convenience translation of publicly announced consolidated financial statements … · ·...

CONVENIENCE TRANSLATIONOF PUBLICLY ANNOUNCED CONSOLIDATEDFINANCIAL STATEMENTS ANDREVIEW REPORT ORIGINALLY ISSUED IN TURKISH,SEE NOTE I OF SECTION THREE

TAIB YATIRIMBANK A.Ş.

PUBLICLY ANNOUNCED CONSOLIDATEDFINANCIAL STATEMENTSTOGETHER WITH REVIEW REPORTAT 31 MARCH 2011

Başaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.BJK Plaza, Süleyman Seba Caddesi No:48 B Blok Kat 9 Akaretler Beşiktaş 34357 İstanbulwww.pwc.com/tr Telephone: +90 (212) 326 6060 Facsimile

CONVENIENCE TRANSLATION OF THE INDEPENDENT AUDITOR’S

REVIEW REPORT ORIGINALLY PREPARED AND ISSUED IN

To the Board of Directors of TAIB YatırımBank A.Ş.

We have reviewed the accompanying consolidated balance sheet of TAIB YatırımBank A.Ş. (“the Bank”)

and its consolidated subsidiaries

flows and changes in shareholders’ equity for the period then ended. These financial statements are the

responsibility of the Bank’s management. Our responsibility, as independent auditors is to issue a report

on these financial statements based

We conducted our review in accordance with the Uniform Chart of Accounts of banks, accounting

standards and the independent audit principles in conformity with Banking Law No. 5411. Those

principles require that we plan and perform the rev

financial statements are free of material misstatement. A review is limited primarily to inquiries

concerning the Bank’s personnel and analytical procedures applied to financial data and thus provides less

assurance than an audit. We have not performed an audit and, accordingly, we do not express an audit

opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying

consolidated financial statements do not

YatırımBank A.Ş. at 31 March 2011

ended in accordance with accounting principles and standards set out by regulations in co

Articles 37 and 38 of Banking Law No. 5411 and other regulations, interpretations and circulars published

by the Banking Regulation and Supervision Agency on accounting and financial reporting principles.

Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. a member ofBJK Plaza, Süleyman Seba Caddesi No:48 B Blok Kat 9 Akaretler Beşiktaş 34357 İstanbul-Turkey

+90 (212) 326 6060 Facsimile: +90 (212) 326 6050


REVIEW REPORT ORIGINALLY PREPARED AND ISSUED IN

To the Board of Directors of TAIB YatırımBank A.Ş.


its consolidated subsidiaries at 31 March 2011 and the related consolidated statements of in



on these financial statements based on our review.



principles require that we plan and perform the review to obtain moderate assurance as to whether the





consolidated financial statements do not give a true and fair view of the financial position of TAIB

31 March 2011 and the results of its operations and its cash flows for the period then

ended in accordance with accounting principles and standards set out by regulations in co



a member of PricewaterhouseCoopersTurkey


REVIEW REPORT ORIGINALLY PREPARED AND ISSUED IN TURKISH


and the related consolidated statements of income, cash





iew to obtain moderate assurance as to whether the





give a true and fair view of the financial position of TAIB

and the results of its operations and its cash flows for the period then

ended in accordance with accounting principles and standards set out by regulations in conformity with



Without changing our conclusion, we would like to draw attention to the following matter:

As explained in detail in Note “III. Explanation on Investments in Associates, Subsidiaries and Joint

Ventures” of Section 3 “Accou

Değerler A.Ş. (“the Subsidiary”) as of

assumption of the Subsidiary into consideration. In accordance with the application o

management, the Capital Markets Board has decided to temporarily suspend the operations of the

Subsidiary for six months to be effective from 30 September 2004.

afterwards, the aforementioned duration has b

to continue as a going concern depends on the willingness of the shareholders and the ability of the

Subsidiary to generate net profit.

Additional paragraph for convenience translation:

As explained in detail in Note “I. Basis of Presentation” of Section 3 “Accounting Policies”, the effects of

differences between accounting principles and standards set out by regulations in conformity with Articles

37 and 38 of the Banking Act No. 5411, accountin

accompanying consolidated financial statements are to be distributed and International Financial

Reporting Standards (“IFRS”) have not been quantified in the accompanying consolidated financial

statements. Accordingly, the accompanying consolidated 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 accept

Başaran Nas Bağımsız Denetim ve

Serbest Muhasebeci Mali Müşavirlik A.Ş.

a member of

PricewaterhouseCoopers

Z. Alper Önder, SMMM

Partner

Istanbul, 10 June 2011



Ventures” of Section 3 “Accounting Policies”, the consolidation of the Bank and TAIB Yatırım Menkul

Değerler A.Ş. (“the Subsidiary”) as of 31 March 2011 has been performed by taking the going concern

assumption of the Subsidiary into consideration. In accordance with the application o


Subsidiary for six months to be effective from 30 September 2004. As a result of additional applications

afterwards, the aforementioned duration has been extended until 1 October 2012


Subsidiary to generate net profit.

Additional paragraph for convenience translation:

ined in detail in Note “I. Basis of Presentation” of Section 3 “Accounting Policies”, the effects of


37 and 38 of the Banking Act No. 5411, accounting principles generally accepted in countries in which the



ements. Accordingly, the accompanying consolidated financial statements are not intended to present


with the accounting principles generally accepted in such countries and IFRS.

Başaran Nas Bağımsız Denetim ve

Serbest Muhasebeci Mali Müşavirlik A.Ş.



nting Policies”, the consolidation of the Bank and TAIB Yatırım Menkul

has been performed by taking the going concern

assumption of the Subsidiary into consideration. In accordance with the application of the Bank


As a result of additional applications

een extended until 1 October 2012. The Subsidiary’s ability


ined in detail in Note “I. Basis of Presentation” of Section 3 “Accounting Policies”, the effects of


g principles generally accepted in countries in which the



ements. Accordingly, the accompanying consolidated financial statements are not intended to present


ed in such countries and IFRS.

CONVENIENCE TRANSLATIONOF PUBLICLY ANNOUNCED CONSOLIDATED FINANCIAL STATEMENTS

ORIGINALLY ISSUED IN TURKISH,SEE NOTE I OF SECTION THREE

THE THREE MONTH CONSOLIDATED INTERIM FINANCIAL REPORT OFTAIB YATIRIMBANK A.Ş. AS OF 31 MARCH 2011

Address of the Bank’s Headquarters : Eski Büyükdere Cad. No: 14 Park Plaza Kat: 6 Maslak / Istanbul

Telephone of the Bank : (0 212) 345 07 11Fax of the Bank : (0 212) 345 07 12Web site of the Bank : www.yatirimbank.com.trE-mail for correspondence : [email protected]

The consolidated three-month financial report includes the following sections in accordance with the Communiqué on FinancialStatements and Related Explanations and Notes that will be Publicly Announced as sanctioned by the Banking Regulation andSupervision Agency.

SECTION ONE - GENERAL INFORMATION ABOUT THE PARENT BANK SECTION TWO - CONSOLIDATED INTERIM FINANCIAL STATEMENTS OF THE PARENT BANK SECTION THREE - EXPLANATIONS ON ACCOUNTING POLICIES SECTION FOUR - INFORMATION RELATED TO FINANCIAL POSITION OF THE GROUP SECTION FIVE - EXPLANATIONS AND NOTES RELATED TO CONSOLIDATED FINANCIAL

STATEMENTS SECTION SIX - EXPLANATIONS ON REVIEW REPORT

Investments in associates, subsidiaries and joint ventures whose financial statements have been consolidated in this reportingpackage are as follows:

Subsidiaries Investment in Associates Joint Ventures

1. TAIB Yatırım Menkul Değerler A.Ş. - -

2. PDF Kurumsal Finansman Danışmanlık Hiz. A.Ş. - -

The accompanying consolidated interim financial statements and notes to these financial statements which are expressed, unlessotherwise stated, in thousands of Turkish Lira (“TL”), have been prepared and presented based on the accounting books of theBank in accordance with the Regulation on Accounting Applications for Banks and Safeguarding of Documents, TurkishAccounting Standards, Turkish Financial Reporting Standards, and related appendices and interpretations of these, and have beenreviewed.

10 June 2011

Murat Yülek Sanjeev Kathpalia Can Çaydaşı Chairman of the President, Executive Vice PresidentBoard of Directors, Member of the Board of Responsible forAudit Committee Member Directors Financial Control and Reporting

Kürşat Semih Şişman Yüksel Güneş Member of the Audit Committee Assistant Manager Responsible for

Financial Control and Reporting

Contact information of the personnel in charge of the addressing of questions about this financial report:

Name-Surname/Title : Yüksel Güneş / Assistant Manager Telephone Number : (0212) 345 07 11 - 1118Fax Number : (0212) 345 17 12

INDEXPAGE

SECTION ONE

GENERAL INFORMATION

I. The Parent Bank’s foundation date, start-up statute, history about the changes in this mentioned statute ....................... 1II. Explanation about the Parent Bank’s capital structure, shareholders of the Parent Bank who are in charge

of the management and/or auditing of the Parent Bank directly or indirectly, changes in these matters(if any) and the group the Parent Bank belongs to............................................................................................................ 1

III. Explanation on the Board of Directors, members of the audit committee, president and executivevice presidents, changes in these matters (if any) and shares of the Parent Bank they possess ........................................ 1

IV. Explanation on shareholders having control shares in the Parent Bank............................................................................ 2V. Information on the Parent Bank’s service type and field of operations ............................................................................ 2VI. Other information ............................................................................................................................................................. 2

SECTION TWO

CONSOLIDATED FINANCIAL STATEMENTS

I. Consolidated balance sheet (Statement of financial position) .......................................................................................... 3-4II. Consolidated income statements (Statements of profit and loss)...................................................................................... 5III. Consolidated off-balance sheet ........................................................................................................................................ 6IV. Consolidated statements of changes in shareholders’ equity ............................................................................................ 7-8V. Statement of income and expense items accounted in consolidated equity ..................................................................... 9VI. Consolidated statement of cash flows............................................................................................................................... 10

SECTION THREE

EXPLANATIONS ON ACCOUNTING POLICIES

I. Basis of presentation ........................................................................................................................................................ 11-12II. Explanations on strategy of using financial instruments and foreign currency transactions............................................. 12III. Explanations on investments in associates, subsidiaries and joint venture ....................................................................... 12-14IV. Explanations on forward transactions, options and derivative instruments ...................................................................... 14V. Explanations on interest income and expense .................................................................................................................. 14VI. Explanations on fee and commission income and expense .............................................................................................. 15VII. Explanations on financial assets ....................................................................................................................................... 15-17VIII. Explanations on impairment of financial assets................................................................................................................ 17IX. Explanations on offsetting financial assets ....................................................................................................................... 17X. Explanations on sales and repurchase agreements and securities lending transactions .................................................... 17XI. Explanations on assets held for resale and fixed assets from discontinued operations and liabilities

related with these assets ................................................................................................................................................... 18XII. Explanations on goodwill and other intangible assets ..................................................................................................... 18-19XIII. Explanations on property and equipment ......................................................................................................................... 19-20XIV. Explanations on leasing transactions ................................................................................................................................ 20XV. Explanations on provisions and contingent commitments................................................................................................ 20XVI. Explanations on contingent assets .................................................................................................................................... 21XVII. Explanations on obligations related to employee rights ................................................................................................... 21XVIII. Explanations on taxation .................................................................................................................................................. 21-22XIX. Explanations on borrowings ............................................................................................................................................. 22XX. Explanations on issuance of share certificates.................................................................................................................. 23XXI. Explanations on avalised drafts and acceptances.............................................................................................................. 23XXII. Explanations on government grants.................................................................................................................................. 23XXIII. Explanations on profit reserves and profit distribution..................................................................................................... 23XXIV. Explanations on earnings per share .................................................................................................................................. 23-24XXV. Explanations on related parties......................................................................................................................................... 24XXVI. Explanations on cash and cash equivalents ...................................................................................................................... 24XXVII. Explanations on segment reporting .................................................................................................................................. 24XXVIII. Reclassifications............................................................................................................................................................... 24

INDEX (Continued)PAGE

SECTION FOUR

INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION

I. Explanations on consolidated capital adequacy ratio ....................................................................................................... 25-27II. Explanations on consolidated market risk ........................................................................................................................ 28III. Explanations on consolidated operational risk ................................................................................................................. 28IV. Explanations on consolidated currency risk ..................................................................................................................... 29-30V. Explanations on consolidated interest rate risk................................................................................................................. 31-33VI. Explanations on consolidated liquidity risk...................................................................................................................... 34VII. Explanations on operating segments ................................................................................................................................ 35

SECTION FIVE

EXPLANATIONS AND NOTES RELATED TO CONSOLIDATED FINANCIAL STATEMENTS

I. Explanations and notes related to consolidated assets ...................................................................................................... 36-43II. Explanations and notes related to consolidated liabilities................................................................................................. 44-48III. Explanations and notes related to consolidated income statement.................................................................................... 49-52IV. Explanations and notes related to consolidated off-balance sheet accounts ..................................................................... 53-54V. Explanations and notes related to the Parent Bank’s risk group ....................................................................................... 55-56VI. Explanations and notes related to subsequent events........................................................................................................ 56-57

SECTION SIX

EXPLANATIONS ON REVIEW REPORT

I. Explanations on review report .......................................................................................................................................... 58II. Explanations and notes prepared by independent auditor................................................................................................. 58

CONVENIENCE TRANSLATION OF PUBLICLY ANNOUNCEDCONSOLIDATED FINANCIAL STATEMENTS ORIGINALLY ISSUEDIN TURKISH, SEE NOTE I OF SECTION THREE

TAIB YATIRIMBANK A.Ş. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS AT 31 MARCH 2011(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

1

SECTION ONE

GENERAL INFORMATION

I. The Parent Bank’s foundation date, start-up statute, history about the changes in this mentionedstatute:

TAIB YatırımBank A.Ş. (“the Parent Bank”) is a wholly owned subsidiary of TAIB Bank B.S.C. (c). The Parent Bank was incorporated on 25 December 1987 as an investment bank with the permission ofthe Council of Ministers decision no. 6224 which allows the transfer of the Banks’ net profit afterstatutory liabilities and in case of liquidation the transfer of capital to foreign shareholders, and startedits financial operations on 1 March 1988. As of 31 March 2011 , the Parent Bank operates in its headoffice in Istanbul and there are no other branches.

II. Explanation about the Parent Bank’s capital structure, shareholders of the Parent Bank who arein charge of the management and/or auditing of the Parent Bank directly or indirectly, changes inthese matters (if any) and the group the Parent Bank belongs to:

The main shareholder TAIB Bank B.S.C. (c) owns 99,28% of the Parent Bank. Dubai Financial GroupL.L.C. indirectly owns 58,1% of the Parent Bank where Dubai Financial Group L.L.C. owns 58,57% ofTAIB Bank B.S.C. (c) in accordance with the Banking Regulation and Supervision Agency’s (“BRSA”)decision No. 2955 dated 25 December 2008. The other main shareholder of TAIB Bank B.S.C. (c) isRashed A. Rahman Al-Rashed&Sons Co. with %12,68 shares. No changes have been made in theParent Bank’s partnership structure.

III. Explanation on the Board of Directors, members of the audit committee, president and executivevice presidents, changes in these matters (if any) and shares of the Parent Bank they possess:

ShareTitle Name Education Percentage

Chairman of the Board of Directors Murat Ali Yülek PhD -Member of the Board of Directors/President Sanjeev Kathpalia Graduate 0,00000005Member of the Board of Directors/ Member of the Audit Committee Kürşat Semih Şişman Undergraduate - Member of the Board of Directors/

Member of the Audit Committee Nader Jasim MohamedAli Alnajjar (*) Graduate -

Member of the Board of Directors/Member of the Audit Committee Syed Khurshid Husain (**) Graduate -

Member of the Board of Directors Güldenir Kurtar Graduate -Member of the Board of Directors Abdurrahman Murat Kuloğlu (***) Graduate - Member of the Board of Directors Sohail Sultan Ahmad (****) Graduate -Executive Vice President Responsible for

Legal Department Gürhan Okay PhD -Executive Vice President Responsible for Financial Control and Reporting Can Çaydaşı Graduate - Executive Vice President Responsible for Internal Systems Arzu Çakmakçıoğlu Graduate -

(*) As of 12 April 2011 Nader Jasim Mohamed Ali Alnajjar resigned from the membership of the Board of Directors andAudit Committee.

(**) As of 10 June 2011 Syed Khurshid Husain has been assigned as the Member of the Board of Directors and Member ofthe Audit Committee.

(***) It has been decided to assign Abdurrahman Murat Kuloğlu as the Member of the Board of Directors pursuant to the decision taken at the General Assembly Meeting dated 12 April 2011.

(****) It has been decided to assign Sohail Sultan Ahmad as the Member of the Board of Directors pursuant to the decisiontaken at the General Assembly Meeting dated 12 April 2011.



