Türkiye İş Bankası Anonim Şirketi

Transcription

1 (Convenience Translation of Unconsolidated Interim Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note I in Section Three) Türkiye İş Bankası Anonim Şirketi Unconsolidated Financial Statements As at and For the Six-Month Period Ended June 30, 2018 With Auditor s Limited Review Report Thereon (Convenience Translation of Unconsolidated Interim Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish) This report includes Auditor s Limited Review Report comprising 2 pages and; "Unconsolidated Financial Statements and Related Disclosures and Footnotes comprising 116 pages.

2 To the Board ofdirectors oftürkiye İş Bankası Anonim Şirketi; statement of cash flows and a summary of signiftcant accounting pollcies and other explanatory notes to the unconsolidated fmancial statements for the six-month-period then ended. The Bank Management is responsible Accounting Applications for Banks and Safeguarding of Documents published in the Official Gazette no Supervision Authority ( BRSA ) and Turkish Accounting Standard ( TAS ) 34 Interim Financial Reporting for those matters not regulated by BRSA Legislation (together referred as BRSA Accounting and Financial Reporting Scope ofreview 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 fırm wiil be aware of ali significant matters which would have been identifled in an audit. Accordingly, we do not express an opinion. Independent Auditors Report on Review of Unconsolidated Interim Financial Information Originaliy Issued in Turkish (See Note 1 in Section Three) of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410, Limited Review June 30, 2018 and the related unconsolidated statement of income, unconsolidated statement ofprofit or Ioss and for the preparation and fair presentation of interim financial statements in accordance with the Regulatkwı on and Supervision Agency ( BRSA ) and circulars and fnterpretations published by Banking Regulation and review. Legislation ). Our responsibility is to express a conclusion on these interim financial statements based on our other comprehensive income, unconsolidated statement of changes in shareholders equity, unconsolidated dated November 1, 2006, and other regulations on accounting records ofbanks published by Banking Regulation We have reviewed the unconsolidated statement of financial position of Türkiye İş Bankası A.Ş. ( the Bank ) at Introduction Convenience Translation of the Auditor s Limited Review Report Istanbul - working world. arıyer Buıldıng a better. Cad. Orjin Mastak Plaza Na: 27 Ticaret Sicit Na : Turkıye Masak MahaUesi Eski Büyükdere ey.com SMMM A.Ş. Fax: E yr Güney BağImfz Lenetim ve Tel ,000 thousands under the expected credit loss of the unconsolidated income statement in the current period by A member flrm ofernst 5 Young Global Lımıted accompanying unconsolidated fınancial statements do not give a tme view ofthe financial position oftürkiye tş ended in ali aspects in accordance with the BRSA Accotınting and Financial Reporting Legislation. Bankası A.Ş. at Jııne 30, and ofthe resııits of its operations and its cash flows for the six-rnonth-period then the unconsolidated financial statements, nothing has come to our attention that causes tıs to believe that the Based on ottr review, except for the effect ofthe matter referred in the basis ofqualifted conclusion paragraph on Quat(fied Conctusion similar provisiorı allocated by a subsidiary in its financial statements. respectively and Profit 1 loss has been overstated amounting to TL 24,3 12 thousands, due to a and Prior Years Proftt 1 loss have been understated amounting to TL 52,676 thousands and TL 76,988 thousands, the equity method in the accompanying unconsolidated fınancial statements as at June 30, 201 8, Subsidiaries (Net), changes in the economy and market conditions which does not meet the recognition criteria oftas 37 Provisions, Contingent Liabilities and Contingent Assets. Furthermore, as a result of the adoption of TAS 27 Separate Financial Statements and consequently commencement of accounting for its direct or indfrect subsidiaries using the Bank management for the possible effects of the negative circumstances which may arise from the possible risks amounting to TL 1,700,000 thousands, of which IL 1,550,000 thousands was provided in prior years and TL The accompanying unconsolidated financial statements as at June 30, inciude a free provision for possible Basis ofqualfled Conclıtsion less in scope than an independent audit performed in accordance with the Independent Auditing Standards and the and applying analytical and other review procedures. A review of interim financial information is substantially financial information consists ofmaking inquiries, primariiy ofpersons responsible for fmancial reporting process,

3 EY Building a better working world Report on other regutatoıy reqıtirements arisingftorn legislation Based on our revfew, nothing has come to our attention that causes us to believe that the fmancial information provided in the accompanying interim activity report in Section Vili, are not consistent with the unconsolidated financial statements and disctosures in al! material respects. A(!ditioııalparagraph for coııvenience transtatioıı to Engtish - As explained in detail in Note 1 of Section Three, the effects of differences between accdnnting principles and standards set out by regulations in conformity with BRSA Accounting and Financial Reporting Legislation, accounting principles generaliy accepted in countries in which the accompanying unconsolidated financial statements are to be distributed and İnternational Financial Reporting Standards ( IFRS ) have not been quantified in the accompanying unconsolidated fmancial statements. Accordingly, the accompanying unconsolidated frnancial statements are not intended to present the financial position, results ofoperations and changes in financial position and cash flows in accordance with the accounting principles generaliy accepted in such countries and IFRS. Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi A mernfirn of Emst c Young Global Limited ; Fatma friicel, SMMM Partner August 1, 2018 İstanbul, Türkiye A memberfirm ofernst 8Young Globai Limited

