Annual Report 2019

1 Kredi Kayıt Bürosu stands for confidence in financial life!

At KKB, we provide the finance sector, real sector, and individuals with value-added services, and lead the way for a secure future with over 70 innovative products.

Boasting extensive expertise and know- how, KKB minimizes uncertainties in trade and transforms data into a secure future.

2 1 CONTENTS

WHO WE ARE BUSINESS UNITS ACTIVITIES 16 About KKB 46 Information Technologies and 76 Our Holistic Products and 18 Awards and Achievements R&D Department Services 19 Shareholding Structure 54 Marketing and Business 78 KKB’s Products and Services 20 Vision, Mission and Strategies Development Department 92 Our Products and Services 22 Milestones 60 Human Resources Department Provided on behalf of TBB Risk 24 Operational Indicators 62 Risk Management Department Center 26 Corporate Values 64 Financial Reporting and 102 Findeks Financial Affairs Department 108 KKB Anadolu Data Center 66 Risk Center Coordination MANAGEMENT Department 30 Letter from the Chairman OUR SOCIAL CONTRIBUTION 68 Regulatory Compliance, Legal 32 Letter from the General 112 You Imagine, We Realize and Operations Department Manager 113 The Audio Question Bank 70 Communication Center 34 Board of Directors 114 KKB Volunteering Platform Department 38 Senior Management 71 Internal Audit Department 40 Members 72 Internal Control Department FINANCIAL INFORMATION 42 Organizational Chart Agenda of the Ordinary 73 Committees 118 General Assembly 119 Financial Statements for the Year Ended 31 December 2019 Together with Independent Auditor’s Report WE PROVIDED 181* MEMBERS WITH VALUE-ADDED PRODUCTS AND SERVICES

As of the end of 2019, 181 members consisting of 53 banks, 56 factorings, 23 leasings, 9 insurance, 15 consumer finance and 21 asset management companies as well as four other companies utilized our advanced product and service portfolio.

*As of 31 December 2019, the number of KKB members is 165 and this figure identifies the members who are served through the Risk Center. UP TO 2 BILLION TRANSACTIONS The total number of transactions under the entire KKB and Risk Center products and services have reached 2 billion. 46 MILLION CHEQUE REPORTS PRODUCED 46 million Cheque Reports contributed to the risk management activities of the finance sector and the real sector. 30 BANKS INTEGRATED WITH THE ELECTRONIC LETTER OF GUARANTEE PLATFORM 30 banks were integrated with the E-Letter of Guarantee Platform, an unprecedented practice in the world, which helps issue electronic letters of guarantee practically and securely. 123 THOUSAND DIGITAL TRAINING COURSES TO BOOST FINANCIAL LITERACY We established the Findeks Academy digital platform to increase financial literacy and facilitate access to financial tools in Turkey. 122,500 training courses were delivered on Findeks Academy, findeks.com and online video platforms for individuals and the real sector. Who We Are 01. ABOUT KKB

KKB makes financial and commercial life easier by serving the finance and real sectors with effective risk management solutions for over 24 years.

Kredi Kayıt Bürosu (KKB) was found- data of customers of credit institu- systems launched in January 2013. Accounting Period of the Report ed on April 11, 1995, as a partnership tions and any financial institutions Offering significant tools for individ- 01.01.2019-31.12.2019 between nine leading banks. One of deemed appropriate by the Banking uals and organizations to manage the deep-rooted institutions in the fi- Regulation and Supervision Agen- their financial reputation, KKB intro- Trade Name nance sector, KKB has a total of 165 cy and to share such data with the duced Findeks, a financial services KKB Kredi Kayıt Bürosu A.Ş. members, including 46 banks, 15 referenced institutions and with the platform aimed at individual custom- consumer finance, 56 factoring, 22 customers themselves, or with any ers and the real sector in 2014. Ulti- Trade Registration Number leasing, 5 insurance, 17 asset man- private legal entities and third natural 76 mately, through the QR Code Cheque 329148-276730 agement companies, 1 resource or- persons if consent has been given by System – launched by KKB in 2015, ganization and 3 other companies as the customers. Upon transfer of the Products became mandatory by law in 2016, MERSİS Number of December 31, 2019. As required by Risk Centralization Center within the and entered into force as of January 0564-0004-2270-0011 Banking Law No: 5411 (Article 73/4), organization of the Central Bank of and 1, 2017 – an important step was tak- KKB was established by at least five Turkey (CBRT), the Risk Center of the en for a more transparent and secure Address banks to facilitate the exchange of in- Banks Association of Turkey (here- Services commercial life. KKB Anadolu Data Barbaros Mah. Ardıç Sok. Varyap Meridian F Blok Ataşehir-İstanbul formation and documents between inafter “BAT”) started its operations Center, which started operations in financial institutions. Under the same on 28 June 2013. KKB conducted all December 2016, provides data center, Anadolu Kurumlar Tax Office/Tax Number article, corporate members have operational and technical activities emergency center and cloud services 564 000 4227 been sharing customers’ credit infor- through its organization as an agen- as well as structured central products mation since April 1999. cy of the Risk Center of TBB and is tailored for institutions and technol- Phone Number providing data collection and sharing ogy infrastructure services, especially +90 216 579 29 29 With the Law No. 6111 issued on Feb- services to 181 financial institutions the banking and finance sector. As of ruary 25, 2011, Additional Article 1 and which are members of the Risk Cen- the end of 2019, KKB offers 76 prod- Fax Number Provisional Article 28 were added to ter (“RC”). ucts and services for members. KKB +90 216 455 45 36 the Banking Law No. 5411. Pursuant has 482 employees as of year-end to Additional Article 1, a Risk Center KKB offers its services not only to fi- 2019. Website has been established within the or- nancial institutions but also to indi- www.kkb.com.tr ganization of the Banks Association viduals and the real sector through of Turkey (TBB) to collect the risk “Cheque Report” and “Risk Report” Call Center 444 99 64 – [email protected]

16 17 02. AWARDS AND ACHIEVEMENTS 03. SHAREHOLDING STRUCTURE

KKB won the Golden Sardis Award with its project Kredi Kayıt Bürosu (KKB) was QR Code Cheque System in the “Product and founded on April 11, 1995, as a Service Innovation” category at the Sardis Awards. partnership between nine leading banks.

AKBANK T.A.Ş. In 2014, In 2019, YAPI VE KREDI 9.09% » GeoMIS, the map-based reporting » The QR Code Cheque System Proj- BANKASI A.Ş. service, was presented with the ect was deemed worthy of the 18.18% “Oracle 2014 Innovator Excellence” Golden Sardis Award in the “Prod- TÜRKIYE award. uct and Service Innovation” cate- GARANTI gory at the Sardis Awards. BANKASI A.Ş. In 2018, » The Electronic Letter of Guarantee 9.09% » Kredi Kayıt Bürosu Information Se- Project won the Silver Award in the curity team was presented with the “Product and Service Innovation “Security Team of the Year” award Category” at the Sardis Awards. in Europe, the Middle East and Af- » The Audio Question Bank won rica by the global cyber security the Innovation Award at the TİSK company FireEye. Corporate Social Responsibility » At the “Best Financial Technology Awards organized by the Turkish Projects of the Year” Awards, or- Confederation of Employers’ Asso- ganized as part of the IDC Turkey ciations (TİSK). Finance Summit, KKB’s Electronic » With the same project, KKB won the TÜRKIYE TÜRKIYE HALK Letter of Guarantee project was Grand Prize as one of the organi- İŞ BANKASI A.Ş. BANKASI A.Ş. awarded the first prize in the “Cor- zations adding value to sustainable 9.09% 18.18% porate Banking” category. development goals at the Corpo- » As part of the IDC Turkey Finance rate Social Responsibility Summit. Summit, KKB won second prize » The Audio Question Bank also won with its project “Digital Transfor- the Gold Award in the Social Re- mation of Software Quality” in sponsibility Project Communica- the “Data Infrastructure” category tions category at the Istanbul Mar- at the “Best Financial Technology keting Awards. Projects of the Year” Awards. ŞEKERBANK T.A.Ş. » KKB’s Audio Question Bank project 9.09% received the “Most Successful Vol- T.C. ZIRAAT unteering Project” award from the BANKASI A.Ş. DENIZBANK A.Ş. Private Sector Volunteers Associa- 9.09% T. VAKIFLAR 9.09% tion. BANKASI » The Audio Question Bank proj- T.A.O. ect also won awards at the Felis 9.09% Awards, organized by MediaCat, in the categories of “Education” and “Voluntary Work for Disabled Per- sons” under the main heading of “Social Responsibility and Sustain- ability.”

18 19 04. VISION, MISSION AND STRATEGIES

Vision Strategies

To become an exemplary, leading credit » To ensure the enrichment of the existing database bureau in the world and a growing va- by better managing customer risk with value-added products and services, which we provide to the Risk lue for Turkey, by exceeding expectations Center (RC) of the Banks Association of Turkey (TBB) with innovative products and services. at the highest security standards and service level, » To develop analytical models based on data richness with the big data concept and to meet the effective risk management needs of a diverse range of industries, » To increase the awareness of receivable risk management and financial literacy by developing products and services for the real sector and individuals, » To contribute to domestic R&D activities that support service diversity offered through cloud computing and AI technologies, » To cooperate with companies that produce technology and to raise awareness by reducing the real sector’s costs of accessing information technologies, » To provide a comprehensive report and macro-economic indicator services on the economic/financial Mission outlook and status on behalf of the member organi- Our vision is to become zations of the KKB and the RC, an exemplary, leading credit To offer the information and technology » To provide operational efficiency and cost advantages by centralizing transactions realized by different insti- that meets the financial needs of the fi- tutions, bureau in the world and a growing nancial industry and the real sector, in the » To effectively analyze the needs that may arise in different industries and provide appropriate solutions, value for Turkey. best way, to increase the operational effi- » To benefit the society and the environment with cor- ciency of the institutions it serves. porate social responsibility projects, and raise the society’s awareness on this subject, » To be an institution committed to delivering a high level of employee satisfaction, prioritizing employee development and synergy between employees, maintaining a strong corporate structure and uphold- ing the principle of equality.

20 21 2014 » Cheque Analysis Portal was » Information contained in the Infor- 05. MILESTONES » The Findeks brand was introduced launched. mation System of the Tradesmen and www.findeks.com launched. » Limit Control System (LCS) Cus- and Craftsmen (ESBIS) started to be Findeks was introduced to the tomer Objection Assessment Sys- shared with KKB members via MER- press. A 360-degree communica- tem (COAS) application was put SIS. tions campaign was initiated. into service. » Data richness was ensured by intro- Findeks Mobile App was revamped and » The first corporate social responsi- » KKB Unknown Number service was ducing leasing and factoring com- bility project, “You Imagine, We Real- launched. pany notifications into the Corporate ize,” organized by KKB for all univer- » Collection Scores were introduced. Bureau System. the Findeks product portfolio was expanded sity students in Turkey, started. The » Inclination Scores were rolled out. www.hayaledingerceklestirelim.com » Commercial Credit Rating (CCR) 2019 upon the introduction of the QR Code Cheque website went live. Version 2 was put into service. » The renewed Findeks Mobile App » Cheque Status Inquiry was » The total number of annual trans- was made available for users. launched. actions exceeded 1 billion. » The QR Code Cheque Score was in- Scores in 2019. » The Household Database and » The social responsibility project troduced. Trade Registry Sharing System ideas competition “You Imagine, » BRSA Product and Service Fees Portal (TRSS) was launched. We Realize” was held for the third went live. » The Loans Analysis Portal went live. time. » “Retrospective CRS Inquiry” and » The Address Processing System “Provision of Risk Center Report via 1995 2005 » In parallel with the modified vi- was launched. 2017 E-Government Gateway” were in- » KKB was established on April 11. » The Commercial Bureau System was sion and needs, the organization- » Letter of Guarantee Status Inquiry » QR Code Cheque implementation troduced on behalf of the TBB Risk put into use for members in June. al structure was revamped, and (LGSI) was launched. became compulsory as of January Center. 1999 new corporate identity works were 1, 2017. » Efforts to establish an R&D Center » The Credit Reference System (CRS) 2006 completed. 2015 » KKB’s Emergency Center moved were initiated. launched in April. » MIDES, Information Verification and » Concrete steps were taken to » The Findeks QR Code Cheque Sys- to the KKB Anadolu Data Center, » At the Sardis Awards, the QR Code » With an amendment to the Banking the Emergency Update System were launch the infrastructure of the Risk tem launched in collaboration with which was completed in Ankara. Cheque System Project won the Law on December 17, 1999, in addi- converted into an online, interactive Center. Risk and Cheque Reports the Banks Association of Turkey. » The “Audio Question Bank” was Golden Sardis, and the Electronic tion to companies such as banks, information exchange platform. were introduced and the E-Report- » The National Fraud Detection and launched by KKB employees to Letter of Guarantee Project won the insurance providers and consumer » The Limit Control System (LCS) was ing System, enabling electronic re- Prevention Service was launched. provide equal opportunity for visu- Silver Sardis. finance companies, other corporate launched pursuant to Article 9 of the port requests and delivery, became » The Factoring Invoice Pool of the ally impaired students. » The Audio Question Bank Project enterprises deemed appropriate by Debit Cards and Credit Cards Law. operational. Association of Financial Institutions » Force Majeure Inquiry and BKM won the Innovation Award at the the Banking Regulation and Super- (FKB) was created. Member Merchant Turnover In- TİSK Corporate Social Responsibili- vision Agency (BRSA) are allowed 2007 2013 » The foundation was laid for the formation Inquiry services were ty Awards. The project also won the to become members of KKB. » The Internet Frauds Alarm System » E-Reporting System was launched. Data Center, which will be built in launched. Gold Award in the Social Responsibil- (IFAS) launched in February. » Commercial Credit Rating (CCR) Ankara. » Individual Inquiry Reports were put ity Projects Communication category 2000 was launched. » The Cross Cheque Relations Inquiry into service. at the Istanbul Marketing Awards, and » The Customer Objections Handling 2008 » Credit Rating and Cheque Index Application was launched. » Loan Utilization Instant Sharing the Grand Prize as a company adding System (MIDES) launched in April » With the addition of the data from started to be provided together » IBAN Verification Service was Service (KAPS) was introduced. value to sustainable development and SABAS went into operation in Mortgaged Real Estate, Persons with the Cheque and Risk Reports. launched. goals. September. Banned from Participation in Ten- » E-Newsletter started to be sent to » The KRS daily sharing system went 2018 » In November, MIDES migrated to ders, and Bounced Cheques to the KKB members regularly. into service. » The Findeks QR Code Cheque Reg- an electronic platform, making it Corporate Bureau System (CBS), the » GeoMIS, the map-based report- » The Real Sector Credit Assessment istration System was introduced on possible to reply to a customer’s database was enriched. ing service, was made available to System, designed in collaboration January 1, 2018. objection within two hours maxi- » The technical infrastructure of SA- CRS-member institutions. with the Auto Leasing and Rental » The Electronic Letter of Guaran- mum. BAS was improved and integrated » TARDES and GeoMIS websites Companies Association (TOKKDER) tee project was launched. The first with the KKB system. went live. for the vehicle rental and leasing electronic letter of guarantee was 2001 » KRM data quality score rose from sector, was launched. issued on October 4, 2018. » Credit Account Records as well 2009 80% to 90% with the support of » The second edition of the social » The Foreign Currency Credit and as Credit Application Records » The Bounced Cheque Query Sys- member institutions. responsibility project ideas com- Income Inquiry System, which en- launched in June. tem launched for inquiry of bounced » Personal Credit Rating (PCR) was petition, “You Imagine, We Realize,” ables the instantaneous monitor- cheque data, which are shared with opened for use with an upgraded was organized. ing of foreign currency income and 2002 the members on a daily basis. fourth version. risks of companies, was introduced. » The Information Verification Sys- » Following the agreement executed 2016 » Unpaid invoice information in the tem (IVS) went into operation. 2012 between the Banks Association of » QR Code Cheque was enacted on telecommunication sector was ob- » Undergoing a period of rapid trans- Turkey (TBB) and KKB, works on the August 9, 2016, with the announce- tained and shared with the financial 2004 formation, KKB set out to create a Risk Center commenced. The entire ment in the Official Gazette num- sector. In the World Bank’s Doing » Individual Credit Score (ICS) was system for the real sector, similar to infrastructure and operation relat- bered 29796. Business Report, KKB received a introduced. the closed-circuit system between ed works were undertaken by KKB. » The construction and infrastructure comprehensive rating in terms of banks. » The website www.kkb.com.tr was of the Anadolu Data Center located the scope and effectiveness of the renewed. in Ankara were completed. credit bureau.

22 23 Individual Bureau Inquiries LCS Inquiries 06. OPERATIONAL INDICATORS (Million Units) (Million Units)

2015 432 2015 136 Boasting innovative products and services 2016 421 2016 140 for the finance sector with an innovative 2017 445 2017 173 2018 488 2018 197 approach, KKB attained successful operational 2019 553 2019 216 results in 2019.

Corporate Bureau Inquiries Produced Cheque Reports (Million Units) (Million Units)

2015 24 2015 21 2016 18 2016 30 2017 30 2017 45 Key Operational Indicators 2015 2016 2017 2018 2019 2018 40 2018 47 Individual Bureau Inquiries (Million Units) 432 421 445 488 553 2019 54 2019 46 Corporate Bureau Inquiries (Million Units) 24 18 30 40 54

Retail Credit Ratings (Million Units) 366 365 375 408 466

Monthly Inquiry Records (Million Units) 52 45 46 48 56 Retail Credit Ratings Produced Risk Reports (Million Units) (Million Units) Objections on MIDES (Thousand Units) 303 267 288 205 219

LCS Inquiries (Million Units) 136 140 173 197 216 2015 366 2015 11 Produced Cheque Reports (Million Units) 21 30 45 47 46 2016 365 2016 13

Produced Risk Reports (Million Units) 11 13 15 17 15 2017 375 2017 15

2018 408 2018 17 2019 466 2019 15

KKB Member Profile

53 15 56 23 9 4 21 * Banks Consumer Factoring Leasing Insurance Other Asset 181 Total Finance Management Members Companies

*As of 31 December 2019, the number of KKB members is 165 and this figure identifies the members who are served through the Risk Center.

24 25 07. CORPORATE VALUES

The corporate values of KKB are predicated on teamwork, responsibility, reputation, and continuous development.

Teamwork Responsibility

Our greatest asset is human re- We are responsible for providing our sources with their open communi- members and customers with accurate cation, team spirit, shared goals, and information, making economic and social devoted efforts. contributions to our country, being fair to our employees, and focusing on employee satisfaction.

Reputation Continuous Development

We owe our reputation to our We are committed to the continu- solid position in Turkey’s econo- ous development of our employ- my, our trustworthiness, and our ees, products, service quality and information security practices. technology infrastructure.

26 27 Management 08. LETTER FROM THE CHAIRMAN

In 2019, KKB continued to provide all industries - banking and finance in particular - with products and services that ensure effective management of financial risks.

Dear Stakeholders, We are aware of our responsibilities in this period, and thus will continue to Economic policies and plans imple- support the growing Turkish economy. mented in Turkey served as a buffer against market and exchange rate Committed to producing and fluctuations, helping us attain a cer- contributing to our stakeholders at tain balance in the economy. With full speed the economy picking up on growth in In 2019, KKB continued to provide all Q3 after shrinkage in the first half of industries - banking and finance in par- the year, the steps taken to minimize ticular - with products and services that economic fluctuations proved quite ensure effective management of finan- effective. cial risks. In 2020, we will continue to work on our innovative products and This positive outlook owes a lot to services, coming up with value-added the policies adopted, and the road- solutions for our stakeholders, making map and strategies developed by investments, and creating added value. the finance sector. We think that this positive climate will prevail and the I would like to congratulate all our upward trend in growth will continue employees - who have adapted to the in 2020. changing dynamics of the period and kept up with the requirements of our age We stand by the banking and real - for their achievements and express my sector gratitude for the esteemed members of Throughout 2019, we witnessed the the Board for their cooperation. I wish impact of economic fluctuations in an even more successful in 2020 for our Turkey and around the world. How- country and KKB. ever, we are coming back even stron- ger, propelled by the economic plans Yours respectfully, introduced, the financially solid structure of the banking system, the economic administration’s experience in market fluctuations, and the strength of the Turkish real sector. Veysel Sunman Chairman of the Board

30 31 09. LETTER FROM THE GENERAL MANAGER 10. BOARD OF DIRECTORS

Veysel Sunman in 1996, Mr. Çokçetin joined VakıfBank Internal Control Department, Risk Fol- In 2019, we maintained our innovative approach Chairman of the Board of Directors as Financial Analyst and went on to low-up and Liquidation Department, and Audit Committee Member assume the roles of Branch Manager Retail Credits Department, Commer- and continued to provide all industries with the T.C. Ziraat Bankası A.Ş. and Unit Manager. He has been serv- cial Branch Directorate, and Credit Head, Credit Risk Monitoring Depart- ing the same Bank as Assessment and Processes and Company Analysis De- ment Rating Director since 2013. He also partment, respectively. Since Decem- products and services tailored to address the Veysel Sunman was born in Sakarya served Vakıf Faktoring A.Ş. as Board ber 2017, he has served as the Head in 1967 and graduated from Marma- Member between 2013 and 2019. of the Credit Risk Monitoring De- requirements of our era. ra University, College of Press and partment. Also serving Halk Leasing Media, Department of Journalism Ahmet Hakan Eken Finansal Kiralama A.Ş., Halk Portföy and Public Relations. He worked as a Member of the Board of Directors Yönetimi A.Ş., Halk Sigorta A.Ş., and Specialist in the Credit Risk Monitor- and Audit Committee Member Halk Faktoring A.Ş., Mr. Ataş is a Board ing Department at Pamukbank T.A.Ş. ŞEKERBANK T.A.Ş. Member at Kredi Kayıt Bürosu. from 1988 to 1994. Mr. Sunman went Assistant General Manager; Loans Dear Stakeholders, letters of the guarantee being issued in the “Product and Service Innova- We will work to sustain secure on to work as Director-Manager of A. Hakan Eken graduated from the Demir Karaaslan in the electronic environment, practi- tion” category. In addition to the Gold- trade activities with innovative the Credit Monitoring Department at Business Administration Department Member of the Board of Directors At Kredi Kayıt Bürosu (KKB), we con- cally and securely. en Award presented to the “QR Code products Osmanlı Bankası A.Ş. between 1994 of Marmara University. He began his and Audit Committee Member cluded yet another productive and Cheque System,” we have received the We will continue to introduce inno- and 2001. Subsequently, he served as career in 1986 as Inspector at Yapı Yapı ve Kredi Bankası A.Ş. successful year, marked by our inten- Findeks reached over 3 million Silver Sardis Award with our “Electronic vative products and services in the the Head of the Credit Risk Monitor- Kredi Bankası. At Yapı Kredi Bankası, he Retail Credits, Assistant General sive efforts and great progress. In the customers in its 5th year Letter of Guarantee” project. coming period, and thus contribute ing Department at T. Halk Bankası A.Ş. held senior managerial roles includ- Manager aftermath of a period of rapid change We have concluded the 5th year of to the growth of Turkey’s economy from 2002 until 2005 and as the Head ing Vice Chairman of the Inspection Demir Karaaslan graduated from and transformation, we anticipate an Findeks, which we launched in 2014 The Audio Question Bank Project and the dissemination of secure of the Internal Control and Monitor- Board, Chairman of the Inspection Marmara University, Department of uptick in Turkey’s economy, which will to provide various financial follow-up implemented by KKB Volunteers trade activities in the real sector. ing Center at MNG Bank from 2005 Board at Yapı Kredi Moscow, Head of Business Administration in 1999. He fare in a more balanced manner. and risk management tools to ad- captured the limelight in Turkey to 2007. Sunman has been serving as the Credit-Risk Management Depart- began his professional career as an dress the needs of individuals and Designed as part of our volunteering I would like to thank our sharehold- Ziraat Bankası A.Ş. Head of the Cred- ment, and Assistant General Manager Assistant at PricewaterhouseCoopers, In 2019, we maintained our innova- the real sector. Tackling individual program to support visually-impaired ers and members for their trust and it Risk Monitoring Department since in charge of Loans at Yapı Kredi Leas- working at the company between tive approach and continued to pro- customers’ and real sector’s require- individuals in their preparations for uni- support in our Institution; to our 2007. Mr. Sunman has been serving ing. Later, Mr. Eken served tourism September 1999 and December vide all industries with the products ments in financial life, Findeks offers versity admission, the Audio Question Board of Directors for the work- as the Chairman of the KKB Board of and media groups as CFO and CEO. In 2004, lastly as Audit Manager. After and services tailored to address the numerous innovative products and Bank project was presented with awards ing meetings conducted effective- Directors since March 2019. September 2014, he joined Şekerbank starting to work at Koçbank A.Ş. in requirements of our era. boasts over 3 million members in its at different platforms for the societal ly throughout the year, and for the T.A.Ş. Mr. Eken has been Assistant January 2005, he held the positions of 5th year. In 2019, we have also mon- benefit it generated. In 2019, the Audio power and support they have given Arif Çokçetin General Manager in charge of Cred- Budget Planning Director and Head of 30 banks completed integration itored digital trends and next-gen Question Bank project was deemed us for the decisions taken, and to all Deputy Chairman of the Board of it Management at Şekerbank since the Planning and Control Department, with the Electronic Letter of technologies closely and renewed worthy of the Innovation Award at the our staff who continue to work hard Directors December 2016. He is also a Board respectively. Following the merger of Guarantee Platform the Findeks mobile application to Corporate Social Responsibility Awards across all our various functions and Türkiye Vakıflar Bankası T.A.O. Member at Şeker Faktoring A.Ş. Koçbank and Yapı ve Kredi Bankası We introduce novelties each passing provide a better user experience. This held by the Turkish Confederation of operations for their efforts. Director, Assessment and Rating De- in 2006, he served as Planning and day as part of our efforts to mitigate is how we have enabled users to fol- Employers’ Association. The Project partment Mehmet Hakan Ataş Control Director until May 2011 and the risks and costs in the finance sec- low up their financial life closely, and also won the Gold Award in the Social Arif Çokçetin was born in 1975 in Is- Member of the Board of Directors then as Planning and Control Group tor. Letters of guarantee, one of the from a single screen. Responsibility Projects Communica- tanbul. He completed his primary Türkiye Halk Bankası A.Ş. Director. He was appointed Assistant most traditional, printed instruments tion category at the Istanbul Marketing and secondary school education in Assistant General Manager General Manager in charge of Retail of the banking sector, have now been We have crowned our Awards. Furthermore, at the 11th edition Istanbul and then graduated from the Head, Credit Risk Monitoring Depart- Credits as of January 2016. During digitized under the Electronic Letter achievements with new awards of the contest organized to celebrate Kasım Akdeniz Ankara Finance Vocational School, ment his career, Mr. Karaaslan served as a of Guarantee project, which helped We are delighted to have garnered corporate contributions to sustainable Ministry of Finance, in 1992. Çokçetin Mehmet Hakan Ataş was born in An- Statutory Auditor and Board Mem- us usher in a new era in the banking awards from various institutions development goals, the Audio Ques- Board Member and started his mandatory service as an takya in 1969. He graduated from the ber at various subsidiaries of Yapı sector. After letters of guarantee, and programs this year, owing to tion Bank project was presented with General Manager officer at the Ministry the same year. Business Administration Department Kredi Bankası. Since March 2016, Mr. which play a significant role in the fi- our products and services used ex- the “Grand Prize” in the category of “Re- Again in 1992, he enrolled in the De- at Ankara University’s Political Sci- Karaaslan has been a Member of the nance and real sectors, were moved tensively in the financial sector. Or- duced Inequalities,” the 10th sustainable partment of Finance at Istanbul Uni- ences Faculty. He began his profes- KKB Board of Directors. to the digital environment, the time ganized for the first time in 2019 to development goal. I thank all my col- versity’s Political Sciences Faculty, sional life in 1999 at the Kızılcaham- and cost LG procedures require have reward most innovative projects un- leagues and stakeholders for their con- working, and studying at the same am Branch of Halk Bankası, where been minimized and fraud risks elim- dertaken by banks, insurance compa- tributions to these projects and wish to time for a period. After his graduation he assumed senior positions at the inated. 30 banks completed inte- nies, fintechs, and other financial in- enjoy many other achievements in the gration with this system, an unprec- stitutions, the Sardis Awards deemed future. edented practice in the world, with two projects of KKB worthy of awards

32 33 34 Ege Gültekin the United States as the System Control and management of the credit alloca- Member of the Board of Directors and Optimization Project Leader. After tion and monitoring systems, formula- AKBANK T.A.Ş. working on R&D projects for GE Energy, tion of credit policies as well as compli- Executive Vice President, Credit Moni- Medical Systems, and other GE compa- ance. During this period, he served as a toring and Follow Up nies, he moved over to Risk Manage- Member of working groups within the Ege Gültekin was born in Aydın in 1969 ment at GE Capital in 2005. Between Banks Association of Turkey in regards and graduated from Middle East Tech- 2005 and 2011, he served in various po- to the preparation of the Banking Law nical University, Department of Eco- sitions and levels at GE Capital in the US, and its sub-regulations, and within KKB nomics. Subsequently, she earned a Europe, and Turkey. He went on to work in regards to the establishment of the Master’s degree from the Johns Hopkins as Risk Director at Garanti Bankası-BB- Corporate Bureau, Intermediary Costs University Carey Business School. After VA Representative Office between 2011 on Credits, and Credits and Provisions. graduating from Ziraat Bank’s Banking and 2015. Since September 2015, he has He also served as the Chairman of the School in 1992, she began her career at served as the Coordinator of Garanti Credit Guarantee Fund (CGF) Work- Osmanlı Bank on the Inspection Board. Bankası Individual and SME Credits Risk ing Group and the Risk Center Working Mrs. Gültekin is currently Executive Vice Management Department. Since March Group. In 2007, he was the Chairman President in charge of Credit Monitoring 2016, he has been a member of the KKB of the Board of Directors of KKB Kredi and Follow Up at Akbank T.A.Ş. She has Board of Directors. Kayıt Bürosu A.Ş. and a Board Member been a member of the Board of Direc- between 2005 and 2011. Kasım Akdeniz tors at KKB since May 2015. Şahismail Şimşek was appointed General Manager of KKB Member of the Board of Directors Kredi Kayıt Bürosu A.Ş. as of October İzzet Oğuzhan Özark T. İş Bankası A.Ş. 2011; he continues to hold this position. Member of the Board of Directors Assistant General Manager; SME Denizbank A.Ş. and Business Banking Sales Depart- Assistant General Manager, Retail ment, Commercial Banking Marketing Banking Department and Commercial Banking Oğuzhan Özark was born in İstanbul Product Department in 1976 and graduated from İstanbul Şahismail Şimşek was born in Erzurum Technical University, Department of in 1968 and graduated from Ankara Uni- Mathematics Engineering. He start- versity, Faculty of Political Sciences, De- ed his professional career in the Retail partment of Finance. Mr. Şimşek started Banking Department at Garanti Bankası his career as Officer at the Yenişehir/An- in 1997. He worked as Supervisor in the kara branch in 1992. Between 1995 and SME Banking Department of the same 2007, he worked in the Sultanhamam bank from 1999 to 2002 and in the Branch as, respectively, Service Officer, CRM Department between 2003 and Deputy Manager and Assistant Man- 2004. Starting to work at DenizBank as ager. Between 2007 and 2012, he as- Manager of the SME Banking Sales De- sumed the roles of Assistant Manager partment in 2004, Mr. Özark served as and Unit Manager in the Commercial Group Manager of Retail Banking Sales Banking Product Management Depart- Management from 2009 until 2013 and ment and Branch Manager at the Avcılar was appointed Assistant General Man- Commercial Branch from 2012 to 2016. ager of the Retail Banking Sales Group Having served as Commercial Banking in February 2014. Mr. Özark has served Sales Department Manager since 2016, as a member of the Board of Directors Şahismail Şimşek was appointed Assis- at KKB since April 28, 2014. tant General Manager on November 28, 2017. Since March 2018, Mr. Şimşek has Şükrü Alper Eker been a Member of the KKB Board of Di- Member of the Board of Directors rectors. T. Garanti Bankası A.Ş. Coordinator, Individual and SME Loans Kasım Akdeniz Risk Management Board Member and General Manager Şükrü Alper Eker was born in Eskişehir Having about 33 years of experience in 1973 and graduated from Boğaziçi in the banking industry, Kasım Akdeniz University, Department of Chemical started his professional career at Yapı Engineering in 1996. He received his Kredi on the Inspection Board in 1987. BACK ROW (From Left to Right): A. Hakan EKEN, Arif ÇOKÇETIN, Mehmet Hakan ATAŞ, Şahismail ŞIMŞEK, Şükrü Alper Master’s degree from Texas A&M Uni- Between 1996 and 2011, he held man- EKER, İzzet Oğuzhan ÖZARK, Demir KARAASLAN versity – College Station in 1998, and his agerial responsibilities, working as a Ph.D. from the University of Houston in manager, director, and group president FRONT ROW (From Left to Right): Veysel SUNMAN, Ege GÜLTEKIN, Kasım AKDENIZ 2001. He started his professional career primarily for the generation of credit in 2001 at GE Global Research Center in products and processes, establishment

35 36 37 Kasım Akdeniz adaptation process of the Leasing BRSA and Koçbank- Turkey, Mr. Çolak also served as Manager in charge of Board Member and General Manager YKB merger. İnci Tümay Özmen joined KKB in May 2012, teams engaged in projects involving audit and con- Having about 33 years of experience in the banking in- and she has served as Assistant General Manager of sultancy services at various financial institutions such 11. SENIOR MANAGEMENT dustry, Kasım Akdeniz started his professional career at Financial Reporting and Financial Affairs since October as banks, insurance providers, leasing companies, and Yapı Kredi on the Inspection Board in 1987. Between 1996 2014. İnci Tümay Özmen was authorized as Indepen- capital market intermediary firms. He submitted re- and 2011, he held managerial responsibilities, working as dent Auditor in 2017 by the Public Oversight, Accounting ports to the BRSA as an independent auditor in charge a manager, director, and group president primarily for and Auditing Standards Authority. of BRSA information systems audits conducted at many the generation of credit products and processes, estab- banks and their participation in Turkey, Germany, Greece, lishment and management of the credit allocation and Orkun Deniz and Portugal. Having the titles of Certified Informa- monitoring systems, formulation of credit policies as well Risk Center Coordination Department tion Systems Auditor (CISA), Certified Internal Control as compliance. During this period, he served as a Member Assistant General Manager Professional (CICP), ISO 27001 Information Security of working groups within the Banks Association of Turkey Orkun Deniz graduated from Boğaziçi University, De- Management System and ISO 22301 Business Con- in regards to the preparation of the Banking Law and its partment of Computer Engineering in 1995. He contin- tinuity Management System Chief Auditor, Mr. Çolak sub-regulations, and within KKB in regards to the estab- ued his academic studies at Yeditepe University, first re- has served as Risk Management Manager at Kredi Kayıt lishment of the Corporate Bureau, Intermediary Costs on ceiving his MBA and later his doctorate in Management Bürosu since April 2014. He is the Senior Management Credits, and Credits and Provisions. He also served as the and Organization. He started his professional career at Representative in charge of the Information Security, Chairman of the Credit Guarantee Fund (CGF) Working Akbank as a Software Developer in the IT Department. Corporate Risk Management and Process Management Group and the Risk Center Working Group. In 2007, he was He was among the founding team of Kredi Kayıt Bürosu, teams. Under the direction of Mr. Çolak, the KKB Infor- the Chairman of the Board of Directors of KKB Kredi Kayıt which he joined in 1997; he played an active role during mation Security team was named “Security Team of the Bürosu A.Ş. and a Board Member between 2005 and 2011. the launch of Turkey’s first credit bureau system. Mr. Year” in Europe, the Middle East and Africa at the FireEye Kasım Akdeniz was appointed General Manager of KKB Deniz designed the Corporate Bureau System – which Excellence Awards in 2018. This was the first time a Turk- Kredi Kayıt Bürosu A.Ş. as of October 2011; he continues was established by the KKB, entirely with its resources – ish team received the award. to hold this position. and managed the development process. He continued his career at Fortis Bank, serving as Director in charge of System Development, Reporting, Credit Policies and Hakan Gümüş Abdullah Bilgin Rating in the Corporate Credits Department. He held Human Resources Department Information Technologies and R&D Department several roles during the transformation process of KKB, Manager Assistant General Manager which he rejoined at the beginning of 2011. Primarily, Mr. Having about 27 years of business experience, Hakan Abdullah Bilgin has 34 years of professional experience. He Kasım Akdeniz Abdullah Bilgin Koray Kaya Deniz ensured the expansion of the product portfolio Gümüş graduated from Hacettepe University, Depart- graduated from Middle East Technical University, Depart- of KKB by developing new products and services as the ment of Economics in 1989. Mr. Gümüş started his ment of Computer Engineering in 1985. Mr. Bilgin received Manager of Project and Process Management. Later, he professional career in 1991 as Assistant Inspector at his Master’s degree from İstanbul University, Department directed all financial sector relations as the Manager of Akbank T.A.Ş., where he later served as Inspector, Dep- of International Relations in 2002. Starting his career at the Banks and Financial Institutions Unit. Throughout his uty Human Resources Manager, Eskişehir and Istanbul Bilpa A.Ş. in 1986, Mr. Bilgin later worked as System Man- career of over 15 years at KKB, Mr. Deniz has provided Regional Manager, SME Banking Sales Manager, Head ager at John Deere in the USA. Subsequently, he served as consulting support for the attempts of many countries of the Marketing Department and Human Resources Director in charge of System and Network Management to establish credit bureaus. Since September 2016, Mr. Career Manager. After leaving Akbank in October 2012, in the Information Technologies Department at Yapı Kredi Deniz has served as the Assistant General Manager in he worked as Human Resources Manager for four years Bankası and as Group Manager of Self-Service Banking charge of Risk Center Coordination. at Türkiye Finans Katılım Bankası. Hakan Gümüş joined in the Alternative Distribution Channels Department until KKB as Human Resources Manager in October 2016 and 2012. Abdullah Bilgin, who has served as Assistant General continues to serve in this position. Manager in charge of Information Technologies and R&D Ali Kemal Cenk at KKB since November 2012, manages KKB’s efforts relat- Internal Audit Department Erşan Rasim Hoşrik ed to digital transformation as well as the activities of the Assistant General Manager Regulatory Compliance, Legal and Operations KKB Anadolu Data Center. Ali Kemal Cenk has 19 years of professional experience. He graduated from Middle East Technical University, Department Manager Erşan Rasim Hoşrik started his professional career in Department of Business Administration. Between 2000 Koray Kaya 2006 as Assistant Inspector at Yapı Kredi Bankası; he and 2012, Mr. Cenk held various positions at the Banking Marketing and Business Development Department went on to hold various positions in the Branch Audit, Regulation and Supervision Agency, including Sworn-in İnci Tümay Özmen Orkun Deniz Ali Kemal Cenk Assistant General Manager Headquarters Audit, and Investigation units at Yapı Kredi Bank Auditor, Group Head, 2011 FSAP Negotiations Co- Koray Kaya has 24 years of experience in the banking in- Bankası. After resigning from his post with the Inspection ordinator, and Vice President of the Audit Department. dustry. He graduated from Yıldız Technical University, Board in 2012, he worked in the Compliance Office as He took key roles in the Working Group for the Risk-Fo- Faculty of Engineering, Department of Civil Engineering. Financial Crimes Prevention Manager and Banking Leg- cused Supervision Project, through which the BRSA has After completing his MBA studies in the United States be- islation Manager, respectively. During his tenure in the reestablished its audit system. He also took part in a tween 1991 and 1994, Mr. Kaya started his career at Ga- Compliance Office, he was involved in coordinating the one-month program geared towards the Risk-Focused ranti Bankası in 1995. He played a key role in the establish- supervision of the Banking Regulation and Supervision Supervision Project involving Federal Reserve audits ment of one of the first personal credits scoring systems Agency and the Ministry of Customs and Trade. In addi- and carried out FDIC-related studies. Mr. Cenk earned in Turkey. During his tenure at Garanti Bankası, Mr. Kaya tion, Mr. Hoşrik served as representative in the working a dual MBA/MSF degree from Boston College between designed credit automation systems for consumer cred- groups of the Banks Association of Turkey. He also par- 2007 and 2009. In addition to BRSA audits concerning a its, credit cards and small enterprise credit applications. ticipated in studies to prepare regulations related to the range of legal issues, internal systems, and information In 2004, he started to work as a Consultant at Experian. banking of the Consumer Protection Law. Having joined management, he also conducted various audits in the Mr. Kaya went on to serve as a Consultant on projects KKB in June 2016, Erşan Hoşrik works as Manager of the Netherlands and Germany. Mr. Cenk attended a series of pertaining to the automation of credit decisions at almost Regulatory Compliance, Legal and Operations Depart- training courses on Risk Management, Basel II-III, inter- all banks in Turkey. He created the good/bad definition at ment. nal control, and banking in the USA; he also participated the customer level used in the scorecard infrastructure in training courses and has certificates of completion on of KKB. Subsequently, Mr. Kaya served as Director of the COBIT, TFRS, International Accounting Standards, Oliver Hazar Tuna Personal Credits Allocation Department at TEB from 2005 Wyman Risk Management, and European Central Bank Internal Control Department until 2009. During that period, he pioneered the modern- Serdar Çolak Hakan Gümüş Erşan Rasim Hoşrik Eurosystem Macro-Micro Financial Audit. Mr. Cenk has Manager ization of the personal credits approval platform of TEB in been serving as Assistant General Manager of Internal Hazar Tuna has 14 years of professional experience. accordance with the current conditions at that time. After Audit since April 2012. After completing his studies at Üsküdar American High starting to work as Head of the Personal Credits Moni- School, he graduated from Purdue University, Depart- toring and Collection Department at Akbank in 2009, Mr. ment of Computer Engineering in 2005. He completed Kaya joined the Board of Directors at Kredi Kayıt Bürosu. Serdar Çolak his Executive MBA at Boğaziçi University in 2012. Mr. He was appointed Head of the Personal Credits Allocation Risk Management Department Tuna started his career in the Corporate Risk Services Department at the same organization in January 2012. Mr. Director Department at Deloitte Denetim in 2006. He took part Kaya has worked as Assistant General Manager in charge Serdar Çolak has 14 years of professional experience. He in independent information systems audits at banks and of Marketing and Business Development at KKB since May graduated from Robert College and İstanbul Technical information systems risk assurance and Sarbanes-Oxley 2012. University and the State University of New York, Depart- audit-related work in the real sector. Mr. Tuna contin- ment of Economics, respectively, as the highest-ranking ued his career in the Information Technologies Audit İnci Tümay Özmen student. He received his Master’s degree from Boğaziçi Department at Yapı Kredi Bankası from 2008 to 2013. In Financial Reporting and Financial Affairs Department University, Department of Management Information addition, he conducted pilot installation work of the au- Assistant General Manager Systems. Mr. Çolak started his professional career as dit workflow software program, which was designed for İnci Tümay Özmen has 24 years of professional experian SAP Consultant in New York and after gaining expe- use within the entire UniCredit Group, playing a key role ence. She graduated from Boğaziçi University, Depart- rience there, he went on to work in the İstanbul office in shaping the final version thereof. Having served as the ment of Business Administration with a degree in 1995. of PwC Turkey. In the İstanbul office of PwC Turkey, he Certified Information Systems Auditor (CISA), Certified She started her career at Ernst & Young Denetim in 1995. served as Manager of the Risk, Process and Technology Internal Control Professional (CICP), ISO 27001 Infor- Hazar Tuna İnci Özmen was involved in the audit services of many Services Department. Having broad experience in the mation Security Management System and ISO 22301 financial institutions while she worked at Ernst&Young. finance industry, Mr. Çolak’s areas of expertise include Business Continuity Management System Chief Auditor, Having obtained the title of Certified Public Accountant in corporate risk management, information systems gov- Mr. Tuna has been the Internal Control Manager at KKB 2000, she left Ernst&Young as Manager. Ms. Kesici worked ernance, information security, business continuity, SOX since April 2013. as Assistant General Manager in charge of Financial Af- IT, organizational and process structuring of companies fairs, Budget Reporting and Operations at Yapı Kredi Leas- in the finance sector, and Banking Regulation and Su- ing from 2000 to 2012. She played an active role in the pervision Agency information systems audits. At PwC

