DENZBANK

FINANCIAL SERVICES GROUP

ANNUAL REPORT 2016

DENZBANK ANNUAL REPORT 2016

DenizBank is a member of Sberbank Group.

SECTION I INTRODUCTION 40 IT Security and Digital-Card Payment Operations Group CONTACT INFORMATION FOR DENZBANK A..
1 DenizBank Financial Services Group (DFSG) 41 Branch and Central Operations Group
2 DenizBanks Mission, Vision 41 Branch Operations and Foreign Trade Center Operations
2 Dividend Distribution Policy 42 Central Operations
3 Dividend Distribution Proposal 43 Treasury, Payment Systems and Private
3 Amendments to the Articles of Association Banking Operations
HEAD OFFICE DOMESTIC BRANCHES
3 Shareholding Structure, Paid-in Capital and Changes, 43 Investment Banking, Custody and Fund Services Bykdere Cad. No: 141 34394 Esentepe-stanbul DenizBank has 694 branches in Turkey. Information on
Shares Held by the Management Operations Tel: (+90 212) 348 20 00 domestic branches is available on the DenizBank web site.
3 Changes in the Management, Shareholding Structure and 45 Foreign Subsidiaries Fax: (+90 212) 354 83 48
Activities of DFSG Companies 46 Information Technology (IT) Services
4 DenizBank in Brief 48 Private Banking and Investment Operations
FOREIGN BRANCHES
6 Sberbank in Brief 50 Leasing, Factoring and Asset Management Services
WEB SITE Bahrain Branch
8 Financial Highlights 52 Cultural Services www.denizbank.com Al Jasrah Tover 6th Floor, Office 62/63 PO Box 10357,
10 2016 Highlights Trade Register Number Diplomatic Area, Manama-Bahrain
11 Awards 368587
12 Message from the Chairman of the Board of Directors Tel: (+973) 17541137
13 Message from the CEO
SECTION II MANAGEMENT AND CORPORATE Fax: (+973) 17541139
15 Banking Services
GOVERNANCE
16 Retail Banking Group 53 Board of Directors
16 Affluent Banking 61 Resident Board Members
17 Mass Banking 62 Executive Board
18 Retail Banking Products 63 Executive Board Members
19 Branch and ATM Planning 66 Executive Management
20 Bancassurance 67 Committees
20 SME Banking Group 68 Summary Report of Board of Directors to the General Assembly
20 SME Banking 69 Donations Made in 2016
22 Merchant Relations and Commercial Cards Management 69 Related Party Transactions
22 Gold Banking 69 Human Resources
22 Cash Management 71 Training
23 Agricultural Banking Group 72 Support Services
25 Wholesale Banking Group 74 DenizBank Corporate Governance Principles Compliance Report
25 Corporate Banking Group
25 Corporate Banking
25 Commercial Banking and Public Finance Group
25 Commercial Banking
SECTION III FINANCIAL INFORMATION AND RISK
26 Public Finance
MANAGEMENT
26 Project Finance 82 Internal Audit, Internal Control, Compliance and Risk
27 Payment Systems and Non-Branch Channels Group Management Systems
27 Credit Cards 85 Assessments of the Audit Committee
28 Debit Cards/PTT Cards 87 Independent Auditor Report on the Annual Report
28 Call Center 88 Five-Year Summary Financial Highlights
29 Telemarketing and Customer Retention 90 Assessment of Financial Position
30 Mobile Sales 91 Capital Market Instruments Issued by DenizBank
31 Treasury and Financial Institutions Group 91 DenizBank Ratings by International Rating Agencies
31 Treasury
31 Treasury Sales
32 Financial Institutions
32 Private Banking Group
33 Digital Generation Banking Group
SECTION IV INDEPENDENT AUDIT REPORTS, FINANCIAL
33 Main Distribution Channels
STATEMENTS AND NOTES
34 Digital Sales, Marketing and New Generation Banking 93 Independent Auditors Reports, Unconsolidated Financial
35 Innovation, Digital Payment Systems, Cloud Banking Statements and Notes as of December 31, 2016
Platforms, Home Banking, Digital Field Sales and 199 Independent Auditors Report, Consolidated Financial
Brand Partnership Statements and Notes Ended 31 December 2016
37 Operations Group
37 Information Technology and Support Operations Group Contact Information
37 Organization
38 Service Quality
39 CRM-Customer Relationship Management
 1

DENZBANK FINANCIAL
SERVICES GROUP (DFSG)

BANKING SERVICES PRIVATE BANKING AND

DENZBANK INVESTMENT ACTIVITIES
DENZBANK AG (AUSTRIA) DENZBANK PRIVATE BANKING
DENZBANK MOSCOW (RUSSIAN FEDERATION) DENZINVEST SECURITIES
EURODENZ INTERNATIONAL BANKING UNIT LTD. (TRNC) DENZ REAL ESTATE INVESTMENT TRUST
DENZPORTFOLIO MANAGEMENT

LEASING, FACTORING AND ASSET INFORMATION TECHNOLOGY

MANAGEMENT SERVICES* SERVICES
DENZLEASING INTERTECH
DENZFACTORING EKSPRES IT AND TRADE
DESTEKASSET MANAGEMENT*

CULTURAL SERVICES
DENZKLTR

OTHER SERVICES
BANTA
AIK DENZ RADIO-TV
DENZ CARD PAYMENT SYSTEMS

*As of December 29, 2016, all of the shares were sold to natural and legal persons
outside DFSG.
2 SECTION I INTRODUCTION

DENZBANKS MISSION, VISION DIVIDEND DISTRIBUTION POLICY

DenizBanks mission is After deducting any sums that would be compulsory for the
Bank to pay or set aside, such as general expenditures and
to become a bank that miscellaneous depreciation costs as well as any amount of
maximizes employee, taxes that would be compulsory for the Bank to pay, from
the calculated income at the end of the accounting year,
customer and shareholder the remaining sum shall constitute the net income; after
deducting the previous years losses, if any, the net income
satisfaction with its position, shall be distributed as follows:

image and corporate First Scheme Legal Reserves:

characteristics in the market a) 5% of this sum shall be allocated to the legal reserves.

by adopting a supermarket First Dividends:

b) Out of the remaining amount, the rate and amount set by
approach to financial the Capital Markets Board of Turkey is allocated to the first
dividend.
services. Second Dividends:
c) After deducting any sums specified in item (a) and
(b) from the net income, the General Assembly shall be
DenizBank envisions authorized to distribute such remaining amount, in part or
in full, or to allocate as the extraordinary reserves.
becoming one of the five
largest banks in Turkey General Legal Reserves:
d) Out of the sum calculated after deducting a dividend
and the foremost financial of 5% of the paid-in capital from the set amount to
be distributed to the shareholders and other parties
institution in the region participating in the profit, 10% shall be added to the
general legal reserves in accordance with Article 519,
defined as the Middle Paragraph 2, Item c of the Turkish Commercial Code.

East, Balkans, Caucasus Unless the discretionary legal reserves are duly set aside,
and unless the dividends determined for the shareholders
and Commonwealth of are distributed in cash and/or in the form of share
Independent States countries certificates as per the Articles of Association, no decision
may be adopted to allocate further legal reserves, to pass
through sustained and any profits to the following year, or to distribute any
dividends to the members of the Board of Directors as well
profitable growth. as any officials, workers and employees, to foundations
established for various purposes, and to similar person and/
or persons.

The date and manner of distribution to shareholders of the

annual profit shall be determined by the General Assembly
upon a proposal by the Board of Directors prepared under
the relevant legislation issued by the Capital Markets Board.
As of the accounting period of the dividend, irrespective
of its issuing and acquiring dates, annual profit shall
be distributed equally to all existing shares. The profits
distributed pursuant to the provisions of these Articles of
Association shall not be recalled.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 3

DIVIDEND DISTRIBUTION SHAREHOLDING STRUCTURE, PAID-

PROPOSAL IN CAPITAL AND CHANGES, SHARES
HELD BY THE MANAGEMENT
At its meeting on 01 March 2017; DenizBank increased its share capital from TL 1,816.1 million to TL 3,316.1 million,
by TL 1,500 million, via TL 750 million from retained earnings from share premium
Taking into consideration the net profit of Denizbank A.. for the financial and TL 750 million in cash.
year 2016 amounting to 1,409,280,690.32 TL, the Board of Directors Required approvals were obtained from the BRSA and CMB in January and from the
hereby resolved to propose to the General Assembly: Ministry of Customs and Trade on February 1, 2016.
Following the decision of the Extraordinary General Assembly, necessary applications
- to allocate 5% of the net profit, amounting to 70,464,034.52 TL, to were made to the CMB on April 1, 2016 regarding the public offering of shares with
the general legal reserve according to Article 519/1 of the Turkish a nominal value of TL 1,500,000,000 subject to an increase and the offering circular
Commercial Code; related to the capital increase was approved by the CMB on May 23, 2016. The
preference right period was exercised between May 27, 2016 and June 10, 2016. The
- to keep the exempt amount of 66,853,611.39 TL in the Mandatory unused shares amounting to TL 16,223.115 remaining after use of preference rights
Funds Account in order to benefit from the exception stated in Article was offered to the public on June 15-16, 2016 and the sale of the unused shares on
the Borsa Istanbul Primary Market was completed on June 15, 2016.
5/1-e of the Corporate Tax Law with respect to the profit gained by
Denizbank A.. in the financial year 2016 from the subsidiary sale; With the registration of the resolution of the Ordinary General Assembly held on
March 31, 2016, related to the decision on the amendment of Article 6 regarding
- (i) to allocate the remaining net profit, amounting to 1,271,963,044.41 Capital of the Bank of the Articles of Association of the Bank on June 28, 2016, the
capital increase was completed.
TL, to the Free Reserves (Extraordinary Reserves), and (ii) to postpone
the issue on distribution and payment of dividends for 2016 to the DenizBanks shareholding structure, and the shares held by ultimate controlling real
shareholders of Denizbank A.. for decision of another meeting of the person(s) as of December 31, 2016 are presented in the table below. DenizBanks
General Assembly to be convened at the Board of Directors option shareholding structure does not contain any cross-shareholdings.
and proposal, and (iii) taking into consideration the letter of the Shares Held by the Management
Banking Regulation and Supervision Agency (BRSA) dated 02.12.2016
no. 20008792-101.01-E.19279, to apply for the permission of DenizBanks CEO Hakan Ate owns 52,449 shares, corresponding to 0.000002% of
the BRSA to distribute dividends for 2016 to the shareholders of the total capital.
Denizbank A..
DenizBank Shareholding Structure - 31.12.2016

Shareholders Nominal Value (TL) Share (%)

Sberbank of Russia 3,311,211,134 99.8526
Central Bank of Russia 49.9263
AMENDMENTS TO THE ARTICLES Foreign Institutional Investors
Domestic Legal Entities
48.4285
1.4978
OF ASSOCIATION Others
Publicly Listed
157
4,888,709
0.000005
0.1474
TOTAL 3,316,100,000 100.00
All Articles of the Articles of Association were amended in 2016.

In line with our Banks Board of Directors decision dated December 2, 2015,
it was decided to amend all articles of the Banks Articles of Association,
except Article 6. The amendment text was approved by the CMB and the CHANGES IN THE MANAGEMENT,
BRSA at the end of February and by the Ministry of Customs and Trade on
March 3, 2016. SHAREHOLDING STRUCTURE AND
In accordance with our Banks Board of Directors decision dated December
ACTIVITIES OF DFSG COMPANIES
31, 2015, it was decided to increase the Banks capital from TL 1,816,100,000
to TL 3,316,100,000 and to amend Article 6 of the Banks Articles of Sale of DestekVarlk Ynetim Shares
Association entitled Capital of the Bank. The amendment text was approved
Shares with a nominal value of TL 10 million of Destek Varlk Ynetim A.., with a
by the CMB and the BRSA at the end of January and by the Ministry of
paid-in capital of TL 10 million previously owned by our Banks subsidiaries Deniz
Customs and Trade on February 1, 2016. Yatrm Menkul Kymetler A.., Ekspres Menkul Deerler A.., Deniz Finansal Kiralama
A.., Deniz Faktoring A.. and Intertech Bilgi lem ve Pazarlama Ticaret A.. were
At the Ordinary General Assembly Meeting of our Bank held on March 31, decided to be sold with Lider Faktoring acquiring 49.98% of the shares, Merkez
2016, it was decided to increase our Banks capital from TL 1,816,100,000 to Faktoring 49.98% of the shares and Nedim Menda, Jak Sucaz, Bahri Ura and Erhan
TL 3,316,100,000 and to amend Article 6 of the Banks Articles of Association zelik equally acquiring 0.04% of the shares with a price of TL 1.232 per share
entitled Capital of the Bank within this scope and to amend all articles of in accordance with the resolution of the company dated July 14, 2016. On July 15,
the Banks Articles of Association, except Article 6 at the same meeting. 2016, a Share Sale and Purchase Agreement was signed between the parties, and
following the approval of the BRSA and Competition Board, the entire sum was paid
in cash and upfront, and the share transfer was completed on December 29, 2016.
With the registration of the mentioned General Assembly decisions on April
4, 2016, all articles except Article 6 of our Articles of Association have been
amended. Change in the Name and Operations of EkspresSecurities
Since the operations of our Banks subsidiary Ekspres Menkul Deerler A.. were
Following the decision of the Extraordinary General Assembly, necessary discontinued as of December 31, 2013 and the companys capital markets operation
approvals regarding the public offering of shares related to the capital licenses were transferred to another brokerage company, it became necessary
increase were received from the CMB on May 23, 2016. The preference to change the Articles of Association of the company as per CMB regulations in
right period was completed on June 15, 2016. With the registration of the such a way that the name, purpose and operations of the company shall not cover
resolution of the Ordinary General Assembly held on March 31, 2016, the investment services and operations. In this context, at the Extraordinary General
capital increase was completed and Article 6 regarding Capital of the Bank Assembly of Ekspres Menkul Deerler A.. on August 5, 2016, it was decided to
was amended on June 28, 2016. change the name and type of the company. The company was renamed Ekspres Bilgi
lem ve Ticaret Anonim irketi and the resolution was registered in the Istanbul
Trade Registry Office on August 10, 2016.
4 SECTION I INTRODUCTION

The financial supermarket era in banking

In addition to the flagship DenizBank, DenizBank
DENZBANK IN BRIEF Financial Services Group includes six domestic and three
international financial subsidiaries, six domestic non-
DenizBank completed its financial subsidiaries and a branch in Bahrain. The Groups
domestic companies include DenizInvest Securities, Deniz
fourth year under the umbrella Real Estate Investment Trust, DenizPortfolio Management,
DenizLeasing, DenizFactoring, DestekAsset Management*,
of Sberbank Group, Russias Intertech, Ekspres IT and Trade, DenizKltr, Ak Deniz
Radio-TV, Deniz Card Payment Systems and Banta.
oldest and largest bank. EuroDeniz, DenizBank AG and DenizBank Moscow are
DFSGs international subsidiaries.

DenizBank Financial Services Groups primary customer

segments include retail customers, small and medium-size
DenizBank was founded in 1938 as a state-owned bank enterprises, exporters, public and project finance customers,
to provide funding for Turkeys developing maritime and commercial and corporate clients. The Group has
sector. Acquired by Zorlu Holding from the Privatization identified the agriculture, energy, tourism, education,
Administration as a banking license in early 1997, healthcare, sports, infrastructure and maritime industries
DenizBank became one of the countrys major banks in a as the top priority areas of its business activities. DFSG
short period of time. also operates in European Union countries via its Vienna-
based subsidiary DenizBank AG. Additionally, DenizBank
In October 2006, Dexia, a leading European financial serves the Groups existing customers abroad that have
services institution, acquired DenizBank from Zorlu Group commercial and trade ties with Russia, meeting their various
and remained its primary shareholder for six years. On financial needs.
September 28, 2012, DenizBank started operating under
the umbrella of Sberbank Group, Russias oldest and largest DFSG consolidated its operations, financial control and
bank. accounting functions at the head-office level and converted
DenizBank branches into marketing centers. As a result of
this strategy, the Bank has maintained an optimal number
A rapid and extensive transformation
of employees while increasing overall operational efficiency.
Following privatization in 1997, DenizBank implemented
a Return to Life program that encompassed employee DFSGs service network reaches out to all segments
recruitment and new branch openings as part of its new of Turkish society. In addition to DenizBanks 694
corporate identity. These initiatives were undertaken in line branch locations in Turkey and Bahrain, DenizBank AG
with a five-year strategic plan, with all the Banks growth and DenizBank Moscow operate 43 branches in total.
objectives ultimately achieved. This growth was bolstered Additionally, DenizBank provides its retail and corporate
by buying back certain branches that were transferred to clients the world over the opportunity to carry out financial
the Savings Deposit Insurance Fund, and by the Groups transactions via the Internet, as part of its alternative
acquisition of Taribank at year-end 2002. To further extend distribution channel offering.
its banking products and services, DenizBank established
factoring, leasing, investment and portfolio management
companies and acquired banks in Austria and Russia during
this period.

As a result of the Banks solid capital base and balanced

financial structure, as well as the rapid growth of Turkeys
banking sector, DenizBank reinforced its strong market
position in very short order. In 2003, DenizBank Financial
Services Group (DFSG) was formed to create a financial
supermarket that provides a wide variety of financial
services under a single umbrella.

*As of December 29, 2016, all of the shares were sold to natural and legal persons
outside DFSG.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 5

Deniz is Everywhere

Krklareli
Bartn Sinop
Edirne stanbul Kastamonu
Tekirda Zonguldak
Karabk Artvin Ardahan
Kocaeli Dzce Samsun
Yalova Rize
Sakarya ankr Ordu Trabzon
Bolu Amasya Giresun
Kars
anakkale Bursa Tokat Gmhane
Bilecik orum Bayburt
Ankara Krkkale Erzurum Idr
Balkesir Yozgat
Eskiehir Erzincan Ar
Ktahya Sivas
Krehir Tunceli Bingl
Manisa
Afyon Mu
zmir Uak Nevehir Van
Kayseri Malatya Elaz
Aksaray Bitlis
Aydn Denizli Isparta Diyarbakr
Konya K.Mara
Nide Batman Siirt
Burdur Adana Adyaman Hakkari
Mula rnak
Mardin
Antalya Karaman anlurfa
Gaziantep
Mersin
Hatay

737 REGION

Mediterranean
BRANCHES* Europe 1
Europe 2
Europe 3
Thrace
Capital 1

4,756 Capital 2
West Anatolia
ukurova
ATMs Aegean
South East Anatolia
Istanbul Anatolia 1
Istanbul Anatolia 2
Black Sea

14,832 Marmara
Central Anatolia

EMPLOYEES

10.3 MILLION
CUSTOMERS
*Including DenizBank AG branches.
6 SECTION I INTRODUCTION

SBERBANK IN BRIEF

Group Profile
Sberbank has international operations in the CIS region in
Established in 1841, Sberbank is a universal commercial Kazakhstan, Ukraine and Belarus, seven countries in Central
bank with diversified businesses and global presence, and Eastern Europe via Sberbank Europe AG, and Turkey via
playing a significant role in Russias economy as the largest DenizBank. Sberbank has representative offices in Germany
commercial bank in terms of assets, deposits and loans and China, a branch in India and operations in Switzerland
with market shares of 28.9%* (assets), 46.6%* (retail via Sberbank (Switzerland) AG.
deposits) and 40.1%* (retail loans), respectively (according
to Sbersanks calculations). More than 129 million Sberbanks major shareholder is the Central Bank of Russia,
individuals in Russia are clients of Sberbank, representing which owns 50% of the Banks share capital plus one voting
approximately 88% of the Russian population. Sberbank share, while the remaining shareholder base is represented
services 1.5 million corporate clients out of by international and domestic investors. The Banks
4.5 million businesses in the country. ordinary and preferred shares have been publicly traded in
Russia since 1996; Sberbanks American Depositary Shares
Sberbank offers its services through the largest banking were listed on the London Stock Exchange, admitted to
distribution network of Russia via 15 thousand branches. trading on the Frankfurt Stock Exchange and, trade over the
Sberbank promotes banking via remote channels, which counter in the United States.
include the largest ATM network of around 79.8 thousand
ATM and self-service terminals, as well as Online and General banking license by the Bank of Russia No. 1481.

Mobile services. Sberbanks official website is www.sberbank.com.

*According to Sberbanks calculation as of 01.01.2017

In addition to traditional banking (loans, deposits, cards),

Sberbank has extended its product lines to provide
high-end financial advisory services and a selection of
investment solutions and operations on global markets via
Sberbank CIB. Sberbank is actively developing its insurance
business and retail brokerage.
SBERBANKS OWNERSHIP STRUCTURE

Free Float
Central Bank of Foreign
Russia 50.0% Institutional
+1 Share 48.50%

Domestic Retail
1.50%
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 7

*Belarus Russia

*Ukraine
**Germany

*Austria

*Switzerland

*Czech Republic
*Turkey

**China
*Slovenia *Kazakhstan
*Hungary ***India
*Croatia
*Bosnia-Herzegovina
*Serbia *Foreign Subsidiaries
**Representative Offices
***Branch

RETAIL DEPOSITS MARKET SHARE EMPLOYEES

46.6% >325 thousand
RETAIL LOANS MARKET SHARE
40.1% CUSTOMERS

~129 million in Russia

CORPORATE LOANS MARKET SHARE
~139 million Internationally
31.7%
ATM AND SELF-SERVICE TERMINALS BRANCHES
79.8 thousand ~15 thousand
8 SECTION I INTRODUCTION

FINANCIAL HIGHLIGHTS

CONSOLIDATED

TOTAL ASSETS (TL million) LOANS(1) (TL million)

135,554 95,023
112,886 77,705
94,403 64,564

2014 2015 2016 2014 2015 2016

DEPOSITS(2) (TL million) SHAREHOLDERS EQUITY(3) (TL million)

90,621 16,074
71,204 13,140
61,831 11,084

2014 2015 2016 2014 2015 2016

NET PROFIT (TL million) CAPITAL ADEQUACY RATIO (%)

1,401 12.87 12.93 14.17

939
859

2014 2015 2016 2014 2015 2016

Audited consolidated BRSA financials.

(1)
Includes factoring and leasing receivables.
(2)
Excludes bank deposits.
(3)
Includes sub-debts.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 9

UNCONSOLIDATED

TOTAL ASSETS (TL million) LOANS (TL million)

103,159 61,820
84,221 51,349
70,931 43,096

2014 2015 2016 2014 2015 2016

DEPOSITS(1) (TL million) SHAREHOLDERS EQUITY(2) (TL million)

59,525 16,045
45,117 13,115
41,552 11,062

2014 2015 2016 2014 2015 2016

NET PROFIT (TL million) CAPITAL ADEQUACY RATIO (%)

1,409 12,83
16.07 17.52
xx,xx
14.09
989
763

2014 2015 2016 2014 2015 2016

Audited unconsolidated BRSA financials.

(1)
Excludes bank deposits.
(2)
Includes sub-debts.
10 SECTION I INTRODUCTION

DenizBank brought the digital world to farmers with its

platform From Deniz to Earth. Adding another to its
2016 HIGHLIGHTS portfolio of innovative solutions in agriculture, the Bank
put into service the From Deniz to Earth Facebook page,
specially designed for producers.

DenizBank increased its paid-in capital by TL 1.5 billion.

Providing services to a wide range of customers with

JANUARYFEBRUARYMARCH its well-established structure in Austria and Germany,
DenizBank was awarded as the bank that grew its DenizBank AG was granted the Excellent Customer
reputation the most at The ONE Awards Integrated Orientation award for the second time by the Financial
Marketing Awards, held with the collaboration of Marketing Association of Austria thanks to its customer
Marketing Turkey, one of the leading journals of the oriented service approach.
marketing industry, and AKADEMETRE.

DenizBank joined forces with Young Community Volunteers. JULYAUGUSTSEPTEMBER

The Bank collaborated with the Community Volunteers In line with its mission to take culture and arts to wider
Foundation to encourage youth to become engaged in social sections of society, DenizBank brought to life the 2nd
responsibility efforts. DenizBank is the main supporter of DenizBank First Script, First Movie contest by expanding
the foundation. the scope of its collaboration with the Turkish Cinema and
Audiovisual Culture Foundation (TRSAK).
DenizBank employees participated in the Runatolia footrace.
Organized with the support of DenizBank, the 45th Naval
Awards were presented to winners of the Best First Cup Salih Reis Open Sea Yacht Race was held August 12-16.
Script contest in collaboration with the Turkish Cinema
and Audiovisual Culture Foundation (TRSAK) to support
original script writing, which is considered as one of the OCTOBER-NOVEMBER-DECEMBER
most important requirements for enduring works of art to DenizBank & TOSYV joined forces for SMEs across the
be created in Turkish and world cinema. seven regions of Turkey.

DenizBank received the Gold Stevie Award for its Fastest DenizBank Designated World Leader in Innovation The
Loan for SMEs service. Bank has been designated The Most Innovative Bank of the
World, the grand prize in the 2016 BAI Banking Innovation
WhatsApp started to be used to access DenizBank Call Awards organized by the US-based Bank Administration
Center. Institute (BAI), one of the most respected authorities on
banking management in the world of financial services.
We organized the second Digital Camp, which has become DenizBank also received the Eli Acman Advertising Copy
an annual tradition, where we keep our finger on the pulse Special Award.
of the digital world.
At Global Finance The Innovators 2016 awards, DenizBank
garnered The Best Organizational Innovation Award of the
APRILMAYJUNE Year 2016 with the mobile transformation project for branch
Intertech held the Code the Bank 2 contest. sales teams.

The Captains Meeting was held in Antalya with the theme DenizBank reached an agreement with TOBB (The Union of
Deniz Is Wherever You May Be. Chambers and Commodity Exchanges of Turkey) and KGF
(Credit Guarantee Fund) as regards the Breathing Loan for
Final Four excitement was on within CEV DenizBank SMEs project, which offers SMEs loans at special interest
Volleyball Mens and Womens Champions League in Italy rates and maturity periods.
and Poland.

With its differentiated innovative solutions, DenizBank was

awarded by being named a Model Bank in the category
of Digital Banking Transformation by Celent, a globally
renowned authority.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 11

Excellent Customer Orientation Award to DenizBank

AG for the second time in a row (June 2016)
AWARDS Providing services to a wide range of customers with
its well-established structure in Austria and Germany,
DenizBank AG was granted the Excellent Customer
Orientation award for the second time by the Financial
Marketing Association of Austria thanks to its customer
oriented service approach.
Marketing Turkey Akademetre The Bank That Grew
Its Reputation the Most Award (January 2016) Award at the Crystal Apples (October 2016)
In research conducted by the Marketing Turkey journal DenizBank won the Eli Acman Special Award for
in collaboration with Akademetre, in which identified Advertisement Script.
companies that grew their reputation the most in 2015
across many industries, DenizBank was awarded as The
BAI Award (October 2016)
Bank That Grew Its Reputation the Most.
DenizBank was awarded as The Most Innovative Bank
of The Year at the 2016 BAI Banking Innovation Awards
DenizBanks Fastest Loan for SMEs service received
organized by US based Bank Administration Institute (BAI),
the Gold Stevie Award (March 2016)
one of the most prestigious institutions in the field of
With its Fastest Loan for SMEs service, DenizBank banking management in the financial services industry.
received the Gold Stevie Award in the Marketing Solution
category, at the Awards for Sales & Customer Service
Global Finance Award (November 2016)
held by Stevie Awards, one of the most prestigious global
awards organizations of the business world, in which over At Global Finance The Innovators 2016 awards, where
2,000 corporations from 36 countries compete. the most innovative projects of the year are designated by
Global Finance, DenizBank garnered The Best Organizational
Innovation Award of the Year 2016 with the mobile
Celent Award (April 2016)
transformation project for branch sales teams.
With its differentiated innovative solutions, DenizBank
was awarded as Model Bank in the category of Digital
Banking Transformation by Celent, a globally renowned
authority.
12 SECTION I INTRODUCTION

MESSAGE FROM THE CHAIRMAN

OF THE BOARD OF DIRECTORS

Dear Stakeholders, Customers and Business Partners,

Despite rising geopolitical risks as well as the slowing

global economy, in 2016 the Turkish banking sector
maintained asset quality and showed a relative increase
in profitability ratios while the capital adequacy ratio
hovered around 15%, nearly double the global standards.
DenizBankone of the largest players of the Turkish
banking sectorreported strong results in 2016, increasing
its consolidated assets by 20%, expanding its loan portfolio
by 22% and growing deposits by 27%.

During the year, DenizBank bolstered its capital position,

allowing the Bank to continue supporting a wide range of
sectors of the countrys economy, with specific focus on
agriculture, SMEs, energy, construction, infrastructure,
tourism, healthcare, sports clubs and education. DenizBank
also continued to support major investments that play a
significant role in Turkeys development.

Committed to expanding its product mix and services

based on its robust technology infrastructure throughout
the reporting year, DenizBank once again proved its
technological superiority, winning the Most Innovative
Bank of the Year award at the BAI Global Banking
Innovation Awards 2016.

At DenizBank, we have no doubt that the Turkish banking

industry will continue to achieve sustainable growth over
the long run, thanks to its strong capital structure, prudent
risk management principles, advanced technology and top-
quality human resources.

Cooperation with Sberbank played a key role in DenizBanks

operational success in 2016, and I am confident that our
collaboration will be productive in the coming period.

Best regards,

HERMAN GREF
CHAIRMAN
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 13

MESSAGE FROM THE CEO

We are once again proud
to be designated the
worlds number one bank
in innovation: At the BAI
Banking Innovation Awards
2016, we were presented
with the The Worlds Most
Innovative Bank award.

Esteemed Friends of DenizBank,

Although the worlds most developed economies, led by the the failed coup attempt of July 15, and the deterioration of
USA, demonstrated a considerable recovery in 2016, the relations with Russia, one of our major trade partners, the
global economy as a whole expanded by only 3.1%, well domestic market remained vibrant thanks to public spending
below its true potential. As the economic recovery in the US and state incentives. In the coming period, as indicated
continued at a gradual pace, the Euro zone showed signs of in the Medium Term Program 2017-19, which sets out
a real upswing. In Japan, however, the deflationary process Turkeys economic road map, steps will be taken to boost the
continued despite counteractive macroeconomic measures domestic market through public spending.
in place there for some years now. Emerging markets saw
a sharp drop in their growth rates, while China reported Despite of the unfavorable developments of 2016, especially
growth of about 6.5-7%. China is slowing its economy in a the failed coup of July 15, the ratio of Turkeys budget
controlled manner, and the decline in its growth performance deficit to national income remains well below the Maastricht
has pulled down energy and commodity prices worldwide. criteria, and the budget continues to generate a primary
surplus, clear indications of the countrys successful
Brexits economic impact will be seen in the long term adherence to fiscal discipline. If the structural reform
package of the 65th government is implemented effectively,
The major event of 2016 relating to the future trajectory private sector investments will grow and the economy will
of the global economy was the referendum whereby British leap forward in every respect in the coming period.
citizens voted to exit the EU. Although the road map of the
exit process remains unclear, the economic effects of the
process are expected to be felt more fully in 2017.

The Fed sticks to its tight monetary policy

Since US inflation has yet to reach the desired level, the
Fed maintained a tight monetary policy centered on gradual In addition to its achievements
interest rate hikes, resulting in a sharp decline in capital
inflows to emerging economies. The ECB, meanwhile, in the digital arena,
pursued an expansionary monetary policy to boost domestic
demand and accelerate growth, expanding its bond purchase DenizBank remains one
program during the year to include private corporate bonds.
Europes central bank is expected to take further steps
to bolster the economic recovery in the Euro zone in the
of the main sponsors of
coming year. leading projects that make
Turkey maintained budgetary discipline significant contributions to
Turkey followed its economic trajectory without
compromising budget discipline in 2016, posting growth Turkeys economic and social
just under 3% at years end. Despite the recessionary
tendencies in the global economy, our country turned the fall development.
in the price of energy, of which it is a net importer, into a
significant advantage: Turkey managed to narrow its current
deficit by a considerable margin during the year. Despite
14 SECTION I INTRODUCTION

In collaboration with Sberbank, we continue to support Once again designated the world leader in innovation
projects bolstering Turkeys prospects
Keeping a close watch on the global banking sectors
Shaping its operations along the vision of contributing to innovation-based development, DenizBank continued to
Turkeys economic and social development, DenizBank has make a difference with its innovative products and services
provided USD 20 billion in long-term financing to over in 2016. Placing technology at the heart of its operations,
300 projects over the last ten years. In the period from the Bank was once again designated the The Worlds Most
September 2012, when Sberbank acquired the Bank, until Innovative Bank at the BAI Banking Innovation Awards,
December 2016: held by the US-based Bank Administration Institute (BAI).
The Bank was proud to represent Turkey and the Turkish
Our loan book grew by 159% and our share in the loan banking sector with success at this prestigious competition,
market went up from 4.9% to 5.5%; which has been organized for the past six years, where over
The Bank offered the Turkish economy USD 6.8 billion 540 top-notch financial institutions from across the globe
participate with more than 1,000 projects. The Bank had
in long term financing for 59 major projects with a total received another award at this competition in 2014, and was
investment volume of USD 31.7 billion; granted the Global Innovator of the Year award at the 2015
DenizBank transferred USD 1.5 billion to mega projects EFMA Awards. As such, the Bank has collected three major
which are set to play a critical role in Turkeys future: awards in the global arena in the last three years.

>> Allocation of a guarantee letter limit worth USD 331 In another major development in 2016, playing a key role
million in the scope of the USD 675 million EPC contract in helping the Bank gain all these prestigious awards and
for construction of the third bridge over the Bosphorus; lead the pack in terms of innovation, our technology and
innovation subsidiary, Intertech moved into its new office
>> The largest contribution by a private bank to the first in Teknopark stanbul, Turkeys leading innovation hub. As
phase financing package of stanbuls third airport the largest tech company of the Middle East and Eastern
projectEUR 500 million out of a total of EUR 4.5 Europe, Intertechwhich also has offices in Esentepe ODT
billion; Technocity, zmir Science Park and Vienna, Austriawill
>> As part of Public-Private Sector Partnership (PPP) project concentrate its extensive resources in its new facility,
tenders, the Bank allocated a total limit of EUR 336 creating immense synergy and competitive edge for the Bank
million to the Mersin and Bilkent PPP projects; as a whole.
>> The allocation of a USD 37 million credit limit to the
Cyprus Peace Water project, whose total project cost Significantly contributing to the national economy not only
through financial activities but also via educational, cultural,
stands at USD 290 million; artistic and sports related initiatives, DenizBank continued
>> Financing solutions for TAV Bodrum Airport, and Ilsu to support the stanbul State Symphony Orchestra, and
Dam, which is set to become Turkeys fourth largest Orchestra Academic Bakent Concerts. In 2015, the Bank
hydroelectric power plant; teamed up with the Turkish Cinema and Audiovisual Culture
>> The only bank providing a 15-year project finance loan Foundation (TRSAK) to launch the First Script Contest,
worth USD 160 million to finance the Ankara Train becoming the events name sponsor. In the field of education,
Station investment worth USD 200 million. DenizBank contributed to the MECE project organized by
the Social Services Foundation (TOVAK) under the auspices
of the Ministry of National Education to renovate primary
DenizBank leads the support of agriculture and tourism schools in need.

Despite the recessionary tendencies in the global economy, I hereby extend my gratitude to all our stakeholders for
the Bank continued to move forward in 2016, increasing their contributions to our business operations in DenizBanks
its net profit by 63% on a consolidated basis to TL 1,401 fourth fiscal year under the umbrella of Sberbank Group.
million, and raising its paid-in capital by TL 1.5 billion, TL We are committed to setting sail toward new achievements
750 million in cash. During the year, the Bank extended with the support of our main shareholder Sberbank, business
new financing facilities to numerous sectors, mainly partners and almost 15 thousand employees in the coming
energy, construction, infrastructure, tourism, healthcare, period.
municipalities, sports clubs and education. With the loan
amounting to USD 3 billion in 2016, DenizBank continued
to contribute to the tourism sector. The Bank continued its
support to the countrys sports clubs in order to bolster the
performance of Turkish sports. As for the agricultural sector,
the Bank boosted its market share among private banks to Best regards,
37%, having allocated loans worth TL 8.1 billion to over
1 million producers at year-end 2016.

DenizBanks SME Support Loan: Breather Loan

Having expanded its SME client base to 1.4 million,
DenizBank recently executed a new agreement with TOBB HAKAN ATE
(Turkish Union of Chambers and Exchanges) and KGF (Credit CEO
Guarantee Fund) related to the Breather Loan for SMEs.
Under this initiative, the TL 250 million to be transferred by
TOBB will be increased ten-fold through DenizBank funding.
Our branches serving all Turkish provinces will thus extend
TL 2.5 billion in credit to TOBB-member SMEs to help them
boost their business performance.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 15

Retail Banking: This segment serves individuals, self-

employed professionals, owners and partners of corporate
BANKING SERVICES and commercial segment companies and owners and
partners of companies that are clients of the Banks SME
segment with annual turnover of more than TL 5 million.

In addition to these six main segments, DenizBank delivers

DENIZBANK CUSTOMER SEGMENTATION private banking services to upper retail segment clients
DenizBank has classified customers into six main segments and companies with a liquid net worth of at least USD 250
to reflect its customer-oriented service approach to its thousand.
operations in the most effective manner.
Branch Network/Segmentation
Corporate Banking: This segment serves all companies with
annual sales turnover of at least TL 200 million, as well Aiming to become one of the major financial services
as the groups to which these companies belong. (Financial providers in the region, DenizBank continued to expand
services companies are included in this segment regardless its branch network in line with the strategy of delivering
of their turnover amount.) closer and more active services to customers, particularly
in the Retail Banking, SME Banking and Agricultural Banking
Commercial Banking: This segment serves companies with segments.
annual sales turnover of at least TL 40 million that do not
fall within the scope of the Corporate Banking segment.

Public Banking: This segment serves local public

administrations, their subsidiaries and economic enterprises,
as well as state economic enterprises, their establishments
and subsidiaries, and all other enterprises in which the
public or public companies hold at least a 50% stake.

SME Banking: This segment serves firms and sole

proprietorships with annual turnover of less than TL 40
million, as well as the owners and partners of businesses
(from TL 25 million to TL 40 million is the common area
with Commercial Banking).

Agricultural Banking: This segment covers producers with

farmer certification who earn a living from agricultural
activities as well as agricultural organizations with legal
entity and agribusinesses.
16 SECTION I INTRODUCTION

Under the Branch Sales Force Mobilization Project, a

key component of DenizBanks innovative approach and
The Retail Banking Group has customer-focused strategy, branch sales personnel provided
on-site services to customers via tablet PCs that integrate
boosted customer loyalty all banking applications.

thanks to the high level of In line with its policy of offering specialized services
according to customer needs, DenizBank performed
satisfaction it delivers with customer management programs under the Affluent
Banking, Mass Banking and Pensioner Banking
its innovative and dynamic segments within the Life Cycle Banking approach, based
structure. on the relationship between the life cycle and the financial
needs of customers.

RETAIL BANKING GROUP Affluent Banking

The Retail Banking Group runs operations within Retail Privileged Services Designed to Touch the Lives of
Banking Sales Management and Marketing, in coordination Customers
and creating synergy with the other business lines of the Affluent Banking focuses on accurately identifying the
Bank. expectations and needs of each customer, and devising
tailor-made products and services.
The main activities of the Group include:
The Affluent Banking program features such exclusive
>> Developing products and services designed for specific services as customized personal consultancy at branches,
customer segments, monitoring the market, generating priority in banking transactions, special prices in deposit/
impact analyses of changes in the competitive investment products and loans, cash deposits from home or
environment, and employing analytical tools to create office with private security guards.
appropriate offers based on customer data,
>> Improving technological and operational processes Privileged services presented such as Affluent Saving
related to retail banking, Products as well as rapid and effective information services
>> Monitoring, evaluating, and conducting strategic planning help them make the right investments.
to develop the business line,
>> Offering banking products and services through the The Affluent Hotline Service Modelestablished in 2015
branches and digital channels (internet, mobile), to provide Affluent Banking services via phone to those
>> Working in coordination with other business lines to customers of branches without Personal Consultants
gain new customers via agreements concerning salary was extended to more branch locations in 2016 as its
payments, school tuition and condo fees, customer base continued to expand. Affluent customers
>> Increasing DenizBanks market share via new branches receive exclusive services complete with specially designed
and ATMs while offering innovative solutions through products, services and financial information via their own
new branch and ATM concepts to meet changing personal customer representatives.
customer needs,
>> Developing new loan, deposit and other banking Affluent Banking values the highly trained human resources
products through an innovative, customer-focused of Turkey, closely monitors daily changes in the needs of
perspective and closely monitoring product performance specific professions such as lawyers, doctors, dentists,
to increase their market share. financial consultants, public notaries and pilots, and offers
them customized financial solutions. Under an agreement
The Retail Banking Groups high service quality was critical with the Turkey Bar Association, DenizBank offered
in encouraging customers to choose DenizBank, and it favorable products and services to lawyers and continued
closed the 2016 with a number of achievements. The new lawyer customers and intensified relationships with
Group introduced new services as firsts in the sector in existing ones.
Turkey and reinforced customer loyalty with innovative and
dynamic services. In 2016, DenizBank Affluent Banking conducted marketing
activities at the general meetings of 63 bar associations
A standout with its customer-focused approach and across Turkey, including those of stanbul, Ankara and
superior service quality in Pensioner Banking, DenizBank zmir. Thanks to these efforts, DenizBank increased the
continued to intermediate in the first pension payments* number of its partner bar associations to 50.
of new retirees, pursuant to an agreement signed with the
Social Security Institution (SGK) in 2015.

* In the provinces of Istanbul, Izmir, Bursa and Kocaeli, all payments are made via
DenizBank; in other provinces, the first salary payments are made via DenizBank
in districts with the Banks branches.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 17

In order for the Bank to ensure collective achievement, new

agreements have been signed with Diyarbakr, Edirne, Ordu,
orum, Nide, Kastamonu, Fethiye, Amasya Chambers of Pensioner Banking continues
Financial Consultants and members affiliated to professional
groups. In order to promote Affluent Banking products and to provide exclusive banking
services we have participated in the general assemblies
of 36 Chambers of Independent Auditors and Financial services for thousands of
Consultants in Turkey.
pension customers.
DenizBank establishes brand partnerships to deliver special
experiences at a discount for its high-net-worth customers.
The Bank conducts seasonal campaigns in cooperation with
car rental and airline companies, offering discounts of up to Pensioner Banking
30%. Delivering privileged banking services to pension customers,
DenizBank Pensioner Banking continued to launch
In addition, the Bank joined forces with Maker Children innovations that make a difference in the sector. In 2016,
(Maker ocuk) to offer training to 50 youth between the Bank offered special advantages to meet the needs
the ages of 7 and 14, to help them become productive and expectations of pensioners with products and services
individuals. Aiming to fulfill its social responsibilities, Retail designed around the concept, Pensioners are Happy at
Banking plans to continue such youth education programs Deniz! Pension customers, who enjoy discounted interest
to help children directly experience new learning methods, rates on general purpose, car and home loans, as well as
by organizing and holding Maker Children Days. priority standing in branch transactions, also benefit from
special fees and commissions in many banking services.
In addition, pensioner customers can take advantage of
Mass Banking
many promotional discount campaigns thanks to the Banks
As part of its Mass Banking activities, DenizBank effectively cooperation agreements with various brands. Pensioners
analyzed customer data to formulate targeted offers for who receive their pensions from DenizBank are also offered
customers in centrally managed promotional campaigns. a free medical consultation service for one year.
The Bank used CRM data to revise current CRM models
and create new models. As a result, DenizBanks CRM Pensioner Bonus, the first Turkish credit card unique to
modeling, which helps customer representatives achieved pensioners, allows customers to conduct free-of-charge
their sales targets, has come to boast a wider array of sales shopping by earning bonus points, enjoy discounts at
opportunities. contracted merchants, or receive discounts on their invoices
during seasonal promotional campaigns. In addition,
In order to manage high-volume customer categories customers can benefit from valuable services such as utility
effectively, the Bank has closely analyzed historical and breakdown assistance, locksmith and glass repair.
current customer data. The sub-segments thus created have
been used in various campaigns. As in previous years, Pensioner Banking personnel met with
thousands of retired customers in 2016 at a wide range of
Additionally, customer experience is measured through social events, including a health seminar, concert, picnic,
various methods and customer feedback obtained from a breakfast and cinema screening in effect becoming a
these studies is employed to enhance service quality: part of their everyday lives. Additionally, the Department
kept pensioners up-to-date with useful information, such as
>> The Banks relationships with its customer base is regular bulletins on healthy living.
monitored regularly via the Mystery Client and Net
Recommendation Score initiatives, The Bank conducted qualitative and quantitative studies to
>> The neuromarketing method is used to measure better understand the needs of pensioners and to provide
customer interest and perception levels and to identify them with better solutions.
the most effective marketing channels in the branches.
18 SECTION I INTRODUCTION

Consumer Loans
DenizBank is one of the key players of the banking sector
Focused on thinking more with its innovative, accessible and competitive loan products,
and has expanded its consumer loan volume by 5% to TL
and more innovatively to 13.4 billion in 2016.

make customers lives easier, General Purpose Loans

In 2016, DenizBanks general purpose loan portfolio
DenizBank continues to expanded 11% to reach a market share of 4.7%, even as the
overall market grew by only 7%.
develop products tailored to
meet customer needs. 2016 was a period when DenizBank developed products
and processes designed to meet customer needs and
expectations, which are increasingly shaped by the ever-
changing retail environment. The Bank also continued to
offer private credit limits for current customers as part of
Retail Banking Products
pre-approved credit promotional campaigns, and particularly
improved loan processes in line with the customer
Deposits and Savings Products experience.
DenizBank Deposits and Savings Products offer an extensive
array of deposit and savings options to meet various DenizBank uses cutting-edge technology to develop new
retail customer needs such as savings or cash flow. These channels. Tele-marketing and Direct Sales teams continue to
products are designed in consideration of customers risk extend loans through tablet computers. In 2016, the Bank
perception and expectations, and to channel their savings also started to allocate pre-approved loans via Internet
towards investment. In line with this approach, DenizBanks Banking and Mobile Banking to customers who have limits
Retail Banking segment continued to expand its total approved via SMS or the web.
deposits in 2016, posting an increase of 25% over the prior
year. With tablet loans sold through direct sales representatives,
DenizBank creates synergy with its business partners by
DenizBank launched two new deposit products during the accepting loan applications via non-branch channels and
year. In April, the Bank rolled out the Dowry Account, extending these sums without the customer having to visit
which offers a state contribution of up to 20% for the first a branch. The Bank also enables customers to file face to
marriage before the age of 27. In August, it launched the face loan applications via tablet PCs through direct sales.
Housing Account, which provides a state contribution of As such, a new channel was added to DenizBank digital
up to 20% for the first home purchase by individuals who channels with tablet loans.
have no homes registered in their name. Also in 2016, new
projects designed to improve branch and customer flows Meanwhile, existing customers were allowed to restructure
were given priority by the Bank. their loans over a 72-month maturity period, in order to give
customers the opportunity to create a budget for new loans.
Promotional campaigns specially designed for specific
customer segments continued throughout 2016. For DenizBank has cooperated with PTT, a large, well-
example, DenizBank successfully carried out the Expat established entity in Turkey, since April 2013. As part of
Campaign, which offers advantages to Turkish citizens this cooperation, customers who receive their pension from
living abroad, between May and September, the period PTT can easily apply for DenizBank loans at any PTT branch,
when this target group visits Turkey most frequently. The without having to visit a bank.
Pensioner Campaign aimed at retired customers is ongoing.
Additionally, the Bank continued to conduct systems Furthermore, the overdraft account product named Kurtaran
development work to provide advantageous time deposits Account, which meets customers urgent demands for cash,
interest rate via the channel Digital Deniz, which allows is available to customers round-the-clock via all the Banks
customers to open an account without having to visit a alternative distribution channels. Customers who would like
physical branch. to access the overdraft account in the form of installments
can opt for installment payments of up to 12 months with
the Overdraft Account with Installments and Instant Money
Retail Customer Deposits (TL million) Account product.

50,714
40,642

2015 2016
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 19

General Purpose Loans (TL million) Housing Loans (TL million)

7,150 7,929 5,099

5,053

2015 2016 2015 2016

Overdraft Loans (TL million) Car Loans (TL million)

586 490
414
491

2015 2016 2015 2016

Housing and Car Loans

In 2016, DenizBanks housing loan volume reached TL 5.1 the following advantages to make urban transformation a
billion with a market share of 3.1%. DenizBank introduced trouble-free process for customers:
yet another innovation in Turkey by opening its first
Mortgage Service Center in Esenyurt and the Banks first >> No obligation to repay the principal during the
Urban Transformation Center in Merter, where special teams construction phase,
focused on home and urban renewal loans provide services >> Round-the-clock free urban transformation related
to customers. consultancy via the Banks website and Call Center,
>> Specialized support in high risk building identification
DenizBank continued to collaborate with Turkeys leading reports.
real estate agencies in 2016, initiating collaborations with
450 new agencies across the country. In addition, by Enjoying active and extensive cooperation with Turkeys
participating in 19 new select and high-profile housing leading automobile brands and an ever expanding car
development projects across Turkey during the year, dealer network, DenizBanks car loans market share reached
DenizBank offered customers loans under attractive terms 6.2% in 2016.
through its superior quality and service approach.
Branch and ATM Planning
Always focused on thinking more innovatively to make life As part of optimization efforts in 2016, DenizBank merged
more enjoyable for customers and to offer them tailor- 25 of its branches. The Bank then used the banking licenses
made products to meet their needs, DenizBank launched the of these branch locations to open new branches in 27 cities
Common Mortgage scheme in 2016. This new offering with high potential for agricultural banking. As such, the
enables multiple customers to jointly finance their home Bank reached its solid market position in 2016, with 694
purchases. In addition, the 100% Mortgage finances the branches and a 6.4% branch market share. Including the
entirety of a new home purchase through the mortgage on Banks 43 overseas foreign subsidiary branch locations, the
an existing home. Bank operates a total of 737 branches.

DenizBank is steadily advancing towards its goal of DenizBanks ATM network, including those allocated to the
becoming Turkeys Leading Bank in Urban Transformation Bank under the PTT partnership, which was comprised of
Projects. Although it was the second bank to sign 4,355 ATMs at year-end 2015, grew to 4,756 in 2016.
an agreement with the Ministry of Environment and
Urbanization, DenizBank was the first Turkish banking In line with its overall strategy, the Bank developed
institution to actually extend an Urban Transformation Loan innovative branch and ATM concepts for different customer
and to complete the urban transformation project. As of segments, boosted its disabled-friendly banking efforts,
year-end 2016, DenizBank has extended more than TL 400 transforming its branches and ATMs accordingly. In
million in Urban Transformation Loans. The Bank provides addition, DenizBank further improved customer satisfaction
in 2016, such as opening time deposit accounts at the ATM
or withdrawing money via SMS.
20 SECTION I INTRODUCTION

Bancassurance
Insurance and Individual Pension Products
As part of its insurance operations, DenizBank provides Through various collaborations,
life insurance, non-life insurance and individual pension
products to customers. The Banks wide product range DenizBank continues to deliver
offers all insurance and individual pension products and
services including fire, agriculture, accident, engineering, services that facilitate the daily
liability, unemployment personal accident, and life insurance
plans, as well as pension plans. operations of SMEs and help them
Individual pension products are on offer in the form reduce costs.
of automatic participation system products, individual
products, corporate products, and various plan options
tailored for specific customer segments. SME BANKING GROUP*
The SME Banking Group operations below are carried in
DenizBank continues its cooperation with Axa Sigorta synergy, and in coordination with the other business lines
in non-life insurance activities and with MetLife in life of the Bank:
insurance and individual pension products.
>> SME Banking,
>> Merchant Relations and Commercial Cards Management,
DenizBank Bancassurance Performance >> Gold Banking,
(TL million) >> Cash Management.

The SME Banking Groups the main operations are following

Cooperation Premiums Commissions activities:

433.0 98.5 >> Developing products and services designed to meet

SMEs needs, devising sector and product-specific
277.5 61.8 packages, and creating timely and multidimensional sales
Life opportunities,
Insurance >> Managing merchant relations, setting targets aligned
2015 2016 2015 2016 with the Banks policies and strategies, and coordinating
the sales of merchant firms,
>> Developing new POS products and support of branches
in promoting and marketing these products,
Cooperation Premiums Commissions >> Marketing and selling of gold and silver loans and
deposits, and other products related to precious
128.1 28.5 metals, as well as carrying out activities to acquire new
93.4 customers,
18.7 >> Managing and improving products pertaining to the
Non-Life Banks Cash Management system, as well as ensuring
Insurance compliance with all relevant legal and in-house
2015 2016 2015 2016 regulations,
>> Organizing the flow of internal-external funds to
strengthen the Banks liquidity structure.

Contributions Commissions
SME Banking
(TL million) (TL million)
2016 was a rather productive year for SME Banking with
7.9 5.0 4.9 added momentum from new products and services. In
7.2
light of macroeconomic developments, the Banks expert
personnel at the Head Office, regions and branches
Individual continued to provide life enhancing solutions to customers
Pensions and boost service quality.
2015 2016 2015 2016
Sector-wide, total cash loans to SMEs grew 8.5%, while
DenizBank SME Banking recorded an increase of 22%,
outperforming the sector average.

DenizBanks SME customer base expanded to 1.4 million,

with an added boost from new products and marketing
related activities.

(*)
SME Banking refers to the SME definition based on the Banks internal limits (p. 15).
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 21

The Banks total number of SME Cards issued rose to

344 thousand, with the product maintaining its weighting
in the overall SME Banking strategy. The SME Card allows SMEs Breathe at Deniz!
shopkeepers to meet their daily financial needs with ease
while also providing fast and practical solutions to SME
customers with a wide range of options. These include
postponed repayment and additional installments, as well as
instant loans for fuel oil, food, electronics, accommodation The Bank offered SMEs additional support and co-financing
and other expenses via promotional campaigns specific to loan packages to help them benefit more actively from
the segment. KOSGEB support. Furthermore, the Bank runs the KOSGEB
2016 Emergency Support Loan Program to help those SMEs
DenizBank refreshed its communications to appeal to affected by strikes, fires, social protests, or terrorism to
small and medium retailers around the concept of New restore their operations.
Shopkeepers Streets and Casts. The aim was to offer
these customers a comprehensive range of banking Under the agreement executed between the Bank, KOSGEB
transactions and financial services. With a series of loan and KGF (Credit Guarantee Fund), DenizBank provides
promotions directed especially at SMEs, the Bank extended Loan Interest Support to assist those manufacturing
TL 3.1 billion in loans to around 83 thousand micro sector enterprises listed in the KOSGEB database in their
enterprises. purchases of new domestic machinery and equipment.

Committed to facilitating SME access to finance and Additionally, DenizBank actively provides SMEs with
streamlining their documentation and procedures, support from KGF, which offers collaterals to those SME
DenizBank launched the Swift Loan, for which customers customers who experience difficulties in accessing finance
may apply via SMS, online, AkDeniz Internet Banking, the due to lack of guarantees. As a result, the Bank assists in
SME Deniz Facebook page and ATMs. With this innovative the development of SMEs, which are the driving engine
loan, SMEs have the opportunity to choose from among of the nations economy. The Bank provides round-the-
one or more of the product optionsSME Card, Installment clock service to customers via the KGF Support Hotline for
Commercial Loans, Commercial Kurtaran Account, DBS and applications and detailed information.
Vehicle Recognition System productsin cash requirements
of up to TL 80 thousand. As such, SMEs that apply for In December, the Bank signed an agreement with TOBB
loans receive the result of their application within at most (Turkish Union of Chambers and Exchanges) and KGF
five minutes, and can easily obtain the products from (Credit Guarantee Fund) for the Breathing Loan for SMEs.
DenizBank branches. In 2016, the Bank received over Under this agreement, DenizBank offers 12-month loans
350 thousand Swift Loan applications. of up to TL 150,000 at an annual interest rate of 9.90%
(0.83% on a monthly basis) to SMEs which are member of
Shopkeepers and SMEs can save up to TL 5,000 per year chambers and exchanges under the umbrella of TOBB.
by selecting the best tariff suited to their needs among
a wide range of SME tariffs, which feature daily banking As a result of collaborations with firms that lead their
transactions that vary according to the type and frequency respective sectors, the Bank provides small and medium
of transaction. Thanks to banking packages tailored to enterprise customers with exclusive services to render their
their sectors specialized needs, they can also benefit from day-to-day operations easier, alleviating issues arising from
sector-specific advantages, convenient credit options, and their commercial operations.
from banking transaction tariffs.
Thanks to other various collaborations, SMEs that are
DenizBank also offers special products and services customers of DenizBank receive discounted services
for different sectors. For example, the Bank provides from firms in industries such as shipping, dry cleaning,
pharmacists additional contributions to their Private Pension electricity, catering and security services.
Payments, cost-free banking transactions, as well as credit
facilities at favorable rates, under the agreement reached In 2016, the Bank continued to serve SME customers via
with the Association of Turkish Pharmacists. all distribution means available. The waiting period for
incoming calls to the SME Call Center (KOB MT) was
DenizBank provides women entrepreneurs the financial only 22 seconds, and 95% of all calls were responded to.
support that they need in establishing and expanding their More than 16 thousands customers took out loans as a
businesses. The fastest and easiest solutions at special result of outgoing calls from the telemarketing channel.
interest rates are offered to meet their loan requirements.
Woman entrepreneurs are also presented with the Women
Entrepreneur Tariff, which consists of the transactions they
need most to save on banking transactions, as well as time
deposits at special interest rates for their savings in TL,
USD, EUR or gold.
22 SECTION I INTRODUCTION

Merchant Relations and Commercial Cards Management

DenizBanks total gold loan support has climbed to some
2016 saw the upgrading of Cash Register POS devices five tons with a 16.9% market share. This was achieved
efforts continue, with ongoing work on the extension and through innovative means such as special loan assessment
enhancement of Cash Register POS applications. DenizBank processes for precious metals, as well as ground-breaking
has 75 thousand Cash Register POS clients, and aims to product innovations including Equal-Installment Gold Loan,
expand its market share as Cash Register POS replacement Gold Loan with Early Closure Option and Gold Support Loan
is set to continue. to Manufacturers.

As a result of the partnership reached with Union Pay,

Cash Management
DenizBank POS devices and Cash Register POS devices
began to accept Union Pay credit cards. The core strategy of the Cash Management Group is to
fully employ its IT resources in order to offer payment and
All of DenizBanks POS and Cash Register POS devices have collection methods best suited to meet customer needs,
also started to accept TROY (Turkeys Payment Method) thus delivering faster, higher quality and more efficient
Credit Cards, which is based on a system unique to Turkey. services. In 2016, the Cash Management Group carried
out infrastructure related changes designed to enrich the
Through agreements and sponsorships with contracted current product range. In addition, the Group initiated the
merchants, DenizBank reinforced its partnerships and Customs Duty Payment via SMS project, which allows the
expanded its brand recognition and also continued to payment of customs duties round-the-clock. Furthermore,
provide new discounts and exclusive services to credit card the Cash Management Group enabled its customers to gain
customers. access to a system that allows them to issue automatic
payment orders for their taxes payable to the Ministry of
POS Number of POS Market Share (%) Finance via branches or online banking.
2016 200,756 6.8
2015 200,020 6.2 Electronic Collection Services
In electronic collection services, the Bank contracted
48 new companies in the Direct Debit System (DDS) and
POS Shopping Turnover Market Share (%) corporate collection projects in 2016. As of years end, the
(TL million) number of parent companies to have signed up to DDS and
2016 23,214 4.0 Card Payment System projects had grown 16% to 455, with
2015 21,145 4.0 a total collection volume of TL 4.8 billion.

DenizBank adopts a holistic approach to customers and

suppliers, viewing the supply chain as a single whole.
Gold Banking
Therefore, the Bank provides solutions appealing to the
entire supply chain. In 2016, the DenizBank introduced
Turkeys Gold Bank new features to its Supplier Finance and Discounted DBS
The gold sector, which creates vast added value for Turkey, products. In line with its goal of intermediating all the
is not simply a niche market for DenizBank. In fact, the cash flow of its customers, the Bank plans to deepen its
Bank intensified its focus in this area, leapfrogging its customer relationships within the context of these products
peers by establishing the Gold Banking department in 2011. in 2017.
DenizBanks objective is to provide a full suite of banking
instruments ranging from loans to deposits so as to fully Electronic Payment Services
meet the demands of the gold sector. During 2016, the Bank intermediated approximately
5.3 million payment transactions through the Bulk Payment
DenizAltn Days has encouraged households to invest their System, and increased the electronic payment transaction
under-the-mattress savings into the national economy. volume by 40% to TL 110 billion.
This scheme has turned more than approximately five
tons of physical gold savings into deposits. The Gold The Banks Foreign Currency Bulk Payment System,
Accumulating Account and Saver Account each offer savers launched to facilitate DenizBank customer domestic and
the opportunity to grow their investments. With the launch overseas bulk foreign currency transfers, recorded a 35%
of the DenizGold product, customers can withdraw their rise in the number of transactions in 2016.
gold, deposited physically or virtually to their account, in
gold coupons of 1, 2, 5, 10, 20, 50 or 100 grams. Collections from Institutions and Municipalities
In 2015, DenizBank executed agreements with 15 new
The goal of DenizBank Gold Banking is to channel investors utility payments and continued to expand the number
gold assets in jewelry to clients as financial support of delivery channels through which it serves customers.
under attractive terms, and thus contribute to the national Additionally, the Bank established strategic partnerships
economy. by providing specialized IT solutions to municipalities, and
increased the number of municipalities who receive its
collection services to 81.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 23

Producer Card
Enjoying a leading position in the provision of financing to the
DenizBank continues to provide agricultural sector, DenizBank establishes a Producer-Merchant-
Bank relationship, offering solutions that provide the maximum
support for the advancement benefit to all parties. Leading the agricultural commercial card
market with 529 thousand Producer Cards issued and various
of Turkish agriculture, helping innovative services on offer, DenizBank has customized the
Producer Card to meet the requirements of the sector. Facilitating
to build a sustainable future access to finance for micro producers and offering zero interest
rate and maturity advantage at contracted merchants, the Bank
for our nation. provides significant cost advantages for producers in their
agricultural input purchases.
AGRICULTURAL BANKING GROUP
Producer Card-holding producers can purchase all their
The Agricultural Banking Group ensures that DenizBanks agricultural inputssuch as fertilizer, animal feed, seeds, saplings
Agricultural Banking activities are run in coordination and and pesticidesfrom 14 thousand contracted merchants across
synergy with the Banks other business lines. the country with six-month grace periods. As part of the Banks
collaboration with Petrol Ofisi dating back to 2006, producers
To reach out to its target groups such as farmers, can purchase fuel oil with a five-month repayment period free
agricultural businesses and investors interested in the of interest from contracted Petrol Ofisi dealers. Under the
agriculture sector, the Group undertakes the following collaboration between DenizBank and Toros Tarm launched in
activities: 2016, all Toros Tarm dealers can now benefit from Producer Card
advantages under special terms.
>> Meeting the financing needs of producers and
agricultural enterprises and developing financial products With the Producer Card Installment Loan product rolled out
to this end, in early 2015, producers can obtain installment loans from
>> Researching and designing new funding products in DenizBank branches, via 24/7 DenizBank ATMs or over the
agricultural banking. phone at maturity periods of up to three years, and with annual
payments following harvest time. Additionally, Producer Card-
DenizBank conducts its operations with a view toward holders can withdraw cash advances from DenizBank branch and
supporting Turkish agriculture, boosting agricultural 24/7 ATMs to meet their short term cash needs.
productivity, carrying out a smile on every farmers face
and contributing to a brighter future for our nation. Producers have the opportunity to pay the premiums on their
Private Pension Insurance, Farmer Health Insurance and Farmer
With the belief that agriculture holds the key to Turkeys Individual Accident Insurance once a year, at harvest time.
future, DenizBank conducts operations in the agricultural The Producer Card also helps farmers pay their monthly bills
sector in line with its social responsibility mission. by giving them the option of repayment at harvest. As such,
DenizBank is the first private Turkish bank to differentiate producers can make their monthly utility bill payments within
its Head Office organizational, region and branch network a certain limit, including electricity, water and natural gas, at
structure to create a true agricultural banking enterprise. harvest time once a year, at more convenient interest rates. In
The Bank has carried out all of its agricultural efforts addition, DenizBank gives producers the chance to pay their Ba-
along the slogan, A smile on every farmers face and has Kur premiums with automatic payment orders via the Producer
touched the lives of about half of all the farmers in Turkey. Card. As a result, producers can pay their premiums at harvest
time and enjoy timely, uninterrupted access to all the rights the
Specialized Services social security institution provides.
In line with its commitment to agriculture and the land,
DenizBank acquired Taribank in 2002 and launched its Producer customers can use the Producer Card to make purchases
Agricultural Banking operations; the Bank is proud to stand of equipment in the member establishments where the Bank has
by Turkish farmers. Today, the Bank delivers the highest an agreement with the advantage of taking up to three years
quality, fastest and state-of-the-art agricultural solutions to pay in full and making payment once a year. Additionally,
to producers, via 311 branches located across Turkeys producers can postpone payment of their Turkcell phone bills
81 provinces, and with a field team composed largely of within a certain limit until harvest time, interest-free.
agricultural engineers.
DenizBank places great importance on agricultural chambers,
DenizBank supports small producers who have difficulties in unions and cooperatives to protect micro-scale farming, and to
accessing finance as well as large producers and investors achieve higher productivity. Thanks to the Banks partnerships
involved in modern agriculture on a larger scale. with leading unions and cooperatives such as ukobirlik, Tari and
Pankobirlik, irrigation cooperatives, as well as breeding animal
In 2016, DenizBank allocated loans worth TL 7.4 billion to and cattle cooperatives, their members are able to purchase
reach a total loan volume of TL 8.1 billion. With more than agricultural inputs at attractive prices. In addition, the Producer
1 million customers, DenizBank is the leader of agricultural Card gives producers the opportunity to postpone payment of
loan allocations among private banks boasting a market their power bills due to agricultural irrigation until harvest time.
share of 37%.
Producers can apply for the Producer Card at DenizBank branches,
POS machines at contracted merchants, ATMs or with a simple SMS
from their mobile phones in an easy, fast and hassle-free manner.
24 SECTION I INTRODUCTION

Other Products and Advantages Instant Farmer Card launched this year to make a difference in TMO
product payments, producerseven those who are not members of
DenizBank provides support to all types of agricultural and DenizBankcan receive their card while waiting in the queue at TMO
animal production and investmentfrom animal husbandry agencies, and then receive product payments 20 days earlier.
to land acquisition, fisheries to green housing.
DenizBank provides support for development of Licensed Warehousing
In agricultural loans, DenizBank offers customers the option activities. Our Bank is involved in intermediating for payment of crop
of making a repayment once a year, at harvest time, in line proceeds by opening investment accounts and also giving credits in
with its payment plans suited to farmers cash and income return for Electronic Crop Receipts as collateral. Thanks to licensed
flows. The Bank has developed numerous products to meet the warehousing system, producers do not have to sell their crop at the time
specific requirements of the sector, such as Animal Husbandry, of harvest; instead, they can store it in licensed warehouses at favorable
Greenhousing, Fruit Growing, Fisher, Tractor, Equipment, Land rates. The system enables to store crops in a healthy environment while
Purchase, Wedding Ceremony, Repair & Modernization, Plow eliminating price disadvantages previously faced by producers.
& Drill, Best Agricultural Practice and Project Investment
loans. These innovative solutions help farmers finance their Agricultural consultancy services by DenizBank
operational costs and all agricultural investments.
DenizBank is committed to help increase the scale of agricultural
DenizBank, acting in accordance with Ministry of Agriculture enterprises, a key issue in Turkish agriculture. To this end, the Bank
and Animal Husbandry regulations preventing the division extends loans to producers to assist in covering agricultural investments
of agricultural land through inheritance arrangements, offers and enterprise costs; additionally, it provides services to facilitate the
My Orchard, My Field loans. These special loan products establishment of new processing plants, to affect capacity increases
are designed to protect the unity of land parcels, prevent in and modernization of existing facilities, and to make equipment
the division of agricultural tracts and promote sustainable purchases easier.
development. The loan provides up to 100% financing for the
transfer of inheritable lands and agricultural tracts generating Tarm Plus is another service that fuels sector growth, by offering
sufficient revenue, at maturity periods of up to 15 years. turnkey project, information transfer and advisory services to large-scale
As such, farmers can continue agricultural activity on their producers, agricultural entrepreneurs and industrials.
parents land and are not forced to abandon their village. To
ensure the sustainability of agricultural production, farmers Agricultural investment projects are supported by the Bank with
who earn the right to receive grants from the Young Farmer convenient maturity and repayment terms so that investors can
Grant Support Program are provided with financing featuring finance their projects in cattle breeding, animal husbandry for meat
maturity periods of up to seven years and affordable interest production, dairy farming, sheep and goat breeding, greenhousing,
rates. and fruit growing with special DenizBank advantages. The Bank also
offers financing facilities under the scope of grant projects such as the
Rural Development Investment Support Program (KKYDP) and the EUs
DenizBank brings banking services to the farmers Instrument for Pre-Accession Assistance in Rural Development (IPARD).
doorstep DenizBanks specialized project team helps entrepreneurs to complete
After the Green Drop branches, a ground-breaking model applications for these programs.
designed to become closer to producers, DenizBank expended
efforts in 2016 to ensure that producers can access banking Social responsibility efforts continue
services without even leaving their homes. Employing DenizBank operates in the agricultural sector not simply as a lender but
technology to deliver more rapid and practical banking also as a comprehensive agricultural banking solutions provider that
services to producers, DenizBank continues to introduce such adds value to the everyday lives of producers in many ways.
innovations in every field of agricultural banking. In addition
to alternative channels such as telemarketing, ATM and digital In an effort to expand the availability of agricultural publications across
banking, the Banks field personnel visit farmers in their Turkey and ensure that farmers have direct access to information, the
villages, fields and homes to bring the branch to their doorstep Bank joined forces with the Ministry of Food, Agriculture and Livestock
in case the farmer customers are not able to easily access the to carry out Turkeys most extensive training campaign. Some 500
Bank. thousand agricultural books were delivered to producers in 5 thousand
villages with the intermediation of agricultural engineers who served
In another innovative solution for the agricultural sector, as consultants. Meanwhile, by sponsoring the national photography
DenizBank launched in May 2016 the Facebook page From competition 8. Agriculture and People held by the Ministry of Food,
the Sea to Land, designed especially for producer users on Agriculture and Livestock, DenizBank intends to raise agricultural
the social media site. The dedicated page now boasts over 50 awareness across the country. In addition, high-achieving children of
thousand followers, enhancing farmers financial literacy and farmers who lack financial means are granted full tuition scholarships in
providing agricultural advisory. The Facebook page provides collaboration with Turkish Education Association.
advice to help farmers boost productivity, information on
weather conditions, news on grants and other support, and In 2016, DenizBank provided support to the Adding Value to
price information during harvest times. Agriculture competition held by the Ministry of Food, Agriculture and
Animal Husbandry; intermediated in recognizing Ministry and Tar-Gel
With DenizBanks Farmer Card, producers receive TMO (Agricultural Know-How Enhancement Project) employees who make
payments early on significant contributions to the agricultural sector with innovative
initiatives that make a difference; and helped promote these projects
With the Farmer Card, specially customized by DenizBank,
which set examples for the sector.
farmer customers can withdraw money round-the-clock from
ATMs, and shop from contracted merchants without having to
carry cash. The Bank also intermediates in Turkish Grain Board As in prior years, DenizBank officers participated in local harvest
(TMO) product payments to farmers, ranking first among all celebrations and agricultural festivals across Turkey in 2016, continued
private banks in this category. Thanks to DenizBanks Farmer to stand by producers no matter what and put smiles on their faces.
Card, producers receive TMO payments early on. With the
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 25

Portal Approach
The Corporate Banking Groups marketing approach rests on
DenizBank continues to the following pillars: The capacity to create high-quality assets,
adapt rapidly to economic change, generate synergy with other
support projects that business lines and subsidiaries, and employ well experienced
personnel who embody DenizBanks collective wisdom
strengthen Turkeys future. approach.

The Corporate Banking Group has over 70 products in areas

such as loans, deposits, securities, cash management, project
WHOLESALE BANKING GROUP finance, leasing, factoring, insurance, foreign trade, and
The Wholesale Banking Group ensures that the following investment banking. Corporate Banking increased its average
cross sales ratio to 4.0.
operations are carried out in such a way as to create
synergy and coordination with the Banks other business
DenizBank Corporate Banking Group contributed to the
lines:
investment and privatization processes through its know-how
in project finance and financial strength, thus reinforcing its
>> Corporate Banking Group, position in the market. The Corporate Banking Department is
>> Commercial Banking and Public Finance Group, keen to continue activities focused on cash management and
>> Project Finance Group. the portal approach in 2017.
The core operations of the Group include enhancing relations Commercial Banking and Public Finance Group
and creating partnerships with overseas subsidiaries and
branches, and expanding the overseas subsidiary and branch The Commercial Banking and Public Finance Group ensures
network in line with the Banks overall strategy. Furthermore, that the following operations are carried out in such a way so
DenizLeasing and DenizFactoring report to the Board Member as to create synergy and coordination with other business lines
in charge of the Group. of the Bank:
>> Commercial Banking,
Corporate Banking Group >> Public Finance.
The Corporate Banking Group ensures that: Targeting a customer base consisting of commercial
enterprises, local government and affiliated agencies, as well
>> Operations are carried out in such a way as to create as state economic enterprises and subsidiaries, the Group
synergy and coordination with the Banks other business carries out the following core operations:
lines.
>> Development of products and services for commercial
The Group carries out the following core activities geared companies and public agencies,
towards its target group, comprising corporate and >> Execution, monitoring, budgeting and reporting of marketing
commercial firms: activities in line with targets and strategies,
>> Development of marketing, sales and campaign models to
>> Development and marketing of Corporate Banking win new customers and promote growth,
products,
>> Organization of sales of products and services by >> Coordination of the Banks marketing activities in
commercial and public finance branches.
branches in line with set targets,
>> Organization of the workflow between related
departments and coordination of their relationships. Commercial Banking
Differentiated Services with a Wide Range of Products
Corporate Banking The Commercial Banking Group, which has turnover criteria
Corporate Banking provides the right financial solutions for between TL 40 and 200 million, provides tailor-made and
its customers needs through innovative project finance and proactive solutions to meet all the financial needs of its
cash management products, as well as traditional corporate customers. Through its financial supermarket approach, the
banking products, and creates chains of value that integrate Group offers customers from different sectors a wide range
all business lines of the DFSG. of products and services such as project financing, cash
management, insurance, leasing, factoring, foreign trade,
Relationships with customers start through loan treasury and investment products, as well as different types
instruments, thereafter becoming permanent as a result of loans. Also, the Group aims to create synergy with other
of customer satisfaction. These strategic alliances in turn business lines and subsidiaries under its collective wisdom
create new business opportunities for the DFSG. The Bank strategy.
offers customers the opportunity to slash operational costs
through its advanced technological infrastructure and cash The Commercial Banking Group boasts close to 300
experienced sales team members that operates in total 33
management products, while receiving the maximum return
branches.
from the economic cycle.
In 2016, the Group continues to make DenizBank the main
bank of its over 14 thousand customers.
26 SECTION I INTRODUCTION

Public Finance
In the last ten years, Turkeys total installed power
generation capacity has increased by 37,507 MW to 78,072
Specialized and Highly-experienced Staff MW. During the same period, DenizBank financed 57 power
Defining public finance as a business line, DenizBank generation projects and intermediated in commissioning
broke new ground in Turkish banking history and targeted 6,400 MW in installed capacity. Including electricity
specializing in public finance as one of its strategic working distribution natural gas distribution and wholesale projects,
fields. The Public Finance Department was established to DenizBank has provided USD 4 billion in long term
service a target group that comprises local government, financing to the energy sector.
its subsidiaries and economic enterprises, as well as state
economic enterprises, their establishments and subsidiaries. DenizBank, also active in Turkeys infrastructure
investments, has specialized in airport financing. The
The Public Finance Department has provided low-cost and Bank provided EUR 500 million to stanbuls Third Airport
long-term financing to more than 300 projects to date. project, EUR 154 million for TAV Bodrum Airport, and
varying amounts to zmir Adnan Menderes Airport, stanbul
The Public Finance Department provides the full range of Atatrk Airport, Antalya Airport and Alanya Gazipaa
banking services to local governments with its specialized Airporttotaling EUR 800 million. DenizBank became the
and highly-experienced staff at its Head Office, regional private bank allocating the highest loan limit to the Third
offices, and branches. Airport project, and singlehandedly assumed the financing
of the TAV Bodrum project.
With its specially developed cash management systems,
DenizBank makes effective use of its branch network and Looking at 2017, the Project Finance Department plans to
alternative distribution channels to maximize operational reinforce its pioneering position in large-scale infrastructure
efficiency and productivity in its tax collection processes. projects, while further bolstering growth in such core
Today, the Bank intermediates in the tax, water bill, and sectors as energy, infrastructure, transportation, healthcare
similar type collections for over 100 municipalities. and education.

The service provided to Public Finance customers is not

limited to banking products. The Bank delivers news and
information to customers via the BelediyeDeniz.com web
site, which is specially designed for municipalities and public
sector employees. By bolstering its pioneering
Project Finance
position in large infrastructure
The Project Finance Departments core business includes projects, DenizBank aims to
providing structured finance for:
continue contributing to the
>> Projects in target sectors,
>> Industrial investments, and flourishing of Turkeys economy.
>> Privatization transactions.

The Project Finance Department focuses on those large-

scale investments that play a key role in developing the
economy, and thus necessitate medium and long-term
financing. The Department provides funds to such top
priority sectors as telecoms, energy, infrastructure (e.g.
ports, airports and motorways), Public-Private Partnerships
(PPP), healthcare and education that form the backbone
of economic and social development. It also conducts
long-term transactions including industrial investment,
privatization and acquisition finance, as well as so-called
club-loans featuring multiple banks.

DenizBank has secured some USD 20 billion in long term

financing for the over 300 public sector projects it has
funded over the last decade.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 27

Bonus and Co-Branded Cards

In order to offer credit card products which will play a
Upon the completion of its role in the life cycles of customers and to help meet their
credit card segmentation daily needs, DenizBank continued to undersign successful
Co-Branded Projects with brands from various sectors, in
study, DenizBank has fully addition to its privileged Bonus offerings with services that
cotinued to make a difference in customers lives in 2016.
implemented its strategy of Tailoring the Banks card products for individual customers
delivering the right card from the application stage through to exclusive promotional
offers in order to provide the right product to the right
product to the right customer. customer, DenizBank offers a vast array of alternatives to its
customer base. The Banks card portfolio includes city cards,
miles credit cards, supermarket cards and cards without
annual fee. A key example was the DenizKz (Mermaid)
initiative, which was designed to become more involved in
PAYMENT SYSTEMS AND NON-BRANCH womens daily lives.
CHANNELS GROUP
The Payment Systems and the Non-Branch Channels Group Segment Cards
make up the following functions within the coordination and With its specially designed products for customers in
synergy with other business lines at DenizBank: different segments and stages of their life cyclesincluding
Deniz Private, Affluent Bonus, Pensioner Bonus and D-arj
>> Credit and Bank Cards Product Management, BonusDenizBank continued to provide services suited to
>> Credit Cards Portfolio Management, the needs and lifestyles of its diversified customer base in
>> Planning and Analysis, 2016.
>> Call Center,
>> Telemarketing and Customer Retention, and Mobile Sales. E-magazines with content especially created for DenizPrivate
and Affluent Bonus cardholders, namely DenizPrivate Life
and Affluent Magazine, were sent to customers every
Credit Cards
quarter.
DenizBank continued to expand its extensive credit card
product portfolio appealing to different segments and DenizPrivate and Affluent Bonus cardholders who
preferences in 2016. seek to make a pleasant start to their trips are offered
complimentary lounge access at the domestic and
The most important development of the year was the international terminals of zmir Adnan Menderes Airport and
completion of the credit card segmentation study, after Bodrum Airport.
which the Bonus Gold and Bonus Platinum products came
to join the Banks Bonus Classic. As such, DenizBank has Placing a special focus on pension customers, DenizBank
completed the final stage of its delivering the right card designed its customized product Emekli Bonus to appeal
product to the right customer initiative. to this key segment. This offering provides up to a 20%
discount on utility bills, such as electricity, phone, water
As of year-end, the Banks total credit card unit market and natural gas, an assistance service that makes their lives
share rose from 5.6% to 6.1%. Credit card turnover easier, and up to a 20% discount with various contracted
increased from TL 29 billion in 2015 with a 17% rise to TL merchants across the country.
34 billion in 2016; meanwhile, DenizBanks turnover market
share went up from 5.5% to 6.0% in 2016. Adding innovation, interactivity and dynamism to the lives of
university students aged 18-30, D-arj Bonus has boosted
The number of credit cards issued rose by 3% sector-wide, new customer acquisition efforts, expanding its portfolio by
while DenizBanks portfolio expanded by 9% during the 44% over 2015.
year.
In addition to these robust product features suited to
the lifestyles of credit card holders, DenizBank has long-
running brand partnerships with prestigious companies
that consumers prefer, including Big Chefs, Sway, Naml,
LegoLand, Rebul, among others.
28 SECTION I INTRODUCTION

Football Fan Cards

DenizBank is the official card supplier of the five of the
major Turkish football teams, which have won the national At the Gamechangers of 2015
championship, in addition to clubs across Anatolia. The
Bank is also the official card supplier of Manchester United, awards ceremony organized
the only international team with a credit card in Turkey. In
total, the Bank has card agreements with 18 football teams. by MasterCard, DenizBank
The portfolio grows rapidly with 20 different products,
totaling 206,000 Football Fan Cards. received the Largest
The Football Fan Card portfolio is expected to generate Unit Growth in Debit Card
turnover of TL 1.6 billion as of year-end 2016. Thanks to
this shopping volume created by football fans, the Bank has Portfolio award in 2016.
made contributions exceeding TL 20 million to the sports
clubs it collaborates with since 2008. Additionally, despite
34% growth in portfolio volume, costs were slashed by
Debit Cards / PTT Cards
38% due to revisions in the terms of contract.
In 2016, the Bank devised the Supplementary Card for
DenizBanks Football-Themed Loyalty Programs, operated in both current and prospective Paracard holders. DenizBank
line with the vision of Triple Win-Win-Win, was deemed branches, the Call Center and AkDeniz all receive
worthy of Visa Vizyonist 2015s Most Successful Brand applications for these cards.
award.
As a result of these many efforts, at the Gamechangers of
The Bank plans to render its current Football Fan Card 2015 awards event organized by MasterCard, DenizBank
partnerships more profitable, and continue providing more received the Largest Unit Growth in Debit Card Portfolio
benefits to the clubs and customers with its innovative award in April 2016.
service approach.
During the year, DenizBanks total debit cards issued rose
from 11.5 million to 11.9 million, with a market share of
10.2%. As such, ATM and POS turnover increased by,
respectively, 23% and 36% to TL 32.6 billion and TL
2.1 billion as of year-end 2016.

Call Center
The Call Center provides customers with top quality,
non-stop services 24/7. All processes and the individual
performance system are designed to maximize customers
experience in customer communications.

The Banks Interactive Voice Response (IVR) System utilizes

user-friendly, functional and advanced technology. It is
able to recognize customers by their voice, mobile phone
number, or the data they enter; then they are diverted
to menus best suited to meet their needs. Approximately
51% of customers complete their transactions via the user
friendly IVR system without needing the help of a customer
representative.

Customer representatives can easily access customer

data over the advanced dashboard within the centralized
authorization system, and offer rapid and perfectly
customized solutions to customers demanding their
services. The user-friendly dashboard helps customer
representatives maximize operational productivity, and
creates immense advantage in a teams job training and
initiation process.

In addition to the conventional channels of access,

customers can reach DenizBank Call Center via telephone,
AkDeniz Internet Banking, Mobil Deniz and fastPay, in line
with changing technological needs and emerging trends.
Furthermore, DenizBank Call Center is the only Turkish
banking call center that customers can access via Skype.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 29

The Call Center screening used to serve inbound customers

is capable of presenting the best offer and next best offer,
DenizBank Call Centers determined according to the needs of the customer through
customer representatives analytical CRM models. The call blending infrastructure
allows the Center to maximize productivity and enables
provide the optimal service respondent personnel to function as a Tele-marketing team.
In 2016, the Call Centers top priorities included systems
and solution to their and technological enhancements, productivity improvements
in sales automation, customer service representative staff
customers through easy-to- increases, and deeper integration of sales activities with
the business culture. In 2016, the Call Center, which is a
use dashboards. standout with its superior service and sales-focus, sold
more than 1.4 million products to customers.

Following its technological and organizational restructuring,

DenizBank Call Center has not only become a strong
Providing services in Turkish, English and Russian, service channel, but also one of the Banks most effective
DenizBank Call Center employs specific communication sales channels. In recognition of its achievements, the Call
strategies for different customer segments. For example, it Center was repeatedly designated as the Best Marketing
implements specialized service models such as KOB mit Program, Best Customer Relations Team and Most
and Deniz zel that serve only special customer groups. Innovative Customer Service on global awards platforms.
Another important link in the DenizBank communications
chain is the POS Hotline which responds to contracted
Telemarketing and Customer Retention
merchant questions and provides immediate solutions to
86% of all incoming cases over the phone. DenizBanks telephone sales channel, which manages all
sales processes that start and end telephonically, has two
The Call Centers organizational structure is designed main functions, namely:
to provide the internal communication and continuous
development of this large team. The organization is >> Customer cross sales, activation and intensification via
managed by teams of 17 customer representatives and team outgoing calls, and
leaders responsible for the performance and development >> Customer retention and reacquisition through incoming
of each team. and outgoing calls.

The Call Centers revenue-oriented business culture Always focused on delivering superior efficiency and
is focused on optimizing the customer experience and high quality sales, the channel managed over 250 sales
maximizing productivity. Systems were established at campaigns per month to meet the targets of the Retail
the Center to monitor its overall performance and issue Banking, Credit Cards, SME and Agriculture Banking
warnings whenever problems arise. The General Service business lines, closing yet another very successful year.
Performance of the Call Center (percentage of answered Thanks to the sales efforts carried out in 2016, the channel
call, speed of answer, overage call quality score) is reached the sales targets for all business lines, reporting a
measured by monthly scorecard and the results are total of 1.5 million products sold and generating sales of TL
reflected in Call Center employees performance system. 1.2 billion.
Studies on incoming call projections and shift organizations
and efficient performance monitoring allowed the Center
to reach its numerical and quality targets. In 2016, the
response period was 30 seconds for 13.7 million incoming
calls, with 92% of all calls answered.
30 SECTION I INTRODUCTION

Some 95% of the channels activities consist of outgoing Sales representatives use the Mobile Sales app installed on
calls, which are performed via a robust automated call their tablet devices. This application enables the marketing
system infrastructure. The internal and external call centers of credit cards, consumer loans, SME cards, overdraft
establish over 1 million customer contacts monthly. Aside accounts, cash advance with installment repayment,
from cross sales activities which are mainly realized automatic utility bill payment, motor vehicle tax payment,
through outgoing calls, the channel also successfully supplementary cards as well as insurance products. Thanks
manages the recycling of retail, commercial and agricultural to upgrades effected in 2016, the Mobile Sales team
credit cards, and their transport by courier. became capable of collecting applications for SME cards,
credit cards integrated with overdraft accounts, automatic
Due to both legislative and operational developments utility bill payment orders via credit card, motor vehicle tax
related to distant sales in the recent period, the channels payment, and supplementary cards with their tablet devices.
transaction diversity has grown. As such, the Tele-marketing In 2017, the Bank aims to add new products to tablet
and Customer Retention Department will continue to play a apps and ensure that each staff member in contact with a
strategic role in helping all business lines attain their sales customer can operate like a Mobile Branch.
targets in the coming year.
Mobile Sales sold over 1 million products in 2016. As a
result of this strong performance, Mobile Sales accounted
Mobile Sales
for 50% of the Banks total SME card sales through all
The Mobile Sales Group is a dedicated sales team focused channels for the SME Banking, 31% of all credit card sales
on the marketing of payment systems, retail, SME and for the Payment Systems unit, and 18% of all retail loan
digital banking products in line with segment-specific sales for the Retail Banking department.
targets. The Group also lends support to the Banks many
business line as well as to general sales initiatives.

The Groups three departments include: Mobile Sales,

Business Partnerships Mobile Sales and Project Mobile
Sales. Mobile Sales that use the
The Mobile Sales Groups primary goal is to acquire new technological infrastructure
customers through multiple sales efforts, while also making
the best use of technology to conduct highly efficient sales in the best way accomplish
transactions.
the goal of multi-product
The mobile team visits individuals who have yet to become
acquainted with DenizBank in their workplaces to respond sales, creating high
to their needs with the widest product range possible,
immediately meeting the financing needs of customers efficiency in the field.
as part of Business Partnership projects. In addition to
acquiring new customers, the team contributes to customer
activation and profitability by offering new products to
current customers encountered in the field. Furthermore, it
supports the bulk customer acquisition projects organized
by the regions.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 31

The Treasury Department monitors the terms and costs

of items on and off the Banks balance sheet that will be
The core strategy of the exposed to risk, monitors economic developments in terms
of risk and ensures that improvements are performed in line
Treasury Department is to with the Banks risk management strategy.

boost the transaction volume The Treasury Department consists of four sub-units:
Treasury Marketing and Pricing, Money Markets, Fixed-
of financial products. Income Securities, and Derivative Transactions. The
Department engages in money market transactions, foreign
and local currency borrowings and placements, and ensures
the effective management of the Banks short-term funds by
TREASURY AND FINANCIAL INSTITUTIONS GROUP means of such instruments as FX swaps, repos and reverse
The Treasury and Financial Institutions Group undertakes repos. The Department carries out the pricing of all treasury
the following activities in such a way so as to create and financial market products such as spot and forward
synergy and coordination with other business lines of exchange in international markets, all kinds of fixed-income
DenizBank: securities, commodities, and derivative products. The
Department is also in charge of profit-oriented trading
>> Treasury, activities within defined limits.
>> Treasury Sales,
>> Financial Institutions.
Treasury Sales
The core activities of the Group include: With the main function of coordinating between the
branches and the Treasury Group, the Treasury Sales
>> Treasury: managing short-term liquidity, pricing treasury Department establishes direct contact with the customer
products, implementing the treasury-related aspects of base via the branch channel, while also providing active
asset-liability decisions, and performing profit-oriented sales and pricing service for capital market products. The
trading activities, core strategy of the Treasury Department is to boost the
>> Financial Institutions: establishing, enhancing and transaction volume of financial products. Treasury Sales
maintaining DFSGs correspondent bank relations; offers its customers treasury products for balance sheet
carrying out talks to intermediate the Bank customers management and to mitigate possible financial risks. The
foreign trade transactions jointly with correspondent Department also plays a role in determining the sales
banks; securing bilateral loans from correspondent strategies and targets of treasury products (foreign
banks, exchange, options, and securities). Treasury Sales devises
>> Management of Nostro Vostro account relations: new and sophisticated treasury products and offers these
conducting talks with overseas banks and other for sale, while ensuring that the branches market these
financial institutions concerning medium and long term products in line with the overall targets. The Department
borrowing activities, structuring and monitoring relevant strives to establish long term, sustainable relationships with
transactions, and coordinating these with the relevant customers as well as branch personnel.
Bank departments corresponding with foreign banks and
other financial institutions as regards medium and long- The Department visits potential customers in person in
term borrowing activities, structuring and monitoring order to expand the customer base and increase transaction
transactions, as well as coordinating these with other volume.
Bank units.
The Treasury Sales Departments other duties include
informing customers about all treasury products, keeping
Treasury
track of customer positions, in addition to providing them
In addition to managing the Banks short-term liquidity with fast, high quality services.
in foreign and local currency, the Treasury Department
performs treasury product pricing, implements those Playing an active role in the issuance of DFSG bonds and
decisions of the Assets and Liabilities Committee related to billswhich have a nominal volume of TL 1.9 billion and a
the Treasury, and carries out profitable trading activities. market share of 5.5%the Treasury Sales Department is
The Treasury Department makes active use of risk key in ensuring the coordination between departments and
measurement techniques in order to balance risks, and the management of corporate investor relations.
bases its activities on the principle of attaining sustainable
profit, rather than short-term gain. Moreover, the Treasury
Department carries out its activities in line with the targets
set by the Assets and Liabilities Committee and implements
the decisions made at the weekly Committee meetings.
32 SECTION I INTRODUCTION

SME-friendly DenizBank has continued to stand beside

SMEs this year, as always, by providing appropriate
DenizBank became one of the financing solutions via Product and Service Packages
customized for SMEs, which account for a significant share
most important and active in Turkeys foreign trade. In addition, it supported foreign
trade with its SME Foreign Trade Hotline, set up especially
players in the sector in 2016, for small and medium enterprise customers.

based on the significant share DenizBanks Correspondent Relations and Foreign Trade
Departments plan to expand their foreign trade solutions
it captures from Turkeys total portfolio, while providing critical support to customers in
foreign trade volume. 2017.

The Credit Analysis Departments main function is to carry

out credit analyses of correspondent banks whose risk
will be assumed by the Bank in line with its requirements,
Financial Institutions
initiate the credit allocation process and follow it up until
Correspondent Relations and Foreign Trade Departments, completion. The Credit Analysis Department works in
maintaining correspondent bank relations in 122 countries coordination with the Credit Allocation Department.
and with over 1,700 banks, DenizBank continued to expand
its Foreign Trade Finance solutions portfolio in 2016. As The Structured Finance Departments responsibility is
a result, the Bank became one of the most important and maintaining relationships with foreign banks and other
active players in the sector during the year, based on the financial institutions to meet the medium- and long-term
significant share it captures from Turkeys total foreign borrowing needs of DenizBank Financial Services Group,
trade volume. managing the financing process, monitoring and structuring
transactions, as well as establishing coordination with the
2016 was marked by political and economic uncertainty in Banks other business lines.
Turkey as elsewhere across the world, which took its toll
on Turkeys foreign trade growth. Although Turkish foreign DenizBank continued to provide loans for the agricultural
trade volume dropped by around 5%, DenizBank preserved sector, SMEs and the public sector secured from the
its extensive base in foreign trade transactions and European Bank for Reconstruction and Development
continued to offer effective financing solutions. As a result, (EBRD), European Investment Bank (EIB), International
the Bank captured a market share of 5% in exports, 4% in Finance Corporation (IFC), Deutsche Investitions- und
imports, and 4.5% in foreign trade as a whole. Entwicklungsgesellschaft mbH (DEG), Japanese Bank for
International Cooperation (JBIC), The European Fund for
DenizBank reported an 8% market share in import letters of Southeast Europe S.A. SICAV-SIF (EFSE), Agence Franaise
credit in 2016 by offering diversified financing alternatives de Dveloppement (AFD).
and options to importers, once again confirming its market
position as a leading foreign trade finance bank. In addition, In 2017, DenizBank plans to continue cooperating with
DenizBank added to its already long list of collaborations international investment and development banks to secure
with various export loan insurance agencies from America such loans, thereby increasing its market share and
to Asia, Europe to the Middle East. The Bank continues to supporting the real economy with low-cost and long-term
be a major solution partner by meeting domestic companies funds.
long term financing needs thanks to the agreements it
has reached with Chinese banks and the China Export and
Credit Insurance Corporation. PRIVATE BANKING GROUP
Information on the activities of the Group is included in
In 2016, DenizBank continued to expand its correspondent the section on Deniz Private and Investment Group, which
bank network into new markets where Turkey increases brings together DenizBank Private Banking, DenizInvest,
its market share. In doing so, the Bank supported its DenizPortfolio and Deniz REIT, with the aim of combining
exporter customers which want to enhance their export DFSG customer access to all financial products under a
performance and hedge themselves against country risk in single roof.
the new markets they enter. DenizBank implements unique,
innovative projects with its solution-centered customer
approach. The solutions provided by the Bank include, for
instance, providing exporter customers with convenient
financing in the form of CBRT loans, international loans
as well as the ability to trade in 146 different currencies. DenizBank continued to expand
Always providing support to meet the international
guarantee requirements of construction companies its correspondent bank network
operating across the world, DenizBank provides those
customers active in Central and West Africa the assistance into new markets, offering
and know-how that they need.
its full support to exporter
customers in 2016.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 33

Main Distribution Channels

DenizBank garnered its third Internet Banking

Internet Banking continued to serve customers with
The Worlds Most Innovative advanced functionality before and after login. The Bank
carried out innovations to acquire new customers and to
Bank award from BAI. enrich the customer experience in frequently used screens;
furthermore, in yet another first in Turkey, it offered
password-free access to the e-Government Portal both via
AkDeniz and e-Government, thus becoming a pioneer once
again in the banking sector.
DIGITAL GENERATION BANKING GROUP
The Digital Generation Banking Group undertakes the In 2016, the Bank launched the Practical Menu, which
following activities in such a way so as to create synergy optimizes the user experience in Internet Banking while
and coordination with other business lines of DenizBank: combining business practices with artificial intelligence.
This innovation played a key role in the Bank winning the
>> Main Distribution Channels, coveted BAI Global Innovator Award.
>> Digital Sales, Marketing and New Generation Banking,
>> Innovation, Digital Payment Systems, Cloud Banking During the year, the Bank completed studies related to
Platforms, Home Banking, Digital Field Sales and Brand legal regulations affecting investment and loan transactions,
Partnership. which led to major changes in Internet Banking.

The Groups core activities are as follows: The Bank started to allocate general purpose loans via
Internet Banking, applications for which were received
>> Delivering banking products and services via the in previous years. With this development, the Banks
current channels, increasing the sales capacity of these operational workload has been drastically reduced by
channels and monitoring and measuring the transactions enabling customers to take out their loans instantly without
undertaken, having to visit a branch.
>> Monitoring technological developments which concern
the channels and adapting innovative projects and new Mobile Banking
products to the channels, In 2016, the Main Distribution Channels and Mobile Banking
>> Developing new business model solutions based on continued its successful operations from the prior year by
digital media for all subsidiaries and business lines, enhancing its applications with features to allow mobile
analyzing user behavior to develop new applications, banking users to perform their transactions with increased
and helping the Bank gain new customers and enhance ease and security. The instant allocation of MobilDeniz
customer loyalty, General Purpose Loan has boosted customer satisfaction
>> Expanding the number of individuals who benefit from and reduced the Banks operational workload, as is the case
products and services in digital media, as well as shifting in Internet Banking.
products and services from more to less costly channels.
The MobilDeniz app, a pioneering innovation, was enhanced
The Digital Generation Banking Group was established on with the money withdrawal feature based on iBeacon
March 1, 2012 in order to rapidly adapt to banking needs technology, enabling users to withdraw cash without their
coming from the changing motivations and preferences of cards and even without touching the ATM. This money
the new generation, which spends much of its time in the withdrawal feature, run as a pilot project in 2016, will be
digital world. extended throughout 2017.

The Digital Generation Banking Group is in charge of Another important feature that has taken the MobilDeniz
managing, disseminating and developing alternative user experience to the next level is the option to dial the
distribution channels, as well as managing and call center directly while using the application. This is
implementing new digital media, social media channels and not a standard call, since the customer representative is
special projects in alternative channels. immediately informed of what transaction the customer
is engaged in on the screen. As a result, the customer
does not go through the standard call center procedure,
and instead reaches the right person immediately. This
feature reinforces customer satisfaction and differentiates
MobilDeniz from other banking applications.

In 2016, with a view to ensuring that users can perform

transactions quickly without having to install applications,
the Bank continued to improve the menu map and design of
its mobile banking app. In 2017, users will be greeted with
a brand new welcome page and offered a next generation
user experience.
34 SECTION I INTRODUCTION

ATM Project Management Channel Penetration, meanwhile, runs the marketing

2016 also saw projects developed for the ATM channel in activities of digital channels (MobilDeniz, Internet Banking,
order to further improve user experience and customer Deniz Shell). The aim is to transfer customers from
satisfaction, bolster non-interest revenues and increase the conventional banking channels to digital channels, and to
Banks innovative brand recognition. ensure their active use of the latter.

In a boost to customer satisfaction, customers became able The Department also monitors the periodic reports on
to access ATMs via SMS even without their bank cards. target-oriented marketing activities, and offers other
Besides, the money withdrawal feature without touching the DenizBank business lines solutions related to their use of
ATM was offered to customers via an innovative technique the channel.
Beacon.
Internet Banking expanded its market share from 4.96%
Numerous infrastructure systems related improvements at year-end 2015 to 4.98% at year-end 2016. The number
and developments to ATMs allow the Bank to intervene of active users rose by 79% year-on-year. In 2016, the
more rapidly in case of ATM problems, and enhanced ATM MobilDeniz app user base went up by 77% with the number
operational management tools ensure increased efficiency. of active users increasing 74% for the year.
In accordance with BRSA legislation pertaining to ATMs
and the Banks Association resolutions in this context, Web Platforms and Social Media
DenizBank designed special menus for the cards of other The Groups primary responsibilities include updating the
banks. content of DenizBanks corporate web site and other web
sites through the coordination of the business lines and
The Bank integrated its systems with the national payment third parties, establishing the necessary functions for the
system TROY as well as UnionPay, to ensure that DenizBank sales and marketing of banking products and services in
ATMs accept the associated cards. The Bank also improved line with interactive marketing strategies, providing support
ATM visuals, promoted new products and made security for the implementation of planned projects, and issuing
notifications; as a result, security risks were minimized, risk reports after their implementation.
costs were reduced and customer satisfaction increased.
www.denizbank.com
As part of its social responsibility efforts, the Bank plans In 2016, denizbank.com continued its broadcast with its
to modernize its ATMs to better serve visually impaired completely refreshed interface and its menu structure
customers in 2017. At the same time, the Bank aims that facilitates user access to the services. This year, the
to upgrade the ATM interface which will improve user monthly number of visitors to the web site exceeded 3
experience at the machines, speeding up and facilitating million. The web site has become a more effective tool
customer transactions. thanks to a reorganization of the business flows, and
the personalization of the page according to each users
behavior patterns while on the site. denizbank.com is now
Digital Sales, Marketing and New Generation Banking
also available in Russian.

Digital Marketing As a result of web site upgrades which enhance the user
The Digital Marketing team is responsible for the sales experience, the number of credit card applications went
and marketing of the Banks products and services via the up by 73% over the prior year. The mobile app was also
online and mobile channels. The team encourages customers upgraded in 2016 in terms of mobile site design and user
to make more use of the DenizBanks digital channels, experience.
and constantly monitors and analyzes the related usage
statistics. Digital Marketing differentiates the products to Social Media
ensure a strong competitive edge and help them reach a In 2016, DenizBank social media accounts continued to
larger customer base. While doing so, the team focuses on be managed with a special focus on brand recognition,
boosting the Banks profitability and cutting costs. reputation management, marketing and customer
satisfaction.
The Digital Marketing team is divided into two units:
Product Sales and Channel Penetration. Product Sales Via the @DenizKredi account, which is positioned as a
focuses on marketing products such as loans, credit sales channel, customers can apply for loans under more
cards, deposits, insurance policies and commissions via convenient terms; meanwhile, the DenizBank Facebook page
digital channels. To ensure that all products and services continues to accept loan and credit card applications with
offered by the Bank are also available for sale through special rates available only on Facebook.
digital channels, the team works in coordination with the
project teams in charge. The group also measures the @DenizDinliyor responds to the inquiries of social media
profit generated by the products promoted through various users within one hour, immediately turns negative situations
communications campaigns. into positive experiences, thereby strengthening the Banks
positive brand image.
In 2016, Digital Marketing made significant contributions
to the mobilization initiated throughout the Bank to expand The DenizBank LinkedIn page figures among the top three
time deposits. Medium and small-scale individual time of the banking sector.
deposits opened through digital channels came to account
for 20% of the Banks total deposits. In order to enhance interaction on this channel, the Bank
organized various campaigns and competitions, especially
during special themed days and weeks.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 35

New Generation Banking carried out work to enable the payment of condominium
The New Generation Banking Department is charged with maintenance fees via fastPay. As part of the integration of
DenizBanks activities in the areas of: other payment systems with fastPay mobile wallet, the Bank
entered into collaboration with the Qapel platform. Without
>> New Generation Projects, and compromising security standards, the single password
>> New Generation Marketing. infrastructure was integrated into the app to accelerate log-
ins and various other projects were implemented to enhance
In 2016, the Bank launched Yihu, a brand new, fun app security.
application which appeals especially to the new
generation, complete with a wide range of transactions As a result of user experience testing, design work was
and functionality. Whether a customer of DenizBank or completed to render the fastPay mobile app interface more
not, anyone who downloads the app to their phone can user-friendly, more functional and esthetically pleasing.
chat, and make money transfers via Facebook or Twitter.
Since Yihu slashes the interest rate whenever users share As part of fastPay marketing activities and brand
posts, they can apply for loans at zero interest rates. In partnership strategies, DenizBank rolled out the fastPay
addition, Yihu users can shoot a simple video and make BJK app, to reach fans of Beikta football club. The
their dreams come true, earn points for each transaction or fastPay mobile payment systems web site fastpay.com.
step they perform, and then purchase discount coupons, tr was launched complete with information on the apps
tickets or partake in entertaining activities with these functionality, promotional campaigns and contracted
points. DenizBanks young customers easily meet their basic merchants. Furthermore, contracted merchants can now
banking needs thanks to the simple language used in the log-in with their user name and password, keep track of
app. payment transactions, perform returns and cancellations.

Non-banking features make the apps use a pleasure for The Captain Mobile app was developed for the
everyone, whether they are DenizBank customers or not participants of the DenizBank Captains Meeting.
and thus facilitate the new customer acquisition.
For the Digital Deniz initiative, the Bank developed the Save
Besides introducing new functionality, the Bank actively As You Share Deposit product and launched it on the web
embarked upon marketing activities geared toward new site. Thanks to this product, users who share the product
generation projects in 2016. Today, it is not sufficient to campaign on their Facebook and Twitter accounts can
merely deliver users the correct content on marketing enjoy advantageous interest rates. As such, the Bank can
channels. It is also necessary to activate potential customers promote its products over social media without requiring an
with the right content at the locations where their needs additional advertising budget, simply by offering customers
arise. For this reason, iBeacon and Geofence mechanisms lower rates. In order to expand the Digital Deniz product
were upgraded to contact customers instantly; at the range and acquire more customers with the welcome
moment they are in a specific location or perform a specific interest rate, the existing Deniz Account product was added
transaction. In addition to visual and audio marketing to the web site under the name Digital Deniz Account.
activities, and organic advertising efforts the Bank has
embraced the new generation marketing philosophy During the year, the Bank made upgrades to the Deniz Shell
of being at the right place at the right time. With this mobile app, which launched in 2015, aiming to boost user
approach, the Bank has employed fastPay to accompany satisfaction. Business cards can now be uploaded to the app
present and potential customers at every phase of their life and shared with other users with a single click. Users can
cycle, while boosting its brand recognition and active user also choose a template to easily create their own business
base. card, navigate with the addresses on business cards or
conduct searches among the cards.
Innovation Committee, Digital Payment Systems, Cloud
In 2016, improvements were made on the Kumsal (Beach)
and Direct Banking, Field Sales and Brand Partnerships
platform, designed by the Cloud Banking unit specially for
The Digital Payment Systemsset up in 2014 to develop SMEs, to make it more user friendly and more popular.
projects related to new generation payment systems
such as fastPay, Turkeys first mobile walletrealized Early in the year, DenizBank made design upgrades to
infrastructure upgrades to facilitate the use of the fastPay enhance user friendliness, and these efforts were shaped
function and ensure its expansion in 2016. Furthermore, in line with customer feedback. The first coupon on fastPay
the Bank executed design improvements to enhance the was defined by an SME employing the Beach; as a result,
usability of the fastPay mobile app and web site, lending improvements were made to fastPay coupon use. SMEs
them a more contemporary look and feel. can create fastPay campaigns and coupons on the Beach,
keep track of these, and manage their businesses via the
In order to encourage more customers to use fastPay, platform.
DenizBank credit cards were enhanced with a cash advance
feature in 2016. A Regular Payment function was added In order to make the Beach platform more popular, the Bank
for the payments defined via fastPay. As such, users can started to sell Intertechs registered electronic mail product
perform their periodic payments with ease. They can also to Kumsal (Beach) users with a six-month grace period.
pay their utility bills and purchase lottery tickets in a
hassle-free manner. Aiming to boost customer satisfaction
and expand the contracted merchant portfolio, the Bank
36 SECTION I INTRODUCTION

Innovation Committee and Management Our Awards

Third quarter 2015 saw the creation of the Innovation 2016 was yet another year when DenizBank bolstered its
Committee, comprised of a Committee President who reputation as an innovation leader. DenizBank placed the
oversees DenizBanks innovation processes, senior executive BAI 2016: the Worlds Most Innovative Bank award it won
comprising over 50 members representing all business lines in October 2016 alongside the Worlds Most Innovative
and the Committee Secretary General. The Committees Bank awards it received in 2014 from BAI and in 2015
vision is to make DenizBank the leading innovative from EFMA.
enterprise in Turkey and worldwide, not only in finance but
all sectors. Its mission is to interpret innovation in a way DenizBank also repeated last years success at EFMA
that touches upon both internal and external customers to Accentures Global Innovator competition, by winning a
ensure that all DenizBank units actively engage in and think Bronze Award in the special category, in recognition of the
of innovation. As such, the Innovation Committee strives to 15 innovative products and services it developed in 2016.
expand the culture of innovation among all Bank employees, This award has once again confirmed that DenizBank is an
and transform DenizBank into a veritable factory of innovation leader not only in Turkey but globally.
innovation.
In addition to these prestigious awards from BAI and
The follow-up of all business lines and the coordination of EFMA, the Banks Mobilization of Branch Salesforce project
the Innovation Committee are carried out by the Innovation placed first in the Most Innovative Cost Saving Initiative
Management Department, which reports to Digital category at the Eye On Innovation Awards held by the
Generation Banking. In order to enhance current innovative world-renowned research and consultancy firm Gartner in
products and identify new problems, the Committee and November, ahead of all global banks including its Turkish
the Innovation Management team join forces, design peers. Furthermore, in the category of Most Innovative
DenizBanks all upcoming product processes, and take the Digital Business Model, the Banks fastPayQapel fintech
necessary action to implement these. Innovation Committee business partnership took second place among all global
is also responsible for the management of Fikrim Var banks.
(I Have an Idea), which collects the innovative ideas of
DenizBank employees on an online and mobile platforms. In April 2016, at the Global Finance Names the Innovators
The Committee strives to encourage all employees to 2016 competition organized by the prominent financial
innovate, by playing an active role in the process from awards authority Global Finance, DenizBank placed first in
the entry of ideas submitted to Fikrim Var up to the the Organizational Innovation branch of the Transaction
implementation of these ideas. At the same time, work Services category with its Mobilization of Sales Force
continues apace on a new innovative, in-house initiative project. With this key win, the Bank once again showcased
to promote innovative thinking, in order to manage its innovative vision in digital transformation to the entire
this platform entirely through the mobile application world.
by early 2017. All creative and innovative ideas are
meticulously analyzed by the Committee management and Also in April, DenizBanks groundbreaking innovative
Innovation Management team, coordination with concerned solutions garnered the Model Bank award at the Digital
departments is established and the innovation process is Banking Transformation competition held by the world-
thus triggered. renowned company Celent, which is part of Oliver Wyman
Group. The Bank made this achievement with its work on
Working in parallel with the Innovation Committee, the the Internet of things (IoT), once again demonstrating its
Innovation Management Department not only follows up innovative approach and digital transformation leadership
on in-house innovation processes, but also keeps track on a global scale.
of all innovative products and technologies from Turkey
and worldwide, and explores how these can be utilized In March, at the Stevie Awards for Sales & Customer
at DenizBank. The Innovation Committee also conducts Service hosted by a selection committee of 189
meetings and agreements with fintech start-ups and professionals from across the world, and drawing 2,100
third parties that provide high quality services which can participants from 36 countries, DenizBank SME Banking
generate value for DenizBank, contributing to the formation received a Gold Stevie in the Marketing Solutions
of an open innovation ecosystem around DenizBank. category for its Fast Loan to Shopkeepers service.

Also, in order to sustain DenizBanks international

innovation achievements, which are appreciated across the
world, applications are made to international awards which
increase the global recognition of innovative products and
services. Furthermore, in order to expand DenizBanks The Innovation Committee
successes and unique experiences in this area, efforts
are made to prepare and publish domestic and overseas works to foster a culture
publications on technology, digitalization and innovation.
of innovation among all
employees and turn DenizBank
into a veritable factory of
innovation.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 37

In line with an approach that strives for continuous

improvement and places the customer at the heart of the
DenizBank focused on business, all processes are designed on the basis of five
principles:
Operational Excellence
>> Simplicity
to improve the Customer >> Consistency
>> Service through Multiple Channels
Experience quality, which it >> Empathy
>> Automation
sees as the key differentiating
element in the products and In order to enhance service quality on an ongoing basis,
the Bank uses customer feedback, customer surveys,
services on offer. operational measurements and benchmark results to
improve the processes with the most advanced BPM
techniques and tools.
OPERATIONS GROUP Organization
The Information Technology and Support Operations Group, The Department focuses on establishing the optimal
IT Security and Digital-Card Payment Operations Group, the organizational structure for DenizBank which strives to
Branch and Central Operations Group, and Intertech report offer top quality service to customers, and providing the
to the Chief Operating Officer (COO). informational tools that maximize in-house cooperation and
sharing.
INFORMATION TECHNOLOGIES AND SUPPORT
The internal web site DenizPortal, which maximizes
OPERATIONS GROUP
information sharing between all Bank employees,
The Information Technology and Support Operations Group consolidates all in-house information and puts these to the
undertakes the following activities in such a way so as to service of the entire workforce.
create synergy and coordination with other business lines
of DenizBank: The Portal provides employees access to:

>> Organization, >> All necessary product information via the DenizBank
>> Service Quality, Product Tree platform,
>> Customer Relationship Management (CRM). >> All procedures and business flows, as well as related
documents,
The core business activities of the Group include the >> Department and job definitions via the Job Definitions
following: platform.

>> Supporting the operations of the Bank and its Thanks to the Process Performance Trends Reports, each
subsidiaries by improving process efficiency and department can visualize how quickly it receives services at
managing organizational changes, both of which are which stage of which process, and can thus compare this
achieved through development and implementation of timing with the regional and bank-wide average. By means
process improvement methodologies, of control panels that enable the monitoring of productivity,
>> Increasing service quality and standardizing services managers can access productivity trends in the operation,
offered through all channels as well as enforcing and sales and control functions. Statistical methods can be
managing business development, process improvement, employed to keep track of process performance in an
branch support and data quality, ongoing manner.
>> Determining strategies to provide the products and
services that suit customer needs by segmenting In order to better manage costs and make cost management
customers in DenizBanks business lines, and updating awareness an integral part of the corporate culture, the
and managing the analytical and operational CRM Bank has switched to the Activity-based Cost Structure.
platform in line with these strategies,
>> Developing and implementing the methodology, process
and other IT projects of credit, allocation and risk units
and managing of similar integrations with Sberbank.

