Türkiye Sınai Kalkınma Bankası A.Ş. The Consolidated Financial Report of Türkiye Sinai Kalkinma Bankasi A.Ş. For The Year Ended 31 December 2012

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1 TSKB 2012 ANNUAL REPORT Türkiye Sınai Kalkınma Bankası A.Ş. The Consolidated Financial Report of Türkiye Sinai Kalkinma Bankasi A.Ş. For The Year Ended 31 December 2012 Address: Meclis-i Mebusan Cad. No: Fındıklı/Istanbul Telephone and Fax: (212) , (212) Web Site: http// Address for communication: The consolidated financial report designed for the year end includes the following sections in accordance with Communiqué on Financial Statements and Related Explanation and Notes that will be made Publicly Announced as sanctioned by the Banking Regulation and Supervision Agency. GENERAL INFORMATION ABOUT THE PARENT BANK CONSOLIDATED FINANCIAL STATEMENTS OF THE PARENT BANK EXPLANATIONS ON THE CORRESPONDING ACCOUNTING POLICIES APPLIED IN THE RELATED PERIOD INFORMATION ON FINANCIAL STRUCTURE OF THE GROUP WHICH IS UNDER CONSOLIDATION EXPLANATORY DISCLOSURES AND FOOTNOTES ON CONSOLIDATED FINANCIAL STATEMENTS OTHER EXPLANATIONS INDEPENDENT AUDITORS REPORT The subsidiaries, associates and joint ventures, financial statements of which are consolidated within the framework of the reporting package, are as follows. Subsidiaries Yatırım Finansman Menkul Değerler A.Ş. TSKB Gayrimenkul Yatırım Ortaklığı A.Ş. Associates İş Finansal Kiralama A.Ş. İş Girişim Sermayesi Yatırım Ortaklığı A.Ş. İş Factoring Finansman Hizmetleri A.Ş. The accompanying consolidated financial statements and the explanatory footnotes and disclosures for the year end, unless otherwise indicated, are prepared in thousands of Turkish Lira ( TL ), in accordance with the Communiqué on Banks Accounting Practice and Maintaining Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards, related communiqués and the Banks records, and have been independently audited and presented as attached. 12 February 2013 Adnan BALİ A. Orhan BEŞKÖK Ömer ERYILMAZ Mustafa GÖKTAŞ Chairman of Board of Directors Deputy General Manager Executive Vice President In Charge of Financial Reporting Head of Financial Control Department M. Baran TUNCER Kemal Serdar DİŞLİ Murat BİLGİÇ Member of Audit Committee Member of Audit Committee Member of Audit Committee Contact information of the personnel in charge for addressing questions about this financial report: Name-Surname/Title: Mustafa Göktaş / Head of Financial Control Department Telephone Number: (212)

2 Türkiye Sınai Kalkınma Bankası A.Ş. INDEX Page Number SECTION ONE General Information I. The Parent Bank s incorporation date, beginning statue, changes in the existing statue II. Explanations regarding the Parent Bank s shareholding structure, shareholders holding directly or indirectly, collectively or individually, the managing and controlling power and changes in current year, if any and explanations on the controlling group of the Bank III. Explanations regarding the chairman and the members of board of the directors, audit committee, general manager and assistant general managers and their shares in the Bank IV. Information about the persons and institutions that have qualified shares in the Parent Bank V. Summary on the Parent Bank s functions and areas of activity VI. Differences between the communiqué on preparation of consolidated financial statements of banks and Turkish Accounting Standards and short explanation about the institution subject to line-by-line method or proportional consolidation and institutions which are deducted from equity or not included in these three methods VII. The existing or potential, actual or legal obstacle on the transfer of shareholder s equity between the Parent Bank and its subsidiaries or the reimbursement of liabilities SECTION TWO Consolidated Financial Statements I. Consolidated balance sheet (Statement of financial position) II. Consolidated statement of off-balance sheet items III. Consolidated income statement IV. Consolidated statement of comprehensive income V. Consolidated statement of changes in equity VI. Consolidated statement of cash flows VII. Statement of profit distribution SECTION THREE Accounting Policies I. Basis of presentation II. Explanations on usage strategy of financial assets and foreign currency transactions III. Information about the Parent Bank and its subsidiaries and associates subject to consolidation IV. Explanations on forward and option contracts and derivative instruments V. Explanations on interest income and expenses VI. Explanations on fees and commission income and expenses VII. Explanations on financial assets VIII. Explanations on impairment on financial assets IX. Explanations on offsetting of financial assets and liabilities X. Explanations on sales and repurchase agreements and lending of securities XI. Explanations on assets held for sale and discontinued operations XII. Explanations on goodwill and other intangible assets XIII. Explanations on tangible assets XIV. Explanations