ISBANK EARNINGS PRESENTATION 2018 Q2

ISBANK EARNINGS PRESENTATION 2018 Q2

2018 H1 Recent Developments in the Economy Global Outlook Main Indicators of Turkey US Robust economic activity Continued rate hikes from the Fed Growing uncertainties over trade policies 16 14 12 Calendar Adjusted Industrial Production (yoy, %) 100 80 Current Account Deficit (12-m, bn USD) EA Slight slowdown in economic growth Upward trend in inflation Agenda set for the exit from the QE 10 8 6 4 60 40 EM Sustained economic performance Fall in capital flows Concerns over the impact of protectionist policies 2 0-2 02/2017 07/2017 12/2017 05/2018 20 0 2012 2014 2016 2018 Domestic Outlook Resilient economic activity No sign of hard landing Supportive fiscal policies ahead of elections Widening in current account deficit Higher energy bill Strong tourism revenues Elevated inflation rates High volatility in FX market Simplification of monetary policy One week repo rate set as the policy rate 500 bps increase in the funding rate in Q2 6.2 5.8 5.4 5.0 4.6 4.2 3.8 3.4 Exchange Rates USD/TRY EUR/TRY 3.0 01/2017 07/2017 01/2018 07/2018 18 16 14 12 10 8 CPI Inflation vs CBRT WACF* (%) WACF* Annual CPI 6 01/2017 06/2017 11/2017 04/2018 (*) 30-day MAof weighted average cost of funding 2

Period s Highlights Strong growth in core revenue items continued: o 9.3% QoQ increase in SWAP Adj. Net Interest Income o Robust fee generation performance sustained 15.7% QoQ and 22.8% YoY growth in Net Fees and Commissions SWAP Adj. NIM maintained at 4.03% - above the full year guidance o Share of demand deposits in total deposits reached 27% o Blended cost of TL deposits remained at 9.2% in Q2 while upward repricing in loans continued Lowest NPL ratio among peers Comfortable level of CAR at 15.9% 3

Strong Growth in Major Revenue Items Maintained 2018 Q2 Revenue Growth & OPEX QoQ YoY (1) Profitability Ratios (3) RoAA & RoATA RoAE & RoATE 16.3% 15.4% 15.8% 15.1% NII NII (Swap adj.) 13.4% 9.3% 24.4% 16.7% 1.84% 1.85% 1.77% 1.78% Net F&C Total Op. Income (2) 15.7% 16.7% 22.8% 19.6% (4) (5) (4) 2017 2018 H1 RoAA RoATA Cost / Income 2017 2018 H1 RoAE RoATE (5) 42.3% 40.5% 39.9% 37.5% OPEX 11.2% 16.3% (4) (2)(5) 2017 2018 H1 (6) Reported Adjusted (1) 2017 H1 vs 2018 H1 (2) 2018 Q1 and H1 income figures include income from participations according to IAS 27 and excludes 504 mn TL of IFRS 9 impact on other operating income (3) Tangible Equity (TE) and Tangible Assets (TA) are calculated by the deduction of M-t-M valuation differences regarding AFS (FVOCI) portfolio and real estates from shareholders equity and total assets. (4) Calculated using restated figures according to IAS 27 (5) Half-year figures are annualized. 4 (6) Adjusted for non-recurring and other items

Selective Growth Funded with a Cost-Oriented Approach Assets Loans QoQ Growth. YtD Growth. Liabilities QoQ Growth. 9.0% 5.9% 5.9% 2.1% 3.1% -3.8% -2.0% -0.7% Deposits -3.7% YtD Growth. 7.5% 0.8% -6.0% Securities Total IEA (1) -7.4% -3.8% 3.5% 2.5% 3.1% 6.6% 9.1% 8.9% -9.2% 10.0% 5.3% -3.4% Non- Deposit (2) Funding -1.0% 14.9% 14.5% 19.8% 15.7% 0.3% Total Assets -1.7% 3.0% Total TL FX (USD) 7.4% 10.0% Shareholders Equity (3) (3) Highest market share in total loans Largest demand deposits 4.9% -2.6% Total TL FX (USD) Share of loans in total assets is at 65.5%. Share of demand deposits: 27.0% in total 26.6% in TL, 28.0% in FX deposits IEAs make up 91.6% of total assets as of 2018 Q2. Strong FX LCR at 244.5% for Q2 average. 0.7% (4) 4.9% (4) (1) Interest earning assets include Central Bank reserves. (2) Non-deposit funding includes repo&money market, funds borrowed, securities issued and subordinated debt. (3) Among private sector banks (4) Excluding interbank deposits. 5