38 39 Factoring Companies Consumer Finance Companies ABC FAKTORİNG A.Ş. ALJ FİNANSMAN A.Ş. 12. MEMBERS ACAR FAKTORİNG A.Ş. DORUK FİNANSMAN A.Ş. AK FAKTORİNG A.Ş. EVKUR FİNANSMAN A.Ş. AKDENİZ FAKTORİNG A.Ş. HEMENAL FİNANSMAN A.Ş. AKIN FAKTORİNG A.Ş. KOÇ FIAT KREDİ FİNANSMAN A.Ş. Member Type 2014 2015 2016 2017 2018 2019 ANADOLU FAKTORİNG HİZMETLERİ A.Ş. KOÇ FİNANSMAN A.Ş. Banks 42 53 52 52 52 53 ARENA FAKTORİNG A.Ş. MERCEDES BENZ FİNANSMAN TÜRK A.Ş. Factoring 76 69 62 61 59 56 ATAK FAKTORİNG A.Ş. ORFİN FİNANSMAN A.Ş. ATILIM FAKTORİNG A.Ş. ŞEKER FİNANSMAN A.Ş. Leasing 20 29 26 25 24 23 BAŞER FAKTORİNG A.Ş. TEB FİNANSMAN A.Ş. Consumer Finance 12 12 14 14 14 15 BAYRAMOĞLU FAKTORİNG A.Ş. TIRSAN FİNANSMAN A.Ş. Asset Management Company - 12 15 13 18 21 C FAKTORİNG A.Ş. TURKCELL FİNANSMAN A.Ş. CREDITWEST FAKTORİNG A.Ş. TÜRK FİNANSMAN A.Ş. Insurance and Other 4 10 11 12 13 13 ÇAĞDAŞ FİNANS FAKTORİNG HİZMETLERİ A.Ş. VFS FİNANSMAN A.Ş. Total 154 185 180 177 180 181* ÇÖZÜM FAKTORİNG A.Ş. VOLKSWAGEN DOĞUŞ FİNANSMAN A.Ş. DENİZ FAKTORİNG A.Ş. *As of 31 December 2019, the number of KKB members is 165 and this figure identifies the members who are served through the Risk Center. DESTEK FAKTORİNG A.Ş Insurance Companies DEVİR FAKTORİNG HİZMETLERİ A.Ş. AKSİGORTA A.Ş. Member Banks DOĞA FAKTORİNG HİZMETLERİ A.Ş. ANADOLU ANONİM TÜRK SİGORTA ŞİRKETİ ADABANK A.Ş. TURKISH BANK A.Ş. DORUK FAKTORİNG A.Ş. ATRADIUS CREDITO Y CAUCION S.A. DE SEGUROS Y AKBANK T.A.Ş. TURKLAND BANK A.Ş. EKO FAKTORİNG A.Ş. REASEGUROS MERKEZİ İSPANYA TÜRKİYE İSTANBUL AKTİF YATIRIM BANKASI A.Ş. TÜRK EKONOMİ BANKASI A.Ş. EKSPO FAKTORİNG A.Ş. ŞUBESİ ALBARAKA TÜRK KATILIM BANKASI A.Ş. TÜRKİYE EMLAK KATILIM BANKASI A.Ş. FİBA FAKTORİNG A.Ş. COFACE SİGORTA A.Ş ALTERNATİF BANK A.Ş. TÜRKİYE FİNANS KATILIM BANKASI A.Ş. GARANTİ FAKTORİNG A.Ş. EULER HERMES SİGORTA A.Ş. ANADOLUBANK A.Ş. TÜRKİYE GARANTİ BANKASI A.Ş. GLOBAL FAKTORİNG HİZMETLERİ A.Ş. EUREKO SİGORTA A.Ş. ARAP TÜRK BANKASI A.Ş. TÜRKİYE HALK BANKASI A.Ş. GSD FAKTORİNG A.Ş. HALK SİGORTA A.Ş. BANK MELLAT TÜRKİYE İHRACAT KREDİ BANKASI A.Ş. HALK FAKTORİNG A.Ş. UNICO SİGORTA A.Ş. BANK OF CHINA TURKEY A.Ş. TÜRKİYE İŞ BANKASI A.Ş. HUZUR FAKTORİNG A.Ş. ZİRAAT SİGORTA A.Ş. BANKPOZİTİF KREDİ VE KALKINMA BANKASI A.Ş. TÜRKİYE KALKINMA VE YATIRIM BANKASI A.Ş. ING FAKTORİNG A.Ş. BİRLEŞİK FON BANKASI A.Ş. TÜRKİYE VAKIFLAR BANKASI T.A.O. İSTANBUL FAKTORİNG A.Ş. Asset Management Companies BURGAN BANK A.Ş. VAKIF KATILIM BANKASI A.Ş. İŞ FAKTORİNG FİNANSMAN HİZMETLERİ A.Ş. ADİL VARLIK YÖNETİM A.Ş. CITIBANK A.Ş. YAPI VE KREDİ BANKASI A.Ş. KAPİTAL FAKTORİNG A.Ş. ARMADA VARLIK YÖNETİM A.Ş. DENİZBANK A.Ş. ZİRAAT KATILIM BANKASI A.Ş. KENT FAKTORİNG A.Ş. ARSAN VARLIK YÖNETİM A.Ş. DEUTSCHE BANK A.Ş. KREDİ FİNANS FAKTORİNG HİZMETLERİ A.Ş. BİRİKİM VARLIK YÖNETİM A.Ş. DİLER YATIRIM BANK A.Ş. Leasing Companies LİDER FAKTORİNG A.Ş. BİRLEŞİM VARLIK YÖNETİM A.Ş. FİBABANKA A.Ş. A&T FİNANSAL KİRALAMA A.Ş. MERT FİNANS FAKTORİNG HİZMETLERİ A.Ş. BOĞAZİÇİ VARLIK YÖNETİM A.Ş. GSD YATIRIM BANKASI A.Ş. AK FİNANSAL KİRALAMA A.Ş. MNG FAKTORİNG HİZMETLERİ A.Ş. DENGE VARLIK YÖNETİM A.Ş. HABİB BANK LIMITED ALTERNATİF FİNANSAL KİRALAMA A.Ş. OPTİMA FAKTORİNG A.Ş. DEREN VARLIK YÖNETİM A.Ş. HSBC BANK A.Ş. ANADOLU FİNANSAL KİRALAMA A.Ş. PAMUK FAKTORİNG A.Ş. DOĞRU VARLIK YÖNETİM A.Ş. ICBC TURKEY BANK A.Ş. ARI FİNANSAL KİRALAMA A.Ş. PARA FİNANS FAKTORİNG HİZMETLERİ A.Ş. EFES VARLIK YÖNETİMİ A.Ş. ING BANK A.Ş. BNP PARIBAS FİNANSAL KİRALAMA A.Ş. QNB FİNANS FAKTORİNG A.Ş. EMİR VARLIK YÖNETİM A.Ş. INTESA SANPAOLO S.P.A. İTALYA İSTANBUL MERKEZ ŞUBESİ BURGAN FİNANSAL KİRALAMA A.Ş. SARDES FAKTORİNG A.Ş. GELECEK VARLIK YÖNETİM A.Ş. İLLER BANKASI A.Ş. DE LAGE LANDEN FİNANSAL KİRALAMA A.Ş. SÜMER FAKTORİNG A.Ş. HAYAT VARLIK YÖNETİM A.Ş. İSTANBULTAKAS VE SAKLAMA BANKASI A.Ş. DENİZ FİNANSAL KİRALAMA A.Ş. ŞEKER FAKTORİNG A.Ş. HEDEF VARLIK YÖNETİM A.Ş. JPMORGAN CHASE BANK GARANTİ FİNANSAL KİRALAMA A.Ş. ŞİRİNOĞLU FAKTORİNG A.Ş. İSTANBUL VARLIK YÖNETİM A.Ş. KUVEYT TÜRK KATILIM BANKASI A.Ş. HALİÇ FİNANSAL KİRALAMA A.Ş. TAM FAKTORİNG A.Ş. MEGA VARLIK YÖNETİM A.Ş. MERRILL LYNCH YATIRIM BANK A.Ş. HALK FİNANSAL KİRALAMA A.Ş. TEB FAKTORİNG A Ş METAL VARLIK YÖNETİM A.Ş. MUFG BANK TURKEY A.Ş. ING FİNANSAL KİRALAMA A.Ş. TRADEWIND FAKTORİNG A.Ş. MET-AY VARLIK YÖNETİM A.Ş. NUROL YATIRIM BANKASI A.Ş. İŞ FİNANSAL KİRALAMA A.Ş. TUNA FAKTORİNG A.Ş. SÜMER VARLIK YÖNETİM A.Ş. ODEA BANK A.Ş. MERCEDES BENZ FİNANSAL KİRALAMA TÜRK A.Ş. ULUSAL FAKTORİNG HİZMETLERİ A.Ş. VERA VARLIK YÖNETİM A.Ş. PASHA YATIRIM BANKASI A.Ş. PERVİN FİNANSAL KİRALAMA A.Ş. VAKIF FAKTORİNG A.Ş. YUNUS VARLIK YÖNETİM A.Ş. QNB FİNANSBANK A.Ş. QNB FİNANS FİNANSAL KİRALAMA A.Ş. VDF FAKTORİNG A.Ş. RABOBANK A.Ş. SIEMENS FİNANSAL KİRALAMA A.Ş. YAPI KREDİ FAKTORİNG A.Ş. Other SOCIETE GENERALE ŞEKER FİNANSAL KİRALAMA A.Ş. YAŞAR FAKTORİNG A.Ş. BORSA İSTANBUL A.Ş. STANDARD CHARTERED YATIRIM BANKASI TÜRK A.Ş. VAKIF FİNANSAL KİRALAMA A.Ş. YEDİTEPE FAKTORİNG A.Ş. KREDİ GARANTİ FONU A.Ş. ŞEKERBANK T.A.Ş. VFS FİNANSAL KİRALAMA A.Ş. ZORLU FAKTORİNG A.Ş. JCR AVRASYA DERECELENDİRME A.Ş. T.C. ZİRAAT BANKASI A.Ş. YAPI KREDİ FİNANSAL KİRALAMA ANONİM ORTAKLIĞI TÜRKİYE TARIM KREDİ KOOPERATİFLERİ MERKEZ BİRLİĞİ TÜRKİYE SINAİ KALKINMA BANKASI A.Ş. YATIRIM FİNANSAL KİRALAMA A.Ş.

40 41 13. ORGANIZATIONAL CHART

Board of Directors

Audit Committee

General Manager Internal Audit Department

Member Audit Finance and Analysis and IT Control Unit Business Units Coordination Audit Unit Unit

Marketing Regulatory Information Financial Reporting Risk Center Risk Communication Human and Business Internal Control Compliance, Legal Technologies and and Financial Affairs Coordination Management Center Resources Development Department and Operations R&D Department Department Department Department Department Department Department Department

IT System Risk Center Procurement Member Analytical Information and Software Project and Information Regulatory and Contract Channel Model Security Human Resources Development R&D Center Product Systems Control Compliance & Management Management Development Management Unit Unit (Distribution Development Unit Legal Unit Unit Unit Unit Unit Channels) Unit

IT System Product Business and Software IT Infrastructure Business Corporate Corporate Risk Budget and Management Processes and Administrative Operations Development and Operation Intelligence & Communications Management Reporting Unit and Development Financial Control Affairs Unit Center Unit Unit (Centralized Unit Reporting Unit Unit Unit Unit Unit Implementations)

CRM and IT Project IT Service Financial Affairs Sales Process Channel Management Management Management Management Management Security Unit Management Unit Unit Unit Unit Unit Unit

Findeks Sales Business Development Unit

42 43 Business Units 14. BUSINESS UNITS

IT System and Software Development connection model was ceased, and two types of data were collected Findeks software the transition to TCP-IP socket model, through the use of this infrastruc- team renewed providing higher security thanks to To- ture. This is how issues and delays the mobile app with Unit is in charge of software kens and Passwords, was completed. that may be encountered at the time Along with banks, consumer finance, of file transfers were prevented. The new infrastructure leasing and factoring organizations, aim is to include new types of data in and services, development activities under asset management companies were the scope of this infrastructure in the contributing to also allowed to post notifications coming periods. the Findeks New the umbrella of the Information on the Corporate Bureau System. Mobile project. Changes are currently being made to The project aimed at the submittal of allow re-structuring sites to post no- reports on “Credit Limit and Debt Sta- Technologies and R&D Department. tifications as part of Individual Bureau tus” and “Cheque Information” via the Fraud Attempts Detection System, Daily Notifications. On the Corporate e-state gateway was completed in a which also started to be developed in INFORMATION Bureau System, the Customer Objec- short span of time. Individuals were 2019, is aimed at providing a flexible tions Handling System (MIDES) was also allowed to access reports pro- reporting platform that can be used TECHNOLOGIES AND R&D deployed for the notifications of asset duced in the electronic environment. by the follow-up and monitoring DEPARTMENT management companies. Emergency functions of the control units. Update efforts for asset management IT Access and Payment Applications companies are also ongoing. On the The team mainly conducts activi- IT Decision Support Team IT System and Software Individual Bureau System, a feature ties related to Risk Center services. IT Decision Support Team is in charge Development Unit was introduced to allow organizations It also introduces developments for of software development and main- Operating under the Information to receive retrospective CRS credit in- KKB’s Payment Systems and Findeks tenance activities related to KKB Technologies and R&D Department, formation via the web service. accounting infrastructure and under- applications and ERP systems. The the IT System and Software Develop- takes efforts to prevent fraud. team finalized the Electronic Letter of ment Unit is in charge of software de- IT Data Warehouse and Business Guarantee project, aimed at moving velopment activities and handles the Intelligence Practices In addition to managing Risk Center the guarantee letters issued by banks incoming business requests within The team is in charge of analytics and infrastructures, the team is also re- to the electronic environment, and the institution considering the tech- reporting activities. Under the “Dataset sponsible for providing the authen- completed the integration with public nological aspects thereof. Linking” project conducted in 2019, a tication and authorization infrastruc- institutions. The system will help fol- datamart was created where different ture to ensure sign-in on applications low guarantee letters issued for the At the unit, there are nine teams with types of data retained at the institution via a single point. public and private sectors end to end. separate fields of responsibility. The (CRS, CRM, Cheque, Bill, Combined, unit also takes part in infrastructure LCS, Inquiries, etc.) could be linked by The unit continued to address main- Also in 2019, E-Cheque and E-Bond and architectural improvement proj- going to their historical records. The tenance requests and develop appli- projects were initiated to reshape the ects (Power Designer, Audit Trail, platform now enables access to indi- cations in the light of new technol- future of trade. Project evaluation ef- NexusIQ, Fortify, SonarQube), while vidual or organizational product usage ogies throughout 2019. Pioneering forts are ongoing. increasing the level of quality, secu- and inquiries. This has also enabled infrastructure activities conducted by rity, and continuity across the insti- strategic decisions to be taken and an- the team on React JS expedited the IT Findeks and Real Sector tution, and contributing to effective alytical studies conducted faster. works of other IT teams, as well. Applications business impact analyses. The Findeks software team mainly Reporting of new datasets, such as The Phase 2 activities for the Risk worked to contribute to the Find- IT Basic Bureau Applications CBS and Cheque Information, via the Center Management System Appli- eks New Mobile Project in 2019. The This unit, which is responsible for OBI Reporting Platform to CBRT, was cation, i.e. the central management mobile app was revamped with a LCS (Limit Control System) and score initiated. point for Risk Center applications and completely new infrastructure and software, as well as Bureau Applica- its members, have been completed in services. Thanks to the Findeks in- tions - KKB’s main operational area IT Risk Center Practices 2019. tegration with electronic letters of - continued working to meet industry The team’s core responsibility is soft- guarantee, these letters are now needs while maintaining the continu- ware development activities for the The structure allowing the inquiries provided via the Findeks application. ity and sustainability of service lev- Risk Center (RC) products. In 2019, it of audit trail logs, which are now be- Updates were made to the blacklists els in 2019. The infrastructure of the deployed an infrastructure capable of ing collected by the institution, has under the Forged Cheque Prevention Individual Bureau (CRS), Corporate prompt data notification and verifica- been deployed in 2019. Consequent- project. Cheque Score was includ- Bureau (CBS) and Limit Control (LCS) tion, as an alternative for data collec- ly, all transaction flows on KKB can ed in reports as a new set of finan- systems was modernized. As for the tion via file transfers from the mem- now be inquired on the front ends. cial information. Server, technology, inquiries, members conduct over the bers of the Risk Center. During the year, line on these systems, use of SNA

46 47 formed job descriptions at KKB and 14. BUSINESS UNITS KKB Anadolu Data Center locations pursuant to the principles of remote working.

Works were initiated for the “Single Data” The Unit contributes to the timely im- Website maintenance efforts at plementation of KKB’s objectives at project in 2019, which will impact the entire the right cost by developing a three- year IT Strategy Plan and updating it KKB were undertaken by the Digital finance sector by enabling data collected in line with KKB corporate strategies. The Unit plays an active role in IT Platforms Team in 2019. by the Turkish Central Bank (CBRT) to be governance, involving identification, definition and management of risks managed on a single platform. while providing a transparent and up- to-date flow of information.

IT Project Management Office The main functions of the Office include ensuring alignment between IT Activities related to the components, and security updates tive, Spring) were developed to pro- are validated and standardized prior ability measurement and reporting of and business unit goals, facilitating, transition to two-factor were made in the application. Bank vide Findeks customers with faster, to collection. The flexible structure the Risk Center Member Audit Track- and accelerating decision-making services were renewed; new services more reliable and quality services. offered has also minimized soft- ing System (MATS) are continued. On processes through adopting a da- authentication for the were introduced to applications and ware dependencies, and new forms the infrastructure side, server avail- ta-driven approach, and increasing Risk Center and KKB made available for users. Activities related to the transition to can now be defined or existing ones ability reporting is monitored and the visibility of IT activities. In 2019, the FTP applications were two-factor authentication for the in their version structure updated forwarded on a daily basis to the rel- IT Project Management Office main- completed. IT Digital Platforms Risk Center and KKB FTP applications without the need for software en- evant teams for necessary interven- tained its successful performance in The Digital Platforms Team contin- were completed. Risk Center/KKB hancements. Developed with latest tions. The monthly SLA report of the line with corporate strategies and a ued to undertake maintenance works differentiation works on the OBI Web technologies, the platform offers a SAP service offered to TBB by İnnova, value-oriented governance perspec- for all the websites of the institution. application serving CBRT and BRSA wide range of capabilities, name- and the monthly SLA report of the tive. It conducted adaptation activ- Developed in line with the high stan- were completed. Works were under- ly diversity of notification collection SAP service offered to TBB by KKB ities related to the project portfolio dards, goals and information secu- taken for the Working Management methods, standardization through continued to be delivered to TBB Risk management tool and master plan- rity approach of the institution, the System and BIONET applications to the data lexicon structure, the rule Center. In 2019, KKB Anadolu Data ning tool to ensure the automation Content Management System was consolidate and report sign-in/sign- engine enabling dynamic definition Center started the monthly transmis- of portfolio and project management enhanced with new features and the out activities at KKB Head Office, KKB of validation rules without the need sions of SLA performance reports, processes in line with international Findeks website was renewed in visu- R&D Center and KKB Anadolu Data for technical know-how, and creation Energy Consumption Data and Cab- standards and methodologies. al and administrative terms. Center. of analytical environments based on in Logs to three different customers. standardized data after data collec- The KKB Anadolu Data Center also Having been submitted to the IT Proj- The team also continued to serve the IT Ankara Data Center Software tion. continued to share the Service Bul- ect Management Unit by business Association of Financial Institutions Anadolu Data Center Software Team letin, which is prepared with data re- units, the scope of these projects has (FKB) and conduct development and worked intensively to develop proj- IT Service Management Unit ceived from the KKBBY application, already been determined and their maintenance activities for the Central ects related to CBRT in 2019. In the 2019 operating period, the with the related department man- legal and regulatory compliance Billing Registration System (MFKS). availability reports of Risk Center and agers via monthly reports. The Daily have been evaluated. The IT Project “MFKS Refactoring Project,” which is New functionalities, primarily includ- KKB products and services continued Service Quality Status Report is sent Management Unit then planned, im- of critical importance, was initiated. ing independent audit process, have to be shared with related persons to the relevant teams at the end of plemented, and coordinated these been introduced to the “Systemic on a monthly basis; meanwhile, the each working day. As for the KKB and projects in accordance with PMI Furthermore, in line with the request Risk Data Tracking System (SRDTS), same reports were shared on the Risk KKB Anadolu Data Center, the works methodology and KKB standards. of the BRSA Financial Consumer De- a project launched in 2018 to enable Center side for 15-days and week- are ongoing concerning the perfor- The IT Project Management Unit, partment, BRSA Product and Service CBRT to monitor the real sector com- ly periods. The KKB product/service mance of the SLA measurements by which focuses on the planning of all Fees Portal was introduced to enable panies’ foreign exchange positions. catalog was updated and new ser- third party firms and communication requests submitted by the business end-users to access information such vices started to be reported to the of the results with the companies. units in line with PMI methodology, as commissions charged to transac- During the year, the “Single Data” related units and the management. successfully realized all of the proj- tions performed on the website of project, which will have an impact on The product/service catalog updates IT Project Management Unit ects it planned by the end of 2019. BRSA. the entire finance sector and play a made on the Risk Center side were The IT Project Management Unit critical role for CBRT, was also initi- concluded, mutually agreeing with supported the information technol- The IT Project Office ensures that: all IT Mobile Technologies ated. Under the project, CBRT will be TBB Risk Center. The availability re- ogy projects as well as the needs of requests/projects carried out within IT Mobile Technologies Team com- capable of managing the data col- ports continued to be shared through the entire KKB organization in 2019 KKB are handled according to a plan pleted the renewal works for the lected on a single platform. The plat- the updated product/service catalog. through three different disciplines. and prioritized correctly; resources Findeks Mobile app in 2019. Under form will also ensure that an infinite Since the IT team commenced oper- are used appropriately and efficiently; this initiative, applications involving number of forms are dynamically de- A catalog for internal services was ations under the KKB Anadolu Data a common language and methodol- the latest technologies (React-Na- fined and notifications on such forms updated on the KKB side. The avail- Center in 2018, the Unit has per- ogy are used in all projects launched

48 49 the IT Middleware team to monitor. 14. BUSINESS UNITS This also provided support in terms of monitoring systemic issues and problems.

As part of KVKK (Personal Data Pro- Mobile app test automation product Thanks to the Analysis and Test Costs tection Law) activities, the Unit col- laborated with the Risk Management Template, all process costs of the projects team for visualization of links be- was introduced to the test automation tween the web service, applications, conducted in 2019 were managed in a more and data. infrastructure to increase quality in transparent and systematic manner. Three “IT Architecture Committee” meetings were held during the year. the software development lifecycle. Through these meetings, the management was updated on the activities performed, new plans, and execution of technologies, while the senior management was also includ- KKB organized various within the organization, and project gression tests on different devices. To ensure a more transparent and Management product were collected ed in the process. training courses and performance measurements and A separate testing environment was systemic method, all process costs and visualized, helping KKB monitor lessons learned become part of the established in 2019 to ensure all test of the projects were calculated using all the APIs. New IP control-related workshops throughout IT Infrastructure and Operation organizational memory. automation scenarios are run period- the Analysis and Test Cost Template routines were added to the product Unit the year to improve the ically and in a stable environment. in 2019. New processes were formu- to support KKB’s security approach. maturity level of project It also organized training courses and lated for test automation, load tests Efforts related to the monitoring of KKB Anadolu Data Center Studies management processes and workshops to increase the maturity To this end, an automated and in- and audit trail developments to guar- system logs and ADMIN activities KKB Anadolu Data Center, which was ensure widespread use of of project management processes tegrated system was prescribed antee effective use of resources in were completed. An API Develop- established by KKB to serve the fi- current project management and encourage the widespread use throughout the entire SDLC, from line with the principle of continuous ment Lifecycle (ADLC) process was nancial sector, was awarded Tier IV of current project management tech- development and improvement. developed and aligned with corpo- techniques and tools across analysis to the transition phase to the certification – the highest level certi- niques and tools. real environment. A test automation rate processes and standards. fication granted by Uptime Institute, the institution. infrastructure was established for An external dependencies inventory a widely recognized global authority. IT Business Analysis and Test all actors in the SDLC to contribute. was created by analyzing the risks Vulnerabilities caused by the depen- Furthermore, the Facility (TCCF) certi- Management Unit The applications are subjected to re- and impacts of external dependen- dencies on open sources used by KKB fication process was also completed The IT Business Analysis and Test gression tests with an “end-to-end cies posed by all the applications de- started to be monitored. Deployment in 2019, with the highest certification Management Unit provided analysis testing” perspective for all types of veloped at KKB. of applications with vulnerabilities level of Tier IV being granted to the and carried out testing in all project infrastructure, software, and configu- caused by dependencies on open Data Center. The leading institutions and software change requests sub- ration changes to achieve total qual- Throughout the year, presentations sources was prevented. Further- of the finance sector, including Ga- mitted during 2019 by taking into ity. were made for employees to keep up more, the entry of vulnerable appli- ranti BBVA, VakıfBank, İş Bankası consideration the current functional with new technologies, products and cations dependent on open sources and BKM also started receive cabi- and technical business requirements; A robot application for MFKS that trends and be prepared for the future. into corporate repositories was also net hosting services via KKB Anado- screen requirements and operations; runs on the real environment was prevented. At the beginning of 2020, lu Data Center, with the occupancy their impact on other systems; autho- designed in 2019 to ensure service IT Technology Architecture quarantines will be imposed for such rate of the Data Center reaching 75%. rization structure; information that continuity and help prompt monitor- Management vulnerabilities. Alongside hosting services, the Data needs to be accessed; target service ing of real environment interruptions. The IT Technology Architecture Center conducts activities aimed at level; performance criteria; domain This application allowed relevant in- Management unit is in charge of ap- The responsibility for SDLC manage- establishing a domestic cloud plat- controls in screen and web services; dividuals to be promptly notified of plications, infrastructure, and data ment and execution products was form that guarantees all types of data and data requirements. interruptions in the MFKS system. architecture. The Unit focuses on handed over to the IT Technology Ar- remain within the borders of Turkey. standardizing internal technology chitecture Team. The team provided Fraudnet, the first product aimed at To ensure service quality continui- As for the alignment of test auto- adoptions and correct positioning of Risk Management with support on fraud prevention, became operation- ty and sustainability and to increase mation and ESC automation efforts, new technologies. project management, software de- al for the banking sector in 2019. the quality of the software develop- MFKS was chosen as a pilot product velopment, analysis, and testing pro- ment lifecycle, the mobile app test and its test automation scripts were The number of services defined cesses. Under the “Rendering of KKB Ser- automation product was included run in the ESC automation flows. This on the API Management product vices Via the Emergency Center for in the test automation infrastructure is expected to bring along significant reached 1,616, while the total API Activities were undertaken to allow an Entire Day” practice, which was in 2019, enabling mobile application added value, including automation calls as of November 2019 reached the IT Middleware team to moni- repeated for the sixth time during tests to be run automatically. Fur- of the tests, reduced reliance on in- 4,124,665,737. Since the increase in tor the WLS server, instances on the the 2019 operating period, both the thermore, a mobile device pool was dividuals, and faster opening times of the number of calls was anticipated, server, and the UP/RUN status of open systems and the mainframe established to help run mobile re- services. the API Management product infra- applications on these instances via environments were rerouted to the structure was expanded in 2019. In the use of server APIs. Access. Logs systems located at the Emergency the meanwhile, metrics of the API of servers were visualized to enable Center (ESC) in Ankara. Thanks to the

50 51 14. BUSINESS UNITS

Efforts to establish a TOKEN infrastructure to ensure secure access for members using the KKB mainframe platform were finalized.

automation of relevant processes in On the side of open systems, On the side of Central IT operations, 2019, all the systems running at the » Active-Active infrastructure was » Operation Orchestration and Serv- Istanbul Data Center were rerouted established for Ankara-Istanbul er Automation platforms were up- to the Ankara Emergency Center in applications. dated. less than one hour. On October 12, » Weblogic servers and Java version » UIPath was chosen for robotic 2019, all KKB services were provided standardization were completed. automation (RPA); orchestrator from ESC for an entire day, and all » ECS infrastructure for the EBS envi- and three robot installations were operations were conducted below ronment was established. made. the predefined RTO and RPO values. » SVC architecture was renewed. » Alpha Vendor SLA developments » Windows Operating Systems were completed and deployed. System Infrastructure Management Modernization was finalized. » AvailabilityGuard infrastructure Works was deployed. During the year, KKB finalized efforts On the side of the network, » User Unlock was automated. to establish a TOKEN infrastructure to » ACI infrastructure was established ensure secure access for members and interoperability with the previ- who receive services from KKB main- ous backbone was attained. frame environments. SNA access to » The network infrastructure was de- mainframe systems was entirely shut signed for the new office. down, and transition to the next-gen » All IT and infrastructure works were access method, i.e. TCP/IP, was com- performed for the relocation oper- pleted. ations of the locations. » KKB Varyap wireless network infra- R&D efforts in the system infrastruc- structure was renewed. ture included the following: » Speech Analytics application was » An application was submitted to deployed. the Technology and Innovation » Call Center PRI infrastructure was Grant Programs Directorate (TEY- established in Ankara, and PRI re- DEB) to establish an AI- and Ma- dundancy was ensured. chine Leaning-based monitoring framework for the identification of system log and report anomalies.

52 53 CRM and Channel Management 14. BUSINESS UNITS Unit Customer satisfaction is at the heart of the strategies developed by CRM and Channel Management Unit. The KKB and Findeks communication activities Unit operates with the aim of increas- KKB reaches out to the financial sector via ing the loyalty of existing customers were performed continuously during 2019 while focusing on offering the right product to the right person at the channels positioned under the Member Channel through media plans implemented utilizing right time and acquiring new customers. To this end, it continues to devel- Management Unit, which plays a critical role in product and service introductory materials op new communication channels and improve existing ones by monitoring and communication strategies. technological developments and managing relations with the sector. trends.

CRM and Channel Management Unit conducts works for: » Determining strategies for the pre- Product Management and MARKETING AND In addition to the management of Striving to create a trustworthy and During the year, KKB and Findeks sentation and dissemination of Development Unit manages BUSINESS DEVELOPMENT the member relations, the unit reg- transparent trade environment un- communication efforts included Findeks products on digital plat- the strategies for KKB ularly monitors the budget and the der KKB, the Product Management creating product and service pro- forms; products/services provided DEPARTMENT sales performance of products, while and Development Unit plays a key motion materials, conducting media » Following technological devel- to address changing working to extend KKB and Risk Cen- role in the development of Findeks planning in line with communica- opments, trends, and customer Member Channel Management Unit ter services. products and services aimed at ad- tion strategies, organizing sponsor- demands in line with these strate- and evolving needs and Member Channel Management is dressing the needs of its members in ship activities at sectoral events, and gies, adaptation of identified needs expectations of the financial, responsible for managing KKB’s rela- From the moment the member- the public and finance sectors, as well holding press meetings. Sponsorship to digital channels and follow-up public, and real sectors, as tions with the financial sector. Believ- ship process begins, Member Chan- as of real sector companies and indi- activities were carried out within sec- thereof; well as individuals. ing in the importance of reaching out nel Management aims to stand by viduals. The products, services and tor-specific events and press meet- » Developing, implementing, moni- broadly in today’s world and being KKB members, whenever they are in projects introduced by the Unit con- ings were organized during the year. toring, and reporting effective cus- always accessible, KKB reaches out to need. The Unit forwards all kinds of tributes to the digital transformation To boost staff motivation and loyalty, tomer and campaign management the financial sector via the channels feedback and suggestions obtained of Turkey’s economic infrastructure. KKB formulated an internal commu- techniques by combining smart positioned under the Member Chan- from the member base during one- The Unit also contributes to individ- nication strategy and conducted var- technologies with analytical ap- nel Management unit. on-one visits, working groups, and uals’ and organizations’ knowledge ious trainings, activities, and events proaches; via the website that it maintains to the and awareness through internal and thereof throughout the year. » Improving performance using in- The unit serves banks, consumer fi- relevant teams. These efforts con- external training courses intended to novative digital publicity methods nancing companies, factoring and tribute to the development of new increase financial literacy. KKB continues to execute corporate and following trends. financial leasing firms, asset man- KKB products and services. social responsibility projects at full agement companies, Borsa Istanbul, The team operates in five core areas: speed. In 2019, the sixth edition of the Throughout 2019, the Unit’s focal Agricultural Credit Cooperative, and Product Management and Product Management, Product De- “You Imagine, We Realize” competi- point was providing Findeks cam- credit insurance companies that are Development Unit velopment, Process Management, tion was completed. Activities were paign management activities, which members of the Risk Center. Member Product Management and Develop- Usability/Interaction Design, Training carried out to implement one of the included targeting and segmenta- representatives are assigned to each ment Unit establishes the strategies Design and Planning. shortlisted projects in the competition studies supported by analytical institution and maintain one-to-one of the products/services offered by tion. KKB supported the active partici- approaches. These campaigns were contact with the individual members. KKB in the light of the requirements Corporate Communications Unit pation of KKB Volunteers in corporate mainly offered through digital chan- They ensure that these members are and expectations of the financial, The Corporate Communications Unit social responsibility projects by help- nels and digital marketing platforms. familiar with KKB and Risk Center ser- public, and real sectors, as well as is responsible for creating, protecting, ing to create a corporate volunteer- In addition to that, in 2019, the Unit vices while guiding them to benefit individuals. The Unit monitors tech- and maintaining the sustainability of ing program. Additionally, KKB sup- continued campaign management from these service offerings in the nology developments in parallel with the image and reputation of KKB and ported the activities of internal social practices and intensive studies to best way possible. these strategies, and performs nec- its sub-brands. To that end, the Unit clubs that aim to bolster organiza- develop and improve channel in- essary activities to improve existing conducts internal and external com- tional culture; encouraged voluntary frastructure. It also focused on data In parallel with the rapid techno- products, and to design, launch, and munication activities with marketing participation in social responsibility warehouse projects that will lay the logical development and the wide- manage new products. communication, media relations, projects; and carried out CSR projects groundwork for analytical studies spread use of the Internet, KKB uses reputation management, event and in collaboration with civil society or- and achieved increased campaign ef- the website managed by the Mem- sponsorship management, media ganizations. ficiencies through renewals and new ber Channel Management team and planning, marketing, and business customer analyses. specifically designed for members as development teams. information, notification, and feedback channel about the KKB and Risk Center products.

