management is responsible for all accepted risks in Saman Bank a) Loans: considering maximum limits, correcting loans portfolio based on time period and • The High Risk Committee always monitors management’s adequacy of policies and processes for return. controlling and responding to risks. Other important duties of the committee are to review internal controls and ensure that they are in accordance with CBI framework, to monitor implementation of b) Debts: reducing debt balances and investigating major debt items. the committee and board directives related to risk emphasizing on enhancing reputation of the bank and compliance with capital adequacy requirements. The consequence of the committee actions The most important plans and requirements of the bank are as follows: is monitoring and guidance reports provided to the board of directors. The HRC is a most effective element in risk management and seeks the following goals: • Setting quantitative objectives for loan granting and collecting debt, letters of guarantee and letter of credits. • Determination of risk appetite framework and desired capital adequacy ratio every 6 months and monitoring this process and preparing it for management approval along with setting key policies • Define the authority levels of credit departments on granting loans and collecting debts. for keeping capital adequacy (as a risk appetite measure) in a desired level of 8 %. • Install and implement monitoring systems of loan granting.
• Approval of the annual report on risk management performance and provide it to the board for • Considering customer capability in granting loan. the purpose presentation in general meetings of shareholders. • Establishing a controlling and monitoring system on reported information. • Approval of annual risk management plans in developing, improving and establishing systems for measurement and calculation of risk in the bank through provision of software and hardware • Reducing loans and liabilities risk through requiring secure collaterals. facilities and human resources. • Precisely accordance with executive directives on unit beneficiary, related parties and significant • Review the reports and evaluate calculations and measurement of significant risks quarterly loans and liabilities. and identification of improvable areas (emphasizing on policies set to manage and control risk, violations, involved people and units, feedback policies for violations, effectiveness of the policies) • Holding meeting of recovery and collecting committees continuously in all levels to quickly and informing the board of directors about results of evaluations and actions performed in this determine debt cases of customers. area. • Special consideration of overdue and outstanding debts and uncollected letters of credit and The risk office has been created as an executive arm of the HRC aiming at meeting CBI seizure guarantees and summarize and report their positions and provide recommendations. requirements and providing facilities for executing the Ball committee guidelines. The office • Monitoring activities for loans granted set by directives including site visits and progress identifies main financial risks accepted by the Ball committee including credit, liquidity, operational checking by inspectors and other qualified persons and credit committee members. and market risks and reports to the HRC, CEO and other interested committees. According to the organizational chart, the risk office is a subset of monitoring deputy. The office acts in accordance 63-3-3- Executive departments of credit risk management with HRC directives to achieve its defined goals. The implementation area includes the bank as a whole particularly, the branches of bank, credit departments management, collecting outstanding debt office, credit committees and other credit units of the bank.
158 159 Anual Report 2015/16
63-3-4-Authority limits of organizational levels for approving loans liabilities When identifying equal beneficiaries, corporate banking offices shall enter information about lenders in the bank databases. An important element of credit risk management is to define exposure limits for counterparties or group of related parties. Since retail banking and corporate banking are separated in the bank, the There should be an approval by the Board of directors in case of granting loans and creating basis for decision about approving loans and liabilities is made on three categories: large loans obligations in behalf of any equal beneficiary subject to large loans regulations. Therefore, if the and liabilities, related parties loans and liabilities1, and small and medium loans and liabilities. customer meets all terms and conditions related to large loans, the loan and obligation should be authorized by the Board of directors.
Large loans and liabilities • Large loans and obligation limits
Large loans and liabilities decisions are based on identification of equal beneficiary2 . Examples - Any large loan and obligation provided to equal beneficiaries cannot be more than 20% of bank of equal beneficiary are: capital..
• People or companies individually - The maximum limit of large loans and obligations is equal to eight times the bank capital.
• People or companies having ownership relationships including: - When loan requested by an equal beneficiary is more than limits in this instruction, bank can grant loans using common methods (such as Syndicate, Consortium or similar methods) - People and their dependents and their associated entities. considering related regulations. - Parent companies with their affiliates. Loans and obligation granted to Related Parties - Relation between affiliates of a parent company, if the percentage of ownership in these Loans and obligation granted to related parties1 will be based on Identification of related affiliates is more than 20% after multiplying their ownership percentages. parties. Such parties may be: • Companies having managerial relationships including: - Managers of credit institute including board of directors, CEO, deputy CEO and other executive - Between a company and another company which have two-thirds of common directors. managers.
- Between a company and another company which have a common chairman. - Independent Auditor (the firm and partners) and legal inspector of the credit institute.
• People and companies having financial relationships including: - People and their dependents including: parents, spouse and children which have individually or totally at least 5% of the credit institute ownership. - Between a person and his dependents. - Parents, and dependents of the people mentioned in 1 and 2 above. - Between a guarantor and guaranteed if the amount of the guarantee is at least 75% of the guarantor total income. The inverse relationship is only considered when the parties are - A company which is owned by people mentioned in 1, 2, 3, and 4 above in such a way that the involved in a mutual guarantee agreement. related parties can select at least one member of the company board.
- Between A and B parties if 50% of A income depends on B. The inverse relationship is not - A company in which related parties mentioned in 1, 2, 3 and 4 above have a managerial positon considered an equal beneficiary. (member of Board of directors, Executive Board, CEO and Deputy CEO).
- All people having at least 20% of voting share of a company. - A company having at least 5% ownership of the credit institute.
- People who have 50% common annual revenue source. - A company which is owned by the credit institute at least 10%.
• People and companies with controlling relationships including: - A company which is owned by the people mentioned in 8 above at least 20%.
- Relationship between a real person and his dependents and an associate company with at • Related Parties loans and obligations limits least 20% ownership. Loans and obligation granted to related parties will be based on Identification of related - A company with at least 20% ownership in another company. parties. Such parties may be:
- A person or company being able to direct financial and operational policies of another - Individual limits: sum of net loans and obligations granted to anyone shall not be more than company including dividend policies. 3% of the bank capital.
- A person or company being able to dismiss and appoint another company significant board - Overall Limits: sum of net loans and obligations granted to related parties shall not be more of directors. than 40% of the bank capital.
1-It means that the total granted loans and made liabilities to an equal beneficiary can be at least %10 of the base capital of the bank.
2 Equal beneficiary means an individual party or company and two or more people exposing the bank to risks through ownership, managing, financial- and controlling relationships in such a way that problems of one can extend to others and lead to failing in repayment of loans and 1- Related parties are people and companies who can affect or influence the bank decisions directly or indirectly through personal, liabilities to the bank. ownership, managerial and monitoring relationships so that they can use the bank resources in order to achieve their own goals.
160 161 Anual Report 2015/16
Loans and obligations granted to related parties shall be approved by the board of directors Authorized Rial amounts by credit committees. Rls (m) before granting/creating. Meetings of the board of directors for granting/creating loans to related parties are held in absence of the beneficiary. Authority in class 2 collaterals Authority in class 3 collaterals Committee type Kind of Loans & LCs-Rial People Companies People Companies Class 4 Branch credit Loans-Rial 2,000 3,000 600 1,000 • Corporate loans and liabilities: committee LGs and Local LCs-Rial 2,000 3,000 600 1,000 Corporate Banking Committee (CBC) has the authority for making decision about granting loans Class 3 Branch credit Loans-Rial 3,000 4,000 800 1,500 committee and credits to customers up to IRR 800 billion and larger loans shall be approved by the board LGs and Local LCs-Rial 3,000 4,000 800 1,500 of directors. Class 2 Branch credit Loans-Rial 4,500 6,000 1,500 2,000 committee LGs and Local LCs-Rial 4,500 6,000 1,500 2,000 Small and medium sized loans and liabilities Class 4 Branch credit Loans-Rial 6,000 9,000 2,000 3,000 Small and medium sized loans and liabilities are dependent to customer type and their committee LGs and Local LCs-Rial 6,000 9,000 2,000 3,000 requested amount. Therefore, customers in this area are identified as follows: Super Branch credit Loans-Rial 8,000 12,000 3,000 5,000 committee LGs and Local LCs-Rial 8,000 12,000 3,000 5,000 • People: all people with any requested amount of loans. Loans-Rial Central Provinces Credit 25% in addition to authority granted 25% in addition to authority granted • Companies: companies and their equal beneficiaries for requested amounts up to IRR 100 Committee LGs and Local LCs-Rial to branches. to branches. billion and equivalent currencies.
