Tejarat Bank s General performance at a glance

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3 Contents Chapter I Tejarat Bank s General performance at a glance A Message fron Board of Directors Statement 6 Member of the Board of Directors 7 Organizational Structure of Tejarat Bank 8 A bout the Bank 11 Our Vision and Mission 12 Our Achievements 16 Fundamental Projects 17 Corporate Gpvernance 19 Risk Analysis Report of the Bank 23 Anti- Money Laundering(AML) Measures 30 Tejarat Bank s Performance in line with Social Responsibilities 33 A Glance at the Bank s Human Capital 35 Tejarat Bank s Branches Network 37 International Banking 39 Indicators of Tejarat Bank s Performance 40 Chapter II Financial Statements and Summary Notes Balance Sheet 42 Cash Flow Statement 45 Chapter III Financial analysis Position of Tejarat Bank among Five Major Commercial Bank s 74 Composition of Assets and Liabilities 75 Analysis of Main Variables Trend 76 The most Important Financial Ratios and Indicators 87 3

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6 A Message from the Board of Directors Once again we praise God that Tejarat Bank, relying on the efforts of its valuable employees and using its great potentialities in terms of wideness of resources and activities, could pass another successful services and presenting modern banking tools to provide the customers requirements, increasing framework of the regulations of the Central Bank of the Islamic Republic of Iran (CBI) and decreasing accounted a threat for the Bank s resources; however, by realizing 30% growth in its Iranian Rial the Bank s incomes was improved to increase non-joint incomes, enhancing the commission income has made many efforts for collecting its claims as one of its major strategies; resulting in reduction of In order to expand the Bank s activities and considering the necessity for capital increase to promote The managers, experts and employees of the Bank will surely continue their efforts towards realizing sustain stable interests for our shareholders, take effective steps in designing a successful model for the Banking business, create added value for all the stakeholders, and always approach the Bank s Board of Directors 6

7 Members of the Board of Directors Dr. S. R. AKRAMI Member of the Board Dr. M.R. RANJBAR FALLAH Managing Director & Member of the Board Dr. M. R. DAVARI Board Member M. RAEI Member of the Board S. DOLATI Member of the Board 7

8 General Assembly Organizational Structure of Tejarat Bank Board of Directors Risk Committee Managing Director Audit Committee Anti Money Laundering Dept Internal Audit Dept Deputy Director of Finance & Procurement Deputy Director of Planning & Supervision Deputy Director of International Affairs Deputy Director of Provinces Affairs Financial Affairs Division Organization Affairs Division International Affairs Division Public Relations & Board Secretariat s Office Affairs Division Provinces Affairs Division. Management Accounting & Statistics Dept Organization & Procedures Dept International Network Affairs & Foreign Currency Operations Dept Public Relations & Advertising Dept Board Secretariat s Office Treasury and transactions Dept Research Risk & Strategic Planning Dept Foreign Guarantees Dept Treasury & Banks Relations Dept Managers Affairs Dept Procurement & Engineering Division Inspection Division Foreign Accounting Dept Supervision & Coordination Dept Engineering & Properties Dept Supplies Dept Domestic Currency Inspection Dept Foreign Currency & Technical Inspection Dept Branches Network Coordination Dept. Head of Region 2 Supervision Dept. General Services Dept Investment Dept Marketing & Customer Relations Dept. Qom North Khorasan Southwest Tehran West & Central Tehran Khuzestan Northwest Tehran Qazvin Alborz Kurdistan West Azarbaijan Kerman Ardebil Gilan Isfahan Markazi Province Chaharmahal va Bakhtiari Yazd Ilam 8 South Khorasan

9 Deputy Director of Information Technology Deputy Director of Human Resources Deputy Director of Credit & Legal Affairs Guarding & Custody Division Information Technology Division Credit Affairs Division Personnel Security Dept Infrastructure Dept Provision of Services Dept Credit Administration Dept Documents Data & Computer Security Dept Physical Security & Safety Services Dept Core Banking Dept Enterprise Resource Planning ERP Dept Planning & Supply of Human Resources Dept Human Resources Development Training Dept General Managers Affairs Dept Screening Board Survey & Supervision Dept Credit Information Dept Collections Follow Up & Monitoring Dept Head of Region 1 Supervision Dept. Legal Affairs Division Sistan va Baluchestan Fars Kermanshah Southeast Tehran Northeast Tehran Shahr e Ray Claims Dept Legal Services Dept Kohgiluyeh Va Boyrahmadd Central Branch, Code 054 Golestan East Azarbaijan Mazandaran Semnan Hormozgan Bushehr Hamedan Khorasan Razavi Lorestan Zanjan 9 9

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11 1- About the Bank replaced with Shahi Bank; but this motion instituted the basis for modern banking in some under ownership of the government, some under domestic private ownerships, After the victory of the Islamic Revolution; on June 7th, 1979, the Revolution Council Bank was formed from merger of 11 private domestic banks and domestic-foreign joint banks with its capital amounting to IRR 39 billion and was registered with the Companies Registry on December 18th, 1979; later joining Iran-o-Russ Bank in 1981, Articles of the 4th Economic, Social and Cultural Development plan of the Islamic Republic of Iran and in execution of the general policies of the 44th Article of the Constitutional Law of the Islamic Republic of Iran; Tejarat bank was included among Composition of the Shareholders of Tejarat Bank on March 20th, 2013 Description Number of Shares Percentage The Government of the Islamic Republic of Iran 40,029,378,742 Edalat Stock Brokerage Agency 6,999,999,894 Bank Staff s Preferential Stock 874,999,993 Other Legal Entities 5,143,476,710 Natural Persons 452,144,661 Total 17,500,000,

12 2-Our Vision and Mission 2-1- Our Mission With a focus on the Islamic banking in rendering banking services and products; Tejarat bank is active in the businesses of attraction of deposits, granting of facilities, Intelligently analyzing the market conditions, identifying and performing the requirements, and maintaining the shareholders interests are among the continuous 2-2- Our Visions To be a superior bank in the Mideast in creation of value for our stakeholders; To have an active presence in rendering banking products and services around 12

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14 2-3- Our Values and Beliefs Customers will satisfy their requirements to obtain competitive advantage in terms of satisfaction, Employees We believe that our staff are the Bank s main capital and consider their promotion Shareholders Besides acquiring short-term achievements for our shareholders; we are committed Society We have committed ourselves to improve our social acceptability by observance of Modern Science and Technology We apply the modern science and technology to meet the requirements of our 14

15 2-4- Our Major Objectives Reaching the largest portion in the deposits Reaching the largest portion in the liabilities Reduction of the claims to facilities ratio Upgrading the level of electronic banking services Promoting our customers satisfaction level Promoting the presence of our bank in the international markets Increasing the capital adequacy ratio Increasing the ratio of our commission incomes to the Bank s total incomes Increasing the Bank s investments Promoting the corporate governance in the Bank 15

16 3-Our Achievements commercial banks of the country commercial banks of the country Growth in the balance of the deposits resources by 33% (more than the deposits jor commercial banks of the country) balance of the granted facilities among country Growth in the incomes earned from investments and joint ventures by 122% Growth in the non-joint incomes by Growth in the capital adequacy ratio Receiving the Silver Trophy in the 3rd Iranian National Financial Management Award Receiving Appreciation in the 2nd International Conference on Electronic Banking and Payment Systems for innovation in presenting banking services and designing Easy Buy Network Acquiring the Pioneer Rank in the Administrative Soundness Management in the 2nd Course of Administrative Soundness Assessment Process Receiving the Gold Trophy for Excellence of Electronic Banking in the 6th Conference on Electronic Banking Receiving the Excellent Tablet from the Selected Brand World Summit for the performance of the Bank in promotion of its commercial brand Receiving the Trophy of the 8th Festival of Industry Champions Receiving Appreciation and achieving the first rank in the 8th International Public Relations Symposium for its comprehensive and systematic relations with media and use of modern communication tools Receiving the trophy of the National 16