2

GENERAL INFORMATION (Continued)

IV. Explanation on shareholders having control shares in the Parent Bank:

Ad Soyad/Ticari Unvanı Pay Tutarları (Nominal) Pay Oranları Ödenmiş Paylar (Nominal)Ödenmemiş

PaylarTAIB Bank B.S.C. (c) 27.003.498 99,28 27.003.498 -SheikhAbdullah Mohammed BAROM 39.300 0,14 39.300 -Igbal G. MAMDANI 39.300 0,14 39.300 -Sheikh Abdulruhman AL JERAISY 39.300 0,14 39.300 -Sheikh Abdulaziz AL RASHED 39.300 0,14 39.300 -First Anglo Holdings Ltd. 39.300 0,14 39.300 -Sanjeev KATH PALIA 1 0,00 1 -Sheikh Ahmed Mohammed Barom 1 0,00 1 -

The main shareholder TAIB Bank B.S.C. (c) owns 99,28% of the Parent Bank. Dubai Financial GroupL.L.C. indirectly owns 58,1% of the Parent Bank where Dubai Financial Group L.L.C. owns 58,57% ofTAIB Bank B.S.C. (c) in accordance with the Banking Regulation and Supervision Agency’s (“BRSA”)decision No. 2955 dated 25 December 2008. The other main shareholder of TAIB Bank B.S.C. (c) isRashed A. Rahman Al-Rashed&Sons Co. with %12,68 shares. No changes have been made in theParent Bank’s partnership structure.

V. Information on the Parent Bank’s service type and field of operations:

The Parent Bank operates as an investment bank and its core business activities include AssetManagement, Real Estate Investment, Fund Management and Corporate Finance.

As of 31 March 2011 the Parent Bank has 16 employees (31 December 2010: 17) and the Group has 27employees (31 December 2010: 28).

The Parent Bank and its consolidated subsidiaries TAIB Yatırım Menkul Değerler A.Ş. (“TAIB Yatırım”) and PDF Kurumsal Finansman Danışmanlık Hizmetleri A.Ş. (“PDF”) have been included in the scope of consolidation. The consolidated subsidiaries are determined in accordance with the“Communiqué Related to Preparation of the Consolidated Financial Statements of the Banks” publishedin the Official Gazette No. 26340 dated 8 November 2006. The Parent Bank together with itsconsolidated subsidiary is collectively referred to as “the Group”.

VI. Other information:

a. Commercial title of the Parent Bank:

TAIB YatırımBank A.Ş.

b. Address of the Parent Bank’s headquarters:

Eski Büyükdere Cad. No: 14 Park Plaza Kat: 6 Maslak / Istanbul

c. Telephone and fax numbers of the Parent Bank:

Telephone : (0 212) 345 07 11Fax : (0 212) 345 07 12

d. Website of the Parent Bank:

www.yatirimbank.com.tr

e. E-mail of the Parent Bank:

[email protected]

f. Reporting Period:

1 January - 31 March 2011

The accompanying consolidated interim financial statements and notes to these financial statementshave been prepared and presented in thousands of Turkish Lira (“TL”) unless otherwise stated.


TAIB YATIRIMBANK A.Ş. CONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)AT 31 MARCH 2011 31 DECEMBER 2010(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

3

SECTION TWO

CONSOLIDATED FINANCIAL STATEMENTS

I. CONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)

ASSETS Note 31 March 2011 31 December 2010(SectionFive-I) TL FC Total TL FC Total

I. CASH AND BALANCES WITH CENTRAL BANK (1) 277 24 301 38 173 211II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR

LOSS (Net) (2) 10.412 - 10.412 477 12 4892.1 Trading Financial Assets 10.402 - 10.402 467 12 4792.1.1 Government Debt Securities 10.402 - 10.402 467 - 4672.1.2 Share Certificates - - - - - -2.1.3 Trading Derivative Financial Assets - - - - 12 122.1.4 Other Marketable Securities - - - - - -2.2 Financial Assets Designated at Fair Value through Profit or Loss 10 - 10 10 - 102.2.1 Government Debt Securities - - - - - -2.2.2 Share Certificates - - - - - -2.2.3 Loans - - - - -2.3.4 Other Marketable Securities 10 - 10 10 - 10III. BANKS (3) 116 66 182 1.176 705 1.881IV. MONEY MARKETS - - - - - -4.1 Interbank Money Market Placements - - - - - -4.2 Receivables from Istanbul Stock Exchange Money Market - - - - - -4.3 Receivables from Reverse Repurchase Agreements - - - - - -V. AVAILABLE-FOR-SALE FINANCIAL ASSETS (Net) (4) 4.816 - 4.816 4.998 - 4.9985.1 Share Certificates - - - - - -5.2 Government Debt Securities 4.816 - 4.816 4.998 - 4.9985.3 Other Marketable Securities - - - - - -VI. LOANS (5) 77 - 77 - - -6.1 Loans 77 - 77 - - -6.1.1 Loans to Bank’s Risk Group - - - - - -6.1.2 Government Debt Securities - - - - - -6.1.3 Other 77 - 77 - - -6.2 Loans under Follow-up 60 - 60 60 - 606.3 Specific Provisions (-) (60) - (60) (60) - (60)VII. FACTORING RECEIVABLES - - - - - -VIII. HELD-TO-MATURITY SECURITIES (Net) (6) - - - - - -8.1 Government Debt Securities - - - - - -8.2 Other Marketable Securities - - - - - -IX. INVESTMENTS IN ASSOCIATES (Net) (7) - - - - - -9.1 Consolidated Based on Equity Method - - - - - -9.2 Unconsolidated - - - - - -9.2.1 Financial Investments in Associates - - - - - -9.2.2 Non-financial Investments in Associates - - - - - -X. SUBSIDIARIES (Net) (8) 12 - 12 12 - 1210.1 Unconsolidated Financial Subsidiaries - - - - - -10.2 Unconsolidated Non-Financial Subsidiaries 12 - 12 12 - 12XI. JOINT VENTURES (Net) (9) - - - - - -11.1 Consolidated Based on Equity Method - - - - - -11.2 Unconsolidated - - - - - -11.2.1 Financial Joint Ventures - - - - - -11.2.2 Non-financial Joint Ventures - - - - - -XII. LEASE RECEIVABLES (Net) (10) - - - - - -12.1 Financial Lease Receivables - - - - - -12.2 Operational Lease Receivables - - - - - -12.3 Other - - - - - -12.4 Unearned Income (-) - - - - - -XIII. HEDGING DERIVATIVE FINANCIAL ASSETS (11) - - - - - -13.1 Fair Value Hedge - - - - - -13.2 Cash Flow Hedge - - - - - -13.3 Foreign Net Investment Hedge - - - - - -XIV. PROPERTY AND EQUIPMENT (Net) 183 - 183 204 - 204XV. INTANGIBLE ASSETS (Net) 6.841 - 6.841 6.971 - 6.97115.1 Goodwill 5.577 - 5.577 5.577 - 5.57715.2 Other 1.264 - 1.264 1.394 - 1.394XVI. INVESTMENT PROPERTY (Net) (12) - - - - - -XVII. TAX ASSET 246 - 246 259 - 25917.1 Current Tax Asset (15) 113 - 113 113 - 11317.2 Deferred Tax Asset (13) 133 - 133 146 - 146XVIII. ASSETS HELD FOR RESALE AND DISCONTINUED

OPERATIONS (Net) (14) - - - - - -18.1 Held for Resale - - - - - -18.2 Discontinued Operations - - - - - -XIX. OTHER ASSETS (15) 511 47 558 117 44 161

TOTAL ASSETS 23.491 137 23.628 14.252 934 15.186

The accompanying explanations and notes form an integral part of these financial statements.


TAIB YATIRIMBANK A.Ş. CONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION)AT 31 MARCH 2011 31 DECEMBER 2010(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

4

I. CONSOLIDATED BALANCE SHEET (STATEMENT OF FINANCIAL POSITION) (Continued),

LIABILITIES Note 31 March 2011 31 December 2010(SectionFive-II) TL FC Total TL FC Total

I. DEPOSITS (1) - - - - - -1.1 Deposits of Bank’s Risk Group - - - - - -1.2 Other - - - - - -II. TRADING DERIVATIVE FINANCIAL LIABILITIES (2) - - - - 11 11III. BORROWINGS (3) 3.173 - 3.173 - 472 472IV. MONEY MARKETS 7.521 - 7.521 - - -4.1 Funds from Interbank Money Market - - - - - -4.2 Funds from Istanbul Stock Exchange Money Market - - - - - -4.3 Funds Provided Under Repurchase Agreements 7.521 - 7.521 - - -V. MARKETABLE SECURITIES ISSUED (Net) - - - - - -5.1 Bills - - - - - -5.2 Asset Backed Securities - - - - - -5.3 Bonds - - - - - -VI. FUNDS - - - - - -6.1 Borrower Funds - - - - - -6.2 Other - - - - - -VII. MISCELLANEOUS PAYABLES 173 - 173 117 1 118VIII. OTHER LIABILITIES (4) - - - - - -IX. FACTORING PAYABLES - - - - - -X. LEASE PAYABLES (Net) (5) - - - - - -10.1 Financial Lease Payables - - - - - -10.2 Operational Lease Payables - - - - - -10.3 Other - - - - - -10.4 Deferred Financial Lease Expenses (-) - - - - - -XI. HEDGING DERIVATIVE FINANCIAL LIABILITIES (6) - - - - - -11.1 Fair Value Hedge - - - - - -11.2 Cash Flow Hedge - - - - - -11.3 Foreign Net Investment Hedge - - - - - -XII. PROVISIONS (7) 1.200 42 1.242 1.261 22 1.28312.1 General Loan Loss Provision 1 1 2 1 1 212.2 Restructuring Provisions - - - - -12.3 Reserve for Employee Rights 295 - 295 349 - 34912.4 Insurance Technical Provisions (Net) - - - - - -12.5 Other Provisions 904 41 945 911 21 932XIII. TAX LIABILITY (8) 143 - 143 126 - 12613.1 Current Tax Liability 143 - 143 126 - 12613.2 Deferred Tax Liability - - - - - -XIV. PAYABLES FOR ASSET HELD FOR RESALE AND

DISCONTINUED OPERATIONS (Net) - - - - - -14.1 Held for Resale - - - - - -14.2 Discontinued Operations - - - - - -XV. SUBORDINATED LOANS - - - - - -XVI. SHAREHOLDERS' EQUITY (9) 11.376 - 11.376 13.176 - 13.17616.1 Paid-in Capital 27.200 - 27.200 27.200 - 27.20016.2 Capital Reserves (20) - (20) 18 - 1816.2.1 Share Premium - - - - - -16.2.2 Share Cancellation Profits - - - - - -16.2.3 Marketable Securities Valuation Reserve (20) - (20) 18 - 1816.2.4 Tangible Assets Revaluation Reserve - - - - - -16.2.5 Intangible Assets Revaluation Reserve - - - - - -16.2.6 Investment Property Revaluation Reserve - - - - - -16.2.7 Bonus Shares Obtained from Investments in Associates, Subsidiaries and

Joint Ventures - - - - - -16.2.8 Hedging Reserves (Effective portion) - - - - - -16.2.9 Value Differences of Assets Held for Resale and Discontinued Operations - - - - - -16.2.10 Other Capital Reserves - - - - - -16.3 Profit Reserves 445 - 445 445 - 44516.3.1 Legal Reserves 48 - 48 48 - 4816.3.2 Status Reserves 397 - 397 397 - 39716.3.3 Extraordinary Reserves - - - - - -16.3.4 Other Profit Reserves - - - - - -16.4 Income or (Loss) (16.249) - (16.249) (14.487) - (14.487)16.4.1 Prior Years’ Income/(Loss) (14.487) - (14.487) (11.227) - (11.227)16.4.2 Current Year Income/(Loss) (1.762) - (1.762) (3.260) - (3.260)16.5 Minority Shares - - - - - -

TOTAL LIABILITIES 23.586 42 23.628 14.680 506 15.186



TAIB YATIRIMBANK A.Ş. CONSOLIDATED INCOME STATEMENT (STATEMENT OF PROFIT AND LOSS)FOR THE THREE-MONTH PERIODS ENDED 31 MARCH 2011 AND 31 MARCH 2010(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

5

II. CONSOLIDATED INCOME STATEMENT (STATEMENT OF PROFIT AND LOSS)

INCOME AND EXPENSE ITEMSNote

(Section Five-III) 1 January -

31 March 20111 January -

31 March 2010

I. INTEREST INCOME (1) 188 1931.1 Interest on Loans - -1.2 Interest Received from Reserve Requirements - -1.3 Interest Received from Banks 29 171.4 Interest Received from Money Market Transactions - 31.5 Interest Received from Marketable Securities Portfolio 159 1731.5.1 Trading Financial Assets 76 801.5.2 Financial Assets at Fair Value through Profit or Loss - -1.5.3 Available-for-sale Financial Assets 83 931.5.4 Held-to-maturity Investments - -1.6 Financial Lease Income - -1.7 Other Interest Income - -II. INTEREST EXPENSE (-) (2) (85) (68)2.1 Interest on Deposits (-) - -2.2 Interest on Funds Borrowed (-) (62) (1)2.3 Interest Expense on Money Market Transactions (-) (22) -2.4 Interest on Securities Issued (-) - -2.5 Other Interest Expenses (-) (1) (67)III. NET INTEREST INCOME (I – II) 103 125IV. NET FEES AND COMMISSIONS INCOME/EXPENSE (13) (5)4.1 Fees and Commissions Received - 94.1.1 Non-cash Loans - -4.1.2 Other - 94.2 Fees and Commissions Paid (-) (13) (14)4.2.1 Non-cash Loans (-) (3) (3)4.2.2 Other (-) (10) (11)V. DIVIDEND INCOME - -VI. TRADING INCOME/( LOSS) (Net) (3) (67) 156.1 Trading Gains/(Losses) on Securities (53) 616.2 Trading Gains/(Losses) on Derivative Financial Instruments (15) 126.3 Foreign Exchange Gains/(Losses) 1 (58)VII. OTHER OPERATING INCOME (4) 21 766VIII. TOTAL OPERATING INCOME (III+IV+V+VI+VII) 44 901IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) (5) - 4X. OTHER OPERATING EXPENSES (-) (6) (1.793) (1.690)XI. NET OPERATING INCOME/(LOSS) (VIII-IX-X) (1.749) (785)XII. EXCESS AMOUNT RECORDED AS INCOME AFTER MERGER - -XIII. INCOME/(LOSS) FROM INVESTMENTS IN SUBSIDIARIES

CONSOLIDATED BASED ON EQUITY METHOD - -XIV. INCOME/(LOSS) ON NET MONETARY POSITION - -XV. INCOME/(LOSS) BEFORE TAX FROM CONTINUING OPERATIONS

(XI+…+XIV) (7) (1.749) (785)XVI. TAX PROVISION FOR CONTINUING OPERATIONS (-) (8) (13) -16.1 Current Tax Provision - -16.2 Deferred Tax Provision (13) -XVII. NET INCOME/(LOSS) FROM CONTINUING OPERATIONS (XV-XVI) (1.762) (785)XVIII. INCOME FROM DISCONTINUED OPERATIONS - -18.1 Income from Non-Current Assets Held for Resale - -18.2 Sale Income from Associates, Subsidiaries and Joint Ventures - -18.3 Other Income from Discontinued Operations - -XIX. EXPENSES FROM DISCONTINUED OPERATIONS (-) - -19.1 Expense from Non-Current Assets Held for Resale - -19.2 Sale Losses from Associates, Subsidiaries and Joint Ventures - -19.3 Other Expenses from Discontinued Operations - -XX. INCOME/(LOSS) BEFORE TAX FROM DISCONTINUED OPERATIONS

(XVIII-XIX) - -XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (-) (8) - -21.1 Current tax provision - -21.2 Deferred tax provision - -XXII. NET INCOME/(LOSS) FROM DISCONTINUED OPERATIONS (XX-XXI) (9) - -XXIII. NET INCOME/(LOSS) (XVII+XXII) (10) (1.762) (785)

23.1 Income/(Loss) of the Group (1.762) (785)23.2 Income/(Loss) of Minority Interest -

Earnings/(Loss) per share (0,065) (0,029)

The accompanying explanations and notes form an integral part of these financial statements


TAIB YATIRIMBANK A.Ş. CONSOLIDATED OFF-BALANCE SHEET COMMITMENTSAT 31 MARCH 2011 31 DECEMBER 2010(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

6

III. CONSOLIDATED OFF-BALANCE SHEET

OFF-BALANCE SHEET COMMITMENTS Note 31 March 2011 31 December 2010(SectionFive-IV) TL FC Total TL FC Total

