keeping pace with life - lacp llcawards & recognitions 2005 • ekovitrin stars of the year:...

Annual Report 2012

keeping pace with life

Reporting Period: 01.01.2012-31.12.2012Corporate Title: Türkiye Finans Katılım Bankası A.Ş.Trade Registration No: 401492/349074

Headquarters Address:Yakacık Mevkii Adnan Kahveci Cad. No: 139 Kartal 34876 İstanbul

Headquarters Telephone No: (+90 216) 586 70 00 (pbx)Headquarters Fax No: (+90 216) 586 63 26Website: www.turkiyefinans.com.trE-mail: [email protected] Code: AFKBTRIS

Presentation

4 Türkiye Finans in Brief

5 Our Vision, Our Mission, Our Corporate Values

6 Awards & Recognitions

10 Summary Financial Information

12 Changes in the Articles of Association and the Justifications for Them

12 Capital and Shareholder Structure

13 Shares Held by the Members of the Board of Directors and Managers

16 Chairman’s Message

18 CEO’s Message

22 Macroeconomic Outlook and Sectoral Developments

25 An Assessment of the Bank’s Position in the Sector in 2012

28 An Assessment of Türkiye Finans’s 2012 Activities and Results

47 Research & Development; New Services and Activities

49 Compliance Opinion on the Annual Report

Management and Corporate Governance Practices

52 Board of Directors and Audit Committee

54 Executive Vice Presidents

56 Unit Managers within Internal Systems

57 Board of Auditors

58 Organization Chart

60 Governing Bodies and Committees at the Bank, Participation of Bank Directors and Committee Members in Meetings

62 Information About General Meetings Held in 2012

62 2012 Annual General Assembly Agenda

63 Summary of the Board of Directors Report Presented to the General Assembly

66 Information About Human Resources Practices

68 Information About the Related Party Transactions, the Bank Enters

68 Other Information

69 Activities for Which Support Services are Outsourced and the Persons and Organizations from Which They are Obtained

Financial Information and Assessment on Risk Management

70 Board of Auditors’ Report

71 Audit Committee’s Assessment of Internal Audit, Internal Control, Risk Management and Regulatory Compliance Functions; Committee Activities During the Reporting Period

73 Declaration Concerning the 2012 Annual Report

74 Independent Auditors’ Report

75 The Unconsolidated Financial Report of Türkiye Finans Katılım Bankası A.Ş. for the Year Ended 31 December 2012

168 Information About the Bank’s Dividend Policy

169 Assessment of Financial Position, Profitability and Solvency; Asset Quality and Profitability

172 Information About Risk Management Policies by Type of Risk

174 Information About Credit Rating Agency Rating Assignments and the Nature of Such Ratings

175 Summary Financial Information Pertaining to the Five-Year Period Including the Reported Period

176 Directory

Contents

Section 1 - Presentation Türkiye Finans 2012 Annual Report 1

Türkiye Finans continues to work for “keeping pace with life”.

Out of its commitment to sustainable growth and change, the bank is blending market dynamics with its own corporate dynamics in order to better internalize them while also advancing strongly in its pursuit of growth driven by participation banking.

Türkiye Finans is the hub of a powerful service platform consisting of 3,595 employees, 220 branches, and an effective array of alternative delivery channels that enables the bank to offer innovative and high added value products, services, and solutions to a broad customer base in the corporate & commercial banking, enterprise banking, and retail banking segments.

Türkiye Finans 2012 Annual Report Section 1 - Presentation2


Keeping pace with life: It means abiding by your principles while also successfully managing change. In 2012 Türkiye Finans once again adhered to a service approach informed by participation banking principles and by its corporate and ethical values as it advanced confidently and sustainably in its relentless effort to do better.

Reliability

Honesty

Respect

Transparency


Türkiye Finans in Brief

A joint venture of the Boydak Group, the Ülker Group, and The National Commercial Bank (Saudi Arabia), Türkiye Finans is grounded Turkey’s deep-rooted knowledge of and experience with participation banking.

Anadolu Finans, which was founded by a group of entrepreneurs from Kayseri in 1991, was Turkey’s first private finance house to be funded entirely by domestic capital. In July 1999, control of Anadolu Finans passed to the Boydak family.

Faisal Finans Kurumu, another private finance house that had been in business since 1985, joined the Ülker Group in 2001 when that group acquired a majority stake in the bank and changed its name to Family Finans.

In 2005 the Boydak Group and the Ülker Group combined these two participation banking concerns under a single roof, thereby transforming them into a potent economic force. This union of strengths was undertaken in order to create more value for Turkey and to bolster the competitive advantages of both.

The Anadolu Finans and Family Finans merger was approved by the Banking Regulation and Supervision Agency (BRSA) on 28 December 2005. Two days later on the 30th, the agency approved the renaming of the bank as “Türkiye Finans Katılım Bankası A.Ş.” (Türkiye Finans Participation Bank Inc).

A rising star powered by a union of strengths…

Immediately after the merger the bank assumed a brand-new corporate identity as it breathed new life into participation banking, a business line whose target audience was growing steadily.

A new period of tremendous change and transformation at Türkiye Finans began on 31 March 2008 when The National Commercial Bank (NCB) acquired a 60% stake in the company. By bringing together the strengths of the Boydak and Ülker groups, two of Turkey’s leading industrial conglomerates, with those of the Middle East’s most deeply-capitalized bank, capital structure and vision of this partnership resulted in its emergence as a leading player in the business of participation banking.

Türkiye Finans at the outset of 2013

In 2011 Türkiye Finans laid out a five-year plan under which it redefined its goals and growth roadmap. As called for in that plan, the bank is currently undertaking a variety of projects and making important progress aimed at further developing its:

• technological infrastructure,• business processes,• service approach.

Out of its commitment to sustainable growth and change, the bank is blending market dynamics with its own corporate dynamics in order to better internalize them while also advancing strongly in its pursuit of growth driven by participation banking.

As of end-2012 Türkiye Finans was the hub of a powerful service platform consisting of 3,595 employees, 220 branches, and an effective array of alternative delivery channels that enables the bank to offer innovative and high added value products, services, and solutions to a broad customer base in the corporate & commercial banking, enterprise banking, and retail banking segments.


Our Vision

To be recognized as the premier source of principles-based banking and investment for individuals and business owners in Turkey.

Our Mission

In line with the principles of Participation Banking, our mission is to foster value-creation rather than consumption and to share the value that is generated from these activities with our owners of the participation fund, our Employees and our Shareholders in a fair and transparent way. We believe in the Service Value Creation Chain whereby value is the outcome of effective employee interactions with our customers, where we are providing the right products and services, when and where the customer wants it, in the right way all the time. We also believe that, as our reputation is our most important asset, it is also the hardest to replace.

Our Corporate Values

Productive SharingWe share in order to be productive; and the more that we share, the more productive we are.

Customer-Focused ServiceWe supply products and services that satisfy our customers’ expectations, whenever and wherever they need them.

SatisfactionWe give importance to the satisfaction of our customers, our employees, our shareholders, and our community.

Superior Service QualityWe constantly improve our service quality by paying heed to our employees’ and customers’ suggestions.

Contributing to the National EconomyWe marshal our resources so as to contribute to the development of the national economy. We support local development by preferentially lending such resources back to the places where we have gathered them.

Constant RenewalWe keep a close watch in developments taking place in Turkey and around the world. We provide our employees with current technological and informational support.

Respect for Shared ValuesWe are respectful of society’s shared values in the conduct of all of our activities.

Our Vision, Our Mission, Our Corporate Values


Awards & Recognitions

2005

• Ekovitrin Stars of the Year: “Participation Bank of the Year”

2006

• Citibank: “Quality Recognition Award” for a better than 99% end-to-end transfer rate

• The Bank of New York: “Quality Recognition Award” for preformatted payment orders and end-to-end transfers

• Standard Chartered Bank: “Certificate of Success in Completing USD Transfers” for preformatted payment orders and end-to-end transfers

2007

• Islamic Finance News: “Best Islamic Bank in Turkey”


• Standard Chartered Bank: “Certificate of Success in Completing USD Transfers” for preformatted payment orders and end-to-end transfers

• kariyer.net: “Respect for People” award in the Banking & Financial Services category

• Eureko Sigorta: “Most Productive Financial Services Agency in Turkey”

2008


• The Bank of New York: “Quality Recognition Award” for preformatted payment orders and end-to-end transfers

• Global Banking and Finance: “Best Islamic Bank in Turkey”

• Eureko Sigorta: “Most Productive Financial Services Agency in Turkey”

• TOP Teams Turkey Western Union: “Newcomer of the Year”

2009


• Deutsche Bank: “Excellence in End-to-End Transfers”

• Tüm Anadolu Çalışan ve Emekliler Birliği Derneği: “Bank of the Year”


2010


• Ekovitrin Stars of the Year: “Participation Bank of the Year”

• Interactive Media Council Awards: “Outstanding Achievement Award” for www.happycard.com.tr website


• Deutsche Bank: “Excellence in End-to-End Transfers”

• Eureko Sigorta: “High-Performing Financial Services Agency in Turkey”

2011

• kariyer.net: “Respect for People” award

• Interactive Media Council Awards: “Outstanding Achievement Award” for www.turkiyefinans.com.tr website


• Financial Crimes Investigation Board (MASAK) Evaluation of Anti-Money Laundering and Combating the Financing of Terrorism: “Turkish Banking Sector First Place”

• Western Union: “Most successful use of campaigns in Turkey”

• Microsoft MVP: An employee in Türkiye Finans’s Information Systems Department has been a designated “Most Valuable Professional” (MVP) in the “Microsoft Active Directory” category for three years in a row. He is one of only 70 Directory MVPs in the world and the only one in Turkey. Another employee in the same department has been a designated MVP in the “Microsoft Forefront” category for four years in a row. He is one of only 30 Forefront MVPs in the world and the only one in Turkey.

2012

• kariyer.net: “Respect for People” award


• Creativity Awards: Silver medal for Türkiye Finans’s 2011 annual report in the “Annual Reports” category

Ever since its inception in 2005, Türkiye Finans has been receiving awards and recognitions in many different categories from respected national and international banks, agencies, magazines, and organizations.


Keeping pace with life: It means constantly maintaining your financial strength even in a tough macroeconomic environment. In 2012 Türkiye Finans increased its share capital by TL 275 million, all of it in cash.

Others

Gözde Finansal Hizmetler A.Ş.

Boydak Group

The National Commercial Bank

66.27%

7.17%

11.57%

14.99%

Paid-in Capital

TL 1,775 million


Summary Financial Information31.12.2012 (TL thousand)

Assets 17,616,504

Cash and Banks 3,315,196

Securities 665,115

Loans 12,763,400

Receivables from Leases 304,369

Fixed Assets (Net) 215,498

Other Assets 352,926

Liabilities 17,616,504

Funds Collected 11,429,536

-Special Current Accounts 2,527,809

-Participation Accounts 8,901,727

Loans Received 2,503,943

Shareholders’ Equity 2,125,162

Paid-up Capital 1,650,000

Other Liabilities 1,557,863

Non-Cash Loans 7,108,697

Income and Expense Accounts

Profit Share Income 1,410,356

Profit Share Expenses (618,245)

Net Profit Share Income 792,111

Net Fee and Commission Income 108,231

Other Non-Profit Income 148,508

Non-Profit Share Expenses (687,024)

Profit Before Tax 361,826

Provision for Taxes (78,253)

Net Period Profit 283,573

Key Ratios

Capital Adequacy Ratio 14.76%

Return on Equity (Annual) 15.17%

Loans / Total Assets 74.18%

Current Accounts / Funds Collected 22.12%

Non-Performing Loans (Gross) / Loans 2.74%

Other

Total Number of Branches 220

Total Number of Personnel 3,595

2012

5,632,207

7,185,124

7,999,620

10,402,875

13,067,769

2008

2009

2010

2011

Total Loans (TL thousand)

TL 13,067,769 thousandTürkiye Finans performed better than the banking sector and participation banks by increasing its credit disbursements including leasing by 25.6% year-on to TL 13.1 billion.

2012

7,104,156

8,699,643

10,691,860

13,528,353

17,616,504

2008

2009

2010

2011

Total Assets(TL thousand)

TL 17,616,504 thousandThe 30% rise that Türkiye Finans achieved in its total assets was substantially higher than the sectoral average. The bank registered a 1.82% rate of return on assets.


2012

160,633

171,388

205,529

231,587

283,573

2008

2009

2010

2011

Türkiye Finans achieved all of its main performance targets and it registered growth rates above sectoral averages in a majority of cases.

2012

1,001,456

1,193,692

1,406,096

1,613,659

2,125,162

2008

2009

2010

2011

2012

5,312,548

6,882,490

8,397,896

9,509,165

11,429,536

2008

2009

2010

2011

Funds Collected(TL thousand)

TL 11,429,536 thousandThe sector’s total deposits grew by 11% while those of the participation banking segment more than doubled that rate at 22.2%. Türkiye Finans’s funds collected increased by 20.2% and reached TL 11.4 billion.

Shareholders’ Equity(TL thousand)

TL 2,125,162 thousandAs a result of having retained prior-year profits, Türkiye Finans’s total shareholders’ equity amounted to TL 2,125million as of end-2012. The bank’s return on equity was15.17% in 2012.

2012

3,625,271

3,758,913

4,280,460

6,538,539

7,108,697

2008

2009

2010

2011

Non-Cash Loans(TL thousand)

TL 7,108,697 thousandIn the case of non-cash credit placements, there was a net8.7% rate of growth in the portfolio, which stood at TL 7.1billion in value at year-end.

Net Profit(TL thousand)

TL 283,573 thousandIn the twelve months to end-2012, the bank increased its total profit by 22% to TL 284 million.


Changes in the Articles of Association and the Justifications for Them

Capital and Shareholder Structure

As a result of an amendment to the articles of association in 2012, the company’s capital was increased from TL 800 million (eight hundred million Turkish liras) to TL 1,775 million (one billion seven hundred seventy-five million Turkish liras). Of the total TL 975 million (nine hundred seventy-five million Turkish liras) increase, TL 275 million (two hundred seventy-five million Turkish liras) was pledged, in good faith and in cash, while TL 700 million (seven hundred million Turkish liras) thereof was covered freely out of a reserve fund which had been set aside pursuant to a general assembly resolution. Of the TL 275 million (two

hundred seventy-five million Turkish liras) pledged in cash, it has been decided that TL 150 million (one hundred fifty million Turkish liras) will be paid within three months of the date on which the share capital increase is registered and that the remaining TL 125 million (one hundred twenty-five million Turkish liras) will be paid no later than 31 December 2012.

The amounts of cash pledged by shareholders towards the share capital increase have already been paid in line with the share capital increase decision taken at the general meeting.

There are no shares which the bank has acquired in itself.

The bank’s capital is sufficient for the bank to conduct its activities in a sound manner and its assets are sufficient

to cover its liabilities. The bank’s capital adequacy ratio, calculated as of end-2012, is 14.76% and is above the statutorily mandated limit.

NCB (National Commercial Bank), Türkiye Finans’s majority shareholder is the most deeply-capitalized bank in the Middle East with its equity amounted USD 10.5 billion. As of the end of 2012, the bank had total assets worth USD 92.1 billion. NCB serves a customer base of nearly 3.3 million with 6,750 employees in 303 branches located in Saudi

Arabia. The bank makes highly effective and efficient use of alternative delivery channels, through which some 88% of its customers’ transactions now flow. NCB was cited by The Banker as “The Best Bank In The Kingdom Of Saudi Arabia” in 2012.

Shareholder Share Amount (TL thousand) Share Ratio (%)NATIONAL COMMERCIAL BANK 1,176,369 66.27 OTHER SHAREHOLDERS (130 in number) 127,335 7.17 GÖZDE GİRİŞİM SERMAYESİ YATIRIM ORTAKLIĞI A.Ş. 205,405 11.57 (HACI) MUSTAFA BOYDAK 41,173 2.32 BOYDAK HOLDİNG A.Ş. 39,213 2.21 BEKİR BOYDAK 33,269 1.87 MEMDUH BOYDAK 33,269 1.87 MUSTAFA BOYDAK (SON OF SAMİ) 33,250 1.87 YUSUF BOYDAK 31,309 1.76 ŞÜKRÜ BOYDAK 27,730 1.56 HACI BOYDAK 26,678 1.50 Total 1,775,000 100.00

About NCB


Shares Held by the Members of the Board of Directors and Managers

Chairman, Board Members, CEO, Executive Vice Presidents, Statutory Auditors, and Shares Held by Them in the Bank

Title Name/Surname Education Area of Responsibility Share Held in the Bank (%)

Chairman Mustafa Boydak Bachelor’s Chairman of Board of Directors 1,87

Members of the BoardAbdulkareem Asaad A. Abu Alnasr

Master’s Member of Board of Directors -

Oğuz Kayhan Master’sMember of Board of Directors and Audit Committee

-

Mehmet Atila Kurama Master’s Member of Board of Directors -

Donald Paul Hill Master’s Member of Board of Directors -

Brian Keith Belcher Bachelor’sMember of Board of Directors and Audit Committee

-

Veysel Derya Gürerk (CEO)

Master’s Member of Board of Directors and CEO -

Members of Audit Committee

Oğuz Kayhan Master’sMember of Board of Directors and Audit Committee

-

Brian Keith Belcher Bachelor’sMember of Board of Directors and Audit Committee

-

Executive Vice Presidents Osman Çelik Bachelor’s Loans -

İkram Göktaş Bachelor’s Distribution and Service -

Zuhal Ulutürk Master’s Human Resources -

Bedri Sayın Bachelor’s Operations -

Aydın Gündoğdu Master’s Commercial Banking -

Menduh Kara Bachelor’s Enterprise Banking -

Fahri Öbek Master’s Information Systems -

Semih Alşar Master’s Personal Banking -

Abdüllatif Özkaynak Bachelor’s Finance -

Ali Güney Bachelor’s Treasury -

Statutory Auditors Eyüp Asker Master’s Member of Board of Auditors -

İdris Turan İlter Bachelor’s Member of Board of Auditors -

Erdoğan Öcal Bachelor’s Member of Board of Auditors -


Keeping pace with life: It means translating your competitive advantages into performance and sustaining healthy growth. In 2012 Türkiye Finans outperformed its sector by increasing its total assets by 30%, its funds collected by 20%, its total lendings by 26%, and its net profit by 22%.

Funds Collected

Net Profit

LoansTotal Assets

30%

20%

22%

26%


Chairman’s Message

We have just completed another year in which the effects of the global economic crisis grew deeper and more intractable. As had been expected, contracting growth rates and problems with debt servicing continued to plague European countries in 2013 as well. With the queue of countries having recourse to the European Central Bank’s bailout program growing longer, speculations were rife that many others were waiting to join it.

Turkish firms, which send 45% of Turkey’s exports to European countries, were adversely impacted by the region’s difficulties and they encountered payment and collection problems. Those doing business in countries such as Algeria, Libya, and Syria were little better off, confronted as they were with the risk of being unable to collect what was owed to them. Nevertheless there were those for whom the winds blew more favorably: some Turkish firms made significant progress in the direction of acquiring new markets, especially in Gulf countries in the wake of the Arab Spring.

Despite every adversity, Turkey continued to stand in the front ranks of not just the region’s but the world’s rising stars. While European countries were wrestling with some of

the highest rates of unemployment experienced in history, our country achieved considerable success on this front thanks to newly-created job opportunities. At the same time, thanks to consistency in monetary policy implementation, Turkey registered historical lows in interest rates and may also be said to have successfully passed its test of keeping inflation under control. The current account deficit, which economists and international agencies alike unanimously agree is the most serious of the risks confronting Turkey, contracted quite significantly as a result of successful policy implementation.

With Turkey’s outstanding obligations to the IMF all but extinguished the country verged on becoming a net contributor to the fund. This fact along may be seen as clear evidence of the success the country has been achieving in recent years. For the first time in two decades, Turkey’s country rating has returned to the investment grade level. This presents significant opportunities from the standpoints of both capital flows and foreign direct investment. This higher country rating will make credit resources more accessible, will reduce borrowing costs, and will broaden the investor base. That said, there is always the risk of

Mustafa BoydakChairman of the Board of Directors


capital flows destabilizing the country’s financial system; however action taken by the central bank in the form of policy interest rates, lending rates, and reserve requirements should substantially mitigate such risks.

Paralleling these excellent developments in our country, Türkiye Finans also had a very successful year. Not only did we achieve all of the targets that we set for 2012 but the positive feedback which we received about the corporate identity transformation that we undertook in line with our new vision was a source of happiness and excitement for us all.

Türkiye Finans shapes and conducts its business in line with its vision of being the leading proponent of participation banking in Turkey. The new products which the bank launched in 2012 continued to set the course of its sector. A share capital increase that we undertook last year boosted our bank’s capitalization by 122% from TL 800 million to TL 1,775 million. This was yet another of the major steps which we are taking to increase our bank’s successful performance. With the additional funding, our principal shareholder the NCB Group, brought additional long-term

capital amounting to more than TL 177 million into our country.

As embodied in its name, Türkiye Finans, our bank regards national growth and development as a core component of its mission and it makes progress in that direction with every step that it takes. I believe that by pursuing this vision, our bank can soon become one of the most important financial institutions in our country. With that in mind, I therefore take this opportunity to thank all of our employees, customers, and shareholders who have contributed towards our bank’s success.

Mustafa BOYDAKChairman of the Board of Directors

Türkiye Finans shapes and conducts its business in line with its vision of being the leading proponent of participation banking in Turkey. The new products which the bank launched in 2012 continued to set the course of its sector.

122% national growthA share capital increase that we undertook last year boosted our bank’s capitalization by 122% from TL 800 million to TL 1,775 million.

Our bank regards national growth and development and it makes progress in that direction with every step that it takes.


CEO’s Message

We have had a successful year in which we reaped the benefits of our dedicated transformation efforts and thus in which we significantly increased the value that we create for our customers, our community, our employees, and our shareholders.

The secret of the strong performance that we achieved in an environment in which we experienced a serious contraction in the rate of credit expansion in the Turkish banking sector, owing partly to the measures taken by regulatory authorities, lies in the strength of the business model that we have developed and to our placing our customers at the focal point of everything that we do. The fundamental goal on which we concentrated in 2012 was to perform strongly in six strategic areas that we defined at the beginning of the year.

Increase productivity

Through our “increase productivity” strategy, we optimized our business processes and ensured that our customers’ needs were satisfied in the least amount of time. In the first ten months of the year we registered a revenues/expenditures ratio of 2.2, which was well above that of the sector as a whole and of other participation banks. Average productivity per branch also increased by 10%, which similarly outpaced both sector and segment averages.

Strengthen the customer experience

We initiated important efforts to further improve both customer management and the customer experience. All of the ways in which the bank comes into contact with customers were reviewed and we completed the design stage of our “Excellence service with professional

team” project, one of whose aims is to standardize such communication. We carried out mystery shopper and customer satisfaction surveys in order to identify opportunities to improve satisfaction levels. Rolling out our “Q-Matic” project, we optimized customer service delivery at our branches. We increased interactions with our customers by conducting sales campaigns via operations teams. We shortened customer service delivery times through process centralization.

Strengthen delivery channels

Delivery channel augmentation was one of our high-priority objectives in 2012. Ongoing projects to improve infrastructure in this area will further support our efforts to better position ourselves in the sector. We introduced an internet-based international money transfer service. Through our ongoing delivery channel relocation efforts, we increased the number of transactions performed via the online branch by 20% year-on and sold 35,000 products in the same way. We increased the number of self-owned ATMs from 230 to 271 and more than doubled (from 16 to 35) the number of branches with at least two units installed. The number of machines capable of accepting deposits was raised from 88 to 155.

In line with our efforts to expand our distribution network we opened 38 new branches in 2012, thus reaching our target for the year and giving us access to a much broader audience. By revamping both our corporate identity and our public face we positioned our bank as financial products and services provider that is more advanced, more congenial, and more dynamic. A successfully mounted public communication campaign increased our visibility.

V. Derya GürerkCEO


Improve assets/liabilities management

In line with our strategy of improving balance sheet management, we allocated a significant proportion of our resources to real-sector financing.

By increasing the total volume of our lending by 26% to TL 13 billion, we outperformed both our sector and other participation banks as well. Our participation funds grew by 20% year-on and reached TL 11.4 billion in value last year, pointing out a performance parallel to the participation banks and above the sector.

We increased our leasing receivables by 440% to TL 304 million in 2012.

New Fund Transfer Pricing application made it possible for us to keep a closer watch on customer behavior and thus achieve growth through more effective revenue/expenditure management with no loss in profitability. A project that we launched to issue instruments based on rental income streams as a way of diversifying our resource mix made substantial progress.

The effectiveness of our resource management is to be seen in a 22% year-on increase in our net profit, which amounted to TL 284 million.

Develop new products

We worked on the development of new products as a way of increasing our market share. With the introduction of our “Finansör” product, we provided our customers with the world’s first debit card-based general-purpose loan solution. The 46% increase registered in our Finansör and debit card turnover in the last two months of 2012 boosted our bank’s ranking in the sector’s debit card turnover by two places. In addition to Finansör, we also expanded our product line with such additions as “Ready Limit”, “Quick Loan”, “Gold Participation Account”, “Mobile Credit”, “Happy Card/Platinum”, “Gold Card”, “Spot FX”, “Business Support Financing”, “Batch Transfers/EFT”, and “Internet-Based FX Transfers”. We are currently working on the development of other products.

Build effective Human Resources

Our Personal Performance Project (AYNA) represents an important investment that we are making in improving competency management. Recruiting qualified personnel and conducting training to improve the personal and professional skills of our existing employees were among the most salient of our activities on this front in 2012.

Our capital increase

We thank our major shareholder for their confidence in the Turkish economy and for their support in our management, both of which contributed meaningfully to our success. The TL 275 million cash injection that we received as a share capital increase in 2012 was immediately put to work for the benefit of the national economy and also helped increase our shareholders’ equity from TL 1,614 million to TL 2,125 million last year.

The outlook for 2013

With the results that we achieved in 2012 we are embarking upon 2013 in an even more solid position than before. The impact of our newly-opened branches and other activities will become even more evident as time goes by. Our effective human resources, our asset quality, our robust capitalization, and our shareholder structure all coalesce and enhance our competitive strength.

From the standpoint of macroeconomic developments, we anticipate that 2013 is going to be an overall better year than was 2012: growth will accelerate somewhat, the national debt will begin to decline (despite the risk of a bigger current account deficit owing to oil prices), unemployment will drop, and inflation will fall. We foresee that lower market interest rates will stimulate domestic demand. Our expectations on the international front are that there will be a relatively modest recovery in the world economy, provided of course that problems in the EU do not get worse and that those in the US can be resolved.

In such an environment we will continue, as we did last year, to further bolster our competitive position, to support the real economy and our retail customers, and–most important of all–to create more added value for all of our stakeholders.

A team whose members are individually and collectively committed to our business model and corporate culture is the wellspring of the strength that enables us to take our “principled banking” approach and success to even greater heights. In closing, I extend my sincerest thanks to our customers, our shareholders, our board of directors, and all of my colleagues for always standing by us on the path of sustainable success.

V. Derya GÜRERKCEO

We will continue further bolster our competitive position, to support the real economy and our retail customers, and–most important of all–to create more added value for all of our stakeholders.


Keeping pace with life: It means taking customer satisfaction to even higher levels. In 2012 Türkiye Finans increased the number of its branches from 182 to 220 with the addition of 38 new locations at which it comes into contact with its customers and serves them.

182# of branches

2011

+38 220# of branches

2012


Macroeconomic Outlook and Sectoral Developments

Overview of the global economy

Five years after the outbreak of the global economic crisis, the world’s economy is still in search of balance.

2012 was a year during which the climate of uncertainty that beset the whole world in the wake of the global economic crisis was as grave as ever, the recovery in global economic activity remained weak, and the impact of developed countries’ sovereign debt difficulties grew more widespread through a process of successive contagion.

By continuing to have recourse to loose monetary policies in order to shore up waning economic activity in 2012, developed countries’ monetary authorities also signaled that interest rates would remain at their historically low levels for at least the medium term. By supporting global liquidity, these policies helped curb the losses sustained by the world’s stock exchanges. As investors’ appetite for risk increased, capital flowed steadily towards such developing countries as appeared to have sound financial structures and growth potential.

Having registered rapid growth as the post-crisis recovery process unfolded, developing countries’ economies performed somewhat more weakly in 2012 than previously. The result was that they too moved in the direction of relatively looser monetary policy.

It was apparent by the end of the year that the global economy had still failed to come to rest on solid ground. Many euro area countries are finding it hard to roll over their high levels of public debt and seem unable to restart economic growth. This in turn leads to frequent disturbances in global markets.

In the nearer term, it seems likely that there will be a modest improvement in economic activity nourished by the measures that policymakers in developed countries are taking. The passage of a bill by the US Senate and House of Representatives to postpone the imminent plunge over America’s self-inflicted “fiscal cliff”, the recent outlining of a roadmap leading towards a euro area banking union, and

expectations that the European Stability Mechanism will become more effective, all support such prospects.

In its January 2013 World Economic Outlook report, the International Monetary Fund (IMF) revised its growth expectations about the global economy downwards. In the same report the IMF also said however that global growth could be stronger than projected provided that “crisis risks do not materialize and financial conditions continue to improve.”

In October 2012, the IMF had projected global output growth rates of 3.6% and 4.2% respectively in 2013 and 2014; the fund reduced those same projections to 3.5% and 4.1% instead.

Overview of the Turkish economy

In 2012 the Turkish economy successfully managed the adversities affecting the global economy and created the conditions needed for a soft landing.

The delayed effects of measures that policymakers took to rein in domestic demand manifested themselves as a restored balance between domestic and external demand in the third quarter of 2012 while both consumption and investment outlays remained weak in appearance. Growth was characterized by a net surplus in exports. National income, which grew by 8.5% in 2011, increased by only 2.6% in the first three quarters of 2012.

Inflation in the first half of the year increased faster than had been expected. This appears to have been due largely to public-side “price adjustments” and to recent rises in crude oil and processed food prices.

After remaining flat in the third quarter, inflation began to show evidence that it was in decline in the fourth. Seasonally-adjusted food price inflation in particular was well below the average and this drove the December 2012 rise in consumer prices down to 6.16%. The twelve-month rise in producer prices last year was 2.45%.


Two factors contributed to the relatively strong performance experienced by Turkey’s exporters in 2012: one was a greater diversification in the country’s export markets; the other was exports of gold. In this process, the overall share of EU countries in Turkey’s exports contracted while the shares of both Near and Middle Eastern countries increased significantly.

A narrowing of Turkey’s foreign trade deficit helped bring the twelve-month current account deficit down from its October 2011 peak of USD 78 billion to around USD 48.9 billion by the end of 2012. That said, it should also be noted that the current account deficit was financed largely by means of short-term capital flows and this situation continues to be an element that increases the Turkish economy’s fragility. The ratio of the current account deficit to GDP, which was 10% in 2011, is thought to have contracted to around 6.3% by the end of 2012.

Fitch Ratings, an international credit rating agency, raised Turkey’s long term credit rating from BB+ to BBB- in November while also announcing a “stable” outlook. This rise places Turkey in the “investment grade” category and marks the first time that an internationally recognized credit rating agency of Fitch’s stature has done so in eighteen years.

The Turkish banking industry; developments in participation banking in 2012

Growth in the Turkish banking industry lost momentum in line with the country’s overall economic performance.

Turkish central bank (CBRT) regulatory changes aimed at increasing the cost of credit introduced in the second half of 2011 as well as of a last-quarter tightening of monetary policy by the bank continued to make themselves felt during the first half of 2012.

Concurrent with this, there was also a rise in funding costs, with more expensive credit causing the banking industry to lose some of its growth momentum. In response to improvements in the current account deficit and in overall economic activity around the middle of 2012, CBRT’s approach changed to one of increasing market liquidity and reducing the cost of credit.

Action taken by CBRT to counter the risk of capital flows destabilizing the country’s financial system engendered results that benefited the banking sector and took the form of policy interest rates, lending rates, and reserve requirements. With the introduction of a new tool (called

Action taken by CBRT to counter the risk of capital flows destabilizing the country’s financial system engendered results that benefited the banking sector and took the form of policy interest rates, lending rates, and reserve requirements.

Agriculture Industry Services Construction GDP TL Deposits FX Deposits Loans

2012

2012

2012

2012

2012

2011

2011

2011

2011

2011

203.3

2.5

3.1

1.0

2.6

5.6

8.3

9.4

11.3

8.5 -5J F M A M J J A DS O N

0

10

15

GDP - Sectoral Growth Rates (*)

(%)

Deposits and Loans - 2012 (*) (YtD) (%)

Source: BRSA Monthly Bulletins(*) Including participation banks.

(*) 2012 data is based on 9-month figures.


Macroeconomic Outlook and Sectoral Developments

the “reserve option coefficient”) CBRT provided banks with a degree of flexibility in the management of their Turkish lira resources while also increasing its own foreign currency reserves.

A persistently gloomy outlook in international markets combined with weak domestic demand stymied growth in Turkey’s banking sector. Nevertheless, rises in the country’s exports to Middle East and African markets helped offset the effects of the global crisis while the impact of events taking place in the euro area and the USA became relatively more manageable by year-end. The end result was an overall favorable contribution to banks’ activities in Turkey.

The Turkish banking industry registered positive growth on a variety of fronts ranging from total assets to newly-opened branch numbers and newly-hired personnel. The sector’s total assets increased by 12.6% in the twelve months to end-2012 and reached TL 1.37 billion in value.

While deposits remained the primary source of funding, the industry also had recourse to non-deposit resources–especially security issues–in order to satisfy its financing requirements. At end-2011, banks’ security issues amounted to TL 18.4 billion in value; over the next twelve months, they increased this volume by no less than 105.2%, bringing the total to TL 37.9 billion. Despite this however, there was an overall slowdown in credit expansion. When adjusted to account for exchange rate movements and parity effects, the net rise in the volume of credit was only 18.6%. A breakdown of the industry’s credit disbursements shows that 41% went to corporate customers, 33% to retail customers, and 26% to commercial (mainly SME) customers.

The accumulation of deposits regained some momentum in the last-quarter of the year. The share of securities in banks’ total assets shrank by 5.3% to 19.7% in 2012 while the share of lendings grew by 16.4% and reached 58%.

The Turkish banking sector’s aggregate capital adequacy ratio increased to 17.9% in 2012.

Spurred partly by the slowdown in economic growth, the total volume of the sector’s non-performing loans (NPL) was up by 23.4% in the twelve months to end-2012. Increases in loan loss provision rates requires higher reserves for NPLs also frustrated the sector’s profitability.

On the other hand, lower interest rates owing to the short-term structure of liabilities had a favorable impact on profitability owing to banks’ net interest margins. The upshot of all of this is that the sector’s aggregate net profit increased by 19.2% in 2012 and reached TL 23.6 billion.

Participation banking has been growing appreciably faster than the banking industry as a whole in recent years. Between 2007 and 2012, the sector’s total assets increased by 18% a year on average whereas those of the participation banking segment grew by 29%.

Over the last two years in particular, the process of branch network expansion has gained increasing momentum among participation banks. Paralleling the growth in the segment’s branch networks and market shares, there have also been rises in both deposits and lendings. Both the greater diversity of products offered to customers and the bolstering of capital structures so as to support further branch expansion are seen as being crucial to the segment’s future growth and development.

TL 1.4 billionThe sector’s total assets increased by 12.6% in the twelvemonths to end-2012 and reached TL 1.37 billion in value.


An Assessment of the Bank’s Position in the Sector in 2012

Indicators TÜRKİYE FİNANS(TL million)

SHARE AMONG PARTICIPATION BANKS

(%)

SHARE IN BANKING INDUSTRY (%) (*)

NUMBER OF BRANCHES 220 26.6 2.0

NUMBER OF PERSONNEL 3,595 23.4 1.8

CASH, BANKS AND CBRT 3,315 28.2 1.8

SECURITIES PORTFOLIO 665 26.8 0.2

LOANS 13,068 25.6 1.6

TOTAL ASSETS 17,617 25.1 1.3

FUNDS COLLECTED 11,430 23.3 1.4

FUNDS RECEIVED FROM BANKS (**) 2,485 29.2 2.3

NON-CASH LOANS 7,109 26.7 3.0

(*) This section is based on information taken from monthly bulletins published by BRSA and from that agency’s Overview of the Turkish Banking Sector report. Owing to differences in methodology, there may be minor discrepancies between those reports and what is said here.(**) Rediscounts are excluded.


Keeping pace with life: It means understanding your customers and coming up with solutions that immediately satisfy their needs. In 2012 Türkiye Finans introduced many new, innovative products capable of responding to the demands of different customer segments.

Finansör

Gold Participation Account

Haremeyn Card

Business Finance Support


An Assessment of Türkiye Finans’s 2012 Activities and Results

Türkiye Finans in 2012:

• Achieved all of its performance targets and registered growth rates above sectoral averages in the majority of its balance sheet items.

• Defined its strategic priorities as (1) pursuing growth in the retail and SME/commercial segments and (2) deepening its customer relationships in the corporate segment; quickly implemented this strategy by introducing new products and services.

• Demonstrated its solid financial structure and strong shareholder support through a cash-based share capital increase that gave it a significant advantage in financing the bank’s growth.

• Continued to pursue organic growth in line with its strategic plan and fulfilled the year’s target of increasing the total number of branches to 220 by opening 38 new ones.

• Supported growth through more effective use of technology by making substantial progress in the direction of process automation, including credit assessment and risk management.

• Joined the sector’s top banks with Fitch Ratings’ assignment of a bb- financial capacity rating.

• Further strengthened its competent manpower through more investment in human resources.

• Swiftly renewed its corporate identity by making change a more salient element of its corporate communication and stance.

• Increased the effectiveness of all processes in which the bank comes into contact with customers by further developing customer management and the customer experience so as to take customer satisfaction to even higher levels and thereby continued to transform customer relationship management competency into performance.

The outstanding performance results achieved by Türkiye Finans in 2012 further strengthened the bank’s position both in the sector and among participation banks.

Despite uncertainties about the direction of the global economy and not withstanding slower economic growth and contractions in the credit supply at the national level, Türkiye Finans completed 2012 having posted successful financial results. The bank achieved all of its main performance targets and it registered growth rates above sectoral averages in a majority of cases.

The 30% rise that Türkiye Finans achieved in its total assets was substantially higher than the sectoral average. The bank registered a 1.82% rate of return on assets.

An abundance of liquidity facilitated the conduct of the bank’s operations in 2012 and enabled Türkiye Finans to increase its non-deposit liquid resources by 65.61% year-on. The share of liquid assets in total assets reached 22.59% last year.

According to year-end figures, there was a twelve-month rise of 16.4% in the banking sector’s total cash lendings. Among participation banks as a group, the rate of growth was an even heftier 24.5%. Türkiye Finans outperformed even that however by increasing its credit disbursements by 25.6% year-on to TL 13.1 billion.

On the deposits side, the sector’s total deposits grew by 11% while those of the participation banking segment more than doubled that rate at 22.2%. Türkiye Finans’s deposits increased by 20.2% and reached TL 11.4 billion. In 2011 Türkiye Finans controlled a 1.5% share of the total lendings market; in 2012, this rose slightly to 1.6%. On the deposits side, the bank’s sectoral market share also increased from 1.4% to 1.5% during the same interval.

Türkiye Finans achieved such high rates of growth without sacrificing profitability. In the twelve months to end-2012, the bank increased its total profit by 22% to TL 284 million. Having been cited as “the most profitable participation bank” in 2011, Türkiye Finans successfully defended that standing in 2012.


Among participation banks, Türkiye Finans controlled market shares of 25%, 23%, and 26% respectively in terms of total assets, funds collected, and total lendings. As of end-November 2012, Türkiye Finans on its own accounted for 31% of the total profit generated by all participation banks in Turkey.

Türkiye Finans’s income/expense ratio of 2.2 means that it is more productive in its operations than other participation banks. The rapid rise in the bank’s productivity is also to be seen in a 10% rate of growth per branch, which is again higher than both sectoral and segmental averages.

Türkiye Finans’s robust capitalization was further boosted by a cash share capital increase.

At a time when the Turkish banking sector is finding it difficult to increase its capital resources, Türkiye Finans undertook a share capital increase. Last year the bank increased its paid-in capital by TL 975 million to TL 1,775 million, of which amount TL 275 million consisted of fresh cash. Of the latter figure, TL 125 million had been paid in by shareholders as of year-end and was transferred to the bank’s capital account in 2013.

As a result of having retained prior-year profits, Türkiye Finans’s total shareholders’ equity amounted to TL 2,125 million as of end-2012. The bank’s return on equity was 15.17% in 2012.

Türkiye Finans’s standard capital adequacy ratio was 14.24% in 2011. As of end-2012 it was up slightly to 14.76%.

Full credit support for real-sector activities

After setting aside amounts prescribed by laws and regulations, Türkiye Finans extended the remainder of the funds that it collected as deposits in its participation accounts as loans to real-sector customers in line with its mission of supporting the real sector. The bank’s total cash lendings increased by 26% in the twelve months to end-2012 and reached TL 13.1 billion in value.

The recycling of assets into loans is an important indication of a bank’s success in real sector-focused participation banking. At end-2012, the ratio of Türkiye Finans’s total

lendings to total assets stood at 74.2%. This is indicative of a substantial amount of lending taking place at a time when there was an overall contraction in sectoral credit resources. In the case of non-cash credit placements, there was a net 8.7% rate of growth in the portfolio, which stood at TL 7.1 billion in value at year-end.

Türkiye Finans seeks to take on new customers in the corporate & commercial banking segment.

While further strengthening its collaboration with its existing customers by means of innovative and diversified financing products and services that conform to the principles of participation banking, Türkiye Finans also made a concerted effort to acquire new customers in the corporate & commercial segment as well. In keeping with its goal of gaining a bigger share of its customers’ transactions, it offered a range of financing solutions and credit opportunities.

In line with its 2012 strategic plan and objectives, Türkiye Finans registered somewhat more substantial growth in the commercial segment; on the corporate side, it deepened its customer relationships and increased its profitability while maintaining its overall risk portion. Despite weaker demand, slower growth, and stiffer competition in the real-sector market, the bank nevertheless fulfilled its target and registered a 101% rate of growth in lending to the corporate & commercial segment.

Türkiye Finans’s cash loans to corporate & commercial segment customers increased by 16% while its non-cash credit placements to the same group were up by 10% year-on. The bank’s portfolio of active customers embraces 71% of the İstanbul Chamber of Industry’s İSO-500 list, with the total number of them increasing by 26% from 8,234 to 10,354 in the twelve months to end-2012.

At a time when the Turkish banking sector is finding it difficult to increase its capital resources, Türkiye Finans increased its paid-in capital by TL 975 million to TL 1,775 million.

74.2%At end-2012, the ratio of Türkiye Finans’s total lendings to total assets stood at 74.2%. This is indicative of a substantial amount of lending taking place at a time whenthere was an overall contraction in sectoral credit resources.



Türkiye Finans enjoys a strong competitive edge among its sectoral and segmental peers thanks to years of experience and to superior portfolio quality. Its position is further supported by a highly effective field organization consisting of 214 customer relationship managers and marketing & sales personnel.

Leasing made a strong contribution to the growth in the bank’s lending.

Changes in the legal framework that increased the VAT advantages enjoyed by leasing contracts made this business line one in which Türkiye Finans decided to pursue growth in 2012.

A number of changes were made in Türkiye Finans’s lending policies both to allow leased properties to serve as the main collateral and to redefine how the value of such properties was to be assessed for lending purposes. Such changes were instrumental in Türkiye Finans’s ability to achieve bigger lending volumes in this business line.

Increasing its support for customers wishing to undertake machinery & equipment investments by means of targeted leasing campaigns, Türkiye Finans increased the total value of its leasing contract portfolio by 440% in 2012 to TL 304 million.

During the same twelve-month period, Türkiye Finans increased its share of leasing transactions among participation banks from 11.1% to 37.4%. Across the sector as a whole, the bank’s share went from 0.4% to 1.9%.

Developments in cash management services: Direct Collection System

In 2012 Türkiye Finans increased customer satisfaction by promoting the use of its Direct Collection System and Commercial Card services aimed at customers that work with dealership networks.

The Türkiye Finans Direct Collection System (DCS) makes it possible for firms which operate through dealership networks or which work with large numbers of business-to-business (B2B) customers to collect both their cash and their credit receivables arising from sales of goods and services directly from the payer’s account based on the invoices which they issue. There was a significant rise in the number of the bank’s DCS customers in 2012.

For B2B customers, DCS offers considerable convenience in collection and cash flow management. For the bank, the system generates additional deposits, sources of commission earnings, and placement opportunities. Last year the number of Türkiye Finans’s DCS customers increased from five to fifteen while the total number of associated dealerships increased from 30 to 101. Total funding allocated to DCS customers also rose from TL 9.2 million to TL 46 million.

The leader in Treasury-backed KGF lending

Türkiye Finans mediates Credit Guarantee Fund (KGF) and Small and Medium Enterprises Development Organization (KOSGEB) credit lines by providing funding services and a variety of credit package options to SMEs that would otherwise have difficulty posting collateral of their own.

Türkiye Finans has established an especially strong collaborative relationship with KGF, as a result of which it achieved about a 20% market share in Treasury-backed KGF financing that ranked it first in the banking sector as a whole as well as among participation banks.

For Türkiye Finans, the KGF relationship is important because it allows the bank to lend to customers who would otherwise lack sufficient collateral of their own. Loans under this program may be partially collateralized or even completely uncollateralized. In the event that such a loan does become non-performing, up to 75% of it is covered by the KGF’s guarantee.

TL 304 billionBy means of targeted leasing campaigns, Türkiye Finans increased the total value of its leasing contract portfolio by 440% in 2012 to TL 304 million.


Our foreign trade banking competencies are reflected in our business volumes.

Firms in the corporate & commercial segment account for a significant share of Türkiye Finans’s foreign trade finance operations. The bank makes use of an extensive network of international correspondents, specialized sales & operations teams, effective foreign trade task flow processes, and an advanced technological infrastructure to supply such firms with a rich array of products with a focus on high-quality, efficient service.

Türkiye Finans’s operations in this business line concentrate on service diversification aimed at highlighting its stature as a foreign trade bank. Making effective use of superior-quality foreign trade finance funding alternatives such as Saudi Export Program (SEP), International Islamic Trade Finance Corporation (ITFC), Islamic Development Bank (IDB), GSM, and Eximbank, the bank is also able to provide its customers with specialized foreign trade consulting services.

In 2012 Türkiye Finans significantly increased both the number of its foreign trade finance customers and the total volume of its business with them. The bank regards foreign trade finance as a crucial component of its strategic approach. Last year Türkiye Finans succeeded in growing the income earned on foreign trade finance by an extraordinary 51%.

Enterprise banking brings us even closer to SMEs.

SMEs make up Türkiye Finans’s traditional customer base.

As called for in the strategic plan and targets formulated in 2011, attention was given to providing more effective, wider-ranging services in the SME financing business line last year. At the beginning of 2012, a more comprehensive “Enterprise Banking” business line was inaugurated with the adoption of policies whose basic goals are more aggressively increasing SME-segment market share, expanding the SME customer base by acquiring new customers, and deepening relationships with existing SME customers.

Under the heading of enterprise banking, “microfirms” are those with annual turnovers of less than TL 500 thousand while “SMEs” are those whose turnovers lie in the TL 500 thousand to TL 15 million range.

Our SME market share grew in 2012.

Recognized as a trusted business partner of SMEs, Türkiye Finans continues to provide such firms with a range of products and services tailored according to the particular needs of their sectors and cash-flow profiles.

In 2011 Türkiye Finans controlled a 2.5% share of the sectoral market for SME banking products and services. In 2012 it increased this proportion to 3.2%. Among participation banks, Türkiye Finans’s share of this market segment rose from 25.7% to 27.8% during the same interval.

Card-based services for SMEs

Türkiye Finans provides SME customers with banking transaction convenience and speed in the form of card-based added-value products and services.

An expert team and fast, local-level solutions

Türkiye Finans’s most important advantage in enterprise banking is its ability to respond nimbly to customers’ needs thanks to business processes that authorize localized solutions at the branch or regional level without the need to query headquarters in advance.

Türkiye Finans employs a dedicated and specialized team of more than 400 people who are committed to serving SMEs and who are most familiar with and capable of analyzing their specific needs. Operating within a perspective that embraces everything from credit & loans at one end to cash management and consulting on the other, the bank is actively involved in every aspect of SMEs’ business cycles and helps them create value.

Advising SMEs is part of our business too.

Because it keeps a close watch on the investment incentives that are provided to businesses in Turkey and is familiar with the criteria which must be satisfied to qualify for them, Türkiye Finans is able to draw the attention of customers in its SME portfolio to the beneficial grant and incentive options that are available to them.

In 2011 Türkiye Finans controlled a 2.5% share of the sectoral market for SME banking products and services. In 2012 it increased this proportion to 3.2%. Among participation banks, Türkiye Finans’s share of this market segment rose from 25.7% to 27.8% during the same interval.



As a bank with one of the biggest SME customer portfolios in Turkey, Türkiye Finans works in collaboration with a specialized firm in providing with consultancy and support services. This enables it to provide its customers with information about development agency grants as well as about innovation-supporting TÜBİTAK R&D incentives, KOSGEB Project Incentives, IPARD Support, and Rural Development and Livestock Incentives.

Seeking to support SMEs that have investment projects but are having trouble finding the resources with which to finance them and to contribute towards increasing their production and capacity, Türkiye Finans provides SMEs with advice about available investment and production incentives. This advice includes both the information and the field support that they need to benefit from such incentives and to carry out their project activities. Under a Dividend Support Protocol signed with the economics ministry, the bank assists customers who qualify for an investment incentives certificate under newly-introduced rules in the conduct of dividend-based projects. Such assistance includes mediating the portion of economics ministry support provided under an investment incentives certificate based on the location where the investment is being undertaken. Under this heading, Türkiye Finans has channeled a total of TL 4.3 million worth of grants-in-aid and incentives support to customers since the introduction of this program in 2009. Türkiye Finans is fully committed to supporting its customers’ project aspirations with investment incentives-related advice and support services in 2013 and the years that follow.

Microbusinesses are an important element of our growth roadmap.

Türkiye Finans has begun working on the infrastructure it needs to serve microbusinesses in line with its intention to focus more on microlending in the period ahead. Essential organizational structuring has been completed and projects to formulate microproduct packages and to set up delivery channels are being accelerated.

A microscoring system that should become operational in the first half of 2013 is a project that will generate new and important gains for Türkiye Finans as it seeks to make financing available to firms in this segment more quickly.

Having established a presence and reputation for itself among small & medium-sized enterprises, the bank’s goal now is to gain a better market share among microsegment businesses as well.

Greater productively through improvements in lending processes

A project undertaken to develop Türkiye Finans’s lending processes improved credit allocations by averages of 41% and 48% respectively in the enterprise banking and commercial banking business lines in 2012.

The average time it takes to approve loans to SME and commercial customers has been reduced to 14 and 22 days respectively. Over the last four years, Türkiye Finans has been supporting its growth by increasing its total lending by 25% annually on average. At the same time, the automation of the bank’s lending processes has also significantly improved the effectiveness of risk management as well as of risk-related processes in general.

The broad-based spread of Türkiye Finans’s risks reduces its exposure to individual customer risk.

Spreading risk across a broad base is fundamental to Türkiye Finans’s lending processes.

Looking at Türkiye Finans’s exposure to risk concentration we see that first ten and twenty customers with the highest levels of risk account for only 6% and 9% respectively of the bank’s total lending. The fact that both ratios are less than 10% is strong evidence that the bank does not suffer from individual customer concentration.

A similar picture is to be seen in the bank’s exposure to sector risk, which is also characterized by an absence of concentration. Türkiye Finans is committed to pursuing growth by working with sectors and firms that have strong growth potential themselves and for which payment problems are not a serious issue. This approach helps keep the bank’s loan portfolio healthy.