on leasing transactions XV. Explanations on provisions and contingent liabilities XVI. Explanations on liabilities regarding employee benefits XVII. Explanations on taxation XVIII. Additional explanations on borrowings XIX. Explanations on share certificates issued XX. Explanations on acceptances XXI. Explanations on government incentives XXII. Explanations on segment reporting XXIII. Explanations on other matters SECTION FOUR Information on Consolidated Financial Structure and Risk Management I. Explanations related to the consolidated capital adequacy standard ratio II. Explanations related to the consolidated credit risk III. Explanations related to consolidated market risk IV. Explanations related to the consolidated operational risk V. Explanations related to consolidated currency risk VI. Explanations related to consolidated interest rate risk VII. Explanations related to consolidated stock position risk VIII. Explanations related to consolidated liquidity risk IX. Explanations related to consolidated securitization position X. Explanations related to consolidated credit risk mitigation techniques XI. Explanations related to consolidated risk management objective and policies XII. Explanations related to presentation of financial assets and liabilities at fair value XIII. Explanations related to transactions made on behalf of others and fiduciary transactions SECTION FIVE Explanations and Disclosures on Consolidated Financial Statements I. Explanations and disclosures related to the consolidated assets II. Explanations and disclosures related to the consolidated liabilities III. Explanations and disclosures related to the consolidated off-balance sheet contingencies and commitments IV. Explanations and disclosures related to the consolidated income statement V. Explanations related to the consolidated statement of changes in shareholders equity VI. Explanations related to the consolidated statement of cash flows VII. Explanations on the risk group of the Parent Bank VIII. Information and disclosures related to the domestic, foreign offshore branches and foreign representations of the Parent Bank SECTION SIX Other Explanations I. Other explanations related to the operations of the Parent Bank II. Other explanations related to the events after the reporting date SECTION SEVEN Independent Auditors Report I. Explanations on the independent auditors report II. Explanations and notes prepared by independent auditors

3 SECTION ONE GENERAL INFORMATION TSKB 2012 ANNUAL REPORT I.The Parent Bank s incorporation date, beginning statue, changes in the existing statue Türkiye Sınai Kalkınma Bankası ( The Parent Bank ) was established in accordance with the decision of President of the Republic of Turkey numbered 3/11203 on 12 May This decision was declared by T.R. Office of Prime Ministry Procedures Directorate Decision Management on 12 May According to the classification set out in the Banking Law No: 5411, the statute of the Parent Bank is Development and Investment Bank. The Parent Bank does not have the authority of Accepting Deposit. Since the establishment date of the Parent Bank, there is no change in its Development and Investment Bank status. II. Explanations regarding the Parent Bank s shareholding structure, shareholders holding directly or indirectly, collectively or individually, the managing and controlling power and changes in current year, if any and explanations on the controlling group of the Parent Bank Türkiye İş Bankası A.Ş. has the authority of managing and controlling power indirectly or directly, alone or together with other shareholders. Shareholders of the Parent Bank are as follows: Share Shareholding Paid in Unpaid Name Surname/Commercial Title Capital Rate (%) Capital Capital T. İş Bankası A.Ş. Group , T. Vakıflar Bankası T.A.O , Under Custody at Merkezi Kayıt Kuruluşu (Other Institutions and Individuals) , Physically Under Custody (Other Institutions and Individuals) Total , Share Shareholding Paid in Unpaid Name Surname/Commercial Title Capital Rate (%) Capital Capital T. İş Bankası A.Ş. Group , T. Vakıflar Bankası T.A.O , Under Custody at Merkezi Kayıt Kuruluşu (Other Institutions and Individuals) , Physically Under Custody (Other Institutions and Individuals) Total , III.Explanations regarding the chairman and the members of board of directors, audit committee, general manager and assistant general managers and their shares in the Parent Bank The Chairman and The Members of Board of Directors: Name Surname Title (1) Date of Appointment Academic Background Experience in Banking and Management Before Appointment Adnan Bali (6) Chairman of the Board of Directors 15 April 2011 Undergraduated 27 Mehmet Şencan Vice Chairman of the Board of Directors 7 June 2011 Undergraduated 25 Durmuş Yılmaz (2) (7) Member of the Board of Directors 26 March 2012 Postgraduate 33 Mustafa Baran Tuncer Member of the Board of Directors and Audit Committee 30 April 2008 Doctorate 33 Ertan Burhanettin Kantar (6) Member of the Board