annual repOrt - Turan Bank

Open Joint-Stock Company
2007
annual
repOrt

2
COntentS
General information about the bank
Significant events in 2007
Management of “TuranBank”
Statement of the management
Azerbaijan Economy in 2007
Macroeconomy
Review of banking sector
Main financial performance
indicators of the bank in 2007
Customer Relationship Policy
Plastic Cards
Credit Policy
Shareholders’ Equity
Capital Investments
Risk Management
Measures against Money Laundry
and Terrorism Financing
Information Technologies
HR
Service Network
International Cooperation
Correspondent Relations and
International Settlements
Auditor Opinion
3
4
6
8
9
12
15
18
21
22
25
26
27
29
30
31
32
34
36
38
www.turanbank.az

www.turanbank.az
Full naMe
OF tHe BanK:
SHOrt naMe:
Date OF
FOunDatIOn:
leGal aDDreSS:
“turanBank”
Open Joint Stock Company
“turanBank” OJSC
12 June 1992
85 Ismayil bey Gutgashinli str.,
aZ1073, Baku, azerbaijan
CODe: 507462
taX ID: 1300016391
COrreSpOn-
Dent aCCOunt
at natIOnal
BanK OF
aZerBaIJan: 0137010027944
SWIFt: ТУРААЗ22
teleX: 14236 turan aI
pHOne: +994 (12) 497 25 11, 497 25 92,
510 79 11, 510 79 22
FaX: +994 (12) 497 25 77
Е-МАИЛ: office@turanbank.az
WЕБ:
щттп:// www.туранбанк.аз
BrIeF InFOrMatIOn
aBOut tHe BanK
LICENSE
license no. 115 issued by the national Bank
of the republic of azerbaijan on 30.12.1992 for
commencement of its activities and license no. 115
renewed on 23.03.2005 in regard to the change in
the organizational and legal form of the bank.
MEMBERSHIP IN PROFESSIONAL
ASSOCIATIONS, UNIONS, STOCK-EXCHANGES
AND PAYMENT SYSTEMS:
• azerbaijan Banks association (aBa)
• azerbaijan Micro-finance association (aMa)
• azerbaijan export and Investment promotion
Foundation (aZprOMO)
• Caspian Integration Business Club (CIBC)
• Society for Worldwide Interbank Financial
telecommunication (SWIFt)
• Baku Interbank Currency exchange (BBVB)
• «MasterCard International» International
payment System
• «Western union» International payment System
• «Contact» International payment System
• «Bistraya pochta» International payment System
• «Migom» payment System for CIS Countries
• «express Money» International payment System
• «privatMoney» International payment System
3

4
Statement by
Mr. FUAD MUSAYEV
CHaIrMan OF tHe SuperVISOry BOarD
OF “turan BanK” OJSC
by Mr. NAZIM SADIGOV
CHaIrMan OF tHe ManaGeMent BOarD
OF “turan BanK” OJSC
www.turanbank.az
Dear laDIeS
anD GentleMen!
I am proud and pleased to state that the year 2007 that
we are seeing off was remarkable for our country and people.
The sustained growth and development that our economy
has been experiencing for the last five years, holding
on its tendency in 2007, lead to major macroeconomic
achievements in a number of fields. In such dynamic growth
of the economy of our country the role of proper and sound
economic strategy, pursued by the government, and the
support and concern for this field is crucial. In a result of
the continuous endeavors made by the government for
rational use of huge economic potential that our country has,
the entreprneourship spirit is increasing year by year. The
most gratifying fact is that those who intend to be engaged
in entrepreneurship set up their activities in this field on longterm
basis, which serves for revival of production, reduction
of foreign dependence, growth of GDP and mainly for the
improvement of the social welfare of the people. As you
well know, the banking system of the country is of great
significance in the development of the economy, and in this
regard, we, Turan Bank OJSC, feel proud and pleasant to
play a role in the development of our economy.
Especially, I would like to note that the year 2007 was
significant for us as, in the result of the involvement of
new customers, including satisfaction of the demands
of the persons engaged in commercial and economical
activities, as well as the increasing confidence and trust of
our customers and people in the bank, the amount of the
savings deposited in the bank exceeded the expectations.
Beside it, strong competitivenes of the banking sector of
the country enables us to attach importance to quality and
customer satisfaction criteria in all kinds of services of the
bank. Turan Bank achieved all targets aimed in the bank’s
strategic plan covering the years 2004-2007, for the purpose
of increasing its lead in the national banking market. Our
financial indicators encourage us to say that Turan Bank is
making a confident progress towards the universal banking,
meeting the modern financial standards.
According to the financial indicators of the bank for 2007,
total assets for the respective year amounted to 60.5 million
AZN (71.5 million US Dollars), which exceeds the respective
indicators for the previous year by 44.4 percent (41.9 million
AZN or 48.1 million US Dollars).
As a characteristic feature of the banking system of our
country, the credit portfolio composes a significant part of
the total assets. The credit portfolio of the bank for 2007 was
47.55 million AZN (56.25 million US Dollars), which, in its
turn, exceeds the corresponding indicators for the previous

www.turanbank.az
year by 47.2 percent (32.3 million AZN or 37.1 million US
Dollar).
Along with its assets, I would like to note the liabilities of
the bank, especially the amount of the savings and deposits
contributed by individuals and legal entities. The total
funds attracted from individuals and legal entities during
the corresponding year amounted to 43.75 million AZN
(51.75 million US dollars), which represents an increase by
(30.85 million AZN or 35.4 million US dollars) 41.8 percent
compared to the previous year. It should be noted that a
number of factors, especially the 16-years reliable and
competitive activity of the bank and the increase in the real
cash incomes of the population, played a significant role
in the remarkable increase in the deposit portfolio of the
bank, which in its turn displays that the free cash flows are
deposited by the population to the reliable and profitable
banks. As to the profitability of the bank for 2007, I would
like to note that the net profit of the bank for the last year
was 2.73 million AZN, exceeds the corresponding figures
for the previous year by 147.7 percent.
In the result of the sustained increase in the profitability
of Turan Bank over 2006 and 2007 and owing to the yearby-year
increase in the level of confidence, the interest in
the shares of the bank has increased. During the reporting
year the bank issued additional shares for three times – on
21.02.2007, on 25.05.2007 and on 10.07.2007, as a result
of which the charter capital of the bank reached 12.5 million
AZN in the end of 2007.
We would also state that the year 2007 was a positive
turning point in establishment of mutual relations with
international financial institutions. Thus, in 2007, Turan Bank
concluded an agreement of cooperation within the Islamic
laws with the Islamic Corporation for the Development, an
affiliate of the Islamic Bank for Development, and agreed
on the opening of a credit line amounting to 1.0 million US
Dollars.
Encouraged by the significance and support by the
government towards the socio-economic development
of the regions, our bank takes serious measures for the
purpose of expanding the branches network in the regions.
For this purpose, Turan Bank a branch in Zagatala city, one
of the picturesque sites of Azerbaijan with large economic,
including agrarian potential. We would like note that in
the branch policy of the bank, the main focus is made
on the quality factor and the economic potential of the
zone or region is also studied. Currently, the bank has 11
branches.
As in the previous years, in 2007 Turan Bank tries to
make a contribution to the economic growth, taking an active
part in a number of economic projects of the government.
Last year the bank was the winner of the projects
“Agricultural Development - 2”, “North-East Development”
and “Development of Agrarian Sector” and in accordance
with the terms and conditions of the projects carries out the
financing of the entities acting in the regions.
We, Turan Bank, are thinking of speeding up the
implementation of the measures aimed at increasing
the competitiveness in the banking system, provision of
comfortable and high quality services to our customers,
improvement of financial performance, as well as at
increasing our contribution, as a bank, to the economical
development. For this purpose, we have already adopted,
with the participation of professional consultants,
next strategic action plan for years 2008 - 2011, the
implementation of which will provide opportunities for the
bank to increase its market share and to achieve the above
mentioned goals.
Our strategic action plans for the coming year 2008 are
based on our financial capacity and we would like to note
that the next year will be the year of radical changes both
in financial performance and in the quality of the banking
services. This may be achieved through rapid economic
growth and increased borrowing demands of the customers,
increased interest of entities acting in the country towards
the banking transactions increase in the amount of the
savings deposited in our bank as a logical result of the yearby-year
increasing trust and confidence in our bank and
the offer of other banking products that constitute a part of
modern bank services. The year 2008 will be the first year
aimed at the universal banking activity providing all kinds of
services stipulated in the strategic action plan and meeting
the requirements of the international standards. The goals
set in the strategic action plan for 2008 to 2011 and the
availability of the resources necessary to achieve these
goals encourages us to look ahead with more confidence.
In the end, we, on behalf of the management of Turan
Bank OJSC, would like to thank our shareholders for their
support to us, our customers including our partners and
employees who have cooperated with us for many years
and those who recently decided to cooperate with us, for
their trust, confidence and loyalty towards our bank, as
well as our personnel for their committed and professional
activity.
5