All branches are allowed to accept and assess credit requests only in the above range. If a credit request is more than the maximum limits, the request will be forwarded to corporate Authorized Currency amounts by branches & central provinces credit committees. Rls (m) banking department by Small and medium sized credits department. Authority in class 1 & 2 collaterals Authority in class 3 collaterals
Regardless of the loan amount requested or used, providing any credit services to customers Branch Type Forex liability type People Companies People Companies below will be the responsibility of the corporate banking department: 5,000 Branches-Forex Demand letters of credit 10,000 2,000 5,000 - Manufacturing companies with more than IRR 100 billion share of capital. Forex letters of guarantee & credit and 4,000 6,000 1,500 2,000 - Business and service companies with more than IRR 800 billion share of capital. refinance Second Class Authority submitted to branches 5,000 15,000 - Public sector companies and organizations. 25% of letters of credit and 35% of forex drafts as collateral of forex liabilities.
- Subsidiaries of banks. Branches-Forex Demand letters of credit 7,500 12,000 3,000 7,000
Forex letters of guarantee & credit and - Listed companies. 6,000 9,000 2,000 3,000 refinance First Class • Small and medium sized loans authorities: 25% of letters of credit & 35% of forex Authority submitted to branches 7,000 20,000 drafts as collateral of for ex liabilities. Saman bank branches are different in terms of authority for granting credits as: super Demand letters of credit 10,000 15,000 4,500 10,000 branches, class 1, class 2, class 3 and class 4 branches. The authority limit for approving and Forex letters of guarantee & credit and accepting mortgages in terms of type, combination and amount in each class of branches is in 8,000 12,000 3,000 5,000 accordance with directive on “Saman bank granting small and medium sized loans” and later refinance Super Branches-Forex amendments to it. 25% of letters of credit & 35% of forex Authority submitted to branches 10,000 25,000 drafts as collateral of for ex liabilities. All branches are required to bring customers’ applications to appropriate committees for making decision about granting loans and issuing letters of guarantees regarding regulations Central Provinces 25% more than submitted authority to branches in case of the above liabilities. Credit Committee on credit authorities of branches and considering current liabilities and obligation of the customers. The committees making decision about granting of loans (Rial and other currencies), issuing letters of guarantees, opening letters of credits and registration order Authorized amounts by higher committee. Rls (m) drafts include: Authority in class 1 & 2 collaterals Authority in class 3 collaterals - Branches Credit Committee; Committee Type People Companies People Companies Internal Credit Committee 30,000 50,000 15,000 25,000 - Central Provinces Credit Committee; Small & medium sized Credit Committee 100,000 - Internal Credit Committee;
- Small and medium sized Credit Committee.
162 163 Anual Report 2015/16
63-3-5-Methods of reducing Credit Risk • Guarantees: if collateral is necessary, some factors shall be considered: adequacy, reliability of the collateral. One of the methods of reducing credit risk is requiring collaterals regarding risk degree and debt liquidity. Types of collateral regarding risk degree are classified in three groups: • Assessing the lender financial position: when analyzing customer financial position, ability to generate cash flows from operations in business activities, is an important factor. When • First class collaterals: includes investment deposit and certificate of deposit issued by bank, assessing customer financial position, these factors are important: ability to repay, liquidity and participating bonds guaranteed by the government or banks, bearer certificates of deposit capability to repay. issued by other banks, letters of guarantee secured by internal and external banks (with approval of the international department manager). • Evaluating ability to repay: the lender shall obtain reasonable assurance about ability of the customer to meet their obligations when due. • Second class collaterals: includes real estates (immovable properties) and listed companies shares (tradable in the main trading floor). It is noted that the real estates shall be in full • Profitability: expense of generating credit for the customer, the fee paid to employees ownership, worthy, tradable and have all necessary licenses. for assessments, credit granting and monitoring, rent and other general expenses shall be recovered by return created on the credit granting (these items are usually collected as a • Third class collaterals: includes movable assets (warehouses certificates approved by prepayment). In fact, the profitability is assessed regarding the cost of capital. manager of small and medium sized credits department) and binding contracts, promissory notes, checks and notes received. • Continuous monitoring: the credit loans shall be monitored on a continuous basis. Determining risk domain and capital allocation along with preparing systematic reports by In order to avoid risks related to collaterals, bank insures the collaterals against fire, explosion, customers, segments, loans status etc… thunder, flood and earthquake in behalf of bank and cost of the customer through Saman Insurance Co. The instruction of collateral insurance is as follows: Fundamental principles in opening a credit file • Properties and collateral to be insured Since the credit granting process starts with creating a credit file in Saman Bank, there are - Housing units which its land and buildings are pledged as security to the bank. fundamental principles which shall be considered as follows:
- Manufacturing facilities including buildings and equipment and other properties related • Customer identification; bank to transaction. • Any access to customer credit files information shall be in accordance with Confidentiality • Insurance amount and Insurance fee calculation policies of the bank;
The insurance amount is preferred to be the real current value of properties (according to expert • Bank shall ensure using the loan as the way declared by the customer; opinion) and insurance fee is calculated based on this value. In case of housing collaterals, annual insurance fee is calculated based on loan (principal plus interest) balances or assessed value of • Before granting any credits, bank shall ensure filling and signing the related forms and legal the collaterals whichever is less. documents by the applicant;
• Bank shall treat all credit requests in a fair and similar way;
63-3-6- Customers credit rating process • The loans granted by the bank shall not be concentrated in a particular industry; This process consists of developing appropriate measures for credit granting, obtaining precise • The bank shall require adequate collateral margin. information from bank’s target market, obtaining complete understanding of the lender or the counterparty and determining the objective and source of the credit granted. • Any instruction, directive and regulation approved shall be in accordance with the CBI regulations. Credit files shall contain: The process works as follows: - Proof of identification for applicant and guarantor • Determining the nature and objective of the credit: the applicant’s business objective shall be accepted by the bank. It means a legal and non- speculative objective which is related to the - A signed request form of credit applicant’s past activities. The bank shall also ensure that the loans are used in usual business activities of the applicant. The amount of loans shall be sufficient and reasonable relative to the - Expert opinion on: applicant resources. With the growth of money-laundering activities, now understanding the - The objective of credit objectives of applicants from lending must be clearly determined. - Collaterals and guarantees • Loan type: credit on checking account, consumption loan, working capital loan, long term loan, leasing, purchase on installment, credit card, real estates, business, mortgages, house - Customer obligations building loans, debt discounts etc. - General background • Qualification for borrowing: the lender shall assess legal situation of the customer. Young - Management people, the poor and retarded persons are not qualified for signing transactional contracts. In these cases, they should have representatives.
164 165 Anual Report 2015/16
- Customer past relations with bank issued by other banks, letters of guarantee secured by internal and external banks (with approval of the international department manager). - Financial position analyses
- Competitive status analyses • Second class collaterals: includes real estates (immovable properties) and listed companies shares (tradable in the main trading floor). It is noted that the real estates shall be in full - Cash flow estimation ownership, worthy, tradable and have all necessary licenses.
- Collateral and guarantee documents • Third class collaterals: includes movable assets (warehouses certificates approved by manager of small and medium sized credits department) and binding contracts, promissory - Credit transaction structure notes, checks and notes received.