54 55 ance agent customers The coop- 14. BUSINESS UNITS eration will allow insurance agent customers to manage their financial risks, find out the financial status of third parties they have trade relations Playing a key role in higher financial literacy with, and consequently manage their Sales and marketing activities for all receivable risks. rates in Turkey, KKB utilizes the Findeks The core duties and responsibilities Findeks products and services are banking channel to provide direct support for of Sales Channels Marketing Man- agement include developing market- conducted by the Sales Management organizations and individuals alike to raise ing strategies for the sales processes of banks, business partnerships and their awareness of managing receivable risks. insurance agents regarding Findeks Unit. products; and briefing on the activities to be conducted for Findeks products on internal and external communication channels. The team formulates arguments in line with the Analytical Model The Unit renewed the web site, applications – including the Personal The Sales Management Unit works Rising product sales since 2015 en- marketing plan to support sales and Development Unit which is a promotional platform for Credit Rating, Personal Indebtedness to increase recognition of the Findeks hance the utilization and recognition relationship management for existing the range of services specifically of- Index, Cheque Score, Commercial brand, establish a culture of risk man- of Findeks products, as well. In the and potential customers with opera- gave further speed to fered to KKB members. The upgrade Credit Rating, Personal Collection agement in both real sector repre- banking channel, the growing base of tions in different sectors. its innovative efforts turned the web site into a user por- Score and Personal Inclination Score sentatives and individuals, and to in- Findeks commercial customers helps throughout 2019 and tal. The Unit also initiated necessary – to a wider audience. Giving further still this culture in the end consumer. improve the real sector’s capability of The Sales Support team pursues the implemented infrastructure works to create a communication momentum to innovative activities, To effectuate this cultural change, the managing receivable risks. mission of providing quality services activities to enable the database for KKB members, ensuring the Analytical Model Development Unit contributes to the establishment on sales channels and necessary co- deployment of machine quick and effective communication. Unit undertook infrastructure works of cooperation between the Findeks To raise recognition of Findeks, the ordination with the field team. It also to help deploy Machine Learning brand and member banks’ branches Banking Channel transforms Findeks monitors field visits and performance learning models. In 2019, the technological infrastruc- models in 2019. and alternative distribution channels. into a product at the headquarters reports to achieve sales targets. It ture of Findeks.com was renewed business line of banks and ensures its successfully supports the operations in light of current user experience In addition to banks and financial in- Aimed at achieving the strategic sales dissemination to the banks’ regional of the field sales team, creates re- trends. Efforts regarding chatbot and stitutions, the Central Decision Sup- targets of Findeks, the Sales Man- and branch network. Spanning all the ports as required for sales channels, real-time offers/pricing processes port Systems applications were also agement Unit provides access to the strategic regions in Turkey, the Find- and communicates necessary infor- are ongoing to carry customer expe- made available to factoring compa- target audience of KKB products. The eks field teamwork under the guid- mation to the field team. rience to higher levels in the coming nies and the real sector. As a result, Unit uses distribution channels of ance of regional managers. The team period. decisions involving risks were made member banks as well as business also pays visits to the branches of Findeks Sales Business in a faster, more consistent, and more partnerships specifically established banks brokering the sales of Findeks Development Unit Quiz shows were organized on Find- accurate manner. The team intro- to develop Findeks sales. products through the Findeks Com- Since its establishment, the Findeks eks social media accounts to increase duced Turkey’s first fraud prevention munication Consultants deployed Sales Business Development Unit has users’ financial literacy. Develop- system and focused on ensuring Four core teams are working under out on the field. been the gateway to the real sector ments in social media management widespread use of this system in the umbrella of the Unit: Banking in terms of identifying financial risk were monitored, and processes were 2019. In an effort to maximize an- Channel, Partnerships Channel, Sales As part of sales management efforts, management needs and providing conducted to consolidate all moni- ti-fraud efforts, the Unit launched the Channels Marketing Management, the Business Partnerships Channel is access to KKB’s services. The activ- toring activities and posts on a single “Loan Utilization Instant Sharing Ser- and Sales Support. expected to expand Findeks products ities conducted by the Unit include platform. vice” (KAPS) and systems to detect and packages to the extreme points. managing receivable risks based on online fraud via device IDs. The Fraud Since 2015, the Findeks Banking The channel will facilitate the devel- rational data, increasing financial lit- Analytical Model Development Information Exchange Platform, Channel has directly supported the opment of business models togeth- eracy through the business models Unit which will be launched in the coming increase of financial literacy and reer. Prospective partners include the developed, establishing standards in Established in 2013, the Analytical period, is aimed at reinforcing coop- ceivable risk management awareness industry’s leading software giants, the process of financial information Model Development Unit’s activities eration between banks and financial among businesses and individuals. which have widespread customer sharing, and ensuring transparency. are focused on three areas: Statis- institutions. KKB focused on works related to the networks, ERP solution partners, op- As a solution partner, the Unit focus- tical Model Development, Central processes of banks’ alternative distri- erators, e-commerce sites that have es on the needs of real sector players, Decision Support Systems and Fraud Sales Management Unit bution channels to be active on digital a wide customer base, and Fintech public organizations and institutions, Prevention. In addition to ensuring The Sales Management Unit con- platforms, which are becoming more firms. and non-governmental organiza- the continuity of existing risk predic- ducts sales and marketing activities widespread. The number of banks tions during its activities. tion (scoring) models, the Unit has for all Findeks products offered to offering Findeks products through As part of the cooperation with the built new models to respond to the the real sector, banks, and insurance their online and mobile applications Insurance Agents Federation of Tur- needs and requests of KKB members. agent customers. in addition to the branch channel is key (TÜSAF), the unit also started to The Unit plans to introduce its various increasing every passing day. offer Findeks packages to the insur-

56 57 14. BUSINESS UNITS

In 2019, the Findeks Sales Business Development Unit focused on increasing the added value generated for the real sector through the services provided.

The Findeks Credit Rating, In 2019, the Business Development The Findeks Credit Rating is now used Efforts to enable the use of Findeks tacted directly, ELGP was presented Through the projects used by the insurance Unit continued to work on increasing in the pricing of motor insurance poli- in bonded sales of durable consum- to a broad sectoral network involving conducted in 2019, the the added value it generates for the cies in the insurance sector. The rating er goods and second-hand cars have automotive, construction, agricul- sector as an important number of Findeks- real sector through its services. Iden- is a key factor for the sector in effec- also contributed to raising individ- ture, energy, healthcare, and durable parameter in the pricing of tifying new commercial opportuni- tive pricing and offers the advantage uals’ financial literacy. More wide- goods, as part of the communication integrated systems was motor insurance policies, ties in services, and introducing new of reducing premium costs for in- spread use of Findeks in this field activities performed via those institu- increased in the sectors also offers discounts on fields of operation for the real sector dividuals. Intensive communication was presented as a reference point tions and firms. In 2019, introductory requiring dealer credit risk premiums for individuals. remained the focal point of the Unit. activities related to such advantages for other sectors in 2019. Within this presentations were delivered at the management such as FMCG, also contributed to product recogni- scope, the groundwork of a project chambers of commerce. Partnerships agriculture, construction In 2019, Findeks continued to be used tion. aimed at outreaching end consumers with associations and prominent materials, automotive increasingly in the automotive rental in the HVAC sector was laid. companies, as well as the commu- sector. Providing significant advan- IBAN-Turkish ID Number and nication activities carried out, helped and fuel oil, as well as tages in managing the financial risks GSM-Turkish ID Number validation Furthermore, the Unit partnered with present both ELGP and especially QR those sectors where risk of the sector’s companies, this ser- services were extended in the in- the leading institutional brands in Code Cheque to broader audiences. monitoring is critical. vice is also beneficial to individuals surance sector, helping companies Turkey to raise individuals’ awareness who lease cars by introducing them achieve operational efficiency. Efforts of Findeks Credit Rating and financial Owing to the projects implement- to Findeks Credit Rating, Cheque and for integration with KKB services in literacy. Projects were developed in a ed throughout 2019, the number of Risk Reports. In this way, it also in- the field of agency risk management manner to suit best the reputation of Findeks-integrated systems rose in creases their awareness in terms of are ongoing. KKB; discounts and similar advantag- sectors involving dealer credit risk financial literacy. Penetration of Find- es for prominent brands were offered management - such as FMCG, ag- eks services in the sector also paves In 2019, initial efforts were undertak- to consumers depending on their riculture, construction, automotive, the way for new partnerships involv- en for the QR Code Cheque Insur- Findeks Credit Rating. fuel oil - as well as those sectors ing bureau services and correlation ance product in collaboration with where risk monitoring is critical. Stud- activities for the respectable repre- the insurance sector. This new insur- Efficient works were undertaken to ies undertaken with the real sector in sentatives of the sector. ance product will help increase the support the widespread use of the the field of risk monitoring expand- use of QR Cheques and establish an Electronic Letter of Guarantee Plat- ed enterprises’ capacity to manage environment of trust in cheque pay- form (ELGP), the recent launch of the dealer risks proactively. Furthermore, ment processes. Activities are ongo- Business Development Unit, in the many enterprises have utilized Find- ing at full speed. real sector in 2019. In addition to the eks reports as a primary evaluation institutions and firms the Unit con- tool for limit allocations and included this rating system in their corporate processes.

58 59 14. BUSINESS UNITS

KKB has built a career management model called “ideal” which is shaped by its vision, mission, strategies, and culture.

Gender Distribution Male Female HUMAN RESOURCES veloping Together” initiated in 2018. In 2017, KKB introduced a series of DEPARTMENT 19 managers provided mentoring to meetings to bolster communica- 85 employees in 2019. tion between employees and senior management. Held regularly in 2019, In 2019, 97 new employees were In line with the “Competence Inven- the “Tête-à-tête with the Gener- 59% 41% hired and 47 were promoted within tory,” developed with the organi- al Manager,” “This Side of Business” the framework of the career man- zation-specific core competencies and “Between HR and Us” meetings, agement model called “Ideal,” which based on job title, 95 employees who respectively, provided KKB staff with is built on the corporate vision, mis- are expected to be future KKB exec- the opportunity to speak with the sion, strategies, and culture. utives participated in the “Competen- General Manager, Assistant Gener- cy Assessment Center.” These staff al Managers and Human Resources Under the “Young Talents Program,” members received feedback on their Department. In this way, each em- 11 new graduates were offered ca- strengths and improvement areas ployee had the chance to participate reer opportunities at KKB. 11 new en- from an objective assessment and in at least one communication meet- gineering graduates who passed the evaluation methodology. With this ing during the year. assessment stage successfully took effort, employees are provided with an 8-week training program and then development plans for the future, The rate of people who left KKB and started to work as “Assistant System and KKB created a Candidate Pool for started to work at other institutions Specialists.” Executive Positions. was 4% in 2019. To facilitate the orientation process of Bachelor and Master Education Level In order to ensure the continuous pro- new hires and encourage the man- Degrees High School fessional and personal development agement staff to understand new of employees, training/development generations’ expectations and per- programs composed of in-class and spectives on professional life, “Men- online modules were developed tors” are appointed for six-month based on job titles; and full employee 80% 20% periods as part of the program “De- participation was achieved.

Profile of Human Resources

482 97 34 10 Total Number of New Hires Average Average Training Employees in 2019 Age Days per Employee in 2019

60 61 14. BUSINESS UNITS KKB strives to bring information security Risk management activities are performed in infrastructure and processes up to the level accordance with international corporate risk of the companies with the best performance in this field. In 2019, KKB continued to invest management standards, namely COSO ERM in information security infrastructure and and ISO 31000 Risk Management. improve cyber security detection capabilities.

The primary responsibility RISK MANAGEMENT sessment prior to contract execution The IT and business processes re- a contribution to the sector in this KKB’s risk management policy in- of the Risk Management DEPARTMENT with critical third parties providing lated to all KKB activities are estab- field. Security training was provided cludes the following activities: Department is to assess support services or with whom a lished and carried out under the CO- to university students through pri- » Defining KKB’s primary business business partnership is to be estab- BIT framework, the ISO 27001, ISO vate sector-university partnerships. goals, risks and opportunities that Shaping its activities according to su- lished. The potential impacts of activ- 22301, and ISO 20000 standards and A big data analytics platform was » Identifying threats that may pre- should be managed taking perior quality standards, KKB man- ities that are underway on KKB were the “Communiqué on the Principles established in 2019, where perfor- vent KKB from achieving its goals, the founding mission and ages strategic, operational, financial, also evaluated; relevant third parties Applicable to the Management of mance and metrics related to infor- » Identifying risks that may give rise and reputational risks in light of in- strategic objectives of KKB were visited and on-site activities Information Systems of Information mation security processes can be to such threats and ascertaining the ternational corporate risk manage- into account. conducted. These efforts helped mit- Exchange, Clearing and Settlement centrally monitored. The maturity of potential impact and likelihood of ment standards (e.g. COSO ERM, ISO igate all external risks, including the Entities and on the Audit of Business related systems and processes was such risks, 31000 Risk Management). The Risk risk arising from support services. Processes and Information Systems,” increased continuously thanks to the » Implementing risk management Management Department operates issued by BRSA in 2013. As part of measurements performed. Under and controls as necessary to re- directly under the General Manager Holding ISO 27001, ISO 22301 and Corporate Process Management, all the people-oriented information se- duce risks to levels determined by and reports to the Audit Committee. ISO20000 certificates, KKB targeted corporate processes are aligned with curity approach, information security senior management, the best practices in risk management the current operations; the impact awareness studies related to current » Establishing the coordination and The Unit works to assess risks and and improved its maturity, passing of changes in processes is analyzed, events and global threats contin- communication network necessary opportunities that should be man- all inspections successfully and re- and these changes are disseminated ued at full speed in 2019. A central for risk management within KKB, aged in line with KKB’s founding mis- newing these certifications. KKB also in a more effective manner. Stan- awareness platform was positioned » Proactively assessing new risks that sion and strategic objectives while made significant progress in the tech- dards were defined for processes, to raise employee awareness of in- may emerge in credit recording and supporting the provision of products nology and structures of crisis man- and efforts initiated in August 2019 formation security. Training and tests information technology systems, and services in the most efficient, agement, risk management, informa- to identify and improve efficiencies were organized on this platform; and and developing recommendations effective, and controlled manner tion security, strategic planning, and in processes. As a result, Key Perfor- suspicious e-mail notifications start- on the mitigation of potential risks, possible. While strategic planning/ process management. In October, mance Indicators were determined ed to be received via this platform, as » Providing KKB executives with targeting and risk management activ- the business continuity and disaster and made available for process own- well. By establishing an independent training programs on risk man- ities are carried out, risk assessment recovery tests were performed suc- ers. Process automation opportuni- security monitoring team under the agement regularly and raising em- is performed in accordance with the cessfully - in a more comprehensive ties were evaluated, and the ground- Information Security Unit, the matu- ployee awareness, Information Security Management manner than the previous years. As work for Robotic Process Automation rity level in detecting and tracking the » Determining and regularly review- System (ISO 27001), Business Con- for crisis management, crisis simula- (RPA), which is among the initial steps cyber risks and threats was increased. ing key risk indicators to measure tinuity Management System (ISO tions were developed with the partic- towards full automation, was laid. Besides, the number of security-ori- and monitor existing risks. 22301), and Service Management ipation of the senior management for ented staff was doubled compared System (ISO 20000) standards. better preparedness against current In order to bring information securi- to the previous year. This policy is supported with writ- These activities were separately con- threats. KKB’s crisis preparedness was ty infrastructure and processes up to ten procedures and job definitions; ducted by process, service, and asset. assessed; potential improvement ar- the level of the companies with the Risk Management also assumes re- the first-level controls of risks iden- This is how KKB’s critical services, as eas were identified. Furthermore, the best performance in this field, KKB sponsibility for operating the Busi- tified by business units in the course well as the processes and assets en- practice initiated in 2018 was repeat- continued to invest in information ness Continuity Management System of daily activities; and the periodic abling the provision of such services, ed. After the independent audit at security and improve cyber security to provide the continuity of services evaluation of the operating results of were subjected to risk assessments KKB Anadolu Data Center, the service detection capabilities in 2019. KKB’s KKB offers to its customers. In 2019, it risk management by senior manage- based on different methods and per- assurance report drafted in accor- Good Information Security Practic- continued working to reduce the risks ment. spectives so as to identify all possible dance with the ISAE3402 reporting es were presented at national and of potential crises and maintain KKB’s risks. In 2019, the Risk Management standard was shared with customers. international conferences to make crisis readiness with business impact Department also performed risk as- The report assured customers while analyses and emergency drills. helping mitigate audit efforts. 62 63 and preparation of the objectives; 14. BUSINESS UNITS ensured that the information flow and budget comply with the in- The primary duties and activities of the come/expense balance by drawing up reports required to define the Budget and Reporting Unit in 2019 included targets; In 2019, accounting and finance » Carried out turnover and income assistance with the formulation of the monitoring as well as budget target realization monitoring and es- operations were successfully carried out financial strategy, preparation of the budget tablished the reporting and system infrastructure required for these to in accordance with the principles and in line with KKB’s policies and objectives, be monitored by the business units as well; and providing guidance on budget-related procedures on accounting standards. Procurement and Contract activities. Management Unit In 2019, the Procurement Manage- ment Unit successfully executed purchasing activities in accordance with legal reporting and independent needs; made year-end estimates; KKB’s corporate structure, audit pro- external audit work conducted and prepared a new budget for the cesses and internal procedures. as per Turkish Accounting and Fi- requests deemed appropriate. » The Unit provided support to ad- nancial Reporting Standards was » Compiled income and cash flow dress KKB’s needs in the most supported. In addition to these ac- data and evaluated them against cost-effective and fastest way in tivities, all opinion requests from the expense budget; prepared a tender processes conducted with within KKB were answered within detailed income and expense bud- suppliers. the framework of tax legislation. get by taking into account the cash » The electronic tender platform was flow statement prepared at the be- used where suppliers can share Budget and Reporting Unit ginning of each fiscal year; revised and update their bids electronical- In 2019, the Budget and Reporting these plans as necessary and mon- ly. Significant savings were attained Unit carried out the following activi- itored them for each department. thanks to this platform. ties: » Ensured dissemination of fast and » As for procurement procedures » Provided assistance in formulating effective information flow in the outside this platform, KKB made the financial strategy, harmonizing most accurate way, with all busi- significant savings through strong financial management and control ness units within KKB and senior negotiation capabilities and effec- systems; preparing the budget in management and verified the active analyses of bids and require- FINANCIAL REPORTING » Compiling and submitting infor- with related business units and the line with KKB’s policies and goals; curacy of data in the MIS systems. ments. AND FINANCIAL AFFAIRS mation, documents, and reports public, the Unit fully met tax obliga- performing budget implementa- » Undertook feasibility studies for » Improvements and additional en- required by public authorities. tions on time. tion and control. new projects and products; and hancements were made in the DEPARTMENT » The Department ensures that all » Cash flows were planned in a way » Established the principles to be tak- oversaw their management within existing ERP system processes to kinds of support needed by the that cash inflows generate an optimal en into account by business units KKB to ensure the implementation make the system more effective, Financial Reporting and Financial Af- operational units is within the legal return. The amendments to the leg- included in the consolidated bud- of an appropriate strategy. efficient, and controlled. fairs Department is in charge of en- and regulatory framework so they islation considering the financial ac- get during budget preparation; co- » Measured financial performance » Process enhancements and up- suring the planning of financial activ- can entirely focus on their areas of tivities were followed and necessary ordinated the budget preparation and guided managers accordingly, dates as required by applicable ity so that obligations and reporting expertise and maximize their effi- arrangements were made. process. » Facilitated the formulation process laws were introduced in supplier requirements on financial activities ciency. » The Unit monitored collections and » Reviewed the budgets prepared by of the financial strategy and carried risk assessment and support ser- are accurately and promptly fulfilled reported its findings to relevant de- business units to ensure their con- out the necessary reporting and vice decision-making processes. and monitoring and systematically Financial Affairs Management Unit partments to ensure efficient re- formity to financial plans; created a analysis in line with KKB’s needs; » As part of inventory management, recording operating results. The De- The Financial Affairs Management source utilization and planning. financial scenario by consolidating » Monitored the channel-based a new platform was formed and partment fulfills these responsibili- Unit successfully carried out ac- » The Unit paid the expenses related budgets; and presented it to the sales performance of the units op- deployed where fixed assets and ties in accordance with KKB’s strate- counting and finance operations in to the maintenance and repair, insur- Board of Directors, explaining the erating under consolidated budget; inventories can be tracked. gic objectives, legislative regulations, 2019, by taking into account the pro- ance expenses for the maintenance rationale. » Conducted performance monitor- » In addition to procurement con- and public interest. cedures and principles related to the of assets and repairs of fixed assets, » Ensured that the budget is imple- ing of distribution channels by sup- tracts, processes were introduced accounting standards. project expenditures, management, mented in accordance with the porting the planning of the cam- regarding business partnership, The Department is also tasked with: and general expenses; it also met its goals described in the annual fi- paign plans in line with the budget product, and data center contracts. » Monitoring and fulfilling tax liabil- To this end: financial obligations arising from ap- nancial plan and carried out work and targets set in the annual finan- » A mechanism was established ities, » In addition to preparing financial plicable laws. related to the actualized budget. cial plan; whereby all procurement details » Cash flow optimization, reports in line with the rules and » As an organization subject to the reg- » Reviewed additional and extraor- » Examined the budgets prepared can be instantly forwarded to de- » Providing the reports requested by regulations set forth by public au- ulations of the Banking Regulation dinary requests submitted by the by the units and facilitated the pro- partment heads via the reporting the senior management, thorities and sharing these reports and Supervision Agency (BRSA), all departments in line with emerging cesses or the budget monitoring system.

64 65 14. BUSINESS UNITS

The Risk Center Coordination Department is primarily responsible for key bureau activities including data collection and sharing services.

“Risk Center Interactive Data The “Risk Center Report RISK CENTER Risk Center Project and Product » In order to allow inquiry of past in data notification processes, trend Inquiry System” project Application” service by the COORDINATION Development financial information, Credit Refer- controls on databases by member, The Risk Center Project and Product ence System (CRS) Retrospective consistency efforts by data type, and initiated in Q4 2019 is Banks Association of Turkey DEPARTMENT Development Unit implemented the Inquiry service was launched; cross controls are run, prior to the planned to move the report (TBB) was made accessible following key projects in 2019: » Cheque scores started to be shared performance of reporting and com- sets shared with TBB Risk for all users via the e-state The Risk Center Coordination Depart- The “Risk Center Report Applica- on the cheque report raw data web munication activities. Significant data » Center Members to gateway to increase ment is responsible for activities car- tion” service by the Banks Associa- service; quality improvements were attained an interactive platform. financial literacy in Turkey. ried out by KKB on behalf of the TBB tion of Turkey (TBB) was made ac- » New risk codes were added in the this way. Risk Center. The Department consists cessible for all users via the e-state Credit Limit-Credit Risk-Receiv- of the Risk Center Project and Prod- gateway to increase financial litera- ables to be Liquidated (CLCR) appli- Statistics shared with the public on uct Development, and Business In- cy in Turkey; cation and activities were conduct- the website of TBB Risk Center start- telligence and Reporting Units. In ad- » Asset management companies ed to differentiate Credit Guarantee ed to be presented on the TBB Data dition to data collection and sharing started to notify their commercial Fund (KGF) credits. System in 2019. This interactive data functions, which are the core bureau credit risks under the CBS Simplifi- inquiry system, which also includes activities, the Unit also focuses on the cation project; The following activities initiated in other statistics of TBB, was made development of new products and » The 2018 turnover and asset size 2019 are planned for deployment in available at https://verisistemi.tbb. services that will create added val- information obtained from the 2020: org.tr/. The project titled “Risk Center ue for the member institutions. The Revenue Administration (GİB) was » Under the Bill Consolidation proj- Interactive Data Inquiry System” was Department’s primary aims include included in the CBS system and ect, bills will be obtained via the launched in Q4 2019 to move the re- receiving new data and services both shared with members; web service and presented in the port sets shared with TBB Risk Center from private and public sources, and » As part of Foreign Currency Loan bill report to be designed; members to an interactive platform. developing new products over exist- and Income Inquiry, members » Accounts that are re-structured or Slated to be completed in 2020, this ing data for the needs of members started to manage procedures re- under an interim injunction will be system will allow members to access in line with KKB’s strategies, in coor- lated with changes in the type of displayed separately in the CRS in- a more visual and enriched version of dination with the Risk Center. On the company, demergers, and mergers; quiries, and retrospective inquiries the reports presented based on the business intelligence side, regular developments required for com- will be shared with members in a data at TBB Risk Center. Furthermore, reports are produced on the collect- pliance with the circular on capital new segment. members will be able to set filters ed data, and statistics are published. movements were completed; and access summary report results. Additionally, efforts to improve the » On the mainframe system where Business Intelligence and The platform will also enable mem- quality of the data are continuously CRS and CBS applications run, SNA Reporting bers to compare their data and over- carried out. technologies were replaced with Data controls and quality improve- all sector figures, and it will be built two-factor authentication structure ment efforts for the data retained on a structure that can be improved after the transition was completed; at TBB’s Risk Center have continued and enhanced in line with future intensively. In addition to automa- needs and expectations. tion validations and sanction rules

66 67 14. BUSINESS UNITS

Regulatory Compliance and Legal Unit ensures that products and services KKB plans to offer are designed in compliance with applicable laws.

The Operations Center Regulatory Compliance REGULATORY Operations Center were commenced to renew the Doc- Dividend Distribution Proposal addresses members’, and Legal Unit is in charge COMPLIANCE, LEGAL The Operations Center ensures the ument Management System, where During the Board of Directors meet- continuity and functioning of busi- official authorities’ requests are mon- ing dated February 27, 2020, and customers’, and internal of preparing contracts KKB AND OPERATIONS ness processes at KKB. To this end, itored. The plan is to deploy the re- in line with the decision numbered units’ requests on behalf will execute, and ensuring DEPARTMENT it responds to the requests of mem- newed system in 2020. The new sys- 2020/09, it was unanimously re- of KKB and the Banks coordination between bers, customers, and the units within tem is intended to run all processes solved by the participating members Association of Turkey Risk relevant KKB departments the organization by proxy, both on in a fully-integrated and automated to submit for the approval of the Regulatory Compliance and Legal behalf of KKB and the Risk Center of manner, reduce transaction times, General Assembly: i) not to distrib- Center, while guaranteeing and companies providing Unit the Banks Association of Turkey. The and mitigate operational risks. ute the net income remaining from the continuity and consultancy services in The Unit aims to ensure compliance Unit operates with two teams: Au- the Company’s 2019 Gross Profit af- effectiveness of business trademark and patent of the products and services KKB thorization Management and Official Audits Conducted, Sanctions and ter setting aside the legal reserves, to plans to offer with applicable laws processes. processes. Correspondence. Penalties Imposed During the the shareholders; and to keep it in the and alignment of existing products Period Extraordinary Reserves Account, ii) to and services with the changes to ap- The Authorization Management As of December 31, 2018, the pending distribute, the remaining net amount plicable laws. Today, many compa- Team’s activities include authorizing lawsuits filed against the Company after setting aside legal reserves nies across industries, in particular internal and external web applica- with pecuniary compensation claims from the TRY 2,836,000.00 of 2014 those in banking and finance, target tions of KKB; defining memberships are as follows: income, recorded in the Extraordinary moving their products and services and subscriptions; meeting customer » The lawsuit filed on November 28, Reserves Account and which was not to the digital environment to boost report requests related to the RC Risk 2013, with a claim of TRY 200,000 previously distributed. efficiency and reduce costs with the Report, making Findeks operational for pecuniary and non-pecuniary use of advanced technology. Against definitions related to real sector cus- damages, each of which amount to Competition Status of the this backdrop, the Unit aims to con- tomers, while ensuring that the data TRY 100,000 and with a claim to at Executives of the Company duct studies for the establishment types, which are notified to the mem- least 20% of the possible earnings. The members of the Board of Di- of the necessary legal infrastructure bers daily, are logged in the system. » A lawsuit filed on 27.10.2016 against rectors of KKB did not engage in any to assist in implementing these cor- The Official Correspondence Team’s a bank and KKB with a claim of TRY business or transactions that violate porate digitalization strategies. The activities include responding to cor- 1,000 for pecuniary damages and the non-competition agreement, nei- Unit is also in charge of preparing respondence from customers as well TRY 30,000 for non-pecuniary ther for themselves nor on behalf of the contracts KKB will execute with as official institutions such as the damages. others. members, customers and suppliers, Courts, Public Prosecutor’s Office, » The lawsuit filed on July 30, 2018, ensuring coordination between rel- Security Directorate, Ministry of Fi- with a non-pecuniary damage evant KKB departments and compa- nance, Capital Markets Board (CMB), claim amounting to TRY 20,000. nies providing consultancy services Social Security Institution (SSI), Rev- » 2 reinstatement lawsuits. in trademark and patent processes, enue Administration, and the Direc- » 4 severance and/or notice pay law- selecting the law firms to provide torate of Execution within the legally suits. legal services and monitoring their required time frame. The team also services, following up litigation cases ensures that the reports requested by In 2019, a total of TRY 79,025 was im- planned to be monitored within KKB, the official institutions are produced posed on the Company in respect of providing legal advice to the units accurately and completely and be- administrative fines. within KKB, and providing support to come ready for submission. Studies General Assembly preparations.

68 69 14. BUSINESS UNITS

R&D activities were initiated to classify, forward, and respond to notifications through the use of Artificial Intelligence.

INTERNAL AUDIT processes – including System Security, presence of member organizations DEPARTMENT Software Development Life Cycle, Data during the security, integrity, and au- Management, Information Architecture thenticity process of Risk Center data. Definition, CRM and Channel Manage- IT Audit and Business Processes ment, and Operation Center processes In 2019, the Internal Control Depart- Audit Units – based on KKB’s service continuity and ment performed risk analyses and pre- In 2019, the Internal Audit Department information security requirements. vious period comparisons with respect completed the process and manage- to 91 audits conducted by independent ment statement audits in line with the Taking KKB’s growing license inventory audit firms at member institutions. The audit plan approved by the Board of Di- into account, and to prevent legal risks, results of the audits were shared with rectors. Management statement works the Department also conducted a Li- the Risk Center administration. and support service provider audits cense Management Audit to guarantee were conducted by the Department for effective management of the license In accordance with the circular pub- the sixth time in 2019. In regard to the costs and license inventory. Compli- lished by TBB Risk Center in 2017, the referenced efforts, KKB’s 2019 Man- ance inspections were performed for Internal Control Department’s mem- agement Statement Report and Man- all the licenses managed on Snow ap- ber inspection team conducted on-site agement Statement Report Related to plication. studies in relation to risk analysis of the Risk Center Operations Carried Out seven Risk Center member organiza- COMMUNICATION raise employees’ level of knowledge. by KKB were prepared successfully. The Using technology effectively in every tions in 2019. Besides, the Department Members’ questions and requests reports were shared with the indepen- CENTER DEPARTMENT aspect of its operations, the Internal developed an early warning system were addressed more promptly and dent audit company and TBB Risk Cen- Audit Department monitors findings, that analyzes the risk structures of member satisfaction increased, with ter. The Communication Center continued and actions through automatic report- members and end users according to the Communication Center receiving to respond accurately and promptly to ing via the GRC system. Monitoring re- various criteria based on an analytical the notifications. The audit plan for 2019 was prepared the requests of KKB member financial sults are reported monthly to KKB and model. Efforts were initiated to devel- with a risk-based methodology, taking institutions in 2019. The Communica- TBB Risk Center administrations. op a system involving advanced tech- In line with emerging technologies, KKB’s broader product range, tech- tion Center provided services for the nological solutions including artificial processes are continuously improved. nological developments, legislative activities of KKB, Risk Center, Turk- Member Audit Analysis and intelligence. The Unit supports the ef- To this end, R&D activities were initiat- changes, and digital innovations across ish Central Bank’s Systemic Risk Data Coordination Unit forts to create a best practices guide- ed to classify, forward, and respond to the globe into account. Process audits Tracking System, and the Association The Risk Center Member Audit Tracking line to raise awareness in the sector notifications through the use of Artifi- including Findeks Flows Security Au- of Financial Institutions. System, which has ensured centralized while continuing with monitoring and cial Intelligence. The aim is to deploy dit, Findeks Mobile and Online Branch management of member audits since steering activities to ensure compliance this practice in the coming period. Security Audit, Membership Access The Communication Center regu- 2016, continued to serve all member with the guideline. and Authorization Process Audit, Data larly convened with product teams organizations and independent audit Warehouse and Business Intelligence and organized product trainings to companies via e-signature verification In 2019, Findeks Web Service Data Se- Applications SDLC and Authoriza- and two-factor identity authentication curity Analyses were carried out at 15 tion Process Audits were conducted infrastructure. Findeks member organizations fol- according to the audit plan. Support lowing a specific methodology. Risk service provider audits, planned in line As a result of analysis and evaluation assessments on legal entities receiving with the criticality of products, were studies made by the Unit, risk perfor- data from Findeks via web service were also completed. The Department com- mance of member organizations can performed and guidance provided to pleted the audit of 31 IT and business be tracked. With the rising awareness, increase the reliability of their systems. processes and two support service the maturity level was increased in the

70 71 COMMITTEES evaluates information from the related Process Committee 14. BUSINESS UNITS department executives about the activ- The Process Committee convenes to as- Project Steering Committee ities realized within the month that are sess the changes to be made in the func- The Project Steering Committee is re- strategically important. tioning of the institutional processes. sponsible for informing senior manage- The Committee is also responsible for ment about the strategic conformity of Weekly Product Evaluation Meeting eliminating gray areas as to which units The focal point of the Internal Control projects, investment decisions regard- Weekly Product Evaluation Meetings are should undertake the process activities; ing important information systems, re- held to evaluate the strategic conformi- determining and monitoring the perfor- quests to be added to the annual project ty of existing products/services, product mance goals of the processes. Also, the Department is to guarantee the efficiency plan, assessing the costs and priorities of usage, and improvement recommen- Process Committee coordinates all opti- projects, and evaluating the risks related dations/requests regarding products. mization and automation efforts of the and effectiveness of KKB’s activities. to existing projects and potential risks. Additionally, decisions are taken on the processes in terms of design and oper- types of data to be used and the man- ation with senior management support. Audit Committee ner of sharing such data within the scope The Audit Committee convenes to re- of the product/service provided by KKB. Change Committee view the activities of the Internal Audit, Important matters regarding the suppli- The Change Committee is tasked with Regulatory Compliance and Operations, ers of new and existing products are also evaluating application and system Internal Control, Risk Management De- evaluated during these meetings. changes’ impact on daily operations and partments. The Committee aims to their compliance with applicable laws. The Information Systems INTERNAL CONTROL data in 2018 and with the integration share the results of these activities with Information Security Committee The Committee also controls the mea- Control Unit conducts DEPARTMENT of third-party service applications in KKB senior management. Information The Information Security Committee sures required to minimize the risks aris- 2019, the project has established a on the results of audit activities conduct- aims to assess KKB’s information secu- ing from changes. control activities for strong foundation to monitor internal ed within the organization is provided rity weaknesses, primarily the changes The Internal Control Department is information system control systems using artificial intel- to the participants, which include some to the operation of the information se- Information Systems Steering focused on guaranteeing the effi- processes while ensuring ligence. members of the Board of Directors. curity function, as well as the evaluation Committee ciency and effectiveness of opera- the compliance of processes of the need for resources and coordi- The Information Systems Steering tions in light of the type and nature The Internal Control Department is Internal Audit Committee nation to eliminate these weaknesses. Committee is responsible for ensuring with applicable laws and of the activities undertaken by KKB. composed of Information Systems The Internal Audit Committee compiles The Committee’s responsibilities include alignment of IT strategies with business corporate procedures. Accordingly, the Department is in Control Unit and Business Processes information on the audit plan, holds informing senior management about in- objectives; prioritizing resource require- charge of planning, implementing, and Financial Control Unit. briefings on completed audits, gathers formation security violations within the ments in this direction; developing strat- and coordinating internal control information on actions/findings, which institution and global information secu- egies; monitoring and improving the de- activities including those related to Information Systems Control Unit are either overdue or incomplete and rity incidents. veloped strategies. The Committee also information systems, business pro- Information Systems Control Unit the action date revision requests. The prepares the annual information sys- cesses, financial reporting systems, executes control activities for the in- Committee discusses the audit findings Business Continuity Committee tems budget and submits it for approval, and compliance with laws. Its re- formation systems processes within and results with executives and/or the The Business Continuity Committee plans IT investments and assesses the sponsibilities include evaluating the KKB pursuant to existing legislation staff of the audited units and depart- convenes to determine crisis scenarios, impact of new investments on the KKB effectiveness of internal control sys- and KKB’s internal procedures. The ments. prepare relevant action plans, review risk profile and resource requirements. tems and thus protecting KKB’s as- identified violations are recorded on changes in the operation of the business sets; implementing control activities the GRC application; relevant action Disciplinary Committee continuity function and evaluate re- Service Management Committee efficiently, effectively, and in accor- plans are regularly monitored. Ad- The Disciplinary Committee is respon- source needs, based on the mentioned The Service Management Committee is dance with applicable laws, internal ditionally, the unit conducts verifica- sible for determining situations con- scenarios. The Committee is responsible responsible for determining the scope, policies and rules; ensuring the reli- tion studies within the institution in trary to the Human Resources Discipline for providing information on the current policy, and objectives of KKB’s service ability and integrity of accounting and relation to the obligations of the ISO Regulation and for implementing the status of business continuity risks, ac- management in line with the corporate financial accounting systems as well 27001, ISO 22301, and ISO 20000 disciplinary sanction decisions that are tions, and practices. strategy, planning and monitoring the as prompt availability of information; certifications. deemed appropriate. To determine sit- efforts related to service management, and developing internal control sys- uations contrary to the Discipline Reg- Data Governance Committee and raising awareness with respect tems and internal control activities in Business Processes and Financial ulation, the Manager of the Regulatory The Data Governance Committee is re- to meeting service requirements. The a manner to eliminate and prevent Control Unit Compliance and Operations Department sponsible for making decisions to ensure Committee also ensures that activities risks. Business Processes and Financial and other KKB Department Executives the quality and integrity of the data that are regularly reviewed and carried out in Control Unit executes control activ- come together to evaluate the results of KKB has provided, stored, and shared. accordance with applicable laws, rules, The “Exhaustive Audit Trail Infrastruc- ities related to all business and fi- the investigation on the related issue. The Committee identifies the needs and regulations; provides adequate re- ture” Project is designed to bolster nancial processes other than the in- related to the data and assesses data sources to conduct service management KKB’s audit trail structure with open formation systems processes within KKB Steering Committee validation rules and methods. Also, the activities; and identifies and manages source software and big data plat- the scope of applicable legislation The KKB Steering Committee is respon- Data Governance Committee evaluates risks related to service management. forms in line with its growing product and KKB procedures. Breaches and sible for the current status of the institu- the information architecture and makes range, expanding the number of cus- violations detected as a result of the tion’s finances, assessment of the com- decisions on the compatibility of proj- tomers and continuously progress- control activities are managed by cre- patibility with the strategic objectives, ects that may affect the information ar- ing technology. The Internal Control ating a finding and action plan on the and evaluation of the new products/ser- chitecture. Department launched this effort in application (GRC) in use. vices planned. Besides, the Committee 2017. Thanks to the accumulation of

72 73 ACTIVITIES

74 75 15. OUR HOLISTIC PRODUCTS AND SERVICES

Service Name 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2 019 Credit Reference System (CRS) Individual Customer Objection Assessment System (Individual MIDES) False Information/Document/Declaration/Application Alert System (SABAS) CRS Information Verification System Personal Credit Rating (PCR) Corporate Bureau System (CBS) Limit Control System (LCS) Internet Frauds Alert System (IFAS) Bounced Cheque Inquiry and Information Sharing Services Personal Indebtedness Index (PII) Cheque Report Risk Report Credit Limit Credit Risk Inquiry and Sharing Services Sharing Information about Protested Bills Individual Cheque Inquiry Risk Center Customer Report Service GeoMIS – Map-Based Reporting Service Agricultural Loan Assessment System (TARDES) Cheque Index Central Decision Support Systems (CDSS) Commercial Credit Rating (CCR) Prescribed Accounts Corporate Customer Objection Assessment System (Corporate MIDES) Cheque Report Raw Data Presentation Risk Report Raw Data Presentation Bounced Cheque Warning System Inquiry and Warning about Entities Prohibited from Participation in Tenders Data Sharing about Derivative Transactions Data Updating Application Data Validation and Sanction Application Acceptance & Rejection Notifications Related to Loan Applications Sharing of Internal Rating Scores Rating Scores Sharing Service Official Institution and Customer Information Request Services Member Request Management Services Risk Center Bulletin and Statistics Publication Services Address Processing Service Cheque Status Inquiry Farmer Registry System (FRS) My Findeks Rating Consultant Findeks Warning Services Findeks Tracer Trade Registry Sharing System (TRSS) Paid Bills Inquiry Service Sharing Information about Cheques under Interim Injunction Sharing Information about Companies that have Declared Bankruptcy/Suspended Bankruptcy/Debt Composition Sharing Information about Customers Banned from Using Cheques Customer RA Personal Record Search Cross Cheque Relations Inquiry Service Credit Insurance Inquiry Service Findeks QR Code Cheque System Letter of Guarantee Status Inquiry (LGSI) Collection Scores Inclination Scores Central Invoice Registration System (CIRS) IBAN Validation Service LCS Customer Objections Handling System (MIDES) Application Fraud Attempt Detection and Prevention Service Credits Analysis Portal CTMCRS Inquiry Service Cheque Analysis Portal KKB Unknown Number Service Address Processing - Maps Service RC Warning Services Force Majeure Inquiry BKM Member Merchant Turnover Information Inquiry Loan Utilization Instant Sharing Service (KAPS) Electronic Letter of Guarantee Individual Inquiry Unit Reporting Findeks QR Code Cheque Registration System Telecommunications Information Inquiry Foreign Currency Credit and Income Inquiry Retroactive CRS Inquiry Provision of Risk Center Report via the E-State Gateway Findeks QR Code Cheque System BRSA Product and Service Fees Portal