The Information Technology (IT) and Support Operations

Group focuses on Operational Excellence in the awareness
that in todays increasingly competitive world, Customer
Experience is key to making a real difference, in addition
to the actual products or services on offer.
38 SECTION I INTRODUCTION

Service Quality

To uphold DenizBanks strategic targets, the Service Quality

To boost branch productivity Department focuses on improving processes and developing
competitive, efficient and productive business methods to
with a customer-focused make progress toward operational excellence. Accordingly,
its main targets are as follows:
approach, strategic projects
>> Achieve simplicity and productivity in processes,
are implemented within the >> Maximize automation,
>> Convert all service points (in branches or non-branch
set deadlines. channels) into sales-focused platforms without
operations,
>> Ensure standardization, and
>> Maximize internal and external customer satisfaction.

The Activity-based Cost Structure helps to: As part of development and improvement efforts, process
analysis modeling is applied, as the projects are put into
>> Identify the cost incurred by the Bank for customer practice, the departments strive to ensure that processes
transactions and processes. are defined and interconnected and that responsibilities and
>> Visualize the net customer profit by taking into account roles are clearly identified. In parallel with the continuous
transaction costs. follow-up and improvement efforts, experiences yielded
>> See how transaction costs vary between channels, by each project are reflected upon in other projects
identifying which channel is more and which is less and processes with a view to establishing a learning
costly. organization.
>> Set more rational prices by knowing transaction costs
beforehand. Meanwhile, the requirements of all business lines are being
elaborated in line with operational excellence targets. To
As part of DenizBanks enterprise resource planning (ERP) ensure that the developed systematic solutions meet the
efforts, the studies on the calculation of staffing patterns requirements, an active role is played at all stages of the
for Branch Operations, Portfolio Management and Central project, and projects put in practice are monitored to make
Operations Departments continued. sure that they deliver the targeted benefits.

In order to lay the basis for both staffing pattern To boost branch productivity with a customer-focused
calculations and activity-based costing work, the Bank approach and to minimize and control risk, the improvement
continued to measure processes and identified the standard needs of branches are identified, turned into projects and
durations and cost centers of transactions managed via resolved; strategic projects concerning the branches are
processes. The interface of the Numerator, which manages implemented within the set deadlines.
the queues in branches, was upgraded so that customers
can take their tickets from a single monitor in a quick and In order to implement the projects, training, notification and
practical manner. coordination related activities are carried out. The purpose
of these activities is to spread and reinforce the innovations
Taking into account the importance of customer agreements that will make DenizBank more competitive and customer-
and documents in the relationship with the customer, the oriented. To this end, the necessary methodology for
Bank continued to coordinate the management and follow- extending and systematically implementing these training
up of all customer agreements and documents from a programs is outlined.
single point within the Organization Department, in order to
optimize each respective relationship and to manage Bank Efforts are expended to implement developments and
risks accurately. improvements across the entire organization at the same
standards. To this end, branch visits are performed, and the
questions, opinions and requests from branch personnel are
duly assessed.

In order to offer customers the most efficient services,

all questions and problems coming from branches on
applications, procedures and business methodsexcepting
certain technical issuesare resolved as soon as possible.
The Department communicates with concerned departments
to settle all malfunctioning business practices.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 39

With customer service and transaction packages designed

in line with customer behavior in transactions and channels,
Thanks to effective online DenizBank took further steps to become customers bank
of choice, and posted significant growth in cross-sales and
CRM applications, the profitability from customers using these packages.

requirements of customers As part of the Branch Sales Teams Mobilization Project

implemented in 2016, sales managers were allocated tablet
were determined at the PCs and started to market products not only within but
also outside branches. The tablet allows the visualization
moment of transaction and of current and potential customers on the map and ensures
they were instantly provided that the time outside the branch is spent in the most
efficient manner. It also provides CRM data to help formulate
with personalized product the right offer for the right customer.

offerings. As one of the largest field team work initiatives in the world,
the Mobile Transformation of Branch Sales Teams project
was granted the most successful organizational innovation
award by Global Finance, and the award for the years most
CRM-Customer Relationship Management
cost-effective innovation by Gartner, in recognition of the
In todays world, where competitors provide similar products mobile work culture that it has created.
and services, companies can create the highest added
value possible solely by offering the best experience and In order to comprehend and improve the DenizBank
delivering superior products or services. For this reason, experience of customers in different segments, a three-
focusing on customers experiences and improving these monthly customer satisfaction survey was initiated during
experiences has become as important as the functions and the year. Based on the customer opinions and thoughts
benefits of services that have become almost a standardized revealed by the survey, the Bank identified areas of
commodity. improvement and implemented experience-enhancing
measures.
Data and customer communication management related
activities were geared up in line with the goal of delivering Customer complaints and suggestions remained a key
DenizBanks personalized financial services at the right time, focal point in 2016. In order to meet customer demands at
through the right channel, at high quality and as quickly the very first moment and channel of contact, DenizBank
as possible. The customer communication and marketing analyzes all customer experiences in detail and introduces
applications have allowed the Bank to offer personalized new processes wherever the need arises.
and proactive solutions based on customer preferences, at
every point of contact. Resource management strategies The central service management model, which helps provide
that maximize efficiency have laid the groundwork for top-notch services in line with customer expectations at
various departments to operate at top productivity levels. the same standard in all the distribution channels, enables
The roadmaps for specific customer groups, which serve to customers to enjoy the same high quality experience at
deepen the relationship on the basis of the customers life every point of contact with the Bank.
cycle, were automated thus bringing resource efficiency to
the highest maximum level. Emphasis was placed on innovative channels created
in line with the channel habits of new generations of
In line with the strategy of offering accessible services that Bank customers. The latest technologies were deployed
make the lives of customers easier, DenizBank customers to communicate with and serve customers in social
were instantly delivered e-mail and SMS messages related networks. To enhance the experience in these channels,
to over 70 banking actions such as money deposits and customer interactions with the Bank were analyzed and the
withdrawals, investment accounts, credit card transactions information collected was used to further improve customer
and cheque transactions, in accordance with individual experience at DenizBank.
customer preferences.

Using online CRM applications, the Bank continued to make

instant, personalized offers to customers by identifying their
needs during various banking transactions. The integration
of the application with trend models has allowed the Bank
to present on-the-spot proposals based on analytical data at
points of contact.
40 SECTION I INTRODUCTION

DenizBank has almost doubled its number of POS devices,

with more than 200 thousand deployed over the past two
In all card payment years; according to statistics of the Interbank Card Center
of Turkey, the Bank ranked fifth in the sector. DenizBank
transactions offered to offers the fastest online/offline provision by switching to ISO
8583 new messaging software. And thanks to POS services
customers, DenizBank aims to enabling customers to receive 24/7 support, DenizBank has
achieved the service quality level required to become their
be the best service provider preferred bank.

in the sector. The Bank participated in the design and manufacture of

the New Generation Payment Registration Devices (KC)
demanded by the Ministry of Finance. It became the first
bank in the world to launch these devices at contracted
IT SECURITY AND DIGITAL-CARD PAYMENT OPERATIONS
merchants. The Bank now enjoys an 8% market share in this
GROUP
segment and KC numbers more than 77 thousand.
The IT Security and Digital-Card Payment Operations Group
is responsible for running DenizBanks coordination and Projects devised for the current POS models were also
synergy with the other business lines: integrated with payment recording device terminals. In 2016,
the Producer Card Project was integrated with Vera Payment
>> IT Security, and Recording Devices. Payment recording devices were also
>> Digital-Card Payment Operations. enhanced to integrate with the multi-bank operation system.
This process has a positive impact on customer satisfaction.
Card payment systems, very well-developed in Turkey,
certainly affect customers choice of bank with the ease of The project to complete fastPay a mobile app launched
use and the comfort they bring to their lives. As such, card for the first time in Turkey by DenizBank by generating
payments form a critical service that creates a competitive invoices, was finalized and around 63 thousand New
difference. Cognizant of the fact that card payment systems Generation Payment Registration Device (KC) terminals
are a key component of its competitive edge, DenizBank started to provide this service. Furthermore, around 50
aims to be the best service provider in the sector in terms thousand terminals over Vera KC can now accept one-
of all card payment transactions offered to customers. touch payments. Users can rapidly define the fastPay
payment process over KC, by simply touching one button.
In order to provide customers the best experience while
striving to achieve operational excellence, DenizBank has The Multi Currency project, which enables credit card
become the bank that delivers credit and debit cards in the payments with multiple currencies, will encourage foreign
fastest and most accurate manner in the sector. DenizBank tourists to make more frequent use of KC POS terminals in
is the Turkish bank with the highest level of completeness Turkey. Once again, a project of this type was implemented
and accuracy in terms of customer address structure. Cards for the first time in Turkey by DenizBank.
are sent to customers with a 90% successful delivery rate,
reflecting the Banks operational accuracy. The working model of POS operation processes was
changed to the per call model, and around TL 1.2 million
The Bank maintains a close watch on technology, and offers was saved per annum.
customers innovative products which break new ground in
the domestic sector and worldwide. By adding anonymous The ATM Cash Flow Management application was enhanced
prepaid and preauthorized prepaid cards to its existing to minimize the funding cost of money transfers to ATMs,
credit/debit cards portfolio, DenizBank has succeeded in and render their operation more efficient.
providing banking services to an even larger customer
base. DenizBanks card services reach out to a vast At the Banks ATMs, supply and breakdown monitoring was
population in Turkey by means of cards specially designed automated. Individuals and institutions in charge of ATMs
for transportation use, sports events and campus projects. are now notified via online and mobile platforms and steps
Payment automation systems set up at Marmara and TED are taken to reach the expected customer service level. The
Universities offer students and academics secure payment Recycle support, which allows the money deposited in ATMs
and safe access at these locations. to be used in withdrawals, has allowed ATMs to run for
longer periods without being supplied and costs were cut
Likewise, prosecutors, attorneys and judges working in as a result. During the year, the Bank launched innovative
Istanbul and Anatolian Courthouses were offered indoor card projects at its ATMs, including card-free money withdrawal,
payment options. login via SMS, money withdrawal by voice, and i-Beacon.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 41

Over the last two years, the number of DenizBank ATMs

has grown to 4,756. To alleviate the workload of branch
tellers, advanced Express Gie Kiosks were developed to DenizBank is transforming
offer money deposit, withdrawal services and function as
alternative distribution channels in retail chains. The number its branches from Service
of Express Gie Kiosks has approached 400. ATMs have
become a channel based on the CRM infrastructure that not Points to Service and Sales
only provides services but also sells products; as such, they
propose products and services to customers. Offices.
The Chargeback project and the Visa-MC foreign barter
Branch Operations and Foreign Trade Center Operations
accounting automation project have minimized the
operations-related loss of time and labor and operational >> Regional Operations and New Applications Department
failure risk. Reports have started to be stored in a digital Managers continue to extend new applications to the
format. entire field, inform and train field employees, and
provide sales coaching to operations staff.
Actions in response to payment system fraud, increasingly >> In order to better coordinate and monitor operational
widespread across the world, were analyzed, with proactive sales and operational functioning, Regional Operations
and reactive measures adopted according to customer was restructured, and the Regional Operation Sales
lifestyles. As a result, DenizBank customers, who carry out Representative Office was created. Field visits and sales
transactions in all channels via the Banks systems, were monitoring activities are carried out under this unit.
provided with the most secure payments services in Turkey. >> At the tellers, aside from the swift, secure service
Loan and credit card applications were merged under provided to customers, the Bank increased the number
Fraud Risk management, and a more secure structure was of products on offer up to 25 during the year, with a
established. view toward providing high quality sales with a smile.
>> In line with the target of transforming branches from
In the area of customer information and security, the Bank Service Points into Service and Sales Offices, a
took measures against financial losses of customers in line new task groupTeller Sales Officerwas created
with recent trends and total loss was lowered despite a rise within the teller group to perform both sales and pricing
in the number of attacks. functions and carry out teller transactions. As of 2016,
a total of 470 staff members in 309 branches are
classified under this category.
BRANCH AND CENTRAL OPERATIONS GROUP
>> To support specialization in foreign trade and enrollment
The Branch and Central Operations Group undertakes the in certification programs, the total number of employees
following activities in such a way as to create synergy and to obtain CDCS on the international ICC test taken
coordination with the other business lines of DenizBank: after intra-departmental training programs was brought
up to 22.
>> Branch Operations and Foreign Trade Center Operations, >> In order to render business processes efficient and
>> Central Operations, productive, the Swift messages processed via the
>> Treasury, Payment Systems and Private Banking Foreign Trade module are now sent STP (without user
Operations, intervention).
>> Investment Banking, Custody and Fund Services >> In line with the Banks paperless office strategy,
Operations. the Export module was redesigned. The first e-file
infrastructure was created and implemented with this
The Branch and Central Operations Group ensures that project.
the banking products previously or currently purchased >> As part of the Workforce Optimization Project, all Branch
by DenizBank customers and their after-sales aspects are Operation and Head Office teams were given Level 1
in accordance with national, international and in-house shared platform certification training and high volume
regulations. transactions started being processed on the branches
shared platforms. This resulted in significant resource
savings and productivity increases related to transaction
durations and man hours.
>> In departments and branches reporting to the Branch
and Central Operations Group, efforts continued to set
up efficient monitoring mechanisms, monitor and develop
operational processes, reduce operational risk and raise
productivity.
42 SECTION I INTRODUCTION

>> The Risk Center, established to centralize DenizBank

reporting, correspondence and coordination with legal
With the shared platform authorities, stepped up its efforts.
>> With the initiation of a shared platform management
management project initiated project for operations, different operation departments
formerly focused on a single task became a single
in operations, different Operations Department that performs all tasks.
Competencies, modus operandi, transaction priorities,
operation departments that SLA management, performance management, and
operation promotion criteria were updated, and transition
used to perform a single was made to an objective, transparent and clear-cut task
task were transformed into a management model based on statistical data. A system
was set up to ensure that branches take tasks from the
single Operation Department central operations pool in peak days and hours.
>> It became possible to make bulk payments in tax and
that performs all tasks. Social Security Institution transactions, issue payment
orders before the payment deadline, and make automatic
payment on the last day of payment. Following the
initiation of bulk payments, the number of automatic
payment orders rose by 5%.
Central Operations
>> In parallel to improvements in Insurance Demand Entry
In 2016, the Department focused on: monitors, all manual operations in the loan application
process were automated, leading to savings of up to
>> Boosting operational efficiency, rendering it sustainable, 90% in paper print-outs.
standardizing the business processes, reducing >> Improvements were made to all monitoring/update/
transaction time, and lowering costs. reporting procedures related to insurance activities and
>> Responding to inquiries, investigations and garnishee it became possible to perform all these activities over
orders from official institutions, submitting data and dashboards.
documents to the banking system. >> In special cash and non-cash loans such as KGF Loans,
>> Executing domestic and overseas wire transfers, foreign KOSGEB Loans, Retail Restructuring Loans, Eximbank
trade transactions, domestic and overseas letters of Loans, CBTs Pre-Shipment and Post-Shipment Rediscount
guarantee. Loans, the Bank performs the control, system entry and
>> Bookkeeping for checks and promissory notes, clearing follow-up stages from the application stage right up to
transactions between banks, and transitioning to the reimbursement.
visualized check clearing system. >> As of December 2016, a special non-performing
>> Expanding the Bulk Payment System which continued loans support hotline was launched to assist branch
during the year; payment transactions performed employees.
through the Bulk Payment System increased by 9%,
totaling 5.3 million in 2016.
>> Upgrading the Bulk Salary Payment system so that Bank
customers were able to conduct Bulk Salary Payments
over AkDeniz Internet Banking in 2016.
>> Making operational the Avclar Archive Building and the
Scanning Centers in seven regions, Head Office Scanning
Center in 2016. The new center started to process Retail
Loan documentation.
>> All operational transactions such as reconciliation and
approval of branches in the Green Drop category,
which mainly focus on the agricultural segment, were
carried out by Central Operations.
>> Management of customer transaction orders, checks of
authorization and signature, and customer confirmation
actions started to be carried out by Central Operations
in order to increase operational efficiency and lower
costs in branches.
>> The Central Operations team, which offers banking
services via non-branch channels, has continued to
provide Central Data Entry, document and information
entry and controls concerning SME Card, from 09:00-
22:00, seven days a week, including official and religious
holidays.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 43

Treasury, Payment Systems and Private Banking

Operations
Treasury, Payment Systems and Private Banking Operations The software project
implemented the following improvements in 2016 to comply
with applicable legislation, boost operational productivity covering all securities was
and minimize operational risk:
completed and put into
>> The Commodity Derivatives module completed in 2016
has not only yielded operational efficiency but also service in July 2016.
minimized risk, ensuring that the Bank can deliver the
referenced products to customers in a more efficient
manner.
Investment Banking, Custody and Fund Services
>> As part of the project launched by the Central Bank of
Operations
the Republic of Turkey to enhance efficiency of Cash
Management Services, the Bank ensured integration
between Banta Nakit ve Kymetli Mal Tama ve Investment Banking
Gvenlik Hizmetleri A.., which provides Cash in Transit To maintain DenizBanks competitive edge in securities
and Handling services for the Bank, and its EFT system. operations, in addition to the standard services offered in
The result was establishment of a fully automated, the market, DenizBanks exclusive securities projects are
end-to-end structure. This structure makes automatic developed and automated in the securities system.
reconciliation of the cash transactions between the
Central Bank and DenizBank via EFT messages. In The Investment Banking Operation Department carries out
addition, the new structure enabled cost savings and the following transactions:
greater efficiency.
>> The Cash Flow Management Module in use was >> Trading in liquid and short term investment funds via
upgraded to enable online balance control of the banks branches and alternative distribution channels, 24/7,
accounts in the correspondent banks. The upgrade has >> Automatic trading for the Captain Account application
allowed us for more efficient use of nostro accounts. In of the Liquid Funds Short-term bond fund,
addition, specific provision demands are handled by the >> Automatic terminating of Liquid Funds and short-term
system. The improvement decreased exceptions handling bond fund during cash withdrawal from ATMs,
time considerably, thus yielding operational efficiency. >> Performing automatic fund sales in line with the criteria
>> With the improvement in our Cash Management Module, of the DepositFund project,
reconciliation between the invoice amount and the >> Conducting public offering of Umbrella Funds,
number of the Cash in Transit and Cash Processing termination of these funds according to certain criteria,
services taken from Banta Nakit ve Kymetli Mal Tama and repayment on maturity date,
ve Gvenlik Hizmetleri A.. has been provided by the >> Issuing DenizBank Asset-Backed Securities, related
system. Central Registry Agency transactions and customer
>> The outgoing EFTs sent back by the counterparty bank transactions,
is now automatically credited to the related customer >> Issuing DenizBank Bonds, related Central Registry
accounts. Agency transactions, distribution, trade, repayment of
principal and coupons.

Since the beginning of 2013, DenizBank has enjoyed

market-maker status in the government debt securities
(DBS) market with the approval of the Undersecretariat of
Treasury. The Banks transactions on the Stock Exchange
and the OTC market have expanded in terms of number
and volume. Due to this market-maker status, the Bank
also participates in Open Market Transactions (AP) tenders
and direct trading tenders. An automatic tender notification
infrastructure has been established to communicate with the
Central Bank of Turkey regarding weekly DBS tenders.

The Inter-Securities Module introduced with the Investment

Funds Project in 2014 was implemented across all
branches, channels, the Head Office and DenizPortfolio
simultaneously.

The software project covering all securities was completed

and put into service in July 2016.
44 SECTION I INTRODUCTION

Fund Services
Fund Services provides such services as price calculation,
DenizBank started to offer accounting, notification and funds reporting to investment
funds set up and managed by Deniz Portfy A.., or other
customer-based custody portfolio management companies.

service to DenizBank AG The Department serves a total of 24 investment funds, of

which 21 are in-house. The follow-up of fund services is
customers. carried out over the program ATP/Yatfon. Changes and
improvements required by applicable laws, rules and
regulations are communicated to the software company and
completed in a joint effort.
Custody Services
In line with Capital Markets Board communiqus, Two funds are being established, foreign currency funds,
DenizBanks Custody Services Department provides custody which were recently introduced to the market in line with
services to: Capital Markets Board communiqus. Work is ongoing to
upgrade the fund system to handle foreign currency funds.
>> customers served by portfolio management companies,
and individual customers;
>> investment funds and investment trusts (collective
investment companies).

The main products that fall under custody services include:

>> Stocks,
>> Fixed Income Securities,
>> Eurobonds,
>> Investment Fund Participation Certificates,
>> Domestic and foreign currency deposits,
>> Foreign currency exchange transactions,
>> OTC derivative transactions and Futures and Options
Market (VOP).

In 2016, the existing Individual Portfolio Custody Contracts

were upgraded in accordance with the latest Capital
Markets Board communiqu.

Furthermore, the Bank started to offer customer-based

custody service to DenizBank AG customers.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 45

JSC DenizBank Moscow (Russian Federation)

DenizBank acquired Iktisat Bank Moscow in 2003 and
DenizBank AG was deemed changed the name to CJSC DenizBank Moscow. This
company name was changed to JSC DenizBank Moscow on
worthy of the High Customer December 3, 2014. The bank offers a full array of banking
services to corporate and commercial customers from its
Satisfaction award by the head office in Moscow.

Austrian Financial Marketing The opportunities for economic partnership between

Turkey and Russia generate new investments, primarily
Association in recognition of in foreign trade and tourism; as such, the number of
its customer-oriented quality Turkish entrepreneurs investing in Russia is on the rise. By
establishing close relationships with these entrepreneurs,
service approach, for the JSC DenizBank can identify the needs of these businesses
accurately and bring all financial services offered by DFSG
second year in a row. to its customers, while responding quickly to requests by
way of DenizBanks financial power.

DenizBank customers perform their foreign trade

transactions in Russian rubles with the support of the
FOREIGN SUBSIDIARIES subsidiary. Moreover, customers can perform many
DenizBank AG (Austria) JSC DenizBank Moscow (Russian other banking transactions like money transfers, account
Federation) EuroDeniz International Banking Unit Ltd. openings, external guarantees, foreign exchange
(TRNC) transactions, Russian ruble purchasing, as well as forwards
and arbitrage.
DenizBank AG (Austria)
As of year-end 2016, the total assets and shareholders
Established in 1996 by the former Esbank in Vienna, Esbank equity of the bank amounted to USD 245 million and USD
AG was acquired by DenizBank A.. in 2002, and renamed 67 million, respectively.
DenizBank AG in 2003.
EuroDeniz International Banking Unit Ltd. (TRNC)
DenizBank AG operates with an extensive range of deposit
and loan products in Retail and Commercial Banking. Acquired by DenizBank from the Savings Deposit Insurance
The Bank serves corporate, commercial, SME and retail Fund of Turkey in 2002, the bank was renamed EuroDeniz
customers by focusing on products such as investment International Banking Unit (IBU) Limited in February 2009.
loans and project and foreign trade finance based on The bank is licensed to undertake all commercial banking
market needs and identified opportunities. Headquartered in operations, and offers various deposit and loan products to
Austria, DenizBank AG has a network of 43 branches; 27 in the corporate and commercial customer segments.
Austria, and 16 branches in Germany as of year-end 2016.
DenizBank AG closely follows global development trends, As of year-end 2016, the banks total assets stood at
and is the third biggest bank in Austria in terms of direct USD 169.4 million and its shareholders equity amounted to
banking customer portfolio. USD 6.9 million.

DenizBank AG also provides retail banking services to many

Turkish citizens living abroad. Synergy between DenizBank
AG and DenizBank is attained by pooling resources such
as the extensive branch network, the increasing number of
money transfer points, and easy access to services. These
resources bring about a positive customer experience that
reflects well on both companies, and thereby expands their
respective customer bases.

As of year-end 2016, the total assets of the bank amounted

to EUR 10.2 billion while total shareholders equity was EUR
1,176 million.

In the coming period, DenizBank plans to expand its branch

network and the scope of its Internet banking services in
the Eurozone.
46 SECTION I INTRODUCTION

In 2016, the inter-Vision platform quickly adapted to

consumer finance in a project implemented at Turkcell
INFORMATION TECHNOLOGY (IT) Tketici Finansman A.. The company also launched mobile
banking and call center applications at Banka Kombetare
SERVICES Tregtare, which operates in Albania and Kosovo; an
inter-factoring app at Yap Kredi Faktoring; an inter-Vision
Intertech offers innovative integrated banking platform at Ziraat Bank International
A.G. Germany; an inter-Vision integrated banking platform
and effective solutions to at the Cyprus-based Albank; and an omni-channel solution
43 companies in 10 countries. at Lebanons Bank Audi.

Choosing to participate in the most prominent fairs and

activities of the sector, Intertech took part in the retail
banking summit organized by EFMA in Beirut on July
26 and the innovation summit held on October 24-25
INTERTECH in Barcelona. At these events, Intertech introduced its
Established to provide much needed IT services to the innovative banking products and forward-looking approach
financial sector, Intertech continues to report to the to the senior financial executives of Lebanon and Europe.
DenizBank COO, under the umbrella of the DenizBank
Financial Services Group (DFSG). Intertech designs In October 2016, an agreement was executed with HSBC
innovative and efficient solutions for 43 institutions in Turkey for the transformation of its existing banking
10 countries, in particular the finance sector, its field of platform into an inter-Vision integrated banking platform.
expertise, with superior service quality. Work on this project has commenced with completion
scheduled for year-end 2017. In terms of scale and content,
Intertech provides cutting edge IT solutions-recognized by the agreement represents a first for HSBC Group. In 2016,
multiple international awards-for DenizBank to achieve its the Ziraat Bank Bahrain and the Bank of China Turkey
targets of Operational Excellence and Unique Customer projects also continued; the former became operational in
Experience. December 2016, with the latter scheduled for completion in
February 2017.
Having received numerous awards since its inception,
Intertech was recently deemed worthy of the first prize in The next generation banking platform, inter-Vision
the Innovation in Internal Process Improvement category Integrated Banking Platform, was developed in line with
of the Bank Administration Institute awards, widely DFSGs IT strategy. It is a web-based banking application
considered the Oscars of the global financial sector, for built entirely on service oriented architecture to assure
its inter-Dashboard application. The application, which scalable solutions through the quick application and unique
maximizes customer satisfaction with its Strong Cash-Desk combination of the best IT infrastructure in its field. The
Module, had already received an award in the Best Use inter-Vision Integrated Banking Platform links DenizBanks
of IT in Retail Banking category at the Banking Technology corporate marketing strategy with banking processes
Awards 2014; in 2015, its success was confirmed at the in a manner that places customer process management
highest level with the BAI award. DenizBank, which uses the at the center, thus allowing DenizBank to execute its
inter-Vision platform, was named Global Innovator by BAI activities in line with customer needs and expectations.
and EFMA in 2014, 2015, and 2016three years in a row. Information retrieved from consolidated and central data
feeds marketing applications to provide dynamic access
Following the inter-Vision project that it carried out for to decision support models and turns its operational
the leading Azeri bank, Azerbaijan Industrial Bank (ASB), employees into a fully equipped sales force.
Intertech added two more institutions and new country
markets to its list of references: Banka Kombetare Tregtare DenizBank has achieved the following results via the inter-
(BKT), which operates in Albania and Kosovo, and Bank Vision Integrated Banking Platform:
Audi S.A.L., which is active in Lebanon.
>> Customer Relationship Management for a Customer-
After Austria, Bahrain, Germany, TRNC, Saudi Arabia, Oriented Perspective: Customers are offered high-quality
Turkey, Albania, Kosovo and Lebanon, Intertechs latest products and services aligned with their preferences and
integrated finance platform inter-Vision has extended financials.
its services to Azerbaijan, thus bringing up the number of >> Business Process Management for Operational
national markets it serves to 10 and its references to 43 as Productivity: The platform was provided to design,
of 2016. automate, implement and optimize customer-oriented
business processes, achieve low training costs and inject
agility across all levels of the organization.
>> Financial Solutions for Agility: Intertechs fields of
expertise are not limited to basic banking operations, but
also include financial topics that appeal to all institutions.
As such, the relevant companies in DFSG not only
utilize Intertechs solutions in basic banking, but also in
factoring and leasing.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 47

>> Business Intelligence Solutions for Efficient Decision

Support: This platform has strengthened the
management of financial data storage and created an DenizBank uses eco-friendly
integrated decision support structure.
>> Alternative Distribution Channels Management for cooling systems and high-
Banking, Anytime and Anywhere: The platform has
provided uninterrupted 24/7 financial services through efficiency UPS systems.
all distribution channels and has developed IT solutions
and infrastructure in line with business growth.

In addition, Intertech develops innovative and mobile In its DenizBank/Intertech IT infrastructure (storing
applications such as fastPay, Sramatik, My DenizBank, units, servers and network equipment, cooling systems),
MobilDeniz, Direct Sales Tablet Apps and Facebook and DenizBank prefers green hardware which uses energy
Twitter Banking, which users can check their accounts, efficiently. In the evaluation of the bid offers, costs and
assets and credit card receipts with ease or make money sensitivity for the environment are important criteria. When
transfers to any recipient anytime on social media calculating the total cost of ownership, energy costs are
platforms. These applications work on platforms such as also included in the calculation.
Windows 8 RT, Windows 8 Pro and Windows Phone 8 and
are a first of their kind in Turkey and in the international Energy consumption figures of DenizBanks systems are
arena. monitored and the Banks IT infrastructure was virtualized
by 70%. Green cooling systems and high efficiency UPS
systems are utilized. In order to control the Data Centers
Intertech designs a continuous, robust and flexible IT energy consumption, air-conditioning is made at the
development infrastructure for DFSG. The company has also optimum temperature the systems can tolerate. The right
established the Disaster Recovery Center in Ankara, outside space for energy optimization is where there are too
operational areas, with a view to providing continuous many devices. For this purpose, all PCs and monitors are
services in cases of emergencies and disasters. Twice a managed remotely by Microsoft SCCM; when they are not
year, Intertech controls the operations expected to be in use, standby mode is activated and thus energy savings
delivered by the Disaster Recovery Center to ensure the are achieved.
continuation of banking services.
Ekspres IT and Trade
As the expansion of online services across the world brings
about a parallel increase in IT security threats, Intertech has EkspresSecurities joined DenizBank Financial Services
expanded its IT security team. As such, Intertech provides Group at the end of 2002 and focuses on offering equity
the following security measures: investment services for foreign institutional investors.

>> Development of security policies and procedures, In the final quarter of 2013, it was decided that
>> Training of code security and techniques for secure code EkspresInvest and DenizInvest would merge under the
development, trade name of the latter and the merger was finalized by
>> Training of security awareness, years end.
>> Audit for IT security,
>> Application security audits, In July 2015, a Securities Trading Brokerage Authorization
>> Network weakness analyses and penetration tests, Certificate sales agreement was signed and finished by June
>> Installation of public key infrastructures, 2016; the conveyancing procedure is ongoing.
>> Encryption and electronic signature applications,
>> IT security risk analyses. Upon a resolution adopted at the Ordinary General
Assembly in August 2016, the companys primary business
Intertech implements processes based on the global line was changed to IT services and its commercial name
ITIL and COBIT standards to continuously improve and modified to Ekspres Bilgi lem ve Ticaret A.. (Ekspres IT
sustain the quality of IT services provided to DFSG, and and Trade).
to keep its services in line with defined Service Level
Agreement (SLA)s.

With the belief that service quality can be guaranteed only

with a quality life cycle, Intertech continuously improves
and sustains its service quality by including the quality life
cycle into all process within its projects, developed through
the total quality management approach.
48 SECTION I INTRODUCTION

The Private Banking Group closed fiscal year 2016 with

total assets worth TL 25 billion. DenizBanks trajectory
PRIVATE BANKING AND of success received a boost when the Bank joined the
Sberbank family in 2012, and was further enhanced upon
INVESTMENT OPERATIONS the acquisition of Citibank Turkeys Retail Banking Division
in 2013. Operating in harmony and collaboration with the
Deniz Private and Investment other business lines to constitute a single gateway for
customers, the Groups 80 portfolio managers deliver all
Group are structured to DenizBank Financial Services Group product and services
enable customer access to with their many advantages and privileges.

all financial products under a In addition to Hillside Leisure Group, DenizBank has signed
new sponsorship agreements with Big Chefs Group and
single roof. Su Group in order to offer its Private Banking customers
various advantages at restaurants managed by these
entities that serve upmarket clientele.
DENZ PRIVATE AND INVESTMENT GROUP
Deniz Private, DenizBanks most prestigious credit card
DenizBank Private Banking and Investment Group designed for the upper segment, offers privileges to Private
established to merge the forces of DenizInvest, Banking customers in both Turkey and abroad. As one of
DenizPortfolio and Deniz REITis structured to enable the most exclusive private cards, Deniz Private offers 10%
customer access to all financial products under a single discount at overseas hotels and restaurants, 30% cashback
roof. Customers can manage their deposits at DenizBank on domestic breakfasts and weekend cinema and theater
Private and Investment Centers, access mutual investment tickets in Turkey, free-of-charge or discounted airport
instruments, including securities, investment funds, and lounge use, 50% discount at airport car parking and valet
derivatives, and conduct their transactions. parking services in large cities, and a free-of-charge tourist
visa consultancy service once a year.
Although most companies focus on providing specific
products, DenizBank places its main emphasis on customers Since its launch in May 2012, the Deniz Private card has
and their satisfaction. The Banks business model has been become a groundbreaking and attention grabbing product
designed to maximize customer trust as well as profit. thanks to the innovative services it provides.
Pursuant to this approach, customers are divided into three
segments: Private, Affluent+ and Mass. In the realm of events, DenizBank Private Banking aims
to offer its customers exclusive experiences where they
Investment instruments are offered to customers at will feel special. The Group is committed to getting to
every service point in line with the financial supermarket know its customers well and strives to maximize customer
approach, and the Bank has determined the service and satisfaction through exclusive activities. In 2016, the Group
product model best suited for each customer segment. reached over 2,000 Private Banking customers via special
DenizBank Private and Investment Centers serve Affluent+ screenings, gourmet and gusto tasting events, concerts,
and Private segment customers, while Mass segment auctions and festival invitations.
customers are served via all DenizBank branches in addition
to alternative distribution channels, such as Internet banking In 2017, the Private Banking Group aims to expand its asset
and phone banking. size and service offering, while providing personalized
solutions with a dedicated workforce to meet customer
needs and expectations. The Group also plans to continue
DenizBank Private Banking
standing by its customers with special activities, and other
Delivering personalized and multi-faceted services and non-banking services.
solutions, the Private Banking Group boasts the widest
private banking network in Turkey. It operates a total of
DenizInvest
21 Private Banking service points: eight in Istanbul and 13
locations elsewhere across the country, in Ankara, zmir, In accordance with the Capital Markets Boards communiqu
Antalya, Bursa, Adana, Kayseri, Samsun, Denizli, Bodrum, on investment firms, 49 DenizInvest branches have been
Diyarbakr, Eskiehir and orlu. The Bank established the established. Nineteen of these branches are Deniz Private
first private banking service points in Kayseri, Samsun, status with an expanding capital market product range that
Denizli, Bodrum, Diyarbakr, Eskiehir and orlu, staying can deliver personalized services in all products.
one step ahead of the competition.
The remaining 30 branches are the status of VIP
Investment Branch, delivering services in organized
markets and investment funds.

Thanks to this restructuring, DenizInvest has transitioned

from a product focus to a customer focus approach,
becoming an investment bank that provides a full range of
capital markets products.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 49

Firsts and Achievements services in response to changing market conditions.

>> In 2007, DenizInvest undersigned a groundbreaking DenizPortfolio manages 21 DenizBank investment funds
achievement by offering institutional investors direct and 11 pension investment funds, providing investors both
electronic access to the Istanbul Stock Exchange and the high performance and consistent returns. Boasting a well-
company continued to expand in this area. experienced team of professionals, DenizPortfolio plays a
>> In 2006, the Group became the first institution in Turkey key role in capital markets with world-class services that
to offer brokerage services for international derivatives include domestic and foreign investment funds, pension
exchanges in accordance with its authorization funds and portfolio management.
certification received from the Capital Markets Board.
>> As part of the Investor Protection and Rewards Program, In 2014, DenizPortfolio focused on the sales and
designed and implemented for the first time in Turkey, management of funds investing in private sector bills and
the incentive mechanisms Repurchase Guarantee and bonds, and came to enjoy a prominent standing in the
Bonus Shares were offered to the public. In 2012, sector with its successful performance, bringing its market
the Daily Purchasing Order Guarantee and Financial share in investment funds up to 4%. The total volume of
Performance Guarantee mechanisms followed, and were investment funds and pension funds under management
designed to support IPO markets. has approached TL 3 billion as of year-end 2016. The
>> In IPOs carried out in Turkey since 2004, DenizInvest has company plans to offer new products to the public, in
captured 16.7% of the total domestic IPO demand and due consideration of the investment preferences of its
has become the leader of the sector with a market share customers, while capturing more market share by focusing
of 17.4% according to the number of domestic investors. on individual/corporate portfolio management in 2017.
>> The company underwrote as consortium leader 15
key IPOs above USD 1 billion, including real estate
Deniz Real Estate Investment Trust
investment trusts, football companies, among others.
>> DenizInvest also played a leading role in the expanding The company joined the DenizBank Financial Services
market of private sector borrowing instruments, and Group under the trade name of DenizYatrm Ortakl A..
underwrote bond issues of many companies from the (DenizInvestment Trust) as a subsidiary of DenizInvest
financial services sector and the real economyincluding Menkul Kymetler A.. (DenizInvest Securities) at the end
Fenerbahe Futbol A.., Bimeks, Zorlu Faktoring, Umur of 2001. At its Ordinary General Assembly on December
Basm, Ereli Tekstil, Baer Faktoring, Final Varlk, 20, 2013, the company transformed itself into a real estate
Derimod and Metal Yap Konutfrom 2012 until 2016. investment trust and changed its trade name to Deniz
>> DenizInvest provides advisory and intermediation Gayrimenkul Yatrm Ortakl A.. (Deniz REIT). After the
services for all capital markets instruments of Turkeys transition, in order to create its real estate investment trust
four major sports clubs. portfolio, Deniz REIT acquired the DFSG company Pupa in
>> DenizInvest commenced margin trading operations after its entirety on December 31, 2013, and on June 11, 2014,
receiving the relevant license from the Capital Markets created its real estate portfolio by merging with Pupa.
Board in 2012, with total margin trading volume of over
USD 200 billion as of year-end 2016. DenizREITs core business consists of investing in real
>> As part of the collaboration initiated with zmir estate, real estate-based capital market instruments, real
Commercial Exchange in 2013, DenizInvest has become estate projects, real estate-based rights and capital markets
the first and only institution to intermediate in the instruments, so as to create and enhance a real estate
electronic spot trading of agricultural products. portfolio.
>> In parallel with the increasing use of technology and
digital channels in the sector, DenizBank continued to Deniz REITs real estate portfolio consists of 29,865 m2 of
invest in these areas; the Bank now boasts 11 electronic leasable area and 158 independent sections.
delivery channels with 60% of all orders communicated
digitally. In the REIT sector, there are 31 companies listed on the
>> The process of integration with Sberbank CIB Research bourse, six of which -including DenizREIT- were established
Department, which started in 2014, was completed by banks. As of year-end 2016, DenizREITs real estate
in 2015. As a result, all the reports of the Research portfolio stands at TL 165 million and its total assets at TL
Department started being issued under the brands of 198 million.
both Sberbank CIB and DenizInvest.
Powered by the corporate and financial resources of DFSG,
Deniz REIT continues its operations along its mission:
DenizPortfolio Management
Carrying out activities to increase the value of the
In May 2003, EgePortfoy Yonetimi A.. (Ege Portfolio property featured in its real estate portfolio, bring about
Management) was acquired from the Savings Deposit regular lease income, consistent growth and profitability,
Insurance Fund of Turkey and renamed Deniz Portfy and create original real estate and construction projects,
Ynetimi A.. (Deniz Portfolio Management) in June 2003. especially in the Istanbul region, by making a difference
DenizPortfolio is committed to delivering top quality with business partners meticulously chosen to meet the
requirements of each project and by upholding ethical
principles.
50 SECTION I INTRODUCTION

LEASING, FACTORING AND ASSET

MANAGEMENT* SERVICES

DENIZLEASING DenizLeasing initiated operational leasing activities, the first

DENIZFACTORING in Turkey among leasing companies, upon the coming into
DESTEK ASSET* effect in 2012 of Law No. 6361 on Leasing, Factoring and
Financing Companies, and has since set up its new brand
DenizLeasing
DenizFleet which stands out as a pioneering enterprise in
DenizLeasing provides financial and operational leasing the sector.
services to Corporate, Commercial, Agricultural and SME
customers in the Turkish economy, which is in need of Capitalizing on the synergy created with DFSGs
modern financing methods due to its rapid development. 737 branch network and 15 thousand-strong workforce,
Established in 1997 with a customer-oriented approach and DenizFleet provides boutique services to every customer
a strategy to launch new products in response to customer and strives to deliver unconditional and sustainable
needs, DenizLeasing is committed to becoming the leading customer satisfaction.
provider in the field. The company maintains its pioneering
position in financial leasing by providing the right financing Near the Top in Leasing Receivables
method for the right investment, establishing customer DenizLeasing continued to provide services for investment
relationships based on trust, and meticulously evaluating financing in line with its strategy of productivity and
the financial requirements of customer projects. profitability, and reinforced its place among sector leaders
in terms of assets and shareholders equity. As of 2016
With its active sales policy; personalized financial solutions year-end, DenizLeasing maintained its place near the top of
developed for the renewable energy, healthcare, real estate, the sector with TL 2,744 million in leasing receivables.
business and construction machinery sectors; and the
fleet leasing services launched under the DenizFleet brand, In 2016, DenizLeasing plans to maintain its position among
DenizLeasing has deepened its relationships with existing the pioneering companies of the sector, with a consistent
customers while acquiring new ones. As a result, in addition and prudent growth strategy. The company will enhance
to its mission of adding value to the synergy of DenizBank its differentiation by offering the advantages of operational
Financial Services Group, the company also maintains its leasing to customers in need of leased car fleets, further
position as an innovative company. improve performance in the SME segment by providing
special financing facilities, boost market share by offering a
Keeping the organizations internal dynamics fresh with specialized service approach to commercial and corporate
a specialized staff, continuous improvement and ongoing enterprises on the basis of each specific customer and
restructuring, DenizLeasing strives to offer added value project. As a result, DenizLeasing will continue advancing
to its solution partners and the sector as a whole. toward its goal of becoming a company that leads and
DenizLeasing manages its sales operations with 18 branches shapes the sector with innovative practices.
across the country. In addition to this management
approach that covers the entire country, DenizLeasing
diversifies customer experience with regional differentiation.
To its solution partners from different sectors, DenizLeasing
provides various long- and medium-term payment schemes
for financing of all manner of investment goods in foreign
currency or TL, according to the respective sectors cash
flow qualities. The company also makes active use of
DenizBanks distribution network.

* On 29 December 2016, all of the shares were sold to legal and real persons other
than DFSG.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 51

DenizFactoring DestekAsset*
Set up in 1998 under the umbrella of DenizBank Financial Deniz Varlk Ynetim A.. was established in May 2013 and
Services Group (DFSG) to offer customers guarantee, started operations in December 2013, following approval
collection and financing services, DenizFactoring is a by the Banking Regulation and Supervision Agency. The
pioneer in the field with products that include Express company was renamed DestekVarlk Ynetim A.. (Destek
Factoring, Collection Management System, Supplier Finance Asset Management) which was entered into the Trade
Application, Public Sector Factoring and Export Factoring. Registry on April 9, 2014. The companys core functions
are as follows:
A full member of the Turkish Union of Financial
Corporations (Union of Financial Leasing, Factoring and >> Acquiring, purchasing, collecting, liquidating or
Finance Companies) and Factors Chain International restructuring the receivables and other assets of
(FCI), DenizFactoring has 19 branches across Turkey. banks, Security Deposit Insurance Fund, other financial
DenizFactoring delivers its products and services to institutions and credit insurance companies,
customers via a highly qualified, 93-strong team at the >> Operating, leasing or investing in real estate and other
Head Office and via the DFSG network, in a rapid and properties, rights and assets with a view to collecting
accessible fashion. DenizBank branches employees support receivables,
DenizFactoring within the legislative framework established. >> Providing additional funding to debtors with a view to
Becoming one of the first three companies by guaranteeing collecting the receivables,
sustainable and profitable growth, the company strives to >> Providing consultancy or brokerage services as
expand DenizBanks product range with factoring products regards the restructuring or sale to third parties of the
and to contribute significantly to DenizBank Financial receivables and other assets of banks, Security Deposit
Services Groups success. Insurance Fund, other financial institutions and credit
insurance companies.
Some 82% of DenizFactorings transaction volume originates
from domestic factoring transactions while 18% is derived On July 15, 2016, a Share Purchase Agreement was signed
from international. between the parties as regards the sales of all DestekVarlk
shares to the Lider Faktoring and Merkez Faktoring
At the FCI 2016 awards, in the Years Export Factoring companies and their shareholders. Following the approvals
category, DenizFactoring placed fourth among 400 of the Banking Regulation and Supervision Authority, the
companies that are FCI members from across the world sale price was paid in cash and the share transfer was
with a service score of 97.78%. completed on December 29, 2016.

* On 29 December 2016, all of the shares were sold to legal and real persons other
than DFSG.
52 SECTION I INTRODUCTION

CULTURAL SERVICES
DenizKltr represents
the Groups corporate and
social mission through
educational, cultural, arts
and sporting events.

DenizKltr A Centuries-Old Turkish Palace in Vienna

Established in 2004 to organize and support scientific Published for Vienna AG and written by art historian lkay
research, arts, literature and other cultural activities, Canan Okkal, the publication has been issued on the
DenizKltr represents the Groups corporate and social centenary of the Turkish Embassy Palace in Vienna.
mission through educational, cultural, arts and sporting
events. The book is a palace biography, focusing on the buildings
construction history, architectural significance, and the
DenizKltrs activities include the following: stories of the antique and historical objects housed within.

>> Publishing books on science, arts and literature, Noir Week Festival
>> Producing audio and visual cultural materials, During the festival organized by DenizBank and Pera Palace
>> Staging arts events, Hotel Jumeirah, top Turkish and international crime writers
>> Organizing collection/exhibition projects geared towards came together in Istanbul for four days.
the plastic arts and handcrafts,
>> Organizing campaigns in line with the Banks social The festival included talks by prominent authors, book
mission, as well as other cultural activities to emerge signing days, and theater shows.
from new ideas.

Arts Productions and Publications in 2016

Two Coasts and One Sea - 3

Published by DenizKltr, the volume Two Coasts and One
Sea 3 focuses on the historical relationship between
Turkey and Russia, touching upon bloody wars as well
as strong friendships, and the stories of Nazm Hikmet
in Moscow, Maxim Gorky in Istanbul and Prinkipo Island,
White Russians at Rejans Restaurant, Shostakovichs
memoirs in Turkey, and countless other lives.

The book has been penned by Mehmet Perinek, Perihan

Ycel and Olga Hergl.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 53

BOARD OF DIRECTORS

Name/ Title Executive/ Education Professional DenizBank Titles Other Non-DFSG % of

Surname Non- Experience Held in the Last Titles Shares
executive/ (years) Five Years Currently Held Held
Independent
Member
Herman Gref Chairman of the Board of Non-executive Ph.D. 25 Chairman of the Board of Member of Sberbank Board of -
Directors Directors Directors, CEO, Chairman of the
Executive Board of Sberbank
Deniz lke Member of the Board Independent Ph.D. 30 Member of the Board of Chairman of the Advisory -
Arboan of Directors, Corporate Member Directors, Vice Chairman Committee of Istanbul Bilgi
Governance and Nomination of the Board of Directors, University, Faculty member at
Committee Member Corporate Governance and Istanbul University, Faculty of
Nomination Committee Political Sciences, Senior Fellow at
Member University of Oxford Centre for the
Resolution of Intractable Conflict
(CRIC)
Hakan Ate Member of the Board of Executive Bachelors 35 Member of the Board of Member of TED Universitys 0.000002
Directors, President and Degree Directors, President and Board of Trustees, Member of
CEO, Credit Committee CEO, Credit Committee TED Ankara College Association
Member Member Board of Directors, Member of THK
Universitys Board of Trustees,
Member of MetLifes Board of
Directors, Member of TED stanbul
College Foundations Board of
Trustees, Vice Chairman of the
Board of Turkish Tourism Investors
Association
Nihat Sevin Vice Chairman of the Independent Bachelors 30 Vice Chairman of the Board - -
Board of Directors, Audit Member Degree of Directors, Member of
Committee Member, the Board of Directors,
Remuneration Committee Audit Committee Member,
Member Remuneration Committee
Member
Wouter Van Member of the Board of Non-executive Bachelors 27 Member of the Board of - -
Roste Directors, Audit Committee Degree Directors, Audit Committee
Member Member
Derya Kumru Member of the Board of Executive Masters 24 Member of the Board of - -
Directors, Credit Committee Degree Directors, Credit Committee
Member Member
Alexander Member of the Board of Non-executive Ph.D. 17 Member of the Board of Chief Risk Officer (CRO) of -
Vedyakhin Directors, Credit Committee Directors, Credit Committee Sberbank of Russia, Board Member
Associate Member Member at Sberbank PJSC (Ukraine),
Supervisory Board Member of BPS
Sberbank (Belarus)
Vadim Kulik(1) Member of the Board of Non-executive Masters 18 Member of the Board of Sberbank Deputy Chairman of the -
Directors Degree Directors Executive Board, Chairman of the
Board of Directors at United Credit
Bureau
Timur Member of the Board of Executive Ph.D. 17 Member of the Board Sberbank Managing Director -
Kozintsev Directors, Credit Committee of Directors, Corporate
Member Governance and Nomination
Committee Member, Credit
Committee Associate
Member and Credit
Committee Member
Svetlana Member of the Board of Non-executive Ph.D. 17 Member of the Board of Sberbank Deputy Chairman of the -
Sagaydak(2) Directors, Credit Committee Directors, Credit Committee Executive Board and Head of the
Associate Member, Associate Member, International Operations, Deputy
Corporate Governance and Corporate Governance and Chairman of the Board at Sberbank
Nomination Committee Nomination Committee PJSC (Ukraine), Deputy Chairman
Member, Remuneration Member, Remuneration of the Supervisory Board at BPS
Committee Member Committee Member Sberbank (Belarus)
Igor Member of the Board of Non-executive Masters 24 Member of the Board of Director of Sberbank Legal -
Kondrashov Directors Degree Directors Department
Alexander Member of the Board of Non-executive Masters 24 Member of the Board of Sberbank Deputy Chairman of the -
Morozov Directors Degree DirectorsExecutive Board, Group CFO, Board
Member at Sberbank PJSC, Board
Member at Sberbank BPS
Pavel Member of the Board of Non-executive Bachelors 21 Member of the Board of Sberbank Financial Planning and -
Barchugov Directors, Audit Committee Degree Directors, Audit Committee Control Director, Supervisory Board
Member Member Member at BPS Sberbank (Belarus)
Resigned from his duties at Sberbank of Russia as from 15.02.2017.
(1)

Resigned from her duties at Sberbank of Russia and its subsidiasires as from 01.03.2017.
(2)
54 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

HERMAN GREF HAKAN ATE

CHAIRMAN OF THE BOARD OF DIRECTORS MEMBER OF THE BOARD OF DIRECTORS
Born in 1964, Mr. Gref received an undergraduate degree PRESIDENT AND CEO
in Jurisprudence from Omsk State University, Faculty of Born in 1959, Mr. Ate graduated from Middle
Law. Subsequently, he obtained a postgraduate degree from East Technical University, Faculty of Economics and
Leningrad State University, Faculty of Law. He went on to Administrative Sciences, Department of Business
complete his Ph.D. studies in Economics at the National Administration after completing his studies at TED Ankara
Academy of Economics, an institution of higher learning College. He started his banking career in 1981 as an
established by the government of the Russian Federation. Internal Auditor at bank. After serving at various Interbank
Starting his professional career in 1992 as First Rank units from 1986 to 1993, he worked as Branch Manager at
Legal Advisor at the Administration of Petrodvorets, St. the Elmada, ili, Bakrky, zmir and Central Branches. He
Petersburg, Mr. Gref served on the City Property Committee established Interbanks Cash Management System and was
of St. Petersburg Mayors Office from 1994 to 1997 as promoted in 1993 as Executive Vice President in charge
First Deputy Chairman and Vice Chairman of the Committee. of Central Operations. Mr. Ate worked as Executive Vice
Between 1997 and 1998, he held the posts of Chairman President in charge of Financial Affairs and Operations at
and Vice Chairman on the City Property Committee of St. Bank Ekspres between the years of 1994 and 1996 and
Petersburg Mayors Office. After holding the position of led the banks restructuring project with Bank of America.
First Deputy Minister of the Ministry of State Property He established Garanti Bank Moscow in Russia and worked
of Russia from 1998 until 2000, Mr. Gref served as the as CEO for one year starting from June 1996. He has
Minister for Economic Development and Trade of Russia continued his duties as President & CEO at DenizBank,
from 2000 to 2007. Mr. Gref has been a Member of the where he started in June 1997 as the Founder President.
Supervisory Board and Chairman of the Executive Board During his management tenure, DenizBank shares were
& CEO at Sberbank since November 2007; Chairman of offered to public in October 2004 and were 5.5 times
Sberbank JSC (Ukraine) Board of Directors since March oversubscribed. His management also ran the process of
2008; and Chairman of DenizBank A.. Board of Directors selling Zorlu Holding owned DenizBank shares to Dexia
since September 2012. S.A. in May 2006 for USD 3.25 billion, 4.7 times its book
value - a record in Turkey - as well as the sales process
of 99.85% of DenizBank shares owned by Dexia Group to
Sberbank six years later in June 2012 for USD 3.6 billion,
1.33 times its book value. Also serving as the Chairman
of the Board of Directors at DenizBank subsidiaries Deniz
Yatrm Securities, Intertech A., DenizBank Moscow and
DenizBank AG, Hakan Ate was granted the Those Who
Add Value to Turkey award presented by Baheehir
University in 2015. Hakan Ate is married with two
children. He speaks fluent English.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 55

DENZ LKE ARIBOAN NHAT SEVN

MEMBER OF THE BOARD OF DIRECTORS VICE CHAIRMAN OF THE BOARD OF DIRECTORS
Born in 1965, Ms. Arboan graduated from TED Ankara Born in 1952, Mr. Sevin graduated from Istanbul
College Foundation High School. She received an University, Faculty of Literature, English Language and
undergraduate degree in International Relations from Ankara Literature. Starting his professional career at Interbank in
University, Faculty of Political Sciences. Subsequently, 1986, he held several different positions in the Branches,
she received an M.A. and Ph.D. from Istanbul University, Central Operations and Capital Market Departments until
Institute of Social Sciences in International Relations. In 1994. Mr. Sevin served as Department Head in the Branch
1995, Ms. Arboan attended the International Security Operations, Internal Control and Legislation Departments
School at the University of St. Andrews in Scotland. at Bank Ekspress headquarters until 1996. He worked as
Her academic career started at Istanbul University, and Deputy General Manager at GarantiBank Moscow between
continued at Istanbul Bilgi University and Baheehir 1996 and 1997. He joined DenizBank in 1997, served as
University. Between 2007 and 2010, she served as the Executive Vice President of Operations until 2002 and
Rector of Baheehir University. From 2010 to 2014, as Executive Vice President of Foreign Subsidiaries from
Professor Deniz lke Arboan served as a member of 2002 to 2007. Mr. Sevin has served as an Independent
the Board of Trustees at Istanbul Bilgi University, prior Board Member at DenizBank A.. since December 2012. As
to working as a faculty member at Istanbul University, of December 2015, he was appointed as an Independent
Faculty of Political Sciences from March 2014, as Chairman Board Member and Vice Chairman of the Board of Directors
of the Advisory Committee at Istanbul Bilgi University serving until March 2018.
from February 2015 and as senior fellow at the University
of Oxford CRIC (Centre for the Resolution of Intractable
Conflict). Ms. Arboan has served as an Independent
Board Member at DenizBank A.. since December 2012. As
of December 2015, she was appointed as an Independent
Board Member serving until March 2018.
56 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

WOUTER VAN ROSTE DERYA KUMRU

MEMBER OF THE BOARD OF DIRECTORS MEMBER OF THE BOARD OF DIRECTORS
Born in 1965, Mr. Van Roste graduated from Limburg Born in 1964, Mr. Kumru graduated from Ankara University,
University (Belgium), Marketing Department. Starting his Faculty of Political Sciences and obtained an M.A. degree
professional career at Bacob Bank Belgium in 1989 in the from Istanbul University, Institute of Social Sciences. From
Corporate Sales Department, he held several positions 1987 to 1999, he held several positions at Esbank T.A..
at Paribas Bank Belgium and Artesia BC as Head of the and was appointed Executive Vice President in 1998.
Corporate Sales, Structured Products, and FX Derivatives Mr. Kumru joined DenizBank Financial Services Group in
Departments before joining Dexia in 2002. Mr. Van Roste 1999. After serving as Executive Vice President in charge
worked at Dexia as Deputy Head of Financial Engineering of DenizBank A.. Corporate Marketing Group, General
and Derivative Products in the Treasury and Financial Manager of DenizLeasing and DenizFactoring, he was
Markets Group and served in the Public and Project Finance appointed General Manager of DenizBank Moscow in 2004.
Group, Structured Finance and Export Finance Department Between 2009 and 2011, he served as Executive Vice
from 2003 to 2005. He held the position of Executive President in charge of Corporate, Commercial Banking,
Director at Dexia Holding between 2005 and 2007, Public Project Finance and the Foreign Subsidiaries Group
Executive Vice President in charge of Public and Project at DenizBank A.. From 2011 to 2012, he assumed the
Finance Group at DenizBank A.. in 2007, and Executive position of Executive Vice President in charge of the
Vice President in charge of Public Project Finance and the Wholesale Banking Group at DenizBank A.. Derya Kumru
Corporate Banking Group at DenizBank A.. from 2007 to has served as a Member of the Board of Directors at
2009. Wouter Van Roste has served as a Member of the DenizBank A.. since December 2012.
Board of Directors at DenizBank A.. since June 2009.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 57

ALEXANDER VEDYAKHIN VADIM KULIK(1)

MEMBER OF THE BOARD OF DIRECTORS MEMBER OF THE BOARD OF DIRECTORS
Born in 1977, Mr. Vedyakhin graduated from Volgograd Born in 1972, Mr. Kulik obtained undergraduate and
State Technical University, Department of Global Economy. Masters degrees from Mendeleyev Institute of Chemical
He obtained a Ph.D. in Economics from Volgograd State Technology in the field of Chemical Technology. From 1998
University and an MBA in Banking from the National to 2004, he worked at AKB Probusinessbank as Head of
Academy of Economics established by the government of the Risk Analysis Department, Vice-President of Credit Risk
the Russian Federation. From 2011 to 2012, he completed and Banking Technologies and Head of the Division for
a program arranged for Sberbank executives at London Commercial Risk Analysis. Serving as Senior Vice President
Business School. Starting his banking career as a Specialist (Head of the Risk Department) at VTB CJSC until 2008, Mr.
at Sberbank in 1999, Mr. Vedyakhin was appointed Head Kulik joined Sberbank as Head of the Retail Risk Department
of the Retail Banking Unit in 2001 and, subsequently, Head in 2008. Holding the post of Head of the Risk Department
of the Operational Department at Sberbank Volgograd. at Sberbank between 2009 and 2013, Mr. Kulik has served
Continuing his career at Sberbank as Head of the Credit as Deputy Chairman of the Executive Board at Sberbank
Department between 2004 and 2006, Mr. Vedyakhin also since January 2013. In addition, Mr. Kulik has held the
served as Deputy Chairman of the Management Board position of Chairman of the Board of Directors at United
at Sberbank Volgograd. From 2008 to 2012, he held the Credit Bureau since March 2010. Vadim Kulik has served as
position of First Deputy Chairman of the Board of Directors a Board Member at DenizBank A.. since September 2012.
at Sberbank PJSC (Ukraine). Mr. Vedyakhin was appointed
as a Member of the Board of Directors and Credit Risk
Officer at DenizBank A.. in November 2012. In addition,
Mr. Vedyakhin has served as Board Member at Sberbank
PJSC (Ukraine) and Supervisory Board Member at BPS
Sberbank (Belarus) since April 2015. In August 2015, Mr.
Vedyakhin was appointed as Head of Risk Management of
Sberbank Group with the title of Senior Vice President and
became Non-Executive Board Member at DenizBank A..
In December 2016, he was appointed as Chief Risk Officer
(CRO) of Sberbank of Russia. Mr. Vedyakhin has continued
to serve as Non-Executive Board Member at DenizBank A..
since August 2015.

Resigned from his duties at Sberbank of Russia as from 15.02.2017.

(1)
58 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

TIMUR KOZINTSEV SVETLANA SAGAYDAK(2)

MEMBER OF THE BOARD OF DIRECTORS MEMBER OF THE BOARD OF DIRECTORS
Born in 1972, Mr. Kozintsev received B.A., M.A. and Ph.D. Born in 1968, Ms. Sagaydak received her Bachelors
degrees in Economics from Moscow State University. He degrees in Political Economy and in Law from M.V.
worked at Bayerische Hypo Vereinsbank as Deputy Head Lomonosov Moscow State University. She completed
Representative from 1996 to 2000, at Unicredit Bank as her Masters studies in Political Economy at the Russian
Head of the Corporate Customers Department between Presidential Academy of National Economy and Public
2000 and 2007, and at Unicredit Security as Debt Capital Administration and Kingston University; she received
Markets Director from 2007 to 2008. Subsequently, he her Ph.D. in Economics from Moscow State Construction
served as Investment Banking Director at IFD Kapital University. Ms. Sagaydak worked at the Agency of Credit
between 2008 and 2012. Mr. Kozintsev has worked at Organizations Restructuring from 1999 to 2004 and at
Sberbank as Senior Managing Director since April 2013. the Deposit Insurance Agency from 2004 to 2006 as
He was appointed as a Member of the Board of Directors the Deputy Head of the Asset Management Department.
at DenizBank A.. in July 2013. Mr. Kozintsev has held Subsequently, she served as the Deputy Chairman of the
the position of Board Member in charge of Credit Risk at Board at the Russian Bank of Development from 2006 to
DenizBank A.. since August 2015 and Supervisory Board 2008. She joined Sberbank in 2008 and has served as
Member at DenizBank AG since November 2016. Deputy Chairman of the Executive Board. In addition, Ms.
Sagaydak has served as Deputy Chairman of the Board
at Sberbank PJSC (Ukraine) and Deputy Chairman of the
Supervisory Board at BPS Sberbank (Belarus) since April
2016. Ms. Sagaydak has been a member of DenizBank A..
Board of Directors since April 2016 and Supervisory Board
Member at DenizBank AG since November 2016.

(2)
Resigned from her duties at Sberbank of Russia and its subsidiasires as
from 01.03.2017.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 59

IGOR KONDRASHOV ALEXANDER MOROZOV

MEMBER OF THE BOARD OF DIRECTORS MEMBER OF THE BOARD OF DIRECTORS
Born in 1973, Mr. Kondrashov graduated from Moscow Born in 1969, Mr. Morozov graduated from Lomonosov
State University, Faculty of Law. Starting his professional Moscow State University, Department of Economics.
career as an Attorney with the law firm YUST in 1992, he Subsequently, he completed an M.A. in Advanced
worked there for nine years. Having held the position of Management Program Executive Education at Harvard
Director of the Legal Department at Sberbank of Russia Business School. Mr. Morozov commenced his professional
since 2011, Mr. Kondrashov has served as Executive Vice career as Deputy Head of the Currency Operations
President at Sberbank since 2014. Igor Kondrashov has Department at Commercial Bank Rodina in 1992. Between
been a Member of the Board of Directors at DenizBank A.. 1994 and 2007, he served as Head of Treasury and General
since December 2012. Manager at International Moscow Bank (UniCredit Bank
since 2007). From 2007 to 2008, he held the posts of
Executive Vice President and CFO at Renaissance Capital
Bank. Mr. Morozov joined Sberbank in 2008 as Head of
Financial Affairs and became Senior Vice President in charge
of Financial Affairs in 2009. Since 2013, Mr. Morozov
has served as Deputy Chairman of the Executive Board at
Sberbank; in addition, he is a Board Member at Sberbank
PJSC and Sberbank BPS, which are Sberbank subsidiaries.
Alexander Morozov has been a Member of the Board of
Directors at DenizBank A.. since December 2012.
60 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

PAVEL BARCHUGOV
MEMBER OF THE BOARD OF DIRECTORS
Born in 1973, Mr. Barchugov studied Finance at Plekhanov
University of Economics in the Russian Federation. From
1995 to 1997, he worked as the Finance Unit Head
at Austria Aktiengesellschaft Bank, Moscow Branch;
between 1997 and 2008, he was the Executive Director
at CJSC UniCredit Bank. From 2008 until 2010, Mr.
Barchugov worked at JSC Swedbank as Finance Director.
Subsequently, he served as Executive Vice President at
Group Renaissance Insurance LLC between 2010 and
2013. Mr. Barchugov joined Sberbank in 2013 where he is
currently the International Business Financial Planning and
Control Director. In addition, Mr. Barchugov has served as
Supervisory Board Member at BPS Sberbank (Belarus) since
March 2014. Mr. Barchugov has been a member of the
Board of Directors of DenizBank A. since May 2016.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 61

RESIDENT BOARD MEMBERS

Left to right: Timur Kozintsev, Derya Kumru, Hakan Ate, Wouter Van Roste.
62 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

TANJU KAYA
Administrative Services and Investment Group, Executive Vice President
Mr. Kaya was born in 1964 and graduated from Gazi University,
EXECUTIVE BOARD Faculty of Economics and Administrative Sciences, Department of
Public Administration. He began his banking career in 1986 and joined
DenizBank in 1997.

DLEK DUMAN
HAKAN ATE Information Technology and Support Operations Group,
President, CEO and Member of the Board of Directors Executive Vice President
Mr. Ate was born in Ankara in 1959 and graduated from Middle East Ms. Duman was born in 1967 and graduated from Boazii University,
Technical University, Faculty of Economics and Administrative Sciences, Department of Computer Engineering. She began her professional
Department of Business Administration. He began his banking career in career in 1989 and joined DenizBank Financial Services Group in 1997.
1981 as an Internal Auditor at bank. He continues to serve as Board Since 2008, Ms. Duman has served as Executive Vice President of the
Member, President and CEO at DenizBank, since joining the Bank in June Information Technology and Support Operations Group.
1997 as the Founder and CEO.
MURAT ELK
WOUTER VAN ROSTE Digital Generation Banking Group, Executive Vice President
Member of the Board of Directors Mr. elik was born in 1968 and graduated from Boazii University,
Mr. Van Roste was born in 1965 and graduated from Limburg University Department of Computer Engineering. He began his professional career in
(Belgium), Marketing Department; he is currently pursuing his MBA. He 1995 and joined DenizBank Financial Services Group in 2004.
began his banking career in 1989 and joined DenizBank in 2007.
SELM EFE TEOMAN
TIMUR KOZINTSEV Corporate and Commercial Credits Group, Executive Vice President
Member of the Board of Directors Mr. Teoman was born in 1970 and graduated from Hacettepe University,
Mr. Kozintsev was born in 1972 and obtained B.A., M.A. and Ph.D. degrees Faculty of Economic and Administrative Sciences, Department of
in Economics from Moscow State University. He began his banking career Economics. He began his banking career in 1994 and joined DenizBank in
in 1996 and joined DenizBank in 2013. 2003.

DERYA KUMRU AYENUR HIKIRAN

Member of the Board of Directors Payment Systems and Non-Branch Channel Group,
Mr. Kumru was born in 1964 and graduated from Ankara University, Executive Vice President
with a degree in Political Science; he also holds an M.A. in Public Ms. Hkran was born in 1969 and graduated from Ege University,
Administration from Istanbul University. He began his banking career in Faculty of Letters, Department of English Language and Literature. She
1987 and joined DenizBank in 1999. began her banking career in 1996 and joined DenizBank in 2013.

BORA BCGZ YAVUZ ELKN

Treasury and Financial Institutions Group, Executive Vice President Human Resources and Deniz Academy, Executive Vice President
Mr. Bcgz was born in 1967 and graduated from Boazii University, Mr. Elkin was born in 1971 and graduated from Marmara University,
Faculty of Economics and Administrative Sciences, Department of Department of Business Administration in English. He started his banking
Business Administration. He began his banking career in 1989 and joined career in 1993 and joined DenizBank in 2004.
DenizBank in 2002.
BURAK KOAK
MURAT KULAKSIZ Agricultural Banking Group, Executive Vice President
SME Banking Group, Executive Vice President Mr. Koak was born in 1970 and graduated from Dokuz Eyll University,
Mr. Kulaksz was born in 1972 and graduated from ukurova University, Department of Econometrics. He started his professional career in 1996
Faculty of Economics and Administrative Sciences, Department of and joined DenizBank in 2006.
Business Administration. He began his banking career in 1996 and joined
DenizBank in 2003. OUZHAN ZARK
Retail Banking Sales Group, Executive Vice President
SUAV DEMRCOLU Mr. zark was born in 1976 and graduated from Istanbul Technical
Financial Affairs Group, Executive Vice President University, Department of Mathematical Engineering. He began his banking
Mr. Demirciolu was born in 1970 and graduated from Middle East career in 1997 and joined DenizBank in 2004.
Technical University, Faculty of Economics and Administrative Sciences,
Department of Business Administration. He began his banking career in CEML CEM NEN
1990 and joined DenizBank in 2005. Private Banking and Investment Sales-Performance Management Group,
Executive Vice President
MUSTAFA ZEL Mr. nen was born in 1971 and graduated from Yldz Technical
Branch and Central Operations Group, Executive Vice President University, Department of Mechanical Engineering. He holds an MBA
Mr. zel was born in 1966 and graduated from Hacettepe University, from New Yorks Pace University and a Ph.D. in Banking from Marmara
Faculty of Economics and Administrative Sciences, Department of Public University. He began his professional career in 1997 at DenizBank.
Administration. He began his banking career in 1988 and joined DenizBank
in 1997. NDER ZCAN
Management Reporting and Budget Planning Group,
BRAHM EN Executive Vice President
Credits Follow-up and Risk Monitoring Group, Executive Vice President Mr. zcan was born in 1971 and graduated from Middle East Technical
Mr. en was born in 1967 and graduated from Middle East Technical University, Department of Business Administration. He began his banking
University, Department of Industrial Engineering. He began his banking career in 1998 and joined DenizBank in 2004.
career in 1993 and joined DenizBank Financial Services Group in 2007.
RUSLAN ABL
MEHMET AYDODU Group Reporting and ALM Group, Executive Vice President
Commercial Banking and Public Finance Group, Executive Vice President Mr. Abil was born in 1975 and graduated from Middle East Technical
Mr. Aydodu was born in 1968 and graduated from Dokuz Eyll University, Department of International Relations. He began his
University, Faculty of Economics and Administrative Sciences. He began professional career in 1997 and joined DenizBank in 2013.
his banking career in 1996 and joined DenizBank Financial Services Group
in 2002.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 63

EXECUTIVE BOARD MEMBERS

Standing (left to right): Murat Kulaksz, Hseyin Melih Akosman, Seated (left to right): Mehmet Aydodu, Mehmet itil, Mustafa
Hayri Cansever, Sinan Ylmaz, Ouzhan zark, Selim Efe Teoman, Saruhan zel, Ali Murat Dizdar,Bora Bcgz, Dilek Duman, Derya
nder zcan, Kahraman Gnaydn, Ruslan Abil, Hakan Turan Kumru, Wouter Van Roste, Hakan Ate, Timur Kozintsev, Tanju Kaya,
Pala, Edip Krad Baer, Verda Beril Yzer Ouz, brahim en, Suavi Demirciolu, Ayenur Hkran, Murat elik, Cem Demira.
Cem nen, Murat tak, Alper Tunga Emecan, Fatih Arabacolu,
Mustafa zel, Burak Koak, Yavuz Elkin, mer Uyar, Ramazan Ik.
HAKAN TURAN PALA ALPER TUNGA EMECAN
Corporate and Commercial Credits Analysis Group, DenizFaktoring, General Manager
Executive Vice President Mr. Emecan was born in 1971 and graduated from Istanbul University,
Mr. Pala was born in 1967 and graduated from Middle East Technical Faculty of Economics and Administrative Sciences, Department of
University, Department of Business Administration. He began his banking International Relations. He began his professional career in 1994 and
career in 1994 and joined DenizBank in 2004. joined DenizBank in 1998. Mr. Emecan has served as General Manager at
DenizFactoring since 2015.
EDP KRAD BAER
Credit Policies and Retail, SME, Agricultural Banking Credits HSEYN MELH AKOSMAN
Allocation Group, Executive Vice President DenizInvest Securities, General Manager and Board Member
Mr. Baer was born in 1967 and graduated from Middle East Technical Mr. Akosman was born in 1971 and graduated from Marmara University,
University, Department of Electrical-Electronics Engineering. He began his Faculty of Economics and Administrative Sciences, Department of Business
banking career in 1990 and joined DenizBank in 2004. Administration; he also holds an MBA from the same university. He began
his professional career in 1991 and joined DenizBank Financial Services
VERDA BERL YZER OUZ Group in 2004.
Financial Institutions Group, Executive Vice President
Ms. Ouz was born in 1975 and graduated from Marmara University, MER UYAR
Department of International Relations. She began her banking career in Intertech, General Manager
1997 and joined DenizBank in 2010. Mr. Uyar was born in 1977 and graduated from Istanbul Technical
University, Department of Electrical and Electronic-Computer Engineering.
MURAT ITAK He began his professional career in 1996 and joined DenizBank Financial
IT Security and Digital Card Payment Operations Group, Services Group in 2000. Mr. Uyar has served as General Manager at
Executive Vice President Intertech since 2012.
Mr. tak was born in 1969 and graduated from Middle East Technical
University, Department of Computer Engineering. He began his career in AHMET MESUT ERSOY
1992 and joined DenizBank in 1998. DenizBank AG, General Manager
Mr. Ersoy was born in 1973 and graduated from Istanbul University,
MUSTAFA SARUHAN ZEL Faculty of Business Administration; he also received an MBA from Bahrain
Economic Research, Strategy and Program Management Office Group, University. He began his banking career in 1995 and joined DenizBank
Executive Vice President Financial Services Group in 2002. Mr. Ersoy has served as General
Mr. zel was born in 1967 and graduated from Boazii University, Manager at DenizBank AG since 2011.
Department of Business Administration. He later obtained an M.A. in
Finance and a Ph.D. in Economics from Virginia Tech. Mr. zel began his FATH ARABACIOLU
professional career in 1996 and joined DenizBank in 1997. DenizPortfolio Management, General Manager
Mr. Arabacolu was born in 1966 and graduated from Ankara
RAMAZAN IIK University, Faculty of Political Sciences. Subsequently, he received an
Internal Audit Group, Head of Internal Audit M.A. in International Banking and Finance from Heriot-Watt University in
Mr. Ik was born in 1977 and graduated from Middle East Technical Edinburgh, Scotland. He began his professional career in 1988 and joined
University, Faculty of Economics and Administrative Sciences, Department DenizInvest Securities in 1999. Mr. Arabacolu has served as General
of Economics. He began his career in 1999 and joined DenizBank in 2013. Manager at DenizPortfolio Management since 2004.

AL MURAT DZDAR OUZ YALIN

Legal Affairs Group, Chief Legal Advisor JSC DenizBank Moscow, General Manager
Mr. Dizdar was born in 1960 and graduated from Istanbul University, Mr. Yaln was born in 1975 and graduated from Boazii University,
Department of Law; he holds an M.A. in Private Law from the same Faculty of Economic and Administrative Sciences, Department of Political
institution. He began his career in 1982 and joined DenizBank in 2002. Sciences and International Relations. He began his banking career in 1998
and joined DenizBank in 2002. Mr. Yaln has served as General Manager
CEM DEMRA at JSC DenizBank Moscow since 2013.
Internal Control Center and Compliance Group, Head of Internal
Control and Compliance HAYR CANSEVER(1)
Mr. Demira was born in 1968 and graduated from Middle East Technical Secretariat General and Sberbank Coordination Group,
University, Faculty of Administrative Sciences, Department of Public Executive Vice President
Administration. He began his professional career in 1991 and joined Mr. Cansever was born in 1974 and graduated from Istanbul Technical
DenizBank in 2010. University, Department of Mechanical Engineering; he also holds an M.A.
in Banking and Finance from Yeditepe University. He began his banking
SNAN YILMAZ career in 1998 at DenizBank Financial Services Group. Mr. Cansever has
Risk Management Group, Head of Risk Management served as Executive Vice President of Secretariat General and Sberbank
Mr. Ylmaz was born in 1974 and graduated from Istanbul Technical Coordination Group since January 2017.
University, Department of Management Engineering. He began his banking
career in 1998 at DenizBank. MEHMET TL
Deniz Real Estate Investment Trust, General Manager
KAHRAMAN GNAYDIN Mr. itil was born in 1966 and graduated from Istanbul Technical
DenizLeasing, General Manager University, Department of Architecture; he also holds an MBA from
Mr. Gnaydn was born in 1966 and graduated from Middle East Technical Istanbul University, Faculty of Economics and Administrative Sciences.
University, Department of Geological Engineering; he also holds an MBA He began his banking career in 1988 and joined DenizBank in 1997.
from Bilkent University. He began his professional career in 1990 and Mr. itil has served as General Manager at Deniz Real Estate Investment
joined DenizBank in 2002. Mr. Gnaydn has worked as General Manager Trust since 2013.
at DenizLeasing since February 2011.

(1)
Serving as General Manager at DestekAsset Management since 2015, Hayri
Cansever resigned from his duty due to the sale of all shares of the company to
legal and real persons other than DFSG on 29 December 2016 and was appointed as
Executive Vice President of Secretariat General and Sberbank Coordination Group as
of January 2017.
66 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

EXECUTIVE MANAGEMENT

Professional
Experience
Title Name/Surname Duty Education (Years)
CEO Hakan Ate CEO Bachelors Degree 35
Mehmet Aydodu Corporate Banking, Commercial Banking and Public Bachelors Degree 19
Finance Group EVP
Bora Bcgz Treasury and Financial Institutions Group EVP Bachelors Degree 27
Suavi Demirciolu Financial Affairs Group EVP, CFO Bachelors Degree 26
Dilek Duman Information Technology and Support Operations Group Bachelors Degree 27
EVP, COO
Murat elik Digital Generation Banking Group EVP Bachelors Degree 24
Tanju Kaya Administrative Services and Investment Group EVP Bachelors Degree 30
Mustafa zel Branch and Central Operations Group EVP Bachelors Degree 28
Saruhan zel Economic Research, Strategy and Program Management Ph.D. 20
Office Group EVP
Murat Kulaksz SME Banking Group EVP Masters Degree 20
brahim en Credit Following and Risk Monitoring Group EVP Bachelors Degree 23
Selim Efe Teoman Corporate and Commercial Credits Group EVP Bachelors Degree 22
Ayenur Hkran Payment Systems and Non-Branch Channel Bachelors Degree 20
Group EVP
Executive Vice Presidents Ruslan Abil Group Reporting and Asset Liability Management Group Bachelors Degree 19
EVP
nder zcan Managerial Reporting and Budget Planning Bachelors Degree 18
Group EVP
Yavuz Elkin Human Resources and Deniz Academy Group EVP Bachelors Degree 23
Burak Koak Agricultural Group EVP Bachelors Degree 20
Ouzhan zark Retail Banking Sales Management Group EVP Bachelors Degree 19
Cemil Cem nen Private Banking and Investment Sales-Performance Ph.D. 19
Management Group EVP
Hakan Turan Pala Corporate and Commercial Credits Analysis Bachelors Degree 22
Group EVP
Edip Krad Baer Credit Policies and Retail-SME, Agricultural Banking Bachelors Degree 26
Credits Allocation Group EVP
Verda Beril Yzer Financial Institutions Group EVP Bachelors Degree 19
Ouz
Murat tak IT Security and Digital Card Payment Operations Bachelors Degree 18
Group EVP
Ali Murat Dizdar Chief Legal Advisor Masters Degree 25
Secretary General Hayri Cansever *
Secretariat General and Sberbank Coordination Group - EVP Masters Degree 18
Ramazan Ik Head of Internal Audit Masters Degree 17
Internal Systems Cem Demira Head of Internal Control Unit and Compliance Bachelors Degree 25
Sinan Ylmaz Head of Risk Management Bachelors Degree 19

*
As of 10.01.2017, appointed in lieu of Krad Taalan.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 67

COMMITTEES

Professional Experience
Committee Name/Surname Title Education (Years)
Nihat Sevin Member Bachelors Degree 30
Audit Committee Wouter G.M. Van Roste Member Bachelors Degree 27
Pavel Barchugov Member Bachelors Degree 21
Corporate Governance and Deniz lke Arboan Member Ph.D. 30
Nomination Committee
Svetlana Sagaydak Member Ph.D. 17
Yeliz Koral zdemir Member Masters Degree 16
Tanju Kaya Member Bachelors Degree 30
Svetlana Sagaydak Member Ph.D. 17
Remuneration Committee
Nihat Sevin Member Bachelors Degree 30
Hakan Ate Member Bachelors Degree 35
Derya Kumru Member Masters Degree 24
Credit Committee Timur Kozintsev Member Ph.D. 17
Alexander Vedyakhin Associate Member Ph.D. 17
Svetlana Sagaydak Associate Member Ph.D. 17

Committee Meetings
Committee members fully and regularly attended all
meetings held during the reporting period.

Other Committees*
Management Board
Executive Committee
Assets and Liabilities Committee
Executive Credit Risk Committee
Disciplinary Committee
Compliance Committee
Operational and Information Risk Committee
Rating Committee

*
Details appear in the Corporate Governance Principles Compliance Report - Item 5.3.
68 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

In line with the Banks core principles of providing

unconditional and sustainable customer satisfaction, at
SUMMARY REPORT OF THE BOARD year-end 2016 DenizBank operated a branch network with
737 locations, employed a workforce numbering 14,832
OF DIRECTORS TO THE GENERAL and served almost 10.3 million customers, up 13% over the
ASSEMBLY prior year. Additionally, the Banks consolidated customer
deposits soared 27% to TL 90,621 million, well above the
sector average. Meanwhile, on an unconsolidated basis,
Dear Shareholders, customer deposits grew 32% to TL 59,525 million.

DenizBank has achieved successful financial and operational As a reflection of these positive financial results, DenizBank
results by growing its balance sheet higher than the sector compensated DFSG personnel with performance based
average in 2016. premium payment of an average 2.62 monthly salaries.
Significantly contributing to the national economy not only
Despite the recessionary tendencies in the global through financial activities but also via educational, cultural,
economy, continuing to move forward, DenizBank artistic and sports related initiatives, DenizBank continued
recorded consolidated net profit of TL 1,401 million to support the stanbul State Symphony Orchestra, and
and non-consolidated net profit of TL 1,409 million in Orchestra Academic Bakent Concerts. In 2015, the Bank
2016. Despite the increased funding costs sector-wide, teamed up with the Turkish Cinema and Audiovisual
DenizBanks consolidated net interest income rose 26% Culture Foundation (TRSAK) to launch the First Script
while unconsolidated net interest income went up 28% Contest, becoming the events name sponsor. In the field
over the prior year. In the same period, the Banks net of education, DenizBank contributed to the MECE project
fees, commissions and banking services revenues increased organized by the Social Services Foundation (TOVAK)
16% on a consolidated basis and 14% on a unconsolidated under the auspices of the Ministry of National Education to
basis, higher than sector averages over 2015. DenizBanks renovate primary schools in need.
consolidated and unconsolidated total operating revenue
went up 28% and 35%, respectively. Keeping a close watch on the global banking sectors
innovation-based development, DenizBank continued to
DenizBank, the fifth largest Turkish private bank by make a difference with its innovative products and services
consolidated asset size, continued its operations along in 2016. Designated The Most Innovative Bank of the
the vision of contributing to Turkeys economic and social Year at the BAI Banking Innovation Awards and Bank
development in 2016. The Bank expanded its assets, loans, of the Year in Turkey at The Banker Awards in 2014, as
deposits and shareholder equity with growth above the well as winning the coveted Global Innovator title in
sector average. 2015 from European Financial Management Association
(EFMA), DenizBank once again garnered the Worlds Most
As of year-end 2016, DenizBank reported consolidated Innovative Bank at the BAI Banking Innovation Awards and
and unconsolidated assets of TL 135,554 million and TL has collected three major awards in the global arena in the
103,159 million, up 20% and 22%, respectively, compared last three years.
to the prior year. Raising its paid-in capital by TL 1.5
billion, TL 750 million in cash, DenizBanks consolidated We would like to take this opportunity to extend our
shareholders equity, including subordinated loans, grew gratitude to our customers, shareholders, business partners
22% to TL 16,074 million, while the Banks consolidated and employees for their unwavering support during the
capital adequacy ratio stood at 14.17%. Unconsolidated operating year 2016, and to our esteemed shareholders and
shareholders equity, including subordinated loans, rose to stakeholders for gracing our General Assembly with their
TL 16,045 million, with an unconsolidated capital adequacy presence.
ratio of 17.52%.

During the year, extending new financing facilities Board of Directors

to numerous sectors, mainly energy, construction,
infrastructure, tourism, healthcare, municipalities, sports
clubs and education, DenizBank succeeded in expanding
its consolidated loan portfolio by 22% over 2015 to TL
95,023 million. The Bank also maintained its market leading
position in turning deposits into loans, with a loan/deposit
ratio of 104.9%. Meanwhile, on an unconsolidated basis,
DenizBanks loan volume increased 20% to
TL 61,820 million.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 69

DONATIONS MADE IN 2016 HUMAN RESOURCES

All together we create a
INSTITUTION NAME Amount (TL) bank our children would
TRK ETM DERNE- TED 614,500
TOPLUM GNLLLER VAKFI 350,000
like to work in.
STANBUL MODERN SANAT VAKFI 140,000
TRKYE KIZILAY DERNE 60,000
TRK ETM VAKFI 2,980
In line with the strategies and goals of the Bank and
TEMA 2,303 in cooperation with all organizational units, the Human
OTHER 50 Resources Department provides guidance to employees,
TOTAL 1,169,833
DenizBank Financial Service Groups most important asset.
The Department strives to create a pleasant and productive
working environment while significantly contributing to
employee development.

DenizBanks almost 15 thousand employees offered services

through a total of 737 domestic and international branches
in 2016. As a result of meticulous workforce planning,
DenizBank is one the banks with the lowest number of
employees per branch.

In order to promote the DenizBank employer brand via

social media, accounts named Career at Deniz were
managed on Instagram, LinkedIn, Facebook, Twitter and
YouTube, with increases in follower numbers.

In 15 universities, the Bank participated in activities

to inform undergraduates on career and development
opportunities at DenizBank. Over 400 students passed
the evaluations for the Pearls of Deniz internship, and
completed their internship with success at the branches or
Head Office. This year, the most successful ones among the
senior year students who participated in the Pearls of Deniz
summer internship, were included in the six-month Pearls
of Deniz Plus internship. Among the latter, the successful
candidates were recruited for various positions across the
Bank.
RELATED PARTY TRANSACTIONS
The Bank also put into practice the very first Online
Internship program for university students. During the
three-month Online Internship program dubbed Over
Seas, undergraduates had an experience complete with
Please see Notes to the Independently Audited Financial simulations, digital cases, e-learning and banking games.
Statements, Section Five-VII. some 152 students participated in the program, at the end
of which the top scorer was given the chance to participate
in a one week internship at DenizBank AG Vienna.
70 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

Reward System
General talent exams for inexperienced candidates and
interviews with experienced candidates from outside The Performance Development Program (PDP), which aims
Istanbul continued to be conducted online in 2016. As to improve employee performance and qualifications, is
part of a project carried out in cooperation with KUR, implemented twice a year. The objective is to increase the
44 different courses have been completed since 2013 and frequency of feedback provided to the employee and to
755 trainees have been recruited by various departments. offer guidance throughout the process.
DenizBank has been the main sponsor of the Job and
Recruitment Fair held in Istanbul this year under its The Group offers competitive salaries and fringe benefits in
partnership with KUR. line with current market conditions. Manager and employee
salaries are determined according to ethical values, internal
Corporate MBA and Executive MBA Programs continued at balance, strategic goals and levels of responsibility.
Baheehir University and Sabanc University, which has
graduated 30 Bank employees to date. All indemnity payments which function as incentives to
reward the performance of managers are assessed with due
A new application, At Sea, has been launched by the consideration of the past performances of employees, and
Bank to communicate continuously with employees and to their contribution to the long term performance of the Bank.
get to know them better, through various prize questions
and surprises. With the application At Sea, employees As part of managers bonus payments GM Premiums and
can easily access the latest news and special campaigns. the PUPA Premium system, performance based premium
The Pulse feature within the application sends instant payment of average 2.62 monthly salary were made to
surveys to employees, and rapid action plans are prepared DFSG personnel in 2016.
according to these results. In addition, the HR Whats
App hotline was put into practice in 2016 with the aim of
responding to employees questions more quickly.

As a learning organization, DenizBank allows three

generations to teach each other and learn from each others
differences. In this context, a reverse mentoring program DenizBank, as a learning
called Bilakis (On the Contrary), which allows different
generations to learn from each other, has been put in place. organization, has launched
With this program, 39 young employees born in 1990 and
later mentored senior executives for six months on the the reverse mentoring
expectations of younger generations, especially as regards
social media, and current issues. program Bilakis, which
Career Opportunities
allows different generations
DenizBank Financial Services Group is committed to offering to learn from each other.
equal opportunities to its employees, cultivating the futures
managers from within its ranks, and giving preference to
current staff members when filling vacancies. As of 2016,
the promotion periods within a year were dropped from
four to two. In 2016, a total of 1,400 individuals advanced
to a higher job level, while 101 Bank employees were
appointed to managerial positions, amounting to 78.9% of
all management promotions for the year.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 71

In 2016, via Deniz Academy, DFSG increased and improved

its investment in human resources - its most important
TRAINING asset. Throughout the year, Deniz Academy reached every
employee and became one of the top institutions in the
Deniz Academy structures the sector by organizing an average of 8.6 days of training per
employee.
individual and professional The Development Center continued to identify the strengths
development of all DFSG and any improvable areas in the role of vice presidents
during the year. Vice presidents who attended this program
employees in a planned way. furthered their personal development by participation in the
Vice President Development Program. The program, which
consists of nine days divided into three modules, branches
out into two separate sub-programs designed for Head
Office employees and branch personnel. Deniz Academy
has a 13-day leadership programs called the New Captains
Deniz Academy views the cultivation of managers from Club designed for those employees who have been
within its own ranks as one of its leading missions and a recently promoted to the positions of branch manager and
strong pillar of the Banks corporate culture. department head.

In addition to these programs, managers are offered

Deniz Academy
select courses on technical and personal development and
Deniz Academy structures the individual and professional leadership throughout the year. Furthermore, managers
development of all DFSG employees in a planned way. come together with experts in corporate entrepreneurship,
The training needs of all employees are analyzed in line positive leadership and psychology in morning and evening
with the importance of training in career improvement. sessions.
Deniz Academy prepares training maps for field employees
according to their level, and structures their development In addition to classroom training programs, DenizBank
throughout their career with compulsory and elective added virtual instruction to its alternative learning portfolio,
courses, thus allowing them to enjoy a faster moving and including e-learning, mobile learning and Deniz TV. Deniz
more satisfying career path. Head Office employees are Academy has thus implemented a multifaceted training
offered boutique courses following the annual training model and provides an average of 20 hours of training
needs analyses and six-monthly curriculum of elective per employee. In 2016, some 1,500 different materials
courses. were offered for use by all employees include personal
development, professional, technical and management
Deniz Academy sees the training of managers as a mission training programs, as well as book summaries and various
guiding the corporate culture, and develops training digital library options. In 2016, all participants became
projects spread over a period of time by utilizing different able to access seminar notes at anytime, anywhere with
teaching methods to make learning by practice more the Deniz Academy mobile app. The Academy continued to
stimulating. Deniz Academy has the capacity to provide administer e-learning programs and launched the applied
training to 1,500 people simultaneously, and organizes monitor simulation program. Facebook and Twitter accounts
seminars, hobby workshops and many other activities in are used to inform employees about developments in the
addition to employee training, while also playing host to Bank, and seminars, projects and activities at the Academy.
many of DFSGs events.
72 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

SUPPORT SERVICES

SUPPORT SERVICES PROVIDERS BUSINESS LINE

TNS PYASA ARATIRMA DANIMANLIK VE TCARET A.. RESEARCH SERVICE
IRON MOUNTAIN ARVLEME HZMETLER A.. ARCHIVE
ACTVE BLGSAYAR HZ. VE TC. LTD T. IT SYSTEMS
INTERTECH BLG LEM VE PAZARLAMA TCARET A.. IT SYSTEMS
V.R.P VER RAPORLAMA PROGRAMLAMA BLSM YAZILIM VE DANIMANLIK HZMETLER TC. A.. IT SYSTEMS
ATP TCAR BLGSAYAR AI VE ELEKTRK G KAYNAKLARI RETM PAZ. VE TC. A.. IT SYSTEMS
ETCBASE YAZILIM VE BLM TEKNOLOJ A.. IT SYSTEMS
FNEKSUS BLM ZMLER A.. IT SYSTEMS
VERIFONE ELEKTRONK DANIMANLIK VE LTD. T. IT SYSTEMS
BLN YAZILIM VE BLM DANIMANLII LTD. T. IT SYSTEMS
SUPERONLINE LETM HZMETLER A.. IT SYSTEMS
INGENCO DEME SSTEM ZMLER. A.. IT SYSTEMS
ELEKTRONK BLG GVENL A.. IT SYSTEMS
TMOB BLM YAZILIM TEKNOLOJ SSTEMLER A.. IT SYSTEMS
ODC ZMLER A.. IT SYSTEMS
KARBL YAZILIM VE BLM TEKN. TC. A.. IT SYSTEMS / OPERATIONAL SERVICES
MT BLG TEKNOLOJLER VE DI TC. A. IT SYSTEMS / OPERATIONAL SERVICES
HUGN YAZILIM TEKNOLOJ A. IT SYSTEMS / OPERATIONAL SERVICES
R2 SERVS ELEKTRK ELEKTRONK VE BLGSAYAR TEKNOLOJ SAN. VE TC.A.. IT SYSTEMS / OPERATIONAL SERVICES
GLOBAL BLG PAZARLAMA DANIMA VE ARI SERVS HZMETLER A.. CALL CENTER
METLIFE EMEKLLK VE HAYAT A.. LE WEBHELP ARI MERKEZ VE MTER HZMETLER A.. CALL CENTER
TURKISH EXPRESS ASSISTANCE YARDIM VE DESTEK HZ. A.. - TURKISH EXPRESS SGORTA CALL CENTER
ARACILIK HZMETLER A..
AXA SGORTA A.. LE WEBHELP ARI MERKEZ VE MTER HZMETLER A.. CALL CENTER
CPP SGORTA ARACILIK HZMETLER A.. CALL CENTER
TEMPO ARI MERKEZ VE SRELER DI KAYNAK HZM. TC. A.. CALL CENTER / MARKETING
WN BLG LETM HZMETLER A.. CALL CENTER / MARKETING
COLLECTRK ALACAK YNETM VE DANIMANLIK A.. CALL CENTER / COLLECTION
MANAGEMENT
BANTA NAKT VE KIYMETL MAL TAIMA VE GVENLK HZMETLER A.. SECURITY
TEPE SAVUNMA VE GVENLK SSTEMLER SANAY A.. SECURITY
BRNKS GVENLK HZMETLER A.. SECURITY
MTM HOLOGRAF GVENLKL BASIM VE BLM TEKNOLOJLER SAN. TC. A. OPERATIONAL SERVICES
KURYE-NET MOTORLU KURYECLK VE DAITIM HZMETLER A.. OPERATIONAL SERVICES
E-KART ELEKTRONK KART SSTEMLER SAN. VE TC. A.. OPERATIONAL SERVICES
PLASTK KART AKILLI KART LETM SS. SAN. TC. A.. OPERATIONAL SERVICES
AUSTRIA CARD TURKEY KART OPERASYONLARI A.. OPERATIONAL SERVICES
ETSAN PROJE BLG VE YAZILIM TEKNOLOJLER SAN. TC.A. . OPERATIONAL SERVICES
STANBUL ALTIN RAFNERS A.. OPERATIONAL SERVICES
BBS DANIMANLIK GAYRMENKUL VE ETM A.. OPERATIONAL SERVICES
FU GAYRMENKUL YATIRIM DANIMANLIK A.. OPERATIONAL SERVICES
TAGAR TAPU GARANT HZMETLER A.. OPERATIONAL SERVICES
AV GAYRMENKUL YATIRIM DEERLEME VE DANIMANLIK A.. OPERATIONAL SERVICES
POTEKA GAYRMENKUL YATIRIM DANIMANLIK A.. OPERATIONAL SERVICES
SSTEM KURYE HZ. TA. TEKSTL DER TC. LTD.T. OPERATIONAL SERVICES
HAYAT TEKNOLOJ BLGSAYAR SS. KART BASIM HZ. SAN. VE TC. LTD. T. OPERATIONAL SERVICES
MAPKART TANITIM HZMETLER VE DI TC. LTD. T. OPERATIONAL SERVICES
KONFDES BLG TEKNOLOJLER TC. A.. OPERATIONAL SERVICES
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 73

SUPPORT SERVICES PROVIDERS BUSINESS LINE

CANKURT SALII VE GVENL HZMETLER ORTAK SALIK GVENLK OPERATIONAL SERVICES
TCARET LTD T.
DHL WORLDWIDE EXPRESS TAIMACILIK VE TC. A.. OPERATIONAL SERVICES
UZ GAYRMENKUL A.. OPERATIONAL SERVICES
ZETA NSAN KAYNAKLARI VE KURUMSAL ZMLER LTD. T. OPERATIONAL SERVICES / MARKETING
ETTS ELEKTRONK TC. TAH. SS. SAN. VE TC. LTD. T. MARKETING
POSTA VE TELGRAF TEKLATI A.. MARKETING
FENERBAHE SPOR OKULLARI LTD. T. MARKETING
ALTEK BLG TEKNOLOJLER DANIMANLIK VE DI TCARET A.. MARKETING
OUZKAAN ETM HZMETLER VE TC. A.. MARKETING
VZYON KOLEJ YAY. ET. HZ. A.. MARKETING
HAS ZEL ETM GIDA TURZM YAYINCILIK SAN. TC. LTD. T. MARKETING
AVRUPA ETM HZ. VE TC. A.. MARKETING
AVRUPA KOLEJ ETM KURUMLARI VE TC. A.. MARKETING
SUR ETM TESSLER VE TC. A.. MARKETING
KLON DEME KURULUU A.. MARKETING
DREN DEMR VE NAAT MALZEMELER TC. SAN. A.. MARKETING
74 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

PART I: CORPORATE GOVERNANCE PRINCIPLES

COMPLIANCE STATEMENT
DENZBANK CORPORATE Prior to its IPO, DenizBank voluntarily conducted studies for
compliance with the Capital Markets Boards (CMB) Corporate
GOVERNANCE PRINCIPLES Governance Principles in line with international principles
COMPLIANCE REPORT and sectorial practices; the Corporate Governance Report
was published upon approval by the Board of Directors at
its meeting dated September 16, 2004. DenizBank views
Corporate Governance Principles as a dynamic field open to
PART I: CORPORATE GOVERNANCE PRINCIPLES further improvement, and works to enhance its operations in
COMPLIANCE STATEMENT this spirit.
PART II: SHAREHOLDERS DenizBank operates with a management approach built on
2.1 Investor Relations Department the principles of transparency, equality, responsibility and
accountability, and exercises maximum care to comply with
2.2 Exercise of Shareholders Right to Information the principles outlined in the annex to BRSAs Regulation on
Corporate Governance Principles (Regulation) and expends
2.3 General Assembly Meetings maximum effort to comply with CMBs Corporate Governance
Communiqu (Communiqu) no. II-17.1, Corporate Governance
2.4 Voting Rights and Minority Rights Principles as regards the management of relations with
shareholders, as well as the determination of the duties,
2.5 Dividend Rights authorities and responsibilities of the Board of Directors and
the management tiers that report to the Board. Differences
2.6 Transfer of Shares between CMB Corporate Governance Principles and the Bank
are outlined under the relevant sections of this report.
PART III: PUBLIC DISCLOSURE AND TRANSPARENCY
3.1 Corporate Website and Contents PART II: SHAREHOLDERS

2.1 Investor Relations Department

3.2 Annual Report
Established in 2004 with the aim of taking necessary
measures to comply with the existing legislation, the Articles
PART IV: STAKEHOLDERS of Association, and other in-house regulations regarding the
4.1 Informing Stakeholders protection and exercising of shareholders rights, and the right
to obtain and review information in particular, the Department
4.2 Stakeholder Participation in Management has been carrying out its activities with name of Investor
Relations and Financial Communication Department within the
4.3 Human Resources Policy structure of Financial Affairs Group, under the supervision
of Financial Affairs Group-EVP, CFO. The tasks of Investor
4.4 Code of Ethics and Social Responsibility Relations Department within the 5th Clause of the 11th Article
of the Communiqu are carried out in coordination with the
Investor Relations and Financial Communication, Secretariat
PART V: BOARD OF DIRECTORS General and Sberbank Coordination, Corporate Compliance,
5.1 Structure and Formation of the Board of Directors Group Reporting and ALM Management and Treasury and
Financial Institutions departments. Names and contact info
5.2 Operating Principles of the Board of Directors regarding the staff members of the Department are given
below. Due to the fact that the portion of shares in public float
5.3 Number, Structure and Independence of Board is 0.15%, the number of inquiries made by investors within
Committees the period was limited, and thus all inquiries were answered
verbally or in writing.
5.4 Risk Management and Internal Control Mechanism
Yeliz Koral zdemir-Department Head-Corporate
5.5 The Companys Strategic Objectives Governance Rating Licenses
[email protected]
5.6 Remuneration Tel: +90 212 348 59 95
Fax: +90 212 336 61 68, +90 212 336 30 80

Due to the fact that most of the tasks specified in the 11th
Article of the Communiqu are carried out by our Banks
Investor Relations and Financial Communication Department
the Department Manager Yeliz Koral zdemir was appointed
as the Director of Investor Relations Department upon the
Board of Directors decision dated June 20, 2014. Furthermore,
within the scope of the 1st Clause of the 11th Article of the
Communiqu she was appointed as a member to the Corporate
Governance and Nomination Committee.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 75

Activities during the Period 2.3 General Assembly Meetings

>> Material event disclosures, Invitation to and Information about the General Assembly
>> Preparation of the annual reports, interim activity reports DenizBank issues the invitation to the Annual General
sections of financial reports, and press releases on Assembly at least 3 (three) weeks before the meeting date,
financial data, as stated in Articles 10 of the Articles of Association. The
>> Updating relevant information on the Banks website, announcement/invitation on/to the General Assembly is
>> Examination of sector data and preparation of market published in the Trade Registry Gazette, on the Central
share reports, Registry Agencys (MKK) Electronic General Meeting System
>> Examination and comparative analysis of reports by other (e-GEM), Public Disclosure Platform (PDP) as well as on the
banks, DenizBank website. Furthermore, the agenda items, proxy
>> Responding to questions received by email and telephone, forms, Annual Report, Articles of Association, financial
>> Organization of Ordinary/Extraordinary General Assembly statements and their footnotes, old and new versions of
Meeting, the Articles of Association in case of any amendments,
>> Communicating with credit rating agencies, reviewing and information stated on principles on Board Members and
evaluating reports, candidate Members in case the agenda items include the
>> Providing assistance to the documentation made within dismissal, replacement or election of Board Members, any
the scope of bonds/bills issuance, making necessary requests from the shareholders to add items to the agenda,
announcements and disclosures, and Information Document including all other documents
>> Coordinating the practices developed in the Bank within regarding the agenda and other documentation are submitted
the scope of Corporate Governance Practices The report for shareholder scrutiny at the Banks Head Office and
regarding the activities carried out within the scope of on the Bank website as of the date of the announcement.
the Communiqu was prepared in coordination for Documents regarding the agenda items are also published via
2016 and was submitted to the Board of Directors on MKKs portals including the e-GEM. Proxy voters do not have
March 2017. to be shareholders. It is no longer necessary to place voting
shares under participators blockage in the General Assembly
Meeting. Shareholders can now participate in the meeting via
2.2 Exercise of Shareholders Right to Information
the e-GEM, until 00:00 hours the day before the meeting. All
The Investor Relations and Financial Communication shareholders whose names are included on the Shareholders
Department treats all shareholders equally. All shareholder List obtained from the e-GEM prior to the meeting can
and other stakeholders inquiries were first assessed to participate in person.
determine whether or not they concerned trade secrets,
and then answered accordingly either in written form, Although not stipulated in the Articles of Association,
or else verbally. Queries made to the Investor Relations DenizBanks Board of Directors can decide to open
and Financial Communication Department concerned the General Assembly meetings to the wider public, including
following topics: stakeholders and the press, although the latter do not have
the right to take the floor. The meeting minutes of the
>> The Banks financial statements, General Assembly and the Attendance List are published on
>> Activities in business lines, the e-GEM, Public Disclosure Platform (PDP) and the Banks
>> General Assembly Meetings, website. In 2016, DenizBank held an Ordinary General
>> Main shareholder, Assembly Meeting.
>> Bonds/bills issued,
>> Project finance. Date: 31.03.2016
General Assembly: 2015-Ordinary
DenizBank exercises maximum care to release information Participants: Shareholders, Representatives of Legal
that may impact the exercising of shareholders rights and Authorities, Stakeholders
the decisions of investors, in the most rapid and effective Participation Rate: 99.85%
manner. Disclosures are considered within the scope of Form of Invitation: Trade Registry Gazette, Hrses newspaper,
the CMBs Communiqu and Guide on Principles Regarding and announcement on the e-GEM, PDP and the Bank website.
Public Disclosure of Material Events, announced via the
Public Disclosure Platform and also published on the Banks
website as in both Turkish and English. The Banks website
is itself used actively to provide shareholders, investors
and other stakeholders easy access to information. The
information published on our website is explained in detail
under Part III/3.1 Company Website and Contents.

Request for the Appointment of a Special Auditor

Shareholders right to request the appointment of a special
auditor is stipulated as an individual right in Article 14 of
the Articles of Association, as per the Turkish Commercial
Code, Article 438 and onwards. During the period, no
request from shareholders, that have such a right according
to internal and legal regulations, for the appointment of a
special auditor was received.
76 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

Shareholders Right to Add Items to the Agenda and Ask 2.5 Dividend Rights
Questions The Banks dividend distribution policy is outlined in Article
As indicated in Article 10 of the Articles of Association, 32 of the Articles of Association and published on the
minority shareholders may add items to the agenda and website. Prior to being presented by the Board of Directors
request the Board of Directors to call an Extraordinary to the General Assembly, the dividend distribution proposal is
General Assembly via justifiable written requests. announced as a material event disclosure to shareholders and
published on the Banks website and e-GEM. The dividend
At the Ordinary General Meeting held on 31 March 2016, distribution policy and the dividend distribution proposal for
one of our shareholders proposed new items for the agenda. the relevant year are published in the Annual Report. There
These proposals were reviewed by the Banks Board of are no privileges concerning the distribution of dividends.
Directors and decided not to be added on the agenda. The Pursuant to the decision of the General Assembly held in
reasons why the proposals not to be added on the agenda March, no dividend is being paid for the year 2015.
announced to the public via the Information Document by
publishing on Public Disclosure Platform and the corporate
2.6 Transfer of Shares
website of the Bank.
There is no provision in the Banks Articles of Association
As per Article 15 of the Articles of Association, all restricting the transfer of shares. According to Article 8 of
shareholders have the right to express their opinions and ask the Articles of Association, the transfer of shares is allowed
questions during General Assemblies. Questions directed at in accordance with Turkish Commercial Code, Banking Law
the Board of Directors shall be answered immediately and no.5411, Capital Market Law and the Articles of Association.
verbally, if possible. Otherwise, these will be answered in
written form within 15 (fifteen) days of the General Assembly.
In line with recent amendments to the Communiqu, questions PART III: PUBLIC DISCLOSURE AND TRANSPARENCY
posed during General Assembly meetings and their answers
3.1 Corporate Website and Contents
are published in 30 (thirty) days on the Banks website.
In accordance with the public disclosure and transparency
At the Ordinary General Meeting held on 31 March 2016, one principles of the Corporate Governance Principles, DenizBank
of our shareholders proposed new items for the agenda and has created an effective website which is updated periodically
asked questions. Proposals were not be added to the agenda to provide timely, accurate, complete, comprehensible, easy
due to the decision resulted by voting. Some of the questions to analyze, low-cost and accessible information. The Banks
were answered by the Chairman of the council during the web address is www.denizbank.com. The website, available in
meeting. Other questions were not replied during the meeting Turkish and English, contains all the information stipulated in
due to no relation with the agenda. The questions were CMBs Corporate Governance Principles.
answered in 15 days in written according to the Articles of
Association and the answers were published on the corporate The following information is available on the website:
website of the Bank.
>> Trade Registry and share information, shareholding and
The Bank makes donations and gives aid in line with the management structure,
Donation Policy and relevant procedures defined by the Social >> The latest version of the Banks Articles of Association,
Responsibility Policy. The sum of donations made during the information about the changes,
period and the benefactors of these donations are listed in >> Material event disclosures,
the Annual Report and presented to the shareholders at the >> Press releases,
General Assembly as a separate agenda item with the policy >> Annual reports and interim activity reports, financial
changes if existed. reports,
>> Documents concerning securities issued,
>> General Assembly forms,
2.4 Voting Rights and Minority Rights
>> Information on the internal control system and risk
DenizBank shares do not have any preferential rights. As per management,
Article 14 of the Articles of Association, each share carries >> Curricula Vitae of the Board of Directors and the
one vote. Obstructions to the exercising of voting rights are Executive Management team,
avoided. Shareholders can be represented at the General >> Policies,
Assembly by other shareholders, or an external proxy. >> Corporate Governance Principles Compliance Report,
>> List of social responsibility activities.
The Bank does not have any cross-shareholding relationships
3.2 Annual Report
with any company. As stipulated by the Article 29 of the
Capital Market Law No. 6362, minority rights shall be The Annual Report is published in sufficient detail to
exercised by shareholders representing at least one-twentieth provide complete and accurate information about the
of the paid-in capital as per Article 411 of the Turkish Banks operations, and in accordance with BRSA and CMB
Commercial Code, and this condition is met by Article 10 of regulations. The Annual Report features all topics listed in
the Articles of Association. the relevant regulations. Following its release on the Public
Disclosure Platform, it is also published on the Banks
website.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 77

PART IV: STAKEHOLDERS the Executive Management after being analyzed by related
departments.
4.1 Informing Stakeholders
The rights earned through legislation and the reciprocal Employees
contracts of DenizBanks stakeholders (employees, clients, >> Committees
correspondent banks, entities participating in syndication >> Suggestion System
loans, public agencies, borrowers, lenders, credit rating
agencies, suppliers, the social environment, and other Customers
interest groups the Bank is in contact with) are protected >> Customer Satisfaction System
by DenizBank. If these rights are violated, the injured party >> Suggestion System
is compensated. Relationships with all stakeholders are
maintained with respect to the Code of Ethics. Employee Shareholders
rights have been determined through the Banks approach, >> General Assembly
and through its human resources policy, remuneration >> Board of Directors
policy, employee, disciplinary, and other regulations. >> Management Meetings
Stakeholders are provided with information related to the
Bank within the framework of the disclosure policy and
4.3 Human Resources Policy
other in-house regulations. Stakeholders are regularly
informed through General Assembly minutes; material event General human resources policies designed for the Bank
disclosures; press releases; internal bulletins; in-house and its subsidiaries to perform their functions in the most
announcements; Team Spirit magazine; emails to clients; effective fashion are based on the principles summarized
announcements via SMS, the call center, web platforms and below. These principles are posted as related procedures
social media channels; annual reports; financial reports; and and processes on the Banks website and intranet portal
all notifications made via the Bank website. DenizPortal and are accessible by all members of staff.