- Audited financial statements In order to avoid risks related to collaterals, bank insures the collaterals against fire, explosion, thunder, flood and earthquake in behalf of bank and cost of the customer through Saman - Business licenses. Insurance Co. The instruction of collateral insurance is as follows:
The overall credit rating process - Properties and collateral to be insured - Housing units which its land and buildings are pledged as security to the bank. • Branches are responsible for customer initial acceptance; preparing credit reports and rating, and performing inquiry from related organizations. - Manufacturing facilities including buildings and equipment and other properties related bank to transaction. In addition to above reports, in case of advanced loans, all branches are required to visit customer’s location of operations, evaluating financial statements and preparing expert - Insurance amount and Insurance fee calculation reports with a clear opinion. These items shall be documented in the customer files and provide a basis for decision. The insurance amount is preferred to be the real current value of properties (according to expert opinion) and insurance fee is calculated based on this value. In case of housing • Credit committees are responsible for evaluating credit proposals received from branches, collaterals, annual insurance fee is calculated based on loan (principal plus interest) balances assessing customers’ credit scores, management of branches credit limits and provide credit or assessed value of the collaterals whichever is less. opinions.
• Credit committees are responsible for approving credits in decision making departments 63-3-7-2- Analyzing credit quality of loans granted, obligations engaged and investments regarding the amount of credit. according to asset classifications
• The risk management department is responsible for providing an opinion on granted loans Loans granted to Banks Loans granted to Customers Obligations for LGs & LCs and updating the rating system, controlling and monitoring credit risk. 2016 2015 2016 2015 2016 2015 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) • Risk management duties in credit area are different from those of business and customer relationship departments. Current - - 115,148,307 106,663,798 12,299,900 18,511,669 Overdue - - 1,643,733 1,349,664 - - • The principles of decision making about credit granting, controlling and reporting are valid Outstanding - - 3,321,252 6,720,566 - - in all circumstances. Doutbful 4,384,725 4,283,573 24,926,909 20,915,905 - - 63-3-7-credit quality analyses Gross Total 4,384,725 4,283,573 145,040,201 135,649,933 12,299,900 18,511,669 Impairement Provision ------Bank’s assets quality including loans and investment liabilities, type and amount of collaterals and Net Book Value 4,384,725 4,283,573 145,040,201 135,649,933 12,299,900 18,511,669 their adequacy (the ratio of loans granted to updated value of collaterals) are illustrated in tables 63-3-7-1 and 63-3-7-2.
63-3-7-1- Analyzing loan and investments based on bank’s internal rating
It should be noted that customer rating system in Saman bank is being developed. Although the credit system has been designed, classification of bank customers by risk degree has not been performed yet.
One way of reducing credit risk is requiring collaterals in accordance with risk and liquidity degrees. Collaterals are classified into three classes based on risk degree:
• First class collaterals: includes investment deposit and certificate of deposit issued by bank, participating bonds guaranteed by the government or banks, bearer certificates of deposit
166 167 Anual Report 2015/16
63-3-7-3- Credit quality of participating bonds and similar items 63-3-7-5-Loans balances according to the ratio of loans balances (less provisions) to updated cash value of collaterals
Governmental bonds and treasury notes 2016 2015 2016 2015 Rls (m) Rls (m) Loans granted to Banks Rls (m) Rls (m) Islamic treasury notes 458,903 - Less than 50 % 4,384,725 4,283,573 458,903 - 51-70 % - - 71-90 - - 63-3-7-4- Type and amount of collaterals received from customers 91-100 - - More than 100 % - - Type of Collaterals 2016 2015 Loans granted to People Loans granted to People Rls (m) Rls (m) Less than 50 % 4,208,879 1,685,871 51-70 % 2,006,331 1,269,116 Cash 38,518 1,955 71-90 3,715,474 2,822,921 Participation/ Sokuk Bonds 5,138 4,238 91-100 1,173,459 1,629,962 marketable shares 231,005 142,766 More than 100 % 38,395,443 38,656,170 Deposit 3,805,935 3,114,452 Loans granted to Companies Real estates 37,087,117 32,325,862 Less than 50 % 3,070,488 1,818,007 Factry & equipment 68,070 100,108 51-70 % 5,571,676 1,643,391 Letter of Credit 36,065 27,631 Check 32,879,977 31,980,517 71-90 3,595,777 4,900,222 Promissory note 9,894,261 11,952,133 91-100 1,392,528 1,728,362 Binding Contract 5,863,352 981,769 More than 100 % 81,910,146 79,495,911 Noraml Notes 16,136 22,562 149,424,926 139,933,506 Guarantee notes 7,181 8,702 Affidavit 2,862 2,110 63-3-8- Credit risk focus Obligatory Document 81,735 98,683 Peace contract of rights 614 - In Saman bank, credit risk focus includes determining type, amount, nature and content of credit Power of Attorney 4,986 5,221 risk. Determining credit risk focus has two elements: target market and maximum share of credit Bai Contract 177,096 8,921 market. To determine credit risk focus, Saman bank defines its target market in balance sheet Loans granted to Companies - and off balance sheet items annually by an operational plan. Saman bank defines its credit risk Cash 75,230 4,655 focus in these areas: Participation/ Sokuk Bonds 13,320 12,990 marketable shares 8,627,879 9,195,662 • Corporate banking Deposit 4,365,583 1,222,044 Real estates 33,088,641 30,216,643 • Retail and middle banking Factry & equipment 3,288,025 3,290,999 Letter of guarantee 482,166 4,306,122 It should be noted that, the High Committee of Strategy and Budget is responsible for defining and Check 146,303,461 121,790,961 revising economic segments including target and total amount of credir portfolio of the bank. Promissory note 14,875,675 19,785,474 Binding Contract 15,929,808 23,346,201 63-3-8-1- Distribution of economic segments of loans and investments and their in land focus Noraml Notes 6,000 5,065 Obligatory Document 92,419 117,122 Loans Granted Invetments Obligation for LGs & LCs Peace contract of rights 400 126,966 2016 2015 2016 2015 2016 2015 Bai Contract 1,419 1,419 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) 317,350,074 294,199,953 Book value 149,424,925 139,933,505 3,238,568 2,445,120 12,299,900 18,511,669 Loans/liabilities by economic sector Business 59,394,824 57,500,348 - - 12,299,900 18,511,669 Service 29,956,453 21,388,612 - - - - Industrial 25,188,485 30,390,337 2,652,381 2,322,077 - - Agricultural 823,780 838,026 - - - - Housing 21,509,585 12,534,198 - - - - Mining 971,975 928,574 - - - - Other 7,195,099 12,069,837 - - - - Banks 4,384,724 4,283,573 127,283 123,043 - - 149,424,925 139,933,505 2,779,664 2,445,120 12,299,900 18,511,669
168 169 Anual Report 2015/16
63-3-8-1-1-Distribution of loans, obligations and investments by industry sell excess and collateral properties to collect outstanding and doubtful debts. According to organizational structure, credit departments are responsible for reducing overdue receivables and 2016 2015 bank Deputy Legal is responsible for collecting outstanding and doubtful receivables. Rls (m) Rls (m) Collecting overdue receivables shall be in accordance with Deputy Credit plans, retail credit Banks & credit institutes 91,584 82,476 committee and corporate banking are responsible for collecting outstanding receivables which is Pharmaceutical - 759 done to achieve goals determined in an annual plan. As stated in the goals of board of directors, Chemical - 8,421 retail credit committee and corporate banking managements are is responsible for collecting IRR Oil products - 2,065 2,100,000 million and IRR 1,101,000 millions of overdue receivables respectively. Therefore, an Investments 89,758 159,141 amount of IRR 3,201,000 million of overdue receivables are collected by the two departments. Telecommunicate 145 16,528 Construction 43,223 35,031 In case of collecting outstanding and doubtful receivables and selling collaterals, the Deputy Basic metals 46,753 141,583 Legal is responsible. It is planned to collect an amount of IRR 1,500,000 million of outstanding Other financial 44,356 60,476 receivables and IRR 10,000000 million of doubtful receivables and to sell an amount of IRR Extraction of metallic ores 5,787 31,061 8,000,000 