TÜRKİYE İŞ BANKASI ANONİM ŞİRKETİ AND ITS SUBSIDIARIES Condensed Consolidated Interim Financial Statements For the Six-month Period Ended 30 June 2020 With Independent Auditors’ Report on Review of Condensed Consolidated Interim Financial Information Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi 30 October 2020 This report contains 1 page of independent auditors’ report on consolidated financial statements and 72 pages of consolidated financial statements and notes to the consolidated financial statements. Türkiye İş Bankası Anonim Şirketi and Its Subsidiaries TABLE OF CONTENTS Page ------ Independent auditors’ report on review of condensed consolidated interim financial information Condensed consolidated statement of financial position 1-2 Condensed consolidated statement of income 3 Condensed consolidated statement of profit or loss and other comprehensive income 4 Condensed consolidated statement of changes in equity 5-6 Condensed consolidated statement of cash flows 7-8 Notes to the condensed consolidated interim financial statements 10-72 Güney Bağımsız Denetim ve SMMM A.Ş. Tel: +90 212 315 3000 Maslak Mah. Eski Büyükdere Cad. Fax: +90 212 230 8291 Orjin Maslak İş Merkezi No: 27 ey.com Kat: 2-3-4 Daire: 54-57-59 Ticaret Sicil No : 479920 34485 Sarıyer Mersis No: 0-4350-3032-6000017 İstanbul - Türkiye Report on the Review of Condensed Consolidated Interim Financial Statements To the Shareholders of Türkiye İş Bankası A.Ş. Introduction We have reviewed the accompanying condensed consolidated interim financial statements of Türkiye İş Bankası A.Ş. (the “Bank”) and its subsidiaries (together referred to as the “Group”) as at June 30, 2020, comprising of the condensed consolidated interim statement of financial position as at June 30, 2020 and the related condensed consolidated interim statements of income, consolidated interim statement of profit or loss and other comprehensive income, consolidated interim statement of changes in equity and consolidated interim statement of cash flows for the six-month period then ended and explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34, “Interim Financial Reporting” (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of interim financial information performed by the independent auditor of the entity”. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, consequently it does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Basis for Qualified Conclusion As explained in Notes 15 and 19, the accompanying interim condensed consolidated financial statements as at June 30, 2020 include a free provision for possible risks amounting to TL 1,580,000 thousands, of which TL 980,000 thousands was provided in prior years and TL 600,000 thousands provided in the current period by the Group management for the possible effects of the negative circumstances which may arise from the possible changes in the economy and market conditions which does not meet the recognition criteria of IAS 37 “Provisions, Contingent Liabilities and Contingent Assets”. Qualified Conclusion Based on our review, except for the effect of the matter referred in the “Basis for Qualified Conclusion” paragraph, nothing has come to our attention that causes us to believe that the accompanying condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with IAS 34. Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik Anonim Şirketi A member firm of Ernst & Young Global Limited Fatma Ebru Yücel, SMMM Partner 30 October 2020 Istanbul, Turkey TÜRKİYE İŞ BANKASI ANONİM ŞİRKETİ AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated) 31 December Assets Note 30 June 2020 2019 Cash on hand 6,542,971 5,528,713 Balances with central bank 8 52,339,701 48,369,677 Loans and advances to banks 28,042,718 22,027,221 Financial assets at fair value through profit or loss 9 3,661,368 2,666,162 Derivative financial assets 23 7,576,001 5,369,818 Loans and advances to customers 10 363,889,309 318,424,746 - Measured at amortised cost 361,739,496 316,274,933 - Measured at fair value through profit or loss 2,149,813 2,149,813 Trade receivables 6,485,370 5,847,878 Insurance receivables 6,259,405 5,008,178 Inventories 4,906,719 4,315,307 Investment securities 9 115,662,157 96,625,522 - Financial assets at fair value through other comprehensive income 71,714,132 61,023,546 - Financial assets measured at amortised cost 43,948,025 35,601,976 Current tax assets 108,925 90,429 Investments in equity-accounted investees 1,112,923 981,049 Property, plant and equipment 12 23,695,622 23,172,273 Investment properties 4,293,073 4,314,742 Intangible assets and goodwill 2,329,652 1,920,650 Non-current assets held for sale 1,207,539 1,218,276 Deferred tax assets 4,204,744 3,075,980 Other assets 15,714,270 10,668,377 Total assets 648,032,467 559,624,998 The accompanying notes form an integral part of these consolidated financial statements. 