vakıf katılım bankası anonim Şirketi

Vakıf Katılım Bankası Anonim Şirketi

Publicly announced unconsolidated financial statements and related disclosures at September 30, 2019 together with independent auditor’s limited review report

(Convenience translation of publicly announced unconsolidated financial statements, related disclosures and auditor’s limited review report originally issued in Turkish - see section three Note I)

E! Güney Bağımsız Denetim ve SMMM A.Ş. Tel: +90 212 315 3000Maslak Mah. Eski Büyükdere Cad. Fax: +90 212 23D 8291Orjin Maslak iş Merkezi No: 27 ey.comKat: 2-3-4 Daire: 54-57-59 Ticaret Sicil No: 479920

B- 344B5 Sarıyer Mersis Ne: 0-4350-3032-6000017

uıl ıng a better Istanbul - Türkiyeworking world

Convenience translation of the auditor’s report originaliy issued in Turkish, See Note 1 ofSection three)

Review Report on Unconsolidated Interim Financial Information

Ta the Board of Directors of Vakıf Katılım Bankası A.Ş.:

Introduction

We have reviewed the unconsolidated statement for the nine month period of financial position of VakıfKatılım Bankası A.Ş. (“the Bank”) at September 30, 2019 and the related unconsolidated statement ofprofit or loss, unconsolidated statement of profit or loss and other comprehensive income,unconsolidated statement of changes in shareholders’ equity, unconsolidated statement of cash flowsand a summary of significant accounting policies and other explanatory notes to the unconsohdatedflnancial statements for the nine-month-period then ended. The Bank Management is responsible forthe preparation and fair presentation of these unconsolidated of interim financial information inaccordance with the “Regulation on Accounting Applications for Banks and Safeguarding of Documents”published in the Officiai Gazette no26333 dated 1 November 2006! and other regulations on accountingrecords of Banks pubhshed by Banking Regulation and Supervision Agency (BRSN) and circulars andinterpretations published by Banking Regulation and Supervision Authority (together referred as BRSAAccounting and Reporting Regislation) and Turkish Accounting Standard 34 “Interim FinancialReporting” principles for those matters not regulated by BRSA LegislaUon; together referred as “BRSAAccounting and Reporting Legislation”. Our responsibility is to express a conclusion on theseunconsolidated interim financial information based on our review.

Scope of Review

We conducted our review in accordance with the Standard on Review Engagements (SRE) 2410,“Review of Interim Financial Information Performed by the lndependent Auditor of the Entity”. A reviewof interim financial information consists of making inquiries, primarily of persons responsible for financialreporting process, and applying analytical and other review procedures. A review of interim financialinformation is substantially Iess in scope than an independent audit performed in accordance with thelndependent Auditing Standards of Turkey and the objective of which is to express an opinion on thefinancial statements. Consequentiy, a review of the interim financial information does not provideassurance that the audit flrm wilI be aware of alI signiflcant matters which would have been identified inan audit. Accordingiy, we do not express an opinion.

Conclusion

Based on our review. nothing has come to our attention that causes us to believe that the accompanyingunconsolidated financial statements do not give a true view of the unconsolidated financial position ofVakıf Katılım Bankası A.Ş. at September 30, 2019, and the resuits of its operations and itsunconsohdated cash flows for the nine-month-period then ended in alI material aspects in accordancewith the BRSA Accounting and Reporting Legislation.

A member timi °ı Ernst Yaur,g Gıebaı Limiled

EYBuilding a betterworking world

Report on other reguiatory requirements arising from legisiation

Based on our review, nothing has come ta our attention that causes üs ta believe that the financialinformation pravided in the accompanying interim activity report in Section Vii! are not consistent, in alimateriai respects, with the reviewed unconsolidated financiai statements and disclosures.

Additionai paragraph for convenience transiation to Engiish:

As explained in detail in Nate 1 af Section Three, the effects of difterences between accounting principiesand standards set out by regulations in conformity with !!BRSA Accounting and Reporting Legisiation”and the accounling principles generafly accepted in countries in which the accompanyingunconsolidated flnanciai slatements are to be distributed and international Financial ReportingStandards (“IFRS”) have not been quantified in the accompanying unconsoiidated flnanciai statements.Accordingiy, the accompanying uncansoiidated flnanciai statements are not intended ta present thefinancial position, results of operations and changes in financial position and cash flows in accordancewith the accounting principles generaliy accepted in such counthes and IFRS.

st Muhasebeci Mali Müşavirlik Anonim ŞirketiGlobal Limited

Güney Bağımsız Denetim veA member firm of Ernst av

9Istanbul, Türkiye

A mombor (“nı e’ Ernol Young Global Lımıtod

eVAKIF KATILIM

Ortak geçmiş. ortak gelecek.

UNCONSOUDATED FINANCIAL REPORT OF VAKIF KATILIM BANKASI A.Ş.AS OF AND FOR THE NINE-MONTHS PERİOD ENDED SEPTEMBER 30, 2019

Bank’ş Headquarter Address

Banks Phone Number and FacsimileBanka’s WebsiteElectronic Mail Contact Info

Saray Mah. Dr.Adnan Büyükdeniz Cad. No:10 34766Ümraniye / Istanbul

:02168005555—02168005556www.vakifkatilim.com.trmaIüşIermudurIuguJvakifkatiIim.com.tr

The unconsolidated financial report for the nine months period ended September 30, 2019, designed by theBanking Regulation and Supervision Agency ÇBRSA”) in line with the CommuniquĞ on Financial Statementsto be Publiciy Announced and the Related Policies and Disolosures consists of the seçtions listed below:

• GENERAL INFORMATION ABOUT THE BANK• UNCONSOLIDATED flNANCIAL STATEMENTS OF THE BANK• EXPLANATIONS ON THE ACCOUNTING PRINCIPLES APPLIED 1W THE RELATED PERIOD• INFORMATION ON FINANCİAL STRUCTURE AND RISK MANAGEMENT• EXPLANATORY DISCLOSURES AND FOOTNOTES ON UNCONSOLIDATED FINANCİAL STATEMENTS• LIMITED REVIEW REPORT• INTERIM ACTIVITY REPORT

The unconsolidated financial statements and related diselosures and footnotes for the nine months; presentedin thousands of Turkish Lira unless otherwise indicated; have been prepared in accordance with theCommuniqu on Accounting Applications of Banks and Safeguarding of Documents, Turkish AccountingStandards, Turkish Financial Reporting Standards and the related appendices and interpretations and incompliance with the records of our Bank, have been independentiy reviewed and presented as attached.

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

Name-Surname? TitleTelephoneFacsimile

Bayram DUMAN / Vice Manager02168003843

:02166005556

v»’1 kat!lrm b-jnk< 4<

Qfl.HHü) No 0If)0.) Mersı No 0S 1)3227000)010

ÖKTAŞ

General Managerof

Ahmet OCAK

Financial Reporting

Mustafa ERDOĞMUŞ

Chairman of the AuditCommittee

Osm

Member of the AuditCommittee

Section oneGeneral information

I. History of the Bank including its incorporation date, initial legal status and amendments to legal status 1II. Shareholding structure, shareholders having direct or indirect, joint or individual control over the management

of the Bank and disclosures on related changes in the current year, if any 1III. Explanation on the chairman and members of board of directors, members of audit committee, general

manager and assistant general managers , their areas of responsibility and their shares in the Bank, if any 1IV. Information on the Bank’s qualified shareholders 2V. Summary on the Bank’s service activities and field of operations 2VI. The existing or potential, actual or legal obstacles on immediate transfer of equity or reimbursement of liabilities

between the Bank and Its subsidiaries 2

Section twoThe unconsolidated financial statements

I Balance sheet (Statement of financial position) 4II. Statement of off-balance sheet 6III. Statement of profit or loss 7IV. Statement of profit or loss and other comprehensive income 8V. Statement of changes in shareholders’ equity 9VI. Statement of cash flows 11

Section threeAccounting policies

I. Explanations on basis of presentation 12II. Explanations on strategy of using financial instruments and foreign currency transactions 13III. Explanations on investments in associates and subsidiaries 14IV. Explanations on forward, option contracts and derivative instruments 14V. Explanations on profit share income and expenses 15VI. Explanations on fees, commission income and expenses 15VII. Explanations on financial assets and liabilities 15VIII. Explanations on expected credit losses 16IX. Explanations on offsetting of financial instruments 18X. Explanations on sale and repurchase agreements and lending of securities 18XI. Explanations on assets held for sale and discontinued operations and liabilities related to these assets 19XII. Explanations on goodwill and other intangible assets 19XIII. Explanations on tangible assets 19XIV. Explanations on leasing transactions 20XV. Explanations on provisions and contingent liabilities 21XVI. Explanations on contingent assets 21XVII. Explanations on liabilities regarding employee rights 21XVIII. Explanations on taxation 22XIX. Additional explanations on borrowings 23XX. Explanations on issued share certificates 24XXI. Explanations on acceptances and availed drafts 24XXII. Explanations on government grants 24XXIII. Explanations on segment reporting 24

Section fourInformation on financial structure and risk management

I. Explanations on equity 25II. Explanations on currency risk 29III. Explanations on position risk of equity securities in banking book 31IV. Explanations on liquidity risk management and liquidity coverage ratio 32V. Explanations on leverage ratio 36VI. Explanations on risk management 37VII. Explanations on business segments 38

Section FiveExplanations and notes on the unconsolidated financial statements

I Explanations and notes related to assets 39II. Explanations and notes related to liabilities 55III. Explanations and notes related to off-balance sheet 62IV. Explanations and notes related to the statement of income 64V. Explanations related to the risk group of the Bank 70VI. Explanations related to subsequent events 71

Section SixLimited Review Report

I. Explanations on independent auditors’ limited review report 72II. Other notes and explanations prepared by the independent auditors 72

Section SevenInterim Activity Report

I. Interim annual report including the evaluations of interim activities of the Chairman of the Board ofDirectors and General Manager

73

Vakıf Katılım Bankası A.Ş.

Notes related to unconsolidated financial statementsas of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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Section one

General informationI. History of the Bank Including Its Incorporation Date, Initial Legal Status and Amendments to

Legal Status:Vakıf Katılım Bankası A.Ş. (“The Bank”) has been established in accordance with the permission ofBanking Regulation and Supervision Authority dated February 27, 2015 and numbered 6205 which waspublished at Official Gazette dated March 3, 2015 and numbered 29284 and become a legal entityfollowing its registration at trade registry on June 25, 2015. Vakıf Katılım Bankası A.Ş. has obtainedofficial authorization with resolution of Banking Regulation and Supervision Authority dated February11, 2016 and numbered 6729 which was published at Official Gazette dated February 17, 2016 andnumbered 29627 and started its Participation Banking Activities as of February 24, 2016. The Bank’spaid in capital is TL 1.020.000. The headquarters of the Bank is located in Istanbul. The Bank, whoseheadquarters is located in Istanbul, provides services with its 97 branch (December 31, 2018: 91) and1.231 employees (December 31, 2018: 1.092) as of September 30, 2019.

II. Shareholding structure, shareholders having direct or indirect, joint or individual control overthe management of the Bank and disclosures on related changes in the current year, if any:Vakıf Katılım Bankası A.Ş. has been established as joint-stock company with its issued capital at anamount of TL 805.000.As September 30, 2019 the Bank's share of paid-in capital to its shareholders:

September 30, 2019 December 31, 2018Name of the Shareholders Paid in

Capital Share % Paid inCapital Share%

T.C. Vakıflar Genel Müdürlüğü 1.009.800 99,00 1.009.800 99,00Beyazid Han-ı Sani(II. Beyazit) Vakfı 2.550 0,25 2.550 0,25Mahmud Han-ı Evvel Bin Mustafa Han(I. Mahmut) Vakfı 2.550 0,25 2.550 0,25Mahmud Han-ı Sani Bin Abdülhamid Han-ı Evvel(II.Mahmut) Vakfı 2.550 0,25 2.550 0,25

Murad Paşa Bin Abdusselam(Murat Paşa) Vakfı 2.550 0,25 2.550 0,25Total 1.020.000 100,00 1.020.000 100,00

III. Explanation on the chairman and members of board of directors, members of audit committee,general manager and assistant general managers, their areas of responsibility and their sharesin the Bank, if any:

Title Name and Surname Administrative Function and ResponsibilityEducaional

Degree

OwnershipPercentage

(%)Chairman of the Board ofDirectors (BOD)

Öztürk ORANChairman of BOD Bachelor -

Members of BOD

Dr. Adnan ERTEM Vice Chairman of BOD Phd -Naci AĞBAL Member of BOD Master -Mustafa ERDOĞMUŞ Member of BOD and Chairman of Audit Committee Bachelor -İlhan ALBAYRAK Member of BOD Bachelor -Osman ÇELİK Member of BOD and Audit Committee Bachelor -İkram GÖKTAŞ Member of BOD and General Manager Bachelor -

Members of AuditCommittee

Mustafa ERDOĞMUŞ Member of BOD and Chairman of Audit Committee Bachelor -Osman ÇELİK Member of BOD and Audit Committee Bachelor -

Assistant GeneralManagers

Ahmet OCAK Financial Affairs, Project Finance Master -Ali GÜNEY* Treasury, International Banking, Strategy and Product

Development Service Bachelor -

Betül Vural YILMAZ Human Resources, Directorate of Education,Corporate Communications Master -

Bülent TABANFinancial Analysis and Intelligence, Commercial andCorporate Loan Allocation, SME and Personal LoanAllocation

Master -

Erhan ÇETİNKAYA Credit and Treasury Operations, External Operations,Banking and Payment Systems Master -

* As of October 16, 2019, Ali GÜNEY resigned from his position as the Assistant General Manager of Treasury andStrategy Business Family.



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IV. Information on the Bank’s qualified shareholders:The Bank’s paid in capital amounting to TL 1.020.000 consists of 102.000.000.000 number of shareswith a nominal value of (full) TL 0,01 for each share. TL 1.009.800 of the paid in capital is owned byqualified shareholders who are listed below:

Name/Commercial name

Shareamount

(nominal)

Shareratio

(%)Paid

shares Unpaid sharesT.C. Vakıflar Genel Müdürlüğü 1.009.800 99,00 1.009.800 -

V. Summary on the Bank’s service activities and field of operations:

The Bank operates in accordance with the principles of interest-free banking as a participation bank.The Bank mainly collects funds through current and profit sharing accounts and through profit sharingaccounts investment agency pools and lends such funds through corporate finance support, retailfinance support, profit/loss sharing investment, profit and loss sharing investments, finance lease,financing commodity against document and joint investments.

The Bank classifies current and profit sharing accounts separately from other accounts in accordancewith their maturities. Profit sharing accounts are classified under six different maturity groups; up to onemonth, up to three months (three months included), up to six months (six months included), up to oneyear (one year included) and one year and more than one year (with monthly, quarterly, semiannual andannual profit share payment) and accumulated participation accounts. In addition to the maturity groupsin the participation accounts, investment agency (Wakalah) accounts may be opened with accounts witha maturity of less than one month (up to 1 month (including 1 month)).

The Parent Participation Bank could freely determine the participation rates on profit/loss sharingaccounts or estimated profit rate. The participation rate on loss of participation accounts is 100%.

The Bank constitutes specific fund pools with minimum maturities of one month, to be allocated toindividually predetermined projects for financing purposes. Profit sharing accounts, which are part of thefunds collected for project financing purpose, are managed in accordance with their maturities andindependently from other accounts and transfers from these accounts to any other maturity groups arenot executed. Specific fund pools are liquidated at the end of the financing period.

In addition to its ordinary banking activities, the Bank operates as an insurance agency on behalf of,Güneş Sigorta, Neova Sigorta, HDI Sigorta, Bereket Sigorta and Vakıf Emeklilik through its branchesand provides services in purchase and sale of precious metals, member business (POS), credit cardand debit card services, money transfer to PTT A.Ş., Vizyon Tahsilat Ve Ödeme Hizmetleri A.Ş.,Hızlıpara Ödeme Hizmetleri ve Elektronik Para A.Ş. and Elekse Yetkili Vezne Ödeme Kuruluşu A.Ş.portfolio agency service, limited custodian service and the Bank is authorized to provide order deliveryand transaction agency services.

The Bank provides non-cash loans which mainly comprise letters of guarantee, letters of credit andacceptance credit. Transactions which can be carried out by the Bank are not limited to the clauseslisted above. If any activities other than those mentioned are considered as beneficial to the Bank, theapplication must be recommended by the Board of Directors, approved by the General Assembly andauthorized by relevant legal authorities which then needs to be approved by the Ministry of Trade sincesuch applications are amendments in nature to the Article of Association. The application is included inthe Article of Association after all necessary approvals are obtained.

VI. The existing or potential, actual or legal obstacles on immediate transfer of equity orreimbursement of liabilities between the bank and its subsidiaries:None.

Section two

The unconsolidated financial statements

I. Balance sheet (Statement of financial position)

II. Statement of off-balance sheet

III. Statement of profit or loss

IV. Statement of profit or loss and other comprehensive income

V. Statement of changes in shareholders’ equity

VI. Statement of cash flows


Unconsolidated Statement of Balance Sheet (Financial Position)as of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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THOUSAND TURKISH LIRA THOUSAND TURKISH LIRACURRENT PERIOD PRIOR PERIOD

ASSETS (30/09/2019) (31/12/2018)Footnote(Section-

Five-I) TL FC Total TL FC Total

I. FINANCIAL ASSETS (Net) 1.476.607 9.473.971 10.950.578 1.992.059 5.007.309 6.999.3681.1 Cash and cash equivalents 161.069 6.542.084 6.703.153 942.499 4.582.514 5.525.0131.1.1 Cash and balances with central bank (1) 158.441 4.793.960 4.952.401 942.519 3.193.471 4.135.9901.1.2 Banks (3) 2.723 1.754.306 1.757.029 783 1.392.839 1.393.6221.1.3 Money market placements - - - - - -1.1.4 Expected Loss Provisions(-) 95 6.182 6.277 803 3.796 4.599

1.2 Financial assets valued at fair value throughprofit or loss - 794.998 794.998 - - -

1.2.1 Government debt securities - 794.998 794.998 - - -1.2.2 Equity securities - - - - - -1.2.3 Other financial assets - - - - - -

1.3 Financial assets valued at fair value throughother comprehensive income (4) 1.250.969 2.070.682 3.321.651 1.032.453 409.634 1.442.087

1.3.1 Government debt securities 1.090.726 2.070.682 3.161.408 928.011 409.634 1.337.6451.3.2 Equity securities - - - - - -1.3.3 Other financial assets 160.243 - 160.243 104.442 - 104.4421.4 Derivative financial assets 64.569 66.207 130.776 17.107 15.161 32.2681.4.1 Derivative financial assets valued at fair value

through profit and loss (2) 64.569 66.207 130.776 17.107 15.161 32.268

1.4.2 Derivative financial assets valued at fair valuethrough other comprehensive income (11) - - - - - -

II. Financial assets valued at amortised cost(Net) 8.759.645 6.819.240 15.578.885 8.779.246 4.708.744 13.487.9902.1 Loans (5) 9.043.347 6.274.312 15.317.659 8.906.282 4.660.946 13.567.2282.2 Lease receivables (10) 58.366 92.797 151.163 47.192 75.141 122.3332.3 Other financial assets valued at amortised

cost (6) - 503.262 503.262 - - -2.3.1 Government debt securities - 503.262 503.262 - - -2.3.2 Other financial assets - - - - - -2.4 Expected Loss Provisions (-) 342.068 51.131 393.199 174.228 27.343 201.571III. ASSETS HELD FOR SALE AND

DISCONTINUED OPERATIONS (Net) (16) - - - - - -3.1 Assets held for sale - - - - - -3.2 Assets of discontinued operations - - - - - -IV. SUBSIDIARY INVESTMENTS 4.819 - 4.819 4.996 - 4.9964.1 Investments in assocıates (net) (7) 4.719 - 4.719 4.896 - 4.8964.1.1 Valued under equity method - - - - - -4.1.2 Unconsolidated associates 4.719 - 4.719 4.896 - 4.8964.2 Investments in subsidiaries (net) (8) 100 - 100 100 - 1004.2.1 Unconsolidated financial subsidiaries 100 - 100 100 - 1004.2.2 Unconsolidated non-financial subsidiaries - - - - - -

4.3 Joıntly controlled entities (joint ventures) (net) (9) - - - - - -4.3.1 Valued under equity method - - - - - -4.3.2 Unconsolidated associates - - - - - -V. TANGIBLE ASSETS (Net) (12) 422.149 - 422.149 286.945 - 286.945VI. INTANGIBLE ASSETS (Net) (13) 19.706 - 19.706 22.801 - 22.8016.1 Goodwill - - - - - -6.2 Other 19.706 - 19.706 22.801 - 22.801VII. INVESTMENT PROPERTY (Net) (14) - - - - - -VIII. CURRENT TAX ASSET - - - - - -IX. DEFERRED TAX ASSET (15) 11.631 - 11.631 31.986 - 31.986X. OTHER ASSETS (17) 200.518 9.849 210.367 117.983 3.443 121.426

TOTAL ASSETS 10.895.075 16.303.060 27.198.135 11.236.016 9.719.496 20.955.512Note: The Communiqué on the Amendment to the Communiqué on the Financial Statements and Related Disclosures and Footnotes to be Announced to Public by Banks in the OfficialGazette dated 1 February 2019 and numbered 30673 and with the Communiqué Amended by the Banks were amended. Based on this change, prior period financial statements are expectedto be comparable with the current period financial statements.