Despite the bank’s growth momentum, Türkiye Finans had an NPL ratio of only 2.7% in 2012. This is substantially below the averages of both the banking sector as a whole and of participation banks in particular. Despite some problems with collections and payments resulting from weak growth among real-sector firms, the bank’s ability to maintain such a low NPL ratio and to preserve its asset quality strengthen its competitive edge.

2012 was a watershed year in retail banking at Türkiye Finans.

In line with strategies which were laid out in 2011 and which identified retail banking as one of the bank’s main avenues of growth, Türkiye Finans embarked upon 2012 with the intention of making serious progress in this business line. Having reorganized its retail banking operations, last year Türkiye Finans accelerated its efforts to:

• Improve its sales competencies, effectiveness, and productivity

• Expand its product and service lineup

• Strengthen its customer communication by giving greater attention to customer data analysis and by organizing campaigns designed to meet customers’ particular needs.

Along with the development of innovative and competitive products and services capable of putting Türkiye Finans in the sector’s front ranks in the retail banking business line, attention was also given to creating teams of people capable of deepening customer relationships through more effective service delivery and cross-sale opportunity exploration.

Training was conducted on a variety of fronts for a sales force of 500 people at the regional and branch levels. This training focused on such matters as improving product sales skills so as to maximize the impact that field operations have on business volumes.

Different financing options to meet the needs of different customer groups

During 2012 Türkiye Finans increased its personal finance product diversity in a number of ways.

• The bank authored another first in participation banking with the introduction of loans to finance payments in lieu of military service. Loan products to finance home-owner energy efficiency and health-related expenditures also addressed customers’ different needs.

• A new Türkiye Finans product called “Finansör” (Financier) was introduced to the market. This innovative loan package helped boost the bank’s competitive edge in the sector by eliminating such costs as filing and membership fees.

• The bank had a very good year in real estate financing. Lending in this business line was boosted by new loan products to finance purchases of Treasury-owned land and mortgages sold to foreign nationals.

• New general purpose loan and motor vehicle finance products were developed for physically handicapped individuals. Vehicle modification loans made a particularly significant contribution to the growth in the latter category of lending.

Finansör is a composite product that has been crafted to combine the elements of a debit card with the predetermined financing limit of a general purpose loan. It allows payments to be transferred directly to a vendor’s account via their POS terminal.

2012

1,225

1,969

2011

Retail Lending(TL billion)

25,3942012

19,3742011

Number of Retail Loans


• Greater attention was given to customer limit management as a way of increasing customer satisfaction and customer loyalty.

• Many aspects of existing customers’ credit limit assignments were automated. Offers to increase limits can now be sent out by SMS and email as well as by being made directly to customers who call at a branch or log onto the Türkiye Finans website. The bank’s “quick financing” and “mobile financing” services that allow loan applications to be submitted through dealerships and by SMS represent yet another Türkiye Finans first among participation banks.

In the twelve months to end-2012, the total volume of Türkiye Finans’s lending to the personal finance segment increased by 62% from TL 1.2 billion to TL 1.9 billion.

Another innovative personal finance product from Türkiye Finans: Finansör

With the introduction of its “Finansör” product, Türkiye Finans breaks new ground in the provision of general purpose loans in the Turkish banking industry. Finansör has been specially designed to be compatible with participation banking principles while meeting the needs of its retail customers for personal finance. A card-based credit product, Finansör addresses the need for general purpose loans while also greatly enhancing the customer experience thanks to such features as immediate issuance by a branch and quick-and-easy limit allocations and credit disbursements.

After they have submitted an application to use Finansör and the application has been approved by the bank, customers may use all of their card’s allocated financing limit immediately or as they need for a designated period of time in line with the sector they have specified and the terms and conditions they have consented to in their agreement with the bank.

Finansör is a composite product that has been crafted to combine the elements of a debit card with the predetermined financing limit of a general purpose loan. It is especially useful when making wholesale purchases because it allows payments to be transferred directly to a vendor’s account via their POS terminal. Finansör also makes it

possible to organize campaigns that target particular sectors and business lines.

In the two months between its launch and end-2012, Finansör generated such intense interest among customers that it increased the bank’s November-December debit card (bank card) turnover by 46%. Finansör boosted Türkiye Finans’s ranking in the banking sector’s debit card turnover by two whole positions while placing it first among participation banks by the same measure.

The success of Finansör is expected to gain increasing momentum in 2013 thanks to strong demand and to transaction volume rises driven by a variety of campaigns. This product looks set to remain a strong item in the general purpose loan market for some time to come.

General and campaign-specific information about Finansör is always available to existing and potential customers on Türkiye Finans’s website at www.finansor.com.tr.

Türkiye Finans convenience in the Holy Land: Haremeyn Card

A Türkiye Finans product specially designed for customers traveling to the Holy Land on pilgrimages, “ Haremeyn (Holy Shrines) Card” offers a wide range of benefits as well as support services.

The scope of the charge-based assistance services that are provided by the card can be tailored according to the customer’s particular needs and wishes. They include such things as emergency health coverage, insurance against loss or theft, and even the provision of interpreter services to those with language difficulties.


2012

891

738

1,025

2011

2010

Credit Card Turnover(TL million)


Türkiye Finans ranks first among participation banks in the real estate finance business line.

In 2012 Türkiye Finans fully achieved all of the targets which it had set for itself in the real estate finance business line. The bank experienced especially strong growth in mortgage financing.

Türkiye Finans registered a 69% rate of year-on growth in its mortgage lendings, which reached a total of TL 1.9 billion in value as of end-2012.

Among participation banks, Türkiye Finans ranked first in overall real estate financing and second in the home-ownership (mortgage) financing business line. Last year the bank increased its market shares in this segment at the national level by means of proactive marketing and by effectively and efficiently deploying its delivery channels in order to provide finance for more than 300 projects in various stages of development ranging from initial-concept to occupation-ready.

Special attention was given to communication in the bank’s real estate financing activities in 2012. All of Türkiye Finans’s mortgage finance products and services are provided under its “Çilingir (Keymaker) Mortgage” brand.

In addition to providing financing for Treasury-owned land sales, Türkiye Finans completed its preparations to sell mortgages to foreign nationals even before the new reciprocity law went into effect. Such proactive approaches are just part of the reason why the bank is a leading player in real estate finance.

Türkiye Finans launched its Happy Card in 2012.

After undergoing visual and design changes, Türkiye Finans’s “Happy Card” was launched in 2012 as a member of the Bonus system. Last year the bank began issuing “Gold” and “Platinum” cards in addition to its standard ones.

Holders of Türkiye Finans-issued credit cards enjoy all of the benefits and opportunities offered not just by Türkiye Finans’s own merchant partners but also by places of business that are members of the Bonus system. Regularly conducted campaigns make it possible for cardholders to

earn extra Bonus points and to take advantage of discounts and special deals as well as additional and deferred installment options.

General and campaign-specific information about the advantages offered by Happy Card is always available to existing and potential customers on Türkiye Finans’s website at www.happycard.com.tr. As of year-end 2012, Türkiye Finans had issued a total of 303 thousand credit cards.

New-generation technology for Türkiye Finans ATMs

In 2012 Türkiye Finans increased the number of ATMs in its network from 230 to 271 while also continuing to upgrade the network by replacing older units with full-function ones.

As a result of installations and replacements during 2012, the number of new-generation machines (including units with deposit mechanisms) in operation increased from 88 to 155.

In order to improve ATM network accessibility, work has begun on installing a second unit in localities where the bank has only one branch. In situations where justified by demand, more than one unit may be installed at a branch. The number of Türkiye Finans branches with more than one ATM in operation more than doubled from 16 to 35 in 2012. Last year work also began on renewing ATM unit livery to better reflect the bank’s refurbished corporate identity.

More POS terminals for expanded merchant partner services

2012 Türkiye Finans made a concerted effort to increase the number of its active merchant partners. At year-end, the number of places of business in the bank’s merchant partner network stood at 17,856. These generated a total POS turnover of TL 2.1 billion, which corresponds to year-on rises of 27% and 8% on a per-unit and aggregate basis respectively.

Türkiye Finans registered a 69% rate of year-on growth in its mortgage lendings, which reached a total of TL 1.9 billion in value as of end-2012.


Among the measures taken to improve merchant partner services in 2012, Türkiye Finans:

• Beefed up merchant partner/POS field support and increased service quality with the introduction of new POS terminals that make use of more advanced technology;

• Collaborated with firms involved in e-commerce in order to offer both e-commerce platform and virtual POS services to customers interested in conducting their business online.

Türkiye Finans is strengthening its presence in the insurance and pension agency business line.

In 2012 Türkiye Finans increased the number of insurers for which it acts as an agent from four to six and also strengthened its collaboration with such firms.

The dynamism generated by an array of new insurance products providing coverage in such areas as credit card theft, family health, and trade finance resulted in significant success in insurance sales. Total premium production increased by 58% year-on and reached TL 33.8 million. The bank also achieved a 152% rate of performance in the fulfillment of its insurance commission fee earnings target.

Türkiye Finans works with Garanti Pension as an agent in the provision of private pensions that conform to participation banking principles. As a result of this collaboration, the number of private pension policyholders benefiting from the bank’s agency services approached 10,000 and there was an 80% year-on rise in the commission earnings on such activities. During 2012 Türkiye Finans worked with Garanti Pension in organizing “Private Pension System Days” at some of the bank’s branches in order to increase customers’ knowledge about private pensions.

Expanding the customer base for cash management products and services

Türkiye Finans seeks to develop its customer portfolio and to deepen its customer relationships by means of a wide range of cash management products and services that play a role in firms’ and organizations’ collection and payment processes. These include salary payments, tax and social security premium payments, utility bill payments, automatic payment & collection systems, and more.

Türkiye Finans’s bill-payment services are provided through “Fatura Vizyon” (BillView), a non-bank delivery channel whose outlets make use of the bank’s IT infrastructure, and through “Ödekolay” (EasyPay), a Türkiye Finans-owned platform created for business concerns. Last year these two channels processed 12 million individual payments worth a total of TL 645 million. Work is continuing to expand these platforms with the addition of new participating firms and organizations.

Bağ-Kur, a social security fund for the self-employed, was added to the list of concerns for which Türkiye Finans makes collections in 2012. Infrastructure was also installed and put into service last year to process Hajj & Umrah payments.

Serving retail customers with a variety of investment vehicles

In 2012 Türkiye Finans joined with other participation banks in the formation of the “Participation Index Fund”, a mutual fund that tracks a stock index based on securities which are traded on the ISE National Market and which conform to participation banking principles. The bank also began selling shares in the fund to its customers. Work is currently in progress to create other mutual funds in line with Türkiye Finans’s strategies in this business line in order to provide customers with new investment alternatives.

Another important development in 2012 was the introduction of gold banking at Türkiye Finans. Both “Gold Participation Account”, scrap gold collection was the bank’s first product in this business line made available to customers last year.



Beginning in December, Türkiye Finans also began collaborating with the İstanbul Gold Refinery in the conduct of “Gold Collection Days” at the bank’s branches. These events were organized both to stimulate interest in the bank’s Gold Participation Account product and to encourage customers to bring in scrap gold of any kind or fineness. After being appraised by the refinery, the value of the gold is booked to the customer’s account, which makes buying and selling gold much more convenient and secure. Customers may keep their earnings in their gold account or transfer them to a current account.

Another Türkiye Finans innovative first last year was “Kişiye Özel Gram Altın” (Personalized Gold Bar), a product that allows customers to create personalized gifts of gold bars up to 20 grams in weight. The bar, which is accompanied by a gift card of the customer’s own design, can be personally delivered to a customer-specified address.

A more sales-focused structure for the bank’s delivery channels in 2012

In 2012 Türkiye Finans inaugurated a new marketing policy which focuses on making sales at every point where the bank comes into contact with its customers.

More effective marketing efforts in the form of teller-window campaigns successfully boosted sales of products such automatic (standing-order) payments and credit cards; outbound service capacity was increased; greater use was made of the call center as a sales channel.

Attention was given to making more active and effective use of all alternative delivery channels in the conduct of the bank’s campaigns during 2012. As a result of such efforts,

the total number of products sold through all alternative delivery channels reached 140,000. The success of last year’s campaigns significantly expanded Türkiye Finans’s presence and competencies in the retail banking business line. The bank plans to increase both the number and the nature of its campaigns in 2013 based on analyses of previous-campaign customer data.

73% of all customers used ADC in 2012.

Türkiye Finans’s technological competencies and its service platform effectiveness are shown by the rate of alternative delivery channel use among its customers, which reached 73% in 2012.

Internet branch

Many new additions were made to Türkiye Finans’s internet branch in order to increase the number of its active users. An English-language version of the online branch was launched and customers were given access to new functions such as domestic and international transfers (via SWIFT) and group transfers. A newly-introduced “Instant PIN” feature allows users to immediately obtain transaction validation codes through their mobile phones. Türkiye Finans has begun accepting loan and credit card applications through its online branch.

The number of Türkiye Finans customers using the bank’s online branch reached 239,000 in 2012. Efforts to encourage customers to use internet banking as their primary delivery channel resulted in a 20% year-on rise in the number of online transactions while the total number of products sold over the internet reached 35,000.

Distinguishing itself among participation banks by virtue of its internal dynamics and growth momentum, Türkiye Finans has a robust, proactive risk management infrastructure capable of supporting its healthy growth and development.

2012

70

73

2011

ADC Utilization Ratio(%)

2392012

2002011

Number of Internet Branch Customers(thousand)


Customer Contact Center

Operating 24 hours a day seven days a week, Türkiye Finans’s Customer Contact Center responded to 1.8 million calls in 2012. The call center began providing telephone banking services for the bank’s corporate customers last year. The center’s usefulness as a sales channel was augmented by an increase in the center’s outbound service capacity.

Mobile banking

Mobile banking functionality was expanded with the addition of SMS-based loan and card application submissions.

The total number of financial transactions conducted via Türkiye Finans’s mobile banking channel increased by 51% year-on in 2012.

A growth-supporting risk management model conforming to international norms

Distinguishing itself among participation banks by virtue of its internal dynamics and growth momentum, Türkiye Finans has a robust, proactive risk management infrastructure capable of supporting its healthy growth and development.

In 2010 Türkiye Finans launched projects to refocus its risk management processes based on business lines. The advanced rating and scoring models resulting from these projects came on stream in 2011 and they significantly improved risk management in both retail and commercial banking.

Commercial credit rating model: This is a statistically-based expert software system that calculates the probability of default (PD) as defined in Basel II. Use of this model allows a credit rating and PD score to be assigned to each commercial customer, whose credit limits, collateral requirements, and pricing ranges are determined accordingly.

Retail credit rating model: This is a “New Business Strategy Manager” (NBSM) scoring model that has been developed as a decision support engine. With NBSM scoring, applications submitted by retail customers can be evaluated and finalized automatically, which results

in credit decisions being made much more quickly than is possible using traditional credit-worthiness policies. As a result of the deployment of NBSM as part of its retail credit infrastructure, Türkiye Finans has reduced its response time to personal loan and credit card applications to a matter of minutes.

Türkiye Finans is solidly and competitively positioned in the sector with respect to its stock of non-performing loans. However to maintain and further increase the health of its asset structure, it is currently involved in a number of projects to improve its early warning systems and collection processes and to manage customers’ transactions and outstanding obligations more effectively.

In addition to advanced credit rating processes and risk modeling, Türkiye Finans also gives great importance to account monitoring functions. Early-warning reviews are conducted at regular intervals in order to detect potential default problems before they arise and, when necessary, to improve collateral and to mitigate risk.

Basel II-compliant capital adequacy ratio calculation

In July 2012 Türkiye Finans began calculating and reporting its capital adequacy ratio (CAR) as prescribed by the Basel II accord.

This was achieved by successfully incorporating Ambit Capital Manager, a software solution created by SunGard, one of the world’s leading software and technology services companies, into the bank’s own system. This makes it possible to automate CAR and CAR-related calculations and to ensure their transparency as required by national and international standards. The system also has the capacity and robustness to support Türkiye Finans’s future growth plans.

The rapid growth in Türkiye Finans’s deposits is nourished by customer confidence.

Customer deposits are the most important source of the credit that Türkiye Finans makes available. The bank’s funds collected reached TL 11.4 billion, a figure that was in line with the year’s budget targets.



Deposits account for a 64.9% share of the bank’s overall balance sheet. Of this total, 65.1% is held in Turkish lira accounts and the remaining 34.9% is held in foreign currency accounts. Current accounts and participation accounts make up 22.1% and 77.9% shares respectively of the bank’s funds collected.

In 2012 Türkiye Finans’s funds collected-to-loans transformation rate was 114.3% (2011: 109.4%).

Steady growth in treasury operations

Türkiye Finans’s treasury operations contributed significantly to the bank’s profitability and productivity while also further enhancing the satisfaction of its internal and external customers.

The bank adhered to a competitive exchange rate policy in customers’ currency trading in order to command a bigger market share in line with its growth strategy. As a result, Türkiye Finans registered significant year-on rises in its customer business volumes in this business line.

The bank’s foreign currency trading with customers amounted to USD 31.7 billion in value in 2012. On the interbank market, Türkiye Finans’s aggregate transaction volume reached USD 40.2 billion.

Such high-volume FX trading contributed substantially to Türkiye Finans’s ability to price customer transactions competitively. The bank’s 2012 forex gains corresponded to 100% of the target set for the year.

Strong liquidity and funding

A high level of liquidity once again helped keep Türkiye Finans’s funding costs low in 2012.

The acquisition of Turkish lira and foreign currency sukuk bonds issued by the Turkish Treasury for the first time last year also contributed significantly to the success of the bank’s liquidity management in 2012.

Türkiye Finans witnessed a 66% increase in its non-deposit resources in 2012, a year in which banks in general had recourse to non-deposit sources of funding in order to

support their growth. In addition to resource diversification, there was also a trend towards longer-term resources in order to improve asset/liability term matching efforts.

FX platform launch

In order both to reduce its FX costs and to strengthen its competitive position among other banks, Türkiye Finans launched its own FX trading platform in 2012. Called “TFX Target” the platform was made accessible to FX spot-trading customers late in the year for tight-spread trading during weekdays. TFX Target is the only FX trading platform in Turkey that allows such continuous currency trading by customers using their own accounts.

In 2013 Türkiye Finans will be focusing on extending TFX Target’s trading hours and encouraging more customers to make use of it as a trading platform.

Improvements in fund transfer pricing

Improvements were made in the bank’s fund transfer pricing processes in line with participation banking principles, needs, and best practices.

To this end, the yield curves to be used in pricing were calculated based on market marginal funding costs. On the deposits categorization side, each product and segment was individually analyzed from the standpoints of price stickiness, market yield rate sensitivity, and average lifetime and the results of this analysis were included in pricing decisions.

Türkiye Finans’s credit rating ranks it among the top banks in Turkey.

Following Fitch Ratings’ upgrading of Turkey’s sovereign rating on November 5th, Türkiye Finans’s rating was also updated the same month.

The bank’s long term foreign currency rating was increased from BBB- to BBB and its long term local currency (TL) rating from BBB to BBB+. Türkiye Finans’s financial capacity rating was also confirmed as BB-.

Türkiye Finans is one level higher than Turkey’s sovereign rating, which is the threshold at which Fitch considers bonds to be of investment grade. They also place Türkiye Finans among Turkey’s top banks as measured by credit rating.


These ratings mean that Türkiye Finans is one level higher than Turkey’s BBB- sovereign rating, which is the threshold at which Fitch considers bonds to be of investment grade. They also place Türkiye Finans among Turkey’s top five banks as measured by credit rating.

Fitch’s rating is also a reflection of Türkiye Finans’s solid shareholder structure and is indicative of the strong support, profitability, and solid growth of its principal shareholder, NCB, which holds an A+ rating as the highest-capitalized bank in the Middle East.

Stronger relations with financial institutions despite challenging macroeconomic conditions

Confronted by a challenging environment in which the effects of the global financial crisis are making themselves felt especially severely in Europe, Türkiye Finans continues to strengthen its dealings with international financial institutions that enjoy high levels of credibility. Both the funding which the bank is able to secure and the volume of foreign trade that it is able to finance as a result of these relationships confirm Türkiye Finans’s stature in the international arena.

• The most salient effect of the EU sovereign debt crisis on the financial sector was a 100 basis-point rise in the cost of financing obtained from abroad during the second half of the year. Despite this, Türkiye Finans experienced absolutely no problems whatsoever in gaining access to or obtaining funding. In the twelve months to end-2012, the bank’s international borrowings increased by 77% from USD 787 million to USD 1,390 million.

• The average maturity of the bank’s borrowings in 2011 was 533 days; by the end of 2012, this had become 725 days–a lengthening on the order of 35%.

• As of end-2011 Türkiye Finans was the recipient of funding from 27 banks in 16 countries; twelve months later, the bank’s investor base had nearly doubled with resources being supplied by 60 banks in 23 countries.

• In 2011 the ratio of non-deposit borrowings to total funding was 14%; in 2012 this figure was up five points to 18%.

• As a result of intensive efforts to issue sukuk bonds, a project which the bank had been working on for quite some time, a brokerage was authorized in late 2012 to issue Turkish lira bonds and the process was officially launched.

• With the EU, Turkey’s main export market, suffering from serious contractions in 2012, Turkish firms successfully sought out ways to diversify their customer base and increased their exports especially to Gulf countries. This is where NCB, Türkiye Finans’s principal shareholder, is highly influential. The result was strong growth in the volume of the bank’s foreign trade finance for its exporting customers. As of end-2012, Türkiye Finans was working with a network of more than 1,000 correspondent banks providing trade finance products and services complying with international rules and standards in the conduct of business in countries around the world.

• Türkiye Finans’s reputation and credibility among correspondent banks continue to grow steadily year after year thanks both to the bank’s strong partnership structure and to the expansion in its foreign trade finance.

• Under foreign trade finance agreements signed with correspondent banks and international agencies, Türkiye Finans secured long-term GSM-102, SEP, ECA, and ITFC funding for importer customers. In two cases the long-term funding credit limits assigned to the bank under these programs were increased from USD 50 million to USD 70 million (GSM-102 financing) and from USD 20 million to USD 35 million (SEP financing). A new USD 25 million limit was granted for ITFC deals. Effective pricing of these new limits resulted in their being used entirely by the bank’s customers.


USD 1,390 millionTürkiye Finans experienced absolutely no problems whatsoever in gaining access to or obtaining funding. In the twelve months to end-2012, the bank’s international borrowings increased by 77% from USD 787 million to USD 1,390 million.


• As of end-2012, the total volume of foreign trade being financed by Türkiye Finans was worth USD 14.5 billion. Based on the bank’s prospects and in view of its strategies and objectives, it is anticipated that this figure will double in the near future. In light of this, concentrated efforts are currently being made to further increase existing limits while also adding new correspondents to the network.

• Work is in progress to begin issuing foreign currency (FC) sukuk bonds in 2013. As of this writing, two foreign banks had been authorized to broker sukuk issues in January. It is believed that FC sukuk issues will also be forthcoming in the near term. The bank plans to renew a USD 350 million syndicated murabahah loan that falls due in May. The intention is to increase the outstanding balance of all such borrowings to USD 1,722 by the end of 2013 through renewals of and additions to the existing stock.

Towards more effective processes with Oracle GL and ERP projects

In February 2012 a project was launched to further develop the bank’s Oracle general ledger (GL) and e-business practices in order both to simplify the management of Türkiye Finans’s uniform chart of accounts and to increase the effectiveness of business processes through financial and fiscal reporting standardization and the adoption of enterprise resource planning (ERP) practices. Work also began last year to compatibilize GL practices and banking software.

Development work was completed last year on e-business applications in the areas of liabilities accounting, procurements management, e-charges, lease management, fixed assets, inventory management, and maintenance management. These modules became operational at the beginning of 2013.

Quantifying internal and external customer productivity

Customer Productivity Project

The goal of the Customer Productivity Project, one of the projects being undertaken to develop decision-making infrastructure at Türkiye Finans, was to make it possible to display revenue streams on the basis of customers. The project became operational in late 2011, since which time it has been possible to measure and track the contributions that customers make to the bank’s profitability.

Individual Performance Management System

One of the most important transformational changes introduced at Türkiye Finans in 2012 was the launching of a system that makes it possible to manage the performance of individual employees. This system is now in operation at all of the bank’s branches.

Called “AYNA”, this system is rooted in the principle of managing the branch network by setting objectives and rewarding performance leading to their fulfillment.

AYNA makes targeting methodology an integral part of the bank’s corporate structure. It allows the branch network to be managed by means of even a single objective such as, for example, a focus on boosting sales productivity. Branch potential can also be taken into account when setting targets, which helps sales teams to identify with the targets more strongly. The criterion by which performance is measured is added value, the creation of which is now being rewarded throughout the bank.

Originally introduced in the bank’s İstanbul Anadolu branches, AYNA subsequently became operational in the other five regional divisions in the last quarter of the year and now encompasses the entire branch network organization. Work is currently in progress to make AYNA operational at headquarters units. This project is slated for completion before end-2013.

Türkiye Finans plans to increase its share of the foreign trade finance market, with particular attention being given to export finance, in order to establish itself as the most important player in Gulf countries.


Effective IT for more productive, better-quality, faster banking

2012 was a year in which deficiencies in Türkiye Finans’s information technology (IT) infrastructure were eliminated and greater attention was given to the development of new products.

Slightly more than half (53%) of the bank’s IT activities last year were concerned with developing new products and services while the remaining 47% focused on improving existing ones.

Türkiye Finans’s IT activities are characterized by a high level of productivity. Although there was only a 22% increase in the number of the bank’s IT personnel last year, there were increases of 150% and 50% respectively in master and tactical project completions.

Highlights of the bank’s 2012 IT activities are summarized below.

• Work was successfully completed on the development of new-launch innovative products and on the installation of infrastructure needed for them.

• Work continued on automating and improving credit-assessment and lending processes and on making such processes more monitorable.

• The bank’s business continuity test, which is carried out and reported to BRSA every year and which shows how quickly operations can respond to and recover from disaster, was passed with tremendous success. According to the test’s results, Türkiye Finans has a disaster-preparedness score of 99%.

• Based on feedback in the aftermath of the Van earthquake, fully-equipped mobile branches consisting of two different kinds of vehicle (minibus and lorry) were created. Satellite links connect these branches to Türkiye Finans’s IT system. The bank plans to introduce a third mobile branch (consisting of a bus) in 2013.

• Increased attention was given to cloud computing and virtualization technologies in line with current IT trends

and approaches. Türkiye Finans is strongly positioned in this respect with a more than 80% rate of server virtualization. System virtualization provides effective use of the bank’s resource and energy. In the near future, users will be given the ability to virtualize such use for designated periods of time.

• Systems were installed to permit detailed analysis of the bank’s data security in real time and to prevent intrusion.

• Activities aimed at formulating information system (IS) strategies which are compatible with business strategies, defining efforts and projects to support these strategies, and supporting efforts to achieve the desired architecture by means of a robust governance model were continued with an approach that contributes to business values and reduces costs by working with our own TOGAF-certified system architects to transform conceptual architectural principles into the most practical solutions.

• Effective methods were employed in order to manage IS risks in a timely manner. A close watch was maintained on changes in the legal framework to ensure that the bank’s systems remained in compliance with the requirements of laws and regulations.

A data center conforming to the highest standards

Set up in late 2011, the Türkiye Finans Data Center is providing full back-up with Tier 3 standards and high capacity. Uninterrupted service continuity is maintained through a backup facility.

The Türkiye Finans Data Center already ranks among the best datacenters not just in Turkey but in Europe as a whole. The center is currently being evaluated by Uptime Institute, a US-based global datacenter authority, prior


80% virtualization rateIncreased attention was given to cloud computing andvirtualization technologies in line with current IT trendsand approaches. Türkiye Finans is strongly positionedin this respect with a more than 80% rate of server virtualization.


to being awarded Tier 3 certification, which is currently expected to take place in the first quarter of 2013 (2013 Q1). A project to obtain certification of the datacenter taking Green IS Criteria into account will be also completed around the same time. Türkiye Finans’s goal is to be the first bank in Turkey to receive Tier 3 datacenter certification.

The Türkiye Finans Data Center:

• Is highly secure and equipped with systems which allow electrical load, temperature, humidity, and similar conditions to be monitored and controlled in real time;

• Makes highly efficient use of energy, as indicated by a power usage efficiency (PUE) rating of about 1.6, which is significantly lower than both the current Turkish (2.2-2.3) and European (~2.0) averages;

• Incorporates infrastructure capable of expansion so as to support Türkiye Finans’s future sustainable growth;

• Allows testing conditions to be defined on-the-fly thanks to a test environment preparation system that is compatible with the speed of the own bank’s processes.

Greater efficiency through centralized operations

In the conduct of all of its operations, Türkiye Finans seeks to achieve perfection, minimize risks, maximize productivity, improve efficiency, and increase customer satisfaction. To this end:

• Sukuk bond-related processes commenced in 2012 and incoming and outgoing TL transfers were introduced to the Western Union system in addition to existing USD and EUR transfers. The bank plans to make the Western Union system accessible to all of its branches before the end of 2013 Q1.

• A Retail Payments System (RPS) was set up as an adjunct of the EFT system. This makes it possible to separate customers’ transfers, which are now being carried out via RPS, from the EFT system, which is now reserved for interbank transfers.

• It is now possible for customers to effect FC transfers to banks both in Turkey and abroad via the internet. As in previous years, the bank received an award in recognition of its excellence in international transfers with an error-free rate of 99.2%.

• Customers’ remittance and EFT transfers are now being conducted on a group basis thanks to operation centralization. Notices about bill-payment orders that cannot be fulfilled owing to insufficient balances are now being sent out to customers via SMS.

• Customers’ POS-related complaints were dealt with by means of device replacements and software upgrades.

• All leasing operations were brought together in a single unit.

A new beginning in corporate communication

2012 marked the beginning of a new era in Türkiye Finans’s corporate communication.

Türkiye Finans seeks to achieve uninterrupted, 360º communication with its customers.

In order to make target audiences better aware of the bank’s transformation in the most effective way possible and to increase brand recognition, an intensive public relations campaign was launched that consisted of 17 TV advertisements for different products while extensive use was also made of printed-media press releases, news, and announcements.

The bank’s corporate identity transformation project was inaugurated in just two months’ time in order to provide physical and visual support for Türkiye Finans’s public relations efforts.

The bank’s logo was renewed in order to draw attention to its new identity as a financial institution which is more accessible, more active, more customer-friendly, and more innovative. This logo was rapidly deployed in all aspects of the Türkiye Finans’s public face such as stationery and printed materials, signage, and ATMs.

Set up in late 2011, the Türkiye Finans Data Center Center is providing full back-up with Tier 3 standards and high capacity.


Work began on the conceptual redesign of branches and all other points where Türkiye Finans comes into physical contact with customers. It is planned to implement these changes in 2013. Türkiye Finans’s newly-opened Nişantaşı branch in İstanbul is serving as the model for this project.

Uninterrupted media communication is treated as a corporate investment initiative within the framework of the Türkiye Finans’s new corporate communication approach.

As a concrete demonstration of this new corporate communication approach and in order to draw attention to its image as a “bank that is closer to its customers”, Türkiye Finans’s major customers are invited to take part in a series of “Tophane Gatherings” conducted at the bank’s premises in the Tophane district of İstanbul.

These gatherings provide an opportunity for customers and guests who are experts on a particular subject to come together and share ideas about the conduct of customers’ business. These meetings also give customers and the bank’s senior management a chance to interact and to become better acquainted with one another.

Making sustainability an integral part of our activities

In keeping with its sense of social responsibility and its approach to sustainability, Türkiye Finans plans to increase the resources that it provides to endeavors in the areas of education, health, and energy efficiency.

Renewable energy, the “green” face of an energy industry whose star has been steadily on the rise, has become an important issue on the world’s agenda in recent years. Turkey is a country with tremendous potential in renewable energy resources such as hydroelectric, wind, solar, and geothermal and it is expected that investments in such areas will continue and gain increasing momentum in the years ahead.

In line with this, Türkiye Finans played an active role in renewable energy investment project financing in 2012 as an intermediary bank for founds made available by Development Bank. The bank lent a total of TL 800 million

in cash and non-cash credit to 468 of its customers for renewable energy investment projects. This corresponded to 3.89% of loan market share, which was more than twice the 1.93% average of the banking industry as a whole.

The energy sector is one of vital strategic importance for our country. In recognition of this and in order to increase its support for that industry, Türkiye Finans has developed a new product which it calls “100% Energy Package” and which is designed to support the investment, procurement, leasing, and other financing needs of energy industry firms. This new product will be launched in 2013.

Türkiye Finans is collaborating with İZODER (a professional association of thermal insulation, waterproofing, sound insulation, and fireproofing material producers, suppliers and applicators) in the development of general purpose retail loan products that are to be used to finance energy efficiency projects. More than a thousand association members located all over Turkey have already made use of such loans.

This is an undertaking of a sort that very few banks in Turkey have involved themselves in and it is a first among participation banks. Türkiye Finans supplies financing with 0% profit rates for projects which İZODER approves in its capacity as a technical consultant. The demand for these loans is expected to become even stronger.

Supporting social solidarity is fundamental to Türkiye Finans’s corporate culture and values. The bank has formulated a corporate social responsibility approach policy as part of its overall sustainability concept. In order to identify issues and to develop projects appropriate to this, a bank-wide poll is planned to select subjects that will draw attention to Türkiye Finans as a distinctive, socially responsible financial institution.



Türkiye Finans’s plans for 2013

In 2013 Türkiye Finans will be undertaking the activities summarized below in order to further increase its competencies, its risk management capacity, and the value which it offers its customers. All of these projects are vitally important to the sustainable growth which the bank plans to achieve in 2013 and the years that follow.

Improvements in lending policies: Following up the leasing, Treasury land, and urban renewal projects that it carried out in 2012, in 2013 the bank will be focusing its attentions on improving its performance in the tourism and agricultural sectors and on developing policies accordingly.

Reorganization of field operations by Enterprise Credit Allocation Teams: The bank’s Enterprise Credit Allocation Teams will be making more frequent customer visits both to become better acquainted with them and to get a better feel of the market.

Retail loan processing & handling optimization: The bank intends to simplify and speed up the way it lends to retail customers.

Corporate Credit Score: Beginning in 2013, all new data generated by Credit Bureau of Turkey (KKB) encompassing everything contained in banks’ records about firms will be taken into account in Türkiye Finans’s lending processes.

Rating validation & calibration: Work will be carried out to corroborate the reliability of the bank’s credit rating model.

Monthly early-warning reports: The bank’s early-warning system will be improved by reducing the early-warning report cycle from semiannual to monthly.

Risk management system intelligence: The risk management infrastructure will be augmented with the addition of greater system intelligence. In particular, the bank’s pursuit of growth in the SME and retail banking business lines will be supported by closer collaboration between Risk Management and other bank units and through the development of new projects.

Leasing certificates and sukuk issuance: Work that was begun in 2012 to create alternative sources of funding will be completed in the first quarter of 2013. The bank plans to issue sharia-compliant leasing certificates in Turkey and foreign currency-denominated sukuk bonds internationally.

Leasing & DCS business volume expansion: Following up the considerable progress made in these business lines in 2012, Türkiye Finans plans to increase the total volume of its leasing business and to promote greater use of its Direct Collection System.

Greater involvement in foreign trade finance: Türkiye Finans plans to increase its share of the foreign trade finance market, with particular attention being given to export finance, in order to establish itself as the most important player in Gulf countries. The bank’s efforts in this direction are being supported both by its principal shareholder NCB and by its investment banking customers. Türkiye Finans will also be playing an active role on such platforms as the Turkish-Arab Economic Forum in pursuit of this objective.

New mutual funds: New mutual funds will be launched in order to provide customers with new investment alternatives in this business line.

Branch network expansion: Türkiye Finans plans to increase the size of its branch network to 246 with the addition of 26 new branches in 2013.

ADC investments: Türkiye Finans intends to undertake a number of major investments in its alternative delivery channels (ADC) in 2013. The underlying objective of these investments is to achieve channel integration so as to increase customer satisfaction by offering greater convenience and service continuity.

Social media presence: Türkiye Finans will establish a strong presence in social media in 2013.

Türkiye Finans has developed a new product which it calls “100% Energy Package” and which is designed to support the investment, procurement, leasing, and other financing needs of energy industry firms. This new product will be launched in 2013.


Türkiye Finans’s operations and future expectations

There were six strategic objectives on which we focused in 2012 and, as is discussed in detail in the CEO’s message, these objectives were largely achieved. These objectives may be stated briefly as:

• Increase productivity

• Develop customer management

• Strengthen the product and service delivery model

• Develop asset & liability management

• Introduce new products to the market

• Create effective human resources

In the case of productivity improvement, the 10% rate of growth achieved in branch productivity was faster than the averages of both the banking industry and among other participation banks. Important projects were launched to strengthen the customer experience. Our delivery channels were strengthened. There were significant increases in the number of our branches and in transaction numbers through other channels. In line with our goal of improving asset & liability management, a new funds transfer pricing (FTP) methodology was introduced and a project was launched to issue Islamic bonds (sukuk). Important progress was also made in the direction of wholesale funding and maturity extension. Intensive efforts were made to develop new products, with more than twenty new products and services being introduced. In the area of effective human resources creation, we invested in competency management through our Individual Performance Management System while training was provided to advance our employees’ personal and management skills.

Balance Sheet & Off-Balance Sheet Items

• Total assets at Türkiye Finans (TKFB) grew by 30.2% year-on in 2012 and amounted to TL 17,617 million at year-end. Of this total, cash lendings increased by 25.6% and reached TL 13,068 million. Deposits were up by 20.2% year-on and reached TL 11,430 million.

• Non-cash credit placements grew by 8.7% in the twelve months to end-2012 and amounted to TL 7,109 million in value.

• Capital grew by 31.7% from TL 1,614 million to TL 2,125 million.

• TKFB’s NPL ratio was significantly 8% below the sector’s average in both 2011 and 2012.

Profitability

• Reflecting the growth in TKFB’s balance sheet items, net profit was up by 22.4% year-on in 2012 and amounted to TL 283.6 million.

• TKFB’s return on equity was 15.7% and its return on assets was 1.82%. Both figures surpassed the targets set for the year.

• TKFB’s capital adequacy ratio increased by 4% year-on and reached 14.76%.

Growth Outlook

• In 2013, TKFB expects its assets to increase by 23.6% and reach TL 21,772 million; cash lendings should increase at virtually the same rate (23.4%) and reach TL 16,130 million. Funds collected are expected to increase by 20.2% and reached TL 13,736 million.

• Non-cash credit placements should increase by 27.9% and reach TL 9,089 million in 2013.

• Total net profit is expected to increase by 15.3% over that of 2012 and to reach TL 327 million in 2013.



Information about Türkiye Finans\s R&D efforts in 2012 and the R&D activities which the bank plans to carry out in 2013 is summarized below.

Activities in 2012

• A project team consisting of representatives from the IS and Finance units was set up. Process consultancy services were outsourced to a firm with experience in R&D center licensing issues. (May-June)

• Work was carried out in the areas of IS projects and processes, physical location, and IS employee profiling. (July)

• A technical consultancy agreement was entered into with the Gebze Institute of Advanced Technology covering Türkiye Finans’s collaboration with that university. As per the agreement, work was begun on a number of the bank’s existing projects. (August)

• Türkiye Finans took part in “ICT Summit Eurasia” held at the Haliç Congress Center in İstanbul on 11-13 September 2012 and it made two vision and progress presentations: “TFKB R&D Center University-Industry Cooperation Program” and “TFKB Research and Development Center Part-Time Support Engineer Program”. (September)

• TKFB worked with its technical consultants in making an evaluation of existing IS projects in order to further develop the bank’s product innovation competencies, particularly in the area of specialized products for the participation banking sector. (September-December)

• Work was completed on preparing the proposed R&D center’s accounting system. (November)

• During a visit to the Ministry of Science, Industry and Technology (General Directorate for Science & Technology), a presentation was made concerning TKFB’s

R&D vision and underlying motivations. Information was also provided about the Türkiye Finans R&D Center application which the bank plans to submit in 2013. (December)

• TKFB’s “Quick-Financing Platform for the Banking Industry” project proposal was formally submitted to the TÜBİTAK Department of Technology and Innovation Funding Programs. (December)

Summary of activities planned for 2013

Türkiye Finans continues to increase the availability of innovative products and services which conform to participation banking principles. Information about the new products which the bank plans to introduce to the market in 2013 is presented below.

Siftah Card

Türkiye Finans’s Siftah Card is a murabahah-compliant credit card for the bank’s business customers. Siftah Card holders may use the card to purchase goods up to the value of their assigned limit and to schedule the amount and timing of their repayments as they wish. The card’s features contribute favorably to customers’ procurements cost management efforts by avoiding unnecessary charges. The Türkiye Finans Siftah Card is expected to become available in 2013 Q1.

Urban Renewal Financing

Urban renewal financing is another credit product that is being readied for launch. Under this program, a portion of the bank’s lending to finance urban renewal projects is subsidized by the government. Türkiye Finans will be one of the first banks in Turkey to offer this product. As of this writing, a protocol covering the subsidies is about to be signed and the bank is involved in discussions with firms that may be undertaking urban renewal projects.

Research & Development; New Services and Activities


BKM Express

In order increase the security of payments which its customers make over the internet, Türkiye Finans will join the Interbank Card Center’s “BKM Express” platform with its own credit cards, debit cards, and online vendors.

Express Pass System

A new product will make it possible for customers to issue instructions to have their Express Pass vehicle tags topped up from their credit card and bank accounts immediately or automatically at regular intervals.

Credit Cards, Insurance, Mortgages

Türkiye Finans will continue to diversify its credit card, insurance, and mortgage products in order to better meet the needs of its customers by means of specially-designed financing opportunities.

Mobile Payments

Increasing use of technology to make payments and transfer money is significantly cutting into the use of cash. The demand for mobile payment solutions is expected to grow strongly in the near and medium terms. Türkiye Finans plans to begin offering mobile payment services to its customers in 2013.

Participation Accounts

Türkiye Finans plans to further diversify its participation accounts in order to permit its customers to put their savings to work in different ways and also to save up for their future needs.

Leasing Certificates

Leasing certificates are financial instruments that private-sector companies issue through sale-and-lease back agreements that they enter into with asset leasing companies. By making it possible for companies to secure financing on the basis of assets that they own or rent, these instruments can be highly attractive in terms of their maturity structure, liquidity, and tax advantages. Türkiye Finans completed the infrastructure needed to fund leasing certificates issued by companies in 2012 and it plans to begin investing on these products in 2013 within the framework of its risk-acceptance criteria.

Research & Development; New Services and Activities


To the Shareholders of Türkiye Finans Katılım Bankası Anonim Şirketi:

We have audited the accuracy and the consistency of the financial information in the annual report of Türkiye Finans Katılım Bankası Anonim Şirketi (“the Bank”) with the audited financial statements as of 31 December 2012. The annual report is the responsibility of the Bank’s management. Our responsibility, as independent auditors, is to express an opinion on the annual report based on our audit.

Our audit was conducted in accordance with the regulations on preparation and issuance of annual report in (Turkish) Banking Law No 5411 and independent auditing principles. Those regulations require that we plan and perform the audit to obtain reasonable assurance regarding whether the consistency of financial information represented in the annual report with the audited financial statements and explanatory notes is free of material misstatement. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

In our opinion, the financial information represented in the accompanying annual report represents fairly, in all material respects, the information regarding the financial position of Türkiye Finans Katılım Bankası Anonim Şirketi as of 31 December 2012 in accordance with the effective regulations described in article 40 of (Turkish) Banking Law No 5411 and includes Independent Auditors’ Report issued by us and Summary of Board of Directors’ Report and is consistent with the audited financial statements and explanatory notes.

İstanbul, 15 March 2013

Akis Bağımsız Denetim ve SerbestMuhasebeci Mali Müşavirlik Anonim Şirketi

Erdal Tıkmak Partner

Compliance Opinion on the Annual Report

Türkiye Finans 2012 Annual Report Section 2 - Management and Corporate Governance Practices50

Section 2 - Management and Corporate Governance Practices Türkiye Finans 2012 Annual Report 51

Keeping pace with life: It means deploying technology to support growth and to respond to customers’ wishes faster. In 2012 Türkiye Finans once again demonstrated its technology and service platform competencies and increased its ADC utilization rate among customers to 73%.

73%

:)

ADC Utilization Rate

Customer Satisfaction


Board of Directors and Audit Committee

MUSTAFA BOYDAKChairman of the Board

ABDULKAREEM ASAAD A. ABU ALNASRVice Chairman of the Board

MEHMET ATİLA KURAMABoard Member

BRIAN KEITH BELCHERBoard Member and Member of the Audit Committee

DONALD PAUL HILL Board Member

OĞUZ KAYHANBoard Member and Chairman of the Audit Committee

V. DERYA GÜRERKBoard Member and CEO


MUSTAFA BOYDAK Chairman of the Board1963 Born in Hacılar, Kayseri; graduated from Vocational Academy of Business Administration at Muğla University1987-1989 Manufacturing Chief, Assistant Manufacturing Manager and Manufacturing Manager in various departments at HES Kablo1990-1992 Purchasing Manager, HES Kablo 1992-1995 Member of Board of Directors, Anadolu Finans1993 Member of Board of Directors, Merkez Çelik A.Ş.1995 Chairman of Board of Directors, Merkez Çelik A.Ş.1996 Member of Board of Directors, Boytaş A.Ş.1999-2005 Chairman of the Board of Directors, Anadolu Finans Kurumu2006 Chairman of the Board of Directors, Türkiye Finans Katılım BankasıTotal banking and business management experience is 26 years.

With the change of the HES Group’s partnership structure in 1999, Mustafa Boydak became general manager of HES Kablo and chairman of Anadolu Finans Kurumu.

Following the group’s subsequent reorganization as Boydak Holding, Mr Boydak became chairman of HES Kablo as well. He currently holds both positions. Since 2003 Mustafa Boydak has been serving both as deputy chairman of Boydak Holding and as a director on the boards of a number of group companies.

Mustafa Boydak has been a member of the Turkish Industrialists’ and Businessmen’s Association (TÜSİAD) since 1998.

Mustafa Boydak was elected president of the Kayseri Chamber of Industry on 6 March 2005 and he officially began his duties in that capacity on March 15th. He was reelected president on 9 February 2009.

Mr Boydak became a member of the board of directors of the Union of Chambers and Commodity Exchanges of Turkey (TOBB) on 10 March 2011. He has been a member of the board of directors of Credit Guarantee Fund since 1 August 2011.

Mustafa Boydak is also a member of many professional organizations.

ABDULKAREEM ASAAD A. ABU ALNASR Vice Chairman of the Board1961 Born in Jeddah; graduated from Business Administration Department at California State University (USA), Master’s Degree on Business Administration from the American University (Cairo)1991-1992 Manager, Saudi American Bank1992-1993 Senior Manager, Saudi American Bank1993-1995 Assistant General Manager, Saudi American Bank1995-1997 Regional Manager, Private Banking, the National Commercial Bank1997-1999 Division Head, Private Banking, the National Commercial Bank1999-2001 Sector Head, Consumer Banking, the National Commercial Bank2001-2004 Deputy General Manager and Consumer Banking Sector Head, the National Commercial Bank2004-2005 Deputy General Manager, the National Commercial Bank2005 General Manager, the National Commercial Bank

2006 Chief Executive Officer (CEO), the National Commercial Bank2008- Vice-Chairman of the Board, Türkiye Finans Katılım Bankası Total banking and business management experience is 24 years.

MEHMET ATİLA KURAMA Board Member1960 Born in Bolu; graduated from the Faculty of Administrative Sciences at Boğaziçi University, MBA Degree from Cardiff Business School 1993-1997 Product Development Manager, the National Commercial Bank1997-1999 Credit Risk Management Director, Swiss Bank Corp.1999-2001 Credit Risk Management Director, UBS Warburg2003-2005 General Manager, Family Finans2005 Member of Executive Board, Ülker Group2006 Member of the Board, Türkiye Finans Katılım Bankası Total banking and business management experience is 29 years.

BRIAN KEITH BELCHER Board Member and Member of the Audit Committee1956 Born in Cardiff, United Kingdom1985-1986 Credit Analyst, Italian International Bank, London1986-1990 Assistant Manager, Banking Supervision Department, Bank of England US Banks Group1990 Risk Manager, Financial Institutions Group, Citibank Europe, London1995-1997 Business Head, Financial Institutions Group, Citibank Norway1996-1998 Supervisor-Chief Auditor, Citibank London1998-2000 European Risk Manager, Insurance Banking Group, Citibank London2000-2002 Country Risk Manager, Financial Institutions, Public Sector & Trade, Citibank Handlowy, Warsaw2002-2004 Corporate and Investment Bank Chief Risk Officer (Non-bank), Financial Institutions, Insurance and Funds Management Group, Citibank London2004-2007 Corporate Banking Chief Credit Officer, Sub-Saharan Africa, Citigroup Citibank Johannesburg2007-2008 Chief Credit Officer, EMEA Global Wealth Management Group, Citibank London2008 Group Chief Risk Officer, the National Commercial Bank, Jeddah2009 Member of the Board of Directors of Türkiye Finans Katılım Bankası Holds ACIB certificate from The Chartered Institute of Bankers course in London. Total banking and business management experience is 33 years. OĞUZ KAYHANBoard Member and Chairman of the Audit Committee1966 Born in Denizli. Graduated from Ankara University Economics Department, Faculty of Political Sciences, Master’s Degree on Accounting-Finance from Gazi University 1987 Assistant Certified Bank Auditor for the Treasury Undersecretariat of the Prime Ministry1998-2001 Vice President of the Board of Certified Bank Auditors Deputy President of the Board of Certified Bank Auditors2001-2006 Head of a number of offices at the Banking Regulation and Supervision Agency

2007-2012 Member of the Board of Directors and Member of the Audit Committee, Ziraat Bank Member of the Board of Directors of Ziraat Bank’s various domestic and international subsidiaries2011-2012 Member of the Board of Directors, Arab-Turkish Bank 2012- Member of the Board of Directors and Chairman of the Audit Committee, Türkiye Finans Katılım Bankası Total banking and business management experience is 25 years.

DONALD PAUL HILL Board Member1946 Born in Colorado (USA); graduated from Economics and Political Science Department, University of Denver, Colorado (USA); MBA from the Harvard Business School, Cambridge, Massachusetts (USA)1993-1999 Treasurer, the National Commercial Bank1999-2002 Advisor to the Chairman and Managing Director, the National Commercial Bank2002-2006 Chief Financial Officer, the National Commercial Bank2006-2009 Support Unit Head, the National Commercial Bank2008- Member of the Board of Directors and Member of the Audit Committee, Türkiye Finans Katılım Bankası2009- Sector Head, International Sector, the National Commercial Bank Total banking and business management experience is 37 years.

V. DERYA GÜRERK Board Member and CEO1963 Born in Ankara; graduated from Gazi University and Master’s from Manchester Business School and University of Wales (United Kingdom)1983-1985 Etibank1986-1996 Citibank, Turkey 1996-1998 Citibank, New York, USA1998-2000 Executive Vice President, Foreign Relations, Kentbank2000-2008 Consultant, Head Office, Türkiye İş Bankası2003-2005 Executive Vice President, Human Resources and Reporter to Board of Directors, AVEA2008-2009 Vice Chairman of the Executive Board / CFO, Dedeman Holding2009-2011 Executive Vice President, Transformation and Project Management, Türkiye Finans Katılım Bankası2011- CEO (Chief Executive Officer), Türkiye Finans Katılım Bankası Total banking and business management experience is 29 years.