17 4-Fundamental Projects 4-1- Review on the Bank s Macro Organizational Structure (Total and Detailed) Considering the necessity of a brisk organizational structure and promotion of promptitude; the diagnostic studies on the available structure were carried out dur 17

18 4-2- Implementing the System for Identifying Each Individual Stakeholder s Status Considering the CBI s requirements for identifying each individual stakeholder s status in the Banks and in order to reduce the credit centralization risks and implementing appropriate systems for this purpose; the application data for the on the formulated program; the correction of the application as well as the preparation of the related software aiming at integration of the data on all the facilities and liabilities of individual stakeholders are under process and a great part of the program was 4-3- Implementation and Development of the Customers Club and its implementation process including the design of structure, software and other 4-4- Design and Arrangements for Comprehensive Banking System The basic studies were carried out and the related training courses were held during of the Comprehensive Banking System will be carried out aiming at especial focus on provision of the requirements of the Bank s valuable customers within the corporate 4-5- Design of Asset & Liability Management (ALM) System Considering the necessity for an optimized asset & liability management (ALM) ing and implementing the Bank s liquidity risk management software system with the implementing which, the Bank will be able to predict its liquidity status for the future 4-6- Capital Increase by Reappraisal of Assets Considering the necessity for an increase in the Bank s capital to expand its capacity 4-7- Formulation of Tejarat Bank s Organizational Architecture of IT 18 Designing a suitable IT organizational architecture is among our main programs dur

19 5-Corporate Governance the Organization for Economic Cooperation and Development (OECD); corporate governance involves a set of relationships between a company s management, its board, its governance also provides the structure through which the objectives of the company are set and the means of attaining those objectives and to approach four main features: accountability, transparency, justice and observance of all Following releasing its shares on the stock market; Tejarat Bank has included in its plans the implementation of the corporate governance as Risk Management High Committee, Audit Committee and Internal Audit Department; the Also in line with the implementation of the corporate governance; the reform in the Bank s organizational structure was of the measures , aiming at separation of the role of execution from supervision (in a way that the Board of Directors only to deal with its supervisory tasks, while the Managing Director and 19

20 Thus, based on the corporate governance principles; the members of the Board of Directors do not participate in the management of the current and daily affairs of the Bank and all the operational decision making are borne by the Bank s executive Some of other measures that Tejarat Bank has under process in order to further implementation of the corporate governance are: motion towards fully separating management and Board of Directors, improvement of the internal control systems by preparing the guidelines of internal audit and implementing the integrated risk management system, establishment of the software systems for identifying each individual stakeholder s status and the related entities, reduction of the Bank s risk statements, and Board of Directors report of performance submitted to the General 5-1- Risk Management High Committee This committee was formed to assist the Board of Directors in the following affairs: Determining the situation of the Bank s risks based on the reports collected from the risks subcommittees Assessing performance of the systems used to determine the risk limits Management and control of the Bank s risk Risk analysis Study on major deals if required It is noteworthy that the Risk Management High Committee surveys and controls the System Security Management, Credit Risk Management, Liquidity Risk Management, committees effectively deal with management of risks, serving the Risk Management 20

21 Members of the Committee: Non-executive member of the Board of Directors (Chairman of the Committee) A member of the Board of Directors Supreme Advisor to the Managing Director The Managing Director s Deputy in legal and credit affairs The Managing Director s Deputy in planning and supervisory affairs The Managing Director s Deputy in international affairs Committee) Major Decisions and Tasks of the Risk Management High Committee: Review of the results and performance of the Risk Management Subcommittees Review and Decision Making Regarding Communicating the Circular of Credit Rating System by the Organization Affairs Division Approval of the task description of the Adaptation Risk Management Subcommittee Decision making regarding the periodic presentation of the credit rating system s performance results in the Credit Risk Committee Decision making regarding revision on the way of identifying the incomes of the reclamation contracts by the Financial Affairs Division Decision making concerning conclusion of contracts for promotion and support of the credit rating software smart the parties to accounts 21

22 5-2- Audit Committee In line with the establishment of the internal control and monitoring system; department which is responsible for applying suitable and effective controls), has formed the Audit Committee whose major responsibility is to assist the Bank s reporting processes, implementation of internal control system, audit process, and the process of matching the laws and regulations, the ethical rules, the framework of attitude in relation with the internal audit is fully complying with the CBI s directives Hence, the reports presented in the Audit Committee will greatly contribute in improvement of the risk management, control processes, and the principles concerning the internal Thus, by formation of the Audit Committee; the Bank has tried to ensure effective achievement of the following objectives properly: Effectiveness of the internal audit system Compliance with relevant laws and regulations, regulatory requirements and policies of the Bank Independence, professional competence, and good performance of the internal and 22

23 The members of the Audit Committee include: A Member of the Board of Directors (chairman of the committee) A Member of the Board of Directors The Managing Director s Deputy in planning and supervisory affairs 5-3- Internal Audit Dept. The top management of Tejarat Bank has always emphasized on the importance effectiveness of the governance, the risk management and internal controls, and internal processes and procedures, as well as surveying on the quality and effectiveness of the major approach in performing the internal audit affairs is commitment to the full compliance with the directives and circulars issued by the CBI and the Basel Committee s standards for the better implementation of internal control and supervision 6- Risk Analysis Report of the Bank One of the most important issues considered in the designing process of different business models is the problem of assessment, management and control of the other economic corporation and of course within the framework of the CBI s directives regarding the management of the major banking risks, has considered the promotion and improvement of the control and supervisory processes as one of its major 23

24 strategies and has accordingly planned Bank to confront the four major risks, that is, credit risk, liquidity risk, operational risk, and market risk has proceeded with some investigative and preventive Risk Committee has been formed aiming at the more compliance of the Bank s operation with the laws, regulations and standards and prevention of the related Based on the principles of the corporate governance considered in the third statement of the Basel Committee; and assessed throughout the organization infrastructures of the internal control and risk management shall be proportional to any kind of change in the Bank s status as well as to prospects of the 24

25 priorities of Tejarat Bank is moving towards the preparation of databases for application 6-1- Credit Risk The credit risk control and management, as one of the most important factors affecting the commercial banks performance, has always attracted in different ways risk and to improve its status, of which the most distinctive one was the implementation required arrangements for receiving updated reports of the customers credit records ers are as follows: Equipping all the branches throughout the country with the mechanized credit rating system for retail customers including natural persons and legal entities Taking the required measures for provision and implementation of the credit rating software for major customers including natural persons and legal entities with regard to the related pattern Procuring and implementing the suitable credit rating software for the customers of L/Cs and applicants of L/Gs with regard to the designed pattern 25

26 Arranging the possibility for use of the credit record reports from Iran Credit Scoring The following table shows some indicators of the credit risk status of the Bank: Credit Risk Indicators from to Indicator Total net claims to balance of facilities and claims Ratio Total deferred and contingent claims to total facilities and claims Ratio claims / total claims) As it is evident in the above table; by reducing the net total balance of claims by about 4% (reducing to IRR 52,898 billion from IRR 54,930 billion), Tejarat Bank could reduce the claims establishing the credit rating system for all its credit customers, observing fairness in granting facilities and receiving suitable pledges, the Bank has taken the required measures for reducing 26

