Annual Report and Financial Statements of Karafarin Bank, 2005-6

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Reports and Financial Statements
For the Year Ended March 20, 2006
Karafarin Bank
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Contents
Page
Karafarin Bank
Financial Highlights........................................................................................................2
Background and Services...............................................................................................3
Board of Directors..........................................................................................................4
Report of Directors to the General Assembly of the Shareholders ........................6
Management ....................................................................................................................20
Iran's Economy in 1384 (March 20, 2005-2006)
Overview ..........................................................................................................................23
Real Sector .......................................................................................................................24
Fiscal Policy .....................................................................................................................26
Employment ....................................................................................................................28
Monetary Sector .............................................................................................................29
Price Trend ......................................................................................................................30
Banking System ...............................................................................................................31
Tehran Stock Exchange .................................................................................................32
External Position.............................................................................................................33
Financial Reports for 1384 (March 20, 2005-2006)
Auditors’ Report .............................................................................................................36
Financial Statements.......................................................................................................38
Notes to the Accounts ...................................................................................................54
nb
- One USD is approximately equal to 9000 rials.
- The Iranian year begins on the 21st of March and ends on 20th of March
next year.
1
Financial Highlights
(Billion rials)
1384
1383
1382
1381
1380
1379
1378
11,387
1,374
7,310
2,890
1,571
1,029
124
350
5,856
691
3,973
1,822
849
530
64
216
3,008
871
1,574
1,094
488
275
34
157
1,455
556
645
630
205
100
16
80
360
212
245
251
43
23
8
19
80
42
45
95
11
2
4
3
9
15
16
4
1
0
1
1
Capital Adequacy Ratio (%)
10.5
9.8
12.5
20
42
-
-
No of Staff
No of Branches
599
26
414
18
282
12
170
7
99
4
49
1
22
1
Deposits
Investments
Loans & Advances
Guarantees Issued
Gross Revenue
Interest Paid
Expenses
Net Income before Tax
2
Background and Services
Karafarin Bank started its operation as Karafarin Credit Institution in 1999 with a
capital of 30 billion rials. The founding shareholders were members of the Association
of Industrial Managers of Iran, the Association of Construction Companies of Iran, the
Association of Mechanical and Electrical Engineers, the Iranian Society of Consulting
Engineers, and Association of Architects and Urban Development Engineers, together
with a group of
senior bankers and, of course, the public. The Institution was
registered with the Companies Registrar's Office of Tehran under registration number
157915 on December 9th, 1999.
After the enactment of the "Law for Establishment of Non-State-Owned Banks" in
April 2001, and ratification of the operating regulations by the Central Bank of Iran, the
Board of Directors of Karafarin Credit Institution decided to opt for a banking license.
The most obvious advantage of the conversion was authorization to offer current
accounts under a banking license. Upon receipt of the preliminary approval from the
Central Bank, the capital of the Credit Institution was increased in two stages first to
100 billion rials and later to 200 billion rials (just over $25 million). Later after
completion of the formalities, the Central Bank of Iran issued its final authorization for
the credit institution to operate as a full-fledged bank on December 25th 2001.
Karafarin Bank is now in full operation offering all the services that state-owned banks
provide. It reports to and is under the supervision of the Central Bank of Iran. The
employees are either experienced bankers or young educated individuals who are
internally trained. They form a dedicated task force equipped with the latest banking
technology available in Iran and, under the banner of 'customer service' and
'transparency', are committed to make a difference in the banking industry in Iran.
The services currently available are:
-Current accounts, savings accounts and term deposits; on-line services in all branches.
-Competitive rates of interest and profit-sharing on deposits.
-ATM services day & night.
-Telephone-banking.
-Bonding and guarantee facilities for contractors.
-Credit facilities for individuals and medium-sized manufacturing companies.
-Foreign currency transactions.
-Foreign currency deposit accounts, interest payable in the same currency.
-Letters of credit for importers and exporters through a wide network of
Correspondent banks.
-Inward and outward letters of guarantee in foreign currencies.
-Credit facilities in foreign currencies for exporters and others with foreign Currency
income.
-Consulting services, particularly for those who require foreign or local partners.
-Investment banking services, undertaking bond issues, syndication and underwriting of
debt and equity.
-Safety Deposit box services.
3
Board of Directors
Khalili, Mohsen – Chairman
Chairman of the Confederation of Iranian Industries
Chairman of the Association of Industrial Owners/Managers
Chairman & Managing Director of Butane Company
Chairman of Irano-Belgian Chamber of Commerce
Chairman of the Association of Liquid Gas Employers
Adab, Bahaedin – Deputy Chairman
Chairman of the Association of Iranian Contractors
Chairman of the Association of Engineering & Building Controllers
Deputy Chairman of the Confederation of Iranian Industries
Chairman of Karafarin Insurance Co.
Deputy Chairman of the Iranian Basketball Federation.
Aghili, Parviz – Managing Director
Deputy Chairman of Karafarin Insurance Co.
Chairman of Karafarin Leasing Co.
Amiri, Mahmood – Director
Chairman of Iran Office Machines Group
Chairman of Nestle Iran
Member of the Board of the Association of Informatics Companies
Afkhami, Ali – Director
Member of the Board of Tadbir Investment Co.
Member of the Board of Mdaber Investment Co.
Member of the Board of Kowsar Economic Organization
Ayatolahi, Ataolah – Director
Managing Director of Jooyabe-now Consulting Engineers
Dadkhah, Amir – Director
Chairman of the Iranian Syndicate of Electrical & Mechanical Contractors
Chairman of C.T.U.
Member of the Association of Chamber of Commerce
Member of the Board of Karafarin Investment Co.
Hoorazar, Saeid – Director
Chairman & Managing Director of Pilekar Construction Co.
Managing Director of Pilekar-Harrison Power Plants Const. Co.
Member of the Board of Energy Industries Development Co.
Member of the Board of Sakht Ajand Construction Investment Co.
Member of the Board of Karafarin Investment Co.
Member of the Board of Karafarin Insurance Co.
Member of the Board of Karafarin Leasing Co.
Nayebi, Khosrow – Director
Former Director-General of Supervision Dept. of the Central Bank of Iran
Managing Director of Iran Hedayat Financial Services
Member of the Association of Iranian Certified Accountants
4
Salimi, Hossain – Director
Chairman and Managing Director of Karafarin Investment Co.
Chairman of Iran Gatch (plaster) Co.
Chairman of the Association of Joint Venture Companies of Iran
Member of the Board of the Association of Indust. Owners/Managers
Member of the Association of Chamber of Commerce
Tabeghanoon, Mehdi – Director
Chairman & Managing Director of Kar & Andisheh Eng.Corp
Member of the Board of the Iranian Syndicate of Electrical & Mechanical Contractors
Member of the Board of Directors of the Iranian Techno-Engineering Enterprise
Member of the Board of Karafarin Insurance Co.
Member of the Board of Karafarin Investment Co.
Member of the Board of Karafarin Leasing Co.
-------------------------------------------------------------------------------------------
Alternate Board Members
Hossaini, Seid Alireza– Alternate Member
Managing Director of Daroopakhsh Co.
Managing Director of Alborz Co.
Managing Director of Teyf Iran Co.
Managing Director of Kimidaroo Co.
Managing Director of Abooreihan Pharmaceutical Co.
Managing Director of Abidi Pharmaceutical Co.
Khakpoor, Parviz– Alternate Member
Managing Director of Genoo Consulting Engineering Co.
Member of the Board of Association of Exporters of Technical Services
Member of the Board of International Construction Co.
Member of the Board of Sakht Ajand Construction Investment Co.
Azad, Ali- Alternate Member
Managing Director of Fari-Rah Co.
Member of the Board of Iran Gas Co.
Executive Board
The Bank's Executive Board is composed of the following board members:
Aghili, Parviz- Head
Amiri, Mahmoud- Member
Hoorazar, Saeed- Member
Nayebi, Khosrow- Member
Tabeghanoon, Mehdi- Member
5
Report of Board of Directors to General Assembly of the
Shareholders of
KARAFARIN BANK for the Year Ended March 20th. 2006
It is our pleasure to welcome you to your Bank's Fifth Annual General Assembly of the
Shareholders and present to you our report for the year ended March 20th, 2006.
1) Background
As you are aware Karafarin Bank was initially established as a non-bank Credit
Institution with a capital of 30 billion rials. The founding shareholders were members
of the Association of Industrial Managers of Iran, the Association of Construction
Companies of Iran, the Association of Mechanical and Electrical Engineers, the Iranian
Society of Consulting Engineers, and Association of Architects and Urban
Development Engineers, together with a group of senior bankers and, of course, the
public. The Institution was registered with the Companies Registrar's Office of Tehran
under registration number 157915 on 18/09/1378 (December 9th, 1999) and continued
to operate as a non-bank credit institution until the third quarter of 1380 (December
2001).
Upon approval of the "Law for Establishment of Non-State-Owned Banks" on
21/1/1379 (April 10th, 2000) and the Central Bank of Iran ratification of relevant
regulations, the Board decided to opt for a banking license. On December 5th, 2001, the
Central Bank issued its preliminary approval authorizing conversion of the credit
institution license into a banking one. Later after completion of the formalities and
receiving the final approval of the Central Bank, Karafarin Bank started its operation
on December 26th, 2001.
6
Board of Directors and Executive Committee
Your bank is managed by a Board of Directors, consisting of eleven members elected
by the General Assembly of the Shareholders convened in the Extraordinary Session
on 19/08/1384. Members of the board are elected for a period of two years. The
credentials of these members had previously been approved by the Central Bank of
Iran.
Your directors are:
Khalili, Mohsen
Adab, Bahaedin
Aghili, Parviz
Amiri, Mahmood
Ayatollahi, Ataollah
Dadkhah, Amir
Hoorazar, Saeid
Mellat Investment Co.
Nayebi, Khosrow
Salimi, Seid Hossain
Tabeghanoon, Mehdi
Chairman
Deputy Chairman
Managing Director
Director
Director
Director
Director
Director
Director
Director
Director
The alternate members are:
Hossaini, Seid Alireza
Khakpoor, parviz
Azad, Ali
The Executive Committee is composed of the following members:
Aghili, Parviz
Head
Amiri, Mahmood
Member
Hoorazar, Saeid
Member
Nayebi, Khosrow
Member
Tabeghanoon, Mehdi
Member
There were 48 Board of Directors meetings and 40 Executive Committee meetings
convened in 1384. In addition, the bank has a number of specialized committees, in
which some Directors together with outside experts, regularly participate in them.
7
2) Capital
As your Bank's assets have been growing considerably, particular attention has been
made by the Management to make sure its capital is sufficient to cope and comply with
the standards of capital adequacy. This is the ratio between a bank's base capital and
the risk carried because of the nature of its various assets. For this purpose, each asset
is given a weight according to the risk it is considered to carry.
This ratio is being used for the following purposes: a) to protect banks against
unforeseen needs, b) to strengthen the depositors' confidence in their bank as well as
the banking system. It is also an internationally accepted common denominator for
entry into the international arena.
The base capital consists of a bank's paid in capital and retained earnings (Tier I) plus
its complementary capital (Tier II). According to the regulations, allowed exposure to
various assets, including exposure to a single client, is defined according to the base
capital.
Our Bank's base capital has been as follows for the past four years;
(billion rials)
1384
1383
1382
1381
a- Tier I
Paid-up capital
Legal Reserve
Retained Earnings
Total
700.0
117.4
33.6
851.0
350.0
67.7
0.1
417.8
200.0
36.5
2.4
238.9
200.0
13.5
1.7
215.1
b- Tier II
General Reserves
Total Base capital
115.4
966.5
61.3
479.1
26.5
265.4
13.7
228.8
9,235.0
10.5
4,902.0
9.8
2,132.0
12.5
1,151.0
20.0
Assets weighted according to risk
Capital Adequacy Ratio (%)
Upon approval of the Extraordinary General Assembly of 17/10/1383, the Bank's
capital was to be raised from 350 billion rials to 2000 billion rials within a period of
three years and the Board of Directors was authorized to act accordingly. Subsequently,
the Board of Directors, having already obtained the approval of the Central Bank and
the Tehran Stock Exchange, in its meeting of 25/12/1383 proceeded, with
the capital
increase from 350 billion rials to 700 billion rials.
As a result, by the end of the year, the Bank's capital adequacy ratio stood at 10.5.
The following table presents the composition of the Bank's shareholders
by the end of 1384:
Groups
Real persons
Legal persons
Total
No. of persons
No. of shares % of ownership
5 470
498,962,672
71
242
201,037,328
29
5 712
700,000,000
100
8
Appointment of Legal Inspector and Auditor
The General Assembly of the Shareholders convened on 05/03/1384 appointed
KPMG Bayat-Rayan Chartered Accountants as Legal Inspector and Mr. Manouchehr
Bayat as Alternate Inspector.