4 TÜRKİYE İŞ BANKASI ANONİM ŞİRKETİ THE UNCONSOLIDATED INTERIM FINANCIAL REPORT AS AT AND FOR THE SIX-MONTH PERIOD ENDED JUNE 30, 2018 Headquarters Address: İş Kuleleri, 34330, Levent/İstanbul Telephone: Fax: Web site: The unconsolidated interim financial report as at and for the six-month period ended prepared in accordance with the communiqué of Financial Statements and Related Disclosures and Footnotes to be announced to Public by Banks as regulated by Banking Regulation and Supervision Agency, comprises the following sections: GENERAL INFORMATION ABOUT THE BANK UNCONSOLIDATED INTERIM FINANCIAL STATEMENTS EXPLANATIONS ON THE ACCOUNTING POLICIES INFORMATION ON FINANCIAL STRUCTURE AND RISK MANAGEMENT DISCLOSURES AND FOOTNOTES ON THE UNCONSOLIDATED INTERIM FINANCIAL STATEMENTS OTHER EXPLANATIONS LIMITED REVIEW REPORT INTERIM ACTIVITY REPORT The unconsolidated financial statements for the six-month period ended and related disclosures and footnotes in this report are prepared in accordance with the Regulation on the Procedures and Principles for Accounting Practices and Retention of Documents by Banks, Banking Regulation and Supervision Agency (BRSA) regulations, Turkish Accounting Standards, Turkish Financial Reporting Standards and the related statements and guidance and in compliance with the financial records of our Bank. Unless otherwise stated, the accompanying unconsolidated financial report is presented in thousands of Turkish Lira (TL), and has been subjected to independent audit and presented as the attached. Prof. Dr. Turkay Berksoy Füsun Tümsavaş H. Ersin Özince Member of the Board and Deputy Chairman of the Board of Directors Chairman of the Board of Directors the Audit Committee and Chairman of the Audit Committee And Member of the Audit Committee Ali Tolga Ünal Senar Akkuş Adnan Bali Head of Financial Management Division Deputy Chief Executive Chief Executive Officer In Charge of Financial Reporting The authorized contact person for questions on this financial report: Name Surname / Title: Süleyman H. Özcan / Head of Investor Relations Division Phone No : Fax No : Suleyman.Ozcan@isbank.com.tr investorrelations@isbank.com.tr Website :

5 Page: SECTION I General Information about the Bank I. Explanations on the Establishment Date and Initial Status of the Bank, History Including the Changes in the Former Status 1 II. Explanations on the Capital Structure, Shareholders who Directly or Indirectly, Solely or Jointly Undertake the Management and Control of the Bank, any Changes in the Period, and Information on the Bank s Risk Group 1 III. Explanations on the Chairman s, Directors, Auditors, Chief Executive Officer s and Deputy Chief Executives Shares, if any, and the Areas of their Responsibility at the Bank 1 IV. Information on the Bank s Qualified Shareholders 2 V. Summary Information on the Bank s Functions and Business Lines 2 VI. Existing or Potential, Actual or Legal Obstacles on the Transfer of Shareholder s Equity Between the Bank and its Subsidiaries or the Reimbursement of Liabilities 2 VII. Written Policies on Assessment of Ensuring Compliance on Market Discipline, Disclosure Obligations, Frequency and Accuracy of Related Disclosures 2 SECTION II Unconsolidated Interim Financial Statements I. Balance Sheet (Statement of Financial Position) Assets 3 II. Balance Sheet (Statement of Financial Position) Assets () 4 III. Balance Sheet (Statement of Financial Position) Liabilities 5 IV. Balance Sheet (Statement of Financial Position) Liabilities () 6 V. Statement of Off-Balance Sheet Items 7 VI. Statement of Off-Balance Sheet Items () 8 VII. Statement of Income 9 VIII. Statement of Income () 10 IX. Statement of Profit or Loss and Other Comprehensive Income 11 X. Statement of Income and Expense Items Accounted under Shareholders Equity () 12 XI. Statement of Changes in the Shareholders Equity 13 XII. Statement of Changes in the Shareholders Equity () 14 XIII. Statement of Cash Flows 15 XIV. Statement of Cash Flows () 16 SECTION III Explanations on Accounting Policies I. Basis of Presentation 17 II. Strategy for Use of Financial Instruments and Foreign Currency Transactions 19 III. Associates and Subsidiaries 20 IV. Forward, Option Contracts and Derivative Instruments 20 V. Interest Income and Expenses 20 VI. Fees and Commission Income and Expenses 20 VII. Financial Assets 21 VIII. Explanations on Expected Credit Losses 22 IX. Offsetting Financial Instruments 23 X. Sale and Repurchase Agreements and Securities Lending Transactions 23 XI. Non-current Assets Held for Sale and Discontinued Operations and Related Liabilities 23 XII. Goodwill and Other Intangible Assets 24 XIII. Tangible Assets 24 XIV. Leasing Transactions 25 XV. Provisions and Contingent Liabilities 25 XVI. Contingent Assets 25 XVII. Liabilities Regarding Employee Benefits 26 XVIII. Taxation 27 XIX. Borrowings 28 XX. Equity Shares and Issuance of Equity Securities 29 XXI. Bank Acceptances and Bills of Guarantee 29 XXII. Government Incentives 29 XXIII. Segment Reporting 29 XXIV. Other Disclosures SECTION IV Information on the Financial Position and Risk Management of the Bank I. Explanations on Shareholders Equity 34 II. Explanations on Currency Risk 42 III. Explanations on Interest Rate Risk 44 IV. Explanations on Equity Shares Risk Arising from Banking Book 47 V. Explanations on Liquidity Risk Management and Liquidity Coverage Ratio 48 VI. Explanations on Leverage Ratio 52 VII. Explanations on Risk Management Objectives and Policies 53 VIII. Explanations on Segment Reporting 63 SECTION V Disclosures and Footnotes on the Unconsolidated Financial Statements I. Disclosures and Footnotes on Assets 65 II. Disclosures and Footnotes on Liabilities 83 III. Disclosures and Footnotes on Off-Balance Sheet Items 93 IV. Disclosures and Footnotes on Statement of Income 95 V. Disclosures and Footnotes on the Bank s Risk Group 101 VI: Subsequent Events 104 SECTION VI Other Explanations I. Explanations on the Bank s Credit Ratings 105 II. Explanations on Special Purpose Audit and Public Audit 105 SECTION VII Explanations on the Limited Review Report I. Explanations on the Limited Review Report 106 II. Explanations and Footnotes of the Independent Auditors 106 SECTION VIII Interim Activity Report I. General Information 107 II. Turkish Economy and Banking Sector Outlook 109 III. Financial Information and Assessment on Bank 110 IV. Information About the Meetings of the Board of Directors 114 V. Information on the Activities of the Committee of Internal Systems 114 VI. Information About the Activities of the Credit Committee 115 VII. Corporate Governance Committee 115 VIII. Information on the transactions relating to Banks Risk Group 115 IX. Information on Dividend Distribution 115 X. Additional Information about the period January 1, 2018 June 30,

