Investor Presentation BRSA Only Results 1st Half, 2006 August,2006

1 History

„ Established in April 1954 under the special law “Türkiye Vakıflar Bankasi Türk Anonim Ortaklığı Kanunu” to manage cash derived from revenues and expenditures of charitable organisations set up during the Ottoman Empire period, conducting banking activities with branch offices in Ankara, and Izmir „ In 1957, made its first venture towards broadening its sevices by establishing Güneş Insurance Company „ Over the next 20 years continued to expand its geographic presence in reaching 206 branches by 1977 „ Since the early 1990s, Vakifbank has increased the scope of its and diversified its loan portfolio by including equipment financing, enterprise loans, auto loans, mortgage loans, and credit cards. In 2000, Vakifbank began offering internet banking services „ Vakifbank is now a full service commercial and retail bank headquartered in Ankara, providing retail, commercial and services through a network of 306 branches, 116 satellite branches and five mobile branches, covering 81 Turkish cities „ Internationally, Vakifbank has subsidiaries in Austria (which operates a branch in Frankfurt and a branch in Köln) and the Turkish Republic of Northern Cyprus and two branches in and Bahrain.

2 52 years of evolving strategy and product innovation

Upgrade of IT Fitch and Moody’s Expansion of retail savings upgrade credit products—mutual funds or rating Begins to grant housing foreign currency products 05 loans with maturities up 20 to 20 years 04 20

Focus on retail lending 03 20 Initiates overdraft facilities 00 (Bankomat-724) and 20 telephone banking Syndicated loans 98 POS project 19 of US$850m

95 19 Opens 10 Completion of very successful 92 branches 19 Internet IPO banking 84 Fitch and Moody’s upgrade 19 launched credit rating 77 Overhaul and modernisation Fitch 19 of management structure upgrades Company-wide restructuring 56 19 credit rating programme to boost New York branch opens efficiency 54 19 Reaches Begins to issue Visa US$750m diversified payment 206 branches and MasterCard rights securitisation Reaches Established 269 branches in Ankara 3 Following successful IPO in November 2005, c. 25% of Vakifbank of is now listed

Main Shareholders „ General Directorate of Foundations The GDF manages foundations owning 58.45% of the shares Ownership structure in the Bank (43.0% in the form of Class A shares and 15.45% in the form of Class B shares). The GDF was established in 1924 to administer and regulate existing and future Turkish charitable foundations as a state entity directly reporting to the General Prime Minister. Free float Directorate „ Non-Affiliated Foundations 25,18% of Foundations The non-affiliated foundations are independent foundations 58,45% with separate boards of trustees. They currently hold Class B shares, constituting 0.19% of the Bank’s equity. „ Vakifbank Pension Fund Other The Vakifbank Pension Fund has a 16.10% stake in the 0,27% Bank’s capital as a Class C shareholder. The Bank’s employees contribute to the Vakifbank Pension Fund as VakifBank opposed to the mandatory social security coverage provided Employee by the state Social Insurance Institution. Pension fund „ Other Shareholders 16,10% The other shareholders consist of individual or legal entities that together own 0.08% of the Bank’s equity as Class C Shareholders. „ Free Float Public domestic and international shareholders.

4 Vakıfbank: An Overview of 1H2006 results & financial performance trends

Increased share of loans in total assets Total Assets 33,828.3 B/S mix Decreasing securities portfolio Increased funding from retail deposits Gross Loans 17,163.9

B/S Strong asset growth driven primarily by rapid growth loan expansion (retail and SME loans) Securities 10,204.8

Decreasing level of NPLs, stringent credit Total Deposits 22,633.2 Asset review/scoring systems quality 100% NPL coverage Shareholders’ Equity 3,848.5 Capitalis Strong capitalisation levels, allowing for future ation growth Net Interest Income 781.5

Increased share of interest income from loans, Revenue rather than securities Net Profit 423.2 mix Focus on generating fee & commission income Branch Network 308 Profitabil Well managed cost base and efficient network ity Customer Number Over 6 million