In addition, information is provided via meetings organized Respect for Individuals: Recognizing that the first criterion
upon request and in written statements. Easy access to for success is respect for the individual, and providing all
up-to-date information is facilitated by posting all the employees, without discrimination, with the harmonious
aforementioned information on the Banks website. professional environment and physical means necessary for
them to fully utilize and improve their abilities and skills.
Several mechanisms have been set up by which stakeholders
can share complaints and suggestions regarding the Banks Transparency in Management: Facilitating new ideas
activities and transactions with the management. While within the framework of mutual trust, understanding and
employees can use the suggestion system to share their communication; and problem solving through collective
wishes, requests, suggestions and complaints with the wisdom. Establishing and developing user-friendly
executive management, other stakeholders can share their technological systems that give employees the opportunity
requests and complaints with the Banks management via the to communicate their demands, suggestions and opinions
customer satisfaction system. by further informing them on the applications that concern
them.
4.2 Stakeholder Participation in Management
Opportunity for Training and Development: Keeping in
To ensure optimum satisfaction while preserving the balance mind that the Banks most valuable investment is the
between customers, employees, shareholders and other development of employees using every available training
stakeholders, the Bank strives to improve its product and tool, as well as managing their careers in accordance with
service quality, and to fulfill the expectations of domestic their accomplishments and competencies, and aiming to
and foreign customers. To this end, DenizBank acts in select the managers and directors of the future from among
accordance with the collective wisdom concept and gears Bank employees.
its systems towards continuous improvement.
Fair and Reliable Remuneration Management: Implementing
Stakeholders can participate in the Banks management a compensation management system that provides fair and
by attending various committee meetings and the General reliable salaries and benefits that encourage and reward
Assembly, as well as by using the suggestion system and success and excellence in line with market and prevailing
by exercising their right (as stated in Article 20 of the conditions.
Articles of Association) to demand from the Chairman
in writing the placing of an item on the agenda of the Practices and attitudes related to matters such as hiring
General Assembly meeting. Furthermore, as per Article 11 criteria, salaries, training and health, in accordance with
of the Articles of Association, minority shareholders may the general approach adopted within the framework of
request in written form that the Board of Directors add the human resources policy, are documented through
an item to the agenda of the General Assembly through guidelines, procedures and policies, all of which are
justifiable written requests prior to the creation of said available to employees.
agenda. Moreover, shareholders may request the Board
of Directors to call for an Extraordinary General Assembly Announcements that are of interest to Bank employees
through justifiable written requests and create the agenda are communicated over the intranet (DenizPortal), mobil
for discussion. Below is a list of systems that facilitate application denizde and by email. A Suggestion System
employee, customer and shareholder participation in was developed through which the employees can transmit
management. The output of these systems is presented to all of their suggestions and opinions. Suggestions submitted
78 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

through I Have an Idea on DenizPortal are evaluated and PART V: BOARD OF DIRECTORS
pre-assessed by the Organization Department. Suggestions
5.1 Structure and Formation of the Board of Directors
deemed viable after the pre-assessment by the relevant
group/ department are submitted to the Suggestions The Annual Report includes the names and short
Committee. biographies of the Banks executive, non-executive and
independent Board Members. The formation, duties, and
Evaluation and rewarding of relevant suggestions are responsibilities of the Banks Board of Directors, as well as
carried out by the Suggestions Committee. The recording its meeting format, are described in detail in Articles 16,
and follow-up of the suggestions chosen for implementation 17, 18, 19, and 20 of the Articles of Association. The Board
are coordinated by the Organization Department. of Directors consists of 13 members, four independent
Furthermore, all employee concerns and problems regarding members of which three are also the Members of the Audit
working practices are evaluated by their supervisors and Committee (as per Articles 4.3.6 of the CMBs Corporate
brought to the attention of the Executive Management, Governance Principles, two are independent members), 10
where necessary. There have been no complaints from are non-executive and three are executive members. In line
employees regarding discrimination in the workplace. with Article 17 of the Articles of Association, the duties of
Chairman and CEO are performed by different individuals.
We believe that development is the most important The term of office for all members of the Board of Directors
factor of our human resource policy, and we support the is defined within the scope of Article 18 of the Articles
personal development and career path of every DenizBank of Association as three years. A member whose term of
Financial Services Group employee with a policy of equal office expires can be re-elected. There are no quantitative
opportunity. All related programs are carried out at Deniz limits as to the Board Members taking office in the Banks
Academy, with training needs analyzed. Modern training subsidiaries. In order to ensure efficient management,
tools and methods like e-Deniz Academy, Deniz TV, mobile in principle, Board Members are asked not to take up
training and social media are used in training projects. more than three duties beyond the Banks subsidiaries. A
Statement of Independence has been received from the
The Banks employee remuneration policy was designed independent members pursuant to Articles 4.3.6 of the
to establish the principles governing payroll and social CMBs Corporate Governance Principles to fulfill the criteria
benefits. The Remuneration Committee was established of independence.
to audit and monitor pay policies and practices on behalf
of the Board of Directors. Salaries, factors significant Investigating the independence of the independent Board
in determining increase rates, the performance based Members and identifying any conflicts of interests are
pay system and criteria used in assessments have been among the duties and responsibilities of the Corporate
identified within the scope of the policy. The policy has Governance and Nomination Committee. Within the
been made available to employees via the website and framework of the principles in force during the period
intranet portal. of activity, there were no circumstances which could
compromise the independence of the Board Members.
In line with the revision of Communiqu criteria, the
4.4 Code of Ethics and Social Responsibility
statements from independent Board Members were renewed
DenizBank carries out its activities within the framework of in 2015 according to CMB principles.
the Banking Code of Ethics it has adapted and published on
its corporate website. Taking and implementing management Two of the Banks 13 Board members are female. According
decisions necessary for compliance with Ethical Principles to the objective set by CMBs Corporate Governance
Policy published by The Banks Association of Turkey, Principles, Article 4.3.9, at least 25% of the members
constitute the basis of the activities. Furthermore, the need to be female, which corresponds to four women in
Bank published the DenizBank Compliance and Integrity DenizBanks case. Women account for 36% of the Banks
Policy in order to establish respect for laws and managers; the Bank is keen on attaining this objective
regulations, ensure trust among customers, employees and concerning the Board of Directors.
shareholders, and prevent misconduct and fraud.
5.2 Operating Principles of the Board of Directors
In addition to contributing to the national economy
through its financial activities, DenizBank supports projects Principles and quorum for Board of Directors meetings
designed to raise public awareness, mainly in the fields of have been established in Article 20 of the Articles of
education, culture and the arts and sports, in line with its Association. Although the Articles of Association state
social responsibility approach. DenizBank Financial Services that the Board of Directors should meet at least four
Groups Corporate Social Responsibility has also been times per year, the Board meets as frequently as required
published on the website. to fulfill its duties effectively. The Board of Directors is
convened by the Chairman of the Board or by the Vice
As part of its social responsibility activities, the Bank makes Chairman if the Chairman is not present. The agenda of
donations, supports projects, organizes cultural events and the Board of Directors meetings consists of items arising
publishes works via DenizKltr. from the duties and responsibilities of Board Members as
stipulated in Article 19 of the Articles of Association, as
The list of activities conducted to this end is presented on well as members requests, matters discussed at the weekly
the Banks website. Executive Committee meetings and Committee resolutions.
In line with shareholder rights, minority and majority
shareholders and stakeholders may demand that a certain
subject be addressed at the Board of Directors meeting
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 79

through a written request to the Chairman, and have it Committees Reporting to the Board of Directors
added to the agenda.
Corporate Governance and Nomination Committee
In the year 2016, the Board of Directors made 132 The Committee determine application of the corporate
decisions. governance principles and detect the reasons and negative
consequences of failure to apply them comprehensively,
It is essential that Board Members attend the meetings as well as suggest the measures for improvement; form a
in person, although attendance is also permitted via any transparent system of selection, determination, evaluation,
means of remote conferencing. Each Board Member has one and traineeship of the candidates for top management; and
vote, all votes are equal and no member or Chairman has investigate the matters of independence and conflicts of
the privileged or weighted power to vote or veto. interests. The Committee is composed of four members.
Due to the fact that most of the tasks specified in the 11th
Board Members cannot vote at a meeting on a related party Article of the Communiqu are carried out by our Banks
transaction concerning themselves. Investor Relations and Financial Communication Department;
the Department Manager was appointed as the Director
Corporate Governance Principles are applied on related of Investor Relations Department and as a member to the
party transactions. Corporate Governance and Nomination Committee upon the
Board of Directors decision dated June 20, 2014.
The Chairman of the Board does his utmost to enable the
participation of non-executive members at the meetings. The The qualifications of committee members are presented in
Chairman is responsible for ensuring that Board meeting the Management section of the report.
invitations and discussions are conducted in accordance
with procedures, and that decisions are recorded in the The Corporate Governance and Nomination Committee
meeting minutes. convene at least three times a year. It also convenes
whenever else required in the performance of its duties.
During the Board of Directors meetings, members who The procedures related to the structure, duties, authorities
cast dissenting votes are required to sign the minutes and responsibilities of the Corporate Governance and
along with a statement explaining the reason for their Nomination Committee have been determined, and its
votes. Minutes of the meetings and documents related to main activities are posted on the Banks website. In 2016,
the meetings are duly included into the resolution book, Corporate Governance and Nomination Committee made
archived and kept under the supervision of the Chairman. 13 decisions to recommend candidates to the Board of
The manner in which the Board of Directors meetings are Directors as regards the appointment of executives. The
held is determined by in-house regulations. Information and nominated executives were appointed in line with the
documents related to the items on the agenda of the Board recommendations presented to the Board of Directors. The
of Directors meetings are presented to Board Members for Committee has reviewed its operating principles during
scrutiny by the Board Secretariat prior to the meeting in the meetings and made an effort to improve these through
order to establish equal information flow. The compliance suggestions to the Board.
of the Banks meeting minutes with legislation is ensured
by the Board Secretariat, and a report is presented to Audit Committee
authorized parties upon request. The duties of the Board The Audit Committee is in charge of the supervision of
Secretariat have been passed onto the Secretary General the Banks accounting system, public disclosure of the
upon resolution of the Board of Directors. Decisions of the financial information, independent auditing, the operation
Board of Directors that are significant to stakeholders are and efficiency of internal control, internal audit and risk
made public via material event disclosures. management systems. The Committee consists of three
members. The qualifications of committee members are
presented in the Management section of the report.
5.3 Number, Structure and Independence of Board
Committees
The Audit Committee convenes at least once every three
The Board of Directors shall form the committees, by virtue months - at least four times a year. In addition, the
of law and/or at its discretion, in order to execute its duties Committee meets with the independent auditors of the Bank,
and responsibilities professionally, effectively, efficiently, and separate from the executive units, at least four times a
being informed in the best possible way. The Committees year to discuss issues regarding internal control, financial
(excepting the Credit Committee) are composed of at least statements, internal audit and other important items that need
two committee members. The Audit Committee and the to be discussed. The procedures regarding the structure,
Corporate Governance and Nomination Committee were duties, authorities and responsibilities of the Audit Committee
established in 2004 within the scope of CMB Corporate have been defined and its main activities are posted on the
Governance Principles. In addition, in 2011, the Board of Banks website. The Audit Committees activities during the
Directors established the Remuneration Committee to monitor year 2016 can be found in the section entitled Assessments
and inspect remuneration practices on behalf of the Board of of the Audit Committee in the Annual Report.
Directors in accordance with the Regulation on the Banks
Corporate Governance Principles of the Banking Regulation Remuneration Committee
and Supervision Agency. The duties and operating principles A Remuneration Committee was established on December
of committees are posted on the Banks website. Information 7, 2011, to monitor and inspect remuneration practices on
about the committees reporting to the Board of Directors and behalf of the Board of Directors in accordance with the
on the executive committees providing information flow to Regulation on the Banks Corporate Governance Principles
the management is presented below. issued by the Banking Regulation and Supervision Agency.
80 SECTION II MANAGEMENT AND CORPORATE GOVERNANCE

The Committee evaluates remuneration policies and Committee Members

practices within the framework of risk management Hakan Ate (CEO), Wouter Van Roste (Board Member
and reports its recommendations annually to the Board in charge of Internal Systems), Timur Kozintsev (Board
of Directors. The qualifications of the members of the Member in charge of Credit Risk- CRO), Derya Kumru
Committee are presented in the section of Management of (Board Member), Banks EVPs, Ahmet Mesut Ersoy
the report. (DenizBank AG GM), Ouz Yaln (DenizBank Moscow
GM), Kahraman Gnaydn (DenizLeasing GM), Alper
Credit Committee Tunga Emecan (DenizFaktoring GM), Fatih Arabacolu
The Credit Committee is authorised to decide on credits and (DenizPortfolio Management GM), Hseyin Melih Akosman
loans, which are under consideration to be granted to the (DenizInvest Securities GM and Board Member), Mehmet
individuals or corporations in accordance with the Banking itil (Deniz Real Estate Investment Trust GM)
Law, the regulations of the BRSA, and the internal rules of
the Bank. The Committee convenes every week, assesses Assets and Liabilities Committee
these proposals or applications, and approves, or rejects The Assets and Liabilities Committee meets every
those within its limits of authority. The Committee submits week under the chairmanship of the CEO and with the
those proposals or applications beyond its authority to the participation of the Banks Chief Economist and the
Board of Directors. The Committee consists of three full and managers of groups which conduct activities that can
two alternate members. The qualifications of the members impact the balance sheet. The meeting agenda consists of
of the Committee presented in the Management section of the balance sheet of the Bank, activities of the business
the report. lines, general economic data and evaluation of current
political and economic developments, along with the
Other Committees determination of the weekly assets and liabilities strategy.

Management Board Committee Members

The DFSG Management Board is a committee operating under Hakan Ate (CEO), Saruhan zel (Economic Research,
the authority of the CEO with powers delegated by the Board Strategy and Program Management Office Group EVP), EVPs
of Directors. The Management Board meets once a week and SVPs involved in activities affecting balance sheet
under the chairmanship of the CEO. Secretariat General and
Sberbank Coordination Group EVP is a natural member of the Executive Credit Risk Committee
Management Board without voting rights. The Management It is responsible for reviewing the market and economic
Board was established to prepare and provide information conditions and evaluating the issues that might cause
to the Board of Directors, and to evaluate, conclude and negative effect on the credit portfolio of the Bank and
exchange ideas regarding certain strategic decisions. Upon subsidiaries, monitoring the economic developments that
accepting recommendations regarding subjects within the might lead to deterioration of the credit worthiness of
authorization limits of the CEO, the CEO along with the EVP customers and changes in other conditions, monitoring our
of the relevant unit, or the GM of the relevant subsidiary Banks legal follow up collections, evaluating the credit
proceeds to enact the change. Recommendations related provision budget and convenes on a quarterly basis.
to subjects within the authorization limits of the Board
of Directors are presented to the Board of Directors by Committee Members
the CEO, and the decisions made are executed under the Hakan Ate (CEO), Timur Kozintsev (Board Member in
responsibility of the Board of Directors. charge of Credit Risk- CRO), Wouter Van Roste (Board
Member in charge of Internal Systems), Derya Kumru
Committee Members (Board Member), Suavi Demirciolu (Financial Affairs Group
Hakan Ate (CEO), Wouter Van Roste (Board Member EVP), Ali Murat Dizdar (Chief Legal Advisor), brahim en
in charge of Internal Systems), Timur Kozintsev (Board (Credits Follow-up and Risk Monitoring Group EVP), Selim
Member in charge of Credit Risk- CRO), Derya Kumru Efe Teoman (Corporate and Commercial Credits Group
(Board Member), Ali Murat Dizdar (Chief Legal Advisor), EVP), Hakan Turan Pala (Corporate and Commercial Credits
Ayenur Hkran (Payment Systems and Non-Branch Analysis Group EVP), Edip Krad Baer (Credit Policies and
Channel Group EVP), Bora Bcgz (Treasury and Retail, SME, Agricultural Banking Credit Allocation Group
Financial Institutions Group EVP), Dilek Duman (Information EVP)
Technology and Support Operations Group EVP), Murat
elik (Digital Generation Banking Group EVP), Mustafa Disciplinary Committee
Saruhan zel (Economic Research, Strategy and Program The Disciplinary Committee identifies operations and
Management Office Group EVP), Suavi Demirciolu behavior punishable under the Banks regulations and
(Financial Affairs Group EVP), Tanju Kaya (Administrative disciplinary code, as well as the perpetrators, their degrees
Services and Investment Group EVP), Hayri Cansever of fault, and the potential damages. The meetings are
(Secretariat General and Sberbank Coordination Group EVP) chaired by the EVP in charge of Administration Services
and Investment Group. The Disciplinary Committee meets at
Executive Committee least six times a year and whenever required, depending on
DFSG Executive Committee is a consultation body that the meeting call and creates its own agenda.
operates within the framework of the responsibilities
delegated to the CEO by the Board of Directors. The
Executive Committee, in principle, meets at least once a
month under the chairmanship of the CEO. The Executive
Committee aims to make timely and reliable decisions in
accordance with the collective wisdom principle.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 81

Committee Members 5.4 Risk Management and Internal Control Mechanism

Wouter Van Roste (Board Member in charge of Internal The Board of Directors has established the risk management
Systems), Tanju Kaya (Administrative Services and and internal control systems designed to minimize the
Investment Group EVP), Ramazan Ik (Head of Internal risks that could affect shareholders and stakeholders;
Audit), Cem Demira (Head of Internal Control and and the Annual Report includes detailed information on
Compliance), Ali Murat Dizdar (Chief Legal Advisor), the functioning, management, authority, responsibilities
Mustafa zel (Branches and Central Operations Group EVP) and efficiency of the system. The Banks Internal Control
mechanism is managed by the Internal Control Center
Yavuz Elkin (Human Resources and Deniz Academy Group and Compliance Department, and by the Internal Audit
EVP), Internal Audit SVP, EVP or Company GM to whom the Department. The Board of Directors monitors the efficiency
head office/subsidiary employee reports to HR recruitment, of risk management and internal control systems via
career and remuneration management SVP quarterly analyses and reports prepared by the Audit
Committee. The Annual Reports section on the assessment
Compliance Committee of the Audit Committee provides further information on this
Compliance Committee gives advice related with the Banks issue.
in-house compliance regulations. Committee convenes 4
times a year under the chairmanship of the Board Member
5.5 The Companys Strategic Objectives
responsible for the internal systems.
The Board of Directors administers and represents the
Committee Members Company by making strategic decisions that prioritize the
Wouter Van Roste (Board Member in charge of Internal long term interests of the Company, through a rational
Systems), Cem Demira (Head of Internal Control and and prudent risk management approach designed to strike
Compliance), Tanju Kaya (Administrative Services and the optimum balance between the Banks risk, growth and
Investment Group EVP), Mustafa zel (Branches and Central returns. To this end, the Board of Directors sets the Banks
Operations Group EVP), Ali Murat Dizdar (Chief Legal strategic objectives, identifies the human and financial
Advisor), Ramazan Ik (Head of Internal Audit), Yavuz Elkin resources it will necessitate, monitors the planning of the
(Human Resources and Deniz Academy Group EVP) organization and operations geared towards this goal, and
audits the managements performance in line with defined
Operational and Information Risk Committee targets. During the implementation of the strategy, the
To discuss operational losses arising from inadequate Board oversees the compliance of the Banks operations
and erroneous IT processes and corresponding actions. with legislation, the Articles of Association, in-house
The committee convenes at least six times per year under regulations and policies.
the chairmanship of Board Member in charge of Internal
Systems. The Companys Strategic Objectives have been approved
by the Board of Directors. The strategic objectives and
Committee Members the actual degree of completion of the business plans and
Wouter Van Roste (Board Member in charge of Internal budgets designed to meet these objectives are periodically
Systems), Dilek Duman (Information Technology and monitored and reported through a robust infrastructural
Support Operations Group EVP), mer Uyar (Intertech system.
GM), Ramazan Ik (Head of Internal Audit), Cem Demira
(Head of Internal Control and Compliance),Murat ITAK
5.6 Remuneration
(IT Security and Digital-Card. Payment Operations Group
EVP), Intertech Infrastructure and Systems Management DenizBank publishes on the corporate website its
Assistant GM, Intertech PMO, Test, Document and Quality Remuneration Policy, approved by the Board of Directors
Management Assistant GM, Head office control units SVP, IT and established to set the principles of payroll and social
Audit SVP, IT Audit Department Head, Control Assessment benefits. Principles regarding the performance-based
and IT Control Department Head, Operational Risk Manager, evaluation and remuneration of members of the Board of
Intertech IT Governance and KEP Management Architectural Directors, executive managers, the second-level managers
Consultant of DenizBank, and second-level managers of subsidiaries
are defined in the Remuneration Policy. Members of the
Rating Committee Management Board (Executive Members of the Board of
The Committee convenes every three months under the Directors and Vice Presidents) receive bonuses based on
chairmanship of the Board Member in charge of Credits: performance. The Chairman, Vice Chairman, and Board
To give final decision about ratings of companies that are Members are paid an attendance fee determined by the
carried to the Committee, To follow up the functioning of General Assembly. Board members residing in Turkey
rating processes. were paid a gross monthly sum of TL 10,000 As part of
managers bonus payments GM Premiums and the PUPA
Committee Members Premium system, performance based premium payment of
Timur Kozintsev (Board Member in charge of Credit Risk- approximately 2.62 monthly salaries were made to DFSG
CRO), Selim Efe Teoman (Corporate and Commercial Credits personnel in 2016.
Group EVP), Derya Kumru (Board Member), Sinan Ylmaz
(Head of Risk Management Center), Credit policies and risk
monitoring SVP, Corporate and Commercial Allocation SVPs,
Risk Reporting and Credit Risk Control and Risk modelling
validation
82 SECTION III FINANCIAL INFORMATION AND RISK MANAGEMENT

Internal Control Activities

The Financial and Official Control Department carries out
INTERNAL AUDIT, INTERNAL the analysis and control of activities that have an impact
on the Banks balance-sheet and profits/losses, within the
CONTROL, COMPLIANCE AND RISK scope of legal regulations, accounting, transaction and
MANAGEMENT SYSTEMS customer. Additionally, the Department controls the reports
prepared by various departments to be sent to public
agencies such as the Banking Regulation and Supervision
Agency, the Central Bank of Turkey and the Savings Deposit
DenizBank, the activities, duties, and responsibilities of Insurance Fund. The Branches Internal Control Department
the internal audit, internal control, compliance and risk produces six-monthly control plans and carries out control
management functions have separated. The Internal Audit efforts across the branches. Via both branch visits and
Department, Internal Control Center and Compliance from the center, the Branches Internal Control Department
Department, and Risk Management Group perform these controls the compliance of transactions with applicable
respective activities under the supervision of a member laws, procedures and in-house regulations, searches for
of the Board of Directors, who is also a member of the any deficiencies in the internal control function, shares its
Audit Committee, pursuant to internationally accepted audit findings with the relevant branches and business lines, and
standards, domestic laws, rules and regulations, as well as follows up future developments. The Basic Controls and
the needs of the Bank and the Group. Support Department organizes the processes of reporting
and coordination inside the Internal Control Center and
Compliance Department, and executes the performance of
Internal Control Center and Compliance Department
administrative and organizational duties, the management of
Reporting directly to the Board of Directors and Audit the Banks support services processes and the assistance of
Committee, the Internal Control Center and Compliance the Consumer Affairs Coordinating Officer. The controls of
Department is charged with making sure that the Groups subsidiaries are executed by the Basic Controls and Support
activities are carried out efficiently and productively in Department and the Branches Internal Control Department
compliance with national laws and in-house regulations; II. The Central Controls Department carries out regular
reducing operational and other risks; and ensuring the centralized controls in line with certain scenarios.
reliability and integration of accounting, financial reporting
and IT systems. The Fund Management Internal Control Department is
charged with controlling transactions conducted by Fund
The internal control and compliance efforts consist Management and relevant operational departments, in
of control and reporting related activities performed financial and operational terms.
independently at specified intervals by internal control
and compliance employees at the Head Office and/or at The Control Assessment and IT Control Department carries
branches, in order to assess the compliance, adequacy and out information technology controls over IT activities that
efficiency of the Banks operations. support the Banks operations, communication channels,
IT systems, and IT security policies. The Department
The units are also responsible for ensuring coordination also oversees the harmony between IT security policies,
with domestic and foreign subsidiaries regarding internal standards and guides in line with the COBIT framework.
control and compliance and routine report flow. Finally, the Loans and Credit Cards Control Department
performs periodic controls to ensure that the loan and
The Internal Control Center and Compliance Department credit card payment transactions undertaken by the Bank
has two SVPs who report to the Head of the Department, are in compliance with applicable laws, rules, regulations
and a 92 strong workforce dispersed across 10 units as and the Banks internal procedures.
of end-2016, pursuant to national laws, rules, regulations,
communiqus, as well as in-house bylaws. Once every
Compliance Activities
three months, the Audit Committee is informed about the
activities, agenda and organization of the Internal Control In 2016, the Compliance Group fulfilled its duties via the
Center and Compliance Department. following departments:

>> Corporate Compliance Department, and

>> Anti-Money Laundering Department.

The Corporate Compliance Department is responsible for

setting basic compliance rules; overseeing the coordination
of compliance risk management; ensuring compliance
with the Group standards and local rules and regulations;
organizing compliance-related information flow and
reporting procedures among the subsidiaries.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 83

Within the scope of Law No. 5549 on the Prevention of 4- Audit of Information Systems Processes
the Laundering Proceeds of Crime and Law No. 6415 and The Department conducts audits to ensure that DFSGs IT
related regulations on the Prevention of the Financing of systems processes are structured to support the Banks
Terrorism, the Anti-Money Laundering Departments duties policies, and are managed in compliance with applicable
include formulating and updating the Banks policies and laws and regulations. In 2016, the Department conducted
procedures; evaluating the Banks risks and taking the 15 audits of this type.
necessary measures; providing continuous information
to the senior management; monitoring and controlling 5- Audit Management Office
risk-bearing customer transactions; giving opinion on The Departments activities include making necessary plans
or approval for transactions concerning risk-bearing and arrangements regarding all of DFSGs internal audit
customers, sectors and countries; controlling correspondent activities; contributing to the identification of the best audit
banks; identifying and monitoring suspicious transactions; tools and methods; generating relevant reports; preparing
reporting suspicious transactions to the public authorities; operational procedures; and updating existing procedures
and organizing classroom, e-learning and Deniz TV under the supervision of the Head of Internal Audit.
seminars among Bank personnel on the Prevention of
Laundering Proceeds of Crime and Financing of Terrorism.
Risk Management Group
The Risk Management Group carries out comprehensive
Internal Audit Department
risk management efforts which play a critical role in the
The auditors of the Internal Audit Department inspect formulation of DenizBanks operational strategies. The
the level of compliance of the Banks operations with Group is responsible for creating, auditing and reporting
legal requirements, the Articles of Association, in-house necessary policies and procedures to identify, measure,
regulations and banking principles. The promotion analyze and monitor risks, which are primarily real or
of auditors is based on examination results and job potential risks including the risk/return ratio of cash flows.
performance. Recruited after a very rigorous selection These policies and procedures follow the principles set by
process followed by an intensive training program, internal the Banks executive management and the Risk Management
auditors conduct their work in an impartial, independent Group and are approved by the Board of Directors.
and meticulous fashion, in line with their professional code
of ethics. Additionally, the Internal Audit Department also Depending on the type of process involved, the Risk
actively informs and trains Bank personnel. In 2016, the Management Group works in collaboration with the Audit
Internal Audit Department staff administered 499 hours of Committee, Assets and Liabilities Committee, Credit
training to 1,818 employees. As of year-end 2016, Internal Committee, Risk Committee, as well as the Internal Control
Audit Department operates with 115 staff members. The Center and Compliance Department, and the Internal Audit
Internal Audit Department performs its functions under the Department regarding both policies and practices.
following five organizational categories:
>> The Risk Management Group periodically reports risk
1- Audits of Head Office Processes and Subsidiaries analyses to the Audit Committee and the Assets and
The Department audits the processes of Head Office units, Liabilities Committee to provide guidance in setting and
and the processes and activities of domestic and foreign monitoring risk limits and developing risk management
subsidiaries in accordance with applicable laws, rules and strategies.
regulations. Additionally, the Department monitors its >> Credit risk management is performed through a holistic
findings in line with an action plan, and analyzes relevant approach that incorporates modeling, validation,
processes. Thirty-nine such audits were performed in 2016. analysis, evaluation and monitoring processes. Credit
risk-related processes are managed with the participation
2- Branch Audits of the Corporate and Commercial Loans Group, Credit
The Department conducts risk assessments of the branches, Policies, and Retail, SME, Agricultural Loan Allocation
prepares annual branch audit plans, audits branch activities, Group, Credit Follow-Up and Risk Monitoring Group, Risk
and shares the findings with relevant branches and Head Management, Credit Committee, and Executive Credit
Office departments. In 2016, 430 branches and eight Risk Committee.
regional offices were audited in accordance with the >> While each business unit is responsible for managing
audit plan. its own operational risk, the Risk Management Group
sets policies and monitors and reports activities in
3- Investigations and Inquiries coordination with the Internal Control Center and
The Department makes investigations and inquiries in Compliance Department, and the Internal Audit
accordance with Internal Audit regulations, prospectus, Department. Assessments are performed by the Risk
the Banks internal rules and legal requirements; prepares Committee and the Audit Committee.
reports; and monitors the cases. Additionally, the
Department provides training for employees in the early Risk management policies consist of risk identification
detection and prevention of misconduct. In 2016, 791 Bank measurement and management processes. DenizBank
employees received 121 hours of training in this area. conducts its banking activities by strictly adhering to risk
management policies that aim to analyze risks and manage
them within acceptable limits. Adopting this approach as a
core operating principle throughout the organization, the
Bank also develops systems that comply with Basel Banking
Supervision Committee regulations, and other guiding
international risk management principles.
84 SECTION III FINANCIAL INFORMATION AND RISK MANAGEMENT

Liquidity Risk
Risk Management policies are based on the following types
of risk: Liquidity adequacy is monitored within the limits defined by
the Board of Directors to ensure that the Bank has sufficient
>> Market Risk, liquidity and reserves under any condition. The adequacy
>> Basel II/Credit Risk, of existing liquidity and reserve opportunities are tested
>> Liquidity Risk, against worst-case scenarios. While analyzing liquidity
>> Operational Risk, and adequacy, any negative developments that may arise as
>> Structural Interest Rate Risk. a result of a change in market conditions or customer
behavior are taken into account. The measures to be taken
and procedure to be followed under stress conditions in
Market Risk
order to preserve liquidity were put down in writing.
The Bank conducts activities in the money and capital
markets in accordance with its risk policies and limits.
Operational Risk
DenizBank measures market risk using the internationally
accepted Value at Risk (VaR) method, which is known All events that bear operational risk for the Bank and its
for its dynamic structure that adapts easily to changing subsidiaries are recorded in a manner that captures the
market conditions. VaR quantifies the loss of value that the causes and impacts of the events, collections and measures
portfolio of the Bank and its financial subsidiaries might taken to prevent their repeat occurrence. Events that are
sustain at a given time and confidence interval as a result frequent or significant are discussed by the Internal Control
of fluctuations in risk factors. VaR analyses are supported Center, the Internal Audit Department and the relevant
by scenario analyses and stress tests. This method allows department, with corrective/preventive measures put into
for adaptation to changing market conditions when the risk practice. Potential operational risk is assessed by means of
level is determined. The reliability of the model used in Risk and Control Self-Assessment. The adequacy of current
calculating VaR is periodically tested through back testing. measures is reviewed during this study and new measures
are implemented when deemed necessary. Additionally, the
The Bank has formulated risk policies and has established coordination of the Business Continuity Program is kept
risk based limits with regards to its money and capital up to date and testing of same is undertaken to ensure its
market trading activities. effectiveness.

Basel II/Credit Risk Structural Interest Rate Risk

In line with BRSAs regulations on Basel II, the Risk DenizBank monitors the structural interest rate risk
Management Group oversees the calculation of legal credit exposure due to the Banks balance sheet structure by
risk weighted assets in Pillar I in coordination with the using advanced models, and controls assumed risks through
Financial Affairs Group. With regard to Pillar II, the Bank the limits defined by Board of Directors. The Bank conducts
calculates the annual general stress test in accordance interest sensitivity analyses to measure the impact of the
with its plans and scenarios; meanwhile, the Internal Banks maturity mismatch on net present value and income.
Capital Assessment Process Report is prepared by Bank The structural interest rate risk exposure due to the Banks
management in coordination with other departments. balance sheet structure is monitored by using advanced
In order to ensure compliance with Basel II credit risk models, and assumed risks are controlled through defined
internal assessment methods, the Group participates in limits.
the development of the necessary credit risk models
and coordinates efforts to integrate these with the data
systems infrastructure. The Group is also charged with the
validation, control and reporting of the credit levels yielded
by the current internal credit assessment models.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 85

The 2016 activities of the groups that report to the Audit

Committee were as follow below.
ASSESSMENTS OF THE AUDIT
COMMITTEE Internal Audit Department
Reporting directly to the Board of Directors, the Internal
Audit Department is charged with ensuring that internal
audit activities are in line with applicable laws, rules and
regulations and the Banks strategies, policies, principles
Reporting to the Board of Directors, the Banks Audit and targets. The Internal Audit Department oversees
Committee functions in accordance with Banking Law No. the efficiency and adequacy of internal control and risk
5411 and the Banks regulation on Internal Systems and management systems, and makes a risk assessment of
Internal Capital Adequacy Evaluation Process. The Audit the operations of the Bank and its subsidiaries. Efforts
Committee meets periodically on behalf of the Board of to efficiently manage operational risk account for a large
Directors and sets the Banks audit policies. portion of the audit activity. In 2016, the Internal Audit
Department also successfully audited the financial and
The Audit Committee is responsible for taking all the steps IT systems of the Banks entire domestic and overseas
necessary to oversee the audit and public disclosure of the business lines and subsidiaries, both from the Head Office
Banks accounting system and financial data, as well as the and on-site.
functioning and effectiveness of its internal audit, internal
control, compliance, and risk management systems. Operating with a 115 strong workforce, DenizBanks
Internal Audit Department fulfills its responsibilities in an
The Audit Committee receives quarterly reports from impartial and independent manner, and reports its findings
the control units (i.e. internal audit, internal control and to the Audit Committee. Aiming to establish a proactive
compliance, risk management) in order to evaluate the audit structure, the Internal Audit Department runs its
adequacy of the methods for the identification, control audit operations largely based on the results of risk
and monitoring of risks that the Bank is exposed to, assessments. The Department completed all activities listed
and to report its findings to the Board of Directors. in the 2016 Annual Audit Plan as scheduled. In addition to
Furthermore, the Audit Committee submits its opinions and such pre-planned audit activities, in 2016 the Department
recommendations on significant matters to the Board of also carried out investigations and inquiries, participated
Directors. in various projects and provided a range of consultancy
services requested by the Banks executive management,
In line with the four meetings it held in 2016 and the when deemed necessary.
activities it conducted as part of its responsibilities, the
Audit Committee took the following actions:
Internal Control Center and Compliance Department
The Audit Committee audited the Banks financial statements Reporting directly to the Audit Committee, the Internal
and notes for year-end 2015 and the first, second and third Control Center and Compliance Department carried out its
quarters of 2016 for compliance with the Banks accounting 2016 activities with a staff of 92 employees. The Internal
principles and international accounting standards, as well Control Center and the Board of Compliance performed
as to confirm the accuracy of the information used. The central and on-site controls of the branches, Head Office
results were reported to the Board of Directors along with units and subsidiaries through the Banks own internal
the Audit Committees own assessments. The Committee control and reporting software. Subsequently, the Center
reviewed the Internal Audit Plan for 2016 and submitted shared the findings of these controls with the relevant
it to the Board of Directors for approval. The Committee business lines and managers, and monitored the actions
also assessed and approved the quarterly reports of the taken. Classroom and web-based training seminars
Internal Audit, Internal Control and Compliance, and Risk (including examination) were held for all employees of
Management units. the Bank and its subsidiaries on the prevention of money
laundering and the financing of terrorism, ethical principles,
In addition, the Committee inspected the performance fight against corruption, prevention of conflicts of interest,
and objectivity of the independent external auditors and the reinforcement of the compliance culture and IT security.
monitored their work at all stages.

The Committee also performed a risk assessment related

to the support services to be received by the Bank, and
submitted its assessments and the risk management
program in a report to the Board of Directors, complete
with a list of these service providers.
86 SECTION III FINANCIAL INFORMATION AND RISK MANAGEMENT

Via the Banks internal tracking software, the Department The Credit Risk Control and Risk Models Validation
performed controls pertaining to the laundering proceeds Department coordinates the Banks Basel II compliance
of crime and financing of terrorism, monitored relevant processes and generates the internal risk reports. Basel
national and international legislation, and took measures II compliance efforts include the development and
necessary for compliance. maintaining the legal reporting data structure and reporting
processes within the scope of Pillar I and stress testing and
In line with relevant BRSA regulations, the Department preparation of ICAAP report within the scope of Pillar II.
monitored, updated and tested processes related to the The Department also undertakes the process of validation
Management Declaration. and control of internal rating based models.

There was work on the examination of projects by the Bank Operational risk events are regularly recorded by the
and its affiliates as project stakeholder, and opinions and Operational Risk Management Department. Relatively
approvals were provided on scope documents as regards high impact events are defined and related measures are
new products and processes. followed. The Operational Risk Department coordinates the
business continuity plan developed against any business
interruption risk of the Bank. Business Continuity Plans
Risk Management Group
are regularly updated, tested and preventive measures are
The Risk Management Group is responsible for creating and taken. Certain regulations and policies are developed at
measuring risks and defining and implementing risk policies DenizBank in accordance with Sberbank Group standards:
and procedures, as well as analyzing, monitoring, reporting, operational risk policy, internal regulation on data loss
investigating, confirming and auditing risks, in line with the recovery, scenario analysis and self-assessment regulations.
principles set jointly by the Banks executive management The Banks Business Continuity Program is coordinated to
and the Risk Management Group, and approved by the cover potentially significant operational risks.
Board of Directors.

The Risk Management Group had 19 employees as of

December 31, 2016.

The Risk Management Groups Market and Interest Rate Risk

Department measures market risk, interest risk and liquidity
risk continually upgrades the analyses and methods NHAT SEVN WOUTER VAN ROSTE PAVEL BARCHUGOV
utilized, oversees compliance with risk tolerance as defined Board Member and Board Member and Board Member and
by the Board of Directors, and reports to the relevant units, Audit Committee Audit Committee Audit Committee
executive management and the Audit Committee. Member Member Member

While analyzing the possible effects of market fluctuations

on the Banks balance sheet and income statement, and
setting in-house risk policies, the Risk Management Group
takes into account legal limitations and regulations, best
practices, and the Banks own requirements. Each year, the
Board of Directors reviews the risk limits determined for
the risk types in question.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 87

INDEPENDENT AUDITOR REPORT

ON THE ANNUAL REPORT

(CONVENIENCE TRANSLATION OF A REPORT ORIGINALLY ISSUED IN TURKISH)

INDEPENDENT AUDITORS REPORT

ON THE ANNUAL REPORT OF THE BOARD OF DIRECTORS

To the Board of Directors of DenizBank A..

Report on the Audit of the Annual Report of the Board of Directors in Accordance with the Independent Auditing Standards
We have audited the annual report of DenizBank A.. (the Bank) and its consolidated subsidiaries (together will be referred as the Group) as at
December 31, 2016.

Responsibility of the Banks Board of Directors

In accordance with Article 514 of the Turkish Commercial Code (TCC) no.6102 and communique on Principles and procedures set out by the regulations on
preparation and issuance of annual reports of Bankspublished in official gazette no.26333 dated November 1, 2006, the Bank management is responsible
for the preparation and fair presentation of annual report consistent with the consolidated and unconsolidated financial statements prepared in accordance
with the Regulation on Accounting Applications for Banks and Safeguarding of Documents published in the Official Gazette no.26333 dated November
1, 2006 and other regulations on accounting records of Banks published by Banking Regulation and Supervision Agency (BRSA), circulars, interpretations
published by BRSA and the provisions of Turkish Accounting Standards for the matters which are not regulated by these regulation; BRSA Accounting and
Financial Reporting Legislation (consolidated and unconsolidated financial statements) and for the internal control considered for the preparation of a
report of such quality.

Independent Auditors responsibility

Our responsibility is to express an opinion based on the independent audit we performed on the Banks annual report, in accordance with the Article
397 of TCC and Communique on Independent Audit of Banks published in the Official Gazette no.29314 dated 2 April 2015 on whether the financial
information provided in this annual report is presented fairly and consistent with the Banks consolidated and unconsolidated financial statements there on
which auditors report dated February 23, 2017 has been issued.

We conducted our audit in accordance Independent Standards of Auditing (ISA) which is a part of Turkish Auditing Standards promulgated by the Public
Oversight Accounting and Auditing Standards Authority (POA). These standards require compliance with ethical requirements the independent audit
to be planned and performed to obtain reasonable assurance on whether the financial information provided in the annual report is free from material
misstatement and consistent with the consolidated and unconsolidated financial statements. An independent audit involves performing audit procedures to
obtain audit evidence about the historical financial information. The procedures selected depend on the independent auditors professional judgment. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion
In our opinion, the financial information provided in the annual report of the Board of Directors is presented fairly and consistent with the audited
consolidated and unconsolidated financial statements in all material respects.

Report on other responsibilities arising from regulatory requirements

In accordance with paragraph 3 of Article 402 of the Turkish Commercial Code, within the framework of the Independent Auditing Standards 570 Going
Concern, no material uncertainty has come to our attention to be disclosed which causes us to believe that the Bank will not be able to continue as a
going concern in the foreseeable future.

Gney Bamsz Denetim ve Serbest Muhasebeci Mali Mavirlik Anonim irketi

A member firm of Ernst &Young Global Limited

Fatma Ebru Ycel, SMMM

Partner

Istanbul, March 1, 2017

88 SECTION III FINANCIAL INFORMATION AND RISK MANAGEMENT

FIVE-YEAR SUMMARY FINANCIAL

HIGHLIGHTS

Summary Consolidated Financial Highlights (TL million)

Balance Sheet 2016 2015 2014 2013 2012
Securities(1) 12,760 13,381 11,664 7,601 8,656
Net Loans(2) 95,023 77,705 64,564 56,466 38,801
Banks 18,588 15,634 12,853 10,132 5,932
Total Assets 135,554 112,886 94,403 79,668 56,495
Customer Deposits(3) 90,621 71,204 61,831 49,702 34,985
Time 71,742 56,949 50,462 39,091 27,950
Demand 18,880 14,255 11,369 10,611 7,035
Borrowings(4) 11,259 11,257 7,889 10,018 6,019
Securities Issued(4) 3,491 3,086 3,393 2,587 1,753
Sub-ordinated Loans 5,484 4,846 3,923 2,354 888
Shareholders Equity 10,590 8,294 7,161 6,088 5,665
Paid-in Capital 3,316 1,816 716 716 716
Non-cash Loans 28,782 24,444 20,452 18,416 12,381

Income Statements 2016 2015 2014 2013 2012

Interest Income 10,120 8,387 7,080 5,454 4,806
Interest Expense -4,985 -4,311 -3,453 -2,443 -2,337
Net Interest Income after Provisions 3,299 2,715 2,675 1,983 1,742
Non-interest Income 1,865 1,439 1,276 1,612 952
Non-interest Expense -3,339 -3,013 -2,736 -2,327 -1,739
Net Profit/Loss From Discontinued Operations 1 1 0 0 0
Net Income 1,401 859 939 1,011 720

Other Highlights 2016 2015 2014 2013 2012

Number of Branches(5) 737 735 758 713 624
Number of Employees 14,832 14,853 14,979 14,413 11,618
Number of ATMs 4,756 4,355 3,989 3,749 3,180
Number of POS Terminals 200,756 200,020 191,148 185,980 122,567
Number of Credit Cards 3,572,969 3,284,266 3,098,579 2,717,839 2,191,590

All financial figures presented in this table are extracts from the audited consolidated financial statements prepared in accordance with accounting and valuation standards as described
in the Regulation on Principles Related to Banks Accounting Applications and Maintaining the Documents, dated 1 November 2006, which is published in the Official Gazette No.
26333, Turkish Accounting Standards and Turkish Financial Reporting Standards.

(1)
Sum of financial assets at fair value through profit or loss (excluding trading purpose derivatives), investment securities available for sale and investment securities held to maturity.
(2)
Includes factoring and leasing receivables.
(3)
Excludes bank deposits.
(4)
Securities issued by Special Purpose Entity DFS Funding Corp. are reported under Securities Issued.
(5)
Includes subsidiaries branches.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 89

Summary Unconsolidated Financial Highlights (TL million)

Balance Sheet 2016 2015 2014 2013 2012
Securities(1) 11,561 11,790 9,822 6,135 7,392
Net Loans 61,820 51,349 43,096 38,637 28,191
Banks 18,579 15,630 12,848 10,127 6,837
Total Assets 103,159 84,221 70,931 60,555 44,198
Customer Deposits(2) 59,525 45,117 41,552 34,328 25,807
Time 47,716 36,751 34,188 26,939 20,816
Demand 11,809 8,366 7,364 7,389 4,991
Borrowings 10,751 10,699 7,508 9,123 5,398
Securities Issued 1,153 1,259 1,622 1,371 772
Sub-ordinated Loans 5,484 4,846 3,923 2,354 888
Shareholders Equity 10,562 8,269 7,139 6,043 5,030
Paid-in Capital 3,316 1,816 716 716 716
Non-cash Loans 28,522 24,275 20,422 18,326 12,106

Income Statements 2016 2015 2014 2013 2012

Interest Income 8,338 6,805 5,744 4,515 4,095
Interest Expense -4,285 -3,651 -2,838 -2,007 -1,953
Net Interest Income after Provisions 2,308 1,936 2,019 1,540 1,476
Non-interest Income 1,640 1,122 1,072 1,092 1,131
Non-interest Expense -3,000 -2,715 -2,509 -2,069 -1,614
Net Profit/Loss From Discontinued Operations 0 0 0 34 0
Net Income 1,409 763 989 790 813

Other Highlights 2016 2015 2014 2013 2012

Number of Branches 694 692 716 689 610
Number of Employees 12,938 12,923 13,187 12,822 10,280
Number of ATMs 4,756 4,355 3,989 3,749 3,180
Number of POS Terminals 200,756 200,020 191,148 185,980 122,567
Number of Credit Cards 3,572,969 3,284,266 3,098,579 2,717,839 2,191,590

All financial figures presented in this table are extracts from the audited unconsolidated financial statements prepared in accordance with accounting and valuation standards as described
in the Regulation on Principles Related to Banks Accounting Applications and Maintaining the Documents, dated 1 November 2006, which is published in the Official Gazette No. 26333,
Turkish Accounting Standards and Turkish Financial Reporting Standards.

(1)
Sum of financial assets at fair value through profit or loss (excluding trading purpose derivatives), investment securities available for sale and investment securities held to maturity.
(2)
Excludes bank deposits.
90 SECTION III FINANCIAL INFORMATION AND RISK MANAGEMENT

ASSESSMENT OF FINANCIAL
POSITION

Shareholders Equity and Capital Adequacy (TL million)

Consolidated Unconsolidated
2016 2015 2014 2016 2015 2014
Capital Adequacy Ratio (%) 14.17 12.93 12.87 17.52 16.07 14.09
Shareholders Equity 10,590 8,294 7,161 10,562 8,269 7,139
Return on Average Equity (%) 14.8 11.1 14.2 15.0 9.9 15.0
Non-performing Loans/ Total Cash Loans Ratio (%) 3.7 4.0 3.0 5.1 5.0 3.8
Free Capital (1) 8,115 6,164 5,397 3,196 2,587 2,623
Free Capital Ratio (%)(2) 5.99 5.46 5.72 3.10 3.07 3.70

(1)
Free Capital = Shareholders Equity - Net Non-performing Loans - Subsidiaries - Deferred Tax Assets - Tangible and Intangible Fixed Assets - Prepaid Expenses - Fixed Assets to be
disposed of.
(2)
Free Capital Ratio = Free Capital / Total Assets.

Asset Quality
Consolidated Unconsolidated
2016 2015 2014 2016 2015 2014
Non-performing Loans/ Total Cash Loans Ratio (%) 3.7 4.0 3.0 5.1 5.0 3.8
Non-performing Loans Provision Ratio (%) 113.8 103.1 112.4 110.1 109.9 120.0
Loan Loss Provisions/ Total Cash Loans Ratio (%) 4.3 4.1 3.4 5.7 5.5 4.6
Cost of Risk (%) 2.5 1.4 1.1 3.4 1.9 1.5
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 91

CAPITAL MARKET INSTRUMENTS

ISSUED BY DENZBANK

Funding Amount TL Maturity Issue Date Maturity Date

Bill 181,000,000 84 days January 15, 2016 April 08, 2016
Bill 23,000,000 189 days January 15, 2016 July 22, 2016
Bill 55,000,000 91 days January 29, 2016 April 29, 2016
Bill 50,000,000 112 days February 24, 2016 June 15, 2016
Bill 125,000,000 84 days March 11, 2016 June 03, 2016
Bill 3,000,000 168 days March 11, 2016 August 26, 2016
Bill 175,000,000 98 days March 25, 2016 July 01, 2016
Bill 200,000,000 112 days April 08, 2016 July 29, 2016
Bill 15,000,000 107 days April 13, 2016 July 29, 2016
Bill 63,000,000 105 days April 29, 2016 Aug 12, 2016
Bill 10,000,000 175 days April 29, 2016 Oct 21, 2016
Bill 60,000,000 98 days May 20, 2016 Aug 26, 2016
Bill 25,000,000 168 days May 20, 2016 Nov 04, 2016
Bill 85,000,000 84 days Jun 03, 2016 Aug 26, 2016
Bill 55,000,000 175 days Jun 03, 2016 Nov 25, 2016
Bill 50,000,000 93 days Jun 15, 2016 Sep 16, 2016
Bill 150,000,000 112 days July 01, 2016 Oct 21, 2016
Bill 26,000,000 161 days July 01, 2016 Dec 09, 2016
Bill 175,000,000 98 days July 29, 2016 Nov 04, 2016
Bill 25,000,000 175 days July 29, 2016 Jan 20, 2017
Bill 75,000,000 119 days Aug 12, 2016 Dec 09, 2016
Bill 85,000,000 98 days Aug 19, 2016 Nov 25, 2016
Bill 65,000,000 175 days Aug 19, 2016 Feb 10, 2017
Bill 129,000,000 91 days Oct 21, 2016 Jan 20, 2017
Bill 71,000,000 182 days Oct 21, 2016 April 21, 2017
Bill 130,000,000 98 days Nov 04, 2016 Feb 2, 2017
Bill 110,000,000 168 days Nov 04, 2016 April 21, 2017
TOTAL Bills 2,216,000,000

DENIZBANK RATINGS BY
INTERNATIONAL RATING AGENCIES

Moodys* Fitch Ratings**

Outlook Negative Outlook Stable
Long Term Foreign Currency Deposits Ba2 Long Term Foreign Currency BB+
Short Term Foreign Currency Deposits Not Prime Short Term Foreign Currency B
Long Term Local Currency Deposits Ba2 Long Term Local Currency BB+
Short Term Local Currency Deposits Not Prime Short Term Local Currency B
Baseline Credit Assessment (BCA) ba3 Viability bb+
*As of 26.09.2016. Support 3
National AA (tur)
**As of 05.08.2016.
92 SECTION III FINANCIAL INFORMATION AND RISK MANAGEMENT
 INDEPENDENT AUDITORS REPORT,
UNCONSOLIDATED FINANCIAL STATEMENTS
AND NOTES FOR THE YEAR
ENDED 31 DECEMBER 2016

(Convenience Translation of the Independent Auditors Report

Originally Prepared and Issued in Turkish See Note 3.I.c)
94 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 95

I. INDEPENDENT AUDITORS REPORT

II. PUBLICLY DISCLOSED UNCONSOLIDATED FINANCIAL REPORT
96 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

(Convenience translation of the independent auditors report originally issued in Turkish, See Note I.c of Section Three)

Independent Auditor Report

To the Board of Directors of Denizbank A..

Report on the Unconsolidated Financial Statements

We have audited the accompanying unconsolidated balance sheet of Denizbank A.. (the Bank) as at 31 December 2016
and the related unconsolidated income statement, unconsolidated statement of income and expense items accounted under
shareholders equity, unconsolidated statement of cash flows and unconsolidated statement of changes in shareholders equity
for the year then ended and a summary of significant accounting policies and other explanatory notes to the financial statements.

Responsibility of the Banks Board of Directors for the financial statements

Bank management is responsible for the preparation and fair presentation of the unconsolidated financial statement in accordance
with Regulation on Accounting Applications for Banks and Safeguarding of Documents published in the Official Gazette
no.26333 dated 1 November 2006 and other regulations on accounting records of Banks published by Banking Regulation
and Supervision Agency (BRSA), circulars, interpretations published by BRSA and BRSA Accounting and Financial Reporting
Legislation which includes the provisions of Turkish Accounting Standards for the matters which are not regulated by these
regulation and for such internal control as management determines is necessary to enable the preparation of the financial
statement that is free from material misstatement, whether due to fraud or error.

Independent Auditors responsibility

Our responsibility is to express an opinion on the unconsolidated financial statements based on our audit. We conducted our
audit in accordance with communique Independent Audit of Banks published by BRSA on the Official Gazette No.29314 dated
2 April 2015 and with the Independent Auditing Standards which is a part of Turkish Auditing Standards promulgated by the
Public Oversight Accounting and Auditing Standards Authority (POA). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of
material misstatement.

An independent audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
unconsolidated financial statements. The procedures selected depend on the independent auditors professional judgment,
including the assessment of risks of material misstatement of the unconsolidated financial statements, whether due to fraud or
error. In making those risk assessments, the independent auditor considers the internal control relevant to banks preparation
and fair presentation of the unconsolidated financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the banks internal control. An
independent audit also includes evaluating the appropriateness of accounting policies used by the reasonableness of accounting
estimates made by the management as well as evaluating the overall presentation of the unconsolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion the accompanying unconsolidated financial statements presents fairly, in all material respects, the financial
position of Denizbank A.. as at 31 December 2016 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 in accordance with BRSA Accounting and
Financial Reporting Legislation.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 97

Reports on arising from other regulatory requirements:

In accordance with Article 402 paragraph 4 of the Turkish Commercial Code (TCC) no 6102; no significant matter has come to
our attention that causes us to believe that the Banks bookkeeping activities for the period 1 January - 31 December 2016 are
not in compliance with the code and provisions of the Banks articles of association in relation to financial reporting.

In accordance with Article 402 paragraph 4 of the TCC; the Board of Directors submitted to us the necessary explanations and
provided required documents within the context of audit.

Additional paragraph for convenience translation to English:

As explained in detail in Note I.c of Section Three, accounting principles and standards set out by regulations in conformity
with BRSA Accounting and Financial Reporting Legislation, accounting principles generally accepted in countries in which
the accompanying unconsolidated financial statements are to be distributed and International Financial Reporting Standards
(IFRS) have not been quantified in the accompanying unconsolidated financial statements. Accordingly, the accompanying
unconsolidated financial statements are not intended to present the financial position, results of operations and changes in
financial position and cash flows in accordance with the accounting principles generally accepted in such countries and IFRS.

Gney Bamsz Denetim ve Serbest Muhasebeci Mali Mavirlik Anonim irketi

A member firm of Ernst & Young Global Limited

Fatma Ebru Ycel, SMMM

Partner

Istanbul, Turkey

23 February 2017
98 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK A..
UNCONSOLIDATED FINANCIAL REPORT AS OF 31 DECEMBER 2016

Address of the Banks Headquarters

Bykdere Caddesi No:141
34394 -ESENTEPE/STANBUL

Telephone and Fax Numbers
Tel : 0 212 348 20 00
Fax: 0 212 336 61 86

Website of the Bank
www.denizbank.com

E-mail address of the Bank
[email protected]

The unconsolidated financial report package prepared in accordance with the statement Financial Statements and Related Disclosures and
Footnotes to be Announced to Public as required by the Banking Regulation and Supervision Agency (BRSA), is comprised of the following
sections.

GENERAL INFORMATION ABOUT THE BANK

UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK
DISCLOSURES ON ACCOUNTING POLICIES IN RELATED PERIOD
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT OF THE BANK
DISCLOSURES AND FOOTNOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS
OTHER DISCLOSURES AND FOOTNOTES
INDEPENDENT AUDITORS REPORT

The unconsolidated financial statements and related disclosures and footnotes that were subject to independent audit, are prepared in
accordance with the Regulation on Accounting Principles and Documentations, Turkish Accounting Standards, Turkish Financial Reporting
Standards and the related statements, and in compliance with the financial records of our Bank.Unless stated otherwise, the accompanying
unconsolidated financial statements are presented in Thousands of Turkish Lira.

23 February 2017

HAKAN ELVERD SUAV DEMRCOLU HAKAN ATE HERMAN GREF

Senior Vice President Executive Vice President Member of Board of Directors Chairman of Board of
International and Regulatory Financial Affairs and President and Chief Directors
Financial Reporting Executive Officer

PAVEL BARCHUGOV WOUTER G.M. VAN ROSTE NHAT SEVN

Member of Board of Directors Member of Board of Directors Member of Board of Directors
and Audit Committe and Audit Committe and Audit Committe

Contact information for questions on this financial report:

Name/Title: mge htiyar / Department Head, International Reporting Department
Tel No: 0 212 348 5997
Fax No: 0 212 336 6186
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 99

PAGE
SECTION ONE
General Information

I. The Banks date of establishment, beginning statute, its history including changes in its statute 100
II. Capital structure, shareholders controlling the management and supervision of the Bank directly or indirectly, and if exists, changes on these issues and the Group that the Bank belongs to 100
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 and their
areas of responsibility 101
IV. Explanations regarding the real person and corporate qualified shareholders at the Bank 102
V. Type of services provided and the areas of operations of the Bank 102
VI. Existing or potential, actual or legal obstacles to immediate transfer of capital between Bank and its subsidiaries and repayment of debts 102

SECTION TWO
Unconsolidated Financial Statements

I. Unconsolidated statements of financial position (Balance sheets) 104

II. Unconsolidated statements of off-balance sheet items 106
III. Unconsolidated statements of income 107
IV. Unconsolidated statements of income and expenses under shareholders equity 108
V. Unconsolidated statements of changes in shareholders equity 109
VI. Unconsolidated statements of cash flows 110
VII. Unconsolidated profit distribution tables 111

SECTION THREE
Accounting Policies

I. Basis of presentation 112
II. Explanation on the strategy for the use of financial instruments and transactions denominated in foreign currencies 114
III. Explanations on investments in associates, subsidiaries, joint ventures 115
IV. Explanations on forward transactions, options and derivative instruments 115
V. Explanations on interest income and expenses 116
VI. Explanations on fees and commissions 116
VII. Explanations on financial assets 116
VIII. Explanations on impairment of financial assets 118
IX. Explanations on offsetting financial instruments 118
X. Explanations on sale and repurchase agreements and transactions related to the lending of securities 118
XI. Explanations on assets held for sale and discontinued operations 118
XII. Explanations on goodwill and other intangible assets 119
XIII. Explanations on tangible assets 119
XIV. Explanations on investment properties 120
XV. Explanations on leasing activities 120
XVI. Explanations on provisions and contingent liabilities 120
XVII. Explanations on obligations for employee benefits 120
XVIII. Explanations on taxation 121
XIX. Additional explanations on borrowings 122
XX. Explanations on issuance of share certificates 122
XXI. Explanations on acceptances 122
XXII. Explanations on government grants 122
XXIII. Explanations on segment reporting 122
XXIV. Explanations on other matters 122

SECTION FOUR
Financial Position And Risk Management

I. Explanations related to the shareholders equity 123
II. Explanations related to the credit risk and risk management 128
III. Explanations related to the foreign currency exchange rate risk 138
IV. Explanations related to the interest rate risk 140
V. Position risk of equity shares on banking book 143
VI. Explanations related to the liquidity risk 143
VII. Explanations related to leverage ratio 147
VIII. Explanations on Risk Management 147
IX. Presentation of financial assets and liabilities at their fair value 160
X. Transactions carried out on behalf and account of other parties and fiduciary transactio 161
XI. Explanations related to hedging transactions 161
XII. Explanations related to the segment reporting 162

SECTION FIVE
Disclosures and Footnotes on Unconsolidated Financial Statements

I. Explanations and disclosures related to assets 164

II. Explanations and disclosures related to liabilities 177
III. Explanations and disclosures related to off-balance sheet items 184
IV. Explanations and disclosures related to statement of income 187
V. Explanations and disclosures related to statement of changes in shareholders equity 191
VI. Explanations and disclosures related to cash flow statement 193
VII. Explanations and disclosures related to the Banks risk group 194
VIII. Domestic, foreign and off-shore banking branches and foreign representatives of the Bankr 195

SECTION SIX
Other Disclosures and Footnotes

I. Other explanations related to The Banks operations 196

SECTION SEVEN
Independent Auditors Report

I. Information on the independent auditors report 197
II. Disclosures and footnotes prepared by independent auditor 197
100 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

SECTION ONE

GENERAL INFORMATION
I. The Banks date of establishment, beginning statute, its history including changes in its statute

Denizbank A.. (the Bank) was established as a public bank to provide financing services to the marine sector in 1938.
In 1992, as a result of the resolution of the Government to merge some public banks, the Bank was merged to Emlakbank.
Following the resolution of the High Council of Privatization numbered 97/5 and dated 20 March 1997 to privatize 100% of
shares of Denizbank A.., share sale agreement between Zorlu Holding A.. and the Privatization Administration was signed on
29 May 1997 and the Bank started its activities on 25 August 1997 upon obtaining a permission to operate. Banks shares have
been quoted on Borsa Istanbul (BIST) since 1 October 2004. 0,15% of the Banks shares are publicly held as of 31 December
2016.

Dexia Participation Belgique SA, owned 100% directly and indirectly by Dexia SA/NV, acquired 75% of the outstanding shares
of the Bank from Zorlu Holding A.. on 17 October 2006, subsequent to the transfer of shares, Dexia Participation Belgiques
ownership rate increased to 99,85%.

On 8 June 2012 Dexia Group and Sberbank of Russia (Sberbank) have signed a sale and purchase agreement regarding the
acquisition of 715.010.291,335 the Bank shares representing 99,85% of the Banks capital. The transaction covers the Bank as
well as all of its subsidiaries in Turkey, Austria and Russia. Following all the necessary regulatory authorizations in the countries
in which seller and buyer operate including that of the European Commission, after the approvals of Competition Authority
on 9 August 2012, the Banking Regulation and Supervision Agency on 12 September 2012 and the Capital Markets Board
(CMB) on 24 September 2012, Dexia has transferred 99,85% of shares of the Bank to Sberbank with a total consideration
of TL 6.469.140.728(*) (Euro 2.790 million) which is the Preliminary Purchase Price determined as per the sale and purchase
agreement as of 28 September 2012. Following the completion of the adjustment process of the Preliminary Purchase Price to
Purchase Price in accordance with the terms in the Share Purchase Agreement, an additional amount of Euro 185 Million which
is equivalent of TL 430.947.685(*) was paid on 27 December 2012. Ultimately the process was completed with a total Purchase
Price of TL 6.900.088.413(*) (Euro 2.975 million).

Amounts are reflected as full TL.

(*)

II. Capital structure, shareholders controlling the management and supervision of the Bank directly or indirectly, and if exists,
changes on these issues and the Group that the Bank belongs to

Current Period
Name of the Shareholder Amount (Full TL) Share (%)
Sberbank of Russia 3.311.211.134 99,85
Publicly traded 4.888.709 0,15
Others shareholders 157 --
Total 3.316.100.000 100,00

Prior Period
Name of the Shareholder Amount (Full TL) Share (%)
Sberbank of Russia 1.813.422.610 99,85
Publicly traded 2.677.304 0,15
Others shareholders 86 --
Total 1.816.100.000 100,00

Paid capital of the Bank was increased at a total amount TL 1.500.000, TL 39 from share premiums, TL 113.097 from
subsidiaries and associate shares and real estate sales income, TL 636.864 from extraordinary reserves and TL 750.000 from
cash reserve, on 28 June 2016.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 101

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

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 and their areas of responsibility

Name Title Shares owned (%)

President of the Board of Directors
Herman Gref Chairman --
Board of Directors
Nihat Sevin Deputy Chairman --
Hakan Ate Member, President and CEO 0,000002
Alexander Vedyakhin Member --
Deniz lke Arboan Member --
Wouter G.M. Van Roste Member --
Timur Kozintsev Member --
Svetlana Sagaydak Member --
Vadim Kulik Member --
Derya Kumru Member --
Igor Kondrashov Member --
Alexander Morozov Member --
Pavel Barchugov Member --
Audit Committee
Wouter G.M. Van Roste Member --
Nihat Sevin Member --
Pavel Barchugov Member --
Executive Vice Presidents
Bora Bcgz Treasury, Financial Institutions --
Suavi Demirciolu Financial Affairs --
Dilek Duman Information Technologies and Support Operations --
Tanju Kaya Administrative Services Group and Investment --
Mustafa zel Branch and Central Operations --
brahim en Credit Follow-up and Risk Monitoring --
Mehmet Aydodu Corporate Banking, Commercial Banking and Public Finance --
Mustafa Saruhan zel Economic Research, Strategy and Program Management --
Cem Demira Head of Internal Control Unit and Compliance --
Ali Murat Dizdar Chief Legal Advisor --
Ayenur Hkran Card Payment Systems and Non-Branch Sales Channels --
Murat elik Digital Generation Banking --
Selim Efe Teoman Corporate and Commercial Loans --
Ramazan Ik Head of Inspection Board --
Ruslan Abil Group Reporting and Asset/Liability Management --
nder zcan Managerial Reporting and Budget Planning --
Murat Kulaksz SME Banking --
Necip Yavuz Elkin Human Resources and Deniz Academy --
Burak Koak Agriculture Banking --
Ouzhan zark Retail Banking --
Cemil Cem nen Private Banking and Investment Sales-Performance Management --
Sinan Ylmaz Risk Management Group Leader --
Hakan Turan Pala Corporate and Commercial Loans Analysis --
Edip Krad Baer(*) Loans Policies - Individual - SME and Agriculture Banking Credit Allocation Group --
Murat tak IT Security and Digital-Card Payment Operations --
Verda Beril Yzer Ouz Corporate Loans Policies

Fatma Ayperi Karahan, Deputy General Manager responsible for Individual - SME and Agriculture Banking Credit Allocation Group at the
(*)

Bank, has retired. Title of Edip Krad Baer has been changed as Deputy General Manager responsible for Loans Policies-Individual - SME and
Agriculture Banking Credit Allocation Group with Board of Directors Decision dated 5 October 2016.

Hayri Cansever, who were General Manager of Destek Varlk Ynetim A.., one of our former Group Companies, has been assigned as Secretary
General and Deputy General Manager responsible for Sberbank Coordination Group following the resignation of Krad Taalan, who were
Secretary General at the Bank.
102 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

IV. Explanations regarding the real person and corporate qualified shareholders at the Bank

Commercial Title Share Amounts Share Percentages Paid-in Capital Unpaid Capital
Sberbank of Russia 3.311.211 % 99,85 3.311.211 --

Sberbank is the controlling party of the Banks capital having both direct and indirect qualified shares.

As of 31 December 2016 the capital structure of Sberbank is as follows:

Shareholders Share Percentages

Central Bank of Russia 50,00 %
Publicly traded 50,00 %
Total 100,00 %

Central Bank of the Russian Federation holds 50%+1 share within 22.586.948.000 ordinary and preferred shares in total in
Sberbank of Russia (the rate in 21.586.948.000 ordinary shares corresponds to 52,32%).

V. Type of services provided and the areas of operations of the Bank

The Bank is a private sector deposit bank which provides banking services to its customers through 693 domestic and 1 foreign
branch as of 31 December 2016.

Activities of the Bank as stated in the 3rd clause of the Articles of Association are as follows:

In accordance with the Banking Law and regulations;

Performing all kinds of banking activities.

Dealing with transactions on all kinds of capital market instruments within the limits set by the related regulations and Capital
Market Law regulations.
Establishing domestic and/or foreign entities and participating in existing entities. Entering into loan and intelligence
agreements with domestic and international financial institutions. Participating in consortiums and syndications.
Incorporating insurance companies, operating insurance agencies, participating in insurance companies which are existing or
planned to be founded.

Apart from the above-mentioned activities, in case different activities deemed advantageous and necessary for the company are
to be undertaken in the future, they will be submitted to approval of the General Assembly based on Board of Directors decision
and the company will be able to implement activities after the relevant decision is made by General Assembly.

VI. Existing or potential, actual or legal obstacles to immediate transfer of capital between Bank and its subsidiaries and
repayment of debts

None.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 103

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

SECTION TWO
UNCONSOLIDATED FINANCIAL STATEMENTS

I. Unconsolidated Statements of Financial Position (Balance Sheets)

II. Unconsolidated Statements of Off-Balance Sheet Items
III. Unconsolidated Statements of Income
IV. Unconsolidated Statements of Income and Expenses Under Shareholders Equity
V. Unconsolidated Statements of Changes in Shareholders Equity
VI. Unconsolidated Statements of Cash Flows
VII. Unconsolidated Profit Distribution Tables
104 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

UNCONSOLIDATED STATEMENTS OF FINANCIAL
Convenience Translation of
POSITION (BALANCE SHEETS) Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 AND 2015 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

CURRENT PERIOD PRIOR PERIOD

ASSETS Footnotes (31/12/2016) (31/12/2015)
TL FC Total TL FC Total
I. CASH AND BALANCES WITH THE CENTRAL BANK (5.I.a) 2.281.715 12.479.223 14.760.938 1.195.116 9.564.027 10.759.143
II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Net) (5.I.b) 1.043.122 482.825 1.525.947 893.753 222.827 1.116.580
2.1 Financial Assets Held For Trading 1.043.122 482.825 1.525.947 893.753 222.827 1.116.580
2.1.1 Public Sector Debt Securities 84.720 3.697 88.417 14.144 8.481 22.625
2.1.2 Share Certificates - - - - - -
2.1.3 Positive Value of Trading Purpose Derivatives 948.815 479.128 1.427.943 879.090 213.782 1.092.872
2.1.4 Other Securities 9.587 - 9.587 519 564 1.083
2.2 Financial Assets Designated at Fair Value - - - - - -
2.2.1 Public Sector Debt Securities - - - - - -
2.2.2 Share Certificates - - - - - -
2.2.3 Loans - - - - - -
2.2.4 Other Securities - - - - - -
III. BANKS (5.I.c) 16.278 2.950.687 2.966.965 21.592 2.198.964 2.220.556
IV. DUE FROM MONEY MARKETS 3.001.396 - 3.001.396 1.200.353 - 1.200.353
4.1 Interbank Money Market - - - - - -
4.2 Istanbul Stock Exchange - - - - - -
4.3 Reverse Repurchase Agreements 3.001.396 - 3.001.396 1.200.353 - 1.200.353
V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (5.I.d) 5.421.996 1.139.562 6.561.558 7.201.943 1.322.536 8.524.479
5.1 Share Certificates 3.930 37.779 41.709 3.929 108.955 112.884
5.2 Public Sector Debt Securities 5.418.066 885.253 6.303.319 7.198.014 1.213.581 8.411.595
5.3 Other Securities - 216.530 216.530 - - -
VI. LOANS AND RECEIVABLES (5.I.e) 49.038.709 12.781.675 61.820.384 42.535.661 8.813.163 51.348.824
6.1 Loans and Receivables 48.094.511 12.781.675 60.876.186 41.806.994 8.813.163 50.620.157
6.1.1 Loans Utilized to the Bank's Risk Group 95.449 118.443 213.892 82.606 7.879 90.485
6.1.2 Public Sector Debt Securities - - - - - -
6.1.3 Others 47.999.062 12.663.232 60.662.294 41.724.388 8.805.284 50.529.672
6.2 Loans under Follow-Up 3.292.211 - 3.292.211 2.682.048 - 2.682.048
6.3 Specific Provisions (-) 2.348.013 - 2.348.013 1.953.381 - 1.953.381
VII. FACTORING RECEIVABLES - - - - - -
VIII. INVESTMENT HELD TO MATURITY (Net) (5.I.f) 3.339.895 1.561.104 4.900.999 2.875.209 366.569 3.241.778
8.1 Public Sector Debt Securities 3.339.895 1.561.104 4.900.999 2.875.209 366.569 3.241.778
8.2 Other Securities - - - - - -
IX. INVESTMENTS IN ASSOCIATES (Net) (5.I.g) 8.654 - 8.654 8.654 - 8.654
9.1 Associates accounted for Under Equity Method - - - - - -
9.2 Unconsolidated Associates 8.654 - 8.654 8.654 - 8.654
9.2.1 Financial Associates 15 - 15 15 - 15
9.2.2 Non-Financial Associates 8.639 - 8.639 8.639 - 8.639
X. INVESTMENTS IN SUBSIDIARIES (Net) (5.I.h) 786.042 4.506.890 5.292.932 703.280 3.236.451 3.939.731
10.1 Unconsolidated Financial Subsidiaries 769.617 4.506.890 5.276.507 697.631 3.236.451 3.934.082
10.2 Unconsolidated Non-Financial Subsidiaries 16.425 - 16.425 5.649 - 5.649
XI. ENTITIES UNDER COMMON CONTROL (JOINT VENT.) (Net) (5.I.i) 2.800 - 2.800 2.800 - 2.800
11.1 Joint Ventures accounted for Under Equity Method - - - - - -
11.2 Unconsolidated Joint Ventures 2.800 - 2.800 2.800 - 2.800
11.2.1 Financial Joint Ventures - - - - - -
11.2.2 Non-Financial Joint Ventures 2.800 - 2.800 2.800 - 2.800
XII. LEASE RECEIVABLES (Net) (5.I.j) - - - - - -
12.1 Financial Lease Receivables - - - - - -
12.2 Operational Lease Receivables - - - - - -
12.3 Others - - - - - -
12.4 Unearned Income (-) - - - - - -
XIII. HEDGING PURPOSE DERIVATIVES (5.I.k) - - - - - -
13.1 Fair Value Hedge - - - - - -
13.2 Cash Flow Hedge - - - - - -
13.3 Hedging of a Net Investment in Foreign Subsidiaries - - - - - -
XIV. TANGIBLE ASSETS (Net) (5.I.l) 430.281 4 430.285 401.022 6 401.028
XV. INTANGIBLE ASSETS (Net) (5.I.m) 188.762 - 188.762 171.178 - 171.178
15.1 Goodwill 869 - 869 869 - 869
15.2 Others 187.893 - 187.893 170.309 - 170.309
XVI. INVESTMENT PROPERTIES (Net) (5.I.n) - - - - - -
XVII. TAX ASSETS (5.I.o) 150.194 - 150.194 85.376 - 85.376
17.1 Current Tax Assets 67.090 - 67.090 - - -
17.2 Deferred Tax Assets 83.104 - 83.104 85.376 - 85.376
XVIII. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) (5.I.p) - - - - - -
18.1 Held For Sale - - - - - -
18.2 Discontinued Operations - - - - - -
XIX. OTHER ASSETS (5.I.q) 1.048.686 498.327 1.547.013 905.801 294.386 1.200.187
TOTAL ASSETS 66.758.530 36.400.297 103.158.827 58.201.738 26.018.929 84.220.667

The accompanying notes are an integral part of these unconsolidated financial statements.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 105

DENZBANK ANONM RKET

UNCONSOLIDATED STATEMENTS OF FINANCIAL
Convenience Translation of
POSITION (BALANCE SHEETS) Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 AND 2015 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

CURRENT PERIOD PRIOR PERIOD

LIABILITIES AND EQUITY Footnotes (31/12/2016) (31/12/2015)
TL FC Total TL FC Total
I. DEPOSITS (5.II.a) 35.124.709 28.066.219 63.190.928 26.095.476 20.492.101 46.587.577
1.1 Deposits of the Bank's Risk Group 278.399 2.951.661 3.230.060 227.627 771.369 998.996
1.2 Others 34.846.310 25.114.558 59.960.868 25.867.849 19.720.732 45.588.581
II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING (5.II.b) 553.627 387.561 941.188 331.910 245.317 577.227
III. FUNDS BORROWED (5.II.c) 844.231 9.906.366 10.750.597 195.122 10.503.948 10.699.070
IV. DUE TO MONEY MARKETS 5.397.576 - 5.397.576 7.184.158 - 7.184.158
4.1 Interbank Money Market - - - - - -
4.2 Istanbul Stock Exchange - - - 720.000 - 720.000
4.3 Repurchase Agreements 5.397.576 - 5.397.576 6.464.158 - 6.464.158
V. SECURITIES ISSUED (Net) (5.II.d) 1.152.633 - 1.152.633 1.259.198 - 1.259.198
5.1 Bills 737.553 - 737.553 609.746 - 609.746
5.2 Asset Backed Securities 415.080 - 415.080 556.311 - 556.311
5.3 Bonds - - - 93.141 - 93.141
VI. FUNDS - - - - - -
6.1 Borrowers Funds - - - - - -
6.2 Others - - - - - -
VII. SUNDRY CREDITORS 1.390.447 460.976 1.851.423 1.139.066 503.695 1.642.761
VIII. OTHER EXTERNAL RESOURCES (5.II.e) 1.057.281 887.790 1.945.071 973.956 799.509 1.773.465
IX. FACTORING PAYABLES - - - - - -
X. LEASE PAYABLES (Net) (5.II.f) 18.493 - 18.493 26.301 933 27.234
10.1 Financial Lease Payables 20.923 - 20.923 31.455 943 32.398
10.2 Operational Lease Payables - - - - - -
10.3 Others - - - - - -
10.4 Deferred Financial Leasing Expenses ( - ) 2.430 - 2.430 5.154 10 5.164
XI. HEDGING PURPOSE DERIVATIVES (5.II.g) - - - - - -
11.1 Fair Value Hedge - - - - - -
11.2 Cash Flow Hedge - - - - - -
11.3 Hedging of a Net Investment in Foreign Subsidiaries - - - - - -
XII. PROVISIONS (5.II.h) 1.682.263 12.010 1.694.273 1.190.643 15.761 1.206.404
12.1 General Provisions 1.277.781 - 1.277.781 984.209 - 984.209
12.2 Restructuring Provisions - - - - - -
12.3 Reserve for Employee Benefits 105.342 - 105.342 93.352 - 93.352
12.4 Insurance Technical Provisions (Net) - - - - - -
12.5 Other Provisions 299.140 12.010 311.150 113.082 15.761 128.843
XIII. TAX LIABILITIES (5.II.i) 171.472 - 171.472 148.289 - 148.289
13.1 Current Tax Liability 171.472 - 171.472 148.289 - 148.289
13.2 Deferred Tax Liability - - - - - -
XIV. LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE AND
DICSOUNTINUED OPERATIONS (Net) - - - - - -
14.1 Held For Sale - - - - - -
14.2 Discontinued Operations - - - - - -
XV. SUBORDINATED LOANS (5.II.k) - 5.483.501 5.483.501 - 4.845.965 4.845.965
XVI. SHAREHOLDERS' EQUITY (5.II.l) 10.671.309 (109.637) 10.561.672 8.227.920 41.399 8.269.319
16.1 Paid-In Capital 3.316.100 - 3.316.100 1.816.100 - 1.816.100
16.2 Supplementary Capital (934.554) (109.637) (1.044.191) (504.529) 41.399 (463.130)
16.2.1 Share Premium 15 - 15 39 - 39
16.2.2 Share Cancellation Profits - - - - - -
16.2.3 Securities Revaluation Reserve (445.696) (109.637) (555.333) (521.167) 41.379 (479.788)
16.2.4 Revaluation Fund on Tangible Assets (5.II.l) 38.273 - 38.273 113.097 - 113.097
16.2.5 Revaluation Fund on Intangible Assets - - - - - -
16.2.6 Revaluation Fund on Investment Properties - - - - - -
16.2.7 Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures 81 - 81 81 - 81
16.2.8 Hedging Funds (Effective Portion) (542.082) - (542.082) (118.144) 20 (118.124)
16.2.9 Revaluation Fund on Assets Held for Sale and Discontinued Operations - - - - - -
16.2.10 Other Supplementary Capital 14.855 - 14.855 21.565 - 21.565
16.3 Profit Reserves 5.323.790 - 5.323.790 4.597.012 - 4.597.012
16.3.1 Legal Reserves 181.352 - 181.352 143.220 - 143.220
16.3.2 Status Reserves - - - - - -
16.3.3 Extraordinary Reserves 4.356.547 - 4.356.547 4.278.319 - 4.278.319
16.3.4 Other Profit Reserves 785.891 - 785.891 175.473 - 175.473
16.4 Profit or Loss 2.965.973 - 2.965.973 2.319.337 - 2.319.337
16.4.1 Prior Periods' Profits / Losses 1.556.692 - 1.556.692 1.556.692 - 1.556.692
16.4.2 Current Period Profit / Loss 1.409.281 - 1.409.281 762.645 - 762.645
16.5 Minority Shares (5.II.l) - - - - - -
TOTAL LIABILITIES AND EQUITY 58.064.041 45.094.786 103.158.827 46.772.039 37.448.628 84.220.667

The accompanying notes are an integral part of these unconsolidated financial statements.
106 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

UNCONSOLIDATED STATEMENTS OF
Convenience Translation of
OFF-BALANCE SHEET ITEMS Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 AND 2015 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

CURRENT PERIOD PRIOR PERIOD

Footnotes (31/12/2016) (31/12/2015)
TL FC Total TL FC Total
A. OFF BALANCE SHEET COMMITMENTS AND CONTINGENCIES (I+II+III) 56.951.168 81.317.679 138.268.847 51.023.522 87.767.568 138.791.090
I. GUARANTEES (5.III.a) 10.087.461 18.434.569 28.522.030 8.859.591 15.415.284 24.274.875
1.1. Letters of Guarantee 10.075.754 11.560.516 21.636.270 8.837.234 11.190.945 20.028.179
1.1.1. Guarantees Subject to State Tender Law - - - - - -
1.1.2. Guarantees Given for Foreign Trade Operations 79.021 90.776 169.797 79.021 105.903 184.924
1.1.3. Other Letters of Guarantee 9.996.733 11.469.740 21.466.473 8.758.213 11.085.042 19.843.255
1.2. Bank Acceptances 5.498 251.332 256.830 12.074 182.245 194.319
1.2.1. Import Letter of Acceptance 5.498 251.332 256.830 12.074 182.245 194.319
1.2.2. Other Bank Acceptances - - - - - -
1.3. Letters of Credit 42 2.312.534 2.312.576 7.687 2.276.362 2.284.049
1.3.1. Documentary Letters of Credit 42 1.625.364 1.625.406 7.687 1.579.788 1.587.475
1.3.2. Other Letters of Credit - 687.170 687.170 - 696.574 696.574
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. Purchase Guarantees for Securities Issued - - - - - -
1.7. Factoring Related Guarantees - - - - - -
1.8. Other Collaterals 6.167 4.310.187 4.316.354 2.596 1.765.732 1.768.328
1.9. Other Sureties - - - - - -
II. COMMITMENTS (5.III.a) 28.323.856 4.655.442 32.979.298 23.958.658 4.174.485 28.133.143
2.1. Irrevocable Commitments 25.004.358 4.655.442 29.659.800 19.804.754 4.174.485 23.979.239
2.1.1. Asset Purchase and Sale Commitments 405.787 2.967.707 3.373.494 304.215 2.857.731 3.161.946
2.1.2. Deposit Purchase and Sales Commitments - - - - - -
2.1.3. Share Capital Commitments to Associates and Subsidiaries - - - - - -
2.1.4. Loan Granting Commitments 9.475.667 - 9.475.667 7.071.136 - 7.071.136
2.1.5. Securities Issuance Brokerage Commitments - - - - - -
2.1.6. Commitments for Reserve Deposit Requirements - - - - - -
2.1.7. Commitments for Cheque Payments 2.111.130 - 2.111.130 1.920.552 - 1.920.552
2.1.8. Tax and Fund Obligations from Export Commitments 2.415 - 2.415 997 - 997
2.1.9. Commitments for Credit Card Limits 12.764.645 - 12.764.645 10.209.119 - 10.209.119
Commitments for Promotional Operations Re-Credit Cards and
2.1.10. Banking Services 1.416 - 1.416 800 - 800
2.1.11. Receivables from "Short" Sale Commitments On Securities - - - - - -
2.1.12. Payables for "Short" Sale Commitments On Securities - - - - - -
2.1.13. Other Irrevocable Commitments 243.298 1.687.735 1.931.033 297.935 1.316.754 1.614.689
2.2. Revocable Commitments 3.319.498 - 3.319.498 4.153.904 - 4.153.904
2.2.1. Revocable Loan Granting Commitments 3.318.939 - 3.318.939 4.153.345 - 4.153.345
2.2.2. Other Revocable Commitments 559 - 559 559 - 559
III. DERIVATIVE FINANCIAL INSTRUMENTS (5.III.b) 18.539.851 58.227.668 76.767.519 18.205.273 68.177.799 86.383.072
3.1. Hedging Purpose Derivatives - - - - - -
3.1.1. Fair Value Hedge - - - - - -
3.1.2. Cash Flow Hedge - - - - - -
3.1.3. Hedging of a Net Investment in Foreign Subsidiaries - - - - - -
3.2. Trading Purpose Derivatives 18.539.851 58.227.668 76.767.519 18.205.273 68.177.799 86.383.072
3.2.1. Forward Foreign Currency Purchases/Sales 1.713.300 5.529.056 7.242.356 1.063.645 4.550.606 5.614.251
3.2.1.1. Forward Foreign Currency Purchases 879.079 2.740.754 3.619.833 531.612 2.266.319 2.797.931
3.2.1.2. Forward Foreign Currency Sales 834.221 2.788.302 3.622.523 532.033 2.284.287 2.816.320
3.2.2. Currency and Interest Rate Swaps 13.002.971 45.306.219 58.309.190 13.062.843 57.339.597 70.402.440
3.2.2.1. Currency Swaps-Purchases 2.927.550 13.589.466 16.517.016 2.166.231 15.516.442 17.682.673
3.2.2.2. Currency Swaps-Sales 8.455.421 6.053.631 14.509.052 10.496.612 5.307.844 15.804.456
3.2.2.3. Interest Rate Swaps-Purchases 810.000 12.831.561 13.641.561 200.000 18.257.656 18.457.656
3.2.2.4. Interest Rate Swaps-Sales 810.000 12.831.561 13.641.561 200.000 18.257.655 18.457.655
3.2.3. Currency, Interest Rate and Security Options 3.823.580 5.299.658 9.123.238 4.078.785 4.936.906 9.015.691
3.2.3.1. Currency Options-Purchases 1.947.257 2.529.225 4.476.482 2.217.151 2.313.493 4.530.644
3.2.3.2. Currency Options-Sales 1.876.323 2.643.805 4.520.128 1.861.634 2.623.413 4.485.047
3.2.3.3. Interest Rate Options-Purchases - 63.314 63.314 - - -
3.2.3.4. Interest Rate Options-Sales - 63.314 63.314 - - -
3.2.3.5. Securities Options-Purchases - - - - - -
3.2.3.6. Securities Options-Sales - - - - - -
3.2.4. Currency Futures - - - - - -
3.2.4.1. Currency Futures-Purchases - - - - - -
3.2.4.2. Currency Futures-Sales - - - - - -
3.2.5. Interest Rate Futures - - - - - -
3.2.5.1. Interest Rate Futures-Purchases - - - - - -
3.2.5.2. Interest Rate Futures-Sales - - - - - -
3.2.6. Others - 2.092.735 2.092.735 - 1.350.690 1.350.690
B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 399.449.855 93.781.365 493.231.220 310.629.813 73.531.339 384.161.152
IV. ITEMS HELD IN CUSTODY 90.113.164 1.945.577 92.058.741 58.856.434 1.731.253 60.587.687
4.1. Customers' Securities and Portfolios Held - - - - - -
4.2. Securities Held in Custody 89.040.303 1.006.875 90.047.178 57.996.909 895.914 58.892.823
4.3. Checks Received for Collection 254.257 600.368 854.625 65.421 613.202 678.623
4.4. Commercial Notes Received for Collection 818.604 254.541 1.073.145 794.104 199.607 993.711
4.5. Other Assets Received for Collection - - - - - -
4.6. Assets Received for Public Offering - - - - - -
4.7. Other Items under Custody - 83.793 83.793 - 22.530 22.530
4.8. Custodians - - - - - -
V. PLEDGED ITEMS 308.952.187 91.001.085 399.953.272 251.359.529 70.922.003 322.281.532
5.1. Securities 3.071.806 616 3.072.422 3.064.091 80.391 3.144.482
5.2. Guarantee Notes 215.141.042 38.740.795 253.881.837 172.074.747 29.774.174 201.848.921
5.3. Commodities 13.702.267 3.683.797 17.386.064 12.329.713 2.880.210 15.209.923
5.4. Warrants - - - - - -
5.5. Immovables 68.699.488 33.499.122 102.198.610 57.338.417 28.010.177 85.348.594
5.6. Other Pledged Items 8.337.584 15.055.000 23.392.584 6.552.561 10.177.051 16.729.612
5.7. Pledged Items-Depository - 21.755 21.755 - - -
VI. ACCEPTED GUARANTEES AND WARRANTIES 384.504 834.703 1.219.207 413.850 878.083 1.291.933
TOTAL OFF BALANCE SHEET ITEMS (A+B) 456.401.023 175.099.044 631.500.067 361.653.335 161.298.907 522.952.242

The accompanying notes are an integral part of these unconsolidated financial statements.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 107

DENZBANK ANONM RKET

UNCONSOLIDATED STATEMENTS OF
Convenience Translation of
OFF-BALANCE SHEET ITEMS Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 AND 2015 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

CURRENT PERIOD PRIOR PERIOD

INCOME AND EXPENSE ITEMS Footnotes (01/01-31/12/2016) (01/01-31/12/2015)
I. INTEREST INCOME (5.IV.a) 8.337.792 6.804.782
1.1 Interest from Loans 7.213.918 5.791.174
1.2 Interest from Reserve Deposits 56.689 24.288
1.3 Interest from Banks 8.059 10.701
1.4 Interest from Money Market Transactions 10.377 1.048
1.5 Interest from Securities Portfolio 986.062 923.128
1.5.1 Trading Securities 3.810 8.181
1.5.2 Financial Assets at Fair Value Through Profit or Loss - -
1.5.3 Available for Sale Securities 662.607 616.852
1.5.4 Held to Maturity Securities 319.645 298.095
1.6 Interest from Financial Leases - -
1.7 Other Interest Income 62.687 54.443
II. INTEREST EXPENSE (5.IV.b) 4.285.033 3.650.766
2.1 Interest on Deposits 3.212.722 2.692.377
2.2 Interest on Funds Borrowed 578.286 475.829
2.3 Interest on Money Market Transactions 346.122 315.665
2.4 Interest on Securities Issued 111.063 139.479
2.5 Other Interest Expense 36.840 27.416
III. NET INTEREST INCOME (I - II) 4.052.759 3.154.016
IV. NET FEES AND COMMISSION INCOME /EXPENSE 1.188.964 1.040.295
4.1 Fees and Commissions Received 1.589.481 1.385.834
4.1.1 Non-Cash Loans 174.386 138.906
4.1.2 Other (5.IV.l) 1.415.095 1.246.928
4.2 Fees and Commissions Paid 400.517 345.539
4.2.1 Non-Cash Loans 757 782
4.2.2 Other (5.IV.l) 399.760 344.757
V. DIVIDEND INCOME (5.IV.c) 58 1.567
VI. TRADING INCOME/LOSS (Net) (5.IV.d) (515.969) (738.075)
6.1 Profit / Loss on Securities Trading (6.061) 21.008
6.2 Profit / Loss on Derivative Financial Transactions 302.541 1.089.708
6.3 Foreign Exchange Gains / Losses (812.449) (1.848.791)
VII. OTHER OPERATING INCOME (5.IV.e) 566.302 472.829
VIII. TOTAL OPERATING INCOME (III+IV+V+VI+VII) 5.292.114 3.930.632
IX. PROVISION FOR LOANS AND OTHER RECEIVABLES (-) (5.IV.f) 1.744.767 1.217.576
X. OTHER OPERATING EXPENSES (-) (5.IV.g) 2.599.065 2.368.986
XI. NET OPERATING PROFIT/LOSS (VIII-IX-X) 948.282 344.070
XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - -
XIII. INVESTMENTS PROFIT / LOSS FROM ACCOUNTED FOR UNDER EQUITY METHOD 699.372 527.605
XIV. GAIN/LOSS ON NET MONETARY POSITION - -
XV. P/L BEFORE TAXES FROM CONTINUING OPERATIONS (XI+...+XIV) (5.IV.h) 1.647.654 871.675
XVI. TAX PROVISION FOR CONTINUING OPERATIONS () (5.IV.i) (238.373) (109.030)
16.1 Current Tax (98.535) -
16.2 Deferred Tax (139.838) (109.030)
XVII. NET PROFIT / LOSS FROM CONTINUING OPERATIONS (XVXVI) (5.IV.j) 1.409.281 762.645
XVIII. PROFIT FROM DISCONTINUED OPERATIONS - -
18.1 Assets Held for Sale - -
18.2 Profit on Sale of Associates, Subsidiaries and Joint Ventures - -
18.3 Other - -
XIX. LOSS FROM DISCONTINUED OPERATIONS (-) - -
19.1 Assets Held for Sale - -
19.2 Loss on Sale of Associates, Subsidiaries and Joint Ventures - -
19.3 Other - -
XX. P/L BEFORE TAXES FROM DISCONTINUED OPERATIONS (XVIII-XIX) - -
XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS () (5.IV.i) - -
21.1 Current Tax - -
21.2 Deferred Tax - -
XXII. NET PROFIT / LOSS FROM DISCONTINUED OPERATIONS (XXXXI) - -
XXIII. NET PROFIT / LOSS (XVII+XXII) (5.IV.k) 1.409.281 762.645
23.1 Group's Profit / Loss 1.409.281 762.645
23.2 Minority Shares - -
Earnings / Losses per Share (Per thousand share) 0,50 0,38

The accompanying notes are an integral part of these unconsolidated financial statements.
108 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

UNCONSOLIDATED STATEMENTS OF
Convenience Translation of
INCOME AND EXPENSES UNDER SHAREHOLDERS EQUITY Unconsolidated Financial Report
FOR THE PERIODS ENDED 31 DECEMBER 2016 AND 2015 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

CURRENT PERIOD PRIOR PERIOD

STATEMENT OF INCOME AND EXPENSES UNDER SHAREHOLDERS EQUITY (01/01-31/12/2016) (01/01-31/12/2015)
I. ADDITIONS TO SECURITIES REVALUATION RESERVE FROM AVAILABLE FOR
SALE INVESTMENTS (90.439) (432.257)
II. TANGIBLE ASSETS REVALUATION DIFFERENCES 30.371 -
III. INTANGIBLE ASSETS REVALUATION DIFFERENCES - -
IV. FOREIGN EXCHANGE DIFFERENCES FOR FOREIGN CURRENCY TRANSACTIONS 610.418 266.744
V. PROFIT/LOSS RELATED TO DERIVATIVES USED IN CASH FLOW HEDGES
(Effective portion of Fair Value Differences) 2.949 6.340
VI. PROFIT/LOSS RELATED TO DERIVATIVES USED IN HEDGE OF A NET
INVESTMENT IN FOREIGN SUBSIDIARIES (Effective portion of Fair Value
Differences) (533.388) (143.445)
VII. THE EFFECT OF CHANGES IN ACCOUNTING POLICIES OR CORRECTION OF
ERRORS - -
VIII. OTHER PROFIT/LOSS ITEMS ACCOUNTED FOR UNDER EQUITY DUE TO TAS (8.388) 1.296
IX. DEFERRED TAXES OF VALUATION DIFFERENCES 121.534 118.802
X. NET PROFIT/LOSS ACCOUNTED UNDER EQUITY (I+II++IX) 133.057 (182.520)
XI. CURRENT PERIOD PROFIT/LOSS 1.409.281 762.645
1.1 Net Change in Fair Value of Securities (Transfer to Profit & Loss) 74.680 29.714
1.2 Reclassification and Transfer of Derivatives Accounted for Cash Flow Hedge
Purposes Recycled to Income Statement (2.752) (5.551)
1.3 Transfer of Hedge of Net Investment in Foreign Operations Recycled to Income
Statement - -
1.4 Other 1.337.353 738.482
XII. TOTAL PROFIT AND LOSS ACCOUNTED FOR THE PERIOD (XXI) 1.542.338 580.125

The accompanying notes are an integral part of these unconsolidated financial statements.
DENZBANK ANONM RKET
UNCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY Convenience Translation of
Unconsolidated Financial Report
FOR THE PERIODS ENDED 31 DECEMBER 2016 AND 2015 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c
Total Equity
Inflation Share Current Period Securities Revaluation Bonus Shares Val.Diff.Related to Attrib.to Equity Total
Adjustments to Share Cancellation Status Extraordinary Net Profit / Prior Period Net Revaluation Fund of Tang./ Obtained from Hedging Assets Held for Holders of the Minorty Shareholders'
CHANGES IN SHAREHOLDERS EQUITY Paid-In Capital Paid-In Capital (*) Premium Profits Legal Reserves Reserves Reserves Other Reserves (Loss) Profit / (Loss) Reserve Intang.A. Associates Reserves Sale/Disc.Opr. Parent Interest Equity
PRIOR PERIOD 01/01-31/12/2015
I. Balances at the Beginning of Period 716.100 189.164 98.411 - 143.220 - 3.781.596 21.550 566.191 14.133 (145.027) 306.054 81 (8.919) - 5.682.554 - 5.682.554
II. Adjustment in accordance with TMS 8 - - - - - - - (92.196) 422.527 1.120.032 6.238 - - - - 1.456.601 - 1.456.601
2.1 Effect of adjustment - - - - - - - - - - - - - - - - - -
DENZBANK FINANCIAL SERVICES GROUP

2.2 Effect of changes in accounting policies - - - - - - - (92.196) 422.527 1.120.032 6.238 - - - - 1.456.601 - 1.456.601
III. New Balance (I+II) 716.100 189.164 98.411 - 143.220 - 3.781.596 (70.646) 988.718 1.134.165 (138.789) 306.054 81 (8.919) - 7.139.155 - 7.139.155
Changes in the Period
IV. Increase / Decrease Related to Mergers (5.V.f) - - - - - - - - - - - - - - - - - -
V. Valuation Differences of Securities (5.V.g) - - - - - - - - - - (285.713) - - - - (285.713) - (285.713)
VI. Hedging Transactions (Effective Portion) (5.V.h) - - - - - - - - - - - - - (109.205) - (109.205) - (109.205)
6.1 Cash Flow Hedge - - - - - - - - - - - - - 5.551 - 5.551 - 5.551
6.2 Hedging of a Net Investment in Foreign Subsidiaries - - - - - - - - - - - - - (114.756) - (114.756) - (114.756)
VII. Revaluation Fund of Tangible Assets (5.V.i) - - - - - - - - - - - - - - - - - -
VIII. Revaluation Fund of Intangible Assets - - - - - - - - - - - - - - - - - -
IX. Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures - - - - - - - - - - - - - - - - - -
X. Foreign Exchange Differences (5.V.j) - - - - - - - 10.750 - - - - - - - 10.750 - 10.750
XI. Changes Related to Sale of Assets - - - - - - - - - - - - - - - - - -
XII. Changes Related to Reclassification of Assets - - - - - - - - - - - - - - - - - -
XIII. Effects of Changes in Equities of Associates - - - - - - - 255.509 - - (55.286) - - - - 200.223 - 200.223
XVI. The Effect of Capital Increase 1.100.000 (189.164) (98.411) - - - - - - - - (262.425) - - - 550.000 - 550.000
14.1 Cash 550.000 - - - - - - - - - - - - - - 550.000 - 550.000
14.2 Internal Resources 550.000 (189.164) (98.411) - - - - - - - - (262.425) - - - - - -
XV. Issuance of Capital Stock - - 39 - - - - - - - - - - - - 39 - 39
XVI. Share Cancellation Profits - - - - - - - - - - - - - - - - - -
XVII. Capital Reserves from Inflation Adjustments to Paid-In Capital - - - - - - - - - - - - - - - - - -
XVIII. Other - - - - - - - 1.425 - - - - - - - 1.425 - 1.425
XIX. Current Period Net Profit / Loss - - - - - - - - 762.645 - - - - - - 762.645 - 762.645
XX. Profit Distribution (5.V.e) - - - - - - 496.723 - (988.718) 422.527 - 69.468 - - - - - -
20.1 Dividends Distributed - - - - - - - - - - - - - - - - - -
20.2 Transfer to Reserves (5.V.k) - - - - - - 496.723 - (988.718) 422.527 - 69.468 - - - - - -
20.3 Other - - - - - - - - - - - - - - - - - -
Balances at the End of Period (I+II+III+...+XVIII+XIX+XX) 1.816.100 - 39 - 143.220 - 4.278.319 197.038 762.645 1.556.692 (479.788) 113.097 81 (118.124) - 8.269.319 - 8.269.319
CURRENT PERIOD 01/01-31/12/2016
I. Balances at the Beginning of Period 1.816.100 - 39 - 143.220 - 4.278.319 197.038 762.645 1.556.692 (479.788) 113.097 81 (118.124) - 8.269.319 - 8.269.319
Changes in the Period
II. Increase / Decrease Related to Mergers (5.V.f) - - - - - - - - - - - - - - - - - -
III. Valuation Differences of Securities (5.V.g) - - - - - - - - - - (123.812) - - - - (123.812) - (123.812)
IV. Hedging Transactions (Effective Portion) (5.V.h) - - - - - - - - - - - - - (423.958) - (423.958) - (423.958)
4.1 Cash Flow Hedge - - - - - - - - - - - - - 2.752 - 2.752 - 2.752
4.2 Hedging of a Net Investment in Foreign Subsidiaries - - - - - - - - - - - - - (426.710) - (426.710) - (426.710)
ANNUAL REPORT 2016

V. Revaluation Fund of Tangible Assets (5.V.i) - - - - - - - - - - - 28.852 - - - 28.852 - 28.852

VI. Revaluation Fund of Intangible Assets - - - - - - - - - - - - - - - - - -
VII. Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures - - - - - - - - - - - - - - - - - -
VIII. Foreign Exchange Differences (5.V.j) - - - - - - - 610.418 - - - - - - - 610.418 - 610.418
IX. Changes Related to Sale of Assets - - - - - - - - - - - - - - - - - -
X. Changes Related to Reclassification of Assets - - - - - - - - - - - - - - - - - -
XI. Effects of Changes in Equities of Associates - - - - - - - - - - 48.267 - - - - 48.267 - 48.267
XII. The Effect of Capital Increase (5.V.a) 1.500.000 - (39) - - - (636.864) - - - - (113.097) - - - 750.000 - 750.000
12.1 Cash 750.000 - - - - - - - - - - - - - - 750.000 - 750.000
12.2 Internal Resources 750.000 - (39) - - - (636.864) - - - - (113.097) - - - - - -
XIII. Issuance of Capital Stock - - 15 - - - - - - - - - - - - 15 - 15
XIV. Share Cancellation Profits - - - - - - - - - - - - - - - - - -
XV. Capital Reserves from Inflation Adjustments to Paid-In Capital - - - - - - - - - - - - - - - - - -
XVI. Other - - - - - - - (6.710) - - - - - - - (6.710) - (6.710)
XVII. Current Period Net Profit / Loss - - - - - - - - 1.409.281 - - - - - - 1.409.281 - 1.409.281
XVIII. Profit Distribution (5.V.e) - - - - 38.132 - 715.092 - (762.645) - - 9.421 - - - - - -
18.1 Dividend Distributed - - - - - - - - - - - - - - - - - -
18.2 Transfer to Reserves (5.V.k) - - - - 38.132 - 715.092 - (762.645) - - 9.421 - - - - - -
18.3 Other - - - - - - - - - - - - - - - - - -
Balances at the End of Period (I+II+III+...+XVI+XVII+XVIII) 3.316.100 - 15 - 181.352 - 4.356.547 800.746 1.409.281 1.556.692 (555.333) 38.273 81 (542.082) - 10.561.672 - 10.561.672

(*)
The amount stated in the column Paid-in Capital Inflation Adjustment Difference and the amount stated in the column Other Reserves amounting to TL (4.802) relating to the actuarial loss/profit calculated as per TAS 19 Employee Benefits and its proportion at an
amount of TL 19.657 related to equity method as a result of amendments in TAS 27 Individual Financial Tables Communique are stated under Other Capital Reserves in financial statements.
109

The accompanying notes are an integral part of these unconsolidated financial statements.
110 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

UNCONSOLIDATED STATEMENTS OF CASH FLOWS
Convenience Translation of
FOR THE PERIODS ENDED Unconsolidated Financial Report
31 DECEMBER 2016 AND 2015 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

CURRENT PERIOD PRIOR PERIOD

Footnotes (01/01-31/12/2016) (01/01-31/12/2015)
A. CASH FLOWS FROM BANKING OPERATIONS
1.1 Operating Profit before Changes in Operating Assets and Liabilities (+) 653.785 1.177.967
1.1.1 Interest Received (+) 7.682.394 6.611.727
1.1.2 Interest Paid (-) 4.170.230 3.643.612
1.1.3 Dividend Received (+) 58 57.397
1.1.4 Fees And Commissions Received (+) 1.568.990 1.351.645
1.1.5 Other Income (+) 334.380 866.173
1.1.6 Collections from Previously Written-Off Loans and Other Receivables (+) 791.761 666.340
1.1.7 Payments to Personnel and Service Suppliers (-) 1.137.617 1.085.254
1.1.8 Taxes Paid (-) 308.542 114.645
1.1.9 Other (+/-) (5.VI.c) (4.107.409) (3.531.804)
1.2 Changes in Operating Assets and Liabilities 2.772.013 2.821.174
1.2.1 Net (Increase) Decrease in Trading Securities (+/-) (64.670) 80.786
1.2.2 Net (Increase) Decrease in Financial Assets Designated at FV (+/-) - -
1.2.3 Net (Increase) Decrease in Banks (+/-) 30.887 58.544
1.2.4 Net (Increase) Decrease in Loans (+/-) (10.327.529) (8.760.930)
1.2.5 Net (Increase) Decrease in Other Assets (+/-) (2.033.627) 92.415
1.2.6 Net Increase (Decrease) in Bank Deposits (+/-) 2.195.225 (76.743)
1.2.7 Net Increase (Decrease) in Other Deposits (+/-) 14.338.622 3.559.781
1.2.8 Net Increase (Decrease) in Funds Borrowed (+/-) 36.517 2.942.110
1.2.9 Net Increase (Decrease) in Due Payables (+/-) - -
1.2.10 Net Increase (Decrease) in Other Liabilities (+/-) (5.VI.c) (1.403.412) 4.925.211
I. Net Cash (Used in)/Provided from Banking Operations (+/-) 3.425.798 3.999.141
B. CASH FLOWS FROM INVESTING ACTIVITIES
II. Net Cash Provided from / (Used in) Investing Activities (+/-) 989.444 (2.456.497)
2.1 Cash Paid for Purchase of Investments, Associates and Subsidiaries (-) - 256.426
2.2 Cash Obtained From Sale of Investments, Associates And Subsidiaries (+) - -
2.3 Fixed Assets Purchases (-) 185.264 126.394
2.4 Fixed Assets Sales (+) 53.739 117.081
2.5 Cash Paid for Purchase of Investments Available for Sale (-) 1.967.276 4.364.516
2.6 Cash Obtained From Sale of Investments Available for Sale (+) 3.088.245 2.170.307
2.7 Cash Paid for Purchase of Investment Securities (-) - -
2.8 Cash Obtained from Sale of Investment Securities (+) - -
2.9 Other (+/-) (5.VI.c) - 3.451
C. CASH FLOWS FROM FINANCING ACTIVITIES
III. Net Cash Provided from / (Used in) Financing Activities (+/-) 318.693 415.710
3.1 Cash Obtained from Funds Borrowed and Securities Issued (+) 5.692.112 6.800.115
3.2 Cash Used for Repayment of Funds Borrowed and Securities Issued (-) 6.111.668 6.911.525
3.3 Capital Increase (+) 750.000 550.000
3.4 Dividends Paid (-) - -
3.5 Payments for Finance Leases (-) 11.751 22.880
3.6 Other (+/-) (5.VI.c) - -
IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents (+/-) (5.VI.c) 858.680 491.429
V. Net Increase / (Decrease) in Cash and Cash Equivalents 5.592.615 2.449.783
VI. Cash and Cash Equivalents at the Beginning of Period (+) (5.VI.a) 6.391.133 3.941.350
VII. Cash and Cash Equivalents at the End of Period (5.VI.a) 11.983.748 6.391.133

The accompanying notes are an integral part of these unconsolidated financial statements.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 111

DENZBANK ANONM RKET

UNCONSOLIDATED PROFIT DISTRIBUTION TABLES
Convenience Translation of
FOR THE PERIODS ENDED Unconsolidated Financial Report
31 DECEMBER 2016 AND 2015 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

CURRENT PERIOD (3) PRIOR PERIOD (3)

(01/01-31/12/2016) (01/01-31/12/2015)
I. DISTRIBUTION OF CURRENT YEAR INCOME (1)
1.1 CURRENT YEAR INCOME 1.647.654 871.675
1.2 TAXES AND DUTIES PAYABLE (-) (238.373) (109.030)
1.2.1 Corporate Tax (Income tax) (98.535) --
1.2.2 Income witholding tax -- --
1.2.3 Other taxes and duties (2) (139.838) (109.030)
A. NET INCOME FOR THE YEAR (1.1-1.2) 1.409.281 762.645
1.3 PRIOR YEARS LOSSES (-) -- --
1.4 FIRST LEGAL RESERVES (-) -- 38.132
1.5 OTHER STATUTORY RESERVES (-) -- 9.421
B. NET INCOME AVAILABLE FOR DISTRIBUTION [(A-(1.3+1.4+1.5)] 1.409.281 715.092
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 GENERAL RESERVES -- 715.092
1.13 OTHER RESERVES -- --
1.14 SPECIAL FUNDS -- --
II. DISTRIBUTION OF RESERVES
2.1 APPROPRIATED 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 0,005 0,004
3.2 TO OWNERS OF ORDINARY SHARES (%) 0,5 0,4
3.3 TO OWNERS OF PRIVILAGED SHARES -- --
3.4 TO OWNERS OF PRIVILAGED SHARES (%) -- --
IV. DIVIDEND PER SHARE
4.1 TO OWNERS OF ORDINARY SHARES -- --
4.2 TO OWNERS OF ORDINARY SHARES (%) -- --
4.3 TO OWNERS OF PRIVILAGED SHARES -- --
4.4 TO OWNERS OF PRIVILAGED SHARES (%) -- --
(1)
Distribution of dividend has not been decided yet since the General Assembly meeting of the Bank has not been held as of the date on which
the financial statements are published.
(2)
BRSA scrutinize that income amounts related to deferred tax assets cannot be considered as cash or internal source and therefore cannot be
included in distribution of net period profit. The Bank has a deferred tax expense of TL 139.838 as of 31 December 2016 (31 December 2015:
TL 109.030 deferred tax expenses).
(3)
It includes impacts of TAS 27 standard.

The accompanying notes are an integral part of these unconsolidated financial statements.
112 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

SECTION THREE
ACCOUNTING POLICIES
I. Basis of presentation

a. Preparation of the financial statements and the accompanying footnotes in accordance with Turkish Accounting Standards
and Regulation on Principles Related to Banks Accounting Applications and Preserving the Documents

The unconsolidated financial statements have been prepared in accordance with the regulations, communiqus, explanations
and circulars published with respect to accounting and financial reporting principles by the Banking Regulation and Supervision
Authority (BRSA) within the framework of the provisions of the Regulation on the Principles and Procedures Regarding
Banks Accounting Applications and Document Keeping published in the Official Gazette no. 26333 dated 1 November 2006 in
relation with the Banking Law no. 5411, as well as the Turkish Accounting Standards (TAS) and Turkish Financial Reporting
Standards (TFRS) enforced by the Public Oversight Accounting and Auditing Standards Authority (POA) and the annexes
and commentaries relating to these Standards (hereinafter collectively referred to as Turkish Accounting Standards or TAS)
if there are no specific regulations made by BRSA. The form and content of the unconsolidated financial statements which have
been drawn up and which will be disclosed to public have been prepared in accordance with the Communiqu on the financial
Statements to be Disclosed to the Public by Banks and the Related Explanations and Footnotes, Communiqu On Disfclosures
About Risk Management To Be Announced To Public By Banks and as well as the communiqus that introduce amendments and
additions to those Communiqus. The parent shareholder Bank keeps its accounting records in Turkish Lira, in accordance with
the Banking Law, Turkish Commercial Law and Turkish Tax legislation.

The amounts in the unconsolidated financial statements and explanations and footnotes relating to these statements have been
denoted in Thousand Turkish Liras unless otherwise stated.

Unconsolidated financial statements have been prepared based on historical cost principle, except the financial assets and
liabilities indicated at their actual values.

In the preparation of unconsolidated financial statements according to TAS, the management of the parent shareholder Bank
should make assumptions and estimations regarding the assets and liabilities in the balance sheet. These assumptions and
estimations are reviewed regularly, the necessary corrections are made and the effects of these corrections are reflected in the
income statement. The assumptions and estimations used are explained in the related foot notes.

The accounting policies followed and revaluation principles used in the preparation of unconsolidated financial statements have
been determined and implemented in accordance with the regulations, communiqus, explanations and circulars published by
BRSA with respect to accounting and financial reporting principles and principles covered by TAS/TFRS in cases where there
were no specific regulations made by BRSA except the change in accounting policy as described under Accounting policies and
valuation principles used in the preparation of the financial statetements below and they are consistent with accounting policies
implemented in annual unconsolidated financial statements prepared for the year ending on 31 December 2015.

These accounting policies and valuation principles are explained in Notes II to XXIV below. The amendments of TAS and TFRS
which have entered into force as of 1 January 2016 have no material impact on the Banks accounting policies, financial position
and performance. TAS and TFRS amendments which are published but not entered into force as of signature date of financial
statements do not have significant impact on accounting policies, financial position and performance of the Bank, except for TFRS
9: Financial Instruments, which shall enter into force as of January 1, 2018 the Bank has begun studies for compliance to TFRS 9
Financial Instruments Standard.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 113

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

b. Accounting policies and valuation principles used in the preparation of the financial statements

Communique on TAS 27 Separate Financial Statements standard, which is in force in order to be applied for accounting
periods after 31 December 2012 via Public Oversight Accounting and Auditing Standards Authority (POA) website and published
in Official Gazette dated 28 October 2011 and numbered 28098, has entered into force with Communique on amending the
Communique on TAS 27 Separate Financial Statements (Communique) published in Official Gazette dated 9 April 2015 and
numbered 29321 to be applied for accounting periods after 1 January 2016.

Entities have the opportunity to recognize their investments in associates, subsidiaries and joint ventures with equity method
in their separate financial statements in line with the amendment while it is stated for entities preparing separate financial
statements before the amendment in communique to recognize their investments in associates, subsidiaries and joint ventures in
accordance with cost value or TAS 39 Financial Instruments standard.

The Bank recognized its subsidiaries, in which it has direct or indirect shares, according to equity method in accordance with the
Communique having a permission to be applied earlier while preparing its non-consolidated financial tables with the 2nd quarter of 2015
in conjunction with the approval letter of Banking Regulation and Supervision Authority (BRSA) dated 20 July 2015 and realized the
implementation retrospectively in the framework of TAS 8 Accounting Policies, amendments and errors in Accounting Estimates Standard.

Deniz Yatrm Menkul Kymetler A.. (Deniz Yatrm), Eurodeniz International Banking Unit Ltd. (Eurodeniz), Deniz Portfy Ynetimi
A.. (Deniz Portfy), Denizbank AG, JSC Denizbank, Deniz Finansal Kiralama A.. (Deniz Leasing), Deniz Faktoring A.. (Deniz
Faktoring), Deniz Gayrimenkul Yatrm Ortakl A.. (Deniz GYO), Destek Varlk Ynetim A.. (Destek Varlk Ynetim) and CR
Erdberg Eins GmbH & Co KG (CR Erdberg), in which the Bank has direct or indirect shares, are associates which are recognized
according to equity method in separate financial statements and included in scope of full consolidation in financial statements in
accordance with the Communique.

It is decided to change type and title of Ekspres Menkul Deerler A.. (Ekspres Menkul Deerler) in Extraordinary General Assembly
Meeting dated August 5, 2016 and the decision is registered by stanbul Trade Registry Directorate on August 10, 2016 and title of
Ekspres Menkul Deerler is changed as Ekspres Bilgi lem ve Ticaret Anonim irketi (Ekspres Bilgi lem) and it is extracted from
consolidated subsidiaries scope in the framework of BRSA regulations due to its non-financial partnership status

Destek Varlk Ynetim A.., one of the subsidiaries of the Bank recognized through equity method, is disposed through sales in
current period.