A. OFF-BALANCE SHEET COMMITMENTS (I+II+III) 146 39 185 123 8.218 8.341I. GUARANTEES AND WARRANTIES (1) 123 - 123 123 - 1231.1. Letters of Guarantee 123 - 123 123 - 1231.1.1. Guarantees Subject to State Tender Law - - - - - -1.1.2. Guarantees Given for Foreign Trade Operations - - - - - -1.1.3. Other Letters of Guarantee 123 - 123 123 - 1231.2. Bank Acceptances - -1.2.1. Import Letter of Acceptance - - - - - -1.2.2. Other Bank Acceptances - - - - - -1.3. Letters of Credit - - - - - -1.3.1. Documentary Letters of Credit - - - - - -1.3.2. Other Letters of Credit - - - - - -1.4. Prefinancing Given as Guarantee - - - - - -1.5. Endorsements - - - - - -1.5.1. Endorsements to the Central Bank of the Republic of Turkey - - - - - -1.5.2. Other Endorsements - - - - - -1.6. Securities Issue Purchase Guarantees - - - - - -1.7. Factoring Guarantees - - - - - -1.8. Other Guarantees - - - - - -1.9. Other Collaterals - - - - - -II. COMMITMENTS - - - - - -2.1. Irrevocable Commitments - - - - - -2.1.1. Asset Purchase and Sales Commitments - - - - - -2.1.2. Deposit Purchase and Sales Commitments - - - - - -2.1.3. Share Capital Commitments to Associates and Subsidiaries - - - - - -2.1.4. Commitments for Loan Limits - - - - - -2.1.5. Securities Issue Brokerage Commitments - - - - - -2.1.6. Commitments for Reserve Deposit Requirements - - - - - -2.1.7. Commitments for Cheques - - - - - -2.1.8. Tax and Fund Liabilities from Export Commitments - - - - - -2.1.9. Commitments for Credit Card Limits - - - - - -2.1.10 Promotion Commitments for Credit Cards and Banking Services - - - - - -2.1.11. Receivables from Short Sale Commitments of Marketable Securities - - - - - -2.1.12. Payables for Short Sale Commitments of Marketable Securities - - - - - -2.1.13. Other Irrevocable Commitments - - - - - -2.2. Revocable Commitments - - - - - -2.2.1. Revocable Commitments for Loan Limits - - - - - -2.2.2. Other Revocable Commitments - - - - - -III. DERIVATIVE FINANCIAL INSTRUMENTS 23 39 62 - 8.218 8.2183.1 Hedging Derivative Financial Instruments - - - - - -3.1.1 Transactions for Fair Value Hedge - - - - - -3.1.2 Transactions for Cash Flow Hedge - - - - - -3.1.3 Transactions for Foreign Net Investment Hedge - - - - - -3.2 Trading Derivative Financial Instruments 23 39 62 - 8.218 8.2183.2.1 Forward Foreign Currency Buy/Sell Transactions 23 39 62 - 8.218 8.2183.2.1.1 Forward Foreign Currency Transactions-Buy - 31 31 - 4.109 4.1093.2.1.2 Forward Foreign Currency Transactions-Sell 23 8 31 - 4.109 4.1093.2.2 Swap Transactions Related to Foreign Currency and Interest Rates - - - - - -3.2.2.1 Foreign Currency Swap-Buy - - - - - -3.2.2.2 Foreign Currency Swap-Sell - - - - - -3.2.2.3 Interest Rate Swap-Buy - - - - - -3.2.2.4 Interest Rate Swap-Sell - - - - - -3.2.3 Foreign Currency, Interest rate and Securities Options - - - - - -3.2.3.1 Foreign Currency Options-Buy - - - - - -3.2.3.2 Foreign Currency Options-Sell - - - - - -3.2.3.3 Interest Rate Options-Buy - - - - - -3.2.3.4 Interest Rate Options-Sell - - - - - -3.2.3.5 Securities Options-Buy - - - - - -3.2.3.6 Securities Options-Sell - - - - - -3.2.4 Foreign Currency Futures - - - - - -3.2.4.1 Foreign Currency Futures-Buy - - - - - -3.2.4.2 Foreign Currency Futures-Sell - - - - - -3.2.5 Interest Rate Futures - - - - - -3.2.5.1 Interest Rate Futures-Buy - - - - - -3.2.5.2 Interest Rate Futures-Sell - - - - - -3.2.6 Other - - - - - -B. CUSTODY AND PLEDGES RECEIVED (IV+V+VI) 565 - 565 810 - 810IV. ITEMS HELD IN CUSTODY 565 - 565 810 - 8104.1. Customer Fund and Portfolio Balances - - - - - -4.2. Investment Securities Held in Custody 565 565 810 - 8104.3. Cheques Received for Collection - - - - - -4.4. Commercial Notes Received for Collection - - - - - -4.5. Other Assets Received for Collection - - - - - -4.6. Assets Received for Public Offering - - - - - -4.7. Other Items Under Custody - - - - - -4.8. Custodians - - - - - -V. PLEDGES RECEIVED - - - - - -5.1. Marketable Securities - - - - - -5.2. Guarantee Notes - - - - - -5.3. Commodity - - - - - -5.4. Warranty - - - - - -5.5. Immovable - - - - - -5.6. Other Pledged Items - - - - - -5.7. Pledged Items-Depository - - - - - -VI. ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES - - - - - -

TOTAL OFF-BALANCE SHEET COMMITMENTS (A+B) 711 39 750 933 8.218 9.151



TAIB YATIRIMBANK A.Ş. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE THREE-MONTHINTERIM PERIOD ENDED 31 MARCH 2011 31 MARCH 2010(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

7

IV. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

PRIOR PERIOD31 March 2010

Paid-inCapital

Adjustmentto ShareCapital

SharePremium

ShareCancellation

ProfitsLegal

ReservesStatus

ReservesExtraordinary

ReservesOther

Reserves

CurrentPeriod

NetIncome/

(Loss)

PriorPeriod

NetIncome/

(Loss)

MarketableSecuritiesValuation

Reserve

Tangible andIntangible

AssetsRevaluation

Reserve

BonusShares

Obtainedfrom

InvestmentsHedgingReserves

ValuationDifference of

AHS andDiscontinued

Operations

TotalEquity

Except forMinorityInterest

MinorityInterest

TotalShareholders’

Equity

I. Period Opening Balance 27.200 - - - 48 397 - - (4.794) (6.433) 11 - - - - - - 16.429II. Changes in Accounting Policies

according to TAS 8 - - - - - - - - - - - - - - - - - -2.1 Effects of Errors - - - - - - - - - - - - - - - - - -2.2 Effects of the Changes in Accounting

Policies - - - - - - - - - - - - - - - - - -III. New Balance (I+II) 27.200 - - - 48 397 - - (4.794) (6.433) 11 - - - - - - 16.429

Changes in the PeriodIV. Increase/Decrease due to the Merger - - - - - - - - - - - - - - - - - -V. Marketable Securities Valuation

Differences - - - - - - - - - - (9) - - - - - - (9)VI. Hedging Reserves (Effective Portion) - - - - - - - - - - - - - - - - - -6.1 Cash Flow Hedge - - - - - - - - - - - - - - - - - -6.2 Foreign Investment Hedge - - - - - - - - - - - - - - - - - -VII. Revaluation Differences of Tangible

Assets - - - - - - - - - - - - - - - - - -VIII. Revaluation Differences of Intangible

Assets - - - - - - - - - - - - - - - - - -IX. Bonus Shares Obtained form

Investments in Associates, Subsidiariesand Joint Ventures - - - - - - - - - - - - - - - - - -

X. Foreign Exchange Difference - - - - - - - - - - - - - - - - - -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 - - - - - - - - - - - - - - - - - -14.1 Cash - - - - - - - - - - - - - - - - - -14.2 Internal Resources - - - - - - - - - - - - - - - - - -XV. Share Premium - - - - - - - - - - - - - - - - - -XVI. Share Cancellation Profits - - - - - - - - - - - - - - - - - -XVII. Adjustment to Share Capital - - - - - - - - - - - - - - - - - -XVIII. Other - - - - - - - - - - - - - - - - - -XIX. Current Year Income or Loss - - - - - - - - (785) - - - - - - - - (785)XX. Profit Distribution - - - - - - - - 4.794 (4.794) - - - - - - - -20.1 Dividend Paid - - - - - - - - - - - - - - - - - -20.2 Transfers to Reserves - - - - - - - - - - - - - - - - - -20.3 Other - - - - - - - - 4.794 (4.794) - - - - - - - -

Period End Balance(III+IV+V+…+XVIII+XIX+XX) 27.200 - - - 48 397 - - (785) (11.227) 2 - - - - - - 15.635



TAIB YATIRIMBANK A.Ş. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE THREE-MONTHINTERIM PERIOD ENDED 31 MARCH2011 AND 31 MARCH 2010(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

8

IV. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (Continued)

CURRENT PERIOD31 March 2011

Paid-inCapital

Adjustmentto ShareCapital

SharePremium

ShareCancellation

ProfitsLegal

ReservesStatus

ReservesExtraordinary

ReservesOther

Reserves

CurrentPeriod

NetIncome/

(Loss)

PriorPeriod

NetIncome/

(Loss)

MarketableSecuritiesValuation

Reserve

Tangible andIntangible

AssetsRevaluation

Reserve

BonusShares

Obtainedfrom

InvestmentsHedgingReserves

ValuationDifference of

AHS andDiscontinued

Operations

TotalEquity

Except forMinorityInterest

MinorityInterest

TotalShareholders’

Equity

I. Prior Period End Balance 27.200 - - - 48 397 - - (3.260) (11.227) 18 - - - - - - 13.176

Changes in the PeriodII. Increase/Decrease due to the Merger - - - - - - - - - - - - - - - - - -III. Marketable Securities Valuation

Differences - - - - - - - - - - (38) - - - - - - (38)IV. Hedging Reserves (Effective Portion) - - - - - - - - - - - - - - - - - -4.1 Cash Flow Hedge - - - - - - - - - - - - - - - - - -4.2 Foreign Investment Hedge - - - - - - - - - - - - - - - - - -V. Revaluation Differences of Tangible

Assets - - - - - - - - - - - - - - - - - -VI. Revaluation Differences of Intangible

Assets - - - - - - - - - - - - - - - - - -VII. Bonus Shares Obtained from

Investments in Associates, Subsidiariesand Joint Ventures - - - - - - - - - - - - - - - - - -

VIII. Foreign Exchange Difference - - - - - - - - - - - - - - - - - -IX. Changes due to the Disposal of Assets - - - - - - - - - - - - - - - - - -X. Changes due to the Reclassification of

the Assets - - - - - - - - - - - - - - - - - -XI. Effects of Changes in Equity of

Investments in Associates - - - - - - - - - - - - - - - - - -XII. Capital Increase - - - - - - - - - - - - - - - - - -12.1 Cash - - - - - - - - - - - - - - - - - -12.2 Internal Resources - - - - - - - - - - - - - - - - - -XIII. Share Premium - - - - - - - - - - - - - - - - - -XIV. Share Cancellation Profits - - - - - - - - - - - - - - - - - -XV. Adjustment to Share Capital - - - - - - - - - - - - - - - - - -XVI. Other - - - - - - - - - - - - - - - - - -XVII. Current Year Income or Loss - - - - - - - - (1.762) - - - - - - - - (1.762)XVIII. Profit Distribution - - - - - - - - 3.260 (3.260) - - - - - - - -18.1 Dividend Paid - - - - - - - - - - - - - - - - - -18.2 Transfers to Reserves - - - - - - - - - - - - - - - - - -18.3 Other - - - - - - - - 3.260 (3.260) - - - - - - - -

Period End Balance(I+II+III+…+XVI+XVII+XVIII) 27.200 - - - 48 397 - - (1.762) (14.487) (20) - - - - - - 11.376



TAIB YATIRIMBANK A.Ş. STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED INCONSOLIDATED EQUITY FOR THE THREE-MONTH INTERIM PERIOD ENDED31 MARCH 2011 AND 31 MARCH 2010(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

9

V. STATEMENT OF INCOME AND EXPENSE ITEMS ACCOUNTED IN CONSOLIDATED EQUITY

1 January -31 March 2011


INCOME AND EXPENSE ITEMS ACCOUNTED IN EQUITY

I. ADDITIONS TO THE MARKETABLE SECURITIES VALUATION RESERVE FROM THEAVAILABLE FOR SALE FINANCIAL ASSETS (56) (20)

II. REVALUATION DIFFERENCES OF TANGIBLE ASSETS - -III. REVALUATION DIFFERENCES OF INTANGIBLE ASSETS - -IV. FOREIGN EXCHANGE TRANSLATION DIFFERENCES FOR FOREIGN CURRENCY

TRANSACTIONS - -V. INCOME/LOSS ON CASH FLOW HEDGE DERIVATIVE FINANCIAL ASSETS (Effective Part

of Fair Value Changes) - -VI. PROFIT/LOSS FROM FOREIGN INVESTMENT HEDGE DERIVATIVE FINANCIAL ASSETS

(Effective Part of Fair Value Changes) - -VII. EFFECTS OF CHANGES IN ACCOUNTING POLICY AND ERRORS - -VIII. OTHER INCOME AND EXPENSE ITEMS ACCOUNTED IN EQUITY ACCORDING TO TAS - -IX. DEFERRED TAX ON VALUATION DIFFERENCES - -X. NET INCOME/LOSS ACCOUNTED DIRECTLY IN EQUITY (I+II+...+IX) (56) (20)XI. CURRENT PERIOD INCOME/LOSS 18 111.1 Net Change in Fair Value of Marketable Securities (Transfer to Income Statement) 18 111.2 Portion of Cash Flow Hedge Derivative Financial Assets Reclassified and Presented on the Income

Statement - -1.3 Portion of Foreign Investment Hedge Derivative Financial Assets Reclassified and Presented on the

Income Statement - -1.4 Other - -

XII. TOTAL INCOME/LOSS RELATED TO THE CURRENT PERIOD (X+XI) (38) (9)



TAIB YATIRIMBANK A.Ş. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE-MONTH INTERIMPERIOD ENDED 31 MARCH 2011 AND 31 MARCH 2010(Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)

10

VI. CONSOLIDATED STATEMENT OF CASH FLOWS



A. CASH FLOWS FROM BANKING OPERATIONS

1.1 Operating Profit Before Changes in Operating Assets and Liabilities 898 (1.323)

1.1.1 Interest Received 73 2341.1.2 Interest Paid (39) (83)1.1.3 Dividend Received - -1.1.4 Fees and Commissions Received - 91.1.5 Other Income 63 661.1.6 Collections from Previously Written-off Loans and Other Receivables - -1.1.7 Payments to Personnel and Service Suppliers (756) (796)1.1.8 Taxes Paid - (111)1.1.9 Other 1.514 (642)

1.2 Changes in Operating Assets and Liabilities (2.662) (1.947)

1.2.1 Net (Increase)/Decrease in Trading Securities (9.829) (11.512)1.2.2 Net (Increase)/Decrease in Fair Value Through Profit/Loss Financial Assets - -1.2.3 Net (Increase)/Decrease in Due from Banks (992) -1.2.4 Net (Increase)/Decrease in Loans (77) 711.2.5 Net (Increase)/Decrease in Other Assets (891) (403)1.2.6 Net Increase/(Decrease) in Bank Deposits - -1.2.7 Net Increase/(Decrease) in Other Deposits - -1.2.8 Net Increase/(Decrease) in Funds Borrowed 2.640 (274)1.2.9 Net Increase/(Decrease) in Payables - -1.2.10 Net Increase/(Decrease) in Other Liabilities 6.487 10.171

I. Net Cash Provided from Banking Operations (1.764) (3.270)

B. CASH FLOWS FROM INVESTING ACTIVITIES

II. Net Cash Provided from Investing Activities 252 (426)

2.1 Cash Paid for Acquisition of Investments, Associates and Subsidiaries - -2.2 Cash Obtained from Disposal of Investments, Associates and Subsidiaries - -2.3 Purchases of Property and Equipment (22) (1)2.4 Disposals of Property and Equipment 1 -2.5 Cash Paid for Purchase of Investments Available-for-Sale 45 (4.278)2.6 Cash Obtained from Sale of Investments Available-for-Sale 229 3.8532.7 Cash Paid for Purchase of Investment Securities - -2.8 Cash Obtained from Sale of Investment Securities - -2.9 Other - -

C. CASH FLOWS FROM FINANCING ACTIVITIES

III. Net Cash Provided from Financing Activities - -- -

3.1 Cash Obtained from Funds Borrowed and Securities Issued - -3.2 Cash Used for Repayment of Funds Borrowed and Securities Issued - -3.3 Issued Capital Instruments - -3.4 Dividends Paid - -3.5 Payments for Finance Leases - -3.6 Other - -

IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents 3 1

V. Net Increase/(Decrease) in Cash and Cash Equivalents (I+II+III+IV) (1.509) (3.695)

VI. Cash and Cash Equivalents at the Beginning of the Period 1.989 3.975

VII. Cash and Cash Equivalents at the End of the Period (V+VI) 480 280




11

SECTION THREE

EXPLANATIONS ON ACCOUNTING POLICIES

I. BASIS OF PRESENTATION

a. The consolidated financial statements are prepared in accordance with the “Regulation onthe Principles and Procedures Regarding Banks’ Accounting Applications and Safeguardingof Documents”:

The Parent Bank maintains its books of accounts in Turkish Lira in accordance with the BankingAct No. 5411 (“Banking Act”) which is effective from 1 November 2005, the Turkish CommercialCode and Turkish tax legislation.