5 Financial performance 1st Half 2006

Balance sheet highlights

„ Continued rapid expansion of credit portfolio supported by growth in deposits and funds borrowed. • Gross loan portfolio increased by 75.4% to YTL17.2bn YoY • Customer deposits grew by 17.1% to YTL22.6bn YoY • Significant growth in higher yielding YTL products: YTL loans grew by 66.2%; YTL deposits registered a 8.8% growth YoY • Funds borrowed grew by 90.3% to YTL4.9bn YoY

„ Share of loans in total assets increased to 47.6% compared to 32.5% in 1H2005, while the share of securities portfolio contracted to 30.2% from 35.6% in 1H2005

„ Loan to deposit ratio reached 71.2% in 1st H 2006 compared to 44.0% in 1st H2005

„ Prudent provisioning and improving loan quality: NPLs down to 6.1% of gross loan portfolio in 1st Half 2006 and are fully provisioned

„ During the fluctuation in 2Q06, long in FX position and has no P&L effect. „ 98% of YTL securities are carried under available-for-sale portfolio, profits and losses being booked under equity where the loss was YTL 421 mn.

6 VakifBank is a market leader, particularly in retail and SME finance

Total market share (%) (31.03.2006)

29.0%

17.8% 15.0% 12.3% 9.0% 9.9% 8.1% 8.3% 6.5% 4.9% 4.9% 3.8%

Total Public YTL Mutual Total Loans Retail Credit Commercial ATMs Branches Debit Credit De pos its salary deposits funds** loans*** Card Installment Card # Card # accounts* Loans Deposits / Funding Credits Distribution

Source: Turkish Association reports under BRSA standards as of March 31 2006, Capital Markets Board * VakıfBank estimates ** Data based on CMB as of June 30, 2006 *** Includes home, auto and other. loans, overdrafts, and State Mass Housing Authority (TOKI) loans not included

7 Diversification of asset mix towards interest-earning assets

Breakdown of assets (YTLbn) Interest earning assets (YTLbn)

Cash and central bank Interbank Securities Loans Fixed assets Other Interbank Securities Loans

23.6% 33.8 .5% 4.4% 1.5 23 1.9 2.7% 0.9 28.9 1.0 27.3 27.2 1.4 5.2% 1.0 3.7% g

47.6% n 11.9 16.1 i 23.4 % 32.5% 8.9 11.9 16.1

s: 85.5 8.9 g terest earn n i % 10.5 In asset 9.8 30.2% 10.2 9.8 10.5

s: 83.1 35.6% 10.2

terest earn 4.8 In asset 4.7 17.2% 7.7% 2.6 4.7 4.8 1.5 5.5% 2.3 7.4% 2.5 2.6 1H05 2005 1H06 1H05 2005 1H06

„ Strong growth in assets driven by rapid expansion of loan portfolio

„ Continued diversification away from securities–from 35.9% of total assets in 1H 2005 to 30.2% in 1H 2006

8 Rapid expansion of loan portfolio continued…

Gross loans (YTLmm) Comments

FX YTL „ Loan portfolio registered a CAGR of 45.7% increase .7% R: 45 CAG in 1H2006 from 1Q2005 % 17,164 +33.0

14,549 „ After a slowdown in the first three quarters of 2005 12,904 due to IPO preparations, 10,915 11,638 9,787 67.8% gross loan growth 8,963 resumed with total 10,312 9,651 portfolio increasing by 7,949 33.0% in 1H2006 7,524 6,537 „ YTL loans grew by 54.7%

5,526 while FX-denominated 4,238 32.2% 3,253 2,426 2,533 2,966 loans increased by 118.4% from 1H2005 to Q1 Q2 Q3 Q4 Q1 Q2 1H2006. 2005 2006

9 Rapid expansion of loan portfolio continued…

„ Strong growth on loan to deposit ratio with focus on profitability.