Solid NIM Performance Maintained Net Interest Income (TL mn.) NIM (Quarterly) (1)(2) 3,750 13.4% 9.3% 4,251 3,238 3,539 6,434 24.4% 16.7% 8,000 5,806 6,777 4.68% NIM NIM - Swap Adjusted 4.86% 4.03% 4.03% 2018 Q1 2018 Q2 NII NII (incl. swap cost) Swap Adjusted NIM Evolution 2017 H1 2018 H1 +48 bps +27 bps +2 bp -11 bps -44 bps 4.03% -24 bp 4.03% 18 Q1 18 Q2 Yield/Cost (Quarterly) (1) TL 14.07% 14.31% 14.67% 15.28% 15.71% 11.88% 10.87% 10.00% 10.15% 10.61% Loan Yield FX 8.54% 9.22% 9.20% 9.16% 9.22% 5.26% 5.52% 5.73% 6.02% 6.56% 5.26% 4.07% 4.28% 4.71% 4.76% Securities Yield Deposit (3) Cost (1) Based on MIS data. (2) Interest earning assets include Central Bank reserves. NPL accruals are excluded. (3) Including demand deposits. 1.34% 1.36% 1.35% 1.41% 1.44% 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 6

Robust Fee Income Performance Sustained Net Fees & Commissions (TL mn.) Net Fees & Commissions Composition 15.7% 22.8% 30.2% 29.7% Lending Related Fees 921 1,066 1,618 1,987 7.9% 7.8% 37.7% 41.0% Mutual Fund Man. & Other Inv. Acc. Fees Credit Cards 24.2% 21.5% Other 2018 Q1 2018 Q2 2017 H1 2018 H1 2017 H1 2018 H1 F&C Growth (2018 Q2) Growth QoQ YoY Lending Related Fees 10.6% 20.8% Mutual Fund Man. & Other Inv. Acc. Fees -2.2% 21.5% Credit Cards (Net) 29.2% 33.4% Other 6.4% 9.3% Total F&C (Net) 15.7% 22.8% Share of net F&C income in total operating income* is 19.1% as of 2018 H1. OPEX coverage of Net F&C income reached 47.9% as of 2018 H1. * Total operating income includes income from participations according to IAS 27. IFRS 9 impact of 504 mn TL on other operating income in 2018H1 is excluded. 7

632 587 45 779 432 346 409 1,453 1,861 Lowest NPL Ratio Among Peers (1) NPL Ratios by Loan Categories (2018 Q2) NPL Trends (Quarterly) SME Corp. & Comm. Credit Cards Consumer Coverage Ratios Performing Loans NPL Total Isbank 2.7% 3.4% 2.3% 2.3% 2.0% Private-Sector Banks 3.6% 3.3% 4.8% 4.7% 5.4% Coverage Ratios 2018 Q1 2018 Q2 Stage 1 0.7% 0.8% Stage 2 8.8% 9.8% Stage 3 71.7% (3) 65.8% (3) Stage 3-Total 157.6% (4) 143.6% (4) (1) Adjusted for the NPL sales made by peer group banks in the period. (2) Net NPL Formation / Average Performing Loans (3) Provisions for Stage 3 Expected Credit Losses / Non-performing Loans (4) (Provisions for Stage 1+2+3 Expected Credit Losses + Free Provisions) / Non-performing Loans (5) (Stage 1+2+3 Expected Credit Losses-Reversals) / Average Performing Loans (6) Stage 3 Expected Credit Losses / Average Performing Loans (7) Collections / (Prior period ending balance NPL + Additions) (TL mn.) 0.08% 0.57% 17 Q4 18 Q1 18 Q2 Net NPL Formation Rate Net Cost of Risk (5) Specific Gross CoR (6) is 109 bps by 2018 H1. Share of Stage 2 Loans is 8.6%. 2.29% Additions Recoveries Net NPL Formation Prov. for Exp. Credit Loss. (TL mn) Q1 Q2 H1 Stage 1 7 269 276 Stage 2 589 357 946 Stage 3 532 824 1,356 Reversals (TL mn) (-) Q1 Q2 H1 Stage 1+2 504 11 515 Stage 3 211 303 514 Net CoR 2018 H1 124 bps 8

