(Convenience translation of publicly announced

(Convenience translation of publicly announced unconsolidatedfinancial statements, related disclosures and audit report originallyissued in Turkish - see section three Note I.a)

Vakıf Katılım BankasıAnonim ŞirketiPublicly announced unconsolidated financialstatements and related disclosures at December 31,2020 together with independent auditor’s report

A member firm of Ernst & Young Global Limited

Güney Bağımsız Denetim ve SMMM A.Ş.Maslak Mah. Eski Büyükdere Cad.Orjin Maslak İş Merkezi No: 27Kat: 2-3-4 Daire: 54-57-5934485 Sarıyerİstanbul - Türkiye

Tel: +90 212 315 3000Fax: +90 212 230 8291ey.comTicaret Sicil No : 479920Mersis No: 0-4350-3032-6000017

(Convenience translation of publicly announced unconsolidated financial statements, related disclosuresand audit report originally issued in Turkish - see section three Note I. A)

INDEPENDENT AUDITOR’S REPORT

To the General Assembly of Vakıf Katılım Bankası A.Ş.

Report on the Unconsolidated Financial Statements

Opinion

We have audited the accompanying unconsolidated financial statements of Vakıf Katılım Bankası A.Ş.(“the Bank”), which comprise the statement of unconsolidated statement of financial position as atDecember 31, 2020, unconsolidated statement of profit and loss and unconsolidated statement of profitor loss and other comprehensive income, unconsolidated statement of changes in shareholders’ equityand unconsolidated statement of cash flows for the year then ended and the notes to the unconsolidatedfinancial statements including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, theunconsolidated financial position of the Bank as at December 31, 2020 and financial performance andunconsolidated its cash flows for the year then ended in accordance with the prevailing accountingprinciples and standards set out as in accordance with “Regulation on Accounting Applications for Banksand Safeguarding of Documents” published in the Official Gazette no.26333 dated November 1, 2006and other regulations on accounting records of Banks published by Banking Regulation and SupervisionAgency (“BRSA”), circulars, interpretations published by BRSA and “BRSA Accounting and FinancialReporting Legislation” which includes the provisions of Turkish Financial Reporting Standards (“TFRS”)for the matters which are not regulated by these regulations.

Basis for Opinion

Our audit was conducted in accordance with “Regulation on independent audit of the Banks” publishedin the Official Gazette no.29314 dated April 2, 2015 by BRSA (BRSA Independent Audit Regulation)and Independent Auditing Standards (“ISA”) which are the part of Turkish Auditing Standards issued bythe Public Oversight Accounting and Auditing Standards Authority (“POA”). Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the FinancialStatements section of our report. We are independent of the Bank in accordance with of Code of Ethicsfor Independent Auditors (Code of Ethics) published by POA and have fulfilled our other responsibilitiesin accordance with the code of ethics. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance inour audit of the unconsolidated financial statements of the current period. These matters wereaddressed in the context of our audit of the unconsolidated financial statements as a whole, and informing our opinion thereon, and we do not provide a separate opinion on these matters.

A member firm of Ernst & Young Global Limited (2)

Key Audit Matter How the Key Audit Matter is addressed in ouraudit

Financial impact of TFRS 9 “FinancialInstruments” standard and recognition ofimpairment on financial assets and relatedimportant disclosuresAs disclosed in footnote VIII of Section 3; theBank measures expected credit losses forfinancial instruments by TFRS 9 “FinancialInstruments Standards”. The rationale reasonsfor selecting TFRS 9 implementation andimpairment of financial assets as key auditsubject are as follows;- Financial assets within balance-sheet and

off-balance-sheet subject to TFRS 9expected credit losses measurement havesignificant balance in the financialstatements

- The applications TFRS 9 are complex andcomprehensive

- The classification of financial instrumentsbased on the Bank’s business models andthe characteristics of contractual cashflows in line with TFRS 9 and requirementof important judgments to determine thisbusiness model and the characteristics ofcontractual cash flows

- Risks related to the policies established bythe management with the compliance andrequirements of the legislation and otherapplications for the calculation of expectedcredit losses

- The complexity and intensity of the controlenvironment in the processes designed orreorganized for TFRS 9

- Estimations and assumptions used inexpected credit losses are new, importantand complex

- Complex and comprehensive disclosurerequirements of TFRS 9.

Our audit procedures in addition to our current auditprocedures:- Evaluation of the compliance of the accounting

policies adopted with regard to TFRS 9, theBank's past performance, and local and globalpractices and declarations of regulatories

- Analysis and testing of processes, systems, andcontrols originated or re-designed in order tocalculate expected credit losses by theInformation Systems and Process Auditspecialists

- Evaluating the impact of Covid-19 outbreak onstaging of loans and macroeconomic parametersused in expected credit losses calculation and fairvalue calculations together with forward-lookingestimates and significant assumptions.

- Evaluation of the key judgments, assumptions,methods used for calculation of expected creditloss determined by the management, andwhether the data source is reasonable or not, andtheir compliance and standard requirements inlight of industry and global practices

- Testing criteria used for determining thecontractual cash flows including profit sharepayments with regard to solely principal andprincipal balance of financial assets on a samplebasis and evaluation of Bank's business model

- Evaluation of significant increase in credit risk,definition of default, definition of restructuring,probability of default, loss given default, exposureat default and macro-economic variables, andrelated basic and significant estimates andassumptions determined for calculation processof expected credit loss and whether theseassumptions determined by financial riskmanagement are in line with the Bank’s historicalperformance, legislation, and reasonableness ofthe estimation process regarding futureperformance and investigation of credit riskportfolio on a sample basis

- Evaluation of the accuracy and completeness ofattributes of the data used for the calculationprocess of expected credit losses

- Detailed testing of mathematical verification ofexpected credit losses’ calculation on a samplebasis

- Evaluating the necessity and accuracy of theupdates made or required updates on parameters

- Auditing of disclosures related to TFRS 9.


(3)

Responsibilities of Management and Those Charged with Governance for the UnconsolidatedFinancial Statements

Bank management is responsible for the preparation and fair presentation of the unconsolidatedfinancial statements in accordance with the BRSA Accounting and Reporting Legislation and for suchinternal control as management determines is necessary to enable the preparation of the financialstatement that is free from material misstatement, whether due to fraud or error.

In preparing the unconsolidated financial statements, management is responsible for assessing theBank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concernand using the going concern basis of accounting unless management either intends to liquidate theBank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Bank’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Unconsolidated Financial Statements

In an independent audit, the responsibilities of us as independent auditors are:

Our objectives are to obtain reasonable assurance about whether the unconsolidated financialstatements as a whole are free from material misstatement, whether due to fraud or error, and to issuean auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but isnot a guarantee that an audit conducted in accordance with BRSA Independent Audit Regulation andISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonably be expectedto influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with BRSA Independent Audit Regulation and ISAs, we exerciseprofessional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the unconsolidated financial statements,whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. (The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.)

Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Bank’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accountingand, based on the audit evidence obtained, whether a material uncertainty exists related to eventsor conditions that may cast significant doubt on the Bank’s ability to continue as a going concern.If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’sreport to the related disclosures in the unconsolidated financial statements or, if such disclosuresare inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtainedup to the date of our auditor’s report. However, future events or conditions may cause the Bankto cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the unconsolidated financialstatements, including the disclosures, and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.


(4)

We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.

From the matters communicated with those charged with governance, we determine those matters thatwere of most significance in the audit of the unconsolidated financial statements of the current periodand are therefore the key audit matters. We describe these matters in our auditor’s report unless law orregulation precludes public disclosure about the matter or when, in extremely rare circumstances, wedetermine that a matter should not be communicated in our report because the adverse consequencesof doing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

Report on Other Legal and Regulatory Requirements

1) In accordance with Article 402 paragraph 4 of the Turkish Commercial Code (“TCC”) numbered6102; no significant matter has come to our attention that causes us to believe that the Bank’sbookkeeping activities and financial statements for the period January 1 – December 31, 2020are not in compliance with the code and provisions of the Bank’s articles of association in relationto financial reporting.

2) In accordance with Article 402 paragraph 4 of the TCC; the Board of Directors submitted to usthe necessary explanations and provided required documents within the context of audit.

The engagement partner who supervised and concluded this independent auditor’s report is DamlaHarman.

Additional paragraph for convenience translation to English

As explained in detail in Note I.a. of Section Three, accounting principles and standards set out byregulations in conformity with BRSA Accounting and Reporting Legislation, accounting principlesgenerally accepted in countries in which the accompanying unconsolidated financial statements are tobe distributed and International Financial Reporting Standards (“IFRS”) have not been quantified in theaccompanying unconsolidated financial statements. Accordingly, the accompanying unconsolidatedfinancial statements are not intended to present the financial position, results of operations and changesin financial position and cash flows in accordance with the accounting principles generally accepted insuch countries and IFRS.

Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim ŞirketiA member firm of Ernst & Young Global Limited

Damla Harman, SMMMPartner

March 12, 2021Istanbul, Turkey

Section oneGeneral information

I. History of the Bank including its incorporation date, initial legal status and amendments to legal status 1II. Shareholding structure, shareholders having direct or indirect, joint or individual control over the management

of the Bank and disclosures on related changes in the current year, if any 1III. Explanation on the chairman and members of board of directors, members of audit committee, general manager

and assistant general managers their areas of responsibility and their shares in the Bank, if any 1IV.V.

Information on the Bank’s qualified shareholdersBank of Consolidated Financial Turkey of the Communiqué on Preparation Table Accounting Standardsrequired by the differences between the structures of consolidation transactions subject to full consolidation orproportionate consolidation, deducted from equity or a short description about agencies that are not includedin these three methods 2

VI. Differences between the Communiqué on Preparation of Consolidated Financial Statements of Banks andTurkish Accounting Standards with respect to consolidation and short explanation about the institutions subjectto full or proportional consolidation and institutions which are deducted from equity or not included in thesethree methods 2

VII. The existing or potential, actual or legal obstacles on immediate transfer of equity or reimbursement of liabilitiesbetween the Bank and Its subsidiaries 3

Section twoThe unconsolidated financial statements

I Balance sheet (Statement of financial position) 4II. Statement of off-balance sheet 6III. Statement of Profit or Loss 7IV. Statement of Profit or Loss and other comprehensive income 8V. Statement of changes in shareholders’ equity 9VI. Statement of cash flows 11VII. Statement of profit appropriation 12

Section threeAccounting policies

I. Explanations on basis of presentation 13II. Explanations on strategy of using financial instruments and foreign currency transactions 14III. Explanations on investments in associates and subsidiaries 14IV. Explanations on forward, option contracts and derivative instruments 15V. Explanations on profit share income and expenses 15VI. Explanations on fees, commission income and expenses 15VII. Explanations on financial assets and liabilities 16VIII. Explanations on expected credit losses 17IX. Explanations on offsetting of financial instruments 20X. Explanations on sale and repurchase agreements and lending of securities 20XI. Explanations on assets held for sale and discontinued operations and liabilities related to these assets 20XII. Explanations on goodwill and other intangible assets 20XIII. Explanations on tangible assets 21XIV. Explanations on leasing transactions 22XV. Explanations on provisions and contingent liabilities 22XVI. Explanations on contingent assets 23XVII. Explanations on liabilities regarding employee rights 23XVIII. Explanations on taxation 24XIX. Additional explanations on borrowings 25XX. Explanations on issued share certificates 25XXI. Explanations on acceptances and availed drafts 25XXII. Explanations on government grants 25XXIII.XXIV.

Explanations on segment reportingExplanations on other matters

2626

Section fourInformation on financial structure and risk management

I. Explanations on equity 27II. Explanations on credit risk 31III. Explanations on currency risk 39IV. Explanations on position risk of equity securities in banking book 41V. Explanations on liquidity risk management and liquidity coverage ratio 43VI. Explanations on leverage ratio 46VII. Explanations on the presentation of financial assets and liabilities at their fair values 46VIII. Explanations regarding the activities carried out on behalf and account of other persons 47IX. Explanations on risk management 48X. Explanations on business segments 62

Section fiveExplanations and notes on the unconsolidated financial statements

I Explanations and notes related to assets 63II. Explanations and notes related to liabilities 80III. Explanations and notes related to off-balance sheet 87IV. Explanations and notes related to the statement of income 90V. Explanations and notes related to the statements of changes in shareholders’ equity 95VI. Explanations and notes related to the statement of cash flows 97VII. Explanations related to the risk group of the Bank 98VIII. Explanations related to domestic, foreign, off-shore branches or investments and

foreign representative offices 99IX. Explanations related to subsequent events 100

Section sixOther explanations

I. Other explanations related to The Bank’s operations 100

Section sevenIndependent auditor report

I. Explanations on independent auditors’ report 100II. Other notes and explanations prepared by the independent auditors 100

Convenience Translation of the Independent Auditor’s Report originally issued in Turkish (See Note 1.a ofSection Three)

Vakıf Katılım Bankası A.Ş.Notes related to unconsolidated financial statementsas of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

1

Section oneGeneral information

I. History of the Bank Including Its Incorporation Date, Initial Legal Status and Amendments to LegalStatus:Vakıf Katılım Bankası A.Ş. (“Bank”) has been established in accordance with the permission of BankingRegulation and Supervision Authority dated February 27, 2015 and numbered 6205 which was published atOfficial Gazette dated March 3, 2015 and numbered 29284 and become a legal entity following its registrationat trade registry on June 25, 2015. Vakıf Katılım Bankası A.Ş. has obtained official authorization withresolution of Banking Regulation and Supervision Authority dated February 11, 2016 and numbered 6729which was published at Official Gazette dated February 17, 2016 and numbered 29627 and started itsParticipation Banking Activities as of February 24, 2016. The Bank’s paid in capital is TL 3.220.000. TheBank, whose headquarters is located in Istanbul, provides services with its 116 branches (December 31,2019: 104) and 1.642 employees (December 31, 2019: 1.322) as of December 31, 2020.

II. Shareholding structure, shareholders having direct or indirect, joint or individual control over themanagement of the Bank and disclosures on related changes in the current year, if any:The Bank has been established as joint-stock company with its issued capital at an amount of TL 805.000.

As December 31, 2020, the Bank's share of paid-in capital to its shareholders:December 31, 2020 December 31, 2019

Name of the Shareholders Paid incapital

Share%

Paid incapital

Share%

T.C. Vakıflar Genel Müdürlüğü 3.187.800 99,00 1.009.800 99,00Beyazid Han-ı Sani (II. Beyazit) Vakfı 8.050 0,25 2.550 0,25Mahmud Han-ı Evvel Bin Mustafa Han (I. Mahmut) Vakfı 8.050 0,25 2.550 0,25Mahmud Han-ı Sani Bin Abdülhamid Han-ı Evvel (II. Mahmut) Vakfı 8.050 0,25 2.550 0,25Murad Paşa Bin Abdusselam (Murat Paşa) Vakfı 8.050 0,25 2.550 0,25Total 3.220.000 100,00 1.020.000 100,00

III. Explanation on the chairman and members of board of directors, members of audit committee,general manager and assistant general managers, their areas of responsibility and their shares in theBank, if any:

Title Name and Surname Administrative Function and ResponsibilityEducaional

Degree

OwnershipPercentage

(%)Chairman of the Board ofDirectors (BOD)

Öztürk ORANChairman of BOD Bachelor -

Vice Chairman of the BoardDirectors

Burhan Ersoy (*)Vice Chairman of the Board Directors Bachelor -

Members of BOD

Osman ÇELİK Member of BOD and Audit Committee Bachelor -İlhan ALBAYRAK Member of BOD Bachelor -Mustafa ERDOĞMUŞ Member of BOD and Chairman of Audit Committee Bachelor -Servet BAYINDIR (*) Member of BOD PhD -İkram GÖKTAŞ Member of BOD and General Manager Bachelor -

Members of Audit Committee Mustafa ERDOĞMUŞ Member of BOD and Chairman of Audit Committee Bachelor -Osman ÇELİK Member of BOD and Audit Committee Bachelor -

Assistant General Managers

Ahmet OCAK

Financial Affairs, Project FinanceCredit and Treasury Operations Department, Banking andPayment Systems Department, Foreign TransactionsOperations Department, Branch Operations CoordinationService, Customer Contact Center Service

Master -

Betül Vural YILMAZ Human Resources, Directorate of Education, CorporateCommunications Master -

Bülent TABANFinancial Analysis and Intelligence, Commercial andCorporate Loan Allocation, SME and Personal LoanAllocation, Insurance ve Corporate Solutions Services

Master -

Sabri Ulus Treasury Department, International Banking Department,Strategy and Business Development Service Bachelor -

Hüseyin Tunç (**)Financial Analysis and Intelligence Directorate,Commercial and Corporate Credit Allocation Directorate,SME and Personal Loan Allocation Directorate

Bachelor

(*)At the General Assembly held on 31 December 2020, Burhan Ersoy was elected as the deputy chairman of the board of directors and Servet Bayındır waselected as a board member.

(**)Hüseyin Tunç was appointed as the deputy general manager responsible for loans on December 31, 2020



2

IV. Information on the Bank’s qualified shareholders:The Bank’s paid in capital amounting to TL 3.220.000 consists of 322.000.000.000 number of shares with anominal value of (full) TL 0,01 for each share. TL 3.187.800 of the paid in capital is owned by qualifiedshareholders who are listed below:

Name / Commercial nameShare

amount (nominal)Share ratio

(%)Paid

sharesUnpaidshares

T.C. Vakıflar Genel Müdürlüğü 3.187.800 99,00 3.187.800 -

V. Summary on the Bank’s service activities and field of operations:

The Bank operates in accordance with the principles of interest-free banking as a participation bank. TheBank mainly collects funds through current accounts, through profit sharing accounts based on profit/losssharing agreement, investment agency pools, lends such funds through corporate finance support, retailfinance support, profit/loss sharing investment, profit and loss sharing investments, finance lease, financingcommodity against document and joint investments.

The Bank classifies current and profit-sharing accounts separately from other accounts in accordance withtheir maturities. Profit sharing accounts are classified under six different maturity groups; up to one month,up to three months (three months included), up to six months (six months included), up to one year (one yearincluded), one year and more than one year (with monthly, quarterly, semi-annual and annual profit sharepayment) and accumulated participation accounts. In addition to the maturity groups in the participationaccounts, investment agency (Wakalah) accounts may be opened with accounts with a maturity of less thanone month.The Participation Bank could freely determine the participation rates on profit/loss sharing accounts andestimated profit rate on İnvestment Agency accounts. The participation rate on loss of all participationaccounts is 100%.The Bank constitutes specific fund pools with minimum maturities of one month, to be allocated to individuallypredetermined projects for financing purposes. Profit sharing accounts, which are part of the funds collectedfor project financing purpose, are managed in accordance with their maturities and independently from otheraccounts and transfers from these accounts to any other maturity groups are not executed. Specific fundpools are liquidated at the end of the financing period.In addition to its ordinary banking activities, the Bank operates as an insurance agency on behalf of, TürkiyeSigorta, Neova Sigorta, HDI Sigorta, Bereket Sigorta and Türkiye Hayat Emeklilik through its branches andprovides services in purchase, RIA Turkey Ödeme Kuruluşu A.Ş money transfer agency to a foreign nameon behalf of and sale of precious metals, member business (P.O.S), credit card and debit card services,money transfer to PTT A.Ş., Vizyon Tahsilat ve Ödeme Hizmetleri A.Ş., Hızlı Para Ödeme HizmetleriElektronik Para A.Ş. and money transfer services to Elekse Yetkili Vezne Ödeme Kuruluşu A.Ş. collection ofinvoice services, money transfer services to NKolay Ödeme Kuruluşu A.Ş., Efix Ödeme Hizmeteri A.Ş andPaladyum Elektronik Para ve Ödeme Hizmetleri A.Ş. collection of invoice services, portfolio agency services,limited custodian services and the Bank is authorized to provide order delivery and transaction agencyservices.The Bank provides non-cash loans which mainly comprise letters of guarantee, letters of credit andacceptance credit. Transactions which can be carried out by the Bank are not limited to the clauses listedabove. If any activities other than those mentioned are considered as beneficial to the Bank, the applicationmust be recommended by the Board of Directors, approved by the General Assembly and authorized byrelevant legal authorities which then needs to be approved by the Ministry of Trade since such applicationsare amendments in nature to the Article of Association. The application is included in the Article of Associationafter all necessary approvals are obtained.

VI. Differences between the Communiqué on Preparation of Consolidated Financial Statements of Banksand Turkish Accounting Standards with respect to consolidation and short explanation about theinstitutions subject to full or proportional consolidation and institutions which are deducted fromequity or not included in these three methods:

Vakıf Varlık Kiralama A.Ş. and Katılım Varlık Kiralama A.Ş., the subsidiaries of the Bank are fully consolidatedin the consolidated financial statements of The Bank.



3

VII. The existing or potential, actual or legal obstacles on immediate transfer of equity or reimbursementof liabilities between the Bank and its subsidiaries:There is no immediate transfer is no existing or potential, actual or legal obstacle to the reimbursement ofliabilities between the Bank and its subsidiaries.

Section two

The unconsolidated financial statements

I. Balance sheet (Statement of financial position)

II. Statement of off-balance sheet

III. Statement of profit or lossIV. Statement of profit or loss and other comprehensive income

V. Statement of changes in shareholders’ equity

VI. Statement of cash flows

VII. Statement of profit appropriation


Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of Balance Sheet (Financial Position)as of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

4

THOUSAND TURKISH LIRA THOUSAND TURKISH LIRA

ASSETSNote

(Section-Five-I)

CURRENT PERIOD PRIOR PERIOD

(31/12/2020) (31/12/2019)TL FC Total TL FC Total

I. FINANCIAL ASSETS (Net) 4.947.158 17.869.991 22.817.149 2.139.229 8.594.826 10.734.0551.1 Cash and cash equivalents 390.309 9.653.845 10.044.154 126.503 4.760.675 4.887.1781.1.1 Cash and balances with central bank (1) 379.930 8.977.860 9.357.790 125.363 2.806.682 2.932.0451.1.2 Banks (3) 10.515 676.513 687.028 1.175 1.955.189 1.956.3641.1.3 Money market placements - - - - - -1.1.4 Expected Loss Provisions (-) 136 528 664 35 1.196 1.231

1.2 Financial assets valued at fair value through profitor loss - 2.396.377 2.396.377 - 1.569.915 1.569.915

1.2.1 Government debt securities - 2.396.377 2.396.377 - 1.569.915 1.569.9151.2.2 Equity securities - - - - - -1.2.3 Other financial assets - - - - - -

1.3 Financial assets valued at fair value through othercomprehensive income (4) 4.457.591 5.540.616 9.998.207 1.956.977 2.228.162 4.185.139

1.3.1 Government debt securities 4.030.589 5.531.941 9.562.530 1.848.502 2.228.162 4.076.6641.3.2 Equity securities - - - - - -1.3.3 Other financial assets 427.002 8.675 435.677 108.475 - 108.4751.4 Derivative financial assets 99.258 279.153 378.411 55.749 36.074 91.8231.4.1 Derivative financial assets valued at fair value through

profit and loss (2) 99.258 279.153 378.411 55.749 36.074 91.823

1.4.2 Derivative financial assets valued at fair value throughother comprehensive income (11) - - - - - -

II. FINANCIAL ASSETS VALUED AT AMORTISEDCOST 18.249.279 11.089.880 29.339.159 10.564.424 8.257.320 18.821.744

2.1 Loans (5) 18.766.423 10.341.184 29.107.607 10.905.962 7.682.783 18.588.7452.2 Lease receivables (10) 176.821 139.365 316.186 71.262 110.494 181.7562.3 Other Financial assets valued at amortised cost (6) - 775.777 775.777 - 547.454 547.4542.3.1 Government debt securities - 775.777 775.777 - 547.454 547.4542.3.2 Other financial assets - - - - - -2.4 Expected Loss Provisions (-) 693.965 166.446 860.411 412.800 83.411 496.211III. ASSETS HELD FOR SALE AND DISCONTINUED

OPERATIONS (Net) (16) - - - - - -3.1 Assets held for sale - - - - - -3.2 Assets of discontinued operations - - - - - -IV. SUBSIDIARY INVESTMENTS 7.574 - 7.574 4.819 - 4.8194.1 Investments in assocıates (net) (7) 7.474 - 7.474 4.719 - 4.7194.1.1 Valued under equity method - - - - - -4.1.2 Unconsolidated associates 7.474 - 7.474 4.719 - 4.7194.2 Investments in subsidiaries (net) (8) 100 - 100 100 - 1004.2.1 Unconsolidated financial subsidiaries 100 - 100 100 - 1004.2.2 Unconsolidated non-financial subsidiaries - - - - - -4.3 Joıntly controlled entities (joint ventures) (net) (9) - - - - - -4.3.1 Valued under equity method - - - - - -4.3.2 Unconsolidated associates - - - - - -V. TANGIBLE ASSETS (Net) (12) 478.296 - 478.296 412.044 - 412.044VI. INTANGIBLE ASSETS (Net) (13) 24.965 - 24.965 21.354 - 21.3546.1 Goodwill - - - - - -6.2 Other 24.965 - 24.965 21.354 - 21.354VII. INVESTMENT PROPERTY (Net) (14) - - - - - -VIII. CURRENT TAX ASSET - - - - - -IX. DEFERRED TAX ASSET (15) 123.465 - 123.465 33.537 - 33.537X. OTHER ASSETS (17) 339.112 27.908 367.020 267.621 53.610 321.231

TOTAL ASSETS 24.169.849 28.987.779 53.157.628 13.443.028 16.905.756 30.348.784

The accompanying explanations and notes are an integral part of these financial statements.


Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of Balance Sheet (Financial Position)as of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

5

LIABILITIES

THOUSAND TURKISH LIRA THOUSAND TURKISH LIRANote

(SectionFive-II)

CURRENT PERIOD(31/12/2020)

PRIOR PERIOD(31/12/2019)

TL FC Total TL FC Total

I. FUNDS COLLECTED (1) 12.549.368 27.017.103 39.566.471 10.026.411 12.926.804 22.953.215II. FUNDS BORROWED (3) 3.146.138 2.662.162 5.808.300 2.722.754 882.162 3.604.916III. MONEY MARKET BALANCES 537.043 - 537.043 344.550 - 344.550IV. MARKETABLE SECURITIES ISSUED (Net) - - - - - -V. FINANCIAL LIABILITIES VALUED AT FAIR VALUE

THROUGH PROFIT AND LOSS - - - - - -VI. DERIVATIVE FINANCIAL LIABILITIES 290.587 101.964 392.551 11.136 41.067 52.2036.1 Derivative financial liabilities valued at fair value through profit

and loss (2) 290.587 101.964 392.551 11.136 41.067 52.203

6.2 Derivative financial liabilities valued at fair value through othercomprehensive income (6) - - - - - -

VII. LEASE LIABILITIES (5) 173.858 193 174.051 149.973 1.833 151.806VIII. PROVISIONS (7) 220.793 81.725 302.518 154.030 37.024 191.0548.1 Restructuring provisions - - - - - -8.2 Reserve for employee benefits 55.629 - 55.629 36.390 - 36.3908.3 Insurance technical reserves (Net) - - - - - -8.4 Other provisions 165.164 81.725 246.889 117.640 37.024 154.664IX. Current tax liability (8) 130.528 - 130.528 108.911 - 108.911X. Deferred tax liability - - - - - -XI. LIABILITIES FOR ASSETS HELD FOR SALE AND

DISCONTINUED OPERATIONS (Net) (9) - - - - - -11.1 Assets held for sale - - - - - -11.2 Assets of discontinued operations - - - - - -XII. SUBORDINATED DEBTS (10) - 764.430 764.430 - 537.047 537.04712.1 Loans - 764.430 764.430 - 537.047 537.04712.2 Other borrowing instruments - - - - - -XIII. OTHER LIABILITES (4) 534.669 148.501 683.170 327.730 116.659 444.389XIV. SHAREHOLDERS' EQUITY (11) 4.729.719 68.847 4.798.566 1.940.155 20.538 1.960.69314.1 Paid-in capital 3.220.000 - 3.220.000 1.020.000 - 1.020.00014.2 Capital reserves 11.504 - 11.504 11.504 - 11.50414.2.1 Share Premium - - - - - -14.2.2 Share cancellation profits - - - - - -14.2.3 Other capital reserves 11.504 - 11.504 11.504 - 11.504

14.3 Accrued other comprehensive income or expense notreclassified in profit and loss (4.217) - (4.217) (1.551) - (1.551)

14.4 Accrued other comprehensive income or expense reclassifiedin profit and loss (17.572) 68.847 51.275 56.609 20.538 77.147

14.5 Profit reserves 853.138 - 853.138 528.706 - 528.70614.5.1 Legal reserves 81.276 - 81.276 51.437 - 51.43714.5.2 Statutory reserves - - - - - -14.5.3 Extraordinary reserves 650.269 - 650.269 446.406 - 446.40614.5.4 Other profit reserves 121.593 - 121.593 30.863 - 30.86314.6 Profit or loss 666.866 - 666.866 324.887 - 324.88714.6.1 Prior years' profit/loss - - - - - -14.6.2 Current period net profit/loss 666.866 - 666.866 324.887 - 324.88714.7 Non-controlling Interest (-) - - - - - -

TOTAL LIABILITIES 22.312.703 30.844.925 53.157.628 15.785.650 14.563.134 30.348.784



Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of Off-balance Sheetas of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

6

STATEMENT OF OFF BALANCE SHEET Note(SectionFive-III)

THOUSAND TURKISH LIRA THOUSAND TURKISH LIRACURRENT PERIOD

(31/12/2020)CURRENT PERIOD

(31/12/2019)

TL FC Total TL FC Total

A. OFF BALANCE SHEET COMMITMENTS (I+II+III) (1) 16.992.479 51.998.310 68.990.789 10.221.085 19.652.025 29.873.110I. GUARANTEES AND SURETIES 7.567.945 6.120.825 13.688.770 5.111.562 3.260.972 8.372.5341.1 Letters of Guarantees 7.533.825 4.827.797 12.361.622 5.030.916 2.592.127 7.623.0431.1.1 Guarantees Subject to State Tender Law 93.795 1.369 95.164 66.261 - 66.2611.1.2 Guarantees Given for Foreign Trade Operations 250 646.338 646.588 1.566 258.519 260.0851.1.3 Other Letters of Guarantee 7.439.780 4.180.090 11.619.870 4.963.089 2.333.608 7.296.6971.2. Bank Loans 7.330 329.133 336.463 2.791 74.222 77.0131.2.1. Import Letter of Acceptances 7.330 329.133 336.463 2.791 74.222 77.0131.2.2. Other Bank Acceptances - - - - - -1.3. Letter of Credits 26.790 958.544 985.334 77.855 594.623 672.4781.3.1. Documentary Letter of Credits - - - - - -1.3.2. Other Letter of Credits 26.790 958.544 985.334 77.855 594.623 672.4781.4. Prefinancing Given as Guarantee - - - - - -1.5. Endorsements - - - - - -1.5.1. Endorsements to the Central Bank of Turkey - - - - - -1.5.2. Other Endorsements - - - - - -1.6. Other Guarantees - 5.351 5.351 - - -1.7. Other Collaterals - - - - - -II. COMMITMENTS (1) 2.632.964 9.554.377 12.187.341 1.335.493 1.417.606 2.753.0992.1. Irrevocable Commitments 2.632.964 9.554.377 12.187.341 1.335.493 1.417.606 2.753.0992.1.1. Asset Purchase and Sale Commitments 965.167 9.554.377 10.519.544 228.159 1.417.606 1.645.7652.1.2. Share Capital Commitment to Associates and Subsidiaries - - - - - -2.1.3. Loan Granting Commitments 1.356.907 - 1.356.907 905.909 - 905.9092.1.4. Securities Underwriting Commitments - - - - - -2.1.5. Commitments for Reserve Deposit Requirements - - - - - -2.1.6. Payment Commitment for Cheques 233.337 - 233.337 160.387 - 160.3872.1.7. Tax and Fund Liabilities from Export Commitments 3.382 - 3.382 3.382 - 3.3822.1.8. Commitments for Credit Card Expenditure Limits 65.614 - 65.614 27.265 - 27.2652.1.9. Commitments for Promotions Related with Credit Cards

and Banking Activities - - - - - -2.1.10. Receivables from Short Sale Commitments of Marketable

Securities - - - - - -2.1.11. Payables for Short Sale Commitments of Marketable

Securities - - - - - -2.1.12. Other Irrevocable Commitments 8.557 - 8.557 10.391 - 10.3912.2. Revocable Commitments - - - - - -2.2.1. Revocable Loan Granting Commitments - - - - - -2.2.2. Other Revocable Commitments - - - - - -III. DERIVATIVE FINANCIAL INSTRUMENTS (2) 6.791.570 36.323.108 43.114.678 3.774.030 14.973.447 18.747.4773.1. Derivative Financial Instruments for Hedging Purposes - - - - - -3.1.1. Fair Value Hedge

- - -- - -

3.1.2. Cash Flow Hedge - - - - - -3.1.3. Hedge of Net Investment in Foreign Operations

- - -- - -

3.2. Held for Trading Transactions 6.791.570 36.323.108 43.114.678 3.774.030 14.973.447 18.747.4773.2.1 Forward Foreign Currency Buy/Sell Transactions 6.008.091 24.685.688 30.693.779 3.772.649 13.166.266 16.938.9153.2.1.1 Forward Foreign Currency Transactions-Buy 2.615.887 10.981.608 13.597.495 3.497.697 5.220.975 8.718.6723.2.1.2 Forward Foreign Currency Transactions-Sell 3.392.204 13.704.080 17.096.284 274.952 7.945.291 8.220.2433.2.2. Other Forward Buy/Sell Transactions 783.479 11.637.420 12.420.899 1.381 1.807.181 1.808.5623.3. Other - - - - - -B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 212.949.509 11.710.850 224.660.359 140.704.505 6.292.819 146.997.324IV. ITEMS HELD IN CUSTODY 19.747.744 6.534.762 26.282.506 20.662.656 3.049.291 23.711.9474.1. Assets Under Management - - - - - -4.2. Investment Securities Held in Custody 13.531.024 7.938 13.538.962 17.424.781 9.830 17.434.6114.3. Cheques Received for Collection 1.791.497 189.947 1.981.444 1.156.709 174.924 1.331.6334.4. Commercial Notes Received for Collection 295.703 14.086 309.789 349.500 9.392 358.8924.5. Other Assets Received for Collection - - - - - -4.6. Assets Received for Public Offering - - - - - -4.7. Other Items Under Custody - - - - - -4.8. Custodians 4.129.520 6.322.791 10.452.311 1.731.666 2.855.145 4.586.811V. PLEDGED ITEMS 193.201.765 5.176.088 198.377.853 120.041.849 3.243.528 123.285.3775.1. Marketable Securities 1.613.301 21.581 1.634.882 868.400 17.464 885.8645.2. Guarantee Notes 32.992 - 32.992 1.568 - 1.5685.3. Commodity 2.173.885 236.701 2.410.586 1.133.811 170.202 1.304.0135.4. Warranty - - - - - -5.5. Properties 32.356.775 - 32.356.775 19.390.561 - 19.390.5615.6. Other Pledged Items 157.023.932 4.917.806 161.941.738 98.646.629 3.055.862 101.702.4915.7. Pledged Items-Depository 880 - 880 880 - 880VI. ACCEPTED INDEPENDENT GUARANTEES AND

WARRANTIES - - - - - -

TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) 229.941.988 63.709.160 293.651.148 150.925.590 25.944.844 176.870.434



Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of Profit or Lossas of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

7

Note: With the Communiqué Amending the Communiqué on Financial Statements and Related Disclosures and Footnotes to be Announced to Public by the Banks in theOfficial Gazette No. 30673 dated 1 February 2019, Financial Statement Formats Disclosed by Banks were changed The accompanying explanations andnotes are an integral part of these financial statements.

