PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS AND RELATED DISCLOSURES AT 30 JUNE 2017 TOGETHER WITH AUDITOR S REVIEW REPORT

Transcription

1 PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS AND RELATED DISCLOSURES AT 30 JUNE 2017 TOGETHER WITH AUDITOR S REVIEW REPORT (Convenience translation of publicly announced unconsolidated financial statements, related disclosures and auditor s review report originally issued in Turkish, See Note. I.b of Section three)

2 AUDITOR S REVIEW REPORT ON INTERIM FINANCIAL INFORMATION (Convenience translation of the independent auditor s review report originally issued in Turkish, See Note I of Section Three) To the Board of Directors of Akbank T.A.Ş.; Introduction We have reviewed the unconsolidated balance sheet of Akbank T.A.Ş. ( the Bank ) at and the related unconsolidated income statement, unconsolidated statement of income and expense items under shareholders equity, unconsolidated statement of changes in shareholders equity, unconsolidated statement of cash flows and a summary of significant accounting policies and other explanatory notes to the unconsolidated financial statements for the six-month-period then ended. The Bank Management is responsible for the preparation and fair presentation of interim financial information in accordance with the Banking Regulation and Supervision Agency ( BRSA ) Accounting and Financial Reporting Legislation which includes Regulation on Accounting Applications for Banks and Safeguarding of Documents published in the Official Gazette no dated 1 November 2006, and other regulations on accounting records of Banks published by Banking Regulation and Supervision Agency and circulars and interpretations published by BRSA and Turkish Accounting Standard 34 Interim Financial Reporting for those matters not regulated by the aforementioned regulations. Our responsibility is to express a conclusion on these interim financial information based on or review. Scope of Review We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410, Limited Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial reporting process, and applying analytical and other review procedures. A review of interim financial information is substantially less in scope than an independent audit performed in accordance with the Independent Auditing Standards and the objective of which is to express an opinion on the financial statements. Consequently, a review of the interim financial information does not provide assurance that the audit firm will be aware of all significant matters which would have been identified in an audit. Accordingly, we do not express an opinion. Basis for the Qualified Conclusion As mentioned in Section Five Part II h.5 (i) of Explanations and Notes to the Unconsolidated Financial Statements; the accompanying unconsolidated financial statements as at include a free provision amounting to TL thousand which had been recognized by the Bank management in the prior periods in line with the conservatism principle considering the circumstances that may arise from possible changes in the economy and market conditions. Qualified Conclusion Based on our review, except for the effects of the matter on the unconsolidated financial statements described in the basis for the qualified conclusion paragraph above, nothing has come to our attention that causes us to believe that the accompanying unconsolidated financial information do not present fairly in all material respects the financial position of Akbank T.A.Ş. at 30 June 2017 and the results of its operations and its cash flows for the six-month period then ended in accordance with the BRSA Accounting and Financial Reporting Legislation. Other Matter The unconsolidated financial statements of the Bank as at 31 December 2016 were audited by another auditor, whose report dated 31 January 2017 expressed a qualified opinion for the related unconsolidated financial statements for the inclusion of a general reserve for possible risks amounting to TL thousands, provided by the Bank management and carried forward from 2014, for considering the circumstances that may arise from possible changes in the economy and market conditions. Report on other regulatory requirements arising from legislation Based on our review, nothing has come to our attention that causes us to believe that the financial information provided in the accompanying interim activity report in Section Seven, is not consistent with the reviewed unconsolidated financial statements and disclosures in all material respects. Additional Paragraph for Convenience Translation: The effects of differences between accounting principles and standards explained in detail in Section Three and accounting principles generally accepted in countries in which the accompanying unconsolidated financial statements are to be distributed and International Financial Reporting Standards ( IFRS ) have not been quantified in the accompanying unconsolidated financial statements. Accordingly, the accompanying unconsolidated financial statements are not intended to present the financial position, results of operations and changes in financial position and cash flows in accordance with the accounting principles generally accepted in such countries and IFRS. PwC Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. Talar Gül, SMMM Partner Istanbul, 26 July 2017