million of collaterals. Therefore, an amount of IRR 19,500,000 million of noncurrent Engineering 65,185 72,072 loans will be collected by Deputy Legal. Oil Extraction 54,608 86,144 Cement, lime & plaster - 1,332 The collecting of receivables in all departments shall be in accordance with regulations of the Transport, storage & communication 61,549 17,262 country, CBI and internal instructions and directives of the bank. In case of collecting receivables Sugar - 2,328 through selling of collaterals, the process is in accordance with current regulations and internal Food except for sugar 1,654 8,621 directives of bank and consists of calculating mortgage debt and sending documents, application Car & parts 104,769 110,099 for issuing an writ of enforcement, notify the enforcement, registration status inquiry, expert Plastics & rubber 4,061 7,766 assessment report, issuing decision approvals before a meeting for auction, executive procedures Basic metals 5,242 - to sell the property and liquidating the receivable. Supply of electricity, gas, steam & hot water 10,112 - Elactrical equipments 3,001 - Non-metallic minerals 916 - Collectiong Plan Insurance & Retirement 1,348 - Receivabl Balances Collecting plan for 2015-2016 Collected in 2015-2016 634,050 843,168 28,986,135 18,400,000 21,084,886
63-3-8-2-Distribution of loans by contract and customer type 63-3-9-1-Noncurrent loans turnover
Loans balances at the end of year 2016 2015 Amount Percent Rls (m) Rls (m) Rls (m) % Non current loans balances at the beginning of year 28,986,135 33,756,865 People 11,085,794 7.6 Exchange contracts Transferred to Noncurrent during the year 24,868,154 14,591,010 Companies 9,111,594 6.3 Liquidated during the year People 37,669,458 26 Collected through Foreclosing ofcollaterals (11,214,927)(14,424,745) Non-exchange contracts (including participating contracts) Companies 87,173,355 60.1 Extended (4,040,630) - Liquidated by cash (4,322,115)(653,422) 145,040,201 Receivable from Banks abd credit institutes (4,384,725)(4,283,573) Non current l oans balances at the end of year 29,891,892 28,986,135 63-3-9-Managing noncurrent loans
The bank policy in managing noncurrent receivables has preventing approaches that means requiring collaterals and following up to collect receivables. According to Law on removal of limitations from competitive production and promotion of Iran financial system passed on April, 21, 2015, by the Parliament and directive No. 69383/94 of the CBI about calculation of profit sharing dividends, banks are required to modify their asset structure and improve revenue generating assets through selling of collaterals owned and collecting loans. Therefore, Saman bank acts in accordance with internal instructions to modify asset structure and follow up to collect its noncurrent receivables. Collecting noncurrent receivables may include taking ownership of real estates, properties and royalties pledged to the bank. If collecting of receivables at branch level is not possible, credit department and corporate banking will follow up the receivable, then Deputy Legal will follow up to collect the receivables in a legal way.
In accordance with operational and strategic actions and regulations, bank is required to
170 171 Anual Report 2015/16
63-3-9-2-Distribution of noncurrent loans by economic sectors 63-4-Liquidity Risk
Non current balances of loans granted Provision For doubtful loans Net value of noncurrent loans and 63-4-1- Definition
Non current loans by sector 2016 2015 2016 2015 2016 2015 In this table, capital used to cover credit risk is 8% to achieve capital adequacy goals. Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) (Capital donated= risk level * 8%) Business 11,925,369 10,314,207 1,222,733 1,308,468 10,702,636 9,005,739 Services 4,062,850 3,002,005 659,380 491,715 3,403,470 2,510,290 63-4-2- Liquidty risk policies Industrial 10,978,086 13,137,797 1,697,156 1,841,496 9,280,930 11,296,301 Saman bank policy is to keep cash buffer for each foreign currency at least 2% of the total related Agriculture 148,429 94,498 6,495 2,028 141,934 92,470 deposits. This buffer is always reviewed to keep at the desired level. There is also limits to Other 696,343 1,178,489 239,116 123,459 457,227 1,055,030 transaction with other banks and there is a rigid control to prevent violations of the limits. 2,080,470 1,259,138 61,925 36,169 2,018,545 1,222,969 Mining 345 - - - 345 - 63-4-3- Executive departments of liquidity risk management Banks 4,384,725 4,283,573 - - 4,384,725 4,283,573 Saman bank believes in active management of liquidity risk. So there is a coherent system to 34,276,617 33,269,707 3,886,805 3,803,335 30,389,812 29,466,372 manage liquidity risk. In this system, the most important role are played by the board of directors, high risk committee, resources and usage committee, treasury management and risk office. 63-3-9-3- Foreclosed asset balances 63-4-4- Measuring liquidity risk
2016 2015 Saman bank uses Ball III ratios to measure liquidity risk including Net Stable Funding Ratio Rls (m) Rls (m) (NSFR) and Liquidity Coverage Ratio (LCR). Liquidity gap between Rial and other foreign Housing Real Estates 6,183,365 1,832,599 currencies is another measure which is used. Office Real estates 12,753,136 13,856,078 NSFR=Necessary Stable Funding / Available Stable Funding Factory & equipment 4,238,905 1,153,346 Land 3,617,484 3,621,351 63-4-5- Procedures for controlling and monitoring Liquidity risk 26,792,890 20,463,375 The risk office, committee of resource and usage and treasury department are responsible for controlling and monitoring liquidity risk in Saman bank. The committee of resource and usage is 63-3-10- Necessary Capital for credit risk coverage responsible to the high risk committee and tracks these issues:
The capital amount needed for credit risk coverage is IRR 15.034.592 million. The related • Review and control measures and ratios and variances from annual operational budget calculation is provided in table 63-3-10-1. • Decision making about desired amount and structure of usages including credits, foreign 63-3-10-1- Calculation of necessary capital for credit risk coverage currencies, investments, cash and equivalents in Rial and other currencies and interbank In this table, capital used to cover credit risk is 8% to achieve capital adequacy goals. market regarding its effects on profitability of the bank considering annual operational budget.
(Capital donated= risk level * 8%) • Decision making about rates of mobilization and allocation of Rial and for ex resources regarding needs, competitors’ rates, and international market rates. Also decision making about authorities of executive departments in changing the rates regarding its effects on 2016 profitability of the bank considering annual operational budget. Assets and Type of Asset Risk Factor Risk Impact Allcated Capital Obligations • Decision making about solutions for liquidity coverage in accordance with liquidity approved Rls (m) % Rls (m) Rls (m) by the high strategy committee and high risk committee. Due from banks & other credit institutes 4,384,725 20 876,945 70,156 Non governmental participating bonds - 100 - - • Determining the interest rate between departments Investment in stock 2,779,664 100 2,779,664 222,373 • Review and approval of caution plan in response to liquidity crisis regarding its effects on Accounts receivable 5,785,072 100 5,785,072 462,806 the bank profitability. If these task are more than authority limits of the committee, the related Hire purchase & housing loans 23,130,163 50 11,565,082 925,207 report shall be provided to the strategy committee and the board of directors. Other loans & receivables 121,910,038 100 121,910,038 9,752,803 • Reviewing maturity dates of assets and liabilities, profitability trends, structure of the Other Assets 30,255,726 100 30,255,726 2,420,458 expenses, the profit-sharing and non-profit-sharing income ratios, rate of return on assets and Guarantee of non governmental participating bonds (subject - 100 - - to 50% factor) shares, cost of money in the authority level and considering its effects on the bank profitability. Obligation for letters of guarantees issued (subject to 20% 7,079,289 100 1,415,858 113,269 factor) • Decision making about amount of investment in capital and commodity markets. Obligation for letters of credit issued (subject to 20% factor) 5,220,611 100 1,044,122 83,530 • Reviewing performance of investment portfolio of the bank and providing solutions to achieve 200,545,288 175,632,507 14,050,601 operational goals in case of variations from budgets.