of Directors 23 March 2005 Undergraduated 24 Kemal Serdar Dişli Member of the Board of Directors and Audit Committee 25 May 2007 Undergraduated 25 Murat Bilgiç (3) Member of the Board of Directors and Audit Committee 23 March 2005 Postgraduate 22 Yonca Koçak (3) Member of the Board of Directors 21 July 2010 Undergraduated 22 Feridun Bilgin (7) Member of the Board of Directors 12 September 2012 Doctorate 16 Uygar Şafak Öğün (7) Member of the Board of Directors 2 April 2010 Postgraduate 18 H. Fevzi Onat (8) Member of the Board of Directors and General Manager 30 May 2011 Undergraduated 31 General Manager, Vice Presidents and Statutory Auditors : Name Surname Title / Area of Responsibility Date of Appointment Academic Background Experience in Banking and Management Before Appointment H. Fevzi Onat (8) General Manager 30 May 2011 Undergraduated 31 Senior Vice President - Technical Services and Financial A.Orhan Beşkök 24 January 2002 Postgraduate 30 Institutions Vice President Corporate Marketing and Corporate Burak Akgüç 29 December 2004 Undergraduated 23 Finance Ömer Eryılmaz Vice President Financial Control and Securities 27 January 2006 Undergraduated 27 Çiğdem İçel Vice President Treasury and Human Resources 27 January 2006 Undergraduated 23 Ufuk Bala Yücel Vice President - Project Finance and Loans 25 December 2007 Undergraduated 26 B. Gökhan Çanakpınar Vice President Information Technology and Loan- Treasury Operation 10 January 2012 Undergraduated 23 M. Armağan Saraçoğlu (5) Statutory Auditor 4 September 2012 Undergraduated 14 Hamide Esma Uygun Çelikten Statutory Auditor 25 March 2011 Undergraduated

4 SECTION ONE (Continued) GENERAL INFORMATION (Continued) III.Explanations regarding the chairman and the members of board of directors, audit committee, general manager and assistant general managers and their shares in the Parent Bank (Continued) 1. The shares of above directors in the Bank are symbolic. 2. In the General Assembly meeting held on 26 March 2012, because of Mr. Yavuz Canevi s expiration of the duty period, Mr. Durmuş Yılmaz was elected as the Board of Directors Member for three years period. 3. In the Board of Directors meeting held on 29 August 2012, in accordance with the Article No.25 of Law About Validity and Manner of Application of Turkish Commercial Code Article No.6103, Murat Bilgiç and Yonca Koçak who have resigned of their duties member of the Board of Directors were elected again as Member of Board of Director in accordance with article no.363 of Turkish Commercial Code to be submitted to approval on the First General Assembly. 4. Mehmet Coşkun Cangöz, member of the Board of Directors, resigned from his duty of the member of the Board of Directors on 31 August Volkan Kublay, auditor of the Bank has resigned his duty and Muzaffer Armağan Saraçoğlu was elected as auditor of the Bank. 6. In the Board of Directors meeting held on 4 September 2012, in accordance with the Article No.25 of Law About Validity and Manner of Application of Turkish Commercial Code Article No.6103, Adnan Bali and Burhanettin Kantar who have resigned of their duties in member of the Board of Directors were reelected as members of the Board of Directors in accordance with article no.363 of Turkish Commercial Code to be submitted to approval on the First General Assembly. 7. In the Board of Directors meeting held on 12 September 2012, in accordance with Article No.25 of Law About Validity and Manner of Application of Turkish Commercial Code Article No.6103, Adnan Bali and Burhanettin Kantar who have resigned of their duties in member of the Board of Directors were reelected as member of the Board of Directors in accordance with article no.363 of Turkish Commercial Code to be submitted to approval on the First General Assembly. Feridun Bilgin was elected as a member of the Board of Directors substituted for Mehmet Coşkun Cangöz who has resigned from his duty from member of the Board of Directors in accordance with Article No.25 of Law About Validity and Manner of Application of Turkish Commercial Code Article No.6103 and Article no. 363 of Turkish commercial Code to be submitted to approval on the First General Assembly. 8. Member of the Board of Directors and General Manager H. Fevzi Onat has retired from his duty as the member of the Board of Directors and General Manager of the Bank due to retirement. As the date of 1 February 2013, Özcan Türkakın was elected to vacant position on the Board of Directors in accordance with the Article No. 363 of Turkish Commercial Code and has started his duty after he has sworn on 4 February Appointed General 9. Manager of the Bank is expected to be Özcan Türkakın and Özcan Türkakın will be start his duty after completion of legal procedures IV.Information about the persons and institutions that have qualified shares in the Parent Bank T. İş Bankası A.Ş. (İş Bank) Group owns the qualified shares that control the Parent Bank s capital directly or indirectly. Share Shareholding Paid in Unpaid Name Surname/Commercial Title Capital Rate (%) Capital Capital T. İş Bankası A.