3 CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCED UNCONSOLIDATED FINANCIAL STATEMENTS, RELATED DISCLOSURES ORIGINALLY ISSUED IN TURKISH, SEE NOTE I.b OF SECTION THREE THE UNCONSOLIDATED FINANCIAL REPORT OF AS OF 30 JUNE 2017 Address : Sabancı Center 34330, 4. Levent / İstanbul Telephone : (0 212) Fax : (0 212) Website : The unconsolidated financial report includes the following sections in accordance with the Communiqué on the Financial Statements and Related Explanation 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 - INFORMATION AND DISCLOSURES RELATED TO UNCONSOLIDATED FINANCIAL STATEMENTS Section Six - EXPLANATIONS ON AUDITOR S REVIEW REPORT Section Seven - INFORMATION ON INTERIM ACTIVITY REPORT The accompanying reviewed unconsolidated financial statements and notes to these financial statements which are expressed, unless otherwise stated, in thousands of Turkish Lira (TL), have been prepared 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 the related appendices and interpretations on these, and have been independently reviewed. 26 July 2017 Suzan SABANCI DİNÇER Hayri ÇULHACI Ş.Yaman TÖRÜNER S. Hakan BİNBAŞGİL K. Atıl ÖZUS Türker TUNALI Chairman of the Head of the Member of the CEO Executive Vice Senior Vice Board of Directors Audit Committee Audit President President Committee Contact information of the personnel in charge of addressing questions regarding this financial report: Name-Surname / Title : Türker TUNALI / Senior Vice President Phone No : (0 212) Fax No : (0 212)

4 SECTION ONE Page General Information about the Bank I. Bank s foundation date, start-up status, history regarding the changes in this status 1 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 1 III. Explanation on the board of directors, members of the audit committee, president and executive vice presidents, if available, shares of the Bank they possess and their areas of responsibility 1 IV. Information on the individual and corporate shareholders having control shares of the Bank 2 V. Information on the Bank s service types and fields of operation 2 SECTION TWO Unconsolidated Financial Statements of the Bank I. Balance sheet 3 II. Off Balance Sheet Commitments 5 III. Income statement 6 IV. Income and expenses accounted under shareholders equity 7 V. Statement of changes in shareholders equity 8 VI. Statement of cash flows 9 SECTION THREE Accounting Policies I. Explanations on basis of presentation 10 II. Explanations on strategy of using financial instruments and explanations on foreign currency transactions 11 III. Explanations on investments in associates and subsidiaries 11 IV. Explanations on forward transactions options and derivative instruments 11 V. Explanations on interest income and expense 12 VI. Explanations on fee and commission income and expenses 12 VII. Explanations on financial assets 12 VIII. Explanations on impairment of financial instruments 13 IX. Explanations on offsetting financial instruments 13 X. Explanations on sales and repurchase agreements and securities lending transactions 13 XI. Explanations on property and equipment held for sale purpose and related to discontinued operations and liabilities related with these assets 14 XII. Explanations on goodwill and other intangible assets 14 XIII. Explanations on property and equipment 14 XIV. Explanations on leasing transactions 14 XV. Explanations on provisions and contingent liabilities 15 XVI. Explanations on contingent assets 15 XVII. Explanations on obligations related to employee rights 15 XVIII. Explanations on taxation 16 XIX. Explanations on borrowings 17 XX. Explanations on issuance of share certificates 17 XXI. Explanations on avalized drafts and acceptances 17 XXII. Explanations on government grants 17 XXIII. Explanations on segment reporting 17 XXIV. Profit reserves and profit appropriation 17 XXV. Earnings per share 18 XXVI. Related parties 18 XXVII. Cash and cash equivalent assets 18 XXVIII. Reclassifications 18 SECTION FOUR Information Related to Financial Position and Risk Management of the Group I. Explanations on equity 19 II. Explanations on currency risk 26 III. Explanations on interest rate risk 28 IV. Explanations on equity securities position risk derived from banking books 30 V. Explanations on liquidity risk management and liquidity coverage ratio: 30 VI. Explanations on leverage ratio 35 VII Explanations on risk management 36 VIII. Explanations on hedge transactions 43 IX. Explanations on business segments 45 SECTION FIVE Information and Disclosures Related to Consolidated Financial Statements I. Explanations and notes related to assets 47 II. Explanations and notes related to liabilities 60 III. Explanations and notes related to off-balance sheet accounts 66 IV. Explanations and notes related to income statement 67 V. Explanations and notes related to statement of cash flows 71 VI. Explanations and notes related to Bank s risk group 72 VII. Explanations and notes related to subsequent events 73 SECTION SIX Explanations on Auditor s Review Report I. Explanations on auditor s review report 74 II. Explanations and notes prepared by independent auditors 74 SECTION SEVEN Information on Interim Activity Report I. Interim period activity report included chairman of the board of directors and CEO s assessments for the interim activities. 75