6
SuperviSory Board
FUAD MUSAYEV
Chairman of Supervisory Board
ManageMent Board
FEZAIL MUSAYEV
Deputy Chairman of
Management Board
SHOHRAT VAKILOV
Member of Supervisory Board
www.turanbank.az
NAZIM SADIGOV
Chairman of Management Board
KAMALA MUSTAFAYEVA
Member of Management Board, Director
of Operations Department

www.turanbank.az
departMentS and Structural unitS
Vugar Asadov
Director of Credit
Department
Emil Mursalov
Head of Corporate
lending unit
Ilgar Maharramov
Business Development
Department, Head of
International relations unit
Turgay Aliyev
Director of administrative
Department
Alizaman Ibrahimov
Deputy Director of
Financial Management
Department
Chingiz Agayev
Director of Internal audit department
Rashad Tanriverdiyev
Biznes Development Department,
Head of Strategic planning unit
Tahir Mehdiyev
Business Development Department, Head of Marketing
and Sales unit
Rashad Mammadov
Director of Customer Services
Department
Orkhan Garayev
Director of treasury
Department
Bakhtiyar
Mammadov
Director of Information
technologies Department
Sevinj Hadjiyeva
Director of Human
resources Department
Kanan Iskandarov
Financial Management
Department, Head of
Budget unit
7

8
Main indicators as of the end of 2007 (mln AZN)
Indicators 2005 2006 2007
Assets 27,9 41,9 60,5
Credit Portfolio 24,0 32,3 47,6
Shareholders' equity 5,0 8,5 12,5
Profit 0,7 1,0 2,7
Our Shareholders
Indicators 2005 2006 2007
Total number of
Shareholders including:
– legal entities
– individuals:
bank personnel
Share of Shareholders
in charter capital (%)
including:
– legal entities
– individuals
– bank personnel
24
6
18
8
29,67
50,37
19,96
Our Customers
28
6
22
6
29,67
57,16
13,17
28
6
22
7
27,77
58,43
13,8
Indicators 2005 2006 2007
Total number of
Customers including:
3 075 5 244 7 307
– legal entities
1 107 757 872
– individuals
1 968 4 487 6 435
Our Personnel
Indicators 2005 2006 2007
Total personnel
including:
120 121 150
head office
36 38 49
branches and representatives 58 73 80
exchange offices
26 10 21
Our Service Network
Our International Auditors:
«PriceWaterHouseCoopers» and
«Deloitte & Touche»
www.turanbank.az
Indicators 2005 2006 2007
Number of branches
including:
8 10 11
– in Baku
5 6 6
– in regions
3 4 5
Number of exchange
offices including:
23 6 15
– in Baku
22 5 13
– in regions
1 1 2
Number of ATMs
including:
2 5 8
– in Baku
1 3 6
– in regions
- 2 2
Number of POS
terminals including:
1 4 52
– in Baku
1 4 46
– in regions
- - 6
Our subsidiaries - 1 1
Our representatives 8 8 8
Significant Events in 2007:
• “Zagatala” branch of the bank launched.
• The bank was selected as the agent bank for
“North-East” Project between the International
Fund for Agricultural Development (IFAD) and the
government of Azerbaijan.
• The bank was selected as the agent bank for
the second project for “Agricultural Lending
and Development” between the International
Development Association and the Government of
Azerbaijan
• The bank made an agreement with Islamic
Corporation for the Development of the Private
Sector on financing medium-sized enterprises.
• The bank developed its strategy for the years
2008-2011.
• The bank became a member of “PrivatMoney”
and “Express Money” international express money
transfers systems.
• The financials of the bank were audited by
“Deloitte & Touche” International Auditor Company.

www.turanbank.az
Growth dynamics of GPD in the country,
(ìлí ÀÇÍ)
30000.0
25000.0
20000.0
15000.0
10000.0
5000.0
0.0
2003 2004 2005 2006 2007
COuntry eCOnOMy
BrIeF reVIeW
3000.0
2500.0
2000.0
1500.0
1000.0
500.0
Per capita GDP in the country, (ÀÇÍ)
0.0
2003 2004 2005 2006 2007
9

10
7,1%
7,3%
Structure of Gross Domestic Product
in 2007, (%)
6,2%
8,3%
5,8%
Industry
Social and other services
Net Taxes
Construction
1,9%
4,2%
Agriculture
Trade and services
Transportation
Communication
59,2%
As the summary of the country economy for 2007,
we would like to note that the year was distinguished
with quite positive factors. Thus, the launch of “Baku-
Tbilisi-Ceyhan” oil pipeline led to a remarkable increase
both in the political weight and in the economic potential
within a single year. Today, the rapid development of
socio-economic processes mostly depends on the
economic reforms carried out in the country, on the
improved regulation of the economic processes and on
the cooperation with International Financial Institutes.
For this purpose, our country pursues a policy of rapid
and comprehensive integration with the world economy
and carries out reforms and economic regulations
in all fields of country’s economy in response to the
economic changes in the world.
The main achievements in the socio-economic
development of the country, reached during the recent
years, were maintained in 2007, thus the sustained
economic growth was ensured.
For 2007, the Gross Domestic Product (GDP) growth
rate in Azerbaijan reached 25 percent, amounting to
25.2 billion AZN, which is a record figure for the world
economy. The amount of per capita GDP in 2007 was
2980.9 AZN (3474 US Dollars).
The share of private sector in the GDP produced
in 2007 was 84 percent and according to the sectoral
division 74 percent of GDP fell under production sector,
www.turanbank.az
Share of the investments intended for fixed assets
in 2007 in respect to financial sources, (%)
25%
4%
6%
Own assets of entities and
organizations
Bank credits
Borrowed assets
3%
0.3%
61.7%
Assets of non-budget funds
Personal assets of population
Other assets
19 percent under service sector and 7 percent under
other sectors. According to the statistic data, the GDP
production increased by 36,8 percent in oil sector and
by 11,4 percent in non-oil sector. Generally, the share
of non-oil sector in GDP for 2007 was 9.5 billion AZN.
In 2007, the amount of investments in the country’s
economy increased compared to the previous years
and during the reporting year, from all sources, total of
6.77 billion AZN (approximately 7.58 billion US Dollars)
investments were made to the country’s economy.
It is gratifying that this year the share of domestic
investments, amounting to 59.6 percent, exceeded
Total amount of the domestic and foreign
investment to the country’s economy
8000.0
6000.0
4000.0
2000.0
0.0
2003 2004 2005 2006 2007
Domestic investments Foreign investments

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Structure of the import operations in 2007
per countries, (%)
43%
Turkey
Russia
Ukraine
Germany
5%
7%
11%
United Kingdom
USA
Other countries
18%
the foreign investments, amounting to 40.4% (2.77
billion AZN or 3.0 billion US Dollars). The financial
funds gained from the oil and gas industry provides
opportunities for the government to enhance its
investment activity to ensure the sustained economic
growth and such opportunities go beyond the borders
of the country. One of the main reasons of such a
large scope of investments is the attractiveness of the
investment environment in the country for the domestic
and foreign investors. A large part (95 percent) of the
foreign investors is from the developed countries such
as Great Britain, USA, Japan, Norway, as well as from
the Turkey and Iran. Great Britain (1 161 million AZN),
USA (653.7 million AZN) and Japan (342.1 million
AZN) are in the leading places among the foreign
investors in our country. Out of the total investments
intended for fixed assets 3456,6 million AZN (51,0
percent) was used for development of oil sector and
3318,2 million AZN (49,0 percent) for non-oil sector.
The government provides both economic and legal
support to the entrepreneurship. The decree issued by
the President in December 2007 on the organization of
the state registration of enterprises under the principle
of “one window” had a huge positive influence on the
economic spirit of entrepreneurship in the country.
In 2007, the foreign trade turnover of the country
with 137 foreign countries was 11.77 billion US Dollars,
8%
8%
Structure of the export operations in 2007
per countries, (%)
33%
Turkey
Russia
Italy
Iran
6%
6%
6%
17%
Georgia
Israel
Indonesia
Other countries
16%
out of which 6.06 billion US Dollars fall under export
and 5.71 billion US Dollars under import. The trade
balance of the country during the overall reporting year
was 349.7 million AZN positive. In the leading places
among the trade partners of the Republic are Turkey
with 1.68 billion US Dollars, the Russian Federation
with 1.53 billion US Dollars and Italy with 1.08 billion
US Dollars. The first place separately in the export
again belongs to Turkey (with 1.056 billion US Dollars).
The amount of the goods exported from our country to
Italy during the reporting year reached 940.9 million
US Dollars, and the goods amounting to 527 million
US Dollars were exported to the Russian Federation.
With 1.0 billion US Dollars the Russian Federation
went up to the first place for the imported goods. The
other places belong respectively to Turkey (with 624.5
million US Dollars), Germany (with 471.0 million US
Dollars) and Ukraine (with 465.5 million US Dollars).
The nominal income of population for 2007 reached
14305.6 million AZN increasing by 40.3 percent. The
nominal per capita income for the mentioned period
was 1690.3 AZN (1970 US Dollars), which exceeds the
corresponding indicators of the previous year by 38.6
percent. In 2007, the average monthly nominal salary
of the employees in various sectors was 214 AZN,
which is 34 percent more compared to the previous
year.
7%
9%
11