The consolidated financial statements are prepared in accordance with the “Regulation on thePrinciples and Procedures Regarding Banks’ Accounting Applications and Safeguarding ofDocuments” published in the Official Gazette No. 26333 dated 1 November 2006 by the BankingRegulation and Supervision Agency (“BRSA”) which refers to “Turkish Accounting Standards”(“TAS”) and “Turkish Financial Reporting Standards” (“TFRS”) issued by the Turkish AccountingStandards Board (“TASB”) and other decrees, notes and explanations related to the accounting andfinancial reporting principles (all “Turkish Accounting Standards” or “TAS”) published by theBRSA. The format and the details of the publicly announced consolidated financial statements andrelated disclosures to these statements have been prepared in accordance with the “CommuniquésRelated to Publicly Announced Financial Statements of Banks and Explanations and Notes Relatedto these Financial Statements” published in the Official Gazette No. 26430 dated 10 February2007.

The consolidated financial statements have been prepared in TL, under the historical costconvention as modified in accordance with inflation adjustments until 31 December 2004, exceptfor the financial assets and liabilities which are carried at fair value.

The preparation of consolidated financial statements in conformity with TAS requires the use ofcertain critical accounting estimates by the Group management to exercise its judgment on theassets and liabilities of the balance sheet and contingent issues as of the balance sheet date. Theseestimates are being reviewed regularly and, when necessary, suitable corrections are made and theeffects of these corrections are reflected to the income statement.

b. The accounting policies and valuation principles applied in the preparation of these financialstatements and valuation principles:

The accounting policies and valuation principles applied in the preparation of these financialstatements and valuation principles are defined and applied in accordance with TAS. Thoseaccounting policies and valuation principles are explained in Notes II to XXVIII below.

c. Investments in associates, subsidiaries and share certificates:

Turkish Lira denominated investments in associates, subsidiaries and share certificates classified asavailable for sale are accounted at cost, if one exists. Associates and subsidiaries are reflected tounconsolidated financial statements at cost in the following periods. The available for salesecurities are reflected to unconsolidated financial statements at fair value in following periods.Gains arising from such shares are reflected to the cost in the unconsolidated financial statementsas “revaluation fund of marketable securities”. By taking into account criteria such as the rate ofthe value decrease and either the impairment is temporary or permanent, the related affiliate,subsidiary and marketable securities available for sale in the portfolio are reduced to net realizablevalue or fair value, if any.



12

EXPLANATIONS ON ACCOUNTING POLICIES (Continued)

d. Additional paragraph for convenience translation into English:

The differences between accounting principles, as described in these preceding paragraphs andaccounting principles generally accepted in countries in which these consolidated financialstatements are to be distributed and International Financial Reporting Standards (“IFRS”) have notbeen quantified in these consolidated financial statements. Accordingly, these consolidatedfinancial statements are not intended to present the financial position, results of operations andchanges in financial position and cash flows in accordance with the accounting principles generallyaccepted in such countries and IFRS.

II. EXPLANATIONS ON STRATEGY OF USING FINANCIAL INSTRUMENTS AND FOREIGNCURRENCY TRANSACTIONS

The general strategy of the Group of using financial instruments is to sustain an optimal balancebetween the yield of the instruments and their risks. The most important funding source of the Group isinternal funding, in addition external funding including funding from repo transactions and borrowingfrom foreign financial institutions is utilised. Funds obtained from internal and external sources areinvested in high yield and quality financial assets and currency, interest rate and liquidity risks are beingkept within the limits following the asset-liability management strategy. The currency, interest andliquidity risks of on-balance sheet and off-balance sheet assets and liabilities are managed in accordancewith the risk limits accepted by the Group and the related legal limits. Derivative instruments are mainlyutilised for liquidity needs and for mitigating currency and interest rate risks. The position of the Groupas a result of foreign currency activities being held at minimum levels and the exposed currency risk isfollowed within the determined levels by the Board of Directors by considering the limits given by theBanking Law.

Foreign currency denominated monetary assets and liabilities are translated with the Parent Bank’sforeign currency bid rates prevailing at the balance sheet date. Gains and losses arising from suchvaluations are recognised in the income statement under the account of “Foreign exchange gains orlosses”.

III. EXPLANATIONS ON INVESTMENTS IN ASSOCIATES, SUBSIDIARIES AND JOINTVENTURES

Consolidated financial statements are prepared in accordance with the “Turkish Accounting Standardfor Consolidated and Separate Financial Statements” (“TAS 27”).

Consolidation principles for subsidiaries are as follows:

Subsidiaries are entities controlled directly or indirectly by the Parent Bank.

Subsidiaries are consolidated using the full consolidation method on the grounds of materiality principleconsidering their operations, asset and equity sizes. Financial statements of related subsidiaries areconsolidated from the date when the control is transferred to the Parent Bank.



13


Control means, directly or indirectly, holding the majority of the capital of an enterprise or although nothaving this majority, by holding privileged shares; or based on agreements made with othershareholders, holding the majority of the voting power or somehow having the power of dismissal orappointment of the majority of the members of the board of directors regarding the Parent Bank.

In the full consolidation method, 100% of subsidiaries’ assets, liabilities, income, expense and off-balance sheet items are combined with the Parent Bank’s assets, liabilities, income, expense and off-balance sheet items. The carrying amount of the Group’s investment in each subsidiary and the Group’sportion of the cost value of the capital of each subsidiary are eliminated. Intergroup balances andintergroup transactions and resulting unrealised profits and losses are eliminated. Minority interests inthe net income of consolidated subsidiaries are identified and adjusted against the income of the Groupin order to arrive at the net income attributable to the Group. Minority interests are presented in theconsolidated balance sheet, in the shareholder’s equity. Minority interests are presented separately in theGroup’s income.

Accounting policies of subsidiaries have been changed where necessary to ensure consistency with thepolicies adopted by the Parent Bank.

Commercial title, operational center, business line, the Parent Bank’s effective share and number ofemployees in the subsidiaries subject to consolidation are summarised below:

The Parent Bank’sOperational Effective Share (%)Center Business 31 March Number of

Title (City/Country) Line 2011 2010 Employees

TAIB Yatırım Investment Menkul Değerler A.Ş. Istanbul/Turkey Management 99,99 99,99 1 PDF Kurumsal Finansman Danışmanlık Hiz. A.Ş. Istanbul/Turkey Consulting 99,99 99,99 10

The subsidiaries of the Parent Bank, TAIB Yatırım Menkul Değerler A.Ş. (“TAIB Yatırım”) and PDF Kurumsal Finansman Danışmanlık Hizmetleri A.Ş. (“PDF”) are consolidated using the full consolidation method in the consolidated financial statements as of 31 March 2011 and31 December 2010.

TAIB Yatırım is incorporated on 25 December 1996 to act as intermediary on share certificates and bonds, and other securities representing financial assets and liabilities of issuers, in the marketablesecurities markets in the name and on account of others or on the account of others and in the name ofitself or in the name and on account of itself in accordance with the Capital Markets Law No. 2499 andrelated legislation.



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PDF is an independent consulting firm that provides corporate financing services to local and foreigncompanies. The main operations of PDF comprise mergers and acquisitions (sell and buy side),financial partnerships, privatisation projects, project finance and related corporate financing services.

In accordance with the application of the Parent Bank management, the Capital Markets Board hasdecided to temporarily suspend the operations of TAIB Yatırım for six months to be effective from 30 September 2004. As a result of additional applications afterwards, the aforementioned duration hasbeen extended until 1 October 2012.

In the Board of Directors resolution No. 2009/15 dated 18 May 2009, the Parent Bank has decided topurchase PDF which was fully owned by TAIB Yatırım, for the acquisition price and the net book value on the date of the sale and to carry out all necessary transactions. Following this resolution, in theBoard of Directors resolution No. 2009/24 dated 3 July 2009, the Parent Bank has decided to purchasePDF for TL7.926 calculated according to the method described above and this amount to be paid in thefirst quarter of year 2010. The Parent Bank has paid the relevant amount on 27 January 2010. PDF hasbecome a fully owned subsidiary of the Parent Bank following the share transfer on 7 July 2009.

The Group has no joint ventures as 31 March 2011 and 31 December 2010.

IV. EXPLANATIONS ON FORWARD TRANSACTIONS, OPTIONS AND DERIVATIVEINSTRUMENTS

The Group does not have any embedded derivative instruments.

Derivative instruments are classified either as “Hedging Derivative Financial Instruments” or “TradingDerivative Financial Instruments” in accordance with the “Turkish Accounting Standard for FinancialInstruments: Recognition and Measurement (“TAS 39”)”. Certain derivative transactions, even thoughthey provide effective economic hedges under the Group’s risk management position, do not qualify forhedge accounting under the specific rules in TAS 39 and are therefore treated as “Financial assets at fairvalue through profit or loss”.

Derivative instruments are measured at fair value on initial recognition and subsequently remeasured attheir fair values. If the fair value of derivative financial instruments is positive, it is disclosed under themain account “Financial assets at fair value through profit or loss” in “Trading derivative financialinstruments” and if the fair value difference is negative, it is disclosed under “Trading derivativefinancial liabilities”. The fair values of the derivative financial instruments are calculated by usingquoted market prices or by using discounted cash flow models. Liabilities and receivables arising fromthe derivative instruments are followed in the off-balance sheet accounts from their contractual values.

V. EXPLANATIONS ON INTEREST INCOME AND EXPENSE

Interest income and expenses are recognised in the income statement on an accrual basis. The Groupceases accruing interest income on non-performing loans and, any interest income accruals from suchloans are being reversed and no income is accounted until the collection is made. Only cash collectionsregarding non-performing loans are recorded as interest income.



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VI. EXPLANATIONS ON FEE AND COMMISSION INCOME AND EXPENSE

All fees and commissions income/expenses are recognised on an accrual basis, except for certaincommission income and fees from various banking services which are recorded as income at the time ofcollection.

Fees and commissions expenses paid to the other institutions regarding financial liabilities areconsidered a component of interest expense of the related funding and are recognised as transactioncosts and recorded as expense in the statement of profit and loss.

Contract-based fees or fees received in return for services such as the purchase and sale of assets onbehalf of a third or legal person are recognised as income at the time of collection.

VII. EXPLANATIONS ON FINANCIAL ASSETS

The Group classifies and accounts its financial assets as “Fair value through profit or loss”, “Available-for-sale”, “Loans and receivables” or “Held-to-maturity”. Sales and purchases of the financial assetsmentioned above are recognised at the “settlement dates”. The appropriate classification of financialassets is determined at the time of purchase by the Group management, taking into consideration thepurpose of holding the investment.

a. Financial assets at fair value through profit or loss:

Financial assets are classified either as “Financial assets at fair value through profit or loss” or“Trading financial assets”.

Trading financial assets are either acquired for generating profit from short-term fluctuations in theprice or dealer’s margin, or are the financial assets included in a portfolio in which a pattern ofshort-term profit making exists independent from the acquisition purpose.

Sales and purchases of trading financial assets are recognised at the “settlement dates”. Tradingfinancial assets are initially recognised at fair value plus transactions costs and are subsequently re-measured at their fair value. All gains and losses arising from these evaluations are recognised inthe income statement. Interest earned while holding financial assets is reported as interest incomeand dividends received are included separately in dividend income.

Derivative financial instruments are treated as trading financial assets unless they are notdesignated as hedge instruments. The principles regarding the accounting of derivative financialinstruments are explained in detail in Note IV of this section.

As of 31 March 2011, The Group has trading financial assets amounting to TL10.402(31 December 2010: TL479) and financial assets at fair value through profit or loss comprise TL10(31 December 2010: TL10).



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b. Available-for-sale financial assets:

Available-for-sale financial assets are defined as financial assets other than the ones classified as“Loans and receivables”, “Held-to-maturity assets” or “Financial asset at fair value through profitor loss”.

Government bonds included in the available-for-sale financial assets are subsequently re-measuredat fair value. “Unrealised gains and losses” arising from changes in the fair value of financial assetsclassified as available-for-sale are recognised in the shareholders’ equity as “Marketable SecuritiesValuation Reserve”, until there is a permanent decline in the fair values of such assets or they aredisposed of. When these financial assets are disposed of or impaired, the related fair valuedifferences accumulated in the shareholders’ equity are transferred to the income statement.

Available-for-sale equity securities that have a quoted market price in an active market and whosefair values can be reliably measured are carried at fair value. Available-for-sale equity securitiesthat do not have a quoted market price in an active market and whose fair values cannot be reliablymeasured are carried at cost, less provision for impairment.

As of 31 March 2011 The Group has available-for-sale financial assets amounting to TL4.816(31 December 2010: TL4.998).

c. Loans and receivables:

Loans and receivables are financial assets which are created by providing money, services or goodsto a debtor. Loans and receivables originated by the Parent Bank are carried initially at cost andsubsequently recognised at the amortised cost value calculated using the effective interest method.The expenses incurred for the assets received as collateral are not considered as transaction costsand are recognised in the expense accounts.

The Group provides general and specific provisions based on the assessments and estimates of themanagement, by considering the “Communiqué Related to Principles and Procedures onDetermining the Qualifications of Banks’ Loans and Other Receivables and the Provision for TheseLoans and Other Receivables” published in the Official Gazette No. 26333 dated 1 November2006. Provision expenses are deducted from the net income of the year. If there is a collection froma receivable that is provisioned previously, the amount is deducted from the “Specific Provisions”account and recorded as an income to “Provision for Loan Losses and Other Receivables” and net-off with the provision amount allocated during the year. Uncollectible receivables are written-offafter all the legal procedures have been finalised. As of 31 March 2011, the Group recognised ageneral provision for loans and other receivables amounting to TL2 (31 December 2010: TL2), anda specific provision amounting to TL60 (31 December 2010: TL60).



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d. Held-to-maturity financial assets:

Held-to-maturity financial assets are assets that are not classified under loans and receivables, withfixed maturities and fixed or determinable payments where management has the intent and abilityto hold the financial assets to maturity. Held-to-maturity financial assets are initially recognised atcost. Held-to-maturity securities are carried at “amortised cost” net of impairment using theeffective interest method after their recognition. Interest income earned from held-to-maturityfinancial assets is reflected to the statement of income.

The Group has financial assets that were previously classified as held-to-maturity but sold beforematurity date. After the sale, the remaining held-to-maturity financial assets were classified asavailable for sale financial assets due to the violation of classification principle. The Group cannotclassify financial assets as held-to-maturity financial assets until 31 December 2012.

VIII. EXPLANATIONS ON IMPAIRMENT OF FINANCIAL ASSETS

The Group assesses at each balance sheet date whether there is objective evidence that a financial assetor a group of financial assets is impaired. Where the estimated recoverable amount of the financialasset, being the present value of the expected future cash flows discounted based on the effectiveinterest method, or the fair value if one exists is lower than its carrying value, then it is concluded thatthe asset under consideration is impaired. A provision is made for the diminution in value of theimpaired financial asset and it is charged against the income for the year.

IX. EXPLANATIONS ON OFFSETTING FINANCIAL ASSETS

Financial assets and liabilities are offset and the net amount is reported in the balance sheet when theGroup has a legally enforceable right to offset the recognised amounts and there is an intention tocollect/pay related financial assets and liabilities on a net basis, or to realise the asset and settle theliability simultaneously.

X. EXPLANATIONS ON SALES AND REPURCHASE AGREEMENTS AND SECURITIESLENDING TRANSACTIONS

Securities subject to repurchase agreements (“Repo”) are classified as “Financial assets at fair valuethrough profit or loss”, “Available-for-sale” and “Held-to-maturity” according to the investmentpurposes of the Group and measured according to the portfolio to which they belong. Funds obtainedfrom repurchase agreements are accounted under “Funds Provided under Repurchase Agreements” inliabilities and the difference between the sale and repurchase price is accrued over the life of repurchaseagreements using the effective interest method.

Funds given against securities purchased under agreements (“Reverse repo”) to resell are accountedunder “Receivables from Reverse Repurchase Agreements” on the balance sheet. The differencebetween the purchase and determined resell price is accrued over the life of repurchase agreementsusing the “effective interest method”.



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XI. EXPLANATIONS ON ASSETS HELD FOR RESALE AND FIXED ASSETS FROMDISCONTINUED OPERATIONS AND LIABILITIES RELATED WITH THESE ASSETS

As explained in Note III of this section, the operations of TAIB Yatırım are temporarily suspended until 20 March 2011. Other than this, the Group has no discontinued operations, assets held for resale, fixedassets from discontinued operations and liabilities related with these assets.

Assets held-for-resale consist of tangible assets that were acquired due to non-performing receivables,and are accounted in the financial statements in accordance with the “Communiqué Regarding thePrinciples and Procedures for the Disposals of Immovables and Commodities Acquired due toReceivables and for Trading of Precious Metal” published in the Official Gazette dated 1 November2006, No. 26333.