Loan/Deposit (%) Loan/Asset (%)

47.6% 71.2% 36.8% 51.9% 33.3% 45.9% 27.5% 37.1%

2003 2004 2005 1H2006 2003 2004 2005 1H2006

10 …with strong focus on retail and SME lending…

Breakdown of loans by sector Comments

„ Good position in traditionally YE2005 1H2006 strong regions of central and eastern Turkey • Selective expansion in Istanbul region Other Other 10.6% 11.3% „ To strengthen its retail Auto 2.2% Auto 1.6% franchise, VakifBank Overdraft 3.6% Overdraft 2.7% introduced 637 SME portfolio Credit card Credit card 5.8% Commercial 3.9% Commercial managers, 388 retail portfolio 47.9% 49.3% Mortgages managers and 477 marketing 8.4% Mortgages associates within 1H2006 11.6% „ As a result of these initiatives, cross-selling ratio for SME SME portfolio managers is 2.09x SME 19.6% 21.5% and for retail portfolio managers is 2.03x in June 2006

11 …and in particular on high margin products

Retail, SME and COMM. loans (YTLmm) Comments

Commercial SME Mortgages * „ High yields in retail & SME Credit cards Overdraft Auto lending: credit card 36%, Other commercial installment loans 22%, retail loans 18% 16.112 „ For the 1st half 2006; average % 1,819 81.0 256 yield on YTL loans is 19.78%, 439 638 average yield on FX loans is 11.905 1,870 7.21% where average cost on 1,274 YTL deposits is 13.33% and 262 8.900 429 average cost on FX deposits 694 3,149 994 3.55% 1,043 333 408 „ Loans grew by 35.3 in 1H2006 678 2,554 627 comparing to the end of 2005. driven by commercial loans 1,966 7,938 growth of 39.3%, SME loans 5,698 growth of 23.3% and housing 3,845 loans growth of 88.1%.

1H05 2005 1H06

*:Includes Housing Loans+TOKI. (YTLmm) 1H2005: 485 Housing Loans+142 TOKI 2005:860 Housing Loans+134 TOKI 1H2006: 1.741 Housing Loans+129 TOKI 12 Steady and significant improvement in asset quality

Gross NPLs as % of gross loans Comments

„ Despite rapid expansion -3.0 p.p. of the loan portfolio, NPLs continued to decrease 9.1% 7.7% 6.1% reaching 6.1% of total gross loan portfolio in 1H2006 compared to 9.1%

1H05 2005 1H06 in 1H2005 „ Since 2003, loan loss provisions cover 100% of Gross NPLs and provisions (YTLmm) NPLs

998,927 998,927 1,051,767 1,051,767 885,762 885,762

1H05 2005 1H06

Gross NPLs Provisions

13 Securities portfolio evolution

Securities 1H 2006 (YTLmm) Comments

Trading securities portfolio Portfolio available for sale Securities held to maturity „ The securities portfolio 10,515 10,205 9,757 increased by 5% in YoY 361 3.4% 0.5 % 577 5.9% 47 but its share in total assets continued to 80.6% 93.2% 7,867 9,275 9,507 88.2% decline—from 35.6% in 1H05 to 30.2% in 1H06

1,313 13.5% 879 8,4 % 6,3% 650 „ Portfolio of securities 1H05 2005 1H06 available for sale stood at Security portfolio breakdown by interest 1H 2006 93.2% of total securities portfolio in 1H06 YTL FX compared to 80.6% in 1H05

„ For the 1st half 2006; Variable ; 38.6% Fix e d; average yield on YTL 44.9% Variable security portfolio is 16.3% Fix e d; ; 55.1% and average yield on FX 61.4% security portfolio is 7.7%

14 Strong deposit growth is supporting the expansion of credit portfolio

Breakdown of liabilities (YTLbn) Comments

Customer deposits Funds „ Total liabilities grew by 19.5% in 1H2006 comparing Interbank Provisions to 1H2005, driven by continued expansion of Other 30.0 19.5% deposit base and increase in external funding 28.1 1.0 3.3% 0.4 1.0 1.4% 0.8 2.8% 3.3% „ Customer deposits posted a 16.6% growth in 0.6 0.7 2.1% 25.1 2.5% 1H2006 and accounted for 75.0% of total liabilities 5.1 17.0% 0.9 3.6% 3.7 0.5 2.0% 13.2% 1.6 6.4% 2.8 11.2% Loans and customer deposits (YTLbn)