6 SECTION ONE: GENERAL INFORMATION ABOUT THE BANK I. Explanations on the Establishment Date and Initial Status of the Bank, History Including the Changes in the Former Status TÜRKİYE İŞ BANKASI A.Ş. ( the Bank ) was established on August 26, 1924 to operate in all kinds of banking activities and to initiate and/or participate in all kinds of financial and industrial sector undertakings when necessary. There is no change in the Bank s status since its establishment. II. Explanations on the Capital Structure, Shareholders who Directly or Indirectly, Solely or Jointly Undertake the Management and Control of the Bank, any Changes in the Period, and Information on the Bank s Risk Group As at June 30, 2018, 40.12% of the Bank s shares are owned by T. İş Bankası A.Ş. Supplementary Pension Fund (Fund), 28.09% are owned by the Republican People s Party- CHP (Atatürk s shares) and 31.79% are on free float (31 December 2017: Fund 39.95%, CHP 28.09%, Free float 31.96%). III. Explanations on the Chairman s, Directors, Auditors, Chief Executive Officer s and Deputy Chief Executives Shares, if any, and the Areas of their Responsibility at the Bank Chairman and Members of the Board of Directors: Name and Surname H. Ersin Özince Füsun Tümsavaş Adnan Bali Prof. Dr. Turkay Berksoy Feray Demir Ertuğrul Bozgedik Ersin Önder Çiftçioğlu Murat Karayalçın Özcal Korkmaz Müslim Sarı Rahmi Aşkın Türeli Areas of Responsibility Chairman of the Board and the Remuneration Committee, Member of the Audit Committee, TRNC Internal Systems Committee and Substitute Member of the Credit Committee Deputy Chairman, Audit Committee, TRNC Internal Systems Committee, Chairman of the Risk Committee and the Corporate Governance Committee, Substitute Member of the Credit Committee Chief Executive Officer and Director, Chairman of the Credit Committee, Member of the Risk Committee, Chairman of the Executive Committee, Chairman of the Human Resources Committee Director, Audit Committee, TRNC Internal Systems Committee and Member of the Remuneration Committee Director, Credit Committee,Member of Corporate Social Responsibility Committee Director, Credit Committee Director, Corporate Governance Committee Director Director, Corporate Governance Committee Director, Member of Corporate Social Responsibility Committee Director, Member of Corporate Social Responsibility Committee 1

7 Chief Executive Officer and Deputy Chief Executives: Name and Surname Adnan Bali Mahmut Magemizoğlu Hakan Aran Yalçın Sezen Senar Akkuş Yılmaz Ertürk Ergün Yorulmaz Murat Bilgiç Nevzat Burak Seyrek Mehmet Şencan Ömer Karakuş Şahismail Şimşek Ebru Özşuca Gamze Yalçın Areas of Responsibility Chief Executive Officer and Director, Chairman of the Credit Committee, Member of the Risk Committee, Chairman of the Executive Committee, Chairman of the Human Resources Committee Senior Deputy Chief Executive, Subsidiaries, Member of the Risk Committee Information Technologies, Digital Banking Operations, Data Management Consumer Loans, Card Payment Systems, Retail Banking Marketing-Sales and Products, Retail Loan and Card Operations Digital Banking, Private Banking Marketing and Sales, Member of the Corporate Social Responsibility Committee Financial Management, Strategy and Corporate Performance Management,, Managerial Reporting and Interna Accounting, Member of the Corporate Social Responsibility Committee and the Risk Committee Economic Research, International Financial Institutions Commercial Banking, Retail Banking and General Deliberation Legal Counsellorship, Commercial and Corporate Loans and Retail Loans Monitoring and Recovery Corporate, SME, Commercial, Retail Banking Allocation, Credit Portfolio Management, Financial Analysis and Member of the Risk Committee Enterprise Architecture, Human Resources and Talent Management, Consumer Relations Coordination Officer Commercial Banking Marketing, Sales and Product, SME and Business Banking Sales, Corporate Banking Marketing and Sales, Free Zone Branches, Foreign Branches and Representations Banking Basic Operations, Support Services and Purchasing, Foreign and Commercial Credit Operations, Interna Operations, Construction and Property Management, Branch Network Development SME and Enterprise Banking Sales, Commercial Banking Marketing and Product Treasury, Economic Enquiries, Member of the Risk Comittee International Financial Institutions, Investor Relations The Bank s shares attributable to the Directors and members of the Audit Committee, to the CEO and the Deputy Chief Executives are of minor importance. IV. Information on the Bank s Qualified Shareholders Name Surname/Company Shares Ownership T. İş Bankası A.Ş. Mensupları Munzam Sosyal Güvenlik ve Yardımlaşma Sandığı Vakfı (İşbank Members Supplementary Pension Fund) Paid-in Capital 1,805,403 % ,805,403 Unpaid Capital Cumhuriyet Halk Partisi Republican People s Party -(Atatürk s Shares) 1,264,142 % ,142 V. Summary Information on the Bank s Functions and Business Lines In line with the relevant legislation and principles stated in the Articles of Incorporation of the Bank, the Bank s activities include operating in retail, commercial, corporate and private banking, foreign currency and money market operations, marketable securities operations, international banking services and other banking operations, as well as initiating or participating in all kinds of financial and industrial sector corporations as may be required. VI. Existing or Potential, Actual or Legal Obstacles on the Transfer of Shareholders Equity between the Bank and its Subsidiaries or the Reimbursement of Liabilities None. VII. Written Policies on Assessment of Ensuring Compliance on Market Discipline, Disclosure Obligations, Frequency and Accuracy of the Related Disclosures The Bank has written policies on assessment of ensuring compliance on market discipline, disclosure obligations, frequency and accuracy of related disclosures. The mentioned policies which are agreed by Board of Directors can be obtained from the Bank s website. 2

