PASHA_BANK ANNUAL REPORT 2021

General Information Financial Information and Risk Management Review Information on Management and Corporate Governance Principles Treasury Management The Treasury Department is tasked with managing PASHA Bank’s assets and liabilities with optimal efficiency in conformity with the regulations of legal bodies. The Unit closely observes the developments in the markets and considers all possible risks including liquidity risk and price risk. The Treasury Department performs trading transactions for profit on the inter‑bank market in line with the risk limits set by the Board of Directors. PASHA Bank employs the treasury products in an increasing quantity while offering the products and services the customers need. The Bank, outstanding with the competitive pricing of derivatives such as forward and swap, helps the customers hedge against risks with custom made products. In addition to its TL‑denominated financing bond issues, it acts as an intermediary for the trading of other capital market instruments on Borsa Istanbul, while supporting customers in their investments with repo transactions denominated in Turkish lira and foreign currencies in various tenors. Monitoring market developments and opportunities closely in Turkey and around the world, PASHA Bank Treasury Department works in coordination with Treasury departments of Pasha Bank Azerbaijan and Georgia, provides guidance for pricing and marketing of local financial products in the targeted region. Similarly, economic developments in the region are being shared with investors through various bulletins and research reports by working in cooperation with research units in Azerbaijan and Georgia. PASHA Bank’s Treasury Department aims as well to manage future risks in the most effective way in line with the Bank’s risk management strategy. The Department plans to improve the structured products offered to domestic and foreign corporate customers and to play a role in expanding the diversification of potential customers and profitability in Azerbaijan and Georgia by offering them Turkish capital markets products. Financial Institutions and Investor Relations Services Financial Institutions and Investor Relations Unit continued to contribute to the increase in foreign trade and Interbank Treasury transactions mediated by PASHA Bank in 2021. This contribution is realized by the Unit expanding its local and international correspondent network and establishing additional cash and non‑cash credit limits in line with the needs of corporate customers and the Treasury Unit. Alongside the transactions, relations are established with correspondent banks in various currencies, thus mediating the exchange transfers of PASHA Bank customers in AZN (Azerbaijani manat), GEL (Georgian lari) and other currencies. The Bank plans to gain further recognition in international banking markets and increase its share in foreign trade transactions of its customers by expanding its encrypted connection network (RMA) and by participating events which all banks of the world such as SIBOS and Euromoney attend. Taking the advantage of being an investment bank, PASHA Bank also provided funds from different markets through alternative financing products such as Murabaha and Sukuk in 2021. Furthermore, looking at transactions in Capital Markets, domestic bond issuance volume tripled in 2021 compared to 2020 and number of investors doubled. In accordance with the permission from CMB dated 16 December 2021, domestic bond issuance ceiling limit was increased from TL 300 million to TL 500 million. Financial Institutions and Investor Relations Department will continue its contributions to the Bank’s growing and developing structure in 2022. Activities of PASHA Bank in 2021 Triple Increase Double Increase USD 25 million in TL Issuance Volume In Investor Portfolio Eurobond Issuance in Azerbaijan 2021 Eurobond/Bond/Sukuk Issuances