XII. EXPLANATIONS ON GOODWILL AND OTHER INTANGIBLE ASSETS

a. Goodwill:

The excess of the cost of an acquisition over the fair value of the Group’s share of the identifiableassets, liabilities or contingent liabilities of the acquired subsidiary at the date of acquisition of thecontrol is recorded as goodwill and represents a payment made by the acquirer in anticipation offuture economic benefits from assets that are not capable of being individually identified andseparately recognised. The acquirer also recognises assets that are capable of being individuallyidentified and separately recognised, intangible assets (i.e. trademarks) and contingent liabilities atfair value, irrespective of whether the asset had been recognised by the acquiree before the businesscombination; if it can be distinguished from the goodwill and if the asset’s fair value can bemeasured reliably.

In line with “Turkish Financial Reporting Standard for Business Combinations” (“TFRS 3”), thegoodwill is not subject to depreciation, but is tested annually for impairment and carried at cost lessaccumulated impairment losses, if any, in line with “Turkish Accounting Standard for Impairmenton Assets” (“TAS 36”). For the purpose of impairment testing, goodwill acquired in a businesscombination must be allocated from the acquisition date to each of the acquirer’s cash generatingunits that are expected to benefit from the synergies of the business combination.

The Group has goodwill amounting to TL5.577 in the financial statements as of 31 March 2011and 31 December 2010 as a result of purchase of PDF and there is no material indicator thatgoodwill has been impaired as of the respective dates.

b. Other Intangible Assets:

Intangible assets are measured at cost on initial recognition and any directly attributable costs ofsetting the asset to work for its intended use are included in the initial measurement. Subsequently,intangible assets are carried at historical costs after the deduction of accumulated amortization andthe provision for value decreases, if any.



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The useful life of the asset is determined by assessing the expected useful life of the asset,technical, technological and other kinds of obsolescence and all required maintenance expensesnecessary to utilise the economic benefit of the assets.

The Group expects no change with respect to accounting estimates, amortization period,amortization method, or residual value that will have significant impact on the current or thefollowing periods.

The intangible assets comprising the brand name and the customer mandates of PDF, which wasacquired in 2008 by the consolidated subsidiary TAIB Yatırım, amounting to TL2.748 and accumulated amortisation of these assets amounting to TL1.506 as of 31 March 2011 are includedin these consolidated financial statements. These assets are amortised using the straight line methodbased on the estimated useful lives for brand name and customer mandates, which are ten years andthree years, respectively.

Computer software development expenses that add to the economic benefit and extend the usefullife of the software are capitalised. These expenses are amortised over the remaining useful life ofthe related intangible asset using “the straight-line method”.

XIII. EXPLANATIONS ON PROPERTY AND EQUIPMENT

Property and equipment is measured at its cost when initially recognised and any directly attributablecosts of setting the asset in working order for its intended use are included in the initial measurement.Subsequently, property and equipment are carried at cost less accumulated depreciation and provisionfor value decrease, if any. Depreciation is calculated over the cost of property and equipment using thestraight-line method. The depreciation rates are stated below:

Office machine, furniture, leasehold improvements and vehicles 4-10 years

The depreciation charge for items remaining in property and equipment for less than an accountingperiod at the balance sheet date is calculated in proportion to the period the item remained in propertyand equipment.

Where the carrying amount of an asset is greater than its estimated “recoverable amount”, it is writtendown immediately to its “recoverable amount” and the provision for the diminution in value is chargedto the income statement.

Property and equipment are not subject to valuation such that fair value is presented in the financialstatements.

Gains and losses on the disposal of property and equipment are determined by deducting the net bookvalue of the property and equipment from its sales revenue.



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Expenditures for the regular repair and maintenance of property and equipment are recognised asexpense. The capital expenditures made in order to increase the capacity of the tangible asset or toincrease its future benefits are capitalised on the cost of the tangible asset. The capital expendituresinclude the cost components which are used either to increase the useful life or the capacity of the asset,or the quality of the product or to decrease the costs.

There is no pledge, mortgage or commitment on the Group’s property and equipments.

The Group expects no change with respect to accounting estimates that have significant impact on thecurrent period or may have significant impact on the following periods.

XIV. EXPLANATIONS ON LEASING TRANSACTIONS

As of 31 March 2011, the Group has no assets acquired through finance lease agreements. Assetsacquired under finance lease agreements are capitalised at the inception of the lease at the “lower of thefair value of the leased asset or the present value of the amount of cash consideration given for theleased asset”. Leased assets are included in the property and equipment and depreciation is charged on astraight-line basis over the useful life of these assets. If there is any diminution in value of the leasedasset, a “Provision for value decrease” is recognised. Liabilities arising from the leasing transactions areincluded in “Financial Lease Payables” on the balance sheet. Interest and foreign exchange expensesregarding lease transactions are charged to the income statement.

The Group did not provide financial leasing services as a “Lessor”.

XV. EXPLANATIONS ON PROVISIONS AND CONTINGENT COMMITMENTS

Provisions and contingent liabilities except for the financial instruments within the scope of the TAS 39or the provisions recognised in accordance with the TAS 12 and TAS 19 are accounted in accordancewith the “Turkish Accounting Standard for Provisions, Contingent Liabilities and Contingent Assets”(“TAS 37”).

Provisions are recognised when the Group has a present legal or constructive obligation as a result ofpast events, it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation, and a reliable estimate of the amount of the obligation can be made. The provisionfor contingent liabilities arising from past events should be recognised in the same period of occurrencein accordance with the “Matching principle”. When the amount of the obligation cannot be estimatedand there is no possibility of an outflow of resources from the Group, it is considered that a“Contingent” liability exists and it is disclosed in the related notes to the financial statements.



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XVI. EXPLANATIONS ON CONTINGENT ASSETS

Contingent assets usually arise from unplanned or other unexpected events that give rise to thepossibility of an inflow of economic benefits to the entity. Contingent assets are not recognised infinancial statements since this may result in the recognition of income that may never be realised.Contingent assets are disclosed where an inflow of economic benefits is probable. Contingent assets areassessed continually to ensure that developments are appropriately reflected in the financial statements.If it has become virtually certain that an inflow of economic benefits will arise, the asset and the relatedincome are recognised in the financial statements in which the change occurs.

XVII. EXPLANATIONS ON OBLIGATIONS RELATED TO EMPLOYEE RIGHTS

Obligations related to employee termination and vacation rights are accounted for in accordance with“Turkish Accounting Standard for Employee Rights” (“TAS 19”) and are classified under “Reserve forEmployee Rights” account in the balance sheet. Under the Turkish Labour Law, the Group is requiredto pay a specific amount to the employees who have retired or whose employment is terminated otherthan the reasons specified in the Turkish Labour Law. The reserve for employment termination benefitsrepresents the present value of the estimated total reserve for the future probable obligation of the ParentBank arising from this liability. The discount rate used in the current period is 4,66% (31 December2010: 4,66%).

The Group has no employees who are members of any foundation or likewise corporations.

As of 31 March 2011 the Group has no employees with fixed period agreements, whose employmentperiod will terminate in more than 12 months starting from the balance sheet date.

XVIII. EXPLANATIONS ON TAXATION

a. Current Tax:

Many clauses of Corporate Tax Law No. 5520 (“Tax Law”) which are valid starting from1 January 2006, were taken into effect after being published in the Official Gazette dated21 September 2006 No. 26205. According to the Tax Law, the corporate tax rate in Turkey ispayable at the rate of 20% since 1 January 2006. The corporate tax rate is calculated on the totalincome of the Group after adjusting for certain disallowable expenses, exempt income (such ascapital gains derived from the sale of equity investments) and other allowances. No further tax ispayable unless the profit is distributed.

Dividends paid to non-resident corporations, which have a place of business in Turkey or toresident corporations are not subject to withholding tax. Otherwise, dividends paid are subject towithholding tax at the rate of 15%. An increase in capital via issuing bonus shares is not consideredas profit distribution and thus does not incur withholding tax.



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Corporations are required to pay advance corporate tax quarterly at a rate of 20% on their corporateincome. Advance tax is declared by the 14th and paid by the 17th day of the second monthfollowing each calendar quarter end. Advance tax paid by corporations which is for the currentperiod is credited against the annual corporation tax calculated on their annual corporate income inthe following year. Despite the offset, if there is temporary prepaid tax remaining, this balance canbe refunded or used to offset any other financial liabilities to the government.

A 75% portion of the capital gains derived from the sale of equity investments and immovableproperties held for at least two years is tax exempt, if such gains are added to paid-in capital or heldin a special account under shareholder’s equity for five years.

Under the Turkish Corporate Tax Law, losses can be carried forward to offset against futuretaxable income for up to five years. Losses cannot be carried back to offset profits from previousperiods.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Taxreturns are required to be filled and delivered to the related tax office until the evening of the 25thof the fourth month following the balance sheet date. Tax returns are open for five years from thebeginning of the year following the date of filing during which period the tax authorities have theright to audit tax returns, and the related accounting records on which they are based, and mayissue re-assessments based on their findings.

b. Deferred Tax:

The Group has deferred tax asset or liability amounting to TL133 as of 31 March 2011(31 December 2010: TL146).

The Group calculates and accounts for deferred income taxes for all temporary differences arisingbetween the tax bases of assets and liabilities and their carrying amounts in these financialstatements in accordance with “Turkish Accounting Standard for Income Taxes” (“TAS 12”). Inthe deferred tax calculation, the enacted tax rate, in accordance with the tax legislation, is used asof the balance sheet date.

Deferred tax liabilities are recognised for all resulting temporary differences whereas deferred taxassets resulting from temporary differences are recognised to the extent that it is probable thatfuture taxable profit will be available against which the deferred tax assets can be utilised.

The calculated deferred tax asset and deferred tax liability are presented as net individually forevery company in these financial statements.

XIX. EXPLANATIONS ON BORROWINGS

Trading and derivative financial liabilities are valued with their fair values and the other financialliabilities are carried at “amortised cost” using the effective interest method.

The Group utilises various hedging techniques to minimise the currency, interest rate and liquidity risksof its financial liabilities.

As of 31 March 2011 the Group has no trading financial liabilities (31 December 2010: TL11).



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XX. EXPLANATIONS ON ISSUANCE OF SHARES CERTIFICATES

Transaction costs regarding the issuance of share certificates are accounted under shareholders’ equityafter eliminating the tax effects. Dividend payments are determined by the General Assembly of Group.

The Group has not issued any share certificates.

No dividend payments were announced after the balance sheet date.

XXI. EXPLANATIONS ON AVALISED DRAFTS AND ACCEPTANCES

Avalised drafts and acceptances shown as liabilities against assets are included in the “Off-balance sheetcommitments”. The Group has no avalised drafts and acceptances shown as liabilities against assets.

XXII. EXPLANATIONS ON GOVERNMENT GRANTS

As of 31 March 2011 and 31 December 2010, the Group has no government grants.

XXIII. EXPLANATIONS ON PROFIT RESERVES AND PROFIT DISTRIBUTION

Retained earnings as per the statutory financial statements other than legal reserves are available fordistribution, subject to the legal reserve requirement referred to below. Under the Turkish CommercialCode (“TCC”) the legal reserves are composed of first and second reserves. The TCC requires firstreserves to be 5% of the profit until the total reserve is equal to 20% of issued and fully paid-in sharecapital. Second reserves are required to be 10% of all cash profit distributions that are in excess of 5%of the issued and fully paid-in share capital. However holding companies are exempt from thisapplication. According to the Turkish Commercial Code, legal reserves can only be used to compensateaccumulated losses and cannot be used for other purposes unless they exceed 50% of paid-in capital.

Retained earnings of the Parent Bank can be distributed upon the written permission of the BRSA.

XXIV. EXPLANATIONS ON EARNINGS PER SHARE

Earnings per share are calculated by dividing net profit for the year to the weighted average number ofshares outstanding during the period concerned. Earnings per share disclosed in the income statementare calculated by dividing net profit for the year to the weighted average capital outstanding during theperiod concerned.

31 March 2011 31 March 2010

Net Income to be Appropriated to Shareholders (1.762) (785)Weighted Average Number of Issued Ordinary Shares (Thousand) 27.200 27.200

Earnings Per Shares (Disclosed in full TL) (0,065) (0,029)



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In Turkey, companies can increase their share capital by making a pro-rata distribution of shares(“bonus shares”) to existing shareholders from retained earnings. For the purpose of earnings per sharecomputations, the weighted average number of shares outstanding during the year has been adjusted inrespect to bonus shares issued without a corresponding change in resources by giving them a retroactiveeffect for the year in which they were issued and for each earlier period. Where the number ofoutstanding shares increase due to distribution of bonus shares after the balance sheet date but beforethe release of the financial statements, earnings per share computations are performed based on therevised average number of shares.

As of 31 March 2011, the Parent Bank has not distributed bonus shares (31 December 2010: None).

XXV. EXPLANATIONS ON RELATED PARTIES

For the purpose of these financial statements, shareholders, senior management members and boardmembers together with their families and companies controlled by/affiliated with them, and associatedcompanies and joint ventures are considered and referred to as related parties in accordance with“Turkish Accounting Standard for Related Parties” (“TAS 24”). The transactions with related parties aredisclosed in detail in Note V of Section Five.

XXVI. EXPLANATIONS ON CASH AND CASH EQUIVALENTS

For the purposes of the preparation of statement of cash flows, “Cash” includes cash, effectives, cash intransit, purchased cheques and demand deposits including balances with the Central Bank; and “Cashequivalents” include interbank money market placements and time deposits at banks with originalmaturity periods of less than three months.

XXVII. EXPLANATIONS ON SEGMENT REPORTING

Information on operational fields which are determined in accordance with the Group’s organisationaland internal reporting structure and the requirements of “Turkish Accounting Standards on SegmentReporting” (“TAS 14”) is disclosed in Note VII of Section Four.

XXVIII. RECLASSIFICATIONS

To conform to presentation of 31 March 2011 consolidated financial statements, some adjustments andreclassifications have been made on 31 December 2010 consolidated financial statements.



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SECTION FOUR

INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION

I. EXPLANATIONS ON CONSOLIDATED CAPITAL ADEQUACY RATIO

a. As of 31 March 2011, the consolidated capital adequacy ratio of the Group is 42,60%(31 December 2010: 66,39%).

b. Risk calculation techniques to determine consolidated capital adequacy ratio:

The consolidated capital adequacy ratio is calculated in accordance with the “Regulation Regardingthe Measurement and Evaluation of Bank’s Capital Adequacy Ratio” published in Official Gazettenumbered 26333, dated 1 November 2006.

Risk assessment methods used in the calculation of the capital adequacy ratio comprise theclassification of the risk weighted assets and non-cash loans according to the risk weights specifiedby the related regulations and the calculation of “Value at risk” which is the sum of the market riskon marketable securities and the Group’s foreign currency risk according to this regulation. Thefollowing tables show the details of “Risk weighted assets” and the calculation of “Shareholders’Equity” for the capital adequacy ratio calculation.

c. Information related to consolidated capital adequacy ratio: TL, %

Risk Weights (*)

The Parent Bank Consolidated

0% 10% 20% 50% 100% 0% 10% 20% 50% 100%

Amount subject to credit risk

Balance sheet items (Net) 300 - 59 - 13.437 547 - 174 - 838Cash 33 - - - - 34 - - - -

Matured marketable securities - - - - - - - - - -

The Central Bank of the Republic of Turkey 264 - - - - 264 - - - -Domestic, foreign banks, foreign head offices and

branches - - 59 - 8 - - 174 - 8

Interbank money market - - - - - - - - - -

Receivables from reverse repurchase transactions - - - - - - - - - -Reserve requirements with the Central Bank of the

Republic of Turkey 3 - - - - 3 - - - -

Loans - - - - 77 - - - - 77

Non-performing receivables (Net) - - - - - - - - - -

Lease receivables - - - - - - - - - -

Available-for-sale financial assets - - - - - - - - - -

Held-to-maturity investments - - - - - - - - - -

Receivables from the disposal of assets - - - - - - - - - -

Miscellaneous receivables - - - - 60 - - - - 69

Interest and income accruals - - - - - - - - - -Investments in associates, subsidiaries and joint

ventures (Net) - - - - 12.819 - - - - 12

Fixed assets - - - - 144 - - 183

Other assets - - - - 329 246 - - - 489

Off-balance sheet items - - - - 123 - - - - 123

Non-cash loans and commitments - - - - 123 - - - - 123

Derivative financial instruments - - - - - - - - - -

Non-risk weighted accounts - - - - - - - - - -

Total Risk Weighted Assets 300 - 59 - 13.560 547 - 174 - 961

(*) The Group’s assets do not include any type of assets weighted within 150% and 200%.