76 77 LIMIT CONTROL SYSTEM (LCS) LCS CUSTOMER OBJECTIONS » Longest overdue period to date * Pursuant to the Bank Cards and Cred- HANDLING SYSTEM (MIDES) » Details of non-performing loans if any 16. KKB’S PRODUCTS AND SERVICES it Cards Law, the total limit of credit LCS MIDES provides a platform for » Leasing – Factoring combined data cards that may be granted by a card KKB members to handle customer » The rating percentiles which indicate issuing organization to a customer, complaints related to incomplete or customer’s credit rating percentile who will begin using a credit card for incorrect information shared via the throughout Turkey the first time, may not exceed twice Limit Control System. » Worst case in the repayment history their income for the first year and four » Longest overdue period to date times thereof for the second year. Pur- If a customer thinks that the informa- » Liabilities of credit card holders, the Service Name 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 suant to the regulation dated October tion shared via LCS is incomplete or outstanding balance under prosecu- Limit Control System (LCS) 8, 2013, credit limits apply to all credit incorrect, they can initiate the objection, credit utilization ratio, the balance Personal Credit Rating (PCR) cardholders. tion process in LCS MIDES by using of outstanding installments False Information/Document/Declaration/Application Alert the reference number generated for » For consumer loans: outstanding bal- System (SABAS) KKB initiated works on this issue in col- the inquiry. Regarding complaints sub- ance under prosecution, credit utili- laboration with the TBB Credit Cards mitted by members, the process runs zation ratio, number of installments, Internet Frauds Alert System (IFAS) Working Group, commencing the test between objecting and responding amount of installments, and the like. Personal Indebtedness Index (PII) run of the Limit Control System (LCS) parties through LCS MIDES screens. If Cheque Report in late 2013. As of January 2014, all the responding member replies to an The Risk Report also shows repay- Risk Report members uploaded customers’ credit objection with a value lower than the ment performance for each loan over GeoMIS - Map-Based Reporting Service card data into the system. LCS value, then the process continues the past 18 months, while providing an Agricultural Loan Assessment System (TARDES) via the LCS Urgent Updating screen overview of repayment performance Designed and developed by KKB in with the responding member updating in the financial sector. The report con- Cheque Index line with the country’s needs, the Limit their reply. tains not only negative information, Central Decision Support Systems (CDSS) Control System runs in real-time. such as overdue payments or records Commercial Credit Rating (CCR) LCS MIDES was developed to re- under prosecution but also positive in- Prescribed Accounts LCS enables credit card issuers to spond to customer objections quickly formation, such as timely repayment Address Processing Service manage the single limit application by and clearly and to carry out all related of loans. Therefore, the Risk Report Cheque Status Inquiry combining credit card limits assigned communications in accordance with offers a significant advantage for per- by credit card issuers for each custom- certain standards. It aims to shorten sons who pay off their debts by the due Farmer Registry System (FRS) er. the objection process and increase date. My Findeks Rating Consultant customer satisfaction. Findeks Warning Services Starting on March 1, 2014, sanctions Since September 2012, KKB has also Findeks Tracer are implemented within the Limit Con- RISK REPORT shared the Risk Reports with report-is- Trade Registry Sharing System (TRSS) trol System (LCS) under the following The Risk Report is a KKB product that suing persons/institutions and third Findeks QR Code Cheque System conditions: shows the past loan repayment per- parties authorized by these issuers • If there are missing records in the formance of natural persons and legal through bank branches. In addition to Letter of Guarantee Status Inquiry (LGSI) first notification file transmitted, or if entities. the financial industry, the Reports have Collection Scores a subsequent addition is attempted, been shared electronically via the Find- Inclination Scores • If FTP notification does not comply The credit registry data owned by eks platform with individuals and the Central Invoice Registration System (CIRS) with the standards or is not made KKB consists of customer information real sector since 2014. IBAN Validation Service within the specified time. shared between KKB’s members. The • If the final limit is notified wrongly, LCS Customer Objections Handling System (MIDES) report is prepared based on this infor- CHEQUE REPORT • If the current limit is communicated mation and submitted without making The enactment of the Law Amending Application Fraud Attempt Detection and Prevention Service incorrectly, changes. It is beyond its peers in the Cheque Law No. 6273, which was pro- Credits Analysis Portal world in terms of design and content mulgated in the Official Gazette No. Cheque Analysis Portal As a result of the latest improvements as a result of the enrichment activities 28193 (Repeating) dated February 3, KKB Unknown Number Service to LCS; reduction and closure transac- carried out in 2014. The following in- 2012, abolished the sanction imposed Address Processing - Maps Service tions, which are carried out in a batch, formation is provided in the report: on issuers of bounced cheques and can now be performed online. Alloca- » Findeks Credit Rating ushered in a new era in the Turkish Loan Utilization Instant Sharing Service (KAPS) tion and additional allocation transac- » Limits, risks, past payment perfor- economy in terms of credit risk man- Electronic Letter of Guarantee tions can be canceled online. mance and credit card payment de- agement. Findeks QR Code Cheque Registration System tails of the respective individual BRSA Product and Service Fees Portal With the launch of the LCS Urgent Up- » Number of financial institutions which Platforms through which information Findeks QR Code Cheque System dating service, members were enabled made the notification required for proper management of to perform reduction, closure, and re- » Total number of credit accounts risk and accurate decision making by *Products and services offered to the TBB Risk Center by proxy are presented in Chapter 17. cord correction transactions without » Total limit and balance data a cheque bearer whether to accept the document circulation in order to facili- » Date of the last loan utilization cheque aim to protect both the cheque tate correction of limits notified as part » Number of overdue credit accounts issuer and bearer. of LCS. » Total amount of overdue balance

78 79 data obtained through the analysis of detailed information pertaining to 16. KKB’S PRODUCTS AND SERVICES cheque history. Therefore, corpora- The Personal Credit Rating (PCR) enables tions can use the Cheque Index before engaging in a cheque transaction lending institutions to make rational, instead of attempting to interpret the The Cheque Report enables easy detailed information in the Cheque standardized risk-based decisions while Report. The Cheque Index enables companies to: Have an idea about the access to the past cheque payment shortening the decision-making process reliability of cheques, which they accept as a guarantee, Make consistent information of cheque issuers. substantially. predictions as to whether the cheque will be paid by the maturity date, and Minimize any financial loss they may incur if the cheque bounces.

PERSONAL CREDIT RATING (PCR) The Personal Credit Rating (PCR) is a numerical indicator calculated by The “Cheque Report The “Cheque Report Presentation » List of dishonored cheques limited The Cheque Report enables track- service makes it possible to discover KKB for individual customers to pre- Presentation System” was System” was introduced by KKB in to the most recent 50 cheques ing of the cheque payment perfor- whether the cheque is in circulation dict and compare customers’ ability April 2012 to make the cheque more Number of open cheques remain- mance of an account holder, whether through an online inquiry via the is- to repay the loans they have obtained introduced by KKB in April » secure as a common instrument of ing unpaid or non-dishonored positive or negative. The report also suing bank. or will obtain from KKB-member in- 2012 to make the cheque payment. The system offers a ser- » Number and amount of postdat- shows how many banks have issued stitutions. PCR is a decision support more secure as a common vice that provides the cheque pay- ed cheques remaining unpaid or cheque books to the account holder With the Cheque Status Inquiry Ser- product developed using a statisti- instrument of payment. ment history information needed by non-dishonored and gives an idea about the credi- vice, the institution can inquire the cal model; it provides a summary of cheque bearers about the cheque » Number of cheques unreturned to bility of the person in question. If the bank code, branch code, checking data pertaining to loan repayments issuers in order to make sound deci- the banking system, Cheque Report is used at the time of account number and cheque row of customers, obtained via the Credit sions via the Cheque Reports the sys- » Cheque Index, cheque acceptance, it is possible to number of the cheques accepted as Reference System (CRS). tem produces. » Table showing the lowest, highest, predict the probability of the cheque a guarantee or for collection, and the and average amounts of cheques bouncing with up to 80% accuracy. status of the cheques. PCR enables lending institutions to The Cheque Report contains the fol- by year, make rational, standardized risk de- lowing information: » Data of open cheques in addition The Cheque Report is receivable via CHEQUE INDEX cisions while shortening the deci- » Banks where the customer has to collection guarantee cheques, mobile devices or online. Reports The Cheque Index summarizes sion-making process substantially. As cheque accounts » Issuers’ postdated and open can be required by real sector play- cheque using habits and the reliabil- a result, customers can access loan » Number of cheques presented cheques, in addition to bounced ers from the counterparty at every ity of a cheque issuer while serving as products in a shorter time. Lastly, KKB since 2007 and paid cheques. platform of commercial transac- a risk indicator in graphic form. The launched the fifth version of PCR in » Number and amount of cheques tions. Through online report applica- Cheque Index is based on a score for 2017. paid upon presentation tions, real sector players can obtain a the market, which is derived from the » Number and amount of cheques Cheque Report or a Risk Report of a cheque payment data of natural and PERSONAL INDEBTEDNESS INDEX bounced and still unpaid since debtor from the said debtor or, with legal persons. PII 2009 their approval, directly from the KKB The Personal Indebtedness Index » Number and amount of cheques inquiry system to control their credit The Cheque Index evaluates the (PII) is a score-based risk index de- bounced but subsequently paid The system offers a service risk. KKB has set an example world- cheque payment behavior of le- veloped by KKB to introduce a new since 2009 that provides the cheque wide with its unique infrastructure, gal entities and natural persons as a risk perception to the banking-finance » Date of the first cheque presented payment history information which enables the requesting of measurable factor. If there has been a industry and to enable better pre- » Date of the first cheque presented needed by cheque bearers Cheque Reports by obtaining online problem, the Cheque Index’s calcula- diction of potential risks. PII aims to and dishonored about the cheque issuers consent from third parties; more- tion reflects the number and amount. identify persons who are inclined to » Date of the last cheque presented in order to make sound over, the system is integrated with all The cheque bearer can easily see the run up excessive debts, even though and dishonored banks in Turkey. standing of a cheque issuer on a sim- they may not have shown any signs » Date of the last cheque paid upon decisions via the Cheque ple diagram and compare his/her po- of repayment problems in the past. presentation Reports the system CHEQUE STATUS INQUIRY sition with other cheque issuers. The objectives of PII include: » Number and amount of cheques produces. SERVICE paid during the last 1-, 3- and The Cheque Status Inquiry Service The Cheque Index, calculated statis- 12-month periods was developed to prevent cheque tically through an analysis of detailed » Number and amount of cheques fraud, which has been on the rise of data in the Cheque Report, facilitates dishonored during the last 1-, 3- late. With this service, one can find interpretation of the reports and and 12-month periods out whether a cheque is in circulation sound decision-making, hence en- by making an online inquiry about suring time and resource savings. The the status of accepted cheques. The Cheque Index is based on statistical

80 81 In 2015, KKB began calculating In- clination Scores for personal loans 16. KKB’S PRODUCTS AND SERVICES by modeling loan and loan application data pertaining to the personal portfolio contained in the data ware- KKB’s Inclination Scores seek to predict house using statistical methods and With Commercial Credit Rating (CCR), calculations. KKB plans to calculate the likelihood of persons to use a new credit Inclination Scores for all personal products in the coming period. monitoring the external behavior of loan product in the future. GEOMIS - MAP-BASED customers becomes easier. REPORTING SERVICE GeoMIS, winner of the “Oracle 2014 Innovator Excellence Award,” is a location-based data reporting service that processes address information contained in KKB data and converts it into geographic coordinates. GeoMIS enables viewing of all types of sta- CCR is based on » Establishing an early warning sys- COMMERCIAL CREDIT RATING The Commercial Credit Rating (CCR) for overdue customers and manage tistical data on the map by assigning demographic data, loan and tem by identifying those persons (CCR) is calculated statistically through the collection processes more effective- different colors to different catego- who use a new loan to pay off ex- The Commercial Credit Rating (CCR) analysis of detailed data contained in ly. Taking into account all CRS data, ries, which are broken down by city collateral data, and cheque isting debt and who therefore are is an evaluation of the creditworthi- the Risk Report. CCR provides the fol- members can boost collection ef- and town. payment performance to increasingly incurring more debt, ness of a firm in order to facilitate lowing advantages: ficiency by planning their actions to predict to what extent an even though they may not have commercial credit analysis. CCR is » Risk decisions made by lending in- realize risk segmentation according Comprised of various components, enterprise will fulfill the shown any signs of repayment notified to member banks and other stitutions can be evaluated more to the related overdue period. They GeoMIS does not only consist of a repayment requirements of problems in the past. financial institutions as part of inqui- accurately. can also ensure to prevent customer database, numerical map, and re- a loan obtained from » Ensuring responsible lending, ries made through the Corporate Bu- » A standard can be established in dissatisfaction except for operational ports. GeoMIS can also be effectively Enabling users to make more accu- reau, which keeps a record of credit the commercial segment. a member. » gain. used as a decision support system rate decisions concerning matters histories. » Decision-making processes are because it visualizes common data- such as determining credit limits, shortened so that customers can INCLINATION SCORES base processes, such as inquiries and risk-based pricing, and the like, CCR is based on demographic data, access loan products in a shorter KKB’s Inclination Scores seek to pre- statistical analysis, combining them » Improving the quality of the lend- loan and collateral data, and cheque time. dict the likelihood of persons to use with geographic analyses provided ing decision systems of banks. payment performance to predict to a new credit product in the future by the maps. Thanks to this capabil- what extent an enterprise will ful- KKB offers its corporate members based on their past behavior and ity, GeoMIS renders report outputs The Personal Indebtedness Index fill the repayment requirements of a two different Commercial Credit Rat- their performance with respect to ex- much more valuable, providing an (PII) was developed to predict those loan obtained from a member. CCR ing models, derived from data mod- isting credit products. This is aimed at output that boosts productivity and persons who will become excessively measures a firm’s default probability eling carried out on the Corporate enabling members to manage their risk models. indebted within one year following within 12 months following the date Bureau System. risks effectively by reaching custom- the date of the inquiry, even if they of inquiry; therefore, if the CCR is ers genuinely in need of loans or cus- The following reports can be gener- are not expected to become insol- high, then it means that default prob- COLLECTION SCORES tomers with sufficient credibility. ated through the GeoMIS Map-based vent within the same period. ability is low. In order to support the data-sharing Reporting System; Standard Report, service it offers to members with an- KKB Inclination Scores: which contains portfolio data of an In addition to the definition of Financial institutions consider many alytic scoring models, KKB launched » Enable KKB members to reach the institution pertaining to a specific pe- “non-performing loan” (i.e. persons variables in the lending process. As the Collection Scores service, one of best prospects rapidly with appro- riod, Trend Report, which enables the who failed to pay three installments financial institutions take into con- its high value-added products. The priate strategies. tracking of changes in portfolio data in succession, persons who are un- sideration several variables during “Collection Scores” service is used to » Allow members to see more com- of an institution within a certain time der legal prosecution, persons who the lending process, loan repayment calculate the risk of further delaying prehensive data via a single score period, Benchmark Report, in which are classified as an uncollectible ac- history is an important variable. CCR payment or defaulting on a loan by a with lesser operational burden. portfolio data of an institution can be count), which Personal Credit Rating fills an important gap by providing customer, who has already delayed » Save time thanks to the easy iden- evaluated against industry data, TÜİK and similar risk prediction models try the information needed to evaluate repayment, in the near future. Col- tification of target masses on a (Turkish Statistical Institute) data and to forecast, PII also detects signs of the loan repayment behavior of legal lection Scores are risk score cards tai- product basis. the mean of a selected benchmark- “excessive indebtedness.” PII was de- persons. As a result, monitoring the lored for each customer who delays » Provide more productive, efficient ing group. veloped to identify persons who have external behavior of loan customers their payments. With this tool, mem- management in making products an outstanding non-guaranteed debt becomes easier. bers can develop collection strategies available. The GeoMIS service is provided by higher than TRY 250 and to predict KKB through the map-based report- excessive indebtedness. ing platform via the Oracle database and application servers. Data positioning on the map is done using geo-coding.

82 83 » Limits in TRY terms and limit occu- With this application, an institution » Have information about the ratio pancy rates on Limit Reports; can: of up-to-date bounced cheques 16. KKB’S PRODUCTS AND SERVICES » Non-performing receivable rates » Track the current state and devel- and on how much of the bounced and delayed credit rates on Ratio opment of its loan portfolio; cheques have been paid; Reports. » Compare data related to different » Compare the ratio of cheque cus- portfolios, such as amount, vol- tomers who issued a cheque for The contents of GeoMIS applications LOANS ANALYSIS PORTAL (LAP) ume, overdue payments, and col- the first time, and who issued a The Loans Analysis Portal (LAP) is an lections, with competitors; bounced cheque for the first time, interactive reporting system that al- » Use all this data to establish and with the sector in general as well are expanded every year, with lows data reporting on the portfolio test its risk management policies. as with a peer group defined by the of any kind of installment loan, over- institution itself; the introduction of new data sets. draft account and credit card products KAP (Public Disclosure Platform: “PD- » Reach cheque index distribution of owned by natural persons; their pay- P”)’s reporting service was prepared the cheque customers. ment performance; and comparison as a separate portal for consumer with the benchmarking group selected finance companies. The compa- ADDRESS PROCESSING SERVICE in the GeoMIS Personal application nies were provided the opportunity The address formatting infrastruc- and with the sector as a whole. LAP’s to receive data from the PDP based ture used in GeoMIS, the map-based primary advantages offered to users on product and under the heading reporting system launched in 2013, include: they prefer. In addition to the newly started to be made available as a GeoMIS Combined maps The system identifies the institution are able to view their data, track the » Showing the changes in an institu- opened accounts analysis, current standalone service in line with the the information related to of the user signing in on the system changes and development of their tion’s loan portfolio monthly and portfolio analysis, and risk analysis needs of KKB members in 2014. via the IP address used and displays data, and to compare it with the in- over time. reports that they can already receive, the credit limit/risk reported information based on the identified dustry and the competition. » Facilitating strategic decision-mak- consumer finance companies can This application contains a control to by the banks and financial institution. ing by providing reports and infor- prepare and use reports in three main update address information, such as institutions as well as Reports generated by the system mation related to risk management, products: vehicle loans, mortgage street names, towns, and similar de- receivables to be liquidated GeoMIS Personal contain information about outstand- credit policies, marketing and cam- loans and consumer loans. tails by geocoding the customer ad- by using the branch’s In July 2013, the members of the ing balances, number of accounts, paign management, and collection dress data with the bank, adding the province and district address Credit Reference System (CRS) start- average score, credit risk/bank practices. CHEQUE ANALYSIS PORTAL geocode data to the address data, ed using the GeoMIS application, branch, and the number of firms on Offering tailored data and content Cheque Analysis Portal is an interac- information. » and accurately defining the newly which had only been covering the in- credit/bank branches. and ease-of-use via the Internet. tive reporting environment that en- added addresses into the system. quiries done by CRS users since the ables KKB members to compare their second half of 2009. As with other GeoMIS applications, Using different parameters and filter- cheque numbers with the “bench- The Address Processing Service pro- the content of GeoMIS Corporate ing options on the reporting screens, marking group” that they will define, vides the following benefits: In 2014, the data set of the GeoMIS & Cheque is continually improved. the Loans Analysis Portal can produce and the “sector in general.” » Collective Processing of Customer application was further enriched with In its first year, GeoMIS Corporate & about 175 million different reports on Addresses: Existing bank custom- the addition of personal loan portfo- Cheque’s data set was expanded with 2.5 billion lines of data. Thanks to its Through the reports prepared with er information can be formatted; lio data. Since that time, the applica- the addition of information about state-of-the-art infrastructure, LAP the data obtained from the daily changed information such as street tion has also served as GeoMIS Per- cheques notified to KKB. generates these reports amazingly check notifications of the Cheque name, town, and the like are up- sonal. fast. Analysis Portal, they can: dated and missing data complet- GeoMIS Combined » Compare the number of cheque ed; and geographic coordinates are GeoMIS Corporate & Cheque The newest member of the GeoMIS KKB’s corporate members who are customers using cheques for the added to the address data (geoc- GeoMIS Corporate & Cheque is a product family, GeoMIS Combined also Credit Reference System (CRS) first time with competitor institu- oding). product of the GeoMIS family. In Au- includes and maps information re- users can perform the following anal- tions; » Sharing the Up-to-date Address gust 2014, KKB expanded the data lated to the credit limit/risk reported yses on LAP: » Have information about the ratios Database with Members: In or- set of the GeoMIS family by adding by banks and financial institutions as » Analysis of newly opened accounts and trends of customers who issue der to ensure accurate data entry specific information about small/ well as receivables to be liquidated » Analysis of the current portfolio, and bounced cheques in their customer of new addresses, Turkey’s ad- medium/large enterprises and the by using the branch’s province and » Risk analysis. portfolio; dress database is uploaded into commercial segment. As a result, town address information. » These three analyses are three core » Monitor the rates of the cheques the member system and integrat- GeoMIS Corporate & Cheque pro- reporting themes available in the whose backs are written and sub- ed with the address entry screens. vides detailed reports based on cities The following information can be product. sequently paid, on a monthly basis KKB assigns coordinates to each and towns. viewed on GeoMIS Combined with the Vintage analysis; address entered. KKB also provides » The number of records, branch- The Credits Portfolio Analysis Service » Measure the ratio of bounced a reverse geocoding service, the The GeoMIS Corporate & Cheque es, customers, and customers per generates reports using data derived cheques during submission, and process of back coding of a point application allows the evaluation of branch on Unit Reports; from the monthly notifications of CRS how loyal cheque customers are, location (i.e. latitude, longitude) to limits, risks, Commercial Credit Rat- » The risk amount in TRY terms, risk members. The system contains data to their payments; a readable address or place name. ing (CCR) and bad cheque data per- amount excluding rediscount and pertaining to the past 13 months and » Mapping Service: Any specific taining to accounts contained in the accrued interest, risk amount per report results are visually represented data relating to a member can be Corporate Bureau (CB) and display of customer, and risk amount per in diagrams. mapped using a function run by this data on the map based on cities branch on Risk Reports; KKB. and even towns. Corporate members

84 85 The Proactive Notification service sends members daily notifications 16. KKB’S PRODUCTS AND SERVICES about selected types of announcements concerning their customers in the Corporate Bureau and newly es- The Farmer Registry System (FRS) requires tablished firms. The related notifica- TARDES contains a data sharing, system-ready tion file is sent to the FTP address.

all farmers to be registered in a central Institutions using the Proactive Notifi- infrastructure for the banks and financial institutions cation service are now able to deter- database in order to monitor the agricultural mine the daily notifications they want extending loans to the agricultural industry. to receive by entering specified criteria support programs granted. into the system.

IBAN VALIDATION SERVICE Fast, secure, and accurate money transfer via financial institutions is becoming increasingly important for customers in today’s fast-paced busi- TARDES provides an AGRICULTURAL LOAN » Inclusion of personal informa- Thanks to the Agricultural Loan As- agricultural support programs; it is ness world. important platform and ASSESSMENT SYSTEM (TARDES) tion as well as production and in- sessment System (TARDES), devel- also used for the development of ag- In 2013, KKB launched the Agricul- come-expense data of other per- oped jointly by the Frankfurt School ricultural policies. IBAN Validation Service minimizes any information service to tural Loan Assessment System (TAR- sons or entities that may impact and KKB and sponsored by the Eu- negative incidents related to mon- financial institutions, DES), which contains a data shar- loan repayment in a single appli- ropean Bank for Reconstruction and FRS Inquiry Screens enable those KKB ey transfers thanks to the inquiry and enabling them to make ing, system-ready infrastructure for cation; Development (EBRD), cost, income members who do not use the TAR- confirmation options it offers. systematic agricultural banks and financial institutions seek- » The ability to offer a general credit and maturity calculations have be- DES loan module to inquire about loan evaluations based ing to extend loans to the agricultural limit taking into account a produc- come much easier. FRS data, compiled by the General KKB’s IBAN Inquiry feature enables on accurate, up-to-date industry. er’s agricultural and non-agricul- Directorate of Agricultural Reform customers to view masked data – such tural, commercial, and personal TARDES helps financial institutions and used to update, inspect, and data, without the need for as name/surname, company name TARDES provides an important plat- activities and ability to repay; save time and manpower by provid- monitor farmer related data. – about the real person or the legal financial institutions or form and information service to fi- » Prevention of the extension of ing information compiled and evalu- entity that owns the IBAN, thus help- specialist teams. nancial institutions, enabling them loans that exceed a producer’s ated by a professional, impartial, and TRADE REGISTRY SHARING ing customers avoid incorrect money to make systematic agricultural loan need and ability to repay; expert team. It also enables financial SYSTEM (TRSS) transfers. evaluations based on accurate, up- » Evaluation of short-, medium- and institutions to establish a standard, The Trade Registry Sharing System to-date data, without the need for long-term loans all-in-one; product-based evaluation system (TRSS) enables financial institutions KKB IBAN Confirmation feature is a specialist teams. » Minimal IT and staff investment re- internally. As a result, TARDES sig- to electronically monitor their cus- verification service that can be used quired by lending institutions; nificantly contributes to the develop- tomers’ up-to-date trade registry when the IBAN and IBAN owners’ TARDES offers KKB members the fol- » Automatic data input from the ment of the agricultural industry. information published in the Trade Turkish ID/Tax numbers are known lowing benefits: Farmer Registry System included; Registry Gazette. but identity verification cannot be per- » Reliable, up-to-date, and detailed » A flexible lending infrastructure FARMER REGISTRY SYSTEM (FRS) formed. Users can check whether the cost tables created by expert staff; tailored for financial institutions, The Farmer Registry System (FRS) re- Through TRSS, users can access match between the IBAN and Turkish » Simultaneous evaluation of differ- enabling them to enter models and quires all farmers to be registered in amendments published in the Trade ID/Tax number is correct by inquiring ent production and/or cultivation parameters into the system in line a central database in order to moni- Registry Gazette on a daily basis us- it on KKB. by the same producer; with their credit policies; tor, inspect, report, and inquire about ing their preferred method. The ap- » The ability to extend loans with dif- » The capability to send notification agricultural support, and to ensure plication allows for both individual KKB’s IBAN Validation Service aims to: ferent maturity dates depending emails to users as the maturity evaluations are sound and accurate. and multiple inquiries as well as the » Prevent erroneous money transfers, on the types of production and ag- date of a product, for which a limit use of proactive notification meth- » Cut operational costs, ricultural products; has been proposed, approaches; FRS is a combined system of systems, ods. » Reduce time costs, » Evaluation of agricultural produc- » Time savings by blocking applica- used to keep records of personal in- » Provide customers with a secure tion by taking into account a pro- tions for products that do not qual- formation and assets (e.g. agricultur- The Multiple Inquiry option enables transaction platform, and ducer’s non-agricultural income ify for a loan extension; al land, livestock, inputs, and the like) users to retrieve information about » Increase customer satisfaction. and expenses; » Evaluation of a producer’s loan of farmers actively engaged in agri- several customers at once. Users can requests for non-agricultural pur- cultural activities, along with product either retrieve information about all poses through the personal loan design and average agricultural pro- types of announcements or select category. ductivity. FRS enables the implemen- announcements in a specific catego- tation, monitoring and inspection of ry.

86 87 16. KKB’S PRODUCTS AND SERVICES The Letter of Guarantee Status Inquiry (LGSI) KKB Unknown Number Service is an unknown service helps instantly check whether the letter of guarantee is still valid without number service that facilitates reaching the need for contacting the issuing bank, and customers in a shorter period of time. therefore guarantees savings on time and operational costs.

The Electronic Letter KKB UNKNOWN NUMBER SERVICE » The Verification Inquiry ensures Real sector firms that are beneficia- Institutions using the LGSI service CDSS is a decision automation system of Guarantee Platform KKB Unknown Number Service is an that the current name, last name, ries in an Electronic Letter of Guaran- save time and cut operational costs used by institutions that deliver every unknown number service that facili- phone number information held by tee transaction, can follow the status by instantly inquiring about the va- type of decision – including applica- transfers traditional paper- tates reaching customers in a shorter the institution is confirmed with the of their letters through Findeks. The lidity of a letter of guarantee without tion management, risk/collection, credit based letters of guarantee period of time, by enriching the cus- information registered in the direc- status of the letter can be displayed the need to contact the issuing bank. monitoring, early warning services and issued by banks to the tomer address information of KKB, tory service. An accuracy score is and the stages of the processes be- the like – related to the services provid- electronic environment when the customers do not have a given to the full address informa- tween the payer and the bank can be Thanks to the system, which allows ed by them to their customers, in a fast, while ensuring that phone number, the correctness of tion. monitored. the validity of a letter of guarantee to efficient, and standardized manner. The all transactions made their contact information is in doubt, be checked instantly, fraud attempts most important downside to these sys- or their contact information is incor- The Electronic Letter of Guarantee can be prevented as well. tems, despite their many advantages, is throughout the life cycle ELECTRONIC LETTER OF rect. GUARANTEE also provides many advantages in that purchase, installation, and opera- of an LoG can be executed The Electronic Letter of Guarantee terms of both the beneficiary and the KKB member institutions and cor- tional costs can be significant. electronically. The following is provided under the transfers traditional paper-based let- payer. The most prominent of these porations can use the LGSI service, KKB Unknown Number Service: ters of guarantee issued by banks to advantages is faster, safer transac- which mainly targets public entities Delivering this service centrally, KKB » With Standard Inquiry, current the electronic environment while en- tions with minimal operational costs. and institutions that accept a large aims to provide institutions with quick, and potential customers can be suring that all correspondence made number of letters of guarantee, via low-cost access to these systems. reached using more precise con- throughout the life cycle of an LoG All the functions in the life cycle of the web screens specially designed for tact information via the name-sur- can be executed electronically. standard letter of guarantee – such this application. Users can make on- KKB enhances any information sent by name-address (province/town) as compensation claim, request for line inquiries using banks’ updated a member when a decision is required, information obtained through the All transactions that can be made for restitution/release, maturity update, letters of guarantee databases, which processes it through CDSS, and then inquiry conducted by using the letters of guarantee created in paper expiry date and status inquiry – are are integrated with the system. sends the final decision to that member. phone numbers registered by the form can also be executed for the also available in the Electronic Letter This way, members can benefit from institution itself, it is also possible to Electronic Letter of Guarantee. of Guarantee. LGSI covers all letters of guarantee this state-of-the-art technology, which communicate with customers who issued to enterprises based in Turkey. was designed to reduce installation do not have contact information, Systems integration works between LETTER OF GUARANTEE STATUS In this online/real-time application, costs and implementation time. Central or who cannot be reached on their banks and intermediary institutions INQUIRY (LGSI) data flow from/to the banks that is- Decision Support Systems (CDSS) are registered numbers, via the num- that are parties to the project went The Letter of Guarantee Status Inqui- sue letters of guarantee is achieved effectively used by both the real sec- bers to be obtained via name-sur- into a production environment on ry (LGSI) service enables customers through web-based service integra- tor and the finance industry. CDSS can name-address (province/town) in- January 5, 2018. The first Electronic who have obtained a letter of guar- tion. be used in several business areas, such formation. Letter of Guarantee was transferred antee from a bank to check whether as Application Management, Custom- » The Address Comparative Inquiry between VakıfBank and Eximbank on the letter of guarantee is still valid CENTRAL DECISION SUPPORT er Management, Limit Management, is designed to provide number in- October 4. All banks are working to with the issuing bank. The service al- SYSTEMS (CDSS) and Collection Management, where formation through name, surname, complete their integration processes lows for inquires using parameters Serving as a data-sharing platform decisions must be constantly updated and full address. This inquiry type with this important project – which such as “bank name,” “branch name,” since its foundation, KKB now en- and optimized to adapt to the rapidly allows coupling proximity of the is a revolutionary step forward in the “row number,” “amount,” “currency” ables execution of the entire decision changing business environment. CDSS inquired address to be measured Turkish banking sector. and “expiration date.” automation by means of cloud tech- features the following advantages: by assigning a score to the phone nology via KKB through the Central number submitted as the answer, Decision Support Systems (CDSS), and to the address in the same in- which began to be offered to the quiry where this number is regis- members in 2014. tered.

88 89 » Enabling KKB members to ex- Another important feature of IFAS is LOAN UTILIZATION INSTANT change information under stan- that it can be integrated and operated SHARING SERVICE (KAPS) 16. KKB’S PRODUCTS AND SERVICES dards and rules that are free of in parallel with SABAS. Criminals gen- The Loan Utilization Instant Sharing personal comments, opinions, or erally use counterfeit documents to Service (KAPS) is designed to prevent judgment, withdraw the stolen money. In online the obtainment of loans by a person » Protecting KKB members from be- fraud, perpetrators generally open from banks and financial institutions Serving the finance industry for the past 10 coming victims of crimes, which deposit accounts using false identi- on the same day above his/her cred- may have more destructive conse- fication documents to withdraw the itworthiness and to determine relat- quences than that of the malicious money they have transferred from ed fraud cases. years, SABAS enables members to share attempts described under SABAS, customers’ bank accounts. Data per- » Enabling KKB members to mini- taining to such accounts are shared The service allows the institution to information about malicious attempts and take mize their risks, thanks to SABAS, within SABAS so the relevant depart- know if a customer has obtained while protecting natural persons ments of corporate members can any other loans within 48 hours at and legal entities from becoming access this information. Hence, infor- the time of utilization of the loan. It necessary measures. victims of such attempts. mation used previously for fraudu- enables prohibiting the person from lent purposes and detected by IFAS obtaining loans above their solven- INTERNET FRAUDS ALERT can never be used again. cy while preventing a type of fraud SYSTEM (IFAS) commonly perpetrated in the market. Scammers can obtain customers’ APPLICATION FRAUD ATTEMPT Deposit accounts opened by » Requires minimal IT resource since FALSE INFORMATION/DOCUMENT/ online banking usernames and pass- DETECTION AND PREVENTION BRSA PRODUCT AND SERVICE using wrongful information the technical infrastructure is pro- DECLARATION/APPLICATION words and use this information to SERVICE FEES PORTAL vided by KKB; ALERT SYSTEM (SABAS) transfer money to their accounts, The objective is to create a nation- BRSA Product and Service Fees Por- are shared within SABAS, » Shortens integration processes to Serving the finance industry for the which they usually open using coun- al database of loan application data tal provides financial consumers with which can be integrated with realize projects, thanks to the ad- past 10 years, the False Information/ terfeit identity documents. This crime provided by member institutions and information on any fees, commis- IFAS, and is made accessible vantage of using an existing ser- Document/Declaration/Applica- has become quite common of late. offer protection to the entire industry. sions and expenses charged for retail for all relevant departments vice; tion Alert System (SABAS) enables Even though banks use highly ad- products and services by banks oth- of member institutions. » Reduces costs with per-transaction members to share information about vanced security systems to prevent The Fraud Attempt Detection and er than interest and profit share in a pricing; malicious attempts to use wrongful such attempts, criminals continue Prevention Service provides for a transparent, legible, and comparable » Enables business units to make de- information and related risk factors to develop new methods to bypass much safer operational environment manner. cisions independently of the IT De- under a defined scheme and to take these systems. when compared to anti-fraud con- partment, thanks to the new gener- necessary measures. trols undertaken by each institution All fees charged by banks to retail ation Strategy Design Studio; Developed by KKB, the Internet separately. This project aims to min- consumers are entered to the system » Compiles and consolidates KKB Thanks to the information sharing Frauds Alert System (IFAS) primar- imize losses incurred by financial in the same format, and data can be data used in CDSS processes, technique and platform, developed ily aims to enable communication institutions as a result of application updated simultaneously in case of which use KKB’s know-how and by KKB, and setting SABAS apart from between member corporations re- fraud. any changes to such fees. The portal technology; other similar systems used around garding Internet fraud. To that end, enables users to review and compare » Conducts inquiries on all reports the world, members are able to share requests to block an account in the The Fraud Attempt Detection and banking product and service fees in a received from KKB through inquiry. facts, findings and evidence related case of money transfer scams can be Prevention Service will run as a single format, regardless of the vary- to crimes such as forgery, fraudu- transmitted via IFAS. This way, more cloud-based application via KKB; ing fees charged by banks. PRESCRIBED ACCOUNTS lence, identity theft, money launder- effective communication can be es- system participation will be easy and With this service, information about ing, and the like. tablished between corporations and low-cost for financial institutions. prescribed deposit accounts, par- all kinds of information regarding Another great advantage is that in- ticipation funds, trust and accounts SABAS is structured around five main transactions can be stored in the data stitutions will share the licensing ex- receivable are collected from the objectives: processing system. penses. The system is being designed banks that are members of the Banks » Protecting citizens and consumers to process both exclusive and shared Association of Turkey (TBB) and Par- from risks and victimization by pre- Given that money transfers can be- rules and data. ticipation Banks Association of Turkey venting the use of their informa- come quite complex, an automatic (TKBB); consolidated; and published tion, documents, possessions, and graph-drawing feature was added The new system will initially be action a common platform (i.e. the web- property by others (e.g. identity to the system to facilitate the investi- vated for lending institutions. Subse- site) for easy access by customers. thieves, money launderers, impos- gation of such incidents. This feature quently, it is expected to expand and tors, swindlers, and the like), is used to create a flow diagram for become a national information-shar- Prescribed Accounts information is » Informing KKB members about ac- each money transfer scam. ing platform with the participation of published every year in early Febru- tual or potential risks arising from different industries. ary and can be accessed by all finan- malicious attempts in order to pro- cial services customers until June. tect them against such risks or reduce their loss or damage,

90 91 and long-term bills in a single format, and via the web service. The plan is to 17. OUR PRODUCTS AND SERVICES OFFERED complete and deploy the develop- ON BEHALF OF TBB RISK CENTER ments in 2020. Credit Reference System is an information- BOUNCED CHEQUE INQUIRY AND INFORMATION SHARING sharing platform, through which detailed In the Bounced Cheque Warning Sys- tem, information about cheques re- Service Name 2013 2014 2015 2016 2017 2018 2019 data about personal loan products is corded as dishonored by banks and Credit Limit Credit Risk Inquiry and Sharing Services their account holders, and informa- Sharing Information about Protested Bills collected from Risk Center Members and tion about cheques paid after being Bounced Cheque Inquiry and Information Sharing Services shared with banks and financing companies. recorded as dishonored and their ac- Individual Cheque Inquiry count holders are notified to the Risk Risk Center Customer Report Service Center on a daily basis, regardless of the cheque amount. Credit Reference System (CRS) Corporate Bureau System (CBS) It is possible to run both individual Individual Customer Objection Assessment System (Individual MIDES) and multiple inquiries about bounced Corporate Customer Objection Assessment System (Corporate MIDES) CREDIT LIMIT-CREDIT RISK Through this system, the following cheques notified by members: CRS Information Verification System INQUIRY AND INFORMATION information is also shared with the SHARING SERVICES members: Information notified to the Collective Sharing: Bounced cheque Cheque Report Raw Data Presentation Risk Center members submit and Risk Center by TMSF (Savings Deposit data submitted by members is con- Risk Report Raw Data Presentation share information about credit limits Insurance Fund of Turkey) regarding solidated and shared collectively with Bounced Cheque Warning System extended to natural persons and le- credit limit, credit risk and accounts all members of the Risk Center via the Inquiry and Warning about Entities Prohibited from Participation in Tenders gal entities and associated credit risk, receivable to be liquidated. Informa- File Transfer System. Data Sharing about Derivative Transactions in addition to accounts receivable to tion about risks associated with com- be liquidated, via this system on a mercial paper issues and principal Individual Inquiry: Results of individu- Data Updating Application monthly basis. debt arising from bills issued through al inquiries can also be shared with all Data Validation and Sanction Application the Central Registry Agency. members, whether they are custom- Acceptance – Rejection Notifications Related to Loan Applications Information is collected from the ers or not, via the Risk Center’s web Sharing of Internal Rating Scores members under the following cate- The Credit Limit-Credit Risk-Receiv- applications. Rating Scores Sharing Service gories: ables to be Liquidated (CLCR) sys- » Credit Limit: Credit limits extended tem launched in 2013 provides com- INDIVIDUAL CHEQUE INQUIRY Official Institution and Customer Information Request Services to real persons and legal entities prehensive information required by This service enables Risk Center mem- Member Request Management Services for cash and non-cash loans, funds, members to evaluate credit risk. bers to inquire about cheques record- Risk Center Bulletin and Statistics Publication Services and other accounts receivable with ed as dishonored as well as cheques Paid Bills Inquiry respect to their activities. With adjustments made to the CLCR paid after being recorded as dishon- Sharing Information about Cheques under Interim Injunction » Credit Risk: Receivables arising system in 2019, new risk codes have ored. from cash and non-cash loans and been introduced for the notification Sharing Information about Companies that have Declared Bankruptcy/Suspended funds extended or mediated to of re-structured receivables. CREDIT REFERENCE SYSTEM (CRS) Bankruptcy/Debt Composition natural persons and legal entities, Credit Reference System is an infor- Sharing Service about Customers Banned from Using Cheques other accounts receivable with re- SHARING INFORMATION ABOUT mation-sharing platform, through Customer RA Personal Record Search spect to their activities, and associ- PROTESTED BILLS which detailed data about personal Cross Cheque Relations Inquiry Service ated interest and profit shares. Members notify the Risk Center loan products is collected from the » Receivables to be Liquidated: about bills protested for non-pay- members of the Risk Center and then Credit Insurance Inquiry Service Loans and other receivables classi- ment and bills of which protest is shared with banks and financing com- CTMCRS Inquiry Service fied as frozen receivables by banks. withdrawn once every 15 days. Per- panies. RC Warning Services Receivables to be liquidated by sonal information of the debtor, ad- Force Majeure Inquiry leasing, factoring, and financing dress and amount stated on the bill Banks and financing companies that BKM Member Merchant Turnover Information Inquiry companies, and accounts classified are recorded in the system. Notifica- are members of the Risk Center can as uncollectible. tions sent by banks are consolidat- access online within several seconds Individual Inquiry Reports ed and shared collectively with Risk via CRS inquiry: Data on all open ac- Telecommunications Information Inquiry Information collected via this sys- Center members via the File Transfer counts under which a consumer is Foreign Currency Credit and Income Inquiry tem is consolidated per account and System. Studies have been initiated “debtor” and “guarantor,” Data on all Retroactive CRS Inquiry shared with members that have sent to provide and share, on a daily basis, closed accounts of the last five years; Provision of Risk Center Report via the E-State Gateway notifications about these accounts. notifications on protested bills, bills Data on applications made during the Individual inquiries are also possible with withdrawn protests, paid bills, last six months; and Loan repayment via the web screen or the web service. performance data pertaining to the last 36 months.