INCOME AND EXPENSE ITEMSNote

(Section-IV)

THOUSANDTURKISH LIRA


CURRENTPERIOD

(01/01/2020-31/12/2020)

PRIORPERİOD

(01/01/2019-31/12/2019)

I. PROFIT SHARE INCOME (1) 3.031.096 2.323.6431.1 Profit share on loans 2.271.210 1.982.1511.2 Profit share on reserve deposits 9.547 18.0131.3 Profit share on banks 8.360 5.0851.4 Profit share on money market placements 82 -1.5 Profit share on marketable securities portfolio 705.801 266.2841.5.1 Financial assets at fair value through profit and loss 41.530 13.9511.5.2 Financial assets valued at fair value through other comprehensive income 633.297 236.2211.5.3 Financial assets valued at amortised cost 30.974 16.1121.6 Finance lease income 24.372 18.1051.7 Other profit share income 11.724 34.005II. PROFIT SHARE EXPENSE (-) (2) 1.344.967 1.643.5092.1 Expense on profit sharing accounts 899.903 1.189.9292.2 Profit share expense on funds borrowed 318.501 416.8602.3 Profit share expense on money market borrowings 79.992 13.3372.4 Expense on securities issued - -2.5 Lease Profit Share Expense (-) 25.477 21.6792.6 Other profit share expense 21.094 1.704III. NET PROFIT SHARE INCOME (I - II) 1.686.129 680.134IV. NET FEES AND COMMISSIONS INCOME 74.409 83.7984.1 Fees and commisions received 199.414 137.2964.1.1 Non-Cash loans 85.265 70.2944.1.2 Other (12) 114.149 67.0024.2 Fees and commisions paid 125.005 53.4984.2.1 Non-Cash loans 13 444.2.2 Other (12) 124.992 53.454V. DIVIDEND INCOME (3) - -VI. TRADING INCOME/EXPENSES (Net) (4) 314.013 512.0006.1 Trading account income/expenses 10.359 (5.544)6.2 Income/expenses from derivative financial instruments 70.433 472.1646.3 Foreign exchange gains/losses 233.221 45.380VII. OTHER OPERATING INCOME (5) 207.672 116.609VIII. TOTAL OPERATING INCOME / EXPENSE (III+IV+V+VI+VII) 2.282.223 1.392.541IX. PROVISION FOR EXPECTED LOSS (-) (6) 514.418 367.495X. OTHER PROVISION EXPENSES (-) 166.526 110.257XI. PERSONEL EXPENSES 357.131 238.261XII. OTHER OPERATING EXPENSES (-) (7) 401.902 234.402XIII. NET OPERATING INCOME/EXPENSE (VIII-IX-X-XI-XII) 842.246 442.126XIV. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - -XV. GAIN AFTER MERGER - -XVI. GAIN/LOSS ON NET MONETARY POSITION - -XVII. PROFIT/LOSS ON CONTINUING OPERATIONS BEFORE TAX (XI+...+XVI) (8) 842.246 442.126XVIII. TAX PROVISION FOR CONTINUING OPERATIONS (±) (9) 175.380 117.23918.1 Current tax charge 246.952 143.74018.2 Deferred tax charge (+) 9.901 8.06018.3 Deferred tax credit (-) 81.473 34.561XIX. NET PERIOD PROFIT/LOSS FROM CONTUNUING OPERATIONS (XVII±XVIII) (10) 666.866 324.887XX. INCOME ON DISCONTINUED OPERATIONS - -20.1 Income on assets held for sale - -

20.2Income on sale of associates, subsidiaries and jointly controlled entities(Joint Vent.) - -

20.3 Income on other discontinued operations - -XXI. EXPENSE ON DISCONTINUED OPERATIONS (-) - -21.1 Expense on assets held for sale - -21.2 Expense on sale of associates, subsidiaries and jointly controlled entities (Joint Vent.) - -21.3 Expense on other discontinued operations - -XXII. PROFIT/(LOSS) ON DISCONTINUED OPERATIONS BEFORE TAXES (XX-XXI) - -XXIII. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) - -23.1 Current tax provision - -23.2 Deferred tax provision (+) - -23.3 Deferred tax provision (-) - -XXIV. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XXII±XXIII) - -XXV. NET PROFIT/LOSS (XIX+XXIV) (11) 666.866 324.88725.1 Group’s Profit/Loss 666.866 324.88725.2 Minority shares (-) - -

Earnings Per Share (Full TL) 0,00232 0,00319


Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of Profit or Loss and Other Comprehensive Incomeas of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

8

PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME



CURRENT PERIOD(01/01/2020-31/12/2020)

PRIOR PERIOD(01/01/2019-31/12/2019)

I. CURRENT PERIOD INCOME/LOSS 666.866 324.887II. OTHER COMPREHENSIVE INCOME (28.538) 97.0762.1 Not Reclassified Through Profit or Loss (2.666) (362)2.1.1 Property and Equipment Revaluation Increase/Decrease - -2.1.2 Intangible Assets Revaluation Increase/Decrease - -2.1.3 Defined Benefit Pension Plan Remeasurement Gain/Loss (3.282) (464)2.1.4 Other Comprehensive Income Items Not Reclassified Through Profit or Loss - -2.1.5 Tax Related Other Comprehensive Income Items Not Reclassified Through Profit or

Loss 616 1022.2 Reclassified Through Profit or Loss (25.872) 97.4382.2.1 Foreign Currency Translation Differences - -2.2.2 Valuation and/or Reclassification Income/Expense of the Financial Assets at Fair

Value through Other Comprehensive Income (44.068) 122.4902.2.3 Cash Flow Hedge Income/Loss - -2.2.4 Foreign Net Investment Hedge Income/Loss - -2.2.5 Other Comprehensive Income Items Reclassified Through Profit or Loss - -2.2.6 Tax Related Other Comprehensive Income Items Reclassified Through Profit or Loss 18.196 (25.052)III. TOTAL COMPREHENSİVE INCOME (I+II) 638.328 421.963


(Convenience Translation of the Independent Auditor’s Report originally issued in Turkish (See Note 1.a of Section Three)

Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of changes in Shareholders’ Equityas of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

9

CHANGES IN SHAREHOLDERS EQUITY Accumulated OtherComprehensive Income orExpense Not Reclassified

through Profit or Loss

Accumulated OtherComprehensive Incomeor Expense Reclassifiedthrough Profit or Loss

PRIOR PERIOD(01/01/2019-31/12/2019)

Paid-inCapital

SharePremium

ShareCertificate

CancellationProfits

OtherCapital

Reserves 1 2 3 4 5 6

ProfitReserv

es

PriorPeriod Net

Income/(Loss)

CurrentPeriod Net

Income /(Loss)

Total equityexcludedfrom non

controllinginterests

Non-controllingInterest (-)

TotalShareholders'

EquityI. Balances at beginning of the period 1.020.000 - - - - (1.189) - - (20.291) - 209.828 (6.519) 325.397 1.527.226 - 1.527.226II. Correction made as per TAS 8 - - - - - - - - - - - - - - - -

2.1 Effect of corrections - - - - - - - - - - - - - - - -2.2 Effect of changes in accounting policies - - - - - - - - - - - - - - - -

III. Adjusted balances at beginning ofthe period (I+II) 1.020.000 - - - - (1.189) - - (20.291) - 209.828 (6.519) 325.397 1.527.226 - 1.527.226

IV. Total Comprehensive Income - - - - - (362) - - 97.438 - - - 324.887 421.963 - 421.963V. Capital Increase by Cash - - - - - - - - - - - - - - - -VI. Capital Increase by Internal Sources - - - - - - - - - - - - - - - -VII. Capital reserves from inflation

adjustments to paid-in capital - - - - - - - - - - - - - - - -VIII. Convertible Bonds to Shares - - - - - - - - - - - - - - - -IX. Subordinated Debt Instruments - - - 11.504 - - - - - - - - - 11.504 - 11.504X. Increase/Decrease by Other Changes - - - - - - - - - - - - - - - -XI. Profit distribution - - - - - - - - - - 318.878 6.519 (325.397) - - -

11.1 Dividends - - - - - - - - - - - - - - - -11.2 Transfers to reserves - - - - - - - - - - 318.878 (318.878) - - - -11.3 Others - - - - - - - - - - - 325.397 (325.397) - - -

Closing Balance (III+IV+…...+X+XI) 1.020.000 - - 11.504 - (1.551) - - 77.147 - 528.706 - 324.887 1.960.693 - 1.960.693

1. Revaluation surplus on tangible and intangible assets2. Defined Benefit Plans' Actuarial Gains/Losses3. Other (Accumulated amounts of share of investments accounted for by the equity method that can not be classified as profit / loss from other comprehensive income with other comprehensive income that will not be reclassified to other profit or loss)4. Foreign Currency Translation Differences5. Income/Expenses from Valuation and/or Reclassification of Financial Assets Measured at FVOCI6. Other (Accumulated amount of cash flow hedge gains / losses, equity attributable to equity holders of the Group for profit or loss from other comprehensive income and other comprehensive income to be reclassified to other profit or loss)


(Convenience Translation of the Independent Auditor’s Report originally issued in Turkish (See Note 1.a of Section Three)

Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of changes in Shareholders’ Equityas of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

10

CHANGES IN SHAREHOLDERS EQUITY Accumulated OtherComprehensive Income orExpense Not Reclassified

through Profit or Loss

Accumulated OtherComprehensive Incomeor Expense Reclassifiedthrough Profit or Loss

CURRENT PERIOD(01/01/2020-31/12/2020)

Paid-inCapital

SharePremium

ShareCertificate

CancellationProfits

OtherCapital

Reserves 1 2 3 4 5 6

ProfitReserv

es

PriorPeriod

NetIncome/

(Loss)

CurrentPeriod Net

Income /(Loss)

Total equityexcludedfrom non

controllinginterests

Non-controllingInterest (-)

TotalShareholders'

EquityI. Balances at beginning of the period 1.020.000 - - 11.504 - (1.551) - - 77.147 - 528.706 - 324.887 1.960.693 - 1.960.693II. Correction made as per TAS 8 - - - - - - - - - - - - - - - -

2.1 Effect of corrections - - - - - - - - - - - - - - - -2.2 Effect of changes in accounting policies - - - - - - - - - - - - - - - -

III. Adjusted balances at beginning ofthe period (I+II) 1.020.000 - - 11.504 - (1.551) - - 77.147 - 528.706 - 324.887 1.960.693 - 1.960.693

IV. Total Comprehensive Income - - - - - (2.666) - - (25.872) - - - 666.866 638.328 - 638.328V. Capital Increase by Cash 2.200.000 - - - - - - - - - - - - 2.200.000 - 2.200.000VI. Capital Increase by Internal Sources - - - - - - - - - - - - - - - -VII. Capital reserves from inflation

adjustments to paid-in capital - - - - - - - - - - - - - - - -VIII. Convertible Bonds to Shares - - - - - - - - - - - - - - - -IX. Subordinated Debt instruments(*) - - - - - - - - - - - - - - - -X. Increase/Decrease by Other Changes - - - - - - - - - - - (455) - (455) - (455)XI. Profit distribution - - - - - - - - - - 324.432 455 (324.887) - - -

11.1 Dividends - - - - - - - - - - - - - - - -11.2 Transfers to reserves - - - - - - - - - - 324.432 (324.432) - - - -11.3 Others - - - - - - - - - - - 324.887 (324.887) - - -

Closing Balance (III+IV+…...+X+XI) 3.220.000 - - 11.504 - (4.217) - - 51.275 - 853.138 - 666.866 4.798.566 - 4.798.566

1. Revaluation surplus on tangible and intangible assets2. Defined Benefit Plans' Actuarial Gains/Losses3. Other (Accumulated amounts of share of investments accounted for by the equity method that cannot be classified as profit / loss from other comprehensive income with other comprehensive income that will not be reclassified to other profit or loss)4. Foreign Currency Translation Differences5. Income/Expenses from Valuation and/or Reclassification of Financial Assets Measured at FVOCI6. Other (Accumulated amount of cash flow hedge gains / losses, equity attributable to equity holders of the Group for profit or loss from other comprehensive income and other comprehensive income to be reclassified to other profit or loss)

(*) Third section seventh note



Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of Cash flowsas of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

11



STATEMENT OF CASH FLOWS CURRENTPERIOD

(01/01/2020-31/12/2020)

PRIORPERIOD

(01/01/2019-31/12/2019)

A. CASH FLOWS FROM BANKING OPERATIONS

1.1 Operating profit before changes in operating assets and liabilities 1.582.858 1.004.373

1.1.1 Profit share income received 2.846.956 2.218.1711.1.2 Profit share expense paid (1.173.046) (1.572.721)1.1.3 Dividend received - -1.1.4 Fees and commissions received 199.414 137.2961.1.5 Other income 1.977 4.6341.1.6 Collections from previously written off loans and other receivables 36.400 54.4981.1.7 Cash payments to personnel and service suppliers (357.131) (238.261)1.1.8 Taxes paid (287.458) (140.996)1.1.9 Other 315.746 541.752

1.2 Changes in operating assets and liabilities subject to banking operations 243.572 592.419

1.2.1 Net (Increase) Decrease in financial assets at fair value through profit or loss (835.390) (1.604.090)1.2.2 Net (Increase) Decrease in due from banks and other financial institutions (3.477.129) (442.619)1.2.3 Net (Increase) Decrease in loans (10.003.020) (4.488.357)1.2.4 Net (Increase) Decrease in other assets (1.708.559) 114.0241.2.5 Net Increase (Decrease) in bank deposits 583.668 (132.338)1.2.6 Net Increase (Decrease) in other deposits 14.556.747 6.743.4251.2.7 Net Increase/Decrease in Financial Liabilities at Fair Value Through Profit or Loss - -1.2.8 Net Increase (Decrease) in funds borrowed 683.042 17.6011.2.9 Net Increase (Decrease) in due payables - -1.2.10 Net Increase (Decrease) in other liabilities 444.213 384.773

I. Net cash provided from banking operations 1.826.430 1.596.792

B. CASH FLOWS FROM INVESTING ACTIVITIES

II. Net cash provided from investing activities (5.677.415) (3.379.312)

2.1 Cash paid for purchase of entities under common control, associates and subsidiaries (2.755) -2.2 Cash obtained from sale of entities under common control, associates and subsidiaries - -2.3 Purchases of tangible assets (135.785) (42.543)2.4 Sales of tangible assets 69.460 -2.5 Purchase of Financial Assets at Fair Value Through Other Comprehensive Income (7.171.969) (2.915.774)2.6 Sale of Financial Assets at Fair Value Through Other Comprehensive Income 1.563.634 244.0652.7 Purchase of Financial Assets Measured at Amortised Cost - (665.060)2.8 Sale of Financial Assets Measured at Amortised Cost - -2.9 Other - -

C. CASH FLOWS FROM FINANCING ACTIVITIES

III. Net cash provided from financing activities 3.975.976 955.323

3.1 Cash obtained from funds borrowed and securities issued 70.922.158 29.226.0003.2 Cash used for repayment of funds borrowed and securities issued (69.093.001) (28.225.876)3.3 Equity instruments issued 2.200.000 -3.4 Dividends paid - -3.5 Payments for financial leases (53.181) (44.801)3.6 Others - -

IV. Effect of change in foreign exchange rate on cash and cash equivalents 46.726 61.967

V. Net increase/(decrease) in cash and cash equivalents 171.717 (765.230)

VI. Cash and cash equivalents at beginning of period 2.652.405 3.417.635

VII. Cash and cash equivalents at end of period 2.824.122 2.652.405



Vakıf Katılım Bankası A.Ş.Unconsolidated Statement of Profit Appropriationas of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

12

STATEMENT OF PROFIT APPROPRIATION CURRENT PERIOD (*)(31/12/2020)

PRIOR PERIOD (*)(31/12/2019)

I. DISTRIBUTION OF CURRENT YEAR INCOME

1.1. CURRENT YEAR INCOME 842.246 442.1261.2. TAXES AND DUTIES PAYABLE (-) 175.380 117.2391.2.1. Corporate tax (Income tax) 246.952 143.7401.2.2. Income withholding tax - -1.2.3. Other taxes and legal liabilities (**) (71.572) (26.501)

A. NET INCOME FOR THE YEAR (1.1-1.2) 666.866 324.887

1.3. PRIOR YEAR LOSSES (-) - -1.4. FIRST LEGAL RESERVES (-) - 14.9191.5. OTHER STATUTORY RESERVES (-) - -

B. DISTRIBUTABLE NET PERIOD INCOME [(A-(1.3+1.4+1.5)] (*) - 309.968

1.6. FIRST DIVIDEND TO SHAREHOLDERS (-) - -1.6.1. To owners of ordinary shares - -1.6.2. To owners of preferred shares - -1.6.3. To owners of preferred shares (Preemptive rights) - -1.6.4. To Profit sharing bonds - -1.6.5. To owners of the profit /loss sharing certificates - -1.7. DIVIDEND TO PERSONNEL (-) - -1.8. DIVIDEND TO BOARD OF DIRECTORS (-) - -1.9. SECOND DIVIDEND TO SHAREHOLDERS (-) - -1.9.1. To owners of ordinary shares - -1.9.2. To owners of preferred shares - -1.9.3. To owners of preferred shares (Preemptive rights) - -1.9.4. To profit sharing bonds - -1.9.5. To owners of the profit /loss sharing Certificates - -1.10. SECOND LEGAL RESERVE (-) - -1.11. STATUS RESERVES (-) - -1.12. EXTRAORDINARY RESERVES - 203.8631.13. OTHER RESERVES - 41.1051.14. SPECIAL FUNDS - 65.000

II. DISTRIBUTION FROM RESERVES

2.1. DISTRIBUTED RESERVES - -2.2. SECOND LEGAL RESERVES (-) - -2.3. SHARE TO SHAREHOLDERS (-) - -2.3.1. To owners of ordinary shares - -2.3.2. To owners of preferred shares - -2.3.3. To owners of preferred shares (Preemptive rights) - -2.3.4. To profit sharing bonds - -2.3.5. To owners of the profit /loss sharing certificates - -2.4. SHARE TO PERSONNEL (-) - -2.5. SHARE TO BOARD OF DİRECTORS (-) - -

III. EARNİNGS PER SHARE

3.1. TO OWNERS OF ORDİNARY SHARES (***) (Full TL) 0,00207 0,003043.2. TO OWNERS OF ORDİNARY SHARES (%) 0,20710 0,303893.3. TO OWNERS OF PREFERRED SHARES - -3.4. TO OWNERS OF PREFERRED SHARES (%) - -

IV. DİVİDEND PER SHARE

4.1. TO OWNERS OF ORDİNARY SHARES (Full TL) - -4.2. TO OWNERS OF ORDİNARY SHARES (%) - -4.3. TO OWNERS OF PREFERRED SHARES - -4.4. TO OWNERS OF PREFERRED SHARES (%) - -

(*) General Assembly of the Bank is the authorized body for the profit appropriation decisions. The Ordinary General Assembly Meeting has not beenheld as of the date of the preparation of these financial statements.

(**) Deferred tax income is not subject to profit distribution.(***) Calculated by using the number of share certificates as of year-end.



Vakıf Katılım Bankası A.Ş.Notes related to unconsolidated financial statements as of December 31, 2020(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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Section threeAccounting policies

I. Explanations on basis of presentation:a. The preparation of the financial statements and related notes and explanations in accordance

with the Turkish Accounting Standards and Regulation on the Principles and ProceduresRegarding Banks’ Accounting Application and Safeguarding of Documents:

The unconsolidated financial statements are prepared within the scope of the “Regulation on AccountingApplications for Banks and Safeguarding of Documents” related with Banking Act numbered 5411published in the Official Gazette numbered 26333 dated 1 November 2006 and in accordance with theregulations, communiqués, interpretations and legislations related to accounting and financial reportingprinciples published by the Banking Regulation and Supervision Agency (“BRSA”), and in case where aspecific regulation is not made “Turkish Accounting Standards” (“TAS”) and “Turkish Financial ReportingStandards” (“TFRS”) put into effect by Public Oversight Accounting and Auditing Standards Authority(“POA”). The format and content of the publicly announced unconsolidated financial statements and notesto these statements have been prepared in accordance with the “Communiqué on Publicly AnnouncedFinancial Statements, Explanations and Notes to These Financial Statements” and “Communiqué OnDisclosures About Risk Management To Be Announced To Public By Banks” and amendments to thisCommuniqué. The Bank maintains its books in Turkish Lira in accordance with the Banking Act, TurkishCommercial Code and Turkish Tax Legislation.The unconsolidated financial statements have been prepared in TL, under the historical cost conventionexcept for the financial assets and liabilities carried at fair value.The preparation of unconsolidated financial statements in conformity with TAS requires the use of certainaccounting estimates by the Bank management to exercise its judgement on the assets and liabilities onthe balance sheet and contingent assets and liabilities as of the balance sheet date. These estimates arebeing reviewed regularly and, when necessary, suitable corrections are made and the effects of thesecorrections are explained in the related notes and reflected to the income statement. Assumptions andestimates that are used in the preparation of the accompanying financial statements are explained in thefollowing related disclosures.Additional paragraph for convenience translation to EnglishThe differences between accounting principles, as described in these preceding paragraphs andaccounting principles generally accepted in countries in which unconsolidated financial statements are tobe distributed and International Financial Reporting Standards (“IFRS”) have not been quantified in theseunconsolidated financial statements. Accordingly, these unconsolidated financial statements are notintended to present the financial position, results of operations and changes in financial position and cashflows in accordance with the accounting principles generally accepted in such countries and IFRS.

b. Accounting policies and valuation principles applied in the preparation of unconsolidatedfinancial statements:

Accounting policies and valuation principles used in the preparation of financial statements; regulations,communiqués, explanations and circulars published by the BRSA regarding the principles of accountingand financial reporting, and the issues that are not regulated with these, are determined according to theprinciples within the scope of TAS / TFRS (all of which are “BRSA Accounting and Financial ReportingLegislation”).The new TFRS/TAS amendments in effect has been assessed on the accounting policies,financial position and performance of the Bank. Financial BRSA Accounting and Financial ReportingLegislation is consistent in the footnote, except for the new regulations mentioned in Section three noteVIII, for the condition of the financial statements evaluated as of the year ended 31 December 2019. Theaccounting policies and valuation principles related with current and prior period are explained in Notes IIto XXIV below. The preparation of financial statements in conformity with TFRS requires the use of certaincritical accounting estimates by the Participation Bank management to exercise its judgment on the assetsand liabilities of the balance sheet and contingent matters as of the balance sheet date. These estimates,which include the fair value calculations of financial instruments and impairments of financial assets arebeing reviewed regularly and, when necessary, suitable corrections are made, and the effects of thesecorrections are reflected to the income statement.



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I. Explanations on basis of presentation (continued):

The COVID-19 epidemic, which has recently emerged in China, has spread to various countries aroundthe world, causing potentially fatal respiratory infections, affects both regional and global economicconditions negatively, as well as causing malfunctions in operations, especially in countries exposed to theepidemic. As a result of the spread of COVID-19 around the world, various measures have been taken inour country as well as in the world in order to prevent the transmission of the virus and it is still being taken.In addition to these measures, economic measures are also taken to minimize the economic impact of thevirus outbreak on individuals and businesses in our country and worldwide.

While preparing the year-end financial statements as of December 31, 2020, the Bank reflected the possibleeffects of the COVID-19 outbreak on the estimate’s ad judgments used in the preparation of the financialstatements. The estimates and assumptions used in the calculation of expected loan losses are explainedin the statements on impairment of financial assets.

c. Comparative Information and Classifications:

Significant changes in accounting policies are applied retrospectively and previous period financialstatements are rearranged. The financial statements of the Bank are prepared in comparison with theprevious period in order to allow the determination of financial status and performance trends. Comparativeinformation is rearranged when necessary in order to comply with the presentation of the current periodfinancial statements.

II. Explanations on strategy of using financial instruments and foreign currency transactions:

The Bank creates its strategies on financial instruments considering its sources of financing. The bank'sfunding structure mainly consists of funds collected as "current accounts", "participation accounts" and"investment agency accounts". Apart from the funds collected, the Bank's most important funding sourcesare equity and funds collected from domestic / foreign financial institutions. Other than current and profit-sharing accounts, the Bank’s most important funding sources are its equity and borrowings from financialinstitutions. The Bank sustains its liquidity to cover matured liabilities by holding adequate level of cash andcash equivalents.

The Bank’s transactions in foreign currencies are accounted in accordance with the TAS 21 “AccountingStandard on the Effect of Changes in Foreign Currency Rates” and converted with the exchange rate rulingat the transaction date into Turkish Lira. Foreign currency assets and liabilities have been translated intoTurkish Lira at the rate of exchange rates ruling at the balance sheet date announced by Central Bank ofRepublic of Turkey “CBRT”. Gains or losses arising from foreign currency transactions and translation offoreign currency assets and liabilities are reflected in the income statement as foreign exchange gain orloss.

The portion of risk belonging to the profit-sharing accounts for foreign currency non-performing loans whichwere funded from these accounts is evaluated at current foreign exchange rates. The portion of provisionsprovided for such loans belonging to profit sharing accounts are also evaluated at current foreign exchangerates.

The foreign currency exchange differences resulting from the translation of debt securities issued andmonetary financial assets into Turkish Lira are included in the income statement.

Precious metals accounted under assets and liabilities which do not have fixed maturity are converted intoTurkish Lira by using the weighted average price at the balance sheet date announced by the Bank andresulting evaluation differences are reflected as foreign exchange gain or loss.

There are no foreign currency differences capitalized by the Bank.

III. Explanations on investments in associates and subsidiaries:

Associates and Entities Under Common Control are recognized in the framework of TFRS 9 “FinancialInstruments: Turkish Financial Reporting Standards” in accordance with TAS 27 “Individual FinancialStatements” and TAS 28 “Investments in Subsidiaries and Associates” standards while subsidiaries arerecognized based on cost principle.



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IV. Explanations on forward, option contracts and derivative instruments:

The derivative financial instruments of the Bank consist of forward foreign currency, forward precious metaland swap agreements. The Bank records the spot foreign currency transactions in asset purchase and salecommitments.

The Bank’s derivative instruments are classified, measured and accounted in accordance with "TFRS 9Financial Instruments”. Derivative instruments held for trading initially recognized at fair value andsubsequently measured at fair value.

The liabilities and receivables arising from the derivative transactions are recorded as off-balance sheetitems at their contractual values. The derivative transactions are accounted for at fair value subsequent toinitial recognition and are presented in the “Derivative Financial Assets at Fair Value Through Profit orLoss”, “Derivative Financial Assets at Fair Value Through Other Comprehensive Income” or “DerivativeFinancial Liabilities at Fair Value Through Profit or Loss” and “Derivative Financial Liabilities at Fair ValueThrough Other Comprehensive Income” items of the balance sheet depending on the resulting positive ornegative amounts of the computed value. These amounts on the balance sheet present the fair values ofderivative transactions.

Since the Bank does not fulfill all the necessary conditions for the derivative transactions to be recognizedas an item in hedge accounting, gain or loss is realized under profit or loss for the related transactions.

V. Explanations on profit share income and expenses:

Profit share income

Profit share income is accounted in accordance with the internal rate of return method, which is equal tothe net present value of the future cash flows of the financial asset determined in TFRS 9 and reflected tothe accrual basis. The Bank calculate accrual for non-performing Loans.

Profit share expense

The Bank records profit share expenses on accrual basis. The profit share expense accrual calculated inaccordance with the unit value method on profit sharing accounts has been included under the account‘Funds Collected’ in the balance sheet.

VI. Explanations on fees, commission income and expenses:

Fees and commissions are accounted for in accordance with “TFRS 15 Revenue from Contracts withCustomers” except for fees and commissions that are integral part of the effective profit share rates offinancial instruments measured at amortized costs.

In accordance with provisions of TAS, the portion of the commission and fees which are related to thereporting period and collected in advance for cash and non-cash loans granted is reflected to the incomestatement by using the internal rate of return method and straight-line methods, respectively over thecommission period of the related loan, respectively. Fees and commissions collected in advance, whichare related to the future periods are recorded under the account ‘Unearned Revenues’ and included in‘Other Liabilities’ in the balance sheet. The commission received from cash loans corresponding to thecurrent period is presented in “Profit Share on Loans” in the income statement.

Related to financial liabilities; loan fees and commission expenses which constitute the transaction costand which are paid to other institutions and organizations are accounted under the prepaid expense accountand reflected in the expense accounts according to the internal rate of return method.



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VII. Explanations on financial assets and liabilities:

The Bank categorizes its financial assets as “Fair Value Through Profit or Loss”, “Fair Value Through OtherComprehensive Income” or “Measured at Amortized Cost”. Such financial assets are recognized orderecognized according to TFRS 9 Financial Instruments Part three Issued for classification andmeasurement of the financial instruments published in the Official Gazette No. 29953 dated 19 January2017 by the Public Oversight Accounting and Auditing Standards Authority. Financial assets are measuredat fair value at initial recognition in the financial statements. During the initial recognition of financial assetsother than "Financial Assets at Fair Value Through Profit or Loss", transaction costs are added to fair valueor deducted from fair value.

The Bank recognizes a financial asset into financial statements when it becomes a party to the contractualterms of a financial instrument. During the first recognition of a financial asset into the financial statements,business model determined by the Bank management and the nature of contractual cash flows of thefinancial asset are taken into consideration. When the business model determined by the Bank'smanagement is changed, all affected financial assets are reclassified and this reclassification is appliedprospectively. In such cases, no adjustments are made to earnings, losses or profit share that werepreviously recorded in the financial statements.

