PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS AND RELATED DISCLOSURES TOGETHER WITH INDEPENDENT LIMITED REVIEW REPORT AT 30 JUNE

Transcription

1 (CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS AND LIMITED REVIEW REPORT ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE I. OF SECTION THREE) PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS AND RELATED DISCLOSURES TOGETHER WITH INDEPENDENT LIMITED REVIEW REPORT AT 30 JUNE 2018

2 E Buıldıng a better working world Güney Bağımsız Denetim ve Tel: SMMM A.Ş. Fax: Maslak Mahallesi Eski Büyükdere ey.com Cad. Orjin Maslak Plaza Na: 27 Ticaret Sicit Na : arıyer Istanbul - Turkıye INTERIM REVIEW REPORT ON INTERIM FINANCİAL INFORMATİON (Convenience translation of the independent auditor s report originaliy issued in Turkish, See Note 1. of Section three) To the Board of Directors of Burgan Bank Anonim Şirketi Introduction We have reviewed the unconsolidated statement of financial position of Burgan Bank A.Ş. ( the Bank ) at 30 June 2018 and the related unconsolidated income statement, unconsolidated staternent of income and expense items under shareholders equity, unconsolidated statement of changes in shareholders equity, unconsolidated statement of cash flows and a surnrnary of significant accounting policies and other explanatory notes to the unconsolidated financial statements for the six-rnonth-period then ended. The Bank Managernent is responsib]e for the preparation and fair presentation of interim financial staternents in accordance with the Regulation on Accountıng 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, (together refelted as BRSA Accounting and Reporting Legislation ) and Turkish Accounting Standard 34 Interim Financial Reporting for those rnatters not regulated by BRSA Legislation. Our responsibility is to express a conclusion on these interim financial staternents based on our review. Scope of Review We conducted our review in accordance with the Standard on Review Engagernents (SRE) 2410, Lirnited Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making ınquiries. pnmanly of persons responsihle for financıal reporting process, and applying analytical and other review procedures. A review of interim financia] 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 wiil be aware of al] significant rnatters which would have been identified in an audit. Accordingly, we do not express an opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying unconsolidated financial staternents do not give a true view of the financial position of Burgan Bank A.Ş. at 30 June and of the results of its operations and its cash flows for the six-rnonth-period then ended in al] material respects in accordance with the BRSA Accounting and Financial Reporting Legislation. A member fimı of Ernst Young Gıobaı Umfted

3 EY Building a better working world Report on other regutatory requirernents arisingfroın legistation Based on our review, nothing has come to our attention that causes us to believe that the financial information provided in the accompanying interim annual report in section seven, are not consistent with the unconsolidated financial staternents and disclosures in al] material respects. Additionatparagraph for Engtish transtation As explained in detail in Note 1 of Section Three, the effects of differences between accounting principles and standards set out by regulations in conforrnity with BRSA Accounting and Reporting Legislation) and Turkish Accounting Standard 34 Interim Financial Reporting except for the matters regulated by BRSA Legislation, accounting princip]es generaliy accepted in countries in which the accornpanying unconsolidated financia] staternents are to be distributed and İnternational Financia] Reporting Standards ( IFRS ) have not been quantified in the accornpanying unconsolidated financial statements. Accordingly, the accornpanyıng unconsolidated financia] staternents 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 generaliy accepted in such countıes and IFRS. Güney Bağımsız Denetim ve Serbest Muhasebeci Malı Müşavirlik Anonim Şirketi A member firrn of ErnstYoung Global Limited Istanbul, 10 August 2018 A memberfirm of Emst8Young Global Limited

4 THE UNCONSOLIDATED INTERIM FINANCIAL REPORT OF AS OF 30 JUNE 2018 Address : Maslak Mahallesi, Eski Büyükdere Caddesi, No: Sarıyer / İstanbul Telephone : Fax : Web site : bilgi@burgan.com.tr The unconsolidated six months financial report includes the following sections in accordance with the Communiqué on Financial Statements and Related Explanations and Notes that will be Publicly Announced as sanctioned by the Banking Regulation and Supervision Agency. Section One GENERAL INFORMATION ABOUT THE BANK Section Two UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK Section Three EXPLANATIONS ON ACCOUNTING POLICIES Section Four INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT OF THE BANK Section Five EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS Section Six EXPLANATIONS ON INDEPENDENT LIMITED REVIEW REPORT Section Seven EXPLANATIONS ON INTERIM ACTIVITY REPORT The accompanying unconsolidated six months financial statements and notes to these financial statements which are expressed, unless otherwise stated, in thousands of Turkish Lira ( TL ), have been prepared and presented based on the accounting books of the Bank in accordance with the Regulation on Accounting Applications for Banks and Safeguarding of Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards, and related appendices and interpretations of these, and have been reviewed. 10 August 2018 Mehmet N. ERTEN Ali Murat DİNÇ Mehmet YALÇIN Ahmet CIĞA Chairman of the Vice General Manager of Board of Directors Finance Member of the Board of Directors and General Manager Head of Accounting, Tax, and Reporting Unit Halil CANTEKİN Adrian Alejandro GOSTUSKI Osama T. AL GHOUSSEIN Head Member Member of the Audit Committee of the Audit Committee of the Audit Committee Contact information of the personnel in charge of the addressing of questions about this financial report: Name-Surname/Title : Ahmet CIĞA / Head of Accounting, Tax, and Reporting Unit Telephone Number : Fax Number :

