İllİk hesabat annual RepoRt

OPEN JOINT STOCK COMPANY AMRAHBANK JOINT STOCK BANK 

 

NOTES TO THE FINANCIAL STATEMENTS (Continued) 

FOR THE YEAR ENDED 31 DECEMBER 2008 

(in Azerbaijan Manats) 

37 

 

 

Government programs - The Azerbaijan Government continues to exercise significant influence 

over the Azerbaijan economy. In response to the economic crisis and to support Azerbaijan 

businesses, the government of Azerbaijan has introduced significant measures including taxation 

holidays for banking sector from 1 January 2009, support from the National Bank of the Republic of 

Azerbaijan and continued support for the local currency, the Azerbaijan Manat. As Azerbaijan is 

heavily dependent on hydrocarbon revenues, the economy’s size and reserves are affected by oil 

prices fluctuations in the global market.  

 

Inflation - The annual rate of inflation, as measures by changes in the Consumer Price Index, was 

20.8% for 2008, 16.7% for 2007 (according to the State Statistics Committee of the Republic of 

Azerbaijan) and is projected at the rate of approximately 13% for 2009. The financial results in the 

Azerbaijan economy and, consequently, the Bank’s financial results will be affected if inflation is 

not controlled effectively. 

 

Recoverability of financial assets – As a result of recent economic turmoil in capital and credit 

markets globally, and the consequential economic uncertainties existing as at balance sheet date, 

there exists the potential that assets may not be recovered at their carrying amount in the regular 

course of business. 

 

As at year end, the Bank has loans to customers amounting to AZN 39,400,062 (2007: AZN 

38,218,750). The recoverability of these loans might to some extent depend on the efficacy of the 

fiscal measures and other measures and other actions, beyond the Bank’s control, undertaken within 

various countries to achieve economic stability and recovery. The recoverability of the Bank’s loans 

is determined based on conditions prevailing and information available as at balance sheet date. 

Management of the Bank is aware of these potential areas of concern and is taking various 

preventative measures (e.g. revised risk management, credit policy strategy, etc.) to minimise such 

risks. It is the management’s opinion that no additional provision on the loans to customers is 

needed at present based on prevailing conditions and available information. 

 

 

22.  SUBSEQUENT EVENTS 

 

In March 2009 the Bank’s shareholders’ meeting decided to increase the share capital of the Bank by 

way of converting share premium of AZN 5,140,410 available at 31 December 2008 into ordinary 

shares of the Bank.  

 

Following the year end the Bank also opened a new branch in Baku located at 44 J. Jabbarli street. 

 

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OPEN JOINT STOCK COMPANY AMRAHBANK JOINT STOCK BANK 

 

NOTES TO THE FINANCIAL STATEMENTS (Continued) 

FOR THE YEAR ENDED 31 DECEMBER 2008 

(in Azerbaijan Manats) 

38 

 

 

23.  TRANSACTIONS WITH RELATED PARTIES  

 

Related parties or transactions with related parties, as defined by IAS 24 “Related party 

disclosures”, represent: 

 

a)  Parties that directly, or indirectly through one or more intermediaries: control, or are controlled 

by, or are under common control with, the Bank (this includes parents, subsidiaries and fellow 

subsidiaries); have an interest in the Bank that gives them significant influence over the Bank; 

and that have joint control over the Bank; 

b)  Associates – enterprises on which the Bank has significant influence and which is neither  

a subsidiary nor a joint venture of the investor; 

c)  Joint ventures in which the Bank is a venturer; 

d)  Members of key management personnel of the Bank or its parent;  

e)  Close members of the family of any individuals referred to in (a) or (d); 

f)  Parties that are entities controlled, jointly controlled or significantly influenced by, or for which 

significant voting power in such entity resides with, directly or indirectly, any individual 

referred to in (d) or (e); or 

g)  Post-employment benefit plans for the benefit of employees of the Bank, or of any entity that is 

a related party of the Bank. 

 

In considering each possible related party relationship, attention is directed to the substance of the 

relationship, and not merely the legal form. The Bank had the following transactions outstanding as 

at 31 December 2008 and 2007 with related parties: 

 

 

31 December 2008 

 

31 December 2007 

 

Related party 

balances 

 

Total 

category as 

per financial 

statements 

caption 

  Related party 

balances 

 

Total 

category as 

per financial 

statements 

caption 

 

   

   

   

 

 

   

   

   

 

Loans to customers 

1,001,384   

40,528,420   

512,406   

44,830,976 

- shareholders and entities under 

common control 

319,182   

   

55,687   

 

- key management personnel  

600,738   

   

3,198   

 

- other related parties  

81,464   

   

453,521   

 

 

   

   

   

 

Allowance for impairment losses  

(12,071)   

(1,128,358)   

(27,594)   

(6,612,226) 

- shareholders and entities under 

common control 

(7,659)   

   

(1,308)   

 

- key management personnel  

(903)   

   

(64)   

 

- other related parties  

(3,509)   

   

(26,222)   

 

 

   

   

   

 

Customer accounts 

(3,205,487)   

(33,611,631)   

(976,216)   

(28,593,038) 

- shareholders and entities under 

common control 

(1,594,233)   

   

(271,011)   

 

- key management personnel  

(3,710)   

   

(40,704)   

 

- other related parties  

(1,607,544)   

   

(664,501)   

 

 

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