8 UNCONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2018 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) SECTION II: UNCONSOLIDATED FINANCIAL STATEMENTS TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION) THOUSAND TL CURRENT PERIOD ASSETS Footnotes (30/06/2018) TL FC Total I. FINANCIAL ASSETS (NET) 57,158,322 54,954, ,112, Cash and Cash Equivale nts 6,913,870 37,965,620 44,879, Cash and Balances with Central Bank V-I-a 5,844,254 35,331,330 41,175, Banks V-I-d 1,069,616 2,634,290 3,703, Money Market Placements Financial Assets at Fair Value Through Profit or Loss V-I-b 424,043 7, , Government Debt Securities 188,194 7, , Equity Securities 234, , Other Financial Assets 1,514-1, Financial Assets at Fair Value Through Other Comprehensive Income V-I-e 26,458,248 10,593,158 37,051, Government Debt Securities 26,404,839 10,311,205 36,716, Equity Securities 53, , , Other Financial Assets - 82,979 82, Financial Assets Measured at Amortised Cost V-I-g 23,299,903 1,793,604 25,093, Government Debt Securities 22,990,844 1,394,577 24,385, Other Financial Assets 309, , , Derivative Financial Assets V-I-c 69,828 4,608,675 4,678, Derivative Financial Assets at Fair Value Through Profit or Loss 69,828 4,608,675 4,678, Derivative Financial Assets at Fair Value Through Other Comprehensive Income Non-Performing Financial Assets Expected Credit Loss (-) 7,570 13,660 21,230 II. LOANS (NET) V-I-f 152,378, ,154, ,532, Loans 151,988, ,054, ,043, Loans Measured at Amortised Cost 151,988, ,054, ,043, Loans Measured at Fair Value Through Profit or Loss Loans Measured at Fair Value Through Other Comprehensive Income Lease Receivables V-I-k Financial Lease Receivables Operating Lease Receivables Unearned Income (-) Factoring Receivables Factoring Receivables Measured at Amortised Cost Factoring Receivables Measured at Fair Value Through Profit or Loss Factoring Receivables Measured at Fair Value Through Other Comprehensive Income Non-Performing Loans V-I-f 6,779, ,624 7,358, Expected Credit Loss (-) 6,390,277 2,478,724 8,869, Month Expected Credit Losses (Stage I) 974, ,626 1,820, Significant Increase in Credit Risk (Stage II) 684,467 1,522,349 2,206, Credit-Impaired Losses (Stage III / Special Provision) 4,731, ,749 4,841,440 III. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) V-I-o 197, , Held for Sale 197, , Discontinued Operations IV. EQUITY INVESTMENTS 13,540,424 1,297,527 14,837, Investments in Associates (Net) V-I-h 185, , Associates Accounted by using Equity Method Unconsolidated Associates 185, , Subsidiaries (Net) V-I-i 13,354,825 1,297,527 14,652, Unconsolidated Financial Subsidiaries 5,383,896 1,297,527 6,681, Unconsolidated Non-Financial Subsidiaries 7,970,929-7,970, Joint Ventures (Net) V-I-j Joint Ventures Accounted by using Equity Method Unconsolidated Joint Ventures V. TANGIBLE ASSETS (Net) 4,434,166 7,390 4,441,556 VI. INTANGIBLE ASSETS (Net) 519, , Goodwill Other 519, ,124 VII. INVESTMENT PROPERTY (Net) V-I-m VIII. CURRENT TAX ASSET 38,508-38,508 IX. DEFERRED TAX ASSET V-I-n 696, , ,037 X. OTHER ASSETS V-I-p 3,085,375 2,635,036 5,720,411 TOTAL ASSETS 232,048, ,290, ,339,540 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. 3