Ş. Group , T. Vakıflar Bankası T.A.O , Under Custody at Merkezi Kayıt Kuruluşu - Other Institutions and Individuals , Physically Under Custody (Other Institutions and Individuals) Total , Share Shareholding Paid in Unpaid Name Surname/Commercial Title Capital Rate (%) Capital Capital T. İş Bankası A.Ş. Group , T. Vakıflar Bankası T.A.O , Under Custody at Merkezi Kayıt Kuruluşu Other Institutions and Individuals , Physically Under Custody (Other Institutions and Individuals) Total , V. Summary on the Parent Bank s functions and areas of activity Türkiye Sınai Kalkınma Bankası A.Ş. ( the Parent Bank ) is the first private investment and development bank which was established by the Council of Ministers resolution number of 3/11203 established in 1950 with the support of World Bank, T.R. Government, T.R. Central Bank and commercial banks. As per the articles of association published in the Official Gazette on 2 June 1950, the aim of TSKB is to support all private sector investments but mostly industrial sectors, to help domestic and foreign capital owners to finance the new firms and to help the improvement of Turkish capital markets. The Bank is succeeding its aims by financing, consulting, giving technical support and financial intermediary services. The Parent Bank, which operates as a non-deposit accepting bank, played a major role on manufacturing and finance sectors in every phase of the economic development of Turkey. The Parent Bank has supported the development of the private sector by extending medium-term loans to more than firms. After 1960 s the Parent Bank had continued to finance over 100 firms by investing in these entities as a shareholder. The Parent Bank has also participated in improvement of capital markets by organizing public offerings of some firms. The Parent Bank has opened two branches in Izmir and Ankara in April 2006 to enhance marketing and valuation operations. TSKB Bahrain Branch, is the only branch of TSKB in abroad, started its operations on 18 January 2005 after obtaining the off-shore banking license from Bahrain Central Bank (BMA) on 30 December The mission of the branch is to expand to the Middle East and exercise all activities including capital market transactions and giving foreign currency loans. In the Board of Directors meeting held on 25 January 2012; it was decided to close the Bahrain Branch of the Parent Bank and in this context, General Management was authorized for the required operations. In accordance with the decision, the Parent Bank management has started to executions in order to terminate the Bahrain Branch activities. As of 27 December 2012, closing procedures of the Bahrain Branch have been completed. 186

5 TSKB 2012 ANNUAL REPORT SECTION ONE (Continued) GENERAL INFORMATION (Continued) VI. Differences between the communiqué on preparation of consolidated financial statements of banks and Turkish Accounting Standards and short explanation about the institution subject to line-by-line method or proportional consolidation and institutions which are deducted from equity or not included in these three methods Due to differences between the Communiqué on Preparation of Consolidated Financial Statements of Banks and Turkish Account Standards (TAS), the non-financial subsidiaries and associates, TSKB Gayrimenkul Değerleme A.Ş., TSKB Gayrimenkul Danışmanlık A.Ş., Terme Metal Sanayi ve Ticaret A.Ş., Ege Tarım Ürünleri Lisanslı Depoculuk A.Ş. and Adana Otel Projesi Adi Ortaklığı are not consolidated since they are not in scope of financial institutions according to related communiqué. Türkiye Sınai Kalkınma Bankası A.Ş. and its financial institutions, Yatırım Finansman Menkul Değerler A.Ş., TSKB Gayrimenkul Yatırım Ortaklığı A.Ş. are included in the accompanying consolidated financial statements by line by line consolidation method; İş Finansal Kiralama A.Ş., İş Girişim Sermayesi Yatırım Ortaklığı A.Ş. and İş Factoring Finansman Hizmetleri A.Ş. are included in the accompanying consolidated financial statements by equity method. Financial institutions included in the consolidation are determined in accordance with Communiqué on Preparation of Consolidated Financial Statements of Banks published in the Official Gazette dated 8 November 2006 numbered The Parent Bank has no partnership share on banks and financial institutions, with shareholding of more than 10% and deducted from capital. Yatırım Finansman Menkul Değerler A.Ş.: Yatırım Finansman Menkul Değerler A.Ş. was established with the title of Yatırım Finansman A.Ş. and registered in Istanbul Trade Registry on 15 October 1976 and it was announced in the Turkish Trade Registry Gazette No: 81 on 25 October Title of the Company was changed into Yatırım Finansman Menkul Değerler A.Ş. by the announcement made in the Turkish Trade Registry Gazette No: 4762 on 2 April The Company s purpose is to perform capital market operations specified in the Company s main contract in accordance with the CMB and the related legislation. The Company was merged with TSKB Menkul Değerler A.