5 TABLE OF CONTENTS SECTION ONE GENERAL INFORMATION ABOUT THE BANK PAGE I. Bank s foundation date, start-up statute, history about the changes in this mentioned statute... 3 II. Explanation about 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 Bank belongs to... 4 III. Explanation on the board of directors, members of the audit committee, president and executive vice presidents, changes in these matters (if any) and shares of the Bank they possess... 5 IV. Explanation on shareholders having control shares... 6 V. Information on the Bank s service type and field of operations... 6 VI. Current or likely actual or legal barriers to immidiate transfer of equity or repayment of debts between the parent bank and its subsidiaries... 6 SECTION TWO UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK I. Balance sheet (Statement of financial position)... 8 II. Statement of off-balance sheet contingencies and commitments III. Income statement IV. Statement of income and expense items accounted in equity V. Statement of changes in shareholders equity VI. Statement of cash flows SECTION THREE EXPLANATIONS ON ACCOUNTING POLICIES I. Basis of presentation II. Explanations on strategy of using financial instruments and foreign currency transactions III. Explanations on investments in associates, subsidiaries and joint ventures IV. Explanations on forward transactions, options and derivative instruments V. Explanations on interest income and expense VI. Explanations on fee and commission income and expense VII. Explanations on financial assets VIII. Explanations on expected credit losses IX. Explanations on offsetting financial assets X. Explanations on sales and repurchase agreements and securities lending transactions XI. Explanations on tangible assets held for resale, discontinued operations and liabilities regarding those assets XII. Explanations on goodwill and other intangible assets XIII. Explanations on property and equipment XIV. Explanations on leasing transactions XV. Explanations on provisions and contingent commitments XVI. Explanations on contingent assets XVII. Explanations on obligations related to employee rights XVIII. Explanations on taxation XIX. Explanations on borrowings XX. Explanations on issuance of share certificates XXI. Explanations on avalized drafts and acceptances XXII. Explanations on government grants XXIII. Explanations on profit reserves and profit distribution XXIV. Explanations on earnings per share XXV. Explanations on related parties XXVI. Explanations on cash and cash equivalents XXVII. Explanations on segment reporting XXVIII. Reclassifications XXIX. Disclosures of TFRS 9 financial instruments standard XXX. Explanations on prior period accounting policies not valid for the current period SECTION FOUR INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT OF THE BANK I. Explanations on equity II. Explanations on risk management III. Explanations on currency risk IV. Explanations on interest rate risk V. Explanations on share certificate position risk VI. Explanations on liquidity risk management and liquidity coverage ratio VII. Explanations on leverage ratio VIII. Explanations on hedge transactions IX. Explanations on the activities carried out on behalf and account of other persons X. Explanations on operating segments SECTION FIVE EXPLANATIONS AND NOTES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS I. Explanations and notes related to assets II. Explanations and notes related to liabilities III. Explanations and notes related to off-balance sheet accounts IV. Explanations and notes related to income statement V. Explanations and notes related to Bank s risk group VI. Explanations and notes related to subsequent events SECTION SIX EXPLANATIONS ON THE INDEPENDENT LIMITED REVIEW REPORT I. Explanations on the independent limited review report II. Explanations and notes prepared by independent auditor SECTION SEVEN EXPLANATIONS ON INTERIM ACTIVITY REPORT I. Evaluations for the operating period and expectations for the future by the chairman of the board of directors and the general manager

