Türkiye İş Bankası Anonim Şirketi

Transcription

1 (Convenience Translation of Unconsolidated Interim Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note I in Section Three) Türkiye İş Bankası Anonim Şirketi Unconsolidated Financial Statements As at and For the Nine-Month Period Ended 30 September 2017 With Limited Review Report Thereon (Convenience Translation of Unconsolidated Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish) This report includes Limited Review Report comprising 2 pages and; "Unconsolidated Financial Statements and Related Disclosures and Footnotes comprising 87 pages.

2 Convenience Translation of the Review Report Originally Prepared and Issued in Turkish to English (See Note I in Section Three) Independent Auditors Report on Review of Unconsolidated Interim Financial Information To the Board of Directors of Türkiye İş Bankası Anonim Şirketi; Introduction We have reviewed the unconsolidated statement of financial position of Türkiye İş Bankası A.Ş. ( the Bank ) at 30 September 2017 and the related unconsolidated income statement, unconsolidated statement of income and expense items under shareholders equity, unconsolidated statement of changes in shareholders equity, unconsolidated statement of cash flows and a summary of significant accounting policies and other explanatory notes to the unconsolidated financial statements for the nine-month-period then ended. The Bank Management is responsible for the preparation and fair presentation of interim financial statements in accordance with the Regulation on Accounting Applications for Banks and Safeguarding of Documents published in the Official Gazette no dated 1 November 2006, and other regulations on accounting records of Banks published by Banking Regulation and Supervision Agency and circulars and interpretations published by Banking Regulation and Supervision Authority and Turkish Accounting Standard 34 Interim Financial Reporting for those matters not regulated by BRSA Legislation (together referred as BRSA Accounting and Financial Reporting Legislation ). Our responsibility is to express a conclusion on these interim financial statements based on our review. Scope of Review We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410, Limited Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial reporting process, and applying analytical and other review procedures. A review of interim financial information is substantially less in scope than an independent audit performed in accordance with the Independent Auditing Standards and the objective of which is to express an opinion on the financial statements. Consequently, a review of the interim financial information does not provide assurance that the audit firm will be aware of all significant matters which would have been identified in an audit. Accordingly, we do not express an opinion. Basis of Qualified Conclusion The accompanying unconsolidated financial statements as at 30 September 2017 include a free provision for possible risks amounting to TL thousands which is carried forward from prior periods, which is provided by the Bank management for the possible effects of the negative circumstances which may arise from the possible changes in the economy and market conditions. Qualified Conclusion Based on our review, except for the effect of the matter referred in the basis of qualified conclusion paragraph on the unconsolidated financial statements, nothing has come to our attention that causes us to believe that the accompanying unconsolidated financial statements do not give a true view of the financial position of Türkiye İş Bankası A.Ş. at 30 September 2017 and of the results of its operations and its cash flows for the nine-monthperiod then ended in all aspects in accordance with the BRSA Accounting and Financial Reporting Legislation.

3 Other Matter The unconsolidated financial statements of the Bank as at 31 December 2016 and 30 September 2016 prepared in accordance with BRSA Accounting and Financial Reporting Legislation were audited and reviewed by another auditor who expressed a qualified opinion and a qualified conclusion in the report of the relevant audit firm issued on 2 February 2017 and 1 November 2016, respectively due to the effect of the general provision for possible risks amounting to TL thousands which had been recognized as expense in the prior periods, which is provided by the Bank management for the possible effects of the negative circumstances which may arise in the economy and market conditions. Report on other regulatory requirements arising from legislation Based on our review, nothing has come to our attention that causes us to believe that the financial information provided in the accompanying interim activity report in Section VIII, are not consistent with the unconsolidated financial statements and disclosures in all material respects. Additional paragraph for convenience translation to English As explained in detail in Note I of Section Three, the effects of differences between accounting principles and standards set out by regulations in conformity with BRSA Accounting and Financial Reporting Legislation, accounting principles generally accepted in countries in which the accompanying unconsolidated financial statements are to be distributed and International Financial Reporting Standards ( IFRS ) have not been quantified in the accompanying unconsolidated financial statements. Accordingly, the accompanying unconsolidated financial statements are not intended to present the financial position, results of operations and changes in financial position and cash flows in accordance with the accounting principles generally accepted in such countries and IFRS. Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi A Member Firm of ERNST&YOUNG GLOBAL LIMITED Fatma Ebru Yücel, SMMM Partner 30 October 2017 Istanbul, Turkey (2)