172 173 Anual Report 2015/16
• Controlling and monitoring rate of loans and return on different assets of the bank (loans, 63-4-5-3- Below table shows maturity of the financial assets and liabilities of the bank by their investments, interbank market etc.) regarding budgeted rates. probable liquidating date:
• Controlling and monitoring cost of resources rates regarding budgeted rates. 2016 Between 3 without • Applying appropriate policies to keep profit margin for resources and usages according to Less than 1 More than 5 Book Value 1-3 Months months and 1-5 years identified budgeted amounts in annual budget and providing solutions to the high strategy committee. Month years 1 year Maturity • Determine and approve cautionary annual liquidity level according to the budget, regulations Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) and suggestion of board of directors. Assets • To ensure controlling and keeping of liquidity levels in different circumstances. Cash 49,362,166 49,362,166 - - - - - Due from other banks & credit 12,700,247 12,700,247 - - - - - • Monitoring interbank activities. institutions Due from government ------Loans & other receivables from Treasury management is responsible for executing aspects of interbank activities. ------public sector Loans & other receivables from 127,499,869 64,686,933 20,416,661 18,617,992 23,144,385 633,898 - 63-4-5-1- Liquidity reserves non public sector Investment in stocks & securities 3,238,568 804,012 - 458,902 - - 1,975,654 2016 2015 Due from subsidiaries & affiliates 1,030,523 - - - - - 1,030,523 Rls (m) Rls (m) Other Accounts receivable 5,785,072 5,785,072 - - - - - Cash balance in CBI 2,478,732 1,778,289 Tangible Fxeds Assets 3,593,858 - - - - - 3,593,858 Cash balances in other banks 44,772,819 39,725,079 Intangible Assets 4,119,563 - - - - - 4,119,563 Treasury Bonds 458,903 - Legal Deposit 21,131,325 325,275 307,357 593,007 1,457,824 18,447,862 - 47,710,454 41,503,369 Other Assets 30,255,726 4,467,566 533,333 7,200,000 17,952,890 - 101,937 258,716,917 138,131,271 21,257,352 26,869,901 42,555,099 19,081,760 10,821,535 63-4-5-2- Liquidity ratios Liabilities
Due to other banks & credit Beginning of Average during Maximum during Minimum End of 29,687,714 21,739,763 - 7,947,951 - - - the year the year the year during the year the year institutions customers' deposits 21,933,900 945,231 766,014 1,548,618 3,859,028 14,815,009 - % % % % % Liquid assets & equivalent to total assets (1) 32 28 46 17 22 Dividends payable 157,034 - - - - - 157,034 Liquid assets & equivalent to total deposits 23 27 41 19 22 Debt Bonds ------net liquid assets to total deposits 21 25 39 17 20 Provision for income tax ------Loans to total deposits 56 49 56 39 52 Other provisions & liabilities 4,268,655 - - - - - 4,268,655 Provision for emplyees' Loans to deposits matured within one year or more 145 143 150 135 136 414,634 - - - - - 414,634 termination benefits Demand deposits to total deposits (3) 15 23 33 14 14 long-term investment deposit 189,413,552 2,308,043 2,308,054 4,382,408 10,721,575 169,693,472 - accounts Interest payable to long- term 2,114,740 2,114,740 - - - - - • Cash and equivalent includes cash, participating bonds and similar items for which there is an investment deposits accounts active market. Total Liabilities 247,990,229 27,107,778 3,074,068 13,878,977 14,580,602 184,508,482 4,840,323 Total shareholders’equity 10,726,688 10,726,688 • Net liquid assets include cash and equivalent, investment securities for which there is an Total Liabilities and 258,716,917 27,107,778 3,074,068 13,878,977 14,580,602 184,508,482 15,567,011 active market less banks’ deposits, issued debt securities, other borrowings and obligations shareholders’equity matured within a month. Gap 111,023,493 18,183,284 12,990,924 27,974,497 (165,426,722)(4,745,476) Retained Gap 111,023,493 129,206,777 142,197,701 170,172,198 4,745,476 - • Liquid deposits are those which do not have a binding maturity such as Qard Hassan, savings Gap to Capital ratio 893.4% 146.3% 104.5% 225.1% (1331.2%) (38.2%) accounts etc. Retained Gap to Capital ratio 893.4% 1039.7% 1144.3% 1369.4% 38.2% 0.0% Capital 12,427,141 12,427,141
174 175 Anual Report 2015/16
63-4-5-4-Analyzing maturity of financial liabilities
63-4-5-4-1- Below table shows maturity of the financial liabilities of the bank by their
2015 contractual liquidating date: Between 3 without Less than 1 More than 5 Book Value 1-3 Months months and 1-5 years identified 2016 Month years Between 3 without 1 year Maturity Less than 1 More than Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Book Value 1-3 Months months and 1-5 years identified Month 5 years Assets 1 year Maturity Cash 43,376,114 43,376,114 - - - - Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Due from other banks & credit Liabilities 11,950,067 11,950,067 - - - - institutions Due to other banks & credit institutions 29,687,714 21,739,763 - 7,947,951 - - - Due from government ------customers' deposits 21,933,900 - - - - - 21,933,900 Loans & other receivables from ------public sector Debt Bonds ------Loans & other receivables from non 118,111,682 61,209,114 17,717,080 19,794,926 19,390,563 - - long-term investment deposit accounts 189,413,551 3,780,525 1,716,227 5,558,564 74,914,880 - 103,443,356 public sector Interest payable to long- term 2,114,740 2,114,740 - - - - - Investment in stocks & securities 2,445,120 1,005,052 - - - - 1,440,068 investment deposits accounts Due from subsidiaries & affiliates 1,186,220 - - - - - 1,186,220 243,149,905 27,635,028 1,716,227 13,506,515 74,914,880 - 125,377,256 Other Accounts receivable 1,704,678 1,704,678 - - - - - Tangible Fxeds Assets 3,358,505 - - - - - 3,358,505 Intangible Assets 3,861,394 - - - - - 3,861,394 2015 Between 3 without Legal Deposit 19,512,265 312,587 337,469 598,591 1,524,302 16,739,317 - Less than 1 More than Book Value 1-3 Months months and 1-5 years identified Other Assets 22,576,877 2,342,594 666,667 2,000,000 17,463,375 - 104,241 Month 5 years 1 year Maturity 228,082,922 121,900,206 18,721,215 22,393,516 38,378,239 16,739,317 9,950,428 Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Liabilities Liabilities Due to other banks & credit 28,755,259 23,104,647 - 5,650,612 - - - institutions Due to other banks & credit institutions 28,755,259 23,104,647 - 5,650,612 - - - customers' deposits 21,694,932 824,407 737,628 1,562,035 4,555,936 14,014,926 - customers' deposits 21,694,932 - - - - - 21,694,932 Dividends payable 185,811 - - - - - 185,811 Debt Bonds 1,000,000 - - 1,000,000 - - - Debt Bonds 1,000,000 - - 1,000,000 - - - long-term investment deposit accounts 157,897,141 1,323,219 15,146,948 40,142,152 20,214,524 - 81,070,298 Interest payable to long- term Provision for income tax ------1,781,795 1,781,795 - - - - - investment deposits accounts Other provisions & liabilities 5,702,007 - - - - - 5,702,007 211,129,127 26,209,661 15,146,948 46,792,764 20,214,524 - 102,765,230 Provision for emplyees' termination 296,307 - - - - - 296,307 benefits long-term investment deposit 157,897,141 2,052,663 2,368,457 3,947,429 9,473,828 140,054,764 - accounts 63-4-5-4-2- Below table shows maturity of the forex financial liabilities of the bank by their Interest payable to long- term contractual liquidating date: 1,781,795 1,781,795 - - - - - investment deposits accounts Total Liabilities 217,313,252 27,763,512 3,106,085 12,160,076 14,029,764 154,069,690 6,184,125 2016 Total shareholders’equity 10,769,670 10,769,670 Between 3 without Total Liabilities and Less than 1 More than 228,082,922 27,763,512 3106085 12160076 14,029,764 154,069,690 16,953,795 Book Value 1-3 Months months and 1-5 years identified shareholders’equity Month 5 years Gap 94,136,694 15,615,131 10,233,440 24,348,475 (137,330,373) (7,003,367) 1 year Maturity Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Retained Gap 94,136,694 109,751,825 119,985,265 144,333,740 (7,003,367) (14,115,035) Liabilities Gap to Capital ratio 757.5% 125.7% 82.3% 195.9% (1105.1%) (56.4%) Due to other banks & credit institutions 20,163,066 12,215,115 - 7,947,951 - - - Retained Gap to Capital ratio 757.5% 883.2% 965.5% 1161.4% (56.4%) (113.6%) customers' deposits 8,424,801 - - - - - 8,424,801 Capital 12,332,122 12,332,122 Debt Bonds ------long-term investment deposit accounts 10,568,102 3,533,655 1,635,067 5,062,064 - - 337,316 Interest payable to long- term ------investment deposits accounts 39,155,969 15,748,770 1,635,067 13,010,015 - - 8,762,117
176 177 Anual Report 2015/16
2015 63-5-Market Risk Between 3 without Less than 1 More than 63-5-1- Definition Book Value 1-3 Months months and 1-5 years identified Month 5 years 1 year Maturity The market risk or value exposed to market risk is defined as the probability of uncertainty Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) in revenues from trading portfolio of a financial institute as a result of change in the market elements including asset prices, interest rates, and market and liquidity volatility. Market risks Liabilities arises when a financial institute is actively trading assets, liabilities and derivatives and it is not Due to other banks & credit institutions 18,336,737 12,686,125 - 5,650,612 - - - probable when these items are trading for long-term investment, financing and hedging purposes. customers' deposits 6,642,411 - - - - - 6,642,411 Debt Bonds ------63-5-2-Executive departments of managing market risk long-term investment deposit accounts 11,123,255 3,086,449 2,184,709 5,646,122 - - 205,975 Saman bank believes in active management of market risk. So there is a coherent system to Interest payable to long- term invest------ment deposits accounts manage the market risk. In this system, the most important role are played by the board of 36,102,403 15,772,574 2,184,709 11,296,734 - - 6,848,386 directors, high risk committee, resources and usage committee, high executive committee, investment committee, investment head officer, international head officer and the risk office.
