ASYA KATILIM BANKASI A.Ş. INDEPENDENT AUDITORS’ REPORT, UNCONSOLIDATED FINANCIAL STATEMENTS AND NOTES FOR THE YEAR ENDED DECEMBER 31, 2012 (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish) To the Board of Directors of Asya Katılım Bankası A.Ş. İstanbul INDEPENDENT AUDITORS’ REPORT FOR THE PERIOD JANUARY 1, 2012- DECEMBER 31, 2012 We have audited the accompanying unconsolidated balance sheet of Asya Katılım Bankası A.Ş. (the “Bank”) as at December 31, 2012 and the related statements of income, cash flows and changes in shareholders’ equity for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements The Board of Directors of the Bank is responsible for the preparation and fair presentation of the financial statements in accordance with the regulation on “Procedures and Principles Regarding Banks’ Accounting Practices And Maintaining Documents” published in the Official Gazette dated November 1, 2006 and numbered 26333 and Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”) and other regulations, circulars, communiqués and pronouncements in respect of accounting and financial reporting made by Banking Regulation and Supervision Agency (“BRSA”). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the regulation on “Licensing and Operations of Audit Firms in Banking” published in the Official Gazette No: 26333 on November 1, 2006 and the International Standards on Auditing. We planned and performed our audit to obtain reasonable assurance whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the consideration of the effectiveness of internal control and appropriateness of accounting policies applied relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independent Auditors’ Opinion In our opinion, the accompanying unconsolidated financial statements present fairly, in all material respects, the financial position of Asya Katılım Bankası A.Ş. as at December 31, 2012 and the results of its operations and its cash flows for the year then ended in accordance with the prevailing accounting principles and standards set out as per Article 37 of the Banking Act No: 5411 and other regulations, circulars and communiqués in respect of accounting and financial reporting and pronouncements made by Banking Regulation and Supervision Agency (“BRSA”). Additional Paragraph for the English Translation The effect of the differences between the accounting principles summarized in Section 3 and the accounting principles generally accepted in countries in which the accompanying unconsolidated financial statements are to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements. The accounting principles used in the preparation of the accompanying unconsolidated financial statements differ materially from IFRS. Accordingly, the accompanying unconsolidated financial statements are not intended to present the Bank’s financial position and results of its operations in accordance with accounting principles generally accepted in such countries of users of the financial statements and IFRS. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU LIMITED Hüseyin Gürer Partner İstanbul, February 22, 2013 THE UNCONSOLIDATED FINANCIAL REPORT OF ASYA KATILIM BANKASI A.Ş. FOR THE YEAR ENDED DECEMBER 31, 2012 Address of the Headquarter of the Bank : Saray Mahallesi Dr. Adnan Büyükdeniz Caddesi No:10 34768 Ümraniye/İSTANBUL Phone and Fax Numbers of the Bank : 0 216 633 50 00 / 0 216 633 69 89 Website of the Bank : www.bankasya.com.tr Electronic Mail Address to Contact : [email protected] The unconsolidated year-end financial report prepared in accordance with the Communiqué of Financial Statements and Related Disclosures and Footnotes to be Announced to Public by Banks as regulated by Banking Regulation and Supervision Agency, is comprised of the following sections: • GENERAL INFORMATION ABOUT THE BANK • UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK • EXPLANATIONS ON THE CORRESPONDING ACCOUNTING POLICIES APPLIED IN THE RELATED PERIOD • INFORMATION ON FINANCIAL STRUCTURE OF THE BANK • EXPLANATORY DISCLOSURES AND FOOTNOTES ON UNCONSOLIDATED FINANCIAL STATEMENTS • OTHER EXPLANATIONS • INDEPENDENT