Penyusunan Laporan Keuangan Laporan Tahunan 2006

These financial statements are originally issued in Indonesian language R12330307 See the Accompanying Notes which are an integral part of these Financial Statements 4 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : PT BANK DKI STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY For the Years Ended December 31, 2006 and 2005 In Full Rupiah Notes Issued and Additional Unrealized Gains Current Year Total Fully Paid Paid-in Capital on Valuation to Market of Income Stockholders Capital Available-for-sale Securities Unappropriated Appropriated Equity Rp Rp Rp Rp Rp Rp Rp BALANCE AS OF DECEMBER 31, 2004 513,644,000,000 -- -- -- 17,678,256,154 51,076,251,989 582,398,508,143 Net Income Sharing Dividend 23 -- -- -- -- -- 32,580,000,000 32,580,000,000 Tantiem and Production Incentives 23 -- -- -- -- -- 18,214,000,000 18,214,000,000 Appropriated Reserves 23 -- -- -- -- 100,000,000 100,000,000 -- Welfare Funds 23 -- -- -- -- -- 182,251,989 182,251,989 Additional Paid-in Capital 22 -- 40,273,866,833 -- -- -- -- 40,273,866,833 Use of Appropriated Reserves 23 -- -- -- -- 1,000,000,000 -- 1,000,000,000 Unrealized Gains on Valuation to Market of Available-for-Sale Securities 2.f, 23 -- -- 278,125,105 -- -- -- 278,125,105 Net Income -- -- -- -- -- 99,438,108,709 99,438,108,709 BALANCE AS OF DECEMBER 31, 2005 513,644,000,000 40,273,866,833 278,125,105 -- 16,778,256,154 99,438,108,709 670,412,356,801 Net Income Sharing Dividend 23 -- -- -- -- -- 39,070,000,000 39,070,000,000 Tantiem and Production Incentives 23 -- -- -- -- -- 18,702,000,000 18,702,000,000 Unappropriatedl Reserves 23 -- -- -- 38,000,000,000 -- 38,000,000,000 -- Appropriated Reserves 23 -- -- -- -- 8,750,000,000 1,250,000,000 10,000,000,000 Welfare Funds 23 -- -- -- -- -- 2,416,108,709 2,416,108,709 Additional Paid-in Capital 21, 22 40,273,000,000 6,135,851,656 -- -- -- -- 46,408,851,656 Unrealized Gains on Valuation to Market of Available-for-Sale Securities 2.f, 23 -- -- 573,500,176 -- -- -- 573,500,176 Net Income -- -- -- -- -- 102,918,602,310 102,918,602,310 BALANCE AS OF DECEMBER 31, 2006 553,917,000,000 46,409,718,489 851,625,281 38,000,000,000 8,028,256,154 102,918,602,310 750,125,202,234 Retained Earnings R12330307 See the Accompanying Notes which are an integral part of these Financial Statements 5 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : PT BANK DKI STATEMENTS OF CASH FLOWS For the Years Ended as of December 31, 2006 and 2005 In Full Rupiah 2006 2005 Rp Rp CASH FLOWS FROM USED IN OPERATING ACTIVITIES Interest Income, Fees and Commissions Received 1,303,781,480,158 907,152,751,343 Recovery of Loans Written-Off 2,509,874,246 6,505,337,514 Gain on Foreign Exchange - Net 453,558,370,806 189,765,455 Interest Expenses, Fees and Commissions 677,212,133,325 453,026,450,413 Other Operating Expenses - Net 607,525,477,734 337,554,310,443 Other Non Operating Income Expenses - Net 326,551,719,199 33,329,468,614 Income before Changes in Operating Assets and Liabilities 148,560,394,952 156,217,031,160 Changes in Operating Assets and Liabilities Increase Decrease in: Placements with Other Banks and Bank Indonesia 14,493,490,308 142,593,261,814 Securities 1,054,739,202,060 1,193,855,686,838 Loans 948,673,671,830 492,325,553,145 Accrued Income 12,630,391,926 52,812,253,083 Other Assets 7,496,224,471 53,137,594,174 Decrease Increase in: Current Liabilities 330,709,957,232 114,706,333,027 Demand Deposits 250,693,452,930 2,425,859,464,724 Savings 251,438,361,110 64,934,908,313 Time Deposits 451,943,927,299 176,077,184,141 Securities Issued 3,351,574,216 179,240,824,216 Other Liabilities 1,655,508,696,078 597,504,544,184 Net Cash from Operating Activities 546,083,328,930 159,357,359,257 CASH FLOWS FROM USED IN INVESTING ACTIVITIES Acquistion of Fixed Assets 34,423,019,502 26,120,592,464 Net Cash Used in Investing Activities 34,423,019,502 26,120,592,464 CASH FLOWS FROM USED IN FINANCING ACTIVITIES Borrowings 8,923,005,135 24,195,474,967 Additional Paid-in Capital 46,408,851,656 40,273,866,833 Use of Specific Reserves 8,750,000,000 900,000,000 Net Income Sharing: Dividend Paid 39,070,000,000 32,580,000,000 Tantiem Payment 18,702,000,000 18,214,000,000 Specific Payment 1,250,000,000 100,000,000 Funds Benefits 2,416,108,709 182,251,989 Others -- 5,724,494,344 Net Cash from Used in Financing Activities 14,856,251,918 18,217,584,155 INCREASE IN CASH AND CASH EQUIVALENTS - NET 496,804,057,510 151,454,350,948 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 752,354,784,951 600,900,434,003 CASH AND CASH EQUIVALENTS - END OF YEAR 1,249,158,842,461 752,354,784,951 Cash and Cash Equivalents consist of: Cash 286,591,039,661 223,850,673,561 Current Accounts with Bank Indonesia 949,015,317,356 517,412,896,658 Current Accounts with Other Banks 13,552,485,444 11,091,214,732 Total 1,249,158,842,461 752,354,784,951 These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS For the Years Ended December 31, 2006 and 2005 In Full Rupiah 6 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date :

1. General