3) Some of the More Significant Activities of the Bank
in 1384 (2005-2006)
Deposits Received
During the year under review our deposits grew considerably both in terms of amount
and number of accounts. The balance of our deposits at the end of 1384 stood at
11,387 billion rials, which showed an increase of 94 per cent over the previous year.
The following table shows the data for the past seven years:
(billion rials)
1384
972
8,896
1,519
11,387
114,064
Current Accounts
Term deposits
Other deposits
Total
Number of accounts
1383
731
4,217
908
5,856
56,362
1382
395
2,349
264
3,008
29,259
1381
353
1,008
94
1,455
12,496
1380
23
315
25
363
4,203
1379
16
54
9
79
1,237
Growth of Deposits
10000
1600
Sight-saving deposits
9000
8000
Term deposits
1400
Other deposits
1200
Billion Rials
7000
1000
6000
5000
800
4000
600
3000
400
2000
200
1000
0
0
1379
1380
1381
1382
9
1383
1384
1378
6
3
0.2
9.2
142
In 1384, having obtained a priori authorization from the Central Bank, we began issuing
floating rate Certificates of Deposits. The operation takes place every Tuesday at 11
a.m. at our head office.
Facilities Granted
The outstanding balance of credit facilities granted at the end of 1384 amounted to
7,310 billion rials, compared to 3,973 billion rials for 1383. It showed an increase of 84
per cent. The following table shows the outstanding balance of credit facilities granted
for the past seven years:
(billion rials)
Loans & Advances (gross)
Future interests (1)
Loans & Advances (net)
1384
8,286
-976
7,310
1383
4,663
-690
3,973
1382
1,858
-284
1,574
1381
734
-89
645
1380
280
-35
245
1379
49
-4
45
1378
16
0
16
It has to be pointed out that all our overdue facilities are fully covered by valid
collateral; the Bank also holds a general doubtful debts reserve amounting to 2% of all
of its facilities granted and investments made, as provided for in the Central Bank
regulations.
The following table presents the relationship between the maturities of our facilities
and our deposits at the end of 1384:
(billion rials)
Maturities:
3 months or less
3- 6 months
6 - 12 months
more than 1 year
Total
Facilities
4,841
781
602
1,086
7,310
Deposits
6,031
450
560
2,827
9,868
(1) Under Non-Usury Banking, certain contracts such as instalment credit and lease-to-own are of
transactional nature (cash purchase by the Bank and credit sale to the Bank's client); therefore future profit
(interest) is represented in the principal, but it is not as yet earned and hence should be deducted.
10
Guarantees Issued
During the year under review, the outstanding balance of the guarantees issued stood at
2,890 billion rials, which compared to 1,822 billion rials for 1383, showed an increase
of 59 per cent. During the year 7,728 new guarantees were issued and due dates of
2,397 old guarantees were extended.
Guarantees Issued
3500
Guarantees Issued
3000
Billion Rials
2500
2000
1500
1000
500
0
1379
1380
1381
1382
1383
1384
Foreign Exchange Activities
The Bank was authorized to engage in all foreign exchange activities on 07/09/1380
(November 28th, 2001). The table below summarizes these activities:
(million dollars)
1384
203
385
35
Foreign exchange transactions
Letters of credit issued
Foreign exchange guarantees
1383
191
220
3
1382
156
112
3
1381
71
52
5
Bond Issues/ Underwriting
Following an agreement with Raian Saipa, Karafarin Bank underwrote and undertook
the issue of 300 billion rials of Participation Bonds for Raian Saipa to finance
production of Pride automobiles. The Bank also made an agreement with Samand
Investment Company (a subsidiary of Iran Khodro) to provide for repurchase of up to
300 billion rials of participation bonds already issued by Iran Khodro, in order to
maintain its price.
11
Main Balance Sheet and Income Statement Figures
(billion rials)
Balance Sheet
Deposits
Loans & Advances
Guarantees issued
Marketable Securities
Fixed assets
Capital
1384
11,387
7,310
2,890
1,280
327
700
1383
5,856
3,973
1,822
684
267
350
1382
3,008
1,574
1,094
864
135
200
%Growth
94
84
59
87
22
100
Balance Sheet
12000
1384
1383
1382
8000
6000
4000
2000
12
Capital
Fixed Assets
Marketable
sec.(Bonds &
Stocks)
Guarantees
Issued
Credit
Facilities
0
Deposits
billion rials
10000
Main Income Statement Figures
(billion rials)
1,112
292
578
194
257
187
% Growth
84/83
92
51
166
77
43
116
1,570
849
487
85
1,029
530
274
94
67
39
23
72
124
64
34
95
350
216
156
62
1384
Revenue earned on loans & advances
Income on market. sec.
Commission income
Total Revenue
1383
1382
Less:
Interest Paid to Depositors
Provision for doubtful debts
General expenses
Profits before tax
1384
Income Statement
1383
1382
1200
1000
Billion Rials
800
600
400
200
0
Revenue
Earned on
Loans
Interest & Commission
Dividend on
on
Market.Sec. Guarantees
Paid to
Depositors
Provision for
Doubtful
Debts
General
Expenses
Profit before
Tax
At the end of the year, the share of depositors in profits (interest) accrued under
Islamic Banking regulations, amounted to 1,002,160 million rials, while the Bank had
actually paid the sum of 1,024,338 million rials to its depositors during the year.
Consequently, no extra payment needed to be paid to the depositors at the end of the
year.
13
New Branches
To expand our network of branches, we have undertaken the following activities in
1384:
Branches opened:
Ardebil Branch, (Ardebil)
Asalooyeh Branch, (Boushehr)
Esfahan Branch, (second Br.), (Esfahan)
Ghazvin Branch, (Ghazvin)
Karaj Branch, (Karaj)
Kermanshah Branch, (Kermanshah)
Kerman Branch, (Kerman)
Saadatabad
Branches being renovated for opening:
Bandar Abbas Branch, (Hormozgan)
Gorgan Branch, (Golestan)
Kish Branch, (Kish)
Sadi Branch, (Tehran)
Yaft abad Branch, (Tehran)
Abroad:
Soleimanieh branch, Iraq
The number of active branches and those planned for 1385 are shown
below:
No. of branches at the beginning of the year
New branches opened during the year
No. of branches at the end of the year
14
1383
12
6
1384
18
8
1385
26
24
18
26
50
Investments
Investments in Unlisted Companies
Our investment positions in Karafarin Insurance Company and Karafarin Investment Company
are as follows:
Date of establishment
Capital
The Bank's stake
Capital already paid
Karafarin Insurance Company
27/12/1381
140 billion rials
10%
14 billion rials
Karafarin Investment Company
1/09/1384
100 billion rials
80%
80 billion rials
Karafarin Insurance Company (KIC) began its operation in Khordad 1382 (June 2003) and set
up a number of branches in the main provincial capitals, such as Esfahan, Tabriz, Mashad, and
Yazd. KIC offers a full range of insurance services and hopes to capture an important share of
the insurance market. We would appreciate if our shareholders direct their insurance business to
KIC, thereby strengthening its activities.
KIC's profit in 1383 amounted to 7,722 million rials of which the Bank's share amounted to 728
million rials, or 10.4% (at the end of 1383, only 50% of the capital was paid up). Its 1384 General
Assembly has not yet been convened to approve its Accounts for 1384.
Investment in Participation Bonds
Participation Bonds are risk free and most liquid, which makes them an ideal instrument for
short term needs. During the year under review, we maintained a sizable portfolio of these
bonds, as well as investing our excess cash in these instruments. We earned 262 billion rials of
'profits' (interests) on our portfolio.
Investment in Shares Quoted on the Tehran Stock Exchange (TSE)
Under the current economic situation and fall in the Stock Exchange Index, our dealing in stocks
has been reduced to a minimum. In 1384, 25,459 million rials of profit was realized, which shows
a growth of 67% over 1383. We have set aside a reserve of 13,207 million rials for the fall in
share prices at the end of 1384.
Fluctuation in the Price of Bank's Shares, and TSE - Index
In early 2002, we applied for admission to the Tehran Stock Exchange, in order to facilitate
transfer of our shares, as well as to benefit from tax and other advantages. Our application was
finally approved by the Admissions Committee of TSE on 07/11/1381. As the first Iranian bank
admitted to the TSE after the Revolution, our shares were traded for the first time on 14/4/1382
(4/7/2003) at 3,521 rials. Until the end of 1384, 257,580,811 of our shares for a value of 2,176
billion rials have been traded on the TSE.
15
The following chart compares the TSE share price index with movement in the price of our
shares. The fall in the price of our shares in 1384 has been partially in connection with our capital
increase and partially in connection with the falling Stock Exchange index.
comparision of the TSE share price index with variation in the price of
Karafarin Bank's share
14,000
12000
Market Index
12,000
Bank Index
10,000
10000
8000
8,000
6000
6,000
4000
4,000
2000
2,000
-
0
82/04/14 82/12/29 83/02/31 84/01/10 84/03/01 84/06/02 84/09/14 84/12/07 85/02/25
A summary of trading in our shares in 1384 is given below:
No. of trades
No. of shares traded
Value of trades (billion rials)
Lowest price
Highest price
Last price on 28/12/84
2,535
58,441,893
192
2,315
7,999
2,384
Human Resources
The following table shows the distribution of our personnel according to position:
Managerials
Specialists
Operationals
Total
1384
152
85
362
599
1383
114
16
284
414
16
1382
74
17
161
282
1381
48
16
106
170
The distribution according to the level of education is given in the table below:
Postgraduates
Undergraduates
Post High Sch.-diploma
High-school diploma
Others
Total
1384
27
410
15
114
33
599
1383
17
259
11
97
30
414
1382
11
161
4
79
27
282
1381
6
83
5
55
21
170
Training Courses
During the year under review, 24 members of our personnel and managers participated in 80
training courses and seminars, as enumerated below:
- 113 persons participated in 6 training courses for new employees.
- 131 persons participated in 63 courses and seminars in Iran.
- 16 persons participated in 11 courses and seminars abroad.
We are further planning to offer basic courses in computer science, English and accounting. A
number of educational institutes are being evaluated for carrying out these programs.
Participation of the Staff in the Bank's Share Capital
In order to further motivate the staff, our Investment Department prepared a proposal for the
participation of our personnel in the Bank's share capital. According to this plan, permanent and
contractual staff may acquire shares of the Bank for up to 36 and 18 times their monthly salaries,
respectively, on Credit.
These shares are reserved for the staff and are transferred upon final settlement of the
installments. Until the final settlement, a rate of interest of 12% is applicable. Up to-date, some
42.8 billion rials worth of shares have been purchased on the account of the personnel.
Promotion From Within the Bank
A program has been proposed by Human Resources for choosing Assistant Managers for
branches from amongst personnel with at least 3 years of service, and who have successfully
completed training courses.
17
4) Ongoing Projects and Plans for 1385
Establishment of Karafarin Leasing Company with IFC
Two years ago, we announced our plans to set up a leasing company, to be called Karafarin
Leasing Company (KLC), with the participation of International Finance Corporation (IFC) and
a reputable international commercial bank, in 1383. Unfortunately, despite the agreement signed,
our foreign partners have not as yet honored their commitments. The Bank went ahead and
established the company on its own with a capital of 50 billion rials. The company has become
operational in 1385.
Establishment of Karafarin Brokerage Company (KBC).
By the end of 1384, Karafarin Brokerage Company was ready to begin its operation. But it was
not before 08/03/1385 that the TSE issued its license.
Establishment of Karafarin Insurance Agency
We are in the process of establishing an Insurance Agency in order to offer insurance services in
all Karafarin Bank branches. The project is ready for implementation and its operation will begin
in 3 branches within a month.
Karafarin Bank- Head Office
In 1383, the Bank's Head office, a 19-storey building on Nahid Boulevard, Tehran was
purchased. All the necessary formalities have been taken care of and the building is being
refurbished. It is expected to be completed by the end of Azar 1385 (November/ December
2006).
5) Recommendations and Acknowledgements
Distribution of Profit
The Board proposes the following distribution of profits:
1384
million rials
Profit before tax
Taxes
Distributable profits
To be appropriated as follows:
Legal Reserve
Bonus for non-executive Directors
Dividend
Undistributed profits at the beginning of the year
Undistributed profits at the end of the year
18
1383
rials per
share
million rials
rials per
share
350,189
(18,830)
331,359
500
(27)
473
215,976
(8,072)
207,904
617
(23)
594
(49,704)
(3,125)
(245,000)
59
33,589
(71)
(5)
(350)
47
(31,186)
(3,125)
(175,000)
1,466
59
(89)
(9)
(500)
4
-
Approval of Transactions Subject to Article 129 of the Commercial Code
All transactions between the Bank and others with mutual-board-membership have been
reported to the Bank's Auditors. These transactions have been undertaken according the
provisions of the Commercial Code of Iran and treated as normal business of the Bank. The
terms and conditions of these transactions are in line with those without mutual-boardmembership. Considering the Auditors corroboration of the above statement, the Board hereby
requests the General Assembly of the Shareholders to approve these transactions.