6 NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2018 SECTION ONE GENERAL INFORMATION ABOUT THE BANK I. BANK S FOUNDATION DATE, START-UP STATUTE, HISTORY ABOUT THE CHANGES IN THIS MENTIONED STATUTE: Tekfen Yatırım ve Finansman Bankası A.Ş. was established as an investment bank with the permission of the Council of Ministers No. 88/13253 on 26 August 1988 and authorised to conduct finance investment and foreign trade activities. Banking operations commenced on 7 August Bank Ekspres A.Ş. ( Bank Ekspres ) was established with the permission of the Council of Ministers in decision No. 91/2316 on 22 September 1991; The Decree of Establishment Permission was published in the Official Gazette numbered and dated 10 October The Articles of Association was published in the Trade Registry Gazette numbered 2969 and dated 18 February The Turkish Savings Deposit and Insurance Fund ( SDIF ) took over the management of Bank Ekspres A.Ş. due to the poor fiscal structure of the bank on 23 October According to the Share Transfer Agreement signed between the SDIF and Tekfen Holding A.Ş. on 30 June 2001, shares with a nominal value of Kr1 each and which amount to 99,46% of the capital of Bank Ekspres A.Ş. under the control of the SDIF in accordance with Banking Law were transferred to Tekfen Holding A.Ş.. Based on this agreement, the acquisition of Tekfen Yatırım ve Finansman Bankası A.Ş., where Tekfen Holding A.Ş. owns 57,69% of the Bank, by Bank Ekspres A.Ş. was permitted by the Banking Regulation and Supervision Agency s ( BRSA ) decision numbered 489 dated 18 October The share transfers were realised on 26 October 2001 and the bank s name was changed to Tekfenbank Anonim Şirketi (the Bank ), which had two main shareholders: Tekfen Holding A.Ş. with 57,30% and TST International S.A. with 40,62%. EFG Eurobank Ergasias S.A. ( Eurobank EFG ) and Tekfen Holding A.Ş. ( Tekfen Group ) signed an agreement as of 8 May 2006, that anticipated Eurobank EFG to purchase Tekfn Group s 70% share in Tekfenbank and Tekfen Leasing which is fully owned by Tekfenbank; where Tekfen Group retained its strategic partnership by keeping all remaining shares. On 23 February 2007, the sale of Tekfenbank A.Ş. to Eurobank EFG Holding (Luxembourg) S.A. ( Eurobank EFG Holding ) was approved by the BRSA and the sale was completed after the share transfer on 16 March Under the agreement regarding the sale of Eurobank Ergasias S.A. s Turkey operations to Burgan Bank K.P.S.C., 70% of the bank shares belonging to Eurobank EFH Holding (Luxemburg) S.A. and 29,26% of the shares belonging to Tekfen Holding A.Ş. are bought by Burgan Bank K.P.S.C. in 7 December 2012 in accordance with the Banking Regulation and Supervision Agency s authorization, and then 99,26% of the bank shares are turned over to Burgan Bank K.P.S.C in 21 December At the Extraordinary Board of Directors meeting on 23 January 2013, the title of the bank has been decided to change from Eurobank Tekfen A.Ş. to Burgan Bank A.Ş., and has been registered to the Turkish Trade Registry as of 25 January

7 NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2018 GENERAL INFORMATION ABOUT THE BANK II. EXPLANATION ABOUT 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 BANK BELONGS TO: The Bank s registered capital ceiling is 2 billion full TL. During the capital increase process following the Board of Directors decisions dated 15 December 2017, 14 January 2018 and 21 February 2018, rights of preference amounting to TL ,45 has been used and the Bank s capital has been registered as TL ,45 at 26 March Following the Board of Directors decision dated 30 May 2018, the Bank s total capital has been increased by TL ,55, with this increase capital previously amounting to TL ,45 has been increased to full TL The main shareholder capital participation fee amounting to TL ,43 has been collected as cash and the following amount has been transferred to the Bank s capital account with the permission of the BRSA as of 13 June The rights of preference usage process has been completed and the Bank s capital amounting to full TL has been registered as of 8 August There is no change in the Bank s shareholder structure, except for the effects of the capital increase during the year. Founded in 1977, Burgan Bank K.P.S.C.,as an affiliate of KIPCO Group (Kuwait Projects Company), one of the largest holding groups of the Middle East and North Africa (MENA) region, is among the significant banking groups in the region. Besides Kuwait, Burgan Bank Group also operates as a main shareholder with its affiliate banks in Algeria (Gulf Bank Algeria), Iraq (Bank of Baghdad), and Tunisia (Tunis International Bank). 4

8 NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2018 GENERAL INFORMATION ABOUT THE BANK III. EXPLANATION ON THE BOARD OF DIRECTORS, MEMBERS OF THE AUDIT COMMITTEE, PRESIDENT AND EXECUTIVE VICE PRESIDENTS, CHANGES IN THESE MATTERS (IF ANY) AND SHARES OF THE BANK THEY POSSESS: Title Name Responsibility Education Chairman of the Board of Directors: Mehmet Nazmi Erten Chairman of Board of Directors Undergraduate Board of Directors Members: Faisal M.A. Al Radwan Vice President Undergraduate Eduardo Eguren Linsen Member Undergraduate Majed E.A.A. Al Ajeel Member Graduate Adrian Alejandro Gostuski Member Graduate Mehmet Alev Göçmez Member Graduate Halil Cantekin Member Undergraduate Osama T. Al Ghoussein Member Undergraduate Ali Murat Dinç Member and General Manager Graduate General Manager: Ali Murat Dinç Member and General Manager Graduate Vice General Managers : (*) Esra Aydın Operations & Management Undergraduate Services Mutlu Akpara Treasury, Capital Market and Graduate Financial Institutions Hüseyin Cem Öge Corporate Banking Graduate Cihan Vural Internal Systems Undergraduate Rasim Levent Ergin Human Resources Graduate Suat Kerem Sözügüzel Commercial Banking Undergraduate Hasan Hüseyin Uyar Loans Graduate Mehmet Yalçın Financial Affairs Undergraduate Audit Committee: Halil Cantekin Committee President Undergraduate Adrian Alejandro Gostuski Member Graduate Osama T. Al Ghoussein Member Undergraduate (*) Retail Banking Vice President Emine Pınar Kuriş has left the Bank at 6 July There is no share of the above individuals in the Bank. 5

