TÜRK EKONOMİ BANKASI A.Ş.

Transcription

1 CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED INTERIM FINANCIAL STATEMENTS AND REVIEW REPORT ORIGINALLY ISSUED IN TURKISH, SEE NOTE I. OF SECTION THREE PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS AND RELATED DISCLOSURES AS OF AND FOR THE NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016

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5 INDEX SECTION ONE General Information Page Number I. History of the Bank, Including Its Incorporation Date, Initial Legal Status and Amendments to Legal Status, If Any 1 II. Explanation on the Bank s Capital Structure, Shareholders of the Bank Who are in Charge of the Management and/or Auditing of the Bank Directly or Indirectly, Changes in These Matters (if any) 1 III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the Bank They Possess 2 IV. Information on the Bank s Qualified Shareholders 3 V. Summary on the Bank s Functions and Lines of Activity 3 VI. Differences between the Communiqué on Preparation of Consolidated Financial Statements of Banks and Turkish Accounting Standards and Short Explanation about the Entities Subject to Full Consolidation or Proportional Consolidation and Entities which are Deducted from Equity or Entities which are not Included in these Three Methods 3 VII. Current or Likely, Actual or Legal Barriers to Immediate Transfer of Equity or Repayment of Debts between Bank and its Subsidiaries 3 SECTION TWO Unconsolidated Financial Statements I. Balance Sheet 5 II. Statement of Off-Balance Sheet Items 7 III. Statement of Income 8 IV. Income and Expense Items under Shareholders Equity 9 V. Statement of Changes in Shareholders Equity 10 VI. Statement of Cash Flows 12 SECTION THREE Accounting Principles I. Basis of Presentation 13 II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions 13 III. Explanations on Investments in Associates, Subsidiaries and Joint Ventures 14 IV. Explanations on Forward and Option Contracts and Derivative Instruments 14 V. Explanations on Interest Income and Expenses 15 VI. Explanations on Fees and Commission Income and Expenses 15 VII. Explanations on Financial Assets 15 VIII. Explanations on Impairment of Financial Assets 17 IX. Explanations on Offsetting of Financial Assets and Liabilities 17 X. Explanations on Sales and Repurchase Agreements and Lending of Securities 17 XI. Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to Those Assets 18 XII. Explanations on Goodwill and Other Intangible Assets 18 XIII. Explanations on Tangible Fixed Assets 19 XIV. Explanations on Leasing Transactions 20 XV. Explanations on Provisions and Contingent Liabilities 20 XVI. Explanations on Liabilities Regarding Employee Benefits 20 XVII. Explanations on Taxation 22 XVIII. Additional Explanations on Borrowings 23 XIX. Explanations on Issued Equity Securities 23 XX. Explanations on Avalized Drafts and Acceptances 23 XXI. Explanations on Government Incentives 23 XXII. Explanations on Reporting According to Segmentation 23 XXIII. Explanations on Other Matters 24 XXIV Reclassifications 24 SECTION FOUR Information on Financial Structure and Risk Management I. Explanations Related to Components of Shareholders Equity 25 II. Explanations Related to Currency Risk 31 III. Explanations Related to Interest Rate Risk 33 IV. Explanations Related to Equity Share Position Risk in Banking Accounts 35 V. Explanations Related to Liquidity Risk Management and Liquidity Coverage Ratio 36 VI. Explanations Related to Leverage Ratio 41 VII. Explanations Related to Risk Management 42 SECTION FIVE Explanations and Disclosures on Unconsolidated Financial Statements I. Explanations and Disclosures Related to the Assets 43 II. Explanations and Disclosures Related to the Liabilities 55 III. Explanations and Disclosures Related to the Off-Balance Sheet Items 60 IV. Explanations and Disclosures Related to the Statement of Income 61 V. Explanations and Disclosures Related to Risk Group of the Bank 66 VI. Explanations and Disclosures Related to Subsequent Events 67 SECTION SIX Independent Auditor s Review Report I. Explanations on the Independent Auditor s Review Report 67 II. Other Footnotes and Explanations Prepared by the Independent Auditors 67 SECTION SEVEN Information on Interim Activity Report I. Interim Period Reports Included Chairman of the Board of Directors and CEO s Assessments for the Interim Activities 68

6 IN TURKISH, SEE NOTE I. OF SECTION THREE SECTION ONE GENERAL INFORMATION I. History of the Bank, Including its Incorporation Date, Initial Legal Status and Amendments to Legal Status, if any Türk Ekonomi Bankası Anonim Şirketi ( TEB or Bank ), which had been a local bank incorporated in Kocaeli in 1927 under the name of Kocaeli Halk Bankası T.A.Ş., was acquired by the Çolakoğlu Group in Its title was changed as Türk Ekonomi Bankası A.Ş. and its headquarters moved to İstanbul. On 10 February 2005, BNP Paribas took over 50% of shares of TEB Holding A.Ş. Consequently, BNP Paribas became indirect shareholder of TEB with % ownership. In 2009 BNP Paribas Group successively acquired 75% of Fortis Bank Belgium and 66% of Fortis Bank Luxembourg and became the shareholder holding the majority of the shares of Fortis Bank Turkey. The indirect majority shareholders of TEB which are BNP Paribas and Çolakoğlu Group has agreed on the merger of TEB and Fortis Bank under the trademark of TEB and following the authorizations obtained from the regulatory authorities on 14 February 2011 the legal merge of two banks has been performed. The process regarding the procedure has been summarized below. As a result of the merger of TEB Holding, TEB has a majority stake of 55% and on the other hand Çolakoğlu Group and BNP Paribas have the share of 50%. II. Explanation on the Bank s Capital Structure, Shareholders of the Bank who are in Charge of the Management and/or Auditing of the Bank Directly or Indirectly, Changes in These Matters (if any), and the Group the Banks Belongs to As of 30 September 2016 and 31 December 2015 the shareholders structure and their respective ownerships are summarized as follows: 30 September December 2015 Paid in Paid in Name of shareholders Capital % Capital % TEB Holding A.Ş. 1,212, ,212, BNPP Yatırımlar Holding A.Ş. 518, , BNP Paribas Fortis Yatırımlar Holding A.Ş. 467, , BNP Paribas SA 5, , Kocaeli Chamber of Commerce ,204, ,204, As of 30 September 2016, Bank s paid-in-capital consists of 2,204,390,000 shares of TL1 (full TL) nominal each. 1