Executive Vice Presidents

OSMAN ÇELİK

SEMİH ALŞAR

İKRAM GÖKTAŞ

ZUHAL ULUTÜRK

AYDIN GÜNDOĞDU

FAHRİ ÖBEK

ALİ GÜNEY

MENDUH KARA

BEDRİ SAYIN

ABDÜLLATİF ÖZKAYNAK


OSMAN ÇELİK1964 Born in Erzincan; graduated from Economics Department, Faculty of Economics and Administrative Sciences, Middle East Technical University1986-1987 Economist, State Statistical Institute1988-1995 Specialist and Chief Specialist, Project Evaluation and Preparation Department, Faisal Finans1995-1999 Project and Marketing Manager, İhlas Finans1999-2005 Executive Vice President, Anadolu Finans2006- Executive Vice President, Türkiye Finans Katılım Bankası Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Commercial Banking Allocation Department, Enterprise Banking Allocation Department, Financial Analysis and Intelligence Department, Loan Monitoring Department, Individual Allocation, Loan Analytics and Program Department Total banking and business management experience is 24 years.

AYDIN GÜNDOĞDU1966 Born in Mesudiye-Ordu1985-1991 graduated from the Faculty of Management Engineering at ITU and Master’s Degree on Business Administration from Institute of Social Sciences at ITU. Specialist, Assistant Chief, Sub-Manager, Assistant Manager at Projects and Investments Department, Kuveyt Türk Evkaf Finans Deputy Manager, Financial Analysis and Intelligence Department, Kuveyt Türk Evkaf Finans1999-2005 Marketing Manager, Marketing Group Manager, Anadolu Finans Kurumu2006- Executive Vice President, Türkiye Finans Katılım BankasıTotal banking and business management experience is 22 years. Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Commercial Banking Department, Corporate Banking Department,

BEDRİ SAYIN1956 Born in Siirt; graduated from Business Administration Department, Faculty of Economics and Administrative Sciences at Çukurova University1974-1983 Ministry of National Education1983-1988 Ziraat Bankası1988-2002 Chief, Adana Branch, Faisal Finans Kurumu Sub-Manager, Assistant Manager and Manager, Urfa Branch Executive Vice President, Ankara Region Executive Vice President, Istanbul Region Executive Vice President, Head Office2002-2005 Executive Vice President, Family Finans2006- Executive Vice President, Türkiye Finans Katılım Bankası Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Loan Operations Department, Commercial Loans Control Department, Foreign Transactions Operations Department, Payment Systems Operations Department, General Banking Operations Department, Treasury Operations Department, Total banking and business management experience is 29 years.

İKRAM GÖKTAŞ1969 Born in Mutki/Bitlis; graduated from Business Administration Department, Faculty of Political Sciences at Ankara University1992-1997 Auditor, Board of Auditors, Garanti Bank1997-2000 Assistant Manager, Istanbul Corporate Branch, Çorum Branch Manager, Garanti Bank2001-2005 Banking Services Manager, Anadolu Finans Kurumu2006-2009 Banking Services Manager, Türkiye Finans Katılım Bankası2009- Executive Vice President, Türkiye Finans Katılım Bankası

Total banking and business management experience is 21 years. Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Branch Network Development and Branch Performance Management Department Alternative Distribution Channels Department, Organization, Capacity Planning and Process Development Department, Corporate Communications Department, Service Management Department, Regional Headquarters

ALİ GÜNEY1964 Born in Rize; graduated from the Faculty of Economics and Administrative Sciences at Marmara University1990-1993 Assistant Specialist, Funds Management Department, Faisal Finans1995-1999 Assistant Manager, Funds Management and Treasury Department, İhlas Finans1999-2005 Manager, Funds Management and Treasury Department, Anadolu Finans2006-2009 Manager, Treasury Department, Türkiye Finans Katılım Bankası2009- Executive Vice President, Türkiye Finans Katılım Bankası Total banking and business management experience is 22 years. Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Treasury Department, Financial Institutions Department

Abdüllatif ÖZKAYNAK1960 Born in Antalya. Graduated from Faculty of Economics and Administrative Sciences, Gazi University1985-1998 Various positions at Accounting, Budgeting and Financial Control Department, Egebank1998-2005 Group Manager, Financial Affairs, Anadolu Finans Kurumu2005-2011 Financial Control Manager, Accounting and Budget, Türkiye Finans Katılım Bankası2011- Executive Vice President, Türkiye Finans Katılım Bankası Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Accounting and Tax Department, Budget, Management Information Systems and Corporate Performance Department, Statutory Reporting and Financial Control Department, Purchasing, Construction and Administrative Affairs Department Total banking and business management experience is 28 years

Semih ALŞAR1969 Born in Istanbul. Graduate from Department of Economics, Faculty of Economics, Istanbul University1990-1993 Financial Analyst, Birleşik Yatırım Bankası1993-1994 Individual Marketing Specialist, Marmara Bank1994-1995 Individual Marketing Specialist, Bank Ekspres1995-1998 Manager, Cash Management, Finansbank1998-2000 Group Manager, Retail Banking, Egebank2000-2002 Marketing and Product Development Director, Global Menkul Değerler2002 -2004 Branch Manager, Mecidiyeköy, Asya Katılım Bankası2004-2011 Individual Marketing and Product Development Manager, Asya Katılım Bankası2011- Executive Vice President, Türkiye Finans Katılım Bankası Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Housing Finance Marketing Department, Payment Systems Marketing Department, Participation and Investment Products Marketing Department, Sales Management Department, Individual Product Coordination and Customer Analytics Service Total banking and business management experience is 22 years.

Fahri ÖBEK1969 Born in Tosya-Kastamonu. Graduated from Computer Science and Engineering Department, Ege University and Master’s degree in Business Management from Koç University1990-1991 Started at Bilpa and continued his career at Egebank1991-1996 Senior System Analyst, Software Development, Koç Bank1996-2006 Group Manager in Charge of Software Development2006 -2008 Head of System Development Group, Yapı Kredi Bank2008-2010 Deputy General Manager in Charge of IT Management, Yapı ve Kredi Bank2010-2011 Department Head in Charge of Information Technologies, Vodafone (CIO)2011- Executive Vice President, Türkiye Finans Katılım Bankası Total banking and business management experience is 22 years. Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Information Systems Coordination Department, Software Development Department, Information Systems Operation Department, Information Systems Analysis and Quality Assurance Department, Alternative Distribution Channels and Payment Systems Development Department, Business Continuity Department.

Zuhal ULUTÜRK1971 Born in Yozgat. Graduated from Department of Economics, Faculty of Political Sciences, Ankara University, e-MBA from Boğaziçi University.1993-1996 Auditor, Akbank1996-1998 Auditor, Kentbank1998 -2001 Manager, Human Resources, Kentbank2002-2007 Group Manager, Human Resources, Denizbank2007-2010 Executive Vice President in Charge of Human Resources, Training and Organization, Şekerbank2010-2011 Head of Business Partners Department, Human Resources, Vodafone2011- Executive Vice President, Türkiye Finans Katılım Bankası Areas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: Human Resources Department, Training Department, Performance Management Department Total banking and business management experience is 20 years.

MENDUH KARA 1975 Born in İzmir. Graduated from İstanbul University, Faculty of Economics, International Relations Department1997-1998 Lale Ajans1998-2002 Various positions at Dışbank2002-2005 Corporate Marketing Department at Anadolu Finans Kurumu 2006-2011 Assistant Manager - Corporate Marketing, Merter Branch Manager, Manager - Enterprise Banking and Manager – Commercial Banking, Türkiye Finans Katılım Bankası2012- Executive Vice President, Türkiye Finans Katılım BankasıAreas of Responsibility at Türkiye Finans Katılım Bankası as Executive Vice President: SME Banking Department, Collections Department, Business Banking Department, Commercial Products Development and Customer Analytics Department Total banking and business management experience is 15 years.


Unit Managers within Internal Systems

EMRE ERTÜRKHead of Board of Auditors

BURCU ÇALIKLI Head of Risk Management Center

OGÜN ATAOĞLU Head of Internal Control Center

CEM AKAR Manager, Compliance Department, Compliance Officer

EMRE ERTÜRK Head of Board of Auditors1976 Born in Samsun. Graduated from İstanbul Technical University, Civil Engineering Department, MBA Degree from İstanbul University, Master’s Degree on Management Information Systems from Boğaziçi University 1999-2005 Inspector, Unit Manager - Inspection Board, Dışbank2005-2011 Assistant Head of Inspection Board, Fortis Bank2011-2012 Assistant Head of Inspection Board, TEB2012- Head of Board of Auditors, Türkiye Finans Katılım BankasıTotal banking experience is 13 years.

BURCU ÇALIKLI Head of Risk Management Center1969 Born in Ankara; graduated from Statistics Department of Middle East Technical University, e-MBA Degree from Koç University1992-1995 Partner, Retsam Bilgisayar Ltd. Şti.1995-1997 Auditor, Fortis Bank1997-2009 Citibank Corporate Loans Risk Management, Market Risk Management Country Risk Director, Individual Credits2009- Head of Risk Management Department, Türkiye Finans Katılım Bankası Total banking and business management experience is 20 years.

OGÜN ATAOĞLUHead of Internal Control Center 1974 Born in Trabzon. Graduated from İstanbul University, Faculty of Economics, Economics (English) Department1999-2002 Inspector, Ege Giyim Sanayicileri Bankası 2003-2009 Assistant Manager – Internal Control, Türkiye Finans Katılım Bankası 2009-2012 Compliance Manager, Türkiye Finans Katılım Bankası 2012- Manager – Internal Control, Türkiye Finans Katılım Bankası Total banking and business management experience is 13 years.

CEM AKARManager, Compliance Department, Compliance Officer1975 Born in Ankara. Graduated from Bilkent University, Tourism Management Department. Holds diploma from the Oxford College Compliance Management Ascentis Level 3 ProgramCurrently studies at Thomas Jefferson School of Law, Compliance and Risk Management Master’s Program 2000-2007 Manager - Fraud Risk Management Department, Manager - Anti-Money Laundering Department, Citibank2007-2009 Assistant General Manager, Fibula Group of Companies2009- Advisor, Compliance Department, Manager, Compliance Department, Compliance Officer, Türkiye Finans Katılım BankasıTotal banking and business management experience is 13 years.


Board of Auditors

İDRİS TURAN İLTER

ERDOĞAN ÖCAL

EYÜP ASKER

İDRİS TURAN İLTER1949 Born in Kemah, Erzincan. Graduated from Faculty of Chemistry, Istanbul University1970-1977 Press-Broadcasting manager1978-1985 Operation Manager and Executive, Laksan A.Ş.1985-1989 Various positions at Albaraka Türk1989-2001 Manager and Assistant General Manager at Kuveyt Türk Evkaf Finans Kurumu2002-2005 Consultant to the Executive Committee, Family Finans2006-2010 Consultant, Türkiye Finans Katılım Bankası2011- Member of the Board of Auditors, Türkiye Finans Katılım Bankası Total banking and business management experience is 42 years.

ERDOĞAN ÖCAL 1968 Graduated from Faculty of Economics at Istanbul University1971-1985 Revenue Controller, Ministry of Finance1985-2006 Partner, PricewaterhouseCoopers2006- Certified Public Accountant, PricewaterhouseCoopers2008- Member of Board of Auditors, Türkiye Finans Katılım Bankası Since 2002 he has been a part-time lecturer on the Turkish Tax System at the Bilgi University.Total banking and business management experience is 42 years.

EYÜP ASKER1969 Born in Ankara. Graduated from Mechanical Engineering from Military Academy and Department of English Literature and Language, Boğaziçi University MBA in Finance, Accounting and Crisis Management from Yeditepe University1995-1997 Supervisor, Cash Management Operations, Citibank Istanbul1997-2004 Assistant Manager, Finance and Accounting Department, Istanbul Office, Credit Lyonnais Investment Bank2004-2008 Assistant Manager, Finance and Accounting Department, Istanbul Office, Credit Agricole Investment Bank2008-2010 Assistant Manager, Finance and Accounting Department, Istanbul Head Office, Societe Generale Investment Bank2010- Senior Financial Control Manager, National Commercial Bank Head Office, Jeddah2011- Member of Board of Auditors, Türkiye Finans Katılım Bankası Total banking and business management experience is 18 years.


Branch Network Development and

Branch Performance Management Dep.

Sait Aytaç

Organization, Capacity Pl.&Process

Improvement Department

Serap Gürses Bal

Organization Chart

Commercial Banking EVP

Aydın Gündoğdu

Legal Advisory Department

Alpaslan Özen

Legal Proceedings Department

Litigation Section

SME Banking EVP

Menduh Kara

Retail BankingEVP

Semih Alşar

HREVP

Zuhal Ulutürk

Commercial Banking Department

Cengiz Gülhan

SME Banking DepartmentTamer Dağlı

Commercial Banking Allocation

DepartmentBayram Uçar

Mortgage Hasan Çelenligil

Human Resources Department

Hakan Gümüş

Micro Banking DepartmentSalih Öten

Financial Analysis and Intelligence

Department Hüseyin Cemtekin

Deposit and Investment

Products Marketing Department

Bünyamin Kılıç

Performance Management DepartmentEvin Köse

Commercial Branches

Corporate Banking DepartmentEnver Şahin

Collections Department

Mustafa Gülen

SME Banking Allocation

DepartmentErol Görgün

Credit Monitoring Department

Ali Süheyl Ancın

Retail Allocation, Credit Analytics

and Program Department

Hüseyin Bekdaş

Payment Systems Marketing

DepartmentMurat Kibaroğulları

Sales Management Marketing

Ömer Faruk Gülap

Retail Product Coordination and

Customer Analytics Section

Trading Departmentİrfan Gültaş ADC Department

Yılmaz Üstün

Corporate Communication

Department N. Çiğdem Belgutay

Service Management Dep.Nurettin Cerrah

Regional Offices

Branches

Commercial Product Development and

Customer Analytics Section

Distribution and Service EVP

İkram Göktaş

CreditsEVP

Osman Çelik

Board of Directors

CEODerya Gürerk

Board SecretariatNihal Mashaki

(SVP)

Legal Group SVPMahmut Gürgeç

ConsultantsHead Office

Secretariat

Strategy and Business Development

Dursun Arslan(SVP)


OperationsEVP

Bedri Sayın

ITEVP

Fahri Öbek

FinanceEVP

Abdüllatif Özkaynak

TreasuryEVP

Ali GüneyRisk Management

Center HeadBurcu Çalıklı

Board of AuditorsEmre Ertürk

Internal Control Department

Ogün Ataoğlu

Compliance DepartmentCem Akar

Risk Reporting and Credit Policies

DepartmentÖzer Baran

Accounting & Tax DepartmentDavut Yücel

Treasury DepartmentHakan Uzun

Credit Operations DepartmentNezihi Ateş

IT Coordination Department

Mehmet Said Gül

Legal Reporting & Financial Control

DepartmentMete M. Kanat

Foreign Transactions

Operations Dep.Bekir Güçlüer

Budget, MIS & Corporate Perf.

DepartmentTaner Yavuz

Financial Institutions Department

M. Fatih Bulaç

Procurement Construction & Administrative

Affairs Departmentİsmail Baran

Commercial Credit Control DepartmentArzum G. Özden

Software Development Dep.

Mustafa Bezeklioğlu

IT Operations Department

Metin Karabiber

ADC and Payment Systems Development Dep.

Selma Alp

IT Analysis & Quality Assurance

Department Filiz Kavaklıoğlu

Payment Systems Operations Dep.Ahmet Yıldırım

General Banking Operations Dep.Hanefi Atalay

Treasury Operations Department

Fahrettin CanbaşBusiness Continuity

Department İ. Özay Çuhadar

Risk Analytics DepartmentAhmet Mert

Audit CommitteeOğuz Kayhan

Brian K. Belcher


Governing Bodies and Committees at the Bank, Participation of Bank Directors and Committee Members in Meetings

Board of Directors

As prescribed by article 29/5 of Türkiye Finans’s articles of association, the bank’s board of directors consists of seven members. Board meetings require a quorum of a least five directors. Board decisions are taken by a simple majority of those present and voting. The duties and authorities of boardmembers are spelled out in the articles of association subject to applicable laws, regulations, and administrative provisions. During 2012 the board convened on five occasions, one of which was for the purpose of approving the board’s declaration to the bank’s independent auditors. All board meetings that took place during 2012 satisfied meeting quorum requirements and all decisions taken at those meetings were passed by a sufficient number of votes. Information about board meetings in 2012 is presented below.

Meeting/Date

1. 17 January 2012

2. 8 February 2012

3. 25 April 2012

4. 29 August 2012

5. 13 December 2012

Executive Committee

Türkiye Finans set up an executive committee in March 2009. The fundamental mission of the executive committee is to closely supervise the performance of the bank’s management and the implementation of the bank’s strategies. The committee is also responsible for over-seeing the bank’s transformation program. Because it usually meets once a month, the executive committee has the ability to keep a closer watch on the bank’s performance and risk exposure, to make decisions more quickly, and to recommend that corrective measures be taken in a timely fashion. The Executive Committee is the channel through which the Board of Directors and the bank’s management communicate with each other. The Türkiye Finans Executive Committee met ten times during 2012.

Credit Committee

The Credit Committee was set up by the Board of Directors to exercise the power to extend credit within the framework of principles and procedures prescribed by banking laws and regulations. The Credit Committee approves credit allocation decisions within the limits of its authority, makes decisions about requests to change the terms of credit allocations which fall within the scope of its authority, and fulfills such other credit-related duties as the Board of Directors may give it. The Türkiye Finans Credit Committee met twelve times during 2012.

Audit Committee

The Audit Committee was set up by the Board of Directors to perform the duties required of it by banking laws and regulations and to assist the board in the conduct of its auditing and supervisory activities. The Audit Committee is also responsible for overseeing the effectiveness and adequacy of the bank’s risk management system and for checking the validity of risk-related judgments, reports, and other documenta-tion submitted to it. The Audit Committee supervises coordination among the Board of Inspectors, the Internal Control Center, and the Risk Management Center; keeps the Board of Directors informed about such matters; formulates principles, procedures, and policies applicable to such issues and submits these to the Board of Directors for its approval.

At least once every six months, the Audit Committee reports the results of its activities to the Board of Directors, at which time the committee also presents its opinions about such matters as measures that need to be taken, practices that need to be followed, and other issues which it deems to be vital to the bank’s ability to conduct its business confidently. During its meetings, the committee discusses the findings and assertions of the bank’s internal audit units and it refers such issues as it deems to be important to the Board of Directors. The committee also discusses issues brought to its attention by the bank’s own external auditors and/or by BRSA auditors and it refers these to the Board of Directors as well. During 2012 the Audit Committee convened five times at the bank’s headquarters; it also met with the bank’s external auditors on four occasions, at which time the findings of three quarterly audits and one year-end audit were discussed.


Corporate Governance Committee

A corporate governance committee was set up at Türkiye Finans in April 2011. The fundamental mission of this committee is to monitor and supervise the bank’s activities so as to ensure that Türkiye Finans’s corporate governance policies, regulations, and procedures are in compli-ance with banking laws and regulations. At regular intervals the committee also informs the Board of Directors of possible changes that may take place in corporate governance laws and regulations and their implementation. This committee met seven times in 2012.

Remuneration & Appointments Committee

A remuneration and appointments committee was set up at Türkiye Finans in April 2011. The fundamental mission of this committee is to determine appropriate forms of remuneration for the bank’s boardmembers, senior managers, and other employees in light both of the bank’s strategies and needs and of market practices. The committee also supports the Board of Directors on issues related to the nomination of candidates to seats on the board. This committee met twice in 2012.

Board of Directors General Secretariat

The duty of the Board of Directors General Secretariat is to coordinate activities and information flows among the Board of Directors and board-level committees. The scope of this secretariat’s duties and responsibilities does not include any of the functions or operations of the bank’s general manager or of any general manager-level committees. This has been done explicitly to separate the corporate management processes of the general manager’s office from the corporate governance processes of the board.

Mustafa Boydak

Abdulkareem Abu Alnasr

Mehmet Atila Kurama

Donald Paul Hill

Oğuz Kayhan

Brian Keith Belcher

Veysel Derya Gürerk

Board of Directors Chairman Vice Chairman Member Member Member Member MemberExecutive Committee Member Chairman Member

Audit Committee Chairman Member Credit Committee Member Chairman Member MemberCorporate Governance Committee

Chairman Member Member

Remuneration & Appointments Committee

Member Chairman

Information about committee members’ participation in meetings during

2012

Number of meetingsNumber of meetings with

full attendanceNumber of meetings with less than full attendance*

Corporate Governance Committee 7 7 -Board of Directors 5 3 2 **Audit Committee 5 5 -Credit Committee 12 12 -Executive Committee 10 10 -Remuneration & Appointments Committee 2 2 -

* Statutorily mandated quorum requirements were satisfied at all meetings.

** One member was absent from each of the two meetings for reasons of excuse.


Information About General Meetings Held in 2012

Three general meetings of the bank were held during 2012: the annual general assembly on 29 March 2012, an extraordinary general meet-ing on 6 June 2012, and another extraordinary general meeting on 29 August 2012. The annual general assembly was convened to discuss routine company matters as required by law. The first extraordinary general meeting, held on 6 June 2012, was convened to discuss and decide upon the amendment of the bank’s articles of association. The second extraordinary general meeting, held on 29 August 2012, was convened to make appointments to seats on the board of directors as required by the rules of article 25 of Turkey’s newly-passed commer-cial code. A seat on the board vacated by the resignation of Varol Şenel was filled by the appointment of Oğuz Kayhan to replace him.

2012 Annual General Assembly Agenda1- Opening the meeting and forming the presiding committee

2- Authorizing the presiding committee to sign the minutes of the meeting on behalf of the general assembly of shareholders

3- Reading and deliberating the Board of Directors’ annual report for 2012

4- Reading and deliberating the statutory auditors’ report and the independent auditor’s report for 2012

5- Reading, deliberating, and approving the financial statements for 2012

6- Acquitting members of the Board of Directors of their fiduciary responsibilities for the company’s activities and transactions in 2012

7- Acquitting statutory auditors of their fiduciary responsibilities for the company’s activities and transactions in 2012

8- Determining how 2012 profits are to be used and how profits and earnings are to be apportioned and distributed

9- Approving the independent auditors selected for fiscal year 2013

10- Deliberating and approving the “General Assembly Internal Directive” prepared by the Board of Directors as required by article 419/2 of the Turkish Commercial Code

11- Determining the monthly salaries to be paid to members of the Board of Directors

12- Deliberating and deciding upon whether or not members of the Board of Directors should be allowed to engage in the activities governed by articles 395 and 396 of the Turkish Commercial Code

13- Petitions and adjournment.


Summary of the Board of Directors report presented to the General Assembly

Dear shareholders,

Welcome to the 22nd annual general assembly of our bank. On behalf of the Board of Directors we respectfully thank you for honoring the bank’s 2012 general meeting with your presence.

Before passing on to the Board of Directors’ and the Statutory Auditors’ reports, the financial statements, and our assessment of the bank’s 2012 results, we should first share with you a review of the year’s developments in the world and Turkish economies.

An economic overview of 2012 and the outlook for 2013

Although five years have passed since the initial outbreak of the global economic crisis, the world economy remains as fragile as ever. In that respect 2012 was therefore yet another year in which uncertainties prevailed and the longed-for level of recovery in the global economic crisis failed to materialize but in which there was nevertheless some short-term mitigation of risks owing to measures that were taken.

In the euro area, which suffers from seemingly intractable structural problems, the relatively larger Italian and Spanish economies were the source of the more serious risks though political and social unrest remained widespread throughout the region. Weak macro-level data coming from the world’s two biggest economies–China and the USA–exacerbated anxieties of another global slowdown. While the world has been accustomed to weak economic performance among developed countries for quite some time, similar concerns have now begun to mount about the developing countries, whose economies have been the engines of global growth since the outbreak of the crisis. In the United States, the tax increases and spending cuts making up the so-called “fiscal cliff” that were automatically supposed to go into effect at the beginning of 2013 were just barely deferred at the last possible moment in a manner that did little, if anything, to lessen the risk of another recession.

Driven by these and similar difficulties, growth estimates for 2013 were revised downwards by many international agencies and organiza-tions. The International Monetary Fund for example, having calculated a 3.2% expansion in the world economy in 2012, reduced its initial 2013 growth projection from 4.5% to 3.5% while also announcing its expectation that the euro area would suffer a further 0.2% contraction in the new year as well.

As the old year waned and the new one approached however, the appearance of more favorable macroeconomic developments in both the USA and China assuaged fears of a “double-dip recession”, concerns about which had begun to revive. Along with steps that were taken to resolve Europe’s problems, the “quantitative easing” policies announced by the world’s leading central banks also helped support investors’ appetites for risk.

The expectation is that global market liquidity will further increase in 2013 and this suggests that capital inflows into developing economies will also accelerate as well. Indeed in the early weeks of the new year, cross-border capital flows already reached historical highs. Because such mobility poses a threat to financial system stability, developing countries’ monetary authorities are attempting to deal with it by means of basic policy tools and, as is the case in Turkey, by taking a variety of macroprudential measures.

The Turkish economy in 2012

Having registered strong, domestic demand-fuelled year-on growth of 8.5% in 2012, the Turkish economy subsequently embarked upon a “rebalancing” process. Responding to measures taken by economic authorities as well as to a general worldwide slowdown, economic growth in the first three quarters of the year slipped to 2.6%. During these nine months, domestic demand weakened while net exports began to make a positive contribution to growth, whose overall picture was thereby somewhat improved. As of this writing, last-quarter figures have not yet been published but the general expectation is that twelve-month growth for the year will end up at around 2.8%. Available evidence for 2013 suggests that economic activity should recover. Our own feeling is that Turkey will rebound to the 4.5%-5% range of year-on growth that is more indicative of the country’s true economic potential.

Despite last year’s slowdown, the average rate of unemployment slipped to the 9% level in 2012, as nearly two million people without jobs found work. With their biggest export markets in Europe moribund, Turkish companies had recourse to alternative markets and this helped boost their foreign sales to a record-breaking level of something over USD 150 billion.


Two significant successes were also achieved in eliminating the imbalance between the country’s internal and external demand. There was a substantial improvement in the current account deficit, which is ever the “soft-underbelly” of the Turkish economy: the ratio of the deficit to national income, which was 10% in 2011, fell to 6.3% in 2012. Considerable progress was also made in restraining the credit supply, whose too-rapid expansion was posing a serious threat to financial stability: at 15%, the credit supply’s growth rate in 2012 was not even half the previous year’s more than 30% level.

The twelve-month rise in inflation at year-end was 6.2%, which was even lower than what the Turkish Central Bank (CBRT) had forecast. In late 2010 the bank announced that financial stability was, like price stability, now one of its high-priority objectives. In 2012 CBRT followed this up with the development of a set of new macroprudential tools with which authorities sought both to curtail credit supply growth and to keep exchange rate movements under control. Having depreciated considerably in 2011, the Turkish lira tended to gain value for the most part in 2012.

Among the 142 countries cited in Global Competitiveness Report, the results of an annual survey published by the World Economic Forum, Turkey moved from 61st to 59th place in 2011-2012; in 2012-2013, the country jumped sixteen positions to 43rd.

Another important development that took place in 2012 was concerned with Turkey’s country rating. In November Fitch Ratings announced that it had raised Turkey’s credit rating from BB+ to BBB-, which places it inside the “investment grade” category for the first time in many years. With the other two leading rating agencies also expected to raise Turkey’s medium-term rating and with an abundance of global liquidity directing a stream of foreign investment into the country, capital markets reached historically high levels in 2012 and contributed favorably to an even more sanguine outlook as they entered 2013.

We take pride in pointing out that following its increase in Turkey’s country rating, Fitch Ratings also increased our own bank’s foreign currency and local currency ratings to BBB and BBB+ respectively. The effect of this is to put our bank’s securities in the investment grade category in the eyes of international investors. We should also note that as a result of these ratings, Türkiye Finans now enjoys one of the highest credit ratings of assigned by Fitch Ratings to any financial institution in Turkey.

The Turkish banking industry and Türkiye Finans in 2012

At end-2011 there were 48 banks operating in the Turkish banking industry. The issuance of a new license to a privately-owned bank brought this number to 49 in 2012. Of these banks, 32 are deposit banks, 4 are participation banks, and 13 are development & investment banks.

In the twelve months to end-2012, the Turkish banking sector’s total assets grew by 12.6% year-on and reached TL 1,371 billion in value. Total deposits were similarly up by 11% to TL 772 billion, total lendings by 16.4% to TL 795 billion, and total equity by 25.8% to TL 182 billion. Looking exclusively at the sector’s four participation banks, their assets grew by 25.2%, their deposits by 22.2%, and their lendings by 24.5%. Having registered growth rates that were above sectoral averages last year, participation banks increased their share of the sector’s total assets from 4.6% in 2011 to 5.1% in 2012.

Responding to measures taken by the Banking Regulation and Supervision Agency and CBRT, the growth in the sector’s credit supply slowed down significantly. Despite this however, banks continued to reap profits all year long both from wider margins and from security portfolios made less costly by lower interest rates. The sector’s aggregate net profit was up by 19.2% year-on and reached TL 23.6 billion in value. Among participation banks, net profit increased by a somewhat slower 16.4% and amounted to TL 0.9 billion. Participation banks’ share of the Turkish banking industry’s total deposits rose from 5.6% to 6.2% last year while they controlled 4.1% of its total equity as of end-2012.

The sector’s total lendings exceeded its total deposits last year. To make up for the shortfall, banks found in necessary to have recourse to alternative sources of funding. The result was that the total volume of bonds that banks issued on national and international markets more than doubled year-on and reached TL 37.9 billion in value during 2012.

For participation banks, one of the most important developments taking place last year was the Treasury’s first venture into the sukuk (Islamic bond) market. Two separate auctions of these financial certificates (one in TL and the other in USD) generated demand well in excess of expectations.

Summary of the Board of Directors Report Presented to the General Assembly


In July 2012 Turkish banks officially began calculating their capital adequacy ratios (CAR) according to Basel II rules. The sector’s overall CAR, which was 16.6% at end-2011, was up to 17.9% at end-2012. Share capital increases that many banks undertook during the same twelve months helped alleviate the impairments in capital adequacy which it had been feared the introduction of Basel II rules would lead to.

In line with our expectations that the national economy will regain strength in 2013, we believe that the banking sector’s performance will also improve additionally as well. Last year’s assignment of a country rating that puts Turkey in the investment grade category should also make it easier for Turkish banks to tap international sources of funding and thus reduce their dependence on deposits.

• As a result of developments in the Turkish economy and thanks also to the strong efforts on behalf of our employees, as of end-2012 Türkiye Finans’s total assets were up by 30.2% year-on and reached TL 17,617 million. The Bank’s funds collected grew by 20.2% and were worth TL 11,430 million. Non-cash placements increased by a more modest 8.7%, they nevertheless reached TL 7,109 million in value.

• The bank secured a pretax profit of TL 361.8 million on its operations. Setting aside a provision for tax leaves a net profit in the amount of TL 283.6 million. After statutorily mandated reserves have been set aside from this figure, the remainder will not be paid out as a dividend but will instead be retained in the company as an extraordinary reserve.

• At an extraordinary general meeting that was held in June last year, it was decided to increase the bank’s paid-in capital by TL 975 million, from its level of TL 800 million. Of this increase, TL 275 million consisted of fresh cash and TL 700 million resulted from the capitalization of internal resources. Of the TL 275 million (two hundred seventy-five million Turkish liras) pledged in cash, it has been decided that TL

• 150 million (one hundred fifty million Turkish liras) will be paid within three months of the date on which the share capital increase is registered.

• In conclusion, the bank’s paid-in capital increased to TL 1,775 million.• As of end-2012 Türkiye Finans’s capital adequacy ratio stood at 14.76%.

Dear shareholders,

This completes our presentation of the annual report, balance sheet, and profit & loss statement showing the results of Türkiye Finans’s activities in 2012. We now submit these for your consideration and approval.

In closing and on behalf of the Board of Directors, we take this opportunity to thank our shareholders, our employees, and our customers for their confidence in our bank. We respectfully thank you, our shareholders, for honoring our 2012 general meeting with your presence.

Yours sincerely,

THE BOARD OF DIRECTORS

TÜRKİYE FİNANS KATILIM BANKASI A.Ş.


The Türkiye Finans Human Resources Department is responsible for recruiting, in line with the bank’s vision and growth strategies, qualified human resources capable of representing the company and similarly for personnel career planning, performance evaluation, motivation, and benefits management and for formulating remuneration policies and determining and planning training requirements.

During 2012, employees were paid motivational bonuses to reward successful performance. These monetary payments were calculated taking into account employees’ duties and responsibilities and both individual and departmental performance.

It is a tenet of Türkiye Finans human resources policy to recruit the bank’s own managers from among its own personnel. In line with this principle, a total of 540 employees received promotions in 2012. A vice president promoted to Executive Vice President position while a branch manager assigned as a unit vice president, and 54 assistant vice president promoted to unit/branch manager positions. Training was planned and carried out in order to ready personnel for the requirements of newly-opened career paths.

Recruiting and holding onto the very best employees is one of Türkiye Finans’s most important human resources objectives.

The Human Resources Department continued to support the successful fulfillment of Türkiye Finans’s aims by developing human resources practices in line with the bank’s strategies and policies. Human resources management at Türkiye Finans is informed by an awareness of employee satisfaction and by the recognition that human resources are a matter of high-priority concern to the bank.

At end-2012, Türkiye Finans had 3,595 people on its payroll and serving in 220 branches and six regional departments. 34% of the bank’s personnel are employed in headquarters units, 1% in regional units, and 65% in branches.

An analysis of Türkiye Finans’s personnel shows that:

• 87% hold university degrees• 26% are female• Their average age is 33.

61% of newly-hired personnel are placed in management trainee and assistant teller positions. This is evidence of the importance that the bank gives to having human resources who are steeped in Türkiye Finans’s culture and values. One result of this approach is that 73% of newly-opened branch-level staff positions were filled by means of internal promotions.

The names of personnel who potentially satisfy specified criteria for the position of branch manager are kept in a centrally maintained “Man-agement Pool”. The training and progression requirements of these individuals are identified and managed accordingly. These procedures are crucial to the bank’s ability to train its own managers.

The Employee Relations Service is a unit of the Human Resources Department whose duty is to receive and evaluate employees’ requests and grievances, pass them on to the appropriate authorities, and finalize them.

Türkiye Finans is well aware both of the contribution that experienced human resources makes to its success as a bank and of the value that loyal human resources can create. To this end, the bank has developed a system of acknowledging and rewarding employees based on their length of service. In 2012, 628 Türkiye Finans employees received tokens of recognition commemorating their 5th, 10th, 15th, 20th, and 25th years in the bank’s employ.

Employees are provided with various forms of material and moral support to help them achieve and maintain a balance between their careers and their private lives and to foster a sense of solidarity and identity. Clubs specializing in such activities as photography, diving, outdoor sports, excursions, cultural activities, and jogging that are organized and managed by volunteers serve as platforms on which employees with shared interests can get together. This also gives employees an opportunity to take initiative, to assume responsibility, and to internal-ize team spirit.

TRAINING

Because Türkiye Finans regards its employees as its internal customers, continuously providing its personnel with training and progress opportunities is an important tenet of its human resources policy. The most important human resources training projects and investments that the bank undertook in 2012 are summarized in the sections below.

New projects and training activities

• “Career-Long Training” is a training program project that has been developed with the aim of systemizing training so as to expand competencies, manage human resources effectively, and equip employees with the knowledge and skills they need to perform successfully in their existing positions. The first training sessions under this new program have begun.

Information About Human Resources Practices


• “Service Excellence through a Professional Team” is a service culture project that was developed in recognition of the importance of service quality and based on the results of employee surveys, individual interviews, and workshops exploring ways to enhance internal and external customer satisfaction. Training is about to begin under this project.

• A series of “Manager Development” programs was inaugurated to provide management-level personnel with support in line with Türkiye Finans’s growth strategies. “From Junior Team to A-Team” is an in-house mentoring program designed to help newly-appointed branch and unit managers adapt to their new jobs more quickly. “Coaching” is a program that focuses on developing regional managers’ coaching skills.

• “Off the Bench & Onto the Field” is the name of a series of manager development programs that have been introduced to help junior management personnel to develop the personal abilities and job skills they will need to undertake branch manager positions.

• “Every Manager is an HR Manager” is a program for all managers that focuses on managing people.• “Trainers: The Power Inside” is a program that supports the in-house training of the bank’s own training program instructors.• “One Day at the Branch” is a project for headquarters junior management personnel whose aims are to strengthen communication and to

improve task flow processes between headquarters and branches.• “Starting Out at Türkiye Finans” is an orientation program created to speed up newly-hired employees’ adaptation processes and to

familiarize newly-recruited personnel with the bank’s corporate culture. The content, methodology, and duration of this program was revamped last year.

• Türkiye Finans’s digital library was opened to all bank employees. This digital platform contains more than 200 e-training modules and can be accessed from any place or device which has internet connectivity. The bank’s EYS training platform was also revamped to make it more interactive and easier for personnel to use.

• “Let’s Learn Together” is a training program designed to foster a learning culture at Türkiye Finans and to encourage the conduct of training at the branch level.

• In 2012 Türkiye Finans took part for the first time in “Global Management Challenge” (GMC), an international strategic management competition for managers and university students which has been conducted since 1980 and which today involves 8,500 teams and 40,000 people from all over the world. The bank’s “Abracadabra” team came in second among 256 Turkish teams. In the 2013 round of GMC, Türkiye Finans will be sponsoring 22 teams of university students.

• A newly-launched online EFL training platform provides all employees with opportunities to improve their English-language proficiency• In line with Türkiye Finans’s commitment to continuous growth and development, graduate education support is provided at twenty

universities for employees wishing to advance their professional credentials.• “Product, Sales & Portfolio Management” is a training program provided for employees who are directly involved in making sales.• Remote and classroom training and support were provided to personnel who are required by law to hold qualifying Capital Market Board,

Private Pension System, and Insurance Training Center certifications.• As required by law and job position qualifications, personnel were provided with training on issues related to the prevention of money

laundering and terrorist financing, information security, first aid, emergency response, and occupational health & safety.

Recognizing that involvement in professional activities contributes significantly to business development, Türkiye Finans personnel contin-ued to take part in training programs conducted by the Banks Association of Turkey, the Participation Banks Association of Turkey, and the Interbank Card Center.

74% of the training sessions conducted in 2012 were classroom-based while the remaining 26% consisted of remote training in the form of OCS, web conferences, and training catalogue courses.

As a result of the above-outlined training activities carried out to support the personal and professional development of Türkiye Finans employees and to contribute to the bank’s performance, average training time per person amounted to 57 hours in 2012.

PERFORMANCE MANAGEMENT

In March 2012 Türkiye Finans set up a Performance Management Department and gave it responsibility for creating and developing infra-structure needed to support the changeover to a more performance- and results-focused culture at the bank. A performance-evaluation system making use of a “corporate scorecard” was set up at headquarters and scorecards graduated for every level from general manager on down were created. These scorecards rate performance on a wide range of issues besides financial indicators such as service quality, custom-er satisfaction, and attitudes towards risk and efficiency. Ratings based on these scorecards began in 2012.

A new Branch Sales Incentive System was also inaugurated to contribute to the development of a performance-focused sales culture and to the bank’s target management.

Employee satisfaction and internal customer satisfaction levels are now being measured at regular intervals in order to manage human resources more effectively and to make Türkiye Finans a preferred financial services industry employer.


Normal customer relationships and market conditions are always taken into account and the limits and restrictions prescribed by Law of Banks are always complied with in all of the bank’s dealings, including those involving related parties. Details of Türkiye Finans’s transactions with related parties are presented in item seven of part five of the Independent Auditors’ Report section of this annual report.

Other Information

Remuneration provided to members of governing bodies and senior management; non-competition covenant

• The total value of rights and material benefits provided to members of the board of directors and of senior management in 2012 amounted to TL 10,386 thousand. The total value of cash and non-cash benefits consisting of allowances, of travel, accommodation, and representation expenses, and of insurance and similar guarantees provided to the Board of Directors was worth TL 415 thousand; those provided to members of senior management were worth TL 1,085 thousand.

• At the 2012 general meeting, shareholders voted to authorize a ban on board of directors members competing with the company.

Duty of loyalty report

• During 2012 Türkiye Finans sustained no losses whatsoever in any of its dealings either with its parent company or with any of its parent company’s subsidiaries or affiliates; neither were there any instances of Türkiye Finans’s covering any benefits arising to or losses sustained by its parent company.

Special audits; public authority audits

• During 2012 there were no shareholder requests for a special audit. Türkiye Finans is subject to continual on-site inspection and remote supervision by BRSA personnel as required by the Banks Act (Statute 5411). The bank’s conduct of its business was also subject to regular oversight by personnel of the Ministry of Labor and Social Security as per that ministry’s program during 2012.

• During 2012 administrative fines totaling TL 196 thousand were levied against Türkiye Finans, of which amount TL 171 thousand were for Statute 5411 contraventions, TL 5 thousand were for tax-law contraventions, and TL 21 thousand were for contraventions of traffic, municipal, and various other laws and regulations.

Investments; Charitable Assistance & Donations

• In 2012 Türkiye Finans undertook investments worth a total of TL 51.2 million, of which amount TL 9.8 million consisted of operating lease development costs, TL 14.6 million consisted of intangible assets, and TL 26.8 million consisted of marketable securities.

• The tax-deductible portion of donations and charitable assistance paid by Türkiye Finans to public-interest organizations amounted to TL 127 thousand in 2012.

• The non-deductible portion of donations paid by Türkiye Finans to other natural and legal persons amounted to TL 62 thousand in 2012.

Information About the Related Party Transactions, the Bank Enters


POSITION NUMBER SUPPORT SERVICE SUPPLIER SUPPORT SERVICE OBTAINED FOR

1 Abaküs Finansal Yazılım ve Danışmanlık A.Ş. Information systems2 Banksoft Bilgisayar Hizmetleri Ltd. Şti. Information systems3 Figen Yazılım Evi Tic. Ltd. Şti. Software support & operational services4 Asseco See Teknoloji A.Ş. Software license5 Asseco See Teknoloji A.Ş. Software maintenance and support & operational services6 Provus Bilişim Hizmetleri A.Ş. Operational services7 Plastkart Plastikkart Akıllı Kart İletişim sistemleri San. ve Tic. A.Ş. Operational services8 Aktif İleti ve Kurye Hizmetleri A.Ş. Operational services9 Hobim Bilgi İşlem Hizmetleri A.Ş. Operational services

10 Kurye Net Motorlu Kuryecilik ve Dağıtım Hizmetleri A.Ş. Operational services11 MTM Holografi Güvenlikli Basım ve Bilişim Teknoloji San. Tic. A.Ş. Operational services12 Acerpro Bilişim Çözümleri Yazılım ve Danışmanlık Hiz. İç ve Dış Tic.

Ltd. Şti.Operational services

13 Kredi Kayıt Bürosu A.Ş. Credit and other transactions14 Türkiye Garanti Bankası A.Ş. Correspondent agreement15 Türkiye Garanti Bankası A.Ş. Cash collection & distribution16 Akbank T.A.Ş. Cash collection & distribution17 Kartek Kart ve Bilişim Teknolojileri Ltd. Şti. Information systems18 Kartek Kart ve Bilişim Teknolojileri Ltd. Şti. Information systems19 Servicium Bil. Hiz. San. ve Dış Tic. A.Ş. Information systems20 Bilişim Bilgisayar Hiz. Ltd. Şti. Information systems21 Türk Telekomünikasyon A.Ş. Information systems22 İnnova Bilişim Çözümleri A.Ş. Information systems23 Iron Mountain Arşivleme Hizmetleri A.Ş. Archives24 Tepe Savunma ve Güvenlik Sistemleri Sanayi A.Ş. Headquarters, Tophane auxiliary services building &

branches25 Bilin Yazılım ve Bilişim Danışmanlığı Ltd. Şti. Human resources management system software; software

use and consultancy services26 Türkiye Garanti Bankası A.Ş. “Bonus” brand license agreement27 Abaküs Finansal Yazılım ve Danışmanlık A.Ş. Corporate & commercial firm ratings and TM processes28 Abaküs Finansal Yazılım ve Danışmanlık A.Ş. TM exception processing29 Formalis Bilgi Teknolojileri Operational services30 Sungard Ambit Software support31 Advanced Financial Solutions * Software support32 İstanbul Altın Rafinerisi Operational services33 CPP Sigorta Aracılık Hizmetleri A.Ş. Card protection plan

* Contract term expired in July 2012.

Activities for Which Support Services are Outsourced and the Persons and Organizations from Which They are Obtained

Section 3 - Financial Information and Assessment on Risk Management70 Türkiye Finans 2012 Annual Report

Board of Auditors’ Report

TO THE GENERAL ASSEMBLY OF TÜRKİYE FİNANS KATILIM BANKASI A.Ş.

As a result of our inspection of the accounts and operations of the Bank comprising 01 January 2012 - 31 December 2012 activity period in terms of Turkish Commercial Code, Banking Law (No : 5411), Articles Of Association of the Bank, regulations governing the Participation Banks and Turkish Accounting Standards it has been confirmed that:

1. Records of the accounts of the Bank are in conformity with the documents,

2. The Balance Sheet is in conformity with the records and presents the true financial status of the Bank as of 31 December 2012,

3. The Statement of Profit and Loss presents the true operating results of the Bank,

4. Activity Report of the Board of Directors presents commercial, financial, and economic status of the Bank.

For your kind consideration,

Kind regards,

BOARD OF AUDITORS

Eyüp ASKER Erdoğan ÖCAL İdris Turan İLTER

Auditor Auditor Auditor

Section 3 - Financial Information and Assessment on Risk Management 71Türkiye Finans 2012 Annual Report

Internal audit, internal control, and risk management activities at Türkiye Finans are carried out by the Board of Auditors, the Internal Control Department, and the Risk Management Center, all of whose duties and responsibilities are spelled out in published regulations and which are organizationally independent of each other. The activities of these units are coordinated by the Audit Committee acting on behalf of the Board of Directors.

Board of Auditors (Internal Audit)

The Board of Auditors is responsible for the internal auditing of the bank’s branches, regional departments, and headquarters units as well as all of its banking processes and information systems. The Board of Auditors reports to the Board of Directors through the Audit Committee.

The board’s fundamental objective is to provide independent and impartial compliance and consultancy services that safeguard the bank’s activities and generate added value. Operating within currently applicable internal and external regulatory frameworks, the board takes a risk-focused approach and makes use of advanced auditing techniques in order to oversee the bank’s activities impartially and independently of the bank’s day-to-day affairs.

The programmed auditing activities carried out in 2012 are summarized below.

• Audits were performed at 82 branches and two regional departments.• Audits were performed on 20 headquarters business processes/units.• Ten audits and three examinations involving information systems were performed.

As of 31 December 2012, the staff of the Board of Auditors consisted of 35 people.

During 2012, members of the Board of Auditors took part in a total of 3,447 hours of professional training programs, congresses, seminars, and conferences. Board of Auditors personnel individually received an average of 98.5 hours of training last year.

Internal Control Department

The Internal Control Department is responsible for overseeing all aspects of Türkiye Finans’s organization and activities so as to ensure that the bank’s business is conducted effectively, productively, and in a manner consistent with the requirements of laws and regulations, the bank’s policies and rules, and ordinary banking practices and also for ensuring the reliability, integrity, and timely accessibility of the account-ing and financial reporting systems and of the information contained therein. The Internal Control Department reports directly to the Board of Directors and provides information to the bank’s senior management. Another function of the Internal Control Department is to develop early warning systems capable of identifying risks in advance and taking measures accordingly.

As of 31 December 2012, the staff of the Internal Control Department consisted of 35 people.

Centralized control is carried out regularly by means of headquarters-based sub-units employing risk control matrices which are formulated according to individual units’ transactions and processes. During 2012, critical control points of the bank’s banking and information systems and processes, including but not limited to basic banking functions, were subjected to testing by means of centrally-managed programs. Querying made it possible for errors to be identified and for personnel to be made aware of them.

As a result of the Internal Control Department’s activities in 2012, the operations of 182 branches were subjected to internal controls 283 times.

Any errors of omission or commission identified as a result of internal control functions are reported to the Audit Committee at three-month intervals. The Internal Control Department is also responsible for overseeing the correction and resolution of any errors which are so identi-fied.

During 2012, personnel of the Internal Control Department took part in a total of 2.521 hours of professional training programs, congresses, seminars, and conferences. Internal Control Department personnel individually received an average of 74 hours of training last year.

Audit Committee’s Assessment of Internal Audit, Internal Control, Risk Management and Regulatory Compliance Functions; Committee Activities During the Reporting Period


Risk Management

Türkiye Finans’s risk management structure consists of the Board of Directors, the Audit Committee, and the Risk Management Center.

As of 31 December 2012, the staff of the Risk Management Center consisted of fourteen people including a head of risk and two vice presidents.

Risk management activities carried out a Türkiye Finans in 2012 are summarized below.

Risk identification

All changes in work flows as well as revisions in programs and new product designs were reviewed. Those concerned were advised of any risks which might be entailed by any of these and risk assessment reports were issued accordingly. Outsourced services were also reviewed and assessed from the standpoint of their associated risks.

Risk quantification

Market risk is calculated at the end of every month and stress tests are also carried out as per BRSA regulations.

Details of risk quantification activities grouped by risk category are provided elsewhere under the heading “Information About Risk Manage-ment Policies By Type Of Risk”.

Risk monitoring

The Risk Management Center monitors economic data in order to detect in advance any changes and/or trends in the economic environment or market conditions that might have an impact on the bank’s business.

Risk monitoring activities are carried out as necessary based on such considerations as the potential consequences and dimensions of all pertinent types of risk. Details of risk monitoring activities grouped by risk category are provided elsewhere under the heading “Information About Risk Management Policies By Type Of Risk”.

Risk reporting

The Risk Management Center reports the results of its risk measurements and analyses to the units and committees concerned, to bank senior management, and to the Audit Committee. The center also submits risk management activity reports to BRSA.

Details of risk reporting activities grouped by risk category are provided elsewhere under the heading “Information About Risk Management Policies By Type Of Risk”.

Risk documentation

All documentation pertaining to risk management policies, procedures, and limits are reviewed at least once a year at year-end and revisions are made in them as necessary.

Audit Committee

Brian Keith BELCHER Oğuz KAYHAN Member of the Audit Committee Member of the Audit Committee

Audit Committee’s Assessment of Internal Audit, Internal Control, Risk Managementand Regulatory Compliance Functions; Committee Activities During the Reporting Period


Türkiye Finans Katılım Bankası A.Ş Annual Report of year 2012 is prepared and presented in accordance with the relevant BRSA Regulation which was published on 1 November 2006 in the Official Gazette No. 26333.

Mustafa BOYDAKChairman of the Board of

Directors

V. Derya GÜRERKCEO

Abdüllatif ÖZKAYNAKFinance

Executive Vice President

Mete M. KANATLegal Reporting & Financial

Control Department Vice President

Oğuz KAYHANMember of the Audit Committee

Brian Keith BELCHERMember of the Audit Committee

Declaration Concerning the 2012 Annual Report


Convenience Translation of the Independent Auditors’ ReportOriginally Prepared and Issued in Turkish (See Note 1 in Third Section)

To the Board of Directors of Türkiye Finans Katılım Bankası AŞ:

We have audited the unconsolidated balance sheet of Türkiye Finans Katılım Bankası AŞ (“the Bank”) as of 31 December 2012 and the unconsolidated statements of income, cash flows and changes in shareholders’ equity for the year then ended and a summary of significant accounting policies and notes to the financial statements.

Disclosure for the Responsibility of the Bank’s Board of DirectorsThe Board of Directors of the Bank is responsible for designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the unconsolidated financial statements that are free from material misstatement, whether due to error or fraud; and for selecting and applying appropriate accounting policies in accordance with the “Regulation on Accounting Applications for Banks and Safeguarding of Documents” published on the Official Gazette numbered 26333 on 1 November 2006, Turkish Accounting Standards, Turkish Financial Reporting Standards and the other regulations, communiqués and circulars in respect of accounting and financial reporting made by the Banking Regulation and Supervision Board and the pronouncements made by the Banking Regulation and Supervision Agency.

