PASHA BANK ENG 20

PASHA Yatırım Bankası A.Ş. Notes to Unconsolidated Financial Statements at 31 December 2020 (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) (Convenience Translation of Publicly Announced Financial Statements Originally Issued in Turkish, See Note I of Section Three) INFORMATION RELATED TO UNCONSOLIDATED FINANCIAL POSITION AND RISK MANAGEMENT(Continued) As a result of COVID-19 epidemic, the fluctuations in the financial markets are experienced as a result of the press statements made by the BRSA on March 23, 2020. Therefore, in the calculation of the amount subject to loan risk in accordance with Regulation on Measurement and Evaluation of Capital Adequacy; the presence of non-monetary assets, historical valued in accordance with Turkey Accounting Standards, except for items on cost, measured in foreign currency amounts and the related specific provisions when calculating the preparation of the December 31, 2019 financial statements is made possible to use the buying Exchange rate taken as a basis. As of 31 December 2020, the Bank did not use these opportunities in preparing its financial statements and footnotes. b. Information about instruments that will be included in total capital calculation None (31 December 2019 - None). c. Explanations on reconciliation between amounts in the statement of information on equity items The main difference between the amount of ‘Equity’ given in the statement of equity and the amount of ‘Equity’ in the unconsolidated balance sheet arises expected credit losses. The expected credit losses are considered as contribution capital in the calculation of the ‘Equity’ given in the equity table. In addition, operating lease development costs, intangible assets, and some other accounts determined by the Board are taken into account in calculating the ‘Equity’ amount in calculations as deductions. II. EXPLANATIONS ON CREDIT RISK a. The Bank takes into account the Banking Law as far as the limits applied to a single obligor or a risk group is concerned. Limits are determined to avoid sectoral concentration, and the compliance to these limits are monitored on transaction basis. Regarding daily credit and security transactions, compliance to limits and concentrations are monitored ad reported by the risk management unit. Besides, the compliance of credits to their limits are followed by operations, marketing and internal control units. Credits and other receivables are re-evaluated at least once a year by the credit allocation unit. Ratings are calculated by using models specifically developed for this purpose. Including the necessary documents, credit allocation activities are also subject to controls by the internal control unit, which is independent from business units. b. According to TFRS 9 Financial Instruments Standard and Regulation on the Procedures and Principles for Classification of Loans by Banks and Provisions, loans are classified as overdue loans that are not have performing loan specifications. The accounting and provisioning police have been disclosed in section 3. c. Bank does not carry any forward or option positions or similar positions based on other agreements on the organized markets. d. The Bank, as an active participant in the national and international banking market, compared to the financial activities of other financial institutions, is not exposed to high volumes of credit risk, which may necessitate mitigation through futures or options. As credit risk increases, usage of such derivative instruments may be relevant. Annual Report 2020 PASHA Bank Year-End Financial Report 137