5 SECTION ONE GENERAL INFORMATION ABOUT THE BANK I. BANK S FOUNDATION DATE, START-UP STATUS, HISTORY REGARDING THE CHANGES IN THIS STATUS: Akbank T.A.Ş. ( the Bank or Akbank ) was established on 30 January 1948 as a private commercial bank, in accordance with the decision of the Council of Ministers, No.3/6710 and is authorized to perform all economic, financial and commercial activities which are allowed by the laws of the Turkish Republic ( T.C. ). The status of the Bank has not changed since its foundation. 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 shares have been quoted on the Borsa Istanbul ( BIST ) since In 1998, 4,03% of the outstanding share capital of the Bank was offered and sold in an international offering outside of Turkey in the form of Ordinary Shares and American Depository Receipts ( ADRs ). As of, approximately 51% of the shares are publicly traded, including the ADRs (31 December 2016: 51%). The major shareholder of the Bank, directly or indirectly, is Sabancı Group. III. EXPLANATION ON THE BOARD OF DIRECTORS, MEMBERS OF THE AUDIT COMMITTEE, PRESIDENT AND EXECUTIVE VICE PRESIDENTS, IF AVAILABLE, SHARES OF THE BANK THEY POSSESS AND THEIR AREAS OF RESPONSIBILITY: Title Name Responsibility Education Chairman: Suzan SABANCI DİNÇER Chairman and Executive Board Member Graduate Honorary Chairman, Board Member, Consultant: Erol SABANCI Honorary Chairman, Board Member and Consultant Undergraduate Board of Directors: Hayri ÇULHACI Vice Chairman and Executive Board Member Graduate A. Fuat AYLA Executive Board Member Undergraduate Ş. Yaman TÖRÜNER Board Member Undergraduate A. Aykut DEMİRAY Board Member Undergraduate I. Aydın GÜNTER Board Member Undergraduate Emre DERMAN Board Member Graduate Can PAKER Board Member PhD S. Hakan BİNBAŞGİL Board Member and CEO Graduate President and CEO: S. Hakan BİNBAŞGİL CEO Graduate Head of Internal Audit: Eyüp ENGİN Head of Internal Audit Undergraduate Executive Vice Presidents: K. Atıl ÖZUS Financial Coordination Undergraduate Kerim ROTA Treasury Graduate C. Kaan GÜR Commercial Banking Undergraduate Bülent OĞUZ SME Banking Graduate H.Burcu CİVELEK YÜCE Human Resources and Strategy Graduate Ege GÜLTEKİN Credit Monitoring and Follow-up Graduate A.Özer İSFENDİYAROĞLU Consumer Banking Graduate Levent ÇELEBİOĞLU Corporate, Investment and Private Banking Undergraduate Emin Tolga ULUTAŞ Direct Banking Graduate N. İlker ALTINTAŞ Technology and Operation PhD Hasan Recai ANBARCI Credit Allocation Graduate Internal Audit Committee: Hayri ÇULHACI Head of the Audit Committee Graduate Ş. Yaman TÖRÜNER Member of the Audit Committee Undergraduate The shares of individuals above are insignificant in the Bank. As of 1 February 2017, İlker Altıntaş has been assigned as Executive Vice President responsible of Technology and Operation Unit instead of Turgut Güney who has resigned from his position on 31 January