63-4-6- Plan for responding to crisis (Liquidity stress testing) Shares:
In order to test liquidity crisis test in Saman bank, it is necessary to identify factors creating • The high executive committee in the top level-more than IRR 50 billion in a day or 10% of an liquidity crisis and make scenarios based on current facts. The executive plan for liquidity crisis investee company’s shares (whichever is less). testing is performed through identification of factors creating liquidity crisis by studying previous • Investment committee- transaction amount up to IRR. 50 billion in a day or 10% of an investee literature, determining major risk factors, shocks and effect on assets and liabilities, developing company’s share (whichever is less). scenarios in favor of assets and liabilities, modeling the liquidity crisis test on the basis of internal affecting factors, evaluating the probability of liquidity crisis and keeping an appropriate level of • Deputy investment and affiliates- transaction amount from IRR. 3 to 30 billion in a day or less liquidity in response to cash outflows and preventing high expense cash . than 5% of an investee company’s share.
Liquidity risk has been center of focus in last financial crises because it showed that how crisis can • Investment head officer- transaction amount from IRR. .2 to 3 billion in a day. expand liquidity problems to other banks quickly and even stop big financial institutes. Before the crises, there were no liquidity stress testing plans in banks, because historical data did not show • Investment expert- transaction amount up to IRR. 200 million in a day. indication of liquidity risk crisis as a result of liquidity problems. Foreign Currencies: In the banking industry, the flow of resources should be consistent with outflows. Otherwise, there • International manager and foreign currency transactions office are responsible for decision will be three scenarios which all of them lead to lack of liquidity. making about transaction limits. The first scenario: It is assumed that the resources inflow and outflow of depositors is in a • • It is possible to add some decisions on the basis of special and long term approaches by the normal situation. But the speed of collecting receivables is less. In this situation the lender will chairman and CEO in the weekly committees held. use the resources in a longer than usual period. 63-5-3-Measuring market risk • The second scenario: It is assumed that outflow of resources by depositors is speedy. Therefore new resources inflow and collecting receivables from lenders will not cover the The transactional portfolio of the bank has two sections: speedy outflow. • Shares • The third scenario: It is assumed that resource outflow is growing and simultaneously return of resource pattern is not normal. • Open position of foreign currencies
One of the common ratios used for liquidity crisis test is the LCR ratio. To make a scenario on the To assess market risk, total value of shares exposed to risk will be calculated at 99% LCR, we should create supposed shocks on inflow and outflow of assets and follow their effects on confidentiality level. the LCR and its crisis border line. According to Ball II and the CBI regulations, the Historical Simulation method is used to calculate In the normal course and according to historical data, the liquidity ratios including LCR never necessary capital to cover share portfolio risk. have reached the crisis borderlines. Therefore, our scenario cannot be developed on the basis of historical data and we use a hypothetical future situation. There are different hypotheses affecting The Historical Simulation method is used for calculation of foreign currency market risk, the open crisis including external factors such as inflation rate, for ex currency changes, housing prices position of the portfolio as whole, the open positive/negative position of each currency, necessary index, blocking the Shetab network by the CBI etc. capital to cover risk, and value of portfolio exposed to risk.
The effect of each exogenous variable on balance sheet ratios and increase in receivables ratio as The open position of a foreign currency include the absolute value of items below: well as decrease in loans, deposits ratios will change liquidity coverage ratio and make it near to crisis. - The Rial amount of difference between foreign currency assets and liabilities included in the balance sheet.
- The Rial amount of difference between bank and customers’ obligations in any currencies
178 179 Anual Report 2015/16
included under the balance sheet. Canadian Australian Turkish Indian Omani Korean Chinese Yuan Dollar Dollar Lira Rupee Rial Won According to the CBI instructions, the authorized open position for a foreign currency (positive or negative) is up to 10% of bank’s capital and authorized open position for foreign currencies as a Cash - - 2,615 - - - - Due from other banks & credit - 12,748 129,532,243 7,621,196,749 164,727,974 91,215,840 10,673,363,813 whole (positive or negative) is up to 30% of bank’s capital. institutions 63-5-4- Analyzing value of shares and other marketable investments exposed to risk ------1,719,950 - 400,360,834
Regarding to historical simulation method and its ratio of probable changes on market value, the Investment in stocks & securities ------value of shares and other marketable investments exposed to risk is shown in the following table: Due from subsidiaries & affiliates ------Other Accounts receivable ------2016 2015 Tangible Fxeds Assets ------Possible changes Effects on profit Possible changes Effects on profit Investment Type in market price (1) or loss (2) in market price or loss Intangible Assets ------% Rls (m) % Rls (m) Legal Deposit ------Investment in marktable shares (-5.2 , 8.0) 7,400 (-5.8 , 5.6) (4,737) Other Assets - - 78,720 - 24,142,410 - 52,416,788,566 Investments in mutual funds (-2.8 , 4.8) 878 (-3.3 , 2.4) (810) Total foreign currency assets - 12,748 129,613,577 7,621,196,749 190,590,334 91,215,840 63,490,513,213 Due to other banks & credit - - - 44,130 - 87,011,073 10,000,000,000 institutions 63-5-5- Analyzing value of foreign currency exchange exposed to risk Customers' deposits 3,302 23,901 72,533,476 6,117,729,224 157,243,366 2,186,146 6,272,340,189 Dividends payable ------The status of foreign currency assets, liabilities and obligations s shown in the following table: Debt Bonds ------