Strong Capitalization 280,496 16.53% 46,377 14.01% 286,600 16.98% 48,672 14.06% 303,609 16.65% 13.99% 50,560 16.51% 320,567 13.78% 52,927 15.88% 340,565 13.06% 54,089 Capital Adequacy Ratio -63 bps Change in CAR 2018 Q1 Net Income 0.42% 16.51% M-t-M Differences -0.33% Stage 1+2 Exp LLPs 0.08% RWA Growth exc. TL Dep. TL Dep. Impact -0.12% -0.84% Other 0.16% 17 Q2 17 Q3 2017 18 Q1 18 Q2 CAR Tier I Ratio RWAs vs. Regulatory Capital (TL mn.) 2018 Q2 (%) 2018 2019 Capital Conservation Buffer 1.875 2.5 (1) Counter Cyclical Buffer 1.875 2.5 SIFI Buffer (2) 1.5 2 Min. Legal Requirement for CAR 8 8 CAR (Bank-only) 11.75 13.00 CAR (Consolidated) 13.25 15.00 Max. Max. 15.88% 17 Q2 17 Q3 2017 18 Q1 18 Q2 RWAs Regulatory Capital Capital adequacy ratio is well above the regulatory limit. Comfortable level of capital (1) As of 2018 Q2, %0.04 on a bank-only basis (2) Taken into consideration only on a consolidated basis 9

Strong Focus on Digitalisation Evolution of Share of Transactions per Channel Digital Banking Number of Customers ( 000) 74.8% Internet Banking ATM Mobile Banking Total Non-Branch 88.2% 5,596 5,925 5,218 ~ 6.5 mn digital customers 50.5% 37.6% 30.3% 19.3% 2.2% 14.6% 2011 2014 2015 2016 2017 2018 Q1 2018 Q2 2,7922,788 2,753 1,620 207 Mobile Banking Internet Banking 2011 2017 2018 Q1 2018 Q2 Mobile Banking Market Shares * Share of Digital Channels in Retail Sales * # Transactions Mobile Banking Investment 33.1% Credit Cards 18.0% Money Transfer 14.9% Payments 14.8% 67.3% TL Time Deposits 53.5% GPLs (*) Source: Turkish Banking A, as of 2018 Q1 (*) Number of sales in 2018 Q2 10

Appendix Page 12 Asset Structure Page 13 Loans Page 14 Loan Composition Page 15 Securities Page 16 Liabilities Structure Page 17 Deposits Page 18 Income Statement Highlights Page 19 Fees & Commissions Income Page 20 Market Shares 11

Asset Structure Assets (TL mn.) 2017 2018 Q1 2018 Q2 QoQ YtD Cash & Banks 38,424 38,540 44,879 16.4% 16.8% Securities (Net) 57,352 60,466 62,576 3.5% 9.1% Loans 239,409 246,483 261,043 5.9% 9.0% Participations (Net) 13,802 14,007 14,838 5.9% 7.5% Fixed Assets (Net) 5,163 5,114 5,159 0.9% -0.1% Other Assets 8,095 6,317 9,843 55.8% 21.6% Total Assets 362,244 370,927 398,340 7.4% 10.0% TL Assets 221,167 225,266 232,049 3.0% 4.9% FX Assets 141,077 145,661 166,291 14.2% 17.9% FX Assets (USD mn.) 37,671 37,349 36,709-1.7% -2.6% Asset Composition 91.5% 92.2% 91.6% 10.6% 10.4% 11.3% 15.8% 16.3% 15.7% 66.1% 66.5% 65.5% IEA / Total Assets Cash & Banks Securities Loans Participations & Other Assets 7.5% 6.9% 7.5% 2017 2018 Q1 2018 Q2 12