27 6-2- Operational Risk By seeking cooperation of external researchers; Tejarat Bank initiated the project of designing a database for recording all the events of operational losses in the Bank s different process could create the grounds of establishing and complementing a data base from operational risk events and gives the possibility to identify the operational risks of all the activities in the different levels of the Bank and optimize them by using the loss resulting from inadequate or failed internal processes, people and systems, or from exter statement of the Basel Committee emphasizes on inclusion of the operational risk in the calculation of capital adequacy; the required capital to cover the Bank s operational risk will be mapping and the categorization allows for managing operational risk and analyzing the such as real time remote monitoring of the branches activities by supervisory bodies, stealthy inspections, promoting the level of internal supervision and controls, updating the control checklists for the supervisory bodies, continuous control on the systems applied by the branches, continuous supervision on modern banking services including the ATMs and POS s, optimizing the IT processes to prevent administrative 27

28 6-3- Liquidity Risk The liquidity risk refers to the availability of the enough resources to tolerate the account, could properly use its available resources by an optimized management of its Moreover; the required policies and arrangements for managing the Bank s resources and by the Bank s Resources and Expenditures Committee; and accordingly the required On the other hand; the preliminary phase of designing and implementing the liquidity years, the Bank will have the possibility to analyze the static and dynamic liquidity gap 6-4- Market Risk Market risk refers to the risks and losses relating to the uncertainty of the incomes caused by the variations in the market conditions including stock rates, exchange Bank s transactions portfolio mainly includes Forex and stocks; Tejarat Bank, while using the potentials available in the Market Risk Subcommittee to control the risk, has tried to continuously review and apply the limits concerning the open Forex position Tejarat Bank during the years and is presented in the following table: 28

29 Description / Fiscal Year Forex Rates Risk Open Forex Position (IRR Million) (7,004,697) 15,067,472 Base Capital (IRR Million) 27,512,000 30,884,000 Open Forex Position to Base Capital Ratio (%) determined as ±10% of the bank s base capital for each single kind of Forex and ±30% position from the allowable limit is resulting from clearing the bank s receivables from the government by the facilities received from the source of the Foreign Currency For the risk of stock portfolio; Tejarat Bank has established the Investment Department during the previous year for optimum use of the investment capacities important results of this decision was the increment in the incomes from the investments in order to provide the shareholders interests are of the major priorities of 29

30 7- Anti-Money Laundering (AML) Measures In line with the execution of the AML policies and regulations; the measures summarized in the following three sections: Policies for Acceptance of Customers Preparation and regulation of the AML Commitment Form for all the accounts for Preparation and updating the black list of the persons, who are not authorized 30

31 Sending the suspicious reports to the Financial Intelligence Center of the Ministry of Economic Affairs and Finance, in the event of cases such as a customer s failing in Systematic prevention from rendering basic and non-basic services to Iranian entities lacking a National ID Code (for natural persons) or National Index Code (for Systematic prevention from rendering basis and non-basic services to foreigners Finalization of purchasing the AML software and identifying its supplier company for monitoring and analyzing data, which can categorize the customers in terms of the risks that may be caused by them considering factors such as career, social position, very useful in monitoring the customers activity level and in determining the criteria for Requirement for entry of a national ID code (for natural persons), a National Index Code (for legal entities) or a the Foreign Individual Index (for foreign individuals) for rendering basic and non-basis services zation for all their own personal and legal affairs in all the branches and main branches and Inserting two boxes for entry of a valid code (national ID code or National Index Code, as applicable) and a postal code in the forms of rendering all of the basic and 31

32 Continuous Monitoring on Accounts Arrangements for the Anti-Money Laundering Department s access to the Database of Basic Service Receivers and the current and past transactions as well as to all the By purchase the Anti-Money Laundering software and acquiring the required standards from the CBI; in addition to the monitoring on the risk of accounts, the Obtaining and sending the monthly list of summary data on receivers of basic services with regard to anti-money laundering issue in the format required by the Improvement of the processes and the possibility for systematically tracking all the transactions related to any account and detecting the transmission routes for the funds 32

33 8-Tejarat Bank s Performance in Line with Social Responsibilities As an Iranian corporation; Tejarat Bank always has been aware of its responsibility toward social problems and committed to charities and support of the vulnerable Tejarat Bank has been a pioneer in cooperation with charity bodies such as the Imam Khomeini Relief Foundation, the State Welfare Organization of Iran, and the Non-Government Department for Administration of Wergild and Helping Needy Payment of the cost of custody of a number of orphans supervised by the Imam Khomeini Relief Foundation and the State Welfare Organization of Iran; Participation in construction of some educational and health places in deprived regions of the country; Participation in releasing tens of prisoners of unpremeditated crimes recommended by the Department for Administration of Wergild and Helping Needy Prisoners through granting interest-free facilities and gratuitous aids; 33

34 Financial support of student festivals; Financial support and granting stock of the Bank to the champions of London 2012 Olympics; Participation in construction and rennovation of holy places inside and outside the country; Development and updating of the electronic services and holding tens of training courses of electronic banking to acquaint compatriots with the advantages of such Giving priority to granting facilities to the industries that are more environment-friendly;production and broadcasting of television teasers to remind the Formation of the Passive Defense Committee and holding training seminars 34

35 9- A Glance at the Bank s Human Capital Conceiving the importance of the human capital importance in approaching the bank s objectives; Tejarat Bank has devoted special attention to this issue and strategy and plan for human capital, design and implementation of a system of job promotion and succession, design and implementation of a systematic training system, and design and pilot implementation of the knowledge management system are of the plans in line with development of the human 35

36 The composition of the human capital employed in the bank in terms of education, gender, place of service and experience is summarized in the following table: Number Education Description Number Portion (%) Number Portion (%) Master s Degree and Higher Bachelor s Degree 6,053 6,301 High School Diploma and Associate Degree 13,074 12,036 Less than High School Diploma 1, Gender Male 17,026 16,287 Female 3,544 3,803 Place of Service 5,100 4,975 15,470 14,692 Experience Less than 5 Years to 10 Years 3,661 2, to 15 Years 7,221 7, to 20 Years 3,592 4, to 25 Years 5,037 4,373 More than 25 Years 389 1,089 General Total 20, , Development of the employees training is of the major priorities of the bank s section of Education; accordingly, every year special training programs for which totally 82,830 training and development of its human capital is indicated in the following table: 36

37 Description / Fiscal Year Number of Training Courses 2,263 1,681 Total Training Hours 1,618,743 1,773,133 Number of Participants in the Training Courses 99,355 82, Tejarat Bank s Branches Network In order to preserve the interests of its shareholders and depositors; Tejarat Bank and reduced the number of its branches to 1863 from 1868: Tejarat Bank s Network of Branches Description Branches in Tehran Province Number of the Bank Branches Branches in Other Provinces 1,483 1,483 Branches in Free Economic Zones Overseas Branches 2 2 Total Branches 1,868 1,863 37

38 Tejarat Bank s Inland Network of Branches Distribution in Provinces ( ) Description Row Province Number Of Branches Row Province Number Of Branches 1 East Azarbaijan Qazvin 39 2 Ardebil Qom 34 3 West Azarbaijan Kurdistan 34 4 Markazi Kerman 57 5 Isfahan Kermanshah 53 6 Alborz Kohgiluyeh Va Boyer-Ahmad 16 7 Ilam Golestan 37 8 Bushehr Gilan 59 9 ChaharmahalVa akhtiari Lorestan Razavi Khorasan Mazandaran North Khorasan Hormozgan South Khorasan Hamedan Khuzestan Yazd Zanjan 30 Total of Provinces Branches 1, Semnan 33 Branches in Free Economic Zones Sistan Va Baluchestan 54 Total of Tehran Province Branches Fars 122 Total of the Bank s Branches 1,861 38