Customer deposits Loans Loans/Deposits

46.1% 53.3% 71.6% 75.0% 22.3 79.4% 22.5 19.3 76.8%

22.3 22.5 19.3 16.1 11.9 8.9

1H05 2005 1H06 1H05 2005 1H06

Note: Customer deposits exclude interbank deposits Total liabilities excluding equity 15 Deposit base composition and evolution

Customer deposit breakdown by type and currency Comments

1H2005 1Q2006 „ Ensured strong profitability by maintaining liquidity levels and FX-term YTL-demand FX-term YTL-demand controlling interest expenses 24.1% 14.2% 22.8% 12.8% through slightly increasing of

FX-demand customer deposits. YTL-term YTL-term 8.5% FX-demand 56.7% 56.0% „ Despite the FX rate increase in 5.0% 2Q06, YTL deposit base is Total: YTL19.3bn Total: YTL22.6bn almost flat.

Deposit composition by type 1H2005 2005 1H2006 (YTLmm) Amount % Amount % Amount % Saving deposits¹ 2,745 14.2% 3,664 16.4% 4,447 19.7% Demand 456 2.4% 548 2.4% 725 3.2% Term 2,289 11.9% 3,116 14.0% 3,722 16.5% Public and Commercial² 10,921 56.6% 12,262 54.9% 11,070 49.0% Demand 2,279 11.8% 2,282 10.2% 2,160 9.6% Term 8,642 44.8% 9,980 44.7% 8,910 39.5% Foreign currency 5,627 29.2% 6,398 28.7% 7,067 31.3% Demand 968 5.0% 778 3.5% 1,922 8.5% Term 4,659 24.1% 5,620 25.2% 5,145 22.8%

Total³ 19,293 100.0% 22,324 100.0% 22,584 100.0% ¹ Represents deposits taken from retail customers ² Represents deposits taken from government related corporates, SMEs and other entities which are not individuals ³ Totals do not include Interbank deposits

16 State deposits remained almost unchanged

State deposits (YTLmm) Comments

State Deposits Share of state deposits „ 32.2% VakifBank did not 31.8% experience a significant withdrawal of state 7,307 7,284 27.6% deposits after IPO

„ Much less pressure felt 20.7% after two largest deposit departures in Q3 2005 and 4,853 Q1 2006

2,992

2003 2004 2005 1H06

17 Strengthened capitalisation to support rapid growth

Capital position Comments

(YTLmm) 1H2005 2005YE 1H2006 „ The bank successfully Paid in share capital 1,000.0 1,279.0 1,279.0 raised YTL1,45mm Adjustment to paid-in capital 605.8 605.8 605.8 through an IPO in Share premium 0 1,172.3 1,172.1 November 2005 Reserves 326.9 326.9 421.8 Profit 208.4 535.2 423.2 „ Subordinated debt of Prioryearincome/loss 0 0 0 YTL213mm was paid

Total core capital 2,141.1 3,919.2 3,901.9 back to SDIF Supplementary capital 569.9 540.2 167.9 „ In General Assembly, Total capital 2,711.0 4,459.4 4,069.8 the bank has decided Deductions (260.4) (403.0) (381.4) to pay YTL 399.4mm to Total shareholders’ equity 2,450.6 4,056.4 3,688.4 the shareholders and YTL 100.5mm was RWA 11,823.9 14,498.5 18,224.5 paid to D Group Market risk 1,509.1 1,474.9 1,557.6 shareholders (free float) in 2Q06.