Approval of the Board Members’ Honorarium
The Board proposes that Members be paid an honorarium of one million rials per meeting, for a
maximum of two meetings per month.
Approval of the Financial Statements of the Bank
The financial statements of the Bank have been audited by Bayat/Rayan (KPMG) and reviewed
by the Legal Inspector appointed in last year's General Assembly of the Shareholders. Your
Directors hereby request the General Assembly of the Shareholders to approve these statements
pursuant to the reports of the Auditors and the Inspector of the Bank.
Notes of Gratitude to the Shareholders and the Employees
The Board of Directors of Karafarin Bank extends its thanks to each and every one of the
shareholders for the support and confidence they have shown us from the very first day of
Karafarin Bank's establishment.
The Board also sincerely thanks the Bank's Managing-Director, managers and employees for
their dedication and efforts. Without their commitment and hard work, Karafarin Bank could not
have achieved any of its objectives.
19
Management
Aghili, Parviz – Managing Director
Ghoddousi, Ahmad – Deputy Managing Director
Javad Javadi- Assistant Mananging Director
Farajolah Mahdavi - Assistant Mananging Director
Khaki, Bahman – Advisor to Managing Director
Rad, Massoud – Advisor to Managing Director
Safarian, Majid -Executive Manager, Branches & Procurement,
Almaei, Esmail – Senior Manager, Legal Dept.
Baghia, Ali-Reza-Inspection Dept.
Jariri, Farkhonde – Senior Manager, International Dept.
Javadi, M.Hosseyn-Senior Manager, Planning
Mesgarian, A.Reza – Senior Manager, Procedures & Systems Dept.
Mirzai-Ghomi, Esmaiil-Senior Manager, Information Technology Dept.
Noorbakhsh, Iman-Senior Manager, Risk Management
Parsa, Mehdi – Senior Manager, Credit Dept.
Sadegh-Vishekaii, Gholam-Reza – Controller.
Safe-Kordi, Mehdi- Senior Manager, Credit Information Dept.
Taherkhani, Gitti- Senior Manager, Procurement.
Tayefe, Hossein – Senior Manager, Human Resource,
Azimi-Panah, Nadereh - Assistant Manager, International Dept.
Bathai'I, Seyd-Hossein - Assistant Manager, Credit Dept.
Kamkar-Haghighi, Ali - Assistant Manager, Financial Dept.
KimiaGhalam, Saeed - Assistant Manager, Procurement Dept.
Maddi Nejad, Hmid- Assistant Manager, Inspection Dept.
Massihi, Vartan -Assistant Manager, International Dept.
Sharif Mohseni, Hedayatollah - Assistant Manager, Procedures & Systems Dept.
Roozbahani, Mehrnoosh - Assistant Manager, Branches affair Dept.
Soroosh Hagh, Batool - Assistant Manager, customer service Dept.
Zianak Shouri, Hosseyn - Assistant Manager, Procedures & Systems Dept.
20
Branches
In Teheran
Central
Afrigha
Apadana
Farmanieh
Jomhouri
Kargar Shomali
Keshavarz Blvd.
Mehrabad
Pasdaran
Saadatabad
Vanak
Zafar
In Provinces
Ardebil
Asalooye
Esfahan
Esfahan, (Second Br.)
Ghazvin
Karaj
Kerman
Kermanshah
Mashhad
Rasht
Shiraz
Tabriz
Yazd
Abroad
Soleimanieh, Iraq
21
Iran's Economy
in 1384
(2005-06)
22
Overview
In 1384, according to the preliminary estimates of the Central Bank, the Iranian economy grew
by 5.4% which was 0.6 percentage points higher than 1383, but still 2.6 percentage points below
the target set in the 4th Five-Year Plan. The rate of inflation was, according to the Central Bank
data, limited to 12.1%, or 3.1 percentage points less than 1383. Unemployment at 11.5% was also
1.2 percentage points less than 1383. Improvement in the balance of payments accelerated,
mainly because of rising oil prices, which approached and surpassed $70 per barrel (averaging
around $51.37/b for Iran in 1384). Meanwhile, rising imports helped to absorb domestic
demand.
During the year under review, economic climate was much influenced by mostly non-economic
factors, which helped to shape investment expectations. Uncertainty persisted almost throughout
the year concerning some domestic issues, as well as the threat of international sanctions due to
uranium enrichment question. 1384 was the year of presidential election and far-reaching policy
changes. Even after the election, the full composition of the Government, however, was not
known until the end of the second quarter and most cabinet members were relatively unknown
faces.
In the banking community, the prospect of lowering bank 'profit' (interest rate) through
legislative action kept all concerned fairly ineffective for the better part of 1384. The Currency &
Credit Council anticipated the legislature and lowered the lending rates on a relatively moderate
scale before the year was over; and, somewhat unexpectedly, even instructed the privately-owned
banks to follow suit. These banks were gradually increasing their share of the market and had
largely succeeded to curb the unofficial black market, thereby enhancing the effective scope of
monetary policy. The new interest rate policy could seriously jeopardize these results.
There were also signs of recessionary tendencies during the year as stock prices fell sharply and
the TSE index reached its lowest point by the end of the year: at that point, the index reached
9460 and showed a fall of 26% compared to its peak at the end of the first month of the year.
The drop from the peak to the trough was more prominent for the stocks of financial institutions
(-44%) compared to the industrial companies (-20%).
Another barometer of the business climate was some 125% increase in the amount of
dishonored promissory notes in Tehran in 1384. The increase in the number (as against the amount)
of dishonored promissory notes was only 12.5%. This could be interpreted as larger businesses,
which sailed through such periods in the past, were not let off this time.
In the same vein, the ratio of 'problematic loans' of the banks (including write offs, doubtful
loans and over-dues) to their total assets, which, according to the Vice-Governor of the Central
Bank, had risen from 6.1% in 1379 to 8.6% in 1383, sharply increased to 12.5% in 1384,
amounting to some 90tr rials.
As for the real sector, the rate of growth of the GDP reached 7.1% in the 1st quarter, but fell in
the 2nd and 3rd quarters, to rise again in the 4th. The unemployment data, however must be used
with more caution, in view of some discrepancies, including the fact that there has been changes
in methodology to improve employment sampling surveys.
Meanwhile, the rate of growth of all the main monetary indicators increased sharply in 1384. The
rate of growth of the monetary base which had increased 17.5% in 1383, shot up to 46.1% in
1384. The rate of growth of the money supply (M1) jumped from 16.3% to 25.8%. The increase
was more moderate for liquidity, rising from 30.2% to34.3%, for total deposits, going from
31.4% to 35.8%, and for private sector credit, barely rising from 37.6% to 38.3%. .
Further analysis is needed in order to reconcile these signals. One explanation is most certainly
the Budget Supplements approved during the last two months of the year, authorizing the
23
Government to draw an additional $11.3b of the oil revenue, with important consequences and
modification of year-end data. The real 'trickling down' effect of this injection will present itself
in 1385.
The financial position of the Government was very much affected during the last month of the
year as the oil revenue rose 12 times and the subsidies quadrupled in that month. Overall, current
expenditure registered a huge leap of 57.3%, while the increase in total expenditure was limited to
52.5%. The 'Deficit' (including repayment of loans) was only 3.0% above last year and the ratio
of Budget Deficit to the GDP was limited to 4.9 %.
The oil revenue was substantially higher than last year and reached $48.8b. Imports also jumped
to $41b, which, all the same, indicated a small fall in its rate of annual growth from 29.3% to
7.3%. The result was quite an unprecedented balance of trade surplus of $19b. The only
significant drop was in the capital account, which registered an outflow of $0.4, in itself quite
small, but compared to the inflow of $7.4b in 1383, it showed a relative position of minus $7.8b.
Consequently, our reserves neared $51b. Our debt/reserve ratio fell to 81% from 107% last year.
Major Economic Indicators
4th Plan
(Average Annual
Growth)
GDP (Fixed Price 1376) (tr. rials)**
(Current Price) (tr. rials)
Fixed Capital Formation (tr. rials)
Inflation Rate
Unemployment
Oil Revenue (billion dollars)
Balance of Payments (billion dollars)
Govt. Expenditures (tr. rials)
Budget Deficit (tr. rials)
Liquidity (tr. rials)
Stock Price Index
Population (million)
%8.0
%12.3
%9.9
%-0.9
%3.0
%20.0
%1.4
1383
398.2
1,384.8
144.4
%15.2
%10.3
36.3
8.8
483.8
-80.8
685.8
12,114.0
67.7
Actual
419.7
1,691.8
152.7
%12.1
%11.5
48.8
13.6
737.9
-83.3
921.0
9,460.0
68.6
1384
Growth
rates
%5.4
%22.2
%5.7
%34.4
%54.5
%52.5
%3.0
%34.3
%-21.9
%1.3
Target
430.1
162.2
%14.6
%11.4
823
-
Real Sector
According to the central bank's preliminary estimates, during the year under review the rate of
growth of the GDP at constant prices reached 5.4%. This was 0.6 percentage points more than
the year before. The quarterly rate of growth varied from 7.1% in the 1st quarter to 5.2% in the
2nd quarter, 4.4% in the 3rd quarter, and finally 5.0% in the 4th quarter.
The same pattern could be observed in Industry, which accounted for 1.3 percentage points of the
total growth. Its growth of 7.1% (4.9 percentage points less than the year before) followed the
same fluctuation as GDP; namely 10.9%, 6.0%, 4.0%, and 8.0% in the four quarters of the year,
respectively. Industry had been growing consistently during the past four years and its growth was
supported by the increasing import of machinery.
Construction behaved differently in 1384. While it grew by 4.4% for the year, the pattern of growth
was erratic: 11.4%, -2.8%, 10.8%, and 1.1% for the four quarters, respectively. Several
observations can be made in this connection: robust first quarter, uncertainty of postpresidential-election in 2nd quarter, completion of unfinished works in 3rd quarter and seasonal
slow down in the 4th quarter. Notwithstanding the interpretation, it must be said that the
consumer price index, the construction whole-sale price index, and the construction services
costs index all indicate slow-down in this sector. The number of construction permits issued in
urban areas, also indicate a consistent (annual) decrease for every quarter during the past 2 years.
24
Water, electricity & gas, the last sub-sector of Industry, mainly controlled by the public sector,
registered a rate of growth of 6.4% (compared to 9.5% for 1383) and its share in growth was 0.1
percentage point.
Agriculture did well in 1384 with a rate of growth of 7.1%. This rate was three times the level of
the year before, and in line with growth rates of 1382 and 1381. Usually seasonal factors play an
important role in this sector. The 2nd quarter production normally accounts for almost half of the
annul value added, while the 4th quarter is much less important. This pattern happened to be
somewhat intensified in 1384. It is also a fact that unlike other sectors, agriculture does not much
react to public or investors mood and even if it did, it would have reacted more slowly. At any
rate, Agriculture’s share in the GDP growth was 1.0 percentage point in 1384 and this was 0.7
percentage points higher than the figure of the year before.
The growth of the Oil sector was limited to 0.6%, compared to 2.6% in 1383. This sector
accounted for 0.1 percentage points of GDP growth in 1384. As we have pointed out before,
investment in the oil fields has been declining; and, unless it is revived, no notable surge in
production may be expected soon. It is, however, worth pointing out that the OPEC data for the
average daily oil production of Iran specifies a growth of some 7% over 1383.
Services registered a growth of 5.6%, against 4.6% for 1383. Although the rate of growth of
Services in the 1st quarter at 6.4% was higher than the rest of the year, there is no significant
quarterly trend to refer to. This sector is the most important sector of the Iranian economy, as it
accounts for more than 50% of the value added and accounted for 2.9 percentage points of the
5.4% GDP growth.
During the year under review, according to the Central Bank's data, Gross Fixed Capital
Formation registered a growth of 5.8% (compared to 7.0% in 1383). The quarterly pattern ranged
from 10.2% in the 1st quarter to 1.2% and 1.1% in the 2nd and 3rd quarters, to rise again to 12% in
the 4th quarter. This was apparently due to a jump in investment in machinery in the 4th quarter
of 15.8%. For the whole year, the rate of growth of investment in machinery was 6.4%, while the
rate of growth of investment in the construction was 4.٧%.
Once again, the 4th quarter has played an important role in shaping the annual trend.
Unfortunately, the data separating private-sector and public-sector investment are not available
for further analysis.