4 TÜRKİYE İŞ BANKASI ANONİM ŞİRKETİ THE UNCONSOLIDATED INTERIM FINANCIAL REPORT AS AT AND FOR THE NINE-MONTH PERIOD ENDED 30 September 2017 Headquarters Address: İş Kuleleri, 34330, Levent/İstanbul Telephone: Fax: Web site: The unconsolidated interim financial report as at and for the nine-month period ended prepared in accordance with the communiqué of Financial Statements and Related Disclosures and Footnotes to be Announced to Public by Banks as regulated by Banking Regulation and Supervision Agency, comprises the following sections: GENERAL INFORMATION ABOUT THE BANK UNCONSOLIDATED INTERIM FINANCIAL STATEMENTS EXPLANATIONS ON THE ACCOUNTING POLICIES INFORMATION ON FINANCIAL STRUCTURE AND RISK MANAGEMENT DISCLOSURES AND FOOTNOTES ON THE UNCONSOLIDATED INTERIM FINANCIAL STATEMENTS OTHER EXPLANATIONS LIMITED REVIEW REPORT INTERIM ACTIVITY REPORT The unconsolidated financial statements for the nine month period ended and related disclosures and footnotes in this report are prepared in accordance with the Regulation on the Procedures and Principles for Accounting Practices and Retention of Documents by Banks, Banking Regulation and Supervision Agency (BRSA) regulations, Turkish Accounting Standards, Turkish Financial Reporting Standards and the related statements and guidance and in compliance with the financial records of our Bank. Unless otherwise stated, the accompanying unconsolidated financial report is presented in thousands of Turkish Lira (TL), and has been subjected to limited review and presented as the attached. Prof. Dr. Turkay Berksoy Füsun Tümsavaş H. Ersin Özince Member of the Board and Deputy Chairman of the Board of Directors Chairman of the Board of Directors the Audit Committee and Chairman of the Audit Committee And Member of the Audit Committee Ali Tolga Ünal Mahmut Magemizoğlu Adnan Bali Head of Financial Management Division Deputy Chief Executive Chief Executive Officer In Charge of Financial Reporting The authorized contact person for questions on this financial report: Name Surname / Title: Süleyman H. Özcan / Head of Investor Relations Division Phone No : Fax No : Suleyman.Ozcan@isbank.com.tr investorrelations@isbank.com.tr Website :

