PASHA_BANK ANNUAL REPORT 2021

161 Annual Report 2021 PASHA Bank (Convenience Translation of Publicly Announced Financial Statements Originally Issued in Turkish, See Note I of Section Three) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) PASHA Yatırım Bank A.Ş. Notes to Unconsolidated Financial Statements At 31 December 2021 INFORMATION RELATED TO UNCONSOLIDATED FINANCIAL POSITION AND RISK MANAGEMENT (Continued) III. EXPLANATIONS ON CURRENCY RISK The Bank’s foreign currency position is managed within the limits set by legislation and the Bank. The basic principle in foreign currency risk management is not to be exposed to currency risk. Accordingly, the exchange-trading risk positions are not allocated to the limit, banking accounts as of the currency by creating a matched asset-liability structure is aimed to provide natural protection. The Bank uses derivative financial instruments such as forward foreign exchange contracts and currency swaps for hedging purposes in foreign currency denominated transactions. Bank’s methodology of digitising the foreign currency position includes the use of standard method when calculating the capital adequacy ratio and application of internal stress tests/sensitivity analysis. The Bank’s publicly announced foreign exchange bid rates as of the date of the financial statements and for the last five business days prior to that date: (Full TL) USD EUR Foreign exchange rates as of 31 December 2021 13.3290 15.0867 1. Bid rate 12.9775 14.6823 2. Bid rate 12.2219 13.8011 3. Bid rate 11.8302 13.4000 4. Bid rate 11.3900 12.8903 5. Bid rate 11.7278 13.2926 Arithmetic average - 31 days 13.6356 15.4126 Foreign exchange rates as of 31 December 2021 7.4194 9.1164 Foreign Exchange Sensitivity Analysis The effects (excluding tax effects) of 10% change of TL against the foreign currencies below on the equity and profit or loss are presented below. This analysis assumes that all other variables, in particular interest rates, remain constant. Change in Currency Rate Effect on Profit and Loss Effect on Equity Current Period Prior Period Current Period Prior Period USD 10% decrease (2,431) (2,556) (2,431) (2,556) USD 10% increase 2,431 2,556 2,431 2,556 EUR 10% decrease (5,641) (854) (5,641) (854) EUR 10% increase 5,641 854 5,641 854