Ş. on 29 December TSKB Gayrimenkul Yatırım Ortaklığı A.Ş.: Core business of TSKB Gayrimenkul Yatırım Ortaklığı A.Ş. is real estate trust to construct and develop a portfolio of properties and make investment to capital market instruments linked to properties. The Company was established on 3 February İş Finansal Kiralama A.Ş. : İş Finansal Kiralama A.Ş. was established on 8 February 1988 and it has been performing its operations in accordance with the Financial Leasing, Factoring and Financing Companies Law No: The Company started its leasing operations in July The Company s headquarters is located at Istanbul/Türkiye. İş Factoring Finansman Hizmetleri A.Ş.: İş Factoring Finansman Hizmetleri A.Ş., was incorporated in Turkey on 4 July 1993 and it has been performing its operations in accordance with the Financial Leasing, Factoring and Financing Companies Law No: The Company s main operation is domestic and export factoring transactions. The Company is a Türkiye İş Bankası A.Ş. Group entity and the parent is İş Finansal Kiralama A.Ş with 78,23% shareholding. The direct share of Türkiye Sınai Kalkınma Bankası A.Ş. is 21,75%. İş Girişim Sermayesi Yatırım Ortaklığı A.Ş.: The principal business of İş Girişim Sermayesi Yatırım Ortaklığı A.Ş. is to make long-term investments in companies existing in Turkey or to be established in Turkey, having a development potential and are in need of financing. The Company is continuing its operations at İş Kuleleri Kule: 2, Kat: 2, Levent, Istanbul. VII. The existing or potential, actual or legal obstacle on the transfer of shareholder s equity between the Parent Bank and its subsidiaries or the reimbursement of liabilities There is no existing or potential, actual or legal obstacle to the reimbursement of liabilities between the Parent Bank and its subsidiaries. The Parent Bank charge or pay cost of the services according to the service agreements done between the Parent Bank and its subsidiaries. Dividend distribution from shareholders equity is made according to related legal regulations. Written policies of the Parent Bank related to compliance to publicly disclosed obligations of the Parent Bank and assessment of accuracy, frequency and compliance of mentioned disclosures TSKB Disclosure Policy approved by the meeting of the Board of Directors and entered into force on 28 February Compliance to publicly disclosed obligations, frequency of public disclosures and tools and methods used for public disclosures are explained in the disclosure policy of the Parent Bank accessible from the TSKB corporate website. 187

6 Consolidated Balance Sheet (Statement of Financial Position) at 31 December 2012 ASSETS Audited 31 December 2012 Audited 31 December 2011 Note Ref. TL FC Total TL FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK (1) FINANCIAL ASSETS AT F.V. THROUGH PROFIT AND II. LOSS (Net) (2) Trading financial assets Public sector debt securities Share certificates Derivative financial assets held for trading Other marketable securities Financial assets at fair value through profit and loss Public sector debt securities Share certificates Other marketable securities Loans III. BANKS (3) IV. MONEY MARKET PLACEMENTS Interbank money market placements Istanbul Stock Exchange money market placements Receivables from reverse repurchase agreements V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (4) Share certificates Public sector debt securities Other marketable securities VI. LOANS (5) Loans Loans to risk group of the Bank Public sector debt securities Other Non performing loans Specific provisions (-) (10.172) (5.452) (15.624) (12.989) (14.709) (27.698) VII. FACTORING RECEIVABLES VIII. HELD TO MATURITY INVESTMENTS (Net) (6) Public sector debt securities Other marketable securities IX. INVESTMENTS IN ASSOCIATES (Net) (7) Accounted for under equity method Unconsolidated associates Financial investments Non-financial investments X. INVESTMENTS IN SUBSIDIARIES (Net) (8) Unconsolidated financial subsidiaries Unconsolidated non-financial subsidiaries ENTITIES UNDER COMMON CONTROL (JOINT VENT.) XI. (Net) (9) Consolidated under equity method Unconsolidated Financial subsidiaries Non-financial subsidiaries XII. LEASE RECEIVABLES (Net) (10) Finance lease receivables Operating lease receivables Other Unearned income ( - ) - (326) (326) - (1.177) (1.177) DERIVATIVE FINANCIAL ASSETS FOR HEDGING XIII. PURPOSES (11) Fair value hedge Cash flow hedge Hedge of net investment in foreign operations XIV. TANGIBLE ASSETS (Net) (12) XV. INTANGIBLE ASSETS (Net) (13) Goodwill Other XVI. INVESTMENT PROPERTY (Net) (14) XVII. TAX ASSET (15) Current tax asset Deferred tax asset ASSETS HELD FOR SALE AND DISCONTINUED XVIII. OPERATIONS (Net) (16) Assets held for sale Assets of discontinued operations XIX. OTHER ASSETS (17) TOTAL ASSETS The accompanying notes are an integral part of these consolidated financial statements.