Gross Domestic Product
(at Fixed 1376 Prices)
Agricultural
Oil
Manufact. & Mine
Construction
Other
Services
Less:
Commissions
GDP
(trillion rials)
1381
Value
1382
1383
1384
49.8
39.4
60.8
3.9
18.7
186.8
53.4
44.7
67.0
4.2
18.7
195.6
54.5
45.9
75.0
17.9
4.6
204.6
58.4
46.1
80.4
18.7
4.9
216.0
7.1
13.4
10.0
8.6
0.0
4.7
2.2
2.6
12.0
324.7
-75.3
4.6
7.1
0.6
7.1
4.4
6.4
5.6
0.3
0.3
2.0
-0.2
0.1
2.4
1.0
0.1
1.3
0.2
0.1
2.9
3.9
355.6
3.7
379.8
4.3
398.2
4.8
419.7
-4.7
6.8
13.6
4.8
12.0
5.4
0.1
4.8
0.1
5.4
1382
%Change
1383
1384
Share in Growth
1383
1384
According to the 4th Economic Development Plan, GDP growth for 1384 was supposed to reach
8%.
25
Fiscal Policy
In 1384, major recent trends continued until the 11th month of the year, when two Budget
Supplements were approved by the parliament, allocating an additional 102.3tr rials** to the
Government from the oil revenue. Consequently, compared to the 3rd quarter figures, there was
an important modification in trends, and the rates of growth of revenues, as well as expenditures
picked up considerably. Government revenue registered an increase of 62.5% over 1383 and
amounted to 654.5tr rials, while Government expenditure increased by 52.5% and reached
737.8tr rials, leaving a 'budget deficit' of 83.3tr rials, which was just ٣% more than last year.
Government revenue is derived from three sources: 1) oil & gas, 2) taxes, and 3) other revenues. The
direct share of the oil revenue was about 28.6% of the total revenue and amounted to 187.3tr
rials. This was about 24% more than the year before. In fact, the approved budget had provided
for 10.7% less dependence on the oil revenue in 1384, compared to 1383.
Taxes accounted for 20.6% of total revenues and registered an increase of 3.4% over the
approved budget. Tax receipts in 1384 were 59.4% higher than in 1383. This increase is mainly
due to the recent 5% tax levied on the NIOC turnover. This is in effect a sales tax on oil,
including domestic consumption, and, therefore, should be considered as part of the oil revenue.
During the period under review, the share of tax revenue to total revenue remained around 20%
and represented no significant change, but the ratio of taxes collected to tax revenue budgeted
increased from 95% in 1383 to 103% in 1384, due, as stated above, to the new sales tax on oil.
The share of direct taxes to total taxes was about 62.4%, while 76.7% of direct taxes consisted of
income tax on corporations. Amongst indirect taxes, import taxes made up the bulk of it or
71.1%.
Consequently, the share of oil in Government expenditure, including energy subsidies, amounted
to 61.6% (compared to 61.7% and 62.4%, for the past two years, respectively). If we take into
account Government drawing on the OSF, the figure would rise to 71% (compared to 74.9% and
76.6%, for the past two years, respectively). Adding our estimate of the sales tax on NIOC (about
33tr rials), total reliance on oil would reach 75.5% of Government expenditure in 1384.
The last revenue item, “other revenues”, amounted to 332.7tr rials and, in effect, was the largest.
It is composed of levies and duties and proceeds of sales of assets, as well as, a notional figure
(both as revenue and expenditure) to indicate energy subsidies. The first part is self-explanatory
and amounted to 65.8tr rials, or almost twice the approved budget. The second part, energy
subsidies, which consists of the difference between international prices of energy products and
the domestic price actually paid for them, amounted to 266.9tr rials, which was 80% more than
the year before. It is noteworthy that just more than half of this item of revenue was realized in
the 4th quarter.
The composition of government expenditure was more or less similar to the year before; i.e.,
current expenditure making up about 81% of the total. There was an increase of 57.3% in current
expenditure. The share of current expenditure gradually picked up during the year, from 56% in
the 1st quarter to reach 72% for the 9 months and 81% for the year. 44.2% of current
expenditure took place during the last quarter of the year, 37.6% of it during the last month.
On the other hand, Acquisition of capital assets, or development expenditure, registered a
respectable increase of 62.6% and amounted to 117.6tr rials, or 4.1% more than the 113tr rials
forecasted. The share of development expenditure in total expenditure amounted to 15.9%,
which was 1 percentage points over last year. In 1384, due to availability of oil revenue, the
Government was able not to cut down on capital expenditure.
The last part of the government expenditure, acquisition of financial assets, consists of repayment of
loans. In 1384, repayment of loans amounted to 22.5tr rials, which was 28.6% less than the figure
of 1383.
26
A word of explanation about the two Budget Supplements is in order. These Supplements
authorized the Government to draw 102.3tr rials, or $11.3b, from the oil revenue directly instead
of borrowing from the OSF, as was previously the case. $3.5b of this amount was to be used for
the import of subsidized gasoline. The rest was directly converted into rials for domestic
expenditure, including food subsidies, Government employees' salaries, and so forth.
Financial Position of the Government
(trillion rials)
1381
Budg. Actual
Revenues:
Oil & Gas
Taxes
Others:
1-levies etc
2-Subsidies
Total
1382
Budg. Actual
1383
Budg. Actual
1384
Budg. Actual
102.6
62.4
103.2
50.6
127.1
74.9
128.2
65.1
150.8
89.0
150.4
84.4
134.3
130.1
187.3
134.6
20.2
12.0
185.2
165.8
25.6
103.9
331.5
13.7
117.3
324.3
29.7
104.0
373.5
20.0
148.1
402.9
32.7
266.9
564.0
65.8
266.9
654.6
Expenditures:
Current
Capital
Acquisition of Assets
Total
155.6
55.0
29.6
240.2
147.6
54.8
27.6
230.0
285.7
85.2
35.6
406.5
295.5
73.8
24.1
393.5
317.3
99.1
43.2
459.9
380.0
72.3
31.5
483.8
382.8
112.9
42.0
537.7
597.8
117.6
22.5
737.8
Surplus/Deficit
-55.0
-64.2
-75.0
-69.2
-86.4
-80.8
26.3
-83.3
2.4
0.5
15.0
35.4
1.7
55.0
2.5
0.3
8.4
52.7
0.9
64.7
5.4
0.0
18.0
38.2
13.7
75.3
7.7
0.1
2.5
56.1
1.9
68.3
13.5
2.3
23.0
46.0
1.6
86.4
12.3
0.3
2.8
63.8
1.5
80.7
11.3
3.5
30.0
66.2
2.6
113.6
6.8
0.6
1.8
69.4
4.7
83.3
Financed by:
Participation Bonds
Foreign borrowing
Privatization
Oil Stabilization Fund
Others
Total
The Oil Stabilization Fund was the main source of financing the 'budget deficit' in 1384. The
share of various sources in financing the deficit is given in the table below:
Financing Budget Deficit
1382
Budget
Actual
Participation Bonds
Foreign borrowing
Privatization
Oil Stabilization Fund
Others
Total
7%
0%
24%
51%
18%
100%
11%
0%
4%
82%
3%
100%
27
1383
Budget
16%
3%
27%
53%
2%
100%
Actual
15%
0%
3%
79%
2%
100%
1384
Budget
Actual
10%
3%
26%
58%
2%
100%
8%
1%
2%
83%
6%
100%
In recent years, with the rise in oil price, the government has lowered its 'borrowings'; instead, it
has increasingly relied on the oil revenue to finance its deficit beyond the approved budget.
In the above table, government reliance on the oil revenue to finance its deficit has systematically
exceeded its original estimated needs, as provided for in the approved budgets. In our
presentation, repayment of loans (or “acquisition of financial assets”) is included in the Budget
Deficit, to show its economic impact. Clearly, when the deficit is financed by the oil revenue, its
effect on money supply may be reversed by imports, and the classical notion of its
inflationary/expansionary effect is no more applicable.
Employment
In 1384, according to the estimate of the Iran Statistical Center, unemployment reached 11.5%
and was 1.2 percentage points above 1383. The age-group most affected by unemployment, was
the 15-24 year-old age-group, namely, the youth entering the labor market. Unemployment in this
age-group reached 23.2%, down from 25.8% the year before. The rate was even higher in urban
areas and women were hit harder than men. General unemployment in urban areas reached
13.7%, up from12.3%, while in rural areas it reached 6%, down from 6.8% in 1383. Women in
urban areas were the social category most affected by unemployment: 25.1%, compared to 5.5%
for their rural counterparts, both of which were lower than 1383.
As a coherent system of registration of the unemployed has not yet become fully operative, the
estimates differ and it is not always an easy task to reconcile the employment figures, the number
of people entering the labor market, the number of jobs created and the amount of investment
required to create new jobs.
As of last spring, a new methodology has been adopted to estimate monthly unemployment
figures, based on sampling surveys. Thus, most probably, there will be an improvement in the
objectivity of the data presented. However, this makes comparison between 1384 and 1383 rather
less reliable. Up to 1383, 3rd quarter employment sampling surveys were assumed to be
representative of the whole year; the new methodology is based on the average of the 4 quarters.
Inflation and Unemployment (1374-84)
60.0
Inflation
Unemployment
50.0
40.0
30.0
20.0
10.0
0.0
1374
1375
1376
1377
1378
1379
1380
1381
1382
1383
1384
According to the 4th Economic Development Plan, by the end of the Plan in 1388
unemployment must reach 8.4%. This requires an annual average decrease of 0.9%, or 11.4% for
1384 (compared to the 12.3% mentioned in the Plan), which corresponds with the estimate. On
the basis of Iran Statistical Center data, unemployment for 1384 should have reached 10.7%,
which is not far from the target.
28
Monetary Sector
In 1384, all the main monetary indicators registered considerable growth, which for most parts,
took place in the last month of the year and coincided with increased Government expenditure
just authorized by the Legislature.
Liquidity reached 921 tr. rials, which showed a rate of growth of 34.3% over the year before, a
record for the past 5 years. This was mostly due to another jump in term deposits.
Money supply (M1) grew by 25.8%, which was considerably lower than the rate of growth in
liquidity, nonetheless it largely exceeded the rates of the past two years. This increase was mainly
brought about by an upsurge of 14.2% in the last month of the year, which was due to the
increase of 33.7% in notes and coins in circulation and 11.1% in demand deposits.
It may be concluded, therefore, that defensive reaction of savers against inflation, together with
relative effectiveness of the rate of interest, should have been at least partially responsible for the
growth of deposits. It could also reflect the anxieties about the stock market, and a movement to
less volatile investments.
The Central Bank's net foreign assets rose sharply (by some 64.4tr rials), which in turn led to an
increase in the monetary base of 46.1% for the year. Concurrently, total private sector credit
increased by 38.3% and by the end of the year amounted to 865 trillion rial. This rate of growth
was more or less comparable to the figures for 1383 (37.6%) and 1382 (39.1%), but higher than
the years before.
Monetary Indicators
(trillion rials)
Money Supply (M1)
Notes & coins
Demand deposits
Total
Liquidity (M2)
Term deposits
Total
Monetary Base*
Total Credit
Private Sector credit
Public Sector credit
Total
Credit to Public Sector
Central Bank
Banks
Total
Credit to Government
Central Bank
Banks
Total
Credit to State Entities
Central Bank
Banks
Total
Year
1383
% Change
1382
1383
1384
19.2%
30.0%
27.8%
11.4%
20.8%
19.0%
15.6%
16.5%
16.3%
13.2%
28.5%
25.8%
603.1
921.0
220.9
31.9%
30.1%
23.1%
31.7%
26.1%
7.6%
40.0%
30.2%
17.5%
39.3%
34.3%
46.1%
625.7
235.9
861.7
865.3
235.7
1,101.0
34.9%
48.9%
40.0%
39.1%
7.6%
26.9%
37.6%
6.3%
27.3%
38.3%
-0.1%
27.8%
136.0
85.9
221.9
132.4
103.6
235.9
123.3
112.4
235.7
59.8%
33.1%
48.9%
3.4%
15.0%
7.6%
-2.7%
20.6%
6.3%
-6.8%
8.5%
-0.1%
111.6
17.3
128.9
117.1
25.9
143.0
111.9
36.8
148.7
101.3
34.5
135.8
72.7%
129.3%
78.6%
4.9%
49.5%
10.9%
-4.4%
42.1%
4.0%
-9.5%
-6.1%
-8.7%
19.9
57.3
77.3
18.9
60.0
78.9
20.4
66.8
87.2
22.1
77.9
99.9
12.6%
18.1%
16.6%
-5.3%
4.6%
2.1%
8.1%
11.4%
10.6%
8.1%
16.6%
14.6%
1381
1382
1384
34.8
147.9
182.7
38.7
178.6
217.4
44.8
208.0
252.8
50.7
267.2
317.9
234.9
417.5
119.6
309.2
526.6
128.7
433.0
685.8
151.2
327.1
206.2
533.3
454.8
221.9
676.7
131.6
74.6
206.2
1381
* = currency in circulation + bank's sight deposits with Central Bank
The rate of growth of public sector credit continued to fall, mainly because the government
continued to rely less on the banking system (the central Bank, as well as other banks) to finance
its needs. In fact, government net borrowing from the Central Bank, as well as other banks, was
negative during the period under review.
