PASHA BANK ENG 20

The Bank’s general policy on profit distribution provides for payment of dividends to the extent allowed by the financial structure of the Bank, the pending investments, the situation of the sector, the economic conjuncture, and the legislation on banking. The Bank’s principles pertaining to profit distribution are included in the Articles of Association and the corporate website of the Bank. The General Assembly can – after setting aside the statutory reserves as required by Turkish Commercial Code and the provisions of the Articles of Association of the Bank, and provided that the permissions required by the legislation on banks are obtained – at its sole discretion and in a way not to constitute a vested right, decide to distribute profits out of the remaining amount, to the members of the Board of Directors and/or of the senior management of the Bank, and to the personnel, at the amounts it wishes. The General Assembly is empowered to decide to distribute the remaining profit entirely or partly to the shareholders, or to set aside as extraordinary reserve. In case the Board of Directors tabled a motion for the approval of the shareholders at the general assembly meeting in order that a decision be taken to not distribute the profit for the period, it is obligatory to disclose to the shareholders the reason for not distributing the profit and where the retained profit will be used. Based on the proposal under the Bank’s Board of Directors Decision No. 2020/03, dated 31 January 2020, it has been resolved as follows at the General Assembly convened on 30 March 2020, taking into consideration the Banking Law and other applicable legislation: Out of the distributable profit of TL 22,128,359.16, which is the Bank’s unconsolidated net profit for the period in 2019 in the amount of TL 25,694,137.17 less prior year losses in the amount of TL 3,565,788.01, TL 1,106,417.96 will be set aside as First Legal Reserves, which is a statutory obligation, and net distributable profit for the period in the amount of TL 21,021,941.20 will not be distributed as dividends but will be transferred to Extraordinary Reserves. It has also been resolved that the profit in the amount of TL 3,605,962.53, which arises due to the inception of the TFRS 9 Financial Instruments Standard implementation as of 1 January 2018 and which is classified under “Prior Year Profit/Loss”, will be transferred to Extraordinary Reserves. Based on our financial statements for the period of 1 January 2020 - 31 December 2020 audited by Güney Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (member company of Ernst&Young Global Limited) TL 31,376,224.82 “Net Period Profit” was realized and the Board of Directors’ proposal for the method of distribution will be submitted for the approval of the General Assembly on 18 March 2021. Profit Distribution Policy Annual Report 2020 PASHA Bank Information on Management and Corporate Governance Practices 61