9 UNCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2017 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION) THOUSAND TL RESTATED PRIOR PERIOD ASSETS Footnotes (31/12/2017) TL FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK V-I-a 4,991,697 30,958,770 35,950,467 II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net) V-I-b-c 461,851 1,969,831 2,431, Financial Assets Held for Trading 461,851 1,969,831 2,431, Government Debt Securities 122,039 10, , Equity Securities 221, , Derivative Financial Assets Held for Trading 118,215 1,959,183 2,077, Other Marketable Securities Financial Assets at Fair Value Through Profit and Loss Government Debt Securities Equity Securities Loans Other Marketable Securities III. BANKS V-I-d 192,077 2,281,128 2,473,205 IV. MONEY MARKET PLACEMENTS Interbank Money Market Placements Istanbul Stock Exchange Money Market Placements Receivables from Reverse Repurchase Agreements V. FINANCIAL ASSETS AVAILABLE-FOR-SALE (Net) V-I-e 38,470,070 10,912,374 49,382, Equity Securities 34, , , Government Debt Securities 38,430,607 10,606,923 49,037, Other Marketable Securities 5, , ,712 VI. LOANS AND RECEIVABLES V-I-f 148,199,165 91,966, ,165, Loans and Receivables 147,442,195 91,966, ,408, Loans to the Bank's Risk Group 993, ,871 1,492, Government Debt Securities Other 146,448,326 91,467, ,916, Non-Performing Loans 5,382,865 20,669 5,403, Specific Provisions (-) 4,625,895 20,669 4,646,564 VII. FACTORING RECEIVABLES VIII. HELD TO MATURITY INVESTMENTS (Net) V-I-g 7,255, ,498 7,614, Government Debt Securities 7,111,197-7,111, Other Marketable Securities 144, , ,618 IX. INVESTMENTS IN ASSOCIATES (Net) V-I-h 185, , Associates Accounted for Using the Equity Method Unconsolidated Associates 185, , Financial Investments 163, , Non-Financial Investments 21,578-21,578 X. INVESTMENTS IN SUBSIDIARIES (Net) V-I-i 12,599,949 1,016,895 13,616, Unconsolidated Financial Subsidiaries 5,430,802 1,016,895 6,447, Unconsolidated Non-Financial Subsidiaries 7,169,147-7,169,147 XI. JOINTLY CONTROLLED ENTITIES (JOINT VENTURES) (Net) V-I-j Jointly Controlled Entities Accounted for Using the Equity Method Unconsolidated Jointly Controlled Entities Jointly Controlled Financial Entities Jointly Controlled Non-Financial Entities XII. LEASE RECEIVABLES V-I-k Finance Lease Receivables Operating Lease Receivables Other Unearned Income (-) XIII. DERIVATIVE FINANCIAL ASSETS HELD FOR HEDGING V-I-l Fair Value Hedges Cash Flow Hedges Net Foreign Investment Hedges XIV. TANGIBLE ASSETS (Net) 4,441,939 7,286 4,449,225 XV. INTANGIBLE ASSETS (Net) 557, , Goodwill Other 557, ,416 XVI. INVESTMENT PROPERTY (Net) V-I-m XVII. TAX ASSETS V-I-n 480,850 28, , Current Tax Assets Deferred Tax Assets 480,850 28, ,969 XVIII. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) V-I-o 155, , Held for Sale 155, , Discontinued Operations XIX. OTHER ASSETS V-I-p 3,175,679 1,575,703 4,751,382 TOTAL ASSETS 221,167, ,076, ,243,533 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. Restatements for the prior period is related with TAS 27 policy change where details are disclosed in Footnote I, Section Three. The accompanying explanations and notes form an integral part of these financial statements. 4

10 UNCONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2018 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION) THOUSAND TL CURRENT PERIOD LIABILITIES Footnotes (30/06/2018) TL FC Total I. DEPOSITS V-II-a 97,784, ,317, ,101,698 II. FUNDS BORROWED V-II-c 1,866,698 43,595,767 45,462,465 III. MONEY MARKETS 20,792,277 4,632,453 25,424,730 IV. SECURITIES ISSUED (Net) V-II-d 4,917,773 25,158,325 30,076, Bills 4,082,881-4,082, Asset Backed Securities Bonds 834,892 25,158,325 25,993,217 V. FUNDS Borrower Funds Other VI. FİNANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS VII. DERIVATIVE FINANCIAL LIABILITIES V-II-b 1,112,678 1,009,840 2,122, Derivative Financial Liabilities at Fair Value Through Profit or Loss 1,112,678 1,009,840 2,122, Derivative Financial Liabilities at Fair Value Through Other Comprehensive Income VIII.FACTORING PAYABLES IX. LEASE PAYABLES (Net) V-II-f Financial Lease Operating Lease Other Deferred Financial Lease Expenses ( - ) X. PROVISIONS V-II-h 6,257, ,289 6,383, Restructuring Provisions Reserve for Employee Benefits 895, , Insurance Technical Provisions (Net) Other Provisions 5,362, ,289 5,488,290 XI. CURRENT TAX LIABILITY V-II-i 459,766 7, ,436 XII. DEFERRED TAX LIABILITY V-II-i XIII.LIABILITIES RELATED TO ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS Held for Sale Discontinued Operations XIV. SUBORDINATED DEBT 1,127,382 8,664,565 9,791, Loans Other Debt Instruments 1,127,382 8,664,565 9,791,947 XV. OTHER LIABILITIES V-II-e 10,951,639 3,482,783 14,434,422 XVI. SHAREHOLDERS' EQUITY V-II-j 46,159,191 (1,084,582) 45,074, Paid-in capital 4,500,000-4,500, Capital Reserves 1,568, ,568, Share Premium 5, , Share Cancellation Profits Other Capital Reserves 1,563,167-1,563, Accumulated Other Comprehensive Income or Loss Not Reclassified Through Profit or Loss 3,394,944 (447) 3,394, Accumulated Other Comprehensive Income or Loss Reclassified Through Profit or Loss 371,128 (1,084,339) (713,211) 16.5 Profit Reserves 27,238,705-27,238, Legal Reserves 3,504,656-3,504, Status Reserves Extraordinary Reserves 23,734,049-23,734, Other Profit Reserves Profit or Loss 9,086,001-9,086, s' Profit or Loss 5,750,989-5,750, Profit or Loss 3,335,012-3,335,012 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 191,428, ,910, ,339,540 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. 5

