PASHA BANK ANNUAL REPOT 2024

EXPLANATIONS ON ACCOUNTING POLICIES (Continued) XVII. EXPLANATIONS ON TAXATION (Continued) Deferred Tax (Continued) Deferred tax liabilities or assets are not recognized for temporary timing differences arising on the initial recognition of assets and liabilities other than goodwill or in a business combination that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheet date. The carrying amount of deferred tax assets is reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be recovered. Deferred tax is measured at the tax rate that is expected to apply in the period in which the liability is settled or the asset realized, and is recognized as an expense or income in profit or loss. In addition, deferred tax is recognized directly in equity if it relates to items recognized directly in equity in the same or a different period. Deferred tax assets and liabilities are offset. Pursuant to Article 53 of the Banking Law No. 5411 dated 19 October 2005, specific provisions for loans and other receivables are recognized as an expense in determining the corporate tax base in the year in which they are recognized in accordance with paragraph 2 of the same article. As of 31 December 2024, in accordance with the provisional Article 33 of the Tax Procedure Law, the tax effects arising from the inflation adjustment of corporate tax have been included in the deferred tax calculation, in the financial statements dated 31 December 2024. XVIII. EXPLANATIONS ON BORROWINGS Financial liabilities held for trading and liabilities related to derivative financial instruments are measured at fair value, while all other financial liabilities are subsequently measured at their “discounted amounts” using the “effective interest (internal rate of return) method.” The Bank utilises various hedging techniques to minimise the currency, interest rate and liquidity risks of its financial liabilities. XIX. EXPLANATIONS ON ISSUANCE OF SHARES CERTIFICATES Transaction costs regarding the issuance of share certificates are accounted under shareholders’ equity after eliminating the tax effects. Dividend payments are determined by the General Assembly of Bank. The Bank has not issued any share certificates. No dividend payments were announced after the balance sheet date. XX. EXPLANATIONS ON AVALIZED DRAFTS AND ACCEPTANCES Avalized drafts and acceptances shown as liabilities against assets are included in the off-balance sheet commitments. XXI. EXPLANATIONS ON GOVERNMENT INCENTIVES None. XXII. EXPLANATIONS ON PROFIT RESERVES AND PROFIT DISTRIBUTION Retained earnings as per the statutory financial statements other than legal reserves are available for distribution, subject to the legal reserve requirement referred to below. Under the Turkish Commercial Code (“TCC”) the legal reserves are composed of first and second reserves. The TCC requires first reserves to be 5% of the profit until the total reserve is equal to 20% of issued and fully paid-in share capital. Second reserves are required to be 10% of all cash profit distributions that are in excess of 5% of the issued and fully paid-in share capital. However holding companies are exempt from this application. According to the Turkish Commercial Code, legal reserves can only be used to compensate accumulated losses and cannot be used for other purposes unless they exceed 50% of paid-in capital. 154 PASHA Yatırım Bankası A.Ş. Notes to the Unconsolidated Financial Statements As of and for the Year Ended 31 December 2024 (Continued) PASHA Bank 2024 Annual Report (Convenience translation of publicly announced financial statements originally issued in Turkish) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)