7 IN TURKISH, SEE NOTE I. OF SECTION THREE III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the Bank They Possess Name Title Education Board of Directors; Yavuz Canevi Chairman of the Board of Directors Master Dr.Akın Akbaygil Deputy Chairman of the Board of Directors and Vice Chairman of the PhD Audit Committee Jean Paul Sabet Deputy Chairman of the Board of Directors University Xavier Henri Jean Guilmineau Member of the Board of Directors Master Ayşe Aşardağ Member of the Board of Directors University Ümit Leblebici General Manager and the Executive Director Master Sabri Davaz Member of the Board of Directors and Audit Committee Master Alain Georges Auguste Fonteneau Member of the Board of Directors Master Yvan L.A.M De Cock Member of the Board of Directors and Audit Committee University Musa Erden Member of the Board of Directors University Jacques Roger Jean Marie Rinino Member of the Board of Directors and Chairman of the Audit Committee University Pascal Jean Fischer Member of the Board of Directors University Assistant General Managers; Turgut Boz Senior Assistant General Manager Responsible from SME Banking Group University and Deputy Chairman of General Manager Gökhan Mendi Senior Assistant General Manager Responsible from Retail and Private Master Banking Group Dr.Nilsen Altıntaş Assistant General Manager Responsible from Human Resources Group PhD Melis Coşan Baban Chief Legal Advisor and Secretary of the Board of Directors Master Mehmet Ali Cer Assistant General Manager Responsible from Information Technologies Master Mustafa Aşkın Dolaştır Assistant General Manager Responsible from Financial Affairs Group Master Osman Durmuş Assistant General Manager Responsible from Retail and Small Business University Credit Group Kubilay Güler Assistant General Manager Responsible from Banking Operations & University Support Services Akil Özçay Assistant General Manager Responsible from Fixed Income Master Gökhan Özdil Assistant General Manager Responsible from Corporate Loans University Nuri Tuncalı Assistant General Manager Responsible from SME Loans University Ömer Abidin Yenidoğan Assistant General Manager Responsible from Corporate Investment Master Banking Group Dr.Tuğrul Özbakan Assistant General Manager Responsible from Asset Liability Management PhD and Treasury Group Gülümser Özgün Henden Assistant General Manager Responsible from Corporate Banking Group University Group Heads (*); Pascal Alfred J. Gilliard Birol Deper Chief Risk Officer Head of Compliance Group and Internal Control Group, Consumer Relations Coordination Officer University Master Inspection Committee (*); Hakan Tıraşın Internal Audit Group University (*) Group Heads and Chairman of the Inspection Committee are in Assistant General Manager status. There are no bank shares owned by the above stated Chairman and Members of Board of Directors, General Manager and Assistants. 2

8 IV. Information on the Bank s Qualified Shareholders Name / Commercial Name Share Amount Share Ratio Paid-up Shares Unpaid Shares TEB Holding A.Ş. 1,212, % 1,212,415 - BNPP Yatırımlar Holding A.Ş. 518, % 518,342 - BNP Paribas Fortis Yatırımlar Holding A.Ş. 467, % 467,879 - TEB Holding A.Ş. is a member of both Çolakoğlu and BNP Paribas groups. 50% of the shares of TEB Holding A.Ş. are controlled by BNP Paribas, Fortis Yatırımlar Holding A.Ş., while the remaining 50% is controlled by Çolakoğlu Group. BNP Paribas Fortis Yatırımlar Holding A.Ş. is controlled by Fortis Bank SA/NV whose shareholders are BNP Paribas Fortis NV/SA by 100% shares, respectively. 100% of the shares of BNPP Yatırımlar Holding are controlled by BNP Paribas SA. V. Summary on the Bank s Functions and Lines of Activity The Bank s operating areas include, corporate, retail and private banking as well as project finance, fund management and custody operations. Besides the ordinary banking operations, the Bank is handling agency functions through its branches on behalf of TEB Yatırım Menkul Değerler A.Ş., TEB Portföy Yönetimi A.Ş., Zurich Sigorta A.Ş. and Cardif Hayat Sigorta A.Ş. As of 30 September 2016, the Bank has 535 local branches and 4 foreign branches (31 December 2015: 528 local branches, 4 foreign branches). VI. Differences between the communiqué on preparation of consolidated financial statements of Banks and Turkish Accounting Standards and short explanation about the entities subject to full consolidation or proportional consolidation and entities which are deducted from equity or entities which are not included in these three methods: There is no difference for the Bank between the consolidation process according to the Turkish Accounting Standards and the Communiqué of the Preparation of Consolidated Financial Statements of Banks in Turkey. The Bank owns 0.1% but the Group owns 33.3% share of Bantaş Nakit ve Kıymetli Mal Taşıma ve Güvenlik Hizmetleri A.Ş, it is presented as joint venture in financial statements however, it is carried by cost value since necessary requirements for consolidation is not met. VII. Current or Likely, Actual or Legal Barriers to Immediate Transfer of Equity or Repayment of Debts Between Bank and Its Subsidiaries: None. 3

