Financial Statements. For the year ended 31 December 1999 and 1998 (стр. 6 )

(l) Employee benefits

The Bank is committed to reimburse employees for all expenses incurred in case of injuries at work. These amounts are expensed when they are incurred.

(m) Provisions

A provision is recognised in the balance sheet when the Bank has a legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation.

(n) Profit tax

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: goodwill not deductible for tax purposes and the initial recognition of assets or liabilities that affect neither accounting nor taxable profit. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balance sheet date.

3. SIGNIFICANT ACCOUNTING POLICIES (continued)

AÀ deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the unused tax losses and credits can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(o) Related parties

For purpose of the financial statements the following are considered to be related parties of the Bank:

·  The Bank’s Shareholders and their immediate families;

·  Directors and officers of the Bank and their immediate families; and

·  Enterprises in which the Bank or its shareholders, officers or directors or their immediate families, have control or significant influence.

In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form.

(p) Statement of Cash Flows

The Bank considers cash and nostro accounts to be cash and cash equivalents. The minimum reserve deposit with the CBR is not considered to be a cash equivalent due to restrictions on its withdrawability.

4. INTEREST INCOME AND INTEREST EXPENSE

		1999		1998
Interest Income		RUR ‘000		RUR ‘000
Loans to customers		657,718		754,181
Placements with banks and other financial institutions		57,932		146,979
Amounts receivable under reverse repurchase agreements		663		256,183
		716,313		1,157,343

		1999		1998
Interest Expense		RUR ‘000		RUR ‘000
Deposits and balances from banks and other financial institutions		543,289		797,470
Current accounts and deposits from customers, certificates of deposit and promissory notes		73,872		56,795
Amounts payable under repurchase agreements		20		63,395
		617,181		917,660

5. FEE AND COMMISSION INCOME

		1999		1998
		RUR ‘000		RUR ‘000
Custody fees		86,404		92,730
Foreign exchange commissions		70,663		27,589
Trade finance/documentary business fees		20,867		10,728
Currency control fees		14,712		8,018
Customer fund transfer/payment fees		13,530		10,199
Cash management fees		10,889		3,414
Other fee and commission income		17,037		213
		234,102		152,891

6. FEE AND COMMISSION EXPENSE