9 NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS AT 30 JUNE 2018 GENERAL INFORMATION ABOUT THE BANK IV. EXPLANATION ON SHAREHOLDERS HAVING CONTROL SHARES: Name/Commercial title Share Amounts Share percentage Paid-in Capital Unpaid portion Burgan Bank K.P.S.C ,55% 99,55% - Based on the Principal Agreement, the Bank has 1 million founder's shares. According to the Principal Agreement, after allocating 5% to legal reserves and distributing 5% of the paid in capital, 10% of distributable amount is distributed to the owners of the founder's shares. V. INFORMATION ON THE BANK S SERVICE TYPE AND FIELD OF OPERATIONS: As of 30 June 2018, the Bank has 43 branches operating in Turkey (31 December 2017: 43). The Bank s core business activities include corporate and commercial banking, retail banking and banking services in treasury fields. As of 30 June 2018, the Bank has (31 December 2017: 978) employees. VI. CURRENT OR LIKELY ACTUAL OR LEGAL BARRIERS TO IMMIDIATE TRANSFER OF EQUITY OR REPAYMENT OF DEBTS BETWEEN THE PARENT BANK AND ITS SUBSIDIARIES: None. 6

10 SECTION TWO UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK I. Balance sheet (Statement of financial position) II. Statement of off balance sheet contingencies and commitments III. Income statement IV. Statement of income and expense items accounted under shareholders equity V. Statement of changes in shareholders equity VI. Statement of cash flow

11 UNCONSOLIDATED BALANCE SHEETS (STATEMENT OF FINANCIAL POSITION) AT 30 JUNE 2018 I. BALANCE SHEET Note (Section (30/06/2018) ASSETS Five) TL FC Total I. FINANCIAL ASSETS (Net) Cash and cash equivalents Cash and balances at Central Bank I-a Banks I-c Receivables from Money Markets Financial assets at fair value through profit or loss I-b Public debt securities Equity instruments Other financial assets Financial assets at fair value through other comprehensive income I-d Public debt securities Equity instruments Other financial assets Financial assets measured at amortized cost I-g Public debt securities Other financial assets Derivative financial assets I-l Derivative financial assets at fair value through profit or loss Derivative financial assets at fair value through other comprehensive income Non-performing financial assets Allowance for expected credit losses (-) II. LOANS (Net) I-e Loans Loans measured at amortized cost Loans at fair value through profit or loss Loans at fair value through other comprehensive income Receivables from leasing transactions I-k Finance lease receivables Operational lease receivables Unearned income (-) Factoring receivables I-e Factoring receivables measured at amortized cost Factoring receivables at fair value through profit or loss Factoring receivables at fair value through other comprehensive income Non-performing loans Allowance for expected credit losses (-) I-e Month expected credit losses (Stage 1) Significant increase in credit risk (Stage 2) Credit-Impaired (Stage 3) III. NON-CURRENTS ASSETS OR DISPOSAL GROUPS "HELD FOR SALE" AND "FROM DISCONTINUED OPERATIONS (Net) I-o Held for sale Held from discontinued operations IV. INVESTMENTS IN ASSOCIATES, SUBSIDIARIES AND JOINT VENTURES Investments in associates (Net) I-h Associates accounted by using equity method Non-consolidated associates Investments in subsidiaries (Net) I-i Non-consolidated financial subsidiaries Non-consolidated non-financial subsidiaries Jointly Controlled Partnerships (Joint Ventures) (Net) I-j Jointly controlled partnerships accounted by using equity method Non-consolidated jointly controlled partnerships V. TANGIBLE ASSETS (Net) VI. INTANGIBLE ASSETS AND GOODWILL (Net) Goodwill Other VII. INVESTMENT PROPERTIES (Net) I-m VIII. CURRENT TAX ASSETS IX. DEFERRED TAX ASSETS I-n X. OTHER ASSETS I-p TOTAL ASSETS Note: The prior period financial statements and related disclosures are not restated as permitted by TFRS 9 transition rules. Since, 2017 and 2018 financial statements are prepared on different principles, 2017 financial statements are presented separately. The accompanying explanations an notes form an integral part of these financial statements. 8

