PASHA_BANK_ANNUAL REPORT 2022

31 PASHA Bank 2022 Annual Report General Information Information on Management and Corporate Governance Principles Financial Information and Risk Management Review Esteemed stakeholders, When we take a look at 2022, we can clearly state that the most significant development directly affecting all economies of the world was Russia’s invasion of Ukraine in February and impacts of this afterwards. After the invasion of Russia, various countries, primarily USA and European Union declared tough sanctions against Russia and as a response, Russia requested these countries to make their natural gas payments in Ruble in return. With all these sanctions and increased tension, oil prices increased to USD 120 and gold prices also cruised at high levels during the year due to expectations of an inflationary environment and continuance of this war. Rapid increases in food and commodity prices resulted in US Central Bank, Fed’s increasing of the policy interest 7 times from 0%-0.25% to 4.25%-4.5% and European Central Bank’s increasing the policy interest at negative levels to 2.50% . Other central banks also returned back to tight monetary policy regimes. While feeling the impacts of high inflation in our country, we followed the steps taken and changes in regulations by BRSA, Central Bank and the Government and worked on adapting these applications and regulations to the banking system. Even though various new regulations, such as currency-protected deposit, security establishment in required reserves, required reserves against asset items made foreign currencies somewhat stable, inflation took a high course during the year. As of year- end, annual inflation rate decreased to 64.27% and we expect economic growth for 2022 will be announced between 4.5%-5% , stronger than other economies. We also expect accelaration of inflation will slow down in 2023 and be at the range of 30%- 35%. PASHA Bank completed the second year of its 3-year strategy period which covers 2021-2023. We achieved our targets in the second year of our strategy which included our goals of achieving a healthy and sustainable growth, increasing the quality of our product variety and service provided to customers, strengthening our role at the capital markets and increasing our share of foreign trade financing in the region. In September, credit rating institution, JCR Eurasia Rating, assessed PASHA Bank’s long-term National Credit Score as A(tur), Compliance with Corporate Governance Principles Score as 9.24 and outlook as “Stable”. AS PASHA Bank, we increased our asset size by 73% and reached TL 6,156 million in accordance with our goal of sustainable growth. Our support for the real sector continued by increasing during this period. Cash credit size of our bank increased by 50% in comparison with 2021 and reached TL 3,638 million. We closed the year with a profit of TL 204 million. Despite rapidly changing market conditions, we continued security and bond issuances both in our country and abroad. Furthermore, USD 25 million 10-year subordinated loan extended to our bank by our majority shareholder PASHA Holding LLC demonstrated, once again, our shareholders’ trust in Turkish economy and our bank. We discussed our country and opportunities in our country with investors during our investor visits in Baku. Our launch of the mortgage campaign for Azerbaijan citizens with the motto “Don’t be a Guest in the Sister Country, Be a Home- owner” attracted a lot of attention in Azerbaijan and accordingly, we started mortgage transactions for this region. As in the prior years, PASHA Bank played a significant role in foreign trade financing in the triangle of Turkey- Azerbaijan and Georgia this year. In accordance with our strategy, we press on with our goal of “being the first bank which comes to mind in the region”. with success

RkJQdWJsaXNoZXIy MTc5NjU0