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


Unconsolidated Statement of Balance Sheet (Financial Position)as of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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LIABILITIES

THOUSAND TURKISH LIRA THOUSAND TURKISH LIRAFootnote(SectionFive-II)

CURRENT PERIOD(30/09/2019)

PRIOR PERIOD(31/12/2018)

TL FC Total TL FC Total

I. FUNDS COLLECTED (1) 8.707.493 12.059.115 20.766.608 7.293.824 7.888.582 15.182.406II. FUNDS BORROWED (3) 2.126.010 1.081.003 3.207.013 1.696.275 1.995.064 3.691.339III. MONEY MARKET BALANCES 16.655 - 16.655 - - -IV. MARKETABLE SECURITIES ISSUED (Net) - - - - - -V. FINANCIAL LIABILITIES VALUED AT FAIR VALUE

THROUGH PROFIT AND LOSS - - - - - -VI. DERIVATIVE FINANCIAL LIABILITIES 13.654 6.555 20.209 10.588 9.053 19.6416.1 Derivative financial liabilities valued at fair value through

profit and loss (2) 13.654 6.555 20.209 10.588 9.053 19.641

6.2 Derivative financial liabilities valued at fair value throughother comprehensive income (6) - - - - - -

VII. LEASE LIABILITIES (5) 138.318 368 138.686 - - -VIII. PROVISIONS (7) 123.775 22.572 146.347 133.279 7.922 141.2018.1 Restructuring provisions - - - - - -8.2 Reserve for employee benefits 31.686 - 31.686 23.228 - 23.2288.3 Insurance technical reserves (Net) - - - - - -8.4 Other provisions 92.089 22.572 114.661 110.051 7.922 117.973IX. Current tax liability (8) 69.535 - 69.535 67.187 - 67.187X. Deferred tax liability - - - - - -XI. LIABILITIES FOR ASSETS HELD FOR SALE AND

DISCONTINUED OPERATIONS (Net) (9) - - - - - -11.1 Assets held for sale - - - - - -11.2 Assets of discontinued operations - - - - - -XII. SUBORDINATED DEBTS (10) - 493.144 493.144 - - -12.1 Loans - 493.144 493.144 - - -12.2 Other borrowing instruments - - - - - -XIII. OTHER LIABILITES (4) 385.965 112.081 498.046 298.399 28.113 326.512XIV. SHAREHOLDERS' EQUITY (11) 1.826.594 15.298 1.841.892 1.527.392 (166) 1.527.22614.1 Paid-in capital 1.020.000 - 1.020.000 1.020.000 - 1.020.00014.2 Capital reserves 11.504 - 11.504 - - -14.2.1 Share Premium - - - - - -14.2.2 Share cancellation profits - - - - - -14.2.3 Other capital reserves 11.504 - 11.504 - - -

14.3 Accrued other comprehensive income or expense notreclassified in profit and loss (1.189) - (1.189) (1.189) - (1.189)

14.4 Accrued other comprehensive income or expensereclassified in profit and loss 13.502 15.298 28.800 (20.125) (166) (20.291)

14.5 Profit reserves 214.828 - 214.828 209.828 - 209.82814.5.1 Legal reserves 20.115 - 20.115 20.115 - 20.11514.5.2 Statutory reserves - - - - - -14.5.3 Extraordinary reserves 181.037 - 181.037 181.037 - 181.03714.5.4 Other profit reserves 13.676 - 13.676 8.676 - 8.67614.6 Profit or loss 567.949 - 567.949 318.878 - 318.87814.6.1 Prior years' profit/loss 313.878 - 313.878 (6.519) - (6.519)14.6.2 Current period net profit/loss 254.071 - 254.071 325.397 - 325.39714.7 Non-controlling Interest (-) - - - - - -

TOTAL LIABILITIES 13.407.999 13.790.136 27.198.135 11.026.944 9.928.568 20.955.512Note: The Communiqué on the Amendment to the Communiqué on the Financial Statements and Related Disclosures and Footnotes to be Announced to Public by Banks in the OfficialGazette dated 1 February 2019 and numbered 30673 and with the Communiqué Amended by the Banks were amended. Based on this change, prior period financial statements areexpected to be comparable with the current period financial statements.



Unconsolidated Statement of Off-balance Sheetas of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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OFF BALANCE SHEETFootnote(SectionFive-II)

THOUSAND TURKISH LIRA THOUSAND TURKISH LIRACURRENT PERIOD

(30/09/2019)PRIOR PERIOD

(31/12/2018)TL FC Total TP TL FC

A. OFF BALANCE SHEET COMMITMENTS (I+II+III) (1) 9.362.715 16.976.793 26.339.508 5.290.596 8.297.999 13.588.595I. GUARANTEES AND SURETIES 4.383.652 2.817.351 7.201.003 3.468.753 2.155.313 5.624.0661.1 Letters of Guarantees 4.314.397 2.269.011 6.583.408 3.452.275 1.729.014 5.181.2891.1.1 Guarantees Subject to State Tender Law 38.272 - 38.272 23.842 9.820 33.6621.1.2 Guarantees Given for Foreign Trade Operations - 305.629 305.629 - 210.021 210.0211.1.3 Other Letters of Guarantee 4.276.125 1.963.382 6.239.507 3.428.433 1.509.173 4.937.6061.2. Bank Loans 4.639 48.149 52.788 4.359 23.653 28.0121.2.1. Import Letter of Acceptances 4.639 48.149 52.788 4.359 23.653 28.0121.2.2. Other Bank Acceptances - - - - - -1.3. Letter of Credits 64.616 500.191 564.807 12.119 402.646 414.7651.3.1. Documentary Letter of Credits - - - - - -1.3.2. Other Letter of Credits 64.616 500.191 564.807 12.119 402.646 414.7651.4. Prefinancing Given as Guarantee - - - - - -1.5. Endorsements - - - - - -1.5.1. Endorsements to the Central Bank of Turkey - - - - - -1.5.2. Other Endorsements - - - - - -1.6. Other Guarantees - - - - - -1.7. Other Collaterals - - - - - -II. COMMITMENTS (1) 954.615 2.047.828 3.002.443 408.980 732.956 1.141.9362.1. Irrevocable Commitments 954.615 2.047.828 3.002.443 408.980 732.956 1.141.9362.1.1. Asset Purchase and Sale Commitments 267.563 2.047.828 2.315.391 199.041 732.956 931.9972.1.2. Share Capital Commitment to Associates and

Subsidiaries - - - - - -

2.1.3. Loan Granting Commitments 502.031 - 502.031 93.447 - 93.4472.1.4. Securities Underwriting Commitments - - - - - -2.1.5. Commitments for Reserve Deposit Requirements - - - - - -2.1.6. Payment Commitment for Cheques 141.620 - 141.620 93.859 - 93.8592.1.7. Tax And Fund Liabilities from Export Commitments

3.382 - 3.382 3.382 - 3.3822.1.8. Commitments for Credit Card Expenditure Limits 24.339 - 24.339 12.570 - 12.5702.1.9. Commitments for Promotions Related with Credit

Cards and Banking Activities - - - - - -2.1.10. Receivables From Short Sale Commitments of

Marketable - - - - - -

2.1.11. Payables for Short Sale Commitments of MarketableSecurities - - - - - -

2.1.12. Other Irrevocable Commitments 15.680 - 15.680 6.681 - 6.6812.2. Revocable Commitments - - - - - -2.2.1. Revocable Loan Granting Commitments - - - - - -2.2.2. Other Revocable Commitments - - - - - -III. DERIVATIVE FINANCIAL INSTRUMENTS (2) 4.024.448 12.111.614 16.136.062 1.412.863 5.409.730 6.822.5933.1. Derivative Financial Instruments for Hedging Purposes - - - - - -3.1.1. Fair Value Hedge

- - - - - -3.1.2. Cash Flow Hedge - - - - - -3.1.3. Hedge of Net Investment in Foreign Operations

- - - - - -3.2. Held for Trading Transactions 4.024.448 12.111.614 16.136.062 1.412.863 5.409.730 6.822.5933.2.1 Forward Foreign Currency Buy/Sell Transactions 4.013.707 11.555.807 15.569.514 1.395.538 5.273.833 6.669.3713.2.1.1 Forward Foreign Currency Transactions-Buy 3.668.117 4.400.175 8.068.292 1.236.056 2.159.762 3.395.8183.2.1.2 Forward Foreign Currency Transactions-Sell 345.590 7.155.632 7.501.222 159.482 3.114.071 3.273.5533.2.2. Other Forward Buy/Sell Transactions 10.741 555.807 566.548 17.325 135.897 153.2223.3. Other - - - - - -B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 110.439.771 5.689.227 116.128.998 87.100.120 2.485.811 89.585.931IV. ITEMS HELD IN CUSTODY 4.319.073 2.807.442 7.126.515 3.287.567 501.498 3.789.0654.1. Assets Under Management - - - - - -4.2. Investment Securities Held in Custody 1.798.143 7.977 1.806.120 1.073.999 219 1.074.2184.3. Cheques Received for Collection 1.106.133 140.689 1.246.822 779.942 80.881 860.8234.4. Commercial Notes Received for Collection 310.250 7.424 317.674 336.794 10.292 347.0864.5. Other Assets Received for Collection - - - - - -4.6. Assets Received for Public Offering - - - - - -4.7. Other Items Under Custody - - - - - -4.8. Custodians 1.104.547 2.651.352 3.755.899 1.096.832 410.106 1.506.938V. PLEDGED ITEMS 106.120.698 2.881.785 109.002.483 83.812.553 1.984.313 85.796.8665.1. Marketable Securities 703.968 16.638 720.606 367.817 15.467 383.2845.2. Guarantee Notes - - - - - -5.3. Commodity 907.866 182.694 1.090.560 810.667 157.265 967.9325.4. Warranty - - - - - -5.5. Properties 17.577.788 - 17.577.788 14.090.933 - 14.090.9335.6. Other Pledged Items 86.930.196 2.682.453 89.612.649 68.542.256 1.811.581 70.353.8375.7. Pledged Items-Depository 880 - 880 880 - 880VI. ACCEPTED INDEPENDENT GUARANTEES AND

WARRANTIES - - - - - -

TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) 119.802.486 22.666.020 142.468.506 92.390.716 10.783.810 103.174.526



Unconsolidated Statement of Profit or lossas of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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Note: The Communiqué on the Amendment to the Communiqué on the Financial Statements and Related Disclosures and Footnotes to be Announced to Public by Banks in the OfficialGazette dated 1 February 2019 and numbered 30673 and with the Communiqué Amended by the Banks were amended. Based on this change, prior period financial statements areexpected to be comparable with the current period financial statements.

.

INCOME AND EXPENSE ITEMSFootnote(SectionFive-IV)

THOUSANDTURKISH

LIRA

THOUSANDTURKISH

LIRA

THOUSANDTURKISH

LIRA

THOUSANDTURKISH

LIRACURRENTPERIOD

(01/01/2019-30/09/2019)

PRIORPERIOD

(01/01/2018-30/09/2018)

CURRENTPERIOD

(01/07/2019-30/09/2019)

PRIORPERIOD

(01/07/2018-30/09/2018)

I. PROFIT SHARE INCOME (1) 1.713.513 1.188.441 614.020 473.6961.1 Profit share on loans 1.476.038 1.053.905 513.679 419.2351.2 Profit share on reserve deposits 17.342 16.053 4.752 6.2611.3 Profit share on banks 4.138 5.490 1.336 3.0551.4 Profit share on money market placements - - - -1.5 Profit share on marketable securities portfolio 173.219 103.950 73.824 42.0791.5.1 Financial assets at fair value through profit and loss 7.167 - 3.575 (4.097)1.5.2 Financial assets valued at fair value through other comprehensive income 156.268 103.950 64.808 46.1761.5.3 Financial assets valued at amortised cost 9.784 - 5.441 -1.6 Finance lease income 11.991 6.474 4.459 2.5711.7 Other profit share income 30.785 2.569 15.970 495II. PROFIT SHARE EXPENSE(-) (2) 1.280.407 738.017 434.410 288.7462.1 Expense on profit sharing accounts 929.468 588.230 310.312 217.5312.2 Profit share expense on funds borrowed 326.318 145.654 112.737 68.2832.3 Profit share expense on money market borrowings 8.869 4.133 5.606 2.9322.4 Expense on securities issued - - - -2.5 Lease Profit Share Expense(-) 15.752 - 5.755 -2.6 Other profit share expense - - - -III. NET PROFIT SHARE INCOME (I - II) 433.106 450.424 179.610 184.950IV. NET FEES AND COMMISSIONS INCOME 60.332 33.484 24.659 8.7254.1 Fees and commisions received 98.603 49.898 38.214 17.2194.1.1 Non-Cash loans 52.094 26.447 17.906 9.7974.1.2 Other (12) 46.509 23.451 20.308 7.4224.2 Fees and commisions paid 38.271 16.414 13.555 8.4944.2.1 Non-Cash loans 43 49 - 14.2.2 Other (12) 38.228 16.365 13.555 8.493V. DIVIDEND INCOME (3) - - - -VI. TRADING INCOME/EXPENSES (Net) (4) 379.291 189.369 109.428 92.0986.1 Trading account income/expenses (4.648) (3.206) (3.249) (419)6.2 Income/expenses from derivative financial instruments 351.833 151.425 97.844 62.8076.3 Foreign exchange gains/losses 32.106 41.150 14.833 29.710VII. OTHER OPERATING INCOME (5) 75.285 11.578 21.556 6.844VIII. TOTAL OPERATING INCOME / EXPENSE (III+IV+V+VI+VII+VIII) 948.014 684.855 335.253 292.617IX. PROVISION FOR EXPECTED LOSS (-) (6) 237.588 76.196 73.926 39.372X. OTHER PROVİSİON EXPENSES(-) 20.874 78.637 3.656 35.795XI. PERSONEL EXPENSES 182.553 115.917 62.879 47.756XII. OTHER OPERATİNG EXPENSES (-) (7) 166.196 131.552 52.244 43.635XIII. NET OPERATING INCOME/EXPENSE (IX-X-XI) 340.803 282.553 142.548 126.059XIV. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - - - -XV. GAIN AFTER MERGER - - - -XVI. GAIN/LOSS ON NET MONETARY POSITION - - - -XVII. PROFIT/LOSS ON CONTINUING OPERATIONS BEFORE TAX (XII+...+XV) (8) 340.803 282.553 142.548 126.059XVIII. TAX PROVISION FOR CONTINUING OPERATIONS (±) (9) 86.732 59.382 39.171 26.61818.1 Current tax charge 79.553 61.581 26.201 28.49018.2 Deferred tax charge (+) 19.330 7.960 9.846 3.35418.3 Deferred tax credit (-) 12.151 10.159 (3.124) 5.226

XIX.NET PERIOD PROFIT/LOSS FROM CONTUNUING OPERATIONS

(XVI±XVII) (10) 254.071 223.171 103.377 99.441XX. INCOME ON DISCONTINUED OPERATIONS - - - -20.1 Income on assets held for sale - - - -

20.2Income on sale of associates, subsidiaries and jointly controlled entities(Joint Vent.) - - - -

20.3 Income on other discontinued operations - - - -XXI. EXPENSE ON DISCONTINUED OPERATIONS (-) - - - -21.1 Expense on assets held for sale - - - -

21.2Expense on sale of associates, subsidiaries and jointly controlled entities(Joint Vent.) - - - -

21.3 Expense on other discontinued operations - - - -

XXII.PROFIT/(LOSS) ON DISCONTINUED OPERATIONS BEFORE TAXES(XVIII-XIX) - - - -

XXIII. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) - - - -23.1 Current tax provision - - - -23.2 Deferred tax provision (+) - - - -23.3 Deferred tax provision (-) - - - -XXIV. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XXI±XXII) - - - -XXV. NET PROFIT/LOSS (XVIII+XXIII) (11) 254.071 223.171 103.377 99.44125.1 Group’s Profit/Loss 254.071 223.171 103.377 99.44125.2 Minority shares (-) - - - -

Earnings Per Share (Full TL) 0,00249 0,00241 0,00101 0,00104

The accompanying explanations and notes are an integral part of these financial statement


Unconsolidated Statement of Profit or loss and other comprehensive incomeas of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

THOUSANDTURKISH LIRA


CURRENT PERIOD(01/01/2019-30/09/2019)

PRIORPERIOD

(01/01/2018-30/09/2018)

I. CURRENT PERIOD INCOME/LOSS 254.071 223.171II. OTHER COMPREHENSIVE INCOME 49.091 (26.132)2.1 Not Reclassified Through Profit or Loss - -2.1.1 Property and Equipment Revaluation Increase/Decrease - -2.1.2 Intangible Assets Revaluation Increase/Decrease - -2.1.3 Defined Benefit Pension Plan Remeasurement Gain/Loss - -2.1.4 Other Comprehensive Income Items Not Reclassified Through Profit or Loss - -2.1.5 Tax Related Other Comprehensive Income Items Not Reclassified Through Profit or

Loss - -2.2 Reclassified Through Profit or Loss 49.091 (26.132)2.2.1 Foreign Currency Translation Differences - -2.2.2 Valuation and/or Reclassification Income/Expense of the Financial Assets at Fair

Value through Other Comprehensive Income 62.267 (34.005)2.2.3 Cash Flow Hedge Income/Loss - -2.2.4 Foreign Net Investment Hedge Income/Loss - -2.2.5 Other Comprehensive Income Items Reclassified Through Profit or Loss - -2.2.6 Tax Related Other Comprehensive Income Items Reclassified Through Profit or Loss (13.176) 7.873III. TOTAL COMPREHENSİVE INCOME (I+II) 303.162 197.039



Unconsolidated Statement of changes in Shareholders’ Equityas of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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CHANGES IN SHAREHOLDERS EQUITY Accumulated OtherComprehensive Income orExpense Not Reclassified

through Profit or Loss

Accumulated OtherComprehensive Incomeor Expense Reclassifiedthrough Profit or Loss

PRIOR PERIOD(01/01/2018-30/09/2018)

Paid-inCapital

SharePremium

ShareCertificate

CancellationProfits

OtherCapital

Reserves 1 2 3 4 5 6

ProfitReserv

es

PriorPeriod

NetIncome/

(Loss)

CurrentPeriod Net

Income /(Loss)

Total equityexcludedfrom non

controllinginterests

Non-controllingInterest (-)

TotalShareholders'

EquityI. Balances at beginning of the period 905.000 - - - - - 177 - (7.120) - 71.696 - 138.132 1.107.885 - 1.107.885II. Correction made as per TAS 8 - - - - - - - - - - - (6.518) - (6.518) - (6.518)

2.1 Effect of corrections - - - - - - - - - - - - - - - -2.2 Effect of changes in accounting policies - - - - - - - - - - - (6.518) - (6.518) - (6.518)III. Adjusted balances at beginning of

the period (I+II) 905.000 - - - - - 177 - (7.120) - 71.696 (6.518) 138.132 1.101.367 - 1.101.367IV. Total Comprehensive Income - - - - - - - - (26.132) - - - 223.171 197.039 - 197.039V. Capital Increase by Cash 115.000 - - - - - - - - - - - - 115.000 - 115.000VI. Capital Increase by Internal Sources - - - - - - - - - - - - - - - -VII. Capital reserves from inflation

adjustments to paid-in capital - - - - - - - - - - - - - - - -VIII. Convertible Bonds to Shares - - - - - - - - - - - - - - - -IX. Subordinated Debt Instruments - - - - - - - - - - - - - - - -X. Increase/Decrease by Other Changes - - - - - - (177) - - - - - - (177) - (177)XI. Profit distribution - - - - - - - - - - 138.132 - (138.132) - - -

11.1 Dividends - - - - - - - - - - - - - - - -11.2 Transfers to reserves - - - - - - - - - - 138.132 - (138.132) - - -11.3 Others - - - - - - - - - - - - - - - -

Closing Balance (III+IV+…...+X+XI) 1.020.000 - - - - - - - (33.252) - 209.828 (6.518) 223.171 1.413.229 - 1.413.229

1. Revaluation surplus on tangible and intangible assets2. Defined Benefit Plans' Actuarial Gains/Losses3. Other (Accumulated amounts of share of investments accounted for by the equity method that can not be classified as profit / loss from other comprehensive income with other comprehensive income that will not be reclassified to other profit or loss)4. Foreign Currency Translation Differences5. Income/Expenses from Valuation and/or Reclassification of Financial Assets Measured at FVOCI6. Other (Accumulated amount of cash flow hedge gains / losses, equity attributable to equity holders of the Group for profit or loss from other comprehensive income and other comprehensive income to be reclassified to other profit or loss)



Unconsolidated Statement of changes in Shareholders’ Equityas of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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CHANGES IN SHAREHOLDERS EQUITY Accumulated OtherComprehensive Income orExpense Not Reclassified

through Profit or Loss

Accumulated OtherComprehensive Income or

Expense Reclassifiedthrough Profit or Loss

CURRENT PERIOD(01/01/2019-30/09/2019)

Paid-inCapital

SharePremium

ShareCertificate

CancellationProfits

OtherCapital

Reserves 1 2 3 4 5 6Profit

Reserves

PriorPeriod

NetIncome/

(Loss) (*)

CurrentPeriod Net

Income /(Loss)

Total equityexcludedfrom non

controllinginterests

Non-controllingInterest (-)

TotalShareholders'

EquityI. Balances at beginning of the period 1.020.000 - - - - (1.189) - - (20.291) - 209.828 (6.519) 325.397 1.527.226 - 1.527.226II. Correction made as per TAS 8 - - - - - - - - - - - - - - - -

2.1 Effect of corrections - - - - - - - - - - - - - - - -2.2 Effect of changes in accounting policies - - - - - - - - - - - - - - - -III. Adjusted balances at beginning of the

period (I+II) 1.020.000 - - - - (1.189) - - (20.291) - 209.828 (6.519) 325.397 1.527.226 - 1.527.226IV. Total Comprehensive Income - - - - - - - - 49.091 - - - 254.071 303.162 - 303.162V. Capital Increase by Cash - - - - - - - - - - - - - - - -VI. Capital Increase by Internal Sources - - - - - - - - - - - - - - - -VII. Capital reserves from inflation

adjustments to paid-in capital - - - - - - - - - - - - - - - -VIII. Convertible Bonds to Shares - - - - - - - - - - - - - - - -IX. Subordinated Debt Instruments (**) - - - 11.504 - - - - - - - - - 11.504 - 11.504X. Increase/Decrease by Other Changes - - - - - - - - - - - - - - - -XI. Profit distribution - - - - - - - - - - 5.000 320.397 (325.397) - - -

11.1 Dividends - - - - - - - - - - - - - - - -11.2 Transfers to reserves - - - - - - - - - - 5.000 (5.000) - - - -11.3 Other - - - - - - - - - - - 325.397 (325.397) - - -

Closing Balance (III+IV+…...+X+XI) 1.020.000 - - 11.504 - (1.189) - - 28.800 - 214.828 313.878 254.071 1.841.892 - 1.841.892

1. Revaluation surplus on tangible and intangible assets2. Defined Benefit Plans' Actuarial Gains/Losses3. Other (Accumulated amounts of share of investments accounted for by the equity method that can not be classified as profit / loss from other comprehensive income with other comprehensive income that will not be reclassified to other profit or loss)4. Foreign Currency Translation Differences5. Income/Expenses from Valuation and/or Reclassification of Financial Assets Measured at FVOCI6. Other (Accumulated amount of cash flow hedge gains / losses, equity attributable to equity holders of the Group for profit or loss from other comprehensive income and other comprehensive income to be reclassified to other profit or loss)

(*) As of the reporting date,The Parent Bank did not hold a General Assembly meeting for 2018.(**) Section three, Footnote VII.

The accompanying explanations and notes are an integral part of these financial statement.


Unconsolidated Statement of Cash flowsas of September 30, 2019(Amounts expressed in Thousands of Turkish Lira (TL) unless otherwise stated.)