29
Price Trends
The average annual rate of inflation for the 12 months preceding the last month of 1384 reached
12.1%, which was 3.1 percentage points lower than 15.2% for 1383 and 2.5 percentage points
lower than the rate of inflation projected in the Fourth Five-Year Development Plan for 1384.
During the period under review, there seemed to be a definite declining monthly price-trend. The
monthly rate continuously fell from 18.5% in the first month of the year to 10.6% in seven
month; then it rose slightly to 11.1% and 11.3% during the next two months. During the 4th
quarter, the declining trend continued, bottoming out in the last month of the year at rate of
10.2%. This rate was 6.5 percentage points less than the corresponding month of the year before
the last month of 1383. Rise and fall of monthly inflation rate in the last two years is presented in
the chart below.
Monthly Inflation
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
84-12
84-11
84-10
84-09
84-08
84-07
84-06
84-05
84-04
84-03
84-02
84-01
83-12
83-11
83-10
83-09
83-08
83-07
83-06
83-05
83-04
83-03
83-02
83-01
0.0
The seasonal factors, as well as delayed imports by the Ministry of Commerce, led to a steep
price rise in the first two months of 1384. But it was clear, as of the end of the 1st quarter that
other factors will influence the behavior of consumers and affect the consumer price index. In
fact, roll-back of prices to 1383 level for services offered by a number of state-owned entities
(mainly public utilities), continuation of imports on a large scale, and macro economic factors
related to demand and recessionary tendencies seemed to be responsible for continuously
decreasing rate of inflation. This is probably the most plausible explanation, because with growth
of liquidity at 34.3% it seems that inflation rate has only been contained for the time being.
It is important to note that Government subsidies, especially energy subsidies, constitute an
important element in suppressing the inflation rate.
The whole sale price index also confirms the above trend. The average annual whole sale price
rise in the last month of 1384 was 5.7% compared to 19.1% for the last month of 1383. It is also
noteworthy that the average annual rate of inflation foreseen in the Fourth Five-Year
Development Plan is 9.9%.
30
% Changes of GDP (at Current and Constant Prices) and Liquidity
1800
1600
1400
tr. rials
1200
1000
800
600
400
200
0
1376
1377
1378
GDP (Constant Prices)
1379
1380
1381
1382
GDP (Current Prices)
1383
1384
Liquidity
As can be seen in the above table, the average annual rate of growth of liquidity, during the past
eight years, reached 27.2 percent, while the average annual rate of growth of the GDP at current
prices, during the past eight years, reached 22.2 percent. The average growth of the GDP at
constant price amounted to 5.4 percent.
Banking System
The banking system in Iran is composed of 11 state-owned banks, 6 privately-owned banks and a
number of non-bank financial institutions. At year end 1384, the government-owned banks
accounted for 766.3tr rials of deposits (or 88% of total deposits) and 760.2tr rials of private
credits (or 88% of total credits). And the balance is handled by the privately-owned banks. But
the letter's share has continuously increased ever since their inception, as shown in the tables
below.
Private and Government-owned Banks
Government-owned banks
Number
Number of branches
Number of staff
11
16 129
173 562
31
Private banks
6
191
3 013
Distribution of Deposits and Credit
(trillion rials)
Amount
Total deposits
Commercial banks
Specialized banks
Total Govt. banks
Private banks
Private Credit
Commercial banks
Specialized banks
Total Govt. banks
Private banks
Share (%)
1382
1383
1384
487.9
407.9
63.2
471.2
16.7
454.8
323.6
113.8
437.4
17.4
640.9
502.5
93.7
596.2
44.7
625.7
434.5
142.0
576.5
49.2
870
634.9
131.4
766.3
104
865.31
556.4
203.8
760.2
105.2
1382
1383
1384
100.0%
83.6%
13.0%
96.6%
3.4%
100.0%
71.2%
25.0%
96.2%
3.8%
100.0%
78.4%
14.6%
93.0%
7.0%
100.0%
69.4%
22.7%
92.1%
7.9%
100.0%
73.0%
15.1%
88.1%
12.0%
100.0%
64.3%
23.6%
87.9%
12.2%
As pointed out above, in 1384, the volume of private sector credit increased by 0.7 percentage
points, from 37.6% to 38.3%. However, rate of growth of credit granted by commercial banks
declined by 6%. As specialized banks (all government-owned) were offering more attractive
terms and higher subsidies, growth of credit to the private sector by these banks was just under
50%. Growth rate of credits granted by privately-owned banks dropped by 69 percentage points
in 1384 (from 183% in 1383 to 114% in 1384). In this case, the reason probably could be
attributed to low starting points and rapid rise in the early years of their activities.
The private banks also invested their excess credit capacity in Government ‘participation bonds’.
Their bond holdings of 4.7tr rials were about 3.5 times the year before. Moreover, these bonds
are very liquid and could be resold at will with no capital loss; hence, a good investment in times
of uncertainty.
Another point of significance in the banking system has been the ratio of 'problematic loans
(including write offs, doubtful loans and over-dues) to their total assets. According to the ViceGovernor of the Central Bank, this ratio has risen from 6.1% in 1379 to 8.6% in 1383 and 12.5%
in 1384, amounting to some 90tr rials.
Tehran Stock Market
The fall of stock prices continued and reached its lowest point by the end of the year. At that
point, the index reached 9459.9, which showed a fall of 26% compared to its peak attained near
the end of the 1st month of the year. There was a short period of rebound in the 3rd quarter (near
the end of eight month of the year), when the index was down to 9788. Then it came to a halt.
The rebound, according to experts, was triggered by the official announcement of deregulation of
the price of cement and was followed by a wave of optimism. Within a fortnight it rose by some
665 points, or 6.8%. But the recovery was, short lived as the price deregulation was not realized
and optimism faded.
32
Tehran Stock Exchange
13000
12500
12000
11500
11000
10500
10000
9500
9000
8500
1384/09/06
1384/05/26
1384/05/08
1384/01/28
1384/01/06
8000
It is interesting to note that the percentage decrease from maxima to minima was much more
prominent for the financial stock than the industrial stock. While the former registered a fall of
44%, that of the latter was 20%. This seems to indicate more tension in the financial sector.
During the period under review, the amount of shares transacted in the Tehran Stock Exchange
was reduced by about 47%, while the number of shares transacted remained almost the same,
which is a clear indication of fall in prices.
Although relatively new, the stock market has shown to be hypersensitive to political issues such
as the course of the nuclear negotiations.
External Position
In 1384, the balance of payments showed an unprecedented positive balance of $13.6b, which
was 54.5% more than the year before. This was due to 37% increase in foreign exchange earnings
brought about mainly by strong oil prices, which for Iranian crude was about $51.37 per barrel
for 1384, while the rate of growth of imports slowed down. The latter should seemingly be
attributed to the general conjunction of factors affecting effective demand. On the other hand, as
the dollar appreciated against the euro by about 10.4%, the purchasing power of our dollar
revenue increased accordingly.
The balance of trade surplus of $19b was even more impressive. It was three and a half times the
figure for 1383 and surpassed all previous records. This rate of annual growth was maintained
throughout the 4 quarters. Even if the pace of imports had not been reduced, the oil revenue at
$48.8b exceeded last year by about $12.5b, which would have resulted in a more than
comfortable surplus balance of trade. Consequently, despite a more-than-average negative net
position in services, the same superlatives could be applied to the balance of payments current
account surplus.
The capital account presented a negative balance of $0.4b at the end of the year. During the past
three years, the surplus capital account has substantially contributed to improvement in the
balance of payment. In 1383, it amounted to some $7.4b. In comparative terms, there seems to
have been a significant negative turnaround in the flow of funds of about $7.8b.
During the period under review, the rate of growth of imports fell from 34.1% in 1382 and
29.2% in 1383 to 7.2%. The figure for the 9 months was even lower and registered an annual
33
increase of only 4.6%. Were it not for the 4th quarter jump (during which imports rose from
$9.3b in the 3rd quarter to $12.5b in the 4th quarter of 1384, or 35%) the annual increase would
still have been lower. This is a significant decline, as no modification of import regulations took
place during this period and, needless to emphasize, there were no constraints so far as foreign
exchange earnings were concerned. During the recent past, imports had served to absorb a major
part of inflationary pressures and help keep the price rise at bay. They performed the same
function in 1384.
Consequently, during the period under review, the balance of payment presented yet another
sizeable surplus, boosting the reserves, after taking into account statistical errors and omission, by
some $13.6b. Thus, by the end of the year, according to our estimate, the country’s cumulative
reserves stood at $50.8b, representing an increase of 36.4% over (the end of) the year before. The
dollar equivalent of the Central Bank’s total foreign assets of 428 tr. rials by the end of the year
would amount to $47.6b.
During the year under review, the rial depreciated against the dollar from 8719 in 1383 to 9026
rials, or about 3.5%, which more or less corresponds to the trend in recent past. Meanwhile the
dollar appreciated by 10.4% against the euro, giving a cross-rate appreciation of the rial vis-à-vis
the euro of about 7.1%. Consequently, this appreciation to an extent may have offset the
domestic inflation.
At the end of the year, the balance of the country's foreign debts stood at $24.3b, up from $23.1b
at the end of 1383, which together with other short and long-term commitments (including
interests) amounted to about $41.8b. This is about 81% of our (estimated) reserves, down from
107% and 121% at the end of 1383 and 1382, respectively.
Balance of Payments
(trillion rials)
Exports
Oil & Gas
Other goods
Import of goods
Balance of Trade
Services (net)
Transfers (net)
Current Account
Capital Account(net)
Balance of Payments
Change in Reserves
Cumulative reserves
Oil Stabilization Fund
External Obligations
1381
28.2
23.0
5.3
22.0
6.2
-3.5
0.9
3.6
2.5
6.1
4.7
24.9
8.2
12.5
Year
1382 1383
34.0 43.9
27.4 36.3
6.6
7.5
29.6 38.2
4.4
5.7
-4.5
0.9
0.8
4.5
5.3
3.7
28.6
8.6
17.0
-5.0
0.8
1.4
7.4
8.8
8.7
37.3
9.7
23.1
1384
60.0
48.8
11.2
41.0
19.0
1381
18.1
18.8
15.5
21.6
7.4
% Change
1382 1383
20.4
29.0
19.1
32.8
25.9
13.6
34.1
29.2
-28.6
27.6
1384
36.9
34.4
48.5
7.3
236.9
-5.9
0.9
14.0
-0.4
13.6
13.6
50.9
10.7
24.3
607.7
25.8
-40.1
120.3
-14.3
-2.0
23.1
12.2
29.5
3.8
-77.2
76.7
-13.5
-20.5
14.9
4.2
17.6
12.5
874.3
-105.6
54.5
55.5
36.4
10.0
10.5
-13.1
76.7
65.1
66.9
135.3
30.6
13.2
During 1384, according to the Management and Planning Organization Weekly confirmed by
Central Bank sources, some $19.6b was credited to the Oil Stabilization Fund (OSF), but before
the end of the year, $6.4b of it was withdrawn under the First Budget Supplement and allocated
to the Government, reducing the amount credited to the Fund to $13.2b, which together with
the credit balance of $9.7b at the beginning of the year amounted to $22.9b. Total withdrawals
from the Fund amounted to $12.2b, which would leave a balance of about $10.7b at the end of
the year.
34
Oil Stabilization Fund
(billion dollars)
1379
1380
1381
1382
1383
1384
Aggregate
Starting Balance
New Contribution
Total available
0.0
5.9
5.9
5.9
2.2
8.1
7.3
5.9
13.2
8.2
5.8
14.0
8.5
10.5
19.0
9.7
13.2
22.9
43.5
43.5
Withdrawals:
Private sector
Public sector
0.0
0.0
0.1
0.7
0.5
4.5
1.1
4.4
1.8
7.5
2.5
9.7
6.0
26.8
Ending Balance
5.9
7.3
8.2
8.5
9.7
10.7
10.7
During the year under review, $2.5b was withdrawn by the private sector for committed projects.
Meanwhile, $2.5b of new projects were approved and $1.7b commitments were undertaken for
projects already approved. These figures revealed no substantial change compared to previous
years.
Balance of Payments
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1379
Exports
1380
Oil & Gas
1381
1382
Import of goods
1383
1384
Balance of Trade
NOTES:
*-You will find a rather more elaborate version of this survey on our Website:
http://www.karafarinbank.com
*- Our text is essentially based on data released by the Economic Research Department, the
Central Bank of the Islamic Republic of Iran (CBI), unless otherwise indicated.