6 As of July 12, 2017, Cem Mengi, Executive Board Member of the Bank, resigned from his position. On the same date, Ahmet Fuat Ayla, Executive Vice President responsible for the Credit Allocation Business Unit has been elected to replace the position of Cem Mengi. This election will be submitted for approval to the upcoming General Assembly. It has been also decided that Hasan Recai Anbarcı is appointed as the Executive Vice President responsible for the Credit Allocation Business Unit, which has been vacated from Ahmet Fuat Ayla. IV. INFORMATION ON THE INDIVIDUAL AND CORPORATE SHAREHOLDERS HAVING CONTROL SHARES OF THE BANK: Share Amounts Share Paid-in Capital Unpaid Name/Commercial Title (Nominal) Percentages (Nominal) Portion Hacı Ömer Sabancı Holding A.Ş ,75 % V. INFORMATION ON THE BANK S SERVICE TYPES AND FIELDS OF OPERATION: The Bank s core business activities consist of consumer banking, commercial banking, SME banking, corporate-investment and private banking, foreign exchange, money markets, securities transactions (treasury transactions) and international banking services. In addition to regular banking operations, the Bank also provides insurance intermediary services as an agency of Aksigorta A.Ş and AvivaSA Emeklilik ve Hayat A.Ş. As of, the Bank has 839 branches dispersed throughout the country and 1 branch operating abroad (31 December 2016: 840 branches and 1 branch operating abroad). As of the Bank has employees (31 December 2016: ). 2

7 I. UNCONSOLIDATED BALANCE SHEET AS OF 30 JUNE 2017 (STATEMENT OF FINANCIAL POSITION) (Amounts are expressed in thousands of Turkish Lira (TL).) CURRENT PERIOD PRIOR PERIOD ASSETS Note (30/06/2017) (31/12/2016) (Section Five) TL FC Total 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 Equity Securities Trading Derivative Financial Assets Other Marketable Securities Financial Assets at Fair Value through Profit or Loss Government Debt Securities Equity Securities Loans Other Marketable Securities III. BANKS (I-c) IV. MONEY MARKETS Interbank Money Market Placements Istanbul Stock Exchange Money Market Placements Receivables from Reverse Repurchase Agreements V. AVAILABLE-FOR-SALE FINANCIAL ASSETS (Net) (I-d) Equity Securities Government Debt Securities Other Marketable Securities VI. LOANS and RECEIVABLES (I-e) Loans and Receivables Loans to Bank's Risk Group (VI) Government Debt Securities Other Loans under Follow-up Specific Provisions (-) VII. FACTORING RECEIVABLES VIII. HELD-TO-MATURITY SECURITIES (Net) (I-f) Government Debt Securities Other Marketable Securities IX. INVESTMENTS IN ASSOCIATES (Net) (I-g) Associates Consolidated Based on Equity Method Unconsolidated Associates Financial Investments in Associates Non-Financial Investments in Associates X. SUBSIDIARIES (Net) (I-h) Financial Subsidiaries Non-Financial Subsidiaries XI. JOINT VENTURES (Net) Joint Ventures Consolidated Based on Equity Method Unconsolidated Joint Ventures Financial Joint Ventures Non-Financial Joint Ventures XII. FINANCIAL LEASE RECEIVABLES (Net) (I-i) Financial Lease Receivables Operating Lease Receivables Other Unearned Income ( - ) XIII. HEDGING DERIVATIVE FINANCIAL ASSETS (I-j) Fair Value Hedge Cash Flow Hedge Foreign Net Investment Hedge XIV. PROPERTY AND EQUIPMENT (Net) (I-k) XV. INTANGIBLE ASSETS (Net) Goodwill Other XVI. INVESTMENT PROPERTY (Net) (I-l) XVII. TAX ASSET Current Tax Asset Deferred Tax Asset (I-m) XVIII. PROPERTY AND EQUIPMENT HELD FOR SALE PURPOSE AND RELATED TO DISCONTINUED OPERATIONS (Net) (I-n) Held for Sale Purpose Related to Discontinued Operations XIX. OTHER ASSETS (I-o) TOTAL ASSETS The accompanying explanations and notes form an integral part of these financial statements. 3