1.a. Establishment of Bank PT Bank DKI was previously a regional government company, owned by Regional Government DKI Jakarta, established based on the Law No. 13 year 1962 regarding Basic Stiplulation of Regional Development Banks and amended lastly with Jakarta Regional Government Regulation No.1 year 1993 dated January 15, 1993 that changed the authorized capital from Rp 50,000,000,000 to Rp 300,000,000,000 until May 5, 1999 and since May 6, 1999, the Bank as an entity has changed to a limited liability company with authorized capital of Rp 700,000,000,000. The changes from a regional government company to a limited liability company has been approved by Regional Government DKI Jakarta with Regional Regulation No.1 year 1999 dated February 1, 1999 and was notarized under notarial deed No. 4 dated May 6, 1999 of Harun Kamil, SH, and has been approved by the Minister of Justice in its Letter of Decree No. C-8270 HT.01.01 1999 dated May 7, 1999 and has been published in State Gazzette No. 45, Additional No.3283 dated June 4, 1999. The Bank’s Article of Associations have been amended several times, the latest with notarial deed No. 152 of Sutjipto, SH, dated January 30, 2006 regarding the increase of authorized capital to be Rp 1,000,000,000,000 andthe increase in paid-incapital. These changes have been approved by Minister of Justice and Human Rights in its Letter No. C-16615 HT.01.04.TH.2006 dated June 7, 2006. The Bank’s scope of activities is to engage in general banking activities. Pursuant to Bank Indonesia Director’s Decree No. 2567KEPDIR dated November 30, 1992, the Bank obtained the permision to run as a foreign exchange bank. The Bank started its sharia banking activities after receiving letter from Bank Indonesia No.639DpbS dated January 13, 2004 regarding the opening of sharia branch office in Bank’s commercial activities. The Bank commenced the operational activities based on sharia banking principle in March 2004. The Bank’s Head Office is located on Jl.Ir.H.Djuanda III7-9, Jakarta. The Bank has branches, sub branches, Cash Office and ATM Automatic Teller Machine as follows: 2006 2005 Branches Offices 11 11 Sharia Branch Offices 1 1 Sub Branches 27 27 Sharia Cash Offices 4 1 Conventional Cash Offices 61 60 Payment Points 1 2 ATMs 48 48 These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS Continued For the Years Ended December 31, 2006 and 2005 In Full Rupiah 7 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : 1.b. Public Offering of Bank’s Bonds For financing purpose, the Bank issued Bond III with first year annual interest rate for 15 and floating interest rates for the following years starting from year 1997 until year 2004. The obligations had been registered on Surabaya Stock Exchange and were mature on June 18, 2004. Then, starting year 2004, the Bank issued Bond IV with fixed rate in the amount of 12.50 per annum for 5 five years period and registered on Surabaya Stock Exchange 1.c. Board of Commissioners and Directors The members of the Bank’s Board of Commissioners as of December 31, 2006, based on the Bank’s Extraordinary Stockholders’ Meeting on August 23, 2006, as stated on notarial deed No. 25 dated August 23, 2006 of Ny. Poerbaningsih Adi Warsito, SH, are as follows: Commissioner: President Commissioner : Suryo Danisworo Commissioner : Hasan Soeftendy Commissioner : Idris Kadir Commissioner : Joni Mulyanto Effective 6 six months since Approval Letter issued by Bank Indonesia on August 14, 2006 The members of the Bank’s Board of Directors as of December 31, 2006, based on the Bank’s Extraordinary Stockholders’ Meeting on January 30, 2006, as stated in notarial deed No.153 dated January 30, 2006 of Ny.Aulia Taufani, SH, are as follows: Director: President Director : Winny E. Hassan Compliance Director : Aris Anwari Marketing Director : Muhamad Irfandi Financial Director : Mamad Sachroni Operational Director : Ilhamsyah Joenoes Bank has 1,268 permanent and contract employees on December 31, 2006 2005: 1,122 permanent and contract employees unaudited. 2. Summary of Significant Accounting Policies 2.a. Basis of Preparation of the Financial Statements The financial statements have been prepared in conformity with accounting principles generally accepted in Indonesia and the Capital Market Supervisory Agency BAPEPAM rules and guidelines for financial statement presentations and disclosures for publicly listed companies and prevailing banking industry practices and accounting and reporting guidelines prescribed by Bank Indonesia. The financial statements have been prepared on the accrual basis and historical concepts, except for certain securities which are valued at market value, certain fixed assets which were revalued in accordance with goverment regulations and certain investment in share of stocks which are accounted under the cost method. The statements of cash flows present cash receipts and payments and are classified into operating, investing and financing activities. For presentation in the statements of cash flows, cash and cash equivalents consist of cash, current accounts with Bank Indonesia and with other banks. These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS Continued For the Years Ended December 31, 2006 and 2005 In Full Rupiah 8 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : 2.b. Transactions with Related Parties The Bank has conducted transactions with certain parties which are regarded as related parties with the Bank under Statements of Financial Accounting Standards PSAK No.7, ”Related Party Disclosures”. All significant transactions with related parties are disclosed in the financial statements. Based on PSAK No.7, transactions between the Bank and other stateowned companies BUMN are not required to be disclosed as transactions with related parties. 