Joint-Stock Commercial Bank “BANKank OFof INVESTMENTS AND SAVINGSIinvestments and Ssavings “Investsberbank” (Open Joint Stock Company ОAO) (стр. 1 )

Joint-Stock Commercial Bank “BANKank OFof INVESTMENTS AND SAVINGSIinvestments and Ssavings “INVESTSBERBANK” (Open Joint Stock Company ОAO) Independent Auditors’ Report Financial Statements Year Ended 31 December 2004

BANK OF INVESTMENTS AND SAVINGS “INVESTSBERBANK” (Open Joint Stock CompanyOAO)

CONTENTS

Page

INDEPENDENT AUDITORS’ REPORT 1

FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2004:

Profit and loss account 2

Balance sheet 3

Statement of cash flows 4-5

Statement of changes in shareholders’ equity 6

Notes to the financial statements 7-31232936

BANK OF INVESTMENTS AND SAVINGS “INVESTSBERBANK” (Open Joint Stock CompanyOAO)

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2004

(in Russian Roubles and in thousands)

	Notes	2004		2003 (unnot audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Profit before income taxes		91355,15307762		14,6289
Adjustments for:
Provision for loan losses	55	66103,72361987		28,223
Provision for losses on other transactions	55	13,727		(305)
Writing-off of bad debts against allowance		(1,154)		(464)
Fair value adjustment on trading securities		292		(20,497)9,838
(Gain)/loss on fixed assets disposal		(17,819)		1
Depreciation charge on fixed and intangible assets	1717	8,467		4,423
Changes in net interest accruals		221523,17675408		(40011,604)
Changes in accrued commissions income		(6,402)		-
Changes in other accruals		2,737(1,940)		-60
Cash flows from operating activities before changes in operating assets and liabilities		181167,21538940538		14,465656,0094005
Changes in operating assets and liabilities
(Increase)/decrease in operating assets:
Obligatory reserveMinimum reserve deposit with the Central Bank of the Russian Federation		175,388		(66,372)
Loans and advances to banks		138,715		98,507774
Trading securities		605,437		(221,339)(179,707)
Loans and advances to customers		(2,404,4672,391,111)		(456,618)
Repurchase agreementsEPO		-		59,936
Other assets		(24033,39717553)		5,9896,533
Increase/(decrease) in operating liabilities
Deposits from banks		(19,333)		(106,42315)
Deposits from customers		1,190,100		311,87583
Other liabilities		8,983		(23,56074808)
Cash outflow from operating activities before income tax		(144,03636)		(3210,88448240)
Income tax paid		(30,34343)		(10,026234)
Net cash outflow from operating activities		(174,379)		(331,11474)

BANK OF INVESTMENTS AND SAVINGS “INVESTSBERBANK” (Open Joint Stock CompanyOAO)

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2004

(in Russian Roubles and in thousands, unless otherwise stated)

1.  ORGANISATION

Bank of Iinvestments and Ssavings “Investsberbank” (the “Bank”) is an open joint - stock company, which was incorporated in the Russian Federation in 1994. The legal address of the Bank is registered as followst: 2/1 Kalanchevskaya st., Moscow, Russian Federation. The Bank is regulated by the Central Bank of the Russian Federation (the “CBR”) and conducts its business under license number 2766 dd 20 May 2004 20/05/2004 (before 20/05/2004 May 2004 – license number 2766 dd 13 February 200313/02/2003). The Bank's primary business consists of commercial banking activities with legal entities and individuals, trading with securities and foreign currencies, and originating loans and guarantees.

The total number of employees of the Bank at 31 December 2004 and 31 December 2003 was 1,034 and 480, respectively.

As at 31 December 2004, the following shareholders owned more than 5% of the outstanding shares.

Shareholder	%
PLCOOO “Investenergo”	19.90
PLCOOO “Interproftehstroy”	19.90
CJSCZAO publishing house “Olma-press”	19.90
PLCOOO “CMA-Service”	15.90
OJSCOAO EKBC “Zvezdny”	13.38
PLCOOO “P. V.F.”	6.85
Others	4.17
Total	100.00

These financial statements were authorized for issue by the PresidentManagement Board of the Bank on
___July According to foundation documents the Board of Directors has the authority to change the Bank’s financial statements.15, 2005.

2.  BASIS OF PRESENTATION

Accounting basis - These financial statements of the Bank have been prepared in accordance with International Financial Reporting Standards (“IFRS”). These financial statements are presented in thousands of Russian Roubles (“RUR”), unless otherwise indicated. These financial statements are prepared on an accrual basis under the historical cost convention modified for the measurement at fair value of available-for-sale investment securities, financial assets and financial liabilities held for trading, derivative financial instruments and according to IAS 29 “Financial Reporting in Hyperinflationary Economies” (“IAS 29”).

The Bank maintains its accounting records in accordance with the Russian law of the Russian Federation. These financial statements have been prepared from the Russian statutory accounting records and have been adjusted to conform to IFRS.

The financial statements of the Bank have been prepared in accordance with IFRS for the first time. Disclosure required by IFRS 1 “First-time adoption of International Financial Reporting Standards” (IFRS 1) relating to the reconciliation from the Russian statutory accounting standards to IFRS are as follows:

	2004		2004		2003		2003
	Equity		Profit		Equity		Profit
Russian Accounting Standards (unnot audited)	580701,635081		1030,41752		576614,38509		343,396,278
Accrued interest, net	62(20,527)218		(14,964)		23,912(5,563)		2,352
Fair value adjustments, net	(340292)		9,546		(9,838)		(30,335)
Provision for losses	(49886,41198397)		7,40769(29,857)		(56,6808)		2,142
Current taxation	-(1,270)		(3429,943)-		34-		-34(9,848)
Depreciation of fixed and intangible assets	(6,3,174196)		12,584		(3322,821477)		2,403
Writing-off of materials	(67,363685)		(4,13412)		(1,951553)		(985590)
Effect ofRevaluation of fixed assets valuation (incl. (IAS 29 and depreciation)	6(3,344148026)		(45,20032,616)		17,7235410,544197		(4,7732,370)
Prepaid expenses	29,864		-		8,317		-
Other	6913220,442521306(42,125803)		(42,212487613894)		(1,4406)6,87937(1,512907)		5460817212
International Financial Reporting Standards	6179582,70218668713		61325,2168349593		556,53940034		4,781844781

The preparation of financial statements in conformity with IFRS requires management of the Bank to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Estimates that are particularly susceptible to change relate to the allowance for losses and impairment and the fair value of financial instruments.