39 11-International Banking Forex Deposits (Amounts in IRR Million) Description / Fiscal Year Qardh-ul-Hassanah Savings Deposits 6,490,605 4,504,585 Individuals Time Deposits 1,496,904 2,097,524 Qardh-ul-Hassanah Current Deposits 9,706,183 7,145,982 Advance Collected for L/Cs 19,794,510 11,277,910 Deposit for L/Gs 1,310, ,394 Other 26,936,816 21,938,232 Total 65,735,119 47,784, Forex Liabilities Amounts in USD Million Description / Fiscal Year Number Amount Number Amount Issued L/Gs during the Year Balance of Liabilities for Total L/Gs Issued 1,396 2,415 1,128 2,071 Opened L/Cs 8,194 7, ,492 Balance of Opened L/Cs 5,527 7, ,560 Inward Remittances 17,192 13,466 5,868 3,789 Outward Remittances 17,537 7,010 5,866 2,437 39

40 11-3- Main Branches Dealing with Forex Operations Description / Fiscal Year Number of Main Branches in Tehran and Other Provinces Number of IRR-Forex Branches 6 6 Number of Sub-Main Branches and Forex Counters in Tehran and Provinces Overseas Branches Tejarat bank has two overseas branches in Paris (France) and Dushanbe 12- Indicators of Tejarat Bank s Performance Title Unit March 20, 2010 March 20, 2011 March 19, 2012 March 20, 2013* Capital IRR Billion 10,437 13,569 17,500 17,500 Total Assets IRR Billion 383, , , ,745 Total Liabilities IRR Billion 361, , , ,413 Total Deposits IRR Billion 268, , , ,061 Total Facilities IRR Billion 201, , , ,035 IRR Billion 4,462 6,355 8,798 7,094 Number of Personnel People 21,236 21,029 20,570 19,667 Number of Branches Branch 1,953 1,900 1,868 1,863 Capital Adequacy Ratio % Balance of Liabilities for L/Gs IRR Billion 89, , , ,988 Balance of Liabilities for L/Cs IRR Billion 74, , ,058 83,502 40

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42 Balance Sheet Fiscal Year Ended March 20, 2013 (Amounts in IRR Million) (Restated) Assets Note March 19, 2012 March 20, 2013 Liabilities Note March 19, 2012 March 20, Cash 4 4,452,192 3,661,116 Claims from Central Banks Claims from Banks and Credit Institutions Claims from Government Granted Facilities and Claims 5 45,030,758 68,698, ,139,903 43,203, ,584,118 37,954, ,325, ,035,401 Dues to Central Banks Dues to Banks and Credit Institutions Demand Deposits Qardh-ul-Hassanah Deposits and Similar Time Investment Deposits 16 12,253,997 15,243, ,019,136 13,422, ,359, ,153, ,686,757 33,071, ,653, ,140,970 Other Receivables 9 3,133,710 5,264,349 Other Deposits 21 32,396,416 25,695,940 Debtors for L/Cs and Time Bills of Exchange 10 40,956,978 25,446,213 Dues for L/Cs & Time Bills of Exchange 22 38,044,579 25,502,796 Participation Bonds 11 23,525,009 43,582,640 Payable Tax 2,823,441 2,254,640 Investments and Joint Ventures Tangible Fixed Assets Intangible Fixed Assets 12 9,520,737 11,977, ,746,440 13,837, , ,794 Other Assets 15 32,564,668 33,273,875 to Depositors Provisions and Other Dues Payable Dividend Provision for Employees End of Service Rewards 3,870,169 2,356, ,890,270 34,131, , ,121 2,802,744 3,120,242 Items In Transit 1,390,769 6,111,434 Total Liabilities 484,116, ,413,055 Equity: Capital 24 17,500,000 17,500,000 Legal Reserve 25 4,048,968 4,972,552 Other Reserves 26 2,697,289 3,313,012 Resulted from Conversions 474, ,622 Total Assets: 516,074, ,744,865 Customers Liabilities for L/Cs Customers Liabilities for L/Gs Customers Other Liabilities Administered Funds and Similar Items Total Contra Nominal Items ,058,451 83,501, ,969, ,987, ,198,093 16,632, ,616 1,042, ,181, ,165,000 Result of Legal Parities in Forex Rates , ,900 6,513,804 9,381,724 Total Equity 31,958,136 36,331,810 Total Equity and Liabilities: 516,074, ,744,865 Bank s Liabilities for L/Cs Bank s Liabilities for L/Gs Bank s Other Liabilities Party to Administered Funds and Similar Items Total Contra Nominal Items ,058,451 83,501, ,969, ,987, ,198,093 16,632, ,616 1,042,383 50,181, ,165,000

43 Fiscal Year Ended March 20, 2013 (Amounts in IRR Million) (Restated) Description Note Joint Income 28 40,434,645 33,498, ,677,329 4,684,435 51,111,974 38,182,599 (44,340,161) (24,678,780) Paid for Investment Deposits 30 (3,341,781) (7,481,485) (47,681,942) (32,160,265) Bank s Share from Joint Incomes 3,430,032 6,022,334 Non-Joint Income: 31 7,194,746 5,020,676 Income from Commissions 32 5,810,516 4,860,308 Income from Foreign Exchange Operations 742,016 1,468,310 Attorney Fees 3,341,781 5,062,987 Other Income 2,170,771 1,292,419 Total Non-Joint Income 19,259,830 17,704,700 Total Income 22,689,862 23,727,034 Less: Expenses: General and Administrative Costs 33 (11,384,784) (10,815,949) Costs of Doubtful Claims 34 (2,343,648) (1,882,281) Financial Costs 35 (1,354,386) (1,777,655) Other Expenses (513,464) (453,328) Total Expenses (15,596,282) (14,929,213) 7,093,580 8,797,821 Tax (936,353) (1,683,508) 6,157,227 7,114,313 Earnings Per Share (EPS) (IRR) Basic Earnings Per Share (BEPS) (IRR) ,157,227 7,114,313 5,662,135 6,092,827 Annual Adjustments 851,668 (633,818) (Adjusted) 6,513,804 5,459,009 Dividends of Previous Fiscal Year (Approved by the Assembly) (1,750,000) (678,430) Capital Increase (3,931,401) (1,750,000) (4,609,831) 10,921,031 7,963,491 Allocations During Fiscal Year Legal Reserves (923,584) (869,812) Other Reserves (615,723) (579,875) Total Reserves (1,539,307) (1,449,687) 9,381,724 6,513,804 43

44 Fiscal Year Ended March 20, 2013 (Amounts in IRR Million) (Restated) Description / Fiscal Year ,114,313 6,157,227 Overseas Branches (148,967) (33,552) 7,263,280 6,123,675 Annual Adjustments (633,818) 851,668 of the Previous Fiscal Year 6,629,462 6,975,343 44

45 Cash Flow Statement Fiscal Year Ended March 20, 2013 (Amounts in IRR Million) (Restated) Description / Fiscal Year Operational Activities Operational Activities for Financing: Dividend Received from Investments & Joint Ventures 9,882,268 (9,828,224) 391, ,406 Dividend Paid to Shareholders (1,747,050) (638,869) Return on Investments Income Tax: (1,355,064) (355,463) Income Tax Paid (2,024,288) (3,625,936) Investment Activities: Funds Paid for Acquiring Investments & Joint Ventures Funds Resulting from Selling Investments & Joint Ventures (1,396,219) (3,163,824) 11, Funds Paid for Buying Fixed Assets (1,457,756) (774,200) Funds from Selling Fixed Assets 193, ,646 Investment Activities Activities Funds (2,648,560) (3,626,600) 3,854,356 (17,436,223) 440, ,175 Net Increase (Decrease) in Cash Funds 4,294,978 (16,962,048) Balance of the Cash Funds at the Beginning of Fiscal year Balance of Cash Funds at the End of Fiscal Year 22,505,179 39,467,228 26,800,158 22,505,179 45