92 93 17. OUR PRODUCTS AND SERVICES uploaded to the daily system. With to the total corporate limit, informa- Thanks to its construction, objections more current data, it became more tion on group limit, group risk, cash made by the customer: Through the likely for members to make healthier and the non-cash limit breakdown Personal MIDES application in re- OFFERED ON BEHALF OF TBB RISK CENTER credit decisions more effectively. and general revision maturity are spect of their data shared in the CRS, shared. and Through the Corporate MIDES As of July 2016, CRS notification was application in respect of their data Featuring individual and collective inquiry methods, initiated by the asset management In 2014, a function was added to the shared in the CBS are handled and companies as well as banks and con- CBS to enable institutions to perform concluded in a short period of time. sumer financing companies, enabling any updating, deletion, and correc- If, as a result of the examination, the the Credit Reference System allows users to reach all existing CRS data to be enriched. tion on the Corporate Bureau Urgent determination is made that there is Updating screens when there is any a problem with the shared data, the individual loan information by credit type and account As of October 2017, personal and com- missing or erroneous data transmit- necessary correction is carried out munication data, which is only report- ted to the CBS without waiting for the without a request within a short pe- ed during the opening of an account, next notification month. Thanks to the riod of time. under which the consumer is debtor and guarantor. began to be received on a monthly ba- system, where objections received sis. Thus, the DVS system was given the and answered via MIDES are listed, MIDES has the distinction of be- capability to be fed with updated per- KKB members can make updates ing the fastest system in the world sonal and communication data. without waiting for the next month’s in terms of examination of and re- notification. sponding to consumer complaints The Credit Reference With the ability to access any infor- Thanks to the CRS Emergency Up- CORPORATE BUREAU SYSTEM when compared to similar systems. System helps encourage mation regarding the overall credit date Application, members are able (CBS) The first phase of the CBS Improve- Although Risk Center member banks risk and repayment habits of any con- to instantly update the financial in- The Corporate Bureau System (CBS) ment and Simplification initiative are allowed a maximum of 24 hours retail loan customers to sumer by using CRS, financial institu- formation and personal information is an information-sharing system that commenced in 2017. This project en- to respond to objections made, the make regular payments tions can make any risk decision per- of their credit accounts, delete guar- includes commercially qualified credit hanced data diversity within CBS and actual response time is less than two and extends the utilization taining to their customers by relying antors and additional card users and information of the real person and le- further improved the system’s data hours. of loans. on concrete data. make credit deletions without waiting gal entity, customers. uploading and inquiry performance. for the next daily notification. In 2018, efforts were made to code The CRS Collective Inquiry service Launched in 2005 as a distinctive ser- Under this effort, KKB plans to enter the current functions of the individu- allows users to make group inqui- The Credit Reference System en- vice, CBS offers an extraordinarily rich Payment Performance data to CBS, al MIDES application with new tech- ries on the portfolio of personal loan sures minimizing personal credit risk, data set for use by members to per- just like in CRS, and share the Number nology in order to better meet the customers and to manage risk effec- boosting credit volume used by mea- form a risk assessment on a legal en- of Days of the Biggest Delays in Pay- developing and changing needs of tively. As a result, financial institutions suring credit risk, making more ratio- tity. With the Collective Inquiry func- ments within the Period for any given members. can make their loan decisions rapidly nal, faster, and healthier credit and tion added to the system in November loan, going back as far as 36 months. (e.g. extend loans by SMS) and offer limit decisions. The system also en- 2013, members can easily update the In parallel to the start of CRS notifi- their loan products rapidly to the right courages individual credit customers portfolio at certain periods. Financial leasing companies that cation and CBS notification by asset customers under the right conditions. to pay on a regular basis and enables were not in the CRM previously were management companies in 2016 loan utilization to be widespread. The content-rich system facilitates the included in the system as of April and 2019, respectively, systematic Thanks to this advantageous system sharing of an extensive range of data, 2018; factoring companies were in- developments were completed for provided by KKB, the finance industry CRS is not a blacklist; it also contains including identity details of real per- cluded as of November 2018. As- the submission and evaluation of the can grow in a healthy manner and positive loan repayment data. Con- sons and legal entities, information set management companies also objections against the asset manage- consumers are provided with the sequently, customers have the op- about relations on a capital basis, loan started CRM notifications as of April ment companies’ information. financial support they require on a portunity to introduce themselves account and repayment data, collat- 2019. Additionally, turnover and as- macro scale. easily to an institution with which eral information and bounced cheque set size percentiles received from the DATA VERIFICATION SYSTEM they will work for the first time. While data. Revenue Administration started to (DVS) Members transmit the data of cus- the loan accounts are updated by the be shared on CRM as of September The Data Verification System (DVS) is tomer loan repayments in the pre- members on a daily basis, application As the number of members who pro- 2019. a KKB platform that allows members scribed details and format for the records are created and opened to vide information to the system in- to check the accuracy of the informa- present and past on a monthly basis sharing instantly. creases, the Corporate Bureau System CUSTOMER OBJECTIONS tion declared by a consumer who ap- to the CRS. KKB transfers the person- is being used more intensively. CBS has HANDLING SYSTEM (MIDES) plied to it; complete any missing in- al loan product data received from After operating with the monthly data become an important tool in the credit The Customer Objection Handling formation of existing customers; and members in accordance with a stan- reporting and update system until assessments of KKB-member institu- System (MIDES) allows automatic update any outdated data of the cus- dard structure to the CRS database in June 2015, CRS began to be updated tions regarding their corporate cus- transmission of the objections relat- tomers. DVS is used very intensively its original state without any modi- daily as of that time. In CRS, where tomers. As a result of a project carried ed to the information shared within by KKB members. fication, consolidation, addition, or millions of accounts are recorded, out to enrich the data of the corporate the CRS and CBS to the member who other alteration and opens the data credit information and payment per- bureau in 2013, corporate inquiries registered the record. Along with the start of CRS notifi- to share with the other members. formance data were ensured to be now include the following: In addition cation by asset management com- Besides, the information contained in panies in 2016, this information was the risk reports comes from this data used to feed the IVS (Information pool. Verification System).

94 95 including information about limits and 17. OUR PRODUCTS AND SERVICES risks on a semimonthly basis. Data shar- OFFERED ON BEHALF OF TBB RISK CENTER ing about derivative transactions can be The Cross Cheque Relations Inquiry Service made either collectively or individually. allows inquiries about the mutual cheque » Collective Sharing: Data about deriv- Cheque Report Raw Data Presentation Service ative transactions is consolidated for each customer and shared collectively relations between the issuer and the last with members that have sent notifica- provides access to information regarding tions about these customers related endorser who presented the cheque to to derivative transactions and CLCR the past payment performance for credit products. Collective Sharing:(Credit Limit-Credit a bank. Risk-Receivables to be Liquidated) on the next business day after the notification. » Individual Inquiry: With this option, one can inquire about Credit Limit-Credit Risk-Receivables to be Liquidated and data about derivative transactions. The report presented by the CHEQUE REPORT RAW DATA RISK REPORT RAW DATA CROSS CHEQUE RELATIONS INQUIRY AND WARNING SERVICES System includes detailed PRESENTATION SERVICE PRESENTATION SERVICE INQUIRY SERVICE ABOUT ENTITIES PROHIBITED FROM PAID BILLS INQUIRY SERVICE This system provides access to the his- Risk Report Raw Data Presentation Ser- This service allows inquiries about the PARTICIPATION IN TENDERS Member banks notify the Risk Center of information about cheques torical payment data of a cheque issuer. vice provides information about the his- mutual cheque relations between the Announcements published in the Of- paid bills and debtor information on a submitted, cheques that The report includes detailed informa- torical loan repayment performance of issuer and the last endorser who pre- ficial Gazette related to entities pro- semimonthly basis. Personal information bounced but subsequently tion about the banks where there is a natural persons and legal entities. sented the cheque to a bank. hibited from participation in tenders, of the debtor, address and amount stat- paid, and details in regard cheque account, cheques submitted, an important input for the risk assessed on the bill are recorded in the system. to the dishonored cheques cheques that bounced but subsequent- Based on personal and commercial The Cross Cheque Relations Inquiry ments conducted by KKB members, are paid in 1-month, 3-month, ly paid, and details in regard to the loan data that the Risk Center periodi- produces a list showing the number entered into the system on a daily basis. Regardless of customer status, infor- dishonored cheques paid in 1-month, cally collects from corporate members and amount of cheques issued mutu- mation about paid bills is shared with all and 12-month intervals. 3-month, and 12-month intervals. via CRS and CBS, this report contains ally between companies and natural Based on this data, various services are members via the web screen applica- the following information: Data such as persons, with detailed breakdown anal- provided to KKB-member institutions, tion, which enables individual inquiries. In addition to dishonored and paid limits, risks, number of credit accounts yses that include: “Cheque recorded as including: Studies have been initiated to provide, cheques, the Cheque Report also con- of real persons and legal entities, as dishonored;” “Cheque paid after being » When an announcement is published on a daily basis, notifications about, and tains information about post-dated well as member information who has recorded as dishonored;” “Cheque paid about prohibited entities and natu- share, protested bills, bills that are no cheques and open cheques. As KKB be- an account, their past credit payment upon presentation;” and “Issuer’s post- ral persons, a warning report is pro- longer under non-payment protest, paid gan collecting information on Postdat- performance, number of financial insti- dated cheque.” duced specifically for the financial -in bills, and forward bills in a single format, ed Cheques and Open Cheques from its tutions that make the notification, delay stitution that serves these clients. As and via the web service. The plan is to fi- members, the Cheque Report now con- and follow-up are included. The Cross Cheque Relations Inquiry a result, members can be informed nalize the studies in 2020. tains information about issuers’ post- service is provided via web applications of announcements published about dated and open cheques, in addition to The limit and risk information that ap- since November 2015, with all mem- their customers without having to SHARING INFORMATION ABOUT dishonored and paid cheques. pears in financial leasing and factoring bers actively using it. monitor the Official Gazette. CHEQUES UNDER INTERIM companies are fed from the CLCR sys- » If a customer who is the subject of INJUNCTION The system now allows for the tracking tem and presented in the Risk Report. BOUNCED CHEQUE WARNING inquiry in the Corporate Bureau has This service includes: If a court granted of a person’s performance as a “bearer” SYSTEM SERVICE a tender ban record, then this infor- an interim injunction on a cheque. If a in the reports that are offered to mem- Improvements made to the individu- While the information about bounced mation is also provided at the time of court lifted an interim injunction order. bers for “inquiry” purposes. In addition al inquiry service of the Risk Report in cheques is uploaded into the system the inquiry. If a court ordered the cancellation of the to these reports, the Cheque Report 2018 included: grouping under the sin- on a daily basis, the system scans the » One can run a customer-based cheque by banks on a daily basis, and Raw Data Presentation System presents gle heading of services that were previ- issuers of these cheques in both the search via the web application called shared it by individual inquiry and collec- information about cheques payable to ously separate for member types in the Credit Reference System (CRS) and the Transactions Related to Entities Pro- tive feedback. the issuer at 1-, 3-, and 12-month in- current structure; adding data for asset Corporate Bureau System (CBS) and hibited From Tenders, and access all tervals; the number/amount and ratio management companies; enriching in- produces a special warning message to announcements published within the The service of Sharing Cheques Im- of cheques paid upon presentation; the dividual credit data. Also, the current inform members about the status of the year. posed under Interim Injunction en- number/amount and ratio of cheques service quality was upgraded by mak- bounced cheque. ables clarification whether there is an that are dishonored but subsequently ing improvements such as simplifying DATA SHARING SERVICE ABOUT interim injunction or cancellation de- paid; the number/amount of cheques “input” information used in inquiries. Consequently, KKB provides an early DERIVATIVE TRANSACTIONS cision on a cheque. With this service, that are dishonored and still unpaid. warning service to its members by in- Under this service, KKB shares data inquiry can be made via the bounced forming them about any potential pay- about futures, options and similar de- cheque individual inquiry screen as Thanks to the developments undertak- ment problems their customers may rivative contracts sold by banks to natu- well as the cheque report. en in 2019, members are able to access face in the future. ral persons and legal entities one busi- cheque scores via the cheque report ness day before the notification date, raw data web service. 96 97 17. OUR PRODUCTS AND SERVICES Center member banks, financial leasing SHARING OF RATING SCORES OFFICIAL INSTITUTION AND companies, factoring firms, consumer JCR Avrasya Derecelendirme A.Ş. no- CUSTOMER INFORMATION REQUEST finance companies, asset management tifies the TBB Risk Center of the cred- SERVICES OFFERED ON BEHALF OF TBB RISK CENTER companies, resource organizations and it scores assigned to customers by The Official Correspondence Team’s other members. The report can be re- Credit Rating Agencies (CRAs), which activities include responding to corre- ceived in three different versions: De- have been authorized but not directly spondence from customers as well as The RA Personal Record Change Web tailed Report, Summary Report, and acknowledged by BRSA, and of cus- official institutions such as the court, Non-performing Loans. tomers’ score scales. This notification prosecutor’s office, police headquar- is shared collectively with all Risk Cen- ters, Ministry of Finance, Capital Markets Service shares daily changes made at Cheque Report ter members, whether or not they are Board (CMB), Social Security Institution This report pertains to bounced customers of the notification service. (SSI) and the Directorate of Execution the Revenue Administration together cheques, cheques paid after being within the legally required time frame. processed as bounced cheques, and DATA UPDATING APPLICATIONS The team also ensures that the reports cheques paid upon presentation, since SERVICE requested by the official institutions are with the type of transaction. 2009. The report includes the total With the Risk Center Data Updating produced accurately and completely number of cheques, the total amount Applications, correction of the data and become ready for submission. of the cheques, bank information, which notified and shared by members can cheques are received, as well as the last be performed instantly, without wait- MEMBER REQUEST MANAGEMENT 50 bounced cheques processed and ing for the next notification period. SERVICES Credit Insurance Inquiry SHARING INFORMATION In August 2016, New RA Person- paid after being processed as bounced Thanks to this service, CRS, CBS, Pro- The Authorization Management Team’s and Sharing Service ensures ABOUT COMPANIES THAT HAVE al Record Change Web Service was cheques. tested Bills and Credit Limit-Credit activities include processing member- DECLARED BANKRUPTCY/ launched in addition to the existing Risk data can be updated online. In ship access forms submitted by mem- the collection of monthly SUSPENDED BANKRUPTCY/DEBT “RA Personal Record Search service.” Protested Bill Report 2016, research studies to implement bers after controlling them in com- limit and risk information COMPOSITION With the addition of the Personal Re- It is the report containing information credit insurance buyer and seller noti- pliance with the memorandum; and based on customers who Information about companies that cord Change Web Service, the daily about protested bills. This report con- fications via the application were com- authorizing members to have access to were insured (buyers) by, have declared Bankruptcy-Suspend- changes in company/person record tains information about protested bills pleted. the applications after the controls. and customers who have ed Bankruptcy-Debt Composition and the type of operation are shared. in the last five years, including bank insurance (sellers) from, and which was published in the Trade name, branch name, record type (notifi- DATA VALIDATION AND SANCTION RISK CENTER BULLETIN AND Registry Gazette is compiled and cation or withdrawal), bill amount, pro- credit insurance companies. CREDIT INSURANCE APPLICATIONS SERVICE STATISTICS PUBLICATIONS shared with all members of the Risk NOTIFICATION AND SHARING tested bill notification period, protested This system automatically checks SERVICES Center via the File Transfer System on This service ensures the collection bill withdrawal period, and reason for whether KKB member data notifica- Seventeen reports and one bulletin are a monthly basis. of monthly limit and risk informa- withdrawal. tions are performed at intervals de- regularly published every month on the tion based on customers who were fined for each product and below a official website of the Risk Center of the SHARING SERVICE ABOUT insured by (buyers), and customers ACCEPTANCE & REJECTION certain error rate, and sends feedback Banks Association of Turkey CUSTOMERS BANNED FROM who have insurance from (sellers), NOTIFICATIONS RELATED TO LOAN to members so that they can take ac- (http://www.riskmerkezi.org). USING CHEQUES credit insurance companies. Besides, APPLICATIONS tion. When an error is detected, the Court decisions related to bans on compensation applications made by Acceptance/rejection status of the system imposes a sanction in accor- Related newsletters and reports include issuing cheques and opening cheque the seller to insurance companies for home, auto and consumer loans; cred- dance with the rules outlined in the the “Credit Limit Credit Risk (CLCR),” accounts are shared daily by the Risk unpaid bills are also shared. Credit in- it cards; overdraft deposit account; and Risk Center Circular. “Personal Loan and Credit Card” “Paid Center with all Risk Center member surance information can be queried commercial loans, for which natural Cheque,” “Bounced Cheque” and “Pro- banks collectively via the File Transfer individually on the screen and via the persons and legal entities have applied, This system provides the following tested Bill” notifications made by mem- System. web service. and acceptance/rejection notifications benefits: bers to the Risk Center of the Banks related to these applications are collec- » Improving the quality of member Association of Turkey. In 2017, content CUSTOMER RA PERSONAL RISK CENTER CUSTOMER REPORT tively sent to the Risk Center as statistical data by minimizing erroneous noti- related to the “Decisions on Cheque RECORD SEARCH SERVICE SERVICE data. This information, obtained from fication rates, Ban” was also included in these statis- Within the Ministry of Finance, Reve- The Risk Center Customer Report the banks, contributes to the CBRT’s » Enabling members to create data tics. nue Administration (GİB), and under Service provides real persons and goal of fostering the development of notifications in a more controlled the “Customer RA Personal Record legal entities with reports related the financial sector. and accurate manner, The development and the size of the Search Service,” Active/Inactive sta- to their loans that have been con- » Taking actions according to different Turkish financial sector, including non- tus is shared with information on the solidated within the Risk Center and SHARING OF INTERNAL RATING types of notifications through prod- bank financial institutions, along with identity of the customer (taxpayer), shared with the members of the Risk SCORES uct diversification, overdue receivables are analyzed with date of establishment, address in- Center. With this service, three differ- Using this system, those banks that are » Protecting customers by ensuring detailed breakdown analyses in these cluding UAVT (National Address Da- ent reports can be generated with the members of the Risk Center and which the accuracy of customer informa- publications. tabase) code and area of activity. information detailed below: have Internal Rating systems notify the tion submitted to the Risk Center. TBB Risk Center of credit scores as- They include basic monthly trend analy- The receipt of the customer’s RA per- Credit Limit, Credit Risk, signed to customers, their risk catego- ses as well as special reports published sonal record via online inquiry not Receivables to Be Liquidated ries and score scales. They also share in the sector for the first time, such as only improves the productivity on the This report includes information per- this information with the Banking Reg- the number of people, overdue receiv- member’s side but also prevents hu- taining to credit and receivables to be ulation and Supervision Agency (BRSA). ables per city, and the like. man-driven operational errors. liquidated, which is declared by Risk

98 99 17. OUR PRODUCTS AND SERVICES come notification service to ensure notifications comply with the Circular OFFERED ON BEHALF OF TBB RISK CENTER on Capital Movements. RETROACTIVE CRS INQUIRY With the TBB Risk Center Report Service Launched in January 2019, Retroactive BKM Member Merchant Turnover Inquiry Service CRS Inquiry allows members to view launched on March 15, 2019, via the e-State customers’ financial information on the Credit Reference System in three- provides details on receivables arising from Gateway, real persons and their commercial month periods. enterprises can file report applications at the POS sales of the commercial enterprises of Members are also able to access cus- www.turkiye.gov.tr. tomers’ information covering the past legal entities and real persons. four terms via the web service. PROVISION OF RISK CENTER REPORT VIA THE E-STATE GATEWAY The Banks Association of Turkey (TBB) As part of the inquiry CTMCRS INQUIRY SERVICE As part of the inquiry service, vari- INDIVIDUAL INQUIRY UNIT FOREIGN CURRENCY CREDIT AND Risk Center Report was launched on service, various information Company Representative Informa- ous information headings – such as REPORTING INCOME INQUIRY SYSTEM March 15, 2019, via the e-state gate- tion, Shareholder Information and member merchant TRID/TID, term This service includes applications The Foreign Currency Credit and In- way. headings – such as member Capital Information as part of the (month/year), the number of banks where sharing is done based on income Inquiry system gives notifica- merchant TRID/TID, term Central Registry System (CTMCRS), worked with, total turnover – are dividual inquiry. The number of in- tions and shares information on for- Real persons and real persons’ com- (month/year), the number under the Ministry of Customs and shared. All Risk Center members are dividual inquiries made by mem- eign currency loans granted to legal mercial enterprises are now able to of banks worked with, total Trade, started to be shared with Risk able to benefit from the BKM Mem- bers on a daily, monthly, and annual entities resident in Turkey, loans ex- submit report applications by going turnover – are shared. Center members at the end of 2016. ber Merchant Turnover Inquiry Ser- basis is shared as a summary and in tended to these entities from abroad to “Risk Center Report Application” at vice. detail based on member users. Be- with the mediation of banks, as well www.turkiye.gov.tr. Members can make an individual sides, warning messages are created as their foreign currency income of inquiry with “MERSİS number, tax RC WARNING SERVICES and shared in the same context with the last three fiscal years. As part of the service, one report per identification number or TRID.” Infor- This product enables the delivery members on a daily basis according month can be obtained free of charge; mation related to stock corporations, of negative notifications to request to the changes in the Trend Analysis If banks, factoring companies, finan- and the right to apply is renewed one cooperatives, individual enterprises, members with a warning file through Report and daily inquiries. cial leasing firms and financing com- month after the date of the previous Turkey branch of foreign companies FTP. These negative notifications in- panies extend foreign currency loans application. as well as their businesses estab- clude different institutions’ cheques, FORCE MAJEURE INQUIRY or their current foreign currency loan lished by associations and founda- bonds, credit insurance and tender Customers who are exposed to balances change (through reim- Users can apply for “Credit Limit and tions is available within the service. bans belonging to the individual and events defined as force majeure are bursement, the extension of addi- Debt Information” or “Cheque Infor- commercial customers who are no- notified to the TBB Risk Center on a tional loans, closure, balance update, mation” reports. Users have access to In 2018, systems upgrades enabled tified by members to the Risk Center. monthly basis by Risk Center mem- becoming the subject matter of legal the following details in the Credit Limit the sharing of tradesmen data in the Warnings are issued for customers bers. Under this service, which can proceedings), this is instantly report- and Debt Information Report: Information System of Tradesmen who are notified by members to the perform individual inquiry through ed to the Risk Center via the web ser- » Debt information on bank/financial and Craftsmen (ESBIS) via MERSIS. Risk Center and involved in cred- the web screen, collective sharing is vice. institution basis and with respect to Additionally, information sharing was it-limit, credit-risk, receivables to be done on a monthly basis via FTP. their maturity breakdown, enriched by enabling results to be liquidated (CLCR), individually qual- Foreign currency credit and income » Information about outstanding in- collected from both MERSIS and ES- ified credit and credit card (CRS) or TELECOMMUNICATIONS information are shared individually terest/commission fees, if any; the BIS when a MERSIS inquiry is made commercially qualified credits (CBS), INFORMATION INQUIRY via the screen and web service ap- total amount of active or closed using TRID. issuers’ postdated cheque applica- Debt information of real persons and plication, regardless of whether the debts written as NPL by banks and tions with banks. legal entities who failed to pay their member making the notification is a financial institutions in the past ten BKM MEMBER MERCHANT debts in due time was obtained from customer or not. years. TURNOVER INFORMATION telecommunication companies at » The Cheque Information Report INQUIRY RC Warning Service enables monthly intervals. The data was bro- In 2019, new scope codes related contains details of: KKB carries out feasibility studies to the delivery of negative ken down by the number of overdue to the notification and sharing of » Cheques paid upon presentation; receive member merchant turnover notifications to request days and shared, after being consol- re-structured foreign currency credits » Bounced cheques that are currently information from the BKM in monthly members with a warning file idated, with all Risk Center members were introduced to the application. unpaid; periods, on identity basis and in con- via the web screen and web service. Enhancements were made in the in- » Cheques that bounced but were solidated form. through FTP, which includes paid afterward; different institutions’ » Cheques for collection/collateral by cheques, bonds, credit Banks; and the number of cheques insurance and tender bans. leaves not yet drawn.

100 101 18. FINDEKS

Launched to help establish a better functioning financial system, Findeks ensures transparency and makes financial management possible for everyone.

Findeks is a financial services platform value-added products. For exam- A key tool for access to Findeks ser- launched by KKB in 2014 to help es- ple, “Findeks Rating Consultancy” vices, Findeks mobile application tablish a better functioning financial provides expert advice on the im- was renewed in 2019. The renewed system in Turkey. To that end, Findeks provement of credit scores. Mean- Findeks mobile provides a next-gen provides individuals and corporations while, the “Findeks Tracer” enables home page where users can easily alike with access to credibility indica- individuals to find out whether their monitor their credit ratings and credit tors, which the financial sector has financial and personal information products at all banks. Featuring a de- used for years, thus ensuring trans- is available online, through unwant- sign that facilitates access to products parency, and making financial man- ed sites. The Warning Service gives and service offerings, the app also agement possible for everyone. alerts on changes in credit card limits offers superior customer experience and debts with all banks and Findeks for Findeks members. Findeks aims to help real sector Credit Rating and notifies credit ap- companies get to know each other plications filed. Boasting a wide range of products, financially; improve their risk-taking Findeks reaches out to customers via and risk-management abilities; pro- QR Code Cheque System introduced the mobile application, online branch, tect their capital and reputation; and by Findeks became mandatory for all website, customer contact center, increase their sales and competitive cheques by law on January 1, 2017. The banks, and strategic partnerships. Ef- power. In light of the advantages pro- QR Code Cheque System is intended forts to further develop these chan- vided by Findeks services, companies to establish a more transparent and nels are ongoing. significantly improve the quality of secure environment for trade, while their assets and contribute to the fi- increasing production, employment, nancial environment and the financial prosperity, and trade volume. The QR 444 4 552 industry in Turkey. Code Cheque Score launched in 2019 www.findeks.com predicts whether the issuer will be www.facebook.com/Findeks In addition to basic products such as able to pay for the cheque. QR Code www.twitter.com/Findeks the Findeks Credit Rating, the Find- Cheque Score is a predictive tool that www.instagram.com/findeks eks Risk Report, the Findeks Cheque calculates the likelihood of the issuer Report, and the Findeks QR Code to pay the cheques for the coming 9 Cheque Report, which cover all ma- months. jor financial indicators, KKB has filled some large gaps in the market with 10 Million Findeks Inquiries

102 103 MY FINDEKS RATING CONSULTANT 18. FINDEKS The Findeks Credit Rating system aims to offer customers foresight to help them manage their financial lives and to ensure that commercial relationships are built on solid foun- The Findeks Risk Report allows users to 3.5 Million dations. In recent years, a need for objective information has emerged, display all information about credits, credit Findeks especially for increasing or maintain- Members ing a credit rating. cards and overdraft accounts on My Findeks Rating Consultant product offers personalized advice on how to increase the Findeks Credit a consolidated basis. Rating or how to maintain a high- grade rating.

LETTER OF GUARANTEE STATUS INQUIRY FINDEKS CREDIT RATING FINDEKS RISK REPORT FINDEKS CHEQUE REPORT FINDEKS CHEQUE INDEX The Findeks Warning Service tracks The Letter of Guarantee Status In- Findeks Credit Rating has served as This is a report allowing users to re- The Findeks Cheque Report contains The Findeks Cheque Index is calcu- these changes in accordance with the quiry (LGSI) service enables custom- a reference guide for banks in their view collective information on credits, information on cheques used in the lated based on the past cheque pay- criteria set by customers and notifies ers to check the validity of a letter of lending decisions for many years. credit cards and overdraft accounts at past, and cheques drawn but not yet ment behavior of legal entities and them via SMS or email. guarantee, without contacting the This score is calculated based on the banks, find out total debt and limit in- paid. natural persons. The main factors issuing bank. Using parameters such credit limit, risk, and payment history formation, and track payment habits. affecting this index include the fre- The Findeks Warning Service allows as “bank name,” “branch name,” “let- related to personal loans that indi- The report covers home, auto and Differently from the Findeks Risk Re- quency of cheques drawn over the warnings to be defined to the system. ter of guarantee number,” “amount,” vidual customers have obtained from consumer loans, credit cards, over- port, the Cheque Report shows the last 36 months, their date proximity, A warning message is sent to the user “currency code” and “expiration date,” banks and financial institutions; credit draft deposit accounts, and commer- debt repayment behavior of a person amounts and number. The Findeks under the following circumstances: customers can run an online check to card and overdraft deposit accounts; cial loans. All information about these or enterprise related to the debt they Cheque Index ranges from 0 to 1,000 » If their Findeks Credit Rating falls find out whether a letter of guaran- as well as the extent and frequency products is submitted to the TBB Risk owe to sectors outside the financial points. In the Findeks Cheque In- below 1,400 points. tee has been issued, and whether an of new credit. Center by financial institutions on a industry. If a cheque bearer obtains dex, if an issuer fails to pay all of the » If their credit card debt exceeds active risk record exists for that letter regular basis, compiled by KKB and approval from the drawer, then they cheques, they receive a score of 0. If TRY 10,000. of guarantee. Findeks Credit Rating functions like a included in the Findeks Risk Report. can track the cheque payment behav- they pay all of the cheques when due, » If they delay payment on one’s summary of the Findeks Risk Report. As a result, individuals and the real ior of that drawer. Additionally, then they receive a score of 1,000 credit cards, cheques, and the like. FINDEKS QR CODE CHEQUE Banks and other financial institutions sector are able to access information The Findeks Cheque Report also con- points. However, if there is even one » If an application for a credit prod- SYSTEM take into consideration the credit about credit products of all banks in a tains information about all banks that cheque that has been dishonored uct (loan and credit card) is made This service enables viewing of an score and the payment history while single report. The Findeks Risk Report issue cheques in Turkey. The data and is still unpaid, then the Findeks in their name. issuer’s past cheque payment sta- assessing new loan applications and allows users to see their financial in- contained in these reports relates to Cheque Index is calculated between tus without an approval process managing their existing consumer formation in detail; in addition, they the period after 2009 for bounced 1 and 500 points. If there are dis- FINDEKS TRACER and controlling potential forgery of loan portfolio. They can also predict can view the financial performance of cheques and after 2007 for paid honored cheques, which have been The Findeks Tracer is another exclu- the cheque by having its QR Code future payment performance. other persons or enterprises, if they cheques. Data is updated daily. paid later, then the Findeks Cheque sive benefit provided to Findeks cus- scanned on the Findeks Mobile Ap- have the approval to do so. Index is calculated between 501 and tomers. Tracer protects personal and plication. Along with legal enforce- Findeks Credit Rating is used by 999 points. The Findeks Cheque In- sensitive data, including ID, contact, ment functionality, QR Code cheques the real sector as a powerful deci- Risk Reports ensure a safe environ- dex gives an idea about the cheque credit card information transmitted may now be produced upon custom- sion-support tool. Requesting the ment for trade, making it possible in payment habits of an individual or an by the user, by running extensive er request from the bank, without Findeks Credit Rating, institutions im- trade relations to see the repayment enterprise. scans online, including the “dark web.” consent. prove the capability of offering their history – and thus the payment habits The user is promptly notified if such customers the right product at the – of the other party and take precau- FINDEKS WARNING SERVICE information is found on unreliable As of January 1, 2017, it is now man- right price, boost automation in de- tionary measures against accounts Another distinguishing feature of websites. In an age where more and datory by law for all cheques to have cision processes, reduce operational receivable risk. Findeks is the Findeks Warning Ser- more people share information on a QR Code, and to be recorded on the costs, and increase customer satis- vice, which provides instant notifica- digital platforms, Findeks Tracer ad- Findeks QR Code Cheque System. faction and profitability. tions on any changes in the Findeks dresses a significant security need of 7.7 Million Credit Rating, credit card limit and customers. Thanks to the Findeks QR Code debt status, or credit applications Cheque System – the first-of-its-kind Findeks made. Thanks to this service, cus- in the world – customers are able to tomers can keep their finances under check the validity and authenticity of control and take action when neces- cheque leaves within seconds, and Risk Reports sary. take precautions against accounts receivable risk, which arises from payments with cheques.

104 105 18. FINDEKS 3,138,288 FINDEKS INDIVIDUAL MEMBERS With the Findeks QR Code Cheque Report, the 3,454,017 cheque payment history of an issuer can be displayed 315,729 TOTAL FINDEKS MEMBERS through the QR code. The report also allows validity FINDEKS COMMERCIAL MEMBERS information on the cheque leaf to be verified.

Findeks QR Code Cheque FINDEKS QR CODE CHEQUE FINDEKS QR CODE CHEQUE Registration System enables REPORTS SCORE The Findeks QR Code Cheque Report QR Code Cheque Score is a predictive a record to be created with allows the check payment history of tool that calculates the likelihood of regard to the time a cheque an issuer to be displayed through the issuer to pay the cheques for the bearer or an endorser accept the QR code, which must appear on coming 9 months. a cheque. checks as of January 1, 2017. The re- 376,054 port also allows validity information The score is expressed in values on the cheque leaf to be verified. standing for A, B, C, D, E, F, and G risk FINDEKS CREDIT RATING When accepting a cheque through groups. The risk groups A, B, C, D, and INQUIRIES the Findeks QR Code Cheque Report, E include the numerical likelihood of the cheque payment performance of issuers in these groups to pay their the issuer can be displayed via the re- cheques when due. port generated on the Findeks mobile app. Besides, lost/stolen checks and The closer the score is to A, the likeli- 7,658,327 counterfeit checks can also be de- hood of the issuer to pay the cheques FINDEKS RISK REPORT tected. in the coming nine months increases. The closer the score is to E, the like- INQUIRIES FINDEKS QR CODE CHEQUE lihood of payment decreases com- REGISTRATION SYSTEM pared to the higher groups. The cheque bearer or endorser should create a record as soon as a The group F stands for at least one 276,099 cheque is accepted via the Findeks unpaid cheque of the issuer, consid- 10,142,560 QR Code Cheque Registration Sys- ering the cheques presented in the FINDEKS CHEQUE REPORT 1.8 Million tem indicating the date on which the past 36 months. FINDEKS INQUIRIES cheque is issued. The Findeks QR INQUIRIES Findeks QR Code Cheque Registration System is The group G stands for the fact that Code Cheque legally supported by means of pro- all the cheques presented by the is- moting its usage as of January 1, 2018. suer in the past 36 months bounced. 1,787,245 Reports An ill-intentioned cheque issuer will For the groups, F and G, the risk of the not be able to raise an objection al- dishonored cheque not being paid is FINDEKS QR CODE CHEQUE leging that the signatory was not an deemed to be materialized. There- REPORTS authorized person of the institution fore, no QR Code Cheque Score is on the date of collection for a cheque calculated to show the likelihood of that is registered in the Findeks QR this risk. Code Cheque Registration system. 44,835 Therefore, checks registered in the QR Code Cheque Score is also pro- cheque registration system may vided in the Findeks QR Code Cheque QR QODE CHEQUE leave traces in the system as of the Report and Cheque Report. date of registration. REGISTRATIONS

106 107 19. KKB ANADOLU DATA CENTER KKB Anadolu Data Center is Turkey’s first data center to have obtained the “LEED 2 Spanning 43 thousand m , the KKB Platinum” Green Building Certificate, which

Anadolu Data Center in Ankara started is the ultimate level of environmental TECHNICAL SPECIFICATIONS OF protection standard. It is now among THE KKB ANADOLU DATA CENTER operations after the construction works The KKB Anadolu Data Center was designed and launched for KKB cus- the world’s five data centers with this tomers to securely protect, store, were completed at the end of 2016. and manage their data. The facility is certification. equipped with the latest technological infrastructure available.