Capital adequacy ratios 18.4% 25.4% 18.6% „ Despite the turmoil in 2Q06, Vakifbank’s CAR is still one of the highest in Turkish Banking Sector. 18 Net banking income posted healthy growth in 1H2006

„ Net banking income grew by a CAGR of 9.7% over the last 1 year, with a growth rate of 10.1% in (YTLmm) 2004 2005 1H05 1H06 1H2006 comparing to 1H2005 Net interest income 1,185 1,318 693 782 „ Continuous diversification from securities to more client-driven business Net F&C income 250 294 145 155 Net trading income 117 176 82 (12) Net banking income composition (YTLmm) Dividend income 4 3 3 6

9.7% CAGR: Other operating income 246 129 81 177 Total operating income 1,801 1,919 1,004 1,108 1,102 1,001 Total operating 722 732 361 402 177 expenses (-) 81

82 155 Operating profit 1,079 1,188 643 706 145 Provisions (-) 344 434 329 136 Tax provisions (-) 143 226 109 157 Income from investments 48739 782 693 and associates

Net monetary gain/loss (16) 0 0 0 Net income 624 535 208 423 -12

1H05 1H06

Net interest income Net F&C income Net trading income Other

19 Net fee and commission income continues to grow

Non-interest income composition (YTLmm) Net F&C income % of operating income

308 599 320 26.3% 21.5% 48.0%

48.4% 49.1% 14. 4% 15. 3% 14. 0%

48.4% 26.6% 29.4% -3.6% 1H 05 2005 1H 06 1H05 2005 1H06 Trading Incom e Ne t F&C Other „ Net F&C income up by 7.3% driven by increase in cash loans „ Trading income is -12 mm YTL due to foreign exchange losses • Trading account securities gains : 44 mm YTL • Foreign exchange losses : -56 mm YTL „ Other income is increased by FX Denominated Loans and Securities FX rate increase gains. • FX Denominated Loans : 49 mm YTL • FX Denominated Securities : 40 mm YTL 20 Increasing interest income from loan activities

„ Net interest income up by 12.8% comparing Net interest income(YTLmm) to 1H2005, despite declining margins • From 1st quarter 2006 net interest 385 397 income grew by 3.2% in 2nd quarter 352 341 2006 309 315 • increasing income from lending activity „ Further move toward higher margin loans in YTL

1Q2005 2Q2005 3Q2005 4Q2005 1Q2006 2Q2006

Interest income (YTLmm) Yield on loans and deposits (%)

27.0% 1,734 3,591 2,082 9.2% 11. 1% 12.8% 19.8%

13.8% 13.3% 52. 6% 52. 3% 54.7% 6.2% 7.2% 2.9% 3.6%

38. 2% 36. 6% 32.5% 1H05 1H06

1H05 2005 1H06 YTL LOANS FX LOANS YTL DEPOSITS FX DEPOSIT Securities Loans Money Market&Banks 21 Operating expenses under control

„ Virtually no growth in costs, despite going through restructuring at branch and headquarter level.

Other expenses composition (YTLmm) Operating expenses/average assets (%)

361 732 402

48.1% 47.5% 49.1%

8.1% 8.3% 7.8% 2.8% 2.6% 2.4%

43.6% 44.3% 43.1%

1H05 2005 1H06 Personnel Expenses Amortisation Other Expenses 1H05 2005 1H06

22 Expansion on NIM and ROE, decrease on C/I

NIM (%) „ Despite margin pressure NIM is almost flat compared to 1Q06 in 2Q06 7.10 6. 36 „ Further growth in loans/assets expected to provide more support to Vakifbank’s NIM 5. 27 5. 51 5. 52 4.97 „ Maintained ROE above stated target of 20%

1Q 2005 2Q 2005 3Q 2005 4Q200 5 1Q2006 2Q 2006

ROE (%) Cost/Income (%)

33 .2 42. 7 38. 6 37. 8 38 .1 25 .6 33. 3 33 .6 22. 1 20. 9

15. 5

4. 2

1Q 20 05 2Q 200 5 3Q 200 5 4Q 2005 1Q 2006 2Q 2006 1Q 2005 2Q 2005 3Q 2005 4Q 2005 1Q20 06 2Q 200 6 23 Performance in line with peer group in 1H2006

