TÜRKİYE İŞ BANKASI ANONİM ŞİRKETİ THE UNCONSOLIDATED INTERIM FINANCIAL REPORT AS AT AND FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2016

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4 TÜRKİYE İŞ BANKASI ANONİM ŞİRKETİ THE UNCONSOLIDATED INTERIM FINANCIAL REPORT AS AT AND FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2016 Headquarters Address: İş Kuleleri, 34330, Levent/İstanbul Telephone: Fax: Web site: The unconsolidated interim financial report as at and for the six-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 REVIEW REPORT INTERIM ACTIVITY REPORT The unconsolidated financial statements for the six 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 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 Interim 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 19 SECTION IV Information on the Financial Position of the Bank and Risk Management of the Bank I. Explanations on Shareholders Equity 20 II. Explanations on Currency Risk 27 III. Explanations on Interest Rate Risk 29 IV. Explanations on Equity Shares Risk Arising from Banking Book 32 V. Explanations on Liquidity Risk Management and Liquidity Coverage Ratio 33 VI. Explanations on Leverage Ratio 37 VII. Explanations on Risk Management Objectives and Policies 38 VIII. Explanations on Segment Reporting 42 SECTION V Disclosures and Footnotes on the Unconsolidated Interim 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 72 VI. Subsequent Events 74 SECTION VI Other Explanations I. Explanations on the Bank s Credit Ratings 75 II. Explanations on Special Purpose Audit and Public Audit 75 SECTION VII Review Report I. Explanations on the Review Report 76 II. Explanations and Footnotes of the Independent Auditors 76

6 Page: SECTION VIII Interim Activity Report I. General Information 77 II. Turkish Economy and Banking Sector Outlook 79 III. Financial Information and Assessment on Bank 80 IV. Information About the Meetings of the Board of Directors 83 V. Information on the Activities of the Committee of Internal Systems 83 VI. Information About the Activities of the Credit Committee 84 VII. Corporate Governance Committee 84 VIII. Information on the transactions relating to Banks Risk Group 84 IX. Information on Dividend Distribution 84 X. Additional Information about the period 1 April June

7 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 June 2016, 40.15% 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 31.76% are on free float (31 December 2015: 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 Board of Directors: Name and Surname Areas of Responsibility H. Ersin Özince Chairman of the Board and the Remuneration Committee Füsun Tümsavaş Deputy Chairman, Audit Committee, TRNC Internal Systems Committee and the Risk Committee, Chairman of the Corporate Governance Committee, Member of the Credit Committee Adnan Bali 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 Hasan Koçhan Director, Member of the Credit Committee Mustafa Kıcalıoğlu Director Hüseyin Yalçın Director Murat Vulkan Director Prof.Dr.Turkay Berksoy Director, Audit Committee, TRNC Internal Systems Committee, Remuneration Committee, and Corporate Governance Committee, Alternate Member of the Credit Committee Kemal Meral Director Ulaş Moğultay Director, Member of Corporate Social Responsibility Committee Feray Demir Director, Member of the Corporate Social Responsibility Committee, Alternate Member of the Credit Committee Chief Executive Officer and Deputy Chief Executives: Name and Surname Adnan Bali Mahmut Magemizoğlu Hakan Aran Levent Korba Ertuğrul Bozgedik Yalçın Sezen Senar Akkuş İlhami Koç Yılmaz Ertürk Ergün Yorulmaz Murat Bilgiç Nevzat Burak Seyrek Areas of Responsibility Chief Executive Officer and Director, Chairman of the Credit Committee, Member of the Risk Committee, Chairman of Executive Committee, Chairman of the Human Resources Committee I.Deputy Chief Executive, Financial Management, Strategy and Corporate Performance Management, Investor Relations, Managerial Reporting and Internal Accounting, Member of the Risk Committee Information Technology Management, Digital Banking Operations, Data Management Banking Operations, Retail Loan and Card Operations, Support Services and Purchasing, Foreign Trade and Commercial Loan Operations, Internal Operations Management, Construction and Real Estate Management, Branch Network Development Corporate Loans, SME Loans, Commercial Loans and Consumer