12
BanKInG
SySteM
The stable economic growth experienced in
the country’s economy during recent years had
a positive influence on all sectors, including the
financial system. The year 2007 may be labeled as a
successful year for the banking system which is one
of the most significant parts of the financial system of
our country and momentum of the economy as well.
This year is also distinguished for the interest of the
foreign financial institutions and investors towards
our banking system and for their economic activeness
in participation in our banking system. Incomplete
realization of the economic capacity of the country
and the role that the bank system may play in this
field may be underlined as the major cause for such
activeness. The sustained economic growth, the
large economic potential of the country, year-by-year
increasing economic capacity and the improvement
of the banking system in correspondence with the
2003
2004
2005
2006
2007
1663
46 банкs
46 банкs
44 банкs
44 банкs
Total assets, (млн АЗН)
46 банкs
2252
www.turanbank.az
3778
305 branches
350 branches
6726
2004 2005 2006 2007
374 branches
420 branches
485
branches
international standards serve as the key factors
ensuring the rapid development and progress of the
banking system.
As of the end of 2007, there were 46 banks
and 96 non-bank credit organizations acting in the
banking and credit system of the country. Compared
to 2006, during the reporting year, the National Bank
of Azerbaijan granted licenses to 2 banks and 2 nonbank
credit organizations for provision of relevant
banking and credit services. Among the banks acting
in the banking system 21 ones are registered as
foreign capital banks, out of which in 6 ones (increased
by one bank compared to 2006) the foreign capital
constitutes more than 50 percent of the authorized
capital, in 13 ones (no change compared to 2006)
the foreign capital constitutes up to 50 percent of the
authorized capital. There are two banks acting as
branches of foreign banks in our country. With the

www.turanbank.az
7%
4%
Credit portfolio
Investment portfolio
Cash assets
Structure of total assets, (%)
10%
70%
Assets in correspondent
accounts
Other assets
opening of one more representation the total number
of the representations of foreign banks in our country
reached 3 during the reporting year. Rapid growth in
the banking system of the country made the year
2007 to be remarkable for opening of the branches
and representations of the domestic banks in foreign
countries. Currently, there are 2 subsidiary banks,
one branch and 2 representations of the domestic
banks in foreign countries.
As for the enhancement of the branch network
of the banks in the country during 2007, it should
be noted that during the mentioned period the
banks demonstrated high activity, opening 65 new
branches.
Currently, there are 485 branches in the banking
system, out of which 125 ones belong to state banks
and 360 ones to the private banks.
The total number of the credit organizations
acting in the country is 96, out of which 77 are
credit unions, 18 are credit organizations funded by
international humanitarian organizations and 1 is a
non-bank credit organization ("Agrarkredit" NBCO).
As of the end of the reporting year, 7 new credit
unions were duly licensed to act and the licenses
of the same number of the existing credit unions
9%
Structure of Credit portfolio per sectors,
(млн АЗН)
1657
469.6
308
Trade and service sector
Energy, chemistry and natural
resourses
Agriculture and processing
Construction and estate
130
111.5
312.3
1194
197.2
302
Industry and production
Transport and communication
Housholds
Other sectors
Financial sector
were terminated. In 2007, 2 new credit organizations
funded by international humanitarian organizations
were registered and licensed.
According to the data of the National Bank of
Azerbaijan, as of the end of 2007, total assets of the
banks amounted to 6725.72 million AZN, increasing
by 78 percent compared to the previous year.
With 4691.8 million AZN (69.6 percent) the credit
portfolio constitutes a significant part of the banks’
assets. Compared to 2006 there was an increase
by 98 percent in credit portfolio. Such rapid growth
increase in the credit portfolio may be explained by
a number of factors. The key factors are the rapid
growth in the economy and concurrent increased
credit demands of the business entities, as well as the
year-by-year increase in the financial capacity of the
banking system and meeting of the credit demands
by the banks through credit offers. Especially during
the recent years the bank, taking into account the
competition conditions, attach more importance to
meeting of the increasing long-term credit demands,
which is of great significance in sustained economic
growth in the country and strategic economic planning
of the business entities. For 2007, the total amount
of the long-term credits constituted 64.8 percent
13

14
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Credit portfolio, (млн АЗН)
2004 2005 2006 2007
(3032.3 million AZN) of the total credit portfolio. As of
the end of the reporting period, the average annual
interest rate for the credits offered by the banks to
non-financial sector was 16.97 percent in domestic
currency and 16.26 percent in foreign currency. The
average annual interest rate for the credits offered
by the domestic banks to other banks was 16.25
percent in domestic currency and 14.69 percent in
foreign currency.
The liabilities of the banks are of the same
importance as their assets. As of 31 December
2007, the total amount of the liabilities of the banking
system was 5627.6 million AZN, which is 77.3 percent
(3174.7 million AZN) more compared to the previous
year. The main parts of the total liabilities are the
deposits (3437.94 million AZN) and the credits and
deposits obtained from the financial sector (1720.15
million AZN). 3183.7 million AZN of the mentioned
deposit amount is the demand and time savings
and deposited involved from individuals and legal
entities. As of the end of 2007, the average annual
interest rate for involvement of deposits and savings
was 11.36 percent in domestic currency and 12.22
percent in foreign currency.
Compared to the previous year (736.3 million
AZN), as of the end of 2007, there was an increase
by 133.7 percent in the amount of the funds involved
from the financial sector (1720.15 million AZN),
where the weight of the international financial
institutions is notable. Especially the European
Bank for Reconstruction and Development, the
Asian Development Bank, International Financial
Corporation, Black Sea Trade and Development Bank
and other financial corporations, with their capital
31%
www.turanbank.az
Structure of total liabilities, (%)
Deposits
Assests involved from
financial sector
8%
Other liabilities
61%
investments and credit lines, deeply integrated into
the banking system of the country.
In 2007, there was a rapid development in the
field of capitalization of the banking system as well.
During the reporting year the total amount of the
capital of the banks acting in the banking system
increased up to 1098.11 million AZN. Generally, as
of the end of 2007, the total capital of each of the 39
banks acting in the banking system was more than
10.0 million AZN, which proves that the banking
system is based on sound financial capacities.
According to the analysis of the loss and profit
indicators of the banks for 2007, as of the end of
the reporting period 40 banks in total obtained a net
profit of 132.77 million AZN (after taxation).
The sustained growth in the banking system
of the country encourages us to say that in 2008
the above mentioned financial performance of the
banking system will be improved. It is guaranteed by
the current status of the banking system, adjustment
by the banks of their activities to international
requirements and standards and by the regulations
and reforms aimed at the sustained development of
the banks that are carried out, from time to time, by
the government, especially by the National Bank of
Azerbaijan.

www.turanbank.az
Structure of assets in 2007, (%)
1%
2%
10%
Cash money and balance
assets in NBA
Credit Portfolio
Credits and advance payments
to banks
1% 7%
Investment
Fixed assets
Other assets
79%
MaIn FInanCIal
perFOrManCe
InDICatOrS
OF tHe BanK
FOr 2007
“Turan Bank” OJSC, as one of the banks in the
banking system of Azerbaijan distinguished for its
progressive development achieves high financial
performance every year. Year 2007, we are seeing
off, was not an exception. The high speed of the
advancement of the bank is expressed by all financial
performance indicators. Turan Bank attaches a special
importance to the quality of all offered banking services
and complies with the requirements of the National
Bank of Azerbaijan and the International Financial
Reporting Standards.
ASSEtS
One of the key indicators showing the rapid progress
of Turan Bankın is its assets. The total assets of Turan
Bank for 2007 reached 60.5 million AZN increasing by
44.5 percent.
StruCturE Of ASSEtS
According to the data for 2007 the credit portfolio
constituted 78.6 percent of the bank’s assets. The
major cause of it is the profitability of credit investments,
as well as the increased borrowing needs of the
customers.
Total assets of the bank, (млн АЗН)
18.99
27.91
41.86
60.5
2004 2005 2006 2007
15

16
1%
Structure of liabilities in 2007, (%)
27%
30%
Assets involved from banks
and credit organizations
Assets involved from customers
Other liabilities
Total Capital
Structure of the total capital in 2007,
(млн АЗН)
Stock capital
Revaluation reserve
0,88
12,5
2,71
Undivided profit
42%
www.turanbank.az
Growth dynamics of the charter capital,
(млн АЗН)
5,0
8,54
12,5
2005 2006 2007
LIAbILItIES
The major part of the liabilities of Turan Bank
is the funds involved from banks and other credit
organizations. The total liabilities of the bank during the
reporting period was 44.4 million AZN, which is 41.4
percent more compared to the previous year.
StruCturE Of LIAbILItIES
In the result of the strengthening and diversification
of the asset base of the bank during the reporting year,
the bank involved assets from local and foreign financial
and credit institutions that are considered to be cheaper.
As of the end of the reporting year funds amounting
Structure of revenues in 2007, (thousand АЗН)
198
1109
Interest income
Dealing incomes
Fees and commissions
57 53
6451
Dividends
Other incomes

