PASHA_BANK ANNUAL REPORT 2021

181 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) To measure the credibility of the customers, analysis and intelligence studies are performed. The information from past, current and future financial and non-financial data are examined. For a consistent evaluation, quantification and monitoring of risks; in order to make correct decisions during the processes of credit request by the customer, credit approval, collateralization, restructuring, monitoring and closing, all information and documents regarding the customer are collected in a shared database. Credit proposals are finalized by the evaluation of General Manager, Credit Committee or Board of Directors, depending on the limits. Credit risks are measured, monitored and reported by the Risk Management Unit. d.1) CR1 - Credit quality of assets Current Period Gross Carrying Amounts reported in Financial Statements in accordance with TAS Allowances/ amortization and impairment Net Value Defaulted exposures Non-defaulted exposures 1 Loans and lease receivables 45,824 2,376,628 (70,933) 2,351,519 2 Debt securities - 432,744 (4,803) 427,941 3 Off-balance sheet exposures - 747,877 (6,820) 741,057 Total 45,824 3,557,249 (82,556) 3,520,517 Prior Period Gross Carrying Amounts reported in Financial Statements in accordance with TAS Allowances/ amortization and impairment Net Value Defaulted exposures Non-defaulted exposures 1 Loans and lease receivables 36,077 1,456,858 (42,190) 1,450,745 2 Debt securities - 155,031 (2,221) 152,810 3 Off-balance sheet exposures - 355,059 (9,539) 345,520 Total 36,077 1,966,948 (53,950) 1,949,075 d.2) CR2 - Changes in stock of defaulted loans and debt securities Current period Prior Period 1 Beginning Balance 36,077 35,454 2 Additions 12,584 53 3 Receivables that are not re-default - - 4 Write-offs - - 5 Other changes 1 (2,837) 570 Ending Balance(1+2-3-4±5 ) 45,824 36,077 (1) Includes collection from the non-performing loans. d.3) CRB - Additional explanations on credit quality of assets Bank details calculate expected loss provisions within the scope of TFRS’9, as explained in the account policies and disclosures related to impairment of Financial assets and expected credit loss calculation. The Bank evaluates whether there is a significant increase in the credit risk of the Financial instrument within the scope of impairment since it was first included in the Financial statements. In making this assessment, it uses the change the expected default risk of the Financial instrument. Loans that have overdue above 90-day in delay in the relevant month are included in the follow-up accounts and are subject to specific provisions.