On the other hand, Intertech Bilgi lem ve Pazarlama Ticaret A.. (Intertech) and Deniz Kltr Sanat Yaynclk Ticaret ve
Sanayi A.. (Deniz Kltr), which are associates of the Bank, and Deniz Kartl deme Sistemleri A. and Ak Deniz Radyo
ve Televizyon letiim Yaynclk Ticaret ve Sanayi A.., which are associates of Intertech, and Banta Nakit ve Kymetli Mal
Tama ve Gvenlik Hizmetleri A.. (Banta), which is jointly controlled entity of Bank, and Deniz Immobilen Service GmbH
(Deniz Immobilen), which is an associate of Denizbank AG are not included in consolidation and are recognized with cost value
according to TAS 27 since they are non-financial associates.
114 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

The Bank has adjusted comparative statement of changes in equity as of 31 December 2014 with respect to amendment in TAS
27 Separate Financial Statements Standard in accordance with TAS 8 Turkish Accounting Standard on Amendments and Errors in
Accounting Policies and Accounting Estimates. Impact of adjustment entries on statements are summarized below:

31 December 2014 Issued Adjustments Revised

Total Assets 69.474.016 1.456.601 70.930.617
Subsidiaries (Net) 1.554.707 1.456.601 3.011.308
Total Liabilities 69.474.016 1.456.601 70.930.617
Equity 5.682.554 1.456.601 7.139.155
Capital Reserves 440.247 26.380 466.627
Profit Reserves 3.945.883 (112.338) 3.833.545
Profit or Loss 580.324 1.542.559 2.122.883
-Prior Period Profit/Loss 14.133 1.120.032 1.134.165
-Current Period Profit/Loss 566.191 422.527 988.718
Dividend Income 50.112 (48.647) 1.465
Profit/Loss from Associates Subjected to Equity Method -- 549.574 549.574
Profit on Sale of Associates, Subsidiaries and Joint Ventures 78.400 (78.400) --

c. Additional paragraph for convenience translation:

The effects of differences between accounting principles and standards set out by BRSA Accounting and Reporting Regislation 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 in the accompanying financial statements. Accordingly,
the accompanying financial statements are not intended to present the financial position, results of operations and changes in
financial position and cash flows in accordance with the accounting principles generally accepted in such countries and IFRS.

II. Explanation on the strategy for the use of financial instruments and transactions denominated in foreign currencies

a. Strategy for the use of financial instruments

Denizbank A..s (The Bank) external sources of funds are comprised of deposits with various maturity periods, and short-
term borrowings. These funds are fixed rate in general and are utilized in high yield financial assets. The majority of the funds
are allocated to high yield, floating rate instruments, such as Turkish Lira and foreign currency government securities and
Eurobonds, and to loans provided to customers on a selective basis in order to increase revenue and support liquidity. The
liquidity structure, insures meeting all liabilities falling due, is formed by keeping sufficient levels of cash and cash equivalents
by diversifying the sources of funds. The Bank assesses the maturity structure of the sources, and the maturity structure and
yield of placements at market conditions and adopts a high yield policy in long-term placements.

The Bank assumes risks within the pre-determined risk limits short-term currency, interest and price movements in money and
capital markets and market conditions.

These positions are closely monitored by the Risk Management System of the Bank and the necessary precautions are taken if
the limits are exceeded or should there be a change in the market environment.

In order to avoid interest rate risk, assets and liabilities with fixed and floating interests are kept in balance, taking the maturity
structure into consideration.

The asset-liability balance is monitored on a daily basis in accordance with their maturity structure and foreign currency type.
The risks associated with short-term positions are hedged through derivatives such as forwards, swaps and options.

No risks are taken as far as possible on foreign currencies other than US Dollar and Euro. Transactions are made under the
determined limits to cover the position.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 115

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

b. Transactions denominated in foreign currencies

Foreign currency exchange rates used in converting transactions denominated in foreign currencies and their presentation in
the financial statements

The Bank accounts for the transactions denominated in foreign currencies in accordance with TAS 21 The Effects of Changes in
Foreign Exchange Rates. Foreign exchange gains and losses arising from transactions that are completed as of the balance sheet
date are translated to TL by using historical foreign currency exchange rates. Balances of the foreign currency denominated
assets and liabilities are translated into TL by using foreign currency exchange rates of the Bank and the resulting exchange
differences are recorded as foreign exchange gains and losses. The Banks foreign currency exchange rates are as follows.

31 December 2016 31 December 2015

US Dollar 3,5192 TL 2,9181 TL
Euro 3,7099 TL 3,1838 TL
Foreign exchange gains and losses included in the income statement

Net foreign exchange loss included in the income statement amounts to TL 812.449 as of 31 December 2016 (1 January - 31
December 2015:TL 1.848.791 net foreign exchange loss).

Total amount of valuation fund arising from foreign currency exchange rate differences

TL 36.673 (31 December 2015: TL 31.817), consisting of conversion of Bahrain Branchs financial statements into TL in
accordance with TAS 21, and TL 749.218, (31 December 2015: TL 143.656) sourcing from recognizing Denizbank AG, JSC
Denizbank and Eurodeniz, which are foreign currency associates of the Bank, with equity method, are recorded under other
reserves account.

The Bank applies net investment accounting hedge as of 1 July 2015 in order to ensure exchange difference hedge sourcing from
equity method implementation for its net investment at a total amount of Euro 1.006 million and US Dollar 6,7 million belonging
to Denizbank AG and Eurodeniz, which are subsidiaries of the Bank. A part of foreign currency deposits at same amounts
is defined as hedging instrument and the part, in which the value change sourcing from foreign currency exchange rates is
effective, is recognized in hedge funds under shareholders equity.

III. Explanations on investments in associates, subsidiaries, joint ventures

Associates, jointly controlled entities and non-financial associates, included in non-consolidated financial tables, are recognized
according to cost value in accordance with the TAS 27 Separate Financial Statements.

Subsidiaries, which are treated in an active market, are reflected to financial statements with their fair values through taking
their recorded prices in the aforementioned market. Subsidiaries and joint controlled entities, which are not treated in an active
market, are monitored over their acquisition costs and shown in financial statements with their cost values after deducting
impairment charges, if available.

Financial associates are recognized in accordance with equity method in the framework of TAS 28 Communique on Investments
in Subsidiaries and Joint Ventures with respect to amendment in TAS 27 Communique on Separate Financial Statements in non-
consolidated financial statements. Associates, which were recognized with cost value in non-consolidated financial statements
beforehand, are recognized in accordance with the equity method as of 1 January 2013 with the 2nd quarter of 2015.

Equity method is the accounting treatment which prescribes to increase or decrease the book value of share included in associate
as quota per participant from change amount occurring in period in the shareholders equity of the participated partnership and
to deduct/set off dividends received from participated associate from the amended value of the associate.

IV. Explanations on forward transactions, options and derivative instruments

The Banks derivative transactions mainly consist of foreign currency and interest rate swaps, foreign currency options and
forward foreign currency purchase/sale contracts.

In accordance with TAS 39 Financial Instruments: Recognition and Measurement, forward foreign currency purchase/sale
contracts, swaps, options and futures that are classified as trading purpose transactions. Derivative transactions are recorded
with their fair values at contract date. Also, the liabilities and receivables arising from the derivative transactions are recorded as
off-balance sheet items at their contractual notional amounts.
116 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

The derivative transactions are valued at fair value using market prices or pricing models subsequent to initial recognition and
are presented in the Positive Value of Trading Purpose Derivatives and Negative Value of Trading Purpose Derivatives items
of the balance sheet depending on the resulting positive or negative amounts of the computed value. Gains and losses arising
from a change in the fair value are recognized in the income statement. Fair values of derivatives are calculated using discounted
cash flow model or market value.

V. Explanations on interest income and expenses

Interest income and expenses are recognized as they are accrued taking into account the internal rate of return method. Interest
accrual does not start until non-performing loans become performing and are classified as performing loans or until collection
in accordance with the Regulation on the Principles and Procedures Related to the Determination of the Loans and Other
Receivables for which Provisions Shall be Set Aside by Banks and to the Provisions to be Set Aside, published in the Official
Gazette No. 26333 dated 1 November 2006, which was prepared on the basis of the provisions of Articles 53 and 93 of the
Banking Law no. 5411.

VI. Explanations on fees and commissions

Fees and commissions received and paid, and other fees and commissions paid to financial institutions are either recognized on
an accrual basis over the period the service is provided or received or recognized as income or expense when collected or paid
depending on their nature.

VII. Explanations on financial assets

Financial assets include cash; acquisition right of cash or acquisition right of other financial asset or bilateral exchange right
of financial assets or equity instrument transactions with the counterpart. Financial assets are classified in four categories; as
financial assets at fair value through profit or loss, financial assets available-for-sale, investment held-to-maturity, and loans and
receivables.

a. Financial assets at fair value through profit or loss

Financial assets held for trading

Trading financial assets are financial assets which are either acquired for generating a profit from short-term fluctuations in
prices or are financial assets included in a portfolio aimed at short-term profit making.

Trading financial assets are recognized at their fair value in the balance sheet and remeasured at their fair value after
recognition.

All gains and losses arising from valuations of trading financial assets are reflected in the income statement. In accordance with
descriptions of the uniform chart of accounts, favorable difference between acquisition cost of financial asset and its discounted
value are recognized in Interest Income, in the case of fair value of asset is above its discounted value, favorable difference
between them are recognized in Capital Market Transactions Profits account, in the case of fair value is below discounted
value, unfavorable difference between them are recognized in Capital Market Transactions Losses account. In the case of
financial asset is sold off before its maturity, consisted gains or losses are accounted within the same principals.

Derivative financial assets are classified as trading financial assets unless they are used for hedging purposes. The accounting of
derivative financial assets is explained in Note IV of Section Three.

Financial assets at fair value through profit or loss

The Bank does not have any securities designated as financial assets at fair value through profit or loss.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 117

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

b. Investment securities available-for-sale

Available-for-sale assets are financial assets that are not loans and receivables, held to maturity investments and financial assets
at fair value through profit or loss.

After the recognition, financial assets available for sale are remeasured at fair value. Interest income arising from available
for sale calculated with Effective interest method and dividend income from equity securities are reflected to the income
statements. Unrealized gains and losses arising from the differences at fair value of securities classified as available for sale and
that is representing differences between amortized cost calculated with effective interest method and fair value of financial assets
are recognized under the account of Marketable securities valuation differences inside shareholders equity items. Unrealized
profits and losses do not represent on relevant income statement until these securities are collected or disposed of and the
related fair value differences accumulated in the shareholders equity are transferred to the income statement. When these
securities are collected or disposed of, the related fair value differences accumulated in the shareholders equity are transferred
to the income statement.

c. Investment securities held-to-maturity

Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an entity has
the positive intention and ability to hold to maturity other than those that the entity upon initial recognition designates as at fair value
through profit or loss, those that the entity designates as available for sale; and those that meet the definition of loans and receivables.

Held to maturity financial assets are initially recognized at acquisition cost including the transaction costs which reflects the fair
value of the those instruments and subsequently recognized at amortized cost by using effective interest rate method.

Interest incomes obtained from held to maturity financial assets are presented in the line of interest received from securities
portfolio - investment securities held-to-maturity in the unconsolidated statement of income.

There are no financial assets that are banned from being classified as investment securities held-to maturity for two years due to
the violation of the tainting rule.

Real coupon of Consumer Price Index (CPI) that is linked government bonds under available-for-sale and held-to maturity
portfolios remains fixed until maturity. At the same time intended to effect of change in Consumer Price Index, valuation is
carried out with using reference indexes at relating issue of security and preparation date of financial statements.

d. Loans and specific provisions

Loans and receivables are non-derivative financial assets that are not classified as financial assets at fair value through
profit or loss or financial assets available for sale, are unlisted in an active market and whose payments are fixed or can be
determined. Loans and receivables are carried initially by adding acquisition cost to transaction costs which reflect fair value and
subsequently recognized at the discounted value calculated using the Effective interest method.

Foreign currency loans are subject to evaluation and currency exchange differences arising from such re-measurements are
reflected in Foreign Exchange Gains/Losses account in the unconsolidated income statement. Foreign currency-indexed loans
are initially recognized in their Turkish Lira equivalents; repayments are calculated with exchange rate at payment date, currency
exchange differences occured are reflected in profit/loss accounts.

Specific and general allowances are made in accordance with the Regulation on the Principles and Procedures Related to the
Determination of the Loans and Other Receivables for which Provisions Shall be Set Aside by Banks and to the Provisions to
be Set Aside published in the Official Gazette numbered 26333 dated 1 November 2006, and which was amended with the
communiqu published in the Official Gazette numbered 27513 dated 6 March 2010.

When collections are made on loans that have been provided for, they are credited to the income statement accounts Provision
for Loan Losses or Other Receivables if the provision was made in the current year, otherwise such collections are credited to
Other Operating Income account with respect to allowances made in prior years. The interest income recovered is booked in
Other Interest Income account.
118 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

VIII. Explanations on impairment of financial assets

The existence of objective evidence whether a financial asset or group of financial assets is impaired, is assessed at each balance
sheet date. If such evidence exists, impairment provision is provided.

Impairment for held-to-maturity financial assets carried at amortized cost is calculated as the difference between the present
value of the expected future cash flows discounted based on the Effective interest method and its carrying value. Regarding
available-for-sale financial assets, when there is objective evidence that the asset is impaired the cumulative loss that had been
recognized in other comprehensive income shall be reclassified from equity to profit or loss as a reclassification adjustment even
though the financial asset has not been derecognized. An explanation about the impairment of loans and receivables is given in
Note VII-d of Section Three.

IX. Explanations on offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet when the Bank has a legally
enforceable right to offset the recognized amounts and there is an intention to collect/pay the related financial assets and
liabilities on a net basis, or to realize the asset and settle the liability simultaneously.

X. Explanations on sale and repurchase agreements and transactions related to the lending of securities

Government bonds and treasury bills sold to customers under repurchase agreements are classified according to purpose of
being hold into portfolio on the assets side of the accompanying unconsolidated balance sheet within Financial Assets Held for
Trading, Investment Securities Available for Sale and Investment Securities Held to Maturity and are valuating according
to valuation principles of relating portfolio. Funds obtained from repurchase agreements are presented on the liability side of
the unconsolidated balance sheet within the account of Funds Provided under Repurchase Agreements. The accrual amounts
corresponding to the period is calculated over the sell and repurchase price difference determined in repurchase agreements.
Accrued interest expenses calculated for funds obtained from repurchase agreements are presented in Reverse Repurchase
Agreements account in liability part of the unconsolidated balance sheet.

Securities received with resale commitments are presented under Reverse Repurchase Agreements line in the balance sheet.
The accrual amounts for the corresponding part to the period of the resale and repurchase price difference determined in reverse
repurchase agreements are calculated using the Effective interest method. The Bank has not any security which subjected to
borrowing activities.

XI. Explanations on assets held for sale and discontinued operations

An asset is regarded as Asset held for resale only when the sale is highly propable and the asset is available for immediate
sale in its present condition. For a highly probable sale, there must be a valid plan prepared by the management for the sale
of asset including identification of possible buyers and completion of sale process. Various events and conditions can prolong
completion period of sale transaction to more than 1 year. This loss of time is realized due to events and conditions out of contol
of an enterprise and in the position of competent evidence about sales plan of an enterprise for sale of relevant asset continuing,
assets mentioned continuing to be classified as assets held for sale.

The liabilities of a disposal group classified as held for sale shall be presented separately from other liabilities in the statement
of financial position. Those assets and liabilities shall not be offset and presented as a single balance.

A discontinued operation is a division of a bank that is either disposed or held for sale and represents a separate major line
of business or geographical area of operations; or is part of a single coordinated plan to dispose of a separate major line of
business or geographical area of operations; or is a subsidiary acquired exclusively with a view to resale.

As 31 December 2016, The Bank does not have non-current assets held for sale and a discontinued operation (31 December
2015: None).
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 119

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

XII. Explanations on goodwill and other intangible assets

a. Goodwill

Goodwill represents the excess of the total acquisition costs over the shares owned in the net assets of the acquired company
at the date of acquisition. The net goodwill resulted from the acquisition of the investment and to be included in the
unconsolidated balance sheet, is calculated based on the financial statements of the investee company as adjusted according
to the required accounting principles. Assets of the acquired company which are not presented on financial statements but
seperated from goodwill represented with fair values of tangible assets (credit card brand equity, customer portfolio etc.) and/or
contingent liabilities to financial statements in process of acquisition.

In accordance with TFRS 3 - Business Combinations, the goodwill is not amortized. It is tested yearly or if there is any
indication of impairment according to Turkish Accounting Standard 36 (TAS 36) - Impairment of Assets.

b. Other intangible assets

Intangible assets are initially classified over acquisition cost values and other costs which are required for activation of the
financial asset in accordance with TAS 38 Intangible Assets standard. Intangible assets are evaluated over excess value of net
cost that derived from accumulated depreciation and accumulated impairment after recognition period.

The Banks intangible assets consist of software, license rights, data/telephone line, total values of credit cards and personal
loans portfolio.

Intangible assets purchased before 1 January 2003 and after 31 December 2006 are amortized on a straight-line basis; and
those purchased between the aforementioned dates are amortized by using the double-declining method. Useful life of an
asset is estimated by assessment of the expected life span of the asset, technical, technological wear outs, of the asset. The
amortization rates used approximate the useful lives of the assets.

Maintenance costs associated with the computer software that are in use are expensed at the period of occurrence.

XIII. Explanations on tangible assets

DFH Group has passed to revaluation model from cost model in the framework of TAS 16 Intangible Fixed Assets in valuation
of properties in use which are tracjed under intangible fixed assets as of 31 December 2016 while it tracks all of its intangible
fixed assets in accordance with TAS 16 Intangible Fixed Assets. Positive differences between property value in expertise
reports prepared by licenced valuation firms and net carrying amount of the related property are tracked under equity accounts
while negative differences are tracled under income statement.

Estimated Economic Life (Year) Depreciation Rate

Movables
- Office machinery 4 YEARS % 10 - % 50
- Furniture/Furnishing 5 YEARS % 10 - % 50
- Means of transport 5 YEARS % 20 - % 50
- Other equipment 10 YEARS % 2,50 - % 50
Real estates 50 YEARS % 2 - % 3,03
Expenditures for maintenance and repairs that are routinely made on tangible assets are charged as expense. The capital
expenditures incurred in order to increase the capacity of the tangible asset or to increase the future benefit of the asset are
capitalized on the cost of the tangible asset.

There are no restrictions such as pledges and mortgages on tangible assets or no purchase commitments.
120 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

XIV. Explanations on investment properties

None.

XV. Explanations on leasing activities

The maximum period of the lease contracts is mostly 4 years. Fixed assets acquired through financial leasing are recognized in
tangible assets and depreciated in line with fixed assets group they relate to. The obligations under finance leases arising from
the lease contracts are presented under Finance Lease Payables account in the balance sheet. Interest expense and currency
exchange rate differences related to leasing activities are recognized in the income statement.

Transactions regarding operational agreements are accounted on an accrual basis in accordance with the terms of the related
contracts.

The Bank does not have finance lease transactions as lessor.

XVI. Explanations on provisions and contingent liabilities

Provisions other than specific and general provisions for loans and other receivables and free provisions for probable risks,
and contingent liabilities are provided for in accordance with TAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Provisions are accounted for immediately when obligations arise as a result of past events and a reliable estimate of the
obligation is made by the Bank management. Whenever the amount of such obligations cannot be measured, they are regarded
as Contingent. If the possibility of an outflow of resources embodying economic benefits becomes probable and the amount of
the obligation can be measured reliably, a provision is recognized. If the amount of the obligation cannot be measured reliably or
the possibility of an outflow of resources embodying economic benefits is remote, such liabilities are disclosed in the footnotes.

Based on the representations of the Banks attorneys, there are 8.816 lawsuits against The Bank with total risks amounting to TL
204.486, US Dollar 705.695 and Euro 1.579.799 as of 31 December 2016. There are also 14.153 follow-up cases amounting to
TL 584.553 and US Dollar 10.000 in total that are filed by The Bank and are at courts. The Bank booked a provision amounting
to TL 19.125 for the continuing lawsuits (31 December 2015: TL 18.120).

XVII. Explanations on obligations for employee benefits

Provision for employee benefits has been accounted for in accordance with TAS 19 Employee Benefits.

The Bank in accordance with existing legislation in Turkey, is required to make retirement and notice payments to each employee
whose employment is terminated due to reasons other than resignation or misconduct. Except to the this extents, the Bank
is required to make severance payment to each employee whose employment is terminated due to retirement, death, military
service and to female employees following their marriage within one year leave the job of their own accords by fourteenth clause
of Labour Law.

The Bank, in accordance with TAS 19 Employee Benefits realized provision registry under the condition of prediction of present
value of possible liability in the future related to employee termination benefits. Losses and gains which occur after 1 January
2013 are adjusting under the Equity Accounts in accordance with updated TAS 19 Standard.

The Bank has recognized vacation pay liability amount which is calculated from unused vacation to financial statement as a
provision.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 121

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

XVIII. Explanations on taxation

a. Current taxes

In accordance with the Corporate Tax Law No: 5520 published in the Official Gazette numbered 26205 dated 21 June 2006, the
corporate tax rate is levied at 20% beginning from 1 January 2006.

Companies file their corporate tax returns between the 1st and 25th days of the following four months period after to which
they relate and the payments are made until the end of that month.

The provision for corporate tax for the period is reflected as the Current Tax Liability in the liabilities and Current Tax
Provision in the income statement.

In accordance with the Corporate Tax Law, tax losses can be carried forward for five years. The tax authorities can inspect tax
returns and the related accounting records back to a maximum period of five years.

Besides institutions reside in Turkey, dividends paid to the offices or the institutions earning through their permanent representatives
in Turkey are not subject to withholding tax. According to the decision no. 2006/10731 of the Council of Ministers published in
the Official Gazette no. 26237 dated 23 July 2006, certain duty rates included in the articles no.15 and 30 of the new Corporate
Tax Law no.5520 are revised. In this respect, the withholding tax rate on the dividend payments other than the ones paid to the
nonresident institutions generating income in Turkey through their operations or permanent representatives and the institutions
residing in Turkey is 15%. While applying the withholding tax rates on dividend payments to the foreign based institutions and the
real persons, the withholding tax rates covered in the related Avoidance of Double Taxation Treaty are taken into account. Addition
of profit to capital is not considered as profit distribution and therefore is not subject to withholding tax.

Current Tax Effects that sourced from directly classified in equity transactions represent on equity accounts.

b. Deferred taxes

In accordance with TAS 12 Income Taxes, The Bank accounts for deferred taxes based on the tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes.

The Banks deferred tax assets and liabilities have been offset in the unconsolidated financial statements. As a result of offsetting,
deferred tax assets of TL 83.104 (31 December 2015: TL 85.376) have been recognized in the accompanying financial statements.

Deferred taxes directly related to equity items are recognized and offset in related equity accounts.

Deferred tax liabilities are generally recognized for all taxable temporary and deferred tax assets are recognized for all
deductible temporary differences to the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilized. Deferred tax asset is not provided over provisions for possible risks and
general loan loss provisions according to the circular of BRSA numbered BRSA.DZM.2/13/1-a-3 and dated 8 December 2004.

c. Transfer pricing

In the framework of the provisions on Disguised Profit Distribution Through Transfer Pricing regulated under article 13 of
Corporate Tax Law no. 5520, pursuant to the Corporate Tax Law General Communiqu no. 1, which became effective upon its
promulgation in the Official Gazette dated 3 April 2007 and numbered 26482, Corporate Tax Law General Communiqu no. 3,
which became effective upon its promulgation in the Official Gazette dated 20 November 2008 and numbered 27060, Council
of Ministers Decree no. 2007/12888, which became effective upon its promulgation in the Official Gazette dated 6 December
2007 and numbered 26722, Council of Minister Decree no. 2008/13490, which became effective upon its promulgation in the
Official Gazette dated 13 April 2008 and numbered 26846, General Communiqu No. 1 on Disguised Profit Distribution Through
Transfer Pricing, which became effective upon its promulgation in the Official Gazette dated 18 November 2007 and numbered
26704 and General Communiqu No. 2 on Disguised Profit Distribution Through Transfer Pricing, which became effective upon
its promulgation in the Official Gazette dated 22 April 2008 and numbered 26855, profits shall be deemed to have been wholly
or partially distributed in a disguised manner through transfer pricing if companies engage in the sales or purchases of goods or
services with related parties at prices or amounts defined contrary to the arms length principle. Buying, selling, manufacturing
and construction operations and services, renting and leasing transactions, borrowing or lending money, bonuses, wages and
similar payments are deemed as purchase of goods and services in any case and under any condition.
122 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Corporate taxpayers are obliged to fill in the The Form on Transfer Pricing, Controlled Foreign Corporation and Thin Capital
regarding the purchases or sales of goods or services they perform with related parties during a fiscal period and submit it to
their tax office in the attachment of the corporate tax return.

Furthermore, the taxpayers registered in the Large Taxpayers Tax Administration (Byk Mkellefler Vergi Dairesi Bakanl)
must prepare the Annual Transfer Pricing Report in line with the designated format for their domestic and cross-border
transactions performed with related parties during a fiscal period until the filing deadline of the corporate tax return, and if
requested after the expiration of this period, they must submit the report to the Administration or those authorized to conduct
tax inspection.

XIX. Additional explanations on borrowings

Instruments representing the borrowings are initially recognized at cost represented its fair value and measured at amortized
cost based on the internal rate of return at next periods. Foreign currency borrowings have been translated using the foreign
currency buying rates of the Bank at the balance sheet date. Interest expense incurred for the period has been recognized in the
accompanying financial statements.

General hedging techniques are used for borrowings against liquidity and currency risks. The Bank, if required, borrows funds
from domestic and foreign institutions. The Bank can also borrows funds in the forms of syndication loans and securitization
loans from foreign institutions.

XX. Explanations on issuance of share certificates

Transactions related to issuance of share certificates are explained in Note II-l-8 of Section Five. No dividends have been declared
subsequent to the balance sheet date.

XXI. Explanations on acceptances

Acceptances are realized simultaneously with the customer payments and recorded in off-balance sheet accounts, if any.

As of the balance sheet date, there are no acceptances recorded as liability in return for assets.

XXII. Explanations on government grants

As of the balance sheet date, The Bank does not have any government grants.

XXIII. Explanations on segment reporting

Segment reporting is presented in Note XII of Section Four.

XXIV. Explanations on other matters

None.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 123

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

SECTION FOUR
FINANCIAL POSITION AND RISK MANAGEMENT
I. Explanations related to the consolidated shareholders equity
Shareholders equity and capital adequacy ratio are calculated in accordance with the Regulation on Equities of Banks and
Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks.
The current period equity amount of the Bank is TL 15.425.649 while its capital adequacy standard ratio is 17,52% as of 31
December 2016. Calculations of 31 December 2015 have been made in the framework of repealed regulations and equity amount
is TL 12.204.766 while the capital adequacy standard ratio is 16,07%.
a. Components of unconsolidated shareholders equity
Amounts
related to
Current Period treatment
31 December before
2016 1/1/2014
Common Equity Tier 1 capital
Directly issued qualifying common share capital plus related stock surplus 3.316.100
Share premium 15
Legal reserves 4.537.899
Projected gains to shareholders equity of the accounting standards in Turkey 904.300
Profit 2.965.973
Net current period profit 1.409.281
Prior period profit 1.556.692
Free shares from investments and associates, subsidiaries and joint ventures that is not recognised in profit 81
Common Equity Tier 1 capital before regulatory adjustments 11.724.368
Common Equity Tier 1 capital: regulatory adjustments
Prudential valuation adjustments --
Sum of current year net loss and prior periods loss that is not covered with reserves and losses on shareholders equity of the accounting standards in
Turkey 1.162.080
Development cost of operating lease 89.732
Goodwill (net of related tax liability) 522 869
Other intangibles other than mortgage-servicing rights (net of related tax liability) 112.735 187.893
Deferred tax assets that rely on future profitability excluding those arising from temporary differences (net of related tax liability) --
Cash-flow hedge reserve --
Gains and losses due to changes in own credit risk on fair valued liabilities --
Securitisation gain on sale --
Gains and losses due to changes in own credit risk on fair valued liabilities --
Defined-benefit pension fund net assets --
Investments in own shares (if not already netted off paid-in capital on reported balance sheet) --
Reciprocal cross-holdings in common equity --
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short
positions, where the bank does not own more than 10% of the issued share capital (amount above 10% threshold) --
Significant investments in the common stock of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of
eligible short positions (amount above 10% threshold) --
Mortgage servicing rights (amount above 10% threshold) --
Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax liability) --
Amount exceeding the 15% threshold --
of which: significant investments in the common stock of financials --
of which: mortgage servicing rights --
of which: deferred tax assets arising from temporary differences --
National specific regulatory adjustments --
Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to cover deductions --
Total regulatory adjustments to Common equity Tier 1 1.365.069
Common Equity Tier 1 capital (CET1) 10.359.299
Additional Tier 1 capital: instruments
Directly issued qualifying Additional Tier 1 instruments plus related stock surplus of which: classified as equity under applicable accounting standards --
Directly issued qualifying Additional Tier 1 instruments plus related stock surplus of which: classified as liabilities under applicable accounting standards --
Additional Tier 1 instruments (and CET1 instruments not included in row 5) issued by subsidiaries and held by third parties (amount allowed in group
AT1) of which: instruments issued by subsidiaries subject to phase out --
Additional Tier 1 capital before regulatory adjustments --
Additional Tier 1 capital: regulatory adjustments
Investments in own Additional Tier 1 instruments --
Reciprocal cross-holdings in Additional Tier 1 instruments --
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions,
where the bank does not own more than 10% of the issued common share capital of the entity (amount above 10% threshold) --
Significant investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation (net of eligible short
positions) --
National specific regulatory adjustments --
The process of transition will continue to reduce from Tier 1 Capital
Goodwill or other intangibles and deferred tax liabilities of which the regulation concerning transitional Article 2 of subsection of core capital not reduced
from (-) 75.505
124 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Net deferred tax asseUliabi)ty which is not deducted trom Common Eguity Tier 1 oapitat for the purposes ot the sub paragraph ot the Provisionat Arlicle 2
of the Regutation on Banks Own Funds (-) --
Regutatory adjustments apptied to Additionat Tier 1 due to insutficient Tier 2 to cover deductions (-) --
Total regulatory adjustments to Additional Tier 1 capital 75.505
Additional Tier 1 capital (AT1) (75.505)
Tier 1 capital (T1 = CET1 + AT1) 10.283.794
Tier 2 capital: instruments and provisions
Directly issued qualifying Tier 2 instruments plus related stock surplus 4.262.567
Directly issued qualifying Tier 2 instruments plus related stock surplus 140.768
Provisions 1.016.387
Tier 2 capital before regulatory adjustments 5.278.954
Tier 2 capital: regulatory adjustments
Reciprocal cross-holdings in Tier 2 instruments --
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation, net of eligible short positions,
where the bank does not own more than 10% of the issued common share capital of the entity (amount above the 10% threshold) (-) --
Significant investments in the capital banking, financial and insurance entities that are outside the scope of regulatory consolidation (net of eligible short
positions) --
National specific regulatory adjustments (-) --
Reciprocal cross-holdings in Tier 2 instruments 115.081
Total regulatory adjustments to Tier 2 capital 115.081
Tier 2 capital (T2) 5.163.873
Total capital (TC = T1 + T2) 15.447.667
Total risk weighted assets
Loans extended being non compliant with articles 50 and 51 of the Law --
Podion ot the sum of the banka reat estate net book vaNce, ahich is in excess ot titiy per cent of their oan funds and net book vatues of those ot
memhandise and real estate which hava to be acpuirad dua to their raceivabtas and disposed of pursuant to Aniote 57 ot the Banking Laa, ahich cannot be
dsposed ot despite the lapse ola period of tive years s:nce the dat e ot such acquisition 9.826
National specific regulatory adjustments 12.192
The process of transition will continue to reduce from Common Equity Tier 1 capital and Additional Tier 1 capital
of which: The sum of partnership share on banks and financial institutions (domestic and abroad), with shareholding of less than 10% --
of which: Partnership share on banks and financial institutions (domestic and abroad) that are not consolidated, with a shareholding of 10% and above --
of which: Partnership share on banks and financial institutions (domestic and abroad) that are not consolidated, with a shareholding of 10% and above --
Shareholders Equity
Total shareholders equity 15.425.649
Total risk weighted items 88.069.544
CAPITAL ADEQUACY RATIOS
Core Capital Adequacy Ratio (%) 11,76
Tier 1 Capital Adequacy Ratio (%) 11,68
Capital Adequacy Standard Ratio (%) 17,52

BUFFERS
Institution specific buffer requirement 0,669
Capital conservation buffer requirement (%) 0,625
Bank specific countercyclical buffer requirement (%) 0,044
Common Equity Tier 1 available to meet buffers (as a percentage of risk weighted assets) (%) 0,048
Amounts below the thresholds for deduction (before risk weighting)
Non-significant investments in the capital of other financials --
Significant investments in the common stock of financials --
Mortgage servicing rights (net of related tax liability) --
Deferred tax assets arising from temporary differences (net of related tax liability) --
Applicable caps on the inclusion of provisions in Tier 2
Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardised approach (prior to application of cap) 1.277.781
Cap on inclusion of provisions in Tier 2 under standardised approach 1.016.387
Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application of cap) --
Cap for inclusion of provisions in Tier 2 under internal ratings-based approach --
Debt instruments subjected to Article 4 (to be implemented between 1 January 2018 and 1 January 2022)
Upper limit for Additional Tier I Capital subjected to temporary Article 4 --
Amounts Excess the Limits of Additional Tier I Capital subjected to temporary Article 4 --
Upper limit for Additional Tier II Capital subjected to temporary Article 4 683.202
Amounts Excess the Limits of Additional Tier II Capital subjected to temporary Article 4 --
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 125

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Priod Period
31 December 2015 (*)
CORE CAPITAL
Paid-in capital following all debts in terms of claim in liquidation of the Bank 1.816.100
Share premium 39
Share cancellation profits --
Reserves 4.421.539
Gains recognized in equity as per TAS 370.614
Profit 2.319.337
Current Period Profit 762.645
Prior Period Profit 1.556.692
Provisions for Possible Risks 11.000
Bonus Shares from Investments in Associates, Subsidiaries and Joint Ventures that are not recognized in Profit 81
Core Capital Before Deductions 8.938.710
Deductions from Common Equity
Portion of the current and prior periods losses which cannot be covered through reserves and losses reflected in equity in accordance with TAS (-) 655.023
Leasehold improvements (-) 95.983
Goodwill or other intangible assets and deferred tax liability related to these items (-) 68.471
Net deferred tax asset/liability (-) 27.886
Shares obtained contrary to the 4th clause of the 56th Article of the Law (-) --
Direct and indirect investments of the Bank in its own Core Capital (-) --
Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside the scope of consolidation where the Bank owns 10%
or less of the issued common share capital exceeding 10% of Core Capital of the Bank (-) --
Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside the scope of consolidation where the Bank owns 10%
or more of the issued common share capital exceeding 10% of Core Capital of the Bank (-) --
Portion of mortgage servicing rights exceeding 10% of the Core Capital (-) --
Portion of deferred tax assets based on temporary differences exceeding 10% of the Core Capital (-) --
Amount exceeding 15% of the common equity as per the 2nd clause of the Provisional Article 2 of the Regulation on the Equity of Banks (-) --
Excess amount arising from the net long positions of investments in core capital items of banks and financial institutions outside the scope of consolidation where the Bank
owns 10% or more of the issued common share capital (-) --
Excess amount arising from mortgage servicing rights (-) --
Excess amount arising from deferred tax assets based on temporary differences (-) --
Other items to be defined by the BRSA (-) --
Deductions to be made from common equity in the case that adequate Additional Tier I Capital or Tier II Capital is not available (-) --
Total Deductions From Core Capital 847.363
Total Common Equity 8.091.347
ADDITIONAL TIER I CAPITAL
Capital amount and related premiums corresponding to preference shares that are not included in common equity --
Debt instruments and premiums deemed suitable by the BRSA (issued/obtained after 1.1.2014) --
Debt instruments and premiums deemed suitable by the BRSA (issued before 1.1.2014) --
Third parties share in the Tier I Capital --
Additional Tier I Capital before Deductions --
Deductions from Additional Tier I Capital --
Direct and indirect investments of the Bank in its own Additional Tier I Capital (-) --
Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside the scope of consolidation where the Bank owns 10%
or less of the issued common share capital exceeding 10% of Common Equity of the Bank (-) --
Portion of the total of net long positions of investments made in Additional Tier I Capital and Tier II Capital items of banks and financial institutions outside the scope of
consolidation where the Bank owns 10% or more of the issued common share capital exceeding 10% of Common Equity of the Bank (-) --
Other items to be defined by the BRSA (-) --
Deductions to be made from common equity in the case that adequate Additional Tier I Capital or Tier II is not available (-) --
Total Deductions From Additional Tier I Capital --
Total Additional Tier I Capital --
Deductions from Tier I Capital 144.535
Portion of goodwill and other intangible assets and the related deferred tax liabilities which not deducted from the Common Equity as per the 1st clause of Provisional Article
2 of the Regulation on the Equity of Banks (-) 102.707
Portion of net deferred tax assets/liabilities which is not deducted from the common equity pursuant to Paragraph 1 Provisional Article 2 of the Regulation on the Equity of
Banks (-) 41.828
Total Tier I Capital 7.946.812
TIER II CAPITAL
Debt instruments and premiums deemed suitable by the BRSA (issued/obtained after 1.1.2014) 1.679.282
Debt instruments and premiums deemed suitable by the BRSA (issued/obtained before 1.1.2014) 2.089.360
Sources pledged to the Bank by shareholders to be used in capital increases of the Bank --
General Loan Loss Provisions 877.326
Tier II Capital Before Deductions 4.645.968
Deductions From Tier II Capital --
Direct and indirect investments of the Bank in its own Tier II Capital (-) --
Portion of the total of net long positions of investments made in Common Equity items of banks and financial institutions outside the scope of consolidation where the Bank
owns 10% or less of the issued common share capital exceeding 10% of Common Equity of the Bank (-) --
Portion of the total of net long positions of investments made in Additional Tier I and Tier II Capital items of banks and financial institutions outside the scope of consolidation
where the Bank owns 10% or more of the issued common share capital exceeding 10% of Common Equity of the Bank (-) --
Other items to be defined by the BRSA (-) 345.613
Total Deductions from Tier II Capital 345.613
Total Tier II Capital 4.300.355
CAPITAL BEFORE DEDUCTIONS
Loans granted contrary to the 50th and 51th Article of the Law (-) --
Net book value of amounts exceeding the limit mentioned in the 1st Paragraph of Article 57 of the Law and assets acquired against overdue receivables which could not be
disposed of even though five years have passed since their acquisition date (-) 1.092
126 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Loans granted to banks and financial institutions, including those established abroad, and to eligible shareholders of the Bank and investments made in the borrowing
instruments issued by them (-) 7.879
Amounts to be deducted from equity as per the 2nd Clause of Article 20 of the Regulation on Measurement and Evaluation of Capital Adequacy of Banks (-) --
Other items to be defined by the BRSA (-) 33.430
Portion of the total of net long positions of investments made in Common Equity items of banks and financial institutions outside the scope of consolidation where the Bank
owns 10% or less of the issued common share capital exceeding 10% of Common Equity of the Bank not to be deducted from the Common Equity, Additional Tier I Capital,
Tier II Capital as per the 1st clause of the Provisional Article 2 of the Regulation on the Equity of Banks. (-) --
Portion of the total of net long positions of direct or indirect investments made in Additional Tier I and Tier II Capital items of banks and financial institutions outside the scope
of consolidation where the Bank owns 10% or more of the issued common share capital exceeding 10% of Common Equity of the Bank not to be deducted from the Additional
Tier I Capital and Tier II Capital as per the 1st clause of the Provisional Article 2 of the Regulation on the Equity of Banks. (-) --
Portion of the total of net long positions of investments made in Common Equity items of banks and financial institutions outside the scope of consolidation where the Bank
owns 10% or more of the issued common share capital, deferred tax assets based on temporary differences and mortgage servicing rights not deducted from Common Equity
as per the 1st and 2nd Paragraph of the 2nd clause of the Provisional Article 2 of the Regulation on the Equity of Banks (-) --
TOTAL CAPITAL 12.204.766
Amounts below the Excess Limits as per the Deduction Principles --
Amounts arising from the net long positions of investments made in Total Capital items of banks and financial institutions
where the Bank owns 10% or less of the issued common share capital --
Amounts arising from the net long positions of investments made in Tier I Capital items of banks and financial institutions
where the Bank owns 10% or more of the issued common share capital --
Amounts arising from mortgage servicing rights --
Amounts arising from deferred tax assets based on temporary differences 128.624

Total capital has been calculated in accordance with the Regulations regarding to changes on Regulation on Equity of Banks effective from
(*)

date 31 March 2016, the information given in the prior period column has been calculated pursuant to former regulation.
DENZBANK ANONM RKET
NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

b. Information on debt instruments included in the calculation of equity

Issuer SBERBANK OF RUSSIA SBERBANK OF RUSSIA SBERBANK OF RUSSIA SBERBANK OF RUSSIA SBERBANK OF RUSSIA DEXIA CREDIT LOCAL PARIS DEXIA CREDIT LOCAL PARIS DEXIA CREDIT LOCAL PARIS
Unique identifier (eg CUSIP, ISIN or Bloomberg identifier for
Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans
private placement)
DENZBANK FINANCIAL SERVICES GROUP

Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated
Governing law(s) of the instrument
5 September 2013. 5 September 2013. 5 September 2013. 1 November 2006. 1 November 2006. 1 November 2006. 1 November 2006. 1 November 2006.
Regulatory treatment
Subject to 10% deduction as of 1/1/2015 Not Deducted Not Deducted Not Deducted Deducted Deducted Deducted Deducted Deducted
Eligible at solo/group/group&solo Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible
Instrument type Loan Loan Loan Loan Loan Loan Loan Loan
Amount recognised in regulatory capital (Currency in mil,
427 528 1056 1056 1056 140 0 0
as of most recent reporting date)
Par value of instrument 427 528 1056 1056 1056 703 457 176
Accounting classification 3470102 3470102 3470102 3470102 3470102 3470102 3470102 3470102
Original date of issuance 30.09.2014 30.04.2014 31.01.2014 30.09.2013 28.06.2013 27.02.2008 27.09.2007 28.06.2007
Perpetual or dated Dated Dated Dated Dated Dated Dated Dated Dated
Original maturity date 10 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years
Issuer call subject to prior supervisory approval Yes Yes Yes Yes Yes Yes Yes Yes
Subject to the written approval of the Subject to the written approval of the Subject to the written approval of the Subject to the written approval of the Subject to the written approval of the Subject to the written approval of the
Subject to the written approval of the Subject to the written approval of the
Banking Regulation and Supervision Banking Regulation and Supervision Banking Regulation and Supervision Banking Regulation and Supervision Banking Regulation and Supervision Banking Regulation and Supervision
Banking Regulation and Supervision Banking Regulation and Supervision
Optional call date, contingent call dates and redemption Agency, repayable in full or partially at Agency, repayable in full or partially at Agency, repayable in full or partially at Agency, repayable in full at any time Agency, repayable in full at any time Agency, repayable in full at any time
Agency, repayable in full on condition Agency, repayable in full on condition
amount any time before the planned repayment any time before the planned repayment any time before the planned repayment before the planned repayment date, before the planned repayment date, before the planned repayment date,
that it is at fifth years of the loan that it is at fifth years of the loan
date, on condition that it is at least 5 date, on condition that it is at least 5 date, on condition that it is at least 5 on condition that it is at least 5 years on condition that it is at least 5 years on condition that it is at least 5 years
is given. is given.
years after the loan is given. years after the loan is given. years after the loan is given. after the loan is given. after the loan is given., after the loan is given.
Subsequent call dates, if applicable None. None. None. None. None. None. None. None.
Dividend/Coupon Payments
Fixed or floating dividend/coupon Fixed Fixed Fixed Fixed Fixed Floating Floating Floating
Coupon rate and any related index First five year 6,2%, after rs +5,64 First five year 7,93%, after rs +6,12 7,5% 7,49% 6,10% Libor + 2,90% Libor + 2,10% Libor + 2,10%
Existence of a dividend stopper None. None. None. None. None. None. None. None.
Fully discretionary, partially discretionary or mandatory -- -- -- -- -- -- -- --
Existence of step up or other incentive to redeem None. None. None. None. None. None. None. None.
Noncumulative or cumulative -- -- -- -- -- -- -- --
Convertible or non-convertible
May be fully or partially extinguished May be fully or partially extinguished
May be permanently or temporarily May be permanently or temporarily May be permanently or temporarily
principal amount and interest payment principal amount and interest payment
derecognized or converted into derecognized or converted into derecognized or converted into
liabilities of loan or converted into liabilities of loan or converted into
capital in accordance with the related capital in accordance with the related capital in accordance with the related
ANNUAL REPORT 2016

capital in accordance with the related capital in accordance with the related
regulations in the case that the regulations in the case that the regulations in the case that the
If convertible, conversion trigger (s) regulations in the case that the regulations in the case that the None. None. None.
operation authorization of the Bank operation authorization of the Bank operation authorization of the Bank
operation authorization of the Bank operation authorization of the Bank
is revoked or in the event of an is revoked or in the event of an is revoked or in the event of an
is revoked or in the event of an is revoked or in the event of an
occurring possibility that the Bank may occurring possibility that the Bank may occurring possibility that the Bank may
occurring possibility that the Bank may occurring possibility that the Bank may
be transferred to the Fund. be transferred to the Fund. be transferred to the Fund.
be transferred to the Fund. be transferred to the Fund.
If convertible, fully or partially Convertible fully. Convertible fully. Convertible fully. Convertible fully. Convertible fully. -- -- --
If convertible, conversion rate -- -- -- -- -- -- -- --
If convertible, mandatory or optional conversion -- -- -- -- -- -- -- --
If convertible, specify instrument type convertible into -- -- -- -- -- -- -- --
If convertible, specify issuer of instrument it converts into -- -- -- -- -- -- -- --
Write-down feature
If write-down, write-down trigger(s) None. None. None. None. None. None. None. None.
If write-down, full or partial -- -- -- -- -- -- -- --
If write-down, permanent or temporary -- -- -- -- -- -- -- --
If temporary write-down, description of write-up mechanism -- -- -- -- -- -- -- --
In the event of the litigation of the In the event of the litigation of the In the event of the litigation of the
Bank, gives the owner the authority to Bank, gives the owner the authority to Bank, gives the owner the authority to
Gives the owner the right to collect Gives the owner the right to collect Gives the owner the right to collect Gives the owner the right to collect Gives the owner the right to collect
collect the claim after the borrowing collect the claim after the borrowing collect the claim after the borrowing
Position in subordination hierarchy in liquidation (specify the claim before share certificates and the claim before share certificates and the claim before share certificates and the claim before share certificates and the claim before share certificates and
instruments to be included in the instruments to be included in the instruments to be included in the
instrument type immediately senior to instrument) primary subordinated debts and after primary subordinated debts and after primary subordinated debts and after primary subordinated debts and after primary subordinated debts and after
additional principal capital and additional principal capital and additional principal capital and
all other debts. all other debts. all other debts. all other debts. all other debts.
after deposit holders and all other after deposit holders and all other after deposit holders and all other
claimants. claimants. claimants.
Whether conditions which stands in article of 7 and 8 of
Possessed for Article 8. Possessed for Article 8. Possessed for Article 8. Possessed for Article 8. Possessed for Article 8. Not Possessed. Not Possessed. Not Possessed.
Banks shareholder equity law are possessed or not
According to article 7 and 8 of Banks shareholders equity
-- -- -- -- -- Article 8/2 () Article 8/2 () Article 8/2 ()
law that are not possesed
127
128 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

c. Main difference between Equity amount mentioned in equity statement and Equity amount in consolidated balance sheet
sources from general provisions and subordinated credits. The portion of main amount to credit risk of general provision up
to 1,25% and subordinated credits are considered as supplementary capital in the calculation of Equity amount included in
equity statement as result of deductions mentioned in scope of Regulation on Equity of Banks. Additionally, Losses reflected to
equity are determined through excluding losses sourcing from cash flow hedge reflected in equity in accordance with TAS which
are subjects of discount from Seed Capital. On the other hand, leasehold improvement costs monitored under Plant, Property
and Equipment in balance sheet, intangible assets and deferred tax liabilities related to intangible assets, net carrying value of
properties acquired in return for receivables and kept for over 5 years and certain other accounts determined by the Board are
taken into consideration in the calculation as assets deducted from capital.

II. Explanations related to the credit risk and risk management

a. Information on risk concentrations by debtors or group of debtors or geographical regions and sectors, basis for risk
limits and the frequency of risk appraisals

Credit risk is the risk that the counterparties of the Bank may be unable to meet in full or part their commitments arising from
contracts and cause to incur losses.

Credit risk limits of the customers are determined based on the customers financial strength and the credit requirement,
within the credit authorization limits of the branches, the credit evaluation group, the regional directorates, the executive vice
presidents responsible from loans, the general manager, the credit committee and the Board of Directors; on condition that they
are in compliance with the related regulations.

Credit risk limits are determined for debtors or group of debtors. Credit risk limits of the debtors, group of debtors and sectors
are monitored on a weekly basis.

Information on determination and distribution of risk limits for daily transactions, monitoring of risk concentrations related to
off-balance sheet items per customer and dealer basis

Risk limits and allocations relating to daily transactions are monitored on a daily basis. Off-balance sheet risk concentrations are
monitored by on-site and off-site investigations.

Information on periodical analysis of creditworthiness of loans and other receivables per legislation, inspection of account
vouchers taken against new loans, if not inspected, the reasons for it, credit limit renewals, collaterals against loans and
other receivables

The Group targets a healthy loan portfolio and in order to meet its target there are process instructions, follow-up and control
procedures, close monitoring procedures and risk classifications for loans in accordance with the banking legislation.

In order to prevent the loans becoming non-performing either due to cyclical changes or structural problems, the potential
problematic customers are determined through the analysis of early warning signals, and the probable performance problems are
aimed to be resolved at an early stage.

It is preferred to obtain highly liquid collaterals such as bank guarantees, real estate and ship mortgages, pledges on securities,
bills of exchange and sureties of the persons and companies.

Descriptions of past due and impaired loans as per the accounting practices

Loans which were transferred to second group loans based on the Regulation on Procedures and Principles for Determination
of Qualifications of Loans and Other Receivables By Banks and Provisions to be Set Aside and whose principal and interest
payments were not realized at the relevant due dates are regarded as past due loans by the Bank. Loans whose principal
and interest payments were late for more than 90 days and the loans whose debtors have suffered deterioration in their
creditworthiness as per the Banks evaluations are regarded as impaired loans.

Methods and approaches regarding valuation adjustments and provisions

Based on the Regulation on Procedures and Principles for Determination of Qualifications of Loans and Other Receivables
By Banks and Provisions to be Set Aside the Bank calculates general provision for past due loans and specific provision for
impaired loans.

Total amount of exposures after offsetting transactions but before applying credit risk mitigations and the average exposure
amounts that are classified in different risk groups and types
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 129

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Corporate and commercial credit risks are evaluated according to the Banks internal assessment (rating) system; which
complies with the Basel II model; and classified according to their probability of default. Ratings of corporate and commercial
loans portfolio is presented below:

Rating/Scoring Grades Current Period Prior Period

Above Average %49 %48
Average %37 %40
Below Average %11 %9
Unrated %3 %3
The Bank applies a different assessment method (scoring) for consumer and SME credit risks. Ratings compatible with Basel II
model is presented below:

Rating/Scoring Grades Current Period Prior Period

Above Average %33 %35
Average %33 %33
Below Average %34 %32

Risk Classification Current Period (*) Average (**)

1 Conditional and unconditional receivables from central governments and Central Banks 24.479.544 22.571.655
2 Conditional and unconditional receivables from regional or local governments 490.682 599.819
3 Conditional and unconditional receivables from administrative bodies and non-commercial
enterprises -- 1
4 Conditional and unconditional receivables from multilateral development banks -- --
5 Conditional and unconditional receivables from international organizations -- --
6 Conditional and unconditional receivables from banks and brokerage houses 5.863.312 3.941.564
7 Conditional and unconditional receivables from corporate 33.850.795 32.970.460
8 Conditional and unconditional receivables from retail portfolios 34.127.937 27.554.783
9 Conditional and unconditional receivables secured by mortgages 5.068.023 4.778.779
10 Conditional and unconditional receivables secured by mortgages 7.428.560 6.298.227
11 Past due receivables 1.019.509 820.098
12 Receivables defined in high risk category by BRSA -- 789.084
13 Securities collateralized by mortgages -- --
14 Short-term receivables from banks, brokerage houses and corporate -- --
15 Investments similar to collective investment funds 2.255 1.995
16 Other receivables 3.627.025 7.621.347
17 Equity security investments 5.308.316 442.360
18 Total 121.265.958 108.390.172
Includes risk amounts in banking book before the effect of credit risk mitigation but after the credit conversions.
(*)

Arithmetical average of the amounts in quarterly reports prepared after the Regulation on Measurement and Assessment of Capital Adequacy
(**)

Ratios of Bank dated 28 June 2012.

b. Information on the control limits of the Bank for forward transactions, options and similar contracts, management of credit
risk for these instruments together with the potential risks arising from market conditions
The Bank has control limits defined for the positions arising from forward transactions, options and similar contracts. Credit risk
for these instruments is managed together with those arising from market conditions.
c. Information on whether the Bank decreases the risk by liquidating its forward transactions, options and similar contracts in
case of facing a significant credit risk or not
Forward transactions can be realized at maturity. However, if it is required, reverse positions of the current positions are
purchased to decrease the risk.
d. Information on whether the indemnified non-cash loans are evaluated as having the same risk weight as non-performing
loans or not
Indemnified non-cash loans are treated as having the same risk weight as non-performing loans.

Information on whether the loans that are renewed and rescheduled are included in a new rating group as determined by
the Banks risk management system, other than the follow-up plan defined in the banking regulations or not; whether new
precautions are considered in these methods or not; whether the Banks risk management accepts long term commitments as
having more risk than short term commitments which results in a diversification of risk or not
130 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Loans that are renewed and rescheduled are included in a new rating group as determined by the risk management system, other
than the follow-up plan defined in the banking regulations.

Long term commitments are accepted as having more risk than short term commitments which results in a diversification of risk
and are monitored periodically.

e. Evaluation of the significance of country specific risk if the banks have foreign operations and credit transactions in a few
countries or these operations are coordinated with a few financial entities

There is no significant credit risk since the Banks foreign operations and credit transactions are conducted in OECD and EU
member countries in considering their economic climate.

Evaluation of the Banks competitive credit risk as being an active participant in the international banking transactions market

Being an active participant in the international banking transactions market, the Bank does not have significant credit risk as
compared to other financial institutions.

f. The Banks

1. The share of the top 100 and 200 cash loan customers in the total cash loans portfolio

The share of the top 100 and 200 cash loan customers comprises 20% and 24% of the total cash loans portfolio (31 December
2015: 18%, 22%).

2. The share of the top 100 and 200 non-cash loan customers in the total loan non-cash loans portfolio

The share of the top 100 and 200 non-cash loan customers comprises 46% and 58% of the total non-cash loans portfolio (31
December 2015: 47%, 59%).

3. The share of the total cash and non-cash loan balance of the top 100 and 200 loan customers in the total assets and off-
balance sheet items

The share of the total cash and non-cash loans from its top 100 and 200 loan customers comprise 15% and 20% of the total
assets and off-balance sheet items (31 December 2015: 16%, 20%).

g. The Banks general loan provision for its loans

As at 31 December 2016, The Banks general loan provision amounts to TL 1.277.781 (31 December 2015: TL 984.209).
DENZBANK ANONM RKET
NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

h. Profile of significant exposures in major regions

DENZBANK FINANCIAL SERVICES GROUP

Risk Classifications (*)(**)

Current Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Total
Domestic 25.103.011 481.317 -- -- -- 807.587 15.523.791 30.614.664 4.769.121 6.609.639 934.963 -- -- -- 1.187 3.624.329 3.930 88.473.539
European Union Countries -- -- -- -- -- 2.465.777 287.186 60.413 37.472 1.182 23.034 -- -- -- -- 2.641 -- 2.877.705
OECD Countries -- -- -- -- -- 20.076 25 4.510 2.774 -- 13 -- -- -- -- -- -- 27.398
Off-Shore Banking Regions -- -- -- -- -- 124 37 3.264 2.230 466 -- -- -- -- -- -- -- 6.121
USA, Canada -- -- -- -- -- 124.066 -- 2.934 1.524 115 39 -- -- -- -- -- -- 128.678
Ohter Countries -- -- -- -- -- 395.426 430.376 43.788 50.026 9.966 1.555 -- -- -- -- 49 -- 931.186
Subsidiares,Associates and jointly controlled companies -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 5.304.386 5.304.386
UnallocatedAssets/Liabilities 179.023 8.671 -- -- -- 2.048.295 16.105.027 2.446.107 163.591 781.709 56.822 -- -- -- 1.068 -- -- 21.790.313
Total 25.282.034 489.988 -- -- -- 5.861.351 32.346.442 33.175.680 5.026.738 7.403.077 1.016.426 -- -- -- 2.255 3.627.019 5.308.316 119.539.326

Risk Classifications (*)(**)

Prior Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Total
Domestic 21.301.214 744.453 -- -- -- 1.408.213 17.050.340 18.500.083 4.681.503 4.382.910 668.134 4.549.207 -- -- -- 2.686.080 -- 75.972.137
European Union Countries -- -- -- -- -- 700.819 363.304 48.967 38.120 4.196 3.131 4.246 -- -- -- -- -- 1.162.783
OECD Countries -- -- -- -- -- 16.474 -- 3.833 2.909 320 -- 215 -- -- -- -- -- 23.751
Off-Shore Banking Regions -- -- -- -- -- 1.154 13.917 671 3.655 30 -- 119 -- -- -- -- -- 19.546
ANNUAL REPORT 2016

USA, Canada -- -- -- -- -- 161.449 -- 2.378 1.566 -- 58 543 -- -- -- -- -- 165.994

Ohter Countries -- -- -- -- -- 20.250 147.092 34.757 53.560 6.042 957 1.825 -- -- -- 19 -- 264.502
Subsidiares,Associates and jointly controlled companies -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 3.951.185 -- 3.951.185
UnallocatedAssets/Liabilities 288.959 4.413 1 -- -- 2.515.511 13.970.825 4.282.778 77.146 325.723 -- 1 -- -- 571 142.822 -- 21.608.750
Total 21.590.173 748.866 1 -- -- 4.823.870 31.545.478 22.873.467 4.858.459 4.719.221 672.280 4.556.156 -- -- 571 6.780.106 -- 103.168.648

(*)
Exposure categories are as per the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks:
1: Conditional and unconditional receivables from central governments and Central Banks 10: Conditional and unconditional receivables secured by mortgages
2: Conditional and unconditional receivables from regional or local governments 11: Past due receivables
3: Conditional and unconditional receivables from administrative bodies and non-commercial enterprises 12: Receivables defined in high risk category by BRSA
4: Conditional and unconditional receivables from multilateral development banks 13: Securities collateralized by mortgages
5: Conditional and unconditional receivables from international organizations 14: Short-term receivables from banks, brokerage houses and corporates
6: Conditional and unconditional receivables from banks and brokerage houses 15: Investments similar to collective investment funds
7: Conditional and unconditional receivables from corporates 16: Other receivables
8: Conditional and unconditional receivables from retail portfolios 17: Equity security transactions
9: Conditional and unconditional receivables secured by mortgages
(**)
OECD countries except for EU countries, USA and Canada
131

(***)
Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
 132

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
SECTION IV

Unconsolidated Financial Report

AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

i. Risk Profile by Sectors or Counterparties

Risk Classifications (*)(**)

Current Period: 31 December 2016 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 TL YP Total
Agricultular 22.268 -- -- -- -- -- 406.313 7.430.999 136.235 886.171 56.644 -- -- -- -- 1 -- 8.780.391 158.240 8.938.631
Farming and Cattle 21.699 -- -- -- -- -- 402.581 7.418.211 135.944 884.881 56.415 -- -- -- -- 1 -- 8.771.142 148.590 8.919.732
Forestry 43 -- -- -- -- -- -- 3.000 241 779 74 -- -- -- -- -- -- 3.369 768 4.137
Fishing 526 -- -- -- -- -- 3.732 9.788 50 511 155 -- -- -- -- -- -- 5.880 8.882 14.762
Manufacturing 263.208 3 -- -- -- -- 12.071.432 1.628.861 219.599 911.990 139.440 -- -- -- -- 13 -- 4.607.009 10.627.537 15.234.546
Mining 6.444 3 -- -- -- -- 2.623.729 106.575 13.702 61.459 8.368 -- -- -- -- -- -- 466.680 2.353.600 2.820.280
Production 256.116 -- -- -- -- -- 7.575.702 1.514.180 199.589 827.138 68.019 -- -- -- -- 11 -- 3.553.101 6.887.654 10.440.755
Electric, Gas, Water 648 -- -- -- -- -- 1.872.001 8.106 6.308 23.393 63.053 -- -- -- -- 2 -- 587.228 1.386.283 1.973.511
Constuction 65.070 2.721 -- -- -- -- 5.906.836 969.454 353.924 861.374 79.705 -- -- -- -- 10 -- 4.664.653 3.574.441 8.239.094
Services 13.463.923 7.133 -- -- -- 5.861.351 9.707.935 6.164.365 803.599 3.718.805 372.886 -- -- -- -- 2.793 5.294.747 18.443.084 26.954.453 45.397.537
Wholesale and Retail Trade 357.064 1 -- -- -- -- 3.659.853 4.688.411 493.607 1.253.057 263.736 -- -- -- -- 132 -- 8.203.064 2.512.797 10.715.861
Hotel and Restaurant Services 21.422 -- -- -- -- -- 1.242.695 222.091 111.468 1.644.098 26.799 -- -- -- -- -- -- 1.381.798 1.886.775 3.268.573
Transportation and telecommunication 58.988 -- -- -- -- -- 2.866.239 920.299 131.709 373.819 61.152 -- -- -- -- 3 2.800 2.320.143 2.094.866 4.415.009
Financial institution 13.011.624 26 -- -- -- 5.861.351 562.203 59.097 9.237 139.651 5.085 -- -- -- -- 2.654 5.291.947 4.855.451 20.087.424 24.942.875
Real estate and letting services 3.154 1.512 -- -- -- -- 85.618 102.851 23.642 12.692 3.427 -- -- -- -- 1 -- 203.632 29.265 232.897
Self-employement services -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Education services 3.024 5.594 -- -- -- -- 532.830 64.862 19.940 153.922 3.973 -- -- -- -- -- -- 739.763 44.382 784.145
Health and social services 8.647 -- -- -- -- -- 758.497 106.754 13.996 141.566 8.714 -- -- -- -- 3 -- 739.233 298.944 1.038.177
Other 11.467.565 480.131 -- -- -- -- 4.253.926 16.982.001 3.513.381 1.024.737 367.751 -- -- -- 2.255 3.624.202 13.569 34.912.196 6.817.322 41.729.518
Total 25.282.034 489.988 -- -- -- 5.861.351 32.346.442 33.175.680 5.026.738 7.403.077 1.016.426 -- -- -- 2.255 3.627.019 5.308.316 71.407.333 48.131.993 119.539.326

(*)
Exposure categories are as per the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks:
1: Conditional and unconditional receivables from central governments and Central Banks 10: Conditional and unconditional receivables secured by mortgages
2: Conditional and unconditional receivables from regional or local governments 11: Past due receivables
3: Conditional and unconditional receivables from administrative bodies and non-commercial enterprises 12: Receivables defined in high risk category by BRSA
4: Conditional and unconditional receivables from multilateral development banks 13: Securities collateralized by mortgages
5: Conditional and unconditional receivables from international organizations 14: Short-term receivables from banks, brokerage houses and corporates
6: Conditional and unconditional receivables from banks and brokerage houses 15: Investments similar to collective investment funds
7: Conditional and unconditional receivables from corporates 16: Other receivables
8: Conditional and unconditional receivables from retail portfolios 17: Equity security transactions
9: Conditional and unconditional receivables from retail portfolios
(**)
Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES
DENZBANK ANONM RKET
NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Risk Classifications (*)(**)

Prior Period:31 December 2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 TL YP Total
DENZBANK FINANCIAL SERVICES GROUP

Agricultular -- -- -- -- -- -- 585.828 4.895.619 67.731 784.710 30.467 3.248 -- -- -- -- -- 6.199.882 167.721 6.367.603
Farming and Cattle -- -- -- -- -- -- 582.946 4.890.236 67.466 781.120 30.174 3.240 -- -- -- -- -- 6.190.963 164.219 6.355.182
Forestry -- -- -- -- -- -- 210 2.740 145 119 53 4 -- -- -- -- -- 3.271 -- 3.271
Fishing -- -- -- -- -- -- 2.672 2.643 120 3.471 240 4 -- -- -- -- -- 5.648 3.502 9.150
Manufacturing -- 3 -- -- -- -- 10.443.729 914.390 141.316 573.544 51.765 6.675 -- -- -- -- -- 4.695.163 7.436.259 12.131.422
Mining -- 3 -- -- -- -- 2.082.888 69.301 13.361 38.980 10.411 193 -- -- -- -- -- 492.658 1.722.479 2.215.137
Production -- -- -- -- -- -- 6.743.520 841.912 126.119 509.526 40.245 4.593 -- -- -- -- -- 3.705.950 4.559.965 8.265.915
Electric, Gas, Water -- -- -- -- -- -- 1.617.321 3.177 1.836 25.038 1.109 1.889 -- -- -- -- -- 496.555 1.153.815 1.650.370
Constuction -- 7.583 -- -- -- -- 6.293.930 456.121 251.665 712.236 35.072 3.289 -- -- -- 10.883 -- 4.122.343 3.648.436 7.770.779
Services 21.590.173 2.090 -- -- -- 4.823.870 9.535.210 4.511.830 544.437 1.816.106 226.145 13.464 -- -- -- 4.063.270 -- 24.308.796 22.817.799 47.126.595
Wholesale and Retail Trade -- 1 -- -- -- -- 4.595.546 3.440.477 370.060 883.950 170.368 11.227 -- -- -- -- -- 7.477.627 1.994.002 9.471.629
Hotel and Restaurant Services -- -- -- -- -- -- 1.123.671 169.302 43.830 467.038 10.304 285 -- -- -- -- -- 1.182.769 631.661 1.814.430
Transportation and
telecommunication -- 18 -- -- -- -- 2.151.700 701.666 87.262 187.031 11.646 1.396 -- -- -- -- -- 2.130.474 1.010.245 3.140.719
Financial institution 21.590.173 80 -- -- -- 4.823.870 284.171 35.434 5.360 62.968 4.544 10 -- -- -- 4.063.270 -- 11.925.558 18.944.322 30.869.880
Real estate and letting services -- 1.991 -- -- -- -- 94.850 77.844 16.685 11.065 2.168 439 -- -- -- -- -- 202.936 2.106 205.042
Self-employement services -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Education services -- -- -- -- -- -- 653.770 33.972 9.591 115.558 1.183 53 -- -- -- -- -- 768.251 45.876 814.127
Health and social services -- -- -- -- -- -- 631.502 53.135 11.649 88.496 25.932 54 -- -- -- -- -- 621.181 189.587 810.768
ANNUAL REPORT 2016

Other -- 739.190 1 -- -- -- 4.686.781 12.095.507 3.853.311 832.624 328.831 4.529.480 -- -- 571 2.705.953 -- 26.071.711 3.700.538 29.772.249
Total 21.590.173 748.866 1 -- -- 4.823.870 31.545.478 22.873.467 4.858.460 4.719.220 672.280 4.556.156 -- -- 571 6.780.106 -- 65.397.895 37.770.753 103.168.648

(*)
Exposure categories are as per the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks:
1: Conditional and unconditional receivables from central governments and Central Banks 10: Conditional and unconditional receivables secured by mortgages
2: Conditional and unconditional receivables from regional or local governments 11: Past due receivables
3: Conditional and unconditional receivables from administrative bodies and non-commercial enterprises 12: Receivables defined in high risk category by BRSA
4: Conditional and unconditional receivables from multilateral development banks 13: Securities collateralized by mortgages
5: Conditional and unconditional receivables from international organizations 14: Short-term receivables from banks, brokerage houses and corporates
6: Conditional and unconditional receivables from banks and brokerage houses 15: Investments similar to collective investment funds
7: Conditional and unconditional receivables from corporates 16: Other receivables
8: Perakende alacaklar 17: Equity security transactions
9: Conditional and unconditional receivables from retail portfolios
(**)
Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
133
134 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

j. Analysis of maturity-bearing exposures according to remaining maturities

Current Period

1-3 3-6 6-12 Over

Risk calssifications Undistributed (*) 1 month months months months 1 Year
1 Conditional and unconditional receivables from central governments
and Central Banks 2.885.359 10.303.014 54.703 8.112 420.364 11.610.482
2 Conditional and unconditional receivables from regional or local
governments -- 255 3.186 9.197 21.830 455.520
3 Conditional and unconditional receivables from administrative bodies
and non-commercial enterprises -- -- -- -- -- --
4 Conditional and unconditional receivables from multilateral
development banks -- -- -- -- -- --
5 Conditional and unconditional receivables from international
organizations -- -- -- -- -- --
6 Conditional and unconditional receivables from banks and brokerage
houses 899.487 3.044.849 193.896 310.992 99.504 1.312.623
7 Conditional and unconditional receivables from corporate 62.590 5.128.420 2.061.169 2.217.023 4.172.125 18.705.115
8 Conditional and unconditional receivables from retail portfolios 1.777 6.534.317 1.440.821 2.203.315 5.524.371 17.471.079
9 Conditional and unconditional receivables secured by mortgages -- 201.376 142.722 200.275 277.489 4.204.876
10 Conditional and unconditional receivables secured by mortgages -- 530.598 456.847 422.216 586.906 5.406.510
11 Past due receivables 999.224 3.918 2 3 6 13.273
12 Receivables defined in high risk category by BRSA -- -- -- -- -- --
13 Securities collateralized by mortgages -- -- -- -- -- --
14 Short-term receivables from banks, brokerage houses and corporate -- -- -- -- -- --
15 Investments similar to collective investment funds -- 2.089 -- -- 166 --
16 Other receivables 3.627.019 -- -- -- -- --
17 Equity security investments 5.308.316 -- -- -- -- --
18 Total 13.783.772 25.748.836 4.353.346 5.371.133 11.102.761 59.179.478
(*)
Drawing amounts are included.

Prior Period

1-3 3-6 6-12 Over

Risk calssifications Undistributed (*) 1 month months months months 1 Year
1 Conditional and unconditional receivables from central governments
and Central Banks 1.449.612 8.551.230 207.563 249.004 417.712 10.715.052
2 Conditional and unconditional receivables from regional or local
governments -- 186 1.715 2.167 39.557 705.241
3 Conditional and unconditional receivables from administrative bodies
and non-commercial enterprises -- -- -- -- -- 1
4 Conditional and unconditional receivables from multilateral
development banks -- -- -- -- -- --
5 Conditional and unconditional receivables from international
organizations -- -- -- -- -- --
6 Conditional and unconditional receivables from banks and brokerage
houses 892.009 2.406.343 202.910 115.068 65.314 1.142.226
7 Conditional and unconditional receivables from corporate 112.929 4.628.554 2.392.646 3.029.139 6.025.788 15.356.422
8 Conditional and unconditional receivables from retail portfolios 87 6.295.669 953.867 1.717.795 5.388.456 8.517.593
9 Conditional and unconditional receivables secured by mortgages -- 132.762 97.014 122.164 156.586 4.349.933
10 Conditional and unconditional receivables secured by mortgages -- 324.111 175.836 303.755 400.705 3.514.814
11 Past due receivables 663.363 2.803 31 48 12 6.023
12 Receivables defined in high risk category by BRSA 65.202 167.006 -- -- -- 4.323.948
13 Securities collateralized by mortgages -- -- -- -- -- --
14 Short-term receivables from banks, brokerage houses and corporate -- -- -- -- -- --
15 Investments similar to collective investment funds -- 432 -- 139 -- --
16 Other receivables 6.637.284 23.324 8.533 1.347 6.793 102.825
17 Equity security investments -- -- -- -- -- --
18 Total 9.820.486 22.532.420 4.040.115 5.540.626 12.500.923 48.734.078
(*)
Drawing amounts are included.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 135

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

k. Risk Classifications

The Bank has simplified its application through only considering credit grades of Fitch rating agency as of July 2016 through
making a notification to Risk Centre on 1 July 2016 in order to limit variability generated by using multiple credit rating agencies
(CRA) on legal rates.

The scope, in which the credit rating grades are taken into consideration, covers receivables from governments or central banks
and receivables from banks and intermediary institutions and corporate receivables for those having residence abroad.

Current Period

Risk Classifications
Risk Rating Receivables from Banks and Brokerage Houses
Receivables from Central Receivables with Remaining Receivables with Remaining
Governments or Central Maturities Less Than 3 Maturities More Than 3 Corporate
Credit Quality Grade Fitch Banks Months Months Receivables
AAA
AA+
1 %0 %20 %20 %20
AA
AA-
A+
2 A %20 %20 %50 %50
A-
BBB+
3 BBB %50 %20 %50 %100
BBB-
BB+
4 BB %100 %50 %100 %100
BB-
B+
5 B %100 %50 %100 %150
B-
CCC
CC
6 %150 %150 %150 %150
C
D

Prior Period

Risk Classifications
Receivables from Banks and Brokerage
Risk Rating Houses
Receivables Receivables Receivables
from Central with Remaining with Remaining
Credit Quality Governments or Maturities Less Maturities More Corporate
Grade Fitch Moodys S&P Central Banks Than 3 Months Than 3 Months Receivables
AAA Aaa AAA
AA+ Aa1 AA+
1 %0 %20 %20 %20
AA Aa2 AA
AA- Aa3 AA-
A+ A1 A+
2 A A2 A %20 %20 %50 %50
A- A3 A-
BBB+ Baa1 BBB+
3 BBB Baa2 BBB %50 %20 %50 %100
BBB- Baa3 BBB-
BB+ Ba1 BB+
4 BB Ba2 BB %100 %50 %100 %100
BB- Ba3 BB-
B+ B1 B+
5 B B2 B %100 %50 %100 %150
B- B3 B-
Caa1 CCC+
CCC Caa2 CCC
6 Caa3 CCC- %150 %150 %150 %150
CC Ca CC
C C C
136 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

l. Exposures by risk weights

Current Period

Equity
Risk Weight %0 %10 %20 %35 %50 %75 %100 %150 %200 %250 %1250 Deduction
Exposures before Credit Risk Mtigation 12.192.857 -- 3.303.775 -- 17.584.405 39.971.681 47.948.103 182.033 -- 83.104 -- 1.572.871
Exposures after Credit Risk Mtigation 12.995.350 -- 3.303.741 5.026.737 23.973.294 32.845.538 41.132.525 179.037 -- 83.104 -- 1.572.871

Prior Period

Risk Weight %0 %10 %20 %50 %75 %100 %150 %200 %250 Equity Deduction
Exposures before Credit Risk Mtigation 21.330.309 -- 3.017.252 3.637.106 26.960.726 43.711.321 1.829.605 2.765.162 17.167 1.379.912
Exposures after Credit Risk Mtigation 21.330.309 -- 3.017.252 12.189.646 21.334.224 39.257.118 1.808.492 2.737.163 17.167 1.379.912

m. Information by major sectors and type of counterparties

Impaired Loans; are the loans either overdue for more than 90 days or loans regarded as impaired due to their creditworthiness.
For such loans, specific provisions are allocated as per the Provisioning Regulation.

Past Due Loans; are the loans those are overdue up to 90 days but not impaired. For such loans, general provisions are
allocated as per the Provisioning Regulation.

Current Period: 31 December 2016

Loans
Important Sectors/Counterparties Impaired Past Due Value Adjustments(*) Provisions(**)
Agricultular 176.447 340.760 10.174 121.770
Farming and Cattle 173.778 338.771 10.109 119.306
Forestry 242 242 6 175
Fishing 2.427 1.747 59 2.289
Manufacturing 299.439 599.580 20.567 170.503
Mining 30.620 68.803 1.578 22.678
Production 186.677 499.988 18.288 127.285
Electric, Gas, Water 82.142 30.789 701 20.540
Constuction 197.016 233.309 7.232 136.937
Services 1.082.879 2.364.961 89.677 730.039
Wholesale and Retail Trade 721.972 634.089 18.493 473.365
Hotel and Restaurant Services 37.850 1.089.073 46.353 14.111
Transportation and telecommunication 208.386 359.467 12.212 148.123
Financial institution 9.353 174.919 7.991 4.362
Real estate and letting services 9.431 8.692 217 6.109
Self-employement services -- -- -- --
Education services 19.645 3.610 89 15.784
Health and social services 76.242 95.111 4.322 68.185
Other 1.536.430 2.714.903 132.695 1.188.764
Total 3.292.211 6.253.513 260.345 2.348.013
(*)
Representing the general provision of past due loans.
(**)
Representing specific provision amounts.

Prior Period: 31 December 2015

DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 137

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Loans
Important Sectors/Counterparties Impaired Past Due Value Adjustments(*) Provisions(**)
Agricultular 202.461 509.323 15.135 146.677
Farming and Cattle 201.990 507.985 15.084 146.460
Forestry 90 75 1 53
Fishing 381 1.263 50 164
Manufacturing 148.105 455.772 18.616 97.851
Mining 43.359 14.462 352 29.468
Production 99.957 353.321 14.288 66.588
Electric, Gas, Water 4.789 87.989 3.976 1.795
Constuction 142.906 93.612 2.393 106.098
Services 580.161 981.245 33.547 364.666
Wholesale and Retail Trade 396.187 317.426 8.643 234.601
Hotel and Restaurant Services 16.559 120.440 4.320 6.453
Transportation and telecommunication 52.892 410.418 15.708 42.076
Financial institution 14.977 6.859 141 10.508
Real estate and letting services 3.369 4.491 108 1.882
Self-employement services -- -- -- --
Education services 2.595 24.632 677 1.487
Health and social services 93.582 96.979 3.950 67.659
Other 1.608.415 1.784.826 100.444 1.238.089
Total 2.682.048 3.824.778 170.135 1.953.381
(*)
Representing the general provision of past due loans.
(**)
Representing specific provision amounts.

Movements in valuation adjustments and provisions

Opening Charge for Releases for Other

Current Period: 31 December 2016 Balance the period provisions Adjustments(*) Ending Balance
Specific Provisions 1.953.381 1.183.916 (236.382) (552.902) 2.348.013
General Provisions 984.209 293.572 -- -- 1.277.781
(*)
Representing sales from the past due loans portfolio.

Opening Charge for Releases for Other

Prior Period: 31 December 2015 Balance the period provisions Adjustments(*) Ending Balance
Specific Provisions 1.171.475 958.000 (173.249) (2.845) 1.953.381
General Provisions 820.581 163.288 -- -- 984.209
(*)
Representing sales from the past due loans portfolio.

n. Risk involved in counter-cyclical capital buffer calculation:

Private sector credit Risk Weighted

Country of ultimate risk exposures in banking book Equivalent trading book Total
Turkey 66.359.794 8.399 66.368.193
Austria 4.371.443 -- 4.371.443
Malta 302.051 -- 302.051
Cyprus 298.203 -- 298.203
Other 839.382 -- 839.382
o. Distribution of credit risk according to the operational segments

Current Period: 31 December 2016 Commercial Loans (*) Consumer Loans Credit Cards Total
Standard Loans 37.737.654 12.083.662 4.801.357 54.622.673
Closely Monitored Loans 4.777.672 1.190.519 285.322 6.253.513
Non-performing Loans 1.978.571 842.254 471.386 3.292.211
Specific Provisions(-) 1.306.918 648.231 392.864 2.348.013
Total 43.186.979 13.468.204 5.165.201 61.820.384
(*)
Commercial loans include commercial, corporate and SME loans.
138 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Prior Period: 31 December 2015 Commercial Loans (*) Consumer Loans Credit Cards Total
Standard Loans 31.466.780 11.195.715 4.132.884 46.795.379
Closely Monitored Loans 2.528.745 1.093.319 202.714 3.824.778
Non-performing Loans 1.261.272 889.383 531.393 2.682.048
Specific Provisions(-) 859.994 662.996 430.391 1.953.381
Total 34.396.803 12.515.421 4.436.600 51.348.824
(*)
Commercial loans include commercial, corporate and SME loans.

The loans of The Bank amounting to TL 38.309.143 (31 December 2015: TL 33.204.407) are collateralized by cash, mortgage,
cheques and notes obtained from customers.

III. Explanations related to the foreign currency exchange rate risk

a. Foreign exchange risk the Bank is exposed to, related estimations, and the limits set by the Board of Directors of the Bank
for positions which are monitored daily

Foreign currency exchange and parity risks are taken by the Bank within defined value at risk limits. Measurable and manageable
risks are taken within legal limits.

Foreign currency exchange rate risk is monitored along with potential evaluation differences in foreign currency transactions
in accordance with Regulation on Banks Internal Control and Risk Management Systems. Value at Risk approach is used to
measure the exchange rate risk and calculations are made on a daily basis.

Based on general economic environment and market conditions the Banks Board of Directors reviews the risk limits daily and
makes changes where necessary.

b. The magnitude of hedging foreign currency debt instruments and net foreign currency investments by using derivatives

The Bank applies net investment accounting hedge as of 1 July 2015 in order to ensure exchange difference hedge sourcing from
equity method implementation for its net investment at a total amount of Euro 1.006 million and US Dollar 6,7 million belonging
to Denizbank AG and Eurodeniz, which are subsidiaries of the Bank. A part of foreign currency deposits at same amounts
is defined as hedging instrument and the part, in which the value change sourcing from foreign currency exchange rates is
effective, is recognized in hedge funds under shareholders equity.

c. Foreign exchange risk management strategy

Foreign currency exchange and parity risks are taken by the Bank within defined value at risk limits. Measurable and manageable
risks are taken within legal limits.

d. The Banks spot foreign exchange bid rates as of the balance sheet date and for each of the five days prior to that date

US Dollar purchase rate as at the balance sheet date TL 3,5192

Euro purchase rate as at the balance sheet date TL 3,7099

Date US Dollar Euro

27 December 2016 3,5135 3,6711
28 December 2016 3,5329 3,6901
29 December 2016 3,5318 3,6939
30 December 2016 3,5192 3,7099
31 December 2016 3,5192 3,7099
e. The basic arithmetical average of the Banks foreign exchange bid rate for the last thirty days prior to the balance sheet
date

The arithmetical average US Dollar and Euro purchase rates for December 2016 are TL 3,0197 and TL 3,3389 respectively.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 139

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

f. Information on currency risk

Current Period EUR USD Other FC (4) Total

Assets
Cash and Balances with the Central Bank of the Republic of Turkey 3.527.408 7.016.511 1.935.304 12.479.223
Due from Banks and Other Financial Institutions 2.444.692 424.959 81.036 2.950.687
Financial Assets at Fair Value Through Profit or Loss (1) 185.418 61.583 -- 247.001
Interbank Money Market Placements -- -- -- --
Investment Securities Available-for-Sale 204.171 935.391 -- 1.139.562
Loans (2) 5.528.660 10.176.429 745.444 16.450.533
Investments in Subsidiaries and Associates 4.365.906 140.984 -- 4.506.890
Investment Securities Held-to-Maturity -- 1.561.104 -- 1.561.104
Hedging Purpose Financial Derivatives -- -- -- --
Tangible Assets -- 4 -- 4
Intangible Assets -- -- -- --
Other Assets (3) 232.144 81.069 179.820 493.033
Total Assets 16.488.399 20.398.034 2.941.604 39.828.037

Liabilities
Bank Deposits 2.387.175 210.978 670.333 3.268.486
Foreign Currency Deposits 11.187.397 12.751.892 858.444 24.797.733
Interbank Money Markets -- -- -- --
Funds Borrowed from Other Financial Institutions 3.785.407 11.597.616 6.844 15.389.867
Marketable Securities Issued -- -- -- --
Miscellaneous Payables 223.486 236.293 1.197 460.976
Hedging Purpose Financial Derivatives -- -- -- --
Other Liabilities (5) 223.484 886.997 2.208 1.112.689
Total Liabilities 17.806.949 25.683.776 1.539.026 45.029.751

Net On Balance Sheet Position (1.318.550) (5.285.742) 1.402.578 (5.201.714)

Net Off-Balance Sheet Position (6) 1.779.276 5.419.879 (1.401.528) 5.797.627
Financial Derivatives (Assets) 11.405.186 21.147.643 943.672 33.496.501
Financial Derivatives (Liabilities) (9.625.910) (15.727.764) (2.345.200) (27.698.874)
Net Position 460.726 134.137 1.050 595.913
Non-Cash Loans 6.928.290 11.115.471 390.808 18.434.569

Prior Period
Total Assets 9.167.108 17.283.555 2.370.488 28.821.151
Total Liabilities 12.866.155 23.315.631 1.105.933 37.287.719
Net On Balance Sheet Position (3.699.047) (6.032.076) 1.264.555 (8.466.568)
Net Off-Balance Sheet Position 4.017.120 6.229.812 (1.257.962) 8.988.970
Financial Derivatives (Assets) 14.719.000 24.457.815 835.435 40.012.250
Financial Derivatives (Liabilities) (10.701.880) (18.228.003) (2.093.397) (31.023.280)
Net Position 318.073 197.736 6.593 522.402
Non-Cash Loans 4.765.432 10.435.291 214.561 15.415.284
(*)
: Prior period balances are rearranged retrospectively as a result of equity method implementation.
(1)
: Foreign currency differences of derivative assets amounting to TL 235.824 are excluded.
(2)
: Foreign currency indexed loans amounting to TL 3.668.858 are included.
(3)
: Prepaid expenses amounting to TL 5.294 are excluded.
(4)
: There are gold amounts in total assets amounting to TL 1.177.272 and in total liabilities amounting to TL 2.728.172
(5)
: Not including the exchange rate difference of TL 174.672 pertaining to derivative financial loans and the FX equity of TL (109.637).
(6)
: Net amount of Receivables and Liabilities from financial derivatives is shown on the table. FX SWAP Transactions that reported under the
Financial Assets Purchase Pledges is included in Net Off-Balance Sheet Position.

g. Informations on currency risk exposure

The table below demonstrates prospective increase and decrease in equities and the statement of income as of 31 December
2016 and 2015 (excluding tax effect) on condition that 10 percent devaluation of TL against the currencies below. This analysis
has been prepared under the assumption that all other variables, especially interest rates, to be constant.

Current Period Prior Period

Period Profit Loss Equity Period Profit Loss Equity
USD Dollar 9.188 (1.375) 11.051 4.493
Euro 47.701 47.268 22.623 22.433
Total (Net) 56.889 45.893 33.674 26.926
140 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

IV. Explanations related to the interest rate risk

a. Interest rate sensitivity of the assets, liabilities and off-balance sheet items

Standard method is used in measuring the interest rate risk of assets, liabilities and off-balance sheet items.

b. The expected effects of the fluctuations of market interest rates on the Banks financial position and cash flows, the
expectations for interest income, and the limits the board of directors has established on daily interest rates

The Bank relies on sensitivity in determining limits against negative market conditions and monitors the risk within this context.
Sensitivity calculations are made and limits are monitored on a weekly basis.

Market interest rates are monitored daily and interest rates are revised where necessary.

c. The precautions taken for the interest rate risk the Bank was exposed to during the current year and their expected effects
on net income and shareholders equity in the future periods

The Bank uses sensitivity analysis, historical stress-testing and value at risk methods to analyze and take precautions against
interest rate risk faced during current period. Interest sensitivity limits have been defined and limits are being monitored on a
weekly basis.

Interest rate sensitivity of assets, liabilities and off-balance sheet items (Based on repricing dates):

5 Years Non-Interest
Current Period Up to 1 Month 1-3 Months 3-12 Months 1-5 Years and Over Bearing Total
Assets
Cash and Balances with the Central
Bank of the Republic of Turkey 3.690.408 -- -- -- -- 11.070.530 14.760.938
Due from Banks and Other Fin. Inst. 2.517.135 -- 130.405 -- -- 319.425 2.966.965
Financial Assets at Fair Value
Through Profit or Loss 455.140 202.715 270.278 379.738 208.489 9.587 1.525.947
Interbank Money Market
Placements 3.001.396 -- -- -- -- -- 3.001.396
Investment Securities Av.-for-Sale 155.210 572.961 1.177.057 1.845.210 2.769.411 41.709 6.561.558
Loans 11.460.439 4.571.198 9.121.418 24.635.474 11.087.657 944.198 61.820.384
Investment Securities Held-to-Mat. 1.612.284 290.784 329.400 443.349 2.225.182 -- 4.900.999
Other Assets (*) -- -- -- -- -- 7.620.640 7.620.640
Total Assets 22.892.012 5.637.658 11.028.558 27.303.771 16.290.739 20.006.089 103.158.827

Liabilities
Bank Deposits 2.425.918 795.851 365.707 -- -- 78.813 3.666.289
Other Deposits 34.996.980 8.524.166 4.159.941 34.603 -- 11.808.949 59.524.639
Interbank Money Market
Placements 5.397.576 -- -- -- -- -- 5.397.576
Miscellaneous Payables -- -- -- -- -- 1.851.423 1.851.423
Marketable Securities Issued 111.342 403.964 374.035 263.292 -- -- 1.152.633
Funds Borrowed from Other Fin.
Inst. 2.511.540 4.901.146 2.923.570 1.554.736 4.343.106 -- 16.234.098
Other Liabilities (**) 131.045 67.201 92.070 479.037 190.328 14.372.488 15.332.169
Total Liabilities 45.574.401 14.692.328 7.915.323 2.331.668 4.533.434 28.111.673 103.158.827

On Balance Sheet Long Position -- -- 3.113.235 24.972.103 11.757.305 -- 39.842.643

On Balance Sheet Short Position (22.682.389) (9.054.670) -- -- -- (8.105.584) (39.842.643)
Off-Balance Sheet Long Position 3.281.977 3.160.110 2.450.357 4.068.624 4.273.732 -- 17.234.800
Off-Balance Sheet Short Position (2.591.356) (5.676.746) (3.397.900) (2.165.234) (2.910.824) -- (16.742.060)
Total Interest Sensitivity Gap (21.991.768) (11.571.306) 2.165.692 26.875.493 13.120.213 (8.105.584) 492.740
(*)
Other assets/non-interest bearings include; Tangible Assets, Intangible Assets, Investments in Associates, Tax Assets, Investments in
Subsidiaries, Joint Ventures, Assets to be sold and other assets with balances of TL 430.285, TL 188.762, TL 8.654, TL 150.194, TL 5.292.932,
TL 2.800, TL 121.513 and TL 1.425.500 respectively.
(**)
Other liabilities/non-interest bearings include; Shareholders Equity, Other External Resources, Provisions, Tax Liabilities with balances of TL
10.561.672, TL 1.945.071, TL 1.694.273, and TL 171.472 respectively.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 141

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

5 Years
Prior Period Up to 1 Month 1-3 Months 3-12 Months 1-5 Years and Over Non-Interest Bearing Total
Assets
Cash and Balances with the Central
Bank of the Republic of Turkey 3.360.162 -- -- -- -- 7.398.981 10.759.143
Due from Banks and Other Fin. Inst. 1.298.618 207.290 -- -- -- 714.648 2.220.556
Financial Assets at Fair Value Through
Profit or Loss 48.994 239.947 161.650 549.871 115.599 519 1.116.580
Interbank Money Market Placements 1.200.353 -- -- -- -- -- 1.200.353
Investment Securities Av.-for-Sale 215.728 877.520 1.735.851 2.678.795 2.903.701 112.884 8.524.479
Loans 10.119.356 4.222.891 7.938.850 20.258.656 8.080.404 728.667 51.348.824
Investment Securities Held-to-Mat. 1.506.874 225.380 307.994 453.552 747.978 -- 3.241.778
Other Assets (*) -- -- -- -- -- 5.808.954 5.808.954
Total Assets 17.750.085 5.773.028 10.144.345 23.940.874 11.847.682 14.764.653 84.220.667

Liabilities
Bank Deposits 710.713 523.358 145.986 -- -- 90.540 1.470.597
Other Deposits 26.079.808 8.516.931 2.142.628 11.564 -- 8.366.049 45.116.980
Interbank Money Market Placements 7.184.158 -- -- -- -- -- 7.184.158
Miscellaneous Payables -- -- -- -- -- 1.642.761 1.642.761
Marketable Securities Issued 241.632 337.501 249.792 430.273 -- -- 1.259.198
Funds Borrowed from Other Fin. Inst. 2.099.659 4.892.557 4.715.487 165.864 3.671.468 -- 15.545.035
Other Liabilities (**) 61.277 82.006 32.247 333.605 95.326 11.397.477 12.001.938
Total Liabilities 36.377.247 14.352.353 7.286.140 941.306 3.766.794 21.496.827 84.220.667

On Balance Sheet Long Position -- -- 2.858.205 22.999.568 8.080.888 -- 33.938.661

On Balance Sheet Short Position (18.627.162) (8.579.325) -- -- -- (6.732.174) (33.938.661)
Off-Balance Sheet Long Position 2.161.735 7.312.989 6.862.938 3.587.715 2.778.546 -- 22.703.923
Off-Balance Sheet Short Position (797.619) (8.445.792) (3.821.445) (6.666.571) (2.120.986) -- (21.852.413)
Total Interest Sensitivity Gap (17.263.046) (9.712.128) 5.899.698 19.920.712 8.738.448 (6.732.174) 851.510
(*)
Other assets/non-interest bearings include; Tangible Assets, Intangible Assets, Investments in Associates, Deferred Tax Assets, Investments in
Subsidiaries, Joint Ventures, Assets to be sold and other assets with balances of TL 401.028, TL 171.178, TL 8.654, TL 85.376, TL 3.939.731,
TL 2.800, TL 81.860 and TL 1.118.327 respectively.
(**)
Other liabilities/non-interest bearings include; Shareholders Equity, Other External Resources, Provisions, Tax Liabilities withbalances of TL
8.269.319, TL 1.773.465, TL 1.206.404, and TL 148.289 respectively.
d. Average interest rates applied to monetary financial instruments
Current Period: 31 December 2016 EUR % USD % JPY % TL %
Assets
Cash and Balances with the Central Bank of the Republic of Turkey -- 0,49 -- 5,00
Due from Banks and Other Financial Institutions 0,06 0,63 -- 9,38
Financial Assets at Fair Value Through Profit or Loss 1,33 4,95 -- 11,22
Interbank Money Market Placements -- -- -- 8,49
Investment Securities Available-for-Sale 2,92 4,46 -- 9,06
Loans 5,17 5,90 5,39 16,40
Investment Securities Held-to-Maturity -- 4,68 -- 9,52

Liabilities
Bank Deposits 0,50 1,70 -- 11,11
Other Deposits 1,66 2,82 0,30 10,74
Interbank Money Market Placements -- -- -- 8,47
Miscellaneous Payables -- -- -- --
Marketable Securities Issued -- -- -- 9,89
Funds Borrowed from Other Financial Institutions 0,54 2,59 -- 9,74

Prior Period: 31 December 2015 EUR % USD % JPY % TL %

Assets
Cash and Balances with the Central Bank of the Republic of Turkey -- 0,31 -- 5,47
Due from Banks and Other Financial Institutions 1,50 0,34 -- 11,48
Financial Assets at Fair Value Through Profit or Loss 3,28 5,01 -- 9,13
Interbank Money Market Placements -- -- -- 10,74
Investment Securities Available-for-Sale 2,92 4,17 -- 8,56
Loans 5,05 5,35 5,29 15,34
Investment Securities Held-to-Maturity -- 4,04 -- 9,35

Liabilities
Bank Deposits 1,00 2,09 -- 11,28
Other Deposits 1,67 1,98 0,17 11,92
Interbank Money Market Placements -- -- -- 8,83
Miscellaneous Payables -- -- -- --
Marketable Securities Issued -- -- -- 10,24
Funds Borrowed from Other Financial Institutions 1,48 2,10 -- 6,66
142 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

e. Interest rate risk on banking book

Nature of interest rate risk resulted from banking book, major assumptions including also early repayment of loans and
movements in deposits other than term deposits and frequency of measuring interest rate risk

Interest rate risk resulted from banking book is due to repricing maturity differences of assets and liabilities. Considering
repricing maturities, average maturity of asset items is higher than the average maturity of liability items.

Interest risk is evaluated weekly considering size, developments at maturity structure and interest movements relating to asset
and liability items. Interest risk exposed by the bank is managed centrally by the asset and liability committee and within the
direction of decisions taken, the balance sheet interest sensitivity is aimed at minimum level and insured by interest based
derivative contracts.

The effect of potential changes on interest rates to net present value is calculated within the scope of Regulation on
Measurement and Evaluation of Interest Rate Risk Resulted from Banking Book as per Standard Shock Method and reported
monthly.

Measurements performed with Standard Shock Method include all on and off balance sheet items in the Banking Book based on
the classification as per the statutory accounting and reporting. Maturity assumption relating to demand deposits is overviewed
yearly with analyses over at least five year data. By such analyses, the Bank gathers information on average duration of its
demand deposits, and the amount and trend of deposit charge offs from different maturity brackets.

Economic value differences resulted from interest rate instabilities and prepared based on the Banks non-consolidated
financial statements according to Regulation on Measurement and Evaluation of Interest Rate Risk Resulted from Banking Book
as per Standard Shock Method

Interest rate risk for all banking transactions outside the trading portfolio are followed under interest rate risk related to the
banking book. Interest rate risk related to the trading portfolio is followed under market risk.

ALCO performs daily management of interest rate risk in accordance with the risk limits set by the Board of Directors of the
Bank in relation to interest rate sensitivities of the banking book. ALCO meetings are held on a weekly basis.

The measurement process of interest rate risk resulting from the banking book is designed and managed by the Bank on a bank-
only basis to include the interest rate positions defined as banking book by the Bank and to consider the relevant repricing and
maturity data. Duration gaps, gaps by maturity brackets and sensitivity analysis are used in monitoring of repricing risk resulting
from maturity mismatch. The duration gap and sensitivity analysis are carried out weekly. In the duration gap analysis, the
present values of interest-rate-sensitive asset and liability items are calculated using yield curves developed from market interest
rates.

In case of instruments with no maturities, the maturity is determined as per interest rate fixing periods and customer behaviors.
Such results are supported by sensitivity and scenario analysis applied periodically for possible fluctuations in the markets.

The Banks economic value differences arising from the interest rate fluctuations pursuant to the Regulation on the Measurement
and Assessment of Interest Rate Risk Arising from Banking Accounts According to the Standard Shock Method in a manner
separated by different currencies are demonstrated in the following table as of 31 December 2016.

Current Period: 31 December 2016 Shocks Applied Gaings/Equity

Type of Currency (+/- x basis points) Gaings/Losses -Losses/Equity
1 TL (+) 500 bps (2.092.692) (%13,57)
2 TL (-) 400 bps 2.052.408 %13,31
3 Euro (+) 200 bps (83.094) (%0,54)
4 Euro (-) 200 bps 136.536 %0,89
5 US Dollar (+) 200 bps (74.706) (%0,48)
6 US Dollar (-) 200 bps 106.189 %0,69
Total (of positive shocks) (2.250.492) (%14,59)
Total (of negative shocks) 2.295.133 %14,89
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 143

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Prior Period: 31 December 2015 Shocks Applied Gaings/Equity

Type of Currency (+/- x basis points) Gaings/Losses -Losses/Equity
1 TL (+) 500 bps (2.185.416) (%17,90)
2 TL (-) 400 bps 2.156.274 %17,67
3 Euro (+) 200 bps 79.948 %0,66
4 Euro (-) 200 bps (74.098) (%0,61)
5 US Dollar (+) 200 bps 23.151 %0,19
6 US Dollar (-) 200 bps (18.178) (%0,15)
Total (of positive shocks) (2.082.317) (%17,05)
Total (of negative shocks) 2.063.998 %16,91
V. Position risk of equity shares on banking book

a. Comparison of carrying, fair and market values of equity shares

The Bank does not have associate and subsidiary traded at BIST markets as of 31 December 2016 (31 December 2015: None).

b. Realized gains/losses, revaluation surpluses and unrealized gains/losses on equity securities and results included in core
and supplementary capital

None (31 December 2015: None).

VI. Explanations related to the liquidity risk

Liquidity risk can form as a result of significant changes which can happen in market liquidity or a general funding risk. Funding
risk states the risk of not meeting cash outflows completely because of maturity mismatch between assets and liabilities while
market liquidity risk states the risk of not liquidating assets because of a collision in market conditions or insufficient market
depth.

The securities portfolio of the Bank carried in order to liquidity risk management is structured in a way to consist of public
securities and treasury stocks issued by Treasury of Turkey in order to reduce liquidity risk sourcing from market to minimum
level. Criteria and principles related to security investments which shall be received to this portfolio are committed on paper and
approved by the related committee.

Management of risk sourcing from funding presents the fundamental of liquidity management activities of the Bank. Main funding
source of the Bank is deposits since it is a more stable funding source compared to other sources and it has a diversification
effect. Additionally, security issuance and credit usage activities are performed in order to extend the maturity of funding.

A large majority of Banks liabilities consist of TL, US Dollar, Euro and gold. The main foreign currency funding source of the
Bank is credit received from deposit and credit agencies. Foreign currency liquidity risk is at a low level since the foreign
currency sources of the Bank are at a higher level than assets.

The Board of Directors approved Risk Appetite Disclosure on 30 March 2016 in order to manage risks in accordance with the
Banks strategy and its financial power. Risk Appetite Disclosure includes limits towards liquidity risks besides other risk limits.
Risk appetite limits are reported to senior management monthly in scope of risk management activities.

Short-term liquidity management of the Bank is under the responsibility of Treasury Group. Treasury Group reports to Assets
and Liabilities Committee (ALCO) weekly related to liquidity structure. ALCO has an active role in establishing related systems
and monitoring and decision making processes regarding liquidity risk management. ALCO is also responsible and authorized
for monitoring current liquidity position and legal and internal liquidity indicators and taking decisions related to liquidity
management taking risk appetite framework into consideration.

Liquidity risk management is performed as par consolidated and non-consolidated. In this context, liquidity monitoring and
management in associates are performed by the related associate and monitored closely by the Bank.

Scenario analyses, including specific conditions having significance with respect to liquidity which have been experienced or
which shall possibly be experienced, are performed in order to measure liquidity level under stress conditions. A liquidity level
at a sufficient amount to meet all liabilities even under stress conditions is aimed in scope of this scenario analyses through
evaluating measures which can be taken. Assumptions related to liquidity stress tests are reviewed annually at minimum.
Periodical stress tests are performed within the determined scenarios and liquidity situation is monitored.
144 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

An Emergency Liquidity Action Plan is established in order to form a trustable and proactive tracking mechanism which can
provide keeping sufficient liquidity reserve under all conditions and to make forecast regarding measures which can be taken
against unexpected liquidity squeezes of the Bank. It is approved by the Board of Directors. Emergency Liquidity Action Plan
includes target levels towards several liquidity indicators related to liquidity reserves and balance sheet structure besides duties
and responsibilities related to liquidity management.

Liquidity coverage rates calculated in accordance with the Regulation on Calculation of Banks Liquidity Coverage rate published
in Official Gazette dated 21 March 2014 and numbered 28948 are as follows. Unconsolidated foreign currency rate calculated
for the last three months is at the lowest level in the week of 11 November 136,82 and at the highest level in the week of 30
December 289,66 while the liquidity coverage rate is at the lowest level in the week of 2 December 93,98 and at the highest
level in the week of 23 December 122,19.

a. Liquidity coverage ratio

Total unweighted Total weighted

value(*) value(*)
Current Period TL+FC FC TL+FC FC
HIGH QUALITY LIQUID ASSETS (HQLA)
Total High Quality Liquid Assets 16.356.991 8.958.244
CASH OUTFLOWS
Retail deposits and deposits from small business customers, of which 33.632.490 11.372.473 3.123.369 1.137.247
Stable deposits 4.797.613 -- 239.881 --
Less stable deposits 28.834.877 11.372.473 2.883.488 1.137.247
Unsecured wholesale funding, of which 21.003.971 9.079.953 10.991.923 4.995.925
Operational deposits 4.932.393 2.269.416 1.233.098 567.354
Non-operational deposits 13.242.375 5.538.354 6.929.622 3.156.388
Unsecured debt 2.829.203 1.272.183 2.829.203 1.272.183
Secured wholesale funding 57.850 55.495
Additional requirements of which 4.883.559 6.700.421 2.216.773 4.313.308
Outflows related to derivative exposures and other collateral
requirements 971.069 3.214.091 971.069 3.214.091
Outflows related to loss of funding on debt products -- -- -- --
Credit and liquidty facilities 3.912.490 3.486.330 1.245.704 1.099.217
Other contractual funding obligations 3.929.139 929.917 1.475.065 929.917
Other contingent funding obligations 49.980.388 14.229.419 4.166.822 1.425.048
TOTAL CASH OUTFLOWS 22.031.802 12.856.940
CASH INFLOWS
Secured lending 303.922 -- -- --
Inflows from fully performing exposures 7.536.059 4.009.737 5.645.237 3.741.423
Other cash inflows 382.256 5.109.177 382.256 5.109.177
TOTAL CASH INFLOWS 8.222.237 9.118.914 6.027.493 8.850.600
Total adjusted value
TOTAL HQLA 16.356.991 8.958.244
TOTAL NET CASH OUTFLOWS 16.004.309 4.006.340
LIQUIDITY COVERAGE RATIO (%) 102,7 209,8
Average of unconsolidated liquidity coverage rate which is calculated by means of monthly simple arithmetic average for the last three
(*)

months, average of unconsolidated liquidity coverage rate which is calculated by means of weekly simple arithmetic average for the last three
months
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 145

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Total unweighted Total weighted

value (*) value(*)
Prior Period TL+FC FC TL+FC FC
HIGH QUALITY LIQUID ASSETS (HQLA)
1 Total High Quality Liquid Assets 13.535.453 8.825.981
CASH OUTFLOWS
2 Retail deposits and deposits from small business customers, of
which 28.092.537 10.943.680 2.600.766 1.051.147
3 Stable deposits 4.169.762 864.419 208.488 43.221
4 Less stable deposits 23.922.775 10.079.261 2.392.278 1.007.926
5 Unsecured wholesale funding, of which 18.221.392 9.478.063 9.238.816 4.908.944
6 Operational deposits 4.693.613 2.485.587 1.173.403 621.397
7 Non-operational deposits 11.032.394 5.997.364 5.570.028 3.292.435
8 Unsecured debt 2.495.385 995.112 2.495.385 995.112
9 Secured wholesale funding -- --
10 Additional requirements of which 3.943.343 6.084.821 1.887.848 4.335.624
11 Outflows related to derivative exposures and other collateral
requirements 924.915 3.531.166 924.915 3.531.166
12 Outflows related to loss of funding on debt products -- -- -- --
13 Credit and liquidty facilities 3.018.428 2.553.655 962.933 804.458
14 Other contractual funding obligations 6.269.234 956.931 1.754.126 956.931
15 Other contingent funding obligations 41.886.583 14.220.790 3.382.768 1.467.098
16 TOTAL CASH OUTFLOWS 18.864.324 12.719.744
CASH INFLOWS
17 Secured lending -- -- -- --
18 Inflows from fully performing exposures 4.981.852 1.547.825 3.294.987 1.447.204
19 Other cash inflows 266.248 10.801.819 205.298 10.769.863
20 TOTAL CASH INFLOWS 5.248.100 12.349.644 3.500.285 12.217.067
Total adjusted value
21 TOTAL HQLA 13.535.453 8.825.981
22 TOTAL NET CASH OUTFLOWS 15.364.039 3.179.936
23 LIQUIDITY COVERAGE RATIO (%) 88,2 275,1
Average of unconsolidated liquidity coverage rate which is calculated by means of monthly simple arithmetic average for the last three
(*)

months, average of unconsolidated liquidity coverage rate which is calculated by means of weekly simple arithmetic average for the last three
months

Calculation table of liquidity coverage rate is reported to BRSA weekly and monitored daily in the Bank.

High quality liquid assets consist of cash assets, reserves kept in Central Bank of Republic of Turkey and unrestricted marketable
securities. Cash outflows consist of deposits, bank borrowings, non-cash loans, derivatives and other liabilities without a certain
maturity. Additionally, several bank borrowings are shown as cash outflow regardless of their maturity since they include
contingent early payment condition. Cash inflows consist of credits having maturity less than 30 day and a certain payment due
date and receivables from banks and derivative products.
146 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

b. Presentation of assets and liabilities according to their residual maturities

Up to 1-3 3-12 1-5 5 Years Non-Interest

Current Period Demand 1 Month Months Months Yearl and Over Bearing (*) Total
Assets
Cash and Balances with the Central Bank
of the Republic of Turkey 4.639.557 10.121.381 -- -- -- -- -- 14.760.938
Due from Banks and Other Fin.Inst. 319.425 2.517.135 -- 130.405 -- -- -- 2.966.965
Financial Assets at Fair Value Through
Profit or Loss 9.587 444.621 182.987 258.813 420.382 209.557 -- 1.525.947
Interbank Money Market Placements -- 3.001.396 -- -- -- -- -- 3.001.396
Investment Securities Av.-for-Sale 41.709 -- 333 1.438 3.165.002 3.353.076 -- 6.561.558
Loans -- 9.611.811 2.735.931 12.569.050 24.868.719 11.090.675 944.198 61.820.384
Investment Securities Held-to-Maturity -- -- 49.485 -- 2.213.269 2.638.245 -- 4.900.999
Other Assets 1.258.756 -- -- -- -- -- 6.361.884 7.620.640
Total Assets 6.269.034 25.696.344 2.968.736 12.959.706 30.667.372 17.291.553 7.306.082 103.158.827

Liabilities
Bank Deposits 78.812 2.425.919 795.851 365.707 -- -- -- 3.666.289
Other Deposits 11.808.949 34.956.804 8.519.771 4.181.787 57.328 -- -- 59.524.639
Funds Borrowed from Other Fin.Inst. and
Subordinated Loans -- 667.318 2.168.310 5.193.969 3.366.741 4.837.760 -- 16.234.098
Interbank Money Market Placements -- 5.397.576 -- -- -- -- -- 5.397.576
Marketable Securities Issued -- 111.343 403.964 374.035 263.291 -- -- 1.152.633
Miscellaneous Payables 1.851.423 -- -- -- -- -- -- 1.851.423
Other Liabilities 1.188.469 531.969 297.378 397.976 470.105 190.328 12.255.944 15.332.169
Total Liabilities 14.927.653 44.090.929 12.185.274 10.513.474 4.157.465 5.028.088 12.255.944 103.158.827
Net Liquidity Gap (8.658.619) (18.394.585) (9.216.538) 2.446.232 26.509.907 12.263.465 (4.949.862) --
Net Off-Balance Sheet Position -- 329.771 148.954 118.244 (174.798) -- -- 422.171
Financial Derivatives (assets) -- 13.796.602 6.108.878 4.465.281 7.042.618 7.181.466 -- 38.594.845
Financial Derivatives (liabilities) -- (13.466.831) (5.959.924) (4.347.037) (7.217.416) (7.181.466) -- (38.172.674)
Non-Cash Loans -- 1.774.649 2.598.212 7.163.301 4.219.993 12.765.875 -- 28.522.030

Prior Period
Total Assets 4.628.249 19.275.927 3.259.221 11.769.563 25.138.666 14.609.819 5.539.222 84.220.667
Total Liabilities 11.211.687 35.180.970 11.376.629 8.253.583 3.951.047 4.771.027 9.475.724 84.220.667
Net Liquidity Gap (6.583.438) (15.905.043) (8.117.408) 3.515.980 21.187.619 9.838.792 (3.936.502) --
Net Off-Balance Sheet Position -- (21.526) 214.147 114.958 247.157 -- -- 554.736
Financial Derivatives (assets) -- 16.908.323 6.120.479 4.173.890 11.200.916 5.065.296 -- 43.468.904
Financial Derivatives (liabilities) -- (16.929.849) (5.906.332) (4.058.932) (10.953.759) (5.065.296) -- (42.914.168)
Non-Cash Loans -- 1.480.880 1.781.377 7.239.495 3.673.178 10.099.945 -- 24.274.875

Certain assets on the balance sheet that are necessary for the banking operations but not convertible into cash in the short run such
(*)

as tangible assets, investments in associates, joint ventures and subsidiaries, stationary supplies, non- performing loans (net) and prepaid
expenses are included in this column.

c. Financial liabilities according to agreement maturities

Current Period Up to 1 Month 1-3 Months 3-12 Months 1-5 Years 5 Years and Over Total
Liabilities
Deposits 49.370.740 9.410.046 4.648.169 61.512 -- 63.490.467
Funds borrowed 715.712 2.382.364 5.864.633 4.815.582 4.815.683 18.593.974
Interbank Money markets 5.398.898 -- -- -- -- 5.398.898
Securities issued 111.783 423.263 415.827 256.403 -- 1.207.276
Total 55.597.133 12.215.673 10.928.629 5.133.497 4.815.683 88.690.615

Prior Period Up to 1 Month 1-3 Months 3-12 Months 1-5 Years 5 Years and Over Total
Liabilities
Deposits 35.282.610 9.124.548 2.361.594 53.350 -- 46.822.102
Funds borrowed 922.463 1.931.900 5.941.980 3.818.769 4.277.736 16.892.848
Interbank Money markets 7.184.158 -- -- -- -- 7.184.158
Securities issued 165.201 427.058 302.088 388.662 -- 1.283.009
Total 43.554.432 11.483.506 8.605.662 4.260.781 4.277.736 72.182.117
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 147

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

VII. Explanations related to leverage ratio

Information on matters causing difference between leverage ratios of current period and previous period:

Leverage ratio of Bank is 6,61% as of 31 December 2016 (31 December 2015: 5,98%). This ratio is over minimum ratio.
Difference between leverage ratios of current and previous period mainly sources from increase in risk amounts regarding assets
on balance sheet.

Leverage ratio common disclosure template:

Current Period (*) Prior Period (*)

On-balance sheet exposures
1 On-balance sheet items (exclude derivatives and SFTs; include collateral) 95.669.014 82.275.249
2 (Assets deducted in determining Basel III Tier 1 capital) (266.427) (323.833)
3 Total on-balance sheet exposures (excluding derivatives and SFTs) (sum of 1 and 2 lines) 95.402.587 81.951.416
Derivative exposures
4 Replacement cost 1.342.291 1.224.904
5 Add-on amount 447.238 469.283
6 Total derivative exposures (sum of 4 and 5 lines) 1.789.529 1.694.187
Securities financing transaction exposures
7 Gross SFT assets (with no recognition of accounting netting) 207.857 34.832
8 Agent transaction exposures
9 Total securities financing transaction exposures (sum of 7 and 8 lines) 207.857 34.832
Other off-balance sheet exposures
10 Off-balance sheet exposures with gross nominal amount 57.826.184 49.364.523
11 Adjustment amount off-balance sheet exposures with credit conversion factor (503) (503)
12 Total off-balance sheet exposures (sum of 10 and 11 lines) 57.825.681 49.364.020
Capital and total exposures
13 Tier 1 capital 10.261.981 7.961.500
14 Total exposures (sum of 3,6,9 and 12 lines) 155.225.654 133.044.455
Leverage ratio
15 Leverage ratio 6,61 5,98
(*)
Average of the monthly leverage ratios over the quarter.

