Asya Katılım Bankası A.Ş.
Transkript
Asya Katılım Bankası A.Ş.
Annual Report 2009 Contents Presentation 2 Mission, Vision, Objectives 3 Corporate Profile 6 Key Highlights 8 Bank Asya’s Standing in the Industry 10 Bank Asya’s Growth Strategy 14 History 16 Changes in Capital and Shareholder Structure During the Reporting Period 20 A Message from Tahsin Tekoğlu 21 A Message from the Board of Directors 24 A Message from Ünal Kabaca 25 CEO’s Message 30 Macroeconomic Overview and the Banking Sector 36 Assessment of Bank Asya’s Activities in 2009 50 Corporate Social Responsibility 51 Subsidiaries and Affiliates 52 Independent Auditors’ Compliance Opinion on Annual Report Information on Management and Corporate Governance Practices 54 Board of Directors 56 Statutory Auditors 58 Senior Management 60 Organization Chart 62 Committees 64 Summary Annual Report 66 Human Resources 68 Transaction Volume of the Risk Group of the Bank, Outstanding Loan and Deposit Balances and Current Income and Expense Amounts 69 Corporate Governance Principles Compliance Report 76 The bank’s Profit Distribution Policy 76 Proposal to Distribute Bank Asya 2009 Year Profits 77 2009 Ordinary General Meeting Agenda 78 Explanatory notes concerning the items on the 2009 Ordinary General Meeting Agenda Assessment on Financial Information and Risk Management 80 Concise Statutory Auditors Report 81 5-Year Summary Financial Information Including the Reporting Period 82 Financial Standing, Profitability, and Debt Service Ability 82 Assessment of the Audit Committee’s Internal Systems and Their Operation 84 Information About Internal System Unit Managersr 85 Risk Management Policies Being Implemented According to Risk Types 87 Credit Ratings and Reports 88 Independent Auditors’ Report for the Year January 1, 2009 – December 31, 2009 161 Independent Auditors’ Report, Consolidated Financial Statements and Notes for the Year Ended December 31, 2009 237 Branches Bank Asya Annual Report 2009 1 Innovation and strong growth Although Bank Asya is the youngest participation bank, it has achieved a solid and respected position as the sector’s fastest growing participant. The Bank is firmly committed to a strategy of sound and sustained growth, and has made it an integral part of its corporate structure. As the first participation bank to go public, Bank Asya continuously develops its product and service line up in order to meet changing needs and expectations of its customers in retail, commercial, corporate and enterprise banking business lines. Bank Asya will continue to enhance its brand value gained in domestic and international markets as an example of active participation bank with innovation and unique growth dynamics. 2 Bank Asya Annual Report 2009 Mission To contribute to shareholder value and Turkish economy by developing modern banking services within the framework of interest-free banking principles and satisfying customer needs and expectations with a “different solutions for different expectations” approach Vision To be a respected, trusted, and effective bank that provides service at world standards through the products that it develops. Bank Asya’s Objectives •To be one of the leading interest-free banks. (According to 2008 results it ranked 520th in terms of shareholders’ equity.) •To be the bank with the highest brand value in Turkey. •To rank in the forefront of companies where highly qualified professionals would strive to work. •To increase its market share. •To be a bank that pioneers innovations in its sector. •To sustain the support of social responsibility projects such as social activities and sports. Bank Asya Annual Report 2009 3 Corporate Profile Having commenced activities in 1996 as “Asya Finans”, Turkey’s sixth private finance house, Bank Asya has since then achieved a strong and respected position as the banking industry’s fastest-growing actor even though it is the sector’s newest participation bank entry. Bank Asya is firmly committed to a strategy of sound and sustainable growth, which it has made an integral part of its corporate structure. As the first participation bank in Turkey to go public in order to establish a solid and broad capital base, Bank Asya launched a 23% initial public offering in 2006. As of end-2009, 50.9% of the bank’s capital was publicly held. Supported by a multi-shareholder, domestically-financed capital structure, Bank Asya increased its paid-in capital to TRY 900 million in 2008. Bank Asya continuously develops its product and service lineup in order to meet the changing needs and expectations of its customers with a proactive approach in the retail banking, commercial banking, corporate banking, and enterprise