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INFORMATION RELATED TO CONSOLIDATED FINANCIAL POSITION (Continued)

Summary information about consolidated capital adequacy ratio:

The Parent Bank Consolidated

31 March 2011 31 December 2010 31 March 2011 31 December 2010

Amount subject to credit risk (ASCR) 13.572 13.194 996 823

Amount subject to market risk (ASMR) 1.075 325 1.375 988

Amount subject to operational risk (ASOR) 1.994 3.123 8.279 7.412

Shareholders’ equity 11.714 12.729 4.537 6.123

Shareholders’ equity/(ASCR+ASMR+ASOR) 70,39 76,49 42,60 66,39

Information about consolidated shareholders’ equity items:

CORE CAPITAL 31 March 2011 31 December 2010

Paid-in capital 27.200 27.200

Nominal capital 27.200 27.200

Capital commitments (-) - -

Inflation adjustment to share capital - -

Share premium - -

Share cancellation profits - -

Legal reserves 48 48

First legal reserve (Turkish Commercial Code 466/1) 41 41

Second legal reserve (Turkish Commercial Code 466/2) 7 7

Other legal reserve per special legislation - -

Status reserves 397 397

Extraordinary reserves - -

Reserves allocated by the General Assembly - -

Retained earnings - -

Accumulated loss - -

Foreign currency share capital exchange difference - -

Inflation adjustment of legal reserves, status reserves and extraordinary reserves - -

Profit - -

Current period profit - -

Prior period profit - -

Provisions for possible risks (up to 25% of core capital) - -

Profit on disposal of associates, subsidiaries and immovables to be transferred toshare capital - -

Primary subordinated loans (up to 15% of core capital)(1) - -

Minority interests - -

Uncovered portion of loss with reserves (-) (16.249) (14.487)

Current period loss (net) (1.762) (3.260)

Prior period loss (14.487) (11.227)

Special costs (-)(2) - -

Prepaid expenses (-)(3) - (74)

Intangible assets (-) (1.264) (1.394)

Deferred tax asset amount exceeding 10% of core capital (-) - -

Limit exceeding amount regarding the third clause of article 56 of the Law (-) - -

Consolidation goodwill (Net) (-) (5.577) (5.577)

Total Core Capital 4.555 6.113



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31 March 2011 31 December 2010

SUPPLEMENTARY CAPITAL

General provisions 2 2

45% of the movables revaluation fund - -

45% of the immovables revaluation fund - -

Bonus shares of investment in associates, subsidiaries and joint ventures - -Primary subordinated loans that are not considered in the calculation of core

capital - -Secondary subordinated loans - -

45% of marketable securities valuation reserve (20) 8

From investments in associates and subsidiaries - -

Available-for-sale financial assets (20) 8

Inflation adjustment of capital reserve, profit reserve and prior years’ income orloss (Except inflation adjustment of legal reserves, status reserves andextraordinary reserves) - -

Minority interests - -

Total Supplementary Capital (18) 10

TIER III CAPITAL - -

CAPITAL 4.537 6.123

DEDUCTIONS FROM THE CAPITAL - -Shares in unconsolidated banks and financial institutions - -

The secondary subordinated loans extended to banks, financial institutions(domestic or foreign) or significant shareholders of the bank and the debtinstruments of a primary or secondary subordinated loan nature purchasedfrom them - -

Shares in banks and financial institutions final equity method applied but assetsand liabilities are not consolidated - -

Loans extended as contradictory to the articles 50 and 51 of the Law - -

The net book value of bank’s immovables that are over 50% of shareholders’equity and immovables or commodities that are received on behalf of thereceivables from customers and are to be disposed of according to bankinglaw article 57 as they have been held for more than five years from theacquisition date - -

Other - -

TOTAL SHAREHOLDERS’ EQUITY 4.537 6.123

(1) According to “Regulation on Making Changes on the Regulation for Shareholders’ Equity of Banks” dated on 10 March 2011 andpublished at Official Gazette no 27870, name of related row has been replaced as “ Primary Subordinated Debt Provided That Not ToExceed Limits on the Eighth Subsection”

(2) According to regulation mentioned above, name of “Special Costs” has been replaced as “Operating Lease Development Costs ”(3) According to regulation mentioned above, considering “Prepaid Expenses” as a deduction account from Principal Capital has been

terminated.



28


II. EXPLANATIONS ON CONSOLIDATED MARKET RISK

The Group considers foreign currency risk and interest rate risk as two most important components ofthe market risks.

The below table represents the details of the market risk calculation as of 31 March 2011 and31 December 2010 in accordance with the “Regulation Regarding Measurement and Evaluation ofBanks’ Capital Adequacy Ratio” published in the Official Gazette No. 26333 dated 1 November 2006,section three “Calculation of Market Risk with Standard Method”.

a. Information on consolidated market risk:


(I) Capital to be Employed for General Market Risk - Standard Method 101 45

(II) Capital to be Employed for Specific Risk -Standard Method - -

(III) Capital to be Employed for Currency Risk - Standard Method 9 34

(IV) Capital to be Employed for Commodity Risk - Standard Method - -

(V) Capital to be Employed for Clearance Risk - Standard Method - -(VI) Capital to be Employed for Market Risk Due to Options - StandardMethod - -(VII) Total Capital to be Employed for Market Risk for BanksApplying Risk Measurement Model - -

(VIII) Total Capital to be Employed for Market Risk (I+…+VI) 110 79

(IX) Amount Subject to Market Risk 12,5xVIII) or (12,5xVII) 1.375 988

III. EXPLANATIONS ON CONSOLIDATED OPERATIONAL RISK

The “Basic indicator method” is used in the consolidated operational risk calculation of the Group. Theamount subject to the consolidated operational risk is calculated based on the consolidated gross incomeof the Group in the last three years - 2009, 2008, and 2007 (31 December 2009, 2008 and 2007) inaccordance with the “Regulation Regarding Measurement and Evaluation of the Bank’s CapitalAdequacy Ratio” published in the Official Gazette No. 26333 dated 1 November 2006, part4 “Calculation of the Operational Risk” which is effective from 1 June 2007. With respect to the“Consolidated Capital adequacy ratio” calculation stated in Note I of this section, the consolidatedoperational risk exposure is represented not by the full amount of TL8.279 (31 December 2010:TL7.412) but by the 8% of it, which amounts to TL662 (31 December 2010: TL593). TL662(31 December 2010: TL593) also represents the minimum capital amount necessary to eliminate theconsolidated operational risk exposure.



29


IV. EXPLANATIONS ON CONSOLIDATED CURRENCY RISK

1. The difference between the Group’s foreign currency denominated and foreign currency indexedon- and off-balance sheet assets and liabilities is defined as the “Net Foreign Currency Position”and it is the basis of currency risk. The Group avoids cross currency risk by engaging intransactions generally denominated in USD.

2. The Group uses derivative financial instruments such as forward foreign exchange contracts andcurrency swaps for hedging purposes in foreign currency denominated transactions.

3. The Group’s foreign currency position is within the statutory limits and the Group’s limits.

4. The Parent Bank’s publicly announced foreign exchange bid rates as of the date of the financialstatements and for the last five business days prior to that date:

USD EUR31 March 31 December 31 March 31 December

2011 2010 2011 2010

Bid rate 1,5500 1,5500 2,1840 2,0544

1. Day bid rate 1,5550 1,5550 2,1930 2,04162. Day bid rate 1,5600 1,5590 2,1924 2,06373. Day bid rate 1,5550 1,5420 2,2008 2,02844. Day bid rate 1,5480 1,5450 2,1856 2,02805. Day bid rate 1,5575 1,5460 2,2067 2,0245

5. The simple arithmetic average of the Parent Bank’s foreign exchange bid rates for the last thirtydays preceding the balance sheet date:

USD EUR31 March 31 December 31 March 31 December

2011 2010 2011 2010

Arithmetic average - 30 days 1,5832 1,5102 2,2029 2,0031



30


Information on currency risk of the Group: (TL)

EUR USD JPY Other FC (*) Total31 March 2011Assets

Cash (Cash in Vault, Effectives, Cash inTransit, Cheques Purchased) and Balanceswith The Central Bank of the Republic ofTurkey - 24 - - 24Due From Banks 46 11 - 9 66Financial Assets at Fair Value ThroughProfit or Loss - - - - -Interbank Money Market Placements - - - - -Available-for-sale Financial Assets - - - - -Loans - - - - -Investments in Associates, Subsidiaries andJoint Ventures - - - - -Held-to-maturity Investments - - - - -Hedging Derivative Financial Assets - - - - -Tangible Assets - - - - -Intangible Assets - - - - -Other Assets 2 45 - - 47

Total Assets 48 80 - 9 137

LiabilitiesBank Deposits - - - - -Foreign Currency Deposits - - - - -Funds From Interbank Money Market - - - - -Funds Borrowed From Other FinancialInstitutions - - - - -Marketable Securities Issued - - - - -Miscellaneous Payables - - - - -Hedging Derivative Financial Liabilities - - - - -Other Liabilities - 42 - - 42

Total Liabilities - 42 - - 42

Net On-balance Sheet Position 48 38 - 9 95Net Off-balance Sheet Position (4) 31 - (4) 23

Financial Derivative Assets - 31 - - 31Financial Derivative Liabilities (4) - - (4) (8)

Non-Cash Loans - - - - -

31 December 2010Total Assets (**) 335 579 - 8 922Total Liabilities (***) 1 494 - - 495

Net On-balance Sheet Position 334 85 - 8 427Net Off-balance Sheet Position - - - - -

Financial Derivative Assets 2.054 2.055 - - 4.109Financial Derivative Liabilities 2.054 2.055 - - 4.109

Non-Cash Loans - - - - -

(*) TL9 (31 December 2010: TL8) classified as Other Foreign Currency under Total Assets comprise of GBP.

(**) As of 31 December 2010, foreign currency denominated trading derivative financial assets amounting to TL12, do not exists at the end of currentperiod and were not included in the foreign currency position. Due to this, there is a difference of TL12 between the foreign currency position’stotal assets and foreign currency total assets of balance sheet as of 31 December 2010 .

(***) As of 31 December 2010, foreign currency denominated trading derivative financial liabilities amounting to TL11, do notexists at the end of current period and were not included in the foreign currency position. Due to this, there is no difference ofTL11 between the foreign currency position’s total liabilities and foreign currency total liabilities of balance sheet as of 31December 2010.



31


V. EXPLANATIONS ON CONSOLIDATED INTEREST RATE RISK

Interest rate risk is the risk that expresses the effects of fluctuations in the market interest rates on thevalue increase/decrease of the Group’s interest rate sensitive assets and liabilities.

a. The interest rate sensitivity of Assets, Liabilities and Off-balance sheet items is carefullyfollowed up by the treasury department of the Bank. Assets and liabilities which are sensitive tointerest are managed in such a way that minimizes the interest risk.

b. Because probable fluctuations in the market interest rate are taken into consideration whilecalculating risk subjected value, the expected impacts are in the limits. The suitability of theinterest rates in the transactions to the market is controlled by the treasury and internal auditdepartments.

c. Interes risk related to interest rate sensitive assets and liabilities is managed in such a waythat the risk stays in the limits which are defined by the Bank. These limits are frozen orreduced when the interest rate risk increases.

Interest rate sensitivity of the Group:

a. Interest rate sensitivity of assets, liabilities and off-balance sheet items based on repricingdates

31 March 2011Up to 1Month

1-3Months

3-12Months

1-5Years

5 Yearsand Over

Non InterestBearing Total

AssetsCash (Cash in Vault, Effectives, Cashin Transit, Cheques Purchased) andBalances with The Central Bank of theRepublic of Turkey - - - - - 301 301Due From Banks - - - - - 182 182Financial Assets at Fair ValueThrough Profit/Loss - 1.973 3.781 4.648 - 10 10.412Interbank Money Market Placements - - - - - - -Available-for-Sale Financial Assets - - 4.816 - - - 4.816Loans 6 12 59 - - - 77Held-to-Maturity Investments - - - - - - -Other Assets (*) - - - - - 7.840 7.840

Total Assets 6 1.985 8.656 4.648 - 8.333 23.628

LiabilitiesBank Deposits - - - - - - -Other Deposits - - - - - - -Funds From Interbank Money Market 7.521 - - - - - 7.521Miscellaneous Payables - - - - - 173 173Marketable Securities Issued - - - - - - -Funds Borrowed From OtherFinancial Institutions - 3.173 - - - - 3.173Other Liabilities (**) - - - - - 12.761 12.761

Total Liabilities 7.521 3.173 - - - 12.934 23.628

Balance Sheet Long Position - - 8.656 4.648 - - 13.304Balance Sheet Short Position 7.515 1.188 - - - 4.601 13.304Off-balance Sheet Long Position - - - - - - -Off-balance Sheet Short Position - - - - - - -

Total Position (7.515) (1.188) 8.656 4.648 - (4.601) -



32


31 December 2010Up to 1Month

1-3Months

3-12Months 1-5 Years

5 Yearsand Over

Non InterestBearing Total

AssetsCash (Cash in Vault, Effectives, Cashin Transit, Cheques Purchased) andBalances with The Central Bank ofthe Republic of Turkey - - - - - 211 211Due From Banks - 622 1.157 - 102 1.881Financial Assets at Fair ValueThrough Profit/Loss 12 - - 467 - 10 489Interbank Money Market Placements - - - - - - -Available-for-Sale Financial Assets - - 4.242 756 - - 4,998Loans - - - - - - -Held-to-Maturity Investments - - - - - - -Other Assets (*) - - - - - 7.607 7.607

Total Assets 12 622 5.399 1.223 - 7.930 15.186

LiabilitiesBank Deposits - - - - - - -Other Deposits - - - - - - -Funds From Interbank Money Market - - - - - - -Miscellaneous Payables - - - - - 118 118Marketable Securities Issued - - - - - - -Funds Borrowed From OtherFinancial Institutions 472 - - - - - 472Other Liabilities (**) 11 - - - - 14.585 14.596

Total Liabilities 483 - - - - 14.703 15.186

Balance Sheet Long Position - 622 5.399 1.223 - - 7.244Balance Sheet Short Position 471 - - - - 6.773 7.244Off-balance Sheet Long Position - - - - - - -Off-balance Sheet Short Position - - - - - - -

Total Position (471) 622 5.399 1.223 - (6.773) -

(*) Other assets include Miscellaneous Receivables, Tangible Assets, Intangible Assets, and Other assets.

(**) Shareholders’ Equity is presented under “Other Liabilities” in the “Non Interest Bearing" column.



33


b. Average interest rates for monetary financial instruments:

EUR % USD % JPY % TL %31 March 2011Assets

Cash (Cash in Vault, Effectives, Cash in Transit,Cheques Purchased) and Balances with theCentral Bank of the Republic of Turkey - - - -Due From Banks - - - -Financial Assets at Fair Value ThroughProfit/Loss - - - 8,46Interbank Money Market Placements - - - -Available-for-Sale Financial Assets - - - 8,07Loans - - - 11,52Held-to-Maturity Investments - - - -

LiabilitiesBank Deposits - - - -Other Deposits - - - -Funds From Interbank Money Market - - - 6,99Miscellaneous Payables - - - -Marketable Securities Issued - - - -Funds Borrowed From Other FinancialInstitutions - - - 9,75

EUR % USD % JPY % TL %31 December 2010Assets

Cash (Cash in Vault, Effectives, Cash in Transit,Cheques Purchased) and Balances with theCentral Bank of the Republic of Turkey - - - -Due From Banks 2,30 2,30 - 8,94Financial Assets at Fair Value ThroughProfit/Loss - - - 6,71Interbank Money Market Placements - - - -Available-for-Sale Financial Assets - - - 6,56Loans - - - -Held-to-Maturity Investments - - - -

LiabilitiesBank Deposits - - - -Other Deposits - - - -Funds From Interbank Money Market - - - -Miscellaneous Payables - - - -Marketable Securities Issued - - - -Funds Borrowed From Other FinancialInstitutions - 0,83 - -



34


VI. EXPLANATIONS ON CONSOLIDATED LIQUIDITY RISK

Liquidity risk is the risk arising from the maturity mismatch of assets and liabilities. The Groupbalances and controls the maturities of these assets and liabilities through short term or even overnightplacements and external funding. One of the core targets of the Group’s asset-liability managementpolicy is to maintain sufficient funding to meet the Group’s liquidity needs.

In order to meet this, sufficient short-term funds are obtained. There are various limits set for theliquidity risk, which are revised continuously according to the market conditions and updated asnecessary. In case of significant market volatility and some specific conditions, analyses are performedon a daily basis or on a transaction basis.

Breakdown of assets and liabilities according to their outstanding maturities:

DemandUp to 1month

1-3Month

3-12Month

1-5Year

5 Yearand Over

Unclassified(*) Total

31 March 2011Assets

Cash (Cash in Vault, Effectives,Cash in Transit, ChequesPurchased) and Balances with theCBRT 301 - - - - - - 301Due From Banks 182 - - - - - - 182Financial Assets at Fair ValueThrough Profit/Loss 10 - 1.973 3.781 4.648 - - 10.412Interbank Money MarketPlacements - - - - - - - -Available-for-Sale Financial Assets - - - 4.816 - - - 4.816Loans - 6 12 59 - - - 77Held-to-Maturity Investments - - - - - - - -Other Assets - - - - - - 7.840 7.840

Total Assets 493 6 1.985 8.656 4.648 - 7.840 23.628

LiabilitiesBank Deposits - - - - - - - -Other Deposits - - - - - - - -Funds From Interbank MoneyMarket - - 3.173 - - - - 3.173Miscellaneous Payables - 7.521 - - - - - 7.521Marketable Securities Issued - - - - - - -Funds Borrowed From OtherFinancial Institutions 173 - - - - - - 173Other Liabilities (**) - 143 - - - - 12.618 12.761

Total Liabilities 173 7.664 3.173 - - - 12.618 23.628Net Liquidity Gap 320 (7.658) (1.188) 8.656 4.648 - (4.778) -

31 December 2009Total Assets 376 403 622 5.400 1.223 - 7.162 15.186Total Liabilities 118 609 219 - - - 14.240 15.186

Net Liquidity Gap 258 (206) 403 5.400 1.223 - (7.078) -

(*) Assets that are necessary for banking activities and that cannot be liquidated in the short-term, such as fixed assets,associates and subsidiaries, stationary stocks, prepaid expenses and loans under follow-up, are classified in this column.