9 SECTION TWO UNCONSOLIDATED FINANCIAL STATEMENTS I. Balance Sheet II. Statement of Off-Balance Sheet Items III. Statement of Income IV. Income and Expense Items Under Shareholders Equity V. Statement of Changes in Shareholders Equity VI. Statement of Cash Flows

10 UNCONSOLIDATED INTERIM BALANCE SHEET AT 30 SEPTEMBER 2016 I. BALANCE SHEET - ASSETS (STATEMENT OF FINANCIAL POSITION) Reviewed Audited Section 5 Note Ref. TL FC Total TL FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK (I-1) 1,327,746 11,168,995 12,496,741 1,202,306 8,713,621 9,915,927 II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net) (I-2) 626, , , , , , Financial Assets Held for Trading 626, , , , , , Government Debt Securities 318,819 25, , ,821 11, , Equity Securities Derivative Financial Assets Held for Trading (I-3) 307, , , ,491 89, , Other Marketable Securities Financial Assets at Fair Value Through Profit and Loss Government Debt Securities Equity Securities Loans Other Marketable Securities III. BANKS (I-4) 241,390 1,237,550 1,478, , ,759 1,321,389 IV. MONEY MARKET PLACEMENTS 800, , Interbank Money Market Placements Istanbul Stock Exchange Money Market Placements Receivables from Reverse Repurchase Agreements 800, , V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (I-5) 3,662,064 44,691 3,706,755 4,029,678 98,873 4,128, Equity Securities 20,956 18,893 39,849 21,384 75,150 96, Government Debt Securities 3,641,108 25,798 3,666,906 4,008,294 23,723 4,032, Other Marketable Securities VI. LOANS AND RECEIVABLES (I-6) 44,325,971 11,123,296 55,449,267 43,513,186 9,699,647 53,212, Loans and Receivables 43,627,953 11,123,296 54,751,249 43,110,006 9,699,647 52,809, Loans to Risk Group of the Bank 20,128-20,128 10, , Government Debt Securities Other 43,607,825 11,123,296 54,731,121 43,099,529 9,699,645 52,799, Loans under Follow-up 1,674,075-1,674,075 1,232,527-1,232, Specific Provisions (-) 976, , , ,347 VII. FACTORING RECEIVABLES VIII. HELD TO MATURITY INVESTMENTS (Net) (I-7) 358, , , , Government Debt Securities 358, , , , Other Marketable Securities IX. INVESTMENTS IN ASSOCIATES (Net) (I-8) Accounted with Equity Method Unconsolidated Associates Financial Investments Non-Financial Investments X. INVESTMENTS IN SUBSIDIARIES (Net) (I-9) 115, , , , Unconsolidated Financial Subsidiaries 115, , , , Unconsolidated Non-Financial Subsidiaries XI. JOINT VENTURES (Net) (I-10) Accounted with Equity Method Unconsolidated Joint Ventures Financial Joint Ventures Non-Financial Joint Ventures XII. FINANCIAL LEASE RECEIVABLES (I-11) Financial Lease Receivables Operating Lease Receivables Others Unearned Income (-) XIII. DERIVATIVE FINANCIAL ASSETS FOR HEDGING PURPOSES (I-12) 39,664-39,664 58,309-58, Fair Value Hedge Cash Flow Hedge 39,664-39,664 58,309-58, Foreign Net Investment Hedge XIV. TANGIBLE ASSETS (Net) 231, , , ,005 XV. INTANGIBLE ASSETS (Net) 488, , , , Goodwill 421, , , , Other 67,334-67,334 50,282-50,282 XVI. INVESTMENT PROPERTIES (Net) (I-13) XVII. TAX ASSET 126, ,741 81,214-81, Current Tax Asset 1,238-1,238 1,430-1, Deferred Tax Asset 125, ,503 79,784-79,784 XVIII. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) (I-14) 89,624-89,624 71,874-71, Held for Sale Purpose 89,624-89,624 71,874-71, Related to Discontinued Operations XIX. OTHER ASSETS 1,237, ,982 1,644, , ,992 1,260,429 TOTAL ASSETS 53,671,727 24,123,627 77,795,354 52,371,765 19,588,577 71,960,342 The accompanying notes are an integral part of these unconsolidated financial statements. 5