During the design phase of the KKB The Center will primarily meet the standard, minimizing the possibility Anadolu Data Center, the most sensi- backup and main data center ser- of interruption of the services provid- tive issues were the creation of a back- vice needs of the banks. The facility ed and ensuring service continuity in up infrastructure providing customers is a data center where infrastructure a short period of time in case of an in- seamless, fast, and continuous acces- costs are shared and operational ap- terruption. Also, KKB holds ISO 27001 sibility as well as data security. Its en- plications are centralized in the finan- Information Security Management ergy and cooling infrastructure holds cial industry. The KKB, which offers System certification. Accordingly, all the certificate of Uptime Institute Tier the most advanced technologies to processes at KKB are carried out in IV design (TCCD). In November 2019, Turkey’s financial institutions, aims to accordance with this global manage- scenario tests by Uptime Institute provide efficiency in technology in- ment system standard, providing the were completed, making KKB ready vestments by offering the services of highest level of confidentiality, uni- for the Tier IV Facility (TCCF) certifica- cloud technologies platform, which formity, and accessibility in case of a tion process. In addition to advanced will be established in accordance need of all information within the re- electricity infrastructure, the Center with financial regulations, primarily sponsibility of the KKB. KKB Anadolu features ventilation systems that pro- for the finance sector and later for all Data Center obtained ISO 20000-1 vide precise climatization and 24/7 sectors. Information Technologies Service cooling and humidity control in case of Management Systems certification any malfunction. The hardware used KKB performed the business KKB Anadolu Data Center was built services were moved to KKB İstanbul KKB Anadolu Data Center comprises in 2018. All the Center’s operations, in the Center, where energy and data continuity testing at on a 43 thousand m2 land in Anka- Data Center at the end of the day and a data center, a support building, and inputs and outputs of service man- cabling is made overhead the cabinet, the Emergency Center on ra and started operations after the continued to be offered from there. a customer operation center. The fa- agement processes are managed provides high-speed support to cus- October 13, 2019. completion of construction works at cility is designed to expand with two with a consistent and continuously tomers. the end of 2016. As of September 2019, Garanti Bank additional data centers and another developing management system ap- completed system relocation and support building. KKB Anadolu Data proach. QUICK AND CONTINUOUS In December 2016, T.C. Ziraat Bank started using KKB Anadolu Data Center is Turkey’s first data center to ACCESSIBILITY started to relocate its systems and Center as the EC. have obtained the “LEED Platinum” KKB Anadolu Data Center is audited Built-in the low earthquake risk zone use KKB Anadolu Data Center as its Green Building Certificate, which is every year by independent auditors in compliance with earthquake regu- Emergency Center (“EC”). As of November 2019, two other sys- the ultimate level of environmental authorized by the BRSA. The Center lations and protected against lightning tem rooms with the same features protection standard. It is now among provides the necessary assurance for hazards, maximum attention is paid As of April 2017, Yapı Kredi Bank com- became operational, increasing the the world’s five data centers with this the supervision environment of the to the physical security of the Center. pleted relocating its systems and total number of system rooms to certification. Besides, KKB Anadolu data center by sharing with its cus- There are different levels of biomet- started using KKB Anadolu Data Cen- 4. Four system rooms, spanning an Data Center has the TIER IV Certif- tomers and auditors the Independent ric and classical security points in the ter as the EC. area of 650 sqm in total, are now icate, which is a high-level uptime Audit Report drawn up in accordance campus area where only authorized in service, with the capacity of KKB standard. with ISAE 3402 Type 2 Report Format staff can enter. Access to the system On October 13, 2019, KKB conducted Anadolu Data Center reaching from at the end of the audit. With this as- room is possible after having an iris its business continuity test studies, 400 to 800 cabinets. KKB also holds ISO 22301 Business surance, the workload of KKB Anado- scan via the iris reader. Building and which it undertakes every year and Continuity Management System cer- lu Data Center users and auditors has infrastructure management at the KKB covers the capability to provide ser- In December 2019, VakıfBank started tification, which is a testimony to the been reduced in terms of both effort Anadolu Data Center is carried out vices from the Emergency Center. relocating to the new system room fact that the quality of all processes and time expended. 24/7 without interruption with state- With this effort, all KKB and Risk Cen- to use KKB’s Anadolu Data Center ac- at KKB are in accordance with this of-the-art automation and monitoring ter services were provided via KKB tively. international management system systems. Anadolu Data Center for one day. All

108 109 OUR SOCIAL CONTRIBUTION

110 111 20. OUR SOCIAL CONTRIBUTION

Organizing the sixth edition of the “You Imagine, We Realize” contest in 2019, KKB aims to increase university students’ sensitivity towards social issues.

The Audio Question THE AUDIO QUESTION The societal benefit created by the Bank project is intended BANK project was recognized and awarded by various platforms. In 2019, the to provide visually- Audio Question Bank won the Inno- In the 2016 “You Imagine, We Realize” impaired individuals with vation Award at the Corporate Social contest, the “Audio Question Bank” personal, professional, Responsibility Awards organized by project won the “Education” category and academic learning Turkish Employers’ Unions Confed- first prize with the highest score. The eration (TİSK). The project also won environments based on project now aims to create personal, the Gold Award in the Social Respon- equal opportunities. Up- professional, and academic learning sibility Project Communication cat- to-date tests and question environments for visually impaired egory at İstanbul Marketing Awards. individuals based on equality of op- banks tailored for university Also, the Corporate Social Responsi- portunity. Audio Question Bank in- admission exams are bility Association deemed the project volves the transmission of updated vocalized under the project. worthy of the Grand Prize in the 11th trial tests and question banks pre- edition of the awards presented to pared for exams such as TYT and AYT businesses contributing to sustain- to the appropriate medium after be- able development goals. ing vocalized. YOU IMAGINE, WE Approximately 2,000 projects were among the first prize winners of all submitted to the contest – where the six categories was presented with REALIZE In order to launch the project in co- student entrants could apply be- the grand prize of TRY 10,000. In ad- operation with the Association of Vi- tween October 1, 2018, and Febru- dition to awarding the three finalists In 2019, KKB organized the sixth sually Impaired in Education (EGED) ary 15, 2019 – in the categories of in each category and the winner of edition of the socially responsible and Istanbul University, Head Office environment, education, culture and the social media category, KKB also project ideas contest, “You Imag- of Library and Documentation, Unim- arts, health, and sports, Findeks fi- provided an internship opportunity to ine, We Realize,” implemented for peded Information Center, a team of nancial literacy, and society. During these students in 2019 summer. the first time in 2013, aiming to raise KKB employee volunteers carried out the award ceremony held on April social responsibility awareness and 15 Thousand the vocalization trials of the ques- 26, 2019, each social media first prize increase sensitivity towards social tion bank. After taking courses from winner and category first prize win- issues among university students. Audio Questions EGED, KKB volunteers started to vo- ner was awarded TRY 5,000, while The jury panel, which evaluated the calize question banks with respect to each category second prize winner 15 thousand social responsibility projects devel- preparation for university admission received TRY 3,000, each category questions were oped by university students, con- exams. From 2017 to the end of 2019, third prize winner won TRY 2,000, vocalized from sisted of İbrahim Betil, Civil Society some 15 thousand questions were each category fourth prize winner 2017 to the end Volunteer; Yasemin Salih, Journalist; vocalized and put to the use of all won TRY 1,000 and the fifth prize of 2019. Fügen Toksü, Communication Expert; the libraries serving for visually-im- winners won TRY 500. “White Vibra- 2,262 Özlem Denizmen, Businesswoman paired individuals. One in every three tion” that received the highest score and Social Entrepreneur; Fatoş Kar- Projects visually impaired had access to the ahasan, Academician and Journalist; resources generated under the Audio Can Yılmaz, Actor, Scriptwriter and submitted for Question Bank effort through the on- Writer; Cem Seymen, Journalist and You Imagine, We line e-library of the Visually Impaired Presenter; Kasım Akdeniz, General Technology and Education Laborato- Manager of KKB. Realize contest ry (GETEM) and prepared for exams.

112 113 20. OUR SOCIAL CONTRIBUTION

The Theater Club of KKB employees performed “Lüküs Hayat” twice in 2019.

a single umbrella, was launched on KKB’S RUNNING TEAM STEPTEMBER FUNDRAISING dation and supports Gençbizz En- December 5 International Volunteers’ KKB’s Running Team ran the Bozcaa- CAMPAIGN trepreneurship Program for High Day. Over 50 KKB Volunteers contin- da Half-Marathon on May 18, 2019, As one of the 30 institutions partici- Schools aimed at high school stu- ue with their activities under this plat- to raise money for the Tohum Au- pating in the Steptember Fundraising dents aged 16 to 18. Taking part in the form. tism Foundation. Completing the 10 Campaign, KKB collected donations project as a volunteer, eight KKB em- km track in the half-marathon, some during the campaign and took 10 ployees provided mentoring support Besides, the Lüküs Hayat (Luxurious TRY 3,500 was raised to contribute thousand steps every day in Septem- to high school students on establish- Life) play, of which the cast featured to the education costs of a child with ber. The proceeds were presented ing a company, preparing a business KKB employees, was performed autism. to the Spastic Children’s Foundation plan, creating a product, and defining twice in 2019. A total of TRY 6,795 in of Turkey to perform activities in line marketing strategies. As a voluntary donations collected from ticket sales On November 3, 2019, KKB’s Running with its vision. In particular, the dona- mentor of KKB, Sezen Döşoğlu, Se- at both performances were trans- Team took part in a significant social tions will help the Foundation pro- nior Specialist of Findeks Business KKB VOLUNTEERING ferred to Tohum Autism Foundation. responsibility project by running 10 vide more training and rehabilitation Partnerships, mentored a group of km and 15 km distances for the bene- to integrate children and young peo- students at Mustafa Saffet Anatolian PLATFORM Throughout 2019, KKB employ- fit of Ahtapot Volunteers’ Foundation ple with cerebral palsy into society. High School. Their project “Evolution” ees’ music band organized charity in the 41st Istanbul Marathon. Com- won the first prize in the Best Market- Putting social responsibility at the concerts and donated the amount pleting the marathon, KKB’s running KKB VOLUNTARY MENTORING ing Sales Category of Gençbizz Tur- core of all its operations, KKB im- collected in ticket sales to various team made personal contributions PROJECT key Finals. plements socially-beneficial projects foundations. The first concert was and raised a total TRY 42,770, which KKB collaborates with the Foundation with the voluntary contribution of performed in support of the Edu- was donated to Ahtapot Volunteers’ of Private Sector Volunteers (ÖSGD) KKB employees. Within this scope, cational Volunteers Foundation of Foundation. and Young Success Education Foun- KKB partnered with Kızılay in orga- Turkey (TEGV). A total of TRY 32,000 nizations including blood donation, collected from the ticket sales was provision of books, educational toys, donated to TEGV. The second concert technical equipment, and clothing was organized in support of the Hope items for the schools in need. KKB’s Foundation for Children with Cancer Volunteering Platform, gathering all (KAÇUV). A total of TRY 5,000 was social responsibility projects under donated to the foundation.

114 115 FINANCIAL INFORMATION

116 117 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS AND 21. AGENDA OF THE ORDINARY GENERAL ASSEMBLY INDEPENDENT AUDITOR’S REPORT ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE 2 KKB KREDİ KAYIT BÜROSU A.Ş.

KKB KREDİ KAYIT BÜROSU ANONİM ŞİRKETİ NOTICE OF THE ORDINARY GENERAL ASSEMBLY TO BE HELD ON MARCH 25, 2020 FINANCIAL STATEMENTS FOR THE YEAR The Annual Ordinary General Assembly of our company will be held at the following head office address at 13:00 on Wednes- day, March 25, 2020, to review the activities of the year 2019 and to discuss and finalize the agenda mentioned below. ENDED 31 DECEMBER 2019 TOGETHER The General Assembly will be held at Barbaros Mah. Ardıç Sokak Varyap Meridian F Blok Batı Ataşehir, İstanbul. WITH INDEPENDENT AUDITOR’S REPORT Shareholders who will be represented by proxy at the meeting must execute the proxy in accordance with the following sample and send it to our Company one week before the day of the assembly.

KKB’s financial statements, consolidated financial statements, the annual report of the Board of Directors, and the profit distribution proposal of the Board of Directors shall be available for review of our shareholders at KKB headquarters as of March 10, 2020.

We kindly request our shareholders to be informed of the foregoing and to honor the meeting.

Yours sincerely,

KKB KREDİ KAYIT BÜROSU A.Ş.

VEYSEL SUNMAN ARİF ÇOKÇETİN CHAIRMAN OF THE BOARD OF BOARD OF DIRECTORS DEPUTY DIRECTORS CHAIRMAN AGENDA 1. Opening and formation of the Chairing Board; 2. Authorizing the Chairing Board to sign the Minutes of the General Assembly; 3. Reading and discussion of the Annual Report prepared by the Board of Directors; 4. Reading and discussion of the Auditor’s Report; 5. Reading, discussion and approval of the financial statements; 6. Release of each member of the Board of Directors from their obligations; 7. Determination of the mode of use of the profit and of the rates of profit and dividend share to be distributed; 8. Determination of remunerations and other benefits, such as attendance fee, bonus, premium, and the like of the members of the Board of Directors; 9. If there is any vacancy in the Board of Directors and if any person has been appointed to the vacant seat during the year, approval of the appointment by the General Assembly; 10. Selection of members to replace Board Members whose terms of office expired; 11. Election of the auditor; 12. Discussion of granting of permissions to the members of the Board of Directors as outlined in Articles 395 and 396 of the Turkish Commercial Code No. 6102; 13. Petitions and suggestions; 14. Closing

PROXY FORM In respect of...... shares at par value of TRY...... in aggregate owned by our Bank in the capital of KKB Kredi Kayıt Bürosu A.Ş. (the “Company’), we appoint...... to be our proxy to represent our Bank and to cast vote on behalf of the Bank on the issues in the agenda of the Ordinary General Assembly of shareholders of the Company to be held at the address of Barbaros Mah. Ardıç Sokak, Varyap Meridian, F Blok, Batı Ataşehir, İstanbul at 13:00 hours on 25.03.2020.

PRINCIPAL: Name and Last Name/Trade Name Date and Signature

P.S. If the proxy is not certified by a notary public, a notarized circular of authorized signatures of the principal must be attached to the proxy.

118 119 120 121 122 123 CONTENTS PAGE

STATEMENT OF FINANCIAL POSITION 126-127

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 128

STATEMENT OF CHANGES IN EQUITY 129

STATEMENT OF CASH FLOWS 130

EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS 131-180

NOTE 1 ORGANISATION AND PRINCIPAL ACTIVITIES OF THE COMPANY 131-133 NOTE 2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS 134-151 NOTE 3 CASH AND CASH EQUIVALENTS 152-153 NOTE 4 TRADE RECEIVABLES AND PAYABLES 153 NOTE 5 OTHER RECEIVABLES AND PAYABLES 154 NOTE 6 BALANCES AND TRANSACTIONS WITH RELATED PARTIES 154-157 NOTE 7 INVENTORIES 158 NOTE 8 TANGIBLE ASSETS 158-159 NOTE 9 INTANGIBLE ASSETS 159-160 NOTE 10 LEASES 160 NOTE 11 SHORT TERM AND LONG TERM LIABILITIES 161 NOTE 12 PROVISIONS, CONTINGENT ASSETS AND LIABILITIES 162 NOTE 13 EMPLOYMENT BENEFITS SHORT TERM AND LONG TERM PROVISIONS 162-164 NOTE 14 PREPAID EXPENSES AND DEFERRED INCOME 164-165 NOTE 15 OTHER ASSETS AND LIABILITIES 165 NOTE 16 SHAREHOLDERS’ EQUITY 166 NOTE 17 SALES AND COST OF SALES 167 NOTE 18 MARKETING, SELLING AND DISTRIBUTION EXPENSES, GENERAL ADMINISTRATIVE EXPENSES 168 NOTE 19 EXPENSES BY NATURE 169 NOTE 20 OTHER OPERATING EXPENSES 169 NOTE 21 FINANCIAL INCOMES AND EXPENSES 169-170 NOTE 22 TAX ASSETS AND LIABILITIES 170-172 NOTE 23 INCOME FROM INVESTING ACTIVITIES 172 NOTE 24 NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS 173-179 NOTE 25 FAIR VALUE OF FINANCIAL INSTRUMENTS 179-180 NOTE 26 SUBSEQUENT EVENTS 180

124 125 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE 2 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE 2 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. STATEMENT OF FINANCIAL POSITION STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2019 AT 31 DECEMBER 2019 (AMOUNTS EXPRESSED TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

Audited Audited Audited Audited Current period Prior period Current period Prior period Notes 31 December 2019 31 December 2018 31 December 31 December ASSETS Notes 2019 2018 Current assets 124,270,443 133,607,040 Short-term liabilities 148,900,439 115,384,197 Cash and cash equivalents 3 72,529,058 94,552,262 Short term borrowings 6,957,116 11,726,416 - Short term borrowings due from related parties 6,957,116 11,726,416 Trade receivables 4 32,317,020 20,530,801 - Financial leasing payables 11 6,957,116 11,726,416 - Trade receivables due from related parties 4, 6 27,998,113 18,028,648 Lease liabilities 10 1,148,714 - - Trade receivables due from other parties 4 4,318,907 2,502,153 Trade payables 4 33,698,895 39,490,049 Other receivables 5 - 251,719 - Trade payables due to related parties 4, 6 3,134,403 4,790,054 - Other receivables due from related parties 5, 6 - 2,331 - Trade payables due to other parties 4 30,564,492 34,699,995 - Other receivables due from other parties 5 - 249,388 Other payables 5 4,803,047 3,164,557 Inventories 7 4,510,643 - - Other payables due to related parties - - Prepaid expenses 14 6,688,146 10,517,653 - Other payables due to other parties 4,803,047 3,164,557 - Prepaid expenses due from related parties 6, 14 4,262,113 2,842,900 Short term provisions 13 30,441,429 18,766,064 - Prepaid expenses due from other parties 14 2,426,033 7,674,753 - Short term provisions for employee benefits 24,610,646 17,208,006 - Other short term provisions 5,830,783 1,558,058 Other current assets 15 716,532 3,819,535 Payables related to employment benefits 13 2,144,524 1,605,917 - Other current assets from other parties 716,532 3,819,535 Deferred income 14 69,706,714 40,631,194 Current income tax assets 22 7,509,044 3,935,070 Long-term liabilities 15,281,480 16,393,509 Non-current assets 260,132,315 209,176,711 Long term borrowing 70,242 6,177,496 Tangible Assets 8 214,775,110 181,205,514 - Long term borrowing from related parties 70,242 6,177,496 - Buildings 116,087,238 120,337,814 - Financial leasing payables 11 70,242 6,177,496 - Machinery. plant and equipment 59,540,968 29,502,989 Lease liabilities 10 1,944,541 - - Furniture and fixtures 33,788,854 28,380,928 Deferred tax liability 22 9,876,747 7,683,713 - Constructions in progress 5,358,050 2,983,783 Long term provisions 13 3,389,950 2,532,300 Right of use asset 10 3,149,540 - - Long term provisions for employee benefits 1,886,824 2,087,456 - Other long term provisions 1,503,126 444,844 Intangible assets 9 31,162,312 24,931,626 Other Liabilities 164,181,919 131,777,706 - Softwares 21,037,136 21,290,445 Shareholders’ Equity - Rights 9,748,641 3,251,527 Share capital 16 7,425,000 7,425,000 - Other intangible assets 376,535 389,654 Restriction reserves from profit 16 14,131,050 12,668,175 Prepaid expenses 14 11,034,033 3,021,751 Adjustment to share capital 16 2,574,025 2,574,025 - Prepaid expenses due to related parties 6, 14 - 109,996 Extraordinary reserves 16 139,367,193 123,581,647 - Prepaid expenses due to other parties 14 11,034,033 2,911,755 Accumulated other comprehensive expense that will not be Other non-current assets 15 11,320 17,820 reclassified to profit or loss (-) 413,992 (157,458) - Other non-current assets due from other parties 11,320 17,820 - Remeasurement losses of defined benefit plans (-) 413,992 (157,458) Retained earnings 34,129,110 23,709,055 Net profit for the period 22,180,469 41,205,601 Total assets 384,402,758 342,783,751 Total shareholders’ equity 220,220,839 211,006,045

Total liabilities and shareholders’ equity 384,402,758 342,783,751

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

126 127 - CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE 2 - - - 571,450 (147,330) 22,751,919 41,058,271 41,205,601 22,180,469

KKB KREDİ KAYIT BÜROSU A.Ş. (13,537,125) (13,537,125) Total equity Total Total equity Total 211,006,045 211,006,045 183,484,899 STATEMENT OF COMPREHENSIVE INCOME FOR THE 220,220,839 ------PERIOD 1 JANUARY - 31 DECEMBER 2019 Net profit profit Net Net profit Net 41,205,601 22,180,469 41,205,601 22,180,469 44,797,597 (AMOUNTS EXPRESSED TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) 41,205,601 41,205,601 22,180,469 (44,797,597) (41,205,601) for the year for for the year for ------earnings earnings Retained Retained Audited Audited Retained 44,797,597 41,205,601 34,129,110 16,783,995 23,709,055 23,709,055 (37,872,537) Current period Prior period (30,785,546) 1 January- 1 January------Notes 31 December 2019 31 December 2018 571,450 Operating income 571,450 413,992 (10,128) (147,330) (147,330) Sales 17 333,141,597 274,471,931 (157,458) (157,458) profit or loss profit profit or loss profit comprehensive Cost of sales (-) 17 (137,911,494) (112,070,158) comprehensive not classified as not classified as Accumulated other Accumulated Gross profit 195,230,103 162,401,773 other Accumulated income or expenses or expenses income income or expenses income General administrative expenses (-) 18 (133,055,536) (98,236,397) - - - Marketing. selling and distribution expenses (-) 18 (51,233,237) (26,647,391) - - - Other operating incomes 3,476,689 6,678,868 reserves Other operating expenses (-) 20 (556,220) (127,821) reserves 30,785,546 36,409,662 Shareholders’ Equity (Auidted) Equity Shareholders’ Shareholders’ Equity (Auidted) Equity Shareholders’ (13,537,125) 139,367,193 123,581,647 123,581,647 100,709,110 Operating profit 13,861,799 44,069,032 (15,000,000) Extraordinary Extraordinary Extraordinary Extraordinary Income from investing activities 23 2,723,363 223,057 ------Operating profit before financial income 16,585,162 44,292,089 profit Financial income 21 20,144,974 28,684,430 profit 1,462,875 1,462,875 14,131,050 12,668,175 12,668,175 Restriction Restriction Restriction Restriction Financial expense (-) 21 (8,465,090) (19,390,150) 11,205,300 reserves from from reserves Profit before tax from continuing operations 28,265,046 53,586,369 from reserves ------Current tax expense for the period (-) 22 (4,052,721) (9,349,815) - - - - - Deferred tax expense (-) 22 (2,031,856) (3,030,953) Net profit for the period from continuing operations 22,180,469 41,205,601 2,574,025 2,574,025 2,574,025 2,574,025 share capital share OTHER COMPREHENSIVE INCOME/(EXPENSE) capital share Adjustment to Adjustment Adjustment to Adjustment Items that will not be reclassified to profit or loss ------Defined benefits plans remeasurement gains/(losses) 12 732,628 (188,885) - - - - - Defined benefits plans remeasurement gains/(losses). 7,425,000 tax effect 22 (161,178) 41,555 7,425,000 7,425,000 7,425,000 Share capital Share Other comprehensive income/(expense) 571,450 (147,330) capital Share Total comprehensive income 22,751,919 41,058,271 The accompanying notes form an integral part of these financial statements. part of an integral form notes The accompanying 1 January 2018 1 January earnings retained to Transfers reserves to Transfers CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE 2 ISSUED IN TURKISH, SEE NOTE ORIGINALLY ENGLISH OF FINANCIAL STATEMENTS INTO TRANSLATION CONVENIENCE A.Ş. BÜROSU KAYIT KKB KREDİ FOR THE PERIOD OF CHANGES IN EQUITY STATEMENT 2019 - 31 DECEMBER 1 JANUARY INDICATED.) UNLESS OTHERWISE (AMOUNTS EXPRESSED TURKISH LIRA (“TRY”), Dividend paid (-) income comprehensive Total reserves to Transfers Dividend paid (-) income comprehensive Total The accompanying notes form an integral part of these financial statements. the period for profit - Net (-) expenses - Other comprehensive 2018 31 December 2019 1 January earnings retained to Transfers the period for profit - Net (-) expenses - Other comprehensive 2019 31 December

128 129 CONVENIENCE TRANSLATION INTO ENGLISH OF FINANCIAL STATEMENTS ORIGINALLY ISSUED IN TURKISH, SEE IN NOTE 2 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY STATEMENT OF CASH FLOWS FOR THE PERIOD NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 1 JANUARY - 31 DECEMBER 2019 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

Audited Audited 1. ORGANISATION AND PRINCIPAL ACTIVITIES OF THE COMPANY Current period Prior period 1 January- 1 January- KKB Kredi Kayıt Bürosu A.Ş. (the “Company” or “KKB”), was established in 11 April 1995 with the partnership of 11 banks as the Notes 31 December 2019 31 December 2018 first and only credit bureau in Turkey. As of 31 December 2019, KKB is owned by 9 banks and has 165 members which consist Net profit for the period 22,180,469 41,205,601 of 46 banks, 15 consumer finance, 56 factoring, 22 financial leasings, 5 insurance, 17 asset management companies, 1 source Adjustments to reconcile net profit and net cash provided from operating activities organization and 3 companies from other sectors. Members have been sharing their credit informations with each other Adjustments for deferred tax expense 22 2,031,856 3,030,953 since April 1999 through KKB. As required by Banking Law No: 5411 (Article 73/4), KKB was established by at least five banks to Adjustments for current tax expense 22 4,052,721 9,349,815 facilitate the exchange of information and documents between financial institutions. Adjustments for personnel bonus provision expense 13 18,658,413 13,471,394 Adjustments for depreciation and amortization 19 32,370,691 24,738,538 Banking Regulation and Supervision Agency (“BRSA”) has approved the adaptation of KKB to Law of Bank Cards and Credit Adjustments for employee termination benefit provision expenses 13 718,498 799,367 Cards numbered 5464, with the first article of the decision dated 3 July 2008 and numbered 2685. Adjustments for interest expense on financial leasing 11 (8,786) (27,215) Adjustments for unused vacation provision expenses 13 1,945,283 1,172,889 With Law No. 6111 issued on February 25, 2011, Additional Article 1 and Provisional Article 28 were added to Banking Law Adjustments for interest income (-) 20 (11,257,509) (16,750,035) Adjustments for profit on sale of tangible assets (-) (2,344,196) (223,057) No. 5411. Pursuant to Additional Article 1, a Risk Center has been established within the organization of the Banks Association Adjustments for other non-cash items 5,945,900 (4,162,059) of Turkey (TBB) to collect the risk data of customers of credit institutions and any financial institutions deemed appropriate Adjustments for net foreign currency exchange effect 742,798 (5,832,060) by the Banking Regulation and Supervision Agency and to share such data with the referenced institutions and with the Provision for expected credit losses 19 108,453 18,473 customers themselves, or with any private legal entities and third real people if consent has been given by the customers. Operating profit before changes in operating assets and liabilities 75,144,591 66,792,604 Upon transfer of the Risk Centralization Center within the organization of the Central Bank of Turkey, the Risk Center of the Changes in assets and liabilities: Banks Association of Turkey started up operations on 28 June 2013. KKB conducted all operational and technical activities Net (increase)/decrease in trade receivables 4 (11,805,325) 4,011,315 through its own organization as an agency of the Risk Center of TBB and providing data collection and sharing services to 181 Net increase/(decrease) in trade payables 4 (5,791,154) 17,536,958 financial institutions which are members of the Risk Center. Net (increase)/decrease in other receivables 5 251,719 (11,541) Net increase/(decrease) in other payables 2,177,097 (302,175) Net (increase)/decrease in current and non-current other assets 3,109,503 (3,720,357) KKB offers its services not only to financial institutions, but also to individuals and the real sector through “Cheque Report” and Net increase/(decrease) in deferred income 14 29,075,520 15,225,624 “Risk Report” systems launched in January 2013. In September 2014, KKB gathered its services aimed at individual customers Net (increase)/decrease in prepaid expenses 14 (4,182,775) (5,484,007) and the real sector under the name of Findeks, the consumer service platform of KKB. In addition to developing new products Net (increase)/decrease in stocks 7 (4,510,643) - and services during the year, KKB continued to create added value for the banking-finance industry primarily, as well as the Unused vacations paid (-) (270,338) (340,313) real sector, through partnerships across different industries. Ultimately, through the QR Code Cheque System - launched by Employee termination benefits paid (-) 13 (186,501) (581,121) KKB in 2015, became mandatory by Law No. 6728 to the Turkish Commercial Code No. 6102, and entered into force as of 1 Income taxes paid (-) 22 (7,391,393) (12,512,847) January 2017. Personnel performance bonus paid (-) 13 (13,471,394) (11,739,895) Commissions paid (-) (373,064) (188,859) Net cash provided from operating activities 61,775,843 68,685,386 Electronic Collateral Letter System which arranges collateral letter in an electronical enviroment has been launched by KKB in Investing activities: 2018 has been run by KKB ever since. Purchases of tangible assets (-) 8 (45,954,000) (23,310,337) Purchases of intangible asset (-) 8 (13,571,660) (18,903,764) The control of the Company is provided by the shareholders according to the allocation of shares presented in the Note 16. Sale of tangible assets 9 5,501,617 610,488 Payments for investments in progress (-) (15,802,734) (6,503,766) As of 31 December 2019, the Company has 482 employees (31 December 2018: 432). Net cash used in investing activities (-) (69,826,777) (48,107,379) Financial activities: Dividends paid (-) (13,537,125) (13,537,125) The Company is registered in Turkey and the registered adress of the Company is as stated below: Payments for finance leases (-) 11 (11,613,971) (9,589,610) Interests paid (-) 11 (513,525) (880,148) As of December 31, 2019, 3 banks have positioned their ordinary status centers in Anadolu Data Center established by KKB in Interests received 12,188,600 16,012,571 Ankara. Net cash used in financial activities (-) (13,476,021) (7,994,312) Net increase in cash and cash equivalents (21,526,955) 12,583,695 Varyap Meridian Sitesi, F Blok, Barbaros Mah. Ardıç Sk., 34746, Ataşehir, İstanbul, Türkiye Net currency effect 516,930 12,097,021 Cash and cash equivalents at the beginning of the period 3 93,421,409 68,740,693 Approval of the financial statements Cash and cash equivalents at the end of the period 3 72,411,384 93,421,409 The financial statements for the period ended 31 December 2019 have been approved by the General Assembly on 20 February 2020. General Assembly and authorised bodies of the Company have the right to amend the financial statements within legal framework. The accompanying notes form an integral part of these financial statements.

130 131 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

1. ORGANISATION AND PRINCIPAL ACTIVITIES OF THE COMPANY (Continued) 1. ORGANISATION AND PRINCIPAL ACTIVITIES OF THE COMPANY (Continued) a. The products and services provided to members directly by KKB are presented below: b. The products and services provided to members by TBB Risk Center are presented below:

- Limit Control System (LCS) - Credit Limit-Credit Risk Inquiry and Sharing Services - Personal Credit Rating (PCR) - Protested Bills Sharing Service - BDDK Porduct and Servise Fees Portal - Bounced Cheque Inquiry and Sharing Services - False Information/Document/Declaration/Application Alert System (SABAS) - Individual Cheque Inquiry - Internet Fraud Alert System (IFAS) - Credit Reference System (CRS) - Loan Utilization Instant Sharing Service (KAPS) - Corporate Bureau System (CBS) - Individual Indebtedness Index - Individual Customer Objection Assessment System (Individual MIDES) - Cheque Report - Corporate Customer Objection Assessment System (Corporate MIDES) - Risk Report - CRS Information Verification System - GeoMIS - Map Based Reporting Service - Cheque Report Raw Data Presentation - Agricultural Loan Assessment System (TARDES) - Risk Report Raw Data Presentation - Cheque Index - Cross-Cheque Relations Inquiry Service - Cheque Scores - Bounced Cheque Alert Service - Real Sector Decision Support Systems (RSDSS) - Inquiry and Warning Services (re:entities banned from tenders) - Central Decision Support Systems (CDSS) - Derivative Transactions Sharing Service - Commercial Credit Rating (CCR) - Paid Bills Inquiry - Prescribed Accounts - Sharing Information about Cheques Granted Interim Injunction - Address Processing Service - Sharing Service about Companies that Declared Bankruptcy/Suspended Bankruptcy/Declared Concordat - Cheque Status Inquiry - Sharing Service about Customers Banned from Using Cheques - Farmer Registration System - Customer RA Personal Record Search - Letter of Guarantee Status Inquiry (LGSI) - Credit Insurance Inquiry and Sharing - Trade Registry Sharing System (TRSS) - Risk Center Customer Report Service - Collection Scores - Acceptance & Rejection Notifications Related to Loan Applications - Inclination Scores - Sharing of Internal Rating Scores - Central Invoice Registration System (CIRS) - Credit Rating Agencies (CRAS) and Sharing of Rating Scores - IBAN Verification Service - Data Updating Application - LCS Customer Objection Assesment System (MIDES) - Data Validation and Sanction Application - National Fraud Attempt Detection and Prevention Service - Risk Center Bulletin and Statistics Publication Services - Credits Analysis Portal - CTMCRS Inquiry Service - Cheque Analysis Portal - BKM Member Merchant Turnover Information Inquiry - KKB Unknown Number Service - RC Warning Services - Electronic Letter of Guarantee Service - Individual Inquiry Unit Query - Findeks - Force Majeure Inquiry • Findeks Credit Rating - Telecommunications Information Inquiry • Risk Report - Foreign Currency Credit and Income Inquiry • Cheque Report - Historical Credit Risk Query • Cheque Index - Presentation of Risk Center Report via E-Government Sistem • Warning Service • Tracer • Rating Consultancy • Findeks QR Code Cheque System • Findeks QR Code Cheque Registration System

132 133 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

Additional paragraph for convenience of translation into English: 2.2 Basis in preperation (Continued)

The differences between accounting principles, as described in the preceding paragraphs, and accounting principles 2.2.3 Offsetting generally accepted in countries in which these accompanying financial statements are to be distributed and International Financial Reporting Standards (“IFRS”) have not been quantified in the accompanying financial statements. Accordingly, the Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally accompanying financial statements are not intended to present the financial position, results of operations and changes in enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and financial position and cash flows in accordance with the accounting principles generally accepted in such countries and IFRS. settle the liability simultaneously

2.1 Acounting standards 2.2.4 Comparatives and restatement of prior year financial statements

Company prepares its financial statements in accordance with Banking Regulation and Supervision Agency (“BRSA”) In order to enable the determination of the financial position and performance trends, the Company’s financial statements Accounting and Reporting Legislation which includes “Communiqué on Uniform Chart of Accounts and Prospectus to be have been presented comparatively with the prior period. Reclassifications are made on comparative figures to conform to implemented by Financial Leasing, Factoring and Financing Companies” published in the Official Gazette numbered 28861 changes in presentation of the financial statements and major differences are explained. dated 24 December 2013 and “Regulation on Accounting Practices and Financial Statements of Financial Leasing, Factoring and Financing Companies”, communiqués, and circulars and, announcements made by BRSA and requirements of Turkish 2.2.5 Changes in accounting policies Accounting Standards for the matters not regulated by the aforementioned legislations. Significant changes in accounting policies are applied retrospectively and prior period financial statements are restated. There The financial statements are prepared on the historical cost basis. was no accounting policy changes in 2019, except for changes required by TFRS 16 “Leases ”.

The preparation of financial statements requires estimates and assumptions that affect the amounts of reported assets and a) TFRS 16 “Leases” Standard liabilities or declared contingent assets and liabilities as of the balance sheet date and the amounts of income and expenses reported in the related period. These estimates are based on managements’ best judgements and information; however, The company - as a lessee actual results may vary from these estimates. At inception of a contract, the Company assess whether the contract is, or contains, a lease. A contract is, or contains, a lease if Financial statements and statutory books of the company are presented in Turkish Lira (“TRY”) in compliance with Turkish the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The Commercial Code (“TCC”) and accounting principles of the tax legislation. Company considers the following matters when assessing whether the agreement transfers the right to control the use of an identified asset for a limited period of time: 2.2 Basis in preperation The contract includes an identified asset; contract includes a definition of a specified asset explicitly or implicitly). The basic accounting policies adopted in the preperation of the financial statements as of 31 December 2019 are presented below. These policies are applied consistently throughout the whole year, unless otherwise indicated. a) A capacity portion of an asset is physically distinct or represents substantially all of the capacity of an asset (if the supplier has a substantive right to substitute the asset and obtain economic benefits from use of the asset, then the asset is not an 2.2.1 Fuctional and reporting currency identified asset), b) The company has the right to obtain substantially all of the economic benefits from use of the identified asset, The Company’s functional and reporting currency is Turkish Lira (“TRY”). c) The company has the right to direct the use of an identified asset. The Company considers that the asset has the right to use if decisions about how and for what purpose the asset is used are predetermined. The company has the right to 2.2.2 Adjustment of financial statements in periods of high inflation manage the use of the asset in the following cases.

Financial statements were subject to inflation accounting in accordance with “Turkish Accounting Standards Financial i. The company has the right to operate the asset (or to direct others to operate the asset in a manner that it determines) Reporting in Hyperinflationary Economies” (“TAS 29”) until 31 December 2004. The BRSA announced a declaration with a throughout the period of use, without the supplier having the right to change those operating instructions; or decision dated 28 April 2005 that hyperinflationary period is over and inflation accounting has ceased as of 1 January 2005. ii. Group designed the asset (or specific aspects of the asset) in a way that predetermines how and for what purpose the asset will be used throughout the period of use.

At the commencement date, the Company recognize a right-of-use asset and a lease liability in financial statements.

134 135 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.2 Basis in preperation (Continued) 2.2 Basis in preperation (Continued)

Right-of-use asset After initial recognition, the lease liability is measured:

The right of use asset is initially recognized at cost comprising of: a) increasing the carrying amount to reflect interest on the lease liability, b) reducing the carrying amount to reflect the lease payments made, and a) the amount of the initial measurement of the lease liability, c) remeasuring the carrying amount to reflect any reassessment or lease modifications or to reflect revised in-substance b) any lease payments made at or before the commencement date, less any lease incentives received, fixed lease payments. c) any initial direct costs incurred by the Company, and Interest on the lease liability in each period during the lease term is the amount that produces a constant periodic rate of The Company re-measure the right of use asset: interest on the remaining balance of the lease liability. The Company determine the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, if that rate can be readily determined, or the lessee’s incremental a) after netting-off depreciation and reducing impairment losses from right of use asset, borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined. After the b) adjusted for certain re-measurements of the lease liability recognized at the present value commencement date, The Company remeasure the lease liability to reflect changes to the lease payments. The Company recognise the amount of the remeasurement of the lease liability as an adjustment to the right-of-use asset. The Company apply the depreciation requirements in TAS 16 Property, Plant and Equipment in depreciating the right-of- use asset, subject to the requirements. If the lease transfers ownership of the underlying asset to the lessee by the end of The Company shall remeasure the lease liability by discounting the revised lease payments using a revised discount rate, if the lease term or if the cost of the right-of-use asset reflects that the lessee will exercise a purchase option, the Company either: depreciate the right-of-use asset from the commencement date to the end of the useful life of the underlying asset. Otherwise, The Company depreciate the right-of-use asset from the commencement date to the earlier of the end of the a) There is a change in the lease term. The Group determine the revised lease payments on the basis of the revised lease useful life of the right-of-use asset or the end of the lease term. term; or b) There is a change in the assessment of an option to purchase the underlying asset. The Group determine the revised lease The company applies TAS 36 Impairment of Assets standard to determine whether the right-of-use asset is impaired and to payments to reflect the change in amounts payable under the purchase option. account for any impairment loss identified. The Company determine the revised discount rate as the interest rate implicit in the lease for the remainder of the lease term, Lease liability if that rate can be readily determined, or the lessee’s incremental borrowing rate at the date of reassessment, if the interest rate implicit in the lease cannot be readily determined. At the commencement date, The Company measure the lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily The Company remeasure the lease liability by discounting the revised lease payments, if either: determined. If that rate cannot be readily determined, the Company use the lessee’s incremental borrowing rate. a) There is a change in the amounts expected to be payable under a residual value guarantee. The Company determine the At the commencement date, the lease payments included in the measurement of the lease liability comprise the following revised lease payments to reflect the change in amounts expected to be payable under the residual value guarantee. payments for the right to use the underlying asset during the lease term that are not paid at the commencement date: b) there is a change in future lease payments resulting from a change in an index or a rate used to determine those payments. The Company remeasure the lease liability to reflect those revised lease payments only when there is a change in the cash a) fixed payments, less any lease incentives receivable, flows. b) variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date, The Group determine the revised lease payments for the remainder of the lease term based on the revised contractual c) the exercise price of purchase option if the Group is reasonably certain to exercise that option; and payments. In that case, the Group use an unchanged discount rate. d) payments of penalties for terminating the lease, if the lease term reflects the lessee exercising an option to terminate the lease. The Group recognises the restructuring of the lease as a separate leasing if both of the following are met:

a) The restructuring extends the scope of the leasing by including the right of use of one or more underlying assets, and b) The lease payment amount increases as much as the appropriate adjustments to the price mentioned individually so that the increase in scope reflects the individual price and the terms of the relevant agreement.