8 I. UNCONSOLIDATED BALANCE SHEET AS OF 30 JUNE 2017 (STATEMENT OF FINANCIAL POSITION) (Amounts are expressed in thousands of Turkish Lira (TL).) CURRENT PERIOD PRIOR PERIOD LIABILITIES Note (30/06/2017) (31/12/2016) (Section Five) TL FC Total TL FC Total I. DEPOSITS (II-a) Deposits of Bank's Risk Group (VI) Other II. TRADING DERIVATIVE FINANCIAL LIABILITIES (II-b) III. FUNDS BORROWED (II-c) IV. MONEY MARKETS Funds from Interbank Money Market Funds from Istanbul Stock Exchange Money Market Funds Provided Under Repurchase Agreements V. 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. FINANCIAL LEASE PAYABLES (Net) (II-f) Financial Lease Payables Operating 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 Provisions Restructuring Provisions Reserve for Employee Benefits Insurance Technical Provisions (Net) Other Provisions XIII. TAX LIABILITY (II-i) Current Tax Liability Deferred Tax Liability XIV. LIABILITIES FOR PROPERTY AND EQUIPMENT HELD FOR SALE AND RELATED TO DISCONTINUED OPERATIONS Held for Sale Purpose Related to Discontinued Operations XV. SUBORDINATED LOANS (II-j) XVI. SHAREHOLDERS' EQUITY (II-k) ( ) ( ) Paid-in capital Capital Reserves ( ) ( ) Share Premium Share Cancellation Profits Marketable Securities Valuation Differences ( ) ( ) ( ) ( ) ( ) ( ) Property and Equipment Revaluation Differences Intangible Assets Revaluation Differences Investment Properties Revaluation Differences Bonus Shares from Investments in Associates, Subsidiaries and Joint Ventures Hedging Funds (Effective portion) (9.663) (15.532) Value Increase of Assets Held for Sale Other Capital Reserves Profit Reserves Legal Reserves Status Reserves Extraordinary Reserves Other Profit Reserves Income or (Loss) s' Income or (Loss) Income or (Loss) TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY The accompanying explanations and notes form an integral part of these financial statements. 4

9 II. UNCONSOLIDATED OFF-BALANCE SHEET COMMITMENTS AS OF 30 JUNE 2017 (Amounts are expressed in thousands of Turkish Lira (TL).) CURRENT PERIOD PRIOR PERIOD Note (30/06/2017) (31/12/2016) (Section Five) TL FC Total TL FC Total A. OFF-BALANCE SHEET COMMITMENTS (I+II+III) I. GUARANTEES AND WARRANTIES (III-2, 3) 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 Turkey Other Endorsements Purchase Guarantees for Securities Issued Factoring Guarantees Other Guarantees Other Collaterals II. COMMITMENTS (III-1) Irrevocable Commitments Asset Purchase Commitments Deposit Purchase and Sales Commitments Share Capital Commitments to Associates and Subsidiaries Loan Granting Commitments Securities Issue Brokerage Commitments Commitments for Reserve Requirements Commitments for Cheque Payments Tax and Fund Liabilities from Export Commitments Commitments for Credit Card Limits Commitments for Credit Cards and Banking Services Promotions Receivables from Short Sale Commitments of Marketable Securities Payables for Short Sale Commitments of Marketable Securities Other Irrevocable Commitments Revocable Commitments Revocable Loan Granting Commitments Other Revocable Commitments III. DERIVATIVE FINANCIAL INSTRUMENTS Hedging Derivative Financial Instruments Fair Value Hedges Cash Flow Hedges Foreign Net Investment Hedges 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 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 Immovables Other Pledged Items Pledged Items-Depository VI. ACCEPTED BILL, GUARANTEES AND WARRANTEES TOTAL OFF-BALANCE SHEET COMMITMENTS (A+B) The accompanying explanations and notes form an integral part of these financial statements. 5