5 Page: SECTION I General Information about the Bank I. Explanations on the Establishment Date and Initial Status of the Bank, History Including the Changes in the Former Status 1 II. Explanations on the Capital Structure, Shareholders who Directly or Indirectly, Solely or Jointly Undertake the Management and Control of the Bank, any Changes in the Period, and Information on the Bank s Risk Group 1 III. Explanations on the Chairman s, Directors, Auditors, Chief Executive Officer s and Deputy Chief Executives Shares, if any, and the Areas of their Responsibility at the Bank 1 IV. Information on the Bank s Qualified Shareholders 2 V. Summary Information on the Bank s Functions and Business Lines 2 VI. Existing or Potential, Actual or Legal Obstacles on the Transfer of Shareholder s Equity Between the Bank and its Subsidiaries or the Reimbursement of Liabilities 2 VII. Written Policies on Assessment of Ensuring Compliance on Market Discipline, Disclosure Obligations, Frequency and Accuracy of Related Disclosures 2 SECTION II Unconsolidated Financial Statements I. Balance Sheet (Statement of Financial Position) Assets 3 II. Balance Sheet (Statement of Financial Position) Liabilities 4 III. Statement of Off-Balance Sheet Items 5 IV. Statement of Income 6 V. Statement of Income and Expense Items Accounted under Shareholders Equity 7 VI. Statement of Changes in the Shareholders Equity 8 VII. Statement of Cash Flows 9 SECTION III Explanations on Accounting Policies I. Basis of Presentation 10 II. Strategy for Use of Financial Instruments and Foreign Currency Transactions 10 III. Associates and Subsidiaries 11 IV. Forward, Option Contracts and Derivative Instruments 11 V. Interest Income and Expenses 11 VI. Fees and Commission Income and Expenses 12 VII. Financial Assets 12 VIII. Impairment of Financial Assets 13 IX. Offsetting Financial Instruments 14 X. Sale and Repurchase Agreements and Securities Lending Transactions 14 XI. Non-current Assets Held for Sale and Discontinued Operations and Related Liabilities 14 XII. Goodwill and Other Intangible Assets 14 XIII. Tangible Assets 14 XIV. Leasing Transactions 15 XV. Provisions and Contingent Liabilities 15 XVI. Contingent Assets 15 XVII. Liabilities Regarding Employee Benefits 16 XVIII. Taxation 17 XIX. Borrowings 18 XX. Equity Shares and Issuance of Equity Securities 19 XXI. Bank Acceptances and Bills of Guarantee 19 XXII. Government Incentives 19 XXIII. Segment Reporting 19 XXIV. Other Disclosures SECTION IV Information on the Financial Position and Risk Management of the Bank I. Explanations on Shareholders Equity 20 II. Explanations on Currency Risk 29 III. Explanations on Interest Rate Risk 31 IV. Explanations on Equity Shares Risk Arising from Banking Book 34 V. Explanations on Liquidity Risk Management and Liquidity Coverage Ratio 35 VI. Explanations on Leverage Ratio 39 VII. Explanations on Risk Management Objectives and Policies 40 VIII. Explanations on Segment Reporting 41 SECTION V Disclosures and Footnotes on the Unconsolidated Financial Statements I. Disclosures and Footnotes on Assets 44 II. Disclosures and Footnotes on Liabilities 58 III. Disclosures and Footnotes on Off-Balance Sheet Items 66 IV. Disclosures and Footnotes on Statement of Income 68 V. Disclosures and Footnotes on the Bank s Risk Group 74 VI. Subsequent Events 76 SECTION VI Other Explanations I. Explanations on the Bank s Credit Ratings 77 II. Explanations on Special Purpose Audit and Public Audit 77 SECTION VII Explanations on the Limited Review Report I. Explanations on the Limited Review Report 78 II. Explanations and Footnotes of the Independent Auditors 78 SECTION VIII Interim Activity Report I. General Information 79 II. Turkish Economy and Banking Sector Outlook 81 III. Financial Information and Assessment on Bank 82 IV. Information About the Meetings of the Board of Directors 85 V. Information on the Activities of the Committee of Internal Systems 85 VI. Information About the Activities of the Credit Committee 86 VII. Corporate Governance Committee 86 VIII. Information on the transactions relating to Banks Risk Group 86 IX. Information on Dividend Distribution 86 X. Additional Information about the period 1 April September

6 NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS SECTION ONE: GENERAL INFORMATION ABOUT THE BANK I. Explanations on the Establishment Date and Initial Status of the Bank, History Including the Changes in the Former Status TÜRKİYE İŞ BANKASI A.Ş. ( the Bank ) was established on 26 August 1924 to operate in all kinds of banking activities and to initiate and/or participate in all kinds of financial and industrial sector undertakings when necessary. There is no change in the Bank s status since its establishment. II. Explanations on the Capital Structure, Shareholders who Directly or Indirectly, Solely or Jointly Undertake the Management and Control of the Bank, any Changes in the Period, and Information on the Bank s Risk Group As at 30 September 2017, 39.95% of the Bank s shares are owned by T. İş Bankası A.Ş. Supplementary Pension Fund (Fund), 28.09% are owned by the Republican People s Party- CHP (Atatürk s shares) and 31.96% are on free float (31 December 2016: Fund 40.15%, CHP 28.09%, Free float 31.76%). III. Explanations on the Chairman s, Directors, Auditors, Chief Executive Officer s and Deputy Chief Executives Shares, if any, and the Areas of their Responsibility at the Bank Chairman and Members of the Board of Directors: Name and Surname H. Ersin Özince Füsun Tümsavaş Adnan Bali Prof. Dr. Turkay Berksoy Feray Demir Ertuğrul Bozgedik Ersin Önder Çiftçioğlu Murat Karayalçın Özcal Korkmaz Müslim Sarı Rahmi Aşkın Türeli Areas of Responsibility Chairman of the Board and the Remuneration Committee, Member of the Audit Committee, TRNC Internal Systems Committee and Substitute Member of the Credit Committee Deputy Chairman, Audit Committee, TRNC Internal Systems Committee, Chairman of the Risk Committee and the Corporate Governance Committee, Substitute Member of the Credit Committee Chief Executive Officer and Director, Chairman of the Credit Committee, Member of the Risk Committee, Chairman of the Executive Committee, Chairman of the Human Resources Committee Director, Audit Committee, TRNC Internal Systems Committee and Member of the Remuneration Committee Director, Credit Committee,Member of Corporate Social Responsibility Committee Director, Credit Committee Director, Corporate Governance Committee Director Director, Corporate Governance Committee Director, Member of Corporate Social Responsibility Committee Director, Member of Corporate Social Responsibility Committee 1