Disclosure for the Responsibility of the Authorized Audit FirmOur responsibility, as independent auditors, is to express an opinion on these financial statements based on our audit. Our audit is performed in accordance with the “Regulation on the Assignment and Activities of the Banks’ Independent Audit Firms” published on the Official Gazette no.26333 dated 1 November 2006 and international Standards on Auditing. We planned and conducted our audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit includes using the audit techniques for the purpose of obtaining evidence supporting the amounts and disclosures in the financial statements. The selection of the audit techniques is made in accordance with our professional judgment by taking the effectiveness of the internal control over financial reporting into consideration and assessing the appropriateness of the applied accounting policies. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independent Auditor’s Opinion:In our opinion, the accompanying unconsolidated financial statements present fairly, in all material respects, the financial position of Türkiye Finans Katılım Bankası AŞ as of 31 December 2012 and the result of its operations and cash flows for the year then ended in accordance with the accounting principles and standards as per the existing regulations described in Article 37 of (Turkish) Banking Law No 5411 and the other regulations, communiqués and circulars published by the Banking Regulation and Supervision Board, and the pronouncements made by the Banking Regulation and Supervision Agency on accounting and financial reporting principles.

İstanbul,

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi

Erdal TIKMAK Partner

Additional paragraph for convenience translation to English:

As explained in Note 1 in Third Section, the accompanying financial statements are not intended to present the financial position and results of operations in accordance with the accounting principles and practices generally accepted in countries and jurisdictions other than Turkey.

Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş.Kavacık Rüzgarlı Bahçe Mah.Kavak Sok. No: 3Beykoz 34805 İstanbul

Telephone +90 (216) 681 90 00Fax +90 (216) 681 90 90İnternet www.kpmg.com.tr

Independent Auditors’ Report


TÜRKİYE FİNANS KATILIM BANKASI AŞ The Unconsolidated Financial Report of Türkiye Finans Katılım Bankası A.Ş. For the Year Ended 31 December 2012

Address of the Headquarter of the Bank : Adnan Kahveci Caddesi No:139 34876 Yakacık –Kartal / İstanbulPhone and Fax Numbers of the Bank : 0 216 586 70 00 / 0 216 586 63 26Website of the Bank : www.turkiyefinans.com.trElectronic Mail Address to Contact : [email protected]

The unconsolidated Year-End Financial Report prepared in accordance with the communiqué of “Financial Statements and Related Disclosures and Footnotes to be Announced to Public by Banks” as regulated by Banking Regulation and Supervision Agency, is comprised of the following sections:

GENERAL INFORMATION ABOUT THE BANK

UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK

EXPLANATIONS ON ACCOUNTING POLICIES OF THE BANK

EXPLANATIONS ON THE UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK

INFORMATION ON FINANCIAL STRUCTURE OF THE BANK

EXPLANATORY DISCLOSURES AND FOOTNOTES ON UNCONSOLIDATED FINANCIAL STATEMENTS

INDEPENDENT AUDITORS’ REPORT

The unconsolidated financial statements and the explanatory footnotes and disclosures, unless otherwise indicated, are prepared in thousands of Turkish Lira, in accordance with the Regulation on Accounting Applications for Banks and Safeguarding of Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards and the related statements and guidances and in compliance with the financial records of our Bank, have been independently audited and presented as attached.

Mustafa BOYDAKChairman of the Board of

Directors

V. Derya GÜRERKCEO

Abdüllatif ÖZKAYNAKFinance Executive Vice President

Mete M. KANATLegal Reporting &

Financial Control Department Vice President

Oğuz KAYHANMember of the Audit Committee

Brian Keith BELCHERMember of the Audit Committee

Information on the authorized personnel to whom questions may be directed related to this financial report:Name-Surname/Title: Sefa SEYHAN / ManagerPhone Nr: 0216 586 91 86Fax Nr: 0216 586 63 34


Index

SECTION ONE

GENERAL INFORMATION

I. Explanations on the date of establishment and the initial status of the Participation Bank, and the history including the changes in the former status 78II. Explanations regarding the Participation Bank’s shareholder structure, shareholders holding directly or indirectly, collectively or individually, the managing and controlling power and changes in the current period, if any and explanations on the controlling group of the Participation Bank 78III, Explanations regarding the chairman and the members of Board of Directors, Audit Committee, General Manager and assistants and their shares in the Participation Bank 79IV. Explanations on the people and institutions that have qualified shares of the Participation Bank 80V. Summary information on the Participation Bank’s functions and areas of activity 80VI. Differences between the Communiqué on Preparation of consolidated financial statements of Banks and Turkish Accounting Standards and short explanation about the Institutions subject to line-by-line method or proportional consolidation and Institutions which are deducted from equity or not included in these three methods 81VII. The existing or potential, actual or legal obstacles on the transfer of shareholder’s equity between the Bank and its Subsidiaries or the reimbursement of liabilities 81

SECTION TWO

UNCONSOLIDATED FINANCIAL STATEMENTS

I. Balance Sheet (Statement of Financial Position) 82II. Off-balance sheet items 84III. Income statement 85IV. Statement of income/expense items accounted under shareholders’ equity 86V. Statement of cash flows 87VI. Statement of changes in shareholders’ equity 88VII. Profit Distribution Table 92

SECTION THREE

ACCOUNTING POLICIES

I. Basis of presentation 93II. Explanations on usage strategy of financial assets and foreign currency transactions 94III. Explanations on forward and option contracts and derivative instruments 94IV. Explanations on profit share income and expenses 94V. Explanations and disclosures on fees and commission income and expenses 94VI. Explanations and disclosures on financial assets 95VII. Explanations on impairment on financial assets 96VIII. Explanations on offsetting of financial assets and liabilities 96IX. Explanations on sales and repurchase agreements and lending of securities 96X. Explanations on assets held for sale and discontinued operations and debts due to these assets 97XI. Explanations and disclosures on goodwill and other intangible assets 97XII. Explanations and disclosures on tangible assets 97XIII. Explanations and disclosures on leasing transactions 98XIV. Explanations on provisions and contingent liabilities 98XV. Explanations on liabilities regarding employee benefits 98XVI. Explanations on taxation 99


Index

XVII. Additional explanations on borrowings 99XVIII. Explanations on share certificates 99XIX. Explanations and disclosures on acceptances 100XX. Explanations and disclosures on government incentives 100XXI. Explanations and disclosures on segment reporting 100XXII. Explanations on other matters 101

SECTION FOURINFORMATION ON FINANCIAL STRUCTURE

I. Explanations and disclosures related to the capital adequacy standard ratio 101II. Explanations and disclosures related to credit risk 104III. Explanations and disclosures related to market risk 115IV. Explanations and disclosures related to operational risk 117 Explanations and disclosures related to currency risk 117VI. Explanations and disclosures related to interest rate risk 119VII. Explanations and disclosures related to share risk due from banking book 120VIII. Explanations and disclosures related to liquidity risk 120IX. Explanations and disclosures related to securitization position 124X. Explanations and disclosures related to credit risk mitigation techniques 124XI. Explanations and disclosures related to risk management target and policies 125XII. Explanations and disclosures related to fair values of financial assets and liabilities 127XIII. Transactions carried out on behalf of customers, items held in trust 128

SECTION FIVEEXPLANATIONS AND DISCLOSURES ON UNCONSOLIDATED FINANCIAL STATEMENTSI. Explanations related to the assets 128II. Explanations related to the liabilities 144III. Explanations related to the off-balance sheet items 154IV. Explanations related to the income statement 157V. Explanations related to the statements of shareholders’ equity movement 162VI. Explanations on the risk group of cash flows 163VII. Explanations on the risk group of the participation bank 164VIII. Explanations on the participation bank’s domestic branches, branches abroad and off-shore branches or associates and agencies 166IX. Explanations related to subsequent events 166

SECTION SIXOTHER EXPLANATIONS I. Other explanations related to participation bank’s operations 167

SECTION SEVENINDEPENDENT AUDITOR’S REPORTI. Explanations on the independent auditor’s report 167II. Other footnotes and explanations prepared by the independent auditors 167

78

TÜRKİYE FİNANS KATILIM BANKASI AŞ Unconsolidated Financial Report As of and For the Year Ended 31 December 2012(Thousands of Turkish Lira (TL) unless otherwise stated)

Section 3 - Financial Information and Assessment on Risk ManagementTürkiye Finans 2012 Annual Report

SECTION ONE

GENERAL INFORMATION

I. Explanations on the date of establishment and the initial status of the Participation Bank, and the history including the changes in the former status

Participation banks started their operations in accordance with the Provision on Establishment of Participation Banks of Decree No. 83/7506 dated 16 December 1983, and the related Communiqués issued by Prime Ministry Undersecretariat of Treasury and by Central Bank of Turkish Republic. Participation banks then continued their operations in accordance with Banking Act Nr. 4389, dated 18 June 1999, with the change declared in Act Nr. 4491, dated 17 December 1999. In the Provisional Article Nr. 3, of Act Nr. 4491, a transition period of two years is stated to complete the compliance to Banking Act. The Participation Bank is now operating in accordance with Banking Act Nr. 5411.

The Participation Bank began its operations on 4 November 1991 in accordance with the regulation nr. 83/7506 published on 16 December 1983.

According to the decision made by Board of Directors’ meeting of Anadolu Finans Kurumu AŞ nr. 1047 on 31 May 2005, it is decided that Anadolu Finans Kurumu AŞ is merged with Family Finans Kurumu AŞ.

The merger was realized by transferring all assets, liabilities and off-balance sheet items of Family Finans Kurumu AŞ to Anadolu Finans Kurumu AŞ. Banking Regulation and Supervision Agency (“BRSA”) affirmed both the transfer agreement signed between Anadolu Finans Kurumu AŞ and Family Finans Kurumu AŞ and alterations in primary contract of Anadolu Finans Kurumu AŞ on 20 October 2005. Decision related to merger was approved by the decree nr. 1764 dated 28 December 2005 of BRSA.

BRSA approved the title of the Participation Bank to be Türkiye Finans Katılım Bankası AŞ (“the Participation Bank”), during the merger process, with the decision dated 30 November 2005 and Nr. 1747, in compliance with Article 48 of Turkish Commercial Code, and subject to the approval of Council of Ministers. The change in title of the Participation Bank was registered by T.R. Istanbul Trade Registry Office on 30 December 2005, in compliance with Turkish Commercial Code Nr. 6762.

As 31 December 2012 the Bank operates through 220 branches with 3,595 employees.

II. Explanations regarding Participation Bank’s shareholder structure, shareholders holding directly or indirectly, collectively or individually, the managing and controlling power and changes in current period, if any and explanations on the controlling group of the Participation Bank

The shareholder structure of the Participation Bank is presented in note IV.

With the authorization of BRSA, numbered 2489 and dated 28 February 2008, 60% of the Participation Bank was acquired by the National Commercial Bank. The Participation Bank increased its capital from TL 292,047 to TL 800,000 with the capital increase in 2008. As per the decision has been taken by the Extraordinary General Assembly on 6 June 2012, the Bank’s share capital will increase by TL 975,000 from TL 800,000 to TL 1,775,000. The part of this increase amounting to TL 700,000 will be transferred from general reserve and the remaining part amounting to TL 275,000 will be paid in cash. This decision has been published and approved in the trade official gazette on 2 July 2012. The portion amounting to TL 150,000 of the capital increase which has been committed to be paid in cash as TL 275,000 in total will be paid in three months after the registration of the capital increase, and the remaining portion amounting to TL 125,000 will be paid until 31 December 2012. Cash commitment amounting to TL 150,000 was paid by shareholders on 2 October 2012 and recorded into capital accounts on 19 November 2012. As of 31 December 2012, cash commitment amounting to TL 125,000 was paid by shareholders and recorded into capital accounts on with the approval of Banking Regulation and Supervision Agency on increase dated 6 February 2013. As of 31 December 2012, the shares are as follows; the National Commercial Bank 66.27%, Boydak group holds 22.09%, Ülker group holds 11.57%; and they have the main controlling power after merger.

79


Section 3 - Financial Information and Assessment on Risk Management Türkiye Finans 2012 Annual Report

As of 31 December 2012, the Participation Bank’s paid-in-capital consists of 1,650,000,000 shares of TL 1 nominal each.

The Participation Bank is controlled by the National Commercial Bank group.

The National Commercial Bank (NCB) established as the first and the biggest bank of Saudi Arabia. The Bank is performing its banking operations through cross-border in Bahrain and Lebanon. The headquarter of The National Commercial Bank is located in Jeddah.

III. Explanations regarding the Chairman and the Members of Board of Directors, Audit Committee, Chief Executive Officer and Assistants, if any, their shares and responsibilities in the Participation Bank

Title Name and SurnameEducational Degree Responsibilities

Ownership percentage %

Chairman of the Board of Directors Mustafa Boydak University

Chairman of the Board of Directors 1.87

Members of the Board Abdulkareem Asaad A.AbuAlnasr Master Member of the Board -

Oğuz Kayhan MasterMember of the Board and the Audit Committee -

Mehmet Atila Kurama Master Member of the Board - Donald Paul Hill Master Member of the Board -

Brian Keith Belcher UniversityMember of the Board and the Audit Committee -

Veysel Derya Gürerk (General Manager) MasterMember of the Board and General Manager -

Members of the Audit Committee Oğuz Kayhan Master

Member of the Board and the Audit Committee -

Brian Keith Belcher UniversityMember of the Board and the Audit Committee -

Presidents Osman Çelik University Loans - İkram Göktaş University Distribution and Service - Zühal Ulutürk Master Human Resources - Bedri Sayın University Operations - Aydın Gündoğdu Master Commercial Banking - Menduh Kara University SME Banking - Fahri Öbek Master Information Technology - Semih Alşar Master Retail Banking - Abdüllatif Özkaynak University Finance - Ali Güney University Treasury -Statutory Auditors Eyüp Asker Master Member of the Audit Board - İdris Turan İlter University Member of the Audit Board - Erdoğan Öcal University Member of the Audit Board -

According to a decision of Board of Directors on 2 January 2012, Menduh Kara is appointed as executive vice president. According to a decision of Extraordinary General Assembly on 29 August 2012 Oğuz Kayhan is appointed as Member of Board instead of Varol Şenel who has resigned. According to a decision of Board of Directors on 29 August 2012, Oğuz Kayhan is appointed as Member of the Audit Committee instead of Varol Şenel.

80



IV. Explanations on the people and institutions that have qualified shares of the Participation Bank

Name Surname / Commercial Name Share Amounts Share Ratio % Paid Up Shares Unpaid SharesTHE NATIONAL COMMERCIAL BANK 1,176,369 66.27 1,082,633 93,736GÖZDE GİRİŞİM SERMAYESİ YATIRIM ORTAKLIĞI A.Ş. 205,405 11.57 205,405 -(HACI) MUSTAFA BOYDAK 41,173 2.32 37,892 3,281BOYDAK HOLDİNG A.Ş. 39,213 2.21 36,088 3,125BEKİR BOYDAK 33,269 1.87 30,618 2,651MEMDUH BOYDAK 33,269 1.87 30,618 2,651MUSTAFA BOYDAK (Sami Oğlu) 33,250 1.87 30,600 2,649YUSUF BOYDAK 31,309 1.76 28,814 2,495ŞÜKRÜ BOYDAK 27,730 1.56 25,521 2,210HACI BOYDAK 26,678 1.50 24,552 2,126

V. Summary on the Participation Bank’s functions and areas of activity

The Participation Bank operates in accordance with the principles of interest-free banking as a participation bank, by collecting funds through current accounts and profit sharing accounts, and lending such funds through production support, finance lease and profit/loss sharing partnership.

The Participation Bank has two ways of collecting funds; current accounts and profit sharing accounts. The Participation Bank classifies current accounts and profit sharing accounts in accordance with their maturities in its accounting system. Profit sharing accounts are categorized into five different maturity groups; one month, up to three months (three months included), up to six months (six months included), up to one year and one year and more than one year (one month, three months, six months and one year profit share payment).

The Participation Bank could determine the participation rates on profit/loss sharing accounts with respect to the maturity group of Turkish Lira and foreign currency accounts, separately under the limitation that the participation rate on loss shall not be less than 50%, for different currency type, amount and maturity groups specifically.

The Participation Bank constitutes specific fund pools, allocated to the individually predetermined projects for financing purposes. Profit sharing accounts, which are part of the funds collected for project financing purpose, are distinguished from others with respect to the terms, accounted separately from the others and it is not allowed to make any transfers from these accounts to any other maturity groups. Specific fund pools are clarified at the end of the financing period.

In addition to ordinary banking activities, the Participation Bank has services through branches. It has insurance agency operations through Eureko Sigorta, Işık Sigorta, Aviva Sigorta, Neova Sigorta and HDI Sigorta. Besides, it has private pension insurance agency operations on behalf of Garanti Emeklilik and Groupama Emeklilik. In addition, it has stock broker agency services on behalf of Bizim Menkul Değerler A.Ş.

On the other hand Participation Bank mainly has services such as letters of guarantee, import credits and acceptance credits and other kind of non-cash credits as well.

The Participation Bank’s operations are not limited as mentioned above. In case of any transaction else made, not mentioned above, and considered as in favor of participating bank, upon the request of the board of directors, this case is adjudicated by general meeting and is proceeded to be got required approval from competent authority and depends on the approval of Ministry of commerce and customs. Thus, the approved decision is added on main agreement.

81



VI. Differences Between the Communiqué on Preparation of Consolidated Financial Statements of Banks and Turkish Accounting Standards and Short Explanation About the Institutions Subject to Line-by-Line Method or Proportional Consolidation and Institutions Which are Deducted From Equity or Not Included in These Three Methods

Kredi Garanti Fonu A.Ş. which is the associate of the Participation Bank recognized at cost in the financial statements because the Participation Bank has no control power and significant influence over Kredi Garanti Fonu A.Ş.

VII. The Existing or Potential, Actual or Legal Obstacles on the Transfer of Shareholder’s Equity Between the Bank and Its Subsidiaries or the Reimbursement of Liabilities

The Participation Bank has no subsidiaries.

SECTION TWO

UNCONSOLIDATED FINANCIAL STATEMENTS

I. Balance Sheet (Statement of Financial Position)

II. Off-Balance Sheet Items

III. Income Statement

IV. Statement of Income/Expense Items Accounted Under Shareholders’ Equity

V. Statement of Cash Flows

VI. Statement of Changes in Shareholders’ Equity

VII. Profit Distribution Table


THOUSAND TURKISH LIRA

CURRENT PERIOD PRIOR PERIOD Audited Audited ASSETS Footnotes (31/12/2012) (31/12/2011) (5-I) TL FC Total TL FC TotalI. CASH AND BALANCES WITH CENTRAL BANK (1) 473,666 2,344,502 2,818,168 315,517 1,602,320 1,917,837II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT

AND LOSS (Net) (2) 6,476 7,797 14,273 19,944 3,723 23,6672,1 Financial assets held for trading 6,476 7,797 14,273 19,944 3,723 23,6672.1.1 Government debt securities - - - - - -2.1.2 Equity securities - - - - - -2.1.3 Derivative financial assets held for trading 6,398 7,692 14,090 19,103 3,623 22,7262.1.4 Other securities 78 105 183 841 100 9412,2 Financial assets valued at fair value through profit or loss - - - - - -2.2.1 Government debt securities - - - - - -2.2.2 Equity securities - - - - - -2.2.3 Loans - - - - - -2.2.4 Other securities - - - - - -III. BANKS AND OTHER FINANCIAL INSTITUTIONS (3) 106,548 390,480 497,028 73,887 194,513 268,400IV. MONEY MARKET PLACEMENTS - - - - - -V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (4) 466,785 198,330 665,115 619,789 1,038 620,8275.1 Equity securities - 121 121 - 85 855.2 Government debt securities 466,785 198,209 664,994 619,789 - 619,7895.3 Other securities - - - - 953 953VI. LOANS (5) 12,071,578 691,822 12,763,400 9,514,412 832,133 10,346,5456.1 Loans 11,978,060 688,629 12,666,689 9,442,045 828,857 10,270,9026.1.1 Loans to risk group of the Bank 77,518 - 77,518 105,781 23,344 129,1256.1.2 Government debt securities - - - - - -6.1.3 Other 11,900,542 688,629 12,589,171 9,336,264 805,513 10,141,7776.2 Non-performing loans 352,498 5,761 358,259 239,658 5,839 245,4976.3 Specific provisions (-) (258,980) (2,568) (261,548) (167,291) (2,563) (169,854)VII. INVESTMENTS HELD TO MATURITY (Net) (6) - - - - - -VIII. INVESTMENTS IN ASSOCIATES (Net) (7) 4,211 - 4,211 3,000 - 3,0008.1 Consolidated under equity method - - - - - -8.2 Unconsolidated associates 4,211 - 4,211 3,000 - 3,0008.2.1 Financial investments 4,211 - 4,211 3,000 - 3,0008.2.2 Non-financial investments - - - - - -IX. INVESTMENTS IN SUBSIDIARIES (Net) (8) - - - - - -9.1 Unconsolidated financial subsidiaries - - - - - -9.2 Unconsolidated non-financial subsidiaries - - - - - -X. JOINTLY CONTROLLED ENTITIES (JOINT VENTURES) (Net) (9) - - - - - -10.1 Consolidated under equity method - - - - - -10.2 Unconsolidated associates - - - - - -10.2.1 Financial investments - - - - - -10.2.2 Non-Financial investments - - - - - -XI. LEASE RECEIVABLES (Net) (10) 304,369 - 304,369 56,330 - 56,33011.1 Finance lease receivables 354,710 - 354,710 68,765 - 68,76511.2 Operating lease receivables - - - - - -11.3 Other - - - - - -11.4 Unearned income (-) (50,341) - (50,341) (12,435) - (12,435)XII. DERIVATIVE FINANCIAL ASSETS HELD FOR RISK

MANAGEMENT (11) - - - - - -12.1 Fair value hedges - - - - - -12.2 Cash flow hedges - - - - - -12.3 Net foreign investment hedges - - - - - -XIII. TANGIBLE ASSETS (Net) (12) 196,617 - 196,617 112,660 - 112,660XIV. INTANGIBLE ASSETS (Net) (13) 18,881 - 18,881 11,801 - 11,80114.1 Goodwill - - - - - -14.2 Other intangibles 18,881 - 18,881 11,801 - 11,801XV. INVESTMENT PROPERTY (Net) (14) - - - - - -XVI. TAX ASSET 11,115 - 11,115 16,661 - 16,66116.1 Current tax asset - - - - - -16.2 Deferred tax asset (15) 11,115 - 11,115 16,661 - 16,661XVII. ASSETS HELD FOR SALE AND DISCONTINUED

OPERATIONS (Net) (16) - - - - - -17.1 Assets held for sale - - - - - -17.2 Assets of discontinued operations - - - - - -XVIII. OTHER ASSETS (17) 308,554 14,773 323,327 143,396 7,229 150,625

TOTAL ASSETS 13,968,800 3,647,704 17,616,504 10,887,397 2,640,956 13,528,353

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

TÜRKİYE FİNANS KATILIM BANKASI AŞ Balance Sheet (Statement of Financial Position)(Thousands of Turkish Lira (TL) unless otherwise stated)


THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD

Audited AuditedLIABILITIES AND EQUITY Footnotes (31/12/2012) (31/12/2011)

(5-II) TL FC Total TL FC Total

I. FUNDS COLLECTED (1) 7,444,772 3,984,764 11,429,536 6,233,354 3,275,811 9,509,1651.1 Funds from risk group of the Bank 233,746 90,393 324,139 227,991 56,318 284,3091.2 Other 7,211,026 3,894,371 11,105,397 6,005,363 3,219,493 9,224,856II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING (2) 6,117 2,358 8,475 15,510 3,861 19,371III. FUNDS BORROWED (3) - 2,503,943 2,503,943 - 1,511,956 1,511,956IV. MONEY MARKET BALANCES - - - - - -V. MARKETABLE SECURITIES ISSUED (Net) - - - - - -VI. MISCELLANEOUS PAYABLES 522,787 55,953 578,740 246,890 88,236 335,126VII. OTHER LIABILITIES (4) 640,100 32,997 673,097 275,784 13,617 289,401VIII. LEASE PAYABLES (Net) (5) - - - - - -8.1 Finance lease payables - - - - - -8.2 Operating lease payables - - - - - -8.3 Other - - - - - -8.4 Deferred finance lease expenses (-) - - - - - -IX. DERIVATIVE FINANCIAL LIABILITIES HELD FOR RISK MANAGEMENT (6) - - - - - -9.1 Fair value hedges - - - - - -9.2 Cash flow hedges - - - - - -9.3 Net foreign investment hedges - - - - - -X. PROVISIONS (7) 236,480 18,107 254,587 177,739 26,008 203,74710.1 General loan loss provision 139,804 - 139,804 94,424 - 94,42410.2 Restructuring provisions - - - - - -10.3 Reserve for employee benefits 46,645 - 46,645 39,659 - 39,65910.4 Insurance technical reserves (Net) - - - - - -10.5 Other provisions 50,031 18,107 68,138 43,656 26,008 69,664XI. TAX LIABILITY (8) 42,964 - 42,964 45,927 1 45,92811.1 Current tax liability 42,964 - 42,964 45,927 1 45,92811.2 Deferred tax liability - - - - - -XII. LIABILITIES FOR ASSETS HELD FOR SALE AND DISCONTINUED

OPERATIONS (Net) (9) - - - - - -12.1 Assets held for sale - - - - - -12.2 Assets of discontinued operations - - - - - -XIII. SUBORDINATED DEBTS (10) - - - - - -XIV. SHAREHOLDERS’ EQUITY (11) 2,125,177 (15) 2,125,162 1,613,659 - 1,613,65914.1 Paid-in capital 1,650,000 - 1,650,000 800,000 - 800,00014.2 Capital reserves 96,531 (15) 96,516 18,586 - 18,58614.2.1 Share premium - - - - - -14.2.2 Share cancellation profits - - - - - -14.2.3 Securities value increase fund 6,916 (15) 6,901 (2,996) - (2,996)14.2.4 Revaluation surplus on tangible assets 89,615 - 89,615 21,582 - 21,58214.2.5 Revaluation surplus on intangible assets - - - - - -14.2.6 Revaluation surplus on investment property - - - - - -14.2.7 Bonus shares obtained from associates, subsidiaries and jointly

controlled entities (Joint Ventures) - - - - - -14.2.8 Hedging reserves (effective portion) - - - - - -14.2.9 Revaluation surplus on assets held for sale and assets of discontinued

operations - - - - - -14.2.10 Other capital reserves - - - - - -14.3 Profit reserves 95,073 - 95,073 563,486 - 563,48614.3.1 Legal reserves 58,083 - 58,083 46,748 - 46,74814.3.2 Statutory reserves - - - - - -14.3.3 Extraordinary reserves 36,990 - 36,990 516,738 - 516,73814.3.4 Other profit reserves - - - - - -14.4 Profit or loss 283,573 - 283,573 231,587 - 231,58714.4.1 Prior years’ profit/loss - - - - - -14.4.2 Current period net profit/loss 283,573 - 283,573 231,587 - 231,587

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 11,018,397 6,598,107 17,616,504 8,608,863 4,919,490 13,528,353


TÜRKİYE FİNANS KATILIM BANKASI AŞ Balance Sheet (Statement of Financial Position)(Thousands of Turkish Lira (TL) unless otherwise stated)



CURRENT PERIODAudited

PRIOR PERIODAudited

(31/12/2012) (31/12/2011) Footnotes TL FC Total TL FC Total (5-III) A. OFF-BALANCE SHEET COMMITMENTS AND CONTINGENCIES (I+II+III) 27,964,250 7,354,423 35,318,673 6,365,053 4,840,770 11,205,823I. GUARANTEES AND SURETIES (1) 4,179,894 2,928,803 7,108,697 3,655,911 2,882,628 6,538,5391.1. Letters of guarantee 4,176,322 2,021,458 6,197,780 3,651,788 1,913,873 5,565,6611.1.1. Guarantees subject to State Tender Law 172,793 - 172,793 159,209 - 159,2091.1.2. Guarantees given for foreign trade operations - - - - - -1.1.3. Other letters of guarantee 4,003,529 2,021,458 6,024,987 3,492,579 1,913,873 5,406,4521.2. Bank acceptances 2,328 289,897 292,225 4,123 240,848 244,9711.2.1. Import letter of acceptance 2,328 289,897 292,225 4,048 240,848 244,8961.2.2. Other bank acceptances - - - 75 - 751.3. Letters of credit 1,244 617,448 618,692 - 727,907 727,9071.3.1. Documentary letters of credit 1,244 617,448 618,692 - 727,907 727,9071.3.2. Other letters of credit - - - - - -1.4. Guaranteed prefinancings - - - - - -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 sureties - - - - - -II. COMMITMENTS (1),(3) 22,836,441 2,235,617 25,072,058 1,478,522 189,717 1,668,2392.1. Irrevocable commitments 1,600,937 262,636 1,863,573 1,478,522 189,717 1,668,2392.1.1. Forward asset purchase and sale commitments 38,997 262,636 301,633 86,992 189,717 276,7092.1.2. Share capital commitments to associates and subsidiaries - - - 1,000 - 1,0002.1.3. Loan granting commitments - - - - - -2.1.4. Securities issuance brokerage commitments - - - - - -2.1.5. Commitments for reserve deposit requirements - - - - - -2.1.6. Commitments for cheque payments 1,066,949 - 1,066,949 858,328 - 858,3282.1.7. Tax and fund obligations on export commitments 2,976 - 2,976 2,916 - 2,9162.1.8. Commitments for credit card limits 461,707 - 461,707 528,378 - 528,3782.1.9. Commitments for credit cards and banking services promotions 1,026 - 1,026 908 - 9082.1.10. Receivables from “short” sale commitments on securities - - - - - -2.1.11. Payables from “short” sale commitments on securities - - - - - -2.1.12. Other irrevocable commitments 29,282 - 29,282 - - -2.2. Revocable commitments 21,235,504 1,972,981 23,208,485 - - -2.2.1. Revocable loan granting commitments 21,235,504 1,972,981 23,208,485 - - -2.2.2. Other revocable commitments - - - - - -III. DERIVATIVE FINANCIAL INSTRUMENTS (2) 947,915 2,190,003 3,137,918 1,230,620 1,768,425 2,999,0453.1 Derivative financial instruments held for risk management - - - - - -3.1.1 Fair value hedges - - - - - -3.1.2 Cash flow hedges - - - - - -3.1.3 Net foreign investment hedges - - - - - -3.2 Trading derivatives 947,915 2,190,003 3,137,918 1,230,620 1,768,425 2,999,0453.2.1 Forward foreign currency buy/sell transactions 947,915 2,123,362 3,071,277 1,230,620 1,768,425 2,999,0453.2.1.1 Forward foreign currency transactions-buy 700,994 808,585 1,509,579 794,436 707,099 1,501,5353.2.1.2 Forward foreign currency transactions-sell 246,921 1,314,777 1,561,698 436,184 1,061,326 1,497,5103.2.2 Other forward buy/sell transactions - 66,641 66,641 - - -3.3 Other - - - - - -B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 166,274,003 16,305,185 182,579,188 117,335,442 15,977,709 133,313,151IV. ITEMS HELD IN CUSTODY 1,756,485 705,284 2,461,769 1,680,824 1,182,232 2,863,0564.1. Customers’ securities held - - - - - -4.2. Investment securities held in custody 28,604 1,706 30,310 28,604 1,747 30,3514.3. Checks received for collection 1,283,898 89,747 1,373,645 1,353,182 115,750 1,468,9324.4. Commercial notes received for collection 443,980 80,803 524,783 299,036 87,215 386,2514.5. Other assets received for collection - - - - - -4.6. Assets received through public offering - - - - - -4.7. Other items under custody - 508,938 508,938 - 948,751 948,7514.8. Custodians 3 24,090 24,093 2 28,769 28,771V. PLEDGED ITEMS 164,517,518 15,570,137 180,087,655 115,654,618 14,795,477 130,450,0955.1. Securities 83,338 26,887 110,225 49,184 18,016 67,2005.2. Guarantee notes 32,103,318 802,127 32,905,445 9,906,628 442,450 10,349,0785.3. Commodities 1,473,959 268,813 1,742,772 1,163,496 179,419 1,342,9155.4. Warranties - - - - - -5.5. Real estates 38,687,297 94,112 38,781,409 31,050,550 110,246 31,160,7965.6. Other pledged items 92,137,339 14,110,808 106,248,147 73,468,066 14,045,292 87,513,3585.7. Pledged items-depository 32,267 267,390 299,657 16,694 54 16,748VI. CONFIRMED BILLS OF EXCHANGE AND SURETIES - 29,764 29,764 - - - TOTAL OFF-BALANCE SHEET ITEMS (A+B) 194,238,253 23,659,608 217,897,861 123,700,495 20,818,479 144,518,974


TÜRKİYE FİNANS KATILIM BANKASI AŞ Off-Balance Sheet Items(Thousands of Turkish Lira (TL) unless otherwise stated)


THOUSAND TURKISH LIRA Audited Audited INCOME AND EXPENSE ITEMS Footnotes CURRENT PERIOD PRIOR PERIOD (5-IV) 1 January- 31 December 2012 1 January- 31 December 2011I. PROFIT SHARE INCOME (1) 1,410,356 1,049,2011.1 Profit share on loans 1,350,262 965,1771.2 Profit share on reserve deposits - -1.3 Profit share on banks 1,312 8121.4 Profit share on money market placements - -1.5 Profit share on marketable securities portfolio 25,044 68,6251.5.1 Financial assets held for trading - -1.5.2 Financial assets at fair value through profit and loss - -1.5.3 Financial assets available for sale 25,044 68,6251.5.4 Investments held to maturity - -1.6 Finance lease income 14,957 2,4691.7 Other profit share income 18,781 12,118II. PROFIT SHARE EXPENSE (2) 618,245 474,7422.1 Expense on profit sharing accounts 543,512 446,8022.2 Profit share expense on funds borrowed 74,733 27,9332.3 Profit share expense on money market borrowings - -2.4 Expense on securities issued - -2.5 Other profit share expense - 7III. NET PROFIT SHARE INCOME (I - II) 792,111 574,459IV. NET FEES AND COMMISSIONS INCOME 108,231 95,9394.1 Fees and commissions received 152,448 132,8144.1.1 Non-Cash loans 75,743 71,2724.1.2 Other (12) 76,705 61,5424.2 Fees and commissions paid 44,217 36,8754.2.1 Non-Cash loans - -4.2.2 Other (12) 44,217 36,875V. DIVIDEND INCOME (3) - -VI. TRADING INCOME/EXPENSES (Net) (4) 56,700 66,3496.1 Trading account income/expenses 1,171 2,0386.2 Income/expenses from derivative financial instruments 138,915 70,6146.3 Foreign exchange gains/losses (83,386) (6,303)VII. OTHER OPERATING INCOME (5) 91,808 84,206VIII. TOTAL OPERATING INCOME / EXPENSE (III+IV+V+VI+VII) 1,048,850 820,953IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) (6) (226,379) (135,128)X. OTHER OPERATING EXPENSES (-) (7) (460,645) (392,404)XI. NET OPERATING INCOME/EXPENSE (VIII-IX-X) 361,826 293,421XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - -XIII. PROFIT/LOSS FROM ASSOCIATES ACCOUNTED FOR USING THE EQUITY

METHOD - -XIV. GAIN/LOSS ON NET MONETARY POSITION - -XV. PROFIT/LOSS ON CONTINUING OPERATIONS BEFORE TAX (XI+...+XIV) (8) 361,826 293,421XVI. TAX PROVISION FOR CONTINUING OPERATIONS (±) (9) (78,253) (61,834)16.1 Current tax charge (78,760) (66,714)16.2 Deferred tax charge/(credit) 507 4,880XVII. NET PERIOD PROFIT/LOSS FROM CONTINUING OPERATIONS (XV±XVI) (10) 283,573 231,587XVIII. INCOME ON DISCONTINUED OPERATIONS - -18.1 Income on assets held for sale - -18.2 Income on sale of associates, subsidiaries and jointly controlled entities (Joint

Vent.) - -18.3 Income on other discontinued operations - -XIX. EXPENSE ON DISCONTINUED OPERATIONS (-) - -19.1 Expense on assets held for sale - -19.2 Expense on sale of associates, subsidiaries and jointly controlled entities (Joint

Vent.) - -19.3 Expense on other discontinued operations - -XX. PROFIT/(LOSS) ON DISCONTINUED OPERATIONS BEFORE TAXES (XVIII-XIX) - -XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) - -21.1 Current tax provision - -21.2 Deferred tax provision - -XXII. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) - -XXIII. NET PROFIT/LOSS (XVII+XXII) (11) 283,573 231,587


TÜRKİYE FİNANS KATILIM BANKASI AŞ Income Statement(Thousands of Turkish Lira (TL) unless otherwise stated)



CURRENT PERIOD PRIOR PERIOD

Audited Audited

(01/01/2012 - 31/12/2012) (01/01/2011 - 31/12/2011)

I. MARKET VALUE GAINS ON AVAILABLE FOR SALE ASSETS ACCOUNTED UNDER “SECURITIES VALUE INCREASE FUND” 12,368 (30,029)

II. REVALUATION SURPLUS ON TANGIBLE ASSETS 71,615 -

III. REVALUATION SURPLUS ON INTANGIBLE ASSETS - -

IV. TRANSLATION DIFFERENCES FOR TRANSACTIONS IN FOREIGN CURRENCIES - -

V. GAIN/LOSS ON DERIVATIVE FINANCIAL ASSETS HELD FOR CASH FLOW HEDGES (effective portion) - -

VI. GAIN/LOSS ON DERIVATIVE FINANCIAL ASSETS HELD FOR HEDGES OF NET INVESTMENT IN FOREIGN OPERATIONS (effective portion) - -

VII. EFFECTS OF CHANGES IN ACCOUNTING POLICIES AND CORRECTIONS - -

VIII. OTHER INCOME/EXPENSE ITEMS ACCOUNTED UNDER SHAREHOLDERS’ EQUITY AS PER TAS - -

IX. DEFERRED TAXES ON VALUE INCREASES/DECREASES (6,053) 6,005

X. NET INCOME/EXPENSE ITEMS ACCOUNTED DIRECTLY UNDER SHAREHOLDERS’ EQUITY (I+II+…+IX) 77,930 (24,024)

XI. CURRENT PERIOD PROFIT/LOSSES 283,573 231,587

1.1 Net changes in fair value of securities (transferred to income statement) (1,713) -

1.2 Gains/losses on derivative financial assets held for cash flow hedges, reclassified and recorded in income statement - -

1.3 Gains/losses on hedges of net investment in foreign operations, reclassified and recorded in income statement - -

1.4 Others 285,286 231,587

XII. TOTAL PROFIT/LOSS ACCOUNTED FOR THE CURRENT PERIOD (X±XI) 361,503 207,563


TÜRKİYE FİNANS KATILIM BANKASI AŞ Statement of Income/Expense Items Accounted Under Shareholders’ Equity(Thousands of Turkish Lira (TL) unless otherwise stated)


THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Footnotes Audited Audited (5-VI) (01/01/2012 - 31/12/2012) (01/01/2011 - 31/12/2011) A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating profit before changes in operating assets and liabilities 572,507 131,127 1.1.1 Profit share income received 1,409,540 1,019,8751.1.2 Profit share expense paid (603,420) (452,890)1.1.3 Dividend received - -1.1.4 Fees and commissions received 152,448 132,8141.1.5 Other income 167,030 (130,337)1.1.6 Collections from previously written off loans and other receivables 74,215 72,4891.1.7 Cash payments to personnel and service suppliers (353,724) (296,623)1.1.8 Taxes paid (81,284) (61,691)1.1.9 Other (1) (192,298) (152,510) 1.2 Changes in Operating Assets and Liabilities (482,000) (300,532) 1.2.1 Net (Increase) / Decrease in financial assets held for trading - -1.2.2 Net(Increase) / Decrease in financial assets at fair value through profit or loss - -1.2.3 Net (Increase) / Decrease in due from banks and other financial institutions (1,045,448) (415,844)1.2.4 Net (Increase) / Decrease in loans (2,753,571) (2,389,006)1.2.5 Net (Increase) / Decrease in other assets (189,188) (72)1.2.6 Net Increase / (Decrease) in bank deposits 346,918 (27,325)1.2.7 Net Increase / (Decrease) in other deposits 1,571,622 1,129,1931.2.8 Net Increase / (Decrease) in funds borrowed 978,993 1,372,6931.2.9 Net Increase / (Decrease) in due payables - -1.2.10 Net Increase / (Decrease) in other liabilities (1) 608,674 29,829 I. Net cash provided from banking operations 90,507 (169,405) B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash provided from investing activities (91,932) (77,656) 2.1 Cash paid for purchase of entities under common control, associates and subsidiaries (2) (1,211) (1,000)2.2 Cash obtained from sale of entities under common control, associates and subsidiaries (3) - -2.3 Purchases of tangible assets (51,244) (30,451)2.4 Sales of tangible assets 1,555 8,7952.5 Cash paid for purchase of financial assets available for sale (594,485) (55,000)2.6 Cash obtained from sale of financial assets available for sale 553,453 -2.7 Cash paid for purchase of investment securities - -2.8 Cash obtained from sale of investment securities - -2.9 Other (1) - - C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net cash provided from financing activities 150,000 (1) 3.1 Cash obtained from funds borrowed and securities issued - -3.2 Cash used for repayment of funds borrowed and securities issued - -3.3 Equity instruments issued 150,000 -3.4 Dividends paid - -3.5 Payments for financial leases - (1)3.6 Others - - IV. Effect of change in foreign exchange rate on cash and cash equivalents (1) (78,768) 220,449 V. Net increase/(decrease) in cash and cash equivalents 69,807 (26,613) VI. Cash and cash equivalents at beginning of period (4) 1,530,157 1,556,770 VII. Cash and cash equivalents at end of period (4) 1,599,964 1,530,157


TÜRKİYE FİNANS KATILIM BANKASI AŞ Statement of Cash Flows(Thousands of Turkish Lira (TL) unless otherwise stated)



STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY Footnotes

Paid-in Capital

Effect of inflation

Accounting on Capital and Other Capital

ReservesShare

Premium

Share Certificate

Cancellation Profits

Legal Reserves

Statutory Reserves

Extraordinary Reserves

Other Reserves

Current Period Net

Income / (Loss)

Prior Period Net

Income / (Loss)

Securities Value Increase

Fund

Revaluation Surplus on

Tangible and Intangible

Assets

Bonus Shares of Equity

ParticipationsHedging

Reserves

Accu. Rev.Surp. on

Assets Held for Sale and

Assets of Discont. Op.s

Total Shareholders’

Equity

PRIOR PERIOD

Audited

(01.01-31.12.2011)

I. Balances at beginning of the period 800,000 - - - 36,772 - 321,185 - 205,529 - 21,028 21,582 - - - 1,406,096

II. 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) 800,000 - - - 36,772 - 321,185 - 205,529 - 21,028 21,582 - - - 1,406,096

Changes during the period

IV. Mergers - - - - - - - - - - - - - - - -

V. Market value changes of securities - - - - - - - - - - (24,024) - - - - (24,024)

VI. Hedging reserves - - - - - - - - - - - - - - - -

6.1 Cash flow hedge - - - - - - - - - - - - - - - -

6.2 Hedge of net investment in foreign operations - - - - - - - - - - - - - - - -

VII. Revaluation surplus on tangible assets - - - - - - - - - - - - - - - -

VIII. Revaluation surplus on intangible assets - - - - - - - - - - - - - - - -

IX. Bonus shares of associates, subsidiaries and joint-ventures - - - - - - - - - - - - - - - -

X. Translation differences - - - - - - - - - - - - - - - -

XI. Changes resulted from disposal of assets - - - - - - - - - - - - - - - -

XII. Changes resulted from resclassification of assets - - - - - - - - - - - - - - - -

XIII. Effect of change in equities of associates on bank’s equity - - - - - - - - - - - - - - - -

XIV. Capital increase - - - - - - - - - - - - - - - -

14.1 Cash - - - - - - - - - - - - - - - -

14.2 Internal sources - - - - - - - - - - - - - - - -

XV. Share issuance - - - - - - - - - - - - - - - -

XVI. Share cancellation profits - - - - - - - - - - - - - - - -

XVII. Capital reserves from inflation adjustments to paid-in capital - - - - - - - - - - - - - - - -

XVIII. Others - - - - - - - - - - - - - - - -

XIX. Current period net profit/loss - - - - - - - - 231,587 - - - - - - 231,587

XX. Profit distribution - - - - 9,976 - 195,553 - (205,529) - - - - - - -

20.1 Dividends - - - - - - - - - - - - - - - -

20.2 Transfers to reserves - - - - 9,976 - 195,553 - (205,529) - - - - - - -

20.3 Others - - - - - - - - - - - - - - - -

Balances at the end of the period (I+II+III+…+XVI+XVII+XVIII) 800,000 - - - 46,748 - 516,738 - 231,587 - (2,996) 21,582 - - - 1,613,659


TÜRKİYE FİNANS KATILIM BANKASI AŞ Statement of Changes in Shareholders’ Equity(Thousands of Turkish Lira (TL) unless otherwise stated)



STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY Footnotes

Paid-in Capital

Effect of inflation


ReservesShare

Premium

Share Certificate


Legal Reserves

Statutory Reserves


Other Reserves

Current Period Net

Income / (Loss)

Prior Period Net

Income / (Loss)


Fund



Assets



Reserves

Accu. Rev.Surp. on




Equity

PRIOR PERIOD

Audited

(01.01-31.12.2011)

I. Balances at beginning of the period 800,000 - - - 36,772 - 321,185 - 205,529 - 21,028 21,582 - - - 1,406,096

II. 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) 800,000 - - - 36,772 - 321,185 - 205,529 - 21,028 21,582 - - - 1,406,096


IV. Mergers - - - - - - - - - - - - - - - -

V. Market value changes of securities - - - - - - - - - - (24,024) - - - - (24,024)

VI. Hedging reserves - - - - - - - - - - - - - - - -

6.1 Cash flow hedge - - - - - - - - - - - - - - - -


VII. Revaluation surplus on tangible assets - - - - - - - - - - - - - - - -

VIII. Revaluation surplus on intangible assets - - - - - - - - - - - - - - - -

IX. Bonus shares of associates, subsidiaries and joint-ventures - - - - - - - - - - - - - - - -

X. Translation differences - - - - - - - - - - - - - - - -

XI. Changes resulted from disposal of assets - - - - - - - - - - - - - - - -

XII. Changes resulted from resclassification of assets - - - - - - - - - - - - - - - -

XIII. Effect of change in equities of associates on bank’s equity - - - - - - - - - - - - - - - -

XIV. Capital increase - - - - - - - - - - - - - - - -

14.1 Cash - - - - - - - - - - - - - - - -

14.2 Internal sources - - - - - - - - - - - - - - - -

XV. Share issuance - - - - - - - - - - - - - - - -

XVI. Share cancellation profits - - - - - - - - - - - - - - - -

XVII. Capital reserves from inflation adjustments to paid-in capital - - - - - - - - - - - - - - - -

XVIII. Others - - - - - - - - - - - - - - - -

XIX. Current period net profit/loss - - - - - - - - 231,587 - - - - - - 231,587

XX. Profit distribution - - - - 9,976 - 195,553 - (205,529) - - - - - - -

20.1 Dividends - - - - - - - - - - - - - - - -

20.2 Transfers to reserves - - - - 9,976 - 195,553 - (205,529) - - - - - - -

20.3 Others - - - - - - - - - - - - - - - -

Balances at the end of the period (I+II+III+…+XVI+XVII+XVIII) 800,000 - - - 46,748 - 516,738 - 231,587 - (2,996) 21,582 - - - 1,613,659




STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Footnotes (5-V)

Paid-in Capital

Effect of inflation


ReservesShare

Premium

Share Certificate


Legal Reserves

Statutory Reserves


Other Reserves

Current Period Net

Income / (Loss)

Prior Period Net

Income / (Loss)


Fund



Assets



Reserves

Accu. Rev.Surp. on




Equity

CURRENT PERIOD

Audited

(01.01-31.12.2012)

I. Balances at beginning of the period 800,000 - - - 46,748 - 516,738 - 231,587 - (2,996) 21,582 - - - 1,613,659


II. Mergers - - - - - - - - - - - - - - - -

III. Market value changes of securities (1),(2) - - - - - - - - - - 9,897 - - - - 9,897

IV. Hedging reserves - - - - - - - - - - - - - - - -

4.1 Cash flow hedge - - - - - - - - - - - - - - - -


V. Revaluation surplus on tangible assets - - - - - - - - - - - 68,033 - - - 68,033

VI. Revaluation surplus on intangible assets - - - - - - - - - - - - - - - -

VII. Bonus shares of associates, subsidiaries and joint-ventures - - - - - - - - - - - - - - - -

VIII. Translation differences - - - - - - - - - - - - - - - -

IX. Changes resulted from disposal of assets - - - - - - - - - - - - - - - -

X. Changes resulted from resclassification of assets - - - - - - - - - - - - - - - -

XI. Effect of change in equities of associates on bank’s equity - - - - - - - - - - - - - - - -

XII. Capital increase 850,000 - - - - - (700,000) - - - - - - - - 150,000

12.1 Cash 150,000 - - - - - - - - - - - - - - 150,000

12.2 Internal sources 700,000 - - - - - (700,000) - - - - - - - - -

XIII. Share issuance - - - - - - - - - - - - - - - -

XIV. Share cancellation profits - - - - - - - - - - - - - - - -

XV. Capital reserves from inflation adjustments to paid-in capital - - - - - - - - - - - - - - - -

XVI. Others (5) - - - - - - - - - - - - - - - -

XVII. Current period net profit/loss - - - - - - - - 283,573 - - - - - - 283,573

XVIII. Profit distribution - - - - 11,335 - 220,252 - (231,587) - - - - - - -

18.1 Dividends (3) - - - - - - - - - - - - - - - -

18.2 Transfers to reserves (4) - - - - 11,335 - 220,252 - (231,587) - - - - - - -

18.3 Others - - - - - - - - - - - - - - - -

Balances at end of the period (I+II+III+…+XVI+XVII+XVIII) 1,650,000 - - - 58,083 - 36,990 - 283,573 - 6,901 89,615 - - - 2,125,162


TÜRKİYE FİNANS KATILIM BANKASI AŞ Statement of Changes in Shareholders’ Equity(Thousands of Turkish Lira (TL) unless otherwise stated)



STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Footnotes (5-V)

Paid-in Capital

Effect of inflation


ReservesShare

Premium

Share Certificate


Legal Reserves

Statutory Reserves


Other Reserves

Current Period Net

Income / (Loss)

Prior Period Net

Income / (Loss)


Fund



Assets



Reserves

Accu. Rev.Surp. on




Equity

CURRENT PERIOD

Audited

(01.01-31.12.2012)

I. Balances at beginning of the period 800,000 - - - 46,748 - 516,738 - 231,587 - (2,996) 21,582 - - - 1,613,659


II. Mergers - - - - - - - - - - - - - - - -

III. Market value changes of securities (1),(2) - - - - - - - - - - 9,897 - - - - 9,897

IV. Hedging reserves - - - - - - - - - - - - - - - -

4.1 Cash flow hedge - - - - - - - - - - - - - - - -


V. Revaluation surplus on tangible assets - - - - - - - - - - - 68,033 - - - 68,033

VI. Revaluation surplus on intangible assets - - - - - - - - - - - - - - - -

VII. Bonus shares of associates, subsidiaries and joint-ventures - - - - - - - - - - - - - - - -

VIII. Translation differences - - - - - - - - - - - - - - - -

IX. Changes resulted from disposal of assets - - - - - - - - - - - - - - - -

X. Changes resulted from resclassification of assets - - - - - - - - - - - - - - - -

XI. Effect of change in equities of associates on bank’s equity - - - - - - - - - - - - - - - -

XII. Capital increase 850,000 - - - - - (700,000) - - - - - - - - 150,000

12.1 Cash 150,000 - - - - - - - - - - - - - - 150,000

12.2 Internal sources 700,000 - - - - - (700,000) - - - - - - - - -

XIII. Share issuance - - - - - - - - - - - - - - - -

XIV. Share cancellation profits - - - - - - - - - - - - - - - -

XV. Capital reserves from inflation adjustments to paid-in capital - - - - - - - - - - - - - - - -

XVI. Others (5) - - - - - - - - - - - - - - - -

XVII. Current period net profit/loss - - - - - - - - 283,573 - - - - - - 283,573

XVIII. Profit distribution - - - - 11,335 - 220,252 - (231,587) - - - - - - -

18.1 Dividends (3) - - - - - - - - - - - - - - - -

18.2 Transfers to reserves (4) - - - - 11,335 - 220,252 - (231,587) - - - - - - -

18.3 Others - - - - - - - - - - - - - - - -

Balances at end of the period (I+II+III+…+XVI+XVII+XVIII) 1,650,000 - - - 58,083 - 36,990 - 283,573 - 6,901 89,615 - - - 2,125,162



THOUSAND TURKISH LIRACURRENT PERIOD PRIOR PERIOD

Audited Audited (31/12/2012) (31/12/2011)

I. DISTRIBUTION OF CURRENT PERIOD PROFIT (*)

1.1 CURRENT PERIOD PROFIT 361,826 293,4211.2 TAXES AND DUES PAYABLE (-) (78,253) (61,834)1.2.1 Corporate Tax (Income Tax) (78,760) (66,714)1.2.2 Income Tax Witholding - -1.2.3 Other Taxes and Dues Payable (**) 507 4,880

A. NET PROFIT FOR THE PERIOD (1.1-1.2) 283,573 231,587

1.3 PRIOR YEAR’S LOSSES (-) - -1.4 FIRST LEGAL RESERVES (-) - (11,335)1.5 OTHER STATUTORY RESERVES (-) (***) - (4,880)

B. DISTRIBUTABLE NET PERIOD PROFIT [(A-(1.3+1.4+1.5)] - 215,372

1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) - -1.6.1 To Owners of Ordinary Shares - -1.6.2 To Owners of Preferred Stocks - -1.6.3 To Owners of Preferred Stocks (Preemptive Rights) - -1.6.4 To Profit Sharing Bonds - -1.6.5 To Owners of the profit and loss Sharing Certificates - -1.7 DIVIDEND TO PERSONNEL (-) - -1.8 DIVIDEND TO BOARD OF DIRECTORS (-) - -1.9 SECOND DIVIDEND TO SHAREHOLDERS (-) - -1.9.1 To Owners of Ordinary Shares - -1.9.2 To Owners of Preferred Stocks - -1.9.3 To Owners of Preferred Stocks (Preemptive Rights) - -1.9.4 To Profit Sharing Bonds - -1.9.5 To Owners of the profit /loss Sharing Certificates - -1.10 SECOND LEGAL RESERVE (-) - -1.11 STATUTORY RESERVES (-) - -1.12 EXTRAORDINARY RESERVES - 215,3721.13 OTHER RESERVES - -1.14 SPECIAL FUNDS - -

II. DISTRIBUTION FROM RESERVES

2.1 DISTRIBUTED RESERVES - -2.2 SECOND LEGAL RESERVES (-) - -2.3 DIVIDENDS TO SHAREHOLDERS (-) - -2.3.1 To Owners of Ordinary Shares - -2.3.2 To Owners of Preferred Stocks - -2.3.3 To Owners of Preferred Stocks (Preemptive Rights) - -2.3.4 To Profit Sharing Bonds - -2.3.5 To Owners of the profit /loss Sharing Certificates - -2.4 SHARE TO PERSONNEL (-) - -2.5 SHARE TO BOARD OF DIRECTORS (-) - -

III. EARNINGS PER SHARE

3.1 TO OWNERS OF STOCKS 0.18 0.143.2 TO OWNERS OF STOCKS (%) 18 143.3 TO OWNERS OF PREFERRED STOCKS - -3.4 TO OWNERS OF PREFERRED STOCKS (%) - -

IV. DIVIDEND PER SHARE

4.1 TO OWNERS OF STOCKS - -4.2 TO OWNERS OF STOCKS (%) - -4.3 TO OWNERS OF PREFERRED STOCKS - -4.4 TO OWNERS OF PREFERRED STOCKS (%) - -

(*) Authorized unit is general assembly on current period profit distribution. Ordinary General assembly of the Participation Bank is not held as of the date of report.(**) Other tax and duties include deferred tax Gains / (Losses) amounts.(***) Other statutory reserves are included in the extraordinary reserves.