46 1-Historical Background By virtue of Resolution dated October 17th, 1979, passed by The Banks General Assembly, Tejarat Bank (Public Joint Stock) was established on December 18th, 1979 through merging Iran-O-British Bank, Bank Etebarate Iran, Bank of Iran and the Middle-East, Mercantile Bank of Iran and Holland, Bank Bazargani Iran, Bank Iranshahr, Bank Sanaye Iran, Bank Shahriar, Bank Iranian, Bank Kar, International Bank of Iran-o-Russ, and International Bank of Iran and Japan, and was registered with Department for The alteration of the Bank s nature to public joint stock and substituting its Articles of Association was registered and publicized by Companies and Non-Commercial Institutions Registry Tehran Stock Exchange on April 29th, 2009, and entered in the quotation board of the stock 46

47 2- Preparation Basis of the Financial Statements 3-A Summary of the Important Accounting Methods 3-1 Investments Evaluation Procedure Long-term investments are evaluated at cost prices after deduction of the Those current investments, which are quickly negotiable in the market, are appraised at minimum cost prices and net sale value of the aggregated investments; but the other current investments are appraised at minimum The Procedure for Identifying Income 47

48 attributable to other investments including current and long-term investments are 3-2-Tangible Fixed assets improvement and major repairs, which would cause either considerable quality of carried out to protect and restore the prospective economic interest of the business unit to the extent of the initially appraised performance standards of assets, when occurred are In compliance with the Article 62 of the 3rd Development Plan, the Bank s land, building and goodwill based on reappraisal prices amounting to IRR 10,830 from the said appraisal for IRR 9,206 billion, as per the provisions of the same article, was In accordance with the 1077th meeting of Money and Credit Council assets are accounted in compliance with the depreciations table subject of Article 151 of Direct Tax Law approved on March 1988 and its subsequent amendments are calculated based on the following rates and methods: Assets Depreciation Rate Depreciation Accounting Method Buildings and Installations 7% Descending Vehicles 25% Descending Furniture and Hardware of Computer Systems 10 Years Direct Computer Hardware (PC) 3 Years Direct 48

49 compliance with Note 10 of the Depreciation Bylaw subject of Article 151 of the Direct 3-3-Goodwill of the Bank s Business units In compliance with provisions of Article 62 of the 3rd Development Program Act, the goodwill for the Bank s business units was recorded in the books at reappraised Money and Credit Council, depreciation of the Bank s Assets are calculated in compliance with the depreciations tables subject of Article 151 of the Direct Taxation Act, so no Central Bank of Iran s Banking Studies and Regulations Department and by virtue of the approval passed in the 1044th session of Money and Credit Council held on is as follows: Type of Income Interest of Granted Facilities Penalties for Delayed Repayment of Installments Commissions for Issued L/Gs Commissions of Other Banking Services On a time-basis and based on the balance of the principal of facilities and the minimum expected interest On a time-basis and based on the amount of the delayed installments and the determined penalty rates At the time of L/Gs Issuance Proportionate to the amplitude of the rendered services In execution of the Usury Free Banking Operation Act approved on Aug

50 dated Jan of Central Bank of Islamic Republic of Iran; the income resulting considered as joint revenue; and depositors shares are determined as ary 24th, 2006 issued by the Central Bank of Iran s Banking Studies and Regulations of the following categories: Current Category (overdue up to 2 months) Overdue Category (overdue between 2 to 6 months) Delayed Category (overdue between 6 to 18 months) Contingent Category (overdue more than 18 months) 3-7- Provision for Contingent Claims Studies and Regulations Department), a provision is accounted as detailed below and allowed for in the accounts for contingent claims: old, current, overdue, delayed, and contingent transactions) at the end of every year, The special provisions as for the balance of the facilities in overdue, delayed, and contingent categories after considering the value of pledges in each case and as for contingent facilities elapsing 5 years or more from their due date irrespective of the value of pledges are calculated by applying the following factors: 50

51 Facilities Factor Facilities of Overdue Category 10% Facilities of Deferred Category 20% Facilities of Contingent Category (based on clients payment potential) 50 to 100% Facilities of Contingent Category overdue 5 years or more 100% equal to 80% of the appraised value for dwelling or administrative properties Central Bank of Iran; equalling 70% of the appraised value of pledged real estates is The provision for employees leaves is accounted and allowed for in the accounts at every year end based on the leave balance of each employee at every year end 3-9-Foreign Exchange Conversions Inland Accounts: Foreign exchange monetary items are converted at the market rates and on the date of balance sheet (the interbank market reference rates are announced by the Central Bank of Iran on a daily basis); and nonmonetary items are converted at market rates on the 51

52 3-9-2-Overseas Branches: All monetary and non-monetary items (excluding the equity) in overseas branches or units are converted at market rates on the date of balance sheet, but the Claims from Government Imperative facilities that are granted under the guarantee of State Management and Planning Organization are categorized as claims from the government under the following conditions: The granted facilities which are deferred due to borrowers inability to repay the The overdue granted facilities related to execution of the projects for acquisition of capital assets; 52

53 4-Cash (Amounts in IRR Million) Fiscal Year / Description March 19, 2012 March 20, 2013 Cash IRR 3,941,924 3,073,799 Cash Forex (Overseas Branches) 7,482 3,623 Foreign Cash and Banknotes 502, ,694 Total 4,452,192 3,661, Claims from the Central Banks (Amounts in IRR Million) Fiscal Year / Description March 19, 2012 March 20, 2013 Statutory Deposits (Domestic and Overseas Branches) 37,832,232 54,250,473 Sight Forex Deposits with CBI 4,518,393 7,868,476 Current Account with Central Banks (Domestic and Overseas Branches) 2,011,196 5,765,121 Other Claims 668, ,257 Total 45,030,758 68,698,327 53

54 6- Claims from Banks and Credit Institutions (Amounts in IRR Million) Fiscal Year / Description March 19, 2012 March 20, 2013 Demand and Time Deposits with Domestic Banks (Forex and IRR) 8,526,317 16,393,484 Payment of Checks Issued by Other Banks 12,318,908 15,845,033 Forex Deposits with Overseas Banks 15,939,977 8,567,106 Facilities Granted to Other Banks 2,387,014 2,311,532 Other Claims 3, ,361 General Provision for Contingent Claims (35,858) (36,523) Total 39,139,903 43,203, Claims from Government (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Facilities Paid based on Guarantee of Government 14,067,162 34,705,709 Claims Committed by Government 9,834,537 14,103,884 Coming Years Income Undertaken by Government (7,065,031) (10,276,624) General Provision for Contingent Claims (252,550) (577,995) Total 16,584,118 37,954,974 54

55 8- Facilities Granted and Claims (Amounts in IRR Million) Fiscal Year Description March 19, 2012 Net Net Provision for Contingent Claims March 20, 2013 Deferred Coming Balance Installment Sale Reward Contracts (Jaaleh) 44,946,884 46,676,893 (6,195,814) (2,485,051) (16,870,073) 72,227,830 8,764,936 12,369,380 (264,789) (7,211) (6,256,161) 18,897,542 Hire Purchase 1,839,324 2,928,949 (90,193) (12,438) (2,768,432) 5,800,011 Futures Deal (Salaf) Bailment (Mudaraba) Civil Participation 499,141 83,848 (14,018) (8,379) - 106,246 6,963 46,218 (25,087) (70,731) - 142, ,433, ,916,300 (8,650,440) (2,565,832) - 196,132,572 Factorage 13,960,572 13,021,980 (266,648) - (2,772) 13,291,401 Interest-Free Loan (Qardh-ul-Hassana) Facilities Granted in Forex Customers Liability for L/Cs Paid Customers Liability for L/Gs Paid 16,791,938 22,305,366 (314,476) - (376,681) 22,996,523 18,247,280 17,246,000 (3,627,379) (1,309,920) - 22,183,299 15,922,213 18,777,278 (4,211,008) ,988, ,712 2,547,733 (816,866) (22,300) - 3,386,900 Other Facilities 953, ,454 (2,030) ,484 Total 286,325, ,035,401 (24,478,746) (6,481,862) (26,274,119) 378,270,130 55