7 NOTES TO THE UNCONSOLIDATED FINANCIAL STATEMENTS Chief Executive Officer and Deputy Chief Executives: Name and Surname Adnan Bali Mahmut Magemizoğlu Hakan Aran Yalçın Sezen Senar Akkuş Yılmaz Ertürk Ergün Yorulmaz Murat Bilgiç Nevzat Burak Seyrek Mehmet Şencan Ömer Karakuş Areas of Responsibility Chief Executive Officer and Director, Chairman of the Credit Committee, Member of the Risk Committee, Chairman of the Executive Committee, Chairman of the Human Resources Committee Senior Deputy Chief Executive, Financial Management, Strategy and Corporate Performance Management, Investor Relations, Managerial Reporting and Internal Accounting, Subsidiaries, Member of the Risk Committee Information Technologies, Digital Banking Operations, Data Management Consumer Loans, Card Payment Systems, Retail Banking Marketing-Sales and Products, Retail Loan and Card Operations Digital Banking, Private Banking Marketing and Sales, Member of the Corporate Social Responsibility Committee Treasury, Corporate Communication, Capital Markets, Member of the Corporate Social Responsibility Committee and the Risk Committee Economic Research, International Financial Institutions Commercial Banking, Retail Banking and General Deliberation Legal Counsellorship, Commercial and Corporate Loans and Retail Loans Monitoring and Recovery Corporate, SME, Commercial, Retail Banking Allocation, Credit Portfolio Management, Financial Analysis and Member of the Risk Committee Enterprise Architecture, Human Resources and Talent Management, Consumer Relations Coordination Officer Commercial Banking Marketing, Sales and Product, SME and Business Banking Sales, Corporate Banking Marketing and Sales, Free Zone Branches, Cross-Border Banking Banking Basic Operations, Support Services and Purchasing, Foreign and Commercial Credit Operations, Interna Operations, Construction and Property Management, Branch Network Development The Bank s shares attributable to the Directors and members of the Audit Committee, to the CEO and the Deputy Chief Executives are of minor importance. IV. Information on the Bank s Qualified Shareholders Name Surname/Company Shares Ownership T. İş Bankası A.Ş. Mensupları Munzam Sosyal Güvenlik ve Yardımlaşma Sandığı Vakfı (İşbank Members Supplementary Pension Fund) Paid-in Capital 1,797, % 1,797,653 Unpaid Capital Cumhuriyet Halk Partisi Republican People s Party -(Atatürk s Shares) 1,264, % 1,264,142 V. Summary Information on the Bank s Functions and Business Lines In line with the relevant legislation and principles stated in the Articles of Incorporation of the Bank, the Bank s activities include operating in retail, commercial, corporate and private banking, foreign currency and money market operations, marketable securities operations, international banking services and other banking operations, as well as initiating or participating in all kinds of financial and industrial sector corporations as may be required. VI. Existing or Potential, Actual or Legal Obstacles on the Transfer of Shareholders Equity between the Bank and its Subsidiaries or the Reimbursement of Liabilities None. VII. Written Policies on Assessment of Ensuring Compliance on Market Discipline, Disclosure Obligations, Frequency and Accuracy of the Related Disclosures The Bank has written policies on assessment of ensuring compliance on market discipline, disclosure obligations, frequency and accuracy of related disclosures. The mentioned policies which are agreed by Board of Directors can be obtained from the Bank s website. 2