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STATEMENT OF CASH FLOWS CURRENTPERIOD

(01/01/2019-30/09/2019)

PRIORPERIOD

(01/01/2018-30/09/2018

A. CASH FLOWS FROM BANKING OPERATIONS

1.1 Operating profit before changes in operating assets and liabilities 1.400.921 (912.187)

1.1.1 Profit share income received 1.425.125 928.3451.1.2 Profit share expense paid (1.091.728) (605.565)1.1.3 Dividend received - -1.1.4 Fees and commissions received 98.603 48.5191.1.5 Other income - 8961.1.6 Collections from previously written off loans and other receivables 73.319 -1.1.7 Cash payments to personnel and service suppliers (158.654) (103.494)1.1.8 Taxes paid (107.741) (48.032)1.1.9 Other 1.161.997 (1.132.856)

1.2 Changes in operating assets and liabilities subject to banking operations 2.673.831 (782.384)

1.2.1 Net (Increase) Decrease in financial assets at fair value through profit or loss (795.479) (89.179)1.2.2 Net (Increase) Decrease in due from banks and other financial institutions (504.824) (198.948)1.2.3 Net (Increase) Decrease in loans (1.124.167) (3.356.890)1.2.4 Net (Increase) Decrease in other assets 123.687 (131.918)1.2.5 Net Increase (Decrease) in bank deposits (160.221) 150.4231.2.6 Net Increase (Decrease) in other deposits 5.048.055 2.679.1911.2.7 Net Increase/Decrease in Financial Liabilities at Fair Value Through Profit or Loss - -1.2.8 Net Increase (Decrease) in funds borrowed 12.661 (10.183)1.2.9 Net Increase (Decrease) in due payables - -1.2.10 Net Increase (Decrease) in other liabilities 74.119 175.120

I. Net cash provided from banking operations 4.074.752 (1.694.571)

B. CASH FLOWS FROM INVESTING ACTIVITIES

II. Net cash provided from investing activities (3.221.237) (525.219)

2.1 Cash paid for purchase of entities under common control, associates and subsidiaries - -2.2 Cash obtained from sale of entities under common control, associates and subsidiaries - -2.3 Purchases of tangible assets (43.996) (33.464)2.4 Sales of tangible assets - -2.5 Purchase of Financial Assets at Fair Value Through Other Comprehensive Income (2.771.170) (954.348)2.6 Sale of Financial Assets at Fair Value Through Other Comprehensive Income 212.289 462.5932.7 Purchase of Financial Assets Measured at Amortised Cost (618.360) -2.8 Sale of Financial Assets Measured at Amortised Cost - -2.9 Other - -

C. CASH FLOWS FROM FINANCING ACTIVITIES

III. Net cash provided from financing activities (69.529) 2.080.075

3.1 Cash obtained from funds borrowed and securities issued 6.923.893 12.546.5083.2 Cash used for repayment of funds borrowed and securities issued (6.993.422) (10.581.433)3.3 Equity instruments issued - 115.0003.4 Dividends paid - -3.5 Payments for financial leases - -3.6 Others - -

IV. Effect of change in foreign exchange rate on cash and cash equivalents 77.059 335.152

V. Net increase/(decrease) in cash and cash equivalents 861.045 195.437

VI. Cash and cash equivalents at beginning of period 3.417.635 1.300.475

VII. Cash and cash equivalents at end of period 4.278.680 1.495.912




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Section three

Accounting policies

I. Explanations on basis of presentation:

a. The preparation of the financial statements and related notes and explanations in accordancewith the Turkish Accounting Standards and Regulation on the Principles and ProceduresRegarding Banks’ Accounting Application and Safeguarding of Documents:

The unconsolidated financial statements are prepared within the scope of the “Regulation on AccountingApplications for Banks and Safeguarding of Documents” related with Banking Act numbered 5411 publishedin the Official Gazette numbered 26333 dated 1 November 2006 and in accordance with the regulations,communiqués, interpretations and legislations related to accounting and financial reporting principlespublished by the Banking Regulation and Supervision Agency (“BRSA”), and in case where a specificregulation is not made “Turkish Accounting Standards” (“TAS”) and “Turkish Financial Reporting Standards”(“TFRS”) put into effect by Public Oversight Accounting and Auditing Standards Authority (“POA”). The formatand content of the publicly announced unconsolidated financial statements and notes to these statementshave been prepared in accordance with the “Communiqué on Publicly Announced Financial Statements,Explanations and Notes to These Financial Statements” and “Communiqué On Disclosures About RiskManagement To Be Announced To Public By Banks” and amendments to this Communiqué. The Bankmaintains its books in Turkish Lira in accordance with the Banking Act, Turkish Commercial Code and TurkishTax Legislation.The unconsolidated financial statements have been prepared in TL, under the historical cost conventionexcept for the financial assets and liabilities carried at fair value.

The preparation of unconsolidated financial statements in conformity with TAS requires the use of certainaccounting estimates by the Bank management to exercise its judgement on the assets and liabilities on thebalance sheet and contingent assets and liabilities as of the balance sheet date. These estimates are beingreviewed regularly and, when necessary, suitable corrections are made and the effects of these correctionsare explained in the related notes and reflected to the income statement. Assumptions and estimates thatare used in the preparation of the accompanying financial statements are explained in the following relateddisclosures.

Additional paragraph for convenience translation to EnglishThe differences between accounting principles, as described in these preceding paragraphs and accountingprinciples generally accepted in countries in which unconsolidated financial statements are to be distributedand International Financial Reporting Standards (“IFRS”) have not been quantified in these unconsolidatedfinancial statements. Accordingly, these unconsolidated financial statements are not intended to present thefinancial position, results of operations and changes in financial position and cash flows in accordance withthe accounting principles generally accepted in such countries and IFRS.

b. Accounting policies and valuation principles applied in the preparation of unconsolidatedfinancial statements:

The accounting policies and valuation principles applied in the preparation of unconsolidated financialstatements, are determined and applied in accordance with regulations, communiqués, explanations andcirculars on accounting and financial reporting principles published by the BRSA, and in case where there isno special regulation made by the BRSA, in accordance with principles in the context of TAS and TFRS.

Public Oversight Accounting and Auditing Standards Authority (“POA”) has issued TFRS 16 ”LeasesStandard” in April 2018. The new standard eliminates the leasing of operating leases and leasing, andrequires many leases for leasing companies to be included in the balance sheet under a single model. Forleasing companies, the recognition has not changed substantially and the difference between operatingleases and financial leasing continues. TFRS 16 replaces TAS 17 and TAS 17 and is effective for annualperiods beginning on or after 1 January 2019.



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I. Explanations on basis of presentation (continued):

Lessees have the exception of not applying this standard to short-term rentals (leases with a rental period of12 months or less) or to leases where the underlying asset is of low value (eg personal computers, someoffice equipment, etc.). At the date when the leasing is actually started, the lessee measures the leasingliability on the present value of the lease payments that were not paid at that date (leasing liability) anddepreciates the existence of the right of use related to the same date as the same date. Lease payments arediscounted using this rate if the implied profit share rate in the lease can be easily determined. If the ratio isnot easily determined, the lessee shall use the lessee's alternative borrowing profit share rate. The lesseeshould record the profit share expense on the lease liability and the depreciation expense of the right to useseparately

The lessee shall re-measure the lease obligation if certain events occur (for example, changes in the leaseterm, future rental payments vary due to changes in a certain index or rate, etc.). In this case, the lesseeshall record the restatement effect of the lease obligation as a correction on the right to use.

The Bank applies TFRS 16 with a simplified retrospective approach. As of the date of transition, the Bankhas benefited from the facilitation practices for leases and low-value rentals that will be completed within aperiod of 12 months or less.

Effects on Financial Position Tables as of 1 January 2019 (increase / decrease)AssestsTangible Fixed Assets (Right To Use) 95.294Prepaid Expenses 2.133

LiabilitiesRental Liability 193.243

Equity Net Effect -

“TFRS 15 Revenue from Contracts with Customers” and other new TFRS/TAS amendments in effect hasbeen assessed on the accounting policies, financial position and performance of the Bank.

The accounting policies and valuation principles related with current and prior period are explained in NotesII to XXIII below.

The preparation of unconsolidated financial statements in conformity with TFRS requires the use of certaincritical accounting estimates by the Participation Bank management to exercise its judgment on the assetsand liabilities of the balance sheet and contingent matters as of the balance sheet date. These estimates,which include the fair value calculations of financial instruments and impairments of financial assets are beingreviewed regularly and, when necessary, suitable corrections are made and the effects of these correctionsare reflected to the income statement.

II. Explanations on strategy of using financial instruments and foreign currency transactions:

The Bank creates its strategies on financial instruments considering its sources of financing. The mainfinancing sources consist of current and profit sharing accounts. Other than current and profit sharingaccounts, the Bank’s most important funding sources are its equity and borrowings from financial institutions.The Bank sustains its liquidity to cover matured liabilities by holding adequate level of cash and cashequivalents.



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II. Explanations on strategy of using financial instruments and foreign currency transactions(continued):

The Bank’s transactions in foreign currencies are accounted in accordance with the TAS 21 “AccountingStandard on the Effect of Changes in Foreign Currency Rates”, and converted with the exchange rate rulingat the transaction date into Turkish Lira. Foreign currency assets and liabilities have been translated intoTurkish Lira at the rate of exchange rates ruling at the balance sheet date announced by Central Bank ofRepublic of Turkey “CBRT”. Gains or losses arising from foreign currency transactions and translation offoreign currency assets and liabilities are reflected in the income statement as foreign exchange gain or loss.

The portion of risk belonging to the profit sharing accounts for foreign currency non-performing loans whichwere funded from these accounts is evaluated at current foreign exchange rates. The portion of provisionsprovided for such loans belonging to profit sharing accounts are also evaluated at current foreign exchangerates.

The foreign currency exchange differences resulting from the translation of debt securities issued andmonetary financial assets into Turkish Lira are included in the income statement.

Precious metals accounted under assets and liabilities which do not have fixed maturity are converted intoTurkish Lira by using the weighted average price at the balance sheet date announced by the Bank andresulting evaluation differences are reflected as foreign exchange gain or loss.

There are no foreign currency differences capitalized by the Bank.

III. Explanations on investments in associates and subsidiaries:

Associates and Entities Under Common Control are recognized in the framework of TFRS 9 “FinancialInstruments: Turkish Financial Reporting Standards” in accordance with TAS 27 “Individual FinancialStatements” and TAS 28 “Investments in Subsidiaries and Associates” standards while subsidiaries arerecognized based on cost principle.

IV. Explanations on forward, option contracts and derivative instruments:

The derivative financial instruments of the Bank consist of forward foreign currency and swap agreements.The Bank records the spot foreign currency transactions in asset purchase and sale commitments.

The Bank’s derivative instruments are classified, measured and accounted in accordance with "TFRS 9Financial Instruments”. Derivative instruments are initially recognized at fair value and subsequentlymeasured at fair value.

The liabilities and receivables arising from the derivative transactions are recorded as off-balance sheet itemsat their contractual values. The derivative transactions are accounted for at fair value subsequent to initialrecognition and are presented in the “Derivative Financial Assets at Fair Value Through Profit or Loss”,“Derivative Financial Assets at Fair Value Through Other Comprehensive Income” or “Derivative FinancialLiabilities at Fair Value Through Profit or Loss” and “Derivative Financial Liabilities at Fair Value ThroughOther Comprehensive Income” items of the balance sheet depending on the resulting positive or negativeamounts of the computed value. These amounts on the balance sheet present the fair values of derivativetransactions.

Since the Bank does not fulfill all the necessary conditions for the derivative transactions to be recognizedas an item in hedge accounting, gain or loss is realized under profit or loss for the related transactions.



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V. Explanations on profit share income and expenses:

Profit share income

Profit share income is accounted in accordance with the internal rate of return method, which is equal to thenet present value of the future cash flows of the financial asset determined in TFRS 9 and reflected to theaccrual basis.

The Bank has begun to calculate accrual for non-performing loans as of January 1, 2018.

Profit share expense

The Bank records profit share expenses on accrual basis. The profit share expense accrual calculated inaccordance with the unit value method on profit sharing accounts has been included under the account‘Funds Collected’ in the balance sheet.

VI. Explanations on fees, commission income and expenses:

Fees and commissions are accounted for in accordance with “TFRS 15 Revenue from Contracts withCustomers” except for fees and commissions that are integral part of the effective profit share rates offinancial instruments measured at amortized costs.

In accordance with provisions of TAS, the portion of the commission and fees which are related to thereporting period and collected in advance for cash and non-cash loans granted is reflected to the incomestatement by using the internal rate of return method and straight-line methods, respectively over thecommission period of the related loan, respectively. Fees and commissions collected in advance, which arerelated to the future periods are recorded under the account ‘Unearned Revenues’ and included in ‘OtherLiabilities’ in the balance sheet. The commission received from cash loans corresponding to the currentperiod is presented in “Profit Share on Loans” in the income statement.

VII. Explanations on financial assets and liabilities:

The Bank categorizes its financial assets as “Fair Value Through Profit or Loss”, “Fair Value Through OtherComprehensive Income” or “Measured at Amortized Cost”. Such financial assets are recognized orderecognized according to TFRS 9 Financial Instruments Part three Issued for classification andmeasurement of the financial instruments published in the Official Gazette No. 29953 dated 19 January 2017by the Public Oversight Accounting and Auditing Standards Authority. Financial assets are measured at fairvalue at initial recognition in the financial statements. During the initial recognition of financial assets otherthan "Financial Assets at Fair Value Through Profit or Loss", transaction costs are added to fair value ordeducted from fair value.

The Bank recognizes a financial asset into financial statements when it becomes a party to the contractualterms of a financial instrument. During the first recognition of a financial asset into the financial statements,business model determined by the Bank management and the nature of contractual cash flows of the financialasset are taken into consideration. When the business model determined by the Bank's management ischanged, all affected financial assets are reclassified and this reclassification is applied prospectively. Insuch cases, no adjustments is made to earnings, losses or profit share that were previously recorded in thefinancial statements.

Financial assets at fair value through profit or loss:

Financial assets at fair value through profit or loss classified under two main categories as "DerivativeFinancial Assets" and "Financial assets at fair value through profit or loss". Financial assets classified in thisgroup are taken into the financial statements with cost values that reflect their fair values and are shown inthe financial statements at fair value in the following periods. The resulting valuation gain and loss areincluded in the profit / loss accounts.



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VII. Explanations on financial assets (continued):

Financial assets valued at fair value through other comprehensive income:

Financial assets at fair value through other comprehensive income are initially recognized at cost; whichreflects their fair values; including the transaction costs. After the initial recognition, financial assets valuedat fair value through other comprehensive income are measured at fair value and the unrealized gains orlosses resulting from the difference between the amortized cost and the fair value is recorded in “accumulatedother comprehensive income or expense to be reclassified through profit or loss” under equity. In case of adisposal of financial assets valued at fair value through profit and loss, increases/decreases which have beenrecorded in the Accumulated other comprehensive income or expense to be reclassified through profit orloss under the equity is transferred to income statement. Financial assets at fair value through othercomprehensive income which do not have a quoted market price in an active market and whose fair valuescan not be reliably measured are carried at cost, less impairment, if any.

Financial assets and liabilities measured at amortized cost:

Financial assets that are held for collection of contractual cash flows where those cash flows represent solelypayments of principal and profit share are classified as financial assets measured at amortized cost. Financialassets and liabilities measured at amortized cost are initially recognized at cost including the transactioncosts which reflect the fair value of those instruments and subsequently recognized at amortized cost byusing the internal rate of return. Profit share income and profit share expense obtained from financial assetsand liabilities measured at amortized cost are accounted in the income statement.

As of September 30, 2019 the Bank has an subordinated debt that the creditor is Türkiye Varlık FonuYönetimi A.Ş., with TRT240424F22 ISIN code, with initial date 24 April 2019, with at least five-year repaymentoption and with no fixed term, amounting to EUR 100.000.000, the financial liability is recorded at fair valueand the difference between cost value and fair value is accounted under “Other Capital Reserves” inshareholders’ equity at the date of initial acquisition (Section 5 Part 2 Footnote 10).

In addition, government securities with no fixed term and with 0% return are classified as ‘financial assetscarried at amortized cost’ and recorded to the balance sheet with the reduced amount of governmentsecurities’ rate of return, in accordance with the decision taken by the Bank's Management. The differencebetween the initial acquisition date cost value and the reduced amount is recorded under ‘Other CapitalReserves’ account in shareholders’ equity (Section 5 Part 1 Footnote 6).

VIII. Explanations on expected credit losses:

As of 1 January 2018, the Bank recognizes a loss allowance for expected credit losses on financial assetsand loans measured at amortized cost, financial assets measured at fair value through other comprehensiveincome, loan commitments and financial guarantee contracts not measured at fair value through profit/lossbased on TFRS 9 “Communiqué Related to Principles and Procedures on Determining the Qualifications ofBanks’ Loans and Other Receivables and the Provision for These Loans and Other Receivables” and theregulation published in the Official Gazette no. 29750 dated 22 June 2016 in connection with “Proceduresand Principals regarding Classification of Loans and Allowances Allocated for Such Loans” effective from 1January 2018. At each reporting date, the Bank shall assess whether the credit risk on a financial instrumenthas increased significantly since initial recognition. The Bank considers the changes in the default risk offinancial instrument, when making the assessment.

The Bank classifies the financial asset as stage 1 if the credit risk of a financial instrument does not materiallyincrease since initial recognition to the financial statements and measures the amount of the impairment onthe financial asset equal to 12-month expected credit losses at each reporting date. The purpose ofimpairment is to recognize lifetime expected credit losses in the financial statement for the credit risk of allfinancial instruments those materially increase since initial recognition to the financial statements withconsidering all supportable information individually or collectively including reasonable and prospectiveinformation.

VIII. Explanations on expected credit losses (continued):



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The expected credit loss estimates are required to be unbiased, probability-weighted and includesinformation about past events, current conditions, and forecasts of future economic conditions. Thesefinancial assets are divided into three categories depending on the increase in credit risk observed since theirinitial prospective information:

Stage 1:

For the financial assets at initial recognition or that do not have a significant increase in credit risk since initialrecognition. Impairment for credit risk is recorded in the amount of 12-month expected credit losses. Thetwelve-month expected credit loss is calculated on the basis of a default estimate of twelve months followingthe reporting date. These expected twelve-month Probability of Defaults (PD) are applied to an estimatedamount of default and this expected twelve-month default is multiplied by the LGD.

Stage 2:

As of the reporting date of the financial asset, in the event of a significant increase in credit risk since initialrecognition, the financial asset is transferred to Stage 2. Impairment for credit risk is determined on the basisof the instrument’s lifetime expected credit losses. As of the reporting date, lifetime expected credit loss of asignificant increase in credit risk is multiplied with Probability of Default and Loss Given Default.

Stage 3:

Financial assets considered as impaired at the reporting date are classified as stage 3. The probability ofdefault is taken into account as 100% in the calculation of impairment provision and Bank accounts lifetimeexpected credit losses. The Bank takes into consideration delay of over 90 days criteria in the determinationof the impairment.

Calculation of expected credit losses

The Bank measures expected credit losses with the reasonable, objective and supportable information basedon a probability-weighted including estimations about past events, current conditions as of the reporting date,without undue cost or effort. The Bank has not developed an internal model for estimating these riskparameters due to insufficient historical data for modeling. In ECL calculations, the Bank consider sectoralaverage NPL ratio as PD with reasonable approach and due to macroeconomic factors, PD can be changed.For LGD, the Bank uses a 45% ratio in compliance with the basic IDD approach in Communiqué Related toPrinciples of the amount credit risk calculated with the Internal Ratings Based Approach published by theBRSA with a reasonable approach. The calculation of expected credit losses consists of three mainparameters: Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD).

Probability of Default (PD)

PD represents the likelihood of a default over a specified time period. A 12-month PD calculates the likelihoodof default determined for the next 12 months and a lifetime PD calculates the probability to occur during theexpected life of the loan.

Loss Given Default (LGD)

LGD represents an estimate of the loss at the time of a potential default occurring during the life of a financialinstrument. LGD is determined as 45% in accordance with Basel criterias and is taken into consideration as100% at the end of the 24-month period starting from 45% on the date of the financial instrument's legalfollow-up.

VIII. Explanations on expected credit losses (continued):



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Exposure at Default (EAD)

EAD represents an estimate of the exposure to credit risk at the time of a potential default. EAD consists ofexpected principal amount and profit share payments. The calculation depends on the nature of receivable(cash, non-cash etc.) and the stage of the receivable.

Calculating the Expected Loss Period

Lifetime ECL is calculated by taking into consideration the period during which the Bank will be exposed tocredit risk.

Significant increase in credit risk

The Bank makes qualitative assessments regarding assessment of significant increase in credit risk offinancial assets to be classified as stage 2 (Significant Increase in Credit Risk).The Participation Bank classifies the financial asset as Stage 2 (Significant Increase in Credit Risk) whereany of the following conditions are satisfied as a result of a qualitative assessment:

- Loans overdue more than 30 days as of the reporting date- Loans classified as watchlist- When there is a change in the payment plan due to restructuring- At least two of the conditions occur; loans overdue more than 3 days, having indemnified liabilities by theBank, having NPL amount in the incorporated registration or having bad cheque,- At least three of the conditions occur; loans overdue more than 15 days, having indemnified liabilities bythe Bank, having NPL amount in the incorporated registration, having accrual, indemnity or restructured loansabove TL 20 in the incorporated registration, execution for debt or e-distraint, having bad cheque.

IX. Explanations on offsetting of financial instruments:

Financial instruments are offset when the Bank has a legally enforceable right to net off the recognizedamounts, and there is an intention to settle on net basis or realize the asset and settle the liabilitysimultaneously.

There are no such offset of financial assets and liabilities.

X. Explanations on sale and repurchase agreements and lending of securities:

Securities subject to repurchase agreement are classified as at “fair value through profit or loss”, “fair valuethrough other comprehensive income” or “amortised cost” according to the investment purposes of the Bankand measured according to the portfolio to which they belong. Funds obtained from the related agreementsare accounted under “Borrowings from Money Markets” in liabilities and the difference between the sale andrepurchase price is accrued over the life of the agreements using the internal rate of return method. Profitshare expense on such transactions is recorded under “Profit Share Expense on Money Market Borrowings”in the income statement.

The Bank has no securities lending transactions.



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XI. Explanations on assets held for sale and discontinued operations and liabilities related to theseassets:

Assets held for sale (or disposal group) in accordance with TFRS 5 (“Assets Held for Sale and DiscontinuedOperations”) are measured at the lower of the carrying amount of assets and fair value less any cost to beincurred for disposal. In order to classify an asset as held for sale, the possibility of sale should be highlyprobable and the asset (or disposal group) should be available for immediate sale in its present condition.Highly saleable condition requires a plan designed by an appropriate level of management regarding the saleof the asset to be disposed of together with an active program for the determination of buyers as well as forthe completion of the plan. Also the asset shall be actively marketed in conformity with its fair value. Inaddition, the sale is expected to be recognized as a completed sale within one year after the classificationdate and the necessary transactions and procedures to complete the plan should demonstrate the fact thatthere is remote possibility of making any significant changes in the plan or cancellation of the plan.

A discontinued operation is a part of the Bank’s business which has been disposed of or classified as held-for-sale. The operating results of the discontinued operations are disclosed separately in the incomestatement. The Bank has no discontinued operations.

