To the shareholders of National Investment Bank LLC

We have audited the accompanying financial statements of National Investment Bank LLC, which comprise the balance sheet as at 31 December 2008 and the income statement, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of these financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessment, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Basis for Qualified Opinion

As disclosed in the note 2.4 to the financial statements, gross loans and advances to the customers totaled MNT18.13 are considered past due or individually impaired. The directors are of the opinion that the balance of the loans and advances from customers of MNT18.13 billion is recoverable from the respective borrowers based on their estimation and judgment exercised. According to IAS 39, the impairment loss on financial assets is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. However, as the methodology used by management to assess impairment was not in compliance with this requirement and we were unable to carry out other alternative audit procedures to satisfy ourselves as to the appropriateness of the impairment amount of MNT927 million recognized during the year.

Qualified Opinion

In our opinion, except for the effects of such adjustments, if any, as might have been determined to be necessary had the matters described in the Basis for Qualified Opinion paragraph been satisfactorily resolved, the financial statements give a true and fair view of the financial position of the Bank as at 31 December 2008, and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards.

Other Matters

This report is made solely to the shareholders of the Bank, as a body, in accordance with Article 91 of Company Law of Mongolia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Mongolia Audit LLC

Certified Public Accountants

Chung Sing Peter YONG

Report of Auditors 2008 /PDF format, 304 KB/

Report of Auditors 2007 /PDF format, 277 KB/

Report of Auditors 2006 /PDF format, 243 KB/