**-One USD is approximately equal to 9000 rials.
35
36
37
Financial Statements
KARAFRIN BANK (Public Joint-Stock Co.)
Balance Sheet as at March 20th.,
Assets
Notes
Cash
Due from Central Bank
Interbank
Gov't Participation Bonds
Investments-Listed Shares
Receivables
Prepayments
Total
Loans & Advances(net)
Investments-Unlisted
4
5
6
7
8
9
10
2006
(In Iranian Rials)
2005
11
12
40,731,918,400
1,651,416,051,893
947,141,298,545
1,177,312,000,000
103,231,519,102
1,025,858,500,043
3,126,527,365
4,948,817,815,348
7,310,063,411,300
93,986,000,000
18,100,885,172
804,946,617,125
221,548,276,535
568,360,500,000
115,625,912,680
554,127,725,257
8,141,687,881
2,290,851,604,650
3,973,504,700,880
7,000,000,000
Fixed Assets
13
327,226,417,004
266,719,730,189
Other Assets
14
4,761,035,995
5,817,237,519
12,684,854,679,647
6,543,893,273,238
Total Assets
Liabilities & Equity
Current &Saving Deposits
Term Deposits
Other Deposits
Other Liabilities
Dividend Payable
Total Liabilities
15
16
17
18
19
971,682,398,234
8,896,250,394,588
1,518,972,553,961
64,733,804,503
245,000,000,000
11,696,639,151,286
731,274,767,317
4,216,564,571,824
908,145,378,260
18,412,437,576
175,000,000,000
6,049,397,154,977
Resrv.&Prov.for Loans &Employ.Severance
20
137,186,732,342
76,701,104,704
Share Capital
Legal Reserve
Undistributed Profit
21
22
700,000,000,000
117,439,503,224
33,589,292,795
350,000,000,000
67,735,685,855
59,327,702
851,028,796,019
417,795,013,557
12,684,854,679,647
6,543,893,273,238
2,889,996,803,717
1,127,276,491,399
600,000,000,000
527,786,467,462
32,803,558,434,040
1,822,414,511,318
657,473,559,094
487,441,085,729
17,328,744,947,528
Total Equity
Total Liabs.& Equity
Memorandum Items:
Guarantees Issued
L/C Commitments
Underwriting commitments
Managed Funds
Securities & Assets Pledged as Collateral
33
34
35
36
37
1
KARAFRIN BANK (Public Joint-Stock Co.)
Profit & Loss Statement for the Year Ended March 20th.,
(In Iranian Rials)
Revenues:
Interest on Loans
Interest on Gov't. Bonds
Interest on Deposits
Interest onStatutory Deposits
Total
Less:Interest paid on Deposits
Net Interest Income
Dividends
Commissions Received
Other Income
Operating Income
Expenses:
Payroll
Administrative Expenses
Reserves for Loans&Investments
Depreciation & Amortization
Notes
23
24
24
24
25
24
26
28
29
29
31
30
Total Expenses
Net Profit before Tax
Taxes
32
Net Profit after Tax
2006
2005
1,112,387,196,146
261,994,508,677
11,673,653,276
11,598,555,087
578,029,351,824
156,936,391,016
7,286,519,862
5,378,988,767
1,397,653,913,186
(1,028,835,313,479)
368,818,599,707
6,918,308,901
94,292,683,457
71,765,366,974
747,631,251,469
(530,177,265,996)
217,453,985,473
24,647,908,828
45,058,045,894
32,040,026,040
541,794,959,039
319,199,966,235
(46,218,052,529)
(56,312,493,119)
(67,063,489,404)
(22,012,375,202)
(24,442,358,715)
(25,190,360,909)
(39,252,809,812)
(14,338,200,220)
(191,606,410,254)
(103,223,729,656)
350,188,548,785
(18,829,766,323)
215,976,236,579
(8,072,103,880)
331,358,782,462
207,904,132,699
Karafarin Bank (Public Joint-Stock Co.)
Statement of Earnings for the Year Ended March 20th..
Notes
Earnings:
Undistri.profit-beg.of the year
Net profit for the year
Previous years Adjustments
2006
(In Iranian Rials)
2005
59,327,702
331,358,782,462
-
2,394,739,170
207,904,132,699
(928,924,262)
Total Available
Allocation:
331,418,110,164
209,369,947,607
Legal Reserve
Proposed Dividend
Directors' Bonus
(49,703,817,369)
(245,000,000,000)
(3,125,000,000)
(31,185,619,905)
(175,000,000,000)
(3,125,000,000)
Undistri.profit-End.of the year
33,589,292,795
As the components of the comprehensive profit & loss account are confined to the income
statement and the statement of earnings, it has not been presented here.
59,327,702
Karafarin Bank (Public Joint-Stock Co.)
Cash Flow Statement for the Year Ended March 20th.,
Interests & commissions
Interests on Gov't. Bonds
Less: Interest on Deposits
Cash Expenses
Cash Income
Changes in Assets & Liabilities:
Increase in Assets:
Due from Central Bank
Interbank
Gov't Participation Bonds
Investments-Listed Shares
Receivables
Prepayments(advance payment)
Loans & Advances(net)
Total
Increase in Liabilities:
Current &Saving Deposits
Term Deposits
Other Deposits
Liabilities
Tax Payable
Previous years Adjustments
Total
Operational Cash Flow
Fixed Assets
Other Assets
Non-Operational Cash Flow
Share Capital
Dividend Payable
Net Capital Account
Net Cash Flow
Cash at the Beginning of the Year
Cash at the End of the Year
2006
1,288,270,890,626
305,392,083,264
(1,028,835,313,479)
(99,282,763,365)
465,544,897,046
(In Iranian Rials)
2005
651,998,578,739
213,338,008,573
(530,177,265,996)
(47,597,228,852)
287,562,092,464
(725,593,022,010)
(846,469,434,768)
(608,951,500,000)
(87,798,663,745)
(484,792,933,646)
(1,090,766,938)
(3,346,374,156,649)
(6,101,070,477,756)
(61,668,814,325)
(440,353,080,886)
192,773,200,000
(32,258,748,190)
(243,565,106,016)
(1,823,551,896)
(2,398,433,699,624)
(2,985,329,800,937)
240,407,630,917
4,679,685,822,764
610,827,175,701
46,321,366,927
(12,723,838,869)
5,564,518,157,440
(71,007,423,270)
336,638,214,510
1,867,727,364,953
644,195,335,908
(6,664,603,432)
(16,928,924,262)
(928,924,262)
2,824,038,463,415
126,270,754,942
(82,417,745,026)
1,056,201,524
(81,361,543,502)
(145,524,085,921)
(2,340,523,940)
(147,864,609,861)
350,000,000,000
175,000,000,000
175,000,000,000
22,631,033,228
18,100,885,172
40,731,918,400
3
150,000,000,000
125,000,000,000
25,000,000,000
3,406,145,081
14,694,740,091
18,100,885,172
KARAFARIN BANK
(Public Joint – Stock Co.)
NOTES TO THE ACCOUNTS
Note 1) Background and Formation of the Company
Karafarin Bank started its operation as Karafarinan Credit Institution (public joint-stock co.). The
Company was registered under no.157915 with the Company Registrar's Office of Tehran on
19/9/1378 (December 9th. 1999). It was granted its banking license under the provisions of the
"Law for Establishment of Non-State-Owned Banks" of 21/1/1379 (April 10th, 2000) and the
relevant operating regulations, ratified by the Central Bank of Iran on 14/9/1379 (December 5th,
2000). It was registered under the same registration no.157915 with the Company Registrar's Office
of Tehran as Karafarin Bank on 1/10/1380 (December 22nd, 2001) and started its operation a few
days later.
Note 1-1) Objectives of the Bank:
The Bank is authorized to engage in all banking operations under the provisions of
the Monetary and Banking Law of Iran of Tir 1351 (July 1972), the Usury-free
Banking Law, the Commercial Code and its Articles of Association.
Its
objectives are to accept deposits and otherwise raise funds through financial
instruments and apply these funds for extension of credit and investment in
various sectors of the economy.
Note 1-2) Scope of the Bank's Activities:
- Accept all kinds of bank–deposits;
- Issue bearer or registered certificates of deposit;
-Grant credit facilities;
-Open letters of credit and engage in all foreign exchange transactions;
-Issue and process domestic and international payment orders and transfers;
-Issue, purchase and sell participation bonds and other instruments, for itself and on
behalf of others under the operative regulations of the Central Bank of Iran;
-Receive credit facilities from real or legal persons in accordance with the
standing regulations;
-Issue bank guarantees, endorse, accept and underwrite securities including
participation bonds;
-Operate safe-deposit boxes;
-Grant facilities for the export of goods and technical services;
-Participate and invest directly or through acquisition of shares in the stock
market in manufacturing, commercial or service projects;
-And engage in all other authorized banking activities.
Note 2) The Basis of Financial Statement
The Bank’s financial statements are based on historical cost to price; current prices are only applied,
where it may be deemed necessary, according international accounting standards and local rules and
legislations.
Note 3) Significant Accounting Policies
Note 3-1) Fixed Assets:
3-1-1) Fixed assets are recorded at purchase price. Any expenditure incurred for
betterment or repair of an asset, resulting in the extension of its useful life or its
improved performance, is capitalized and depreciated over the remaining useful life
of the asset. Minor expenses, when incurred, are treated as current expenditure and
taken to the profit and loss account.
3-1-2) Depreciation of fixed assets is based on the expected useful life of such assets
(in accordance with the operative instructions of the Central Bank) and is calculated
according to the following table:
Assets
Land Buildings, Utilities , etc
Motor Vehicles
Furniture & fixture
Useful life (years)
10
4
4
Procedure
Straight line
Straight line
Straight line
3-1-3) Fixed assets acquired during a month and immediately put to use are
depreciated starting the first day of the following month.
Note 3-2) Goodwill:
Goodwill is recorded at cost/amount-paid and is amortized over a ten year period in
accordance with the operative instructions of the Central Bank.
Note 3-3) Investments:
Investments are recorded at purchase price after taking provision for any reductions in value/share
price on the date of the Balance Sheet.
Note 3-4) Assets and liabilities in other currencies:
All assets and liabilities are converted into rials at the rates specified by the Central
Bank on March 20th of every year.
Note 3-5) Income Recognition Procedure:
3-5-1) Income recognition from loans and facilities granted: Per the Currency and
Credit Council resolution of 19/12/1380 (March 10, 2001) and the resolution of the
General Assembly of all state-owned banks dated 8/3/1381 (May 29, 2002), banks
were required to prepare their financial statements on accrual basis (as opposed to
cash basis for previous years).
Accordingly, Karafarin Bank changed its system to accrual basis in 1381 (year ended
March 20, 2003).
3-5-2) Investment Income: Income form investments are taken into income when
such income is realized, and, as the Bank’s investments do not generally exceed 20%
of the share-capital of the companies, dividends are taken into account upon the
approval of the general assemblies.
3-5-3) Commissions: Commissions on letters of guarantee, letters of credit, foreignexchange transactions, managed funds, etc. are taken into income upon receipt.
3-6) Expense Recognition Procedures:
3-6-1) Profit (or interest) on investment (or term) deposits: Per terms of agreements
signed with investment-depositors, profit is paid in proportion to the amount and
maturity of deposits. Furthermore, at year-end, after calculation of statutory
deposits, and considering bank's own fund, any additional profit is calculated and
paid to investment-depositors.
3-6-2) Provision for Doubtful Debt: According to the instructions of the Central
Bank, banks are required to set aside 2% of their loan and investment portfolios as
"general reserve for doubtful loans." An additional "specific provision" is set aside
for those facilities that in the opinion of the Bank's Internal and/or External
Auditors may so require.
3-6-3) Provision for employees severance pay: Provision for employees severance
pay is provided based on one-month of the latest salary of all employees at the end
of every year.