www.turanbank.az
Structure of expenses in 2007, (thousand AZN)
2085
148
Interest expenses
Fees and commissions
466
Operational costs
Profit taxes
2439
to 25.5 million AZN were involved from banks and
financial organizations. Another significant part of the
liabilities are the funds involved from individuals and
such funds attracted by the bank during the mentioned
period amounted to 18.25 million AZN.
CApItAL
As of the end of 2007, the total capital of the bank
was 16.09 million AZN. For the purpose of increasing its
share capital, the bank carried out the issue of shares
for three times, in a result of which its share capital
reached 12.5 million AZN in the end of the year.
StruCturE Of CApItAL
The total capital of the bank consists of the paid
shareholders’ equity of 12.5 million AZN, as mentioned
above, the undivided profit of 2.7 million AZN and the
reserve capital of 0.88 million AZN established under
revaluation.
prOfIt
As of the end of 2007, the incomes of the bank
were 7.868 million AZN and the expenses, including
profit tax was 5.138 million AZN. As of the end of the
Dynamics of the bank’s revenues, expenses
and profit, (thousand AZN)
8000
7000
6000
5000
4000
3000
2000
1000
0
2004 2006 2007
Income Expense Profit
reporting period net profit of the bank was 2.73 million
AZN.
According to the results of the comparative analysis
of the incomes and expenses items separately, the
incomes of the bank during the reporting year exceeds
the corresponding indicator of the previous year by
63.4 percent. Eighty two percent of the incomes for
2007 are the interest incomes (6.45 million AZN).
The commission fees (1.11 million AZN) and dealing
incomes (0.198 million AZN) may be deemed significant
for the bank as well.
According to the result of the expense items for the
reporting year, the major expense items are interest
expenses (2.44 million AZN), transaction costs (2.085
million AZN) and budget payments (0.47 million AZN).
For 2007 the return on assets (ROA) for the bank
was 4.42 percent, and return on equity (ROE) was
21.5 percent. Owing to such growth in these indicators,
in the information released on 31 December 2007 by
“Banks & Business” and “Business & Consulting”,
famous journals in the banking system of the country,
Turan Bank OJSC was indicated as the fifth most
profitable bank among 46 banks acting in the banking
system of the country.
17

18
CuStOMer relatIOnSHIp
ManaGeMent
Customer services and customer relations are the
key priorities of “TuranBank”. In compliance with the
slogan of the bank - “Be confident with us”, the variety
and diversity of the rendered services and offered
products, as well as the maintenance of the quality
parameters were the key goals of the bank’s activity.
As provided in the strategic plans of the bank, one of
the major goals within the bank’s scope of activity was
a balanced attitude towards both individual customers
and corporative customers.
Owing to the remarkable and successful activities
aimed at customer management policy and the
successive and purposeful marketing policy, during the
2007 reporting year the bank succeeded in increasing
the number of its customers, which is an eloquent
evidence of not only of the maintenance but also of
the enhancement of the scope of customer during
the reporting year. The increase in the number of
customers was ensured mainly through involvement of
the individuals and legal entities belonging to the nonoil
sector, which points to the increased confidence of
www.turanbank.az
the customers in the bank.
The key guiding principles of the customer
management policy of the bank was the same as
the previous years: provision of complex services,
protection of the involved funds, rapid and high quality
performance of the transactions, etc.
The bank is always committed to the idea of getting
closer to its customers and promoting their development.
Thus, as in the previous years, the strategy of the bank
aimed at the lowering of the service fees enabled the
customers carrying out active transactions over the
accounts to save a considerable amount of funds.
A base of new bank services was established by
the bank during the reporting year, the implementation
of which is planned for 2007. The procurement of the
service network of the bank with modern technical and
dedicated equipment, the highly qualified personnel
enables the bank to provide bank services meeting the
requirements of the modern international standards.
The actual application of the mentioned achievements
results in involvement of larger scope of customers.

www.turanbank.az
Structure of customer base in 2007, (%)
12%
88%
Individuals Legal entities
Structure of the customer accounts in 2007
per economic sectors, (%)
10%
8%
Individuals
Construction
Insurance
5%
1%
2%
Trade
Agriculture
Other
74%
Structure of customer deposit in 2007, (%)
44%
Individuals Legal entities
9
6
3
0
Savings and deposits by maturity,
(ìèí ÀÇÍ)
4,1
2,8
up to 1 month from 1 to
3 months
TuranBank offers its customers the following
package of complex products and services:
6,9
from 3 months
to 1 year
Our SErvICES:
- Cash settlement service
- FEX operations
- Credits (consumer credits, pawn credits,
micro credits, mortgage, business credits,
project credits)
- Deposits
- Plastic Cards
- Money Transfers
- Azercell, Bakcell and Nar Mobile payments
- Documentary Transactions
- Salary Projects
- Encashment
56%
0,4
from 1 to
5 years
19

20
For the purposes of customer management service,
TuranBank carries out measures in two courses, one
of which is service for corporative customers and the
other course is the services rendered to individuals.
Joining of “TuranBank” with a number of projects
of different international financial institutions lead to
expansion of the variety of credit products offered to
corporative customers, which resulted in customer
satisfaction as expressed in the questionnaire forms
filled out by our corporative customers.
The increase in the transactions carried out under
“Trade Financing” project of the bank during the
reporting year, as well as the active cooperation with
international financial institutions for this purpose,
enabled our customers to carry out import and export
operations on more favorable terms.
The reporting year was, as well, notable for the
Savings campaigns offered to the customers. A number
of seasonal and nominal campaigns – Anniversary,
New Year and Novruz – were conducted during the
reporting year.
During the 2007 reporting year the bank also
provided a wide range of banking products to its
individual customers, such as consumer credits,
mortgage credits, micro credits, plastic card credits,
express money transfers, receipt of payments to mobile
www.turanbank.az
operators, deposits, etc.
Having entered in plastic card business since 2003,
TuranBank, currently, offers its customers internationally
famous MasterCard plastic cards (Maestro Cirrus,
Master Standard, Master Gold). Application of zero
interest to the credits under plastic card, 18 percent
interest for further 180 days and 24 percent interest
later on, availability of additional services through
plastic cards (virtual shopping, non-cash settlements
in public catering establishments, payment of mobile
phone fees, payment for public utilities, card to card,
and conversions into other currencies, etc.) resulted
in positioning of the bank in the leading places in the
credit cards market in Azerbaijan.
Furthermore, TuranBank offers the population
services of express money transfers through Western
Union, Contact, Bistraya Pochta, Migom, Privat Money,
Xpress Money systems. The transition into Privat
Money express money transfer system was completed
during the reporting year.
Systematic and coordinated activity in the field of
retail business, study of the customer requirements
and timely meeting of their needs, fulfillment of
the obligations undertaken before the customers,
competitive interest rates, are the key principles of the
bank in this field of activities.

www.turanbank.az
Wider use of non-cash settlements by the people
and making of payments via plastic cards proves the
confi dence in banks and in the payment cards. The
plastic card market has taken a signifi cant place in the
banking system of Azerbaijan and, as in the previous
years, it experienced a dynamic growth. TuranBank
has started to release plastic card products since 2003
and provides its customers domestic and international
plastic cards, expanding the variety of its cards every
year. During the reporting year our bank released a
new type of card – Eurocard plastic cards. Today, the
customers of TuranBank are served in public catering
and service enterprises in any point of the world
through cash and non-cash transactions by means of
their plastic cards. Our bank made it available for its
customers to pay mobile communication fees through
ATMs, and there was notable increase in the scope of
transactions carried out by means of “Card to Card”
services. For the purpose of rendering more effi cient
services to the customers in payments for public
utilities, the installation of Paypoint system is set as a
strategic target.
The plastic card infrastructure of the bank was
changed and the installation of new-type “Cash In”
ATMs was started. The customers may use the ATMs of
the bank in Baku and other regions of the Republic. As
in the previous years, the POS Terminal and POS Cash
plaStIC CarDS
network of the bank was expanded and new entities
were served in this fi eld. During the reporting period the
Salary Card project, intended for corporative customers,
was implemented and this type of service was made
available to a number of entities and organizations.
For the purpose of rendering more effi cient and
prompt services, Telescope Remote Access system
was installed to facilitate the fi le exchange. Beside it, the
application of the Internet Banking service provides the
customers with new opportunities in payment system
and resulted in a progress in the plastic cards system
of the bank.
Turan Bank renders services to its customers by
means of 3 kinds of plastic cards - MasterCard Gold,
MasterCard Standard, and CirrusMaestro. At the
same time, the customers are successfully rendered
preferential services by means of credit cards.
The bank intends to implement a number of projects
connected with the plastic cards during the next
reporting year. This includes, along with the installation
of the above-mentioned Paypoint system, application of
Visa International system and the issue of “chip” cards.
Furthermore, for the next reporting year, it is intended
to provide more opportunities for the customers and to
improve the services through expansion of the POS
terminal and ATM network of the bank.
21