56 9- Other accounts receivable (Amounts in IRR Million) Fiscal Year / Description March 19, 2012 March 20, 2013 Dues of Issuant of Participation Bonds 2,466,544 4,546,853 Receivable Dividend 540, , ,118 68,645 Retained Commission Receivable for Forex L/Gs (26,036) (39,821) Total 3,133,710 5,264, Debtors for L/Cs and Time Bills of Exchange (Amounts in IRR Million) Fiscal Year / Description March 19, 2012 March 20, 2013 Debtors for L/Cs and Time Bills of Exchange of Non-Governmental Sector 22,321,776 7,736,545 Debtors for L/Cs and Time Bills of Exchange of Governmental Sector 19,258,912 18,097,174 Provisions for Contingent Claims (623,710) (387,506) Total 40,956,978 25,446, Participation Bonds (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Participation Bonds / Governmental 9,370,234 32,385,658 Participation Bonds / Non-Governmental 13,534,754 10,915,708 Participation Bonds of Civil Projects 576,621 - Forex Participation Bonds 43, ,274 Total 23,525,009 43,582,640 56

57 12- Joint Ventures and Investments Description/ Fiscal Year Investment in Easily Tradable Stock Long-Term Investment in Other Stock Other Investments (Abroad) Current (Amounts in IRR Million) March 19, 2012 March 20, 2013 Long Sum Current Long Term Term Sum 1,914,119-1,914,119 1,546,675-1,546,675-5,116,937 5,116,937-7,941,687 7,941,687-2,489,681 2,489,681-2,489,602 2,489,602 Total 1,914,119 7,606,618 9,520,737 1,546,675 10,431,289 11,977,964 57

58 Tangible Fixed Assets (Amounts in IRR Million) Cost Price or Reappraised Cost Accumulated Depreciation Book Value Balance at End of Fiscal Year & Adjustments Accumulated Depreciation of Sold Properties Depreciation during Fiscal Year Balance at the Beginning of Fiscal Year Balance at End of Fiscal Year Transfers & Other Changes & Adjustments Assets Sold during Fiscal Year Assets Added during Fiscal Year Balance at the Beginning of Fiscal Year Description March 20, 2013 March 19, 2012 Tangible Fixed Assets Inland: Land 469,254 65,722 (45,605) (17,380) 152, , , ,749 Building 10,615, ,484 (32,109) 18, ,517 11,303, ,978 95,434 (1,619) - 611,793 10,097,196 10,691,769 Vehicles 79, ,330 59,382 5, ,433 19,870 14,897 Furniture and Equipment 1,591,405 58,045 (3,641) - 281,800 1,927, , ,078 (1,294) (33,012) 1,064, , ,349 Total 12,755, ,251 (81,355) 1, ,155 13,935,251 1,567, ,563 (2,913) (33,012) 1,740,487 11,187,237 12,194,764 Tangible Fixed Assets Abroad: Land Building 133, (2,663) - 130,517 84,532 4,464 - (1,714) 87,282 48,648 43,235 Vehicles 1, (19) - 1, (12) Furniture and Equipment 50,920 1,735 - (1,043) - 51,612 48, (991) 47,929 2,656 3,683 Total 185,352 1,735 - (3,725) - 183, ,449 5,304 - (2,717) 136,036 51,903 47,326 Other Fixed Assets: Assets Under Completion 1,363, ,746 - (102,142) (599,868) 1,249,630 1,363,893 1,249,630 Orders and Capital Advances 134, ,927 - (5,062) (69,868) 206, , ,502 Capital Items in Stock 8, ,097 - (18) (265,419) 139,563 8, ,563 Total 1,507,300 1,130,770 - (107,222) (935,155) 1,595,695 1,507,300 1,595,695 General Total 14,447,737 1,457,756 (81,355) (109,832) 0 15,714,308 1,701, ,868 (2,913) (35,729) 1,876,523 12,746,440 13,837,785

59 14- Intangible Assets (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Royalty for Using Public Services 35,028 35,743 Goodwill 669, ,051 Total 704, , Other Assets (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Stock and Assets of Corporations Assigned by Government 19,672,826 17,227,407 Temporary Debtors Forex / IRR 11,533,504 13,774,689 Other 1,530,903 2,477,883 General Provision for Contingent Claims (172,565) (206,104) Total 32,564,668 33,273, Due to Central Banks (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Current Balance of State-Owned Companies and Institutions 2,373,336 11,134,884 Term Deposits of CBI 7,923,354 3,195,034 Facilities Received from CBI 1,957, ,344 Total 12,253,997 15,243,262 59

60 17- Liabilities to Banks and Credit Institutions (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Deposits of Banks IRR / Forex 11,748,159 12,325,966 Interbank Account: SHETAB Plan 1,312, ,213 Facilities Received from Foreign Banks for Domestic Usance 6,832,011 73,440 Other 126,024 82,201 Total 20,019,136 13,422, Demand Deposits (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Qardh-ul-Hassanah Current Deposits IRR / Forex 86,348,133 94,741,295 Bank Checks Sold, Borne by Other Banks 11,696,240 17,401,834 Temporary Creditor IRR / Forex 12,620,791 17,897,686 Various Kinds of Bank Checks Sold, Borne by Tejarat Bank 1,077,107 1,455,088 Other 617, ,255 Total 112,359, ,153,158 60

61 19- Qardh-ul-Hassanah Savings Deposits and Similar (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Qardh-ul-Hassanah Savings Deposits IRR / Forex Unspent Qardh-ul-Hassanah Savings Intended for Youth 28,057,441 32,305, , ,788 Total 28,686,757 33,071, Term Investment Deposits (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Long-Term Investment Deposits (20-1) 141,440, ,395,349 Short-Term Investment Deposits 67,778, ,670,508 Special Short-Term Investment Deposits 10,936,987 10,977,589 Forex Term Deposits 1,496,904 2,097,524 Total 221,653, ,140,970 61

62 20-1- Long-Term Investment Deposits (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, Year Investment Deposit 29,332,389 39,355,351 2-Year Investment Deposit 5,932,190 7,901,427 3-Year Investment Deposit 5,125,676 3,658,378 4-Year Investment Deposit 925, ,748 5-Year Investment Deposit 97,353, ,148,240 Special Deposit for Public Investment (One-Year) 2,771,330 4,691,205 Total 141,440, ,395, Other Deposits (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Cash Deposit for L/Gs IRR / Forex 10,648,020 11,246,123 Advance Received for L/Cs IRR / Forex 21,573,807 14,298,665 Advance Received from Customers for Other Facilities 174, ,152 Total 32,396,416 25,695, Bank s Dues for Acceptance of L/Cs and Time Bills of Exchange The balance of the Bank s dues for acceptance of L/Cs and time bills of exchange is 62

63 23- Reserves and Other Liabilities (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 On-account Selling of Forex in IRR - 14,463,697 Facilities Received from Forex Reserve Account 4,845,024 9,008,842 Funds Resulting from Selling Participation Bonds - 4,684,755 Collection of Other Banks Check (Presented by Customers) 283,437 1,509, ,451 1,385,723 Provision for Repurchase of Employees Leaves 833, ,200 Provision for Costs of Retirement Fund 871, ,407 Provision for Unpaid Expenses of Employees 403, ,000 Provision for Prizes of Qardh-ul-Hassanah Savings 402, ,063 Other 447, ,353 Total 8,890,270 34,131, Capital The Bank s capital at the time of its foundation stood at IRR 39,120 million (comprising 39,120,000 shares each with a nominal value of IRR 1,000) which Based on decisions adopted by the General Meeting of Shareholders of Tejarat Bank in the session held on July 20, 2011; the Board of Directors was authorized to increase the Bank s capital to reach IRR 21,500 billion from IRR 13,568,599 17,500 billion and a capital increase of IRR 2,500 billion from the source of retained 63