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note (4) Cash
Mar.20,2006
Vault
Stock of Stamps and Promissory Notes
Total
39,634,387,510
1,097,530,890
40,731,918,400
Note (5) Due from Central Bank
Mar.20,2006
Statutory Deposit
1,633,599,636,000
6,217,860,806
11,598,555,087
1,651,416,051,893
Current Account With the CBI
Others
Total
(In Iranian Rials)
Mar.20,2005
17,388,303,672
712,581,500
18,100,885,172
(In Iranian Rials)
Mar.20,2005
795,727,350,000
3,840,278,358
5,378,988,767
804,946,617,125
(In Iranian Rials)
Note (6) Interbank
Note
Term Deposits & Current Acc. with Banks -LCY
Term Deposits &Current Acc. with Banks -FCY
Total
(6-1)
Mar.20,2006
Mar.20,2005
877,178,268,304
89,175,947,959
69,963,030,241
132,372,328,576
947,141,298,545
221,548,276,535
(In Iranian Rials)
Note (6-1) Due from Banks-LCY
Mar.20,2006
Mar.20,2006
Facilities Granted
710,000,000,000
0
Our Credit Account With Bank
167,178,268,304
89,175,947,959
877,178,268,304
89,175,947,959
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note (7) Government participation Bonds
Mar.20,2006
Held in Keshavarzi Bank 's vault
110,000,000,000
Held in Mellat Bank 's vault
5,145,000,000
Held in Melli Bank 's vault
Held in Tejarat Bank 's vault
Held in Sadarat Bank 's vault
Held in Saman Bank 's vault
Held in our own vault
Purchased in Tehran Stock Exchange (TSE)
Total
Our holding, per type and date of issue of bonds, was as follows:
Iran Khodro (Purchase in TSE)
Gov't. Development Projects, 9th issue (1st issue 1383)
Iran Khodro
Development Projects , 2nd issue 1382
Gov't. Development Projects , 2nd issue (1st Issue 1380)
Development Projects, 2nd issue 1382
Keshavarzi Bank
Zagros Petrochemicals
Rayan Saipa
Ministry of Power, 1st issue 1383
Borzooye Petrochemicals
Development Projects , 1st issue 1382
Maroun Petrochemicals
Ministry of Power, 1st issue 1384
1384 Central Bank Participation Bonds, 2nd issue
1384 Central Bank Participation Bonds, 1st issue
Ministry of Road -Shipping
Highway Development Projects (Ghazvin- Rasht)
1384 Central Bank Participation Bonds, 3rd issue
Total
Less bonds held for our clients
Our own holding (net)
(In Iranian Rials)
Mar.20,2005
287,102,000,000
398,159,000,000
53,000,000,000
0
74,822,000,000
249,084,000,000
1,177,312,000,000
Maturity
88/05/31
88/10/07
85/12/17
87/10/07
85/08/26
88/10/15
87/08/21
86/11/26
87/06/26
87/04/15
85/11/11
87/06/01
86/07/05
88/07/16
85/10/22
85/09/19
86/12/17
87/08/19
85/12/06
Profit Rate
19%
17%
17%
17%
17%
17%
17%
17%
17%
17%
17%
17%
17%
17%
15.5%
15.5%
17%
17%
15.5%
169,445,000,000
132,417,500,000
163,000,000,000
20,000,000,000
83,498,000,000
568,360,500,000
Nominal Amount (rial)
349,984,000,000
340,000,000,000
231,000,000,000
200,000,000,000
175,000,000,000
120,000,000,000
116,500,000,000
111,500,000,000
95,854,000,000
80,000,000,000
60,057,000,000
1,000,000,000
70,000,000,000
15,000,000,000
14,141,000,000
12,553,000,000
10,443,000,000
5,145,000,000
1,960,000,000
2,010,137,000,000
(832,825,000,000)
1,177,312,000,000
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note(8) Investment-Listed Shares
Listed Shares at Tehran Stock Exchange (TSE)
Note
(8-1)
Total
(In Iranian Rials)
Mar.20,2005
Mar.20,2006
122,412,803,313
(19,181,284,211)
103,231,519,102
121,600,139,568
(5,974,226,888)
115,625,912,680
Note (8-1) Listed shares are adjusted on the basis of market prices on March20, 2006.
2 006
Groups:
Purchase price
Vehicles
Non-metal minerals
Chemicals
Financial intermediaries
Construction
Metals
Machinery & equipment
Television & radio
Mineral extraction
Electrical appliances
Home appliances
Note(9) Receivables
79,624,051,227
76,126,381,449
6,466,178,403
7,263,102,181
9,413,024,585
6,438,877,770
3,561,461,922
5,129,400,714
797,688,219
1,215,092,722
8,867,301,696
8,795,158,914
8,148,650,760
6,438,410,779
4,237,752,984
4,099,494,106
1,712,548,022
1,221,590,889
889,231,643
1,517,592,676
Food & beverages
Others
Total
270,677,751
270,677,755
666,764,270
48,890,873
122,412,803,313
189,342,015
603,598,556
121,600,139,568
Note
Mar.20,2006
Sundry Debtors In Iranian Rials
Sundry Debtors In Foreign Exchange
Total
(9-1)
1,025,836,687,501
21,812,542
1,025,858,500,043
Note(9-1) Sundry Debtors In Iranian rials
Note
Mar.20,2006
Banks
Loans
Dividends
Others
Total
(9-1-1)
Market price
493,614,041,940
374,903,737,136
11,876,984,956
145,441,923,469
1,025,836,687,501
Note (9-1-1) This is interest receivable on loans, calculated on accrual basis as at March 20th., 2005 and 2006.
(In Iranian Rials)
Mar.20,2005
554,051,615,674
76,109,583
554,127,725,257
Mar.20,2005
273,746,839,486
205,946,808,095
6,534,144,169
67,823,823,924
554,051,615,674
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note(10) Prepayments
Rent
Taxes- prepayment,Ministry of Economic Affairs
Insurance
Advertisement
Shetab System
Others
Total
Note(11) Loans & Advances
Installment Credit
Future Contracts
Repairs & Upkeep Facilities
Commercial Participations
Leasing Facilities
Joint Participations
Foreign exchange faciclities
Facilities to Staff
Low-Interest Loans
Loans in FCY
Total
Past Dues
Total
less: Unearned Income on Installment Credits
Loans Disbursed
Debtors for Paid L/Cs
Debtors for Paid L/Gs
Net Outstanding
add:Debtors Term L/Cs
Total
Mar.20,2006
1,205,920,000
0
705,898,763
305,332,834
150,000,000
759,375,768
3,126,527,365
(In Iranian Rials)
Mar.20,2005
6,105,927,454
353,045,251
284,862,500
200,000,000
1,197,852,676
8,141,687,881
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
3,187,364,794,147
429,685,283,776
1,177,612,488,684
1,000,776,910,000
673,267,619,278
70,334,464,043
578,740,941,620
48,637,959,191
198,269,094
26,387,214,639
7,193,005,944,472
(12,692,000,000)
7,180,313,944,472
(975,757,213,552)
6,204,556,730,920
94,566,895,159
2,197,504,361
6,301,321,130,440
1,008,742,280,860
7,310,063,411,300
1,573,753,986,694
497,640,936,364
709,322,480,553
396,248,458,733
667,038,418,438
73,786,334,559
237,902,601,307
13,582,204,464
176,605,105
19,618,034,976
4,189,070,061,193
(2,866,355,951)
4,186,203,705,242
(689,540,407,194)
3,496,663,298,048
22,325,476,434
1,625,626,659
3,520,614,401,141
452,890,299,739
3,973,504,700,880
12- Investment-unlisted
This balance represents our 10% particiaption in Karafarin Insurance Company and 80% participation in Karafarin Investment Company,
both wholly paid.
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
(In Iranian Rials)
Mar.20,2006
Note (14) Other Assets
Mar.20,2005
Deposits for rented buildings
2,288,000,000
3,758,000,000
Deposits for rented software
1,071,000,000
1,057,000,000
Deposits for telephones
680,230,019
591,372,019
Undelivered cheque books
215,923,000
300,865,500
Others
505,882,976
110,000,000
4,761,035,995
5,817,237,519
Total
Note(15)Current& Saving Deposits
Mar.20,2006
Current and Savings Accounts- in Rials
Current and Savings Accounts- in F.exchange
Saled Cheque
unutilized Portion of Managed Funds
Total
Note(16)Term Deposits
Term Deposits-Rials
Term Deposits-Foreign Exchange
Total
Note (16-1) Term Deposits - Rials
1-Month Deposits
6-Month Deposits
1-Year Deposits
2-Year Deposits
3-Year Deposits
4-Year Deposits
5-Year Deposits
Total
Note (16-2) Term Deposits - F.Exchange
Term-Deposit in EURO
Term-Deposit in GB pound
Term-Deposit in US Dollars
Total
327,243,584,183
24,669,861,388
607,142,452,663
12,626,500,000
971,682,398,234
Mar.20,2005
254,273,987,945
43,099,656,736
433,901,122,636
731,274,767,317
Note
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
(16-1)
(16-2)
8,866,388,026,413
29,862,368,175
8,896,250,394,588
4,139,295,033,802
77,269,538,022
4,216,564,571,824
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
4,789,282,564,577
371,782,014,274
721,911,983,081
207,058,712,025
49,917,320,000
51,383,350,000
2,675,052,082,456
8,866,388,026,413
1,685,352,385,590
69,459,407,000
460,206,240,467
106,115,460,000
22,628,216,670
2,042,750,000
1,793,490,574,075
4,139,295,033,802
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
3,912,718,125
11,568,848,880
14,380,801,170
29,862,368,175
17,145,194,912
11,952,220,672
48,172,122,438
77,269,538,022
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note(17) Other Deposit
Margins Held Against Letters of Guarantee (L/G's) Issued
Margins Held Against Letters of Credit (L/C's) Opened
Advances Received Against Letters of Credit
Others
Total
Note(18) Other Liabilities
Due to the Central Bank for Participation Bond Sold
Payroll Taxes Payable
Dividend
Due to Customers for their Profit (Interest) on Rayan Saipa Bond
Interests Payable
Accrued Expenses
Board Members' Bonuses
Others
Total
Note(19) Dividend Payable
Proposed Dividend for 1383 (year ended March 20, 2005)
Number of Share in 1383
Cash Profit
Mar.20,2006
278,342,936,487
1,136,625,465,311
75,835,970,670
28,168,181,493
1,518,972,553,961
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
181,022,374,152
488,580,847,046
38,595,201,560
199,946,955,502
908,145,378,260
(In Iranian Rials)
Mar.20,2005
26,030,000,000
12,723,838,869
9,212,765,573
1,867,240,702
1,015,300,332
6,544,802,157
3,125,000,000
4,214,856,870
64,733,804,503
Mar.20,2006
245,000,000,000
700,000,000
350
10,842,707,049
2,336,739,984
3,125,000,000
2,107,990,543
18,412,437,576
(In Iranian Rials)
Mar.20,2005
175,000,000,000
350,000,000
500
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note(20) Reserves & Provisions
Reserves on Loans & Investments
Provision for Severance Pay
Total
Note
(20-1)
(20-2)
(In Iranian Rials)
Mar.20,2005
Mar.20,2006
130,159,978,750
7,026,753,592
137,186,732,342
72,922,133,395
3,778,971,309
76,701,104,704
Note (20-1) According to the Currency & Credit Council resolution no.880 dated 7/10/1376 (28/12/1997)and the
Supervision Department of CBI Circular no.NB8238 of 5/11/1376 (31/1/1998) all banks and credit institutions are
required to set aside 2%of net outstanding balance of their loans and investments portfolios in the form of "Reserves
on Loans & Investments".
Note (20-2) Provision for Severance Pay is annually updated on the basis of on one-month salary of all full-time employees.
Note(21) Capital
Paid up capital
(In Iranian Rials)
Mar.20,2005
Mar.20,2006
700,000,000,000
350,000,000,000
Upon approval of the Extraordinary General Assembly of 17/10/1383, the Bank's capital was raised from 350 billion rials to 2000 billion rials.
Furthermore, the Extraordinary General Assembly of 17/10/1383 approved another capital increase from 350 billion rials to 2,000 billion
rials over a maximum period of three years, and authorized the Board of Directors to implement it. Having already obtained the approval
of the Central Bank and Tehran Stock Exchange, on 25/12/1383, the Board of Directors proceeded with calling a first capital increase of
350,000 billion rials.
Note (21-1) Capital adequacy ratio
Tier one:
(In Iranian Rials)
Mar.20,2005
Mar.20,2006
Paid-up capital
700,000,000,000
350,000,000,000
Legal Reserve
117,439,503,224
67,735,685,855
Accumulated profits
33,589,292,795
Total tier one capital
851,028,796,019
417,795,013,557
General reserve on loans 7 investments
130,159,978,750
72,922,133,395
Minus adjusments to tier two capital in excess of 1.25% of weighteted assets
(14,726,264,120)
(11,651,952,578)
Total tier two capital
115,433,714,630
61,270,180,817
Base capital
966,462,510,649
479,065,194,374
10.5
9.8
59,327,702
Tier two:
Capital adequacy ratio
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note (22) Legal Reserve
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
Balance at the beg. of the year
Appropriated from net income
67,735,685,855
49,703,817,369
36,550,065,950
31,185,619,905
Balance at the end of the year
117,439,503,224
67,735,685,855
According to Articles (140) and (238) of the Commercial Code of Iran of 1347 (1968), Resolutions of the Currency and
Credit Council and Article (58) of the Bank's Articles of Association, 15% of the Bank's annual net income must
be retained and credited to the "Legal Reserve" until the balance equates the paid-in capital.