(**) Shareholders’ equity is presented under “Other liabilities” item in the “Unclassified” column.



35


VII. EXPLANATIONS ON OPERATING SEGMENTS

The Parent Bank operates as an investment bank.

Current Period –31 March 2011

Corporateand

Commercial TreasuryFinancial

IntermediaryInvestment

Consultancy Unclassified

Equity andOther

Eliminations TotalTotal Assets 629 10.769 5.016 8.642 5.980 (7.408) 23.628Total Liabilities 1.920 10.694 5.016 1.801 11.605 (7.408) 23.628

Net InterestIncome/(Loss) (1) (3) 83 24 - - 103Net Fee andCommissionIncome/(Loss) (12) - (1) - - - (13)Trading Gain/(Loss) - (68) - (1) 2 - (67)Other OperatingSegments Gain/(Loss) 4 - (175) (465) (1.013) (123) (1.772)Profit Before Tax (9) (71) (93) (442) (1.011) (123) (1.749)Tax Provision - - - (13) - - (13)Net Profit (9) (71) (93) (455) (1.011) (123) (1.762)



36

SECTION FIVE

EXPLANATIONS AND NOTES RELATED TOCONSOLIDATED FINANCIAL STATEMENTS

I. EXPLANATIONS AND NOTES RELATED TO CONSOLIDATED ASSETS

1. Information related to cash and the account of The Central Bank of the Republic of Turkey(the “CBRT”):

a. Information on cash and the account of the CBRT:

31 March 2011 31 December 2010TL FC TL FC

Cash/Foreign currency 18 16 10 13CBRT 259 8 28 160Other - - - -Total 277 24 38 173

b. Information on the account of the CBRT:

31 March 2011 31 December 2010TL FC TL FC

Demand Unrestricted Amount 259 5 28 57

Time Unrestricted Amount - - - -Time Restricted Amount - 3 - 103Total 259 8 28 160

c. Information on reserve requirements:

As of balance sheet date, according to CBRT’s “Required Reserves Announcement “ No 2005/1,required reserves ratios for commercial banks operating in Turkey, are as follows; for demanddeposits, notice deposits and private current accounts it is 12%, for deposits/participation accountsup to 1-month maturity (including 1-month) 10%, for deposits/participation accounts up to 3-monthmaturity (including 3-month) 9%, for deposits/participation accounts up to 6-month maturity(including 6-month) 7%, for deposits/participation accounts up to 1-year maturity is 6%, fordeposits/participation accounts with 1-year and longer maturity and cumulativedeposits/participation accounts 5%, and for liabilities other than deposits/participation funds it is9%. For foreign exchange currency liabilities USD or EUR, required reserves ratio is 11% .

As of the preparation date of these financial statements, required reserves ratios mentioned abovewill be changed to ratios below which will be effective from 29 April 2011 onwards. Fordeposits/participation accounts up to 1-month maturity (including 1-month) required reserves ratiois 16%, for deposits/participation accounts up to 3-month maturity (including 3-month) 13%, fordeposits/participation accounts up to 6-month maturity (including 6-month) 9%, fordeposits/participation accounts up to 1-year maturity 6%, for deposits/participation accounts with1-year and longer maturity and cumulative deposits/participation accounts 5%, for liabilities otherthan deposits/participation funds it is 13%. For foreign currency demand deposits, notice depositsand foreign currency private current accounts, deposits/participation accounts up to 1-month, up to3-month, up to 6-month and up to 1-year maturities the ratio is 12%, for foreign currency deposits/foreign currency participation accounts with 1-year and longer maturity and cumulative foreigncurrency deposits/ foreign currency participation accounts 11%, for other foreign currencyliabilities up to 1 year maturity (including 1-year) 12%, for other foreign currency liabilities up to3-year maturity (including 3-year) 11,5%, and for other foreign currency liabilities longer than 3-year maturity it is 11%.No interest is charged by CBRT for Turkish Lira and foreign currency denominated reserverequirements.

2. Information on financial assets at fair value through profit or loss:

a. As of 31 March 2011, there are financial assets at fair value through profit or loss subject torepo transactions amounting TL7.861 (31 December 2010: None) and given ascollateral/blocked amount to TL662 (31 December 2010: TL280) respectively.



37

EXPLANATIONS AND NOTES RELATED TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)

b. Positive differences related to trading derivative financial assets:


TL FC TL FC

Forward Transactions - - - 12

Swap Transactions - - - -

Futures Transactions - - - -

Options - - - -

Other - - - -

Total - - - 12

3. Information on banks:

a. Information on banks:


TL FC TL FC

Banks

Domestic 116 2 1.176 624

Foreign - 64 - 81

Headquarters and Branches Abroad - - - -

Total 116 66 1.176 705

4. Information on available-for-sale financial assets:

a. As of 31 March 2011 there is no available-for-sale financial assets subject to repo transactions(31 December 2010: None).

b. Information on available-for-sale financial assets:


Debt Securities 4.816 4.998

Quoted on Stock Exchange (*) 4.816 4.998

Not Quoted - -

Share Certificates - -

Quoted on Stock Exchange - -

Not Quoted - -

Impairment Provision (-) - -

Total 4.816 4.998

(*) Although the debt securities that comprise the government bonds are not quoted on a specific exchange, theyare clasiffied as “Quoted on Stock Exchange” because they are traded in the secondary market.

5. Explanations on loans:

a. Information on all types of loan or advance balances given to shareholders andemployees of the Parent Bank:

Current Period31 March 2011

Prior Period31 December 2010

Cash Non-cash Loans Cash Non-cash Loans

Direct Loans Granted To Shareholders - - ------- -Corporate Shareholders - - - -Real Person Shareholders - - - -

Indirect Loans Granted To Shareholders - - - -Loans Granted To Employees 77 - - -Total 77 - - -



38


b. Information on the first and second group loans and other receivables including loansthat have been restructured or rescheduled and other receivables:

Standard Loans and OtherReceivables

Loans and Other Receivables UnderClose Monitoring

Loans and OtherReceivables

Restructured orRescheduled

Loans and OtherReceivables

Restructured orRescheduled

Non-Specialised Loans 77 - - -Discount and Purchase Notes - - - -Export Loans - - - -Import Loans - - - -Loans Granted to Financial Sector - - - -Foreign Loans - - - -Consumer Loans - - - -Credit Cards - - - -Precious Metal Loans - - - -Other 77 - - -

Specialised Loans - - - -Other Receivables - - - -Total 77 - - -

c. Information on consumer loans, individual credit cards, personnel loans and personnelcredit cards:

As of 31 March 2011 there are loans granted to employees amounting to TL77(31 December 2010: None).

d. Information on commercial instalment loans and corporate credit cards:

None (31 December 2010: None).

e. Distribution of domestic and foreign loans:


Domestic Loans 77 -

Foreign Loans - -

Total 77 -

f. Loans given to investments in associates and subsidiaries:


g. Specific provisions provided against loans:

31 March 2011 31 December 2010Loans and Other Receivables with Limited Collectability - -Loans and Other Receivables with Doubtful Collectability - -Uncollectible Loans and Other Receivables 60 60Total 60 60



39


h. Information on non-performing loans:

1. Information on non-performing loans restructured or rescheduled and otherreceivables:


2. Information on the movement of total non-performing loans:

III. Group IV. Group V. GroupLoans and otherreceivables with

limitedcollectability

Loans and otherreceivables with

doubtfulcollectability

Uncollectibleloans and other

receivablesPrior Period End Balance: 31 December 2010 - - 60

Additions (+) - - -Transfers from Other Categories of Nonperforming Loans (+) - - -Transfers to Other Categories of Non-performing Loans (-) - - -Collections (-) - - -Write-offs (-) - - -

Corporate and Commercial Loans - - -Consumer Loans - - -Credit Cards - - -Other - - -

Current Period End Balance: 31 March 2011 - - 60Specific Provision (-) - - (60)

Net Balance on Balance Sheet - - -

3. Information on non-performing loans granted as foreign currency loans:




40


4. Information on non-performing loans based on types of borrowers:

III. Group IV. Group V. GroupLoans and otherreceivables with

limitedcollectability

Loans and otherreceivables with

doubtfulcollectability

Uncollectibleloans and other

receivablesCurrent Period (Net) - - -Loans Given to Real Persons and Legal Persons (Gross) - - -

Specific Provision Amount (-) - - -Loans Given to Real Persons and Legal Persons (Net) - - -Banks (Gross) - - -

Specific Provision Amount (-) - - -Banks (Net) - - -Other Loans and Receivables (Gross) - - 60

Specific Provision Amount (-) - - (60)Other Loans and Receivables (Net) - - -

Prior Period (Net)Loans Given to Real Persons and Legal Persons (Gross) - - -

Specific Provision Amount (-) - - -Loans Given to Real Persons and Legal Persons (Net) - - -Banks (Gross) - - -

Specific Provision Amount (-) - - -Banks (Net) - - -Other Loans and Receivables (Gross) - - 60

Specific Provision Amount (-) - - (60)Other Loans and Receivables (Net) - - -

6. Information on held-to-maturity investments:


7. Information on investments in associates:




41


8. Information on subsidiaries (Net):

a. Recognition of subsidiaries:

Explained in Note III of Section Three.

b. Information on unconsolidated subsidiaries:

TAIB Yatırım ve Yönetim Danışmanlığı Hizmetleri Limited Şirketi is not consolidated in these financial statements according to materiality principle.

TitleAddress (City/

Country)

The Parent Bank’sshare percentage, if

different votingpercentage (%)

Other shareholders’share percentage (%)

1 TAIB Yat. ve Yön. Dan. Hzm. Ltd. Şti. Istanbul/Turkey 100,00 100,00

TotalAssets

Shareholders’Equity

TotalFixed

AssetsInterestIncome

Income fromMarketable

SecuritiesPortfolio

CurrentPeriodProfit /

Loss

PriorPeriodProfit /

LossFair value

(*)8 (3) - - - (1) - 12

(*) Carrying value in the balance sheet as of 31 March 2011.

c. Information on consolidated subsidiaries:

TitleAddress (City/

Country)

The Parent Bank’sshare percentage, if

different votingpercentage (%)

Othershareholders’

share percentage(%)

1 TAIB Yatırım Menkul Değerler A.Ş. Istanbul/Turkey 99,99 0,012 PDF Kurumsal Finansman Danışmanlık Hzm. A.Ş. Istanbul/Turkey 99,99 0,01

In accordance with the application of the Bank management, the Capital Markets Board hasdecided to temporarily suspend the operations of the Subsidiary for six months to be effectivefrom 30 September 2004. As a result of additional applications afterwards, the aforementionedduration has been extended until 1 October 2012.

In the Board of Directors resolution No. 2009/15 dated 18 May 2009, the Parent Bank hasdecided to purchase PDF which was fully owned by TAIB Yatırım, for the acquisition price and the net book value on the date of the sale and to carry out all necessary transactions.Following this resolution, in the Board of Directors resolution No. 2009/24 dated 3 July 2009,the Parent Bank has decided to purchase PDF for TL7.926 calculated according to the methoddescribed above and this amount to be paid in the first quarter of year 2010. The Parent Bankhas paid the relevant amount on 27 January 2010. PDF has become a fully owned subsidiaryof the Parent Bank following the share transfer on 7 July 2009.



42


d. Main financial figures of the subsidiaries in the order of the above table:

The financial figures below have been obtained from the unconsolidated financial statementsof the subsidiaries as of 31 March 2011.

TotalAssets

Shareholders’Equity

TotalFixed

AssetsInterestIncome

Income fromMarketable

SecuritiesPortfolio

CurrentPeriod

Profit/Loss

PriorPeriod

Profit/LossFair

value (*)1 5.016 4.879 15 83 83 (93) (76) 4.8812 1.801 753 27 24 - (455) 366 7.938

(*) Carrying value in the unconsolidated balance sheet of the Parent Bank as of 31 March 2011.

e. Movement schedules of consolidated subsidiaries:

31 March 2011 31 December 2010Balance at the beginning of the Period 12.819 22.819Movements during the Period

Purchases - -Bonus Shares Obtained - -Dividends from Current Year Income - -Sales - -Revaluation Increase - -Impairment Provision - -Capital deductions (*) - (10.000)

Balance at the end of the Period 12.819 12.819Capital Commitments - -Share Percentage at the end of the Period (%) 99,99 99,99

(*) TAIB Yatırım has announced in the Turkish Trade Registry Gazette No.7445 dated 24 November 2009 that its paid-in capital will be decreased from TL15.000 to TL5.000. The process has been finalised as of27 January 2010. As a result of abolition of 10.000.000 shares belongs to the Bank with the BOD decision,the released amount of TL10.000 was returned to the Bank as of 27 January 2010.

f. Sectoral information on consolidated financial subsidiaries and the related carryingamounts:

Subsidiaries (*) 31 March 2011 31 December 2010Banks - -

Insurance Companies - -

Factoring Companies - -

Leasing Companies - -

Finance Companies - -

Other Financial Subsidiaries 4.881 4.881

(*) In addition to the table above, PDF, whose carrying value is TL7.926 in the unconsolidated balance sheetand operates in the corporate finance consulting industry, is a consolidated subsidiary.

g. Subsidiaries quoted on stock exchange:




43


9. Information on joint ventures:


10. Information on lease receivables (net):


11. Information on hedging derivative financial assets:


12. Information on investment property:


13. Information on deferred tax asset:

Explanations on deferred tax of the Group are presented in Note XVIII of Section Three. As of31 March 2011, the Group has TL133 deferred tax asset arising from temporary differences(31 December 2010: 146). The Group has total accumulated financial loss that may be deductedfrom future period net income amounting to TL11.558 (31 December 2010: TL10.358) over whichdeferred tax asset has not been calculated as of 31 March 2011.

14. Information on assets held for resale and discontinued operations:


15. Information on other assets:

a. Information on prepaid expenses, tax and similar transactions:

Prepaid expenses mainly consist of financial operations fees, prepaid insurance and prepaidrent expenses. Prepaid tax amount is TL113 (31 December 2010: TL113).

b. If other assets exceed 10% of total assets excluding commitments in the off-balancesheet, the names and amounts of sub-accounts which comprise at least %20 of thesebalances are disclosed:

Other assets amount to TL558 as of 31 March 2011 (31 December 2010: TL161). TL443 ofother assets comprise prepaid expenses (31 December 2010: TL74).



44


II. EXPLANATIONS AND NOTES RELATED TO CONSOLIDATED LIABILITIES

1. Information on deposits:

The Parent Bank has no deposits due to its nature as an investment bank.

2. Information on trading derivative financial liabilities:

Schedule of negative differences concerning trading derivative financial liabilities:


TL FC TL FC

Forward Transactions - - - 11

Swap Transactions - - - -

Futures Transactions - - - -

Options - - - -

Other - - - -

Total - - - 11

3. Information on borrowings:

a. Information on banks and other financial institutions:


TL FC TL FC

Borrowings from the CBRT - - - -

From Domestic Banks and Institutions - - - -

From Foreign Banks, Institutions and Funds 3.173 - - 472

Total 3.173 - - 472

As of 31 March 2011 and 31 December 2010 all the borrowings have been obtained from theParent Bank’s risk group.

b. Information on maturity structure of borrowings:


TL FC TL FC

Short-term 3.173 - - 472

Medium and Long-term - - - -

Total 3.173 - - 472

4. Information on other liabilities:

The Group has no other liabilities that exceed 10% of the total assets of the Group (31 December2010: None).

5. Information on financial lease agreements:




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6. Information on hedging derivative financial liabilities:


7. Information on provisions:

a. Information on general provisions:

31 March 2011 31 December 2010General Provisions 2 2

Provisions for Group I. Loans and Receivables 1 -Provisions for Group II. Loans and Receivables - -Provisions for Non Cash Loans - -Other 1 2

b. Information on provisions related with foreign currency difference of foreign indexedloans:


c. Obligations related to employee rights:

In accordance with Turkish Labour Law, the reserve has been calculated by estimating thepresent value of the future probable obligation of the Group arising from the retirement of itsemployees. TAS 19 necessitates the actuarial valuation methods to calculate liabilities ofenterprises. In this context, the following actuarial assumptions were used in the calculation oftotal liabilities.