11 UNCONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2017 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION) THOUSAND TL RESTATED PRIOR PERIOD LIABILITIES Footnotes (31/12/2017) TL FC Total I. DEPOSITS V-II-a 97,050, ,701, ,752, Deposits from the Bank's Risk Group 2,598,162 3,115,774 5,713, Other 94,451, ,586, ,038,096 II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING V-II-b 274,798 1,018,230 1,293,028 III. FUNDS BORROWED V-II-c 1,966,845 36,457,591 38,424,436 IV. MONEY MARKET FUNDS 17,318,967 2,514,594 19,833, Interbank Money Market Funds 2,502,656-2,502, Istanbul Stock Exchange Money Market Funds 488, , Funds Provided Under Repurchase Agreements 14,328,285 2,514,594 16,842,879 V. MARKETABLE SECURITIES ISSUED (Net) V-II-d 4,396,751 21,514,528 25,911, Bills 3,237,626 71,646 3,309, Asset-backed Securities Bonds 1,159,125 21,442,882 22,602,007 VI. FUNDS Borrower funds Other VII. MISCELLANEOUS PAYABLES 9,262, ,270 10,076,726 VIII. OTHER LIABILITIES V-II-e 960,019 1,124,345 2,084,364 IX. FACTORING PAYABLES X. LEASE PAYABLES (Net) V-II-f Finance Lease Payables Operating Lease Payables Other Deferred Financial Lease Expenses (-) XI. DERIVATIVE FINANCIAL LIABILITIES HELD FOR RISK MANAGEMENT V-II-g Fair Value Hedges Cash Flow Hedges Net Foreign Investment Hedges XII. PROVISIONS V-II-h 8,713,316 95,418 8,808, General Loan Loss Provisions 2,903,423 7,189 2,910, Provision for Restructuring Reserves for Employee Benefits 807, , Insurance Technical Reserves (Net) Other Provisions 5,002,705 88,229 5,090,934 XIII. TAX LIABILITIES V-II-i 780,876 6, , Current Tax Liabilities 780,876 6, , Deferred Tax Liabilities XIV. LIABILITIES RELATED TO ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS Held for Sale Discontinued Operations XV. SUBORDINATED DEBT 1,124,891 7,163,090 8,287,981 XVI. SHAREHOLDERS' EQUITY V-II-j 43,091,719 (107,452) 42,984, Paid-in Capital 4,500,000-4,500, Capital Reserves 3,905,037 (107,452) 3,797, Share premium 5, , Share Cancellation Profits Marketable Securities Value Increase Fund (1,050,967) (107,209) (1,158,176) Tangible Assets Revaluation Reserve 3,518,771 (447) 3,518, Intangible Assets Revaluation Reserve Investment Property Revaluation Reserve Bonus Shares Obtained from Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) Hedging Reserves (Effective Portion) (73) - (73) Accumulated Revaluation Reserves on Assets Held for Sale and Discontinued Operations Other Capital Reserves 1,432,060-1,432, Profit Reserves 24,088,510-24,088, Legal Reserves 3,076,046-3,076, Statutory Reserves Extraordinary Reserves 20,176,527-20,176, Other Profit Reserves 835, , Profit or Loss 10,598,172-10,598, Prior Years' Profit/Loss 4,396,893-4,396, Profit/Loss 6,201,279-6,201,279 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 184,940, ,302, ,243,533 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. Restatements for the prior period is related with TAS 27 policy change where details are disclosed in Footnote I, Section Three. The accompanying explanations and notes form an integral part of these financial statements. 6

12 UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET ITEMS AS OF JUNE 30, 2018 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET ITEMS THOUSAND TL OFF-BALANCE SHEET ITEMS CURRENT PERIOD Footnotes (30/06/2018) TL FC Total V-III-a 151,375, ,899, ,274,414 A. OFF-BALANCE SHEET CONTINGENCIES and COMMITMENTS (I+II+III) I. GUARANTEES AND SURETYSHIPS 31,892,884 62,785,455 94,678, Letters of Guarantee 31,818,657 36,760,639 68,579, Guarantees Subject to State Tender Law 801,383 2,859,172 3,660, Guarantees Given for Foreign Trade Operations 1,794,990 11,214,072 13,009, Other Letters of Guarantee 29,222,284 22,687,395 51,909, Bank Acceptances - 4,269,136 4,269, Import Letter of Acceptance - 192, , Other Bank Acceptances - 4,076,742 4,076, Letters of Credit 74,227 19,796,266 19,870, Documentary Letters of Credit 23,549 16,256,052 16,279, Other Letters of Credit 50,678 3,540,214 3,590, Prefinancing Given as Guarantee Endorsements Endorsements to the Central Bank of Turkey Other Endorsements Purchase Guarantees for Securities Issued Factoring Guarantees Other Guarantees - 1,959,414 1,959, Other Suretyships V-III-b 51,454,604 18,612,569 70,067,173 II. COMMITMENTS 2.1 Irrevocable Commitments 50,522,326 10,736,378 61,258, Forward Asset Purchase Commitments 3,083,488 5,159,294 8,242, Forward Deposit Purchase and Sales Commitments Capital Commitments to Associates and Subsidiaries Loan Granting Commitments 14,591, ,133 15,029, Securities Underwriting Commitments Commitments for Reserve Deposit Requirements Commitments for Cheque Payments 2,999,119-2,999, Tax and Fund Liabilities from Export Commitments 27,436-27, Commitments for Credit Card Expenditure Limits 26,125,904-26,125, Commitments for Credit Cards and Banking Services Promotions 103, , Receivables from Short Sale Commitments Payables for Short Sale Commitments Other Irrevocable Commitments 3,591,770 5,138,951 8,730, Revocable Commitments 932,278 7,876,191 8,808, Revocable Loan Granting Commitments 932,278 7,876,191 8,808, Other Revocable Commitments III. DERIVATIVE FINANCIAL INSTRUMENTS 68,027, ,501, ,528, Derivative Financial Instruments Held for Risk Management Fair Value Hedges Cash Flow Hedges Net Foreign Investment Hedges Derivative Financial Instruments Held for Trading 68,027, ,501, ,528, Forward Foreign Currency Buy/Sell Transactions 10,191,042 17,883,308 28,074, Forward Foreign Currency Buy Transactions 4,680,355 9,323,489 14,003, Forward Foreign Currency Sell Transactions 5,510,687 8,559,819 14,070, Currency and Interest Rate Swaps 47,025, ,370, ,395, Currency Swap Buy Transactions 6,152,955 51,419,193 57,572, Currency Swap Sell Transactions 39,997,203 14,172,430 54,169, Interest Rate Swap Buy Transactions 437,423 30,889,576 31,326, Interest Rate Swap Sell Transactions 437,423 30,889,576 31,326, Currency, Interest Rate and Security Options 10,811,476 21,565,597 32,377, Currency Call Options 4,692,573 11,044,880 15,737, Currency Put Options 6,118,903 9,080,493 15,199, Interest Rate Call Options - 720, , Interest Rate Put Options - 720, , Securities Call Options Securities Put Options Currency Futures Currency Buy Futures Currency Sell Futures Interest Rate Futures Interest Rate Buy Futures Interest Rate Sell Futures Other - 3,681,700 3,681,700 B. CUSTODY AND PLEDGES RECEIVED (IV+V+VI) 456,447, ,091, ,538,545 IV. ITEMS HELD IN CUSTODY 46,012,293 24,842,966 70,855, Customers' Securities Held Investment Securities Held in Custody 23,957,567 2,414,093 26,371, Cheques Received for Collection 18,460,869 9,077,884 27,538, Commercial Notes Received for Collection 3,216,186 10,888,155 14,104, Other Assets Received for Collection 2, , Assets Received for Public Offering Other Items Under Custody 375,033 2,462,240 2,837, Custodians V. PLEDGED ITEMS 410,435, ,248, ,683, Marketable Securities 18,377,972-18,377, Guarantee Notes 3,055,483 12,580,609 15,636, Commodity 75,106,161 8,195,088 83,301, Warranty Real Estates 281,924, ,058, ,983, Other Pledged Items 31,971,365 43,413,548 75,384, Pledged Items-Depository VI. ACCEPTED BILL, GUARANTEES AND SURETIES TOTAL OFF-BALANCE SHEET COMMITMENTS (A+B) 607,822, ,990,490 1,134,812,959 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. 7