Loans Underwriting, Loans Portfolio Management, Financial Analysis, Member of the Risk Committee Consumer Loans, Card Payment Systems, Retail Banking Marketing, Sales and Product Management, Retail Loans and Card Operations, Digital Banking, Private Banking Marketing and Sale Management, Member of the Corporate Social Responsibility Committee Treasury Management, Corporate Communication Management, Corporate Social Responsibility Committee Member of the Risk Committee Associates, Cross-Border Banking and Foreign Subsidiaries, Branches and Representative Offices, Capital Markets Management and the Risk Committee (1) Economic Research, International Financial Institutions Commercial Banking, Retail Banking and General Legal Counsellorship, Commercial and Corporate Loans and Retail Loans Monitoring and Recovery Management Corporate and Commercial Banking Marketing, Sales and Product Management, SME and Business Banking Sales, Free Zone Branches Enterprise Architecture, Human Resources, and Talent Management, Coordination of Consumer Relations Officer (1) İlhami Koç participates in the meetings of the Risk Committee on a consolidated basis. 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. 1

8 IV. Information on the Bank s Qualified Shareholders Name Surname/Company Shares Ownership Paid-in Capital T. İş Bankası A.Ş. Mensupları Munzam Sosyal Güvenlik ve Yardımlaşma Sandığı Vakfı (İşbank Members Supplementary Pension Fund) 1,806, % 1,806,553 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

9 UNCONSOLIDATED FINANCIAL STATEMENTS (STATEMENT OF FINANCIAL POSITION) THOUSAND TL CURRENT PERIOD PRIOR PERIOD ASSETS Footnotes (30/06/2016) (31/12/2015) TL FC Total TL FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK V-I-a 5,540,165 27,700,304 33,240,469 3,288,379 28,364,146 31,652,525 II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net) V-I-b-c 605,733 1,058,092 1,663, ,401 1,147,897 1,592, Financial Assets Held for Trading 605,733 1,058,092 1,663, ,401 1,147,897 1,592, Government Debt Securities 368,232 7, , ,528 9, , Equity Securities 79,276-79,276 56,255-56, Derivative Financial Assets Held for Trading 155,407 1,050,093 1,205, ,592 1,138,833 1,263, Other Marketable Securities 2,818-2,818 1,026-1, Financial Assets at Fair Value Through Profit and Loss Government Debt Securities Equity Securities Loans Other Marketable Securities III. BANKS V-I-d 215,680 1,262,580 1,478,260 87,888 1,429,613 1,517,501 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 34,047,020 10,197,715 44,244,735 31,072,239 9,788,121 40,860, Equity Securities 34,172 70, ,621 34, , , Government Debt Securities 34,002,916 9,125,668 43,128,584 31,028,365 8,519,904 39,548, Other Marketable Securities 9,932 1,001,598 1,011,530 9,702 1,011,837 1,021,539 VI. LOANS AND RECEIVABLES V-I-f 118,491,862 65,124, ,616, ,031,662 63,902, ,933, Loans and Receivables 117,496,626 65,124, ,620, ,137,177 63,899, ,036, Loans to the Bank's Risk Group 1,126, ,252 1,637, , ,319 1,230, Government Debt Securities Other 116,370,563 64,612, ,983, ,519,735 63,286, ,805, Non-Performing Loans 4,492,554 5,931 4,498,485 3,597,737 5,952 3,603, Specific Provisions (-) 3,497,318 5,931 3,503,249 2,703,252 3,301 2,706,553 VII. FACTORING RECEIVABLES VIII. HELD TO MATURITY INVESTMENTS (Net) V-I-g 3,653, ,722 3,770,296 3,476, ,105 3,591, Government Debt Securities 3,640,825-3,640,825 3,414,877-3,414, Other Marketable Securities 12, , ,471 61, , ,754 IX. INVESTMENTS IN ASSOCIATES (Net) V-I-h 128, , , , Associates Accounted for Using the Equity Method Unconsolidated Associates 128, , , , Financial Investments 124, , , , Non-Financial Investments 3,671-3,671 3,671-3,671 X. INVESTMENTS IN SUBSIDIARIES (Net) V-I-i 9,091, ,539 9,647,656 8,708, ,539 9,265, Unconsolidated Financial Subsidiaries 3,935, ,539 4,491,920 4,045, ,539 4,601, Unconsolidated Non-Financial Subsidiaries 5,155,736-5,155,736 4,663,792-4,663,792 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) V-I-m 4,290,394 8,704 4,299,098 4,340,202 10,077 4,350,279 XV. INTANGIBLE ASSETS (Net) 346, , , , Goodwill Other 346, , , ,908 XVI. INVESTMENT PROPERTY (Net) V-I-n XVII. TAX ASSETS V-I-o 617, , , , Current Tax Assets Deferred Tax Assets 617, , , ,710 XVIII. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) V-I-p 49,336-49,336 42,929-42, Held for Sale 49,336-49,336 42,929-42, Discontinued Operations XIX. OTHER ASSETS V-I-r 2,892,627 2,285,818 5,178,445 2,289,970 1,664,120 3,954,090 TOTAL ASSETS 179,970, ,311, ,281, ,739, ,978, ,717,584 3

