1. The consolidated and non-consolidated balance sheets of Bank Saderat Iran (BSI) as of March 20, 2006 and the consolidated and non-consolidated profit and loss accounts and cash flow statements of BSI for the year ended at the same date, together with descriptive notes, have been audited by this organization. The board of directors of the Bank is responsible for the content of the financial statements and it is the responsibility of this organization to comment on the financial statements based on the performed audit and to report cases of non-compliance with monetary and banking rules as well as regulations on usury-free banking, as stipulated in the Commercial Code as amended and the Bank's articles of association.

2. The audit by this organization has been accomplished based on auditing standards. According to these standards, this organization has programmed and performed an optimized audit to reasonably ensure the non-existence of significant mistakes and distortions. The audit included random checks of evidence and documents supporting the figures in the financial statements. The audit also included inspection of accounting policies implemented, assessments made by the board of directors and inspection of the overall accounts presented. This organization believes the performed audit produced a reasonable base of opinion on the financial statements.

3. In the opinion of this organization the above mentioned financial statements show that the consolidated and nonconsolidated financial status of Bank Saderat Iran as of March 20, 2006 and the consolidated and non-consolidated results of its operations and cash flows for the fiscal year ended on the same date, are in all important aspects consistent with the accounting standards.

4. 'Due from Government' in the amount of Rials 1,471 billion relates to penalty interest on obligatory financial facilities. This amount does not include all items that have to be accounted for, such as overdue facilities guaranteed by the government.

5. In accordance with letter No. 1345, dated 18/03/2002 and according to Note 2 of the regulations on open forex positions, the allowed open position is limited for each foreign currency to +/- 10% of the share capital of the Bank, whereas the total open forex position shall not exceed 30% of the share capital of the Bank. In the fiscal year, the total open forex position amounted between -39 and -104%. Also the maximum ratio for each single foreign currency was not adhered to.

6. In the fiscal year, the depositors were not informed about the management fee charged by the Bank. Moreover, depositors have not received their dividend deficit in the amount of Rials 738 billion for the previous fiscal year (ended March 2005) from Bank Saderat.

7. In the fiscal year, immovable assets of provincial subsidiaries of Bank Saderat have been transferred to Bank Saderat Iran. The book value of mentioned assets is Rials 1,723 billion. The tax related to this transfer has not been settled yet.

8. The Central Bank of Iran has obliged the Bank to allocate min. 17% of their loan portfolio to the agriculture sector, while the actual loans granted amount only to 13.7%.

9. Iranian monetary policies and decisions of the Monetary and Credit Council have not been considered in the below mentioned cases;

9.1. According to Note 4-3-34 of the Iranian monetary policies, investments in stocks and participation bonds should not exceed 30% of a bank's capital and reserves. However, 58% of the Bank's capital and reserves is invested in stocks and participation bonds.

9.2. According to Note 6-34 of the Iranian monetary policies, the ratio of depreciated immovable assets to capital and reserves should not exceed 30%. This ratio is 71% for the Bank.

9.3. According to the Monetary and Credit Council's decision dated 14/02/2003, the minimum ratio of capital adequacy should be 8%. This ratio is 5.7% for the Bank.

10. The Board of Directors' report to the annual general assembly of shareholders was examined by this organization. In the course of the performed audit, this organization has not noticed any important discrepancy between the content of the report and the documents and evidences presented by the Board of Directors.

August 17, 2006
State Audit Organization
Alireza Asadi - Mir Majid Vakil Zadian