136 137 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.2 Basis in preperation (Continued) 2.2 Basis in preperation (Continued)

The Company - as a Lessor TFRS 16 “Leases” standard current period effects

All the leases that Company is the lessor are operating leases. Assets leased out under operating leases are classified under The right of the use assets and the movement table as of 31 December 2019 are as follows: investment properties, property, plant and equipment or other current assets in the consolidated balance sheet. Rental income is recognised in the consolidated statement of income on a straight-line basis over the lease term. Vehicles Buildings Total As of January 1 761,757 - 761,757 The Company distributes an amount that takes place in an agreement which includes an item that has or has not one or more Additions 228,760 2,831,985 3,060,745 extra leasing qualities along with a leasing item through applying the TFRS 15 “Revenue arising from agreements made with customers” standard. Disposals (-) - - - Depreciation expenses (-) (434,722) (238,240) (672,962) First time adoption of TFRS 16 Leases As of December 31 3,149,540

As of 1 January 2019, the Company has applied TFRS 16, “Leases” standard, which replaces TAS 17, “Leasing Transactions”. The As of 31 December 2019, the company has accounted for TRY 3,149,540 right of use and TRY 3,093,255 lease obligation. company did not rearrange comparable amounts for the previous year using the simplified transition application. With this method, all right of use assets were measured from the amount of lease liabilities (which were made in advance or adjusted Regarding the lease agreements within the scope of TFRS 16, the Company has recognized TRY 672,962 of amortization according to the lease costs accrued). expense, TRY 389,630 of interest expense and TRY 41,974 foreign exchange expense instead of operating lease expense amounting to TRY 1,160,850 in the period ended 31 December 2019. During the first implementation, the Company recorded a lease obligation regarding its leases previously classified as operational leasing in accordance with TAS 17. These liabilities were discounted using alternative borrowing interest rates Options to extend and terminate as of 1 January 2019 and measured from their present value. As of 1 January 2019, the weighted average of the alternative borrowing rates used by the Company is 2,15% for Euro and 19,75% for Turkish Lira. The Company assesses the contractual options to extend or to terminate the lease when determining the lease liability. The majority of the options to extend and terminate are exercisable both by the Company and the respective lessor. Company The right of use assets and liabilities classified as financial leasing previously are now measured with carrying amount before determines the lease term of a lease considering the periods covered by options to extend and terminate the lease if the the transition. options are exercisable by the Company and the Company is reasonably certain to exercise those options. If a significant change in circumstances takes place, related lease term assessment is revisited by the Company. The reconciliation of operating lease commitments under TAS 17 before the transition date and the lease liabilities measured under TFRS 16 as of 1 January 2019 is as below: 2.2.6 Changes in accounting estimates and errors

1 January 2019 If the changes in accounting estimates are related to only one period, they are applied in the current period in which the change is made, and if they are related to future periods, they are applied both prospectively and in the future periods. The Operating lease commitments within the scope of TAS 17 5,394,857 Company’s accounting estimates did not change significantly in the current period. Total lease liability within the scope of TFRS 16 (undiscounted) 5,394,857 Total lease liability within the scope of TFRS 16 (discounted with alternative borrowing rate) 3,822,502 Significant accounting errors are applied retrospectively and the prior period financial statements are restated. - Short term leasing liabilities 1,484,415 - Long term leasing liabilities 2,338,087 2.2.7 Going concern

The Company prepared its financial statements on a going concern basis.

2.2.8 Segment reporting

The company, which operates in Turkey and in a single field of activity, has not reported its financial information according to segments.

138 139 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.3 Amendments in standards and interpretations 2.3 Amendments in standards and interpretations (Continued)

Implementation of new or revised TAS and TFRS and interpretations - TFRS 23, ‘Uncertainty over income tax treatments’; effective from annual periods beginning on or after 1 January 2019. This IFRIC clarifies how the recognition and measurement requirements of TAS 12 ‘Income taxes’, are applied where The Company adopted the new and revised standards, amendments and interpretations published by POA which are there is uncertainty over income tax treatments. The IFRS IC had clarified previously that TAS 12, not TAS 37 ‘Provisions, applicaple after 1 January 2019 and related to the Company’s operations. contingent liabilities and contingent assets’, applies to accounting for uncertain income tax treatments. IFRIC 23 explains how to recognise and measure deferred and current income tax assets and liabilities where there is uncertainty over a tax a) Standards, amendments and interpretations applicable as at 31 December 2019: treatment. An uncertain tax treatment is any tax treatment applied by an entity where there is uncertainty over whether that treatment will be accepted by the tax authority. For example, a decision to claim a deduction for a specific expense or not - Amendment to TFRS 9, ‘Financial instruments’; effective from annual periods beginning on or after 1 January 2019. This to include a specific item of income in a tax return is an uncertain tax treatment if its acceptability is uncertain under tax law. amendment confirmed two points: that reasonable compensation for prepayments can be both negative or positive cash IFRIC 23 applies to all aspects of income tax accounting where there is an uncertainty regarding the treatment of an item, flows when considering whether a financial asset solely has cash flows that are principal and interest and that when a including taxable profit or loss, the tax bases of assets and liabilities, tax losses and credits and tax rates. financial liability measured at amortised cost is modified without this resulting in de-recognition, a gain or loss should be recognised immediately in profit or loss. The gain or loss is calculated as the difference between the original contractual - Annual improvements 2015-2017; effective from annual periods beginning on or after 1 January 2019. These amendments cash flows and the modified cash flows discounted at the original effective interest rate. This means that the difference include minor changes to: cannot be spread over the remaining life of the instrument which may be a change in practice from TAS 39. • TFRS 3, ‘Business combinations’, – a company remeasures its previously held interest in a joint operation when it obtains - Amendment to TAS 28, ‘Investments in associates and joint venture’; effective from annual periods beginning on or after control of the business. 1 January 2019. These amendments clarify that companies account for long-term interests in associate or joint venture to • TFRS 11, ‘Joint arrangements’, – a company does not remeasure its previously held interest in a joint operation when it which the equity method is not applied using TFRS 9. obtains joint control of the business. • TAS 12, ‘Income taxes’ – a company accounts for all income tax consequences of dividend payments in the same way. - TFRS 16, ‘Leases’; effective from annual periods beginning on or after 1 January 2019, with earlier application permitted • TAS 23, ‘Borrowing costs’ – a company treats as part of general borrowings any borrowing originally made to develop an if TFRS 15‘Revenue from Contracts with Customers’ is also applied. This standard replaces the current guidance in TAS 17 asset when the asset is ready for its intended use or sale. and is a farreaching change in accounting by lessees in particular. Under TAS 17, lessees were required to make a distinction between a finance lease (on balance sheet) and an operating lease (off balance sheet). TFRS 16 now requires lessees to - Amendments to TAS 19, ‘Employee benefits’ on plan amendment, curtailment or settlement’; effective from annual recognise a lease liability reflecting future lease payments and a ‘right of use asset’ for virtually all lease contracts. The IASB periods beginning on or after 1 January 2019. These amendments require an entity to: has included an optional exemption for certain short-term leases and leases of low-value assets; however, this exemption can only be applied by lessees. • use updated assumptions to determine current service cost and net interest for the reminder of the period after a plan amendment, curtailment or settlement; and For lessors, the accounting stays almost the same. However, as the IASB has updated the guidance on the definition of a • recognise in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if lease (as well as the guidance on the combination and separation of contracts), lessors will also be affected by the new that surplus was not previously recognised because of the impact of the asset ceiling. standard. At the very least, the new accounting model for lessees is expected to impact negotiations between lessors and lessees. Under TFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified b) Standards, amendments and interpretations that are issued but not effective as at 31 December 2019: asset for a period of time in exchange for consideration. - Amendments to TAS 1 and TAS 8 on the definition of material; effective from Annual periods beginning on or after 1 Standard was promulgated in Official Gazette No. 29826, dated 16 April 2018 to be applied in the accounting period starting January 2020. These amendments to TAS 1, ‘Presentation of financial statements’, and TAS 8, ‘Accounting policies, changes on 31 December 2018. The Company applied TFRS 16 “Leasing” standard, which replaced TAS 17 “Leasing”, as of 1 January in accounting estimates and errors’, and consequential amendments to other TFRSs: 2019, the date of first implementation. The impacts of the said transition have been explained in the Note 2.2.5. i) use a consistent definition of materiality throughout TFRSs and the Conceptual Framework for Financial Reporting; ii) clarify the explanation of the definition of material; and iii) incorporate some of the guidance in TAS 1 about immaterial information.

140 141 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.3 Amendments in standards and interpretations (Continued) 2.4 Summary of Significant Accounting Policies (Continued)

- Amendments to TFRS 3 - definition of a business; effective from Annual periods beginning on or after 1 January 2020. Assessment of whether contractual cash flows are solely payments of principal and interest (SPPI) This amendment revises the definition of a business. According to feedback received by the IASB, application of the current guidance is commonly thought to be too complex, and it results in too many transactions qualifying as business For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. combinations. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs. - Amendments to TFRS 9, TAS 39 and TFRS 7 - Interest rate benchmark reform; effective from Annual periods beginning on or after 1 January 2020. These amendments provide certain reliefs in connection with interest rate benchmark reform. In assessing whether the contractual cash flows are SPPI, the Company considers the contractual terms of the instrument. The reliefs relate to hedge accounting and have the effect that IBOR reform should not generally cause hedge accounting This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of to terminate. However, any hedge ineffectiveness should continue to be recorded in the income statement. Given the contractual cash flows such that it would not meet this condition. pervasive nature of hedges involving IBOR-based contracts, the reliefs will affect companies in all industries. The Company meets the balance sheet classificaiton and measurement requirements by applying the above procedures. The - TFRS 17, ‘Insurance contracts’; effective from annual periods beginning on or after 1 January 2021. This standard replaces Company measures and classfies all of its financial asset by “Financial assets measured at Amortised cost”. TFRS 4, which currently permits a wide variety of practices in accounting for insurance contracts. TFRS 17 will fundamentally change the accounting by all entities that issue insurance contracts and investment contracts with discretionary participation At initial recognition, the Company classifies its financial assets in the following categories: “Financial Assets at Fair Value features. Through Profit or Loss”; “Financial Assets Measured at Fair Value Through Other Comprehensive Income” or “Financial Assets Measured at Amortised Cost”. Measurement and classification of financial lliabilites do not materially change from the The ammendments that will be effective as of 1 January 2020 are not expected to have a significant impact on the Company’s requirements of TAS 39. financials, operations and financial performance. The Company classifies and measures its financial assets as “Financial Assets Measured at Amortised Cost”. The financial 2.4 Summary of Significant Accounting Policies assets are recognized or derecognized in accordance with the “Recognition and Derecognition” principles defined in the section below related to the classification and measurement of financial instruments of “TFRS 9 Financial Instruments”. At The principal accounting policies applied in the preparation of these financial statements are summarized below: initial recognition, financial assets are measured at fair value. In the case if financial assets are not measured at fair value through profit or loss, transaction costs are added or deducted to/from their fair value. Cash and cash equivalents The Company recognizes a financial asset in the financial statements when, and only when, the Company becomes a party to Cash and cash equivalents consist of cash on hand, deposits at banks and highly liquid and insignificant risk of change in the the contractual provisions of the instrument. When the Company first recognizes a financial asset, the business model and the value of the investments with maturity periods of less than three months. characteristics of contractual cash flows of the financial asset are considered by management.

Financial instruments Financial assets measured at amortized cost

Classification and measurement of financial instruments A financial asset is classified as a financial asset measured at amortized cost when it is held within a business model to collect contractual cash flows and the terms give rise to cash flows that are solely payments of principal or interest. The Company recognizes a financial asset in the financial statement when, and only when, the Company becomes a party to the contractual provisions of the instrument. When the Company first recognizes a financial asset, the business model and Financial assets measured at amortized cost are initially recognized at acquisition cost including the transaction costs, if any, the characteristics of contractual cash flows of the financial asset are considered by management. Based on assessments, which reflect the fair value of those instruments and subsequently recognized at amortized cost by using effective interest the Company has classified its financial assets as the business model that aims to keep the contractual cash flows and has rate method. Interest income obtained from financial assets measured at amortized cost is accounted in income statement. determined that the contractual terms of the financial assets contain solely payments of principal and interest on the principal The Company has measured cash and cash equivalents and trade receivables in the financial statements at amortized cost as amounts outstanding. of 31 December 2019.

142 143 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.4 Summary of Significant Accounting Policies (Continued) 2.4 Summary of Significant Accounting Policies (Continued)

Impairment of financial assets Tangible assets

As of 1 January 2018, a loss allowance for expected credit losses is provided for all financial assets measured at amortised Tangible assets are measured at its cost when initially recognized and any directly attributable costs of setting the asset in cost in accordance with TFRS 9 principles. Impairment method is based on the gradual increase in credit risk observed since working order for its intended use are included in the initial measurement. Subsequently, tangible assets are carried at cost their initial recognition. less accumulated depreciation and provision for value decrease.

Measurement of the expected credit losses includes the following decisions that shall be taken by the Company: All tangible assets are carried at cost, restated equivalent to purchasing power of TRY at 31 December 2005 less accumulated depreciation. Depreciation is calculated over the restated amounts of tangible assets by using the straight-line method to - Definition of criterias regarding to the increase in credit risk write down the restated cost of each asset to their residual values over their estimated useful life. Depreciation is calculated - Determination of appropriate model and assumptions on measuring expected credit losses over the cost of tangible assets using the straight-line method over estimated useful lives. - Reasonable and supportable information on past events, current conditions and forecasts of future economic conditions at the reporting date Gains and losses on disposals of property, plant and equipment are determined by comparing the carrying amount and the - Definition of similar financial asset groups for calculation of expected credit loss selling price.

As of 31 December 2019, the Company management has assumed that there is no significant change in the credit risks of the The residual value and usefull lives of the assets are evaluated at each balance sheet date and adjusted when necessary. financial assets carried at the financial statements and that the impairment measured for financial assets are not material. Costs associated with developing or maintaining tangible assets are recognized as an expense as incurred. Expenditure The Company has recognized expected credit loss provision of TRY 18,473 in its financial statements prepared as at 31 which enhances or extends the performance of tangible assets beyond their original specifications is recognized as a capital December 2019. improvement and added to the original cost of the software. These costs consist of expenses that extend the useful lives and enhances service capacity of the assets, increase the quality and decrease the cost of using the equipments. Effective interest method The estimated useful lives are stated below: The effective interest method is a method of calculating the amortized cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts Useful life through the expected life of the financial asset, or where appropriate, a shorter period. Buildings 10-50 years Machinery, plant and equipment 3-15 years Inventories Furniture and fixtures 2-15 years Inventories are stated at the lower of cost and net realizable value. The cost of inventories consists of all purchase costs and other costs necessary to make a sale. Unit cost of inventories is determined using weighted average method. Net realizable Intangible Assets value represents the estimated selling price less all estimated costs of completion and costs necessary to make a sale. (Note 6). Acquired intangible assets Provision for impairment of inventories Acquired intangible assets with unique useful lives, are carried at historical costs after the deduction of accumulated Inventories are evaluated whether provision for impairment is required or not by investigating the purchase date and physical amortization. These assests are amortized using the straight-line method over their useful lives. Expected useful lives and conditions of the asset and by assessment of usability perfomed by technical personnel. Since the inventories of the Company amortization method are evaulted every year and the changes are applied prospectively. Acquired intangible assets with are being sold to members shortly before obtaining the asset, the Company hasn’t booked any provision for impairment of infinite useful lives are measured at acquisition costs after the deduction of impairments. inventories. Other intangible assets Short and long term liabilities Other intangible assets of the Company consist of licenses, trademarks and patents. Other intangible assets are carried Financial liabilities including borrowings are recognized initially at fair value, net of transaction costs incurred. Subsequently, at historical cost. Other intangible assets have unique useful lives and are carried at historical costs after the deduction of financial liabilities are measured at amortized cost. accumulated amortization. Other intangible assets are amortized using the straight-line method over their useful lives.

144 145 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.4 Summary of Significant Accounting Policies (Continued) 2.4 Summary of Significant Accounting Policies (Continued)

Softwares Impairment of tangible assets and intangible assets other than goodwills

Softwares are recorded at cost of acquisition and are amortized on a straight-line basis over their estimated useful lives, Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate which are 3-15 years from the date of acquisition. that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to Costs associated with developing or maintaining computer software programmes are recognized as an expense as sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are incurred. Expenditure which enhances or extends the performance of computer software programmes beyond their original separately identifiable cash flows (cash-generating units). Non-financial assets other than goodwill that suffered impairment specifications is recognized as a capital improvement and added to the original cost of the software. Costs contain general are reviewed for possible reversal of the impairment at each reporting date. administrative expenses and the personnel expense for the personnel who improved the softwares. When an asset’ (or cash generating unit’s) recoverable amount is lower than their carrying value asset’s (or cash generating Internally-generated intangible assets - research and development expenditures unit’s) carrying value is decreased to their recoverable amount. If the related asset is not measured at revalued amount impairment loss is directly recognized in profit/loss. In such cases, the impairment loss is treated as revaluation loss. Expenditures on research activities are recognized in profit and loss in the period they are incurred. When there is any indication that an impairment loss recognised in prior periods for an asset other than goodwill may no An internally-generated intangible asset arising from development is recognized if, and only if, all of the following have been longer exist or may have decreased at each reporting period and, if such a conditions exists, the Company reverses the demonstrated: impairment loss recognized in prior periods for an individual asset, Unless the related asset is accounted and measured under a different standard, reversal of the impairment is accounted under statement of comprehensive income, • The technical feasibility of completing the intangible asset so that it will be available for use or sale; • The intention to complete the intangible asset and use or sell it; Employment termination benefits • The ability to use or sell the intangible asset; • How the intangible asset will generate probable future economic benefits; Provision for employee termination benefts • The availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and TAS 19 “Turkish Accounting Standard for Employee Benefits” requires companies to use their actuarial valuation methods • The ability to measure reliably the expenditure attributable to the intangible asset during its development. to calculate the present value of the potential liabilities. Therefore, the present value of the Company’s possible liability is calculated using the assumptions in the following table. The amount initially recognized for internally-generated intangible assets is the sum of expenditure incurred from the date when the intangible asset first meets the recognition criteria listed above. Where no internally-generated intangible asset can The provision for employment termination benefits is calculated as required by Turkish Labor Law as a statutory obligation of be recognized, development expenditure is charged to profit or loss in the period in which it is incurred. the Company and reflects the present value of severance pay entitlement to employee retirement, dismissal, call for military service or death in case of completion of at least one year of service. TAS 19 “Turkish Accounting Standard for Employee Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortization Benefits” requires companies to use their actuarial valuation methods to calculate the present value of the potential liabilities. and accumulated impairment losses, on the same basis as intangible assets acquired separately. Therefore, the present value of the Company’s possible liability is calculated using the assumptions.

The estimated useful lives are stated below: Provision for unused vacation

Useful life According to the Labor Law applicable in Turkey, the Company is obliged to pay the annual leave periods which the Softwares 3-15 years employment contract are not entitled for any reason, to the employer or their beneficiaries at the date the contract ends. Rigths 3-5 years Bonus payments Other intangible assets 3-15 years The Company records the accrual as an obligation and expense based on a method that takes into consideration the Company’s profitability, budget realization and performance criteria.The Company also reserves provisions in cases where it is a contractual obligation.

146 147 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.4 Summary of Significant Accounting Policies (Continued) 2.4 Summary of Significant Accounting Policies (Continued)

Provisions, contingent assets and liabilities The Company does not make any adjustments to the effect of a significant financing component at the commitment price if the contract at the outset suggests that the period between the transfer date of the goods or services undertaken by In accordance with the TAS 37 “Provisions, Contingent Liabilities and Contingent Assets”, a provision is recognised when the the customer and the date the customer pays the price of the goods or services is one year or less. If the other party has Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of resources significant financing within the revenue, the revenue value is determined by discounting future collections with the interest embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount rate included in the financing element. The difference is recorded in the related periods as Other income from the main of the obligation. If the specified criteria are not met, the Company discloses the related issues in the accompanying notes. operations on the accrual basis. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability if the time value of the money is significant to the Foreign currency transactions provision. In determining the discount rate to be used in reducing the provisions to their present value, the interest rate on the relevant market and the risk related to the related obligation are taken into consideration. Contingent assets are disclosed in Transactions in foreign currencies are initially recorded in the functional currency rate ruling at the date of the transaction. the notes and not recognised unless they are realized. Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency rate of exchange ruling at the balance sheet date Foreign currency translation rates used by the Company as of respective year-ends are 5.9402 Revenue recognition TRY=1 US Dollars and 6.6506 TRY=1 Euro (2018: 5.2609 TRY=1 US Dollars and 6.028 TRY=1 Euro).

In accordance with TFRS 15 “Revenue Standard from Customer Agreements”, which is effective as of 1 January 2018, the Earnings per share Company accounts in the financial statements of the revenue consignment in accordance with the following five-tiered model. In accordance with the Turkish Accounting Standards 33 - Earning per share (“TAS 33”), the companies, whose common stocks are not quoted on the stock exchange, do not have to disclose earning per share information. Since the parent Company’s • Identification of customer contracts common stocks are not quoted on the stock exchange, earnings per share information is not calculated in the accompanying • Identification of performance obligations financial statements. • Determination of transaction price in the contract • Allocation of price to performance obligations Deferred Revenue • Recognition of revenue Deferred revenues are liabilities that consist of advances from other parties that are obtained in the relevant period in terms of The Company assesses the goods or services undertaken by each contract made with the customers and sets each sale agreements or booked as receivables and related with future periods. commitment to transfer such goods or services as a separate performance obligation.. Taxes calculated on the basis of corporate income For each performance obligation, at the beginning of the contract, the obligation to fulfill the obligation is to be delivered in time or at a certain time. When the control of a good or service is over time and the Company fulfills its performance Income tax expense consists of corporate tax and deferred tax expenses. obligations related to sales in a timely manner, the Group takes the financial statements in the console at the expiration time by measuring the progress towards fulfillment of the fulfillment obligations. Corporate/Income tax

When the Company fulfills the obligation to perform the obligation by transferring a promised good or service to the Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered customer, it records the transaction value corresponding to the obligation as revenue in the consolidated financial statements. from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or When the control of the goods or services is overtaken by the customers (or as they pass) the goods or services are substantially enacted by the balance sheet date. transferred. Deferred tax When the Company evaluates the transfer of the customer for the control of the goods or services sold, Deferred income tax is provided, using the liability method, on all temporary differences at the balance sheet date between a) Group owns the right to collect the goods or services,, the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax b) Owns legal ownership of the goods or services, liabilities are recognized for all taxable temporary differences. The rates enacted, or substantively enacted, at the balance c) The transfer of the possession of the goods or services, sheet date are used to determine deferred income tax. d) Ownership of the significant risks and rewards of ownership of the property of the customer, e) Takes into consideration the conditions under which the customer accepts goods or services.

148 149 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued) 2. BASIS OF PRESENTATION OF FINANCIAL STATEMENTS (Continued)

2.4 Summary of Significant Accounting Policies (Continued) 2.4 Summary of Significant Accounting Policies (Continued)

Deferred tax (Continued) (b) An entity is related to a reporting entity if any of the following conditions applies:

Under TAS 12, which deals with income taxes, deferred tax assets are recognized to the extent that it is probable that future (i) The entity and the reporting entity are members of the same group (which means that each parent, subsidiary and taxable profits will be available against which the deferred tax asset can be utilized and deferred tax assets should be reduced fellow subsidiary is related to the others). to the extent that it is no longer probable that the related tax benefit will be realized. The deferred tax asset and deferred tax (ii) One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of liability have been netted off in these financial statements. which the other entity is a member). (iii) Both entities are joint ventures of the same third party. Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against (iv) One entity is a joint venture of a third entity and the other entity is an associate of the third entity. current tax liabilities, and deferred taxes relate to the same taxable entity and the same taxation authority. (v) The entity is a post-employment benefit plan for the benefit of employees of either the reporting entity or an entity related to the reporting entity. If the reporting entity is itself such a plan, the sponsoring employers are also related to Corporate and deferred taxes for the period the reporting entity. (vi) The entity is controlled or jointly controlled by a person identified in (a). Income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other (vii) A person identified in (a)(i) has significant influence over the entity or is a member of the key management personnel comprehensive income or directly in equity and not in the statement of profit or loss. of the entity (or of a parent of the entity).

Cash flow statement 2.5 Significant accounting judgements, estimates and assumptions

The Company prepares cash flow statements to inform users of the ability to direct the amount and timing of changes in net The Company has prepared its financial on going concern principal. assets, financial structure and cash flows according to changing conditions. Preparation of the financial statements requires estimates and judgments about the reported amount of assets and liabilities In the cash flow table, the cash flows related to the turnover are reported by being classified as operating, investing and or contingent assets and liabilities and reported amount of income and expenses of the related period. Such estimates and financing activities. Cash flows arising from operating activities represent cash flows arising from the transactions entered judgments are based on the Company’s best estimates regarding current events and transactions, however, the actual results into the operating area of the Company. Cash flows from investing activities represent for the Company used and obtained may differ from these estimates. from investment activities (fixed investments and financial investments). Cash flows from financing activities represent the resources the Company uses in its financing activities and the repayments of these resources. The significant estimates and assumptions the Company uses in preparing its financial statements are explained below:

Related parties Useful lives of tangible assets and intangible assets: The useful life of assets and additional costs are determined by the Company Management at initial recognition date and re-evaluated tregularly. The Company determines useful lives of For the purposes of these financial statements, shareholders, key management personnel and Board members, in each case the assets by evaluating estimated benefits of the related assets. This evaluation is based on the Company’ experiences on together with companies controlled by/or affiliated with them and associated companies are considered and referred to as relevant assets. related parties. Recognition of deferred tax asset: Deferred tax assets can only be booked if the relevant tax benefit is probable. The amount A related party is a person or entity that is related to the entity that is preparing its financial statements of the probable future tax advantages and taxable income are based on the Company’s medium-term projections and expectations based on these projections. (a) A person or a close member of that person’s family is related to a reporting entity if that person:

(i) has control or joint control over the reporting entity; (ii) has significant influence over the reporting entity; or (iii) is a member of the key management personnel of the reporting entity or of a parent of the reporting entity.

150 151 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

3. CASH AND CASH EQUIVALENTS 3. CASH AND CASH EQUIVALENTS (Continued)

The details of the Company’s cash and cash equivalents as of 31 December 2019 and 2018 are as follows: As of 31 December 2019 and 2018, in the cash flow statement, cash and cash equivalents of the Company are shown by deducting interest accruals : 31 December 2019 31 December 2018 Banks 31 December 2019 31 December 2018 - Time deposit 69,817,322 92,744,552 Cash and cash equivalents 72,618,405 94,559,520 - Demand deposit 985,387 205,598 Interest accruals (-) (207,021) (1,138,111) Credit card receivables with term of less than three months (*) 1,815,696 1,609,370 Cash and cash equivalents in the cash flow statement 72,411,384 93,421,409 Provision for expected credit loss (-) (89,347) (7,258) 4. TRADE RECEIVABLES AND PAYABLES

Total 72,529,058 94,552,262 As of 31 December 2019 and 2018, the details of trade receivables are as follows:

(*) As of 31 December 2019, the average maturity of credit card receivables of the Company amounting to TRY 1,815,696 (31 December 2018: TRY 1,609,370) is 40 days (31 December 2018: 40 days). 31 December 2019 31 December 2018 Trade receivables As of 31 December 2019 and 2018, there is no restriction on cash and cash equivalents. Trade receivables from related parties (Note 6) 28,001,943 18,037,432 As of 31 December 2019 and 31 December 2018, the details of time deposits are as follows: Trade receivables from other parties 4,334,183 2,504,584 Provision for expected credit loss (-) (19,106) (11,215) 31 December 2019 - Regarding trade receivables from related parties (3,830) (8,784) - Regarding trade receivables from other parties (15,276) (2,431) Gross annual Maturity date Currency interest rate (%) 31 December 2019 1 January 2020 TRY 10.80 25,452,161 Total 32,317,020 20,530,801 1 January 2020 TRY 11.00 10,000,000 1 January 2020 TRY 11.00 10,000,000 The average maturity of trade receivables is 10 days (31 December 2018: 10 days). As of 31 December 2019, there is no neither 1 January 2020 TRY 11.00 10,000,000 past due nor impaired receivable (31 December 2018: no neither past due nor impaired receivable). 1 January 2020 TRY 11.15 10,000,000 1 January 2020 USD 1.90 4,158,140 As of 31 December 2019 and 2018, the details of trade payables are as follows; 69,610,301 Interest accruals on time deposits 207,021 31 December 2019 31 December 2018 Trade payables (*) Total time deposit 69,817,322 Trade payables to other parties 30,564,492 34,699,995 31 December 2018 Trade payables to related parties (Note 6) 3,134,403 4,790,054

Gross annual Total 33,698,895 39,490,049 Maturity date Currency interest rate (%) 31 December 2018 2 January 2019 TRY 23.10 5,274,126 (*) The average maturity for trade payables is between 30 and 60 days (31 December 2018: between 30 and 60 days). As of 31 December 2019 and 2018, a 30 January 2019 TRY 24.50 20,000,000 significant portion of the trade payables consist of the purchases and maintenance of tangible and intangible assets and their liabilities related to outsourced 30 January 2019 TRY 24.00 10,000,000 services. 30 January 2019 TRY 24.00 10,000,000 2 January 2019 TRY 6.00 31,771 2 January 2019 TRY 16.80 134,000 31 January 2019 EUR 1.50 15,979,993 31 January 2019 USD 4.40 30,186,551 91,606,441 Interest accruals on time deposits 1,138,111

Total time deposit 92,744,552

152 153 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

5. OTHER RECEIVABLES AND PAYABLES 6. BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Continued)

As of 31 December 2019 and 2018, the details of other receivables are as follows: Trade payables to related parties 31 December 2019 31 December 2018 Aksigorta Anonim Şirketi 815,582 - 31 December 2019 31 December 2018 Anadolu Anonim Türk Sigorta Şirketi 729,486 - Other receivables Koçsistem Bilgi ve İletişim Hizm. A.Ş. 512,437 3,675,901 Other receivables from other parties - 249,388 Vakıf Katılım Bankası A.Ş. 493,150 - Other receivables from related parties (Note 6) - 2,331 Türkiye Bankalar Birliği Risk Merkezi İkt. İşl. 355,487 119,060 T. İş Bankası A.Ş. 187,864 978,217 Total - 251,719 T. Halk Bankası A.Ş. 36,695 13,377 Otokoç. Otomotiv Ticaret ve Sanayi Anonim Şirketi 1,935 - As of 31 December 2019 and 2018, the details of other payables are as follows: Anadolu Hayat Emeklilik A.Ş. 835 - T. Garanti Bankası A.Ş. 677 - 31 December 2019 31 December 2018 VDF Filo Kiralama Anonim Şirketi 255 - Other payables Other payables due to other parties 4,803,047 3,164,557 Akbank T.A.Ş. - 3,499 -Tax payable and liabilities 3,455,961 3,109,082 -Value Added Tax (“VAT”) payable 1,327,856 - Total 3,134,403 4,790,054 -Deposits and guarantees received - 38,493 As of 31 December 2019 and 2018, the details of cash and cash equivalents with related parties are as follows : -Other payables 19,230 16,982 Cash and cash equivalents from related parties 31 December 2019 31 December 2018 Total 4,803,047 3,164,557 Denizbank A.Ş. 29,857,928 61,704,770 T. Garanti Bankası A.Ş. 10,594,179 475,605 6. BALANCES AND TRANSACTIONS WITH RELATED PARTIES T. İş Bankası A.Ş. 10,477,649 328,345 As of 31 December 2019 and 2018, the Company’s balances with related parties are as follows: T. Halk Bankası A.Ş. 10,120,025 10,296,245 Yapı ve Kredi Bankası A.Ş. 703,286 713,521 Trade receivables from related parties 31 December 2019 31 December 2018 Akbank T.A.Ş. 422,020 228,210 Türkiye Bankalar Birliği Risk Merkezi İkt. İşl. 15,336,768 11,438,679 T.C. Ziraat Bankası A.Ş. 194,355 55,314 T. Vakıflar Bankası T.A.O. 5,982,483 450,060 Vakıf Katılım Bankası A.Ş. 133,264 - T. Garanti Bankası A.Ş. 1,752,230 1,371,373 T. Vakıflar Bankası T.A.O. 16,924 20,627,941 T. İş Bankası A.Ş. 1,264,797 786,691 Şekerbank T.A.Ş. 201 - Akbank T.A.Ş. 1,166,107 947,259 Expected credit loss (-) (3,830) (6,607) Denizbank A.Ş. 946,225 763,545 Yapı ve Kredi Bankası A.Ş. 919,394 902,570 Total 62,516,001 94,423,344 T. Halk Bankası A.Ş. 237,703 229,573 As of 31 December 2019 and 2018, the details of the Company’s other receivables balances from related parties are as follows: Şekerbank T.A.Ş. 114,108 150,850 T.C. Ziraat Bankası A.Ş. - 795,764 Other receivables from related parties 31 December 2019 31 December 2018 Other 282,128 201,068 Yapı ve Kredi Bankası A.Ş. - 1,073 Expected credit loss (-) (3,830) (8,784) Denizbank A.Ş. - 847 T. Vakıflar Bankası T.A.O. - 411 Total 27,998,113 18,028,648

Total - 2,331

154 155 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

6. BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Continued) 6. BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Continued)

As of 31 December 2019, the details of prepaid expenses to related parties are as follows: Total salaries and benefits of top management

Prepaid expenses to related parties 31 December 2019 31 December 2018 The Company’s shareholders, senior executives and directors, members of the board of directors and their respective Anadolu Anonim Türk Sigorta A.Ş. 2,668,495 1,680,339 companies and their families are deemed to be related parties. For the period ended 31 December 2019, the total amount of Aksigorta A.Ş. 814,197 646,230 benefits provided to top management is TRY 6,281,021 (31 December 2018: TRY 5,411,260). Koçsistem Bilgi ve İletişim Hizm. A.Ş. 724,312 576,845 Anadolu Hayat Emeklilik A.Ş. 55,011 49,429 1 January - 1 January - Revenue from related parties 31 December 2019 31 December 2018 T. Halk Bankası A.Ş. 98 53 Türkiye Bankalar Birliği Risk Merkezi İkt. İşl. 186,468,185 134,047,274 T. Garanti Bankası A.Ş. 22,201,891 11,615,635 Total 4,262,113 2,952,896 T. Vakıflar Bankası T.A.O. 20,489,261 4,978,748 T.C. Ziraat Bankası A.Ş. 13,556,026 9,846,231 T. İş Bankası A.Ş. 12,739,695 8,490,022 For the periods ended at 31 December 2019 and 2018, the details of the Company’s short and long term liabilities to related Yapı ve Kredi Bankası A.Ş. 12,444,003 10,890,839 parties are as follows: Denizbank A.Ş. 11,667,601 9,922,755 Akbank T.A.Ş. 11,828,507 9,104,853 T. Halk Bankası A.Ş. 3,653,297 3,879,506 Short and long term liabilities to related parties 31 December 2019 31 December 2018 Koçsistem Bilgi Ve İletişim Hizm. A.Ş. 2,929,251 1,662,530 İş Finansal Kiralama A.Ş. 6,664,329 16,935,450 Şekerbank T.A.Ş. 1,251,308 1,409,647 Yapı Kredi Finansal Kiralama A.O. 363,029 968,462 Anadolu Anonim Türk Sigorta Şirketi 1,746,990 34,800 Otokoç Otomotiv Tic. ve San. A.Ş. 808,186 407,215 Vakıf Katılım Bankası A.Ş. 411,938 234,257 Total 7,027,358 17,903,912 Aksigorta A.Ş. 328,191 189,950 Anadolu Hayat Emeklilik A.Ş. 224,576 - For the periods ended at 31 December 2019 and 2018, the details of the Company’s expenses to related parties are as follows: TBB Türkiye Bankalar Birliği 101,863 906,927 Ziraat Katılım Bankası A.Ş. 197,080 105,433 Koç Finansman A.Ş. 171,820 135,813 1 January - 1 January - Bankalararası Kart Merkezi A.Ş. 154,002 170,009 Expenses to related parties 31 December 2019 31 December 2018 İş Faktoring A.Ş. 106,214 158,526 Garanti Faktoring A.Ş. 93,406 24,294 T.C. Ziraat Bankası A.Ş. 29,830,917 3,116,318 Şeker Faktoring A.Ş. 88,180 100,332 Anadolu Anonim Türk Sigorta A.Ş. 7,941,393 2,591,087 Türkiye Sınai Ve Kalkınma Bankası A.Ş. 90,163 60,054 Koçsistem Bilgi ve İletişim Hizm. A.Ş. 5,231,169 4,034,941 Koç Fiat Kredi Finansman A.Ş. 72,473 63,123 T. İş Bankası A.Ş. 5,123,363 3,328,935 İş Finansal Kiralama A.Ş. 55,179 27,274 Deniz Faktoring A.Ş. 51,447 69,317 T. Vakıflar Bankası T.A.O. 4,106,140 2,463,013 Halk Finansal Kiralama A.Ş. 45,217 32,930 Vakıf Katılım Bankası A.Ş. 2,648,976 - Yapı Kredi Finansal Kiralama A.O. 44,286 23,959 Türkiye Bankalar Birliği Risk Merkezi İkt. İşl. 2,089,516 1,377,761 Garanti Finansal Kiralama A.Ş. 40,961 23,400 Vakıf Faktoring A.Ş. 35,413 14,965 Aksigorta A.Ş. 954,721 664,724 Arap Türk Bankası A.Ş. 23,663 23,831 T. Halk Bankası A.Ş. 655,601 2,084,055 Volkswagen Doğuş Finansman A.Ş. 22,021 23,040 VDF Filo Kiralama A.Ş. 643,228 - Yatırım Finansal Kiralama A.Ş. 7,770 2,404 Halk Faktoring A.Ş. 7,916 12,891 İş Finansal Kiralama A.Ş. 569,929 792,567 Ak Finansal Kiralama A.Ş. 6,461 5,343 Otokoç Otomotiv Tic. ve San. A.Ş. 297,191 155,417 Vakıf Finansal Kiralama A.Ş. 4,962 8,305 Anadolu Hayat Emeklilik A.Ş. 163,747 3,403 Kredi Garanti Fonu A.Ş. 4,654 - Akbank T.A.Ş. 126,110 80,945 Yapı Kredi Faktoring A.Ş. 4,022 18,347 Şeker Finansal Kiralama A.Ş. 3,487 2,645 Yapı Kredi Finansal Kiralama A.O. 60,198 79,745 VDF Filo Kiralama A.Ş. 3,380 - Şekerbank T.A.Ş. 56,285 5,679 VDF Faktoring A.Ş. 3,095 2,605 Yapı ve Kredi Bankası A.Ş. 56,221 20,379 Hemenal Finansal Kiralama A.Ş. 1,435 57,792 A&T Finansal Kiralama A.Ş. 901 553 T. Garanti Bankası A.Ş. 12,659 15,019 Şeker Finansman A.Ş. 293 - Denizbank A.Ş. 11,932 25,772 Ziraat Finansal Kiralama A.Ş. 117 7,280 Bankalararası Kart Merkezi A.Ş. 86 68 Deniz Finansal Kiralama A.Ş. 187 12,149 Garanti Filo Yönetim Hizmetleri A.Ş. 30 - Şeker Mortgage Finansman A.Ş. - 289 Total 60,579,382 20,839,828 Total 304,191,004 208,808,092

156 157 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

7. INVENTORIES 8. TANGIBLE ASSETS (Continued)

31 December 2019 31 December 2018 Movement of tangible assets for the period between 1 January and 31 December 2018 is as follows: Trade goods (*) 4,510,643 - 1 January 2018 31 December 2018 Cost Opening Additions Disposals (-) Transfers Closing Total 4,510,643 - Buildings 130,331,609 1,652,698 - - 131,984,307 (*) It consists of equipment obtained to sale to customers for use of services provided by the Company to member organizations. These stock items consist of Machinery, plant and equipment 41,554,049 10,836,067 (353,445) - 52,036,671 consumables such as cables, shelves and cabinets. Furniture and fixtures 23,810,743 14,096,624 2,502,092 40,409,459 As of 31 December 2019 and 2018, there is no stock given as collateral for liabilities. Constructions in progress 1,511,480 6,503,766 - (5,031,463) 2,983,783