10 UNCONSOLIDATED FINANCIAL STATEMENTS (STATEMENT OF FINANCIAL POSITION) THOUSAND TL CURRENT PERIOD PRIOR PERIOD LIABILITIES Footnotes (30/06/2016) ( 31/12/2015) TL FC Total TL FC Total I. DEPOSITS V-II-a 83,518,665 80,085, ,603,962 73,230,005 80,572, ,802, Deposits from the Bank's Risk Group 2,982,463 2,912,598 5,895,061 2,253,576 3,665,080 5,918, Other 80,536,202 77,172, ,708,901 70,976,429 76,907, ,883,770 II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING V-II-b 126,740 1,222,013 1,348, , , ,974 III. FUNDS BORROWED V-II-c 2,782,627 25,346,558 28,129,185 2,651,943 25,756,556 28,408,499 IV. MONEY MARKET FUNDS 15,761,260 3,049,290 18,810,550 17,046,938 3,042,209 20,089, Interbank Money Market Funds 1,800,450-1,800, Istanbul Stock Exchange Money Market Funds Funds Provided Under Repurchase Agreements 13,960,810 3,049,290 17,010,100 17,046,938 3,042,209 20,089,147 V. MARKETABLE SECURITIES ISSUED (Net) V-II-d 5,753,131 13,224,497 18,977,628 6,325,685 13,435,444 19,761, Bills 4,855,154 1,221,514 6,076,668 5,551,796 1,927,381 7,479, Asset-backed Securities Bonds 897,977 12,002,983 12,900, ,889 11,508,063 12,281,952 VI. FUNDS Borrower funds Other VII. MISCELLANEOUS PAYABLES 7,105, ,870 7,521,822 6,303, ,070 6,850,381 VIII. OTHER LIABILITIES V-II-e 2,122,295 1,486,265 3,608,560 1,481, ,411 2,117,105 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 7,013,199 41,124 7,054,323 7,064,150 29,596 7,093, General Loan Loss Provisions 2,928,540 8,957 2,937,497 2,842,117 9,712 2,851, Provision for Restructuring Reserves for Employee Benefits 608, , , , Insurance Technical Reserves (Net) Other Provisions 3,476,397 32,167 3,508,564 3,668,966 19,884 3,688,850 XIII. TAX LIABILITIES V-II-i 653, , ,023 11, , Current Tax Liabilities 653, , ,023 11, , Deferred Tax Liabilities XIV. LIABILITIES RELATED TO ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS Held for Sale Discontinued Operations XV. SUBORDINATED DEBT - 4,004,755 4,004,755-4,047,133 4,047,133 XVI. SHAREHOLDERS' EQUITY V-II-j 34,366, ,193 34,568,038 31,979,467 55,523 32,034, Paid-in Capital 4,500,000-4,500,000 4,500,000-4,500, Capital Reserves 7,771, ,193 7,972,533 6,879,271 55,523 6,934, Share premium 3,694-3,694 3,694-3, Share Cancellation Profits Marketable Securities Value Increase Fund 3,908, ,193 4,110,161 2,982,574 55,523 3,038, Tangible Assets Revaluation Reserve 2,244,765-2,244,765 2,279,090-2,279, Intangible Assets Revaluation Reserve Investment Property Revaluation Reserve Bonus Shares Obtained from Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) 26,692-26,692 26,692-26, Hedging Reserves (Effective Portion) Accumulated Revaluation Reserves on Assets Held for Sale and Discontinued Operations Other Capital Reserves 1,587,221-1,587,221 1,587,221-1,587, Profit Reserves 19,775,095-19,775,095 17,507,958-17,507, Legal Reserves 2,714,077-2,714,077 2,483,718-2,483, Statutory Reserves Extraordinary Reserves 17,057,785-17,057,785 15,018,038-15,018, Other Profit Reserves 3,233-3,233 6,202-6, Profit or Loss 2,320,410-2,320,410 3,092,238-3,092, Prior Years' Profit/Loss 32,992-32,992 9,547-9, Current Period Profit/Loss 2,287,418-2,287,418 3,082,691-3,082,691 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 159,204, ,077, ,281, ,961, ,756, ,717,584 4

11 UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET ITEMS THOUSAND TL OFF-BALANCE SHEET ITEMS CURRENT PERIOD PRIOR PERIOD Footnotes (30/06/2016) (31/12/2015) TL FC Total TL FC Total A. OFF-BALANCE SHEET CONTINGENCIES AND COMMITMENTS (I+II+III) V-III 85,886, ,906, ,792,477 91,672, ,335, ,008,455 I. GUARANTEES AND SURETYSHIPS 20,293,319 30,463,564 50,756,883 20,181,325 30,459,541 50,640, Letters of Guarantee 20,282,473 19,204,401 39,486,874 20,167,536 18,372,484 38,540, Guarantees Subject to State Tender Law 769,885 2,122,776 2,892, ,216 2,524,859 3,329, Guarantees Given for Foreign Trade Operations 3,186,707 7,403,687 10,590,394 3,540,122 6,843,585 10,383, Other Letters of Guarantee 16,325,881 9,677,938 26,003,819 15,823,198 9,004,040 24,827, Bank Acceptances - 1,116,563 1,116,563 4, , , Import Letters of Acceptance - 81,322 81, , , Other Bank Acceptances - 1,035,241 1,035,241 4, , , Letters of Credit 10,846 9,175,562 9,186,408 5,655 10,249,180 10,254, Documentary Letters of Credit 1,343 6,759,835 6,761,178 5,067 7,780,957 7,786, Other Letters of Credit 9,503 2,415,727 2,425, ,468,223 2,468, Prefinancing