7 TSKB 2012 ANNUAL REPORT Türkiye Sınai Kalkınma Bankası A.Ş. and its subsidiaries Consolidated Balance Sheet (Statement of Financial Position) at 31 December 2012 Audited 31 December 2012 Audited 31 December 2011 LIABILITIES Note Ref TL FC Total TL FC Total I. DEPOSITS (1) Deposits from Risk Group of the Bank Other II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING (2) III. FUNDS BORROWED (3) IV. MONEY MARKET BALANCES (3) Interbank money market takings Istanbul Stock Exchange money market takings Funds provided under repurchase agreements V. DEBT SECURITIES ISSUED (Net) Bills Asset backed securities Bonds VI. FUNDS Borrower funds Others VII. MISCELLANEOUS PAYABLES VIII. OTHER LIABILITIES (4) IX. FACTORING PAYABLES X. LEASE PAYABLES (5) Finance lease payables Operating lease payables Other Deferred finance lease expenses (-) - (2) (2) - (2) (2) XI. DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING PURPOSES (6) Fair value hedge Cash flow hedge Hedge of net investment in foreign operations XII. PROVISIONS (7) General loan loss provisions Restructuring provisions Reserve for employee benefits Insurance technical reserves (Net) Other provisions XIII. TAX LIABILITY (8) Current tax liability Deferred tax liability XIV. PAYABLES RELATED TO ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (9) Held for sale Discontinued operations XV. SUBORDINATED LOANS (10) XVI. SHAREHOLDERS EQUITY (11) Paid-in capital Capital reserves Share premium Share cancellation profits Marketable securities value increase fund (11) (2.846) Tangible assets revaluation differences (11) Intangible assets revaluation differences Investment property revaluation differences Bonus shares obtained from associates, subsidiaries and jointly controlled entities (Joint Vent.) Hedging reserves (Effective portion) Revaluation surplus on assets held for sale and discontinued operations Other capital reserves Profit reserves Legal reserves (11) Statutory reserves Extraordinary reserves (11) Other profit reserves Profit or loss Prior years profit/loss Current year profit/loss Non-controlling interests (12) TOTAL LIABILITIES AND EQUITY The accompanying notes are an integral part of these consolidated financial statements. 189

8 Consolidated Statement of Off-Balance Sheet Items at 31 December 2012 Note Ref Audited 31 December 2012 Audited 31 December 2011 TL FC Total TL FC Total A. OFF BALANCE SHEET COMMITMENTS AND CONTINGENCIES (I+II+III) I. GUARANTEES AND COLLATERALS (1) Letters of guarantee Guarantees subject to State Tender Law Guarantees given for foreign trade operations Other letters of guarantee Bank acceptances Import letters of acceptance Other bank acceptances Letters of credit Documentary letters of credit Other letters of credit Prefinancing given as guarantee Endorsements Endorsements to the Central Bank of Turkey Other endorsements Securities issue purchase guarantees Factoring guarantees Other guarantees Other collaterals II. COMMITMENTS (1) Irrevocable commitments Forward asset purchase and sales commitments Forward deposit purchase and sales commitments Share capital commitment to associates and subsidiaries Loan granting commitments Securities underwriting commitments Commitments for reserve deposit requirements Payment commitment for checks Tax and fund liabilities from export commitments Commitments for credit card expenditure limits Commitments for promotions related with credit cards and banking activities Receivables from short sale commitments Payables for short sale commitments Other irrevocable commitments Revocable commitments Revocable loan granting commitments Other revocable commitments III. DERIVATIVE FINANCIAL INSTRUMENTS (2) Derivative financial instruments for hedging purposes Fair value hedge Cash flow hedge Hedge of net investment in foreign operations Held for trading transactions Forward foreign currency buy/sell transactions Forward foreign currency transactions-buy Forward foreign currency transactions-sell Swap transactions related to f.c. and interest rates Foreign currency swaps-buy Foreign currency swaps-sell Interest rate swaps-buy Interest rate swaps-sell Foreign currency, interest rate and securities options Foreign currency options-buy Foreign currency options-sell Interest rate options-buy Interest rate options-sell Securities options-buy Securities options-sell Foreign currency futures Foreign currency futures-buy Foreign currency futures-sell Interest rate futures Interest rate futures-buy Interest rate futures-sell Other The accompanying notes are an integral part of these consolidated financial statements. 190

9 Consolidated Statement of Off-Balance Sheet Items at 31 December 2012 TSKB 2012 ANNUAL REPORT Note Ref Audited 31 December 2012 Audited 31 December 2011 TL FC Total TL FC Total B. CUSTODY AND PLEDGED SECURITIES (IV+V+VI) IV. ITEMS HELD IN CUSTODY Customers securities held Investment securities held in custody Checks received for collection Commercial notes received for collection Other assets received for collection Assets received for public offering Other items under custody Custodians V. PLEDGED ITEMS Marketable securities Guarantee notes Commodity Warranty Real estates Other pledged items Pledged items-depository VI. ACCEPTED BILLS OF EXCHANGE AND COLLATERALS TOTAL OFF BALANCE SHEET ITEMS (A+B) The accompanying notes are an integral part of these consolidated financial statements. 191

