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) III. EXPLANATIONS ON CURRENCY RISK The Bank’s foreign currency position is managed within the limits set by legislation and the Bank. The basic principle in foreign currency risk management is not to be exposed to currency risk. Accordingly, the exchange-trading risk positions are not allocated to the limit, banking accounts as of the currency by creating a matched asset-liability structure is aimed to provide natural protection. The Bank uses derivative financial instruments such as forward foreign exchange contracts and currency swaps for hedging purposes in foreign currency denominated transactions. Bank’s methodology of digitising the foreign currency position includes the use of standard method when calculating the capital adequacy ratio and application of internal stress tests/ sensitivity analysis. The Bank’s publicly announced foreign exchange bid rates as of the date of the financial statements and for the last five business days prior to that date: (Full TL) USD EUR Foreign exchange rates as of 31 December 2020 7.4194 9.1164 1. Bid rate 7.3405 9.0079 2. Bid rate 7.4063 9.0697 3. Bid rate 7.4738 9.1370 4. Bid rate 7.5517 9.2037 5. Bid rate 7.6190 9.2948 Arithmetic average - 31 days 7.7138 9.3887 Foreign exchange rates as of 31 December 2019 5.9400 6.6621 Foreign Exchange Sensitivity Analysis The effects (excluding tax effects) of 10% change of TL against the foreign currencies below on the equity and profit or loss are presented below. This analysis assumes that all other variables, in particular interest rates, remain constant. Change in Currency Rate Effect on Profit and Loss Effect on Equity 31 December 2020 31 December 2019 31 December 2020 31 December 2019 USD 10% decrease (2,556) (2,547) (2,556) (2,547) USD 10% increase 2,556 2,547 2,556 2,547 EUR 10% decrease (854) (11) (854) (11) EUR 10% increase 854 11 854 11 152 Annual Report 2020 PASHA Bank Year-End Financial Report