Given as Guarantee Endorsements Endorsements to the Central Bank of Turkey Other Endorsements Purchase Guarantees for Securities Issued Factoring Guarantees Other Guarantees - 967, ,038 3, , , Other Suretyships II. COMMITMENTS 41,742,006 17,367,111 59,109,117 40,030,743 12,279,503 52,310, Irrevocable Commitments 41,627,215 12,354,629 53,981,844 39,904,819 5,050,503 44,955, Forward Asset Purchase Commitments 492,393 10,434,444 10,926, ,889 3,008,812 3,161, Forward Deposit Purchase and Sale Commitments Capital Commitment for Associates and Subsidiaries - 78,318 78, Loan Granting Commitments 10,917, ,885 11,297,560 10,340, ,627 10,907, Securities Underwriting Commitments Commitments for Reserve Deposit Requirements Commitments for Cheque Payments 5,845,147-5,845,147 5,654,056-5,654, Tax and Fund Liabilities from Export Commitments 12,096-12,096 11,630-11, Commitments for Credit Card Expenditure Limits 21,842,325-21,842,325 21,219,999-21,219, Commitments for Credit Cards and Banking Services Promotions 100, , , , Receivables from Short Sale Commitments Payables for Short Sale Commitments Other Irrevocable Commitments 2,417,066 1,461,982 3,879,048 2,424,838 1,475,064 3,899, Revocable Commitments 114,791 5,012,482 5,127, ,924 7,229,000 7,354, Revocable Loan Granting Commitments 114,791 5,012,482 5,127, ,924 7,229,000 7,354, Other Revocable Commitments III. DERIVATIVE FINANCIAL INSTRUMENTS 23,851,140 78,075, ,926,477 31,460,506 84,596, ,057, Derivative Financial Instruments Held for Risk Management Fair Value Hedges Cash Flow Hedges Net Foreign Investment Hedges Derivative Financial Instruments Held for Trading 23,851,140 78,075, ,926,477 31,460,506 84,596, ,057, Forward Foreign Currency Buy/Sell Transactions 2,811,315 4,728,869 7,540,184 3,038,471 5,442,224 8,480, Forward Foreign Currency Buy Transactions 1,406,643 2,345,971 3,752,614 1,489,731 2,728,910 4,218, Forward Foreign Currency Sell Transactions 1,404,672 2,382,898 3,787,570 1,548,740 2,713,314 4,262, Currency and Interest Rate Swaps 17,979,970 62,626,067 80,606,037 24,345,220 67,352,684 91,697, Currency Swap Buy Transactions 1,781,718 23,628,749 25,410,467 2,813,441 27,689,453 30,502, Currency Swap Sell Transactions 15,724,584 6,722,170 22,446,754 18,758,355 8,743,921 27,502, Interest Rate Swap Buy Transactions 236,834 16,137,574 16,374,408 1,386,712 15,459,655 16,846, Interest Rate Swap Sell Transactions 236,834 16,137,574 16,374,408 1,386,712 15,459,655 16,846, Currency, Interest Rate and Security Options 2,830,284 5,240,702 8,070,986 3,660,920 6,723,743 10,384, Currency Call Options 1,735,577 1,653,951 3,389,528 2,756,108 1,818,458 4,574, Currency Put Options 1,094,707 2,186,645 3,281, ,812 3,327,425 4,232, Interest Rate Call Options - 700, , , , Interest Rate Put Options - 700, , , , 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 229,571 5,479,699 5,709, ,895 5,078,186 5,494,081 B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 271,446, ,152, ,598, ,094, ,928, ,023,157 IV. ITEMS HELD IN CUSTODY 38,158,149 11,384,384 49,542,533 40,198,190 11,902,950 52,101, Customers securities held Investment securities held in custody 20,464, ,412 20,567,189 22,737, ,981 22,893, Cheques received for collection 14,325,898 3,722,901 18,048,799 14,051,240 3,940,719 17,991, Commercial notes received for collection 2,939,698 6,150,684 9,090,382 2,982,759 6,499,384 9,482, Other assets received for collection 15,304 1,445 16,749 13,560 2,638 16, Assets received for public offering 2,541-2,541 2,541-2, Other items under custody 409,931 1,406,942 1,816, ,881 1,304,228 1,715, Custodians V. PLEDGED ITEMS 233,288, ,767, ,056, ,896, ,025, ,922, Marketable securities 10,252,259-10,252,259 14,221,630-14,221, Guarantee notes 3,418,923 10,479,539 13,898,462 3,591,980 9,624,977 13,216, Commodity 47,607,535 11,589,733 59,197,268 40,272,232 11,164,836 51,437, Warranty Real Estates 161,829,386 81,925, ,754, ,183,032 74,639, ,822, Other pledged items 10,180,023 18,773,593 28,953,616 9,627,608 18,596,013 28,223, Pledged items-depository VI. ACCEPTED BILL GUARANTEES AND SURETIES TOTAL OFF-BALANCE SHEET ITEMS (A+B) 357,332, ,058, ,391, ,767, ,264, ,031,612 5

