Joint-Stock Commercial Bank “BANKank OFof INVESTMENTS AND SAVINGSIinvestments and Ssavings “Investsberbank” (Open Joint Stock Company ОAO) (стр. 4 )

11. INCOME TAXES

The Bank provides for taxes based on the statutory tax accounts maintained and prepared in accordance with the Russian statutory tax regulations which may differ from International Financial Reporting Standards. During the years ended 31 December 2004 and 2003, the Russian tax rate for corporations’ profits other than on state securities was 24% (in 2004 5% were payable to the federal budget and 19% to the regional and local budgets, in 2003 – 6% to the federal budget and 18% to the regional and local budgets) (in 2004 5% was attributed to the Federal taxes and 19% to the Regional and Local taxes, while in 2003 76.5% was attributed to the Federal taxes and 168.5% to the Regional and Local taxes). The tax rate for interest income on state securities was 15% (federal budget) (for the Federal taxes).

As at 31 December 2004 and 2003 current income tax liabilitiesreceivable is amounting tototalledequaled RUR 304 thousand.

As at 31 December 2003 current income tax liability is amounting to RUR 430 thousand.

and RUR 430 464 thousand, respectively.

The Bank is subject to certain permanent tax differences due to non-tax deductibility of certain expenses and tax-free regime under local tax regulations.

Deferred taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for tax purposes.

Temporary differences as of 31 December 2004 and 2003 relate mostly to different methods of income and expense recognition as well as to recorded values of certain assets and liabilities.

The tax effects of temporary differences as at 31 December 2004 and 2003 are presented below:

	2004		2003
Deferred assets
ProvisionsLoans to customers	5087,38027653		65,004
Fixed assets	32,551		-
Other liabilities	42,86472737		-60
Trading securities	39		132
Total deferred assets	875122,624479980		65,1936
Deferred liabilities:
Other assets	6,047		2,959
Fixed assets	-		5,506
Investment Ssecurities available-for-sale	-		2,431
Total deferred liabilities	6,047		10,896
Net deferred assets/(liabilities)	8179116,935774323		54,30240
Total deferred tax assets/(liabilities) (24%)	1928,5780664		13,03218
Less: valuation allowance	(1928,5780664)		(13,03218)
Net deferred tax assets/(liabilities)	-		-

Relationships between tax expenses and accounting profit for the years ended 31 December 2004 and 2003 are explained as follows:

	2004		2003
Profit before income tax	91355,15307762		14,6289
Statutory tax rate	24%		24%
Theoretical tax at the statutory tax rate	21213,835289		3,51125
Tax effect of permanent differences	(1,5053689)		5,371405371(6,695)
Change in valuation allowances	615,50446		9665213,018
Income tax expense	29,90943		9,844882
Current income tax expense	29,90943		9,844882
Deferred income tax (recovery)/expense	-		-
Income tax expense	29,90943		9,844882

12. CASH AND CASH EQUIVALENTS

	2004		2003
Demand deposits with banks	501,805471		323,210163
Balances with the Central Bank of the Russian Federation	411410,667001		246,494541
Cash in vault	201,570		152,797
Total cash and cash equivalents	1,114,042		722,501

13. LOANS AND ADVANCES TO BANKS

	2004		2003
Loans to banks	7,143		145,858
Accrued interest income on loans to banks	693		39
Total loans and advances to banks, net	7,836		145,897

As of 31 December 2003 Bank placed a deposit with the Central Bank of Russian Federation amounting 69% of loans and advances to banks. The amount of deposit (RUR 100,000 thousand) exceeded 10% of the capital of the Bank. and was RUR 100,000 thousand.

14. TRADING SECURITIES

	Interest to nominal	2004	Interest to nominal	2003 (not audited)
Bonds:
OFZ	7.5%-11%	111,474	9%-14%	376,492
Moscow Government	10%	11,502	15%-17%	147,395
Petrocommertz Bank	15%	1,900	-	-
OVGVZ	-	-	3%	26,961
Moscow Government eurobonds	-	-	10%	19,708
Promissory notes:
Bank Russian Standard	5.3%	54,599	-	-
Savings Bank	-	-	9.32%-16.25%	112,863
Gazprom	-	-	11%	99,565
Rosbank	-	-	9.97%-10.29%	14,461
Total trading securities		179,475		797,445

As of 31 December 2004 and 2003 included in trading securities was the accrued interest income on debt securities amounting to RUR 2,251 thousand and RUR 14,492 thousand, respectively.