10 Consolidated Income Statement For the Year Ended 31 December 2012 Note Ref. Audited 1 January December 2012 Audited 1 January December 2011 I. INTEREST INCOME (1) Interest on loans Interest received from reserve deposits Interest received from banks Interest received from money market placements Interest received from marketable securities portfolio Financial assets held for trading Financial assets at fair value through profit and loss Available-for-sale financial assets Investments held-to-maturity Finance lease income Other interest income II. INTEREST EXPENSES (2) ( ) ( ) 2.1 Interest on deposits Interest on funds borrowed (93.343) (80.394) 2.3 Interest on money market borrowings (94.733) (90.231) 2.4 Interest on securities issued - (3.922) 2.5 Other interest expense (117) (35) III. NET INTEREST INCOME (I - II) IV. NET FEES AND COMMISSIONS INCOME Fees and commissions received Non-cash loans Other Fees and commissions paid (3.322) (2.098) Non-cash loans (1.021) (3) Other (2.301) (2.095) V. DIVIDEND INCOME (3) VI. NET TRADING INCOME (4) (20.025) 6.1 Securities trading gains/ (losses) (5.030) 6.2 Derivative financial instruments gains/losses (54.430) 6.3 Foreign exchange gains/losses (net) (25.248) VII. OTHER OPERATING INCOME (5) VIII. TOTAL OPERATING INCOME (III+IV+V+VI+VII) IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) (6) (34.595) (32.234) X. OTHER OPERATING EXPENSES (-) (7) ( ) (93.246) XI. NET OPERATING INCOME/(LOSS) (VIII-IX-X) XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - - XIII. PROFIT / (LOSS) ON EQUITY METHOD XIV. GAIN / (LOSS) ON NET MONETARY POSITION - - XV. PROFIT/(LOSS) FROM CONTINUED OPERATIONS BEFORE TAXES (XI+XII+XIII+XIV) (8) XVI. TAX PROVISION FOR CONTINUED OPERATIONS (±) (9) (76.254) (63.269) 16.1 Provision for current income taxes (94.286) (51.040) 16.2 Provision for deferred taxes (12.229) XVII. NET PROFIT/(LOSS) FROM CONTINUED OPERATIONS (XV±XVI) (10) XVIII. INCOME ON DISCONTINUED OPERATIONS Income on assets held for sale Income on sale of associates, subsidiaries and jointly controlled entities (Joint vent.) Income on other discontinued operations - - XIX. LOSS FROM DISCONTINUED OPERATIONS (-) Loss from assets held for sale Loss on sale of associates, subsidiaries and jointly controlled entities (Joint vent.) Loss from other discontinued operations - - XX. PROFIT / (LOSS) ON DISCONTINUED OPERATIONS BEFORE TAXES (XVIII-XIX) - - XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS(±) Provision for current income taxes Provision for deferred taxes - - XXII. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) - - XXIII. NET PROFIT/LOSS (XVII+XXII) (11) Group s profit / loss Minority shares (2.143) Earnings / (losses) per share 0,296 0, The accompanying notes are an integral part of these consolidated financial statements.

11 TSKB 2012 ANNUAL REPORT Türkiye Sınai Kalkınma Bankası A.Ş. and its subsidiaries Consolidated Statement of Comprehensive Income For the Year Ended 31 December 2012 PROFIT AND LOSS ITEMS ACCOUNTED FOR UNDER SHAREHOLDER S EQUITY Audited 1 January December 2012 Audited 1 January December 2011 I. ADDITIONS TO MARKETABLE SECURITIES REVALUATION DIFFERENCES FOR AVAILABLE FOR SALE FINANCIAL ASSETS (59.347) II. TANGIBLE ASSETS REVALUATION DIFFERENCES - - III. INTANGIBLE ASSETS REVALUATION DIFFERENCES - - IV. TRANSLATION DIFFERENCES FOR TRANSACTIONS IN FOREIGN CURRENCIES - - V. GAIN/LOSS ON DERIVATIVE FINANCIAL ASSETS HELD FOR CASH FLOW HEDGES (effective portion of fair value differences) - - VI. GAIN/LOSS ON DERIVATIVE FINANCIAL ASSETS HELD FOR HEDGES OF NET INVESTMENT IN FOREIGN OPERATIONS (effective portion) - - VII. EFFECTS OF CHANGES IN ACCOUNTING POLICIES AND CORRECTIONS OF ERRORS - - VIII. OTHER PROFIT/LOSS ITEMS ACCOUNTED FOR UNDER SHAREHOLDERS EQUITY AS PER TAS (230) (3.059) IX. DEFERRED TAX OF VALUATION DIFFERENCES (28.053) X. NET PROFIT/LOSS ACCOUNTED FOR DIRECTLY UNDER SHAREHOLDERS EQUITY (I+II+...+IX) (51.859) XI. CURRENT YEAR PROFIT/LOSS Net changes in fair value of securities (Recycled to Profit/Loss) (756) (1.770) 11.2 Reclassification of and recycling derivatives accounted for cash flow hedge purposes to Income Statement Recycling hedge of net investments in foreign operations to Income Statement Other XII. TOTAL PROFIT/LOSS ACCOUNTED FOR THE CURRENT PERIOD (X±XI) The accompanying notes are an integral part of these consolidated financial statements 193