12 UNCONSOLIDATED STATEMENT OF INCOME THOUSAND TL CURRENT PERIOD PRIOR PERIOD CURRENT PERIOD PRIOR PERIOD INCOME STATEMENT Footnotes (01/01-30/06/2016) (01/01-30/06/2015) (01/04-30/06/2016) (01/04-30/06/2015) I. INTEREST INCOME V-IV-a 10,612,785 9,036,780 5,346,311 4,643, Interest Income on Loans 8,610,441 7,356,296 4,343,970 3,787, Interest Income on Reserve Deposits 86,053 19,599 44,365 11, Interest Income on Banks 14,246 8,448 8,732 3, Interest Income on Money Market Placements Interest Income on Marketable Securities Portfolio 1,891,363 1,646, , , Financial Assets Held for Trading 11,910 15,616 5,277 7, Financial Assets at Fair Value Through Profit and Loss Financial Assets Available for Sale 1,711,284 1,594, , , Held to Maturity Investments 168,169 35,793 85,377 10, Finance Lease Income Other Interest Income 10,646 6,176 2,544 1,534 II. INTEREST EXPENSE V-IV-b 5,627,224 4,940,566 2,844,074 2,497, Interest on Deposits 3,685,899 3,111,282 1,936,409 1,610, Interest on Funds Borrowed 406, , , , Interest on Money Market Funds 819, , , , Interest on Securities Issued 700, , , , Other Interest Expense 15,257 22,029 4,143 8,142 III. NET INTEREST INCOME / EXPENSE (I - II) 4,985,561 4,096,214 2,502,237 2,145,913 IV. NET FEES AND COMMISSIONS INCOME / EXPENSE 1,355,972 1,143, , , Fees and Commissions Received 1,593,528 1,333, , , Non-cash Loans 213, , , , Other 1,380,315 1,151, , , Fees and Commissions Paid 237, , , , Non-cash Loans Other 237, , , ,241 V. DIVIDEND INCOME 682, , , ,064 VI. TRADING INCOME / LOSS (NET) V-IV-c (699,468) (155,805) (201,894) (177,579) 6.1 Gains/Losses on Securities Trading 149, ,199 83, , Derivative Financial Transactions Gains/Losses (1,069,693) (447,409) (296,607) (232,967) 6.3 Foreign Exchange Gains/Losses 220,318 3,405 11,136 (133,241) VII. OTHER OPERATING INCOME V-IV-d 812, , , ,824 VIII. TOTAL OPERATING INCOME / EXPENSE (III+IV+V+VI+VII) 7,137,070 6,242,000 3,895,934 3,140,568 IX. PROVISION FOR LOSSES ON LOANS AND OTHER RECEIVABLES (-) V-IV-e 1,367,686 1,153, , ,663 X. OTHER OPERATING EXPENSES (-) V-IV-f 3,088,089 2,895,298 1,594,345 1,546,286 XI. NET OPERATING INCOME (VIII-IX-X) 2,681,295 2,192,943 1,569,006 1,072,619 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) 2,681,295 2,192,943 1,569,006 1,072,619 XVI. TAX PROVISION FOR CONTINUING OPERATIONS (±) V-IV-g 393, , , , Current Tax Provision 723, , ,283 31, Deferred Tax Provision (329,342) 266,638 (103,689) 132,892 XVII. NET PERIOD PROFIT/LOSS FROM CONTUNUING OPERATIONS (XV±XVI) 2,287,418 1,820,001 1,318, ,850 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 (±) 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 2,287,418 1,820,001 1,318, ,850 Earnings per Share (in full TL)

13 UNCONSOLIDATED STATEMENT OF INCOME AND EXPENSE ITEMS UNDER SHAREHOLDERS EQUITY THOUSAND TL INCOME AND EXPENSE ITEMS UNDER SHAREHOLDERS EQUITY CURRENT PERIOD PRIOR PERIOD (01/01-30/06/2016) (01/01-30/06/2015) I. ADDITIONS TO MARKETABLE SECURITIES VALUE INCREASE FUND FROM FINANCIAL ASSETS AVAILABLE FOR SALE 1,196,085 (1,801,381) II. REVALUATION SURPLUS ON TANGIBLE ASSETS (36,131) - III. REVALUATION SURPLUS ON INTANGIBLE ASSETS - - IV. TRANSLATION ADJUSTMENT FOR FOREIGN CURRENCY TRANSACTIONS (2,969) 242 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 63,796 (86,472) IX. DEFERRED TAX EFFECT OF REVALUATION AND VALUE INCREASES (186,011) 296,831 X. NET INCOME/EXPENSE DIRECTLY RECOGNISED UNDER SHAREHOLDERS EQUITY (I+II+ +IX) 1,034,770 (1,590,780) XI. PROFIT/LOSS FOR THE PERIOD 2,287,418 1,820, Net Changes in the Fair Values of Marketable Securities (Transfer to Profit/Loss) 205,964 (169,678) 1.2 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 2,081,454 1,989,679 XII. TOTAL PROFIT/LOSS RECOGNISED FOR THE PERIOD (X±XI) 3,322, ,221 7

14 UNCONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY THOUSAND TL CHANGES IN SHAREHOLDERS EQUITY Footnotes 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 (30/06/2015) I. Beginning Balance 4,500,000 1,615,938 3,694-2,246,666-12,584,659 (1,500) - 3,382,442 4,952,476-26, ,311,067 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) 4,500,000 1,615,938 3,694-2,246,666-12,584,659 (1,500) - 3,382,442 4,952,476-26, ,311,067 Changes During the Period IV. Increase/Decrease Due to Mergers V. Marketable Securities Value Increase Fund (1,591,022) (1,591,022) VI. Hedge Reserves (Effective Portion) Cash Flow Hedges Net Foreign Investment Hedges VII. Revaluation Surplus on Tangible Assets VIII. Revaluation Surplus on Intangible Assets IX. Bonus Shares from Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) X. Translation Differences 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 ,820, ,820,001 XX. Profit Distribution ,052-2,433, (3,382,442) (712,011) 20.1 Dividend Paid (841,011) (841,011) 20.2 Transfer to Reserves ,052-2,304, (2,541,431) Other (*) , ,000 Ending Balance (III+IV+V...