8 UNCONSOLIDATED FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2017 AND 31 DECEMBER 2016 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED FINANCIAL STATEMENTS (STATEMENT OF FINANCIAL POSITION) THOUSAND TL CURRENT PERIOD PRIOR PERIOD ASSETS Footnotes (30/09/2017) (31/12/2016) TL FC Total TL FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK V-I-a II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net) V-I-b-c Financial Assets Held for Trading Government Debt Securities Equity Securities Derivative Financial Assets Held for Trading Other Marketable Securities Financial Assets at Fair Value Through Profit and Loss Government Debt Securities Equity Securities Loans Other Marketable Securities III. BANKS V-I-d 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) V-I-e Equity Securities Government Debt Securities Other Marketable Securities VI. LOANS AND RECEIVABLES V-I-f Loans and Receivables Loans to the Bank's Risk Group Government Debt Securities Other Non-Performing Loans Specific Provisions (-) VII. FACTORING RECEIVABLES VIII. HELD TO MATURITY INVESTMENTS (Net) V-I-g Government Debt Securities Other Marketable Securities IX. INVESTMENTS IN ASSOCIATES (Net) V-I-h Associates Accounted for Using the Equity Method Unconsolidated Associates Financial Investments Non-Financial Investments X. INVESTMENTS IN SUBSIDIARIES (Net) V-I-i Unconsolidated Financial Subsidiaries Unconsolidated Non-Financial Subsidiaries XI. JOINTLY CONTROLLED ENTITIES (JOINT VENTURES) (Net) V-I-j Jointly Controlled Entities Accounted for Using the Equity Method Unconsolidated Jointly Controlled Entities Jointly Controlled Financial Entities Jointly Controlled Non-Financial Entities XII. LEASE RECEIVABLES V-I-k Finance Lease Receivables Operating Lease Receivables Other Unearned Income (-) XIII. DERIVATIVE FINANCIAL ASSETS HELD FOR HEDGING V-I-l Fair Value Hedges Cash Flow Hedges Net Foreign Investment Hedges XIV. TANGIBLE ASSETS (Net) XV. INTANGIBLE ASSETS (Net) Goodwill Other XVI. INVESTMENT PROPERTY (Net) V-I-m XVII. TAX ASSETS V-I-n Current Tax Assets Deferred Tax Assets XVIII. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) V-I-o Held for Sale Discontinued Operations XIX. OTHER ASSETS V-I-p TOTAL ASSETS The accompanying explanations and notes form an integral part of these financial statements. 3

9 UNCONSOLIDATED FINANCIAL STATEMENTS AS OF 30 SEPTEMBER 2017 AND 31 DECEMBER 2016 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED FINANCIAL STATEMENTS (STATEMENT OF FINANCIAL POSITION) THOUSAND TL CURRENT PERIOD PRIOR PERIOD LIABILITIES Footnotes (30/09/2017) ( 31/12/2016) TL FC Total TL FC Total I. DEPOSITS V-II-a Deposits from the Bank's Risk Group Other II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING V-II-b III. FUNDS BORROWED V-II-c IV. MONEY MARKET FUNDS Interbank Money Market Funds Istanbul Stock Exchange Money Market Funds Funds Provided Under Repurchase Agreements V. MARKETABLE SECURITIES ISSUED (Net) V-II-d Bills Asset-backed Securities Bonds VI. FUNDS Borrower funds Other VII. MISCELLANEOUS PAYABLES VIII. OTHER LIABILITIES V-II-e IX. FACTORING PAYABLES X. LEASE PAYABLES (Net) V-II-f Finance Lease Payables Operating Lease Payables Other Deferred Financial Lease Expenses (-) XI. DERIVATIVE FINANCIAL LIABILITIES HELD FOR RISK MANAGEMENT V-II-g Fair Value Hedges Cash Flow Hedges Net Foreign Investment Hedges XII. PROVISIONS V-II-h General Loan Loss Provisions Provision for Restructuring Reserves for Employee Benefits Insurance Technical Reserves (Net) Other Provisions XIII. TAX LIABILITIES V-II-i Current Tax Liabilities Deferred Tax Liabilities XIV. LIABILITIES RELATED TO ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS Held for Sale Discontinued Operations XV. SUBORDINATED DEBT XVI. SHAREHOLDERS' EQUITY V-II-j (45.660) ( ) Paid-in Capital Capital Reserves (45.660) ( ) Share premium Share Cancellation Profits Marketable Securities Value Increase Fund (45.660) ( ) Tangible Assets Revaluation Reserve Intangible Assets Revaluation Reserve Investment Property Revaluation Reserve Bonus Shares Obtained from Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) Hedging Reserves (Effective Portion) Accumulated Revaluation Reserves on Assets Held for Sale and Discontinued Operations Other Capital Reserves Profit Reserves Legal Reserves Statutory Reserves Extraordinary Reserves Other Profit Reserves (75.074) - (75.074) Profit or Loss Prior Years' Profit/Loss Current Period Profit/Loss TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY The accompanying explanations and notes form an integral part of these financial statements. 3