12 Consolidated Statement of Changes in Equity For the Year Ended 31 December 2012 CHANGES IN SHAREHOLDER S EQUITY Note Ref. Paid in Capital Effect of Inflation on Paid in Capital Share Premiums Share Cancellation Profits Legal Reserves Status Reserves Extraordinary Reserves 31 December 2011 I. Opening Balance Changes during the period II. Increase / Decrease related to merger III. Marketable securities value increase fund IV. Hedging (Effective portion) Cash-flow hedge Hedge of net investment in foreign operations V. Tangible assets revaluation differences VI. Intangible assets revaluation differences VII. Bonus shares obtained from associates, subsidiaries and jointly controlled entities (Joint Vent.) VIII. Foreign exchange differences IX. Disposal of assets X. Reclassification of assets XI. Effect of change in equities of associates on bank s equity XII. Capital increase Cash Internal sources XIII. Share issuance XIV. Share cancellation profits XV. Effect of inflation on paid-in capital XVI. Other XVII. Period net income XVIII. Profit distribution Dividends distributed Transfers to reserves Other Closing Balance December 2012 I. Opening Balance Changes during the period II. Increase / Decrease related to merger III. Marketable securities value increase fund IV. Hedging (Effective portion) Cash-flow hedge Hedge of net investment in foreign operations V. Tangible assets revaluation differences VI. Intangible assets revaluation differences VII. Bonus shares obtained from associates, subsidiaries and jointly controlled entities (Joint Vent.) VIII. Foreign exchange differences IX. Disposal of assets X. Reclassification of assets XI. Effect of change in equities of associates on bank s equity XII. Capital increase (1) ( ) 12.1 Cash Internal sources ( ) XIII. Share issuance XIV. Share cancellation profits XV. Effect of inflation on paid-in capital XVI. Other - - (25) - (859) - (5.221) XVII. Period net income XVIII. Profit distribution Dividends distributed Transfers to reserves Other Closing Balance The accompanying notes are an integral part of these consolidated financial statements. 194

13 TSKB 2012 ANNUAL REPORT Türkiye Sınai Kalkınma Bankası A.Ş. and its subsidiaries Consolidated Statement of Changes in Equity For the Year Ended 31 December 2012 Other Reserves Current Period Net Profit / Loss Prior Period Net Profit / Loss Marketable Securities Value Increase Fund Tangible and Intangible Assets Revaluation Differences Bonus Shares Obtained from Associates, Subs and Jointly Controlled Entities Hedging Reserves Revaluation Surplus on Assets Held for sale and on Disc. Operations Shareholders Equity Before Noncontrolling Interest Non- Controlling Interest Total Shareholders Equity (51.859) (51.859) - (51.859) ( ) ( ) (2.143) ( ) (47.199) (982) (48.181) - - (47.199) (47.199) (982) (48.181) - - (66.726) (3.983) ( ) ( ) (2.601) (8.706) (20.674) (29.380) ( ) (50.479) - (50.479) - - (50.479) (50.479) - (50.479) - - (64.301) The accompanying notes are an integral part of these consolidated financial statements. 195

14 Consolidated Statement of Cash Flows For the Year Ended 31 December 2012 Notes Audited 31 December 2012 Audited 31 December 2011 A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating profit before changes in operating assets and liabilities Interest received Interest paid ( ) ( ) Dividends received Fees and commissions received Other income (1) Collections from previously written off loans Payments to personnel and service suppliers (75.962) (69.558) Taxes paid (78.649) (50.461) Others (1) (60.176) Changes in operating assets and liabilities (18.665) ( ) Net (increase) decrease in financial assets Net (increase) decrease in financial assets at fair value through profit or loss Net (increase) decrease in due from banks and other financial institutions Net (increase) decrease in loans ( ) ( ) Net (increase) decrease in other assets (1) (53.518) Net increase (decrease) in bank deposits Net increase (decrease) in other deposits Net increase (decrease) in funds borrowed Net increase (decrease) in matured payables Net increase (decrease) in other liabilities (1) ( ) I. Net cash provided by/(used in) banking operations B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash provided by/(used in) investing activities ( ) (21.876) 2.1 Cash paid for purchase of entities under common control, associates and subsidiaries (2) (420) (1.040) 2.2 Cash obtained from sale of entities under common control, associates and subsidiaries (3) Fixed asset purchases (2) (13.613) (6.384) 2.4 Fixed asset sales (3) Cash paid for purchase of financial assets available for sale ( ) ( ) 2.6 Cash obtained from sale of financial assets available for sale Cash paid for purchase of investment securities Cash obtained from sale of investment securities (*) Others (560) (404) C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net cash provided by/(used in) financing activities (50.481) ( ) 3.1 Cash obtained from funds borrowed and securities issued Cash used for repayment of funds borrowed and securities issued (2) ( ) 3.3 Capital increase Dividends paid (50.479) (48.181) 3.5 Payments for finance leases Other - - IV. Effect of change in foreign exchange rate on cash and cash equivalents (1) (2.400) V. Net increase / (decrease) in cash and cash equivalents (68.030) (29.957) VI. Cash and cash equivalents at beginning of the period (4) VII. Cash and cash equivalents at end of the period (4) (*) Current period amount comprises of the Parent Bank s held to maturity investment that was redeemed on 15 February The accompanying notes are an integral part of these consolidated financial statements.