AUDITORS’ REPORT The unconsolidated financial statements and related disclosures and footnotes that were subject to independent audit, are prepared in accordance with the Regulation on Accounting Applications for Banks and Safeguarding of Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards and the related statements and guidances and in compliance with the financial records of our Bank and, unless stated otherwise, presented in thousands of Turkish Lira (TL). Prof. Dr. Erhan BİRGİLİ Ahmet BEYAZ Mahmut YALÇIN Kamil YILMAZ Chairman of the Board Member of the Board of Assistant General Manager Manager in Charge of of Directors Directors and General Responsible of Financial Reporting Manager Financial Reporting Dr. Ercüment GÜLER Mehmet URUÇ Member of the Board of Member of the Board of Directors and Member of Directors and Member of the Audit Committee the Audit Committee Responsible personnel for the questions that can be raised on the financial statements: Name-Surname/Title: Merve Yasemin GÜNEŞ / Assistant Manager in Charge of Budgeting and Financial Controlling Telephone Number : 0 216 633 54 82 Fax Number : 0 216 633 69 89 SECTION ONE GENERAL INFORMATION I. History of the Bank Including Its Incorporation Date, Initial Status and Amendments to the Initial Status 1 II. Shareholder Structure, Shareholders Having Direct or Indirect, Joint or Individual Control Over the Management and Internal Audit of the Bank, Changes in Shareholder Structure During the Current Period, if any and Information on the Bank’s Risk Group 1 III. Explanations Regarding the Shares of the Bank Owned by and Areas of Responsibility of the Chairman and the 1 Members of Board of Directors, Audit Committee Members, Chief Executive Officer, Executive Vice Presidents IV. Individuals and Institutions That Have Qualified Shares in the Bank 2 V. Summary Information on the Bank’s Services and Activity Areas 2 VI. Current or Likely Actual or Legal Barriers to Immediate Transfer of Equity or Repayment of Debts between Parent Bank and Its Subsidiaries 2 SECTION TWO THE UNCONSOLIDATED FINANCIAL STATEMENTS I. Balance Sheet 3 – 4 II. Statement of Off-Balance Sheet Contingencies and Commitments 5 III. Statement of Income 6 IV. Statement of Income and Expense Accounted under Equity 7 V. Statement of Changes in Shareholders’ Equity 8 VI. Statement of Cash Flows 9 VII. Statement of Profit Distribution 10 SECTION THREE ACCOUNTING PRINCIPLES I. Explanations on Basis of Presentation 11 II. Explanations on Strategy for Use of Financial Instruments and Foreign Currency Transactions 12 III. Explanations on Forward and Option Contracts and Derivative Instruments 12 IV. Explanations on Profit Share Income and Expenses 12 V. Explanations on Fees and Commission Income and Expenses 12 VI. Explanations on Financial Assets 13 VII. Explanations on Impairment of Financial Assets 15 VIII. Explanations on Offsetting Financial Assets and Liabilities 16 IX. Explanations on Sales and Repurchase Agreements and Lending of Securities 16 X. Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to Those Assets 16 XI. Explanations on Goodwill and Other Intangible Assets 17 XII. Explanations on Tangible Assets 17 XIII. Explanations on Leasing Transactions 18 XIV. Explanations on Provisions and Contingent Liabilities 18 XV. Explanations on Liabilities for Employee Benefits 18 XVI. Explanations on Taxation 19 XVII. Additional Disclosures on Borrowing 19 XVIII. Explanations on Issuance of Share Certificates 20 XIX. Explanations on Avalized Drafts and Acceptances 20 XX. Explanations on Government Incentives 20 XXI. Explanations on Segment Reporting 20 XXII. Explanations on Other Matters 20 SECTION FOUR INFORMATION ON FINANCIAL STRUCTURE AND RİSK MANAGEMENT STRATEGY I. Explanations on Capital Adequacy Standard Ratio 21 II. Explanations on Credit Risk 24 III. Explanations on Market Risk 31 IV. Explanations on Operational Risk 32 V. Explanations on Currency Risk 33 VI. Explanations on Interest Rate Risk 35 VII. Explanations on Liquidity Risk 35 VIII. Explanations on Presentation of Financial Assets and Liabilities at Fair Value 41 IX. Explanations