TÜRKİYE FİNANS KATILIM BANKASI AŞ Profit Distribution Table(Thousands of Turkish Lira (TL) unless otherwise stated)

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SECTION THREE

ACCOUNTING POLICIES

I. Basis of Presentation

1. Presentation of Financial Statements

As per the Article 37 of “Accounting and Recording Rules” of the Turkish Banking Law No 5411 published on the Official Gazette no.25983 dated 1 November 2005 and became effective, the Participation Bank keeps its accounting records and prepares its unconsolidated financial statements and the related footnotes in accordance with accounting and valuation standards described in “Regulation on Accounting Applications for Banks and Safeguarding of Documents” published by the Banking Regulatory and Supervisory Agency (BRSA) and in effect since 1 November 2006, Turkish Accounting Standards (TAS) and Turkish Financial Reporting Standards (TFRS) issued by Turkish Accounting Standards Board and the related statements and guidance.

As per the 28103 numbered Official Gazette published on 2 November 2011, and entered into force with Decree Law No. 660 of Law, additional article 1 of the establishment clause for Turkish Accounting Standards Board in the Law numbered 2499 has been canceled and Public Oversight of Accounting and Auditing Standards Board (“The Authority”) is decided to be established by Council of Ministers. Existing regulations regarding to these issues will continue to enforce until standards and regulations according to temporary article 1 of this Decree Law, come into force when released by the Authority. This situation does not affect the “Basis of Presentation” for the current period as of the reporting date.

The Participation Bank prepares financial statements by applying accounting policies and basis of accounting in accordance with the Turkish Accounting Standards and related communiqués, pronouncements and explanations issued by the Banking Regulation and Supervision Agency. The related accounting policies and basis of accounting are explained in disclosures II to XXII below.

Amounts in Financial Statements and related explanations and disclosures are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.

2. Restatement of Financial Statements upon the Current Purchasing Power Parity

The Participation Bank’s financial statements have been prepared in accordance with TAS 29 “Reporting in Hyperinflationary Economies” until 31 December 2004. By a Circular declared by BRSA at 28 April 2005, it was stated that the indicators of a need for inflation accounting have been ceased and inflation accounting would not be applied starting from 1 January 2005.

3. Additional Paragraph for Convenience Translation to English

The differences between accounting principles, as described in the preceding paragraphs, and the accounting principles generally accepted in countries, in which the accompanying financial statements are to be distributed, and International Financial Reporting Standards (“IFRS”), may have significant influence on the accompanying financial statements. Accordingly, the accompanying financial statements are not intended to present the financial position and results of operations in accordance with the accounting principles generally accepted in such countries and IFRS.

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II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions

The Participation Bank receives profit share accounts on the basis of taking share from both profit and loss. These profit loss based accounts are generally evaluated as Corporate Financing Support, Individual Financing Support, Financial Leasing and Profit Loss Joint Project. Yields of these funds are fixed.

Active credit risk management procedures are applied due to fixed yields of funds. The rating and scoring systems applied by the Participation Bank, includes detailed company analysis realized in annually or semi-annually and enables rating of all companies and loans without any restrictions regarding credibility. Loans and companies, which have been renewed, restructured or rescheduled, are rated within the scope of this system and if acceptable, loan limits are revised.

In order to maintain the ratio of liquid assets to total assets (except statutory reserves) around 15%-17% is adopted as liquidity principle by the Participation Bank. Equity profitability is maximized by evaluating this liquidity opportunity in short maturity transactions in international markets.

Foreign exchange gains and losses arising from foreign currency transactions are recorded at transaction dates. At the end of the periods, foreign currency assets and liabilities evaluated with the Central Bank of Turkey’s spot purchase rates and the differences are recorded as foreign exchange gain or loss in the income statement.

Net foreign currency position is followed in legal limits and ensured that the ratio is within +-20% level. Besides, different policies and strategies are settled according to macro economic situations about foreign currency position. However, the Participation Bank always avoids taking positions that expose high level of currency risk.

III. Explanations on Forward and Option Contracts and Derivative Instruments

The Participation Bank’s derivative financial instruments consist of forward foreign currency buy/sell agreements. The Participation Bank has no derivative products that are detached from the host contract.

Derivatives are initially recorded in off-balance sheet accounts at their contract values.

Subsequently, the derivative transactions are valued at their fair values and the changes in their fair values are recorded on balance sheet under “derivative financial assets” or “derivative financial liabilities”, respectively. Subsequent fair value changes for trading derivatives are recorded under income statement.

The Participation Bank does not have any derivative financial instruments held for risk management as of balance sheet date.

IV. Explanations on Profit Share Income and Expenses

Profit share income and expenses are recognized in the income statement on an accrual basis.

Realized and unrealized profit share accruals of the non-performing loans are reversed and profit share income in connection with these loans is recorded as profit share income only when they are collected.

V. Explanations and Disclosures on Fees and Commission Income and Expenses

Banking service revenues are recognized as income only when they are collected while only the current portion of the prepaid commission income obtained from corporate loans is recorded as income on an accrual basis.

Fees and commissions for funds borrowed paid to other financial institutions, as part of the transaction costs, are recorded as prepaid expenses and calculated based on internal rate of return method.

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VI. Explanations and Disclosures on Financial Assets

Financial instruments comprise of financial assets, financial liabilities and derivative instruments. Basically, financial assets form majority of the commercial activities and operations of the Participation Bank. Risks due to these instruments are substantial portion of the total risk taken by the Participation Bank. Financial instruments expose, change or reduce the liquidity, credit and market risks of the Participation Bank’s financial statements. Buying/selling of these financial instruments is carried out in the name of customers and on behalf and account of the Participation Bank.

Basically, financial instruments generate commercial operations of the Participation Bank. These instruments reveal, affect and decrease liquidity and credit risk on financial statements.

Buying/selling of financial instruments is recognized on settlement date basis. It is the date which an asset is delivered to the Participation Bank or by the Participation Bank. Settlement date accounting requires (a) recognizing of the asset in purchase date, and (b) to exclude the asset from balance sheet as of delivery date and recognizing profit or loss due to disposal of the assets as of the same date. Changes in fair value of the assets between trading date and settlement date are recognized for the financial assets at fair value through profit&loss and financial assets available for sale.

Ordinary purchase and sale generally suppose to purchase or sale of an asset based on a contract that requires the delivery of the asset in legal procedures and market precedents. Changes in fair value of the asset acquired between trading date and settlement date are recognized as the same in assets purchased. Changes in fair value of the asset are not recognized if it is recorded with its purchase or amortized cost. Gain or loss due to a financial asset at fair value is recorded in profit or loss, gain or loss due to an asset available for sale is recorded in equity.

Methods and assumptions used to determine reasonable value of every financial instrument are specified below.

Cash, Banks, and Other Financial Institutions

Cash and cash equivalents comprise of cash on hand, demand deposits, and highly liquid short-term investments not bearing risk of significant value change, and that are readily convertible to a known amount of cash. The book value of these financial assets approximate to their fair value.

Securities

Securities are classified in three groups in balance sheet of the Participation Bank:

Marketable securities at fair value through profit or loss are classified in two categories; i) marketable securities classified as trading securities: acquired or incurred principally for the purpose of selling or repurchasing it in the near term in order to benefit from short-term profit opportunities; ii) marketable securities classified as marketable securities at fair value through profit or loss at initial recognition. The Participation Bank uses the above-mentioned classification when permitted, or for the purposes of providing a more appropriate presentation.

In this group, trading securities are initially recognized at cost and measured at fair value on the financial statements. Fair value of debt securities traded in an active market is determined based on the quoted prices or current market prices.

The difference between initial cost and fair value of financial assets at fair value through profit and loss is reflected to profit share income or diminution in value of marketable securities accounts. Profit share income from financial assets at fair value through profit and loss is reflected in profit share income.

Investments held to maturity include securities with fixed or determinable payments and fixed maturity when there is an intention of holding till maturity and the relevant conditions for fulfillment of such intention, including the funding ability. This portfolio excludes loans and receivables. Subsequent to initial recognition, held to maturity investments are measured at amortized cost by using the internal rate of return method less impairment losses, if any. The Participation Bank has no financial assets acquired and classified as held to maturity investments that cannot be subject to such classification for two years because of the non-performance of tainting rules.

The profit share income received from held to maturity investments is recorded as profit share income in the income statement.

The Participation Bank does not have any investments held to maturity as of balance sheet date.

96



Marketable securities classified as available for sale are initially recognized at cost including the transaction costs. After initial recognition, available for sale securities are measured at fair value and unrealized gains/losses originating from the difference between the amortized cost and the fair value are recorded in “Securities Value Increase Fund” under equity. At the disposal of available for sale financial assets, value increase/decrease recorded in “Securities Value Increase Fund” under equity is transferred to the income statement.

Loans

Loans and receivables are recognized at purchase cost and valued at amortized cost. Fees, transaction costs and other similar costs in connection with the guarantees of loans are considered as part of the transaction cost.

Individual and corporate loans followed in cash loans are recognized at their original amounts according to Uniform Chart of Accounts (UCA) and accounts determined in its prospects based on loans’ contents.

Foreign currency indexed retail and commercial loans are converted to Turkish Lira at the rate on the lending date; they are followed under Turkish Lira (“TL”) accounts. Repayment amounts are calculated at the exchange rate on the repayment date and the foreign exchange differences are reflected in the profit/loss accounts.

VII. Explanations on Impairment on Financial Assets

At each balance sheet date, the Participation Bank evaluates the carrying amounts of its financial asset or a group of financial assets to determine whether there is objective evidence that those assets have suffered an impairment loss. If any such indication exists, the Participation Bank determines the related impairment. A financial asset or a group of financial assets are impaired and have impairment loss if, and only if, there is an objective indicator of a single or multiple event (“event of loss”) occurring after the initial recognition of the related asset and that the expected future cash flows of financial asset or group of financial assets are adversely affected by that event (or events). The losses expected to incur due to future events are not accounted regardless of high probability.

Loans considered as non-performing are classified in accordance with the “Regulation on Procedures and Principles Determination of Qualifications of Loans and Other Receivables by Banks and Provision”, published on the Official Gazette nr.26333 dated 1 November 2006.

The provisions released in the same year are accounted by crediting the Provision Expenses Account and the released parts of the previous years’ provisions are recorded to the Collections from Prior Years Expense account.

In addition to specific loan loss provisions, within the framework of the regulation and principles referred to above; the Participation Bank records general loan loss provisions for loans and other receivables.

VIII. Explanations on Offsetting of Financial Assets and Liabilities

In cases where the fair values of trading securities, securities available-for-sale, securities quoted at the stock exchanges, associates and subsidiaries are less than their carrying values, a provision for impairment is allocated, and the net value is shown on the balance sheet.

The Participation Bank provides specific allowances for loan and other receivables in accordance with the Regulation on Identification of and Provision against Non-Performing Loans and Other Receivables. The allowances are recorded under “loans” as negative balances on the asset side.

Other financial assets and liabilities than explained above are offset when the Participation Bank has a legally enforceable right to set off, and when the Participation Bank has the intension of collecting or paying the net amount of related assets and liabilities or when the Participation Bank has the right to offset the assets and liabilities simultaneously.

IX. Explanations on Sales and Repurchase Agreements and Lending of Securities

The Participation Bank does not have any repurchase agreements or lending of securities.

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X. Explanations on Assets Held For Sale and Discontinued Operations and Debts due to These Assets

The principles on accounting, assessment and disposal of assets held for sale of the Participation Bank are determined based on the Communiqué of “Principles and Procedures on Bank’s Disposal of Precious Metals and Assets Held for Sale” published on 1 November 2006 in the Official Gazette numbered 26333.

If assets acquired due to receivables of the Participation Bank are under a plan, they are followed in assets held for sale account.

Assets which meet the criteria to be classified as held for sale are measured by the book value or the fair value from which the cost of sales is deducted, whichever is lower and no more amortization is made for the said assets; and these assets are shown separately on the balance sheet. In order to classify an asset as an asset held for sale, the related asset (or the group of assets to be disposed of) should be able to be sold immediately and the probability of sale for such assets (or group of assets to be disposed of), should be high under current conditions. In order for the sale to be highly probable, a plan should have been made by the suitable management for the sale of the asset (or the group of assets to be disposed of) and an active program should have been started to determine the buyers and to carry out the plan. Furthermore, the asset (or the group of assets to be disposed of) should be actively marketed at a price consistent with its fair value. Various events and conditions may extend the period for the completion of the sales process to more than a year. If there is enough evidence that the related delay has occurred beyond the Participation Bank’s control and that the Participation Bank’s plans for selling the related asset (or the group of assets to be disposed of) is still in progress, the related assets are continued to be classified as assets held for sale.

A discontinued operation is a part of a bank’s business classified as sold or held-for-sale. The results of the discontinued operations are disclosed separately in the income statement. There is not a discontinued operation of the Participation Bank in the current period.

XI. Explanations and Disclosures on Goodwill and Other Intangible Assets

As of the balance sheet date, The Participation Bank does not have any goodwill in its accompanying unconsolidated interim financial statements.

Intangible assets purchased before 1 January 2005, are presented with their inflation adjusted historical acquisition cost as of 31 December 2004 and intangible assets purchased in the subsequent periods, are presented with their acquisition cost less the accumulated amortization, and impairment provisions. Intangible assets are amortized by the straight-line method, considering their useful life. The amortization method and period are periodically reviewed at the end of each year. Intangible assets are comprised of computer software.

XII. Explanations and Disclosures on Tangible Assets

Tangible assets are accounted for at acquisition cost plus any other direct costs incurred to bring the asset for ready to use. Tangible assets are remeasured at their acquisition cost less accumulated depreciation and impairment loss, if any. The Participation Bank adopted a revaluation method in 2006 for its real estates in tangible assets due to (TAS 16) Standard for Tangible Assets. Expert values determined in December 2012 by an independent expert company are reflected to the financial statements. Such revaluation increase is realized net TL 89,615 after deferred tax as of balance sheet date (31 December 2011: TL 21,582).

The depreciation of an asset held for a period less than a full financial year is calculated as a proportion of the full year depreciation charge from the date of acquisition to the financial year end.

Gains/losses arising from the disposal of tangible assets or the inactivation of a tangible asset are recognized in the income statement by taking into account the difference between the net book value and the net proceeds.

Regular maintenance and repair costs incurred for tangible assets are recorded as expense.

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

98



The estimated useful lives of the tangible assets used by the Participation Bank are as follows:

Tangible Assets Estimated Useful LivesSafety Boxes 5-50 yearsOffice equipment 3-10 yearsLeasehold Improvements 2-10 yearsOther Movables 3-15 yearsFurniture and Fixtures 3-10 yearsVehicles 5 yearsReal Estates 50 years

XIII. Explanations and Disclosures on Leasing Transactions

The Participation Bank as a Lessor;

The Participation Bank acts as a Lessor in leasing transactions. Assets subject to leasing are accounted in the Participation Bank’s financials as receivables that equal to net leasing investment amount. Total of rental payments including profit shares and principals are recorded under “finance lease receivables” as gross. The difference, i.e. the profit share, between the total of rental payments and the cost of the related tangible asset is recorded under “unearned income”. When the rent payment incurs, the rent amount is deducted from “finance lease receivables”; and the profit share is recorded as finance lease income in the income statement.

The Participation Bank as a Lessee;

Assets held under finance leases are recognized as assets of the Participation Bank at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. While the corresponding liability to the lessor is included in the balance sheet as a finance lease obligation, profit share amounts are accounted as deferred profit share amounts. Leased assets are followed in tangible assets account and subjected to the same accounting policy.

XIV. Explanations on Provisions and Contingent Liabilities

Apart from specific and general provisions set for funds given and other receivables, other provisions and contingent liabilities are set based on TAS 37 standard.

Specific and general provision expenses related with profit share accounts which are set by the Participation Bank are met from profit share accounts.

There are 319 ongoing suits filed against to the Participation Bank as of balance sheet date. Total amount of these suits are TL 162,888 (31 December 2011: 192 suits, TL 162,783). The Participation Bank set TL 4,913 provision for ongoing suits filed against to the Participation Bank for which cash outflow is probable and measurable (31 December 2011: TL 3,792).

XV. Explanations on Liabilities Regarding Employee Benefits

As per the existing labour law in Turkey, the Participation Bank is required to pay certain amounts to the employees retired or fired except for resignations or misbehaviours specified in the Turkish Labour Law.

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Accordingly, the Participation Bank reserved for employee severance indemnities in the accompanying financial statements using actuarial method in compliance with the TAS 19 “Employee Benefits” for all its employees who retired or whose employment is terminated, called up for military service or died. The major actuarial assumptions used in the calculation of the total liability are as follows:

Current Period Prior PeriodDiscount Rate (%) 2.76 4.66The ratio used against Retirement Possibility (%) 94.06 94.35

The Participation Bank provided for undiscounted short-term employee benefits earned during the financial periods as per services rendered in compliance with TAS 19.

The Participation Bank employees are not members of any foundation or pension fund.

XVI. Explanations on Taxation

Tax expense is the total amount of current tax expense and deferred tax expense.

Taxable profit is different from the profit on the income statement, due to the fact that it excludes the income and expense items, which can be taxed or deducted in the following periods and the items, which cannot be taxed or deducted, permanently. Liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax liability or asset is determined by calculating tax effects of temporary differences between the base amounts of the financial statement and legally enacted tax base amounts of liabilities and assets by using balance sheet method and considering legal tax rates. Deferred tax liabilities are calculated for all the temporary taxable differences, while the deferred tax assets composed of temporary deductible differences, are calculated in case it is highly probable to use these differences in the future to gain taxable profit. Deferred tax liability is not calculated for temporary timing differences, which are arising from the initial entering of assets or liabilities, except for goodwill and mergers, and which do not affect either the commercial or financial profit or loss.

The book value of deferred tax liability is reviewed at each balance sheet date. The book value of the deferred tax is reduced as probability of gaining enough taxable profit decreases.

Deferred tax is calculated at enacted tax rates valid in the period when the assets are formed or liabilities are fulfilled, and the tax is recorded as income or expense in the income statement. Nonetheless, if the deferred tax is related to assets directly associated with the equity in the same or different period, it is directly recognized in the group of equity accounts.

A portion of provision directly associated with the equity is offset with related accounts in equity. Therefore, TL 6,441 deferred tax provision (31 December 2011: TL 388) directly associated with the equity is offset with “Revaluation Surplus on Tangible Assets” and “Securities Value Increase Fund” accounts in equity as of 31 December 2012.

Current tax liability is offset with prepaid tax amounts due to its association. Deferred tax asset and liability is also offset.

XVII. Additional Explanations on Borrowings

Borrowings are recognized in accordance with TAS 39 “Financial Instruments: Recognition and Measurement”. Borrowings except derivatives financial liabilities held for trading are recorded at their purchase costs and discounted by using the internal rate of return. Derivatives financial liabilities held for trading are recorded at their fair value amounts as explained in the accounting policy numbered III.

XVIII. Explanations on Share Certificates

The Participation Bank increased its capital by TL 800,000 to TL 1,650,000. The part of this increase amounting to TL 150,000 has been paid in cash and the remaining part amounting to TL 700,000 has been transferred from general reserve. As of 31 December 2012, the Participation Bank’s paid-in-capital consists of 1,650,000,000 shares of TL 1 nominal each.

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XIX. Explanations and Disclosures on Acceptances

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

XX. Explanations and Disclosures on Government Incentives

There are no government incentives used by the Participation Bank as of balance sheet date.

XXI. Explanations and Disclosures on Segment Reporting

The Participation Bank operates in individual banking, specific customer current accounts, profit sharing accounts, credit and ATM cards, consumer loans, long term housing and car loans and other individual bank services.

The Participation Bank operates in automatic transfer services, internet banking services, current accounts, profit share accounts, cash/non cash loans, financial leasing, foreign trade transactions, insurance transactions and corporate banking services.

There are not any economic, financial and political factors that affect segmenting of activities and investments. Due to fluctuations in economic situation, investments are affected from instability and available resources are evaluated as liquid.

31.12.2012 Retail BankingCorporate

Banking Treasury Unallocated TotalOperating Income 255,996 524,245 268,609 - 1,048,850

Net profit of segment (*) 115,824 236,843 9,159 - 361,826Profit Before Tax 115,824 236,843 9,159 - 361,826Tax Provision - - - 78,253 78,253Profit after tax 115,824 236,843 9,159 (78,253) 283,573Net period profit 115,824 236,843 9,159 (78,253) 283,573

Assets of segment 3,107,769 10,288,504 3,750,299 469,932 17,616,504Total Assets 3,107,769 10,288,504 3,750,299 469,932 17,616,504

Liabilities of segment 8,099,591 4,413,103 2,574,752 403,896 15,491,342Equity - - - 2,125,162 2,125,162

Total liabilities and equity 8,099,591 4,413,103 2,574,752 2,529,058 17,616,504Other segment items - - - 30,633 30,633

Depreciation(**) - - - 30,455 30,455Impairment - - - 178 178

(*) Personnel and administrative expenses are allocated according to ratio of asset and liabilities of the segments.(**) Depreciation amount of TL 30,455 comprise of TL 22,334 of tangible assets’ depreciation, TL 7,553 of intangible assets’ depreciation and TL 568 of depreciation for assets held for resale.

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31.12.2011 Retail BankingCorporate

Banking Treasury Unallocated TotalOperating Income 201,226 503,913 115,814 - 820,953

Net profit of segment (*) 26,125 178,634 88,662 - 293,421Profit Before Tax 26,125 178,634 88,662 - 293,421Tax Provision - - - 61,834 61,834Profit after tax 26,125 178,634 88,662 (61,834) 231,587Net period profit 26,125 178,634 88,662 (61,834) 231,587

Assets of segment 3,412,248 8,465,629 1,366,738 283,738 13,528,353Total Assets 3,412,248 8,465,629 1,366,738 283,738 13,528,353

Liabilities of segment 7,261,536 2,646,730 1,544,536 461,892 11,914,694Equity - - - 1,613,659 1,613,659

Total liabilities and equity 7,261,536 2,646,730 1,544,536 2,075,551 13,528,353Other segment items - - - 30,374 30,374

Depreciation(**) - - - 30,016 30,016Impairment - - - 358 358

(*) Personnel and administrative expenses are allocated according to ratio of asset and liabilities of the segments. (**) Depreciation amount of TL 30,016 comprise of TL 23,452 of tangible assets’ depreciation, TL 6,016 of intangible assets’ amortization and TL 548 of depreciation for fixed assets to be sold.

XXII. Explanations on Other Matters

There are no explanations exist other than the accounting policies stated above.

SECTION FOUR

INFORMATION ON FINANCIAL STRUCTURE

I. Explanations and Disclosures Related to the Capital Adequacy Standard Ratio

The capital adequacy ratio of the Participation Bank is 14.76%. The capital adequacy ratio of the Participation Bank was not recalculated related to prior periods, accordance with the communiqué “Financial Statements and Related Disclosures and Footnotes to be Announced to Public” which is published in Official Gazette no 28337 dated 28 June 2012.

Risk Measurement Methods in Calculation of Capital Adequacy Ratio

Capital adequacy ratio is calculated within the scope of the “Communiqué on Measurement and Assessment of Capital Adequacy Ratios of Banks (the “Regulation”)”, “Regulation on Credit Risk Mitigation Techniques” and “Regulation on Calculation of Risk Weighted Amounts for Securitisations” published in the Official Gazette no.28337 dated 28 June 2012 and the “Regulation on Equities of Banks” published in the Official Gazette no.26333 dated 1 November 2006.

In the calculation of capital adequacy ratio, the data prepared from accounting records in compliance with the current legislation are used. Such accounting data is included in the calculation of credit and market risks subsequent to their designation as “trading book” and “banking book” according to the Regulation. The items classified as trading book and the items deducted from the equity are not included in the calculation of credit risk. In the calculation of risk weighted assets, the assets subject to amortisation or impairment, are taken into account on a net basis after being reduced by the related amortisations and provisions.

In the calculation of the value at credit risk for the non-cash loans and commitments and the receivables from counterparties in such transactions are weighted after netting with specific provisions that are classified under liabilities and calculated based on the “Regulation on Procedures and Principles Determination of Qualifications of Loans and Other Receivables by Banks and Provision”. The net amounts are then multiplied by the rates stated in the Article 5 of the Regulation, reduced as per the “Regulation on Credit Risk Mitigation Techniques” and then included in the relevant exposure category defined in the article 6 of the Regulation and weighted as per Appendix-1 of the Regulation.

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The amount subject to credit risk is calculated and reported with Simple Approach, the amount subject to market risk is calculated and reported with the Standard Method and the amount subject to operational risk is calculated and reported with Basic Indicator Method, described in the Communiqué on “Measurement and Assessment of Capital Adequacy Ratios of Banks (the “Regulation”) published in the Official Gazette No: 28337 dated 28 June 2012.

In the calculation of counterparty credit risk arising from derivative instruments and marketable securities, “the valuation method according to the fair value” is used in accordance with the Regulation.

Risk Weightness Participation Bank 0% 10% 20% 50% 75% 100% 150% 200%The Amount Subject to Credit Risk 2,804,383 - 381,343 6,052,483 3,137,018 7,200,464 37,562 13,340Risk Types

Contingent and Non-Contingent Claims on Sovereigns 2,504,766 - - 800,481 - - - -

Contingent and Non-Contingent Claims on Regional Governments and Local Authorities - - 29 - - - - -

Contingent and Non-Contingent Claims on Administrative Units and Non-commercial Enterprises - - - - - 2,846 - -

Contingent and Non-Contingent Claims on Multilateral Development Banks - - - - - - - -

Contingent and Non-Contingent Claims on International Organizations - - - - - - - -

Contingent and Non-Contingent Claims on Banks and Capital Market Intermediary - - 296,247 232,356 - 83 - -

Contingent and Non-Contingent Claims on Corporate Receivables 198,027 - 84,937 - - 6,592,435 - -

Contingent and Non-Contingent Claims Included in the Regulatory Retail Portfolios - - - - 3,137,018 8,719 - -

Contingent and Non-Contingent Claims Secured by Residential Property - - - 5,004,370 - - - -

Past Due Loans - - - 11,337 - 33,348 - -Higher-Risk Categories Defined by Agency - - - 3,374 - 9,210 37,562 13,340Collateralized Mortgage Marketable

Securities - - - - - - - -Securitization Exposures - - - - - - - -Short-Term Claims on Banks and Corporate - - - - - - - -Undertakings for Collective Investments in

Transferable Securities - - - - - - - -Other Claims 101,590 - 130 565 - 553,823 - -

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Summary of the Capital Adequacy Standard Ratio of the Participation Bank

Current PeriodRequired Capital Liabilities for Credit Risk (Main Amount related with Credit Risk*0,08) (RCLCR) 1,019,101Required Capital Liabilities for Market Risk (RCLMR) 19,966Required Capital Liabilities for Operational Risk (RCLOR) 103,234Shareholders’ Equity 2,107,599Shareholders’ Equity/((RCLCR+RCLMR+RCLOR) *12,5)*100 14.76

Information about the shareholders’ equity items

Current periodCORE CAPITAL Paid-in capital 1,650,000

Nominal capital 1,775,000Capital commitments (-) (125,000)

Adjustment to paid-in capital -Share Premiums -Share Cancellation Profits -Transfers from reserves 95,073Reserves from Inflation Adjustments -Profit 283,573

Net current period profit 283,573Prior period profit -

Provisions for possible losses up to 25% of core capital -Profit on sale of associates, subsidiaries and buildings -Primary subordinated loans -Loss that is not covered with reserves (-) -

Net current period loss -Prior period loss -

Leasehold improvements (-) 30,004Intangible assets (-) 18,881Deferred-assets for tax which exceeds 10% of core capital (-) -Excess amount expressed in the Law (Article 56, 3rd paragraph) (-) -Total Core Capital 1,979,761

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SUPPLEMENTARY CAPITAL Current periodGeneral reserves 85,86245% of increase in revaluation fund of movables -45% of increase in revaluation fund of fixed assets 40,327Bonus shares from investment and associates, subsidiaries and joint ventures (business partners) -Primary subordinated loans which are ignored in the calculation of core capital -Secondary subordinated loans -45% of marketable securities and investment securities value increase fund 3,105Adjustment to paid-in capital, profit reserves and previous years losses(except adjustment to legal, status and extraordinary reserves) -Total Supplementary Capital 129,294CAPITAL 2,109,055DEDUCTIONS FROM THE CAPITAL 1,456Partnership share on banks and financial institutions (domestic and abroad) that are not consolidated, with a shareholding of 10% and above -The sum of partnership share on banks and financial institutions (domestic and abroad), with shareholding of less than 10%, but exceeding 10% and more of the sum of core and supplementary capital of the bank -Loans extended to banks, financial institutions (domestic and abroad) and qualified shareholders, like secondary subordinated loan and debt instruments purchased from these institutions issued, like primary and secondary subordinated loan -Loans extended being noncompliant with articles 50 and 51 of the Law -Net book values of properties owned, exceeding 50% of banks’ equity and properties, and trade goods overtaken in exchange for loans and receivables that should be disposed within five years in accordance with article 57 of the Law, but not yet disposed 1,456Securitization positions deducted from preferred equity -Other -TOTAL SHAREHOLDERS’ EQUITY 2,107,599

The Approaches for Internal Capital Adequacy Assessment Process about Current and Future Activities

The internal capital adequacy requirement is assessed within the framework of the Bank’s operations and the risks by considering capital structure and a 5-year strategic plan by the year 2012. This assessment covers the market, credit and operational risks directly affect the regulatory capital adequacy ratio, and also liquidity risk, reputational risk, residual risk, concentration risk, strategic risk and transfer risk arising from banking book. Internal capital adequacy assessment process is considered as a developing methodology and work plans are created by identifying improvement areas for the next period. In addition, by identifying the risk appetite of the bank, management, monitoring and involvement of senior management in the direction of the mentioned processes to the related the activities of the bank are being carried out in this regard.

II. Explanations and Disclosures Related to Credit Risk

Credit risk is the risk of a counter party with whom the Participation Bank has a commercial relation. This risk represents the losses of the Participation Bank when its counter party can not conform to a signed contract by disregarding the related obligations partially or totally in specified periods.

Credit worthiness of loan customers are monitored and reviewed by the Credit Allocation Department of the Participation Bank semiannually or annually in accordance with the Communiqué on “Determining the Nature of Loan and Other Receivable Provisions Allocated by Banks and Procedures and Principles of Allocating Provisions”. The account statements are obtained based on the prevailing regulations. Credit limits are determined by the Board of Directors, the Credit Committee of the Participation Bank and the Credit Administration. The Participation Bank obtains guarantees for its loans and other receivables. Guarantees received comprised of real and legal person sureties with a high credibility, bonds issued with guarantees of Treasury, Privatization Administration and Housing Development Administration of Turkey, securities issued with the guarantees of central governments and central banks of OECD countries, European Central Bank and securities issued with

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this Bank’s guarantee, gold and other precious metals, investment equity shares listed on the stock exchange, asset based securities, private sector bonds, letters of guarantee and other guarantees by the banks, guarantees of banks operating in OECD countries, the guarantees of central governments and central banks of OECD countries, transfer or pledge of claims arise from public institutions, customer check, vehicle pledges, export documents, pledge of assets, hypothecs such as ship, aircraft and real estate and cash blockages.

In case of any significant credit risk exposure, the Participation Bank do not use forward, option or similar kind of contracts to reduce these risks by exercising their rights, fulfilling their obligations or selling them.

Indemnified non-cash loans are subject to the same risk weight with the unpaid cash loans although their maturity was due.

The risk of the Participation Bank from its top 100 and top 200 cash loan customers share in total cash loans ratios are 14.04% and 20.69% (31 December 2011: 16.3% and 23.45%).

The risk of the Participation Bank from its top 100 and top 200 non-cash loan customers share in total non-cash loan ratios are 29.96% and 40.32% (31 December 2011: 31.94% and 42.51%).

The cash receivables of the Bank from its top 100 and top 200 loan customers shares in total balance sheet assets are 10.34% and 15.23% (31 December 2011: 12.45% and 17.9%).

The non-cash receivables of the Participation Bank from its top 100 and top 200 loan customers shares in total non-cash loan ratios are 0.98% and 1.32% (31 December 2011: 1.45% and 1.92%).

The Participation Bank’s general provision amount for its credit risk is TL 139,804 (31 December 2011: TL 94,424).

Risk ClassificationsCurrent Period Risk

Amount*Average Risk

Amount**Contingent and Non-Contingent Claims on Sovereigns 3,302,463 2,558,513Contingent and Non-Contingent Claims on Regional Governments and Local Authorities 29 10,543Contingent and Non-Contingent Claims on Administrative Units and Non-commercial Enterprises 2,846 2,864Contingent and Non-Contingent Claims on Multilateral Development Banks - -Contingent and Non-Contingent Claims on International Organizations - -Contingent and Non-Contingent Claims on Banks and Capital Market Intermediary 528,686 777,599Contingent and Non-Contingent Claims on Corporate Receivables 6,743,530 6,986,403Contingent and Non-Contingent Claims Included in the Regulatory Retail Portfolios 3,254,676 2,801,097Contingent and Non-Contingent Claims Secured by Residential Property 5,029,603 4,715,343Past Due Loans 44,699 48,600Higher-Risk Categories Defined by Agency 63,884 44,265Collateralized Mortgage Marketable Securities - -Securitization Exposures - -Short-Term Claims on Banks and Corporate - -Undertakings for Collective Investments in Transferable Securities - -Other Claims 656,177 505,698

(*) Includes to risk amounts before credit risk mitigation but after credit conversions.(**) Average risk amounts are the arithmetical average of the amounts in monthly reports prepared starting from the date of publication of the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks” (28 June 2012) to the period end.

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Risk profile according to the geographical concentration

Risk Classifications*

Contingent and Non-Contingent

Claims on Sovereigns


Claims on Regional Governments and Local Authorities


Claims on Administrative Units and Non-commercial

Enterprises

Contingent and Non-Contingent Claims on Banks

and Capital Market Intermediary


Claims on Corporate

Receivables

Contingent and Non-Contingent Claims Included

in the Regulatory Retail Portfolios

Contingent and Non-Contingent Claims

Secured by Residential Property

Past Due Loans

Higher-Risk Categories Defined by

Agency Other Claims Total Current Period1 Domestic 3,302,463 29 2,846 309,858 6,700,169 3,252,651 5,021,518 44,699 49,081 650,665 19,333,9792 EU countries - - - 131,225 4,540 289 3,434 - - 938 140,4263 OECD countries ** - - - 2,513 839 1 283 - - - 3,6364 Off-shore banking regions - - - - 5,493 382 - - - - 5,8755 USA, Canada - - - 41,908 - 33 - - - 4,573 46,5146 Other countries - - - 43,182 32,489 1,320 4,368 - 14,803 1 96,163

7Investment and associates, subsidiaries and joint ventures - - - - - - - - - - -

8 Undistributed Assets / Liabilities*** - - - - - - - - - - -9 Total 3,302,463 29 2,846 528,686 6,743,530 3,254,676 5,029,603 44,699 63,884 656,177 19,626,593

* Risk classifications in the “Regulation on Measurement and Evaluation of Capital Adequacy of Banks” will be used. Includes to risk amounts before credit risk mitigation but after credit conversions.** OECD Countries other than EU countries, USA and Canada.*** Includes assets and liabilities items that can not be allocated on a consistent basis.

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Risk profile according to the geographical concentration



Claims on Sovereigns


Claims on Regional Governments and Local Authorities


Claims on Administrative Units and Non-commercial

Enterprises

Contingent and Non-Contingent Claims on Banks

and Capital Market Intermediary


Claims on Corporate

Receivables

Contingent and Non-Contingent Claims Included

in the Regulatory Retail Portfolios

Contingent and Non-Contingent Claims

Secured by Residential Property

Past Due Loans

Higher-Risk Categories Defined by

Agency Other Claims Total Current Period1 Domestic 3,302,463 29 2,846 309,858 6,700,169 3,252,651 5,021,518 44,699 49,081 650,665 19,333,9792 EU countries - - - 131,225 4,540 289 3,434 - - 938 140,4263 OECD countries ** - - - 2,513 839 1 283 - - - 3,6364 Off-shore banking regions - - - - 5,493 382 - - - - 5,8755 USA, Canada - - - 41,908 - 33 - - - 4,573 46,5146 Other countries - - - 43,182 32,489 1,320 4,368 - 14,803 1 96,163

7Investment and associates, subsidiaries and joint ventures - - - - - - - - - - -

8 Undistributed Assets / Liabilities*** - - - - - - - - - - -9 Total 3,302,463 29 2,846 528,686 6,743,530 3,254,676 5,029,603 44,699 63,884 656,177 19,626,593

* Risk classifications in the “Regulation on Measurement and Evaluation of Capital Adequacy of Banks” will be used. Includes to risk amounts before credit risk mitigation but after credit conversions.** OECD Countries other than EU countries, USA and Canada.*** Includes assets and liabilities items that can not be allocated on a consistent basis.

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Risk profile by sectors or counterparties

Risk Classifications* Sectors/Counterparties 1 2 3 4 5 6 7 8 9 10 TC FC Total1 Agriculture - - - - 128,139 54,538 50,637 3,151 231 12 217,776 18,932 236,7081,1 Farming and Stockbreeding - - - - 128,139 54,538 50,637 3,151 231 12 217,776 18,932 236,7081,2 Forestry - - - - - - - - - - - - -1,3 Fishery - - - - - - - - - - - - -2 Manufacturing - 6 2,846 - 2,575,028 710,402 572,667 13,437 22,042 305 2,710,772 1,185,961 3,896,7332,1 Mining - 6 14 - 172,123 25,304 22,302 140 59 17 178,380 41,585 219,9652,2 Production - - 1,425 - 2,065,598 668,783 520,866 12,045 21,485 276 2,310,063 980,415 3,290,4782,3 Electricity, Gas, Water - - 1,407 - 337,307 16,315 29,499 1,252 498 12 222,329 163,961 386,2903 Construction - - - - 1,057,069 498,763 785,086 10,206 4,675 216 2,099,756 256,259 2,356,0154 Services 3,302,463 8 - 528,686 2,714,678 1,323,466 1,242,578 14,099 7,316 672 5,480,561 3,653,405 9,133,9664,1 Wholesale and Retail Trade - - - - 1,764,269 1,057,683 839,177 12,023 5,181 225 3,286,808 391,750 3,678,5584,2 Hotel, Food and Beverage Services - - - - 174,936 17,415 107,943 172 52 4 99,088 201,434 300,5224,3 Transportation and Telecommunication - - - - 291,857 81,195 84,945 1,407 1,822 71 381,580 79,717 461,2974,4 Financial Institutions 3,302,463 - - 528,686 43,034 4,415 2,709 8 77 326 992,787 2,888,931 3,881,7184,5 Real Estate and Renting Services - 8 - - 343,357 112,954 137,214 386 170 16 506,825 87,280 594,1054,6 “Self-Employment” Type Services - - - - - - - - - - - - -4,7 Educational Services - - - - 21,819 14,999 37,320 - - 2 74,140 - 74,1404,8 Health and Social Services - - - - 75,406 34,805 33,270 103 14 28 139,333 4,293 143,6265 Other - 15 - - 268,616 667,507 2,378,635 3,806 29,620 654,972 3,829,437 173,734 4,003,1716 Total 3,302,463 29 2,846 528,686 6,743,530 3,254,676 5,029,603 44,699 63,884 656,177 14,338,302 5,288,291 19,626,593

1-Contingent and Non-Contingent Claims on Sovereigns

2-Contingent and Non-Contingent Claims on Regional Governments and Local Authorities

3-Contingent and Non-Contingent Claims on Administrative Units and Non-commercial Enterprises

4-Contingent and Non-Contingent Claims on Banks and Capital Market Intermediary

5-Contingent and Non-Contingent Claims on Corporate Receivables

6-Contingent and Non-Contingent Claims Included in the Regulatory Retail Portfolios

7-Contingent and Non-Contingent Claims Secured by Residential Property

8-Past Due Loans

9-Higher-Risk Categories Defined by Agency

10-Other Claims

* Risk classifications in the “Regulation on Measurement and Evaluation of Capital Adequacy of Banks” will be used. Includes to risk amounts before credit risk mitigation but after credit conversions.

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Risk profile by sectors or counterparties

Risk Classifications* Sectors/Counterparties 1 2 3 4 5 6 7 8 9 10 TC FC Total1 Agriculture - - - - 128,139 54,538 50,637 3,151 231 12 217,776 18,932 236,7081,1 Farming and Stockbreeding - - - - 128,139 54,538 50,637 3,151 231 12 217,776 18,932 236,7081,2 Forestry - - - - - - - - - - - - -1,3 Fishery - - - - - - - - - - - - -2 Manufacturing - 6 2,846 - 2,575,028 710,402 572,667 13,437 22,042 305 2,710,772 1,185,961 3,896,7332,1 Mining - 6 14 - 172,123 25,304 22,302 140 59 17 178,380 41,585 219,9652,2 Production - - 1,425 - 2,065,598 668,783 520,866 12,045 21,485 276 2,310,063 980,415 3,290,4782,3 Electricity, Gas, Water - - 1,407 - 337,307 16,315 29,499 1,252 498 12 222,329 163,961 386,2903 Construction - - - - 1,057,069 498,763 785,086 10,206 4,675 216 2,099,756 256,259 2,356,0154 Services 3,302,463 8 - 528,686 2,714,678 1,323,466 1,242,578 14,099 7,316 672 5,480,561 3,653,405 9,133,9664,1 Wholesale and Retail Trade - - - - 1,764,269 1,057,683 839,177 12,023 5,181 225 3,286,808 391,750 3,678,5584,2 Hotel, Food and Beverage Services - - - - 174,936 17,415 107,943 172 52 4 99,088 201,434 300,5224,3 Transportation and Telecommunication - - - - 291,857 81,195 84,945 1,407 1,822 71 381,580 79,717 461,2974,4 Financial Institutions 3,302,463 - - 528,686 43,034 4,415 2,709 8 77 326 992,787 2,888,931 3,881,7184,5 Real Estate and Renting Services - 8 - - 343,357 112,954 137,214 386 170 16 506,825 87,280 594,1054,6 “Self-Employment” Type Services - - - - - - - - - - - - -4,7 Educational Services - - - - 21,819 14,999 37,320 - - 2 74,140 - 74,1404,8 Health and Social Services - - - - 75,406 34,805 33,270 103 14 28 139,333 4,293 143,6265 Other - 15 - - 268,616 667,507 2,378,635 3,806 29,620 654,972 3,829,437 173,734 4,003,1716 Total 3,302,463 29 2,846 528,686 6,743,530 3,254,676 5,029,603 44,699 63,884 656,177 14,338,302 5,288,291 19,626,593

1-Contingent and Non-Contingent Claims on Sovereigns

2-Contingent and Non-Contingent Claims on Regional Governments and Local Authorities

3-Contingent and Non-Contingent Claims on Administrative Units and Non-commercial Enterprises

4-Contingent and Non-Contingent Claims on Banks and Capital Market Intermediary

5-Contingent and Non-Contingent Claims on Corporate Receivables

6-Contingent and Non-Contingent Claims Included in the Regulatory Retail Portfolios

7-Contingent and Non-Contingent Claims Secured by Residential Property

8-Past Due Loans

9-Higher-Risk Categories Defined by Agency

10-Other Claims

* Risk classifications in the “Regulation on Measurement and Evaluation of Capital Adequacy of Banks” will be used. Includes to risk amounts before credit risk mitigation but after credit conversions.

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Analysis of maturity-bearing exposures according to remaining maturities


Term To Maturity Up to 1 Month

1-3 Months

3-6 Months

6-12 Months

Over 1 Year

1 Contingent and Non-Contingent Claims on Sovereigns 1,636,253 255,047 409,947 - -

2Contingent and Non-Contingent Claims on Regional Governments and Local Authorities - - - - 8

3Contingent and Non-Contingent Claims on Administrative Units and Non-commercial Enterprises 2,466 - - - 374

4Contingent and Non-Contingent Claims on Banks and Capital Market Intermediary 12,507 4 - 53 18,838

5 Contingent and Non-Contingent Claims on Corporate Receivables 662,414 760,881 1,022,941 1,381,082 2,891,935

6Contingent and Non-Contingent Claims Included in the Regulatory Retail Portfolios 338,746 421,102 536,397 693,933 1,086,153

7Contingent and Non-Contingent Claims Secured by Residential Property 101,557 165,391 316,177 681,015 3,746,003

8 Past Due Loans 44,699 - - - -9 Higher-Risk Categories Defined by Agency 21,203 - - 8,414 34,263

10 Other Claims 1,169 - - - - TOTAL 2,821,014 1,602,425 2,285,462 2,764,497 7,777,574

* Includes to risk amounts before credit risk mitigation but after credit conversions.

Risk balances according to risk weights

Risk Weights 0% 10% 20% 50% 75% 100% 150% 200% 1250%

Deductions from the

shareholders’ equity

1 Pre-Amount of Credit Risk Mitigation 2,604,203 - 296,406 4,033,547 4,056,374 8,572,179 48,248 15,636 - -

2 Amount after Credit Risk Mitigation 2,804,383 - 381,343 6,052,483 3,137,018 7,200,464 37,562 13,340 - -

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Information by Major Sectors and Type of Counterparties:

Impaired Credits; are the credits that either overdue more than 90 days as of the reporting date or are treated as impaired due to their creditworthiness. For such credits, “specific provisions” are allocated as per the Provisioning Regulation.

Past Due Credits; are the credits that overdue up to 90 days but not impaired. For such credits, “general provisions” are allocated as per the Provisioning Regulation.

Major Sectors/Counterparties

Credits Impaired

CreditsPast Due

CreditsValue

Adjustments Provisions

1 Agriculture 8,739 4,634 2,597 4,4321,1 Farming and Stockbreeding 8,739 4,634 2,597 4,4321,2 Forestry - - - -1,3 Fishery - - - -2 Manufacturing 112,897 67,458 35,210 77,7252,1 Mining 3,049 1,228 2,048 2,6552,2 Production 104,712 65,187 30,902 72,6842,3 Electricity, Gas, Water 5,136 1,043 2,260 2,3863 Construction 65,128 65,429 17,550 48,0764 Services 127,623 132,459 53,315 95,2844,1 Wholesale and Retail Trade 108,275 69,422 38,408 79,1834,2 Hotel, Food and Beverage Services 1,261 5,565 2,124 9134,3 Transportation and Telecommunication 6,321 44,808 4,609 4,5904,4 Financial Institutions 178 - 2,251 744,5 Real Estate and Renting Services 10,844 4,939 4,014 9,9764,6 “Self-Employment” Type Services - - - -4,7 Educational Services 60 1,999 702 604,8 Health and Social Services 684 5,726 1,207 4885 Other 43,872 54,165 31,132 36,0316 Total 358,259 324,145 139,804 261,548

Information About Value Adjustments and Changes in the Loan Impairment:

The opening

balance

Provision amounts set aside during

the period

The cancelation

of the provisions**

Other adjustments*

Close out balance

1 Specific Provisions 169,854 156,620 (63,179) (1,747) 261,5482 General Provisions 94,424 46,856 (979) (497) 139,804

* Determined according to exchange rate differences. ** The amount of TL 63,179 of the cancelation of the provisions include write off amounting to TL 35,184.

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The credit quality of financial assets as of 31 December 2012 is as follows:

Neither overdue nor impaired

Overdue and impaired Total

Banks 497,028 - 497,028Financial assets at fair value through profit and loss 14,273 - 14,273Financial asset available for sale 664,994 - 664,994Loans* 12,971,058 358,259 13,329,317

Corporate loans 4,049,434 168,809 4,218,243Loans to SMEs 6,522,522 169,004 6,691,526Consumer loans 2,399,102 20,446 2,419,548Other - - -

Total 14,147,353 358,259 14,505,612

* Leasing receivables are also included in loans.

The credit quality of financial assets as of 31 December 2011 is as follows:

Neither overdue nor impaired

Overdue and impaired Total

Banks 268,400 - 268,400Financial assets at fair value through profit and loss 23,667 - 23,667Financial asset available for sale 620,742 - 620,742Loans* 10,121,764 450,965 10,572,729

Corporate loans 4,603,644 177,636 4,781,280Loans to SMEs 4,041,930 230,222 4,272,152Consumer loans 1,476,190 43,107 1,519,297Other - - -

Total 11,034,573 450,965 11,485,538

* Leasing receivables are also included in loans.

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Information on Risk Classifications

Risk classifications of receivables from countries or central banks are regarded by grade of Fitch Ratings, global credit rating institution, whereas other institutions remaining outside of Fitch Ratings are subject to the credit ratings country risk classification issued by Organization of Economic Corporation and Development. In case credit rating grades of institutions like Standart&Poor’s (S&P), Moody’s and Fitch Ratings are available, grades are in use together. Corporate receivables from counterparties are settled abroad with other risk classes, corporate receivables from residents and receivables from banks are accepted as ‘’gradeless’’. Credit quality grades corresponding to score of Fitch Ratings, Moody’s and Standart&Poor’s are shown below.

Ratings to be matched Credit Quality Grade Fitch Moody’s S&P

Long term credit ratings

1 AAA to AA- Aaa to Aa3 AAA to AA-2 A+ to A- A1 to A3 A+ to A-3 BBB+ to BBB- Baa1 to Baa3 BBB+ to BBB-4 BB+ to BB- Ba1 to Ba3 BB+ to BB-5 B+ to B- B1 to B3 B+ to B-6 CCC+ and below Caa1 and below CCC+ and below

Short term credit ratings

1 F1+ to Fİ P-1 A-1+ to A-12 F2 P-2 A-23 F3 P-3 A-34 below F3 NP below A-35 — — —6 — — —

Long term securitization positions ratings

1 AAA to AA- Aaa to Aa3 AAA to AA-2 A+ to A- A1 to A3 A+ to A-3 BBB+ to BBB- Baa1 to Baa3 BBB+ to BBB-4 BB+ to BB- Ba1 to Ba3 BB+ to BB-5 B+ and below B1 and below B+ and below

Short term securitization positions ratings

1 F1+ to F1 P-1 A-1+ to A-12 F2 P-2 A-23 F3 P-3 A-3

Others below F3 NP below A-3

Match for collective investment undertakings

1 AAA to AA- Aaa to Aa3FCQR: AAAf to AA-f; PSFR:

AAAm to AA-m

2 A+ to A- A1 to A3FCQR: A+f to A-f; PSFR: A+m

to A-m

3 BBB+ to BBB- Baa1 to Baa3FCQR: BBB+f to BBB-f; PSFR:

BBB+m to BBB-m

4 BB+ to BB- Ba1 to Ba3FCQR:BB+f to BB-f; PSFR:

BB+m to BB-m

5 B+ to B- B1 to B3FCQR: B+f to B-f; PSFR: B+m

to B-m

6 CCC+ and below Caa1 and belowFCQR: CCC+f and below; PSFR:

CCC+m and below

FCQR: Fund Credit Quality Ratings.PSFR: Principal Stability Fund Ratings.

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Credit Rating System

The credit risk is assessed through the internal rating system of the Participation Bank. Credits listed from the best ratings (high) to the lowest degrees (below standard) presented below; also in the bottom of the table, non-performing loans (impaired loans) is presented.

Current period**Historical Default

Rates % Total* High 0.18% 379,739Standard 0.45% 7,994,584Below Standard 0.57% 8,475,149Non-performing Loans - 358,259Not Graded 6.10% 3,230,283Total 20,438,014

*The amounts comprise of loans, leasing receivables and commitments and contingencies.**Default ratios are the rate of non-performing loans (impaired loans) in 2012 to loans given in 2012.

The category “High” means that the borrower has a strong financial structure; the category “Standard” means that the borrower has a good and sufficient financial structure, and the category “Below Standard” means that the borrower’s financial structure is under risk in the medium and short term.

Carrying values of rescheduled financial assets:

Current Period Prior PeriodBanks - -Financial assets at fair value through profit and loss - -Loans 54,302 115,530

Corporate loans 25,922 67,960Loans to SMEs 28,232 46,599Consumer loans 148 971Other - -

Total 54,302 115,530

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III. Explanations and Disclosures Related to Market Risk

The amount subject to market risk is calculated and reported with the Standard Method described in Article 2 of Section 2 of the Communiqué on “Measurement and Assessment of Banks’ Capital Adequacy” published in the Official Gazette No: 28337 dated 28 June 2012. Market risk is measured on a monthly basis.

1.1. Information on the market risk

Amount(I) Capital requirement to be employed for general market risk - Standard method 249(II) Capital requirement to be employed for specific risk - Standard method -(III) Standard method for specific risk of necessary capital requirement on securitization positions -(IV) Capital requirement to be employed for currency risk - Standard method 17,246(V) Capital requirement to be employed for commodity risk - Standard method 1,806(VI) Capital requirement to be employed for settlement risk - Standard method -(VII) Total capital requirement to be employed for market risk resulting from options–Standard method -(VIII) Counterparty credit risk capital requirement - Standard method 665(IX) Total capital requirement to be employed for market risk in banks using risk measurement model -(X) Total capital requirement to be employed for market risk (I+II+III+IV+V+VI+VII+VIII) 19,966(XI) Market Value at Risk (12,5 x IX) or (12,5 x X) 249,570

1.2. Monthly average values at market risk

Current Period Prior Period Average Highest Lowest Average Highest Lowest

Interest Rate Risk 512 840 249 1,810 2,565 485Common Share Risk 2 18 - - - -Currency Risk 4,956 17,246 1,124 2,419 3,225 1,322Stock Risk 1,513 1,999 1,084 - - -Exchange Risk - - - - - -Option Risk - - - - - -Counterparty Credit Risk 1,319 2,492 665 - - -

Total Value at Risk 95,525 249,570 43,763 52,865 66,050 34,750

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2. Quantitative information on counterparty risk

The Methods Related Credit Limits, Internal Capital Allocation and Distribution for Counterparty Risk

Credibility measure, limit allocation, the authorities and responsibilities of the users involved in the processes for transactions subjected to counterparty risk were determined in the bank’s internal policies.

Within the scope of counterparty risk, the creditworthiness of customers are evaluated according to their ability in compliance with international and national legislations, the ratings taken from independent rating agencies, their operations, geographical regions and countries, the legislation, economic and social status of the region and countries as well as the customers financial information.

Collaterals for transactions with customers related the counterparty credit risks, when necessary providing additional collaterals and also provision policies are assessed in the scope of the Participation Bank’s credit policies.

The bank does not have a policy for opposite tendency risk mentioned in the Regulation on Measurement And Evaluation of Capital Adequacy of Banks Annex 2.

Positive fair value of agreements, benefits of netting off, netted current risk amount, indemnities and net derivative position

Information About Counterparty Risk BalanceContracts based on Interest rate -Contracts based on currency 1,509,579Contracts based on commodity -Contracts based on stocks -Other -Gross Positive Fair Value 14,431Benefits of clarification -Clarified current risk amount 14,431The securities which are held 9,322The net position of derivatives 29,527

The amount of credit risk calculated by the method set out in sections 3 to 5th of the Regulation on Measurement And Evaluation Of Capital Adequacy of Banks Annex-2

The counterparty risk of trading books for derivative financial instruments is calculated by fair use valuation method within the framework of Regulation on Measurement and Evaluation of Capital Adequacy of Banks in Annex-2. The renewal costs of contracts with positive values are determined by valuation based on the fair value of the contracts. Potential credit risk is calculated by multiplying credit conversion rates with contract amounts mentioned in the Regulation Annex-2. Total amount of counterparty risk is calculated by summing of the renewal costs of contracts with positive values and the potential credit risk of all contracts.

The Valuation Method According to the Fair Value BalanceAmount of contracts based on currency 1,509,579Factor used for contracts based on currencies and gold (Up to one year) 1%Amount of contracts*Factor 15,096Replacement cost 14,431Amount of counterparty risk (Thousands of TL) 29,527

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Amount of credit derivatives protection and distribution of current credit risk based on risk classifications

The credit derivatives instruments does not exist. Distribution of current risk and total counterparty risk based on risk classifications are shown below.

Risk Classifications Amount of Current RiskAmount of

Counterparty RiskContingent and Non-Contingent Claims on Banks and Capital Market Intermediary 5,666 15,973Contingent and Non-Contingent Claims on Corporate Receivables 1,804 4,224Contingent and Non-Contingent Claims Included in the Regulatory Retail Portfolios 6,961 9,330TOTAL 14,431 29,527

The credit derivatives instruments does not exist in the bank and the allowance for using risk model and “α” value estimation mentioned in the Regulation on Measurement and Evaluation of Capital Adequacy of Banks Annex 2 was not taken from BRSA.

IV. Explanations and disclosures related to operational risk

The value at operational risk is calculated according to the basic indicator approach as per the Section 3 of “Regulation regarding Measurement and Assessment of Capital Adequacy Ratios of Banks” published in Official Gazette no. 26333 dated 1 November 2006. The value at operational risk used in the calculation of Capital Adequacy Standard Ratio is computed with the data dated 31 December 2011, 31 December 2010 and 31 December 2009.

2 PP value (2009)

1 PP value (2010)

CP value (2011)

Total/ No. of Years of

Positive Gross Rate (%) TotalGross Income 672,099 634,453 758,123 688,225 15 103,234Amount subject to operational risk

(Total*12,5) 1,290,422

V. Explanations and Disclosures Related to Currency Risk

Currency risk is included in foreign currency buying/selling portfolio so that how available position affects the general risk profile is calculated. Sensitivity analysis made by RMD results and stress tests are reported to top management.

The Participation Bank does not have any derivative instruments held for risk management as of 31 December 2012.

The Participation Bank centralized currency risk and ensured the managing and bearing of all currency risk by Fund Management. Other profit centers transfers the currency risk on them to Fund Management and the risk is followed in foreign currency buying/selling portfolio.

The Participation Bank efforts not to take short position based on the foreign currency risk. When any currency risk is occurred due to customer transactions, currency risk is eliminated by taking reverse position.

Foreign exchange buying rates of the Participation Bank at the date of the balance sheet and for the previous five working days are in the following table:

EUR USD JPY (100)Buying Rate at Balance Sheet Date 2.3517 1.7826 2.0656December 31, 2012 2.3517 1.7826 2.0656December 28, 2012 2.3657 1.7829 2.0750December 27, 2012 2.3566 1.7848 2.0866December 26, 2012 2.3586 1.7877 2.1049December 25, 2012 2.3651 1.7893 2.1151December 24, 2012 2.3605 1.7869 2.1209

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The Participation Bank’s average foreign currency buying rate over a period of thirty days preceding the date of the financial statement is in the table below:

1 USD 1.7791 TL1 EUR 2.3332 TL

Information on currency risk of the Participation Bank: Foreign Currencies (Thousand of TL)

EUR USD Other FC TotalCurrent PeriodAssets

Cash and Balances with the Central Bank of Turkey 421,012 1,549,113 374,377 2,344,502Banks 89,056 210,387 91,037 390,480Financial Assets at Fair Value through Profit/Loss (****) - - - -Money Market Placements - - - -Financial Assets Available for Sale 121 198,209 - 198,330Loans (*) 1,031,003 2,868,015 - 3,899,018Investment in Associates, Subsidiaries and Jointly Controlled

Entities (Joint Ventures) - - - -Investments Held to Maturity - - - -Derivative Financial Assets Held for Risk Management - - - -Tangible Assets - - - -Intangible Assets - - - -Other Assets (**) 128,995 100,153 5,747 234,895

Total Assets 1,670,187 4,925,877 471,161 7,067,225 Liabilities

Funds Collected from Banks Via Current and Profit Sharing Accounts 5,163 57,047 141 62,351

Current and Profit Sharing Accounts 1,088,088 2,318,244 516,081 3,922,413Money Market Deposits - - - -Funds Provided from Other Financial Institutions 242,075 2,261,868 - 2,503,943Marketable Securities Issued - - - -Miscellaneous Payables 16,557 39,396 - 55,953Derivative Financial Liabilities Held for Risk Management - - - -Other Liabilities (***) 21,305 45,155 105 66,565

Total Liabilities 1,373,188 4,721,710 516,327 6,611,225 Net Balance Sheet Position 296,999 204,167 (45,166) 456,000Net Off Balance Sheet Position (299,330) (226,196) 63,065 (462,461)

Financial Derivative Assets 275,339 595,969 123,781 995,089Financial Derivative Liabilities 574,669 822,165 60,716 1,457,550Non-Cash Loans (*****) 917,456 1,970,960 40,387 2,928,803

119



EUR USD Other FC TotalPrior Period Total Assets 1,250,889 3,434,790 541,469 5,227,148Total Liabilities 1,340,012 3,055,251 529,293 4,924,556

Net Balance Sheet Position (89,123) 379,539 12,176 302,592Net Off Balance Sheet Position 88,214 (388,551) (2,109) (302,446)

Financial Derivative Assets 270,454 534,183 23,211 827,848Financial Derivative Liabilities 182,240 922,734 25,320 1,130,294Non-Cash Loans (*****) 879,268 1,985,571 17,789 2,882,628

(*) Loans given includes foreign currency indexed loans (principle, exchange rate differences, rediscounts and accruals) given as foreign currency indexed but followed in TL accounts amounting to TL 3,210,389.(**) Other assets comprise of receivables from leasing operations, sundry debtors and other assets. Besides, foreign currency indexed leasing receivables (Principle, exchange rate differences, rediscount and accruals) amounting to TL 210,341 and foreign currency indexed closely monitored loans amounting to TL 6,588 are included to other assets.(***) Other liabilities include general loan loss provision set for foreign currency denominated and foreign currency indexed loans amounting to TL 15,529. Accrual of derivative financial liabilities held for trading amounting to TL 2,426 is deducted from other liabilities. Besides, securities value increase fund amounting to TL 15 is added into other liabilities.(****) Accrual of derivative financial assets held for trading amounting to TL 7,797 is deducted from financial assets at fair value through profit or loss.(*****) No effect on net off balance sheet position.

Foreign currency sensitivity

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

The following table details the Participation Bank’s sensitivity to a 10% change in the TL against USD and EUR. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. A positive number indicates an increase in profit or loss and other equity in the case of TL strengthens 10% against USD and EUR. This analysis has been prepared with the assumption that all other variables remain constant.

Change in currency rate in %* Effect on profit / (loss) Effect on equity Current Period Prior Period Current Period Prior PeriodUSD 10% (2,203) (901) (2,203) (901)EUR 10% (233) (91) (233) (91)Other FC 10% 1,790 1,007 1,790 1,007

(*) Includes the profit / (loss) effect in the case of a change for 10% in currency rates.

VI. Explanations and disclosures related to interest rate risk

Since the Participation Bank has interest-free banking operations, it does not have any interest sensitive asset or liability and consequently, it does not have any interest rate risk.

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VII. Explanations and Disclosures Related to Share Risk due from Banking Book

Comparison of carrying, fair value and market value of shares is stated below:

Investment in SharesComparison

Carrying Value Fair Value Market Value1 Securities Available-for-Sale 121 - - Quoted Securities - - -2 Associates 4,211 - - Quoted Securities - - -

VIII. Explanations and Disclosures Related to Liquidity Risk

The TL and FC liquidity need of the Participation Bank is met by the funds collected, when needed, certain amount of funds from abroad are used via syndication loans. The Participation Bank’s cash inflows mainly come from profit share income and commissions earned from non-cash loans whereas the cash outflows mainly consist of profit share expenses given to the collected funds and operational expenses. Main reason of the liquidity risk is funding long-term assets with short-term resources. The Participation Bank uses its liquidity in foreign investments for one or two weeks in order to maintain regular cash inflows and collects loan installments monthly. Procedures for liquidity risk method and urgent action plan are available for the Participation Bank.

The ratios of liquid assets to total assets and liquid assets to funds collected are 22.68% (31 December 2011: 20.92%) and 34.95% (31 December 2011: 29.77%) respectively. Cash demands occurred in every maturity segment are determined via maturity dispersion (Gap) analysis. It is enforced to have short term liquid assets and long term liabilities. As of 31 December 2012 it is seen that 16% of total assets are in cash and cash equivalents (31 December 2011: 14.18%) and 2.82% of total assets are in banks (31 December 2011: 1.97%) in financial statements.

Condensation of funds collected to one month predominantly and having long term loans perceived as a threat as in the general conditions of Turkish banking system. In order to decrease related risk to minimum, the Participation Bank enforces to be liquid in up to one month group.

As per the BRSA Communiqué, “Measurement and Assessment of the Adequacy of Banks’ Liquidity”, the weekly (7 days) and monthly (31 days) liquidity ratios on a bank-only basis for foreign currency assets/liabilities and total assets/liabilities should be minimum 80% and 100%, respectively. The liquidity ratios of the years 2012 are as follows:

Current Period First Maturity Bracket (Weekly) Second Maturity Bracket (Monthly) FC FC + TL FC FC + TLAverage (%) 196.26 163.13 147.49 127.90Maximum (%) 256.65 192.22 188.22 153.96Minimum (%) 134.69 124.31 100.13 103.45

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Presentation of assets and liabilities according to their remaining maturities

DemandUp to 1 Month 1-3 Months 3-12 Months 1-5 Years

5 Years and over Unallocated* Total

Current Period

Assets

Cash and Balances with the Central Bank of Turkey 2,818,168 - - - - - - 2,818,168

Banks and Other Financial Institutions 497,028 - - - - - - 497,028

Financial Assets at Fair Value through Profit/Loss - 11,139 1,480 1,654 - - - 14,273

Money Market Placements - - - - - - - -

Financial Assets Available for Sale 121 - 56,838 - 409,947 198,209 - 665,115

Loans - 1,784,551 2,220,102 4,733,699 3,650,394 277,943 - 12,666,689

Investments Held to Maturity - - - - - - - -

Other Assets** 311,510 8,468 17,275 75,394 203,215 17 339,352 955,231

Total Assets 3,626,827 1,804,158 2,295,695 4,810,747 4,263,556 476,169 339,352 17,616,504

Liabilities

Funds Collected from Banks via Current and Profit Sharing Accounts 3,978 58,091 182,507 121,112 - - - 365,688

Current and Profit Sharing Accounts 2,523,831 4,911,037 1,512,399 2,017,996 98,585 - - 11,063,848

Funds Provided from Other Financial Institutions - 67,769 267,456 1,063,657 1,105,061 - - 2,503,943

Money Market Deposits - - - - - - - -

Marketable Securities Issued - - - - - - - -

Miscellaneous Payables 492,853 85,887 - - - - - 578,740

Other Liabilities*** 673,097 26,658 23,826 955 - - 2,379,749 3,104,285

Total Liabilities 3,693,759 5,149,442 1,986,188 3,203,720 1,203,646 - 2,379,749 17,616,504

Liquidity Gap (66,932) (3,345,284) 309,507 1,607,027 3,059,910 476,169 (2,040,397) -

Prior Period - - - - - - - -

Total Assets 2,327,711 1,245,947 2,337,474 4,242,887 3,033,947 111,386 229,001 13,528,353

Total Liabilities 2,879,093 4,951,691 1,499,011 2,047,227 291,029 42,896 1,817,406 13,528,353

Liquidity Gap (551,382) (3,705,744) 838,463 2,195,660 2,742,918 68,490 (1,588,405) -

(*)Certain assets in the balance sheet that are necessary for the banking operations but cannot be readily convertible into cash in the near future such as tangible assets, investments in associates and subsidiaries, stationary supplies, prepaid expenses and non-performing loans are included in this column.(**)Other assets include net finance lease receivables amounting to TL 304,369 and non-performing loans (net) amounting to TL 96,711.(***)Shareholders’ equity and provisions is included in “other liabilities” line under “unallocated” column.

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Analysis of financial liabilities based on the remaining contractual maturities:

The table below is drawn up based on the undiscounted contractual maturities and earliest payment dates of the financial liabilities. Profit share expenses to be paid on such liabilities are included in this table. “Adjustments” column is the difference between the balance sheet values and undiscounted values of financial liabilities. These items are not included in the balance sheet value of such financial liabilities.

Current Period DemandUp to 1 Month 1-3 Months

3-12 Months 1-5 Years

5 Years and Over Adjustments Total

Funds Collected from Banks Via Profit Sharing Accounts 3,978 58,091 182,507 121,112 - - - 365,688Other Profit Sharing Accounts 2,523,831 4,911,037 1,512,399 2,017,996 98,585 - - 11,063,848Funds Provided from Other Financial Institutions - 67,805 284,200 1,092,091 1,189,281 - (129,434) 2,503,943Miscellaneous Payables 492,853 85,887 - - - - - 578,740Other Liabilities 302,050 - - - - - - 302,050 Total 3,322,712 5,122,820 1,979,106 3,231,199 1,287,866 - (129,434) 14,814,269

Prior Period DemandUp to 1 Month 1-3 Months


5 Years and Over Adjustments Total

Funds Collected from Banks Via Profit Sharing Accounts 8,885 4,806 13 - - - - 13,704Other Profit Sharing Accounts 2,329,671 4,774,084 830,339 1,561,367 - - - 9,495,461Funds Provided from Other Financial Institutions - 58,762 643,000 496,278 321,716 44,130 (51,930) 1,511,956Miscellaneous Payables 251,136 83,990 - - - - - 335,126Other Liabilities 125,491 - - - - - - 125,491 Total 2,715,183 4,921,642 1,473,352 2,057,645 321,716 44,130 (51,930) 11,481,738

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Maturity analysis of conditioned liabilities and commitments is as follows:

Current Period DemandUp to 1 Month 1-3 Months


5 Years and Over Total

Guarantees and Collaterals 2,273,619 1,049,468 705,206 1,878,163 1,082,494 119,747 7,108,697Irrevocable Commitments 1,529,682 302,455 29,152 1,253 1,030 1 1,863,573

Forward asset purchase and sale commitments - 301,633 - - - - 301,633

Share capital commitments to associates and subsidiaries - - - - - - -

Commitments for cheque payments 1,066,949 - - - - - 1,066,949

Tax and fund obligations on export commitments - 188 504 1,253 1,030 1 2,976

Commitments for credit card limits 461,707 - - - - - 461,707

Commitments for credit cards and banking services promotions 1,026 - - - - - 1,026

Other irrevocable commitments - 634 28,648 - - - 29,282Revocable Commitments 23,208,485 - - - - - 23,208,485

Revocable loan allocation commitments 23,208,485 - - - - - 23,208,485Forward foreign currency buy/sell transactions - 2,650,740 265,932 221,246 - - 3,137,918

Forward foreign currency transactions-buy - 1,296,164 102,399 111,016 - - 1,509,579

Forward foreign currency transactions-sell - 1,287,935 163,533 110,230 - - 1,561,698

Other forward foreign currency buy/sell transactions - 66,641 - - - - 66,641Total 27,011,786 4,002,663 1,000,290 2,100,662 1,083,524 119,748 35,318,673

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Prior Period DemandUp to 1 Month 1-3 Months


5 Years and Over Total

Guarantees and Collaterals 2,575,581 558,739 659,580 1,671,784 960,234 112,621 6,538,539Irrevocable Commitments 1,388,614 276,735 - - 2,889 1 1,668,239

Forward asset purchase and sale commitments - 276,709 - - - - 276,709

Share capital commitments to associates and subsidiaries 1,000 - - - - - 1,000

Commitments for cheque payments 858,328 - - - - - 858,328

Tax and fund obligations on export commitments - 26 - - 2,889 1 2,916

Commitments for credit card limits 528,378 - - - - - 528,378

Commitments for credit cards and banking services promotions 908 - - - - - 908

Other irrevocable commitments - - - - - - -Revocable Commitments - - - - - - -

Revocable loan allocation commitments - - - - - - -Forward foreign currency buy/sell transactions - 2,151,413 460,841 386,791 - - 2,999,045

Forward foreign currency transactions-buy - 1,077,521 231,081 192,933 - - 1,501,535

Forward foreign currency transactions-sell - 1,073,892 229,760 193,858 - - 1,497,510Total 3,964,195 2,986,887 1,120,421 2,058,575 963,123 112,622 11,205,823

IX. Explanations and Disclosures Related to Securitization Position

The Participation bank has not securitization position.

X. Explanations and Disclosures Related to Credit Risk Mitigation Techniques

The Participation Bank applies credit risk mitigation according to simple method that includes risk mitigation calculations considering the volatility-adjusted values of financial colleterals in compliance with the article 33 of the “Regulation on Credit Risk Mitigation Techniques”.

The risk mitigators that are used in credit process are stated below:

• Financial Colleterals(Cash or equivalent and high quality credit level had debt instruments) • Guarantees • Mortgage (In the implementation of the Basel II, although, risk mortgage loans evaluated as a class, in terms of valuation methods and

concentrations they are also given in this section).

The value of mortgage is being revalued during the credit period. Only Treasury and the Banks’ guarantees are taken into account as risk mitigaton within the framework of BRSA regulations. Besides, the credibility of Participation Banks is reviewed periodically.

There is no on-balance sheet netting and special netting agreement.

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Risk Classifications Amount(*)Financial

Other/Physical

Guarantees and credit derivativesCollaterals Collaterals

Contingent and Non-Contingent Claims on Sovereigns 3,302,463 - - -Contingent and Non-Contingent Claims on Regional Governments and

Local Authorities 122 - - -Contingent and Non-Contingent Claims on Administrative Units and

Non-Commercial Enterprises 5,710 - - -Contingent and Non-Contingent Claims on Multilateral Development

Banks - - - -Contingent and Non-Contingent Claims on International

Organizations - - - -Contingent and Non-Contingent Claims on Banks and Capital Market

Intermediary 829,264 - - -Contingent and Non-Contingent Claims on Corporate Receivables 8,676,094 188,781 - 243Contingent and Non-Contingent Claims Included in the Regulatory

Retail Portfolios 5,198,331 157,071 - 3,396Contingent and Non-Contingent Claims Secured by Residential

Property 5,430,174 25,233 - -Past Due Loans 44,699 14 - -Higher-Risk Categories Defined by Agency 69,426 397 - -Collateralized Mortgage Marketable Securities - - - -Securitization Exposures - - - -Short-Term Claims on Banks and Corporate - - - -Undertakings for Collective Investments in Transferable Securities - - - -Other Claims 656,177 68 - 1

(*) Includes total risk amounts before the effect of credit risk mitigation but after credit conversions..

XI. Explanations and Disclosures Related to Risk Management Target and Policies

The risk measurement, description and following activities are being carried out by the Risk Management Department which reports to Audit Committee directly.

Risk Management Department consists of Risk Reporting, Credit Policy and Risk Analysis Management.

The structure of personal based allocation authority has been established since the beginning of 2012 in parallel with the commercial and retail credit policy revision in 2011. These policies with the legal regulations generate the reference legislation for monitoring and controlling activities of the Risk Management Department.

The storage of the datas, analysis and measurement of risks, the results of analysis and monitor activities of compliance with limit and criteria which is determined due to the credit policy of the Participation Bank’s credit risk from banking book is regularly reported to the Board of Directors, the audit committee and the management by the Risk Management Department. The following of compliance and focusing of the limit of country, products, customer, maturity and sector has been carried out periodically.

The analysis about under close monitoring and non-performing loans and receivables is being made in order to provide suggestions to the Board of Directors, the audit committee and the management for risk factors on market, sector, customer, products and application process of internal banking.

Scoring models and the decision support system are used in the process of credit evaluation of the Participation Bank internal rating and the actions according to the ratings are defined due to the credit policies. Mentioned rating, scoring and the decision support system regularly followed and tested retrospectively.

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The risk exposure of the credit portfolio of the Participation Bank in the negative economic circumstances proactively managed by estimating via scenario analysis and stress tests. Besides, product risk analysis is made with calculating the exposure of the new products on the Participation Bank’s credit portfolio and financial structure.

The Board of Directors, the audit committee and the management of the Participation Bank are informed by the Risk Management Department monthly and quarterly about the quality of credit portfolio, statistics, eye catching fluctuations and compliance with the credit policies and the reports in which these analysis are took part in with the calculation, analysis and monitor activities; and thus, the required update on credit policies and processes are made after the evaluation of these results.

Market risk factors and its effects are measured and regularly reported to BRSA in the Participation Bank. The market risks are measured and reported with the standard method including trading accounts according to the “Comminuque on Measurement and Assessment of Capital Adequacy Ratios of Banks”.

Risk mitigating cautions are applied while managing the foreign exchange position with defining the trading of foreign exchange, stop loss and position limits. The monitor, control and reporting of the specified limits daily, monthly and yearly are performed by the Risk Management Department. In addition, Value at Risk is calculated daily on a portfolio basis and reported to the related department in order to calculate the currency risk.

Stress tests are performed to follow up the effect of the volatility of the market conditions on the financial position and to reduce the possible risks.

The Participation Bank apply some strategies in order to mitigate liquidity risk such as diversification of funding sources, obtaining funds with a longer term and catching the maturity match between the assets and liabilities.

Risk Management Department created some methodologies and methods to measure, analyse, report and manage the liquidity risk.

The liquidity position is analysed by preparing the tables for the maximum cumulative cash outflows of all balance sheet items subject to liquidity risk according to their maturities. In addition, the measurement of liquidity ratios is calculated and evaluated on a monthly basis in the meetings of Asset/Liability Committee.

The stress tests are performed to calculate the liquidity risk of the Participation Bank.

The liquidity risk management and emergency plan in which the actions and the cautions defined with their priorities are built in case of any liquidity congestion results from the Participation Bank or market.

The Participation Bank adopts a risk terminology which is in accordance with Basel II in order to create an international approach on Operational Risk Management. This common risk language provides a consistent view and communication about operational risk throughout the Participation Bank. A software is used in order to support the standard framework for the management of operational risk by creating the data house for risk losses and reporting of the mentioned data.

The Risk Control Evaluation (RCE) is performed periodically in the Participation Bank as a basic principle of the Basel II Operational Risk implementations. It is aimed with RCE to restrict the operational risk effects by investigating the business processes subject to operational risk and performing controls by the process owners. In the departments where RCC study is implemented, ‘Key Risk Indicators’ and the threshold value for the mentioned risk points are determined.

Besides, within the Capital Adequacy Measurement and Reporting Project, the software solutions are started to be used since June 2012 in order to build a flexible parametric model to create a reporting system that is complaint with Basel II, to apply stress tests to the capital adequacy related risks and to be in compliance with the legal framework changes.

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XII. Explanations and disclosures related to fair values of financial assets and liabilities

The table below shows the carrying value and the fair value of financial assets and liabilities of the Participation Bank:

Carrying value Fair value

Current Period Prior Period Current Period Prior PeriodFinancial Assets 14,133,201 11,216,459 14,405,770 11,020,966

Equity Securities - - - -Banks* 497,028 268,400 497,028 268,400Financial Assets Available For Sale 665,115 620,827 665,115 620,827Loans** 12,971,058 10,327,232 13,243,627 10,131,739

Financial Liabilities 14,512,219 11,356,247 14,500,755 11,352,867Funds Collected from Banks Via Current and Profit Sharing

Accounts*** 365,688 13,704 365,688 13,704Current and Profit Sharing Accounts*** 11,063,848 9,495,461 11,063,848 9,495,461Funds Provided from Other Financial Institutions 2,503,943 1,511,956 2,492,479 1,508,576Marketable Securities Issued - - - -Miscellaneous Payables 578,740 335,126 578,740 335,126

(*) Because due from banks are demand deposits, their carrying value and fair value is the same.(**)In order to calculate the fair value of loans, current profit sharing rates are used as of the balance sheet date. Loan balance also includes finance lease receivables.(***)Carrying value of the funds collected funds collected from banks via current and profit sharing accounts and current and profit sharing accounts equals to their fair value as it is revalued with the year end unit value.

The table below analyses financial instruments carried at fair value, by valuation method:

Current Period Level 1 Level 2 Level 3 TotalFinancial Assets Available for Sale - 664,994 121 665,115Financial Assets Held for Trading - 183 - 183Derivative Financial Assets Held for Trading - 14,090 - 14,090Financial Assets at Fair Value - 679,267 121 679,388Financial Liabilities Held for Trading - 8,577 - 8,577Derivative Financial Liabilities Held for Trading - 8,577 - 8,577

Prior Period Level 1 Level 2 Level 3 TotalFinancial Assets Available for Sale 953 619,789 85 620,827Financial Assets Held for Trading - 941 - 941Derivative Financial Assets Held for Trading - 22,726 - 22,726Financial Assets at Fair Value 953 643,456 85 644,494Financial Liabilities Held for Trading - 19,529 - 19,529Derivative Financial Liabilities Held for Trading - 19,529 - 19,529

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices)

Level 3: Inputs for the asset or liability that is not based on observable market data (unobservable inputs)

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XIII. Transactions carried out on behalf of customers, items held in trust

The Participation Bank does not provide buying, selling and custody services and management and financial advisory services in the name of the third parties. The Bank is not involved in trust activities.

SECTION FIVE

EXPLANATIONS AND DISCLOSURES ON UNCONSOLIDATED FINANCIAL STATEMENTS

I. Explanations Related to the Assets

1. Cash and Central Bank of Turkey:

1.1. Information on Cash and Central Bank of Turkey:

Current Period Prior Period TL FC TL FCCash 73,962 27,629 51,223 25,408Central Bank of Turkey 399,574 2,303,169 264,029 1,197,970Others (*) 130 13,704 265 378,942Total 473,666 2,344,502 315,517 1,602,320

(*) As of 31 December 2011, precious metal storage account amounting to TL 378,942 is included.

1.2. Information on Balances with the Central Bank of Turkey

Current Period Prior Period TL FC TL FCUnrestricted Demand Deposit 399,574 601,641 264,029 541,890Unrestricted Time Deposit - - - -Restricted Time Deposit - - - -Others (*) - 1,701,528 - 656,080Total 399,574 2,303,169 264,029 1,197,970

(*) Reserve deposits that are kept as blockage in CBTR for foreign currency liabilities. The banks operating in Turkey keep reserve deposits for Turkish currency and foreign currency liabilities in TL and USD or EUR at the rates of 6% and 11%, respectively as per the Communiqué no.2005/1 “Reserve Deposits” of the Central Bank of Turkey. After the change in communiqué reserve ratio for Turkish Lira liabilities has been changed to between 5% and 11% according to the maturity of the liabilities and it has been taken into consideration as of the report date.

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2. Information on Financial Assets at Fair Value through Profit and Loss

The other security line in the amount of TL 183 refers to fair value of spot derivative transactions of the Participation Bank, accounted based on the settlement date, between the trade date and the balance sheet date (31 December 2011: TL 941).

2.1. Information on Financial Assets at Fair Value through Profit and Loss, Which are Given as Collateral or Blocked

None (31 December 2011: None).

2.2. Information on Financial Assets at Fair Value through Profit and Loss, Which are Subject to Repurchase Agreements


2.3. Positive Differences Related to Derivative Financial Assets Held-for-Trading

Financial Derivative Assets Held for TradingCurrent Period Prior Period

TL FC TL FCForward Transactions 4,514 6,697 19,103 3,623Swap Transactions 1,884 995 - -Futures Transactions - - - -Options - - - -Other - - - -

Total 6,398 7,692 19,103 3,623

3. Information on Banks

Current Period Prior PeriodTL FC TL FC

BanksDomestic 106,033 201,277 73,879 130,496Foreign 515 189,203 8 64,017Branches and Head Offices Abroad - - - -

Total 106,548 390,480 73,887 194,513

Unrestricted Balances Restricted Balances

Current Period Prior Period Current Period Prior PeriodEU Countries 130,991 26,188 - -USA and Canada 41,908 31,155 - -OECD Countries* 2,470 3,109 - -Off-Shore Banking Regions - - - -Other 14,349 3,573 - -Total 189,718 64,025 - -

* OECD countries other than the EU countries, USA and Canada

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4. Information on Financial Assets Available for Sale

Current Period Prior PeriodDebt Securities 664,994 619,789

Quoted on a Stock Exchange - -Not Quoted* 664,994 619,789

Share Certificates 121 85Quoted on a Stock Exchange - -Not Quoted 121 85

Impairment Provision(-) - -Other - 953Total 665,115 620,827

(*) Although the related debt securities are quoted on a Stock Exchange, they have been presented as not quoted since the market transactions are not deep enough as of balance sheet date.

As of 31 December 2012, the Participation Bank’s “financial assets available-for-sale” portfolio includes income indexed bonds at a total face value of TL 55,000 (31 December 2011: TL 605,000), a total carrying value amounting to TL 56,838 (31 December 2011: TL 619,789) and rent certificate at a total face value of TL 591,642 and a total carrying value amounting to TL 608,156.

4.1. Available-for-Sale Financial Assets Blocked/Given As Collateral or Subject to Repurchase Agreements


4.2. Information on Financial Assets Available for Sale, Which are Subject to Repurchase Agreements


5. Information Related to Loans

5.1. Information on All Types of Loans and Advances Given to Shareholders and Employees of the Participation Bank

Current Period Prior PeriodCash Non-cash Cash Non-cash

Direct Loans Granted to Shareholders 703 74,320 904 59,340Corporate Shareholders - 74,317 - 59,337Real Person Shareholders 703 3 904 3

Indirect Loans Granted to Shareholders - - - -Loans Granted to Employees 12,720 - 10,599 -Total 13,423 74,320 11,503 59,340

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5.2. Information about the First And Second Group Loans and Other Receivables Including Loans That Have Been Restructured or Rescheduled

Standard Loans and Other ReceivablesLoans and Other Receivables Under Close

Monitoring

Loans and Other

ReceivablesAmendments on Conditions

of Contract

Loans and Other

ReceivablesAmendments on Conditions of

Contract

Amendments related to the

extension of the payment plan Other

Amendments related to the

extension of the payment plan Other

Cash Loans 12,342,544 51,544 30,079 324,145 71,051 24,223Export Loans 648,046 - - 6,805 - -Import Loans - - - - - -Business Loans 9,315,841 47,364 29,942 276,342 71,051 24,212Consumer Loans 2,147,782 4,180 137 27,433 - 11Credit Cards 218,575 - - 5,312 - -Loans Given to Financial Sector 10,008 - - - - -Other 2,292 - - 8,253 - -

Other Receivables - - - - - -Total 12,342,544 51,544 30,079 324,145 71,051 24,223

The loans for which the amendments related to the extension of the payment plan made according to article 4 of first clause (a) and (b) of “Regulation on Procedures and Principles Determination of Qualifications of Loans and Other Receivables by Banks and Provision” are stated below as of 31 December 2012.

Number of amendments related to the extension of the payment plan


MonitoringExtended for 1 or 2 times 51,544 70,641Extended for 3,4 or 5 times - 410Extended for more than 5 times - -

The time extended via the amendment on payment plan Standard Loans and Other Receivables

Loans and Other Receivables Under Close Monitoring

0-6 Months 19,862 1,4896 Months - 12 Months 14,812 11,2031-2 Years 11,179 33,5432-5 Years 5,691 24,8165 Years and More - -

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According to article 5 of regulation on procedures and principles for determination of qualifications of loans and other receivables by banks and provision, there are one restructured loan as of 31 December 2012. The maturity date of these loans were rolled over 24 days and 417 days.

According to article 6 of regulation on procedures and principles for determination of qualifications of loans and other receivables by banks and provision, there are thirteen restructured loans as of 31 December 2012. The maturity date of this loans were rolled over 273-1,026 days.

5.3. Maturity Analysis of Cash Loans


Monitoring

Loans and Other

ReceivablesRestructured or

RescheduledLoans and Other

ReceivablesRestructured or

RescheduledShort-Term Loans and Other Receivables 3,794,275 - 62,568 -

Loans 3,794,275 - 62,568 -Other Receivables - - - -

Medium and Long-Term Loans and Other Receivables 8,518,190 30,079 237,354 24,223

Loans 8,518,190 30,079 237,354 24,223Other Receivables - - - -

5.4. Collaterals Received for Loans and Other Receivables under Close Monitoring

Current Period Prior PeriodCash 13,656 3,028Mortgages 222,029 145,433Pledged Assets 10,631 4,451Cheques and Notes 35,743 10,377Other Collaterals 2,126 1,240Unsecured Loans 42,863 40,939Total 327,048 205,468

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5.5. Information on Consumer Loans, Individual Credit Cards, Personnel Loans and Personnel Credit Cards

Short Term Medium and Long Term TotalConsumer Loans - TL 30,518 2,134,726 2,165,244

Real Estate Loans 12,636 1,914,421 1,927,057Auto Loans 12,058 188,065 200,123General Purpose Consumer Loans 2,688 26,388 29,076Other 3,136 5,852 8,988

Consumer Loans - FC Indexed - 4,479 4,479Real Estate Loans - 4,435 4,435Auto Loans - 44 44General Purpose Consumer Loans - - -Other - - -

Consumer Loans - FC - - -Real Estate Loans - - -Auto Loans - - -General Purpose Consumer Loans - - -Other - - -

Individual Credit Cards - TL 172,964 4,903 177,867With Instalment 64,630 4,903 69,533Without Instalment 108,334 - 108,334

Individual Credit Cards - FC - - -With Instalment - - -Without Instalment - - -

Personnel Loans -TL 554 4,931 5,485Real Estate Loans 2 645 647Auto Loans 284 2,756 3,040General Purpose Consumer Loans 111 963 1,074Other 157 567 724

Personnel Loans - FC Indexed - 7 7Real Estate Loans - 7 7Auto Loans - - -General Purpose Consumer Loans - - -Other - - -

Personnel Loans - FC - - -Real Estate Loans - - -Auto Loans - - -General Purpose Consumer Loans - - -Other - - -

Personnel Credit Cards-TL 7,204 24 7,228With Instalment 3,739 24 3,763Without Instalment 3,465 - 3,465

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Short Term Medium and Long Term TotalPersonnel Credit Cards - FC - - -

With Instalment - - -Without Instalment - - -

Overdraft Accounts - TL (real persons) - - -Overdraft Accounts - FC (real persons) - - -Total 211,240 2,149,070 2,360,310

5.6. Installment Based Commercial Loans and Corporate Credit Cards

Short Term Medium and Long Term TotalCommercial Loans with Instalment-TL 65,766 736,015 801,781

Business Loans 10,857 608,393 619,250Auto Loans 3,739 99,911 103,650General Purpose Consumer Loans 152 27,711 27,863Other 51,018 - 51,018

Commercial Loans with Instalment - FC Indexed 201 39,048 39,249Business Loans - 34,590 34,590Auto Loans 201 345 546General Purpose Consumer Loans - 4,113 4,113Other - - -

Commercial Loans with Instalments - FC - - -Business Loans - - -Auto Loans - - -General Purpose Consumer Loans - - -Other - - -

Corporate Credit Cards-TL 38,771 21 38,792With Instalment 494 21 515Without Instalment 38,277 - 38,277

Corporate Credit Cards-FC - - -With Instalment - - -Without Instalment - - -

Overdraft Accounts - TL (corporate) - - -Overdraft Accounts - FC (corporate) - - -Total 104,738 775,084 879,822

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5.7. Loan Distribution According to Borrowers

Current Period Prior PeriodPublic Sector - -Private Sector 12,666,689 10,270,902Total 12,666,689 10,270,902

5.8. International and Domestic Loans

Current Period Prior PeriodDomestic Loans 12,600,567 10,159,930International Loans 66,122 110,972Total 12,666,689 10,270,902

5.9. Loans Granted to Subsidiaries and Participations


5.10. Specific Provisions Provided Against Loans

Current Period Prior PeriodLoans and Receivables with Limited Collectibility 32,090 14,450Loans and Receivables with Doubtful Collectibility 51,129 12,402Uncollectible Loans and Receivables 178,329 143,002Total 261,548 169,854

5.11. Information on Non-Performing Loans (Net)

5.11.1. Information on Loans and Other Receivables Included in Loans under Follow-Up Account, Which are Restructured or Rescheduled

III. Group IV. Group V. Group

Loans and Receivables with Limited Collectibility

Loans and Receivables with Doubtful

CollectibilityUncollectible Loans and

ReceivablesCurrent Period: - - -(Gross Amount Before Specific Provisions) - - -

Restructured Loans and Receivables - - -Rescheduled Loans and Receivables - - -

Prior Period: - - 636(Gross Amount Before Specific Provisions) - - 636

Restructured Loans and Receivables - - 636Rescheduled Loans and Receivables - - -

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5.11.2. Information of Movements of Loans





ReceivablesPrior Period Ending Balance 28,172 23,879 193,446

Additions (+) 212,736 3,498 5,927Transfers from Other Categories of Non- performing

Loans(+) - 159,166 84,459Transfers to Other Categories of Non-performing

Loans (-) (159,166) (84,459) -Collections (-) (23,192) (18,348) (32,675)Write-offs (-) - - (35,184)

Corporate and Commercial Loans - - (26,987)Retail Loans - - (1,917)Credit Cards - - (6,099)Other - - (181)

Current Period Ending Balance 58,550 83,736 215,973Specific Provisions (-) (32,090) (51,129) (178,329)

Net Balance on Balance Sheet 26,460 32,607 37,644

5.11.3. Information on Foreign Currency Loans and Other Receivables Included in Loans under Follow-Up Account





ReceivablesCurrent Period: Period Ending Balance - 181 5,580

Specific Provisions (-) - (45) (2,523)Net Balance on Balance Sheet - 136 3,057Prior Period:Prior Period Ending Balance 3 - 5836

Specific Provisions (-) (1) - (2,562)Net Balance on Balance Sheet 2 - 3,274

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5.11.4. Information on Gross and Net Non-Performing Loans and Receivables as per Customer Categories:

III. Group IV. Group V. GroupLoans and

Receivables with Limited Collectibility

Loans and Receivables with

Doubtful Collectibility

Uncollectible Loans and Receivables

Current Period (Net) 26,460 32,607 37,644Loans to Individuals and Corporates (Gross) 58,467 83,665 212,310

Specific Provisions (-) (32,043) (51,086) (174,837)Loans to Individuals and Corporates (Net) 26,424 32,579 37,473Banks (Gross) - - -

Specific Provisions (-) - - -Banks (Net) - - -Others Loans and Receivables (Gross) 83 71 3,663

Specific Provisions (-) (47) (43) (3,492)Other Loans and Receivables (Net) 36 28 171Prior Period (Net) 13,722 11,477 50,444Loans to Individuals and Corporates (Gross) 27,486 23,863 190,379

Specific Provisions (-) (13,773) (12,391) (140,153)Loans to Individuals and Corporates (Net) 13,713 11,472 50,226Banks (Gross) - - -

Specific Provisions (-) - - -Banks (Net) - - -Others Loans and Receivables (Gross) 686 16 3,067

Specific Provisions (-) (677) (11) (2,849)Others Loans and Receivables (Net) 9 5 218

5.11.5. Collaterals Received for Non-Performing Loans

Current Period Prior PeriodCash 1,234 156Mortgages 150,780 100,811Pledged Assets 16,593 12,887Cheques and Notes 21,194 2,394Other Collaterals 8,186 5,259Unsecured Loans 160,272 123,990Total 358,259 245,497

5.11.6. Non-Performing Loans and Main Guidelines of Liquidation Process for Loans and Receivables

Related loans are classified as non-performing loans as per “Determining the Nature of Loan and Other Receivable Provisions Allocated by Banks and Procedures and Principles of Allocating Provisions” which was published in the Official Gazette No: 26333 on November 1, 2006.

5.11.7. Explanation on “Write-off” Policies

The loans and receivables whose collections are considered to be definitely uncollectible are collected by legal proceedings and encashing the guarantees or written-off by the decision of the Participation Bank’s management pursuant to the requirements in outstanding Turkish Tax Procedures Code.

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5.12. Other Explanation and Disclosures

Aging analysis of past due but not impaired loans per classes of financial statements is stated as below:

Current Period* 0-30 Days 31- 60 Days 61- 90 Days TotalLoans and Receivables

Commercial Loans 13,825 2,768 1,672 18,265SME Loans 15,180 8,124 5,637 28,941Consumer Loans 17,183 5,581 2,555 25,319

Total 46,188 16,473 9,864 72,525

(*) Only past due loans are presented and the principals of unpaid loans.

Prior Period* 0-30 Days 31- 60 Days 61- 90 Days TotalLoans and Receivables

Commercial Loans 7,073 3,624 710 11,407SME Loans 15,572 7,597 3,967 27,136Consumer Loans 7,442 2,525 742 10,709

Total 30,087 13,746 5,419 49,252

(*) Only past due loans are presented and the principals of unpaid loans.

6. Investments Held-to-Maturity (Net)


7. Information on Associates (Net)

At the board of directors dated 14 July 2009, the Participation Bank has decided to participate in the capital increase of Kredi Garanti Fonu A.Ş.’s in accordance with the current partnership structure change as Turkish Union of Chambers and Commodity Exchanges (TOBB), the Small and Medium Size Enterprises Development Organization (KOSGEB) and Banks, as three partnership structure, with commitment to TL 4,000. In accordance with the decision, the Participation Bank has paid TL 2,000 as of 15 November 2009, TL 1,000 as of 29 July 2011 and TL 1,000 as of 20 September 2012 to Kredi Garanti Fonu A.Ş. based on capital increase dated 11 September 2009 total amounting to TL 4,000. At the board of directors dated 13 December 2012, the Participation Bank has decided to buy share of Kredi Garanti Fonu AŞ amounting to TL 211 and the amount has been paid on 28 December 2012.

Associate Address (City/ Country)

Bank’s Share – If Different, Voting Rights (%)

Bank’s Risk Group Share (%)

1 Kredi Garanti Fonu AŞ (1) Ankara / Turkey 1.75 1.75

Total AssetsShareholders’

EquityTotal Fixed

AssetsInterest Income

Income on Securities Portfolio

Current Period Profit/

LossPrior Period Profit/Loss

Company’s Fair Value

1 247,800 242,307 3,113 8,322 - 6,695 7,665 -

(1) Financial statements belong to 30 September 2012 and prior period profit/loss belongs to 30 September 2011.

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8. Information on Subsidiaries (Net)


9. Information on Entities under Common Control


10. Information on Finance Lease Receivables (Net)

10.1. Presentation of Finance Lease Investments According to Their Remaining Maturities

Current Period Prior Period Gross Net Gross NetUp to 1 year 117,864 101,137 26,791 21,9471-4 Years 221,988 190,483 37,912 31,056More Than 4 Years 14,858 12,749 4,062 3,327Total 354,710 304,369 68,765 56,330

10.2. Financial Information on Net Investments Made in Finance Lease

Current Period Prior PeriodGross Finance Lease Receivables 354,710 68,765Income Earned from Other Operations apart from Finance Lease (-) (50,341) (12,435)Written off leasing amounts - -Total 304,369 56,330

10.3. General Information on Criteria Used in Determination of Contingent Lease Installments, If Any, Updates About Available Situations and Contract Amounts Related to Renewal or Purchase Options and Constraints due to Leasing Contracts, Any Past Due Situations, Renewal of Contracts, If Renewaled, Conditions on It, Any Matter Caused to Constraints and Other Important Issues Related to Finance Lease Contracts

Finance lease contracts are realized in consistent with the Financial Leasing, Factoring And Financing Companies Law Nr. 6361. There is not any constraint due to finance lease contracts or any renewal that affects financial statements. (31 December 2011: None)

11. Derivative Financial Assets Held for Risk Management


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12. Information on Tangible Assets

BuildingsLeased Tangible

AssetsOther Tangible

Assets TotalCostOpening Balance 43,915 6,979 160,929 211,823Movements in the Current Period 71,235 - 20,919 92,154

Additions - - 36,611 36,611Disposals - - (15,692) (15,692)Transfers - - - -Impairments (Losses) / Reversals 38 - - 38Value Increase 71,197 - - 71,197

Ending Balance 115,150 6,979 181,848 303,977 Accumulated Depreciation - - - -Opening Balance (1,560) (6,608) (90,995) (99,163)

Accumulated Depreciation Reversals - - - -Movements in the Current Period (353) (315) (7,529) (8,197)

Depreciation Expense (353) (315) (21,666) (22,334)Value Increase - - - -Transfers - - - -Disposals - - 14,137 14,137

Ending Balance (1,913) (6,923) (98,524) (107,360)Prior Period Net Book Value 42,355 371 69,934 112,660Current Period Net Book Value 113,237 56 83,324 196,617

13. Information on Intangible Assets

13.1. Useful Life or Depreciation Rates Used

It is explained in the footnote numbered XI in the Section 3.

13.2. Depreciation Methods Used for Intangible Assets

Intangible assets are depreciated by straight-line depreciation method.

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13.3. Movement Table Between the Current and Prior Period

Intangible AssetsCostOpening Balance 33,185Movements in the Current Period 14,633

- Additions 14,633- Disposals (-) --Transfers -- Impairment -- Value Increase -

Ending Balance 47,818 Accumulated Depreciation -Opening Balance (21,384)Movements in the Current Period (7,553)

- Depreciation Expense (-) (7,553)- Value Increase -- Disposals -

Ending Balance (28,937)Prior Period Net Book Value 11,801Current Period Net Book Value 18,881

14. Information on Investment Property


142



15. Explanations Related to the Deferred Tax Asset

The Participation Bank is calculated deferred tax liability amounting to TL 14,374 (31 December 2011: TL 8,200) from the difference between book values of assets and liabilities, and the tax based amounts which are going to be added to the financial profit or loss in the following periods. The Participation Bank net-off calculated deferred tax asset amounting to TL 25,489 (31 December 2011: TL 24,861) and deferred tax liability, and booked deferred tax asset amounting to TL 11,115 in the current period (31 December 2011: TL 16,661).

Current Period

Deferred Tax Base

AmountDeferred Tax Asset /

(Liability)Retirement Pay Provisions 15,824 3,165Short-Term Employee Benefits 11,378 2,276Credit Card Promotion Provision 1,333 267Provision Expense for Law Suits 4,913 983Fair Value Valuation Differences (81) (16)Loan Accrual Differences (167) (33)Fair Value Differences of Derivative Financial Instruments (5,615) (1,123)Fixed Asset Depreciation Difference (26,031) (5,206)Revaluation Surplus on Tangible Assets (23,583) (4,717)Rediscounts of Commission 85,588 17,118Other (7,993) (1,599)Deferred Tax Asset (net) 11,115

Prior Period

Deferred Tax Base

AmountDeferred Tax Asset /

(Liability)Retirement Pay Provisions 11,460 2,292Short-Term Employee Benefits 28,200 5,640Credit Card Promotion Provision 1,124 225Provision Expense for Law Suits 3,792 758Fair Value Valuation Differences (783) (157)Loan Accrual Differences 118 24Fair Value Differences of Derivative Financial Instruments (3,355) (671)Fixed Asset Depreciation Difference (17,335) (3,467)Revaluation Surplus on Tangible Assets (5,679) (1,136)Rediscounts of Commission 60,082 12,016Other 5,684 1,137Deferred Tax Asset (net) 16,661

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Movement of the deferred tax asset is stated as below:

Current Period Prior PeriodAs of January 1 16,661 5,776Current Period Income/(Expense) 507 4,880Effect of the Change in Tax Rate - -Deferred Tax Accounted for Under Equity (6,053) 6,005Deferred Tax Asset 11,115 16,661

16. Information on Assets Held for Sale


17. Information on Other Assets

Other assets do not exceed 10% of total assets as of 31 December 2012 and 31 December 2011.

144



II. Explanations Related to the Liabilities

1. Information on funds collected

1.1. The Maturity Structure of Funds Collected

Current Period DemandUp to 1 Month

Up to 3 Month

Up to 6 Month

Up to 9 Months

Up to 1 Year

1 Year and Over

Accumulated Profit Sharing

Accounts TotalI. Real Persons Current Accounts-TL 580,048 - - - - - - - 580,048II. Real Persons Profit Sharing Accounts-TL - 2,001,737 1,188,873 151,363 - 88,314 1,371,042 - 4,801,329III. Other Current Accounts-TL 722,622 - - - - - - - 722,622

Public Sector 27,264 - - - - - - - 27,264Commercial Sector 674,869 - - - - - - - 674,869Other Institutions 20,217 - - - - - - - 20,217Commercial and Other

Institutionals 164 - - - - - - - 164Banks and Finance

Houses 108 - - - - - - - 108Central Bank of

Turkey - - - - - - - - -Domestic Banks - - - - - - - - -Foreign Banks 52 - - - - - - - 52Bank 56 - - - - - - - 56Other - - - - - - - - -

IV. Profit Sharing Accounts-TL - 242,437 624,589 155,468 - 37,278 281,001 - 1,340,773

Public Sector - 151 74 - - - - - 225Commercial Sector - 218,777 386,813 30,186 - 37,133 267,783 - 940,692Other Institutions - 23,393 55,640 4,170 - 145 13,218 - 96,566Commercial and Other

Institutionals - 61 - - - - - - 61Banks - 55 182,062 121,112 - - - - 303,229

V. Real Persons Current Accounts-FC 286,509 - - - - - - - 286,509VI. Real Persons Profit Sharing Accounts-FC - 789,256 552,410 63,253 - 154,624 450,286 - 2,009,829VII. Other Current Accounts-FC 456,597 - - - - - - - 456,597

Commercial Residents in Turkey 430,135 - - - - - - - 430,135

Commercial Residents in Abroad 22,592 - - - - - - - 22,592

Banks 3,870 - - - - - - - 3,870Central Bank of

Turkey - - - - - - - - -Domestic Banks - - - - - - - - -Foreign Banks 534 - - - - - - - 534Banks 3,336 - - - - - - - 3,336Other - - - - - - - - -

145



Current Period DemandUp to 1 Month

Up to 3 Month

Up to 6 Month

Up to 9 Months

Up to 1 Year

1 Year and Over

Accumulated Profit

Sharing Accounts Total

VIII. Profit Sharing Accounts Other-FC - 280,645 259,840 17,552 - 21,703 145,829 - 725,569

Public Sector - 11 - - - - - - 11

Commercial Sector - 127,884 193,769 5,074 - 172 142,964 - 469,863

Other Institutions - 2,060 8,346 - - 6 2,865 - 13,277

Commercial and Other Institutionals - 92,654 57,280 12,478 - 21,525 - - 183,937

Banks and Participation Banks - 58,036 445 - - - - - 58,481

IX. Precious Metal Accounts 482,033 - 12,322 11,876 - 29 - - 506,260

X. Profit Sharing Accounts Special Fund Pools-TL - - - - - - - - -

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

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

XI. Profit Sharing Accounts Special Fund Pools.-FC - - - - - - - - -



Total (I+II+…..+IX+X+XI) 2,527,809 3,314,075 2,638,034 399,512 - 301,948 2,248,158 - 11,429,536

146



Prior Period DemandUp to 1 Month

Up to 3 Months

Up to 6 Months

Up to 9 Months

Up to 1 Year

1Year and Over


Accounts TotalI. Real Persons Current Accounts-TL 537,637 - - - - - - - 537,637II. Real Persons Profit Sharing Accounts-TL - 1,846,857 1,343,084 137,245 - 74,328 815,754 - 4,217,268III. Other Current Accounts-TL 710,915 - - - - - - - 710,915

Public Sector 531 - - - - - - - 531Commercial Sector 690,445 - - - - - - - 690,445Other Institutions 16,909 - - - - - - - 16,909Commercial and Other

Institutionals 2,097 - - - - - - - 2,097Banks and Finance

Houses 933 - - - - - - - 933Central Bank of

Turkey - - - - - - - - -Domestic Banks - - - - - - - - -Foreign Banks 2 - - - - - - - 2Bank 931 - - - - - - - 931Other - - - - - - - - -

IV. Profit Sharing Accounts-TL - 228,400 237,523 56,689 - 52,760 192,162 - 767,534

Public Sector - 125 69 - - - - - 194Commercial Sector - 201,101 210,224 52,855 - 52,586 185,267 - 702,033Other Institutions - 26,323 27,217 3,834 - 174 6,895 - 64,443Commercial and Other

Institutionals - - - - - - - - -Banks - 851 13 - - - - - 864

V. Real Persons Current Accounts-FC 233,187 - - - - - - - 233,187VI. Real Persons Profit Sharing Accounts-FC - 718,183 498,033 63,867 - 161,375 242,666 - 1,684,124VII. Other Current Accounts-FC 335,417 - - - - - - - 335,417

Commercial Residents in Turkey 318,629 - - - - - - - 318,629

Commercial Residents in Abroad 8,836 - - - - - - - 8,836

Banks 7,952 - - - - - - - 7,952Central Bank of

Turkey - - - - - - - - -Domestic Banks - - - - - - - - -Foreign Banks 437 - - - - - - - 437Banks 7,515 - - - - - - - 7,515Other - - - - - - - - -

147



Prior Period DemandUp to 1 Month

Up to 3 Months

Up to 6 Months

Up to 9 Months

Up to 1 Year

1Year and Over


Accounts Total

VIII. Profit Sharing Accounts Other-FC - 99,498 271,662 5,026 - 90 125,407 - 501,683

Public Sector - 23 - - - - - - 23

Commercial Sector - 93,428 182,234 4,989 - 83 125,298 - 406,032

Other Institutionals - 2,040 68,386 37 - 7 109 - 70,579

Commercial and Other Institutionals - 52 21,042 - - - - - 21,094

Banks and Participation Banks - 3,955 - - - - - - 3,955

IX. Precious Metal Accounts 521,400 - - - - - - - 521,400

X. Profit Sharing Accounts Special Fund Pools-TL - - - - - - - - -



XI. Profit Sharing Accounts Special Fund Pools-FC - - - - - - - - -



Total (I+II+…..+IX+X+XI) 2,338,556 2,892,938 2,350,302 262,827 - 288,553 1,375,989 - 9,509,165

1.2. Current and Participation Accounts Attributable to Real Entities/Persons under the Guarantee of Saving Deposit Insurance Fund Exceeding the Limit of the Deposit Insurance Fund

Under the Guarantee of insurance Exceeding the Limit of insurance

Current Period Prior Period Current Period Prior PeriodReal Persons Current and Profit Sharing Accounts that are not Subject to the Commercial Activities 3,399,951 3,265,452 4,711,264 3,572,691

TL Accounts 2,510,748 2,417,115 2,827,133 2,173,044FC Accounts 889,203 848,337 1,884,131 1,399,647Foreign Branches’ Deposits Under Foreign

Authorities’ Insurance - - - -Off-Shore Banking Regions’ Deposits Under Foreign

Authorities’ Insurance - - - -

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1.3. Current and Profit Sharing Accounts which are not Under the Guarantee of Deposit Insurance Fund

Current Period Prior PeriodForeign Branches’ Profit Share Funds and Other Accounts - -Profit Sharing Accounts and Other Accounts held by Shareholders and Their Relatives - 315,376Profit Sharing Accounts and Other Accounts of the Chairman and Board of Directors, Chief Executive Officer, Senior Executive Officers and Their Relatives 49,969 3,595Profit Sharing Accounts and Other Accounts Held as Assets Subject to the Crime defined in the Article 282 of the Turkish Criminal Code No. 5237 dated 26/9/2004 - -Off Shore banking Regions’ Profit Sharing Accounts - -

1.4. Information on the Current and Profit Sharing Accounts of the Participation Bank with Head Office Abroad, if the Saving Deposits in the Branches of the Participation Bank Located in Turkey are Under the Guarantee of Saving Deposit Insurance in that Country Abroad

The center of the Participation Bank is in Turkey and under the guarantee of Saving Deposits Insurance Fund of Turkey.

1.5. Current and Profit Sharing Accounts which are not Under the Guarantee of Deposit Insurance Fund

Total of current and profit sharing accounts which are not under the guarantee of Deposit Insurance Fund is TL 49,969 (31 December 2011: TL 318,971).

2. Negative Differences on Derivative Financial Liabilities Held for Trading

Derivative Financial Liabilities Held for TradingCurrent Period Prior Period

TL FC TL FCForward Transaction 2,777 2,236 13,389 3,253Swap Transaction 3,340 122 2,121 608Future - - - -Options - - - -Other - - - -

Total 6,117 2,358 15,510 3,861

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3. Information on Borrowings

3.1. Information on Banks and Other Financial Institutions

Current Period Prior Period

TL FC TL FCFunds Borrowed from the Central Bank of Turkey - - - -Funds Borrowed from Domestic Banks and Institutions - 7,130 - -Funds Borrowed from Foreign Banks, Institutions and Funds - 2,496,813 - 1,511,956Total - 2,503,943 - 1,511,956

3.2. Maturity Analysis of Funds Borrowed

Current Period Prior Period TL FC TL FCShort-Term - 1,398,882 - 1,178,031Medium and Long-Term - 1,105,061 - 333,925Total - 2,503,943 - 1,511,956

4. Other Liabilities Exceeding 10% of the Balance Sheet Total and the Breakdown of Such Liabilities Constituting at Least 20% of the Grand Total

Other liabilities do not exceed 10% of total liabilities as of 31 December 2012 and 31 December 2011.

5. Information on Finance Lease Payables (net)

5.1. The General Explanations on Criteria Used in Determining Installments of Financial Lease Agreements, Renewal and Purchasing Options and Restrictions in the Agreements that Create Significant Obligations to the Participation Bank


5.2. The Explanation on Modifications in Agreements and New Obligations Resulting from such Modifications


6. Information on Derivative Financial Liabilities Held for Risk Management


150



7. Information on Provisions

7.1. Information on General Provisions

Current Period Prior PeriodGeneral Provisions 139,804 94,424Provision for Group 1. Loans and Receivables 115,487 78,801

Profit Sharing Accounts’ Share 50,344 36,680The Bank’s Share 65,143 42,121Other - -Additional provisions for Group 1. loans with

extended payment plan 2,046 85Profit Sharing Accounts’ Share 783 45The Bank’s Share 1,263 40Other - -

Provision for Group 2. Loans and Receivables 9,211 3,042Profit Sharing Accounts’ Share 3,598 1,439The Bank’s Share 5,613 1,603Other - -Additional provisions for Group 2. loans with

extended payment plan 3,241 -Profit Sharing Accounts’ Share 1,402 -The Bank’s Share 1,839 -Other - -

Provision for Non Cash Loans 15,106 12,581Other - -

7.2. Information on Foreign Exchange Losses on the Foreign Currency Indexed Loans and Finance Lease Receivables

Foreign exchange differences on foreign currency indexed loans amounting to TL 31,606 are netted with loans on the asset side as of balance sheet date (31 December 2011: TL 4,069).

7.3. Information on Employee Termination Benefits

The Participation Bank’s provision amount for unused vacation is TL 11,378 (31 December 2011: TL 12,321), provision amount for performance premium is TL 19,443 (31 December 2011: TL 15,879) and provision amount for severance indemnities is TL 15,824 (31 December 2011: TL 11,459) as of 31 December 2012.

151



7.4. Information on Other Provisions

7.4.1. Information on Provisions for possible risks


7.4.2. Other Provisions Exceeding 10% of Total Provisions and Name, Amount and Breakdown of Such Provisions

Current Period Prior PeriodSpecific Provision for Cheques 24,977 21,487Specific Provision for Non Cash Loans not Indemnified or not Converted into Cash 26,398 14,422Provision for Lawsuits against Participation Bank 4,913 3,792Provision for Decrease in Value Spot Derivative Transactions 102 158Provision for Profits will be Allocated to Participation Accounts (*) 10,415 28,681Provision for Credit Cards Promotion Commitments 1,333 1,124Total 68,138 69,664

(*) According to article 14 of regulation on procedures and principles for determination of qualifications of loans and other receivables and provision by banks, the amount is reserved to use for general loan loss provision, specific provisions and the Participation Accounts allocated to premium of Guarantee of Deposit Insurance Fund.

8. Information on Tax Liability

8.1. Explanations Related to Current Tax Liability

8.1.1. Information on Tax Provision

The Participation Bank has corporate tax liability amounting to TL 78,760 (31 December 2011: TL 66,714) and prepaid tax amounting to TL 59,391 (31 December 2011: TL 44,758) as of 31 December 2012. The remaining corporate tax liability after the deduction of the prepaid tax amount is reflected to financial statements.

152



8.1.2. Information on Taxes Payable

Current Period Prior PeriodCorporate Tax Payables 19,369 21,956Tax on Securities Income 6,807 6,228Tax on Real Estate Income 562 425Banking Insurance Transaction Tax 6,124 6,499Foreign Exchange Transaction Tax - -Value Added Tax Payables 1,137 301Other 4,667 3,829Total 38,666 39,238

8.1.3. Information on Premiums

Current Period Prior PeriodSocial Security Premiums-Employees 1,900 2,940Social Security Premiums-Employer 1,922 3,009Bank Pension Fund Premiums- Employees - -Bank Pension Fund Premiums- Employer - -Pension Fund Membership Fees and Provisions- Employees - -Pension Fund Membership Fees and Provisions- Employers - -Unemployment Insurance- Employees 136 210Unemployment Insurance- Employer 271 420Other 69 111Total 4,298 6,690

8.2. Information on Deferred Tax Liabilities


9. Information on Liabilities Regarding Assets Held for Sale and Discontinued Operations


10. Information on Subordinated Loans


11. Information on Shareholders’ Equity

11.1. Presentation of Paid-in Capital

Current Period Prior PeriodCommon Stock 1,650,000 800,000Preferred Stock - -

153



11.2. Paid-in Capital Amount, Explanation as to Whether the Registered Share Capital System is Applicable at Participation Bank if so Amount of Registered Share Capital Ceiling

Registered share capital system is not applied in Participation Bank.

11.2.1 Information on Share Capital Increases and Their Sources; Other Information on Increased Capital Shares in Current Period

During the current period Participation Bank increased its capital total amounting to TL 850,000 consisting of amounting TL 150,000 paid in cash and amounting to TL 700,000 from general reserve (2011: None).

11.2.2 Information on Capital Reserves Transferred to the Capital During the Period

During the current period Participation Bank transferred capital reserves to the capital amounting to TL 700,000 (31 December 2011: None).

No balance has been added to capital reserves from revaluation fund in the current period (31 December 2011: None).

11.2.3 Capital Commitments in the Last Fiscal Year and at the end of the Following Interim Period, the General Purpose of These Commitments and Projected Resources Required Meeting These Commitments


11.3. Indicators of the Participation Bank’s Income, Profitability and Liquidity for the Previous Periods and Possible Effects of These Future Assumptions on the Participation Bank’s Equity Due to the Uncertainty of These Indicators


11.4. Information on Preferred Shares


11.5. Information on Securities Value Increase Fund

Current Period Prior Period TL FC TL FC

Securities Available for Sale 6,916 (15) (2,996) -Valuation Differences 6,916 (15) (2,996) -Exchange Rate Differences - - - -

Total 6,916 (15) (2,996) -

11.6. Other Information on Shareholders’ Equity

By a decision taken in the Participation Bank’s General Assembly dated 29 March 2012, the profit of the year 2011 that is amounting to TL 231,587 was transferred to statutory reserves and extraordinary reserves amounting to TL 11,335 and TL 220,252 respectively.

154



III. Explanations Related to the Off-Balance Sheet Items

1. Information on Off-Balance Sheet Liabilities

1.1. Types and Amounts of Irrevocable Loan Commitments

Current Period Prior PeriodAsset purchase-sale commitments 301,633 276,709Commitments for Subsidiaries and Affiliates - 1,000Commitments for Check Payments 1,066,949 858,328Tax and Fund Liabilities from Export Commitments 2,976 2,916Commitments for Credit Card Expenditure Limits 461,707 528,378Commitments for Credit Cards and Banking Services Promotions 1,026 908Other 29,282 -Total 1,863,573 1,668,239

1.2. Nature and Amount of Irrevocable Loan Commitments

1.2.1. Non-Cash Loans Including Guarantees, Acceptances, Financial Guarantee and Other Letters of Credits

Current Period Prior PeriodGuarantees 6,197,780 5,565,661Acceptances 292,225 244,971Letter of Credits 618,692 727,907Other guarantees - -Total 7,108,697 6,538,539

1.2.2. Permanent Guarantees, Temporary Guarantees, Suretyships and Similar Transactions

Current Period Prior PeriodTemporary Guarantee Letters 821,661 779,337Permanent Guarantee Letters 3,596,243 3,327,267Advance Guarantee Letters 283,098 266,924Guarantee Letters Given to Duties 226,378 166,046Other Guarantee Letters 1,270,400 1,026,087Total 6,197,780 5,565,661

1.2.3. Total Non Cash Loans

Current Period Prior PeriodNon-cash loans given against achieving cash loans 640,838 444,336

With maturity of 1 year or less than 1 year 10,419 25,299With maturity more than 1 year 630,419 419,037

Other non cash loans 6,467,859 6,094,203Total 7,108,697 6,538,539

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1.2.4 Information on Sectoral Risk Concentration of Non-Cash Loans


TL (%) FC (%) TL (%) FC (%)Agriculture 45,860 1.10 24,229 0.83 51,905 1.41 53,997 1.87

Farming and Stockbreeding 45,860 1.10 24,229 0.83 51,672 1.41 53,997 1.87Forestry - 0.00 - 0.00 131 0.00 - 0.00Fishery - 0.00 - 0.00 102 0.00 - 0.00

Manufacturing 759,360 18.16 1,279,664 43.69 728,512 19.92 1,310,059 45.45Mining 53,924 1.29 58,253 1.99 52,337 1.43 66,670 2.31Production 553,443 13.23 1,033,642 35.29 566,110 15.48 1,079,221 37.44Electricity, Gas, Water 151,993 3.64 187,769 6.41 110,065 3.01 164,168 5.70

Construction 1,639,783 39.23 473,798 16.18 1,378,165 37.70 421,849 14.63Services 1,562,770 37.39 1,028,582 35.12 1,450,656 39.69 1,087,850 37.74

Wholesale and Retail Trade 825,394 19.74 482,995 16.49 894,081 24.46 467,636 16.22Hotel, Food and Beverage

Services 17,842 0.43 218,232 7.45 16,412 0.45 129,177 4.48Transportation and

Telecommunication 154,979 3.71 88,980 3.04 97,082 2.66 123,890 4.30Financial Institutions 14,490 0.35 85,493 2.92 26,455 0.72 202,440 7.02Real Estate and Renting

Services 406,093 9.71 144,765 4.94 291,788 7.98 161,404 5.60“Self-Employment” Type

Services - 0.00 - 0.00 - 0.00 - 0.00Educational Services 35,405 0.85 - 0.00 28,811 0.79 1,907 0.07Health and Social Services 108,567 2.60 8,117 0.28 96,027 2.63 1,396 0.05

Other 172,121 4.12 122,530 4.18 46,673 1.28 8,873 0.31Total 4,179,894 100.00 2,928,803 100.00 3,655,911 100.00 2,882,628 100.00

1.2.5 Information on Ist and IInd Group Non-Cash Loans

I st Group II nd Group TL FC TL FC

Non-Cash Loans 4,140,172 2,906,876 39,722 21,927Letters of Guarantee 4,136,600 1,999,672 39,722 21,786Endorsements and Acceptances 2,328 289,897 - -Letters of Credit 1,244 617,307 - 141Endorsements - - - -Underwriting Commitments - - - -Factoring Commitments - - - -Other Commitments and Contingencies - - - -

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2. Explanations Related to the Derivative Financial Instruments

Current Period Prior PeriodType of Trading Transactions Foreign Currency Related Derivative Transactions (I): 3,071,277 2,999,045

Forward Transactions 1,554,162 2,132,091Swap Transactions 1,517,115 866,954Futures Transactions - -Option Transactions - -

Other Trading Derivative Transactions (II) 66,641 -A. Total Trading Derivative Transactions (I+II) 3,137,918 2,999,045


Fair Value of Assets

Fair Value of Liabilities

TL Equivalents of the Amount for Derivative

Product Specified in the

ContractFair Value of

AssetsFair Value of

Liabilities

TL Equivalents of the Amount for Derivative

Product Specified in the

ContractDerivative Financial Transactions Held for Trading 14,090 8,475 3,137,918 22,726 19,371 2,999,045Forward Foreign Currency Buy/Sell Transactions 11,211 5,013 1,554,162 22,726 16,642 2,132,091Foreign Currency Swap Contracts 2,879 3,462 1,517,115 - 2,729 866,954Other - - 66,641 - - -

3. Explanations Related to the Contingent Liabilities and Assets


4. Services rendered on behalf of third parties


157



IV. Explanations Related to the Income Statement

1. Profit Share Income

1.1. Information on Profit Share on Loans

Current Period Prior Period TL FC TL FC

Profit Share on Loans* 1,297,671 52,591 924,530 40,647Short Term Loans 414,961 14,485 273,132 14,275Medium and Long Term Loans 876,103 38,106 641,435 26,372Profit Share on Non Performing Loans 6,607 - 9,963 -Premiums Received From Resource Utilization Support

Fund - - - -Total 1,297,671 52,591 924,530 40,647

(*) Profit Share on Loans includes commission income on cash loans.

1.2. Information on Profit Share on Participation Banks


TL FC TL FCCentral Bank of Turkey - - - -Domestic Banks - - - -Foreign Banks 530 782 33 779Branches and Head Office Abroad - - - -Total 530 782 33 779

1.3. Information on Profit Share on Marketable Securities Portfolio


TL FC TL FCFinancial Assets Held for Trading - - - -Financial Assets at Fair Value Through Profit and Loss - - - -Financial Assets Available for Sale 24,133 911 68,619 6Investments Held to Maturity - - - -

Total 24,133 911 68,619 6

1.4. Information on Profit Share Income Received from Associates and Subsidiaries


158



2. Profit Share Expenses

2.1. Information on Profit Share on Funds Borrowed


TL FC TL FCBanks 805 73,928 - 27,933

Central Bank of Turkey - - - -Domestic Banks 767 2 - -Foreign Banks* 38 73,926 - 27,933Branches and Head Office Abroad - - - -

Other Institutions - - - -Total 805 73,928 - 27,933

(*) Profit Share on Funds Borrowed includes commission expense on cash loans.

2.2. Profit Share Expense Given to Associates and Subsidiaries


2.3. Information on Profit Share Expense to Marketable Securities Issued


2.4. Distribution of Profit Share Expense on Funds Collected Based on Maturity of Funds Collected

Account NameUp to 1 Month

Up to 3 Months

Up to 6 Months Up to 1 Year

More than 1 Year


Account TotalTurkish Lira Funds Collected from Banks via Current and Profit Sharing Accounts 21 3,612 2,436 - - - 6,069Real Person’s Non Commercial Profit Sharing Acc. 136,965 106,621 10,772 6,717 100,456 - 361,531Public Sector Profit Sharing Acc. 12 6 - - - - 18Commercial Sector Profit Sharing Acc. 13,267 29,065 2,316 4,387 18,249 - 67,284Other Institutions Profit Sharing Acc. 1,654 4,716 498 12 1,232 - 8,112Total 151,919 144,020 16,022 11,116 119,937 - 443,014Foreign CurrencyBanks 275 180 - - - - 455Real Person’s Non Commercial Profit Sharing Acc. 24,390 21,591 1,929 5,113 14,467 - 67,490Public Sector Profit Sharing Acc. - - - - - - -Commercial Sector Profit Sharing Acc. 3,984 11,937 6,436 5 6,831 - 29,193Other Institutions Profit Sharing Acc. 306 2,918 - 42 90 - 3,356Precious Metal Accounts - 3 1 - - - 4Total 28,955 36,629 8,366 5,160 21,388 - 100,498Grand Total 180,874 180,649 24,388 16,276 141,325 - 543,512

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3. Information on Dividend Income


4. Information on Trading Income/Losses (net)

Current Period Previous PeriodIncome 1,178,434 1,322,713Trading Account Income 1,171 2,038Derivative Financial Instruments 436,166 377,807Foreign Exchange Gains 741,097 942,868Losses (-) (1,121,734) (1,256,364)Trading Account Losses - -Derivative Financial Instruments (297,251) (307,193)Foreign Exchange Losses (824,483) (949,171)

Foreign exchange gains from the exchange rate changes of derivative financial instruments: TL 10,896 (31 December 2011: TL 16,149). TL 8,637 (31 December 2011: TL 8,613) of foreign exchange losses are resulted from the exchange rate changes of derivative financial instruments.

5. Information on Other Operating Income

Current Period Previous PeriodCommunication Expense Charged to Customers 6,351 6,658Gain on Sale of Assets 6,383 9,524Checkbook Expenses 5,886 5,387Reversals Related to Prior Year’s Expenses 58,254 52,727Other 14,934 9,910Total 91,808 84,206

160



6. Provision Expenses Related To Loans and Other Receivables of the Participation Bank

Current Period Previous PeriodSpecific Provisions for Loans and Other Receivables 156,620 64,427

III. Group 32,401 17,502IV. Group 50,939 12,723V. Group 72,022 34,202Doubtful Commission, Fee and Other Receivables 1,258 -

General Provision Expenses 46,856 29,755Provision Expenses for Possible Losses - -Marketable Securities Impairment Losses - -

Financial Assets at Fair Value Through Profit and Losses - -Investment Securities Available for Sale - -

Impairment Provision Expenses - -Investment in Associates - -Subsidiaries - -Jointly Controlled Entities - -Investments Held to Maturity - -

Other (*) 22,903 40,946Total 226,379 135,128

(*) Other provision expenses amounting to TL 22,903 comprised of specific provision expenses for cheques amounting to TL 5,628, specific provision expenses for non cash loans not indemnified or not converted into cash amounting to TL 13,341, specific provision expenses allocated to participation accounts amounting to TL 1,513 and provision expense for law suits amounting to TL 2,421 (31 December 2011: Other provision expenses amounting to TL 40,946 comprised of specific provision expenses for cheques amounting to TL 2,687, specific provision expenses for non cash loans not indemnified or not converted into cash amounting to TL 11,645, specific provision expenses allocated to participation accounts amounting to TL 24,766 and provision expense for law suits amounting to TL 1,848).

7. Information on Other Operating Expenses

Current Period Previous PeriodPersonnel Expenses 242,839 210,236Reserve for Employee Termination Benefits 6,520 2,999Bank Pension Fund Deficit Provisions - -Impairment Losses on Tangible Assets 418 -Depreciation Expenses of Tangible Assets 22,334 23,452Impairment Losses on Intangible Assets - -

Amortization Expenses of Goodwill - -Depreciation Expenses of Intangible Assets 7,553 6,016Impairment Provision for Investments Accounted for Under Equity Method - -Impairment Losses on Assets to be Disposed 178 358Depreciation Expenses of Assets to be Disposed 568 548Impairment Losses on Assets Held for Sale - -Other Operating Expenses 110,885 86,387

Operating Lease Expenses 42,336 36,965Repair and Maintenance Expenses 3,265 2,775Advertisement Expenses 14,864 7,946Other Expenses 50,420 38,701

Loss on Sales of Assets 1,090 862Other 68,260 61,546Total 460,645 392,404

161



8. Explanations Related to the Profit/Loss Before Taxes Including Profit/Loss from Discontinued Operations

The Participation Bank’s profit before taxes realized at TL 361,826 increasing by 23.31% comparing to the prior year. The profit before taxes includes a net profit share income of TL 792,111, a net fees and commission income of TL 108,231. Operating expenses are amounted to TL 460,645.

9. Information on Provision for Taxes

The Participation Bank tax reconciliation is listed below:

Current Period Prior Period Profit Before Tax 361,826 293,421Corporate Tax Ratio 20% 20%Calculated Tax 72,365 58,684 Deductions (25,497) (22,707)Other 31,385 25,857 Income Tax Expense 78,253 61,834

10. Explanations Related to the Net Profit/Loss Including Profit/Loss From Discontinued Operations

Net period profit is TL 283,573 (31 December 2011: TL 231,587).

11. Explanation on Net Period Profit / Loss

11.1. The Nature and Amount of Certain Income and Expense Items from Ordinary Operations is Disclosed If the Disclosure for Nature, Amount and Repetition Rate of Such Items is Required for the Complete Understanding of the Participation Bank’s Performance for the Period

Profit share income on regular banking operations is TL 1,410,356 and profit share expenses are TL 618,245 (31 December 2011: profit share income; TL 1,049,201, profit share expenses: TL 474,742).

11.2. Effect of Changes in Accounting Estimates on Income Statement for the Current and, If Any, for Subsequent Periods


11.3 Nature and Amount of Changes in Accounting Estimates which Have Material Effects on the Current Period or Expected to Have Material Effects on the Subsequent Periods


162



12. If the Other Items in the Income Statement Exceed 10% of the Income Statement Total, Accounts Amounting to At Least 20% of These Items are shown below

Other Fees and Commissions Received Current Period Prior PeriodCommissions of Letters of Credit on Imports 511 609Commission of Collection Note/Check 2,628 2,617Commissions on Remittance 8,058 7,576Insurance Commissions 6,315 3,173Credit Letter Commissions 1,780 1,543Expert Fees 11,042 8,221Credit Card Fees and Commissions 16,647 11,900Commissions on Member Firm -POS 12,301 10,269Cash Import Commissions 2,836 2,290Other Commissions and Fees 14,587 13,344Total 76,705 61,542

Other Fees and Commissions Given Current Period Prior PeriodPOS Transaction Commission Expense 20,127 17,5037/24 Card Domestic ATM Commission Given 919 746Credit Card Service and Usage Expense 3,137 2,750Commissions and Fees Given for Remittance 1,549 1,265Other Commissions and Fees 18,485 14,611Total 44,217 36,875

V. Explanations and Disclosures Related to the Statements of Shareholders’ Equity Movement

1. Information on Any Increases Arising from Application of Accounting for Financial Instruments in the Current Period

1.1. Increases from Valuation of Financial Assets Available-for-Sale

As of 31 December 2012, an increase of TL 9,897 resulted from the revaluation of financial assets available-for-sale at fair value after being netted with the related deferred tax liability effect is presented as the current period movements in securities value increase fund in the statement of changes in shareholders’ equity (31 December 2011: None).

1.2. Increases Due to Cash Flow Hedges


1.3. Increases Due to the Revaluation of Tangible Fixed Assets

As of 31 December 2012, an increase of TL 68,033 resulted from the revaluation of tangible fixed assets at fair value after being netted with the related deferred tax liability effect is presented as the current period movements in tangible fixed assets value increase fund in the statement of changes in shareholders’ equity (31 December 2011: None).

163



2. Information on Any Decreases Arising from Application of Accounting for Financial Instruments in the Current Period

2.1. Decreases from Valuation of Financial Assets Available-for-Sale

None (31 December 2011: TL 24,024).

2.2. Decreases Due to Cash Flow Hedges


3. Information on Dividend

3.1. Dividends Declared Subsequent to the Balance Sheet Date, but Before the Announcement of the Financial Statements

None.

3.2. Dividends per Share Proposed Subsequent to the Balance Sheet Date

None.

4. Amounts Transferred to Legal Reserves

In 2012, the amount transferred to legal reserves is TL 11,335 and amount transferred to extraordinary reserves TL 220,252 (31 December 2011: to the legal reserves is TL 9,976, to the extraordinary reserves is TL 195,553).

5. Information on Shares Issued

5.1. For All Capital Share Classes of the Participation Bank; Rights, Priorities and Restrictions about This Item Including Distribution of Dividend and Restrictions related to Repayment of Capital


5.2. Explanations Related to Other Capital Increase Items in the Statements of Shareholders’ Equity Movement

None.

VI. Explanations Related to Statement of Cash Flows

1. Disclosures for “other” items and “effect of change in foreign currency rates cash and cash equivalents” in statement of cash flows

The “other” item amounting to a loss of TL 192,298 under operating profit before changes in operating assets and liabilities composes of fees and commissions paid, other operating expenses excluding employee costs and depreciation expense, provision expense (31 December 2011: TL 152,510 loss).

The “net increase in other liabilities” amounting to TL 608,674 under the changes in operating assets and liabilities is resulted from the changes in the miscellaneous payables and other external funding payables (31 December 2011: TL 29,829).

As of 31 December 2012, the effect of change in the exchange rate on cash and cash equivalents calculated a loss of TL 78,768 (31 December 2011: TL 220,449).

2. Cash outflows from Acquisition of Associates, Subsidiaries and Joint-ventures

The Participation Bank has paid TL 1,000 at 20 September 2012 of its capital commitment of TL 2,000 for the capital increase of Kredi Garanti Fonu AŞ. At the board of directors dated 13 December 2012, the Participation Bank has decided to buy share of Kredi Garanti Fonu AŞ amounting to TL 211 and the amount has been paid on 28 December 2012 (31 December 2011: 1,000).

164



3. Cash Inflows from Acquisition of Associates, Subsidiaries and Joint-ventures


4. Information on Cash and Cash Equivalents at Beginning and End of Periods

Current Period Prior PeriodCash 1,102,936 1,261,757

Cash in TL and Foreign Currency 101,591 76,631Central Bank of Turkey 1,001,215 805,919Other 130 379,207

Cash Equivalents 497,028 268,400Receivables from Interbank Money Markets - -Banks and Other Financial Institutions 497,028 268,400

Total Cash and Cash Equivalents 1,599,964 1,530,157

5. Restricted Cash and Cash Equivalents of the Participation Bank Due to Legal Requirements or Other Reasons

The placements at Central Bank of Turkey include blocked accounts with a total principal balance of TL 1,701,528 which is kept as reserve deposits for foreign currency liabilities.

6. Additional Information on Financial Position and Liquidity

6.1. Restrictions on the Participation Bank’s potential borrowings


6.2. Cash inflows presenting increase in operating capacity of the Participation Bank

The Participation Bank daily follows the cash transactions for banking activities continuance and the cash flow represents the increase in the banking activities is analyzed under this conditions.

VII. Explanations on the Risk Group of the Participation Bank

1. Information on the volume of transactions relating to the Participation Bank’s risk group, incomplete loan and funds collected transactions and period’s profit and loss

1.1. Information on loans and other receivables of the Participation Bank’s risk group

Current Period

Bank’s Risk Group

Associates, Subsidiaries and Jointly Controlled

Entities

Direct and Indirect Shareholders of the

Bank

Other items that have been included in the Risk

Group Cash Non Cash Cash Non Cash Cash Non CashLoans and Others Receivables

Balance at the beginning of the period - - 147 59,337 133,063 74,466Balance at the end of the period (*) - - 116 74,318 85,459 89,573

Profit Share and Commission Income - - 318 - 15,768 1,042

(*) Lease receivables from the Participation Bank’s risk group are included in cash balances amounting to TL 8,057.

165



Prior Period

Bank’s Risk GroupAssociates, Subsidiaries and

Jointly Controlled EntitiesDirect and Indirect

Shareholders of the BankOther items that have been included in the Risk Group

Cash Non Cash Cash Non Cash Cash Non CashLoans and Others Receivables

Balance at the beginning of the period - - 46 12 97,711 70,350Balance at the end of the period (*) - - 147 59,337 133,063 74,466

Profit Share and Commission Income - - 81 - 28,618 516

(*) Lease receivables from the Participation Bank’s risk group are included in cash balances amounting to TL 4,085.

1.2 Information on Current and Profit Sharing Accounts Related to Risk Group of the Participation Bank




Current and Profit Sharing AccountsCurrent Period Prior Period



Balance at the beginning of the period - - 203,337 136,607 80,972 60,936Balance at the end of the period - - 197,213 203,337 126,926 80,972

Profit Share Expenses - - 18,068 11,585 9,984 2,998

1.3. Forward Transactions, Option Contracts and Other Similar Contracts Made With the Participation Bank’s Risk Group







Financial Transactions at fair value through profit/loss

Balance at the beginning of the period - - - - 8,732 1,580Balance at the end of the period - - - - 9,032 8,732Total Profit / Loss - - - - 40 2,379

Derivative Instruments Held for Risk Management

Balance at the beginning of the period - - - - - -Balance at the end of the period - - - - - -Total Profit / Loss - - - - - -

1.4. Funds Borrowed from the Participation Bank’s Risk Group




Loans ReceivedCurrent Period Prior Period



Balance at the Beginning of the period - - 376,757 - - -Balance at the End of the period - - 935,865 376,757 - -

Profit Share and Commission Expense - - 25,887 6,314 - -

166



VIII. Explanations on the Participation Bank’s Domestic Branches, Branches Abroad and Off-shore Branches or Associates and Agencies

1. Explanations on the Participation Bank’s Domestic Branches, Agencies and Branches Abroad and Off-shore Branches

Number Employees* Domestic Branches 220 2,332 Country Rep-Offices Abroad 1- 2- Total Assets CapitalBranches Abroad 1- 2- Off-Shore Branches 1- 2-

(*) Employees number consists of branch employees. As of 31 December 2012, 1,263 employees work at the head office.

2. Explanations on Branch and Agency Openings or Closings of the Participation Bank

In 2012, Participation Bank opened 38 new domestic branches.

IX. Explanations Related to Subsequent Events

1. Transactions Not Finalized Yet Related to Subsequent Events and Their Impact on Financial Statements

As of 31 December 2012, cash commitment amounting to TL 125,000 was paid by shareholders and recorded into capital accounts on with the approval of Banking Regulation and Supervision Agency on increase dated 6 February 2013.

According to a decision of Board of Directors on 22 October 2012, asset rent company was establish purposing rent certificate issues. Asset rent company named TF Varlık Kiralama A.Ş. was established with the authorizations of Banking Regulation and Supervision Agency dated 20 December 2012, Capital Markets Board dated 8 February 2013 and Ministry of Customs and Trade dated 11 February 2013.

2. Information about effects of significant changes in foreign exchange rates after balance sheet date that would affect decision making process of users

None.

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SECTION SIX

OTHER EXPLANATIONS

I. Other Explanations Related to Participation Bank’s Operations

Summary information of the Participation Bank related to rating given by international rating agencies:

Foreign Currency Long Term BBBShort Term F3View StableTurkish Lira Long Term BBB+Short Term F2View StableNational Long Term AAA(tur)Financial Capacity Note bb-Stand By Note 2View Stable

Information obtained from Fitch Ratings Report published at 28 December 2012.

SECTION SEVEN

INDEPENDENT AUDITOR’S REPORT

I. Explanations on the Independent Auditor’s Report

The unconsolidated financial statements of the The Participation Bank as of and for the year ended 31 December 2012 were audited by Akis Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik AŞ (the Turkish member firm of KPMG International Cooperative, a Swiss entity) and Independent Auditors’ Report dated 15 February 2013 is presented in the introduction of this report. It was noted in their report that the accompanying financial statements present fairly, in all material respects, the financial position of Türkiye Finans Katılım Bankası AŞ as of 31 December 2012 and the result of its operations.

II. Other Footnotes and Explanations Prepared by the Independent Auditors

None.


As it also did in previous years, the bank plans to retain its 2012 profits and to make use of them in the conduct of its banking activities. Profits reserves and cash capital increases are what make it possible for the bank to carry out its operations within the framework of sound banking principles.

Information About the Bank’s Dividend Policy


In the year to end-2012 Türkiye Finans’s total assets increased by 30.2% and reached TL 17.6 billion in value. The bank posted a gross income of TL 361.8 million and a net income of TL 283.6 million. The latter figure corresponds to a year-on rise of 22.4%.

Türkiye Finans’s return on assets in 2011 was 1.9%; in 2012 it was 1.8%. In 2011 the bank’s return on equity was 15.3%; in 2012 this figure amounted to 15.2%.

Assessment of Financial Position, Profitability and Solvency; Asset Quality and Profitability

2012

2.12

1.91

1.82

2010

2011

Return on Assets(ROA %)

2012

15.81

15.34

15.17

2010

2011

Return on Equity(ROE %)

2012

10,691,860

13,528,353

17,616,504

2010

2011

Total assets(TL thousand)

2012

205,529

231,587

283,573

2010

2011

Net Period Profit (TL thousand)


All of the deposits received by the bank as participation accounts were lent out save for those portions which must be retained as mandatory reserves. The ratio of Türkiye Finans’s total lendings to total assets at year-end 2012 was 74%; in 2011 it was 77%. In the twelve months to end-2012, the bank’s net profit share income increased by 37.9% and reached TL 792 million in value.

Türkiye Finans’s total loans increased by 25.6% year-on from TL 10.4 billion to TL 13.1 billion. Despite this growth in the bank’s loans the quality of the bank’s assets remained high. Non-performing loans accounted for only 2.8% of the total in 2012; in 2011 this ratio was 2.3%. These figures are consistent with the performance of the banking industry as a whole, whose overall end-December NPL ratios were 2.9% in 2012 and 2.7% in 2011.

The non-cash loan portfolio grew by 8.7% and reached TL 7.1 billion in value.

2012

7,999,620

10,402,875

13,067,769

2010

2011

Loans(TL thousand)

2012

8,508,489

10,947,974

13,636,052

2010

2011

Income-Bearing Assets(TL thousand)

2012

86,183

75,643

96,711

2010

2011

NPL(Net-TL thousand)

Assessment of Financial Position, Profitability and Solvency; Asset Quality and Profitability


Funds collected and Shareholders’ Equity

Türkiye Finans’s funds collected increased by 20.2% and reached TL 11.4 billion as of end-2012. Funds collected accounted for about a 65% share of the bank’s overall balance sheet. Of this total, 65% is held in Turkish lira and the remaining 35% in foreign currency accounts.

With the inclusion of retained prior-year profits, total shareholders’ equity amounted to TL 2.1 billion last year.

The bank’s standard capital adequacy ratio was 14.24% in 2011. As of end-2012 it was up slightly to 14.76%.

Türkiye Finans’s asset & liability management strategies are formulated on the basis of annual budget plans and monthly analyses performed by the Assets & Liabilities Committee.

It is Türkiye Finans’s intention to continue abiding by its customer- and service-focused policies in its efforts to increase its banking service and operational income while also advancing confidently as it pursues additional growth that is nevertheless sustainable as well as profitable.

2012

8,397,896

9,509,165

11,429,536

2010

2011

Funds Collected(TL thousand)

2012

1,406,096

1,613,659

2,125,162

2010

2011

Shareholders’ Equity(TL thousand)


Credit risk

The Risk Management Center is responsible for maintaining data about the credit risks to which Türkiye Finans is exposed on account of its loans, and for quantifying and analyzing such risks. Additionally the center also monitors compliance with credit limits and criteria as prescribed by credit policies and it reports the results of its risk monitoring, measurement, and analysis activities to the Board of Directors, to the Audit Committee, and to members of senior management. In addition, all credit products, customers, terms, and sector and country limits and concentrations are periodically checked for their compliance with lending policies as prescribed by applicable laws and regulations.

Credit risk is measured using the simple-method standardized approach set forth in Regulation on Measurement and Assessment of Capital Adequacy of Banks.

To ensure that credit risk exposure arising from personal loans and credit cards is measured reliably and effectively, policy- and rule-based decision support systems are consistently employed, as are a variety of portfolio-specific, statistics-based scoring models that have been developed.

In the case of loans made to small-business, commercial, and corporate customers, credit risk quantification and grading employs rating models which are both sector-appropriate and international standard-compliant and which make use of portfolio-specific statistical methods. These rating models generate not only individual customers’ ratings but also provide estimates of a customer’s probability of default (PD).

In addition to these rating models, small-business, commercial, and corporate customer credit risk measurement and grading also involve the use of a suite of target market and risk acceptance criteria that make it possible to make judgments about individual customers’ ratings based on their sector and appetite for risk.

Close-monitored as well as non-performing loans are analyzed and recommendations are made to the Board of Directors, to the Audit Com-mittee, and to members of senior management so that risk-mitigation measures may be taken based on specific market, sector, customer, and product risk exposure as well as on the bank’s own practices and processes.

The risks associated with new products are analyzed based on a quantification of their potential impact on the bank’s loan portfolio and the bank’s financial structure.

In addition to its risk monitoring, quantification, and analysis functions, the Risk Management Center also keeps the Board of Directors, the Audit Committee, and members of senior management advised about risk-related issues by means of monthly and quarterly reports in which it sets forth its findings and analyses of the bank’s loan book dimensions, quality, noteworthy changes, and compliance with lending policies and it may additionally make recommendations about such changes in lending policies and processes as, based on its own judgment, it deems to be necessary. The center also monitors compliance with lending limits and restrictions as prescribed by banking law.

Market risk

The factors contributing to Türkiye Finans’s market risk exposure and to the potential impact of those risks are measured and reported to BRSA on a regular basis.

Market risk is measured using the simple-method standardized approach set forth in Regulation on Measurement and Assessment of Capital Adequacy of Banks. Türkiye Finans includes its trading accounts in its market risk calculations.

The Risk Management Center monitors, checks, and reports compliance with specified limits on a daily, monthly, and yearly basis.

Stress tests are conducted in order both to observe the impact which market volatilities may have on the bank’s financial standing and to determine ways in which to mitigate potential risks.

Liquidity risk

Türkiye Finans makes use of such strategies as diversifying its resources, obtaining longer-term funding, and matching the maturities of its assets and its liabilities in order to protect itself against exposure to liquidity risk.

The Risk Management Center has formulated liquidity risk quantification methodologies and methods whose purpose is to measure, analyze, report, and manage Türkiye Finans’s exposure to liquidity risk.

Information About Risk Management Policies by Type of Risk


Türkiye Finans has formulated and published a “Liquidity Risk Management & Contingency Plan” in which are set out the actions and meas-ures that are to be taken in the event of a shortage of liquidity whether in markets or at the bank itself. The plan also specifies those who are responsible for taking such actions and measures and who are to be held accountable for their consequences.

Operational risk

Türkiye Finans currently quantifies its operational risk exposure using the “basic approach” prescribed by regulations pertaining to the calcu-lation of capital requirements. The bank is currently collecting loss data in order to quantify operational risk exposure using the alternative standard or advanced measurement approaches as appropriate.

In order to abide by internationally recognized approaches in the management of operational risk, Türkiye Finans has adopted a risk terminol-ogy that is compatible with Basel II documentation. The use of such a common terminology ensures the consistency of operational risk-relat-ed understanding and communication throughout the bank. Software solutions are being used to create a database of operational risk losses and to report such losses in order to formulate a standardized framework for operational risk management.

Risk control assessments (RCA) are performed periodically at Türkiye Finans as a basic requirement of Basel II operational risk practices. These assessments are carried out on the one hand to identify which business processes at the bank are exposed to operational risk and on the other to limit the impact of such risks through measures aimed at better supervising those responsible for the conduct of such processes.

Insurance is used as a way of mitigating and/or offloading operational risks. In some cases, especially support services, operational risk man-agement is achieved by outsourcing the services to an external service provider. Türkiye Finans has published an “Emergency and Contingen-cy Plan” to deal with situations such as earthquakes, fires, etc which are beyond the bank’s control. The effectiveness of this plan is tested by conducting drills.

Regulatory compliance

Türkiye Finans’s regulatory compliance department is responsible both for ensuring the regulatory compliance of the banks products and ser-vices and for complying with the rules and guidelines of the Financial Crimes Investigation Board (MASAK). In the case of product and service regulatory compliance, the department considers all of the bank’s existing and proposed activities from the standpoint of their compatibility with applicable laws and regulations, with the bank’s own policies and rules, and with ordinary banking practices. As of 31 December 2012, the Türkiye Finans Regulatory Compliance Department was staffed by ten people consisting of one department head, six MASAK analysts, and three product and service compliance control analysts.