banking business lines. As the first participation bank in Turkey to be awarded ISO 9001:2000 Quality Management System certification, Bank Asya seeks to reinforce its market share by making an ever greater effort to: • Develop interest-free banking products and come up with new derivative products in this field. • Adapt widely used banking products into the interest-free banking system. In keeping with its principle of investing in the future, Bank Asya invests both in people and in technology. It deploys advanced technology in order to continuously strengthen the momentum of its own growth by supporting youthful, dynamic, and development-focused human resources who identify with its corporate values. In 2009 Bank Asya’s “AsyaCard DIT” product received both the “Best Cash Displacement Initiative” award in the “Visa Europe Best Card & Payment Sector Awards” and the Cards & Payments Organization’s “Best New Credit Card Product Launch” award. Having expanded the scope of its delivery network through investments in technological infrastructure and alternative distribution channels in addition to its 158 branches, Bank Asya has been particularly successful in gaining increasingly more frequent recognition in recent years for the innovative payment system products that it has introduced. AsyaCard DIT (Europe’s most advanced contactless credit card) and DIT Pratik (Turkey’s first prepaid contactless bank card), both of which have been made available for the use of the bank’s customers, are but two examples of how Bank Asya continues to distinguish itself in the market. Bank Asya regards social involvement as an aspect of being a productive and profitable bank whose importance goes beyond the purely economic and financial dimensions. For this reason, it defines its strategic goals out of its awareness that its own sustainability can only be achieved by creating more value for all of its stakeholders. Transforming a business model which is based on supporting the real sector and production and which is informed by the fundamental principles of interest-free banking into an effective example of participation banking through its management competencies, funding practices, risk and quality policies, innovativeness, and unmatched growth dynamics, Bank Asya will continue to enhance the brand value that it has achieved in its national market and in the international arena. In 2009 Bank Asya increased the number of its branches from 149 to 158 with the addition of nine new ones located outside İstanbul. 4 Bank Asya Annual Report 2009 12-month rise in deposits: 56.4% Trustworthiness, sustained growth, effective risk management, business continuity, and productivity are all Bank Asya’s top strategic priorities. 22.2% 12-month rise in cash loans: 30.9% Maintaining a solid capital structure, Bank Asya increased its capital adequacy ratio to 14.45% in 2009. Posting a 22.2% rate of profitability in 2009, Bank Asya’s standing as the most profitable participation bank in Turkey has been unchallenged for the last three years in a row. DIT Pratik, Turkey’s first prepaid contactless bank card, was the undisputed leader of its category in 2009. 43.2% Extraordinary growth in total assets In the year to end-2009, Bank Asya’s total assets grew 43.2% and reached TRY 11.6 billion. This growth in the bank’s assets was nourished primarily by its loans. With nearly 51% of its stock publicly held, Bank Asya is committed to strict compliance with corporate governance principles in its ongoing efforts to maximize fulfillment of its responsibilities towards its shareholders and all other stakeholders. 51% publicly held Bank Asya Annual Report 2009 Goal To be a model bank along all three axes of quality, productivity, and profitability. 5 6 Bank Asya Annual Report 2009 The leader of participation banking… During 2009 Bank Asya sustained both its growth and its profitability in line with its identified targets thanks to its solid capital base and to its evenhanded balance sheet structure. Bank Asya remained the leader of participation banks in Turkey in 2009 in terms of total assets, total loans, non-cash loans, deposits, and net profit. It registered above sector average growth as measured by total assets, total loans, and total deposits. Total Assets Shareholders’ Equity Net Period Profit (TRY billion) (TRY billion) (TRY million) 1.7 11.6 43% 1.4 301 22% 247 22% 8.1 08 09 08 09 08 09 Bank Asya Annual Report 2009 7 Key Highlights Key Financial Highlights (TRY thousand) Total Assets Cash Loans (*) Deposits Shareholders’ Equity Paid-in Capital Non-cash Loans Net Period Profit 2008 8,108,829 6,381,322 5,842,821 1,403,692 900,000 10,215,415 246,529 2009 