22
CreDIt pOlICy
as a result of the correct credit policy of the bank
and the conducted active credit transactions, the credit
portfolio of the bank increased by 15 192,0 thousand
aZn compared to the corresponding period of the
previous year and reached 47 500,0 thousand aZn.
the key goal of the crediting activity of the bank is to
invest the cash assets rationally and to gain maximal
profits, within minimal risks and maintaining the liquidity
at the necessary level. In the result of such policy,
a high quality and diversified credit portfolio was established
through well-balanced amounts, terms and
types of credits across the regions customers or customer
groups, as well as the sectors of economy.
“turanBank” provided various types of credits to individuals
and legal entities in 200 as well. In the result
of the works performed for this purpose the range of
both business and consumer credits was expanded.
the credit portfolio of the bank is composed of credits
provided to individuals and corporative customers acting
ion various sectors of the economy. In 2007, the
credits to individuals amounted to 20 146,0 thousand
aZn, increasing by 7 940,0 thousand aZn or 65 percent
compared to 2006. the division of such credits
according to the credit products is as follows:
www.turanbank.az
• Consumer credits – 16 055,0 thousand aZn
• Mortgage credits – 2 404,0 thousand aZn
• Car credits – 1 110,0 thousand aZn
• Other credits – 577,0 thousand aZn
the business crediting is also of great significance
in the crediting activity of the bank. the bank provides
the business credits for its own accounts and the funds
involved from various domestic and international financial
organizations. the credits provided to the enterprises,
acting in various sectors of the economy, during
2007 amounted to 27 404,0 thousand aZn increasing
by 7 252,0 thousand aZn or 36 percent compared to
2006. the sectoral division of such credits is as follows:
• trade and service sector – 8 170,0 thousand aZn
• agricultural sector – 6 872,0 thousand aZn
• Construction sector – 6 376,0 thousand aZn
• production sector – 5 737,0 thousand aZn
• Other sectors – 249,0 thousand aZn
Generally, the sectoral structure of the credit investments
for 2007 is composed of production, processing,
agricultural, construction, and trade and service sec-

www.turanbank.az
50000
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
Growth dynamics of Credit Portfolio
per years, (thousand AZN)
9,860.00
15,498.00
24,036.00
32,308.00
47,500.00
2003 2004 2005 2006 2007
tors of the economy and is characterized by the issue
of consumer-oriented credits. the incomes from the
interests on the credit transactions, increasing year by
year with a dynamic growth rate, constitute a significant
part of the total incomes of the bank. In 2007, the
incomes from the interests on the credits increasing by
2 166,0 thousand aZn compared to 2006, amounted
to 6 312,0 aZn, which constituted 70 percent of the
total revenues of the bank.
the reserves established in the bank for the potential
losses on the credits increased by 88,0 thousand
aZn compared to 2006 and amounted to 1 610,0 thousand
aZn.
the division of the credit portfolio according to
terms is as follows:
• Credits up to 1 year - 15 465,0 thousand aZn
or 32,5 percent of the portfolio
• Credits from 1 year to 5 years - 30 192,0 thousand
aZn or 63,5 percent of the portfolio
• Credits for more than 5 years - 1 893,0 thousand
aZn or 4 percent of the portfolio
In its activities in the field of business crediting,
our bank closely cooperates with both domestic and
international financial organizations. the year 2007
is also remarkable for the participation of our bank in
Consumer
Mortgage
Division of the credits to individuals
per sectors, (%)
13%
1%
3%
Car
Other
83%
new projects. Our bank, having participated in “Development
of Mountainous and Highlands areas”,
“Development of Small and Medium - sized enterprises”,
“Mortgage lending” projects so far, in 2007,
joined “agricultural Development - 2”, “north-east
Development” projects of the World Bank and the
International Fund for agricultural Development and
“Development of agrarian Sector” project funded by
the State agency on agricultural lending under the
Ministry of agriculture, and the Islamic Corporation
for the Development open a credit line of 1 000 000
uS Dollars for our bank.
Since 2004, within the framework of the Development
programme for Mountain and Highland areas,
the bank disbursed loans amounting to 487 027 aZn
for financing of the projects of 68 enterprises in the
regions covered by the projects (Guba, Gabala, Dashkasan,
Gadabay, Ismayilli and lerik). as of the end of
2007, the credits under the project amounted 282 822
aZn and the collection rate for the principal amount
and interest was 100 percent.
as mentioned above, since July 2007, our bank
participates in “north-east Development” project of
the International Fund for agricultural Development.
the main objective of the project is the financing of
the small and medium entreprises acting in the field
23

24
Division of credit investments per the sectors
of the economy, (%)
23%
Trade and service
Agriculture
Construction
21%
1%
25%
Production
Other sectors
30%
of agriculture in the northeastern regions of azerbaijan
– absheron, Khizi, Siyazan and Davachi, organization
of the processing and sale of the products of
such small-scale and medium enterprises, purchase
of seasonal production facilities to ensure the activity
of such enterprises and procurement of processing
equipment and vehicles. In 2007, the bank issued
credits amounting to 52 000 aZn for financing of the
projects of 3 enterprises within the framework of this
project, and it is planned to enhance the crediting under
the project in 2008.
One of the domestic financial organizations with
which our bank cooperates for a long time (since 2002)
is the national Fund for the Support of entrepreneurship.
During this period “turanBank” OJSC issued
preferential credits (including micro credits – in 79
cases), amounting to 7 138,5 thousand aZn (including
micro credits – 72,4 thousand aZn), for financing of
the projects of 140 enterprises in 22 cities and regions,
out of the means of the Fund.
eighty seven percent of the financed projects were
implemented in the regions and the share of the production-oriented
projects constitutes 85 percent.
as of the end of 2007, the credits out of the means
of the national Fund for the Support of entrepreneurship
was 6 057 thousand aZn and the share of such
70,00%
60,00%
50,00%
40,00%
30,00%
20,00%
10,00%
0,00%
32,52%
www.turanbank.az
Distribution of Credit Portfolio
per period, (%)
63,50%
3,98%
Up to 1 year From 1 to 5 years More than 5 years
credits in the credit portfolio of the bank constituted
12,7 percent.
Beginning from this year, our bank was one of
the first banks acting as agent bank for the issue
of credits out of the means of the State agency on
agricultural Credits under the Ministry of agriculture,
within the framework of “Development of agrarian
Sector” project.
In 2007, within the framework of this project, “turanbank”
OJSC issued loans, amounting to 700,0 thousand
aZn, for financing of the projects of 7 enterprises
acting in the fields of cattle-breeding, production and
processing in 6 regions.
One of the significant part of the credit activity of
the bank is mortgage lending. Our bank, acting as an
agent bank for the issue of credits funded by azerbaijan
Mortgage Fund, after joining the state programme for
mortgage crediting, made a significant progress in this
field in 2007. While 10 mortgage loans amounting to
188,2 thousand aZn were issued within the framework
of this programme in 2006, such credits numbered 48,
amounting to 1 763,0 thousand aZn.
as it is obvious, the positions of the bank in the field
of lending becomes stronger year by year and in accordance
with the strategic plan and the goal set, is is
planned to improve the activities in this field.

www.turanbank.az
SHareHOlDerS’ equIty
As of the end of 2007, the shareholders’ equity of
TuranBank amounted to 12,5 million AZN (14,8 million
US Dollars), which exceeds the minimal requirement
of the National Bank for the authorized capital of the
banks by 2,5 million AZN (3 million US Dollars) or 25
percent.
The relations established on sincerity, trust and
transparency principles increases the confidence of
the actual stockholders of TuranBank in the productive
growth of the bank, which is proved by the dynamic
increase in the share capital of the bank during the 16
year of functioning, as well as by the issue of additional
stocks for 4 times during the reporting year. Compared
to the end of 2006, the growth of the stock capital
amounted to 4 million AZN (4,7 million US Dollars),
which was provided through additional issue of shares
in Baku Stock Exchange in February, April, June and
December 2007.
Structure of Share Capital, (%)
12%
88%
Individuals Legal entities
As of the end of 2007, the total number of the
shares of the bank was 12 500, the nominal value of
each being 1000 AZN.
In the Strategic Plan for 2008-2011 approved in the
General Meeting of Stockholders held in November
2007, it is forecasted to increase the share capital of
the bank to 15, 20, 25, 30 million AZN (17; 23,7; 29,6
and 35,5 million US Dollars) during the next 4 years.
One of the notable features of the strategic approach
adopted in 2007 is the involvement of foreign capital to
TuranBank during the next 4 years. For this purpose,
the key criteria for participation in the share capital
of the bank were developed by the shareholders of
the bank and will be submitted, as proposals, to the
selected foreign financial institutions.
For the reporting year the bank has 26 stockholders,
22 of which are individuals and 6 ones are legal
entities.
15
10
5
0
Growth dynamics of the authorized
capital per years, (ìлí ÀÇÍ)
2,46
3,1
4,15
5,0
8,54
12,5
2002 2003 2004 2005 2006 2007
25