Loan Portfolio Loans (TL mn.) 2017 2018 Q1 2018 Q2 QoQ YtD Total Loans 239,409 246,483 261,043 5.9% 9.0% TL Loans 147,442 148,841 151,989 2.1% 3.1% Retail Loans 56,913 57,670 58,102 0.7% 2.1% Housing Loans 20,852 21,548 21,372-0.8% 2.5% Auto Loans 676 695 700 0.8% 3.5% GPLs (1) 23,354 23,570 23,863 1.2% 2.2% Credit Card Loans 12,031 11,857 12,167 2.6% 1.1% Non-Retail Loans 90,529 91,171 93,887 3.0% 3.7% SME Loans (2) 51,611 51,303 59,450 15.9% 15.2% Commercial and Corporate Loans 38,918 39,868 34,438-13.6% -11.5% FX Loans 91,967 97,642 109,054 11.7% 18.6% SME Loans (2) 3,457 3,612 7,384 104.4% 113.6% Commercial and Corporate Loans 88,510 94,030 101,670 8.1% 14.9% FX Loans (USD mn.) 24,557 25,036 24,074-3.8% -2.0% SME Loans (2) 923 926 1,630 76.0% 76.6% Commercial and Corporate Loans 23,634 24,110 22,444-6.9% -5.0% (1) Including overdraft accounts (2) SME definition includes companies with number of employees < 250 and turnover or total assets <= TL 40 mn. for 2017 and 2018 Q1; companies with number of employees < 250 and turnover or total assets <= TL 125 mn. for 2018 Q2. 13

Loan Composition Currency Mix Loan Composition - Total Loans 38.4% 39.6% 41.8% FX 18.7% 18.6% 17.6% 5.0% 4.8% 4.7% 23.0% 22.3% 25.6% Consumer (1) Credit Cards (2) 61.6% 60.4% 58.2% 2017 2018 Q1 2018 Q2 TL 53.2% 54.3% 52.1% 2017 2018 Q1 2018 Q2 SME (3) Commercial & Corporate Loan Composition - TL Loans Loan Composition - FX Loans 38.6% 38.7% 38.2% Retail (4) 3.8% 3.7% 6.8% SME (3) 35.0% 34.5% 39.1% 26.4% 26.8% 22.7% SME (3) Commercial & Corporate 96.2% 96.3% 93.2% Commercial & Corporate 2017 2018 Q1 2018 Q2 2017 2018 Q1 2018 Q2 (1) Including retail overdraft accounts (2) Shows retail credit card balances only (3) SME definition includes companies with number of employees < 250 and turnover or total assets <= TL 40 mn. for 2017 and 2018 Q1; companies with number of employees < 250 and turnover or total assets <= TL 125 mn. for 20818 Q2. (4) Including retail credit cards and overdraft accounts 14

Securities Securities (TL mn.) 2017 2018 Q1 2018 Q2 QoQ YtD Total Securities 57,352 60,466 62,576 3.5% 9.1% TL Securities 46,069 48,949 50,182 2.5% 8.9% FX Securities 11,283 11,517 12,394 7.6% 9.9% Composition of Securities 2018 Q2 2017 TL FX 86.1% 57.4% 13.3% 99.9% 2018 Q2 Held FVTPL for trading AFS FVOCI HTM FVMaAC FX Securities (USD mn) 3,013 2,953 2,736-7.4% -9.2% 42.6% 59.2% 40.1% Yield of Securities (Quarterly)(*) Floating Fixed 10.00% 10.15% 10.87% 10.61% 11.88% 4.07% 4.28% 4.71% 4.76% 5.26% 17 Q2 17 Q3 17 Q4 18 Q1 18 Q2 35.4% share of CPI linkers in total portfolio in 2018 Q2. 698 mn TL interest revenue and 13.5% quarterly yield on CPI linkers portfolio As of 2018 Q2 expected inflations on the CBRT survey are 10.47% for 12 months (vs 9.24% in Q1) and 9.18% for 24 months (vs 8.31% in Q1) Average durations: 1.67 years for TL securities 5.75 years for FX securities TL Securities FX Securities (*) Based on MIS data 15