Financial assets at fair value through profit or loss:Financial assets at fair value through profit or loss classified under two main categories as "DerivativeFinancial Assets" and "Financial assets at fair value through profit or loss". Financial assets classified inthis group are taken into the financial statements with cost values that reflect their fair values and are shownin the financial statements at fair value in the following periods. The resulting valuation gain and loss areincluded in the profit / loss accounts.

Financial assets valued at fair value through other comprehensive income:

Financial assets at fair value through other comprehensive income are initially recognized at cost; whichreflects their fair values; including the transaction costs. After the initial recognition, financial assets valuedat fair value through other comprehensive income are measured at fair value and the unrealized gains orlosses resulting from the difference between the amortized cost and the fair value is recorded in“accumulated other comprehensive income or expense to be reclassified through profit or loss” underequity. In case of a disposal of financial assets valued at fair value through profit and loss,increases/decreases which have been recorded in the Accumulated other comprehensive income orexpense to be reclassified through profit or loss under the equity is transferred to income statement.Financial assets at fair value through other comprehensive income which do not have a quoted marketprice in an active market and whose fair values can not be reliably measured are carried at cost, lessimpairment, if any.



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VII. Explanations on financial assets and liabilities (continued):

Financial assets and liabilities measured at amortized cost:Financial assets that are held for collection of contractual cash flows where those cash flows representsolely payments of principal and profit share are classified as financial assets measured at amortized cost.Financial assets and liabilities measured at amortized cost are initially recognized at cost including thetransaction costs which reflect the fair value of those instruments and subsequently recognized at amortizedcost by using the internal rate of return. Profit share income and profit share expense obtained from financialassets and liabilities measured at amortized cost are accounted in the income statement.

As of December 31, 2020 the Bank has an subordinated debt that the creditor is Türkiye Varlık FonuYönetimi A.Ş., with TRT240424F22 ISIN code, with initial date 24 April 2019, with at least five-yearrepayment option and with no fixed term, amounting to EUR 100.000.000, the financial liability is recordedat fair value and the difference between cost value and fair value is accounted under “Other CapitalReserves” in shareholders’ equity at the date of initial acquisition (Section 5 Part 2 Note 10).

In addition, government securities with no fixed term and with 0% return are classified as ‘financial assetscarried at amortized cost’ and recorded to the balance sheet with the reduced amount of governmentsecurities’ rate of return, in accordance with the decision taken by the Bank's Management. The differencebetween the initial acquisition date cost value and the reduced amount is recorded under ‘Other CapitalReserves’ account in shareholders’ equity (Section 5 Part 1 Note 6).

The Bank's profit and loss sharing investment (musharakah) investments are followed under the "Financialassets valued at amortised cost " account. profit and loss sharing investment (musharakah) followed in theloan account by the Bank according to the BRSA Uniform Chart of Accounts and the Bank applies "Interest-free Finance Accounting Standard 3: Mudarebe Financing" or "Interest-free Finance Accounting Standard4: Musharakah Financing" for partnership financing funds in the form of "labor-capital partnership"(mudarebe) or "profit and loss partnership" (musharakah) which will be valued for the first time as ofDecember 31, 2020 or as of January 1, 2021 in accordance with the BRSA's letter numbered E-43890421-010.07.01-1294.

VIII. Explanations on expected credit losses:

As of 1 January 2018, the Bank recognizes a loss allowance for expected credit losses on financial assetsand loans measured at amortized cost, financial assets measured at fair value through othercomprehensive income, loan commitments and financial guarantee contracts not measured at fair valuethrough profit/loss based on TFRS 9 “Communiqué Related to Principles and Procedures on Determiningthe Qualifications of Banks’ Loans and Other Receivables and the Provision for These Loans and OtherReceivables” and the regulation published in the Official Gazette no. 29750 dated 22 June 2016 inconnection with “Procedures and Principals regarding Classification of Loans and Allowances Allocated forSuch Loans” effective from 1 January 2018. At each reporting date, the Bank shall assess whether thecredit risk on a financial instrument has increased significantly since initial recognition. The Bank considersthe changes in the default risk of financial instrument, when making the assessment.

The Bank classifies the financial asset as stage 1 if the credit risk of a financial instrument does notmaterially increase since initial recognition to the financial statements and measures the amount of theimpairment on the financial asset equal to 12-month expected credit losses at each reporting date. Thepurpose of impairment is to recognize lifetime expected credit losses in the financial statement for the creditrisk of all financial instruments those materially increase since initial recognition to the financial statementswith considering all supportable information individually or collectively including reasonable and prospectiveinformation.

The expected credit loss estimates are required to be unbiased, probability-weighted and includesinformation about past events, current conditions, and forecasts of future economic conditions. Thesefinancial assets are divided into three categories depending on the increase in credit risk observed sincetheir initial prospective information:



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VIII. Explanations on expected credit losses (continued):

Stage 1:

For the financial assets at initial recognition or that do not have a significant increase in credit risk sinceinitial recognition. Impairment for credit risk is recorded in the amount of 12-month expected credit losses.The twelve-month expected credit loss is calculated on the basis of a default estimate of twelve monthsfollowing the reporting date. These expected twelve-month Probability of Defaults (PD) are applied to anestimated amount of default and this expected twelve-month default is multiplied by the LGD.

Stage 2:

As of the reporting date of the financial asset, in the event of a significant increase in credit risk since initialrecognition, the financial asset is transferred to Stage 2. Impairment for credit risk is determined on thebasis of the instrument’s lifetime expected credit losses. As of the reporting date, lifetime expected creditloss of a significant increase in credit risk is multiplied with Probability of Default and Loss Given Default.

Stage 3:Financial assets considered as impaired at the reporting date are classified as stage 3. The probability ofdefault is taken into account as 100% in the calculation of impairment provision and Bank accounts lifetimeexpected credit losses. The Bank takes into consideration delay of over 180 days criteria in thedetermination of the impairment.

As mentioned in the important estimates and judgments note used in the preparation of the financialstatements, the Bank reflected the possible effects of the COVID-19 outbreak on the financial statementswith the best estimation method as of December 31, 2020. In this context, the Bank has establishedadditional provisions by increasing the probability of default by taking into account the ratio of the follow-upin the negative scenario in the ISEDES report due to the possible effects of the epidemic on the economy.This approach, which is preferred in expected credit loss calculations for 2020, will be revised by taking intoconsideration the impact of the epidemic, credit portfolio and future expectations in the following reportingperiods.

Due to the disruptions in economic and commercial activities as a result of the COVID-19 outbreak, basedon the BRSA's resolutions of March 17 2020, numbered 8948 and March 27 2020, numbered 8970, as ofMarch 17, 2020, within the scope of the 4th and 5th articles of the "Regulation on the Procedures andPrinciples Regarding the Classification of Loans and Provisions to Be Allocated for Them”, 30 days delayperiod envisaged for classification of loans in the second group is applied as 90 days until December 31,2020 for the loans monitored in the first group, 90 days delay period envisaged for the classification of loansin non-performing loans, is provided to be applied as 180 days until December, 31 2020 for the loansmonitored in the first and second groups. This application was extended until June 30, 2021 with the BRSAdecision numbered 9312 dated December 8, 2020. In this context;

Temporarily, the practice of the classifying receivables which cannot be collected up to 180 daysin the second group has been established.

For customer who do not want to be delayed in overdue installments, the installment of installmentshas started within the framework of these deadlines without breaking the existing configurationcontracts.

In the completion of the “Garame” banks protocols, the time to be given to time-consumingoperations was extended with a joint agreement.

Ultimately, it was concluded that the provisions to be set aside for such receivables will continue accordingto their own risk models used by banks to calculate expected loan losses under TFRS 9. As of December31, 2020, the Bank has a total loan of 39.977 TL with a delay of +30 days and above and a total of 266.661TL with a delay of +90 days and above are classified as first and second group loans, respectively.



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Calculation of expected credit losses

The Bank measures expected credit losses with the reasonable, objective and supportable informationbased on a probability-weighted including estimations about past events, current conditions as of thereporting date, without undue cost or effort. The Bank has not developed an internal model for estimatingthese risk parameters due to insufficient historical data for modelling. In ECL calculations, the Bank considersectoral average NPL ratio as PD with reasonable approach and the ratio of non-performing loans to grossloans, in line with the projection of the next year. If there is a rating determined by the internationalindependent rating agencies for the first 100 credits, the default probability (PD) ratio corresponding to theirratings has been used for these loans. Real estate mortgages taken as collateral, KGF (Credit GuaranteeFund) warranties and cash blocks were taken into consideration in provision calculation accordance withthe collaterals specified in the “Regulation on Procedures and Principles Regarding the Classification ofLoans and Provisions to be Reserved for Them” which determines the rates of consideration in calculationof special provisions. For LGD, the Bank uses a 45% ratio in compliance with the basic IDD approach inCommuniqué Related to Principles of the amount credit risk calculated with the Internal Ratings BasedApproach published by the BRSA with a reasonable approach. The calculation of expected credit lossesconsists of three main parameters: Probability of Default (PD), Loss Given Default (LGD), and Exposureat Default (EAD).

Probability of Default

PD represents the likelihood of a default over a specified time period. A 12-month PD calculates thelikelihood of default determined for the next 12 months and a lifetime PD calculates the probability to occurduring the expected life of the loan.

Loss Given Default

LGD represents an estimate of the loss at the time of a potential default occurring during the life of afinancial instrument. LGD is determined as 45% in accordance with Basel criterias and is taken intoconsideration as 100% at the end of the 24-month period starting from 45% on the date of the financialinstrument's legal follow-up.

Exposure at Default

EAD represents an estimate of the exposure to credit risk at the time of a potential default. EAD consistsof expected principal amount and profit share payments. The calculation depends on the nature ofreceivable (cash, non-cash etc.) and the stage of the receivable.

Calculating the Expected Loss Period

Lifetime ECL is calculated by taking into consideration the period during which the Bank will be exposed tocredit risk.

Significant increase in credit riskThe Bank makes qualitative assessments regarding assessment of significant increase in credit risk offinancial assets to be classified as stage 2 (Significant Increase in Credit Risk).

The Participation Bank classifies the financial asset as Stage 2 (Significant Increase in Credit Risk) whereany of the following conditions are satisfied as a result of a qualitative assessment:

Loans overdue more than 30 days as of the reporting date Loans classified as watchlist When there is a change in the payment plan due to restructuring At least two of the conditions occur; loans overdue more than 3 days, having indemnified liabilities by

the Bank, having NPL amount in the incorporated registration or having bad cheque,



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At least three of the conditions such as having more than 15 days of delay, having an obligation indemnifiedby the Bank, having NPL amount in the incorporated registration, an accrual, compensation or restructuringabove the amount determined by the bank, an e-distraint or execution proceeding, and a bounced checkoccur.

IX. Explanations on offsetting of financial instruments:

Financial instruments are offset when the Bank has a legally enforceable right to net off the recognizedamounts, and there is an intention to settle on net basis or realize the asset and settle the liabilitysimultaneously.

There are no such offset of financial assets and liabilities.

X. Explanations on sale and repurchase agreements and lending of securities:Securities subject to repurchase agreement are classified as at “fair value through profit or loss”, “fair valuethrough other comprehensive income” or “amortised cost” according to the investment purposes of theBank and measured according to the portfolio to which they belong. Funds obtained from the relatedagreements are accounted under “Borrowings from Money Markets” in liabilities and the difference betweenthe sale and repurchase price is accrued over the life of the agreements using the internal rate of returnmethod. Profit share expense on such transactions is recorded under “Profit Share Expense on MoneyMarket Borrowings” in the income statement.

The Bank has no securities lending transactions.

XI. Explanations on assets held for sale and discontinued operations and liabilities related to theseassets:

Assets held for sale (or disposal group) in accordance with TFRS 5 (“Assets Held for Sale and DiscontinuedOperations”) are measured at the lower of the carrying amount of assets and fair value less any cost to beincurred for disposal. In order to classify an asset as held for sale, the possibility of sale should be highlyprobable and the asset (or disposal group) should be available for immediate sale in its present condition.Highly saleable condition requires a plan designed by an appropriate level of management regarding thesale of the asset to be disposed of together with an active program for the determination of buyers as wellas for the completion of the plan. Also, the asset shall be actively marketed in conformity with its fair value.In addition, the sale is expected to be recognized as a completed sale within one year after the classificationdate and the necessary transactions and procedures to complete the plan should demonstrate the fact thatthere is remote possibility of making any significant changes in the plan or cancellation of the plan.

A discontinued operation is a part of the Bank’s business which has been disposed of or classified as held-for-sale. The operating results of the discontinued operations are disclosed separately in the incomestatement.

The Bank has no discontinued operations.

XII. Explanations on goodwill and other intangible assets:

Goodwill and other intangible assets are recorded at cost in accordance with TAS 38 “Turkish AccountingStandards for Intangible Assets”. As of the balance sheet date, there is no goodwill in the financialstatements of the Bank. The Bank’s intangible assets consist of softwares and intangible rights.

Intangible assets purchased after this date have been recorded at their historical costs. Intangible assetsare amortized by the Bank over their estimated economic useful lives in equal amounts on a straight-linebasis. Useful lives of the Bank’s software have been determined as 3 years and other intangible assets’useful lives have been determined as 5 years.

If there is objective evidence of impairment, the asset’s recoverable amount is estimated in accordancewith the TAS 36 “Turkish Accounting Standard for Impairment of Assets” and if the recoverable amount isless than the carrying value of the related asset, a provision for impairment loss is provided.



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XIII. Explanations on tangible assets :

The tangible assets purchased after this date are recorded at their historical costs. Tangible assets arerecorded at cost less accumulated depreciation and provision for impairment, if any in compliance with theTAS 16 “Turkish Accounting Standards for Tangible Assets” in the financial statements.

There are no restrictions such as pledges, mortgages or any other restriction on tangible assets.

There are no changes in the accounting estimates which are expected to have an impact in the current orsubsequent periods.

Depreciation is calculated on a straight-line basis. Depreciation rates used are determined by consideringthe estimated economic useful life of the assets. The annual rates used are as follows:

The depreciation of an asset held for a period less than a full financial year is calculated as a proportion ofthe full year depreciation charge from the date of acquisition to the financial year-end. Leaseholdimprovements are depreciated over their estimated economic useful lives in equal amounts. The estimatedeconomic useful lives cannot exceed the leasing period. In cases where the leasing period is not certain,the useful life is determined as five years.

If there is an indication for impairment, the Bank estimates the recoverable amount of the tangible asset inaccordance with TAS 36 “Turkish Accounting Standard for Impairment of Assets” and if the recoverableamount is less than it is carrying value, provides for an impairment loss.

Gain or loss resulting from disposals of the tangible assets is calculated as the difference between the netproceeds from the sale and the net book value of the related asset.

The repair and maintenance costs of the tangible assets are capitalized, if the expenditure increases theeconomic life of the asset, other repair and maintenance costs are expensed.

Depreciable Asset Useful LifeOffice equipments 3 - 10 yearsSafe-deposit boxes 50 yearsTransportation vehicles 5 yearsOperational lease improvement costs (Leasehold improvements) 4 months-5 yearsOther tangible assets 2 - 25 yearsFurniture, fixture 3 - 10 yearsLeasing assets 1 - 25 years



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XIV. Explanations on leasing transactions:

Transactions as a lessee

Leases where the terms of the lease transfer substantially all the risks and rewards of ownership to thelessee are classified as finance leases and other leases are classified as operational leases.

Assets acquired under finance lease contracts are recorded both as an asset and a liability at the beginningdate of the lease. The basis for the determination of the balances recorded in the balance sheet as assetand liability is the lower of fair value of the leased asset at the inception of the lease and the present valueof the lease payments. Finance charges arising from lease contracts are expensed in the related periodstaking into consideration the internal rate of return over the period of the lease.

Assets acquired under finance lease contracts are depreciated over their useful lives and impairmentprovision is provided in case a decrease in recoverable amount has been determined.

The prepaid lease payments made under operational leases are charged to income statement on a straight-line basis over the period of the lease.

Transactions as a lessor

The Bank, as a participation bank, acts as a lessor in finance leasing transactions. The Bank presentsfinance leased assets as a receivable equal to the net investment in the lease. Finance income is basedon a pattern reflecting a constant periodic rate of return on the net investment outstanding.

Public Oversight Accounting and Auditing Standards Authority (“POA”) has issued TFRS 16 “LeasesStandard” in April 2018. The new standard eliminates the leasing of operating leases and leasing andrequires many leases for leasing companies to be included in the balance sheet under a single model. Forleasing companies, the recognition has not changed substantially and the difference between operatingleases and financial leasing continues. IFRS 16 replaces TAS 17 and TAS 17 and is effective for annualperiods beginning on or after 1 January 2019.

Lessees have the exception of not applying this standard to short-term rentals (leases with a rental periodof 12 months or less) or to leases where the underlying asset is of low value (eg personal computers, someoffice equipment, etc.). At the date when the leasing is actually started, the lessee measures the leasingliability on the present value of the lease payments that were not paid at that date (leasing liability) anddepreciates the existence of the right of use related to the same date as the same date. Lease paymentsare discounted using this rate if the implied profit share rate in the lease can be easily determined. If theratio is not easily determined, the lessee shall use the lessee's alternative borrowing profit share rate. Thelessee should record the profit share expense on the lease liability and the depreciation expense of theright to use separately.

The lessee shall re-measure the lease obligation if certain events occur (for example, changes in the leaseterm, future rental payments vary due to changes in a certain index or rate, etc.). In this case, the lesseeshall record the restatement effect of the lease obligation as a correction on the right to use.

XV. Explanations on provisions and contingent liabilities:

Provisions and contingent liabilities, excluding the general and specific provisions for impairment on loansand other receivables, are accounted in accordance with TAS 37: ‘‘Turkish Accounting Standard forProvisions, Contingent Liabilities and Contingent Assets’’.



23

XV. Explanations on provisions and contingent liabilities (continued):

Provisions are recognized when the Bank has a present legal or constructive obligation as a result of pastevents, it is probable that an outflow of resources embodying economic benefits will be required to settlethe obligation, and a reliable estimate of the amount of the obligation can be made. A provision forcontingent liabilities arising from past events should be recognized in the same period of occurrence inaccordance with the cut-off principle. A liability is recognized as a contingent liability where a possibleobligation that arises from past events and whose existence will be confirmed only by the occurrence ornon-occurrence of more than one events not wholly within the control of the Bank; or a present obligationthat arises from past events but it is not probable that an outflow of resources embodying economic benefitswill be required to settle the obligation; or the amount of the obligation cannot be measured with sufficientreliability and disclosed in the footnotes.

XVI. Explanations on contingent assets:

Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibilityof an inflow of economic benefits to the entity. Contingent assets are not recognized in financial statementssince this may result in the recognition of income that may never be realized. Contingent assets aredisclosed where an inflow of economic benefits is probable. Contingent assets are assessed continually toensure that developments are appropriately reflected in the financial statements. If it has become virtuallycertain that an inflow of economic benefits will arise, the asset and the related income are recognized inthe financial statements in which the change occurs.

XVII. Explanations on liabilities regarding employee rights:

i) Defined benefit plans:

Provision for employee severance benefits has been accounted for in accordance with TAS 19 “EmployeeBenefits”.

In accordance with the existing social legislation in Turkey, the Bank is required to make lump-sumtermination indemnities including retirement and notice payments to each employee whose employment isterminated due to resignation or for reasons other than misconduct. The retirement pay is calculated forevery working year within the Bank over salary for 30 days or the official ceiling amount per year ofemployment and the notice pay is calculated for the relevant notice period time as determined based onthe number of years worked for the Bank.

The Bank has reflected the retirement pay liability amount in the accompanying financial statements.According to TAS 19, the Bank recognizes all actuarial gains and losses immediately through othercomprehensive income. Provision for the employees’ unused vacations has been booked in accordancewith TAS 19 and reflected to the financial statements.

There are no foundations, pension funds or similar associations of which the employees are members.

As of December 31, 2020, the Bank has TL 4.217 actuarial loss (December 31, 2019: 1.551 TL).

ii) Defined contribution plans:

The Bank pays defined contribution plans to publicly administered Social Security Funds for its employees.The Bank has no further payment obligations other than this contribution share. The contributions arerecognized as personnel expenses when they accrue.

iii) Short term benefits to employees:

The Bank makes provisions for other employee benefits (accumulated leaves, premiums and in accordancewith article 31 of articles of incorporation of the Bank, dividend premium, which is equivalent to 9% of netprofit of year of the Bank, in order to be distributed to the personnel, limited to three months gross wage ofthe related personnel in scope of principles determined by Board of Directors) in its financial statementsbased on undiscounted amounts, which are anticipated to be paid in return for services provided by theemployees throughout an accounting period in accordance with TAS 19.



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XVIII. Explanations on taxation:

Current tax:

The Bank is subject to tax laws and legislation effective in Turkey.

In accordance with the Corporate Tax Law numbered 5520 published in the Official Gazette numbered26205 dated June 21, 2006, the corporation tax rate effective from January 1, 2006 is 20%. In accordancewith the Clause 91 of Corporate Tax Law numbered 7061 published in the Official Gazette numbered 30261dated December 5, 2017, current tax rate is increased from 20% to 22% for corporations in 2018, 2019 and2020 taxation periods.

Dividends paid to the resident institutions are not subject to withholding tax. Withholding tax rate on thedividend payments other than these is 15%. Appropriation of the retained earnings to capital is notconsidered as profit distribution and accordingly is not subject to withholding tax.

50% of gain from the sale of real estate which are held more than two years in the assets of the Bank and75% of gain on disposal of subsidiary shares which are held for more than two years in the assets of theBank are exemption from tax according to Corporate Tax Law in condition with allocating into a specificfund account in the Bank’s liabilities for five years. The amount received from the private fund account istaxed in case of transfer or distribution of the amount to another account in any way other than addition tothe capital.

Income generated by the transfer of properties, share certificates of subsidiaries, founders’ shares,preferred shares and preemptive rights owned by corporations under legal follow-up together with theirguarantors and mortgagers, which are transferred to banks due to their debts and used for winding up thedebts and 50% of the profit generated by sales of above-mentioned properties and 75% of the profitgenerated by sales of the others are exempt from corporation tax.

In accordance with the tax legislation, tax losses can be carried forward to offset against future taxableincome for up to five years. Tax losses cannot be carried back to offset profits from previous periods.

In Turkey, there is no procedure for a final and definite agreement on tax assessments. Companies filetheir tax returns to their tax offices by the end of 25th of the fourth month following the close of theaccounting period to which they relate. With the circular of the Tax Procedure Law No. 115 dated March29, 2019; The submission period of the corporate tax declaration has been extended until the evening ofthe last day of April until a new determination is made. Tax returns are open for five years from the beginningof the year that follows the date of filing during which time the tax authorities have the right to audit taxreturns, and the related accounting records on which they are based, and may issue reassessments basedon their findings and carry out sectorial investigations.

Corporate tax rate is applied to the income of the corporation's commercial income in the net corporateincome which will be deducted as deduction according to the tax law and deduction of the exemptions anddiscounts included in the tax laws. The corporation tax is declared until the end of the fourth month followingthe end of the year in which it is relevant and paid until the end of the relevant month.

Companies calculate their advance tax at the rate of 20% (22% for taxation periods of 2018, 2019 and2020) on their quarterly financial profits, declare until the 14th day of the second month following that periodand pay until the evening of the seventeenth day. With the Circular of the Tax Procedural Law No. 115 of29 March 2019, the period of issuance of the tax declaration has been extended until the seventeenth dayof the second month following the period of the provisional tax return period until the date of issuance. Theadvance tax paid belongs that year and is offset from the corporation tax that will be calculated on the taxdeclaration of the companies to be given in the following year. If the advance tax paid amount remains afteroffsetting, this amount could be either returned as cash or offset.



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XVIII. Explanations on taxation (continued):

Deferred tax:

The Bank calculates and accounts for deferred income taxes for all temporary differences arising betweenthe tax bases of assets and liabilities and their carrying amounts in these financial statements in accordancewith “Turkish Accounting Standard for Income Taxes” (“TAS 12”) and the related decrees of the BRSAconcerning income taxes. In calculating deferred tax, legalized tax rates effective as of balance sheet dateare used as per tax legislations. Deferred tax asset and liabilities are shown in the accompanying financialstatements on a net basis.

Deferred tax is calculated on the basis of the tax rates that are applicable to or are certain to have effect onthe income statement for the period in which the asset is realized or the liability is settled and recorded asincome or expense in the income statement. However, deferred tax is recognized directly in equity if thetax asset relates directly to equity in the same or different period.

The tax rate of 22% valid for 3 years as of January 1, 2018 will be applied as 20% as of January 1, 2021.Therefore, the rate of 20% is used in the deferred tax calculation as of 31 December 2020. Current taxpayable is netted off as it relates to prepaid tax amounts. Similarly, the deferred tax liability and theobligation are offset in the financial statements.

Also, by Banking Regulation and Supervision Agency's notice, if there is a income balance after the deferredtax assets and clarified debt, deferred debt assets are not taken into account in the profit allocation andincreased capital investments.

Deferred tax calculation has started to be measured over Stage 1 and Stage 2 expected credit lossprovisions for The Bank's share of loans provided from participation accounts and loans provided by equity,according to TFRS 9 from beginning January 1, 2018.

Deferred tax liabilities are recognized for all temporary differences whereas deferred tax assets calculatedfrom deductible temporary differences are only recognized if it’s highly probable that these will in the futurecreate taxable profit.

XIX. Additional explanations on borrowings:

The Bank generates funds from domestically and internationally resident people and institutions by usingdebt instruments such as syndication, borrowing and the debt certificates issued by the asset leasingcompany. Funds obtained via the debt certificates issued by the asset leasing company have beenpresented under “Funds Borrowed”. Borrowings, except for funds collected, are recognized at amortizedcost using the effective internal rate of return method in the following periods after the initial recognition.

XX. Explanations on issued share certificates:

None.

XXI. Explanations on acceptances and availed drafts:

Acceptances and availed drafts are realized simultaneously with the payment dates of the customers andthey are presented as commitments in the off-balance sheet accounts.

XXII. Explanations on government grants:

As of the balance sheet date, there are no government grants received by the Bank.



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XXIII. Explanations on segment reporting:

Business segment is a component of the Bank that engages in business activities from which the Bank mayearn revenues and incur expenses, whose operating results are regularly reviewed by the Bank's chiefoperating decision makers to make decisions about resources to be allocated to the segment and assessits performance, which and for discrete financial available.

Segment reporting is disclosed in Section Four, Note X.

XXIV. Explanations on other matters:

None.



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Section four

Information on financial structure and risk management

I. Explanations on equity:

The calculation of the own funds and the capital adequacy standard ratio are performed in accordance withthe communiqués such as “Regulation Regarding the Measurement and Evaluation of Banks’ CapitalAdequacy Ratio”, and “Regulation Regarding Banks’ Shareholders’ Equity”.

The Bank’s common Equity Tier 1 Capital is TL 5.629.088 (December 31, 2019: TL 2.505.971) whichcalculated as of December 31, 2020 and the capital adequacy ratio is 18,47% (December 31, 2019:14,88%).

a) Information about total capital items:

Current PeriodDecember 31,

2020

Prior PeriodDecember 31,

2019COMMON EQUITY TIER 1 CAPITALPaid-in capital following all debts in terms of claim in liquidation of the Bank 3.220.000 1.020.000Share issue premiums - -Reserves 853.138 527.706Gains recognized in equity as per TAS 62.779 88.651Profit 666.866 324.887 Current Period Profit 666.866 324.887 Prior Period Profit - -Shares acquired free of charge from subsidiaries, affiliates and jointly controlled partnerships and cannot berecognized within profit for the period - -Common Equity Tier 1 Capital Before Deductions 4.802.783 1.962.244Deductions from Common Equity Tier 1 Capital 57.458 49.996Common Equity as per the 1st clause of Provisional Article 9 of the Regulation on the Equity of Banks - -Portion of the current and prior periods’ losses which cannot be covered through reserves and losses reflectedin equity in accordance with TAS (-) 4.217 1.551Leasehold improvements(-) 30.099 28.765Goodwill (net of related tax liability) - -Other intangibles other than mortgage-servicing rights (net of related tax liability) 23.142 19.680Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net ofrelated tax liability) - -Differences are not recognized at the fair value of assets and liabilities subject to hedge of cash flow risk - -Communiqué Related to Principles of the amount credit risk calculated with the Internal Ratings BasedApproach, total expected loss amount exceeds the total provision - -Gains arising from securitization transactions - -Unrealized gains and losses due to changes in own credit risk on fair valued liabilities - -Defined-benefit pension fund net assets - -Direct and indirect investments of the Bank in its own Common Equity - -Shares obtained contrary to the 4th clause of the 56th Article of the Law - -Portion of the total of net long positions of investments made in equity items of banks and financial institutionsoutside the scope of consolidation where the Bank owns 10% or less of the issued common share capitalexceeding 10% of Common Equity of the Bank - -Portion of the total of net long positions of investments made in equity items of banks and financial institutionsoutside the scope of consolidation where the Bank owns 10% or more of the issued common share capitalexceeding 10% of Common Equity of the Bank - -Portion of mortgage servicing rights exceeding 10% of the Common Equity - -Portion of deferred tax assets based on temporary differences exceeding 10% of the Common Equity - -Amount exceeding 15% of the common equity as per the 2nd clause of the Provisional Article 2 of the Regulationon the Equity of Banks - -Excess amount arising from the net long positions of investments in common equity items of banks and financialinstitutions outside the scope of consolidation where the Bank owns 10% or more of the issued common sharecapital - -Excess amount arising from mortgage servicing rights - -Excess amount arising from deferred tax assets based on temporary differences - -Other items to be defined by the BRSA - -Deductions to be made from common equity due to insufficient Additional Tier I Capital or Tier II Capital - -Total Deductions From Common Equity Tier 1 Capital 57.458 49.996Total Common Equity Tier 1 Capital 4.745.325 1.912.248



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I. Explanations on equity (continued):Amount Amount

ADDITIONAL TIER 1 CAPITALPreferred Stock not Included in Common Equity and the Related Share Premiums - -Debt instruments and premiums approved by BRSA 703.053 519.069Debt instruments and premiums approved by BRSA (Temporary Article 4) - -Additional Tier I Capital before Deductions 703.053 519.069Deductions from Additional Tier I Capital - -Direct and indirect investments of the Bank in its own Additional Tier I Capital - -Investments of Bank to Banks that invest in Bank's additional equity and components of equity issued by financial institutionswith compatible with Article 7. - -Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions where the Bankowns 10% or less of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital - -The Total of Net Long Position of the Direct or Indirect Investments in Additional Tier I Capital of Unconsolidated Banks andFinancial Institutions where the Bank Owns more than 10% of the Issued Share Capital - -Other items to be defined by the BRSA - -Transition from the Core Capital to Continue to deduce Components - -Goodwill and other intangible assets and related deferred tax liabilities which will not deducted from Common Equity Tier 1 capitalfor the purposes of the first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds (-) - -Net deferred tax asset/liability which is not deducted from Common Equity Tier 1 capital for the purposes of the sub-paragraphof the Provisional Article 2 of the Regulation on Banks’ Own Funds (-) - -Deductions to be made from common equity in the case that adequate Additional Tier I Capital or Tier II Capital is not available(-) - -Total Deductions From Additional Tier I Capital - -Total Additional Tier I Capital 703.053 519.069Total Tier I Capital (Tier I Capital=Common Equity+Additional Tier I Capital) 5.448.378 2.431.317TIER 2 CAPITALDebt instruments and share issue premiums deemed suitable by the BRSA - -Debt instruments and share issue premiums deemed suitable by BRSA(Temporary Article 4) - -Provisions (Article 8 of the Regulation on the Equity of Banks) 194.644 74.693Tier II Capital Before Deductions 194.644 74.693Deductions From Tier II Capital - -Direct and indirect investments of the Bank on its own Tier II Capital (-) - -Investments of Bank to Banks that invest on Bank's Tier 2 and components of equity issued by financial institutions with theconditions declared in Article 8. - -Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside the scopeof consolidation where the Bank owns 10% or less of the issued common share capital exceeding 10% of Common Equity of theBank (-) - -Portion of the total of net long positions of investments made in Additional Tier I Capital item of banks and financial institutionsoutside the scope of consolidation where the Bank owns 10% or more of the issued common share capital exceeding 10% ofCommon Equity of the Bank - -Other items to be defined by the BRSA (-) - -Total Deductions from Tier II Capital - -Total Tier II Capital 194.644 74.693Total Capital (The sum of Tier I Capital and Tier II Capital) 5.643.022 2.506.010Deductions from Capital 13.934 39Deductions from Capital Loans granted contrary to the 50th and 51th Article of the Law - -

Net Book Values of Movables and Immovables Exceeding the Limit Defined in the Article 57, Clause 1 of the Banking Law andthe Assets Acquired against Overdue Receivables and Held for Sale but Retained more than Five Years - -Other items to be defined by the BRSA 13.934 39Deductions from Capital Loans granted contrary to the 50th and 51th Article of the Law - -The Sum of net long positions of investments (the portion which exceeds the %10 of Banks Common Equity) in the capital ofbanking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank does not ownmore than 10% of the issued common share capital of the entity which will not deducted from Common Equity Tier 1 capital,Additional Tier 1 capital, Tier 2 capital for the purposes of the first sub-paragraph of the Provisional Article 2 of the Regulation onBanks’ Own Funds - -The Sum of net long positions of investments in the Additional Tier 1 capital and Tier 2 capital of banking, financial and insuranceentities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued commonshare capital of the entity which will not deducted from Common Equity Tier 1 capital, Additional Tier 1 capital, Tier 2 capital forthe purposes of the first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds - -The Sum of net long positions of investments in the common stock of banking, financial and insurance entities that are outsidethe scope of regulatory consolidation, where the bank does not own more than 10% of the issued common share capital of theentity, mortgage servicing rights, deferred tax assets arising from temporary differences which will not deducted from CommonEquity Tier 1 capital for the purposes of the first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ OwnFunds - -



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I. Explanations on equity (continued):

Amount AmountTOTAL CAPITALTotal Capital (The sum of Tier 1 capital and Tier 2 capital) 5.629.088 2.505.971Total Risk Weighted Amounts 30.480.836 16.840.489

CAPITAL ADEQUACY RATIOS

Core Capital Adequacy Ratio (%) 15,57 11,36Tier 1 Capital Adequacy Ratio (%) 17,88 14,44Capital Adequacy Ratio (%) 18,47 14,88BUFFERSTotal buffer requirement (%) 2,50 2,50Capital conservation buffer requirement (%) 2,50 2,50Bank specific counter-cyclical buffer requirement (%) - -The ratio of Additional Common Equity Tier 1 capital which will be calculated by the first paragraph of the Article 4 of Regulationon Capital Conservation and Countercyclical Capital buffers to Risk Weighted Assets - -Total buffer requirement (%) 10,47 6,86Amounts below the Excess Limits as per the Deduction Principles - -Portion of the total of net long positions of investments in equity items of unconsolidated banks and financial institutions wherethe bank owns 10% or less of the issued share capital exceeding the 10% threshold of above Tier I capital - -Portion of the total of investments in equity items of unconsolidated banks and financial institutions where the bank owns 10%or less of the issued share capital exceeding the 10% threshold of above Tier I capital - -Amount arising from mortgage servicing rights - -Amount arising from deferred tax assets based on temporary differences 151.666 59.653

Limits related to provisions considered in Tier II calculation - -General provisions for standard based receivables (before ten thousand twenty five limitation) 194.644 74.693Up to 1.25% of total risk-weighted amount of general reserves for receivables where the standard approach used 194.644 74.693Excess amount of total provision amount to credit risk Amount of the Internal Ratings Based Approach in accordance with theCommuniqué on the Calculation - -Excess amount of total provision amount to &0,6 of risk weighted receivables of credit risk Amount of the Internal RatingsBased Approach in accordance with the Communiqué on the Calculation - -Debt instruments subjected to Article 4(to be implemented between January 1, 2018 and January 1, 2022) - -Upper limit for Additional Tier I Capital subjected to temporary Article 4 - -Amounts Excess the Limits of Additional Tier I Capital subjected to temporary Article 4 - -Upper limit for Additional Tier II Capital subjected to temporary Article 4 - -Amounts Excess the Limits of Additional Tier II Capital subjected to temporary Article 4 - -

In press release by BRSA dated March 23, 2020 it is stated that there are financial market turbulances asa result of Covid 19 pandemia. Because of this, in calculating credit risk as per “Regulation on Measurementand Assessment of Capital Adequacy of Banks”, it is possible that last 252 working days (before calculationdate) arithmetical averages of central bank buying exchange rates can be used in calculating the revaluedamounts of monetary and non-monetary items and their specific provisions. The items which are carried atcost is out of scope. In addition, if the net revaluation amounts are negative for “Financial Assets Measuredat Fair Value through Other Comprehensive Income”, these negative amounts may not be considered incalculating equity calculated as per “Regulation on Equity of Banks”. However, if the financial AssetsMeasured at Fair Value through Other Comprehensive Income acquired after March 23, 2020, then theexisting clauses of the regulation is applied. As of December 31, 2020, the Bank utilized the facilitiesmentioned above.