26
CapItal InVeStMentS
As in the previous years, in 2007, TuranBank
adhered to its course of economic activity in the field
of capital investments, and taking into account the
profitability of the field of business it is planned to
provide a balanced approach to this field in the next
years.
During the reporting year the capital investments of
TuranBank was as follows:
1 “Azer-TurkBank” OJSC
2 “Bashak Inam” Insurance Company
3 “Milli Kart” LLC Processing Center
4 “TuranLizinq” LLC
“AZEr-turk bANk” OJSC:
“Azer-Turk Bank” OJSC was founded in 25 May
1995 by T.C. Ziraat Bankası and Azerbaijan Republic
Joint Stock Commercial Agrarian-Industrial Bank and
was launched in 11 July 1995 under license No. 234
issued by the National Bank of Azerbaijan on 29 June
1995.
The authorized capital of “Azer-Turk Bank” OJSC,
as of the end of the reporting year was 10 million
AZN (11,8 million US Dollars). The shareholders of
the Bank are T.C. Ziraat Bankası A.S. (owner of 46
percent of stocks), “AgrarCredit” Non-Bank Credit
Organization (owner of 46 percent of stocks), Ziraat
Bank International AG Frankfurt, Germany (owner of 4
percent of stocks) and “TuranBank” OJSC (owner of 4
percent of stocks).
“bAShAk INAM” INSurANCE COMpANy:
“Bashak Inam” Joint Insurance Company started its
activity on 9 August 1996 under the license granted
by the Ministry of Finance for the relevant insurance
activity.
As of the end of the reporting year, the charter capital
of “Bashak Inam” Joint Insurance Company was 1
million AZN (1,2 million US Dollars). The stockholders
of the company are “Bashak Sigorta” A.S. (owner of
49 percent of stocks), “TuranBank” OJSC (owner of
15,75 percent of stocks). The remaining 35,25 percent
of the stocks are owned by “Azer-Turk Bank” OJSC,
“AgrarCredit” Non-Bank Credit organization and
individuals.
In 2006, “Bashak Sigorta” A.S., the owner of a
significant part, i.e. 49 percent of the stocks of the
company, was purchased by Groupama, one of the
leaders in the insurance market of France.
www.turanbank.az
“Bashak Inam” Joint Insurance Company takes
one of the leading places in the insurance market of
Azerbaijan.
“MILLI kArt” LLC prOCESSINg CENtEr:
“Milli Kart” LLC Processing Center was established
as a processing center alternative to “Azerkart” LLC,
which is a subsidiary of the International bank of
Azerbaijan in the plastic card market of Azerbaijan.
As a Processing Center, serving the domestic banks
while the turnover of the operations carried out by
means of plastic cards, it carries out the production
and release of bank cards, use of bank cards in the
domestic and international non-cash payments and
settlements network, and provides services connected
with settlements by means of such bank cards. The
Center started its activity after its state registration in
September 2006.
As of the end of the reporting year the authorized
capital of “Milli Kart” LLC Processing Center was 4
million AZN (4,7 million US Dollars). The shareholders
of the Center are 18 domestic banks – AtaBank,
AzerdemiryolBank, StandardBank, Bank Respublika,
Azer-TurkBank, Bank of Baku, Azerbaijan Industrial
Bank, DebutBank, EmrahBank, KhalgBank,
CredoBank, Azerbaijan Micro Finance Bank, ParaBank,
RabitaBank, ZaminBank, and TuranBank (owner of 3
percent of stocks).
“turANLIZINq” LLC:
Along with the rapid growth in banking operations,
a rapid growth is experienced in leasing operations,
as well. Taking into account the business potential
of this field, TuranBank signed a memorandum of
understanding on establishment of a subsidiary leasing
entity within the programme, under Azerbaijan Leasing
Development project implemented by the International
Finance Corporation (IFC) and funded by Swiss State
Secretariat for Economic Affairs (SECO).
In the result of the technical assistance by IFC, in 21
August 2006, “TuranLizing” LLC, 100 percent of stocks
owned by TuranBank, was established and officially
registered.
In the end of the reporting year, for the purpose
of joining a number of import projects, “TuranLizing”
LLC conducted productive negotiations with BCP,
Switzerland, the implementation of which is intended
in 2008 financial year.

www.turanbank.az
Improvement of the internal control system, as
well as the guidance by the risk management criteria
were priorities for TuranBank in 2007. The adopted
new strategy set the reconstruction of the organization
structure as a main target of the bank, which in its turn
initiated the establishment and development of the
Risk Management Department and Risk Management
Commission in the bank.
The newly established Risk Management
Department was composed of 4 structural units.
rISK ManaGeMent
1 Risk Methodology Unit;
2 Risk Control Unit;
3 Problem Credits Unit;
4 Credits Monitoring Unit;
The activity of the Risk Management Department,
functioning within the new organizational structure,
include assessment of the risk level of the current
transactions, control of currency position, assessment
of market risks and other risks, monitoring of risks,
provision of proposals to other departments on efficient
27

28
Fezail MUsayev
Deputy Chairman of
Management Board
management of risks, development of new methods
and regulations in this field, including intra-bank
instructions and procedures, control of the established
comprehensive intra-bank limits, as well as reporting
to Risk Management Commission.
One of the most significant and important elements
of risk management is the provision efficient control
over liquidity risk. For this purpose, the minimum and
maximum ratios of liquidity were approved and the
liquidity management system was established. Based
on the data obtained by means of this system every
day, relevant decisions are made and the daily credit
limits and the currency of the credits are determined.
The credit risks are attached a special importance
within the measures taken for risk management in the
bank. The fact that the overdue credits constitutes
3.7 percent of the total credit portfolio and the credit
losses were kept almost at the minimum level during
the recent year is an evidence of correct and efficient
risk management in the bank.
During 2007, the bank actively improved its
capacity in management of currency risks, in study of
the current status of the open currency position and its
orientation according to the future expectations. Thus,
during the reporting yea various scenarios of exchange
rate fluctuations were optimally studied and the most
realistic scenarios were considered.
The adopted new strategy contains the action
plan for application of the tactical steps of the Risk
Management module under operations plans. For
the purpose of ensuring efficient control over the
implementation of the measures to be carried out in
2007, a Strategic Plan Group is established in the bank
and the schedule of a number of measures to be taken
for Risk Management has been provided in operations
www.turanbank.az
Improvement of the internal control systems,
especially, organization of the efficient
functioning of the Risk Management module
are the key strategic targets of the bank.
Development phase of both systems has already
made its contribution to the period of activity
of TuranBank.
plans. The Operations Plans contain the below
mentioned measures connected with the application of
Risk Management module in the bank.
1 Training of the risk managers on risks;
2 Thorough analysis of all risks of the bank;
3 Development of a draft risk management policy;
4 Establishment of a working group to
establish the procedures required by the risk
management policy;
5 Development of draft procedures required by
the risk management policy in accordance with
the schedule;
One of the most remarkable measures for risk
management taken in 2007 was the participation
of the bank personnel in trainings on efficient risk
management in financial institutions, held by such
famous organizations as USAID and ACDI&VOCA.
Thanks to such training the bank personnel gained
practical knowledge and skills that they benefited from
in their productive activities aimed at the application
of a risk management system based on international
good practice and local approach. Within the applied
new Risk Management module, practical works aimed
at determination of risks at macro and micro levels, at
determination and assessment of risk zones and their
limits and the tasks and objectives in this field, as well
as at preparation of risk map were performed.
The first trainings and seminars in the bank based
on the International Efficient Risk Management
Practice were held by the professionals specialists of
the International Financial Corporation (IFC) under the
mutual memorandum signed with the IFC in 2006.

www.turanbank.az
In 2007, as in the recent years, TuranBank carried
on its avtivities in prevention of money laundry and
terrorism financing. Earlier in 2004 the bank developed
its internal procedures and instructions against money
laundry and terrorism financing in accordance with the
laws of the Republic of Azerbaijan “On the National
Bank of Azerbaijan” and “On Banks”, international
conventiones joined by the Republic of Azerbaijan,
instructions of the Financial Action Task Force (FATF),
“Volfsberg” principles of the Basel Committee on
MeaSureS aGaInSt
MOnel launDry anD
FInanCInG terrOrISM
Banking Supervision. In 2007 such internal regulations
and normative legal basis was improved and the
Compliance Officers of the Customer Care Department
regularly participated in the trainings, cources and
seminars on money laundry and terrorism financing
held by such famous organizations as USAID, ATTF
and ABTM.
The important documents adopted by the bank
against money laundry and terrorism financing include
the Declaration on Prevention of Money Laundry and
Terrorism Financing, “”Know your Customer” Policy.
The overall internal normative legal basis adopted by
the bank with respect to money laundry and terrorism
financing is based on the identification of customers and
operations and on the relevant normative documents
on keeping of records of operations.
As a part of the measures taken by the bank againist
money laundry and terrorism financing, a working
group, consisting of the heads of three structural
units, was established for the purpose of controlling
the implementation of the intrabank procedures and
rules against money laundry and terrorism financing,
monitoring of customer transactions and improving
the process of regular following of the list of terorist
organizations and countries updated by the National
Bank.
The inquiries on money laundry and terrorism
financing received from the correspondent banks
with which the bank cooperates are reviewed and
responded. For this purpose, the bank started to
cooperate with CSC, a famous company of the USA,
and signed the jointly developed Patriot Act. The
signed Patriot Act also stimulated the establishment of
correspondent relations between Deutche Bank New
York, one of the financial oligarches of the USA, and
TuranBank.
29