11 UNCONSOLIDATED INTERIM BALANCE SHEET AT 30 SEPTEMBER 2016 I. BALANCE SHEET - LIABILITIES AND EQUITY (STATEMENT OF FINANCIAL POSITION) Reviewed Audited Section 5 Note Ref. TL FC Total TL FC Total I. DEPOSITS (II-1) 31,319,567 16,555,915 47,875,482 28,627,484 15,768,376 44,395, Deposits from Risk Group of the Bank 1,106,698 1,053,078 2,159, ,219 1,009,931 1,577, Other 30,212,869 15,502,837 45,715,706 28,060,265 14,758,445 42,818,710 II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING (II-2) 265,760 92, , ,161 53, ,447 III. FUNDS BORROWED (II-3) 142,703 11,819,406 11,962,109 1,243,066 10,351,671 11,594,737 IV. MONEY MARKET BALANCES 2,696,539-2,696,539 2,384,787-2,384, Interbank Money Market Payables Istanbul Stock Exchange Money Market Payables Funds Provided Under Repurchase Agreements 2,696,539-2,696,539 2,384,787-2,384,787 V. SECURITIES ISSUED (Net) (II-3) 534, , ,110 86, , Bills 534, , ,110 86, , Asset Backed Securities Bonds VI. FUNDS Borrower Funds Other VII. MISCELLANEOUS PAYABLES 1,102, ,240 1,395, , ,792 1,286,557 VIII. OTHER EXTERNAL FUNDINGS PAYABLE (II-4) 1,462,313 18,665 1,480,978 1,063,037 1,421 1,064,458 IX. FACTORING PAYABLES X. FINANCIAL LEASE PAYABLES (II-5) Financial Lease Payables Operating Lease Payables Other Deferred Financial Lease Expenses (-) XI. DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING PURPOSES (II-6) 358, , , , Fair Value Hedge Cash Flow Hedge 358, , , , Foreign Net Investment Hedge XII. PROVISIONS (II-7) 1,115, ,476 1,236,589 1,036, ,721 1,151, General Loan Loss Provisions 727, , , , Restructuring Provisions Reserve for Employee Benefits 205,505 7, , ,530 5, , Insurance Technical Provisions (Net) Other Provisions 182, , , , , ,983 XIII. TAX LIABILITY (II-8) 153, , , , Current Tax Liability 153, , , , Deferred Tax Liability XIV. LIABILITIES FOR PROPERTY AND EQUIPMENT HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) Held for Sale Purpose Related to Discontinued Operations XV. SUBORDINATED LOANS - 2,050,093 2,050,093-1,940,036 1,940,036 XVI. SHAREHOLDERS' EQUITY (II-9) 7,691,694 1,365 7,693,059 6,902,345 59,479 6,961, Paid-in Capital 2,204,390-2,204,390 2,204,390-2,204, Capital Reserves 945,517 1, , ,515 59, , Share Premium 2,565-2,565 2,565-2, Share Cancellation Profits Marketable Securities Valuation Differences (6,026) 1,365 (4,661) (60,958) 59,523 (1,435) Revaluation Surplus on Tangible Assets 311, ,160 97,024-97, Revaluation Surplus on Intangible Assets Revaluation Surplus on Investment Property Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures Hedging Funds (Effective Portion) (71,155) - (71,155) 80,987 (44) 80, Revaluation Surplus on Assets Held for Sale and Assets of Discontinued Operations Other Capital Reserves 708, , , , Profit Reserves 3,645,806-3,645,806 2,977,490-2,977, Legal Reserves 247, , , , Status Reserves Extraordinary Reserves 3,081,817-3,081,817 2,484,698-2,484, Other Profit Reserves 316, , , , Profit or Loss 895, , , , s Profit / (Loss) 9,497-9,497 9,497-9, Profit / (Loss) 886, , , , Minority Interest TOTAL LIABILITIES AND EQUITY 46,842,376 30,952,978 77,795,354 43,296,330 28,664,012 71,960,342 The accompanying notes are an integral part of these unconsolidated financial statements 6