I. Explanations on equity (continued):



30

b) Information on debt instruments to be included in the equity calculation:

Issuer Türkiye Varlık Fonu Yönetimi A.Ş.

Unique Identifier (CUSIP, ISIN etc.) TRT240424F22

Governing Law(s) of the InstrumentRegulation on Banks “Equity Communiqué onPrinciples Regarding Borrowing Instrumentsto be Included in Banks'” Equity Calculation

Special Consideration in the Calculation of Equity

As of January 1, 2015, consideration to be subject to a 10% reduction application status

Eligible at Unconsolidated/Consolidated Unconsolidated/Consolidated

Instrument Type Subordinated Loan

Amount recognized in regulatory capital (as of most recent reporting date – Million TL) 715

Par Value of Instrument (Million TL) 901

Accounting Classification 3470001

Original date of Issuance 24/04/2019

Perpetual or dated Undated

Initial maturity 24/04/2019

Issuer call subject to prior supervisory (BRSA) approval YES

Optional call date, contingent call dates and redemption amount 24/04/2024 and after, 100 Mn Avro

Subsequent call dates 24/04/2024 and after

Profit Share/Dividends *

Fixed or floating profit share/dividend -

Profit share rate and any related index -

Existence of a dividend stopper -

Fully discretionary, partially discretionary or mandatory -

Existence of step up or other incentive to redeem -

Noncumulative or cumulative -

Convertible or Non-convertible

If convertible, conversion trigger -

If convertible, fully or partially -

If convertible, conversion rate -

If convertible, mandatory or optional conversion -

If convertible, specify instrument type convertible into -

If convertible, specify issuer of instrument it converts into -

Write-down feature

If write-down, write-down trigger(s)In case of the ratio of core capital adequacyratio or consolidated core capital ratio fallbelow 5,125 percent

If write-down, full or partial Yes

If write down, permanent or temporary Temporary

If temporary write-down, description of write-up mechanism Value increase after temporary reduction ispossible

Position in subordination hierarchy in liquidation (specify instrument type immediately senior to instrument)

i. After payments within the scope of priorityliablities,ii. Equal rank without preference (pari pasu)among themselves and with all other co-liabilities and,iii. Low obligations before all payments.

In compliance with article number 7 and 8 of “Own fund regulation” In compliance with article number 7

Which of the conditions stated in the 7th and 8th articles of the Regulation on the Equity of Banks is not met In compliance with article number 7

II. Explanation on credit risk:



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1. Credit risk is identified as possibility of loss which the bank may be exposed, since the credit customersdoes not fulfil its liability partially or completely through not complying with the requirements of creditagreement.

The credit allocation authorization is possessed by Board of Directors principally and this authorizationcan be assigned to sub-committees in accordance with the Banking Law. Board of Directors determinescredit policies and macro levels of credit extension. It establishes policies related to credit extension,approval and other administrative principles. It monitors compliance to policies, concentrations and limitsand takes required measures. It provides suitable environment for the smooth and effective operationof credit function. Authorizations, roles and limits are clearly determined and required controls areestablished through providing sufficient personnel and software. Credit risk is measured, analyzed andreported periodically.

Preparations are made for the measurement of SME, commercial and corporate user credit risk, ratinggrades, and the use of default design and rating models. The rating grades produced are used in makingthe decision to work with the customer and in determining the working conditions. Credit limit allocationsare performed separately for the customer or credit group based on financial analysis and intelligencereports, rating grades and its segment. Allocated limits are reviewed in periods mentioned in commercialand individual credits and intelligence reports of the customers are updated. The Bank pays strictattention to balanced sectoral breakdown of credits and the extension of TL resources as TL and ForeignCurrency resources as Foreign Currency in order not to give rise to exchange non-compliance. Creditlimits, mentioned in Banking Law and related legislation, are complied. Collateralization is paid attentionfor risk mitigation although the credit worthiness of the customer is principal. The Bank also pays strictattention to compliance of maturity and currency of the credit and collateral. Received collaterals areperiodically reviewed and insured.

A provision is made for credit receivables at default in accordance with TFRS 9 “Communiqué Relatedto Principles and Procedures on Determining the Qualifications of Banks’ Loans and Other Receivablesand the Provision for These Loans and Other Receivables”.

Risk Categories Current PeriodRisk Amount

AverageRisk Amount

1 Receivables from central governments or central banks 16.066.581 13.137.3122 Receivables from regional or local governments 168.531 161.1433 Receivables from administrative units and non-commercial enterprises 353.908 259.3574 Receivables from multilateral development banks - -5 Receivables from international organizations - -6 Receivables from banks and brokerage houses 1.728.874 2.831.0457 Receivables from corporates 17.567.121 14.325.8458 Retail receivables 4.883.089 3.733.8859 Receivables secured by mortgages on property 4.147.997 3.134.13410 Past due receivables 79.273 102.62511 Receivables defined in high risk category by BRSA - -12 Securities collateralized by mortgages - -13 Securitization positions - -14 Short-term receivables from banks, brokerage houses and corporates - -15 Investments similar to collective investment funds 88.072 12.89716 Equity security investments 7.574 8.04117 Other receivables 3.538.863 2.527.194

Total 48.629.883 40.233.478

2. The credit risk undertaken for forwards, options and similar agreements is managed together with therisks arising from market movements.

3. The risks of forwards, options and similar agreements are followed regularly and risk mitigationmethods are utilized if needed.

4. Indemnified non-cash loans are subject to the same risk weight with the unpaid cash loans althoughtheir maturity was due.



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II. Explanations on credit risk (continued):

5. The Bank’s banking activities in foreign countries and credit transactions do not constitute an importantrisk in terms of the related countries’ economic conditions and activities of customers and companies.

When considered within the financial activities of other financial institutions, the Bank as an activeparticipant in the national and international banking market is not exposed to credit risk.

6. In terms of credit risk;

a) Share of receivables of the Bank from its top 100 and top 200 cash loan customers in totalcash loans is %49,04 and %57,48 (December 31, 2019: %62,97 and %73,08) respectively.

b) Share of receivables of the Bank from its top 100 and top 200 non-cash loan customers intotal non-cash loans is %49,29 and %62,41 (December 31, 2019: %56,31 and %69,22)respectively.

c) Share of cash and non-cash receivables of the Bank from its top 100 and top 200 loan andnon-cash loan customers in total of balance sheet and total non-cash loans commitments is%41,15 and %51,33 (December 31, 2019: %51,98 and %63,41) respectively.

7. General provision amount for the credit risk undertaken by the Bank is TL 354.043 (December 31,2019: TL 156.205).

Convenience Translation of the Independent Auditor’s Report originally issued in Turkish (See Note 1.a of Section Three)


33

II. Explanations on credit risk (continued):8. Geographical Distribution of Risks classified in risk categories according to significant risks categories in significant regions; distribution of risks classified

in risk categories according to sectors and counterparties; distribution of all risks according to maturity

a. Profile on significant risks in significant regions:

Risk Categories*1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Total

Current Period1 Domestic 16.066.581 168.531 353.908 - - 709.114 17.131.356 4.882.896 4.101.772 79.273 - - - - 88.072 - 3.538.863 47.120.3662 EU Countries - - - - - 335.471 91.613 169 15.459 - - - - - - - - 442.7123 OECD Countries ** - - - - - 573.217 - - - - - - - - - - - 573.2174 Off-shore banking regions - - - - - - 85.586 - 30.010 - - - - - - - - 115.5965 USA, Canada - - - - - 24.488 - - 3 - - - - - - - - 24.4916 Other countries - - - - - 86.584 258.566 24 753 - - - - - - - - 345.9277 Associates, subsidiaries and jointly controlled

entities - - - - - - - - - - - - - - - 7.574 - 7.5748 Unallocated assets/liabilities*** - - - - - - - - - - - - - - - - - -9 Total 16.066.581 168.531 353.908 - - 1.728.874 17.567.121 4.883.089 4.147.997 79.273 - - - - 88.072 7.574 3.538.863 48.629.883

Prior Period1 Domestic 6.695.666 157.385 25.126 - - 2.887.465 10.167.046 1.690.419 1.907.211 138.202 - - - - 5.908 6.082 1.397.289 25.077.7992 EU Countries - - - - - 51.185 2.977 181 20.325 - - - - - - - - 74.6683 OECD Countries ** - - - - - 307.705 - - - - - - - - - - - 307.7054 Off-shore banking regions - - - - - - 24.204 - 4.543 - - - - - - - - 28.7475 USA, Canada - - - - - 22.213 - 8 - - - - - - - - - 22.2216 Other countries - - - - - 39.992 136.002 309 53 - - - - - - - - 176.3567 Associates, subsidiaries and jointly controlled

entities- - - - - - - - - - - - - - - 4.819 - 4.819

8 Unallocated assets/liabilities*** - - - - - - - - - - - - - - - - - -9 Total 6.695.666 157.385 25.126 - - 3.308.560 10.330.229 1.690.917 1.932.132 138.202 - - - - 5.908 10.901 1.397.289 25.692.315

* Risk classifications in the “Regulation on Measurement and Assessment of Capital Adequacy of Banks” will be used.

1 Receivables from central governments or central banks 10 Past due receivables2 Receivables from regional or local governments 11 Receivables defined in high risk category by BRSA3 Receivables from administrative units and non-commercial enterprises 12 Securities collateralized by mortgages4 Receivables from the Multilateral Development Banks 13 Securitization positions5 Conditional and unconditional receivables from international organizations 14 Short-term receivables from banks, brokerage houses and corporates6 Receivables from banks and brokerage houses 15 Investments similar to collective investment funds7 Conditional and unconditional receivables from 16 Equity security transactions8 Conditional and unconditional receivables from retail portfolios 17 Other Receivables9 Receivables secured by mortgages on property

** OECD countries other than EU countries, USA and Canada.*** Assets and liabilities are not allocated on a consistent basis.

Convenience Translation of the Independent Auditor’s Report originally issued in Turkish (See Note 1.a of Section Three)


34


b. Risk Profile according to sectors and counterparties:

Risk Categories*December 31, 2019 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 TP YP Total

1 Agriculture - - - - - - 106.805 45.416 14.683 96 - - - - - - - 133.167 33.833 167.0001.1 Farming and stockbreeding - - - - - - 98.096 39.834 14.223 96 - - - - - - - 118.751 33.498 152.2491.2 Forestry - - - - - - 6 4.954 460 - - - - - - - - 5.420 - 5.4201.3 Fishery - - - - - - 8.703 628 - - - - - - - - - 8.996 335 9.3312 Manufacturing - - 187.634 - - - 6.798.440 1.480.827 341.122 14.417 - - - - - - - 4.546.382 4.276.058 8.822.4402.1 Mining - - - - - - 290.195 31.878 13.881 - - - - - - - - 149.148 186.806 335.9542.2 Production - - 172.410 - - - 5.028.188 1.413.341 287.422 13.164 - - - - - - - 3.560.230 3.354.295 6.914.5252.3 Electricity, gas, water - - 15.224 - - - 1.480.057 35.608 39.819 1.253 - - - - - - - 837.004 734.957 1.571.9613 Construction - - - - - - 2.595.712 719.521 994.376 6.956 - - - - - - - 2.980.927 1.335.638 4.316.5654 Services 15.939.206 - 150.781 - - 1.728.874 7.506.086 2.030.396 740.962 55.839 - - - - 88.072 7.574 928 10.624.380 17.624.338 28.248.7184.1 Wholesale and retail trade - - - - - - 3.546.442 1.580.692 398.153 38.291 - - - - - - - 3.696.139 1.867.439 5.563.578

4.2 Hotel, food and beverageservices - - - - - - 74.225 50.157 25.092 360 - - - - - - - 97.914 51.920 149.834

4.3 Transportation andtelecommunication - - 144.662 - - - 2.318.015 152.204 106.307 396 - - - - - - - 775.406 1.946.178 2.721.584

4.4 Financial institutions 15.939.206 - - - - 1.728.874 760.745 7.489 20.779 - - - - - 88.072 7.574 928 5.221.624 13.332.043 18.553.667

4.5 Real estate and rentingservices - - - - - - 223.567 30.997 146.398 3.215 - - - - - - - 237.459 166.718 404.177

4.6 Self-employment services - - - - - - 485.767 161.356 35.632 13.575 - - - - - - - 493.381 202.949 696.3304.7 Education services - - 6.119 - - - 35.335 14.165 6.407 2 - - - - - - - 38.429 23.599 62.0284.8 Health and social services - - - - - - 61.990 33.336 2.194 - - - - - - - - 64.028 33.492 97.5205 Other 127.375 168.531 15.493 - - - 560.078 606.929 2.056.854 1.965 - - - - - - 3.537.935 4.349.954 2.725.206 7.075.1606 Total 16.066.581 168.531 353.908 - - 1.728.874 17.567.121 4.883.089 4.147.997 79.273 - - - - 88.072 7.574 3.538.863 22.634.810 25.995.073 48.629.883

* Stands for the risk categories listed in “Regulations on Measurement and Assessment of Capital Adequacy Ratios of Banks.”

1 Receivables from central governments or central banks 10 Past due receivables2 Receivables from regional or local governments 11 Receivables defined in high risk category by BRSA3 Receivables from administrative units and non-commercial enterprises 12 Securities collateralized by mortgages4 Receivables from the Multilateral Development Bank 13 Securitization positions5 Conditional and unconditional receivables from international organizations 14 Short-term receivables from banks, brokerage houses and corporates6 Receivables from banks and brokerage houses 15 Investments similar to collective investment funds7 Conditional and unconditional receivables from 16 Equity security transactions8 Conditional and unconditional receivables from retail portfolios 17 Other Receivables9 Receivables secured by mortgages on property

** Exposure amount before applying risk mitigation and after risk transition is given.



35


c. Distribution of risks with term structure according to remaining maturities:

Time To MaturityRisk Categories 1 month 1–3 month 3–6 month 6–12 month 1 year and more Unallocated

1 Receivables from central governments or centralbanks 5.584.179 1.263.593 1.305.199 632.478 7.153.701 127.431

2 Receivables from regional or local governments 446 1.481 4.893 1.555 158.747 1.4093 Receivables from administrative units and non-

commercial enterprises 144.542 1.162 40 735 28.265 179.1644 Receivables from the Multilateral Development

Bank - - - - - -5 Conditional and unconditional receivables from

international organizations - - - - - -6 Receivables from banks and brokerage houses 1.517.002 53.811 3.317 107.588 610 46.5467 Conditional and unconditional receivables from 1.206.865 1.405.003 1.456.789 3.381.334 8.422.972 1.694.1588 Conditional and unconditional receivables from

retail portfolios 82.458 267.602 367.695 666.497 2.963.235 535.6029 Receivables secured by mortgages on property 11.493 40.501 106.077 222.492 3.599.604 167.83010 Past due receivables - - - - - 79.27311 Receivables defined in high risk category by BRSA - - - - - -12 Securities collateralized by mortgages - - - - - -13 Securitization positions - - - - - -14 Short-term receivables from banks, brokerage

houses and corporates - - - - - -15 Investments similar to collective investment funds 112 35.231 - - 5.929 46.80016 Equity security investments - - - - - 7.57417 Other receivables 2.758.981 - - - - 779.882

TOTAL 11.306.078 3.068.384 3.244.010 5.012.679 22.333.063 3.665.669

1. Explanations regarding risk categories mentioned in 6th clause of Capital Adequacy Measurement andEvaluation Communiqué:

a) Ratings given by Islamic International Rating Agency (IIRA) ratings are taken into account for whole riskcategory of receivables from governments or central banks. Turkey's long-term foreign currency creditrating (BBB-), is used for foreign currency securities issued by the Republic of Turkey’s Treasury andfor other foreign currency risks associated with the government of Republic of Turkey.

According to capital adequacy regulations, to determine risk classifications of receivables from the banksand intermediary institutions, credit rating grades of the rating agencies authorized or authorized by theBoard are considered for the receivables from counterparties are settled abroad. For receivables fromcounterparties are residents are accepted as ‘’gradeless’’ and are included in the calculation of capitaladequacy.

“Credit Quality Degrees” corresponding to grades of rating agencies authorized or authorized by theBoard are included in the table below.



36


Ratings to bematched

CreditQualityDegrees

Fitch RatingsMoody’sInvestorService

S&P RatingsService

Japan CreditRating Agency DBRS IIRA

Ratings of long-termcredits

1 AAA and AA- Aaa and Aa3 AAA and AA- AAA and AA- AAA to AA(below) AAA and AA-

2 A+ and A- A1 and A3 A+ and A- A+ and A- A (above) to A(below) A+ and A-

3 BBB+ and BBB- Baa1 and Baa3 BBB+ and BBB- BBB+ and BBB- BBB (above) toBBB (below ) BBB+ and BBB-

4 BB+ and BB- Ba1 and Ba3 BB+ and BB- BB+ and BB- BB (above) toBB (below BB+ and BB-

5 B+ and B- B1 and B3 B+ and B- B+ and B- B (above) toB (below B+ and B-

6 CCC+ andbelow

Caa1 andbelow

CCC+ andbelow

CCC+ andbelow

CCC (and belowabove)

CCC+ andbelow

Ratings of short-termcredits

1 F1+ and F1 P-1 A-1+ and A-1 J-1 R-1 (above) toR-1 (below) A-1+ and A-1

2 F2 F2 P-2 A-2 J-2 R-2 (above) toR-2 (below)

3 F3 F3 P-3 A-3 J-3 R-3

4 F3 below F3 below NP A-3 below J-3 below Lower thanR-3

5 - - - - - -6 - - - - - -

Long-termsecuritization

position ratings

1 AAA and AA- AAA and AA- Aaa and Aa3 AAA and AA- - AAA to AA(below)

2 A+ and A- A+ and A- A1 and A3 A+ and A- - A (above) to A(below)

3 BBB+ and BBB- BBB+ andBBB- Baa1 and Baa3 BBB+ and BBB- - to BBB ( BBB (

above below ))

4 BB+ and BB- BB+ and BB- Ba1 and Ba3 BB+ and BB- - BB (above) toBB (below)

5 B+ and below B+ and below B1 and below B+ and below - B (above) andbelow

Short-termsecuritization

position ratings

1 F1+ and F1 F1+ and F1 P-1 A-1+ and A-1 - R-1 (above) toR-1 (below)

2 F2 F2 P-2 A-2 - R-2 (above) toR-2 (below)

3 F3 F3 P-3 A-3 - R-3Others F3 below F3 below NP A-3 below - R-3

Collective investmentundertaking

1 AAA and AA- Aaa and Aa3

FCQR: AAAfand

AA-f;PSFR: AAAm

andAA-m

- - -

2 A+ and A- A1 and A3

FCQR: A+f andA-f;

PSFR: A+m andA-m

- - -

3 BBB+ andBBB- Baa1 and Baa3

FCQR: BBB+fand BBB-f;

PSFR: BBB+mand BBB-m

- - -

4 BB+ and BB- Ba1 and Ba3

FCQR: BB+fand

BB-f;PSFR: BB+m

andBB-m

- - -

5 B+ and B- B1 and B3

FCQR: B+f andBf;

PSFR: B+m andB-m

- - -

6 CCC+ andbelow Caa1 and below

FCQR: CCC+fand

below; PSFR:CCC+m and

below

- - -

AAA and AA- Aaa and Aa3

FCQR: AAAfand

AA-f;PSFR: AAAm

andAA-m

- - -



37


b) Risk Amounts According to Risk Weight:

Risk Weights %0 %10 %20 %35 %50 %75 %100 %150 %200 %1250 Deductions fromEquity

1 Amount before credit risk mitigation 11.560.943 - 1.143.239 1.884.640 9.881.678 4.883.089 19.276.294 - - - 53.240

2 Amount after credit risk mitigation 15.295.998 - 1.713.422 1.881.096 9.736.985 3.198.932 16.803.450 - - - 53.240

2. Miscellaneous important information:

Amounts of impaired loans and past due receivables, value adjustments and provisions, current period valueadjustments and provisions according to sectors or counterparties individually:

For loans which are classified as impaired loans due to delay of collection of principal or profit share 180(December 31, 2019: 90) days and above, or negative risk assessments of credit worthiness of the debtor;“specific provision” is set aside in the accompanying financial statements as of December 31, 2020.

For loans which are classified as past due not impaired loans due to delay of collection of principal or profitshare up to 180 (December 31, 2019: 90) days; “general provision” is set aside in the accompanying financialstatements as of December 31, 2020.

Loans (*) Provisions

Current Period

Sectors / Counterparties

Impaired (TFRS 9 )Significantincrease incredit risk(Stage 2)

Non-performing

(Stage 3)

ExpectedLoss

Provisions (TFRS 9)

1 Agriculture 308 1.274 1.0871.1 Farming and stockbreeding 308 1.274 1.0871.2 Forestry - - -1.3 Fishery - - -2 Manufacturing 604.402 147.823 129.7132.1 Mining - - -2.2 Production 224.689 142.699 125.8602.3 Electricity, gas, water 379.713 5.124 3.8533 Construction 412.368 102.786 101.9964 Services 481.958 452.176 388.4234.1 Wholesale and retail trade 328.027 279.538 232.8994.2 Hotel, food and beverage services 18.855 1.389 1.1234.3 Transportation and telecommunication 130.174 12.596 16.0294.4 Financial institutions - - -4.5 Real estate and renting services - 51.799 45.6844.6 Self-employment services 3.365 105.891 91.7134.7 Education services 1.251 828 8404.8 Health and social services 286 135 1355 Other 13.360 10.593 8.040

6 Total 1.512.396 714.652 629.259

(*) Consist of cash loans and financial lease receivables



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Loans (*) Provisions

Prior Period

Sectors / Counterparties

Impaired (TFRS 9)Significantincrease incredit risk(Stage 2)

Non-performing

(Stage 3)

ExpectedLoss

Provisions (TFRS 9)

1 Agriculture 4.462 1.008 7261.1 Farming and stockbreeding 2.727 1.008 7211.2 Forestry 9 - -1.3 Fishery 1.726 - 52 Manufacturing 185.205 115.663 78.9742.1 Mining - - -2.2 Production 137.282 114.112 77.6612.3 Electricity, gas, water 47.923 1.551 1.3133 Construction 534.870 110.074 89.2034 Services 331.207 332.119 222.1034.1 Wholesale and retail trade 143.521 193.519 125.9404.2 Hotel, food and beverage services 9.147 507 4924.3 Transportation and telecommunication 89.100 17.000 15.1734.4 Financial institutions - - -4.5 Real estate and renting services 64.530 43.285 30.7954.6 Self-employment services 23.455 76.913 48.9904.7 Education services 164 781 6044.8 Health and social services 1.290 114 1095 Other 41.108 12.210 8.307

6 Total 1.096.852 571.074 399.313

(*) Consist of cash loans and financial lease receivables

3. Information related to value adjustments and credit provisions:

Current Period OpeningBalance

Provision madeduring the period

Reversal ofProvisions

OtherAdjustments

ClosingBalance

1 Stage 3 377.705 252.217 (27.282) - 602.6402 Stage 1 and 2 115.520 158.573 (20.237) - 253.856

(*) It includes cash loans and financial lease receivables.

Prior Period OpeningBalance

Provision madeduring the period

Reversal ofProvisions

OtherAdjustments

ClosingBalance

1 Stage 3 130.002 276.653 (28.950) - 377.7052 Stage 1 and 2 71.569 65.407 (21.424) - 115.552

(*) It includes cash loans and financial lease receivables.

4. Risk involved in counter-cyclical capital buffer calculation:

Current Period

Country of ultimate riskPrivate sector credit

exposures in banking bookRisk Weighted

Equivalent trading book TotalTurkey 17.771.657 - 17.771.657Niger 95.369 - 95.369Marshall Islands 79.293 - 79.293United Arab Emirates 78.254 - 78.254Germany 74.821 - 74.821Qatar 67.646 - 67.646Other Countries 24.204 - 24.204



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Prior Period Country ofultimate risk

Private sector creditexposures in banking book

Risk WeightedEquivalent trading book Total

Turkey 10.524.444 - 10.524.444Niger 77.496 - 77.496United Arab Emirates 56.698 - 56.698Marshall Islands 12.706 - 12.706Seyscheller 10.622 - 10.622Other Countries 13.396 - 13.396

III. Explanations on currency risk:Foreign currency risk arises from the Bank’s possible exposure to the changes in foreign currencies.

a) The Bank is exposed to currency risks as a market risk and pay attention to keep at a minimum level byavoiding keeping any positions. The currency risk and the calculation of value at risk method aremonitored on a daily basis. Net foreign currency position / shareholders’ equity ratio is also controlledperiodically. All foreign currency assets, liabilities and foreign currency forward transactions are takeninto consideration while capital requirement to be employed for foreign currency risk is calculated.Standard Method used in legal reporting and value at market risk is calculated on a monthly basis.

b) The Bank does not have any derivative financial instruments held for hedging purposes.

c) TL resources are used in TL and foreign currency resources are used in related currencies withoutcausing any currency inconsistency in the use of loans. Due to uncertainty and volatility that may arisein the markets, foreign currency position limit that can be formed for strategic purposes is limited andmonitored.

d) Foreign exchange buying rates of the last five working days before the balance sheet date as publiclyannounced by the Bank are as follows:

USD EUR

As of December 31, 2020 - Balance sheet evaluation rate 7,3405 9,0079As of December 30, 2020 7,4063 9,0697As of December 29, 2020 7,4738 9,1370As of December 28, 2020 7,5517 9,2037As of December 25, 2020 7,6190 9,2948As of December 24, 2020 7,6321 9,3030

e) The simple arithmetical average of the major foreign exchange buying rates of the Bank for the thirtydays before the balance sheet date is full TL 7,7202 for 1 USD (December 2019 : full TL 5,8357), full TL9,3871 for 1 EURO (December 2019 : full TL 6,4814).

Foreign currency sensitivity:

The Bank is mainly exposed to EUR, USD and XAU currency risks.

The following table details the Bank’s sensitivity to a 10% change in the USD, EURO and XAU rates. A negativeamount indicates a decrease effect in profit/loss or equity of the 10% value change of USD, EUR and XAUagainst TL.



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III. Explanations on currency risk (continued):

% Change in foreigncurrency rate

Effect on profit / loss (*) Effect on equity (*)

December 31, 2020 December 31, 2019 December 31, 2020 December 31, 2019

USD %10 35.670 5.339 (4.722)(2.163)

(717) (1.337)EURO %10 (2.273) (10.794)

XAU %10 603 448 - -

(*) The effect of 10% decrease on the currencies above against the TL will be the same amounts but adverse effect as above.