Liabilities Structure Liabilities (TL mn.) 2017 2018 Q1 2018 Q2 QoQ YtD Deposits 203,752 206,900 219,102 5.9% 7.5% REPOs & Money Market 19,834 20,326 25,425 25.1% 28.2% Funds Borrowed 38,424 40,386 45,462 12.6% 18.3% Securities Issued 25,911 26,993 30,076 11.4% 16.1% Other (*) 31,338 31,559 33,200 5.2% 5.9% Equity 42,984 44,763 45,075 0.7% 4.9% Total Liabilities & Equity 362,244 370,927 398,340 7.4% 10.0% TL Liabilities 184,941 188,730 191,429 1.4% 3.5% FX Liabilities 177,303 182,197 206,911 13.6% 16.7% FX Liabilities (USD bn.) 47,344 46,717 45,676-2.2% -3.5% Liabilities Composition 81.8% 81.8% 82.8% 56.2% 55.8% 55.0% 5.5% 5.5% 6.4% 10.6% 10.9% 11.4% 7.2% 7.3% 7.6% 11.9% 12.1% 11.3% 8.7% 8.5% 8.3% 2017 2018 Q1 2018 Q2 (*) Includes subordinated debt. IBL / Total Liabilities Deposits Repos & Money Market Funds Borrowed Securities Issued Equity Other (*) 16

Deposit Base 25.0% 27.2% 25.8% 25.4% 28.1% 26.4% 25.4% 27.4% 26.3% 25.3% 26.0% 25.3% 26.6% 28.0% 27.0% Deposits (TL mn.) 2017 2018 Q1 2018 Q2 QoQ YtD Total Deposits 203,752 206,900 219,102 5.9% 7.5% TL Deposits 97,050 98,496 97,784-0.7% 0.8% TL Saving Deposits 66,682 68,256 68,217-0.1% 2.3% TL Commercial Deposits 25,045 25,302 25,258-0.2% 0.9% Other TL Deposits 5,323 4,938 4,310-12.7% -19.0% FX Deposits 106,702 108,404 121,317 11.9% 13.7% FX Deposits (USD mn.) 28,492 27,796 26,781-3.7% -6.0% Demand Deposits 53,501 52,360 59,073 12.8% 10.4% Demand Deposits / Total Deposits Demand Deposits Market Share 15.1% 15.3% 15.5% 14.7% 14.5% 17 Q2 17 Q3 2017 18 Q1 18 Q2 (*) (*) TL FX Total 17 Q2 17 Q3 2017 18 Q1 18 Q2 (*) Excluding interbank deposits 17

Income Statement Highlights (TL mn.) 2018 Q1 2018 Q2 QoQ 2017 H1 2018 H1 YoY Net Interest Income 3,750 4,251 13.4% 6,434 8,000 24.4% (1) (-) SWAP Cost 512 712 39.1% 628 1,223 94.8% Net Interest Income Incl. Swap Cost 3,238 3,539 9.3% 5,806 6,777 16.7% Net Fees & Commissions 921 1,066 15.7% 1,618 1,987 22.8% Net Trading Gains/Losses Excl. Swap Cost -166-57 -65.6% -149-223 50.4% Other Operating Income (2) 797 379-52.4% 629 (2) 1,176 87.1% Total Operating Income 4,790 4,927 2.9% 7,903 9,717 22.9% HR Expenses 914 1,007 10.3% 1,681 1,921 14.3% Non-HR Expenses 1,049 1,176 12.1% 1,884 2,225 18.1% Total Operating Expenses 1,963 2,183 11.2% 3,565 4,146 16.3% (-) Pre-provision for pension fund 90 125 38.9% 120 215 79.2% Total Operating Expenses - Adj. 1,873 2,058 9.9% 3,445 3,931 14.1% Operating Profit 2,827 2,744-2.9% 4,339 5,571 28.4% Operating Profit - Adj. 2,917 2,869-1.7% 4,459 5,786 29.8% Stage 3 Expected Credit Losses 532 824 55.1% 1,109 1,356 22.3% Stage 1+2 Expected Credit Losses 596 625 4.8% 264 1,221 362.3% Other Provision Charges 3 154 NM 56 157 178.6% Total Provision Charges 1,130 1,604 41.9% 1,429 2,734 91.3% (-) Free Provisions 0 150 NM 0 150 NM Total Provision Charges - Adj. 1,130 1,454 28.6% 1,429 2,584 80.8% Income from Participations 510 669 31.1% 784 1,179 50.4% Tax Provisions 400 280-29.9% 638 680 6.7% Net Income 1,807 1,528-15.4% 3,056 3,335 9.1% NM: Not meaningful (1) Based on MIS data (2) 504 mn TL of this figure is resulting from IFRS 9 impact on other income. 18