12 UNCONSOLIDATED BALANCE SHEETS (STATEMENT OF FINANCIAL POSITION) AT 31 DECEMBER 2017 I. BALANCE SHEET Note (Section (31/12/2017) ASSETS Five) TL FC Total I. CASH AND BALANCES WITH CENTRAL BANK I-a II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT or LOSS (Net) I-b Trading Financial Assets Government Debt Securities Share Certificates Trading Derivative Financial Assets Other Marketable Securities Financial Assets Designated at Fair Value through Profit or Loss Government Debt Securities Share Certificates Loans Other Marketable Securities III. BANKS I-c IV. MONEY MARKETS Interbank Money Market Placements Receivables from Istanbul Stock Exchange Money Market Receivables from Reverse Repurchase Agreements V. AVAILABLE-FOR-SALE FINANCIAL ASSETS (Net) I-d Share Certificates Government Debt Securities Other Marketable Securities VI. LOANS I-e Loans Loans to Bank s Risk Group Government Debt Securities Other Loans under Follow-up Specific Provisions (-) VII. FACTORING RECEIVABLES I-e 6-6 VIII. HELD-TO-MATURITY SECURITIES (Net) I-g Government Debt Securities Other Marketable Securities IX. INVESTMENTS IN ASSOCIATES (Net) I-h Consolidated Based on Equity Method Unconsolidated Financial Investments in Associates Non-financial Investments in Associates X. SUBSIDIARIES (Net) I-i Unconsolidated Financial Subsidiaries Unconsolidated non-financial Subsidiaries XI. JOINT VENTURES (Net) I-j Consolidated Based on Equity Method Unconsolidated Financial Joint Ventures Non-financial Joint Ventures XII. LEASE RECEIVABLES (Net) I-k Financial Lease Receivables Operational Lease Receivables Other Unearned Income (-) XIII. HEDGING DERIVATIVE FINANCIAL ASSETS I-l Fair Value Hedge Cash Flow Hedge Foreign Net Investment Hedge XIV. PROPERTY AND EQUIPMENT (Net) XV. INTANGIBLE ASSETS (Net) Goodwill Other XVI. INVESTMENT PROPERTY (Net) I-m XVII. TAX ASSET I-n Current Tax Asset Deferred Tax Asset XVIII. ASSETS HELD FOR RESALE AND DISCONTINUED OPERATIONS (Net) I-o Held for Resale Discontinued Operations XIX. OTHER ASSETS I-p TOTAL ASSETS Note: The prior period financial statements and related disclosures are not restated as permitted by TFRS 9 transition rules. Since, 2017 and 2018 financial statements are prepared on different principles, 2017 financial statements are presented separately. The accompanying explanations an notes form an integral part of these financial statements. 9

13 UNCONSOLIDATED BALANCE SHEETS (STATEMENT OF FINANCIAL POSITION) AT 30 JUNE 2018 I. BALANCE SHEET Note (Section (30/06/2018) LIABILITIES Five) TL FC Total I. DEPOSITS II-a II. LOANS RECEIVED II-c I. MONEY MARKET FUNDS II. MARKETABLE SECURITIES (Net) II-d Bills Asset backed securities Bonds V. FUNDS Borrower funds Other VI. FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS VII. DERIVATIVE FINANCIAL LIABILITIES II-b Derivative financial liabilities at fair value through profit or loss Derivative financial liabilities at fair value through other comprehensive income VIII. FACTORING PAYABLES IX. LEASE PAYABLES II-f Finance lease payables Operating lease payables Other Deferred finance lease expenses (-) X. PROVISIONS II-h Provision for restructuring Reserves for employee benefits Insurance technical reserves (Net) Other provisions XI. CURRENT TAX LIABILITIES II-i XII. DEFERRED TAX LIABILITIES XIII. LIABILITIES RELATED TO NON-CURRENT ASSETS "HELD FOR SALE" AND "DISCONTINUED OPERATIONS" (Net) II-j Held for sale Related to discontinued operations XIV. SUBORDINATED DEBT II-k Loans Other debt instruments XV. OTHER LIABILITIES II-e XVI. SHAREHOLDERS` EQUITY II-l Paid-in capital Capital reserves Equity share premiums Share cancellation profits Other capital reserves Other accumulated comprehensive income that will not be reclassified in profit or loss Other accumulated comprehensive income that will be reclassified in profit or loss Profit reserves Legal reserves Statutory reserves Extraordinary reserves Other profit reserves Profit or loss (72.280) - (72.280) Prior years' profits or losses ( ) - ( ) Current period net profit or loss Minority share TOTAL EQUITY AND LIABILITIES Note: The prior period financial statements and related disclosures are not restated as permitted by TFRS 9 transition rules. Since, 2017 and 2018 financial statements are prepared on different principles, 2017 financial statements are presented separately. The accompanying explanations and notes form an integral part of these financial statements. 10