64 (Amounts in IRR Million) Fiscal Year Percent of Increase Amount of Increase Amount of New Capital Source of the Capital Increase ,120 Merger of banks , , , ,000 1,231, ,206,264 10,437, ,131,215 13,568,599 Reappraisal of Special participation bonds, the subject of article 93 of the 3 rd economic plan Surplus of reappraisal of Cash provided, due claims of shareholders and retained earnings ,931,401 17,500,000 Retained earnings 64

65 The composition of shareholders at the date of the balance sheet is as follows: March 19, 2012 March 20, 2013 Fiscal Year Description Number Portion (%) Number Portion (%) The Government of the Islamic Republic of Iran Provincial Edalat Stock Brokerage Companies Saba Tamin (Public Joint Stock) Staff (Preferential Shares) Tadarokat Karamad Pooya Abrisham Trading Omran Razavi (Private Joint Stock) Other legal entities (with less than 5% shares) 3,569,576,360 4,029,378,742 6,999,999,894 6,999,999,894 1,733,500,462 1,742,911, ,999, ,999, ,999, ,555, ,555, ,186,591,648 2,617,010,007 Natural persons 476,776, ,144,661 Total 17,500,000, ,500,000, Number of Shareholders: Natural persons 28,915 Legal Entities 84 65

66 24-4- According to the requirements of the Central Bank of Iran; the capital adequacy ratio, that is the bank s base capital divided by risk-weighted assets, shall computed as follows: (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 The paid capital 7,761,736 7,761,736 Legal Reserve 4,048,968 4,972,552 Other Reserves 3,895,364 4,477,535 Retained Earnings 6,513,804 9,381,724 Total Major Capital 22,219,872 26,593,547 General Provision of Claims and Investments 5,179,028 5,415,144 Reserve of Reappraisal of Fixed Assets 9,738,264 9,738,264 Total of Complementary Capital 14,917,292 15,153,408 Total of Base Capital Before Deductions 37,137,164 41,746,954 Less: Credit Institutions (unmerged) (3,651,904) (3,576,165) Total Base Capital 33,485,260 38,170,789 Total Risk Weighted Assets 414,322, ,211,489 Ratio of Capital Adequacy (%) Legal Reserve As per the contents of the Monetary & Banking Act Article 33, equal to 15% of a bank until the bank s legal reserve becomes equal to its capital and it will thereafter 66

67 26- Other Reserves on the article 53 of its Articles of Association; the Bank allocates 10% of its net 27- Result of Changes Due to Legal Forex Rates Parities MB dated March 9th, 2002 issued by Central Bank of Iran, subject of Forex Rates on March 26th, 2002 were converted in compliance with the said circular and the result amounting to IRR 723,900 million was recorded in the account entitled as 28 & 29- Joint Incomes (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, ,870,092 30,617,902 Recognizance Collected for Islamic Conclusion Facilities 7,600,018 9,809,450 2,934,048 6,944,878 the Bank 1,094,251 1,712, ,190 2,027,371 Total 38,182,599 51,111,974 67

68 Bank of Iran, as follows: (Amounts in IRR Million) Description / Fiscal Year Facilities Granted * 222,083, ,323,270 Investments * 7,121,270 4,614,768 Participation Bonds* 27,577,112 11,453,667 Total Resources Applied (Bank s Resources + Depositors Resources) 256,781, ,391,705 Less Net Resources of Depositors: Total Investment Deposits 270,665, ,519,496 Legal Deposit of Investment Deposits (30,518,609) (23,363,610) Net Resources of Depositors 240,147, ,155,886 The Bank s Resources 16,634,170 27,235,819 Depositors Resources to Total Applied Resources Ratio 40,434,645 33,498,164 6,944,878 1,884,000 3,732,451 1,750,387 51,111,974 37,132,551 Depositors Dividend (Accounting the Prize for Legal Deposit) 47,681,943 32,160,265 Attorney Fee (3,341,781) (5,062,987) 44,340,162 27,097,278 during the Fiscal Year (44,340,162) (24,678,780) The Balance Distributable among Depositors - 2,418,498 *The amounts of the granted facilities, investments, participation bonds, investment deposits and the related legal 68

69 (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Factorage 1,892,227 2,006,585 Recognizance Collected from L/Cs 1,275,071 2,119,874 Recognizance Collected from Other Claims 425,924 2,533,270 Facilities 501, , ,366 2, , ,413 Other 40,612 24,321 Total 5,020,676 7,194, Income from Commission Fee (Non-Joint Income) (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Commission Fee for Issued L/Gs 1,889,727 2,193,579 Commission Fee for Opened L/Cs 1,146, ,213 Commission Fee Collected from Banks (RTGS) 543, ,303 Commission Fee of Qardh-ul-Hassanah Facilities 452, ,720 Commission Fee for Bank Transfers 125,494 76,509 Commission Fee Collected (Overseas Branches) 99,183 34,816 Commission Fee Collected for Other Services 602,518 1,388,376 Total 4,860,308 5,810,516 69

70 33 & 34- General and Administrative Expenses and Contingent Claims Expense (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Personnel Expenses 7,871,942 8,422,555 Administrative Expenses 2,768,176 2,748,021 Depreciation Expenses 175, ,208 Contingent Claims Expenses 1,882,281 2,343,648 Total 12,698,230 13,728, Financial Expenses (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Commission Paid for Banking Services 670, ,597 38,015 83,889 CBI 642,513 48, ,284 11,021 Demand Forex Deposits of Correspondents 188,798 17,265 Others 34, ,062 Total 1,777,655 1,354,386 70

71 36- Contra Nominal Items Liabilities of Customers for L/Cs (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Liabilities of Customers for L/Cs 95,124,851 68,170,287 Liabilities of Customers for Domestic L/Cs 13,933,600 15,331,573 Total 109,058,451 83,501, Liabilities of Customers for issued L/Gs (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Liabilities of Customers for Issued L/Gs IRR 94,467, ,662,410 Liabilities of Customers for Issued L/Gs Forex 29,502,231 25,325,512 Total 123,969, ,987,922 71

72 36-3- Other Liabilities of Customers (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Liabilities of Customers for Contracts Concluded for Transactions / Nongovernmental 8,280,401 8,556,222 Liabilities of Management and Planning Organization for Facilities from Forex Reserve 6,283,889 6,460,843 Account Party to Liabilities of Customers for Contracts Concluded for Transactions 1,626,808 1,593,493 Other 6,995 22,277 Total 16,198,093 16,632, Administered Funds and Similar Items (Amounts in IRR Million) Description / Fiscal Year March 19, 2012 March 20, 2013 Facilities Granted from Administered Funds 35, ,019 Administered Funds Not Spent 11,674 - Facilities Granted from Special Qardh-ul- Hassanah Deposits 256, ,755 Special Qardh-ul-Hassanah Deposits Not Spent 119, ,288 Facilities Granted from Interbank Funds 533, ,321 Total 955,616 1,042, Basic Earnings per Share (EPS) Share) based on the share numbers weighted average during the year (17,500 million 72

73 73

74 1- Position of Tejarat Bank in Industry The following table sets forth the portion of Tejarat Bank s employees, branches, resources, consumptions, and liabilities among ten major Iranian banks during the (Amounts in IRR Billion) Time Section Description Number of Employees Number of Branches Private Resources (IRR) Net Private Consumptions L/C Commitments L/G Commitments March 20 th, 2012 March 20 th, 2013 Total of Ten Banks 170,013 16,076 2,462,500 2,470, , ,608 Tejarat Bank 20,439 1, , , , ,938 Portion from Total 12% 12% 14% 12% 31% 35% Rank Total of Ten Banks 166,658 15,993 3,222,056 2,805, , ,163 Tejarat Bank 19,532 1, , ,826 83, ,969 Portion from Total 12% 12% 14% 12% 32% 36% Rank