11,608,955 8,355,346 9,136,578 1,707,894 900,000 8,885,977 301,281 Change (%) 43.2 30.9 56.4 21.7 0.0 (13.0) 22.2 Information on Branches and Personnel Number of Branches Number of Personnel 2008 149 3,806 2009 158 4,074 Change (%) 6.0 7.0 Key Financial Ratios (%) Cash Loans/Total Assets Deposits/Total Assets Cash Loans/Deposits Return on Equity Return on Assets Capital Adequacy Ratio Shareholders’ Equity/Total Assets 2008 78.7 72.1 105.4 21.8 3.4 13.40 17.3 2009 72.0 78.8 91.5 19.4 3.1 14.45 14.7 14th In the third quarter of 2009, Bank Asya stood in 14th position among Turkey’s largest banks on the basis of its total assets. (*) including leasing receivables. Assets Composition Liabilities Composition Income Composition (%) (%) (%) 15 22 79 72 3 3 08 3 3 09 Liquid Assets Cash Loans Fixed Assets Others 72 79 6 2 15 4 17 5 08 09 Deposits Borrowings Shareholders’ Equity Other 08 58 57 26 24 16 19 09 Net Profit Share Income Net Commissions Other Income 8 Bank Asya Annual Report 2009 Bank Asya’s Standing in the Industry Total Assets-Change Cash Loans-Change (%) (%) 43 31 Deposits-Change (%) 56 30 40 30 13 14 5 7 12 Shareholders’ Equity-Change Net Period Profit-Change Non-cash Loans-Change (%) (%) (%) 30 56 28 50 13 7 7 63 63 22 19 (1) 22 10 (13) Total Loans-Change Non-performing LoansChange (%) (%) 14 56 Provisions-Change (%) 56 75 64 40 7 6 4 41 9 Bank Asya Annual Report 2009 Number of Personnel-Change Number of Branches-Change (%) (%) 7 7 6 6 3 0,43 Bank Asya Participation Banks Deposit Banks Banking Industry 2 1 Total Assets Shareholders’ Equity Net Period Profit/Loss Loans (%) (%) (%) (%) 34.5 38.6 65.5 42.5 61.4 65.3 57.5 Deposits Number of Branches Number of Personnel (%) (%) (%) 34.7 34.2 27.8 34.5 65.8 72.2 65.5 Bank Asya Other Participation Banks 10 Bank Asya Annual Report 2009 Bank Asya’s Growth Strategy Bank Asya successfully reflected its growth strategy in its 2009 results through the implementation of its insightful processes and practices. Bank Asya shapes its strategies around the underlying goal of being one of the most important brands in the participation banking business line not just in Turkey but throughout the world. Acting in line with the principles of sustainable growth whose aim is to achieve this underlying goal, the bank focuses on creating more value not just for the economy but for society as a whole. Bank Asya is committed to being a model bank along all three axes of quality, productivity, and profitability. It invests in both technology and people in order to make its proactive, customer-focused service philosophy a reality in all aspects. Bank Asya is a transparent bank which continuously improves its processes and systems in line with the requirements of the day and which embodies the very best of corporate governance principles and practices. Solid capital base 14.45% capital adequacy ratio (Tier 1) Rapid increase in deposits 56.4% rise in deposits (13th in sector) Longer average terms on deposits 100+ day average deposit maturity High liquidity 106.2% rise in liquid assets Sustainably high profitability 22.2% increase in net profit 19.4% return on equity Effective credit and risk management Deeper customer relations 30.9% growth in cash loans Increased diversity in loans 13th in cash loans High rate of NPL recovery 5.3% ratio of NPL/cash loans Lower NPL ratio 2.6% ratio of NPL/total loans Increased loan loss reserves 70.7% NPL coverage Effective product and brand management Growth in innovative products Greater brand awareness (Sponsorships and effective advertising and promotion) Success Effective Effective resource management AsyaCard DIT: Leader of the contactless card market with two international awards 25% rise in credit card turnover 10th in sector with 1.5 million credit cards High profile with Bank Asya 1st League (Soccer league) Bank Asya Annual Report 2009 Bank Asya’s Competitive Advantages • Leader among participation banks as measured by total assets, deposits, loans, and profitability • Experienced in crisis management • Qualified young staff • Customers trust Bank Asya • Dynamic, growing structure • Fast and efficient technology deployment • Leader in innovation • Strong team spirit and sense of identity throughout the bank Bank Asya’s Strategic Orientation in 2010-2014 Trustworthiness, stable growth, effective risk management, business continuity, and productivity are Bank Asya’s top strategic priorities. Having clearly and explicitly defined its objectives in line with its corporate vision, Bank Asya groups its strategies to achieve those objectives under four main headings: • Financial • Operational excellence • Stakeholders • Personnel & progression In the same