1 TÜRKİYE İŞ BANKASI ANONİM ŞİRKETİ AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated) 31 December Liabilities and equity Note 30 June 2020 2019 Deposits 339,310,123 294,647,350 - Deposits from banks 6,167,866 5,905,168 - Deposits from customers 333,142,257 288,742,182 Obligations under repurchase agreements 16,663,868 2,863,882 Derivative financial liabilities 23 5,541,911 3,013,852 Lease payables 1,272,625 1,245,427 Funds borrowed 13 85,534,799 79,295,160 Debt securities issued 43,608,544 44,266,745 Payables to money market 743,835 166,453 Trade payables 6,084,200 6,343,693 Taxes and dues payable 914,143 819,762 Employee benefits 5,662,656 5,455,826 Corporate tax liability 2,295,602 1,043,071 Insurance contract liabilities 15,286,300 13,188,011 Provisions 15 3,090,064 1,989,940 Deferred tax liabilities 328,469 287,030 Other liabilities 19,754,375 15,394,612 Subordinated liabilities 22,670,763 15,365,226 Total liabilities 568,762,277 485,386,040 Share capital 16 6,115,938 6,115,938 Share premium 38,621 38,611 Legal reserves 16 6,107,828 5,631,247 Fair value reserves 1,247,813 486,376 Revaluation reserves 4,854,900 4,821,759 Hedging reserves 110,897 3,149 Translation reserves 3,446,313 3,302,365 Other reserves (790,416) (789,608) Retained earnings 41,573,259 39,172,563 Total equity attributable to equity holders of the Bank 62,705,153 58,782,400 Non-controlling interests 16,565,037 15,456,558 Total equity 79,270,190 74,238,958 Total liabilities and equity 648,032,467 559,624,998 Commitment and contingencies 23 183,961,874 159,867,175 The accompanying notes form an integral part of these consolidated financial statements. 2 TÜRKİYE İŞ BANKASI ANONİM ŞİRKETİ AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2020 (Amounts expressed in thousands of Turkish Lira (“TL”) unless otherwise stated) 1 January- 1 January- Note 30 June 2020 30 June 2019 Interest income on loans 16,404,049 18,117,519 Interest income on securities 5,660,390 5,396,411 Interest income on deposits at banks 251,538 302,692 Interest income on reserve deposit at central banks 10,125 280,815 Interest income on finance leases 248,615 241,273 Interest income on factoring transactions 148,564 254,587 Other interest income 86,619 325,031 Total interest income 22,809,900 24,918,328 Interest expense on deposits (4,517,014) (8,759,926) Interest expense on borrowings (1,451,111) (1,717,126) Interest expense on interbank borrowings (518,640) (1,059,696) Interest expense on debt securities issued (2,444,374) (2,560,857) Interest expense on leasing (91,869) (92,602) Other interest expense (412,469) (65,301) Total interest expense (9,435,477) (14,255,508) Net interest income 13,374,423 10,662,820 Fee and commission income 17 3,332,986 3,326,007 Fee and commission expense 17 (1,127,822) (1,140,357) Net fee and commission income 17 2,205,164 2,185,650 Securities trading income, net 497,163 162,306 Derivative trading expense, net (2,690,502) (3,945,756) Income from manufacturing operations 8,820,362 8,605,972 Income from insurance operations 4,102,677 3,165,862 Income from other operations 425,460 641,692 Cost of manufacturing operations (6,248,297) (5,809,570) Cost of insurance operations (3,183,790) (2,697,016) Cost of other operations (790,112) (739,836) Other operating income 18 610,839 815,101 Other operating expenses 19 (9,189,385) (7,272,436) Foreign exchange gains/(losses), net 1,971,390 1,449,692 Impairment losses, net (4,794,112) (3,765,875) Dividend income 22,491 18,004 Share of income from equity-accounted investees 37,453 65,345 Profit before income tax 5,171,224 3,541,955 Income tax expense (1,323,368) (292,060) Profit for the period 3,847,856 3,249,895 Profit attributable to Equity holders of the Bank 2,877,296 2,074,989 Non-controlling interest 970,560 1,174,906 Profit for the period 3,847,856 3,249,895 Basic and diluted earnings per share (Full TL) 21 0.0256 0.0184 The accompanying notes form an integral part of these consolidated financial statements.