12 UNCONSOLIDATED INTERIM STATEMENT OF OFF-BALANCE SHEET ITEMS AT 30 SEPTEMBER 2016 II. STATEMENT OF OFF-BALANCE SHEET ITEMS Reviewed Audited Section 5 Note Ref. TL FC TOTAL TL FC TOTAL A. OFF BALANCE SHEET COMMITMENTS AND CONTINGENCIES (I+II+III) 55,477,923 60,133, ,611,244 54,743,859 53,030, ,774,354 I. GUARANTEES (III-1) 7,128,105 8,850,974 15,979,079 6,275,583 8,223,238 14,498, Letters of Guarantee 5,835,661 5,114,490 10,950,151 4,805,952 5,061,178 9,867, Guarantees Subject to State Tender Law 178,720 79, , , , , Guarantees Given for Foreign Trade Operations 358, , , , ,643 1,131, Other Letters of Guarantee 5,298,234 4,704,981 10,003,215 4,361,113 4,116,335 8,477, Bank Acceptances - 19,910 19,910-48,830 48, Import Letter of Acceptance - 19,910 19,910-48,830 48, Other Bank Acceptances Letters of Credit 3,001 1,401,834 1,404,835 1,419 1,405,327 1,406, Documentary Letters of Credit 3, , ,757 1, , , Other Letters of Credit - 1,266,078 1,266,078-1,258,324 1,258, Prefinancing Given as Guarantee Endorsements Endorsements to the Central Bank of Turkey Other Endorsements Purchase Guarantees for Securities Issued Factoring Guarantees Other Guarantees 1,282,077 1,836,319 3,118,396 1,465,662 1,176,545 2,642, Other Collaterals 7, , ,787 2, , ,908 II. COMMITMENTS (III-1) 11,826,966 2,882,663 14,709,629 11,809,764 1,420,492 13,230, Irrevocable Commitments 11,826,966 2,882,663 14,709,629 11,809,764 1,420,492 13,230, Asset Purchase and Sale Commitments 657,134 1,989,475 2,646, ,976 1,219,279 1,567, Forward Deposit Purchase and Sale Commitments - 607, , Share Capital Commitment to Associates and Subsidiaries Loan Granting Commitments 4,016, ,126 4,224,741 4,306, ,306, Securities Issuance Brokerage Commitments Commitments for Reserve Deposit Requirements Commitments for Cheque Payments 2,284,544-2,284,544 2,260,921-2,260, Tax and Fund Liabilities from Export Commitments 16,122-16,122 26,185-26, Commitments for Credit Card Limits 4,701,451-4,701,451 4,580,727-4,580, Commitments for Credit Cards and Banking Services Promotions 5,486-5,486 4,538-4, Receivables from Short Sale Commitments on Securities Payables for Short Sale Commitments on Securities Other Irrevocable Commitments 145,614 77, , , , , Revocable Commitments Revocable Loan Granting Commitments Other Revocable Commitments III. DERIVATIVE FINANCIAL INSTRUMENTS 36,522,852 48,399,684 84,922,536 36,658,512 43,386,765 80,045, Derivative Financial Instruments for Hedging Purposes 14,059, ,955 14,882,998 12,880,140 1,378,498 14,258, Fair Value Hedge Cash Flow Hedge 14,059, ,955 14,882,998 12,880,140 1,378,498 14,258, Foreign Net Investment Hedges Held for Trading Transactions 22,463,809 47,575,729 70,039,538 23,778,372 42,008,267 65,786, Forward Foreign Currency Buy/Sell Transactions 4,561,896 7,528,730 12,090,626 3,696,905 6,047,077 9,743, Forward Foreign Currency Transactions-Buy 1,868,105 4,147,273 6,015,378 1,331,946 3,475,605 4,807, Forward Foreign Currency Transactions-Sell 2,693,791 3,381,457 6,075,248 2,364,959 2,571,472 4,936, Swap Transactions Related to Foreign Currency and Interest Rates 12,819,001 21,813,506 34,632,507 15,050,915 27,796,905 42,847, Foreign Currency Swap-Buy 4,961,023 10,128,176 15,089,199 5,268,363 13,806,210 19,074, Foreign Currency Swap-Sell 7,257,978 7,687,210 14,945,188 9,382,552 9,649,731 19,032, Interest Rate Swaps-buy 300,000 1,999,060 2,299, ,000 2,170,482 2,370, Interest Rate Swaps-Sell 300,000 1,999,060 2,299, ,000 2,170,482 2,370, Foreign Currency, Interest Rate and Securities Options 5,082,912 18,217,965 23,300,877 5,030,552 8,162,470 13,193, Foreign Currency Options-Buy 2,662,941 8,983,140 11,646,081 2,100,903 4,524,006 6,624, Foreign Currency Options-Sell 2,419,971 9,234,825 11,654,796 2,929,649 3,638,464 6,568, 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 - 15,528 15,528-1,815 1,815 B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 161,699,515 24,687, ,386, ,779,878 24,008, ,788,515 IV. ITEMS HELD IN CUSTODY 25,926,202 1,589,806 27,516,008 24,038,802 1,474,752 25,513, Assets Under Management Investment Securities Held In Custody 14,414, ,845 14,971,745 13,189, ,059 13,580, Cheques Received for Collection 9,245, ,971 9,940,955 10,084, ,100 10,914, Commercial Notes Received for Collection 333, , , , , , Other assets Received for Collection , , , , Assets Received for Public Offering Other Items under Custody 1,932,105-1,932, , , Custodians V. PLEDGED ITEMS 135,121,450 23,057, ,178, ,324,722 22,474, ,799, Marketable Securities 387,578 32, , ,925 50, , Guarantee Notes 54,957,955 15,209,531 70,167,486 55,503,999 16,140,886 71,644, Commodity 34, , , , , , Warranty Properties 71,735,070 4,266,293 76,001,363 61,762,008 4,088,626 65,850, Other Pledged Items 8,005,861 3,342,255 11,348,116 7,325,655 1,988,880 9,314, Pledged Items-Depository VI. ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES 651,863 40, , ,354 58, ,283 TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) 217,177,438 84,820, ,997, ,523,737 77,039, ,562,869 The accompanying notes are an integral part of these unconsolidated financial statements. 7

13 UNCONSOLIDATED INTERIM STATEMENT OF INCOME FOR THE PERIOD FROM 1 JANUARY TO 30 SEPTEMBER 2016 III. STATEMENT OF INCOME Reviewed Reviewed Reviewed Reviewed Section 5 Note Ref. I. INTEREST INCOME (IV-1) 5,398,680 4,522,966 1,817,872 1,592, Interest Income on Loans 4,971,770 4,153,589 1,676,964 1,487, Interest Income on Reserve Deposits 38,035 11,717 12,028 7, Interest Income on Banks 18,523 28,443 7,056 10, Interest Income on Money Market Placements 4,666 49,353 4,447 4, Interest Income on Securities Portfolio 362, , ,359 83, Held-For-Trading Financial Assets 35,963 16,690 13,025 3, Financial Assets at Fair Value Through Profit and Loss Available-for-sale Financial Assets 303, ,295 94,384 78, Held-to-maturity Investments 22,934 17,432 8,950 1, Financial Lease Income Other Interest Income 2,940 2,447 1, II. INTEREST EXPENSE (IV-2) 2,835,150 2,234, , , Interest Expense on Deposits 2,433,250 1,862, , , Interest Expense on Funds Borrowed 203, ,538 66,171 76, Interest Expense on Money Market Borrowings 144, ,177 46,670 37, Interest Expense on Securities Issued 21,464 38,874 13,394 9, Other Interest Expense 32,156 28,006 8,571 6,345 III. NET INTEREST INCOME (I - II) 2,563,530 2,288, , ,547 IV. NET FEES AND COMMISSIONS INCOME/EXPENSE 731, , , , Fees and Commissions Received 988,633 1,068, , , Non-cash Loans 106,616 92,681 37,393 32, Other (IV-9) 882, , , , Fees and Commissions Paid 256, ,669 85,968 82, Non-cash Loans 1,790 1, Other (IV-9) 254, ,094 85,362 82,001 V. DIVIDEND INCOME 20,697 20, VI. TRADING INCOME / (LOSS) (Net) (IV-3) (279,819) (440,374) (78,476) (148,755) 6.1 Securities Trading Gains / (Losses) 12, ,631 (8,204) 6.2 Gains / (Losses) on Derivative Financial Instruments (310,415) 1,248, , , Foreign Exchange Gains / (Losses) 17,893 (1,689,620) (183,306) (918,086) VII. OTHER OPERATING INCOME (IV-4) 305, ,347 51,140 36,383 VIII. TOTAL OPERATING INCOME/LOSS (III+IV+V+VI+VII) 3,341,869 2,856,956 1,110, ,551 IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) (IV-5) 524, , , ,783 X. OTHER OPERATING EXPENSES (-) (IV-6) 1,709,419 1,565, , ,609 XI. NET OPERATING INCOME/(LOSS) (VIII-IX-X) 1,107, , , ,159 XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER XIII. GAIN / (LOSS) FROM INVESTMENTS UNDER EQUITY ACCOUNTING XIV. GAIN / (LOSS) ON NET MONETARY POSITION XV. PROFIT / (LOSS) FROM CONTINUED OPERATIONS BEFORE TAX (XI+ +XIV) 1,107, , , ,159 XVI. TAX PROVISION FOR CONTINUED OPERATIONS (±) (IV-7) (221,059) (167,446) (68,243) (49,062) 16.1 Current Tax Provision (227,656) (75,041) (36,582) 37, Deferred Tax Provision 6,597 (92,405) (31,661) (86,711) XVII. NET PROFIT / (LOSS) FROM CONTINUED OPERATIONS (XV±XVI) 886, , , ,097 XVIII. INCOME ON DISCONTINUED OPERATIONS Income on Assets Held for Sale Income on sale of associates, subsidiaries and joint ventures Income on other discontinued operations XIX. LOSS FROM DISCONTINUED OPERATIONS (-) Loss from assets held for sale Loss on Sale of Associates, Subsidiaries and Joint Ventures Loss from Other Discontinued Operations XX. PROFIT / (LOSS) ON DISCONTINUED OPERATIONS BEFORE TAX (XVIII-XIX) XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) (IV-7) Current Tax Provision Deferred Tax Provision XXII. NET PROFIT / (LOSS) FROM DISCONTINUED OPERATIONS (XX+XXI) XXIII. NET PROFIT / (LOSS) (XVII+XXII) (IV-8) 886, , , , Group s Profit / (Loss) 886, , , , Minority Interest Profit / (Loss) Earnings per Share The accompanying notes are an integral part of these unconsolidated financial statements. 8