2.c. Current Accounts with Other Banks Current accounts with other banks are stated at their outstanding balances and net of allowance for possible losses. 2.d. Placements with Other Banks and Bank Indonesia Placements with other banks represent placements in form of call money and deposit. Placement with other banks are stated at outstanding balances of each placement and net of allowance for possible losses. Placement with Bank Indonesia represents placements in the form of BI intervention and are stated at the outstanding balance less unearned interest income. 2.e. Securities Securities consist of certificates of Bank Indonesia, Medium Term Notes MTN and bonds including Goverment Bonds that are traded in money market and bonds that are listed in stock exchange. In accordance with PSAK No.50, AAccounting for Certain Securities, securities are stated based on the following classifications: 1. Trading securities are stated at fair value. Unrealized gain or losses from the appreciation or decline in the fair value of securities are credited or charged to current statements of income. 2. Available for sale securities are stated at fair value. Unrealized gains or losses from the appreciation or decline in the fair value of securties are presented as a component of stockholders’s equity. 3. Held-to-maturity securities for which the Bank has the positive intention and ability to hold to maturity are stated at cost, adjusted for the amortization of premiums or discounts. The transfer of securities to another classification is accounted for at fair value at the date of transfer. The unrealized gains or losses from the appreciation or decline in the fair value of securities at the date of transfer are accounted for as follows: 1. For securities transferred from the trading classification, the previously recognized unrealized gains or losses that were credited or charged to current statements of income at the time of transfer are not reversed. 2. For securities transferred to trading classification, the unrealized gains or losses at the time of transfer are credited or charged to current statements of income immediately. 3. For held-to-maturity securities transferred into available-for-sale classification, the unrealized gains or losses at the date of transfer are presented as a separate component of stockholders’ equity. 4. For available-for-sale securities transferred into held-to-maturity classification, the unrealized gains or losses at the date of transfer continue to be reported as a separate component of stockholders’ equity but are amortized over the remaining lives of the securities as an adjustment of yield in a manner consistent with the amortization of any premium or discount. Fair value is determined based on quoted market prices. These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS Continued For the Years Ended December 31, 2006 and 2005 In Full Rupiah 9 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : Decline in the fair value of individual held-to-maturity securities, other than temporary, below its cost is recognized as loss in current statements of income. Realized gains or losses from selling of marketable securities are recognized or charged to the statement of income for the year based on the diference between selling price and the carrying value. Repurchased bonds are presented as deduction to securities issued. Interest incomes from repurchased bonds are presented as deduction to bond interest expense. 2.f. Reverse Repo Reverse repo are presented as receivables and recognized at their resale price commencing from the acquisition date to resale date which are selling price plus the difference between purchase price and resale price, and allowance for possible losses. The difference between purchase price and resale price is amortized as interest income over the period. 2.g. Loans Loans are carried at their outstanding balance less an allowance for possible losses. Loans under joint financing syndicated loans and channeling loans are stated at the principal amount according to the risk portion assumed by the Bank. Loans include sharia financing which consists of sharia receivables and musyarakah financing. Sharia receivables result from selling and purchasing transactions based on murabahah and istishna agreements. Murabahah and Istishna financing are sale purchase agreement between customer and Bank that is to finance investment needs and customer’s working capital that are sold with cost of goods sold plus the margin that are mutually acknowledged. Murabahah and istishna financing are stated at the amount of financing balance less with deferred margin income and balance on