14 UNCONSOLIDATED BALANCE SHEETS (STATEMENT OF FINANCIAL POSITION) AT 31 DECEMBER 2017 I. BALANCE SHEET Note (Section (31/12/2017) LIABILITIES Five) TL FC Total I. DEPOSITS II-a Deposits of Bank s Risk Group Other II. TRADING DERIVATIVE FINANCIAL LIABILITIES II-b III. BORROWINGS II-c IV. MONEY MARKETS Funds from Interbank Money Market Funds from Istanbul Stock Exchange Money Market Funds Provided Under Repurchase Agreements V. MARKETABLE SECURITIES ISSUED (Net) II-d Bills Asset Backed Securities Bonds VI. FUNDS Borrower Funds Other VII. MISCELLANEOUS PAYABLES VIII. OTHER LIABILITIES II-e IX. FACTORING PAYABLES X. LEASE PAYABLES (Net) II-f Financial Lease Payables Operational Lease Payables Other Deferred Financial Lease Expenses (-) XI. HEDGING DERIVATIVE FINANCIAL LIABILITIES II-g Fair Value Hedge Cash Flow Hedge Foreign Net Investment Hedge XII. PROVISIONS II-h General Loan Loss Provision Restructuring Provisions Reserve for Employee Rights Insurance Technical Provisions (Net) Other Provisions XIII. TAX LIABILITY II-i Current Tax Liability Deferred Tax Liability XIV. PAYABLES FOR ASSET HELD FOR RESALE AND DISCONTINUED OPERATIONS (Net) II-j Held for Resale Discontinued Operations XV. SUBORDINATED LOANS II-k XVI. SHAREHOLDERS' EQUITY II-l Paid-in Capital Capital Reserves Share Premium Share Cancellation Profits Marketable Securities Valuation Reserve (2.366) (143) (2.509) Tangible Assets Revaluation Reserve Intangible Assets Revaluation Reserve Investment Property Revaluation Reserve Bonus Shares Obtained from Investments in Associates, Subsidiaries and Joint Ventures Hedging Reserves (Effective portion) Value Differences of Assets Held for Resale and Discontinued Operations Other Capital Reserves (2.957) - (2.957) 16.3 Profit Reserves Legal Reserves Status Reserves Extraordinary Reserves Other Profit Reserves Income or (Loss) Prior Years Income/ (Loss) Current Year Income/ (Loss) TOTAL EQUITY AND LIABILITIES Note: The prior period financial statements and related disclosures are not restated as permitted by TFRS 9 transition rules. Since, 2017 and 2018 financial statements are prepared on different principles, 2017 financial statements are presented separately. The accompanying explanations and notes form an integral part of these financial statements. 11

15 UNCONSOLIDATED OFF-BALANCE SHEET CONTINGENCIES AND COMMITMENTS AT 30 JUNE 2018 AND 31 DECEMBER 2017 II. OFF-BALANCE SHEET The accompanying explanations and notes form an integral part of these financial statements. 12 Note (Section Five) (30/06/2018) (31/12/2017) TL FC Total TL FC Total A. OFF-BALANCE SHEET COMMITMENTS (I+II+III) I. GUARANTEES AND WARRANTIES III-a Letters of Guarantee Guarantees Subject to State Tender Law Guarantees Given for Foreign Trade Operations Other Letters of Guarantee Bank Acceptances Import Letter 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 the Republic of Turkey Other Endorsements Securities Issue Purchase Guarantees Factoring Guarantees Other Guarantees Other Collaterals II. COMMITMENTS III-a Irrevocable Commitments Asset Purchase and Sales Commitments Deposit Purchase and Sales Commitments Share Capital Commitments to Associates and Subsidiaries Commitments for Loan Limits Securities Issue Brokerage Commitments Commitments for Reserve Deposit Requirements Commitments for Cheques Tax and Fund Liabilities from Export Commitments Commitments for Credit Card Limits Promotion Commitments for Credit Cards and Banking Services Receivables from Short Sale Commitments of Marketable Securities Payables for Short Sale Commitments of Marketable Securities Other Irrevocable Commitments Revocable Commitments Revocable Commitments for Loan Limits Other Revocable Commitments III. DERIVATIVE FINANCIAL INSTRUMENTS Hedging Derivative Financial Instruments Transactions for Fair Value Hedge Transactions for Cash Flow Hedge Transactions for Foreign Net Investment Hedge Trading Derivative Financial Instruments Forward Foreign Currency Buy/Sell Transactions Forward Foreign Currency Transactions-Buy Forward Foreign Currency Transactions-Sell Swap Transactions Related to Foreign Currency and Interest Rates Foreign Currency Swap-Buy Foreign Currency Swap-Sell Interest Rate Swap-Buy Interest Rate Swap-Sell Foreign Currency, Interest rate and Securities Options Foreign Currency Options-Buy Foreign Currency Options-Sell Interest Rate Options-Buy Interest Rate Options-Sell Securities Options-Buy Securities Options-Sell Foreign Currency Futures Foreign Currency Futures-Buy Foreign Currency Futures-Sell Interest Rate Futures Interest Rate Futures-Buy Interest Rate Futures-Sell Other Other B. CUSTODY AND PLEDGES RECEIVED (IV+V+VI) IV. ITEMS HELD IN CUSTODY Customer Fund and Portfolio Balances 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. PLEDGES RECEIVED Marketable Securities Guarantee Notes Commodity Warranty Immovable Other Pledged Items Pledged Items-Depository VI. ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES TOTAL OFF-BALANCE SHEET COMMITMENTS (A+B)