way, Bank Asya has laid out a five-year roadmap whose course is defined by these strategies. Sustainable growth and profitability Increase use of technology Strengthen financial structure Increase effectiveness of business processes Targets concerning subsidiaries and affiliates Increase effectiveness of risk management practices OPERATIONAL EXCELLENCE FINANCIAL STABLE GROWTH EFFECTIVE RISK MANAGEMENT TRUST PRODUCTIVITY BUSINESS CONTINUITY PERSONNEL & PROGRESSION STAKEHOLDERS Increase employees’ knowledge levels Maximize customer satisfaction Increase employees’ communication effectiveness and competencies Offer different solutions capable of addressing different customer expectations Broaden strategy- and performance-focused management Ensure sustainable dividend payment to shareholders 11 12 Bank Asya Annual Report 2009 Asya Finans Kurumu AŞ (Asya Private Finance House Inc) commences operation on 24 October 1996 1996 Asya Finans is brought within the scope of the Banks Act. 1999 Alo Asya (444 4 888) telephone banking services are launched. 2000 The Asya Finans online branch goes into service. 2004 Bank Asya Annual Report 2009 13 Highly impressive performance Bank Asya is cited in The Banker magazine’s list of the world’s 1,000 biggest banks for its highly impressive performance. 2009 2008 The new headquarters building goes into service. 2007 AsyaCard DIT (Europe’s most advanced contactless credit card) and DIT Pratik (Turkey’s first prepaid contactless bank card) are made available for the use of the bank’s customers. With an IPO in which 23% of its shares are snapped up due to recordbreaking demand, Bank Asya goes public. 2006 2005 It is decided to continue Asya Finans’s operations as “Bank Asya”. 13th year Originally founded with TRY 2 million in capital, Bank Asya commenced operation on 24 October 1996 with its main branch located in the Altunizade district of İstanbul. Now in its 13th year, it is a strongly funded bank with a capital of TRY 900 million. 14 Bank Asya Annual Report 2009 The youngest and fastest-growing… Having commenced operation in 1996 as “Asya Finans”, Turkey’s sixth private finance house, Bank Asya has since then achieved a strong and respected position as the banking industry’s fastest-growing actor even though it is the sector’s newest participation bank entry. Bank Asya Annual Report 2009 15 History 1996 Originally founded with TRY 2 million in capital, Asya Finans Kurumu AŞ (Asya Private Finance House Inc) commences operation on 24 October 1996 with its main branch located in the Altunizade district of İstanbul. 1997 The number of branches reaches 15. The company’s paid-in capital is increased to TRY 40 million. The number of branches reaches 43. 2004 Alo Asya (444 4 888) telephone banking services for retail and corporate customers are launched. 2007 Continued heavy trading in ASYAB shares results in their inclusion in the ISE-30 index. The company’s new headquarters building in the Ümraniye district of İstanbul goes into service. The number of branches reaches 118. 1998 The company undergoes a headquarters reorganization in which the number of units is increased to 24. 2008 The number of branches reaches 16. Asya Finans joins the Joint Point system, enabling its customers to access their accounts from any of more than 2,400 Joint Point ATM units located all over the country. The company undergoes a headquarters reorganization in which the number of units is increased to 40. Asya Finans launches the Asya Finans credit card for its customers. 1999 Asya Finans is brought within the scope of the Banks Act. The company’s paid-in capital is increased to TRY 10 million. 2000 The Asya Finans online branch goes into service. The number of branches reaches 25. 2001 The company’s paid-in capital is increased to TRY 120 million. The number of branches reaches 62. 2005 As a result of amendments in the Banks Act, private finance houses are given a year’s time during which they must bring themselves into compliance with “participation bank” status. The Association of Private Finance Houses is set up and a Guarantee Fund is formed. Control of the Guarantee Fund is turned over to the Savings Deposit Insurance Fund. The company’s paid-in capital is increased to TRY 20 million. Asya Finans Kurumu AŞ is reincorporated as Asya Katılım Bankası AŞ. (Asya Participation Bank Inc) and it is decided to continue Asya Finans’s operations as “Bank Asya”. 2002 The company launches an installment-based credit card and the ASYA24 ATM network for its customers. “Regulations concerning the Private Finance House Private Current and Participation Account Guarantee Fund” go into effect on September 18th. The company’s paid-in capital is increased to TRY 40 million. The number of branches reaches 28. 