VIII. Explanations on Risk Management

Notes and explanations in this section have been prepared in accordance with the Communiqu on Disclosures about Risk
Management to Be Announced to Public by Banks that have been published in Official Gazette no. 29511 on 23 October 2015
and became effective as of 31 March 2016. According to Communiqu, notes and explanations have to be presented on a
quarterly basis. Due to usage of standard approach for the calculation of capital adequacy by the Bank, tables, which have to be
prepared within the scope of Internal rating-based (IRB) approach, have not been presented as of 31 December 2016.

a. Risk management and Overview of RWA

1. Disclosures related to the risk management approach

Risks, exposed as a result of business model of the Bank, are determined on a consolidated basis through risk definition and
materiality assessment of the Bank. Risk mitigation factors and monitoring activities are established for significant risks which are
determined. Limits are identified for risks, considered to be significant, in Risk Appetite Declaration of the Bank and those limits
are approved by the Board of Directors. Developments with respect to risk limits determined in Risk Appetite Declaration are
monitored on a monthly basis and actions which are pre-determined in risk appetite declaration if those limits are excessed.

Denizbank Risk Management Group Directorate is an internal systems unit responsible for carrying out risk management activities
working subject to Board of Directors. It directly reports to Board of Directors. Risk Management Group is responsible to carry
out processes such as definition and measurement of risks, establishment and application of risk policies and implementation
procedures, analysis, monitoring and reporting of risks in the framework of principles determined by Senior Management of the
Bank and Risk Management Group and approved by Board of Directors.

Delegation levels of groups, formed by client and clients at the Bank, are determined in accordance with risk categories
established according to limit and credit grade components within the body of the Bank.
148 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Rating process executed by Credit Analysis department and reviews of Credit Allocation department are periodically audited by
Credit Risk Control in scope of determined rules and related outputs are presented to Rating Committee.

Informative contents are presented in order to extend risk culture within the body of the Bank and questionnaires towards
reviewing of risk perception are performed. Risk sensitivity developments of employees are monitored in line with outputs of
aforementioned questionnaires and required actions are taken through identifying weaker aspects. Training plans are established
in this scope and it is aimed to provide contribution to developments of employees in determined matters.

Main components of risk measurement systems and its scope

Identification of Risks:

The Bank has a comprehensive risk definition process including its subsidiaries. The process aims to determine significant risks
specific to the Bank based on a broad list including inherent risks of banking and it is performed on an annual basis. Opinions
and reviews of expert individuals within the body of the Bank during the determination of materiality level of risks. Review
outputs are used in reports and form a basis to internal capital assessment processes of the Bank.

Measurement of Risks:

The purpose of the studies made in scope of measurement of risks includes measuring of financial risks exposed by the Bank
and its subsidiaries in order to prepare internal and legal reports and form a relation between carried risks and estimated
profitability and evaluation of validity of parameters and assumptions used in risk measurement.

Controlling, reporting and management of Risks:

It determines which type of reports shall be prepared as consolidated and unconsolidated. It ensures to establish an effective
internal audit system which shall prevent to take risk exceeding targeted risk level and limits determined by regulatory authority.
Risk limits, approved by Board of Directors for each type of risk types, are taken into account while controlling and reporting of
risks.

Disclosures on risk reporting processes provided to Board of Directors and senior management, especially the scope and
main content of the reporting

Risk Management Group performs reporting to Senior Management and Board of Directors through Audit Committee, ALCO and
Rating Committees.

Audit Committee holds quarterly meetings in ordinary situations. Activities and risk indicators performed by Risk Management
Group are presented to the Committee.

ALCO holds weekly meetings. Risk-limit follow-up and detailed analysis related to indicators such as interest and liquidity risk,
capital adequacy are presented.

Disclosures on Stress Test

The Bank performs stress test studies evaluating its capital adequacy in scope of ICAAP. Stress tests help to determine capital
adequacy in three years projection and possible capital buffer requirement in scope of scenarios determined by regulatory
authority and bank based on budget plan of the Bank.

Risk management, hedging and mitigation strategies of the Bank sourcing from business model and monitoring process with
respect to continuing effectiveness of hedging and mitigating components

Limits, which are defined for risks considered to be significant, are monitored on a monthly basis and actions included in risk
appetite declaration are taken, if required.

In addition, emergency plan related to capital adequacy in order to meet its strategic aims considering stress conditions of the
Bank.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 149

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

2. Overview of RWA

Minimum capital
Risk Weighted Amount requirement
Current Period Prior Period Current Period
1 Credit risk (excluding counterparty credit risk) (CCR) 79.535.237 69.448.180 6.362.819
2 Standardised approach (SA) 79.535.237 69.448.180 6.362.819
3 Internal rating-based (IRB) approach -- -- --
4 Counterparty credit risk 1.765.074 737.861 141.206
5 Standardised approach for counterparty credit risk (SA-CCR) 1.765.074 737.861 141.206
6 Internal model method (IMM) -- -- --
7 Basic risk weight approach to internal models equity position in the banking account -- -- --
8 Investments made in collective investment companies - look-through approach -- -- --
9 Investments made in collective investment companies - mandate-based approach 10.654 -- 852
10 Investments made in collective investment companies - %1250 weighted risk approach -- -- --
11 Settlement risk -- -- --
12 Securitization positions in banking accounts -- -- --
13 IRB ratings-based approach (RBA) -- -- --
14 IRB Supervisory Formula Approach (SFA) -- -- --
15 SA/simplified supervisory formula approach (SSFA) -- -- --
16 Market risk 725.975 389.425 58.078
17 Standardised approach (SA) 725.975 389.425 58.078
18 Internal model approaches (IMM) -- -- --
19 Operational Risk 6.032.604 5.384.583 482.608
20 Basic Indicator Approach 6.032.604 5.384.583 482.608
21 Standart Approach -- -- --
22 Advanced measurement approach -- -- --
23 The amount of the discount threshold under the equity (subject to a 250% risk weight) -- -- --
24 Floor adjustment -- -- --
25 Total (1+4+7+8+9+10+11+12+16+19+23+24) 88.069.544 75.960.049 7.045.563
150 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

b. Linkages between financial statements and exposures

1. Amounts valued in accordance with TAS in financial statements and matching

a c d e f g
Carrying values as reported in published financial statements
Carrying values of Subject to Subject to Subject to the Subject to the Not subject to capital
items under scope credit risk counterparty credit securitisati on market risk requirements or subject
of TAS framework risk framework framework framework to deduction from capital
Assets
Cash and balances at central bank 14.760.938 14.760.938 -- -- -- --
Financial assets held for trading 1.525.947 -- 1.427.943 -- 98.004 --
Financial assets designated at fair value
through profit or loss -- -- -- -- -- --
Banks 2.966.965 2.966.965 -- -- -- --
Receivables from money markets 3.001.396 -- 3.001.396 -- -- --
Available for sale financial assets (net) 6.561.558 6.561.558 -- -- -- --
Loans and receivables 61.820.384 61.820.384 -- -- -- 127.273
Factoring receivables -- -- -- -- -- --
Held to maturity investments (net) 4.900.999 4.900.999 -- -- -- --
Investments in associates (net) 8.654 8.654 -- -- -- --
Investments in subsidiaries (net) 5.292.932 5.292.932 -- -- -- --
Investments in joint ventures (net) 2.800 2.800 -- -- -- --
Leasing receivables -- -- -- -- -- --
Derivative financial assets held for hedges -- -- -- -- -- --
Tangible assets (net) 430.285 430.285 -- -- -- 89.732
Intangible assets (net) 188.762 188.762 -- -- -- 188.762
Investment properties (net) -- -- -- -- -- --
Tax assets 150.194 150.194 -- -- -- --
Non-current assets and disposal groups
classified as held for sale (net) -- -- -- -- -- --
Other assets 1.547.013 1.547.013 -- -- -- 9.826
Total assets 103.158.827 98.631.484 4.429.339 -- 98.004 415.593
Liabilities
Deposits 63.190.928 -- -- -- -- 63.190.928
Derivative financial liabilities held for trading 941.188 -- -- -- -- 941.188
Loans 10.750.597 -- -- -- -- 10.750.597
Debt to money markets 5.397.576 -- 5.397.576 -- -- 5.397.576
Debt securities in issue 1.152.633 -- -- -- -- 1.152.633
Funds -- -- -- -- -- --
Various debts 1.851.423 -- -- -- -- 1.851.423
Other liabilities 1.945.071 -- -- -- -- 1.945.071
Factoring debts -- -- -- -- -- --
Debts from leasing transactions 18.493 -- -- -- -- 18.493
Derivative financial liabilities held for hedges -- -- -- -- -- --
Provisions 1.694.273 -- -- -- -- 1.694.273
Tax liability 171.472 -- -- -- -- 171.472
Liabilities included in disposal groups classified
as held for sale (net) -- -- -- -- -- --
Subordinated debts 5.483.501 -- -- -- -- 5.483.501
Equity 10.561.672 -- -- -- -- 10.561.672
Total liabilities 103.158.827 -- 5.397.576 -- -- 103.158.827
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 151

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

2. Main sources of differences between risk exposures and valued amounts in accordance with TMS in financial statements

a b c d e
Items subject Items subject to Items subject to Items subject
to credit risk securitisation counterpart y credit to market risk
Total framework framework risk framework framework (*)
1 Asset carrying value amount under scope of TAS 103.158.827 98.631.484 -- 4.429.339 98.004
2 Liabilities carrying value amount under TAS -- -- 5.397.576 --
3 Total net amount 103.158.827 98.631.484 -- 9.826.915 98.004
4 Off-balance sheet amounts (**) 58.145.630 20.909.526 -- -- --
5 Differences in valuations -- -- -- --
6 Differences due to different netting rules, other
than those already included in row 2 -- -- -- --
7 Differences due to consideration of provisions -- -- -- --
8 Differences due to prudential filters -- -- -- 627.971
9 Differences resulted from considering of the
financial guarantees (1.726.630) -- -- --
10 Risk exposures 161.304.457 117.814.380 -- 9.826.915 725.975
(*)
Financial instruments included in trading accounts according to Communique on Measurement and Evaluation of Banks Capital Adequacy
and principal amount subject to market risk sourcing from capital requirement calculated for foreign Exchange risk are included in line of risk
amounts.
(**)
It includes risk which are included in credit risk calculation.

3. Disclosures on differences between amounts valued in accordance with TAS and risk exposures
Differences between valued amounts in accordance with TAS and risk exposures:
It is obtained through addition of potential risk exposures according to type of transaction and maturity to risk exposure renewal
costs in derivative transactions included in counterparty credit risk and through offsetting of cash amount subject to amount
adjusted with volatility made to related security in repo and reverse repo transactions.
Amounts of items which are value in accordance with TAS and subject to market risk indicate fair value of financial instruments
held for trade. Amounts in line of risk amount related to aforementioned transactions indicate principal amount subject to market
risk sourcing from capital requirement calculated related to potential losses which can be caused by interest rate risk, share
price risk, exchange rate risks in scope of Communique on Measurement and Evaluation of Banks Capital Adequacy.
Disclosures on controls performed and systems used in order to ensure prudentiality and reliability of valuations estimates of the
Bank in accordance with prudential valuation principles and procedures included in accompanying Annex-3 to Communique on
Measurement and Evaluation of Banks Capital Adequacy:
If the financial instruments recognized through fair value have an active and deep market, valuation is performed based on prices
included in market in question. Reliability of market data used in valuations is examined periodically. The Bank does not operate
in markets which do not have a depth. Discounted cash flow model is mainly used in the evaluation of derivative instruments
and generally accepted valuation models are used for derivative transactions including optionality. Accuracy of market data
and model outputs used in valuations are periodically controlled and differences between counterparty valuations and banks
evaluations are monitored regularly.
c. Credit Risk
1. General qualitative information about credit risk
How does the business model of the Bank transform to components in its credit risk portfolio
Credit risk within the body of the Bank is managed in the framework of Credit Risk Management Policy approved by
Board of Directors. Risk, related to credit, are defined, duties of departments are determined and main principles of credit
risk management are brought in aforementioned policy document. Departments assigned in credit management and their
authorization/responsibilities are defined in aforementioned document.
In this direction, main limitations related to credit risk are determined in Risk Appetite Document approved annually by Board
of Directors and reported throughout the year by Risk Management Department. Concentration limits on the basis of sector,
customer segment and risk groups are determined. Actions which shall be taken in case of a possible overflow are also
determined in this document.

In this scope, credit portfolio of the Bank draws a dispersed view with respect to customers segments and sectors.
152 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Criteria and approach used while determining credit risk policy and credit risk limits

Risk limits defined to all counterparties in monitoring of credit risks are tracked on the basis of products, customers and risk
groups separately by systems and it is not permitted to take risks exceeding determined limits. Many factors such as ability
to pay, features of the sector and possible impacts of geographical and economic conditions are taken into consideration while
determining the credit limits of counterparty. If deemed appropriate, it is tried to reduce possible losses of the Bank to minimum
through applying required risk mitigation techniques. All documents required by the related legislation should be taken into
account during credit examinations. Credit worthiness of counterparty is periodically controlled for limits provided for multi-use
and limits are revised considering changes and requirements in the credit worthiness of counterparty. Customers are determined
based on their classes by credit allocation officers and respective classes are changed, if required.

Structure and organization of credit risk management and control function

Credit allocation and monitoring is performed in accordance with segregation of duties and therefore, the credit can be reviewed
in an objective manner during its economic life. Risk models are used in order to measure credit risk of customers in both
allocation and monitoring groups in an accurate and objective manner. Early Warning Systems are used for the tracking of credit
customers and signals received are regularly tracked by Monitoring groups and pre-determined action plans are taken with
allocation groups if pre-determined triggers are detected

Relation between credit risk management, risk control, legal compliance and internal audit functions

Credit Risk Control periodically presents analysis and results of execution of internal rating systems, development of credit rating
grades, documentation of changes made in credit grade and compliance to internal limitations to Rating Committee. Compliance
of Credit Risk Control activities to intra-bank arrangements and regulatory regulations and guides is periodically audited by
internal audit departments of the Bank and issue requiring to be developed are monitored following their identification.

Scope and main content of reporting which shall be made to senior management and members of board of directors regarding
credit risk management function and exposed credit risk

Board of Directors determines policy of the Group in credit management field and ensures establishment of required conditions
to perform determined policies in an effective manner. In this scope, it defines sections related to measurement and management
of credit quality and approves documents having primary importance related to credit risk such as Risk Appetite Declaration

2. Credit quality of assets

a b c d
Gross carrying values of
(according to TAS)
Defaulted Non-defaulted Allowances/ Net values
exposures exposures impairments (a+b-c)
1 Loans 3.292.211 60.876.186 3.690.886 60.477.511
2 Debt Securities -- 11.420.850 1.159 11.419.691
3 Off-balance sheet explosures (*) 252.392 54.555.944 189.253 54.619.083
4 Total 3.544.603 126.852.980 3.881.298 126.516.285
(*)
It doesnt include revocable commitments and Forward Asset Purhcase -Sales Commitments.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 153

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

3. Changes in stock of defaulted loans and debt securities

a (*)
1 Defaulted loans and debt securities at end of the previous reporting period 2.682.048
2 Loans and debt securities that have defaulted since the last reporting period 1.901.506
3 Returned to non-defaulted status 43.516
4 Amounts written off (**) 552.902
5 Other changes (694.925)
6 Defaulted loans and debt securities at end of the reporting period (1 + 2 - 3 - 4 5) 3.292.211
(*)
It doesnt include off-balance sheet receivables.
(**)
It indicates sales made from non-performing loans portfolio.

4. Additional disclosure related to the credit quality of assets

(i) Scope and definitions of overdue receivables and provisioned receivables used for purposes of accounting

The Bank considers loans that have overdue principal and interest payments and are classified as 2nd Group according to the
Communiqu on Determining the Quality of Loans and Other Receivables by Banks and Procedures and Principles of Provisions
to be made as past due loans. Loans that have overdue principal and interest payments for more than 90 days after the
maturity date or the debtor of which are deemed unworthy by the Bank are considered impaired loans.

(ii) Part of overdue receivables (over 90 days) which are not considered as Provisioned and reasons for the implementation
in question.

The Bank calculates general loan loss provision for past due loans and specific provision for impaired loans according to the
Communiqu on Determining the Quality of Loans and Other Receivables by Banks and Procedures and Principles of Provisions
to be made.

(iii) Definitions of methods used while determining amount of provision

The Bank calculates general credit provision for overdue credits and specific provision for impaired credits in scope of
Communiqu on Determining the Quality of Loans and Other Receivables by Banks and Procedures and Principles of Provisions
to be made

(iv) Definitions of restructured receivables.

The Bank can restructure both of its first and second group of credit and its illiquid credit and receivables. Restructuring in first
and second group of credits and in other receivables are made in order to improve repayment ability of the customer as well
as including changes made in contract terms with the request of the customer independent from credit risk of the customer.
Restructurings made in illiquid claims and receivables are changes made in payment plan of the credit towards ensuring of
collection of the receivable. Credits which are overdue over 90 days of delay are automatically transferred to follow-up accounts
and subject to specific provision in accordance with Communiqu on Determining the Quality of Loans and Other Receivables
by Banks and Procedures and Principles of Provisions to be made .

(v) Breakdown of receivables by geographical area

Borrowing Off-Balance sheet

Loans instruments receivables
Non- Non- Non- Allowance/ Write-
Defaulted defaulted Defaulted defaulted Defaulted defaulted impairments Offs (*)
1 Domestic 3.203.443 59.794.432 -- 11.420.850 252.390 42.973.552 2.283.850 551.279
2 EU Countries 86.547 498.470 -- -- 2 466.498 63.548 --
3 OECD Countries 33 7.309 -- -- -- 791.318 19 --
4 Off Shore Zones -- 14.074 -- -- -- 3.220 -- 1.623
5 USA, Canada 52 4.572 -- -- -- 111.186 13 --
6 Other Countries 2.136 557.329 -- -- -- 10.210.170 583 --
7 Total 3.292.211 60.876.186 -- 11.420.850 252.392 54.555.944 2.348.013 552.902
(*)
It indicates sales made from non-performing loans portfolio
154 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

(vi) Breakdown of receivables by sectors

Loans Borrowing instruments Off-Balance sheet receivables
Allowance/ Write-
Defaulted Non-defaulted Defaulted Non-defaulted Defaulted Non-defaulted impairments Offs (*)
Agricultular 176.447 8.669.251 -- -- 3.714 1.837.547 121.770 4.117
Farming and Cattle 173.778 8.652.957 -- -- 3.635 1.829.868 119.306 4.057
Forestry 242 2.843 -- -- 17 3.672 175 32
Fishing 2.427 13.451 -- -- 62 4.007 2.289 28
Manufacturing 299.439 7.456.296 -- -- 30.760 11.662.772 170.503 11.324
Mining 30.620 2.541.541 -- -- 1.765 704.850 22.678 2.221
Production 186.677 3.780.552 -- -- 23.348 10.020.335 127.285 9.088
Electric, Gas, Water 82.142 1.134.203 -- -- 5.647 937.587 20.540 15
Constuction 197.016 3.706.469 -- -- 75.177 9.505.455 136.937 17.386
Services 1.082.879 16.405.101 -- 212.546 106.752 12.412.588 730.039 84.493
Wholesale and Retail Trade 721.972 7.766.959 -- -- 94.767 7.853.848 473.365 72.003
Hotel and Restaurant Services 37.850 2.817.847 -- -- 3.719 789.735 14.111 2.353
Transportation and
telecommunication 208.386 3.512.547 -- -- 5.627 1.903.596 148.123 8.205
Financial institution 9.353 657.107 -- 212.546 141 1.250.300 4.362 569
Real estate and letting services 9.431 216.382 -- -- 555 78.642 6.109 614
Self-employement services -- -- -- -- -- -- -- --
Education services 19.645 748.185 -- -- 884 85.607 15.784 221
Health and social services 76.242 686.074 -- -- 1.059 450.860 68.185 528
Other 1.536.430 24.639.069 -- 11.208.304 35.989 19.137.582 1.188.764 435.582
Total 3.292.211 60.876.186 -- 11.420.850 252.392 54.555.944 2.348.013 552.902
(*)
It indicates sales made from non-performing loans portfolio.
(vii) Breakdown of receivables by outstanding maturity

Undistributed 1 month 1-3 months 3-6 months 6-12 months 1 year and more Total
Non-defaulted receivables 26.250 22.582.103 5.879.234 7.221.398 24.946.561 66.197.434 126.852.980
1 Credits -- 9.552.149 2.735.488 3.739.295 8.906.736 35.942.518 60.876.186
2 Debt Instruments 2 -- 50.590 -- -- 11.370.258 11.420.850
3 Off-balance sheet
receivables 26.248 13.029.954 3.093.156 3.482.103 16.039.825 18.884.658 54.555.944
Defaulted receivables 3.544.603 -- -- -- -- -- 3.544.603
1 Credits 3.292.211 -- -- -- -- -- 3.292.211
2 Debt Instruments -- -- -- -- -- -- --
3 Off-balance sheet
receivables 252.392 -- -- -- -- -- 252.392
Specific Provisions 2.348.013 -- -- -- -- -- 2.348.013
Total 1.222.840 22.582.103 5.879.234 7.221.398 24.946.561 66.197.434 128.049.570
(viii) Aging analysis of overdue receivables

1-30 days 31-60 days 61-90 days Total

Credits 6.273.302 1.312.479 858.290 8.444.070
Debt Instruments -- -- -- --
Off-balance sheet receivables 582.504 32.516 35.886 650.906
(ix) Breakdown of restructured recievables whether they are provisioned or not

31 December 2016
Credits having standard natre and restructured from other reciavables 1.376.210
Credits in close follow-up and restructured from other receivables 2.914.008
Restructured from non-performing receivables 150.334
5. Credit risk mitigation techniques
The Bank can demand collateral in order to mitigate risk level of the credit. Each type of collaterals and collateral processes
approved in credit risk calculations are defined with Bank procedures. Insurance and evaluation approach off properties or goods
subject to collateral are regulated in internal documents of the Bank prepared in accordance with Turkish Banking Legislation.
The Bank performs credit risk mitigation according to comprehensive financial collateral method in accordance with
Communique on Credit Risk Mitigation Techniques. Exchange mismatch between receivable and collateral and cut-off rates
based on type of collateral are considered through inspecting standard cut-off ratios mentioned in annex of the communique
while maturity mismatch between receivable and collateral is taken into account in accordance with method mentioned in Article
49.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 155

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Bank established compliant provisions to Turkish Banking Legislation and BRSA Regulations in order to cover expected loss
sourcing from occurrence of credit risk.
6. Credit risk mitigation techniques - overview

a b c d e f g
Exposures
Exposures secured by Exposures Financial Exposures Exposures secured
unsecured of Exposures collateral, of secured by guarantees, of securedby credit derivatives,
(according to secured by which secured financial which secured by credit of which secured
TAS collateral amount guarantees amount derivatives amount
1 Loans 47.004.104 13.473.407 11.917.730 -- -- -- --
2 Debt Securities 11.419.691 -- -- -- -- -- --
3 Total 58.423.795 13.473.407 11.917.730 -- -- -- --
4 Of which defaulted (*)
3.278.524 266.079 191.763 -- -- -- --
(*)
It includes default figure belonging to amount before provision and off-balance sheet receivables.
7. Disclosures on rating grades used while calculating credit risk with standard approach
Ratings provided by international rating agency Fitch are used for the determination of risk weights which shall be applied in
the calculation of capital adequacy. The scope, in which the credit rating grades are taken into consideration, covers receivables
from governments or central banks and receivables from banks and intermediary institutions and corporate receivables for those
having residence abroad.
8. Standardised approach - Credit risk exposure and credit risk mitigation (CRM) effects

a b c d e f
Exposures before credit Exposures post-credit RWA and
conversion factor and CRM conversion factor and CRM RWA density
On-balance Off-balance On-balance Off-balance RWA
Risk classifications sheet amount sheet amount sheet amount sheet amount RWA density
1 Exposures to central governments or central banks 24.300.514 688.695 25.083.273 198.759 7.110.087 %28,12
2 Exposures to regional governments or local authorities 481.439 19.368 481.317 8.671 244.994 %50,00
3 Exposures to public sector entities -- -- -- -- -- %0,00
4 Exposures to multilateral development banks -- -- -- -- -- %0,00
5 Exposures to international organisations -- -- -- -- -- %0,00
6 Exposures to institutions 3.813.088 2.372.780 3.813.055 2.048.296 1.971.679 %33,64
7 Exposures to corporates 17.160.467 29.572.870 16.242.539 16.103.902 32.346.439 %100,00
8 Retail exposures 31.525.444 25.647.719 30.746.238 2.429.463 24.964.339 %75,25
9 Exposures secured by residential property 4.901.223 332.318 4.863.692 163.046 1.759.358 %35,00
10 Exposures secured by commercial real estate 6.646.851 1.160.079 6.622.264 780.811 4.190.626 %56,61
11 Past-due loans 961.382 188.172 959.586 56.821 939.462 %92,43
12 Higher-risk categories by the Agency Board -- -- -- -- -- %0,00
13 Exposures in the form of covered bonds -- -- -- -- -- %0,00
14 Exposures to institutions and corporates with a short-term
credit assessment -- -- -- -- -- %0,00
15 Exposures in the form of units or shares in collective
investment undertakings (CIUs) 1.187 1.068 1.187 1.068 2.255 %100,00
16 Other assets 3.627.024 -- 3.627.024 -- 1.812.194 %49,96
17 Investments in equities 5.308.315 -- 5.308.315 -- 5.308.315 %100,00
18 Total 98.726.934 59.983.069 97.748.490 21.790.837 80.649.748 %67,47
156 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

9. Standardised Approach - Exposures by asset classes and risk weights

a b c k d l e f g h j
%35 %50
Secured Secured Total risk
with with exposure
property property (after CCF
Risk Classifications/Risk Weight %0 %10 %20 mortgage mortgage. %50 %75 %100 %150 %200 Others ve CRM )
1 Exposures to central governments or central
banks 11.061.862 -- -- -- -- 14.220.170 -- -- -- -- -- 25.282.032
2 Exposures to regional governments or local
authorities -- -- -- -- -- 489.988 -- -- -- -- -- 489.988
3 Exposures to public sector entities -- -- -- -- -- -- -- -- -- -- -- --
4 Exposures to multilateral development banks -- -- -- -- -- -- -- -- -- -- -- --
5 Exposures to international organisations -- -- -- -- -- -- -- -- -- -- -- --
6 Exposures to institutions -- -- 3.296.301 -- -- 2.505.263 -- 59.787 -- -- -- 5.861.351
7 Exposures to corporates -- -- -- -- -- -- -- 32.346.441 -- -- -- 32.346.441
8 Retail exposures -- -- -- -- -- -- 32.845.382 330.319 -- -- -- 33.175.701
9 Exposures secured by residential property -- -- -- 5.026.738 -- -- -- -- -- -- -- 5.026.738
10 Exposures secured by commercial real estate -- -- -- -- 6.424.900 -- -- 978.175 -- -- -- 7.403.075
11 Past-due loans -- -- -- -- 332.965 -- -- 504.405 179.037 -- -- 1.016.407
12 Higher-risk categories by the Agency Board -- -- -- -- -- -- -- -- -- -- -- --
13 Exposures in the form of covered bonds -- -- -- -- -- -- -- -- -- -- -- --
14 Exposures to institutions and corporates with a
short-term credit assessment -- -- -- -- -- -- -- -- -- -- -- --
15 Exposures in the form of units or shares in
collective investment undertakings (CIUs) -- -- -- -- -- -- -- -- -- -- -- --
16 Other assets -- -- -- -- -- -- -- 5.308.315 -- -- -- 5.308.315
17 Investments in equities 1.933.488 -- 7.440 -- 3 -- 180 1.602.809 -- -- 83.104 3.627.024
18 Total 12.995.350 -- 3.303.741 5.026.738 6.757.868 17.215.421 32.845.562 41.132.506 179.037 -- 83.104 119.539.327

d. Counterparty Credit Risk

1. Counterparty Credit risk (CCR) explanations

Counterparty credit risk is determined according to type of counterparty and the transaction. Counterparties are divided into
segments as financial institutions, corporate-commercial customers, KBI-Micro-Gold-Agriculture customers and individual
customers. Transaction types are grouped as derivative financial products and repo transactions.

Compliance test is applied in line with production information, financial position and transaction frequency of the customer in
order to determine products and services provided to customers.

Credit worthiness of counterparty is analysed before the transactions causing counterparty credit risk and periodically reviewed.
Reviewing frequency is increased if required.

Limits, in line with risk appetite, policy and strategies of the Bank are determined for the transactions in scope of CCR. Those
limits are approved by Board of Directors for banks. Approval authorizations determined in scope of credit allocation process are
applied for parties apart from banks. Limits are reviewed at least annually. If the market conditions get worse or credit qualities
of certain counterparties decline, limits are reviewed and required changes are made. Approved limits are blocked with the
approval of Credit Committee/Credit Allocation Department, if required.

Risk mitigation methods such as netting contracts, collateral and margin contracts are used in counterparty credit risk
management related to financial institutions. Collateralization principles and procedures are applied in scope of credit policy and
procedures currently applied within the Bank for counterparties apart from financial institutions.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 157

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Potential and current risk amounts of transactions are calculated/determined in order to determine counterparty credit risk. The
risks of transactions that are subject to the legally binding bilateral netting agreement and to which the netting transaction can
be applied are followed together.

2. Analysis of counterparty credit risk exposure by approach

a b c d e f
Alpha used
for computing
Potential regulatory Exposure
Replacement future exposure at at default
cost exposure EEPE default) post CRM RWA
1 Standardised Approach (for derivatives) 1.427.941 505.353 -- 1.853.391 1.008.071
2 Internal Model Method (for derivatives, Repo
Transactions, Marketable Securities or EMTIA lending
or borrowing transactions, transactions with a long
settlement time, Marketable Security transactions
with credit) -- -- -- --
3 Simple Approach for credit risk mitigation (for
derivatives, Repo Transactions, Marketable Securities
or EMTIA lending or borrowing transactions,
transactions with a long settlement time, Marketable
Security transactions with credit) -- --
4 Comprehensive Approach for credit risk mitigation
(for derivatives, Repo Transactions, Marketable
Securities or EMTIA lending or borrowing
transactions, transactions with a long settlement
time, Marketable Security transactions with credit) 392.667 95.785
5 VaR for for derivatives, Repo Transactions,
Marketable Securities or EMTIA lending or borrowing
transactions, transactions with a long settlement
time, Marketable Security transactions with credit -- --
6 Total 1.103.856
3. Credit valuation adjustment (CVA) capital charge

a b
Exposure at
default post-CRM RWA
Total portfolios subject to the Advanced CVA capital charge
1 Value at Risk (VaR) component (including the 3multiplier) -- --
2 Stressed VaR component (including the 3multiplier) -- --
3 All portfolios subject to the Standardised CVA capital charge 1.853.391 661.218
4 Total subject to the CVA capital charge 1.853.391 661.218
158 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

4. Standard approach - Counterparty credit risk with respect to risk classes and weights
a b c d e f g h i
Total credit
Risk Weigths / Risk Classifications %0 %10 %20 %50. %75 %100 %150 Dier exposure (*)
Claims from central governments and central banks -- -- -- -- -- -- -- -- --
Claims from regional and local governments -- -- -- -- -- -- -- -- --
Claims from administration and non commercial entity -- -- -- -- -- -- -- -- --
Claims from multilateral development banks -- -- -- -- -- -- -- -- --
Claims from international organizations -- -- -- -- -- -- -- -- --
Claims from institutions -- -- 663.200 1.220.357 -- -- -- -- 742.819
Corporates -- -- -- -- -- 355.581 -- -- 355.581
Retail portfolios -- -- -- -- 5.851 -- -- -- 4.388
Claims on landed real estate -- -- -- -- -- -- -- -- --
Past due loans -- -- -- -- -- -- -- -- --
Claims which are determined as high risk by the
board of BRSA -- -- -- -- -- -- -- -- --
Mortgage securities -- -- -- -- -- -- -- -- --
Securitization positions -- -- -- -- -- -- -- -- --
Claims from corporates, banks and financial
intermediaries which have short term credit rating -- -- -- -- -- -- -- -- --
Investments which are qualified as collective
investment institutions -- -- -- -- -- 1.068 -- -- 1.068
Stock investment -- -- -- -- -- -- -- -- --
Other claims -- -- -- -- -- -- -- -- --
Other assets(**) -- -- -- -- -- -- -- -- --
Total -- -- 663.200 1.220.357 5.851 356.649 -- -- 1.103.856
Total credit exposure: the amount relevant for the capital requirements calculation, having applied CRM techniques.
(*)

Other assets: the amount excludes exposures to Central counterparty which are reported in Counterparty credit risk.
(**)

5. Collaterals used for counterparty credit risk

a b c d e f
Guarantees of Derivative Financial Instrument
Given Guarantees Received Guarantees Guarantees of Other Transactions
Received
Appropriated Unappropriated Appropriated Unappropriated Given Guarantees Guarantees
Cash-Domestic Currency -- -- -- -- 3.001.396 5.628.366
Cash-Foreign Currency 79.903 -- -- -- -- --
Government Bond-Domestic -- -- -- -- -- --
Government Bond-Other -- -- -- -- -- --
Public Bond -- -- -- -- -- --
Corporate Bond -- -- -- -- -- --
Stock -- -- -- -- -- --
Other Guarantee -- -- -- -- -- --
Total 79.903 -- -- -- 3.001.396 5.628.366
6. Credit derivatives
None.
7. Exposures to central counterparties (CCP)
None.
e. Securitization
1. Disclosures on securitization positions
None.
2. Securitization positions in banking accounts
None.
3. Securitization positions in trading accounts
None.
4. Securitization positions in banking positions and capital requirements related to those whose sponsorship or founder is the
bank
None.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 159

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

5. Securitization positions in banking positions and capital requirements related to those- in which the Bank is an investor
None.

f. Market risk

1. Explanations on market risk

Principles, policies and limits related to management of market risk are approved by board of directors and periodically
reviewed. The Bank is exposed to market risk mainly due to interest rates, exchange rates and changes which may occur in share
and commodity prices. When the asset structure of the Bank is examined, it is concluded that the most significant one among
aforementioned risks is interest and exchange rate risk. Two separate methods, standard method and internal method, are
used in measurement of aforementioned risks.

Value at risk approach is mainly taken as basis in the follow-up process of risk limits. There exist sensitivity limits in addition to
aforementioned limit for risk which are not covered by the model. Parametric approach is adopted since the structure of financial
positions held by the Bank is simple and the model is easy to use and understandable. Value at risk calculations are made over
all instruments and foreign currency positions of the Bank which are sensitive to interest. Value at risk calculations are supported
with stress tests and scenario analysis and possible results of potential market movements which can cause a significant impact
on the Bank although having a low possibility to emerge are examined. Retrospective tests of the model are made periodically
and amendments can be made in the model in accordance with test results, if required.

2. Standardised approach

RMT
Outright products
1 Interest rate risk (general and specific) 26.813
2 Equity risk (general and specific) --
3 Foreign exchange risk 620.437
4 Commodity risk 50.287
Options
5 Simplified approach --
6 Delta-plus method 28.438
7 Scenario approach --
8 Securitisation --
9 Total 725.975
3. Information on market risk calculated as of month-ends during the period

Current Period: 31 December 2016 Prior Period: 31 December 2015

Average Highest Lowest Average Highest Lowest
Interest Rate Risk 1.658 2.802 1.078 3.617 19.703 1.486
Stock Risk -- -- -- -- -- --
Currency Riski 39.738 53.414 10.748 61.817 133.176 7.180
Emtia Risk 1.105 4.023 257 541 832 338
Settlement Risk -- -- -- -- -- --
Option Risk 2.177 3.642 956 1.018 6.322 36
Counterparty Risk -- -- -- 3.425 31.059 560
Total Risk Exposure Value 558.467 744.938 200.238 880.230 1.878.325 150.088
g. Explanations related to the operational risk

1. Disclosures on operational risk calculation

Basic Indicator Approach is utilized in operational risk calculation of the Bank. Principal amount subject to operational risk is
calculated through using year-end gross income of 2015, 2014 and 2013 of DFH Group belonging to last 3 years via Basic
Indicator Approach dated 1 July 2012 in accordance with Communique on Measurement and Evaluation of Banks Capital
Adequacy published on Official Gazette dated 28 June 2013 and numbered 28337.
160 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

2. Standart method

Total/Positive
31.12.2013 31.12.2014 31.12.2015 GI year number Ratio(%) Total
Gross IGross Income 2.889.648 3.248.811 3.513.707 3.217.389 15 482.608
AmounAmount Subject to
Operationel Risk 6.032.604
IX. Presentation of financial assets and liabilities at their fair value

a. Calculation of financial assets and liabilities at their fair value

The fair value of held-to-maturity assets are determined based on market prices, or when they are not available, based on market
prices quoted for other securities subject to similar terms of interest, maturity and other conditions.

The expected fair value of the demand deposits represents the amount to be paid upon request. The fair value of the overnight
deposits and floating rate placements represent their carrying value. The expected fair value of the fixed rate deposits are
determined by calculating the discounted cash flows using the market interest rates of similar instruments.

The expected fair value of fixed rate loans and receivables are determined by calculating the discounted cash flows using the
current market interest rates. For the loans with floating interest rates, it is assumed that the carrying value reflects the fair
value.

Estimated fair value of banks, funds provided from other financial entities, issued securities and deposits is calculated through
determination of discounted cash flows using current market interest rates.

The following table summarizes the carrying value and fair value of financial assets and liabilities. The carrying value represents
the sum of the acquisition costs and interest accruals of financial assets and liabilities.

Carrying Value Fair Value

Current Period Prior Period Current Period Prior Period
Financial Assets 79.251.302 66.535.990 78.491.087 65.713.250
Interbank Money Market Placements 3.001.396 1.200.353 3.001.396 1.200.353
Banks 2.966.965 2.220.556 2.966.814 2.219.847
Investment Securities Available-For-Sale 6.561.558 8.524.479 6.561.558 8.524.479
Investment Securities Held-To-Maturity 4.900.999 3.241.778 4.801.372 3.250.150
Loans and Other Receivables 61.820.384 51.348.824 61.159.947 50.518.421
Financial Liabilities 87.826.658 72.188.729 87.383.563 71.953.440
Bank Deposits 3.666.289 1.470.597 3.665.126 1.469.603
Other Deposits 59.524.639 45.116.980 59.535.364 45.119.167
Interbank Money market borrowings 5.397.576 7.184.158 5.397.576 7.184.158
Funds Borrowed From Other Financial Institutions 10.750.597 10.669.070 10.668.529 10.621.849
Subordinated Loans 5.483.501 4.845.965 5.104.666 4.675.890
Securities Issued 1.152.633 1.259.198 1.160.879 1.240.012
Miscellaneous Payables 1.851.423 1.642.761 1.851.423 1.642.761
b. Classification of fair value

TFRS 7 sets classification of valuation techniques according to the inputs used in valuation techniques based on fair value
calculations which are whether observable or not.

Fair value levels of financial assets and liabilities that are carried at fair value in the Banks financial statements are given below:
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 161

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Current Period Level 1 Level 2 Level 3 Total

Financial Assets at Fair Value Through Profit or Loss 98.004 1.427.943 -- 1.525.947
Public Sector Debt Securities 88.417 -- -- 88.417
Share Certificated -- -- -- --
Trading Purpose Derivatives -- 1.427.943 -- 1.427.943
Other Securities 9.587 -- -- 9.587
Financial Assets Available for Sale (*) 6.303.319 216.530 -- 6.519.849
Public Sector Debt Securities 6.303.319 -- -- 6.303.319
Other Securities -- 216.530 -- 216.530
Hedging Purpose Derivatives --
Total Assets 6.401.323 1.644.473 -- 8.045.796
Derivative Financial Liabilities Held for Trading -- 941.188 -- 941.188
Hedging Purpose Derivatives -- -- -- --
Total Liabilities -- 941.188 -- 941.188
Prior Period Level 1 Level 2 Level 3 Total
Financial Assets at Fair Value Through Profit or Loss 23.708 1.092.872 -- 1.116.580
Public Sector Debt Securities 22.625 -- -- 22.625
Share Certificated -- -- -- --
Trading Purpose Derivatives -- 1.092.872 -- 1.092.872
Other Securities 1.083 -- -- 1.083
Financial Assets Available for Sale (*) 8.411.595 -- 108.955 8.520.550
Public Sector Debt Securities 8.411.595 -- -- 8.411.595
Other Securities -- -- 108.955 108.955
Hedging Purpose Derivatives -- -- -- --
Total Assets 8.435.303 1.092.872 108.955 9.637.130
Derivative Financial Liabilities Held for Trading -- 577.227 -- 577.227
Hedging Purpose Derivatives -- -- -- --
Total Liabilities -- 577.227 -- 577.227
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices)
Level 3: Unobservable inputs

Share certificates amounting TL 3.930 (31 December 2015: TL 3.945) classified in financial assets available for sale that do not have quoted
(*)

market prices in an active market or whose fair value cannot be measured, are carried at cost in the framework of TAS 39.

X. Transactions carried out on behalf and account of other parties and fiduciary transactions

a. Information on whether the Group performs sales, purchase, management, consultancy and custody services on behalf and
account of others, or not

The Bank performs sales, purchase, management, consultancy and custody services on behalf and account of others.

b. Transactions directly realized with other financial institutions depending on fiduciary contracts and probability of material
effect of such transactions on the financial position of the Bank

None.

XI. Explanations related to hedging transactions

a. Net Investment Risk

The Bank applies net investment accounting hedge as of 1 July 2015 in order to ensure exchange difference hedge sourcing from
equity method implementation for its net investment at a total amount of Euro 1.006 million and US Dollar 6,7 million belonging
to Denizbank AG and Eurodeniz, which are subsidiaries of the Bank. A part of foreign currency deposits at same amounts
is defined as hedging instrument and the part, in which the value change sourcing from foreign currency exchange rates is
effective, is recognized in hedge funds under shareholders equity. Total net investment hedging funds recognized under equity
after deferred tax is amounting to TL (541.466) as of 31 December 2016. (31 December 2015: TL (114.756)).
162 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

b. Cash Flow Hedge

The Bank stopped applying cash flow hedge accounting arising from the fluctuations in the interest rate and in which the
hedging instrument was interest rate swaps and the hedged item was deposit, on 31 May 2013. Consequently, derivatives
financial instruments which were previously in hedging purpose derivatives assets/liabilities because of being risk hedging
instruments are classified in financial assets/liabilities held for trading lines. Negative differences amounting to TL (18.657)
which were cumulated until the transfer date in hedging funds account under equity will be transferred to statement of income
until the maturities of related derivative instruments. As of the balance sheet date, net negative valuation difference under equity
after deferred tax is amounting to TL (616) (31 December 2015: TL (3.368)).

XII. Explanations related to the segment reporting

The Bank is active in three areas, namely, wholesale banking, retail banking, treasury and investment banking.

Wholesale banking offers financial and banking solutions to large-scale local and international corporate and commercial
customers. In order to meet customer needs related to projects, investment and working capital, corporate banking offers short
and long-term working capital loans, investment loans, non-cash loans, foreign exchange transactions, export finance, project
finance, structured finance, corporate finance, deposit products and cash management services.

In retail banking, it offers loan products (consumer loans, mortgage, and vehicle loans), distinctive credit cards, investment
products (mutual funds, shares, government bonds/treasury bills, and repos), deposit products (time, demand, protected),
insurance products, SME loans as well as agricultural loans. Alternative distribution channels allow customers to meet their
banking needs without the need to physically visit the branches. Among products that meet every day needs of customers are
overdraft loans, automated bill payment, checkbooks and rental safes.

Within treasury and investment banking, sales, prop-trading and private banking departments offer spot and forward TL and
foreign exchange transactions, trading of treasury bills, bonds and other local and international securities and derivative
products. Servicing the upper segment of wealthy and high income retail customers who require sophisticated banking and
investment services falls within the scope of private banking.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 163

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Segment information of the Bank is presented in the following table:

Wholesale Banking Retail Banking

Commercial& SME&
Current Period Corporate Public Agriculture Treasury and
(01.01.2016-31.12.2016) Banking Finance Banking Retail BankingInvestment Banking Total
Net interest income 303.059 418.561 1.612.257 915.676 803.206 4.052.759
Net fee and commission income 75.639 106.346 590.391 466.312 (49.724) 1.188.964
Other income/expense, net 29.009 115.005 105.999 242.246 (441.868) 50.391

Total segment income 407.707 639.912 2.308.647 1.624.234 311.614 5.292.114

Other operating expenses (144.153) (294.347) (989.948) (1.109.998) (60.619) (2.599.065)

Provision for loan losses and other receivables (87.209) (488.142) (653.180) (479.717) (36.519) (1.744.767)
Tax charge (238.373)
699.372
Net profit from continuing operations 176.345 (142.577) 665.519 34.519 214.476 1.409.281
Net profit from discontinued operations -- -- -- -- -- --

Net profit 176.345 (142.577) 665.519 34.519 214.476 1.409.281

Current Period (31.12.2016)

Segment assets 7.922.610 11.429.577 26.079.055 16.389.143 33.717.802 95.538.187
Subsidiaries and associates 5.304.386
Undistributed assets 2.316.254
Total assets 103.158.827

Segment liabilities 12.599.996 9.564.827 12.873.685 26.179.002 27.411.679 88.629.189

Undistributed liabilities 3.967.966
Shareholders equity 10.561.672
Total liabilities 103.158.827

Wholesale Banking Retail Banking

Commercial& Treasury and
Prior Period Corporate Public SME& Investment
(01.01.2015-31.12.2015) Banking Finance Agriculture Banking Retail Banking Banking Total
Net interest income 337.975 427.428 1.152.217 689.619 546.777 3.154.016
Net fee and commission income 80.247 117.550 386.811 493.122 (37.435) 1.040.295
Other income/expense, net 94.704 75.658 137.898 208.337 (780.435) (263.679)

Total segment income 512.926 620.636 1.676.926 1.391.078 (270.934) 3.930.632

Other operating expenses (129.485) (277.584) (886.078) (977.712) (98.127) (2.368.986)

Provision for loan losses and other receivables (29.402) (111.161) (406.352) (608.722) (61.939) (1.217.576)
Tax charge (109.030)
527.605
Net profit from continuing operations 354.039 231.891 384.496 (195.356) (431.000) 762.645
Net profit from discontinued operations -- -- -- -- -- --

Net profit 354.039 231.891 384.496 (195.356) (431.000) 762.645

Prior Period (31.12.2015)

Segment assets 6.970.701 8.463.853 19.979.122 15.935.149 27.062.888 78.411.713
Subsidiaries and associates 3.951.185
Undistributed assets 1.857.769
Total assets 84.220.667

Segment liabilities 8.412.008 7.251.048 10.156.937 20.501.489 26.065.351 72.386.833

Undistributed liabilities 3.564.515
Shareholders equity 8.269.319
Total liabilities 84.220.667

Information relating to segment information of the Bank was prepared in accordance with data obtained from system of
Management Reporting.
164 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

SECTION FIVE

DISCLOSURES AND FOOTNOTES ON UNCONSOLIDATED FINANCIAL

STATEMENTS
I. Explanations and disclosures related to assets
a. Information on cash and balances with the Central Bank of the Republic of Turkey
1. Information on cash and balances with the Central Bank of the Republic of Turkey

Current Period Prior Period

TL FC TL FC
Cash in TL / Foreign Currency 876.184 877.995 732.446 619.716
Central Bank of the Republic of Turkey 1.405.531 11.601.208 462.670 8.944.286
Other (*) -- 20 -- 25
Total 2.281.715 12.479.223 1.195.116 9.564.027
(*)
Includes TL 20 of cheques purchased (31 December 2015: TL 25).

2. Information on balances with the Central Bank of the Republic of Turkey

Current Period Prior Period

TL FC TL FC
Unrestricted Demand Deposits 1.405.531 1.501.383 462.670 997.242
Unrestricted Time Deposits -- -- -- --
Restricted Time Deposits -- 10.099.825 -- 7.947.044
Total 1.405.531 11.601.208 462.670 8.944.286
3. Information on required reserves
As of 31 December 2016, all banks operating in Turkey should provide a reserve in a range of 4% to 10,5% (31 December 2015:
between 5% and 11,5%) depending on the terms of the deposits for their liabilities in Turkish Lira and in a range of 4,5% to
24,5% (31 December 2015: between 5% and 25%) in US Dollars or standard gold for their liabilities in foreign currencies.
CBRT began paying interest for the required reserves maintained in Turkish Lira as from November 2014 and for the required
reserves maintained in US Dollar as from May 2015. The interest income of TL 56.689 derived from the required reserves
maintained by the Bank at CBRT (1 January - 31 December 2015: 24.288 ) has been recorded under the account interests
derived from required reserves.
b. Information on financial assets at fair value through profit or loss
1. Information on trading securities given as collateral or blocked
None (31 December 2015: None).
2. Trading securities subject to repurchase agreements
None (31 December 2015: None).

3. Positive value of trading purpose derivatives

Current Period Prior Period

TL FC TL FC
Forward Transactions 1.549 59.520 4.615 11.830
Swap Transactions 946.743 351.614 874.302 179.173
Futures Transactions -- -- -- --
Options 523 67.994 173 22.779
Other -- -- -- --
Total 948.815 479.128 879.090 213.782
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 165

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

c. Information on Banks

1. Information on Banks

Current Period Prior Period

TL FC TL FC
Banks
Domestic 6.234 212.415 8.602 1.296.248
Foreign 10.044 2.738.272 12.990 902.716
Foreign head offices and branches -- -- -- --
Total 16.278 2.950.687 21.592 2.198.964
2. Information on Foreign banks

Unrestricten Amount Restricted Amount

Current Period Prior Period Current Period Prior Period
EU Countries 149.902 522.714 2.058.995 --
USA, Canada 124.066 147.664 -- 12.180
OECD Countries(*) 20.420 15.857 -- --
Off shore zones 124 177 -- --
Other 394.809 217.114 -- --
Total 689.321 903.526 2.058.995 12.180
(*)
OECD countries except for EU countries, USA and Canada

d. Information on investment securities available-for-sale

1. Major types of investment securities available-for-sale

Investment securities available-for-sale consist of share certificates unquoted stock exchange, debt securities representing
government bonds, Eurobonds and foreign currency government bonds issued by the Turkish Treasury.

2. Investment securities available-for-sale given as collateral

Available-for-sale financial assets which were collateralized consist of securities offered to various financial institutions, primarily
the Central Bank of the Republic of Turkey and stanbul Takas ve Saklama Bankas A.. (Settlement and Custody Bank) for
interbank money market, foreign exchange market and other transactions. Such financial assets include government bonds and
Eurobonds, and their total book value amounts to TL 849.495 (31 December 2015: TL 1.690.385).

3. Investment securities available-for-sale given as collateral or blocked

Current Period Prior Period

TL FC TL FC
Share certificates -- -- -- --
T-bills, Bonds and Similar Securities 725.926 123.569 857.701 832.684
Other -- -- -- --
Total 725.926 123.569 857.701 832.684

4. Investment securities available-for-sale subject to repurchase agreements

Current Period Prior Period

TL FC TL FC
Government Bonds 3.830.370 -- 4.811.887 --
Treasury Bills -- -- -- --
Other Debt Securities -- -- -- --
Bonds Issued or Guaranteed by Banks -- -- -- --
Asset Backed Securities -- -- -- --
Other -- -- -- --
Total 3.830.370 -- 4.811.887 --
166 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

5. Information on available-for-sale securities

Current Period Prior Period

Debt instruments 6.830.255 8.840.892
Quoted on Stock Exchange 6.830.255 8.840.892
Unquoted on Stock Exchange -- --
Share certificates 41.709 112.884
Quoted on Stock Exchange 37.779 --
Unquoted on Stock Exchange 3.930 112.884
Impairment provision (-) 310.406 429.297
Total 6.561.558 8.524.479
e. Information related to loans

1. Information on all types of loans and advances given to shareholders and employees of the Bank

Current Period Prior Period

Cash Non-Cash Cash Non-Cash
Direct Loans Granted to Shareholders -- -- -- --
Corporate Shareholders -- -- -- --
Individual Shareholders -- -- -- --
Indirect Loans Granted to Shareholders -- 7.721 -- 19.970
Loans Granted to Employees 60.339 4 63.001 115
Total 60.339 7.725 63.001 20.085
2. Information on loans classified in groups I and II and other receivables and loans that have been restructured or
rescheduled

Loans and Other Receivables

Performing Loans and Other Receivables (*) Under Close Monitoring
Agreement conditions Agreement conditions
modified modified
Loans and Other Extension of Loans and Other Extension of
Receivables (Total) Payment Plan Other Receivables (Total) Payment Plan Other
Non-specialized Loans 47.306.075 1.364.892 -- 5.449.561 2.679.020 --
Working Capital Loans 1.688.112 313.882 -- 572.289 491.328 --
Export Loans 1.402.581 6.218 -- 24.680 5.211 --
Import Loans -- -- -- -- -- --
Loans Given to Financial
Sector 387.541 -- -- 168.744 163.189 --
Consumer Loans 12.083.662 259.838 -- 1.190.519 392.174 --
Credit Cards 4.801.357 3.527 -- 285.322 64.172 --
Other 26.942.822 781.427 -- 3.208.007 1.562.946 --
Specialization Loans 7.316.598 11.318 -- 803.952 234.988 --
Other Receivables -- -- -- -- -- --
Total 54.622.673 1.376.210 -- 6.253.513 2.914.008 --
The Bank has a cash loan exposure amounting to USD 117 million related with the acquisitation finance of a telecommunication company
(*)

within a syndicate formed by various domestic and foreign banks, where the financing structure includes acquired companys shares pledged
as collateral. Discussions among shareholders of the entity, creditor banks and related public institutions regarding restructuring of current
main partner including change of shareholder have been commenced and it is expected that aforementioned discussions shall result in a
positive development. Respective loan is classified under Standard Loan and Other Receivables as of 31 December 2016.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 167

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Performing Loans and Loans and Other Receivables

Number of modifications made to extend payment plan Other Receivables Under Close Monitoring
Extended by 1 or 2 times 1.311.069 2.677.980
Extended by 3,4 or 5 times 65.062 234.071
Extended by more than 5 times 79 1.957
Total 1.376.210 2.914.008

Performing Loans and Loans and Other Receivables

Extended payment period of time Other Receivables Under Close Monitoring
0-6 Months 4.977 153.588
6-12 Months 9.003 57.517
1-2 Years 24.846 195.368
2-5 Years 426.469 753.971
5 Year and Over 910.915 1.753.564
Total 1.376.210 2.914.008
3. Information on loans according to maturity structure concentration

Standard Loans and Other Loans and Other Receivables

Receivables Under Close Monitoring
Loans and other Restructured Loans and other Restructured
Receivables or Rescheduled Receivables or Rescheduled
Short-Term Loans and Other Receivables 17.294.416 42.922 1.174.733 68.883
Non-Specialized Loans 15.724.110 41.237 1.062.470 41.071
Specialized Loans 1.570.306 1.685 112.263 27.812
Other Receivables -- -- -- --
Medium and Long-Term Loans and Other Receivables 37.328.257 1.333.288 5.078.780 2.845.125
Non-Specialized Loans 31.581.965 1.323.655 4.387.091 2.637.949
Specialized Loans 5.746.292 9.633 691.689 207.176
Other Receivables -- -- -- --
Total 54.622.673 1.376.210 6.253.513 2.914.008
168 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

4. Information on consumer loans, individual credit cards and personnel credit cards

Short Term Medium or Long Term Total

Consumer Loans-TL 263.618 12.391.945 12.655.563
Real estate Loans 4.794 5.007.451 5.012.245
Vehicle Loans 2.610 411.279 413.889
General Purpose Loans 256.214 6.973.215 7.229.429
Other -- -- --
Consumer Loans-Indexed to FC -- 36.623 36.623
Real estate Loans -- 36.185 36.185
Vehicle Loans -- -- --
General Purpose Loans -- 438 438
Other -- -- --
Consumer Loans-FC -- 2.346 2.346
Real estate Loans -- 2.159 2.159
Vehicle Loans -- -- --
General Purpose Loans -- 187 187
Other -- -- --
Individual Credit Cards-TL 4.523.428 254.375 4.777.803
Installment 2.070.874 254.375 2.325.249
Non installment 2.452.554 -- 2.452.554
Individual Credit Cards-FC 1.414 -- 1.414
Installment 56 -- 56
Non installment 1.358 -- 1.358
Loans Given to Employees-TL 3.627 30.555 34.182
Real estate Loans -- 1.798 1.798
Vehicle Loans -- 93 93
General Purpose Loans 3.627 28.664 32.291
Other -- -- --
Loans Given to Employees - Indexed to FC -- -- --
Real estate Loans -- -- --
Vehicle Loans -- -- --
General Purpose Loans -- -- --
Other -- -- --
Loans Given to Employees - FC -- -- --
Real estate Loans -- -- --
Vehicle Loans -- -- --
General Purpose Loans -- -- --
Other -- -- --
Personnel Credit Cards - TL 24.488 234 24.722
Installment 11.528 234 11.762
Non installment 12.960 -- 12.960
Personnel Credit Cards - FC 24 -- 24
Installment 8 -- 8
Non installment 16 -- 16
Overdraft Loans-TL (Real Persons) (*) 545.467 -- 545.467
Overdraft Loans-FC (Real Persons) -- -- --
Total 5.362.066 12.716.078 18.078.144
(*)
Overdrafts used by the personnel of the Bank are TL 1.489 (31 December 2015: TL 1.371).
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 169

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

5. Information on installment commercial loans and corporate credit cards

Short Term Medium or Long Term Total

Installment Commercial Loans - TL 919.302 8.025.791 8.945.093
Real estate Loans 624 223.589 224.213
Vehicle Loans 10.674 534.271 544.945
General Purpose Loans 908.004 7.267.931 8.175.935
Other -- -- --
Installment Commercial Loans - Indexed to FC 23.700 1.323.659 1.347.359
Real estate Loans -- 13.594 13.594
Vehicle Loans 281 40.524 40.805
General Purpose Loans 23.419 1.269.541 1.292.960
Other -- -- --
Installment Commercial Loans - FC 2.537 58.556 61.093
Real estate Loans -- -- --
Vehicle Loans -- 234 234
General Purpose Loans 2.537 58.322 60.859
Other -- -- --
Corporate Credit Cards - TL 282.664 2 282.666
Installment 106.298 2 106.300
Non installment 176.366 -- 176.366
Corporate Credit Cards - FC 50 -- 50
Installment -- -- --
Non installment 50 -- 50
Overdraft Loans-TL (Legal Entities) 1.452.593 -- 1.452.593
Overdraft Loans-FC (Legal Entities) -- -- --
Total 2.680.846 9.408.008 12.088.854
6. Loan concentration according to counterparty

Current Period Prior Period

Public 565.794 802.481
Private 60.310.392 49.817.676
Total 60.876.186 50.620.157
7. Domestic and foreign loans

Current Period Prior Period

Domestic Loans 59.787.720 49.890.022
Foreign Loans 1.088.466 730.135
Total 60.876.186 50.620.157
8. Loans granted to subsidiaries and associates

Current Period Prior Period

Direct loans granted to subsidiaries and associates 213.836 32.438
Indirect loans granted to subsidiaries and associates -- --
Total 213.836 32.438
9. Specific provisions for loans

Specific Provisions Current Period Prior Period

Loans and Receivables with Limited Collectability 117.558 62.112
Loans and Receivables with Doubtful Collectability 308.596 245.582
Uncollectible Loans and Receivables 1.921.859 1.645.687
Total 2.348.013 1.953.381
170 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

10. Information on non-performing loans (Net)

(i) Information on loans under follow-up, loans and other receivables those are restructured/rescheduled

Group III Group IV Group V

Loans and receivables Loans and receivables with Uncollectible loans
with limited collectability doubtful collectability and receivables
Current Period 12.405 22.935 107.038
(Gross Amounts Before Specific Reserves)
Restructured Loans and Other Receivables -- -- --
Rescheduled Loans and Other Receivables 12.405 22.935 107.038
Prior Period 15.994 37.147 65.519
(Gross Amounts Before Specific Reserves)
Restructured Loans and Other Receivables -- -- --
Rescheduled Loans and Other Receivables 15.994 37.147 65.519
(ii) Movement of non-performing loans

Group III Group IV Group V

Loans and receivables Loans and receivables with Uncollectible loans
with limited collectability doubtful collectability and receivables
Balances at Beginning of Period 336.216 544.429 1.801.403
Additions (+) 1.678.031 79.840 143.635
Transfers from Other Categories of Non-
Performing Loans (+) -- 1.284.724 1.066.875
Transfers from Other Categories of Non-
Performing Loans (-) 1.284.724 1.066.875 --
Collections (-) 229.322 158.157 350.962
Write-offs (-) -- -- 552.902
Corporate and Commercial Loans -- -- 28.028
Retail Loans -- -- 242.059
Credit Cards -- -- 182.960
Other -- -- 99.855
Balances at End of the Period 500.201 683.961 2.108.049
Specific Provisions (-) 117.558 308.596 1.921.859
Net Balance on Balance Sheet 382.643 375.365 186.190
The Bank has sold individual loan, credit cards and enterprise credit portfolio amounting to TL 295.535, tracked in legal proceedings
(*)

accounts, for a price of TL 30.100 to Finansal Varlk Ynetimi A.. with sales contracts dated 29 April and 30 June 2016 and has also sold
individual loan, credit cards and enterprise credit portfolio amounting to TL 110.891 and TL 110.474, tracked in legal proceedings accounts,
for a price of TL 11.600 TL and 11.700TL respectively Smer Varlk Ynetimi A.. and stanbul Varlk Ynetimi A.. with sales contracts dated
29 September and 30 September 2016 respectively and has sold individual loan, credit cards and enterprise credit portfolio amounting to TL
36.002, tracked in legal proceedings accounts, for a price of TL 50 to Vera Varlk Ynetimi A.. with sales contract dated 29 December 2016.

(iii) Information on non performing loans and other receivables in foregn currincies

Foreign currency loans, reverted/lapsed to illiquid claims accounts, are tracked as Turkish Lira.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 171

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

(iv) Information on non performing loans according to beneficiary group

Group III Group IV Group V

Loans and receivables Loans and receivables with Uncollectible loans and
with limited collectability doubtful collectability receivables
Current Period (Net): 31 December 2016 382.643 375.365 186.190
Loans Granted to Real Persons and Legal Entities (Gross) 500.201 683.961 2.108.049
Specific provisions (-) 117.558 308.596 1.921.859
Loans Granted to Real Persons and Legal Entities (Net) 382.643 375.365 186.190
Banks (Gross) -- -- --
Specific provisions (-) -- -- --
Banks (Net) -- -- --
Other Loan and Receivables (Gross) -- -- --
Specific provisions (-) -- -- --
Other Loan and Receivables (Net) -- -- --
Prior Period (Net): 31 December 2015 274.104 298.847 155.716
Loans Granted to Real Persons and Legal Entities (Gross) 336.216 544.429 1.801.403
Specific provisions (-) 62.112 245.582 1.645.687
Loans Granted to Real Persons and Legal Entities (Net) 274.104 298.847 155.716
Banks (Gross) -- -- --
Specific provisions (-) -- -- --
Banks (Net) -- -- --
Other Loan and Receivables (Gross) -- -- --
Specific provisions (-) -- -- --
Other Loan and Receivables (Net) -- -- --
11. Liquidation policy for uncollectible loans and receivables

For uncollectible loans and receivables, the Bank tries to solve the issue with the customer. If no result is obtained, all legal
actions are taken. Such actions are completed when the insufficiency of collaterals is documented or a certificate of insolvency is
obtained.

12. Information on write-off from assets policy

Unrecoverable non-performing loans are written off on condition that receivable of the Bank is not material compared to the
costs to be incurred for the preparation of necessary documentation. There is no written-off amount in 2016 (31 December
2015: TL 2.849).

f. Information on investment securities held-to-maturity

1. Information on securities subject to repurchase agreement and given as collateral or blocked

(i) Information on securities subject to repurchase agreement

Held-to-maturity investments subject to repurchase agreement are TL 1.797.997 (31 December 2015: TL 1.595.489).

(ii) Information on securities subject to given as collateral or blocked

Collateralized held-to-maturity investments are government bonds, whose book value amounts to TL 1.099.775 (31 December
2015: TL 959.121).

2. Information on government securities held-to-maturity

Current Period Prior Period

Government Bonds 4.900.999 3.241.778
Treasury Bills -- --
Other Government Debt Securities -- --
Total 4.900.999 3.241.778
172 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

3. Information on investment securities held-to-maturity

Current Period Prior Period

Debt Securities 4.909.438 3.247.249
Quoted on Stock Exchange 4.909.438 3.247.249
Unquoted on Stock Exchange -- --
Impairment (-) 8.439 5.471
Total 4.900.999 3.241.778
4. Information on the movement of investment securities held-to-maturity during the period

Current Period Prior Period

Balance at the beginning of the period 3.241.778 3.022.707
Foreign exchange differences (*) 248.152 227.993
Purchases during the year (**) 1.419.508 --
Disposals/Redemptions -- (3.451)
Impairment losses (-) 8.439 5.471
Total 4.900.999 3.241.778
(*)
Accruals of investment securities held-to-maturity are included in foreign exchange differences.
(**)
Classifications of available-for-sale financial assets are shown under Purchases During The Year.

The Bank transferred a portion of its securities from investment securities available-for-sale portfolio, as of reclassification
date with a new cost is amounting to TL 2.826.026 and US Dollar 320.674, to the investment securities held-to-maturity
portfolio due to change in the intention of holding dating 23 July,24 July, 26 December 2013, 24 January 2014 and 1 November
2016. The negative valuation differences amounting to TL 326.599 followed under equity until the date of classification will be
amortized with effective interest method and recycled to profit/loss until the maturities of these securities. As of the balance
sheet date, the remaining negative valuation difference under equity is TL 224.805 (31 December 2015: TL 192.722).

g. Investments in associates

Address The Banks share The Parent Banks risk group

Title (City/Country) percentage (%) share percentage (%)
1-Kredi Kayt Brosu A.. (*) stanbul/Trkiye 9 --
2-Kredi Garanti Fonu A.. (**) Ankara/Trkiye 2 --
3-Ege Tarm rnleri Lisansl Dep. A.. (**) zmir/Trkiye 9 --

Shareholders Total Fixed Interest Income on Current Period Prior Period

Total Assets Equity Assets Income Securities Portfolio Profit/(Loss) Profit/(Loss) Fair Value
1 185.448 129.647 135.578 2.817 -- 16.458 26.782 --
2 303.700 299.526 5.691 15.573 -- 5.483 11.811 --
3 11.541 11.095 8.393 135 -- (465) (172) --
(*)
Information on the financial statements is presented as of the period ended 30 September 2016.
(**)
Information on the financial statements is presented as of the period ended 31 December 2015.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 173

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

h. Investments in subsidiaries

1. Information on capital adequacies of major subsidiaries

Amounts at below prepared within the scope of regulation depended by Denizbank AG and they are obtained from financial datas
of 31 December 2016.

Denizbank AG
Paid-in capital 711.674
Share Premium 1.041.091
Reserves 2.505.232
Deductions from capital 1.832
Total Common Equity 4.256.165
Total Additional Tier I Capital --
Deductions from capital 7.328
Total Core Capital 4.248.837
Total Supplementary Capital 105.584
Capital 4.354.421
Deductions from capital --
SHAREHOLDERS EQUITY 4.354.421
2. Information on subsidiaries

The Parent Banks

Address The Banks share risk group share
Title (City/Country) percentage (%) percentage (%) (4)
1 ntertech Bilgi lem ve Pazarlama Ticaret A..(1) Istanbul/Turkey 100 --
2 Denizbank Kltr Sanat Yaynclk Ticaret ve Sanayi A.. (1) Istanbul/Turkey 100 --
3 Denizbank AG Vienna/Austria 100 --
4 Eurodeniz International Banking Unit Ltd. Nicosia / Cyprus 100 --
5 Deniz Yatrm Menkul Kymetler A.. Istanbul/Turkey 100 --
6 Ekspres Bilgi lem ve Ticaret A..(3) Istanbul/Turkey 71 29
7 JSC Denizbank Moskova Moscow / Russia 49 51
8 Deniz Portfy Ynetimi A.. Istanbul/Turkey -- 100
9 Deniz Finansal Kiralama A.. Istanbul/Turkey 49 51
10 Deniz Faktoring A.. Istanbul/Turkey 100 --
11 Deniz Gayrimenkul Yatrm Ortakl A.. (2) Istanbul/Turkey -- 91
12 CR Erdberg Eins GmbH & Co KG. (2) Istanbul/Turkey -- 100
(1)
It is not included in TAS 27 equity method implementation mentioned in Note I of Section Three.
(2)
They are included in TAS 27 equity method mentioned in Note I of Section Three although which are not the Banks direct subsidiaries.
(3)
The main activity area of Ekspres Menkul Deerler A.. has been changed on 10 August 2016 and its title has become Ekspres Bilgi lem ve
Ticaret A..
(4)
Presenting risk group of Banks share percentage.

Total Shareholders Total Fixed Interest Income on Current Period Prior Period Fair
Assets Equity Assets Income Securities Portfolio Profit/(Loss) Profit/(Loss) Value Total Assets
1 183.805 (3.192) 56.189 923 -- (9.055) 462 -- 183.805
2 1.350 1.317 -- -- -- 44 (9) -- 1.350
3 38.016.406 4.339.770 41.948 1.417.968 16.391 547.337 459.473 -- 38.016.406
4 596.336 24.528 78 21.078 -- 684 691 -- 596.336
5 195.802 167.604 2.486 5.228 249 14.026 (12.342) -- 195.802
6 17.017 15.600 2.206 863 -- 1.285 1.071 -- 17.017
7 869.245 237.711 3.335 43.824 4.701 27.440 28.893 -- 869.245
8 13.337 12.263 17 1.129 42 3.656 2.319 -- 13.337
9 2.983.510 631.198 121.760 214.584 -- 76.485 71.469 -- 2.983.510
10 1.288.260 190.745 2.224 162.669 -- 16.015 (36.638) -- 1.288.260
11 198.266 197.142 222 129 -- 12.327 10.285 -- 198.266
12 94.975 82.963 78.279 6 -- 2.111 1.827 -- 94.975
Information on the financial statements is presented as of the period ended 31 December 2016.
174 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

(i) Movement of subsidiaries

Current Period Prior Period

Balance at the Beginning of the Period 3.939.731 3.011.308
Movements during the Period 1.353.201 928.423
Purchases (*) -- 256.426
Bonus Shares Received -- --
Dividends from Current Year Profit (**) 699.372 471.774
Sales -- --
Revaluation Increase, Effect of Inflation and F/X Difference (***) 653.829 200.223
Allowance for impairment -- --
Balance at the End of the Period -- --
Capital Commitments 5.292.932 3.939.731
Share Percentage at the end of Period (%) -- --
(*)
On 4 September 2015, the Bank has increased Denizbank AGs capital by Euro 80 million.
(**)
As of 31 December 2016, there isnt divident income as a consequence of equity method implementation in accordance with TAS 27
mentioned in Note I of Section Three (31 December 2015: TL 55.836).
(***)
It consists of other reserves amounting to TL 605.562 as of 31 December 2016 (31 December 2015: TL 255.509) and valuation differences
of securities amounting to TL 48.267 as of 31 December 2016 (31 December 2015: TL (55.286)) as a consequence of equity method
implementation in accordance with TAS 27 mentioned in Note I of Section Three.

(ii) Sectorial information on the subsidiaries and the related carrying amounts

Current Period Prior Period

Banks 4.506.890 3.236.453
Insurance Companies -- --
Factoring Companies 190.745 174.730
Leasing Companies 309.287 271.816
Finance Companies -- --
Other Subsidiaries 286.010 256.732
Total 5.292.932 3.939.731
(iii) Quoted subsidiaries: None.

(iv) Subsidiaries disposed during the current period:

Shares of Destek Varlk Ynetim A.., owned at 100% ratio by Deniz Yatrm, Ekspres Bilgi lem, Deniz Finansal Kiralama,
Deniz Faktoring and Intertech, were sold to Lider Faktoring and Merkez Faktoring with a total consideration of TL 12.320 on 29
December 2016 in accordance with the Board of Directors decision of the Company dated 14 July 2016.

(v) Subsidiaries acquired during the current period: None.

i. Entities Under Common Control (Joint Ventures)

The Parent Banks The Groups share Current Non-Current Non-Current

Title share percentage (%) percentage (%) Assets Assets Liabilities Income Expenses
Banta Nakit ve Kymetli
Mal Tama ve Gvenlik
Hizmetleri A.. 33 33 22.003 26.970 5.466 100.511 (94.209)
Information on the unreviewed financial statements is presented as of the period ended 31 December 2016.
j. Information on receivables from leasing activities

None (31 December 2015: None).

k. Explanation on hedging purpose derivatives

None (31 December 2015: None).

DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 175

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

l. Information on tangible assets

Tangible Fixed Assets Other Tangible

Real Estate Retained With Leasing Vehicles Fixed Assets Total
Prior Period
Cost 45.217 219.327 1.486 756.832 1.022.862
Accumulated Depreciation (10.415) (160.602) (1.084) (449.733) (621.834)
Net Book Value 34.802 58.725 402 307.099 401.028
Current Period --
Net Book Value at the Beginning
of the Period 34.802 58.725 402 307.099 401.028
Differences During the Period (Net) 32.940 82 -- 103.045 136.067
Depreciation Cost (873) (16.280) (193) (85.747) (103.093)
Provision For Decrease In Value (3.719) -- -- -- (3.719)
FX Dfferences (Net) -- -- -- 1 1
Cost At the End of the Period 63.150 212.233 1.293 850.294 1.126.970
Accumulated Depreciation At the End of
the Period -- (169.706) (1.084) (525.895) (696.685)
Net Book Value At The End Of The Period 63.150 42.527 209 324.399 430.285
The Bank has passed to revaluation model from cost model in the framework of TAS 16 Intangible Fixed Assets in valuation
of properties in use which are tracjed under intangible fixed assets as of December 31, 2016 while it tracks all of its intangible
fixed assets in accordance with TAS 16 Intangible Fixed Assets. Positive differences between property value in expertise
reports prepared by licenced valuation firms and net carrying amount of the related property are tracked under equity accounts
while negative differences are tracled under income statement.

Revaluation difference amounting to TL 30.370 is recognized under equities as a result of revaluation process and impairment
provision made in previous periods for related properties amounting to TL (4.080) is cancelled and an impairment provision
amounting to TL (3.719) is made for related properties.

m. Information on intangible assets

Other Goodwill Total

Prior Period
Cost 489.367 869 490.236
Accumulated Depreciation (319.058) -- (319.058)
Net Book Value 170.309 869 171.178
Current Period --
Net Book Value at the Beginning
of the Period 170.309 869 171.178
Differences During the Period (Net) 105.386 -- 105.386
Depreciation Cost (87.802) -- (87.802)
Provision For Decrease In Value -- -- --
FX Dfferences (Net) -- -- --
Cost At the End of the Period 595.362 869 596.231
Accumulated Depreciation At the End of the Period (407.469) -- (407.469)
Net Book Value At The End Of The Period 187.893 869 188.762
n. Explanation on investment property

None (31 December 2015: None).

176 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

o. Information on deferred tax asset

Deferred tax asset is calculated on the basis of related regulation and these balances are the net of deductible and taxable
temporary differences calculated as of the balance sheet date.
The following table presents the deferred tax bases:
Current Period Prior Period
Unearned ncome 56.753 43.260
Miscellaneous Provisions Financial Loss 43.948 5.638
Valuation Differences of Financial Assets 21.068 18.670
Provision for Employee Benefits 18.696 --
Financial Loss (*) -- 69.714
Other -- 4.143
Deferred Tax Assets 140.465 141.425

Valuation Differences of Derivatives (25.616) (42.846)

Valuation Differences of Tangible Assets (13.640) (10.477)
Valuation Differences of Financial Assets -- (2.726)
Other (18.105) --
Deferred Tax Liabilities (57.361) (56.049)
Net Deferred Tax Assets 83.104 85.376
Fiscal loss essentially arises from the valuation of financial instruments in the calculation of corporate tax of the current period under the Tax
(*)

Procedures Law (TPL).

p. Explanation on property and equipment held for sale and related to discontinued operations
None (31 December 2015: None).
q. Information on other assets
1. Information on prepaid expense, taxes and similar items
The Banks total prepaid expenses are TL 293.306 (31 December 2015: TL 263.450).
2. Other assets do not exceed 10% of total assets excluding the off-balance sheet items.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 177

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

II. Explanations and disclosures related to liabilities

a. Information on deposits
1. Information on maturity structure of deposits
Current period - 31 December 2016:
Accumulated
7 Days Up to 1-3 3-6 6 Months- 1 Year Deposit
Demand Notice 1 Month Months Months 1 Year and Over Accounts Total
Saving Deposits 2.317.105 -- 2.352.764 15.059.997 699.472 152.910 252.209 26.694 20.861.151
Foreign Currency
Deposits (*) 5.814.353 -- 2.749.788 11.554.311 1.005.906 1.813.221 1.324.601 1.325 24.263.505
Residents in Turkey 5.525.624 -- 2.706.647 10.688.813 931.789 1.647.850 929.316 1.165 22.431.204
Residents Abroad 288.729 -- 43.141 865.498 74.117 165.371 395.285 160 1.832.301
Public Sector Deposits 486.443 -- 38.636 51.363 3.669 349 10.808 -- 591.268
Commercial Deposits 2.823.452 -- 2.188.047 5.212.021 706.498 152.886 154.242 -- 11.237.146
Other Ins. Deposits 102.245 -- 103.356 1.515.642 128.363 9.358 178.377 -- 2.037.341
Precious Metal
Deposits 265.351 -- 29.656 151.809 41.997 28.783 12.364 4.268 534.228
Bank Deposits 78.812 -- 2.215.792 1.003.351 260.680 1.767 105.887 -- 3.666.289
Central Bank -- -- -- -- -- -- -- -- --
Domestic Banks 2.712 -- 111.297 27.378 -- 1.767 -- -- 143.154
Foreign Banks 51.543 -- 2.104.495 975.973 260.680 -- 105.887 -- 3.498.578
Special Finan. Inst. 24.557 -- -- -- -- -- -- -- 24.557
Other -- -- -- -- -- -- -- -- --
Total 11.887.761 -- 9.678.039 34.548.494 2.846.585 2.159.274 2.038.488 32.287 63.190.928
(*)
Foreign Exchange Deposit Account consists of Saving Deposit customers at the amount of TL 11.500.075 and Commercial Deposit customers
at the amount of TL 12.763.430.

Prior period - 31 December 2015:

Accumulated
7 Days Up to 1-3 3-6 6 Months- 1 Year Deposit
Demand Notice 1 Month Months Months 1 Year and Over Accounts Total
Saving Deposits 1.603.758 -- 1.539.693 12.588.853 250.974 126.499 198.688 34.631 16.343.096
Foreign Currency
Deposits (*) 3.975.007 -- 2.693.442 9.496.538 1.121.513 858.764 932.895 1.477 19.079.636
Residents in Turkey 3.632.126 -- 2.645.771 9.012.894 1.055.969 670.674 657.700 1.290 17.676.424
Residents Abroad 342.881 -- 47.671 483.644 65.544 188.090 275.195 187 1.403.212
Public Sector Deposits 416.169 -- 46.680 48.266 1.899 13 411 -- 513.438
Commercial Deposits 2.167.352 -- 1.678.913 3.353.789 116.203 110.219 30.272 -- 7.456.748
Other Ins. Deposits 81.973 -- 92.902 1.028.700 169.986 910 11.862 -- 1.386.333
Precious Metal
Deposits 121.790 -- 24.210 136.557 11.513 31.379 9.578 2.702 337.729
Bank Deposits 90.540 -- 607.903 617.404 6.939 147.811 -- -- 1.470.597
Central Bank -- -- -- -- -- -- -- -- --
Domestic Banks 892 -- 104.601 35.637 -- 1.466 -- -- 142.596
Foreign Banks 76.987 -- 503.302 581.767 6.939 146.345 -- -- 1.315.340
Special Finan. Inst. 12.661 -- -- -- -- -- -- -- 12.661
Other -- -- -- -- -- -- -- -- --
Total 8.456.589 -- 6.683.743 27.270.107 1.679.027 1.275.595 1.183.706 38.810 46.587.577
(*)
Foreign Exchange Deposit Account consists of Saving Deposit customers at the amount of TL 9.846.585 and Commercial Deposit customers
at the amount of TL 9.233.051.
178 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

2. Information on deposit insurance

(i) Information on saving deposits insured by Saving Deposit Insurance Fund and the total amount of the deposits exceeding
the insurance coverage limit

Exceeding the Insurance Coverage

Saving Deposit Insurance Fund Limit
Current Period Prior Period Current Period Prior Period
Saving Deposits 10.732.125 7.838.510 10.067.622 8.447.404
Foreign Currency Saving Deposits 2.373.888 2.148.057 9.536.921 7.964.570
Other Saving Deposits -- -- -- --
Foreign Branches Deposits Under Foreign Insurance
Coverage -- -- -- --
Off-Shore Deposits Under Foreign Insurance Coverage -- -- -- --
Total 13.106.013 9.986.567 19.604.543 16.411.974

(ii) Saving deposits that are not under the guarantee of deposit insurance fund

Current Period Prior Period

Deposits and Other Accounts in Foreign Branches 162.530 75.346
Deposits and Other Accounts belong to Major Shareholders with Their Parents, Spouse and Children
under Their Wardship -- --
Deposits and Other Accounts belong to Members of Board of Directors, CEO and Deputy CEO with
Their Parents, Spouse and Children under Their Wardship 41.124 30.020
Deposits and Other Accounts linked to Crimes Mentioned in 282nd Article of 5237 Numbered Turkish
Penal Code dated on 26/09/2004 -- --
Deposits belong to Off-Shore Banks who are established in Turkey -- --
Total 203.654 105.366

(iii) Saving deposits in Turkey are not covered by any insurance in any other countries since the Banks headquarter is not
located abroad.
b. Information on trading purpose derivatives
1. Negative value of trading purpose derivatives

Current Period Prior Period

TL FC TL FC
Forward Transactions 40.372 21.537 3.424 29.821
Swap Transactions 513.248 279.494 328.486 193.753
Futures Transactions -- -- -- --
Options 7 86.530 -- 21.743
Other -- -- -- --
Total 553.627 387.561 331.910 245.317

c. Information on funds borrowed

1. Information on banks and other financial institutions

Current Period Prior Period

TL FC TL FC
Central Bank Loans -- -- -- --
Domestic Bank and Institutions 223.985 466.629 195.122 243.205
Foreign Bank, Institutions and Funds 620.246 9.439.737 -- 10.260.743
Total 844.231 9.906.366 195.122 10.503.948

2. Maturity information of funds borrowed

Current Period Prior Period

TL FC TL FC
Short-Term 317.028 3.547.375 195.122 5.411.001
Medium and Long-Term 527.203 6.358.991 -- 5.092.947
Total 844.231 9.906.366 195.122 10.503.948
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 179

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

3. Additional explanation on concentrations of the Banks liabilities

As at 31 December 2016, the Banks liabilities comprise; 61% deposits, 22% loans received, debts to money markets, issued
securities and subordinated loans (31 December 2015: 55%, 28%, respectively).

d. Information on securities issued

Current Period Prior Period

TL FC TL FC
Bonds -- -- 93.141 --
Bills 737.553 -- 609.746 --
Asset Backed Security 415.080 -- 556.311 --
Total 1.152.633 -- 1.259.198 --
Nominal value of TL 70.095 (31 December 2015: TL 188.439) of the securities issued were repurchased by the Bank and offset
in the financial statements.

e. If other liabilities line of the balance sheet exceeds 10% of the balance sheet total; excluding the off balance sheet
commitments; information on components making up at least 20% of the other liabilities

Other liabilities do not exceed 10% of the balance sheet total excluding the off-balance sheet items.

f. Information on lease payables (net)

Maturity of the leasing agreements are usually 4 years. Interest rate and the Banks cash flow are the criteria, taken into
consideration, on the lease contracts. There are no judgements which, exposed to significant liabilities to the Bank, on the lease
contracts.

Current Period Prior Period

Gross Net Gross Net
Less than a year 10.696 8.932 11.608 8.803
Between 1-4 years 10.227 9.561 20.790 18.431
More than 4 years -- -- -- --
Total 20.923 18.493 32.398 27.234
1. Changes in agreements and further commitments arising

None (31 December 2015: None).

2. Obligations under finance leases

None (31 December 2015: None).

3. Explanations on operational leases

The Bank has operational lease agreements for its bank branches, motor vehicles and ATM locations. Rental payments for the
majority of these agreements are made and expensed on a monthly basis. The unexpired portion of prepayments made for rent
agreements on a yearly basis are accounted for under prepaid expenses in other assets.

4. Explanation on Sell-and-lease back agreements

None (31 December 2015: None).

g. Information on liabilities arising from hedging purpose derivatives

None (31 December 2015: None).

180 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

h. Explanation on provisions

1. Information on general provisions

Current Period Prior Period

Provisions for Loans and Receivables in Group I 915.660 732.433
Additional Provision for Loans with Extended Maturities 71.838 31.355
Provisions for Loans and Receivables in Group II 258.866 170.305
Additional Provision for Loans with Extended Maturities 160.565 88.712
Provisions for Non Cash Loans 103.255 81.471
Other -- --
Total 1.277.781 984.209
Minimum provision rates for the general provision calculation are determined in Communique on Amendments made on Communiqu
Related to Principles and Procedures on Determining the Qualifications of Banks Loans and Other Receivables and the Provision for
These Loans and Other Receivables which is published at Official Gazette dated 14 December 2016 and numbered 29918 and the Bank
has made provisions over the aforementioned minimum provision rates as of 31 December 2016. General provision amount would be TL
868.000 less if the minimum provision rates, which are mentioned in the aforementioned Communique, were applied.

2. Provision for currency exchange gain/loss on foreign currency indexed loans

As of 31 December 2016 the reserves allocated for the exchange rate differences of loans indexed to foreign currency amount to
TL 128 (31 December 2015: TL 10.635). Provisions for exchange rate differences pertaining to loans indexed to foreign currency
are netted off against the credits and receivables under asset items in financial statements.

3. Liabilities on provision for employee benefits

TAS 19 required to using the actuarial methods for calculation of operating obligations.

Accordingly, the following actuarial assumptions were used in the calculation of the total reserve for employment termination benefits:

Current Period Prior Period

Discount rate %5,71 %5,71
nterest Rate %11,00 %11,00
Expected rate of salary/limit increase %5,00 %5,00
As of 31 December 2016, TL 77.610 of provision for employment termination benefits (31 December 2015: TL 64.150) and TL
27.732 of unused vacation accruals (31 December 2015: TL 29.202) were reflected to the financial statements.

Movement of retirement pays liability during the period:

Current Period Prior Period

Balance at the Beginning of the Period 64.150 59.697
Changes in the period 18.202 15.967
Actuarial loss/gain 8.388 (1.781)
Paid in the period (13.130) (9.733)
Balance at the End of the Period 77.610 64.150
4. Information on other provisions

(i) As of 31 December 2016, the free reserves allocated to potential risks amount to TL 197.829 (31 December 2015: TL
11.000), which includes other reserves set aside of credit portfolio.

(ii) Information on other provisions exceeding 10% of total provisions

TL 85.998 (31 December 2015: TL 65.998) of other provisions consists of provisions for non-cash loans that are not indemnified
and converted into cash, TL 19.125 (31 December 2015: TL 18.120) consists of provisions for lawsuits pending against Bank and
TL 8.198 (31 December 2015: TL 33.725) consists of other provisions.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 181

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

i. Information on taxation

1. Information on current taxes

(i) Information on current tax liability

As of 31 December 2016, the amount of the corporate tax provision of the Bank is TL 98.535 (31 December 2015: None), and
the prepaid tax amount is TL 165.625 (312 December 2015: None).

As of 31 December 2016, the Banks total tax and premium liabilities is TL 171.472 (31 December 2015: TL 148.289).

(ii) Information on taxes payable

Current Period Prior Period

Corporate taxes payable -- --
Taxation on securities 52.753 45.575
Capital gains taxes on property 1.992 1.779
Banking Insurance Transaction Tax (BITT) 48.973 41.422
Taxes on foreign exchange transactions -- --
Value added taxes payable 2.851 1.756
Other 46.688 41.048
Total 153.257 131.580
(iii) Information on premiums

Current Period Prior Period

Social security premiums- employee share 7.804 7.161
Social security premiums- employer share 8.785 8.054
Bank pension fund premium- employee share -- --
Bank pension fund premium- employer share -- --
Pension fund membership fees and provisions- employee share -- --
Pension fund membership fees and provisions- employer share -- --
Unemployment insurance- employee share 542 498
Unemployment insurance- employer share 1.084 996
Other -- --
Total 18.215 16.709
2. Information on deferred tax liabilities

The Bank has no deferred tax liability calculated on the basis of related regulation. Information on deferred taxes is disclosed in
Note o of explanations and disclosures related to assets.

j. Information on payables related to assets held for sale

None (31 December 2015: None).

k. Information on subordinated loans

Current Period Prior Period

TL FC TL FC
Domestic Banks -- -- -- --
Other Domestic Institutions -- -- -- --
Foreign Banks -- 5.483.501 -- 4.845.965
Other Foreign Institutions -- -- -- --
Total -- 5.483.501 -- 4.845.965
Information related to subordinated loans is given in Note I-b of Section Four.
182 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

l. Information on shareholders equity

1. Paid-in capital

Current Period Prior Period

Common Stock 3.316.100 1.816.100
Preferred Stock -- --
Paid-in capital of the Bank is shown as nominal above. Disclosure regarding capital increase is made in note numbered II--3 in Section Five.

2. Paid-in capital amount, explanation as to whether the registered share capital system is applied at the bank; if so the
amount of registered share capital

Registered paid-in capital system is not applied.

3. Information on share capital increases and their sources; other information on any increase in capital shares during the
current period

The Bank has increased its paid capital at a total amount of TL 1.500.000 on 28 June 2016 consisting of share premium of TL
39, subsidiary and associate shares and real estate sales income of TL 113.097 and extraordinary reserves of TL 636.864 and
cash reserve of TL 750.000.

Amount of Profit reserves Capital reserves

Date of Increase Increase Cash entreated in increase entreated in increase
28 June 2016 1.500.000 750.000 113.136 636.864
4. Information on share capital increases from revaluation funds

Bonus share real estate profit on sale

Securities Revaluation Increase in Value for of subsidiaries, associates and joint controlled
Growth Fund tangible and intangible fixed assets partnerships (joint ventures) Other
-- -- 113.097 --
5. Capital commitments in the last fiscal year and at the end of the following period, the general purpose of these
commitments and projected resources required to meet these commitments

The capital is totally paid in and there are no capital commitments.

6. Prior period indicators of the Banks income, profitability and liquidity; and possible effects of the predictions on equity,
considering uncertainty indicators

Balance sheets of the Bank is managed prudently, to minimize the negative effects of interest rate, foreign currency and credit
risks. This policy contributes to the progress of the Banks profitability with a steady increasing trend.

7. Information on the privileges given to stocks representing the capital

The Bank does not have any preferred stocks.

DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 183

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

8. Common stock issue premiums, shares and equity instruments

Current Period Prior Period

Number of Shares (*) 50.368.526 50.368.526
Preferred Stock -- --
Common Stock Issue Premium (**) 15 39
Common Stock Cancellation Profits -- --
Other Equity Instruments -- --
Total Common Stock Issued (*) 50.369 50.369
(*)
Related to the Banks paid-in capital increase on 27 September 2004. At that date, the paid-in capital was increased from TL 202.000 to TL
290.000; and TL 50.369 of this TL 88.000 increase was received in cash through issuance of new shares to the public.
(**)
The share price for the above mentioned public issuance was twothousandeighthundredandseventyfive Turkish Liras and a total issuance
premium of TL 94.441 was realized. The inflation restatement effect of TL 3.910 was also recognized over the original balance until December
2004. A total issuance premium of TL 60 was realized through the Banks paid-in capital increase amounting TL 400.000 on 28 August 2008.

Share premium at an amount of TL 94.501 and inflation adjustment differences of share premium at an amount of TL 3.910 has
been added to paid-in capital with the capital increase made by the Bank at the date of 14 October 2015.

A share premium at an amount of TL 15 has been occurred due to capital increase on 28 June 2016 at an amount of TL 1.500.000.

9. Securities Revaluation Reserve

Current Period Prior Period

TL FC TL FC
Associates, Subsidiaries and JVs -- -- -- --
Valuation Difference (445.696) (109.637) (521.167) 41.379
Total (445.696) (109.637) (521.167) 41.379
10. Information on hedging funds

Explanations about hedging funds are in Note XI of Section Four.

11. Information on minority shares

None (31 December 2015: None).

12. Information on revaluation differences of tangible assets

The Bank has passed to revaluation model from cost model in the framework of TAS 16 Intangible Fixed Assets in valuation of
properties in use which are tracjed under intangible fixed assets as of 31 December 2016 while it tracks all of its intangible fixed
assets in accordance with TAS 16 Intangible Fixed Assets. Revaluation difference amounting to TL 28.852 is recognized under
equities as a result of revaluation process.

TL 113.097 of TL122.518 included in revaluation differences of tangible fixed assets has been used in capital increase dated 28
June 2016. Disclosure on capital increase is made in note numbered II--3 in Fifth section.

TL 9.421 included in tangible fixed assets revaluation differences is income from real estate sales and transferred to related fund
account under shareholders equity (31 December 2015:TL (13.097)).
184 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

III. Explanations and disclosures related to off-balance sheet items

a. Information related to off-balance sheet commitments
1. Type and amount of irrevocable commitments
All of the Banks off-balance sheet loan commitments are in the nature of irrevocable commitments. As of 31 December 2016,
non-cash loans, commitments for credit card limits and commitments for cheque payments are TL 28.522.030, TL 12.764.645
and TL 2.111.130, respectively (31 December 2015: TL 24.274.875, TL 10.209.119 and TL 1.920.552, respectively). These items
are detailed in the off-balance sheet accounts.
2. Type and amount of possible losses from off-balance sheet items referred to below
(i) Guarantees, bills of exchange and acceptances and other letters of credit which can be considered as financial collateral
As of 31 December 2016, The Bank has letters of guarantee amounting to TL 21.636.270, bills of exchange and acceptances
amounting to TL 256.830, and guarantees and sureties on letters of credit amounting to TL 2.312.576 and other guarantees and
sureties amounting to TL 4.316.354.

As of 31 December 2015, The Bank has letters of guarantee amounting to TL 20.028.179, bills of exchange and acceptances
amounting to TL 194.319, and guarantees and sureties on letters of credit amounting to TL 2.284.049 and other guarantees and
sureties amounting to TL 1.768.328.
(ii) Final guarantees, provisional guarantees, sureties and similar transactions

Current Period Prior Period

Provisional Letters of Guarantee 912.008 903.725
Final Letters of Guarantee 14.268.946 13.535.613
Letters of Guarantee for Advances 2.874.152 2.938.430
Letters of Guarantee given to Customs Offices 169.797 184.924
Other Letters of Guarantee 3.411.367 2.465.487
Total 21.636.270 20.028.179
3. Information on non-cash loans

(i) Total amount of non-cash loans

Current Period Prior Period

Non-Cash Loans Given for Obtaining Cash Loans 7.727.341 4.232.981
With Original Maturity of 1 Year or Less 7.726.461 4.232.247
With Original Maturity of More Than 1 Year 880 734
Other Non-Cash Loans 20.794.689 20.041.894
Total 28.522.030 24.274.875
(ii) Sectorial risk concentrations of non-cash loans

Current Period Prior Period

TL % FC % TL % FC %
Agricultular 125.897 1,25 115.147 0,62 125.561 1,42 228.819 1,48
Farming and Cattle 124.881 1,24 113.637 0,62 124.382 1,40 228.819 1,48
Forestry 584 0,01 768 -- 893 0,02 --
Fishing 432 -- 742 -- 286 -- --
Manufacturing 2.217.779 21,98 8.384.204 45,48 2.021.443 22,82 5.267.961 34,17
Mining 325.222 3,22 277.022 1,50 229.451 2,59 126.342 0,82
Production 1.558.544 15,45 7.502.762 40,70 1.462.574 16,51 4.558.775 29,57
Electric, Gas, Water 334.013 3,31 604.420 3,28 329.418 3,72 582.844 3,78
Constuction 2.982.079 29,56 5.163.150 28,01 2.502.194 28,24 5.082.112 32,97
Services 3.350.033 33,20 3.244.097 17,59 3.140.789 35,45 3.207.427 20,81
Wholesale and Retail Trade 1.963.421 19,46 1.645.071 8,92 1.929.549 21,78 1.994.358 12,94
Hotel and Restaurant Services 250.429 2,48 345.654 1,88 223.470 2,52 238.031 1,54
Transportation and telecommunication 489.354 4,85 813.601 4,41 473.289 5,34 547.087 3,55
Financial institution 341.805 3,39 354.679 1,92 216.654 2,45 353.902 2,30
Real estate and letting services 21.577 0,21 3.998 0,02 30.106 0,34 1.984 0,01
Self-employement services -- -- -- -- -- -- --
Education services 38.997 0,39 11.688 0,06 37.715 0,43 13.870 0,09
Health and social services 244.450 2,42 69.406 0,38 230.006 2,59 58.195 0,38
Other 1.411.673 13,99 1.527.971 8,29 1.069.604 12,07 1.628.965 10,57
Total 10.087.461 99,98 18.434.569 99,99 8.859.591 100,00 15.415.284 100,00
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 185

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

(iii) Information about the first and second group of non-cash loans
I. Group II. Group
TL FC TL FC
Letters of Guarantee 9.890.287 11.353.162 185.468 207.355
Bank Aceptances 5.498 251.332 -- --
Letters of Credit 42 2.312.534 -- --
Endorsements -- -- -- --
Underwriting Commitments -- -- -- --
Faktoring Commitments -- -- -- --
Other Commitments and Contingencies 6.167 4.306.250 -- 3.937
Total 9.901.994 18.223.278 185.468 211.292
b. Information related to derivative financial instruments
Current Period Up to 1 moth 1-3 month 3-12 month 1-5 years More than 5 years Total
Hedging Purpose Derivative Transactions
A. Total Hedging Purpose Derivative Transactions -- -- -- -- -- --
Fair Value Hedge Transactions -- -- -- -- -- --
Cash Flow Hedge Transactions -- -- -- -- -- --
Net Foreign Inverstment Hedge Transactions -- -- -- -- -- --
Types of Trading Transactions -- -- -- -- --
Foreign Currency Related Derivative Transactions (I) 25.686.276 10.960.506 6.107.028 4.511.224 -- 47.265.034
Forward FC Call Transactions 2.015.918 916.013 687.902 -- -- 3.619.833
Forward FC Pull Transactions 2.005.424 927.659 689.440 -- -- 3.622.523
Swap FC Call Transactions 9.517.821 3.813.556 1.015.051 2.170.588 -- 16.517.016
Swap FC Pull Transactions 7.630.313 3.696.601 841.502 2.340.636 -- 14.509.052
Options FC Call Transactions 2.241.091 825.161 1.410.230 -- -- 4.476.482
Options FC Pull Transactions 2.275.709 781.516 1.462.903 -- -- 4.520.128
Futures FC Call Transactions -- -- -- -- -- --
Futures FC Pull Transactions -- -- -- -- -- --
Total of Interest Derivative Transactions (II) 21.114 1.073.356 2.535.872 9.416.476 14.362.932 27.409.750
Swap Interest Call Transactions 10.557 536.678 1.267.936 4.708.238 7.118.152 13.641.561
Swap Interest Pull Transactions 10.557 536.678 1.267.936 4.708.238 7.118.152 13.641.561
Options Interest Call Transactions -- -- -- -- 63.314 63.314
Options Interest Pull Transactions -- -- -- -- 63.314 63.314
Securities Interest Call Transactions -- -- -- -- -- --
Securities Interest Pull Transactions -- -- -- -- -- --
Futures Interest Call Transactions -- -- -- -- -- --
Futures Interest Pull Transactions -- -- -- -- -- --
Other Types of Trading Transactions (III) 1.556.043 34.940 169.418 332.334 -- 2.092.735
B. Total Types of Trading Transactions (I + II + III) 27.263.433 12.068.802 8.812.318 14.260.034 14.362.932 76.767.519

Total Derivatives Transactions (A+B) 27.263.433 12.068.802 8.812.318 14.260.034 14.362.932 76.767.519

186 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

Prior Period Up to 1 moth 1-3 month 3-12 month 1-5 years More than 5 years Total
Hedging Purpose Derivative Transactions
A. Total Hedging Purpose Derivative Transactions -- -- -- -- -- --
Fair Value Hedge Transactions -- -- -- -- -- --
Cash Flow Hedge Transactions -- -- -- -- -- --
Net Foreign Inverstment Hedge Transactions -- -- -- -- -- --
Types of Trading Transactions
Foreign Currency Related Derivative Transactions (I) 32.487.482 5.063.386 5.101.644 5.464.559 -- 48.117.071
Forward FC Call Transactions 1.326.285 557.706 888.006 25.934 -- 2.797.931
Forward FC Pull Transactions 1.325.174 559.422 904.922 26.802 -- 2.816.320
Swap FC Call Transactions 13.261.329 1.033.679 557.741 2.829.924 -- 17.682.673
Swap FC Pull Transactions 11.943.422 863.189 415.946 2.581.899 -- 15.804.456
Options FC Call Transactions 2.320.709 1.047.381 1.162.554 -- -- 4.530.644
Options FC Pull Transactions 2.310.563 1.002.009 1.172.475 -- -- 4.485.047
Futures FC Call Transactions -- -- -- -- -- --
Futures FC Pull Transactions -- -- -- -- -- --
Total of Interest Derivative Transactions (II) -- 6.963.425 3.131.178 16.690.116 10.130.592 36.915.311
Swap Interest Call Transactions -- 3.481.713 1.565.589 8.345.058 5.065.296 18.457.656
Swap Interest Pull Transactions -- 3.481.712 1.565.589 8.345.058 5.065.296 18.457.655
Options Interest Call Transactions -- -- -- -- -- --
Options Interest Pull Transactions -- -- -- -- -- --
Securities Interest Call Transactions -- -- -- -- -- --
Securities Interest Pull Transactions -- -- -- -- -- --
Futures Interest Call Transactions -- -- -- -- -- --
Futures Interest Pull Transactions -- -- -- -- -- --
Other Types of Trading Transactions (III) 1.350.690 -- -- -- -- 1.350.690
B. Total Types of Trading Transactions (I + II + III) 33.838.172 12.026.811 8.232.822 22.154.675 10.130.592 86.383.072

Total Derivatives Transactions (A+B) 33.838.172 12.026.811 8.232.822 22.154.675 10.130.592 86.383.072

c. Credit derivatives and risk exposures on credit derivatives

None.

d. Contingent assets and liabilities

A tax inspection for the years of 2010, 2011, 2012, 2013 and 2014 is carried out by Large Taxpayers Office of Turkish Tax
Inspection Board with respect to an inspection conducted debt collection fees. In tax inspection reports, tax and penalty
notifications, including a total amount of TL 55.745.

A tax inspection for the years of 2010, 2011, 2012, 2013 and 2014 is carried out by Large Taxpayers Office of Turkish Tax
Inspection Board regarding the examination of judgment and compensation fees with respect to Corporation Tax has been carried
out. In tax inspection reports, tax and penalty notifications, including a total amount of TL 952.

Tax investigation reports and tax penalty notifications for the years of 2009 and 2010 and tax investigation reports for 2011,
2012, 2013 and 2014 have been issued by Large Taxpayers Office of Turkish Tax Inspection Board as a result of examination
of derivative transactions with respect to Banking and Insurance Transaction Tax. In tax inspection reports, tax and penalty
notifications, including a total amount of TL 67.780.

The Bank has decided to benefit from favorable provisions of the Law on Restructuring of Certain Receivables numbered
6736 published on Official Gazette dated 19 August 2016 and numbered 29806 and related communique with respect to
abovementioned penalties and applied to respective tax office. In scope of aforementioned Law, as a result of restructuring of tax
and penalties, accrued amounts are paid in cash on 30 November 2016 for judgement cost of collection amounting to TL 12.924,
TL 199 for corporate tax and banking and insurance transaction tax amounting to TL 15.096.

Tax investigation report for 2010 has been issued by Large Taxpayers Office of Turkish Tax Inspection Board as a result of
examination of file cost collected from customers who use individual credits with respect to Resource Utilization Support Fund. In
tax inspection reports, an accrual slip including Resource Utilization Support Fund at an amount of TL 1.774 and delaying penalty
at an amount of TL 2.141 has been submitted on account of the fact that the Bank has not calculated Resource Utilization Support
Fund over file cost collected from customers who use individual credits. There is no provision made in financial statements since
the implementation of the Bank is in line with legislation taking into consideration that file costs should be included in non-interest
revenues rather than interest revenue in Uniform Chart of Account published by Banking Regulation and Supervision Agency. The
Bank has appealed to the court for the stay of execution. The defendant tax office has notified the Bank regarding payment orders
on 15 March 2016 since the aforementioned case has not been concluded. The Bank has paid a total amount of TL 3.957 to Large
Taxpayers Office with prejudice including a RUSF at an amount of TL 1.774, a penalty rate amounting to TL 2.141 and a late fee at
an amount of TL 42 on 21 March 2016 and has applied to Istanbul Tax Court for the stay of execution and cancellation of payment
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 187

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

orders on 22 March 2016. As a result of examination of filing expenditure collected from customers who are provided individual
credits by Tax Inspection Board - Istanbul Large Taxpayers Directorate with respect to Resource Utilization Support Fund (RUSF), a
tax investigation report is issued for 2011. Accrual slips including RUSF amount of TL 2,182 and penalty rate amount of TL 2.911 is
notified for 2011 in tax investigation report since the Bank did not calculate RUSF over filing expenditure collected from customers
who are provided individual credits. No provisions are made in financial statements since it is concluded that implementation of
Bank are compliant to legislation considering decisions regarding repayment of file expenditures in court decisions due to not
being accepted as interest in Uniform Chart of Accounts published by BRSA. The Bank has filed a claim in order for suspension of
execution to Istanbul Administrative Court on 16 January 2017. It is decided to suspend execution on 19 January 2017.

Based on the principle of conservatism the Bank made a provision amounting to TL 14.025 (31 December 2015: TL 18.120) for
lawsuits pending against itself; which are classified in Other provisions item at the balance sheet. Other ongoing lawsuits which
have not any provision are unlikely to occur and for which cash outflow is not expected to incur.

e. Activities carried out on behalf and account of other persons

The Bank provides trading, custody, management and consultancy services to its customers.

IV. Explanations and disclosures related to statement of income

a. Interest income

1. Information on interest income received from loans

Current Period Prior Period

TL FC TL FC
Short Term Loans 2.384.305 79.303 2.079.048 70.429
Medium and Long Term Loans 4.164.666 541.188 3.120.805 478.463
Loans Under Follow-Up 44.456 -- 42.429 --
Premiums Received from Resource Utilization Support Fund -- -- -- --
Total 6.593.427 620.491 5.242.282 548.892
Interest income received from loans also includes fees and commissions from cash loans granted.

2. Information on interest income received from banks

Current Period Prior Period

TL FC TL FC
Central Bank of the Republic of Turkey 2 602 -- 150
Domestic Banks 1.511 2.504 5.240 895
Foreign Banks 59 3.381 864 3.552
Foreign Head Offices and Branches -- -- -- --
Total 1.572 6.487 6.104 4.597
The interest income from required reserves that maintain in CBRT of the Bank amounting to 56.689 (1 January-31 December
2015: 24.288) recognized under Interest Income Received From Required Reserves account.

3. Information on interest income received from securities portfolio

Current Period Prior Period

TL FC TL FC
Trading Securities 3.490 321 7.801 380
Financial Assets at Fair Value Through Profit or Loss -- -- -- --
Investment Securities Available-for-Sale 581.559 81.048 570.637 46.215
Investment Securities Held-to-Maturity 289.607 30.037 277.678 20.417
Total 874.656 111.406 856.116 67.012
4. Information on interest income received from associates and subsidiaries

Current Period Prior Period

Interest Received from Associates and Subsidiaries 28.618 10.479
188 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

b. Interest expense

1. Information on interest expense related to funds borrowed

Current Period Prior Period

TL FC TL FC
Banks 49.545 528.741 28.095 447.734
Central Bank of the Republic of Turkey 52 -- 49 --
Domestic Banks 13.392 6.951 14.110 3.731
Foreign Banks 36.101 521.790 13.936 444.003
Foreign Head Offices and Branches -- -- -- --
Other Institutions -- -- -- --
Total 49.545 528.741 28.095 447.734
Interest expense related to funds borrowed also includes fees and commission expenses.