XII. Explanations on goodwill and other intangible assets:

Goodwill and other intangible assets are recorded at cost in accordance with TAS 38 “Turkish AccountingStandards for Intangible Assets”. As of the balance sheet date, there is no goodwill in the financial statementsof the Bank. The Bank’s intangible assets consist of softwares and intangible rights.

Intangible assets purchased after this date have been recorded at their historical costs. Intangible assets areamortized by the Bank over their estimated economic useful lives in equal amounts on a straight-line basis.Useful lives of the Bank’s software have been determined as 3 years and other intangible assets’ useful liveshave been determined as 5 years.

If there is objective evidence of impairment, the asset’s recoverable amount is estimated in accordance withthe TAS 36 “Turkish Accounting Standard for Impairment of Assets” and if the recoverable amount is lessthan the carrying value of the related asset, a provision for impairment loss is provided.

XIII. Explanations on tangible assets:

The tangible assets purchased after this date are recorded at their historical costs. Tangible assets arerecorded at cost less accumulated depreciation and provision for impairment, if any in compliance with theTAS 16 “Turkish Accounting Standards for Tangible Assets” in the financial statements.

There are no restrictions such as pledges, mortgages or any other restriction on tangible assets.

There are no changes in the accounting estimates which are expected to have an impact in the current orsubsequent periods.

Depreciation is calculated on a straight-line basis. Depreciation rates used are determined by consideringthe estimated economic useful life of the assets. The annual rates used are as follows:

Depreciable Asset Useful Life %Office equipments 3 - 10 years 10 - 33Safe-deposit boxes 50 years 2Operational lease improvement costs Term of Lease - 5 years 20Other tangible assets 3 - 25 years 4-33Furniture, fixture 3 - 10 years 10 - 33Leased assets 1 - 15 years 7 - 100



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XIII. Explanations on tangible assets (continued):

The depreciation of an asset held for a period less than a full financial year is calculated as a proportion ofthe full year depreciation charge from the date of acquisition to the financial year-end. Leaseholdimprovements are depreciated over their estimated economic useful lives in equal amounts. The estimatedeconomic useful lives cannot exceed the leasing period. In cases where the leasing period is not certain, theuseful life is determined as five years.

If there is an indication for impairment, the Bank estimates the recoverable amount of the tangible asset inaccordance with TAS 36 “Turkish Accounting Standard for Impairment of Assets” and if the recoverableamount is less than its carrying value, provides for an impairment loss.

Gain or loss resulting from disposals of the tangible assets is calculated as the difference between the netproceeds from the sale and the net book value of the related asset.

The repair and maintenance costs of the tangible assets are capitalized, if the expenditure increases theeconomic life of the asset, other repair and maintenance costs are expensed.

XIV. Explanations on leasing transactions:

Transactions as a lessee

Leases where the terms of the lease transfer substantially all the risks and rewards of ownership to the lesseeare classified as finance leases and other leases are classified as operational leases.

Assets acquired under finance lease contracts are recorded both as an asset and a liability at the beginningdate of the lease. The basis for the determination of the balances recorded in the balance sheet as assetand liability is the lower of fair value of the leased asset at the inception of the lease and the present valueof the lease payments. Finance charges arising from lease contracts are expensed in the related periodstaking into consideration the internal rate of return over the period of the lease.

Assets acquired under finance lease contracts are depreciated over their useful lives and impairmentprovision is provided in case a decrease in recoverable amount has been determined.

The prepaid lease payments made under operational leases are charged to income statement on a straight-line basis over the period of the lease.

Transactions as a lessor

The Bank, as a participation bank, acts as a lessor in finance leasing transactions. The Bank presents financeleased assets as a receivable equal to the net investment in the lease. Finance income is based on a patternreflecting a constant periodic rate of return on the net investment outstanding.

Public Oversight Accounting and Auditing Standards Authority (“POA”) has issued TFRS 16 ”LeasesStandard” in April 2018. The new standard eliminates the leasing of operating leases and leasing, andrequires many leases for leasing companies to be included in the balance sheet under a single model. Forleasing companies, the recognition has not changed substantially and the difference between operatingleases and financial leasing continues. IFRS 16 replaces TAS 17 and TAS 17 and is effective for annualperiods beginning on or after 1 January 2019.

Lessees have the exception of not applying this standard to short-term rentals (leases with a rental period of12 months or less) or to leases where the underlying asset is of low value (eg personal computers, someoffice equipment, etc.). At the date when the leasing is actually started, the lessee measures the leasingliability on the present value of the lease payments that were not paid at that date (leasing liability) anddepreciates the existence of the right of use related to the same date as the same date. Lease payments arediscounted using this rate if the implied profit share rate in the lease can be easily determined. If the ratio isnot easily determined, the lessee shall use the lessee's alternative borrowing profit share rate. The lesseeshould record the profit share expense on the lease liability and the depreciation expense of the right to useseparately.



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XIV. Explanations on leasing transactions (continued):

The lessee shall re-measure the lease obligation if certain events occur (for example, changes in the leaseterm, future rental payments vary due to changes in a certain index or rate, etc.). In this case, the lesseeshall record the restatement effect of the lease obligation as a correction on the right to use.

XV. Explanations on provisions and contingent liabilities:

Provisions and contingent liabilities, excluding the general and specific provisions for impairment on loansand other receivables, are accounted in accordance with TAS 37: ‘‘Turkish Accounting Standard forProvisions, Contingent Liabilities and Contingent Assets’’.

Provisions are recognized when the Bank has a present legal or constructive obligation as a result of pastevents, it is probable that an outflow of resources embodying economic benefits will be required to settle theobligation, and a reliable estimate of the amount of the obligation can be made. A provision for contingentliabilities arising from past events should be recognized in the same period of occurrence in accordance withthe cut-off principle.

A liability is recognized as a contingent liability where a possible obligation that arises from past events andwhose existence will be confirmed only by the occurrence or non-occurrence of more than one events notwholly within the control of the Bank; or a present obligation that arises from past events but it is not probablethat an outflow of resources embodying economic benefits will be required to settle the obligation; or theamount of the obligation cannot be measured with sufficient reliability and disclosed in the footnotes.

XVI. Explanations on contingent assets:

Contingent assets usually arise from unplanned or other unexpected events that give rise to the possibilityof an inflow of economic benefits to the entity. Contingent assets are not recognized in financial statementssince this may result in the recognition of income that may never be realized. Contingent assets are disclosedwhere an inflow of economic benefits is probable. Contingent assets are assessed continually to ensure thatdevelopments are appropriately reflected in the financial statements. If it has become virtually certain that aninflow of economic benefits will arise, the asset and the related income are recognized in the financialstatements in which the change occurs.

XVII. Explanations on liabilities regarding employee rights:

i) Defined benefit plans:

Provision for employee severance benefits has been accounted for in accordance with TAS 19 “EmployeeBenefits”.

In accordance with the existing social legislation in Turkey, the Bank is required to make lump-sumtermination indemnities including retirement and notice payments to each employee whose employment isterminated due to resignation or for reasons other than misconduct. The retirement pay is calculated for everyworking year within the Bank over salary for 30 days or the official ceiling amount per year of employmentand the notice pay is calculated for the relevant notice period time as determined based on the number ofyears worked for the Bank.

The Bank has reflected the retirement pay liability amount in the accompanying financial statements.According to TAS 19, the Bank recognizes all actuarial gains and losses immediately through othercomprehensive income.

Provision for the employees’ unused vacations has been booked in accordance with TAS 19 and reflectedto the financial statements.

There are no foundations, pension funds or similar associations of which the employees are members.

As of September 30, 2019, the Bank’s actuarial loss amounts is 1.189 TL (September 30, 2018: None).



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XVII. Explanations on liabilities regarding employee rights (continued):

ii) Defined contribution plans:

The Bank pays defined contribution plans to publicly administered Social Security Funds for its employees.The Bank has no further payment obligations other than this contribution share. The contributions arerecognized as personnel expenses when they accrue.

iii) Short term benefits to employees:

The Bank makes provisions for other employee benefits (accumulated leaves, premiums and in accordancewith article 31 of articles of incorporation of the Bank, dividend premium, which is equivalent to 9% of netprofit of year of the Bank, in order to be distributed to the personnel, limited to three months gross wage ofthe related personnel in scope of principles determined by Board of Directors) in its financial statementsbased on undiscounted amounts, which are anticipated to be paid in return for services provided by theemployees throughout an accounting period in accordance with TAS 19.

XVIII. Explanations on taxation:

Current tax:

The Bank is subject to tax laws and legislation effective in Turkey.

In accordance with the Corporate Tax Law numbered 5520 published in the Official Gazette numbered 26205dated June 21, 2006, the corporation tax rate effective from January 1, 2006 is 20%. In accordance with theClause 91 of Corporate Tax Law numbered 7061 published in the Official Gazette numbered 30261 datedDecember 5, 2017, current tax rate is increased from 20% to 22% for corporations in 2018, 2019 and 2020taxation periods.

Dividends paid to the resident institutions are not subject to withholding tax. Withholding tax rate on thedividend payments other than these is 15%. Appropriation of the retained earnings to capital is not consideredas profit distribution and accordingly is not subject to withholding tax.

50% of gain from the sale of real estate which are held more than two years in the assets of the Bank and75% of gain on disposal of subsidiary shares which are held for more than two years in the assets of theBank are exemption from tax according to Corporate Tax Law in condition with allocating into a specific fundaccount in the Bank’s liabilities for five years. The amount received from the private fund account is taxed incase of transfer or distribution of the amount to another account in any way other than addition to the capital.

Income generated by the transfer of properties, share certificates of subsidiaries, founders’ shares, preferredshares and preemptive rights owned by corporations under legal follow-up together with their guarantors andmortgagers, which are transferred to banks due to their debts and used for winding up the debts and 50% ofthe profit generated by sales of above-mentioned properties and 75% of the profit generated by sales of theothers are exempt from corporation tax.

In accordance with the tax legislation, tax losses can be carried forward to offset against future taxableincome for up to five years. Tax losses cannot be carried back to offset profits from previous periods.

In Turkey, there is no procedure for a final and definite agreement on tax assessments. Companies file theirtax returns to their tax offices by the end of 25th of the fourth month following the close of the accountingperiod to which they relate. With the Circular of the Tax Procedural Law No. 115 of 29 March 2019; the periodof issuance of the corporate tax declaration is extended until evening of the last day of April until a newdetermination is made. Tax returns are open for five years from the beginning of the year that follows thedate of filing during which time the tax authorities have the right to audit tax returns, and the relatedaccounting records on which they are based, and may issue reassessments based on their findings andcarry out sectorial investigations.



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XVIII. Explanations on taxation (continued):

Institutions tax rate is applied to the income of the corporation's commercial income in the net corporateincome which will be deducted as deduction according to the tax law and deduction of the exemptions anddiscounts included in the tax laws. The corporation tax is declared and paid until the end of the fourth monthfollowing the end of the related year.

Companies calculate their advance tax at the rate of 20% (22% for taxation periods of 2018, 2019 and 2020)on their quarterly financial profits, declare until the 14th day of the second month following that period andpay until the evening of the seventeenth day. With the Circular of the Tax Procedural Law No. 115 of 29March 2019,The period of issuance of the tax declaration has been extended until the seventeenth day ofthe second month following the period of the provisional tax return period until the date of issuance.Theadvance tax paid belongs that year and is offset from the corporation tax that will be calculated on the taxdeclaration of the companies to be given in the following year. If the advance tax paid amount remains afteroffsetting, this amount could be either returned as cash or offset.

Deferred tax:

The Bank calculates and accounts for deferred income taxes for all temporary differences arising betweenthe tax bases of assets and liabilities and their carrying amounts in these financial statements in accordancewith “Turkish Accounting Standard for Income Taxes” (“TAS 12”) and the related decrees of the BRSAconcerning income taxes. In calculating deferred tax, legalized tax rates effective as of balance sheet dateare used as per tax legislations. Deferred tax asset and liabilities are shown in the accompanying financialstatements on a net basis.

Deferred tax is calculated on the basis of the tax rates that are applicable to or are certain to have effect onthe income statement for the period in which the asset is realized or the liability is settled and recorded asincome or expense in the income statement. However, deferred tax is recognized directly in equity if the taxasset relates directly to equity in the same or different period.

The Bank makes deferred tax calculation using the related rates, considering the periods when the deferredtax assets and liabilities will be realized. Current tax payable is netted off as it relates to prepaid tax amounts.Similarly, the deferred tax liability and the obligation are offset in the financial statements.

Also, by the Banking Regulation and Supervision Agency's notice, if there is a income balance after thedeferred tax assets and clarified debt, deferred debt assets are not taken into account in the profit allocationand increased capital investments.

Deferred tax calculation has started to be measured over Stage 1 and Stage 2 expected credit loss provisionsfor The Bank's share of loans provided from participation accounts and loans provided by equity, accordingto TFRS 9 from beginning January 1, 2018.

Deferred tax liabilities are recognized for all temporary differences whereas deferred tax assets calculatedfrom deductible temporary differences are only recognized if it’s highly probable that these will in the futurecreate taxable profit.

XIX. Additional explanations on borrowings:

The Bank generates funds from domestically and internationally resident people and institutions by usingdebt instruments such as syndication, borrowing and the debt certificates issued by the asset leasingcompany. Funds obtained via the debt certificates issued by the asset leasing company have been presentedunder “Funds Borrowed”. Borrowings, except for funds collected, are recognized at amortized cost using theeffective internal rate of return method in the following periods after the initial recognition.



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XX. Explanations on issued share certificates:

None.

XXI. Explanations on acceptances and availed drafts:

Acceptances and availed drafts are realized simultaneously with the payment dates of the customers andthey are presented as commitments in the off-balance sheet accounts.

XXII. Explanations on government grants:

As of the balance sheet date, there are no government grants received by the Bank.

XXIII. Explanations on segment reporting:

Business segment is a component of the Bank that engages in business activities from which the Bank mayearn revenues and incur expenses, whose operating results are regularly reviewed by the Bank's chiefoperating decision makers to make decisions about resources to be allocated to the segment and assess itsperformance, which and for discrete financial available.

Segment reporting is disclosed in Section Four, Note VII.



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Section four

Information on financial structure and risk management

I. Explanations on equity:

The calculation of the own funds and the capital adequacy standard ratio are performed in accordance withthe communiqués such as “Regulation Regarding the Measurement and Evaluation of Banks’ CapitalAdequacy Ratio”, and “Regulation Regarding Banks’ Shareholders’ Equity”.

The Bank’s common Equity Tier 1 Capital is TL 2.328.218 (December 31, 2018: TL 1.519.114) whichcalculated as of September 30, 2019 and the capital adequacy ratio is 15,27% (December 31, 2018: 13,60%).

a) Information about total capital items:CurrentPeriod

September30, 2019

PriorPeriod

December 31,2018

COMMON EQUITY TIER 1 CAPITALPaid-in capital following all debts in terms of claim in liquidation of the Bank 1.020.000 1.020.000Share issue premiums - -Reserves 208.309 203.309Gains recognized in equity as per TAS 40.304 -Profit 574.468 325.397

Current Period Profit 254.071 325.397Prior Period Profit 320.397 -

Shares acquired free of charge from subsidiaries, affiliates and jointly controlled partnerships and cannot be recognizedwithin profit for the period - -Common Equity Tier 1 Capital Before Deductions 1.843.081 1.548.706Deductions from Common Equity Tier 1 Capital 48.004 70.817Common Equity as per the 1st clause of Provisional Article 9 of the Regulation on the Equity of Banks - -Portion of the current and prior periods’ losses which cannot be covered through reserves and losses reflected in equity inaccordance with TAS (-) 1.189 21.480Leasehold improvements(-) 28.517 28.403Goodwill (net of related tax liability) - -Other intangibles other than mortgage-servicing rights (net of related tax liability) 18.298 20.934Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related taxliability) - -Differences are not recognized at the fair value of assets and liabilities subject to hedge of cash flow risk - -Communiqué Related to Principles of the amount credit risk calculated with the Internal Ratings Based Approach, totalexpected loss amount exceeds the total provision - -Gains arising from securitization transactions - -Unrealized gains and losses due to changes in own credit risk on fair valued liabilities - -Defined-benefit pension fund net assets - -Direct and indirect investments of the Bank in its own Common Equity - -Shares obtained contrary to the 4th clause of the 56th Article of the Law - -Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside thescope of consolidation where the Bank owns 10% or less of the issued common share capital exceeding 10% of CommonEquity of the Bank - -Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside thescope of consolidation where the Bank owns 10% or more of the issued common share capital exceeding 10% ofCommon Equity of the Bank - -Portion of mortgage servicing rights exceeding 10% of the Common Equity - -Portion of deferred tax assets based on temporary differences exceeding 10% of the Common Equity - -Amount exceeding 15% of the common equity as per the 2nd clause of the Provisional Article 2 of the Regulation on theEquity of Banks - -Excess amount arising from the net long positions of investments in common equity items of banks and financial institutionsoutside the scope of consolidation where the Bank owns 10% or more of the issued common share capital - -Excess amount arising from mortgage servicing rights - -Excess amount arising from deferred tax assets based on temporary differences - -Other items to be defined by the BRSA - -Deductions to be made from common equity due to insufficient Additional Tier I Capital or Tier II Capital - -Total Deductions From Common Equity Tier 1 Capital 48.004 70.817Total Common Equity Tier 1 Capital 1.795.077 1.477.889



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I. Explanations on equity (continued):Amount Amount

ADDITIONAL TIER 1 CAPITALPreferred Stock not Included in Common Equity and the Related Share Premiums - -Debt instruments and premiums approved by BRSA 482.621 -Debt instruments and premiums approved by BRSA (Temporary Article 4) - -Additional Tier I Capital before Deductions 482.621 -Deductions from Additional Tier I Capital - -Direct and indirect investments of the Bank in its own Additional Tier I Capital - -Investments of Bank to Banks that invest in Bank's additional equity and components of equity issued by financialinstitutions with compatible with Article 7. - -Total of Net Long Positions of the Investments in Equity Items of Unconsolidated Banks and Financial Institutions wherethe Bank owns 10% or less of the Issued Share Capital Exceeding the 10% Threshold of above Tier I Capital - -The Total of Net Long Position of the Direct or Indirect Investments in Additional Tier I Capital of Unconsolidated Banksand Financial Institutions where the Bank Owns more than 10% of the Issued Share Capital - -Other items to be defined by the BRSA - -Transition from the Core Capital to Continue to deduce Components - -Goodwill and other intangible assets and related deferred tax liabilities which will not deducted from Common Equity Tier 1capital for the purposes of the first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds (-) - -Net deferred tax asset/liability which is not deducted from Common Equity Tier 1 capital for the purposes of the sub-paragraph of the Provisional Article 2 of the Regulation on Banks’ Own Funds (-) - -Deductions to be made from common equity in the case that adequate Additional Tier I Capital or Tier II Capital is notavailable (-) - -Total Deductions From Additional Tier I Capital - -Total Additional Tier I Capital 482.621 -Total Tier I Capital (Tier I Capital=Common Equity+Additional Tier I Capital) 2.277.698 1.477.889TIER 2 CAPITALDebt instruments and share issue premiums deemed suitable by the BRSA - -Debt instruments and share issue premiums deemed suitable by BRSA(Temporary Article 4) - -Provisions (Article 8 of the Regulation on the Equity of Banks) 50.597 41.228Tier II Capital Before Deductions 50.597 41.228Deductions From Tier II Capital - -Direct and indirect investments of the Bank on its own Tier II Capital (-) - -Investments of Bank to Banks that invest on Bank's Tier 2 and components of equity issued by financial institutions withthe conditions declared in Article 8. - -Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside thescope of consolidation where the Bank owns 10% or less of the issued common share capital exceeding 10% of CommonEquity of the Bank (-) - -Portion of the total of net long positions of investments made in Additional Tier I Capital item of banks and financialinstitutions outside the scope of consolidation where the Bank owns 10% or more of the issued common share capitalexceeding 10% of Common Equity of the Bank - -Other items to be defined by the BRSA (-) - -Total Deductions from Tier II Capital - -Total Tier II Capital 50.597 41.228Total Capital (The sum of Tier I Capital and Tier II Capital) 2.328.295 1.519.117Deductions from Capital 77 3Deductions from Capital Loans granted contrary to the 50th and 51th Article of the Law - -

Net Book Values of Movables and Immovables Exceeding the Limit Defined in the Article 57, Clause 1 of the Banking Lawand the Assets Acquired against Overdue Receivables and Held for Sale but Retained more than Five Years - -Other items to be defined by the BRSA 77 3Regulatory Adjustments which will be deducted from Total Capital during the transition period - -The Sum of net long positions of investments (the portion which exceeds the %10 of Banks Common Equity) in the capitalof banking, financial and insurance entities that are outside the scope of regulatory consolidation, where the bank doesnot own more than 10% of the issued common share capital of the entity which will not deducted from Common EquityTier 1 capital, Additional Tier 1 capital, Tier 2 capital for the purposes of the first sub-paragraph of the Provisional Article2 of the Regulation on Banks’ Own Funds - -The Sum of net long positions of investments in the Additional Tier 1 capital and Tier 2 capital of banking, financial andinsurance entities that are outside the scope of regulatory consolidation, where the bank does not own more than 10% ofthe issued common share capital of the entity which will not deducted from Common Equity Tier 1 capital, Additional Tier1 capital, Tier 2 capital for the purposes of the first sub-paragraph of the Provisional Article 2 of the Regulation on Banks’Own Funds - -The Sum of net long positions of investments in the common stock of banking, financial and insurance entities that areoutside the scope of regulatory consolidation, where the bank does not own more than 10% of the issued common sharecapital of the entity, mortgage servicing rights, deferred tax assets arising from temporary differences which will notdeducted from Common Equity Tier 1 capital for the purposes of the first sub-paragraph of the Provisional Article 2 of theRegulation on Banks’ Own Funds - -



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I. Explanations on equity (continued):Amount Amount

TOTAL CAPITALTotal Capital (The sum of Tier 1 capital and Tier 2 capital) 2.328.218 1.519.114Total Risk Weighted Amounts 15.246.071 11.167.634

CAPITAL ADEQUACY RATIOS

Core Capital Adequacy Ratio (%) 11,77 13,23Tier 1 Capital Adequacy Ratio (%) 14,94 13,23Capital Adequacy Ratio (%) (*) 15,27 13,60BUFFERSTotal buffer requirement (%) 2,50 1,875Capital conservation buffer requirement (%) 2,50 1,875Bank specific counter-cyclical buffer requirement (%) - -The ratio of Additional Common Equity Tier 1 capital which will be calculated by the first paragraph of the Article 4 ofRegulation on Capital Conservation and Countercyclical Capital buffers to Risk Weighted Assets - -Total buffer requirement (%) 7,27 5,60Amounts below the Excess Limits as per the Deduction Principles - -Portion of the total of net long positions of investments in equity items of unconsolidated banks and financial institutionswhere the bank owns 10% or less of the issued share capital exceeding the 10% threshold of above Tier I capital - -Portion of the total of investments in equity items of unconsolidated banks and financial institutions where the bank owns10% or less of the issued share capital exceeding the 10% threshold of above Tier I capital - -

Amount arising from mortgage servicing rights - -Amount arising from deferred tax assets based on temporary differences 37.141 37.213

Limits related to provisions considered in Tier II calculation - -General provisions for standard based receivables (before ten thousand twenty five limitation) 50.597 41.228Up to 1.25% of total risk-weighted amount of general reserves for receivables where the standard approach used 50.597 41.228Excess amount of total provision amount to credit risk Amount of the Internal Ratings Based Approach in accordance withthe Communiqué on the Calculation - -Excess amount of total provision amount to &0,6 of risk weighted receivables of credit risk Amount of the Internal RatingsBased Approach in accordance with the Communiqué on the Calculation - -Debt instruments subjected to Article 4 (to be implemented between January 1, 2018 and January 1, 2022) - -Upper limit for Additional Tier I Capital subjected to temporary Article 4 - -Amounts Excess the Limits of Additional Tier I Capital subjected to temporary Article 4 - -Upper limit for Additional Tier II Capital subjected to temporary Article 4 - -Amounts Excess the Limits of Additional Tier II Capital subjected to temporary Article 4 - -



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I. Explanations consolidated on equity (continued):

b) Information on debt instruments to be included in equity calculation

Issuer Türkiye Varlık Fonu Yönetimi A.Ş.