13 UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET ITEMS AS OF DECEMBER 31, 2017 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF OFF-BALANCE SHEET ITEMS THOUSAND TL OFF-BALANCE SHEET ITEMS PRIOR PERIOD Footnotes (31/12/2017) TL FC Total A. OFF-BALANCE SHEET CONTINGENCIES AND COMMITMEN V-III 126,783, ,674, ,457,852 I. GUARANTEES AND SURETYSHIPS 30,304,874 51,112,109 81,416, Letters of Guarantee 30,293,364 29,468,711 59,762, Guarantees Subject to State Tender Law 842,452 2,757,476 3,599, Guarantees Given for Foreign Trade Operations 2,044,694 10,676,161 12,720, Other Letters of Guarantee 27,406,218 16,035,074 43,441, Bank Acceptances - 3,337,813 3,337, Import Letters of Acceptance - 107, , Other Bank Acceptances - 3,230,812 3,230, Letters of Credit 11,510 16,658,466 16,669, Documentary Letters of Credit 9,275 13,422,916 13,432, Other Letters of Credit 2,235 3,235,550 3,237, Prefinancing Given as Guarantee Endorsements Endorsements to the Central Bank of Turkey Other Endorsements Purchase Guarantees for Securities Issued Factoring Guarantees Other Guarantees - 1,647,119 1,647, Other Suretyships II. COMMITMENTS 49,677,449 19,256,693 68,934, Irrevocable Commitments 49,417,141 14,621,881 64,039, Forward Asset Purchase Commitments 1,152,526 10,500,261 11,652, Forward Deposit Purchase and Sale Commitments Capital Commitment for Associates and Subsidiaries - 67,523 67, Loan Granting Commitments 14,479, ,381 14,764, Securities Underwriting Commitments Commitments for Reserve Deposit Requirements Commitments for Cheque Payments 6,056,477-6,056, Tax and Fund Liabilities from Export Commitments 20,805-20, Commitments for Credit Card Expenditure Limits 24,193,467-24,193, Commitments for Credit Cards and Banking Services Promotions 84,622-84, Receivables from Short Sale Commitments Payables for Short Sale Commitments Other Irrevocable Commitments 3,429,587 3,769,716 7,199, Revocable Commitments 260,308 4,634,812 4,895, Revocable Loan Granting Commitments 260,308 4,634,812 4,895, Other Revocable Commitments III. DERIVATIVE FINANCIAL INSTRUMENTS 46,800, ,305, ,106, Derivative Financial Instruments Held for Risk Management Fair Value Hedges Cash Flow Hedges Net Foreign Investment Hedges Derivative Financial Instruments Held for Trading 46,800, ,305, ,106, Forward Foreign Currency Buy/Sell Transactions 5,970,950 10,820,316 16,791, Forward Foreign Currency Buy Transactions 2,910,754 5,483,809 8,394, Forward Foreign Currency Sell Transactions 3,060,196 5,336,507 8,396, Currency and Interest Rate Swaps 35,537, ,073, ,611, Currency Swap Buy Transactions 4,362,485 47,241,756 51,604, Currency Swap Sell Transactions 30,424,625 17,935,996 48,360, Interest Rate Swap Buy Transactions 375,371 22,447,887 22,823, Interest Rate Swap Sell Transactions 375,371 22,447,887 22,823, Currency, Interest Rate and Security Options 5,292,162 9,443,504 14,735, Currency Call Options 2,512,548 4,220,094 6,732, Currency Put Options 2,779,614 3,952,634 6,732, Interest Rate Call Options - 635, , Interest Rate Put Options - 635, , Securities Call Options Securities Put Options Currency Futures Currency Buy Futures Currency Sell Futures Interest Rate Futures Interest Rate Buy Futures Interest Rate Sell Futures Other - 3,968,417 3,968,417 B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 378,492, ,926, ,418,755 IV. ITEMS HELD IN CUSTODY 41,996,497 17,974,809 59,971, Customers securities held Investment securities held in custody 20,895,685 1,938,155 22,833, Cheques received for collection 17,567,505 5,275,088 22,842, Commercial notes received for collection 3,146,970 8,724,159 11,871, Other assets received for collection 2,638-2, Assets received for public offering 2,527-2, Other items under custody 381,172 2,037,407 2,418, Custodians V. PLEDGED ITEMS 336,496, ,951, ,447, Marketable securities 15,197,589-15,197, Guarantee notes 3,157,401 12,631,989 15,789, Commodity 69,766,556 15,306,869 85,073, Warranty Real Estates 226,621, ,941, ,562, Other pledged items 21,753,177 34,071,251 55,824, Pledged items-depository VI. ACCEPTED BILL GUARANTEES AND SURETIES TOTAL OFF-BALANCE SHEET ITEMS (A+B) 505,275, ,600, ,876,607 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. 8

