BANK OF BAKU
AUDITORS REPORT AND FINANCIAL STATEMENTS AT 31 DECEMBER 1999

According to the regulations of the NBAR, the Bank is required to maintain reserve deposits equivalent to 12% of balances of liability accounts calculated at month-ends by using average balances. Accordingly, balances with the NBAR include a mandatory reserve deposit of AZM 228,195 (1998: AZM 395,183). These funds are not available to finance the Banks day to day operations. The remaining AZM 450,038 (1998: AZM 1,928,193) with the NBAR represents the balance of a correspondent account through which the Bank makes its settlements in Manat with the other banks in the country and no interest is applicable on this balance.

Note 1 Principal Activities 
Note 2 Basis of Presentation 
Note 3 Significant Accounting Policies 
Note 4 Cash and short-term Funds 
Note 5 Loans and Advances to Banks 
Note 6 Loans and Advances to Customers 
Note 7 Other Assets 
Note 8 Premises and Equipment 
Note 9 Due to Banks 
Note 10 Customer Accounts 
Note 11 Other Borrowed Funds 
Note 12 Other Liabilities
Note 13 Paid-in Capital 
Note 14 Retained earnings / Accumulated Deficit 
Note 15 Fees and Commission Income 
Note 16 Fees and Commission Expense
Note 17 General, Administrative and Other Operating Expenses 
Note 18 Taxation 
Note 19 Dividends 
Note 20 Asset and Liability Concentration 
Note 21 Risk Management 
Note 22 Commitments and Contingent Liabilities 
Note 23 Reconciliation of Azeri Accounting Rules to International Accounting Standards 
Note 24 Related Party Transactions