75 2- Composition of Assets and Liabilities The following table shows the portions of each of the assets and liabilities of income generating assets (facilities granted, participation bonds, accounts receivable, claims for L/Cs and time bills of exchange, investments and plans adopted for, and despite the close competition for attracting deposits in the Figures in percent Fiscal Year Description Dues to Banks Deposits March 19, 2012 March 20, 2013 Fiscal Year Description Cash and Claims from Banks Facilities Granted March 19, 2012 March 20, 2013 Liabilities for Accepting L/Cs and Time Bills of Exchange Debtors for L/Cs and Time Bills of Exchange Other Liabilities and Reserves Equity Other Accounts Receivable Participation Bonds Investments and Savings Fixed Assets Other Assets Total Liabilities & Equity Total Assets

76 3- Analysis of the Main Variables Trend Deposits The following chart shows the Bank s total balance of IRR and forex IRR Billion Diagram of Total Deposits 482, , , , , , ,

77 3-2 - Composition of Deposits Composition of Deposits in Terms of Cost ( ) Qarth-ul-Hassanah Savings and Similar Long Term Investment Deposits Demand Deposits Short Term Investment Depsits Other Deposits Facilities The following chart shows the growth trend of the total IRR and forex facilities IRR Billion IRR and Forex Facilities 400, , , , , , , ,

78 3-4 - Composition of IRR Facilities a) Composition in terms of Type of Conclusion One of the most important strategies of the Bank is the move towards granting facilities are granted in the format of participation with customers in commercial affairs, promotion of the participation conclusions portion while increasing the bank s 78

79 , ,855 Transaction Facilities Participation Facilities , ,638 Transaction Facilities Participation Facilities 79

80 b) Composition in terms of Sector The following pie chart shows the composition of the balance of facilities granted to 66%) has been allocated to the productive sectors (industry and mine, construction and Composition of Balance of Facilities in Various Economic Sectors in % 29% 17% 2% 32% Trade & Services Industry & Mine Agriculture Export Construction & Housing 80

81 3-5 - Commitments for L/Gs The following diagram show the data on the liabilities balances of the issued L/Gs private banks in terms of L/G liabilities, bearing 36% of the total L/G liabilities of IRR billion Balance of Iabilities for IRR and Forex L/Gs 114, , , ,000 89,954 80,000 60,000 40,

82 3-6 - Commitments for L/Cs reduction in the activity levels of all the corporations and organizations in the which is the channel for clearing of the foreign transactions was affected by the of its powerful and old presence in the arena of international activities and having Accordingly, while the balance of liabilities for L/Cs of 10 major banks of the country decreased by more than 25% in as compared to ; this reduction was about 23% for Tejarat Bank, so the bank s top situation in the banking IRR billion Liabilities of Customers for L/Cs 103, ,058 90,000 80,000 83,502 70,000 74,852 60,000 50,000 40,

83 3-7 - Income presented in the following table: Total Income of the Bank (Amounts in IRR Million) Description / Fiscal Year Change Balance Balance (%) 33,498,164 40,434,645 4,684,435 10,677,329 Total Joint Income 38,182,599 51,111,974 Collected 5,020,676 7,194,746 Income from Commission Fees 4,860,308 5,810,516 Other Income 7,823,716 6,254,568 Total Non-Joint Income 17,704,700 19,259,830 Total Income 55,887,299 70,371, Composition of Income in ,5% % Other Income Income from Commission Fees 8,9% 8,3% 10,2% 83

84 resulting from 31% growth in the volume of the investment deposits, the increase in IRR billion 47, ,000 30,000 32,160 25,000 22,489 20,000 17,683 15,000 10,000 5,

85 3-9 - Costs Other costs of the Bank are those of personnel, administrative, depreciation and (Amounts in IRR Million) Fiscal Year Description Cost 12,611,229 14,116,225 14,929,213 15,596,282 % Trend of Growth in Costs

86 during a period; therefore it is one of the most important indicators for evaluation of the billion in from IRR 5,799 billion in due to the return of clearing of IRR Billion 7,114 6,157 4,506 4,000 3,000 3,354 2,

87 4-The Most Important Financial Ratios and Indicators The following table shows the return on equity (ROE) and the return on assets Description / Fiscal Year Return On Equity (ROE) (%) Return On Assets (ROA) (%) 87

88 4-2 - Return On Investments (ROI) investments in the country s economic growth and expansion and also for the purpose as expected by depositors, and more value creation for shareholders; development of Accordingly; as the table in the following page shows, the investments volume, representing a 26% growth, totaled to IRR 11,978 billion at the end of the quality of the Bank s investments in stock exchange as well as improvement in (Amounts in IRR Million) Description / Fiscal Year Growth (%) 684,190 2,027, Volume of Investments 9,520,737 11,977, Return On Assets % 20/0 15/0 10/0 5/1 0,

89 12 Description / Fiscal Year Returns on Facilities and Investments Cost of Operational Money Cost of Nonoperational Money 4 (Amounts in IRR Million) Indicator / Fiscal Year Growth (%) Deposits Per Capita 19,065 24, Personnel Facilities Per Capita 15,903 20, Income Per Capita 2,697 3, Deposits Per Capita 211, , Branches Facilities Per Capita 176, , Income Per Capita 29,918 37,

90 4-5- Fixed Assets to Total Assets Ratio (Amounts in IRR Billion) Description / Fiscal Year Fixed Assets 13,451 14,535 Total Assets 516, ,745 Fixed Assets to Total Assets Ratio (%) 5 4 % Fixed Assets to Total Assets Ratio

91 4-6 - Income-Generating Assets to Total Assets Ratio The income-generating assets consist of facilities granted and claims, participation bonds, debtors for L/Cs and time bills of exchange, and investments and deposits (Amounts in IRR Billion) Description / Fiscal Year Average of Income-Generating Assets 245, , ,784 Average of Total Assets 417, , ,582 Income-Generating Assets to Total Assets Ratio (%) % 85,0 70,0 Income-Generating Assets to Total Assets Ratio 65,0 60,0 55,

92 4-7- Claims of Conclusions to Total of Facilities and Claims of Conclusions Ratio The following diagram indicates the trend of claims of conclusions to the total of As it is seen in the following table; despite the growth of the facilities balance in the to total of facilities and claims ratio indicating the increased credit soundness and the (Amounts in IRR Million) Description / Fiscal Year Claims of Conclusions 65,655,933 59,690,726 Total of Facilities and Claims of Conclusions 287,844, ,021,478 Claims of Conclusions to Total Facilities and Claims of Conclusions Ratio %

93 4-8.Reserves Adequacy Ratio (Amounts in IRR Million) Description / Fiscal Year ,384,792 20,055,320 Net Balance of Claims 48,242,634 50,603,057 Reserves Adequacy Ratio (%) % Reserves Adequacy Ratio

94 4-9- Capital Adequacy Ratio The capital adequacy ratio is one of the indicators for expressing the degree the bank s capital adequacy ratio for three year period ending March 20th, 2013 is and the lower growth in the risk weighted assets ratio (to total assets) have been trend; reaching to a capital adequacy ratio of 12% has been determined as one of the strategic objectives of the Bank, the required planning for realization of which has % Capital Adequacy Ratio

95 4-10- Forex Open Position The following diagram shows the Bank s foreign exchange open position for the the Bank s forex liabilities and commitments; moving towards a positive forex open position was seriously placed in the agenda to avoid the potential costs arising IRR BILLION Forex Open Position ,067-7, ,

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