8. TANGIBLE ASSETS Total 197,207,881 33,089,155 (353,445) (2,529,371) 227,414,220

Movement of tangible assets for the period between 1 January and 31 December 2019 is as follows: 1 January 2018 31 December 2018 Accumulated depreciation Opening Additions (-) Disposals Transfers Closing 1 January 2019 31 December 2019 Buildings (-) (8,285,086) (3,361,407) - - (11,646,493) Cost Opening Additions Disposals (-) Transfers Closing Machinery,plant and equipment (-) (17,708,490) (5,049,942) 224,750 - (22,533,682) Buildings 131,984,307 1,494,147 (4,563,862) - 128,914,592 Furniture and fixtures (-) (5,563,485) (6,465,046) - - (12,028,531) Machinery, plant and equipment 52,036,671 28,834,488 (81,322) 7,571,993 88,361,830 Furniture and fixtures 40,409,459 15,625,365 (1,271) - 56,033,553 Total (31,557,061) (14,876,395) 224,750 - (46,208,706) Constructions in progress 2,983,783 15,802,734 - (13,428,467) 5,358,050 Net book value 165,650,820 181,205,514

Total 227,414,220 61,756,734 (4,646,455) (5,856,474) 278,668,025 There is no mortgage on the Companys’s tangible assets (31 December 2018: No mortgage). As of 31 December 2019, the insurance amount on tangible assets is TRY 954.114.102 (31 December 2018: TRY 335,075,056). 1 January 2019 31 December 2019 Accumulated depreciation Opening Additions (-) Disposals Transfers Closing 9. INTANGIBLE ASSETS Buildings (-) (11,646,493) (3,229,690) 2,048,829 - (12,827,354) Machinery,plant and equipment (-) (22,533,682) (6,343,788) 56,608 - (28,820,862) Movement of intangible assets for the period between 1 January and 31 December 2019 is as follows: Furniture and fixtures (-) (12,028,531) (10,216,592) 424 - (22,244,699) 1 January 2019 31 December 2019 Cost Opening Additions Disposals (-) Transfers Closing Total (46,208,706) (19,790,070) 2,105,861 - (63,892,915) Softwares 55,482,229 10,121,887 (740,178) 1,559,595 66,423,533 Net book value 181,205,514 214,775,110 Rights 4,710,303 3,428,857 - 4,296,879 12,436,039 Other intangible assets 1,633,044 20,916 - - 1,653,960

Total 61,825,576 13,571,660 (740,178) 5,856,474 80,513,532

1 January 2019 31 December 2019 Accumulated depreciations Opening Additions (-) Disposals Transfers Closing Softwares (34,191,784) (11,317,964) 123,351 - (45,386,397) Rights (1,458,776) (1,228,622) - - (2,687,398) Other intangible assets (1,243,390) (34,035) - - (1,277,425)

Total (36,893,950) (12,580,621) 123,351 - (49,351,220) Net book value 24,931,626 31,162,312

158 159 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

9. INTANGIBLE ASSETS (Continued) 11. SHORT TERM AND LONG TERM LIABILITIES

Movement of intangible assets for the period between 1 January and 31 December 2018 is as follows: As of 31 December 2019 and 2018, the details of short and long term liabilities are as follows:

1 January 2018 31 December 2018 31 December 2019 31 December 2018 Cost Opening Additions Disposals (-) Transfers Closing Short term leasing payables 6,957,116 11,726,416 Softwares 39,068,879 16,679,499 (266,149) - 55,482,229 Total 6,957,116 11,726,416 Rights 61,500 2,119,432 - 2,529,371 4,710,303 Long term leasing payables 70,242 6,177,496 Other intangible assets 1,528,211 104,833 - - 1,633,044 Total 70,242 6,177,496 Total 40,658,590 18,903,764 (266,149) 2,529,371 61,825,576 Total leasing payables 7,027,358 17,903,912 1 January 2018 31 December 2018 As of 31 December 2019, the effective weighted average interest rates for denominated US Dollar, Euro and TRY financial Accumulated depreciations Opening Additions (-) Disposals Transfers Closing leasing payables are respectively 6.02%, 3.19% and 14.22%, (31 December 2018: 5.91%, 3.19% and 14.22%). Softwares (25,875,115) (8,324,082) 7,413 - (34,191,784) Rights (13,638) (1,445,138) - - (1,458,776) As of 31 December 2019 and 2018, the payment schedule of financial leasing payables is as follows: Other intangible assets (1,150,467) (92,923) - - (1,243,390)

31 December 2019 31 December 2018 Total (27,039,220) (9,862,143) 7,413 - (36,893,950) Net book value 13,619,370 24,931,626 Up to 1 year 6,957,116 11,726,416 Between 1-2 years 70,242 6,113,428 10. LEASES Between 2-3 years - 64,068 As of 31 December 2019 and 2018, the details of right of use assets are as follows: Total 7,027,358 17,903,912 31 December 2019 31 December 2018 The movement table of the Company’s financial liabilities for the accounting period between 1 January and 31 December 2019 Buildings 2,593,745 - and 2018 is as follows: Vehicles 555,795 - 2019 2018 Total 3,149,540 - Beginning of the period - 1 January 17,903,912 22,135,924 As of 31 December 2019 and 2018, the details of lease liabilities are as follows: Payments during the period (-) (12,127,496) (10,469,758) The effect of unrealized exchange rate differences 1,259,728 6,264,961 31 December 2019 31 December 2018 Accrual of interest (8,786) (27,215) Short term lease liabilities 1,148,714 - Long term lease liabilities 1,944,541 - End of the period - 31 December 7,027,358 17,903,912

Total 3,093,255 -

Movement table of the lease liabilities in the period of 1 January - 31 December 2019 is as follows:

Beginning of the period - 1 January 761,757 Additions 3,060,745 Payments (-) (1,160,851) Interest expenses 389,630 Exchange differences 41,974 End of the period - 31 December 3,093,255

160 161 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

12. PROVISIONS, CONTINGENT ASSETS AND LIABILITIES 13. EMPLOYMENT BENEFITS (Continued)

Letters of guarantee given: ii)Short term provisions

31 December 2019 31 December 2018 As of 31 December 2019 and 2018, the details of the Company’s short-term provisions are as follows: Letters of guarantee 228,421 182,536 31 December 2019 31 December 2018 Total 228,421 182,536 Provision for personnel performance bonus 18,658,413 13,471,394 Provision for unused vacation 5,952,233 3,736,612 Letters of guarantee received: Provision for bank commissions (*) 2,529,625 373,064 Provision for uninvoiced expenses 128,374 112,294 31 December 2019 31 December 2018 Other provions 3,172,784 1,072,700 Letters of guarantee received (*) 1,149,446 4,973,528 Total 30,441,429 18,766,064 Total 1,149,446 4,973,528 (*) The Company works with various banks from Turkey in order to complete transactions of Findeks products. The Company pays commissions to the banks in (*) Letters of guarantee received from the service provider companies regarding the building of the Company that is located in Ankara Organized Industrial Zone. direct proportion to sale amounts within the context of agreements terms. These balances consist of provisions for commissions payable to branch banks as of 31 December 2019 and 2018. As of 31 December 2019, the Company has no collateral, pledge or mortgage given for the purpose of acquiring its own debt The movement table of provision for personnel performance bonus of the Company for the periods between 1 January and 31 or debt of any person or entity other than the Company. (31 December 2018: No colleteral, pledge or mortgage). December 2019 and 2018 is as follows: Lawsuits againts the company: 2019 2018 As of 31 December 2019, there are 9 lawsuits filed against the Company. Provision of TRY 677,000 has been provided based Beginning of the period - 1 January 13,471,394 11,739,895 on the best estimates of the Company management regarding these lawsuits. (31 December 2018: There are 7 cases and TRY Increase in the period 18,658,413 13,471,394 457,344 has been provisioned). Paid during the period (-) (13,471,394) (11,739,895)

13. EMPLOYMENT BENEFITS End of the period - 31 December 18,658,413 13,471,394 i) Payables for employee benefits iii) Long term provisions As of 31 December 2019 and 2018, the details of the payables for the employees are as follows: As of 31 December 2019 and 2018, the details of the Company’s long-term provisions are as follows:

31 December 2019 31 December 2018 31 December 2019 31 December 2018 Social security witholding to be paid 2,081,295 1,490,513 Provision for employment termination benefits 1,886,824 2,087,456 Payables to employees 63,229 115,404 Provision for lawsuits 677,000 444,844

Total 2,144,524 1,605,917 Total 2,563,824 2,532,300

The provision for employment termination benefits is provided for as explained below;

Under the Turkish Labor Law, the Company is required to pay termination benefits to each employee who has completed at least one year of service and whose employment is terminated without due cause, is called up for military service, dies or who retires after completing 25 years of service (20 years for women) and achieves the retirement age (58 for women and 60 for men). Since the legislation was changed on 23 May 2002, there are certain transitional provisions relating to length of service prior to retirement.

162 163 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

13. EMPLOYMENT BENEFITS (Continued) 14. PREPAID EXPENSES AND DEFERRED INCOME (Continued) iii) Long term provisions (Continued) As of 31 December 2019 and 2018, the details of long-term prepaid expenses are as follows:

The principal assumption is that the maximum liability for each year service will increase in line with inflation. Thus, the Long term prepaid expenses (*) 31 December 2019 31 December 2018 discount rate applied represents the expected rate of actual inflation. As the maximum liability is revised semi-annually the Prepaid expenses from related parties - 109,996 maximum amount of 6.TRY 730,15 which is effective as of 1 January 2020 has been taken into consideration in calculating the Prepaid expenses from other parties 11,034,033 2,911,755 provision for employment termination benefits of the Company (31 December 2018: TRY 6,017.60, effective from 1 January 2019). Total 11,034,033 3,021,751 The liability is not funded, as there is no funding requirement. Provision for employment termination benefits is calculated by (*) As of 31 December 2019 and 2018, the related amounts consist of prepaid insurance, maintenance, dues, training and other miscellaneous expenses which have estimating the present value of the probable liability in the case of retirement of the employees. not been included in the statement of profit or loss.

The Company develops and uses actuarial valuation methods to estimate the employee termination benefit provision. The details of deferred income as of 31 December 2019 and 2018 are as follows: Accordingly, the following actuarial assumptions were used in the calculation of the total liability: Deferred income 31 December 2019 31 December 2018 31 December 2019 31 December 2018 Deferred income (**) 69,706,714 40,631,194 Annual discount rate (%) 4.19 5.73

The movement of employment termination benefits during the year is as follows: Total 69,706,714 40,631,194

(**) As at 31 December 2019 and 2018, related amounts consist of service income of the Company generated from Findeks, IFAS and MKDS products, which have 2019 2018 been collected in advance but not accrued. Beginning of the period - 1 January 2,087,455 1,680,325 Service cost 378,243 459,112 15. OTHER ASSSETS AND LIABILITIES Interest cost 340,255 340,255 a) Other current assets: Payment within the period (-) (186,501) (581,121) Actuarial (gain)/loss (732,628) 188,885 The details of other current assets as of 31 December 2019 and 2018 are as follows:

End of the period - 31 December 1,886,824 2,087,456 31 December 2019 31 December 2018 Order advances given 290,574 - 14. PREPAID EXPENSES AND DEFERRED INCOME Amounts to be invoiced 284,227 29,390 The details of short-term prepaid expenses of the Company as of 31 December 2019 and 2018 are as follows: Receivables from employees 111,650 103,950 Accruals on trade receivables from customers 30,081 463,437 Short term prepaid expenses (*) 31 December 2019 31 December 2018 Deferred VAT - 3,222,758 Prepaid expenses from related parties 4,262,113 2,842,900 Prepaid expenses from other parties 2,426,033 7,674,753 Total 716,532 3,819,535 b) Other non-current assets: Total 6,688,146 10,517,653 The details of other fixed assets as of 31 December 2019 and 2018 are as follows: (*) As of 31 December 2019 and 2018, the related amounts consist of prepaid insurance, maintenance, dues, training and other miscellaneous expenses which have not been included in the statement of profit or loss. 31 December 2019 31 December 2018 Deposits and guarantees given 11,320 17,820

Total 11,320 17,820

164 165 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

16. SHAREHOLDERS’ EQUITY 17. SALES AND COST OF SALES

The Company’s authorized share capital consists of TRY 7,425,000 of each 1 TRY nominal share (31 December 2018: TRY The Company’s sales for the periods 1 January - 31 December 2019 and 2018 and the cost of sales are as follows: 7,425,000). 1 January - 1 January - Shareholders or their proxies present at the Ordinary and Extraordinary General Assembly meetings have 1 voting right per 31 December 2019 31 Decemeber 2018 share. CRS product income 94,808,784 85,384,886 Findeks product income 83,329,896 53,603,048 The Company’s shareholders and their shares in the capital at 31 December 2019 and 2018 are as follows: LCS product income 23,806,056 24,496,734 PPI product income 22,505,733 15,953,758 Datacenter product income 21,004,324 6,752,577 31 December 2019 31 December 2018 Risk center cheque report product income 19,632,183 18,606,790 Shareholders: Share (%) Share amount Share (%) Share amount Personel credit rating 13,932,370 18,536,030 Yapı ve Kredi Bankası A.Ş. 18.182 1,350,000 18.182 1,350,000 Individual limit risk query 10,149,595 10,628,614 CBS product income 9,247,153 6,849,099 Türkiye Halk Bankası A.Ş. 18.182 1,350,000 18.182 1,350,000 Risk center service income 4,236,091 4,547,688 Akbank T.A.Ş. 9.091 675,000 9.091 675,000 Commercial credit rating product income 4,023,698 6,632,439 Türkiye Garanti Bankası A.Ş. 9.091 675,000 9.091 675,000 Risk center risk report product income 3,852,743 4,637,887 Trade registry sharing system product income 2,808,000 2,193,000 Şekerbank T.A.Ş. 9.091 675,000 9.091 675,000 Factoring invoice pool product income 2,787,576 2,397,797 Türkiye İş Bankası A.Ş. 9.091 675,000 9.091 675,000 Electronic guarantee product income 2,369,000 - Denizbank A.Ş. 9.091 675,000 9.091 675,000 KKB cheque report product income 1,692,947 2,582,535 T. Vakıflar Bankası T.A.O. 9.091 675,000 9.091 675,000 GeoMIS product income 1,609,000 1,791,500 Loan utilization instant sharing service product income 1,522,547 421,395 T.C. Ziraat Bankası A.Ş. 9.091 675,000 9.091 675,000 Tardes product income 1,405,515 771,364 Telecom individual query product income 1,312,064 246,736 Paid in capital 100.00 7,425,000 100.00 7,425,000 GİB künye product income 1,113,208 826,136 Risk center report via E-Goverment system product income 1,074,016 - Reserves on retained earnings Cross cheque query product income 776,320 956,683 Central Bank Servises product income 701,443 1,420,770 Product income from the declaration and sharing of foreign currency loans and incomes 698,716 566,895 31 December 2019 31 December 2018 IBAN confirmation servise 521,473 63,070 Extraordinary reserves 139,367,193 123,581,6470 Address database servise 410,000 432,842 Reserves on retained earnings 14,131,050 12,668,1750 CTMCRS product income 404,474 274,320 FRS product income 332,000 334,052 Share capital adjustment 2,574,025 2,574,0255 DVS product income 303,666 408,187 Internet frauds alarm system income 301,539 216,794 156,072,268 138,823,8475 KKB risk report product income 240,804 315,180 CDSS incomes 195,378 120,786 The legal reserves consist of first and second reserves, appropriated in accordance with the Turkish Commercial Code (“TCC”). Individual cheque query product income 158,685 262,109 The TCC stipulates that the first legal reserve is appropriated out of statutory profits at the rate of 5% per annum, until the total Tendency score incomes 154,822 384,027 reserve reaches 20% of the Company’s paid-in share capital. The second legal reserve is appropriated at the rate of 10% per Bounced cheque product income 144,448 220,342 Other income 729,660 1,406,524 annum of all cash distributions in excess of 5% of the paid-in share capital. Under the TCC, the legal reserves can only be used Sales 334,295,927 275,242,594 to offset losses and are not available for any other usage unless they exceed 50% of paid-in share capital. As of 31 December Sales returns (-) (1,154,330) (770,663) 2019, the extraordinary reserves of the Company which are classified under the statutory reserves are TRY 139,367,193 (31 Net sales 333,141,597 274,471,931 December 2018: TRY 123,581,647). Cost of sales (-) (137,911,494) (112,070,158) - Personnel expenses (-) (76,643,489) (56,214,436) At the Ordinary General Assembly held on 27 March 2019, the Company decided to pay dividends amounting to TRY - Score service expenses (-) (20,395,217) (24,888,446) 15,000,000 (31 December 2018:, the Company has paid a dividend payment of TRY 15,000,000). The dividend payments have - Depreciation expenses (-) (16,747,417) (13,475,436) been made to the shareholders in the second quarter of 2018. - System services expenses (-) (8,806,497) (8,368,697) - Query services expenses (-) (5,434,983) (6,880,810) - Other expenses (-) (9,883,891) (2,242,333) Gross operating profit 195,230,103 162,401,773

166 167 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

18. MARKETING, SELLING AND DISTRIBUTION EXPENSES, GENERAL ADMINISTRATIVE EXPENSES 19. EXPENSES BY NATURE a) Marketing, selling and distribution expenses: The details of expenses by nature for the accounting periods of 1 January - 31 December 2019 and 2018 are as follows:

The details of marketing, selling and distribution expenses of the Company for the periods 1 January - 31 December 2019 and 1 January - 1 January - 2018 are as follows: 31 December 2019 31 December 2018 Personnel expenses 127,827,881 94,996,206 1 January - 1 January - Score service expenses 32,370,691 24,888,446 31 December 2019 31 December 2018 Amortization and depreciation expense 27,992,844 24,738,538 Commission expenses 27,305,922 13,220,101 Installation and maintenance cost 20,395,217 17,067,849 Advertising, media and sales expenses 23,294,459 12,842,520 Consultancy expenses 11,948,329 9,988,946 Other 632,856 584,770 Communication expenses 9,355,629 8,438,992 System services expenses 8,806,497 8,368,697 Query services expenses 6,040,963 6,880,810 Total 51,233,237 26,647,391 Electricity. water and fuel cost 5,434,983 3,434,884 b) General administrative expenses: Taxes and other liabilities 2,096,266 1,422,433 Travel expenses 1,303,226 960,611 The details of general administrative expenses for the accounting periods of 1 January - 31 December 2019 and 2018 are as Insurance expenses 1,168,646 743,522 follows: Amortisation expense related with leases 672,962 - Other 15,552,896 8,376,621 1 January - 1 January - 31 December 2019 31 December 2018 Total 270,967,030 210,306,555 Personnel expenses 51,184,392 38,781,770 20. OTHER OPERATING EXPENSES Installation and maintenance expense 27,992,844 17,067,849 Amortization and depreciation expense 15,623,274 11,263,102 The details of the Company’s other operating expenses for the accounting periods of 1 January - 31 December 2019 and 2018 Consultancy expenses 11,948,329 9,988,946 are as follows: Communication expenses 9,355,629 8,438,992 Electricity, water and fuel costs 6,040,963 3,434,884 1 January - 1 January - Taxes and other liabilities 2,096,266 1,422,433 31 December 2019 31 December 2018 Travel expenses 1,303,226 960,611 Losses from fix asset sales 379,167 - Insurance expenses 1,168,646 743,522 Expected credit loss provision expense 108,453 18,473 Amortisation expenses from lease 672,962 - Other expenses 68,600 109,348 Other 5,669,005 6,134,288 Total 556,220 127,821 Total 133,055,536 98,236,397 21. FINANCIAL INCOMES AND EXPENSES

The details of financing income and expenses of the Company for the periods 1 January - 31 December 2019 and 2018 are as follows:

1 January - 1 January - Financial income 31 December 2019 31 December 2018 Interest income on time deposits 11,257,509 17,487,500 Foreign exchange gains 8,887,465 11,196,930

Total 20,144,974 28,684,430

168 169 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

21. FINANCIAL INCOMES AND EXPENSES (Continued) 22. TAX ASSETS AND LIABILITIES (Continued)

1 January - 1 January - Under the Turkish taxation system, tax losses can be carried forward to offset against future taxable income for up to 5 years. Financial expenses (-) 31 December 2019 31 December 2018 Tax losses cannot be carried back to offset profits from previous periods. Foreign exchange loss 7,569,416 18,537,218 The tax expenses in the statement of profit or loss for the periods ended at 31 December 2019 and 2018 are summarized Interest expenses 895,674 852,932 below:

Total 8,465,090 19,390,150 1 January - 1 January - 31 December 2019 31 December 2018 22. TAX ASSETS AND LIABILITIES Current tax charge (-) (4,052,721) (9,349,815) Deferrred tax expense (-) (2,031,856) (3,030,953) 31 December 2019 31 December 2018 Provision for corporate tax 4,052,721 9,349,815 Total tax expense (-) (6,084,577) (12,380,768) Prepaid corporate tax (-) (11,561,765) (13,284,885) As of 31 December 2019 and 2018, the Company’s tax reconciliation is presented as follows: Current period tax (asset)/liability, net (7,509,044) (3,935,070) 1 January - 1 January - “Law on the Amendment of Some Tax Acts and Some Other Laws” numbered 7061 is published on Official Gazette dated 5 31 December 2019 31 December 2018 December 2017 and numbered 30261. With the temporary amendmend on 32nd article of Law numbered 5520, the corporate tax rate has been determined as 22% that to be applied to earnings generated in the 2018, 2019 and 2020 fiscal periods. Profit before tax 28,265,046 53,586,369 Theoretical tax expense calculated with current tax rate (-) (6,218,310) (11,789,001) Corporation tax is payable on the total income of the Company after adjusting for certain disallowable expenses, corporate Effect of change in tax rate (*) - (469,432) income tax exemptions (participation exemption and investment allowance, etc.) and corporate income tax deductions (Disallowable expenses)/discounts, net 133,733 (122,335) (like research and development expenditures deduction). No further tax is payable unless the profit is distributed (except withholding tax at the rate of 19.8% on an investment incentive allowance utilized within the scope of Income Tax Law Total tax expenses (6,084,577) (12,380,768) transitional article 61). (*) Due to a change in the corporate tax rate as detailed above, The Company has prepared deferred tax assets and liabilities based on the effective tax rates for Dividends paid to non-resident corporations, which have a place of business in Turkey, or resident corporations are not subject the periods in which the assets will be realized or the liabilities are fulfilled. For the temporary differences expected to be eliminated in 2018, 2019 and 2020, a to withholding tax. Otherwise, dividends paid are subject to withholding tax at the rate of 10%. An increase in capital is not deferred tax asset or liability of 22% is calculated. considered as a profit distribution. Deferred Tax Corporations are required to pay advance corporation tax quarterly on their corporate income. Advance tax declaration is made by the 14th day and payable by the 17th day of the second month following each calendar quarter end by companies. The Company calculates and accounts for deferred income taxes for all temporary differences arising between the tax bases Advance tax paid by corporations is credited against the annual corporation tax liability. If, despite offsetting, there remains a of assets and liabilities and their carrying amounts in these financial statements in accordance with TAS 12. In the deferred tax paid advance tax amount, it may be refunded or offset against other liabilities to the government. calculation, the enacted tax rate, in accordance with the tax legislation, is used as of the balance sheet date.

In Turkey, there is no procedure for a final and definitive agreement on tax assessments. Companies file their tax returns within The calculated deferred tax asset and deferred tax liabilities are offset in the financial statements. the 25th of the fourth month following the close of the financial year to which they relate. Deferred tax liabilities calculated on accumulated temporary differences subject to deferred taxation as of 31 December 2019 Tax returns are open for 5 years from the beginning of the year that follows the date of filing for the tax authorities’ review and 2018 have been prepared using the related tax rates effective for the periods when the related liabilities are expected to who have the right to audit tax returns, and the related accounting records on which they are based, and they may issue re- be realized and reflected to the financial statements. assessments based on their findings.

170 171 KKB KREDİ KAYIT BÜROSU A.Ş. KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

22. TAX ASSETS AND LIABILITIES (Continued) 24. NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS

The details of the deferred tax calculations as of 31 December 2019 and 2018 are as follows: Due to its operations, The Company is exposed to cash flow risk, market risk arising from interest risks, capital risk, credit risk and liquidity risk. The Company’s risks management policy focuses on unexpected changes in financial markets. Total temporary differences Deferred tax assets/(liabilities) 31 December 2019 31 December 2018 31 December 2019 31 December 2018 The management policy of financial risks is performed by the Company’s senior management and finance department in line Provision for unused vacation (Note 13) 5,952,233 3,736,612 1,309,491 822,055 with its policies and strategies approved by the Board of Directors. The Board of Directors prepares principles and policies in general to manage exchange rate, interest and capital risks and closely monitors financial and operational risks. Provision for termination (Note 11) 1,886,824 2,087,456 415,101 459,240 Lease liabilities and right of use asset, net 123,986 - 27,277 - The Company is exposed to the following risks during its operations: Provision for expected credit loss 108,453 18,473 23,860 4,064 Deferred tax assets 8,071,496 5,842,541 1,775,729 1,285,359 Credit Risk Depreciation adjustment of tangible and intangible assets (-) (52,965,800) (40,768,511) (11,652,476) (8,969,072) Liquidity Risk Deferred tax liabilities (-) (52,965,800) (40,768,511) (11,652,476) (8,969,072) Deferred tax liabilities (-), net (9,876,747) (7,683,713) Market Risk

The details of the movement table of the deferred tax liabilities for the periods ended at 31 December 2019 and 2018 are as Capital Risk follows: This note is presented to inform the Company about its objectives, policies and processes under these risks if the Company is 2019 2018 exposed to the above mentioned risks. Beginning of the period - 1 January (7,683,713) (4,694,315) Deferred tax expense recognized under the statement of profit or loss (-) (2,031,856) (3,030,953) Deferred tax (expense)/income recognized under equity (161,178) 41,555

End of the period - 31 December (9,876,747) (7,683,713)

23. INCOME FROM INVESTING ACTIVITIES

The details of the income obtained from the investment activities of the Company for the periods 1 January - 31 December 2019 and 2018 are as follows:

1 January - 1 January - 31 December 2019 31 December 2018 Income from sale of tangible and intangible assets 2,723,363 223,057

Total 2,723,363 223,057

172 173 ------128,918 128,918 10,013,057 Third party Third 10,013,057 Third party Third ------Cash and cash and cash Cash Cash and cash Cash equivalents at banks at equivalents 94,423,344 62,516,001 equivalents at banks at equivalents 62,516,001 94,423,344 Related party Related Related party Related ------249,388 249,388 Third party Third Third party Third ------2,331 2,331 Other receivables Other receivables Related party Related Related party Related ------2,502,153 4,318,907 2,502,153 4,318,907 Third party Third Third party Third ------Trade receivables Trade Trade receivables Trade 27,998,113 18,028,648 27,998,113 18,028,648 Related party Related Related party Related 31 December 2018 31 December KKB KREDİ KAYIT BÜROSU A.Ş. BÜROSU KAYIT KKB KREDİ 31 ARALIK 2019 HESAP DÖNEMİNE AİT FİNANSAL DİPNOTLAR İLİŞKİN AÇIKLAYICI TABLOLARA OLARAK GÖSTER I LM ŞT R.) TÜRK L I RASI (“TL”) I LMED KÇE AKS I BEL RT (TUTARLAR (Continued) FINANCIAL INSTRUMENTS ARISING FROM AND EXTENT OF RISKS 24. NATURE risk: Credit a) also carries the risk of In addition, it holds hold the financial assets receivables. trade parties and other related from deposits in banks, receivables risk arises from Credit in each the counterparty risk for limiting the average these risks by meets management The Company the agreement. of the requirements meeting not party’s the third in the balance situation and presented economic and current past experiences on the basis of management the Company by evaluated are receivables Trade agreement. sheet. is as follows: the financial instruments for risk exposure 2019 and 2018, the credit 31 December As of A.Ş. BÜROSU KAYIT KKB KREDİ ENGLISH OF EXPLANATORY INTO TRANSLATION CONVENIENCE FOR THE YEAR ENDED FINANCIAL STATEMENTS TO NOTES ISSUED IN TURKISH 2019 ORIGINALLY 31 DECEMBER INDICATED.) UNLESS OTHERWISE (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), 31 December 2019 31 December date reporting as of risk exposed credit of amount Maximum (A+B+C+D+E) - Maximum credit risk secured guarantees etc guarantees risk secured - Maximum credit financial assets neither past due nor impaired book value of A. Net which will otherwise restricted, that are financial assets B. Book value of or impaired as overdue be recongized impaired past due but not assets book value of C. Net etc. guarantees by - Secured assets imapired book value of Net D. book value) - Past due (gross (-) amount - Impairment etc. guarantees by value secured - Net book value) past due (gross - Non (-) amount - Impairment etc guarantees by value secured - Net risk credit to exposed items E. Off-balance (Continued) FINANCIAL INSTRUMENTS ARISING FROM AND EXTENT OF RISKS 24. NATURE risk (Continued): Credit a) Maximum amount of credit risk exposed as of reporting date date reporting as of risk exposed credit of amount Maximum (A+B+C+D+E) - Maximum credit risk secured guarantees etc guarantees risk secured - Maximum credit A. Net book value of neither past due nor impaired financial assets neither past due nor impaired book value of A. Net B. Book value of financial assets that are restricted, otherwise which will otherwise restricted, that are financial assets B. Book value of or impaired as overdue be recongized C. Net book value of assets past due but not impaired past due but not assets book value of C. Net - Secured by guarantees etc. guarantees by - Secured D. Net book value of imapired assets imapired book value of Net D. - Past due (gross book value) - Past due (gross - Impairment amount (-) amount - Impairment - Net value secured by guarantees etc. guarantees by value secured - Net - Non past due (gross book value) past due (gross - Non - Impairment amount (-) amount - Impairment - Net value secured by guarantees etc guarantees by value secured - Net E. Off-balance items exposed to credit risk credit to exposed items E. Off-balance

174 175 ------KKB KREDİ KAYIT BÜROSU A.Ş. - (924,293) US Dollar (924,293) 15,979,993

CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY (1,010,304) 15,979,993 15,979,993 (17,726,983) (3,681,587) (3,681,587) (18,737,287) NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED (19,661,580) ------31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH - Euro

(AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) 144,048 (352,698) 30,186,552 (4,792,401) 15,301,667 15,301,667 (9,883,834) (4,792,401) 30,330,600 30,330,600 (10,236,532) (15,028,933) 31 December 2018 31 December ------

24.NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued) Total 144,048 46,166,545 (5,716,694) 46,310,593 46,310,593 11,620,080 11,620,080 (18,079,681) (5,716,694) b) Liquidity Risk: (10,894,138) (28,973,819) (34,690,513) ------Prudent liquidity risk management implies holding sufficient cash and marketable securities, the availability of funding - through adequate credit transactions and the ability to close out market positions. (76,586) (76,586) US Dollar 4,405,045 (1,029,821) (7,691,836) 4,405,045 The risk of being able to fund the existing and prospective debt requirements is managed by maintaining the availability of 4,405,045 (8,721,657) (4,393,198) (4,393,198) sufficient number of credit providers and sufficient amounts of funds generated from operations. The Company management (8,798,243) monitors the collection of customer receivables on maturity and tries to avoid any financial burden on the Company in order ------to ensure uninterrupted liquidation and, as a result of the works carried out with the banks, the cash and non-cash credit limits - Euro (199) are determined. (199) 199,518 140,842 340,360 340,360 (218,572) (5,455,848) (5,674,619) (5,334,259) (5,334,259) As of 31 December 2019 and 2018, the analysis of liquidity risk by type of financial liability is as follows: (5,674,420) 31 December 2019 31 December ------31 December 2019: - Total 199,518 (76,785)

Total cash (76,785) 4,545,887 4,745,405 4,745,405 (7,910,408) (6,485,669) (9,727,457) outflow in (9,727,457) (14,396,077) accordance with (14,472,862) Maturity in accordance with the the agreement Up to 3 - 12 1 - 5 agreement Book value (=I+II+III) 3 months ( I ) months (II) years (III) Non derivative financial liabilities Financial leasing payables 7,027,358 7,218,924 2,160,257 3,766,753 1,291,914 Trade payables 33,698,895 33,698,895 33,698,895 - -

Total 40,726,253 40,917,819 35,859,152 3,766,753 1,291,914

31 December 2018:

Total cash outflow in accordance with Maturity in accordance with the the agreement Up to 3 - 12 1 - 5 agreement Book value (=I+II+III) 3 months ( I ) months (II) years (III) Non derivative financial liabilities Financial leasing payables 17,903,912 18,569,612 3,001,216 9,003,646 6,564,750 Trade payables 39,490,049 39,490,049 39,490,049 - -

Total 57,393,961 58,059,661 42,491,265 9,003,646 6,564,750

Total fair value of financial instruments used for foreign currency hedge currency foreign used for financial instruments of value fair Total Net foreign currency positions of assets/liabilities(monetary items) items) assets/liabilities(monetary positions of currency foreign Net (1+2a+3+5+6a-10-11-12a-14-15-16a) Net foreign currency position of assets/(liabilities) (19+9-18) assets/(liabilities) position of currency foreign Net Total amount of hedged liabilities of amount Total Total amount of hedged assets of amount Total Net asset/(liability) position of off-balance sheet derivative instruments (19a-19b) instruments sheet derivative off-balance position of asset/(liability) Net Long-term liabilities (15+16+17) liabilities (13+17) Total Other non-monetary liabilities Other non-monetary Financial liabilities liabilities Other monetary Short-term liabilities (10+11+12) payable Trade Other non-monetary liabilities Other non-monetary Financial liabilities Total assets (4+8) Total payables Trade liabilities Other monetary Fixed assets (5+6+7) assets Fixed Other Non-monetary financial assets Non-monetary Monetary financial assets Monetary Other assets (1+2+3) Current receivable Trade Monetary financial assets (including cash, cash at banks etc.) financial assets Monetary financial assets Non-monetary Trade receivables Trade 22. 21. 20. 19b. 19a. 19. 17. 18. 16b. 15. 16a. 13. 14. 12b. 11. 9. 10. 12a. 8. 7 6b. 6a. 3 4. 5. 2a 2b. 1. KKB KREDİ KAYIT BÜROSU A.Ş. BÜROSU KAYIT KKB KREDİ ENGLISH OF EXPLANATORY INTO TRANSLATION CONVENIENCE FOR THE YEAR ENDED FINANCIAL STATEMENTS TO NOTES ISSUED IN TURKISH 2019 ORIGINALLY 31 DECEMBER INDICATED.) UNLESS OTHERWISE (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), (Continued) FINANCIAL INSTRUMENTS ARISING FROM AND EXTENT OF RISKS 24. NATURE risk: Market c) Risk i) Currency risk arising rate and the exchange in US Dollars and Euros and assets debt denominated currency foreign of based on the existence risk is primarily exchange Foreign TRY. these to of changes during translation rate exchange currency foreign from position table: currency Foreign

176 177 - - KKB KREDİ KAYIT BÜROSU A.Ş. 736,317 736,317 CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY (3,060,333) (2,324,016) (3,060,333) NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED Depreciation of of Depreciation foreign currency foreign 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH - - (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.) Profit/Loss (736,317) 31 December 2018 31 December (736,317) 3,060,333 2,324,016 3,060,333

Appreciation of of Appreciation 24. NATURE AND EXTENT OF RISKS ARISING FROM FINANCIAL INSTRUMENTS (Continued) foreign currency foreign - - ii) Interest rate risk

The need of Company’s dealing ways with interest risk rate arises from effects of interest rates changes on the financial 878,640 878,640 1,066,852 1,945,492 1,066,852 instruments. The sensitivity of the Company to interest rate risk is related with maturity mismatch of assets and liabilities. This risk is managed through corresponding assets that are sensitive to interest rates with similar liabilities. Depreciation of of Depreciation foreign currency foreign Interest position table - -

Fixed rate financial instruments 31 December 2019 31 December 2018 Profit/Loss Time deposits 69,817,322 92,744,552 31 December 2019 31 December (878,640) (878,640) (1,066,852) Short term borrowings 6,957,116 11,726,416 (1,945,492) (1,066,852) Long term borrowings 70,242 6,177,496 Appreciation of of Appreciation foreign currency foreign As of 31 December 2019, the Company has no interest-sensitive financial assets. (31 December 2018: None). Since the Company does not have any floating rate financial assets, the Company is not exposed to interest rate risk. Therefore, the interest rate sensitivity table is not presented.

d) Capital risk management

The Company manages its debt and equity balance in the most efficient manner by examining the maturities of cash and trade receivables and financial and commercial debts from its operations while trying to ensure the continuity of its activities. Risks associated with each capital class together with the capital cost of the Company are evaluated by the top management. The Company management presents these risks to the Board of Directors. Based on the evaluations of the management and the Board of Directors, the Company aims to balance its capital structure through dividend payments as well as through new borrowing or payment of existing debt.

25. FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of financial instruments have been determined by the Company using available market information and appropriate valuation methodologies. However, judgment is necessarily required to interpret market data to estimate the fair value. Accordingly, the estimates presented herein are not necessarily indicative of the amounts the Company could realise in a current market exchange.

The fair value of short-term assets and liabilities other than trade receivables and borrowings is considered approximate to the carrying value, since the discount effect of fair value is insignificant.

6- Euro effect-net (4+5) effect-net 6- Euro In case of 20% change in the value of Euro against TRY: Euro of 20% change in the value of case In asset/liability net 4- Euro hedging (-) currency 5- Euro (3+6) Total 3- US Dollar effect-net (1+2) 3- US Dollar effect-net In case of 20% change in the value of US Dollar against TRY: of 20% change in the value of case In asset/liability US Dollar net 1- 2- US Dollar currency hedging (-) US Dollar currency 2- KKB KREDİ KAYIT BÜROSU A.Ş. BÜROSU KAYIT KKB KREDİ ENGLISH OF EXPLANATORY INTO TRANSLATION CONVENIENCE FOR THE YEAR ENDED FINANCIAL STATEMENTS TO NOTES ISSUED IN TURKISH 2019 ORIGINALLY 31 DECEMBER INDICATED.) UNLESS OTHERWISE (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), (Continued) FINANCIAL INSTRUMENTS ARISING FROM AND EXTENT OF RISKS 24. NATURE risk (Continued) i) Currency sensitivity table rate Exchange

178 179 KKB KREDİ KAYIT BÜROSU A.Ş. CONVENIENCE TRANSLATION INTO ENGLISH OF EXPLANATORY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019 ORIGINALLY ISSUED IN TURKISH (AMOUNTS EXPRESSED IN TURKISH LIRA (“TRY”), UNLESS OTHERWISE INDICATED.)

25. FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

As of 31 December 2019 and 2018, the carrying amount and fair value of financial assets and liabilities are as follows;

31 December 2019 31 December 2018 Carrying amount Fair value Carrying amount Fair value Financial assets Cash and cash equivalents 72,529,058 72,618,405 94,552,262 94,559,520 Trade receivables 32,317,020 32,332,296 20,530,801 20,542,016

Financial liabilities Leasing payables 7,027,358 7,218,924 17,903,912 18,569,612 Trade payables 33,698,895 33,698,895 39,490,049 39,490,049

Fair values of financial assets and liabilities are determined as follows:

• Level 1: Financial assets and liabilities are valued at the stock exchange price in an active market for exactly the same assets and liabilities.

• Level 2: Financial assets and liabilities are valued with the inputs used to determine a directly or indirectly observable price other than the stock market price of the relevant asset or liability mentioned in Level 1.

• Level 3: Financial assets and liabilities are valued with inputs that cannot be based on data observable in the market and used to determine the fair value of the asset or liability.

As of 31 December 2019 and 2018, the Company does not have any financial assets or liabilities which are carried at fair value.

26. SUBSEQUENT EVENTS

On 16 October 2019, the Company applied to the Ministry of Industry and Technology General Directorate of R&D Incentives to obtain an R&D Center Certificate within the scope of law numbered 5746. The application has been approved as a result of inspections and it has been approved on 7 January 2020 officially. As of this day, the Company will be able to benefit from the incentives and exemptions provided under the law numbered 5746 based on the deadlines set by the legislation.

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