Unique Identifier (CUSIP, ISIN etc.) TRT240424F22

Governing Law(s) of the InstrumentRegulation on Banks “Equity Communiqué onPrinciples Regarding Borrowing Instrumentsto be Included in Banks'” Equity Calculation

Special Consideration in the Calculation of Equity

As of January 1, 2015 consideration to be subject to a 10% reduction application status

Eligible at Unconsolidated/Consolidated Unconsolidated/Consolidated

Instrument Type Subordinated Loan

Amount recognized in regulatory capital (as of most recent reporting date – Million TL) 494

Par Value of Instrument (Million TL) 618

Accounting Classification 3470001

Original date of Issuance 24/04/2019

Perpetual or dated Undated

Initial maturity 24/04/2019

Issuer call subject to prior supervisory (BRSA) approval YES

Optional call date, contingent call dates and redemption amount 24/04/2024 and after, TL 655 Million

Subsequent call dates 24/04/2024 and after

Profit Share/Dividends *

Fixed or floating profit share/dividend -

Profit share rate and any related index -

Existence of a dividend stopper -

Fully discretionary, partially discretionary or mandatory -

Existence of step up or other incentive to redeem -

Noncumulative or cumulative -

Convertible or Non-convertible

If convertible, conversion trigger -

If convertible, fully or partially -

If convertible, conversion rate -

If convertible, mandatory or optional conversion -

If convertible, specify instrument type convertible into -

If convertible, specify issuer of instrument it converts into -

Write-down feature

If write-down, write-down trigger(s)In case of the ratio of core capital adequacyratio or consolidated core capital ratio fallbelow 5,125 percent

If write-down, full or partial Yes

If write down, permanent or temporary Temporary

If temporary write-down, description of write-up mechanism Value increase after temporary reduction ispossible

Position in subordination hierarchy in liquidation (specify instrument type immediately senior to instrument)

i. After payments within the scope of priorityliablities,ii. Equal rank without preference (pari pasu)among themselves and with all other co-liabilities and,iii. Low obligations before all payments.

In compliance with article number 7 and 8 of “Own fund regulation” In compliance with article number 7

Details of incompliances with article number 7 and 8 of “Own fund regulation” In compliance with article number 7



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II. Explanations on currency risk:

Foreign currency risk arises from the Bank’s possible exposure to the changes in foreign currencies.

a) The Bank is exposed to currency risks as a market risk and pay attention to keep at a minimum levelby avoiding to keep any positions. The currency risk and the calculation of value at risk method aremonitored on a daily basis. Net foreign currency position / shareholders’ equity ratio is also controlledperiodically. All foreign currency assets, liabilities and foreign currency forward transactions are takeninto consideration while capital requirement to be employed for foreign currency risk is calculated.Standard Method used in legal reporting and value at market risk is calculated on a monthly basis.

b) The Bank does not have any derivative financial instruments held for hedging purposes.

c) TL resources are used in TL and foreign currency resources are used in related currencies withoutcausing any currency inconsistency in the use of loans. Due to uncertainty and volatility that may arisein the markets, foreign currency position limit that can be formed for strategic purposes is limited andmonitored.

d) Foreign exchange buying rates of the last five working days before the balance sheet date as publiclyannounced by the Bank are as follows:

USD EUR

As of September 30, 2019 - Balance sheet evaluation rate 5,6591 6,1836As of September 27, 2019 5,6659 6,1982As of September 26, 2019 5,6882 6,2544As of September 25, 2019 5,6743 6,2381As of September 24, 2019 5,7183 6,2819As of September 23, 2019 5,6889 6,2847

e) The simple arithmetical average of the major foreign exchange buying rates of the Bank for the thirtydays before the balance sheet date is full TL 5,7066 for 1 USD (December 2018 : full TL 5,3061), fullTL 6,2894 for 1 EUR (December 2018 : full TL 6,0387).

Foreign currency sensitivity:

The Bank is mainly exposed to EUR and USD currency risks.

The following table details the Bank’s sensitivity to a 10% change in the USD and EURO rates. A negativeamount indicates a decrease effect in profit/loss or equity of the 10% value change of USD and EUR againstTL.

% Change inforeign

currency rate Effect on profit / loss (*) Effect on equity (*)September 30,

2019December 31, 2018 September 30,

2019December 31, 2018

USD %10 1.115 4.385 (68) 380EURO %10 (1.511) (2.288) (1.462) (363)(*) The effect of 10% decrease on the currencies above against the TL will be the same amount but adverse effect at the profit and

loss as above.



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II. Explanations on currency risk (continued):

Information on currency risk of the Bank:

EURO USD Other FC Total

Current Period

AssetsCash (cash in vault, foreign currency, money in transit, chequespurchased) and balances with the Central Bank of Republic of Turkey 3.074.255 988.469 731.236 4.793.960

Banks 1.149.221 93.037 512.048 1.754.306Financial assets at fair value through profit and loss (***) 18.470 28.578 794.998 842.046Money market placements - - - -Financial Liabilities Valued At Fair Value Through Profit And Loss 1.668.608 402.074 - 2.070.682Loans and financial lease receivables (*) 4.276.269 2.830.945 - 7.107.214Subsidiaries, associates and joint ventures - - - -Financial Assets Measured at Amortized Cost 503.262 - - 503.262Derivative financial assets for hedging purposes - - - -Tangible assets - - - -Intangible assets - - - -Other assets 7.094 2.740 15 9.849

Total Assets 10.697.179 4.345.843 2.038.297 17.081.319

LiabilitiesCurrent account and funds collected from banks via participation accounts 363.507 918 337.391 701.816Other current and profit sharing accounts 5.725.033 4.607.988 1.024.278 11.357.299Money market borrowings - - - -Funds provided from other financial institutions and subordinated loans 1.205.610 368.537 - 1.574.147Marketable securities issued - - - -Miscellaneous payables - - - -Derivative financial liabilities for hedging purposes - - - -Other liabilities (****) 16.072 52.295 44.082 112.449

Total Liabilities 7.310.222 5.029.738 1.405.751 13.745.711

Net balance sheet position 3.386.957 (683.895) 632.546 3.335.608

Net off balance sheet position (3.402.065) 695.043 (577.526) (3.284.548)Derivative financial instruments assets(**) 742.791 4.055.459 639.198 5.437.448Derivative financial instruments liabilities(**) 4.144.856 3.360.416 1.216.724 8.721.996Non-cash loans 1.522.733 1.280.575 14.043 2.817.351

Prior PeriodTotal assets 6.197.697 3.999.731 945.971 11.143.399Total liabilities 4.248.499 4.823.876 839.384 9.911.759

Net balance sheet position 1.949.198 (824.145) 106.587 1.231.640

Net off balance sheet position (1.972.082) 867.993 (106.083) (1.210.172)Derivative financial instruments assets (**) 516.947 1.818.999 130.311 2.466.257Derivative financial instruments liabilities (**) 2.489.029 951.006 236.394 3.676.429Non-cash loans 1.107.161 1.024.326 16.460 2.147.947

(*) Foreign currency leasing receivables amounting to TL 92.797 (December 31, 2018: TL 75.141) and balances of foreign exchange loan and leasingreceivables amounting to TL 760.194 included in balance sheet in Turkish Lira (December 31, 2018: TL 1.397.990) are included.

(**) Derivative financial instruments include foreign currency buying commitment amounting to TL 1.006.354 (December 31, 2018: TL 295.710) andforeign currency selling commitment amounting to TL 1.041.475 in current period (December 31, 2018: TL 437.246).

(***) Income rediscounts of derivative financial instruments amounting to TL 19.159 (December 31, 2018: TL 2.096) and expense rediscounts ofexchange amounting to TL 6.555 (December 31, 2018: TL 9.053) are not included.

(****) Provisions TL 22.572 (December 31, 2018: TL 7.922) and equity TL 15.298 (December 31, 2018: TL (166)) are not considered in the calculationof currency risk.



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II. Explanations on position risk of equity securities in banking book:

The Bank has no associates and subsidiaries traded on Borsa İstanbul (December 31, 2018: None).

III. Explanations on liquidity risk management and liquidity coverage ratio:

The Bank’s liquidity risk consists of funding liquidity risk and market liquidity risk.

Funding liquidity risk explains the probability of loss occurs in case of unable to meet the Bank’s all anticipatedand unanticipated cash flow requirements without damaging daily operations or the financial position.

Market liquidity risk is the probability of loss in case of the Bank's failure to close any position or inability ofstabilize market prices due to lack of depth in the market or over fluctuations.

a) Information on risk capacity of the Bank, responsibilities and structure of liquidity riskmanagement, the Bank’s internal liquidity risk reporting, communication between the Board ofDirectors and business lines on liquidity risk strategy, policy and application:

Management of liquidity risk is shared by Audit Committee, Top Management, Asset – Liability RiskCommittee (ALCO), Treasury Department and Risk Management Department. The appropriate liquidity risklevel which is created by Top Management and Treasury and Risk Management Department in line with theBank’s risk appetite and monitors whether the liquidity risk is managed under the framework of determinedpolicies and within the defined limits. The categories of defined limits are;

• Liquidity coverage ratio• Maturity mismatch equity• High amount of participation account rate• Core funds collected

ALCO evaluates the balance sheet and off-balance sheet position monthly. Evaluations are performed byconsidering the sector, segment breakdowns, limits and usage rate of loan products. Decisions taken byALCO are performed by Treasury and related departments and the results are monitored with preparedreports by Risk Management and Reporting Departments.

b) Information on the centralization degree of liquidity management and funding strategy and thefunctioning between the Bank and the Bank’s subsidiaries:

Liquidity risk management is performed by Audit Committee, Top Management, ALCO, Treasury and RiskManagement Departments at Headquarters.

c) Information on the Bank’s funding strategy including the policies on funding types and variety ofmaturities:

Besides the strong capital structure, the Bank aims to obtain diversified funding sources and the Bankstrategise in this direction. The Bank performs works regarding to spread funds collected to the base, limitingthe rate of high amount of participation to total funds collected by monitoring, limiting maturity mismatch andincreasing core funds collected.



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IV. Explanations on liquidity risk management and liquidity coverage ratio (continued):

d) Information on liquidity management on the basis of currencies constituting a minimum of fivepercent of the Bank’s total liabilities:

Almost all the liabilities of the Bank are in TL, USD or EUR currencies. TL funds comprise of equity,participation and current accounts and domestic loans. TL liquidity is managed by keeping high quality liquidassets with prudential. Foreign currencies comprise of participation and current accounts and domestic andforeign loans. Foreign currency liquidity management is performed by cash flow, limits at correspondentbanks and high quality foreign currency liquid assets within the scope of determinated risk limits. Availableliquidity and matured liabilities are monitored daily. Also, important cash flows are monitored and managedin real-time basis.

e) Information on liquidity risk mitigation techniques:

The Bank decreases the liquidity risk by monitoring collection of high amount funds, funding, the maturity ofparticipation accounts and other liabilities closely, estimating monthly cash flow, inciting for long-termparticipation accounts, purchasing of lease certificates issued by Republic of Turkey Prime Ministry ofTreasury and Finance, making short-term murabaha investments, allocating limits from foreign banks toborrow whenever needed, diversifying the source of funds and homogenizing the maturity distribution.

f) Information on the use of stress tests:

Resistance to the scenarios created for liquidity conditions of the Bank is tested by stress tests. Two differentscenarios are applied as stressed and the severe case and the results are shared to Top Management overALCO. Results of the stress tests guide on reaching to possible various liquidity sources. The Bank remainswithin the liquidity risk tolerance by reviewing liquidity management strategies, policies and proceduresaccording to the results of these tests.

g) General information on urgent and unexpected liquidity situation plans:

Strategy and policies for the management of the possible liquidity crises are determined by the Board ofDirectors. In case of possible liquidity crises contingency plan determines precautions and actions to be takenwith order of priority. In such situations, ALCO meets more frequently and where necessary with the partialmember participation meets under the chairmanship of General Manager of treasury meet everyday andmanage liquidity crisis.

With the liquidity risk management, prudent and proactive measurement of current and future liquidityposition of the Bank aimed by taking the currency and maturity of assets and liabilities into consideration.Enough liquid asset stock is provided in order to meet matured liabilities in ordinary and extraordinary termson maturity dates. Fund sources are diversified in order to prevent financial assets turning into cash inunreasonable conditions. Forward and swap transactions can be made in order to balance foreign currencytransactions demanded by customers in high volatility period.

Liquidity is managed in prudential manner, available liquidity and matured liabilities are monitored daily. Also,important cash flows are monitored and managed in real-time basis. Liquidity projections are performed withstress tests and scenario analysis. Results of the tests guide on reaching to possible various liquidity sources.Liquidity management strategies, policies and procedures are reviewed according to the results of thesetests.



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Liquidity Coverage Ratio:

Rate of “Percentage to betaken into account” notImplemented Total value

(*)

Rate of “Percentage tobe taken into account”

Implemented Totalvalue (*)

Current Period TL+FC FC TL+FC FCHIGH QUALITY LIQUID ASSETS (HQLA)

1 High quality liquid assets 6.422.602 5.765.517

CASH OUTFLOWS2 Retail and Small Business Funds Collected 5.790.080 3.384.104 530.982 338.4103 Stable Funds Collected 960.535 - 48.027 -4 Less stable Funds Collected 4.829.545 3.384.104 482.955 338.410

5 Unsecured Funding other than Retail and Small BusinessCustomers Deposits 8.757.118 4.644.975 4.756.208 2.282.282

6 Operational Funds Collected 791.914 562.710 197.978 140.6787 Non-Operational Funds Collected 6.553.841 3.670.780 3.146.867 1.730.1198 Other Unsecured Funding 1.411.363 411.485 1.411.363 411.4859 Secured funding - - - -

10 Other Cash Outflows 5.953.354 5.692.210 5.848.288 5.587.191

11 Liquidity needs related to derivatives and marketvaluation changes on derivatives transactions 5.803.260 5.542.183 5.803.260 5.542.183

12 Debts related to the structured financial products - - - -

13 Commitment related to debts to financial marketsand other off balance sheet liabilities 150.094 150.027 45.028 45.008

14 Commitments that are unconditionally revocable at anytime by the Bank and other contractual commitments - - - -

15 Other irrevocable or conditionally revocable commitments 4.017.121 1.070.191 352.579 81.42416 TOTAL CASH OUTFLOWS 11.488.057 8.289.307

CASH INFLOWS17 Secured Lending Transactions - - - -18 Unsecured Lending Transactions 3.436.014 2.055.995 2.875.132 1.888.42919 Other contractual cash inflows 5.837.266 3.786.235 5.837.266 3.786.23520 TOTAL CASH INFLOWS 9.273.280 5.842.230 8.712.398 5.674.664

Upper limit applied amounts21 TOTAL HQLA 6.422.602 5.765.51722 TOTAL NET CASH OUTFLOWS 2.872.014 2.614.64323 Liquidity Coverage Ratio (%) 223,63 220,51

(*) Simple arithmetic average calculated for the last three months of values calculated by taking the weekly simple arithmetic average.

As per “Regulation on Liquidity Coverage Ratio Calculation” published in the Official Gazette numbered28948, dated 21 March 2014, the weeks on which the minimum and maximum liquidity coverage ratios havebeen calculated for the last three months are as follows:

Current Period - 30.09.2019TL+FC FC

Lowest(%) 191,30 184,58Week 05/07/2019 16/08/2019Highest (%) 249,10 267,62Week 26/07/2019 19/07/2019Average 214,18 225,07



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IV. Explanations on liquidity risk management and liquidity coverage ratio (continued):Rate of “Percentage to betaken into account” not

Implemented Total value (*)

Rate of “Percentage tobe taken into account”

Implemented Total value (*)Prior Period TL+FC FC TL+FC FCHIGH QUALITY LIQUID ASSETS (HQLA)

1 High quality liquid assets 2.965.326 2.115.984CASH OUTFLOWS

2 Retail and Small Business Funds Collected 3.951.398 1.985.450 361.946 198.5453 Stable Funds Collected 663.875 - 33.194 -4 Less stable Funds Collected 3.287.523 1.985.450 328.752 198.5455 Unsecured Funding other than Retail and Small Business

Customers Deposits 6.789.735 3.360.055 3.787.897 1.786.5676 Operational Funds Collected 911.519 643.337 227.880 160.8347 Non-Operational Funds Collected 4.984.679 2.574.076 2.666.480 1.483.0918 Other Unsecured Funding 893.537 142.642 893.537 142.6429 Secured funding - - - -

10 Other Cash Outflows 3.821.792 3.651.590 3.820.692 3.650.632

11 Liquidity needs related to derivatives and marketvaluation changes on derivatives transactions 3.820.221 3.650.221 3.820.221 3.650.221

12 Debts related to the structured financial products - - - -13 Commitment related to debts to financial markets

and other off balance sheet liabilities 1.571 1.369 471 41114 Commitments that are unconditionally revocable at any

time by the Bank and other contractual commitments - - - -15 Other irrevocable or conditionally revocable commitments 5.045.313 1.647.988 403.277 133.10516 TOTAL CASH OUTFLOWS 8.373.812 5.768.849

CASH INFLOWS17 Secured Lending Transactions - - - -18 Unsecured Lending Transactions 2.989.326 2.021.928 2.429.281 1.933.74019 Other contractual cash inflows 3.858.148 2.262.792 3.858.148 2.262.79220 TOTAL CASH INFLOWS 6.847.474 4.284.720 6.287.429 4.196.532

Upper limit applied amounts21 TOTAL HQLA 2.965.326 2.115.98422 TOTAL NET CASH OUTFLOWS 2.093.453 1.572.31723 Liquidity Coverage Ratio (%) 141,65 134,58(*) Simple arithmetic average calculated for the last three months of values calculated by taking the weekly simple arithmetic average.

Prior Period - 31.12.2018TL+FC FC

Lowest (%) 106,10 83,88Week 26/10/2018 05/10/2018Highest (%) 170,66 190,12Week 28/12/2018 28/12/2018Average 133,14 127,50



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Presentation of assets and liabilities according to their remaining maturities:

DemandUp to 1month

1-3months

3-12months

1-5years

Over5 years

Unallocated(**)(***) Total

Current Period

AssetsCash (cash in vault, foreign currency,money in transit, cheques purchased)and balances with the Central Bank ofRepublic of TurkeyBanks

2.784.986 2.164.014 - - - - - 4.949.0001.531.638 222.959 - - - - - 1.754.597

Financial Assets at Fair Value ThroughProfit and Loss - 58.558 16.799 9.741 793.626 - 47.050 925.774Money Market Placements - - - - - - - -Financial assets valued at fair valuethrough other comprehensive income - 140.541 98.263 992.921 2.071.913 18.013 - 3.321.651Loans (*) 100.175 1.607.786 1.795.160 5.350.081 5.747.693 299.817 480.843 15.381.555Financial assets valued at amortisedcost - - - - 502.818 - - 502.818Other Assets (****) - 95.159 6.520 5.917 1.351 - 253.793 362.740

Total Assets 4.416.799 4.289.017 1.916.742 6.358.660 9.117.401 317.830 781.686 27.198.135

LiabilitiesCurrent account and funds collectedfrom banks via participation accounts 340.369 217.728 145.192 - - - - 703.289Other current and profit sharingaccounts 3.476.371 11.390.370 4.536.157 660.176 238 7 - 20.063.319Funds provided from other financialinstitutions and subordinated loans - 1.868.201 865.215 390.424 576317 - 3.700.157Money market borrowings - 16.655 - - - - - 16.655Marketable securities issued - - - - - - - -Miscellaneous payables - - - - - - - -Other liabilities (***) - 117.805 69.956 34.838 97.434 56.730 2.337.952 2.714.715

Total Liabilities 3.816.740 13.610.759 5.616.520 1.085.438 673.989 56.737 2.337.952 27.198.135

Net Liquidity Gap 600.059 (9.321.742) (3.699.778) 5.273.222 8.443.412 261.093 (1.556.266) -

Net Off-balance sheet Position - 61.374 23.195 814 - - - 85.383Financial Derivative Assets - 8.435.644 372.099 460.675 - - - 9.268.418Financial Derivative Liabilities - 8.374.270 348.904 459.861 - - - 9.183.035Non-cash Loans 2.780.846 107.081 584.387 2.179.056 1.409.139 140.494 - 7.201.003

Prior Period

Total Assets 3.759.915 4.301.673 1.930.353 4.328.708 5.858.091 271.781 504.991 20.955.512Total Liabilities 2.956.593 10.074.312 3.830.549 1.808.911 378.276 8.663 1.898.208 20.955.512

Net Liquidity Gap 803.322 (5.772.639) (1.900.196) 2.519.797 5.479.815 263.118 (1.393.217) -

Net Off-balance sheet Position - 2.599 3.532 (1.917) - - - 4.214

(*) Leasing receivables are included under loans.(**) Certain assets in the balance sheet that are necessary for the banking operations but cannot be readily convertible into cash in the near futuresuch tangible assets, investments in associates and subsidiaries, stationary supplies, prepaid expenses and the amount of non-performing loans exceptspecific provision amounts are shown here.

(***) The unallocated other liabilities column consists of equity, provisions and tax liabilities.(****) Property and equipment held for sale and related to discontinued operations, subsidiary investments, tangible and intangible assets, other assets anddeferred tax assets are represented in other assets.



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V. Explanations on leverage ratio:

As of September 30, 2019, leverage ratio of the Bank calculated from the arithmetic average of the last 3months is 6,31% (December 31, 2018: 5,61%). This ratio is above the minimum required (3%).

