PASHA BANK ANNUAL REPOT 2024

INFORMATION RELATED TO FINANCIAL POSITION AND RISK MANAGEMENT (Continued) VIII. EXPLANATIONS ON THE RISK MANAGEMENT (Continued) d. Explanations on Credit Risk (Continued) d.4) Qualitative requirements to be disclosed regarding Credit risk mitigation techniques and CR3 - Explanations on Credit risk mitigation techniques In order to ensure timely and complete fulfilment of all obligations arising from loans, it is essential to obtain appropriate collaterals. The main purpose of collateralization of any loan is to minimize the credit, foreign exchange and maturity risk. Within this scope, the minimum margin of guarantee is determined and the guarantees suitable for the loan types are obtained. There is collateral matching in the system for each loan. In addition, the appropriateness of the margin for each guarantee is also checked. The Bank discounts the collaterals by using some fixed ratios and calculates the expected cash equivalent of the collaterals in case they are transformed into cash. The difference between the credit and the cash equivalent of the collateral is defined as the net risk. In calculation of the net risk, the coefficients in the facility rating model are taken into account. Current Period Exposures unsecured: carrying amount (According to TAS) Exposures secured by collateral Exposures secured by collateral, of which: secured amount Exposures secured by financial guarantees Exposures secured by financial guarantees, of which: secured amount Exposures secured by credit derivatives Exposures secured by credit derivatives, of which: secured amount 1 Loans and lease receivables 5,503,595 1,485,356 760,465 250,166 128,313 - - 2 Debt securities 1,883,511 - - - - - - 3 Total 7,387,106 1,485,356 760,465 250,166 128,313 - - 4 Defaulted items 35,268 - - - - - - Prior Period Exposures unsecured: carrying amount (According to TAS) Exposures secured by collateral Exposures secured by collateral, of which: secured amount Exposures secured by financial guarantees Exposures secured by financial guarantees, of which: secured amount Exposures secured by credit derivatives Exposures secured by credit derivatives, of which: secured amount 1 Loans and lease receivables 4,494,239 1,090,368 686,935 516,063 400,115 - - 2 Debt securities 1,160,592 - - - - - - 3 Total 5,654,831 1,090,368 686,935 516,063 400,115 - - 4 Defaulted items 13,787 - - - - - - d.5) Qualitative explanations using the rating grades to calculate the banks’ credit risk by standard approach In determining the risk weights regarding risk classes defined in Article 6 of “Regulation on Measurement and Assessment of Capital Adequacy of Banks”, country risk classification published by OECD (Organisation for Economic Cooperation and Development) is taken into account. According to capital adequacy regulations, the risk classification and risk weights of receivables from banks and intermediary institutions and receivables from corporates are determined in accordance with the regulations. 201 Financial Information and Risk Management Review PASHA Yatırım Bankası A.Ş. Notes to the Unconsolidated Financial Statements As of and for the Year Ended 31 December 2024 (Continued) (Convenience translation of publicly announced financial statements originally issued in Turkish) (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.)