10 UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET ITEMS AS OF 30 SEPTEMBER 2017 AND 31 DECEMBER 2016 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET ITEMS THOUSAND TL OFF-BALANCE SHEET ITEMS CURRENT PERIOD PRIOR PERIOD Footnotes (30/09/2017) (31/12/2016) TL FC Total TL FC Total A. OFF-BALANCE SHEET CONTINGENCIES AND COMMITMENTS (I+II+III) V-III I. GUARANTEES AND SURETYSHIPS 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 Purchase Guarantees for Securities Issued Factoring Guarantees Other Guarantees Other Suretyships II. COMMITMENTS Irrevocable Commitments Forward Asset Purchase Commitments Forward Deposit Purchase and Sale Commitments Capital Commitment for Associates and Subsidiaries Loan Granting Commitments Securities Underwriting Commitments Commitments for Reserve Deposit Requirements Commitments for Cheque Payments Tax and Fund Liabilities from Export Commitments Commitments for Credit Card Expenditure Limits Commitments for Credit Cards and Banking Services Promotions 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 Derivative Financial Instruments Held for Risk Management Fair Value Hedges Cash Flow Hedges Net Foreign Investment Hedges Derivative Financial Instruments Held for Trading Forward Foreign Currency Buy/Sell Transactions Forward Foreign Currency Buy Transactions Forward Foreign Currency Sell Transactions Currency and Interest Rate Swaps Currency Swap Buy Transactions Currency Swap Sell Transactions Interest Rate Swap Buy Transactions Interest Rate Swap Sell Transactions Currency, Interest Rate and Security Options Currency Call Options Currency Put Options Interest Rate Call Options Interest Rate Put Options Securities Call Options Securities Put Options Currency Futures Currency Buy Futures Currency Sell Futures Interest Rate Futures Interest Rate Buy Futures Interest Rate Sell Futures Other B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) IV. ITEMS HELD IN CUSTODY Customers securities held Investment securities held in custody Cheques 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 BILL GUARANTEES AND SURETIES TOTAL OFF-BALANCE SHEET ITEMS (A+B) The accompanying explanations and notes form an integral part of these financial statements. 5

11 UNCONSOLIDATED STATEMENT OF INCOME AS OF 30 SEPTEMBER 2017 AND 30 SEPTEMBER 2016 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF INCOME THOUSAND TL CURRENT PERIOD PRIOR PERIOD CURRENT PERIOD PRIOR PERIOD INCOME STATEMENT Footnotes (01/01-30/09/2017) (01/01-30/09/2016) (01/07-30/09/2017) (01/07-30/09/2016) I. INTEREST INCOME V-IV-a Interest Income on Loans Interest Income on Reserve Deposits Interest Income on Banks Interest Income on Money Market Placements Interest Income on Marketable Securities Portfolio Financial Assets Held for Trading Financial Assets at Fair Value Through Profit and Loss Financial Assets Available for Sale Held to Maturity Investments Finance Lease Income Other Interest Income II. INTEREST EXPENSE V-IV-b Interest on Deposits Interest on Funds Borrowed Interest on Money Market Funds Interest on Securities Issued Other Interest Expense III. NET INTEREST INCOME / EXPENSE (I - II) IV. NET FEES AND COMMISSIONS INCOME / EXPENSE Fees and Commissions Received Non-cash Loans Other Fees and Commissions Paid Non-cash Loans Other V. DIVIDEND INCOME VI. TRADING INCOME / LOSS (NET) V-IV-c ( ) ( ) ( ) ( ) 6.1 Gains/Losses on Securities Trading Derivative Financial Transactions Gains/Losses ( ) ( ) Foreign Exchange Gains/Losses ( ) ( ) ( ) ( ) VII. OTHER OPERATING INCOME V-IV-d VIII. TOTAL OPERATING INCOME / EXPENSE (III+IV+V+VI+VII) IX. PROVISION FOR LOSSES ON LOANS AND OTHER RECEIVABLES (-) V-IV-e X. OTHER OPERATING EXPENSES (-) V-IV-f XI. NET OPERATING INCOME (VIII-IX-X) XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER XIII. PROFIT/LOSS FROM ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD XIV. NET MONETARY POSITION GAIN/LOSS XV. PROFIT/LOSS ON CONTINUING OPERATIONS BEFORE TAX (XI+ +XIV) XVI. TAX PROVISION FOR CONTINUING OPERATIONS (±) V-IV-g Current Tax Provision Deferred Tax Provision (63.135) ( ) XVII. NET PERIOD PROFIT/LOSS FROM CONTUNUING OPERATIONS (XV±XVI) XVIII. INCOME ON DISCONTINUED OPERATIONS Income on Assets Held for Sale Gain on Sale of Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) Other Income on Discontinued Operations XIX. EXPENSE ON DISCONTINUED OPERATIONS(-) Expense on Assets Held for Sale Loss on Sale of Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) Other Expense on Discontinued Operations XX. PROFIT/LOSS ON DISCONTINUED OPERATIONS BEFORE TAX (XVIII-XIX) XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) V-IV-g Current Tax Provision Deferred Tax Provision XXII. NET PERIOD PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) XXIII. NET PERIOD PROFIT/LOSS (XVII+XXII) V-IV-h , , , , The accompanying explanations and notes form an integral part of these financial statements. 6