+XVIII+XIX+XX) 4,500,000 1,615,938 3,694-2,483,718-15,018,038 (1,258) 1,820,001-3,361,454-26, ,828,277 CURRENT PERIOD (30/06/2016 ) I. Beginning Balance 4,500,000 1,615,938 3,694-2,483,718-15,018,038 (22,515) - 3,092,238 3,038,097 2,279,090 26, ,034,990 Changes During the Period II. Increase/Decrease Due to Mergers III. Marketable Securities Value Increase Fund ,072, ,072,064 IV. Hedge Reserves (Effective Portion) Cash Flow Hedges Net Foreign Investment Hedges V. Revaluation Surplus on Tangible Assets (34,325) (34,325) VI. Revaluation Surplus on Intangible Assets VII. Bonus Shares from Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) VIII. Translation Differences (2,969) (2,969) 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 , ,992 XVII. Net Profit / Loss for the Period ,287, ,287,418 XVIII. Profit Distribution ,359-2,039, (3,092,238) (822,132) 18.1 Dividend Paid (936,132) (936,132) 18.2 Transfer to Reserves ,359-1,925, (2,156,106) Other (*) , ,000 Ending Balance (I+II+III...+XVI+XVII+XVIII) 4,500,000 1,615,938 3,694-2,714,077-17,057,785 (25,484) 2,287,418 32,992 4,110,161 2,244,765 26, ,568,038 (*) 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. 8

15 UNCONSOLIDATED STATEMENT OF CASH FLOWS Footnotes THOUSAND TL CURRENT PERIOD PRIOR PERIOD (01/01-30/06/2016) (01/01-30/06/2015) A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating Profit Before Changes in Operating Assets and Liabilities 3,447,812 4,815, Interest Received 10,480,796 9,111, Interest Paid (5,412,070) (4,873,198) Dividend Received 363, , Fees and Commissions Received 1,593,528 1,333, Other Income 482, , Collections from Previously Written Off Loans and Other Receivables 546, , Cash Payments to Personnel and Service Suppliers (2,342,623) (2,133,515) Taxes Paid (716,290) (579,464) Other (1,548,426) 885, Changes in Operating Assets and Liabilities 3,122,169 (1,434,505) Net (Increase) Decrease in Financial Assets Held for Trading (126,259) (157,675) Net (Increase) Decrease in Financial Assets at Fair Value through Profit or Loss Net (Increase) Decrease in Due From Banks 946,601 (6,898,517) Net (Increase) Decrease in Loans (7,456,327) (13,357,928) Net (Increase) Decrease in Other Assets (1,088,977) (833,695) Net Increase (Decrease) in Bank Deposits (703,273) 362, Net Increase (Decrease) in Other Deposits 10,749,964 12,429, Net Increase (Decrease) in Funds Borrowed (104,471) 4,081, Net Increase (Decrease) in Matured Payables Net Increase (Decrease) in Other Liabilities 904,911 2,940,270 I. Net Cash Provided From Banking Operations 6,569,981 3,381,369 B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net Cash Provided from / Used in Investing Activities (2,394,925) (3,734,956) 2.1 Cash Paid for Purchase of Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) - (103,450) 2.2 Cash Obtained from Sale of Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) 20, Tangible Asset Purchases (80,727) (98,470) 2.4 Tangible Asset Sales 59,841 58, Cash Paid for Purchase of Financial Assets Available for Sale (8,112,642) (11,348,210) 2.6 Cash Obtained from Sales of Financial Assets Available for Sale 5,983,021 6,838, Cash Paid for Purchase of Investment Securities Held to Maturity (504,526) (110,760) 2.8 Cash Obtained from Sales of Investment Securities Held to Maturity (*) 346,177 1,179, Other (106,522) (150,179) C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net Cash Provided from / Used in Financing Activities (1,573,852) 218, Cash Obtained from Funds Borrowed and Securities Issued 9,277,901 8,641, Cash Used for Repayment of Funds Borrowed and Securities Issued (9,915,621) (7,582,295) 3.3 Equity Instruments Dividends Paid (936,132) (841,011) 3.5 Payments for Finance Leases Other - - IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents (118,562) (38,213) V. Net Increase / (Decrease) in Cash and Cash Equivalents 2,482,642 (173,289) VI. Cash and Cash Equivalents at Beginning of the Period 8,936,321 9,321,787 VII. Cash and Cash Equivalents at End of the Period 11,418,963 9,148,498 (*) Redeemed invesment securities are included. 9