10 III. UNCONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 30 JUNE 2017 (Amounts are expressed in thousands of Turkish Lira (TL).) INCOME AND EXPENSE ITEMS Note CURRENT PERIOD PRIOR PERIOD CURRENT PERIOD PRIOR PERIOD (Section Five) (01/01-30/06/2017) (01/01-30/06/2016) (01/04-30/06/2017) (01/04-30/06/2016) I. INTEREST INCOME (IV-a) Interest on Loans (IV-a-1) Interest on Reserve Requirements Interest on Banks (IV-a-2) Interest on Money Market Transactions Interest on Marketable Securities Portfolio (IV-a-3) 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 II. INTEREST EXPENSE (IV-b) Interest on Deposits (IV-b-4) Interest on Funds Borrowed (IV-b-1) Interest Expense on Money Market Transactions Interest on Securities Issued (IV-b-3) Other Interest Expenses III. NET INTEREST INCOME (I - II) IV. NET FEES AND COMMISSIONS INCOME Fees and Commissions Received Non-cash Loans Other Fees and Commissions Paid Non-cash Loans Other V. DIVIDEND INCOME VI. TRADING INCOME /(LOSS) (Net) (IV-c) ( ) ( ) Trading Gains / (Losses) on Securities Gains / (Losses) on Derivative Financial Transactions ( ) (38.223) ( ) Foreign Exchange Gains / (Losses) (87.866) 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. PROFIT/LOSS BEFORE TAX FROM CONTINUED OPERATIONS (XI+ +XIV) XVI. TAX PROVISION FOR CONTINUED OPERATIONS (±) (IV-g) Current Tax Provision Deferred Tax Provision (11.871) (24.688) XVII. CURRENT PERIOD PROFIT/LOSS FROM CONTINUED OPERATIONS (XV±XVI) XVIII. INCOME FROM DISCONTINUED OPERATIONS Income from Non-current Assets Held for Sale Profit from Sales of Associates, Subsidiaries and Joint Ventures Income from Other Discontinued Operations XIX. EXPENSES FOR DISCONTINUED OPERATIONS (-) Expenses for Non-current Assets Held for Sale Loss from Sales of Associates, Subsidiaries and Joint Ventures Expenses for Other Discontinued Operations XX. PROFIT/LOSS BEFORE TAX FROM DISCONTINUED OPERATIONS (XVIII-XIX) XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) Current Tax Provision Deferred Tax Provision XXII. CURRENT PERIOD PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) XXIII. NET INCOME/(LOSS) (XVII+XXII) (IV-h) Earnings per share (in full TL) 0, , , ,00333 The accompanying explanations and notes form an integral part of these financial statements. 6

11 IV. UNCONSOLIDATED STATEMENT OF INCOME AND EXPENSES ACCOUNTED UNDER SHAREHOLDERS' EQUITY FOR THE PERIOD ENDED 30 JUNE 2017 (Amounts are expressed in thousands of Turkish Lira (TL).) INCOME AND EXPENSES ACCOUNTED UNDER SHAREHOLDERS' EQUITY CURRENT PERIOD PRIOR PERIOD (30/06/2017) (30/06/2016) I. ADDITIONS TO MARKETABLE SECURITIES VALUATION DIFFERENCES FROM AVAILABLE- FOR- SALE FINANCIAL ASSETS II. PROPERTY AND EQUIPMENT REVALUATION DIFFERENCES III. INTANGIBLE ASSETS REVALUATION DIFFERENCES - - IV. TRANSLATION DIFFERENCES FROM FOREIGN CURRENCY TRANSACTIONS - - V. PROFIT/LOSS FROM CASH FLOW HEDGE DERIVATIVE FINANCIAL ASSETS (Effective Portion of Fair Value Changes) (23.090) (5.700) VI. PROFIT/LOSS FROM FOREIGN NET INVESTMENT HEDGE DERIVATIVE FINANCIAL ASSETS (Effective Portion) - - VII. EFFECTS OF CHANGES IN ACCOUNTING POLICY AND CORRECTIONS - - VIII. OTHER INCOME/EXPENSE ACCOUNTED UNDER SHAREHOLDERS' EQUITY AS PER TAS - - IX. TAX RELATED TO VALUATION DIFFERENCES ( ) ( ) X. NET INCOME/EXPENSE DIRECTLY ACCOUNTED UNDER SHAREHOLDERS' EQUITY (I+II+ +IX) XI. CURRENT PERIOD INCOME / LOSS Net Change in Fair Value of Marketable Securities (Transfer to Profit/Loss) Part of Cash Flow Hedge Derivative Financial Assets Reclassified and Presented on the Income Statement (16.135) (18.437) 11.3 Part of Foreign Net Investment Hedge Derivative Financial Assets Reclassified and Presented on the Income Statement Other XII. TOTAL INCOME / LOSS ACCOUNTED FOR THE PERIOD (X±XI) The accompanying explanations and notes form an integral part of these financial statements. 7