Information on currency risk of the Bank:

EURO USD Other FC TotalCurrent PeriodAssets

Cash (cash in vault, foreign currency, money in transit, cheques purchased)and balances with the Central Bank of Republic of Turkey 3.004.183 2.786.932 3.186.745 8.977.860Banks 364.904 29.345 282.264 676.513Financial assets at fair value through profit and loss (***) 121.339 28.848 2.396.377 2.546.564Money market placements - - - -Financial Liabilities Valued At Fair Value Through Profit And Loss 2.058.991 3.481.625 - 5.540.616Loans and financial lease receivables (*) 6.025.676 4.512.301 97.024 10.635.001Subsidiaries, associates and joint ventures - - - -Financial Assets Measured at Amortized Cost 775.777 - - 775.777Derivative financial assets for hedging purposes - - - -Tangible assets - - - -Intangible assets - - - -Other assets 23.860 7.312 - 31.172

Total Assets 12.374.730 10.846.363 5.962.410 29.183.503

LiabilitiesCurrent account and funds collected from banks via participation accounts 1.635 2.369 1.308.370 1.312.374Other current and profit-sharing accounts 6.461.825 11.325.925 7.916.979 25.704.729Money market borrowings - - - -Funds provided from other financial institutions and subordinated loans 1.983.707 1.442.885 - 3.426.592Marketable securities issued - - - -Miscellaneous payables - - - -Derivative financial liabilities for hedging purposes - - - -Other liabilities (****) 6.516 141.205 973 148.694

Total Liabilities 8.453.683 12.912.384 9.226.322 30.592.389

Net balance sheet position 3.921.047 (2.066.021) (3.263.912) (1.408.886)

Net off balance sheet position (3.943.795) 2.422.718 3.269.946 1.748.869Derivative financial instruments assets (**) 2.895.951 11.769.538 9.147.688 23.813.177Derivative financial instruments liabilities (**) 6.839.746 9.346.820 5.877.742 22.064.308Non-cash loans 3.396.284 2.463.775 260.766 6.120.825

Prior PeriodTotal assets 10.434.727 4.825.925 2.354.983 17.615.635Total liabilities 6.726.568 6.036.890 1.701.047 14.464.505

Net balance sheet position 3.708.159 (1.210.965) 653.936 3.151.130

Net off balance sheet position (3.816.098) 1.264.360 (657.017) (3.208.755)Derivative financial instruments assets (**) 802.438 4.809.230 979.481 6.591.149Derivative financial instruments liabilities (**) 4.618.536 3.544.870 1.636.498 9.799.904Non-cash loans 1.697.404 1.529.059 34.509 3.260.972

(*) Foreign currency leasing receivables amounting to TL 139.365 (December 31, 2019: TL 110.494) and balances of foreign exchange loan and leasingreceivables amounting to TL 224.412 included in balance sheet (December 31, 2019: TL 686.616) are included.

(**) Derivative financial instruments include asset value buying commitment amounting to TL 5.034.909 (December 31, 2019: TL 720.213) and assetvalue selling commitment amounting to TL 4.519.468 in current period. (December 31, 2019: TL 697.393).

(***) Income rediscounts of derivative financial instruments amounting to TL 128.966 (December 31, 2019: TL 22.406) and expense rediscounts ofexchange amounting to TL 101.964 (December 31, 2019: TL 41.067) are not included.

(****) Provisions TL 81.725 (December 31, 2019: TL 37.024) and equity TL 68.847 (December 31, 2019: TL 20.538) are not considered in the calculationof currency risk.



41

IV. Explanations on position risk of equity securities in banking book:

According to the credit risk standard method, equity investments in banking accounts amount to TL 7,574.100% risk weight is applied to all of them (December 31, 2019: 10.801).

V. Explanations on liquidity risk management and liquidity coverage ratio:

The Bank’s liquidity risk consists of funding liquidity risk and market liquidity risk.

Funding liquidity risk explains the probability of loss occurs in case of unable to meet the Bank’s all anticipatedand unanticipated cash flow requirements without damaging daily operations or the financial position.

Market liquidity risk is the probability of loss in case of the Bank's failure to close any position or inability ofstabilize market prices due to lack of depth in the market or over fluctuations.

a) Information on risk capacity of the Bank, Responsibilities and structure of liquidity riskmanagement, the Bank’s internal liquidity risk reporting, communication between the Board ofDirectors and business lines on liquidity risk strategy, policy and application:

Management of liquidity risk is shared by Audit Committee, Top Management, Asset – Liability Risk Committee(ALCO), Treasury Department and Risk Management Department. The appropriate liquidity risk level which iscreated by Top Management and Treasury and Risk Management department in line with the Bank’s riskappetite and monitors whether the liquidity risk is managed under the framework of determined policies andwithin the defined limits. The categories of defined limits are;

• Liquidity coverage ratio• Maturity mismatch equity• High amount of participation account rate• Core funds collected

ALCO evaluates the balance sheet and off-balance sheet position monthly. Evaluations are performed byconsidering the sector, segment breakdowns, limits and usage rate of loan products. Decisions taken by ALCOare performed by Treasury and related departments and the results are monitored with prepared reports byRisk Management and Reporting Departments.

b) Information on the centralization degree of liquidity management and funding strategy and thefunctioning between the Bank and the Bank’s subsidiaries:

Liquidity risk management is performed by Audit Committee, Top Management, ALCO, Treasury and RiskManagement Departments at Headquarters.

c) Information on the Bank’s funding strategy including the policies on funding types and variety ofmaturities:

Besides the strong capital structure, the Bank aims to obtain diversified funding sources and the Bankstrategies in this direction. The Bank performs works regarding to spread funds collected to the base, limitingthe rate of high amount of participation to total funds collected by monitoring, limiting maturity mismatch andincreasing core funds collected.



42

V. Explanations on liquidity risk management and liquidity coverage ratio (continued):

d) Information on liquidity management on the basis of currencies constituting a minimum of fivepercent of the Bank’s total liabilities:

Almost all the liabilities of the Bank are in TL, USD or EUR currencies. TL funds comprise of equity,participation and current accounts and domestic loans. TL liquidity is managed by keeping high quality liquidassets with prudential. Foreign currencies comprise of participation and current accounts and domestic andforeign loans. Foreign currency liquidity management is performed by cash flow, limits at correspondent banksand high-quality foreign currency liquid assets within the scope of determinated risk limits. Available liquidityand matured liabilities are monitored daily. Also, important cash flows are monitored and managed in real-timebasis.

e) Information on liquidity risk mitigation techniques:

The Bank decreases the liquidity risk by monitoring collection of high amount funds, funding, the maturity ofparticipation accounts and other liabilities closely, estimating monthly cash flow, inciting for long-termparticipation accounts, purchasing of lease certificates issued by Republic of Turkey Prime MinistryUndersecretariat of Treasury, making short-term murabaha investments, allocating limits from foreign banksto borrow whenever needed, diversifying the source of funds and homogenizing the maturity distribution.

f) Information on the use of stress tests:

Resistance to the scenarios created for liquidity conditions of the Bank is tested by stress tests. Two differentscenarios are applied as stressed and the severe case and the results are shared to Top Management overALCO. Results of the stress tests guide on reaching to possible various liquidity sources. The Bank remainswithin the liquidity risk tolerance by reviewing liquidity management strategies, policies and proceduresaccording to the results of these tests.

g) General information on urgent and unexpected liquidity situation plans:

Strategy and policies for the management of the possible liquidity crises are determined by the Board ofDirectors. In case of possible liquidity crises contingency plan determines precautions and actions to be takenwith order of priority. In such situations, ALCO meets more frequently and where necessary with the partialmember participation meets under the chairmanship of General Manager of treasury meet everyday andmanage liquidity crisis.

With the liquidity risk management, prudent and proactive measurement of current and future liquidity positionof the Bank aimed by taking the currency and maturity of assets and liabilities into consideration. Enough liquidasset stock is provided in order to meet matured liabilities in ordinary and extraordinary terms on maturitydates. Fund sources are diversified in order to prevent financial assets turning into cash in unreasonableconditions. Forward and swap transactions can be made in order to balance foreign currency transactionsdemanded by customers in high volatility period.

Covid-19 virus worldwide and the negative effects (country risks and foreign bank limits / correspondent bankrelations etc.) in areas such as real sector and banking sector are carefully monitored. In this regard, liquidityadequacy is constantly monitored by stress tests and scenario analyzes among risk management activities.

The sectors that are expected to be affected the most in the Bank's activities are divided into risk groups andevaluated in monitoring activities, stress test analysis, sectoral concentration analysis, and possible effects ofthe Bank on equity and capital adequacy ratios and liquidity adequacy level are closely monitored.



43

V. Explanations on liquidity risk management and liquidity coverage ratio (continued):In addition, the factors that create the liquidity risk of the bank, such as the bank's access to liquidity resources,the adequacy of liquidity limits, the ability to perform liquidity operations, and the continuity of the services itpurchases for liquidity operations, have been reassessed by taking the effects of the COVID-19 outbreak intoconsideration and necessary measures are taken.Liquidity is managed in prudential manner, available liquidity and matured liabilities are monitored daily. Also,important cash flows are monitored and managed in real-time basis. Liquidity projections are performed withstress tests and scenario analysis. Results of the tests guide on reaching to possible various liquidity sources.Liquidity management strategies, policies and procedures are reviewed according to the results of these tests.

Liquidity Coverage Ratio:

(*) Simple arithmetic average calculated for the last three months of values calculated by taking the weekly simple arithmetic average.

As per “Regulation on Liquidity Coverage Ratio Calculation” published in the Official Gazette numbered 28948,dated 21 March 2014, the weeks on which the minimum and maximum liquidity coverage ratios have beencalculated for the last three months are as follows:

Current Period - 31.12.2020TL+FC FC

Lowest (%) 180,42 235,80Week 30/10/2020 06/11/2020Highest (%) 229,80 272,00Week 20/11/2020 16/10/2020Average 202,29 252,98

Rate of “Percentage to betaken into account” notImplemented Total value

(*)

Rate of “Percentage tobe taken into account”

Implemented Totalvalue (*)

Current Period TL+FC FC TL+FC FCHIGH QUALITY LIQUID ASSETS (HQLA)

1 High quality liquid assets 19.013.944 15.926.232CASH OUTFLOWS

2 Retail and Small Business Funds Collected 16.533.025 11.516.096 1.554.408 1.151.6103 Stable Funds Collected 1.977.887 - 98.894 -4 Less stable Funds Collected 14.555.138 11.516.096 1.455.514 1.151.6105 Unsecured Funding other than Retail and Small Business

Customers Deposits 19.209.430 13.241.848 10.076.604 6.871.3696 Operational Funds Collected 1.839.403 1.303.807 459.851 325.9527 Non-Operational Funds Collected 14.730.418 10.507.809 6.977.144 5.115.1858 Other Unsecured Funding 2.639.609 1.430.232 2.639.609 1.430.2329 Secured funding 1.068.966 - - -

10 Other Cash Outflows 16.760.206 15.009.136 16.309.046 14.558.249

11 Liquidity needs related to derivatives and market valuation changes on derivatives transactions 16.115.692 14.365.012 16.115.692 14.365.012

12 Debts related to the structured financial products - - - -13 Commitment related to debts to financial markets

and other off balance sheet liabilities 644.514 644.124 193.354 193.237

14Commitments that are unconditionally revocable at anytime by the Bank and other contractual commitments - - - -

15 Other irrevocable or conditionally revocable commitments 7.936.089 2.619.219 676.850 195.19016 TOTAL CASH OUTFLOWS 28.616.908 22.776.418

CASH INFLOWS17 Secured Lending Transactions - - - -18 Unsecured Lending Transactions 3.817.797 2.550.966 2.984.710 2.316.88919 Other contractual cash inflows 16.167.893 14.646.456 16.167.893 14.646.456 20 TOTAL CASH INFLOWS 19.985.690 17.197.422 19.152.603 16.963.345

Upper limit applied amounts 21 TOTAL HQLA 19.013.944 15.926.232 22 TOTAL NET CASH OUTFLOWS 9.464.305 5.813.073 23 Liquidity Coverage Ratio (%) 200,90 273,97



44


Rate of “Percentage to betaken into account” notImplemented Total value

(*)

Rate of “Percentage tobe taken into account”

Implemented Totalvalue (*)

Prior Period TL+FC FC TL+FC FCHIGH QUALITY LIQUID ASSETS (HQLA)

1 High quality liquid assets 7.819.211 7.066.881CASH OUTFLOWS

2 Retail and Small Business Funds Collected 6.924.964 3.922.207 617.540 392.2213 Stable Funds Collected 1.499.125 - 74.956 -4 Less stable Funds Collected 5.425.839 3.922.207 542.584 392.2215 Unsecured Funding other than Retail and Small Business

Customers Deposits 10.662.979 5.840.024 5.895.805 2.911.0116 Operational Funds Collected 1.018.356 706.896 254.589 176.7247 Non-Operational Funds Collected 8.077.978 4.643.724 4.074.571 2.244.8838 Other Unsecured Funding 1.566.645 489.404 1.566.645 489.4049 Secured funding - - - -

10 Other Cash Outflows 7.555.309 7.288.582 7.360.627 7.093.900

11 Liquidity needs related to derivatives and market valuation changes on derivatives transactions 7.277.191 7.010.464 7.277.191 7.010.464

12 Debts related to the structured financial products - - - -13 Commitment related to debts to financial markets

and other off balance sheet liabilities 278.118 278.118 83.436 83.436

14Commitments that are unconditionally revocable at anytime by the Bank and other contractual commitments - - - -

15 Other irrevocable or conditionally revocable commitments 4.721.190 1.279.575 410.402 95.04816 TOTAL CASH OUTFLOWS 14.284.374 10.492.180

CASH INFLOWS17 Secured Lending Transactions - - - -18 Unsecured Lending Transactions 2.844.469 2.054.731 2.328.304 1.914.19019 Other contractual cash inflows 7.328.165 4.368.315 7.328.165 4.368.315 20 TOTAL CASH INFLOWS 10.172.634 6.423.046 9.656.469 6.282.505

Üst Sınır Uygulanmış Değerler 21 TOTAL HQLA 7.819.211 7.066.881 22 TOTAL NET CASH OUTFLOWS 4.627.905 4.209.675 23 Liquidity Coverage Ratio (%) 168,96 167,87

(*) Simple arithmetic average calculated for the last three months of values calculated by taking the weekly simple arithmetic average.

As per “Regulation on Liquidity Coverage Ratio Calculation” published in the Official Gazette numbered 28948,dated 21 March 2014, the weeks on which the minimum and maximum liquidity coverage ratios have beencalculated for the last three months are as follows:

Prior Period - 31.12.2019TL+FC FC

Lowest (%) 149,87 140,21Week 20/12/2019 20/12/2019Highest (%) 195,77 202,18Week 15/11/2019 25/10/2019Average 170,91 170,42



45


Presentation of assets and liabilities according to their remaining maturities:

DemandUp to 1month 1-3 months

3-12months 1-5 years

5 yearsand

beyondUnallocated

(**) (***)Total(*****)

Current PeriodAssetsCash (cash in vault, foreign currency,money in transit, cheques purchased) andbalances with the Central Bank of Republicof Turkey 3.776.028 5.581.222 - - - - - 9.357.250Banks 686.904 - - - - - - 686.904Financial Assets at Fair Value ThroughProfit and Loss - 131.672 969.092 1.286.621 222.627 - 164.776 2.774.788Money Market Placements - - - - - - - -Financial assets valued at fair valuethrough other comprehensive income 76.955 115.219 1.347.410 2.425.241 6.033.382 - - 9.998.207Loans (*) 146.482 2.404.861 3.266.024 8.597.766 12.289.436 1.750.716 714.652 29.169.937Financial assets valued at amortised cost - - - - 771.862 - - 771.862Other Assets (****) - 142.136 8.176 28.478 19.694 - 200.196 398.680

Total Assets 4.686.369 8.375.110 5.590.702 12.338.106 19.337.001 1.750.716 1.079.624 53.157.628

LiabilitiesCurrent account and funds collected frombanks via participation accounts 1.314.368 - - - - - - 1.314.368Other current and profit-sharing accounts 12.047.872 18.352.525 6.104.155 1.736.652 10.888 11 - 38.252.103Funds provided from other financialinstitutions and subordinated loans - 1.681.446 2.400.498 1.192.356 1.298.430 - - 6.572.730Money market borrowings - 537.043 - - - - - 537.043Marketable securities issued - - - - - - - -Miscellaneous payables - - - - - - - -Other liabilities (***) - 294.352 254.511 102.022 130.806 94.383 5.605.310 6.481.384

Total Liabilities 13.362.240 20.865.366 8.759.164 3.031.030 1.440.124 94.394 5.605.310 53.157.628

Net Liquidity Gap (8.675.871) (12.490.256) (3.168.462) 9.307.076 17.896.877 1.656.322 (4.525.686) -

Net Off-balance sheet Position - (74.355) (92.781) (86.931) 3 - - (254.064)Financial Derivative Assets - 21.132.452 3.955.555 1.576.711 25.361 - - 26.690.079Financial Derivative Liabilities - 21.206.807 4.048.336 1.663.642 25.358 - - 26.944.143Non-cash Loans 4.433.750 265.888 1.049.609 4.920.472 2.861.824 157.227 - 13.688.770

Prior Period

Total Assets2.499.275 5.064.358 2.616.375 8.394.577

10.487.221 353.924 933.054 30.348.784

Total Liabilities 4.735.381 15.769.034 5.870.197 687.163 710.924 86.941 2.489.144 30.348.784

Net Liquidity Gap (2.236.106) (10.704.676) (3.253.822) 7.707.414 9.776.297 266.983 (1.556.090) -

Net Off-balance sheet Position - (1.179) (8.780) 635 (4) - - (9.328)

(*) Leasing receivables are included under loans.(**) Other assets that are required to continue the banking activities such as fixed assets, prepaid expenses, which are one of the active accounts that

make up the balance sheet, and the balance of receivables under follow-up receivables with the expected loss allowance deducted are shown here.

(***) The unallocated other liabilities column consists of equity, provisions and tax liabilities.(****) Property and equipment held for sale and related to discontinued operations, subsidiary investments, tangible and intangible assets, other assets

and deferred tax assets are represented in other assets.(*****) From Cash (cash in vault, foreign currency, money in transit, cheques purchased) and balances with the Central Bank of Republic of Turkey TL 540 Banks TL 124, from loans TL 253.856 and from the financial assets valued at their amortized cost TL 3.915 has been deducted from expected loss provisions.



46

VI. Explanations on leverage ratio:

As of December 31, 2020, leverage ratio of the Bank calculated from the arithmetic average of the last 3months is 6,53% (December 31, 2019: 5,93%). This ratio is above the minimum required (3%).

Disclosure of Leverage ratio template:

VII. Explanation on the presentation of financial assets and liabilities at their fair values:

Carrying value Fair valueDecember 31,

2020December 31,

2019December 31,

2020December 31,

2019

Financial AssetsBanks 687.028 1.956.364 687.028 1.956.364Financial assets at fair value through profitand loss 2.396.377 1.569.915 2.396.377 1.569.915Financial assets valued at fair value throughother comprehensive income 9.998.207 4.185.139 9.998.207 4.185.139Financial assets valued at amortised cost 775.777 547.454 778.982 538.950

Financial LiabilitiesFunds collected from banks via currentaccounts and profit-sharing accounts 1.451.486 730.837 1.451.486 730.837Other current and profit-sharing accounts 38.114.985 22.222.378 38.114.985 22.222.378Other Liabilities 683.170 444.389 683.170 444.389

Current Period Prior PeriodDecember 31,

2020 (*)December 31,

2019 (*)Balance sheet assets

1 Balance sheet assets (excluding derivative financial assets and creditderivatives, including collaterals) 54.292.491 28.290.944

2 (Assets deducted from Core capital) 95.209 47.3943 Total risk amount of balance sheet assets (sum of lines 1 and 2) 54.197.282 28.243.550

Derivative financial assets and credit derivatives4 Cost of replenishment for derivative financial assets and credit derivatives 214.723 51.6795 Potential credit risk amount of derivative financial assets and credit

derivatives 190.847 81.7366 Total risk amount of derivative financial assets and credit derivatives (sum

of lines 4 and 5) 405.570 133.415Financing transactions secured by marketable security orcommodity

7 Risk amount of financing transactions secured by marketable security orcommodity (excluding Balance sheet) 3.796.914 430.028

8 Risk amount arising from intermediary transactions - -9 Total risk amount of financing transactions secured by marketable

security or commodity (sum of lines 7 and 8) 3.796.914 430.028Off-balance sheet transactions

10 Gross notional amount of off-balance sheet transactions 24.117.664 11.341.06111 (Correction amount due to multiplication with credit conversion rates) - -12 Total risk of off-balance sheet transactions (sum of lines 10 and 11) 24.117.664 11.341.061

Capital and total risk13 Core Capital 5.389.746 2.382.04014 Total risk amount (sum of lines 3, 6, 9 and 12) 82.517.430 40.148.054

Leverage ratio15 Leverage ratio (%) 6,53 5,93

(*) The arithmetic average of the last 3 months in the related periods.



47

VII. Explanation on the presentation of financial assets and liabilities at their fair values (continued):

Information on fair value measurement recognized in the financial statements:

TFRS 7 (Financial Instruments: Turkish Financial Reporting Standard Related to Explanations) sets ahierarchy of valuation techniques according to the observability of data used in valuation techniques whichestablish a basis for fair value measurement. Aforesaid fair value hierarchy is determined as follows:

a. Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level I);

b. Directly (by way of prices) or indirectly (derived from prices) data for the assets or liabilities, other thanquoted prices in Level 1 (Level II);

c. Data not based on observable data regarding assets and liabilities (Level III).

Fair value hierarchy of the financial assets and liabilities of the Bank carried at fair value according to theforegoing principles are given in the table below:

Current period Level I Level II Level III Total

Financial assets

Financial assets at fair value through profit and loss 828.632 1.567.745 - 2.396.377Public sector debt securities 828.632 1.567.745 - 2.396.377Equity securities - - - -Other - - - -Financial assets valued at fair value through other comprehensive

income 1.866.462 8.131.745 9.998.207 Equity securities - - - -

Public sector debt securities 1.866.462 7.696.068 - 9.562.530Other marketable securities - 435.677 - 435.677Financial Derivative Assets - 378.411 - 378.411

Financial liabilities

Derivative financial liabilities held for trading - 392.551 - 392.551 Derivative financial liabilities for hedging purposes - - - -

Prior period Level I Level II Level III Total

Financial assets

Financial assets at fair value through profit and loss 590.523 979.392 - 1.569.915Public sector debt securities 590.523 979.392 - 1.569.915Equity securities - - - -Derivative financial assets held for trading - - - -Other 1.463.456 2.721.683 - 4.185.139

Financial assets- available for sale - - - - Equity securities 1.444.020 2.632.644 - 4.076.664

Public sector debt securities 19.436 89.039 - 108.475Other marketable securities - 91.823 - 91.823

Financial liabilities

Derivative financial liabilities held for trading - 52.203 - 52.203 Derivative financial liabilities for hedging purposes - - - -

VIII. Explanations regarding the activities carried out on behalf and account of other persons:

The Bank does not perform purchases, sales and custody services on behalf of its customers. The Bank hasno fiduciary transactions.



48

IX. Explanations on risk management

Notes and explanations in this section have been prepared in accordance with the Communiqué OnDisclosures About Risk Management To Be Announced To Public By Banks that have been published inOfficial Gazette numbered 29511 on October 23, 2015 and became effective as of March 31, 2016. The tablesrelated to ‘Internal Rating-Based (IRB) Approach’ are not presented due to the usage of standard approachfor the calculation of capital adequacy.

a) Risk Management approach of the Bank and general overview of risk weighted amounts

1. Risk Management Approach of the Bank

The explanations below are made under this title in accordance with Communiqué On Disclosures About RiskManagement To Be Announced To Public By Banks that have been published in Official Gazette no. 29511on October 23, 2015.

Risk Management activities consist of timely and comprehensively identification, measurement, monitoring,control and reporting phase of risks which may be exposed by the Bank due to its strategy and activitiesthrough policies, implementation procedures and limits determined towards monitoring, controlling andchanging, if required, the nature of activities depending upon the risk-return structure included by future cashflows of the Bank.

Establishment and monitoring of risk management process and related activities by Board of Directors,establishment and development of policies and procedures in scope of forming of adequate policies,procedures and limits which can allow managing different aspects of risk sourcing from activities anddetermination and monitoring of risk appetite limits, performing adequate and consistent risk measurement,analysis and monitoring activities through employing appropriate employees, availability of access to reliabletechnology and management information system, accuracy and integrity of data and existence of managementinformation system are ensured in order to execute and maintain an effective, independent and strong riskmanagement system within the framework of corporate risk culture.

Risk policies and their implementation procedures are prepared under the guidance of Audit Committee andapplied through the approval of Board of Directors. Audit Committee ensures updating and required revisionof these procedures. Risk policies and their implementation procedures, including written standards appliedby the Top Management, are announced to all personnel of the Bank by the Risk Management Directorate.

Written limits for digitized risks of the Bank are determined by Top Management and submitted to approval ofBoard of Directors through Audit Committee. Risk limits are determined in line with risk appetite, activities, sizeof products and services and complexity of the Bank. Risk limits are periodically reviewed in a way to reflectactuality of developments in implementation and updated according to changes in market conditions andBank’s strategy. A range of movement is provided related to necessary actions which shall be taken in caseof getting closer to limits through determining risk indicators and early warning levels in the risk limit structureof the Bank. Risk limits are forwarded to related department’s personnel to make them understand for risklimits. Limit usages are monitored closely and limit excesses are immediately notified to Top management inorder take required measures.

It is principal to determine the limits as risk based. These limits can be proportional limits based on riskmeasurement results such as percentage of risk based amount, percentage of risk weighted assets in additionto nominal values depending upon monetary magnitude or limits towards concentration such as limitationsbased on sector or debtor. The risk limits, which shall be determined, cannot be out of the limits brought bythe legislation. Risk limits are monitored through Bank Risk Limits Statement.

It is aimed to increase awareness and adoption of risk management culture throughout the Bank via reviewingof risks which may occur during the operation process in decision mechanisms.



49

IX. Explanations on risk management (continued):

The Bank expects that it will have a more complex structure in the future with its growth process and thereforethe risks, which may be faced, can be differentiated. The Bank is exposed to residual risk, reputation risk,business risk, strategic risk, compliance risk, country risk and transfer risk under the title of other risks, inaddition to main risks such as credit risk, market risk, liquidity risk, operational risk and dividend ratio risksourcing from banking accounts.

Risk Management Directorate, established in the framework of risk management legislation, carries outactivities to develop different method for the evaluation of the risks which cannot be digitized throughidentification, measurement, monitoring and reporting of risks exposed by the Bank. Risk ManagementDirectorate performs coordination of ICAAP studies and scenario analysis and stress test studies. In addition,Inspection Board, Internal Audit, Internal Control Directorate and Legislation and Compliance Directorate carryout their activities subject to Board of Directors through Audit Committee in order to prevent laundering crimerevenues and financing terrorism.

Approaches applied for the purpose of evaluation of adequacy of internal capital requirement withrespect to current and future activities:

“Internal Capital Adequacy Assessment Process Policy” and “Internal Capital Adequacy Assessment ProcessProcedure” are prepared by the Bank in order to identify internal capital requirement assessment process andapproved by Board of Directors. The purposes of this Internal Capital Adequacy Assessment Process Policyis to ensure maintenance of capital adequacy on a level which can meet Bank’s exposed risks throughdetermining main principles for the management of internal capital adequacy. The aims to manage internalcapital adequacy in line with nature, size, risk profile, complexity level and strategic plans of operations throughconsidering good practices guides in the framework of that policy and BRSA regulations. Internal capitaladequacy assessment methodology is considered as a process developing with the Bank and works areplanned accordingly.

2. General overview of risk weighted amountsRisk weighted assets

Minimum CapitalRequirements

CurrentPeriod

PriorPeriod

Current Period

1 Credit risk (excluding counterparty credit risk) (CCR) 24.660.242 15.351.278 1.972.8192 Of which standardised approach (SA) 24.660.242 15.351.278 1.972.8193 Of which internal rating-based (IRB) approach -4 Counterparty credit risk 368.493 87.203 29.4795 Of which standardised approach for counterparty credit risk (SA-CCR) 368.493 87.203 29.4796 Of which internal model method (IMM) - - -7 Equity positions in banking book under market-based approach - - -8 Equity investments in funds – look-through approach 58.559 - 4.6859 Equity investments in funds – mandate-based approach - 5.907 -10 Equity investments in funds – fall-back approach (1250% risk weight) - - -11 Settlement risk - - -12 Securitisation exposures in banking book - - -13 Of which IRB ratings-based approach (RBA) - - -14 Of which IRB Supervisory Formula Approach (SFA) - - -15 Of which SA/simplified supervisory formula approach (SSFA) - - -16 Market risk 3.702.980 445.274 296.23817 Of which standardised approach (SA) 3.702.980 445.274 296.23818 Of which internal model approaches (IMM) - - -19 Operational risk 1.690.562 950.827 135.24520 Of which Basic Indicator Approach 1.690.562 950.827 135.24521 Of which Standardised Approach - - -22 Of which Advanced Measurement Approach - - -23 Amounts below the thresholds for deduction (subject to 250% risk weight) - - -24 Floor adjustment - - -25 Total (1+4+7+8+9+10+11+12+16+19+23+24) 30.480.836 16.840.489 2.438.466



50


b) Relationships Between Financial Statements and Risk Amounts:

1. Differences between accounting and regulatory scopes of consolidation and mapping offinancial statement categories with regulatory risk categories:

Current Period- 31.12.2020 Carrying values of items in accordance with TurkishAccounting Standards (TAS)

Carrrying valuereported in financial

tables inaccordance with

TASSubject tocredit risk

Subject tocounterparty

credit riskSecuritization

positionsSubject to

market risk

Not subject tocapital

requirementsor deductedfrom capital

AssetsCash and balances with the centralbank 9.357.790 9.357.790 - - - -Banks 687.028 687.028 - - - -Money market placements - - - - - -Expected Loss Provisions (-) 664 - - - - 664Financial Assets at Fair ValueThrough Profit and Loss 2.396.377 - - - 2.396.377 -Financial assets valued at fair valuethrough other comprehensiveincome 9.998.207 9.998.207 544.496 - - -Derivative Financial Assets 378.411 - 378.411 - 378.411 -Loans and receivables 29.107.607 29.107.607 - - - -Lease receivables 316.186 316.186 - - - -Financial assets valued atamortised cost 775.777 775.777 - - - -Expected Loss Provisions (-) 866.861 602.639 - - - 264.222Assets held for sale and assets ofdiscontinued operations (net) - - - - - -Investments in associates (net) 7.474 7.474 - - - -Subsidiaries (net) 100 100 - - - -Joint ventures (net) - - - - - -Tangible assets (net) 478.296 448.197 - - - 30.099Intangible assets (net) 24.965 1.823 - - - 23.142Investment property (net) - - - - - -Tax asset 123.465 123.465 - - - -Other assets 373.470 373.470 - - - -Total Assets 53.157.628 50.594.485 922.907 - 2.774.788 (211.645)LiabilitiesParticipation Fund 39.566.471 - - - - 39.566.471Funds borrowed 5.808.300 - - - - 5.808.300Borrowings from money markets 537.043 - - - - 537.043Securities issued - - - - - -Financial Liabilities at Fair ValueThrough Profit and Loss - - - - - -Derivative financial liabilities 392.551 - - - - 392.551Lease payables 174.051 - - - - 174.051Provisions 302.518 - - - - 302.518Tax liability 130.528 - - - - 130.528Liabilities for assets held for saleand assetsof discontinued operations (net) - - - - - -Subordinated loans 764.430 - - - - 764.430Other liabilities 683.170 - - - - 683.170Shareholders’ equity 4.798.566Total Liabilities 53.157.628 - - - - 48.359.062

(*) The position amounts included in general market risk and specific risk calculation are taken into consideration.



51


2. Main reasons of the differences between the risk amounts and Carrrying Value in accordancewith Turkish Accounting Standards (TAS):

TotalSubject tocredit risk

Securitisationpositions

Subject tocounterparty

credit riskSubject to

market risk

1 Carrrying value of in accordance with TurkishAccounting Standard 53.157.628 50.594.485 - 922.907 2.774.788

2 Carrrying value of liabilities in accordance with TurkishAccounting Standard - - - - -

3 Total net amount 53.157.628 50.594.485 - 922.907 2.774.7884 Off balance sheet amounts 68.990.789 8.983.951 - 484.6075 Differences in valuations - - - - -

6 Differences arising from different netting rules (otherthan those set out in line 2) - - - - -

7 Differences arising from consideration of provisions - - - - -8 Differences arising from BRSA’s applications - (12.356.067) - - -9 Risk amounts 122.148.417 47.222.369 - 1.407.514 2.774.788

3. Explanations on differences between carrying values in accordance with Turkish AccountingStandards (TAS) and risk amounts:

There is no significant difference between the financial statement amounts of assets and liabilities and theamounts included in capital adequacy calculation.

c) Explanation on Credit Risk:

1. General information on credit risk:

Credit risk represents the risk or losses arising from corporate and individual loan customers who have cashor non-cash credit relations with the Bank not fulfilling the terms of their agreements partially or in full.

Lending authority is primarily the Board of Directors and based on the authority given by the Board of Directors.Loan Committee and Head-office Loan Committee also have that authority within specified limits. The Boardof Directors determines credit policies and limits to lending loan. It makes lending, credit approval and policiesrelated to other administrative principles and also It monitors conformity to policies, concentrations, limits andtakes necessary precautions. It determines risk limits within risk appetite, risk indicators, early warning levelsand controls the conformity to them. It watches out the balanced distribution of credits in scope of sector,lending without exchange incompatibility, compliance to legal limits, creditworthiness and collateralization.