NIM (%) Cost/Income (%)

5.57 43. 06 5.46 5.36 5.20 35. 95 34 .33 35 .00

Isba nk Akba nk Garanti Vakifba nk Isbank Akbank Garanti Vakifbank

Loans/Number of Branches (mmYTL) Net Profit/Number of Branches (thousandYTL)

54.9 52.3 1,371 1,374

41.2 1,108

31.8 846

Isbank Akbank Garanti Vakifbank 24 Isbank Akbank Garanti Vakifbank Balance Sheet Details for 1H2006: Assets

(Thousand YTL) 2005 1H2006 Growth %

Cash&Balances with Central Bank 1,655,463 1,672,178 1.0

Banks&Other FI 2,125,899 1,843,164 (13.3)

Money Market Securities 2,649,000 747,000 (71.8)

Trading Securities 879,405 650,264 (26.1)

Available for Sale Portfolio 9,275,282 9,507,210 2.5

Held to Maturity Securities 360,767 47,374 (86.9)

Loans (net) 11,905,056 16,112,127 35.3

Subsidiaries&Associates 560,606 573,824 2.4

Premises&Equipment 1,006,918 874,986 (13.1)

Other Assets 1,964,404 1,800,158 (8.4)

Total Assets 32,382,800 33,828,285 4.5

25 Balance Sheet Details for 1H2006: Liabilities

(Thousand YTL) 2005 1H2006 Growth %

Deposits 22,945,691 22,633,191 (1.4)

Interbank Money Market 108,046 965,606 793.7

Funds Borrowed 3,512,824 4,940,434 40.6

Funds 151,597 146,642 (3.3)

Taxes and Dues Payable 44,739 58,051 29.8

Provisions 584,636 398,148 (31.9)

Shareholder’s Equity 4,261,408 3,848,498 (9.7)

Other Liability 773,859 837,715 8.3

Total Liability 32,382,800 33,828,285 4.5

26 P&L for 1st H 2006

(Million YTL) 1H2005 1H2006 Growth %

Net Interest Income 693,092 781,520 12.8

Net F&C Income 144,907 155,496 7.3

Net Trading Income 82,247 (12,239) (114.9)

Other Operating Income 80,553 177,388 120.2

Total Operating Income 1,004,171 1,108,541 10.4

Total Operating Expenses (360,968) (401,863) 11.3

Provisions (328,961) (136,252) (58.6)

Tax Provisions (108,278) (156,569) 44.6

Net Profit 208,376 423,241 103.1

27 Subsidiaries and affiliates

Türkiye Vakıflar Bankasi T.A.O

Financial Subsidiaries Non-Financial Subsidiaries

VakıfYatırım Menkul Degerler A.Ş 99% Vakıf Sistem Paz.Yaz.Ser.Tic San A.Ş 73%

Vakifbank International A.G 90% Vakıf Enerji ve Madencilik A.Ş 66% World Vakıf Off Shore Banking Ltd. 82% Taksim Otelcilik A.Ş 51% Vakıf Finans Factoring Hizmetleri A.Ş 78% Ataköy MağazacılıkTicaretA.Ş. 46% Vakıf Deniz Finansal Kiralama A.Ş 69% İşkur İşçi İşadamı Kimya Kur. A.Ş. 25% Vakıf Finansal Kiralama A.Ş 59% Vakıf Gayrimenkul Ekspertiz ve Deg. A.Ş 20% Vakıf Emeklilik A.Ş 54% Orta Dogu YatırımHizmetleriA.Ş 9% Vakıf Girisim Sermayesi YatırımOrtaklığı A.Ş 46%

Gunes Sigorta A.Ş 35%

Vakıf Gayrimenkul YatırımOrtaklığı A.Ş 28%

KıbrısVakıflar Bankası Ltd. 15%

Vakıf Menkul Kıymetler YatırımOrtaklığı A.Ş 12%

28 THANK YOU [email protected] +90-212-3167120 +90-212-3167121

29