2. Information on interest expense paid to associates and subsidiaries

Current Period Prior Period

Interest Paid to Associates and Subsidiaries 24.725 27.086
3. Information on interest expense paid to securities issued

Current Period Prior Period

Interest Paid to Securities Issued 111.063 139.479
4. Maturity structure of the interest expense on deposits

Time Deposit
Demand Up to 1 Up to 3 Up to 6 Up to More than Cumulative
Account Name Deposits Month Month Month 1 Year 1 Year Deposit Total
TL
Bank Deposits 17 32.488 -- -- -- -- -- 32.505
Saving Deposits 45 200.802 1.533.346 43.076 14.018 25.012 2.372 1.818.671
Public Sector Deposits -- 2.357 5.390 702 14 96 -- 8.559
Commercial Deposits 1 211.262 494.701 45.306 9.506 6.776 -- 767.552
Other Deposits 1 11.551 158.925 39.216 5.429 2.340 -- 217.462
7 Days Notice Deposits -- -- -- -- -- -- -- --
Total 64 458.460 2.192.362 128.300 28.967 34.224 2.372 2.844.749
FC
Foreign Currency Deposits 2 51.760 230.721 18.238 20.635 22.668 14 344.038
Bank Deposits 644 9.165 -- -- -- -- -- 9.809
7 Days Notice Deposits -- -- -- -- -- -- -- --
Precious Metal Deposits 3 9.550 3.118 354 797 251 53 14.126
Total 649 70.475 233.839 18.592 21.432 22.919 67 367.973
Grand Total 713 528.935 2.426.201 146.892 50.399 57.143 2.439 3.212.722
c. Dividend income

Current Period Prior Period

Trading Securities -- --
Financial Assets at Fair Value Through Profit or Loss -- --
Investment Securities Available-For-Sale -- --
Other(*) 58 1.567
Total 58 1.567
(*)
Presents dividend income from unconsolidated subsidiaries and associates.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 189

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

d. Information on trading income / loss

Current Period Prior Period

Income 228.225.865 256.727.428
Capital Market Transactions 41.851 43.692
Derivative Financial Instruments 5.426.408 6.619.983
Foreign Exchange Gains 222.757.606 250.063.753
Loss (-) 228.741.834 257.465.503
Capital Market Transactions 47.912 22.684
Derivative Financial Instruments 5.123.867 5.530.275
Foreign Exchange Losses 223.570.055 251.912.544
Net Trading Income / Loss (515.969) (738.075)
Net gain from foreign exchange translation differences related to derivative financial instruments is TL 265.964 (net gain for the
period 1 January - 31 December 2015: TL 1.065.761).

e. Information on other operating income

Current Period Prior Period

Reversal of prior periods provisions 296.356 277.428
Sale revenue for Real estate properties 13.262 38.748
Communication income 10.957 12.423
Cheque book fees 3.743 4.150
Other 241.984 140.080
Total 566.302 472.829
Other operating income item consists of revenue obtained as a result of sales made from follow-up portfolio and collections
made from receivables for which a provision has been made in previous periods. Additionally, income amounting to TL 120.672
related to cash portion as a result of the transfer of Visa Europe Ltd., to Visa Inc., in which the Bank has a share in its capital, is
recognized in financial statements.

f. Impairment on loans and other receivables

Current Period Prior Period

Specific Provisions on Loans and Other Receivables 1.183.916 958.000
Loans and Receivables in Group III 65.053 65.389
Loans and Receivables in Group IV 313.688 254.078
Loans and Receivables in Group V 805.175 638.533
Non-performing Commissions and Other Receivables -- --
General Loan Loss Provisions 293.572 163.628
Free Provision for Probable Risks 189.829 3.000
Impairment Losses on Securities 30.154 26.058
Financial Assets at Fair Value Through Profit or Loss 228 1.025
Investment Securities Available-for-Sale 29.926 25.033
Impairment Losses on Associates, Subsidiaries, Joint Ventures and Investment
Securities Held to Maturity 2.969 2.373
Associates -- --
Subsidiaries -- --
Joint Ventures -- --
Investment Securities Held-to-Maturity 2.969 2.373
Other 44.327 64.517
Total 1.744.767 1.217.576
190 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

g. Information related to other operational expenses

Current Period Prior Period

Personnel Expenses 1.185.090 1.097.381
Reserve for Employee Termination Benefits 5.072 6.234
Reserve for Banks Social Aid Fund Deficit -- --
Impairment Losses on Tangible Assets 3.719 --
Depreciation Charges of Tangible Assets 103.093 105.916
Impairment Losses on Intangible Assets -- --
Amortization Charges of Intangible Assets 87.802 77.797
Impairment Losses on Investment Accounted for under Equity Method -- --
Impairment of Assets to be Disposed -- --
Depreciation of Assets to be Disposed 2.576 1.629
Impairment of Assets Held for Sale -- --
Other Operating Expenses 899.719 784.637
Operational Leases Expenses 234.755 239.095
Repair and Maintenance Expenses 59.774 48.475
Advertisement Expenses 78.255 66.445
Other Expenses (*) 526.935 430.622
Losses on Sale of Assets 4.364 7.818
Other 307.630 287.574
Total 2.599.065 2.368.986
Other expenses in other operational expenses comprise; communication expenses, IT repair and maintenance and software fees, stationery,
(*)

heating and lighting, transportation, credit card service fee, entertainment and representation and others amounting to TL 73.719, TL 62.570,
TL 20.323, TL 23.934, TL 22.013, TL 113.765, TL 7.641 and TL 202.970, respectively (1 January - 31 December 2015: 72.873, TL 55.891, TL
18.033, TL 23.061, TL 21.031, TL 95.597, TL 7.620 and TL 136.516, respectively).

h. Information on profit / loss before tax from continuing operations

As 1 January - 31 December 2016, The Bank has a profit before tax from continuing operations amounting to TL 1.647.654 (1
January-31 December 2015: TL 871.675).
As 1 January - 31 December 2016, The Bank has no profit from discontinuous operations (1 January-31 December 2015: None).
i. Information on tax provision for continued and discontinued operations
1. Current period taxation benefit or charge and deferred tax benefit or charge
As 1 January-31 December 2016 the current period taxation charge on continuing operations is TL 98.535 (1 January-31 December
2015: None) while deferred tax charge is TL 139.838 (1 January-31 December 2015: TL 109.030 deferred tax benefit).
There are not current period taxation charge on discontinuing operations (1 January-31 December 2015: None).
2. Deferred tax benefit / (charge) arising from origination or reversal of temporary differences

Deferred tax benefit/charge arising from temporary differences Current Period Prior Period
Arising from Origination of Deductible Temporary Differences (+) 82.905 87.149
Arising from Reversal of Deductible Temporary Differences (-) (195.483) (233.663)
Arising from Origination of Taxable Temporary Differences (-) (27.883) (1.697)
Arising from Reversal of Taxable Temporary Differences (+) 623 39.181
Total (139.838) (109.030)
3. Deferred tax benefit / (charge) arising from temporary differences, tax losses or unused tax credits

Sources of deferred tax benefit/charge Current Period Prior Period

Arising from Origination (+)/ Reversal (-) of Deductible Temporary Differences (42.864) (216.228)
Arising from Origination (-)/ Reversal (+) of Taxable Temporary Differences (27.260) 37.484
Arising from Origination (+)/ Reversal (-) of Tax Losses (69.714) 69.714
Arising from Origination (+)/ Reversal (-) of Unused Tax Credits -- --
Total (139.838) (109.030)
j. Information on continuing and discontinued operations net profit/loss
The Bank has a net profit is amounting to TL 1.409.281 (31 December 2015: TL 762.645).
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 191

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

k. Information on net profit and loss

1. The nature and amount of certain income and expense items from ordinary operations is disclosed if the disclosure for nature,
amount and repetition rate of such items is required for the complete understanding of the Banks performance for the period
Income generated from Banks ordinary banking transactions during the current and prior period are mainly consisted of interest
income from loans and marketable securities and income from other banking services. Main expense items are the interest
expenses related to deposits and borrowings which are the main funding sources of marketable securities and loans.
2. No changes have been made in the accounting estimates which may have a material effect in the current period and materially
affect subsequent periods.
3. The Bank recognized its associates, in which it has direct or indirect shares, according to equity method in accordance with
TAS 27 Separate Financial Statements, having a permission to be applied earlier, while preparing its non-consolidated financial
tables dated 31 December 2016.
4. The Bank applies net investment accounting hedge as of 1 July 2015 in order to ensure exchange difference hedge sourcing
from equity method implementation for its net investment at a total amount of Euro 1.006 million and US Dollar 6,7 million
belonging to Denizbank AG and Eurodeniz, which are subsidiaries of the Bank. A part of foreign currency deposits at same
amounts is defined as hedging instrument and the part, in which the value change sourcing from foreign currency exchange rates
is effective, is recognized in hedge funds under shareholders equity.
l. If other lines of the income statement exceeds 10% of the period profit/loss, information on components making up at
least 20% of other items

Other Fees and Commissions Received Current Period Prior Period

Credit card clearing and other commissions 608.493 508.952
Contracted merchant / POS commissions 258.470 231.790
Insurance services 155.450 112.990
Filing fees 142.490 102.268
Account management fees 56.528 82.480
Remittance commissions 32.398 30.311
Intermediary services 17.393 26.178
Expertise fees 16.767 14.604
Other 127.106 137.355
Total 1.415.095 1.246.928
Other Fees and Commissions Paid Current Period Prior Period
Credit card / POS commissions 305.524 261.785
EFT fees and commissions 10.163 8.888
Other 84.073 74.084
Total 399.760 344.757
V. Explanations and disclosures related to statement of changes in shareholders equity
a. Information on capital increase
At the date of 28 June 2016, the Bank has increased its paid-in capital at an amount of TL 1.500.000 in total through share
premiums at an amount of TL 39, inflation adjustment differences of paid-in capital at an amount of TL 113.097, shares of
subsidiaries and associates and return on sales at an amount of TL 636.864 and cash reserves at an amount of TL 750.000.
b. Information on issuance of shares
Share premium, at an amount of TL 39, has added to paid capital with the capital increase made by the Bank on 28 June 2016.
A premium of issued shares amounting to TL 15 formed as a result of capital increase of TL 1.500.000 made on 28 June 2016.
192 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

c. Adjustments made in accordance with TAS 8

Communique on TAS 27 Separate Financial Statements standard, which is in force in order to be applied for accounting periods
after 31 December 2012 via Public Oversight Accounting and Auditing Standards Authority (POA) website and published in
Official Gazette dated 28 October 2011 and numbered 28098, has entered into force through making amendments to be applied
for accounting periods after 1 January 2016 with Communique on amending the Communique on TAS 27 Separate Financial
Statements (Communique) published in Official Gazette dated 9 April 2015 and numbered 29321.
The Bank adjusted its comparative financial statements of 31 December 2013 and 2014 through making rearrangements with
respect to amendments in TAS 27 Separate Financial Statements Standard.
d. Effects of changes in Subsidiary Equity on Banks Equity
Financial associates are recognized according to equity method in the framework of TAS 28 Communique on Investments in
Subsidiaries and Associates with respect to TAS 27 Separate Financial Statements Communique in non-consolidated financial
statements. Associates, which were recognized with cost value in the non-consolidated financial statement previously along with
the 2nd quarter of 2015, are recognized according to equity method as of 1 January 2013.
Equity method is the recognition treatment which prescribes to increase or decrease the book value of share included in
associate from the change amount occurring in the period in the equity of participated partnership as the share falling to
participant and deduction of dividends and associate amounts from the value which is changed in the aforementioned manner.
In this scope, the parts falling to Banks share from equity of participated associates, gain or loss and other comprehensive
income are recognized under equity of the Bank, income statement of the Bank and other comprehensive income statement of the
Bank respectively.
e. Information on distribution of profit
General Assembly of the Bank is authorized body for the profit appropriation decisions. As of the preparation date of these
financial statements, annual ordinary meeting of the General Assembly has not been held yet.
f. Information on increase/decrease amounts resulting from merger
None.
g. Information on investments available-for-sale
Unrealised gain/loss arising from changes in the fair value of securities classified as availablefor-sale are not recognized in
current year income statement but recognized in the Marketable securities valuation differences account under equity, until the
financial assets are derecognised, sold, disposed or impaired.
h. Hedging transactions
Explained in Information on hedging transations in Note XI of Section Four.
i. Revaluation difference on tangible assets
Revaluation differences on tangible assets includes gains on sales of subsidiaries and gains on sales of real estates and explained
in detail in Note II-l-12 of Section Five.
j. Information on to foreign exchange difference
TL 36.673 (31 December 2015: TL 31.817), consisting of conversion of Bahrain Branchs financial statements into TL in
accordance with TAS 21, and TL 749.218, (31 December 2015: TL 143.656) sourcing from recognizing Denizbank AG, JSC
Denizbank and Eurodeniz, which are foreign currency associates of the Bank, with equity method, are recorded under other
reserves account.
Explained in detail in Information on to foreign exchange difference in Note II-b of Section Three.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 193

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

k. Amounts transferred to legal reserves

The Bank transferred TL 715.091 (31 December 2015: TL 496.723) to extraordinary reserves from prior period profits in 2016.
TL 38.132 (31 December 2015: None) amount transferred to legal reserves.
VI. Explanations and disclosures related to cash flow statement
a. Information on cash and cash equivalents
Components of cash and cash equivalents and the accounting policy applied in their determination:
Cash and foreign currency together with demand deposits at banks including the CBRT are defined as Cash; interbank money
market and time deposits in banks with original maturities less than three months are defined as Cash equivalents.
1. Cash and cash equivalents at the beginning of the period

Current Period Prior Period

01.01.2016 01.01.2015
Cash 2.066.403 1.545.002
Cash in Vault, foreign currencies and other 1.352.186 1.195.145
Banks demand deposits 714.217 349.857
Cash and Cash Equivalent 4.324.730 2.396.348
Interbank Money market placements 1.200.353 970.298
Banks time deposits 2.809.634 1.180.541
Securities 314.743 245.509
Total Cash and Cash Equivalents 6.391.133 3.941.350
2. Cash and cash equivalents at the end of the period

Current Period Prior Period

31.12.2016 31.12.2015
Cash 2.073.608 2.066.403
Cash in Vault, foreign currencies and other 1.754.183 1.352.186
Banks demand deposits 319.425 714.217
Cash and Cash Equivalent 9.910.140 4.324.730
Interbank Money market placements 3.001.396 1.200.353
Banks time deposits 6.812.558 2.809.634
Securities 96.186 314.743
Total Cash and Cash Equivalents 11.983.748 6.391.133
b. Information on cash and cash equivalent assets of the Bank that are not available for free use due to legal restrictions or
other reasons
The Bank made a total provision for required reserves on CB of Turkey in amount of TL 13.006.739 (31 December 2015: TL
9.406.456). Additionally, there is TL 2.058.995 (31 December 2015: TL 12.180) limited amount in foreign banks account.
c. Disclosures for other items in the statement of cash flows and effect of changes in foreign currency exchange rates on
cash and cash equivalents
Other item amounting to TL (4.107.409) (31 December 2015: TL (3.531.804)) before changes in operating assets and
liabilities comprise other operating expenses, fees and commissions paid and net trading loss. As a result of these changes
in the cash flow statement, the balance of cash and cash equivalents has changed from TL 6.391.133 (31 December 2015: TL
4.097.176) to TL 11.938.748 in 2016 (31 December 2015: TL 6.546.959).
Other liabilities item included in change in assets and liabilities arising from banking activities, amounting to TL (1.403.412)
(31 December 2015: TL 4.925.211) comprise changes in payables to money market, sundry creditors, taxes and duties payable,
and other external resources.
The impact of change in exchange rate on cash and cash equivalent assets consists of exchange difference occurring as a result
of translation of foreign currency cash and cash equivalent assets average to TL with rates belonging to beginning and end of
the period and it amounts to TL 858.680 as of 31 December 2016 (31 December 2015: TL 491.429).
194 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

VII. Explanations and disclosures related to the Banks risk group

a. Information on loans and other receivables to the Banks risk group
Current Period
Associates, Subsidiaries Banks Direct and Indirect Other Real Persons and
and Joint-Ventures Shareholder Legal Entities in Risk Group
DFS Groups Risk Group (*) Cash Non-Cash Cash Non-Cash Cash Non-Cash
Loans and Other Receivables
Balance at the Beginning of the Period 250.214 252.052 2.299 19.970 58.047 701
Balance at the End of the Period 2.661.889 188.357 5.448 7.721 56 4
Interest and Commission Income
Received 50.467 629 212 8 5.046 8
(*)
As described in the Article 49 of Banking Law no.5411.

Prior Period
Associates, Subsidiaries and Banks Direct and Indirect Other Real Persons and Legal
Joint-Ventures Shareholder Entities in Risk Group
DFS Groups Risk Group (*) Cash Non-Cash Cash Non-Cash Cash Non-Cash
Loans and Other Receivables
Balance at the Beginning of the Period 275.941 124.564 18.175 59.102 94 25
Balance at the End of the Period 250.214 252.052 2.299 19.970 58.047 701
Interest and Commission Income Received 43.982 800 308 81 3.678 1
(*)
As described in the Article 49 of Banking Law no.5411.

b. Information on deposits held by and funds borrowed from the Banks risk group
Associates, Subsidiaries and Banks Direct and Indirect Other Real Persons and
Joint-Ventures Shareholder (**) Legal Entities in Risk Group
DFS Groups Risk Group (*) Current Period Prior Period Current Period Prior Period Current Period Prior Period
Balance at the Beginning of the Period 466.304 631.467 6.257.056 3.878.370 8.962 16.245
Balance at the End of the Period 2.580.369 466.304 6.607.506 6.257.056 9.448 8.962
Interest and Commission Income Received 29.621 32.999 324.071 266.165 4.067 4.890
(*)
As described in the Article 49 of Banking Law no.5411.
(**)
Includes the subordinated loan of US Dollar 1.050 million and Euro 115 million received from Sberbank.

c. Information on forward and option agreements and similar agreements made with the Banks risk group
Associates, Subsidiaries and Banks Direct and Indirect Other Real Persons and Legal
Joint-Ventures Shareholder Entities in Risk Group
DFS Groups Risk Group (*) Current Period Prior Period Current Period Prior Period Current Period Prior Period
Transactions for Trading Purposes:
Balance at the Beginning of the Period 14.029.161 9.104.630 -- 54.565 6.368 5.654
Balance at the End of the Period 9.209.555 14.029.161 -- -- -- 6.368
Total Income/(Loss) (62.528) (87.891) (5.989) (12.712) (388) (156)
Transactions for Hedging Purposes:
Balance at the Beginning of the Period -- -- -- -- -- --
Balance at the End of the Period -- -- -- -- -- --
Total Income/(Loss) -- -- -- -- -- --
(*)
As described in the Article 49 of Banking Law no.5411.

d. Information on benefit provided to Executives

The Bank makes payment amounting to TL 71.893 (31 December 2015: TL 63.462) to its Executives as of 31 December 2016.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 195

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

e. Information on transactions with the Banks risk group

As of 31 December 2016, cash loans and other receivables of the risk group represent 4,1% of the Banks total cash loans and
bank deposits granted, the deposits and borrowings represent 11,6% of the Banks total deposits and borrowings. Non-cash
loans granted to risk group companies represent 0,7% of the total balance.
The Bank has finance lease contracts with Deniz Leasing. As of 31 December 2016, The Banks contractual finance lease payables
are TL 18.493 (31 December 2015: TL 27.234). Also, the Bank gives brokerage services through its branches for Deniz Yatrm.

VIII. Domestic, foreign and off-shore banking branches and foreign representatives of the Bank

a. Information relating to the Banks domestic and foreign branch and representatives
Number Number of Employees
Domestic branch 693 12.932
Country of Incorporations
Foreign representation - - -
Statutory
Total Assets Share Capital
Foreign branch - - - - -
Off shore banking region branches 1 6 1-Bahreyn 7.016.474 -

b. Explanations on the Banks branch and agency openings or closings

The Bank opened 27 new branches closed 25 branches in 2016.

196 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

SECTION SIX

OTHER DISCLOSURES AND FOOTNOTES

I. Other explanations related to the Banks operations

a. Explanations related to the Banks operations

None.

b. Summary information about ratings of the Banks which has been assigned by the international rating agencies

Moodys* Fitch Ratings**

Outlook On Watch Outlook Stable
Long Term Foreign Currency Deposits Ba2(On Watch for the possible decrease) Long Term Foreign Currency BB+
Short Term Foreign Currency Deposits Not Prime Short Term Foreign Currency B
Long Term Local Currency Deposits Ba2 (On Watch for the possible decrease) Long Term Local Currency BB+
Short Term Local Currency Deposits Not Prime Short Term Local Currency B
Bank Financial Strenght Rating (BCA) ba3 (On Watch for the possible decrease) Viability bb+
Support 3
National AA (tur)

*As of 20.07.2016 **As of 18.03.2016

c. Subsequent events
None.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 197

DENZBANK ANONM RKET

NOTES TO UNCONSOLIDATED FINANCIAL STATEMENTS Convenience Translation of
Unconsolidated Financial Report
AS OF 31 DECEMBER 2016 Originally Issued in Turkish,
(Currency: Thousands of TL - Turkish Lira) See Note 3.I.c

SECTION SEVEN

INDEPENDENT AUDITORS REPORT

I. Information on the independent auditors report
The Banks unconsolidated financial statements and footnotes have been reviewed by Gney Bamsz Denetim ve Serbest
Muhasebeci Mali Mavirlik A.. (Member Firm of Ernst&Young Global Limited) and the independent auditors report dated 23
February 2017 is presented in front of the unconsolidated financial statements.

II. Disclosures and footnotes prepared by independent auditor

There are no significant issues and required disclosures and footnotes related to the Banks operations, deemed as necessary,
which have not been explained in the sections above.
 (Convenience Translation of the Independent Auditors Report

Originally Prepared and Issued in Turkish See Note 3.I.c)

INDEPENDENT AUDITORS REPORT,

CONSOLIDATED FINANCIAL STATEMENTS
AND NOTES ENDED 31 DECEMBER 2016
200 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 201

DENZBANK ANONM RKET

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2016
(Currency: Thousands of TL - Turkish Lira)

I. INDEPENDENT AUDITOR REPORT

II. PUBLICLY DISCLOSED CONSOLIDATED FINANCIAL REPORT
202 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

(Convenience translation of the independent auditors report originally issued in Turkish, See Note I.c of Section Three)

Independent Auditor Report

To the Board of Directors of Denizbank A..

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Denizbank A.. (the Bank) and its consolidated subsidiaries
(together will be referred as the Group) as at 31 December 2016 and the related consolidated income statement, consolidated
statement of income and expense items accounted under shareholders equity, consolidated statement of cash flows and
consolidated statement of changes in shareholders equity for the year then ended and a summary of significant accounting
policies and other explanatory notes to the financial statements.

Responsibility of the Banks Board of Directors for the financial statements

Bank management is responsible for the preparation and fair presentation of the consolidated financial statement in accordance
with Regulation on Accounting Applications for Banks and Safeguarding of Documents published in the Official Gazette
no.26333 dated 1 November 2006 and other regulations on accounting records of Banks published by Banking Regulation
and Supervision Agency (BRSA), circulars, interpretations published by BRSA and BRSA Accounting and Financial Reporting
Legislation which includes the provisions of Turkish Accounting Standards for the matters which are not regulated by these
regulation and for such internal control as management determines is necessary to enable the preparation of the financial
statement that is free from material misstatement, whether due to fraud or error.

Independent Auditors responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our
audit in accordance with communique Independent Audit of Banks published by BRSA on the Official Gazette No.29314 dated
2 April 2015 and with the Independent Auditing Standards which is a part of Turkish Auditing Standards promulgated by the
Public Oversight Accounting and Auditing Standards Authority (POA). Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of
material misstatement.

An independent audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the independent auditors professional judgment,
including the assessment of risks of material misstatement of the consolidated financial statements, whether due to fraud or
error. In making those risk assessments, the independent auditor considers the internal control relevant to banks preparation
and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the banks internal control. An
independent audit also includes evaluating the appropriateness of accounting policies used by the reasonableness of accounting
estimates made by the management as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion the accompanying consolidated financial statements presents fairly, in all material respects, the financial position
of Denizbank A.. and its subsidiaries as at 31 December 2016 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 in accordance with BRSA Accounting
and Financial Reporting Legislation.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 203

DENZBANK ANONM RKET

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2016
(Currency: Thousands of TL - Turkish Lira)

Reports on arising from other regulatory requirements:

In accordance with Article 402 paragraph 4 of the Turkish Commercial Code (TCC) no 6102; no significant matter has come to
our attention that causes us to believe that the Banks bookkeeping activities for the period 1 January 31 December 2016 are
not in compliance with the code and provisions of the Banks articles of association in relation to financial reporting.

In accordance with Article 402 paragraph 4 of the TCC; the Board of Directors submitted to us the necessary explanations and
provided required documents within the context of audit.

Additional paragraph for convenience translation to English:

As explained in detail in Note I.c of Section Three, accounting principles and standards set out by regulations in conformity
with BRSA Accounting and Financial Reporting Legislation, accounting principles generally accepted in countries in which the
accompanying consolidated financial statements are to be distributed and International Financial Reporting Standards (IFRS)
have not been quantified in the accompanying consolidated financial statements. Accordingly, the accompanying consolidated
financial statements are not intended to present the financial position, results of operations and changes in financial position and
cash flows in accordance with the accounting principles generally accepted in such countries and IFRS.

Gney Bamsz Denetim ve Serbest Muhasebeci Mali Mavirlik Anonim irketi

A member firm of Ernst & Young Global Limited

Fatma Ebru Ycel, SMMM

Partner

Istanbul, Turkey
23 February 2017
204 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK A.. CONSOLIDATED FINANCIAL

REPORT AS OF 31 DECEMBER 2016
Address of the Banks Headquarters
Bykdere Caddesi No:141
34394 ESENTEPE/STANBUL

Telephone and Fax Numbers

Tel : 0.212.348 20 00
Fax: 0.212.336 61 86

Website of the Bank

www.denizbank.com

E-mail address of the Bank

[email protected]

The consolidated financial report package prepared in accordance with the statement Financial Statements and Related Disclosures and
Footnotes to be Announced to Public as required by the Banking Regulation and Supervision Agency (BRSA), is comprised of the following
sections.

GENERAL INFORMATION ABOUT THE PARENT BANK

CONSOLIDATED FINANCIAL STATEMENTS OF THE PARENT BANK
DISCLOSURES ON ACCOUNTING POLICIES IN RELATED PERIOD
INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT OF THE CONSOLIDATED GROUP
DISCLOSURES AND FOOTNOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OTHER DISCLOSURES AND FOOTNOTES
INDEPENDENT AUDITORS REPORT

Our special purpose entity and subsidiaries whose financial statements have been consolidated under this consolidated financial report are as
follows:

Subsidiaries
1 Denizbank AG, Vienna
2 Eurodeniz International Banking Unit Ltd.
3 Deniz Yatrm Menkul Kymetler A..
4 JSC Denizbank, Moscow
5 Deniz Portfy Ynetimi A..
6 Deniz Finansal Kiralama A..
7 Deniz Faktoring A..
8 Deniz Gayrimenkul Yatrm Ortakl A..
9 CR Erdberg Eins GmbH & Co KG

Structured Entity
1 DFS Funding Corp.
The consolidated financial statements and related disclosures and footnotes that were subject to independent audit, are prepared in accordance
with the Regulation on Accounting Principles and Documentations, Turkish Accountinpg Standards, Turkish Financial Reporting Standards
and the related statements, and in compliance with the financial records of our Bank. Unless stated otherwise, the accompanying consolidated
financial statements are presented in Thousands of Turkish Lira.

23 February 2017

HAKAN ELVERD SUAV DEMRCOLU HAKAN ATE HERMAN GREF

Senior Vice President Senior Vice President Member of Board of Directors Chairman of Board of
International and Regulatory International and Regulatory and President and Chief Directors
Financial Reporting Executive Officer

PAVEL BARCHUGOV WOUTER G.M. VAN ROSTE NHAT SEVN

Member of Board of Directors Member of Board of Directors Member of Board of Directors
and Audit Committe and Audit Committe and Audit Committe

Contact information for questions on this financial report:

Name/Title: mge htiyar / Department Head, International Reporting Department
Tel No :0 212 348 5997
Fax No :0 212 336 6186
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 205

PAGE
SECTION ONE
General Information
I. Parent Banks date of establishment, beginning statute, its history including changes in its statute 206
II. Capital structure, shareholders controlling the management and supervision of the Parent Bank directly or indirectly, and, if exists, changes on
these issues and the Group that the Parent Bank belongs to 206
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 and their areas of responsibility 207
IV. Explanations regarding the real person and corporate qualified shareholders at the Parent Bank 208
V. Type of services provided and the areas of operations of the Parent Bank 208
VI. A short explanation on the differences between the communique on consolidated financial statement reporting and the consolidation procedures required by Turkish
Accounting Standards and about institutions that are subject to full consolidation, proportional consolidation, by way of deduction from capital or those that are subject to none 208
VII. Existing or potential, actual or legal obstacles to immediate transfer of capital between Parent Bank and its subsidiaries and repayment of debts 208

SECTION TWO
Consolidated Financial Statements
I. Consolidated statements of financial position (Balance sheets) 210
II. Consolidated statements of off-balance sheet items 212
III. Consolidated statements of income 213
IV. Consolidated statements of income and expenses under shareholders equity 214
V. Consolidated statements of changes in shareholders equity 215
VI. Consolidated statements of cash flows 216
VII. Consolidated profit distribution tables 217

SECTION THREE
Accounting Policies
I. Basis of presentation 218
II. Explanation on the strategy for the use of financial instruments and transactions denominated in foreign currencies 219
III. Information regarding the consolidated subsidiaries 220
IV. Explanations on forward transactions, options and derivative instruments 221
V. Explanations on interest income and expenses 221
VI. Explanations on fees and commissions 221
VII. Explanations on financial assets 221
VIII. Explanations on impairment of financial assets 223
IX Explanations on offsetting financial instruments 223
X. Explanations on sale and repurchase agreements and transactions related to the lending of securities 223
XI. Explanations on assets held for sale and discontinued operations 223
XII. Explanations on goodwill and other intangible assets 224
XIII. Explanations on tangible assets 224
XIV. Explanations on investment properties 224
XV. Explanations on leasing activities 225
XVI. Explanations on provisions and contingent liabilities 225
XVII. Explanations on obligations for employee benefits 225
XVIII. Explanations on taxation 226
XIX. Additional explanations on borrowings 227
XX. Explanations on issuance of share certificates 227
XXI. Explanations on acceptances 227
XXII. Explanations on government grants 227
XXIII. Explanations on segment reporting 227
XXIV. Explanations on other matters 227

SECTION FOUR
Consolidated Financial Position and Risk Management

I. Explanations related to the consolidated shareholders equity 228

II. Explanations related to the consolidated credit risk and risk managegement 233
III. Explanations related to the consolidated foreign currency exchange rate risk 243
IV. Explanations related to the consolidated interest rate risk 245
V. Position risk of equity shares on banking book 248
VI. Explanations related to the consolidated liquidity risk 248
VII. Explanations related to leverage ratio 252
VIII. Explanations related on risk management 253
IX. Presentation of financial assets and liabilities at their fair value 265
X. Transactions carried out on behalf and account ot other parties and fiduciary transactions 266
XI. Explanations related to hedging transactions 267
XII. Explanations related to the consolidated segment reporting 267

SECTION FIVE
Disclosures and Footnotes on Consolidated Financial Statements
I. Explanations and disclosures related to consolidated assets 269
II. Explanations and disclosures related to consolidated liabilities 283
III. Explanations and disclosures related to consolidated off-balance sheet items 289
IV. Explanations and disclosures related to consolidated statement of income 292
V. Explanations and disclosures related to consolidated statement of changes in shareholders equity 297
VI. Explanations and disclosures related to consolidated cash flow statement 298
VII. Explanations and disclosures related to DFS Groups risk group 299
VIII. Domestic, foreign and off-shore banking branches and foreign representatives of the Parent Bank 300

SECTION SIX
Other Disclosures and Footnotes
I. Other explanations related DFS Groups operations 301

SECTION SEVEN
Independent Auditors Report
I. Matters to be disclosed related to Independent Audit Report 302
II. Explanations and notes prepared by Independent Auditor 302
206 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

SECTION ONE

GENERAL INFORMATION
I. Parent Banks date of establishment, beginning statute, its history including changes in its statute

Denizbank A.. (the Bank) was established as a public bank to provide financing services to the marine sector in 1938.
In 1992, as a result of the resolution of the Government to merge some public banks, the Bank was merged to Emlakbank.
Following the resolution of the High Council of Privatization numbered 97/5 and dated 20 March 1997 to privatize 100% of
shares of Denizbank A.., share sale agreement between Zorlu Holding A.. and the Privatization Administration was signed on
29 May 1997 and the Bank started its activities on 25 August 1997 upon obtaining a permission to operate. Banks shares have
been quoted on Borsa Istanbul (BIST) since 1 October 2004. 0,15% of the Banks shares are publicly held as of 31 December
2016.

Dexia Participation Belgique SA, owned 100% directly and indirectly by Dexia SA/NV, acquired 75% of the outstanding shares
of the Bank from Zorlu Holding A.. on 17 October 2006, subsequent to the transfer of shares, Dexia Participation Belgiques
ownership rate increased to 99,85%.

On 8 June 2012 Dexia Group and Sberbank of Russia (Sberbank) have signed a sale and purchase agreement regarding the
acquisition of 715.010.291,335 Parent Bank shares representing 99,85% of the Banks capital. The transaction covers the Parent
Bank as well as all of its subsidiaries in Turkey, Austria and Russia. Following all the necessary regulatory authorizations in
the countries in which seller and buyer operate including that of the European Commission, after the approvals of Competition
Authority on 9 August 2012, the Banking Regulation and Supervision Agency on 12 September 2012 and the Capital Markets
Board (CMB) on 24 September 2012, Dexia has transferred 99,85% of shares of the Parent Bank to Sberbank with a total
consideration of TL 6.469.140.728(*) (Euro 2.790 million) which is the Preliminary Purchase Price determined as per the sale and
purchase agreement as of 28 September 2012. Following the completion of the adjustment process of the Preliminary Purchase
Price to Purchase Price in accordance with the terms in the Share Purchase Agreement, an additional amount of Euro 185 Million
which is equivalent of TL 430.947.685(*) was paid on 27 December 2012. Ultimately the process was completed with a total
Purchase Price of TL 6.900.088.413(*) (Euro 2.975 million).

Amounts are reflected as full TL.

(*)

II. Capital structure, shareholders controlling the management and supervision of the Parent Bank directly or indirectly, and if
exists, changes on these issues and the Group that the Parent Bank belongs to

Current Period
Name of the Shareholder Amount (Full TL) Share (%)
Sberbank of Russia 3.311.211.134 99,85
Publicly traded 4.888.709 0,15
Others shareholders 157 --
Total 3.316.100.000 100,00

Prior Period
Name of the Shareholder Amount (Full TL) Share (%)
Sberbank of Russia 1.813.422.610 99,85
Publicly traded 2.677.304 0,15
Others shareholders 86 --
Total 1.816.100.000 100,00

Paid capital of Parent Bank was increased at a total amount TL 1.500.000, TL 39 from share premiums, TL 113.097 from
subsidiaries and associate shares and real estate sales income, TL 636.864 from extraordinary reserves and TL 750.000 from
cash reserve, on 28 June 2016.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 207

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

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 and their areas of responsibility

Name Title Shares owned (%)

President of the Board of Directors
Herman Gref Chairman --
Board of Directors
Nihat Sevin Deputy Chairman --
Hakan Ate Member, President and CEO 0,000002
Alexander Vedyakhin Member --
Deniz lke Arboan Member --
Wouter G.M. Van Roste Member --
Timur Kozintsev Member --
Svetlana Sagaydak Member --
Vadim Kulik Member --
Derya Kumru Member --
Igor Kondrashov Member --
Alexander Morozov Member --
Pavel Barchugov Member --
Audit Committee
Wouter G.M. Van Roste Member --
Nihat Sevin Member --
Pavel Barchugov Member --
Executive Vice Presidents
Bora Bcgz Treasury, Financial Institutions --
Suavi Demirciolu Financial Affairs --
Dilek Duman Information Technologies and Support Operations --
Tanju Kaya Administrative Services Group and Investment --
Mustafa zel Branch and Central Operations --
brahim en Credit Follow-up and Risk Monitoring --
Mehmet Aydodu Corporate Banking, Commercial Banking and Public Finance --
Mustafa Saruhan zel Economic Research, Strategy and Program Management --
Cem Demira Head of Internal Control Unit and Compliance --
Ali Murat Dizdar Chief Legal Advisor --
Ayenur Hkran Card Payment Systems and Non-Branch Sales Channels --
Murat elik Digital Generation Banking --
Selim Efe Teoman Corporate and Commercial Loans --
Ramazan Ik Head of Inspection Board --
Ruslan Abil Group Reporting and Asset/Liability Management --
nder zcan Managerial Reporting and Budget Planning --
Murat Kulaksz SME Banking --
Necip Yavuz Elkin Human Resources and Deniz Academy --
Burak Koak Agriculture Banking --
Ouzhan zark Retail Banking --
Cemil Cem nen Private Banking and Investment Sales-Performance Management --
Sinan Ylmaz Risk Management Group Leader --
Hakan Turan Pala Corporate and Commercial Loans Analysis --
Edip Krad Baer(*) Corporate Loans Policies --
Murat tak IT Security and DigitalCard Payment Operations --
Verda Beril Yzer Ouz Financial Institutions --
Fatma Ayperi Karahan, Deputy General Manager responsible for Individual SME and Agriculture Banking Credit Allocation Group at Parent
(*)

Bank, has retired. Title of Edip Krad Baer has been changed as Deputy General Manager responsible for Loans Policies-Individual SME
and Agriculture Banking Credit Allocation Group with Board of Directors Decision dated 5 October 2016.

Hayri Cansever, who were General Manager of Destek Varlk Ynetim A.., one of our former Group Companies, has been assigned as Secretary
General and Deputy General Manager responsible for Sberbank Coordination Group following the resignation of Krad Taalan, who were
General Secretary at Parent Bank.
208 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

IV. Explanations regarding the real person and corporate qualified shareholders at the Parent Bank

Commercial Title Share Amounts Share Percentages Paid-in Capital Unpaid Capital
Sberbank of Russia 3.311.211 % 99,85 3.311.211 --

Sberbank is the controlling party of the Parent Banks capital having both direct and indirect qualified shares.

As of 31 December 2016 the capital structure of Sberbank is as follows:

Shareholders Share Percentages

Central Bank of Russia 50,00 %
Publicly traded 50,00 %
Total 100,00 %

Central Bank of the Russian Federation holds 50%+1 share within 22.586.948.000 ordinary and preferred shares in total in
Sberbank of Russia (the rate in 21.586.948.000 ordinary shares corresponds to 52,32%).

V. Type of services provided and the areas of operations of the Parent Bank

The Parent Bank is a private sector deposit bank which provides banking services to its customers through 693 domestic and 1
foreign branch as of 31 December 2016.

Activities of the Parent Bank as stated in the 3rd clause of the Articles of Association are as follows:

In accordance with the Banking Law and regulations;

Performing all kinds of banking activities.

Dealing with transactions on all kinds of capital market instruments within the limits set by the related regulations and Capital
Market Law regulations.
Establishing domestic and/or foreign entities and participating in existing entities. Entering into loan and intelligence
agreements with domestic and international financial institutions. Participating in consortiums and syndications.
Incorporating insurance companies, operating insurance agencies, participating in insurance companies which are existing or
planned to be founded.

A part from the above-mentioned activities, in case different activities deemed advantageous and necessary for the company are
to be undertaken in the future, they will be submitted to approval of the General Assembly based on Board of Directors decision
and the company will be able to implement activities after the relevant decision is made by General Assembly.

VI. A short explanation on the differences between the communiqu on consolidated financial statement reporting and
the consolidation procedures required by Turkish Accounting Standards and about institutions that are subject to full
consolidation, proportional consolidation, by way of deduction from capital or those that are subject to none.

Banks are obligated to prepare consolidated financial statements for credit institutions and financial subsidiaries for creating legal
restrictions on a consolidated basis based on the Communiqu on Preparation of Consolidated Financial Statements of Banks
by applying Turkish Accounting Standards. There is not any difference between the related Communiqu and the consolidation
operations based on Turkish Accounting Standards except the scope of non-financial associate and subsidiary. Information in
regards to consolidated subsidiaries and consolidation methods are given in Note III of Section Three.

VII. Existing or potential, actual or legal obstacles to immediate transfer of capital between Parent Bank and its subsidiaries
and repayment of debts.

None.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 209

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

SECTION TWO
CONSOLIDATED FINANCIAL STATEMENTS

I. Consolidated Statements of Financial Position (Balance Sheets)

II. Consolidated Statements of Off-Balance Sheet Items
III. Consolidated Statements of Income
IV. Consolidated Statements of Income and Expenses Under Shareholders Equity
V. Consolidated Statements of Changes in Shareholders Equity
VI. Consolidated Statements of Cash Flows
VII. Consolidated Profit Distribution Tables
210 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Consolidated Financial Report
Originally Issued in Turkish
(BALANCE SHEETS) AS OF 31 DECEMBER 2016 AND 2015 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

CURRENT PERIOD PRIOR PERIOD

ASSETS Footnotes (31/12/2016) (31/12/2015)
TL FC Total TL FC Total
I. CASH AND BALANCES WITH THE CENTRAL BANK (5.I.a) 2.281.807 12.557.554 14.839.361 1.195.331 9.628.021 10.823.352
II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS (Net) (5.I.b) 1.049.942 397.917 1.447.859 899.970 273.469 1.173.439
2.1 Financial Assets Held For Trading 1.049.942 397.917 1.447.859 899.970 273.469 1.173.439
2.1.1 Public Sector Debt Securities 93.100 3.787 96.887 21.650 8.649 30.299
2.1.2 Share Certificates - - - 78 79 157
2.1.3 Positive Value of Trading Purpose Derivatives 946.929 394.096 1.341.025 877.723 264.177 1.141.900
2.1.4 Other Securities 9.913 34 9.947 519 564 1.083
2.2 Financial Assets Designated at Fair Value - - - - - -
2.2.1 Public Sector Debt Securities - - - - - -
2.2.2 Share Certificates - - - - - -
2.2.3 Loans - - - - - -
2.2.4 Other Securities - - - - - -
III. BANKS (5.I.c) 17.006 5.555.737 5.572.743 23.566 6.199.134 6.222.700
IV. DUE FROM MONEY MARKETS 3.001.571 - 3.001.571 1.213.997 - 1.213.997
4.1 Interbank Money Market - - - 13.644 - 13.644
4.2 Istanbul Stock Exchange 175 - 175 - - -
4.3 Reverse Repurchase Agreements 3.001.396 - 3.001.396 1.200.353 - 1.200.353
V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (5.I.d) 5.421.996 2.174.994 7.596.990 7.310.139 2.663.050 9.973.189
5.1 Share Certificates 3.930 37.798 41.728 3.929 108.971 112.900
5.2 Public Sector Debt Securities 5.418.066 1.707.773 7.125.839 7.306.210 2.157.005 9.463.215
5.3 Other Securities - 429.423 429.423 - 397.074 397.074
VI. LOANS AND RECEIVABLES (5.I.e) 49.267.080 41.883.408 91.150.488 42.972.068 31.715.329 74.687.397
6.1 Loans and Receivables 48.268.612 41.878.192 90.146.804 42.084.220 31.712.586 73.796.806
6.1.1 Loans Utilized to the Bank's Risk Group 14.194 - 14.194 23 10 33
6.1.2 Public Sector Debt Securities - - - - - -
6.1.3 Others 48.254.418 41.878.192 90.132.610 42.084.197 31.712.576 73.796.773
6.2 Loans under Follow-Up 3.635.008 16.631 3.651.639 3.156.348 12.426 3.168.774
6.3 Specific Provisions (-) 2.636.540 11.415 2.647.955 2.268.500 9.683 2.278.183
VII. FACTORING RECEIVABLES 1.155.332 79.389 1.234.721 712.017 35.285 747.302
VIII. INVESTMENT HELD TO MATURITY (Net) (5.I.f) 3.339.895 1.716.137 5.056.032 2.875.209 500.960 3.376.169
8.1 Public Sector Debt Securities 3.339.895 1.678.583 5.018.478 2.875.209 468.743 3.343.952
8.2 Other Securities - 37.554 37.554 - 32.217 32.217
IX. INVESTMENTS IN ASSOCIATES (Net) (5.I.g) 10.147 - 10.147 10.147 - 10.147
9.1 Associates accounted for Under Equity Method - - - - - -
9.2 Unconsolidated Associates 10.147 - 10.147 10.147 - 10.147
9.2.1 Financial Associates 1.508 - 1.508 1.508 - 1.508
9.2.2 Non-Financial Associates 8.639 - 8.639 8.639 - 8.639
X. INVESTMENTS IN SUBSIDIARIES (Net) (5.I.h) 12.103 130 12.233 5.649 111 5.760
10.1 Unconsolidated Financial Subsidiaries - - - - - -
10.2 Unconsolidated Non-Financial Subsidiaries 12.103 130 12.233 5.649 111 5.760
XI. ENTITIES UNDER COMMON CONTROL (JOINT VENT.) (Net) (5.I.i) 2.800 - 2.800 2.800 - 2.800
11.1 Joint Ventures accounted for Under Equity Method - - - - - -
11.2 Unconsolidated Joint Ventures 2.800 - 2.800 2.800 - 2.800
11.2.1 Financial Joint Ventures - - - - - -
11.2.2 Non-Financial Joint Ventures 2.800 - 2.800 2.800 - 2.800
XII. LEASE RECEIVABLES (Net) (5.I.j) 616.636 2.020.671 2.637.307 704.878 1.565.486 2.270.364
12.1 Financial Lease Receivables 780.796 2.420.711 3.201.507 888.297 1.802.956 2.691.253
12.2 Operational Lease Receivables - - - - - -
12.3 Others - - - - - -
12.4 Unearned Income (-) 164.160 400.040 564.200 183.419 237.470 420.889
XIII. HEDGING PURPOSE DERIVATIVES (5.I.k) - - - - - -
13.1 Fair Value Hedge - - - - - -
13.2 Cash Flow Hedge - - - - - -
13.3 Hedging of a Net Investment in Foreign Subsidiaries - - - - - -
XIV. TANGIBLE ASSETS (Net) (5.I.l) 552.614 111.965 664.579 466.203 81.419 547.622
XV. INTANGIBLE ASSETS (Net) (5.I.m) 193.140 11.679 204.819 174.927 3.330 178.257
15.1 Goodwill 869 - 869 869 - 869
15.2 Others 192.271 11.679 203.950 174.058 3.330 177.388
XVI. INVESTMENT PROPERTIES (Net) (5.I.n) 164.527 - 164.527 157.381 - 157.381
XVII. TAX ASSETS (5.I.o) 220.354 34.510 254.864 145.057 21.293 166.350
17.1 Current Tax Assets 67.178 34.510 101.688 3.691 21.293 24.984
17.2 Deferred Tax Assets 153.176 - 153.176 141.366 - 141.366
XVIII. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) (5.I.p) - - - - - -
18.1 Held For Sale - - - - - -
18.2 Discontinued Operations - - - - - -
XIX. OTHER ASSETS (5.I.q) 1.099.302 603.655 1.702.957 974.381 355.802 1.330.183

TOTAL ASSETS 68.406.252 67.147.746 135.553.998 59.843.720 53.042.689 112.886.409

The accompanying notes are an integral part of these consolidated financial statements.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 211

DENZBANK ANONM RKET

Convenience Translation of
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION Consolidated Financial Report
Originally Issued in Turkish
(BALANCE SHEETS) AS OF 31 DECEMBER 2016 AND 2015 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

CURRENT PERIOD PRIOR PERIOD

LIABILITIES AND EQUITY Footnotes (31/12/2016) (31/12/2015)
TL FC Total TL FC Total
I. DEPOSITS (5.II.a) 35.185.381 57.010.570 92.195.951 26.161.926 46.497.329 72.659.255
1.1 Deposits of the Bank's Risk Group 38.299 732.007 770.306 71.979 514.048 586.027
1.2 Others 35.147.082 56.278.563 91.425.645 26.089.947 45.983.281 72.073.228
II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING (5.II.b) 546.611 701.775 1.248.386 311.050 327.591 638.641
III. FUNDS BORROWED (5.II.c) 2.129.526 9.129.165 11.258.691 1.853.923 9.403.343 11.257.266
IV. DUE TO MONEY MARKETS 5.397.576 - 5.397.576 7.184.158 - 7.184.158
4.1 Interbank Money Market - - - - - -
4.2 Istanbul Stock Exchange - - - 720.000 - 720.000
4.3 Repurchase Agreements 5.397.576 - 5.397.576 6.464.158 - 6.464.158
V. SECURITIES ISSUED (Net) (5.II.d) 2.181.325 1.309.730 3.491.055 1.604.898 1.481.142 3.086.040
5.1 Bills 1.766.245 - 1.766.245 945.365 - 945.365
5.2 Asset Backed Securities 415.080 - 415.080 556.311 - 556.311
5.3 Bonds - 1.309.730 1.309.730 103.222 1.481.142 1.584.364
VI. FUNDS - - - - - -
6.1 Borrowers Funds - - - - - -
6.2 Others - - - - - -
VII. SUNDRY CREDITORS 1.429.351 532.863 1.962.214 1.185.867 586.352 1.772.219
VIII. OTHER EXTERNAL RESOURCES (5.II.e) 1.060.323 912.887 1.973.210 978.653 776.012 1.754.665
IX. FACTORING PAYABLES - - - - - -
X. LEASE PAYABLES (Net) (5.II.f) - - - - - -
10.1 Financial Lease Payables - - - - - -
10.2 Operational Lease Payables - - - - - -
10.3 Others - - - - - -
10.4 Deferred Financial Leasing Expenses ( - ) - - - - - -
XI. HEDGING PURPOSE DERIVATIVES (5.II.g) - - - - - -
11.1 Fair Value Hedge - - - - - -
11.2 Cash Flow Hedge - - - - - -
11.3 Hedging of a Net Investment in Foreign Subsidiaries - - - - - -
XII. PROVISIONS (5.II.h) 1.715.537 32.614 1.748.151 1.201.923 22.578 1.224.501
12.1 General Provisions 1.269.354 - 1.269.354 975.339 - 975.339
12.2 Restructuring Provisions - - - - - -
12.3 Reserve for Employee Benefits 114.048 7.671 121.719 102.009 5.004 107.013
12.4 Insurance Technical Provisions (Net) - - - - - -
12.5 Other Provisions 332.135 24.943 357.078 124.575 17.574 142.149
XIII. TAX LIABILITIES (5.II.i) 188.093 17.072 205.165 158.159 11.343 169.502
13.1 Current Tax Liability 188.093 1.626 189.719 157.649 3.201 160.850
13.2 Deferred Tax Liability - 15.446 15.446 510 8.142 8.652
XIV. LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE AND DICSOUNTINUED OPERATIONS
(Net) - - - - - -
14.1 Held For Sale - - - - - -
14.2 Discontinued Operations - - - - - -
XV. SUBORDINATED LOANS (5.II.k) - 5.483.501 5.483.501 - 4.845.965 4.845.965
XVI. SHAREHOLDERS' EQUITY (5.II.l) 7.266.585 3.323.513 10.590.098 6.054.349 2.239.848 8.294.197
16.1 Paid-In Capital 3.316.100 - 3.316.100 1.816.100 - 1.816.100
16.2 Supplementary Capital (1.414.688) (98.711) (1.513.399) (926.975) (7.623) (934.598)
16.2.1 Share Premium 15 - 15 39 - 39
16.2.2 Share Cancellation Profits - - - - - -
16.2.3 Securities Revaluation Reserve (444.941) (110.354) (555.295) (472.145) (7.643) (479.788)
16.2.4 Revaluation Fund on Tangible Assets (5.II.l) 28.852 11.643 40.495 113.097 - 113.097
16.2.5 Revaluation Fund on Intangible Assets - - - - - -
16.2.6 Revaluation Fund on Investment Properties 13.397 - 13.397 13.397 - 13.397
16.2.7 Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures 11 - 11 11 - 11
16.2.8 Hedging Funds (Effective Portion) (1.007.220) - (1.007.220) (583.282) 20 (583.262)
16.2.9 Revaluation Fund on Assets Held for Sale and Discontinued Operations - - - - - -
16.2.10 Other Supplementary Capital (4.802) - (4.802) 1.908 - 1.908
16.3 Profit Reserves 3.988.561 1.144.242 5.132.803 4.464.231 538.631 5.002.862
16.3.1 Legal Reserves 182.355 5.019 187.374 144.542 5.019 149.561
16.3.2 Status Reserves - - - - - -
16.3.3 Extraordinary Reserves 3.769.533 11.173 3.780.706 4.287.872 11.173 4.299.045
16.3.4 Other Profit Reserves 36.673 1.128.050 1.164.723 31.817 522.439 554.256
16.4 Profit or Loss 1.368.342 2.277.982 3.646.324 693.795 1.708.840 2.402.635
16.4.1 Prior Periods' Profits / Losses 746.069 1.500.228 2.246.297 534.187 1.010.045 1.544.232
16.4.2 Current Period Profit / Loss 622.273 777.754 1.400.027 159.608 698.795 858.403
16.5 Minority Shares (5.II.l) 8.270 - 8.270 7.198 - 7.198

TOTAL LIABILITIES AND EQUITY 57.100.308 78.453.690 135.553.998 46.694.906 66.191.503 112.886.409

The accompanying notes are an integral part of these consolidated financial statements.
212 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
CONSOLIDATED STATEMENTS OF OFF-BALANCE SHEET Consolidated Financial Report
Originally Issued in Turkish
ITEMS AS OF 31 DECEMBER 2016 AND 2015 See Note 3.I.c
(Currency: Thousands of TL- Turkish Lira)

CURRENT PERIOD PRIOR PERIOD

Footnotes (31/12/2016) (31/12/2015)
TL FC Total TL FC Total
A. OFF BALANCE SHEET COMMITMENTS AND CONTINGENCIES (I+II+III) 54.889.084 89.829.528 144.718.612 49.052.544 83.696.209 132.748.753
I. GUARANTEES (5.III.a) 10.041.664 18.740.351 28.782.015 8.808.946 15.635.469 24.444.415
1.1. Letters of Guarantee 10.029.957 11.752.258 21.782.215 8.786.589 11.300.829 20.087.418
1.1.1. Guarantees Subject to State Tender Law - - - - - -
1.1.2. Guarantees Given for Foreign Trade Operations 79.021 90.776 169.797 79.021 105.903 184.924
1.1.3. Other Letters of Guarantee 9.950.936 11.661.482 21.612.418 8.707.568 11.194.926 19.902.494
1.2. Bank Acceptances 5.498 251.332 256.830 12.074 182.245 194.319
1.2.1. Import Letter of Acceptance 5.498 251.332 256.830 12.074 182.245 194.319
1.2.2. Other Bank Acceptances - - - - - -
1.3. Letters of Credit 42 2.426.574 2.426.616 7.687 2.386.663 2.394.350
1.3.1. Documentary Letters of Credit 42 1.611.093 1.611.135 7.687 1.559.184 1.566.871
1.3.2. Other Letters of Credit - 815.481 815.481 - 827.479 827.479
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. Purchase Guarantees for Securities Issued - - - - - -
1.7. Factoring Related Guarantees - - - - - -
1.8. Other Collaterals 6.167 4.310.187 4.316.354 2.596 1.765.732 1.768.328
1.9. Other Sureties - - - - - -
II. COMMITMENTS (5.III.a) 28.323.856 4.027.727 32.351.583 23.949.814 2.881.260 26.831.074
2.1. Irrevocable Commitments 25.004.358 4.027.727 29.032.085 19.795.910 2.881.260 22.677.170
2.1.1. Asset Purchase and Sale Commitments 405.787 2.956.586 3.362.373 295.371 2.203.351 2.498.722
2.1.2. Deposit Purchase and Sales Commitments - - - - - -
2.1.3. Share Capital Commitments to Associates and Subsidiaries - - - - - -
2.1.4. Loan Granting Commitments 9.475.667 24.982 9.500.649 7.071.136 23.854 7.094.990
2.1.5. Securities Issuance Brokerage Commitments - - - - - -
2.1.6. Commitments for Reserve Deposit Requirements - - - - - -
2.1.7. Commitments for Cheque Payments 2.111.130 - 2.111.130 1.920.552 - 1.920.552
2.1.8. Tax and Fund Obligations from Export Commitments 2.415 - 2.415 997 - 997
2.1.9. Commitments for Credit Card Limits 12.764.645 - 12.764.645 10.209.119 - 10.209.119
2.1.10. Commitments for Promotional Operations Re-Credit Cards and Banking Services 1.416 - 1.416 800 - 800
2.1.11. Receivables from "Short" Sale Commitments On Securities - - - - - -
2.1.12. Payables for "Short" Sale Commitments On Securities - - - - - -
2.1.13. Other Irrevocable Commitments 243.298 1.046.159 1.289.457 297.935 654.055 951.990
2.2. Revocable Commitments 3.319.498 - 3.319.498 4.153.904 - 4.153.904
2.2.1. Revocable Loan Granting Commitments 3.318.939 - 3.318.939 4.153.345 - 4.153.345
2.2.2. Other Revocable Commitments 559 - 559 559 - 559
III. DERIVATIVE FINANCIAL INSTRUMENTS (5.III.b) 16.523.564 67.061.450 83.585.014 16.293.784 65.179.480 81.473.264
3.1. Hedging Purpose Derivatives - - - - - -
3.1.1. Fair Value Hedge - - - - - -
3.1.2. Cash Flow Hedge - - - - - -
3.1.3. Hedging of a Net Investment in Foreign Subsidiaries - - - - - -
3.2. Trading Purpose Derivatives 16.523.564 67.061.450 83.585.014 16.293.784 65.179.480 81.473.264
3.2.1. Forward Foreign Currency Purchases/Sales 1.711.451 2.321.703 4.033.154 1.047.452 3.372.820 4.420.272
3.2.1.1. Forward Foreign Currency Purchases 879.079 1.148.288 2.027.367 524.028 1.677.026 2.201.054
3.2.1.2. Forward Foreign Currency Sales 832.372 1.173.415 2.005.787 523.424 1.695.794 2.219.218
3.2.2. Currency and Interest Rate Swaps 10.988.532 57.347.352 68.335.884 11.167.547 55.519.064 66.686.611
3.2.2.1. Currency Swaps-Purchases 2.846.554 22.168.613 25.015.167 1.880.585 24.159.278 26.039.863
3.2.2.2. Currency Swaps-Sales 6.920.574 16.486.099 23.406.673 9.285.556 14.869.890 24.155.446
3.2.2.3. Interest Rate Swaps-Purchases 610.000 9.347.248 9.957.248 - 8.245.744 8.245.744
3.2.2.4. Interest Rate Swaps-Sales 611.404 9.345.392 9.956.796 1.406 8.244.152 8.245.558
3.2.3. Currency, Interest Rate and Security Options 3.823.581 5.299.660 9.123.241 4.078.785 4.936.906 9.015.691
3.2.3.1. Currency Options-Purchases 1.947.258 2.529.227 4.476.485 2.217.151 2.313.493 4.530.644
3.2.3.2. Currency Options-Sales 1.876.323 2.643.805 4.520.128 1.861.634 2.623.413 4.485.047
3.2.3.3. Interest Rate Options-Purchases - 63.314 63.314 - - -
3.2.3.4. Interest Rate Options-Sales - 63.314 63.314 - - -
3.2.3.5. Securities Options-Purchases - - - - - -
3.2.3.6. Securities Options-Sales - - - - - -
3.2.4. Currency Futures - - - - - -
3.2.4.1. Currency Futures-Purchases - - - - - -
3.2.4.2. Currency Futures-Sales - - - - - -
3.2.5. Interest Rate Futures - - - - - -
3.2.5.1. Interest Rate Futures-Purchases - - - - - -
3.2.5.2. Interest Rate Futures-Sales - - - - - -
3.2.6. Others - 2.092.735 2.092.735 - 1.350.690 1.350.690
B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 406.703.917 104.773.998 511.477.915 321.419.943 73.730.659 395.150.602
IV. ITEMS HELD IN CUSTODY 93.768.668 2.468.962 96.237.630 59.570.147 1.930.573 61.500.720
4.1. Customers' Securities and Portfolios Held 137.718 - 137.718 149.481 - 149.481
4.2. Securities Held in Custody 91.541.375 1.006.875 92.548.250 57.996.909 895.914 58.892.823
4.3. Checks Received for Collection 1.116.594 962.251 2.078.845 617.583 786.013 1.403.596
4.4. Commercial Notes Received for Collection 971.623 415.353 1.386.976 805.066 226.116 1.031.182
4.5. Other Assets Received for Collection - - - - - -
4.6. Assets Received for Public Offering - - - - - -
4.7. Other Items under Custody - 83.793 83.793 - 22.530 22.530
4.8. Custodians 1.358 690 2.048 1.108 - 1.108
V. PLEDGED ITEMS 312.550.745 101.470.333 414.021.078 261.435.946 70.922.003 332.357.949
5.1. Securities 3.134.244 25.768 3.160.012 3.591.505 80.391 3.671.896
5.2. Guarantee Notes 217.463.456 45.384.701 262.848.157 179.485.991 29.774.174 209.260.165
5.3. Commodities 13.702.267 3.683.797 17.386.064 14.308.847 2.880.210 17.189.057
5.4. Warrants - - - - - -
5.5. Immovables 69.421.586 35.399.926 104.821.512 57.338.417 28.010.177 85.348.594
5.6. Other Pledged Items 8.829.192 16.954.386 25.783.578 6.711.186 10.177.051 16.888.237
5.7. Pledged Items-Depository - 21.755 21.755 - - -
VI. ACCEPTED GUARANTEES AND WARRANTIES 384.504 834.703 1.219.207 413.850 878.083 1.291.933

TOTAL OFF BALANCE SHEET ITEMS (A+B) 461.593.001 194.603.526 656.196.527 370.472.487 157.426.868 527.899.355

The accompanying notes are an integral part of these consolidated financial statements.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 213

DENZBANK ANONM RKET

Convenience Translation of
CONSOLIDATED STATEMENTS OF INCOME Consolidated Financial Report
Originally Issued in Turkish
FOR THE PERIOD ENDED 31 DECEMBER 2016 AND 2015 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

CURRENT PERIOD PRIOR PERIOD

INCOME AND EXPENSE ITEMS Footnotes (01/01-31/12/2016) (01/01-31/12/2015)
I. INTEREST INCOME (5.IV.a) 10.120.405 8.387.453
1.1 Interest from Loans 8.723.432 7.108.995
1.2 Interest from Reserve Deposits 56.689 24.288
1.3 Interest from Banks 14.610 19.509
1.4 Interest from Money Market Transactions 20.337 5.986
1.5 Interest from Securities Portfolio 1.029.817 986.847
1.5.1 Trading Securities 3.854 8.386
1.5.2 Financial Assets at Fair Value Through Profit or Loss - -
1.5.3 Available for Sale Securities 703.666 677.786
1.5.4 Held to Maturity Securities 322.297 300.675
1.6 Interest from Financial Leases 211.070 186.224
1.7 Other Interest Income 64.450 55.604
II. INTEREST EXPENSE (5.IV.b) 4.985.151 4.310.578
2.1 Interest on Deposits 3.677.436 3.195.380
2.2 Interest on Funds Borrowed 730.767 547.388
2.3 Interest on Money Market Transactions 347.363 324.829
2.4 Interest on Securities Issued 195.505 219.029
2.5 Other Interest Expense 34.080 23.952
III. NET INTEREST INCOME (I - II) 5.135.254 4.076.875
IV. NET FEES AND COMMISSION INCOME /EXPENSE 1.253.758 1.083.864
4.1 Fees and Commissions Received 1.666.196 1.456.279
4.1.1 Non-Cash Loans 180.765 143.657
4.1.2 Other (5.IV.l) 1.485.431 1.312.622
4.2 Fees and Commissions Paid 412.438 372.415
4.2.1 Non-Cash Loans 1.258 1.382
4.2.2 Other (5.IV.l) 411.180 371.033
V. DIVIDEND INCOME (5.IV.c) 205 1.685
VI. TRADING INCOME/LOSS (Net) (5.IV.d) (570.120) (632.972)
6.1 Profit / Loss on Securities Trading (28.440) 70.314
6.2 Profit / Loss on Derivative Financial Transactions 57.944 824.317
6.3 Foreign Exchange Gains / Losses (599.624) (1.527.603)
VII. OTHER OPERATING INCOME (5.IV.e) 768.662 613.795
VIII. TOTAL OPERATING INCOME (III+IV+V+VI+VII) 6.587.759 5.143.247
IX. PROVISION FOR LOANS AND OTHER RECEIVABLES (-) (5.IV.f) 1.836.532 1.361.419
X. OTHER OPERATING EXPENSES (-) (5.IV.g) 2.926.170 2.640.587
XI. NET OPERATING PROFIT/LOSS (VIII-IX-X) 1.825.057 1.141.241
XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER - -
XIII. INVESTMENTS PROFIT / LOSS FROM ACCOUNTED FOR UNDER EQUITY METHOD - -
XIV. GAIN/LOSS ON NET MONETARY POSITION - -
XV. P/L BEFORE TAXES FROM CONTINUING OPERATIONS (XI+...+XIV) (5.IV.h) 1.825.057 1.141.241
XVI. TAX PROVISION FOR CONTINUING OPERATIONS () (5.IV.i) (424.683) (283.384)
16.1 Current Tax (301.748) (148.437)
16.2 Deferred Tax (122.935) (134.947)
XVII. NET PROFIT / LOSS FROM CONTINUING OPERATIONS (XVXVI) (5.IV.j) 1.400.374 857.857
XVIII. PROFIT FROM DISCONTINUED OPERATIONS 983 1.670
18.1 Assets Held for Sale - 1.670
18.2 Profit on Sale of Associates, Subsidiaries and Joint Ventures - -
18.3 Other 983 -
XIX. LOSS FROM DISCONTINUED OPERATIONS (-) 258 -
19.1 Assets Held for Sale - -
19.2 Loss on Sale of Associates, Subsidiaries and Joint Ventures 258 -
19.3 Other - -
XX. P/L BEFORE TAXES FROM DISCONTINUED OPERATIONS (XVIII-XIX) 725 1.670
XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS () (5.IV.i) - (232)
21.1 Current Tax - -
21.2 Deferred Tax - (232)
XXII. NET PROFIT / LOSS FROM DISCONTINUED OPERATIONS (XXXXI) 725 1.438
XXIII. NET PROFIT / LOSS (XVII+XXII) (5.IV.k) 1.401.099 859.295
23.1 Group's Profit / Loss 1.400.027 858.403
23.2 Minority Shares 1.072 892
Earnings / Losses per Share (Per thousand share) 0,48 0,43

The accompanying notes are an integral part of these consolidated financial statements.
214 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
CONSOLIDATED STATEMENTS OF INCOME AND EXPENSES Consolidated Financial Report
UNDER SHAREHOLDERS EQUITY Originally Issued in Turkish
See Note 3.I.c
FOR THE PERIODS ENDED 31 DECEMBER 2016 AND 2015
(Currency: Thousands of TL - Turkish Lira)

STATEMENT OF INCOME AND EXPENSES UNDER SHAREHOLDERS' EQUITY CURRENT PERIOD PRIOR PERIOD
(01/01-31/12/2016) (01/01-31/12/2015)

I. ADDITIONS TO SECURITIES REVALUATION RESERVE FROM AVAILABLE FOR SALE INVESTMENTS (90.391) (432.258)
II. TANGIBLE ASSETS REVALUATION DIFFERENCES 45.895 13.397
III. INTANGIBLE ASSETS REVALUATION DIFFERENCES - -
IV. FOREIGN EXCHANGE DIFFERENCES FOR FOREIGN CURRENCY TRANSACTIONS 610.467 266.803
V. PROFIT/LOSS RELATED TO DERIVATIVES USED IN CASH FLOW HEDGES
(Effective portion of Fair Value Differences) 2.949 6.340
VI. PROFIT/LOSS RELATED TO DERIVATIVES USED IN HEDGE OF A NET INVESTMENT IN FOREIGN
SUBSIDIARIES (Effective portion of Fair Value Differences) (533.388) (278.122)
VII. THE EFFECT OF CHANGES IN ACCOUNTING POLICIES OR CORRECTION OF ERRORS - -
VIII. OTHER PROFIT/LOSS ITEMS ACCOUNTED FOR UNDER EQUITY DUE TO TAS (8.388) 1.781
IX. DEFERRED TAXES OF VALUATION DIFFERENCES 117.643 145.738
X. NET PROFIT/LOSS ACCOUNTED UNDER EQUITY (I+II++IX) 144.787 (276.321)
XI. CURRENT PERIOD PROFIT/LOSS 1.401.099 859.295
1.1 Net Change in Fair Value of Securities (Transfer to Profit & Loss) 74.680 29.714
1.2 Reclassification and Transfer of Derivatives Accounted for Cash Flow Hedge Purposes Recycled to Income
Statement (2.752) (5.551)
1.3 Transfer of Hedge of Net Investment in Foreign Operations Recycled to Income Statement - -
1.4 Other 1.329.171 835.132

XII. TOTAL PROFIT AND LOSS ACCOUNTED FOR THE PERIOD (XXI) 1.545.886 582.974

The accompanying notes are an integral part of these consolidated financial statements.
DENZBANK ANONM RKET
Convenience Translation of
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY Consolidated Financial Report
Originally Issued in Turkish
FOR THE PERIODS ENDED 31 DECEMBER 2016 AND 2015 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)
Inflation Securities Bonus Shares Val.Diff.Related to Total Equity Attrib.
Adjustments to Share Cancellation Extraordinary Current Period Net Prior Period Net Revaluation Revaluation Fund of Obtained from Assets Held for to Equity Holders Total Shareholders'
CHANGES IN SHAREHOLDERS' EQUITY Paid-In Capital Paid-In Capital (*) Share Premium Profits Legal Reserves Status Reserves Reserves Other Reserves Profit / (Loss) Profit / (Loss) Reserve Tang./Intang.A. Associates Hedging Reserves Sale/Disc.Opr. of the Parent Minorty Interest Equity

PRIOR PERIOD 01/01-31/12/2015

I. Balances at the Beginning of Period 716.100 189.164 98.411 - 149.561 - 3.802.322 287.936 937.409 1.173.014 (138.789) 306.054 11 (366.315) - 7.154.878 6.306 7.161.184
II. Adjustment in accordance with TMS 8 - - - - - - - - - - - - - - - - - -
2.1 Effect of adjustment - - - - - - - - - - - - - - - - - -
2.2 Effect of changes in accounting policies - - - - - - - - - - - - - - - - - -
DENZBANK FINANCIAL SERVICES GROUP

III. New Balance (I+II) 716.100 189.164 98.411 - 149.561 - 3.802.322 287.936 937.409 1.173.014 (138.789) 306.054 11 (366.315) - 7.154.878 6.306 7.161.184

Changes in the Period

IV. Increase / Decrease Related to Mergers (5.V.f) - - - - - - - - - - - - - - - - - -

V. Valuation Differences of Securities (5.V.g) - - - - - - - - - - (340.999) - - - - (340.999) - (340.999)
VI. Hedging Transactions (Effective Portion) (5.V.h) - - - - - - - - - - - - - (216.947) - (216.947) - (216.947)
6.1 Cash Flow Hedge - - - - - - - - - - - - - 5.551 - 5.551 - 5.551
6.2 Hedging of a Net Investment in Foreign Subsidiaries - - - - - - - - - - - - - (222.498) - (222.498) - (222.498)
VII. Revaluation Fund of Tangible Assets (5.V.i) - - - - - - - - - - - 13.397 - - - 13.397 - 13.397
VIII. Revaluation Fund of Intangible Assets - - - - - - - - - - - - - - - - - -
IX. Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures - - - - - - - - - - - - - - - - - -
X. Foreign Exchange Differences (5.V.j) - - - - - - - 266.803 - - - - - - - 266.803 - 266.803
XI. Changes Related to Sale of Assets - - - - - - - - - - - - - - - - - -
XII. Changes Related to Reclassification of Assets - - - - - - - - - - - - - - - - - -
XIII. Effects of Changes in Equities of Associates - - - - - - - - - - - - - - - - - -
XVI. The Effect of Capital Increase 1.100.000 (189.164) (98.411) - - - - - - - - (262.425) - - - 550.000 - 550.000
14.1 Cash 550.000 - - - - - - - - - - - - - - 550.000 - 550.000
14.2 Internal Resources 550.000 (189.164) (98.411) - - - - - - - - (262.425) - - - - - -
XV. Issuance of Capital Stock - - 39 - - - - - - - - - - - - 39 - 39
XVI. Share Cancellation Profits - - - - - - - - - - - - - - - - - -
XVII. Capital Reserves from Inflation Adjustments to Paid-In Capital - - - - - - - - - - - - - - - - - -
XVIII. Other - - - - - - - 1.425 - - - - - - - 1.425 - 1.425
-
XIX. Current Period Net Profit / Loss - - - - - - - - 858.403 - - - - - - 858.403 892 859.295
XX. Profit Distribution (5.V.e) - - - - - - 496.723 - (937.409) 371.218 - 69.468 - - - - - -
20.1 Dividends Distributed - - - - - - - - - - - - - - - - - -
20.2 Transfer to Reserves (5.V.k) - - - - - - 496.723 - (937.409) 371.218 - 69.468 - - - - - -
20.3 Other - - - - - - - - - - - - - - - - - -

Balances at the End of Period (I+II+III+...+XVIII+XIX+XX) 1.816.100 - 39 - 149.561 - 4.299.045 556.164 858.403 1.544.232 (479.788) 126.494 11 (583.262) - 8.286.999 7.198 8.294.197 8.294.197

CURRENT PERIOD 01/01-31/12/2016

8.294.197
I. Balances at the Beginning of Period 1.816.100 - 39 - 149.561 - 4.299.045 556.164 858.403 1.544.232 (479.788) 126.494 11 (583.262) - 8.286.999 7.198 8.294.197

Changes in the Period (5.V.f) - - - - - - - - - - - - - - - - - -

(75.507)
II. Increase / Decrease Related to Mergers (5.V.f) - - - - - - - - - - - - - - - - - -
III. Valuation Differences of Securities (5.V.g) - - - - - - - - - - (75.507) - - - - (75.507) - (75.507)
ANNUAL REPORT 2016

IV. Hedging Transactions (Effective Portion) (5.V.h) - - - - - - - - - - - - - (423.958) - (423.958) - (423.958)

4.1 Cash Flow Hedge - - - - - - - - - - - - - 2.752 - 2.752 - 2.752
4.2 Hedging of a Net Investment in Foreign Subsidiaries - - - - - - - - - - - - - (426.710) - (426.710) - (426.710)
V. Revaluation Fund of Tangible Assets (5.V.i) - - - - - - - - - - - 40.495 - - - 40.495 - 40.495
VI. Revaluation Fund of Intangible Assets - - - - - - - - - - - - - - - - - -
VII. Bonus Shares Obtained from Associates, Subsidiaries and Joint Ventures - - - - - - - - - - - - - - - - - -
VIII. Foreign Exchange Differences (5.V.j) - - - - - - - 610.467 - - - - - - - 610.467 - 610.467
IX. Changes Related to Sale of Assets - - - - - - - - - - - - - - - - - -
X. Changes Related to Reclassification of Assets - - - - - - - - - - - - - - - - - -
XI. Effects of Changes in Equities of Associates - - - - - - - - - - - - - - - - - -
XII. The Effect of Capital Increase (5.V.a) 1.500.000 - (39) - - - (636.864) - - - - (113.097) - - - 750.000 - 750.000
12.1 Cash 750.000 - - - - - - - - - - - - - - 750.000 - 750.000
12.2 Internal Resources 750.000 - (39) - - - (636.864) - - - - (113.097) - - - - - -
XIII. Issuance of Capital Stock - - 15 - - - - - - - - - - - - 15 - 15
XIV. Share Cancellation Profits - - - - - - - - - - - - - - - - - -
XV. Capital Reserves from Inflation Adjustments to Paid-In Capital - - - - - - - - - - - - - - - - - -
XVI. Other - - - - - - - (6.710) - - - - - - - (6.710) - (6.710)

XVII. Current Period Net Profit / Loss - - - - - - - - 1.400.027 - - - - - - 1.400.027 1.072 1.401.099
XVIII. Profit Distribution (5.V.e) - - - - 37.813 - 118.525 - (858.403) 702.065 - - - - - - - -
18.1 Dividend Distributed - - - - - - - - - - - - - - - - - -
18.2 Transfer to Reserves (5.V.k) - - - - 37.813 - 118.525 - (858.403) 702.065 - - - - - - - -
18.3 Other - - - - - - - - - - - - - - - - - -

Balances at the End of Period (I+II+III+...+XVI+XVII+XVIII) 3.316.100 - 15 - 187.374 - 3.780.706 1.159.921 1.400.027 2.246.297 (555.295) 53.892 11 (1.007.220) - 10.581.828 8.270 10.590.098

(*)
The amount stated in the column Paid-in Capital Inflation Adjustment Difference and the amount stated in the column Other Reserves amounting to TL (4.802) and relating to the actuarial loss/profit calculated as per TAS 19 Employee Benefits is stated under Other Capital Reserves in consolidated financial
statements.

The accompanying notes are an integral part of these consolidated financial statements.
215
216 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR Consolidated Financial Report
Originally Issued in Turkish
THE PERIODS ENDED 31 DECEMBER 2016 AND 2015 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

CURRENT PERIOD PRIOR PERIOD

(01/01-31/12/2016) (01/01-31/12/2015)

A. CASH FLOWS FROM BANKING OPERATIONS

1.1 Operating Profit before Changes in Operating Assets and Liabilities (+) 1.943.673 543.317

1.1.1 Interest Received (+) 9.384.814 8.123.828

1.1.2 Interest Paid (-) 4.904.038 4.271.494
1.1.3 Dividend Received (+) 205 1.685
1.1.4 Fees And Commissions Received (+) 1.637.707 1.422.090
1.1.5 Other Income (+) 469.515 342.053
1.1.6 Collections from Previously Written-Off Loans and Other Receivables (+) 941.910 692.471
1.1.7 Payments to Personnel and Service Suppliers (-) 1.311.267 1.241.590
1.1.8 Taxes Paid (-) 373.635 185.185
1.1.9 Other (+/-) (5.VI.c) (3.901.538) (4.340.541)

1.2 Changes in Operating Assets and Liabilities (1.364.457) 1.992.315

1.2.1 Net (Increase) Decrease in Trading Securities (+/-) (65.357) 76.371

1.2.2 Net (Increase) Decrease in Financial Assets Designated at FV (+/-) - -
1.2.3 Net (Increase) Decrease in Banks (+/-) (151.097) 271.438
1.2.4 Net (Increase) Decrease in Loans (+/-) (16.999.803) (12.817.643)
1.2.5 Net (Increase) Decrease in Other Assets (+/-) (1.808.278) (1.858.214)
1.2.6 Net Increase (Decrease) in Bank Deposits (+/-) 119.622 (818.270)
1.2.7 Net Increase (Decrease) in Other Deposits (+/-) 19.374.401 9.321.619
1.2.8 Net Increase (Decrease) in Funds Borrowed (+/-) (389.133) 2.951.527
1.2.9 Net Increase (Decrease) in Due Payables (+/-) - -
1.2.10 Net Increase (Decrease) in Other Liabilities (+/-) (5.VI.c) (1.444.812) 4.865.487

I. Net Cash (Used in)/Provided from Banking Operations (+/-) 579.216 2.535.632

B. CASH FLOWS FROM INVESTING ACTIVITIES

II. Net Cash Provided from / (Used in) Investing Activities (+/-) 1.408.206 (1.541.714)

2.1 Cash Paid for Purchase of Investments, Associates and Subsidiaries (-) - -
2.2 Cash Obtained From Sale of Investments, Associates And Subsidiaries (+) 9.239 -
2.3 Fixed Assets Purchases (-) 272.403 178.371
2.4 Fixed Assets Sales (+) 64.905 119.692
2.5 Cash Paid for Purchase of Investments Available for Sale (-) 2.834.393 5.254.990
2.6 Cash Obtained From Sale of Investments Available for Sale (+) 4.440.858 3.767.174
2.7 Cash Paid for Purchase of Investment Securities (-) - -
2.8 Cash Obtained from Sale of Investment Securities (+) - -
2.9 Other (+/-) - 4.781

C. CASH FLOWS FROM FINANCING ACTIVITIES

III. Net Cash Provided from / (Used in) Financing Activities (+/-) 1.224.377 662.711

3.1 Cash Obtained from Funds Borrowed and Securities Issued (+) 8.676.950 7.822.843
3.2 Cash Used for Repayment of Funds Borrowed and Securities Issued (-) 8.202.573 7.710.132
3.3 Capital Increase (+) 750.000 550.000
3.4 Dividends Paid (-) - -
3.5 Payments for Finance Leases (-) - -
3.6 Other (+/-) - -

IV. Effect of Change in Foreign Exchange Rate on Cash and Cash Equivalents (+/-) (5.VI.c) 803.652 718.903

V. Net Increase / (Decrease) in Cash and Cash Equivalents (5.VI.c) 4.015.451 2.375.532

VI. Cash and Cash Equivalents at the Beginning of Period (+) (5.VI.a) 9.947.093 7.571.561

VII. Cash and Cash Equivalents at the End of Period (5.VI.a) 13.962.544 9.947.093

The accompanying notes are an integral part of these consolidated financial statements.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 217

DENZBANK ANONM RKET

Convenience Translation of
CONSOLIDATED PROFIT DISTRIBUTION TABLES Consolidated Financial Report
Originally Issued in Turkish
FOR THE PERIODS ENDED 31 DECEMBER 2016 AND 2015 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

CURRENT PERIOD PRIOR PERIOD

(01/01-31/12/2016) (01/01-31/12/2015)

I. DISTRIBUTION OF CURRENT YEAR INCOME

1.1 CURRENT YEAR INCOME - -

1.2 TAXES AND DUTIEN 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 YEAR 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 owner of ordinary shares - -
1.6.2 To owner of preferred shares - -
1.6.3 To owner of preferred shares (preem private rihgts) - -
1.6.4 To profit sharing bonds - -
1.6.5 To holders of profit or 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 owner of ordinary shares - -
1.9.2 To owner of preferred shares - -
1.9.3 To owner of preferred shares (preem private rihgts) - -
1.9.4 To profit sharing bonds - -
1.9.5 To holders of profit or loss sharing certificates - -
1.10 SECOND LEGAL RESERVES (-) - -
1.11 STATUTORY RESERVES (-) - -
1.12 GENERAL RESERVES - -
1.13 OTHER RESERVES - -
1.14 SPECIAL FUNDS - -

II. DISTRIBUTION OF RESERVES

2.1 APPROPRIATED RESERVES - -

2.2 SECOND LEGAL RESERVES (-) - -
2.3 DIVIDENDS TO SHAREHOLDERS (-) - -
2.3.1 To owner of ordinary shares - -
2.3.2 To owner of preferred shares - -
2.3.3 To owner of preferred shares (preem private rihgts) - -
2.3.4 To profit sharing bonds - -
2.3.5 To holders of profit or 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 PRIVILAGED SHARES - -
3.4 TO OWNERS OF PRIVILAGED SHARES (%) - -

IV. DIVIDEND PER SHARE

4.1 TO OWNERS OF ORDINARY SHARES - -

4.2 TO OWNERS OF ORDINARY SHARES (%) - -
4.3 TO OWNERS OF PRIVILAGED SHARES - -
4.4 TO OWNERS OF PRIVILAGED SHARES (%) - -

(*)
According to Turkish Commercial Code, profit distribution is prepared based on unconsolidated financial statements not on consolidated
financial statements.
218 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

SECTION THREE
ACCOUNTING POLICIES
I. Basis of presentation

a. Preparation of the consolidated financial statements and the accompanying footnotes in accordance with Turkish Accounting
Standards and Regulation on Principles Related to Banks Accounting Applications and Preserving the Documents

Consolidated financial statements have been prepared in accordance with the regulations, communiqus, explanations and circulars
published with respect to accounting and financial reporting principles by the Banking Regulation and Supervision Authority (BRSA)
within the framework of the provisions of the Regulation on the Principles and Procedures Regarding Banks Accounting Applications and
Document Keeping published in the Official Gazette no. 26333 dated 1 November 2006 in relation with the Banking Law no. 5411, as
well as the Turkish Accounting Standards (TAS) and Turkish Financial Reporting Standards (TFRS) enforced by the Public Oversight
Accounting and Auditing Standards Authority (POA) and the annexes and commentaries relating to these Standards (hereinafter
collectively referred to as Turkish Accounting Standards or TAS) if there are no specific regulations made by BRSA. The form and
content of the consolidated financial statements which have been drawn up and which will be disclosed to public have been prepared in
accordance with the Communiqu on the financial Statements to be Disclosed to the Public by Banks and the Related Explanations and
Footnotes and Communiqu On Disclosures About Risk Management To Be Announced To Public By Banks as well as the communiqus
that introduce amendments and additions to this Communiqu. The parent shareholder Bank keeps its accounting records in Turkish Lira,
in accordance with the Banking Law, Turkish Commercial Law and Turkish Tax legislation.

The amounts in the consolidated financial statements and explanations and footnotes relating to these statements have been denoted in
Thousand Turkish Liras unless otherwise stated.

Consolidated financial statements have been prepared based on historical cost principle, except the financial assets and liabilities
indicated at their actual values.

In the preparation of consolidated financial statements according to TAS, the management of the parent shareholder Bank should make
assumptions and estimations regarding the assets and liabilities in the balance sheet. These assumptions and estimations are reviewed
regularly, the necessary corrections are made and the effects of these corrections are reflected in the income statement. The assumptions
and estimations used are explained in the related foot notes.

The accounting policies followed and revaluation principles used in the preparation of consolidated financial statements have been
determined and implemented in accordance with the regulations, communiqus, explanations and circulars published by BRSA with
respect to accounting and financial reporting principles and principles covered by TAS/TFRS in cases where there were no specific
regulations made by BRSA and they are consistent with accounting policies implemented in consolidated financial statements prepared for
the period ending on 31 December 2015.

Aforementioned accounting policies and valuation principles are disclosed below in notes between note numbered II and note numbered
XXIV. There exist no significant impacts of TAS/TFRS amendments entered into force as of 1 January 2016 on accounting policies,
financial position and performance of DFH Group. TAS and TFRS amendments which are published but not entered into force as of
signature date of financial statements do not have significant impact on accounting policies, financial position and performance of DFH
Group, except for TFRS 9: Financial Instruments, which shall enter into force as of 1 January 2018 DFH Group has begun studies for
compliance to TFRS 9 Financial Instruments Standard.

b. Accounting policies and valuation principles used in the preparation of the financial statements
None (31 December 2015: None).

c. Additional paragraph for convenience translation:

The effects of differences between accounting principles and standards set out by BRSA Accounting and Reporting Regislation 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 in the accompanying financial statements. Accordingly, the
accompanying financial statements are not intended to present the financial position, results of operations and changes in financial
position and cash flows in accordance with the accounting principles generally accepted in such countries and IFRS.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 219

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

II. Explanation on the strategy for the use of financial instruments and transactions denominated in foreign currencies

a. Strategy for the use of financial instruments

Denizbank Financial Services Groups (DFS Group) external sources of funds are comprised of deposits with various maturity
periods, and short-term borrowings. These funds are fixed rate in general and are utilized in high yield financial assets. The
majority of the funds are allocated to high yield, floating rate instruments, such as Turkish Lira and foreign currency government
securities and Eurobonds, and to loans provided to customers on a selective basis in order to increase revenue and support
liquidity. The liquidity structure, insures meeting all liabilities falling due, is formed by keeping sufficient levels of cash and cash
equivalents by diversifying the sources of funds. The Bank assesses the maturity structure of the sources, and the maturity
structure and yield of placements at market conditions and adopts a high yield policy in long-term placements.

DFS Group assumes risks within the pre-determined risk limits short-term currency, interest and price movements in money and
capital markets and market conditions.

These positions are closely monitored by the Risk Management System of the Parent Bank and the necessary precautions are
taken if the limits are exceeded or should there be a change in the market environment.

In order to avoid interest rate risk, assets and liabilities with fixed and floating interests are kept in balance, taking the maturity
structure into consideration.

The asset-liability balance is monitored on a daily basis in accordance with their maturity structure and foreign currency type.
The risks associated with short-term positions are hedged through derivatives such as forwards, swaps and options.

No risks are taken as far as possible on foreign currencies other than US Dollar and Euro. Transactions are made under the
determined limits to cover the position.

Net foreign currency position of DFS Group in foreign enterprises is considered along with the position of the Parent Bank and
the specific position is evaluated within the risk limits.
b. Transactions denominated in foreign currencies

Foreign currency exchange rates used in converting transactions denominated in foreign currencies and their presentation in
the financial statements

DFS Group accounts for the transactions denominated in foreign currencies in accordance with TAS 21 The Effects of Changes in
Foreign Exchange Rates. Foreign exchange gains and losses arising from transactions that are completed as of the balance sheet
date are translated to TL by using historical foreign currency exchange rates. Balances of the foreign currency denominated
assets and liabilities are translated into TL by using foreign currency exchange rates of the Parent Bank and the resulting
exchange differences are recorded as foreign exchange gains and losses. The Parent Banks foreign currency exchange rates are
as follows.

31 December 2016 31 December 2015

US Dollar 3,5192 TL 2,9181 TL
Euro 3,7099 TL 3,1838 TL
Foreign exchange gains and losses included in the income statement

As of 31 December 2016, net foreign exchange loss included in the income statement amounts to TL 599.624 (1 January 30
September 2015: net foreign exchange loss of TL 1.527.603).

Total amount of valuation fund arising from foreign currency exchange rate differences

The assets and liabilities of foreign operations are translated to TL at foreign exchange rates of the Parent Bank ruling at the
balance sheet date. The revenues and expenses of foreign operations are translated to TL at nine months average foreign
exchange rates of the Parent Bank. The foreign exchange differences derived from translation of income statements of
consolidated subsidiaries, and arising from the difference between TL equivalent of their equities and the Parent Banks share in
their net assets are recorded in other profit reserves.

As of 31 December 2016, total foreign exchange differences in equity amount to TL 1.128.050 (31 December 2015: TL 522.439).
220 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

The foreign exchange difference of TL 36.673 (31 December 2015: TL 31.817) arising from the translation of the financial
statements of Bahrain branch of the Parent Bank to Turkish Lira per TAS 21 is recorded in other profit reserves.

DFS Groups foreign currency denominated subsidiaries on a consolidated basis of the difference in the resulting exchange
contracts to hedge the net investment hedge strategy is being implemented. Part of the same amount with foreign currency
deposits is designated as hedging instrument and the effective portion of the foreign exchange difference of these financial
liabilities is recognized under Hedging funds in equity.

III. Information regarding the consolidated subsidiaries

Consolidated financial statements are prepared in accordance with (TFRS 10) the Turkish Accounting Standard for
Consolidated Financial Statements.

The Parent Bank owns, directly or indirectly, the shares of Deniz Yatrm Menkul Kymetler A.. (Deniz Yatrm), Eurodeniz
International Banking Unit Ltd. (Eurodeniz), Deniz Portfy Ynetimi A.. (Deniz Portfy), Denizbank AG, JSC Denizbank, Deniz
Finansal Kiralama A.. (Deniz Leasing), Deniz Faktoring A.. (Deniz Faktoring), Deniz Gayrimenkul Yatrm Ortakl A.. (Deniz
GYO) and CR Erdberg Eins GmbH & Co KG (CR Erdberg) and these subsidiaries are consolidated fully.

DFS Funding Corp., which is a structured entity, is also included in the scope of consolidation.

It was decided to change type and title of Ekspres Menkul Deerler A.. (Ekspres Menkul Deerler) in Extraordinary General
Assembly meeting held on 5 August 2016 and the decision has been registered at Istanbul Trade Registry Office on 10 August
2016 and title of Ekspres Menkul Deerler has changed as Ekspres Bilgi lem ve Ticaret Anonim irketi (Ekspres Bilgi lem) and
it was excluded from consolidated subsidiaries in scope of BRSA regulations since it has a non-financial subsidiary status.

The Parent Bank and its consolidated subsidiaries are referred to as DFS Group in the disclosures and footnotes related to the
consolidated financial statements.

In addition, the non-financial subsidiaries of the parent bank; Intertech Bilgi lem ve Pazarlama Ticaret A.. (Intertech), Deniz
Kltr Sanat Yaynclk Ticaret ve Sanayi A.. (Deniz Kltr) and Banta Nakit ve Kymetli Mal Tama ve Gvenlik Hizmetleri
A.. (Banta) which is jointly controlled company and affiliates of Intertech; Deniz Kartl deme Sistemleri A.. and Ak Deniz
Radyo ve Televizyon letiim Yaynclk Ticaret ve Sanayi A.., Deniz Immobilien Service GMBH (Deniz Immobilien) subsidiary of
Denizbank AG since they are non-financial subsidiaries are excluded from the consolidation process.

Important changes on consolidated subsidiaries in reporting period

Shares of Destek Varlk Ynetim A.., owned at 100% ratio by Deniz Yatrm, Ekspres Bilgi lem, Deniz Finansal Kiralama,
Deniz Faktoring and Intertech, were sold to Lider Faktoring and Merkez Faktoring with a total consideration of TL 12.320 on 29
December 2016 in accordance with the Board of Directors decision of the Company dated 14 July 2016.

Consolidation principles for subsidiaries

Subsidiaries are the entities controlled directly or indirectly by the Parent Bank. Subsidiaries are consolidated using the full
consolidation method.

Control is defined as the power over the investee, exposure or rights to variable returns from its involvement with the investee
and the ability to use its power over the investee to affect the amount of the Banks returns.

According to this method, the financial statements of the Parent Bank and its subsidiaries are combined on a line-by-line basis by
adding together like items of assets, liabilities, income, expenses and off-balance sheet items, in preparing consolidated financial
statements. Minority interests are presented separately in the consolidated balance sheet and consolidated income statement.

The carrying amount of the Parent Banks investment in each subsidiary and the Parent Banks portion of equity of each
subsidiary are eliminated.

All intercompany transactions and intercompany balances between the consolidated subsidiaries and the Parent Bank are
eliminated.
The financial statements which have been used in the consolidation are prepared as of 31 December 2016 and appropriate
adjustments are made to financial statements to use uniform accounting policies for transactions and events alike in similar
circumstances, in accordance with the principal of materiality.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 221

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

IV. Explanations on forward transactions, options and derivative instruments

DFS Groups derivative transactions mainly consist of foreign currency and interest rate swaps, foreign currency options and
forward foreign currency purchase/sale contracts.

In accordance with TAS 39 Financial Instruments: Recognition and Measurement, forward foreign currency purchase/sale
contracts, swaps, options and futures that are classified as trading purpose transactions. Derivative transactions are recorded
with their fair values at contract date. Also, the liabilities and receivables arising from the derivative transactions are recorded as
off-balance sheet items at their contractual notional amounts.

The derivative transactions are valued at fair value using market prices or pricing models subsequent to initial recognition and
are presented in the Positive Value of Trading Purpose Derivatives and Negative Value of Trading Purpose Derivatives items
of the balance sheet depending on the resulting positive or negative amounts of the computed value. Gains and losses arising
from a change in the fair value are recognized in the income statement. Fair values of derivatives are calculated using discounted
cash flow model or market value.

V. Explanations on interest income and expenses

Interest income and expenses are recognized as they are accrued taking into account the internal rate of return method. Interest
accrual does not start until non-performing loans become performing and are classified as performing loans or until collection
in accordance with the Regulation on the Principles and Procedures Related to the Determination of the Loans and Other
Receivables for which Provisions Shall be Set Aside by Banks and to the Provisions to be Set Aside, published in the Official
Gazette No. 26333 dated 1 November 2006, which was prepared on the basis of the provisions of Articles 53 and 93 of the
Banking Law no. 5411.

VI. Explanations on fees and commissions

Fees and commissions received and paid, and other fees and commissions paid to financial institutions are either recognized on
an accrual basis over the period the service is provided or received or recognized as income or expense when collected or paid
depending on their nature.

VII. Explanations on financial assets

Financial assets include cash; acquisition right of cash or acquisition right of other financial asset or bilateral exchange right
of financial assets or equity instrument transactions with the counterpart. Financial assets are classified in four categories; as
financial assets at fair value through profit or loss, financial assets available-for-sale, investment held-to-maturity, and loans and
receivables.

a. Financial assets at fair value through profit or loss

Financial assets held for trading

Trading financial assets are financial assets which are either acquired for generating a profit from short-term fluctuations in
prices or are financial assets included in a portfolio aimed at short-term profit making.

Trading financial assets are recognized at their fair value in the balance sheet and remeasured at their fair value after
recognition.

All gains and losses arising from valuations of trading financial assets are reflected in the income statement. In accordance with
descriptions of the uniform chart of accounts, favorable difference between acquisition cost of financial asset and its discounted
value are recognized in Interest Income, in the case of fair value of asset is above its discounted value, favorable difference
between them are recognized in Capital Market Transactions Profits account, in the case of fair value is below discounted
value, unfavorable difference between them are recognized in Capital Market Transactions Losses account. In the case of
financial asset is sold off before its maturity, consisted gains or losses are accounted within the same principals.

Derivative financial assets are classified as trading financial assets unless they are used for hedging purposes. The accounting of
derivative financial assets is explained in Note IV of Section Three.

Financial assets at fair value through profit or loss

DFS Group does not have any securities designated as financial assets at fair value through profit or loss.
222 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

b. Investment securities available-for-sale

Available-for-sale assets are financial assets that are not loans and receivables, held to maturity investments and financial assets
at fair value through profit or loss.

After the recognition, financial assets available for sale are remeasured at fair value. Interest income arising from available
for sale calculated with Effective interest method and dividend income from equity securities are reflected to the income
statements. Unrealized gains and losses arising from the differences at fair value of securities classified as available for sale and
that is representing differences between amortized cost calculated with effective interest method and fair value of financial assets
are recognized under the account of Marketable securities valuation differences inside shareholders equity items. Unrealized
profits and losses do not represent on relevant income statement until these securities are collected or disposed of and the
related fair value differences accumulated in the shareholders equity are transferred to the income statement. When these
securities are collected or disposed of, the related fair value differences accumulated in the shareholders equity are transferred
to the income statement.

c. Investment securities held-to-maturity

Held to maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturity that an
entity has the positive intention and ability to hold to maturity other than those that the entity upon initial recognition designates
as at fair value through profit or loss, those that the entity designates as available for sale; and those that meet the definition of
loans and receivables.

Held to maturity financial assets are initially recognized at acquisition cost including the transaction costs which reflects the fair
value of the those instruments and subsequently recognized at amortized cost by using effective interest rate method.

Interest incomes obtained from held to maturity financial assets are presented in the line of interest received from securities
portfolio investment securities held-to-maturity in the consolidated statement of income.

There are no financial assets that are banned from being classified as investment securities held-to maturity for two years due to
the violation of the tainting rule.

Real coupon of Consumer Price Index (CPI) that is linked government bonds under available-for-sale and held-to maturity
portfolios remains fixed until maturity. At the same time intended to effect of change in Consumer Price Index, valuation is
carried out with using reference indexes at relating issue of security and preparation date of financial statements.

d. Loans and specific provisions

Loans and receivables are non-derivative financial assets that are not classified as financial assets at fair value through
profit or loss or financial assets available for sale, are unlisted in an active market and whose payments are fixed or can be
determined. Loans and receivables are carried initially by adding acquisition cost to transaction costs which reflect fair value and
subsequently recognized at the discounted value calculated using the Effective interest method.

Foreign currency loans are subject to evaluation and currency exchange differences arising from such re-measurements are
reflected in Foreign Exchange Gains/Losses account in the consolidated income statement. Foreign currency-indexed loans are
initially recognized in their Turkish Lira equivalents; repayments are calculated with exchange rate at payment date, currency
exchange differences occured are reflected in profit/loss accounts.

Specific and general allowances are made in accordance with the Regulation on the Principles and Procedures Related to the
Determination of the Loans and Other Receivables for which Provisions Shall be Set Aside by Banks and to the Provisions to
be Set Aside published in the Official Gazette numbered 26333 dated 1 November 2006, and which was amended with the
communiqu published in the Official Gazette numbered 27513 dated 6 March 2010.

When collections are made on loans that have been provided for, they are credited to the income statement accounts Provision
for Loan Losses or Other Receivables if the provision was made in the current year, otherwise such collections are credited to
Other Operating Income account with respect to allowances made in prior years. The interest income recovered is booked in
Other Interest Income account.
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Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

VIII. Explanations on impairment of financial assets

The existence of objective evidence whether a financial asset or group of financial assets is impaired, is assessed at each balance
sheet date. If such evidence exists, impairment provision is provided.

Impairment for held-to-maturity financial assets carried at amortized cost is calculated as the difference between the present
value of the expected future cash flows discounted based on the Effective interest method and its carrying value. Regarding
available-for-sale financial assets, when there is objective evidence that the asset is impaired the cumulative loss that had been
recognized in other comprehensive income shall be reclassified from equity to profit or loss as a reclassification adjustment even
though the financial asset has not been derecognized. An explanation about the impairment of loans and receivables is given in
Note VII-d of Section Three.

IX. Explanations on offsetting financial instruments

Financial assets and liabilities are offset and the net amount is reported in the balance sheet when the DFS Group has a legally
enforceable right to offset the recognized amounts and there is an intention to collect/pay the related financial assets and
liabilities on a net basis, or to realize the asset and settle the liability simultaneously.

X. Explanations on sale and repurchase agreements and transactions related to the lending of securities

Government bonds and treasury bills sold to customers under repurchase agreements are classified according to purpose of
being hold into portfolio on the assets side of the accompanying consolidated balance sheet within Financial Assets Held for
Trading, Investment Securities Available for Sale and Investment Securities Held to Maturity and are valuating according
to valuation principles of relating portfolio. Funds obtained from repurchase agreements are presented on the liability side of
the consolidated balance sheet within the account of Funds Provided under Repurchase Agreements. The accrual amounts
corresponding to the period is calculated over the sell and repurchase price difference determined in repurchase agreements.
Accrued interest expenses calculated for funds obtained from repurchase agreements are presented in Reverse Repurchase
Agreements account in liability part of the consolidated balance sheet.

Securities received with resale commitments are presented under Reverse Repurchase Agreements line in the balance sheet.
The accrual amounts for the corresponding part to the period of the resale and repurchase price difference determined in
reverse repurchase agreements are calculated using the Effective interest method. The Parent Bank has not any security which
subjected to borrowing activities.

XI. Explanations on assets held for sale and discontinued operations

An asset is regarded as Asset held for resale only when the sale is highly propable and the asset is available for immediate
sale in its present condition. For a highly probable sale, there must be a valid plan prepared by the management for the sale
of asset including identification of possible buyers and completion of sale process. Various events and conditions can prolong
completion period of sale transaction to more than 1 year. This loss of time is realized due to events and conditions out of contol
of an enterprise and in the position of competent evidence about sales plan of an enterprise for sale of relevant asset continuing,
assets mentioned continuing to be classified as assets held for sale.

The liabilities of a disposal group classified as held for sale shall be presented separately from other liabilities in the statement
of financial position. Those assets and liabilities shall not be offset and presented as a single balance.

A discontinued operation is a division of a bank that is either disposed or held for sale and represents a separate major line
of business or geographical area of operations; or is part of a single coordinated plan to dispose of a separate major line of
business or geographical area of operations; or is a subsidiary acquired exclusively with a view to resale.

Shares of Destek Varlk Ynetim A.., owned at 100% ratio by Deniz Yatrm, Ekspres Bilgi lem, Deniz Finansal Kiralama,
Deniz Faktoring and Intertech, were sold to Lider Faktoring and Merkez Faktoring with a total consideration of TL 12.320 on 29
December 2016 in accordance with the Board of Directors decision of the Company dated 14 July 2016.

As 31 December 2016, DFS Group does not have a discontinued operation (31 December 2015: None).
224 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

XII. Explanations on goodwill and other intangible assets

a. Goodwill

Goodwill represents the excess of the total acquisition costs over the shares owned in the net assets of the acquired company at
the date of acquisition. The net goodwill resulted from the acquisition of the investment and to be included in the consolidated
balance sheet, is calculated based on the financial statements of the investee company as adjusted according to the required
accounting principles. Assets of the acquired company which are not presented on financial statements but seperated from
goodwill represented with fair values of tangible assets (credit card brand equity, customer portfolio etc.) and/or contingent
liabilities to financial statements in process of acquisition.

In accordance with TFRS 3 Business Combinations, the goodwill is not amortized. It is tested yearly or if there is any indication
of impairment according to TAS 36 Impairment of Assets.

b. Other intangible assets

Intangible assets are initially classified over acquisition cost values and other costs which are required for activation of the
financial asset in accordance with TAS 38 Intangible Assets standard. Intangible assets are evaluated over excess value of net
cost that derived from accumulated depreciation and accumulated impairment after recognition period.

The Groups intangible assets consist of software, license rights, data/telephone line, total values of credit cards and personal
loans portfolio.

Intangible assets purchased before 1 January 2003 and after 31 December 2006 are amortized on a straight-line basis; and
those purchased between the aforementioned dates are amortized by using the double-declining method. Useful life of an
asset is estimated by assessment of the expected life span of the asset, technical, technological wear outs, of the asset. The
amortization rates used approximate the useful lives of the assets.

Maintenance costs associated with the computer software that are in use are expensed at the period of occurrence.

XIII. Explanations on tangible assets

DFH Group has passed to revaluation model from cost model in the framework of TAS 16 Intangible Fixed Assets in valuation
of properties in use which are tracjed under intangible fixed assets as of 31 December 2016 while it tracks all of its intangible
fixed assets in accordance with TAS 16 Intangible Fixed Assets. Positive differences between property value in expertise
reports prepared by licenced valuation firms and net carrying amount of the related property are tracked under equity accounts
while negative differences are tracled under income statement.

Estimated Economic Life (Year) Depreciation Rate

Movables
- Office machinery 4 Years % 10 - % 50
- Furniture/Furnishing 5 Years % 10 - % 50
- Means of transport 5 Years % 20 - % 50
- Other equipment 10 Years % 2,50 - % 50
Real estates 50 Years % 2 - % 3,03
Expenditures for maintenance and repairs that are routinely made on tangible assets are charged as expense. The capital
expenditures incurred in order to increase the capacity of the tangible asset or to increase the future benefit of the asset are
capitalized on the cost of the tangible asset.

There are no restrictions such as pledges and mortgages on tangible assets or no purchase commitments.

XIV. Explanations on investment properties

Land and buildings that are held for rental yields or for capital appreciation or both rather than held in the production or
supply of goods or services or for administrative purposes or for the sale in the ordinary course of business are classified as
investment property. Investment property is carried at fair value. Gains or losses arising from a change in the fair value of
investment property are recognized in the income statement in the period in which they occur.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 225

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Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Investment property is derecognized through disposal or withdrawal from use and when no future economic benefit is expected
from its disposal. Gains or losses arising from the disposal of investment property are recognized in the related statement of
income or expense accounts in the period in which they occur.

Due to sale of the Parent Banks real property to the subsidiary Deniz GYO in 2015, this property has been classified as
investment property in the Groups consolidated financial statements, and the difference of TL 13.397 between the net book
value and fair value as of the date of sale has been classified in Investment Properties Revaluation Differences under Equity
according to TAS 16.

XV. Explanations on leasing activities

Fixed assets acquired through financial leasing are recognized in tangible assets and depreciated in line with fixed assets group
they relate to.The obligations under finance leases arising from the lease contracts are presented under Finance Lease Payables
account in the balance sheet. Interest expense and currency exchange rate differences related to leasing activities are recognized
in the income statement.

DFS Group has finance lease transactions as lessor via its subsidiary, Deniz Leasing. The lease receivables related to leased
assets are recorded as finance lease receivables.The asset subject to the financial leasing is presented in the balance sheet as
receivable equal to the net leasing amount. Interest income is recognized over the term of the lease using the net investment
method which reflects a constant periodic rate of return and the unrecognized portion is followed under unearned interest
income account.

Specific provisions for non-performing financial lease receivables of DFS Group are provided for in accordance with the
Communiqu On Procedures and Principles For The Provisions To Be Set Aside By Financial Leasing, Factoring and Financing
Companies For Their Receivables published in the Official Gazette numbered 28861 dated 24 December 2013 and it represented
under loans and specific provision for receivables in the consolidated balance sheet.

Transactions regarding operational agreements are accounted on an accrual basis in accordance with the terms of the related
contracts.

XVI. Explanations on provisions and contingent liabilities

Provisions other than specific and general provisions for loans and other receivables and free provisions for probable risks,
and contingent liabilities are provided for in accordance with TAS 37 Provisions, Contingent Liabilities and Contingent Assets.
Provisions are accounted for immediately when obligations arise as a result of past events and a reliable estimate of the
obligation is made by DFS Group management. Whenever the amount of such obligations cannot be measured, they are regarded
as Contingent. If the possibility of an outflow of resources embodying economic benefits becomes probable and the amount of
the obligation can be measured reliably, a provision is recognized. If the amount of the obligation cannot be measured reliably or
the possibility of an outflow of resources embodying economic benefits is remote, such liabilities are disclosed in the footnotes.

Based on the representations of the Parent Banks attorneys, there are 9.352 lawsuits against DFS Group with total risks
amounting to TL 230.822, US Dollar 757.354 and Euro 1.579.799 as of 31 December 2016. There are also 14.433 follow-up
cases amounting to TL 619.598, US Dollar 2.363.954 and Euro 45.000 in total that are filed by DFS Group and are at courts.
DFS Group booked a provision amounting to TL 29.059 for the continuing lawsuits (31 December 2015: TL 26.288).

XVII. Explanations on obligations for employee benefits

Provision for employee benefits has been accounted for in accordance with TAS 19 Employee Benefits.

The Parent Bank in accordance with existing legislation in Turkey, is required to make retirement and notice payments to each
employee whose employment is terminated due to reasons other than resignation or misconduct. Except to the this extents,
the Parent Bank is required to make severance payment to each employee whose employment is terminated due to retirement,
death, military service and to female employees following their marriage within one year leave the job of their own accords by
fourteenth clause of Labour Law.

DFS Group, in accordance with TAS 19 Employee Benefits realized provision registry under the condition of prediction of
present value of possible liability in the future related to employee termination benefits. Losses and gains which occur after 1
January 2013 are adjusting under the Equity Accounts in accordance with updated TAS 19 Standard.

The Bank has recognized vacation pay liability amount which is calculated from unused vacation to financial statement as a
provision.
226 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

XVIII. Explanations on taxation

a. Current taxes
In accordance with the Corporate Tax Law No: 5520 published in the Official Gazette numbered 26205 dated 21 June 2006, the
corporate tax rate is levied at 20% beginning from 1 January 2006.
Companies file their corporate tax returns between the 1st and 25th days of the following four months period after to which
they relate and the payments are made until the end of that month.
The provision for corporate tax for the period is reflected as the Current Tax Liability in the liabilities and Current Tax
Provision in the income statement.
In accordance with the Corporate Tax Law, tax losses can be carried forward for five years. The tax authorities can inspect tax
returns and the related accounting records back to a maximum period of five years.

Besides institutions reside in Turkey, dividends paid to the offices or the institutions earning through their permanent
representatives in Turkey are not subject to withholding tax. According to the decision no. 2006/10731 of the Council of
Ministers published in the Official Gazette no. 26237 dated 23 July 2006, certain duty rates included in the articles no.15
and 30 of the new Corporate Tax Law no.5520 are revised. In this respect, the withholding tax rate on the dividend payments
other than the ones paid to the nonresident institutions generating income in Turkey through their operations or permanent
representatives and the institutions residing in Turkey is 15%. While applying the withholding tax rates on dividend payments to
the foreign based institutions and the real persons, the withholding tax rates covered in the related Avoidance of Double Taxation
Treaty are taken into account. Addition of profit to capital is not considered as profit distribution and therefore is not subject to
withholding tax.

The foreign subsidiaries of DFS Group that operate in Austria, the Russian Federation and Cyprus are subject to corporate tax
rates of 25%, 20% and 2%, respectively.
Current Tax Effects that sourced from directly classified in equity transactions represent on equity accounts.
b. Deferred taxes
In accordance with TAS 12 Income Taxes, DFS Group accounts for deferred taxes based on the tax effect of temporary
differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes.

Individual deferred tax assets and liabilities of the consolidated entities have been offset in their separate financial statements,
but have not been offset in the consolidated balance sheet. As a result of offsetting, as of 31 December 2016 deferred tax assets
of TL 153.176 (31 December 2015: TL 141.366) and deferred tax liabilities of TL 15.446 (31 December 2015: TL 8.652) have
been recognized in the accompanying financial statements.
Deferred taxes directly related to equity items are recognized and offset in related equity accounts.
Deferred tax liabilities are generally recognized for all taxable temporary and deferred tax assets are recognized for all
deductible temporary differences to the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilized. Deferred tax asset is not computed over provisions for possible risks and
general loan loss provisions according to the circular of BRSA numbered BRSA.DZM.2/13/1-a-3 and dated 8 December 2004.
c. Transfer pricing
In the framework of the provisions on Disguised Profit Distribution Through Transfer Pricing regulated under article 13 of
Corporate Tax Law no. 5520, pursuant to the Corporate Tax Law General Communiqu no. 1, which became effective upon its
promulgation in the Official Gazette dated 3 April 2007 and numbered 26482, Corporate Tax Law General Communiqu no. 3,
which became effective upon its promulgation in the Official Gazette dated 20 November 2008 and numbered 27060, Council
of Ministers Decree no. 2007/12888, which became effective upon its promulgation in the Official Gazette dated 6 December
2007 and numbered 26722, Council of Minister Decree no. 2008/13490, which became effective upon its promulgation in the
Official Gazette dated 13 April 2008 and numbered 26846, General Communiqu No. 1 on Disguised Profit Distribution Through
Transfer Pricing, which became effective upon its promulgation in the Official Gazette dated 18 November 2007 and numbered
26704 and General Communiqu No. 2 on Disguised Profit Distribution Through Transfer Pricing, which became effective upon
its promulgation in the Official Gazette dated 22 April 2008 and numbered 26855, profits shall be deemed to have been wholly
or partially distributed in a disguised manner through transfer pricing if companies engage in the sales or purchases of goods or
services with related parties at prices or amounts defined contrary to the arms length principle. Buying, selling, manufacturing
and construction operations and services, renting and leasing transactions, borrowing or lending money, bonuses, wages and
similar payments are deemed as purchase of goods and services in any case and under any condition.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 227

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Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Corporate taxpayers are obliged to fill in the The Form on Transfer Pricing, Controlled Foreign Corporation and Thin Capital
regarding the purchases or sales of goods or services they perform with related parties during a fiscal period and submit it to
their tax office in the attachment of the corporate tax return.

Furthermore, the taxpayers registered in the Large Taxpayers Tax Administration (Byk Mkellefler Vergi Dairesi Bakanl)
must prepare the Annual Transfer Pricing Report in line with the designated format for their domestic and cross-border
transactions performed with related parties during a fiscal period until the filing deadline of the corporate tax return, and if
requested after the expiration of this period, they must submit the report to the Administration or those authorized to conduct
tax inspection.

XIX. Additional explanations on borrowings

Instruments representing the borrowings are initially recognized at cost represented its fair value and measured at amortized
cost based on the internal rate of return at next periods. Foreign currency borrowings have been translated using the foreign
currency buying rates of the Parent Bank at the balance sheet date. Interest expense incurred for the period has been recognized
in the accompanying financial statements.

General hedging techniques are used for borrowings against liquidity and currency risks. The Parent Bank, if required, borrows
funds from domestic and foreign institutions. The Parent Bank can also borrows funds in the forms of syndication loans and
securitization loans from foreign institutions.

XX. Explanations on issuance of share certificates

Transactions regarding issue of shares are mentioned in note numbered II-l-8 in section five. Profit shares related to shares have
not been announced after date of balance sheet.

XXI. Explanations on acceptances

Acceptances are realized simultaneously with the customer payments and recorded in off-balance sheet accounts, if any.

As of the balance sheet date, there are no acceptances recorded as liability in return for assets.

XXII. Explanations on government grants

As of the balance sheet date, DFS Group does not have any government grants.

XXIII. Explanations on segment reporting

Segment reporting is presented in Note IX of Section Four.

XXIV. Explanations on other matters

None (31 December 2015: None).

228 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

SECTION FOUR

CONSOLIDATED FINANCIAL POSITION AND RISK MANAGEMENT

I. Explanations related to the consolidated shareholders equity

Shareholders equity and capital adequacy ratio are calculated in accordance with the Regulation on Equities of Banks and
Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks.