The process of lending is executed within the phases of gathering information about client before creditrelationship, working on analysis and intelligence to identify creditworthiness, determining the way of work,allocation, collateralization, approval, lending and watching.

Credit risk is administered within the framework of Credit Strategy Policy, Commercial Loan Policy, IndividualLoan Policy, Related Party Lending Policy, Guaranties Policy, Credit Liquidation Policy and Risk Policy.Authorities, roles and limits are clearly identified with the adequate personnel and software support bypreparing the stable environment for healthy and effective functioning credit. Efforts continue to the regulationsof rating and scoring models leading to default possibility are prepared in order to measure credit risk of sme,commercial and corporate clients; And it is carried out systematically through the decision branches consistingof individual scoring models and credit lending policies. These rating models are used to make decision onworking together and determining working conditions. Credit limit allocations are carried out separately forclient or credit group according to administrative analysis and intelligence report, given ratings to client.İntelligence and rating reports are updated by reviewing allocated limits in certain periods determined inCommercial and Individual Credit Policy.



52

IX. Explanations on risk management (continued):Credit limits, mentioned in Banking Law and related legislation, are compiled while paying strict attention tobalanced sectoral breakdown of credits and the extension of TL resources as TL and Foreign Currencyresources as Foreign Currency in order not to give rise to exchange non-compliance. Collateralization is paidattention for risk mitigation although the credit worthiness of the customer is principal, It is also paid strictattention to provide conformity of maturity and exchange, İndependent appraisal for credit and assurance. Aprovision is made for credit receivables at default in accordance with “Communiqué Related to Principles andProcedures on Determining the Qualifications of Banks’ Loans and Other Receivables and the Provision forThese Loans and Other Receivables”.

Results of measurement, monitoring, analysis and evaluation related to key indicators of management of creditrisk such as credit risk variability of the Bank, sector comparison, region, sector, segment, branch,concentration based on rating and maturity, collection performance, non-performing loans and provisions areshared with top management through management information system. In addition, required actions are takenbefore the credits become non-performing through early warning systems and strategies are established forrisky sector and customer profiles in line with market and sector analysis in addition to early warning system.Collateral structures of customers having risk concern are reviewed and required actions are taken.

Departments, carrying out activities in credit risk management, are responsible for definition of risks occurringin their processes, informing of top management and taking required actions and Risk Management Directorateis responsible for calculation, reporting, compliance with legal and internal capital limitations and monitoringand reporting of concentrations. Additionally, Credit Monitoring Committee tracks developments in creditsprocess, early warning signals, sector and market developments periodically.

Internal Control Directorate and Inspection Board carries out internal control and internal audit activitiestowards both the credit risk of headquarters and also branches in scope of compliance to policies related tofund allocation applications, allocation and collaterals. Capital, required for the credit risk, is measured throughusing “Communique on Measurement and Evaluation of Bank’s Capital Adequacy” published by BRSA.

2. Credit quality of assets:Gross carrying value in financial

statements prepared in accordance withTurkish Accounting Standards (TAS)

Provisions/amortisation and

impairmentsNet values

(a+b-c)December 31, 2020 Defaulted Non-defaulted

1 Loans 714.652 28.709.141 863.610 28.560.1832 Debt securities - 10.773.984 3.915 10.770.0693 Off-balance sheet exposures 36.993 15.319.574 108.103 15.248.4644 Total 751.645 54.802.699 975.628 54.578.716

Gross carrying value in financialstatements prepared in accordance with

Turkish Accounting Standards (TAS)Provisions/

amortisation andimpairments

Net values(a+b-c)

December 31, 2019 Defaulted Non-defaulted

1 Loans 571.074 18.199.427 494.489 18.276.0122 Debt securities - 4.732.593 2.953 4.729.6403 Off-balance sheet exposures 52.515 9.427.353 53.784 9.426.0844 Total 623.589 32.359.373 551.226 32.431.736



53


3. Changes in stock of default loans and debt securities:Current Period

1 Defaulted loans and debt securities at end of the previous reporting period 571.0742 Loans and debt securities that have defaulted since the last reporting period 463.5993 Receivables back to non-defaulted status 23.3434 Amounts written off -5 Other changes (296.678)6 Defaulted loans and debt securities at end of the reporting period (1+2-3-4±5) 714.652

Prior Period1 Defaulted loans and debt securities at end of the previous reporting period 245.9882 Loans and debt securities that have defaulted since the last reporting period 540.4823 Receivables back to non-defaulted status -4 Amounts written off -5 Other changes (215.396)6 Defaulted loans and debt securities at end of the reporting period (1+2-3-4±5) 571.074

4. Additional information on credit quality of assets:

a) The criteria that the bank has taken into consideration in determining the impairment are explained in noteVIII of the third part. In the prior period, according to IAS 39, receivables with a delay of more than 90 daysare classified as “overdue receivables”. There is no difference between “overdue receivables” and“provisions made” as provisions made for all the overdue receivables.

b) There is no part of past due receivables not counted in Provisional receivables and reasons for thisapplication.

c) The specific provision calculation for the current period is explained in footnote VIII of the third section. Indetermining the specific provision amount for the prior period, minimum specific provision ratios are usedin accordance with the “Communiqué Related to Principles and Procedures on Determining theQualifications of Banks’ Loans and Other Receivables and the Provision for These Loans and OtherReceivables”” and collaterals are not excluded from risk balances.

d) The Bank defines its receivables as “restructured receivables”, which are observed negative developmentsin the solvency or cash flow of the debtor.

e) Breakdown of receivables according to geographical regions, sector and remaining maturity:

Breakdown according to geographical regions:

December 31, 2020 December 31, 2019

Domestic 27.615.661 17.629.008EU Countries 159.628 40.891OECD Countries (*) 1.553 -Off-shore banking regions 234.342 57.493USA, Canada - -Other Countries 381.771 290.279

Total 28.392.955 18.017.671(*) OECD countries except EU countries, USA and Canada



54


Breakdown according to sector: December 31, 2020 December 31, 2019Agriculture 239.699 120.476

Farming and stockbreeding 222.854 110.455Forestry 3210 52Fishery 13.635 9.969

Manufacturing 7.462.710 4.846.691Mining 251.900 229.528Production 5.644.458 3.655.113Electricity, gas, water 1.566.352 962.050

Construction 4.680.591 3.382.080Services 11.270.315 7.527.490

Wholesale and retail trade 6.057.296 3.746.156Hotel, food and beverage services 126.491 46.591Transportation and telecommunication 2.537.426 1.143.296Financial institutions 1.027.170 1.382.943Real estate and renting services 729.203 663.232Self-employment services 619.569 373.491Education services 46.412 35.705Health and social services 126.748 136.076

Other 4.739.640 2.140.934Total 28.392.955 18.017.671

Breakdown according to remaining maturity:

31/12/2020 Up to 1 month 1-3 Months 3-12 Months 1-5 Years Over 5 years TotalCredits 2.569.758 3.301.186 8.686.779 12.087.402 1.747.830 28.392.955

Breakdown according to remaining maturity:

31/12/2019 Up to 1 month 1-3 Months 3-12 Months 1-5 Years Over 5 years TotalCredits 2.690.951 2.260.235 6.181.854 6.548.882 335.749 18.017.671

f) Receviable amounts with provision by geographical area and sector (according to accounting relateddefinition used by The Bank) and written off assets depending on related provisions:

Breakdown according to geographical regions:

Current Period Non-performing loans Specific provisionsDomestic 714.652 602.640EU Countries - -OECD Countries - -Off-shore banking regions - -USA, Canada - -Other countries - -

Total 714.652 602.640Prior Period Non-performing loans Specific provisions

Domestic 571.074 377.705EU Countries - -OECD Countries - -Off-shore banking regions - -USA, Canada - -Other countries - -

Total 571.074 377.705

There is no written off amount from assets (December 31, 2019: None).



55


Breakdown according to sector:

Sectors / Counterparties Non-performing loans ProvisionsCurrent Period

1 Agriculture 1.274 1.0851.1 Farming and stockbreeding 1.274 1.0851.2 Forestry - -1.3 Fishery - -2 Manufacturing 147.823 127.0842.1 Mining - -2.2 Production 142.699 123.4952.3 Electricity, gas, water 5.124 3.5893 Construction 102.786 93.7904 Services 452.176 372.6984.1 Wholesale and retail trade 279.538 221.8314.2 Hotel, food and beverage services 1.389 6824.3 Transportation and telecommunication 12.596 11.8384.4 Financial institutions - -4.5 Real estate and renting services 51.799 45.6844.6 Self-employment services 105.891 91.7014.7 Education services 828 8274.8 Health and social services 135 1355 Other 10.593 7.983

6 Total 714.652 602.640

Sectors / Counterparties Non-performing loans ProvisionsPrior Period

1 Agriculture 1.008 6671.1 Farming and stockbreeding 1.008 6671.2 Forestry - -1.3 Fishery - -2 Manufacturing 115.663 75.7302.1 Mining - -2.2 Production 114.112 74.8352.3 Electricity, gas, water 1.551 8953 Construction 110.074 77.2964 Services 332.119 216.2594.1 Wholesale and retail trade 193.519 124.5374.2 Hotel, food and beverage services 507 3574.3 Transportation and telecommunication 17.000 12.0954.4 Financial institutions - -4.5 Real estate and renting services 43.285 29.7254.6 Self-employment services 76.913 48.8404.7 Education services 781 6014.8 Health and social services 114 1045 Other 12.210 7.753

6 Total 571.074 377.705

g) Aging analysis for past due receviables:

Current Period1-90 Days 91-180 Days Total1.133.456 294.932 1.428.388

* Consists of close monitoring loans

Prior Period1-30 Days 31-90 Days Total366.249 665.312 1.031.561

* Consists of close monitoring loans



56


h) Breakdown by whether restructured receivables have provision:

Current PeriodDecember 31,

2020

Prior PeriodDecember 31,

2019Loans Structured from Standard Loans and Other Receivables 372.489 178.627Loans Structured from Loans and Other ReceivablesUnder Close Monitoring 630.504 513.950

Loans Structured from Non-Performing Loans 126.557 118.456

The general provision is provided for Loans Structured from Standard Loans and Other Receivables andStructured from Loans and Other Receivables Under Close Monitoring. The specific provision is provided forLoans Structured from Non-Performing Loans.

5. Qualitative public disclosure on credit risk mitigation techniques:

The Bank is based on repayment of provided credits from revenue of customers obtained from their mainactivities. The Bank operates in the framework of “Collaterals Policy” established for the aforementionedpurpose and approved by Board of Directors. Various collaterals are requested with variable degrees in linewith credits provided for hedging purposes. Risk mitigation function of collaterals are measured through theirlegal applicability at default and liquidity periods.

Components constituting the collaterals of the credits are divided into two as main collaterals (liquid or can beliquidated in a short period) and supporting collaterals (takes time to turn into cash). Loan to value ratio isdetermined according to related asset price or volatility of its value in credits which are provided in return forcollaterals whose value is continuously changing (gold, shares, other precious metals etc.) and foreigncurrency current/participation account pledge.

In determination of loan to value ratio, losses which can occur due to liquidation of collateral and risk regardingcollateralized asset are taken into account. Received collaterals are reviewed periodically and insured.Information systems of the Bank are developed in order to ensure compliance of monitoring of credit conditionsand collaterals received from customers to extension conditions.

Values of the collaterals and their concentration based on type are tracked in credit risk monitoring process.

In legal capital adequacy calculations, credit risk reduction techniques are taken into account within thestandard specified in the legislation. Real estates are used as physical collateral, cash or similar securities areused as financial collateral and Credit Guarantee Fund bails are used.

6. Credit risk mitigation techniques - General outlook:

Current Period 31.12.2020Exposuresunsecured:

carryingamount as pes

TAS

Exposuressecured by

collateral

Collateralizedamount ofexposuressecured by

collateral

Exposuressecured by

financialguarantees


financialguarantees

Exposuressecured by

creditderivatives


creditderivatives

1 Loans 17.122.819 11.698.335 8.395.703 6.924.008 3.992.125 - -2 Debt securities 10.773.984 - - - - - -3 Total 27.896.803 11.698.335 8.395.703 6.924.008 3.992.125 - -4 Of which defaulted 91.325 20.688 7.592 20.254 7.151 - -

Prior Period 31.12.2019Exposuresunsecured:

carryingamount as pes

TAS

Exposuressecured by

collateral


collateral

Exposuressecured by

financialguarantees


financialguarantees

Exposuressecured by

creditderivatives


creditderivatives

1 Loans 13.571.504 4.821.292 3.411.783 2.076.483 1.223.274 - -2 Debt securities 4.732.593 - - - - - -3 Total 18.304.097 4.821.292 3.411.783 2.076.483 1.223.274 - -4 Of which defaulted 146.539 46.830 37.095 36.037 29.225 - -



57


7. Qualitative disclosures on banks’ use of external credit ratings under the standardisedapproach for credit risk:

Calculation of rating grades specified in article 6 of Communique on Measurement and Evaluation of Bank’sCapital Adequacy by BRSA mentioned in the footnote numbered 8/c for Explanations on Credit Risk.

1. Standardised Approach - Credit risk exposure and credit risk mitigation techniques:

Current Period 31.12.2020Exposures before Credit

Conversion Factor andCredit Risk Mitigation

Credit Risk Mitigationand Exposures post-

Credit Conversion Rate

Risk Weighted Averageand Risk Weighted

Average Density

Risk Categories On-balancesheet

amount

Off-balancesheet

amount

On-balancesheet

amount

Off-balance

sheetamount RWA

RWAdensity

Receivables from central governments or central banks 16.013.034 - 18.735.751 37.108 3.541.287 %18,86Receivables from regional or local governments 164.942 7.477 164.942 3.589 83.665 %49,64Receivables from administrative units and non-commercial enterprises 29.516 360.060 29.517 179.856 209.291 %99,96Receivables from multilateral development banks - - - - - %0,00Receivables from international organizations - - - - - %0,00Receivables from banks and brokerage houses 1.042.306 24.849 1.042.306 15.467 403.421 %38,14Receivables from corporates 10.136.942 10.787.173 9.192.867 6.892.205 15.001.625 %93,26Retail receivables 3.399.557 3.515.412 1.880.643 1.455.583 2.407.136 %72,15Exposures secured by residential property 1.883.908 1.463 1.883.276 731 658.903 %34,96Exposures secured by commercial real estate 1.855.305 656.385 1.601.124 398.537 1.341.171 %67,07Past due receivables 79.273 - 74.358 - 45.056 %60,59Receivables defined in high risk category by BRSA - - - - - %0,00Securities collateralized by mortgages - - - - - %0,00Short-term receivables from banks, brokerage houses and corporates - - - - - %0,00Investments similar to collective investment funds 88.072 - 88.072 - 58.559 %66,49Other receivables 3.537.935 3.799 3.537.935 928 961.111 %27,16Investments in equities 7.574 - 7.574 - 7.574 %100,00Total 38.238.364 15.356.618 38.238.365 8.984.004 24.718.799 %52,35

Prior Period 31.12.2019Exposures before Credit

Conversion Factor andCredit Risk Mitigation

Credit Risk Mitigationand Exposures post-

Credit Conversion Rate

Risk Weighted Averageand Risk Weighted

Average Density

Risk Categories On-balancesheet

amount

Off-balance

sheetamount

On-balancesheet

amount

Off-balance

sheetamount RWA

RWAdensity

Receivables from central governments or central banks 6.840.426 - 6.621.189 38.177 1.429.595 %21,47Receivables from regional or local governments 157.318 333 157.318 67 78.693 %50,00Receivables from administrative units and non-commercial enterprises 23.304 3.700 23.304 1.822 25.062 %99,75Receivables from multilateral development banks - - - - - %0,00Receivables from international organizations - - - - - %0,00Receivables from banks and brokerage houses 3.154.232 20.092 3.154.232 10.050 1.204.117 %38,05Receivables from corporates 6.192.526 6.817.539 6.089.545 4.065.061 9.629.714 %94,83Retail receivables 826.733 2.033.576 701.390 844.260 1.113.200 %72,02Exposures secured by residential property 440.137 1.610 440.137 805 154.237 %34,97Exposures secured by commercial real estate 1.132.438 600.532 1.115.754 346.073 968.262 %66,24Past due receivables 138.202 - 120.412 - 79.578 %66,09Receivables defined in high risk category by BRSA - - - - - %0,00Securities collateralized by mortgages - - - - - %0,00Short-term receivables from banks, brokerage houses and corporates - - - - - %0,00Investments similar to collective investment funds 5.908 - 5.908 - 5.908 %100,00Other receivables 1.396.758 2.647 1.396.758 531 657.919 %47,09Investments in equities 10.901 - 10.901 - 10.901 %100,00Total 20.318.883 9.480.029 19.836.848 5.306.846 15.357.186 %61,08



58


1. Standardised approach – Receivables related to Risk categories and risk weights:

Risk Categories/Risk WeightsCurrent Period

0% 10% 20%

35%secured byMortgages

on Property 50% 75% 100% 150% 200% Others

Total riskamount

(post-CCFand CRM )**

1 Receivables from central governmentsor central banks 11.690.284 - - - 7.082.575 - - - - - 18.772.859

2 Receivables from regional or localgovernments 1.200 - - - 167.331 - - - - - 168.531

3 Receivables from administrative unitsand non-commercial enterprises 81 - - - - - 209.292 - - - 209.373

4 Receivables from multilateraldevelopment banks - - - - - - - - - - -

5 Receivables from internationalorganizations - - - - - - - - - - -

6 Receivables from banks and brokeragehouses - - 478.284 - 543.450 - 36.039 - - - 1.057.773

7 Receivables from corporates 399.395 - 548.838 - 489.963 - 14.646.876 - - - 16.085.0728 Retail receivables 67.173 - 81.187 - - 3.187.866 - - - - 3.336.226

9 Exposures secured by residentialproperty 312 - 2.600 1.881.095 - - - - - - 1.884.007

10 Exposures secured by commercial realestate 21.570 - 60.485 - 1.177.065 - 740.541 - - - 1.999.661

11 Past due receivables 5 - 2 - 58.591 - 15.760 - - - 74.358

12 Receivables defined in high riskcategory by BRSA - - - - - - - - - - -

13 Securities collateralized by mortgages - - - - - - - - - - -

14 Short-term receivables from banks,brokerage houses and corporates - - - - - - - - - - -

15 Investments similar to collectiveinvestment funds 1.205 - 35.386 - - - 51.481 - - - 88.072

16 Investments in equities - - - - - - 7.574 - - - 7.57417 Other receivables 2.577.749 - 3 - - - 961.111 - - - 3.538.86318 Total 14.758.974 - 1.206.785 1.881.095 9.518.975 3.187.866 16.668.674 - - - 47.222.369

(*) Amount post CCF and CRM

Risk Categories/Risk WeightsPrior Period

0% 10% 20%

35% securedby

Mortgages onProperty 50% 75% 100% 150% 200% Others

Total riskamount

(post-CCF andCRM )**

1 Receivables from centralgovernments or central banks 3.800.175 - - - 2.859.191 - - - - - 6.659.366

2 Receivables from regional or localgovernments - - - - 157.385 - - - - - 157.385

3Receivables from administrativeunits and non-commercialenterprises 65 - - - - - 25.061 - - - 25.126

4 Receivables from multilateraldevelopment banks - - - - - - - - - - -

5 Receivables from internationalorganizations - - - - - - - - - - -

6 Receivables from banks andbrokerage houses - - 1.309.985 - 1.824.355 - 29.942 - - - 3.164.282

7 Receivables from corporates 388.313 - 113.051 - 92.278 - 9.560.964 - - - 10.154.6068 Retail receivables 41.151 - 27.589 - - 1.476.910 - - - - 1.545.650

9 Exposures secured by residentialproperty 143 - 284 440.515 - - - - - - 440.942

10 Exposures secured by commercialreal estate 17.469 - 32.165 - 900.726 - 511.467 - - - 1.461.827

11 Past due receivables 16 - 3 - 81.631 - 38.762 - - - 120.412

12 Receivables defined in high riskcategory by BRSA - - - - - - - - - - -

13 Securities collateralized bymortgages - - - - - - - - - - -

14 Short-term receivables from banks,brokerage houses and corporates - - - - - - - - - - -

15 Investments similar to collectiveinvestment funds - - - - - - 5.908 - - - 5.908

16 Investments in equities - - - - - - 10.901 - - - 10.90117 Other receivables 693.401 - 57.460 - - - 646.428 - - - 1.397.28918 Total 4.940.733 - 1.540.537 440.515 5.915.566 1.476.910 10.829.433 - - - 25.143.694

(*) Amount post CCF and CRM



59


d) Explanations on Counterparty Credit Risk:

1. Qualitative Explanations on Counterparty Credit Risk:

Counterparty credit risk (CCR) states default risk of counterparty, which is a party to a transaction imposingan obligation to both parties, going into default before the final payment included in cash flow of the transactionin question. In accordance with Risk Policies approved by Board of Directors, counterparty credit risk ismanaged through determining and monitoring the substitution cost risk of limits in domestic and foreign settledfinancial institutions (transaction becomes defaulted as counterparty defaults its liability in a date beforesettlement day) and settlement risk(transaction becomes defaulted as counterparty defaults its liability in thesettlement date)

In counterparty credit risk management with respect to financial institutions, risk mitigation methods such asoffset and collateralization are used. Controls of collaterals are performed on a daily basis. If there is an excessof limits, it is ensured to take necessary action through making related reporting.

“Valuation Method according to Fair Value” is used for counterparty credit risk in legal capital calculationsrequired for credit risk.

2. Counterparty credit risk (CCR) approach analysis:

Current Period - 31.12.2020Replacement

cost

PotentialFuture

exposure EEPE (*)

Alpha used forcomputingregulatory

exposure atdefault

EAD post-CRM RWA

1 Standardised Approach - CCR (for derivatives) 213.636 649.382 - 1,4 863.018 345.947

2Internal Model Method (for repo transactions, securities or commodity lendingor borrowing transactions, long settlement transactions and securitiesfinancing transactions) - - - - - -

3Simple Approach for credit risk mitigation (for repo transactions, securities orcommodity lending or borrowing transactions, long settlement transactionsand securities financing transactions) - - - - 544.496 7.461

4Comprehensive Approach for credit risk mitigation (for repo transactions,securities or commodity lending or borrowing transactions, long settlementtransactions and securities financing transactions) - - - - - -

5Value-at-Risk (VaR) for repo transactions, securities or commodity lending orborrowing transactions, long settlement transactions and securities financingtransactions - - - - - -

6 Total 353.408

(*) Effective expected positive exposure

Prior Period - 31.12.2019Replacement

cost

PotentialFuture

exposure EEPE (*)

Alpha used forcomputingregulatory

exposure atdefault

EAD post-CRM RWA

1 Standardised Approach - CCR (for derivatives) 36.161 158.615 - 1,4 194.776 84.313

2Internal Model Method (for repo transactions, securities or commodity lendingor borrowing transactions, long settlement transactions and securitiesfinancing transactions) - - - - - -

3Simple Approach for credit risk mitigation (for repo transactions, securities orcommodity lending or borrowing transactions, long settlement transactionsand securities financing transactions) - - - - 353.844 880

4Comprehensive Approach for credit risk mitigation (for repo transactions,securities or commodity lending or borrowing transactions, long settlementtransactions and securities financing transactions) - - - - - -

5Value-at-Risk (VaR) for repo transactions, securities or commodity lending orborrowing transactions, long settlement transactions and securities financingtransactions - - - - - -

6 Total 85.193



60


3. Capital requirement for credit valuation adjustment (CVA):

Current Period - 31.12.2020 EAD post-CRM RWA

Total portfolios subject to the Advanced CVA capital obligation - -1 (i) VaR component (including the 3*multiplier) - -2 (ii) Stressed VaR component (including the 3*multiplier) - -3 All portfolios subject to the Standardised CVA capital obligation 863.018 15.0854 Total subject to the CVA capital obligation 863.018 15.085

4. Standardised Approach- CCR exposures by risk class and risk weights:

Risk Weights – Current Period %0 %10 %20 %50 %75 %100 %150 OtherTotalCreditRisk*

Risk CategoriesReceivables from central governments or centralbanks - - - 53.547 - - - - 53.547Receivables from regional or local governments - - - - - - - - -Receivables from administrative units and non-commercial enterprises 143.350 - - - - 1.185 - - 144.535Receivables from multilateral development banks - - - - - - - - -Receivables from international organizations - - - - - - - - -Receivables from banks and brokerage houses - - 506.637 164.464 - - - - 671.101Receivables from corporates 385.739 - - - - 133.591 - - 519.330Retail receivables 7.936 - - - 11.065 - - - 19.001Receivables secured by mortgages on property - - - - - - - - -Past due receivables - - - - - - - - -Receivables defined in high risk category by BRSA - - - - - - - - -Securities collateralized by mortgages - - - - - - - - -Securitization positions - - - - - - - - -Short-term receivables from banks, brokerage housesand corporates - - - - - - - - -Investments similar to collective investment funds - - - - - - - - -Equity security investmens - - - - - - - - -Other receivables - - - - - - - - -Other assets - - - - - - - - -Total 537.025 - 506.637 218.011 11.065 134.776 - - 1.407.514

(*) Total credit risk respresents the amount relating to CAR calculation after application of counterparty risk measurement techniques.

Risk Weights – Current Period %0 %10 %20 %50 %75 %100%150

OtherTotalCreditRisk*

Risk CategoriesReceivables from central governments or central banks 333.385 - - 3.892 - - - - 337.277Receivables from regional or local governments - - - - - - - - -Receivables from administrative units and non-commercial enterprises - - - - - - - - -Receivables from multilateral development banks - - - - - - - - -Receivables from international organizations - - - - - - - - -Receivables from banks and brokerage houses - - 120.225 24.053 - - - - 144.278Receivables from corporates 15.800 - - - - 46.156 - - 61.956Retail receivables 3.749 - - - 1.361 - - - 5.110Receivables secured by mortgages on property - - - - - - - - -Past due receivables - - - - - - - - -Receivables defined in high risk category by BRSA - - - - - - - - -Securities collateralized by mortgages - - - - - - - - -Securitization positions - - - - - - - - -Short-term receivables from banks, brokerage housesand corporates - - - - - - - - -Investments similar to collective investment funds - - - - - - - - -Equity security investmens - - - - - - - - -Other receivables - - - - - - - - -Other assets - - - - - - - - -Total 352.934 - 120.225 27.945 1.361 46.156 - - 548.621

(*) Total credit risk respresents the amount relating to CAR calculation after application of counterparty risk measurement techniques.



61


5. Collaterals for CCR:

Since the derivative collaterals do not exist in capital adequacy calculations, there is no related statement(December 31, 2019: None).

6. Credit Derivatives:

None (December 31, 2019: None).

7. Risks arising from central counterparty:


e) Explanation on Securitization:


f) Explanation on Market risks:

1. Qualitative disclosure on market risk:

Market risk is identified as probability of loss depending upon the changes of dividend rates, exchange ratesand prices of securities due to positions/portfolios held in in-balance sheet and off-balance sheet accounts ofthe Bank. Market Risk covers probability of loss which may be exposed by the Bank due to dividend rate risk,share position risk, commodity risk and exchange risk.

Market risk management framework and implementation procedures are established in “Risk Policies” and“Market Risk Procedure” documents approved by Board of Directors.

Trading transactions are monitored within the limits approved by Board of Directors and reported. The Bankcontinuously monitors whether market risk is complied with limits determined with legislations and indicatorsdetermined in the framework of risk appetite. Trading portfolios are subject to daily review and total riskposition, valuation results and limit usage levels are monitored. Trading portfolio transactions aresimultaneously compared with limits and personnel responsible for the position are informed regarding thecurrent usage level and measures eliminating limit excess are developed. If any non-compliance exists withtreasury transaction limits approved by the Board of Directors, it is reported.

Risk Management Directorate carries out monitoring of market risk and reporting processes while TreasuryDirectorate carries out its operations in the framework policies, strategies and limits determined by Board ofDirectors under the supervision of Audit Committee.

Market risk is also measured with value at risk calculations through using internal models and controlled withretrospective tests and analysis performed are supported with scenario analysis and stress test studies.

Market risk is measured and reported through Standard Method mentioned in “Communique on Measurementand Evaluation of Bank’s Capital Adequacy” published by BRSA. Marketable securities, which are tracked withfair value in financial statements, derivatives and Exchange rate and commodity risk calculated over all balancesheet are covered by the calculation.



62


1. Standardised approach:

Risk Weighted AmountsCurrent Period

Risk Weighted AmountsPrior Period

Outright products1 Profit rate risk (general and specific) 321.538 212.4382 Equity risk (general and specific) - -3 Foreign exchange risk 347.235 139.3544 Commodity risk 3.034.207 93.482

Options5 Simplified approach - -6 Delta-plus method - -7 Scenario approach - -8 Securitisation - -9 Total 3.702.980 445.274

X. Explanations on business segments:

The table of information regarding the segmentation reporting is given below.

Current Period RetailCommercial

and Corporate Treasury Undistributed Total

Total Assets 3.609.419 25.636.058 13.329.159 10.582.992 53.157.628

Total Liabilities 15.633.101 30.951.525 1.067.137 707.299 48.359.062Total Equity - - - 4.798.566 4.798.566

Net profit share income/(expense) (*) (64.512) 1.077.044 661.609 11.988 1.686.129Net fees and commissions income/(expense) 3.684 (15.450) (11.604) 97.779 74.409Other operating income/(expense) (357.131) (31.663) 81.252 70.194 (237.348)Loss Provisions (42.616) - (39.282) (599.046) (680.944)Profit/(loss) before tax (460.575) 1.029.931 691.975 (419.085) 842.246Provision for tax - - - (175.380) (175.380)

Net profit / (loss) for the period (460.575) 1.029.931 691.975 (594.465) 666.866

(*) The distribution difference in the retail, commercial and corporate segments stems from fund allocation and fund collectionmethods of the Bank.

Prior Period RetailCommercial

and Corporate Treasury Undistributed Total

Total Assets 1.060.745 19.173.050 6.336.991 3.777.998 30.348.784

Total Liabilities 7.989.667 18.635.585 1.155.427 607.412 28.388.091Total Equity - - - 1.960.693 1.960.693

Net profit share income/(expense) (*) (247.244) 538.906 335.708 52.764 680.134Net fees and commissions income/(expense) 1.733 54.929 (30.522) 57.658 83.798Other operating income/(expense) (238.259) (22.329) 466.620 (50.086) 155.946Loss Provisions (30.144) (30.324) (6.645) (410.639) (477.752)Profit/(loss) before tax (513.914) 541.182 765.161 (350.303) 442.126Provision for tax - - - (117.239) (117.239)

Net profit / (loss) for the period (513.914) 541.182 765.161 (467.542) 324.887

(*) The distribution difference in the retail, commercial and corporate segments stems from fund allocation and fund collectionmethods of the Bank.



63

Section five

Explanations and notes on the unconsolidated financial statements

I. Explanations and notes related to assets:1. a) Cash and balances with the Central Bank of Republic of Turkey (CBRT):

Current Period Prior PeriodTL FC TL FC

Cash / Foreign currency 80.761 1.038.824 46.304 510.521CBRT 299.169 6.299.641 79.057 2.102.126Other (*) - 1.639.395 2 194.035

Total 379.930 8.977.860 125.363 2.806.682(*) Other consists of precious metals and moneys in transit.

b) Information related to CBRT:Current Period Prior Period

TL FC TL FC

Unrestricted demand deposit 289.294 723.326 76.923 3.511Unrestricted time deposit - - - -Restricted time deposit 9.875 5.576.315 2.134 2.098.615

Total 299.169 6.299.641 79.057 2.102.126

In accordance with the “Communiqué Regarding the Reserve Requirements numbered 2013/15”, banksoperating in Turkey are required to maintain reserves in CBRT for TL and foreign currency liabilities. Accordingto the Communiqué Regarding the Reserve Requirements, reserve requirements can be maintained in TL,USD and/or EURO and standard gold.

As of December 31, 2020, for TL ratio applicable to reserve requirements participation funds and otherliabilities’ maturity structure is between 1% and 6%, according to the maturity structure of the foreign currencyratio applicable to reserve requirements participation fund and in other liabilities, it is between 5% and 22%.

2. a) Information on financial assets at fair value through profit/loss subject to repurchaseagreements and given as collateral/blocked:


b) Table of positive differences related to derivative financial assets held for trading:


Forward Transactions 71.563 23.437 9.061 4.464Swap Transactions 10.654 85.307 4.502 5.600Futures Transactions - - - -Options - - - -Other (*) 17.041 170.409 42.186 26.010Total 99.258 279.153 55.749 36.074(*) Other consists of derivative guarantees given.