12 UNCONSOLIDATED STATEMENT OF INCOME AN EXPENSE ITEMS UNDER SHAREHOLDERS EQUITY AS OF 30 SEPTEMBER 2017 AND 30 SEPTEMBER 2016 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF INCOME AND EXPENSE ITEMS UNDER SHAREHOLDERS EQUITY THOUSAND TL INCOME AND EXPENSE ITEMS UNDER SHAREHOLDERS EQUITY CURRENT PERIOD PRIOR PERIOD (01/01-30/09/2017) (01/01-30/09/2016) I. ADDITIONS TO MARKETABLE SECURITIES VALUE INCREASE FUND FROM FINANCIAL ASSETS AVAILABLE FOR SALE II. REVALUATION SURPLUS ON TANGIBLE ASSETS (36.131) III. REVALUATION SURPLUS ON INTANGIBLE ASSETS - - IV. TRANSLATION ADJUSTMENT FOR FOREIGN CURRENCY TRANSACTIONS ( ) (8.825) V. PROFIT/LOSS ON DERIVATIVE FINANCIAL ASSETS HELD FOR CASH FLOW HEDGES (Effective Portion of the Changes in Fair Value) - - VI. PROFIT/LOSS ON DERIVATIVE FINANCIAL ASSETS HELD FOR NET FOREIGN INVESTMENT HEDGES (Effective Portion of the Changes in Fair Value) - - VII. THE EFFECT OF CORRECTIONS OF THE ERRORS AND CHANGES IN THE ACCOUNTING POLICIES - - VIII. OTHER INCOMES AND EXPENSES RECOGNISED UNDER SHAREHOLDERS EQUITY ACCORDANCE WITH TAS (80.680) IX. DEFERRED TAX EFFECT OF REVALUATION AND VALUE INCREASES ( ) ( ) X. NET INCOME/EXPENSE DIRECTLY RECOGNISED UNDER SHAREHOLDERS EQUITY (I+II+ +IX) XI. PROFIT/LOSS FOR THE PERIOD Net Changes in the Fair Values of Marketable Securities (Transfer to Profit/Loss) The Portion of Derivative Financial Assets Held for Cash Flow Hedges Reclassified in and Transferred to Income Statement The Portion of Derivative Financial Assets Held for Net Foreign Investment Hedges Reclassified in and Transferred to Income Statement Other XII. TOTAL PROFIT/LOSS RECOGNISED FOR THE PERIOD (X±XI) The accompanying explanations and notes form an integral part of these financial statements. 7