allowance of possible losses. Mudharabah is a commercial cooperation contract between the owner of funds shahibul maal and a funds manager mudharib based on predetermined ratio of revenue or profit and loss sharing. Musyarakah financing is an agreement between the investors mitra musyarakah to have a joint-venture in a partnership with revenue or profit and loss sharing based on an agreement and capital contribution proportion. Restructured loans are presented at the lower of carrying value of the loan at the time of restructuring or net present value of the total future cash receipts after restructuring. Losses arising from any excess of the carrying value of the loan at the time of restructuring over the net present value of the total future cash receipts after restructuring are recognized in the statement of income. Non performing loans are written-off against the related allowance for possible losses when there is no realistic prospect of collection. Subsequent recovery is credited to the allowance for possible losses in the balance sheet. These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS Continued For the Years Ended December 31, 2006 and 2005 In Full Rupiah 10 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : 2.h. Allowance for Possible Losses on Earning Assets and Non Earning Assets and Estimated Losses on Commitment and Contingencies Earning assets consist of current account with other banks, placement with other banks and Bank Indonesia, securities, reverse repo, loans, investments in shares of stock and commitments and contingencies which carry credit risk. Non earning assets are assets with a potential for loss, includes but is not limited to foreclosed collateral, abandoned property, interoffice accounts and suspense accounts. Commitment and contingencies of off-balance sheet transactions, includes but is not limited to issued guarantees, letters of credits, standby letters of credit and undisbursed loans. The allowance for possible losses on earning assets and estimated commitment and contingencies are determined based on Management’s review on each earnings asset quality and commitment and contingencies at the end of the year in conformity with Bank Indonesia’s Regulation PBI No. 72PBI2005 dated January 20, 2005 and PBI No. 82PBI2006 dated January 30, 2006, each regarding the assessment of Assets Quality of General Bank and its amendment, respectively. Earning assets are classified based on management’s evaluation for business prospect, debtor’s performance and the ability to pay. The percentage of allowance for possible losses for earning assets and commitments and contingencies less the collateral value, except for earning assets and commitments and contingencies that are categorized as Current, is applied directly to the related outstanding balance of earning assets and commitments and contingencies. PBI classifies earning assets into 5 five categories with the following minimum rates of allowance for possible losses: Classifications Minimum Percentage Allowance for Possible Losses Current 1 Special Mention 5 Substandard 15 Doubtful 50 Loss 100 The earning assets classified as Current and Special Mention are considered as performing earning assets, in accordance withPBI. Non performing earning assets consist of assets with classification of Substandard, Doubtful and Loss. The allowance for possible losses consists of specific and general allowance. Specific provisions for earning assets with classification as Special Mention and non performing are calculated based on the borrower’s debt servicing ability and the adequacy of collateral value. Specific provisions are made if the borrower’s ability to service the loan is questionable and the Management considers that the estimated recovery from the borrower is likely to fall short from the amount of principal and loan interest outstanding. These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS Continued For the Years Ended December 31, 2006 and 2005 In Full Rupiah 11 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : General provisions are maintained for losses that are not yet identified but can reasonably be expected to arise, based on historical experience, from the existing overall loan portfolio. In determining the level of general provisions, the Management follows Bank Indonesia’s regulations. Estimated losses on commitments and contingencies are presented in the liability section of the balance sheet. The allowance for possible losses on non earning assets have been determined by PBI No.72PBI2005 dated January 20, 2005 regarding the assesment of Assets Quality of General Bank, that classifies non earning assets into 4 four categories, are as follows: Classification Period Current Up to 1 year Substandard More than 1 year up to 3 years Doubtful More than 3 years up to 5 years Loss More than 5 years The PBI is effective on the issuance date and applied by Bank prospectively. The allowances for possible loss on non earning assets based on above classifications are applied starting January 20, 2006. 