12 V. UNCONSOLIDATED STATEMENT OF CHANGES IN THE SHAREHOLDERS' EQUITY FOR THE PERIOD ENDED 30 JUNE 2017 (Amounts are expressed in thousands of Turkish Lira (TL)). Note (Section Five) Paid-in Capital Adjustment to Share Capital(*) Share Premiums Share Cancellation Profits Legal Reserves Status Reserves Extraordinary Reserves Other Net Reserves Income (Loss) Net Income (Loss) Marketable Securities Valuation Differences Property & Equipment Revaluation Differences Bonus Shares from Invest. in Ass., Subs. and J.V. Hedging Transactions Val. Chan. in Prop. and Eq. HFS Purp./ Total Shareholders' Disc. Opr. Equity PRIOR PERIOD (30/06/2016) I. Begining Balance ( ) (60.377) II. Corrections and Accounting Policy Changes Made According to TAS Effects of Corrections Effects of the Changes in Accounting Policies III. Adjusted Beginning Balance (I+II) ( ) (60.377) Changes in the period IV. Increase/Decrease due to Mergers V. Marketable Securities Valuation Differences (II-k-8) VI. Hedging transactions (4.560) - (4.560) 6.1 Cash Flow Hedge (4.560) - (4.560) 6.2 Foreign Net Investment Hedge VII. Property and Equipment Revaluation Differences VIII. Intangible Assets Revaluation Differences IX. Bonus Shares from Investments in Associates, Subsidiaries and Joint Ventures X. Translation Differences XI. Changes due to the disposal of assets XII. Changes due to the reclassification of assets XIII. Effects of changes in equity of investments in associates XIV. Capital Increase Cash Increase Internal Resources XV. Share Issuance XVI. Share Cancellation Profits XVII. Paid-in capital inflation adjustment difference XVIII. Other XIX. Current Year Income or (Loss) XX. Profit Distribution ( ) ( ) 20.1 Dividends paid ( ) ( ) 20.2 Transfers to Reserves ( ) Other Ending Balance (III+IV+V+ +XVIII+XIX+XX) ( ) (64.937) CURRENT PERIOD (30/06/2017) I. End Balance ( ) Changes in the period II. Increase/Decrease due to Mergers III. Marketable Securities Valuation Differences (II-k-8) IV. Hedging transactions (18.472) - (18.472) 4.1 Cash flow Hedge (18.472) - (18.472) 4.2 Foreign Net Investment Hedge V. Property and Equipment Revaluation Differences VI. Intangible Assets Revaluation Differences VII. Bonus Shares from Investments in Associates, Subsidiaries and Joint Ventures VIII. Translation Differences IX. Changes due to the disposal of assets X. Changes due to the reclassification of assets XI. Effects of changes in equity of investments in associates XII. Capital Increase Cash Increase Internal Resources XIII. Share Issuance XIV. Share Cancellation Profits XV. Paid-in capital inflation adjustment difference XVI. Other XVII. Current Year Income or (Loss) XVIII. Profit Distribution ( ) ( ) 18.1 Dividends paid ( ) ( ) 18.2 Transfers to Reserves ( ) Other Ending Balance (I+II+III+ +XVI+XVII+XVIII) ( ) (*) The amounts for the Paid-in Capital Inflation Adjustment Difference and Actuarial Loss/Gain which is in the Other Reserves are presented under Other Capital Reserves in the financial statements. The accompanying explanations and notes form an integral part of these financial statements. 8