Disclosure of Leverage ratio template:

Current Period Prior PeriodSeptember 30,

2019 (*)December 31,

2018 (*)Balance sheet assets

1 Balance sheet assets (excluding derivative financial assets and creditderivatives, including collaterals) 25.322.365 19.410.023

2 (Assets deducted from Core capital) 48.222 72.9493 Total risk amount of balance sheet assets (sum of lines 1 and 2) 25.274.143 19.337.074

Derivative financial assets and credit derivatives4 Cost of replenishment for derivative financial assets and credit derivatives 57.256 33.0645 Potential credit risk amount of derivative financial assets and credit

derivatives 56.471 37.5626 Total risk amount of derivative financial assets and credit derivatives (sum

of lines 4 and 5) 113.727 70.626Financing transactions secured by marketable security orcommodity

7 Risk amount of financing transactions secured by marketable security orcommodity (excluding Balance sheet) 132.731 168.163

8 Risk amount arising from intermediary transactions - -9 Total risk amount of financing transactions secured by marketable

security or commodity (sum of lines 7 and 8) 132.731 168.163Off-balance sheet transactions

10 Gross notional amount of off-balance sheet transactions 9.949.063 6.438.70511 (Correction amount due to multiplication with credit conversion rates) - -12 Total risk of off-balance sheet transactions (sum of lines 10 and 11) 9.949.063 6.438.705

Capital and total risk13 Core Capital 2.239.542 1.458.83514 Total risk amount (sum of lines 3, 6, 9 and 12) 35.469.664 26.014.568

Leverage ratio15 Leverage ratio (%) 6,31 5,61

(*) The arithmetic average of the last 3 months in the related periods.



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VI. Explanations on risk management:

Notes and explanations in this section have been prepared in accordance with the Communiqué OnDisclosures About Risk Management To Be Announced To Public By Banks that have been published inOfficial Gazette numbered 29511 on October 23, 2015 and became effective as of March 31, 2016. Thetables related to ‘Internal Rating-Based (IRB) Approach’ are not presented due to the usage of standardapproach for the calculation of capital adequacy.

a) Risk Management and general overview of risk weighted amounts

1. General overview of risk weighted amounts

Risk weighted assets

MinimumCapital

RequirementsCurrent Period Prior Period Current Period

1 Credit risk (excluding counterparty credit risk) (CCR)* 13.922.693 10.474.487 1.113.8152 Of which standardised approach (SA) 13.922.693 10.474.487 1.113.8153 Of which internal rating-based (IRB) approach - - -4 Counterparty credit risk 75.271 42.566 6.0225 Of which standardised approach for counterparty credit risk (SA-CCR) 75.271 42.566 6.0226 Of which internal model method (IMM) - - -7 Equity positions in banking book under market-based approach - - -8 Equity investments in funds – look-through approach - - -9 Equity investments in funds – mandate-based approach 5.736 5.047 45910 Equity investments in funds – fall-back approach (1250% risk weight) - - -11 Settlement risk - - -12 Securitisation exposures in banking book - - -13 Of which IRB ratings-based approach (RBA) - - -14 Of which IRB Supervisory Formula Approach (SFA) - - -15 Of which SA/simplified supervisory formula approach (SSFA) - - -16 Market risk 291.545 98.790 23.32417 Of which standardised approach (SA) 291.545 98.790 23.32418 Of which internal model approaches (IMM) - - -19 Operational risk 950.826 546.744 76.06620 Of which Basic Indicator Approach 950.826 546.744 76.06621 Of which Standardised Approach - - -22 Of which Advanced Measurement Approach - - -23 Amounts below the thresholds for deduction (subject to 250% risk weight) - - -24 Floor adjustment - - -25 Total (1+4+7+8+9+10+11+12+16+19+23+24) 15.246.071 11.167.634 1.219.686* Does not include Equity investments in funds.



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VII. Explanations on business segments:

Information on business segments is given below.

Current Period

Retail

Commercialand

Corporate Treasury Unallocated Total

Total Assets 1.007.838 15.823.590 4.700.079 5.666.628 27.198.135

Total Liabilities 6.701.786 17.767.467 405.600 481.390 25.356.243Total Equity - - - 1.841.892 1.841.892

Net profit share income/(expense) (*)(**) (190.030) 348.815 225.562 48.759 433.106Net fees and commissions income/(expense) 1.046 40.454 (21.216) 40.048 60.332Other operating income/(expense) (24.201) (15.232) 347.184 (201.924) 105.827Expected Loss Provisions - (15.422) (202) (242.838) (258.462)Profit/(loss) before tax (213.185) 358.615 551.328 (355.955) 340.803Provision for tax - - - (86.732) (86.732)

Net profit / (loss) for the period (213.185) 358.615 551.328 (442.687) 254.071

(*) The distribution difference in the retail, commercial and corporate segments stems from fund allocation and fund collection methods of the Bank.(**) Since the management uses net profit share income/ (expense) as a performance measurement criteria, profit share income and expense is presented

net.

Prior Period

Retail

Commercialand

Corporate Treasury Unallocated Total

Total Assets 892.455 13.998.918 1.456.291 4.607.848 20.955.512

Total Liabilities 4.672.687 13.974.628 424.324 356.647 19.428.286Total Equity - - - 1.527.226 1.527.226

Net profit share income/(expense) (*)(**) (101.591) 420.545 112.848 18.622 450.424Net fees and commissions income/(expense) 668 18.731 (5.382) 19.467 33.484Other operating income/(expense) - (15.195) 148.219 (185.144) (52.120)Provision for loan losses and other receivables - (22.166) (314) (126.755) (149.235)Profit/(loss) before tax (100.923) 401.915 255.371 (273.810) 282.553Provision for tax - - - (59.382) (59.382)

Net profit / (loss) for the period (100.923) 401.915 255.371 (333.192) 223.171

(*) The distribution difference in the retail, commercial and corporate segments stems from fund allocation and fund collection methods of the Bank.(**) Since the management uses net profit share income/ (expense) as a performance measurement criteria, profit share income and expense is presented

net.



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Section five

Explanations and notes on the unconsolidated financial statements

I. Explanations and notes related to assets:

1.a) Cash and balances with the Central Bank of Republic of Turkey (CBRT):

Current Period Prior PeriodTL FC TL FC

Cash / Foreign currency 52.478 844.360 44.294 440.883CBRT 105.963 3.677.239 898.225 2.297.263Other (*) - 272.361 - 455.325

Total 158.441 4.793.960 942.519 3.193.471(*) Other balance consists of precious metals and money in transit.

b) Information related to CBRT:


Unrestricted demand deposit 99.315 1.516.032 890.988 648.178Unrestricted time deposit - - - -Restricted time deposit 6.648 2.161.207 7.237 1.649.085

Total 105.963 3.677.239 898.225 2.297.263

In accordance with the “Communiqué Regarding the Reserve Requirements numbered 2013/15”, banksoperating in Turkey are required to maintain reserves in CBRT for TL and foreign currency liabilities.According to the Communiqué Regarding the Reserve Requirements, reserve requirements can bemaintained in TL, USD and/or EURO and standard gold.

As of September 30, 2019, the compulsory rates for the reserve deposits at the Central Bank of Turkey forTurkish Lira are implemented within an interval from 1 % to 7% (December 31, 2018: From 1,5% to 8%)depending on maturity of deposits and other liabilities. The compulsory rates for the foreign currency liabilitiesare within an interval from 12% to 16% (December 31, 2018: From 8% to 12%) depending on maturity ofdeposits and the compulsory rates for the foreign currency liabilities are within an interval from 5% to 21%(December 31, 2018: From 4% to 20%) depending on maturity of other liabilities.

2. a) Information on financial assets at fair value through profit/loss subject to repurchaseagreements and given as collateral/blocked:

None (December, 31 2018: None).

b) Table of positive differences related to derivative financial assets held for trading:


Forward Transactions 24.855 4.103 13.731 1.880Swap Transactions 39.526 12.702 2.626 40Futures Transactions - - - -Options - - - -Other(*) 188 49.402 750 13.241Total 64.569 66.207 17.107 15.161(*) Other consists of derivative guarantees given.



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I. Explanations and notes related to assets (continued):

3. a) Information on banks:


BanksDomestic 2.723 1.462.669 783 1.021.337Abroad - 291.637 - 371.502Foreign head offices and branches - - - -

Total 2.723 1.754.306 783 1.392.839

b) Information on foreign bank accounts:

Not prepared in compliance with the Article 25 of the Communiqué “Financial Statements and RelatedDisclosures and Footnotes to be Announced to Public by Banks”.

4. Information on Financial Assets at fair value through other comprehensive income:

a) Information on financial assets valued at fair value through other comprehensive incomesubject to repurchase transactions, given as a guarantee or blocked:

Financial assets valued at fair value through other comprehensive income subject to repurchasetransactions assets, which are subjected to repurchase agreements is TL 16.670 as of September 30,2019 (December 31, 2018: None) and financial assets given as collateral/blocked are amounting toTL 390.417 (December 31, 2018: TL 98.423).

b.1) Financial assets valued at fair value through other comprehensive income:

Current Period Prior PeriodDebt securities 3.314.239 1.465.613

Quoted on a stock exchange (*) 3.314.239 1.465.613Unquoted on a stock exchange - -

Share certificates 15.257 15.436Quoted on a stock exchange (*) 15.257 15.436Unquoted on a stock exchange - -

Impairment provision (-) 7.845 38.962

Total 3.321.651 1.442.087(*) Includes debt securities quoted on a stock exchange which are not traded at the related period ends.



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5. Information on loans and receivables:a) Information on all types of loans and advances given to shareholders and employees of the

Bank:

Current Period Prior PeriodCash Non-Cash Cash Non-Cash

Direct loans granted to shareholders - - - -Corporate shareholders - - - -Real person shareholders - - - -

Indirect loans granted to shareholders - - - -Loans granted to employees 697 - 429 -

Total 697 - 429 -

b) Information on the first and second group loans including restructed loans

(*) Commercial installment loan (TL 1.086.895), investment loans (TL 51.504), foreign loans (TL 230.817), Profit and LossInvestments (TL 12.054), to purchase security for customer (TL 6.142) and other loans (TL 1.684).

(*) Commercial installment loan (TL 1.235.422), investment loans (TL 99.007), foreign loans (TL 216.498), Profit and LossInvestments (TL 11.500), to purchase security for customer (TL 10.256) and other loans (TL 5.377).

Cash Loans(Current Period) Standard

loans

Loans Under Close Monitoring

Loans Notsubject to

restructuredloans

Restructured LoansLoans with

RevisedContractTerms

Refinance

Loans 14.006.969 324.183 3.072 502.592Export loans 28.702 - - -Import loans 1.003.922 194 - -Business loans 9.911.118 250.664 - 502.516Consumer loans 990.112 15.205 3.072 -Credit cards 5.143 140 - -Loans given to financial sector 736.932 - - -Other (*) 1.331.040 57.980 - 76

Total 14.006.969 324.183 3.072 502.592

Cash Loans(Prior Period) Standard

loans

Loans Under Close Monitoring

Loans Notsubject to

restructuredloans

Restructured LoansLoans with

RevisedContractTerms

Refinance

Loans 12.720.394 464.028 1.317 135.501Export loans 8.505 8.241 - -Import loans 723.748 53.327 - -Business loans 8.486.155 260.105 - 135.501Consumer loans 885.501 9.657 1.317 -Credit cards 2.236 20 - -Loans given to financial sector 1.168.867 - - -Other (*) 1.445.382 132.678 - -

Total 12.720.394 464.028 1.317 135.501



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Current Period Standard LoansLoans Under Close

MonitoringExpected loss of provision for 12 Months 83.295 -Substantial increase in credit risk - 10.916

Prior Period Standard LoansLoans Under Close

MonitoringExpected loss of provision for 12 Months 67.710 -Substantial increase in credit risk - 3.859

Extension of Repayment PlanStandard Loans Loans Under Close Monitoring

Extended by 1 or 2 times 157.479 496.994Extended by 3,4 or 5 times - 8.670Extended by more than 5 times - -

Extension Periods Standard Loans Loans Under Close Monitoring0 - 6 months 544 25.7646 - 12 months 4.045 28.3611 - 2 years 13.723 98.8272 - 5 years 93.976 324.7715 years and over 45.191 27.941

c) Maturity analysis of cash loans:




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d) Information on consumer loans, retail credit cards, loans given to personnel and personnelcredit cards:

Current Period Short TermMedium and

long term Total

Consumer loans-TL 2.813 989.951 992.764Housing loans 893 964.830 965.723Vehicle loans 1.249 20.723 21.972Consumer loans 671 4.398 5.069Other - - -

Consumer loans-FC indexed - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Consumer loans-FC - 15.224 15.224Housing loans - 340 340Vehicle loans - - -Consumer loans - 14.884 14.884Other - - -

Retail credit cards-TL 4.987 - 4.987With installment - - -Without installment 4.987 - 4.987

Retail credit cards--FC - - -With installment - - -Without installment - - -

Personnel loans-TL 210 191 401Housing loans - 90 90Vehicle loans - 83 83Consumer loans 210 18 228Other - - -

Personnel loans-FC indexed - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Personnel loans-FC - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Personnel credit cards-TL 296 - 296With installment - - -Without installment 296 - 296

Personnel credit cards-FC - - -With installment - - -Without-installment - - -

Overdraft account-TL(real person) - - -Overdraft account-FC(real person) - - -

Total 8.306 1.005.366 1.013.672



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Prior Period Short TermMedium and

long term Total

Consumer loans-TL 2.380 893.373 895.753Housing loans 201 871.794 871.995Vehicle loans 672 18.841 19.513Consumer loans 1.507 2.738 4.245Other - - -

Consumer loans-FC indexed - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Consumer loans-FC - 462 462Housing loans - 462 462Vehicle loans - - -Consumer loans - - -Other - - -

Retail credit cards-TL 2.087 - 2.087With installment - - -Without installment 2.087 - 2.087

Retail credit cards--FC - - -With installment - - -Without installment - - -

Personnel loans-TL 107 153 260Housing loans - 81 81Vehicle loans 5 64 69Consumer loans 102 8 110Other - - -

Personnel loans-FC indexed - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Personnel loans-FC - - -Housing loans - - -Vehicle loans - - -Consumer loans - - -Other - - -

Personnel credit cards-TL 169 - 169With installment - - -Without installment 169 - 169

Personnel credit cards-FC - - -With installment - - -Without-installment - - -

Overdraft account-TL(real person) - - -Overdraft account-FC(real person) - - -

Total 4.743 893.988 898.731



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e) Information on commercial loans with installments and corporate credit cards:

Current Period Short TermMedium and

long-term Total

Commercial installment loans-TL 55.166 627.387 682.553Business loans 430 286.046 286.476Vehicle loans 44.717 215.112 259.829Consumer loans 10.019 126.229 136.248Other - - -

Commercial installment loans-FC indexed - 344.127 344.127Business loans - 259.231 259.231Vehicle loans - 46.770 46.770Consumer loans - 38.126 38.126Other - - -

Commercial installment Loans-FC - 60.215 60.215Business loans - 40.875 40.875Vehicle loans - 10.377 10.377Consumer loans - 8.963 8.963Other - - -

Corporate credit cards-TL - - -With installment - - -Without installment - - -

Corporate credit cards-FC - - -With installment - - -Without installment - - -

Overdraft account-TL (legal entity) - - -Overdraft account-FC(legal entity) - - -

Total 55.166 1.031.729 1.086.895



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Prior Period Short TermMedium and

long-term Total

Commercial installment loans-TL 37.181 672.186 709.367Business loans - 310.554 310.554Vehicle loans 28.801 194.223 223.024Consumer loans 8.380 167.409 175.789Other - - -

Commercial installment loans-FC indexed 2.394 441.084 443.478Business loans - 278.492 278.492Vehicle loans 2.394 119.023 121.417Consumer loans - 43.569 43.569Other - - -

Commercial installment Loans-FC 13.402 69.175 82.577Business loans - 52.425 52.425Vehicle loans 13.402 16.750 30.152Consumer loans - - -Other - - -

Corporate credit cards-TL - - -With installment - - -Without installment - - -

Corporate credit cards-FC - - -With installment - - -Without installment - - -

Overdraft account-TL (legal entity) - - -Overdraft account-FC(legal entity) - - -

Total 52.977 1.182.445 1.235.422

f) Allocation of loans by customers:


g) Breakdown of domestic and foreign loans:

Loans excluding NPL is stated below:

Current Period Prior Period

Domestic loans 14.605.999 13.104.742Foreign loans 230.817 216.498

Total 14.836.816 13.321.240

h) Loans granted to subsidiaries and associates:

None (December 31, 2018: None).



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i) Specific provisions for loans:


i) Loans and Receivables with Limited Collectability 55.896 65.636Doubtful Loans and Other Receivables 124.013 43.480Uncollectible Loans and Receivables 125.356 20.886

Total 305.265 130.002

j) Information on non-performing loans and receivables (net):j.1) Non-performing loans and receivables which are restructured:

III. Group IV. Group V. Group

Loans and receivableswith limited

collectability

Loans andreceivables

with doubtfulcollectability

Uncollectible loansand other

receivablesCurrent PeriodGross Amounts Before the Provisions 92.876 129.292 148.672Restructured Loans 18.362 74.050 17.590Prior PeriodGross Amounts Before the Provisions 141.226 77.907 24.973Restructured Loans 1.882 - -

j.2) Movements of non-performing loans:


Current Period Loans with limitedcollectability

Loans withdoubtful

collectability Uncollectible loans

Closing balance of prior period 143.108 77.907 24.973Additions in the current period (+) 400.682 16.634 18.346Transfers from other categories of non-performing loans (+) - 414.956 227.966Transfers to other categories of non-performing loans (-) 414.956 227.966 -Transfers to standard loans (-) 17.596 78.189 105.023Collections in the current period (-) - - -Write offs (-) - - -

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

Current Period Ending Balance 111.238 203.342 166.262Provision (-) 55.896 124.013 125.356

Net balance at the balance sheet 55.342 79.329 40.906



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Prior Period Loans with limitedcollectability

Loans withdoubtful

collectability Uncollectible loans

Closing balance of prior period 1.186 4.631 9.621Additions in the current period (+) 217.105 20.745 6.593Transfers from other categories of non-performing loans (+) - 67.554 9.060Transfers to other categories of non-performing loans (-) 67.554 9.060 -Transfers to standard loans (-) 7.629 5.963 301Collections in the current period (-) - - -Write offs (-) - - -

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

Current Period Ending Balance 143.108 77.907 24.973Provision (-) 65.636 43.480 20.886

Net balance at the balance sheet 77.472 34.427 4.087

j.3) Non-performing loans and other receivables in foreign currencies:

III. Group IV. Group V. GroupLoans with

limitedcollectability

Loans withdoubtful

collectabilityUncollectible

loans

Current period:Period end balance 16.649 3.276 164

Provision (-) 9.392 2.208 111

Net balance on balance sheet 7.257 1.068 53

Prior period:Period end balance 3.130 - -

Provision (-) 1.480 - -

Net balance on balance sheet 1.650 - -



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I. Explanations and notes related to assets (continued)

j.4) Gross and net non-performing loans and other receivables per customer categories:

III. Group IV. Group V. GroupLoans with

limitedcollectability

Loans withdoubtful

collectabilityUncollectible

Loans

Current period (net) 55.342 79.329 40.906Loans to individuals and corporates (gross) 111.238 203.342 166.262

Provision (-) 55.896 124.013 125.356Loans to individuals and corporates (net) 55.342 79.329 40.906Banks (gross) - - -

Provision (-) - - -Banks (Net) - - -Other Loans (Gross) - - -

Provision (-) - - -Other Loans (Net) - - -

Prior Period (Net) 77.472 34.427 4.087Loans to Real Persons and Legal Entities (Gross) 143.108 77.907 24.973

Specific provision (-) 65.636 43.480 20.886Loans to Real Persons and Legal Entities (Net) 77.472 34.427 4.087Banks (Gross) - - -

Provision (-) - - -Banks (Net) - - -Other Loans and Receivables (Gross) - - -

Provision (-) - - -Other loans and receivables (Net) - - -

j.5) Information on Profit Share Accruals, Rediscounts and Valuation Differences Calculated for Non-Performing Loans and Their Provisions:


Loans andReceivables with

Limited Collectibility

Loans andReceivables with

DoubthfulCollectibility

Uncollectible Loansand Other

ReceivablesCurrent Period(Net) 4.576 10.628 9.547Profit share accruals and valuation differences 9.197 27.242 38.802

Provision (-) 4.621 16.614 29.255Prior Period (Net) 6.259 7.941 1.064Profit share accruals and valuation differences 11.562 17.970 6.503

Provision (-) 5.303 10.029 5.439

k)Liquidation policy for uncollectible loans and receivables:


l) Information on ‘‘Write-off” policies:




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6. Information on Financial Assets Measured at Amortized Cost

a) Information on financial assets measured at amortized cost subject to repurchase agreementsand provided as collateral/blocked:

None (December 31, 2018: The Bank has no financial assets held-to-maturity subject to repurchaseagreements and provided as collateral/blocked).

b) Information on government debt securities measured at amortized cost


Government Bonds - -Treasury Bills - -Other Government Securities (*) 503.262 -

Total 503.262 -(*) Consists of non-profit special category state domestic borrowing notes issued by Ministery of Treasury and Finance and purchased from the Türkiye Varlık FonuA.Ş.and Piyasa ve İstikrar Denge Alt Fonu A.Ş.

c) Information on investment securities measured at amortized cost


Debt Securities 503.262 -Quoted on a stock exchange - -Unquoted (*) 503.262 -

Impairment provision (-) - -

Total 503.262 -(*) Consists of non-profit special category state domestic borrowing notes issued by Ministery of Treasury and Finance and purchased from the Türkiye Varlık FonuA.Ş.and Piyasa ve İstikrar Denge Alt Fonu A.Ş.

d) Information on movements of financial assets measured at amortized cost


Balance at beginning of period - -Foreign currency differences on monetary assets (7.438) -Purchases during period (*) 510.700 -Disposals through sales and redemptions - -Impairment provision (-) - -

Closing Balance 503.262 -(*) Consists of non-profit special category state domestic borrowing notes issued by Ministery of Treasury and Finance and purchased from the Türkiye Varlık FonuA.Ş.and Piyasa ve İstikrar Denge Alt Fonu A.Ş.



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7. Associates (net):

a) Information on unconsolidated associates:

Since the Bank does not have the necessary shareholding percentage to become a qualifiedshareholder and significant influence over this associate, it has not been consolidated.

Name Address(City/ Country

Bank’s sharepercentage-

If different votingpercentage (%)

Bank’s riskgroup share

percentage (%)Kredi Garanti Fonu A.Ş. Ankara / Turkey 1,49 -

The balances of Kredi Garanti Fonu A.Ş. presented in the table below have been obtained from theaudited financial statements as of December 31, 2018.

Totalassets

Shareholders’equity

Totalfixed

assets

Dividendor profitshare

income

Incomefrom

marketablesecurities

Currentperiod

income/lossPrior periodincome/loss Fair value

476.692 392.969 25.822 - - 64.893 135.818 -

b) Information on consolidated associates:

As of balance sheet date, the Bank does not have consolidated associates (December 31, 2018:None).