2.i. Investments in Shares of Stocks Investments in shares of stocks represent investment in non publicly listed companies principally engaged in the financial services industry and held for long term purposes. Investments in shares of stocks wherein the Bank has an ownership interest of less than 20 and whose market price is unavailable are carried at cost. Under this method, investments are carried at cost reduced by an allowance for diminution in value of investments. Investment in shares of stock are stated at cost less an allowance for possible losses. 2.j. Fixed Assets Fixed Assets are carried at cost less acumulated depreciation, except for land rights see Note 11. Building’s depreciation is computed using the straight line method. While, office supplies and motor vehicles are computed using double declining method based on the estimated useful lives of the assetsthat ranging between 4 four until 8 eight years. In compliance with PSAK No.47, “Accounting for Land”, land acquisition after January 1, 1999 are stated at carrying cost and not depreciated. The material expenses related to acquisition or extension of landrights is deferred and amortized based on the shorter period between landrights or economic lives of the land. The cost of repairs and maintenance is charged to current statement of income as incurred. Significant renewals and improvements that extend the useful life of the assets are capitalized. When fixed assets are retired or otherwise disposed of, their carrying values and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to current statement of income. These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS Continued For the Years Ended December 31, 2006 and 2005 In Full Rupiah 12 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : In compliance with PSAK No.48, “Impairment in the Value of Assets”, Bank reviews the carrying values of its assets for any impairment and possible write-down to fair values whenever events or changes in circumstances as described in PSAK No. 48, show that their carrying values may not be fully recovered. The excess of the carrying value over the estimated recoverable amount of the assets is charged to current statement of income. 2.k. Prepaid Expense Prepaid expense is amortized over their beneficial periods by using the straight line method. 2.l. Other Assets Other assets consist of prepaid expenses, ijarah, deferred expense, inventories, abandoned assets, properties, and others. Ijarah financing is leasing agreement between Bank and leasee to obtain repayment for the leased object with the option of property right transfer on certain period according to the lease agreement. 2.m. Deposits from Customers Demand Deposits and saving deposits are stated at the amount payable. Time Deposits are stated at their face value. Deposits include sharia deposits and unrestricted investment that consist of: a. Wadiah is demand deposits from third party that is unrestricted and given bonus based on the Bank’s policy. b. Unrestricted investment in the form of mudharabah savings is third party funds that earn profit sharing in return for the usage of the funds with the pre-defined terms nisbah. c. Unrestricted investment in the form of mudharabah term deposits is deposit from other parties with profit sharing in accordance with the pre-defined terms nisbah and can only be withdrawn at specified time according to agreement. 2.n. Deposits from Other Banks Deposits from other banks represent liabilities to domestic and overseas bank, in the form of demand deposits, inter-bank call money with original maturities of 90 ninety days, term deposits and certificates of deposits. All of them are stated in accordance with total liabilities to other banks. Deposits from other banks include sharia deposits in the form of wadiah demand deposits and unrestricted investments which consist of mudharabah time deposits. 2.o. Securities Issued Securities Issued represent Fixed Rate Notes Bonds that issued by the Bank are stated at nominal value less with deferred issuance losts. The deferred issuance cost is amortized over the term of the bonds using straight line method. Repurchase bonds are presented as deduction in securities issued. Interest incomes that come from repurchase bond are presented as deduction in bond interest expense. 2.p. Interest Income and Expenses Interest income and expenses are recognized on an accrual basis, except interest income on loans and other earning assets that are classified as non performing. Interest income on liquidity loans from Bank Indonesia are recorded using cash basis that is the Bank would record after receiving debit note from Bank Indonesia. These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS Continued For the Years Ended December 31, 2006 and 2005 In Full Rupiah 13 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : When a loan is classified as a non performing loan, any interest income previously recognized but not yet collected is reversed against interest income. The reversed interest income is recognized as a contingent receivable. Interest income on loan classified as Substandard is recognized only to the extend of cash collections received. Cash receipts from loans that are classified as Doubtful or Loss are applied to the loan principal