13 VI. UNCONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 30 JUNE 2017 (Amounts are expressed in thousands of Turkish Lira (TL)). Note CURRENT PERIOD PRIOR PERIOD (Section Five) (30/06/2017) (30/06/2016) A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating Profit before changes in operating assets and liabilities Interest received Interest paid ( ) ( ) Dividend received Fees and commissions received Other income ( ) ( ) Collections from previously written-off loans and other receivables Payments to personnel and service suppliers ( ) ( ) Taxes paid ( ) ( ) Other ( ) Changes in operating assets and liabilities ( ) ( ) Net decrease in trading securities (9.392) (3.478) Net (increase) / decrease in fair value through profit/(loss) financial assets Net (increase) / decrease in due from banks and other financial institutions Net (increase) / decrease in loans ( ) ( ) Net (increase) / decrease in other assets ( ) ( ) Net increase / (decrease) in bank deposits ( ) Net increase / (decrease) in other deposits Net increase / (decrease) in funds borrowed ( ) Net increase / (decrease) in payables Net increase / (decrease) in other liabilities ( ) I. Net cash provided from banking operations ( ) ( ) B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash provided from investing activities ( ) Cash paid for acquisition of investments, associates and subsidiaries Cash obtained from disposal of investments, associates and subsidiaries Purchases of property and equipment (93.701) (60.650) 2.4 Disposals of property and equipment Cash paid for purchase of investments available-for-sale ( ) ( ) 2.6 Cash obtained from sale of investments available-for-sale Cash paid for purchase of investment securities (164) Cash obtained from sale of investment securities Other ( ) ( ) C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net cash provided from financing activities ( ) 3.1 Cash obtained from funds borrowed and securities issued Cash used for repayment of funds borrowed and securities issued ( ) ( ) 3.3 Issued equity instruments Dividends paid ( ) ( ) 3.5 Payments for finance leases (12.872) (28.895) 3.6 Other - - IV. Effect of change in foreign exchange rate on cash and cash equivalents (22.809) V. Net increase in cash and cash equivalents (I+II+III+IV) ( ) ( ) VI. Cash and cash equivalents at beginning of the period (V) VII. Cash and cash equivalents at end of the period (V) The accompanying explanations and notes form an integral part of these financial statements 9

14 I. EXPLANATIONS ON BASIS OF PRESENTATION: SECTION THREE EXPLANATIONS ON ACCOUNTING POLICIES a. The preparation of the financial statements and related notes and explanations in accordance with the Turkish Accounting Standards and Regulation on Accounting Applications for Banks and Safeguarding of Documents: The unconsolidated financial statements are prepared within the scope of the Regulation on Accounting Applications for Banks and Safeguarding of Documents related with Banking Law numbered 5411 published in the Official Gazette no dated 1 November 2006 and in accordance with the regulations, communiqués, interpretations and legislations related to accounting and financial reporting principles published by the Banking Regulation and Supervision Agency ( BRSA ), and in case where a specific regulation is not made by BRSA, Turkish Accounting Standards ( TAS ) and Turkish Financial Reporting Standards ( TFRS ) and related appendices and interpretations 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 and Communiqué On Disclosures About Risk Management To Be Announced To Public By Banks and amendments to this Communiqué. The Bank maintains its books in Turkish Lira in accordance with the Banking Law, Turkish Commercial Code and Turkish Tax Legislation. The unconsolidated financial statements have been prepared in TL, under the historical cost convention except for the financial assets and liabilities carried at fair value. The preparation of unconsolidated financial statements in conformity with TAS requires the use of certain critical accounting estimates by the Bank management to exercise its judgment on the assets and liabilities of the balance sheet and contingent issues as of the balance sheet date. These estimates, which include the fair value calculations of financial instruments and impairments of financial assets are being reviewed regularly and, when necessary, suitable corrections are made and the effects of these corrections are reflected to the income statement. Assumptions and estimates that are used in the preparation of the accompanying financial statements are explained in the following related disclosures. The amendments of TAS and TFRS, effectiveness date is 1 January 2017, have no material impact on the Bank s accounting policies, financial position and performance. The amendments of TAS and TFRS will be effective as of 1 January 2018, except TFRS 9 Financial Instruments, will have no impact on the accounting policies, financial condition and performance of the Bank. The Bank continues works in order to comply with TFRS 9 Financial Instruments Standard. b. Explanation for convenience translation into English: The differences between accounting principles, as described in these preceding paragraphs and accounting principles generally accepted in countries in which unconsolidated financial statements are to be distributed and International Financial Reporting Standards ( IFRS ) have not been quantified in these unconsolidated financial statements. Accordingly, these 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. c. Accounting policies and valuation principles applied in the presentation of unconsolidated financial statements: The accounting policies and valuation principles applied in the preparation of unconsolidated financial statements, are determined and applied in accordance with regulations, communiqués, explanations and circulars on accounting and financial reporting principles published by the BRSA, and in case where there is no special regulation made by the BRSA, in accordance with principles in the context of TAS and TFRS, and are consistent with the accounting policies applied in the annual financial statements of the year ended 31 December 2016 except for applying revaluation model in the properties in accordance with TAS 16 Plant and Equipment as explained in the note of I-k of the Fifth Section. The aforementioned accounting policies and valuation principles are explained in Notes II to XXVIII below. 10