8. Information on subsidiaries (net):

a) Information on unconsolidated subsidiaries:

As of balance sheet date, the Bank does not have unconsolidated subsidiary (December 31, 2018: None).

b) Information on consolidated subsidiaries:

The balances of Vakıf Varlık Kiralama A.Ş. and Katılım Varlık Kiralama A.Ş presented in the table belowhave been obtained from the reviewed financial statements as of September 30, 2019.

Name Address(City/ Country)

Bank’s sharepercentage-

If different votingpercentage (%)

Risk sharepercentage of other

shareholders (%)

Vakıf Varlık Kiralama A.Ş İstanbul / Turkey 100,00 -Katılım Varlık Kiralama A.Ş İstanbul / Turkey 100,00 -

NameTotal

AssetsShareholders

’ equity

Totalfixed

assets

Dividendor profit

shareincome

Incomefrom

marketsecurities

Currentperiod

income/loss

Priorperiod

income/loss

Fairvalue

Vakıf Varlık Kiralama A.Ş. 2.104.292 50 - - - - - -Katılım Varlık Kiralama A.Ş. 761.592 2.178 - 270 - 617 1.342 -



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b.1) Movement schedule on subsidiaries:

Current Period Prior PeriodAmount at the beginning of the period 100 100Movements inside the term - -

Purchases / new incorporations / capital increases - -Bonus shares - -Profit received from current year share - -Sales - -Revaluation increases - -Impairments - -

Amount at the end of the period 100 100Capital commitments - -Share of the capital at the end of the period (%) 100 100

b.2) Sectoral information on subsidiaries and related carrying amounts

Current Period Prior PeriodBanks - -Insurance Companies - -Factoring Companies - -Leasing Companies - -Finance companies - -Other Financial Subsidiaries 100 100

9. Information on investments in jointventures:

As of balance sheet date, the Bank does not have investments in joint ventures (December 31, 2018: None).

10. Information on lease receivables (net):

a) Presentation of remaining maturities of funds lent under finance lease method:

Current Period Prior PeriodGross Net Gross Net

Less than a year 63.330 49.494 38.620 28.9081 to 4 years 108.339 99.055 103.999 91.503More than 4 years 2.721 2.614 1.973 1.922

Total 174.390 151.163 144.592 122.333

b) Information on net investments through finance lease:


Gross finance lease receivables 174.390 144.592Unearned finance lease receivable (-) 23.227 22.259

Net receivable from finance leases 151.163 122.333



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c) General explanation on finance lease contracts:

Finance lease contracts are realized in accordance with the related articles of Finance Lease,Factoring and Financing Companies Act numbered 6361. There are no restrictions due to financelease contracts, no renewals or contingent rent payments that materially affect the financialstatements.

Information on leasing receivables:

11. Information on derivative financial assets for hedging purposes:


12. Information on tangible assets:


13. Information on intangible assets:


14. Information on investment property:


Finance lease Standard Loans

Leasing Receivables Under Close Monitoring

Leasing receivables notsubject to restructured

loans

Restructuredor rescheduled

LeasingReceivableswith Revised

Contract Terms

Refinance

Finance lease receivables (Net) 151.163 - - -



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15. Information related to deferred tax asset:

Information related to deferred tax asset of the Bank:

As of September 30, 2019, the Bank calculated deferred tax asset of TL 37.141 (December 31, 2018:TL 37.213) and deferred tax liability of TL 25.510 (December 31, 2018: TL 5.227) on all tax deductible/taxable temporary differences arising between the carrying amounts and the tax base of assets andliabilities in the financial statements that will be considered in the calculation of taxable earnings in thefuture periods and presented them as net in the accompanying financial statements.

CurrentPeriod

PriorPeriod

Prepaid wages and commissions and unearned income 14.214 13.072Dividend premium and bonus provision 5.203 3.919Evaluation difference of financial assets valued at fair value through othercomprehensive income 24 7.253

Provision for severance pay and vacation pay 1.768 1.191Expected Loss Provisions 11.788 9.356Other 4.144 2.422

Deferred tax asset 37.141 37.213

Difference between carrying value and tax base of fixed assets 2.719 3.459Derivative transactions rediscount 13.974 124Financial activity fee 700 -Other 8.117 1.644

Deferred tax liability 25.510 5.227

Deferred tax asset/(liability) (Net) 11.631 31.986

16. Information on assets held for sale and assets of discontinued operations:


17. Information on other assets:

As of the balance sheet date, the Bank’s other assets balance is TL 210.367 (December 31, 2018: TL121.426) and does not exceed 10% of balance sheet total excluding balance sheet commitments.



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II. Explanations and notes related to liabilities:

1. Information on funds collected:

a. Information on maturity structure of funds collected

Current Period DemandUp to

1 monthUp to 3months

Up to 6months

Up to 9months

Up to1 year

Over 1year

Accumulatedparticipation

accounts Total

I. Real Persons Current Accounts Non-Trade TL 217.250 - - - - - - - 217.250II. Real Persons Participation Accounts Non-Trade TL - 480.065 1.756.743 50.314 - 54.240 17.284 387 2.359.033III. Current Account other-TL 671.800 - - - - - - - 671.800

Public Sector 73.527 - - - - - - - 73.527Commercial Institutions 558.073 - - - - - - - 558.073Other Institutions 38.727 - - - - - - - 38.727Commercial and Other Institutions - - - - - - - - -Banks and Participation Banks 1.473 - - - - - - - 1.473

Central Bank of Turkey - - - - - - - - -Domestic Banks 20 - - - - - - - 20Foreign Banks 1.422 - - - - - - - 1.422Participation Banks 31 - - - - - - - 31Other - - - - - - - - -

IV. Participation Accounts-TL - 773.476 3.661.132 503.318 - 484.440 37.044 - 5.459.410Public Sector - 231.542 343.145 421.442 - 91.003 - - 1.087.132Commercial Institutions - 524.515 2.985.006 74.516 - 392.904 26.930 - 4.003.871Other Institutions - 17.419 332.435 7.360 - 533 10.114 - 367.861Commercial and Other Institutions - - 546 - - - - - 546Banks and Participation Banks - - - - - - - - -

V. Real Persons Current Accounts Non- TradeFC 541.181 - - - - - - - 541.181VI. Real Persons Participation Accounts Non-Trade FC - 215.248 2.165.779 133.856 - 169.536 9.279 - 2.693.698VII. Other Current Accounts FC 1.682.269 - - - - - - - 1.682.269

Residents in Turkey-Corporate 1.538.834 - - - - - - - 1.538.834Residents Abroad-Corporate 141.359 - - - - - - - 141.359Banks and Participation Banks 2.076 - - - - - - - 2.076

Central Bank of Turkey - - - - - - - - -Domestic Banks 57 - - - - - - - 57Foreign Banks - - - - - - - - -Participation Banks 2.019 - - - - - - - 2.019Other - - - - - - - - -

VIII. Participation Accountsother- FC - 429.377 3.834.095 1.477.131 - 133.639 6.225 - 5.880.467

Public sector - - 448 - - - - - 448Commercial institutions - 383.900 3.370.789 1.475.502 - 116.208 6.225 - 5.352.624Other institutions - 822 53.858 - - 17.431 - - 72.111Commercial and Other Institutions - 12.824 77.911 1.629 - - - - 92.364Banks and Participation Banks - 31.831 331.089 - - - - - 362.920

IX. Precious Metals Deposits 704.240 - 440.779 92.670 - 22.839 972 - 1.261.500X. Participation Accounts Special Fund PoolsTL - - - - - - - - -

Residents in Turkey - - - - - - - - -Residents Abroad - - - - - - - - -

XI. Participation Accounts Special Fund Pools– FC - - - - - - - - -


Total (I+II+…..+IX+X+XI) 3.816.740 1.898.166 11.858.528 2.257.289 - 864.694 70.804 387 20.766.608



(56)

II. Explanations and notes related to liabilities (continued):

Prior Period DemandUp to

1 monthUp to

3 monthsUp to

6 months

Up to9

monthsUp to

1 yearOver 1

year


accounts Total

I. Real Persons Current Accounts Non-Trade TL 160.233 - - - - - - - 160.233II. Real Persons Participation Accounts Non-Trade TL - 493.150 1.207.175 45.479 - 54.796 18.755 237 1.819.592III. Current Account other-TL 939.809 - - - - - - - 939.809

Public Sector 191.300 - - - - - - - 191.300Commercial Institutions 725.858 - - - - - - - 725.858Other Institutions 21.249 - - - - - - - 21.249Commercial and Other Institutions - - - - - - - - -Banks and Participation Banks 1.402 - - - - - - - 1.402

Central Bank of Turkey - - - - - - - - -Domestic Banks - - - - - - - - -Foreign Banks 1.214 - - - - - - - 1.214Participation Banks 188 - - - - - - - 188Other - - - - - - - - -

IV. Participation Accounts-TL - 290.931 3.151.075 522.032 - 376.045 34.107 - 4.374.190Public Sector - 193.780 406.629 68.482 - 284.078 83 - 953.052Commercial Institutions - 93.500 2.420.426 21.039 - 91.750 22.713 - 2.649.428Other Institutions - 3.651 323.739 432.511 - 217 11.311 - 771.429Commercial and Other Institutions - - 281 - - - - - 281Banks and Participation Banks - - - - - - - - -

V. Real Persons Current Accounts Non- Trade FC 280.180 - - - - - - - 280.180VI. Real Persons Participation Accounts Non-Trade FC - 62.995 1.547.059 102.688 - 219.178 3.766 - 1.935.686VII. Other Current Accounts FC 1.007.029 - - - - - - - 1.007.029

Residents in Turkey-Corporate 935.256 - - - - - - - 935.256Residents Abroad-Corporate 31.316 - - - - - - - 31.316Banks and Participation Banks 40.457 - - - - - - - 40.457

Central Bank of Turkey - - - - - - - - -Domestic Banks - - - - - - - - -Foreign Banks - - - - - - - - -Participation Banks 40.457 - - - - - - - 40.457Other - - - - - - - - -

VIII. Participation Accounts other- FC - 247.958 3.475.154 94.022 - 23.398 - - 3.840.532Public sector - - 142.788 - - - - - 142.788Commercial institutions - 175.663 2.800.453 94.022 - 6.189 - - 3.076.327Other institutions - 7.404 62.041 - - 15.690 - - 85.135Commercial and Other Institutions - 4.388 113.382 - - 1.519 - - 119.289Banks and Participation Banks - 60.503 356.490 - - - - - 416.993

IX. Precious Metals Deposits 569.342 - 201.532 49.782 - 4.499 - - 825.155X. Participation Accounts Special Fund Pools TL - - - - - - - - -


XI. Participation Accounts Special Fund Pools – FC - - - - - - - - -Residents in Turkey - - - - - - - - -Residents Abroad - - - - - - - - -

Total (I+II+…..+IX+X+XI) 2.956.593 1.095.034 9.581.995 814.003 - 677.916 56.628 237 15.182.406



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b) Saving deposits and other deposits accounts insured by Saving Deposit Insurance Fund:

b.1) Exceeding the limit of Insurance Fund:

Information on real persons’ current and participation accounts not subject to trading transactions under theguarantee of insurance and exceeding the limit of Insurance Fund:

Under theguarantee ofInsurance

Exceeding theguarantee ofInsurance

CurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

Real persons’ current and participation accountsnot subject to trading transactions

Turkish Lira accounts 1.541.510 1.201.588 1.033.097 776.189Foreign currency accounts 957.586 436.366 3.017.226 2.107.530

Foreign branches’ deposits subject to foreignauthorities insurance - - - -Off-shore deposits under foreign authorities'insurance - - - -

Funds collected by Participation Banks (except foreign branches) from current and participationaccounts denominated in Turkish Lira or foreign currency up to a limit of maximum TL 150 (includingboth capital and profit shares) for each real person is under the guarantee of Saving DepositInsurance Fund in accordance with the Banking Law numbered 5411.

b.2) Funds collected which are not under the guarantee of insurance fund:

Funds collected of real persons which are not under the guarantee of insurance fund:

CurrentPeriod

PriorPeriod

Foreign Branches’ Profit Sharing Accounts and Other Accounts - -Profit Sharing Accounts and Other Accounts of Controlling Shareholders and ProfitSharing Accounts and Other Accounts of Their Mother, Father, Spouse, and Childrenin Care - -Profit Sharing Accounts and Other Accounts of Chairman and Members of Board OfDirectors or Managers, General Manager and Assistant General Managers and ProfitSharing Accounts and Other Accounts of Their Mother, Father, Spouse, and Childrenin Care 2.608 2.423Profit Sharing Accounts and Other Accounts in Scope of the Property HoldingsDerived from Crime Defined in article 282 of Turkish Criminal Law no:5237 dated26.09.2004 - -Profit Sharing Accounts in Participation Banks Established in Turkey in order toengage solely in Off-Shore Banking Activities - -



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2. Information on derivative financial liabilities held for trading:


Forward Transactions 13.294 4.270 10.423 144Swap Transactions 85 1.566 - 5.986Futures Transactions - - - -Options - - - -Other 275 719 165 2.923Total 13.654 6.555 10.588 9.053

3. Information on borrowings:

a) Information on banks and other financial institutions:


Loans from CBRT - - - -Loans from domestic banks and institutions 2.126.010 481.813 1.696.275 317.147Loans from foreign banks, institutions andfunds - 599.190 - 1.677.917

Total 2.126.010 1.081.003 1.696.275 1.995.064

b) Maturity analysis of funds borrowed:


Short-Term 2.126.010 470.151 1.696.275 235.941Medium and Long-Term - 610.852 - 1.759.123

Total 2.126.010 1.081.003 1.696.275 1.995.064

c) Additional explanations related to the concentrated fields of the Bank’s liabilities based onconcentrated fields of the Bank’s major liabilities, funder customers, segments or othercriterias with risk concentration:


4. Breakdown of items in other liabilities which exceed 10% of the balance sheet total andbreakdown of items which constitute at least 20% of grand total:

As of 30 September 2019 and 31 December 2018, other liabilities do not exceed 10% of thebalance sheet.

5. Information on lease payables:


Less than a year 21.662 321 - -1 to 5 years 66.220 47 - -Over 5 years 50.436 - - -

Total 138.318 368 - -



(59)


6. Information on hedging derivative financial liabilities:


7. Information on provisions:

a) Information on provisions for foreign exchange losses on foreign currency indexed loansand financial lease receivables:

As of September 30, 2019 provision for foreign exchange losses on foreign currency indexed loansamounting to TL 661 (December 31, 2018: None) has been offset against the loans included in theassets of the balance sheet.

b) Information on provisions for employee rights:

Provisions for Bank’s employee benefits consist of reserve for employee termination benefitsamounting to TL 5.167 (December 31, 2018: TL 3.162), vacation pay liability amounting to TL 2.871(December 31, 2018: TL 2.252), dividend and premium bonus for personnel amounting to TL 23.648(December 31, 2018: TL 17.814). The Parent Bank’s total amount of provisions for employee rightsis TL 31.686 (December 31, 2018: TL 23.228). As of September 30, 2019 there is no premiumreserve (December 31, 2018: None ). The Parent Bank has calculated the reserve for employeetermination benefits using actuarial valuation methods as indicated in TAS 19. Accordingly, followingactuarial assumptions were used in the calculation of the total liability.


Discount rate (%) 16,00 16,00Estimated increase rate of salary ceiling (%) 12,90 12,90Rate used in relation to possibility of retirement (%) (*) 96,50 96,50

(*) The rate has been calculated depending on the years of service of the employees; the rate presented in the tablerepresents the average of such rates.

Movement of the reserve for employment termination benefits in the balance sheet is as follows:


Prior period ending balance 3.162 566Provisions made in the period 2.166 2.744Paid during the period (161) (148)

Balance at the end of the period 5.167 3.162

c) Other provisions:

As of balance sheet date TL 71.111 (December 31, 2018: TL 79.353) in other provisions of the Bankconsist of provisions allocated from profit shares to be distributed to profit sharing accounts, TL11.682 (December 31, 2018: TL 9.160) consist of provisions for KOSGEB budget expenses and TL23.542 (December 31, 2018: TL 20.201) consist of expected credit loss for Stage 1 and Stage 2 fornon-cash loans, consist of expected loss provision provided for unindemnified Stage 3 non-cashloans is amounting to TL 7.077 (December 31, 2018: TL 9.039) and TL 1.069 (December 31, 2018:TL 220) consist of other provisions.



(60)


8. Information on taxes payable:

a) Explanations on current tax liability:

a.1) Explanations on tax provisions:

As of September 30, 2019, the Bank’s corporate tax payable is TL 28.417 (December 31, 2018: TL39.182) after offsetting prepaid corporate tax.

a.2) Information on taxes payable:


Corporate taxes payable 28.417 39.182Taxation on securities income 19.835 7.938Banking insurance transaction tax 8.913 9.593Foreign exchange transaction tax 233 -Taxation on real estate income 458 335Value added tax payable 524 752Other 4.779 4.618

Total 63.159 62.418

a.3) Information on premiums:


Social security premiums-employer 3.306 2.477Social security premiums-employee 2.237 1.676Unemployment insurance-employer 317 238Unemployment insurance-employee 159 119Bank pension fund premium- employees - -Bank pension fund premium- employer - -Pension fund membership fees and provisions-employees - -Pension fund membership fees and provisions- employer - -Other (*) 357 259

Total 6.376 4.769

(*) Consists of Individual Pension System payments.

b) Information on deferred tax liability:

As of September 30, 2019, the Bank calculated deferred tax asset of TL 37.141 (December 31, 2018:TL 37.213) and deferred tax liability of TL 25.510 (December 31, 2018: TL 5.227) on all tax deductible/taxable temporary differences arising between the carrying amounts and the tax base of assets andliabilities in the financial statements that will be considered in the calculation of taxable earnings in thefuture periods and presented them as net in the accompanying financial statements.

9. Liabilities for assets held for sale and discontinued operations:




(61)


10. Detailed explanations on number, maturity, profit share rate, creditor and option to convert toshare certificates; if any; of subordinated loans:

As of September 30, 2019 the Bank has an subordinated debt that the creditor is Türkiye VarlıkFonu Yönetimi A.Ş., with TRT240424F22 ISIN code, with initial date 24 April 2019, with at leastfive-year repayment option and with no fixed term, amounting to EUR 100.000.000. The relatedborrowing instrument has no option to pay dividends and convert to share certificates.

11. Information on shareholders’ equity:

a) Presentation of paid-in capital:


Common stock 1.020.000 1.020.000Preferred stock - -

b) Paid-in capital amount, explanation as to whether the registered share capital system isapplicable at the Bank and if so, amount of the registered share capital ceiling:

Share Capital System Paid-in Capital CeilingRegistered Capital 1.020.000 4.525.000

c) Information on the share capital increases during the period and their sources; other informationon increased capital in the current period:

There is no capital increase in current period.

d) Information on share capital increases from capital reserves during the current period:

There is no share capital increase from capital reserves during the current period.

e) Capital commitments in the last fiscal year and by the end of the following interim period, generalpurpose of these commitments and projected resources required to meet these commitments:

As of the balance sheet date there are no capital commitments (December 31, 2018: None).

f) Estimated effects on the shareholders equity of the Bank, of predictions to be made by takinginto account previous period indicators regarding the Bank’s income, profitability and liquidity,and uncertainties regarding such indicators:

The Bank’s majority of the profits are kept in shareholders’ equity through transfer to reserves.Moreover, the Bank’s shareholders’ equity is invested in liquid and earning assets.

g) Information on privileges given to stocks representing the capital:

There is no privilege given to stocks representing the capital.



(62)


h) Information on marketable securities valuation reserve:


From investments in associates, subsidiaries, andjoint ventures - - - -Valuation difference (*) 13.502 15.298 (20.125) (166)Foreign exchange difference - - - -

Total 13.502 15.298 (20.125) (166)

(*) The related balance is the net amount after deducting deferred tax assets and liabilities related to valuation difference.The relevant balance includes also the expected loss provision for Financial Assets at Fair Value Through OtherComprehensive Income.