64

I. Explanations and notes related to assets (continued):

3. a) Information on banks:


BanksDomestic 10.515 280.294 1.175 1.646.023Abroad - 396.219 - 309.166Foreign head offices and branches - - - -

Total 10.515 676.513 1.175 1.955.189

b) Information on foreign bank accounts:

Current period Prior periodUnrestricted

amountRestricted

amountUnrestricted

amountRestricted

amount

European Union Countries 36.207 - 19.208 -USA and Canada 24.488 - 22.213 -OECD Countries (*) 285.745 - 257.689 -Off-shore banking regions - - - -Other 49.779 - 10.056 -

Total 396.219 - 309.166 -(*) OECD countries other than EU countries, USA and Canada.

4. Information on Financial Assets at fair value through other comprehensive income:

a) Information on financial assets valued at fair value through other comprehensive income subjectto repurchase transactions, given as a guarantee or blocked:

Financial assets valued at fair value through other comprehensive income subject to repurchasetransactions assets, which are subjected to repurchase agreements as of December 31, 2020: TL 544.496(December 31, 2019: 344.528) and financial assets given as collateral/blocked are amounting to TL3.217.881 (December 31, 2019: TL 104.113).

b) Financial assets valued at fair value through other comprehensive income:

Current Period Prior Period

Debt securities 10.036.818 4.165.097 Quoted on a stock exchange (*) 10.036.818 4.165.097 Unquoted on a stock exchange - -

Share certificates - 20.695 Quoted on a stock exchange (*) - 20.695 Unquoted on a stock exchange - -

Impairment provision (-) 38.611 653

Total 9.998.207 4.185.139

(*) Includes debt securities quoted on a stock exchange which are not traded at the related period ends.



65


5. Information on loans and receivables:a) Information on all types of loans and advances given to shareholders and employees of the

Bank:

Current Period Prior PeriodCash Non-cash Cash Non-cash

Direct loans granted to shareholders - - - - Corporate shareholders - - - - Real person shareholders - - - -Indirect loans granted to shareholders - - - -Loans granted to employees 1.398 - 672 -

Total 1.398 - 672 -

b) Information on the first and second group loans including restructed loans

(*) Other, commercial installment loan (TL 4.000.376), investment loans (TL 13.775), foreign loans excluding loans given to financial sector (TL 741.262),profit and loss sharing investments(TL 63.500), to purchase loans security for customer (TL 2.385), precious metal loans (97.024 TL) and other loans (TL6.856).

The Bank’s profit and loss sharing investments are amounting to TL 63.500 and is followed under loansaccount as December 31, 2020. Profit and loss sharing investments of the Bank are fixed musharakahinvestments and have been accounted at historical cost in accordance with article 2/3/1 of “Interest-freeFinance Accounting Standard 4”: Musharakah Financing.

Cash Loans(Current Period) Standard

loans

Loans Under Close Monitoring

Loans Notsubject to

restructuredloans

Restructured LoansLoans with

RevisedContractTerms

Refinance

Loans 26.964.566 797.885 362 630.142Export loans 191.629 - - -Import loans 1.274.333 11.246 - -Business loans 16.145.804 756.910 - 629.784Consumer loans 3.585.028 3.840 362 358Credit cards 14.641 71 - -Loans given to financial sector 853.771 - - -Other (*) 4.899.360 25.818 - -

Total 26.964.566 797.885 362 630.142



66


(*) Other, commercial installment loan (TL 1.204.595), investment loans (TL 43.323), foreign loans excluding loans given to financial sector (TL 358.734),to purchase loans security for customer (TL 27.441) and other loans (TL 7.601).

Current Period Standard LoansLoans Under Close

MonitoringExpected loss of provision for 12 Months 227.237 -Substantial increase in credit risk - 26.619

Prior Period Standard LoansLoans Under Close

MonitoringExpected loss of provision for 12 Months 93.939 -Substantial increase in credit risk - 21.614

Extension of Repayment Plan Standard LoansLoans Under Close

MonitoringExtended by 1 or 2 times 123.684 513.940Extended by 3,4 or 5 times 79.824 116.564Extended by more than 5 times 168.981 -

Extension Periods Standard LoansLoans Under Close

Monitoring0 -6 Ay 28.602 90.6486 Ay -12 Ay 61.123 9.9701 -2 Yıl 11.390 8.6852 -5 Yıl 271.374 430.0005 Yıl ve Üzeri - 91.201

Cash Loans(Prior Period) Standard

loans

Loans Under Close Monitoring

Loans Notsubject to

restructuredloans

Restructured LoansLoans with

RevisedContractTerms

Refinance

Loans 16.986.110 517.611 701 513.249Export loans 33.436 - - -Import loans 1.207.901 52.457 - -Business loans 11.858.829 404.049 - 495.350Consumer loans 1.033.287 8.528 701 2.044Credit cards 6.034 76 - -Loans given to financial sector 1.273.285 - - -Other (*) 1.573.338 52.501 - 15.855

Total 16.986.110 517.611 701 513.249



67


c) Maturity analysis of cash loans:

Current Period Standard Loans Loans Under Close Monitoring

Loans Not subject torestructured loans Restructured Loans

Short Term Loans 4.301.146 79.652 10.601Medium- and long-term loans* 22.663.420 718.233 619.903

Total 26.964.566 797.885 630.504

(*) Loans with original maturities longer than a year are classified as “Medium- and Long-Term Loans”.

Prior Period Standard Loans Loans Under Close Monitoring

Loans Not subject torestructured loans Restructured Loans

Short Term Loans 5.685.644 14.419 50.613Medium- and long-term loans* 11.300.466 503.192 463.337

Toplam 16.986.110 517.611 513.950

(*) Loans with original maturities longer than a year are classified as “Medium- and Long-Term Loans”.



68


d) Information on consumer loans, retail credit cards, loans given to personnel and personnelcredit cards:

Current Period Short-termMedium and

long-term Total

Consumer loans-TL 4.277 3.584.305 3.588.582Housing loans 2.357 3.312.969 3.315.326Vehicle loans 1.708 170.179 171.887Consumer loans 212 101.157 101.369Other - - -

Consumer loans-FC indexed - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Consumer loans-FC - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Retail credit cards-TL 9.507 - 9.507With installment - - -Without installment 9.507 - 9.507

Retail credit cards-FC - - -With installment - - -Without installment - - -

Personnel loans-TL 63 943 1.006Housing loans - 25 25Vehicle loans 50 754 804Consumer loans 13 164 177Other - - -

Personnel loans-FC indexed - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Personnel loans-FC - - -Housing loans - - -

Vehicle loans - - -Consumer loans - - -Other - - -

Personnel credit cards-TL 392 - 392 With installment - - -

Without installment 392 - 392Personnel credit cards-FC - - -

With installment - - - Without-installment - - -Overdraft account-TL(Real Person) - - -Overdraft account-FC(Real Person) - - -

Total 14.239 3.585.248 3.599.487



69


Prior Period Short-termMedium and

long-term Total

Consumer loans-TL 2.614 1.041.272 1.043.886Housing loans 948 1.000.657 1.001.605Vehicle loans 1.059 32.773 33.832Consumer loans 607 7.842 8.449Other - - -

Consumer loans-FC indexed - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Consumer loans-FC - 317 317Housing loans - 317 317Vehicle loans - - -Consumer loans - - -Other - - -

Retail credit cards-TL 5.795 - 5.795With installment - - -Without installment 5.795 - 5.795

Retail credit cards-FC - - -With installment - - -Without installment - - -

Personnel loans-TL 130 227 357Housing loans - 78 78Vehicle loans 10 138 148Consumer loans 120 11 131Other - - -

Personnel loans-FC indexed - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Personnel loans-FC - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Personnel credit cards-TL 315 - 315With installment - - -Without installment 315 - 315

Personnel credit cards-FC - - - With installment - - -

Without-installment - - -Overdraft account-TL(Real Person) - - -Overdraft account-FC(Real Person) - - -

Total 8.854 1.041.816 1.050.670



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e) Information on commercial loans with installments and corporate credit cards:

Current Period Short-termMedium and

long-term Total

Commercial installment loans-TL 148.831 3.715.873 3.864.704Business loans - 287.751 287.751Vehicle loans 114.503 718.606 833.109Consumer loans 34.328 2.709.516 2.743.844Other - - -

Commercial installment loans-FC indexed - 61.035 61.035Business loans - 10.076 10.076Vehicle loans - 18.030 18.030Consumer loans - 32.929 32.929Other - - -

Commercial installment Loans-FC - 74.637 74.637Business loans - 34.271 34.271Vehicle loans - 18.708 18.708Consumer loans - 21.658 21.658Other - - -

Corporate credit cards-TL 4.813 - 4.813With installment - - -Without installment 4.813 - 4.813

Corporate credit cards-FC - - -With installment - - -Without installment - - -

Overdraft account-TL (Legal Entity) - - -Overdraft account-FC(Legal Entity) - - -

Total 153.644 3.851.545 4.005.189



71


Prior Period Short-termMedium and

long-term Total

Commercial installment loans-TL 61.091 731.973 793.064Business loans 613 274.844 275.457Vehicle loans 50.890 332.785 383.675Consumer loans 9.588 124.344 133.932Other - - -

Commercial installment loans-FC indexed - 346.711 346.711Business loans - 269.214 269.214Vehicle loans - 40.902 40.902Consumer loans - 36.595 36.595Other - - -

Commercial installment Loans-FC 7.452 57.368 64.820Business loans - 34.344 34.344Vehicle loans 7.325 10.676 18.001Consumer loans 127 12.348 12.475Other - - -

Corporate credit cards-TL - - -With installment - - -Without installment - - -

Corporate credit cards-FC - - -With installment - - -Without installment - - -

Overdraft account-TL (Legal Entity) - - -Overdraft account-FC(Legal Entity) - - -

Total 68.543 1.136.052 1.204.595

f) Allocation of loans by customers:


Public 554.122 1.825.319Private 27.838.833 16.192.352

Total 28.392.955 18.017.671

g) Breakdown of domestic and foreign loans:

The distribution of loans excluding non-performing loans are as follows,


Domestic loans 27.615.661 17.629.008Foreign loans 777.294 388.663

Total 28.392.955 18.017.671

h) Loans granted to subsidiaries and associates:




72

I. Explanations and notes related to assets (continued):i) Specific provisions for loans:


Loans and Receivables with Limited Collectability 26.656 159.944Doubtful Loans and Other Receivables 79.434 102.803Uncollectible Loans and Receivables 496.550 114.958

Total 602.640 377.705

j) Information on non-performing loans and receivables (net):j.1) Non-performing loans and receivables which are restructured or rescheduled:

III. Group IV. Group V. GroupLoans and receivables

with limited collectabilityLoans and receivables with

doubtful collectabilityUncollectible loans

and other receivablesCurrent PeriodGross Amounts Before the Provisions 52.059 108.391 427.646Restructured Loans - 10.441 116.116Prior PeriodGross Amounts Before the Provisions 247.999 79.699 124.920Restructured Loans 21.207 73.810 23.439

j.2) Movements of non-performing loans:III. Group IV. Group V. Group

Current Period Loans and receivableswith limited collectibility

Loans and receivableswith doubtful collectibility

Uncollectibleloans and receivables

Closing balance of prior period 269.206 153.509 148.359Additions in the current period (+) 312.652 37.180 113.768Transfers from other categories of non-

performing loans (+) - 320.432 347.852Transfers to other categories of non-

performing loans (-) 320.432 347.852 -Transfers to standard loans (-) 203.577 44.437 48.664Collections in the current period (-) 5.790 - 17.553Write offs (-) - - -

Corporate and commercial loans - - - Retail loans - - - Credit cards - - -

Other - - -Closing balance of the current period 52.059 118.832 543.762

Provision (-) 26.656 79.434 496.550

Net balance at the balance sheet 25.403 39.398 47.212

III. Group IV. Group V. GroupPrior Period Loans and receivables with

limited collectibilityLoans and receivables

with doubtful collectibilityUncollectible

loans and receivables

Closing balance of prior period 143.108 77.907 24.973Additions in the current period (+) 538.542 80 1.860Transfers from other categories of non-

performing loans (+) - 332.565 138.877Transfers to other categories of non-

performing loans (-) 332.565 138.877 -Transfers to standard loans (-) 79.879 118.166 17.351Collections in the current period (-) - - -Write offs (-) - - -

Corporate and commercial loans - - - Retail loans - - - Credit cards - - -

Other - - -Closing balance of the current period 269.206 153.509 148.359

Specific provision (-) 159.944 102.803 114.958

Net balance at the balance sheet 109.262 50.706 33.401



73


j.3) Non-performing loans and other receivables in foreign currencies:

III. Group IV. Group V. Group

Loans with limitedcollectability

Loans withdoubtful

collectabilityUncollectible

loans

Current period:Period end balance 14.837 35.898 15.022


Net balance on balance sheet 7.142 8.456 719

Prior period:Period end balance 34.601 1.446 2.902


Net balance on balance sheet 15.674 381 903

j.4) Gross and net non-performing loans and other receivables per customer categories:

III. Group IV. Group V. GroupLoans with

limitedcollectability

Loans withdoubtful

collectability Uncollectible

loans

Current period (net) 25.403 39.398 47.212Loans to individuals and corporates (gross) 52.059 118.832 543.762

Provision (-) 26.656 79.434 496.550Loans to individuals and corporates (net) 25.403 39.398 47.212Banks (gross) - - -

Provision (-) - - -Banks (Net) - - -Other Loans (Gross) - - -

Provision (-) - - -Other Loans (Net) - - -

Prior Period (Net) 109.262 50.706 33.401Loans to Real Persons and Legal Entities (Gross) 269.206 153.509 148.359

Specific provision (-) 159.944 102.803 114.958Loans to Real Persons and Legal Entities (Net) 109.262 50.706 33.401Banks (Gross) - - -

Provision (-) - - -Banks (Net) - - -Other Loans and Receivables (Gross) - - -

Provision (-) - - -Other loans and receivables (Net) - - -



74


j.5) Information on Profit Share Accruals, Rediscounts and Valuation Differences Calculated for Non-Performing Loans and Their Provisions:

III. Group IV. Group V. GroupLoans and

Receivables withLimited Collectibility

Loans andReceivables with

DoubthfulCollectibility

Uncollectible Loansand Other

Receivables

Current Period (Net) 2.209 6.330 15.641Profit share accruals and valuation differences 4.526 19.092 180.139

Provision (-) 2.317 12.762 164.498Prior Period (Net) 13.853 8.018 8.741Profit share accruals and valuation differences 34.131 24.273 38.824

Provision (-) 20.278 16.255 30.083

k) Liquidation policy for uncollectible loans and receivables:

Execution proceedings are carried out for the collection of receivables from loan services of the Bank’s.During this process, tangible guarantees constituting guarantees of receivables of the Bank and assets ofthe debtor(s) are realized while receivables of the Bank are also tried to be collected and liquidated byadministrative procedures.

l) Information on ‘‘Write-off” policies:

None.

6. Information on Financial Assets Measured at Amortized Cost

a) Information on financial assets measured at amortized cost subject to repurchase agreementsand provided as collateral/blocked:

None (December 31, 2019: The Bank has no financial assets held-to-maturity subject to repurchaseagreements and provided as collateral/blocked).

b) Information on government debt securities measured at amortized cost


Government Bonds - -Treasury Bills - -Other Government Securities (*) 775.777 547.454

Total 775.777 547.454(*) Consists of non-profit special category state domestic borrowing notes issued by Ministery of Treasury and Finance and purchased from the Türkiye Varlık FonuA.Ş.and Piyasa ve İstikrar Denge Alt Fonu A.Ş.

c) Information on investment securities measured at amortized cost


Debt Securities 775.777 547.454 Quoted on a stock exchange - - Unquoted (*) 775.777 547.454Impairment provision (-) - -

Total 775.777 547.454(*) Consists of non-profit special category state domestic borrowing notes issued by Ministery of Treasury and Finance and purchased from the Türkiye Varlık FonuA.Ş.and Piyasa ve İstikrar Denge Alt Fonu A.Ş.



75


d) Information on movements of financial assets measured at amortized cost


Balance at beginning of period 547.454 -Foreign currency differences on monetary assets (**) 228.323 -Purchases during period (*) - 547.454Disposals through sales and redemptions - -Impairment provision (-) - -

Closing Balance 775.777 547.454(*) Consists of non-profit special category state domestic borrowing notes issued by Ministery of Treasury and Finance and purchased from the Türkiye Varlık FonuA.Ş.and Piyasa ve İstikrar Denge Alt Fonu A.Ş.

(**) 40.200 TL income rediscount is included in this amount.

7. Associates (net):

a) Information on unconsolidated associates:

Kredi Garanti Fonu A.Ş. and JCR Avrasya Rating A.Ş. in the accompanying financial statements, theyhave not been consolidated due to the fact that the Bank does not have a qualified share and does nothave significant influence in there companies.

Name Address(City/ Country)

Bank’s sharepercentage-

If different votingpercentage (%)

Bank’s riskgroup share

percentage (%)Kredi Garanti Fonu A.Ş. Ankara / Türkiye 1,49 -

JCR Avrasya Derecelendirme A.Ş İstanbul/Türkiye 2,86 -

The balances of Kredi Garanti Fonu A.Ş. presented in the table below have been obtained from theaudited financial statements as of December 31, 2020.

Totalassets

Shareholders’equity

Totalfixed

assets

Dividendor profit

shareincome

Incomefrom

marketablesecurities

Currentperiodincome/loss

Prior periodincome/loss Fair value

963.634 560.910 30.717 - - 95.447 55.708 -

b) Information on consolidated associates:

As of balance sheet date, the Bank does not have consolidated associates (December 31, 2019: None).

8. Information on subsidiaries (net):a) Information on unconsolidated subsidiaries:

As of balance sheet date, the Bank does not have unconsolidated subsidiary (December 31, 2019:None).

b) Information on consolidated subsidiaries:The balances of Vakıf Varlık Kiralama A.Ş.and Katılım Varlık Kiralama A.Ş presented in the tablebelow have been obtained from the audited financial statements as of December 31, 2019.

NameAddress

(City/ Country)

Bank’s share percentage-If different votingpercentage (%)

Risk sharepercentage of other

shareholders (%)Vakıf Varlık Kiralama A.Ş İstanbul / Turkey 100,00 -Katılım Varlık Kiralama A.Ş İstanbul / Turkey 100,00 -



76


Name:Total

assetsShareholders’

equity

Totalfixed

assets

Dividendor profitshare

income

Income frommarketablesecurities

Currentperiod

income/lossPrior periodincome/loss

Fairvalue

Vakıf Varlık Kiralama A.Ş. 3.052.394 50 - - - - - -Katılım Varlık Kiralama A.Ş. 2.294 2.292 - 188 - 75 656 -

b.1) Movement schedule on subsidiaries:

Current Period Prior PeriodAmount at the beginning of the period 100 100Movements inside the term - -

Purchases / new incorporations / capital increases - -Bonus shares - -

Profit received from current year share - -Sales - -Revaluation increases - -Impairments - -

Amount at the end of the period 100 100Capital commitments - -Share of the capital at the end of the period (%) 100 100

b.2) Sectoral information on subsidiaries and related carrying amounts

Current Period Prior PeriodBanks - -Insurance Companies - -Factoring Companies - -Leasing Companies - -Finance companies - -Other Financial Subsidiaries 100 100

9. Information on investments in jointventures:

As of balance sheet date, the Bank does not have investments in joint-ventures (December 31, 2019:None).

10. Information on lease receivables (net):

a) Presentation of remaining maturities of funds lent under finance lease method:

Current Period Prior PeriodGross Net Gross Net

Less than a year 115.768 97.563 62.687 49.6991 to 4 years 243.998 210.655 130.956 113.868More than 4 years 9.066 7.968 19.130 18.189

Total 368.832 316.186 212.773 181.756

b) Information on net investments through finance lease:


Gross finance lease receivables 368.832 212.773Unearned finance lease receivable (-) 52.646 31.017

Net receivable from finance leases 316.186 181.756



77


c) General explanation on finance lease contracts:Finance lease contracts are realized in accordance with the related articles of Finance Lease, Factoringand Financing Companies Act numbered 6361. There are no restrictions due to finance lease contracts,no renewals or contingent rent payments that materially affect the financial statements.

Information on leasing receivables:

11. Information on derivative financial assets for hedging purposes:


12. Information on tangible assets:

Current period Immovables Vehicles Other TotalCost

Opening balance: January 1, 2020 344.507 18.020 130.122 492.649Additions(*) 40.554 13.365 59.620 113.539Revaluation differences - - - -Disposals (3.678) (2.039) (1.338) (7.055)Impairment losses(-)/Reversal ofimpairment losses 21.558 - - 21.558Transfers - - - -Ending balance: December 31, 2020 402.941 29.346 188.404 620.691

- - -Accumulated depreciation(-)

Opening balance: January 1, 2020 27.578 4.699 48.328 80.605Depreciation expense(*) 33.870 5.177 27.143 66.190Reversal of depreciation of the disposedassets (1.482) (2.039) (1.201) (4.722)Transfers - 322 - 322Ending balance: December 31, 2020 59.966 8.159 74.270 142.395

- - - -Total cost at the end of the year 402.941 29.346 188.404 620.691Total accumulated depreciation at theend of the year 59.966 8.159 74.270 142.395Closing net book value 342.975 21.187 114.134 478.296

(*) As of December 31, 2020, historical value of movables and real estates that are accounted for as a right of use is amounting to TL222.546 in accordance with the “TFRS 16 Leases” standard, and the depreciation amount is TL 61.861.

Finance lease Standard Loans

Leasing Receivables Under Close Monitoring

Leasing receivables notsubject to restructured

loans

Restructured or rescheduledLeasing

Receivableswith Revised

Contract Terms

Refinance

Finance lease receivables (Net) 232.179 83.447 560 -



78


Prior period Immovables Vehicles Other TotalCost

Opening balance: January 1, 2019 194.400 13.823 107.380 315.603Additions 171.665 4.348 23.637 199.650Revaluation differences - - - -Disposals - (151) (895) (1.046)Impairment losses(-)/Reversal ofimpairment losses (21.558) - - (21.558)Transfers - - - -Ending balance: December 31, 2019 344.507 18.020 130.122 492.649

- - -Accumulated depreciation(-)

Opening balance: January 1, 2019 - 273 28.385 28.658Depreciation expense 27.578 4.447 20.752 52.777Reversal of depreciation of the disposedassets - (21) (809) (830)Transfers - - - -Ending balance: December 31, 2019 27.578 4.699 48.328 80.605

- - - -Total cost at the end of the year 344.507 18.020 130.122 492.649Total accumulated depreciation at theend of the year (27.578) (4.699) (48.328) (80.605)Closing net book value 316.929 13.321 81.794 412.044

(*) As of December 31, 2019, historical value of movables and real estates that are accounted for as a right of use is amounting to TL 174.345 in accordancewith the “TFRS 16 Leases” standard, and the depreciation amount is TL 29.116. The initial transition effect of the "TFRS 16 Leases" standard is shown in the" additions " line, see detailed information: Chapter Three: Accounting Policies, Accounting policies used in the preparation of financial statements andvaluation principles used, Classifications on TFRS 16 Standard.

13. Information on intangible assets:

a) Opening and ending book values and accumulated depreciation balances:


Cost 86.033 68.856Accumulated depreciation (-) (61.068) (47.502)

Total (net) 24.965 21.354

b) Intangible assets movement between the beginning and end of the period:


Opening balance 68.856 55.932 Additions 17.177 12.924 Disposals (-) net - - Depreciation expense (-) (61.068) (47.502)

Closing net book value 24.965 21.354

14. Information on investment property:




79


15. Information related to deferred tax asset:

As of December 31, 2020, the Bank calculated deferred tax asset of TL 151.666 (December 31, 2019:TL 59.653) and deferred tax liability of TL 28.201 (December 31, 2019: TL 26.116) on all tax deductible/taxable temporary differences arising between the carrying amounts and the tax base of assets andliabilities in the financial statements that will be considered in the calculation of taxable earnings in thefuture periods and presented them as net in the accompanying financial statements.


Prepaid wages and commissions and unearned income 21.049 14.964Securities valuation difference 11.487 110Severance pay and vacation pay provisions 4.219 2.607Expected Loss Provisions 53.740 18.962Derivative Transactions Rediscount 35.783 3.745KOSGEB participation share provisions 4.490 2.875Loans received profit share rediscounts 10.300 3.970Impairment of assets held for sale - 4.763Other 10.598 7.657

Deferred tax asset 151.666 59.653

Profit share rediscount on borrowed loans 9.417 3.544Difference between carrying value and tax base of fixed assets 3.792 3.087Derivative Transaction Rediscount - 216Securities valuation difference 11.224 18.991Other 3.768 278

Deferred tax liability 28.201 26.116

Deferred tax asset/(liability) (Net) 123.465 33.537

16. Information on assets held for sale and assets of discontinued operations:

None (December 31, 2019: none).

17. Information on other assets:

As of the balance sheet date, the Bank’s other assets balance is TL 367.020 (December 31, 2019: TL321.231) and does not exceed 10% of balance sheet total excluding balance sheet commitments.



80

II. Explanations and notes related to liabilities:

1. Information on funds collected:

a) Information on maturity structure of funds collected:

Current Period DemandUp to

1 monthUp to 3months

Up to 6months

Up to 9months

Up to1 year

Over 1year

Accumulatedparticipation

accounts Total

I. Real Persons Current Accounts Non-Trade TL 783.530 - - - - - - - 783.530II. Real Persons Participation Accounts Non-Trade TL - 482.128 2.129.623 61.044 - 58.497 52.688 512 2.784.492III. Current Account other-TL 1.402.287 - - - - - - - 1.402.287

Public Sector 110.092 - - - - - - - 110.092Commercial Institutions 1.229.699 - - - - - - - 1.229.699Other Institutions 59.009 - - - - - - - 59.009Commercial and Other Institutions 1.494 - - - - - - - 1494Banks and Participation Banks 1.993 - - - - - - - 1.993

Central Bank of Turkey - - - - - - - - -Domestic Banks 75 - - - - - - - 75Foreign Banks 1.907 - - - - - - - 1.907Participation Banks 11 - - - - - - - 11Other - - - - - - - - -

IV. Participation Accounts-TL - 2.763.758 3.300.257 119.594 - 1.129.018 266.432 - 7.579.059Public Sector - 800.750 1.136.775 46.406 - 32.131 - - 2.016.062Commercial Institutions - 1.951.754 1.684.825 48.567 - 1.081.938 263.544 - 5.030.628Other Institutions - 11.254 478.657 24.621 - 14.949 2.888 - 532.369Commercial and Other Institutions - - - - - - - - -Banks and Participation Banks - - - - - - - - -

V. Real Persons Current Accounts Non- Trade FC 1.543.833 - - - - - - - 1.543.833VI. Real Persons Participation Accounts Non-Trade FC - 304.317 3.807.515 185.364 - 188.767 46.544 - 4.532.507VII. Other Current Accounts FC 3.183.076 - - - - - - - 3.183.076

Residents in Turkey-Corporate 2.742.005 - - - - - - - 2.742.005Residents Abroad-Corporate 435.650 - - - - - - - 435.650Banks and Participation Banks 5.421 - - - - - - - 5.421 Central Bank of Turkey - - - - - - - - -Domestic Banks 1.477 - - - - - - - 1.477Foreign Banks 1.529 - - - - - - - 1.529Participation Banks 2.415 - - - - - - - 2.415Other - - - - - - - - -

VIII. Participation Accountsother- FC - 1.552.845 6.835.069 234.063 - 809 16.047 - 8.638.833

Public sector - 378.989 4.956 - - - - - 383.945 Commercial institutions - 1.156.654 6.308.727 224.174 - 251 15.469 - 7.705.275 Other institutions - 447 290.209 9.264 - 558 578 - 301.056 Commercial and Other Institutions - 16.755 231.177 625 - - - - 248.557 Banks and Participation Banks - - - - - - - - -

IX. Precious Metals Deposits 6.449.514 14.623 2.281.117 288.664 - 82.595 2.341 - 9.118.854X. Participation Accounts Special Fund PoolsTL - - - - - - - - -

Residents in Turkey - - - - - - - - - Residents Abroad - - - - - - - - -

XI. Participation Accounts Special Fund Pools– FC - - - - - - - - -

Residents in Turkey - - - - - - - - -Residents Abroad - - - - - - - - -

Total (I+II+…..+IX+X+XI) 13.362.240 5.117.671 18.353.581 888.729 - 1.459.686 384.052 512 39.566.471



81

II. Explanations and notes related to liabilities (continued):

Prior Period DemandUp to

1 monthUp to 3months

Up to 6months

Up to 9months

Up to1 year

Over 1year


accounts Total

I. Real Persons Current Accounts Non-Trade TL 345.528 - - - - - - - 345.528II. Real Persons Participation Accounts Non-Trade TL - 192.770 2.453.031 78.092 - 71.911 27.071 454 2.823.329III. Current Account other-TL 1.083.648 - - - - - - - 1.083.648

Public Sector 41.947 - - - - - - - 41.947Commercial Institutions 1.001.212 - - - - - - - 1.001.212Other Institutions 37.096 - - - - - - - 37.096Commercial and Other Institutions - - - - - - - - -Banks and Participation Banks 3.393 - - - - - - - 3.393

Central Bank of Turkey - - - - - - - - -Domestic Banks 25 - - - - - - - 25Foreign Banks 3.347 - - - - - - - 3.347Participation Banks 21 - - - - - - - 21Other - - - - - - - - -

IV. Participation Accounts-TL - 1.424.408 3.405.915 698.512 - 240.117 4.954 - 5.773.906Public Sector - 269.874 325.338 494.102 - 9.633 - - 1.098.947Commercial Institutions - 1.146.455 2.818.053 170.053 - 228.151 1.385 - 4.364.097Other Institutions - 8.079 262.524 34.357 - 2.333 3.569 - 310.862Commercial and Other Institutions - - - - - - - - -Banks and Participation Banks - - - - - - - - -

V. Real Persons Current Accounts Non- TradeFC 579.200 - - - - - - - 579.200VI. Real Persons Participation Accounts Non-Trade FC - 115.195 2.717.480 150.328 - 185.805 12.355 - 3.181.163VII. Other Current Accounts FC 1.867.432 - - - - - - - 1.867.432

Residents in Turkey-Corporate 1.760.459 - - - - - - - 1.760.459Residents Abroad-Corporate 106.058 - - - - - - - 106.058 Banks and Participation Banks 915 - - - - - - - 915Central Bank of Turkey - - - - - - - - -Domestic Banks 75 - - - - - - - 75Foreign Banks - - - - - - - - -Participation Banks 840 - - - - - - - 840Other - - - - - - - - -

VIII. Participation Accountsother- FC - 870.849 4.131.850 571.184 - 67.017 11.572 - 5.652.472

Public sector - - 971 - - - - - 971 Commercial institutions - 667.850 3.520.153 569.467 - 66.556 11.572 - 4.835.598 Other institutions - 1.471 428.413 - - 461 - - 430.345 Commercial and Other Institutions - 1.944 78.074 1.717 - - - - 81.735 Banks and Participation Banks - 199.584 104.239 - - - - - 303.823

IX. Precious Metals Deposits 859.569 - 632.432 118.352 - 35.142 1.042 - 1.646.537X. Participation Accounts Special Fund PoolsTL - - - - - - - - -

Residents in Turkey - - - - - - - - - Residents Abroad - - - - - - - - -

XI. Participation Accounts Special Fund Pools– FC - - - - - - - - -

Residents in Turkey - - - - - - - - -Residents Abroad - - - - - - - - -

Total (I+II+…..+IX+X+XI) 4.735.377 2.603.222 13.340.708 1.616.468 - 599.992 56.994 454 22.953.215



82


b) Saving deposits and other deposits accounts insured by Saving Deposit Insurance Fund:

b.1) Exceeding the limit of Insurance Fund:

Information on real persons’ current and participation accounts not subject to trading transactionsunder the guarantee of insurance and exceeding the limit of Insurance Fund:

Under theguarantee of Insurance

Exceeding theguarantee of Insurance

CurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

Real persons’ current and participation accounts notsubject to trading transactions Turkish Lira accounts 1.945.942 1.794.645 1.620.337 1.372.584

Foreign currency accounts 3.643.874 1.030.604 8.240.495 3.664.837Foreign branches’ deposits subject to foreignauthorities insurance - - - -Off-shore deposits under foreign authorities'insurance - - - -

Funds collected by Participation Banks (except foreign branches) from current and participationaccounts denominated in Turkish Lira or foreign currency up to a limit of maximum TL 150 (includingboth capital and profit shares) for each real person is under the guarantee of Saving Deposit InsuranceFund in accordance with the Banking Law numbered 5411.

b.2) Funds collected which are not under the guarantee of insurance fund:

Funds collected of real persons which are not under the guarantee of insurance fund:


Foreign Branches’ Profit Sharing Accounts and Other Accounts - -Profit Sharing Accounts and Other Accounts of ControllingShareholders and Profit Sharing Accounts and Other Accounts ofTheir Mother, Father, Spouse, and Children in Care - -Profit Sharing Accounts and Other Accounts of Chairman andMembers of Board Of Directors or Managers, General Manager andAssistant General Managers and Profit Sharing Accounts and OtherAccounts of Their Mother, Father, Spouse, and Children in Care 4.490 1.786Profit Sharing Accounts and Other Accounts in Scope of the PropertyHoldings Derived from Crime Defined in article 282 of Turkish CriminalLaw no:5237 dated 26.09.2004 - -Profit Sharing Accounts in Participation Banks Established in Turkey inorder to engage solely in Off-Shore Banking Activities - -



83


2. Information on derivative financial liabilities held for trading:


Forward Transactions 57.342 22.171 9.525 3.535Swap Transactions 226.969 42.438 1.393 26.148Futures Transactions - - - -Options - - - -Other 6.276 37.355 218 11.384Total 290.587 101.964 11.136 41.067

3. Information on borrowings:

a) Information on banks and other financial institutions:


Loans from CBRT - - - -Loans from domestic banks and institutions 3.146.138 1.672.296 2.722.754 207.523Loans from foreign banks, institutions and funds - 989.866 - 674.639Total 3.146.138 2.662.162 2.722.754 882.162

b) Maturity analysis of funds borrowed:


Short-Term 3.146.138 1.510.251 2.722.754 402.981Medium and Long-Term - 1.151.911 - 479.181Total 3.146.138 2.662.162 2.722.754 882.162

c) Additional explanations related to the concentrated fields of the Bank’s liabilities based onconcentrated fields of the Bank’s major liabilities, funder customers, segments or othercriterias with risk concentration:

The Bank does not have concentration on customer or sector group providing funds.