16 SECTION THREE: EXPLANATIONS ON ACCOUNTING POLICIES I. Basis of Presentation The unconsolidated financial statements, related notes and explanations in this report are prepared in accordance with the Regulation on Accounting Applications for Banks and Safeguarding of Documents 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, (together referred as BRSA Accounting and Reporting Legislation ) and requirements of Turkish Accounting Standards published the Public Oversight Accounting and Auditing Standards Authority for the matters not regulated by the aforementioned legislations. Accounting policies applied and valuation methods used in the preparation of the financial statements are expressed in detail below. Additional paragraph for convenience translation to English The differences between accounting principles, as described in the preceding paragraphs, and the accounting principles generally accepted in countries, in which the accompanying interim financial statements are to be distributed, and International Financial Reporting Standards ( IFRS ), may have significant influence on the accompanying interim financial statements. Accordingly, the accompanying interim financial statements are not intended to present the financial position and results of operations in accordance with the accounting principles generally accepted in such countries and IFRS. II. Strategy for Use of Financial Instruments and Foreign Currency Transactions 1. The Bank s Strategy on Financial Instruments The Bank s main activities comprise private, retail, commercial and corporate banking, money market and securities market operations, as well as activities related to international banking services. In conformity with the general liability structure of the banking system, the Bank s liabilities are mainly composed of short-term deposits and other medium and long-term liabilities. The liquidity risk that may arise from this liability structure can be easily controlled through deposit continuity, as well as widespread network of the correspondent banks, market maker status (The Bank is one of the market maker banks) and by the use of liquidity facilities of the Central Bank of Republic of Turkey ( CBRT ). As a result, the liquidity of the Bank and the banking system can be easily monitored. On the other hand, foreign currency liquidity requirements are met by the money market operations and currency swaps. Most of the funds collected bear fixed-interest, and by monitoring the sectoral developments and the yields of alternative investment instruments, fixed and floating rate placements are made. Safety principle has always been the top priority in placements and the placements are focused on high yielding and low risk assets by considering their maturity structure. Accordingly, a pricing policy aiming at high return is implemented in the long-term placements and attention is paid to the maximum use of non-interest income generation opportunities. The Bank determines its lending strategy by taking into consideration the international and national economic data and expectations, market conditions, current and potential credit customers expectations and tendencies, and risks such as; interest rate, liquidity, currency and credit risks. Furthermore, in conformity with this strategy, the Bank acts within the legal limits in terms of asset-liability management. The primary objectives related to balance sheet components are set by the long-term plans shaped along with budgeting; and the Bank takes the required positions against the short-term currency, interest rates and price fluctuations in accordance with these plans and the course of the market conditions. Foreign currency, interest rate and price fluctuations in the markets are monitored instantaneously. While taking positions, in addition to the legal limits, the Bank s own transaction and control limits are also effectively monitored in order to avoid limit overrides. The Bank s asset-liability management is executed by the Asset-Liability Management Committee, within the risk limits determined by the Board of Directors, in order to keep the liquidity risk, interest rate risk, currency risk and credit risk within certain limits depending on the equity adequacy and to maximize profitability. 10

