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

In accordance with the Azerbaijani Law on Banks and Banking Activity, the Bank distributes profits as dividends or transfers them to reserves (fund accounts) on the basis of financial statements prepared in accordance with Azerbaijani Accounting Rules. The Bank's reserves under Azerbaijani Accounting Rules at 31 December 2001 are AZM 1,279,660 (2000: AZM 1,224,680). Statutory profits are distributed on an annual basis.

A reconciliation of the Bank's reserves and income before taxation under Azerbaijani Accounting Rules with International Accounting Standards is performed in Note 23.

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