14 UNCONSOLIDATED STATEMENT OF INCOME AS OF JUNE 30, 2018 (Unless otherwise stated amounts are expressed in thousands of Turkish Lira ( TL )) TÜRKİYE İŞ BANKASI A.Ş. UNCONSOLIDATED STATEMENT OF INCOME THOUSAND TL CURRENT PERIOD CURRENT PERIOD INCOME STATEMENT Footnotes (01/01-30/06/2018) (01/04-30/06/2018) I. INTEREST INCOME V-IV-a 16,638,075 8,814, Interest Income on Loans 13,437,147 7,087, Interest Income on Reserve Deposits 202, , Interest Income on Banks 29,293 16, Interest Income on Money Market Placements Interest Income on Marketable Securities Portfolio 2,959,207 1,598, Financial Assets At Fair Value Through Profit or Loss 11,048 5, Financial Assets At Fair Value Through Other Comprehensive Income 1,890, , Financial Assets At Measured at Amortised Cost 1,058, , Financial Lease Income Other Interest Income 9,441 1,238 II. INTEREST EXPENSE (-) V-IV-b 8,637,730 4,563, Interest on Deposits 5,127,519 2,621, Interest on Funds Borrowed 728, , Interest on Money Market Funds 1,479, , Interest on Securities Issued 1,273, , Other Interest Expenses 28,421 20,443 III. NET INTEREST INCOME (I - II) 8,000,345 4,250,726 IV. NET FEES AND COMMISSIONS INCOME V-IV-c 1,986,605 1,065, Fees and Commissions Received 2,402,741 1,298, Non-cash Loans 361, , Other 2,041,675 1,102, Fees and Commissions Paid 416, , Non-cash Loans Other 416, ,704 V. PERSONNEL EXPENSE (-) 1,921,230 1,007,451 VI DIVIDEND INCOME 9,492 2,371 VII. TRADING INCOME /(LOSS) (Net) (1,446,488) (768,780) 7.1 Gains / (Losses) on Securities Trading 22,804 4, Derivative Financial Transactions Gains/Losses 535,594 (55,632) 7.3 Foreign Exchange Gains / (Losses) (2,004,886) (717,796) VIII. OTHER OPERATING INCOME V-IV-d 1,166, ,055 IX. GROSS OPERATING INCOME (III+IV+V+VI+VII+VIII) 7,795,647 3,919,621 X. EXPECTED CREDIT LOSS (-) 2,734,102 1,603,761 XI. OTHER OPERATING EXPENSES (-) V-IV-e 2,224,866 1,175,797 XII. NET OPERATING INCOME/(LOSS) (IX-X-XI) 2,836,679 1,140,063 XIII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - - XIV. PROFIT/LOSS FROM ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD 1,178, ,582 XV. NET MONETARY POSITION GAIN/LOSS - - XVI. PROFIT/LOSS ON CONTINUING OPERATIONS BEFORE TAX (XII+ +XV) 4,015,367 1,808,645 XVII. TAX PROVISION FOR CONTINUING OPERATIONS (±) V-IV-g 680, , Current Tax Provision 142,298 (32,681) 17.2 Deferred Tax Income Effect (+) 886, , Deferred Tax Expense Effect (-) (348,910) (42,506) XVIII. NET PERIOD PROFIT/LOSS FROM CONTUNUING OPERATIONS (XVI±XVII) 3,335,012 1,528,239 XIX. INCOME ON DISCONTINUED OPERATIONS Income on Assets Held for Sale Gain on Sale of Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) Other Income on Discontinued Operations - - XX. EXPENSE ON DISCONTINUED OPERATIONS(-) Expense on Assets Held for Sale Loss on Sale of Associates, Subsidiaries and Jointly Controlled Entities (Joint Ventures) Other Expense on Discontinued Operations - - XXI. PROFIT/LOSS ON DISCONTINUED OPERATIONS BEFORE TAX (XIX-XX) - - XXII. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) Current Tax Provision Deferred Tax Expense Effect (+) Deferred Tax Income Effect (-) - - XXIII. NET PERIOD PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XXI±XXII) - - XXIV. NET PERIOD PROFIT/LOSS (XVIII+XXIII) V-IV-h 3,335,012 1,528,239 Earnings per Share (*) (*)Expressed in exact TL. 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. 9