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) Risk rating models are utilised to discriminate borrowers in terms of their credibilities. In the credit risk management process, Risk Management Unit conducts the activities of measurement of credit risk through models, monitoring and reporting. In addition to the risk limits regarding credit risk, several concentrations are analyzed in the credit portfolio. The outputs of the risk rating models are an important part of credit allocation process as well as a tool to measure the probability of default of the customers and the portfolio. The Bank utilises an effective risk management policy that truly classifies risks and customers in order to achieve its targets. Appropriate decision systems are in place for the correct evaluation of risks and the limit structure of the customers are determined. To measure the credibility of the customers, analysis and intelligence studies are performed. The information from past, current and future financial and non-financial data are examined. For a consistent evaluation, quantification and monitoring of risks; in order to make correct decisions during the processes of credit request by the customer, credit approval, collateralization, restructuring, monitoring and closing, all information and documents regarding the customer are collected in a shared database. Credit proposals are finalized by the evaluation of General Manager, Credit Committee or Board of Directors, depending on the limits. Credit risks are measured, monitored and reported by the Risk Management Unit. d.1) CR1 - Credit quality of assets Current Period Gross Carrying Amounts reported in Financial Statements in accordance with TAS Allowances / amortization and impairment Net Value Defaulted exposures Non-defaulted exposures 1 Loans and lease receivables 36,077 1,456,858 (42,190) 1,450,745 2 Debt securities - 155,031 (2,221) 152,810 3 Off-balance sheet exposures - 355,059 (9,539) 345,520 Total 36,077 1,966,948 (53,950) 1,949,075 Prior Period Gross Carrying Amounts reported in Financial Statements in accordance with TAS Allowances / amortization and impairment Net Value Defaulted exposures Non-defaulted exposures 1 Loans and lease receivables 35,454 1,057,595 (47,989) 1,045,060 2 Debt securities - 96,799 (666) 96,133 3 Off-balance sheet exposures - 356,406 (7,387) 349,019 Total 35,454 1,510,800 (56,042) 1,490,212 172 Annual Report 2020 PASHA Bank Year-End Financial Report