III. Explanations and notes related to off-balance sheet:

1. Explanations on off balance sheet:

a) Type and amount of irrevocable loan commitments:

Current Period Prior PeriodForward Asset Purchase Commitments 1.158.467 466.281Forward Asset Sale Commitments 1.156.924 465.716Payment Commitments for Cheques 141.620 93.859Commitment For Use Guaranteed Credit Allocation 502.031 93.447Credit Cards Limit Commitments 24.339 12.570Other Irrevocable Commitments 19.062 10.063

Total 3.002.443 1.141.936

b) Type and amount of possible losses and commitments arising from off-balance sheet items:

b.1) Non-cash loans including guarantees, bank acceptances, collaterals and others that areaccepted as financial commitments and other letters of credit:

Current Period Prior PeriodGuarantees 6.583.408 5.181.289Bank loans 52.788 28.012Letters of credit 564.807 414.765Other guaranties and sureties - -

Total 7.201.003 5.624.066

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

Current Period Prior PeriodLetters of guarantees 6.583.408 5.181.289

Long standing letters of guarantees 4.271.270 3.746.873Temporary letters of guarantees 339.314 225.544Advance letters of guarantees 658.601 749.565Letters of guarantees given to customs 136.975 69.948

Letters of guarantees given for obtaining cash loans 1.177.248 389.359Sureties and similar transactions - -

Total 6.583.408 5.181.289

http://tureng.com/search/forward%20asset%20purchase%20commitments

http://tureng.com/search/forward%20asset%20purchase%20commitments

http://tureng.com/search/commitment%20for%20use%20guaranteed%20credit%20allocation



(63)

III. Explanations and notes related to off-balance sheet (continued):

c) Within the Non-cash Loans:

c.1) Total amount of non-cash loans:


Non-cash loans given against cash loans 1.177.248 389.359With original maturity of 1 year or less 135.645 -With original maturity of more than 1 year 1.041.603 389.359

Other non-cash loans 6.023.755 5.234.707

Total 7.201.003 5.624.066

c.2) Sectoral risk concentration of non-cash loans:


c.3) Information on the non-cash loans classified in Group I and Group II:


2) Explanations on derivative transactions:


3) Explanations on credit derivatives and risk beared due to these:


4) Explanations on contingent assets and liabilities:


5) Explanations on services rendered on behalf of third parties:




(64)

IV. Explanations and notes related to the statement of income:

1. Information on profit share income:

a) Information on profit share income received from loans:


Profit share received from loans (*) 1.240.804 235.234 954.398 99.507Short Term Loans 451.573 55.618 273.980 10.867Medium and Long Term Loans 747.877 178.952 679.558 88.640Profit Share on Non–Performing Loans 41.354 664 860 -

(*) Includes fees and commission income on cash loans.

b) Information on profit share income received from banks:


CBRT 9.517 7.825 12.542 3.511Domestic Banks 276 3.472 - 5.490Foreign Banks - 390 - -Head Offices and Branches Abroad - - - -

Total 9.793 11.687 12.542 9.001

c) Information on profit share income received from marketable securities:

Current PeriodTL FC

Financial Assets Measured at Fair Value through Profit/Loss (FVTPL) - 7.167Financial Assets Measured at Fair Value through Other ComprehensiveIncome (FVOCI) 115.705 40.563Financial Assets Measured at Amortized Cost - 9.784

Total 115.705 57.514

Prior PeriodTL FC

From financial assets at fair value through profit or loss - -From financial assets available-for-sale 101.128 2.822From held-to-maturity investments - -

Total 101.128 2.822

d) Information on profit share income received from associates and subsidiaries:


Received Profit Shares from Associates and Subsidiaries 26.763 - 5.989 -

Total 26.763 - 5.989 -



(65)

IV. Explanations and notes related to the statement of income (continued):

2. Explanations on profit share expenses:

a) Information on profit share expense paid to funds borrowed:


Banks 1.846 36.194 1.031 29.117CBRT - - - -Domestic banks 1.846 5.199 1.031 3.472Foreign banks - 30.995 - 25.645Head offices and branches abroad - - - -

Other institutions 277.755 10.523 115.506 -

Total 279.601 46.717 116.537 29.117

b) Profit share expense paid to associates and subsidiaries:


Profit share expense paid to associates andsubsidiaries 277.825 - 115.602 -

Total 277.825 - 115.602 -

c) Profit share expenses paid to marketable securities issued:

None (September 30, 2018: None).

d) Distribution of profit share expense on funds collected based on maturity of funds collected:

Current Period Profit Sharing Accounts

Account Name Up to 1month

Up to 3months

Up to 6months

Up to 9months

Up to 1year

Morethan 1

year


accounts TotalTLFunds collected from banks through

current and profit sharing accounts - - - - - - - -Real persons’ non-trading profit sharingaccounts 28.927 176.635 5.004 - 6.420 2.332 39 219.357Public sector profit sharing accounts 18.280 53.243 55.633 - 9.393 3 - 136.552Commercial sector profit sharing accounts 27.031 299.297 19.901 - 41.134 3.294 - 390.657Other institutions profit sharing accounts 1.366 33.385 20.733 - 970 841 - 57.295Total 75.604 562.560 101.271 - 57.917 6.470 39 803.861FCBanks 1.322 4.665 - - - - - 5.987Real persons’ non-trading profit sharingaccounts 1.887 36.409 2.061 - 5.053 134 - 45.544Public sector profit sharing accounts 221 689 - - - - - 910Commercial sector profit sharing accounts 2.059 50.421 11.615 - 658 29 - 64.782Other institutions profit sharing accounts 71 1.772 - - 617 - - 2.460Precious metals deposits - 4.571 1.280 70 3 - 5.924Total 5.560 98.527 14.956 - 6.398 166 - 125.607Grand Total 81.164 661.087 116.227 - 64.315 6.636 39 929.468



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Prior Period Profit Sharing Accounts

Account Name Up to 1Month

Up to 3months

Up to 6months

Up to 9months

Up to 1year

Morethan 1

year


accounts TotalTLFunds collected from banks through

current and profit sharing accounts - - - - - - - -Real persons’ non-trading profit sharingaccounts 24.627 111.105 3.469 - 1.373 618 12 141.204Public sector profit sharing accounts 10.521 51.409 3.397 - 17.299 5 - 82.631Commercial sector profit sharing accounts 19.206 208.999 20.649 - 1.875 4 - 250.733Other institutions profit sharing accounts 360 18.020 9.907 - 77 338 - 28.702Total 54.714 389.533 37.422 - 20.624 965 12 503.270FCBanks - 1.295 - - - - - 1.295Real persons’ non-trading profit sharingaccounts 981 22.497 1.273 - 1.933 48 - 26.732Public sector profit sharing accounts 745 732 - - - - - 1.477Commercial sector profit sharing accounts 821 41.111 8.251 - 359 - - 50.542Other institutions profit sharing accounts 36 3.404 34 - 4 - - 3.478Precious metals deposits - 1.181 241 - 14 - - 1.436Total 2.583 70.220 9.799 - 2.310 48 - 84.960Grand Total 57.297 459.753 47.221 - 22.934 1.013 12 588.230

3. Information on dividend income:


4. Explanations on trading income/loss (net):


Income 16.930.994 6.095.044Income from capital market transactions 3.726 98Income from derivative financial instruments 457.646 230.421Foreign exchange income 16.469.622 5.864.525

Loss (-) (16.551.703) (5.905.675)Loss on capital market transactions (8.374) (3.304)Loss on derivative financial instruments (105.813) (78.996)Foreign exchange losses (16.437.516) (5.823.375)

Trading income/loss (net) 379.291 189.369

5. Explanations related to other operating income:

Other operating income consists of provision expense reversals booked in prior period profit amounting toTL 71.341 (September 30, 2018: TL 9.168), fund support related to credit card, debit card and pos servicesamounting to TL 160 (September 30, 2018: 61) and other items amounting to TL 3.784 (September 30, 2018:TL 2.349).



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6. Provision for losses on loans:

Current Period Prior PeriodExpected Credit Loss 237.588 76.196

12 month expected credit loss (stage 1) 44.627 20.607Significant increase in credit risk (stage 2) 8.329 2.489Non-performing loans (stage 3) 184.632 53.100

Marketable Securities Impairment Expense 202 1.298Financial Assets at Fair Value through Profit or Loss - -Financial Assets at Fair Value through Other Comprehensive Income 202 1.298

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

Investments in Associates - -Subsidiaries - -Joint Ventures - -Investments Held to Maturity - -

Other (*) 20.672 77.339Total 258.462 154.833

(*) Consist of provisions allocated from profit shares to be distributed to profit sharing accounts amounting to TL 12.525 (September 30, 2018: TL 71.741),provisions for KOSGEB budget expenses amounting to TL 7.232 (September 30, 2018; TL 5.598) and other provisions amounting to TL 915 (September30, 2018: none).

7. Information on other operating expenses:


Provision for retirement pay liability (*) 2.006 40Deficit provision for pension fund - -Impairment expenses of tangible assets - -Depreciation expenses of tangible assets 38.100 10.884Impairment expenses of intangible assets - -Impairment expense of goodwill - -Amortization expenses of intangible assets 10.940 11.049Impairment provision for investments accounted for under equitymethodImpairment expenses of assets to be disposed - -Depreciation expenses of assets to be disposed - -Impairment expenses of assets held for sale and assets of discontinuedoperations - -Other operating expenses 68.763 82.409

Lease expenses related to TFRS 16 exemptions 590 -Operating lease expenses - 25.544Maintenance expenses 3.019 1.870Advertisement expenses 21.220 27.743Other expenses 43.934 27.252

Loss on sale of assets - -Other (**) 48.393 27.170

Total 168.202 131.552(*) Personnel expenses and retirement pay liability provision are presented in the "Personnel expenses" line in the current period income statement.(**) Lease expenses in accordance with TFRS 16, which entered into force as of 1 January 2019, are presented in the “Lease profit share expenses” in theProfit and Loss Statement.



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(***) Details of other expenses under other operational expenses are provided below:


Aid and Donations 6.474 4.839Heating, Lighting and Water Expenses 5.390 2.080Communication Expenses 4.405 2.931Shipping and Handling Expenses 2.498 226Representation and Hospitality expenses 2.099 1.681Vehicle Expenses 2.066 1.354İnsurance Expenses 1.946 734Cleaning Expenses 1.282 781Other Expenses 17.774 12.626

Total 43.934 27.252

(****) Details of other balance are provided as below:


Taxes, Duties, Charges and Funds 15.232 9.596Participation Share Expenses 9.386 3.225Saving Deposit Insurance Fund 11.167 8.048Expertise and Information Expenses 2.958 3.346Audit and Consultancy Fees 1.479 1.759Other 8.171 6.834Total 48.393 32.808

8. Explanations on income/loss from continued operations before taxes:

Not prepared in compliance with the Article 25 of the Communiqué “Financial Statements and RelatedDisclosures and Footnotes to be Announced to Public by Banks.

9. Explanations on tax provision for continued and discontinued operations:

As of September 30, 2019, the Bank has current tax expense amounting to TL 79.553 (September 30,2018: TL 61.581), deferred tax expense amounting to TL 19.330 (September 30, 2018: TL 7.960),deferred tax income amounting to TL 12.151 (September 30, 2018: TL 10.159).

Since the Bank does not have any discontinued operations, there is no tax provision for discontinuedoperations.

10. Explanations on net income/loss from continued and discontinued operations:

Not prepared in compliance with the Article 25 of the Communiqué “Financial Statements and RelatedDisclosures and Footnotes to be Announced to Public by Banks.



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11. Explanations on net income/ loss:

a. The nature and amount of certain income and expense items from ordinary operations; if thedisclosure for nature, amount and repetition rate of such items is required for a completeunderstanding of the Bank’s performance for the period:

None.

b. The effect of the change in accounting estimates to the net income/loss; including the effectson the future period:

None.

c. Income/loss of minority shares:

None.


12. Components of other items which constitute at least 20% of the total of other items, if the totalof other items in income statement exceed 10% of the total of income statement:

Other Fees and Commissions Received Current Period Prior Period

Insurance and brokerage commissions 9.221 5.806Commissions on money orders 8.947 3.331Member firm-POS fees and commissions 6.870 1.557Credit Card Fees and Comissions 2.503 2.221Import letter of credit commissions 3.579 1.913Expertise Fee 3.818 3.705Other 11.571 4.918Total 46.509 23.451

Other Fees and Commissions Paid Current Period Prior Period

Fees and commissions paid to Banks 22.587 5.855Funds borrowed fees and commissions 3.982 4.275Other 11.659 6.235Total 38.228 16.365



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V. Explanations related to the risk group of the Bank:

1. Information on the volume of transactions relating to the Bank’s risk group, outstanding loansand funds collected and income and expenses related to the period:

a) Current period:

Risk Group of the Bank (*)

Investment in associates,subsidiaries and jointventures (business

partnerships)Direct and indirect

shareholders of the Bank

Other real or legal personsincluded in

the risk groupCash Non-Cash Cash Non-Cash Cash Non-Cash

Loans and other receivablesBalance at the beginning of the period - - - - 433.341 -Balance at the end of the period - - - - 76.633 -

Profit share and commission incomereceived (***)

26.763 - - - 6.805 -

b) Prior Period:

Risk Group of the Bank



shareholders of the Bank


the risk groupCash Non-Cash Cash Non-Cash Cash Non-Cash

Loans and other receivablesBalance at the beginning of the period - - - - 104.959 -Balance at the end of the period - - - - 433.341 -

Profit share and commission incomereceived (**)

5.989 - - - 4.434 -

(*) Defined under Banking Law numbered 5411 in article 49 and “Communiqué Related to Credit Operations of Banks” in article 4published on November 1, 2006.(**) Prior period columns present the profit / loss figures as of September 30, 2018.(***) Consist of profit share income received from loans and marketable securities.

c.1.) Information on current and profit sharing accounts of the Bank’s risk group:




Shareholders of the Bank


the risk groupCurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

Current and profit sharing accountsBalance at the beginning of period 1.586 238 17.813 84.288 40.796 7.072Balance at the end of period 2.204 1.586 2.684 17.813 106.572 40.796

Profit share expense (*) 253 82 1.087 5.521 8.031 523

(*) Prior period columns present the profit / loss figures as of September 30, 2018.

V. Explanations related to the risk group of the Bank(continued):



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c.2.) Information on forward and option agreements and other similar agreements with relatedparties:




Shareholders of the Bank


the risk groupCurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

CurrentPeriod

PriorPeriod

Transactions at Fair ValueThrough Profit or LossBalance at the beginning of period - - - - - 103.847Balance at the end of period - - - - - -Total Income / Loss (*) - - - - 1.668 4.587Transactions for Hedging PurposesBalance at the beginning of period - - - - - -Balance at the end of period - - - - - -Total Income/Loss (*) - - - - - -(*) Prior period columns present the profit / loss figures as of September 30, 2018.

d) Information regarding benefits provided to the Bank’s top management:

As of September 30, 2019; the Bank has paid TL 6.414 (September 30, 2018: TL 5.209) to top management.

VI. Explanations related to subsequent events:

Ali Güney, who served with the title of Deputy General Manager under Treasury and Family BusinessStrategy resigned from his position as of October 16, 2019 and has appointed to Türkiye İhracat KrediBankası A.Ş. as General Manager, as of October 17, 2019.



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Section Six

Limited review report

I. Explanations on independent auditors’ limited review report:

The Bank’s unconsolidated financial statements as of and for the period ended September 30, 2019 havebeen reviewed by Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (a Member Firm ofErnst & Young Global Limited) and the independent auditors’ limited review report dated November 8, 2019is presented at the beginning of the financial statements and related notes.

II. Other notes and explanations prepared by the independent auditors:



Notes related to unconsolidated financial statementsas of September 30, 2019(Amounts expressed in Turkish Lira (TL) unless otherwise stated.)

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Section Seven

Interim Activity Report

1. Message of the Chairman of the Board

We left behind the third quarter of 2019. Albeit the ups and downs in the markets, we have a more balanceview in front of us as compared to the same period of last year. International Monetary Fund (IMF)’s Aprilreport revised the global growth expectation to 3.3% from 3.5% for 2019 while maintaining the 2020 forecastat 3.6%. Global economy have shown a remarkable acceleration of growth in the previous year and in thefirst half of last year.

However from the second half of 2018 onwards, the trade tension between USA and China as twointernational powers have caused declines in export figures. Additionally, the concerns regarding theEurozone economies were among the factors affecting the global growth. Another factor was the troubledaccess to international funds by the developing economies. Despite all these factors, IMF expects a growthin the average of 1.8% by the 39 developed economies, and the growth of 155 developing economies toaverage 4.4%, by the end of 2019.

Turkey continues to grow

It’s not easy to keep afloat in an environment of such global fluctuations. Even though Turkey stands as acountry of steady growth since the last quarter of 2018. The fact that almost all of the domestic developmentsin Turkey has some international market responses shows us the amount of potential Turkey possesses.Turkey maintains its position within the global economy in attracting attention and having a say in internationalaffairs, with its young population as well as strong financial structure and stable policies. We have observedhaving left behind by the first quarter the fluctuation in our economy as a result of foreign interference lastyear, thanks to the appropriate interventions and successful management by the economy administration.Turkey’s performance for the first three quarters also confirms that the country’s economy is in a balancingperiod, the slowing down of the growth reflected only a temporary situation and a moderate recovery havealready started

Asset size have increased strongly

We as Vakıf Katılım pursue our endeavors uninterruptedly in line with our mission of “Shared past, sharedfuture”. We are increasing the number of people we reach out to, and widening further the service rangeevery day, based on the vast experience of waqf/foundations culture, accumulated within hundreds of years.Albeit being a younger player within the participation banking market, we are delighted to have completedsuccessfully the first three quarters of 2019 with our experienced management, ever-improving deliverychannels, dynamic operation systems, and devoted employees. Thanks to our endeavors, we have managedto increase our total assets size by 480.9% as compared to the year we started operations, and 46.3% fromthe same period last year. Furthermore, we ranked among the highest in profitability per assets and perequity within the overall banking sector.

Growing with the sector

As Vakıf Katılım our main objective is to grow together with the participation banking sector. We are workinghard to increase the market share of participation banks within the Turkish banking industry to 15% fromwhere it stayed at the level of 4-5% for many years. We are targeting to be an arbiter in our participationbanking industry, which is expected to grow by 30% annually by the end of 2019. We are carrying outsignificant efforts to reach out to more and more people in our day when awareness about participationbanking have just started to improve. Furthermore, we believe Turkey has a great potential to become anIslamic Financial Center. We will do our best on our part as the participation banks to help our country toadvance in this direction.

I’d like to extend my gratitude to the executive level for their support in our efforts to develop our country andour industry, to all of our colleagues, and the clients for their kind interest in our bank

Sincerely,

Öztürk OranChairman



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2. Message of General Manager

We had a period in which we have worked harder every day to realize our targets and the period was full ofmany “first of its kind” innovations in our sector as products. We are going forward successfully ever sincewe started operations, and within the 2019 as well, thanks to our competent management team, our serviceapproach fulfilling customer needs and demands quickly, and continuing efforts of our dedicated employees.

As well known, participation banking is a relatively young establishment, compared to the conventionalbanking for our country. Going forward, our priority and main target will continue to be to introduce ourselves,and the participation banking system. We believe we will move significantly forward the participation bankingsector very soon, with the support and important guidance obtained from the President of our Republic.

Our ranking in total asset size as Vakif Katilim have increased to 20, among the 38 banks active inconventional commercial banking and the participation banking. In this journey which started not long ago,our target is to become the participation banking sector leader in 2021, and to rank among top 5 among allbanks in 2023.

In the third quarter of 2019, our asset size reached TL 27.2 billion with an increase of 29,8 percent and fundscollected reached TL 20.8 billion with an increase of by 36,8 percent compared to the previous year. Weincreased our support to the real sector with both our strong funding sources and our own funds, andconsequently we extended loans TL 22.7 billion in cash + non-cash. We received an approval for theissuance of a lease certificate of TL 8 billion for 2019 and issued TL 2.81 billion in the first quarter.

In this period, where we concentrate on the digital transformation process as an indispensable part of ourera, we also continue to carry out our branching activities, as important signatures of our sector withcontinuing importance. In this regard, the opening of our branches will continue uninterruptedly, to ensureuninterrupted service to our customers at every point of Turkey. We aim to reach approximately 106 branchesat the end of 2019. Our sector employs more than 15 thousand people and we, as Vakıf Katılım, believe inthe importance of human resources, with our 1.250 employees.

In the period we left behind, we have come to an important point with the issuance of the lease certificate tothe domestic market with intent to support economy of our country to move forward a further dimension. The525 million TL lease certificate issued by our subsidiary Vakıf Varlık Kiralama A.Ş. was among the importantachievements of this year.

We have great objectives for the rest of this year and the coming years. By further improving our issuancepotential based on our strong balance-sheet structure, we will continue to move forward with confidence, theway we did since the establishment of our bank. We will always be a pioneer for digital orientations and usetechnology to increase the efficiency of the “qualified labor”. With the effect of having the title of R & D Center,we plan to develop new strategic alliances with academic and fintech ecosystems in order to continue ourtitle and accelerate our digital innovation efforts in the coming period.

I would like to thank to our Board of Directors, who has always given support to us in all our innovations, andto my teammates, who have worked with great effort and enthusiasm for the success of Vakıf Katılım, andto our customers who prefer Vakıf Katılım.

Sincerely

İkram Göktaş CEO



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3. Summary of Unconsolidated Financials

Assets Current Period Prior Period Change (%)

Loans and Leasing Receivables 15.075.623 13.487.990 11,77Cash and balances with central bank 4.952.401 4.135.990 19,74Banks 1.757.029 1.393.622 26,08Securities 4.619.911 1.442.087 220,36Other Assets 793.171 495.823 59,97Total Assets 27.198.135 20.955.512 29,79

Liabilities Current Period Prior Period Change (%)Funds Collected 20.766.608 15.182.406 36,78Funds Borrowed 3.207.013 3.691.339 (13,12)Subordinated Debts 493.144 - 100Shareholders Equity 1.841.892 1.527.226 20,60Other Liabilities 889.478 554.541 75,76Total Liabilities 27.198.135 20.955.512 29,79

Income/Loss Accounts Current Period Prior Period Change (%)Profit Share Income 1.713.513 1.188.441 44,18Profit Share Expenses 1.280.407 738.017 73,49Net Profit Share Income 433.106 450.424 (3,84)Net Fees and Commissions Income/Expenses 60.332 33.484 80,18Trading Income/Loss 379.291 189.369 100,29Other Operating Income 75.285 11.578 550,24Provision For Expected Loss (-) 237.588 76.196 211,81Other Provision Expenses (-) 20.874 78.637 (73,46)Personnel Expenses 182.553 115.917 57,49Other Operating Expenses 166.196 131.552 26,33Income/Loss before taxes 340.803 282.553 20,62Tax Provision (86.732) (59.382) 46,06Net Profit/Loss 254.071 223.171 13,85

Ratios (%) Current Period Prior PeriodTotal Loan/Total Assets (*) 56,87 64,36Total Loan/Funds Collected (*) 74,49 88,84Return on Average Equity( ROAE%) 28,17 29,73Return on Average Assets (ROAA%) 1,58 1,79Capital Adequacy Ratio 15,27 13,60

(*)Total Loan amount including leasing receivables.



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Changes on Articles of Incorporations in current period:

None.

4. Important Developments and Transactions in Current Period:

Through Vakıf Varlık Kiralama A.Ş., 19 lease certificates have been issued, January 11, 2019, January 16,2019, January 23, 2019, January 31, 2019, February 13, 2019, February 22, 2019, March 7, 2019, March20, 2019, March 28, 2019, April 10, 2019, April 25, 2019, May 8, 2019, May 22, 2019, May 31, 2019, June12, 2019, June 20, 2019, July 4, 2019, July 12, 2019, July 18, 2019, August 01, 2019, August 26, 2019,August 28, 2019, September 19, 2019, October 03, 2019, October 10, 2019, October 16, 2019, October 24,2019 and November 06, 2019. As a result, as of September 30, 2019 total of 24 exports with a total ofapproximately TL 5.6 billion leasing certificate has been reached.

Through Katılım Varlık Kiralama A.Ş., Our foreign lease certificate issuance preparation works amounting toTL 300 million Deniz Finansal Kiralama A.Ş. (Deniz Leasing), which we received the approval of issuanceceiling by the Capital Markets Board in September 2019, are still proceeding.

İrfan ŞAVİK, who worked as the Assistant General Manager of Support Services Business Family, hasresigned from his duty as of September 27, 2019.

Ali Güney, who served with the title of Deputy Manager under Treasury and Family Business Strategyresigned from his position as of October 16, 2019 and has been appointed as General Manager in Türkiyeİhracat Kredi Bankası A.Ş. as of October 17, 2019.

There is no significant change on the amounts on financial statements on annual report which prepared inaccordance with the Regulation on Procedures and Principles Concerning the Preparation and Publicationof Annual Report.

5. Expectations of the Upcoming Period:

Vakıf Katılım Bankası A.Ş. , has issued 71 lease certificates amounting to approximately TL 14.9 billion inthe last 2,5 years. The Bank's subsidiary Vakıf Varlık Kiralama A.Ş., has issued 64 lease certificatesamounting to approximately TL 14 billion in the last 2,5 years, which the Parent Bank is fund user. ThroughKatılım Varlık Kiralama A.Ş., another subsidiary of the Bank, in the last 2,5 years, a total of 7 sukuk certificateissuance of TL 903 million are reached.

The Bank intend to contribute sukuk market growth with issueing new sukuk certificates in leasing and energysectors and to improve capital market products of interest-free banking in the rest of the year.

The Bank aims to reach 106 branches and about 1.305 employees until the year end of 2019.