first. The excess of cash receipts over loan principal is recognized as interest income in current statement of income. Interest on non performing loans that is capitalizad upon debt restructuring is deffered and is recognized as income upon actual collection.Interest receivables on non performing loans are disclosed as contingent receivables in the notes to the financial statements. Loans and other earning assets are considered as non performing when the principal or interest is 90 ninety days or more past due, or those classified as Substandard, Doubtful or Loss in accordance with Bank Indonesia’s Regulations, or when in the opinión of Management, the collection of interest andor principal is doubtful. The bond issuance costs include the cost of notary, public accountant, underwriter, legal consultant, appraisal fee and other expenses that recorded on “Bond Issuance Cost” and amortized according to the term of the bond. Interest income and expense include sharia income and expenses. Sharia income is earned from profit or loss sharing from murabahah and istishna, mudharabah and musyarakah financing. Income from murabahah transaction is recognized using the accrual basis. The income from mudharabah and musyarakah financing is recognized when installment is received in cash. Sharia expenses are expenses from profit sharing of mudharabah saving and wadiah bonuses that are recognized when the obligation incurred to conduct profit sharing in accordance the agreed terms nisbah. 2.q. Income on Commissions and Fees Significant fees and commissions which are directly related to the granting of loans or for specified years are deferred and amortized based on the straight line method over the respective years. The unamortized balance of fees and commissions relating to loans that is settled prior to maturity is recognized as income at settlement. Fees and commissions which are indirectly related to the granting of loans or not for specified years are recorded as income upon execution of the transactions. 2.r. Foreign Currency Transaction and Balance Transaction denominated in foreign currencies are converted into Rupiah at the exchange rate prevailing at the date of transaction. At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are adjusted to Rupiah based on the Reuters spot rate as of 4:00 p.m., West Indonesian Time. The resulting gains or losses are credited or charged to current statement of income. These financial statements are originally issued in Indonesian language PT BANK DKI NOTES TO THE FINANCIAL STATEMENTS Continued For the Years Ended December 31, 2006 and 2005 In Full Rupiah 14 DRAFT For Discussion Purpose Only April 26, 2007 To be Finalized Agreed by : Date : On December 31, 2006 and 2005, the exchange rates used were: 2006 Rp 2005 Rp United States Dollar 9,003.00 9,830.00 Japanese Yen 75.63 83.83 Euro 11,846.25 11,643.15 Singapore Dollar 5,867.89 5,917.04 Australian Dollar 7,117.89 7,215.72 Hongkong Dollar 1,157.71 1,267.83 Poundsterling 17,616.19 16,982.10 2.s. Income Taxes Current tax expense is based on the estimated taxable income for the year and calculated using the enacted tax rates. Deferred tax assets and liabilities are recognized for temporary differences between assets and liabilities for the purpose of commercial and fiscal on each reporting date. Future tax benefits such as carry forward of unused tax losses are recognized to the extent that realization of such benefit is probable. Deferred tax assets and liabilities are measured based on the tax rates are expected to be applied to the period when the assets are realized or when the liabilities are settled based on tax rates and tax law that have been enacted or effective on the balance sheet date. Amendments to tax obligationsare recorded when an assessment is received or if appealed against by the Bank, when the results of the appeal are determined. 2.t. Pension Fund and Employee Benefits Program Pension Fund The Bank has a defined contibution plan covering all of its permanent employees. Pension plan is funded by the Bank and employees’ contribution of 39 and 5 of the employees’monthly salaries respectively. Bank’s contributions made are charged to current statement of income. Employee Benefits Program The Bank provides employee defined benefits according to Labor Law No.132003. Based on PSAK No.24 2004 Revision, ”Employee Benefits”, the liability of past service cost is estimated using Projected Unit Credit Method. No funding of benefits has been allocated by the Bank in regards to the estimated liability. Based on PSAK No.24 Revised 2004, the employee benefits expense is recognized directly, except for the actuarial gain loss and non vested past service cost. Actuarial gain or losses are recognized as income or expense when the net cumulative unrecognized actuarial gains or losses at the end of previous reporting year exceeded 10 of the present value of the defined benefit obligation are amortized using straight line method for the remaining working lives. However, actuarial gain loss from liability upon employees who are beyond normal retirement age but still active is recognized immediately since the liability is already due. .