US Pound UAE Japanese Swiss Provision for income tax ------Euro Dollar Sterling Dirham Yen Franc Other provisions & liabilities ------Cash 12,935,464 13,872,587 152,079.59 7,166,705 - - LCs and drafts acceptance - - - - 1,719,950 - 500,451,042 Long-term investment deposit Due from other banks & credit institutions 37,475,314 397,160,543 4,495,483 40,572,855 21,279,741,484 60,688,632 61,993 718 35,370,672 - 1,000 - - accounts ------Total liabilities and foreign currency 65,295 24,619 107,904,148 6,117,773,355 158,964,317 89,197,218 16,772,791,231 20,688,781 132,077,616 - 2,684,275 7,214,364 27,576,603 deposit account equity Net Assets (liabilities) as at March Investment in stocks & securities ------(65,295)(11,871) 21,709,430 1,503,423,394 31,626,018 2,018,622 46,717,721,982 19,2016 Due from subsidiaries and affiliates ------Foreign exchange long (short (1,507) (273) 229,056 681,051 147,219 158,555 1,203 Other Accounts receivable ------Foreign currency open position to (0.01%) 0.00% 1.86% 5.53% 1.19% 1.29% 0.01% Tangible Fxeds Assets ------capital Net Assets (liabilities) as at March (65,504) (11,871) 32,840,149 140,569,644 (143,625,664) 2,012,691 78,951,900,892 Intangible Assets ------19,2015 Legal Deposit ------Obligation of opened LCs - - 4,799,620 1,724,694,756 124,949,132 21,704,704 16,593,890,765 Other Assets 19,118,782 202,780,776 - 36,940,749 - - Obligation of issued LGs 2,370,000 - - 115,827,360 15,642,623 - - Total foreign currency assets Obligation of amounts received from 90,218,340 745,891,522 4,647,562 87,364,585 21,286,955,848 88,265,235 ------National Development Fund Due to other banks & credit institutions 13,223,047 295,675,746 1,493 82,273,021 18,851,570,172 70,040,022 Customers' deposits 7,020,104 137,062,460 115,539 9,331,532 426,240,704 11,264,360 Dividends payable ------Debt Bonds ------Provision for income tax ------Other provisions & liabilities 4,298,709 6,786,729 - 288,910 - 105,691 LCs and drafts acceptance - 1,682,669 - - - - Long-term investment deposit accounts 96,323,512 208,831,971 767,764 16,923,939 2,039,562,587 1,489 Total liabilities & foreign currency deposit 120,865,372 650,039,576 884,796 108,817,403 81,411,561 account equity 21,317,373,463 Net Assets (liabilities) as at March 19,2016 (30,647,032) 95,851,946 3,762,767 (21,452,818)(30,417,615) 6,853,674 Foreign exchange long (short (926,766) 3,252,931 162,134 (176,596) (82) 212,005 Foreign currency open position to capital (7.52%) 26.40% 1.32% (1.43%) 0.00% 1.72% Net Assets (liabilities) as at March 19,2015 (18,145,817) 68,146,830 3,597,951 (95,962,100) (405,797,721) 5,633,730 Obligation of opened LCs - 45,801,409 - 95,064 139,503,001 1,440,689 Obligation of issued LGs 408,476 5,052,303 138,334 - - - Obligation of amounts received from National ------Development Fund
180 181 Anual Report 2015/16
Regarding to historical simulation method and its ratio of probable changes on market value, the 63-5-7- Analyzing the gap between assets and liabilities sensitive to interest rate value of shares and other marketable investments exposed to risk is shown in the following table 2016 Between 3 Non Less than 1 More than 5 2016 2015 Book Value 1-3 Months months and 1-5 years sensitive Possible changes Effects on profit Possible changes Effects on profit Month years Currency Type 1 year to rates in market price (1) or loss (2) in market price or loss Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) % Rls (m) % Rls (m) Assets (US Dollar )-0/02 ، 0/43( (1,967) (47/0 ، 02/0-) (1,415 49,362,166 44,772,819 - - - - 4,589,347 Euro )-2/68 ، 2/98( 9,718 (23/1 ، 21/2-) (8,234) Cash - 9/63% - - - - - Pound Sterling )-2/49 ، 2/58( 171 (60/1 ، 03/2-) 5 12,700,194 4,569,253 - - - - 8,130,994 UAE Dirham )-0/04 ، 0/43( (375) (49/0 ، 04/0-) (2,036) Due from other banks & credit 22% 22% - - - - - Japanese Yen )-2/24 ، 2/68( (0) (70/1 ، 22/2-) 2 institutions 127,499,869 68,258,469 33,822,271 162,835 12,845,230 12,411,064 - Loans & other receivables from Swiss Franc )-2/71 ، 3/41( 370 (49/2 ، 192/3-) 0 public sector 22% 23/6% 23/3% 24/5% 20/4% 11/7% - Canadian Dollar )-2/63 ، 2/73( (1) (90/1 ، 48/2-) 1 Investment in stocks & securities 3,238,568 - - - - - 3,238,568 Australian Dollar )-3/67 ، 3/58( (0) (36/1 ، 25/2-) 4 Due from subsidiaries & affiliates 1,030,523 - - - - - 1,030,523 (Turkish Lira )-3/57 ، 3/50( (185) (79/0 ، 61/0-) (1,767 Other Accounts receivable 5,785,072 - - - - - 5,785,072 Indian Rupee )-1/43 ، 20/6( 160 (46/1 ، 48/1-) 127 Tangible Fxeds Assets 3,593,858 - - - - - 3,593,858 Chinese Yuan )-0/87 ، 10/1( 137 (9/2 ، 16/2-) 4 Intangible Assets 4,119,563 - - - - - 4,119,563 Omani Rial )-0/20 ، 0/47( 337 (61/0 ، 15/0-) 406 Legal Deposit 21,131,325 - - - - - 21,131,325 (Korean Won )-2/61 ، 2/73( 1 (90/2 ، 07/3-) (317 Other Assets 30,255,726 - - - - - 30,255,726 258,716,864 117,600,542 33,822,271 162,835 12,845,230 12,411,064 81,874,976 • The probable change in market price is calculated by a 10 days period Liabilities 583,649 4,666,611 1,709,699 - - 22,727,755 • The effects on profit or loss in market price is calculated by a 10 days period Due to other banks & credit 29,687,714 institutions %4/0 %45/0 %1/23 %3/4 - - 63-5-6- Necessary capital for market risk coverage Customers' deposits 21,933,900 - - - - - 21,933,900 Dividends payable 157,034 - - - - - 157,034 Share risk Currency risk Other provisions & liabilities 4,268,654 - - - - 4,268,654 Necessary Total Necessary Capital Measurement Method Value at risk Necessary Capital Value at risk 107,223,881 1,716,227 5,558,564 71,950,976 2,963,905 - Capital for Market risk long-term investment deposit 189,413,552 accounts %16.50 %4.8 %6.8 %20.3 %22.9 - Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) %17/6 Interest payable to long- term Historical Simulation Model 23,753 225,345 18,185 387,532 612,877 2,114,740 - - - - - 2,114,740 investment deposits accounts
Total Liabilities 247,575,595 107,807,530 6,382,838 7,268,263 71,950,976 2,963,905 51,202,083 Total shareholders’equity 10,726,688 10,726,688 Total Liabilities and shareholders’equity 258,302,283 107,807,530 6,382,838 7,268,263 71,950,976 2,963,905 61,928,771
Gap - 9,793,012 27,439,433 (7,105,428) (59,105,746) 9,447,159 19,946,205 Retained Gap - 9,793,012 37,232,445 30,127,017 (28,978,729) (19,531,570) 414,635
182 183 Anual Report 2015/16
63-6-Operational Risk
2015 63-6-1-Definition Between 3 Non Less than 1 More than 5 Operational risk is defined as loss of error or inefficiency of internal processes, people, system Book Value 1-3 Months months and 1 1-5 years sensitive Month years and external events. It does not include reputation and legal risk. year to rates Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) Rls (m) 63-6-2-Executive departments of managing operational risk Assets Saman bank has developed a coherent process of operational risk management in accordance 43,376,114 39,725,079 - - - - 3,651,035 Cash with the CBI regulations and the best practice in the banking industry as well as ensuring that 0.0% 4.59% - - - - - operational risks are identified, assessed, measured and controlled on a reasonable and complete Due from other banks & credit 11,950,067 4,635,788 - - - - 7,314,279 basis reacting to other departments. This process is as follows: institutions 22% 22% - - - - - • The risk office: this is the executive operational risk department which aims at identifying Loans & other receivables from public 118,111,682 43,134,977 42,489,615 208,113 16,416,933 15,862,045 - resources exposed to operational risk and implementing operational risk management process sector 21.03% 23.39% 27.17% 26.08% 19.18% - - in the organization process. Investment in stocks & securities 2,445,120 - - - - - 2,445,120 • Quality improvement division: This department designs and documents operational process Due from subsidiaries & affiliates 1,186,220 - - - - - 1,186,220 of the bank, determines relations between departments, defines controlling and monitoring Other Accounts receivable 1,704,678 - - - - - 1,704,678 indices and links the directives and regulations to active processes. This structure is formed to Tangible Fxeds Assets 3,358,505 - - - - - 3,358,505 standardize the processes and minimize the operational events. Intangible Assets 3,861,394 - - - - - 3,861,394 Legal Deposit 19,512,265 - - - - - 19,512,265 • Inspection division: this department performs periodical inspections from branches in accordance with directives and instructions and prepares reports of the findings. These reports Other Assets 22,576,877 - - - - - 22,576,877 are a basis for analyzing operational event at branch level and assesse the operational risk of 228,082,922 87,495,844 42,489,615 208,113 16,416,933 15,862,045 65,610,373 branches by event type required by the Ball committee regarding frequency and impact of the Liabilities possible loss. 28,755,259 1,793 3,026,444 2,559,469 - - 23,167,554 Due to other banks & credit institutions 63-6-3-Preventing policies for intentional or unintentional human mistakes 0.57% 0.10% 2.41% 3.50% - - - Customers' deposits 21,694,932 - - - - - 21,694,932 Since people are a source of loss to organizations, Saman bank attempts to prevent from Dividends payable 185,811 - - - - - 185,811 intentional or unintentional human mistakes. 