13 UNCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY AS OF SEPTEMBER 30, 2017 AND SEPTEMBER 30, 2016 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY THOUSAND TL CHANGES IN SHAREHOLDERS EQUITY Footnotes Paid-in Paid-in Capital Share Share Cancellation Legal Statutory Extraordinary Other Net Current Prior Period Marketable Securities Tangible and Intangible Bonus Shares from Hedging Accumulated Rev. Reserve on Asset Total Shreholder's Capital Inflation Adjustment Premium Profits Reserves Reserves Reserves Reserves Period Profit/(Loss) Profit / (Loss) Value Increase Fund Assets Revaluation Reserve Equity Participations Reserves Held for Sale and Discontinued Oper. Equity PRIOR PERIOD (30/09/2016) I. Beginning Balance (22.515) II. Corrections Made According to TAS The Effect of Corrections of Errors The Effect of Changes in Accounting Policies III. Adjusted Beginning Balance (I+II) (22.515) Changes During the Period - IV. Increase/Decrease Due to Mergers V. Marketable Securities Value Increase Fund VI. Hedge Reserves (Effective Portion) Cash Flow Hedges Net Foreign Investment Hedges VII. Revaluation Surplus on Tangible Assets (34.325) (34.325) VIII. Revaluation Surplus on Intangible Assets IX. Bonus Shares from Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) X. Translation Differences (8.825) (8.825) XI. The Effect of Disposal of Assets XII. The Effect of Reclassification of Assets XIII. The Effect of Changes in the Equity of Subsidiaries on the Equity of the Bank XIV. Capital Increase Cash Internal Sources XV. Share Issue XVI. Share Cancellation Profits XVII. Paid-in-Capital Inflation Adjustment XVIII. Other XIX. Net Profit / Loss for the Period XX. Profit Distribution ( ) ( ) 20.1 Dividend Paid ( ) ( ) 20.2 Transfer to Reserves ( ) 20.3 Other (*) Ending Balance (III+IV+V...+XVIII+XIX+XX) CURRENT PERIOD (30/09/2017) I. Beginning Balance Changes During the Period - II. Increase/Decrease Due to Mergers III. Marketable Securities Value Increase Fund IV. Hedge Reserves (Effective Portion) Cash Flow Hedges Net Foreign Investment Hedges V. Revaluation Surplus on Tangible Assets VI. Revaluation Surplus on Intangible Assets VII. Bonus Shares from Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) VIII. Translation Differences ( ) ( ) IX. The Effect of Disposal of Assets X. The Effect of Reclassification of Assets XI. The Effect of Changes in the Equity of Subsidiaries on the Equity of the Bank XII. Capital Increase Cash Internal Sources XIII. Share Issue XIV. Share Cancellation Profits XV. Paid-in-Capital Inflation Adjustment XVI. Other XVII. Net Profit / Loss for the Period XVIII. Profit Distribution ( ) ( ) 18.1 Dividend Paid ( ) ( ) 18.2 Transfer to Reserves ( ) 18.3 Other (*) Ending Balance (I+II+III...+XVI+XVII+XVIII) ( ) (*)According to the Articles of Incorporation of the Bank, since a portion of the net profit for the period is distributed to the employees as a dividend, the provision provided for employee dividend distribution within the scope of TAS 19-Employee Benefits, has been added to distributable profit. The accompanying explanations and notes form an integral part of these financial statements. 8

14 UNCONSOLIDATED STATEMENT OF CASH FLOW AS OF 30 SEPTEMBER 2017 AND 30 SEPTEMBER 2016 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF CASH FLOWS Footnotes THOUSAND TL CURRENT PERIOD PRIOR PERIOD (01/01-30/09/2017) (01/01-30/09/2016) A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating Profit Before Changes in Operating Assets and Liabilities Interest Received Interest Paid ( ) ( ) Dividend Received Fees and Commissions Received Other Income Collections from Previously Written Off Loans and Other Receivables Cash Payments to Personnel and Service Suppliers ( ) ( ) Taxes Paid ( ) ( ) Other ( ) ( ) 1.2 Changes in Operating Assets and Liabilities ( ) Net (Increase) Decrease in Financial Assets Held for Trading ( ) Net (Increase) Decrease in Financial Assets at Fair Value through Profit or Loss Net (Increase) Decrease in Due From Banks ( ) Net (Increase) Decrease in Loans ( ) ( ) Net (Increase) Decrease in Other Assets ( ) 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 I. Net Cash Provided From Banking Operations B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net Cash Provided from / Used in Investing Activities ( ) ( ) 2.1 Cash Paid for Purchase of Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) Cash Obtained from Sale of Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) Tangible Asset Purchases ( ) ( ) 2.4 Tangible Asset Sales Cash Paid for Purchase of Financial Assets Available for Sale ( ) ( ) 2.6 Cash Obtained from Sales of Financial Assets Available for Sale Cash Paid for Purchase of Investment Securities Held to Maturity ( ) ( ) 2.8 Cash Obtained from Sales of Investment Securities Held to Maturity (*) Other ( ) ( ) C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net Cash Provided from / Used in Financing Activities ( ) 3.1 Cash Obtained from Funds Borrowed and Securities Issued Cash Used for Repayment of Funds Borrowed and Securities Issued ( ) ( ) 3.3 Equity Instruments Dividends Paid ( ) ( ) 3.5 Payments for Finance Leases Other - - IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents V. Net Increase / (Decrease) in Cash and Cash Equivalents VI. Cash and Cash Equivalents at Beginning of the Period VII. Cash and Cash Equivalents at End of the Period (*)Redeemed invesment securities are included. The accompanying explanations and notes form an integral part of these financial statements. 9