PASHA_BANK_ANNUAL REPORT 2022

INFORMATION RELATED TO UNCONSOLIDATED FINANCIAL POSITION AND RISK MANAGEMENT (Continued) V. EXPLANATIONS ON EQUITY POSITION RISK The Bank does not hold equity position as of 31 December 2022. (31 December 2021 - None). VI. EXPLANATIONS ON LIQUIDTY RISK and LIQUIDITY COVERAGE RATIO a. Information on risk capacity, responsibilities and structure of liquidity risk management, reporting of liquidity risk at bank, liquidity risk management including how liquidity risk strategy, policy and implementations communicates with board of directors and business units Liquidity risk is the risk occurring as a result of non-availability of sufficient cash on hand or cash inflow to meet cash outflows in a timely manner completely as a result of imbalance in cash flows. Treasury department manages the liquidity of the Bank daily and informs ALCO about the liquidity position of the Bank weekly. It is the Treasury Department’s responsibility to plan the liquidity management for weekly, monthly and annual periods and to take the necessary precautions, in coordination with the Financial Planning & Control Department and Risk Management. It is the Risk Management’s responsibility to inform the senior management. The Bank forms its assets and liabilities in balance not to create a negative gap on cumulative basis in maturity segments. In accordance with the “Regulation on Measurement and Evaluation of Liquidity Adequacy of Banks” entered into force after published on Official Gazette dated November 1, 2006 and numbered 26333 by BRSA, starting from June 1, 2007, weekly simple average of total liquidity adequacy rates related to primary maturity segment and total liquidity adequacy rate related to secondary maturity segment cannot be less than 100% while weekly simple average of foreign currency liquidity ratio related to primary maturity segment and foreign currency adequacy rate related to secondary maturity segment cannot be less than 80%. The Reporting Department is responsible for calculating the first maturity and second maturity liquidity ratios and reporting to the legal authorities. The stress tests to be applied on the liquidity position and the liquidity coverage ratio are calculated by the Risk Management Unit. Risk Management Department monitors related unit’s activities and reports to the Senior Management monthly. b. Information on centralization grade of liquidity management and funding strategy and its functionality among Bank and its affiliates There is no structured liquidity management requiring centralization between bank and its affiliates. 172 PASHA Bank 2022 Annual Report Notes to Unconsolidated Financial Statements at 31 December 2022 Pasha Yatırım Bankası A.Ş. (Amounts are expressed in thousands of Turkish Lira (“TL”) unless otherwise stated.) Convenience translation of publicly announced unconsolidated financial statements originally issued in turkish, see note I of section three