16 UNCONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 30 JUNE 2018 III. INCOME STATEMENT Note (Section 01/01/ /04/2018- INCOME AND EXPENSE ITEMS Five) 30/06/ /06/2018 I. INTEREST INCOME IV-a Interest on loans Interest received from reserve deposits Interest received from banks Interest received from money market transactions Interest received from marketable securities portfolio Financial assets at fair value through profit or loss Financial assets at fair value through other comprehensive income Financial assets measured at amortized cost Finance lease income Other interest income IV-k II. INTEREST EXPENSES (-) IV-b Interest on deposits Interest on funds borrowed Interest on money market transactions Interest on securities issued Other interest expenses IV-k III. NET INTEREST INCOME/EXPENSE (I - II) IV. NET FEES AND COMMISSIONS INCOME/EXPENSES Fees and commissions received Non-cash loans Other IV-k Fees and commissions paid (-) Non-cash loans (-) Other (-) IV-k V. PERSONNEL EXPENSES (-) VI. DIVIDEND INCOME VII. TRADING PROFIT/LOSS (Net) IV-c Profit/losses from capital market transactions Profit/losses from derivative financial transactions Foreign exchange profit/losses VIII. OTHER OPERATING INCOME IV-d IX. GROSS PROFIT FROM OPERATING ACTIVITIES (III+IV+V+VI+VII+VIII) X. ALLOWANCES FOR EXPECTED CREDIT LOSSES (-) IV-e XI. OTHER OPERATING EXPENSES (-) IV-f XII. NET OPERATING PROFIT/LOSS (IX-X-XI) XIII. SURPLUS WRITTEN AS GAIN AFTER MERGER - - XIV. PROFIT/LOSS FROM EQUITY METHOD APPLIED SUBSIDIARIES XV. NET MONETORY POSITION GAIN/LOSS - - PROFIT/LOSS BEFORE TAXES FROM CONTINUING OPERATIONS XVI. (XII+...+XV) IV-g XVII. PROVISION FOR TAXES ON INCOME FROM CONTINUING OPERATIONS (±) IV-h Current tax provision - (988) 17.2 Expense effect of deferred tax (+) Income effect of deferred tax (-) XVIII. NET PROFIT/LOSS FROM CONTINUING OPERATIONS (XVI±XVII) IV-i XIX. INCOME FROM DISCONTINUED OPERATIONS Income from assets held for sale Profit from sale of associates, subsidiaries and joint ventures Other income from discontinued operations - - XX. EXPENSES FROM DISCONTINUED OPERATIONS (-) Expenses on assets held for sale Losses from sale of associates, subsidiaries and joint ventures Other expenses from discontinued operations - - PROFIT/LOSS BEFORE TAXES FROM DISCONTINUED OPERATIONS (±) (XIX-XX) - - XXI. XXII. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) Current tax provision Expense effect of deferred tax (+) Income effect of deferred tax (-) - - XXIII. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XXI±XXII) - - XXIV. NET PROFIT/LOSSES (XVIII+XXIII) IV-j Group`s profit/loss Minority shares - - Profit/Loss per share 0,837 0,427 Note: The prior period financial statements and related disclosures are not restated as permitted by TFRS 9 transition rules. Since, 2017 and 2018 financial statements are prepared on different principles, 2017 financial statements are presented separately. The accompanying explanations and notes form an integral part of these financial statements. 13

17 UNCONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 30 JUNE 2017 III. INCOME STATEMENT Note (Section Five) 01/01/ /06/ /04/ /06/2017 INCOME AND EXPENSE ITEMS I. INTEREST INCOME IV-a Interest on Loans Interest Received from Reserve Requirements Interest Received from Banks Interest Received from Money Market Transactions Interest Received from Marketable Securities Portfolio Trading Financial Assets Financial Assets at Fair Value through Profit or Loss Available-for-sale Financial Assets Held-to-maturity Investments Financial Lease Income Other Interest Income IV-k II. INTEREST EXPENSE (-) IV-b Interest on Deposits Interest on Funds Borrowed Interest Expense on Money Market Transactions Interest on Securities Issued Other Interest Expenses IV-k III. NET INTEREST INCOME (I + II) IV. NET FEES AND COMMISSIONS INCOME/EXPENSE Fees and Commissions Received Non-cash Loans Other IV-k Fees and Commissions Paid (-) Non-cash Loans (-) Other (-) IV-k V. DIVIDEND INCOME VI. TRADING INCOME/( LOSS) (Net) IV-c Trading Gains/(Losses) on Securities Trading Gains/(Losses) on Derivative Financial Instruments Foreign Exchange Gains/(Losses) (1.766) VII. OTHER OPERATING INCOME IV-d VIII. TOTAL OPERATING INCOME (III+IV+V+VI+VII) IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) IV-e X. OTHER OPERATING EXPENSES (-) IV-f XI. NET OPERATING INCOME/(LOSS) (VIII+IX+X) XII. EXCESS AMOUNT RECORDED AS INCOME AFTER MERGER - - XIII. INCOME/(LOSS) FROM INVESTMENTS IN SUBSIDIARIES CONSOLIDATED BASED ON EQUITY METHOD XIV. INCOME/(LOSS) ON NET MONETARY POSITION - - XV. INCOME/(LOSS) BEFORE TAX FROM CONTINUING OPERATIONS (XI+ +XIV) IV-g XVI. TAX PROVISION FOR CONTINUING OPERATIONS (-) IV-h Current Tax Provision Deferred Tax Provision XVII. NET INCOME/(LOSS) FROM CONTINUING OPERATIONS (XV+XVI) IV-i XVII. INCOME FROM DISCONTINUED OPERATIONS Income from Non-Current Assets Held for Resale Sale Income from Associates, Subsidiaries and Joint Ventures Other Income from Discontinued Operations - - XIX. EXPENSES FROM DISCONTINUED OPERATIONS (-) Expense from Non-Current Assets Held for Resale Sale Losses from Associates, Subsidiaries and Joint Ventures Other Expenses from Discontinued Operations - - XX. INCOME/(LOSS) BEFORE TAX FROM DISCONTINUED OPERATIONS (XVIII+XIX) - - XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (-) Current tax provision Deferred tax provision - - XXII. NET INCOME/(LOSS) FROM DISCONTINUED OPERATIONS (XX+XXI) - - XXII. NET INCOME/(LOSS) (XVII+XXII) IV-j Earnings/(Loss) per share (1.000 nominal in TL full) 0,501 0,269 Note: The prior period financial statements and related disclosures are not restated as permitted by TFRS 9 transition rules. Since, 2017 and 2018 financial statements are prepared on different principles, 2017 financial statements are presented separately. The accompanying explanations and notes form an integral part of these financial statements. 14