17 2. Foreign Currency Transactions In the statutory records of the Bank, transactions recognized in foreign currencies (currencies except for Turkish Lira) are converted into Turkish Lira by using the prevailing exchange rates at the transaction dates. Foreign currency monetary assets and liabilities on the balance sheet are converted into Turkish Lira by using the prevailing exchange rates at the balance sheet date. Non-monetary items in foreign currencies carried at fair value are converted into Turkish Lira by the rates at the date of which the fair value is determined. Exchange rate differences arising from the conversions of monetary foreign currency items and the collections of and payments in foreign currency transactions are reflected to the income statement. In accordance with TAS 21-Effects of Changes In Foreign Exchange Rates, net investments in non-domestic companies are considered as non-monetary items, measured on the basis of historical cost and converted into Turkish Currency at the currency rates at the transaction date, and also in accordance with TAS 29-Financial Reporting In Hyperinflationary Economics, the inflation adjusted value is calculated by using the inflation indices prevailing between the date of transaction and final date that the inflation adjustment is applied, 31 December 2004, and it is accounted by allocating provision amounts for any permanent impairment losses. The financial statements of the foreign branches of the Bank are prepared in the currency of the primary economic environment in which the entity operates (functional currency). The financial statements of foreign branches are expressed in TL which is the functional currency of the Bank and the presentation currency of the financial statements. Assets and liabilities of the foreign branches of the Bank are converted into TL by using the prevailing exchange rates at the balance sheet date. Income and expenses are converted by at exchange rates at the dates of the transactions. The exchange rate differences arising from the conversion are recorded in the Other Profit Reserves account under the shareholders equity. III. Associates and Subsidiaries Investments in associates and subsidiaries are recognized within the scope of TAS 27-Separate Financial Statements and TAS 28-Investments in Associates and Joint Ventures. Investments in subsidiaries, whose shares are traded in an active market (stock market), are shown in the financial statements with their fair values by taking into account their prices recorded in the related market (stock market). Investments in subsidiaries and associates, whose shares are not traded in an active market (stock market), are followed at their cost of acquisition and these assets are shown in the financial statements with their cost values after the deduction of, if any, impairment losses. IV. Forward and Option Contracts and Derivatives Instruments Derivative transactions of the Bank consist of foreign currency and interest rate swaps, forwards, foreign currency options and interest rate options. The Bank has no derivative instruments decomposed from the main contract. Derivative transactions are carried at their fair values at the contract dates and the receivables and payables arising from these transactions are followed under off-balance sheet accounts. Derivative transactions are measured at their fair values in the reporting periods following their recording and the valuation differences are shown under the accounts, Derivative Financial Assets Held for Trading and Derivative Financial Liabilities Held for Trading, depending on the difference being positive or negative. Although some derivative transactions are qualified as economical hedging items, they do not meet all the definition requirements of hedge accounting items. Therefore, under the Turkish Accounting Standard No: 39 Financial Instruments: Recognition and Measurement (TAS 39), these derivative instruments are recognized as held for trading. The valuation differences arising from the valuation of derivative transactions are associated with the income statement. On off-balance sheet items table, options which generated assets for the Bank are presented under call options line and which generated liabilities are presented under put options line. V. Interest Income and Expenses Interest income and expenses are recognized on an accrual basis using the effective interest method (the rate that equals the future cash flows of a financial asset or liability to its present net book value) in conformity with TAS 39 Financial Instruments: Recognition and Measurement. In accordance with the related legislation, realized and unrealized interest accruals of the non-performing loans are reversed and interest income related to these loans are recorded as an interest income only when they are collected. 11