Note(23) Interest on Loans
Mar.20,2006
Revenues under Islamic Contracts
Late Payment Fees
Total
946,669,034,641
165,718,161,505
1,112,387,196,146
Note(24) Interest on Deposits and Investments
Mar.20,2006
Interest on Participation Bonds
Investment earned on other Deposits-rials
(In Iranian Rials)
Mar.20,2005
510,569,440,458
67,459,911,366
578,029,351,824
Mar.20,2005
261,994,508,677
8,118,298,129
156,936,391,016
4,749,005,146
3,555,355,147
2,537,514,716
11,598,555,087
5,378,988,767
Interest earned on Companies' Shares
25,459,208,553
15,271,639,260
Profit from Transactions in Quoted shares
(5,333,842,329)
15,350,496,445
Interest Earned on other Deposits- F.exchange
Interest Earned on Statutory Deposits
Differential of End of the Year Market Price and Purchased Price
(13,207,057,323)
(5,974,226,877)
292,185,025,941
194,249,808,473
Note(24-1) Profit on Gov't. Bonds
Interest on Government's Participation Bonds is calculated on a daily basis and paid either on 90-day
or 180-day intervals. For those securities with interest payment dates falling beyond the Bank's year-end,
accrued Interest is calculated and taken into income for the year.
Note(25) Interest on Term-Deposits
Interest paid on deposits-rials
Supplementary Interest Paid
Interest paid on deposits-F.exchange
Total
Note (25-1) Provisional Interest paid
Five-year deposits
Four-year deposits
Three-year deposits
Two-year deposits
One-year deposits
Short-term deposits
Certificats of deposits
One- month deposits
Total
Note
(25-1)
(25-2)
Mar.20,2006
1,024,338,312,172
0
4,497,001,307
1,028,835,313,479
Mar.20,2006
451,816,891,729
927,091,397
6,171,659,560
24,370,988,147
93,475,627,712
25,825,862,658
8,951,813,911
412,798,377,058
1,024,338,312,172
(In Iranian Rials)
Mar.20,2005
518,069,658,689
10,654,444,958
1,453,162,349
530,177,265,996
(In Iranian Rials)
Mar.20,2005
286,774,403,131
325,825,797
3,544,028,487
13,898,890,340
64,589,795,072
6,718,520,857
7,050,315,558
135,167,879,447
518,069,658,689
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note (26) Commissions Received
From Guarantees Issued
From Managed Funds
From Foreign exchange
From Participation Bonds Transaction
Others
Total
Note (27) Income Received from Foreign exchange Transaction
Foreign Exchange Transactions
Note (28) Other Income
Valuation fees
Others
Total
Note (29) Administrative Expenses
Staff Charges
Data Processing Charges
Advertising Expenses
Printing Charges
Consultants' Fees
Attendance Fees- Board members
Upkeep and Maintenance Charges
Official stamps
Cash insurance premium
On-the-job-training costs
wate, electricity, fuel & telephone
Rent
Commissions paid for participation bonds held in other banks' vaults
Membership fees
Others
Total
Note (30) Depreciation &Amortization
Land and Buildings
Furniture and Fixture
Amortization
Total
Note(31) Reserves Loans & Investments
General Reserves on Loans & Investments
Specific Provision on Loans
Total
Mar.20,2006
48,773,856,170
26,699,346,373
3,997,765,499
10,505,408,106
4,316,307,309
94,292,683,457
Mar.20,2006
1,465,913,567
1,465,913,567
Mar.20,2006
70,219,297,297
80,156,110
70,299,453,407
Mar.20,2006
Mar.20,2005
31,043,228,704
8,325,757,310
3,443,232,599
1,367,327,422
878,499,859
45,058,045,894
Mar.20,2005
1,552,348,907
1,552,348,907
(In Iranian Rials)
Mar.20,2005
30,223,573,982
264,103,151
30,487,677,133
Mar.20,2005
46,218,052,529
24,442,358,715
16,608,197,562
9,694,826,651
1,790,307,592
5,651,744,330
155,000,000
2,997,022,962
700,000,000
1,937,944,152
1,866,771,025
2,741,773,177
4,460,485,736
2,412,119,117
615,108,000
4,681,192,815
102,530,545,648
8,282,909,963
5,851,707,633
789,922,800
2,458,985,534
196,000,000
987,535,707
300,000,000
1,253,147,223
286,108,550
1,362,358,321
525,665,968
679,735,441
360,743,000
1,855,440,769
49,632,619,624
Mar.20,2006
13,024,624,233
6,608,256,873
2,379,494,096
22,012,375,202
Mar.20,2006
57,237,845,355
9,825,644,049
67,063,489,404
According to the resolution no.880 of 7/10/1376 (28/12/1997) of the Monetary & Credit Council
and Circular no.NB8238 of 5/11/1376 (31/1/1998) of the Supervision Department of CBI, all banks
and credit institutions are required to set aside 2% of net outstanding balance of their loan and
investment portfolios in the form of "Reserves on Loans & Investments." Furthermore, a specific provision
for doubtful loans is provided for.
(In Iranian Rials)
Mar.20,2005
10,124,567,776
3,261,069,484
952,562,960
14,338,200,220
(In Iranian Rials)
Mar.20,2005
39,252,809,812
0
39,252,809,812
Karafarin Bank(public joint stock co.)
NOTES ON THE ACCOUNTS (continued)
Note (33) Guarantees Issued
Bid&Performance Bonds, and Advance Payment Guarantees -rials
Bid&Performance Bonds, and Advance Payment Guarantees -F.Exch.
Total
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
2,783,045,520,939
106,951,282,778
2,889,996,803,717
1,793,828,296,273
28,586,215,045
1,822,414,511,318
(In Iranian Rials)
Note (34) Commitments for L/Cs opened
Mar.20,2006
Mar.20,2005
L/Cs opened in dollars
619,546,642,749
330,021,030,486
L/Cs opened in rials
193,793,797,243
186,904,756,987
L/Cs opened in euros
249,882,079,434
94,673,995,323
L/Cs opened in yens
48,313,288,980
42,184,430,824
L/Cs opened in other currencies
15,740,682,993
3,689,345,474
Total
1,127,276,491,399
657,473,559,094
Note (35): Underwriting Commitments
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
Underwriting Commitments
300,000,000,000
0
Underwriting Commitments
300,000,000,000
0
600,000,000,000
0
Note(36)
Managed Funds
Facilities granted against funds placed with the Bank
Note (37) Securities & Assets Pledged as Collateral
Callateral Account
Pledged Marketable Securities
Pledged Real Estate
Counter-Guarantees - Banks
Promisory Notes, Cheques, Trade Receivables pledged against guarantees
Promisory Notes, Cheques, Trade Receivables pledged against facilitie
Leased goods
Others
Total
Mar.20,2006
527,786,467,462
Mar.20,2006
(In Iranian Rials)
Mar.20,2005
487,441,085,729
(In Iranian Rials)
Mar.20,2005
2,548,931,882,692
71,056,913,667
2,095,453,257,663
3,067,020,190,740
42,743,500,000
16,336,731,717,954
6,692,081,526,544
520,021,090,881
1,500,575,267,566
32,803,558,434,040
1,317,902,739,577
2,069,492,384,735
38,490,424,996
8,337,606,793,310
4,180,656,711,492
451,685,087,197
861,853,892,554
17,328,744,947,528
Note(38) Transactions which are Subject to Article 129 of the Commercial Code
All transactions, including Rls.152.750 million loan facilities and Guarantees andRls.122.031 opening letter of credit and 1.429 milion rials
purchase of equipment and Rls.321 million other transactions which are subject to Article 129 of the Commercial Code
have been reported to the Auditors and Inspector of the Bank.
13-3)Cap.exp-in Progress
13-4)GoodWill
Total
Renovation costs
Total
13-1)Premises:
Land &Building
Total
13-2)Tangible Assets:
Vehicles
Furnitures
Total
13
44,139,564,026
12,627,350,000
82,417,745,026
1,148,282,450
13,316,598,678
14,464,881,128
2,447,576,000
21,044,472,707
23,492,048,707
123,143,955,416
15,375,627,625
290,845,784,767
11,185,949,872
11,185,949,872
at cost
Increase(dec.)
128,834,153,019
128,834,153,019
2005
NOTES ON THE ACCOUNTS(continued)
Karafarin Bank(public joint-stock co.)
167,283,519,442
28,002,977,625
373,263,529,793
3,595,858,450
34,361,071,385
37,956,929,835
140,020,102,891
140,020,102,891
2006
0
2,534,709,579
25,540,927,913
948,326,836
5,785,663,374
6,733,990,210
0
2,379,494,096
21,911,058,211
619,795,685
5,887,295,825
6,507,091,510
13,024,472,605
13,024,472,605
Accumulated Depreciation/Amortized
Depreciation/Amortized
16,272,228,124
16,272,228,124
2005
0
4,914,203,675
47,451,986,124
1,568,122,521
11,672,959,199
13,241,081,720
29,296,700,729
29,296,700,729
2006
123,143,955,416
12,840,918,046
265,304,856,854
1,414,873,335
266,719,730,189
1,499,249,164
15,258,809,333
16,758,058,497
112,561,924,895
112,561,924,895
167,283,519,442
23,088,773,950
325,811,543,669
1,414,873,335
327,226,417,004
2,027,735,929
22,688,112,186
24,715,848,115
110,723,402,162
110,723,402,162
Net Book Value
Mar.20,2005
Mar.20,2006
197,217,519,102
537,228,733,798
3,126,527,365
Investments
Receivables
Prepayments
Capital Adequacy Ratio
Total Weighted Risk Adjusted Assets
Guarantees Issued(Credit Conversion Factors 20%)
L.C Commitments(Credit Conversion Factors 20%)
13,616,726,580,426.00
577,999,360,743
225,455,298,280
122,246,000,000
4,761,035,995
Other Assets
under righting commitment
327,226,417,004
Fixed Assets
2,071,707,188,948
5,238,356,222,352
676,838,000,000
Loans & Advances(Fully Secured by Mortgage)
Loans & Advances(Other)
500,474,000,000
Non-Gov't Participation Bonds
1,441,942,306,546
Gov't Participation Bonds
1,651,416,051,893
Interbank
Assets
40,731,918,400
(A)+(B)
(A)
Due from Central Bank
Risk-Adjusted Assets:
Cash
Capital
Capital Adequacy Ratio:
Tier I:
Share Capital
Legal Reserve
Undistributed Profit
Tier I
general reserve on loans
s adjustments to tier two capital in exess of 1.25% of weighted assets
Karafarin Bank(Public joint stock CO.)
-
Mar. 20, 2006
Risk Weight
100
100
100
100
100
100
50
100
100
100
0
20
0
0
Mar.20,2006
700,000,000,000
117,439,503,224
33,589,292,795
851,028,796,019
130,159,978,750
14,726,264,120
115,433,714,630
966,462,510,649
10.5
9,229,936,134,427
577,999,360,743
225,455,298,280
122,246,000,000
327,226,417,004
5,238,356,222,352
3,126,527,365
1,035,853,594,474
197,217,519,102
537,228,733,798
676,838,000,000
-
288,388,461,309
-
Risk-Adjusted Assets
-
(In Million Rials)
Mar.20,2005
350,000,000,000
67,735,685,855
59,327,702
417,795,013,557
72,922,133,395
11,651,952,578
61,270,180,817
479,065,194,374
6,477,251,515,257
364,482,902,264
131,494,711,819
5,817,237,519
_
266,719,730,189
677,794,097,622
3,295,710,603,258
265,755,815,647
8,141,687,881
122,625,912,680
5,817,237,519
509,844,076,562
804,946,617,125
Assets
18,100,885,172
Mar.20,2005
Risk Weight
100
100
0
100
100
50
100
100
100
100
0
20
0
0
9.8
4,901,614,465,380
364,482,902,264
131,494,711,819
5,817,237,519
_
266,719,730,189
338,897,048,811
3,295,710,603,258
265,755,815,647
8,141,687,881
122,625,912,680
-
101,968,815,312
-
Risk-Adjusted Assets
-
3,277
79,711
156,709
215,976
350,189
-
18,817
12,177
35,876
83,689
2,332
36,000
119,428
191,353
-
1,089
34,900
-
Agreed
4,704
2,639
8,072
18,830
882
9,000
29,857
47,838
-
403
8,725
-
Taxes
Declared by Claimed by tAgreed &
Bank
MOF
Due
Tax liabilities amounting to 12.7 billion rials have been recognized under Note 18
1382 and 1381 income taxes have been fully paid (2002 and 2003)
Year
3/20/2000-2001
3/20/2002-2003
3/20/2003-2004
3/20/2004-2005
3/20/2005-2006
Total
Taxable Income
Net Income per
Bank's books
Declared by Claimed by
Bank
MOF
Note(32) Taxes
Tax status of the Bank over the last four years
-
511
8,725
2,639
14,178 -
Paid
6,106
18,830
12,724
Provision
for Taxes
(In Million Rials)