4. Breakdown of items in other liabilities which exceed 10% of the balance sheet total andbreakdown of items which constitute at least 20% of grand total:

As of December 31, 2020, and December 31, 2019, other liabilities item does not exceed 10% of the balancesheet.

5. Lease payables:


Less than 1 year 29.902 193 21.281 1.690Between 1-5 years 63.903 - 48.121 1435 years and beyond 80.053 - 80.571 -

Total 173.858 193 149.973 1.833



84


6. Information on hedging derivative financial liabilities:


7. Information on provisions:

a) Information on provisions for foreign exchange losses on foreign currency indexed loansand financial lease receivables:

As of December 31, 2020, there is no provision for foreign exchange losses on foreign currencyindexed loans (December 31, 2019: None).

b) Information on provisions for employee rights:

Provisions for Bank’s employee benefits consist of reserve for employee termination benefitsamounting to TL 12.907 (December 31, 2019: TL 6.099), vacation pay liability amounting to TL 4.866(December 31, 2019: TL 3.686) and accordance with the thirty-first article of the Bank's articles ofassociation amounting to TL 37.849 (December 31, 2019: TL 26.605) provision reserved. The Bank’stotal amount of provisions for employee rights is TL 55.629 (December 31, 2019: TL 36.390). TheBank has calculated the reserve for employee termination benefits using actuarial valuation methodsas indicated in TAS 19. Accordingly, following actuarial assumptions were used in the calculation ofthe total liability.


Discount rate (%) 12,80 11,70Estimated increase rate of salary ceiling (%) 12,10 8,90

Movement of the reserve for employment termination benefits in the balance sheet is as follows:


Prior period ending balance 6.099 3.162Provisions made in the period 6.950 3.138Paid during the period (142) (201)

Balance at the end of the period 12.907 6.099

c) Information on provisions for employee rights:

CariDönem Önceki Dönem

Provisions allocated from profit shares to be distributed to profitsharing accounts 111.090 84.596Expected expected credit loss for Stage 1 and Stage 2 for non-cash loans 93.072 39.422Expected loss provision provided for unindemnified Stage 3 non-cash loans 15.031 14.362KOSGEB budget expenses 22.450 13.067Other provisions 5.246 3.217

Dönem sonu bakiyesi 246.889 154.664



85


8. Information on taxes payable:

a) Explanations on current tax liability:

a.1) As of December 31, 2020, the Bank’s corporate tax payable is TL 70.768 (December 31, 2019: TL65.353) after offsetting prepaid corporate tax.

a.2) Information on taxes payable:


Corporate taxes payable 70.768 65.353Taxation on securities income 17.149 17.916Banking insurance transaction tax 11.068 8.008Foreign exchange transaction tax 5.698 872Taxation on real estate income 226 419Value added tax payable 1.560 809Other 12.132 7.611

Total 118.601 100.988

a.3) Information on premiums:


Social security premiums-employer 4.203 2.787Social security premiums-employee 6.187 4.106Unemployment insurance-employer - -Unemployment insurance-employee - -Bank pension fund premium- employees - -Bank pension fund premium- employer - -Pension fund membership fees and provisions-employees 299 198Pension fund membership fees and provisions- employer 598 396Other (*) 640 436

Total 11.927 7.923

(*) Consist of private pension system payments.

b) Information on deferred tax liability:

As of December 31, 2020, the Bank calculated deferred tax asset of TL 151.666 (December 31, 2019:TL 59.653) and deferred tax liability of TL 28.201 (December 31, 2019: TL 26.116) on all tax deductible/taxable temporary differences arising between the carrying amounts and the tax base of assets andliabilities in the financial statements that will be considered in the calculation of taxable earnings in thefuture periods and presented them as net in the accompanying financial statements.

9. Liabilities for assets held for sale and discontinued operations:




86


10. Detailed explanations on number, maturity, profit share rate, creditor and option to convert toshare certificates; if any; of subordinated loans:As of December 31, 2020, the Bank has an subordinated debt that the creditor is Türkiye Varlık FonuYönetimi A.Ş., with TRT240424F22 ISIN code, with initial date 24 April 2019, with at least five-yearrepayment option and with no fixed term, amounting to EUR 100.000.000. The related borrowinginstrument has no option to pay dividends and convert to share certificates.

Current Period Prior PeriodTP YP TP YP

Borrowing İnstruments to be Included in Additional Capital Calculation - 764.430 - 537.047Subordinated Loans - 764.430 - 537.047Subordinated Debt Instruments - - - -

Debt Instruments to be Included in the Contribution Capital Calculation - - - -Subordinated Loans - - - -Subordinated Debt Instruments - - - -

Total - 764.430 - 537.047

11. Information on shareholders’ equity:

a) Presentation of paid-in capital:Current Period Prior Period

Common stock 3.220.000 1.020.000Preferred stock - -

b) Paid-in capital amount, explanation as to whether the registered share capital system isapplicable at the Bank and if so, amount of the registered share capital ceiling:

Share Capital System Paid-in Capital CeilingRegistered Capital 3.220.000 16.100.000

c) Information on the share capital increases during the period and their sources; other informationon increased capital in the current period:The Bank reflected the capital increase of 2,200,000 TL, which was met by its shareholders in proportionto its shares, and the paid-in capital of the Bank was 3.220.000 TL.

d) Information on share capital increases from capital reserves during the current period:There is no share capital increase from capital reserves during the current period.

e) Capital commitments in the last fiscal year and by the end of the following interim period, generalpurpose of these commitments and projected resources required to meet these commitments:

There are no capital commitments (December 31, 2019: None).

f) Estimated effects on the shareholders equity of the Bank, of predictions to be made by takinginto account previous period indicators regarding the Bank’s income, profitability and liquidity,and uncertainties regarding such indicators:The Bank’s profits are kept in shareholders’ equity through transfer to reserves. Moreover, the Bank’sshareholders’ equity is invested in liquid and earning assets.

g) Information on privileges given to stocks representing the capital:

There is no privilege given to stocks representing the capital.



87

II. Explanations and notes related to liabilities (continued):h) Information on marketable securities valuation reserve:

Current Period Prior PeriodTP YP TP YP

From investments in associates, subsidiaries, and jointventures - - - - Valuation difference - - - - Foreign exchange difference - - - -Fair value difference from purchases reflected in othercomprehensive income (17.572) 68.847 56.609 20.538 Valuation difference (39.563) 44.530 51.560 16.532 Expected Loss Provisions 21.991 24.317 5.049 4.006

Toplam (17.572) 68.847 56.609 20.538

III. Explanations and notes related to off-balance sheet:

1. Explanations on off balance sheet:a) Type and amount of irrevocable loan commitments:

Current Period Prior PeriodForward Asset Purchase Commitments 5.251.902 823.323Forward Asset Sale Commitments 5.267.642 822.442Payment Commitments for Cheques 233.337 160.387Commitment For Use Guaranteed Credit Allocation 1.356.907 905.909Credit Cards Limit Commitments 65.614 27.265Tax and Fund Liabilities Arising from Export Commitments 3.382 3.382Other Irrevocable Commitments 8.557 10.391Total 12.187.341 2.753.099

b) Type and amount of possible losses and commitments arising from off-balance sheet items:

b.1) Non-cash loans including guarantees, bank acceptances, collaterals and others that areaccepted as financial commitments and other letters of credit:

Current Period Prior PeriodGuarantees 12.361.622 7.623.043Bank loans 336.463 77.013Letters of credit 985.334 672.478Other guaranties and sureties 5.351 -

Total 13.688.770 8.372.534

b.2) Revocable, irrevocable guarantees and other similar commitments and contingencies:Current Period Prior Period

Letters of guarantees 12.361.622 7.623.043 Long standing letters of guarantees 6.825.069 4.741.765 Temporary letters of guarantees 803.584 607.634

Advance letters of guarantees 1.173.334 762.950 Letters of guarantees given to customs 290.089 143.455

Letters of guarantees given for obtaining cash loans 3.269.546 1.367.239 Sureties and similar transactions 5.351 -

Total 12.366.973 7.623.043



88

III. Explanations and notes related to off-balance sheet (continued):

c) Within the Non-cash Loans:

c.1) Total amount of non-cash loans:


Non-cash loans given against cash loans 3.269.546 1.367.239With original maturity of 1 year or less 330.442 172.601With original maturity of more than 1 year 2.939.104 1.194.638

Other non-cash loans 10.419.224 7.005.295

Total 13.688.770 8.372.534

c.2) Sectoral risk concentration of non-cash loans:

Current period Prior periodTL (%) TL (%) TL (%) TL (%)

Agricultural 18.244 0,24 6.197 0,10 12.299 0,24 8.433 0,26Farming and stockbreeding 13.808 0,18 6.197 0,10 10.644 0,21 4.576 0,14Forestry 4.436 0,06 - - 1.655 0,03 - -Fishery - - - - - - 3.857 0,12

Manufacturing 1.933.363 25,55 3.098.186 50,62 1.098.262 21,49 1.594.592 48,90Mining 150.612 1,99 158.401 2,59 56.318 1,10 28.479 0,87Production 1.279.017 16,90 2.719.570 44,43 606.293 11,86 1.379.349 42,30Electricity, gas and water 503.734 6,66 220.215 3,60 435.651 8,52 186.764 5,73

Construction 2.523.610 33,35 546.322 8,93 1.734.444 33,93 199.030 6,10Services 2.583.301 34,13 2.422.087 39,57 1.745.084 34,14 1.410.270 43,25

Wholesale and retail trade 1.434.540 18,95 1.052.584 17,20 909.966 17,8 543.385 16,66Hotel, food and beverageservices 67.875 0,90 34.124 0,56 77.928 1,52 14.653 0,45Transportation andtelecommunication 359.937 4,76 1.178.206 19,24 207.213 4,05 716.337 21,97Financial Institutions 154.622 2,04 36.097 0,59 107.461 2,10 35.114 1,08Real estate and renting

services 30.356 0,40 - - 72.959 1,43 - -Self-employment services 506.460 6,69 86.418 1,41 348.575 6,82 78.901 2,42Education services 12.241 0,16 23.601 0,39 7.386 0,14 21.880 0,67Health and social services 17.270 0,23 11.057 0,18 13.596 0,27 - -

Other 509.427 6,73 48.033 0,78 521.473 10,20 48.647 1,49

Total 7.567.945 100 6.120.825 100 5.111.562 100 3.260.972 100

c.3) Information on the non-cash loans classified in Group I and Group II:

I st Group II nd GroupTL FC TL FC

Non-cash loans 7.476.882 6.043.807 57.185 77.018

Letters of guarantee 7.442.762 4.827.797 57.185 -Bank loans 7.330 329.133 - -Letters of credit 26.790 881.526 - 77.018Endorsements - - - -Underwriting commitments - - - -Factoring commitments - - - -Other commitments and contingencies - 5.351 - -



89

III. Explanations and notes related to off-balance sheet (continued):

2) Explanations on derivative transactions:

Derivative transactions according topurpose

December 31, 2020 December 31, 2019Trading DerivativesForeign Currency Related Derivative Transactions ( I )

Currency Forwards-Purchases, sales 30.693.779 16.938.915Currency Swaps-Purchases, sales 6.794.561 4.170.988Currency Futures 23.899.218 12.767.927Currency Options-Purchases, sales - -

Interest Rate Related Derivative Transactions ( II ) - -Interest rates forwards-Purchase, sales - -Interest rates swaps-Purchases, sales - -Interest rates options-Purchases, sales - -

Interest rates futures-Purchases, sales - -Other Trading Derivatives ( III ) - -A. Total Trading Derivatives ( I + II + III ) 12.420.899 1.808.562

43.114.678 18.747.477Hedging Derivatives

Fair value hedges - -Cash flow hedges - -Foreign currency investment hedges - -

B. Total Hedging Derivatives - -Total Derivatives Transactions ( A+B) 43.114.678 18.747.477

3) Explanations on credit derivatives and risk beared due to these:

None (December, 31 2019: None).

4) Explanations on contingent assets and liabilities:


5) Explanations on services rendered on behalf of third parties:




90

IV. Explanations and notes related to the statement of income:

1. Information on profit share income:

a) Information on profit share income received from loans:


Profit share received from loans (*) 1.848.883 422.327 1.654.238 327.913Short Term Loans 446.056 55.794 607.934 74.450Medium- and Long-Term Loans 1.299.773 360.437 982.411 249.763Profit Share on Non–Performing Loans 103.054 6.096 63.893 3.700

(*) Includes fees and commission income on cash loans.

b) Information on profit share income received from banks:


CBRT 9.547 - 10.187 7.826Domestic Banks 4.685 3.450 298 4.305Foreign Banks - 225 - 482Head Offices and Branches Abroad - - - -

Total 14.232 3.675 10.485 12.613

c) Information on profit share income received from marketable securities:


Financial Assets Measured at Fair Value throughProfit/Loss (FVTPL) - 41.530 - 13.951Financial Assets Measured at Fair Value throughOther Comprehensive Income (FVOCI) 433.723 199.574 175.719 60.502Financial Assets Measured at Amortized Cost - 30.974 - 16.112

Total 433.723 272.078 175.719 90.565

d) Information on profit share income received from associates and subsidiaries:


Received Profit Shares from Associates and Subsidiaries 5.440 - 32.704 -

Total 5.440 - 32.704 -



91

IV. Explanations and notes related to the statement of income (continued):

2. Explanations on profit share expenses:

a) Information on profit share expense paid to funds borrowed:


Banks 4.798 28.209 2.757 42.696CBRT - - - -Domestic banks 4.798 8.738 2.757 6.450Foreign banks - 19.471 - 36.246Head offices and branches abroad - - - -

Other institutions 252.032 33.462 354.069 17.338

Total 256.830 61.671 356.826 60.034

b) Profit share expense paid to associates and subsidiaries:


Profit share expense paid to associates and subsidiaries 252.220 - 354.404 -

Total 252.220 - 354.404 -

c) Profit share expenses paid to marketable securities issued:


d) Distribution of profit share expense on funds collected based on maturity of funds collected:

Current Period Profit Sharing Accounts

Account Name Up to 1month

Up to 3months

Up to 6months

Up to 9months

Up to 1year

Morethan 1

year


accounts TotalTL Funds collected from banks throughcurrent and profit-sharing accounts - - - - - - - -Real persons’ non-trading profit sharingaccounts 37.197 197.423 6.241 - 6.465 4.490 47 251.863Public-sector profit-sharing accounts 37.105 49.651 16.349 - 1.837 - - 104.942Commercial sector profit sharingaccounts 71.000 159.722 32.434 - 32.716 6.374 - 302.246Other institutions profit sharing accounts 4.433 53.948 2.998 - 213 271 - 61.863Total 149.735 460.744 58.022 - 41.231 11.135 47 720.914FCBanks 436 1.348 1.292 - - - - 3.076Real persons’ non-trading profit sharingaccounts 2.896 36.862 2.341 - 2.273 369 - 44.741Public-sector profit-sharing accounts 1.152 22 - - - - - 1.174Commercial sector profit sharingaccounts 10.385 96.633 5.958 - 195 105 - 113.276Other institutions profit sharing accounts 62 5.592 451 - 6 3 - 6.114Precious metals deposits 185 8.510 1.392 507 14 - 10.608Total 15.116 148.967 11.434 - 2.981 491 - 178.989Grand Total 164.851 609.711 69.456 - 44.212 11.626 47 899.903



92


Prior Period Profit Sharing Accounts

Account Name Up to 1month

Up to 3months

Up to 6months

Up to 9months

Up to 1year

Morethan 1

year


accounts TotalTL Funds collected from banks throughcurrent and profit-sharing accounts - - - - - - - -Real persons’ non-trading profit sharingaccounts 36.545 237.217 6.850 - 8.187 2.996 54 291.849Public-sector profit-sharing accounts 22.609 60.684 68.435 - 10.258 3 - 161.989Commercial sector profit sharingaccounts 38.813 385.702 24.968 - 55.556 4.673 - 509.712Other institutions profit sharing accounts 1.722 41.736 21.555 - 995 998 - 67.006Total 99.689 725.339 121.808 - 74.996 8.670 54 1.030.556FCBanks 1.527 5.141 - - - - - 6.668Real persons’ non-trading profit sharingaccounts 2.586 47.654 2.788 - 6.154 189 - 59.371Public-sector profit-sharing accounts 221 692 - - - - - 913Commercial sector profit sharingaccounts 3.255 61.886 14.923 - 1.148 45 - 81.257Other institutions profit sharing accounts 86 2.400 - - 861 - - 3.347Precious metals deposits - 6.053 1.594 163 7 - 7.817Total 7.675 123.826 19.305 - 8.326 241 - 159.373Grand Total 107.364 849.165 141.113 - 83.322 8.911 54 1.189.929

3. Information on dividend income:


4. Explanations on trading income/loss (net):


Income 43.597.299 26.273.383Income from capital market transactions 14.766 6.501Income from derivative financial instruments 851.349 604.208Foreign exchange income 42.731.184 25.662.674

Loss (-) 43.283.286 25.761.383Loss on capital market transactions 4.407 12.045Loss on derivative financial instruments 780.916 132.044Foreign exchange losses 42.497.963 25.617.294

Trading income/loss (net) 314.013 512.000

5. Explanations related to other operating income:

Other operating income consists of provision expense reversals booked in prior period profit amounting to TL184.345 (December 31, 2019: TL 110.096), income from sales of assets amounting to TL 11.380 (December31, 2019: 760) and other items amounting to TL 11.947 (December 31, 2019: TL 5.753).



93


6. Provision for losses on loans:

Current Period Prior PeriodExpected Credit Loss 514.418 367.495

12 month expected credit loss (stage 1) 242.666 76.236Significant increase in credit risk (stage 2) 13.025 19.686Non-performing loans (stage 3) 258.727 271.573

Marketable Securities Impairment Expense 22.338 4.579Financial Assets at Fair Value through Profit or Loss 16.589 3.975Financial Assets at Fair Value through Other Comprehensive Income 5.749 604

Investments in Associates, Subsidiaries and Held-to-maturitySecurities Value Decrease - -

Investments in Associates - -Subsidiaries - -Joint Ventures - -Investments Held to Maturity - -

Other (*) 144.188 105.678Total 680.944 477.752

(*) Consist of provisions allocated from profit shares to be distributed to profit sharing accounts amounting to TL 76.658 (December 31, 2019: TL 37.751),provisions for KOSGEB budget expenses amounting to TL 22.450 (December 31, 2019: TL 13.067), short-term employee rights obligations provisionexpenses amounting to TL 38.981 (December 31,2019: TL 27.671) and other provisions amounting to TL 6.099 (December 31, 2019: 27.189).

7. Information on other operating expenses:


Provision for retirement pay liability (*) 3.635 2.473Deficit provision for pension fund - -Impairment expenses of tangible assets - -Depreciation expenses of tangible assets 66.189 52.764Impairment expenses of intangible assets - -Impairment expense of goodwill - -Amortization expenses of intangible assets 13.566 14.372Impairment provision for investments accounted for under equitymethod - -Impairment expenses of assets to be disposed - -Depreciation expenses of assets to be disposed - -Impairment expenses of assets held for sale and assets of discontinuedoperations - -Other operating expenses 214.121 96.129

Lease expenses related to TFRS 16 exemptions 1.257 895Maintenance expenses 8.160 4.784Advertisement expenses 56.744 29.140Other expenses 147.960 61.310

Loss on sale of assets - 4Other (**) 108.026 71.133

Total 405.537 236.875 (*) Personnel expenses and retirement pay liability provision are presented in the "Personnel expenses" line in the current period income statement.(**) Lease expenses in accordance with TFRS 16, which entered into force as of 1 January 2020, are presented in the “Lease profit share expenses” in theProfit and Loss Statement.



94


(***) Details of other expenses under other operational expenses are provided below:


Aid and Donations 47.696 6.974Heating, Lighting and Water Expenses 9.964 7.717Communication Expenses 8.937 6.429Shipping and Handling Expenses 8.534 3.581Computer Usage Expenses 6.146 331Representation and Hospitality expenses 2.964 2.787Vehicle Expenses 2.985 2.839İnsurance Expenses 3.580 2.845Cleaning Expenses 4.587 1.903Other Expenses 52.567 25.904

Total 147.960 61.310

(****) Details of other balance are provided as below:


Taxes, Duties, Charges and Funds 31.663 22.328Participation Share Expenses 18.754 15.191Saving Deposit Insurance Fund 31.220 15.970Expertise and Information Expenses 14.594 4.691Audit and Consultancy Fees 3.830 3.236Other 7.965 9.717Total 108.026 71.133

8. Explanations on income/loss from continued operations before taxes:

Bank’s income before tax comprises net profit share income in the amount of TL 1.686.129 (December31, 2019: 680.134) and fees and commission income in the amount of TL 74.409 (December 31, 2019:TL 83.798). Total other operating expenses amount to TL 759.033 (December 31, 2019: TL 472.663).

9. Explanations on tax provision for continued and discontinued operations:

As of December 31, 2020, the Bank has current tax expense amounting to TL 246.952 (December 31,2019: TL 143.740), deferred tax expense amounting to TL 9.901 (December 31, 2019: TL 8.060),deferred tax income amounting to TL 81.473 (December 31, 2019: TL 34.561).

Since the Bank does not have any discontinued operations, there is no tax provision for discontinuedoperations.

10. Explanations on net income/loss from continued and discontinued operations:

The Bank has no discontinued operations. Net income for the period has been realized as TL 842.246(December 31, 2019: TL 442.126) by deducting tax provision expense amounting to 175.380 TL(December 31, 2019: TL 117.239) from profit from continued operations amounting to TL 666.866(December 31, 2019: TL 324.887).



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11. Explanations on net income/ loss:

a) The nature and amount of certain income and expense items from ordinary operations; if thedisclosure for nature, amount and repetition rate of such items is required for a completeunderstanding of the Bank’s performance for the period:

None.

b) The effect of the change in accounting estimates to the net income/loss; including the effectson the future period:

None.

c) Income / loss of minority share:

None

12. Components of other items which constitute at least 20% of the total of other items, if the total ofother items in income statement exceed 10 % of the total of income statement:

Other Fees and Commissions Received Current Period Prior Period

Insurance and brokerage commissions 36.991 12.951Commissions on money orders 9.814 11.937Member firm-POS fees and commissions 10.785 9.303Credit Card Fees and Comissions 3.708 3.466Import letter of credit commissions 6.514 4.872Expertise Fee 15.312 5.871Other 31.025 18.602

Total 114.149 67.002

Other Fees and Commissions Paid Current Period Prior Period

Fees and commissions paid to Banks 62.763 32.568Commissions paid for TCMB required reserves 24.278 -Funds borrowed fees and commissions 138 4.168Other 37.813 16.718

Total 124.992 53.454

V. Explanations and notes related to the statement of changes in shareholders’ equity:

1. Information on Any Increases Arising from Application of Accounting for Financial Instruments inthe Current Period

a) Increases from Valuation of Financial Assets Valued at Fair Value Through OtherComprehensive Income

There is no increase after the revaluation of financial assets valued at fair value through othercomprehensive income in the current period (December 31, 2019:TL 97.438 increase).



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V. Explanations and notes related to the statement of changes in shareholders’ equity (continued):

b) Increases Due to Cash Flow Hedges

There is no increase due to cash flow hedges (December 31, 2019: None).

c) Increases Due to the Revaluation of Tangible Fixed Assets

There is no increase of the revaluation of tangible fixed assets with their fair values in the current period(December 31, 2019: None).

2. Information on Any Decreases Arising from Application of Accounting for Financial Instruments inthe Current Period

a) Decreases from Valuation of Financial assets valued at fair value through othercomprehensive income

The decrease in fair value differences after revaluation of financial assets at fair value through othercomprehensive decreases is TL 25.872 (December 31, 2019: None).

b) Decreases Due to Cash Flow Hedges


3. Information on Dividend

a) Dividends Declared Subsequent to the Balance Sheet Date, but Before the Announcement ofthe Financial Statements

None.

b) Dividends per Share Proposed Subsequent to the Balance Sheet Date

None.

4. Amounts Transferred to Legal Reserves

In the current period, the amount transferred to legal reserves is TL 29.839 (December 31, 2019:31.122), to the extraordinary reserves is TL 203.548 (December 31, 2019: 265.569), to the otherreserves is TL 26.500 (December 31, 2019: 17.187) and to the private funds is TL 65.000 (December31, 2019:TL 5.000).

5. Information on Shares Issued

a) For All Capital Share Classes of the Participation Bank; Rights, Priorities and Restrictionsabout This Item Including Distribution of Dividend and Restrictions related to Repayment ofCapital

None (31 December 2019: None).



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V. Explanations and notes related to the statement of changes in shareholders’ equity (continued):

b) Explanations Related to Other Capital Increase Items in the Statements of Shareholders’Equity MovementNone.

VI. Explanations and disclosures related to the statement of cash flows:

a) Components of cash and cash equivalents and accounting policy applied in their determination:

“Cash” is defined as cash in vault and foreign currency cash, money in transit, cheques purchased,unrestricted balance with the Central Bank and demand deposits at banks. “Cash equivalents” is definedas money market placements and time deposits at banks with original maturities less than three months.

(i). Cash and cash equivalents at the beginning of the period:


Cash 696.183 2.024.343Cash in TL/foreign currency 556.825 485.177Cash in transit 57460 -CBRT 81.898 1.539.166Cash equivalents 1.956.222 1.393.292Domestic banks 1.647.056 1.021.790Foreign banks 309.166 371.502

Total cash and cash equivalents 2.652.405 3.417.635

(ii). Cash and cash equivalents at the end of the period:


Cash 2.137.094 696.183Cash in TL/foreign currency 1.119.585 556.825Cash in transit 3 57460CBRT 1.017.506 81.898Cash equivalents 687.028 1.956.222Domestic banks 290.809 1.647.056Foreign banks 396.219 309.166

Total cash and cash equivalents 2.824.122 2.652.405

2. Cash and cash equivalent items which are restricted for the usage of the Bank by legal or otherlimitations:

Restricted time deposits held at the Central Bank of Turkey and blockaged amount arising from POSare not considered as cash and cash equivalent items.



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VI. Explanations and disclosures related to the statement of cash flows (continued):

3. Explanation about other cash flow items and the effect of the changes in foreign exchange rateson cash and cash equivalents:

The “Others” item under “Operating profit before changes in operating assets and liabilities” amountingto TL 315.735 (December 31, 2019: TL (541.752)) mainly comprises other operating expenses excludingpersonnel expenses and amortization expenses.

The “Net increase/decrease in other liabilities” item under “Changes in operating assets and liabilities”amounting to TL 442.041 (December 31, 2019: TL 384.773) mainly comprises changes in miscellaneouspayables, other liabilities and taxes and other duties payable.

Effect of the changes in foreign currency rates on cash and cash equivalents has been calculatedapproximately as TL 46.726 as of December 31, 2020 (December 31, 2019: TL 61.967).

VII. Explanations related to the risk group of the Bank:

1. Information on the volume of transactions relating to the Bank’s risk group, outstanding loansand funds collected and income and expenses related to the period:

a) Current period:

Risk Group of the Bank (*)

Investment in associates,subsidiaries and jointventures (business

partnerships)Direct and indirect

shareholders of the Bank

Other real or legal personsincluded in

the risk groupCash Non-cash Cash Non-cash Cash Non-cash

Loans and other receivablesBalance at the beginning of the period - - - - 6 -Balance at the end of the period - - - 2.550 22 5.378Profit share and commission incomereceived 1.042 - - - - 5

b) Prior period:

Risk Group of the Bank (*)



shareholders of the Bank


the risk groupCash Non-cash Cash Non-cash Cash Non-cash

Loans and other receivablesBalance at the beginning of the period - - - - 433.341 -Balance at the end of the period - - - - 6 -Profit share and commission incomereceived (**) 11.924 - - - - -

(*) Defined under Banking Law numbered 5411 in article 49 and “Communiqué Related to Credit Operations of Banks” in article 4published on November 1, 2006.

(**) Consist of profit share income received from loans and marketable securities.

c.1.) Information on current and profit-sharing accounts of the Bank’s risk group:

Risk Group of the Bank



Shareholders of the Bank


the risk groupCurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

Current and profit-sharing accounts Balance at the beginning of period 2.213 1.586 31 17.813 1.650 40.796 Balance at the end of period 2.271 2.213 124.546 31 14.883 1.650Profit share expense 188 335 22.757 1.110 488 131

(*) Prior period columns present the profit / loss figures as of December 31, 2019



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VII. Explanations related to the risk group of the Bank (continued):

c.2.) Information on forward and option agreements and other similar agreements with relatedparties:

Risk Group of the Bank



Shareholders of the Bank


the risk groupCurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

Transactions at Fair ValueThrough Profit or LossBalance at the beginning of period - - - - - -Balance at the end of period - - - - - -Total Income / Loss (*) - - - - - -Transactions for Hedging PurposesBalance at the beginning of period - - - - - -Balance at the end of period - - - - - -Total Income/Loss (*) - - - - - -

(*) Prior period columns present the profit / loss figures as of December 31, 2019.

d) Information regarding benefits provided to the Bank’s top management:

As of December 31, 2020; the Bank has paid TL 8.215 (December 31, 2019: TL 8.553) to top management.

VIII. Explanations related to domestic, foreign and off-shore branches or investments and foreignrepresentative offices:

1. Information on the domestic and foreign branches and representative offices of the Bank:

Number Number ofPersonnel

Domestic Branches 116 1.642Country

Foreign RepresentationOffice - - -

Total Assets(thousand TL) Statutory Share Capital

Foreign Branches - - - - -

Off-Shore Branches - - - - -

2. Information on the Bank’s branch or representative office openings, closings, significantchanges in the organizational structure:

In 2020, the Bank has opened 12 domestic branches.



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IX. Explanations related to subsequent events:

The Bank accounted TL 2.500.000 capital increase to its accounting records which was paid by its currentshareholders as of February 21, 2021 and paid-in capital of the Bank became TL 5.720.000.

Section Six

Other explanations

i. Other explanations related to The Bank’s operations

None.

Section seven

Independent Auditors’ report

I. Explanations on independent auditors’ report:

The Bank’s unconsolidated financial statements as of and for the period ended December 31, 2020 have beenaudited by Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (a Member Firm of Ernst &Young Global Limited) and the independent auditors’ audit report dated March 12, 2021 is presented beforethe unconsolidated financial statements.

II. Other notes and explanations prepared by the independent auditors:
