TÜRK EKONOMİ BANKASI A.Ş. 2009 ARENG.pdf · The Annual Report of Türk Ekonomi Bankası A.Ş. has been prepared in accordance with the ... 3.00 3.50: teb volume TRL teb price:

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TÜRK EKONOMİ BANKASI A.Ş.

2009 ANNUAL REPORT

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Contents Section I - Introduction Statement Concerning the 2009 Annual Report of Türk Ekonomi Bankası A.Ş. TEB From Past to Present Corporate Profile Main Indicators and Ratios TEB’s Values Shareholding Structure of TEB TEB Shares Awards Chairman’s Message CEO’s Message Economic and Sectoral Perspectives in 2009 Türk Ekonomi Bankası in 2009 Section II - Management and Corporate Governance Practices Members of the Board of Directors and the Audit Committee Executive Management Committees of Türk Ekonomi Bankası A.Ş. Human Resources Practices Information on Transactions Conducted with the Risk Group which TEB is Included Outsourced Services and Outsourcing Companies Agenda of the Ordinary General Assembly Meeting on March 30, 2010 Summary of the Board of Directors’ Report Presented to the General Assembly Our Proposal for Profit Distribution Corporate Governance Principles Compliance Report Section III - Assessment of Financial Position and Risk Management Auditors Report The Audit Committee’s Assessment of Internal Control, Internal Audit and Risk Management Systems and its Activities During the Reporting Period Assessment of Financial Position, Profitability and Debt-Servicing Capacity Risk Management Policies According to Various Types of Risks Credit Ratings Assigned by Rating Agencies and Information on their Contents Donations Five-Year Summary of Financial Information Including the Reporting Period Annual Activity Report Compliance Opinion Independent Audit Report for 31 December 2008 Non-Consolidated Financial Accounts and Footnotes for the Financial Accounts Section IV- Consolidated Financial Information and Assessment on the TEB Financial Services Group Independent Audit Report for 31 December 2008, Consolidated Financial Accounts and Footnotes for the Financial Accounts TEB Financial Services Group Directory

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STATEMENT CONCERNING THE 2009 ANNUAL REPORT OF TÜRK EKONOMI BANKASI A.Ş. The Annual Report of Türk Ekonomi Bankası A.Ş. has been prepared in accordance with the “Regulation on Principles and Standards for the Preparation and Publication of Annual Reports by Banks” published in the Official Journal numbered 26333, dated 1 November 2006. Yavuz CANEVİ Chairman of the Board of Directors

Patrick René PITTON Board Member and Chairman of the Audit Committee

Dr. Akın AKBAYGİL Vice Chairman of the Board of Directors and Vice Chairman of the Audit Committee

Varol CİVİL General Manager

M. Aşkın DOLAŞTIR Assistant General Manager in Charge of Financial Reporting

B. Ilgaz DOĞAN Director in Charge of Financial Reporting

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The best companies balance their values that ensure sustainable growth with their capabilities and resources at the optimal level. TEB is one of those companies. Ambition and commitment, innovation and creativity, respectability and reliability are the foundational values of the powerful brand TEB has built over many years. These values also light TEB’s way forward and guide its future roadmap. TEB FROM PAST TO PRESENT TEB has provided services to its customers for 83 years... Kocaeli Halk Bankası T.A.Ş., a small local bank originally founded in 1927, was acquired by Çolakoğlu Group in 1982 and renamed Türk Ekonomi Bankası A.Ş. (TEB). The Bank is the founder and principal stockholder in most of the members of the TEB Group. TEB is a pioneer in private banking in our country... At the beginning of the 1990s, TEB pioneered the introduction of private banking as a separate business line in Turkey. The respected and distinguished position that the Bank enjoyed in the sector was further enhanced by subsidiaries active in investment, leasing, factoring and asset management as well as by an expanded branch network and by more diversified products and services. TEB’s first public offering was in 2000. TEB went public in 2000 when a 20.4% block of its shares was offered to investors and began trading on İstanbul Stock Exchange's National Market under the symbol TEBNK. TEB stock was also listed on the London Stock Exchange's depository receipt market. Detailed information about the shareholding structure of TEB and TEB Shares can be found on pages 7 and 8 of this Report. Up-to-date information about TEB shares can also be followed on the Bank’s web site at www.teb.com.tr. BNP Paribas partnership is a milestone in TEB's corporate history. On 10 February 2005, control of a 50% stake in TEB Mali Yatırımlar A.Ş., TEB's principal shareholder, was transferred to BNP Paribas, a major international bank and one of the leading financial institutions in the European Union. As a result of this transaction, BNP Paribas acquired a 42.125% indirect stake in TEB.

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CORPORATE PROFILE

• As one of the most reputable corporations in Turkey, TEB is among the leaders in the private banking sector. According to end-of-year 2009 data, TEB's total assets reached TRY 15.06 billion, its loan book totaled TRY 8.99 billion and deposits were TRY 9.42 billion.

• Active principally in corporate, commercial, retail and private banking as well as treasury and capital markets brokerage, TEB delivers its extensive array of products and services via 334 branches, 5,871 employees, 596 TEB Expresses, the Internet branch at www.teb.com.tr and the 444 0 666 Call Center to nearly 1.5 million customers with an innovative and technology-intensive approach.

• In addition to its expertise and strong reputation in international financial markets, TEB maintains its competitive edge with BNP's international banking network and its own Turkey Desks within this network.

• Innovation, quality and an activity-based business approach together form the foundation of TEB. The Bank provided numerous innovative products, services and applications that resulted in a high level of customer satisfaction, especially in retail and commercial banking, in 2009.

• TEB is the leader of a financial services group that operates in the fields of banking, leasing, investment and asset management in Turkey and abroad. This structure makes TEB an integrated financial services provider.

TEB, • is a bank committed to service excellence and its customers; • is devoted to its business with true passion; • carefully monitors and manages risks; • has a disciplined, information- and analysis-based fair lending policy; • has a service-oriented staff engaged in continuous professional development; • deploys a technological infrastructure that exceeds world standards; • focuses on sustainable and profitable growth. TEB will continue to grow and develop by adhering to its corporate values in the best way. The Bank will remain committed to delivering financial services at universally recognized standards of quality for an expanding portfolio of customers while continuing to create added value for all of its stakeholders in 2010.


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MAIN INDICATORS AND RATIOS TEB'S main business lines continued to pursue growth strategies with great care and discipline. The table below shows the progress of our development in different areas of banking in relation to our business performance. Financial Highlights (Based on non-consolidated figures) 31 December 2009 31 December 2008

Thousand USD (*) Thousand TRY Thousand USD (*) Thousand

TRY Balance Sheet Total assets 10,128,125 15,063,560 9,907,924 14,736,055 Securities 1,793,266 2,667,125 1,348,511 2,005,641 Loans (Net) 6,044,991 8,990,715 5,749,031 8,550,534 Deposits 6,334,724 9,421,635 6,233,945 9271,747 Equity 1,109,024 1,649,452 957,183 1,423,619 Income statement Interest income 1,099,143 1,634,755 1,345,874 2,001,718 Interest expense 560,664 833,875 824,576 1,226,392 Net profit 141.308 210,167 110,400 164,198 (*) conversion rate: USD 1 = TRY 1.4873 (31.12.2009) Financial Ratios 31 December 2009 31 December 2008 CAR 17.70 17.65 Return on equity 13.68 14.07 Return on assets 1.41 1.24 HR and Branch Indicators 31 December 2009 31 December 2008 Number of personnel 5,871 6,400 Number of branches 334 336

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TEB'S VALUES TEB Group aims,

• to build strong, efficient and respectful relationships with its shareholders, customers and all its employees in the long run, and

• shape the future by developing new products and services in line with TEB principles.

TEB's reputation in international markets and strong position in its domestic market are the result of TEB's banking principles. The essential attributes that make up the "TEB Position" are, • Respect • Reliability • Innovativeness and creativity • Ambition and commitment. These attributes are at the core of all the Bank's financial and nonfinancial operations. Respect is the reflection of TEB's position in domestic and international markets and an expression of the great care TEB shows to its customers. Reliability is one of the building blocks of the TEB brand. TEB's main objective is to build and maintain relationships based on mutual trust with its customers in every area, particularly banking services. TEB has always pursued transparency in all information and data disclosures. TEB has also long proved to be a reliable bank in the eyes of all its stakeholders, especially customers and employees. Innovativeness and creativity are indispensable values that play a significant role in shaping the banking products and services on offer, and are both extremely important for TEB. Ambition and commitment together reflect the expression of the commitment of TEB's human resource staff to their work. TEB's entire professional team is deeply committed to its work and sees stakeholder satisfaction as a fundamental objective that should be achieved above all.

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SHAREHOLDING STRUCTURE OF TEB SHAREHOLDER’S NAME/TITLE SHARE IN CAPITAL

PERCENTAGE

TEB MALİ YATIRIMLAR A.Ş. 926,796,305.37 84.25% Publicly Traded 171,965,904.34 15.63% Total Shares of the Other Shareholders 1,237,790.29 0.12%

TOTAL 1,100,000,000 100.00%

Shares of the Chairman and Members of the Bank’s Board of Directors, General Manager and Assistant General Managers Name, surname and title Share (TRY) Yavuz Canevi (Chairman) 28.83 Dr. Akın Akbaygil (Deputy Chairman) 46.36 Refael Taranto (Member) 14.29 Varol Civil (Member and General Manager) 28.83 Saniye Telci (Assistant General Manager) 4,759.08 Nuri Tuncalı (Assistant General Manager) 8,889.61 Levent Çelebioğlu (Assistant General Manager) 10,000.00

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TEB SHARES Shares TEB's share certificates were offered to the public for the first time in February 2000. A total of 15.63% of the bank's shares were floated on the Istanbul Stock Exchange (ISE) and the London Stock Exchange. Simultaneously, a public offering was realized via the American and Global depository receipt program (144A and Reg-S) in international markets. TEB share certificates are traded under the symbol "TEBNK" on the IMKB in the national market. Depository Receipts, of which each is equivalent to one share, are traded in the International Order Book, the international share certificate market of the London Stock Exchange.

Symbol on IMKB: <TEBNK.IS> Symbol on GDR: TKKKYP(144A) Reuters Code: < TURAq.L> Bloomberg Code: <TURA LI>

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TEB share certificates, which began trading at TRY 0.82 on the first trading day of 2009, ended the year at TRY 2.80, with a gain in value of 242%. The highest trading price of TEB stock for 2009 was TRY 2.96 (22 December 2009) while the low was TRY 0.52 (5-6 March 2009). TEB’s annual stock performance outpaced that of the IMKB 100, IMKB30 and IMKB Bank indexes. TEB’s market capitalization, which was TRY 902 million (USD 588 million) at the beginning of 2009, reached TRY 3.08 billion (USD 2.05 billion) by the end of the year.

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Average daily trading volume, which started to increase in the third quarter of the year, rose to TRY 16.9 million in 2009, compared to TRY 4.8 million in 2008.

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Dividend distribution, as well as rights issues and free float issues since 2000, when TEB was offered to public, are summarized in the table below. Dividend Distribution and Capital Increases Year 2000 2001 2002 2003 2004 2005 2006 Jun 07 Nov 07 Sep 08 2009 Dividend Cash Dividend (Thousand TRY)(*)

- - - 15,953.33 14,018.77 9,414.94 18,742.63 - - - -

% - - 27.6 25.43 16.28 32.42 - - - - Free Issue from Internal Sources (Thousand TRY)

30,650.00 - - - 2,675.00 - - 23,500.00 445,000.00 - -

% 125.00 - - - 4.85 - - 30.71 445 - - Cash Provision of Capital Share Issuance (Thousand TRY)

- - - - - 18,700.00 - 210,000.00 345,000.00 -

% - - - - - - 32.35 - 210 45.69 - Previous Paid-In Capital (Thousand TRY)

24,500.00 55,125.00 55,125.00 55,125.00 55,125.00 57,800.00 57,800.00 76,500.00 100,000.00 755,000.00 1,100,000.00

Previous Paid-In Capital (Thousand TRY)

55,125.00 55,125.00 55,125.00 55,125.00 57,800.00 57,800.00 76,500.00 100,000.00 755,000.00 1,100,000.00 1,100,000.00

(*) Based on the year when the dividend payment was started.

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AWARDS

TEB's activities drew widespread acclaim and won many awards in Turkey and abroad in 2009.

• With the Supplier Financing System and MOBILE DBS application, TEB was honored with three appreciation awards in two different competitions in Europe.

• In addition to winning the "E-Communication" award in the Golden Compass Competition on KOBI TV, TEB was also selected as the "People's Choice" in the Golden Spider Competition, which is one of the most respected competitions of the online world.

• TEB placed second in the KSS Marketplace Event, which was held for the first time

by the Corporate Social Responsibility Association of Turkey.

• TEB's SME Banking approach was once again granted the Quality Award, just as in the two previous years, by the Consumer Summit.

• TEB was evaluated as the most transparent publicly held bank in the report entitled

"Extent of Disclosure and Governance Attributes of Banks Traded on the İstanbul Stock Exchange" prepared by Sabancı University’s Corporate Governance Forum.

• In the "TEB Creates a Culture of Innovation" report published by Gartner Group, one

of the world's leading consultancies, TEB was selected as a "Case Study." It was the first time Gartner selected a Turkish bank for inclusion in its reports.

• TEB won yet another award in 2009 in the BNP Paribas Innovation Award Program,

which has been held since 2007 to encourage efforts in the area of innovation. Receiving awards in the "Creative Café and Smart Ideas" and "Innovation Encouraging Managerial Application" categories, TEB has proved to be one of the most innovative members of the BNP Paribas family thanks to the awards it has won for three consecutive years.

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CHAIRMAN'S MESSAGE

I respectfully greet our valued partners honoring the Ordinary General Assembly Meeting 2010 of our Bank. Before the evaluation of TEB's operations in 2009, I would like to share my findings about the developments in both the global and the Turkish economy. While approaching the end of the global crisis... Actions taken to overcome the global economic crisis and the dynamics of the post-crisis period are among the most important agenda items of the entire world as 2010 approaches. The crisis, which intensified in the second half of 2008, began to adversely affect the Turkish economy in the same period. While the first half of 2009 was a very difficult time, especially for the real sector, the consensus agreed that the most challenging period of the global crisis was left behind by the second half of the year. Positive economic data also confirmed that the end of the crisis was near. Encouraging news also started to affect our domestic economy; the slowdown in the rate of GDP contraction was the most obvious indicator of this effect. When examining economic developments across the world, the US and European economies recorded growth for the first time since the beginning of the crisis and technically emerged from the recessionary period in the third quarter of 2009. However, it is likely that the recovery in the world’s economies will take place slowly and gradually; no real permanent and sustainable recovery is yet seen in the primary macroeconomic data. In addition, the level of unemployment is persistently high in a low inflation environment. The world's central banks and monetary authorities implemented extraordinary monetary and fiscal policies in response to the global crisis. Turkey’s risk premium and that of many developing countries decreased to pre-crisis levels due to a relative rise in the global risk appetite for financial market instruments at the end of this period. A return to increasing capital inflows led to the appreciation of the currencies of developing countries relative to the USD. Increasing oil and gold prices, as well as rising stock markets in developing economies, are a result of market players gravitating toward commodity markets and emerging market countries in search of relatively higher returns. During the economic crisis, central banks and monetary authorities acted in coordination with each other and thus played a significant role in overcoming the crisis in a shorter period of time than expected. It is equally important that they now show the same diligence and cooperation regarding the timing of exiting markets and the specific measures they choose to apply in response to these changing economic conditions. The Turkish banking sector successfully navigated through the global crisis, and continued its development without compromising growth and profitability.

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After emerging from the country’s 2000-2001 economic crisis with a historic reform and restructuring process, the Turkish banking sector faced the 2008 global crisis at a time when it was very strong; accordingly, the sector could manage the challenging dynamics of the crisis in both domestic and foreign markets. In addition to a strong capital structure, sensitive risk assessment and governance approach, the existence of an independent and effective regulatory and oversight mechanism also clearly played a significant role in the sector's ability to manage and minimize the impact of the crisis. In parallel with the contraction in real economic activity, the year 2009 saw a decrease in credit demand together with an increase in non-performing loans. The Turkish banking sector's general strategy in 2009 was to increase assets with the help of relatively high returns from securities portfolios. The consistent and clear position of the Turkish Central Bank (TCMB) regarding policy interest rates played a major role in the banking sector's ability to maintain its healthy and profitable environment in 2009. TEB's performance in 2009 proved not only our corporate strength but also our success in integrating our capabilities with our business strategy. In 2009 when conflicting dynamics competed with each other, TEB succeeded in having a business model that is completely in sync with the reality of the market, creates added value and supports sustainable growth. I believe that this is even more important than making profit in exceptional years like 2009 and that it is a strong indicator of the long-term vitality of a company. Our Bank recorded significant growth in 2009. Our innovative and pioneering position in banking can be seen in many areas of our service offerings including credit cards, project financing, alternative distribution channels and investment banking. Our primary responsibility is to direct our values to productive business areas and fulfill our commitments to our customers. This responsibility develops along two axes for bank shareholders. The first is to ensure appropriate and ethical implementation of banking activities and the second is to secure strong and continuous capital to meet the needs of the organization. I would gladly like to state that TEB was once again supported by its shareholders in the tough market environment of 2009. In addition to the strong support from our main shareholders Çolakoğlu Group and BNP Paribas, the ever-growing support of the investors buying our shares on the IMKB and London Stock Exchange proves the soundness and future potential of TEB's strategy. We are a customer-oriented organization in parallel with our position in the sector and our mission. Our primary objective is to meet our customers' financial needs by offering integrated and customized solutions. Our organization and corporate culture are defined and structured in accordance with our customer-oriented business approach. We will continue to strengthen our brand in the banking sector as long as we build and maintain long-term and deeper relationships with our customers.

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Our human resources composed of our professional management team and employees perform their jobs with devotion, ambition and utmost care. As long as this simple fact remains a reality at TEB, it will be possible to achieve our corporate objectives no matter what. Before we present our 2009 Annual Report and Financial Statements for the review of our shareholders, I want to thank all my colleagues who contributed to the continuous success of TEB and provided quality services to our customers, and pay my respects to our valued shareholders. Best regards, Yavuz Canevi Chairman of the Board of Directors

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CEO'S MESSAGE Dear investors, customers, business partners and colleagues, The development of a company is determined by how it perceives innovation. Financial performance is a measurement of success. The added value created for stakeholders occurs at the point where these two intersect. As TEB, we are pleased to have balanced both innovation and financial performance at an appropriate and sustainable point. Our performance... Known for its reputation, financial clout, professionalism and innovativeness in the Turkish banking sector, TEB displayed a strong operational and financial performance in 2009. TEB's total assets reached TRY 15,064 billion at year-end. For full-year 2009, the Bank recorded pretax profit of TRY 256.8 million and after-tax profit of TRY 210.2 million. With these results, our average return on capital was 13.68% (14.07% in 2008) and our average return on assets was 1.41% (1.24% in 2008). While TEB's total lendings reached TRY 9 billion according to our end-of-year data, the amount of total deposits our customers entrusted to us was TRY 9.4 billion. The Bank’s capital adequacy ratio, which is one of the most important indicators of financial strength, was 17.70% for 2009 (17.65% in 2008). We conduct our business activities in a sector that is periodically, easily and rapidly affected by economic turbulence. Accordingly, it is extremely important to have a structure that is balanced, easy-to-manage and as conservative as needed. By protecting our values... The effects of the global economic crisis that began in 2008 were intensely experienced in Turkey during the first two quarters of 2009. Domestic and international economic contraction forced all financial institutions to take a range of fiscal measures in response. While the global crisis reminds companies that efficiency is a must in the business world, it also emphasized the importance of developing innovative and creative products to protect and improve their positions in the market. Across business lines, but particularly in retail banking and commercial banking, TEB won awards for,

• offering innovative products and services, • working efficiently, • creating added value for its customers, • investing in human resources and technology,

by successfully completing a difficult year like 2009. Reputation, reliability, ambition and commitment, innovativeness and creativity...Being protected from the deepest impact of the economic crisis environment by adopting these values, TEB strengthened its market share thanks to its products and services created with an innovative approach and continued to be the consultant bank for its customers in 2009.

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We undertook many significant research and development initiatives in the name of innovativeness and creativity by "protecting the values that made us TEB." With our core values and innovative approach, I do believe that we will continue to fulfill our responsibilities to our customers, employees, shareholders and other social stakeholders in 2010. As long as we work to further develop TEB with this philosophy in mind, our profitability will continue steadily and our operational performance will remain strong. Continuity of change... The global market is characterized by change. Everything is in a process of change including the individual components of our daily lives, personal living standards and many other basic elements of the business world. Consumption patterns and the habits of individuals have been changing quickly. Banking is one of the sectors that is most affected by this reality of today’s world. TEB predicted that change will occur ever faster and in every conceivable area. We expect a radical restructuring will take place on all strata from the global market to the domestic market and we have prepared our strategic road map accordingly. Our long-term strategic plan, which was prepared in line with this prediction, proceeded through the partnership with BNP Paribas and played a significant role in the success of our integrated financial services offering we organized under the TEB brand. We have to accept that the concept of change is an integral and continuous part of modern daily life. Success in navigating through all the economic issues in the coming short- and mid-term depends on the ability to manage change. The 2009 global economic crisis brought change to a new dimension. Dear customers, business partners and colleagues, TEB planned its journey of development to become one of Turkey’s leading banks in line with the facts I have summarized above. We should take our Bank and business a step further everyday and update our processes according to changing market conditions. Our human resources, technological infrastructure, customer-oriented business philosophy and proactive risk management approach are our main assets that will continue to guide us in this journey. These assets provide us the opportunity to improve the quality of income generating business lines and make our revenues sustainable. Sustainable growth strategies, one of the key trends in global banking and which have been successfully implemented by TEB in recent years, were the most important driving force behind the positive developments we achieved in our revenue base despite the extraordinary challenging conditions of 2009. TEB covered a significant amount of its operational expenses thanks to its non-interest income in a year when the demand in credit facilities, which are the basis of our main business, decreased in parallel with the economic contraction. Product engineering… TEB's ability to offer innovative products and services has always played an important role in its strong reputation and position in the market.

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We see our customers at the center of all of our activities. Products and services developed according to the needs of our customers have made TEB an example of excellence within Turkey and in international markets, especially in terms of retail and commercial banking. In addition to our products that create added value, our applications in e-banking also provide a high level of customer satisfaction, which led to an increase in business volume and market share. Efficient cross-selling activities we conduct with our existing customers and sales to new customers make the positive trend in our revenue base sustainable. TEB also implemented successful projects in non-banking products and services in 2009. In 2009,

• TEB moved up to rank sixth in POS turnover in Turkey. • TEB continued to be among the first three banks in Gold Banking with a market share

of nearly 30% in loans. • TEB further strengthened its foreign trade intermediation services market share,

which has always been at a high level. • TEB increased its market share to 4.2% by recording an increase of 40% in

investment funds. Another significant success we had in 2009 was the completion of ISO 14001 certification. TEB was entitled to receive ISO 14001 certification by taking its environmentally minded approach to the corporate level in 2009. Our Bank is the first deposit bank in Turkey to receive this certification. I would like to thank all my team members who contributed to the successful completion of the ISO 14001 certification process. TEB plans to further detail its environmentally friendly approach and integrate it into its products in the following period. We should take care of the next generations more than ever today to ensure future sustainability. Our primary mission is to leave a livable, clean and green world for the next generation. TEB is determined to act as a good corporate citizen taking care of the next generations and fulfill its related responsibilities in interaction with its stakeholders. As the market expands after the crisis... We have a customer base that is extensive and differentiated. We stand out within the sector with highly competitive products and services in all our business lines. Our physical growth in recent years enabled us to provide services in a wider geographic area of the domestic market. TEB is committed to protect its prestigious market position and continue its growth across all business lines, particularly in retail banking and SME banking. TEB will focus on controlled growth in 2010. The year 2009 was dominated by a focus on risk management. We see 2010 as a year where controlled growth will be prioritized.

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I would like to share the headlines of our objectives in this area.

• One of the most important requirements in our banking approach today is to provide customers with efficient, fast and quality services. In line with strategy, 2010 will be the year when TEB will provide its customers with faster, more efficient and higher quality services and take significant steps to become a "Convenient Bank."

• In 2010, we believe that the most important source to finance growth will continue to be deposits. Accordingly, we plan to focus on cash management products that create demand deposits in all of our business lines.

• We expect that low policy interest rates will continue for a certain period of time in 2010. This will result in a decrease in interest income generated in the markets. Therefore, increasing our non-interest income will be extremely important to protect our profitability.

• We are determined to improve innovativeness, which is one of the basic principles of TEB banking. We aim to win another award in 2010 in the BNP Paribas Innovation Awards Program, in which we have been winning awards for three consecutive years. The support we expect to receive from our subsidiaries for our projects will be vitally important.

TEB’s core values were safeguarded and adopted in our product and service development initiatives and TEB achievements will guide the projects we plan for 2010. Our Bank will continue to develop further in terms of not only financial results but also market position and reputation in the sector in 2010. Best regards, Varol Civil CEO

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ECONOMIC AND SECTORAL PERSPECTIVES IN 2009 Recovery from the global economic crisis was stronger and faster than expected in 2009. Following the world-wide recession that grew deeper after the last quarter of 2008, the global economic crisis was mostly left behind thanks to the monetary and fiscal measures taken by G-20 countries as well as the IMF's activist policies and its support for the world’s problematic economies. The signs of recovery became clearer as of the second half of 2009. Even though the global economy will be slow in 2010, it will return to its path of growth. After the contraction of 0.9% in 2009, the global economy is expected to grow at a rate of 3.6% in 2010. However, estimates predict that the recovery in economic activity will be uneven among country groups and may take longer for some countries. Global economic growth is forecast to be slow due to weakness in credit demand conditions and high unemployment because of the conclusion of fiscal and monetary stimulus measures in the US and the EU. Half of the world’s economic growth will originate from Asian countries and especially China, with Japan as the exception. Developing countries are expected to lead in global economic growth in 2010-2012 for nearly three quarters. Deflationary pressure in developed economies and inflationary pressure in developing economies are the likely results with unbalanced economic activity globally. Signs of recovery in GDP started to emerge in Turkey in the second half of 2009. Contracting at a rate of 4.6% in the last quarter of 2008 and 7.6% in the first quarter of 2009, Turkey’s GDP started to show signs of recovery in the second half of the year due to the stimulating effects of temporary tax relief after contraction for four consecutive quarters. A more moderate recovery began in economic activity in the third quarter. It is estimated that GDP declined a total of 5.8% in 2009. For 2010, forecasts predict that GDP will grow at an annual rate of nearly 5% thanks to restocking of inventory and recovery after the contraction in 2009. Chart: GDP growth (in constant prices) GDP in constant prices Growth rate I 24,483 7.2 II 25,279 2.8 III 28,049 1.0 IV 24,353 -6.5 2008 Annual 102,164 0.9 I* 20,879 -14.7 II* 23,285 -7.9 III 27,129 -3.3 2009 9-month 71,294 -8.4 Source: TÜİK

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Decrease in inflation continued until the last quarter of the year. CPI inflation, which was 10.06% at the end of 2008, declined to 5.08% by October 2009 due to weak demand, a decrease in global commodity prices and temporary tax breaks. By the end of 2009, CPI increased 6.53% because of the end of the temporary tax relief in the last two months of the year and the negative base effect.

Consumer Price Index Annual Rate of Change (%)

9,10

10,74 10,61 11,13

11,99

9,15

11,77

10,76

10,06

8,17

9,66

12,06

6,53

5,27 5,33

7,73

9,50

7,89

5,24 5,73 5,39 5,08 5,53

6,13

5,00

7,00

9,00

11,00

13,00

01 02 03 04 05 06 07 08 09 10 11 12

Months

2008 2009

Producer Price Index Annual Rate of Change (%)

16,53 18,41 17,03

14,56 13,29 12,49

10,50

14,67

12,25

8,11

6,44 8,15

0,19 -1,04

-3,75 -1,86

-0,35

5,93

0,47 1,51

-2,46

6,43 7,90

3,46

-4,00

-

4,00

8,00

12,00

16,00

01 02 03 04 05 06 07 08 09 10 11 12

Months

2008 2009

Source: TÜİK The annual PPI inflation rate, which is more sensitive to fluctuations in global oil prices and the USD exchange rate, stood at 8.11% at end-of-year 2008. However, this indicator fell to 3.75% in July 2009 before rising to 5.93% at the end of 2009 due to the oil price swings on global markets. Beginning in November 2008, and until November 2009, TCMB steadily lowered interest rates due to weakness in economic activity and low inflation. During this period, TCMB reduced its policy interest rate to 6.50%, a decrease of 10.25 percentage points. Annual inflation is expected to accelerate especially in the first half of the year and complete 2010 with an approximate rate of 8% due to tax increases, a rise in global commodity prices, a negative base effect and recovery in economic activity. Exchange rates paralleled global risk appetite while borrowing costs depended on monetary policy. The decrease in bond interest rates continued in 2009 in parallel with TCMB's interest rate cuts and the contraction in credit demand. The benchmark bond yield, which was at 16.1% at the beginning of the year, fell to 7.7% in October and completed 2009 at 8.9%, after a period of fluctuations because of the uncertainties related to the IMF program. The US Dollar exchange rate gained value in relation to the TRY, climbing to 1.80, an increase of approximately 20%, due to the global risk perception. Subsequently, the USD to TRY exchange rate dropped to 1.50 in parallel with the increase in risk appetite in global financial markets at the end of 2009. The decline in global energy prices continued in 2009. The average price of a barrel of oil, which was nearly USD 100 in 2008, decreased to nearly USD 60 in 2009. With energy prices lower than in previous years and a decline in imports, a decrease in the current account deficit occurred. The current account deficit to GDP ratio, which was 5.7% in 2008, is forecast to drop to 2.3% in 2009 and reach 4% in 2010, in the scenario that the per barrel price of oil rises to USD 80.

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The Turkish banking sector maintains its robustness. Despite the worldwide economic crisis that continued to affect financial markets globally in 2009, the Turkish banking sector maintained a robust structure characterized by high capital adequacy ratios and healthy balance sheets. The capital adequacy ratio of the Turkish banking sector, which was 18.0% at year-end 2008, reached 20.5% as of end-of-year 2009. Total assets of the sector increased by 13.8% when compared to year-end 2008, reaching TRY 833.9 billion at end-of-year 2009. While the banking sector assets to GDP ratio was 77.1% at the end of 2008, it had risen to 85.5% by September 2009. Total loans increased by 6.9% when compared to the end of 2008 and reached TRY 367.4 billion at year-end 2009. A significant amount of the annual increase in loans, 4.5 percentage points, took place in the last quarter of the year. The greatest increase occurred in personal loans, which rose 10.9%, followed by corporate and commercial loans at 7.9% and a rise in SME loans of 0.7%. When compared to end-of-year 2008, the share of loans to assets decreased 3.1 percentage points but loans continued to be the biggest placement unit in the banking sector with a share of 47.1% by year-end 2009. The NPL ratio, which stood at 3.7% at end-of-year 2008, reached 5.3% as of year-end 2009. The NPL ratio was replaced by a decrease in all the segments towards the end of 2009. In 2009, a strategy to expand the assets in the banking sector with the help of a high-income securities portfolio was widely adopted. The share of the sector's securities to total assets increased by 5 percentage points, to 31.5%, compared to year-end 2008. The total of syndication and securitization loans, which was USD 26.3 billion in September 2008, declined to USD 18.1 billion in December 2009, a decrease of USD 8.2 billion. The renewal rate of syndication and securitization loans was 56.89% in 2009. The banking sector in 2009 Total assets TRY 833.9 billion Loans TRY 392.6 billion Marketable securities TRY 262.9 billion Deposits TRY 514.6 billion Current period net income TRY 20.2 billion Source: Banking Regulation and Supervision Agency, February 2010 monthly interactive bulletin, www.bddk.gov.tr

http://www.bddk.gov.tr/�

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TÜRK EKONOMİ BANKASI IN 2009 General evaluation TEB made pretax profit of TRY 256.8 million and after-tax profit of TRY 210.2 million in 2009. Economic contraction in the first half of 2009, which saw a rapid decline in economic activity in the first quarter followed by a slow and gradual recovery in the second quarter, had a negative impact on loan and deposit levels in the banking sector. This impact was especially obvious in banks that focus on asset quality such as TEB. TEB continued its expansion strategy in retail banking coupled with its strategy to deepen its relationships with existing corporate and commercial customers without compromising risk-management. Evaluating market conditions in detail, TEB adopted a fast growth strategy in the third quarter of the year. While the banking sector recorded some growth thanks to the economic recovery in the second half of 2009, TEB offset the impact of the contraction in the first half of the year on its balance sheet and business volume by recording a growth rate higher than the sector average.

Loans

0.0%2.0%

4.8%

-9.1%

10.3% 10.6%

-0.3%

-4.0%1Q - 2009 2Q - 2009 3Q - 2009 4Q - 2009

SectorTEB

Deposits

2.0% 1.0%

4.1%

6.8%

1.3%

-14.0%

8.0% 8.1%

1Q - 2009 2Q - 2009 3Q - 2009 4Q - 2009

SectorTEB

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TEB's position in the sector TEB's shares in the sector, and the indicators related to the developments in these shares, in 2009 are shown below.

31 December 2009 31 December 2008

TEB Sector TEB

Share TEB Sector TEB

Share Total Assets* 15,063,560 833,924,690 1.81% 14,736,055 732,748,885 2.01% Total Loans* 8,990,715 396,220,460 2.27% 8,550,534 370,432,468 2.31% Total Deposits* 9,421,635 515,164,370 1.83% 9,271,747 454,599,582 2.04% Number of Branches ** 334 9,036 3.70% 336 8,791 3.82% Number of Personnel ** 5,871 172,403 3.41% 6,400 171,574 3.73% * Source (sectoral figures): February 2010 Monthly Bulletin, Banking Regulation and Supervision Agency. Values in TRY 1,000. ** Source (sectoral figures): Banks Association of Turkey. Comparisons of TEB's own balance sheet composition with that of the sector as a whole are shown below. (Figures as % of balance sheet total.) 31 December 2009 31 December 2008 Share in Balance Sheet TEB Sector* TEB Sector* Liquid Assets 17% 13% 23% 15% Marketable Securities 18% 32% 14% 26% Loans 60% 48% 58% 51% Fixed Assets 1% 1% 1% 1% Other 4% 6% 4% 7% Total Assets 100% 100% 100% 100% Deposits 63% 62% 63% 62% Money Markets 7% 7% 1% 6% Borrowings 11% 10% 17% 12% Subordinated Debt 3% 1% 3% 1% Other 5% 7% 6% 7% Shareholder's Equity 11% 13% 10% 12% Total Liabilities 100% 100% 100% 100%

* Source: Banking Regulation and Supervision Agency Monthly Bulletin February 2010

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In 2009, TEB's • Total assets increased 17% when compared to the first half of the year. • Shareholder's equity reached TRY 1,649 million. • Share of total deposits in the balance sheet was 63%. • Credit portfolio increased by 22% when compared to the first half of the year

paralleling the expansion in personal loans and working capital loans, and composed 60% of the assets.

• NPL ratio was below the sector average with a rate of 4.64%. Strong lending policies and a cautious approach to risk played a significant role in these positive results.

• Loans to deposits ratio, which was 95%, showed that TRY 95 of each 100 TRY deposit was used as a loan.

• Capital adequacy ratio was 17.70% and return on equity was 13.68%. The ratios summarized above are strong indicators of TEB's rapid growth capacity. TEB is determined to improve its efficiency, agility and organizational productivity in line with its vision in and after 2010. This determination will increase the added value the Bank creates for its customers, shareholders, society and the environment. Financial Institutions International Banking Credibility, efficiency, reputation The TEB brand stands for credibility, efficiency and reputation in international banking. TEB's respected position in international markets was further enhanced by its strategic partnership with BNP Paribas in 2005. The subsidiaries and branch network of BNP Paribas in 87 countries significantly expanded the scope of the Bank's international activities and improved its competitive advantage in the domestic market. With its quality and efficiency-oriented products and services, TEB meets all the international banking needs of its customers through a network of more than 1,800 correspondent relationships in over 140 countries. Thanks to its wide correspondent network based on mutual efficiency and cooperation, TEB managed to meet the demands of its customers completely and swiftly in spite of the extraordinarily challenging economic environment in the last two years. In 2009 where Turkish exporters planned to enter new markets... EU countries, which receive the biggest share of Turkey's exports, were seriously affected by the global economic crisis in 2009; this fact was one of the main reasons for the sharp contraction in Turkey's total exports. Moving swiftly to counteract the negative effects of falling demand in EU countries, Turkish exporters headed for new markets. North Africa ranks number one among these new export markets.

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TEB enables its customers to export with confidence to higher-risk markets. In 2009, TEB conducted studies to determine the risk acceptance level of banks with operations in different countries in Africa. Under the campaign called Africa Expansion, package banking solutions were offered based on the needs of customers exporting to this continent. A similar study was made for Middle Eastern countries; TEB introduced Middle East Expansion in October 2009. TEB will continue to monitor Turkish exporters all over the world and develop package solutions they may need in different geographic locations in 2010. TEB maintained its position in the foreign trade market in 2009 and completed the year with a market share of 4.5% in imports and 6.6% in exports. The "Foreign Trade Centers" concept was one of the first innovations to be introduced in Turkey as a result of TEB-BNP Paribas synergy. TEB currently operates four Foreign Trade Centers: one each in İstanbul, İzmir, Adana and Ankara. Specialists on staff at TEB Foreign Trade Centers target not only existing customers, but also prospective companies, by making regular visits to firms heavily involved in foreign trade. This strategy also contributes to the acquisition of new customers. TEB also pays careful attention to develop the best foreign trade financing solutions according to customer needs in cooperation with the other centers in related countries and TEB's wide correspondent network. Foreign Trade Centers of BNP Paribas all over the world... TEB is in close communications and cooperation with the Foreign Trade Centers of BNP Paribas at 90 locations in 55 countries. It also has strong relations with BNP Paribas subsidiaries, especially in North Africa. TEB offers effective and fast solutions to companies and exporters in the Turkish construction sector through the BNP Paribas network. How to Do Business in North Africa? With the purpose of publicizing the range of solutions offered to foreign trade customers, TEB held a seminar entitled "How to Do Business in North Africa?" in cooperation with the Turkish Contractors Association in Istanbul on 12 November 2009. Turkish Exporters Committee representatives were present at the informational seminar, which was organized with the participation of Turkey Desk staff in Algeria and Egypt in addition to the Trade Center directors in BNP Paribas subsidiaries in North Africa. The "How to Do Business in North Africa?" seminar attracted great interest from participants and enabled TEB employees to gather with more than 300 company representatives to discuss opportunities for cooperation. EFIL-IV Loan In 2009, TEB continued its intermediation program for EFIL-IV loans for export financing in 2008. TEB also took steps to develop relationships with international development agencies

26

and supranational institutions and implemented initiatives to create long-term funding sources. TEB has traditionally been a leader in commodity financing. In 2009, TEB continued to play a leading role in commodity financing of Turkey's traditional agricultural commodities such as tobacco, hazelnuts, olive oil and raisins. TEB participated in commodity financing deals as proxy, guarantor and creditor and it financed customers' export sales with a total of USD 228 million together with foreign banks in 2009. A syndication strategy in line with lending policy TEB provided syndication loans of EUR 190 million and USD 92 million with the participation of 28 banks from 17 countries in line with the market conditions and lending policy in November 2009. A one-year term syndication loan to be used in export financing was the most demanded transaction proportionally in Turkey. While the renewal rate of sectoral syndication loans was 64.4% in 2009, TEB well surpassed this figure with its 153% renewal rate for the year. TEB also maintains strong relationships with export insurance agencies to support its customers' foreign trade transactions. TEB currently has agreements with export insurance agencies in the USA (US EXIM), Germany (HERMES), Austria (OEKB), Belgium (ONDD), Denmark (EKF), Finland (FINNVERA), France (COFACE), the Netherlands (Atradius), United Kingdom (ECGD), Spain (CESCE), Sweden (EKN), Switzerland (SERV), Italy (SACE), Japan (JBIC), South Korea (KEXIM), and Taiwan (TAIWAN EXIM) and continues to provide alternative financing sources to its customers through these agreements. Another resource TEB provides in intermediation services is GSM-102 loans that are used for the financing of US-based agricultural products trade. Turkey Desks service is developing... Turkey Desks is another positive result of the multi-faceted BNP Paribas-TEB synergy. The first Turkey Desk was set up in Algeria at BNP Paribas El Djazair in 2005, followed by Ukraine and Egypt in 2006 and Russia in 2007. TEB has come to the last stage of joint studies with BNP Paribas to create a Turkey Desk in Libya, which is a significant market for Turkey. The fifth desk, which will be established at Sahara Bank, one of BNP Paribas's subsidiaries in Libya, is planned for completion in the first quarter of 2010. Corporate Banking TEB continued to be the choice of multinational and domestic companies in 2009. With its nine branches, TEB Corporate Banking provides world-class banking services supported by an advanced technological infrastructure to leading locally and foreign financed companies in an extremely competitive environment. With the transactions TEB directed to other business lines, group companies and the BNP Paribas global network, Corporate Banking,

• meets the financial needs of existing and target customers,

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27

• acts in accordance with the principle of long-term relationship banking, • in addition to adhering to a customer-oriented approach.

Restructured with divisions such as Local Financed Companies and Foreign Financed Companies to emphasize BNP Paribas synergy in 2008, TEB Corporate Banking prioritized risk management in 2009 due to the financial crisis growing deeper in the last quarter of 2008. Sharing this approach with its customer base, the Bank focused on overcoming the crisis with the least negative impact for itself and its corporate customers. Solutions creating added value in Cash Management played a significant role in deepening the relationships with its corporate customers in the difficult market conditions in 2009. TEB made an important expansion in TRY and foreign currency cash management by increasing the number of its multinational and domestic customers and due to the effectiveness of its electronic payments and collection solutions. TEB Corporate Banking is in synergistic cooperation with subsidiaries. TEB closely follows and meets its customers' needs in financial leasing, operational leasing, factoring, intermediation services and investment banking. The Bank offers effective and efficient solutions to its customers by acting in synergistic cooperation with its subsidiaries. TEB's competitive advantages in corporate banking include,

• Efficient customer relations management, • "Business partnership" approach, • Synergy created with BNP Paribas global network and competitive advantage gained

especially in North African countries, • Cash management services supported by a powerful technological infrastructure.

TEB's objective in corporate banking is to strengthen its position as the main bank of its customers through long-term cooperation. This objective is supported by the Bank’s powerful technological infrastructure, in efficient customer management, and especially in cash management, which bolsters TEB's competitive advantage in corporate banking. Further developing relationships with BNP Paribas TEB continued to develop its relationships with the product groups of BNP Paribas Corporate and Investment Banking (CIB) in the corporate banking business line in 2009. Joint financing transactions were made with BNP Paribas in commodity financing to create new business areas in metal-mineral and oil-oil derivatives, as well as agricultural products in particular. The first agreement was signed with BNP Paribas regarding cooperation in Country Loans. Financing of France-based machinery and equipment imports to Turkey will jointly be realized by BNP Paribas and TEB under the guarantee of Coface, which is one of the world's biggest credit insurance companies.

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The first joint financing transaction with BNP Paribas CIB was completed in December 2009 to achieve more efficient cooperation in Media and Telecom Financing. This cooperation is expected to further develop and continue in the future. The synergy was also harnessed to realize banking transactions of BNP Paribas customers making investments in Turkey through TEB. Many accounts were opened for an increasing number of foreign financed and multinational companies and solution packages were offered to meet the financial needs of these companies by TEB in 2009. Commercial Banking An approach that targets emerging and growing business sectors TEB’s main strategy in commercial banking is to ensure deepening of its relationships by strategically positioning itself with existing customers while targeting sectors that are emerging and growing. In addition to offering financial solutions to its customers, TEB Commercial Banking strives to become the solution partner and consultant bank of its customers. TEB’s sales force, which is trained as Commercial Banking Strategic Consultants, provides not only banking services but also strategic consultancy services to existing and new customers. Customers are supported to ensure that they are in the right sector using the right instruments and products mix in order to grow. This strategy also provides a “win-win” opportunity for both TEB and its customer base by expanding the use of sophisticated instruments and banking products such as foreign trade, cash management and derivative products. Aiming to bolster TEB’s customer-oriented service approach, the Commercial Banking Strategic Consultant Project is conducted with the consultancy support of PriceWaterhouseCoopers. Synergistic cooperation between BNP Paribas, Foreign Trade Centers and Subsidiaries Under the framework of the cooperation between TEB Commercial Banking and BNP Paribas, the opportunities and experience provided by the Foreign Trade Centers in the countries where BNP Paribas has a strong presence is highly beneficial. This cooperation also increased the strength of TEB as the solution partner of its customers. Seminars and meetings that focused on the domestic economy for the real sector were organized by TEB Foreign Trade Centers in cooperation with BNP Paribas, bringing a new dimension to the Bank’s relationships with its existing customers. These meetings contributed to the expansion of TEB’s customer portfolio. TEB Commercial Banking also conducted joint studies with TEB Arval, TEB Cetelem, TEB Financial Leasing and TEB Factoring to meet customer needs in the segment of financial market structuring.

29

The Bank also offered foreign trade expertise and cash management solutions, two areas in which it particularly excels, to its commercial customers. TEB Gold Banking TEB Gold Banking provides Gold-Backed Loans supported by the Goldsmith’s Insurance Package, in line with the cross product sales target, to jewelry makers and dealers. This service line provides banking services at internationally competitive terms to tradesmen in the gold business. TEB Gold Banking intends to capture the largest market share in the Turkish Gold Market by offering a wide product range to investors who want to utilize Gold Custody Accounts and Gold-Based Mutual Funds. As of September 2009, TEB became the third leading bank in this business line with a market share of 28.33% for the volume of Gold-Backed Loans it extended to the jewelry sector through its 178 branches. TEB offers the Goldsmith’s Insurance Package to the jewelry sector in cooperation with Zurich Insurance. Favored by many customers, the Goldsmith’s Insurance Package was among the best performing products due to the increase in the number of policies and strong premium production. SME Banking TEB’s objective is to become not only the bank but also the consultant for SMEs. Customer needs and expectations from the banking sector change rapidly in today’s globalized world. TEB SME Banking sees this rapid change as a growth opportunity and works to convert the traditional bank-customer relationship into a versatile partnership. TEB designs and develops its SME products and services accordingly and focuses on meeting the financial and nonfinancial needs of SMEs. TEB’s objective is to become not only the bank but also the consultant for SMEs. TEB’s product range includes loans, deposits and cash management products developed for the banking needs of SMEs. In addition, customer representatives dedicated exclusively for SMEs are available in TEB branches. In 2009, TEB gained 3,843 new SME customers. The most important factor that differentiates TEB in the intense competition in SME banking is the Bank’s products and services offering. While developing its products and services portfolio, TEB considers not only the financial needs of SMEs but also their particular challenges in the areas of business development and governance. The Bank implemented a sectoral innovation with its services offering solutions for SME issues regarding information, consultancy, training and supplies procurement. TEB believes that the biggest obstacles to SME growth are lack of financing as well as lack of information. In order to solve this problem, TEB started to provide services such as SME Academy, SME TV, SME Support Line and SME Consultants. In addition to financial support, TEB’s services

30

provide information for SME’s managerial issues and enable them to share their experiences. TEB’s SME Banking products and services enable SMEs to secure a strong market position in today’s competitive environment. TEB’s long-term objective is to become the consultant bank of SMEs. The Bank has come closer to realizing this goal thanks to the great strides it has taken since its establishment and through the variety of products and services it offers. The Bank provides updated and objective information to SMEs through SME Academy, SME TV, SME Support Line and SME Consultants. TEB SME Club offers supplies procurement support to SMEs. Company analyses conducted by TEB SME Consultants help SMEs see their work processes from an objective perspective. Efficiency Analysis in Foreign Trade assists SMEs in making efficient foreign trade transactions while Production System Development Analysis helps raise the efficiency of production processes. In 2010, there will be more intense competition in offering new solutions. TEB predicts that there will be more intense competition in finding new solutions to the financial needs of SMEs in 2010. In response, TEB plans to,

• Improve the attractiveness of its Supplier Financing System, which was prepared to meet the financial needs of SMEs engaged in production for large corporate entities,

• Continue to extend KOSGEB Loans, which is among its areas of expertise, • Support SMEs through a Credit Guarantee Fund.

A perfect example: TEB SME Academy TEB SME Academy Corporate Development Training, which has been organized since 2005, has reached 4,500 companies and 6,200 business professionals in 30 provinces as of the end of 2009. SME Academy Corporate Development Trainings were held in Burdur, Adıyaman and Sivas in 2009 and nearly 450 SMEs received training. Some 150 business professionals participated in the meeting in Trabzon, where strategies to weather the global economic crisis were discussed. Development plans were determined according to the needs of the provinces and a summary report was shared with nearly 200 business professionals, public institutions and organizational authorities and nongovernmental organization representatives during the Future Strategies Conferences in Aksaray and Erzincan. All the initiatives conducted under the aegis of TEB SME Academy enhanced the Bank’s brand recognition and helped TEB acquire new customers and deepen its relationships with existing customers. TEB SME Academy was selected as the best project by BNP Paribas. TEB SME Academy won the top award by outpacing many projects from 85 countries in the Innovation Competition organized by BNP Paribas to support and foster innovation. BNP Paribas selected TEB SME Academy as the best project, which was adopted by other countries in the Group. The first SME Academy outside Turkey was implemented in Algeria in September 2007. BNP Paribas has been conducting feasibility studies to launch TEB SME Academy in Belgium, France, Italy and the USA.

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TEB SME Club: A system that offers SMEs cost advantages. About 15,000 SMEs became members of TEB SME Club, which was established in February 2009. Helping link supply and demand on the web, TEB SME Club provides cost advantages for SMEs’ purchases in the sectors in which they incur the highest expenses. TEB organized meetings with 50 companies in 22 different sectors, in supplies areas which SMEs consume the most, and extended discounts up to 50%. SMEs were very interested in the deep discounts in sectors such as fuel oil, telecommunications, office supplies, cargo and insurance, one of the most significant items in SMEs’ annual expenses. One of our business partners that extends a discount under TEB SME Club is Zurich Insurance. The discounts granted with SME Liability Insurance and Comprehensive Insurance drew great interest from SMEs. TEB SME TV Specialists TEB launched its SME TV Specialists services to enable SMEs access to the right information in the shortest period of time and in the most effective manner. Thanks to this service, SMEs can pose questions to specialists about topics of interest such as taxes, social security, labor law, incentives, company strategy and company management. SMEs receive replies to their questions via videos on TEB SME TV. As of November 2009, a total number of 4,271 questions were asked to TEB SME TV Specialists. SME TV is yet more proof of the strong and highly innovative support TEB provides to SMEs. SME Specialists As the second stage of the TEB SME Consultant service that was established in 2008, SME Expertise started to provide services to companies conducting business in domestic marketing & sales, global marketing & sales and production management with its 33 employees, who completed their expert training in 2009. Entitled to receive their certification after completion of a training course at TOBB University, TEB SME Specialists provide services to SMEs with a customer-oriented approach. Retail Banking Making a difference TEB is a bank that is capable of making a real difference in the lives of its retail customers. As a result of its systematic and planned development in recent years, TEB segmented its customer base and launched TEB Star Banking to completely meet the differentiated needs of its customers. The Bank has the scale, distribution network and superior technological infrastructure to provide products and services at the right time and in the right way. Appropriate, deliberate

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and efficient usage of TEB’s retail banking capabilities strengthened its position and market share in this business line. Retail banking in figures Working to increase customer activity volume and cross sales, TEB continued its healthy growth in retail banking. With TEB’s retail banking campaigns in line with its deposit structure and healthy growth in loans, coupled with the objective of growing deeper relationships with its customers, the Bank recorded an increase of,

• 53% in salary customers, • 41% in internet banking customers, • 89% in automatic payment customers, • 63% in current accounts, • 24% in investment funds, • 39% in consumer loans, • 78% in housing loans

and successfully achieved growth that outpaced the sector. With its new product and service packages, campaigns and salary agreements, TEB gained an average of 30,000 new customers every month. The total number of its retail customers reached 1.2 million by the end of 2009. Quickly broadening its customer base, TEB increased the number of its active customers per branch as well as its retail customer profitability. The number of TEB’s personal loan customers rose to 109,000 by the end of the year, a growth rate of 29%. TEB also increased its cross sales rate thanks to its campaign management as a result of the customer segmentation and analysis initiatives conducted in 2009. The rate of cross sales per retail customer in 2009 reached 3.80. TEB provides continuous and conveniently accessible services to its retail banking customers through its Call Center and Internet Branch in addition to its 334 branches and 596 TEB Expresses. Product development capability that meets customers’ demands and needs In 2009, TEB continued to focus on new product and services development, campaign management and CRM campaigns within its retail banking business line. As a result of these initiatives, TEB gave its full support to innovation that will lead the sector as in previous years. TEB launched several new product packages in 2009 including University Package, Retired Customer Package, Med-Kit Product Package, Wedding Package and Home Owner Package that aim to meet specialized needs, provide customer satisfaction and foster customer loyalty. These product packages were developed to meet customer needs and increase the advantages for customers. TEB identified evolving customer needs by conducting market research in 2009 and launched new products and services including Art Loan, Hybrid Car Loan, Everything

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Included Mortgage, Periodic Payment Personal Loan for Retirees, Buy-Rent Mortgage, Energy Savings and Insulation Loan and Drop Account. Life cycle banking With its mission to provide products and services that individuals will need at different stages of their lives, life cycle banking is one of the areas TEB differentiates itself from the competition in retail banking. The Bank continued to expand its life cycle banking product offerings in 2009, with the introduction of,

• Retiree Package developed for customers, who receive their social security payments through our Bank, and

• UniversiTEB Package developed for undergraduate, graduate, post-graduate and doctorate students studying in at least 4-year departments of universities were offered for the use of target customers in March.

TEB plans to launch more new products for different age groups under its life cycle banking approach in the near future. Housing loans comprise another part of TEB’s retail banking offering. TEB offers its customers effective housing loan (mortgage) related services that are based on efficiency for both parties. In 2009, TEB offered the lowest interest rate for housing loans in Turkey in the last 10 years. Some of TEB’s activities in the housing sector are stated below. International Mortgage – BNP Paribas International Buyers collaboration. Provided in collaboration with BNP Paribas International Buyers, TEB’s international mortgage services target those borrowers living abroad who want to buy a house in Turkey. The mortgage product was launched at a press conference organized jointly with BNP Paribas in Antalya in October 2008. Mortgage Package. Introduced to the market in August 2009, the Mortgage Package is designed to raise customer perception, improve TEB’s reputation in the housing loan segment and help TEB become the first choice bank. The package is differentiated from competing offerings in the market due to its product range, customized pricing, flexible payment plan options, interest rate discounting according to product ownership and discount opportunities granted by selected companies. TEB became the first deposit bank in Turkey to obtain ISO 14001 Environmental Management System certification. In May 2009, TEB became the first deposit bank in Turkey to obtain 14001 Environmental Management System certification. In addition, the Bank launched its Environment-Friendly Products Package during the year. Taking a significant step in integrating environmental awareness with banking products and services, the Package includes Energy Savings and Insulation Loan and Organic Agriculture Loan options.

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Advantages shape the future TEB is a bank that,

• Operates in a flexible and agile way, • Listens to its customers and designs products that suit their needs, • Gives great importance to innovation. These attributes define TEB’s advantages and also serve as the Bank’s road map in retail banking. Considering customer satisfaction equal to corporate success, TEB will continue to make a difference in the lives of individuals.

TEB’s priority development areas for 2010 will be housing and personal loans as well as asset management services. TEB will continue to increase its market share in 2010 thanks to further development and acceleration of its business processes, product and service variety, pricing advantage and success in risk management. TEB Star Banking TEB Star Banking, which is TEB’s banking solution for the high net worth segment, provides services in 58 branches. TEB Star Banking stands out in elite banking thanks to its,

• Differentiated product range, • Extensive wealth management services, • Privileges offered for customers with different life styles.

TEB Star Banking aims to,

• Provide versatile financial consultancy services to its customers, • Improve customer loyalty by providing customized services that suit their life styles, • Build long-term relationships with customers by focusing more on housing loans.

Star Banking updated its service strategy in response to the changing market conditions of 2009 and aimed to provide the best service to its customers. Investment funds became more attractive due to decreasing interest rates in 2009. Star Banking investment fund volume increased 78% in the first half of the year. Star Banking’s total assets increased 35% as of November 2009 from the previous year. In parallel with the briskness in loan demand in the second half of the year, housing loans granted by TEB to Star Banking borrowers were up 65% as of June 2009, and up by 32% at year-end over 2008. Star Banking continued to offer customized solutions to its customers in 2009. A EUR/TRY indexed quarterly band renewable capital guaranteed fund that was

launched in January, Portfolio Pro, was relaunched in May, Art Loan launched in August, Boat Loan and Family Loan offered in November, Star Housing Package offered in November, BRIC Fund launched in December, Indexed Time Deposit offered in December.

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Working in cooperation with TEB Investment in customer sharing, TEB Star Banking also processes customer stock transactions in designated branches after transferring TEB Investment based portfolios to Star Banking. In 2010, Star Banking plans to meet all the retail banking needs of its customers in the high net worth segment and increase its market share by developing a product portfolio that will continuously be renewed in response to market conditions. TEB Star Banking intends to increase its number of branches to 65 and continue to, Focus on non-interest income, which will become more important for the entire sector

in 2010, Increase cross sales with existing and new products, Boost the activation and transaction volume levels of Star Platinum Card, which plays

a key role to accessing Star Banking privileges, Introduce innovative deposit and investment products such as Three-Currency

Deposit and Flexible Term Deposit, Develop services that create added value for high net worth life styles, Raise brand recognition with the help of advertisements and publicity campaigns.

Small Business Banking TEB Small Business Banking helps its customers find solutions to all kinds of financial needs with its wide product portfolio and endeavors to become the preferred bank in retail banking for tradesmen. The number of TEB Small Business Banking customers increased 12% in 2009 and reached 252,000 by year’s end. Small Business Banking current deposits grew by 44% and total deposits increased by 17% in 2009. This growth in the customer portfolio is a natural outcome of TEB’s strategy to efficiently use the full range of its distribution channels. Small Business Banking Salaries Package and Tradesmen’s Solution Package Small Business Banking Salaries Package is a TEB solution developed jointly with the Retail Banking business line. With this new offering, the Bank acquired over 600 companies as new customers and started to pay salaries to more than 20,000 accounts. Designed with sector-specific solution packages in mind, the Tradesmen’s Solution Package was one of the Bank’s most effective service packages in 2009. The Bank gained more than 7,000 new customers in June-December from this initiative that targeted the active use of at least three different products. In 2009, TEB increased the number of companies in its customer portfolio in the health sector, especially pharmacists, with the help of its SGK Package that was developed specifically for this sector. Contribution of Small Business Banking to POS market share TEB’s POS product, which is effective in channeling customers’ cash flow through the Bank, continued to be one of the primary offerings of Small Business Banking.

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Small Business Banking played a significant role in the 4.70% increase in TEB’s POS market share in 2009. About 70% of TEB’s total POS contracted merchant turnover and 80% of its POS transaction volume originate from the Small Business Banking business line. TEB Small Business Banking saw significant developments in 2009. At the BNP Paribas Small Business Community meeting organized in Paris in

November, participants were informed about Small Business Banking initiatives in different countries.

New steps were taken to acquire customers originating from subsidiaries under the Ocean 1 project.

Intermediation services were initiated regarding SGK payments of customers in the health sector with the cooperation with SGK. Advantageous products and services were offered to customers in the health sector, particularly pharmacists, through the Health Package.

KOSGEB-supported loan packages were offered to more than 1,500 customers. Thanks to cooperation with trade associations, advantageous products such as loan

products and insurance services were offered to their members. Market research studies were conducted on screen designs required for multiple and

effective sales, applications that serve as an example in Agricultural Banking and CRM-oriented segmentation models.

Using all types of communication channels in its marketing activities, TEB regularly informed Small Business Banking customers about sector developments as well as the Bank’s solutions; TEB also offered special solutions for tradesmen through cooperation with a high-circulation newspaper in 2009. Pilot programs of the Gold Bracelet Loan developed in collaboration with the UNDP and GYIAD started up in Bursa and Ankara in 2008. The loan program was suspended due to the impact of the global crisis in 2009. TEB plans to relaunch the Gold Bracelet initiative in 2010 after converting it into a microfinancing project that supports entrepreneurs. Our objectives for 2010... TEB Small Business Banking plans to improve its product penetration in its existing customer base and reach new customers with the support of its experienced sales staff in 2010. TEB’s objective is to increase its market share by raising the number of Small Business Banking customers to over 300,000 in 2010. In parallel with its objective to become the first choice of tradesmen, TEB will continue to develop new products and services in line with the specific needs of its customer base and the market, and further strengthen its position in small business banking. Agricultural Banking TEB considers supporting agriculture a civic duty. The success of Turkish farmers to realize the full potential of the soil they cultivate by using high production standards under the scope of the EU harmonization process is a civic duty that goes beyond any mere business objective. Accordingly, TEB Agricultural Banking continues to support the agricultural sector with a customer-oriented approach.

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TEB’s objective is to support the financial foundation of Turkish agriculture in industry, production and trade. To this end, TEB offers loans and other banking services in line with both customer and regional needs with the help of its specialized and experienced Agricultural Banking team that,

• understands the dynamics of the agricultural sector, and • follows local and global trends in the sector.

Established under the Small Business Banking unit in 2007, Agricultural Banking completed most of its staffing in 2009 and took a step forward to become one of the major banks in the agricultural sector thanks to its specialized and experienced team of professionals. Developments in the sector started to change the agricultural company organizational structures. Former company organization structures based on the traditional agricultural model were replaced by medium and large scale concerns that focus on production efficiency and quality. TEB’s local and global based solution packages facilitate organization structural change, ensure continuous sector development and give companies the chance to meet their financial needs from different sources. In addition to contributing to the sustainable agricultural production of small agribusinesses, TEB Agricultural Banking continues to meet the loan needs of medium and large scale enterprises for their working capital and investment. Financing alternatives are offered under agreements executed with agricultural producer associations, cooperatives and trade associations. The banking needs of environmental friendly companies that are interested in organic agriculture in line with consumer demands and needs are also among TEB’s priorities. A key product in Agricultural Banking: Thresh Card Thresh Card is a card payment system designed specifically for TEB customers in the agricultural sector. Launched in the last quarter of 2009, Thresh Card gives agribusinesses the chance to purchase their production inputs such as fuel, fertilizer, seeds and feed under the best terms and conditions from suppliers. The card also helps suppliers, which are TEB solution partners, to gain new customers and increase their turnover. The number of Thresh Cards issued reached 1,500 as of the end of 2009. TEB Agricultural Banking strives to become one of the major players in the sector for payment systems in the agricultural sector. TEB also supports agricultural insurance solutions, which rank among the most important needs of the sector. Insurance sales are made by branches in this service offered under the framework of TARSIM, of which Zurich Insurance is a member.

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Card Payment Systems A valuable component for gaining new customers In recent years, TEB has implemented important innovations in payment systems and continues to offer innovative products and solutions to its customers. Contributing to customer loyalty, profitability and customer acquisition across all the Bank’s business lines in 2009, TEB Card Payment Systems focused on,

• product development, • marketing, and • sales activities.

With the main target of directing the cash flow of individuals and companies to the Bank via a wide range of cards and POS products, the Card Payment Systems business unit was restructured in 2009, and now has two main departments, marketing and sales. In 2010, the primary objectives of Card Payment Systems are to quickly acquire credit card customers by forging strategic partnerships and generate more transaction activity and greater penetration in existing cardholders. TEB was ranked 9th in the sector in expenditure per card. TEB, which was ranked ninth in the sector in expenditure per card in Turkey, increased the number of its credit cards issued to 717,356, up 11% for the year. TEB’s credit card market share reached 1.64% in 2009, while the Bank’s market share of total credit card turnover rose to 1.33%. With the TEB Star Platinum Card and TEB Special Platinum Card programs, which were introduced in January 2009, a total of 22,273 customers were acquired in the high end group of cards. Card Payment Systems, which continued to support the Bank’s business lines with credit card products, launched TEB Thresh Card, intended to meet the cash needs of agricultural production companies, World Signia for the private banking group, and UniversiTEB Card for undergraduates. In 2009, the UniversiTEB Card acquired 20,000 new customers. The most money-making card in the sector In 2009, with the highest bonus point offering campaign in the sector, “A Huge Bonus from TEB: 100 TRY Bonus,” TEB strengthened its “most money making card” image in the banking sector. Over 75,000 POS With more than 75,000 POS machines in use, and up 70% for the year, TEB ranked sixth in the market. TEB captured a 4.68% market share in POS turnover of the sector, an increase of 11% over the previous year. In 2009, the Bank was fourth in the sector with TRY 10,281 in turnover per POS. With a monthly average of 3,000 new contracted merchants, POS machines became a key product in Small Business and SME Banking’s efforts to gain new customers.

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TEB, • Continued to add new contracted merchants to its Bonus Card program in 2009. The

Bank reached 27,882 contracted merchants and recorded TRY 605 million in Bonuscard turnover.

• Implemented an advantageous ADSL campaign to contracted merchants by collaborating with Millenicom in September.

TEB also undertook various social responsibility projects in 2009 within its credit cards business line.

• Thanks to the fund provided by TEB Bonus İzmirim Card, the only credit card specific to a city in Turkey, which was launched in April 2007 in cooperation with the İzmir Chamber of Commerce Education and Health Foundation, eye screening of 100,000 students was carried out in elementary schools in the 2008 – 2009 academic year.

• From the environmentally friendly TEB Bonus TEMA Card developed in cooperation with the TEMA Foundation and introduced in 2007, a fund of TRY 80,000 was generated and transferred for use in the battle against global warming and in other environmental projects that will be implemented by TEMA.

We do everything we can to offer higher quality service to our customers… By forming a strategic partnership with the Bonus Card credit card program, which has the highest brand recognition and the widest contracted merchant network, TEB provided a service network capable of comprehensively meeting the expectations and needs of its customers. By organizing attractive campaigns, TEB aims to become the bank that contributes most to its customers in the credit card market. TEB, which addresses differentiated customer segments thanks to its wide product range, plans to take additional pioneering steps in this area in 2010. Alternative Delivery Channels In parallel with differentiated, varied and rapidly growing customer needs, a fundamental shift is occurring in the banking sector, namely, away from branch banking and toward alternative delivery channels. In response to this development, TEB’s primary objective is to enable its customers reach content-rich and quality banking products in a faster and more effective way. As a result, shifting the operational work load on the Bank’s physical service network was a priority. TEB Express, Call Center, mobile banking and Internet applications make up TEB’s primary alternative delivery channels, with which TEB provides services to different customer segments with its extensive menu of options. Of the share of the Bank’s customer transactions completed through alternative delivery channels in 2009, TEB Expresses received 27%, retail and corporate/commercial Internet branches 62%, mobile banking 1%, and the Call Center 10%. Nearly 100 million transactions were made through Internet, mobile banking, Call Center and TEB Express channels in 2009.

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The number of TEB customers has risen considerably in recent years. Notably the Bonus Card partnership and the Bank’s growth in differentiated products and services yielded an increase in the number of customers and business volume. A natural result of this development was the operational load increase across the Bank. TEB’s ability to turn banking into an easy-to-access and consumable product, and its superior technological infrastructure, allowed the transfer of a significant part of the operational work load to non-branch channels, primarily through TEB Expresses. TEB Internet Branch In 2009, the number Internet Branch users reached 290,000, a 40% increase from the prior year; active users totaled 110,000, a rise of 34% from 2008. The active customer penetration rate of the branch increased from 14.2% to 16%. TEB Handy Internet Branch TEB Handy Internet Branch continued to enhance its offering with new functionality added in 2009. Designed for retail banking customers who want to make daily transactions easily and quickly, TEB Handy Internet Branch became the favorite of an increasing number of TEB customers. CEPTETEB Users can access information about local and global markets (foreign currencies, gold and repo, foreign exchange market indices), the closest TEB Branch and TEB Express and our loan and investment products at wap.teb.com.tr, the address of the CEPTETEB WAP Branch. CEPTETEB’s offering was further extended with stock, fund and foreign currency buying & selling functionality. TEB customers can make money transfers and payments and withdraw cash as well as review their account details, account summary and TEB Bonus Card information at the WAP Branch. WHERE IS TEB In cooperation with Turkcell, the “Where is TEB” service was launched as an innovation in Turkey that enables Bank customers to learn via SMS where the nearest TEB Branch or TEB Express is in relation to their geographic location. CALL CENTER TEB Call Center continued to raise its service quality and increase its sales volume in 2009 with an organizational structure based on providing the utmost customer satisfaction. TEB Call Center provides services through three different units. The Telephone Branch provides retail and commercial customers 24/7 access to retail banking services. TEB Call Center meets customers’ needs quickly without compromising quality by serving as an easy-to-access distribution channel. TEB Call Center also strives to acquire new customers by focusing on marketing activities.

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SMART IVR Smart IVR, which is a smart voice recognition system and an innovation in Turkey, was implemented as a part of the TEB Call Center Interactive Voice Response System. The concept at the heart of this project, that automatically recognizes customers and ensures more efficient transaction processing for each customer, originated in the “Make an Invention” competition. As Smart IVR recognizes the voice of customers, callers do not have to listen to all the IVR menus. Their favorite menus are presented firstly and this leads to faster and easier completion of transactions. The Smart IVR application also shortened the customer waiting time on the phone. TEB Express The number of TEB Express and TEB Express Plus points reached 596 in 2009, an increase of 2% over the previous year. Total transaction volume for the year through this channel rose to 27,231,374, up 60% from 2008. TEB continues to enhance the transactional capabilities of TEB Express. New software for the TEB Express infrastructure was developed and will be deployed in December. An innovative and unique business model for ATMs TEB has been preparing an innovative and unique business model for ATMs in conjunction with its agreement with First Data. A TEB Express network will be established at retail points such as supermarkets, gas stations, white goods stores and at other suitable locations within urban areas. With this collaborative project, the objective is to triple the number of TEB Expresses within three years. In addition to TEB customers, local and global card holders will be able to use services such as money withdrawal through non-branch TEB Express points to be established. Private Banking The first to introduce private banking in Turkey in 1989, TEB provides Private Banking services to high net worth individuals. All the banking and investment product needs of customers are met through customized asset management by a qualified and experienced team of professionals. TEB Private Banking assesses the financial expectations and risk appetite of its customers with a personalized approach and meets their needs through investment opportunities with high added value. Experienced Private Banking Portfolio Managers provide services in TEB Private Banking... Individuals with assets worth at least TRY 1 million are the target group of TEB Private Banking. Most of TEB’s traditional customers are those who request professional investment advisory and wealth management services from the provider with the highest private banking standards in Turkey.

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TEB Private Banking services are based on investment opportunities that are reliable and beyond reproach. One of TEB’s competitive advantages is its staff of Private Banking Portfolio Managers who have an average of 12 years of experience in the sector. This highly experienced team of professionals provides the opportunity not only to act quickly when making investment decisions but also to manage high level investment products requiring a Capital Markets Board license, according to the risk appetite of customers. Our priority in a market affected by the global crisis is … Starting in the mortgage market in the USA in the last quarter of 2008 and spreading all over the world, the global economic crisis seriously affected the Turkish economy in 2009. TEB Private Banking adopted an asset allocation policy in line with the risk appetites of its customers and accordingly designed its wealth management services in response to the market conditions of a depressed economy. TEB Private Banking continued to offer the right local and global investment options designed on a personalized basis with the help of its experienced and specialized team throughout 2009. The decisions of the Investment Committee, which makes investment recommendations, were readily shared with customers. In 2009, the number of TEB Private Banking customers increased by 2% while investment fund business volume rose 31% over 2008. Cooperation with subsidiaries and other business lines TEB Private Banking performs asset management and investment advisory services together with TEB Portfolio Management. VOP and stock transactions are conducted jointly with TEB Investment. TEB Private Banking works in close cooperation with the Corporate and Commercial Banking business lines to gain new customers. The year 2009 was one of innovations for TEB Private Banking. TEB added Tax Advisory to its Wealth Management Advisory services, which have been provided in the area of Private Banking since 1989. tebozel.com TEB Private Banking’s new web site was launched in 2009. With up-to-date market developments and daily analyses, Your Finance Coach provides customers with actionable daily and historical macroeconomic data to better inform their investment decisions. In 2009, Tebozel.com won the Distinguished Web Site award in the Web Awards, one of the most prestigious global competitions for the internet world. Tebozel.com is the first Turkish private banking web site to win this coveted award. TEB works in cooperation with be Travel in providing personalized travel-related support and services to its Private Banking clients. Additionally, TEB offers international travel consultancy and advisory services to its customers.

http://www.tebozel.com/�

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TEB Private Banking aims to provide its customers a perfect service experience by further improving its offering in 2010. Under the synergistic cooperation with BNP Paribas Wealth Management, TEB is preparing to provide both art and real estate consultancy services to its private banking customers in 2010. TEB plans to maintain its traditional leadership position in Private Banking and provide exemplary services to an expanding customer base in 2010. Treasury Treasury Marketing TEB Treasury Marketing is a unit that focuses on sales and marketing, without dealing with operational details, and that can convert customers’ foreign currency, interest and commodity risks into opportunities thanks to its wide product portfolio. Treasury Marketing develops competitive products that can be modified according to customer needs with the help of the advantages created by its service platform and TEB’s membership in a global bank network. Customer visits are organized to determine their needs on an accurate and timely basis; customer balance sheet risks are assessed with the help of active balance sheet analysis. A wide range of technical support is given and information and experience is exchanged as a result of joint initiatives with BNP Paribas. The year 2010 will be one of opportunities for Treasury Marketing. TEB aims to become the first Turkish Bank to offer commodity derivatives to its customers. Assets & Liabilities Management The Assets & Liabilities Management division manages the Bank’s balance sheet on the basis of a sustainable profitability and growth strategy. The primary duty of this department is to,

• Minimize the impact of economic fluctuations and risks on TEB’s balance sheet, • Control the long-term interest rate risks that may occur in the balance sheet by using

advanced hedging techniques, • Support TEB’s long-term growth strategy.

TEB has long-standing expertise in the Assets & Liabilities Management arena. TEB efficiently manages its balance sheets by using modern analytical methods with the contribution of know-how and expertise of BNP Paribas. The model applied by TEB is among the best applications of BNP Paribas, with which TEB is in close cooperation in Assets & Liabilities Management. TEB Assets & Liabilities Management also makes recommendations to the strategic investment committees of BNP Paribas.

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Information Technologies To develop and balance operational efficiency, risk management effectiveness and customer orientation... TEB Information Technologies implemented many initiatives that include both front and back office applications for developing and balancing operational efficiency, risk management effectiveness and customer orientation to support daily work requirements with the Convenient Banking approach. Information Technologies has coordinated sustainable growth and cost-effective initiatives across the entire Bank for years.

ACE program applications started... In 2009, TEB applications of the ACE program, which integrates the Lean Six Sigma methodology with change management approaches, started in line with the customer orientation and operational excellence objectives of BNP Paribas. The ACE program integrates the “Lean” approach that started in BNP Paribas in 2005 and the “Six Sigma” approach; it is further supported by change management applications. “Lean” strategies focus on increasing speed and efficiency. “Six Sigma” aims to reduce variations, generate more stable and clearer work results and increase customer satisfaction. TEB implemented this program in 2009, which has been applied by BNP Paribas in several other countries. TEB aims to utilize LSS methodology, when applicable, for development and change projects, and studies related to operational efficiency and service quality TEB will conduct these studies under the ACE program. TEB Information Technologies also... Implemented TEBKEYS-TEB User Access Management System, which is an

application that includes identity and access management main modules and which was designed to manage user access to IT resources.

Adopted the system designed to increase and monitor software code quality. Signed a contract with ITU regarding the storage of software resource codes. Started a project to replace the Call Center IVR system with the new generation

Voice Portal technology. Aimed to increase the efficiency of the data center by focusing on server virtualization

and consolidation projects. Renewed the network infrastructure of the Headquarters and increased infrastructure

security measures. Spread the use of integrated communication tools throughout the entire bank. Updated the version of the basic banking database.

In 2009, TEB Information Technologies implemented the following applications. Compass 3, which is the new version of Compass used by the portfolios in TEB

branches, started to be used as a sales automation system that focuses on efficiency, sales and risks by Headquarters Sales / Marketing Departments, Regional Directorate Teams, Private Banking Portfolio Representatives and 50 pilot users in various branches.

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Card Systems Management Package was rewritten with a new design and technology.

Foreign currency (FX) and money markets transactions realized by the Treasury were included in the Treasury front office application.

Retail internet banking for TEB Kosovo and leasing main loan applications for TEB Leasing were developed.

New and extended data model initiative that focuses on loan and risk related subjects for data storage was designed with the MIS team.

Improvements were completed to upgrade the existing profitability application by including a breakdown of products.

Unica software was purchased to enable multichannel and automated Campaign Management. Branch integration projects were implemented with the Compass application in 2009.

A new control system started to be used to monitor all the details of TEB Express. Productivity was increased by installing identity scanning for all the front office users. An Application Fraud Detection system started to be used for Personal Loans. A joint POS infrastructure was established. Real persons’ new BNP-Paribas-compatible rating model was developed and started

to be applied. Mobile Direct Debiting System, operated via Mobile systems, was developed.

Under the scope of IT processes, TEB… Processes such as Event Management, Demand Management, Project Management and Software Configuration Management were developed to increase IT service quality and level of compliance with the standards. Software tools that are widely used in the industry were purchased for the automation of these processes. In the upcoming period, TEB is determined to use information technologies efficiently in all its work processes in line with its sustainable profitability and growth objective and develop central operations capabilities by adding new functions. TEB Banking Operations TEB has a laser-like focus on operational efficiency. TEB Banking Operations established its overall strategy for 2009 on the basis of increasing the effectiveness and efficiency of all the operational processes and functions and improving customer satisfaction. In line with this strategy, TEB targeted highly effective cost control management in its operations. TEB Banking Operations, which have enjoyed the competitive advantage of a centralized operation platform for years, reflected the requirements of quality certification which demonstrates the compliance with ISO standards to all new parts of the Group. TEB actively supports innovativeness among its staff. Employees are actively encouraged to give innovative recommendations to assist TEB to perfect its quality processes and gain competitive advantages. In 2009, TEB Banking Operations continued its action plan intended to implement operational initiatives in a faster and more effective way at the branch level.

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Full compliance with legal regulations In 2009, TEB Banking Operations improved relationships with customers directly or together with business lines with the purpose of increasing compliance with legal regulations and norms. Responsibility areas of Group employees were enhanced to achieve marketing and sales objectives of business lines. In 2010, TEB Banking Operations will maintain this approach and its efforts to extend the concepts of “operational excellence” and “center of excellence” throughout the Group. Cooperation with BNP Paribas In 2009, TEB Banking Operations started joint projects to,

• Increase and strengthen the synergy between BNP Paribas and our Bank, • Share the “best” applications it developed with BNP Paribas Group and use the “best”

applications of BNP Paribas. TEB Banking Operations moved to its new service building on the Anatolian side of Istanbul. TEB Banking Operations, which moved to TEB Campus Block C in 2009, effected improvements in synergy within the Group and by organizing operations functions in one location. As a result of the move, the Group became stronger in directing its employees and projects to action plans. Its capability was also improved to achieve objectives and immediately respond to sectoral developments. Located on the Anatolian side of Istanbul, TEB Campus Blocks C and D have a working capacity of nearly 2,000 employees on an approximate area of 12,000 thousand sqm. Although the geographic region of these buildings is categorized as a second-degree seismic zone, the complex was constructed as though it were in a first-degree seismic zone. The blocks set an example in energy efficiency with their ventilation devices that have a heat recovery system and condensing boiler. Receiving natural light from three facades and having a ceiling height of 3.44m, the TEB Campus complex provides a spacious, comfortable and modern environment for its employees. Information related to research & development applications on new services and activities In 2009, TEB continued to develop its product and service range according to ever evolving customer needs and expectations based on its extensive research and development initiatives. Information related to the new products, services and applications developed by different business lines of the Bank is stated in the respective sections of the report.

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Human Resources Group In striving to achieve its strategic goals, TEB’s most important asset is its human resources. As of the end of 2009, the Bank had 5,871 employees on its payroll and a total of 334 branches. Of TEB’s employees, 70.63% are university graduates, 8.23% hold a master’s degree and 0.22% have a doctorate. The average training time per employee was 30 hours in 2009. The underlying objectives in TEB’s human resources activities are to be one of the best examples of excellence in human resources practices in the financial services industry, to manage all human resources related processes actively so as to give itself a competitive edge and to support the Bank’s human resources performance through coordination of the overall effort. To achieve these objectives, TEB relies upon: COMPETENCE MANAGEMENT TEB makes use of competence management to identify employees who are high potential and high performance to ensure their continued personal and professional development. These employees are candidates for key positions within the Bank. Follow-on development is conducted via competence management, in conjunction with the employee’s relevant manager and TEB’s Training & Development unit. This process serves to both give TEB a competitive edge and to strengthen the commitment of the employees to the company. Out of 2% of our employees, the ones who have the potential to work abroad were offered international career opportunities TEB COMPETENCY MODEL With the purpose of sustaining a high level of performance, the TEB Competency Model was created and it plays a significant role in the development of employees in line with TEB Vision, Mission and Corporate Values.

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The TEB Competency Model contains four main headings, and 12 Competences, which can be measured on a staff position basis.

The TEB Competency Model aims to sustain a high level of employee work performance by effectively fostering the personal and professional development of employees and increasing the dynamism and performance of the entire TEB Group. “Competence, Career and Development” reports are prepared by using a TEB developed process to make an impartial and systematic evaluation. Managers and employees are trained on competence evaluation and the process. TEB TALENT DAY TEB brought together its most talented employees, who stand out in terms of their performance and potential as well as their ability to speak English, on “TEB Talent Day” organized on 4 November 2009. The selected employees exchanged their innovative and creative ideas with one another and also learned from the experiences of the top management of TEB and BNP Paribas. After attending speeches and presentations of BNP Paribas top managers, “TEB Talents” participated in workshops with these managers. The “Talents of Our Bank” discussed their career expectations and development with our managers following the workshops. TALENT POOL Special training and development programs for the participants of the TEB Talent Pool Program, created in 2008, continued this year. While direct managers and HR monitored professional performance of Talent Pool employees, managers, mentors and HR worked together for the development of their competences. All Talent Pool employees prepared and presented two projects within one year under the scope of the mentorship program.

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INNOVATION IN TEB TEB continues to foster a culture of innovation by encouraging its employees to generate innovative and creative ideas through internal initiatives, and offering innovative and creative products to its customers. In recognition of its efforts in this area, TEB was cited as an international model of excellence for its innovation related activities by USA-based international consultancy Gartner Group, which also published a “Case Study” about TEB. TEB advanced to the finals with its “The Most Effective Cultural Change” project in the “Financial Innovation Awards 2009” to which many global banks apply with their innovative projects every year in London. “TEB SMART IDEAS COMPETITION” - MAKE AN INVENTION The competition, which was organized for the third time, reflects the comprehensive range of TEB’s innovation related activities. Facilitating customers’ lives with its innovative and creative services, TEB considers innovation and creativity as one of the most important tools of its differentiation strategy. The competition also serves as a platform for cooperating with universities, improving the knowledge and competence of university students, recruiting talented young people to TEB and enabling our customers to shape our products and services. Ideas that were entered in the competition in 2009, as in previous years, were presented to customers as products and services; four of the finalists were recruited by TEB. The competition received the Golden Compass Award in the “Corporate Communications” category at the annual awards of TUHID (Turkish Public Relations Association) in 2009. The “Smart/Handy Call Center” application, which was selected as the winner last year, made it to the finals in the Best Alternative Distribution Channels category of The Banker Technology Awards. “TEB SMART IDEAS COMPETITION” – INNOVATION SUMMIT In the “Smart Ideas Competition” held every year with the participation of 1,500 employees and 500 customers, inspirational international speakers served to broaden the vision of participants. Awards were granted to the most innovative, creative employees and teams thanks to their ideas presented in the Sparkle innovation portal as well as customers, university students and new graduates that entered the “Smart Ideas Competition.” Those who won in the students and new graduates category of the competition participated in a 3-day Silicon Valley tour. Customers and employees gather during the afternoon to generate ideas for TEB regarding differentiated products and services in the “TEB Creative Café” workshops and some of these ideas are starting to be implemented by TEB. With its “TEB Creative Café” project and “Smart Ideas Campus” initiative, the Bank participated in the “Innovation” competition, which is organized by BNP Paribas and to which projects from 85 countries apply every year; TEB placed first in the “Managerial Practice Encouraging Innovation” category.

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The Creative Café projects advanced to the finals in the “Best Public Relations and Communications” category of the “Financial Innovation Awards 2009,” which is an innovation competition held every year in London. UNIVERSITY ACTIVITIES In 2009, the TEB Human Resources Group continued to organize university campus activities to identify of young, budding talents and introduce them to TEB. Having targeted handicapped students initially the prior year, our activities expanded significantly in 2009. EDUCATION AT TEB TEB considers education and development opportunities as an important investment in human resources. TEB aims to support the personal and professional development of employees through programs defined in career roadmaps in line with Bank objectives and strategies. In addition, TEB strives to create a professional working environment and career development opportunities by using advanced training programs of BNP Paribas within the framework of a continuous learning and development approach. Another objective of TEB is to identify and promote its managers from within the organization. Accordingly, employees with high potential are entitled to become manager candidates by participating in “Evaluation Centers” within the scope of competence management. The aim is to provide said employees with the required managerial competences through development programs and personal coaching support. The “Competence and Development Project” rolled out in 2009 for the entire staff of the Bank. The project enabled employees to decide on the training programs they need to take, in parallel with their competences, together with their managers, thereby ensuring training investments are made at the exact points where employees need the most support in order to improve their performance. All business lines conducted trainings focusing on risk management in parallel with the global economic crisis in 2009. Employees across all business lines, including managers, participated in training programs customized for the Bank. Another training project that rolled out in 2009 was the Corporate Culture and Values program. Targeting all the Bank’s employees, this training initiative included not only classroom instruction but also e-learning sessions in order to ensure continuity of training. This project also introduced a new training method: “Learning Maps.” The Excellent Customer Experience project also began in 2009. This project includes all the Bank’s employees and is expected to yield results in 2010. The primary objective of the initiative is to create and implement high service standards in all branches specifically for TEB customers. Preliminary studies were completed and the first group of trainings was held at the beginning of 2009. The TEB Performance Appraisal System is designed with quality improvement processes and systems in order to improve individual and team performance, reward performance and offer equal opportunities to everyone in line with their career roadmaps.

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MENTORSHIP ACTIVITIES The TEB Mentor program contributes to self-development of employees by benefiting from the professional knowledge and experience of mentors, who are more advanced in their careers at TEB. The TEB MENTOR program is open to all employees with the goal of differentiating the human resources performance and contributing to the development of competences. A first in the Bank, the TEB MENTOR program evaluated requests of 47 employees and assigned Mentors in accordance with their needs. HR WEBSITE Deployed in 2009, the lively, dynamic, innovative and creative attributes of the human resources website communicates the general business approach of TEB Group to wider audiences, provides information on the Bank and introduces human resources applications. The TEB human resources website contains,

• General information on TEB, • Introduction of groups, • Human Resources approach and applications, • Open positions, • Videos of various organizations, • Social activities.

TEB CLUB The Bank’s contests, social events, and athletic and cultural activities are conducted within the framework of TEB Club, which serves as a motivational tool for the staff. TEB Club’s wide range of activities attracted much interest from employees across the Bank in 2009. In this context,

• Painting contests with “Mother’s Day” and “environment” topics and a game called Enercin were organized. Employee picnics were held around the Marmara and Adana regions. Trips organized by the Photography Club members created beautiful photographic opportunities.

• TEB Stars represented the Bank in the Business League and TEB athletes competed in the Eurasia Marathon, Gazi Marathon and the Ataturk Marathon.

• Istanbul and Marmara Football Tournaments were held as events that offer both sports and entertainment.

• The TEB Club Theater Group staged the “School of Artists” play twice in Bursa, entertaining the regional staff. “The Bourgeois Gentleman” by Moliere and “Ward 72” by Orhan Kemal were other plays that the Group staged in Istanbul before an audience of 252 people.

• Monthly Bowling tournaments also created exciting and entertaining moments for employees.

• The fundraising activities of TEB volunteer athletes raised a total of TRY 5,112 in three months for the benefit of the Turkish Paraplegic Society within the scope of the Bank’s support for the handicapped.

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“HR AND COMMUNICATIONS ARE LISTENING TO YOU” MEETINGS TEB implemented the “HR and Communications are Listening to You” meetings in order to become closer to employees at branches and regions and listen to their expectations while creating an environment conducive for the exchange information and opinions. The meetings aimed to share the TEB Human Resources vision, provide information on human resources activities carried out in the Bank, listen to opinions and expectations of employees and conduct individual meetings with those who request so. Officers from all functions of the TEB Human Resources Group attended the “HR and Communications are Listening to You” meetings and endeavored to show the utmost care towards the requests and expectations of employees. Meetings in all regions were completed as of the end of 2009 with a total of individual meetings with 236 employees.

Region Date No. of Participants No. of Individual Meetings Mediterranean 8 October 2009 111 17 Cukurova 3 October 2009 119 19 Central Anatolia 1 17 November 2009 63 16 Central Anatolia 2 17 November 2009 74 14 Istanbul Anatolian 19 November 2009 105 20 Marmara 4 December 2009 101 16 Aegean 9 December 2009 156 45 Black Sea 15 December 2009 61 22 Europe 2 and 22 December 2009 66 14 Thrace 22 December 2009 62 13 Europe 1 29 December 2009 172 40

1,090 236 TOTAL

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Corporate Social Responsibility As a good corporate citizen that is fully aware of its social responsibilities, TEB strives to be a Bank that upholds the core values and heritage of the society that it conducts business in. To achieve this goal, TEB implements corporate social responsibility projects that contribute to the protection of the environment, the development of SMEs that are the dynamo of the Turkish economy and provide for a large proportion of the country’s employment, and the education of our youth population that will build the future of our country. Planning its corporate social responsibility program in parallel with its business activities, TEB continues to encourage active, voluntary participation of its employees in its projects. Contributions to the Environment As a pioneer that is aware of its responsibility to contribute to a sustainable environment, TEB developed and deployed an effective and systematic management approach to minimize the environmental impact of its business operations. The Bank aims and undertakes to:

• Preserve and effectively use natural resources, • Reduce and recycle waste at source, • Offer environmental-friendly products, • Increase resource savings and energy efficiency, • Follow up scientific and technological developments to prevent environmental

pollution and continuously improve its environmental performance, • Increase the environment awareness of its employees, suppliers and customers.

TEB became the first deposit bank entitled to receive ISO 14001 Environmental Management Standard Certification. TEB aims to minimize the negative environmental impact (i.e. the carbon footprint) of its banking operations in part through obtaining ISO 14001 Certification. As a result, the Bank plans to reduce energy consumption by 10%, paper consumption by 25%, water consumption by 10% and its overall carbon footprint by 5%. TEB also demonstrates its contribution to the environment through a variety of initiatives in many environmentally oriented products including TEB Bonus TEMA Card, Energy Saving Consumer Credit, Organic Agriculture Credit and Hybrid Car Credit. TEB prioritizes raising the level of environmental knowledge and societal awareness of environmental issues, and positions itself as an environmentally friendly bank. The Bank demonstrated its efforts toward increasing public awareness of the environment through sponsorship of the Turkish premiere of the film, “HOME,” which depicts our planet’s environmental problems. Contributions to SMEs With a watchful eye on the development of SMEs, which are among the fundamental pillars of the Turkish economy, TEB supports many activities in this area.

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Since 2005, after forging a strategic partnership with BNP Paribas, the largest bank in the Euro zone, TEB has further contributed to the development of SMEs. The Bank has provided SMEs with knowledge that will help them gain a competitive edge through its own TEB SME Academy-Corporate Development Program and Future Strategy for Provinces Conferences. TEB SME Academy – Corporate Development Program The Corporate Development Program is a hands-on initiative designed to help guide SMEs on the path toward increasing their local and international profitability and gaining a competitive edge in the marketplace. The program also shows SMEs important tips as to how they can strategically manage their companies in the most appropriate manner. The Corporate Development Program started in 2005 and has reached thousands of SMEs in 27 cities. TEB SME Academy – Future Strategy for Provinces Conferences Future Strategy Conferences are held in different cities on a monthly basis. With the participation of local businessmen, academics, bureaucrats and local administrative officials, the conferences aim to help SMEs determine their future objectives and strategies. In addition, the Future Strategy Conferences reveal potential investment areas in provinces based on the economic, commercial and social histories of the locations. TEB SME TV TEB has also established TEB SME TV, a first in the industry. TEB SME TV enables SMEs to gain access to valuable information and benefit from educational programming on a TV channel with ever changing content on a 24x7 basis. TEB SME CONSULTANTS The Bank has implemented another first in the industry: TEB SME CONSULTANTS. These consultants work at TEB branches and help SME clients identify problematic issues in their businesses, offer them solutions and guide them toward opportunities ahead.

Contributions to Youth Turkey’s Youth are “Inventing” with TEB Recognizing that a large proportion of the Turkish population is composed of youth, TEB organizes an annual innovation competition, “Make an Invention,” in order to encourage the youth population to generate creative and innovative ideas. Serving as a good example of private sector-university cooperation, this TEB-sponsored competition contributes to various topics such as raising awareness among the university students and young professionals on “innovation-creativity,” developing competencies and introducing the finance sector to university students. TEB provides special education programs for and awards youth participants who demonstrate high potential for generating innovative and creative ideas. TEB also organizes an innovation contest among its customers in order to encourage them in this area and grants awards to winning customers.

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In addition, TEB provides university students with special education programs in the fields of innovation, communication and creativity. Its “Smart Ideas Campus” designed for undergraduate and masters students and the “No Barriers Campus” designed for disabled students. TEB helps students discover their innovation-creativity abilities and contributes to their education through these initiatives. Students from different universities that participated the “TEB Smart Ideas Campus” and “TEB No Barriers Campus” also have the opportunity to work at TEB based on their education, knowledge and experience.

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SECTION II MANAGEMENT AND CORPORATE GOVERNANCE PRACTICES BOARD OF DIRECTORS AND AUDIT COMMITTEE Chairman and Members of the Board of Directors Name Position Yavuz Canevi Chairman Dr. Akın Akbaygil Deputy Chairman Jean Jacques Marie Santini Deputy Chairman Varol Civil Executive Member and General Manager Musa Erden Executive Member Yves Paul Henri Martrenchar Member Patrick René Pitton Member Refael Taranto Member Metin Toğay Member Yavuz Canevi, Chairman 1996-present Türk Ekonomi Bankası A.Ş. (TEB), Chairman of the Board of Directors 1993-2005 Istanbul Stock Exchange, Vice Chairman and Board Member 1989-2005 Euro Turk Bank, Chairman of the Executive Board 1987-1989 Türk Eximbank, Chairman 1986-1989 Undersecretary of Treasury and Foreign Trade, Prime Minister’s Office 1984-1986 Central Bank of Turkey, Governor 1980-1984 Central Bank of Turkey, Vice Governor 1979-1980 T. Garanti Bankası, Assistant General Manager in Charge of International

Relations 1976-1979 Central Bank of Turkey, Director General of Foreign Exchange 1974-1975 Ministry of Finance, Tax Inspector Georgia State University, USA, Faculty Member; University of Southern California (USC), USA; Ankara University, Faculty of Political Science, Department of Public

Finance and Economics Additional Professional Occupations: TEB N.V., Netherlands, Chairman of the Supervisory Board TEB Mali Yatırımlar A.Ş. Member of the Board FNSS Savunma Sistemleri A.Ş. Chairman of the Board TSKB Member of the Board Hedef Alliance A.Ş. Member of the Board NETAŞ Member of the Board TUSİAD Member of High Advisory Council IKV Member of the Board DEİK Holland Member of the Board

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Dr. Akın Akbaygil, Deputy Chairman 2008-present TEB A.Ş. Audit Committee Vice Chairman 2005-present TEB Leasing and TEB Factoring, Chairman; TEB Financial Investments,

Board Member 2004-2007 TEB Asset Management, Chairman 2003-present TEB, Vice Chairman and Executive Member; TEB Financial Investments,

General Manager 2003-2005 TEB Financial Investments, Vice Chairman 2001-2002 Banks Association of Turkey, Vice Chairman 1999-present Ekonomi Bank IBU Ltd, Vice Chairman 1998-present TEB NV, Vice Chairman 1997-2005 TEB Insurance, Chairman; TEB Factoring, Board Member, TEB Factoring, Board Member 1996-2005 TEB Leasing, Board Member 1994-2001 Banks Association of Turkey, Board Member 1987-2003 TEB, Vice Chairman, Executive Member and General Manager 1982-1987 TEB, Executive Member, 1965-1982 Akbank, Director of Foreign Affairs Istanbul University, Faculty of Economics, BA and PhD Jean-Jacques Marie Santini, Deputy Chairman 2007-present SAHARA BANK (Tripoli-Libya), Board Member 2005-present TEB, Vice Chairman TEB Financial Investments, Board Member 2004-present B.M.O.I. - Banque Malgache de I'Ocean Indien, Vice Chairman BNP Paribas Nouvelle Caledonie, Board Member BNP Paribas Martinique, Board Member BNP Paribas El Djazair (Algeria), Board Member Societe Financiere de Beyrouth BNP Paribas (Lebanon), Board Member 2003-present BNP INTERCONTINENTALE (Paris), Chairman and General Manager

BNP Paribas BDDI Participations (Paris) Chairman B.I.C.I du Gabon - Banque Internationale pour le Commerce et I'Industrie

(Libreville-Gabon), Vice Chairman BNP PARIBAS Reunion, Board Member BNP Paribas Guadeloupe, Board Member BIC Comores-Banque pour I'Industrie et le Commerce (Comoros), Board

Member BNP Paribas Egypt, Board Member 2003-2009 BMCI B.M.C.I. - Banque Marocaine pour le Commerce et I'Industrie,

(Casablanca-Morocco) Member of Audit Committee 2003-2009 UBCI - Union Bancaire pour le Commerce et I'Industrie (Tunis-Tunisia)

Board Member 2003-2009 BNP Paribas Group, Member of the General Management Group

Committee; Head of International Retail Banking Group 1998-2003 BNP Paribas, Country Manager in Morocco; CEO of Banque Marocaine

pour le Commerce et l’Industrie 1994-1998 BNP Paribas, Country Manager and Chief Executive Officer in Belgium

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1988-1994 BNP Paribas, Head of International Development Department at BNP Head Office in Paris

1986-1988 Ministry of Finance, Treasury, Head of Financial Markets Forecast Unit 1984-1986 Ministry of Finance, Treasury, Vice Head of European Economies Unit Graduate of Institut d’Etudes Politiques de Paris (ICP), Paris University, MA in Law Ecole des Hautes Etudes Commerciales (HEC), MBA Graduate of National School of Public Administration (ENA) Varol Civil, Executive Board Member and CEO 2007-present TEB Asset Management; TEB Investment, Chairman 2006-present Banks Association of Turkey, Deputy Chairman of the Board of Directors 2005-present TEB Leasing, TEB Factoring, Vice Chairman 2005-2006 TEB Insurance, Chairman 2003-2004 TEB Insurance, Vice Chairman 2003-present TEB, Board Member and CEO; TEB NV, Board Member 1999-2007 TEB Asset Management, Board Member 1999-2005 TEB Leasing, Board Member 1998-2005 TEB Factoring, Board Member 1998-2003 TEB Financial Investments, General Manager; TEB, Board Member and

Vice General Manager 1995-1997 Bank Kapital, Board Member and General Manager 1992-1995 Arap Türk Bankası, Assistant General Manager 1985-1992 Undersecretariat of Treasury and Foreign Trade, Certified Bank Auditor 1983-1984 TEB, Expert in Loan and Insurance Department 1992-1993 Marmara University, Contemporary Business Management Program 1983-1984 Istanbul University; Faculty of Social Sciences, Department of Money and

Banking 1978-1982 Istanbul University, Faculty of Economics, Economics and Business

Administration Department

Musa Erden, Board Member 2008-present Türk Ekonomi Bankası A.Ş., Executive Director 2006-2008 Türk Ekonomi Bankası A.Ş., Consultant 2006-2008 The Ottoman Fund Ltd Board Member 2006-2008 Osmanlı Yapı 1 İnş. Tur. San. Tic. A.Ş. Chairman 2006-2008 Osmanlı Yapı 2 İnş. Tur. San. Tic. A.Ş. Chairman 2006-2008 Osmanlı Yapı 3 İnş. Tur. San. Tic. A.Ş. Chairman 2006-2008 Osmanlı Yapı 4 İnş. Tur. San. Tic. A.Ş. Chairman 2005-2008 TEB Mali Yatırımlar A.Ş. Auditor 2005-2006 TEB A.Ş. Auditor 2003-2003 MNG Bank, Board Member 2002-2003 Turkish Banking Association, Arbitration Committee Member 1996-2001 Osmanlı Bankası A.Ş., Assistant General Manager 1993-1996 Osmanlı Bankası A.Ş., Deputy General Manager /BD 1991-1993 Osmanlı Bankası A.Ş., Deputy General Manager /CM 1988-1991 Osmanlı Bankası A.Ş., Deputy General Manager /CM 1986-1988 Osmanlı Bankası A.Ş. Coordinator 1985-1986 Osmanlı Bankası A.Ş. Şişli Branch Manager

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1983-1985 Osmanlı Bankası A.Ş. Main Branch 2nd Manager 1979-1983 Osmanlı Bankası A.Ş. Personnel 2nd Manager 1976-1979 Osmanlı Bankası A.Ş. Inspector 1973-1976 Osmanlı Bankası A.Ş. Assistant Inspector 1972-1973 Yapı ve Kredi Bankası A.Ş. Officer 1966-1970 Ankara University, Faculty of Economics and Commerce, Banking Division Yves Paul Henri Martrenchar, Board Member 2009-present Bank of the West USA, Board Member BancWest Corporation USA, Board Member; TEB, Board Member;

Findomestic, Board Member; Head of Distribution, Markets and solutions for BNP Paribas Retail Banking

2007-present BNP Paribas Assurance, Board Member; BNP Paribas Personal Finance, Board Member 2006-present BNP Paribas Asset Management, Board Member BNP Paribas Immobilier, Board Member; Partecis, Board Member 2005-present Crédit Logement, Chairman 2004-present Parvest Luxembourg, Board Member 2003-present Cortal Consors, Board Member, BNP Paribas permanent Representative 2003-2008 Head of BDDF Retail (Retail part of FRB) 2000-2003 BNP Paribas Securities Services, Luxembourg, Execution General

Manager 2000-present BNP Paribas Lease Group, Board Member 1996-2003 Head of "Distribution, Products and Markets" Department of French Retail

Banking (FRB) 1989-1991 Deputy Manager of the Nord Pas-de-Calais Network 1991-1993 Group Head of LILLE Group Branches 1987-1989 Head of the BNP Savoie 1980 Ecole Polytechnique 1980 Banque Nationale de Paris Patrick René Piton, Board Member 2009-present The Economy Bank N.V. Board Member 2008-present TEB Factoring A.Ş. ve TEB Leasing A.Ş. Board Member 2007-present TEB A.Ş., Asset Management A.Ş., TEB UCB A.Ş. Ekonomi Bank IBU Ltd.,

Board Member 2007-present TEB Chairman of the Audit Committee 2007-present TEB Sh.A Chairman of the Board of Directors 2007-present TEB Investment, Vice Chairman of the Board of Directors 2007-2008 TEB Insurance, TEB UCB Real Estate, TEB Arval Board Member 2005-2007 BNP Ivory Coast (BICICI) Board Member and CEO 2001-2005 BNP Head Office, Head of Magreb Region, supervising Algeria, Tunisia,

and Morocco and Board Member 1998-2001 BNP Paribas Head Office, Vice President in Charge of Energy and Paper

Products Sector at BNP’s corporate department (Senior banker in charge of “multinationals” portfolio)

1995-1998 BNP Lyon, France, Group Manager 1991-1995 BNP St. Etienne, France, Group Manager

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1988-1991 BNP, Aix en Provence, France, Group Manager 1985-1988 BNP Nancy, France, Deputy Regional Manager for the North East of

France 1983-1985 BNP Bordeaux, France, Deputy Group Manager in Charge of Retail

Banking 1979-1983 BNP Paris Head Office, General Inspector 1974-1979 BNP Vienne (France), Deputy Head of Retail Banking Department &

Deputy Head of Corporate Banking Department 1968 Diploma of ESSEC, (Business School) Paris, France 1968 Bachelor of Mathematics, University of Lyon Paris Refael Taranto, Board Member 2000-present TEB, Board Member 1987-2000 TEB, Executive Board Member 1976-1987 Egebank, Izmir, Vice General Manager and later Board Member 1964-1976 Türk Dış Ticaret Bankası A.Ş., Izmir, Assistant Manager in charge of Loans

and Correspondent Banking 1952-1964 Türkiye Kalkınma Bankası A.Ş., Izmir, various positions Graduate of Saint Michel College, Istanbul Metin Toğay, Board Member 2005-present TEB A.Ş. Board Member 2000-present BNP Paribas, Regional Director, Turkey 1997-2000 Banque Paribas, Turkey Representative Office, Assistant of Turkey

Representative 1996-1997 Finans Yatırım A.Ş., Istanbul, Turkey, General Manager 1994-1996 Banque Paribas, Paris, France, Head Office, International Executive,

Commodities Trade Finance 1991-1994 Ottoman Bank, Istanbul (Subsidiary of Banque Paribas until April 1996),

Head Office Manager 1989-1991 Finansbank A.Ş., Corporate Finance Department Manager 1986-1989 Chase Manhattan N.A., Istanbul, Corporate Banking Manager 1984-1985 K-Mart Corporation, Troy-Michigan, USA, Assistant Store Manager 1981 University of Wisconsin, USA, MBA in Marketing 1980 Middle East Technical University (METU), B.Sc. in Business Administration

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Audit Committee Members Name Position Patrick René Pitton Chairman Dr. Akın Akbaygil Vice Chairman Patrick René Piton, Audit Committee Chairman 2009-present The Economy Bank N.V. Board Member 2008-present TEB Factoring A.Ş. ve TEB Leasing A.Ş. Board Member 2007-present TEB A.Ş., Asset Management A.Ş., TEB UCB A.Ş. Ekonomi Bank IBU Ltd.,

Board Member 2007-present TEB Chairman of the Audit Committee 2007-present TEB Sh.A Chairman of the Board of Directors 2007-present TEB Investment, Vice Chairman of the Board of Directors 2007-2008 TEB Insurance, TEB UCB Real Estate, TEB Arval Board Member 2005-2007 BNP Ivory Coast (BICICI) Board Member and CEO 2001-2005 BNP Head Office, Head of Magreb Region, supervising Algeria, Tunisia,

and Morocco Board Member 1998-2001 BNP Paribas Head Office, Vice President in Charge of Energy and Paper

Products Sector at BNP’s corporate department (Senior banker in charge of “multinationals” portfolio)

1995-1998 BNP Lyon, France, Group Manager 1991-1995 BNP St. Etienne, France, Group Manager 1988-1991 BNP, Aix en Provence, France, Group Manager 1985-1988 BNP Nancy, France, Deputy Regional Manager for the North East of

France 1983-1985 BNP Bordeaux, France, Deputy Group Manager in Charge of Retail

Banking 1979-1983 BNP Paris Head Office, General Inspector 1974-1979 BNP Vienne (France), Deputy Head of Retail Banking Department &

Deputy Head of Corporate Banking Department 1968 Diploma of ESSEC, (Business School) Paris, France 1968 Bachelor of Mathematics, University of Lyon Paris Dr. Akın Akbaygil, Audit Committee Vice Chairman 2008-present TEB A.Ş. Audit Committee Vice Chairman 2005-present TEB Leasing and TEB Factoring, Chairman; TEB Financial Investments,

Board Member 2004-2007 TEB Asset Management, Chairman 2003-present TEB, Vice Chairman and Executive Member; TEB Financial Investments,

General Manager 2003-2005 TEB Financial Investments, Vice Chairman 2001-2002 Banks Association of Turkey, Vice Chairman 1999-present Ekonomi Bank IBU Ltd, Vice Chairman 1998-present TEB NV, Vice Chairman 1997-2005 TEB Insurance, Chairman; TEB Factoring, Board Member, TEB Factoring, Board Member 1996-2005 TEB Leasing, Board Member

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1994-2001 Banks Association of Turkey, Board Member 1987-2003 TEB, Vice Chairman, Executive Member and General Manager 1982-1987 TEB, Executive Member, 1965-1982 Akbank, Director of Foreign Affairs Istanbul University, Faculty of Economics, BA and PhD

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EXECUTIVE MANAGEMENT General Manager, Assistant General Managers and Their Responsibilities in the Bank Varol Civil Executive Member and General Manager Nilsen Altıntaş Assistant General

Manager Human Resources Group

Ünsal Aysun Assistant General Manager

Project Financing and Cash Management

Melis Coşan Baban Assistant General Manager

Legal Affairs

Turgut Boz Assistant General Manager

Commercial Banking Group

Levent Çelebioğlu Assistant General Manager

Corporate Banking and Financial Institutions Group

Mustafa Aşkın Dolaştır

Assistant General Manager

Financial Control Group

Osman Durmuş Assistant General Manager

Retail and Small Business Credit Group

Turgut Güney Assistant General Manager

Information Technologies Group

İ. Cemal Kişmir Assistant General Manager

Retail Banking Group

Ümit Leblebici Assistant General Manager

Treasury Group

Saniye Telci Assistant General Manager

Banking Operations Group

Nuri Tuncalı Assistant General Manager

Credit Allocation and Financial

Ömer Abidin Yenidoğan

Assistant General Manager

Private Banking

Jean Milan Givadinovitch

Risk Management

Ayşe Korkmaz Head of Risk Management and Compliance Group Hakan Tıraşın Head of Internal Audit Varol Civil, Executive Member and General Manager 2007-present TEB Asset Management; TEB Investment, Chairman 2006-present Banking Regulation and Supervision Agency Deputy Chairman of the

Board of Directors 2005-present TEB Leasing, TEB Factoring, Vice Chairman 2005-2006 TEB Insurance, Chairman 2003-2004 TEB Insurance, Vice Chairman 2003-present TEB, Board Member and General Manager; TEB NV, Board Member 1999-2007 TEB Asset Management, Board Member 1999-2005 TEB Leasing, Board Member 1998-2005 TEB Factoring, Board Member

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1998-2003 TEB Financial Investments, General Manager; TEB, Board Member and Vice General Manager

1995-1997 Bank Kapital, Board Member and General Manager 1992-1995 Arap Türk Bankası, Assistant General Manager 1985-1992 Undersecretariat of Treasury and Foreign Trade, Certified Bank Auditor 1983-1984 TEB, Expert in Loan and Insurance Department 1992-1993 Marmara University, Contemporary Business Management Program 1983-1984 Istanbul University; Faculty of Social Sciences, Department of Money and

Banking 1978 - 1982 Istanbul University, Faculty of Economics, Economics and Business

Administration Department Nilsen Altıntaş, Assistant General Manager, Human Resources Group 2005-present TEB, Assistant General Manager, Human Resources Group 2002-2005 İnovasyon Bilişim Danışmanlık ve Eğitim Hizmetleri (Innovative-HR)

Founder, Management and Human Resources Consultant 2000-2002 Eczacıbaşı Holding A.Ş., Human Resources and Corporate

Communications Coordinator, Member of the Executive Board 1995-2000 Eczacıbaşı Holding A.Ş., Human Resources Director, Manager and later

Coordinator 1990-1995 STFA Holding A.Ş., Organization and Human Resources Coordinator 1987-1990 STFA Holding A.Ş., Investments and Economic Analysis Manager 1979-1987 TÜBİTAK- Marmara Scientific and Technical Research Institute, Chemical

Technologies Group, Research Specialist 1987 Boğaziçi University, Associate Professor 1983 Istanbul Technical University, PhD in Industrial Chemical Engineering 1979 Boğaziçi University, MS in Chemical (Process) Engineering 1977 Boğaziçi University, BS in Chemical Engineering Ünsal Aysun, Assistant General Manager, Project Financing and Cash Management 2005-present TEB A.Ş. Assistant General Manager, Project Financing and Cash

Management 2006-2006 TEB Insurance, Board Member 2002-2008 TEB Factoring, Board Member 2000-2008 TEB Leasing, Board Member 1999-2008 TEB, Assistant General Manager, Corporate Banking and Cash

Management 1997-1999 TEB, Assistant General Manager, Cash Management 1995-1997 Demirbank, Cash Management Department Head 1985-1995 İktisat Bankası, Loan Marketing Manager, Branch Manager, Cash

Management Unit Director 1984-1985 UETB, Medium-Term Loans Department, Project Evaluation Expert 1980-1984 Türkiye Şişe ve Cam Sanayi A.Ş., Budget and Financial Control

Department, Assistant Expert. 1979-1980 Istanbul University, Faculty of Business Administration – MA Istanbul University, Faculty of Business Administration - BA (Finance

Department)

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Melis Coşan Baban, Assistant General Manager, Legal Affairs 2008 present TEB, Assistant General Manager, Legal Affairs 2005 present TEB, Chief Legal Advisor, Board General Secretary 2000-2005 Pekin & Pekin Law Firm, Partner 1998-2000 Pekin & Pekin Law Firm, Senior Lawyer 1993-1998 Postacioglu Law Firm, Lawyer 1997 Columbia University, New York, USA, Master of Law ( LL.M.) 1995 Istanbul University Law School, Law Degree 1989 Istanbul American Robert College Turgut Boz, Assistant General Manager, Commercial Banking Group 2004-present TEB Leasing and TEB Factoring, Board Member 2003-present TEB, Assistant General Manager, Commercial Banking Group 2000-2003 Garanti Bankası, Commercial Marketing Unit Head 2000-2000 Osmanlı Bankası, Commercial Banking Coordinator 1995-2000 Finansbank Denizli and Ankara Branch Manager 1994-1995 Ata Invest, Denizli Branch Manager 1989-1994 Egebank, Bornova and Denizli Branch Manager 1986-1989 Pamukbank, Karabağlar Branch Manager 1981-1986 Pamukbank, Audit Department, Internal Auditor 1976-1980 Ankara University, Academy of Economic and Administrative Sciences,

Banking and Insurance Levent Çelebioğlu, Assistant General Manager, Corporate Banking and Financial Institutions Group 2009-present The Economy Bank N.V. Board Member 2008-present Türk Ekonomi Bankası, Assistant General Manager, Corporate Banking

and Financial Institutions Group, TEB Leasing A.Ş. Board Member 2004-2008 TEB A.Ş. Assistant General Manager, Financial Institutions Group 1999-2004 TEB A.Ş. Director; Structured Finance and Investor Relations Departments 1992-1999 TEB A.Ş. Treasury Manager 1988-1992 TEB A.Ş. Correspondent Banking Department, Assistant Manager 1987-1988 Yaşarbank, Correspondent Banking Department, Assistant Manager 1979-1983 9 Eylül University, Faculty of Economics, Monetary Economics and Banking

Division M. Aşkın Dolaştır, Assistant General Manager, Financial Control 2007-present TEB A.Ş.; Assistant General Manager, Financial Control 2007 TEB/Arval/Factoring/Leasing; Chief Financial Officer 1998-2007 The Economy Bank N.V., Amsterdam; Deputy Managing Director 1994-1998 Finansbank (Holland) N.V.; Assistant General Manager 1992-1994 Commercial Union Hayat Sigorta A.Ş.; Assistant General Manager,

Financial Control and Administration 1990-1992 Finansbank A.Ş. Istanbul; Group Head, Participations

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1986-1989 Arthur Anderson & Co.; Istanbul, Lisbon, London and Cambridge Offices, Senior Auditor

1985-1986 The Central Bank of Turkey; Specialist 1984-1985 Istanbul Technical University; Operations Research Department 1983-1986 Istanbul Technical University Master Degree in Management Engineering 1979-1983 Istanbul Technical University Management Engineering Osman Durmuş, Assistant General Manager, Retail and Small Business Credit Group 2008-present TEB A.Ş., Assistant General Manager, Retail and Small Business Credit

Group 1998-2008 HSBC/Demirbank A.Ş., Head of Retail and Small Business Credit and Risk

Group 1997-1998 Yapı Kredi Kart Hizmetleri A.Ş., Head of Credit Cards and Risk 1986-1996 Yapı Kredi Bankası A.Ş., Clerk, Chief Assistant, Specialist, Retail Banking

Accounting Department Unit Manager 1982-1986 Marmara University, Faculty of Press and Media, Journalism and Public

Relations Department Turgut Güney, Assistant General Manager, Information Technologies Group 2004-present TEB, Assistant General Manager, Information Technologies Group 2000-2004 TEB, Information Technologies Director 1997-2000 Demirbank, Information Technologies Coordinator 1995-1997 Oracle Consulting Services, USA, Senior Consultant 1994-1995 CTG (Computer Task Group), USA, Senior Consultant 1992-1994 Southern Illinois University, USA, Research Assistant 1990-1992 Türkiye Kalkınma Bankası System Analyst 1992-1994 Southern Illinois University, USA, MS in Computer Science, 1985-1990 Hacettepe University, Computer Science İ. Cemal Kişmir, Assistant General Manager, Retail and Small Business Group 2008-present TEB Investment, Board Member 2006-present TEB Asset Management, Vice Chairman 2005-2006 TEB Insurance, Board Member 2005-present TEB, Assistant General Manager, Retail Banking Group 1997-2005 Garanti Bankası, Unit Manager EVP for Retail and Small Business EVP for Marketing and CRM EVP for Credit Cards Marketing 1995-1997 University Hartford, Barney School of Business - Executive MBA 1990-1994 Mobil Oil Turkey, Resale Programs Associate 1988-1989 STFA Foreign Trade, Area Coordinator 1987-1988 Tekfen Foreign Trade, Area Manager 1986-1987 Marmara University, "Contemporary Management" Post-graduate Program 1982-1986 Marmara University, Economics and Business Administration Faculty

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Ümit Leblebici, Assistant General Manager, Treasury Group 2001-present TEB, Assistant General Manager, Treasury Group 1999-2001 TEB A.Ş., Director, Treasury Group 1997-1999 Osmanlı Bankası; Treasury Manager 1997-1997 Ulusal Bank; Treasury Manager 1991-1997 Midland Bank; Treasury Manager 1988-1994 İstanbul University MBA at Finance Major 1984-1988 İstanbul University Faculty of Business Administration Saniye Telci, Assistant General Manager, Banking Operations Group 2005-present TEB A.Ş. Assistant General Manager, Banking Operations Group 1999-2005 TEB, Operations Manager, Branch and Headquarter Operations & Treasury

Operations 1997-1999 T. Garanti Bankası A.Ş., Operation Centre, Operations Manager 1994-1997 T. Garanti Bankası A.Ş., Istanbul 1st Region Operations and Kozyatağı

Corporate Branch, Operations Manager; Istanbul 2nd Region Operations and Istanbul Corporate Branch, Operations Manager

1991-1994 T. Garanti Bankası A.Ş., Istanbul 3rd Region Operations, Assistant Manager

1987-1991 T. Garanti Bankası A.Ş., Foreign Transactions Department, Assistant Supervisor and Assistant Manager

1984-1987 Anadolu Bank T.A.Ş., Foreign Transactions Department, Foreign Exchange Assistant Expert

1977-1982 Istanbul University, Faculty of Economics Nuri Tuncalı, Assistant General Manager, Corporate & Commercial Credits Assistant General Manager 2008-present TEB A.Ş. Assistant General Manager, Corporate and Commercial Credits

Group 2001-2008 TEB A.Ş. Assistant General Manager, Credit Allocation and Financial

Analysis 1999-2001 TEB, Loan Allocation Department, Director 1996-1999 TEB, Loan Allocation Department, Manager 1988-1996 TEB, Loan Control, Gayrettepe Branch, Loan Allocation, Assistant Manager 1986-1988 TEB A.Ş. Board of Inspectors, Inspector 1984-1986 Akbank, Audit Department, Auditor 1978-1982 Boğaziçi University, Faculty of Administrative Sciences, Business

Administration Department Ömer Yenidoğan, Assistant General Manager, Private Banking 2007-present TEB A.Ş. Assistant General Manager, Private Banking 2003-present TEB Asset Management, General Manager 2001-2003 TEB Retail Banking Marketing and Sales Director 1999-2001 TEB Asset Management, Group Manager responsible for Marketing, Sales,

and Business Development

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1997-1999 TEB Investment, Unit Manager, Distribution Channel of Investment Funds 1995-1997 Citibank N.A., Credit Card Department, Assistant Manager 1994-1995 University of Nottingham, Nottingham, UK, MBA Finance 1989-1994 Marmara University, Public Administration, Department of Finance 1982-1989 Galatasaray High School Jean Milan Givadinovitch, Head of Group Risk Management 2009 TEB A.Ş. Head of Group Risk Management, TEB Leasing A.Ş., TEB

Factoring A.Ş., TEB Investment A.Ş. ve TEB Asset Management A.Ş.; Board Member

2002-2009 Bancwest; General Auditor Bank of West Director of Audit and Inspection 1998-2002 BNP Paribas, Deputy Head of Inspection 1997-1998 BNP Paribas; Head of Eastern Asia Pacific Region 1992-1997 BNP Plc Deputy General Manager 1989-1992 BNP Paribas; Big Corporates Division; Relationship Manager 1985-1989 BNP Paribas; Inspector and Head of Mission 1983-1985 BNP Paribas; Relationship Manager for Corporate Clients 1981-1983 BNP Paribas; Corporate Finance Executive 1997-1998 Institut des Techniques de Marche 1975-1978 Institut d'etudes Politiques de Paris; Social Science Master 1975-1979 Ecole Des Hautes Etudes Commerciales- Paris, Diplome H.E.C. Ayşe Korkmaz, Head of Risk Management and Compliance Group 2008-present TEB A.Ş. Head of Risk Management and Compliance Group 2006-2008 TEB A.Ş. Chairman of Group Compliance, Internal Control and Operational

Risk 2003-2005 TEB Financial Investments, Audit Coordinator 2000-2003 Banking Regulation and Supervision Agency, Certified Bank Auditor 1995-2000 Undersecretariat of the Treasury, Certified Bank Auditor 1991-1995 Ankara University, Faculty of Political Sciences, Department of Business

Administration Hakan Tıraşın, Head of Internal Audit 2006-present TEB A.Ş. Head of Internal Audit 2004-2005 TEB, Assistant General Manager, Organization, Banknote Markets and

Support Services and Secretary General 1992-2004 TEB, Secretary General 1989-1992 TEB, Internal Auditor 1973-1989 Akbank, Branch Manager and Internal Auditor 1972-1977 Istanbul Academy of Economics and Business Administration

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Statutory Auditors, Terms of Office and Professional Backgrounds Ayşe Aşardağ, Auditor 2009 TEB Arval Araç Filo Kiralama A.Ş.; TEB JSC (Kosovo); Board Member 2008-2009 TEB ARVAL Araç Filo Kiralama A.Ş. Vice Chairman, Etkin Temizlik

Hizmetleri A.Ş. Chairman; 2008-present TEB Consumer Financing; Vice Chairman 2007-2009 TEB JSC (Kosovo) Vice Chairman 2007-2008 TEB Insurance; TEB Communication and Publishing Services; Etkin

Temizlik Hizmetleri A.Ş. and Etkin Personel Taşıma Hizmetleri A.Ş., Chairman; TEB Consumer Financing, TEB ARVAL Araç Filo Kiralama A.Ş., Board Member

2007-present TEB UCB Real Estate Counseling, Chairman 2004-present Ege Turizm ve İnşaat A.Ş., Vice Chairman 2003-present Ekonomi Bank Offshore Ltd., Board Member 2001-2009 TEB Leasing; TEB Factoring; TEB Investment, Auditor 2001-present TEB Financial Investments, Budget and Financial Control Coordinator; TEB

Auditor 2001-2007 TEB Insurance, Board Member; TEB Asset Management, Auditor 1995-2000 TEB, Budget and Financial Control Unit 1994-1995 University of Glamorgan, Lecturer in Accounting 1987-1994 Price Waterhouse, Istanbul, London, Audit Unit 1992 Institute of Chartered Accountants in England and Wales, ACA 1987 Boğaziçi University, Faculty of Administrative Sciences, Business

Administration Department, BS Cihat Madanoğlu, Auditor 2009-present TEB Investment A.Ş. Auditor, TEB ARVAL Araç Filo Kiralama A.Ş. Board

Member 2008-2009 TEB ARVAL Araç Filo Kiralama A.Ş. Auditor; Tasfiye Halinde Etkin Temizlik

Hiz. A.Ş. Vice Chairman 2007-2009 TEB Asset Management A.Ş., Auditor 2007-2008 TEB Insurance A.Ş., TEB Communication and Publishing Services A.Ş.,

Etkin Personel Taşımacılık Hizmetleri A.Ş., Etkin Temizlik Hizmetleri A.Ş. Vice Chairman, TEB UCB Real Estate Counseling A.Ş. ve TEB ARVAL Araç Filo Kiralama A.Ş., Board Member

2007-present TEB Consumer Financing; Board Member, TEB Leasing A.Ş ve TEB Factoring A.Ş. Auditor 2006-2007 TEB Insurance A.Ş. Board Member 2006-present TEB A.Ş., Auditor 2005-present Economy Bank Offshore, Board Member 2005-2006 TEB Insurance, Auditor 2005-2006 TEB Factoring, Board Member 2004-present Ege Turizm ve İnşaat A.Ş., Chairman 2004-2006 TEB Leasing, Board Member 2002-2006 TEB Investment, Auditor 2001-present TEB Financial Investments, Coordinator

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2000-2004 TEB Leasing, Auditor 1999-2001 TEB Investment, Auditor 1997-2005 TEB Insurance, Board Member 1997-2005 TEB, Board Member 1997-2004 TEB Factoring, Auditor 1997-2000 TEB Leasing, Board Member 1997-1999 TEB Investment, Board Member 1996-2001 TEB, Assistant General Manager 1992-1996 Housing Development Administration of Turkey, Director of Administration

and Finance 1989-1992 ATAUM, Ankara University, Lecturer in EU Budget and Indirect Tax

Harmonization 1988-1992 Ministry of Finance, Chief Public Auditor 1978-1988 Ministry of Finance, Public Auditor 1987 Vanderbilt University, Nashville TN U.S.A., Development Economics 1977 Tax Officer 1976 Ankara University Faculty of Political Sciences Department of Economics

and Finance

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COMMITTEES OF TÜRK EKONOMİ BANKASI A.Ş. Credit Committee The Credit Committee extends loans in accordance with the rules of the Banking Regulation and Supervision Agency and within the powers and limits specified by the Board of Directors. Chairman : Musa ERDEN Vice Chairman : Varol CİVİL Member : Yavuz CANEVİ Audit Committee Purposes of Establishment: To centralize audit systems, validate procedures, monitor and audit risks in the eight

risk categories below:

a. Credit and counterparty risk: Default by third parties b. Market and liquidity risk: Market price fluctuations c. Administrative risk: Appropriate administration of operations (including operational

risk) d. Legal risk: Conformity with tax law and other legislation e. Accounting risk: Conformity with regulations and legally acceptable presentation of

accounts f. IT risk: Adequacy and security of systems g. Human resources risk: Adequacy of staff with regard to quality and functions h. Reputation and commercial risk: Damage to Group’s image

Determining risk policies and principles for the appropriate conduct of risk

management, internal audit system and compliance; Monitoring the Group’s adequacy and effectiveness in internal controls and risk

management and auditing accounting and reporting systems Taking necessary measures to ensure that the Board of Directors is informed of any

incident or condition that may prevent the Bank from functioning in an uninterrupted manner or of any event that violates laws and regulations; and making recommendations periodically through reporting to the Board of Directors any measures required to be taken.

The committee meets at least once every two months. Chairman : Patrick René PITTON Vice Chairman : Dr. Akın AKBAYGİL Participation of Board Members and Committee Members in Meetings According to Article 24 of the Articles of Association, in order for a meeting of the Board of Directors to be valid, at least seven (7) members must be present. Decisions shall be adopted by the affirmative votes of at least seven (7) members. The Board of Directors adopted 113 decisions, and the Audit Committee adopted 16 decisions in 2009. The participation of Board Members and Committee Members to meetings was at a satisfactory level.

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HUMAN RESOURCES PRACTICES In line with its targets and strategies, it is TEB’s policy to recruit highly qualified employees, preferably university graduates who are able to represent the bank, think analytically and get along well with their co-workers. Appropriately designed selection and assessment systems and tools ensure that high-potential, promising, creative and innovative people join the Group. Successful employees who have a high potential are promoted both within TEB and within the TEB Financial Services Group following performance assessment. INFORMATION ON TRANSACTIONS CONDUCTED WITH THE RISK GROUP WHICH TEB IS INCLUDED The Bank is involved in various transactions with the risk group to which TEB is included (related-parties) and these are carried out for commercial purposes and at market prices. The most striking indicator of this well-established policy is that the share of related-party risk in TEB’s total cash and non-cash loans remained below 2%. Loan transactions with related-parties and their share in the Bank’s total credit risk as of 31 December 2009 and 31 December 2008 were as follows: (%) 31.12.2009 31.12.2008 Share in total cash loans 0.59 0.12 Share in total non-cash loans 4.09 0.74 Share in total cash and non-cash loans 1.56 0.29 Detailed information about the risk group to which TEB is included has been prepared in accordance with the “Communiqué on Financial Statements and Related Explanations and Footnotes Announced to the Public by Banks” and published in Section 4, Paragraph b of the “Annual Report" and was also included in the financial statements as of 31 December 2009 and Section VII, Articles 1 and 2 of the Independent Audit Report. OUTSOURCED SERVICES AND OURSOURCING COMPANIES Within Banks’ Outsourced Services and Authorization of Outsourcing Institutions context, TEB applied for permission to BRSA in 2009, for sales and marketing of credit card service to be provided by Telegami Satış Hizmetleri San. ve Tic. Ltd. Şti. and received approval from BRSA.

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AGENDA OF THE ORDINARY GENERAL ASSEMBLY MEETING ON MARCH 30, 2010 “THE AGENDA OF THE ORDINARY GENERAL ASSEMBLY: 1- Opening and formation of the Presiding Board, composed of a Chairman, two vote collectors and two secretaries, 2- Granting authorization to the Presiding Board for signing the meeting minutes, 3- Approving the appointment executed pursuant to Article 315 of the Turkish Commercial Code with respect to the resigned member of the Board of Directors, 4- Reading, discussion and approval of the Auditor’s Report and Board of Directors Activity Report for the year 2009, prepared in accordance with the Legislation, 5- Reading, discussion and approval of the 2009 balance sheet and profit and loss statement, and approval, amendment or rejection of the Board of Directors’ proposal on the distribution of profit, discussion of proposals related to the same, 6- Reading of the summary of the annual audit report prepared by the Independent Audit Firm, and approval of the Independent Audit Firm appointed by the Board of Directors for approving and auditing of the 2010 financial statements, 7- Providing information to the General Assembly on the donations made by the Bank in 2009, 8- Providing information to the General Assembly regarding the “performance bonus” which is planned to be distributed to the Bank’s employees in relation to 2009 performances 9- Release of the members of the Board of Directors and Auditors with respect to their activities in 2009, 10- Determination of term of office and election of the members of the Board of Directors and Auditors, 11- Determination of remuneration and attendance fees to be paid to the Board of Directors and Credit Committee and Auditors, 12- Granting permission to the members of the Board of Directors for performance of the transactions set forth in articles 334-335 of the Turkish Commercial Code.

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SUMMARY OF BOARD DIRECTORS’ REPORT PRESENTED TO THE GENERAL ASSEMBLY Dear Shareholders, Reports of the Board of Directors, Independent Auditors and the Profit-and-Loss Statement for 2009 have been presented for your evaluation and approval. In Turkey the effects global crisis of 2008 was excessively felt in the first two quarters of 2009. All financial institutions were forced to take various measures to face the challenges posed by the new market conditions due to the contraction in the local economy as well as world economy. Global crises reminded the need for efficiency as well as the importance of presenting innovative and creative products to the market to protect and enhance one’s market positioning. TEB has successfully completed 2009 by

• presenting innovative products and services in all businesses lines, especially in retail and commercial banking,

• acting efficiently • creating added value for its customers • investing in HR and IT

Respect, Reliability, ambition and commitment, being creative and innovative...adopting these principles TEB was able to prevent itself from deep affects of the crises and TEB has strengthen its position with new products and services and continued to be the advisor bank during 2009. We set good examples of creative and innovative products by protecting our values. We believe with our values and innovative approach, we will continue to fulfill our responsibilities against our employees, shareholders and stakeholders. As long as we continue to have this point of view, TEB will continue to have continuous profitability and strong performance. Regards, Board of Directors

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OUR PROPOSAL FOR DISTRIBUTION OF PROFIT TÜRK EKONOMİ BANKASI A.Ş. 2009 DISTRIBUTION OF PROFIT CHART (TRY) 1. Paid-in / Issued Capital 1.100.000.000,00 2. Total legal reserves (According to Legal Records) 34.959.467,94 Information regarding the privilege, if any privilege with respect to distribution of profit is stated in the articles of association According to Legal

Records (“LR”) 3. Profit for the period 256.836.399,72 4. Taxes to be paid ( - ) (46.669.415,22) 5. Net profit for the period ( = ) 210.166.984,50 6. Losses related to the Previous Years ( - ) (0) 7. Primary Legal Reserve ( - ) (10.508.349,23) 8.

Distributable Profit amount (distribution decision has not rendered) of the Affiliate (*) which is subject to Consolidation ( - )

9. NET DISTRIBUTABLE PROFIT FOR THE PERIOD (=) 199.658.635,27 10. Donations made within the year ( + ) 11.

Net distributable profit (donations are included) for the period according to which the first divided will be calculated

12. First divided for the shareholders 0 -Cash 0 -free of cost 0 - Total 0

13.

Dividend distributed to the holders of the privileged share 0

14. Dividend distributed to the Board of Directors members, employees etc. 0

15. Dividend distributed to the holders of redeemed share certificates 0

16. Second dividend for the shareholders 0 17. Secondary Legal Reserves 0 18. Statutory Reserves 0 19. Special Reserves 0 20. EXTRAORDINARY RESERVES 199.658.635,27 21.

Other resources planned to be distributed - Profit of the previous year - Extraordinary Reserves - Other distributable reserves according to the laws and

articles of association

(*) Affiliate means; an affiliate of the main partnership, subsidiary and the partnerships which are subject to common management.

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INFORMATION REGARDING THE PERCENTAGE OF THE DISTRIBUTED PROFIT(1) DIVIDEND INFORMATION REGARDING EACH SHARE

GROUP

TOTAL DIVIDEND

AMOUNT (TRY)

DIVIDEND CORRESPONDS TO SHARES WITH A NOMINAL VALUE

OF TRY 1 AMOUNT(TRY) PERCENTAGE

(%) GROSS 0 0 0 NET 0 0 0 THE PROPORTION BETWEEN THE DISTRIBUTED SHARE OF PROFIT AND NET DISTRIBUTABLE PROFIT (DONATIONS ARE INCLUDED) FOR THE PERIOD SHARE OF PROFIT DISTRIBUTED TO THE SHAREHOLDERS (TRY)

THE PROPORTION BETWEEN THE DISTRIBUTED SHARE OF PROFIT TO THE SHAREHOLDERS AND NET DISTRIBUTABLE PROFIT (DONATIONS ARE INCLUDED) FOR THE PERIOD (%)

0 0 (1) If there is a privileged share group in the profit, a group separation shall be realized. Performance and Sales Bonus Total amount of TRY 16.5 million, consisting of TRY 14.9 million performance bonus and TRY 1.6 million sales bonus is reserved to be paid in 2010.

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CORPORATE GOVERNANCE PRINCIPLES COMPLIANCE REPORT PART I – SHAREHOLDERS 1. Statement of Compliance with Corporate Governance Principles TEB aims to fully comply with the “Corporate Governance Principles” issued by the Capital Markets Board (CMB) in July 2003 concerning the principles to be observed by listed companies to achieve professional management, transparency and ethical conduct in the course of their activities. As TEB believes that compliance with these principles will become as important as credit valuation (ratings) in the near future, the Board of Directors has set up a Corporate Governance Committee at the Board level through Resolution No: 3609/4 dated 24 January 2004, to regulate and monitor compliance with these principles. The Corporate Governance Committee performs the functions explained below. Although compliance with these principles issued in 2003 requires a process development, it has been noted that complete compliance has been realized without any conflicts of interest. 2. Shareholder Relations Department A Shareholder Relations Department (referred to as the Shareholders Unit in the organizational chart) has been established in an effort to inform registered shareholders about dividends, capital increases and the agenda and resolutions of General Meetings, to maintain the share register in accordance with Article 326/1 of the Turkish Commercial Code and to manage legal and operational relations with shareholders. The contact details of this unit are as follows: Cüneyt Temiztürk (Unit Manager) Phone: +90 212 251 21 21 (extension 1923) Fax: +90 212 249 65 68 This unit reports to the General Secretary of the Board of Directors In 2009, the Shareholders Unit conducted the announcement of one Ordinary General Meeting of Shareholders and carried out the following transactions: Shareholders and carried out the following transactions: 18 transactions concerning the distribution of new share certificates in return for new share coupons (excluding transactions through the Central Registry Agency), 4 transactions concerning dividend payments (excluding transactions through the Central Registry Agency). 2 share registration transactions Additionally, the Bank has an “Investor Relations and Corporate Governance Department” to establish relations with domestic and foreign investors and inform them about the Bank’s activities and financial results.

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Çiğdem Başaran and Özgün Zaimoğlu are responsible for the overall management of the department. Their contact information is as follows: Çiğdem Başaran (Manager) Phone: 0212 251 21 21 (extension 1532) Fax: 0212 249 65 68 E-mail: [email protected] Özgün Zaimoğlu (Analyst) Phone: 0212 251 21 21 (extension 3320) Fax: 0212 249 65 68 E-mail: [email protected] 3. Exercise of Shareholders’ Right to Information Investors and the general public are provided with detailed information both in Turkish and in English through the “Investor Relations” and “Corporate Governance” sections on TEB’s website: http://www.teb.com.tr/eng/main/HaritaInvestor_relations_menu.aspx http://www.teb.com.tr/eng/main/HaritaCorporate_governance_menu.aspx Information is available under the following headings: • TEB-BNP Paribas • Share Price Info • Financial Calendar • Ratings • Financial Highlights • Financials • Investor Presentations • Dividends • Annual Reports • Announcements • Research Reports • Broker Forecasts • Press Releases • Frequently Asked Questions • Contact Info • Corporate Governance Principles • Management • General Meetings • Committees • Policies • Annual Reports

mailto:[email protected]�

mailto:[email protected]�

http://www.teb.com.tr/eng/main/HaritaInvestor_relations_menu.aspx�

http://www.teb.com.tr/eng/main/HaritaCorporate_governance_menu.aspx�

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In addition to meetings, nearly 100 queries about TEB have been answered by telephone and e-mail in 2009. The questions were about various subjects and all requests for information by shareholders were answered as quickly as possible, provided that they are not related to trade secrets or information that is not publicly available. Although Article 36 of the Articles of Association of TEB provides for the appointment of a special auditor, no special auditor was elected in 2009. This article does not define the request for the appointment of a special auditor as an individual right. However, the Articles of Association does not contain any provisions that contradict with the relevant provision of the Turkish Commercial Code. This right was not exercised in 2009. 4. Information on General Meetings of Shareholders The General Meeting of Shareholders convened to an Ordinary General Meeting which was held on 24 March 2009 and Attendance was 84.58%, no media members were present at these events. Invitation letters were sent by registered mail at least 15 days prior to the respective meeting dates to the Shareholders in the share register. The meetings were also announced in the Turkish Trade Registry Gazette and a national daily newspaper. In addition, e-mail messages were sent to the shareholders whose e-mail addresses were known. In accordance with the provisions of the 2499 Capital Markets Act temporary article and 294 of Central Register Agency communication, completion of dematerialization of shares is mandatory in order to vote in General Assembly. Unless the dematerialization is completed, attendance of our shareholders to General Assembly is not possible. The shareholders who will attend the Ordinary General Assembly meeting individually or via proxy shall submit the below listed documents, before the meeting date, to the Shareholders Unit of the Bank’s Head Office or to Branches, and obtain the Entrance Cards or shall apply before the establishment of Presidential Board of the General Assembly, at the latest. - Identity documents and/or proxies, - General assembly blocking letters related to the shares that they own, - In addition to the above listed documents, the authorization document of the person who

is authorized by the legal entity shareholders The date, venue, time and agenda of the meeting, as well as sample statements for those who wish to appoint a proxy to attend the meeting on their behalf, are included in the invitation letters, the newspaper announcements and on TEB’s website. Shareholders exercised their right to ask questions at general meetings and their questions were answered informatively. Shareholders tabled motions, which were put to the vote of attending shareholders and accepted. According to the Articles of Association, approval of the General Meeting of Shareholders is not required for decisions concerning spin-offs or the sale, purchase and leasing of material

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assets. The powers and responsibilities of the Board of Directors in relation to these decisions have been specified in Article 26 of the Articles of Association. To facilitate attendance at General Meetings of Shareholders, notices are sent out on time, the meetings are held in central locations in Istanbul and the minutes of the meetings are made available at the Shareholders Unit and on the website. 5. Voting Rights and Minority Rights There are no privileges regarding voting rights. Further there are not any cross-shareholding companies. Minority shares are not represented in management; however the views, suggestions and requests of minority shareholders are communicated to the management through the Investor Relations and Corporate Governance Department and the Shareholders Unit. The Articles of Association do not provide for cumulative voting. 6. Dividend Policy and Time of Distributions There are no privileges regarding dividend distribution. TEB’s dividend policy, which was amended on 29 September 2006 and announced to the public, is as follows: Dividend Policy: “Türk Ekonomi Bankası A.Ş. will pay up to 40% of the net distributable profit to its shareholders as a cash dividend or as bonus shares within the context of its Articles of Association. The amount distributable depends on market conditions, maintenance of a comfortable capital adequacy ratio and growth plans of the bank and will be proposed by the Board of Directors to the Ordinary General Meeting of Shareholders every year.” No dividend was distributed for the profit generated in the year 2009. 7. Transfer of Shares Article 9 of the Articles of Association stipulates that: • The relevant provisions of the Turkish Commercial Code and other applicable legislation

shall govern share transfers. • Transfer of shares at the percentages specified in the Banking Law and transfer of share

certificates that grant usufruct rights shall be subject to the prior permission of the Banking Regulation and Supervision Agency and the Capital Markets Board.

• In order for such transfer and assignment to be binding for the company and for third

parties, the share transfer must be approved and certified by the Board of Directors and entered into the share register.

Furthermore, the same article stipulates that the company’s Board of Directors may reject approval and registration without specifying any reason.

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PART II - PUBLIC DISCLOSURE AND TRANSPARENCY 8. Disclosure Policy As indicated on its website, TEB has publicly announced the following Disclosure Policy within the context of the Corporate Governance Principles: “Subject to applicable legislation, TEB promptly, accurately and fully discloses any matters concerning its operations for which a disclosure has been requested.” All information that fits the above definition is publicly disclosed by the Investor Relations and Corporate Governance Department or the Official Reporting Department and is subject to the approval of the Board of Directors and the General Management. Announcements made are also reported to the Corporate Governance Committee. 9. Special Circumstances Disclosures TEB made 20 special circumstances disclosures in 2009. None of these was an additional disclosure made in response to the instructions of the Istanbul Stock Exchange (ISE). Since the Bank is listed on the London Stock Exchange (LSE) as well, the material disclosures made to the ISE and the Capital Markets Board (CMB) are also sent simultaneously to the LSE. No disclosures were made to the LSE other than those made to the ISE and the CMB. Since TEB takes the utmost care in its disclosures, the CMB has not imposed any sanctions on the Bank in 2009. All material disclosures are available on TEB’s website. 10. The Website and its Contents TEB’s website is at www.teb.com.tr. TEB monitors similar websites in other countries and constantly updates the information available on its website in accordance with Section II Article 1.11.5 of the Corporate Governance Principles issued by the CMB. The website contains sufficient information to satisfy shareholders and third parties who need information about TEB. 11. Ultimate Controlling Individual Shareholders The shareholding structure of TEB as of 31 December 2009 was as follows: • 84.25% TEB Mali Yatırımlar A.Ş. (TEB Financial Investments) • 15.63% Publicly-traded • 0.12% other shareholders

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12. Individuals with Access to Insider Information According to the Banking Law, the law that governs the banking profession and defines its legal and ethical rules, it is forbidden for bank employees to convey to third parties confidential information on the bank or its customers that they acquire during the performance of their duties. Since this obligation continues after the termination of employment, it was not deemed necessary to disclose and publicly announce the list of persons who have access to insider information, in view of the industry practice and employment ethics and work discipline. PART III - STAKEHOLDERS 13. Announcements to Stakeholders Stakeholders are provided information concerning TEB’s activities through special circumstances disclosures, as published on the website and in annual reports. Views, opinions and questions submitted to TEB using the ‘Contact us’ section of the website are referred to the relevant departments and answered within the framework of applicable legislation. 14. Participation of Stakeholders in Management As banking practice and legal rules impose strict restrictions on the appointment of executives, no model has been devised for stakeholders to personally take part in management. TEB believes that this applies equally to other banks in the industry. However, stakeholders can communicate their views, opinions, critiques and demands to the management through the “Investor Relations and Corporate Governance Department”, the “Shareholders Unit” and the “Customer Communications Unit”. 15. Human Resources Policy The main objective of TEB’s Human Resources Group is to adopt the best HR practices in the finance industry. Given this objective, the Bank’s human resource policy assures the following: Ensuring dynamism and readiness for change in the organizational structure, in line with the strategic plans and goals of the TEB Group. Within the scope of the TEB Talent Pool, recruiting people for the TEB Group who are well educated, open to innovation and change, have entrepreneurial skills, are energetic, dynamic, who possess potential for self-development, are team players and who can adopt corporate values and commit to them. Utilizing human resources in the most effective and productive manner in conformity with the Bank’s targets and strategies, supporting employees with development programs that are in line with both professional and personal career goals indicated in employees’ career plans and creating career opportunities by ensuring employees’ participation in advanced BNP Paribas training courses.

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Considering training and development as an investment in human resources and contributing to the development of employees in line with the TEB Group’s targets and strategies within the framework of the “continuous learning and development” philosophy of the TEB Formation Academy, Training future managers amongst employees within the organization and prioritizing applicants amongst employees within TEB for future open positions, Improving individual and team performance continuously through quality improving methods and systems, focusing on rewarding schemes in the Performance Assessment System that enables the recognition of superior performance and giving each employee equal opportunity within the context of their career plans, Contributing to the productivity and performance of the Bank’s branches by providing all employees with quick and effective HR support. 16. Relationships with Customers and Suppliers A “Customer Communication Unit” directly reporting to the General Manager was established to maintain customer service quality, measure customer satisfaction and assess the complaints, views and suggestions of customers. TEB also monitors customer expectations and remarks in cooperation with consulting companies and reports findings to the Board of Directors. 17. Social Responsibility As a good corporate citizen that is fully aware of its social responsibilities, TEB strives to be a Bank that upholds the core values and heritage of the society that it conducts business in. To achieve this goal, TEB implements corporate social responsibility projects that contribute to the protection of the environment, the development of SMEs that are the dynamo of the Turkish economy and provide for a large proportion of the country’s employment, and the education of our youth population that will build the future of our country. Planning its corporate social responsibility program in parallel with its business activities, TEB continues to encourage active, voluntary participation of its employees in its projects. Contributions to the Environment As a pioneer that is aware of its responsibility to contribute to a sustainable environment, TEB developed and deployed an effective and systematic management approach to minimize the environmental impact of its business operations. The Bank aims and undertakes to:

• Preserve and effectively use natural resources, • Reduce and recycle waste at source, • Offer environmental-friendly products,

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• Increase resource savings and energy efficiency, • Follow up scientific and technological developments to prevent environmental

pollution and continuously improve its environmental performance, • Increase the environment awareness of its employees, suppliers and customers.

TEB became the first deposit bank entitled to receive ISO 14001 Environmental Management Standard Certification. TEB aims to minimize the negative environmental impact (i.e. the carbon footprint) of its banking operations in part through obtaining ISO 14001 Certification. As a result, the Bank plans to reduce energy consumption by 10%, paper consumption by 25%, water consumption by 10% and its overall carbon footprint by 5%. TEB also demonstrates its contribution to the environment through a variety of initiatives in many environmentally oriented products including TEB Bonus TEMA Card, Energy Saving Consumer Credit, Organic Agriculture Credit and Hybrid Car Credit. TEB prioritizes raising the level of environmental knowledge and societal awareness of environmental issues, and positions itself as an environmentally friendly bank. The Bank demonstrated its efforts toward increasing public awareness of the environment through sponsorship of the Turkish premiere of the film, “HOME,” which depicts our planet’s environmental problems. Contributions to SMEs With a watchful eye on the development of SMEs, which are among the fundamental pillars of the Turkish economy, TEB supports many activities in this area. Since 2005, after forging a strategic partnership with BNP Paribas, the largest bank in the Euro zone, TEB has further contributed to the development of SMEs. The Bank has provided SMEs with knowledge that will help them gain a competitive edge through its own TEB SME Academy-Corporate Development Program and Future Strategy for Provinces Conferences. TEB SME Academy – Corporate Development Program The Corporate Development Program is a hands-on initiative designed to help guide SMEs on the path toward increasing their local and international profitability and gaining a competitive edge in the marketplace. The program also shows SMEs important tips as to how they can strategically manage their companies in the most appropriate manner. The Corporate Development Program started in 2005 and has reached thousands of SMEs in 27 cities. TEB SME Academy – Future Strategy for Provinces Conferences Future Strategy Conferences are held in different cities on a monthly basis. With the participation of local businessmen, academics, bureaucrats and local administrative officials, the conferences aim to help SMEs determine their future objectives and strategies. In addition, the Future Strategy Conferences reveal potential investment areas in provinces based on the economic, commercial and social histories of the locations.

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TEB SME TV TEB has also established TEB SME TV, a first in the industry. TEB SME TV enables SMEs to gain access to valuable information and benefit from educational programming on a TV channel with ever changing content on a 24x7 basis. TEB SME CONSULTANTS The Bank has implemented another first in the industry: TEB SME CONSULTANTS. These consultants work at TEB branches and help SME clients identify problematic issues in their businesses, offer them solutions and guide them toward opportunities ahead. Contributions to Youth Turkey’s Youth are “Inventing” with TEB Recognizing that a large proportion of the Turkish population is composed of youth, TEB organizes an annual innovation competition, “Make an Invention,” in order to encourage the youth population to generate creative and innovative ideas. Serving as a good example of private sector-university cooperation, this TEB-sponsored competition contributes to various topics such as raising awareness among the university students and young professionals on “innovation-creativity,” developing competencies and introducing the finance sector to university students. TEB provides special education programs for and awards youth participants who demonstrate high potential for generating innovative and creative ideas. TEB also organizes an innovation contest among its customers in order to encourage them in this area and grants awards to winning customers. In addition, TEB provides university students with special education programs in the fields of innovation, communication and creativity. Its “Smart Ideas Campus” designed for undergraduate and masters students and the “No Barriers Campus” designed for disabled students. TEB helps students discover their innovation-creativity abilities and contributes to their education through these initiatives. Students from different universities that participated the “TEB Smart Ideas Campus” and “TEB No Barriers Campus” also have the opportunity to work at TEB based on their education, knowledge and experience.

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PART IV - THE BOARD OF DIRECTORS 18. Structure and Composition of the Board of Directors and Independent Members Members of the Board of Directors and their responsibilities as of 31 December 2009 are listed below: Name Position Yavuz Canevi Chairman Dr. Akın Akbaygil Vice Chairman Jean Jacques Marie Santini Vice Chairman Varol Civil Executive Member and General Manager Musa Erden Executive Member Yves Paul Henri Martrenchar Member Refael Taranto Member Metin Toğay Member An up-to-date list of the members of the Board of Directors and their resumes are available on TEB’s website. The concept of an independent board member has been introduced in Turkey together with the adoption of the corporate governance principles. Corporate governance structures and processes and related principles is to be determined by the Banking Regulation and Supervision Agency after consultation with the Capital Markets Board and associated unions, as specified in Article 22 of Banking Law No: 5411. Since applicable legislation has introduced additional responsibilities for board members, in addition to the requirements foreseen for membership in banks’ Boards of Directors, the number of suitable candidates became limited. Thus, TEB believes that it is going to take some time for the number of independent members on its Board of Directors to reach the requested level. Article 28 of TEB’s Articles of Association on Prohibited Transactions states the following: “Activities and transactions that the Chairman and members of the Board of Directors as well as the Chairman and Members of the Credit Committee may not engage in are specified in the relevant provisions of the Turkish Commercial Code, the Banking Law and the Capital Markets Law.” 19. Qualifications of Board Members The qualifications required for membership in the Board of Directors are specified in Article 22 of the Articles of Association and the relevant provisions of the Banking Law. The qualifications of TEB board members comply with applicable legislation and the Corporate Governance Principles.

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20. Mission, Vision and Strategic Targets As stated in the ‘Corporate Governance’ section of its website, TEB’s mission is defined as follows: TEB is committed to adding value to its stakeholders with its selected customer portfolio and world-class financial services. TEB aspires to maximize customer satisfaction. TEB fully complies with international practices in corporate governance. TEB employs employees who are committed to business ethics, protect the values of the organization and are open to innovation. TEB has been able to achieve its mission due to its shareholders who are strictly committed to their business principles, responsibilities and to employees’ rights. The Bank’s strategic targets and primarily its budget are assessed and approved by the Board of Directors. The extent to which the targets are achieved, as well as the reasons of any failure to achieve targets are evaluated at meetings attended by senior executives, branch managers and other related executives. Targets, strategies and operational results are liaised to the management team at biannual General Management Meetings. 21. Risk Management and Internal Control In accordance with the provisions of the Banking Law No: 5411, the Bank has established an “Audit Committee” reporting to the Board of Directors through two non-executive board members exclusively appointed for this task. The Board of Directors has set up the Audit Committee for the following purposes:

Centralizing audit systems, validating procedures, monitoring and auditing of risks in the eight risk groups below:

− Loans and counter party risk: Default by third parties − Market and liquidity risk: Market price fluctuations − Administrative risk: Appropriate administration of operations (including operational risk) − Legal risk: Compliance with tax laws and other legislation − Accounting risk: Compliance with regulations and legally acceptable presentation of accounts − IT risk: Adequacy and security of systems − Human resources risk: Adequacy of staff with regard to quality and functioning − Reputation and commercial risk: Damage to the Group’s image Determining risk policies and principles for appropriate risk management, internal audit

and compliance, Monitoring the Group’s adequacy and effectiveness in terms of internal control and risk

management and auditing accounting and reporting systems,

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Taking the necessary measures to ensure that the Board of Directors is informed of any incident or condition that may prevent the Bank from functioning in an uninterrupted manner or of any event that violates the legislation; making recommendations periodically through reporting to the Board of Directors any measures required to be taken.

22. Authority and Responsibilities of Board Members and Executives The authorities and responsibilities of board members and executives are governed by Articles 26 and 30 of the Articles of Association, while issues related to the General Manager and his/her deputies are covered by Articles 32 and 33. 23. Activities of the Board of Directors Meetings of the Bank’s Board of Directors are organized through the General Secretary of the Board of Directors. Members of the Board of Directors submit to the General Secretary any items that they want to be included in the agenda and the final agenda is communicated to the members at least one week before the meeting. The Board of Directors has taken 113 decisions in 2009. As mentioned above, the General Secretary is responsible for the implementation of these matters. All decisions during the reporting period were made unanimously and no dissenting opinion was noted. Members who do not attend a meeting based on a reasonable ground are informed of the resolutions taken in their absence at the first meeting they attend. There are meeting minutes whereby the decisions taken are noted. TEB’s Articles of Association does not contain any provisions on weighted voting rights or negative veto rights. 24. Ban on Dealing and Competing with the Company Members of the Board of Directors have no relationships with TEB that could result in a conflict of interest. 25. Ethical Rules As also stated on our website, The Board of Directors complies with the Code of Banking Ethics dated November 1, 2001 and numbered 1012 as prepared and published by the Banks Association of Turkey to which TEB contributes to the activities thereof. According to Article 75 of Banking Law (No: 5411), banks and their employees shall ensure that activities are performed in compliance with this Law, applicable legislation and the banks’ goals and policies and shall comply with ethical principles that put justice, fairness, honesty and social responsibility at the foundations of management. These principles will be determined by the related agencies in consultation with the Board.

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26. Numbers, Structure and Independence of Committees Established by the Board of Directors In accordance with corporate governance principles, the following committees were active in 2009: Corporate Governance Committee Duties: • Monitoring and guiding corporate governance practices at the Bank, • Convening upon the request of the Chairman. Members: Chairman: Board Member and Audit Committee Chairman (Patrick René Pitton) Members: Chairman (Yavuz Canevi) Head of Internal Audit (Hakan Tıraşın) Chief Legal Advisor, Board General Secretary (Melis Coşan Baban) Audit Committee In accordance with the provisions of the Banking Law No: 5411, the Bank has established an “Audit Committee” reporting to the Board of Directors through two non-executive board members exclusively appointed for this task. The Board of Directors has set up the Audit Committee for the following purposes: Centralizing audit systems, validating procedures, monitoring and auditing of risks in the eight risk groups below: − Loans and counter party risk: Default by third parties − Market and liquidity risk: Market price fluctuations − Administrative risk: Appropriate administration of operations (including operational risk) − Legal risk: Compliance with tax laws and other legislation − Accounting risk: Compliance with regulations and legally acceptable presentation of accounts − IT risk: Adequacy and security of systems − Human resources risk: Adequacy of staff with regard to quality and functioning − Reputation and commercial risk: Damage to the Group’s image Determining risk policies and principles for appropriate risk management, internal audit

and compliance, Monitoring the Group’s adequacy and effectiveness in terms of internal control and risk

management and auditing accounting and reporting systems, Taking the necessary measures to ensure that the Board of Directors is informed of any

incident or condition that may prevent the Bank from functioning in an uninterrupted manner or of any event that violates the legislation; making recommendations periodically through reporting to the Board of Directors any measures required to be taken.

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The committee meets at least once every two months. Chairman : Patrick René PITTON Vice Chairman : Dr. Akın AKBAYGİL 27. Remuneration of the Board of Directors At the Ordinary General Meeting of Shareholders held on 24 March 2009, it was resolved that no fees be paid to the members of the Board of Directors, who shall continue to perform this duty voluntarily and that a gross monthly fee of TRY 750.- be paid to Statutory Auditors. Remuneration to be paid to Executive Board Members is determined by the Board of Directors in accordance with Article 27 of the Articles of Association and in view of the nature of the duties involved and the time to be spent to fulfill these duties. In 2009, TRY 6,968,460.- was paid to the Members of the Board of Directors as salaries and attendance fees. Board members may be granted loans within the limits defined by law or may be rewarded depending on the performance of the Bank, the duties vested on them and the time spent by them to fulfill these duties.

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SECTION III ASSESSMENT OF FINANCIAL POSITION AND RISK MANAGEMENT AUDITORS REPORT TO THE ORDINARY GENERAL MEETING OF SHAREHOLDERS OF TÜRK EKONOMI BANKASI A.Ş. 4 March 2010 We have examined the financial statements of Türk Ekonomi Bankası A.Ş., of which we are the statutory auditors, for the year ending on 31 December 2009. We confirm that said statements are in compliance with the Banking Law No: 5411, the Regulation on the Procedures and Principles Governing Banks’ Accounting Standards and Safekeeping of Documents, related communiqués and provisions, as well as the Bank’s general policies and regulations Regards, Statutory Auditor Statutory Auditor Ayşe Aşardağ Cihat Madanoğlu

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THE AUDIT COMMITTEE’S ASSESSMENT OF INTERNAL CONTROL, INTERNAL AUDIT AND RISK MANAGEMENT SYSTEMS AND ACTIVITIES DURING THE REPORTING PERIOD The organizational structure at TEB in terms of internal control, internal audit and risk management was implemented in accordance with the “Regulations on the Internal Systems of Banks”. This structure is appropriate in view of the scope and nature of TEB’s activities and can effectively respond to changing conditions. The Risk Management Division, the Internal Control Center and Internal Audit Group, all reporting to the Board of Directors, independent from each other but working in cooperation, have performed their activities in 2009. The Board of Directors has taken the necessary measures regarding the approval of important strategies and policies with regard to control activities and the maintenance of effective internal audit and risk management systems. The internal audit system is organized to cover all activities and units of the Bank. As of year-end, the Group Internal Audit operates with Head of Audit, two deputy heads, one IT and External Reporting and one manager and a staff of 46 internal auditors. The Board of Directors has taken all necessary measures authorizing the Group Internal Audit to conduct its audit activities without any restrictions and covering TEB’s consolidated subsidiaries and their respective units. In 2009, the Group Internal Audit conducted 158 branch audits, 27 Head Office unit audits, 17 subsidiary audits and 23 process audits. Internal control activities are organized as an inseparable part of daily activities and cover all areas of basic control. Following the organizational change during the year, Internal Control and Compliance functions are now structured separately. Within the scope of internal control, daily, weekly, monthly and quarterly controls of critical activities at branches and departments of the headquarters are carried out under the Banking Transactions Control, Treasury Control and Legal Compliance Units. The Compliance function covers the departments of Banking and Tax Legislation Compliance, Operational Risk, Information Security and Work Continuity, parallel to the Internal Systems Regulation of the BRSA. These departments have completed their tasks in 2009 with a staff of 73. The risk management process is composed of risk definition and measurement, establishing risk policies and procedures, risk analysis and monitoring, reporting, and auditing phases, all in accordance with the principles that are jointly determined by TEB’s senior management and the Risk Management Group and approved by the Board of Directors. The mission of the Group Risk Management function is to ensure, jointly with senior management, that the risks undertaken by the Group comply with the TEB’s policies and procedures and meet the Bank’s profitability criteria and rating. In 2009, the Risk Management Group, under the Risk Management and Compliance Group had a staff of 13, including the Chairman of Group Risk Management. TEB’s Risk

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Management Division is composed of 4 departments, namely the Market and Liquidity Risk Department, Credit Risks and Subsidiary Risks Management Department, Operational Risk and Business Continuity departments. In addition to employees in charge of determining, measuring and reporting market, credit and operational risk, a risk management officer is employed in each subsidiary to monitor the implementation of risk management principles and policies. Group employees use advanced techniques in risk measurement and monitoring activities and closely follow local and international best practices. At its meeting held on 8 November 2005, the Board of Directors convened to establish an Audit Committee responsible for all companies comprising the TEB Group, in accordance with Article 24 of Banking Law No: 5411 and further resolved that the powers of the Senior Risk Committee, which was established in accordance with Law No: 4389, be taken over by the new committee. The Audit Committee has gathered sixteen times during the course of the year 2009. It monitors all risk in a consolidated format at the group level, establishing mechanisms of control, reviewing all written procedures, ensuring coordination between the Internal Audit Group, the Risk Management Group and the Compliance and Internal Control Centre, as well as working toward the establishment of internal control systems at the Bank and at Group companies which are in essence of the same scope. TEB closely follows and implements new legislation and best practices of internal audit and risk management systems. ASSESSMENT OF FINANCIAL POSITION, PROFITABILITY AND DEBT-SERVICING CAPACITY

%75 of our loans portfolio is comprised of corporate, commercial and SME loans. Retail loans and credit card receivables increased by 31% compared to previous year and reached TRY 2.2 millions and their share reached to25%.with an increased share of 25%.

Non Performing Loans reached to 4.64% in 2009 from 2.34% from 2008, which is still below the sector average of %5.2.In other words, regardless of the loan growth and deterioration in the market, asset quality is above the sector average. As of December 2009, 95% of our deposits were granted as loans. TEB meets liquidity requirement primarily from deposits and the share of deposits which is our main source of funding, reached 63% in total liabilities. Demand deposit’s share in total deposits increased from 15% to 22% corresponding to TRY 2.1 billion and thus made a significant contribution towards decreasing our cost of funding TEB diversifies its funding resources by foreign borrowings. Bank utilized further sources of long-term funds through syndications from international markets and other similar sources; additionally, continued to create Turkish Lira funds using derivative instruments. As of December 31, 2009, the Bank has a syndication loan of EUR 190 million and USD 92 million obtained on December 2, 2009, with a maturity date of 24 November 2010.

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TEB has outstanding 4 different subordinated loan facilities amounting to EUR 110 million and USD 165 million, borrowed from various banks and financial institutions between 2002 and 2007. The repayment of principal amounting 3 million USD is made on October 15, 2009. Despite the IT expenditures, promotional expenses regarding campaigns supporting the expansion of Retail banking activities and specialization of Corporate and Commercial Banking expenses, operational expenses remain TRY 701 million same as previous year. Changes in the composition of our balance sheet due to the market conditions and growing number of customers increased our fees and commissions income by 12% in comparison to the previous year. The Bank increased its net income, as a result of its operations as a whole, by 28%, from TRY 164.2 million in 2008 to TRY 210.2 million in 2009.

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RISK MANAGEMENT POLICIES ACCORDING TO VARIOUS TYPES OF RISKS

Interest Rate Risk

Interest rate risk involves possible losses a bank may incur due to fluctuations and volatility in interest rates, depending on its portfolio positions. At TEB, the Assets and Liabilities Committee manages interest rate risk. The Assets and Liabilities Management Department within the Treasury Group thereupon implements the decisions taken by this committee

Protection against fluctuations in interest rates is a top priority for TEB. Interest rate risk is determined by measuring the rate of sensitivity of assets, liabilities and off-balance sheet items. TEB runs simulations of interest revenues according to estimated macroeconomic indicators. Duration, term and sensitivity analyses are conducted and these calculations are conveyed to the Assets and Liabilities Committee. Interest rate risk is determined by measuring the rate of sensitivity of assets, liabilities and off-balance sheet items. TEB runs simulations of interest revenues according to estimated macroeconomic indicators. Duration, term and sensitivity analyses are conducted and these calculations are conveyed to the Assets and Liabilities Committee. Possible negative effects of interest rate fluctuations on financial position and cash flow are minimized by means of prompt decisions. The management monitors interest rate movements on a daily basis and makes changes whenever necessary in deposit and loan rates. When determining short, medium and long-term pricing strategies, TEB’s Assets and Liabilities Committee manages maturity incongruity and adopts the principle of working with positive balance sheet margins as its pricing policy. Market Risk Market risk involves possible losses a bank may incur as a result of the exposure of its balance sheet and off-balance sheet accounts to interest rate risk, equity position risk or exchange rate risk resulting from fluctuations in the financial markets, in interest rates, exchange rates or stock prices. TEB’s Board of Directors ensures that the risk management units and senior management take the necessary steps to properly measure, monitor and manage its exposure to market risk. The Board of Directors determines market risk limits and regularly revises these limits in accordance with market conditions and the strategies of TEB. With regard to TEB’s daily transactions, stop-loss and transaction limits are defined for each product. The Board of Directors assigns limits for positions in derivatives and similar contracts. Transactions are carried out within these limits and the limits are monitored and reported daily.

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The market risk of the Bank is calculated using a standard method and reported to legal authorities. The market risk can influence the Value-at-Risk (VaR) figure, which is also calculated using various financial models. VaR figure is calculated using a variance/co-variance method on the basis of a 250-business-day data and a one-day holding period in a 99% confidence interval. Daily VaR figures are the main drivers of TEB’s internal reports and efforts to monitor market risk. Back testing is periodically performed to validate the accuracy of calculations and the methods used. The VaR figures calculated by internal models to predict losses in the event of a crisis are also verified by scenario analyses and stress tests and are then reported to senior management and the Board of Directors. Scenario analyses and stress tests involve the re-application of past crises to existing portfolios or the observation of likely losses due to interest and foreign exchange shocks. Liquidity Risk Liquidity risk is defined as the risk of failing to fully meet cash obligations in due time, because the bank in question does not possess sufficient cash or is not able to generate cash when needed, which might result from mismatches between TEB’s cash inflows and outflows. Liquidity risk also includes the risk of loss that may arise when there is an inability to enter or exit the market as needed. When it is not possible for a bank to adequately close positions at favorable prices and at sufficient amounts or as rapidly as required, the lack of sufficient cash may translate into losses. TEB’s policies focus on maintaining the quality of its asset structure, so that liquid assets can meet all obligations. Striving to be one of the most liquid banks in the industry is of utmost importance to TEB. The Board of Directors regularly monitors and determines liquidity ratios and the relevant standards for maintaining high liquidity at all times. TEB has in place an effective management reporting system for the timely reporting of the liquidity position to the Board of Directors, senior management and all related units. Cash flow analyses are carried out for different maturity structures and currency units. Maturity mismatches are monitored and concentrations in funding sources are closely monitored. As a matter of general policy, consistency in maturities and interest rates is maintained in line with Assets and Liabilities Management at all times, and balance sheet positions of TRY and returns on foreign currency mix are continuously managed in the positive. With regard to the sources of funding and liquidity, it is observed that while the greater part of the liquidity requirement of TEB is met by deposits, syndicated loans and pre-financing products are also used at times to obtain funds in addition to deposits.

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TEB strictly adheres to the policy of maintaining high-quality liquid assets in sufficient amounts. This assures a regular cash flows and strong liquidity position at all times and enables the Bank to be a net lender to the market. Exchange Rate Risk Exchange rate risk is defined as a possible loss that a bank may incur with all of its currency assets and liabilities in the event of changes in exchange rates. In calculating capital adequacy that underlies exchange rate risk risk weighted assets are calculated and reported with the standard method. While doing this TEB takes into account all of its foreign-currency assets, liabilities and forward foreign-currency contracts. Within the limits approved by the Board of Directors, the Treasury Group is responsible for the management of price, liquidity and fulfillment risk arising from fluctuations in local or foreign currency prices in domestic and international markets. Money market risks and risk-bearing transactions are monitored on a daily basis and reported weekly to TEB’s Assets and Liabilities Committee. Position limits determined by the Board of Directors are monitored on a daily basis and possible changes in the Bank’s monetary positions that may come about as a result of routine foreign currency transactions are also examined. Position limits determined by the Board of Directors are reported on a daily basis. As a part of the Bank’s risk management strategy, every type of borrowings in foreign currency is protected against exchange rate risk by derivative products. Equity interests held in foreign companies are protected against exchange rate risk along the lines of the TEB’s overall strategy. Credit Risk Credit risk is the loss that may be incurred if the other party of the loan relationship fails, partially or entirely, to fulfill its obligations on time. One of the most prominent characteristics at TEB that distinguishes it from the competition is its prudent lending policy and solid asset structure that go hand in hand with a stable growth strategy. The Board of Directors has the final authority in the allocation of loan facilities. This power is delegated to the Credit Committee and the General Manager on certain conditions. The exercise of these delegated powers are regularly monitored and reported by the internal audit and risk management units. Loans are extended within the limits defined for each debtor and group of debtors individually. Every customer that performs a transaction on credit must have a loan facility allocated by the relevant authorities and customers are systematically prevented from exceeding those limits. Branch officers visit loan applicants and obtain financial statements and information related to the potential customer’s activities and plans. A loan proposal is prepared containing a

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commentary on the company’s financial position, an industry analysis, information about the partners and managers, as well as references from other banks and companies with which the applicant is doing business. This information is then submitted to the Credit Allocation and Financial Analysis Group, which assesses the applicant’s creditworthiness and sends its report to the Credit Committee for approval. In assessing customers, TEB uses an internally developed rating system, which takes into account both financial and non-financial criteria. The rating of the collateral proposed for the loan is also calculated using a system developed by TEB. In accordance with the Bank’s lending policy, overall credit risk is assessed through both debtor and collateral ratings. Developments in the marketplace are closely monitored to minimize credit risk and industry limits are applied. As a result of the prudent policy the Bank adopts, the maximum amount of loan that can be granted to a customer is kept below legal limits, thus minimizing the risk of loan concentration. Limits set by the Board of Directors are regularly monitored and reported. The Risk Management Group, in collaboration with the Credits and Financial Analysis Group, makes assessments of the loan portfolio for the Board of Directors and the Board of Internal Auditors and reports high-risk cases and non-performing loans. The Credit Monitoring and Legal Proceedings Department is structured under the supervision of the General Manager. This Department submits regular reports to the Credit Committee and also to the Board of Directors via the Board of Internal Auditors. After a loan facility is offered, the Credit Monitoring Department monitors the customer’s repayment capability and the sufficiency and adequacy of the collateral. In this way, any problematic loan is identified at an early stage. Should the credit rating and/or the quality of the collateral raise any doubts, the customer will then be closely reviewed and additional collateral shall be requested. Limits related to counter party risk arising from treasury transactions or from customer-based commercial transactions are monitored on a daily basis. Daily controls are also performed on the limits that have been offered to correspondent banks in accordance with their ratings and the maximum risk that the Bank is able to bear with its own capital. Country risk involves the likelihood of partial or complete failure of the debtor person or company in international loan transactions to fulfill obligations on time, due to economic, political or social incidents taking place in the relevant country. TEB exclusively enters into loan transactions with foreign financial institutions or countries that are rated investment grade by international rating agencies. For this reason, possible risks in such transactions do not pose an important threat for the Bank, given its current financial structure. Operational Risk Operational risk is defined as the risk of loss that may result from inappropriate or malfunctioning practices, or from human and system errors or external reasons.

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Operational risk can occur along the entire spectrum of banking activities as a result of human and system errors or inappropriate practices. It also includes the risk of loss resulting from mistakes and negligence, internal or external fraud and natural disasters. TEB’s main objectives in this regard are to achieve total compliance with internal rules, to develop a strong internal control culture and to attain all the qualitative standards determined by the Basel Committee. Compliance with legal requirements, adherence to the ethical values of the banking profession, information security, prevention of internal and external fraud, contingency and business continuity plans and “know-your-customer” policies are all fundamental controls for the reduction of operational risk. By taking into consideration the risk caused by lack of information about the legislation, TEB has undertaken an organizational restructuring effort in the areas of taxation and banking legislation and strengthened its decision support functions with high-quality staff. The project of gathering and managing operational risk loss data became operational in 2007, and with this project, TEB aims to be one of the banks in the industry that is most prepared for Basel II in terms of operational risk.

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CREDIT RATINGS ASSIGNED BY RATING AGENCIES AND INFORMATION ON THEIR CONTENTS (*) TEB maintained its position as one of the most highly rated banks in Turkey. As of the end of 2009, TEB’s ratings were as follows:

Moody’s Investor Services: Financial Strength Rating D+ FX Deposits Rating B1/NP Outlook Stable Fitch Ratings: Foreign Currency Long-term BBB- Short-term F3 Outlook Stable Turkish Lira Long-term BBB Short-term F3 Outlook Stable National AAA (tur) Outlook Stable Individual Rating C/D Support Points 2

(*) These ratings are not the ratings realized in accordance with BRSA’s “Regulations on Principles of Authorization and Activities of Rating Agencies”.

101

DONATIONS Date Recipient Amount (TRY) 29 .01.2009 Education Volunteers Foundation 1,000.00 11.02.2009 Commercial Court of First Instance 175.00 21.05.2009 İzmir American Collegiate Institute Alumni Community 1,000.00 29.05.2009 Kastamonu Association of County Support 2,000.00 9.06.2009 Deniz Temiz Association 10,000.00 26.06.2009 Beyoğlu Police Department Support Association 1,000.00 7.07.2009 Narlıdere Police Department 250.00 21.07.2009 Antalya Sport Club Association 10,000.00 11.08.2009 S.S. TOMURCUK Education, Culture, Support and

Business Cooperative 2,000.00

30.09.2009 İstanbul Police Department 2,652.70 16.10.2009 The Association in Support of Contemporary Living 228,200.00 26.11.2009 Aksaz Turgut Reis Primary School 2,500.00 Total 260,777.70

102

FIVE YEAR SUMMARY OF FINANCIAL INFORMATION INCLUDING THE REPORTING PERIOD Thousand TRY

31.12.2005(*) 31.12.2006 2006-2005

change (%)

31.12.2007 2007-2006

change (%)

31.12.2008 2008-2007

change (%)

31.12.2009 2009-2008

change (%)

Liquid Assets

1,030,014 1,403,098 36.22 2,466,589 75.80 3,368,482 36.56 2,610,222 -22.51

Securities 1,168,431 1,612,781 38.03 1,779,613 10.34 2,005,641 12.70 2,667,125 32.98 Loans 2,969,125 4,951,436 66.76 6,864,427 38.64 8,550,534 24.56 8,990,715 5.15 Other Assets

270,039 312,24 15.63 690,287 121.08 811,398 17.55 795,498 -1.96

Total Assest

5,437,609 8,279,555 52.26 11,800,916 42.53 14,736,055 24.87 15,063,560 2.22

Demand Deposits

739,356 1,012,353 36.92 1,393,103 37.61 1,401,191 0.58 2,072,396 47.90

Time Deposits

2,512,724 4,413,554 75.65 5,689,869 28.92 7,870,556 38.33 7,349,239 -6.62

Funds Borrowed

1,505,844 1,989,910 32.15 2,894,689 45.47 3,141,402 8.52 3,205,060 2.03

Other Liabilities

202,182 306,062 51.38 912,924 198.28 899,287 -1.49 787,413 -12.44

Equity (Excl. profit)

392,387 459,895 17.20 780,045 69.61 1,259,421 61.45 1,439,285 14.28

Net Income

85,116 97,781 14.88 130,286 33.24 164,198 26.03 210,167 28.00

Total Liabilities

5,437,609 8,279,555 52.26 11,800,916 42.53 14,736,055 24.87 15,063,560 2.22

Selected Ratios

NPL Ratio 1.13 0.90 -20.35 1.75 94.44 2.34 33.60 4.64 98.32 Return on Equity

19.39 18.89 -2.58 17.75 -6.03 14.07 -20.73 13.68 -2.79

Return on Assets

1.89 1.43 -24.34 1.30 -9.09 1.24 -4.81 1.41 13.98

Capital Adequacy Ratio

12.33 14.27 15.73 14.88 4.27 17.65 18.62 17.70 0.28

(*) Financial statements dated 31 December 2005 have been rearranged in accordance with the Turkish Accounting Standards that were published in the Official Gazette numbered 26333, dated 1 November 2006.

To the Board of Directors of Türk Ekonomi Bankası A.Ş. Istanbul

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ

INDEPENDENT AUDITOR’S REPORT FOR THE YEAR JANUARY 1, 2009 – DECEMBER 31, 2009

We have audited the accompanying balance sheet of Türk Ekonomi Bankası A.Ş. as at December 31, 2009, and the related statements of income, cash flows and changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements The Board of Directors of the Bank is responsible for the preparation and fair presentation of the financial statements in accordance with the regulation on “Procedures and Principles Regarding Banks’ Accounting Practices and Maintaining Documents” published in the Official Gazette dated November 1, 2006 and numbered 26333 and Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”) and other regulations, circulars, communiqués and pronouncements in respect of accounting and financial reporting made by Banking Regulation and Supervision Agency (“BRSA”). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the regulation on “Licensing and Operations of Audit Firms in Banking” published in the Official Gazette no: 26333 on November 1, 2006 and the International Standards on Auditing. We planned and performed our audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the consideration of the effectiveness of internal control and appropriateness of accounting policies applied relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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 financial statements present fairly, in all material respects, the financial position of Türk Ekonomi Bankası A.Ş. as at December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with the prevailing accounting principles and standards set out as per the Article 37 of the Banking Act No: 5411, and other regulations, communiqués and circulars in respect of accounting and financial reporting and pronouncements made by BRSA. Additional paragraph for English translation: The effect of the differences between the accounting principles summarized in Section 3 and the accounting principles generally accepted in countries in which the accompanying financial statements are to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements. The accounting principles used in the preparation of the accompanying financial statements differ materially from IFRS. Accordingly, the accompanying financial statements are not intended to present the Bank’s financial position and results of its operations in accordance with accounting principles generally accepted in such countries of users of the financial statements and IFRS. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU Hasan Kılıç Partner Istanbul, February 8, 2010

THE UNCONSOLIDATED FINANCIAL REPORT OF TÜRK EKONOMİ BANKASI A.Ş. FOR THE YEAR ENDED DECEMBER 31, 2009

Address : Meclis-i Mebusan Caddesi No: 57 Fındıklı 34427 - Istanbul Telephone : (0 212) 251 21 21 Fax : (0 212) 249 65 68 Web Site : www.teb.com.tr E-mail Address : [email protected] The year end unconsolidated financial report designed by the Banking Regulation and Supervision Agency in line with Communiqué on Financial Statements to be Publicly Announced and the Related Policies and Disclosures consists of the sections listed below:

• GENERAL INFORMATION ABOUT THE BANK • UNCONSOLIDATED FINANCIAL STATEMENTS 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 • OTHER EXPLANATIONS AND FOOTNOTES • INDEPENDENT AUDITOR’S 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 Communique on Banks’ Accounting Practice and Maintaining Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards, related communiqués and the Banks’ records, have been independently audited and presented as attached. February 8, 2010

Yavuz Canevi

Patrick

Rene Pitton

Dr. Akın Akbaygil

Varol Civil

M. Aşkın Dolaştır

B. Ilgaz Doğan Chairman of the Board of

Directors

Chairman of the Audit Committee

Vice Chairman of the Audit Committee

General Manager

Assistant General Manager Responsible of

Financial Reporting

Director Responsible of

Financial Reporting

Information related to responsible personnel for the questions can be raised about financial statements: Name-Surname / Title: Çiğdem Başaran / Investor Relations Manager Telephone Number: (0212) 251 21 21 Fax Number: (0212) 249 65 68

INDEX Page Number

SECTION ONE General Information

I. History of the Bank, Including its Incorporation Date, Initial Legal Status and Amendments to Legal Status, if any 1 II. Explanation on the Bank’s Capital Structure, Shareholders of the Bank who are in Charge of the Management and/or Auditing of the Bank Directly

or Indirectly, Changes in These Matters (if any), and the Group the Bank Belongs to 1 III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the

Bank They Possess 2 IV. Information About the Persons and Institutions That Have Qualified Shares 2 V. Summary on the Bank’s Functions and Areas of Activity 3

SECTION TWO Unconsolidated Financial Statements

I. Balance Sheet 4 II. Statement of Off Balance Sheet Contingencies and Commitments 6 III. Statement of Income 7 IV. Statement of Profit and Loss Accounted for Under Equity 8 V. Statement of Changes in Shareholders’ Equity 9 VI. Statement of Cash Flows 11 VII. Profit Distribution Table 12

SECTION THREE

Accounting Principles I. Basis of Presentation 13 II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions 13 III. Explanations on Forward and Option Contracts and Derivative Instruments 14 IV. Explanations on Interest Income and Expenses 15 V. Explanations on Fees and Commission Income and Expenses 15 VI. Explanations on Financial Assets 15 VII. Explanations on Impairment of Financial Assets 17 VIII. Explanations on Offsetting of Financial Assets and Liabilities 17 IX. Explanations on Sales and Repurchase Agreements and Lending of Securities 18 X. Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to Those Assets 18 XI. Explanations on Goodwill and Other Intangible Assets 18 XII. Explanations on Tangible Fixed Assets 19 XIII. Explanations on Leasing Transactions 19 XIV. Explanations on Provisions and Contingent Liabilities 20 XV. Explanations on Liabilities Regarding Employee Benefits 20 XVI. Explanations on Taxation 20 XVII. Additional Explanations on Borrowings 21 XVIII. Explanations on Issued Share Certificates 21 XIX. Explanations on Acceptances 21 XX. Explanations on Government Incentives 21 XXI. Explanations on Reporting According to Segmentation 22 XXII. Explanations on Other Matters 23

SECTION FOUR Information on Financial Structure

I. Explanations Related to the Capital Adequacy Standard Ratio 24 II. Explanations Related to Credit Risk 27 III. Explanations Related to Market Risk 32 IV. Explanations Related to Operational Risk 33 V. Explanations Related to Currency Risk 33 VI. Explanations Related to Interest Rate Risk 36 VII. Explanations Related to Liquidity Risk 40 VIII. Explanations Related to Presentation of Financial Assets and Liabilities at Fair Value 43 IX. Explanations Related to Transactions Carried out on Behalf of Other Parties and Fiduciary Assets 44

SECTION FIVE Explanations and Disclosures on Unconsolidated Financial Statements

I. Explanations and Disclosures Related to the Assets 45 II. Explanations and Disclosures Related to the Liabilities 61 III. Explanations and Disclosures Related to the Off-Balance Sheet Contingencies and Commitments 70 IV. Explanations and Disclosures Related to the Statement of Income 75 V. Explanations and Disclosures Related to Statement of Shareholders’ Equity Movement 81 VI. Explanations and Disclosures Related to Statement of Cash Flows 82 VII. Explanations on the Risk Group of the Bank 83 VIII. Explanations on the Bank’s Domestic Branches, Agencies and Branches Abroad and Off-shore Branches 85

SECTION SIX Other Explanations

I. Other Explanations on the Operations of the Bank 86

SECTION SEVEN Independent Auditor’s Report

I. Explanations on the Independent Auditor’s Report 86 II. Other Footnotes and Explanations Prepared by the Independent Auditors 86

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2009 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

1

SECTION ONE

GENERAL INFORMATION I. History of the Bank, Including its Incorporation Date, Initial Legal Status and

Amendments to Legal Status, if any

Türk Ekonomi Bankası Anonim Şirketi (“the Bank”), which had been a local bank incorporated in Kocaeli in 1927 under the name of Kocaeli Halk Bankası T.A.Ş., was acquired by the Çolakoğlu Group in 1982. Its title was changed as Türk Ekonomi Bankası A.Ş. and its headquarters moved to Istanbul.

II. Explanation on the Bank’s Capital Structure, Shareholders of the Bank who are in

Charge of the Management and/or Auditing of the Bank Directly or Indirectly, Changes in These Matters (if any), and the Group the Bank Belongs to

As of December 31, 2009 and December 31, 2008 the shareholders’ structure and their respective

ownerships are summarized as follows:

Current Period Prior Period Name of shareholders

Paid in capital

%

Paid in capital

%

TEB Mali Yatırımlar A.Ş. 926,796 84.25 926,796 84.25 Publicly Traded 171,966 15.63 171,966 15.63 Other Shareholders 1,238 0.12 1,238 0.12 1,100,000 100.00 1,100,000 100.00

As of December 31, 2009 Bank’s paid-in-capital consists of 1,100,000,000 shares of TRY 1.00 (full

TRY) nominal each.


2

III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the Bank They Possess

Name Title Board of Directors; Yavuz Canevi Chairman of the Board of Directors Dr.Akın Akbaygil Member of the Board of Directors, Vice Chairman of the Audit

Committee and Vice Chairman of the Board of Directors Patrick Rene Pitton Member of the Board of Directors , Chairman of the Audit Committee Jean-Jacques Marie Santini Member of the Board of Directors and Vice Chairman of the Board of

Directors Metin Toğay Member of the Board of Directors Yves Paul Henri Martrenchar(*) Member of the Board of Directors Refael Taranto Member of the Board of Directors Varol Civil Member of the Board of Directors and General Manager Musa Erden Member of the Board of Directors Assistant General Managers;

Mustafa Aşkın Dolaştır Assistant General Manager Responsible from Financial Reporting İzzet Cemal Kişmir Assistant General Manager Responsible from Consumer Banking and

Business Banking Levent Çelebioğlu Assistant General Manager Responsible from Corporate Banking and

Financial Institutions Nilsen Altıntaş Assistant General Manager Responsible from Human Resources Nuri Tuncalı Assistant General Manager Responsible from Corporate and

Commercial Loans Saniye Telci Assistant General Manager Responsible from Banking Operations Turgut Boz Assistant General Manager Responsible from Commercial Banking and

SME Banking Turgut Güney Assistant General Manager Responsible from Information Technologies Ümit Leblebici Assistant General Manager Responsible from Treasury Ünsal Aysun Assitant General Manager Responsible from Project Financing and Cash

Management Ömer Abidin Yenidoğan Assistant General Manager Responsible from Private Banking

(Vicarious) Melis Coşan Baban Assistant General Manager Responsible from Legal Affairs and

Secretary of the Board of Directors Osman Durmuş Assistant General Manager Responsible from Consumer Loans and

Business Loans Inspection Committee and Statutory Auditors;

Hakan Tıraşın Chairman of the Inspection Committee Ayşe Aşardağ Statutory Auditor Cihat Madanoğlu Statutory Auditor

(*) Christophe Philippe Marie Vallée left from his position as a member of the Board of Directors as of June 17, 2009, and Yves

Paul Henri Martrenchar was appointed as the new member of the Board of Directors.

Shares of the Bank owned by the above stated Chairman and Members of Board of Directors, General Manager and Assistants are negligible.

IV. Information About the Persons and Institutions That Have Qualified Shares:

Name / Commercial Name Share

Amount Share Ratio

Paid up Shares

Unpaid Shares

TEB Mali Yatırımlar A.Ş. 926,796 84.25% 926,796 -

The directly or indirectly authorized group that has the qualified shares in the Bank’s capital is TEB Mali Yatırımlar A.Ş. TEB Mali Yatırımlar A.Ş. is a member of Çolakoğlu and BNP Paribas Group. 50% of the shares of TEB Mali Yatırımlar A.Ş. is controlled by BNP Paribas, while the remaining 50% is controlled by Çolakoğlu Group.


3

V. Summary on the Bank’s Functions and Areas of Activity The Bank’s operating areas include, corporate, retail and private banking as well as project finance, fund management and custody operations. Besides the ordinary banking operations, the Bank is handling agency functions through its branches on behalf of TEB Yatırım Menkul Değerler A.Ş. and Zurich Sigorta A.Ş (formerly TEB Sigorta A.Ş. prior to the title change due to the sale of the entity on August 18, 2008). As of December 31, 2009, Bank has 330 local branches and 4 foreign branches (2008 - 332 local branches, 4 foreign branches).

SECTION TWO

UNCONSOLIDATED FINANCIAL STATEMENTS

I. Balance Sheet II. Statement of Off Balance Sheet Contingencies and Commitments

III. Statement of Income IV. Statement of Profit and Loss Accounted for Under Equity V. Statement of Changes in Shareholders’ Equity

VI. Statement of Cash Flows VII. Profit Distribution Table

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

4

I. BALANCE SHEET – ASSETS (STATEMENT OF FINANCIAL POSITION) Audited Audited Current Period Prior Period 31.12.2009 31.12.2008

Note Ref.

TRY FC

Total

TRY FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK (1) 344,364 1,167,340 1,511,704 536,070 1,563,427 2,099,497 II.

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net)

(2) 165,315 22,990 188,305 49,118 41,524 90,642

2.1 Financial assets held for trading 165,315 22,990 188,305 49,118 41,524 90,642 2.1.1 Public sector debt securities 122,146 4,464 126,610 11,183 1,239 12,422 2.1.2 Share certificates - - - - - - 2.1.3 Derivative financial assets held for trading 43,169 18,526 61,695 37,935 40,285 78,220 2.1.4 Other marketable securities - - - - - - 2.2 Financial assets classified at fair value through profit and loss - - - - - - 2.2.1 Public sector debt securities - - - - - - 2.2.2 Share certificates - - - - - - 2.2.3 Loans - - - - - - 2.2.4 Other marketable securities - - - - - - III. BANKS (3) 57,807 345,794 403,601 24,673 487,626 512,299 IV. MONEY MARKET PLACEMENTS 610,110 84,807 694,917 700,292 56,394 756,686 4.1 Interbank money market placements 610,110 84,807 694,917 700,292 56,394 756,686 4.2 Istanbul Stock Exchange money market placements - - - - - - 4.3 Receivables from reverse repurchase agreements - - - - - - V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (4) 1,597,385 62,327 1,659,712 1,067,250 128,198 1,195,448 5.1 Share certificates 9 2,583 2,592 9 1,554 1,563 5.2 Public sector debt securities 1,597,376 59,744 1,657,120 1,067,241 126,644 1,193,885 5.3 Other marketable securities - - - - - - VI. LOANS AND RECEIVABLES (5) 7,003,244 1,987,471 8,990,715 6,372,198 2,178,336 8,550,534 6.1 Loans and receivables 6,815,092 1,987,471 8,802,563 6,276,765 2,178,336 8,455,101 6.1.1 Loans to Risk Group of the Bank 22,005 31,260 53,265 9,361 978 10,339 6.1.2 Public sector debt securities - - - - - - 6.1.3 Other 6,793,087 1,956,211 8,749,298 6,267,404 2,177,358 8,444,762 6.2 Non-performing loans 427,991 - 427,991 201,525 - 201,525 6.3 Specific provisions (-) (239,839) - (239,839) (106,092) - (106,092) VII. FACTORING RECEIVABLES - - - - - - VIII. HELD TO MATURITY INVESTMENTS (Net) (6) 880,803 - 880,803 797,771 - 797,771 8.1 Public sector debt securities 880,803 - 880,803 797,771 - 797,771 8.2 Other marketable securities - - - - - - IX. INVESTMENTS IN ASSOCIATES (Net) (7) 2,001 - 2,001 - - - 9.1 Accounted for under equity method - - - - - - 9.2 Unconsolidated associates 2,001 - 2,001 - - - 9.2.1 Financial investments 2,000 - 2,000 - - - 9.2.2 Non-financial investments 1 - 1 - - - X. INVESTMENTS IN SUBSIDIARIES (Net) (8) 92,667 61,254 153,921 92,667 61,254 153,921 10.1 Unconsolidated financial subsidiaries 92,667 61,254 153,921 92,667 61,254 153,921 10.2 Unconsolidated non-financial subsidiaries - - - - - - XI. ENTITIES UNDER COMMON CONTROL (JOINT VENT.) (Net) (9) - - - - - - 11.1 Consolidated under equity method - - - - - - 11.2 Unconsolidated - - - - - - 11.2.1 Financial subsidiaries - - - - - - 11.2.2 Non-financial subsidiaries - - - - - - XII. FINANCE LEASE RECEIVABLES (Net) (10) - - - - - - 12.1 Finance lease receivables - - - - - - 12.2 Operating lease receivables - - - - - - 12.3 Other - - - - - - 12.4 Unearned income (-) - - - - - - XIII. DERIVATIVE FINANCIAL ASSETS FOR HEDGING PURPOSES (11) 30,976 354 31,330 54,210 2,214 56,424 13.1 Fair value hedge 30,976 354 31,330 54,210 2,214 56,424 13.2 Cash flow hedge - - - - - - 13.3 Hedge of net investment risks in foreign operations - - - - - - XIV. TANGIBLE ASSETS (Net) (12) 154,984 - 154,984 167,123 - 167,123 XV. INTANGIBLE ASSETS (Net) (13) 10,910 - 10,910 9,857 - 9,857 15.1 Goodwill - - - - - - 15.2 Other 10,910 - 10,910 9,857 - 9,857 XVI. INVESTMENT PROPERTIES (Net) (14) - - - - - - XVII. TAX ASSET (15) 7,869 - 7,869 23,683 - 23,683 17.1 Current tax asset - - - 10,710 - 10,710 17.2 Deferred tax asset 7,869 - 7,869 12,973 - 12,973 XVIII. ASSETS HELD FOR SALE AND DISCONTINUED

OPERATIONS (Net) (16) - - - - - -

18.1 Held for sale - - - - - - 18.2 Discontinued operations - - - - - - XIX. OTHER ASSETS (17) 340,853 31,935 372,788 268,207 53,963 322,170

TOTAL ASSETS

11,299,288 3,764,272 15,063,560 10,163,119 4,572,936 14,736,055

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

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

5

I. BALANCE SHEET – LIABILITIES AND EQUITY (STATEMENT OF FINANCIAL POSITION) Audited Audited Current Period Prior Period 31.12.2009 31.12.2008 Note Ref. TRY FC Total TRY FC Total

I. DEPOSITS (1) 5,867,274 3,554,361 9,421,635 5,571,990 3,699,757 9,271,747 1.1 Deposits from Risk Group of the Bank 142,353 286,136 428,489 246,379 238,169 484,548 1.2 Other 5,724,921 3,268,225 8,993,146 5,325,611 3,461,588 8,787,199 II.

DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING

(2) 30,123 21,746 51,869 98,047 79,104 177,151

III. FUNDS BORROWED (3) 787,994 861,621 1,649,615 1,692,963 751,640 2,444,603 IV. MONEY MARKET BALANCES 1,071,971 - 1,071,971 201,744 - 201,744 4.1 Interbank money market takings - - - - - - 4.2 Istanbul Stock Exchange money market takings - - - - - - 4.3 Funds provided under repurchase agreements 1,071,971 - 1,071,971 201,744 - 201,744 V. MARKETABLE SECURITIES ISSUED (Net) - - - - - - 5.1 Bills - - - - - - 5.2 Asset backed securities - - - - - - 5.3 Bonds - - - - - - VI. FUNDS - - - - - - 6.1 Borrower funds - - - - - - 6.2 Other - - - - - - VII. SUNDRY CREDITORS 244,767 12,633 257,400 238,765 4,639 243,404 VIII. OTHER LIABILITIES (4) 237,606 388 237,994 223,896 3,726 227,622 IX. FACTORING PAYABLES - - - - - - X. FINANCE LEASE PAYABLES (5) - 30 30 - 117 117 10.1 Finance lease payables - 42 42 - 141 141 10.2 Operating lease payables - - - - - - 10.3 Other - - - - - - 10.4 Deferred finance lease expenses (-) - (12) (12) - (24) (24) XI.

DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING PURPOSES

(6) 73,493 - 73,493 67,611 - 67,611

11.1 Fair value hedge 73,493 - 73,493 67,611 - 67,611 11.2 Cash flow hedge - - - - - - 11.3 Hedge of net investment in foreign operations - - - - - - XII. PROVISIONS (7) 119,850 12,222 132,072 118,207 17,771 135,978 12.1 General loan loss provisions 62,406 12,222 74,628 56,927 17,771 74,698 12.2 Restructuring provisions - - - - - - 12.3 Reserve for employee benefits 17,556 - 17,556 13,133 - 13,133 12.4 Insurance technical reserves (Net) - - - - - - 12.5 Other provisions 39,888 - 39,888 48,147 - 48,147 XIII. TAX LIABILITY (8) 34,555 - 34,555 47,404 - 47,404 13.1 Current tax liability 34,555 - 34,555 47,404 - 47,404 13.2 Deferred tax liability - - - - - - XIV. PAYABLES RELATED TO ASSETS HELD FOR SALE AND

DISCONTINUED OPERATIONS (9) - - - - - -

14.1 Held for sale - - - - - - 14.2 Discontinued operations - - - - - - XV. SUBORDINATED LOANS (10) - 483,474 483,474 - 495,055 495,055 XVI. SHAREHOLDERS' EQUITY (11) 1,644,728 4,724 1,649,452 1,426,011 (2,392) 1,423,619 16.1 Paid-in capital 1,100,000 - 1,100,000 1,100,000 - 1,100,000 16.2 Supplementary capital 19,908 4,724 24,632 11,358 (2,392) 8,966 16.2.1 Share premium 2,158 - 2,158 2,158 - 2,158 16.2.2 Share cancellation profits - - - - - - 16.2.3 Marketable securities value increase fund 16,824 4,724 21,548 8,274 (2,392) 5,882 16.2.4 Tangible assets revaluation differences - - - - - - 16.2.5 Intangible assets revaluation differences - - - - - - 16.2.6 Investment property revaluation differences - - - - - - 16.2.7 Bonus shares obtained from associates, subsidiaries and jointly

controlled entities (Joint Vent.) - - - - - -

16.2.8 Hedging funds (Effective portion) - - - - - - 16.2.9 Accumulated valuation differences from assets held for sale and from

discontinued operations - - - - - -

16.2.10 Other capital reserves 926 - 926 926 - 926 16.3 Profit reserves 314,653 - 314,653 150,455 - 150,455 16.3.1 Legal reserves 34,959 - 34,959 26,750 - 26,750 16.3.2 Status reserves - - - - - - 16.3.3 Extraordinary reserves 279,694 - 279,694 123,705 - 123,705 16.3.4 Other profit reserves - - - - - - 16.4 Profit or loss 210,167 - 210,167 164,198 - 164,198 16.4.1 Prior years’ income/ (losses) - - - - - - 16.4.2 Current year income/ (loss) 210,167 - 210,167 164,198 - 164,198 16.5 Minority shares (12) - - - - - - TOTAL LIABILITIES AND EQUITY 10,112,361 4,951,199 15,063,560 9,686,638 5,049,417 14,736,055


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ STATEMENTS OF OFF-BALANCE SHEET CONTINGENCIES AND COMMITMENTS AS OF DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

6

II. STATEMENT OF OFF-BALANCE SHEET CONTINGENCIES AND COMMITMENTS

Audited

Current Period 31.12.2009

Audited Prior Period 31.12.2008

Note Ref.

TRY FC TOTAL TRY FC TOTAL

A. OFF BALANCE SHEET CONTINGENCIES AND COMMITMENTS (I+II+III)

7,443,468 6,990,647 14,434,115 5,977,960 7,473,375 13,451,335

I. GUARANTEES (1), (3) 1,532,701 1,895,919 3,428,620 1,348,770 1,968,620 3,317,390 1.1 Letters of guarantee 1,415,128 1,263,267 2,678,395 1,262,496 1,255,178 2,517,674 1.1.1 Guarantees subject to State Tender Law 78,334 24,009 102,343 60,852 23,317 84,169 1.1.2 Guarantees given for foreign trade operations 134,913 19,444 154,357 126,643 53,026 179,669 1.1.3 Other letters of guarantee 1,201,881 1,219,814 2,421,695 1,075,001 1,178,835 2,253,836 1.2 Bank loans 171 39,034 39,205 - 51,320 51,320 1.2.1 Import letter of acceptance 171 36,594 36,765 - 47,272 47,272 1.2.2 Other bank acceptances - 2,440 2,440 - 4,048 4,048 1.3 Letters of credit 339 503,069 503,408 238 530,725 530,963 1.3.1 Documentary letters of credit 339 408,795 409,134 238 438,537 438,775 1.3.2 Other letters of credit - 94,274 94,274 - 92,188 92,188 1.4 Prefinancing given as guarantee - - - - - - 1.5 Endorsements - - - - - - 1.5.1 Endorsements to the Central Bank of Turkey - - - - - - 1.5.2 Other endorsements - - - - - - 1.6 Securities issue purchase guarantees - - - - - - 1.7 Factoring guarantees - - - - - - 1.8 Other guarantees 116,803 68,573 185,376 85,517 99,511 185,028 1.9 Other collaterals 260 21,976 22,236 519 31,886 32,405 II. COMMITMENTS (1), (3) 3,077,874 636,396 3,714,270 2,178,550 186,014 2,364,564 2.1 Irrevocable commitments 3,077,874 636,396 3,714,270 2,178,550 186,014 2,364,564 2.1.1 Forward asset purchase commitments 108,571 235,667 344,238 - 182,115 182,115 2.1.2 Forward deposit purchase and sales commitments - 16,814 16,814 - - - 2.1.3 Share capital commitment to associates and subsidiaries 2,000 - 2,000 - - - 2.1.4 Loan granting commitments 996,619 - 996,619 843,376 - 843,376 2.1.5 Securities underwriting commitments - - - - - - 2.1.6 Commitments for reserve deposit requirements 346,683 380,104 726,787 - - - 2.1.7 Payment commitment for checks 650,733 - 650,733 560,682 - 560,682 2.1.8 Tax and fund liabilities from export commitments 14,914 - 14,914 12,449 - 12,449 2.1.9 Commitments for credit card expenditure limits 956,344 - 956,344 759,651 - 759,651 2.1.10 Commitments for promotions related with credit cards and banking

activities 1,899 - 1,899 2,281 - 2,281

2.1.11 Receivables from short sale commitments - - - - - - 2.1.12 Payables for short sale commitments - - - - - - 2.1.13 Other irrevocable commitments 111 3,811 3,922 111 3,899 4,010 2.2 Revocable commitments - - - - - - 2.2.1 Revocable loan granting commitments - - - - - - 2.2.2 Other revocable commitments - - - - - -III. DERIVATIVE FINANCIAL INSTRUMENTS (2) 2,832,893 4,458,332 7,291,225 2,450,640 5,318,741 7,769,381 3.1 Derivative financial instruments for hedging purposes 469,988 291,511 761,499 582,448 420,017 1,002,465 3.1.1 Fair value hedge 469,988 291,511 761,499 582,448 420,017 1,002,465 3.1.2 Cash flow hedge - - - - - -3.1.3 Hedge of net investment in foreign operations - - - - - -3.2 Held for trading transactions 2,362,905 4,166,821 6,529,726 1,868,192 4,898,724 6,766,916 3.2.1 Forward foreign currency buy/sell transactions 539,048 1,048,584 1,587,632 485,927 2,249,719 2,735,646 3.2.1.1 Forward foreign currency transactions-buy 355,035 452,209 807,244 261,915 1,104,139 1,366,054 3.2.1.2 Forward foreign currency transactions-sell 184,013 596,375 780,388 224,012 1,145,580 1,369,592 3.2.2 Swap transactions related to f.c. and interest rates 861,205 1,268,459 2,129,664 1,041,335 1,847,903 2,889,238 3.2.2.1 Foreign currency swap-buy 151,511 765,023 916,534 889,289 484,233 1,373,522 3.2.2.2 Foreign currency swap-sell 509,694 400,436 910,130 152,046 1,261,594 1,413,640 3.2.2.3 Interest rate swaps-buy 100,000 51,500 151,500 - 51,038 51,038 3.2.2.4 Interest rate swaps-sell 100,000 51,500 151,500 - 51,038 51,038 3.2.3 Foreign currency, interest rate and securities options 962,652 1,366,605 2,329,257 340,930 347,988 688,918 3.2.3.1 Foreign currency options-buy 440,201 702,193 1,142,394 162,923 182,845 345,768 3.2.3.2 Foreign currency options-sell 485,796 664,412 1,150,208 178,007 165,143 343,150 3.2.3.3 Interest rate options-buy 36,655 - 36,655 - - -3.2.3.4 Interest rate options-sell - - - - - -3.2.3.5 Securities options-buy - - - - - -3.2.3.6 Securities options-sell - - - - - -3.2.4 Foreign currency futures - 483,173 483,173 - 453,114 453,114 3.2.4.1 Foreign currency futures-buy - 234,791 234,791 - 208,133 208,133 3.2.4.2 Foreign currency futures-sell - 248,382 248,382 - 244,981 244,9813.2.5 Interest rate futures - - - - - -3.2.5.1 Interest rate futures-buy - - - - - -3.2.5.2 Interest rate futures-sell - - - - - -3.2.6 Other - - - - - -B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 136,718,654 7,443,354 144,162,008 86,475,964 7,640,250 94,116,214 IV. ITEMS HELD IN CUSTODY 118,904,375 482,176 119,386,551 71,876,949 582,489 72,459,438 4.1 Assets under management - - - - - - 4.2 Investment securities held in custody 116,004,825 110,097 116,114,922 68,836,870 120,664 68,957,534 4.3 Checks received for collection 2,754,141 229,619 2,983,760 2,901,234 287,854 3,189,088 4.4 Commercial notes received for collection 145,063 84,934 229,997 138,746 112,307 251,053 4.5 Other assets received for collection 247 57,526 57,773 - 61,664 61,664 4.6 Assets received for public offering - - - - - - 4.7 Other items under custody 99 - 99 99 - 99 4.8 Custodians - - - - - - V. PLEDGED ITEMS 17,788,575 6,957,362 24,745,937 14,578,043 7,056,852 21,634,895 5.1 Marketable securities 266,577 8,351 274,928 273,479 12,963 286,442 5.2 Guarantee notes 8,833,394 5,403,205 14,236,599 7,430,760 5,491,782 12,922,542 5.3 Commodity 7,515 104,472 111,987 8,466 126,818 135,284 5.4 Warranty - - - - - - 5.5 Properties 7,457,561 1,077,294 8,534,855 5,615,167 1,048,994 6,664,161 5.6 Other pledged items 1,223,528 364,040 1,587,568 1,250,171 376,295 1,626,466 5.7 Pledged items-depository - - - - - - VI. ACCEPTED INDEPENDENT GUARANTEES AND

WARRANTIES 25,704 3,816 29,520 20,972 909 21,881

TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) 144,162,122 14,434,001 158,596,123 92,453,924 15,113,625 107,567,549


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

7

III. STATEMENT OF INCOME


Audited Current Period

01.01-31.12.2009

Audited Prior Period

01.01-31.12.2008

Note Ref.

Total

Total I. INTEREST INCOME (1) 1,634,755 2,001,718 1.1 Interest on loans 1,268,164 1,476,932 1.2 Interest received from reserve deposits 27,364 44,924 1.3 Interest received from banks 12,970 41,016 1.4 Interest received from money market placements 26,869 86,832 1.5 Interest received from marketable securities portfolio 289,644 301,243 1.5.1 Held-for-trading financial assets 11,913 27,786 1.5.2 Financial assets at fair value through profit and loss - - 1.5.3 Available-for-sale financial assets 161,630 239,206 1.5.4 Investments held-to-maturity 116,101 34,251 1.6 Finance lease Income - - 1.7 Other interest income 9,744 50,771 II. INTEREST EXPENSE (2) 833,875 1,226,392 2.1 Interest on deposits 594,338 880,924 2.2 Interest on funds borrowed 174,134 244,533 2.3 Interest on money market borrowings 44,249 93,589 2.4 Interest on securities issued - - 2.5 Other interest expense 21,154 7,346 III. NET INTEREST INCOME/EXPENSE (I - II) 800,880 775,326 IV. NET FEES AND COMMISSIONS INCOME/EXPENSE 238,930 191,528 4.1 Fees and commissions received 359,344 300,207 4.1.1 Non-cash loans 37,969 36,759 4.1.2 Other 321,375 263,448 4.2 Fees and commissions paid 120,414 108,679 4.2.1 Non-cash loans 2,100 981 4.2.2 Other 118,314 107,698 V. DIVIDEND INCOME (3) 11,973 19,248 VI. NET TRADING INCOME (4) 50,162 (42,222) 6.1 Securities trading gains/ (losses) 60,973 (26,902) 6.2 Gains/ (losses) from derivative financial instruments (183,624) (19,958) 6.3 Foreign exchange gains/ (losses) 172,813 4,638 VII. OTHER OPERATING INCOME (5) 32,348 83,323 VIII. NET OPERATING INCOME (III+IV+V+VI+VII) 1,134,293 1,027,203 IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) (6) 176,421 128,924 X. OTHER OPERATING EXPENSES (-) (7) 701,035 701,015 XI. NET OPERATING INCOME/(LOSS) (VIII-IX-X) 256,837 197,264 XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - - XIII. GAIN / (LOSS) ON EQUITY METHOD - - XIV. GAIN / (LOSS) ON NET MONETARY POSITION - - XV. PROFIT/(LOSS) FROM CONTINUED OPERATIONS BEFORE TAXES

(XI+…+XIV) (8) 256,837 197,264

XVI. TAX PROVISION FOR CONTINUED OPERATIONS (±) (9) (46,670) (33,066) 16.1 Current income tax (charge)/benefit (45,083) (2,637) 16.2 Deferred tax (charge)/benefit (1,587) (30,429) XVII. NET PROFIT/(LOSS) FROM CONTINUED OPERATIONS (XV±XVI) (10) 210,167 164,198 XVIII. INCOME ON DISCONTINUED OPERATIONS - - 18.1 Income on assets held for sale - - 18.2 Income on sale of associates, subsidiaries and entities under common control

(Joint vent.) - -

18.3 Income on other discontinued operations - - XIX. LOSS FROM DISCONTINUED OPERATIONS (-) - - 19.1 Loss from assets held for sale - - 19.2 Loss on sale of associates, subsidiaries and jointly controlled entities (Joint vent.) - - 19.3 Loss from other discontinued operations - - XX. PROFIT / (LOSS) ON DISCONTINUED OPERATIONS BEFORE TAXES

(XVIII-XIX) (8) - -

XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) (9) - - 21.1 Current income tax (charge)/benefit - - 21.2 Deferred tax (charge)/benefit - - XXII. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) (10) - - XXIII. NET PROFIT/LOSS (XVII+XXII) (11) 210,167 164,198 23.1 Group’s profit/loss 210,167 164,198 23.2 Minority shares - - Earnings per share 0.1911 0.1942

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ STATEMENTS OF PROFIT LOSS ACCOUNTED FOR UNDER EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

8

IV. STATEMENT OF PROFIT AND LOSS ACCOUNTED FOR UNDER EQUITY


01.01-31.12.2009


01.01-31.12.2008 I. Additions to marketable securities revaluation differences for available for

sale financial assets 74,783 (2,820)

II. Tangible assets revaluation differences - - III. Intangible assets revaluation differences - - IV. Foreign exchange differences for foreign currency transactions - - V. Profit/Loss from derivative financial instruments for cash flow hedge purposes

(Effective portion of fair value differences) - -

VI. Profit/Loss from derivative financial instruments for hedge of net investment in foreign operations (Effective portion of fair value differences)

- -

VII. The effect of correction of errors and changes in accounting policies - - VIII. Other profit loss items accounted for under equity due to TAS - - IX. Deferred tax of valuation differences (4,106) (727) X. Total Net Profit/Loss accounted for under equity (I+II+…+IX) 70,677 (3,547) XI. Profit/Loss (55,011) 7,215 1.1 Change in fair value of marketable securities (Transfer to Profit/Loss) (55,011) 7,215 1.2 Reclassification and transfer of derivatives accounted for cash flow hedge purposes

to Income Statement - -

1.3 Transfer of hedge of net investments in foreign operations to Income Statement - - 1.4 Other - - XII. Total Profit/Loss accounted for the period (X±XI) 15,666 3,668


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 31, 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

9

V. STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Audited

Note Ref

Paid-in Capital

Effect of inflation

Accounting on Capital and Other Capital Reserves

Share premium

Share certificate

cancellation profits

Legal Reserves

StatutoryReserves

Extraordinary Reserves

Other Reserves

Current Period

Net Income/ (Loss)

Prior

Period Net

Income/ (Loss)

MarketableSecurities

Value Increase

Fund

Tangible and

Intangible Assets

Revaluation Differences

Bonus shares obtained

from Associates

Hedging Funds

Acc. val. diff. from assets held for sale and from disc.

op.

Equity Attributable to the Parent

Minority Shares

Total Equity

Prior Period – 01.01.-31.12.2008 I Beginning Balance – 31.12.2007 755,000 926 1,736 - 20,235 - (66) - - 130,286 2,214 - - - - 910,331 - 910,331 II. Corrections according to TAS 8 - - - - - - - - - - - - - - - - - - 2.1 The effect of correction of errors - - - - - - - - - - - - - - - - - - 2.2 The effects of changes in accounting policy - - - - - - - - - - - - - - - - - - III. New Balance (I+II) 755,000 926 1,736 - 20,235 - (66) - - 130,286 2,214 - - - - 910,331 - 910,331 Changes in period - - - - - - - - - - - - - - - - - - IV. Increase/Decrease related to merger - - - - - - - - - - - - - - - - - - V. Marketable securities valuation differences - - - - - - - - - - 3,668 - - - - 3,668 - 3,668 VI. Hedging Funds (Effective Portion) - - - - - - - - - - - - - - - - - - 6.1 Cash-flow hedge - - - - - - - - - - - - - - - - - - 6.2 Hedge of net investment in foreign operations - - - - - - - - - - - - - - - - - - VII. Tangible assets revaluation differences - - - - - - - - - - - - - - - - - - VIII. Intangible assets revaluation differences - - - - - - - - - - - - - - - - - - IX. Bonus shares obtained from associates,

subsidiaries and entities under common control (Joint vent.)

- - - - - - - - - - - - - - - - - - X. Foreign exchange differences - - - - - - - - - - - - - - - - - - XI. The disposal of assets - - - - - - - - - - - - - - - - - - XII. The reclassification of assets - - - - - - - - - - - - - - - - - - XIII. The effect of change in associates’ equity - - - - - - - - - - - - - - - - - - XIV. Capital increase 345,000 - - - - - - - - - - - - - - 345,000 - 345,000 14.1 Cash 345,000 - - - - - - - - - - - - - - 345,000 - 345,000 14.2 Internal sources - - - - - - - - - - - - - - - - - - XV. Share premium - - 422 - - - - - - - - - - - - 422 - 422 XVI. Share cancellation profits - - - - - - - - - - - - - - - - - - XVII. Inflation adjustment to paid-in capital - - - - - - - - - - - - - - - - - - XVIII. Other - - - - - - - - - - - - - - - - - - XIX. Period net income/(loss) - - - - - - - - 164,198 - - - - - - 164,198 - 164,198 XX. Profit distribution - - - - 6,515 - 123,771 - - (130,286) - - - - - - - - 20.1 Dividends distributed - - - - - - - - - - - - - - - - - - 20.2 Transfers to reserves - - - - 6,515 - 123,771 - - (130,286) - - - - - - - - 20.3 Other - - - - - - - - - - - - - - - - - - Closing Balance 31.12.2008

(III+IV+V+VI+VII+VIII+IX+X+XI+XII+XIII+XIV+XV+XVI+XVII+XVIII+XIX+XX) 1,100,000 926 2,158 - 26,750 - 123,705 - 164,198 - 5,882 - - - - 1,423,619 - 1,423,619


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 31, 2009 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

10

V. STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Audited

Note Ref

Paid-inCapital

Effect of inflation

Accounting on Capital and Other Capital Reserves

Share premium

Share

certificate cancellation

profits Legal

ReservesStatutoryReserves

ExtraordinaryReserves

Other Reserves

Current Period

Net Income/

(Loss)

Prior Period

Net Income/

(Loss)

MarketableSecurities

Value Increase

Fund

Tangible and Intangible

Assets Revaluation Differences

Bonus shares obtained

from Associates

Hedging Funds

Acc. val.

diff. from assets held for sale and assets from

disc. op.

Equity Attributable to the Parent

Minority Shares

Total Equity

Current Period – 01.01-31.12.2009 I Prior period balance – 31.12.2008 1,100,000 926 2,158 - 26,750 - 123,705 - - 164,198 5,882 - - - - 1,423,619 - 1,423,619 Changes in period - - - - - - - - - - - - - - - - - - II. Increase/Decrease related to merger - - - - - - - - - - - - - - - - - - III. Marketable securities valuation differences - - - - - - - - - - 15,666 - - - - 15,666 - 15,666 IV. Hedging Funds (Effective Portion) - - - - - - - - - - - - - - - - - - 4.1 Cash-flow hedge - - - - - - - - - - - - - - - - - - 4.2 Hedge of net investment in foreign operations - - - - - - - - - - - - - - - - - - V. Tangible assets revaluation differences - - - - - - - - - - - - - - - - - - VI. Intangible assets revaluation differences - - - - - - - - - - - - - - - - - - VII. Bonus shares obtained from associates,


- - - - - - - - - - - - - - - - - - VIII. Foreign exchange differences - - - - - - - - - - - - - - - - - - IX. The disposal of assets - - - - - - - - - - - - - - - - - - X. The reclassification of assets - - - - - - - - - - - - - - - - - - XI. The effect of change in associates’ equity - - - - - - - - - - - - - - - - - - XII. Capital increase - - - - - - - - - - - - - - - - - - 12.1 Cash - - - - - - - - - - - - - - - - - - 12.2 Internal sources - - - - - - - - - - - - - - - - - - XIII. Share premium - - - - - - - - - - - - - - - - - - XIV. Share cancellation profits - - - - - - - - - - - - - - - - - - XV. Inflation adjustment to paid-in capital - - - - - - - - - - - - - - - - - - XVI. Other - - - - - - - - - - - - - - - - - - XVII. Period net income/(loss) - - - - - - - - 210,167 - - - - - - 210,167 - 210,167 XVIII. Profit distribution - - - - 8,209 - 155,989 - - (164,198) - - - - - - - - 18.1 Dividends distributed - - - - - - - - - - - - - - - - - - 18.2 Transfers to reserves - - - - 8,209 - 155,989 - - (164,198) - - - - - - - - 18.3 Other - - - - - - - - - - - - - - - - - - Closing Balance 31.12.2009

(I+II+III+IV+V+VI+VII+VIII+IX+X+XI+XII+XIII+XIV+XV+XVI+XVII+XVIII) 1,100,000 926 2,158 - 34,959 - 279,694 - 210,167 - 21,548 - - - - 1,649,452 - 1,649,452


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

11

VI. STATEMENT OF CASH FLOWS Audited Audited Current Period Prior Period Note Ref. 01.01-31.12.2009 01.01-31.12.2008A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating profit before changes in operating assets and liabilities 452,431 567,530 1.1.1 Interest received 1,785,773 1,686,5141.1.2 Interest paid (1,057,912) (1,178,831)1.1.3 Dividend received 11,973 19,2481.1.4 Fees and commissions received 359,344 300,2071.1.5 Other income 296,268 801,8051.1.6 Collections from previously written off loans 142,576 137,9621.1.7 Payments to personnel and service suppliers (341,878) (350,471)1.1.8 Taxes paid (42,538) (22,142)1.1.9 Others (1) (701,175) (826,762) 1.2 Changes in operating assets and liabilities (602,752) 795,172 1.2.1 Net (increase) decrease in financial assets held for trading (113,289) 183,7241.2.2 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 (6,846) (153)1.2.4 Net (increase) decrease in loans (774,949) (1,530,258)1.2.5 Net (increase) decrease in other assets (8,083) (62,979)1.2.6 Net increase (decrease) in bank deposits 756,444 (898,425)1.2.7 Net increase (decrease) in other deposits 297,876 2,350,7811.2.8 Net increase (decrease) in funds borrowed (729,848) 788,0941.2.9 Net increase (decrease) in matured payables - -1.2.10 Net increase (decrease) in other liabilities (1) (24,057) (35,612) I. Net cash provided from banking operations (150,321) 1,362,702 B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash provided from investing activities (533,859) (1,174,467) 2.1 Cash paid for purchase of entities under common control, associates and subsidiaries (2,001) -2.2 Cash obtained from sale of entities under common control, associates and subsidiaries - -2.3 Fixed assets purchases (18,684) (66,544)2.4 Fixed assets sales 7,455 5,4622.5 Cash paid for purchase of financial assets available for sale (2,943,961) (1,153,156)2.6 Cash obtained from sale of financial assets available for sale 2,533,676 48,4742.7 Cash paid for purchase of investment securities (103,360) -2.8 Cash obtained from sale of investment securities - -2.9 Others (1) (6,984) (8,703) C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net cash provided from financing activities (4,409) 332,439 3.1 Cash obtained from funds borrowed and securities issued - -3.2 Cash used for repayment of funds borrowed and securities issued (4,310) -3.3 Capital increase - 345,4223.4 Dividends paid - -3.5 Payments for finance leases (99) (12,983)3.6 Other (1) - - IV. Effect of change in foreign exchange rate on cash and cash equivalents (1) (36,272) 428,402 V. Net increase / (decrease) in cash and cash equivalents (724,861) 949,076 VI. Cash and cash equivalents at beginning of the period 3,061,796 2,112,720 VII. Cash and cash equivalents at end of the period 2,336,935 3,061,796


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ PROFIT DISTRIBUTION TABLES FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

12

VII. PROFIT DISTRIBUTION TABLE (*)Audited Audited Current Period Prior Period 31.12.2009 31.12.2008I. DISTRIBUTION OF CURRENT YEAR INCOME 1.1 CURRENT YEAR INCOME 256,837 197,2641.2 TAXES AND DUTIES PAYABLE (-) 46,670 33,0661.2.1 Corporate tax (Income tax) 46,670 33,0661.2.2 Income witholding tax - -1.2.3 Other taxes and duties - - A. NET INCOME FOR THE YEAR (1.1-1.2) 210,167 164,198 1.3 PRIOR YEARS’ LOSSES (-) - -1.4 FIRST LEGAL RESERVES (-) - 8,2091.5 OTHER STATUTORY RESERVES (-) - - B. NET INCOME AVAILABLE FOR DISTRIBUTION [(A-(1.3+1.4+1.5)] - 155,989 1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) - -1.6.1 To owners of ordinary shares - -1.6.2 To owners of preferred shares - -1.6.3 To owners of preferred shares (preemptive rights) - -1.6.4 To profit sharing bonds - -1.6.5 To holders of profit and loss sharing certificates - -1.7 DIVIDENDS TO PERSONNEL (-) - -1.8 DIVIDENDS 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 shares - -1.9.3 To owners of preferred shares (preemptive rights) - -1.9.4 To profit sharing bonds - -1.9.5 To holders of profit and loss sharing certificates - -1.10 SECOND LEGAL RESERVES (-) - -1.11 STATUTORY RESERVES (-) - -1.12 EXTRAORDINARY RESERVES - 186,4181.13 OTHER RESERVES - (30,429)1.14 SPECIAL FUNDS - - II. DISTRIBUTION OF 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 shares - -2.3.3 To owners of preferred shares (preemptive rights) - -2.3.4 To profit sharing bonds - -2.3.5 To holders of profit and loss sharing certificates - -2.4 DIVIDENDS TO PERSONNEL (-) - -2.5 DIVIDENDS TO BOARD OF DIRECTORS (-) III. EARNINGS PER SHARE 3.1 TO OWNERS OF ORDINARY SHARES - 0.153.2 TO OWNERS OF ORDINARY SHARES ( % ) - 14.933.3 TO OWNERS OF PREFERRED SHARES - -3.4 TO OWNERS OF PREFERRED SHARES ( % ) - - IV. DIVIDEND PER SHARE - - 4.1 TO OWNERS OF ORDINARY SHARES - -4.2 TO OWNERS OF ORDINARY SHARES ( % ) - -4.3 TO OWNERS OF PREFERRED SHARES - -4.4 TO OWNERS OF PREFERRED SHARES ( % ) - - (*) General Assembly has not been held yet as of the issue date of this report.


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ NOTES AND DISCLOSURES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2009 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

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SECTION THREE

ACCOUNTING PRINCIPLES I. Basis of Presentation The Bank prepares financial statements and notes according to Communiqué on Banks’ Accounting Practice and Maintaining Documents, Turkish Accounting Standards (TAS), Turkish Financial Reporting Standards (TFRS), other regulations, communiques and circulars in respect of accounting and financial reporting and pronouncements made by Banking Regulation and Supervision Agency (BRSA), Turkish Commercial Code and Tax Legislation. The prior period financial statements are presented in line with the principles of TAS No:1 “Fundamentals of Preparing and Presenting Financial Statements” published in the Official Gazette on January 16, 2005 with No: 25702, and in accordance with Turkish Accounting Standards and Turkish Financial Reporting Standards; and other principles, methods and explanations about accounting and financial reporting issued by the BRSA. Certain reclassifications have been made to the prior year financial statements in order to comply with the current year presentation whenever required. The reclassifications in the prior year financial statements are presented in the table below:

31.12.2008 ASSETS TRY FC

Loans and Receivables 45,757 - Loans to Risk Group of the Bank - - Public Sector Debt Securities - - Other 45,757 -

Derivative Financial Assets for Hedging Purposes (45,757) - Fair Value Hedge (45,757) -

INCOME STATEMENT 31.12.2008

Other Interest Income (Increase / (Decrease)) 35,927 Other Interest Expense (Increase / (Decrease)) (35,212) Gains from Derivative Financial Instruments (Increase / (Decrease)) (35,927) Losses from Derivative Financial Instruments (Increase / (Decrease)) 35,212

In accordance with Law No: 5083 “Monetary Unit of the Turkish Republic” (Law No: 5083), the name of the monetary and sub-currency unit of Turkish Republic is changed to the New Turkish Lira and the New Turkish Cent, respectively. However, in accordance with the additional resolution of the Council of Ministers in regards to the order on the removal of the phrase “New” in the New Turkish Lira and the New Turkish Cent and Its Application Principles, the phrase “New” used in the Turkish Republic’s monetary unit is removed both from New Turkish Lira and the New Turkish Cent as of January 1, 2009. II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions The Bank aims to develop and promote products for the financial needs of each customer such as SMEs, multinational companies and small individual investors in line with Banking Legislation. The primary objective of the Bank is to increase profitability with optimum liquidity and minimum risk while fulfilling customer needs. Thus, the Bank uses 35% on average of its resources on liquid assets, as well as intending for the highest possible yield with effective maturity management. The Bank aims at creating an optimum maturity risk and working with a positive margin between cost of resource and product yield in the process of asset and liability management.


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II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions (continued)

As a component of risk management strategy of the Bank, risk bearing short positions of currency, interest or price movements is performed only by the Treasury Asset-Liability Management using the limits defined by the Board of Directors. The Asset-Liability Committee manages the maturity mismatches while deciding the short, medium and long term strategies as well as adopting the principle of positive balance sheet margin as a pricing policy. The Board of Directors allows a purchase risk in treasury operations and individual limits are defined by the Board of Directors for each product. The Bank’s hedging activities for the currency risk due to foreign currency available-for-sale equity instruments are described under the Currency Risk section; and the Bank’s hedging activities from interest rate risk arising from fixed interest rate deposits and floating interest rate borrowings are described in detail under Interest Rate Risk section. The Bank’s Asset-Liability Committee approves the trading of various derivative instruments such as currency swaps, forwards and similar derivatives to hedge interest and currency exchange risks in line with the balance sheet structure. III. Explanations on Forward and Option Contracts and Derivative Instruments Fair values of foreign currency forward and swap transactions are determined by comparing the period end Bank foreign exchange rates with the contractual forward rates discounted to the balance sheet date with the prevailing current market rates. The resulting gain or loss is reflected to the income statement. In the assessment of fair value of interest rate swap instruments, interest amounts to be paid or to be received due to/from the fixed rate on the derivative contract are discounted to the balance sheet date with the current applicable fixed rate in the market that is prevailing between the balance sheet date and the interest payment date, whereas interest amounts to be paid or to be received due to/from the floating rate on the derivative contract are recalculated with the current applicable market rates that are prevailing between the balance sheet date and the interest payment date and are discounted to the balance sheet date again with the current applicable market rates that are prevailing between the balance sheet date and the interest payment date. The differences between the fixed rate interest amounts and floating rate interest amounts to be received/paid are recorded in the profit/loss accounts in the current period. The fair value of call and put option agreements are measured at the valuation date by using the current premium values of all option agreements, and the differences between the contractual premiums received/paid and the current premiums measured at valuation date are recognized in the statement of income. Futures transactions are valued on a daily basis by the primary market prices and related unrealized gains or losses are reflected in the income statement. The valuation of CDS transactions are based on discounting the differences between the existing and recalculated payment plans to the valuation date with current CDS interest rates. As of July 1, 2008, the Bank has adopted fair value hedge accounting in order to avoid the effects of interest rate changes in the market by matching a portion of its swap portfolio with its loan portfolio. While the Bank recognizes the fair value changes of the hedged items in the “other interest income” and “other interest expense” accounts, it recognizes the fair value changes of the hedging instruments related to the same period in the “gains/(losses) from derivative financial instruments” account. Additionally, the difference between the fair value and carrying value of the hedged items as of the application date of hedge accounting is amortized based on their maturities and recognized in “other interest income” and “other interest expense” accounts.


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IV. Explanations on Interest Income and Expenses Interest income and expense are recognized in the income statement for all interest bearing instruments whose cash inflows and outflows are known on an accrual basis using the effective interest method. In accordance with the related regulation, realized and unrealized interest accruals of the non-performing loans are reversed and interest income related to these loans are recorded as interest income only when collected. V. Explanations on Fees and Commission Income and Expenses Fees for various banking services are recorded as income when collected and prepaid commission income on cash and non-cash loans is recorded as income by using effective interest rate in the related period. Fees and commissions for funds borrowed paid to other financial institutions, as part of the transaction costs, are recorded as prepaid expenses by using effective interest rate and are expensed on the related periods. The dividend income is reflected to the financial statements when the profit distribution is realized by the associates and subsidiaries. VI. Explanations on Financial Assets Financial instruments comprise financial assets, financial liabilities and derivative instruments. Risks related to these activities form a significant part among total risks the Bank undertakes. Financial instruments affect liquidity, market, and credit risks on the Bank’s balance sheet in all respects. The Bank trades these instruments on behalf of its customers and on its own behalf. Basically, financial assets create the majority of the commercial activities of the Bank. These instruments expose, affect and diminish the liquidity, credit and interest risks in the financial statements. All regular way purchases and sales of financial assets are recognized on the settlement date i.e. the date that the asset is delivered to or by the Bank. Settlement date accounting requires (a) accounting of the asset when acquired by the institution and (b) disposing of the asset out of the balance sheet on the date settled by the institution; and accounting of gain or loss on disposal. In case of application of settlement date accounting, the institution accounts for the changes that occur in the fair value of the asset in the period between commercial transaction date and settlement date as in the assets that the institution settles. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place. Changes in fair value of assets to be received during the period between the trade date and the settlement date are accounted for in the same way as the acquired assets. The methods and assumptions used in determining the reasonable estimated values of all of the financial instruments are described below. Cash, Banks, and Other Financial Institutions

Cash and cash equivalents comprise cash on hand, demand deposits, and highly liquid short-term investments with maturity of 3 months or less following the purchase date, not bearing risk of significant value change, and that are readily convertible to a known amount of cash. The book value of these assets approximates their fair values.


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VI. Explanations on Financial Assets (continued) Financial Assets at Fair Value Through Profit and Loss Trading securities are securities which were either acquired for generating a profit from short-term fluctuations in price or dealer’s margin, or are securities included in a portfolio with a pattern of short-term profit taking. Trading securities are initially recognized at cost. Transaction costs of the related securities are included in the initial cost. The positive difference between the cost and fair value of such securities is accounted for as interest and income accrual, and the negative difference is accounted for as “Impairment Provision on Marketable Securities”. Held to Maturity Investments and Financial Assets Available for Sale

Investments held to maturity include securities with fixed or determinable payments and fixed maturity where there is an intention of holding till maturity and the relevant conditions for fulfillment of such intention, including the funding ability other than loans and receivables. Available for sale financial assets include all securities other than loans and receivables, securities held to maturity and securities held for trading. Marketable securities are initially recognized at cost including the transaction costs. After the initial recognition, available for sale securities are measured at fair value and the unrealized gain/loss originating from the difference between the amortized cost and the fair value is recorded in “Marketable Securities Valuation Differences” under the equity. Fair values of debt securities that are traded in an active market are determined based on quoted prices or current market prices. In the absence of prices formed in an active market, fair value of these securities is determined using the prices declared in the Official Gazette or other valuation methods stated in TAS. After initial recognition, held to maturity investments are measured at amortized cost by using effective interest rate less impairment losses, if any. The interests received from held to maturity investments are recorded as interest income. There are no financial assets that have been previously classified as held to maturity investments but cannot be currently classified as held to maturity for two years due to “tainting” rule. The Bank classifies its securities as referred to above at the acquisition date of related assets. The sale and purchase transactions of the held to maturity investments are recorded on a settlement date basis. Loans and Provisions for Impairment Loans are financial assets those generated by lending money and exclude those that are held with the intention of trading or selling in the near future. The Bank initially records loans and receivables at cost. In subsequent periods, in accordance with TAS, loans are measured at amortized cost using effective interest rate method. Provision is set for the loans that may be doubtful and the amount is charged in the current period income statement. The provisioning criteria for non-performing loans are determined by the Bank’s management for compensating the probable losses of the current loan portfolio, by evaluating the quality of loan portfolio, risk factors and considering the economical conditions, other facts and related regulations.


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VI. Explanations and Disclosures on Financial Assets (continued) Loans and Provisions for Impairment (continued) Specific reserves are provided for Group III, IV and V loans in accordance with the regulation on “Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” published in the Official Gazette No. 26333 dated November 1, 2006 which was amended with the communiqué published in the Official Gazette No. 27119 dated January 23, 2009. These provisions are reflected in the income statement under “Provision and Impairment Expenses - Special Provision Expense". The collections made regarding these loans are first deducted from the principal amount of the loan and the remaining collections are deducted from interest receivables. The collections made related to loans for which provision is made in the current period are reversed from the “Provision for Loans and Other Receivables” account in the income statement, and related interest income is credited to the “Interest Received from Non-performing Loans” account. Releases of loan loss provisions are reversed from the “Provision and Impairment Expenses - Special Provision Expense” account. In addition to specific loan loss provisions, within the framework of the regulation and principles referred to above; the Bank records general loan loss provision for loans and other receivables. The Bank calculated the general loan provision as 0.5% for cash loans and other receivables, and 0.1% for non-cash loans until November 1, 2006. Subsequent to the change in the regulation on “Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” published in the Official Gazette No. 26333 dated November 1, 2006; Bank started to book general loan loss provision of 1% for cash loans and other receivables; and 0.2% for non-cash loans on the increase in the cash and non-cash loan portfolio as compared to their October 31, 2006 balances whereas allocating 0.5% general loan loss provision for cash loans and other receivables, and 0.1% for non-cash loans for the balances as of October 31, 2006. Together with the change in the same regulation made on February 6, 2008, the Bank started to book general loan loss provision of 2% for cash loans under watch-list and 0.4% for non-cash loans under watch-list. VII. Explanations on Impairment of Financial Assets

At each balance sheet date, the Bank evaluates the carrying amounts of its financial asset or a group of financial assets to determine whether there is an objective indication that those assets have suffered an impairment loss or not. If any such indication exists, the Bank determines the related impairment. A financial asset or a financial asset group incurs impairment loss only if there is an objective indicator related to the occurrence (or nonoccurrence) of one or more than one event (“loss event”) after the first journalization of that asset; and such loss event (or events) causes, an impairment as a result of the effect on the reliable estimate of the expected future cash flows of the related financial asset and asset group. Irrespective of high probability the expected losses caused by the future events are not journalized. VIII. Explanations on Offsetting of Financial Assets and Liabilities Financial assets and liabilities are offset when the Bank has a legally enforceable right to set off, and the intention of collecting or paying the net amount of related assets and liabilities or the right to offset the assets and liabilities simultaneously.


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IX. Explanations on Sales and Repurchase Agreements and Lending of Securities The sales and purchase of government securities under repurchase agreements made with the customers are recorded in balance sheet accounts in accordance with the Uniform Chart of Accounts. Accordingly in the financial statements, the government bonds and treasury bills sold to customers under repurchase agreements are classified under securities held for trading, available for sale and held to maturity depending on the portfolio they are originally included in and are valued according to the valuation principles of the related portfolios. Funds obtained from repurchase agreements are classified as a separate sub-account under money markets borrowings account in the liabilities. These transactions are short-term and consist of domestic public sector debt securities. The income and expenses from these transactions are reflected to the “Interest Income on Marketable Securities” and “Interest Expense on Money Market Borrowings” accounts in the income statement. As of December 31, 2009, the Bank does not have any reverse repo transactions (2008 - None). As of December 31, 2009, the Bank does not have any marketable securities lending transaction (2008 - None). X. Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to

Those Assets Assets held for sale are those under a plan prepared by the management regarding the sale of the asset to be disposed (or else the group of assets), together with an active program for determination of buyers as well as for the completion of the plan. Also the asset (or else the group of assets) shall be actively marketed in conformity with its fair value. On the other hand, the sale is expected to be journalized as a completed sale within one year after the classification date; and the necessary transactions and procedures to complete the plan should demonstrate the fact that the possibility of making significant changes or canceling the plan is low. The Bank does not have any assets held for sale. A discontinued operation is a division of a bank that is either disposed or held for sale. Results of discontinued operations are included in the income statement separately. The Bank does not have any discontinued operations. XI. Explanations on Goodwill and Other Intangible Assets There is no goodwill regarding the investments in associates and subsidiaries.

Intangible assets are accounted for at restated cost until December 31, 2004 in accordance with inflation accounting and are amortized with straight-line method, after December 31, 2004 the acquisition cost and any other cost incurred so as to prepare the intangible asset ready for use less reserve for impairment, if any, and amortized on a straight-line method. The cost of assets subject to amortization is restated after deducting the exchange differences, capitalized financial expenses and revaluation increases, if any, from the cost of the assets.

The other intangible assets of the Bank comprise mainly software. The requirements of the Turkish Tax Procedural Code are taken into consideration in determining the useful lives and no other specific criteria are used. Useful lives of such assets acquired prior to 2004 are determined as 5 years and for the year 2004 and forthcoming years as 3 years. Software used are mainly developed within the Bank by the Bank’s personnel and the related expenses are not capitalized. Software is purchased only in emergency cases and for special projects. There are no anticipated changes in the accounting estimates about the amortization rate and amortization method and residual values that would have a significant impact in the current and future periods.


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XII. Explanations on Tangible Fixed Assets Properties are accounted for at their restated costs until December 31, 2004; after December 31, 2004 the acquisition cost and any other cost incurred so as to prepare the fixed asset ready for use are reflected, less reserve for impairment, if any. The straight-line method of depreciation is used for buildings and useful life is considered as 50 years. Leasehold improvements are depreciated over the lease period by straight-line method. Other tangible fixed assets are accounted for at their restated costs until December 31, 2004; afterwards the acquisition cost and any other cost incurred so as to prepare the fixed asset ready for use are reflected less reserve for impairment, if any, and depreciated on a straight-line method. Depreciation of assets held less than one year as of the balance sheet date is accounted for proportionately. The annual rates used, which approximate rates based on the estimated economic useful lives of the related assets, are as follows:

% Buildings 2 Motor vehicles 20 Furniture, fixtures and office equipment and others 3 – 50 Gain or loss resulting from disposals of the tangible fixed assets is reflected to the income statement as the difference between the net proceeds and net book value. Maintenance costs of tangible fixed assets are capitalized if they extend the economic useful life of related assets. Other maintenance costs are expensed. There are no pledges, mortgages or other restrictions on the tangible fixed assets. There are no purchase commitments related to the tangible fixed assets. There are no anticipated changes in the accounting estimates, which could have a significant impact in the current and future periods. The Bank employs independent appraisers in determining the current fair values of its real estates at year ends. As of December 31, 2009, there is a provision for impairment loss amounting to TRY 2,608 for real estates held for resale as per the appraisals performed at the year end (2008 – TRY 1,544). XIII. Explanations on Leasing Transactions Tangible fixed assets acquired by financial leases are accounted for in accordance with TAS No:17. In accordance with this standard, the leasing transactions, which consist of only foreign currency liabilities, are translated to Turkish Lira with the exchange rates prevailing at the transaction dates and they are recorded as an asset or a liability. The foreign currency liabilities are translated to Turkish Lira with the Bank’s period end exchange rates. The increases/decreases resulting from the differences in the foreign exchange rates are recorded as expense/income in the relevant period. The financing cost resulting from leasing is distributed through the lease period to form a fixed interest rate. In addition to the interest expense, depreciation expense is recorded for the depreciable leased assets in each period. The depreciation rate is determined in accordance with TAS No:16 "Accounting Standard for Tangible Fixed Assets" by taking the useful lives into account. Operating lease payments are recognized as expense in the income statement on a straight line basis over the lease term. The Bank does not have any leasing transactions as lessor.


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XIV. Explanations on Provisions and Contingent Liabilities Provisions are recognized when there is a present obligation, and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are determined by using the Bank’s best expectation of expenses in fulfilling the obligation, and discounted to present value if material. XV. Explanations on Liabilities Regarding Employee Benefits

Defined Benefit Plans

In accordance with existing social legislation in Turkey, the Bank is required to make lump-sum termination indemnities over a 30 day salary to each employee who has completed over one year of service, whose employment is terminated due to retirement or for reasons other than resignation or misconduct, and due to marriage, female employees terminating their employments within a year as of the date of marriage, or male employees terminating their employments due to their military service. The Bank is also required to make a payment for the period of notice calculated over each service year of the employee whose employment is terminated for reasons other than resignation or misconduct. Total benefit is calculated in accordance with TAS No:19 “Turkish Accounting Standard on Employee Benefits”.

Such benefit plans are unfunded since there is no funding requirement in Turkey. The cost of providing benefits to the employees for the services rendered by them under the defined benefit plan is determined by independent actuaries annually using the projected unit credit method. All actuarial gains and losses are recognized in the income statement. In calculating the related liability to be recorded in the financial statements for these defined benefit plans, the Bank uses independent actuaries and also makes assumptions and estimation relating to the discount rate to be used, turnover of employees, future change in salaries/limits, etc. These estimations are reviewed annually. The carrying value of provision for employee termination benefits as of December 31, 2009 is TRY 17,556 (2008 - TRY 13,133).

Defined Contribution Plans The Bank pays contributions to Social Security Funds on a mandatory basis. There are no other liabilities related to employee benefits to be provisioned.

XVI. Explanations on Taxation Corporate tax According to the Article 32 of the Corporate Tax Law No. 5520, announced in the Official Gazette dated June 21, 2006, the corporate tax rate is 20%. The tax legislation, requires advance tax of 20% to be calculated and paid based on earnings generated for each quarter. The amounts thus calculated and paid are offset from the final tax liability for the year. Tax returns are required to be filed between the first and twenty-fifth day of the fourth month following the balance sheet date and paid in one installment until the end of the related month. Tax provision related with items that are credited or charged directly to equity are charged or credited to equity. As at December 31, 2009 TRY 5,386 (2008 - TRY 1,280) deferred tax which is related with items recorded in the equity was net off under equity in “Marketable Securities Valuation Differences”. According to the Corporate Tax Law, tax losses can be carried forward for a maximum period of five years following the year in which the losses are incurred. Tax authorities can inspect tax returns and the related accounting records for a retrospective maximum period of five years.


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XVI. Explanations on Taxation (continued) Deferred Tax Liability / Asset The Bank calculates and reflects deferred tax asset or liability on timing differences which will result in taxable or deductible amounts in determining taxable profit of future periods. As of December 31, 2009 and December 31, 2008, in accordance with TAS No: 12 “Turkish Accounting Standard on Income Taxes” and the changes in the circular of BRSA numbered BDDK.DZM.2/13/1-a-3 dated December 8, 2004, the Bank calculated deferred tax asset on all deductible temporary differences except for general loan reserves, if sufficient taxable profit in future periods to recover such amounts is probable; as well as deferred tax liability on all taxable temporary differences. Deferred tax assets and liabilities are shown in the accompanying financial statements on a net basis. The net deferred tax asset is included in deferred tax asset and the net deferred tax liability is reflected under deferred tax liability on the balance sheet. The deferred tax charge of TRY 1,587 (2008 – TRY 30,429) is stated under the tax provision in the income statement. The deferred tax of TRY 5,386 (2008 - TRY 1,280) resulting from differences related to items that are debited or charged directly to equity is netted with these accounts. Furthermore, as per the above circular of BRSA, deferred tax benefit balance resulting from netting of deferred tax assets and liabilities should not be used in dividend distribution and capital increase. XVII. Additional Explanations on Borrowings The borrowing costs related to purchase, production, or construction of qualifying assets that require significant time to be prepared for use and sale are included in the cost of assets until the relevant assets become ready to be used or to be sold. Financial investment income obtained by temporary placement of undisbursed investment loan in financial investments is offset against borrowing costs qualified for capitalization. All other borrowing costs are recorded to the income statement in the period they are incurred. There are no debt securities issued by the Bank. The Bank has not issued convertible bonds. XVIII. Explanations on Issued Share Certificates None.

XIX. Explanations on Acceptances

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

XX. Explanations on Government Incentives

There are no government incentives utilized by the Bank.


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XXI. Explanations on Reporting According to Segmentation

The Bank mainly operates in retail and corporate banking segments.

Current Period Retail Corporate Treasury/

Head OfficeTotal

Net interest income 115,597 461,247 224,036 800,880Net fees and commissions income and other operating income 81,984 181,097 8,197 271,278Trading profit / loss 2,702 36,786 10,674 50,162Dividend income - - 11,973 11,973Impairment provision for loans and other receivables (-) 51,492 122,184 2,745 176,421Other operating expenses (-) 151,505 284,845 264,685 701,035 Profit before tax (2,714) 272,101 (12,550) 256,837Taxation - - (46,670) (46,670) Net profit for the period (2,714) 272,101 (59,220) 210,167

Current Period Retail Corporate Treasury/Head Office

Total

Segment assets 1,924,478 7,219,746 5,763,414 14,907,638Investments in associates and subsidiaries - - 155,922 155,922Total Assets 1,924,478 7,219,746 5,919,336 15,063,560 Segment liabilities 5,046,831 4,625,113 3,742,164 13,414,108Shareholders’ equity - - 1,649,452 1,649,452Total Liabilities 5,046,831 4,625,113 5,391,616 15,063,560


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XXI. Explanations on Reporting According to Segmentation (continued)

Prior Period Retail Corporate Treasury/

Head OfficeTotal

Net interest income 78,039 492,130 205,157 775,326 Net fees and commissions income and other operating income 76,516 170,724 27,611 274,851 Trading profit / loss (14,034) 19,264 (47,452) (42,222) Dividend income - - 19,248 19,248Impairment provision for loans and other receivables (-) 11,690 76,382 40,852 128,924Other operating expenses (-) 101,654 226,532 372,829 701,015 Profit before tax 27,177 379,204 (209,117) 197,264Taxation - - (33,066) (33,066) Net profit for the period 27,177 379,204 (242,183) 164,198

Prior Period Retail Corporate Treasury/Head Office

Total

Segment assets 1,003,523 6,602,587 6,976,024 14,582,134Investments in associates and subsidiaries - - 153,921 153,921Total Assets 1,003,523 6,602,587 7,129,945 14,736,055 Segment liabilities 5,259,887 4,086,278 3,966,271 13,312,436Shareholders’ equity - - 1,423,619 1,423,619Total Liabilities 5,259,887 4,086,278 5,389,890 14,736,055 XXII. Explanations on Other Matters BNP Paribas, holding 50% of TEB Mali Yatırımlar A.Ş. which holds the controlling shareholding of 84.25% of the Bank, has acquired 75% of the shares of Fortis Bank Belgium being the main shareholder of Fortis Bank A.Ş. with 94.11% shareholding, from the State of Belgium based on the resolutions taken at Fortis Holding General Assembly of Shareholders held in Belgium and Netherlands on April 28 and 29, respectively. The share transfer procedures were completed as of May 13, 2009. In this respect, as explained also in the Special Public Disclosure of the Bank dated June 22, 2009, the Bank has signed a confidentiality agreement with Fortis Bank A.Ş. in order to exchange information and assess the options for several corporate structures. These assessments take place solely for consultation purposes and do not intend to make decisions regarding any business transactions. On September 23, 2009, BRSA has announced its consent on indirect acquisition of 70.52% of total shares of Fortis Bank A.Ş. by BNP Paribas with the 18th article of Banking Act No: 5411.

Explanation for convenience translation to English The accounting principles used in the preparation of the accompanying financial statements differ from International Financial Reporting Standards (IFRS). The effects of the differences between these accounting principles and the accounting principles generally accepted in the countries in which the accompanying financial statements are to be used and IFRS have not been quantified in the financial statements.


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SECTION FOUR

INFORMATION ON FINANCIAL STRUCTURE I. Explanations Related to the Capital Adequacy Standard Ratio The method used for risk measurement in determining capital adequacy standard ratio; Capital Adequacy Standard Ratio is calculated in accordance with the Communiqué on "Measurement and Assessment of Capital Adequacy of Banks ", which was published on November 1, 2006 in the Official Gazette numbered 26333 and the Communiqué on "The Amendment in the Communiqué on Measurement and Assessment of Capital Adequacy of Banks" which was published on October 10, 2007 in the Official Gazette numbered 26669. The Bank’s unconsolidated capital adequacy ratio in accordance with the related Communiqué is 17.70% at December 31, 2009 (2008 - 17.65%). In the computation of capital adequacy standard ratio, information prepared in accordance with statutory accounting requirements are used. Additionally, the market risk amount is calculated in accordance with the Communiqué on the "Measurement and Assessment of Capital Adequacy of Banks" and is taken into consideration in the capital adequacy standard ratio calculation. The values deducted from the capital base in the shareholders’ equity computation are excluded while calculating risk-weighted assets, non-cash loans and contingent liabilities. Assets subject to depreciation and impairment among risk-weighted assets are included in the calculations over their net book values after deducting the relative depreciations and provisions. While calculating the basis of non-cash loans subject to credit risk, the net receivable amount from the counter parties net of provision amount set in accordance with the “Communiqué on Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” is multiplied by the loan conversion rates presented in the Article 5, the Clause 1 of the Communiqué on "Measurement and Assessment of Capital Adequacy of Banks", and calculated by applying the risk weights presented in the Capital Adequacy Analysis Form. Receivables from counter parties from derivative foreign currency and interest rate transactions are multiplied by the loan conversion rates presented in the Article 5, the Clause 2 of the Communiqué on "Measurement and Assessment of Capital Adequacy of Banks", and calculated by applying the risk weights presented in the Capital Adequacy Analysis Form.


25

I. Explanations Related to the Capital Adequacy Standard Ratio (continued) Information related to the capital adequacy ratio: Risk Weight 0% 10% 20% 50% 100% 150% 200%Risk Weighted Assets, Liabilities and Non-Cash Loans

Balance Sheet Items (Net) Cash 327,953 - 10 - - - -Matured Marketable Securities - - - - - - -Due From Central Bank of Turkey 922,102 - - - - - -Due From Domestic Banks, Foreign Banks, Branches and Head Office Abroad - - 367,842 - 34,255 - -Interbank Money Market Placements 694,776 - - - - - -Receivables From Reverse Repo Transactions - - - - - - -Reserve Deposits 257,208 - - - - - -Loans 269,010 - 80,898 2,480,064 5,757,920 18,322 192Non-performing loans (Net) - - - - 188,152 - -Financial Lease Receivables - - - - - - -Available-For-Sale Financial Assets 1,557,669 - - - 3,738 - -Held to Maturity Investments 852,801 - - - - - -Receivables From Installment Sales of Assets - - - - - - -Sundry Debtors - - 191,796 - 3,516 - -Interest and Income Accruals 130,878 - 1,503 30,586 169,886 - -Subsidiaries, Associates and Entities Under Common Control (Joint Vent.) (Net) - - - - 155,922 - -Tangible Assets - - - - 104,589 - -Other Assets 120,723 - - - 30,833 - -

Off-Balance Sheet Items Guarantees and Commitments 128,672 - 186,743 - 2,156,288 - -Derivative Financial Instruments - - 105,337 - 35,091 - -

Non Risk Weighted Accounts - - - - - - - Total Value at Risk 5,261,792 - 934,129 2,510,650 8,640,190 18,322 192Total Risk Weighted Assets - - 186,826 1,255,325 8,640,190 27,483 384 Summary information related to the capital adequacy ratio: Current

Period Prior

Period Total Risk Weighted Assets (TRWA) 10,110,208 9,710,054 Amount Subject to Market Risk (ASMR) 326,175 282,863 Amount Subject to Operational Risk (ASOR) (*) 1,323,618 896,330 Shareholders’ Equity 2,082,025 1,922,486 Shareholders’ Equity / (TRWA + ASMR + ASOR) *100 17.70 17.65 TRWA: Total Risk Weighted Assets ASMR: Amount Subject to Market Risk ASOR: Amount Subject to Operational Risk (*) Operational risk has been calculated by using the Basic Indicator Approach.


26

I. Explanations Related to the Capital Adequacy Standard Ratio (continued) Information related to the components of shareholders' equity:

Current Period Prior Period CORE CAPITAL Paid-in capital 1,100,000 1,100,000

Nominal capital 1,100,000 1,100,000 Capital commitments (-) - -

Paid-in capital indexation difference 926 926 Share premium 2,158 2,158 Cancellation profits - - Legal reserves 34,959 26,750

First legal reserve (Turkish Commercial Code 466/1) 29,423 21,214 Second legal reserve (Turkish Commercial Code 466/2) 5,536 5,536 Other legal reserve per special legislation - -

Statutory reserves - - Extraordinary reserves 279,694 123,705

Reserves allocated by the General Assembly 279,694 123,705 Retained earnings - - Accumulated losses - - Foreign currency share capital exchange difference - -

Indexation differences of legal, statutory and extraordinary reserves - - Profit 210,167 164,198

Current period net profit 210,167 164,198 Prior years’ profits - -

Provision for possible losses up to 25% of the Core Capital - - Gains on sale of associates and subsidiaries and properties to be added to capital - - Primary subordinated loans up to 15% of the Core Capital 148,730 152,180 Losses that cannot be covered by reserves (-) - -

Net current period loss - - Prior years’ losses - -

Leasehold improvements (-) 50,395 - Prepaid expenses (-) 29,475 31,139 Intangible assets (-) 10,910 9,857 Deferred tax asset exceeding 10% of the Core Capital (-) - - Excess amount in the Article 56, Clause 3 of the Banking Law (-) - - Total Core Capital 1,685,854 1,569,917 SUPPLEMENTARY CAPITAL - General loan loss reserves 74,628 74,698 45% of the revaluation reserve for movable fixed assets - - 45% of the of revaluation reserve for properties - - Bonus shares obtained from associates, subsidiaries and entities under common control - - Primary subordinated loans excluded in the calculation of the Core Capital - - Secondary subordinated loans 311,846 316,220 45% of Marketable securities value increase fund 9,697 2,647

Associates and subsidiaries - - Available for sale securities 9,697 2,647

Indexation differences for capital reserves, profit reserves and retained earnings (Except indexation differences for legal reserves, statutory reserves and extraordinary reserves) - - Total Supplementary Capital 396,171 393,565 TIER III CAPITAL - - CAPITAL 2,082,025 1,963,482 DEDUCTIONS FROM THE CAPITAL - 40,996 Shareholdings of banks and financial institutions (Domestic, Foreign) from which the Bank keeps ten percent or more of capitals - - Shareholdings of unconsolidated banks and financial institutions (Domestic, Foreign) from which the Bank keeps lessthan ten percent of capitals which exceed the ten percent of Bank’s Core and Supplementary Capital - - Secondary subordinated loans granted to Banks and Financial Institutions (Domestic, Foreign) or Qualified Shareholdersand placements that possess the nature of their Primary or Secondary Subordinated Debt - - Loans granted being non-compliant with the Articles 50 and 51 of the Banking Law - - The net book value of properties exceeding fifty percent of equity and properties held for sale and properties andcommodity to be disposed, acquired in exchange of loans and receivables according to the Article 57 of the Banking Lawand have not been disposed yet after 5 years after foreclosure - - Other - - Total Shareholders’ Equity 2,082,025 1,922,486


27

II. Explanations Related to Credit Risk

Credit risk is the risk that the Bank is a party in a contract whereby the counterparty fails to meet its obligation and cause to incur a financial loss. The credit allocation is performed on a debtor and a debtor group basis within the limits. In the credit allocation process, many financial and non-financial criteria are taken into account within the framework of the internal rating procedures of the Bank. These criteria include geographical and sector concentrations. The sector concentrations for loans are monitored closely. In accordance with the Bank’s loan policy, the rating of the companies, credit limits and guarantees are considered together, and credit risks incurred are monitored. The credit risks and limits related to treasury activities, the limits of the correspondent banks that are determined by their ratings and the control of the maximum acceptable risk level in relation to the equity of the Bank are monitored daily. Risk limits are determined in connection with these daily transactions, and risk concentration is monitored systematically concerning off-balance sheet operations. As prescribed in the Communiqué on “Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves”, the credit worthiness of the debtors of the loans and other receivables is monitored regularly. Most of the statement of accounts for the loans are derived from audited financial statements. The unaudited documents result from the timing differences between the loan allocation and the audit dates of the financial statements of the companies and subsequently the audited financial statements are obtained from the companies. Credit limits are determined according to the audited statement of accounts, and guarantee factors are developed in accordance with the decision of the credit committee considering the characteristics of the transactions and the financial structures of the companies. For the forward transactions and other similar positions of the Bank, operational limits are set by the Board of Directors and the transactions take place within these limits. The fulfillment of the benefits and proceeds related to forward transactions is realized at maturity. However, in order to minimize the risk, counter positions of existing risks are entered into in the market. Indemnified non-cash loans are subject to the same risk weight as outstanding loans matured but not yet paid. Since the volume of the restructured loans is not material to the financial statements, no additional follow up methodology is developed, except as stated in the regulations. Financial institutions abroad and country risks of the Bank are generally taken for the financial institutions and countries that are rated at investment level by international rating agencies and which do not have the risk of failing to meet minimum obligations. Therefore, the probable risks are not material when the financial structure of the Bank is concerned. The Bank does not have a material credit risk concentration as an active participant in the international banking market when the financial operations of the other financial institutions are concerned. As of December 31, 2009, the receivables of the Bank from its top 100 cash loan customers amount to TRY 1,712,095 (2008 – TRY 1,407,512) with a share of 19.45% in the total cash loans (2008 – 16.65%). As of December 31, 2009, the receivables of the Bank from its top 100 non-cash loan customers amount to TRY 1,250,742 (2008 – TRY 1,231,677) with a share of 36.48% in the total non-cash loans (2008 – 37.13%).


28

II. Explanations Related to Credit Risk (continued) As of December 31, 2009, the share of cash and non-cash receivables of the Bank from its top 100 customers in total balance sheet and off-balance sheet assets is 19.22%. (2008 – 17.33%). As of December 31, 2009, the general loan loss provision related with the credit risk taken by the Bank is TRY 74,628 (2008 – TRY 74,698). Credit risk by types of borrowers and geographical concentration:

Loans to Real Persons and Legal Entities

Loans to Banks and Other Financial

Institutions Marketable Securities* Other Loans**

Current Period

Prior Period

Current Period

Prior Period

Current Period

Prior Period

Current Period

Prior Period

Loans according to borrowers 8,796,343 8,512,115 194,372 38,419 2,667,125 2,005,641 559,523 666,220Private Sector 6,579,969 6,796,161 146,393 36,978 - - 94,668 92,667Public Sector 4,925 15,618 16,448 316 2,664,533 2,004,078 - -Banks - - 31,531 1,125 - - 464,855 573,553Retail 2,211,449 1,700,336 - - - - - -Share Certificates - - - - 2,592 1,563 - - Information according to geographical concentration 8,796,343 8,512,115 194,372 38,419 2,667,125 2,005,641 559,523 666,220Domestic 8,688,951 8,405,266 161,215 37,487 2,663,463 2,004,155 347,334 343,630

European Union Countries 43,980 17,208 - - - - 130,803 245,010 OECD Countries*** 117 148 - - - - 4,550 6,393

Off-shore Banking Regions 17,272 36,834 33,157 932 1,147 - 34,046 25,628

USA, Canada 5,163 68 - - 2,515 1,486 41,865 45,124 Other Countries 40,860 52,591 - - - - 925 435

Total 8,796,343 8,512,115 194,372 38,419 2,667,125 2,005,641 559,523 666,220 * Includes marketable securities designated at fair value through profit or loss, available-for-sale and held-to-maturity. ** Includes the on balance sheet transactions classified in the Uniform Chart of Accounts except the ones in the first three categories and the transactions defined as loan in the Article 48 of the Banking Act No: 5411. *** OECD countries other than European Union countries, USA and Canada.


29

II. Explanations Related to Credit Risk (continued) Information according to geographical concentration :

Assets LiabilitiesNon-Cash

LoansEquity

Investments

Net Income/

LossCurrent Period Domestic 14,516,783 10,962,520 3,383,435 - 210,167European Union Countries 154,280 946,527 12,286 - -OECD Countries (*) 6,795 54,923 8 - -Off-shore Banking Regions 98,555 731,322 10,913 - -USA, Canada 89,440 398,426 - - -Other Countries 41,785 320,390 21,978 - -Associates, Subsidiaries and Entities Under Common Control (Joint Vent.) - - - 155,922 -Unallocated Assets/Liabilities (**) - - - - -Total 14,907,638 13,414,108 3,428,620 155,922 210,167 Prior Period Domestic 14,048,768 9,955,237 3,257,507 - 164,198European Union Countries 336,301 2,070,691 11,844 - -OECD Countries (*) 8,989 57,882 - - -Off-shore Banking Regions 77,541 403,397 10,892 - -USA, Canada 57,509 456,325 - - -Other Countries 53,026 368,904 37,147 - -Associates, Subsidiaries and Entities Under Common Control (Joint Vent.) - - - 153,921 - Unallocated Assets/Liabilities (**) - - - - - Total 14,582,134 13,312,436 3,317,390 153,921 164,198 (*) OECD countries other than EU countries, USA and Canada. (**) Assets and liabilities that cannot be allocated on a coherent basis.


30

II. Explanations Related to Credit Risk (continued) Sector concentrations for cash loans :

Current Period Prior Period TRY (%) FC (%) TRY (%) FC (%)

Agricultural 238,642 3.50 70,988 3.57 213,242 3.40 77,185 3.54

Farming and Raising Livestock 203,062 2.98 53,943 2.70 178,035 2.84 54,344 2.49Forestry, Wood and Paper 24,598 0.36 15,566 0.78 23,897 0.38 16,568 0.76Fishery 10,982 0.16 1,479 0.09 11,310 0.18 6,273 0.29

Manufacturing 2,732,120 40.09 1,484,127 74.67 2,448,699 39.01 1,789,232 82.14Mining and Quarry 187,474 2.75 63,422 3.19 167,203 2.66 93,152 4.28Production 2,499,316 36.67 1,366,193 68.74 2,265,710 36.10 1,676,297 76.95Electricity, Gas and Water 45,330 0.67 54,512 2.74 15,786 0.25 19,783 0.91

Construction 328,971 4.83 65,363 3.29 375,065 5.98 38,098 1.75Services 1,140,757 16.74 319,928 16.10 1,153,734 18.38 230,472 10.58

Wholesale and Retail Trade 296,997 4.35 38,444 1.93 416,998 6.65 67,980 3.12Hotel, Tourism, Food and Beverage Services

89,020 1.31 66,573 3.35 89,833

1.43

40,390 1.85

Transportation and Communication

238,557 3.50 97,689 4.92 265,089

4.22

55,815 2.56

Financial Institutions 220,707 3.24 23,388 1.18 103,940 1.66 39,988 1.84Real Estate and Renting Services

114,309 1.68 76,786 3.86 109,954

1.75

12,656 0.58

Self-Employment Services 87,821 1.29 1,135 0.06 90,533 1.44 1,697 0.08Education Services 10,052 0.15 207 0.01 9,931 0.16 - -Health and Social Services 83,294 1.22 15,706 0.79 67,456 1.07 11,946 0.55

Other(*) 2,374,602 34.84 47,065 2.37 2,086,025 33.23 43,349 1.99 Total 6,815,092 100.00 1,987,471 100.00 6,276,765 100.00 2,178,336 100.00 (*) Accruals are included in other. The table below shows the maximum exposure to credit risk for the components of the financial statements: Current Period Prior Period Central Bank of Turkey 1,183,741 1,830,494 Due from banks 403,601 512,299 Other money markets 694,917 756,686 Trading financial assets 126,610 12,422 Derivative financial instruments 61,695 78,220 Derivative financial instruments for hedging purposes 31,330 56,424 Financial assets available-for-sale 1,659,712 1,195,448 Held-to-maturity investments 880,803 797,771 Loans 8,990,715 8,550,534 Total 14,033,124 13,790,298 Contingent liabilities 3,428,620 3,317,390 Commitments 3,714,270 2,364,564 Total 7,142,890 5,681,954 Total credit risk exposure 21,176,014 19,472,252


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II. Explanations Related to Credit Risk (continued) Credit quality per class of financial assets as of December 31, 2009 and December 31, 2008 is as follows:

Current Period

Neither past due norimpaired

Past due or individually impaired Total

Loans and advances to customers Corporate lending 3,902,439 182,744 4,085,183 Small business lending 2,282,276 358,587 2,640,863 Consumer lending 1,696,745 61,846 1,758,591 Credit cards 413,164 92,914 506,078 Other - - -

Total 8,294,624 696,091 8,990,715

Prior Period



Loans and advances to customers Corporate lending 3,788,900 153,209 3,942,109Small business lending 2,393,823 467,382 2,861,205Consumer lending 1,062,249 175,484 1,237,733Credit cards 408,244 101,243 509,487Other - - -

Total 7,653,216 897,318 8,550,534

Carrying amount per class of financial assets whose terms have been renegotiated: Current Period Prior PeriodLoans and advances to customers

Corporate lending 135,433 3,222 Small business lending - -Consumer lending - -Other - -

Total 135,433 3,222 Credit Rating System The credit risk is assessed through the internal rating system of the Bank, by classifying loans from highest grade to lowest grade according to the probability of default. As of December 31, 2009 consumer loans and small business loans are excluded from the internal rating system of the Bank. Additional scoring methodologies are applied for these loans. The risks that are subject to rating models can be allocated as follows:

Category Description of Category Share in the Total %

1st Category The borrower has a very strong financial structure 25.79 2nd Category The borrower has a good financial structure 22.40 3rd Category The borrower has an intermediate level of financial structure 45.69 4th Category The financial structure of the borrower has to be closely monitored in the

medium term 6.12

Total 100.00


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III. Explanations Related to Market Risk

The Bank has established market risk management operations and taken the necessary precautions in order to hedge market risk within its financial risk management purposes, in accordance with the Communiqué on “Measurement and Assessment of Capital Adequacy of Banks” issued on Official Gazette dated November 1, 2006 numbered 26333. The Board of Directors determines the limits for the basic risk that the Bank is exposed to. Those limits are revised periodically in line with the market forces and strategies of the Bank. Additionally, the Board of Directors has ensured that the risk management division and senior management has taken necessary precautions to describe, evaluate, control and manage risks faced by the Bank. Interest rate and exchange rate risks, arising from the volatility in the financial markets, of the financial positions taken by the Bank related to balance sheet and off-balance sheet accounts are measured, and in the computation of capital adequacy, the amount subject to VAR calculated by using the standard method (summarized below) is taken into consideration. Besides the standard method, VAR is calculated by using internal model as supported by scenario analysis and stress tests. VAR is calculated daily by three different methods which are historic simulation, Monte Carlo simulation and parametric method, and results are reported daily to the management. a) Information Related to Market Risk

Amount (I) Capital Requirement to be Employed For General Market Risk - Standard Method 19,321 (II) Capital Requirement to be Employed For Specific Risk - Standard Method 195 (III) Capital Requirement to be Employed For Currency Risk - Standard Method 6,569 (IV) Capital Requirement to be Employed For Commodity Risk – Standard Method - (V) Capital Requirement to be Employed For Settlement Risk - Standard Method - (VI) Total Capital Requirement to be Employed For Market Risk Resulting From Options - Standard Method 9 (VII) Total Capital Requirement to be Employed For Market Risk in Banks Using Risk Measurement Model - (VIII) Total Capital Requirement to be Employed For Market Risk (I+II+III+IV+V+VI) 26,094 (IX) Amount Subject to Market Risk (12,5 x VIII) or (12,5 x VII) 326,175 b) Average market risk table calculated at month ends during the period:

Current Period Prior Period Average Maximum Minimum Average Maximum Minimum

Interest Rate Risk 16,089 20,898 9,767 10,661 14,062 7,804 Common Stock Risk 243 311 210 186 186 186 Currency Risk 8,119 16,912 4,909 10,446 19,348 5,050 Commodity Risk - - - - - - Settlement Risk - - - - - - Option Risk 3,250 12,122 5 2,794 6,719 931

Total Value Subject to Risk 346,265 456,463 274,263 298,959 406,488 237,225 Other price risks The Bank is not subject to a significant share price risk due to share certificates.


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IV. Explanations Related to Operational Risk

a) Operational risk has been calculated using the Basic Indicator Approach. Market risk measurements are performed monthly.

b) The Bank does not use the Standard Approach. V. Explanations Related to Currency Risk Foreign currency risk indicates the probability of loss that banks are subject to due to the exchange rate changes in the market. While calculating the share capital requirement, all foreign currency assets, liabilities and forward transactions of the Bank are taken into consideration and value at risk is calculated by using the standard method. The Board of Directors sets limits for the positions, which are followed up daily. Any possible value changes in the foreign currency transactions in the Bank’s positions are also monitored. As an element of the Bank’s risk management strategies, foreign currency liabilities are hedged against exchange rate risk by derivative instruments. The Treasury Department of the Bank is responsible for the management of Turkish Lira or foreign currency price, liquidity and affordability risks that could occur in the domestic and international markets within the limits set by the Board of Directors. The monitoring of risk and risk related transactions occurring in the money markets is performed daily and reported to the Bank’s Asset-Liability Committee on a weekly basis. As of December 31, 2009, the Bank's net long position is TRY 18,435 (2008 - TRY 62,957 net long) resulting from short position on the balance sheet amounting to TRY 517,674 (2008 - TRY 480,641 long) and long position on the off-balance sheet amounting to TRY 536,109 (2008 - TRY 417,684 short). The announced current foreign exchange buying rates of the Bank at December 31, 2009 and the previous five working days in full TRY are as follows:

24.12.2009 25.12.2009 28.12.2009 29.12.2009 30.12.2009 31.12.2009USD 1.5070 1.5052 1.5065 1.5026 1.5057 1.4873CHF 1.4530 1.4508 1.4528 1.4557 1.4492 1.4411GBP 2.4097 2.4018 2.4068 2.4067 2.3892 2.4025JPY 1.6474 1.6471 1.6433 1.6360 1.6302 1.6075EURO 2.1680 2.1702 2.1686 2.1680 2.1603 2.1427 The simple arithmetic averages of the major current foreign exchange buying rates of the Bank for the thirty days before December 31, 2009 are as follows:

Monthly Average Foreign Exchange Rate

USD 1.4984CHF 1.4541GBP 2.4308JPY 1.6652EURO 2.1881


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V. Explanations Related to Currency Risk (continued) Information on the foreign currency risk of the Bank: Current Period EUR USD YEN OTHER TOTALAssets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased, Precious Metals) and Balances with the Central Bank of Turkey. 648,103 491,789 155 27,293 1,167,340

Banks 40,636 287,704 141 17,313 345,794Financial Assets at Fair Value Through Profit and Loss (*****) 2,174 2,736 - - 4,910Money Market Placements - 84,807 - - 84,807Available-For-Sale Financial Assets 22,957 39,370 - - 62,327Loans (**) 845,634 1,483,616 16,380 291,093 2,636,723Subsidiaries, Associates and Entities Under Common Control (Joint Vent.) 61,254 - - - 61,254Held-To-Maturity Investments - - - - -Derivative Financial Assets for Hedging Purposes - 354 - - 354Tangible Assets - - - - -Intangible Assets - - - - -Other Assets (***) 455 31,267 91 22 31,835

Total Assets 1,621,213 2,421,643 16,767 335,721 4,395,344Liabilities

Bank Deposits 37,908 44,428 87 23,782 106,205Foreign Currency Deposits (*) 1,292,267 1,992,557 12,768 150,564 3,448,156Money Market Borrowings - - - - -Funds Provided From Other Financial Institutions 759,861 576,909 - 8,325 1,345,095Marketable Securities Issued - - - - -Sundry Creditors 1,530 9,191 1,606 306 12,633Derivative Financial Liabilities for Hedging Purposes - - - - -

Other Liabilities (***) 618 272 - 39 929Total Liabilities 2,092,184 2,623,357 14,461 183,016 4,913,018Net Balance Sheet Position (470,971) (201,714) 2,306 152,705 (517,674)Net Off-Balance Sheet Position 503,108 200,149 (5,228) (161,920) 536,109

Financial Derivative Assets (****) 1,024,703 1,316,243 113,943 160,165 2,615,054Financial Derivative Liabilities (****) 521,595 1,116,094 119,171 322,085 2,078,945Non-Cash Loans (******) 709,903 1,138,496 3,353 44,167 1,895,919

Prior Period Total Assets 1,850,254 3,233,968 40,201 311,986 5,436,409Total Liabilities 1,825,664 2,987,721 4,507 137,876 4,955,768Net Balance Sheet Position 24,590 246,247 35,694 174,110 480,641Net Off-Balance Sheet Position 61,583 (271,000) (34,855) (173,412) (417,684)Financial Derivative Assets (****) 771,432 1,635,100 5,579 129,474 2,541,585Financial Derivative Liabilities (****) 709,849 1,906,100 40,434 302,886 2,959,269Non-Cash Loans (******) 743,980 1,174,936 4,922 44,782 1,968,620

(*) Precious metal accounts amounting to TRY 23,762 (2008 - TRY 14,791) are included in the foreign currency deposits. (**) Foreign currency indexed loans amounting to TRY 649,252 (2008 – TRY 902,732 ) are included in the loan portfolio. (***) TRY 100 (2008 – TRY 200) prepaid expenses are deducted from other assets, and TRY 21,235 (2008 – TRY 78,270) expense

accruals from derivative financial instruments, and TRY 12,222 (2008 – TRY 17,771) provision for general loan losses are deducted from other liabilities.

(****) Forward asset and marketable securities purchase-sale commitments of TRY 117,828 (2008 – TRY 91,180) are added to derivative financial assets and TRY 117,839 (2008 – TRY 90,933) has been added to derivative financial liabilities.

(*****) TRY 18,080 (2008 – TRY 39,059) income accruals from derivative financial instruments is deducted from Financial Assets at Fair Value Through Profit and Loss.

(******)There are no effects on the net off-balance sheet position.


35

V. Explanations Related to Currency Risk (continued) Foreign currency sensitivity: The Bank is mainly exposed to EUR and USD currency risks. The following table details the Bank’s sensitivity to a 10% increase and decrease in the TRY 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 short position and a decrease in the case of long position where the TRY strengthens against USD and EUR.

Change in currency rate in %

Effect on profit or loss

Effect on equity (*)

December 31, 2009

December 31, 2008

December 31, 2009

December 31, 2008

USD 10 increase (157) (2,475) 396 (80) USD 10 decrease 157 2,475 (396) 80 EUR 10 increase 3,214 8,617 77 (159) EUR 10 decrease (3,214) (8,617) (77) 159

(*) The effect on equity does not include the effect of changes in foreign exchange rate on the income statement. The Bank’s sensitivity to foreign currency rates have not changed significantly during the current period. The positions taken in line with market expectations can increase the foreign currency sensitivity from period to period.


36

VI. Explanations Related to Interest Rate Risk Interest rate risk shows the probability of loss related to the changes in interest rates depending on the Bank’s position, and it is managed by the Asset-Liability Committee. The interest rate sensitivity of assets, liabilities and off-balance sheet items related to this risk are measured by using the standard method and included in the market risk for capital adequacy. The priority of the risk management department is to protect from interest rate volatility. Duration, maturity and sensitivity analysis performed within this context are calculated by the risk management department and reported to the Asset-Liability Committee. Simulations on interest income are performed in connection with the forecasted economic indicators used in the budget of the Bank. The Bank management monitors the market interest rates on a daily basis and revises the interest rates of the Bank when necessary. Since the Bank does not allow maturity mismatches or imposes limits on mismatch, no significant interest rate risk exposure is expected. Information related to the interest rate sensitivity of assets, liabilities and off-balance sheet items (based on repricing dates): Up to 1

Month1-3

Months3-12

Months1-5

YearsOver

5 Years Non-interest

Bearing TotalCurrent Period Assets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased, Precious Metals) and Balances with the Central Bank of Turkey 989,645 - - - - 522,059 1,511,704Banks 237,172 7,845 10,582 - - 148,002 403,601Financial Assets at Fair Value Through Profit and Loss 2,669 1,952 70,618 55,733 2,232 55,101 188,305Money Market Placements 694,917 - - - - - 694,917Available-For-Sale Financial Assets 306,546 35,130 723,346 556,398 35,700 2,592 1,659,712 Loans(*) 3,917,118 428,266 1,498,471 2,439,707 519,001 188,152 8,990,715 Held-To-Maturity Investments - 734,782 44,434 101,587 - - 880,803Other Assets 70 - 231 3,579 19 729,904 733,803

Total Assets 6,148,137 1,207,975 2,347,682 3,157,004 556,952 1,645,810 15,063,560 Liabilities

Bank Deposits 64,525 - - - - 82,854 147,379 Other Deposits 5,977,852 1,194,838 111,955 69 - 1,989,542 9,274,256 Money Market Borrowings 1,071,971 - - - - - 1,071,971 Sundry Creditors - - - - - 257,400 257,400 Marketable Securities Issued - - - - - - -Funds Provided From Other Financial Institutions 922,020 123,847 756,812 5,910

324,500 - 2,133,089

Other Liabilities 6,939 3 4,020 50,825 16,461 2,101,217 2,179,465

Total Liabilities 8,043,307 1,318,688 872,787 56,804 340,961 4,431,013 15,063,560 Balance Sheet Long Position - - 1,474,895 3,100,200 215,991 - 4,791,086Balance Sheet Short Position (1,895,170) (110,713) - - - (2,785,203) (4,791,086)Off-Balance Sheet Long Position 59,492 - 89,238 500,473 43,132 - 692,335Off-Balance Sheet Short Position (46,040) - (80,505) (496,909) (46,780) - (670,234) Total Position (1,881,718) (110,713) 1,483,628 3,103,764 212,343 (2,785,203) 22,101 (*) Loans with floating interest rates amounting to TRY 2,311,525 are included in “Up to 1 Month” while mark to market differences

from hedged loans amounting to TRY 46,589 are included in “1-5 Years”.


37

VI. Explanations Related to Interest Rate Risk (continued) Information related to the interest rate sensitivity of assets, liabilities and off-balance sheet items (based on repricing dates) (continued): The other assets line in the non-interest bearing column consists of tangible assets amounting to TRY 154,984 intangible assets amounting to TRY 10,910, subsidiaries amounting to TRY 153,921, unconsolidated financial investments amounting to TRY 2,000 and unconsolidated non-financial investments amounting to TRY 1 while other liabilities line includes the shareholders’ equity of TRY 1,649,452. Average interest rates applied to monetary financial instruments: EURO

% USD

% YEN

% TRY

% Current Period Assets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased) And Balances With The Central Bank Of Turkey - - - 7.49 Banks 0.39 0.21 - 10.47 Financial Assets At Fair Value Through Profit And Loss 5.69 7.52 - 12.30 Money Market Placements 1.25 0.84 - 11.18 Available-For-Sale Financial Assets 5.27 6.57 - 13.17 Loans 5.67 5.60 4.71 19.69 Held-To-Maturity Investments - - - 13.93

Liabilities Bank Deposits 1.54 1.23 0.25 7.02 Other Deposits 2.90 2.84 0.30 10.29 Money Market Borrowings - - - 8.18 Sundry Creditors - - - - Marketable Securities Issued - - - - Funds Provided From Other Financial Institutions 4.38 4.45 - 13.56


38

VI. Explanations Related to Interest Rate Risk (continued) Information related to the interest rate sensitivity of assets, liabilities and off-balance sheet items (based on repricing dates) (continued): Up to 1

Month1-3

Months3-12

Months1-5

YearsOver


Bearing TotalPrior Period Assets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased, Precious Metals) and Balances with the Central Bank of Turkey. 1,400,326 - - - - 699,171 2,099,497Banks 246,701 1,021 3,372 - - 261,205 512,299Financial Assets at Fair Value Through Profit and Loss 36 757 10,885 1,609 362 76,993 90,642Money Market Placements 756,686 - - - - - 756,686Available-For-Sale Financial Assets 259,565 56,891 311,618 526,687 39,124 1,563 1,195,448Loans(*) 4,256,062 595,093 1,438,428 1,910,013 255,505 95,433 8,550,534Held-To-Maturity Investments - 623,972 - 173,799 - - 797,771Other Assets 3,163 5,993 1,131 46,086 51 676,754 733,178


Bank Deposits 206,239 379 2,122 - - 49,472 258,212Other Deposits 6,767,445 707,072 187,299 - - 1,351,719 9,013,535Money Market Borrowings 201,744 - - - - - 201,744Sundry Creditors - - - - - 243,404 243,404Marketable Securities Issued - - - - - - -Funds Provided From Other Financial Institutions 471,838 1,446,312 690,585 7,853

323,070 - 2,939,658

Other Liabilities 8,359 3,955 7,062 39,911 14,625 2,005,590 2,079,502

Total Liabilities 7,655,625 2,157,718 887,068 47,764 337,695 3,650,185 14,736,055 Balance Sheet Long Position - - 878,366 2,610,430 - - 3,488,796Balance Sheet Short Position (733,086) (873,991) - - (42,653) (1,839,066) (3,488,796)Off-Balance Sheet Long Position 45,654 45,654 108,055 403,649 44,132 - 647,144Off-Balance Sheet Short Position (43,013) (40,020) (113,057) (372,717) (46,780) - (615,587) Total Position (730,445) (868,357) 873,364 2,641,362 (45,301) (1,839,066) 31,557 (*) Loans with floating interest rates amounting to TRY 4,023,941 are included in “Up to 1 Month” while mark to market differences

from hedged loans amounting to TRY 45,757 are included in “1-5 Years”. The other assets line in the non-interest bearing column consists of tangible assets amounting to TRY 167,123; intangible assets amounting to TRY 9,857, subsidiaries amounting to TRY 153,921 and the other liabilities line includes the shareholders’ equity of TRY 1,423,619.


39

VI. Explanations Related to Interest Rate Risk (continued)

Average interest rates applied to monetary financial instruments

EURO %

USD %

YEN %

TRY %

Prior Period Assets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased) And Balances With The Central Bank Of Turkey 1.68 0.98 - 11.90 Banks 3.79 1.93 - 16.95 Financial Assets At Fair Value Through Profit And Loss 6.79 8.37 - 16.16 Money Market Placements - 3.38 - 16.14 Available-For-Sale Financial Assets 6.15 7.74 - 16.99 Loans 9.48 7.57 5.16 25.50 Held-To-Maturity Investments - - - 18.98

Liabilities Bank Deposits 4.15 2.97 - 14.69 Other Deposits 4.35 4.00 0.33 16.05 Money Market Borrowings - - - 15.05 Sundry Creditors - - - - Marketable Securities Issued - - - - Funds Provided From Other Financial Institutions 5.34 5.08 - 17.56

Interest rate sensitivity:

If interest rates had been increased by 0.5% in TRY and FC and all other variables were held constant, the Bank’s:

• Net profit of the Bank for the year would have changed by TRY 3,872 (2008 – TRY 6,743). The interest rate sensitivity the Bank is exposed to due to its balance sheet composition is calculated with the net interest income approach. The net interest income is calculated by using the original interest rates until maturity and using market interest curves until the remaining annualized period subject to analysis. This calculation is re-performed by altering the market interest curves based on rate changes accepted by management. The difference between the initial and re-performed calculation is assessed to be the interest sensitivity of the Bank.


40

VII. Explanations Related to Liquidity Risk Liquidity risk occurs when there is insufficient cash or cash inflows to meet the cash outflows completely and timely. Liquidity risk may also occur when the market penetration is not adequate, when the open positions cannot be closed quickly at suitable prices and sufficient amounts due to barriers and break-ups at the markets. The Bank’s policy is to establish an asset structure that can meet all kinds of liabilities by liquid sources at all times. In this context, liquidity problem has not been faced in any period. In order to maintain this, the Board of Directors of the Bank continuously determines standards for the liquidity ratios, and monitors them. According to the general policies of the Bank, the matching of the maturity and interest rate structure of assets, and liabilities is always established within the asset liability management strategies. A positive difference is tried to be established between the yields of TRY and foreign currency assets and liabilities on the balance sheet and their costs. According to this strategy, the Bank manages its maturity risk within the limits determined by Bank’s Board of Directors. When the funding and liquidity sources are considered, the Bank covers majority of its liquidity need from deposits, and in addition to this source, it makes use of pre-financing and syndication products to generate additional sources. Generally the Bank is in a lender position. The liquidity position is assessed and managed under a variety of scenarios, giving due consideration to stress factors relating to both the market in general and specifically to the Bank. The most important of these is to maintain limits on the ratio of net liquid assets to customer liabilities, set to reflect market conditions. The ratios realized during the year were as follows:

Current Period %

Prior Period %

Average during the period 29 31 Highest 39 42 Lowest 20 25


41

VII. Explanations Related to Liquidity Risk (continued) Presentation of assets and liabilities according to their remaining maturities: Current Period Demand

Up to 1 Month

1-3 Months

3-12Months

1-5 Years

Over 5 Years

Undistributed(*) Total

Assets Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased, Precious Metals) and Balances with the Central Bank of Turkey 522,059 989,645 - - - - - 1,511,704Banks 148,002 237,172 7,845 10,582 - - - 403,601Financial Assets at Fair Value Through Profit and Loss - 11,280 17,887 93,955 62,951 2,232 - 188,305Money Market Placements - 694,917 - - - - - 694,917Available-For-Sale Financial Assets - - 23,112 684,801 913,507 35,700 2,592 1,659,712Loans(**) - 3,917,118 428,266 1,498,471 2,439,707 519,001 188,152 8,990,715Held-To-Maturity Investments - - 450,212 222,390 208,201 - - 880,803Other Assets - 356,310 - 8,964 8,826 19 359,684 733,803

Total Assets 670,061 6,206,442 927,322 2,519,163 3,633,192 556,952 550,428 15,063,560 Liabilities

Bank Deposits 82,854 64,525 - - - - - 147,379Other Deposits 1,989,542 5,977,852 1,194,838 111,955 69 - - 9,274,256Funds Provided From Other Financial Institutions - 641,996 104,219 712,694 102,704 571,476 - 2,133,089Money Market Borrowings - 1,071,971 - - - - - 1,071,971Marketable Securities Issued - - - - - - - -Sundry Creditors 257,400 - - - - - - 257,400Other Liabilities - 303,679 6,932 12,862 54,359 20,109 1,781,524 2,179,465

Total Liabilities 2,329,796 8,060,023 1,305,989 837,511 157,132 591,585 1,781,524 15,063,560 Liquidity Gap (1,659,735) (1,853,581) (378,667) 1,681,652 3,476,060 (34,633) (1,231,096) - Prior Period Total Assets 960,376 6,961,140 620,957 1,725,728 3,694,019 314,121 459,714 14,736,055Total Liabilities 1,644,595 7,717,633 2,128,434 922,873 167,047 595,876 1,559,597 14,736,055Liquidity Gap (684,219) (756,493) (1,507,477) 802,855 3,526,972 (281,755) (1,099,883) - (*) The assets which are necessary to provide banking services and could not be liquidated in a short term, such as tangible assets,

investments in subsidiaries and associates, office supply inventory, prepaid expenses and non-performing loans, are classified as under undistributed.

(**) Loans with floating interest rates amounting to TRY 2,311,525 (2008: TRY 4,023,941) are included in “Up to 1 Month” while mark to market differences from hedged loans amounting to TRY 46,589 (2008: TRY 45,757) are included in “1-5 Years”.


42

VII. Explanations Related to Liquidity Risk (continued) Analysis of financial liabilities by remaining contractual maturities:

Demand Up to 1 Month

1-3 Months

3-12 Months

1-5 Years

Over 5 Years

Adjustments Total

As of December 31, 2009 Money market borrowings - 1,073,776 - - - - (1,805) 1,071,971 Other deposits 1,989,542 5,992,823 1,206,439 116,755 73 - (31,376) 9,274,256 Bank deposits 82,854 64,571 - - - - (46) 147,379 Funds provided from other financial institutions - 649,582 108,072 750,553 223,256 633,259 (231,633) 2,133,089 Total 2,072,396 7,780,752 1,314,511 867,308 223,329 633,259 (264,860) 12,626,695

As of December 31, 2008 Money market borrowings - 201,883 34 - - - (173) 201,744 Other deposits 1,351,719 6,807,850 718,736 203,620 - - (68,390) 9,013,535 Bank deposits 49,472 206,631 381 2,406 - - (678) 258,212 Funds provided from other financial institutions

- 182,004 1,452,052 730,758 273,020 686,968 (385,144) 2,939,658

Total 1,401,191 7,398,368 2,171,203 936,784 273,020 686,968 (454,385) 12,413,149

Analysis of contractual expiry by maturity of the Bank’s derivative financial instruments:

Up to 1 Month

1-3 Months

3-12 Months

1-5 Years

Over 5 Years

Total

As of December 31, 2009 Derivative financial instruments for hedging purposes

Fair value hedge 53,145 1,428 129,455 166,432 62,240 412,700 Held for trading transactions

Foreign exchange forward contracts 341,974 187,673 206,776 43,965 - 780,388 Currency swaps 553,175 89,324 110,916 213,511 - 966,926Interest rate swaps 117 6,634 5,771 34,064 - 46,586

Total 948,411 285,059 452,918 457,972 62,240 2,206,600


Fair value hedge 58,725 46,293 84,839 342,734 69,947 602,538 Held for trading transactions

Foreign exchange forward contracts 241,808 209,382 886,245 32,157 - 1,369,592 Currency swaps 972,421 15,026 209,363 57,490 - 1,254,300Interest rate swaps 200 373 1,024 910 - 2,507

Total 1,273,154 271,074 1,181,471 433,291 69,947 3,228,937


43

VIII. Explanations Related to Presentation of Financial Assets and Liabilities at Fair Value The table below shows the book value and the fair value of the financial assets and liabilities which are not disclosed at their fair value in the financial statements of the Bank. Current period investment securities are comprised of interest-bearing assets held-to-maturity and interest-bearing assets available-for-sale. The fair value of the held to maturity assets is determined by market prices or quoted market prices of other marketable securities which are subject to redemption with same characteristics in terms of interest, maturity and other similar conditions when market prices cannot be determined. The book value of demand deposits, money market placements with floating interest rate and overnight deposits represents their fair values due to their short-term nature. The estimated fair value of deposits and funds provided from other financial institutions with fixed interest rate is calculated by determining their cash flows discounted by the current interest rates used for other liabilities with similar characteristics and maturity structure. The fair value of loans is calculated by determining the cash flows discounted by the current interest rates used for receivables with similar characteristics and maturity structure. The book value of the sundry creditors reflect their fair values since they are short-term.

Book Value Fair Value Current Period Prior Period Current Period Prior PeriodFinancial Assets 12,629,748 11,812,738 12,485,942 11,996,616

Money Market Placements 694,917 756,686 694,917 756,686Banks 403,601 512,299 403,601 512,299Available-For-Sale Financial Assets 1,659,712 1,195,448 1,659,712 1,195,448Held-To-Maturity Investments 880,803 797,771 917,918 806,518Loans 8,990,715 8,550,534 8,809,794 8,725,665

Financial Liabilities 12,884,095 12,656,553 12,775,050 12,658,051Bank Deposits 147,379 258,212 147,380 258,229Other Deposits 9,274,256 9,013,535 9,165,210 9,015,016Funds Borrowed From Other Financial Institutions (*) 3,205,060 3,141,402 3,205,060 3,141,402Marketable Securities Issued - - - -Sundry Creditors 257,400 243,404 257,400 243,404

(*) Funds provided under repo transactions and interbank money market takings are included in funds borrowed from other financial

institutions. The methodologies and assumptions used to determine fair values for those financial instruments which are not already recorded at fair value in the financial statements:

i- For the fair value calculation of loans, the prevailing interest rates as of the balance sheet date were used.

ii- For the fair value calculation of deposits, the prevailing interest rates as of the balance sheet date were used.

iii- For the fair value calculation of the balances with banks, the prevailing interest rates as of the

balance sheet date were used.

iv- For the fair value calculation of held-to-maturity investments, quoted prices as of the balance sheet date were used.


44

VIII. Explanations Related to Presentation of Financial Assets and Liabilities by Fair Value (continued) The following table shows an analysis of financial instruments recorded at fair value, between those whose fair value is recorded on quoted market prices, those involving valuation techniques where all model inputs are observable in the market and, those where the valuation techniques involves the use of non observable inputs.

Current Period Quoted Valuation techniques –

market observableValuation techniques – non market observable

Fair value not available

Financial Assets

Money Market Placements - 694,917 - -Banks - 403,601 - -Available-for-sale financial assets 1,659,712 - - -Held-to-maturity investments 917,918 - - -Loans - 8,809,794 - -

Financial Liabilities Bank deposits - 147,380 - -Other deposits - 9,165,210 - -Funds borrowed from other financial institutions(*) - 3,205,060 - -Marketable securities issued - - - -Sundry creditors - 257,400 - -

Prior Period Quoted Valuation techniques –



Financial Assets

Money Market Placements - 756,686 - -Banks - 512,299 - -Available-for-sale financial assets 1,195,448 - - -Held-to-maturity investments 806,518 - - -Loans - 8,725,665 - -



institutions. IX. Explanations Related to Transactions Carried out on Behalf of Other Parties and

Fiduciary Assets The Bank performs buying transactions on behalf of customers, and gives custody, administration and advisory services. The Bank does not deal with fiduciary transactions.


45

SECTION FIVE

EXPLANATIONS AND DISCLOSURES ON UNCONSOLIDATED FINANCIAL STATEMENTS

I. Explanations and Disclosures Related to the Assets

1.a) Information on Cash and Balances with the Central Bank of Turkey:

Current Period Prior Period TRY FC TRY FC Cash in TRY/Foreign Currency 140,473 168,873 88,514 163,252 Balances with the Central Bank of Turkey 203,891 979,850 447,556 1,382,938 Other - 18,617 - 17,237 Total 344,364 1,167,340 536,070 1,563,427

b) Information related to the account of the Central Bank of Turkey:

Current Period Prior Period TRY FC TRY FC Unrestricted demand deposit (*) 203,891 251,831 447,556 284,864 Unrestricted time deposit - 728,019 - 1,098,074 Restricted time deposit - - - - Total 203,891 979,850 447,556 1,382,938

(*) TRY 728,019 foreign currency and TRY 198,419 domestic currency unrestricted deposit balance comprises of reserve deposits. Unrestricted TRY deposit balance includes average reserve deposit held in Central Bank. The interest rates applied for reserve deposits are 5.20% for TRY deposits and none for foreign currency deposits (2008 – TRY 12.00% and 0.15%-1.18% for foreign currency), respectively. 2. Information on financial assets at fair value through profit and loss (net):

a.1) Information on financial assets at fair value through profit and loss given as collateral or blocked: None (2008 – None).

a.2) Financial assets at fair value through profit and loss subject to repurchase agreements: None (2008-

None). Net book value of unrestricted financial assets at fair value through profit and loss is TRY 126,610 (2008 – TRY 12,422).


46

I. Explanations and Disclosures Related to the Assets (continued) 2. Information on financial assets at fair value through profit and loss (net): (continued)

a.3) Positive differences related to derivative financial assets held-for-trading:

Current Period Prior Period

TRY FC TRY FCForward Transactions 15,681 14,057 21,559 37,831 Swap Transactions 18,886 1,496 7,067 2,454 Futures Transactions - - - -Options 8,372 2,973 9,309 -Other 230 - - -Total 43,169 18,526 37,935 40,285

3.a) Information on banks : Current Period Prior Period TRY FC TRY FCBanks Domestic 29,559 223,107 4,405 246,558 Foreign 28,248 122,687 20,268 241,068 Branches and head office abroad - - - -Total 57,807 345,794 24,673 487,626

b) Information on foreign bank accounts: Unrestricted Amount Restricted Amount Current Period Prior Period Current Period Prior PeriodEuropean Union Countries 37,842 40,474 31,707 143,282USA and Canada 41,865 45,124 - -OECD Countries (*) 4,550 6,393 - -Off-shore banking regions 34,046 25,628 - -Other 925 435 - -Total 119,228 118,054 31,707 143,282 (*) OECD countries other than European Union countries, USA and Canada.


47

I. Explanations and Disclosures Related to the Assets (continued) 4. Information on financial assets available-for-sale:

a.1) Information on financial assets available-for-sale given as collateral or blocked:

Current Period Prior Period TRY FC TRY FC Share certificates - - - - Bond, Treasury bill and similar investment securities 124,605 40,373 179,500 112,103 Other - - - - Total 124,605 40,373 179,500 112,103

a.2) Financial assets available-for-sale subject to repurchase agreements:

Current Period Prior Period TRY FC TRY FC Government bonds 526,855 - - - Treasury bills - - - - Other public sector debt securities - - - - Bank bonds and bank guaranteed bonds - - - - Asset backed securities - - - - Other - - - - Total 526,855 - - -

Net book value of unrestricted financial assets available-for-sale is TRY 967,879 (2008 – TRY 903,845).

b) Information on financial assets available for sale portfolio: Current Period Prior PeriodDebt securities 1,657,700 1,198,261

Quoted on a stock exchange 1,492,612 906,658 Not quoted 165,088 291,603

Share certificates 2,592 1,563 Quoted on a stock exchange 2,515 1,486Not quoted 77 77

Impairment provision (-) (580) (4,376) Total 1,659,712 1,195,448 All unquoted available for sale equities are recorded at fair value except for the Bank’s investment of TRY 77 which is recorded at cost since its fair value cannot be reliably estimated (2008 – TRY 77). 5. Information on loans:

a) Information on all types of loans and advances given to shareholders and employees of the Bank: Current Period Prior Period

Cash Loans

Non-Cash Loans

Cash Loans

Non-Cash Loans

Direct loans granted to shareholders 1,603 46,004 953 14,059 Corporate shareholders 1,603 46,004 953 14,059 Real person shareholders - - - -

Indirect loans granted to shareholders - - - -Loans granted to employees 22,842 - 6,887 -Total 24,445 46,004 7,840 14,059


48

I. Explanations and Disclosures Related to the Assets (continued) 5. Information on loans: (continued)

b) Information on the first and second group loans and other receivables including restructured or rescheduled loans:

Standard Loans and Other Receivables

Loans and Other Receivables Under Close Monitoring (*)

Cash Loans

Loans and OtherReceivables

Restructured or Rescheduled

Loans and Other Receivables


Non-specialized loans 8,346,188 - 320,942 135,433Discount notes 76,963 - 1,088 -Export loans 909,706 - 29,903 -Import loans - - - -Loans given to financial sector 160,502 - 713 -Foreign loans 110,838 - 35 -Consumer loans(**) 1,691,883 - 61,748 4,529 Credit cards 447,011 - 25,663 8,183 Precious metal loans 246,498 - 14,361 -Other 4,702,787 - 187,431 122,721

Specialized loans - - - -Other receivables - - - -Total 8,346,188 - 320,942 135,433 (*) The total principal amount of the loans under close monitoring in accordance with the requirements of the regulation on “Methods and

Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” changed on February 6, 2008.

(**) TRY 46,589 of income accrual resulting from the fair value difference of the hedged item loans is included in the loan balance.

c) Loans and other receivables according to their maturity structure:


Loans and Other Receivables Under Close Monitoring

Cash Loans





Short-term loans and other receivables 5,042,784 - 192,660 21,728

Non-specialized loans 5,042,784 - 192,660 21,728 Specialized loans - - - -Other receivables - - - -

Medium and Long-term loans and other receivables 3,303,404 - 128,282 113,705


Total 8,346,188 - 320,942 135,433


49

I. Explanations and Disclosures Related to the Assets (continued)

5. Information on loans: (continued)

d) Information on consumer loans, individual credit cards, personnel loans and credit cards given to

personnel:

Short Term

Medium and Long Term Total

Consumer Loans-TRY 91,664 1,523,986 1,615,650 Housing Loans 2,072 892,310 894,382 Vehicle Loans 5,336 114,969 120,305 General Purpose Loans 84,244 516,707 600,951 Other 12 - 12

Consumer Loans –Indexed to FC 379 76,858 77,237 Housing Loans - 45,152 45,152 Vehicle Loans 245 22,710 22,955 General Purpose Loans 44 3,626 3,670 Other 90 5,370 5,460

Consumer Loans-FC - - -Housing Loans - - -Vehicle Loans - - -General Purpose Loans - - -Other - - -

Individual Credit Cards-TRY 426,379 - 426,379 With Installments 147,281 - 147,281 Without Installments 279,098 - 279,098

Individual Credit Cards-FC 1,852 - 1,852 With Installments - - -Without Installments 1,852 - 1,852

Personnel Loans-TRY 3,969 8,875 12,844 Housing Loans - - -Vehicle Loans - 12 12 General Purpose Loans 3,934 8,863 12,797 Other 35 - 35

Personnel Loans- Indexed to FC - - -Housing Loans - - -Vehicle Loans - - -General Purpose Loans - - -Other - - -

Personnel Loans-FC - - -Housing Loans - - -Vehicle Loans - - -General Purpose Loans - - -Other - - -

Personnel Credit Cards-TRY 9,122 - 9,122 With Installments 4,015 - 4,015 Without Installments 5,107 - 5,107

Personnel Credit Cards-FC 50 - 50 With Installments - - -Without Installments 50 - 50

Overdraft Accounts-TRY(Real Persons) (*) 52,421 - 52,421 Overdraft Accounts-FC(Real Persons) 8 - 8 Total 585,844 1,609,719 2,195,563 (*) Overdraft Accounts include personnel loans amounting to TRY 826.


50

I. Explanations and Disclosures Related to the Assets (continued)

5. Information on loans: (continued) e) Information on commercial loans with installments and corporate credit cards:

Short Term


Commercial loans with installment facility-TRY 92,549 760,907 853,456 Business Loans 81 43,861 43,942 Vehicle Loans 11,440 159,972 171,412 General Purpose Loans 80,948 524,515 605,463 Other 80 32,559 32,639

Commercial loans with installment facility - Indexed to FC 14,834 161,561 176,395 Business Loans - 4,182 4,182 Vehicle Loans 2,280 61,406 63,686 General Purpose Loans 12,313 90,437 102,750 Other 241 5,536 5,777

Commercial loans with installment facility –FC - - -Business Loans - - -Vehicle Loans - - -General Purpose Loans - - -Other - - -

Corporate Credit Cards-TRY 42,255 - 42,255With Installments 7,919 - 7,919 Without Installments 34,336 - 34,336

Corporate Credit Cards-FC 1,199 - 1,199 With Installments - - -Without Installments 1,199 - 1,199

Overdraft Accounts-TRY(Legal Entities) 102,847 - 102,847 Overdraft Accounts-FC(Legal Entities) 4,500 - 4,500 Total 258,184 922,468 1,180,652 f) Loans according to borrowers:

Current Period Prior PeriodPublic 21,373 15,934 Private 8,781,190 8,439,167 Total 8,802,563 8,455,101 g) Domestic and foreign loans:

Current Period Prior PeriodDomestic loans 8,666,490 8,397,035 Foreign loans 136,073 58,066 Total 8,802,563 8,455,101 h) Loans granted to subsidiaries and associates:

Current Period Prior PeriodDirect loans granted to subsidiaries and associates 500 6,240Indirect loans granted to subsidiaries and associates - -Total 500 6,240 i) Specific provisions provided against loans: Current Period Prior PeriodSpecific provisions

Loans and receivables with limited collectability 12,288 7,166 Loans and receivables with doubtful collectability 46,145 19,936 Uncollectible loans and receivables 181,406 78,990

Total 239,839 106,092


51


j) Information on non-performing loans: (Net):

j.1) Information on loans and other receivables included in non-performing loans which are

restructured or rescheduled: None (2008 – None).

j.2) The movement of non-performing loans:

III. Group IV. Group V. Group Loans and

receivables with limited

collectability

Loans and receivables

with doubtful collectability

Uncollectible

loans and receivables

Prior period end balance 40,705 45,887 114,933

Additions (+) 386,659 1,509 9,879 Transfers from other categories of non-performing loans (+) - 300,253 194,065 Transfers to other categories of non-performing loans (-) 300,253 194,065 - Collections (-) (*) 45,795 33,911 90,449 Write-offs (-) 19 106 1,301

Corporate and commercial loans - 2 440 Retail loans 19 104 861 Credit cards - - - Other - - -

Current period end balance 81,297 119,567 227,127 Specific provision (-) 12,288 46,145 181,406

Net Balances on Balance Sheet 69,009 73,422 45,721 (*) TRY 29,530 of the non-performing loans portfolio of the Bank with TRY 29,214 provision has been sold

to LBT Varlık Yönetim A.Ş. for TRY 1,950. This balance has been collected as of November 9, 2009 with the completion of the necessary procedures, and the related non-performing loans have been written off from the records.

j.3) Information on foreign currency non-performing loans and other receivables: None.


52


j.4) Information regarding gross and net amounts of non-performing loans with respect to user groups:

III. Group IV. Group V. Group

Loans and receivables with

limited collectability


doubtful

Uncollectible loans and

receivables

Current Period (Net)

Loans to Real Persons and Legal Entities (Gross) 81,297 119,567 227,127

Specific Provision (-) 12,288 46,145 181,406

Loans to Real Persons and Legal Entities (Net) 69,009 73,422 45,721

Banks (Gross) - - -

Specific Provision (-) - - -

Banks (Net) - - -

Other Loans and Receivables (Gross) - - -


Other Loans and Receivables (Net) - - -

Prior Period (Net)


Specific Provision (-) 7,166 19,936 78,990


Banks (Gross) - - -


Banks (Net) - - -

Other Loans and Receivables (Gross) - - -


Other Loans and Receivables (Net) - - - k) Main principles of liquidating non performing loans and receivables:

According to the “Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” published on Official Gazette No. 26333 dated November 1, 2006; loans and other receivables for which the collection is believed to be impossible are classified as nonperforming loans by complying with the requirements of the Tax Procedural Law in accordance with the decision of the upper management of the Bank.

l) Explanations on write-off policy:

Unrecoverable non performing loans can be written off with the decision of the Board of Directors.


53


m) Other explanations and disclosures: Current Period Corporate Small Business Consumer Credit Cards Other Total Neither past due nor impaired 3,902,439 2,282,276 1,696,745 413,164 - 8,294,624 Past due not impaired 118,021 260,810 61,415 67,693 - 507,939 Individually impaired 93,901 219,835 34,416 79,839 - 427,991 Total gross 4,114,361 2,762,921 1,792,576 560,696 - 9,230,554 Less: allowance for individually impaired loans 29,178 122,058 33,985 54,618 - 239,839 Total allowance for impairment 29,178 122,058 33,985 54,618 - 239,839 Total net 4,085,183 2,640,863 1,758,591 506,078 - 8,990,715 Prior Period Corporate Small Business Consumer Credit Cards Other Total Neither past due nor impaired 3,788,900 2,393,823 1,062,249 408,244 - 7,653,216 Past due not impaired 141,442 422,007 160,949 77,487 - 801,885 Individually impaired 31,729 96,094 26,643 47,059 - 201,525 Total gross 3,962,071 2,911,924 1,249,841 532,790 - 8,656,626 Less: allowance for individually impaired loans 19,962 50,719 12,108 23,303 - 106,092 Total allowance for impairment 19,962 50,719 12,108 23,303 - 106,092 Total net 3,942,109 2,861,205 1,237,733 509,487 - 8,550,534 A reconciliation of the allowance for impairment losses and advances by classes is as follows;

Corporate Small Business Consumer Credit Cards Other Total

At January 1, 2009 19,962 50,719 12,108 23,303 - 106,092Charge for the period 18,742 93,405 33,310 65,606 - 211,063Recoveries (9,526) (22,066) (6,490) (10,020) - (48,102)Amounts written off (*) - - (4,943) (24,271) - (29,214)At December 31, 2009 29,178 122,058 33,985 54,618 - 239,839

Corporate Small Business Consumer Credit Cards Other Total

At January 1, 2008 44,232 16,139 8,132 4,704 - 73,207Charge for the period 18,079 57,236 16,473 27,433 - 119,221Recoveries (1,647) (7,541) (5,915) (4,747) - (19,850)Amounts written off(**) (40,702) (15,115) (6,582) (4,087) - (66,486)At December 31, 2008 19,962 50,719 12,108 23,303 - 106,092 (*) TRY 29,530 of the non-performing loans portfolio of the Bank with TRY 29,214 provision has been sold to LBT Varlık Yönetim

A.Ş. for TRY 1,950. This balance has been collected as of November 9, 2009 with the completion of the necessary procedures, and the related non-performing loans have been written off from the records.

(**) TRY 76,187 of the non-performing loans portfolio of the Bank with TRY 66,374 provision has been sold to Girişim Varlık Yönetim

A.Ş. for TRY 10,850. This balance has been collected as of July 31, 2008 with the completion of the necessary procedures, and the related non-performing loans have been written off from the records.


54


m) Other explanations and disclosures: (continued) The fair value of collaterals, capped with the respective outstanding loan balance, that the Bank holds relating to loans individually determined to be impaired at December 31, 2009 is TRY 126,343 (2008: TRY 70,356). Collaterals and credit enhancement obtained during the year: December 31, 2009 Corporate Small Business Consumer Credit Cards Other Total Residential, commercial or industrial property 11,639 7,324 1,339 - - 20,302Financial assets - - - - - -Other 16 6 17 - - 39 Total 11,655 7,330 1,356 - - 20,341 December 31, 2008 Corporate Small Business Consumer Credit Cards Other Total

Residential, commercial or industrial property 3,953 810 269 - - 5,032 Financial assets - - - - - -Other 16 - - - - 16 Total 3,969 810 269 - - 5,048 Aging analysis of past due but not impaired loans per classes of financial statements: December 31, 2009

Less than 30 days

31-60 days

61-90 days

More than 91 days

Total

Loans and advances to customers

Corporate lending 92,777 6,512 18,732 - 118,021 Small business lending 142,081 69,771 48,958 - 260,810 Consumer lending 7,825 41,900 11,690 - 61,415 Credit cards 67,580 106 7 - 67,693

Other - - - - -Total 310,263 118,289 79,387 - 507,939 December 31, 2008

Less than 30 days

31-60 days

61-90 days

More than 91 days

Total

Loans and advances to customers

Corporate lending 102,364 15,055 24,023 - 141,442Small business lending 268,499 72,362 81,146 - 422,007Consumer lending 98,351 51,364 11,234 - 160,949Credit cards 74,633 2,772 82 - 77,487

Other - - - - -Total 543,847 141,553 116,485 - 801,885


55


m) Other explanations and disclosures: (continued) Of the total aggregate amount of gross past due but not yet impaired loans and advances to customers, the fair value of collaterals, capped with the respective outstanding total loan balance of the customer, that the Bank held as at December 31, 2009 is TRY 311,296 (2008: TRY 517,749). Loans and receivables amounting to TRY 2,311,525 have floating interest rates (2008 – TRY 4,023,941) and the remaining TRY 6,491,038 have fixed interest rates (2008 – TRY 4,431,160).

6. Information on held-to-maturity investments :

a.1) Information on held-to-maturity investments given as collateral or blocked:

Current Period Prior Period TRY FC TRY FC Share Certificates - - - - Bond, Treasury bill and similar securities 187,395 - 178,151 - Other - - - - Total 187,395 - 178,151 -

a.2) Held-to-maturity investments subject to repurchase agreements:

Current Period Prior Period TRY FC TRY FC Government bonds 560,365 - 206,829 - Treasury bills - - - - Other public sector debt securities - - - - Bank bonds and bank guaranteed bonds - - - - Asset backed securities - - - - Other - - - - Total 560,365 - 206,829 -

Net book value of unrestricted financial assets available-for-sale is TRY 133,043 (2008 – 412,791). b) Movement of public sector debt investments held-to-maturity: Current Period Prior Period Beginning balance 797,771 - Foreign currency differences on monetary assets - - Purchases during the year(*) 97,111 797,771 Disposals through sales and redemptions - - Impairment provision (-) - - Change in income on redeemed cost adjustments (14,079) - Closing Balance 880,803 797,771 (*) Accruals are included in purchases during the year.


56

I. Explanations and Disclosures Related to the Assets (continued) 7. Information on associates (Net): a.1) Information on the unconsolidated associates:

Description

Address (City/ Country)

Bank’s share percentage-If different voting percentage(%)

Other shareholders’ share percentage (%)

Bantaş Nakit ve Kıymetli Mal Taşıma veGüvenlik Hizmetleri A.Ş.

İstanbul/Turkey

0.1

33.3

Kredi Garanti Fonu A.Ş.(*)

Ankara/Turkey

1.7

-

(*) In the Board of Directors meeting on September 23, 2009, the Bank decided to participate in the revised capital

structure of Kredi Garanti Fonu A.Ş. including TOBB (Turkish Union of Chambers and Exchange Commodities), KOSGEB (Presidency of Development and Support of Small and Medium-sized Enterprises Administration) and the banks by TRY 4,000. Upon this decision related to the capital increase of Kredi Garanti Fonu A.Ş. on September 11, 2009, the Bank paid TRY 2,000 of its capital commitment of TRY 4,000 on October 14, 2009.

b.1) Information on the consolidated associates: None (2008 - None).

b.2) Valuation of consolidated associates: None (2008 - None).

b.3) Consolidated associates which are quoted on the stock exchange: None (2008 - None). 8. Information on subsidiaries (Net):

a) Information on the unconsolidated subsidiaries: None (2008 - None). b) Information on the consolidated subsidiaries:

b.1) Information on the consolidated subsidiaries:

Description




The Economy Bank N.V. Netherlands 100.00 - TEB Finansal Kiralama A.Ş. İstanbul/Turkey 100.00 - TEB Faktoring A.Ş. İstanbul/Turkey 100.00 - TEB Yatırım Menkul Değerler A.Ş. İstanbul/Turkey 74.94 25.06 TEB Portföy Yönetimi A.Ş. İstanbul/Turkey 46.77 53.23

Information on the consolidated subsidiaries with the order as presented in the table above:

Total Assets

Shareholders’ Equity

Total Fixed Assets

Interest Income

Income from Marketable

Securities Portfolio

Current Period

Profit / Loss

Prior Period Profit / Loss

(*) Fair

Value (i) 1,166,608 180,680 8,948 60,976 3,758 14,351 13,562 -(ii) 512,396 96,657 1,621 55,509 - 37,176 12,168 -(ii) 437,564 22,903 750 49,723 - 7,616 9,137 -(ii) 39,265 35,667 1,865 4,141 486 8,164 5,598 -(ii) 15,123 13,678 551 1,219 857 5,312 3,036 -

(*) Represents the amounts in the financial statements as of December 31, 2008. (i) Represents financial figures of foreign currency statutory financial statements translated at period end foreign exchange rates

for balance sheet and twelve months’ average rates for profit and loss as of December 31, 2009. The Economy Bank NV has two consolidated subsidiaries named Stichting Effecten Dienstverlening and Kronenburg Vastgoed B.V.

(ii) Represents financial figures based on BRSA as of December 31, 2009.


57

I. Explanations and Disclosures Related to the Assets (continued) 8. Information on subsidiaries (Net): (continued)

b.2) Information on consolidated subsidiaries:

Current Period Prior Period Balance at the beginning of the period 153,921 152,208 Movements during the period - 1,713

Purchases - - Bonus shares obtained - 1,713 Share in current year income - - Sales - - Revaluation increase - - Provision for impairment - -

Balance at the end of the period 153,921 153,921 Capital commitments - - Share percentage at the end of the period (%) - -

b.3) Sectoral information on the consolidated subsidiaries and the related carrying amounts:

Current Period Prior Period Banks / The Economy Bank N.V. 61,254 61,254 Leasing Companies / TEB Finansal Kiralama A.Ş 40,190 40,190 Factoring Companies / TEB Faktoring A.Ş. 24,037 24,037 Other Financial Subsidiaries / TEB Yatırım Menkul Değerler A.Ş. 26,382 26,382 TEB Portföy Yönetimi A.Ş. 2,058 2,058 Total 153,921 153,921

b.4) Consolidated subsidiaries quoted on the stock exchange: None (2008 – None). 9. Information on entities under common control (joint ventures): None (2008 – None). 10. Information on finance lease receivables (Net): None (2008 – None). 11. Information on derivative financial assets for hedging purposes:

Current Period Prior Period TRY FC TRY FC Fair value hedge 30,976 354 54,210 2,214 Cash flow hedge - - - - Hedge of net investment in foreign operations - - - - Total 30,976 354 54,210 2,214


58

I. Explanations and Disclosures Related to the Assets (continued) 12. Information on tangible assets :

Opening BalanceDecember 31,

2008 Additions Disposals Other

Ending BalanceDecember 31,

2009Cost:

Land and buildings 9,637 - - - 9,637 Leased tangible assets 57,581 - (8,119) (2) 49,460 Vehicles 518 - (126) - 392 Other 256,317 43,698 (23,591) 2 276,426

Total Cost 324,053 43,698 (31,836) - 335,915 Opening Balance

December 31, 2008 Period Charge Disposals Other


2009Accumulated Depreciation:

Land and buildings (3,337) (200) (3,537) Leased tangible assets (40,109) (6,253) 8,109 - (38,253) Vehicles (169) (86) 126 - (129) Other (*) (113,315) (39,703) 15,070 (1,064) (139,012)

Total Accumulated Depreciation (156,930) (46,242) 23,305 (1,064) (180,931)

Net Book Value 167,123 (2,544) (8,531) (1,064) 154,984 (*) “Other” consists of TRY 2,608 impairment loss provision booked for appraised real estates in assets to be disposed.

a) The impairment provision set or cancelled in the current period according to the asset groups not individually significant but materially affecting the overall financial statements, and the reason and conditions for this: As of December 31, 2009, provision for impairment loss amounting to TRY 2,608 is booked for real estates to be disposed with respect to appraisals performed at the year end (2008: TRY 1,544).

b) Pledges, mortgages and other restrictions on the tangible fixed assets, expenses arising from the

construction for tangible fixed assets, commitments given for the purchases of tangible fixed assets: None.

13. Information on intangible assets:

Opening BalanceDecember 31, 2008 Additions Disposals Other

Ending BalanceDecember 31, 2009

Cost: Other intangible assets 29,161 6,984 - - 36,145

Total Cost 29,161 6,984 - - 36,145 Opening Balance

December 31, 2008 Period Charge Disposals OtherEnding Balance

December 31, 2009Accumulated Amortization:

Other intangible assets (19,304) (5,931) - - (25,235) Total Accumulated Amortization (19,304) (5,931) - - (25,235)

Net Book Value 9,857 1,053 - - 10,910


59

I. Explanations and Disclosures Related to the Assets (continued) 13. Information on intangible assets: (continued)

a) Disclosures for book value, description and remaining useful life for a specific intangible fixed asset that is material to the financial statements: None.

b) Disclosure for intangible fixed assets acquired through government grants and accounted for at fair value

at initial recognition: None.

c) The method of subsequent measurement for intangible fixed assets that are acquired through government incentives and recorded at fair value at the initial recognition : None.

d) The book value of intangible fixed assets that are pledged or restricted for use: None. e) Amount of purchase commitments for intangible fixed assets: None.

f) Information on revalued intangible assets according to their types: None.

g) Amount of total research and development expenses recorded in income statement within the period if

any: None. h) Positive or negative consolidation goodwill on entity basis: Not applicable for the unconsolidated

financial statements. i) Information on goodwill: None.

j) Movements on goodwill in the current period: None.

14. Information on investment property: None (2008 – None).


60

I. Explanations and Disclosures Related to the Assets (continued) 15. Explanations on deferred tax asset:

a) As of December 31, 2009, deferred tax asset computed on the temporary differences is TRY 7,869 (2008 – TRY 12,973). There are no tax exemptions or deductions over which deferred tax asset is computed.

b) Temporary differences over which deferred tax asset is not computed and recorded in the balance sheet in

prior periods: None. c) Allowance for deferred tax and deferred tax assets from reversal of allowance: None. d) Movement of deferred tax:

Current Period Prior Period At January 1, 12,973 44,129 Effect of change in tax rate - - Other 589 - Deferred tax (charge)/benefit (1,587) (30,429) Deferred tax (charge)/benefit (Net) (998) (30,429) Deferred tax accounted for under equity (4,106) (727) Deferred Tax Asset 7,869 12,973

16. Information on assets held for sale and discontinued operations: None (2008: None). 17. Information on other assets:

a) Breakdown of other assets

Current Period Prior Period Clearing Account 112,330 113,780 Collateral Given for Derivative Financial Assets 31,513 57,242 Transaction Costs Related to Financial Liabilities 7,296 6,774 Prepaid Rent Expenses 4,483 5,118 Prepaid Insurance Premiums 96 132 Advances Given 1 6 Other Prepaid Expenses 17,600 19,115 Receivables from Credit Card Payments 162,685 96,173 Temporary EFT Account 30,668 15,851 Other 6,116 7,979 Total 372,788 322,170

b) Other assets which exceed 10% of the balance sheet total (excluding off balance sheet commitments) and breakdown of these which constitute at least 20% of grand total: None.


61

SECTION FIVE II. Explanations and Disclosures Related to the Liabilities 1. a) Information on maturity structure of deposits:

a.1) Current period:

Demand7 Day Call

AccountsUp to 1Month

1-3Months

3-6Months

6 Month-1 Year

1 Yearand Over

Accumulated Deposits Total

Saving deposits 246,684 - 803,947 2,310,906 66,611 37,413 629 11,414 3,477,604Foreign currency deposits 906,774 - 1,180,905 1,236,085 29,670 68,426 412 2,122 3,424,394

Residents in Turkey 848,068 - 1,139,404 1,202,051 26,835 64,388 336 2,122 3,283,204Residents abroad 58,706 - 41,501 34,034 2,835 4,038 76 - 141,190

Public sector deposits 103,715 - 1,095 1,508 - - 194 - 106,512Commercial deposits 706,228 - 678,394 648,077 14,650 27,444 263 102 2,075,158Other institutions deposits 9,528 - 24,219 87,932 44,702 444 1 - 166,826Precious metals deposits 16,613 - 3,854 2,086 835 374 - - 23,762Interbank deposits 82,854 - 47,681 13,238 3,606 - - - 147,379 Central Bank of Turkey - - - - - - - - -

Domestic Banks - - - 5,068 - - - - 5,068Foreign Banks 32,381 - 47,681 8,170 3,606 - - - 91,838Special finance houses 50,473 - - - - - - - 50,473Other - - - - - - - - -

Total 2,072,396 - 2,740,095 4,299,832 160,074 134,101 1,499 13,638 9,421,635

a.2) Prior period:

Demand7 Day Call

AccountsUp to 1Month

1-3Months

3-6Months

6 Month-1 Year

1 Yearand Over


Saving deposits 129,855 - 791,513 2,499,108 20,807 33,839 187 399 3,475,708Foreign currency deposits 676,896 - 1,699,056 1,080,922 105,211 29,995 3,865 80 3,596,025

Residents in Turkey 628,688 - 1,646,870 1,041,666 98,033 22,288 1,458 80 3,439,083Residents abroad 48,208 - 52,186 39,256 7,178 7,707 2,407 - 156,942

Public sector deposits 76,405 - 7,143 1,157 - - - - 84,705Commercial deposits 451,838 - 763,541 344,410 26,154 98,316 - - 1,684,259Other institutions deposits 8,648 - 10,938 137,532 75 854 - - 158,047Precious metals deposits 8,077 - 3,628 2,237 128 721 - - 14,791Interbank deposits 49,472 - 187,625 15,632 3,361 - 2,122 - 258,212 Central Bank of Turkey - - - - - - - - -

Domestic Banks - - 3,012 - - - 2,122 - 5,134Foreign Banks 17,507 - 184,613 15,632 3,361 - - - 221,113Special finance houses 31,965 - - - - - - - 31,965Other - - - - - - - - -

Total 1,401,191 - 3,463,444 4,080,998 155,736 163,725 6,174 479 9,271,747

b) Information on saving deposits under the guarantee of saving deposit insurance: b.1) Saving deposits exceeding the limit of insurance: i) Information on saving deposits under the guarantee of saving deposit insurance and exceeding the

limit of saving deposit insurance:

Saving Deposits Under the guarantee of insurance(*)

Exceeding the limit of Insurance(*)

Current Period Prior Period Current Period Prior PeriodSaving deposits 1,265,160 1,263,272 2,130,077 2,179,589Foreign currency saving deposits 379,691 366,622 1,302,510 1,587,049Other deposits in the form of saving deposits 3,372 1,496 18,838 11,571Foreign branches’ deposits under foreign authorities' insurance - - - -Off-shore banking regions’ deposits under foreign authorities' insurance - - - -Total 1,648,223 1,631,390 3,451,425 3,778,209

(*) According to the BRSA’s circular no 1584 dated on February 23, 2005, accruals are included in the saving deposit amounts.


62

II. Explanations and Disclosures Related to the Liabilities (continued)

b.2) Information on the saving deposits of the bank with head office abroad, if the saving deposits in the branches of the bank located in Turkey are under the guarantee of saving deposit insurance in that country abroad: None.

b.3) Saving deposits not guaranteed by insurance:

i) Deposits of real persons not under the guarantee of saving deposit insurance:

Current Period Prior PeriodDeposits and accounts in branches abroad 64,476 58,824

Deposits of ultimate shareholders and their close families

263,013

177,868

Deposits of chairman and members of the Board of Directors and their close families

10,408

11,360

Deposits obtained through illegal acts defined in the 282nd Article of the 5237 numbered Turkish Criminal Code dated September 26, 2004. -

- Saving deposits in banks established in Turkey exclusively for off shore banking activities -

-

2. Information on derivative financial liabilities:

a) Negative differences table related to derivative financial liabilities held-for-trading:

Current Period Prior Period TRY FC TRY FCForward Transactions 2,623 3,014 27,087 36,285Swap Transactions 20,387 1,262 65,365 4,164Futures Transactions - 14,497 - 38,655Options 7,061 2,973 5,595 -Other 52 - - -Total 30,123 21,746 98,047 79,104

3. a) Information on banks and other financial institutions:

Current Period Prior Period TRY FC TRY FCLoans from Central Bank of Turkey - - - -From Domestic Banks and Institutions 41,790 102,481 64,371 109,173From Foreign Banks, Institutions and Funds 746,204 759,140 1,628,592 642,467Total 787,994 861,621 1,692,963 751,640

b) Maturity analysis of borrowings:

Current Period Prior Period TRY FC TRY FCShort-term 784,736 670,914 1,320,054 545,087Medium and long-term 3,258 190,707 372,909 206,553Total 787,994 861,621 1,692,963 751,640


63


c) Additional explanation related to the concentrations of the Bank’s major liabilities:

Bank diversifies its funding resources by the customer deposits and by the foreign borrowings. As of December 31, 2009, the Bank has a syndication loan of EUR 190,000,000 and USD 92,000,000, obtained on December 2, 2009 with a maturity of November 24, 2010, under foreign borrowings.

Bank makes analysis of its customers that provide the maximum amount of funds within the branches and throughout the Bank, in consideration of profitability. Bank takes short and long term preventive measures to spread its customers on a wider spectrum on the basis of customer concentration in the branches. Information on funds provided from repurchase agreement transactions:


TRY FC TRY FCFrom domestic transactions 1,071,971 - 201,621 -Financial institutions and organizations 1,071,243 - 126,644 -Other institutions and organizations - - 69,106 -Real persons 728 - 5,871 -From foreign transactions - - 123 -Financial institutions and organizations - - - -Other institutions and organizations - - - -Real persons - - 123 -Total 1,071,971 - 201,744 -

4. Other liabilities which exceed 10% of the balance sheet total (excluding off-balance sheet

commitments) and the breakdown of these which constitute at least 20% of grand total: None (2008 – None).

5. Explanations on financial lease obligations (Net):

a) 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 bank:

In the financial lease agreements, installments are based on useful life, usage periods and principles of the Tax Procedural Law.

b) The explanation on modifications in agreements and new obligations resulting from such modifications:

None

c) Explanation on finance lease payables:

Current Period Prior Period Gross Net Gross NetLess than 1 Year 25 16 99 87Between 1-4 Years 17 14 42 30More than 4 Years - - - -Total 42 30 141 117


64

II. Explanations and Disclosures Related to the Liabilities (continued) 5. Explanations on financial lease obligations (Net): (continued)

d) Explanations regarding operational leases:

Except for the Head-Office-Istanbul and Izmir-Ege Kurumsal Branch buildings, all branch premises of the Bank are leased under operational leases. For the period ended December 31, 2009, operational lease expenses amounting to TRY 74,743 (2008 – TRY 65,351) have been recorded in the profit and loss accounts. The lease periods vary between 1 and 10 years and lease agreements are cancelable subject to a certain period of notice.

e) Explanations on the lessor and lessee in sale and lease back transactions, agreement conditions, and major

agreement terms: None.

6. Information on derivative financial liabilities for hedging purposes:

Current Period Prior Period TRY FC TRY FC Fair value hedge (*) 73,493 - 67,611 - Cash flow hedge - - - - Hedge of net investment in foreign operations - - - - Total 73,493 - 67,611 -

(*) Comprised of swaps for hedging purposes. 7. Information on provisions:

a) Information on general provisions:

Current Period Prior Period General Provisions

Provisions for First Group Loans and Receivables 56,570 52,247 Provisions for Second Group Loans and Receivables 9,225 14,558 Provisions for Non-Cash Loans 8,833 7,893 Other - - Total 74,628 74,698

b) Foreign exchange losses on the foreign currency indexed loans and finance lease receivables: The foreign

exchange losses on the foreign currency indexed loans amounting to TRY 26,976 (2008 - TRY 16,269) is offset from the loans on the balance sheet.

c) The specific provisions provided for unindemnified non cash loans amount to TRY 10,617 (2008 - TRY

1,611).

d) Information on employee termination benefits and unused vacation accrual: The Bank has calculated reserve for employee termination benefits by using actuarial valuations as set out in the TAS No:19 and reflected this in the financial statements.

As of December 31, 2009, the Bank provided a reserve of TRY 8,575 (2008 - TRY 7,784) for the unused vacations. This balance is classified under other provisions in the financial statements.


65


7. Information on provisions (continued)

d.1) Movement of employee termination benefits

Current Period Prior Period As of January 1 13,133 10,588 Service cost 2,542 2,088 Interest cost 1,515 1,125 Settlement cost 1,473 273 Actuarial gain / (loss) 2,115 (149) Benefits paid (3,222) (792) Total 17,556 13,133

e) Information on other provisions:

e.1) Provisions for possible losses: None (2008 – None).

e.2) The breakdown of the subsidiary accounts if other provisions exceed 10% of the grand total of

provisions:

Current Period Prior Period Provision for employee benefits 8,575 7,784 Provision for promotion of credit cards and banking services 4,163 3,648 Other (*) 27,150 36,715 Total 39,888 48,147

(*) Included in other, TRY 16,533 (2008: TRY 20,393) is the provision related to the bonuses to be paid to the personnel and TRY

10,617 (2008: TRY 1,611) is the specific provisions for unindemnified non cash loans.

f) Liabilities on pension rights:

f.1) Liabilities for pension funds established in accordance with “Social Security Institution": None

(2008 – None).

f.2) Liabilities resulting from all kinds of pension funds, foundations etc. which provide post retirement benefits for the employees: None (2008 – None).

8. Explanations on taxes payable:

a) Information on current tax liability:

a.1) Corporate taxes:

Current Period Prior PeriodProvision for corporate taxes 2,545 -

a.2) Information on taxes payable:

Current Period Prior PeriodTaxation on Securities 8,754 17,633Property Tax 920 884Banking Insurance Transaction Tax (BITT) 9,696 15,664Foreign Exchange Transaction Tax 10 8Value Added Tax Payable 605 667Other (*) 6,529 6,925Total 26,514 41,781

(*) Others include income taxes deducted from wages amounting to TRY 5,597 (2008 – TRY 5,963) and stamp taxes payable amounting to TRY 713 (2008 - TRY 433).


66

II. Explanations and Disclosures Related to the Liabilities (continued) 8. Explanations on taxes payable: (continued)

b) Information on premiums:

Current Period Prior PeriodSocial Security Premiums-Employee 2,417 2,474Social Security Premiums-Employer 2,572 2,632Bank Social Aid Pension Fund Premium-Employee - -Bank Social Aid Pension Fund Premium-Employer - -Pension Fund Membership Fees and Provisions-Employee - -Pension Fund Membership Fees and Provisions-Employer - -Unemployment Insurance-Employee 169 173Unemployment Insurance-Employer 338 344Other - -Total 5,496 5,623

c) Explanations on deferred tax liabilities, if any: None (2008 – None).

9. Information on liabilities regarding assets held for sale and discontinued operations: None (2008 – None).

10. Explanations on the number of subordinated loans the Bank used, maturity, interest rate, institution that the loan was borrowed from, and conversion option, if any: The Bank has signed an agreement with the International Finance Corporation (IFC) on July 17, 2002, for a subordinated loan of USD 15 million. The maturity of the loan is October 15, 2011 and interest rate is LIBOR+2.85%. USD 3 million principle of this subordinated loan was paid on October 15, 2009 in accordance with the terms of the main agreement.

The Bank has signed another agreement with the IFC on June 27, 2005, for a subordinated loan. The facility is a USD 50 million subordinated loan, with a maturity of July 15, 2015 and with an interest rate of LIBOR+3.18%.

The Bank has signed an agreement with the Economy Luxembourg S.A on October 27, 2006 for a subordinated loan. The facility is a EUR 110 million subordinated loan, with a maturity of October 31, 2016, and with a fixed interest rate of 6.10%.

The Bank has obtained a primary subordinated loan by issuing a bond amounting to USD 100 million as of July 31, 2007. The investor of the bond is IFC International Finance Corporation (IFC). The maturity of the borrowing is indefinite with semi-annually interest payment. The interest rate is defined as LIBOR+3.5% until July 31, 2017. In case the borrowed amount is not repaid at that date, the interest rate will be revised as LIBOR + 5.25%.

Each of the four of the above facilities match BRSA’s subordinated loan-capital definitions and contribute to the Bank’s capital adequacy ratio in a positive manner, as well as creating long term financing.


67

II. Explanations and Disclosures Related to the Liabilities (continued) 10. Explanations on the number of subordinated loans the Bank used, maturity, interest rate,

institution that the loan was borrowed from, and conversion option, if any: (continued)

a) Information on subordinated loans:

Current Period Prior Period TRY FC TRY FC From Domestic Banks - - - - From Other Domestic Institutions - - - - From Foreign Banks - - - - From Other Foreign Institutions - 483,474 - 495,055 Total - 483,474 - 495,055

11. Information on Shareholders’ Equity:

a) Presentation of Paid-in Capital:

Current Period Prior Period Common stock 1,100,000 1,100,000 Preferred stock - -

b) Paid-in capital amount, explanation as to whether the registered share capital system is applicable at bank

if so amount of registered share capital ceiling:

Capital System Paid-in capital Ceiling Registered Capital System 1,100,000 1,400,000

c) Information on share capital increases and their sources; other information on increased capital shares in

current period: None

d) Information on share capital increases from revaluation funds: None.

e) 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 to meet these commitments: None.


68

II. Explanations and Disclosures Related to the Liabilities (continued) 11. Information on Shareholders’ Equity: (continued)

f) Indicators of the Bank’s income, profitability and liquidity for the previous periods and possible effects of

these future assumptions on the Bank’s equity due to the uncertainty of these indicators:

Prior year income, profitability and liquidity of the Bank is closely monitored and reported to Board of Directors, Asset and Liability Committee, and Risk Management by the Budget and Financial Control Group. This group tries to forecast the effects of interest, currency and maturity fluctuations that change these indicators with static and dynamic scenario analysis. Net asset value, which is defined as the difference of fair values of assets and liabilities, is measured. Expectations are made for Bank’s future interest income via simulations of net interest income and scenario analysis.

g) Information on preferred shares:

7% of the Bank’s remaining net income after tax subsequent to deducting legal reserves and first dividends, corresponding to the Bank’s 60,000 shares of TRY 30 (in full TRY) is distributed to the founder shares.

h) Information on marketable securities value increase fund:

Current Period Prior Period TRY FC TRY FCFrom Associates, Subsidiaries, and Entities Under Common Control (Joint Vent.) - - - -Valuation Difference 16,824 4,724 8,274 (2,392)Foreign Exchange Difference - - - -Total 16,824 4,724 8,274 (2,392)

Current Period Prior PeriodForeign currency marketable securities value increase fund 4,724 (2,392)Foreign exchange gains resulting from foreign currency associates, subsidiaries, and securities held to maturity related to the above amount - -Total 4,724 (2,392)

Information on legal reserves:

Current Period Prior PeriodFirst legal reserves 29,423 21,214 Second legal reserves 5,536 5,536 Other legal reserves appropriated in accordance with special legislation

- -

Total 34,959 26,750


69


Information on extraordinary reserves:

Current Period Prior PeriodReserves appropriated by the General Assembly 279,694 123,705Retained earnings - -Accumulated losses - -Foreign currency share capital exchange difference - -

Total 279,694 123,705

Other Information on Shareholders’ Equity: The movement of the marketable securities value increase fund is as follows: Current Period Prior PeriodAt January 1 5,882 2,214Net unrealized gains on available for sale investments 74,783 (2,820)Realized gains on available for sale investments recycled to income statement on disposal - -Realized losses on available for sale investments recycled to income statement on disposal and impairment (55,011) 7,215Tax effect of net gains on available for sale investments (4,106) (727)Unrealized gains / (losses) on cash flow hedges - -Gains / (losses) on cash flow hedges recycled to income statement - -Tax effect of gains on cash flow hedges - -

At period end 21,548 5,882 12. Information on minority shares: None (2008 – None).


70

SECTION FIVE III. Explanations and Disclosures Related to the Off-Balance Sheet Contingencies and

Commitments 1. Information on off-balance sheet liabilities:

a) Nature and amount of irrevocable loan commitments: Credit card expenditure limit commitments are TRY 956,344 and TRY 759,651; payment commitments for checks are TRY 650,733 and TRY 560,682 as of December 31, 2009 and December 31, 2009, respectively.

b) Possible losses and commitments related to off-balance sheet items including items listed below:

The Bank, within the context of banking activities, undertakes certain commitments, consisting of loan commitments, letters of guarantee, acceptance credits and letters of credit.

b.1) Non-cash loans including guarantees, acceptances, financial guarantee and other letters of credits: As of December 31, 2009 total guarantees and commitments consist of letters of guarantee

amounting to TRY 2,678,395 (2008 - TRY 2,517,674) acceptances amounting to TRY 39,205 (2008 - TRY 51,320) and letters of credit amounting to TRY 503,408 (2008 -TRY 530,963).

b.2) Guarantees, suretyships, and similar transactions: The Bank has other guarantees and suretyships

amounting to TRY 207,612 as of December 31, 2009 (2008 – TRY 217,433).

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

Current Period Prior Period Non-cash loans given against achieving cash loans 206,485 270,536

With maturity of 1 year or less than 1 year 39,899 66,824 With maturity of more than 1 year 166,586 203,712

Other non-cash loans 3,222,135 3,046,854 Total 3,428,620 3,317,390

c.2) Information on sectoral risk breakdown of non-cash loans:


Agricultural 22,109 1.44 9,734 0.51 19,275 1.43 13,767 0.70Farming and raising livestock 16,422 1.07 8,966 0.47 15,739 1.16 7,073 0.36Forestry 5,180 0.34 768 0.04 3,046 0.23 6,694 0.34Fishery 507 0.03 - - 490 0.04 - -

Manufacturing 830,539 54.19 961,807 50.73 702,891 52.11 1,101,905 55.97Mining 43,566 2.85 24,103 1.27 45,075 3.34 26,225 1.33Production 767,155 50.05 921,658 48.61 639,680 47.43 1,049,346 53.30Electric, gas and water 19,818 1.29 16,046 0.85 18,136 1.34 26,334 1.34

Construction 328,665 21.44 267,409 14.10 251,617 18.66 299,778 15.23Services 331,611 21.64 272,719 14.39 358,133 26.55 237,741 12.08

Wholesale and retail trade 99,329 6.48 22,991 1.21 185,268 13.73 83,713 4.26Hotel, food and beverage services 7,139 0.47 3,209 0.17 7,076 0.52 2,864 0.15Transportation and telecommunication 77,468 5.05 177,007 9.34 46,903 3.48 73,506 3.73Financial institutions 39,790 2.60 17,756 0.94 36,919 2.74 33,599 1.71Real estate and renting services 25,949 1.69 22,953 1.21 25,518 1.89 21,086 1.07Self-employment services 47,328 3.09 10,290 0.54 31,177 2.31 9,334 0.47Education services 564 0.04 579 0.03 614 0.05 572 0.03Health and social services 34,044 2.22 17,934 0.95 24,658 1.83 13,067 0.66

Other 19,777 1.29 384,250 20.27 16,854 1.25 315,429 16.02 Total 1,532,701 100.00 1,895,919 100.00 1,348,770 100.00 1,968,620 100.00


71

III. Explanations and Disclosures Related to the Off-Balance Sheet Contingencies and Commitments (continued)

1. Information on off-balance sheet liabilities: (continued) c.3) Information on I st and II nd Group non-cash loans:

I st Group II nd Group Non-cash loans TRY FC TRY FC Letters of guarantee 1,394,572 1,251,470 20,556 11,797Bank acceptances 171 39,034 - -Letters of credit 233 502,483 106 586Endorsements - - - -Underwriting commitments - - - -Factoring commitments - - - -Other commitments and contingencies 116,943 88,975 120 1,574Total 1,511,919 1,881,962 20,782 13,957

The Bank provided a reserve of TRY 10,617 (2008: TRY 1,611) for non-cash loans not yet indemnified amounting to TRY 18,361 (2008: TRY 9,711).

2. Information related to derivative financial instruments:

Derivative transactions according to purposes Trading Hedging Current Period Prior Period Current Period Prior PeriodTypes of trading transactions Foreign currency related derivative transactions (I): 6,190,071 6,664,840 - -

Forward transactions 1,587,632 2,735,646 - - Swap transactions 1,826,664 2,787,162 - - Futures transactions 483,173 453,114 - - Option transactions 2,292,602 688,918 - -

Interest related derivative transactions (II) : 339,655 102,076 - - Forward rate transactions - - - - Interest rate swap transactions 303,000 102,076 - - Interest option transactions 36,655 - - - Futures interest transactions - - - -

Marketable securities call-put options (III) - - - - Other trading derivative transactions (IV) - - - - A.Total trading derivative transactions (I+II+III+IV) 6,529,726 6,766,916 - - Types of hedging transactions

Fair value hedges - - 761,499 1,002,465Cash flow hedges - - - -Net investment hedges - - - -

B.Total hedging related derivatives - - 761,499 1,002,465Total Derivative Transactions (A+B) 6,529,726 6,766,916 761,499 1,002,465

Related to agreements of forward transactions and options; the information based on the type of forward and options transactions are disclosed separately, specified with related amounts, type of agreement, purpose of transaction, nature of risk, strategy of risk management, hedging relationship, possible effects on the Bank’s financial position, timing of cash flows, reasons of unrealized transactions which previously projected to be realized, income and expenses that could not be linked to income statement in the current period because of the agreements: Forward foreign exchange and swap transactions are based on protection from interest and currency fluctuations. According to TAS, they do not qualify as hedging instruments and are remeasured at fair value.


72


2. Information related to derivative financial instruments: (continued)

As of July 1, 2008, the Bank has started to apply fair value hedge accounting in order to avoid the effects of interest rate changes in the market by matching TRY 761,499 (2008 - TRY 1,002,465 ) of its swap portfolio with its loan portfolio. As of December 31, 2009 and December 31, 2008, breakdown of the Bank’s foreign currency forward and swap transactions based on currencies are disclosed below in their TRY equivalents:

Forward Buy Forward Sell Swap Buy Swap Sell Option Buy Option Sell Futures Buy Futures Sell Current Period TRY 355,035 184,013 251,511 609,694 476,856 485,796 - -USD 150,296 425,389 251,233 317,579 324,390 322,206 234,791 -EURO 274,995 147,342 466,787 91,600 245,423 230,800 - -OTHER 26,918 23,644 98,503 42,757 132,380 111,406 - 248,382Total 807,244 780,388 1,068,034 1,061,630 1,179,049 1,150,208 234,791 248,382 Prior Period TRY 261,915 224,012 889,289 152,046 162,923 178,007 - -USD 555,403 623,661 324,449 1,149,490 83,155 86,107 208,133 -EURO 506,633 488,422 125,112 108,260 99,690 79,036 - -OTHER 42,103 33,497 85,710 54,882 - - - 244,981Total 1,366,054 1,369,592 1,424,560 1,464,678 345,768 343,150 208,133 244,981

As of December 31, 2009, the Bank has no cash flow hedges. (2008: None.)

As of December 31, 2009, the Bank has no hedge of net investment in foreign operations. (2008: None.)


73


3. Explanations on contingent liabilities and assets:

a.1) The Bank's share in contingent liabilities arising from entities under common control (joint ventures) together with other venturer: None.

a.2) Share of entity under common control (joint ventures) in its own contingent liabilities: None. a.3) The Bank’s contingent liabilities resulting from liabilities of other venturers in entities under

common control (joint ventures): None. b) Accounting and presentation of contingent assets and liabilities in the financial statements:

b.1) Contingent assets are accounted for, if probability of realization is almost certain. If probability of

realization is high, then it is explained in the footnotes. As of December 31, 2009 there are no contingent assets that need to be explained (2008 - None).

b.2) A provision is made for contingent liabilities, if realization is probable and the amount can be

reliably determined. If realization is remote or the amount cannot be determined reliably, then it is explained in the footnotes: As of December 31, 2009 there are no contingent liabilities that need to be explained (2008 - None).

4. Custodian and intermediary services:

The Bank provides trading and safe keeping services in the name and account of third parties, which are presented in the statement of contingencies and commitments. Investment securities held in custody include investment fund participation certificates which are accounted for with their number of certificates. As of December 31, 2009 the total number of certificates is 11,782,469 thousand (2008 – 13,388,799 thousand) and the total fair value is TRY 1,131,866 (2008 – TRY 924,039).


74


5. The information on the Bank’s rating by the international rating introductions (*) :

The results of the ratings performed by Moody’s Investor Services and Fitch Ratings are shown below:

Moody’s Investor Services: November 2009 View Stable Bank Financial Strength D+ Foreign Currency Deposits B1/NP Fitch Ratings: December 2009 Foreign Currency Commitments Long term BBB- Short term F3 View Stable Turkish Lira Commitments Long term BBB Short term F3 View Stable National AAA (tur) View Stable Individual Rating C/D Support Points 2

(*) Ratings above are not performed based on the “Communiqué for Authorization and Activities of Rating Institutions” published by the Capital Markets Board.


75

SECTION FIVE

IV. Explanations and Disclosures Related to the Statement of Income 1. a) Information on interest on loans:

Current Period Prior Period Interest on loans (*) TRY FC TRY FC Short term loans 752,817 99,226 961,595 111,006Medium and long term loans 373,519 35,883 355,976 43,007Interest on non-performing loans 6,719 - 5,348 -Premiums received from Resource Utilization Support Fund - -

- -

Total 1,133,055 135,109 1,322,919 154,013 (*) Includes fees and commissions obtained from cash loans amounting to TRY 36,312 (2008: TRY 38,626).

b) Information on interest received from banks: Current Period Prior Period TRY FC TRY FCThe Central Bank of Turkey - 10 - 2,371Domestic banks 2,359 44 3,264 433Foreign banks 4,369 6,188 3,138 31,810Branches and head office abroad - - - -Total 6,728 6,242 6,402 34,614

c) Interest received from marketable securities portfolio: Current Period Prior Period TRY FC TRY FC Trading securities 11,389 524 26,637 1,149Financial assets at fair value through profit and loss - - - -Available-for-sale securities 154,787 6,843 229,286 9,920Held-to-maturity securities 116,101 - 34,251 -Total 282,277 7,367 290,174 11,069 d) Information on interest income received from associates and subsidiaries:

Current Period Prior Period Interest received from associates and subsidiaries 2,309 1,201


76

IV. Explanations and Disclosures Related to the Statement of Income (continued) 2. a) Information on interest on funds borrowed (*) :

Current Period Prior Period TRY FC TRY FC Banks

The Central Bank of Turkey - - - -Domestic banks 7,446 4,089 9,417 6,180Foreign banks 113,875 14,425 158,407 36,816Branches and head office abroad - - - -

Other financial institutions - 34,299 - 33,713Total 121,321 52,813 167,824 76,709 (*) Includes fees and commission expenses of cash loans amounting to TRY 3,821 (2008 : TRY 1,882).

b) Information on interest expense to associates and subsidiaries:

Current Period Prior Period Interest expenses to associates and subsidiaries 2,791 830

c) Information on interest expenses to marketable securities issued: None (2008 – None).

d) Distribution of interest expenses on deposits based on maturity of deposits:

Time Deposits

Account Name Demand Deposits

Up to 1 Month

Up to 3 Months

Up to 6 Months

Up to 1 Year

More than 1 Year


TRY Bank deposits - 4,955 469 - 40 288 - 5,752Saving deposits 6 86,415 259,286 8,283 11,361 71 754 366,176Public sector deposits - 445 340 49 2 - - 836Commercial deposits 24 59,242 46,742 2,902 11,301 - - 120,211Other deposits - 2,493 14,585 1,106 1,508 38 - 19,7307 days call accounts - - - - - - - -

Total 30 153,550 321,422 12,340 24,212 397 754 512,705FC

Foreign currency deposits 7 33,297 40,683 3,673 3,421 70 29 81,180Bank deposits 8 86 140 42 - - - 2767 days call accounts - - - - - - - -Precious metal deposits 2 42 114 7 12 - - 177

Total 17 33,425 40,937 3,722 3,433 70 29 81,633Grand Total 47 186,975 362,359 16,062 27,645 467 783 594,338

3. Information on dividend income:

Current Period Prior Period Trading Securities - - Financial assets at fair value through profit and loss - - Available-for-sale securities 10 477 Other 11,963 18,771 Total 11,973 19,248


77

IV. Explanations Related to the Statement of Income (continued)

4. Information on net trading income:

Current Period Prior Period Income 2,354,569 3,696,948Gains on capital market operations 74,319 22,476Gains on derivative financial instruments (**) 482,770 771,437Foreign exchange gains(*) 1,797,480 2,903,035Losses (-) 2,304,407 3,739,170Losses on capital market operations 13,346 49,378Losses on derivative financial instruments (**) 666,394 791,395Foreign exchange losses(*) 1,624,667 2,898,397

(*) As of December 31, 2009, the foreign exchange gains on the foreign currency indexed loans are TRY 33,426 (2008 - TRY

279,225). As of December 31, 2009 the foreign exchange losses on the foreign currency indexed loans are TRY 30,576 (2008 – TRY 11,124).

(**) Gains on hedging transactions are TRY 15,556 (2008 – TRY 101,324), while losses on hedging transactions are TRY 103,640

(2008 – TRY 88,026).

5. Information on other operating income:

The information on the factors affecting the Bank’s income including new developments, and the explanation on nature and amount of income earned from such items:

In the comparative statement of income, as a result of a lawsuit opened against the Ministry of Finance of the Turkish Republic (“Ministry”) based on the requirement about the deduction of losses arising from the capital decrease in the financial statements of the Bank dated December 31, 2001 based on the Temporary Article 4 with the law numbered 4743 added to the Banking Law No: 4389 that is ceased to be effective on November 1, 2005, by using the statutory and optional reserves as an expense in determining the banks’ profit within the framework set out in Paragraph 7 of Article 14 of the annulled Corporate Tax Law No: 5422, the Bank has settled its tax reimbursement issue with the Ministry based on Article 3 of Law No: 5736 “Collection of Some Government Receivables by Compromise Procedures” published in the Official Gazette No: 26800 on February 27, 2008, and it has reflected its receivable amounting to TRY 41,207 in its statement of income as of December 31, 2008, which became collectible with the notification to the Bank by the Ministry in regards to the decision made on the settlement of this reimbursement by deducting that receivable amount from other taxes payable to the extent that 65% of the losses arising from year 2001 inflation accounting adjustment should be taken into account.

6. Provision expenses of banks for loans and other receivables:

Current Period Prior PeriodSpecific provisions for loans and other receivables 171,967 100,386

III. Group Loans and Receivables 4,955 3,678IV. Group Loans and Receivables 28,102 8,376V. Group Loans and Receivables 138,910 88,332

General provision expenses (1,610) 15,119Provision expenses for possible losses - -Marketable securities impairment losses 2,947 13,419

Financial assets at fair value through profit and loss 143 39Investment securities available for sale 2,804 13,380

Impairment provision expense 3,117 -Associates - -Subsidiaries - -Entities under common control (Joint Vent.) - -Investments held to maturity 3,117 -

Other - -Total 176,421 128,924


78

IV. Explanations and Disclosures Related to the Statement of Income (continued) 7. Information on other operating expenses:

Current Period Prior Period Personnel expenses 341,878 350,471 Reserve for employee termination benefits 7,645 3,337 Bank social aid fund deficit provision - - Impairment expenses of fixed assets - - Depreciation expenses of fixed assets 46,242 39,424 Impairment expenses of intangible assets - -

Impairment expense of goodwill - - Amortization expenses of intangible assets 5,931 4,898 Impairment for investments accounted for under equity method - - Impairment expenses of assets to be disposed 2,106 1,544 Depreciation expenses of assets to be disposed - - Impairment expenses of assets held for sale and discontinued operations - - Other operating expenses 243,737 221,084

Rent expenses 74,743 65,351 Maintenance expenses 6,064 6,124 Advertisement expenses 22,940 23,998 Other expenses 139,990 125,611

Loss on sales of assets 983 483 Other (*) 52,513 79,774 Total 701,035 701,015 (*) Included in other, premiums paid to the Saving Deposit Insurance Fund is TRY 9,927 (2008 – TRY 8,909).

8. Information on profit/(loss) from continued and discontinued operations before taxes:

Profit before tax of the Bank has increased by 30% for the year ended December 31, 2009 as compared to the prior year. In comparison with the prior year, the Bank’s net interest income increased by 3%, net fees and commissions income, and provisions and operating expenses increased by 25% and 6%, respectively.

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

a) As of December 31, 2009, the current tax charge is TRY 45,083 (2008 – TRY 2,637), and deferred tax charge is TRY 1,587 (2008 – TRY 30,429 deferred tax charge).

b) Deferred tax charge on temporary differences is TRY 1,587 (2008 – TRY 30,429 deferred tax charge).


79

IV. Explanations and Disclosures Related to the Statement of Income (continued) 9. Information on tax provision: (continued)

c) Tax reconciliation:

Current Period Prior Period Profit before tax 256,837 197,264 Additions 17,182 39,863 Disallowables 16,887 3,695 General loan loss provision - 20,931 Provision for possible tax disputes - 14,711 Other 295 526 Deductions (40,671) (71,798) Dividend income (11,921) (18,659) General loan loss provision (280) - Provision for possible tax disputes (14,711) - Recovered tax related to previous years due to inflation accounting - (41,207) Income from branches abroad (11,993) (10,776) Other (1,766) (1,156) Taxable Profit / (Loss) 233,348 165,329 Corporate tax rate 20% 20% Tax calculated 46,670 33,066

As of December 31, 2009, current tax charge is TRY 45,083 (2008 – TRY 2,637) and deferred tax charge on temporary differences is TRY 1,587 (2008 – TRY 30,429). Net tax charge recognized in the financial statements is TRY 46,670 (2008 – TRY 33,066).

10. Information on net profit/(loss) from continued and discontinued operations:

The Bank increased its net profit for the year ended December 31, 2009 by 28% as compared to the prior year profit.

11. The explanations on net income / loss for the period:

a) 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 Bank's performance for the period: None (2008 – None).

b) Effect of changes in accounting estimates on income statement for the current and, if any, for subsequent

periods: None (2008 – None).

c) Profit or loss attributable to minority shares: None (2008 – None).


80

IV. Explanations and Disclosures Related to the Statement of Income (continued) 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:

Current Period Prior Period Other fees and commissions received Credit cards commissions and fees 177,022 134,100 Import letters of credit commissions 4,011 4,275 Inquiry and company search fees and commissions 17,920 17,435 Fund management commissions 29,984 23,514 Settlement expense provision, eft, swift, agency commissions 9,915 10,973 Insurance commissions 10,966 10,032 Transfer commissions 6,227 5,322 Commissions and fees earned from correspondent banks 6,389 5,695 Other 58,941 52,102 Total 321,375 263,448

Other fees and commissions given Credit cards commissions and fees 97,548 93,647 Commissions and fees paid to correspondent banks 2,470 2,105 Settlement and swift commissions 3,808 3,335 Other 14,488 8,611 Total 118,314 107,698


81

SECTION FIVE

V. Explanations and Disclosures Related to Statement of Shareholders' Equity Movement

a) Increase resulting from revaluation of financial assets available for sale is TRY 15,666 (2008 – TRY 3,668 increase).

Gain or loss arising from measurement of financial assets available-for-sale included in shareholders' equity in the current period, excluding those related to hedging: Indicated above.

The amount recycled from equity to net income/loss account if the loss or gain related with measurement at fair value is recorded to equity for the financial assets available-for-sale (excluding the assets related to hedging): TRY 55,011 income (2008 – TRY 7,215 loss).

b) Increase in cash flow risk hedging items: None.

b.1) Reconciliation of beginning and ending balances: None. b.2) Amount recorded in the current period if a gain or loss from a cash flow hedging derivative or non-

derivative financial asset is accounted for under shareholders’ equity: None.

c) The reconciliation related with foreign exchange amounts in the beginning and end of the period: None. d) Dividends declared subsequent to the balance sheet date, but before the announcement of the financial

statements: None, e) Dividends per share proposed subsequent to the balance sheet date: Profit appropriation will be resolved

in the General Assembly meeting which has not been conducted as of the date of the accompanying financial statements are authorized for issue.

f) Proposals to General Assembly for the payment dates of dividends and if it will not be appropriated the

reasons for this: The Board of Directors has not decided for profit appropriation as of the date of the financial statements are authorized for issue.

g) Amounts transferred to legal reserves: Amount transferred to legal reserves is TRY 8,209 in 2009 (2008 –

TRY 6,515).

h) Information on shares issued:

TRY 2,041 has been collected from the sale of the share certificates with nominal value of TRY 1,619 on the Istanbul Stock Exchange (ISE) – arising from the capital increase of the Bank in 2008, corresponding to the shares of shareholders who have not used their pre-emptive rights. The Bank has recorded the difference of TRY 422 under “Share Premiums” account.


82

VI. Explanations and Disclosures Related to Statement of Cash Flows

1. The effects of the other items stated in the cash flow statement and the changes in foreign currency exchange rates on cash and cash equivalents:

“Other items” amounting to TRY 701,175 (2008 – TRY 826,762) in “Operating profit before changes in operating assets and liabilities” consists of fees and commissions paid and other expenses except for personnel expenses, leasing expenses, reserve for employee termination benefits, depreciation charges and taxes paid.

“Net increase/decrease in other liabilities” amounting to TRY 24,057 (2008 – TRY 35,612) in “Changes in operating assets and liabilities” consists of changes in sundry creditors, other liabilities and interbank money market borrowings. “Net increase/decrease in other assets” with a total amount of TRY 8,083 (2008 – TRY 62,979) consists of changes in sundry debtors and other assets.

2. Cash and cash equivalents at beginning and end of periods:

The reconciliation of the components of cash and cash equivalents, accounting policies used to determine these components, the effect of any change made in accounting principle in the current period, the recorded amounts of the cash and cash equivalent assets at the balance sheet and the recorded amounts in the cash flow statement:

Beginning of the period Current Period Prior PeriodCash 1,796,738 1,592,937 Cash in TRY/Foreign Currency 251,766 191,082 Central Bank – Unrestricted amount 1,527,735 1,399,404 Other 17,237 2,451Cash equivalents 1,265,058 519,783 Banks 508,751 329,783 Money market placements 756,307 190,000Total cash and cash equivalents 3,061,796 2,112,720

End of the period Current Period Prior PeriodCash 1,250,065 1,796,738 Cash in TRY/Foreign Currency 309,346 251,766 Central Bank – Unrestricted amount 922,102 1,527,735 Other 18,617 17,237Cash equivalents 1,086,870 1,265,058 Banks 392,094 508,751 Money market placements 694,776 756,307Total cash and cash equivalents 2,336,935 3,061,796


83

VII. Explanations on the Risk Group of the Bank 1. Volume of related party transactions, income and expense amounts involved and outstanding loan

and deposit balances:

a) Current Period:

Related Parties

Subsidiaries, associates and entities under common

control (Joint Vent.) Direct and indirect

shareholders of the Bank Other entities included

in the risk group Cash Non-cash Cash Non-cash Cash Non-cash Loans and other receivables

Balance at beginning of period 6,285 3,771 82,234 14,059 66,936 6,794Balance at end of period 557 7,198 15,688 46,004 57,190 86,909

Interest and commission income 2,309 259 6,381 2 3,492 234

Included in the balances above, the Bank has placements in foreign bank accounts amounting to TRY 57 from subsidiaries and associates, TRY 14,085 under direct and indirect corporate and real person shareholders and TRY 6,028 from other entities included in the risk group.

b) Prior Period:

Related Parties



Shareholders of the Bank Other entities included


Balance at beginning of period 717 23,499 26,294 25,144 6,559 5,979 Balance at end of period 6,285 3,771 82,234 14,059 66,936 6,794

Interest and commission income received 1,201 122 7,496 2 5,551 2,888

Included in the balances above, the Bank has placements in foreign bank accounts amounting to TRY 45 from subsidiaries and associates, TRY 81,281 under direct and indirect corporate and real person shareholders and TRY 63,790 from other entities included in the risk group.

c.1) Information on related party deposits balances:

Related parties




in the risk group

Deposits Current Period

PriorPeriod

Current period

Prior period

Current period

Priorperiod

Balance at beginning of period 22,816 3,147 189,247 587,446 272,485 31,506Balance at end of period 18,591 22,816 282,015 189,247 127,883 272,485Interest on deposits 2,791 830 48,791 43,905 6,466 11,677

c.2) Information on forward and option agreements and other similar agreements made with related parties:

Related Parties




in the risk group

Current Period

PriorPeriod

Current period

Prior period

Current period

PriorPeriod

Financial Assets at Fair Value Through Profit and Loss

Beginning of period 141,755 11,232 2,401,449 1,363,285 419,698 75,136End of period 32,150 141,755 1,508,190 2,401,449 746,942 419,698Total income/loss 1,082 (776) (43,063) 5,316 (41,922) 37,913

Hedging transactions purposes Beginning of period - - 322,681 - - -End of period - - 306,331 322,681 - -Total income/loss - - (14,510) (1,165) - -


84

VII. Explanations on the Risk Group of the Bank (continued) 1. Volume of related party transactions, income and expense amounts involved and outstanding loan

and deposit balances: (continued) d) As of December 2009, the total amount of remuneration and benefits provided for the senior

management of the Bank is TRY 15,692 (2008 – TRY 16,447). 2. Disclosures for related parties:

a) The relations of the Bank with the entities controlled by the Bank and its related parties, regardless of whether there are any transactions or not:

In the normal course of its banking activities, the Bank conducted various business transactions with related parties at commercial terms and at rates which approximate market rates.

b) Besides the structure of relationship, nature of the transaction, amount and ratio to the total volume of

transactions, amount of major items and ratio to all items, pricing policies and other factors:

Amount

% Compared to the Amounts in the

Financial Statements Cash loans 53,265 0.59 Non-cash loans 140,111 4.09 Deposits 428,489 4.55 Derivative financial instruments 2,287,282 35.03 Derivative financial instruments for hedging purposes 306,331 40.23 These transactions are priced in accordance with the general pricing policies of the Bank and are in line with market rates.

c) Except for cases whereby separate disclosure is necessary, the total of similar items in order to present the

total impact on the financial statements: Explained in b).

d) Transactions accounted for under the equity method: None.

e) Disclosures related to purchase and sale of real estate and other assets, services given / received, agency contracts, leasing contracts, transferring information as a result of research and development, license contracts, financing (including supports in the form of loans, capital in cash and capital in kind), guarantees, and management contracts:

The Bank enters into leasing agreements with TEB Finansal Kiralama A.Ş. As of December 31, 2009 the

total leasing obligations related to these agreements amounted to TRY 30. Additionally, the Bank provides agency services for TEB Yatırım Menkul Değerler A.Ş. and TEB Sigorta A.Ş via its branches.

Within the limits of the Banking Law, the Bank renders cash and non-cash loans to its related parties and the ratio of these to the Bank’s total cash and non-cash loan portfolio is 1.56%. Details of these loans are explained in the Section VII, Note 1a.

As of December 31, 2009 the Bank has no purchases and sale of real estate and other assets, transfer of

information as a result of research and development and management contracts with the related parties.


85

VIII. Explanations on the Bank’s Domestic Branches, Agencies and Branches Abroad and Off-shore Branches

1. Explanations on the Bank’s domestic branches, agencies and branches abroad and off-shore

branches:

Number Employees Domestic branches 330 5,832 Country Rep-offices abroad - - - Total Assets Capital Branches abroad 3 37 Cyprus 129,776 10,000 Off-shore branches 1 2 Bahrain 1,079,728 -

2. Explanations on Branch and Agency Openings or Closings of the Bank: The Bank opened 4 new branches and closed 6 of its branches in 2009.


86

SECTION SIX

OTHER EXPLANATIONS I. Other Explanations on the Operations of the Bank None.

SECTION SEVEN

INDEPENDENT AUDITOR’S REPORT

I. Explanations on the Independent Auditor’s Report

The unconsolidated financial statements of the Bank were audited by DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (Member of Deloitte Touche Tohmatsu) and the independent auditor’s report dated February 8, 2010 is presented preceding the financial statements.

II. Other Footnotes and Explanations Prepared by the Independent Auditors

None.

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ AND ITS FINANCIAL SUBSIDIARIES INDEPENDENT AUDITOR’S REPORT, CONSOLIDATED FINANCIAL STATEMENTS AND NOTES FOR THE YEAR ENDED DECEMBER 31, 2009 Translated into English from the Original Turkish Report

To the Board of Directors of Türk Ekonomi Bankası A.Ş. Istanbul

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ AND ITS FINANCIAL SUBSIDIARIES


FOR THE YEAR JANUARY 1, 2009 – DECEMBER 31, 2009

We have audited the accompanying consolidated balance sheet of Türk Ekonomi Bankası A.Ş. and its financial subsidiaries (“the Group”) as at December 31, 2009, and the related consolidated statements of income, cash flows and changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements The Board of Directors of the Bank is responsible for the preparation and fair presentation of the financial statements in accordance with the regulation on “Procedures And Principles Regarding Banks’ Accounting Practices And Maintaining Documents” published in the Official Gazette dated November 1, 2006 and numbered 26333 and Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”) and other regulations, circulars, communiqués and pronouncements in respect of accounting and financial reporting made by Banking Regulation and Supervision Agency (“BRSA”). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the regulation on “Licensing and Operations of Audit Firms in Banking” published in the Official Gazette no: 26333 on November 1, 2006 and the International Standards on Auditing. We planned and performed our audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the consideration of the effectiveness of internal control and appropriateness of accounting policies applied relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. 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 consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with the prevailing accounting principles and standards set out as per the Articles 37 and 38 of the Banking Act No: 5411, and other regulations, communiqués and circulars in respect of accounting and financial reporting and pronouncements made by BRSA. Additional paragraph for English translation: The effect of the differences between the accounting principles summarized in Section 3 and the accounting principles generally accepted in countries in which the accompanying financial statements are to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements. The accounting principles used in the preparation of the accompanying financial statements differ materially from IFRS. Accordingly, the accompanying financial statements are not intended to present the Group’s financial position and results of its operations in accordance with accounting principles generally accepted in such countries of users of the financial statements and IFRS. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU Hasan Kılıç Partner Istanbul, February 8, 2010

THE CONSOLIDATED FINANCIAL REPORT OF TÜRK EKONOMİ BANKASI A.Ş.

FOR THE YEAR ENDED DECEMBER 31, 2009 Address : Meclis-i Mebusan Caddesi No: 57 Fındıklı 34427 - Istanbul

Telephone : (0 212) 251 21 21 Fax : (0 212) 249 65 68

Web Site : www.teb.com.tr

E-mail Address : [email protected] The year end consolidated financial report designed by the Banking Regulation and Supervision Agency in line with Communiqué on Financial Statements to be Publicly Announced and the Related Policies and Disclosures consists of the sections listed below:

• GENERAL INFORMATION ABOUT THE PARENT BANK • CONSOLIDATED FINANCIAL STATEMENTS OF THE PARENT BANK • EXPLANATIONS ON THE CORRESPONDING ACCOUNTING POLICIES APPLIED IN THE

RELATED PERIOD • INFORMATION ON FINANCIAL STRUCTURE OF THE GROUP WHICH IS UNDER

CONSOLIDATION • EXPLANATORY DISCLOSURES AND FOOTNOTES ON CONSOLIDATED FINANCIAL

STATEMENTS • OTHER EXPLANATIONS AND FOOTNOTES • INDEPENDENT AUDITOR’S REPORT

The subsidiaries, associates and jointly controlled entities, financial statements of which are consolidated within the framework of the reporting package are as follows:

Subsidiaries 1. The Economy Bank N.V. 2. Stichting Effecten Dienstverlening 3. Kronenburg Vastgoed B.V. 4. TEB Finansal Kiralama A.Ş. 5. TEB Faktoring A.Ş. 6. TEB Yatırım Menkul Değerler A.Ş. 7. TEB Portföy Yönetimi A.Ş.

The consolidated financial statements and the explanatory footnotes and disclosures, unless otherwise indicated, are prepared in thousands of New Turkish Lira, in accordance with the Communique on Banks’ Accounting Practice and Maintaining Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards, related communiqués and the Banks’ records, have been independently audited and presented as attached.

February 8, 2010

Yavuz Canevi

Patrick Rene Pitton

Dr. Akın Akbaygil

Varol Civil

M. Aşkın Dolaştır

B. Ilgaz Doğan Chairman of the Board of

Directors

Chairman of the Audit Committee

Vice Chairman of the Audit Committee

General Manager

Assistant General Manager Responsible of

Financial Reporting

Director Resposible of Financial Reporting

Information related to responsible personnel for the questions can be raised about financial statements:

Name-Surname / Title: Çiğdem Başaran / Investor Relations Manager

Telephone Number: (0212) 251 21 21

Fax Number: (0212) 249 65 68

INDEX Page Number

SECTION ONE General Information

I. History of the Parent Bank, Including its Incorporation Date, Initial Legal Status and Amendments to Legal Status, if any 1 II. Explanation on the Parent Bank’s Capital Structure, Shareholders of the Parent Bank who are in Charge of the Management and/or Auditing of the

Parent Bank Directly or Indirectly, Changes in These Matters (if any), and the Group the Parent Bank Belongs to 1 III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the

Parent Bank They Possess 2 IV. Information About the Persons and Institutions That Have Qualified Shares in the Parent Bank 2 V. Summary on the Parent Bank’s Functions and Areas of Activity 3

SECTION TWO Consolidated Financial Statements

I. Consolidated Balance Sheet 4 II. Consolidated Statement of Off Balance Sheet Contingencies and Commitments 6 III. Consolidated Statement of Income 7 IV. Consolidated Statement of Profit and Loss Accounted for Under Equity 8 V. Consolidated Statement of Changes in Shareholders’ Equity 9 VI. Consolidated Statement of Cash Flows 11 VII. Consolidated Profit Distribution Table 12

SECTION THREE Accounting Principles

I. Basis of Presentation 13 II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions 13 III. Information about the Parent Bank and its Consolidated Subsidiaries 14 IV. Explanations on Forward and Option Contracts and Derivative Instruments 15 V. Explanations on Interest Income and Expenses 16 VI. Explanations on Fees and Commission Income and Expenses 16 VII. Explanations on Financial Assets 16 VIII. Explanations on Impairment of Financial Assets 19 IX. Explanations on Offsetting of Financial Assets and Liabilities 19 X. Explanations on Sales and Repurchase Agreements and Lending of Securities 19 XI. Explanations on Assets Held For Sale, Discontinued Operations and Liabilities Related to Those Assets 19 XII. Explanations on Goodwill and Other Intangible Assets 20 XIII. Explanations on Tangible Fixed Assets 20 XIV. Explanations on Leasing Transactions 21 XV. Explanations on Provisions and Contingent Liabilities 21 XVI. Explanations on Liabilities Regarding Employee Benefits 21 XVII. Explanations on Taxation 22 XVIII. Additional Explanations on Borrowings 23 XIX. Explanations on Share Certificates 23 XX. Explanations on Acceptances 23 XXI. Explanations on Government Incentives 23 XXII. Explanations on Reporting According to Segmentation 23 XXIII. Explanations on Other Matters 24

SECTION FOUR Information on Consolidated Financial Structure

I. Explanations Related to the Consolidated Capital Adequacy Standard Ratio 25 II. Explanations Related to the Consolidated Credit Risk 28 III. Explanations Related to the Consolidated Market Risk 33 IV. Explanations Related to the Consolidated Operational Risk 34 V. Explanations Related to the Consolidated Currency Risk 34 VI. Explanations Related to the Consolidated Interest Rate Risk 37 VII. Explanations Related to the Consolidated Liquidity Risk 41 VIII. Explanations Related to the Presentation of Financial Assets and Liabilities at Fair Value 44 IX. Explanations Related to the Transactions Carried out on Behalf of Other Parties and Fiduciary Assets 45

SECTION FIVE

Explanations and Disclosures on Consolidated Financial Statements I. Explanations and Disclosures Related to the Consolidated Assets 46 II. Explanations and Disclosures Related to the Consolidated Liabilities 67 III. Explanations and Disclosures Related to the Consolidated Off-Balance Sheet Contingencies and Commitments 76 IV. Explanations and Disclosures Related to the Consolidated Statement of Income 80 V. Explanations and Disclosures Related to the Consolidated Statement of Shareholders’ Equity Movement 86 VI. Explanations and Disclosures Related to the Consolidated Statement of Cash Flows 87 VII. Explanations on the Risk Group of the Parent Bank 88 VIII. Explanations on the Parent Bank’s Domestic Branches, Agencies and Branches Abroad and Off-shore Branches 90

SECTION SIX Other Explanations

I. Explanations on the Operations of the Parent Bank 91

SECTION SEVEN Independent Auditor’s Report

I. Explanations on the Independent Auditor’s Report 91 II. Other Footnotes and Explanations Prepared by the Independent Auditors 91

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2009 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

1

SECTION ONE

GENERAL INFORMATION I. History of the Parent Bank, Including its Incorporation Date, Initial Legal Status and

Amendments to Legal Status, if any

Türk Ekonomi Bankası Anonim Şirketi (“the Bank”), which had been a local bank incorporated in Kocaeli in 1927 under the name of Kocaeli Halk Bankası T.A.Ş., was acquired by the Çolakoğlu Group in 1982. Its title was changed as Türk Ekonomi Bankası A.Ş. and its headquarters moved to Istanbul.

II. Explanation on the Parent Bank’s Capital Structure, Shareholders of the Parent Bank

who are in Charge of the Management and/or Auditing of the Parent Bank Directly or Indirectly, Changes in These Matters (if any), and the Group the Parent Bank Belongs to

As of December 31, 2009 and December 31, 2008 the shareholders’ structure and their respective ownerships are summarized as follows:


Name of shareholders

Paid in capital

%

Paid in capital

%

TEB Mali Yatırımlar A.Ş. 926,796 84.25 926,796 84.25 Publicly Traded 171,966 15.63 171,966 15.63 Other Shareholders 1,238 0.12 1,238 0.12 1,100,000 100.00 1,100,000 100.00

As of December 31, 2009 Parent Bank’s paid-in-capital consists of 1,100,000,000 shares of TRY 1.00 (full TRY) nominal each.


2

III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the Parent Bank They Possess

Name Title Board of Directors; Yavuz Canevi Chairman of the Board of Directors Dr.Akın Akbaygil Member of the Board of Directors, Vice Chairman of the Audit

Committee and Vice Chairman of the Board of Directors Patrick Rene Pitton Member of the Board of Directors , Chairman of the Audit Committee Jean-Jacques Marie Santini Member of the Board of Directors and Vice Chairman of the Board of

Directors Metin Toğay Member of the Board of Directors Yves Paul Henri Martrenchar(*) Member of the Board of Directors Refael Taranto Member of the Board of Directors Varol Civil Member of the Board of Directors and General Manager Musa Erden Member of the Board of Directors Assistant General Managers;

Mustafa Aşkın Dolaştır Assistant General Manager Responsible from Financial Reporting İzzet Cemal Kişmir Assistant General Manager Responsible from Consumer Banking and

Business Banking Levent Çelebioğlu Assistant General Manager Responsible from Corporate Banking and

Financial Institutions Nilsen Altıntaş Assistant General Manager Responsible from Human Resources Nuri Tuncalı Assistant General Manager Responsible from Corporate and

Commercial Loans Saniye Telci Assistant General Manager Responsible from Banking Operations Turgut Boz Assistant General Manager Responsible from Commercial Banking and

SME Banking Turgut Güney Assistant General Manager Responsible from Information Technologies Ümit Leblebici Assistant General Manager Responsible from Treasury Ünsal Aysun Assitant General Manager Responsible from Project Financing and Cash

Management Ömer Abidin Yenidoğan Assistant General Manager Responsible from Private Banking

(Vicarious) Melis Coşan Baban Assistant General Manager Responsible from Legal Affairs and

Secretary of the Board of Directors Osman Durmuş Assistant General Manager Responsible from Consumer Loans and

Business Loans Inspection Committee and Statutory Auditors;

Hakan Tıraşın Chairman of the Inspection Committee Ayşe Aşardağ Statutory Auditor Cihat Madanoğlu Statutory Auditor

(*) Christophe Philippe Marie Vallée left from his position as a member of the Board of Directors as of June 17, 2009, and Yves Paul Henri Martrenchar was appointed as the new member of the Board of Directors.

Shares of the Parent Bank owned by the above stated Chairman and Members of Board of Directors, General Manager and Assistants are negligible.

IV. Information About the Persons and Institutions That Have Qualified Shares in the Parent Bank

Name / Commercial Name Share

Amount Share Ratio

Paid up Shares

Unpaid Shares

TEB Mali Yatırımlar A.Ş. 926,796 84.25% 926,796 -

The directly or indirectly authorized group that has the qualified shares in the Parent Bank’s capital is TEB Mali Yatırımlar A.Ş. TEB Mali Yatırımlar A.Ş. is a member of Çolakoğlu and BNP Paribas Group. 50% of the shares of TEB Mali Yatırımlar A.Ş. is controlled by BNP Paribas, while the remaining 50% is controlled by Çolakoğlu Group.


3

V. Summary on the Parent Bank’s Functions and Areas of Activity The Parent Bank’s operating areas include corporate, retail and private banking as well as project finance, fund management and custody operations. Beside the ordinary banking operations, the Parent Bank is handling agency functions through its branches on behalf of TEB Yatırım Menkul Değerler A.Ş. and Zurich Sigorta A.Ş. (formerly TEB Sigorta A.Ş. prior to the title change on August 18, 2008). As of December 31, 2009 the Parent Bank has 330 local branches and 4 foreign branches (2008 - 332 local branches, 4 foreign branches).

SECTION TWO

CONSOLIDATED FINANCIAL STATEMENTS

I. Consolidated Balance Sheet II. Consolidated Statement of Off Balance Sheet Contingencies and Commitments

III. Consolidated Statement of Income IV. Consolidated Statement of Profit and Loss Accounted for Under Equity V. Consolidated Statement of Changes in Shareholders’ Equity

VI. Consolidated Statement of Cash Flows VII. Consolidated Profit Distribution Table

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

4

I. CONSOLIDATED BALANCE SHEET – ASSETS (STATEMENT OF FINANCIAL POSITION) Audited Audited Current Period Prior Period 31.12.2009 31.12.2008 Note

Ref.

TRY

FC

Total TRY FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK (1) 344,368 1,167,344 1,511,712 536,128 1,563,431 2,099,559 II.

FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net)

(2) 176,429 23,594 200,023 56,756 44,385 101,141

2.1 Financial assets held for trading 176,429 23,594 200,023 56,756 44,385 101,141 2.1.1 Public sector debt securities 133,230 4,687 137,917 11,825 3,780 15,605 2.1.2 Share certificates - - - - - - 2.1.3 Derivative financial assets held for trading 43,199 18,907 62,106 44,931 40,605 85,536 2.1.4 Other marketable securities - - - - - - 2.2 Financial assets classified at fair value through profit and loss - - - - - - 2.2.1 Public sector debt securities - - - - - - 2.2.2 Share certificates - - - - - - 2.2.3 Loans - - - - - - 2.2.4 Other marketable securities - - - - - - III. BANKS (3) 171,832 552,171 724,003 41,235 1,126,954 1,168,189 IV. MONEY MARKET PLACEMENTS 619,657 84,807 704,464 700,508 56,394 756,902 4.1 Interbank money market placements 610,110 84,807 694,917 700,292 56,394 756,686 4.2 Istanbul Stock Exchange money market placements 145 - 145 - - - 4.3 Receivables from reverse repurchase agreements 9,402 - 9,402 216 - 216 V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (4) 1,603,901 72,979 1,676,880 1,082,396 154,298 1,236,694 5.1 Share certificates 9 2,583 2,592 9 1,554 1,563 5.2 Public sector debt securities 1,603,892 63,018 1,666,910 1,082,387 146,788 1,229,175 5.3 Other marketable securities - 7,378 7,378 - 5,956 5,956 VI. LOANS (5) 7,077,534 2,788,198 9,865,732 6,389,603 2,885,641 9,275,244 6.1 Loans and receivables 6,889,382 2,787,705 9,677,087 6,294,170 2,883,418 9,177,588 6.1.1 Loans to Risk Group of the Bank 21,507 32,035 53,542 3,122 8,576 11,698 6.1.2 Public sector debt securities - - - - - - 6.1.3 Other 6,867,875 2,755,670 9,623,545 6,291,048 2,874,842 9,165,890 6.2 Non-performing loans 427,991 7,675 435,666 201,525 6,820 208,345 6.3 Specific provisions (-) (239,839) (7,182) (247,021) (106,092) (4,597) (110,689) VII. FACTORING RECEIVABLES (18) 289,794 84,363 374,157 196,626 121,955 318,581 VIII. HELD TO MATURITY INVESTMENTS (Net) (6) 882,324 19,316 901,640 799,384 19,427 818,811 8.1 Public sector debt securities 882,324 19,316 901,640 799,384 19,427 818,811 8.2 Other marketable securities - - - - - - IX. INVESTMENTS IN ASSOCIATES (Net) (7) 2,013 - 2,013 12 - 12 9.1 Accounted for under equity method - - - - - - 9.2 Unconsolidated associates 2,013 - 2,013 12 - 12 9.2.1 Financial investments 2,012 - 2,012 12 - 12 9.2.2 Non-financial investments 1 - 1 - - - X. INVESTMENTS IN SUBSIDIARIES (Net) (8) - - - - - - 10.1 Unconsolidated financial subsidiaries - - - - - - 10.2 Unconsolidated non-financial subsidiaries - - - - - - XI. ENTITIES UNDER COMMON CONTROL (Net) (9) - - - - - - 11.1 Consolidated under equity method - - - - - - 11.2 Unconsolidated - - - - - - 11.2.1 Financial subsidiaries - - - - - - 11.2.2 Non-financial subsidiaries - - - - - - XII. LEASE RECEIVABLES (Net) (10) 65,360 341,809 407,169 88,965 488,992 577,957 12.1 Finance lease receivables 79,949 389,180 469,129 114,468 560,528 674,996 12.2 Operating lease receivables - - - - - - 12.3 Other 2,133 406 2,539 1,435 284 1,719 12.4 Unearned income (-) (16,722) (47,777) (64,499) (26,938) (71,820) (98,758) XIII.

DERIVATIVE FINANCIAL ASSETS FOR HEDGING PURPOSES

(11) 30,976 354 31,330 54,210 2,214 56,424

13.1 Fair value hedge 30,976 354 31,330 54,210 2,214 56,424 13.2 Cash flow hedge - - - - - - 13.3 Hedge of net investment risks in foreign operations - - - - - - XIV. TANGIBLE ASSETS (Net) (12) 156,381 7,765 164,146 168,789 7,914 176,703 XV. INTANGIBLE ASSETS (Net) (13) 14,300 1,183 15,483 12,300 561 12,861 15.1 Goodwill 1,205 - 1,205 1,205 - 1,205 15.2 Other 13,095 1,183 14,278 11,095 561 11,656 XVI. INVESTMENT PROPERTY (Net) (14) - - - - - - XVII. TAX ASSET (15) 48,522 1,536 50,058 28,783 868 29,651 17.1 Current tax asset - - - 10,889 - 10,889 17.2 Deferred tax asset 48,522 1,536 50,058 17,894 868 18,762 XVIII. ASSETS HELD FOR SALE AND DISCONTINUED

OPERATIONS (Net) (16) - - - - - -

18.1 Held for sale - - - - - - 18.2 Discontinued operations - - - - - - XIX. OTHER ASSETS (17) 372,652 36,970 409,622 303,346 62,383 365,729

TOTAL ASSETS

11,856,043 5,182,389 17,038,432 10,459,041 6,535,417 16,994,458


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

5

I. CONSOLIDATED BALANCE SHEET – LIABILITIES AND EQUITY (STATEMENT OF FINANCIAL POSITION) Audited Audited Current Period Prior Period 31.12.2009 31.12.2008 Note Ref. TRY FC Total TRY FC Total

I. DEPOSITS (1) 5,920,071 4,443,213 10,363,284 5,619,993 4,875,793 10,495,786 1.1 Deposits from Risk Group of the Bank 169,603 287,471 457,074 242,001 783,616 1,025,617 1.2 Other 5,750,468 4,155,742 9,906,210 5,377,992 4,092,177 9,470,169 II.

DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING

(2) 31,036 26,953 57,989 96,573 79,674 176,247

III. FUNDS BORROWED (3) 1,142,881 1,317,619 2,460,500 1,781,312 1,546,145 3,327,457 IV. MONEY MARKET BALANCES 1,071,971 - 1,071,971 201,804 - 201,804 4.1 Interbank money market takings - - - - - - 4.2 Istanbul Stock Exchange money market takings - - - 60 - 60 4.3 Funds provided under repurchase agreements 1,071,971 - 1,071,971 201,744 - 201,744 V. MARKETABLE SECURITIES ISSUED (Net) - - - - - - 5.1 Bills - - - - - - 5.2 Asset backed securities - - - - - - 5.3 Bonds - - - - - - VI. FUNDS - - - - - - 6.1 Borrower funds - - - - - - 6.2 Other - - - - - - VII. SUNDRY CREDITORS 246,316 20,916 267,232 242,356 15,289 257,645 VIII. OTHER LIABILITIES (4) 237,607 388 237,995 223,898 4,164 228,062 IX. FACTORING PAYABLES - - - - - - X. FINANCE LEASE PAYABLES (Net) (5) - - - - - - 10.1 Finance lease payables - - - - - - 10.2 Operating lease payables - - - - - - 10.3 Other - - - - - - 10.4 Deferred finance lease expenses (-) - - - - - - XI.

DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING PURPOSES

(6) 73,493 - 73,493 67,611 - 67,611

11.1 Fair value hedge 73,493 - 73,493 67,611 - 67,611 11.2 Cash flow hedge - - - - - - 11.3 Hedge of net investment in foreign operations - - - - - - XII. PROVISIONS (7) 132,829 18,380 151,209 126,721 20,619 147,340 12.1 General loan loss provisions 70,145 16,681 86,826 60,752 20,619 81,371 12.2 Restructuring reserve - - - - - - 12.3 Reserve for employee benefits 18,512 - 18,512 13,795 - 13,795 12.4 Insurance technical reserves (Net) - - - - - - 12.5 Other provisions 44,172 1,699 45,871 52,174 - 52,174 XIII. TAX LIABILITY (8) 37,244 733 37,977 49,335 - 49,335 13.1 Current tax liability 37,244 733 37,977 49,326 - 49,326 13.2 Deferred tax liability - - - 9 - 9 XIV. PAYABLES RELATED TO ASSETS HELD FOR SALE AND

DISCONTINUED OPERATIONS (9)

- - - - - -

14.1 Held for sale - - - - - - 14.2 Discontinued operations - - - - - - XV. SUBORDINATED LOANS (10) - 483,474 483,474 - 495,055 495,055 XVI. SHAREHOLDERS' EQUITY (11) 1,714,293 119,015 1,833,308 1,449,652 98,464 1,548,116 16.1 Paid-in capital 1,100,000 - 1,100,000 1,100,000 - 1,100,000 16.2 Supplementary capital 20,119 4,857 24,976 11,394 (3,023) 8,371 16.2.1 Share premium 2,227 - 2,227 2,227 - 2,227 16.2.2 Share cancellation profits - - - - - - 16.2.3 Marketable securities value increase fund 16,966 4,857 21,823 8,241 (3,023) 5,218 16.2.4 Tangible assets revaluation differences - - - - - - 16.2.5 Intangible assets revaluation differences - - - - - - 16.2.6 Investment properties revaluation differences - - - - - - 16.2.7 Bonus shares obtained from associates, subsidiaries and jointly

controlled entities (Joint Vent.) - - - - - -

16.2.8 Hedging funds (Effective portion) - - - - - - 16.2.9 Accumulated valuation differences from assets held for sale and from

discontinued operations - - - - - -

16.2.10 Other capital reserves 926 - 926 926 - 926 16.3 Profit reserves 340,621 99,807 440,428 164,820 87,927 252,747 16.3.1 Legal reserves 57,519 - 57,519 46,693 - 46,693 16.3.2 Status reserves - - - - - - 16.3.3 Extraordinary reserves 274,270 99,807 374,077 111,658 86,247 197,905 16.3.4 Other profit reserves 8,832 - 8,832 6,469 1,680 8,149 16.4 Profit or loss 253,553 14,351 267,904 173,438 13,560 186,998 16.4.1 Prior years’ income/ (loss) - - - - - - 16.4.2 Current year income/ (loss) 253,553 14,351 267,904 173,438 13,560 186,998 16.5 Minority shares (12) - - - - - - TOTAL LIABILITIES AND EQUITY 10,607,741 6,430,691 17,038,432 9,859,255 7,135,203 16,994,458


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED STATEMENTS OF OFF-BALANCE SHEET CONTINGENCIES AND COMMITMENTS AS OF DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

6

II. CONSOLIDATED STATEMENT OF OFF-BALANCE SHEET CONTINGENCIES AND COMMITMENTS


31.12.2009

Audited Prior Period 31.12.2008

Note Ref.

TRY FC TOTAL TRY FC TOTAL

A.

OFF BALANCE SHEET CONTINGENCIES AND COMMITMENTS (I+II+III)

7,540,811 7,977,427 15,518,238 6,036,504 7,647,735 13,684,239

I. GUARANTEES (1), (3) 1,532,701 2,222,970 3,755,671 1,348,770 2,071,470 3,420,240 1.1 Letters of guarantee 1,415,128 1,309,344 2,724,472 1,262,496 1,273,016 2,535,512 1.1.1 Guarantees subject to State Tender Law 78,334 24,009 102,343 60,852 23,317 84,1691.1.2 Guarantees given for foreign trade operations 134,913 65,521 200,434 126,643 70,864 197,507 1.1.3 Other letters of guarantee 1,201,881 1,219,814 2,421,695 1,075,001 1,178,835 2,253,836 1.2 Bank loans 171 39,034 39,205 - 51,320 51,320 1.2.1 Import letter of acceptance 171 36,594 36,765 - 47,272 47,272 1.2.2 Other bank acceptances - 2,440 2,440 - 4,048 4,048 1.3 Letters of credit 339 784,043 784,382 238 615,737 615,975 1.3.1 Documentary letters of credit 339 689,769 690,108 238 523,549 523,787 1.3.2 Other letters of credit - 94,274 94,274 - 92,188 92,188 1.4 Prefinancing given as guarantee - - - - - -1.5 Endorsements - - - - - -1.5.1 Endorsements to the Central Bank of Turkey - - - - - -1.5.2 Other endorsements - - - - - -1.6 Securities issue purchase guarantees - - - - - -1.7 Factoring guarantees - - - - - -1.8 Other guarantees 116,803 68,573 185,376 85,517 99,511 185,028 1.9 Other collaterals 260 21,976 22,236 519 31,886 32,405 II. COMMITMENTS (1), (3) 3,110,272 648,459 3,758,731 2,221,159 195,315 2,416,474 2.1 Irrevocable commitments 3,110,272 648,459 3,758,731 2,221,159 195,315 2,416,474 2.1.1 Forward asset purchase commitments 108,571 235,667 344,238 - 182,115 182,115 2.1.2 Forward deposit purchase and sales commitments - 16,814 16,814 - - -2.1.3 Share capital commitment to associates and subsidiaries 2,000 - 2,000 - - -2.1.4 Loan granting commitments 996,619 - 996,619 843,376 - 843,376 2.1.5 Securities underwriting commitments - - - - - -2.1.6 Commitments for reserve deposit requirements 346,683 380,104 726,787 - - -2.1.7 Payment commitment for checks 650,733 - 650,733 560,682 - 560,682 2.1.8 Tax and fund liabilities from export commitments 14,914 - 14,914 12,449 - 12,449 2.1.9 Commitments for credit card expenditure limits 956,344 1,172 957,516 759,651 1,114 760,765 2.1.10 Commitments for promotions related with credit cards and banking

activities 1,899 - 1,899 2,281 - 2,281

2.1.11 Receivables from short sale commitments - - - - - -2.1.12 Payables for short sale commitments - - - - - -2.1.13 Other irrevocable commitments 32,509 14,702 47,211 42,720 12,086 54,806 2.2. Revocable commitments - - - - - -2.2.1 Revocable loan granting commitments - - - - - -2.2.2 Other revocable commitments - - - - - -III. DERIVATIVE FINANCIAL INSTRUMENTS (2) 2,897,838 5,105,998 8,003,836 2,466,575 5,380,950 7,847,525 3.1 Derivative financial instruments for hedging purposes 469,988 291,511 761,499 582,448 420,017 1,002,465 3.1.1 Fair value hedge 469,988 291,511 761,499 582,448 420,017 1,002,465 3.1.2 Cash flow hedge - - - - - -3.1.3 Hedge of net investment in foreign operations - - - - - -3.2 Held for trading transactions 2,427,850 4,814,487 7,242,337 1,884,127 4,960,933 6,845,060 3.2.1 Forward foreign currency buy/sell transactions 550,095 1,105,030 1,655,125 482,898 2,293,938 2,776,836 3.2.1.1 Forward foreign currency transactions-buy 358,911 481,993 840,904 258,886 1,128,001 1,386,887 3.2.1.2 Forward foreign currency transactions-sell 191,184 623,037 814,221 224,012 1,165,937 1,389,949 3.2.2 Swap transactions related to f.c. and interest rates 915,490 1,860,058 2,775,548 1,060,299 1,865,893 2,926,1923.2.2.1 Foreign currency swap-buy 151,511 1,067,639 1,219,150 841,255 559,182 1,400,4373.2.2.2 Foreign currency swap-sell 563,979 653,905 1,217,884 219,044 1,213,943 1,432,9873.2.2.3 Interest rate swaps-buy 100,000 69,257 169,257 - 46,384 46,384 3.2.2.4 Interest rate swaps-sell 100,000 69,257 169,257 - 46,384 46,384 3.2.3 Foreign currency, interest rate and securities options 962,265 1,366,226 2,328,491 340,930 347,988 688,918 3.2.3.1 Foreign currency options-buy 440,198 701,814 1,142,012 162,923 182,845 345,768 3.2.3.2 Foreign currency options-sell 485,412 664,412 1,149,824 178,007 165,143 343,150 3.2.3.3 Interest rate options-buy 36,655 - 36,655 - - -3.2.3.4 Interest rate options-sell - - - - - -3.2.3.5 Securities options-buy - - - - - -3.2.3.6 Securities options-sell - - - - - -3.2.4 Foreign currency futures - 483,173 483,173 - 453,114 453,114 3.2.4.1 Foreign currency futures-buy - 234,791 234,791 - 208,133 208,133 3.2.4.2 Foreign currency futures-sell - 248,382 248,382 - 244,981 244,9813.2.5 Interest rate futures - - - - - -3.2.5.1 Interest rate futures-buy - - - - - -3.2.5.2 Interest rate futures-sell - - - - - -3.2.6 Other - - - - - -B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 137,348,045 7,504,361 144,852,406 86,967,681 7,698,290 94,665,971 IV. ITEMS HELD IN CUSTODY 119,506,841 543,183 120,050,024 72,347,416 640,529 72,987,945 4.1. Assets under management 551,881 - 551,881 440,645 - 440,645 4.2. Investment securities held in custody 116,055,410 171,104 116,226,514 68,866,692 178,704 69,045,396 4.3. Checks received for collection 2,754,141 229,619 2,983,760 2,901,234 287,854 3,189,088 4.4. Commercial notes received for collection 145,063 84,934 229,997 138,746 112,307 251,053 4.5. Other assets received for collection 247 57,526 57,773 - 61,664 61,664 4.6. Assets received for public offering - - - - - -4.7. Other items under custody 99 - 99 99 - 99 4.8. Custodians - - - - - -V. PLEDGED ITEMS 17,815,500 6,957,362 24,772,862 14,599,293 7,056,852 21,656,145 5.1. Marketable securities 266,577 8,351 274,928 273,479 12,963 286,442 5.2. Guarantee notes 8,833,394 5,403,205 14,236,599 7,430,760 5,491,782 12,922,542 5.3. Commodity 7,515 104,472 111,987 8,466 126,818 135,284 5.4. Warranty - - - - - -5.5. Properties 7,478,811 1,077,294 8,556,105 5,635,117 1,048,994 6,684,111 5.6. Other pledged items 1,229,203 364,040 1,593,243 1,251,471 376,295 1,627,766 5.7. Pledged items-depository - - - - - -VI.

ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES

25,704 3,816 29,520 20,972 909 21,881

TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) 144,888,856 15,481,788 160,370,644 93,004,185 15,346,025 108,350,210


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

7

III. CONSOLIDATED STATEMENT OF INCOME



01.01-31.12.2009


01.01-31.12.2008

Note Ref.

Total

Total I. INTEREST INCOME (1) 1,802,718 2,230,566 1.1 Interest on loans 1,320,122 1,528,026 1.2 Interest received from reserve deposits 27,364 44,924 1.3 Interest received from banks 19,852 75,371 1.4 Interest received from money market placements 27,755 87,342 1.5 Interest received from marketable securities portfolio 294,747 308,209 1.5.1 Held-for-trading financial assets 12,866 28,532 1.5.2 Financial assets at fair value through profit and loss - - 1.5.3 Available-for-sale financial assets 164,461 244,925 1.5.4 Investments held-to-maturity 117,420 34,752 1.6 Finance lease Income 54,684 60,184 1.7 Other interest income 58,194 126,510 II. INTEREST EXPENSE (2) 911,498 1,355,540 2.1 Interest on deposits 618,606 930,648 2.2 Interest on funds borrowed 227,483 322,439 2.3 Interest on money market borrowings 44,275 95,495 2.4 Interest on securities issued - - 2.5 Other interest expense 21,134 6,958 III. NET INTEREST INCOME/EXPENSE (I - II) 891,220 875,026 IV. NET FEES AND COMMISSIONS INCOME/EXPENSE 281,834 227,991 4.1 Fees and commissions received 405,974 341,002 4.1.1 Non-cash loans 46,465 42,858 4.1.2 Other 359,509 298,144 4.2 Fees and commissions paid 124,140 113,011 4.2.1 Non-cash loans 1,897 842 4.2.2 Other 122,243 112,169 V. DIVIDEND INCOME (3) 13 481 VI. NET TRADING INCOME (4) 45,232 (53,929) 6.1 Securities trading gains/ (losses) 62,652 (27,620) 6.2 Gains/ (losses) from derivative financial instruments (205,382) (15,301) 6.3 Foreign exchange gains/ (losses) 187,962 (11,008) VII. OTHER OPERATING INCOME (5) 32,019 85,308 VIII. NET OPERATING INCOME (III+IV+V+VI+VII) 1,250,318 1,134,877 IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) (6) 200,268 144,020 X. OTHER OPERATING EXPENSES (-) (7) 759,582 765,239 XI. NET OPERATING INCOME/(LOSS) (VIII-IX-X) 290,468 225,618 XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - - XIII. GAIN / (LOSS) ON EQUITY METHOD - - XIV. GAIN / (LOSS) ON NET MONETARY POSITION - - XV. PROFIT/(LOSS) FROM CONTINUED OPERATIONS BEFORE TAXES

(XI+…+XIV) (8) 290,468 225,618

XVI. TAX PROVISION FOR CONTINUED OPERATIONS (±) (9) (22,564) (38,620) 16.1 Provision for current income taxes (57,476) (11,688) 16.2 Provision for deferred taxes 34,912 (26,932) XVII. NET PROFIT/(LOSS) FROM CONTINUED OPERATIONS (XV±XVI) (10) 267,904 186,998 XVIII. 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. LOSS FROM DISCONTINUED OPERATIONS (-) - - 19.1 Loss from assets held for sale - - 19.2 Loss on sale of associates, subsidiaries and jointly controlled entities

(Joint vent.) - -

19.3 Loss from other discontinued operations - - XX. PROFIT / (LOSS) ON DISCONTINUED OPERATIONS BEFORE

TAXES (XVIII-XIX) (8) - -

XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) (9) - - 21.1 Provision for current income taxes - - 21.2 Provision for deferred taxes - - XXII. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) (10) - - XXIII. NET PROFIT/LOSS (XVII+XXII) (11) 267,904 186,998 23.1 Group’s profit/loss 267,904 186,998 23.2 Minority shares - - Earnings per share 0.2435 0.2212

TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED STATEMENTS OF PROFIT / LOSS ACCOUNTED FOR UNDER EQUITY FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

8

IV. CONSOLIDATED STATEMENT OF PROFIT AND LOSS ACCOUNTED FOR UNDER EQUITY


01.01-31.12.2009


01.01-31.12.2008 I. Additions to marketable securities revaluation differences for available for sale

financial assets 76,054 (3,737)

II. Tangible assets revaluation differences - - III. Intangible assets revaluation differences - - IV. Foreign exchange differences for foreign currency transactions 683 31,768 V. Profit/Loss from derivative financial instruments for cash flow hedge purposes

(Effective portion of fair value differences) - -

VI. Profit/Loss from derivative financial instruments for hedge of net investment in foreign operations (Effective portion of fair value differences)

- -

VII. The effect of corrections of errors and changes in accounting policies - - VIII. Other profit loss items accounted for under equity due to TAS - - IX. Deferred tax of valuation differences (4,198) (669) X. Total Net Profit/Loss accounted for under equity (I+II+…+IX) 72,539 27,362 XI. Profit/Loss (55,251) 7,225 1.1 Change in fair value of marketable securities (Transfer to Profit/Loss) (55,251) 7,225 1.2 Reclassification and transfer of derivatives accounted for cash flow hedge purposes to

Income Statement - -

1.3 Transfer of hedge of net investments in foreign operations to Income Statement - - 1.4 Other - - XII. Total Profit/Loss accounted for the Period (X±XI) 17,288 34,587


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 31, 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

9

V. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Audited

Note Ref

Paid-in Capital

Effect of inflation Accounting on

Capital and Other Capital Reserves

Share premium

Share cancellation

profits

Legal Reserves

StatutoryReserves


Other Reserves

Current Period

Net Income/ (Loss)

Prior Period

Net Income/ (Loss)

Marketable Securities

Value Increase

Fund



Bonus shares

obtained from

Associates

Hedging Funds

Acc. Val. diff. from assets held

for sale and from disc. op.

Equity Attributable

to the Parent

Minority Shares

Total Equity

Prior Period – 01.01.-31.12.2008 I. Beginning Balance – 31.12.2007 755,000 926 1,805 - 36,423 - 61,105 (23,619) - 147,070 2,399 - - - - 981,109 - 981,109 II.

Corrections according to TAS 8 - - - - - - - - - - - - - - - - - -

2.1 The effect of corrections of errors - - - - - - - - - - - - - - - - - - 2.2 The effects of changes in accounting policy. - - - - - - - - - - - - - - - - - - III. New Balance (I+II) 755,000 926 1,805 - 36,423 - 61,105 (23,619) - 147,070 2,399 - - - - 981,109 - 981,109 Changes in period - - - - - - - - - - - - - - - - - - IV. Increase/Decrease related to merger - - - - - - - - - - - - - - - - - - V. Marketable securities valuation differences - - - - - - - - - - 2,819 - - - - 2,819 - 2,819 VI. Hedging Funds (Effective Portion) - - - - - - - - - - - - - - - - - - 6.1 Cash-flow hedge - - - - - - - - - - - - - - - - - - 6.2 Hedge of net investment in foreign operations - - - - - - - - - - - - - - - - - - VII. Tangible assets revaluation differences - - - - - - - - - - - - - - - - - - VIII. Intangible assets revaluation differences - - - - - - - - - - - - - - - - - - IX. Bonus shares obtained from associates,

subsidiaries and entities under common control (Joint vent.) - - - - - - - - - - - - - - - - - -

X. Foreign exchange differences - - - - - - - 31,768 - - - - - - - 31,768 - 31,768 XI. The disposal of assets - - - - - - - - - - - - - - - - - - XII. The reclassification of assets - - - - - - - - - - - - - - - - - - XIII. The effect of change in associates’ equity - - - - - - - - - - - - - - - - - - XIV. Capital increase 345,000 - - - - - - - - - - - - - - 345,000 - 345,000 14.1 Cash 345,000 - - - - - - - - - - - - - - 345,000 - 345,000 14.2 Internal sources - - - - - - - - - - - - - - - - - - XV. Share Premium - - 422 - - - - - - - - - - - - 422 - 422 XVI. Share cancellation profits - - - - - - - - - - - - - - - - - - XVII. Inflation adjustment to paid-in capital - - - - - - - - - - - - - - - - - - XVIII Other - - - - - - - - - - - - - - - - - - XIX. Period net income/(loss) - - - - - - - - 186,998 - - - - - - 186,998 - 186,998 XX. Profit distribution - - - - 10,270 - 136,800 - - (147,070) - - - - - - - - 20.1 Dividends distributed - - - - - - - - - - - - - - - - - - 20.2 Transfers to reserves - - - - 10,270 - 136,800 - - (147,070) - - - - - - - - 20.3 Other - - - - - - - - - - - - - - - - - - Closing Balance 31.12.2008

(III+IV+V+VI+VII+VIII+IX+X+XI+XII+XIII+XIV+XV+XVI+XVII+XVIII+XIX+XX)

1,100,000 926 2,227 - 46,693 - 197,905 8,149 186,998 - 5,218 - - - - 1,548,116 - 1,548,116


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE YEAR ENDED DECEMBER 31, 2009 Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.

10

V. CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

Audited

Note Ref Paid-inCapital

Effect of inflation Accounting on

Capital and Other Capital Reserves

Share premium

Share cancellation

profitsLegal

ReservesStatutoryReserves


Other Reserves

Current Period

Net Income/ (Loss)

Prior Period

Net Income/ (Loss)

Marketable Securities

Value Increase

Fund



Bonus shares

obtained from

Associates

Hedging Funds

Acc. val. diff. from

assets held for sale and

from disc. op.

Equity Attributable to the

Parent

Minority Shares

Total Equity

Current Period – 01.01.-31.12.2009 I. Prior period balance – 31.12.2008 1,100,000 926 2,227 - 46,693 - 197,905 8,149 - 186,998 5,218 - - - - 1,548,116 - 1,548,116 Changes in period - - - - - - - - - - - - - - - - - - II. Increase/Decrease related to merger - - - - - - - - - - - - - - - - - - III. Marketable securities valuation differences - - - - - - - - - - 16,605 - - - - 16,605 - 16,605 IV. Hedging Funds (Effective Portion) - - - - - - - - - - - - - - - - - - 4.1 Cash-flow hedge - - - - - - - - - - - - - - - - - - 4.2 Hedge of net investment in foreign operations - - - - - - - - - - - - - - - - - - V. Tangible assets revaluation differences - - - - - - - - - - - - - - - - - - VI. Intangible assets revaluation differences - - - - - - - - - - - - - - - - - - VII. Bonus shares obtained from associates,


- - - - - - - - - - - - - - - - - - VIII. Foreign exchange differences - - - - - - - 683 - - - - - - - 683 - 683 IX. The disposal of assets - - - - - - - - - - - - - - - - - - X. The reclassification of assets - - - - - - - - - - - - - - - - - - XI. The effect of change in associates’ equity - - - - - - - - - - - - - - - - - - XII. Capital increase - - - - - - - - - - - - - - - - - - 12.1 Cash - - - - - - - - - - - - - - - - - - 12.2 Internal sources - - - - - - - - - - - - - - - - - - XIII. Share Premium - - - - - - - - - - - - - - - - - - XIV. Share cancellation profits - - - - - - - - - - - - - - - - - - XV. Inflation adjustment to paid-in capital - - - - - - - - - - - - - - - - - - XVI. Other - - - - - - - - - - - - - - - - - - XVII. Period net income/(loss) - - - - - - - - 267,904 - - - - - - 267,904 - 267,904 XVIII. Profit distribution - - - - 10,826 - 176,172 - - (186,998) - - - - - - - - 18.1 Dividends distributed - - - - - - - - - - - - - - - - - - 18.2 Transfers to reserves - - - - 10,826 - 176,172 - - (186,998) - - - - - - - - 18.3 Other - - - - - - - - - - - - - - - - - - Closing Balance 31.12.2009

(I+II+III+IV+V+VI+VII+VIII+IX+X+XI+XII+XIII+XIV+XV+XVI+XVII+XVIII) 1,100,000 926 2,227 - 57,519 - 374,077 8,832 267,904 - 21,823 - - - - 1,833,308 - 1,833,308


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

11

VI. CONSOLIDATED STATEMENT OF CASH FLOWS Audited Audited Current Period Prior Period Note Ref. 01.01-31.12.2009 01.01-31.12.2008A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating profit before changes in operating assets and liabilities 493,531 500,426 1.1.1 Interest received 1,957,103 1,913,487 1.1.2 Interest paid (1,143,386) (1,313,767)1.1.3 Dividend received 13 481 1.1.4 Fees and commissions received 405,974 341,002 1.1.5 Other income 315,021 782,366 1.1.6 Collections from previously written off loans 142,915 137,962 1.1.7 Payments to personnel and service suppliers (392,629) (394,042)1.1.8 Taxes paid (53,651) (32,426)1.1.9 Others (1) (737,829) (934,637) 1.2 Changes in operating assets and liabilities (981,964) 892,196 1.2.1 Net (increase) decrease in financial assets held for trading (120,077) 194,602 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 (7,377) (11) 1.2.4 Net (increase) decrease in loans (918,165) (1,494,445)1.2.5 Net (increase) decrease in other assets 110,362 (207,534)1.2.6 Net increase (decrease) in bank deposits 893,412 (968,403)1.2.7 Net increase (decrease) in other deposits (123,805) 2,525,986 1.2.8 Net increase (decrease) in funds borrowed (784,936) 894,780 1.2.9 Net increase (decrease) in matured payables - -1.2.10 Net increase (decrease) in other liabilities (1) (31,378) (52,779) I. Net cash provided from banking operations (488,433) 1,392,622 B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash provided from investing activities (513,075) (1,185,984) 2.1 Cash paid for purchase of entities under common control, associates and subsidiaries

(Joint Vent.) (2,001) -

2.2 Cash obtained from sale of entities under common control, associates and subsidiaries (Joint Vent.)

- -

2.3 Fixed assets purchases (19,653) (69,480)2.4 Fixed assets sales 9,918 5,687 2.5 Cash paid for purchase of financial assets available for sale (3,051,654) (1,246,630)2.6 Cash obtained from sale of financial assets available for sale 2,662,878 134,212 2.7 Cash paid for purchase of investment securities (103,360) -2.8 Cash obtained from sale of investment securities - -2.9 Others (1) (9,203) (9,773) C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net cash provided from financing activities (4,310) 345,422 3.1 Cash obtained from funds borrowed and securities issued - -3.2 Cash used for repayment of funds borrowed and securities issued (4,310) -3.3 Capital increase - 345,422 3.4 Dividends paid - -3.5 Payments for finance leases - -3.6 Other (1) - - IV. Effect of change in foreign exchange rate on cash and cash equivalents (1) (45,912) 570,816 V. Net increase / (decrease) in cash and cash equivalents (1,051,730) 1,122,876 VI. Cash and cash equivalents at beginning of the period 3,717,943 2,595,067 VII. Cash and cash equivalents at end of the period 2,666,213 3,717,943


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ CONSOLIDATED PROFIT DISTRIBUTION TABLES FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

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VII. CONSOLIDATED PROFIT DISTRIBUTION TABLE

(*) Audited Audited Current Period Prior Period 31.12.2009 31.12.2008I. DISTRIBUTION OF CURRENT YEAR INCOME 1.1 CURRENT YEAR INCOME - -1.2 TAXES AND DUTIES PAYABLE (-) - -1.2.1 Corporate tax (Income tax) - -1.2.2 Income witholding tax - -1.2.3 Other taxes and duties - - A. NET INCOME FOR THE YEAR (1.1-1.2) - - 1.3 PRIOR YEARS’ LOSSES (-) - -1.4 FIRST LEGAL RESERVES (-) - -1.5 OTHER STATUTORY RESERVES (-) - - B. NET INCOME AVAILABLE FOR DISTRIBUTION [(A-(1.3+1.4+1.5)] - - 1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) - -1.6.1 To owners of ordinary shares - -1.6.2 To owners of preferred shares - -1.6.3 To owners of preferred shares (preemptive rights) - -1.6.4 To profit sharing bonds - -1.6.5 To holders of profit and loss sharing certificates - -1.7 DIVIDENDS TO PERSONNEL (-) - -1.8 DIVIDENDS 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 shares - -1.9.3 To owners of preferred shares (preemptive rights) - -1.9.4 To profit sharing bonds - -1.9.5 To holders of profit and loss sharing certificates - -1.10 SECOND LEGAL RESERVES (-) - -1.11 STATUTORY RESERVES (-) - -1.12 EXTRAORDINARY RESERVES - -1.13 OTHER RESERVES - -1.14 SPECIAL FUNDS - - II. DISTRIBUTION OF 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 shares - -2.3.3 To owners of preferred shares (preemptive rights) - -2.3.4 To profit sharing bonds - -2.3.5 To holders of profit and loss sharing certificates - -2.4 DIVIDENDS TO PERSONNEL (-) - -2.5 DIVIDENDS TO BOARD OF DIRECTORS (-) - - III. EARNINGS PER SHARE 3.1 TO OWNERS OF ORDINARY SHARES - -3.2 TO OWNERS OF ORDINARY SHARES ( % ) - -3.3 TO OWNERS OF PREFERRED SHARES - -3.4 TO OWNERS OF PREFERRED SHARES ( % ) - - IV. DIVIDEND PER SHARE 4.1 TO OWNERS OF ORDINARY SHARES - -4.2 TO OWNERS OF ORDINARY SHARES ( % ) - -4.3 TO OWNERS OF PREFERRED SHARES - -4.4 TO OWNERS OF PREFERRED SHARES ( % ) - - (*) Based on the regulations in Turkey, profit distribution is not made on the consolidated income.


TÜRK EKONOMİ BANKASI ANONİM ŞİRKETİ NOTES AND DISCLOSURES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2009 (Amounts expressed in thousands of Turkish Lira (TRY) unless otherwise stated.)

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SECTION THREE

ACCOUNTING PRINCIPLES I. Basis of Presentation The Parent Bank prepares its financial statements and notes according to Communiqué on Banks’ Accounting Practice and Maintaining Documents, Turkish Accounting Standards (TAS), Turkish Financial Reporting Standards (TFRS), other regulations, communiqués and circulars in respect of accounting and financial reporting and pronouncements made by Banking Regulation and Supervision Agency (BRSA), Turkish Commercial Code and Tax Legislation. The prior period financial statements are prepared in line with the principles of TAS No:1 “Fundamentals of Preparing and Presenting Financial Statements” published in the Official Gazette on January 16, 2005 with No: 25702, and in accordance with Turkish Accounting Standards and Turkish Financial Reporting Standards; and other principles, methods and explanations about accounting and financial reporting issued by the BRSA. Certain reclassifications have been made to the prior year financial statements in order to comply with the current year presentation whenever required. The reclassifications in the prior year financial statements are presented in the table below:

31.12.2008 ASSETS TRY FC

Loans and Receivables 45,757 - Loans to Risk Group of the Bank - - Public Sector Debt Securities - - Other 45,757 -

Derivative Financial Assets for Hedging Purposes (45,757) - Fair value hedge (45,757) -

INCOME STATEMENT 31.12.2008

Other Interest Income (Increase / (Decrease)) 35,927 Other Interest Expense (Increase / (Decrease)) (35,212) Gains from Derivative Financial Instruments (Increase / (Decrease)) (35,927) Losses from Derivative Financial Instruments (Increase / (Decrease)) 35,212

Factoring payables are offset from factoring receivables in 2008 financial statements presented for comparison purposes. In accordance with Law No: 5083 “Monetary Unit of the Turkish Republic” (Law No: 5083), the name of the monetary and sub-currency unit of Turkish Republic is changed to the New Turkish Lira and the New Turkish Cent, respectively. However, in accordance with the additional resolution of the Council of Ministers in regards to the order on the removal of the phrase “New” in the New Turkish Lira and the New Turkish Cent and Its Application Principles, the phrase “New” used in the Turkish Republic’s monetary unit is removed both from New Turkish Lira and the New Turkish Cent as of January 1, 2009. II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions The Group aims to develop and promote products for the financial needs of each customer such as SMEs, multinational companies and even small individual investors in line with banking legislation. The primary objective of the Parent Bank is to increase profitability with optimum liquidity and minimum risk while fulfilling customer needs. Thus, the Parent Bank uses 35% on average of its resources on liquid assets, as well as intending for the highest possible yield with effective maturity management. The Group aims at creating an optimum maturity risk and working with a positive margin between cost of resource and product yield in the process of asset and liability management.


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II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions (continued)

As a component of risk management strategy of the Group, risk bearing short term positions of currency, interest or price movements is performed only by the Treasury Asset-Liability Management using the limits defined by the Board of Directors. The Asset-Liability Committee of the Parent Bank manages the maturity mismatches while deciding the short, medium and long term strategies as well as adopting the principle of positive balance sheet margin as a pricing policy. The Board of Directors of the Parent Bank allows a purchase risk in treasury operations and individual limits are defined by the Board for each product. The Parent Bank’s hedging activities for the currency risk due to foreign currency available-for-sale equity instruments are described under the Currency Risk section; and the Parent Bank’s hedging activities from interest rate risk arising from fixed interest rate deposits and floating interest rate borrowings are described in detail under Interest Rate Risk section. The Parent Bank’s Asset-Liability Committee approves the trading of various derivative instruments such as currency swaps, forwards and similar derivatives to hedge interest and currency exchange risks in line with the balance sheet structure. III. Information about the Parent Bank and its Consolidated Subsidiaries Türk Ekonomi Bankası Anonim Şirketi and its financial institutions, The Economy Bank N.V. (Economy Bank), Stichting Effecten Dienstverlening (Stichting), Kronenburg Vastgoed B.V. (Kronenburg), TEB Finansal Kiralama A.Ş. (TEB Leasing), TEB Faktoring A.Ş. (TEB Faktoring), TEB Yatırım Menkul Değerler A.Ş. (TEB Yatırım) and TEB Portföy Yönetimi A.Ş. (TEB Portföy) are included in the accompanying consolidated financial statements by line-by-line consolidation method. The accompanying consolidated financial statements are prepared in accordance with “Communiqué on Preparation of Consolidated Financial Statements of Banks” published in the Official Gazette dated November 8, 2006 numbered 26340. The Parent Bank and the entities included in the consolidation are referred to as “the Group” in this report. The financial statements of the subsidiaries, which were prepared in accordance with the prevailing principles and rules regarding financial accounting and reporting standards in their respective country of incorporation and the Turkish Commercial Code and/or Financial Leasing Law and/or communiqués of the Capital Market Board, are duly adjusted in order to present their financial statements in accordance with TAS and TFRS.

Explanations on Consolidation Method and Scope

The commercial names of the entities included in consolidation and the locations of the head offices of these institutions: Commercial Name Head Office Economy Bank Netherlands Stichting Netherlands Kronenburg Netherlands TEB Leasing Turkey TEB Faktoring Turkey TEB Yatırım Turkey TEB Portföy Turkey

Line-by-line consolidation method is used for all the financial institutions included in the consolidation.

When there are differences between the accounting policies of the subsidiaries and the Parent Bank, the financial statements are adjusted in accordance with the principle of materiality. The financial statements of the subsidiaries are prepared as of December 31, 2009 and December 31, 2008. The transactions and balances between the consolidated entities and the Parent Bank are eliminated.


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III. Information about the Parent Bank and its Consolidated Subsidiaries (continued) Explanations on Foreign Currency Transactions Gains or losses arising from foreign currency transactions realized during the year are reflected to the income statement. Foreign currency assets and liabilities at each period-end are translated into Turkish lira at the period-end foreign exchange buying rates and the resulting foreign exchange gains or losses are recorded in the income statement as foreign exchange gain or loss. The EUR exchange rate used for translating foreign currency transactions into Turkish Lira and reflecting these to consolidated financial statements as of December 31, 2009, is TRY 2.1427, in full TRY, while the USD exchange rate is TRY 1.4873, in full TRY (2008 – EUR: TRY 2.1332, in full TRY, USD: TRY 1.5218, in full TRY). There are no capitalized foreign exchange differences. The information regarding the principles of foreign currency risk management are stated in Section Four, Note V. There are no debt securities issued. Foreign exchange gains and losses arising from translating monetary financial assets are reflected to “Foreign Exchange Gains / (Losses) in the income statement. The foreign currency net investment in consolidated foreign subsidiaries are translated into New Turkish Lira using the exchange rate prevailing at the balance sheet date for their assets and liabilities and twelve months average exchange rate for their income statement items. The currency translation gain arising from the consolidated subsidiaries’ inflation and devaluation differences amounting to TRY 8,832 (2008 - TRY 8,149 currency translation gain) has been recorded in “Other Profit Reserves” under shareholders’ equity. IV. Explanations on Forward and Option Contracts and Derivative Instruments Fair values of foreign currency forward and swap transactions are determined by comparing the period end foreign exchange rates with the contractual forward rates discounted to the balance sheet date with the prevailing current market rates. The resulting gain or loss is reflected to the income statement. In the assessment of fair value of interest rate swap instruments, interest amounts to be paid or to be received due to/from the fixed rate on the derivative contract are discounted to the balance sheet date with the current applicable fixed rate in the market that is prevailing between the balance sheet date and the interest payment date, whereas interest amounts to be paid or to be received due to/from the floating rate on the derivative contract are recalculated with the current applicable market rates that are prevailing between the balance sheet date and the interest payment date and are discounted to the balance sheet date again with the current applicable market rates that are prevailing between the balance sheet date and the interest payment date. The differences between the fixed rate interest amounts and floating rate interest amounts to be received/paid are recorded in the profit/loss accounts in the current period. The fair value of call and put option agreements are measured at the valuation date by using the current premium values of all option agreements, and the differences between the contractual premiums received/paid and the current premiums measured at valuation date are recognized in the statement of income. Futures transactions are valued on a daily basis by the primary market prices and related unrealized gains or losses are reflected in the income statement. The valuation of CDS transactions are based on the differences between the existing and recalculated payment plans discounted to the valuation date with current CDS interest rates.


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IV. Explanations on Forward and Option Contracts and Derivative Instruments (continued) As of July 1, 2008, the Parent Bank has adopted fair value hedge accounting in order to avoid the effects of interest rate changes in the market by matching a portion of its swap portfolio with its loan portfolio. While the Parent Bank recognizes the fair value changes of the hedged items in the “other interest income” and “other interest expenses” accounts, it recognizes the fair value changes of the hedging instruments related to the same period in the “gains/(losses) from derivative financial instruments” account. Additionally, the difference between the fair value and carrying value of the hedged items as of the application date of hedge accounting is amortized based on their maturities and recognized in “other interest income” and “other interest expenses” accounts. V. Explanations on Interest Income and Expenses Interest income and expense are recognized in the income statement for all interest bearing instruments whose cash inflows and outflows are known on an accrual basis using the effective interest method. In accordance with the related regulation, realized and unrealized interest accruals of the non-performing loans are reversed and interest income related to these loans are recorded as interest income only when collected. VI. Explanations on Fees and Commission Income and Expenses Fees for various banking services are recorded as income when collected and prepaid commission income on cash and non-cash loans is recorded as income by using effective interest rate in the related period. Fees and commissions for funds borrowed paid to other financial institutions, as part of the transaction costs, are recorded as prepaid expenses using the effective interest rate and are expensed on the related periods. The dividend income is reflected to the financial statements on a cash basis when the profit distribution is realized by the associates and subsidiaries. VII. Explanations on Financial Assets Financial instruments comprise financial assets, financial liabilities and derivative instruments. Risks related to these activities form a significant part among total risks the Parent Bank undertakes. Financial instruments affect liquidity, market, and credit risks on the Parent Bank’s balance sheet in all respects. The Parent Bank trades these instruments on behalf of its customers and on its own behalf. Basically, financial assets create the majority of the commercial activities of the Group. These instruments expose, affect and diminish the liquidity, credit and interest risks in the financial statements.

All regular way purchases and sales of financial assets are recognized on the settlement date i.e. the date that the asset is delivered to or by the Group. Settlement date accounting requires (a) accounting of the asset when acquired by the institution and (b) disposing of the asset out of the balance sheet on the date settled by the institution; and accounting of gain or loss on disposal. In case of application of settlement date accounting, the institution accounts for the changes that occur in the fair value of the asset in the period between commercial transaction date and settlement date as in the assets that the institution settles.


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VII. Explanations on Financial Assets (continued) Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place. Changes in fair value of assets to be received during the period between the trade date and the settlement date are accounted for in the same way as the acquired assets. The methods and assumptions used in determining the reasonable estimated values of all of the financial instruments are described below. Cash, Banks, and Other Financial Institutions

Cash and cash equivalents comprise cash on hand, demand deposits, and highly liquid short-term investments with maturity of 3 months or less following the purchase date, not bearing risk of significant value change, and that are readily convertible to a known amount of cash. The book value of these assets approximates their fair values. Financial Assets at Fair Value Through Profit and Loss Trading securities are securities which were either acquired for generating a profit from short-term fluctuations in price or dealer’s margin, or are securities included in a portfolio with a pattern of short-term profit taking. Trading securities are initially recognized at cost. Transaction costs of the related securities are included in the initial cost. The positive difference between the cost and fair value of such securities is accounted for as interest and income accrual, and the negative difference is accounted for as “Impairment Provision on Marketable Securities”. Held to Maturity Investments and Financial Assets Available for Sale Investments held to maturity include securities with fixed or determinable payments and fixed maturity where there is an intention of holding till maturity and the relevant conditions for fulfillment of such intention, including the funding ability other than loans and receivables. Available for sale financial assets include all securities other than loans and receivables, securities held to maturity and securities held for trading. Marketable securities are initially recognized at cost including the transaction costs. After the initial recognition, available for sale securities are measured at fair value and the unrealized gain/loss originating from the difference between the amortized cost and the fair value is recorded in “Marketable Securities Valuation Differences” under the equity. Fair values of debt securities that are traded in an active market are determined based on quoted prices or current market prices. In the absence of prices formed in an active market, fair value of these securities is determined using the prices declared in the Official Gazette or other valuation methods stated in TAS. After initial recognition, held to maturity investments are measured at amortized cost by using effective interest rate less impairment losses, if any. The interests received from held to maturity investments are recorded as interest income. There are no financial assets that have been previously classified as held to maturity investments but cannot be currently classified as held to maturity for two years due to “tainting” rule. The Group classifies its securities as referred to above at the acquisition date of related assets. The sale and purchase transactions of the held to maturity investments are recorded on a settlement date basis.


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VII. Explanations on Financial Assets (continued) Loans and Provisions for Impairment Loans are financial assets those generated by lending money and exclude those that are held with the intention of trading or selling in the near future. The Group initially records loans and receivables at cost. In subsequent periods, in accordance with TAS, loans are measured at amortized cost using effective interest rate method.

Provision is set for the loans that may be doubtful and the amount is charged in the current period income statement. The provisioning criteria for non-performing loans are determined by the Group’s management for compensating the probable losses of the current loan portfolio, by evaluating the quality of loan portfolio, risk factors and considering the economical conditions, other facts and related regulations. Specific reserves are provided for Group III, IV and V loans in accordance with the regulation on “Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” published in the Official Gazette No. 26333 dated November 1, 2006 which was amended with the communiqué published in the Official Gazette No. 27119 dated January 23, 2009. These provisions are reflected in the income statement under “Provision and Impairment Expenses - Special Provision Expense". The collections made regarding these loans are first deducted from the principal amount of the loan and the remaining collections are deducted from interest receivables. The collections made related to loans for which provision is made in the current period are reversed from the “Provision for Loans and Other Receivables” account in the income statement, and related interest income is credited to the “Interest Received from Non-performing Loans” account. Releases of loan loss provisions are reversed from the “Provision and Impairment Expenses - Special Provision Expense” account. In addition to specific loan loss provisions, within the framework of the regulation and principles referred to above; the Parent Bank records general loan loss provisions for loans and other receivables. The Parent Bank calculated the general loan provision as 0.5% for cash loans and other receivables, and 0.1% for non-cash loans until November 1, 2006. Subsequent to the change in the regulation on “Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” published in the Official Gazette No. 26333 dated November 1, 2006; the Parent Bank started to book general loan loss provision of 1% for cash loans and other receivables; and 0.2% for non-cash loans on the increase in the cash and non-cash loan portfolio as compared to their October 31, 2006 balances whereas allocating 0.5% general loan loss provision for cash loans and other receivables, and 0.1% for non-cash loans for the balances as of October 31, 2006. With the change in the same regulation on February 6, 2008, the Parent Bank started to book general loan loss provision of 2% for cash loans under watch-list and 0.4% for non-cash loans under watch-list. Specific reserves are also provided by TEB Leasing and TEB Faktoring based on the Communiqué on “Methods and Principles for the Determination of Receivables to be Reserved for and Allocation of Reserves of Financial Institutions, Leasing, and Factoring Firms” published in the Official Gazette No: 26588 on July 20, 2007 which was amended with the communiqué published in the Official Gazette No. 27270 dated June 26, 2009 and based on the Communiqué about “The Amendment in the Communiqué on Methods and Principles for the Determination of Receivables to be Reserved for and Allocation of Reserves of Finance Companies, Leasing, and Factoring Firms” published in the Official Gazette No: 26808 on March 6, 2008.


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VIII. Explanations on Impairment of Financial Assets

At each balance sheet date, the Group evaluates the carrying amounts of its financial asset or a group of financial assets to determine whether there is an objective indication that those assets have suffered an impairment loss or not. If any such indication exists, the Group determines the related impairment. A financial asset or a financial asset group incurs impairment loss only if there is an objective indicator related to the occurrence (or nonoccurrence) of one or more than one event (“loss event”) after the first journalization of that asset; and such loss event (or events) causes, an impairment as a result of the effect on the reliable estimate of the expected future cash flows of the related financial asset and asset group. Irrespective of high probability the expected losses caused by the future events are not journalized. IX. Explanations on Offsetting of Financial Assets and Liabilities Financial assets and liabilities are offset when a party has a legally enforceable right to set off, the intention of collecting or paying the net amount of related assets and liabilities or the right to offset the assets and liabilities simultaneously. X. Explanations on Sales and Repurchase Agreements and Lending of Securities The sales and purchase of government securities under repurchase agreements made with the customers are recorded in balance sheet accounts in accordance with the Uniform Chart of Accounts by the Group. Accordingly in the financial statements, the government bonds and treasury bills sold to customers under repurchase agreements are classified under securities held for trading, available for sale and held to maturity depending on the portfolio they are originally included in and are valued according to the valuation principles of the related portfolios. Funds obtained from repurchase agreements are classified as a separate sub-account under money markets borrowings account in the liabilities. These transactions are short-term and consist of domestic public sector debt securities. The income and expenses from these transactions are reflected to the “Interest Income on Marketable Securities” and “Interest Expense on Money Market Borrowings” accounts in the income statement. As of December 31, 2009, the Group has reverse repurchase agreements amounting to TRY 9,402 (2008 – TRY 216). As of December 31, 2009, the Group does not have any marketable securities lending transaction (2008 - None). XI. Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to

Those Assets Assets held for sale are those under a plan prepared by the management regarding the sale of the asset to be disposed (or else the group of assets), together with an active program for determination of buyers as well as for the completion of the plan. Also the asset (or else the group of assets) shall be actively marketed in conformity with its fair value. On the other hand, the sale is expected to be journalized as a completed sale within one year after the classification date; and the necessary transactions and procedures to complete the plan should demonstrate the fact that the possibility of making significant changes or canceling the plan is low. The Group does not have any assets held for sale. A discontinued operation is a division of a bank that is either disposed or held for sale. Results of discontinued operations are included in the income statement separately. The Group does not have any discontinued operations.


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XII. Explanations on Goodwill and Other Intangible Assets The positive difference of TRY 1,205 (2008 - TRY 1,205), between the acquisition cost and share in the equity of acquired subsidiaries is reflected under the intangible fixed assets as goodwill in the accompanying consolidated financial statements. Intangible assets are accounted for at restated cost until December 31, 2004 in accordance with inflation accounting and are amortized with straight-line method, after December 31, 2004 the acquisition cost and any other cost incurred so as to prepare the intangible asset ready for use less reserve for impairment, if any, and are amortized on a straight-line method. The cost of assets subject to amortization is restated after deducting the exchange differences, capitalized financial expenses and revaluation increases, if any, from the cost of the assets. The other intangible assets of the Group comprise mainly software. The requirements of the Turkish Tax Procedural Code are taken into consideration in determining the useful lives and no other specific criteria are used. Useful lives of such assets acquired prior to 2004 are determined as 5 years and for the year 2004 and forthcoming years as 3 years. Software used are mainly developed within the Parent Bank by the Parent Bank’s personnel and the related expenses are not capitalized. Software is purchased only in emergency cases and for special projects. There are no anticipated changes in the accounting estimates about the amortization rate and amortization method and residual values that would have a significant impact in the current and future periods. XIII. Explanations on Tangible Fixed Assets Properties are accounted for at their restated costs until December 31, 2004; afterwards the acquisition cost and any other cost incurred so as to prepare the fixed asset ready for use are reflected, less reserve for impairment, if any. The straight-line method of depreciation is used for buildings and useful life is considered as 50 years. Leasehold improvements are depreciated over the lease period by straight-line method. Other tangible fixed assets are accounted for at their restated costs until December 31, 2004; afterwards the acquisition cost and any other cost incurred so as to prepare the fixed asset ready for use are reflected less reserve for impairment, if any, and depreciated on a straight-line method. Depreciation of assets held less than one year as of the balance sheet date is accounted for proportionately. The annual rates used, which approximate rates based on the estimated economic useful lives of the related assets, are as follows:

% Buildings 2 Motor vehicles 20 Furniture, fixtures and office equipment and others 3 – 50 Gain or loss resulting from disposals of the tangible fixed assets is reflected to the income statement as the difference between the net proceeds and net book value. Maintenance costs of tangible fixed assets are capitalized if they extend the economic useful life of the related asset. Other maintenance costs are expensed. There are no pledges, mortgages or other restrictions on the tangible fixed assets. There are no purchase commitments related to the tangible fixed assets. There are no anticipated changes in the accounting estimates, which could have a significant impact in the current and future periods. The Parent Bank employs independent appraisers in determining the current fair values of its real estates. As of December 31, 2009, there is a provision for impairment loss amounting to TRY 2,608 for real estates held for resale as per the appraisals performed at the year end (2008 – TRY 1,544).


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XIV. Explanations on Leasing Transactions Tangible fixed assets acquired by financial leases are accounted for in accordance with TAS No:17. In accordance with this standard, the leasing transactions, which consist only foreign currency liabilities, are translated to Turkish Lira with the exchange rates prevailing at the transaction dates and they are recorded as an asset or a liability. The foreign currency liabilities are translated to Turkish Lira with the Parent Bank’s period end exchange rates. The increases/decreases resulting from the differences in the foreign exchange rates are recorded as expense/income in the relevant period. The financing cost resulting from leasing is distributed through the lease period to form a fixed interest rate. In addition to the interest expense, depreciation expense is recorded for the depreciable leased assets in each period. The depreciation rate is determined in accordance with TAS No:16 "Accounting Standard for Tangible Fixed Assets" by taking the useful lives into account. The gross lease receivables including interest and principal amounts regarding the Group’s financial leasing activities conducted by TEB Leasing as “Lessor” are stated under the receivables from the financial leasing activities. The difference between the total of rent payments and the cost of the related fixed assets are reflected to the “unearned income” account. The interest income is calculated and recorded to create a constant rate of return over the lessor’s net investment on the leased item. Operating lease payments are recognized as expense in the income statement on a straight line basis over the lease term. XV. Explanations on Provisions and Contingent Liabilities Provisions are recognized when there is a present obligation, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are determined by using the Group’s best expectation of expenses in fulfilling the obligation as of the balance sheet date, and discounted to present value if material. XVI. Explanations on Liabilities Regarding Employee Benefits Defined Benefit Plans In accordance with existing social legislation in Turkey, the Group is required to make lump-sum termination indemnities over a 30 day salary to each employee who has completed over one year of service, whose employment is terminated due to retirement or for reasons other than resignation or misconduct, and due to marriage, female employees terminating their employments within a year as of the date of marriage, or male employees terminating their employments due to their military service. The Group is also required to make a payment for the period of notice calculated over each service year of the employee whose employment is terminated for reasons other than resignation or misconduct. Total benefit is calculated in accordance with TAS No:19 “Turkish Accounting Standard on Employee Benefits”. Such benefit plans are unfunded since there is no funding requirement in Turkey. The cost of providing benefits to the employees for the services rendered by them under the defined benefit plan is determined by independent actuaries annually using the projected unit credit method. All actuarial gains and losses are recognized in the income statement. In calculating the related liability to be recorded in the financial statements for these defined benefit plans, the Group uses independent actuaries and also makes assumptions and estimation relating to the discount rate to be used, turnover of employees, future change in salaries/limits, etc. These estimations are reviewed annually. The carrying value of provision for employee termination benefits as of December 31, 2009 is TRY 18,512 (2008 - TRY 13,795).


22

XVI. Explanations on Liabilities Regarding Employee Benefits (continued) Defined Contribution Plans The Group pays contributions to Social Security Funds on a mandatory basis. There are no other liabilities related to employee benefits to be provisioned. XVII. Explanations on Taxation Corporate tax According to the Article 32 of the Corporate Tax Law No. 5520, announced in the Official Gazette dated June 21, 2006, the corporate tax rate is 20%. The tax legislation, requires advance tax of 20% to be calculated and paid based on earnings generated for each quarter. The amounts thus calculated and paid are offset against the final tax liability for the year. Tax returns are required to be filed between the first and twenty-fifth day of the fourth month following the balance sheet date and paid in one installment until the end of the related month. Tax provision related with items that are credited or charged directly to equity are charged or credited to equity. As of December 31, 2009, TRY 5,467 (2008 - TRY 1,269) deferred tax which is related with items recorded in the equity was net off under equity in “Marketable Securities Valuation Differences”. According to the Corporate Tax Law, tax losses can be carried forward for a maximum period of five years following the year in which the losses are incurred. Tax authorities can inspect tax returns and the related accounting records for a retrospective maximum period of five years. Deferred Tax Liability / Asset The Group calculates and reflects deferred tax asset or liability on timing differences which will result in taxable or deductible amounts in determining taxable profit of future periods. As of December 31, 2009 and December 31, 2008, in accordance with TAS No: 12 “Turkish Accounting Standard on Income Taxes” and the changes in the circular of BRSA numbered BDDK.DZM.2/13/1-a-3 dated December 8, 2004, the Bank calculated deferred tax asset on all deductible temporary differences except for general loan reserves, if sufficient taxable profit in future periods to recover such amounts is probable; as well as deferred tax liability on all taxable temporary differences. Deferred tax assets and liabilities are shown in the accompanying financial statements on a net basis in the standalone financial statements of the consolidated subsidiaries. The net deferred tax asset is included in deferred tax asset and the net deferred tax liability is reflected under deferred tax liability on the balance sheet. The deferred tax benefit of TRY 34,912 is stated under the tax provision in the income statement (2008 - TRY 26,932 deferred tax charge). The deferred tax of TRY 5,467 (2008 - TRY 1,269) resulting from differences related to items that are credited or charged directly to equity is netted with these accounts. Furthermore, as per the above circular of BRSA, deferred tax benefit balance resulting from netting of deferred tax assets and liabilities should not be used in dividend distribution and capital increase.


23

XVIII. Additional Explanations on Borrowings The borrowing costs related to purchase, production, or construction of qualifying assets that require significant time to be prepared for use and sale are included in the cost of assets until the relevant assets become ready to be used or to be sold. Financial investment income obtained by temporary placement of undisbursed investment loan in financial investments is offset against borrowing costs qualified for capitalization. All other borrowing costs are recorded to the income statement in the period they are incurred. There are no debt securities issued by the Parent Bank. The Group has not issued convertible bonds. XIX. Explanations on Issued Share Certificates None. XX. Explanations on Acceptances Acceptances are realized simultaneously with the payment dates of the customers and they are presented as probable commitments in off-balance sheet accounts. XXI. Explanations on Government Incentives There are no government incentives utilized by the Group. XXII. Explanations on Reporting According to Segmentation The Group mainly operates in retail and corporate banking segments.


Head OfficeEliminations Total

Net interest income 99,838 545,242 246,140 - 891,220 Net fees and commissions income and other operating income 115,893 186,203 13,657 (1,900) 313,853 Trading profit / loss 3,258 32,206 10,095 (327) 45,232 Dividend income 1,366 1,227 11,974 (14,554) 13 Impairment provision for loans and other receivables (-) 51,492 144,915 3,861 - 200,268Other operating expenses (-) 175,641 305,159 280,682 (1,900) 759,582 Profit before tax (6,778) 314,804 (2,677) (14,881) 290,468 Taxation - - (22,564) - (22,564) Net profit for the period (6,778) 314,804 (25,241) (14,881) 267,904



Segment assets 1,986,569 9,025,823 6,054,504 (30,477) 17,036,419 Investments in associates and subsidiaries - - 167,621 (165,608) 2,013 Total Assets 1,986,569 9,025,823 6,222,125 (196,085) 17,038,432 Segment liabilities 5,695,943 5,629,100 3,910,434 (30,353) 15,205,124 Shareholders’ equity - - 1,999,040 (165,732) 1,833,308 Total Liabilities 5,695,943 5,629,100 5,909,474 (196,085) 17,038,432


24

XXII. Explanations on Segment Reporting (continued)

Prior Period Retail Corporate Treasury/


Net interest income 59,691 594,784 220,506 45 875,026Net fees and commissions income and other operating income 105,665 178,549 28,497 588 313,299Trading profit / loss (14,049) 7,775 (47,818) 163 (53,929)Dividend income 1,690 3,070 19,252 (23,531) 481Impairment provision for loans and other receivables (-) 11,690 91,479 40,851 - 144,020Other operating expenses (-) 130,062 249,767 387,449 (2,039) 765,239 Profit before tax 11,245 442,932 (207,863) (20,696) 225,618Taxation - - (38,620) - (38,620) Net profit for the period 11,245 442,932 (246,483) (20,696) 186,998 Prior Period Retail Corporate Treasury/


Segment assets 1,053,622 8,335,471 7,654,422 (49,069) 16,994,446 Investments in associates and subsidiaries - - 165,620 (165,608) 12 Total Assets 1,053,622 8,335,471 7,820,042 (214,677) 16,994,458 Segment liabilities 5,782,881 5,726,570 3,986,167 (49,276) 15,446,342 Shareholders’ equity - - 1,713,517 (165,401) 1,548,116 Total Liabilities 5,782,881 5,726,570 5,699,684 (214,677) 16,994,458

XXIII. Explanations on Other Matters BNP Paribas, holding 50% of TEB Mali Yatırımlar A.Ş. which holds the controlling shareholding of 84.25% of the Parent Bank, has acquired 75% of the shares of Fortis Bank Belgium being the main shareholder of Fortis Bank A.Ş. with 94.11% shareholding, from the State of Belgium based on the resolutions taken at Fortis Holding General Assembly of Shareholders held in Belgium and Netherlands on April 28 and 29, respectively. The share transfer procedures were completed as of May 13, 2009. In this respect, as explained also in the Special Public Disclosure of the Parent Bank dated June 22, 2009, the Parent Bank has signed a confidentiality agreement with Fortis Bank A.Ş. in order to exchange information and assess the options for several corporate structures. These assessments take place solely for consultation purposes and do not intend to make decisions regarding any business transactions. On September 23, 2009, the BRSA has announced its consent on the indirect acquisition of 70.52% of the total shares of Fortis Bank A.Ş. by BNP Paribas as per the 18th article of the Banking Act No: 5411. Explanation for convenience translation to English The accounting principles used in the preparation of the accompanying financial statements differ from International Financial Reporting Standards (IFRS). The effects of the differences between these accounting principles and the accounting principles generally accepted in the countries in which the accompanying financial statements are to be used and IFRS have not been quantified in the financial statements.


25

SECTION FOUR

INFORMATION ON CONSOLIDATED FINANCIAL STRUCTURE OF THE GROUP I. Explanations Related to the Consolidated Capital Adequacy Standard Ratio The method used for risk measurement in determining consolidated capital adequacy standard ratio; Capital Adequacy Standard Ratio is calculated in accordance with the Communiqué on “Measurement and Assessment of Capital Adequacy of Banks”, which was published on November 1, 2006 in the Official Gazette numbered 26333 and the Communiqué on “The Amendment in Measurement and Assessment of Capital Adequacy of Banks” published on October 10, 2007 in the Official Gazette numbered 26669. As of December 31, 2009, the Group’s consolidated capital adequacy ratio in accordance with the related Communiqué is 16.95% (2008 – 16.47%). In the computation of capital adequacy standard ratio, information prepared in accordance with statutory accounting requirements are used. Additionally, the market risk amount is calculated in accordance with the communiqué on the "Measurement and Assessment of Capital Adequacy of Banks" and is taken into consideration in the capital adequacy standard ratio calculation. The values deducted from the capital base in the shareholders’ equity computation are excluded while calculating risk-weighted assets, non-cash loans and contingent liabilities. Assets subject to depreciation and impairment among risk-weighted assets are included in the calculations over their net book values after deducting the relative depreciations and provisions. While calculating the basis of non-cash loans subject to credit risk, the net receivable amount from the counter parties net of provision amount set in accordance with the “Communiqué on Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” is multiplied by the loan conversion rates presented in the Article 5, the Clause 1 of the Communiqué on "Measurement and Assessment of Capital Adequacy of Banks", and calculated by applying the risk weights presented in the Capital Adequacy Analysis Form. Receivables from counter parties from derivative foreign currency and interest rate transactions are multiplied by the loan conversion rates presented in the Article 5, the Clause 2 of the Communiqué on "Measurement and Assessment of Capital Adequacy of Banks", and the related credit risk is calculated by applying the risk weights presented in the Capital Adequacy Analysis Form.


26

I. Explanations Related to the Consolidated Capital Adequacy Standard Ratio (continued) Information related to the consolidated capital adequacy ratio:

Consolidated Parent Bank Risk Weight Risk Weight 0% 10% 20% 50% 100% 150% 200% 0% 10% 20% 50% 100% 150% 200%Risk Weighted Assets, Liabilities and Non-Cash Loans Balance Sheet Items (Net)

Cash 327,961 - 10 - - - - 327,953 - 10 - - - -Matured Marketable Securities - - - - - - - - - - - - - -Due From Central Bank of Turkey 922,102 - - - - - - 922,102 - - - - - -Due From Domestic Banks, Foreign Banks, Branches and Head Office Abroad 149,310 - 538,643 - 34,255 - - - - 367,842 - 34,255 - -Interbank Money Market Placements 694,921 - - - - - - 694,776 - - - - - -Receivables From Reverse Repo Transactions 9,400 - - - - - - - - - - - - -Reserve Deposits 257,208 - - - - - - 257,208 - - - - - -Loans 293,015 - 441,048 2,480,064 6,615,714 18,322 192 269,010 - 80,898 2,480,064 5,757,920 18,322 192Non-performing loans (Net) - - - - 190,186 - - - - - - 188,152 - -Financial Lease Receivables - - - 53,661 350,072 - - - - - - - - -Available-For-Sale Financial Assets 1,561,269 - 12,113 - 4,433 - - 1,557,669 - - - 3,738 - -Held to Maturity Investments 865,300 - - - 8,262 - - 852,801 - - - - - -Receivables From Installment Sales of Assets

- - - - -- - - - - - - - -

Sundry Debtors - - 191,796 - 27,582 - - - - 191,796 - 3,516 - -Interest and Income Accruals 131,399 - 3,278 31,094 176,839 - - 130,878 - 1,503 30,586 169,886 - -Subsidiaries, Associates and Entities Under Common Control (Joint Vent.) (Net) - - - - 2,013 - - - - - - 155,922

- -

Tangible Assets - - - - 113,396 - - - - - - 104,589 - -Other Assets 167,779 - - - 37,411 - - 120,723 - - - 30,833 - -

Off-Balance Sheet Items Guarantees and Commitments 179,395 - 449,950 - 2,194,548 - - 128,672 - 186,743 - 2,156,288 - -Derivative Financial Instruments - - 106,604 - 35,820 - - - - 105,337 - 35,091 - -

Non Risk Weighted Accounts - - - - - - - - - - - - - - Total Value at Risk 5,559,059 - 1,743,442 2,564,819 9,790,531 18,322 192 5,261,792 - 934,129 2,510,650 8,640,190 18,322 192Total Risk Weighted Assets - - 348,688 1,282,410 9,790,531 27,483 384 - - 186,826 1,255,325 8,640,190 27,483 384

Summary information related to the capital adequacy ratio: Consolidated Parent Bank Current Period Prior Period Current Period Prior Period Total Risk Weighted Assets (TRWA) 11,449,496 11,000,386 10,110,208 9,710,054 Amount Subject to Market Risk (ASMR) 458,488 403,800 326,175 282,863 Amount Subject to Operational Risk (ASOR) (*) 1,492,474 1,041,648 1,323,618 896,330 Shareholders’ Equity 2,271,620 2,049,856 2,082,025 1,922,486 Shareholders’ Equity / (TRWA + ASMR + ASOR) *100 16.95 16.47 17.70 17.65 TRWA: Total Risk Weighted Assets ASMR: Amount Subject to Market Risk ASOR: Amount Subject to Operational Risk (*) Operational risk has been calculated by using the Basic Indicator Approach.


27

I. Explanations Related to the Consolidated Capital Adequacy Standard Ratio (continued) Information related to the components of shareholders' equity: Consolidated Parent Bank Current Period Prior Period Current Period Prior PeriodCORE CAPITAL Paid-in capital 1,100,000 1,100,000 1,100,000 1,100,000

Nominal capital 1,100,000 1,100,000 1,100,000 1,100,000 Capital commitments (-) - - - -

Paid-in capital restatement difference 926 926 926 926 Share premium 2,227 2,227 2,158 2,158 Cancellation profits - - - - Legal reserves 57,519 46,693 34,959 26,750

First legal reserve (Turkish Commercial Code 466/1) 42,642 32,980 29,423 21,214 Second legal reserve (Turkish Commercial Code 466/2) 14,877 13,713 5,536 5,536 Other legal reserve per special legislation - - - -

Statutory reserves - - - - Extraordinary reserves 382,909 206,054 279,694 123,705

Reserves allocated by the General Assembly 382,909 206,054 279,694 123,705 Retained earnings - - - - Accumulated losses - - - - Foreign currency share capital exchange difference - - - -

Restatement differences of legal, statutory and extraordinary reserves - - - - Profit 267,904 186,998 210,167 164,198

Current period net profit 267,904 186,998 210,167 164,198 Prior years’ profits - - - -

Provision for possible losses up to 25% of the Core Capital - - - - Gains on sale of associates and subsidiaries and properties to be added to capital - - - - Primary subordinated loans up to 15% of the Core Capital 148,730 152,180 148,730 152,180 Minority Shares - - - - Losses (-) (that cannot be covered by reserves) - - - -

Net current period loss - - - - Prior years’ losses - - - -

Leasehold improvements (-) 50,750 - 50,395 - Prepaid expenses (-) 30,854 31,902 29,475 31,139 Intangible assets (-) 14,278 11,656 10,910 9,857 Deferred tax asset exceeding 10% of the Core Capital (-) - - - - Excess amount in the Article 56, Clause 3 of the Banking Law (-) - - - - Goodwill (Net) (-) 1,205 1,205 - - Total Core Capital 1,863,128 1,695,078 1,685,854 1,569,917 SUPPLEMENTARY CAPITAL

General Loan Loss Reserves 86,826 81,371 74,628 74,698 45% of the revaluation reserve for movable fixed assets - - - - 45% of the of revaluation reserve for properties - - - - Bonus shares obtained from associates, subsidiaries and entities under common control - - - - Primary subordinated loans excluded in the calculation of the Core Capital - - - - Secondary subordinated loans 311,846 316,220 311,846 316,220 45% of Marketable securities value increase fund 9,820 1,950 9,697 2,647

Associates and subsidiaries - - - - Available for sale securities 9,820 1,950 9,697 2,647

Indexation differences for capital reserves, profit reserves and retained earnings (Except indexation differences for legal reserves, statutory reserves and extraordinary reserves) - - - - Minority interest - - - - Total Supplementary Capital 408,492 399,541 396,171 393,565 TIER III CAPITAL - - - - CAPITAL 2,271,620 2,094,619 2,082,025 1,963,482 DEDUCTIONS FROM THE CAPITAL - 44,763 - 40,996 Shareholdings in unconsolidated banks and financial institutions - - - - Secondary subordinated loans granted to Banks and Financial Institutions (Domestic,Foreign) or Qualified Shareholders and placements that possess the nature of theirPrimary or Secondary Subordinated Debt and Primary and Secondary loans borrowedfrom them - - - - Shareholdings in the banks and financial institutions which are accounted for underthe equity pick up method but the assets and liabilities are not consolidated. - - - - Loans granted being non-compliant with the Articles 50 and 51 of the Banking Law - - - - The net book value of properties exceeding fifty percent of equity and properties heldfor sale and properties and commodity to be disposed, acquired in exchange of loansand receivables according to the Article 57 of the Banking Law and have not beendisposed yet after 5 years after foreclosure - - - - Other - - - - Total Shareholder’s Equity 2,271,620 2,049,856 2,082,025 1,922,486


28

II. Explanations Related to the Consolidated Credit Risk

Credit risk is the risk that the Group is a party in a contract whereby the counterparty fails to meet its obligation and cause to incur a financial loss. The credit allocation is performed on a debtor and a debtor group basis within the limits. In the credit allocation process, many financial and non-financial criteria are taken into account within the framework of the internal rating procedures of the Parent Bank. These criteria include geographical and sector concentrations. The sector concentrations for loans are monitored closely. In accordance with the Parent Bank’s loan policy, the rating of the companies, credit limits and guarantees are considered together, and credit risks incurred are monitored. The credit risks and limits related to treasury activities, the limits of the correspondent banks that are determined by their ratings and the control of the maximum acceptable risk level in relation to the equity of the Parent Bank are monitored daily. Risk limits are determined in connection with these daily transactions, and risk concentration is monitored systematically concerning off-balance sheet operations. As prescribed in the Communiqué on “Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves”, the credit worthiness of the debtors of the loans and other receivables is monitored regularly. Most of the statement of accounts for the loans are derived from audited financial statements. The unaudited documents result from the timing differences between the loan allocation and the audit dates of the financial statements of the companies and subsequently the audited financial statements are obtained from the companies. Credit limits are determined according to the audited statement of accounts, and guarantee factors are developed in accordance with the decision of the credit committee considering the characteristics of the transactions and the financial structures of the companies. For the forward transactions and other similar positions of the Parent Bank, operational limits are set by the Board of Directors and the transactions take place within these limits. The fulfillment of the benefits and proceeds related to forward transactions is generally realized at maturity. However, in order to minimize the risk, counter positions of existing risks are entered into in the market. Indemnified non-cash loans are subject to the same risk weight as outstanding loans matured but not yet paid. Since the volume of the restructured loans is not material to the financial statements, no additional follow up methodology is developed, except as stated in the regulations. Financial institutions abroad and country risks of the Parent Bank are generally taken for the financial institutions and countries whose investment level is rated by international rating agencies and which do not have the risk of failing to meet minimum obligations. Therefore, the probable risks are not material when the financial structure of the Bank is concerned. The Parent Bank does not have a material credit risk concentration as an active participant in the international banking market when the financial operations of the other financial institutions are concerned. As of December 31, 2009, the receivables of the Group from its top 100 cash loan customers amount to TRY 2,058,182 (2008 – TRY 1,680,286) with a share of 21.27% in the total cash loans (2008 – 18.31%). As of December 31, 2009, the receivables of the Group from its top 100 non-cash loan customers amount to TRY 1,403,850 (2008 – TRY 1,255,255) with a share of 37.38% in the total non-cash loans (2008 – 36.70%). The share of cash and non-cash receivables of the Group from its top 100 customers in total balance sheet and off-balance sheet assets is 20.20% as of December 31, 2009 ( 2008 – 17.99%). As of December 31, 2009, the general loan loss provision related with the credit risk taken by the Group is TRY 86,826 (2008 – TRY 81,371).


29

II. Explanations Related to the Consolidated Credit Risk (continued)

Credit risk by types of borrowers and geographical concentration:

Loans to Real Persons and Legal Entities

Loans to Banks and Other Financial

Institutions Marketable Securities* Other Loans**

Current Period

Prior Period

Current Period

Prior Period

Current Period

Prior Period

Current Period

Prior Period

Loans according to borrowers 9,264,790 8,832,665 600,942 442,579 2,716,437

2,071,110 1,516,744 2,064,955

Private Sector 7,037,974 7,114,977 146,393 36,979 -

- 757,978 867,241

Public Sector 4,925 15,618 16,448 316 2,706,467 2,063,590 158,110 -

Banks - - 438,101 405,284 7,378 5,957 600,656 1,197,714

Retail 2,221,891 1,702,070 - - - - - -

Share Certificates - - - - 2,592

1,563 - -Information according to geographical concentration

9,264,790 8,832,665 600,942 442,579 2,716,437

2,071,110 1,516,744 2,064,955

Domestic 9,007,454 8,562,460 493,728 325,376 2,688,081

2,033,417 987,640 1,056,742

European Union Countries 114,137 89,701 13,157 25,485 3,861

13,301 354,496 842,628

OECD Countries*** 45,667 34,309 - 2,789 -

11,767 4,653 6,642

Off-shore Banking Regions 17,272 87,143 33,157 932 1,147

- 124,316 69,238

USA, Canada 5,610 6,440 - 6,315 2,515 1,486 44,714 89,270

Other Countries 74,650 52,612 60,900 81,682 20,833 11,139 925 435

Total 9,264,790 8,832,665 600,942 442,579 2,716,437 2,071,110 1,516,744 2,064,955 * Includes marketable securities designated at fair value through profit or loss, available-for-sale and held-to-maturity. ** Includes the on balance sheet transactions classified in the Uniform Chart of Accounts except the ones in the first three categories and the transactions defined as loan in the Article 48 of the Banking Act No: 5411. *** OECD countries other than European Union countries, USA and Canada.


30

II. Explanations Related to the Consolidated Credit Risk (continued) Information according to geographical concentration :

Assets LiabilitiesNon-Cash

LoansEquity

Investments

Net Income/

LossCurrent Period Domestic 15,999,660 11,552,097 3,541,051 - 254,055 European Union Countries 545,442 1,987,775 84,979 - 13,849 OECD Countries (*) 52,449 143,363 62,322 - -Off-shore Banking Regions 188,825 744,537 10,913 - -USA, Canada 92,735 418,453 826 - -Other Countries 157,308 358,899 55,580 - -Associates, Subsidiaries and Entities Under Common Control (Joint Vent.) - - - 2,013 -Unallocated Assets/Liabilities (**) - - - - -Total 17,036,419 15,205,124 3,755,671 2,013 267,904 Prior Period Domestic 15,373,358 10,278,646 3,274,455 - 173,924European Union Countries 1,131,463 3,195,642 57,061 - 13,074OECD Countries (*) 57,955 73,226 10,075 - -Off-shore Banking Regions 171,460 1,032,730 30,490 - -USA, Canada 114,875 487,066 2,271 - -Other Countries 145,335 379,032 45,888 - -Associates, Subsidiaries and Entities Under Common Control (Joint Vent.) - - - 12 -Unallocated Assets/Liabilities (**) - - - - -Total 16,994,446 15,446,342 3,420,240 12 186,998 (*) OECD countries other than EU countries, USA and Canada. (**) Assets and liabilities that cannot be allocated on a coherent basis.


31

II. Explanations Related to the Consolidated Credit Risk (continued) Sector concentrations for cash loans :


Agricultural 238,642 3.45 114,439 4.11 213,242 3.41 116,328 4.04

Farming and Raising Livestock 203,062 2.95 84,420 3.03 178,035 2.85 83,938 2.91Forestry, Wood and Paper 24,598 0.36 28,540 1.03 23,897 0.38 26,117 0.91Fishery 10,982 0.14 1,479 0.05 11,310 0.18 6,273 0.22

Manufacturing 2,732,120 39.66 1,640,106 58.83 2,449,197 39.20 1,883,224 65.31Mining and Quarry 187,474 2.72 63,422 2.28 167,203 2.68 93,152 3.23Production 2,499,316 36.28 1,492,664 53.54 2,266,208 36.27 1,756,905 60.93Electricity, Gas and Water 45,330 0.66 84,020 3.01 15,786 0.25 33,167 1.15

Construction 328,971 4.78 89,515 3.21 375,065 6.00 38,098 1.32Services 1,215,030 17.64 812,993 29.16 1,166,136 18.66 720,045 24.97

Wholesale and Retail Trade 296,997 4.31 41,251 1.48 416,998 6.67 85,012 2.95Hotel, Tourism, Food and Beverage Services

94,972 1.38 66,573 2.39 89,833

1.44

40,390 1.40

Transportation and Communication

238,557 3.46 142,822 5.12 265,089

4.24

115,861 4.02

Financial Institutions 289,028 4.20 468,513 16.81 116,342 1.86 452,483 15.69Real Estate and Renting Services

114,309 1.66 76,786 2.75 109,954

1.76

12,656 0.44

Self-Employment Services 87,821 1.27 1,135 0.04 90,533 1.45 1,697 0.06Education Services 10,052 0.15 207 0.01 9,931 0.16 - -Health and Social Services 83,294 1.21 15,706 0.56 67,456 1.08 11,946 0.41

Other(*) 2,374,619 34.47 130,652 4.69 2,090,530 32.73 125,723 4.36 Total 6,889,382 100.00 2,787,705 100.00 6,294,170 100.00 2,883,418 100.00

(*)Accruals are included in other. The table below shows the maximum exposure to credit risk for the components of the financial statements: Current Period Prior Period Central Bank of Turkey 1,183,741 1,830,494Due from Banks 724,003 1,168,189Other money markets 704,464 756,902Trading financial assets 137,917 15,605Derivative financial instruments 62,106 85,536Derivative financial instruments for hedging purposes 31,330 56,424Financial assets available-for-sale 1,676,880 1,236,694Held-to-maturity investments 901,640 818,811Loans (*) 10,647,058 10,171,782Total 16,069,139 16,140,437 Contingent liabilities 3,755,671 3,420,240Commitments 3,758,731 2,416,474Total 7,514,402 5,836,714 Total credit risk exposure 23,583,541 21,977,151 (*) Loans include TRY 374,157 (2008: TRY 318,581 ) factoring receivables and TRY 407,169 (2008: TRY 577,957) lease receivables.


32

II. Explanations Related to the Consolidated Credit Risk (continued) Credit quality per class of financial assets as of December 31, 2009 and December 31, 2008 are as follows: Current Period



Loans and advances to customers Corporate lending 4,757,069 183,715 4,940,784 Small business lending 2,290,680 358,587 2,649,267 Consumer lending 1,707,757 61,846 1,769,603 Credit cards 413,164 92,914 506,078Other - - -

Total 9,168,670 697,062 9,865,732 Prior period



Loans and advances to customers Corporate lending 4,480,787 163,088 4,643,875Small business lending 2,411,475 467,382 2,878,857Consumer lending 1,067,541 175,484 1,243,025Credit cards 408,244 101,243 509,487Other - - -

Total 8,368,047 907,197 9,275,244 Carrying amount per class of financial assets whose terms have been renegotiated: Current Period Prior Period Loans and advances to customers

Corporate lending 142,059 3,222Small business lending - -Consumer lending - -Other - -

Total 142,059 3,222 Credit Rating System The credit risk is assessed through the internal rating system of the Parent Bank, by classifying loans from highest grade to lowest grade according to the probability of default. As of December 31, 2009, consumer loans, and small business loans are excluded from the internal rating system of the Parent Bank. Additional scoring methodologies are applied for these loans. The risks that are subject to rating models can be allocated as follows:

Category Description of Category Share in the Total %

1st Category The borrower has a very strong financial structure 25.79 2nd Category The borrower has a good financial structure 22.40 3rd Category The borrower has an intermediate level of financial structure 45.69 4th Category The financial structure of the borrower has to be closely monitored in the

medium run 6.12

Total 100.00


33

III. Explanations Related to the Consolidated Market Risk

The Group has established market risk management operations and taken the necessary precautions in order to hedge market risk within its financial risk management purposes, in accordance with the Communiqué on “Measurement and Assessment of Capital Adequacy of Banks” issued on Official Gazette dated November 1, 2006 numbered 26333.

The Board of Directors determines the limits for the basic risk that the Parent Bank is exposed to. Those limits are revised periodically in line with the market forces and strategies of the Parent Bank. Additionally, the Board of Directors has ensured that the risk management division and senior management has taken necessary precautions to describe, evaluate, control and manage risks faced by the Parent Bank. Interest rate and exchange rate risks, arising from the volatility in the financial markets, of the financial positions taken by the Parent Bank related to balance sheet and off-balance sheet accounts are measured and while calculating the capital adequacy and the amount subject to VAR, as summarized below, is taken into consideration by the standard method. Beside the standard method, VAR is calculated by using internal model as supported by scenario analysis and stress tests. VAR is calculated daily by three different methods which are historic simulation, Monte Carlo simulation and parametric method. These results are also reported daily to the management. a) Information Related to Market Risk

Consolidated Parent Bank (I) Capital Requirement to be Employed For General Market Risk - Standard Method 19,995 19,321 (II) Capital Requirement to be Employed For Specific Risk - Standard Method 282 195 (III) Capital Requirement to be Employed For Currency Risk – Standard Method 16,393 6,569 (IV) Capital Requirement to be Employed For Commodity Risk – Standard Method - - (V) Capital Requirement to be Employed For Settlement Risk – Standard Method - - (VI) Total Capital Requirement to be Employed For Market Risk Resulting From Options - Standard Method 9 9 (VII) Total Capital Requirement to be Employed For Market Risk in Banks Using Risk Measurement Model - - (VIII) Total Capital Requirement to be Employed For Market Risk (I+II+III+IV+V+VI) 36,679 26,094 (IX) Amount Subject to Market Risk (12,5 x VIII) or (12,5 x VII) 458,488 326,175 b) Average market risk table calculated at the end of the months during the period:

Current Period Prior Period Average Maximum Minimum Average Maximum Minimum

Interest Rate Risk 16,485 19,966 10,596 12,796 15,092 10,401 Common Stock Risk 248 311 216 75 221 - Currency Risk 16,968 18,160 16,393 16,801 25,005 12,659 Commodity Risk - - - - - - Settlement Risk - - - - - - Option Risk 2,570 7,057 9 3,156 6,277 931

Total Value Subject to Risk 453,391 516,500 409,063 410,360 486,638 340,875 Other price risks The Group is not subject to a significant share price risk due to share certificates.


34

IV. Explanations Related to the Consolidated Operational Risk

a) Operational risk has been calculated using the Basic Indicator Approach. Market risk measurements are performed monthly.

b) The Group does not use the Standard Approach. V. Explanations Related to the Consolidated Currency Risk Foreign currency risk indicates the probability of loss that the Group is subject to due to the exchange rate movements in the market. While calculating the share capital requirement, all foreign currency assets, liabilities and forward transactions of the Group are taken into consideration and value at risk is calculated by using the standard method. The Board of Directors of the Parent Bank sets limits for the positions, which are followed up daily. Any possible changes in the foreign currency transactions in the Parent Bank’s positions are also monitored. As an element of the Group’s risk management strategies, foreign currency liabilities are hedged against exchange rate risk by derivative instruments. The Treasury Department of the Parent Bank is responsible for the management of New Turkish Lira or foreign currency price, liquidity and affordability risks that could occur in the domestic and international markets within the limits set by the Board of Directors. The monitoring of risk and risk related transactions occurring in the money markets is performed daily and reported to the Parent Bank’s Asset-Liability Committee on a weekly basis. As of December 31, 2009, the Group’s net long position is TRY 143,387 (2008 - TRY 169,461 net long) resulting from short position on the balance sheet amounting to TRY 444,614 (2008 - TRY 461,040 long) and long position on the off-balance sheet amounting to TRY 588,001 (2008 - TRY 291,579 short).

The announced current foreign exchange buying rates of the Parent Bank at December 31, 2009 and the previous five working days in full TRY are as follows:

24.12.2009 25.12.2009 28.12.2009 29.12.2009 30.12.2009 31.12.2009USD 1.5070 1.5052 1.5065 1.5026 1.5057 1.4873CHF 1.4530 1.4508 1.4528 1.4557 1.4492 1.4411GBP 2.4097 2.4018 2.4068 2.4067 2.3892 2.4025JPY 1.6474 1.6471 1.6433 1.6360 1.6302 1.6075EURO 2.1680 2.1702 2.1686 2.1680 2.1603 2.1427

The simple arithmetic averages of the major current foreign exchange buying rates of the Parent Bank for the thirty days before December 31, 2008 are as follows:

Monthly Average Foreign Exchange Rate

USD 1.4984CHF 1.4541GBP 2.4308JPY 1.6652EURO 2.1881


35

V. Explanations Related to the Consolidated Currency Risk (continued) Information on the foreign currency risk of the Group: Current Period EUR USD YEN OTHER TOTALAssets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased, Precious Metals) and Balances with the Central Bank of Turkey. 648,107 491,789

155

27,293 1,167,344 Banks 203,926 325,016 152 23,077 552,171 Financial Assets at Fair Value Through Profit and Loss (*****) 2,424 3,090 - - 5,514 Money Market Placements - 84,807 - - 84,807 Available-For-Sale Financial Assets 30,335 42,644 - - 72,979 Loans (**) 1,166,530 1,951,857 16,383 302,680 3,437,450 Subsidiaries, Associates and Entities Under Common Control - - - - -Held-To-Maturity Investments 8,628 10,688 - - 19,316Derivative Financial Assets for Hedging Purposes - 354 - - 354Tangible Assets 7,765 - - - 7,765Intangible Assets 1,183 - - - 1,183Other Assets (***) 307,046 168,869 91 2,558 478,564

Total Assets 2,375,944 3,079,114 16,781 355,608 5,827,447 Liabilities

Bank Deposits 93,044 86,169 87 40,553 219,853 Foreign Currency Deposits (*) 1,827,732 2,225,238 12,775 157,615 4,223,360 Money Market Borrowings - - - - -Funds Provided From Other Financial Institutions 1,058,156 727,440 - 15,497 1,801,093 Marketable Securities Issued - - - - -Sundry Creditors 7,371 11,135 1,606 804 20,916 Derivative Financial Liabilities for Hedging Purposes - - - - -Other Liabilities (***) 1,377 5,352 - 110 6,839

Total Liabilities 2,987,680 3,055,334 14,468 214,579 6,272,061 Net Balance Sheet Position (611,736) 23,780 2,313 141,029 (444,614)Net Off-Balance Sheet Position 781,482 (38,002) (5,211) (150,268) 588,001

Financial Derivative Assets (****) 1,313,600 1,347,192 127,109 176,932 2,964,833 Financial Derivative Liabilities (****) 532,118 1,385,194 132,320 327,200 2,376,832 Non-Cash Loans (******) 752,192 1,423,259 3,353 44,166 2,222,970 Prior Period Total Assets 2,758,246 4,266,745 40,295 333,604 7,398,890Total Liabilities 2,703,176 4,070,723 4,507 159,444 6,937,850Net Balance Sheet Position 55,070 196,022 35,788 174,160 461,040Net Off-Balance Sheet Position 138,667 (221,979) (34,855) (173,412) (291,579)Financial Derivative Assets 815,115 1,685,574 5,579 129,474 2,635,742Financial Derivative Liabilities 676,448 1,907,553 40,434 302,886 2,927,321Non-Cash Loans (******) 774,817 1,246,948 4,922 44,783 2,071,470

(*) Gold account deposits amounting to TRY 23,762 ( 2008 - TRY 14,791) are included in the foreign currency deposits. (**) Foreign currency indexed loans amounting to TRY 649,252 (2008 – TRY 902,732) are included in the loan portfolio. (***) As TRY 13,986 foreign currency indexed factoring receivables are included in other assets while TRY 100 (2008 – TRY 200)

prepaid expenses are deducted from other assets, and TRY 21,235 (2008 – TRY 78,270) expense accruals from derivative financial instruments, TRY 16,681 (2008 – TRY 20,619) provision for general loan losses and TRY 1,699 (2008 – None) other provision are deducted from other liabilities.

(****) Forward asset and marketable securities purchase-sale commitments of TRY 117,828 (2008 – TRY 91,180) are added to derivative financial assets and TRY 117,839 (2008 – TRY 90,933) has been added to derivative financial liabilities.

(*****) TRY 18,080 ( 2008 – TRY 39,059) income accruals from derivative financial instruments is deducted from Financial Assets at Fair Value Through Profit and Loss.

(******)There is no effect on the net off-balance sheet position.


36

V. Explanations Related to the Consolidated Currency Risk (continued) Foreign currency sensitivity: The Group is mainly exposed to EUR and USD currencies. The following table details the Group’s sensitivity to a 10% increase and decrease in the TRY 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 short position and a decrease in the case of long position where the TRY strengthens against USD and EUR.

Change in currency rate in %

Effect on profit or loss

Effect on equity (*)

December 31, 2009

December 31, 2008

December 31, 2009

December 31, 2008

USD 10 increase (1,422) (2,596) 393 (120) USD 10 decrease 1,422 2,596 (393) 120

EURO 10 increase 16,975 19,374 10,074 8,975 EURO 10 decrease (16,975) (19,374) (10,074) (8,975)

(*) The effect on equity does not include the effect of changes in foreign exchange rate on the income statement. The Group’s sensitivity to foreign currency rates have not changed significantly during the current period. The positions taken in line with market expectations can increase the foreign currency sensitivity from period to period.


37

VI. Explanations Related to the Consolidated Interest Rate Risk Interest rate risk shows the probability of loss related to the changes in interest rates depending on the Parent Bank’s position, and it is managed by the Asset-Liability Committee. The interest rate sensitivity of assets, liabilities and off-balance sheet items related to this risk are measured by using the standard method and included in the market risk for capital adequacy. The first priority of the risk management department is to protect from interest rate volatility. Duration, maturity and sensitivity analysis performed within this context are calculated by the risk management department and reported to the Asset-Liability Committee.

Simulations on interest income are performed in connection with the forecasted economic indicators used in the budget of the Group.

The Parent Bank management monitors the market interest rates on a daily basis and revises the interest rates of the Bank when necessary.

Since the Group does not allow maturity mismatches or imposes limits on the mismatch, no significant interest rate risk exposure is expected.

Information related to the interest rate sensitivity of assets, liabilities and off-balance sheet items (based on repricing dates): Up to 1

Month1-3

Months3-12

Months1-5

YearsOver


Bearing TotalCurrent Period Assets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased, Precious Metals) and Balances with the Central Bank of Turkey

989,645 - - -

- 522,067 1,511,712

Banks 561,176 7,845 10,582 - - 144,400 724,003 Financial Assets at Fair Value Through Profit and Loss 3,119 3,225 77,549 58,649

2,371 55,110 200,023

Money Market Placements 704,464 - - - - - 704,464 Available-For-Sale Financial Assets 306,548 35,229 729,735 566,383 35,700 3,285 1,676,880 Loans(*) 4,165,352 597,379 1,891,437 2,503,918 519,001 188,645 9,865,732 Factoring Receivables 164,302 111,170 97,038 107 - 1,540 374,157 Financial Lease Receivables 33,846 33,290 127,966 193,676 6,045 12,346 407,169 Held-To-Maturity Investments - 736,302 46,750 118,588 - - 901,640Other Assets 23,811 - 231 3,579 19 645,012 672,652


Bank Deposits 152,630 60,165 5,231 - - 78,555 296,581 Other Deposits 6,492,489 1,277,476 254,197 64,764 - 1,977,777 10,066,703 Money Market Borrowings 1,071,971 - - - - - 1,071,971 Sundry Creditors 1,854 - - - - 265,378 267,232 Marketable Securities Issued - - - - - - -Funds Provided From Other Financial Institutions 1,267,303 278,339 883,282 190,550

324,500 - 2,943,974

Factoring Payables - - - - - - -Other Liabilities 14,414 933 4,163 50,799 16,461 2,305,201 2,391,971

Total Liabilities 9,000,661 1,616,913 1,146,873 306,113 340,961 4,626,911 17,038,432 Balance Sheet Long Position - - 1,834,415 3,138,787 222,175 - 5,195,377 Balance Sheet Short Position (2,048,398) (92,473) - - - (3,054,506) (5,195,377)Off-Balance Sheet Long Position 64,561 13,387 89,238 488,519 55,452 - 711,157 Off-Balance Sheet Short Position (51,109) (13,333) (80,505) (484,955) (59,100) - (689,002) Total Position (2,034,946) (92,419) 1,843,148 3,142,351 218,527 (3,054,506) 22,155

(*) Loans with floating interest rates of the Parent Bank amounting to TRY 2,311,525 are included in “Up to 1 Month” while mark to market differences from hedged loans amounting to TRY 46,589 are included in “1-5 Years”.


38

VI. Explanations Related to the Consolidated Interest Rate Risk (continued) Information related to the interest rate sensitivity of assets, liabilities and off-balance sheet items (based on repricing dates) (continued): The other assets line in the non-interest bearing column consists of tangible assets amounting to TRY 164,146; intangible assets amounting to TRY 15,483, TRY 50,058 tax asset, and the other liabilities line includes the shareholders’ equity of TRY 1,833,308. Average interest rates applied to monetary financial instruments: EURO

% USD

% YEN

% TRY

% Current Period Assets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased) And Balances With The Central Bank Of Turkey - - - 7.49Banks 0.35 0.22 - 9.39Financial Assets At Fair Value Through Profit And Loss 5.69 7.81 - 12.01Money Market Placements 1.25 0.84 - 8.97Available-For-Sale Financial Assets 5.60 7.79 - 13.09Loans 4.62 4.88 3.86 14.10 Leasing Receivables 8.14 7.78 - 21.68 Factoring Receivables 4.06 3.92 - 12.56 Held-To-Maturity Investments 5.25 5.81 - 9.86

Liabilities Bank Deposits 1.38 1.22 0.25 6.62 Other Deposits 2.94 2.21 0.30 8.27 Money Market Borrowings - - - 8.18 Sundry Creditors - - - -Marketable Securities Issued - - - -Funds Provided From Other Financial Institutions 3.56 3.46 - 9.79


39

VI. Explanations Related to the Consolidated Interest Rate Risk (continued) Information related to the interest rate sensitivity of assets, liabilities and off-balance sheet items (based on repricing dates): Up to 1

Month1-3

Months3-12

Months1-5

YearsOver


Bearing TotalPrior Period Assets

Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased, Precious Metals) and Balances with the Central Bank of Turkey 1,400,326 - - -

- 699,233 2,099,559Banks 901,101 1,021 3,372 - - 262,695 1,168,189Financial Assets at Fair Value Through Profit and Loss 553 2,451 11,385 4,155

552 82,045 101,141

Money Market Placements 756,902 - - - - - 756,902Available-For-Sale Financial Assets 264,169 61,802 327,051 526,687 55,078 1,907 1,236,694Loans(*) 4,447,989 769,920 1,767,584 1,936,590 255,505 97,656 9,275,244Factoring Receivables 201,880 86,434 30,144 - - 123 318,581Financial Lease Receivables 43,562 40,298 170,208 298,895 11,242 13,752 577,957Held-To-Maturity Investments - 625,585 - 175,932 17,294 - 818,811Other Assets 19,520 5,993 1,131 46,086 51 568,599 641,380


Bank Deposits 218,345 379 2,187 - - 49,251 270,162Other Deposits 7,692,251 777,117 410,745 4 - 1,345,507 10,225,624Money Market Borrowings 201,804 - - - - - 201,804Sundry Creditors - - - - - 257,645 257,645Marketable Securities Issued - - - - - - -Funds Provided From Other Financial Institutions 650,783 1,601,273 986,739 260,647

323,070 - 3,822,512

Factoring Payables - - - - - - -Other Liabilities 8,495 4,006 7,075 40,165 14,625 2,142,345 2,216,711

Total Liabilities 8,771,678 2,382,775 1,406,746 300,816 337,695 3,794,748 16,994,458 Balance Sheet Long Position - - 904,129 2,687,529 2,027 - 3,593,685Balance Sheet Short Position (735,676) (789,271) - - - (2,068,738) (3,593,685)Off-Balance Sheet Long Position 45,654 60,640 115,616 404,351 44,132 - 670,393Off-Balance Sheet Short Position (43,013) (53,156) (119,747) (373,126) (46,780) - (635,822) Total Position (733,035) (781,787) 899,998 2,718,754 (621) (2,068,738) 34,571 (*) Loans with floating interest rates of the Parent Bank amounting to TRY 4,023,941 are included in “Up to 1 Month” while mark to

market differences from hedged loans amounting to TRY 45,757 are included in “1-5 Years”. The other assets line in the non-interest bearing column consists of tangible assets amounting to TRY 176,703; intangible assets amounting to TRY 12,861, TRY 29,651 tax asset and the other liabilities line includes the shareholders’ equity of TRY 1,548,116.


40

VI. Explanations Related to the Consolidated Interest Rate Risk (continued) Average interest rates applied to monetary financial instruments EURO

% USD

% YEN

% TRY

% Prior Period Assets

Cash (Cash In Vault, Foreign Currency Cash, Money In Transit, Cheques Purchased) And Balances With The Central Bank Of Turkey 1.68 0.98 - 11.90Banks 4.01 2.95 - 19.81Financial Assets At Fair Value Through Profit And Loss 6.65 8.62 - 15.48Money Market Placements - 3.38 - 15.31Available-For-Sale Financial Assets 5.86 6.74 - 17.16Loans 7.68 6.20 4.21 22.44Leasing Receivables 12.00 11.70 - 24.50Factoring Receivables 6.91 6.62 - 23.84Held-To-Maturity Investments 5.25 5.72 - 18.38

Liabilities Bank Deposits 3.00 2.58 - 15.09Other Deposits 4.49 2.92 0.33 15.81Money Market Borrowings - - - 14.93Sundry Creditors - - - -Marketable Securities Issued - - - -Funds Provided From Other Financial Institutions 5.78 4.88 - 18.50

Interest rate sensitivity:

If interest rates had been increased by 0.5% in TRY and FC and all other variables were held constant, the Group’s:

• Net profit of the Group for the year would have changed by TRY 4,884 (2008 - TRY 7,826).

The interest rate sensitivity the Group is exposed to due to its balance sheet composition is calculated with the net interest income approach. The net interest income is calculated by using the original interest rates until maturity and using market interest curves until the remaining annualized period subject to analysis. This calculation is re-performed by altering the market interest curves based on rate changes accepted by management. The difference between the initial and re-performed calculation is assessed to be the interest sensitivity of the Group.


41

VII. Explanations Related to the Consolidated Liquidity Risk Liquidity risk occurs when there is insufficient cash or cash inflows to meet the cash outflows completely and timely. Liquidity risk may also occur when the market penetration is not adequate, when the open positions cannot be closed quickly at suitable prices and sufficient amounts due to barriers and break-ups at the markets. The Group’s policy is to establish an asset structure that can meet all kinds of liabilities by liquid sources at all times. In this context, liquidity problem has not been faced in any period. In order to maintain this, the Board of Directors of the Group continuously determines standards for the liquidity ratios, and monitors them. According to the general policies of the Group, the matching of the maturity and interest rate structure of assets, and liabilities is always established within the asset liability management strategies. A positive difference is tried to be established between the yields of TRY and foreign currency assets and liabilities on the balance sheet and their costs. According to this strategy, the Parent Bank manages its maturity risk within the limits determined by Parent Bank’s Board of Directors. When the funding and liquidity sources are considered, the Parent Bank covers majority of its liquidity need by deposits, and in addition to this source, it makes use of pre-financing and syndication products to generate additional sources. Generally the Parent Bank is in a lender position. The liquidity position is assessed and managed under a variety of scenarios, giving due consideration to stress factors relating to both the market in general and specifically to the Group. The most important of these is to maintain limits on the ratio of the Parent Bank’s net liquid assets to customer liabilities, set to reflect market conditions. The ratio realized during the year were as follows:

Current Period %

Prior Period %

Average during the period 29 31 Highest 39 42 Lowest 20 25


42

VII. Explanations Related to the Consolidated Liquidity Risk (continued) Presentation of assets and liabilities according to their remaining maturities: Current Period Demand

Up to 1 Month 1-3 Months

3-12 Months

1-5 Years

Over 5 Years

Undistributed(*) Total

Assets Cash (Cash in Vault, Foreign Currency Cash, Money in Transit, Cheques Purchased, Precious Metals) and Balances with the Central Bank of Turkey

522,067 989,645 - -

-

- - 1,511,712

Banks 173,781 531,795 7,845 10,582 - - - 724,003 Financial Assets at Fair Value Through Profit and Loss - 11,727 19,174 100,885

65,866

2,371 - 200,023

Money Market Placements - 704,464 - - - - - 704,464 Available-For-Sale Financial Assets 695 - 23,211 691,190 923,492 35,700 2,592 1,676,880 Loans(**) 28,331 4,115,877 593,202 1,886,674 2,534,002 519,001 188,645 9,865,732 Factoring Receivables - 164,302 111,170 97,038 107 - 1,540 374,157 Financial Lease Receivables - 33,846 33,290 127,966 193,676 6,045 12,346 407,169Held-To-Maturity Investments - - 451,733 224,706 225,201 - - 901,640Other Assets - 383,960 2,994 8,984 13,139 19 263,556 672,652

Total Assets 724,874 6,935,616 1,242,619 3,148,025 3,955,483 563,136 468,679 17,038,432 Liabilities

Bank Deposits 97,638 133,547 60,165 5,231 - - - 296,581 Other Deposits 2,389,653 6,077,681 1,270,652 212,928 115,789 - - 10,066,703 Funds Provided From Other Financial Institutions - 981,257 244,129 845,374 301,738 571,476 - 2,943,974Money Market Borrowings - 1,071,971 - - - - - 1,071,971Marketable Securities Issued - - - - - - - -Factoring Payables - - - - - - - -Sundry Creditors 257,401 4,349 3,628 - - - 1,854 267,232Other Liabilities - 310,833 8,687 18,814 56,919 20,183 1,976,535 2,391,971

Total Liabilities 2,744,692 8,579,638 1,587,261 1,082,347 474,446 591,659 1,978,389 17,038,432 Liquidity Gap (2,019,818) (1,644,022) (344,642) 2,065,678 3,481,037 (28,523) (1,509,710) - Prior Period Total Assets 1,017,514 7,980,976 919,492 2,291,965 4,112,349 331,343 340,819 16,994,458Total Liabilities 2,055,319 8,393,528 2,307,849 1,456,350 487,632 601,473 1,692,307 16,994,458Liquidity Gap (1,037,805) (412,552) (1,388,357) 835,615 3,624,717 (270,130) (1,351,488) - (*) The assets which are necessary to provide banking services and could not be liquidated in a short term, such as tangible assets,

investments in subsidiaries and associates, office supply inventory, prepaid expenses and non-performing loans, are classified as under undistributed.

(**) Loans with floating interest rates of the Parent Bank amounting to TRY 2,311,525 (2008: TRY 4,023,941) are included in “Up to 1 Month” while mark to market differences from hedged loans amounting to TRY 46,589 (2008: TRY 45,757) are included in “1-5 Years”.


43

VII. Explanations Related to Consolidated Liquidity Risk (continued) Analysis of financial liabilities by remaining contractual maturities:

Demand Up to 1 Month

1-3 Months

3-12 Months

1-5 Years

Over 5 Years

Adjustments Total

As of December 31, 2009 Money market borrowings - 1,073,776 - - - - (1,805) 1,071,971 Other deposits 2,389,653 6,094,914 1,282,478 221,423 123,388 - (45,153) 10,066,703 Bank deposits 97,638 133,625 60,256 5,270 - - (208) 296,581 Funds provided from other financial institutions

- 990,406 251,306 893,390 432,782

633,259 (257,169) 2,943,974

Total 2,487,291 8,292,721 1,594,040 1,120,083 556,170 633,259 (304,335) 14,379,229

As of December 31, 2008 Money market borrowings - 201,943 34 - - - (173) 201,804 Other deposits 1,759,139 7,317,733 776,642 434,622 10,695 - (73,207) 10,225,624 Bank deposits 49,530 218,536 381 2,406 - - (691) 270,162 Funds provided from other financial institutions

- 325,572 1,577,083 1,055,201 609,805

692,731 (437,880) 3,822,512

Total 1,808,669 8,063,784 2,354,140 1,492,229 620,500 692,731 (511,951) 14,520,102

Analysis of contractual expiry by maturity of the Group’s derivative financial instruments:

Up to 1 Month

1-3 Months

3-12 Months

1-5 Years

Over 5 Years

Total


Fair value hedge 53,145 1,428 129,455 166,432 62,240 412,700

Held for trading transactions Foreign Exchange Forward Contracts 352,364 211,116 206,776 43,965 - 814,221 Currency Swaps 827,674 118,893 114,647 213,511 - 1,274,725 Interest Rate Swaps 248 6,740 5,912 34,101 - 47,001

Total 1,233,431 338,177 456,790 458,009 62,240 2,548,647

As of December 31, 2008 Derivative financial instruments for hedging purposes Fair value hedge 58,725 46,293 84,839 342,734 69,947 602,538 Held for trading transactions Foreign exchange forward contracts 251,262 218,179 888,352 32,156 - 1,389,949

Currency swaps 975,687 39,799 198,444 62,600 - 1,276,530 Interest rate swaps 593 409 1,362 1,106 - 3,470

Total 1,286,267 304,680 1,172,997 438,596 69,947 3,272,487


44

VIII. Explanations Related to Presentation of Financial Assets and Liabilities at Fair Value The table below shows the book value and the fair value of the financial assets and liabilities which are not disclosed at their fair value in the financial statements of the Group. Current period investment securities are comprised of interest-bearing assets held-to-maturity and interest-bearing assets available-for-sale. The fair value of the held to maturity assets is determined by market prices or quoted market prices of other marketable securities which are subject to redemption with same characteristics in terms of interest, maturity and other similar conditions when market prices cannot be determined. The book value of demand deposits, money market placements with floating interest rate and overnight deposits represents their fair values due to their short-term nature. The estimated fair value of deposits and funds provided from other financial institutions with fixed interest rate is calculated by determining their cash flows discounted by the current interest rates used for other liabilities with similar characteristics and maturity structure. The fair value of loans is calculated by determining the cash flows discounted by the current interest rates used for receivables with similar characteristics and maturity structure. The book value of the sundry creditors reflect their fair values since they are short-term.

Book Value Fair Value Current Period Prior Period Current Period Prior PeriodFinancial Assets 14,654,045 14,152,378 14,497,444 14,337,499

Money Market Placements 704,464 756,902 704,464 756,902Banks 724,003 1,168,189 724,003 1,168,189Available-For-Sale Financial Assets 1,676,880 1,236,694 1,676,880 1,236,694Held-To-Maturity Investments 901,640 818,811 939,553 827,557Loans (**) 10,647,058 10,171,782 10,452,544 10,348,157

Financial Liabilities 14,646,461 14,777,747 14,539,222 14,779,379Bank Deposits 296,581 270,162 296,581 270,179Other Deposits 10,066,703 10,225,624 9,959,196 10,227,108Funds Borrowed From Other Financial Institutions (*) 4,015,945 4,024,316 4,016,213 4,024,447Marketable Securities Issued - - - -Sundry Creditors 267,232 257,645 267,232 257,645


institutions. (**) Factoring and lease receivables are included in the loans. The methodologies and assumptions used to determine fair values for those financial instruments which are not already recorded at fair value in the financial statements:

i- For the fair value calculation of loans, the prevailing interest rates as of the balance sheet date were used.

ii- For the fair value calculation of deposits, the prevailing interest rates as of the balance sheet date

were used.

iii- For the fair value calculation of the balances with banks, the prevailing interest rates as of the balance sheet date were used.

iv- For the fair value calculation of held-to-maturity investments, quoted prices as of the balance sheet

date were used.


45

VIII. Explanations Related To Presentation of Financial Assets and Liabilities by Fair Value (continued)

The following table shows an analysis of financial instruments recorded at fair value, between those whose fair value is recorded on quoted market prices, those involving valuation techniques where all model inputs are observable in the market and, those where the valuation techniques involves the use of non observable inputs.

Current Period Quoted Valuation techniques –



Financial Assets

Money Market Placements - 704,464 - -Banks - 724,003 - -Available-for-sale financial assets 1,676,880 - - -Held-to-maturity investments 939,553 - - -Loans (**) - 10,452,544 - -


Prior Period Quoted Valuation techniques –



Financial Assets

Money Market Placements - 756,902 - -Banks - 1,168,189 - -Available-for-sale financial assets 1,236,694 - - -Held-to-maturity investments 827,557 - - -Loans (**) - 10,348,157 - -


(*) Funds provided under repo transactions and interbank money market takings are included in funds borrowed from other financial institutions.

(**) Factoring and lease receivables are included in the loans. IX. Explanations Related to Transactions Carried out on Behalf of Other Parties and

Fiduciary Assets The Group performs trading transactions on behalf of customers, and gives custody, administration and advisory services. The Group does not deal with fiduciary transactions.


46

SECTION FIVE

EXPLANATIONS AND DISCLOSURES ON CONSOLIDATED FINANCIAL STATEMENTS I. Explanations and Disclosures Related to the Consolidated Assets

1. a) Information on Cash and Balances with the Central Bank of Turkey:

Current Period Prior Period TRY FC TRY FC Cash in TRY/Foreign Currency 140,477 168,877 88,572 163,256 Balances with the Central Bank of Turkey 203,891 979,850 447,556 1,382,938 Other - 18,617 - 17,237 Total 344,368 1,167,344 536,128 1,563,431

b) Information related to the account of the Central Bank of Turkey:

Current Period Prior Period TRY FC TRY FC Unrestricted demand deposit (*) 203,891 251,831 447,556 284,864 Unrestricted time deposit - 728,019 - 1,098,074 Restricted time deposit - - - - Total 203,891 979,850 447,556 1,382,938

(*) TRY 728,019 foreign currency and TRY 198,419 domestic currency unrestricted demand deposit balance comprises of reserve deposits. Unrestricted demand deposit balance also includes average reserve deposit held in Central Bank. The interest rates applied for reserve deposits are 5.20% for TRY deposits and none for foreign currency deposits (2008 – TRY 12.00% and 0.15% - 1.18% for foreign currency), respectively. 2. Information on financial assets at fair value through profit and loss (net):

a.1) Information on financial assets at fair value through profit and loss given as collateral or blocked: None (2008 – None).

a.2) Financial assets at fair value through profit and loss subject to repurchase agreements: None (2008 –

None). Net book value of unrestricted financial assets at fair value through profit and loss is TRY 137,917 (2008 – TRY 15,605).


47

I. Explanations and Disclosures Related to the Consolidated Assets (continued)

2. Information on financial assets at fair value through profit and loss (net): (continued) a.3) Positive differences related to derivative financial assets held-for-trading:


TRY FC TRY FCForward Transactions 15,696 14,195 21,559 38,537 Swap Transactions 18,899 1,739 14,063 2,068 Futures Transactions - - - -Options 8,374 2,973 9,309 -Other 230 - - -Total 43,199 18,907 44,931 40,605

3. a) Information on banks: Current Period Prior Period TRY FC TRY FCBanks Domestic 37,534 241,727 20,963 251,492 Foreign 134,298 310,444 20,272 875,462 Branches and head office abroad - - - - Total 171,832 552,171 41,235 1,126,954

b) Information on foreign bank accounts: Unrestricted Amount Restricted Amount Current Period Prior Period Current Period Prior PeriodEuropean Union Countries 238,427 586,867 31,707 143,282 USA and Canada 44,714 89,270 - -OECD Countries(*) 4,653 6,642 - -Off-shore banking regions 124,316 69,238 - -Other 925 435 - -Total 413,035 752,452 31,707 143,282 (*) OECD countries other than European Union countries, USA and Canada.


48

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 4. Information on financial assets available-for-sale:

a.1) Information on financial assets available-for-sale given as collateral or blocked:

Current Period Prior Period TRY FC TRY FC Share certificates - - - - Bond, Treasury bill and similar investment securities

124,704 40,373 183,406 112,103

Other - - - - Total 124,704 40,373 183,406 112,103

a.2) Financial assets available-for-sale subject to repurchase agreements:

Current Period Prior Period TRY FC TRY FC Government bonds 526,855 - - - Treasury bills - - - - Other public sector debt securities - - - - Bank bonds and bank guaranteed bonds - - - - Asset backed securities - - - - Other - - - - Total 526,855 - - -

Net book value of unrestricted financial assets available-for-sale is TRY 984,948 (2008 – TRY 941,185).

b) Information on financial assets available for sale portfolio: Current Period Prior PeriodDebt securities 1,674,868 1,239,507

Quoted on a stock exchange 1,509,681 947,904 Not quoted 165,187 291,603

Share certificates 2,592 1,563 Quoted on a stock exchange 2,515 1,486 Not quoted 77 77

Impairment provision(-) (580) (4,376) Total 1,676,880 1,236,694 All unquoted available for sale equities are recorded at fair value except for the Group’s investment of TRY 77 which is recorded at cost since its fair value cannot be reliably estimated (2008 – TRY 77). 5. Information on loans: a) Information on all types of loans and advances given to shareholders and employees of the Bank: Current Period Prior Period

Cash Loans

Non-Cash Loans

Cash Loans

Non-Cash Loans

Direct loans granted to shareholders 1,603 46,004 953 14,059 Corporate shareholders 1,603 46,004 953 14,059 Real person shareholders - - - -

Indirect loans granted to shareholders - - - -Loans granted to employees 22,842 - 6,887 -Total 24,445 46,004 7,840 14,059


49

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 5. Information on loans: (continued)

b) Information on the first and second group loans and other receivables including restructured or rescheduled loans:


Loans and Other Receivables Under Close Monitoring (*)

Cash Loans





Non-specialized loans 9,213,608 - 321,420 142,059 Discount notes 76,963 - 1,088 -Export loans 909,706 - 29,903 -Import loans - - - -Loans given to financial sector 492,515 - 713 -Foreign loans 327,238 - 513 6,626 Consumer loans(**) 1,702,326 - 61,748 4,529 Credit cards 447,011 - 25,663 8,183 Precious metal loans 246,498 - 14,361 -Other 5,011,351 - 187,431 122,721

Specialized loans - - - -Other receivables - - - -Total 9,213,608 - 321,420 142,059 (*) The total principal amount of the loans under close monitoring in accordance with the requirements of the regulation on “Methods and

Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” amended on February 6, 2008.

(**) TRY 46,589 income accrual resulting from the fair value difference of the hedged item loans is included in the loan balance.

c) Loans according to their maturity structure:


Loans and Other Receivables Under Close Monitoring

Cash Loans





Short-term loans and other receivables 5,681,123 - 193,138 21,728


Medium and Long-term loans and other receivables 3,532,485 - 128,282 120,331


Total 9,213,608 - 321,420 142,059


50



d) Information on consumer loans, individual credit cards, personnel loans and credit cards given to

personnel:

Short Term


Consumer Loans-TRY 91,672 1,523,986 1,615,658 Housing Loans 2,072 892,310 894,382 Vehicle Loans 5,336 114,969 120,305 General Purpose Loans 84,252 516,707 600,959 Other 12 - 12

Consumer Loans –Indexed to FC 379 76,858 77,237 Housing Loans - 45,152 45,152 Vehicle Loans 245 22,710 22,955 General Purpose Loans 44 3,626 3,670 Other 90 5,370 5,460

Consumer Loans-FC 7,303 3,132 10,435 Housing Loans - - -Vehicle Loans - - -General Purpose Loans 7,303 3,132 10,435 Other - - -

Individual Credit Cards-TRY 426,379 - 426,379 With Installments 147,281 - 147,281 Without Installments 279,098 - 279,098

Individual Credit Cards-FC 1,852 - 1,852 With Installments - - -Without Installments 1,852 - 1,852

Personnel Loans-TRY 3,969 8,875 12,844 Housing Loans - - -Vehicle Loans - 12 12 General Purpose Loans 3,934 8,863 12,797 Other 35 - 35

Personnel Loans- Indexed to FC - - -Housing Loans - - -Vehicle Loans - - -General Purpose Loans - - -Other - - -

Personnel Loans-FC - - -Housing Loans - - -Vehicle Loans - - -General Purpose Loans - - -Other - - -

Personnel Credit Cards-TRY 9,122 - 9,122 With Installments 4,015 - 4,015 Without Installments 5,107 - 5,107

Personnel Credit Cards-FC 50 - 50 With Installments - - -Without Installments 50 - 50

Overdraft Accounts-TRY(Real Persons) (*) 52,421 - 52,421 Overdraft Accounts-FC(Real Persons) 8 - 8 Total 593,155 1,612,851 2,206,006

(*) Overdraft accounts include personnel loans amounting to TRY 826.


51


5. Information on loans: (continued) e) Information on commercial loans with installments and corporate credit cards:

Short Term


Commercial loans with installment facility-TRY 92,549 760,907 853,456 Business Loans 81 43,861 43,942 Vehicle Loans 11,440 159,972 171,412 General Purpose Loans 80,948 524,515 605,463 Other 80 32,559 32,639

Commercial loans with installment facility - Indexed to FC 14,834 161,561 176,395 Business Loans - 4,182 4,182 Vehicle Loans 2,280 61,406 63,686 General Purpose Loans 12,313 90,437 102,750Other 241 5,536 5,777

Commercial loans with installment facility –FC - - -Business Loans - - -Vehicle Loans - - -General Purpose Loans - - -Other - - -

Corporate Credit Cards-TRY 42,255 - 42,255 With Installments 7,919 - 7,919 Without Installments 34,336 - 34,336

Corporate Credit Cards-FC 1,199 - 1,199 With Installments - - -Without Installments 1,199 - 1,199

Overdraft Accounts-TRY(Legal Entities) 102,847 - 102,847 Overdraft Accounts-FC(Legal Entities) 4,500 - 4,500 Total 258,184 922,468 1,180,652 f) Loans according to borrowers:

Current Period Prior PeriodPublic 21,373 15,934 Private 9,655,714 9,161,654 Total 9,677,087 9,177,588 g) Domestic and foreign loans:

Current Period Prior PeriodDomestic loans 9,317,509 8,842,117 Foreign loans 359,578 335,471 Total 9,677,087 9,177,588 h) Loans granted to subsidiaries and associates:

Such loans are eliminated from the consolidated financial statements. i) Specific provisions provided against loans: Current Period Prior PeriodSpecific provisions

Loans and receivables with limited collectability 12,288 7,166 Loans and receivables with doubtful collectability 53,327 24,533 Uncollectible loans and receivables 181,406 78,990

Total 247,021 110,689


52



j) Information on non-performing loans: (Net):

j.1) Information on loans and other receivables included in non-performing loans which are

restructured or reschedule There are no loans or other receivables included in non-performing loans which are restructured or

rescheduled by the Parent Bank. (2008 – None). j.2) The movement of non-performing loans:



limited collectability



Uncollectible


Prior period end balance 40,705 52,707 114,933

Additions (+) 386,659 2,677 9,879 Transfers from other categories of non-performing loans (+) - 300,253 194,065 Transfers to other categories of non-performing loans (-) 300,253 194,065 -Collections (-) (*) 45,795 34,224 90,449 Write-offs (-) 19 106 1,301

Corporate and commercial loans - 2 440 Retail loans 19 104 861 Credit cards - - - Other - - -

Current period end balance 81,297 127,242 227,127 Specific provision (-) 12,288 53,327 181,406

Net Balances on Balance Sheet 69,009 73,915 45,721 (*) TRY 29,530 of the non-performing loans portfolio of the Parent Bank with TRY 29,214 provision has been

sold to LBT Varlık Yönetim A.Ş. for TRY 1,950. This balance has been collected as of November 9, 2009 with the completion of the necessary procedures, and the related non-performing loans have been written off from the records.

j.3) Information on foreign currency non-performing loans and other receivables:

III. Group IV. Group V. Group Loans and

receivables with limited

collectability



Uncollectible


Current Period : Current period end balance - 7,675 -

Specific provision (-) - 7,182 -Net Balances on Balance Sheet - 493 -Prior Period : Prior period end balance - 6,820 -

Specific provision (-) - 4,597 -Net Balances on Balance Sheet - 2,223 -


53



j.4) Information regarding gross and net amounts of non-performing loans with respect to user groups:


Loans and

receivables with limited collectability


doubtful collectability

Uncollectible


Current Period (Net)


Specific provision (-) 12,288 53,327 181,406


Banks (Gross) - - - Specific provision (-) - - -

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

Specific provision (-) - - - Other Loans and Receivables (Net) - - -

Prior Period (Net)

Loans to Real Persons and Legal Entities (Gross) 40,705 52,707 114,933 Specific provision (-) 7,166 24,533 78,990

Loans to Real Persons and Legal Entities (Net) 33,539 28,174 35,943 Banks (Gross) - - -

Specific provision (-) - - - Banks (Net) - - - Other Loans and Receivables (Gross) - - -

Specific provision (-) - - - Other Loans and Receivables (Net) - - -

k) Main principles of liquidating non performing loans and receivables:

According to the “Methods and Principles for the Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” published on Official Gazette No. 26333 dated November 1, 2006; loans and other receivables for which the collection is believed to be impossible are classified as non performing loans by complying with the requirements of the Tax Procedural Law in accordance with the decision of the upper management of the Parent Bank.

l) Explanation related to write-off policy:

Unrecoverable non performing loans can be written off with the decision of the Board of Directors.


54



m) Other explanations and disclosures:

Current Period Corporate Small Business Consumer Credit Cards Other Total Neither past due nor impaired 4,757,069 2,290,680 1,707,757 413,164 - 9,168,670 Past due not impaired 118,499 260,810 61,415 67,693 - 508,417 Individually impaired 101,576 219,835 34,416 79,839 - 435,666 Total gross 4,977,144 2,771,325 1,803,588 560,696 - 10,112,753

Less: allowance for individually impaired loans

36,360

122,058

33,985 54,618 - 247,021

Total allowance for impairment 36,360 122,058 33,985 54,618 - 247,021 Total net 4,940,784 2,649,267 1,769,603 506,078 - 9,865,732

Prior Period Corporate Small Business Consumer Credit Cards Other Total Neither past due nor impaired 4,480,787 2,411,475 1,067,541 408,244 - 8,368,047 Past due not impaired 149,098 422,007 160,949 77,487 - 809,541 Individually impaired 38,549 96,094 26,643 47,059 - 208,345 Total gross 4,668,434 2,929,576 1,255,133 532,790 - 9,385,933 Less: allowance for individually impaired loans 24,559 50,719 12,108 23,303 - 110,689 Total allowance for impairment 24,559 50,719 12,108 23,303 - 110,689 Total net 4,643,875 2,878,857 1,243,025 509,487 - 9,275,244


55


m) Other explanations and disclosures: (continued) A reconciliation of the allowance for impairment losses and advances by classes is as follows;

Corporate Small Business Consumer Credit Cards Other Total At January 1, 2009 24,559 50,719 12,108 23,303 - 110,689 Charge for the year 21,655 93,405 33,310 65,606 - 213,976 Recoveries (9,865) (22,066) (6,490) (10,020) - (48,441) Amounts written off (*) - - (4,943) (24,271) - (29,214) Exchange differences 11 - - - - 11 At December 31, 2009 36,360 122,058 33,985 54,618 - 247,021

Corporate Small Business Consumer Credit Cards Other Total At January 1, 2008 44,232 16,139 8,132 4,704 - 73,207 Charge for the year 22,676 57,236 16,473 27,433 - 123,818 Recoveries (1,647) (7,541) (5,915) (4,747) - (19,850) Amounts written off(**) (40,702) (15,115) (6,582) (4,087) - (66,486) At December 31, 2008 24,559 50,719 12,108 23,303 - 110,689 (*) TRY 29,530 of the non-performing loans portfolio of the Parent Bank with TRY 29,214 provision has been

sold to LBT Varlık Yönetim A.Ş. for TRY 1,950. This balance has been collected as of November 9, 2009 with the completion of the necessary procedures, and the related non-performing loans have been written off from the records.

(*) TRY 76,187 of the non-performing loans portfolio of the Parent Bank with TRY 66,374 provision has been

sold to Girişim Varlık Yönetim A.Ş. for TRY 10,850. This balance has been collected as of July 31, 2008 with the completion of the necessary procedures, and the related non-performing loans have been written off from the records.

The fair value of collaterals, capped with the respective outstanding loan balance, that the Parent Bank holds relating to loans individually determined to be impaired at December 31, 2009 is TRY 126,343 (2008: TRY 70,356).


56


m) Other explanations and disclosures: (continued) Collaterals and credit enhancement obtained by the Group during the year:

December 31, 2009

Corporate

Small Business

Consumer

Credit Cards

Other

Total

Residential, commercial or industrial property 11,639 7,324 1,339 - - 20,302 Financial assets - - - - - - Other 16 6 17 - - 39 Total 11,655 7,330 1,356 - - 20,341

December 31, 2008

Corporate

Small Business

Consumer

Credit Cards

Other

Total

Residential, commercial or industrial property 3,953 810 269 - - 5,032 Financial assets - - - - - - Other 16 - - - - 16 Total 3,969 810 269 - - 5,048

Aging analysis of past due but not impaired loans per classes of financial statements:

December 31, 2009

Less than 30 days

31-60 days

61-90 days

More than 91 days

Total

Loans and Advances to customers

Corporate lending 93,255 6,512 18,732 - 118,499 Small business lending 142,081 69,771 48,958 - 260,810 Consumer lending 7,825 41,900 11,690 - 61,415 Credit cards 67,580 106 7 - 67,693

Other - - - - - Total 310,741 118,289 79,387 - 508,417

December 31, 2008

Less than 30 days

31-60 days

61-90 days

More than 91 days

Total


Corporate lending 102,364 15,055 31,679 - 149,098 Small business lending 268,499 72,362 81,146 - 422,007 Consumer lending 98,351 51,364 11,234 - 160,949 Credit cards 74,633 2,772 82 - 77,487

Other - - - - - Total 543,847 141,553 124,141 - 809,541


57

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 5. Information on loans: (continued) m) Other explanations and disclosures: (continued) Of the total aggregate amount of gross past due but not yet impaired loans and advances to customers, the fair value of collaterals, capped with the respective outstanding total past due and not past due loan balances of the customer, that the Parent Bank held as at December 31, 2009 was TRY 311,296 (2008: TRY 517,749). Loans and receivables amounting to TRY 2,486,750 have floating interest rates (2008 – TRY 4,034,726) and the rest TRY 7,190,337 have fixed interest rates (2008 – TRY 5,142,862).

6. Information on held-to-maturity investments :

a.1) Information on held-to-maturity investments given as collateral or blocked:

Current Period Prior Period TRY FC TRY FC Share Certificates - - - - Bond, Treasury bill and similar securities 187,395 - 178,151 - Other - - - - Total 187,395 - 178,151 -

a.2) Held-to-maturity investments subject to repurchase agreements: None (2008 – None).

Current Period Prior Period TRY FC TRY FC Government bonds 560,365 - 206,829 - Treasury bills - - - - Other public sector debt securities - - - - Bank bonds and bank guaranteed bonds - - - - Asset backed securities - - - - Other - - - - Total 560,365 - 206,829 -

Net book value of unrestricted financial assets held-to-maturity is TRY 153,880 (2008 – TRY 433,831).

b) Movement of held-to-maturity investments:

Current Period Prior Period Beginning balance 818,811 7,740 Foreign currency differences on monetary assets (183) 888 Purchases during the year(*) 97,111 814,717 Disposals through sales and redemptions - (4,534) Impairment provision (-) - - Change in income on redeemed cost adjustments (14,099) - Closing Balance 901,640 818,811

(*) Accruals are included in purchases during the year.


58

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 7. Information on associates (Net):

a.1) Information on the unconsolidated associates: Participations Current Period Prior PeriodOther Financial Associates / Kredi Garanti Fonu A.Ş. (*) 2,000 -Other Financial Associates / Gelişen İşletmeler Piyasası A.Ş. 12 12Other Non-Financial Associates / Bantaş Nakit ve Kıymetli Mal Taşımave Güvenlik Hizmetleri A.Ş. 1 -Total 2,013 12 (*) In the Board of Directors meeting on September 23, 2009, the Parent Bank decided to participate in the

revised capital structure of Kredi Garanti Fonu A.Ş. including TOBB (Turkish Union of Chambers and Exchange Commodities), KOSGEB (Presidency of Development and Support of Small and Medium-sized Enterprises Administration) and the banks by TRY 4,000. Upon this decision related to the capital increase of Kredi Garanti Fonu A.Ş. on September 11, 2009, the Parent Bank paid TRY 2,000 of its capital commitment of TRY 4,000 on October 14, 2009.

a.2) Gelişen İşletmeler Piyasası A.Ş. commenced its operations on December 30, 2005, and Bantaş Nakit ve Kıymetli Mal Taşıma ve Güvenlik Hizmetleri A.Ş. commenced its operations on January 8, 2009.

b.1) Information on the consolidated associates: None (2008 – None). b.2) Valuation of consolidated associates: None (2008 – None). b.3) Consolidated associates which are quoted on the stock exchange: None (2008 – None).

8. Information on subsidiaries (Net):

a) Information on the unconsolidated subsidiaries: None (2008 – None). b) Information on the consolidated subsidiaries:

b.1) Information on the consolidated subsidiaries:

Description




The Economy Bank N.V. Netherlands 100.00 - TEB Finansal Kiralama A.Ş. İstanbul/Turkey 100.00 - TEB Faktoring A.Ş. İstanbul/Turkey 100.00 - TEB Yatırım Menkul Değerler A.Ş. İstanbul/Turkey 74.94 25.06 TEB Portföy Yönetimi A.Ş. İstanbul/Turkey 46.77 53.23


59

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 8. Information on subsidiaries (Net): (continued)

Information on the consolidated subsidiaries with the order as presented in the table above:

Total Assets

Shareholders’ Equity

Total Fixed Assets

Interest Income

Income from Marketable

Securities Portfolio

Current Period

Profit / Loss

Prior PeriodProfit / Loss

(*) Fair

Value (i) 1,166,608 180,680 8,948 60,976 3,758 14,351 13,562 -(ii) 512,396 96,657 1,621 55,509 - 37,176 12,168 -(ii) 437,564 22,903 750 49,723 - 7,616 9,137 -(ii) 39,265 35,667 1,865 4,141 486 8,164 5,598 -(ii) 15,123 13,678 551 1,219 857 5,312 3,036 -

(*) Represents the amounts in the financial statements as of December 31, 2008. (i) Represents financial figures of foreign currency statutory financial statements translated at period end foreign exchange rates

for balance sheet and twelve months’ average rates for profit and loss as of December 31, 2009. The Economy Bank NV has two consolidated subsidiaries named Stichting Effecten Dienstverlening and Kronenburg Vastgoed B.V.

(ii) Represents financial figures based on BRSA regulations as of December 31, 2009.

b.2) Information on consolidated subsidiaries:

Current Period Prior Period Balance at the beginning of the period 165,910 164,136 Movements during the period 2 1,774

Purchases - - Bonus shares obtained - 1,713 Share in current year income - - Sales - - Revaluation increase 2 61 Provision for impairment - -

Balance at the end of the period 165,912 165,910 Capital commitments - - Share percentage at the end of the period (%) - -

b.3) Sectoral information on the consolidated subsidiaries and the related carrying amounts: Current Period Prior Period Banks / The Economy Bank N.V. 61,254 61,254 Leasing Companies / TEB Finansal Kiralama A.Ş 40,190 40,190 Factoring Companies / TEB Faktoring A.Ş. 24,037 24,037 Other Financial Subsidiaries / TEB Yatırım Menkul Değerler A.Ş. 34,770 34,770 TEB Portföy Yönetimi A.Ş. 5,354 5,354 Stichting Effecten Dienstverlening 268 267 Kronenburg Vastgoed B.V. 39 38 Total 165,912 165,910 The carrying amounts of the subsidiaries above have been eliminated in the consolidated financial statements.

b.4) Consolidated subsidiaries quoted on the stock exchange: None (2008 – None). 9. Information on entities under common control (Joint Vent.): None (2008 – None).


60

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 10. Information on finance lease receivables (Net): a) Maturity Analysis:

Current Period Prior Period Gross Net Gross NetLess than 1 year 230,115 195,102 320,469 272,835 Between 1-4 years 215,413 187,146 333,583 285,490 Over 4 years 36,041 34,822 27,678 24,647 Specific provisions (9,901) (9,901) (5,015) (5,015) Total 471,668 407,169 676,715 577,957

b) Other explanations and disclosures:

Current Period Corporate Small Business Consumer Other Total Neither past due nor impaired 50,673 252,932 - - 303,605Past due not impaired 2,242 88,976 - - 91,218Individually impaired - 22,247 - - 22,247Total gross 52,915 364,155 - - 417,070

Less: allowance for individually impaired loans - 9,901 - - 9,901 Total allowance for impairment - 9,901 - - 9,901 Total net 52,915 354,254 - - 407,169

Prior Period Corporate Small Business Consumer Other Total Neither past due nor impaired 58,348 494,377 - - 552,725Past due not impaired 653 10,827 - - 11,480Individually impaired - 18,767 - - 18,767Total gross 59,001 523,971 - - 582,972

Less: allowance for individually impaired loans - 5,015 - - 5,015 Total allowance for impairment - 5,015 - - 5,015 Total net 59,001 518,956 - - 577,957


61

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 10. Information on finance lease receivables (Net): (continued)

b) Other explanations and disclosures: (continued)

A reconciliation of the allowance for impairment losses and advances by classes is as follows;

Corporate Small Business Consumer Other Total At January 1, 2009 - 5,015 - - 5,015 Charge for the year - 17,359 - - 17,359 Recoveries - (4,421) - - (4,421) Amounts written off - (8,052) - - (8,052) At December 31, 2009 - 9,901 - - 9,901

Corporate Small Business Consumer Other Total At January 1, 2008 - 3,831 - - 3,831 Charge for the year - 4,070 - - 4,070 Recoveries - (268) - - (268) Amounts written off - (2,618) - - (2,618) At December 31, 2008 - 5,015 - - 5,015

The fair value of collaterals that TEB Finansal Kiralama A.Ş. holds relating to lease receivables individually determined to be impaired at December 31, 2009 is TRY 2,894 (2008 – TRY 2,343). Aging analysis of past due but not impaired loans per classes of financial statements:

December 31, 2009

Less than 30 days

31-60 days

61-90 days

More than 91 days

Total


Corporate lending - 2,242 - - 2,242 Small business lending 38,199 25,868 12,061 12,848 88,976 Consumer lending - - - - -

Other - - - - - Total 38,199 28,110 12,061 12,848 91,218

December 31, 2008

Less than 30 days

31-60 days

61-90 days

More than 91 days

Total


Corporate lending 191 110 352 - 653 Small business lending 3,557 3,911 2,533 826 10,827 Consumer lending - - - - -

Other - - - - - Total 3,748 4,021 2,885 826 11,480

Of the total aggregate amount of gross past due but not yet impaired loans and advances to customers, the fair value of collaterals, capped with the respective outstanding total past due and not past due loan balances of the customers, that TEB Finansal Kiralama A.Ş. held as at December 31, 2009 was TRY 25,787 (2008 – TRY 30,012).


62

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 11. Information on derivative financial assets for hedging purposes:

Current Period Prior Period TRY FC TRY FC Fair value hedge 30,976 354 54,210 2,214 Cash flow hedge - - - - Hedge of net investment in foreign operations - - - - Total 30,976 354 54,210 2,214

12. Information on tangible assets:

Opening BalanceDecember 31,

2008 Additions Disposals Other


2009Cost:

Land and buildings 18,298 - - 38 18,336Leased tangible assets 60,547 - (8,119) (2) 52,426Vehicles 635 - (126) (1) 508Other 267,287 44,667 (27,486) 1,648 286,116

Total Cost 346,767 44,667 (35,731) 1,683 357,386 Opening Balance

December 31, 2008 Period Charge Disposals Other

Ending Balance December 31,

2009Accumulated Depreciation:

Land and buildings (4,359) (418) - (1) (4,778)Leased tangible assets (43,075) (6,253) 8,109 - (41,219)Vehicles (258) (109) 126 - (241)Other (*) (122,372) (40,489) 18,639 (2,780) (147,002)

Total Accumulated Depreciation (170,064) (47,269) 26,874 (2,781) (193,240)

Net Book Value 176,703 (2,602) (8,857) (1,098) 164,146 (*) “Other” consists of TRY 2,608 impairment loss provision booked for appraised real estates in assets to be disposed (2008 –

TRY 1,544).

a) The impairment provision set or cancelled in the current period according to the asset groups not individually significant but materially affecting the overall financial statements, and the reason and conditions for this: As of December 31,2009 provision for impairment loss amounting to TRY 2,608 is booked for real estates to be disposed with respect to appraisals performed at the year end (2008: TRY 1,544).

b) Pledges, mortgages and other restrictions on the tangible fixed assets, expenses arising from the

construction for tangible fixed assets, commitments given for the purchases of tangible fixed assets: None.


63

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 13. Information on intangible assets:

Opening BalanceDecember 31, 2008 Additions Disposals Other

Ending BalanceDecember 31, 2009

Cost: Other intangible assets 35,938 9,203 (51) (914) 44,176

Total Cost 35,938 9,203 (51) (914) 44,176 Opening Balance

December 31, 2008 Period Charge Disposals OtherEnding Balance

December 31, 2009Accumulated Amortization:

Other intangible assets (23,077) (6,574) 46 912 (28,693)Total Accumulated Amortization (23,077) (6,574) 46 912 (28,693)

Net Book Value 12,861 2,629 (5) (2) 15,483

a) Disclosures for book value, description and remaining useful life for a specific intangible fixed asset that

is material to the financial statements: None. b) Disclosure for intangible fixed assets acquired through government grants and accounted for at fair value

at initial recognition: None.

c) The method of subsequent measurement for intangible fixed assets that are acquired through government incentives and recorded at fair value at the initial recognition : None.

d) The book value of intangible fixed assets that are pledged or restricted for use: None. e) Amount of purchase commitments for intangible fixed assets: None.

f) Information on revalued intangible assets according to their types: None.

g) Amount of total research and development expenses recorded in income statement within the period if

any: None. h) Positive or negative consolidation goodwill on entity basis: There is a positive goodwill of TRY 1,205

(2008 – TRY 1,205) arising from the purchase of TEB Portföy by TEB Yatırım on February 27, 2005. i) Movements on goodwill in the current period:

Current Period Prior PeriodGross value at the beginning of the period 1,685 1,685

Accumulated depreciation (-) 480 480Impairment provision (-) - -

Movements within the period : - -Additional goodwill - -Corrections arising from the changes in value of assets and liabilities - -Goodwill written off due to discontinued operations in current period or complete /partial sale of an asset (-) - -Amortization (-) - -Impairment provision (-) - -Reversal of impairment provision (-) - -Other differences occurred in the book value - -

Gross value at the end of the period 1,685 1,685Accumulated amortization (-) 480 480Impairment provision (-) - -

Net book value at the end of the period 1,205 1,205


64

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 14. Information on investment property: None (2008 – None). 15. Explanations on deferred tax asset:

a) As of December 31, 2009, deferred tax asset computed on the temporary differences and reflected to the balance sheet is TRY 50,058 (2008 – TRY 18,762). There are no tax exemptions or deductions over which deferred tax asset is computed. Investment incentive was abolished being effective from January 1, 2006. In case that entities do not have sufficient taxable income, deduction of the unused investment incentive as of December 31, 2005 from 2006, 2007 and 2008 income was allowed however it was not permitted to defer this investment incentive to subsequent periods after 2008. The Constitutional Court abolished this regulation on October 15, 2009 and the time constraint related to investment incentive has been removed as of the issue date of this report. The resolution has been published in the Official Gazette on January 8, 2010. For this reason, TEB Finansal Kiralama A.Ş. recognized deferred tax asset amounting to TRY 36,214 in the year end financial statements assuming that it will take advantage of the unused investment incentive in the subsequent periods.

b) Temporary differences over which deferred tax asset is not computed and recorded in the balance sheet in prior periods: None.

c) Allowance for deferred tax and deferred tax assets from reversal of allowance: None.

d) Movement of deferred tax:

Current Period Prior Period At January 1 18,762 46,272 Effect of change in tax rate 2 94 Other 589 - Deferred tax (charge)/benefit 34,903 (26,935) Deferred tax (charge)/benefit (Net) 35,494 (26,841) Deferred tax accounted for under equity (4,198) (669) Deferred Tax Asset 50,058 18,762

Current Period Prior Period At January 1 (Deferred Tax Liability) (9) (12) Effect of change in tax rate - - Deferred tax (charge)/benefit 9 3 Deferred tax (charge)/benefit (Net) 9 3 Deferred tax accounted for under equity - - Deferred Tax Liability - (9)

16. Information on assets held for sale and discontinued operations : None (2008: None).


65

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 17. Information on other assets:

a) Breakdown of other assets:

Current Period Prior Period Clearing Account 112,330 113,780 Receivables From Securities Transactions 23,365 16,358 Leasing Contracts in Progress 930 6,171 Collateral Given for Derivative Financial Assets 31,743 57,314 Advances Given 3,424 2,787 Transaction Costs Related to Financial Liabilities 7,296 6,774 Prepaid Rents 4,515 5,210 Prepaid Insurance Premiums 99 278 Other Prepaid Expenses 18,944 20,025 Receivables from Credit Cards Payments 162,685 96,173 Temporary EFT Account 30,668 15,851 Other 13,623 25,008 Total 409,622 365,729

b) Other assets which exceed 10% of the balance sheet total (excluding off balance sheet commitments) and

breakdown of these which constitute at least 20% of grand total: None. 18. Information on factoring receivables:

a) Maturity Analysis:

Current Period Prior Period TRY FC TRY FCShort term 297,515 84,754 202,868 122,235 Medium and Long Term 107 - - -Specific provisions (7,828) (391) (6,242) (280) Total 289,794 84,363 196,626 121,955

b) Other explanations and disclosures:

Current Period Corporate Small Business Consumer Other Total Neither past due nor impaired 221,833 122,430 - - 344,263Past due not impaired 24,139 4,215 - - 28,354Individually impaired 2,943 6,816 - - 9,759Total gross 248,915 133,461 - - 382,376

Less: allowance for individually impaired loans 1,403 6,816 - - 8,219 Total allowance for impairment 1,403 6,816 - - 8,219 Total net 247,512 126,645 - - 374,157


66

I. Explanations and Disclosures Related to the Consolidated Assets (continued) 18. Information on factoring receivables: (continued) b) Other explanations and disclosures: (continued)

Prior Period Corporate Small Business Consumer Other Total Neither past due nor impaired 207,481 110,977 - - 318,458Past due not impaired - - - - -Individually impaired 1,012 5,633 - - 6,645Total gross 208,493 116,610 - - 325,103

Less: allowance for individually impaired loans 1,012 5,510 - - 6,522 Total allowance for impairment 1,012 5,510 - - 6,522 Total net 207,481 111,100 - - 318,581

A reconciliation of the allowance for impairment losses and advances by classes is as follows;

Corporate

Small Business

Consumer

Other

Total

At January 1, 2009 1,012 5,510 - - 6,522 Charge for the period 391 2,108 - - 2,499 Recoveries - (802) - - (802) Amounts written off - - - - - At December 31, 2009 1,403 6,816 - - 8,219

Corporate

Small Business

Consumer

Other

Total At January 1, 2008 1,030 1,383 - - 2,413 Charge for the period - 4,189 - - 4,189 Recoveries (18) (62) - - (80) Amounts written off - - - - - At December 31, 2008 1,012 5,510 - - 6,522


67

SECTION FIVE II. Explanations and Disclosures Related to the Consolidated Liabilities 1. a) Information on maturity structure of deposits:

a.1) Current period:

Demand7 Day Call

AccountsUp to 1month

1-3Month

3-6Month

6 Month-1 Year

1 Yearand Over


Saving deposits 270,084 - 803,947 2,310,906 66,611 37,413 629 11,414 3,501,004 Foreign currency deposits 1,283,739 - 1,186,456 1,338,293 79,720 147,897 161,371 2,122 4,199,598

Residents in Turkey 925,985 - 1,142,739 1,286,703 64,399 74,596 24,790 2,122 3,521,334 Residents abroad 357,754 - 43,717 51,590 15,321 73,301 136,581 - 678,264

Public sector deposits 103,715 - 1,095 1,508 - - 194 - 106,512 Commercial deposits 705,974 - 670,802 649,711 14,650 27,499 263 102 2,069,001 Other institutions deposits 9,528 - 24,219 87,932 44,702 444 1 - 166,826 Precious metals deposits 16,613 - 3,854 2,086 835 374 - - 23,762 Interbank deposits 97,638 - 91,200 34,046 64,623 9,057 17 - 296,581 Central Bank of Turkey - - - - - - - - -

Domestic Banks 14,862 - - 5,068 - - - - 19,930 Foreign Banks 32,303 - 91,200 28,978 64,623 9,057 17 - 226,178 Special finance houses 50,473 - - - - - - - 50,473 Other - - - - - - - - -

Total 2,487,291 - 2,781,573 4,424,482 271,141 222,684 162,475 13,638 10,363,284

a.2) Prior period:

Demand7 Day Call

AccountsUp to 1month

1-3Month

3-6Month

6 Month-1 Year

1 Yearand Over


Saving deposits 129,934 - 791,513 2,499,108 20,807 33,839 189 399 3,475,789Foreign currency deposits 1,059,779 - 2,161,789 1,112,544 288,223 65,912 77,179 80 4,765,506

Residents in Turkey 677,996 - 1,684,611 1,059,329 122,504 22,582 24,885 80 3,591,987Residents abroad 381,783 - 477,178 53,215 165,719 43,330 52,294 - 1,173,519

Public sector deposits 76,405 - 7,143 1,157 - - - - 84,705Commercial deposits 476,296 - 781,210 344,784 26,175 98,321 - - 1,726,786Other institutions deposits 8,648 - 10,938 137,532 75 854 - - 158,047Precious metals deposits 8,077 - 3,628 2,237 128 721 - - 14,791Interbank deposits 49,530 - 199,452 15,632 3,361 - 2,187 - 270,162 Central Bank of Turkey - - - - - - - - -

Domestic Banks - - 3,012 - - - 2,122 - 5,134Foreign Banks 17,565 - 196,440 15,632 3,361 - 65 - 233,063Special finance houses 31,965 - - - - - - - 31,965Other - - - - - - - - -

Total 1,808,669 - 3,955,673 4,112,994 338,769 199,647 79,555 479 10,495,786

b) Information on saving deposits under the guarantee of saving deposit insurance: b.1) Saving deposits exceeding the limit of insurance: i) Information on saving deposits under the guarantee of saving deposit insurance and exceeding the

limit of saving deposit insurance:

Saving Deposits Under the guarantee of insurance(*)

Exceeding the limit of insurance(*)

Current Period Prior Period Current Period Prior PeriodSaving deposits 1,265,160 1,263,272 2,130,077 2,179,589Foreign currency saving deposits 379,691 366,622 1,302,510 1,587,049Other deposits in the form of saving deposits 3,372 1,496 18,838 11,571Foreign branches’ deposits under foreign authorities' insurance - - - -Off-shore banking regions’ deposits under foreign authorities' insurance - - - -Total 1,648,223 1,631,390 3,451,425 3,778,209

(*) According to the BRSA’s circular no 1584 dated on February 23, 2005, accruals are included in the saving deposit amounts.


68

II. Explanations and Disclosures Related to the Consolidated Liabilities (continued) b.2) Information on the saving deposits of the bank with head office abroad, if the saving deposits in the

branches of the bank located in Turkey are under the guarantee of saving deposit insurance in that country abroad: None.

b.3) Saving deposits not guaranteed by insurance:

i) Deposit of real persons not under the guarantee of saving deposit insurance:

Current Period Prior Period Deposits and accounts in branches abroad

64,476 58,824

Deposits of ultimate shareholders and their close families 263,013 177,868Deposits of chairman and members of the Board of Directors and their close families

10,408 11,360

Deposits obtained through illegal acts defined in the 282nd Article of the 5237 numbered Turkish Criminal Code dated September 26, 2004. - -Saving deposits in banks established in Turkey exclusively for off shore banking activities - -

2. Information on derivative financial liabilities:

a) Negative differences table related to derivative financial liabilities held-for-trading:

Current Period Prior Period TRY FC TRY FCForward Transactions 2,629 3,341 27,067 36,574Swap Transactions 21,294 6,142 63,911 4,446Futures Transactions - 14,497 - 38,654Options 7,061 2,973 5,595 -Other 52 - - -Total 31,036 26,953 96,573 79,674

3. a) Information on banks and other financial institutions:

Current Period Prior Period TRY FC TRY FCLoans from Central Bank of Turkey - - - - From Domestic Banks and Institutions 279,972 165,273 136,387 167,645From Foreign Banks, Institutions and Funds 862,909 1,152,346 1,644,925 1,378,500Total 1,142,881 1,317,619 1,781,312 1,546,145


69

II. Explanations and Disclosures Related to the Consolidated Liabilities (continued)

b) Maturity analysis of borrowings:

Current Period Prior Period TRY FC TRY FCShort-term 1,130,992 873,061 1,399,774 929,854Medium and long-term 11,889 444,558 381,538 616,291Total 1,142,881 1,317,619 1,781,312 1,546,145

c) Additional explanation related to the concentrations of the Parent Bank’s major liabilities:

The Parent Bank diversifies its funding resources by the customer deposits and by the foreign borrowings. As of December 31, 2009, the Bank has a syndication loan of EUR 190,000,000 and USD 92,000,000, with a maturity of November 24, 2010, under foreign borrowings obtained on December 2, 2009. The Parent Bank makes analysis of its customers that provide the maximum amount of funds within the branches and throughout the Parent Bank, in consideration of profitability. The Parent Bank takes short and long term preventive measures to spread its customers on a wider spectrum on the basis of customer concentration in the branches.

Information on funds provided from repurchase agreement transactions:

Current Period Prior Period TRY FC TRY FC

From domestic transactions 1,071,971 - 201,621 -Financial institutions and organizations 1,071,243 - 126,644 -Other institutions and organizations - - 69,106 -Real persons 728 - 5,871 -From foreign transactions - - 123 -Financial institutions and organizations - - - -Other institutions and organizations - - - -Real persons - - 123 -Total 1,071,971 - 201,744 -

4. Other liabilities which exceed 10% of the balance sheet total (excluding off-balance sheet

commitments) and the breakdown of these which constitute at least 20% of grand total: None (2008 – None).

5. Explanations on financial lease obligations (Net):

a) 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 group:

In the financial lease agreements, installments are based on useful life, usage periods and provisions of the Tax Procedural Law.

b) The explanation on modifications in agreements and new obligations resulting from such modifications:

None c) Explanation on finance lease payables: None.


70

II. Explanations and Disclosures Related to the Consolidated Liabilities (continued) 5. Explanations on financial lease obligations (Net): (continued)

d) Explanations regarding operational leases: Except for the Head-Office-Istanbul and Izmir-Ege Kurumsal Branch buildings, all branch premises of the Parent Bank are leased under operational leases. For the year ended December 31, 2009, operational lease expenses amounting to TRY 76,346 (2008 – TRY 67,093) have been recorded in the profit and loss accounts. The lease periods vary between 1 and 10 years and lease agreements are cancelable subject to a certain period of notice.

e) Explanations on the lessor and lessee in sale and lease back transactions, agreement conditions, and major

agreement terms: None.

6. Information on derivative financial liabilities for hedging purposes:

Current Period Prior Period TRY FC TRY FC Fair value hedge (*) 73,493 - 67,611 - Cash flow hedge - - - - Hedge of net investment in foreign operations - - - - Total 73,493 - 67,611 -

(*) Comprised of swaps for hedging purposes.

7. Information on provisions:

a) Information on general provisions:

Current Period Prior Period General Provisions

Provisions for First Group Loans and Receivables 61,030 55,095 Provisions for Second Group Loans and Receivables 9,225 14,558 Provisions for Non-Cash Loans 8,833 7,893 Other 7,738 3,825 Total 86,826 81,371

b) Foreign exchange losses on the foreign currency indexed loans and finance lease receivables: The foreign

exchange losses on the foreign currency indexed loans amounting to TRY 26,976 (2008 - TRY 16,269) is offset from the loans on the balance sheet.

c) The specific provisions provided for unindemnified non cash loans amount to TRY 10,617 (2008 - TRY

1,611).


71

II. Explanations and Disclosures Related to the Consolidated Liabilities (continued) 7. Information on provisions: (continued)

d) Information on employee termination benefits and unused vacation accrual:

The Group has calculated reserve for employee termination benefits by using actuarial valuations as set out in the TAS No:19 and reflected this in the financial statements.

As of December 31, 2009, the Group provided a reserve of TRY 9,476 (2008- TRY 8,660) for the unused vacations. This balance is classified under other provisions in the financial statements.

d.1) Movement of employee termination benefits

Current Period Prior Period As of January 1 13,795 11,187 Service cost 2,676 2,220 Interest cost 1,591 1,190 Settlement cost 1,473 518 Actuarial (gain)/loss 2,410 (168) Benefits paid (3,433) (1,152) Total 18,512 13,795

e) Information on other provisions:

e.1) Provisions for possible losses: None ( 2008 – None). e.2) The breakdown of the subsidiary accounts if other provisions exceed 10% of the grand total of

provisions:

Current Period Prior Period Provision for employee benefits 9,476 8,660 Provision for promotion of credit cards and banking services 4,163 3,648 Other (*) 32,232 39,866 Total 45,871 52,174

(*) Included in other, TRY 20,605 (2008 – TRY 23,543) is the provision related to the bonuses to be paid to the personnel and

TRY 10,617 (2008 – TRY 1,611) is the specific provisions for unindemnified non cash loans.

f) Liabilities on pension rights:

f.1) Liabilities for pension funds established in accordance with “Social Security Institution": None ( 2008 – None).

f.2) Liabilities resulting from all kinds of pension funds, foundations etc, which provide post retirement

benefits for the employees: None (2008 – None).


72

II. Explanations and Disclosures Related to the Consolidated Liabilities (continued) 8. Explanations on taxes payable:

a) Information on current tax liability:

a.1) Corporate taxes:

Current Period Prior PeriodProvision for Corporate Taxes 3,913 288

a.2) Information on taxes payable:

Current Period Prior PeriodTaxation on Securities 9,088 17,633Property Tax 920 884Banking Insurance Transaction Tax (BITT) 10,050 16,091Foreign Exchange Transaction Tax 10 8Value Added Tax Payable 735 713Other (*) 7,436 7,493Total 28,239 42,822

(*) Others include income taxes deducted from wages amounting to TRY 6,108 (2008 – TRY 5,963) and stamp taxes payable amounting to TRY 782 (2008 - TRY 446).

b) Information on premiums:

Current Period Prior PeriodSocial Security Premiums-Employee 2,563 2,628Social Security Premiums-Employer 2,723 2,815Bank Social Aid Pension Fund Premium-Employee - -Bank Social Aid Pension Fund Premium-Employer - -Pension Fund Membership Fees and Provisions-Employee - -Pension Fund Membership Fees and Provisions-Employer - -Unemployment Insurance-Employee 180 185Unemployment Insurance-Employer 359 365Other - 223Total 5,825 6,216

c) Explanations on deferred tax liabilities, if any:

The deferred tax liability of the Group as of December 31, 2009: None (2008 – TRY 9). The deferred tax liability movement is presented under “Explanations on Deferred Tax Asset”.


73

II. Explanations and Disclosures Related to the Consolidated Liabilities (continued) 9. Information on liabilities regarding assets held for sale and discontinued operations: None (2008 –

None).

10. Explanations on the number of subordinated loans the Parent Bank used, maturity, interest rate, institution that the loan was borrowed from, and conversion option, if any: The Parent Bank has signed an agreement with the International Finance Corporation (IFC) on July 17, 2002, for a subordinated loan of USD 15 million. The maturity of the loan is October 15, 2011 and interest rate is LIBOR+2.85%. USD 3 million principle of this subordinated loan was paid on October 15, 2009 in accordance with the terms of the main agreement.

The Parent Bank has signed another agreement with the IFC on June 27, 2005, for a subordinated loan. The facility is a USD 50 million subordinated loan, with a maturity of July 15, 2015 and with an interest rate of LIBOR+3.18%. The Parent Bank has signed an agreement with the Economy Luxembourg S.A on October 27, 2006 for a subordinated loan. The facility is a EUR 110 million subordinated loan, with a maturity of October 31, 2016, and with an interest rate of 6.10%. The Parent Bank has obtained a primary subordinated loan by issuing a bond amounting to USD 100 million as of July 31, 2007. The investor of the said bond is IFC International Finance Corporation (IFC). The maturity of the borrowing is indefinite with semi-annually interest payment. The interest rate is defined as LIBOR+3.5% until July 31, 2017. In case the borrowed amount is not repaid at that date, the interest rate will be revised as LIBOR + 5.25%. Each of the four of the above facilities match BRSA’s subordinated loan-capital definitions and positively contribute the Parent Bank’s capital adequacy ratio in a positive manner as well as creating long term financing.

a) Information on subordinated loans:

Current Period Prior Period TRY FC TRY FC From Domestic Banks - - - - From Other Domestic Institutions - - - - From Foreign Banks - - - - From Other Foreign Institutions - 483,474 - 495,055 Total - 483,474 - 495,055


74

II. Explanations and Disclosures Related to the Consolidated Liabilities (continued) 11. Information on Shareholders’ Equity:

a) Presentation of Paid-in capital:

Current Period Prior Period Common stock 1,100,000 1,100,000 Preferred stock - -

b) Paid-in capital amount, explanation as to whether the registered share capital system is applicable at bank

if so amount of registered share capital ceiling:

Capital System Paid-in capital Ceiling Registered Capital System 1,100,000 1,400,000

c) Information on share capital increases and their sources; other information on increased capital shares in

current period: None

d) Information on share capital increases from revaluation funds: None.

e) 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 to meet these commitments: None.

f) Indicators of the Parent Bank’s income, profitability and liquidity for the previous periods and possible effects of these future assumptions due to the uncertainty of these indicators on the Parent Bank’s equity:

Prior year income, profitability and liquidity of the Parent Bank is closely monitored and reported to Board of Directors, Asset and Liability Committee, and Risk Management by the Budget and Financial Control Group. This group tries to forecast the effects of interest, currency and maturity fluctuations that change these indicators with static and dynamic scenario analysis. Net asset value, which is defined as the difference of fair values of assets and liabilities, is measured. Expectations are made for the Parent Bank’s future interest income via simulations of net interest income and scenario analysis.

g) Information on preferred shares:

7% of the Parent Bank’s remaining net income after tax subsequent to deducting legal reserves and first dividends, corresponding to the Bank’s 60,000 shares of TRY 30 (in full TRY) is distributed to the founder shares.

h) Information on marketable securities value increase fund:

Current Period Prior Period TRY FC TRY FCFrom Associates, Subsidiaries, and Entities Under Common Control (Joint Vent.) - -

- -

Valuation Difference 16,966 4,857 8,241 (3,023)Foreign Exchange Difference - - - -Total 16,966 4,857 8,241 (3,023)


Foreign currency marketable securities value increase fund 4,857 (3,023)Foreign exchange gains resulting from foreign currency associates, subsidiaries, and securities held to maturity related to the above amount - -Total 4,857 (3,023)


75

II. Explanations and Disclosures Related to the Consolidated Liabilities (continued) 11. Information on Shareholders’ Equity: (continued)

Information on legal reserves:

Current Period Prior PeriodFirst legal reserves 42,642 32,980Second legal reserves 14,877 13,713Other legal reserves appropriated in accordance with special legislation - -

Total 57,519 46,693 Information on extraordinary reserves:

Current Period Prior PeriodReserves appropriated by the General Assembly 374,077 197,905Retained earnings - -Accumulated losses - -Foreign currency share capital exchange difference - -

Total 374,077 197,905

Other Information on Shareholders’ Equity:

The movement of the marketable securities value increase fund is as follows: Current Period Prior PeriodAt January 1 5,218 2,399Net unrealized gains on available for sale investments 76,054 (3,737)Realized gains on available for sale investments recycled to income statement on disposal - -Realized losses on available for sale investments recycled to income statement on disposal and impairment (55,251) 7,225Tax effect of net gains on available for sale investments (4,198) (669)Unrealized gains / (losses) on cash flow hedges - -Gains / (losses) on cash flow hedges recycled to income statement - -Tax effect of net gains on cash flow hedges - -

At period end 21,823 5,218 12. Information on minority shares: None (2008 – None). 13. Explanations on factoring payables: None (2008 – None).


76

SECTION FIVE III. Explanations and Disclosures Related to the Consolidated Off-Balance Sheet

Contingencies and Commitments 1. Information on off-balance sheet liabilities:

a) Nature and amount of irrevocable loan commitments: Credit card expenditure limit commitments are TRY 957,516 and TRY 760,765; payment commitments for checks are TRY 650,733 and TRY 560,682 as of December 31, 2009 and December 31, 2008 respectively.

b) Possible losses and commitments related to off-balance sheet items including items listed below:

The Group, within the context of banking activities, undertakes certain commitments, consisting of loan commitments, letters of guarantee, acceptance credits and letters of credit.

b.1) Non-cash loans including guarantees, acceptances, financial guarantee and other letters of credits: As of December 31, 2009 total guarantees and commitments consist of letters of guarantee

amounting to TRY 2,724,472 (2008 - TRY 2,535,512), acceptances amounting to TRY 39,205 (2008 - TRY 51,320) and letters of credit amounting to TRY 784,382 (2008 -TRY 615,975).

b.2) Guarantees, suretyships, and similar transactions: The Group has other guarantees and suretyships

amounting to TRY 207,612 as of December 31, 2009 (2008 – TRY 217,433).

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

Current Period Prior Period Non-cash loans given against achieving cash loans 206,721 270,707

With maturity of 1 year or less than 1 year 40,135 66,995 With maturity of more than 1 year 166,586 203,712

Other non-cash loans 3,548,950 3,149,533 Total 3,755,671 3,420,240

c.2) Information on sectoral risk breakdown of non-cash loans:


Agricultural 22,109 1.44 39,986 1.80 19,275 1.43 22,126 1.07Farming and raising livestock 16,422 1.07 23,166 1.04 15,739 1.16 14,575 0.71Forestry 5,180 0.34 16,820 0.76 3,046 0.23 7,551 0.36Fishery 507 0.03 - - 490 0.04 - -

Manufacturing 830,539 54.19 1,142,034 51.37 702,891 52.11 1,130,659 54.58Mining 43,566 2.85 24,103 1.08 45,075 3.34 26,225 1.26Production 767,155 50.05 1,101,885 49.57 639,680 47.43 1,078,100 52.05Electric, gas and water 19,818 1.29 16,046 0.72 18,136 1.34 26,334 1.27

Construction 328,665 21.44 280,978 12.64 251,617 18.66 301,552 14.56Services 331,611 21.64 335,758 15.10 358,133 26.55 288,954 13.95

Wholesale and retail trade 99,329 6.48 23,038 1.04 185,268 13.74 99,331 4.80Hotel, food and beverage services 7,139 0.47 3,209 0.14 7,076 0.52 2,864 0.14Transportation and telecommunication 77,468 5.05 177,007 7.96 46,903 3.48 73,506 3.55Financial institutions 39,790 2.60 80,748 3.63 36,919 2.73 69,194 3.34Real estate and renting services 25,949 1.69 22,953 1.03 25,518 1.89 21,086 1.02Self-employment services 47,328 3.09 10,290 0.46 31,177 2.31 9,334 0.45Education services 564 0.04 579 0.03 614 0.05 572 0.03Health and social services 34,044 2.22 17,934 0.81 24,658 1.83 13,067 0.62

Other 19,777 1.29 424,214 19.09 16,854 1.25 328,179 15.84 Total 1,532,701 100.00 2,222,970 100.00 1,348,770 100.00 2,071,470 100.00


77

III. Explanations and Disclosures Related to the Consolidated Off-Balance Sheet Contingencies and Commitments (continued)

1. Information on off-balance sheet liabilities: (continued) c.3) Information on I st and II nd Group non-cash loans:

I st Group II nd Group Non-cash loans TRY FC TRY FC Letters of guarantee 1,394,572 1,297,547 20,556 11,797Bank acceptances 171 39,034 - -Letters of credit 233 783,457 106 586Endorsements - - - -Underwriting commitments - - - -Factoring commitments - - - -Other commitments and contingencies 116,943 88,975 120 1,574Total 1,511,919 2,209,013 20,782 13,957

The Parent Bank provided a reserve of TRY 10,617 (2008 – TRY 1,611) for non-cash loans not yet indemnified amounting to TRY 18,361 ( 2008 - TRY 9,711).

2. Information related to derivative financial instruments:

Derivative Transactions According to Purposes Trading Hedging Current Period Prior Period Current Period Prior PeriodTypes of trading transactions Foreign currency related derivative transactions (I) 6,867,168 6,752,292 - -

Forward transactions 1,655,125 2,776,836 - - Swap transactions 2,437,034 2,833,424 - - Futures transactions 483,173 453,114 - - Option transactions 2,291,836 688,918 - -

Interest related derivative transactions (II) 375,169 92,768 - - Forward rate transactions - - - - Interest rate swap transactions 338,514 92,768 - - Interest option transactions 36,655 - - - Futures interest transactions - - - -

Marketable securities call-put options (III) - - - - Other trading derivative transactions (IV) - - - - A.Total trading derivative transactions (I+II+III+IV) 7,242,337 6,845,060 - - Types of hedging transactions

Fair value hedges - - 761,499 1,002,465 Cash flow hedges - - - - Net investment hedges - - - -

B.Total hedging related derivatives - - 761,499 1,002,465 Total Derivative Transactions (A+B) 7,242,337 6,845,060 761,499 1,002,465

Related to agreements of forward transactions and options; the information based on the type of forward and options transactions are disclosed separately, specified with related amounts, type of agreement, purpose of transaction, nature of risk, strategy of risk management, hedging relationship, possible effects on the Bank’s financial position, timing of cash flows, reasons of unrealized transactions which previously projected to be realized, income and expenses that could not be linked to income statement in the current period because of the agreements: Forward foreign exchange and swap transactions are based on protection from interest and currency fluctuations. According to TAS, they do not qualify as hedging instruments and as trading transactions are remeasured at fair value.


78


2. Information related to derivative financial instruments: (continued)

As of July 1, 2008, the Parent Bank has started to apply fair value hedge accounting in order to avoid the effects of interest rate changes in the market by matching TRY 761,499 of its swap portfolio (2008: TRY 1,002,465) with its loan portfolio. As of December 31, 2009 and December 31, 2008, breakdown of the Group’s foreign currency forward and swap transactions based on currencies are disclosed below in their TRY equivalents:

Forward Buy Forward Sell Swap Buy Swap Sell Option Buy Option Sell Future Buy Future Sell Current Period TRY 358,911 191,184 251,511 663,979 476,853 485,412 - -USD 160,626 445,333 272,232 566,736 324,011 322,206 234,791 -EURO 286,391 145,176 744,288 104,290 245,423 230,800 - -OTHER 34,976 32,528 120,376 52,136 132,380 111,406 - 248,382Total 840,904 814,221 1,388,407 1,387,141 1,178,667 1,149,824 234,791 248,382Prior Period TRY 258,886 224,012 841,255 219,044 162,923 178,007 - -USD 562,766 642,559 367,559 1,132,045 83,155 86,107 208,133 -EURO 523,130 489,882 152,297 73,400 99,690 79,036 - -OTHER 42,105 33,496 85,710 54,882 - - - 244,981Total 1,386,887 1,389,949 1,446,821 1,479,371 345,768 343,150 208,133 244,981

As of December 31, 2009, the Group has no cash flow hedges. (2008 – None) As of December 31, 2009, the Group has no hedge of net investment. (2008 – None)

3. Explanations on contingent liabilities and assets:

a.1) The Group's share in contingent liabilities arising from entities under common control together with other venturers: None.

a.2) Share of entity under common control in its own contingent liabilities: None. a.3) The Group’s contingent liabilities resulting from liabilities of other venturers in entities under

common control: None. b) Accounting and presentation of contingent assets and liabilities in the financial statements:

b.1) Contingent assets are accounted for, if probability of realization is almost certain. If probability of

realization is high, then it is explained in the footnotes. As of December 31, 2009 there are no contingent assets that need to be explained (2008 – None).

b.2) A provision is made for contingent liabilities, if realization is probable and the amount can reliably

be determined. If realization is remote or the amount cannot be determined reliably, then it is explained in the footnotes: As of December 31, 2009 there are no contingent liabilities that need to be explained (2008 – None).

4. Custodian and intermediary services:

The Parent Bank provides trading and safe keeping services in the name and account of third parties, which are presented in the consolidated statement of contingencies and commitments. Investment securities held in custody include investment fund participation certificates which are accounted for by their number of certificates. As of balance sheet date the total number of certificates is 11,878,481 thousand (2008 – 13,454,307 thousand) and the total fair value is TRY 1,245,765 (2008 – TRY 1,013,676).


79


5. The information on the Bank’s rating by the international rating introductions (*) :

The results of the ratings performed by Moody’s Investor Services and Fitch Ratings for the Parent Bank are shown below:

Moody’s Investor Services: November 2009 View Stable Bank Financial Strength D+ Foreign Currency Deposits B1/NP Fitch Ratings: December 2009 Foreign Currency Commitments Long term BBB- Short term F3 View Stable Turkish Lira Commitments Long term BBB Short term F3 View Stable National AAA (tur) View Stable Individual Rating C/D Support Points 2 (*) Ratings above are not performed based on the “Communiqué for Authorization and Activities of

Rating Institutions” published by the Capital Markets Board.


80

SECTION FIVE IV. Explanations and Disclosures Related to the Consolidated Statement of Income 1. a) Information on interest on loans:

Current Period Current Period Prior Period Interest on loans (*) TRY FC TRY FC Short term loans 759,821 140,645 978,821 138,961Medium and long term loans 373,519 39,418 355,976 48,920Interest on non-performing loans 6,719 - 5,348 -Premiums received from Resource Utilization Support Fund - -

- -

Total 1,140,059 180,063 1,340,145 187,881

(*) Includes fees and commissions obtained from cash loans amounting to TRY 39,848 (2008: TRY 44,539).

b) Information on interest received from banks: Current Period Prior Period TRY FC TRY FCThe Central Bank of Turkey - 10 - 2,371Domestic banks 1,956 66 3,238 10,818Foreign banks 5,360 12,460 4,685 54,259Branches and head office abroad - - - -Total 7,316 12,536 7,923 67,448

c) Interest received from marketable securities portfolio: Current Period Prior Period TRY FC TRY FC Trading securities 12,219 647 27,020 1,512Financial assets at fair value through profit and loss - - - -Available-for-sale securities 156,467 7,994 234,142 10,783Held-to-maturity securities 116,283 1,137 34,513 239Total 284,969 9,778 295,675 12,534

d) Information on interest income received from associates and subsidiaries:

Interest income received from associates and subsidiaries are eliminated in the consolidated financial statements.


81

IV. Explanations and Disclosures Related to the Consolidated Statement of Income (continued)

2. a) Information on interest on funds borrowed (*):

Current Period Prior Period TRY FC TRY FC Banks

The Central Bank of Turkey - - - -Domestic banks 20,093 6,364 29,561 11,722Foreign banks 123,679 43,048 176,987 70,456Branches and head office abroad - - - -

Other financial institutions - 34,299 - 33,713Total 143,772 83,711 206,548 115,891

(*) Includes fees and commission expenses of cash loans amounting to TRY 3,821 (2008: TRY 1,882). b) Information on interest expenses to associates and subsidiaries: Interest income received from associates and subsidiaries are eliminated in the consolidated financial statements. c) Information on interest expenses to marketable securities issued: None (2008 – None).

d) Distribution of interest expense on deposits based on maturity of deposits:

Time Deposits

Account Name Demand Deposits

Up to 1 Month

Up to 3 Months

Up to 6 Months

Up to 1 Year

More than 1 Year


TRY Bank deposits - 4,597 469 - 40 286 - 5,392 Saving deposits 6 86,415 259,286 8,283 11,361 71 754 366,176 Public sector deposits - 445 340 49 2 - - 836 Commercial deposits 1,824 56,731 47,113 2,914 11,301 28 - 119,911 Other deposits - 2,493 14,585 1,106 1,508 38 - 19,730 7 days call accounts - - - - - - - -

Total 1,830 150,681 321,793 12,352 24,212 423 754 512,045 FC

Foreign currency deposits 9,281 33,298 40,753 3,945 3,566 5,317 31 96,191 Bank deposits 8 1,612 3,701 2,649 30 2,193 - 10,193 7 days call accounts - - - - - - - - Precious metal deposits 2 42 114 7 12 - - 177

Total 9,291 34,952 44,568 6,601 3,608 7,510 31 106,561 Grand Total 11,121 185,633 366,361 18,953 27,820 7,933 785 618,606

3. Information on dividend income:

Current Period Prior Period Trading securities - -Financial assets at fair value through profit and loss - -Available-for-sale securities 13 481Other - -Total 13 481


82


4. Information on net trading income:

Current Period Prior Period Income 2,483,826 3,941,735 Gains on capital market operations 76,133 25,203 Gains on derivative financial instruments (**) 483,776 788,555 Foreign exchange gains (*) 1,923,917 3,127,977 Losses (-) 2,438,594 3,995,664 Losses on capital market operations 13,481 52,823 Loss on derivative financial instruments (**) 689,158 803,856 Foreign exchange losses (*) 1,735,955 3,138,985 (*) As of December 31, 2009, the foreign exchange gains on the foreign currency indexed loans are TRY 34,659 (2008: TRY

282,351) and the foreign exchange losses on the foreign currency indexed loans are TRY 31,248 (2008: TRY 11,897). (**) Gains on hedging transactions are TRY 15,556 (2008 – TRY 101,324), while losses on hedging transactions are TRY 103,640

(2008: TRY 88,026).

5. Information on other operating income:

The information on the factors affecting the parent Bank’s income including new developments, and the explanation on nature and amount of income earned from extraordinary such items:

In the comparative consolidated statement of income, as a result of a lawsuit opened against the Ministry of Finance of the Turkish Republic (“Ministry”) based on the requirement about the deduction of losses arising from the capital decrease in the financial statements of the Parent Bank dated December 31, 2001 based on the Temporary Article 4 with the law numbered 4743 added to the Banking Law No: 4389 that is ceased to be effective on November 1, 2005, by using the statutory and optional reserves as an expense in determining the banks’ profit within the framework set out in Paragraph 7 of Article 14 of the annulled Corporate Tax Law No: 5422, the Parent Bank has settled its tax reimbursement issue with the Ministry based on Article 3 of Law No: 5736 “Collection of Some Government Receivables by Compromise Procedures” published in the Official Gazette No: 26800 on February 27, 2008, and it has reflected its receivable amounting to TRY 41,207 in its consolidated statement of income as of December 31, 2008, which became collectible with the notification to the Parent Bank by the Ministry in regards to the decision made on the settlement of this reimbursement by deducting that receivable amount from other taxes payable to the extent that 65% of the losses arising from year 2001 inflation accounting adjustment should be taken into account.

6. Provision expenses of banks for loans and other receivables:

Current Period Prior PeriodSpecific provisions for loans and other receivables 174,541 104,477

III. Group Loans and Receivables 4,955 3,678IV. Group Loans and Receivables 30,676 12,467V. Group Loans and Receivables 138,910 88,332

General provision expenses 3,912 18,214Provision expenses for possible losses - -Marketable securities impairment losses 2,947 13,418

Financial assets at fair value through profit and loss 143 39Investment securities available for sale 2,804 13,379

Impairment provision expense 3,117 -Associates - -Subsidiaries - -Entities under common control (Joint Vent.) - -Investments held to maturity 3,117 -

Other 15,751 7,911Total 200,268 144,020


83


7. Information on other operating expenses:

Current Period Prior PeriodPersonnel expenses 376,850 392,985Reserve for employee termination benefits 8,150 3,760Bank social aid fund deficit provision - -Impairment expenses of fixed assets - -Depreciation expenses of fixed assets 47,269 40,476Impairment expenses of intangible assets - -

Impairment expense of goodwill - -Amortization expenses of intangible assets 6,574 5,388Impairment for investments accounted for under equity method - -Impairment expenses of assets to be disposed 2,106 1,544Depreciation expenses of assets to be disposed - -Impairment expenses of assets held for sale and discontinued operations - -Other operating expenses 261,398 237,158

Rent expenses 76,346 67,093Maintenance expenses 6,306 6,484Advertisement expenses 23,617 24,725Other expenses 155,129 138,856

Loss on sales of assets 983 1,293Other(*) 56,252 82,635 Total 759,582 765,239 (*) Included in other, premiums paid to the Saving Deposit Insurance Fund is TRY 9,927 (2008 – TRY 8,909).

8. Information on profit/(loss) from continued and discontinued operations before taxes:

Profit before tax of the Group has increased by 29% for the period ended December 31, 2009 as compared to the prior year. In comparison with the prior period, the Group’s net interest income increased by 2%, net fees and commissions income and provision and operating expenses increased by 24% and 6%, respectively.

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

a) As of December 31, 2009, the current tax charge is TRY 57,476 (2008 – TRY 11,688 tax charge) and deferred tax benefit is TRY 34,912 (2008 – TRY 26,932 deferred tax charge).

b) Deferred tax benefit on temporary differences is TRY 34,912 (2008 – TRY 26,932 deferred tax charge).


84


9. Information on tax provision: (continued)

c) Tax reconciliation:

Current Period Prior Period Profit before tax 290,468 225,618 Additions 93,444 46,349 Disallowables 17,180 4,468 General loan loss provision 3,916 21,494 Provision for possible tax disputes 735 14,711 Effect of different tax rate 63,364 5,015 Other 8,249 661 Deductions (271,092) (78,866) General loan loss provision (280) - Provision for possible tax disputes (14,711) - Recovered tax related to previous years due to inflation accounting - (41,207) Prior years’ losses - (22,657) Income from branches abroad (11,993) (10,776) Unused investment incentive (239,181) - Other (4,927) (4,226) Taxable Profit / (Loss) 112,820 193,101 Corporate tax rate 20% 20% Tax calculated 22,564 38,620

As of December 31, 2009, current tax charge is TRY 57,476 (2008 – TRY 11,688 current tax charge) and deferred tax benefit on temporary differences is TRY 34,912 (2008 – TRY 26,932 deferred tax charge). Net tax charge recognized in the financial statements is TRY 22,564 (2008 – TRY 38,620 net tax charge).

10. Information on net operating income after taxes: The Group increased its net profit for the year ended December 31, 2009 by 43% as compared to the prior year profit.

11. The explanations on net income / loss for the period:

a) 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 Bank's performance for the period: None (2008 – None).

b) Effect of changes in accounting estimates on income statement for the current and, if any, for subsequent

periods: None (2008 – None).

c) Profit or loss attributable to minority shares: None (2008 – None).


85


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:

Current Period Prior Period Other interest income Factoring interest income 45,692 70,356 Mark to market differences of the hedged item 8,724 35,927 Other 3,778 20,227 Total 58,194 126,510

Current Period Prior Period Other fees and commissions received Brokerage commissions received 22,032 21,511 Credit cards commissions and fees 177,022 134,100 Fund management commissions 43,066 34,070 Import letters of credit commissions 4,011 4,275 Inquiry and company search fees and commissions 17,920 17,435 Settlement expense provision, eft, swift, agency commissions 9,915 10,973 Insurance commissions 11,232 10,695 Transfer commissions 7,506 5,322 Commissions and fees earned from correspondent banks 6,389 5,695 Consultancy fees 1,149 1,255 Other 59,267 52,813 Total 359,509 298,144

Other fees and commissions given Credit cards commissions and fees 97,548 93,647

Commissions and fees paid to correspondent banks 8,306 6,842

Settlement and swift commissions 3,873 3,386

Other 12,516 8,294

Total 122,243 112,169


86

SECTION FIVE

V. Explanations and Disclosures Related to the Consolidated Statement of Shareholders' Equity Movement

a) Increase resulting from revaluation of financial assets available for sale is TRY 16,605 (2008 – TRY

2,819 increase).

Gain or loss arising from measurement of financial assets available-for-sale included in shareholders' equity in the current period, excluding those related to hedging: Indicated above.

The amount recycled from equity to net income/loss account if the loss or gain related with measurement at fair value is recorded to equity for the financial assets available-for-sale (excluding the assets related to hedging): TRY 55,251 income (2008 – TRY 7,225 loss).

b) Increase in cash flow risk hedging items: None.

b.1) Reconciliation of beginning and ending balances: None. b.2) Amount recorded in the current period if a gain or loss from a cash flow hedging derivative or non-

derivative financial asset is accounted for under shareholders’ equity: None.

c) The reconciliation related with foreign exchange amounts in the beginning and end of the period: None. d) Dividends declared subsequent to the balance sheet date, but before the announcement of the financial

statements: None, e) Dividends per share proposed subsequent to the balance sheet date: Profit appropriation will be resolved

in the General Assembly meeting which has not been yet held as of the date of the accompanying financial statements are authorized for issue.

f) Proposals to General Assembly for the payment dates of dividends and if it will not be appropriated the

reasons for this: The Board of Directors has not decided for profit appropriation as of the date of the financial statements are authorized for issue.

g) Amounts transferred to legal reserves: Amount transferred to legal reserves is TRY 10,826 in 2009 (2008

– TRY 10,270).

h) Information on shares issued:

TRY 2,041 has been collected from the sale of the share certificates with nominal value of TRY 1,619 on the Istanbul Stock Exchange (ISE) – arising from the capital increase of the Parent Bank in 2008, corresponding to the shares of shareholders who have not used their pre-emptive rights. The Parent Bank has recorded the difference of TRY 422 under the “Share Premiums” account.


87

VI. Explanations and Disclosures Related to the Consolidated Statement of Cash Flows

1. The effects of the other items stated in the cash flow statement and the changes in foreign currency exchange rates on cash and cash equivalents:

“Other items” amounting to TRY 737,829 (2008 – TRY 934,637) in “Operating profit before changes in operating assets and liabilities” consists of fees and commissions paid and other expenses except for personnel expenses, leasing expenses, reserve for employee termination benefits, depreciation charges and taxes paid.

“Net increase/decrease in other liabilities” amounting to TRY 31,378 (2008 – TRY 52,779) in “Changes in operating assets and liabilities” consists of changes in sundry creditors, other liabilities and interbank money market borrowings. “Net increase/decrease in other assets” with a total amount of TRY 110,362 (2008 – TRY 207,534) consists of changes in sundry debtors and other assets.

2. Cash and cash equivalents at beginning and end of periods:

The reconciliation of the components of cash and cash equivalents, accounting policies used to determine these components, the effect of any change made in accounting principle in the current period, the recorded amounts of the cash and cash equivalent assets at the balance sheet and the recorded amounts in the cash flows statement:

Beginning of the period Current Period Prior PeriodCash 1,796,800 1,592,944 Cash in TRY/Foreign Currency 251,828 191,089 Central Bank – Unrestricted amount 1,527,735 1,399,404 Other 17,237 2,451Cash equivalents 1,921,143 1,002,123 Banks 1,164,620 802,621 Money market placements 756,523 199,502Total cash and cash equivalents 3,717,943 2,595,067

End of the period Current Period Prior PeriodCash 1,250,073 1,796,800 Cash in TRY/Foreign Currency 309,354 251,828 Central Bank – Unrestricted amount 922,102 1,527,735 Other 18,617 17,237Cash equivalents 1,416,140 1,921,143 Banks 711,676 1,164,620 Money market placements 704,464 756,523Total cash and cash equivalents 2,666,213 3,717,943


88

VII. Explanations on the Risk Group of the Parent Bank

1. Volume of related party transactions, income and expense amounts involved and outstanding loan and deposit balances:

a) Current Period:

Related Parties





Balance at beginning of period - - 82,234 14,059 121,993 7,573 Balance at end of period - - 15,688 46,004 60,793 88,948

Interest and commission income - - 6,561 2 5,108 234

Included in the balances above, the Parent Bank has placements in foreign bank accounts amounting to TRY 14,085 with respect to direct and indirect corporate and real person shareholders and TRY 8,854 other entities included in the risk group.

b) Prior Period:

Related Parties





Balance at beginning of period - - 26,294 25,144 7,060 7,074 Balance at end of period - - 82,234 14,059 121,993 7,573

Interest and commission income received - - 10,452 2 8,792 2,888

Included in the balances above, the Parent Bank has placements in foreign bank accounts amounting to TRY 81,281 with respect to direct and indirect corporate and real person shareholders and TRY 111,248 other entities included in the risk group.

c.1) Information on related party deposits balances:

Related parties




in the risk group

Deposits Current Period

PriorPeriod

Current period

Prior period

Current period

PriorPeriod

Balance at beginning of period - - 189,247 587,446 836,370 684,332Balance at end of period - - 282,015 189,247 175,059 836,370Interest on deposits - - 48,906 43,905 6,466 29,451

c.2) Information on forward and option agreements and other similar agreements made with related parties:

Related Parties




in the risk group Current Period Prior PeriodCurrent Period Prior Period Current Period Prior PeriodFinancial Assets at Fair Value Through Profit and Loss

Beginning of period - - 2,401,449 1,363,285 419,698 75,136End of period - - 1,649,880 2,401,449 746,942 419,698Total income/loss - - (43,062) 5,316 (41,922) 37,913

Hedging transactions purposes Beginning of period - - 322,681 - - -End of period - - 306,331 322,681 - -Total income/loss - - (14,510) (1,165) - -

d) As of December 31, 2009, the total amount of remuneration and benefits provided for the senior management of the Group is TRY 25,024 (2008 – TRY 24,634).


89

VII. Explanations on the Risk Group of the Parent Bank (continued)

2. Disclosures for related parties:

a) The relations of the Bank with the entities controlled by the Bank and its related parties, regardless of whether there are any transactions or not:

In the normal course of its banking activities, the Parent Bank conducted various business transactions with related parties at commercial terms and at rates which approximate market rates.

b) Besides the structure of relationship, nature of the transaction, amount and ratio to the total volume of

transactions, amount of major items and ratio to all items, pricing policies and other factors:

Amount

% Compared to the Amounts in the

Financial Statements Cash loans 53,542 0.54 Non-cash loans 134,952 3.59 Deposits 457,074 4.41 Derivative financial instruments 2,396,822 33.09 Derivative financial instruments for hedging purposes 306,331 40.23

These transactions are priced in accordance with the general pricing policies of the Parent Bank and are in line with market rates.

c) Except for cases whereby separate disclosure is necessary, the total of similar items in order to present the

total impact on the financial statements: Explained in (b).

d) Transactions accounted for under the equity method: None.

e) Disclosures related to purchase and sale of real estate and other assets, services given/received, agency contracts, leasing contracts, transferring information as a result of research and development, license contracts, financing (including supports in the form of loans, capital in cash and capital in kind), guarantees, and management contracts:

The Group enters into leasing agreements with TEB Finansal Kiralama A.Ş. As of December 31, 2009 the

total leasing obligations related to these agreements amounted to TRY 72. This amount is eliminated from the accompanying consolidated financial statements. Additionally, the Parent Bank provides agency services for TEB Yatırım Menkul Değerler A.Ş. via its branches.

Within the limits of the Banking Law, the Group renders cash and non-cash loans to its related parties and the ratio of these to the Group’s total cash and non-cash loan portfolio is 1.38%. Details of these loans are explained in the Section V, Note VII- 1a.

As of December 31, 2009 the Parent Bank has no purchases and sale of real estate and other assets,

transfer of information as a result of research and development and management contracts with the related parties.


90

VIII. Explanations on the Parent Bank’s Domestic Branches, Agencies and Branches Abroad and Off-shore Branches

1. Explanations on the Bank’s domestic branches, agencies and branches abroad and off-shore

branches:

Number Employees Domestic branches 330 5,832 Country Rep-offices abroad - - - Total Assets Capital Branches abroad 3 37 Cyprus 129,776 10,000 Off-shore branches 1 2 Bahrain 1,079,728 -

2. Explanations on Branch and Agency Openings or Closings of the Parent Bank: The Parent Bank opened 4 new branches and closed 6 of its branches in 2009.


91

SECTION SIX

OTHER EXPLANATIONS I. Explanations on the Operations of the Parent Bank

None.

SECTION SEVEN


I. Explanations on the Independent Auditor’s Report

The consolidated financial statements of the Group were audited by DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (Member of Deloitte Touche Tohmatsu) and the independent auditor’s report dated February 8, 2010 is presented preceding the financial statements.

II. Other Footnotes and Explanations Prepared by the Independent Auditors

None.

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Our subsidiaries in 2009 TEB Factoring Founded in 1997, TEB Factoring is one of Turkey’s leading factoring service providers. TEB Factoring seeks to satisfy its customers’ needs by offering quick solutions. Strictly abiding by and implementing corporate governance principles, TEB Factoring is also a service provider that distinguishes itself by virtue of its technical infrastructure, human resources, and vast knowledge and experience in the factoring industry. TEB Factoring plays a pioneering role in its sector by developing innovative products and services. During 2009 when small and medium-sized businesses were confronted by a global business downturn, TEB Factoring continued to support the real sector without interruption. The best export factoring company in 2009 TEB Factoring was voted “Best Export Factoring Company In 2009” by Factors Chain International (FCI), which gave the company an “excellent” rating with a total of 96.4 points out of a possible 100. Originally founded in 1968, FCI is the world’s biggest association of factoring companies. Consisting of 244 factoring concerns from 65 countries, FCI members wrote USD 1,110 billion worth of business last year. Together they handled 65% of the world’s factoring business and 82% of all international factoring. TEB Factoring General Manager Çağatay Baydar was elected Vice President of FCI in 2009. Financial performance… All of TEB Factoring’s marketing activities are shaped by its strategy of spreading its risk base as much as possible. In 2009 TEB Factoring wrote USD 1,686 million worth of factoring business, of which USD 1,193 million was domestic factoring and USD 493 million was international factoring. The company commanded a 6% market share last year. As a result of all of its activities in 2009, the company booked a profit of TRL 7,616,000 on total assets worth TRL 437.5 million. MOBILE Factoring MOBILE Factoring is an innovative product specially developed for small and medium-sized enterprises (SME). Through MOBILE Factoring and mobile offices that serve such businesses, TEB Factoring takes factoring services right to the customer’s doorstep. As a pilot project, four vehicles designed and equipped to function as offices traveled around and promoted factoring in industrial parks where small businesses are concentrated. The aim of MOBILE Factoring, the first undertaking of its kind in Turkey, is to make it possible for businesses in localities outside major cities to take advantage of factoring products and services as conveniently as possible.

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In 2010 TEB Factoring plans to increase the number of such specially-designed and fully-equipped mobile offices and to continue promoting factoring services in industrial parks around the country where SMEs are to be found. TEB Factoring believes that Turkey’s GNP will grow about 3% in 2010 and that the Turkish factoring industry will finance about a 4.5% share of that growth. On this basis, the industry can also expect to write about USD 27.5 billion worth of business in the coming year. In 2010… Having gone through a transition period in which it completed its infrastructure and put together new packages of products, TEB Factoring made a quick start as it entered 2010. During 2010, TEB Factoring will once again be working to take care of small businesses’ liquidity needs in its capacity as a leading player in its sector. TEB Factoring expects to see a growth rate on the order of 25-30% in 2010. TEB Asset Management Risk-profiled portfolio management services for individual and institutional investors Founded in 1999, TEB Asset Management’s fundamental objective is to determine the investment vehicle compositions of investment portfolios based on the risk profiles of their individual and corporate customers and to manage those portfolios accordingly. TEB Asset Management has been providing asset management services since June 2004. The goals of asset management services are to understand the company’s individual and corporate customers’ investor profiles in line with its analysis of their risk vs return preferences and from among a range of investment model possibilities, to determine the one that best balances risk and return in the customer’s view. As of end-2005, TEB Asset Management began providing corporate asset management services for corporate customers as a specialized line of its asset management services. The asset management company of the future TEB Asset Management has successfully laid the foundations of an asset management company whose goal is to position itself in the international arena. Having entered into a synergetic collaboration with its partner BNP Paribas Asset Management, a leading name in the asset management business in the Eurozone, TEB Asset Management is determined to advance quickly towards its goal of becoming a global player. Innovative approaches in everything from product design to delivery channels TEB Asset Management gives great importance to designing and delivering innovative products. PortföyPro, FX Performance Model, a range of principal protected funds, and a BRIC fund, are just a handful of the innovative products that TEB Asset Management has recently brought to market that first come to mind. TEB Asset Management also provides management services for the mutual funds of Millennium Bank.

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Changing trends and TEB Asset Management … Mutual funds in Turkey have been largely successful in protecting their asset values despite the ravages of the global economic crisis for over a year whereas their European cousins have suffered average losses on the order of 18%. This is because mutual funds in Turkey tend to invest mainly in money market assets rather than in equities and this practice has shielded them against the worst effects of the crisis. TEB Asset Management believes that interest rates will be coming down in the nearer term and that investors will be looking for different opportunities amidst the uncertainties engendered by the current crisis environment. That being so, one may expect that the need for professional management skills will be felt even more sharply and that both individual and corporate investors will be turning their attentions to mutual funds and to private portfolio management services. Along the same lines, one may guess that more equities, forward contracts, and other capital market vehicles will be included in funds’ portfolios and that both principal-protected and guaranteed mutual funds will emerge to the fore as investors’ preferred investment vehicles. The most important consideration to which TEB Asset Management gives attention when designing products is to come up with products that have been formulated according to the rights strategies and to supply them to the right customers at the right times. One of the most important factors that will ensure the survival and growth of products that are developed is undoubtedly the existence of a good risk management system. TEB Asset Management has fully integrated into its own system the RiskMetrics program which is used in all of BNP Paribas Asset Management’s offices worldwide and which makes it possible for the risks incurred on all assets both owned and managed by the company to be quantified instantly. Performance highlights… In the first nine months of 2009, the mutual fund industry’s assets under management increased 25.7% in value and reached TRL 30.3 billion (USD 20.5 billion). “Type B” (bond & bill/money-market) funds were worth a total of TRL 29.3 billion while “Type A” (equity) funds had combined resources amounting to around TRL 974 million. As of end-2008 the sector had TRL 24.1 billion (USD 16.3 billion) under management and in the twelve months to that date the aggregate values of “Type A” funds, “non-liquid” (bond & bill) Type B funds, and “liquid” (money market) Type B funds had increased 62.5%, 124.6%, and 9.8% respectively. As of the same date, 74% of the industry’s assets consisted of Type B money-market funds, 23% of Type B bond & bill funds, and only 3% of Type A equity funds. As of December 2009 on the other hand, Type B money-market funds accounted for an 85% share of the total. In the twelve months to end-2009 the total value of the mutual funds under TEB Asset Management’s management had increased 23% to TRL 1.2 billion. During the same period, the company’s market share slipped slightly from 4.01% to 3.94%. At the end of the year, TEB Asset Management was managing 26 portfolios consisting of: • 18 TEB mutual funds • 5 TEB Investment mutual funds • 3 Millennium Bank mutual funds.

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At the same time the company was managing two pension funds for Anadolu Hayat Emeklilik while also providing portfolio management services for its corporate and individual customers. Among the funds under TEB Asset Management’s management, the proportion of those demanding advanced management skills is higher than it is at any other portfolio management company in Turkey. TEB Asset Management also serves as a consultant for the Parvest Turkey Equity Fund that is managed by BNP Paribas Asset Management. At end-2009, TEB Asset Management was managing the portfolios of 29,108 individual and corporate customers and of 11 institutional customers. The total value of the non pension fund assets under management was TRL 1,289 million while the two Anadolu Hayat Emeklilik funds amounted to TRL 25 million. As it advances towards becoming the asset management company of the future, TEB Asset Management is committed to building its tomorrows on the solid foundations provided by its strong global partnerships, its culture of innovation, its extensive distribution network, its superior human resources, and its customer-focused approach to service. TEB Leasing Serving a sector-diversified customer portfolio TEB’s first subsidiary, TEB Leasing is a leasing company that was founded in 1997. TEB Leasing provides leasing products and services primarily for firms in the construction, medical services, transportation, printing, agriculture, metalworking, textile, and food industries. In addition, the company is also looking into ways to further diversify into energy and mining and into niche markets such as waste treatment. Performance highlights The appetite for investment paled considerably in response to the global economic crisis in 2009 and this had a serious impact on the leasing industry. The sector’s total business volume shrank 58% as the amount of new business written plummeted from USD 5.3 billion in 2008 to USD 2.2 billion in 2009. In a year characterized by such a contraction, TEB Leasing booked a turnover worth USD 71 million and achieved a market share of 3.2%. While the sector-wide non-performing loan ratio reached 12% or so as of September 2009, the significantly lower 5% level at TEB Leasing was eloquent evidence of the company’s rational credit placement policy. TEB Leasing had total assets worth TRL 512.4 million in 2009. The most important item among those assets were the company’s leasing receivables, which amounted to TRL 407.2 million in value. Shareholders’ equity, always the most important indicator of healthy growth, was TRL 96.6 million.

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The enduring importance of cross-sale opportunities… As in 2008 so to in 2009, making cross-sales was foremost among the issues to which leasing companies gave their attention. Some 65% of the leasing sector’s business was generated through branch branches. In 2009, such contracts reached an aggregate value of USD 58 million and cross-sales accounted for no less than an 85% share of the sector’s business portfolio. The successful and innovative campaigns that TEB Leasing conducted jointly with TEB under the heading of cross-sale operations earned the firm the “Most Innovative and Creative Group Company” award in the 2009 TEB Group Innovation Awards program. Supply Lease and other campaigns… TEB introduced a new product called “Supply Lease” (“Tedarik Lease”) that was specially designed for the suppliers of the firms in the bank’s corporate and commercial customer portfolios. This product increased cross-sale opportunities within the group by means of highly advantageous packages made available to the suppliers of firms that worked with TEB’s corporate and commercial branches. Efforts to keep interest in leasing products and services lively was supported by means of other campaigns conducted jointly with the bank such as “LeaseRace”, “TEB Leasing Summertime”, and “All Star 2009”. During 2009 TEB Leasing also gave heightened attention to vendors that were working together with the BNP Paribas Lease Group (BPLG). The number of vendors with which both firms did business jointly reached 20 while a variety of sales-based programs and joint campaigns were organized. In the future… In parallel with ongoing economic developments, leasing is ceasing to be solely a source of medium-term financing for which goods serve as the collateral and it is becoming instead a credit product which demands serious technical analysis and for which the importance of consultation emerges to the fore. TEB Leasing believes that this trend is going to become even more evident in 2010. With this in mind, the company will be seeking to further develop its products and services accordingly and to reach an increasing number of customers through its strong distribution network. TEB Investment TEB Investment is a TEB brokerage house subsidiary that became operational in 1997. The company enjoys a strong reputation as much for its ability to respond nimbly and quickly to its customers’ changing and complex needs as for its superior services. 2009 was a year of precarious yet sluggish markets… TEB Investment’s equity trading brokerage services continued to be the firm’s principal business activity during 2009 in parallel with sectoral conditions and with the interests of the investor base. Nevertheless there was a significant amount of growth in forward trading brokerage services, a business line into which TEB Investment has been expanding rapidly recently. Market

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developments and economic uncertainties almost everywhere made it all but impossible to supply corporate financing services such as public offerings while both the supply of and the demand for consultancy services remained virtually nil. On the international investor front… As was the case with other developing markets in 2009, there were significant declines in capital inflows into Turkey whether as portfolio investments or as foreign direct investments. Nowhere was this trend more in evidence than it was in foreign institutional investors’ appetite for Turkish capital market equities. There was only about USD 1.3 billion worth of such portfolio investment in 2009 while nearly USD 3 billion had left the country in 2008. This resulted in a significant contraction in TEB Investment’s foreign institutional investor business, a situation that indeed prevailed throughout the entire sector. At the İstanbul Stock Exchange, there was about a 30% decline in the average daily volume of trading by foreign investors. For those brokerages operating in Turkey that were mostly foreign-owned, this situation led to huge losses in market share and in some cases even to the suspension of activities. TEB Investment by contrast managed to maintain its market share and even to take on new customers. Resident investors have become more discriminating in their service perceptions. In the case of brokerage services provided to individual investors who are residents of Turkey, results were rather more successful despite the existence of similar sectoral constraints. High levels of market volatility during the year did not lead to a contraction in trading volumes among domestic investors as they did among foreign; on the contrary, they generated even higher transaction volumes than might otherwise have been expected. Greater sales effectiveness combined with greater discrimination in service quality perceptions among investors last year made it possible for TEB Investment to double both its transaction volumes and its earnings over what they had been the year before. In 2009 TEB Investment strengthened both its total market share and its position in the sector while also successfully making up for the revenue losses that it sustained as a result of the cutback in its international investor trading activities. The futures market continued to grow despite the economic crisis. The futures & options market in Turkey continued to flourish and reached record trading volumes despite the economic crisis. Indeed TEB Investment futures brokerage was the business line that was the least affected by the crisis. The company’s brokerage services in such trading did well in terms of both volumes and market shares. TEB Investment’s commission fee earnings trebled while its market shares and trading volumes doubled. There was a net rise in the number of resident customers while, beginning with the second quarter of the year, there were also significant gains in services supplied to non-resident customers.

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Strongly positioned in the sector TEB Investment numbered among the leading contenders in the sector in terms of both income and volume in 2009. TEB Investment ranked: • 7th with a 3.4% share of equity trading volumes and, in terms of earnings, among the top five from the standpoint of customer profitability; • 16th in futures & options brokerage services with a 2% market share and, in terms of earnings, among the top ten. TEB Investment’s competitive advantages played a big role in its having achieved such healthy results. Considered from a strategic perspective, TEB Investment’s productive financial structure, effective staff, and change-accommodating flexible infrastructure make up the building blocks of the company’s sustainable growth and development. BNP Paribas Securities Services TEB Investment’s business operations are fully integrated into the branch network of BNP Paribas Securities Services. TEB Investment engages in a synergetic collaboration with BNP Paribas Securities Services not only to keep abreast of market developments in the best way possible but also to take maximum advantage of any customer-based cross-sale opportunities that present themselves. TEB Investment provides brokerage and custodian services to all BNP Paribas group companies that are involved in investment in Turkey. The Economy Bank NV Founded in 1998, Netherlands-based The Economy Bank NV (TEB NV) became operational the same year. TEB NV provides its customers with a wide range of banking products and services that include international trade & commodity finance, forfaiting, treasury, private banking, and retail deposit accounts. TEB NV’s goal is to be one of the most active and service-focused players in Turkish and European financial markets in its capacity as the TEB Group’s specialized service provider in the international trade & commodity finance business line. TEB NV seeks to pursue growth and to enlarge its business volumes by negotiating its customers’ foreign trade transactions throughout an expanding geographical region. A proactive portfolio management strategy under crisis conditions TEB NV adhered to a proactive strategy in the face of the crisis conditions that beset the global financial sector as of the last quarter of 2008 while choosing to manage its loan book and balance sheet volumes with an approach that was even more risk-sensitive than usual. In keeping with this approach, the bank decided to increase the relative weight of liquid financial institution debentures in its portfolio toward the latter part of that year. Not until the last quarter of 2009 did TEB NV gradually begin increasing its portfolio’s exposure to corporate customer risk once again. Throughout 2009 it was TEB NV’s policy to manage its cost base with even greater care and in this way it succeeded in balancing its expenditure/income ratio at the 45.9% level. The

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bank’s pretax profit in 2009 was down 5% year-on and amounted to EUR 9 million. One of the reasons for the observed reduction in profit was the bank’s decision to set aside more generous provisions in line with its more sensitive risk management policy. Be that as it may, TEB NV’s loan book remained sound in 2009 with a very low NPL ratio on the order of just 0.88%. During 2009 TEB NV negotiated a total of EUR 1.2 billion worth of foreign trade finance. The strong performance registered by TEB NV in the retail banking business line that it first ventured into in 2007 provided the bank with an important means of achieving optimal balance in its portfolio in the face of adverse market conditions. By the end of 2009, the number of TEB NV’s retail banking customers had reached 11,000. With its high capital adequacy and highly liquid financial structure, TEB NV is focused on pursuing growth in different business lines with particular attention to be given to foreign trade finance and retail banking.

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DIRECTORY Türk Ekonomi Bankası A.Ş. Meclis-i Mebusan Cad. No: 57 Fındıklı 34427 İstanbul, Turkey T +90 212 251 21 21 www.teb.com.tr
