BANK OF BAKU
AUDITORS REPORT AND FINANCIAL STATEMENTS AT 31 DECEMBER 2001

During 2001 and 2000, a number of banking transactions were entered into with related parties in the normal course of business. These mainly included cash settlements, loan disbursements, and deposit taking. These transactions were priced predominantly at market rates. The outstanding balances at the year-end and interest expenses and income for the year with related parties are as follows:

	2001	2000
Loans and advances to customers
Loans outstanding at year-end	566,454	451,902
Interest income earned	59,754	72,022
Customer accounts
Customer accounts outstanding at year-end	135,494	3,545
Interest expense paid	4,307	-

Interest rates on AZM loans granted to related parties during the year ranged from 16% to 18% p.a.
Interest rate on term deposits in USD was 15%.

Note 1 Principal Activities 
Note 2 Significant Accounting Policies 
Note 3 Use of financial instruments 
Note 4 Cash and short-term Funds 
Note 5 Loans and Advances to Banks 
Note 6 Loans and Advances to Customers 
Note 7 Investment securities held-to-maturity 
Note 8 Other Assets 
Note 9 Intangible assets 
Note 10 Premises and Equipment 
Note 11 Due to Banks 
Note 12 Customer Accounts
Note 13 Other Borrowed Funds 
Note 14 Other Liabilities 
Note 15 Paid-in Capital 
Note 16 Retained earnings
Note 17 Dividends 
Note 18 Fee and commission income 
Note 19 Fee and commission expense 
Note 20 General, administrative and other operating expenses 
Note 21 Taxation 
Note 22 Commitments and contingent liabilities 
Note 23 Reconciliation of Azerbaijanian Accounting Rules to International Accounting Standards 
Note 24 Related party transactions 
Note 25 Post balance sheet events