14 UNCONSOLIDATED INTERIM STATEMENT OF INCOME AND EXPENSE ITEMS UNDER SHAREHOLDERS EQUITY IV. INCOME AND EXPENSE ITEMS UNDER SHAREHOLDERS EQUITY Reviewed Reviewed I. ADDITIONS TO MARKETABLE SECURITIES VALUATION DIFFERENCES FROM AVAILABLE SALE FINANCIAL ASSETS (4,322) (85,479) II. REVALUATION SURPLUS ON TANGIBLE ASSETS - - III. REVALUATION SURPLUS ON INTANGIBLE ASSETS - - IV. TRANSLATION DIFFERENCES FOR TRANSACTIONS IN FOREIGN CURRENCIES - - V. PROFIT / (LOSS) FROM DERIVATIVE FINANCIAL INSTRUMENTS FOR CASH FLOW HEDGE PURPOSES (EFFECTIVE PORTION OF FAIR VALUE CHANGES) (190,123) 225,894 VI. PROFIT/ (LOSS) FROM DERIVATIVE FINANCIAL INSTRUMENTS FOR FOREIGN NET INVESTMENT HEDGE OPERATIONS (EFFECTIVE PORTION OF FAIR VALUE CHANGES) - - VII. THE EFFECT OF CHANGES IN ACCOUNTING POLICIES AND CORRECTIONS - - VIII. OTHER PROFIT LOSS ITEMS ACCOUNTED UNDER SHAREHOLDERS EQUITY AS PER TAS IX. DEFERRED TAX OF VALUATION DIFFERENCES 39,121 (28,084) X. TOTAL NET PROFIT/LOSS ACCOUNTED UNDER SHAREHOLDERS EQUITY (I+II+ +IX) (155,249) 112,579 XI. PROFIT / (LOSS) 886, , Net Change in Fair Value of Marketable Securities (Transfer to Profit / (Loss)) 95,425 22, Reclassification and Transfer of Derivatives Accounted for Cash Flow Hedge Purposes to Income Statement (3,143) (2,575) 11.3 Transfer of Foreign Net Investment Hedge Operations to Income Statement Other 794, ,135 XII. TOTAL PROFIT / (LOSS) ACCOUNTED FOR THE PERIOD (X±XI) 731, ,779 The accompanying notes are an integral part of these unconsolidated financial statements. 9