Fees & Commissions Income (TL thousand) 2018 Q1 2018 Q2 QoQ 2017 H1 2018 H1 YoY Non-Cash Loans 165,052 196,014 18.8% 277,369 361,066 30.2% Cash Loans 115,413 114,100-1.1% 211,529 229,513 8.5% Mutual Fund Man. & Other Inv. Acc. Fees 78,422 76,674-2.2% 127,640 155,096 21.5% Credit Cards (Net) 355,055 458,640 29.2% 610,095 813,695 33.4% * Other 206,963 220,273 6.4% 390,958 427,235 9.3% Total Fees & Commissions Income (Net) 920,905 1,065,700 15.7% 1,617,591 1,986,605 22.8% Total Fees & Commissions Income (Gross) 1,104,276 1,298,465 17.6% 1,923,729 2,402,741 24.9% * Including fund transfer, insurance, account keeping and other fees 19

Market Shares Largest Private Bank Market Shares (%) (1) Rank (2) 2017 2018 Q2 2017 2018 Q2 Total Assets 11.7 11.4 1 st 1 st Total Loans 11.8 11.5 1 st 1 st TL Loans 11.0 10.6 1 st 2 nd FX Loans 13.4 13.0 1 st 1 st Consumer Loans (3) 11.7 11.4 2 nd 2 nd Non-Retail Loans 11.8 11.5 1 st 1 st Total Deposits 12.0 11.6 1 st 1 st TL Deposits 10.5 10.0 1 st 2 nd FX Deposits 13.8 13.2 1 st 1 st Demand Deposits 15.5 14.5 1 st 1 st (1) Market share calculations are based on weekly BRSA data excluding participation banks. Total assets market share is based on monthly BRSA data. (2) Ranking among private banks. (3) Including retail overdraft accounts 20

Disclaimer The information in this document has been obtained by Türkiye İş Bankası A.Ş. ( Isbank ) from sources believed to be reliable, however, Isbank cannot guarantee the accuracy, completeness, or correctness of such information. This document has been issued for information purposes only. The financial reports and statements announced by Isbank to the public and the relevant corporations are accepted to be the sole material. Isbank does not accept any liability whatsoever for any direct, indirect or consequential loss arising from any use of this document or its contents due to the misleading information in this document. All estimations, opinion, all forward looking statements and projections expressed, implied, contained in this document are the current beliefs or expectations of Isbank s management as of the date of this document and are subject to significant risks, uncertainties and changes in circumstances. Actual results, performance or events could differ materially from those expressed or implied in the estimations, opinions and forward-looking statements in this document. All estimations, opinions and forward-looking statements contained in this document can be subject to change without notice. Isbank expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any estimations, opinions, forward-looking statements contained in this document to reflect any change in Isbank s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. This document can not be interpreted as an advice to the investors or as an offer or solicitation for the purchase or sale of any financial instrument or the provision of an offer to provide investment services and Isbank can not be held responsible for the results of investment decisions made on account of this document. This document has been issued specially to the person, whom the document is concerned and may not be reproduced, distributed, published or shared with third parties for any purpose. All rights of Isbank are reserved. 21

Contact Information: Türkiye İş Bankası A.Ş. Head Office Investor Relations Division Phone: + 90 212 316 16 02 Fax: + 90 212 316 08 39 E-mail: investorrelations@isbank.com.tr 22