30
InFOrMatIOn
teCHnOlOGIeS
The more progress experiences the modern society,
the more is the needs for the development of information
technologies. The increase in the information flow
creates a need in rapid processing of such information.
As all other organizations, TuranBank is interested in
development of this field.
In 2007, TuranBank applied a number of innovations
in the field of information technologies that enabled the
provision of more rapid and high quality services to
the customers. The functioning of all branches of the
bank with automated banking system on online mode
was ensured. Owing to the installation of new systems,
the bank ensured the working conditions in various
force majeure circumstances and a reserve center of
automated banking system in a branch of bank located
in a geographically different location. The systems for
joining with various express money transfer systems
were centralized and optimized and new systems were
launched in the branches of the bank.
Taking into account the growth rates of the bank,
modern and powerful server equipment were purchased
www.turanbank.az
and put into operation. It is planned to move the bank
to new head office and for this purpose a design
meeting the requirements of international standards on
information technologies was developed. The design
provides for laying of optic line to the office up to ten
miles, installation of Call Center for reception and
management of the calls, installation security system,
installation of intrabank local network, purchase of new
computed equipment, use of “Thin Client” computers
and other modern systems in the bank.
At the end of the reporting period a SWOT
analysis on Information technologies was held and
it was planned to develop some projects aimed
at development of information technologies. The
application of international standards on information
technologies was brought to the fore.
The strategy of TuranBank for the next years
provide for development of Information Technologies
that will enable the customers of the bank to enjoy the
services of the bank through high quality and reliable
systems in the next years.

www.turanbank.az
One of the major projects implied by the Strategic
Plan of “TuranBank” OJSC for 2008-2011 is “Reconstruction
of Human Resources Management Activity”
project. The first and most important plan implied by
this project is the new, multilateral and comprehensive
structure of the bank the work for establishment of
which have already commenced.
The Human Resources Management Policy, corresponding
to the strategic development plan of the bank,
has been developed and according to this policy the HR
Management Committee that will ensure the development
of HR management procedures and systems and
the monitoring of the implementation and application of
such procedures and systems was established.
As for other operation plans, new processes for future
development of the bank was launched. First of
all, a testing, consisting of two phases, was held in
Azerbaijan Bank Trainign Center in order to improve
the knowledge and skill of the bank personnel, qualification
of the officers according to the offices they
hold, and according to the result of the testing relevant
intrabank rotations and promotions were made (The
employees who took the leading places were awarded
money prizes and certificates)
For the purpose of recruitment of new employees
in connection with the establishment of new structural
units in the bank, as well as the expansion of a number
of existing units the recruitment system was improved
and new Procedures on Recruitment System were
developed. The Procedures on Recruitment System
defines the main priciples, forms and phases of the recruitment
of new employees for the vacancies in the
bank in accordinance with the determined rules and
phases. The procedures also contain the procedures
for helding both testings and oral inquiries in recruitment
of new employees.
щР
Active measures are taken for training and education
of the bank personnel and the HR Management
Department ensures the regular participation of
the bank personnel in various trainings and cources
both within the country and abroad (for example, two
or three employees of bank passes training in Ziraat
Bank, Republic of Turkey every year).
Furthermore, with the establishment and application
of the “Categorization of Positions and Basic Salary”
System, which is based on the principles of equity,
transparency, impartiality and accuracy, the categorization
of the position and fair renumation according to
the level of significance of position for the bank was
initiated.
According to the Personnel Policy, a fair system –
“System of Assessement of the Performance of Personnel
and Structural Units” was established and is
applied. The system is designed to determination of
the eligibility of the personnel to the positions held and
assessement of the performance of personnel from the
point of view of qualitative and quantitative criteria.
For the purpose of fair remunaration against of the
performance of each employee and structural unit,
employee motivation through economic and non-economic
methods and improvement of the performance
of the employees and their loyalty towards the bank
the Procedures on Motivation System was applied in
the bank during this year. With the application of this
optimal and fair system the meeting of the material and
mental needs of the bank personnel, improvement of
the efficiency of their activity was ensured.
The Personnel Policy supports all endeavors of the
personnel of the bank that will promote the development
of the bank and aims at improvement of their performance,
meeting all of their needs.
31

32
SerVICe netWOrK
The new strategy adopted in 2007 sets new
targets for the bank – meeting of the demands
of the popultion for banking products
and services, increasing the support
to small and medium sized enterprises
and, for the purpose of activity in all regional
centers, expanding the branch network
up to 23 branches by 2011.
One of the key provisions of the new strategy of
TuranBank is the expansion of its service network. As
of the end of the year, the service network of the bank
include 11 regional branches, 8 representative offices
and 21 exchange offices.
Setting the expansion of service network in the
regional centers as of its priorities, in the first quarter
of 2007, TuranBank opened a new branch in Zagatala,
one of the cities with most potential in the Northwestern
territories of the Republic.
Comprehensive development and expansion of the
service network is not limited only to representation in
regions and increase in the number of regional units,
but also include the improvement of the efficiency of the
existing structural units. For this purpose, TuranBank
always does its best to increase the capacity of its
service network and to improve the quantitative and
qualitative parameters of its activity.
The geographical coverage of the branches,
representative offices and exchange offices constituting
the service network of the bank is quite large with 6
www.turanbank.az
KaMala MUstaFayeva
Board Member
Head of Operations
Department
branches in various locations in Baku, 5 branches in
Ganja, Sumgayit, Tovuz, Aghstafa and Zagatala.
Joining with a number of express money transfer
systems enabled the bank to meet the needs of the
population of the regions for such banking services
as money transfers and receipts and to enhance its
profitable activities in this field.
Today, the bank is the member of such express
money transfer systems as Western Union, Express
Money, Bistraya Pochta, Migom və PravatMoney.
As one of the priority fields of its activities,
TuranBank carries out the crediting of project not only
in the capital of the country – in Baku, but also provides
the crediting of various types of projects at the regional
level. Generlly, the role of regional economic growth
is vital for overall economic growth of the country. The
State Programm for Development of Regions dopted
in 2000, encourages nd promotes the restoration of
alrady existing production fields in various regions of
the country and stablishment nd devlopment of new
and non-traditional sectors of business.

www.turanbank.az
hEAd OffICE
85 I.Gutgashinli Street, AZ1073
Baku, Azerbaijan
Tel: +994 (12) 497 25 11/92
510 79 11/22
Fax: +994 (12) 497 25 77
e-mail: office@turanbank.az
web: http://www.turanbank.az
yASAMAL brANCh:
53 Nizami Street, AZ1005
Baku, Azerbaijan
Tel.: +994 (12) 596 06 38, 596 06 24
Fax: +994 (12) 596 26 41
e-mail: yasamalbranch@turanbank.az
bINAgAdI brANCh:
11C, A.Nakhchivani,
block 3066,
AZ1130 Baku, Azerbaijan
Tel.: +994 (12) 436 46 08
Fax: +994 (12) 436 46 09
e-mail: binagadibranch@turanbank.az
Nur brANCh:
41 Khagani Street, AZ1000
Baku, Azerbaijan
Tel.: +994 (12) 418 73 98
Fax: +994 (12) 498 19 35
e-mail: nurbranch@turanbank.az
NASIMI brANCh:
245F Mirzaagha Aliyev Street, AZ1014
Baku, Azerbaijan
Tel/Fax: +994 (12) 494 83 85
e-mail: nasimibranch@turanbank.az
bAku brANCh:
11 F.Amirov Street, AZ1000
Baku, Azerbaijan
Tel.: + 994 (12) 498 23 28
Fax: +994 (12) 498 22 88
e-mail: bakubranch@turanbank.az
SAhIL brANCh:
31 Matbuat avenue, AZ1100
Baku, Azerbaijan
Tel.: +994 (12) 439 85 02
Fax: +994 (12) 439 64 70
e-mail: sahilbranch@turanbank.az
gANJA brANCh:
24 Cavadkhan Street, AZ2000
Ganja, Azerbaijan
Tel.: +994 (22) 56 43 86, 56 49 75
Fax: +994 (22) 56 43 86
e-mail: ganja@turanbank.az
SuMgAyIt brANCh:
11 N.Narimanov Street, 1st microdistrict,
AZ5004, Sumgayit, Azerbaijan
Tel.: +994 (1864) 2 22 29
Fax: +994 (12) 448 35 36
e-mail: sumgaitbranch@turanbank.az
tOvuZ brANCh:
11 Sabir Street, AZ6000
Tovuz, Azerbaijan
Tel/Fax: + 994 (231) 5 62 11
e-mail: tovuzbranch@turanbank.az
AghStAfA brANCh:
11A H.Aliyev Street, AZ0500
Aghstafa, Azerbaijan
Tel.: +994 (244) 5 30 02, 5 35 95
Fax: +994 (244) 5 30 02
e-mail: akhstafabranch@turanbank.az
ZAgAtALA brANCh:
100 H.Aliyev avenue,
AZ6200 Zagatala, Azerbaijan
Tel/Fax: + 994 (174) 5 57 65
e-mail: zagatalabranch@turanbank.az
33