15 UNCONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY FOR THE PERIOD FROM 1 JANUARY TO 30 SEPTEMBER 2015 V. STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Paid-in Capital Capital Reserves from Inflation Adj.s to Paid in Capital Share Premium Share Cancellation Profits Legal Reserves Statutory Reserves Extraordinary Reserves Other Reserves Current Period Net Profit/ (Loss) Prior Period Net Profit/ (Loss) Marketable Securities Valuation Differences Revaluation Surplus on Tangible and Intangible Assets Bonus Shares Obtained from Associates Hedging Funds Revaluation Surplus on Assets Held for Sale and Assets of Disc. Op. Total Equity Except from Minority Minority Interest Interest Reviewed I. Beginning Balance ,204, ,262 2, ,700-1,959, , ,057 (18,811) 91, (60,118) - 5,902,979-5,902,979 II. Corrections According to TAS The Effect of Corrections of Errors The Effect of Changes in Accounting Policy III. Adjusted Beginning Balance (I+II) 2,204, ,262 2, ,700-1,959, , ,057 (18,811) 91, (60,118) - 5,902,979-5,902,979 Changes in Period IV. Increase/Decrease Related to Merger V. Marketable Securities Valuation Differences (68,384) (68,384) - (68,384) VI. Hedging Funds (Effective Portion) , , , Cash-Flow Hedge , , , Foreign Net Investment Hedge VII. Revaluation Surplus on Tangible Assets VIII. Revaluation Surplus on Intangible Assets IX. Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures X. Foreign Exchange Differences XI. The Disposal of Assets XII. The Reclassification of Assets XIII. The Effect of Change in Associate s Equity XIV. Capital Increase Cash Internal Sources XV. Share Premium XVI. Share Cancellation Profits XVII. Inflation Adjustment to Paid-in Capital XVIII. Other XIX. Period net Profit/(Loss) , , ,200 XX. Profit Distribution , ,400 60,999 - (622,560) - 5, Dividends Distributed Transfers to Reserves , ,400 60,999 - (622,560) - 5, Other Closing Balance (III+IV+V+VI+VII+VIII+IX+X+XI+XII +XIII+XIV+XV+XVI+XVII+XVIII+XIX+XX) 2,204, ,262 2, ,828-2,484, , ,200 9,497 (87,195) 97, ,597-6,600,758-6,600,758 Total Equity The accompanying notes are an integral part of these unconsolidated financial statements. 10

16 UNCONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY V. STATEMENT OF CHANGES IN SHAREHOLDERS EQUITY Paid-in Capital Capital Reserves from Inflation Adj.s to Paid in Capital Share Premium Share Cancellation Profits Legal Reserves Statutory Reserves Extraordinary Reserves Other Reserves Current Period Net Profit/ (Loss) Prior Period Net Profit/ (Loss) Marketable Securities Valuation Differences Revaluation Surplus on Tangible and Intangible Assets Bonus Shares Obtained from Associates Hedging Funds Revaluation Surplus on Assets Held for Sale and Assets of Disc. Op. Total Equity Except from Minority Minority Interest Interest Reviewed I. Beginning Balance ,204, ,262 2, ,828-2,484, , ,950 (1,435) 97, ,943-6,961,824-6,961,824 Changes in Period II. Increase/Decrease Related to Merger III. Marketable Securities Valuation Differences (3,226) (3,226) - (3,226) IV. Hedging Funds (Effective Portion) (152,098) - (152,098) - (152,098) 4.1 Cash-Flow Hedge (152,098) - (152,098) - (152,098) 4.2 Foreign Net Investment Hedge V. Revaluation Surplus on Tangible Assets VI. Revaluation Surplus on Intangible Assets VII. Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures VIII. Foreign Exchange Differences IX. The Disposal of Assets X. The Reclassification of Assets XI. The Effect of Change in Associate s Equity XII. Capital Increase Cash Internal Sources XIII. Share Premium XIV. Share Cancellation Profits XV. Inflation Adjustment to Paid-in Capital XVI. Other XVII. Period Net Profit/(Loss) , , ,484 XVIII. Profit Distribution , ,119 27,075 - (882,453) - 214, Dividends Distributed Transfers to Reserves , ,119 27,075 - (882,453) - 214, Other Closing Balance (I+II+III+IV+V+VI+VII+VIII+IX+X+XI+ XII+XIII+XIV+XV+XVI+XVII+XVIII) 2,204, ,262 2, ,951-3,081, , ,484 9,497 (4,661) 311, (71,155) - 7,693,059-7,693,059 Total Equity The accompanying notes are an integral part of these unconsolidated financial statements. 11

17 UNCONSOLIDATED INTERIM STATEMENT OF CASH FLOWS VI. STATEMENT OF CASH FLOWS A. CASH FLOWS FROM BANKING OPERATIONS Reviewed Reviewed Operating profit before changes in operating assets and liabilities 1,750,865 1,041, Interest received 5,214,024 3,407, Interest paid (2,805,276) (1,697,455) Dividend received 20,697 19, Fees and commissions received 1,553,717 1,700, Other income 271,179 1,475, Collections from previously written off loans 387, , Payments to personnel and service suppliers (721,338) (658,684) Taxes paid (300,667) (195,482) Others (1,868,649) (3,382,919) 1.2 Changes in operating assets and liabilities (1,422,194) (361,270) Net increase in financial assets held for trading (138,834) (40,931) Net increase / decrease in financial assets at fair value through profit or loss Net decrease / (increase) in due from banks and other financial institutions 38,768 (4,983) Net increase in loans (2,419,731) (8,523,989) Net increase in other assets (2,767,732) (883,094) Net increase / (decrease) in bank deposits 539,910 (774,447) Net increase in other deposits 3,271,032 6,317, Net increase in funds borrowed 406,192 3,563, Net increase / decrease in matured payables Net decrease in other liabilities (351,799) (15,084) I. Net cash provided from banking operations 328, ,149 B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash provided from investing activities 435, , Cash paid for purchase of entities under common control, associates and subsidiaries (Joint Vent.) Cash obtained from sale of entities under common control, associates and subsidiaries (Joint Vent.) Fixed assets purchases (19,311) (21,584) 2.4 Fixed assets sales Cash paid for purchase of financial assets available for sale (1,613,357) (2,342,334) 2.6 Cash obtained from sale of financial assets available for sale 2,115,115 2,716, Cash paid for purchase of investment securities Cash obtained from sale of investment securities Others (47,011) (18,358) C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net cash provided from financing activities 252,614 (670,010) 3.1 Cash obtained from funds borrowed and securities issued 519, , Cash used for repayment of funds borrowed and securities issued (266,521) (978,800) 3.3 Capital increase Dividends paid Payments for financial leases Other - - IV. Effect of change in foreign exchange rate on cash and cash equivalents 98, ,405 V. Net increase in cash and cash equivalents 1,114, ,643 VI. Cash and cash equivalents at beginning of the period 3,880,129 3,310,166 VII. Cash and cash equivalents at end of the period 4,995,001 4,074,809 The accompanying notes are an integral part of these unconsolidated financial statement 12