The current period equity amount of the DFS Group is TL 15.803.437 while its capital adequacy standard ratio is 14,17% as
of 31 December 2016. Calculations of 31 December 2015 have been made in the framework of repealed regulations and equity
amount is TL 12.613.417 while the capital adequacy standard ratio is 12,93%.

a. Components of consolidated shareholders equity

Current Period Amounts subject to

31 December 2016 treatment before 1/1/2014
Common Equity Tier 1 capital
Directly issued qualifying common share capital plus related stock surplus 3.316.100
Share premium 15
Legal reserves 3.968.080
Projected gains to shareholders equity of the accounting standards in Turkey 212.370
Profit 3.646.324
Net current period profit 1.400.027
Prior period profit 2.246.297
Free shares from investments and associates, subsidiaries and joint ventures that is not recognised in profit 11
Minority shares 8.270
Common Equity Tier 1 capital before regulatory adjustments 11.151.170
Common Equity Tier 1 capital: regulatory adjustments
Prudential valuation adjustments --
Sum of current year net loss and prior periods loss that is not covered with reserves and losses on
shareholders equity of the accounting standards in Turkey 560.456
Development cost of operating lease 91.733
Goodwill (net of related tax liability) 522 869
Other intangibles other than mortgage-servicing rights (net of related tax liability) 122.370 203.950
Deferred tax assets that rely on future profitability excluding those arising from temporary differences
(net of related tax liability) 378
Cash-flow hedge reserve --
Gains and losses due to changes in own credit risk on fair valued liabilities --
Securitisation gain on sale --
Gains and losses due to changes in own credit risk on fair valued liabilities --
Defined-benefit pension fund net assets --
Investments in own shares (if not already netted off paid-in capital on reported balance sheet) --
Reciprocal cross-holdings in common equity --
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory
consolidation, net of eligible short positions, where the bank does not own more than 10% of the issued
share capital (amount above 10% threshold) --
Significant investments in the common stock of banking, financial and insurance entities that are outside the
scope of regulatory consolidation, net of eligible short positions (amount above 10% threshold) --
Mortgage servicing rights (amount above 10% threshold) --
Deferred tax assets arising from temporary differences (amount above 10% threshold, net of related tax
liability) --
Amount exceeding the 15% threshold --
of which: significant investments in the common stock of financials --
of which: mortgage servicing rights --
of which: deferred tax assets arising from temporary differences --
National specific regulatory adjustments --
Regulatory adjustments applied to Common Equity Tier 1 due to insufficient Additional Tier 1 and Tier 2 to
cover deductions --
Total regulatory adjustments to Common equity Tier 1 775.459
Common Equity Tier 1 capital (CET1) 10.375.711
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 229

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Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Additional Tier 1 capital: instruments

Directly issued qualifying Additional Tier 1 instruments plus related stock surplus of which: classified as equity under applicable
accounting standards --
Directly issued qualifying Additional Tier 1 instruments plus related stock surplus of which: classified as liabilities under
applicable accounting standards --
Additional Tier 1 instruments (and CET1 instruments not included in row 5) issued by subsidiaries and held by third parties
(amount allowed in group AT1) of which: instruments issued by subsidiaries subject to phase out --
The additional Tier 1 capital shares of third parties --
The additional Tier 1 capital shares of third parties (Covered by Temporary Ailicte 3) --
Additional Tier 1 capital before regulatory adjustments --
Additional Tier 1 capital: regulatory adjustments --
Investments in own Additional Tier 1 instruments --
Reciprocal cross-holdings in Additional Tier 1 instruments --
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation,
net of eligible short positions, where the bank does not own more than 10% of the issued common share capital of the entity
(amount above 10% threshold) --
Significant investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory
consolidation (net of eligible short positions) --
National specific regulatory adjustments --
The process of transition will continue to reduce from Tier 1 Capital --
Goodwill or other intangibles and deferred tax liabilities of which the regulation concerning transitional Article 2 of subsection of
core capital not reduced from (-) 81.927
Net deferred tax asseUliabi)ty which is not deducted trom Common Eguity Tier 1 oapitat for the purposes ot the sub
paragraph ot the Provisionat Arlicle 2 of the Regutation on Banks Own Funds (-) 252
Regutatory adjustments apptied to Additionat Tier 1 due to insutficient Tier 2 to cover deductions (-) --
Total regulatory adjustments to Additional Tier 1 capital 82.179
Additional Tier 1 capital (AT1) (82.179)
Tier 1 capital (T1 = CET1 + AT1) 10.293.532
Tier 2 capital: instruments and provisions
Directly issued qualifying Tier 2 instruments plus related stock surplus 4.262.567
Directly issued qualifying Tier 2 instruments plus related stock surplus 140.768
The additional Tier 1 capital shares of third parties --
The additional Tier 1 capital shares of third parties (Covered by Temporary Ailicte 3) --
Provisions 1.269.354
Tier 2 capital before regulatory adjustments 5.531.921
Tier 2 capital: regulatory adjustments --
Investments in own Tier 2 instruments (-) --
Reciprocal cross-holdings in Tier 2 instruments --
Investments in the capital of banking, financial and insurance entities that are outside the scope of regulatory consolidation,
net of eligible short positions, where the bank does not own more than 10% of the issued common share capital of the entity
(amount above the 10% threshold) (-) --
Significant investments in the capital banking, financial and insurance entities that are outside the scope of regulatory
consolidation (net of eligible short positions) --
National specific regulatory adjustments (-) --
Total regulatory adjustments to Tier 2 capital --
Tier 2 capital (T2) 5.531.921
Total capital (TC = T1 + T2) 15.825.453
Total risk weighted assets
Loans extended being non compliant with articles 50 and 51 of the Law --
Podion ot the sum of the banka reat estate net book vaNce, ahich is in excess ot titiy per cent of their oan funds and net book
vatues of those ot memhandise and real estate which hava to be acpuirad dua to their raceivabtas and disposed of pursuant
to Aniote 57 ot the Banking Laa, ahich cannot be dsposed ot despite the lapse ola period of tive years s:nce the dat e ot such
acquisition 9.825
National specific regulatory adjustments 12.191
The process of transition will continue to reduce from Common Equity Tier 1 capital and Additional Tier 1 capital
of which: The sum of partnership share on banks and financial institutions (domestic and abroad), with shareholding of less than
10% --
of which: Partnership share on banks and financial institutions (domestic and abroad) that are not consolidated, with a
shareholding of 10% and above --
of which: Partnership share on banks and financial institutions (domestic and abroad) that are not consolidated, with a
shareholding of 10% and above --
Shareholders Equity
Total shareholders equity 15.803.437
Total risk weighted items 111.503.228
CAPITAL ADEQUACY RATIOS
Consolidated Core Capital Adequacy Ratio (%) 9,31
Consolidated Tier 1 Capital Adequacy Ratio (%) 9,23
Consolidated Capital Adequacy Standard Ratio (%) 14,17
230 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

BUFFERS
Institution specific buffer requirement 0,647
Capital conservation buffer requirement (%) 0,625
Bank specific countercyclical buffer requirement (%) 0,022
Common Equity Tier 1 available to meet buffers (as a percentage of risk weighted assets) (%) 0,013
Amounts below the thresholds for deduction (before risk weighting)
Non-significant investments in the capital of other financials --
Significant investments in the common stock of financials --
Mortgage servicing rights (net of related tax liability) --
Deferred tax assets arising from temporary differences (net of related tax liability) --
Applicable caps on the inclusion of provisions in Tier 2
Provisions eligible for inclusion in Tier 2 in respect of exposures subject to standardised approach (prior to application of cap) 1.269.354
Cap on inclusion of provisions in Tier 2 under standardised approach 1.269.354
Provisions eligible for inclusion in Tier 2 in respect of exposures subject to internal ratings-based approach (prior to application
of cap) --
Cap for inclusion of provisions in Tier 2 under internal ratings-based approach --
Debt instruments subjected to Article 4 (to be implemented between January 1, 2018 and January 1, 2022)
Upper limit for Additional Tier I Capital subjected to temprorary Article 4 --
Amounts Excess the Limits of Additional Tier I Capital subjected to temprorary Article 4 --
Upper limit for Additional Tier II Capital subjected to temprorary Article 4 683.202
Amounts Excess the Limits of Additional Tier II Capital subjected to temprorary Article 4 --

Prior Period
31 December 2015 (*)
CORE CAPITAL
Paid-in capital following all debts in terms of claim in liquidation of the Bank 1.816.100
Share premium 39
Share cancellation profits --
Reserves 4.448.606
Gains recognized in equity as per TAS 128.405
Profit 2.402.635
Current Period Profit 858.403
Prior Period Profit 1.544.232
Provisions for Possible Risks 11.000
Bonus Shares from Investments in Associates, Subsidiaries and Joint Ventures that are not recognized in Profit 11
Minorities Share 7.198
Core Capital Before Deductions 8.813.994
Deductions from Common Equity
Portion of the current and prior periods losses which cannot be covered through reserves and losses reflected in equity in accordance with TAS (-) 505.426
Leasehold improvements (-) 98.486
Goodwill or other intangible assets and deferred tax liability related to these items (-) 71.304
Net deferred tax asset/liability (-) 28.701
Shares obtained contrary to the 4th clause of the 56th Article of the Law (-) --
Direct and indirect investments of the Bank in its own Core Capital (-) --
Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside the scope of consolidation where the
Bank owns 10% or less of the issued common share capital exceeding 10% of Core Capital of the Bank (-) --
Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside the scope of consolidation where the
Bank owns 10% or more of the issued common share capital exceeding 10% of Core Capital of the Bank (-) --
Portion of mortgage servicing rights exceeding 10% of the Core Capital (-) --
Portion of deferred tax assets based on temporary differences exceeding 10% of the Core Capital (-) --
Amount exceeding 15% of the common equity as per the 2nd clause of the Provisional Article 2 of the Regulation on the Equity of Banks (-) --
Excess amount arising from the net long positions of investments in core capital items of banks and financial institutions outside the scope of consolidation
where the Bank owns 10% or more of the issued common share capital (-) --
Excess amount arising from mortgage servicing rights (-) --
Excess amount arising from deferred tax assets based on temporary differences (-) --
Other items to be defined by the BRSA (-) --
Deductions to be made from common equity in the case that adequate Additional Tier I Capital or Tier II Capital is not available (-) --
Total Deductions From Core Capital 703.917
Total Common Equity 8.110.077
ADDITIONAL TIER I CAPITAL
Capital amount and related premiums corresponding to preference shares that are not included in common equity --
Debt instruments and premiums deemed suitable by the BRSA (issued/obtained after 1.1.2014) --
Debt instruments and premiums deemed suitable by the BRSA (issued before 1.1.2014) --
Third parties share in the Tier I Capital --
Additional Tier I Capital before Deductions --
Deductions from Additional Tier I Capital --
Direct and indirect investments of the Bank in its own Additional Tier I Capital (-) --
Portion of the total of net long positions of investments made in equity items of banks and financial institutions outside the scope of consolidation where the
Bank owns 10% or less of the issued common share capital exceeding 10% of Common Equity of the Bank (-) --
Portion of the total of net long positions of investments made in Additional Tier I Capital and Tier II Capital items of banks and financial institutions outside the
scope of consolidation where the Bank owns 10% or more of the issued common share capital exceeding 10% of Common Equity of the Bank (-) --
Other items to be defined by the BRSA (-) --
Deductions to be made from common equity in the case that adequate Additional Tier I Capital or Tier II is not available (-) --
Total Deductions From Additional Tier I Capital --
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 231

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Total Additional Tier I Capital --

Deductions from Tier I Capital 150.004
Portion of goodwill and other intangible assets and the related deferred tax liabilities which not deducted from the
Common Equity as per the 1st clause of Provisional Article 2 of the Regulation on the Equity of Banks (-) 106.953
Portion of net deferred tax assets/liabilities which is not deducted from the common equity pursuant to Paragraph 1
Provisional Article 2 of the Regulation on the Equity of Banks (-) 43.051
Total Tier I Capital 7.960.073
TIER II CAPITAL
Debt instruments and premiums deemed suitable by the BRSA (issued/obtained after 1.1.2014) 1.679.282
Debt instruments and premiums deemed suitable by the BRSA (issued/obtained before 1.1.2014) 2.089.360
Sources pledged to the Bank by shareholders to be used in capital increases of the Bank --
General Loan Loss Provisions 975.339
Third parties share in the Tier II Capital --
Tier II Capital Before Deductions 4.743.981
Deductions From Tier II Capital --
Direct and indirect investments of the Bank in its own Tier II Capital (-) --
Portion of the total of net long positions of investments made in Common Equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or less of the issued common share capital
exceeding 10% of Common Equity of the Bank (-) --
Portion of the total of net long positions of investments made in Additional Tier I and Tier II Capital items of banks
and financial institutions outside the scope of consolidation where the Bank owns 10% or more of the issued common
share capital exceeding 10% of Common Equity of the Bank (-) --
Other items to be defined by the BRSA (-) 56.115
Total Deductions from Tier II Capital 56.115
Total Tier II Capital 4.687.866
CAPITAL BEFORE DEDUCTIONS
Loans granted contrary to the 50th and 51th Article of the Law (-) --
Net book value of amounts exceeding the limit mentioned in the 1st Paragraph of Article 57 of the Law and assets
acquired against overdue receivables which could not be disposed of even though five years have passed since their
acquisition date (-) 1.092
Loans granted to banks and financial institutions, including those established abroad, and to eligible shareholders of
the Bank and investments made in the borrowing instruments issued by them (-) --
Loans granted to banks and financial institutions, including those established abroad, and to eligible shareholders of
the Bank and investments made in the borrowing instruments issued by them (-) --
Other items to be defined by the BRSA (-) 33.430
Portion of the total of net long positions of investments made in Common Equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or less of the issued common share capital
exceeding 10% of Common Equity of the Bank not to be deducted from the Common Equity, Additional Tier I Capital,
Tier II Capital as per the 1st clause of the Provisional Article 2 of the Regulation on the Equity of Banks. (-) --
Portion of the total of net long positions of direct or indirect investments made in Additional Tier I and Tier II Capital
items of banks and financial institutions outside the scope of consolidation where the Bank owns 10% or more of the
issued common share capital exceeding 10% of Common Equity of the Bank not to be deducted from the Additional
Tier I Capital and Tier II Capital as per the 1st clause of the Provisional Article 2 of the Regulation on the Equity of
Banks. (-) --
Portion of the total of net long positions of investments made in Common Equity items of banks and financial
institutions outside the scope of consolidation where the Bank owns 10% or more of the issued common share capital,
deferred tax assets based on temporary differences and mortgage servicing rights not deducted from Common Equity
as per the 1st and 2nd Paragraph of the 2nd clause of the Provisional Article 2 of the Regulation on the Equity of
Banks (-) --
TOTAL CAPITAL 12.613.417
Amounts below the Excess Limits as per the Deduction Principles --
Amounts arising from the net long positions of investments made in Total Capital items of banks and financial
institutions where the Bank owns 10% or less of the issued common share capital --
Amounts arising from the net long positions of investments made in Tier I Capital items of banks and financial
institutions where the Bank owns 10% or more of the issued common share capital --
Amounts arising from mortgage servicing rights --
Amounts arising from deferred tax assets based on temporary differences 227.388

Total capital has been calculated in accordance with the Regulations regarding to changes on Regulation on Equity of Banks effective from
(*)

date 31 March 2016, the information given in the prior period column has been calculated pursuant to former regulation.
 232

DENZBANK ANONM RKET

31 ARALIK 2016 TARH TBARIYLA KONSOLDE
SECTION IV

FNANSAL TABLOLARA LKN AIKLAMA VE DPNOTLAR

(Para birimi: Tutarlar Bin Trk Liras olarak ifade edilmitir.)

b. Information on debt instruments included in the calculation of equity

Issuer SBERBANK OF RUSSIA SBERBANK OF RUSSIA SBERBANK OF RUSSIA SBERBANK OF RUSSIA SBERBANK OF RUSSIA DEXIA CREDIT LOCAL PARIS DEXIA CREDIT LOCAL PARIS DEXIA CREDIT LOCAL PARIS
Unique identifier (eg CUSIP, ISIN or Bloomberg identifier for private placement) Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans Subordinated Loans
Governing law(s) of the instrument Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated Regulations on Banks Equity dated
5 September 2013. 5 September 2013. 5 September 2013. 1 November 2006. 1 November 2006. 1 November 2006. 1 November 2006. 1 November 2006.
Regulatory treatment
Subject to 10% deduction as of 1/1/2015 Not Deducted Not Deducted Not Deducted Deducted Deducted Deducted Deducted Deducted
Eligible at solo/group/group&solo Eligible Eligible Eligible Eligible Eligible Eligible Eligible Eligible
Instrument type Loan Loan Loan Loan Loan Loan Loan Loan
Amount recognised in regulatory capital (Currency in mil, as of most recent reporting date) 427 528 1056 1056 1056 140 0 0
Par value of instrument 427 528 1056 1056 1056 703 457 176
Accounting classification 3470102 3470102 3470102 3470102 3470102 3470102 3470102 3470102
Original date of issuance 30.09.2014 30.04.2014 31.01.2014 30.09.2013 28.06.2013 27.02.2008 27.09.2007 28.06.2007
Perpetual or dated Dated Dated Dated Dated Dated Dated Dated Dated
Original maturity date 10 years 10 years 10 years 10 years 10 years 10 years 10 years 10 years
Issuer call subject to prior supervisory approval Yes Yes Yes Yes Yes Yes Yes Yes
Subject to the written approval of the Subject to the written approval of the Subject to the written approval of the
Subject to the written approval of the Subject to the written approval of the Subject to the written approval of the
Subject to the written approval of the Subject to the written approval of the Banking Regulation and Supervision Banking Regulation and Supervision Banking Regulation and Supervision
Banking Regulation and Supervision Banking Regulation and Supervision Banking Regulation and Supervision
Banking Regulation and Supervision Banking Regulation and Supervision Agency, repayable in full or partially Agency, repayable in full or partially Agency, repayable in full or partially
Agency, repayable in full at any time Agency, repayable in full at any time Agency, repayable in full at any time
Optional call date, contingent call dates and redemption amount Agency, repayable in full on condition Agency, repayable in full on condition at any time before the planned at any time before the planned at any time before the planned
before the planned repayment date, before the planned repayment date, before the planned repayment date,
that it is at fifth years of the loan that it is at fifth years of the loan repayment date, on condition that repayment date, on condition that repayment date, on condition that
on condition that it is at least 5 years on condition that it is at least 5 years on condition that it is at least 5 years
is given. is given. it is at least 5 years after the loan it is at least 5 years after the loan it is at least 5 years after the loan
after the loan is given. after the loan is given., after the loan is given.
is given. is given. is given.
Subsequent call dates, if applicable None. None. None. None. None. None. None. None.
Dividend/Coupon Payments
Fixed or floating dividend/coupon Fixed Fixed Fixed Fixed Fixed Floating Floating Floating
Coupon rate and any related index First five year 6,2%, after rs +5,64 First five year 7,93%, after rs +6,12 7,5% 7,49% 6,10% Libor + 2,90% Libor + 2,10% Libor + 2,10%
Existence of a dividend stopper None. None. None. None. None. None. None. None.
Fully discretionary, partially discretionary or mandatory -- -- -- -- -- -- -- --
Existence of step up or other incentive to redeem None. None. None. None. None. None. None. None.
Noncumulative or cumulative -- -- -- -- -- -- -- --
Convertible or non-convertible
May be fully or partially May be fully or partially
extinguished principal amount and extinguished principal amount and May be permanently or temporarily May be permanently or temporarily May be permanently or temporarily
interest payment liabilities of loan or interest payment liabilities of loan or derecognized or converted into derecognized or converted into derecognized or converted into
converted into capital in accordance converted into capital in accordance capital in accordance with the capital in accordance with the capital in accordance with the
with the related regulations in the with the related regulations in the related regulations in the case that related regulations in the case that related regulations in the case that
If convertible, conversion trigger (s) None. None. None.
case that the operation authorization case that the operation authorization the operation authorization of the the operation authorization of the the operation authorization of the
of the Bank is revoked or in the of the Bank is revoked or in the Bank is revoked or in the event of an Bank is revoked or in the event of an Bank is revoked or in the event of an
event of an occurring possibility event of an occurring possibility occurring possibility that the Bank occurring possibility that the Bank occurring possibility that the Bank
that the Bank may be transferred that the Bank may be transferred may be transferred to the Fund. may be transferred to the Fund. may be transferred to the Fund.
to the Fund. to the Fund.
If convertible, fully or partially Convertible fully. Convertible fully. Convertible fully. Convertible fully. Convertible fully. -- -- --
If convertible, conversion rate -- -- -- -- -- -- -- --
If convertible, mandatory or optional conversion -- -- -- -- -- -- -- --
If convertible, specify instrument type convertible into -- -- -- -- -- -- -- --
If convertible, specify issuer of instrument it converts into -- -- -- -- -- -- -- --
Write-down feature
If write-down, write-down trigger(s) None. None. None. None. None. None. None. None.
If write-down, full or partial -- -- -- -- -- -- -- --
If write-down, permanent or temporary -- -- -- -- -- -- -- --
If temporary write-down, description of write-up mechanism -- -- -- -- -- -- -- --
Position in subordination hierarchy in liquidation (specify instrument type immediately In the event of the litigation of the In the event of the litigation of the In the event of the litigation of the Gives the owner the right to collect Gives the owner the right to collect Gives the owner the right to collect Gives the owner the right to collect Gives the owner the right to collect
senior to instrument) Bank, gives the owner the authority to Bank, gives the owner the authority to Bank, gives the owner the authority to the claim before share certificates and the claim before share certificates and the claim before share certificates and the claim before share certificates and the claim before share certificates and
collect the claim after the borrowing collect the claim after the borrowing collect the claim after the borrowing primary subordinated debts and after primary subordinated debts and after primary subordinated debts and after primary subordinated debts and after primary subordinated debts and after
instruments to be included in the instruments to be included in the instruments to be included in the all other debts. all other debts. all other debts. all other debts. all other debts.
additional principal capital and additional principal capital and additional principal capital and
after deposit holders and all other after deposit holders and all other after deposit holders and all other
claimants. claimants. claimants.
Whether conditions which stands in article of 7 and 8 of Banks shareholder equity law Possessed for Article 8. Possessed for Article 8. Possessed for Article 8. Possessed for Article 8. Possessed for Article 8. Not Possessed. Not Possessed. Not Possessed.
are possessed or not
INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

According to article 7 and 8 of Banks shareholders equity law that are not possesed -- -- -- -- -- Article 8/2 () Article 8/2 () Article 8/2 ()
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 233

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

c. Main difference between Equity amount mentioned in equity statement and Equity amount in consolidated balance sheet
sources from general provisions and subordinated credits. The portion of main amount to credit risk of general provision up
to 1,25% and subordinated credits are considered as supplementary capital in the calculation of Equity amount included in
equity statement as result of deductions mentioned in scope of Regulation on Equity of Banks. Additionally, Losses reflected to
equity are determined through excluding losses sourcing from cash flow hedge reflected in equity in accordance with TAS which
are subjects of discount from Seed Capital. On the other hand, leasehold improvement costs monitored under Plant, Property
and Equipment in balance sheet, intangible assets and deferred tax liabilities related to intangible assets, net carrying value of
properties acquired in return for receivables and kept for over 5 years and certain other accounts determined by the Board are
taken into consideration in the calculation as assets deducted from capital.

II. Explanations related to the consolidated credit risk and risk management

a. Information on risk concentrations by debtors or group of debtors or geographical regions and sectors, basis for risk
limits and the frequency of risk appraisals

Credit risk is the risk that the counterparties of the Parent Bank and consolidated subsidiaries and associates may be unable to
meet in full or part their commitments arising from contracts and cause to incur losses.

Credit risk limits of the customers are determined based on the customers financial strength and the credit requirement,
within the credit authorization limits of the branches, the credit evaluation group, the regional directorates, the executive vice
presidents responsible from loans, the general manager, the credit committee and the Board of Directors; on condition that they
are in compliance with the related regulations.

Credit risk limits are determined for debtors or group of debtors. Credit risk limits of the debtors, group of debtors and sectors
are monitored on a weekly basis.

Information on determination and distribution of risk limits for daily transactions, monitoring of risk concentrations related to
off-balance sheet items per customer and dealer basis

Risk limits and allocations relating to daily transactions are monitored on a daily basis. Off-balance sheet risk concentrations are
monitored by on-site and off-site investigations.

Information on periodical analysis of creditworthiness of loans and other receivables per legislation, inspection of account
vouchers taken against new loans, if not inspected, the reasons for it, credit limit renewals, collaterals against loans and
other receivables

The Group targets a healthy loan portfolio and in order to meet its target there are process instructions, follow-up and control
procedures, close monitoring procedures and risk classifications for loans in accordance with the banking legislation.

In order to prevent the loans becoming non-performing either due to cyclical changes or structural problems, the potential
problematic customers are determined through the analysis of early warning signals, and the probable performance problems are
aimed to be resolved at an early stage.

It is preferred to obtain highly liquid collaterals such as bank guarantees, real estate and ship mortgages, pledges on securities,
bills of exchange and sureties of the persons and companies.

Descriptions of past due and impaired loans as per the accounting practices

Loans which were transferred to second group loans based on the Regulation on Procedures and Principles for Determination
of Qualifications of Loans and Other Receivables By Banks and Provisions to be Set Aside and whose principal and interest
payments were not realized at the relevant due dates are regarded as past due loans by the Parent Bank.Loans whose principal
and interest payments were late for more than 90 days and the loans whose debtors have suffered deterioration in their
creditworthiness as per the Banks evaluations are regarded as impaired loans.
234 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Methods and approaches regarding valuation adjustments and provisions

Based on the Regulation on Procedures and Principles for Determination of Qualifications of Loans and Other Receivables By
Banks and Provisions to be Set Aside the Parent Bank calculates general provision for past due loans and specific provision for
impaired loans.

Total amount of exposures after offsetting transactions but before applying credit risk mitigations and the average exposure
amounts that are classified in different risk groups and types

Corporate and commercial credit risks are evaluated according to the Groups internal assessment (rating) system; which
complies with the Basel II model; and classified according to their probability of default. Ratings of corporate and commercial
loans portfolio is presented below:

Rating/Scoring Grades Current Period Prior Period

Above Average %42 %45
Average %41 %44
Below Average %10 %6
Unrated %7 %5

Group applies a different assessment method (scoring) for consumer and SME credit risks. Ratings compatible with Basel II
model is presented below:

Rating/Scoring Grades Current Period Prior Period

Above Average %37 %39
Average %31 %31
Below Average %32 %30

Risk classifications Current Period (*) Average (**)

1 Conditional and unconditional receivables from central governments and Central Banks 29.206.638 26.258.918
2 Conditional and unconditional receivables from regional or local governments 546.445 656.152
3 Conditional and unconditional receivables from administrative bodies and non-
commercial enterprises -- 1
4 Conditional and unconditional receivables from multilateral development banks -- --
5 Conditional and unconditional receivables from international organizations -- --
6 Conditional and unconditional receivables from banks and brokerage houses 5.027.705 4.917.235
7 Conditional and unconditional receivables from corporate 60.739.447 57.177.588
8 Conditional and unconditional receivables from retail portfolios 35.166.364 28.627.101
9 Conditional and unconditional receivables secured by mortgages 5.383.060 5.026.243
10 Conditional and unconditional receivables secured by mortgages 11.679.326 9.031.700
11 Past due receivables 1.155.948 981.167
12 Receivables defined in high risk category by BRSA -- 790.630
13 Securities collateralized by mortgages -- --
14 Short-term receivables from banks, brokerage houses and corporate -- --
15 Investments similar to collective investment funds 2.255 2.004
16 Other receivables 4.435.249 3.984.588
17 Equity security investments 29.109 2.911
18 Total 153.371.546 137.456.238

Includes risk amounts in banking book before the effect of credit risk mitigation but after the credit conversions.
(*)

Arithmetical average of the amounts in quarterly reports prepared after the Regulation on Measurement and Assessment of Capital Adequacy
(**)

Ratios of Bank dated 28 June 2012.

DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 235

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

b. Information on the control limits of the Group for forward transactions, options and similar contracts, management of
credit risk for these instruments together with the potential risks arising from market conditions

The Group has control limits defined for the positions arising from forward transactions, options and similar contracts. Credit
risk for these instruments is managed together with those arising from market conditions.

c. Information on whether the Group decreases the risk by liquidating its forward transactions, options and similar contracts
in case of facing a significant credit risk or not

Forward transactions can be realized at maturity. However, if it is required, reverse positions of the current positions are
purchased to decrease the risk.

d. Information on whether the indemnified non-cash loans are evaluated as having the same risk weight as non-performing
loans or not

Indemnified non-cash loans are treated as having the same risk weight as non-performing loans.

Information on whether the loans that are renewed and rescheduled are included in a new rating group as determined by
the Banks risk management system, other than the follow-up plan defined in the banking regulations or not; whether new
precautions are considered in these methods or not; whether the Banks risk management accepts long term commitments as
having more risk than short term commitments which results in a diversification of risk or not

Loans that are renewed and rescheduled are included in a new rating group as determined by the risk management system, other
than the follow-up plan defined in the banking regulations.

Long term commitments are accepted as having more risk than short term commitments which results in a diversification of risk
and are monitored periodically.

e. Evaluation of the significance of country specific risk if the banks have foreign operations and credit transactions in a few
countries or these operations are coordinated with a few financial entities

There is no significant credit risk since the Parent Banks foreign operations and credit transactions are conducted in OECD and
EU member countries in considering their economic climate.

Evaluation of the Banks competitive credit risk as being an active participant in the international banking transactions market

Being an active participant in the international banking transactions market, the Parent Bank does not have significant credit risk
as compared to other financial institutions.

f. DFS Groups

1. The share of the top 100 and 200 cash loan customers in the total cash loans portfolio

The share of the top 100 and 200 cash loan customers comprises 32% and 39% of the total cash loans portfolio (31 December
2015: %29, %36).

2. The share of the top 100 and 200 non-cash loan customers in the total loan non-cash loans portfolio

The share of the top 100 and 200 non-cash loan customers comprises 46% and 58% of the total non-cash loans portfolio (31
December 2015: %48, %60).

3. The share of the total cash and non-cash loan balance of the top 100 and 200 loan customers in the total assets and off-
balance sheet items

The share of the total cash and non-cash loans from its top 100 and 200 loan customers comprise 19% and 26% of the total
assets and off-balance sheet items (31 December 2015: %21, %27).

g. DFS Groups general loan provision for its loans

As at 31 December 2016, DFS Groups general loan provision amounts to TL 1.269.354 (31 December 2015: 975.339 TL).
 236

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
SECTION IV

Originally Issued in Turkish

AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)
h. Profile of significant exposures in major regions

Risk Classifications (*)(**)

Current Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Total
Domestic 25.479.742 494.522 -- -- -- 1.345.409 32.040.595 31.585.944 5.055.717 8.035.893 1.068.112 -- -- -- 1.187 4.147.723 3.929 109.258.773
European Union Countries 4.350.363 42.559 -- -- -- 1.071.439 4.316.668 65.885 37.884 1.182 23.359 -- -- -- -- 240.388 -- 10.149.727
OECD Countries -- -- -- -- -- 21.467 188.293 4.510 2.774 -- 13 -- -- -- -- -- -- 217.057
Off-Shore Banking Regions -- -- -- -- -- 42.363 315.674 3.264 2.230 1.766 -- -- -- -- -- -- -- 365.297
USA, Canada -- -- -- -- -- 128.150 212.006 6.267 1.524 115 96 -- -- -- -- -- -- 348.158
Ohter Countries -- -- -- -- -- 475.226 2.079.585 61.315 78.054 2.833.177 4.464 -- -- -- -- 47.139 -- 5.578.960
Subsidiares,Associates and jointly controlled companies -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 25.180 25.180
UnallocatedAssets/Liabilities 179.022 8.671 -- -- -- 1.941.779 15.663.010 2.479.419 163.592 781.708 56.822 -- -- -- 1.068 -- -- 21.275.091
Total 30.009.127 545.752 -- -- -- 5.025.833 54.815.831 34.206.604 5.341.775 11.653.841 1.152.866 -- -- -- 2.255 4.435.250 29.109 147.218.243

(*)(**)
Risk Classifications
Prior Period 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Total
Domestic 21.991.416 763.342 -- -- -- 2.401.276 39.964.488 19.001.905 5.124.910 4.382.910 895.853 4.549.324 -- -- -- 3.114.867 -- 102.190.291
European Union Countries 3.069.134 38.346 -- -- -- 1.367.606 1.073.204 181.305 46.417 4.196 3.504 4.156 -- -- -- 163.449 -- 5.951.317
OECD Countries -- -- -- -- -- 16.772 -- 3.833 2.908 321 -- 215 -- -- -- -- -- 24.049
Off-Shore Banking Regions -- -- -- -- -- 1.154 325.574 671 3.816 30 -- 119 -- -- -- 22 -- 331.386
USA, Canada -- -- -- -- -- 290.009 15.021 2.378 1.566 -- 1.193 543 -- -- -- -- -- 310.710
Ohter Countries -- -- -- -- -- 102.032 1.394.097 37.683 65.297 6.042 928 1.826 -- -- -- 55.537 -- 1.663.442
Subsidiares,Associates and jointly controlled companies -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 18.708 -- 18.708
UnallocatedAssets/Liabilities 24.383 4.413 1 -- -- 1.695.433 14.279.863 4.309.490 77.147 325.722 -- -- -- -- 571 13.651 -- 20.730.674
Total 25.084.933 806.101 1 -- -- 5.874.282 57.052.247 23.537.265 5.322.061 4.719.221 901.478 4.556.183 -- -- 571 3.366.234 -- 131.220.577

(*)
Exposure categories are as per the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks:
1: Conditional and unconditional receivables from central governments and Central Banks 10: Conditional and unconditional receivables secured by mortgages
2: Conditional and unconditional receivables from regional or local governments 11: Past due receivables
3: Conditional and unconditional receivables from administrative bodies and non-commercial enterprises 12: Receivables defined in high risk category by BRSA
4: Conditional and unconditional receivables from multilateral development banks 13: Securities collateralized by mortgages
5: Conditional and unconditional receivables from international organizations 14: Short-term receivables from banks, brokerage houses and corporates
6: Conditional and unconditional receivables from banks and brokerage houses 15: Investments similar to collective investment funds
7: Conditional and unconditional receivables from corporates 16: Other receivables
8: Conditional and unconditional receivables from retail portfolios 17: Equity security transactions
9: Conditional and unconditional receivables secured by mortgages
(**)
OECD countries except for EU countries, USA and Canada
(***)
INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)
i. Risk Profile by Sectors or Counterparties

Risk Classifications (*)(**)

DENZBANK FINANCIAL SERVICES GROUP

Current Period: 31 December 2016 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 TL FC Total

Agricultural 22.268 -- -- -- -- -- 451.448 7.498.019 136.286 886.942 78.307 -- -- -- -- 1 -- 8.837.231 236.040 9.073.271
Farming and Cattle 21.699 -- -- -- -- -- 447.351 7.483.545 135.995 885.652 78.078 -- -- -- -- 1 -- 8.826.064 226.257 9.052.321
Forestry 43 -- -- -- -- -- 365 3.564 241 779 74 -- -- -- -- -- -- 4.298 768 5.066
Fishing 526 -- -- -- -- -- 3.732 10.910 50 511 155 -- -- -- -- -- -- 6.869 9.015 15.884
Manufacturing 263.208 3 -- -- -- -- 16.703.427 1.892.782 233.414 1.203.471 172.334 -- -- -- -- 13 -- 4.899.235 15.569.417 20.468.652
Mining 6.444 3 -- -- -- -- 2.863.020 127.182 16.210 66.563 14.705 -- -- -- -- -- -- 486.419 2.607.708 3.094.127
Production 256.116 -- -- -- -- -- 10.043.433 1.740.201 205.567 1.091.567 94.081 -- -- -- -- 11 -- 3.821.443 9.609.533 13.430.976
Electric, Gas, Water 648 -- -- -- -- -- 3.796.974 25.399 11.637 45.341 63.548 -- -- -- -- 2 -- 591.373 3.352.176 3.943.549
Construction 65.070 15.925 -- -- -- -- 9.828.871 1.215.556 410.618 1.107.707 106.859 -- -- -- -- 10 -- 4.896.136 7.854.480 12.750.616
Services 16.924.497 7.133 -- -- -- 5.025.833 20.528.951 6.472.762 1.020.706 7.241.323 410.246 -- -- -- -- 6.306 15.411 18.065.616 39.587.552 57.653.168
Wholesale and Retail Trade 357.064 1 -- -- -- -- 6.019.827 4.870.635 569.310 1.624.963 270.740 -- -- -- -- 132 -- 8.514.870 5.197.802 13.712.672
Hotel and Restaurant Services 21.422 -- -- -- -- -- 4.241.199 242.411 232.268 4.607.475 31.321 -- -- -- -- -- -- 1.412.240 7.963.856 9.376.096
Transportation and
telecommunication 58.988 -- -- -- -- -- 5.731.937 987.283 151.313 483.325 64.249 -- -- -- -- 22 2.800 2.433.939 5.045.978 7.479.917
Financial institution 16.472.198 26 -- -- -- 5.025.833 764.043 61.439 10.226 139.651 13.438 -- -- -- -- 6.148 12.611 3.848.549 18.657.064 22.505.613
Real estate and letting services 3.154 1.512 -- -- -- -- 182.740 108.519 23.651 12.692 3.501 -- -- -- -- 1 -- 205.163 130.607 335.770
Self-employement services -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Education services 3.024 5.594 -- -- -- -- 880.066 69.886 19.941 231.170 4.999 -- -- -- -- -- -- 827.637 387.043 1.214.680
ANNUAL REPORT 2016

Health and social services 8.647 -- -- -- -- -- 2.709.139 132.589 13.997 142.047 21.998 -- -- -- -- 3 -- 823.218 2.205.202 3.028.420
Other 12.734.084 522.691 -- -- -- -- 7.303.134 17.127.485 3.540.751 1.214.398 385.120 -- -- -- 2.255 4.428.920 13.698 36.017.911 11.254.625 47.272.536
Total 30.009.127 545.752 -- -- -- 5.025.833 54.815.831 34.206.604 5.341.775 11.653.841 1.152.866 -- -- -- 2.255 4.435.250 29.109 72.716.129 74.502.114 147.218.243

(*)
Exposure categories are as per the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks:

1: Conditional and unconditional receivables from central governments and Central Banks 10: Conditional and unconditional receivables secured by mortgages
2: Conditional and unconditional receivables from regional or local governments 11: Past due receivables
3: Conditional and unconditional receivables from administrative bodies and non-commercial enterprises 12: Receivables defined in high risk category by BRSA
4: Conditional and unconditional receivables from multilateral development banks 13: Securities collateralized by mortgages
5: Conditional and unconditional receivables from international organizations 14: Short-term receivables from banks, brokerage houses and corporates
6: Conditional and unconditional receivables from banks and brokerage houses 15: Investments similar to collective investment funds
7: Conditional and unconditional receivables from corporates 16: Other receivables
8: Conditional and unconditional receivables from retail portfolios 17: Equity security transactions
9: Conditional and unconditional receivables secured by mortgages
237

(**)
Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
 238

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
SECTION IV

Originally Issued in Turkish

AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Risk Classifications (*)(**)

Prior Period:31 December 2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 TL FC Total
Agricultural -- -- -- -- -- -- 719.842 4.946.734 67.731 784.710 34.716 3.248 -- -- -- -- -- 6.257.478 299.233 6.556.981
Farming and Cattle -- -- -- -- -- -- 656.022 4.940.366 67.466 781.120 34.167 3.240 -- -- -- -- -- 6.247.234 235.147 6.482.381
Forestry -- -- -- -- -- -- 60.886 3.386 145 119 309 4 -- -- -- -- -- 4.357 60.492 64.849
Fishing -- -- -- -- -- -- 2.937 2.982 120 3.471 240 4 -- -- -- -- -- 6.157 3.594 9.751
Manufacturing -- 3 -- -- -- -- 16.134.608 1.055.394 169.268 573.544 74.709 6.702 -- -- -- -- -- 5.124.773 12.889.455 18.014.228
Mining -- 3 -- -- -- -- 2.897.834 81.889 13.361 38.980 16.371 193 -- -- -- -- -- 536.946 2.511.685 3.048.631
Production -- -- -- -- -- -- 10.059.162 968.670 141.813 509.526 57.229 4.620 -- -- -- -- -- 4.088.486 7.652.534 11.741.020
Electric, Gas, Water -- -- -- -- -- -- 3.177.612 4.835 14.094 25.038 1.109 1.889 -- -- -- -- -- 499.341 2.725.236 3.224.577
Construction -- 26.472 -- -- -- -- 9.674.836 552.486 345.685 712.236 56.527 3.289 -- -- -- 10.883 -- 4.349.445 7.032.969 11.382.414
Services 25.084.933 2.090 -- -- -- 5.874.282 22.040.918 4.682.827 837.599 1.816.106 324.498 13.464 -- -- -- 34.383 -- 24.598.596 36.112.504 60.711.100
Wholesale and Retail Trade -- 1 -- -- -- -- 6.898.190 3.547.066 471.093 883.950 213.351 11.227 -- -- -- -- -- 7.767.787 4.257.091 12.024.878
Hotel and Restaurant Services -- -- -- -- -- -- 6.895.040 183.185 173.780 467.038 10.951 285 -- -- -- -- -- 1.212.380 6.517.899 7.730.279
Transportation and
telecommunication -- 18 -- -- -- -- 4.233.516 736.089 128.662 187.031 14.965 1.396 -- -- -- 16 -- 2.250.727 3.050.966 5.301.693
Financial institution 25.084.933 80 -- -- -- 5.874.282 1.031.726 37.380 10.320 62.968 13.370 10 -- -- -- 34.367 -- 11.577.432 20.572.004 32.149.436
Real estate and letting services -- 1.991 -- -- -- -- 216.891 80.486 25.839 11.065 38.861 439 -- -- -- -- -- 204.345 171.227 375.572
Self-employement services -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- --
Education services -- -- -- -- -- -- 915.397 37.083 9.591 115.558 1.638 53 -- -- -- -- -- 858.787 220.533 1.079.320
Health and social services -- -- -- -- -- -- 1.850.158 61.538 18.314 88.496 31.362 54 -- -- -- -- -- 727.138 1.322.784 2.049.922
Other -- 777.536 1 -- -- -- 8.482.043 12.299.824 3.901.779 832.624 411.028 4.529.480 -- -- 571 3.320.968 -- 26.924.433 7.631.421 34.555.854
Total 25.084.933 806.101 1 -- -- 5.874.282 57.052.247 23.537.265 5.322.062 4.719.220 901.478 4.556.183 -- -- 571 3.366.234 -- 67.254.995 63.965.582 131.220.577

(*)
Exposure categories are as per the Regulation on Measurement and Assessment of Capital Adequacy Ratios of Banks:

1: Conditional and unconditional receivables from central governments and Central Banks 10: Conditional and unconditional receivables secured by mortgages
2: Conditional and unconditional receivables from regional or local governments 11: Past due receivables
3: Conditional and unconditional receivables from administrative bodies and non-commercial enterprises 12: Receivables defined in high risk category by BRSA
4: Conditional and unconditional receivables from multilateral development banks 13: Securities collateralized by mortgages
5: Conditional and unconditional receivables from international organizations 14: Short-term receivables from banks, brokerage houses and corporates
6: Conditional and unconditional receivables from banks and brokerage houses 15: Investments similar to collective investment funds
7: Conditional and unconditional receivables from corporates 16: Other receivables
8: Conditional and unconditional receivables from retail portfolios 17: Equity security transactions
9: Conditional and unconditional receivables secured by mortgages
INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

(**)
Includes risk amounts before the effect of credit risk mitigation but after the credit conversions.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 239

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

j. Analysis of maturity-bearing exposures according to remaining maturities

Current Period
Risk calssifications Undistributed (*) 1 month 1-3 months 3-6 months 6-12 months Over 1 Year
1 Conditional and unconditional receivables from central governments and
Central Banks 6.345.933 10.303.013 73.255 8.112 420.364 12.858.450
2 Conditional and unconditional receivables from regional or local
governments -- 255 3.186 9.197 21.830 511.284
3 Conditional and unconditional receivables from administrative bodies and
non-commercial enterprises -- -- -- -- -- --
4 Conditional and unconditional receivables from multilateral development
banks -- -- -- -- -- --
5 Conditional and unconditional receivables from international
organizations -- -- -- -- -- --
6 Conditional and unconditional receivables from banks and brokerage
houses 1.372.923 850.462 656.659 275.061 564.726 1.306.002
7 Conditional and unconditional receivables from corporate 62.590 4.548.309 3.426.258 2.586.737 5.914.416 38.277.521
8 Conditional and unconditional receivables from retail portfolios 1.777 6.559.619 1.759.786 2.224.001 5.579.901 18.081.520
9 Conditional and unconditional receivables secured by mortgages -- 212.808 146.533 208.157 310.954 4.463.323
10 Conditional and unconditional receivables secured by mortgages -- 536.148 549.819 520.154 609.152 9.438.568
11 Past due receivables 1.058.710 5.401 839 1.281 2.984 83.651
12 Receivables defined in high risk category by BRSA -- -- -- -- -- --
13 Securities collateralized by mortgages -- -- -- -- -- --
14 Short-term receivables from banks, brokerage houses and corporate -- -- -- -- -- --
15 Investments similar to collective investment funds -- 2.089 -- -- 166 --
16 Other receivables 4.404.835 11.609 -- -- -- 18.806
17 Equity security investments 29.109 -- -- -- -- --
18 Total 13.275.877 23.029.713 6.616.335 5.832.700 13.424.493 85.039.125
(*)
Drawing amounts are included.

Prior Period
Risk calssifications Undistributed (*) 1 month 1-3 months 3-6 months 6-12 months Over 1 Year
1 Conditional and unconditional receivables from central governments
and Central Banks 4.101.972 8.286.654 207.563 249.004 417.712 11.822.028
2 Conditional and unconditional receivables from regional or local
governments -- 186 1.715 2.167 39.557 762.476
3 Conditional and unconditional receivables from administrative bodies
and non-commercial enterprises -- -- -- -- -- 1
4 Conditional and unconditional receivables from multilateral
development banks -- -- -- -- -- --
5 Conditional and unconditional receivables from international
organizations -- -- -- -- -- --
6 Conditional and unconditional receivables from banks and brokerage
houses 1.001.956 2.358.338 432.729 301.519 71.419 1.708.321
7 Conditional and unconditional receivables from corporate 102.551 5.018.198 3.130.938 3.613.331 7.642.126 37.545.103
8 Conditional and unconditional receivables from retail portfolios 157 6.427.550 964.886 1.740.015 5.420.365 8.984.292
9 Conditional and unconditional receivables secured by mortgages -- 133.584 98.032 127.056 158.325 4.805.064
10 Conditional and unconditional receivables secured by mortgages -- 324.111 175.836 303.755 400.705 3.514.814
11 Past due receivables 825.258 6.083 438 1.274 3.628 64.797
12 Receivables defined in high risk category by BRSA 65.202 167.033 -- -- -- 4.323.948
13 Securities collateralized by mortgages -- -- -- -- -- --
14 Short-term receivables from banks, brokerage houses and corporate -- -- -- -- -- --
15 Investments similar to collective investment funds -- 432 -- 139 -- --
16 Other receivables 3.296.495 58.808 -- -- 6.000 4.931
17 Equity security investments -- -- -- -- -- --
18 Total 9.393.591 22.780.977 5.012.137 6.338.260 14.159.837 73.535.775
(*)
Drawing amounts are included.
k. Risk Classifications
Parent Bank has simplified its application through only considering credit grades of Fitch rating agency as of July 2016 through
making a notification to Risk Centre on 1 July 2016 in order to limit variability generated by using multiple credit rating agencies
(CRA) on legal rates.

The scope, in which the credit rating grades are taken into consideration, covers receivables from governments or central banks and
receivables from banks and intermediary institutions and corporate receivables for those having residence abroad.
240 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Current Period
Risk Classifications
Risk Rating Receivables from Banks and Brokerage Houses
Receivables from Receivables with Receivables with
Credit Quality Central Governments or Remaining Maturities Remaining Maturities Corporate
Grade Fitch Central Banks Less Than 3 Months More Than 3 Months Receivables
AAA
AA+
1 %0 %20 %20 %20
AA
AA-
A+
2 A %20 %20 %50 %50
A-
BBB+
3 BBB %50 %20 %50 %100
BBB-
BB+
4 BB %100 %50 %100 %100
BB-
B+
5 B %100 %50 %100 %150
B-
CCC
CC
6 %150 %150 %150 %150
C
D

Prior Period
Risk Classifications
Receivables from Banks and
Risk Rating Brokerage Houses
Receivables Receivables Receivables
from Central with Remaining with Remaining
Credit Quality Governments or Maturities Less Maturities More Corporate
Grade Fitch Moodys S&P Central Banks Than 3 Months Than 3 Months Receivables
AAA Aaa AAA
AA+ Aa1 AA+
1 %0 %20 %20 %20
AA Aa2 AA
AA- Aa3 AA-
A+ A1 A+
2 A A2 A %20 %20 %50 %50
A- A3 A-
BBB+ Baa1 BBB+
3 BBB Baa2 BBB %50 %20 %50 %100
BBB- Baa3 BBB-
BB+ Ba1 BB+
4 BB Ba2 BB %100 %50 %100 %100
BB- Ba3 BB-
B+ B1 B+
5 B B2 B %100 %50 %100 %150
B- B3 B-
Caa1 CCC+
CCC Caa2 CCC
Caa3 CCC-
6 CC Ca CC %150 %150 %150 %150
C C C
D D

DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 241

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

l. Exposures by risk weights

Current Period
Equity
Risk Weight %0 %10 %20 %35 %50 %75 %100 %150 %200 %250 %1250 Deduction
Exposures before Credit Risk
Mtigation 16.439.368 -- 1.870.339 -- 18.517.089 41.035.264 75.067.893 287.179 -- 154.415 -- 879.654
Exposures after Credit Risk
Mtigation 17.241.861 -- 1.870.339 5.341.774 28.577.710 33.874.791 59.873.169 284.184 -- 154.415 -- 879.654

Prior Period
Equity
Risk Weight %0 %10 %20 %50 %75 %100 %150 %200 %250 Deduction
Exposures before Credit Risk Mtigation 24.014.207 -- 3.294.447 5.872.451 27.490.649 65.679.995 2.032.547 2.765.162 71.119 944.558
Exposures after Credit Risk Mtigation 24.014.207 -- 3.294.447 14.816.887 21.852.327 57.379.274 2.011.498 2.737.163 71.119 944.558

m. Information by major sectors and type of counterparties

Impaired Loans; are the loans either overdue for more than 90 days or loans regarded as impaired due to their creditworthiness.
For such loans, specific provisions are allocated as per the Provisioning Regulation.

Past Due Loans; are the loans those are overdue up to 90 days but not impaired. For such loans, general provisions are
allocated as per the Provisioning Regulation.

Current Period: 31 December 2016

Loans Provisions(**)
Important Sectors/Counterparties Impaired Past Due Value Adjustments (*)

Agricultural 200.093 340.760 10.174 137.753

Farming and Cattle 197.139 338.771 10.109 135.004
Forestry 527 242 6 460
Fishing 2.427 1.747 59 2.289
Manufacturing 357.990 599.580 20.567 215.052
Mining 39.933 68.803 1.578 27.911
Production 235.915 499.988 18.288 166.601
Electric, Gas, Water 82.142 30.789 701 20.540
Construction 232.278 233.309 7.232 156.120
Services 1.157.129 2.364.961 89.677 787.920
Wholesale and Retail Trade 748.500 634.089 18.493 495.120
Hotel and Restaurant Services 41.453 1.089.073 46.353 16.764
Transportation and telecommunication 216.466 359.467 12.212 154.069
Financial institution 28.667 174.919 7.991 17.282
Real estate and letting services 9.604 8.692 217 6.209
Self-employement services -- -- -- --
Education services 21.522 3.610 89 16.673
Health and social services 90.917 95.111 4.322 81.803
Other 1.704.149 2.714.903 132.695 1.351.110
Total 3.651.639 6.253.513 260.345 2.647.955
(*)
Representing the general provision of past due loans.
(**)
Representing specific provision amounts.

242 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Prior Period: 31 December 2015

Loans
Important Sectors/Counterparties Impaired Past Due Value Adjustments(*) Provisions (**)
Agricultural 232.264 509.323 15.135 171.896
Farming and Cattle 230.664 507.985 15.084 170.806
Forestry 1.219 75 1 926
Fishing 381 1.263 50 164
Manufacturing 288.689 455.772 18.616 222.931
Mining 68.220 14.462 352 46.343
Production 214.322 353.321 14.288 173.435
Electric, Gas, Water 6.147 87.989 3.976 3.153
Construction 220.098 93.612 2.393 155.494
Services 703.176 981.245 33.547 441.827
Wholesale and Retail Trade 460.737 317.426 8.643 260.357
Hotel and Restaurant Services 22.442 120.440 4.320 11.750
Transportation and telecommunication 80.896 410.418 15.708 67.262
Financial institution 18.811 6.859 141 14.342
Real estate and letting services 6.793 4.491 108 4.129
Self-employement services 42 -- -- 40
Education services 3.826 24.632 677 2.263
Health and social services 109.629 96.979 3.950 81.684
Other 1.724.547 1.784.826 100.444 1.286.035
Total 3.168.774 3.824.778 170.135 2.278.183
(*)
Representing the general provision of past due loans.
(**)
Representing specific provision amounts.

Movements in valuation adjustments and provisions

Charge fort he Releases for Other
Current Period: 31 December 2016 Opening Balance period provisions Adjustments(*) Ending Balance
Specific Provisions 2.278.183 1.241.892 (269.966) (602.154) 2.647.955
General Provisions 975.339 294.015 -- -- 1.269.354
(*)
It includes sales made from non-performing loans and exchange differences amount of TL 2.383.

Charge fort he Releases for Other

Prior Period: 31 December 2015 Opening Balance period provisions Adjustments(*) Ending Balance
Specific Provisions 1.375.164 1.095.770 (190.919) (1.832) 2.278.183
General Provisions 813.128 162.211 -- -- 975.339
(*)
Representing sales from the non-performing loans portfolio in amount of TL (2.845) and foreign exchange differences in amount of TL 1.013.

n. Risk involved in counter-cyclical capital buffer calculations:

Private sector credit exposure Risk weighted equivalent

Country of ultimate risk in banking book trading book Total
Turkey 86.029.159 25.542 86.054.701
Malta 1.452.193 -- 1.452.193
Germany 1.177.841 -- 1.177.841
Netherlands 1.169.288 -- 1.169.288
Other 3.895.763 -- 3.895.763

o. Distribution of credit risk according to the operational segments

Current Period: 31 December 2016 Commercial Loans (*) Consumer Loans Credit Cards Other Total
Standard Loans 70.296.983 12.204.822 4.801.357 26.643 87.329.805
Closely Monitored Loans 5.213.186 1.190.519 285.322 -- 6.689.027
Non-performing Loans 2.331.997 848.256 471.386 -- 3.651.639
Specific Provisions(-) 1.600.858 654.233 392.864 -- 2.647.955
Total 76.241.308 13.589.364 5.165.201 26.643 95.022.516

(*)
Informations on the table include receivables of Deniz Leasing and Deniz Factoring.
(**)
Commercial loans include commercial, corporate and SME loans.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 243

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Prior Period: 31 December 2015 Commercial Loans (*) Consumer Loans Credit Cards Other Total
Standard Loans 56.828.960 11.645.974 4.132.903 14.316 72.622.153
Closely Monitored Loans 2.896.286 1.093.319 202.714 -- 4.192.319
Non-performing Loans 1.684.130 898.406 586.238 -- 3.168.774
Specific Provisions(-) 1.179.281 668.445 430.457 -- 2.278.183
Total 60.230.095 12.969.254 4.491.398 14.316 77.705.063

Informations on the table include receivables of Deniz Leasing and Deniz Factoring.
(*)

Commercial loans include commercial, corporate and SME loans.

(**)

The loans of DFS Group amounting to TL 60.734.592 (31 December 2015: TL 56.329.099) are collateralized by cash, mortgage,
cheques and notes obtained from customers.

III. Explanations related to the consolidated foreign currency exchange rate risk

a. Foreign exchange risk the Group is exposed to, related estimations, and the limits set by the Board of Directors of the
Parent Bank for positions which are monitored daily

Foreign currency exchange and parity risks are taken by DFS Group within defined value at risk limits. Measurable and
manageable risks are taken within legal limits.

Foreign currency exchange rate risk is monitored along with potential evaluation differences in foreign currency transactions
in accordance with Regulation on Banks Internal Control and Risk Management Systems. Value at Risk approach is used to
measure the exchange rate risk and calculations are made on a daily basis.

Based on general economic environment and market conditions the Parent Banks Board of Directors reviews the risk limits daily
and makes changes where necessary.

b. The magnitude of hedging foreign currency debt instruments and net foreign currency investments by using derivatives

In accordance with TAS 39, DFS Group applies net investment hedge accounting to avoid foreign currency exchange rate risk
arising from retranslation of its foreign investments in its consolidated financial statements.

Informations relating to investment hedge to avoid foreign currency exchange rate risk arising from retranslation of its foreign
investments are explained in Note VIII-a of Section Four.

c. Foreign exchange risk management strategy

Foreign currency exchange and parity risks are taken by DFS Group within defined value at risk limits. Measurable and
manageable risks are taken within legal limits.

d. The Parent Banks spot foreign exchange bid rates as of the balance sheet date and for each of the five days prior to that
date

US Dollar purchase rate as at the balance sheet date TL 3,5192

Euro purchase rate as at the balance sheet date TL 3,7099

Date US Dollar Euro

27 December 2016 3,5135 3,6711
28 December 2016 3,5329 3,6901
29 December 2016 3,5318 3,6939
30 December 2016 3,5192 3,7099
31 December 2016 3,5192 3,7099

e. The basic arithmetical average of the Parent Banks foreign exchange bid rate for the last thirty days prior to the balance
sheet date

The arithmetical average US Dollar and Euro purchase rates for December 2016 are TL 3,0197 and TL 3,3389 respectively.
244 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

f. Information on currency risk

Current Period EUR USD Other FC (5) Total

Assets
Cash and Balances with the Central Bank of the Republic of Turkey 3.593.180 7.019.629 1.944.745 12.557.554
Due from Banks and Other Financial Institutions 4.543.698 865.857 146.182 5.555.737
Financial Assets at Fair Value Through Profit or Loss (1) 177.120 42.482 1 219.603
Interbank Money Market Placements -- -- -- --
Investment Securities Available-for-Sale 1.030.396 1.080.344 64.254 2.174.994
Loans (2) 20.765.084 23.817.521 969.661 45.552.266
Investments in Subsidiaries and Associates 130 -- -- 130
Investment Securities Held-to-Maturity 155.033 1.561.104 -- 1.716.137
Hedging Purpose Financial Derivatives -- -- -- --
Tangible Assets 111.067 82 816 111.965
Intangible Assets (3) -- -- -- --
Other Assets (4) 1.805.995 944.970 191.479 2.942.444
Total Assets 32.181.703 35.331.989 3.317.138 70.830.830

Liabilities
Bank Deposits 601.140 125.378 672.524 1.399.042
Foreign Currency Deposits 37.991.989 16.652.338 967.201 55.611.528
Interbank Money Markets -- -- -- --
Funds Borrowed from Other Financial Institutions 2.966.852 11.638.970 6.844 14.612.666
Marketable Securities Issued 1.192.424 117.306 -- 1.309.730
Miscellaneous Payables 272.697 258.865 1.301 532.863
Hedging Purpose Financial Derivatives -- -- -- --
Other Liabilities (6) 304.275 856.058 9.258 1.169.591
Total Liabilities 43.329.377 29.648.915 1.657.128 74.635.420

Net On Balance Sheet Position (11.147.674) 5.683.074 1.660.010 (3.804.590)

Net Off-Balance Sheet Position (7) 11.032.843 (5.646.113) (1.418.136) 3.968.594
Financial Derivatives (Assets) 19.896.141 16.210.215 886.959 36.993.315
Financial Derivatives (Liabilities) (8.863.298) (21.856.328) (2.305.095) (33.024.721)
Net Position (114.831) 36.961 241.874 164.004
Non-Cash Loans 7.005.000 11.257.796 477.555 18.740.351

Prior Period
Total Assets 21.317.524 31.976.949 2.641.004 55.935.477
Total Liabilities 34.816.004 27.748.600 1.183.454 63.748.058
Net On Balance Sheet Position (13.498.480) 4.228.349 1.457.550 (7.812.581)
Net Off-Balance Sheet Position 13.215.699 (4.294.944) (1.313.498) 7.607.257
Financial Derivatives (Assets) 18.653.766 18.207.544 633.734 37.495.044
Financial Derivatives (Liabilities) (5.438.067) (22.502.488) (1.947.232) (29.887.787)
Net Position (282.781) (66.595) 144.052 (205.324)
Non-Cash Loans 4.774.463 10.605.095 255.911 15.635.469

(1) :Foreign currency differences of derivative assets amounting to TL 178.314 are excluded.
(2) :Foreign currency indexed loans amounting to TL 3.668.858 are included.
(3) :Intangible assets amounting to TL 11.679 are excluded.
(4) :Factoring receivables, indexed to foreign exchange, amount of TL 204.219 are included while prepaid expenses amount of 1.748.151
TL are not included.
(5) :There are gold amounts in total assets amounting to TL 1.117.272 and in total liabilities amounting to TL 2.728.172.
(6) :Not including the exchange rate difference of TL 488.886 pertaining to derivative financial loans and the FX equity of TL 3.323.513
and the free reserve of TL 5.871.
(7) :Net amount of Receivables and Liabilities from financial derivatives is shown on the table. FX SWAP Transactions that reported
under the Financial Assets Purchase Pledges is included in Net Off-Balance Sheet Position.

g. Informations on currency risk exposure

The table below demonstrates prospective increase and decrease in equities and the statement of income as of 31 December
2016 and 2015 (excluding tax effect) on condition that 10 percent devaluation of TL against the currencies below. This analysis
has been prepared under the assumption that all other variables, especially interest rates, to be constant.

Current Period Prior Period

Period Profit Loss Equity Period Profit Loss Equity
USD Dollar (3.716) (14.628) 6.400 (4.379)
Euro (19.276) (19.504) (15.125) (16.025)
Total (Net) (22.992) (34.132) (8.725) (20.404)
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 245

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

IV. Explanations related to the consolidated interest rate risk

a. Interest rate sensitivity of the assets, liabilities and off-balance sheet items

Standard method is used in measuring the interest rate risk of assets, liabilities and off-balance sheet items.

b. The expected effects of the fluctuations of market interest rates on the Groups financial position and cash flows, the
expectations for interest income, and the limits the board of directors has established on daily interest rates

The Parent Bank relies on sensitivity in determining limits against negative market conditions and monitors the risk within this
context. Sensitivity calculations are made and limits are monitored on a weekly basis.

Market interest rates are monitored daily and interest rates are revised where necessary.

c. The precautions taken for the interest rate risk the Group was exposed to during the current year and their expected
effects on net income and shareholders equity in the future periods

The Group uses sensitivity analysis, historical stress-testing and value at risk methods to analyze and take precautions against
interest rate risk faced during current period. Interest sensitivity limits have been defined and limits are being monitored on a
weekly basis.

Interest rate sensitivity of assets, liabilities and off-balance sheet items (Based on repricing dates):

Up to 1 5 Years and Non-Interest

Current Period Month 1-3 Months 3-12 Months 1-5 Years Over Bearing Total
Assets
Cash and Balances with the Central
Bank of the Republic of Turkey 3.690.409 -- -- -- -- 11.148.952 14.839.361
Due from Banks and Other Fin. Inst. 855.829 260.105 169.288 -- -- 4.287.521 5.572.743
Financial Assets at Fair Value Through
Profit or Loss 415.670 188.658 267.941 365.926 199.717 9.947 1.447.859
Interbank Money Market Placements 3.001.571 -- -- -- -- -- 3.001.571
Investment Securities Av.-for-Sale 305.338 649.893 1.320.671 2.509.948 2.769.411 41.729 7.596.990
Loans 14.507.220 8.979.161 17.911.370 30.957.978 17.791.075 1.003.684 91.150.488
Investment Securities Held-to-Mat. 1.654.843 365.704 329.400 480.903 2.225.182 -- 5.056.032
Other Assets (*) 573.602 187.879 527.646 1.540.244 1.042.657 3.016.926 6.888.954
Total Assets 25.004.482 10.631.400 20.526.316 35.854.999 24.028.042 19.508.759 135.553.998

Liabilities
Bank Deposits 331.633 795.851 105.887 265.369 -- 76.053 1.574.793
Other Deposits 36.855.195 10.782.700 14.062.585 9.506.576 526.631 18.887.471 90.621.158
Interbank Money Market Placements 5.397.576 -- -- -- -- -- 5.397.576
Miscellaneous Payables -- -- -- -- -- 1.962.214 1.962.214
Marketable Securities Issued 688.505 1.894.739 456.230 266.086 185.495 -- 3.491.055
Funds Borrowed from Other Fin. Inst. 3.821.161 3.889.867 3.131.408 1.742.145 4.157.611 -- 16.742.192
Other Liabilities (**) 280.887 228.536 91.714 460.544 186.705 14.516.624 15.765.010
Total Liabilities 47.374.957 17.591.693 17.847.824 12.240.720 5.056.442 35.442.362 135.553.998

On Balance Sheet Long Position -- -- 2.678.492 23.614.279 18.971.600 -- 45.264.371

On Balance Sheet Short Position (22.370.475) (6.960.293) -- -- -- (15.933.603) (45.264.371)
Off-Balance Sheet Long Position 3.281.977 3.160.110 2.450.357 4.068.624 4.273.732 -- 17.234.800
Off-Balance Sheet Short Position (2.591.356) (5.676.746) (3.397.900) (2.165.234) (2.910.824) -- (16.742.060)
Total Interest Sensitivity Gap (21.679.854) (9.476.929) 1.730.949 25.517.669 20.334.508 (15.933.603) 492.740
(*)
Other assets/non-interest bearings include; Tangible Assets, Intangible Assets, Investment Properties, Investments in Associates and Joint
Ventures, Tax Assets, Investments in Subsidiaries, Assets to be sold and other assets with balances of TL 664.579, TL 204.819, TL 164.527, TL
12.947, TL 254.864, TL 12.233, TL 123.311 and TL 1.579.646 respectively.
(**)
Other liabilities interest free include equities amount of TL 10.590.098, tax debt amounting to TL 205.165, provision balances
amounting to TL 1.748.151 and other foreign resources amount of TL 1.973.210.
246 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Up to 5 Years and Non-Interest

Prior Period 1 Month 1-3 Months 3-12 Months 1-5 Years Over Bearing Total
Assets
Cash and Balances with the Central Bank of the
Republic of Turkey 3.360.160 -- -- -- -- 7.463.192 10.823.352
Due from Banks and Other Fin. Inst. 2.192.594 314.307 61.352 -- -- 3.654.447 6.222.700
Financial Assets at Fair Value Through Profit or Loss 73.983 265.332 190.415 532.231 110.802 676 1.173.439
Interbank Money Market Placements 1.213.997 -- -- -- -- -- 1.213.997
Investment Securities Av.-for-Sale 283.639 1.567.201 2.426.953 2.678.795 2.903.701 112.900 9.973.189
Loans 11.841.376 8.408.220 13.921.559 25.494.345 14.209.224 812.673 74.687.397
Investment Securities Held-to-Mat. 1.545.220 289.208 340.211 453.552 747.978 -- 3.376.169
Other Assets (*) 405.120 206.015 339.755 1.534.803 532.769 2.397.704 5.416.166
Total Assets 20.916.089 11.050.283 17.280.245 30.693.726 18.504.474 14.441.592 112.886.409

Liabilities
Bank Deposits 614.237 555.196 145.986 -- -- 139.734 1.455.153
Other Deposits 27.354.211 10.538.010 9.482.253 9.290.366 284.646 14.254.616 71.204.102
Interbank Money Market Placements 7.184.158 -- -- -- -- -- 7.184.158
Miscellaneous Payables 80 1.521 7.977 1.033 -- 1.761.608 1.772.219
Marketable Securities Issued 1.865.068 540.907 249.792 430.273 -- -- 3.086.040
Funds Borrowed from Other Fin. Inst. 2.239.084 4.942.730 4.891.805 165.864 3.863.748 -- 16.103.231
Other Liabilities (**) 99.385 98.261 41.387 307.204 95.326 11.439.943 12.081.506
Total Liabilities 39.356.223 16.676.625 14.819.200 10.194.740 4.243.720 27.595.901 112.886.409

On Balance Sheet Long Position -- -- 2.461.045 20.498.986 14.260.754 -- 37.220.785

On Balance Sheet Short Position (18.440.134) (5.626.342) -- -- -- (13.154.309) (37.220.785)
Off-Balance Sheet Long Position 2.161.735 7.312.989 6.862.938 3.587.715 2.778.546 -- 22.703.923
Off-Balance Sheet Short Position (797.619) (8.445.792) (3.821.445) (6.666.571) (2.120.986) -- (21.852.413)
Total Interest Sensitivity Gap (17.076.018) (6.759.145) 5.502.538 17.420.130 14.918.314 (13.154.309) 851.510

(*)
Other assets/non-interest bearings include; Tangible Assets, Intangible Assets, Investment Properties, Investments in Associates and Joint
Ventures, Tax Assets, Investments in Subsidiaries, Assets to be sold and other assets with balances of TL 547.622, TL 178.257, TL 157.381, TL
12.947, TL 166.350, TL 5.760, TL 84.591 and TL 1.244.796 respectively.
(**)
Other liabilities/non-interest bearings include; Shareholders Equity, Tax Liabilities, Provisions, and Other Liabilities with balances of TL
8.294.197, TL 169.502, TL 1.224.501, and TL 1.751.743 respectively.

d. Average interest rates applied to monetary financial instruments

Current Period: 31 December 2016 EUR % USD % JPY % TL %
Assets
Cash and Balances with the Central Bank of the Republic of Turkey -- 0,49 -- 5,00
Due from Banks and Other Financial Institutions 0,88 1,54 -- 9,38
Financial Assets at Fair Value Through Profit or Loss 1,33 4,95 -- 11,22
Interbank Money Market Placements -- -- -- 8,49
Investment Securities Available-for-Sale 1,42 4,44 -- 9,05
Loans 4,60 5,68 5,39 16,38
Investment Securities Held-to-Maturity 4,46 4,68 -- 9,52

Liabilities
Bank Deposits 0,15 1,54 -- 4,34
Other Deposits 1,64 3,10 0,30 10,74
Interbank Money Market Placements -- -- -- 8,47
Miscellaneous Payables -- -- -- --
Marketable Securities Issued 2,75 3,75 -- --
Funds Borrowed from Other Financial Institutions 2,74 3,74 -- 12,56

Prior Period: 31 December 2015 EUR % USD % JPY % TL %

Assets
Cash and Balances with the Central Bank of the Republic of Turkey -- 0,31 -- 5,47
Due from Banks and Other Financial Institutions 0,70 0,65 -- 11,48
Financial Assets at Fair Value Through Profit or Loss 3,28 5,01 -- 9,13
Interbank Money Market Placements -- -- -- 10,74
Investment Securities Available-for-Sale 1,79 4,29 -- 8,55
Loans 5,87 5,36 5,29 15,31
Investment Securities Held-to-Maturity 4,46 4,04 -- 9,35

Liabilities
Bank Deposits 0,23 2,08 -- 11,28
Other Deposits 1,57 2,54 0,17 11,92
Interbank Money Market Placements -- -- -- 8,83
Miscellaneous Payables -- -- -- --
Marketable Securities Issued 2,33 3,05 -- 10,58
Funds Borrowed from Other Financial Institutions 1,80 3,73 -- 13,15
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 247

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

e. Interest rate risk on banking book

Nature of interest rate risk resulted from banking book, major assumptions including also early repayment of loans and
movements in deposits other than term deposits and frequency of measuring interest rate risk

Interest rate risk resulted from banking book is due to repricing maturity differences of assets and liabilities. Considering
repricing maturities, average maturity of asset items is higher than the average maturity of liability items.

Interest risk is evaluated weekly considering size, developments at maturity structure and interest movements relating to asset
and liability items. Interest risk exposed by the bank is managed centrally by the asset and liability committee and within the
direction of decisions taken, the balance sheet interest sensitivity is aimed at minimum level and insured by interest based
derivative contracts.

The effect of potential changes on interest rates to net present value is calculated within the scope of Regulation on
Measurement and Evaluation of Interest Rate Risk Resulted from Banking Book as per Standard Shock Method and reported
monthly.

Measurements performed with Standard Shock Method include all on and off balance sheet items in the Banking Book based on
the classification as per the statutory accounting and reporting. Maturity assumption relating to demand deposits is overviewed
yearly with analyses over at least five year data. By such analyses, the Bank gathers information on average duration of its
demand deposits, and the amount and trend of deposit charge offs from different maturity brackets.

Economic value differences resulted from interest rate instabilities and prepared based on the Parent Banks non-consolidated
financial statements according to Regulation on Measurement and Evaluation of Interest Rate Risk Resulted from Banking Book
as per Standard Shock Method

Interest rate risk for all banking transactions outside the trading portfolio are followed under interest rate risk related to the
banking book. Interest rate risk related to the trading portfolio is followed under market risk.

ALCO performs daily management of interest rate risk in accordance with the risk limits set by the Board of Directors of the
Parent Bank in relation to interest rate sensitivities of the banking book. ALCO meetings are held on a weekly basis.

The measurement process of interest rate risk resulting from the banking book is designed and managed by the Parent Bank on
a bank-only basis to include the interest rate positions defined as banking book by Parent the Bank and to consider the relevant
repricing and maturity data. Duration gaps, gaps by maturity brackets and sensitivity analysis are used in monitoring of repricing
risk resulting from maturity mismatch. The duration gap and sensitivity analysis are carried out weekly. In the duration gap
analysis, the present values of interest-rate-sensitive asset and liability items are calculated using yield curves developed from
market interest rates.

In case of instruments with no maturities, the maturity is determined as per interest rate fixing periods and customer behaviors.
Such results are supported by sensitivity and scenario analysis applied periodically for possible fluctuations in the markets.

The Groups economic value differences arising from the interest rate fluctuations pursuant to the Regulation on the
Measurement and Assessment of Interest Rate Risk Arising from Banking Accounts According to the Standard Shock Method in a
manner separated by different currencies are demonstrated in the following table as of 31 December 2016.

Current Period: 31 December 2016 Shocks Applied Gaings/Equity-

Type of Currency (+/- x basis points) Gaings/Losses Losses/Equity
1 TL (+) 500 bps (2.141.923) (%13,55)
2 TL (-) 400 bps 2.099.329 %13,28
3 Euro (+) 200 bps (243.636) (%1,54)
4 Euro (-) 200 bps 504.133 %3,19
5 US Dollar (+) 200 bps (131.925) (%0,83)
6 US Dollar (-) 200 bps 159.574 %1,01
Total (of positive shocks) (2.517.484) (%15,92)
Total (of negative shocks) 2.763.036 %17,48
248 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Prior Period: 31 December 2015 Shocks Applied Gaings/Equity -

Type of Currency (+/- x basis points) Gaings/Losses Losses/Equity
1 TL (+) 500 bps (2.269.431) (%17,99)
2 TL (-) 400 bps 2.240.738 %17,76
3 Euro (+) 200 bps (17.487) (%0,14)
4 Euro (-) 200 bps 97.569 %0,77
5 US Dollar (+) 200 bps (59.665) (%0,47)
6 US Dollar (-) 200 bps 72.156 %0,57
Total (of positive shocks) (2.346.583) (%18,60)
Total (of negative shocks) 2.410.463 %19,10

V. Position risk of equity shares on banking book

a. Comparison of carrying, fair and market values of equity shares

DFS Group does not have associate and subsidiary traded at BIST markets as of 31 December 2016 (31 December 2015: None).

b. Realized gains/losses, revaluation surpluses and unrealized gains/losses on equity securities and results included in core
and supplementary capital

None (31 December 2015: None).

VI. Explanations related to the consolidated liquidity risk

Liquidity risk can form as a result of significant changes which can happen in market liquidity or a general funding risk. Funding
risk states the risk of not meeting cash outflows completely because of maturity mismatch between assets and liabilities while
market liquidity risk states the risk of not liquidating assets because of a collision in market conditions or insufficient market
depth.

The securities portfolio of the Parent Bank carried in order to liquidity risk management is structured in a way to consist of
public securities and treasury stocks issued by Treasury of Turkey in order to reduce liquidity risk sourcing from market to
minimum level. Criteria and principles related to security investments which shall be received to this portfolio are committed on
paper and approved by the related committee.

Management of risk sourcing from funding presents the fundamental of liquidity management activities of the Parent Bank. Main
funding source of the Parent Bank is deposits since it is a more stable funding source compared to other sources and it has a
diversification effect. Additionally, security issuance and credit usage activities are performed in order to extend the maturity of
funding.

A large majority of Parent Banks liabilities consist of TL, US Dollar, Euro and gold. The main foreign currency funding source
of the Parent Bank is credit received from deposit and credit agencies. Foreign currency liquidity risk is at a low level since the
foreign currency sources of the Parent Bank are at a higher level than assets.

The Board of Directors approved Risk Appetite Disclosure on 30 March 2015 in order to manage risks in accordance with the
Parent Banks strategy and its financial power. Risk Appetite Disclosure includes limits towards liquidity risks besides other risk
limits. Risk appetite limits are reported to senior management monthly in scope of risk management activities.

Short-term liquidity management of the Parent Bank is under the responsibility of Treasury Group. Treasury Group reports to
Assets and Liabilities Committee (ALCO) weekly related to liquidity structure. ALCO has an active role in establishing related
systems and monitoring and decision making processes regarding liquidity risk management. ALCO is also responsible and
authorized for monitoring current liquidity position and legal and internal liquidity indicators and taking decisions related to
liquidity management taking risk appetite framework into consideration.

Liquidity risk management is performed as par consolidated and non-consolidated. In this context, liquidity monitoring and
management in associates are performed by the related associate and monitored closely by the Parent Bank.

Scenario analyses, including specific conditions having significance with respect to liquidity which have been experienced or
which shall possibly be experienced, are performed in order to measure liquidity level under stress conditions. A liquidity level
at a sufficient amount to meet all liabilities even under stress conditions is aimed in scope of this scenario analyses through
evaluating measures which can be taken. Assumptions related to liquidity stress tests are reviewed annually at minimum.
Periodical stress tests are performed within the determined scenarios and liquidity situation is monitored.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 249

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

An Emergency Liquidity Action Plan is established in order to form a trustable and proactive tracking mechanism which can
provide keeping sufficient liquidity reserve under all conditions and to make forecast regarding measures which can be taken
against unexpected liquidity squeezes of the Parent Bank. It is approved by the Board of Directors. Emergency Liquidity Action
Plan includes target levels towards several liquidity indicators related to liquidity reserves and balance sheet structure besides
duties and responsibilities related to liquidity management.

Liquidity coverage rates calculated in accordance with the Regulation on Calculation of Parent Banks Liquidity Coverage rate
published in Official Gazette dated 21 March 2014 and numbered 28948 are as follows. Consolidated foreign currency rate
calculated for the last three months is at the lowest level in October 151,21 and at the highest level in December 253,67 while
the liquidity coverage rate is at the lowest level in November 95,13 and at the highest level in December 115,27.

a. Liquidity coverage ratio

Current Period Total unweighted value (*) Total weighted value(*)

TL+FC FC TL+FC FC
HIGH QUALITY LIQUID ASSETS (HQLA)
1 Total High Quality Liquid Assets 20.033.226 12.857.037
CASH OUTFLOWS
2 Retail deposits and deposits from small business
customers, of which 57.675.367 35.614.053 5.507.091 3.561.405
3 Stable deposits 5.208.907 -- 260.445 --
4 Less stable deposits 52.466.460 35.614.053 5.246.646 3.561.405
5 Unsecured wholesale funding, of which 26.356.827 11.970.447 15.025.492 6.919.243
6 Operational deposits 5.601.040 2.437.107 1.400.260 609.277
7 Non-operational deposits 16.518.103 8.782.761 9.387.548 5.559.387
8 Unsecured debt 4.237.684 750.579 4.237.684 750.579
9 Secured wholesale funding 173.464 173.464
10 Additional requirements of which 5.246.846 8.068.269 2.475.074 5.575.897
11 Outflows related to derivative exposures and other
collateral requirements 1.151.728 4.398.147 1.151.728 4.398.147
12 Outflows related to loss of funding on debt products -- -- -- --
13 Credit and liquidty facilities 4.095.118 3.670.122 1.323.346 1.177.750
14 Other contractual funding obligations 2.369.250 933.190 1.399.629 933.190
15 Other contingent funding obligations 51.564.631 15.057.850 4.221.627 1.505.275
16 TOTAL CASH OUTFLOWS 28.802.377 18.668.474
CASH INFLOWS
17 Secured lending 2.607.807 -- -- --
18 Inflows from fully performing exposures 10.998.795 6.898.849 8.708.864 6.387.496
19 Other cash inflows 445.904 5.652.432 445.904 5.652.432
20 TOTAL CASH INFLOWS 14.052.506 12.551.281 9.154.768 12.039.928
Total adjusted value
21 TOTAL HQLA 20.033.226 12.857.037
22 TOTAL NET CASH OUTFLOWS 19.647.609 6.628.546
23 LIQUIDITY COVERAGE RATIO (%) 101,9 197,1

Average of consolidated liquidity coverage rate which is calculated by means of monthly simple arithmetic average for the last three months,
(*)

average of consolidated liquidity coverage rate which is calculated by means of weekly simple arithmetic average for the last three months
250 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Prior Period Total unweighted value (*) Total weighted value(*)

TL+FC FC TL+FC FC
HIGH QUALITY LIQUID ASSETS (HQLA)
1 Total High Quality Liquid Assets 15.585.473 11.237.166
CASH OUTFLOWS
2 Retail deposits and deposits from small business
customers, of which 48.686.650 31.533.740 4.647.393 3.108.473
3 Stable deposits 4.425.453 898.007 221.273 44.900
4 Less stable deposits 44.261.197 30.635.733 4.426.120 3.063.573
5 Unsecured wholesale funding, of which 22.207.386 10.788.785 12.465.655 5.496.133
6 Operational deposits 5.287.465 2.750.059 1.321.866 687.515
7 Non-operational deposits 11.337.295 6.560.102 5.561.163 3.329.994
8 Unsecured debt 5.582.626 1.478.624 5.582.626 1.478.624
9 Secured wholesale funding -- --
10 Additional requirements of which 4.068.391 7.252.159 2.038.288 5.529.433
11 Outflows related to derivative exposures and other
collateral requirements 1.086.734 4.736.815 1.086.734 4.736.815
12 Outflows related to loss of funding on debt products -- -- -- --
13 Credit and liquidty facilities 2.981.657 2.515.344 951.544 792.618
14 Other contractual funding obligations 6.057.980 945.978 1.729.299 945.978
15 Other contingent funding obligations 42.388.060 14.667.892 3.442.548 1.522.106
16 TOTAL CASH OUTFLOWS 24.323.184 16.602.124
CASH INFLOWS
17 Secured lending 400.471 -- -- --
18 Inflows from fully performing exposures 8.906.122 5.014.213 6.972.831 4.734.585
19 Other cash inflows 189.742 11.117.487 189.742 11.117.487
20 TOTAL CASH INFLOWS 9.496.335 16.131.700 7.162.573 15.852.072
Total adjusted value
21 TOTAL HQLA 15.585.473 11.237.166
22 TOTAL NET CASH OUTFLOWS 17.160.611 4.150.531
23 LIQUIDITY COVERAGE RATIO (%) 90,8 271,6

Average of consolidated liquidity coverage rate which is calculated by means of monthly simple arithmetic average for the last three months,
(*)

average of consolidated liquidity coverage rate which is calculated by means of weekly simple arithmetic average for the last three months.

Calculation table of liquidity coverage rate is reported to BRSA monthly and monitored daily in the Parent Bank.

Premium/high quality liquid assets consists of cash assets, reserves kept in Central Bank of Republic of Turkey and free/open
securities. Cash outflows consist of deposits, bank borrowings, non-cash credits, derivative products and other liabilities without
a certain maturity. Additionally, several bank borrowings are shown as cash outflow regardless of their maturity since they
include contingent annuity. On the other hand, cash outflows also include additional guarantee liability sourcing from possible
changes in fair values of derivative transactions. Cash inflows consist of credits having maturity less than 30 day and a certain
payment due date and receivables from banks and derivative products.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 251

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

b. Presentation of assets and liabilities according to their residual maturities

5 Years and Non-Interest

Current Period Demand Up to 1 Month 1-3 Months 3-12 Months 1-5 Yearl Over Bearing (*) Total
Assets
Cash and Balances with the Central Bank of the
Republic of Turkey 4.709.643 10.129.718 -- -- -- -- -- 14.839.361
Due from Banks and Other Fin.Inst. 4.287.521 308.145 417.036 560.041 -- -- -- 5.572.743
Financial Assets at Fair Value Through Profit or Loss 9.947 405.151 168.844 256.476 406.656 200.785 -- 1.447.859
Interbank Money Market Placements -- 3.001.571 -- -- -- -- -- 3.001.571
Investment Securities Av.-for-Sale 41.728 -- 333 6.072 4.126.699 3.422.158 -- 7.596.990
Loans -- 9.801.714 3.670.790 15.647.248 33.574.620 27.452.432 1.003.684 91.150.488
Investment Securities Held-to-Maturity -- -- 68.037 -- 2.349.750 2.638.245 -- 5.056.032
Other Assets 1.352.560 573.000 186.450 520.848 1.549.176 1.042.657 1.664.263 6.888.954
Total Assets 10.401.399 24.219.299 4.511.490 16.990.685 42.006.901 34.756.277 2.667.947 135.553.998

Liabilities
Bank Deposits 76.053 331.633 795.851 105.887 265.369 -- -- 1.574.793
Other Deposits 18.887.471 36.798.092 10.778.346 14.095.193 9.535.318 526.738 -- 90.621.158
Funds Borrowed from Other Fin.Inst. and
Subordinated Loans -- 1.976.939 2.270.576 5.310.226 2.984.147 4.200.304 -- 16.742.192
Interbank Money Market Placements -- 5.397.576 -- -- -- -- -- 5.397.576
Marketable Securities Issued -- 550.916 893.700 470.624 895.667 680.148 -- 3.491.055
Miscellaneous Payables 1.962.214 -- -- -- -- -- -- 1.962.214
Other Liabilities 1.131.066 685.593 457.284 390.822 460.544 186.705 12.452.996 15.765.010
Total Liabilities 22.056.804 45.740.749 15.195.757 20.372.752 14.141.045 5.593.895 12.452.996 135.553.998
Net Liquidity Gap (11.655.405) (21.521.450) (10.684.267) (3.382.067) 27.865.856 29.162.382 (9.785.049) --
Net Off-Balance Sheet Position -- 874.059 (769.459) 117.624 (174.800) -- -- 47.424
Financial Derivatives (assets) -- 18.331.884 9.011.985 4.365.116 4.293.056 5.814.178 -- 41.816.219
Financial Derivatives (liabilities) -- (17.457.825) (9.781.444) (4.247.492) (4.467.856) (5.814.178) -- (41.768.795)
Non-Cash Loans -- 1.775.889 2.589.671 7.421.090 4.259.244 12.736.121 -- 28.782.015

Prior Period
Total Assets 7.712.800 20.327.485 3.993.911 14.128.760 34.954.592 29.641.914 2.126.947 112.886.409
Total Liabilities 17.209.237 37.913.386 13.646.519 15.720.586 13.222.708 5.596.724 9.577.249 112.886.409
Net Liquidity Gap (9.496.437) (17.585.901) (9.652.608) (1.591.826) 21.731.884 24.045.190 (7.450.302) --
Net Off-Balance Sheet Position -- (35.074) 227.672 121.594 247.154 -- -- 561.346
Financial Derivatives (assets) -- 19.127.470 7.504.135 6.144.416 4.109.780 4.131.504 -- 41.017.305
Financial Derivatives (liabilities) -- (19.162.544) (7.276.463) (6.022.822) (3.862.626) (4.131.504) -- (40.455.959)
Non-Cash Loans -- 1.490.653 1.795.954 7.419.775 3.819.033 9.919.000 -- 24.444.415

Certain assets on the balance sheet that are necessary for the banking operations but not convertible into cash in the short run such
(*)

as tangible assets, investments in associates, joint ventures and subsidiaries, stationary supplies, non- performing loans (net) and prepaid
expenses are included in this column.

c. Financial liabilities according to agreement maturities

DFS Group has significant financial liabilities which are not in derivative status. These are based on contract and separation
of the contract maturities can be seen on table below. Interest amounts that will pay on these assets and liabilities added on
maturity columns.

Current Period Up to 1 Month 1-3 Months 3-12 Months 1-5 Years 5 Years and Over Total
Liabilities
Deposits 56.058.504 11.542.912 14.205.029 10.365.503 641.343 92.813.291
Funds borrowed 2.107.932 2.390.916 5.716.728 4.192.219 4.886.238 19.294.033
Interbank Money markets 5.398.898 -- -- -- -- 5.398.898
Securities issued 551.356 1.020.781 832.168 1.121.541 86.548 3.612.394
Total 64.116.690 14.954.609 20.753.925 15.679.263 5.614.129 121.118.616

Prior Period Up to 1 Month 1-3 Months 3-12 Months 1-5 Years 5 Years and Over Total
Liabilities
Deposits 42.156.533 11.147.194 9.729.852 9.396.504 554.675 72.984.758
Funds borrowed 2.536.660 1.979.770 6.069.885 4.046.428 4.319.167 18.951.910
Interbank Money markets 7.184.158 -- -- -- -- 7.184.158
Securities issued 307.495 710.199 535.510 1.349.107 310.446 3.212.757
Total 52.184.846 13.837.163 16.335.247 14.792.039 5.184.288 102.333.583
252 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

VII. Explanations related to leverage ratio

Information on matters causing difference between leverage ratios of current period and previous period:

Leverage ratio of DFS Group is 5,51% as of 31 December 2016 (31 December 2015: 4,97%). This ratio is over minimum ratio.
Difference between leverage ratios of current and previous period mainly sources from increase in risk amounts regarding assets
on balance sheet.

Comparison table of total assets and total risk amounts in the financial statements prepared in accordance with TAS:

Current Period (**) Prior Period (**)

1 Total assets in the consolidated financial statements prepared in accordance with TAS (*) 131.643.936 110.263.318
2 Differences between the total assets in the consolidated financial statements prepared in
accordance with TAS and the total assets in the consolidated financial statements prepared in
accordance with Communique on Preparation of Consolidated Financial Statements of the Banks (3.916.000) (51.337)
3 Differences between the balances of derivative financial instruments and the credit derivatives
in the consolidated financial statements prepared in accordance with the Communique on
Preparation of Consolidated Financial Statements of the Banks and their risk exposures 485.213 518.752
4 Differences between the balances of securities financing transactions in the consolidated
financial statements prepared in accordance with the Communique on Preparation of
Consolidated Financial Statements of the Banks and their risk exposures -- --
5 Differences between off- balance sheet itmes in the consolidated financial statements prepared
in accordance with the Communique on Preparation of Consolidated Financial Statements of the
Banks and their risk exposures (503) (503)
6 Other differences in the consolidated financial statements prepared in accordance with the
Communique on Preparation of Consolidated Financial Statements of the Banks and their risk
exposures 58.563.211 49.831.480
7 Total Risk 186.775.857 160.561.710
(*)
The consolidated financial statements prepared in accordance with the sixth paragraph of the Article 5 in the Communique on Preparation of
Consolidated Financial Statements of the Banks.
(**)
The arithmetic average of the last 3 months in the related periods.

Leverage ratio common disclosure template:

Current Period (*) Prior Period (*)

On-balance sheet exposures
1 On-balance sheet items (exclude derivatives and SFTs; include collateral) 127.727.936 110.211.981
2 (Assets deducted in determining Basel III Tier 1 capital) (282.798) (334.756)
3 Total on-balance sheet exposures (excluding derivatives and SFTs) (sum of 1 and 2 lines ) 127.445.138 109.877.225
Derivative exposures
4 Replacement cost 1.226.002 1.198.701
5 Add-on amount 485.213 518.752
6 Total derivative exposures (sum of 4 and 5 lines ) 1.711.215 1.717.453
Securities financing transaction exposures
7 Gross SFT assets (with no recognition of accounting netting) 204.604 34.725
8 Agent transaction exposures
9 Total securities financing transaction exposures (sum of 7 and 8 lines) 204.604 34.725
Other off-balance sheet exposures
10 Off-balance sheet exposures with gross nominal amount 57.415.403 48.932.810
11 Adjustment amount off-balance sheet exposures with credit conversion factor (503) (503)
12 Total off-balance sheet exposures (sum of 10 and 11 lines) 57.414.900 48.932.307
Capital and total exposures
13 Tier 1 capital 10.274.321 7.975.417
14 Total exposures (sum of 3,6,9 and 12 lines) 186.775.857 160.561.710
Leverage ratio
15 Leverage ratio 5,51 4,97
(*)
The arithmetic average of the last 3 months in the related periods.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 253

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

VIII. Explanations on Risk Management

Notes and explanations in this section have been prepared in accordance with the Communiqu on Disclosures about Risk
Management to Be Announced to Public by Banks that have been published in Official Gazette no. 29511 on 23 October 2015
and became effective as of 31 March 2016. According to Communiqu, notes and explanations have to be presented on a
quarterly basis. Due to usage of standard approach for the calculation of capital adequacy by the Bank, tables, which have to be
prepared within the scope of Internal rating-based (IRB) approach, have not been presented as of 31 December 2016.
a. Risk management and Overview of RWA
1. Disclosures related to the risk management approach
Risks, exposed as a result of business model of the Bank, are determined on a consolidated basis through risk definition and
materiality assessment of the Bank. Risk mitigation factors and monitoring activities are established for significant risks which are
determined. Limits are identified for risks, considered to be significant, in Risk Appetite Declaration of the Bank and those limits
are approved by the Board of Directors. Developments with respect to risk limits determined in Risk Appetite Declaration are
monitored on a monthly basis and actions which are pre-determined in risk appetite declaration if those limits are excessed.

Denizbank Risk Management Group Directorate is an internal systems unit responsible for carrying out risk management activities
working subject to Board of Directors. It directly reports to Board of Directors. Risk Management Group is responsible to carry
out processes such as definition and measurement of risks, establishment and application of risk policies and implementation
procedures, analysis, monitoring and reporting of risks in the framework of principles determined by Senior Management of the
Bank and Risk Management Group and approved by Board of Directors.

Delegation levels of groups, formed by client and clients at the Bank, are determined in accordance with risk categories
established according to limit and credit grade components within the body of the Bank.

Rating process executed by Credit Analysis department and reviews of Credit Allocation department are periodically audited by
Credit Risk Control in scope of determined rules and related outputs are presented to Rating Committee.

Informative contents are presented in order to extend risk culture within the body of the Bank and questionnaires towards
reviewing of risk perception are performed. Risk sensitivity developments of employees are monitored in line with outputs of
aforementioned questionnaires and required actions are taken through identifying weaker aspects. Training plans are established
in this scope and it is aimed to provide contribution to developments of employees in determined matters.
Main components of risk measurement systems and its scope
Identification of Risks
The Bank has a comprehensive risk definition process including its subsidiaries. The process aims to determine significant risks
specific to the Bank based on a broad list including inherent risks of banking and it is performed on an annual basis. Opinions
and reviews of expert individuals within the body of the Bank during the determination of materiality level of risks. Review
outputs are used in reports and form a basis to internal capital assessment processes of the Bank.
Measurement of Risks
The purpose of the studies made in scope of measurement of risks includes measuring of financial risks exposed by the Bank
and its subsidiaries in order to prepare internal and legal reports and form a relation between carried risks and estimated
profitability and evaluation of validity of parameters and assumptions used in risk measurement.
Controlling, reporting and management of Risks

It determines which type of reports shall be prepared as consolidated and unconsolidated. It ensures to establish an effective
internal audit system which shall prevent to take risk exceeding targeted risk level and limits determined by regulatory authority.
Risk limits, approved by Board of Directors for each type of risk types, are taken into account while controlling and reporting of
risks.

Disclosures on risk reporting processes provided to Board of Directors and senior management, especially the scope and
main content of the reporting

Risk Management Group performs reporting to Senior Management and Board of Directors through Audit Committee, ALCO and
Rating Committees.
254 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Audit Committee holds quarterly meetings in ordinary situations. Activities and risk indicators performed by Risk Management
Group are presented to the Committee.

ALCO holds weekly meetings. Risk-limit follow-up and detailed analysis related to indicators such as interest and liquidity risk,
capital adequacy are presented.

Rating Committee: Rating Committee holds meetings on a quarterly basis. It is the Committee to which the Risk Management
presents its evaluation, analysis and findings regarding Internal Rating processes

Disclosures on Stress Test

The Bank performs stress test studies evaluating its capital adequacy in scope of ICAAP. Stress tests help to determine capital
adequacy in three years projection and possible capital buffer requirement in scope of scenarios determined by regulatory
authority and bank based on budget plan of the Bank.

Risk management, hedging and mitigation strategies of the Bank sourcing from business model and monitoring process with
respect to continuing effectiveness of hedging and mitigating components

Limits, which are defined for risks considered to be significant, are monitored on a monthly basis and actions included in risk
appetite declaration are taken, if required.

In addition, emergency plan related to capital adequacy in order to meet its strategic aims considering stress conditions of the
Bank.

2. Overview of RWA

Minimum capital
Risk Weighted Amount requirement
Current Period Prior Period Current Period
1 Credit risk (excluding counterparty credit risk) (CCR) 101.521.984 89.735.270 8.121.759
2 Standardised approach (SA) 101.521.984 89.735.270 8.121.759
3 Internal rating-based (IRB) approach -- -- --
4 Counterparty credit risk 1.670.008 769.952 133.601
5 Standardised approach for counterparty credit risk (SA-CCR) 1.670.008 769.952 133.601
6 Internal model method (IMM) -- -- --
7 Basic risk weight approach to internal models equity position in the banking account -- -- --
8 Investments made in collective investment companies look-through approach -- -- --
9 Investments made in collective investment companies mandate-based approach 9.843 -- 787
10 Investments made in collective investment companies - %1250 weighted risk approach -- -- --
11 Settlement risk -- -- --
12 Securitization positions in banking accounts -- -- --
13 IRB ratings-based approach (RBA) -- -- --
14 IRB Supervisory Formula Approach (SFA) -- -- --
15 SA/simplified supervisory formula approach (SSFA) -- -- --
16 Market risk 399.825 274.113 31.986
17 Standardised approach (SA) 399.825 274.113 31.986
18 Internal model approaches (IMM) -- -- --
19 Operational Risk 7.901.568 6.749.375 632.125
20 Basic Indicator Approach 7.901.568 6.749.375 632.125
21 Standart Approach -- -- --
22 Advanced measurement approach -- -- --
23 The amount of the discount threshold under the equity (subject to a 250% risk weight) -- -- --
24 Floor adjustment -- -- --
25 Total (1+4+7+8+9+10+11+12+16+19+23+24) 111.503.228 97.528.710 8.920.258
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 255

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

b. Linkages between financial statements and exposures

1. Mapping and differences between accounting and regulatory scopes of consilodation

Legal consolidation refers to the consolidation that includes the consolidation of subsidiaries which are credit institutions or
financial institutions in accordance with Article 5 paragraph 1 of the Communiqu on the Preparation of Consolidated Financial
Statements of Banks published in the Official Gazette dated 8 November 2006 and numbered 26340. Accounting consolidation
refers to the consolidation in which all of the subsidiaries are included in the scope of consolidation in accordance with the
Article 5 paragraph 6 of the same communiqu, irrespective of whether these subsidiaries are credit institutions or financial
institutions,or not.

a b c d e f g
Carrying values of items under scope of TAS
Carrying Carrying Not subject
values as values as Subject to to capital
Subject to Subject to the Subject to the
reported in reported in counterparty requirements
credit risk securitisati on market risk
published regulatory credit risk or subject to
framework framework framework
financial scope of framework deduction from
statements consolidation capital
Assets
Cash and balances at central bank 14.839.361 14.839.361 14.839.361 -- -- -- --
Financial assets held for trading 1.448.214 1.447.859 -- 1.341.025 -- 106.834 --
Financial assets designated at fair value
through profit or loss -- -- -- -- -- -- --
Banks 5.573.829 5.572.743 5.572.743 -- -- -- --
Receivables from money markets 3.001.570 3.001.571 175 3.001.396 -- -- --
Available for sale financial assets (net) 7.596.990 7.596.990 7.596.990 -- -- -- --
Loans and receivables 91.138.210 91.150.488 91.150.488 -- -- -- 12.191
Factoring receivables 1.234.721 1.234.721 1.234.721 -- -- -- --
Held to maturity investments (net) 5.056.032 5.056.032 5.056.032 -- -- -- --
Investments in associates (net) 10.147 10.147 10.147 -- -- -- --
Investments in subsidiaries (net) -- 12.233 12.233 -- -- -- --
Investments in joint ventures (net) 9.735 2.800 2.800 -- -- -- --
Leasing receivables 2.637.307 2.637.307 2.637.307 -- -- -- --
Derivative financial assets held for hedges -- -- -- -- -- -- --
Tangible assets (net) 722.973 664.579 664.579 -- -- -- 91.733
Intangible assets (net) 212.894 204.819 204.819 -- -- -- 204.819
Investment properties (net) 164.527 164.527 164.527 -- -- -- --
Tax assets 258.362 254.864 254.864 -- -- -- 630
Non-current assets and disposal groups
classified as held for sale (net) -- -- -- -- -- -- --
Other assets 1.740.559 1.702.957 1.702.957 -- -- -- 9.825
Total assets 135.645.431 135.553.998 131.104.743 4.342.421 -- 106.834 319.198
Liabilities
Deposits 92.102.850 92.195.951 -- -- -- -- 92.195.951
Derivative financial liabilities held for trading 1.248.386 1.248.386 -- -- -- -- 1.248.386
Loans 11.292.338 11.258.691 -- -- -- -- 11.258.691
Debt to money markets 5.397.576 5.397.576 -- 5.397.576 -- -- 5.397.576
Debt securities in issue 3.491.055 3.491.055 -- -- -- -- 3.491.055
Funds -- -- -- -- -- -- --
Various debts 2.082.030 1.962.214 -- -- -- -- 1.962.214
Other liabilities 1.977.433 1.973.210 -- -- -- -- 1.973.210
Factoring debts -- -- -- -- -- -- --
Debts from leasing transactions -- -- -- -- -- -- --
Derivative financial liabilities held for hedges -- -- -- -- -- -- --
Provisions 1.757.572 1.748.151 -- -- -- -- 1.748.151
Tax liability 214.266 205.165 -- -- -- -- 205.165
Liabilities included in disposal groups
classified as held for sale (net) -- -- -- -- -- -- --
Subordinated debts 5.483.501 5.483.501 -- -- -- -- 5.483.501
Equity 10.598.424 10.590.098 -- -- -- -- 10.590.098
Total liabilities 135.645.431 135.553.998 -- 5.397.576 -- -- 135.553.998
256 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

2. Main sources of differences between risk exposures and valued amounts in accordance with TMS in financial statements

a b c d e
Items Items subject
Items subject subject to to counterparty Items subject
to credit risk securitisation credit risk to market risk
Total framework framework framework framework (*)
1 Asset carrying value amount under scope of TAS 135.553.998 131.104.743 -- 4.342.421 106.834
2 Liabilities carrying value amount under TAS -- -- 5.397.576 --
3 Total net amount under regulatory scope of
consolidation 135.553.998 131.104.743 -- 9.739.997 106.834
4 Off-balance sheet amounts (**) 57.789.021 20.444.394 -- -- --
5 Differences in valuations -- -- -- --
6 Differences due to different netting rules, other than
those already included in row 2 -- -- -- --
7 Differences due to consideration of provisions -- -- -- --
8 Differences due to prudential filters -- -- -- 292.991
9 Differences resulted from considering of the financial
guarantees (6.153.306) -- -- --
10 Risk exposures 193.343.019 145.395.831 -- 9.739.997 399.825
(*)
Financial instruments included in trading accounts according to Communique on Measurement and Evaluation of Banks Capital Adequacy
and principal amount subject to market risk sourcing from capital requirement calculated for foreign Exchange risk are included in line of risk
amounts.
(**)
It includes risk which are included in credit risk calculation.

3. Disclosures on differences between amounts valued in accordance with TAS and risk exposures

Differences between valued amounts in accordance with TAS and risk exposures:

It is obtained through addition of potential risk exposures according to type of transaction and maturity to risk exposure renewal
costs in derivative transactions included in counterparty credit risk and through offsetting of cash amount subject to amount
adjusted with volatility made to related security in repo and reverse repo transactions.

Amounts of items which are value in accordance with TAS and subject to market risk indicate fair value of financial instruments
held for trade. Amounts in line of risk amount related to aforementioned transactions indicate principal amount subject to market
risk sourcing from capital requirement calculated related to potential losses which can be caused by interest rate risk, share
price risk, exchange rate risks in scope of Communique on Measurement and Evaluation of Banks Capital Adequacy.

Disclosures on controls performed and systems used in order to ensure prudentiality and reliability of valuations estimates
of the Bank in accordance with prudential valuation principles and procedures included in accompanying Annex-3 to
Communique on Measurement and Evaluation of Banks Capital Adequacy:

If the financial instruments recognized through fair value have an active and deep market, valuation is performed based on prices
included in market in question. Reliability of market data used in valuations is examined periodically. The Bank does not operate
in markets which do not have a depth. Discounted cash flow model is mainly used in the evaluation of derivative instruments
and generally accepted valuation models are used for derivative transactions including optionality. Accuracy of market data
and model outputs used in valuations are periodically controlled and differences between counterparty valuations and banks
evaluations are monitored regularly.

c. Credit risk

1. General qualitative information about credit risk

How does the business model of the Bank transform to components in its credit risk portfolio

Credit risk within the body of the Bank is managed in the framework of Credit Risk Management Policy approved by
Board of Directors. Risk, related to credit, are defined, duties of departments are determined and main principles of credit
risk management are brought in aforementioned policy document. Departments assigned in credit management and their
authorization/responsibilities are defined in aforementioned document.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 257

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

In this direction, main limitations related to credit risk are determined in Risk Appetite Document approved annually by Board
of Directors and reported throughout the year by Risk Management Department. Concentration limits on the basis of sector,
customer segment and risk groups are determined. Actions which shall be taken in case of a possible overflow are also
determined in this document.

In this scope, credit portfolio of the Bank draws a dispersed view with respect to customers segments and sectors.

Criteria and approach used while determining credit risk policy and credit risk limits

Risk limits defined to all counterparties in monitoring of credit risks are tracked on the basis of products, customers and risk
groups separately by systems and it is not permitted to take risks exceeding determined limits. Many factors such as ability
to pay, features of the sector and possible impacts of geographical and economic conditions are taken into consideration while
determining the credit limits of counterparty. If deemed appropriate, it is tried to reduce possible losses of the Bank to minimum
through applying required risk mitigation techniques. All documents required by the related legislation should be taken into
account during credit examinations. Credit worthiness of counterparty is periodically controlled for limits provided for multi-use
and limits are revised considering changes and requirements in the credit worthiness of counterparty. Customers are determined
based on their classes by credit allocation officers and respective classes are changed, if required.

Structure and organization of credit risk management and control function

Credit allocation and monitoring is performed in accordance with segregation of duties and therefore, the credit can be reviewed
in an objective manner during its economic life. Risk models are used in order to measure credit risk of customers in both
allocation and monitoring groups in an accurate and objective manner. Early Warning Systems are used for the tracking of credit
customers and signals received are regularly tracked by Monitoring groups and pre-determined action plans are taken with
allocation groups if pre-determined triggers are detected.

Relation between credit risk management, risk control, legal compliance and internal audit functions

Credit Risk Control periodically presents analysis and results of execution of internal rating systems, development of credit rating
grades, documentation of changes made in credit grade and compliance to internal limitations to Rating Committee. Compliance
of Credit Risk Control activities to intra-bank arrangements and regulatory regulations and guides is periodically audited by
internal audit departments of the Bank and issue requiring to be developed are monitored following their identification.

Scope and main content of reporting which shall be made to senior management and members of board of directors regarding
credit risk management function and exposed credit risk

Board of Directors determines policy of the Group in credit management field and ensures establishment of required conditions
to perform determined policies in an effective manner. In this scope, it defines sections related to measurement and management
of credit quality and approves documents having primary importance related to credit risk such as Risk Appetite Declaration.

2. Credit quality of assets

a b c d
Gross carrying values of
(according to TAS)
Defaulted Non-defaulted Allowances/ Net values
exposures exposures impairments (a+b-c)
1 Loans 3.651.639 94.018.832 4.024.967 93.645.504
2 Debt Securities -- 12.611.296 1.159 12.610.137
3 Off-balance sheet explosures (*) 252.392 54.199.335 182.858 54.268.869
4 Total 3.904.031 160.829.463 4.208.984 160.524.510
(*)
It doesnt include revocable commitments and Forward Asset Purhcase Sales Commitments.
258 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

3. Changes in stock of defaulted loans and debt securities

a (*)
1 Defaulted loans and debt securities at end of the previous reporting period 3.168.774
2 Loans and debt securities that have defaulted since the last reporting period 1.975.518
3 Returned to non-defaulted status 19.826
4 Amounts written off (**) 604.213
5 Other changes (868.614)
6 Defaulted loans and debt securities at end of the reporting period (1 + 2 - 3 4 5) 3.651.639
(*)
It doesnt include off-balance sheet receivables.
(**)
It indicates sales made from non-performing loans portfolio.

4. Additional disclosure related to the credit quality of assets

(i) Scope and definitions of overdue receivables and provisioned receivables used for purposes of accounting

The Parent Bank considers loans that have overdue principal and interest payments and are classified as 2nd Group according
to the Communiqu on Determining the Quality of Loans and Other Receivables by Banks and Procedures and Principles of
Provisions to be made as past due loans. Loans that have overdue principal and interest payments for more than 90 days
after the maturity date or the debtor of which are deemed unworthy by the Bank are considered impaired loans.

(ii) Part of overdue receivables (over 90 days) which are not considered as Provisioned and reasons for the implementation
in question.

The Bank calculates general loan loss provision for past due loans and specific provision for impaired loans according to the
Communiqu on Determining the Quality of Loans and Other Receivables by Banks and Procedures and Principles of Provisions
to be made.

(iii) Definitions of methods used while determining amount of provision

Parent Bank calculates general credit provision for overdue credits and specific provision for impaired credits in scope of
Communiqu on Determining the Quality of Loans and Other Receivables by Banks and Procedures and Principles of Provisions
to be made.

(iv) Definitions of restructured receivables

The Bank can restructure both of its first and second group of credit and its illiquid credit and receivables. Restructuring in first
and second group of credits and in other receivables are made in order to improve repayment ability of the customer as well
as including changes made in contract terms with the request of the customer independent from credit risk of the customer.
Restructurings made in illiquid claims and receivables are changes made in payment plan of the credit towards ensuring of
collection of the receivable. Credits which are overdue over 90 days of delay are automatically transferred to follow-up accounts
and subject to special provision in accordance with Communiqu on Determining the Quality of Loans and Other Receivables by
Banks and Procedures and Principles of Provisions to be made.
(v) Breakdown of receivables by geographical area

Off-Balance sheet
Loans Borrowing instruments receivables
Non- Allowance /
Defaulted defaulted DefaultedNon-defaulted DefaultedNon-defaulted impairments Write-Offs (*)
1 Domestic 3.552.074 82.830.277 -- 11.565.804 252.390 42.526.906 2.574.631 602.590
2 EU Countries 95.316 4.841.812 -- 981.240 2 483.684 71.992 --
3 OECD Countries 33 195.576 -- -- -- 791.318 19 --
4 Off Shore Zones -- 331.011 -- -- -- 3.220 -- 1.623
5 USA, Canada 52 236.664 -- -- -- 111.186 13 --
6 Other Countries 4.164 5.583.492 -- 64.252 -- 10.283.021 1.300 --
7 Total 3.651.639 94.018.832 -- 12.611.296 252.392 54.199.335 2.647.955 604.213
(*)
It indicates sales made from non-performing loans portfolio.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 259

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

(vi) Breakdown of receivables by sectors

Off-Balance sheet
Loans Borrowing instruments receivables
Non- Non- Non- Allowance /
Defaulted defaulted Defaulted defaulted Defaulted defaulted impairments Write-Offs
Agricultural 200.093 8.796.827 -- -- 3.714 1.837.547 137.753 6.509
Farming and Cattle 197.139 8.778.483 -- -- 3.635 1.829.868 135.004 6.074
Forestry 527 3.771 -- -- 17 3.672 460 407
Fishing 2.427 14.573 -- -- 62 4.007 2.289 28
Manufacturing 357.990 12.815.751 -- 57.735 30.760 11.670.095 215.052 33.260
Mining 39.933 2.811.457 -- -- 1.765 705.388 27.911 7.763
Production 235.915 6.906.034 -- 51.717 23.348 10.027.120 166.601 25.399
Electric, Gas, Water 82.142 3.098.260 -- 6.018 5.647 937.587 20.540 98
Construction 232.278 9.334.442 -- -- 75.177 9.618.001 156.120 21.994
Services 1.157.129 33.603.669 -- 412.929 106.752 12.546.879 787.920 92.011
Wholesale and Retail Trade 748.500 12.833.708 -- -- 94.767 7.997.189 495.120 75.075
Hotel and Restaurant Services 41.453 9.269.785 -- -- 3.719 795.942 16.764 3.774
Transportation and
telecommunication 216.466 6.519.837 -- 33.517 5.627 1.945.952 154.069 9.947
Financial institution 28.667 837.870 -- 379.412 141 1.192.687 17.282 582
Real estate and letting services 9.604 319.263 -- -- 555 78.642 6.209 1.433
Self-employement services -- -- -- -- -- -- -- --
Education services 21.522 1.178.221 -- -- 884 85.607 16.673 357
Health and social services 90.917 2.644.985 -- -- 1.059 450.860 81.803 843
Other 1.704.149 29.468.143 -- 12.140.632 35.989 18.526.813 1.351.110 450.439
Total 3.651.639 94.018.832 -- 12.611.296 252.392 54.199.335 2.647.955 604.213
(*)
It indicates sales made from non-performing loans portfolio.

(vii) Breakdown of receivables by outstanding maturity

Undistributed 1 month 1-3 months 3-6 months 6-12 months Over 1 year Total
Non - defaulted receivables 26.248 21.998.313 8.223.328 8.109.397 27.548.606 94.923.571 160.829.463
1 Loans -- 9.612.324 5.069.570 4.615.492 11.258.160 63.463.286 94.018.832
2 Borrowings instruments -- -- 69.142 4.634 -- 12.537.520 12.611.296
3 Off-balance sheet receivables 26.248 12.385.989 3.084.616 3.489.271 16.290.446 18.922.765 54.199.335
Defaulted receivables 3.904.031 -- -- -- -- -- 3.904.031
1 Loans 3.651.639 -- -- -- -- -- 3.651.639
2 Borrowings instruments -- -- -- -- -- -- --
3 Off-balance sheet receivables 252.392 -- -- -- -- -- 252.392
Specific Provision 2.647.955 -- -- -- -- -- 2.647.955
Total 1.282.324 21.998.313 8.223.328 8.109.397 27.548.606 94.923.571 162.085.539
(viii) Ageing analysis of Parent Bank for overdue receivables

1-30 days 31-60 days 61-90 days Total

Loans 6.273.302 1.312.479 858.290 8.444.070
Borrowings instruments -- -- -- --
Off-balance sheet receivables 582.504 32.516 35.886 650.906
(ix) Breakdown of restructured recievables whether they are provisioned or not

31 December 2016
Credits having standard nature and restructured from other reciavables 1.437.793
Credits in close follow-up and restructured from other receivables 2.914.008
Restructured from illiquid claims 150.334
5. Credit risk mitigation techniques
The Bank can demand collateral in order to mitigate risk level of the credit. Each type of collaterals and collateral processes
approved in credit risk calculations are defined with Bank procedures. Insurance and evaluation approach off properties or goods
subject to collateral are regulated in internal documents of the Bank prepared in accordance with Turkish Banking Legislation.
The Bank performs credit risk mitigation according to comprehensive financial collateral method in accordance with
Communique on Credit Risk Mitigation Techniques. Exchange mismatch between receivable and collateral and cut-off rates
based on type of collateral are considered through inspecting standard cut-off ratios mentioned in annex of the communique
while maturity mismatch between receivable and collateral is taken into account in accordance with method mentioned in Article
49.
260 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Bank established compliant provisions to Turkish Banking Legislation and BRSA Regulations in order to cover expected loss
sourcing from occurrence of credit risk.

6. Credit risk mitigation techniques overview

a b c d e f g
Exposures
Exposures secured Financial secured by credit
Exposures by collateral, of Exposures secured guarantees, of Exposures derivatives, of
unsecured of Exposures secured which secured by financial which secured secured by credit which secured
(according to TAS by collateral amount guarantees amount derivatives amount
1 Loans 70.373.081 23.272.423 20.223.805 -- -- -- --
2 Debt Securities 12.610.137 -- -- -- -- -- --
3 Total 82.983.218 23.272.423 20.223.805 -- -- -- --
4 Of which defaulted (*) 3.635.260 268.771 193.941 -- -- -- --

(*)
It includes default figure belonging to amount before provision and off-balance sheet receivables.

7. Disclosures on rating grades used while calculating credit risk with standard approach

Ratings provided by international rating agency Fitch are used for the determination of risk weights which shall be applied in
the calculation of capital adequacy. The scope, in which the credit rating grades are taken into consideration, covers receivables
from governments or central banks and receivables from banks and intermediary institutions and corporate receivables for those
having residence abroad.