31 March 2011 31 December 2010Discount rate (%) 4,66 4,66Rate for the Probability of Retirement (%) 9,19 9,07

The principal assumption is that the maximum liability for each year of service will increase inline with inflation. In this way, the discount rate used reflect the real rate net off expectedinflation. As the maximum liability is revised semi-annually, the maximum amount ofTL2.623,23 (31 December 2010: TL2.517,01) which is effective from 1 January 2011 hasbeen taken into consideration in calculating the provision for employment termination benefitsof the Group.

The movement of employee benefit termination and call provision is shown below:

31 March 2011 31 December 2010Balance at the end of the Previous Period 143 88Provisions Recognised During the Period 10 55Paid During the Period (42) -Balance at the end of the period 111 143

In addition, as of 31 March 2011 the Group has unused vacation provision amounting toTL184 (31 December 2010: TL206).



46


d. Information on other provisions:

1. Information on provisions for possible risks:


2. Other provisions are explained if they exceed 10% of the total provision balance:

31 March 2011 31 December 2010Personel Bonus Provision 6133 6133Provision for TSPAKB 655 433Provision for Audit Fee 477 533Other (*) 2211 2233Total 9455 9322

(*) Other provisions comes from legal counselling amounting to TL110, the rest of the amount comes from theprovisions allocated for various expenses.

8. Information on taxes payable:

a. Information on current year tax liability:

Information on tax provision:

Explanations on taxation are presented in Note XVIII of Section Three. As of 31 March 2011,the Group has no tax liability after the deduction of temporary taxes paid (31 December 2010:TL353).

Information on taxes payable:


Corporate Tax Payable - -

Taxation on Marketable Securities 1 -

Property Tax 9 8

Banking Insurance Transaction Tax (BITT) 1 3

Foreign Exchange Transaction Tax - -

Value Added Tax Payable 13 -

Other 36 77

Total 60 88

Information on premium payables:

31 March 2011 31 December 2010Social Security Premiums – Employee 9 10Social Security Premiums – Employer 13 28Bank Social Aid Pension Fund Premium- Employee - -Bank Social Aid Pension Fund Premium – Employer - -Pension Fund Membership Fees and Provisions - Employee - -Pension Fund Membership Fees and Provisions - Employer - -Unemployment Insurance – Employee - -Unemployment Insurance – Employer 1 -Other 60 -Total 83 38



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b. Information on deferred tax liability:

The Group has no deferred tax liability (31 December 2010: None).

9. Information on shareholders’ equity:

a. Presentation of paid-in capital:

The Parent Bank has paid-in-capital of TL27.200 (31 December 2010: TL27.200).

31 March 2011 31 December 2010Common Stock 27.200 27.200Preferred Stock - -

b. Paid-in capital amount, explanation as to whether the registered share capital system isapplied and if so, amount of registered share capital ceiling:

The Parent Bank does not apply the registered share capital system.

c. Information on share capital increases and their sources; other relevant information onincreased share capital in current period:


d. Explanation on the transfers from capital reserve to paid-in capital in the currentperiod:


e. Information on capital commitments, the general purpose and the estimated sources forthese commitments until the end of the fiscal year and the subsequent interim period:




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f. Information on the Group’s income, profitability, prior period indicators on liquidityand uncertainty on these indicators and their potential effects on the Group’s capital:

The Group considers there is no uncertainty regarding the prior period income, profitabilityand liquidity indicators, therefore the Group does not foresee an effect on capital(31 December 2010: None).

g. Summary information about privileged shares representing the capital:


h. Information on marketable securities value increase/decrease fund:

Marketable securities value decrease fund is TL20 as of 31 March 2011(31 December 2010: TL18) and comprises the valuation differences in TL of the marketablesecurities classified from “Available for Sale Financial Assets” account to “Held to MaturitySecurities” account and other available for sale financial assets.



49


III. EXPLANATIONS AND NOTES RELATED TO CONSOLIDATED INCOME STATEMENT

1. Information on interest income:

a. Information on interest income on loans:

None (31 March 2010: None).

b. Information on interest income on banks:

31 March 2011 31 March 2010

TL FC TL FC

From the CBRT - - 3 -

From Domestic Banks 29 - 11 3

From Foreign Banks - - - -


Total 29 - 14 3

c. Information on interest income received from investments in associates and subsidiaries:




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2. Information on interest expense:

a. Information on interest expense on borrowings:

31 March 2011 31 March 2010

TL FC TL FC

Banks

The CBRT - - - -

Domestic Banks - - - -

Foreign Banks 62 - - 1


Other Institutions - - - -

Total 62 - - 1

b. Information on interest expense given to investments in associates and subsidiaries:


3. Information on trading income/loss (Net):

31 March 2011 31 March 2010

Income 90.250 46.149

Income from Capital Market Transactions 13 65

Income from Derivative Financial Transactions (*) 10 125

Foreign Exchange Gains 90.227 45.959

Loss (-) 90.317 46.134

Loss from Capital Market Transactions 66 4

Loss from Derivative Financial Transactions (*) 25 113

Foreign Exchange Loss 90.226 46.017

(*) The major part of the gain/loss from derivative financial transactions stems from the changes in FX rates due to thefact that these derivatives are short term.

4. Information on other operating income:

Information on new developments and significant factors affecting the Group’s income,including the extent of the effect on income:

Other operating income does not include income from extraordinary operating activities.



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5. Provision expenses related to loans and other receivables:

31 March 2011 31 March 2010

Specific Provisions for Loans and Other Receivables - -

III. Group Loans and Receivables - -

IV. Group Loans and Receivables - -

V. Group Loans and Receivables - -

Doubtful receivables of fees, commissions and otherreceivables - -

General Provision Expenses - (4)

Provision Expense for Possible Risks - -

Marketable Securities Impairment Expense - -

Financial Assets at Fair Value Through Profit or Loss - -

Available-for-sale Financial Assets - -

Investments in Associates, Subsidiaries and Held-to-MaturitySecurities Value Decrease - -

Investments in Associates - -

Subsidiaries - -

Joint Ventures - -

Held-to-Maturity Investments - -

Other - -

Total - (4)

6. Information related to other operating expenses :

31 March 2011 31 March 2010

Personnel Expenses 756 796

Reserve For Employee Termination Benefits 10 5

Bank Social Aid Pension Fund Deficit Provision - -

Impairment Expenses of Fixed Assets - -

Depreciation Expenses of Fixed Assets 23 21

Impairment Expenses of Intangible Assets - -

Goodwill impairment expenses - -

Amortisation Expenses of Intangible Assets 4 5

Impairment Expenses of Equity Participations for whichEquity Method is Applied - -

Impairment Expenses of Assets Held For Resale - -

Depreciation Expenses of Assets Held for Resale - -

Impairment Expenses of Fixed Assets Held for Sale - -

Other Operating Expenses 457 454

Operational Lease Expenses 122 141

Maintenance Expenses 3 3

Advertising Expenses 8 24

Other Expense 323 286

Loss on Sales of Assets - -

Other 543 409

Total 1.793 1.690



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7. Information on income/(loss) before tax from continuing or discontinued operations:

Loss before tax comes from net interest income amounting TL103, net commission fee amountingTL13, trading expense amounting TL67, other operating income amounting TL21 and otheroperation expenses amounting TL1.793.

8. Information on provision for taxes from continuing or discontinued operations:

a. Information on calculated current tax income or expense and deferred tax income orexpense:

As of 31 March 2011, the Group has no current tax expense (31 March 2010: None). As of 31March 2011, the Group has deferred tax expense amounting TL13 (31 March 2010: None).

b. Explanations on deferred tax income or expense arising from the temporary differencesoccurred or have been closed:

The Group has no deferred tax income due to temporary differences(31 March 2010: None).

c. Information on recognition of temporary difference, financial loss, diminution of tax andexemptions on income statement:

As of 31 March 2011, the Group has TL13 deferred tax income arising from temporarydifferences (31 March 2010: None).

9. Information on net income/(loss) for the period from continuing or discontinued operations:

The Group has no discontinued operations. The net loss for the period from continuing operationsamounting TL1.762 (31 March 2010: TL785).

10. Information on net income/(loss) for the period:

a. If the disclosure of ordinary banking transactions and the composition of income andexpense items is necessary to understand the annual performance of Group, thecomposition and amount of these items:


b. If an accounting estimate change significantly affects the profit/loss in the current periodor has a probability to significantly affect the profit/loss in the subsequent periods, theoverall effect is disclosed:

There is no significant change in accounting estimates which would affect the current or thesubsequent periods.

11. Disclosure of 20% of sub-accounts in the case of other line items exceed 10% of the incomestatement total.

TL15 (31 March 2010: TL723) of other operating income, which exceed 10% of the incomestatement total, comes from the consulting service income.



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IV. EXPLANATIONS AND NOTES RELATED TO CONSOLIDATED OFF-BALANCE SHEETACCOUNTS

1. Information on off-balance sheet commitments:

a. The amount and type of irrevocable commitments:


Other guarantees

Letter of guarantees 123 123

Letter of credits - -

Bank acceptance loans - -

Factoring guarantees - -

Total 123 123

b. Type and amount of probable losses and obligations arising from off-balance sheetitems:

1. Non-cash loans including guarantees, bank avalised and acceptance loans,collaterals that are accepted as financial commitments and other letters of credit:


Other guarantees

Letter of guarantees 123 123

Letter of credits - -

Bank acceptance loans - -

Factoring guarantees - -

Total 123 123

2. Revocable, irrevocable guarantees, contingencies and other similar commitments:


Irrevocable letters of guarantee - -

Letters of guarantee given in advance - -

Guarantees given to customs - -

Revocable letters of guarantee - -

Other letters of guarantee 123 123

Total 123 123

c. Total amount of non-cash loans:

31 March 2011 31 December 2010Non-cash loans given against cash loans - -

With original maturity of 1 year or less than 1 year - -With original maturity of more than 1 year - -

Other non-cash loans (*) 123 123Total 123 123

(*) The Parent Bank has no non-cash loans that are classified in Group II.



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2. Investment Funds:

As of 31 March 2011, the Group is the founder of 2 (31 December 2010: 2) investment funds witha total fund value of TL15 (31 December 2010: TL15). The shares of the investment fundsestablished in accordance with the Capital Markets Board legislation are kept dematerialised byCentral Registry Agency Inc.

3. Information on contingent liabilities and assets:

Recognition of contingent assets and liabilities is based on the probability of realization ofcontingent events.

As a result of tax investigations performed regarding the years ended in 2001, 2002 and 2003, taxand tax penalties have been charged to the Bank amounting to TL799, TL1.628 and TL35,respectively. The Bank has opened 5 lawsuits in tax courts regarding these tax and tax penalties. Asof 14 January 2008 the lawsuit regarding the tax penalty in 2001 has been concluded in favour ofthe Bank but the Taxation Authority appealed this decision to the Council of State. The fourlawsuits regarding years 2002 and 2003 have also been concluded in favour of the Bank on22 December 2009. The Taxation Authority also appealed the decision for the four lawsuits to theCouncil of State. As a result, the Bank did not provide any provision for these lawsuits in thesefinancial statements. As explained in the article (b) of section “VI. Explanations And Notes RelatedTo Subsequent Events”, The Parent Bank management decided to disclaim from these tax lawsuits.As of 31 March of 2011, there is no provision granted on the financial statements for these lawsuits.



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V. EXPLANATIONS AND NOTES RELATED TO THE PARENT BANK’S RISK GROUP

The Parent Bank’s risk group is defined in the 49th Article of subsection 2 of the Banking ActNo. 5411.

1. The volume of transactions relating to the Group’s risk group, outstanding loan and deposittransactions and profit and loss of the period:

Prior period financial information is presented as at 31 December 2010 for balance sheet and as at31 March 2011 for income statements items.

a. Current Period (31 March 2011):

Groups’ Risk Group (*)Investments in Associates,

subsidiaries and joint venturesDirect and indirect shareholders

of the Group

Other real and legal personsthat have been included in

the risk group

Cash Non-Cash Cash Non-Cash Cash Non-CashLoans and OtherReceivables

Beginning of the Period - 92 - - - -

End of the Period - 92 - - - -Interest and CommissionIncome Received - - - - - -

(*) Defined in Article 49 of subsection 2 of the Banking Act No. 5411.

b. Previous Period (31 December 2010):

Groups’ Risk Group(*)Investments in Associates,

subsidiaries and joint venturesDirect and indirect shareholders

of the Group


the risk group

Cash Non-Cash Cash Non-Cash Cash Non-CashLoans and OtherReceivables

Beginning of the Period - 2 - - - -

End of the Period - 92 - - - -Interest and CommissionIncome Received - - - - - -

(*) Defined in Article 49 of subsection 2 of the Banking Act No. 5411.

c. Information on deposits of the Group’s risk group:

Groups’ Risk Group (*)Investments in Associates,

subsidiaries and joint venturesDirect and indirect

shareholders of the Group


the risk group

Deposit (**)30 September

201031 December

200930 September

201031 December

200930 September

201031 December

2009

Beginning of the Period - - 472 305 - -

End of the Period - - 3.173 472 - -

Interest Expense onDeposits (**) - - 62 2 - -

(*) Defined in Article 49 of subsection 2 of the Banking Act No. 5411.(**) The balances stated above indicate borrowings.



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d. Information on forward and option agreements and other similar agreements made withthe Group’s risk group:


e. Information on key management compensation:

Information on the compensation provided to the key management of the companies in theGroup is presented below:

31 March 2011 31 March 2010

Short Term Employee Benefits (*) 225 306Post Employment Benefits (**) - -Other Long Term Benefits (***) 26 23Termination Benefits (****) - -Share-based Payments - -

Total Key Management Compensation 251 329

(*) Salaries, bonus, accommodation, vehicle, social insurance, health insurance, vacation etc. payment(**) The planned payments for the retired key management personnel.(***) Employee termination benefits provisions expense, long term part of vacation provisions, long term bonus

plans, etc.(****) The employee termination benefits, payment in lieu of notice and other legal payments to terminated key

management personnel.

VI. EXPLANATIONS AND NOTES RELATED TO SUBSEQUENT EVENTS

a. Changes in Reserve Requirement ratios:

1. In accordance with the “CBRT No. 2011/5 Communiqué to Amend the Communiqué Regardingthe Reserve Requirement” published in the Official Gazette dated 24 March 2011 No. 27784,beeffective as of 1 April 2011, the Turkish lira required reserve ratio, is differentiated according tothe maturity structure of deposits and set as:

Required ReserveTL Liabilities Ratios (%)

Demand deposits, notice deposits and private current accounts 15Deposits/participation accounts up to 1-month maturity (including 1-month) 15Deposits/participation accounts up to 3-month maturity (including 3-month) 13Deposits/participation accounts up to 6-month maturity (including 6-month) 9Deposits/participation accounts up to 1-year maturity 6Deposits/participation accounts with 1-year and longer maturity

and cumulative deposits/participation accounts 5Special fund pools Ratios for corresponding maturitiesLiabilities other than deposits/participation funds 13

Required reserve ratios for FX liabilities has been determined 11%.



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2. Published in the Official Gazette No. 27913 dated 22 April 2011 and No. 2011/6 on theAmendment of the Communiqué on the Required Provisions Scale obligation dated 1 April 2011,to be effective with the Turkish lira and foreign currency liabilities required reserve ratio fordeposits/participation were differentiated in terms of the maturity structure of funds. These ratiosare presented below:

Required ReserveTL Liabilities Ratios (%)

Demand deposits, notice deposits and private current accounts 16Deposits/participation accounts up to 1-month maturity (including 1-month) 16Deposits/participation accounts up to 3-month maturity (including 3-month) 13Deposits/participation accounts up to 6-month maturity (including 6-month) 9Deposits/participation accounts up to 1-year maturity 6Deposits/participation accounts with 1-year and longer maturity

and cumulative deposits/participation accounts 5Special fund pools Ratios for corresponding maturitiesLiabilities other than deposits/participation funds 13

Required ReserveFX Liabilities Ratios (%)

FC demand deposit, Notice deposits, FC private current accounts, Deposits/participationaccounts up to 1-month, 3-months, 6-months and up to 1-year maturities 12FC deposits / FC participation accounts with 1-year or longer maturity,Cumulative FC deposits / FC participation accounts 11Special Fund Pools Ratios corresponding to maturitiesFC other liabilities up to 1-year maturity (including 1 year) 12FC other liabilities up to 3-years maturity (including 3 years) 11,5FC other liabilities with maturity longer than 3 years 11

b. In the Board of Directors Meeting dated 11 April 2011 No:2011/9, it has been decided to withdrawtax cases in order to take advantage of provisions of code related to “Restructuring someReceivables” published in the Official Gazette dated 25 February 2011 No. 27857. In this context, aliability calculated by Tax Authority and amounting to TL187, has been reflected to financialstatements in June 2011.



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SECTION SIX

EXPLANATIONS ON REVIEW REPORT

I. EXPLANATIONS ON REVIEW REPORT

The consolidated financial statements for the period ended 31 March 2011 have been reviewed byBaşaran Nas Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (a member of PricewaterhouseCoopers) and the independent auditor’s review report dated 10 June 2011 has beenpresented prior to the consolidated financial statements.

II. EXPLANATIONS AND NOTES PREPARED BY INDEPENDENT AUDITOR

None (31 December 2010: None)

..............................