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