18 UNCONSOLIDATED STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED IN EQUITY FOR THE PERIOD ENDED 30 JUNE 2018 IV. STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED IN EQUITY 30/06/2018 I. CURRENT PERIOD INCOME / LOSS II. OTHER COMPREHENSIVE INCOME Other comprehensive income not to be reclassified to profit or loss in subsequent periods: Revaluation Differences of Tangible Assets Revaluation Differences of Intangible Assets Defined benefit plans remeasurement gains/losses Other comprehensive income not to be reclassified to profit or loss Income tax relating to components of other comprehensive income not to be reclassified to profit or loss Other comprehensive income to be reclassified to profit or loss in subsequent periods: Exchange differences on translation of foreign operations Gains or losses on valuation or reclassification arising from financial assets at fair value through other comprehensive income (24.301) Gains or losses arising on cash flow hedges Gains or losses arising on net invesment hedges Other comprehensive income to be reclassified to profit or loss Income tax relating to components of other comprehensive income to be reclassified to profit or loss (11.982) III. TOTAL COMPREHENSIVE INCOME (I+II) Note: The prior period financial statements and related disclosures are not restated as permitted by TFRS 9 transition rules. Since, 2017 and 2018 financial statements are prepared on different principles, 2017 financial statements are presented separately. The accompanying explanations and notes form an integral part of these financial statements. 15

19 UNCONSOLIDATED STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED IN EQUITY FOR THE PERIOD ENDED 30 JUNE 2017 IV. STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED IN EQUITY 30/06/2017 I. ADDITIONS TO THE MARKETABLE SECURITIES VALUATION RESERVE FROM THE AVAILABLE FOR SALE FINANCIAL ASSETS II. REVALUATION DIFFERENCES OF TANGIBLE ASSETS - III. REVALUATION DIFFERENCES OF INTANGIBLE ASSETS - IV. FOREIGN EXCHANGE TRANSLATION DIFFERENCES FOR FOREIGN CURRENCY TRANSACTIONS - V. INCOME/LOSS ON CASH FLOW HEDGE DERIVATIVE FINANCIAL ASSETS (Effective Part of Fair Value Changes) (6.139) VI. PROFIT/LOSS FROM FOREIGN INVESTMENT HEDGE DERIVATIVE FINANCIAL ASSETS (Effective Part of Fair Value Changes) - VII. EFFECTS OF CHANGES IN ACCOUNTING POLICY AND ERRORS (*) - VIII. OTHER INCOME AND EXPENSE ITEMS ACCOUNTED IN EQUITY ACCORDING TO TAS (145) IX. DEFERRED TAX ON VALUATION DIFFERENCES (573) X. NET INCOME/LOSS ACCOUNTED DIRECTLY IN EQUITY (I+II+...+IX) XI. CURRENT PERIOD INCOME/LOSS Net Change in Fair Value of Marketable Securities (Transfer to Income Statement) Portion of Cash Flow Hedge Derivative Financial Assets Reclassified and Presented on the Income Statement Portion of Foreign Investment Hedge Derivative Financial Assets Reclassified and Presented on the Income Statement Other XII. TOTAL (INCOME)/LOSS RELATED TO THE CURRENT PERIOD (X+XI) Note: The prior period financial statements and related disclosures are not restated as permitted by TFRS 9 transition rules. Since, 2017 and 2018 financial statements are prepared on different principles, 2017 financial statements are presented separately. The accompanying explanations and notes form an integral part of these financial statements. 16