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

Interest rate risk

Average rates applicable to the major components of the balance sheet have been disclosed within the notes relating to these components.

 Liquidity risk

Liquidity risk is defined as the risk that exists when the maturity of assets and liabilities does not match. The table below shows all assets and liabilities by remaining contractual maturity. Loans to banks and customers are shown as net of provisions for impairment. Some of the assets may have a longer-term nature; for example, frequently loans can be renewed, and accordingly, short-term loans can have a longer-term duration. The liquidity position of the Bank at 31 December 1999 is set out below:

	Overdue	Demand and less than  1 month	From 1 to 6 months	From 6 to 12 months	No maturity	Total
Assets
Cash and short-term funds	-	7,080,591	-	-	-	7,080,591
Loans and advances to banks	-	196,785	270,033	-	-	466,818
Loans and advances to customers	155,462	612,275	3,141,383	721,219	-	4,630,339
Accrued interest and commission income	62,193	5,431	5,960	3,516	-	77,100
Other assets	-	43,946	4,321	8,921	-	57,188
Premises and equipment	-	-	-	-	520,456	520,456
Deferred tax asset	-	-	-	72,012	-	72,012
Total assets	217,655	7,939,028	3,421,697	805,668	520,456	12,904,504
Liabilities
Due to banks	-	2,278,048	-	-	-	2,278,048
Customer accounts	-	1,100,335	14,317	100,000	-	1,214,652
Other borrowed funds	-	349,840	131,190	-	-	481,030
Accrued interest and commission expense	-	13,018	-	-	-	13,018
Other liabilities	-	123,290	122,352	13,050	-	258,692
Total liabilities	-	3,864,531	267,859	113,050	-	4,245,440
Net position at 31 December 1999	217,655	4,074,497	3,153,838	692,618	520,456	8,659,064
Net position at 31 December 1998	-	3,181,451	1,888,945	402,313	391,544	5,864,253

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