34
Enhancement of the relations with international
financial institutions is one of the priorities of
“TuranBank” and active measures were taken on in
this field in 2007.
The year 2007 is considered to be a successful
years from the point of view of enhancement and
establishment of the international cooperation. The
successful activity carried out during the reporting year
may be divided into 2 groups. The first group of activities
includes the enhancement of the existing relations and
the second group includes the establishment of new
relations.
In the reporting year the bank participated in
“North-East” Project provided by International Fund
For Agricultural Development (IFAD) and covering 4
regions (Absheron, Khizi, Davachi and Siyazan). The
project, having a total budget of the is 13 million US
Dollars and covering a five-year period, is aimed at the
development of small-scale and medium enterprises
acting in the field of production and processing of
agricultural products.
The first credit agreement between IFAD and
TuranBank was concluded in 2004 within the framework
of “Development of Mountainous and Highlands Areas”
project. The mentioned project, intended for 5 years
and covering 7 mountainous and highland regions, is
www.turanbank.az
InternatIOnal COOperatIOn
aimed at the development of SMEs. Within this project
TuranBank acted as an agent bank, being the sole
partner of IFAD.
The long-term cooperation and partnership
relations with IFAD, provides great opportunities for
“TuranBank” to participate in new “Development of
Western Regions” project in 2008.
TuranBank’s next achievement was the agreement
with International Development Association (IDA) which
was amounted to 15 mln US Dollars for 7 years aimed
to finance SMEs operating in agricultural sector.
TuranBank concluded the third long-term credit
agreement with the Islamic Corporation for the
Development of the Private Sector (ICD – a subsidiary
of Islamic Development Bank). Conclusion of this
credit agreement between ICD and TuranBank was a
significant step in improving the competetiveness of
the bankin the financial sector of Azerbaijan in the field
of crediting of SMEs under Islamic banking principles.
The credit agreement with ICD, amounting to 1 million
US Dollars, is intended for 6 years, the first year of
which is preferencial, and is aimed at crediting of
SMEs.
Since it is based on favourable and productive
principles, the first credit agreement with ICD will
provide a ground for participation of TuranBank in

www.turanbank.az
Назiм Садыgов
Chairman of
Management Board
other large-scale profitable projects of ICD after
the complete implementation phase of credit line.
Generally, TuranBank plans to to enhance the
productive partnership relations with ICD in the field of
Islamic banking in the future.
In enhancement of the international partnership
relations, TuranBank attaches importance to the
programmes for financing of trade, along with business
crediting. The existing cooperation of “TuranBank” with
BCP Bank, Switzerland and Ziraat Bank, are of great
importance from this point of view.
For the purpose of enhancing the copperation
under the programs for financing of trade, TuranBank
is holding intensive negotiations with international
financial institutions such as Black Sea Trade and
Development Bank, Raiffeisen Bank, Societe Generale,
BankTuranAlem, etc.
Micro financing sector of banking business is of
great importance for Turan bank in his international
partnership relations. The fact that the bank became
a member of Azerbaijan Micro Finance Association in
2006 proves the above-mentioned.
One of the principles of the strategy for 2008-2011,
adoptd by TuranBank in 2007, provides for carrying
on the future activities of the bank as a universal
bank module. For this purpose, TuranBank plans to
establish close prtnership realtions with a number of
international micro finance donor organiztions, such as
KIVA, Bluorchard, MicroVest, Planis, ResponsibAlity,
DWM, Oikocredit, Credit Agricole, Triple Jump,
Kolibri, Minlam Assets Management, Cyrano, Tridos
Invetsment.
Another sector of banking business in out country
is the activity in securities market, issue of bonds,
particiption in syndicative project credits. In this regard,
TuranBank plans to achieve certain serious progress
in 2008-2011, establi shing partnership relations with
the famous international financial institutions in the
financial markets of Europe, Asia and America.
Another important and significant item of the
TuranBank, being a reliable
financial institution with a sound
dynamic development history,
attaches a special importance to
international cooperation in the
future. The bank plans to share its
economic growth with its future
potential foreign investors as well.
international relations is the international rating of the
bank. In accordnce with the principles of universal bank
module, as well as with the new strategy set for 2008-
2011, du ring the mentioned period the bank intends to
establish partnership relations with Moody’s Investors
or Fitch Rating in the field of global bank rating and with
Microfinanza Rating agency in the field of coopertion
with interntional micro finance institutions.
As on of the strategically significant provisions of
the new strategy adopted by the stockholders of the
bank in 2007, bank targets to become a foreign capital
financil institution during the strategic development
period (2008-2011).
35

36
One of the main parts of the banking business is international
transactions and express money transfers/
receipts.
As in the previous years, in the 2007 reporting year,
in its correspondent relations TuranBank, taking into
account the needs of the bank and its customers, adhered
to the principles of ensuring the efficiency and
reliability of domestic and international settlements,
providing the most favorable conditions, from the point
of view of time and commission fees, for customer
payments and for bank’s own transactions, considering
the peculiarities of the banks and characteristic
features of the regional markets, establishing individual
schemes of cooperation with banks, involving new
counter agents and correspondent through long-term
cooperation and mutual benefit, as well as by a number
of other principles.
www.turanbank.az
COrreSpOnDent relatIOnS
anD InternatIOnal
SettleMentS
name of corresponding bank
deutsche bank trust company americas
New Йорк / USA
deutsche bank frankfurt
Франкфурт / Germany
bcp - banque de commerce
et de placements
Geneve / Switzerland
raiffeisen Zentralbank
Vienna / Austria
T.C.Ziraat Bank İnternatıonal AG
Франкфурт / Germany
Yapı ve Kredı Bankası A.Ш., Istanbul
Head Office – International Relations
Istanbul / Turkey
T.Halk Bankasi A.Ш.
Àíêàðà corporative section / Turkey
ing bank
Head Office, Istanbul / Turkey
Evrotrust CB ZAO
Moscow / Russia
Russian Agricultural Bank (Росселхозбанк)
Moscow / Russia
raiffeisen Zentralbank moscow branch
Moscow / Russia (former ЫМПЕХБАНК)
corresponding banks
account
currency
TuranBank has already established a complete correspondent
banks network, enabling o carry out domestic
and international settlements with minimal risks
and minimal financial and time costs and it is intended
to expand the network taking into account the expansion
in the geographical coverage of the international
settlements.
Generally, joining with SWIFT international interbank
settlements system enabled “TuranBank” to ensure
the immediacy of the settlement transactions and
improve the reliability and quality of the rendered services.
Along with expansion of the correspondent banks
network, bank also ensured the establishment of the
network of express money transfer systems. During
the reporting year, the bank also included PrivatMoney
into its existing money transfers system.
account no sWift
USD 04-438-990 BKTRUS33
EUR 100-9477639-00 EUR DEUTDEFF
USD
EUR
EUR
USD
EUR
USD
10.602489.0.100 USD
10.602489-0.100 EUR
000-55.074.603/100
70-55.074.603/001
1000787000
1000787018
BPCPCHGG
RZBAATWW
TCZBDEFF
USD 51715635 YAPITRISFEX
USD
EUR
USD
USD
EUR
USD
EUR
TR7700012009888
0004Y000554
TRHBTR2A06L
247-C-76410-MY-2
247-C-76410-MY-1
INGBTRIS
30111840800000000 386
30111978400000000 386 CEURRUMM
30111840400000000 003
30111978700000000 002
RUAGRUMM
USD 30111840800000000 056 RZBMRUMM

www.turanbank.az
name of corresponding bank
Russlavbank
Moscow / Russia
Privatbank
Днепропетровск / Ukraine
uralsib
Moscow / Russia
bta bank
Àëìàòà / Kazakistan
IБA – Moscow
Moscow / Russia
national bank of azerbaijan
Baku / Azerbaijan
iba
Baku / Azerbaijan
azer-turk bank
Baku / Azerbaijan
rabitabank
Baku / Azerbaijan
Банк Standard
Baku / Azerbaijan
tekhnikabank
Baku / Azerbaijan
atabank
Baku / Azerbaijan
azerbaijan industrial bank
Baku / Azerbaijan
parabank
Baku / Azerbaijan
unibank
Baku / Azerbaijan
bank respublika
Baku / Azerbaijan
bank of baku
Baku / Azerbaijan
Yapы Kredi – Azerbaijan
Baku / Azerbaijan
Caucasus Development Банк
Baku / Azerbaijan
Аъъесс Банк
Baku / Azerbaijan
corresponding banks
account
currency
RUB
USD
EUR
USD
EUR
RUB
USD
EUR
GBP
USD
EUR
RUB
USD
EUR
USD
EUR
USD
EUR
RUB
USD
EUR
30111810700000000 108
30111840000000000 108
30111978600000000 108
16004000533003
16000000533063
30111810800000000 005
30111840700000000 010
30111978600000000 008
30111826600000000 008
001073125
002073125
30111810100000000 359
30111840400000000 359
30111978000000000 359
0137 11 00 27 840
0137 11 00 27 954
205302 USD 3712-01
205302 EUR 3712-01
205302 RUR 3722-01
RSLBRUMM
PBANUA2X
AVTBRUMM
ABKZKZKX
IBAZRUMM
NABZAZ2X
IBAZAZ2X
37110000150001 AZRTAZ22
USD 0037110100840-05829 RBTAAZ22
USD 3711021 MOSZAZ22
USD
EUR
37110005230001
37110005230001 EUR
TECIAZ22
USD 802-40658-7 ATAZAZ22
USD 1100305 USD 3711 CAPNAZ22
USD 00 0045 3711 USD 00 PARAAZ22
USD 0013711030 UBAZAZ22
USD 3711 840 000 6865 BRESAZ22
USD 37110010100047 JBBKAZ22
USD
EUR
account no sWift
00239283
00239291
KABAAZ22
USD 371100100070000 TDJOAZ22
USD 001 00 1242 000 15 1173 MIFAAZ22
37

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