8. Standardised approach Credit risk exposure and credit risk mitigation (CRM) effects
a b c d e f
Exposures before credit Exposures post-credit
conversion factor and CRM conversion factor and CRM RWA and RWA density
On-balance sheet Off-balance sheet On-balance sheet Off-balance sheet
Risk classifications amount amount amount amount RWA RWA density
1 Exposures to central governments or central banks 29.027.608 688.695 29.810.368 198.759 7.373.518 %24,57
2 Exposures to regional governments or local authorities 537.203 19.368 537.081 8.671 272.876 %50,00
3 Exposures to public sector entities -- -- -- -- -- %0,00
4 Exposures to multilateral development banks -- -- -- -- -- %0,00
5 Exposures to international organisations -- -- -- -- -- %0,00
6 Exposures to institutions 3.084.054 2.258.890 3.084.054 1.941.779 2.110.608 %42,00
7 Exposures to corporates 44.491.134 29.227.490 39.153.945 15.661.886 54.815.830 %100,00
8 Retail exposures 32.529.013 25.701.748 31.743.829 2.462.775 25.737.950 %75,24
9 Exposures secured by residential property 5.216.261 332.318 5.178.729 163.046 1.869.621 %35,00
10 Exposures secured by commercial real estate 10.897.617 1.160.079 10.873.030 780.811 6.605.552 %56,68
11 Past-due loans 1.097.821 188.177 1.096.044 56.822 1.125.693 %97,64
12 Higher-risk categories by the Agency Board -- -- -- -- -- %0,00
13 Exposures in the form of covered bonds -- -- -- -- -- %0,00
14 Exposures to institutions and corporates with a short-term credit
assessment -- -- -- -- -- %0,00
15 Exposures in the form of units or shares in collective investment
undertakings (CIUs) 1.187 1.068 1.187 1.068 2.255 %100,00
16 Other assets 4.435.249 -- 4.435.250 -- 2.681.236 %60,45
17 Investments in equities 29.109 -- 29.109 -- 28.979 %99,55
18 Total 131.346.256 59.577.833 125.942.626 21.275.617 102.624.118 %69,71

DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 261

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

9. Standardised Approach Exposures by asset classes and risk weights

a b c k d e f g h j
%35 %50
Secured Secured Total risk
with with exposure
Risk Classifications/ property property (after CCF
Risk Weight* %0 %10 %20 mortgage mortgage %50 %75 %100 %150 %200 Dierleri and CRM )
1 Exposures to central
governments or central
banks 15.262.094 -- -- -- -- 14.747.033 -- -- -- -- -- 30.009.127
2 Exposures to regional
governments or local
authorities -- -- -- -- -- 545.752 -- -- -- -- -- 545.752
3 Exposures to public
sector entities -- -- -- -- -- -- -- -- -- -- -- --
4 Exposures to multilateral
development banks -- -- -- -- -- -- -- -- -- -- -- --
5 Exposures to
international
organisations -- -- -- -- -- -- -- -- -- -- -- --
6 Exposures to institutions -- -- 1.862.899 -- -- 2.849.812 -- 313.122 -- -- -- 5.025.833
7 Exposures to corporates -- -- -- -- -- -- 2 54.815.829 -- -- -- 54.815.831
8 Retail exposures -- -- -- -- -- -- 33.874.612 331.992 -- -- -- 34.206.604
9 Exposures secured by
residential property -- -- -- 5.341.775 -- -- -- -- -- -- -- 5.341.775
10 Exposures secured by
commercial real estate -- -- -- -- 10.096.579 -- -- 1.557.262 -- -- -- 11.653.841
11 Past-due loans -- -- -- -- 338.529 -- -- 530.154 284.183 -- -- 1.152.866
12 Higher-risk categories
by the Agency Board -- -- -- -- -- -- -- -- -- -- -- --
13 Exposures in the form of
covered bonds -- -- -- -- -- -- -- -- -- -- -- --
14 Exposures to institutions
and corporates with
a short-term credit
assessment -- -- -- -- -- -- -- -- -- -- -- --
15 Exposures in the form
of units or shares in
collective investment
undertakings (CIUs) -- -- -- -- -- -- -- 2.255 -- -- -- 2.255
16 Other assets 130 -- -- -- -- -- -- 28.979 -- -- -- 29.109
17 Investments in equities 1.979.637 -- 7.440 -- 3 -- 180 2.293.575 -- -- 154.415 4.435.250
18 Total 17.241.861 -- 1.870.339 5.341.775 10.435.111 18.142.597 33.874.794 59.873.168 284.183 -- 154.415 147.218.243

d. Counterparty Credit Risk

1. Counterparty Credit risk (CCR) explanations

Counterparty credit risk is determined according to type of counterparty and the transaction. Counterparties are divided into
segments as financial institutions, corporate-commercial customers, KBI-Micro-Gold-Agriculture customers and individual
customers. Transaction types are grouped as derivative financial products and repo transactions.

Compliance test is applied in line with production information, financial position and transaction frequency of the customer in
order to determine products and services provided to customers.

Credit worthiness of counterparty is analysed before the transactions causing counterparty credit risk and periodically reviewed.
Reviewing frequency is increased if required.

Limits, in line with risk appetite, policy and strategies of the Bank are determined for the transactions in scope of CCR. Those
limits are approved by Board of Directors for banks. Approval authorizations determined in scope of credit allocation process are
applied for parties apart from banks. Limits are reviewed at least annually. If the market conditions get worse or credit qualities
of certain counterparties decline, limits are reviewed and required changes are made. Approved limits are blocked with the
approval of Credit Committee/Credit Allocation Department, if required.

Risk mitigation methods such as netting contracts, collateral and margin contracts are used in counterparty credit risk
management related to financial institutions. Collateralization principles and procedures are applied in scope of credit policy and
procedures currently applied within the Bank for counterparties apart from financial institutions.

Potential and current risk amounts of transactions are calculated/determined in order to determine counterparty credit risk. The
risks of transactions that are subject to the legally binding bilateral netting agreement and to which the netting transaction can
be applied are followed together.
262 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

2. Analysis of counterparty credit risk exposure by approach

a b c d e f
Alpha
used for
computing
Potential regulatory Exposure at
Replacement future exposure at default
cost exposure EEPE default) post CRM RWA
1 Standardised Approach (for derivatives) 1.340.530 544.723 -- 1.805.349 996.506
2 Internal Model Method (for derivatives, Repo Transactions, Marketable Securities or EMTIA
lending or borrowing transactions, transactions with a long settlement time, Marketable
Security transactions with credit) -- -- -- --
3 Simple Approach for credit risk mitigation (for derivatives, Repo Transactions, Marketable
Securities or EMTIA lending or borrowing transactions, transactions with a long settlement
time, Marketable Security transactions with credit) -- --
4 Comprehensive Approach for credit risk mitigation (for derivatives, Repo Transactions,
Marketable Securities or EMTIA lending or borrowing transactions, transactions with a long
settlement time, Marketable Security transactions with credit) 392.667 95.785
5 VaR for for derivatives, Repo Transactions, Marketable Securities or EMTIA lending or
borrowing transactions, transactions with a long settlement time, Marketable Security
transactions with credit -- --
6 Total 1.092.291

3. Credit valuation adjustment (CVA) capital charge

a b
Exposure at default
post-CRM RWA
Total portfolios subject to the Advanced CVA capital charge
1 Value at Risk (VaR) component (including the 3multiplier) -- --
2 Stressed VaR component (including the 3multiplier) -- --
3 All portfolios subject to the Standardised CVA capital charge 1.805.349 577.717
4 Total subject to the CVA capital charge 1.805.349 577.717
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 263

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

4. Standard approach Counterparty credit risk with respect to risk classes and weights
a b c d e f g h i
Risk Weigths / Risk Classifications %0 %10 %20 %50. %75 %100 %150 Dier Total credit
Exposure (*)
Claims from central governments and central banks -- -- -- -- -- -- -- -- --
Claims from regional and local governments -- -- -- -- -- -- -- -- --
Claims from administration and non commercial entity -- -- -- -- -- -- -- -- --
Claims from multilateral development banks -- -- -- -- -- -- -- -- --
Claims from international organizations -- -- -- -- -- -- -- -- --
Claims from institutions -- -- 693.315 1.091.567 -- -- -- -- 684.447
Corporates -- -- -- -- -- 390.909 -- -- 390.909
Retail portfolios -- -- -- -- 21.156 -- -- -- 15.867
Claims on landed real estate -- -- -- -- -- -- -- -- --
Past due loans -- -- -- -- -- -- -- -- --
Claims which are determined as high risk by the
board of BRSA -- -- -- -- -- -- -- -- --
Mortgage securities -- -- -- -- -- -- -- -- --
Securitization positions -- -- -- -- -- -- -- -- --
Claims from corporates, banks and financial
intermediaries which have short term credit rating -- -- -- -- -- -- -- -- --
Investments which are qualified as collective
investment institutions -- -- -- -- -- 1.068 -- -- 1.068
Stock investment -- -- -- -- -- -- -- -- --
Other claims -- -- -- -- -- -- -- -- --
Other assets (**) -- -- -- -- -- -- -- -- --
Total -- -- 693.315 1.091.567 21.156 391.977 -- -- 1.092.291
Total credit exposure: the amount relevant for the capital requirements calculation, having applied CRM techniques.
(*)

Other assets: the amount excludes exposures to Central counterparty which are reported in Counterparty credit risk.
(**)

5. Collaterals used for counterparty credit risk

a b c d e f
Guarantees of Derivative Financial Instrument Guarantees of Other Transactions
Received Guarantees Given Guarantees
Received Given
Appropriated Unappropriated Appropriated Unappropriated Guarantees Guarantees
Cash-Domestic Currency -- -- -- -- 3.001.396 5.628.366
Cash-Foreign Currency 79.903 -- -- -- -- --
Government Bond-Domestic -- -- -- -- -- --
Government Bond-Other -- -- -- -- -- --
Public Bond -- -- -- -- -- --
Corporate Bond -- -- -- -- -- --
Stock -- -- -- -- -- --
Other Guarantee -- -- -- -- -- --
Total 79.903 -- -- -- 3.001.396 5.628.366
6. Credit derivatives
None.
7. Exposures to central counterparties (CCP)
None.
e. Securitization
1. Disclosures on securitization positions
None.
2. Securitization positions in banking accounts
None.
3. Securitization positions in trading accounts
None.
4. Securitization positions in banking positions and capital requirements related to those whose sponsorship or founder is
the bank
None.
264 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

5. Securitization positions in banking positions and capital requirements related to those- in which the Bank is an investor

None.

f. Market Risk

1. Explanations on market risk

Principles, policies and limits related to management of market risk are approved by board of directors and periodically
reviewed. The Bank is exposed to market risk mainly due to interest rates, exchange rates and changes which may occur in share
and commodity prices. When the asset structure of the Bank is examined, it is concluded that the most significant one among
aforementioned risks is interest and exchange rate risk. Two separate methods, standard method and internal method, are
used in measurement of aforementioned risks.

Value at risk approach is mainly taken as basis in the follow-up process of risk limits. There exist sensitivity limits in addition to
aforementioned limit for risk which are not covered by the model. Parametric approach is adopted since the structure of financial
positions held by the Bank is simple and the model is easy to use and understandable. Value at risk calculations are made over
all instruments and foreign currency positions of the Bank which are sensitive to interest. Value at risk calculations are supported
with stress tests and scenario analysis and possible results of potential market movements which can cause a significant impact
on the Bank although having a low possibility to emerge are examined. Retrospective tests of the model are made periodically
and amendments can be made in the model in accordance with test results, if required.

2. Standardised approach

RAT
Outright products
1 Interest rate risk (general and specific) 27.263
2 Equity risk (general and specific) 75
3 Foreign exchange risk 288.449
4 Commodity risk 55.600
Options
5 Simplified approach --
6 Delta-plus method 28.438
7 Scenario approach --
8 Securitisation --
9 Total 399.825

3. Information on market risk calculated as of month-ends during the period

Current Period: 31 December 2016 Prior Period: 31 December 2015

Average Highest Lowest Average Highest Lowest
Interest Rate Risk 1.647 2.715 960 4.772 30.449 1.541
Stock Risk 34 84 2 49 89 18
Currency Riski 31.587 57.264 14.949 43.933 78.214 12.437
Emtia Risk 280 395 257 542 832 338
Settlement Risk -- -- -- -- -- --
Option Risk 2.177 3.642 956 1.096 6.322 43
Counterparty Risk -- -- -- 3.833 34.372 560
Total Risk Exposure Value 458.641 780.438 239.725 674.041 1.795.600 229.188
g. Operationel Risk

1. Disclosures on operational risk calculation

Basic Indicator Approach is utilized in operational risk calculation of DFH Group. Principal amount subject to operational risk
is calculated through using year-end gross income of 2015, 2014 and 2013 of DFH Group belonging to last 3 years via Basic
Indicator Approach dated 1 July 2012 in accordance with Communique on Measurement and Evaluation of Banks Capital
Adequacy published on Official Gazette dated 28 June 2013 and numbered 28337.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 265

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

2. Standart method

Total/Positive
31.12.2013 31.12.2014 31.12.2015 GI year number Ratio(%) Total
Gross Income 3.811.680 4.131.530 4.699.298 4.214.169 15 632.125
Amount Subject to Operationel Risk 7.901.568

IX. Presentation of financial assets and liabilities at their fair value

a. Calculation of financial assets and liabilities at their fair value

The fair value of held-to-maturity assets are determined based on market prices, or when they are not available, based on market
prices quoted for other securities subject to similar terms of interest, maturity and other conditions.

The expected fair value of the demand deposits represents the amount to be paid upon request. The fair value of the overnight
deposits and floating rate placements represent their carrying value. The expected fair value of the fixed rate deposits are
determined by calculating the discounted cash flows using the market interest rates of similar instruments.

The expected fair value of fixed rate loans and receivables are determined by calculating the discounted cash flows using the
current market interest rates. For the loans with floating interest rates, it is assumed that the carrying value reflects the fair
value.

Estimated fair value of banks, funds provided from other financial entities, issued securities and deposits is calculated through
determination of discounted cash flows using current market interest rates.

The following table summarizes the carrying value and fair value of financial assets and liabilities. The carrying value represents
the sum of the acquisition costs and interest accruals of financial assets and liabilities.

Carrying Value Fair Value

Current Period Prior Period Current Period Prior Period
Financial Assets 116.249.852 98.491.118 115.475.425 97.657.543
Interbank Money Market Placements 3.001.571 1.213.997 3.001.571 1.213.997
Banks 5.572.743 6.222.700 5.572.631 6.222.698
Investment Securities Available-For-Sale 7.596.990 9.973.189 7.596.990 9.973.189
Investment Securities Held-To-Maturity 5.056.032 3.376.169 4.961.408 3.390.677
Loans and Other Receivables 95.022.516 77.705.063 94.342.825 76.856.982

Financial Liabilities 119.788.988 100.804.903 119.433.556 100.638.455

Bank Deposits 1.574.793 1.455.153 1.574.184 1.453.988
Other Deposits 90.621.158 71.204.102 90.712.016 71.304.071
Interbank Money market borrowings 5.397.576 7.184.158 5.397.576 7.184.158
Funds Borrowed From Other Financial Institutions 11.258.691 11.257.266 11.180.602 11.181.275
Subordinated Loans 5.483.501 4.845.965 5.104.666 4.675.890
Securities Issued 3.491.055 3.086.040 3.502.298 3.066.854
Miscellaneous Payables 1.962.214 1.772.219 1.962.214 1.772.219
266 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

b. Classification of fair value

TFRS 7 sets classification of valuation techniques according to the inputs used in valuation techniques based on fair value
calculations which are whether observable or not.

Fair value levels of financial assets and liabilities that are carried at fair value in DFS Groups financial statements are given
below:

Current Period Level 1 Level 2 Level 3 Total

Financial Assets at Fair Value Through Profit or Loss 106.834 1.341.025 -- 1.447.859
Public Sector Debt Securities 96.887 -- -- 96.887
Share Certificated -- -- -- --
Trading Purpose Derivatives -- 1.341.025 -- 1.341.025
Other Securities 9.947 -- -- 9.947
Financial Assets Available for Sale (*) 7.125.839 429.423 -- 7.555.262
Public Sector Debt Securities 7.125.839 -- -- 7.125.839
Other Securities -- 429.423 -- 429.423
Hedging Purpose Derivatives --
Total Assets 7.232.673 1.770.448 -- 9.003.121

Derivative Financial Liabilities Held for Trading -- 1.248.386 -- 1.248.386

Hedging Purpose Derivatives -- -- -- --
Total Liabilities -- 1.248.386 -- 1.248.386

Prior Period Level 1 Level 2 Level 3 Total

Financial Assets at Fair Value Through Profit or Loss 31.539 1.141.900 -- 1.173.439
Public Sector Debt Securities 30.299 -- -- 30.299
Share Certificated 157 -- -- 157
Trading Purpose Derivatives -- 1.141.900 -- 1.141.900
Other Securities 1.083 -- -- 1.083
Financial Assets Available for Sale (*) 9.463.215 397.074 108.955 9.969.244
Public Sector Debt Securities 9.463.215 -- -- 9.463.215
Other Securities -- 397.074 108.955 506.029
Hedging Purpose Derivatives -- -- -- --
Total Assets 9.494.754 1.538.974 108.955 11.142.683

Derivative Financial Liabilities Held for Trading -- 638.641 -- 638.641

Hedging Purpose Derivatives -- -- -- --
Total Liabilities -- 638.641 -- 638.641

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities
Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or
indirectly (derived from prices)
Level 3: Unobservable inputs

Share certificates amounting TL 3.930 (31 December 2015: TL 3.945), classified in financial assets available for sale that do not have quoted
(*)

market prices in an active market or whose fair value cannot be measured, are carried at cost in the framework of TAS 39.

X. Transactions carried out on behalf and account of other parties and fiduciary transactions

a. Information on whether the Group performs sales, purchase, management, consultancy and custody services on behalf and
account of others, or not

DFS Group performs sales, purchase, management, consultancy and custody services on behalf and account of others.

b. Transactions directly realized with other financial institutions depending on fiduciary contracts and probability of material
effect of such transactions on the financial position of the Bank.

None.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 267

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

XI. Explanations related to hedging transactions

a. Net Investment Risk

DFH Group applies net investment hedge strategy to hedge against the currency risk arising on a consolidated basis from the net
investments amounting to a total of Euro 1.006 million and US Dollar 6,7 million of subsidiaries Denizbank AG and Eurodeniz.
The part consisting of the same amounts of its foreign currency deposit has been defined as hedging instrument.The effective
part of the change in value of the foreign currency deposit arising from exchange rate has been recognized as hedging funds
under equity.

On the other hand, as of 1 April 2014 the Parent Bank stopped applying net investment hedge accounting due to its net
investment to hedge against the currency risk on the subsidiary of JSC Denizbank, and the total hedging fund which is booked
under equity for such subsidiary is amounting to TL (57.744).

Total net investment hedging funds recognized under equity is amounting to TL (1.006.604) as of 31 December 2016 (31
December 2015: TL (579.894)).

b. Cash Flow Hedge

The Parent Bank stopped applying cash flow hedge accounting arising from the fluctuations in the interest rate and in which
the hedging instrument was interest rate swaps and the hedged item was deposit, on 31 May 2013. Consequently, derivatives
financial instruments which were previously in hedging purpose derivatives assets/liabilities because of being risk hedging
instruments are classified in financial assets/liabilities held for trading lines. Negative differences amounting to TL (18.657)
which were cumulated until the transfer date in hedging funds account under equity will be transferred to statement of income
until the maturities of related derivative instruments. As of the balance sheet date, net negative valuation difference under equity
is net amounting to TL (616) (31 December 2015: TL (3.368)).

XII. Explanations related to the consolidated segment reporting

DFS Group is active in three areas, namely, wholesale banking, retail banking, treasury and investment banking.

Wholesale banking offers financial and banking solutions to large-scale local and international corporate and commercial
customers. In order to meet customer needs related to projects, investment and working capital, corporate banking offers short
and long-term working capital loans, investment loans, non-cash loans, foreign exchange transactions, export finance, project
finance, structured finance, corporate finance, deposit products and cash management services.

In retail banking, it offers loan products (consumer loans, mortgage, and vehicle loans), distinctive credit cards, investment
products (mutual funds, shares, government bonds/treasury bills, and repos), deposit products (time, demand, protected),
insurance products, SME loans as well as agricultural loans. Alternative distribution channels allow customers to meet their
banking needs without the need to physically visit the branches. Among products that meet every day needs of customers are
overdraft loans, automated bill payment, checkbooks and rental safes.

Within treasury and investment banking, sales, prop-trading and private banking departments offer spot and forward TL and
foreign exchange transactions, trading of treasury bills, bonds and other local and international securities and derivative
products. Servicing the upper segment of wealthy and high income retail customers who require sophisticated banking and
investment services falls within the scope of private banking.
268 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Segment information is presented in the following table:

Wholesale Banking Retail Banking

Treasury and
Corporate Commercial& SME&Agriculture Investment
Current Period (01.01.2016-31.12.2016) Banking Public Finance Banking Retail Banking Banking Total
Net interest income 796.122 739.598 1.682.522 1.024.170 892.842 5.135.254
Net fee and commission income 92.601 99.312 596.224 521.815 (56.194) 1.253.758
Other income/expense, net 141.549 243.103 190.887 263.338 (640.130) 198.747

Total segment income 1.030.272 1.082.013 2.469.633 1.809.323 196.518 6.587.759

Other operating expenses (217.310) (341.859) (1.039.606) (1.250.556) (76.839) (2.926.170)

Provision for loan losses and other
receivables (94.879) (521.765) (703.621) (479.747) (36.520) (1.836.532)
Tax charge (424.683)

Net profit from continuing operations 718.083 218.389 726.406 79.020 83.159 1.400.374
Net profit from discontinued operations -- -- -- -- -- 725

Net profit 718.083 218.389 726.406 79.020 83.159 1.401.099

Current Period (31.12.2016)

Segment assets 27.311.779 22.840.097 28.333.699 16.536.941 37.514.556 132.537.072
Subsidiaries and associates 25.180
Undistributed assets 2.991.746
Total assets 135.553.998

Segment liabilities 16.212.772 11.243.823 13.644.291 51.266.805 28.455.620 120.823.311

Undistributed liabilities 4.140.589
Shareholders equity 10.590.098
Total liabilities 135.553.998

Wholesale Banking Retail Banking

Treasury and
Corporate Commercial& SME&Agriculture Investment
Prior Period (01.01.2015-31.12.2015) Banking Public Finance Banking Retail Banking Banking Total
Net interest income 707.962 829.518 1.212.450 758.357 568.588 4.076.875
Net fee and commission income 90.055 109.782 391.841 532.063 (39.877) 1.083.864
Other income/expense, net 203.472 208.111 207.465 230.561 (867.101) (17.492)

Total segment income 1.001.489 1.147.411 1.811.756 1.520.981 (338.390) 5.143.247

Other operating expenses (198.083) (325.135) (924.056) (1.081.569) (111.744) (2.640.587)

Provision for loan losses and other
receivables (36.034) (204.227) (450.464) (608.755) (61.939) (1.361.419)
Tax charge (283.384)

Net profit from continuing operations 767.372 618.049 437.236 (169.343) (512.073) 857.857
Net profit from discontinued
operations -- -- -- -- 1.438

Net profit 767.372 618.049 437.236 (169.343) (512.073) 859.295

Prior Period (31.12.2015)

Segment assets 19.455.682 22.129.557 20.016.066 16.103.759 32.782.845 110.487.909
Subsidiaries and associates 18.707
Undistributed assets 2.379.793
Total assets 112.886.409

Segment liabilities 11.878.769 9.302.364 10.189.095 41.056.193 28.469.405 100.895.826

Undistributed liabilities 3.696.386
Shareholders equity 8.294.197
Total liabilities 112.886.409
Information relating to segment information of the Group was prepared in accordance with data obtained from system of
Management Reporting.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 269

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

SECTION FIVE

DISCLOSURES AND FOOTNOTES ON CONSOLIDATED FINANCIAL

STATEMENTS
I. Explanations and disclosures related to consolidated assets

a. Information on cash and balances with the Central Bank of the Republic of Turkey

1. Information on cash and balances with the Central Bank of the Republic of Turkey

Current Period Prior Period

TL FC TL FC
Cash in TL / Foreign Currency 876.276 947.988 732.661 679.049
Central Bank of the Republic of Turkey 1.405.531 11.609.546 462.670 8.948.947
Other (*) -- 20 -- 25
Total 2.281.807 12.557.554 1.195.331 9.628.021
(*)
Includes TL 20 of cheques purchased as of (31 December 2015 TL 25).

2. Information on balances with the Central Bank of the Republic of Turkey

Current Period Prior Period

TL FC TL FC
Unrestricted Demand Deposits 1.405.531 1.501.383 462.670 846.677
Unrestricted Time Deposits -- -- -- --
Restricted Time Deposits -- 10.108.163 -- 8.102.270
Total 1.405.531 11.609.546 462.670 8.948.947
Includes the balances of consolidated foreign subsidiaries at foreign central banks.

3. Information on required reserves

As of 31 December 2016, all banks operating in Turkey should provide a reserve in a range of 4% to 10,5% (31 December 2015:
between 5% and 11,5%) depending on the terms of the deposits for their liabilities in Turkish Lira and in a range of 4,5% to
24,5% (31 December 2015: between 5% and 25%) in US Dollars or standard gold for their liabilities in foreign currencies.

CBRT began paying interest for the required reserves maintained in Turkish Lira as from November 2014 and for the required
reserves maintained in US Dollar as from May 2015. The interest income of TL 56.689 derived from the required reserves
maintained by the Parent Bank at CBRT (1 January31 December 2015: TL 24.288) has been recorded under the account
interests derived from required reserves.

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

1. Information on trading securities given as collateral or blocked

Current Period Prior Period

TL FC TL FC
Share Certificates -- -- -- --
Bonds, Treasury Bills and Similar Marketable Securities 8.380 -- 7.506 --
Other -- -- -- --
Total 8.380 -- 7.506 --
2. Trading securities subject to repurchase agreements

None (31 December 2015: None).

270 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

3. Positive value of trading purpose derivatives

Current Period Prior Period

TL FC TL FC
Forward Transactions 1.549 57.153 4.614 11.199
Swap Transactions 944.857 268.949 872.936 230.199
Futures Transactions -- -- -- --
Options 523 67.994 173 22.779
Other -- -- -- --
Total 946.929 394.096 877.723 264.177

c. Information on Banks

1. Information on Banks

Current Period Prior Period

TL FC TL FC
Banks
Domestic 6.383 655.752 8.994 2.007.929
Foreign 10.623 4.899.985 14.572 4.191.205
Foreign head offices and branches -- -- -- --
Total 17.006 5.555.737 23.566 6.199.134

2. Information on Foreign Banks

Unrestricted Amount Restricted Amount

Current Period Prior Period Current Period Prior Period
EU Countries 4.216.039 3.802.814 -- --
USA, Canada 133.538 276.224 -- 12.180
OECD Countries(*) 24.627 16.156 -- --
Off shore zones 42.362 7.384 -- --
Other 494.042 91.019 -- --
Total 4.910.608 4.193.597 -- 12.180

OECD countries except for EU countries, USA and Canada

(*)

d. Information on investment securities available-for-sale

1. Major types of investment securities available-for-sale

Investment securities available-for-sale consist of share certificates, debt securities representing government bonds, Eurobonds
and foreign currency government bonds issued by the Turkish Treasury and foreign private sector debt securities.

2. Investment securities available-for-sale given as collateral

Available-for-sale financial assets which were collateralized consist of securities offered to various financial institutions, primarily
the Central Bank of the Republic of Turkey and stanbul Takas ve Saklama Bankas A.. (Settlement and Custody Bank) for
interbank money market, foreign exchange market and other transactions. Such financial assets include government bonds and
Eurobonds, and their total book value amounts to TL 849.495 (31 December 2015: TL 1.690.385).

3. Investment securities available-for-sale given as collateral or blocked

Current Period Prior Period

TL FC TL FC
Share certificates -- -- -- --
T-bills, Bonds and Similar Securities 725.926 123.569 857.701 832.684
Other -- -- -- --
Total 725.926 123.569 857.701 832.684
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 271

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

4. Investment securities available-for-sale subject to repurchase agreements

Current Period Prior Period

TL FC TL FC
Government Bonds 3.830.370 -- 4.811.887 --
Treasury Bills -- -- -- --
Other Debt Securities -- -- -- --
Bonds Issued or Guaranteed by Banks -- -- -- --
Asset Backed Securities -- -- -- --
Other -- -- -- --
Total 3.830.370 -- 4.811.887 --

5. Information on available-for-sale securities

Current Period Prior Period

Debt instruments 7.865.668 10.289.586
Quoted on Stock Exchange 7.865.668 10.289.586
Unquoted on Stock Exchange -- --
Share certificates 41.728 112.900
Quoted on Stock Exchange 37.779 --
Unquoted on Stock Exchange 3.949 112.900
Impairment provision (-) 310.406 429.297
Total 7.596.990 9.973.189
e. Information related to loans
1. Information on all types of loans and advances given to shareholders and employees of the Bank

Current Period Prior Period

Cash Non-Cash Cash Non-Cash
Direct Loans Granted to Shareholders -- -- -- --
Corporate Shareholders -- -- -- --
Individual Shareholders -- -- -- --
Indirect Loans Granted to Shareholders -- 7.721 -- 19.970
Loans Granted to Employees 60.741 4 63.019 115
Total 60.741 7.725 63.019 20.085

2. Information on loans classified in groups I and II and other receivables and loans that have been restructured or
rescheduled

Performing Loans and Other Receivables (*) Loans and Other Receivables Under Close Monitoring
Agreement conditions modified Agreement conditions modified
Loans and Other Extension of Loans and Other Extension of
Receivables (Total) Payment Plan Other Receivables (Total) Payment Plan Other
Non-specialized Loans 76.576.693 1.426.475 -- 5.449.561 2.679.020 --
Working Capital
Loans 2.160.315 375.465 -- 572.289 491.328 --
Export Loans 1.402.581 6.218 -- 24.680 5.211 --
Import Loans -- -- -- -- -- --
Loans Given to
Financial Sector 390.073 -- -- 168.744 163.189 --
Consumer Loans 12.204.822 259.838 -- 1.190.519 392.174 --
Credit Cards 4.801.357 3.527 -- 285.322 64.172 --
Other 55.617.545 781.427 -- 3.208.007 1.562.946 --
Specialization Loans 7.316.598 11.318 -- 803.952 234.988 --
Other Receivables -- -- -- -- -- --
Total 83.893.291 1.437.793 -- 6.253.513 2.914.008 --

The Bank has a cash loan exposure amounting to USD 117 million related with the acquisitation finance of a telecommunication company
(*)

within a syndicate formed by various domestic and foreign banks, where the financing structure includes acquired companys shares pledged
as collateral. Discussions among shareholders of the entity, creditor banks and related public institutions regarding restructuring of current
main partner including change of shareholder have been commenced and it is expected that aforementioned discussions shall result in a
positive development. Respective loan is classified under Standard Loan and Other Receivables as of 31 December 2016.
272 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Number of modifications made to Performing Loans and Loans and Other Receivables
extend payment plan Other Receivables Under Close Monitoring
Extended by 1 or 2 times 1.372.652 2.677.980
Extended by 3,4 or 5 times 65.062 234.071
Extended by more than 5 times 79 1.957
Total 1.437.793 2.914.008

Performing Loans and Loans and Other Receivables

Extended payment period of time Other Receivables Under Close Monitoring
0-6 Months 5.557 153.588
6-12 Months 9.003 57.517
1-2 Years 24.846 195.368
2-5 Years 464.681 753.971
5 Year and Over 933.706 1.753.564
Total 1.437.793 2.914.008

3. Information on loans according to maturity structure concentration

Standard Loans and Other Loans and Other Receivables Under Close
Receivables Monitoring
Loans and other Restructured or Loans and other Restructured or
Receivables Rescheduled Receivables Rescheduled
Short-Term Loans and Other Receivables 17.953.834 42.922 1.174.733 68.883
Non-Specialized Loans 16.383.528 41.237 1.062.470 41.071
Specialized Loans 1.570.306 1.685 112.263 27.812
Other Receivables -- -- -- --
Medium and Long-Term Loans and Other
Receivables 65.939.457 1.394.871 5.078.780 2.845.125
Non-Specialized Loans 60.193.165 1.385.238 4.387.091 2.637.949
Specialized Loans 5.746.292 9.633 691.689 207.176
Other Receivables -- -- -- --
Total 83.893.291 1.437.793 6.253.513 2.914.008

DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 273

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

4. Information on consumer loans, individual credit cards and personnel credit cards

Medium or
Short Term Long Term Total
Consumer Loans-TL 263.618 12.394.257 12.657.875
Real estate Loans 4.794 5.007.451 5.012.245
Vehicle Loans 2.610 411.279 413.889
General Purpose Loans 256.214 6.975.527 7.231.741
Other -- -- --
Consumer Loans-Indexed to FC -- 36.623 36.623
Real estate Loans -- 36.185 36.185
Vehicle Loans -- -- --
General Purpose Loans -- 438 438
Other -- -- --
Consumer Loans-FC 1.255 79.274 80.529
Real estate Loans -- 2.309 2.309
Vehicle Loans -- -- --
General Purpose Loans 1.255 76.937 78.192
Other -- 28 28
Individual Credit Cards-TL 4.523.428 254.375 4.777.803
Installment 2.070.874 254.375 2.325.249
Non installment 2.452.554 -- 2.452.554
Individual Credit Cards-FC 1.414 -- 1.414
Installment 56 -- 56
Non installment 1.358 -- 1.358
Loans Given to Employees-TL 3.627 30.555 34.182
Real estate Loans -- 1.798 1.798
Vehicle Loans -- 93 93
General Purpose Loans 3.627 28.664 32.291
Other -- -- --
Loans Given to Employees - Indexed to FC -- -- --
Real estate Loans -- -- --
Vehicle Loans -- -- --
General Purpose Loans -- -- --
Other -- -- --
Loans Given to Employees - FC 41 361 402
Real estate Loans -- -- --
Vehicle Loans -- -- --
General Purpose Loans 27 -- 27
Other 14 361 375
Personnel Credit Cards - TL 24.488 234 24.722
Installment 11.528 234 11.762
Non installment 12.960 -- 12.960
Personnel Credit Cards - FC 24 -- 24
Installment 8 -- 8
Non installment 16 -- 16
Overdraft Loans-TL (Real Persons) (*) 560.700 -- 560.700
Overdraft Loans-FC (Real Persons) 25.030 -- 25.030
Total 5.403.625 12.795.679 18.199.304
(*)
Overdrafts used by the personnel of the Parent Bank are TL 1.489 (31 December 2015: TL 1.371).
274 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

5. Information on installment commercial loans and corporate credit cards

Medium or
Short Term Long Term Total
Installment Commercial Loans - TL 919.302 8.025.791 8.945.093
Real estate Loans 624 223.589 224.213
Vehicle Loans 10.674 534.271 544.945
General Purpose Loans 908.004 7.267.931 8.175.935
Other -- -- --
Installment Commercial Loans Indexed to FC 23.700 1.323.659 1.347.359
Real estate Loans -- 13.594 13.594
Vehicle Loans 281 40.524 40.805
General Purpose Loans 23.419 1.269.541 1.292.960
Other -- -- --
Installment Commercial Loans - FC 2.537 58.556 61.093
Real estate Loans -- -- --
Vehicle Loans -- 234 234
General Purpose Loans 2.537 58.322 60.859
Other -- -- --
Corporate Credit Cards - TL 282.664 2 282.666
Installment 106.298 2 106.300
Non installment 176.366 -- 176.366
Corporate Credit Cards - FC 50 -- 50
Installment -- -- --
Non installment 50 -- 50
Overdraft Loans-TL (Legal Entities) 1.452.593 -- 1.452.593
Overdraft Loans-FC (Legal Entities) -- -- --
Total 2.680.846 9.408.008 12.088.854

6. Loan concentration according to counterparty

Current Period Prior Period

Public 1.427.934 891.287
Private 88.718.870 72.905.519
Total 90.146.804 73.796.806

7. Domestic and foreign loans

Current Period Prior Period

Domestic Loans 82.206.250 71.078.349
Foreign Loans 7.940.554 2.718.457
Total 90.146.804 73.796.806

8. Loans granted to subsidiaries and associates

Current Period Prior Period

Direct loans granted to subsidiaries and associates 14.139 --
Indirect loans granted to subsidiaries and associates -- --
Total 14.139 --

9. Specific provisions for loans

Specific Provisions Current Period Prior Period

Loans and Receivables with Limited Collectability 128.655 66.986
Loans and Receivables with Doubtful Collectability 463.077 410.993
Uncollectible Loans and Receivables 2.056.223 1.800.204
Total 2.647.955 2.278.183
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 275

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

10. Information on non-performing loans (Net)

(i) Information on loans under follow-up, loans and other receivables those are restructured /rescheduled

Group III Group IV Group V

Loans and receivables Loans and receivables Uncollectible
with limited with doubtful loans and
collectability collectability receivables
Current Period 12.405 22.935 107.038
(Gross Amounts Before Specific Reserves) -- -- --
Restructured Loans and Other Receivables -- -- --
Rescheduled Loans and Other Receivables 12.405 22.935 107.038
Prior Period 15.994 37.147 65.519
(Gross Amounts Before Specific Reserves) -- -- --
Restructured Loans and Other Receivables -- -- --
Rescheduled Loans and Other Receivables 15.994 37.147 65.519

(ii) Movement of non-performing loans

Group III Group IV Group V

Loans and receivables Loans and receivables Uncollectible
with limited with doubtful loans and
collectability collectability receivables
Balances at Beginning of Period 471.167 718.083 1.979.524
Additions (+) 1.707.814 116.904 150.800
Transfers from Other Categories of Non-Performing Loans (+) -- 1.292.066 1.082.261
Transfers from Other Categories of Non-Performing Loans (-) 1.292.066 1.082.261 --
Collections (-) 315.903 178.039 394.498
Write-offs (-) -- -- 604.213
Corporate and Commercial Loans -- -- 33.181
Retail Loans -- -- 242.059
Credit Cards -- -- 182.960
Other -- -- 146.013
Balances at End of the Period 571.012 866.753 2.213.874
Specific Provisions (-) 128.655 463.077 2.056.223
Net Balance on Balance Sheet 442.357 403.676 157.651

The Group has sold individual loan, credit cards and enterprise credit portfolio amount of TL 295.535, tracked in legal proceedings accounts,
(*)

for a price of TL 30.100 to Finansal Varlk Ynetimi A.. with sales contracts dated 29 April and 30 June 2016 and has also sold individual
loan, credit cards and enterprise credit portfolio amount of TL 110.891 and TL 110.474, tracked in legal proceedings accounts, for a price of
TL 11.600 TL and 11.700TL respectively Smer Varlk Ynetimi A.. and stanbul Varlk Ynetimi A.. with sales contracts dated 29 September
and 30 September 2016 respectively and has sold individual loan, credit cards and enterprise credit portfolio amount of TL 36.002, tracked in
legal proceedings accounts, for a price of TL 50 to Vera Varlk Ynetimi A.. with sales contract dated 29 December 2016 and enterprise and
commercial credit portfolio amount of TL 51.312 tracked in legal proceedings accounts, for a price of TL 150 to Vera Varlk Ynetimi A.. with
sales contract dated 30 December 2016.

(iii) Information on non-performing loans and other receivables in foreign currencies

Group III Group IV Group V

Loans and receivables Loans and receivables Uncollectible
with limited with doubtful loans and
collectability collectability receivables
Current Period: 31 December 2016
Balance as of the Period End 7.700 8.431 500
Specific Provisions (-) 2.979 8.298 138
Net Balance on Balance Sheet 4.721 133 362
Prior Period: 31 December 2015
Balance as of the Period End 2.482 9.189 755
Specific Provisions (-) 758 8.542 383
Net Balance on Balance Sheet 1.724 647 372
276 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

(iv) Information on non-performing loans according to beneficiary group

Group III Group IV Group V

Loans and receivables
Loans and receivables with doubtful Uncollectible loans and
with limited collectability collectability receivables
Current Period (Net): 31 December 2016 410.488 384.234 208.962
Loans Granted to Real Persons and Legal Entities (Gross) 539.143 845.105 2.265.185
Specific provisions (-) 128.655 460.871 2.056.223
Loans Granted to Real Persons and Legal Entities (Net) 410.488 384.234 208.962
Banks (Gross) -- -- --
Specific provisions (-) -- -- --
Banks (Net) -- -- --
Other Loan and Receivables (Gross) -- 2.206 --
Specific provisions (-) -- 2.206 --
Other Loan and Receivables (Net) -- -- --

Prior Period (Net): 31 December 2015 404.181 307.090 179.320

Loans Granted to Real Persons and Legal Entities (Gross) 471.167 716.158 1.979.524
Specific provisions (-) 66.920 409.068 1.800.204
Loans Granted to Real Persons and Legal Entities (Net) 404.247 307.090 179.320
Banks (Gross) -- -- --
Specific provisions (-) -- -- --
Banks (Net) -- -- --
Other Loan and Receivables (Gross) 66 1.925 --
Specific provisions (-) 66 1.925 --
Other Loan and Receivables (Net) -- -- --

11. Liquidation policy for uncollectible loans and receivables

For uncollectible loans and receivables, the Bank tries to solve the issue with the customer. If no result is obtained, all legal
actions are taken. Such actions are completed when the insufficiency of collaterals is documented or a certificate of insolvency is
obtained.

12. Information on write-off from assets policy

Unrecoverable non-performing loans are written off with the decision of the Board of Directors on condition that receivable of
the Group is not material compared to the costs to be incurred for the preparation of necessary documentation. There is no
written-off amount in 2016 (31 December 2015: TL 2.849).

f. Information on investment securities held-to-maturity

1. Information on securities subject to repurchase agreement and given as collateral or blocked

(i) Information on securities subject to repurchase agreement

Held-to-maturity investments subject to repurchase agreement are TL 1.797.997 (31 December 2015: TL 1.595.489).

(ii) Information on securities subject to given as collateral or blocked

Collateralized held-to-maturity investments are government bonds, whose book value amounts to TL 1.099.775 (31 December
2015: TL 959.121).

2. Information on government securities held-to-maturity

Current Period Prior Period

Government Bonds 5.018.478 3.343.952
Treasury Bills -- --
Other Government Debt Securities -- --
Total 5.018.478 3.343.952
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 277

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

3. Information on investment securities held-to-maturity

Current Period Prior Period

Debt Securities 5.066.364 3.381.640
Quoted on Stock Exchange 5.028.810 3.349.423
Unquoted on Stock Exchange 37.554 32.217
Impairment (-) 10.332 5.471
Total 5.056.032 3.376.169

4. Information on the movement of investment securities held-to-maturity during the period

Current Period Prior Period

Balance at the beginning of the period 3.376.169 3.142.200
Foreign exchange differences (*) 270.686 242.891
Purchases during the year (**) 1.419.509 --
Disposals/Redemptions -- (3.451)
Impairment losses (-) 10.332 5.471
Total 5.056.032 3.376.169
(*)
Accruals of investment securities held-to-maturity are included in foreign exchange differences.
(**)
Classifications of available-for-sale financial assets are shown under Purchases During The Year.

The Parent Bank transferred a portion of its securities from investment securities available-for-sale portfolio, as of
reclassification date with a new cost is amounting to TL 2.826.026 and US Dollar 320.674, to the investment securities held-
to-maturity portfolio due to change in the intention of holding dating 23 July, 24 July, 26 December 2013 and 24 January
2014. The negative valuation differences amounting to TL 326.599 followed under equity until the date of classification will be
amortized with effective interest method and recycled to profit/loss until the maturities of these securities. As of the balance
sheet date, the remaining negative valuation difference under equity is TL 224.805 (31 December 2015: TL 192.722).

g. Investments in associates

1. Investments in unconsolidated associates

The Parent The Parent Banks risk

Address Banks share group share
Title (City/Country) percentage (%) percentage (%)
1-Kredi Kayt Brosu A.. (*) stanbul/Trkiye 9 --
2-Kredi Garanti Fonu A.. (**) Ankara/Trkiye 2 --
3-Ege Tarm rnleri Lisansl Dep. A.. (**) zmir/Trkiye 9 --

Income on
Shareholders Total Fixed Securities Current Period Prior Period
Total Assets Equity Assets Interest Income Portfolio Profit/(Loss) Profit/(Loss) Fair Value
1 185.448 129.647 135.578 2.817 -- 16.458 26.782 --
2 303.700 299.526 5.691 15.573 -- 5.483 11.811 --
3 11.541 11.095 8.393 135 -- (465) (172) --
(*)
Information on the financial statements is presented as of the period ended 30 September 2016.
(**)
Information on the financial statements is presented as of the period ended 31 December 2015.

2. Investments in consolidated associates

There are no investments in consolidated associates.

278 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

h. Investments in subsidiaries

1. Information on shareholders of major subsidiaries

The parent Bank does not need any capital requirement due to its subsidiaries included in the calculation of its consolidated
capital adequacy standard ratio.

Amounts at below prepared within the scope of regulation depended by Denizbank AG and they are obtained from financial datas
of 31 December 2016.

Denizbank AG
Paid-in capital 711.674
Share Premium 1.041.091
Reserves 2.505.232
Deductions from capital 1.832
Total Common Equity 4.256.165
Total Additional Tier I Capital --
Deductions from capital 7.328
Total Core Capital 4.248.837
Total Supplementary Capital 105.584
Capital 4.354.421
Deductions from capital --
SHAREHOLDERS EQUITY 4.354.421

2. Information on non-consolidated subsidiaries

The Parent Banks share Other shareholders

Title Address (City/Country) percentage (%) share percentage (%)
1-ntertech Bilgi lem ve Pazarlama Ticaret A.. Istanbul/Turkey 100 --
2-Denizbank Kltr Sanat Yaynclk Ticaret ve Sanayi A.. Istanbul/Turkey 100 --
3-Deniz Kartl deme Sistemleri A.. Istanbul/Turkey -- 100
4-Ak Deniz Radyo ve Televizyon letiim Yaynclk ve Sanayi A.. Istanbul/Turkey -- 100
5-Deniz Immobilien Service GmbH Vienna/Austria -- 100
6-Ekspres Bilgi lem ve Ticaret A..(*) stanbul/Trkiye 71 29

Field of activity of Ekspres Menkul Deerler A.. has been changed on 10 August 2016 and its title has become Ekspres Bilgi lem ve Ticaret
(*)

A..

Income on
Shareholders Total Fixed Securities Current Period Prior Period
Total Assets Equity Assets Interest Income Portfolio Profit/(Loss) Profit/(Loss) Fair Value
1 183.805 (3.192) 56.189 923 -- (9.055) 462 --
2 1.350 1.317 -- -- -- 44 (9) --
3 228 219 -- 11 -- (11) (9) --
4 308 305 -- -- -- 12 11 --
5 73 73 -- -- -- (12) (12) --
6 17.017 15.600 2.206 863 -- 1.285 1.071 --

Information on the financial statements is presented as of the period ended 31 December 2016, subsidiaries above are not
included in consolidation because they are nonfinancial partnerships.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 279

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

3. Information on consolidated subsidiaries

Other shareholders
The Parent Banks share share
Title Address (City/Country) percentage(%) percentage (%) (*) Consolidation Method
1 Denizbank AG Vienna/Austria 100 -- Full consolidation
2 Eurodeniz International Banking Unit Ltd. Nicosia / Cyprus 100 -- Full consolidation
3 Deniz Yatrm Menkul Kymetler A.. Istanbul/Turkey 100 -- Full consolidation
4 JSC Denizbank Moskova Moscow / Russia 49 51 Full consolidation
5 Deniz Portfy Ynetimi A.. Istanbul/Turkey -- 100 Full consolidation
6 Deniz Finansal Kiralama A.. Istanbul/Turkey 49 51 Full consolidation
7 Deniz Faktoring A.. Istanbul/Turkey 100 -- Full consolidation
8 Deniz Gayrimenkul Yatrm Ortakl A.. Istanbul/Turkey -- 91 Full consolidation
9 CR Erdberg Eins GmbH & Co KG Vienna/Austria -- 100 Full consolidation

(*)
Presenting risk group of Banks share percentage.

Income on
Shareholders Interest Securities Current Period Prior Period Capital
Total Assets Equity Total Fixed Assets Income Portfolio Profit/(Loss) Profit/(Loss) Fair Value requirement
1 38.016.406 4.339.770 41.948 1.417.968 16.391 547.337 459.473 -- --
2 596.336 24.528 78 21.078 -- 684 691 -- --
3 195.802 167.604 2.486 5.228 249 14.026 (12.342) -- --
4 869.245 237.711 3.335 43.824 4.701 27.440 28.893 -- --
5 13.337 12.263 17 1.129 42 3.656 2.319 -- --
6 2.983.510 631.198 121.760 214.584 -- 76.485 71.469 -- --
7 1.288.260 190.745 2.224 162.669 -- 16.015 (36.638) -- --
8 198.266 197.142 222 129 -- 12.327 10.285 -- --
9 94.975 82.963 78.279 6 -- 2.111 1.827 -- --
Includes information on the consolidated financial statements as of 31 December 2016.
(i) Movement of consolidated subsidiaries

Current Period Prior Period

Balance at the Beginning of the Period 2.307.921 2.034.054
Movements during the Period 71.067 273.867
Purchases (*) -- 257.537
Bonus Shares Received -- --
Dividends from Current Year Profit -- --
Sales (***) (9.999) --
Revaluation Increase, Effect of Inflation and F/X Difference 87.520 16.330
Other (**) (6.454) --
Allowance for impairment -- --
Balance at the End of the Period 2.378.988 2.307.921
Capital Commitments -- --
Share Percentage at the end of Period (%) -- --

(*)
Explanations about year in purchasing are in Note III of Section Three.
(**)
Type of Ekspres Menkul Deerler A.. has changed and excluded from consolidation scope.
(***)
Shares of Destek Varlk Ynetim A.., owned at 100% ratio by Deniz Yatrm, Ekspres Bilgi lem, Deniz Finansal Kiralama, Deniz Faktoring
and Intertech, were sold to Lider Faktoring and Merkez Faktoring with a total consideration of TL 12.320 on 29 December 2016 in accordance
with the Board of Directors decision of the Company dated 14 July 2016.

(ii) Sectorial information on the consolidated subsidiaries and the related carrying amounts

Current Period Prior Period

Banks 1.417.857 1.409.200
Insurance Companies -- --
Factoring Companies 138.107 138.107
Leasing Companies 512.877 462.173
Finance Companies -- 9.999
Other Subsidiaries 310.147 288.442
Total 2.378.988 2.307.921

Balances of the consolidated subsidiaries above have been eliminated in the accompanying financial statements.
280 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

(iii) Quoted subsidiaries within the consolidation scope

Current Period Prior Period

Quoted on domestic markets 67.141 67.624
Quoted on foreign markets -- --
(iv) Consolidated subsidiaries disposed during the current period:
Shares of Destek Varlk Ynetim A.., owned at 100% ratio by Deniz Yatrm, Ekspres Bilgi lem, Deniz Finansal Kiralama,
Deniz Faktoring and Intertech, were sold to Lider Faktoring and Merkez Faktoring with a total consideration of TL 12.320 on 29
December 2016 in accordance with the Board of Directors decision of the Company dated 14 July 2016. Sales loss sourcing from
aforementioned transaction amount of TL 258 is represented as Sale loss sourcing from sales of subsidiary under Expenses
from Discontinuing Operations in accompanying financial statemens.
(v) Consolidated subsidiaries acquired during the current period: None
i. Entities Under Common Control (Joint Ventures)
1. Entities Under Common Control (Joint Ventures)

The Parent The Groups

Banks share share
percentage percentage Current Non-Current Non-Current
Title (%) (%) Assets Assets Liabilities Income Expenses
Banta Nakit ve Kymetli 33 33 22.003 26.970 5.466 100.511 (94.209)
Mal Tama ve Gvenlik
Hizmetleri A..
Information on the unreviewed financial statements is presented as of the period ended 31 December 2016.
2. Reasons of being non-consolidated for non-consolidated entities under common control (Joint Ventures) and methods of
recognition of entities under common control (Joint Ventures) in the Parent Banks unconsolidated financial statements
The Parent Bank, although represents Banta Nakit ve Kymetli Mal Tama ve Gvenlik Hizmetleri A.. (Banta) with 33% of
ownership rate as entities under common control in its financial statements, it was not consolidated due to be nonfinancial entity.
This entityis carried at cost.
j. Information on receivables from leasing activities
1. Maturity analysis of finance lease receivables

Current Period Prior Period

Gross Net Gross Net
Less than 1 year 192.240 184.849 980.260 828.480
Between 1-4 years 1.425.809 1.269.652 1.285.557 1.088.637
Over 4 years 1.583.458 1.182.806 425.436 353.247
Total 3.201.507 2.637.307 2.691.253 2.270.364
2. Information on net investments in finance lease receivables

Current Period Prior Period

Gross finance lease receivable 3.201.507 2.691.253
Unearned finance income (-) 564.200 420.889
Cancelled leasing agreements (-) -- --
Net investment on finance leases 2.637.307 2.270.364

3. Information on operating lease activities

Deniz Finansal Kiralama A.. started to fleet rental operations in the scope of operational leasing in June 2014.

Future receivables arising from leased assets are not recognized in the Groups balance sheet. Receivables arising from the rents
invoiced within the period are recognized in the Groups balance sheet.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 281

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

As of 31 December 2016, the Groups receivables which arise from its operational leasing agreements and will emerge in the
future are distributed as follows by year:

Current Period Prior Period

Up to 1 year 31.158 17.376
Between 1-5 years 29.254 19.579
5 years and over -- --
Total 60.412 36.955
k. Explanation on hedging purpose derivatives

None (31 December 2015: None).

l. Information on tangible assets

Tangible Fixed Assets Other Tangible Fixed

Real Estate Retained With Leasing Vehicles Assets Total
Prior Period
Cost 104.608 224.038 66.848 789.226 1.184.720
Accumulated Depreciation (12.494) (164.274) (7.838) (452.492) (637.098)
Net Book Value 92.114 59.764 59.010 336.734 547.622
Current Period --
Net Book Value at the Beginning
of the Period 92.114 59.764 59.010 336.734 547.622
Differences During the Period (Net) 46.149 70 69.668 112.322 228.209
Depreciation Cost (2.069) (16.525) (9.390) (92.388) (120.372)
Provision For Decrease In Value (3.719) -- -- -- (3.719)
FX Dfferences (Net) 8.954 -- 53 3.832 12.839
Cost At the End of the Period 141.429 216.670 135.502 914.474 1.408.075
Accumulated Depreciation At the End of the Period -- (173.361) (16.161) (553.974) (743.496)
Net Book Value At The End Of The Period 141.429 43.309 119.341 360.500 664.579

DFH Group has passed to revaluation model from cost model in the framework of TAS 16 Intangible Fixed Assets in valuation
of properties in use which are tracjed under intangible fixed assets as of 31 December 2016 while it tracks all of its intangible
fixed assets in accordance with TAS 16 Intangible Fixed Assets. Positive differences between property value in expertise
reports prepared by licenced valuation firms and net carrying amount of the related property are tracked under equity accounts
while negative differences are tracled under income statement.

Revaluation difference amount of TL 45.894 is recognized under equities as a result of revaluation process and impairment
provision made in previous periods for related properties amount of TL (4.080) is cancelled and an impairment provision amount
of TL (3.719) is made for related properties.

m. Information on tangible assets

Other Goodwill Total

Prior Period
Cost 518.559 869 519.428
Accumulated Depreciation (341.171) -- (341.171)
Net Book Value 177.388 869 178.257
Current Period --
Net Book Value at the Beginning of the Period 177.388 869 178.257
Differences During the Period (Net) 117.891 -- 117.891
Depreciation Cost (92.092) -- (92.092)
Provision For Decrease In Value -- -- --
FX Dfferences (Net) 763 -- 763
Cost At the End of the Period 640.132 869 641.001
Accumulated Depreciation At the End of the Period (436.182) -- (436.182)
Net Book Value At The End Of The Period 203.950 869 204.819

n. Explanation on investment property

Investment properties are properties held by Deniz GYO for the basic purpose of making lease profit.

As of 31 December 2016, the Group has investment property is amounting to TL 164.527 (31 December 2015: TL 157.381)
which carried from its fair value on the Groups Financial Statements.
282 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

o. Information on deferred tax asset

Deferred tax asset calculated on the basis of related regulation is TL 153.176 (31 December 2015: TL 141.366) and deferred tax
liability is TL 15.446 (31 December 2015: TL 8.652). These balances are the net of deductible and taxable temporary differences
calculated as of the balance sheet date.

The following table presents the deferred tax bases:

Current Period Prior Period

Miscellaneous Provisions Financial Loss (**) 102.894 37.441
Unearned ncome 56.753 42.750
Provision for Employee Benefits 22.882 20.461
Valuation Differences of Financial Assets 10.615 20.385
Financial Loss (*) 629 71.752
Other 20.985 3.787
Deferred Tax Assets 214.758 196.576

Valuation Differences of Tangible Assets (44.759) (19.883)

Valuation Differences of Derivatives (32.269) (43.979)
Other -- --
Deferred Tax Liabilities (77.028) (63.862)
Net Deferred Tax Assets 137.730 132.714

(*)
Fiscal loss essentially arises from the valuation of financial instruments in the calculation of corporate tax of the current period under the Tax
Procedures Law (TPL).
(**)
Balances of Deniz Leasig and Deniz Faktoring are also included in Miscellaneous Provisions.

p. Explanation on property and equipment held for sale and related to discontinued operations

DFG Group has no held for trade assets and discontinuing operations in current period.

q. Information on other assets

1. Information on prepaid expense, taxes and similar items

DFS Groups total prepaid expenses are TL 300.053 (31 December 2015: TL 268.965).

2. Other assets do not exceed 10% of total assets excluding the off-balance sheet items.

DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 283

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

II. Explanations and disclosures related to consolidated liabilities

a. Information on deposits

1. Information on maturity structure of deposits:

Current Period: 31 December 2016

Accumulated
7 Days Up to 1-3 3-6 6 Months- 1 Year Deposit
Demand Notice 1 Month Months Months 1 Year and Over Accounts Total
Saving Deposits 2.322.348 -- 2.355.686 15.076.048 701.221 153.831 252.692 26.694 20.888.520
Foreign Currency Deposits (*) 12.890.613 -- 2.975.273 11.835.876 1.553.924 6.001.084 19.819.205 1.325 55.077.300
Residents in Turkey 5.861.977 -- 2.696.271 10.866.308 1.278.067 1.962.383 1.588.328 1.165 24.254.499
Residents Abroad 7.028.636 -- 279.002 969.568 275.857 4.038.701 18.230.877 160 30.822.801
Public Sector Deposits 486.443 -- 38.636 51.363 3.669 349 10.808 -- 591.268
Commercial Deposits 2.820.471 -- 2.206.973 5.371.941 711.082 155.101 226.933 -- 11.492.501
Other Ins. Deposits 102.245 -- 103.356 1.515.642 128.363 9.358 178.377 -- 2.037.341
Precious Metal Deposits 265.351 -- 29.656 151.809 41.997 28.783 12.364 4.268 534.228
Bank Deposits 76.053 -- 507.818 882.414 860 1.767 105.881 -- 1.574.793
Central Bank -- -- -- -- -- -- -- -- --
Domestic Banks 7.198 -- 111.364 27.378 -- 1.767 -- -- 147.707
Foreign Banks 44.298 -- 396.454 855.036 860 -- 105.881 -- 1.402.529
Special Finan. Inst. 24.557 -- -- -- -- -- -- -- 24.557
Other -- -- -- -- -- -- -- -- --
Total 18.963.524 -- 8.217.398 34.885.093 3.141.116 6.350.273 20.606.260 32.287 92.195.951

(*)
Foreign Exchange Deposit Account consists of Saving Deposit customers at the amount of TL 34.483.244 and Commercial Deposit customers
at the amount of TL 18.594.056.

Prior Period: 31 December 2015

Accumulated
7 Days Up to 1-3 3-6 6 Months- 1 Year Deposit
Demand Notice 1 Month Months Months 1 Year and Over Accounts Total
Saving Deposits 1.611.963 -- 1.539.654 12.627.000 252.858 128.011 199.058 34.631 16.393.175
Foreign Currency Deposits (*) 9.857.764 -- 2.783.078 9.956.894 1.376.704 2.444.644 18.555.740 1.477 44.976.301
Residents in Turkey 4.055.236 -- 2.715.018 9.219.769 1.263.219 898.260 1.504.270 1.290 19.657.062
Residents Abroad 5.802.528 -- 68.060 737.125 113.485 1.546.384 17.051.470 187 25.319.239
Public Sector Deposits 416.169 -- 47.736 48.877 1.899 46 459 -- 515.186
Commercial Deposits 2.164.960 -- 1.667.334 3.432.461 116.203 111.929 94.213 -- 7.587.100
Other Ins. Deposits 81.970 -- 92.903 1.028.700 169.986 910 20.142 -- 1.394.611
Precious Metal Deposits 121.790 -- 24.210 136.557 11.513 31.379 9.578 2.702 337.729
Bank Deposits 139.734 -- 490.742 649.242 6.939 168.496 -- -- 1.455.153
Central Bank -- -- -- -- -- -- -- -- --
Domestic Banks 3.252 -- 104.475 35.637 -- 1.466 -- -- 144.830
Foreign Banks 123.821 -- 386.267 613.605 6.939 167.030 -- -- 1.297.662
Special Finan. Inst. 12.661 -- -- -- -- -- -- -- 12.661
Other -- -- -- -- -- -- -- -- --
Total 14.394.350 -- 6.645.657 27.879.731 1.936.102 2.885.415 18.879.190 38.810 72.659.255

Foreign Exchange Deposit Account consists of Saving Deposit customers at the amount of TL 30.343.294 and Commercial
(*)

Deposit customers at the amount of TL 14.633.007.

2. Information on deposit insurance
(i) Information on saving deposits insured by Saving Deposit Insurance Fund and the total amount of the deposits exceeding
the insurance coverage limit
Deposits owned by foreign subsidiaries in scope of consolidation are under insurance coverage according to legislations of
countries in which they are located and are not included in following table.
284 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

Saving Deposit Insurance Fund Exceeding the Insurance Coverage Limit

Current Period Prior Period Current Period Prior Period
Saving Deposits 10.732.125 7.838.510 10.067.622 8.447.404
Foreign Currency Saving Deposits 2.373.888 2.148.057 9.536.921 7.964.570
Other Saving Deposits -- -- -- --
Foreign Branches Deposits Under Foreign Insurance Coverage -- -- -- --
Off-Shore Deposits Under Foreign Insurance Coverage -- -- -- --
Total 13.106.013 9.986.567 19.604.543 16.411.974

(ii) Saving deposits that are not under the guarantee of deposit insurance fund

Current Period Prior Period

Deposits and Other Accounts in Foreign Branches 162.530 75.346
Deposits and Other Accounts belong to Major Shareholders with Their Parents, Spouse and Children under Their
Wardship -- --
Deposits and Other Accounts belong to Members of Board of Directors, CEO and Deputy CEO with Their Parents,
Spouse and Children under Their Wardship 41.124 30.020
Deposits and Other Accounts linked to Crimes Mentioned in 282nd Article of 5237 Numbered Turkish Penal Code
dated on 26/09/2004 -- --
Deposits belong to Off-Shore Banks who are established in Turkey 24.265 110.234
Total 227.919 215.600

(iii) Saving deposits in Turkey are not covered by any insurance in any other countries since the Banks headquarter is not
located abroad.
b. Information on trading purpose derivatives
1. Negative value of trading purpose derivatives

Current Period Prior Period

TL FC TL FC
Forward Transactions 40.220 19.978 3.413 28.971
Swap Transactions 506.384 595.267 307.637 276.878
Futures Transactions -- -- -- --
Options 7 86.530 -- 21.742
Other -- -- -- --
Total 546.611 701.775 311.050 327.591
c. Information on funds borrowed
1. Information on banks and other financial institutions

Current Period Prior Period

TL FC TL FC
Central Bank Loans -- -- -- --
Domestic Bank and Institutions 1.094.208 740.691 1.416.454 291.518
Foreign Bank, Institutions and Funds 1.035.318 8.388.474 437.469 9.111.825
Total 2.129.526 9.129.165 1.853.923 9.403.343
2. Maturity information of funds borrowed

Current Period Prior Period

TL FC TL FC
Short-Term 1.602.323 3.571.403 1.853.923 5.411.777
Medium and Long-Term 527.203 5.557.762 -- 3.991.566
Total 2.129.526 9.129.165 1.853.923 9.403.343
3. Additional explanation on concentrations of the Groups liabilities
Deposits constitute the most important fund of the Group, and they account for 68% of total funds (31 December 2015: 64%).
Loans received, subordinated loans, debts to money markets and issued securities account for 19% of total funds (31 December
2015: 23%)
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 285

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

d. Information on securities issued

Current Period Prior Period

TL FC TL FC
Bonds -- 1.309.730 103.222 1.481.142
Bills 1.766.245 -- 945.365 --
Asset Backed Security 415.080 -- 556.311 --
Total 2.181.325 1.309.730 1.604.898 1.481.142
Nominal value of TL 70.095 (31 December 2015: TL 188.439) of the securities issued were repurchased by the Parent Bank and
offset in the financial statements.
e. If other liabilities line of the balance sheet exceeds 10% of the balance sheet total; excluding the off balance sheet
commitments; information on components making up at least 20% of the other liabilities
Other liabilities do not exceed 10% of the balance sheet total excluding the off-balance sheet items.
f. Information on lease payables
None (31 December 2015: None).
1. Changes in agreements and further commitments arising
None (31 December 2015: None).
2. Obligations under finance leases
None (31 December 2015: None).
3. Explanations on operational leases
DFS Group has operational lease agreements for its bank branches, motor vehicles and ATM locations. Rental payments for the
majority of these agreements are made and expensed on a monthly basis. The unexpired portion of prepayments made for rent
agreements on a yearly basis are accounted for under prepaid expenses in other assets.
4. Explanation on Sell-and-lease back agreements
There is no sale and lease back transactions in the current period.
g. Information on liabilities arising from hedging purpose derivatives
None (31 December 2015: None).
h. Explanation on provisions
1. Information on general provisions

Current Period Prior Period

Provisions for Loans and Receivables in Group I 907.233 723.563
Additional Provision for Loans with Extended Maturities 71.838 31.355
Provisions for Loans and Receivables in Group II 258.866 170.305
Additional Provision for Loans with Extended Maturities 160.565 88.712
Provisions for Non Cash Loans 103.255 81.471
Other -- --
Total 1.269.354 975.339

Minimum provision rates for the general provision calculation are determined in Communique on Amendments made on
Communiqu Related to Principles and Procedures on Determining the Qualifications of Banks Loans and Other Receivables
and the Provision for These Loans and Other Receivables which is published at Official Gazette dated December 14, 2016 and
numbered 29918 and the Bank has made provisions over the aforementioned minimum provision rates as of December 31, 2016.
General provision amount would be TL 868.000 less if the minimum provision rates, which are mentioned in the aforementioned
Communique, were applied.
286 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

2. Provision for currency exchange gain/loss on foreign currency indexed loans

As of 31 December 2016, the reserves allocated for the exchange rate differences of loans indexed to foreign currency amount
to TL 128 (31 December 2015: TL 10.635). Provisions for exchange rate differences pertaining to loans indexed to foreign
currency are netted off against the credits and receivables under asset items in financial statements.
3. Liabilities on provision for employee benefits
TAS 19 required to using the actuarial methods for calculation of operating obligations.
Accordingly, the following actuarial assumptions were used in the calculation of the total reserve for employment termination
benefits:

Current Period Prior Period

Discount rate 5,71% 5,71%
nterest Rate 11,00% 11,00%
Expected rate of salary/limit increase 5,00% 5,00%
As of 31 December 2016, TL 86.385 of provision for employment termination benefits (31 December 2015: TL 70.923) and TL
35.334 of unused vacation accruals (31 December 2015: TL 36.090) were reflected to the consolidated financial statements.
Movement of retirement pays liability during the period:

Current Period Prior Period

Balance at the Beginning of the Period 70.923 65.431
Changes in the period 21.344 17.891
Actuarial loss/gain 8.388 (1.781)
Paid in the period (14.517) (10.785)
FX difference 247 167
Balance at the End of the Period 86.385 70.923
4. Information on other provisions
(i) As of 31 December 2016, the free reserves allocated to potential risks amount to TL 233.823 (31 December 2015: TL
12.813), which includes other provisions for the possible outflows regarding to specific loan portfolio.
(ii) Information on other provisions exceeding 10% of total provisions
TL 85.998 (31 December 2015: TL 65.998) of other provisions consists of provisions for non-cash loans that are not indemnified
and converted into cash. TL 29.059 (31 December 2015: TL 26.288) consists of provisions for lawsuits pending against DFS
Group, comprise of tax fine provision amounting to TL 44.000, whose details are mentioned in note numbered III.b in section five
and TL 8.197 (31 December 2015: TL 37.050) consists of other provisions.
i. Information on taxation
1. Information on current taxes
(i) Information on current tax liability
As of 31 December 2016, the corporate tax provision of DFS Group is TL 320.330 (31 December 2015: TL 155.107), and it has
been offset with advance taxes amounting to TL 312.220 (31 December 2015: TL 151.424).
(ii) Information on taxes payable

Current Period Prior Period

Corporate taxes payable 8.110 3.683
Taxation on securities 52.785 45.588
Capital gains taxes on property 1.992 1.779
Banking Insurance Transaction Tax (BITT) 50.659 42.730
Taxes on foreign exchange transactions -- --
Value added taxes payable 3.636 2.118
Other 46.938 41.219
Total 164.120 137.117
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 287

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

(iii) Information on premiums

Current Period Prior Period

Social security premiums- employee share 8.154 7.512
Social security premiums- employer share 8.933 8.218
Bank pension fund premium- employee share -- --
Bank pension fund premium- employer share -- --
Pension fund membership fees and provisions- employee share 348 291
Pension fund membership fees and provisions- employer share 426 356
Unemployment insurance- employee share 582 537
Unemployment insurance- employer share 1.111 1.024
Other 6.045 5.795
Total 25.599 23.733
2. Information on deferred tax liabilities

Deferred tax liability calculated on the basis of related regulation is TL 15.446 (31 December 2015: TL 8.652). Information on
deferred taxes is disclosed in Note o of explanations and disclosures related to consolidated assets.

j. Information on debts of fixed assets held for sales purposes and related to discontinuing operations

None.

k. Information on subordinated credits

Current Period Prior Period

TL FC TL FC
Domestic Banks -- -- -- --
Other Domestic Institutions -- -- -- --
Foreign Banks -- 5.483.501 -- 4.845.965
Other Foreign Institutions -- -- -- --
Total -- 5.483.501 -- 4.845.965

Information on subordinated credits are provided in note numbered I-b in Fourth section.

l. Information on shareholders equity

1. Paid-in capital

Current Period Prior Period

Common Stock 3.316.100 1.816.100
Preferred Stock -- --

Paid-in capital of the Parent Bank is shown as nominal above. Disclosure regarding capital increase is made in note numbered
II-l-3 in Section Five.

2. Paid-in capital amount, explanation as to whether the registered share capital system is applied at the bank; if so the
amount of registered share capital

Registered paid-in capital system is not applied.

3. Information on share capital increases and their sources; other information on any increase in capital shares during the
current period

The Parent Bank has increased its paid capital at a total amount of TL1.500.000 on 28 June 2016 consisting of share premium of
TL 39, subsidiary and associate shares and real estate sales income of TL 113.097 and extraordinary reserves of TL 636.864 and
cash reserve of TL 750.000.

Profit reserves Capital reserves

Date of Increase Amount of Increase Cash entreated in increase entreated in increase
28 June 2016 1.500.000 750.000 113.136 636.864
288 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

4. Information on share capital increases from revaluation funds

Bonus share real estate profit on

sale of subsidiaries, associates
Revaluation Increase in Value for and joint controlled partnerships
Securities Growth Fund tangible and intangible fixed assets (joint ventures) Other
-- -- 113.097 --

5. Capital commitments in the last fiscal year and at the end of the following period, the general purpose of these
commitments and projected resources required to meet these commitments
The capital is totally paid in and there are no capital commitments.

6. Prior period indicators of the Parent Banks income, profitability and liquidity; and possible effects of the predictions on
equity, considering uncertainty indicators

Balance sheets of the entities under DFS Group are managed prudently, to minimize the negative effects of interest rate, foreign
currency and credit risks. This policy contributes to the progress of DFS Groups profitability with a steady increasing trend.
7. Information on the privileges given to stocks representing the capital
The Parent Bank does not have any preferred stocks.
8. Common stock issue premiums, shares and equity instruments

Current Period Prior Period

Number of Shares (*) 50.368.526 50.368.526
Preferred Stock -- --
Common Stock Issue Premium (**) 15 39
Common Stock Cancellation Profits -- --
Other Equity Instruments -- --
Total Common Stock Issued (*) 50.369 50.369
(*)
Related to the Parent Banks paid-in capital increase on 27 September 2004. At that date, the paid-in capital was increased from TL 202.000
to TL 290.000; and TL 50.369 of this TL 88.000 increase was received in cash through issuance of new shares to the public.
(**)
The share price for the above mentioned public issuance was twothousandeighthundredandseventyfive Turkish Liras and a total issuance
premium of TL 94.441 was realized. The inflation restatement effect of TL 3.910 was also recognized over the original balance until December
2004. A total issuance premium of TL 60 was realized through the Banks paid-in capital increase amounting TL 400.000 on 28 August 2008.

Share premium at an amount of TL 94.501 and inflation adjustment differences of share premium at an amount of TL 3.910 has been added to
paid-in capital with the capital increase made by the Parent Bank at the date of 14 October 2015.

A share premium at an amount of TL 15 has been occurred due to capital increase on 28 June 2016 at an amount of TL 1.500.000.

9. Securities Revaluation Reserve

Current Period Prior Period

TL FC TL FC
Associates, Subsidiaries and JVs -- -- -- --
Valuation Difference (444.941) (110.354) (472.145) (7.643)
FX Difference -- -- -- --
Total (444.941) (110.354) (472.145) (7.643)

10. Information on hedging funds

Explanations about hedging funds are in Note VIII of Section Four.

11. Information on minority shares

Current Period Prior Period

Balance at the Beginning of the Period 7.198 6.306
Minority interest in net income of consolidated subsidiaries 1.072 892
Increase/(decrease) in minority interest due to disposals -- --
Other -- --
Balance at the End of the Period 8.270 7.198
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 289

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

12. Information on revaluation differences of tangible assets

DFH Group has passed to revaluation model from cost model in the framework of TAS 16 Intangible Fixed Assets in valuation
of properties in use which are tracjed under intangible fixed assets as of 31 December 2016 while it tracks all of its intangible
fixed assets in accordance with TAS 16 Intangible Fixed Assets. Revaluation difference amount of TL 40.495 is recognized
under equities as a result of revaluation process.

Revaluation differences of tangible assets amounting to TL 113.097 have used for capital increase dated on 28 June 2016. The
explanation regarding capital increase can be found in Note II-l-3 of Section Five (31 December 2015: TL 262.425 ).

III. Explanations and disclosures related to consolidated off-balance sheet items

a. Information related to off-balance sheet commitments

1. Type and amount of irrevocable commitments

All of DFS Groups off-balance sheet loan commitments are in the nature of irrevocable commitments. As of 31 December 2016,
non-cash loans, commitments for credit card limits and commitments for cheque payments are TL 28.782.015, TL 12.764.645
and TL 2.111.130, respectively (31 December 2015: TL 24.444.415, TL 10.209.119 and TL 1.920.552, respectively). These items
are detailed in the off-balance sheet accounts.

2. Type and amount of possible losses from off-balance sheet items referred to below

(i) Guarantees, bills of exchange and acceptances and other letters of credit which can be considered as financial collateral

As of 31 December 2016, DFS Group has letters of guarantee amounting to TL 21.782.215, bills of exchange and acceptances
amounting to TL 256.830, and guarantees and sureties on letters of credit amounting to TL 2.426.616 and other guarantees and
sureties amounting to TL 4.316.354.

As of 31 December 2015 DFS Group has letters of guarantee amounting to TL 20.087.418, bills of exchange and acceptances
amounting to TL 194.319, and guarantees and sureties on letter of credit amounting to TL 2.394.350 and other guarantees and
sureties amounting to TL 1.768.328.

(ii) Final guarantees, provisional guarantees, sureties and similar transactions

Current Period Prior Period

Provisional Letters of Guarantee 1.103.750 1.013.609
Final Letters of Guarantee 14.223.149 13.484.968
Letters of Guarantee for Advances 2.874.152 2.938.430
Letters of Guarantee given to Customs Offices 169.797 184.924
Other Letters of Guarantee 3.411.367 2.465.487
Total 21.782.215 20.087.418
3. Information on non-cash loans

(i) Total amount of non-cash loans

Current Period Prior Period

Non-Cash Loans Given for Obtaining Cash Loans 8.211.637 4.624.008
With Original Maturity of 1 Year or Less 7.816.907 4.369.183
With Original Maturity of More Than 1 Year 394.730 254.825
Other Non-Cash Loans 20.570.378 19.820.407
Total 28.782.015 24.444.415
290 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

(ii) Sectorial risk concentrations of non-cash loans

Current Period Prior Period

TL % FC % TL % FC %
Agricultural 125.897 1,25 115.147 0,61 125.561 1,42 228.819 1,46
Farming and Cattle 124.881 1,24 113.637 0,61 124.382 1,41 228.819 1,46
Forestry 584 0,01 768 -- 893 0,01 -- --
Fishing 432 -- 742 -- 286 -- -- --
Manufacturing 2.217.779 22,09 8.391.528 44,78 2.021.443 22,95 5.275.588 33,74
Mining 325.222 3,24 277.560 1,48 229.451 2,60 126.803 0,81
Production 1.558.544 15,52 7.509.548 40,07 1.462.574 16,60 4.565.941 29,20
Electric, Gas, Water 334.013 3,33 604.420 3,23 329.418 3,75 582.844 3,73
Construction 2.982.079 29,70 5.275.696 28,15 2.502.194 28,41 5.172.860 33,08
Services 3.304.228 32,89 3.421.731 18,26 3.090.136 35,08 3.327.861 21,28
Wholesale and Retail Trade 1.963.421 19,55 1.788.412 9,54 1.929.549 21,90 2.266.018 14,49
Hotel and Restaurant Services 250.429 2,49 351.862 1,88 223.470 2,54 244.521 1,56
Transportation and telecommunication 489.354 4,87 855.957 4,57 473.289 5,37 554.439 3,55
Financial institution 296.000 2,95 340.408 1,82 166.001 1,88 188.834 1,21
Real estate and letting services 21.577 0,21 3.998 0,02 30.106 0,34 1.984 0,01
Self-employement services -- -- -- -- -- -- -- --
Education services 38.997 0,39 11.688 0,06 37.715 0,43 13.870 0,09
Health and social services 244.450 2,43 69.406 0,37 230.006 2,62 58.195 0,37
Other 1.411.681 14,07 1.536.249 8,20 1.069.612 12,14 1.630.341 10,44
Total 10.041.664 100,00 18.740.351 100,00 8.808.946 100,00 15.635.469 100,00

(iii) Information about the first and second group of non-cash loans

I. Group II. Group

TL FC TL FC
Letters of Guarantee 9.844.489 11.544.903 185.468 207.355
Bank Aceptances 5.498 251.332 -- --
Letters of Credit 42 2.426.574 -- --
Endorsements -- -- -- --
Underwriting Commitments -- -- -- --
Faktoring Commitments -- -- -- --
Other Commitments and Contingencies 6.167 4.306.250 -- 3.937
Total 9.856.196 18.529.059 185.468 211.292

b. Information related to derivative financial instruments

More than
Current Period Up to 1 moth 1-3 month 3-12 month 1-5 years 5 years Total
Hedging Purpose Derivative Transactions
A. Total Hedging Purpose Derivative Transactions -- -- -- -- -- --
Fair Value Hedge Transactions -- -- -- -- -- --
Cash Flow Hedge Transactions -- -- -- -- -- --
Net Foreign Inverstment Hedge Transactions -- -- -- -- -- --
Types of Trading Transactions
Foreign Currency Related Derivative Transactions (I) 34.214.405 16.867.847 5.859.534 4.509.821 -- 61.451.607
Forward FC Call Transactions 1.165.432 174.033 687.902 -- -- 2.027.367
Forward FC Pull Transactions 388.688 927.659 689.440 -- -- 2.005.787
Swap FC Call Transactions 14.903.585 7.050.000 890.994 2.170.588 -- 25.015.167
Swap FC Pull Transactions 13.239.897 7.109.478 718.065 2.339.233 -- 23.406.673
Options FC Call Transactions 2.241.094 825.161 1.410.230 -- -- 4.476.485
Options FC Pull Transactions 2.275.709 781.516 1.462.903 -- -- 4.520.128
Futures FC Call Transactions -- -- -- -- -- --
Futures FC Pull Transactions -- -- -- -- -- --
Total of Interest Derivative Transactions (II) 19.259 1.073.356 2.583.656 3.918.759 12.445.642 20.040.672
Swap Interest Call Transactions 10.557 536.678 1.291.828 1.958.678 6.159.507 9.957.248
Swap Interest Pull Transactions 8.702 536.678 1.291.828 1.960.081 6.159.507 9.956.796
Options Interest Call Transactions -- -- -- -- 63.314 63.314
Options Interest Pull Transactions -- -- -- -- 63.314 63.314
Securities Interest Call Transactions -- -- -- -- -- --
Securities Interest Pull Transactions -- -- -- -- -- --
Futures Interest Call Transactions -- -- -- -- -- --
Futures Interest Pull Transactions -- -- -- -- -- --
Other Types of Trading Transactions (III) 1.556.043 34.940 169.418 332.334 -- 2.092.735
B. Total Types of Trading Transactions (I + II + III) 35.789.707 17.976.143 8.612.608 8.760.914 12.445.642 83.585.014
Total Derivatives Transactions (A+B) 35.789.707 17.976.143 8.612.608 8.760.914 12.445.642 83.585.014
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 291

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

More than
Prior Period Up to 1 moth 1-3 month 3-12 month 1-5 years 5 years Total
Hedging Purpose Derivative Transactions
A. Total Hedging Purpose Derivative Transactions -- -- -- -- -- --
Fair Value Hedge Transactions -- -- -- -- -- --
Cash Flow Hedge Transactions -- -- -- -- -- --
Net Foreign Inverstment Hedge Transactions -- -- -- -- -- --
Types of Trading Transactions
Foreign Currency Related Derivative Transactions (I) 36.939.324 12.194.324 9.036.060 5.461.564 -- 63.631.272
Forward FC Call Transactions 729.409 557.706 888.005 25.934 -- 2.201.054
Forward FC Pull Transactions 728.072 559.422 904.922 26.802 -- 2.219.218
Swap FC Call Transactions 16.077.352 4.605.911 2.528.268 2.828.332 -- 26.039.863
Swap FC Pull Transactions 14.773.219 4.421.895 2.379.836 2.580.496 -- 24.155.446
Options FC Call Transactions 2.320.709 1.047.381 1.162.554 -- -- 4.530.644
Options FC Pull Transactions 2.310.563 1.002.009 1.172.475 -- -- 4.485.047
Futures FC Call Transactions -- -- -- -- -- --
Futures FC Pull Transactions -- -- -- -- -- --
Total of Interest Derivative Transactions (II) -- 2.586.274 3.131.178 2.510.842 8.263.008 16.491.302
Swap Interest Call Transactions -- 1.293.137 1.565.589 1.255.514 4.131.504 8.245.744
Swap Interest Pull Transactions -- 1.293.137 1.565.589 1.255.328 4.131.504 8.245.558
Options Interest Call Transactions -- -- -- -- -- --
Options Interest Pull Transactions -- -- -- -- -- --
Securities Interest Call Transactions -- -- -- -- -- --
Securities Interest Pull Transactions -- -- -- -- -- --
Futures Interest Call Transactions -- -- -- -- -- --
Futures Interest Pull Transactions -- -- -- -- -- --
Other Types of Trading Transactions (III) 1.350.690 -- -- -- -- --
B. Total Types of Trading Transactions (I + II + III) 38.290.014 14.780.598 12.167.238 7.972.406 8.263.008 81.473.264
Total Derivatives Transactions (A+B) 38.290.014 14.780.598 12.167.238 7.972.406 8.263.008 81.473.264
c. Credit derivatives and risk exposures on credit derivatives
None.
d. Contingent assets and liabilities
A tax inspection for the years of 2010, 2011, 2012, 2013 and 2014 is carried out by Large Taxpayers Office of Turkish Tax
Inspection Board with respect to an inspection conducted debt collection fees. In tax inspection reports, tax and penalty
notifications, amounting to TL 55.745 assessment, have been delivered to the Parent Bank on account of the fact that legal
encashment fee related to collections made externally through making payments to Parent Bank or lawyers by related debtors
regarding their non-performing credits in Parent Bank is not paid.

A tax inspection for the years of 2010, 2011, 2012, 2013 and 2014 is carried out by Large Taxpayers Office of Turkish Tax
Inspection Board regarding the examination of judgment and compensation fees with respect to Corporation Tax has been carried
out. In tax inspection reports, tax and penalty notifications, amounting to TL 952 assessment have been delivered to Parent Bank
on account of the fact that corporation tax regarding 2011,2012 and 2014 was not paid completely.

As a result of investigation of derivative transactions with respect to Banking and Insurance Transaction Tax made by Tax
Inspection Board Istanbul Large Taxpayers Office Group Presidency, tax investigation reports and tax notifications for penalty
have been issued for 2009, 2010, 2011, 2012, 2013 and 2014. In tax inspection reports, tax and fine notifications, amounting to
TL 67.780 assessment have been delivered to Parent Bank on account of the fact that Banking and Insurance transaction Tax was
not paid.

The Parent Bank has decided to benefit from favorable provisions of the Law on Restructuring of Certain Receivables numbered
6736 published on Official Gazette dated 19 August 2016 and numbered 29806 and related communique with respect to
abovementioned penalties and applied to respective tax office. In scope of aforementioned Law, as a result of restructuring of tax
and penalties, accrued amounts are paid in cash on 30 November 2016 for judgement cost of collection amount of TL 12.924, TL
199 for corporate tax and banking and insurance transaction tax amount of TL 15.096.

Tax investigation report for 2010 has been issued by Large Taxpayers Office of Turkish Tax Inspection Board as a result of
examination of file cost collected from customers who use individual credits with respect to Resource Utilization Support Fund. In
tax inspection reports, an accrual slip including Resource Utilization Support Fund at an amount of TL 1.774 and delaying penalty
at an amount of TL 2.141 has been submitted on account of the fact that the Parent Bank has not calculated Resource Utilization
Support Fund over file cost collected from customers who use individual credits. There is no provision made in financial
statements since the implementation of the Parent Bank is in line with legislation taking into consideration that file costs should
be included in non-interest revenues rather than interest revenue in Uniform Chart of Account published by Banking Regulation
and Supervision Agency. The Parent Bank has appealed to the court for the stay of execution. The defendant tax office has
notified the Parent Bank regarding payment orders on 15 March 2016 since the aforementioned case has not been concluded.
292 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

The parent Bank has paid a total amount of TL 3.957 to Large Taxpayers Office with prejudice including a RUSF at an amount
of TL 1.774, a penalty rate amounting to TL 2.141 and a late fee at an amount of TL 42 on 21 March 2016 and has applied to
Istanbul Tax Court for the stay of execution and cancellation of payment orders on 22 March 2016. As a result of examination
of filing expenditure collected from customers who are provided individual credits by Tax Inspection Board Istanbul Large
Taxpayers Directorate with respect to Resource Utilization Support Fund (RUSF), a tax investigation report is issued for 2011.
Accrual slips including RUSF amount of TL 2,182 and penalty rate amount of TL 2.911 is notified for 2011 in tax investigation
report since the Parent Bank did not calculate RUSF over filing expenditure collected from customers who are provided individual
credits. No provisions are made in financial statements since it is concluded that implementation of Parent Bank are compliant
to legislation considering decisions regarding repayment of file expenditures in court decisions due to not being accepted as
interest in Uniform Chart of Accounts published by BRSA. The Parent Bank has filed a claim in order for suspension of execution
to Istanbul Administrative Court on 16 January 2017. It is decided to suspend execution on 19 January 2017.

Based on the principle of conservatism DFS Group made a provision amounting to TL 23.959 (31 December 2015: TL 26.288)
for lawsuits pending against itself; which are classified in Other provisions item at the balance sheet. Other ongoing lawsuits
which have not any provision are unlikely to occur and for which cash outflow is not expected to incur.
e. Activities carried out on behalf and account of other persons
The Bank provides trading, custody, management and consultancy services to its customers.
IV. Explanations and disclosures related to consolidated statement of income
a. Interest income
1. Information on interest income received from loans

Current Period Prior Period

TL FC TL FC
Short Term Loans 2.525.685 111.928 2.240.514 112.699
Medium and Long Term Loans 4.190.252 1.851.111 3.156.197 1.551.605
Loans Under Follow-Up 44.456 -- 47.980 --
Premiums Received from Resource Utilization Support Fund -- -- -- --
Total 6.760.393 1.963.039 5.444.691 1.664.304
Interest income received from loans also includes fees and commissions from cash loans granted.
2. Information on interest income received from banks
Current Period Prior Period
TL FC TL FC
Central Bank of the Republic of Turkey 2 602 -- 150
Domestic Banks 2.365 9.825 7.211 9.977
Foreign Banks 343 1.473 952 1.219
Foreign Head Offices and Branches -- -- -- --
Total 2.710 11.900 8.163 11.346

The interest income from required reserves that maintain in CBRT of Parent Bank amounting to 56.689 (1 January-31 December
2015: 24.288) recognized under Interest Income Received From Required Reserves account.
3. Information on interest income received from securities portfolio
Current Period Prior Period
TL FC TL FC
Trading Securities 3.531 323 7.997 388
Financial Assets at Fair Value Through Profit or Loss -- -- -- --
Investment Securities Available-for-Sale 584.188 119.478 579.661 98.126
Investment Securities Held-to-Maturity 289.607 32.690 277.678 22.997
Total 877.326 152.491 865.336 121.511
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 293

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

4. Information on interest income received from associates and subsidiaries

Current Period Prior Period

Interest Received from Associates and Subsidiaries 359 1.156

b. Interest expense

1. Information on interest expense related to funds borrowed

Current Period Prior Period

TL FC TL FC
Banks 179.630 551.137 115.249 432.139
Central Bank of the Republic of Turkey 52 -- 49 --
Domestic Banks 103.919 8.451 90.046 8.169
Foreign Banks 75.659 542.686 25.154 423.970
Foreign Head Offices and Branches -- -- -- --
Other Institutions -- -- -- --
Total 179.630 551.137 115.249 432.139

Interest expense related to funds borrowed also includes fees and commission expenses.

2. Information on interest expense paid to associates and subsidiaries

Current Period Prior Period

Interest Paid to Associates and Subsidiaries 3.344 2.809

3. Information on interest expense paid to securities issued

Current Period Prior Period

Interest Paid to Securities Issued 195.505 219.029
4. Maturity structure of the interest expense on deposits

Time Deposit
Demand Up to Up to Up to Up to More than Cumulative
Account Name Deposits 1 Month 3 Month 6 Month 1 Year 1 Year Deposit Total
TL
Bank Deposits 17 32.546 -- -- -- -- -- 32.563
Saving Deposits 45 201.698 1.535.975 43.076 14.036 25.012 2.372 1.822.214
Public Sector Deposits -- 2.357 5.390 702 14 96 -- 8.559
Commercial Deposits 1 219.880 505.660 45.306 9.818 7.103 -- 787.768
Other Deposits 1 11.551 158.925 22.050 5.429 2.340 -- 200.296
7 Days Notice Deposits -- -- -- -- -- -- -- --
Total 64 468.032 2.205.950 111.134 29.297 34.551 2.372 2.851.400
FC
Foreign Currency Deposits 2.152 506.708 233.077 18.376 20.635 24.066 14 805.028
Bank Deposits 644 6.238 -- -- -- -- -- 6.882
7 Days Notice Deposits -- -- -- -- -- -- -- --
Precious Metal Deposits 3 9.550 3.118 354 797 251 53 14.126
Total 2.799 522.496 236.195 18.730 21.432 24.317 67 826.036
Grand Total 2.863 990.528 2.442.145 129.864 50.729 58.868 2.439 3.677.436
c. Dividend Income

Current Period Prior Period

Trading Securities -- 119
Financial Assets at Fair Value Through Profit or Loss -- --
Investment Securities Available-For-Sale -- --
Other(*) 205 1.566
Total 205 1.685
(*)
Presents dividend income from unconsolidated subsidiaries and associates.
294 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

d. Information on trading income / loss

Current Period Prior Period

Income 231.976.770 260.042.549
Capital Market Transactions 19.677 94.293
Derivative Financial Instruments 4.575.590 4.890.262
Foreign Exchange Gains 227.381.503 255.057.994
Loss (-) 232.546.890 260.675.521
Capital Market Transactions 48.117 23.979
Derivative Financial Instruments 4.517.646 4.065.945
Foreign Exchange Losses 227.981.127 256.585.597
Net Trading Income / Loss (570.120) (632.972)
Net gain from foreign exchange translation differences related to derivative financial instruments is TL 265.964 (net gain for the
period 1 January-31 December 2015: TL 1.065.761).
e. Information on other operating income

Current Period Prior Period

Reversal of prior periods provisions 332.407 302.986
Sale revenue for Real estate properties 13.262 25.473
Communication income 10.957 12.423
Cheque book fees 3.743 4.150
Other 408.293 268.763
Total 768.662 613.795
Other operating income item consists of revenue obtained as a result of sales made from follow-up portfolio and collections
made from receivables for which a provision has been made in previous periods. Additionally, income amounting to TL 120.672
related to cash portion as a result of the transfer of Visa Europe Ltd., to Visa Inc., in which the Parent Bank has a share in its
capital, is recognized in financial statements.

f. Impairment on loans and other receivables

Current Period Prior Period

Specific Provisions on Loans and Other Receivables 1.241.892 1.095.704
Loans and Receivables in Group III 123.029 203.093
Loans and Receivables in Group IV 313.688 254.078
Loans and Receivables in Group V 805.175 638.533
Non-performing Commissions and Other Receivables -- --
General Loan Loss Provisions 294.015 162.211
Free Provision for Probable Risks 222.471 4.647
Impairment Losses on Securities 30.154 26.058
Financial Assets at Fair Value Through Profit or Loss 228 1.025
Investment Securities Available-for-Sale 29.926 25.033
Impairment Losses on Associates, Subsidiaries, Joint Ventures and Investment Securities Held to
Maturity 2.969 2.373
Associates -- --
Subsidiaries -- --
Joint Ventures -- --
Investment Securities Held-to-Maturity 2.969 2.373
Other 45.031 70.426
Total 1.836.532 1.361.419
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 295

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

g. Information related to other operational expenses

Current Period Prior Period

Personnel Expenses 1.359.190 1.245.238
Reserve for Employee Termination Benefits 7.202 8.833
Reserve for Banks Social Aid Fund Deficit -- --
Impairment Losses on Tangible Assets 3.719 --
Depreciation Charges of Tangible Assets 120.372 118.244
Impairment Losses on Intangible Assets -- --
Amortization Charges of Intangible Assets 92.092 81.079
Impairment Losses on Investment Accounted for under Equity Method -- --
Impairment of Assets to be Disposed -- --
Depreciation of Assets to be Disposed 2.579 1.634
Impairment of Assets Held for Sale -- --
Other Operating Expenses 975.872 849.598
Operational Leases Expenses 242.400 247.566
Repair and Maintenance Expenses 60.462 49.296
Advertisement Expenses 92.763 80.008
Other Expenses (*) 580.247 472.728
Losses on Sale of Assets 4.376 7.867
Other 360.768 328.094
Total 2.926.170 2.640.587

Other expenses in other operational expenses comprise; communication expenses, IT repair and maintenance and software fees, stationery,
(*)

entertainment and representation, heating and lighting, credit card service fee and others amounting to TL 78.141, TL 82.257, TL 21.216, TL
8.040, TL 24.813, TL 113.765 and TL 252.015, respectively (1 January 31 December 2015: TL 78.262, TL 72.595, TL 18.904, TL 7.991, TL
23.852, TL 95.597 and TL 179.266, respectively).

h. Information on profit / loss before tax from continued and discontinued operations
As 1 January-31 December 2016, DFS Group has a profit before tax from continuing operations amounting to TL 1.825.057 (1
January-31 December 2015: TL 1.141.241).

Sales of Destek Varlk A.., one of the subsidiaries of the Group, is made as it is stated in h.3.(iv) Fifth Section. Current period
income and expense items of aforementioned subsidiary, until its diposal date, are classified as Sales losses of Subsidiaries,
Associates and joint ventures included under income and expenses sourcing from discontinuing operations in consolidated
income statement.

Income and expenses from discontinuing activities belonging to accounting period ending as of 31 December 2016 and 2015 are
as follows:

Income Statement From Discontinued Operations Current Period Prior Period

Net Interest Income 5.387 7.540
Net Fees and Commission Income (34) (25)
Dividend Income -- --
Commercial Profit/Loss (Net) -- 454
Other Operation Income 917 70
Total Operation Income/Expenses 6.270 8.039
Impairment of Loans and Other Receivables -- (66)
Other Operation Expense (5.221) (6.303)
Discontinued Operations Profit/Loss Before Taxation 1.049 1.671
Discontinued Operations Tax Deduction (66) (232)
Discontinued Operations net Profit/Loss fort he Period 983 1.439
Subsidaries and Jointly Controlled Entities (258) --
Discontinued Operations Net Profit/Loss fort he Period 725 1.439
i. Information on tax provision for continued and discontinued operations
1. Current period taxation benefit or charge and deferred tax benefit or charge
As 1 January-31 December 2016 the current period taxation charge on continuing operations is TL 301.748 (1 January31
December 2015: TL 148.437) while deferred tax charge is TL 122.935 (1 January-31 December 2015: TL 134.947 deferred tax
charge).
The current period taxation charge on discontinuing operations is TL 66 ( 1 January-31 December 2015: None). There is no
deffered tax profit / loss (1 January-31 December 2015: TL 232 deferred tax loss)
296 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

2. Deferred tax benefit / (charge) arising from origination or reversal of temporary differences

Deferred tax benefit/charge arising from temporary differences Current Period Prior Period
Arising from Origination of Deductible Temporary Differences (+) 24.307 54.777
Arising from Reversal of Deductible Temporary Differences (-) (124.207) (218.060)
Arising from Origination of Taxable Temporary Differences (-) (55.351) (17.434)
Arising from Reversal of Taxable Temporary Differences (+) 32.316 45.770
Total (122.935) (134.947)

3. Deferred tax benefit / (charge) arising from temporary differences, tax losses or unused tax credits

Sources of deferred tax benefit/charge Current Period Prior Period

Arising from Origination (+)/ Reversal (-) of Deductible Temporary Differences (28.777) (235.035)
Arising from Origination (-)/ Reversal (+) of Taxable Temporary Differences (23.035) 28.336
Arising from Origination (+)/ Reversal (-) of Tax Losses (71.123) 71.752
Arising from Origination (+)/ Reversal (-) of Unused Tax Credits -- --
Total (122.935) (134.947)

j. Information on continuing and discontinued operations net profit/loss

DFS Group has a net profit is amounting to TL 1.401.099 (31 December 2015: 859.295 TL).

DFS Group does not have discontinuing operations.

k. Information on net profit and loss

1. The nature and amount of certain income and expense items from ordinary operations is disclosed if the disclosure for
nature, amount and repetition rate of such items is required for the complete understanding of the Banks performance for the
period

Income generated from DFS Groups ordinary banking transactions during the current and prior period are mainly consisted
of interest income from loans and marketable securities and income from other banking services. Main expense items are the
interest expenses related to deposits and borrowings which are the main funding sources of marketable securities and loans.

2. Profit or loss attributable to minority interests

Current Period Prior Period

Profit/(loss) attributable to minority interests 1.072 892

3. No changes have been made in the accounting estimates which may have a material effect in the current period and
materially affect subsequent periods.

l. If other lines of the income statement exceeds 10% of the period profit/loss, information on components making up at
least 20% of other items

Other Fees and Commissions Received Current Period Prior Period

Credit card clearing and other commissions 608.509 508.976
Contracted merchant / POS commissions 258.470 231.790
Insurance services 158.719 115.653
Filing fees 145.506 105.548
Intermediary services 84.490 91.883
Account management fees 56.528 82.480
Remittance commissions 42.472 38.445
Expertise fees 16.767 14.604
Other 113.970 123.243
Total 1.485.431 1.312.622

Other Fees and Commissions Paid Current Period Prior Period

Credit card / POS commissions 305.524 261.785
EFT fees and commissions 10.163 8.888
Other 95.493 100.360
Total 411.180 371.033
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 297

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

V. Explanations and disclosures related to consolidated statement of changes in shareholders equity

a. Information on capital increase

Parent Bank has increased its paid capital at a total amount of TL 1.500.000 consisting of share premiums amount of TL 39,
sales profits sourcing from shares of subsidiaries and associates and properties amount of TL 113.097, extraordinary reserves
amount of TL 636.964 and cash reserve amount of TL 750.000 on 28 June 2016.

b. Informafion on issuance of shares

Share premium, at an amount of TL 39, has added to paid capital with the capital increase made by the Bank on 28 June 2016.

A premium of issued shares amount of TL 15 formed as a result of capital increase of TL 1.500.000 made on 28 June 2016.

c. Information on distribution of profit

General Assembly of the Bank is authorized body for the profit appropriation decisions. As of the preparation date of these
financial statements, annual ordinary meeting of the General Assembly has not been held yet.

d. Information on increase/decrease amounts resulting from merger

None.

e. Information on investments available-for-sale

Unrealised gain/loss arising from changes in the fair value of securities classified as availablefor-sale are not recognized in
current year income statement but recognized in the Marketable securities valuation differences account under equity, until the
financial assets are derecognised, sold, disposed or impaired.

f. Hedging transactions

Explained in Information on hedging transations in Note XI of Section Four.

g. Revaluation difference on tangible assets

Revaluation differences on tangible assets includes gains on sales of subsidiaries and gains on sales of real estates and explained
in detail in Note II-l-12 of Section Five.

h. Information on to foreign exchange difference

Balance sheet items of Bahreyn branch of the Parent Bank and subsidiaries of the Group founded abroad are translated into
Turkish Lira with the foreign exchange rates prevailing at the balance sheet date, and income statements items are translated into
Turkish Lira with the average foreign exchange rates. Related foreign exchange differences are accounted in the shareholders
equity under Other profit reserves.

Explained in detail in Information on to foreign exchange difference in Note II-b of Section Three.

i. Other

None.

j. Amounts transferred to legal reserves

The Parent Bank transferred TL 715.091 (31 December 2015: TL 496.723) to extraordinary reserves from prior period profits in
2016. The amount of TL 38.132 transferred to legal reserves (31 December 2015: None).

298 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

VI. Explanations and disclosures related to consolidated cash flow statement

a. Information on cash and cash equivalents

Components of cash and cash equivalents and the accounting policy applied in their determination:

Cash and foreign currency together with demand deposits at banks including the CBRT are defined as Cash; interbank money
market and time deposits in banks with original maturities less than three months are defined as Cash equivalents.

1. Cash and cash equivalents at the beginning of the period

Current Period Prior Period

01.01.2016 01.01.2015
Cash 5.066.168 2.245.290
Cash in Vault, foreign currencies and other 1.411.721 1.246.778
Banks demand deposits 3.654.447 998.512
Cash and Cash Equivalent 4.880.925 5.326.271
Interbank Money market placements 1.213.997 980.123
Banks time deposits 3.333.389 3.992.518
Securities 333.539 353.630
Total Cash and Cash Equivalents 9.947.093 7.571.561

2. Cash and cash equivalents at the end of the period

Current Period Prior Period

31.12.2016 31.12.2015
Cash 6.111.804 5.066.168
Cash in Vault, foreign currencies and other 1.824.283 1.411.721
Banks demand deposits 4.287.521 3.654.447
Cash and Cash Equivalent 7.850.740 4.880.925
Interbank Money market placements 3.001.570 1.213.997
Banks time deposits 4.734.305 3.333.389
Securities 114.865 333.539
Total Cash and Cash Equivalents 13.962.544 9.947.093

b. Information on cash and cash equivalent assets of DFS Group that are not available for free use due to legal restrictions or
other reasons

DFS Group made a total provision for required reserves on CB of Turkey and other foreign Central Banks in amount of TL
13.015.077 (31 December 2015: TL 9.411.617).

c. Disclosures for other items in the statement of cash flows and effect of changes in foreign currency exchange rates on
cash and cash equivalents

Other item amounting to TL (3.901.538) (31 December 2015: TL (4.340.541)) before changes in operating assets and
liabilities comprise other operating expenses, fees and commissions paid and net trading loss. As a result of these changes
in the cash flow statement, the balance of cash and cash equivalents has changed from TL 9.947.093 (31 December 2015: TL
7.571.561) to TL 13.962.544 in 2015 (31 December 2015: TL 9.947.093).

Other liabilities item included in change in assets and liabilities arising from banking activities, amounting to TL (1.444.812)
(31 December 2015: TL 4.865.487) comprise changes in sundry creditors, taxes and duties payable, and other external
resources.

The impact of change in exchange rate on cash and cash equivalent assets consists of exchange difference occurring as a result
of translation of foreign currency cash and cash equivalent assets average to TL with rates belonging to beginning and end of
the period and it amounts to TL 803.652 as of 31 December 2016 (31 December 2015: TL 718.903).
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 299

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

VII. Explanations and disclosures related to DFS Groups risk group

a. Information on loans and other receivables to DFS Groups risk group

Current Period
Associates, Subsidiaries and Banks Direct and Indirect Other Real Persons and Legal
Joint-Ventures Shareholder Entities in Risk Group
DFS Groups Risk Group (*) Cash Non-Cash Cash Non-Cash Cash Non-Cash
Loans and Other Receivables
Balance at the Beginning of the Period 2 35.394 2.299 19.970 33 30
Balance at the End of the Period 14.146 128.405 5.448 7.721 56 4
Interest and Commission Income Received 377 54 126 8 3 --
(*)
As described in the Article 49 of Banking Law no.5411.

Prior Period
Associates, Subsidiaries and Banks Direct and Indirect Other Real Persons and Legal
Joint-Ventures Shareholder Entities in Risk Group
DFS Groups Risk Group (*) Cash Non-Cash Cash Non-Cash Cash Non-Cash
Loans and Other Receivables
Balance at the Beginning of the Period 1 10.477 18.175 59.102 94 4
Balance at the End of the Period 2 35.394 2.299 19.970 33 30
Interest and Commission Income Received 1.167 63 772 81 2 --
(*)
As described in the Article 49 of Banking Law no.5411.

b. Information on deposits held by and funds borrowed from DFS Groups risk group

Associates, Subsidiaries and Banks Direct and Indirect Other Real Persons and Legal
Joint-Ventures Shareholder (**) Entities in Risk Group
DFS Groups Risk Group (*) Current Period Prior Period Current Period Prior Period Current Period Prior Period
Balance at the Beginning of the
Period 27.778 26.193 6.257.056 3.878.370 8.552 14.305
Balance at the End of the Period 102.325 27.778 6.607.506 6.257.056 9.247 8.552
Interest and Commission Income
Received 3.347 2.809 231.906 264.635 907 1.198
(*)
As described in the Article 49 of Banking Law no.5411.
(**)
Includes the subordinated loan of US Dollar 1.050 million and Euro 115 million received from Sberbank.

c. Information on forward and option agreements and similar agreements made with DFS Groups risk group

Associates, Subsidiaries and Banks Direct and Indirect Other Real Persons and Legal
Joint-Ventures Shareholder Entities in Risk Group
DFS Groups Risk Group (*) Current Period Prior Period Current Period Prior Period Current Period Prior Period
Transactions for Trading Purposes:
Balance at the Beginning of the Period -- -- -- 54.565 11.510 5.654
Balance at the End of the Period -- -- -- -- -- 11.510
Total Income/(Loss) -- -- (5.681) (12.712) (388) (164)
Transactions for Hedging Purposes:
Balance at the Beginning of the Period -- -- -- -- -- --
Balance at the End of the Period -- -- -- -- -- --
Total Income/(Loss) -- -- -- -- -- --

As described in the Article 49 of Banking Law no.5411.

(*)
300 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

d. Information on benefit provided to Executives

DFS Group makes payment amounting to TL 81.609 (31 December 2015: TL 70.453) to its Executives as of 31 December 2016.

e. Information on transactions with DFS Groups risk group

As of 31 December 2016, cash loans and other receivables of the risk group represent 0,02% of DFS Groups total cash loans
and bank deposits granted the deposits and borrowings represent 7,3% of DFS Groups total deposits and borrowings. Non-cash
loans granted to risk group companies represent 0,6% of the total balance.

The risk group, which DFS Group belongs to, has finance and operation lease contracts with Deniz Leasing. The Parent Bank
gives brokerage services through its branches for Deniz Yatrm. As part of the consolidation adjustments, these balances and
transactions have been eliminated from the accompanying financial statements.

VIII. Domestic, foreign and off-shore banking branches and foreign representatives of the Parent Bank

a. Information relating to the Parent Banks domestic and foreign branch and representatives

Number of
Number Employees
Domestic branch 693 12.932
Country of
Incorporations
Foreign representation - - -
Statutory Share
Total Assets Capital
Foreign branch - - - - -
Off shore banking region
branches 1 6 1-Bahreyn 7.016.474 -

b. Explanations on the Parent Banks branch and agency openings or closings

The Parent Bank opened 27 new branches closed 25 branches in 2016.

c. The branches of associates and subsidiaries

There are 43 branches of Denizbank AG, which headquarter is located centrally in Vienna. 27 of branches are located in Austria,
16 branches are in Germany.

JSC Denizbank Moscow, which headquarter is located in Moscow, operates through center.
DENZBANK FINANCIAL SERVICES GROUP ANNUAL REPORT 2016 301

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

SECTION SIX

OTHER DISCLOSURES AND FOOTNOTES

I. Other explanations related to DFS Groups operations

a. Explanations related to DFS Groups operations

None.

b. Summary information about ratings of the Banks which has been assigned by the international rating agencies

Moodys* Fitch Ratings**

Outlook On Watch Outlook Stable
Ba2(On Watch for the possible
Long Term Foreign Currency Deposits decrease) Long Term Foreign Currency BB+
Short Term Foreign Currency Deposits Not Prime Short Term Foreign Currency B
Ba2 (On Watch for the possible
Long Term Local Currency Deposits decrease) Long Term Local Currency BB+
Short Term Local Currency Deposits Not Prime Short Term Local Currency B
ba3 (On Watch for the possible
Bank Financial Strenght Rating (BCA) decrease) Viability bb+
Support 3
National AA (tur)
*As of 20.07.2016 **As of 18.03.2016

c. Subsequent events

None.
302 SECTION IV INDEPENDENT AUDITORS REPORT, FINANCIAL STATEMENTS AND NOTES

DENZBANK ANONM RKET

Convenience Translation of
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Financial Report
Originally Issued in Turkish
AS OF 31 DECEMBER 2016 See Note 3.I.c
(Currency: Thousands of TL - Turkish Lira)

SECTION SEVEN

INDEPENDENT AUDITORS REPORT

I. Matters to be disclosed related to Independent Audit Report

Consolidated financial statements and notes of DFH Group are subject to independent audit by Gney Bamsz Denetim ve Serbest
Muhasebeci Mali Mavirlik A.. (A Member Firm of Ernst & Young Global Limited) and audit report dated 23 February 2017 is
presented preceding the consolidated financial statements.

II. Explanations and notes prepared by Independent Auditor

There exist no explanations or notes, deemed to be required, and no significant issues which are not mentioned above and related to
activities of DFH Group.
SECTION I INTRODUCTION 40 IT Security and Digital-Card Payment Operations Group CONTACT INFORMATION FOR DENZBANK A..
1 DenizBank Financial Services Group (DFSG) 41 Branch and Central Operations Group
2 DenizBanks Mission, Vision 41 Branch Operations and Foreign Trade Center Operations
2 Dividend Distribution Policy 42 Central Operations
3 Dividend Distribution Proposal 43 Treasury, Payment Systems and Private
3 Amendments to the Articles of Association Banking Operations
HEAD OFFICE DOMESTIC BRANCHES
3 Shareholding Structure, Paid-in Capital and Changes, 43 Investment Banking, Custody and Fund Services Bykdere Cad. No: 141 34394 Esentepe-stanbul DenizBank has 694 branches in Turkey. Information on
Shares Held by the Management Operations Tel: (+90 212) 348 20 00 domestic branches is available on the DenizBank web site.
3 Changes in the Management, Shareholding Structure and 45 Foreign Subsidiaries Fax: (+90 212) 354 83 48
Activities of DFSG Companies 46 Information Technology (IT) Services
4 DenizBank in Brief 48 Private Banking and Investment Operations
FOREIGN BRANCHES
6 Sberbank in Brief 50 Leasing, Factoring and Asset Management Services
WEB SITE Bahrain Branch
8 Financial Highlights 52 Cultural Services www.denizbank.com Al Jasrah Tover 6th Floor, Office 62/63 PO Box 10357,
10 2016 Highlights Trade Register Number Diplomatic Area, Manama-Bahrain
11 Awards 368587
12 Message from the Chairman of the Board of Directors Tel: (+973) 17541137
13 Message from the CEO
SECTION II MANAGEMENT AND CORPORATE Fax: (+973) 17541139
15 Banking Services
GOVERNANCE
16 Retail Banking Group 53 Board of Directors
16 Affluent Banking 61 Resident Board Members
17 Mass Banking 62 Executive Board
18 Retail Banking Products 63 Executive Board Members
19 Branch and ATM Planning 66 Executive Management
20 Bancassurance 67 Committees
20 SME Banking Group 68 Summary Report of Board of Directors to the General Assembly
20 SME Banking 69 Donations Made in 2016
22 Merchant Relations and Commercial Cards Management 69 Related Party Transactions
22 Gold Banking 69 Human Resources
22 Cash Management 71 Training
23 Agricultural Banking Group 72 Support Services
25 Wholesale Banking Group 74 DenizBank Corporate Governance Principles Compliance Report
25 Corporate Banking Group
25 Corporate Banking
25 Commercial Banking and Public Finance Group
25 Commercial Banking
SECTION III FINANCIAL INFORMATION AND RISK
26 Public Finance
MANAGEMENT
26 Project Finance 82 Internal Audit, Internal Control, Compliance and Risk
27 Payment Systems and Non-Branch Channels Group Management Systems
27 Credit Cards 85 Assessments of the Audit Committee
28 Debit Cards/PTT Cards 87 Independent Auditor Report on the Annual Report
28 Call Center 88 Five-Year Summary Financial Highlights
29 Telemarketing and Customer Retention 90 Assessment of Financial Position
30 Mobile Sales 91 Capital Market Instruments Issued by DenizBank
31 Treasury and Financial Institutions Group 91 DenizBank Ratings by International Rating Agencies
31 Treasury
31 Treasury Sales
32 Financial Institutions
32 Private Banking Group
33 Digital Generation Banking Group
SECTION IV INDEPENDENT AUDIT REPORTS, FINANCIAL
33 Main Distribution Channels
STATEMENTS AND NOTES
34 Digital Sales, Marketing and New Generation Banking 93 Independent Auditors Reports, Unconsolidated &
35 Innovation, Digital Payment Systems, Cloud Banking Consolidated Financial Statements and Notes as of
Platforms, Home Banking, Digital Field Sales and December 31, 2016
Brand Partnership 199 Independent Auditors Report, Consolidated Financial
37 Operations Group Statements and Notes Ended 31 December 2016
37 Information Technology and Support Operations Group
37 Organization Contact Information
38 Service Quality
39 CRM-Customer Relationship Management
 DENZBANK
FINANCIAL SERVICES GROUP
ANNUAL REPORT 2016

DENZBANK ANNUAL REPORT 2016

DenizBank is a member of Sberbank Group.