18 I. Basis of Presentation SECTION THREE ACCOUNTING PRINCIPLES The unconsolidated financial statements are prepared within the scope of the Regulation on Accounting Applications for Banks and Safeguarding of Documents related with Banking Act numbered 5411 published in the Official Gazette no dated 1 November 2006 and other regulations related to reporting principles 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 in case where a specific regulation is not made by BRSA, Turkish Accounting Standards, within the scope of interim reporting Turkish Accounting Standards 34 and Turkish Financial Reporting Standards ( TFRS ) and related appendices and interpretations (referred as Turkish Accounting Standards or TAS ) put into effect by Public Oversight Accounting and Auditing Standards Authority ( POA ). The format and content of the publicly announced unconsolidated financial statements and notes to these statements have been prepared in accordance with the Communiqué on Publicly Announced Financial Statements, Explanations and Notes to These Financial Statements, published in Official Gazette no , dated 28 June 2012, and amendments to this Communiqué. The prior period financial statements are presented in line with the principles of TAS Board No:1 Fundamentals of Preparing and Presenting Financial Statements published in the Official Gazette on 16 January 2005 with No: 25702, and in accordance with Turkish Accounting Standards and Turkish Financial Reporting Standards; and other principles, methods and explanations about accounting and financial reporting issued by the BRSA. Certain reclassifications have been made to the prior year financial statements in order to comply with the current year presentation whenever required. Additional paragraph for convenience of translation into English: The differences between accounting principles, as described in the preceding paragraphs, and accounting principles generally accepted in countries in which these 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. II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions The Bank aims to develop and promote products for the financial needs of each customer such as SMEs, multinational companies and small individual investors in line with Banking Legislation. The primary objective of the Bank is to increase profitability with optimum liquidity and minimum risk while fulfilling customer needs. The Bank aims at creating an optimum maturity risk and working with a positive margin between cost of resource and product yield in the process of asset and liability management. As a component of risk management strategy of the Bank, risk bearing short positions of currency, interest or price movements is performed only by the Treasury Asset-Liability Management using the limits defined by the Board of Directors. The Asset-Liability Committee manages the maturity mismatches while deciding the short, medium and long term strategies as well as adopting the principle of positive balance sheet margin as a pricing policy. The Board of Directors allows a purchase risk in treasury operations and individual limits are defined by the Board of Directors for each product. 13

19 II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions (continued) At period ends, foreign currency asset and liability balances are valued at the Bank s period end counter currency buying rates and recognized as a Foreign exchange gain/loss. The Bank s hedging activities for the currency risk due to foreign currency available-for-sale equity instruments are described under the Currency Risk section; and the Bank s hedging activities from interest rate risk arising from fixed interest rate deposits and floating interest rate borrowings are described in detail under Interest Rate Risk section. The Bank s Asset-Liability Committee approves the trading of various derivative instruments such as currency swaps, forwards and similar derivatives to hedge interest and currency exchange risks in line with the balance sheet structure. III. Explanations on Investments in Associates, Subsidiaries and Joint Ventures Based on the TAS 27 Turkish Accounting Standard for Consolidated and Separate Financial Statements, Turkish Lira denominated investments in associates and subsidiaries are accounted at cost and are reflected to the unconsolidated financial statements after deducting the provision for impairment, if any. IV. Explanations on Forward and Option Contracts and Derivative Instruments Fair values of foreign currency forward and swap transactions are determined by valuating the period end Bank foreign exchange rates with the maturity value discounted to the balance sheet date with the prevailing current market rates. The resulting gain or loss is reflected to the income statement. In the assessment of fair value of interest rate swap instruments, interest amounts to be paid or to be received due to/from the fixed rate on the derivative contract are discounted to the balance sheet date with the current applicable fixed rate in the market that is prevailing between the balance sheet date and the interest payment date, whereas interest amounts to be paid or to be received due to/from the floating rate on the derivative contract are recalculated with the current applicable market rates that are prevailing between the balance sheet date and the interest payment date and are discounted to the balance sheet date again with the current applicable market rates that are prevailing between the balance sheet date and the interest payment date. The differences between the fixed rate interest amounts and floating rate interest amounts to be received/paid are recorded in the profit/loss accounts in the current period. The fair value of call and put option agreements are measured at the valuation date by using the current premium values of all option agreements, and the differences between the contractual premiums received/paid and the current premiums measured at valuation date are recognized in the statement of income. Futures transactions are valued on a daily basis by the primary market prices and related unrealized gains or losses are reflected in the income statement. The Bank has adopted fair value and cash flow hedge accounting. The Bank documents relations between hedging instrument and hedged item on transaction date, in conjunction with strategies on objectives of the Bank's risk management and hedging transactions for hedging purposed transactions. Besides, the Bank that effectively values fair value changes of hedged items that are balanced by derivative transactions for hedging purposes documented regularly. In case that the hedging transactions do not meet the hedging accounting conditions, adjustments to fair value of hedged item, which are rediscounted within days to maturity, are reflected in Income Statement. While the Bank recognizes the fair value changes of the hedged items in the Other Interest Income and Other Interest Expense accounts, it recognizes the fair value changes of the hedging instruments related to the same period in the Gains/ (Losses) from Derivative Financial Instruments account. Additionally, the difference between the fair value and carrying value of the hedged items as of the application date of hedge accounting is amortized based on their maturities and recognized in Other Interest Income and Other Interest Expense accounts. 14