Under the heading of MASAK compliance, activities are carried out so as to ensure that the bank is not in violation of any laws, regulations, or administrative provisions or of any international regulations or standards as may be applicable to the prevention of money-laundering and of terrorism financing. In the conduct of such activities, Türkiye Finans takes a risk-based approach to ensure the complete satisfaction of the bank’s regulatory compliance policy. The head of the Regulatory Compliance Department is responsible for reporting any transaction or situation which is deemed to be suspicious in light of MASAK rules and regulations.

During 2012, 65% of Türkiye Finans’s personnel received training specific to MASAK-related issues and 45% received Code of Ethics Policy training.


Türkiye Finans was one of nine banks in Turkey whose credit ratings were increased by Fitch Ratings after that agency raised Turkey’s country rating.

Türkiye Finans’s long term foreign currency rating was increased from BBB- to BBB and its long term local currency (TL) rating from BBB to BBB+.

FITCH RATINGS

Credit Ratings 2011 2012Foreign CurrencyLong Term BBB- BBBShort Term F3 F3Outlook Stable StableLocal CurrencyLong Term BBB BBB+Short Term F3 F2Outlook Stable StableSovereignLong Term AAA(tur) AAA(tur)Financial Capacity Rating bb- bb-Support Rating 2 2Outlook Stable Stable

Information About Credit Rating Agency Rating Assignments and the Nature of Such Ratings


5-Year Summary Financial Information (TL thousand)

Assets 2008 2009 2010 2011 2012CASH AND BANKS 1,225,166 663,512 1,797,513 2,186,237 3,315,196SECURITIES 6,335 592,383 595,123 620,827 665,115LOANS 5,498,927 7,123,545 7,975,316 10,346,545 12,763,400RECEIVABLES FROM LEASES 133,280 61,579 24,304 56,330 304,369FIXED ASSETS (NET) 112,693 112,274 132,273 124,461 215,498OTHER ASSETS 127,755 146,350 167,331 193,953 352,926TOTAL ASSETS 7,104,156 8,699,643 10,691,860 13,528,353 17,616,504

Liabilities 2008 2009 2010 2011 2012FUNDS COLLECTED 5,312,548 6,882,490 8,397,896 9,509,165 11,429,536- SPECIAL CURRENT ACCOUNTS 932,283 1,244,194 1,545,294 2,338,556 2,527,809- PARTICIPATION ACCOUNTS 4,380,265 5,638,296 6,852,602 7,170,609 8,901,727FUNDS RECEIVED 261,534 17,857 126,812 1,511,956 2,503,943SHAREHOLDERS’ EQUITY 1,001,456 1,193,692 1,406,096 1,613,659 2,125,162PAID-UP CAPITAL 800,000 800,000 800,000 800,000 1,650,000OTHER LIABILITIES 528,618 605,604 761,056 893,573 1,557,863NON-CASH LOANS 3,625,271 3,758,913 4,280,460 6,538,539 7,108,697

Income and Expense Accounts 2008 2009 2010 2011 2012PROFIT SHARE INCOME 827,812 943,104 889,675 1,049,201 1,410,356PROFIT SHARE EXPENSES -423,556 -473,375 -416,692 -474,742 -618,245NET PROFIT SHARE INCOME 404,256 469,729 472,983 574,459 792,111NET FEE AND COMMISSION INCOME 69,573 129,924 83,035 95,939 108,231OTHER NON-PROFIT SHARE INCOME 76,197 110,582 135,438 150,555 148,508NON-PROFIT SHARE EXPENSES -389,393 -538,847 -485,927 -589,366 -765,277NET PERIOD PROFIT 160,633 171,388 205,529 231,587 283,573

Summary Financial Information Pertaining to the Five-Year Period Including the Reported Period

176 DirectoryTürkiye Finans 2012 Annual Report

BRANCH ADDRESS TELEPHONE/FAX1 ADANA BRANCH Tepebağ Mah. Abidinpaşa Cad. No :7/A SEYHAN/ADANA Tel: (+90 322) 359 55 35

Fax: (+90 322) 359 56 732 ADAPAZARI BRANCH Tığcılar Mahallesi Atatürk Bulvarı No:29/B Adapazarı/

SAKARYATel: (+90 264) 274 01 91Fax: (+90 264) 274 01 90

3 ADIYAMAN BRANCH Yenipınar Mah. Atatürk Cad. No:35/A ADIYAMAN Tel: (+90 416) 213 34 34Fax: (+90 416) 213 10 98

4 AFYON BRANCH Umurbey Mah. Cumhuriyet Meydanı No:5/A AFYONKARAHİSAR

Tel: (+90 272) 213 06 07Fax: (+90 272) 213 06 57

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6 AKSARAY İSTANBUL BRANCH Mesihpaşa Mah. Gazi Mustafa Kemalpaşa Cad. 40 A Aksaray/Fatih/İSTANBUL

Tel: (+90 212) 518 83 84Fax: (+90 212) 518 71 50

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9 ALTINTEPE BRANCH Altıntepe Mah. Bağdat Cad. No:60A Maltepe/İSTANBUL Tel: (+90 216) 549 25 02Fax: (+90 216) 549 25 06

10 ALTUNİZADE BRANCH Altunizade Mah. Mahir İz Cad. No:26/A Üsküdar/İSTANBUL

Tel: (+90 216) 651 87 90Fax: (+90 216) 651 87 99

11 AMASYA BRANCH Yüzevler Mah. Mustafa Kemal Paşa Cad. No:65/A AMASYA

Tel: (+90 358 212 15 20)Fax: (+90 358) 212 90 45

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Tel: (+90 326) 225 36 12Fax: (+90 326) 225 36 65

14 ANTALYA BRANCH Tahıl Pazarı Mah. Adnan Menderes Bulvarı Erkal Apartmanı A Blok No:2/7 ANTALYA

Tel: (+90 242) 244 53 57Fax: (+90 242)243 78 86

15 ASPENDOS BULVARI BRANCH Mehmetçik Mah. Aspendos Bulvarı Aspendos İş Merkezi No:69/B Muratpaşa/ANTALYA

Tel: (+90 242) 322 28 57Fax: (+90 242) 322 37 49

16 ATATÜRK ÜNİVERSİTESİ SUB-BRANCH Atatürk Mah. Üniversite Loj. Küme Evleri No:101 Yakutiye/ERZURUM

Tel: (+90 442) 236 04 78Fax: (+90 442) 236 04 79

17 AVCILAR BRANCH Merkez Mah.Reşitpaşa Cad. No:37/2A Avcılar/İSTANBUL Tel: (+90 212) 593 34 44Fax: (+90 212) 593 67 37

18 AYDIN BRANCH Ramazanpaşa Mah. Hükümet Bulvarı No:18 AYDIN Tel: (+90 256) 213 70 02Fax: (+90 256) 212 22 03

19 AZİZİYE BRANCH Aziziye Mah. Türbe Cad. Şair Hasan Rüştü Sok. No:2 Karatay/KONYA

Tel: (+90 332) 351 93 04Fax: (+90 332) 350 59 63

20 BAFRA BRANCH Hükümet Cad. Büyükcami Mah. No:5/B Bafra/SAMSUN Tel: (+90 362) 542 54 74Fax: (+90 362) 542 54 84

21 BAĞCILAR BRANCH Çınar Mah. Osmangazi Cad. NO: 22/A Bağcılar/İSTANBUL Tel : (+90 212) 462 92 28Fax: (+90 212) 433 59 02

22 BAHÇELİEVLER BRANCH Bahçelievler Mah.Naci Kasım Sk. No: 7/B Bahçelievler/İSTANBUL

Tel: (+90 212) 555 28 20Fax: (+90 212) 555 68 19

23 BAKIRKÖY BRANCH Cevizlik Mah.Fahri Korutürk Cad. No:28A Bakırköy/İSTANBUL

Tel: (+90 212) 583 02 70Fax: (+90 212)583 13 70

24 BALGAT BRANCH Oğuzlar Mah.Ceyhun Atuf Kansu Cad. No:92/A Çankaya/ANKARA

Tel: (+90 312) 284 87 07Fax: (+90 312) 284 87 14

25 BALIKESİR BRANCH Altıeylül Mah. Kızılay Cad. No: 4/A BALIKESİR Tel: (+90 266) 244 12 55Fax: (+90 266) 244 12 56

Directory

177Directory Türkiye Finans 2012 Annual Report

26 BAŞKENT CORPORATE BRANCH Atatürk Bulv. No:60/4 Kızılay/Çankaya/ANKARA Tel: (+90 312)417 98 98Fax: (+90 312)417 98 03

27 BATI ATA ŞEHİR BRANCH Barbaros Mah. Sütçü Yolu Cad. No:74 Özel İşyeri: 1 Ataşehir/İSTANBUL

Tel: (+90 216) 324 01 65Fax: (+90 216) 317 30 44

28 BATMAN BRANCH Şirinevler Mah.Atatürk Bulv. Demir Apartman Altı No:48/B MERKEZ/BATMAN

Tel: (+90 488) 214 15 06Fax: (+90 488) 213 14 86

29 BAYRAMPAŞA BRANCH Yenidoğan Mah.Abdi İpekçi Cad. No: 41/A Bayrampaşa/İSTANBUL

Tel: (+90 212) 612 24 20Fax: (+90 212) 612 24 27

30 BAYRAMYERİ BRANCH (DENİZLİ) Saraylar Mah. 2. Ticari Yol No : 30 DENİZLİ Tel: (+90 258) 265 06 03Fax: (+90 258) 265 06 07

31 BEŞEVLER BRANCH Odunluk Mah. Akademi Cad.Zeno İş Merkezi B Blok No:14 Nilüfer/BURSA

Tel: (+90 224) 451 80 60Fax: (+90 224) 451 80 99

32 BEŞİKTAŞ BRANCH Türkali Mah.Ihlamurdere Cad. No:37 Beşiktaş/İSTANBUL Tel: (+90 212) 236 69 59Fax: (+90 212) 236 67 27

33 BEŞYÜZEVLER BRANCH Yıldırım Mah. Eski Edirne Asfaltı. No:313/A Bayrampaşa/İSTANBUL

Tel: (+90 212) 479 71 66Fax: (+90 212) 649 70 98

34 BEYKENT BRANCH Cumhuriyet Mah. Gürpınaryolu Sok. No:11 Büyükçekmece/İSTANBUL

Tel: (+90 212) 871 31 18Fax: (+90 212) 873 13 47

35 BEYLİKDÜZÜ BRANCH Beylikdüzü OSB Mah.Açelya Cad. No:1/8 Beylikdüzü/İSTANBUL

Tel: (+90 212) 876 68 00Fax: (+90 212) 876 68 10

36 BİNGÖL BRANCH Yenişehir Mah. İnönü Cad. No: 24 BİNGÖL Tel: (+90 426) 214 15 23Fax: (+90 426) 214 15 24

37 BOLU BRANCH Karaçayır Mah. İzzet Baysal Cad. No: 82/A BOLU Tel: (+90 374) 217 61 31Fax: (+90 374) 217 71 23

38 BORNOVA BRANCH Kazım Dirik Mah. Mustafa Kemal Cad. No: 39/C Bornova/İZMİR

Tel: (+90 232) 339 57 07Fax: (+90 232) 339 93 97

39 BUCA BRANCH Kazağaç Mah.Özmen Cad. No:121/A Buca/İZMİR Tel: (+90 232) 452 66 64Fax: (+90 232) 452 60 45

40 BURDUR BRANCH Özgür Mah. Gazi Cad. No. 49 BURDUR Tel: (+90 248) 234 62 42Fax: (+90 248) 234 61 34

41 BURSA BRANCH Aktarhüssam Mah. Ahmet Hamdi Tanpınar Cad. No:25 Osmangazi/BURSA

Tel: (+90 224) 221 33 00Fax: (+90 224) 221 33 02

42 BÜSAN BRANCH (KONYA) Fevzi Çakmak Mah. Kosgeb Cad. No:7/A Karatay/KONYA Tel: (+90 332) 345 31 00Fax: (+90 332) 345 31 10

43 CADDEBOSTAN BRANCH Caddebostan Mah. Bağdat Cad. No:258/A Kadıköy/İSTANBUL

Tel: (+90 216) 355 70 07Fax: (+90 216) 355 70 12

44 CEVİZLİ BRANCH (MALTEPE) Cevizli Mah. Bağdat Cad. No:458/A Maltepe/İSTANBUL Tel: (+90 216) 441 74 75Fax: (+90 216) 441 05 85

45 CEYHAN BRANCH Türlübaş Mah. Atatürk Cad. No:278/A Ceyhan/ADANA Tel: (+90 322) 611 52 64Fax: (+90 322) 611 52 74

46 ÇAĞLAYAN BRANCH Çağlayan Mah.Vatan Cad. No:30/A Kağıthane/İSTANBUL Tel: (+90 212) 291 55 25Fax: (+90 212) 234 70 92

47 ÇALLI BRANCH/ANTALYA Sedir Mah. Gazi Bulvarı No:96 ANTALYA Tel: (+90 242) 345 00 55Fax: (+90 242) 345 33 53

48 ÇAMDİBİ BRANCH Mersinli Mah. Fatih Cad. 80/1 A Konak/İZMİR Tel: (+90 232) 462 12 67Fax: (+90 232) 435 34 29

49 ÇAMLICA BRANCH Kısıklı Mah. Alemdağ Cad. No:53/B Üsküdar/İSTANBUL Tel: (+90 216) 461 00 06Fax: (+90 216) 461 00 07

50 ÇANAKKALE BRANCH Kemalpaşa Mah. Çarşı Cad. No: 103 ÇANAKKALE Tel: (+90 286) 214 33 01Fax: (+90 286) 214 33 09

51 ÇANKAYA BRANCH Hoşdere Cad. No:188 Çankaya/ANKARA Tel: (+90 312) 441 20 55Fax: (+90 312) 441 20 93


52 ÇARŞI BRANCH (ÜMRANİYE) Atatürk Mah. Alemdağ Cad. No:82/A Ümraniye/İSTANBUL

Tel: (+90 216) 316 85 85Fax: (+90 216) 344 70 71

53 ÇAYIROVA BRANCH Çayırova Mah. Fatih Cad. No:114 Çayırova/KOCAELİ Tel: (+90 262) 742 42 04Fax: (+90 262) 742 41 65

54 ÇEKMEKÖY BRANCH Çamlık Mah. Muhsin Yazıcıoğlu Cad. No:44/A Çekmeköy/İSTANBUL

Tel: (+90 216) 640 01 05Fax: (+90 216) 640 01 06

55 ÇERKEZKÖY BRANCH Gaziosmanpaşa Mah. Atatürk Cad. No : 1/A Çerkezköy/TEKİRDAĞ

Tel: (+90 282) 726 48 58Fax: (+90 282) 726 72 92

56 ÇİĞLİ BRANCH Büyükçiğli Mahallesi Anadolu Cad. No: 937 Çiğli/İZMİR Tel: (+90 232) 329 54 60Fax: (+90 232) 329 54 77

57 ÇORLU BRANCH Kazimiye Mah.Salih Omurtak Cad. No:20/A ÇORLU Tel: (+90 282) 673 57 26Fax: (+90 282) 673 57 32

58 ÇORUM BRANCH Çepni Mah.İnönü Cad. No:41 ÇORUM Tel: (+90 364) 225 31 82Fax: (+90 364) 224 81 47

59 ÇUKURAMBAR BRANCH Çukurambar Mah. 1425 Cad. No:26/A Çukurambar/ANKARA

Tel: (+90 312) 287 04 36Fax: (+90 312) 287 04 56

60 DEĞİRMENDERE BRANCH Sanayi Mah. Devlet Karayolu Cad. No:49 TRABZON Tel: (+90 462) 328 10 02Fax: (+90 462) 328 10 05

61 DEMETEVLER BRANCH Karşıyaka Mah. İvedik Cad. No:428/A Demetevler/Yenimahalle/ANKARA

Tel: (+90 312) 335 04 76Fax: (+90 312) 335 08 76

62 DEMİRTAŞ BRANCH/BURSA Panayır Mah. Yeni Yalova Yolu Buttim İş Merkezi A 4 B Blok No: 38 Osmangazi/BURSA

Tel: (+90 224) 211 33 97Fax: (+90 224) 211 33 98

63 DEMİRTEPE BRANCH Maltepe Mah.Gazi Mustafa Kemal Bulvarı No: 51/A Çankaya/ANKARA

Tel: (+90 312) 230 52 10Fax: (+90 312) 230 52 09

64 DENİZLİ BRANCH Saraylar Mh. Cumhuriyet Cad. No: 16/A DENİZLİ Tel : (+90 258) 241 67 00Fax : (+90 258) 261 90 74

65 DES BRANCH Dudullu OSB Mah. DES-1.Cad. A Blok No: 5/B Ümraniye İSTANBUL

Tel: (+90 216) 420 38 00Fax: (+90 216) 420 30 82

66 DİYARBAKIR BRANCH Cami Nebi Mah. Gazi Cad. No: 31/C Sur/DİYARBAKIR Tel: (+90 412) 229 00 03Fax: (+90 412) 229 00 01

67 DUDULLU BRANCH Yukarı Dudullu Mah. Necip Fazıl Bulvarı KEYAP Çarşı A1 Blok No:44/2 Ümraniye İSTANBUL

Tel: (+90 216) 540 70 70Fax: (+90 216) 540 54 87

68 DÜZCE BRANCH Camikebir Mah. İstanbul Cad. No: 13/A DÜZCE Tel: (+90 380) 514 78 37Fax: (+90 380) 514 78 38

69 EDİRNE BRANCH Çavuşbey Mah.Hükümet Cad.No:5/1 EDİRNE Tel: (+90 284) 214 92 40Fax: (+90 284) 214 92 48

70 ELAZIĞ BRANCH İcadiye Mah.Hürriyet Cad. No:23/A ELAZIĞ Tel : (+90 424) 236 43 74Fax : (+90 424) 218 21 29

71 EMİNÖNÜ BRANCH Rüstem Paşa Mah. Vasıfçınar Cad. No: 45 Fatih/İSTANBUL

Tel: (+90 212) 514 01 54Fax: (+90 212) 514 01 59

72 EMNİYET CADDESİ BRANCH Ulubatlı Mah. Yunus Emre Cad. No:69/A Merkez/ŞANLIURFA

Tel: (+90 414) 312 25 68Fax: (+90 414) 313 58 66

73 ERENLER BRANCH Erenler Mah. Sakarya Cad. No:346/B Erenler/SAKARYA Tel: (+90 264) 276 99 81Fax: (+90 264) 276 99 26

74 ERENKÖY BRANCH 19 Mayıs Mah. Şemsettin Günaltay Cad. No:198/A Kadıköy/İSTANBUL

Tel: (+90 216) 478 54 02Fax: (+90 216) 478 54 03

75 ERZİNCAN BRANCH Karaağaç Mah. Fevzipaşa Cad. No:24/A ERZİNCAN Tel: (+90 446) 223 39 39Fax: (+90 446) 223 33 83

76 ERZURUM BRANCH Topçuoğlu Mah.Orhan Şerifsoy Cad..No:18 ERZURUM Tel: (+90 442) 213 50 10Fax: (+90 442) 213 50 18

77 ESENLER BRANCH Fevzi Çakmak Mah. Atışalanı Cad. No: 16 Esenler/İSTANBUL

Tel: (+90 212) 568 10 80Fax: (+90 212) 568 12 92

Directory


78 ESENYURT BRANCH İnönü Mah. Doğan Araslı Bulv. No:124/D Esenyurt/İSTANBUL

Tel:(+90 212) 596 00 76Fax:(+90 212) 450 20 45

79 ESKİŞEHİR BRANCH Cumhuriyet Mah. Sakarya- 1 Cad. No:27/A ESKİŞEHİR Tel: (+90 222) 230 02 98Fax: (+90 222) 220 14 13

80 ETİLER BRANCH Etiler Mah. Nisbetiye Cad. No: 63 Beşiktaş/İSTANBUL Tel: (+90 212) 257 12 30Fax: (+90 212) 257 37 25

81 ETLİK BRANCH İncirli Mah. Gn.Dr.Teyfik Sağlam Cad. No:76/A Keçiören/ANKARA

Tel: (+90 312) 322 04 06Fax: (+90 312) 322 14 64

82 FATİH BRANCH Ali Kuşçu Mah. Macar Kardeşler Cad. No: 54/B Fatih/İSTANBUL

Tel: (+90 212) 631 04 90Fax: (+90 212) 631 04 96

83 FATSA BRANCH Mustafa Kemal Paşa Mah. Cumhuriyet Meydanı No:2/A Fatsa/ORDU

Tel: (+90 452) 424 24 06Fax: (+90 452) 424 04 26

84 FETHİYE BRANCH Cumhuriyet Mah. Çarşı Cad. No:43 FETHİYE Tel: (+90 252) 612 01 30Fax: (+90 252) 612 03 73

85 FINDIKZADE BRANCH Molla Gürani Mah. Turgut Özal Millet Cad. No 78A Fatih İSTANBUL

Tel:(+90 212) 491 20 40Fax:(+90 212) 491 20 43

86 FLORYA BRANCH Şenlikköy Caddesi. Beyazlar Apt. No: 47/1 Florya/Bakırköy/İSTANBUL

Tel: (+90 212) 624 60 93Fax: (+90 212) 624 60 15

87 FSM BULVARI BRANCH Esentepe Mah. Fatih Sultan Mehmet Bulvarı. No: 98/1 Nilüfer/BURSA

Tel: (+90 224) 246 65 15Fax: (+90 224) 246 62 25

88 GATEM BRANCH Sanayi Mah. Erdoğan Ergönül Cad. No:17 Şehitkamil/GAZİANTEP

Tel: (+90 342)238 42 07Fax: (+90 342)238 42 08

89 GAZİANTEP BRANCH İncilipınar Mah. Prf. Muammer Aksoy Bulv. No:19/A Şehitkamil GAZİANTEP

Tel: (+90 342) 215 35 31Fax: (+90 342) 215 35 32

90 GAZİOSMANPAŞA BRANCH Merkez Mah. Eyüp Cad. No:2/1-A Gaziosmanpaşa İSTANBUL

Tel: (+90 212) 614 40 46Fax: (+90 212) 616 69 69

91 GEBZE BRANCH Hacı Halil Mah. Atatürk Cad. No:15/A Gebze/KOCAELİ Tel: (+90 262) 644 71 36Fax: (+90 262) 644 67 71

92 GEBZE E-5 BRANCH Osman Yılmaz Mah.İstanbul Cad. No:56/B Gebze/KOCAELİ Tel: (+90 262) 644 87 19Fax: (+90 262) 644 88 67

93 GİMAT BRANCH Macun Mahallesi Bağdat Cad. No:95/5 Yenimahalle/ANKARA

Tel: (+90 312) 397 22 77Fax: (+90 312) 397 22 85

94 GİRESUN BRANCH Sultan Selim Mah. Arif Bey Cad. No: 3 GİRESUN Tel: (+90 454) 212 04 90Fax: (+90 454) 212 73 70

95 GİYİMKENT BRANCH Oruç Reis Mah. Vadi Cad.No:3 Esenler/İSTANBUL Tel: (+90 212) 438 35 61Fax: (+90 212) 438 35 68

96 GÖLBAŞI BRANCH Seğmenler Mah. Ankara Cad. No:71/A Gölbaşı/ANKARA Tel: (+90 312) 484 45 41Fax: (+90 312) 484 46 61

97 GÜLTEPE BRANCH Ortabayır Mah.Talatpaşa Cad. No:70/B Kağıthane/İSTANBUL

Tel: (+90 212) 280 20 42Fax: (+90 212) 280 19 71

98 GÜNEŞLİ BRANCH Evren Mah. Gülbahar Cad. No: 14 Bağcılar/İSTANBUL Tel: (+90 212) 602 03 30Fax: (+90 212) 602 03 25

99 GÜNGÖREN BRANCH Sanayi Mah.Sancaklı Cad. No:4/A Güngören/İSTANBUL Tel: (+90 212) 539 91 11Fax: (+90 212) 539 91 12

100 GÜNGÖREN ÇARŞI BRANCH İnönü Cad. No:23/B Güngören/İSTANBUL Tel: (+90 212) 502 80 41Fax: (+90 212) 502 80 48

101 HADIMKÖY YOLU BRANCH Akçaburgaz Mah. Hadımköy Yolu Cad. No:202/A Esenyurt/İSTANBUL

Tel: (+90 212) 886 22 82Fax: (+90 212) 886 22 92

102 HALKALI BRANCH İkitelli Organize Sanayi Bölgesi Atatürk Mah. İkitelli Cad. İETT garajları karşısı İmsan Sanayi Sitesi E Blok No:18-19 İkitelli/Küçükçekmece/İSTANBUL

Tel: (+90 212) 697 43 12Fax: (+90 212) 698 43 13


103 IHLAMURKUYU BRANCH Tepeüstü Mah.Alemdağ Cad. No:582/A Ümraniye/İSTANBUL

Tel: (+90 216) 540 87 50Fax: (+90 216) 540 17 99

104 ISPARTA BRANCH Pirimehmet Mah. 101. Cad. No:25 ISPARTA Tel: (+90 246) 233 00 21Fax: (+90 246) 233 00 29

105 İKİTELLİ BRANCH Ziya Gökalp Mahallesi Atatürk Bulvarı No: 74/D Başakşehir/İSTANBUL

Tel: (+90 212) 671 21 00Fax: (+90 212) 549 65 14

106 İKİTELLİ SAN. BRANCH Ziya Gökalp Mah. Süleyman Demirel Bulvarı HESKOP Yanı İş Modern Ticaret Merkezi H Blok No:20 Başakşehir/İSTANBUL

Tel: (+90 212) 777 55 83Fax: (+90 212) 777 56 64

107 İNEGÖL BRANCH Sinanbey Mah. Nuri Doğrul Cad. No: 5 İnegöl/BURSA Tel: (+90 224) 711 90 80Fax: (+90 224) 713 90 09

108 İSKENDERUN BRANCH Savaş Mah. Şehit Pamir Cad. No:11/A İSKENDERUN Tel: (+90 326)613 16 15Fax: (+90 326) 612 10 02

109 İSTOÇ BRANCH İstoç Ticaret Merkezi 3.Ada C Tipi No:5-7 Mahmutbey Bağcılar İSTANBUL

Tel: (+90 212) 659 58 00Fax: (+90 212) 659 56 54

110 İZMİR BRANCH Akdeniz Mahallesi Fevzipaşa Bulvarı No:55 A Çankaya/Konak/İZMİR

Tel: (+90 232) 445 51 75Fax: (+90 232) 445 51 71

111 İZMİT SANAYİ BRANCH Sanayi Mah. Sanayi Sitesi 7.Cad No:48/7 İzmit/KOCAELİ Tel: (+90 262) 335 60 35Fax: (+90 262) 335 60 40

112 İZMİT BRANCH Ömerağa Mahallesi Cumhuriyet Caddesi No:136/A İZMİT/KOCAELİ

Tel : (+90 262) 325 25 20Fax : (+90 262)321 92 87

113 İVEDİK BRANCH İvedik organize sanayi bölgesi 1368.cad.Eminel iş merkezi no:18/16 ivedik yenimahalle/ANKARA

Tel: (+90 312) 395 24 07Fax: (+90 312) 394 38 69

114 KADIKÖY BRANCH Eğitim Mah. Fahrettin Kerim Gökay Cad. No:71/A Kadıköy İSTANBUL

Tel: (+90 216) 414 56 76Fax: (+90 216) 414 56 23

115 KAHRAMANMARAŞ BRANCH İsmetpaşa Mah. Trabzon Bulvarı No:2/A KAHRAMANMARAŞ

Tel: (+90 344) 224 00 32Fax: (+90 344) 224 00 74

116 KARABAĞLAR BRANCH Karabağlar Mh. Yeşillik Cd. No:419 İZMİR Tel: (+90 232)253 66 86Fax: (+90 232) 254 83 25

117 KARAKÖY BRANCH Arapcami Mahallesi Bankalar Caddesi No:29/A Beyoğlu/İSTANBUL

Tel: (+90 212) 297 09 09Fax: (+90 212) 237 40 17

118 KARAMAN BRANCH Fenari Mah. 9.Sok. No:2B KARAMAN Tel: (+90 338) 214 70 70Fax: (+90 338) 213 71 71

119 KARTAL BRANCH Yukarı Mahalle Üsküdar Cad. No:14/B Kartal/İSTANBUL Tel: (+90 216) 387 21 51Fax: (+90 216) 387 01 20

120 KASTAMONU BRANCH Topçuoğlu Mah.Cumhuriyet Cad. No:34/A Merkez/KASTAMONU

Tel: (+90 366) 212 97 90Fax: (+90 366) 212 97 91

121 KAVACIK BRANCH Çubuklu Mah. Orhan Veli Kanık Cad. No:81/E Beykoz/İSTANBUL

Tel: (+90 216) 680 38 60Fax: (+90 216) 680 38 67

122 KAYAPINAR BRANCH Peyas Mah. Urfa Bulvarı Ekinciler Sitesi A Blok No:80/C Kayapınar/DİYARBAKIR

Tel: (+90 412) 252 24 54Fax: (+90 412) 252 24 94

123 KAYSERİ BRANCH Kiçikapı Mahallesi Bankalar Cad. No:1/A Melikgazi/KAYSERİ

Tel: (+90 352) 222 34 88Fax: (+90 352) 222 34 96

124 KAYSERİ OSB BRANCH Organize Sanayi Bölgesi 8.Cad. No: 62 KAYSERİ Tel: (+90 352) 322 16 70Fax: (+90 352) 322 16 78

125 KAYSERİ SANAYİ BRANCH Sanayi Mah. Osman Kavuncu Bulvarı.No:130 Kocasinan/Kayseri

Tel: (+90 352) 336 45 28Fax: (+90 352) 336 45 68

126 KAYSERİ SİVAS CADDESİ BRANCH Mimarsinan Mah. Sivas Bulvarı No:189/B Kocasinan/KAYSERİ

Tel: (+90 352) 223 64 24Fax: (+90 352) 223 58 85

127 KEÇİÖREN BRANCH Şenlik Mah.Kızlarpınarı Cad.No:107/C Keçiören/ANKARA Tel: (+90 312) 356 00 70Fax : (+90 312) 356 00 76

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128 KESTEL BRANCH Uludağ Cad. Kestel Organize Sanayi Bölgesi A Blok No:3 Kestel/BURSA

Tel: (+90 224) 372 01 60Fax : (+90 224) 372 01 74

129 KDZ. EREĞLİ BRANCH Müftü Mah. Yukarı Sokak No:4 Kdz. Ereğli/ZONGULDAK Tel: (+90 372) 323 53 23Fax: (+90 372) 323 53 63

130 KIRIKKALE BRANCH Yeni Doğan Mahallesi Barbaros Hayrettin Cad. No:32/A KIRIKKALE

Tel: (+90 318) 218 89 89Fax: (+90 318) 218 03 83

131 KIRŞEHİR BRANCH Kuşdilli Mahallesi Terme Cad. No:16 KIRŞEHİR Tel: (+90 386) 212 32 62Fax: (+90 386) 212 32 93

132 KIZILAY BRANCH Kızılay Mahallesi Atatürk Bulvarı No:60/A Çankaya/ANKARA

Tel: (+90 312) 417 44 40Fax: (+90 312) 417 44 43

133 KONYA BRANCH Musalla Bağları Mah. Ankara Cad. No:117/1 Selçuklu/KONYA

Tel: (+90 332) 238 06 66Fax: (+90 332) 238 72 72

134 KONYA ALTI BRANCH Altunkum Mah. Atatürk Bulvarı No:209 Konyaaltı/ANTALYA

Tel: (+90 242) 228 61 73Fax: (+90 242) 230 38 92

135 KONYA YENİ TOPTANCILAR SİTESİ BRANCH

Fevzi Çakmak Mah. Karakayış Cad. No:269/1 Karatay/KONYA

Tel: (+90 332) 342 25 36Fax: (+90 332)342 24 93

136 KOZYATAĞI CORPORATE BRANCH Kozyatağı Mahallesi Değirmen Sk. No:18/B-D Kadıköy/İSTANBUL

Tel: (+90 216) 463 56 01Fax: (+90 216) 463 56 02

137 KURTKÖY BRANCH Şeyhli Mah. Ankara Cad. No:193/B Kurtköy Pendik/İSTANBUL

Tel: (+90 216) 595 11 06Fax: (+90 216) 595 11 75

138 KURTTEPE BRANCH Yurt Mah. Turgut Özal Blv. No:180/A Çukurova/ADANA Tel: (+90 322) 247 24 04Fax: (+90 322) 247 24 05

139 KÜÇÜKBAKKALKÖY BRANCH Küçükbakkalköy Mah. Kayışdağı Cad. No:141/A Ataşehir/İSTANBUL

Tel:(+90 216) 469 74 80Fax:(+90 216) 469 74 87

140 KÜÇÜKYALI BRANCH Küçükyalı Mah. Bağdat Cad. No:151/A Maltepe/İSTANBUL

Tel: (+90 216) 518 50 30Fax: (+90 216) 518 59 70

141 KÜTAHYA BRANCH Mecidiye Mah. Abdurrahman Paşa Cad. No:7 KÜTAHYA Tel: (+90 274) 216 40 81Fax: (+90 274) 216 40 82

142 LALELİ BRANCH Mimar Kemalettin Mah.Soğanağa Camii Sok. No:33/A Fatih/İSTANBUL

Tel: (+90 212) 517 37 40Fax: (+90 212) 517 37 46

143 LEVENT SANAYİ BRANCH Sanayi Mah. Eski Büyükdere Cad. No:43/A Kağıthane/İSTANBUL

Tel: (+90 212) 278 58 34Fax: (+90 212) 278 58 83

144 LÜLEBURGAZ BRANCH Yeni Mah. Emrullah Efendi Cad. No:12/A Lüleburgaz/KIRKLARELİ

Tel: (+90 288) 412 05 55Fax: (+90 88) 412 74 11

145 MAIN BRANCH Hürriyet Mah. Adnan Kahveci No:139 Kartal/İSTANBUL Tel: (+90 216) 452 86 43Fax: (+90 216) 452 55 25

146 MALATYA BRANCH B.Hüseyinbey Mah. Atatürk Cad. No:23/A Merkez/MALATYA

Tel: (+90 422) 325 94 49Fax: (+90 422) 325 94 59

147 MALTEPE BRANCH Bağlarbaşı Mah. Bağdat Cad. No:419/A Maltepe/İSTANBUL

Tel: (+90 216) 442 80 05Fax: (+90 216)442 80 09

148 MANAVGAT BRANCH Bahçelievler Mah. Demokrasi Bulvarı No:10/A Manavgat/ANTALYA

Tel: (+90 242) 743 23 94Fax: (+90 242) 743 23 95

149 MANİSA BRANCH 1. Anafartalar Mah. Mustafa Kemal Paşa Cad. No:38/A MANİSA

Tel: (+90 236) 239 84 84Fax: (+90 236) 232 07 00

150 MARDİN BRANCH Yenişehir Mah.Vali Ozan Cad. No:69/A MARDİN Tel: (+90 482) 212 32 87Fax: (+90 482) 212 32 97

151 MASLAK BRANCH Maslak Mah. Zümrüt Sokak No: 1 A Şişli/İSTANBUL Tel: (+90 212) 286 95 36Fax: (+90 212) 286 95 39

152 MECİDİYEKÖY BRANCH Mecidiyeköy Mah. Büyükdere Cad. No:89/A Şişli/İSTANBUL

Tel: (+90 212) 356 03 15Fax: (+90 212) 356 03 20

153 MEGA CENTER BRANCH Kocatepe Mah.Gümrük İskelesi Cad., Mega Center, No:12/C-Z.Kat D:5/37-12 Bayrampaşa/İSTANBUL

Tel: (+90 212) 640 06 75Fax: (+90 212) 640 47 87


154 MERSİN BRANCH Cami Şerif Mah. İstiklal Cad. No:33/B MERSİN Tel: (+90 324) 238 20 24Fax: (+90 324) 239 05 24

155 MERTER BRANCH Fatih Cad No:27 Güngören/İSTANBUL Tel: (+90 212) 637 26 09Fax: (+90 212) 637 61 48

156 MEVLANA BRANCH Şükran Mah. Mevlana Cad. No : 14/A Meram/KONYA Tel: (+90 332) 353 61 03Fax: (+90 332) 353 61 02

157 NEVŞEHİR BRANCH Camicedit Mah. Atatürk Bulvarı No:29/A Merkez/NEVŞEHİR

Tel: (+90 384) 214 36 00Fax: (+90 384) 214 32 17

158 NİLÜFER BRANCH Üçevler Mah. Nilufer Cad. No: 4/5 Nilufer/BURSA Tel: (+90 224) 443 43 00Fax: (+90 224) 443 43 33

159 NİŞANTAŞI BRANCH Vali konağı Cad. No: 54/B Nişantaşı/Şişli/İSTANBUL Tel: (+90 212) 343 62 82Fax: (+90 212) 343 62 19

160 ORDU BRANCH Şarkiye Mah. Süleyman Felek Cad. No : 88/1 ORDU Tel: (+90 452) 223 27 47Fax: (+90 452) 223 44 49

161 OSMANAĞA BRANCH (KADIKÖY) Osmanağa Mah. Başçavuş Sok. No:31/B Kadıköy/İSTANBUL

Tel: (+90 216) 348 28 19Fax: (+90 216) 348 82 27

162 OSMANBEY BRANCH Cumhuriyet Mah. Halaskargazi Cad. No:127/A Şişli/İSTANBUL

Tel: (+90 212) 231 18 12Fax: (+90 212) 231 20 52

163 OSMANİYE BRANCH Alibeyli mah. Palalı Süleyman Cad. No:9/B OSMANİYE Tel: (+90 328) 813 56 26Fax: (+90 328) 813 59 90

164 OSTİM BRANCH Ostim Mah. 100.Yıl Bulvarı No:36 Yenimahalle/ANKARA Tel : (+90 312) 385 68 23Fax: (+90 312) 385 68 26

165 PENDİK BRANCH Doğu Mah. Ankara Cad. No: 163 Pendik/İSTANBUL Tel: (+90 216) 483 64 05Fax: (+90 216) 483 64 09

166 PERPA BRANCH Halil Rıfat Paşa Mah. Yüzer Havuz Sok. No:1 Perpa Ticaret Merkezi Elektrokent A Blok Kat : 4,5,6 No: 290/B Yeşil Avlu Şişli/İSTANBUL

Tel: (+90 212) 222 66 16Fax: (+90 212) 222 42 14

167 PINARBAŞI BRANCH Kemalpaşa Mah.Kemalpaşa Cad.No:34 Pınarbaşı/Bornova/İZMİR

Tel: (+90 232) 479 90 82Fax: (+90 232) 479 90 83

168 POLATLI BRANCH Cumhuriyet Mah.Ankara Cad.No:35/C Polatlı/ANKARA Tel: (+90 312) 621 11 33Fax: (+90 312) 621 06 96

169 RAMİ BRANCH Yeni Mah.Kuru Gıda 14.Sokak No 137 Rami/Eyüp/İSTANBUL

Tel: (+90 212) 417 38 40Fax: (+90 212) 563 26 00

170 RİZE BRANCH Çarşı Mah. Cumhuriyet Cad. No:152/A Merkez/RİZE Tel: (+90 464) 213 21 08Fax: (+90 464) 214 01 65

171 SAHRAYICEDİT BRANCH Erenköy Mah. Fahrettin Kerim Gökay Cad. No.278/A Kadıköy/İSTANBUL

Tel: (+90 216) 411 14 94Fax: (+90 216) 411 14 98

172 SALİHLİ BRANCH Mithatpaşa Mah. Mithatpaşa Cad. No: 137 Salihli/MANİSA Tel: (+90 236) 715 20 89Fax: (+90 236) 715 20 99

173 SAMANDIRA BRANCH Osmangaizi Mah. Osmangazi Cad. No: 155/156 A Sancaktepe/İSTANBUL

Tel: (+90 216) 561 04 16Fax: (+90 216) 561 04 26

174 SAMSUN BRANCH Kale Mah. Kazımpaşa Cad. No:12/A İlkadım/SAMSUN Tel: (+90 362) 435 86 04Fax: (+90 362) 432 35 89

175 SAMSUN SANAYİ BRANCH Şabanoğlu Mah.Atatürk Bulvarı No:229 Tekkeköy/SAMSUN

Tel: (+90 362) 266 83 07Fax: (+90 362) 266 89 38

176 SEFAKÖY BRANCH Fevzi Çakmak Mah. Ahmet Kocabıyık Sk. No:12/A Küçükçekmece/İSTANBUL

Tel: (+90 212) 599 12 35Fax: (+90 212) 599 12 89

177 SERBEST BÖLGE BRANCH İstanbul Endüstri ve Ticari Serbest Bölgesi Matraş Cad. No:14 Tuzla/İSTANBUL

Tel: (+90 216) 394 09 42Fax: (+90 216) 394 08 84

178 SEYHAN BRANCH (ADANA) Kuruköprü Mah.Çakmak Cad.No:39/B Seyhan/ADANA Tel : (+90 322) 363 07 11Fax: (+90 322) 363 06 32

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179 SEYİTNİZAM BRANCH Seyitnizam Mah. Seyitnzam Cad. No:51/4 D Zeytinburnu/İSTANBUL

Tel: (+90 212) 416 26 09Fax: (+90 212) 416 25 96

180 SİİRT BRANCH Bahçelievler Mah. Hükümet Bulv. No:8/A SİİRT Tel: (+90 484) 224 69 30Fax: (+90 484) 224 69 40

181 SİLİVRİ BRANCH Piri Mehmet Paşa Mah. Ali Çetinkaya Cad. No:78 Silivri İSTANBUL

Tel: (+90 212) 728 96 01Fax: (+90 212) 728 96 10

182 SİNCAN BRANCH Atatürk Mah. Onur Sok. No:12/A Sincan/ANKARA Tel: (+90 312) 276 77 47Fax: (+90 312) 276 77 46

183 SİTELER BRANCH Ulubey Mah. Karacakaya Cad. No:73/O Siteler/Altındağ/ANKARA

Tel: (+90 312) 348 10 90Fax: (+90 312) 348 34 02

184 SİVAS BRANCH Eski Kale Mah. Sirer Cad. No:18/A SİVAS Tel: (+90 346) 225 72 00Fax: (+90 346) 224 30 72

185 SUBURCU BRANCH Karagöz mah.Karagöz cad. No: 20 Şahinbey/GAZİANTEP Tel: (+90 342) 231 20 10Fax: (+90 342) 231 20 70

186 SULTANBEYLİ BRANCH Mehmet Akif Ersoy Mah. Fatih Bulvarı No:185/A Sultanbeyli/İSTANBUL

Tel: (+90 216) 496 12 22Fax: (+90 216) 496 17 57

187 SULTANÇİFTLİĞİ BRANCH Cebeci Mah. Eski Edirne Asfaltı No:732A Sultangazi/İSTANBUL

Tel: (+90 212) 475 36 00Fax: (+90 212) 475 36 00

188 SULTANHAMAM BRANCH Hobyar Mah. Sultan Hamamı Cad. No:15/A Fatih/İSTANBUL

Tel: (+90 212) 514 02 98Fax: (+90 212) 514 16 77

189 ŞANLIURFA BRANCH Atatürk Mah. Atatürk Bulvarı No:80/A ŞANLIURFA Tel: (+90 414) 215 54 21Fax: (+90 414) 215 54 24

190 ŞEHİTKAMİL BRANCH Budak Mah. Gazimuhtarpaşa Bulvarı Yaşam İş Merkezi No:42/7 Şehitkamil/GAZİANTEP

Tel: (+90 342) 323 20 14Fax: (+90 342) 323 20 19

191 ŞİRİNEVLER BRANCH Hürriyet Mah. Mahmutbey Cad. No:1A Şirinevler/Bahçelievler/İSTANBUL

Tel: (+90 212) 551 73 13Fax: (+90 212) 654 20 17

192 TAKSİM BRANCH Harbiye Mah. Cumhuriyet Cd. No:30A Şişli İSTANBUL Tel: (+90 212) 296 58 28Fax: (+90 212) 296 58 33

193 TARSUS BRANCH Kızıl Murat Mah.Atatürk Bulvarı No:12 Tarsus/MERSİN Tel: (+90 324) 613 95 01Fax: (+90 324) 614 30 49

194 TEKİRDAĞ BRANCH Yavuz Mah. Hükümet Cad. No:125 TEKİRDAĞ Tel: (+90 282) 260 40 04Fax: (+90 282) 260 40 03

195 TERAZİDERE BRANCH Terazidere Mah. Güneş Cad. No: 15/A Bayrampaşa-İSTANBUL

Tel: (+90 212)501 02 56Fax: (+90 212) 501 03 74

196 TOPÇULAR BRANCH Topçular Mah. Rami Kışla Caddesi No:68/G Eyüp/İSTANBUL

Tel: (+90 212) 612 13 00Fax: (+90 212) 612 24 34

197 TOPHANE BRANCH Hacımimi Mah. Kemeraltı Cad. No:46 Beyoğlu/İSTANBUL Tel: (+90 212) 251 65 20Fax: (+90 212) 245 56 32

198 TOPKAPI BRANCH Maltepe Mah. Davutpaşa Cad.No:81 Dk.69 Zeytinburnu/İSTANBUL

Tel: (+90 212) 674 33 36Fax: (+90 212) 674 33 16

199 TRABZON BRANCH Kemerkaya Mah.Kahramanmaraş Cad. Ustaömeroğlu İş Merkezi No:19 TRABZON

Tel: (+90 462)326 01 36Fax: (+90 462) 322 37 48

200 TURGUTLU BRANCH Turan Mahallesi Atatürk Bulv. No:178 Turgutlu/MANİSA Tel: (+90 236) 314 70 60Fax: (+90 236) 314 80 10

201 TUZLA BRANCH İçmeler Mah. Mazhar Sok. No:21/B Tuzla/İSTANBUL Tel: (+90 216) 493 13 82Fax: (+90 216) 493 13 90

202 TUZLA SANAYİ BRANCH Mescit Mah. Demokrasi Cad. Birmes Sanayi Sitesi A 8 Blok No:3 Tuzla/İSTANBUL

Tel: (+90 216) 394 20 45Fax: (+90 216) 394 94 37

203 TÜMSAN BRANCH Ziya Gökalp Mah. Tümsan Sanayi Sitesi 1. Kısım 3. Blok No:7 Başakşehir/İSTANBUL

Tel: (+90 212) 486 12 39Fax: (+90 212) 486 12 57

204 ULUCAMİ BRANCH Nalbantoğlu Mah. Taşkapı Cad. 2 Bademli Sok.Cemil Öz Apt.16/A Osmangazi/BURSA

Tel: (+90 224) 223 48 40Fax: (+90 224) 223 48 46


205 ULUS BRANCH Necatibey Mah. Anafartalar Cad.No:45/C Altındağ ANKARA

Tel: (+90 312) 309 27 41Fax: (+90 312) 309 27 46

206 UŞAK BRANCH Kurtuluş Mah. İsmetpaşa Cad. No: 46/A UŞAK Tel: (+90 276) 227 11 10Fax: (+90 276) 227 74 76

207 ÜÇKUYULAR BRANCH Mithatpaşa Cad.No:1181/A Üçkuyular/Karabağlar/İZMİR” Tel: (+90 232) 278 67 68Fax: (+90 232) 278 67 61

208 ÜMRANİYE BRANCH Atatürk Mah. Alemdağ Cad. Dönmezler Ap.No:58B Ümraniye/İSTANBUL

Tel: (+90 216) 523 13 63Fax: (+90 216) 523 13 70

209 ÜSKÜDAR BRANCH Mimar Sinan Mah.İnkılap Çıkmazı No:6 ÜSKÜDAR/İSTANBUL

Tel: (+90 216) 391 00 70Fax: (+90 216) 391 00 77

210 VAN BRANCH Şerefiye Mah.Cumhuriyet Cad.No:29 VAN Tel: (+90 432) 215 62 62Fax: (+90 432) 214 44 45

211 YALOVA BRANCH R.paşa Mah. Cumhuriyet Cad. No:16/A YALOVA Tel: (+90 226) 811 21 50Fax: (+90 226) 811 21 58

212 YAVUZSELİM BRANCH Akşemsettin Mahallesi Fevzipaşa Cad.no:147 Fatih/İSTANBUL

Tel: (+90 212) 631 93 53Fax: (+90 212) 631 71 37

213 YENİBOSNA BRANCH Yenibosna Merkez Mah. Köyceğiz Sok. No:2-4/A Bahçelievler/İSTANBUL

Tel: (+90 212) 474 42 09Fax: (+90 212) 474 42 64

214 YEŞİLPINAR BRANCH Yeşilpınar Mah. Pamuk Sok. No:8 Eyüp/İSTANBUL Tel: (+90 212) 535 25 71Fax: (+90 212) 535 25 98

215 YILDIRIM BRANCH Anadolu Mah. Ankarayolu Cad. No : 77 Yıldırım/BURSA Tel: (+90 224) 361 52 22Fax: (224) 360 08 18

216 YILDIZ BRANCH Sançak Mah. Turan Güneş Bulvarı No:31/D Çankaya/ANKARA

Tel: (+90 312) 441 36 11Fax: (+90 312) 441 36 12

217 YOZGAT BRANCH Medrese Mah. Lise Cad. Birlik İş Merkezi No:26/A Merkez/YOZGAT

Tel: (+90 354) 212 45 62Fax: (+90 354) 212 45 63

218 YÜREĞİR BRANCH Dadaloğlu Mah. Kozan Cad. No:357/A Yüreğir/ADANA Tel: (+90 322) 328 20 63Fax: (+90 322) 328 20 67

219 YÜZYIL BRANCH Oruçreis Mah.Barbaros Cad.No:80 Esenler/İSTANBUL Tel: (+90 212) 429 33 02Fax: (+90 212) 432 31 12

220 ZEYTİNBURNU BRANCH Gökalp Mah. 58 Bulvarı Cad No:49-51/B Zeytinburnu/İSTANBUL

Tel: (+90 212) 665 00 23Fax: (+90 212) 665 02 61

221 ADANA REGIONAL HEADQUARTERS Tepebağlar Mah. Abidinpaşa Cad. No: 15 KAT: 4 ADANA Tel: (+90 322) 359 01 85Fax: (+90 322) 359 01 88

222 ANKARA REGIONAL HEADQUARTERS Atatürk Bulvarı No: 60 Kat: 2- 3 Kızılay/ANKARA Tel: (+90 312) 417 30 90Fax: (+90 312) 417 30 75

223 BURSA/FINANCIAL CONTROL Doğanbey Mah. Haşim İşcan Cad., Yentürk Çıkmazı Tuğtaş Plaza No:1 Kat: 10 Daire:15 Osmangazi/BURSA

Tel: (+90 224) 220 56 70Fax: (+90 224) 220 83 32

224 İSTANBUL ANATOLIAN SIDE REGIONAL HEADQUARTERS

Kayışdağ Cad. No: 145 Küçükbakkalköy/Kadıköy/İSTANBUL

Tel: (+90 216) 573 16 00Fax: (+90 216) 573 16 09

225 İSTANBUL EUROPEAN SIDE REGIONAL HEADQUARTERS

Kemeraltı Cad. No : 46 Tophane/İSTANBUL Tel: (+90 212) 393 10 00

226 İZMİR REGIONAL HEADQUARTERS Halit Ziya Bulvarı No: 42 Kayhan İş Hanı Kat: 5 Konak/İZMİR

Tel: (+90 232) 483 55 66Fax: (+90 232) 483 80 32

227 KAYSERİ REGIONAL HEADQUARTERS Bankalar Cad. No: 5/A Melikgazi/KAYSERİ Tel: (+90 352) 221 15 66Fax: (+90 352) 221 15 59

228 TOPHANE HEADQUARTERS Kemeraltı Cad. No : 46 Tophane/İSTANBUL Tel: (+90 212) 393 10 00

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