1,000,000 - - 1,000,000 - - - Debt Bonds Trying to create a clear culture and environment in which people are aware of their duties and 20% - - 20% - - - responsibilities against loss making events related to operational risk. Other provisions & liabilities 5,702,007 - - - - - 5,702,007 157,897,141 82,393,517 15,146,948 40,142,152 20,214,524 - To expand an appropriate culture about operational risks and institutionalize high ethical values. long-term investment deposit accounts 19.04% 15.38% 22.16% 22.37% 25% - - Planning for training courses to ensure that the staff is sufficiently knowledgeable and Interest payable to long- term 1,781,795 - - - - - 1,781,795 experienced in field of working. investment deposits accounts
Total Liabilities 217,016,946 82,395,310 18,173,392 43,701,621 20,214,524 - 52,532,099 63-6-4-Figureing for responding to the crisis Total shareholders’equity 10,769,670 10,769,670 There is a Passive Defense instruction developed in Saman bank in order to ensure keeping the Total Liabilities and 227,786,616 82,395,310 18,173,392 43,701,621 20,214,525 - 63,301,769 normal situation, returning to normal situation programs, and minimizing consequences in case of shareholders’equity crises occurring. Gap 5,100,535 24,316,223 (43,493,508) (3,797,591) 15,862,045 2,308,604 Retained Gap 5,100,535 29,416,758 (14,076,750) (17,874,342) (2,012,297) 296,307 63-6-5-Measuring operational risk Saman bank uses the Base Index approach consistent with Ball II in to include operational risk in its capital adequacy calculations. The bank is working to develop structures necessary in calculation of operational risk with new methods. Therefore, the bank needs identification and assessment of operational risk in all processes.
184 185 Anual Report 2015/16
Identification and assessment tools include: 63-7- Capital Management • Using the self-risk assessment method in a qualitative manner involving managers and operational divisions. 63-7-1-Capital
• Using the findings and data of regular audit and inspection related to loss making events of The capital of the bank is IRR. 12.362.709 million as at March, 19, 2016: operational risk. 2016 2015 • Using key indications of risk in the important processes of the bank in order to monitor operational risk trends. Rls (m) Rls (m) A) Main capital 63-6-6-Operational risk controlling and monitoring mechanism Capital less Capital from reassessment 5,575,004 4,163,004 • Operational risk controlling mechanism: after assessment of operational risk, the bank shall Ongoing capital increase - 412,000 determine the risk classes to be accepted or controlled. Controlling the operational risk shall Legal reserve 1,523,868 1,448,456 be done by cooperation of all related operational divisions. The most important action in this Retained eranings 1,202,145 2,447,064 fields are identification of constraints creating operational risk (people, systems, processes 8,301,017 8,470,524 and external events), developing /revising preventing and detecting instructions related to loss B) Additional Capital making events of operational risk. General provision for debts & investments 1,788,907 1,703,206 • Operational risk monitoring mechanism: the operational risk position is monitored Surplus on reassessment of tangible fixed assets 2,425,671 2,425,671 periodically to review the efficiency and effectiveness of controls and effects of any new event 4,214,578 4,128,877 on the organization risk profile. After each period, resources exposed to operational risk, Less: Excess of additional capital to main capital - - frequency and impact of risk factors, key indications of risk, and efficiency and effectiveness of Additional Capital 4,214,578 4,128,877 established controls are reviewed. Capital before deductions 12,515,595 12,599,401 63-6-7-Necessary capital for operational risk coverage C) Dduction from capital nvestment in subsidiary banks & credit institutes - - Necessary capital for operational risk coverage is evaluated by the Base Index method. The capital exposed to operational risk is as follow: nvestment in other banks & credit institutes (152,885)(144,721) (152,885)(144,721)
Capital exposed to operational risk. Rls (m) Capital 12,362,709 12,454,680 Measurement Method 2016 2015 Base Index 321,500 438,450 The capital basis for calculation of cautionary ratios is IRR 11,799,287 million at the date of approving the financial statements. The new capital of the bank will be validated by the CBI after considering any possible changes and deductions such as dividends.
186 187 Anual Report 2015/16
63-7-3- Capital Adequacy Ratio
The Capital Adequacy Ratio of then bank is 8% as at March, 19, 2016. ------6,270
74,315
850,956 227,210 Rls (m)
8,872,326 2,362,623 2,890,898 7,219,899 1,069,272 1,622,464 Assets &
Liabilities 13,721,331 88,870,485 20,613,060
147,301,253
Risk-weighted 2016 2015 Rls (m) Rls (m) Capital 12,362,709 12,454,680 2015 - - - -
% 100 100 100 Total assets and liabilities weighted by risk 155,265,581 147,301,253
Risk Factor Capital Adequency Ratio(CAR) 8.0% 8.5%
63-7-4-Leverage - - -
6,270 74,315 100 Rls (m) 850,956 100 227,210 100 2,362,6232,890,898 100 100 7,219,899 100 1,069,272 100 1,622,464 100 9,092,568 1,871,981 Liabilities 27,442,66388,870,485 50 20,613,060 100 100 44,361,631 20 19,512,265 Leverage is calculated by dividing total assets to shareholders equity. The bank leverage is 24.12% Assets and as at March, 19, 2016.
2016 2015 ------Rls (m) Rls (m) 28,815
276,508 779,490 117,567 Rls (m)
9,868,603 2,694,634 6,815,594 7,713,421 1,147,475 1,486,644
13,781,239 90,074,578 20,481,015 Total Assets 258,716,916 228,082,921
155,265,581
Risk-weighted Total shareholders' equity 10,726,687 10,769,670 Assets & Liabilities Leverage 24.12 21.18 2016 - - - -
% 100 100 100 100 100 100 Risk Factor - -
28,815 Rls (m) 458,903 276,508 779,490 117,567 2,109,620 2,694,6346,815,594 100 100 7,713,421 100 1,147,475 100 1,486,644 100 Liabilities 21,131,325 10,609,779 49,343,013 20 27,562,47890,074,578 50 20,481,015 100 100 Assets and 63-7-2- Capital Allocation Total risk-weighted assets are equal to IRR. 155.265.581 million as at March 19, 2016. Cash Legal Deposit Due from Central Bank Due from other banks & credit institutions Government Participation Bonds Non government Participation Bonds Investment in Shares Accounts Receivable Housing loans other loans Net tangible fixed assets & goodwill Other Assets Guarantee of non governmental participating bonds (subject to 50% factor) Obligation for letters of guarantees issued (subject to 20% factor) Obligation for letters of guarantees issued (subject to 50% factor) Obligation for letters of credit issued (subject to 20% factor) Obligation for letters of credit issued (subject to 50% factor) Obligation for contracts on transactions (subject to 50% factor) Other Obligations Total risk-weighted assets & liabilities
188 189