2003 Asya Finans is licensed by the finance ministry to accept tax payments. Asya Finans customers begin making credit card payments and money transfers through online PTT offices located all over the country. Asya Finans joins the VISA system on October 24th. The company’s paid-in capital is increased to TRY 240 million. The number of branches reaches 72. 2006 Bank Asya increases its paid-in capital to TRY 300 million as a result of an initial public offering in which 23% of its shares are snapped up due to record-breaking demand. Bank Asya begin trading on the İstanbul Stock Exchange under the ASYAB ticker symbol on May 12th. Heavy trading in the company’s shares qualifies it for inclusion in the ISE-50 index of most-traded shares by the end of the same year. Bank Asya celebrates its 10th year in the financial services industry. The number of branches reaches 92. Bank Asya becomes a named sponsor of the Turkish Football Federation 1st League. AsyaCard DIT (Europe’s most advanced contactless credit card) and DIT Pratik (Turkey’s first prepaid contactless bank card) are made available for the use of the bank’s customers. With the launching of the first transportation system project in the city of Kahramanmaraş in southeastern Turkey, people begin using AsyaCard DIT to pay bus fares. The company’s paid-in capital is increased to TRY 900 million. The number of branches reaches 149. 2009 The number of cities in which municipal bus fares can be paid using AsyaCard DIT reaches four with the introduction of the system in Karabük, Balıkesir, and Bolu. AsyaCard DIT receives both the “Best Cash Displacement Initiative” award in the “Visa Europe Best Card & Payment Sector Awards” and the Cards & Payments Organization’s “Best New Credit Card Product Launch” award. The AsyaCard website located at www. asyacard.com.tr receives the “Best in Class” award from Interactive Media. Bank Asya signs a strategic partnership agreement with the Islamic Corporation for the Development of the Private Sector (ICD), an agency of the Islamic Development Bank (IDB), and becomes a shareholder in Tamweel Africa Holding SA, a Senegal-based company that engages in interest-free banking in Africa. The number of branches reaches 158. Bank Asya is cited in The Banker magazine’s list of the world’s 1,000 biggest banks for its highly impressive performance. 16 Bank Asya Annual Report 2009 Changes in Capital and Shareholder Structure During the Reporting Period 255 Bank Asya has a broadbased, multi-shareholder, domestically-financed capital structure. The closely-held portion of the company’s capital was divided among 255 shareholders who are the direct owners of preference shares. Bank Asya’s shareholder structures at the beginning and end of 2009 are shown in the table below. 1 Jan 2009 % 31 Dec 2009 % Group A (preference shares) 360,000,000 40.00 360,000,000 40.00 Group B (not traded on ISE) 130,504,653 14.50 82,014,186 9.11 Group B (traded on ISE) 409,495,347 45.50 457,985,814 50.89 Total 900,000,000 100.00 900,000,000 100.00 Shareholding interests held by Chairman and members of the Board of Directors, CEO and Executive Vice Presidents Statements concerning the shareholding interests belonging to the Chairman and members of the Board of Directors, CEO and Executive Vice Presidents as shown in its shareholders’ register as of 31 December 2009 are presented below. Title Name/Surname Ownership in the bank (%) Chairman Tahsin Tekoğlu (*) 0.0050 Board Members Cemil Özdemir (**) 0.0026 Tacettin Negiş (***) 0.2467 Salih Sarıgül 0.4983 Ahmet Çelik 0.4467 Murat Sungurlu 0.1073 Board Member and CEO Ünal Kabaca (**) 0.0267 Executive Vice Presidents Ayhan Keser 0.0069 Mustafa Büyükateş - Yusuf İzzettin İmre - Buket Gereçci - Dr. Mahmut Demirkan - Ali Tuğlu - Group Manager Salim Köse - Statutory Auditors Ali Akbulut 0.0002 Atıf Bilgin 0.3057 İrfan Hacıosmanoğlu 2.0068 (*) Tahsin TEKOĞLU resigned from both his seat on the Board of Directors and his position as Chairman of the Board of Directors as of 12 February 2010. Behçet AKYAR was elected to replace him as : Chairman of the Board of Directors while İsmail Erol İŞBİLEN was elected to serve both as director and Audit Committee member. (**) Ünal KABACA resigned from both his seat on the Board of Directors and his position as CEO as of 28 January 2010. Deputy Chairman of the Board of Directors Cemil ÖZDEMİR was elected to replace him as CEO while Behçet AKYAR was elected to a seat on the board. (***) Tacettin NEGİŞ was elected to serve as a member of the Audit Committee as of 12 February 2010. Bank Asya Annual Report 2009 17 Names and Shareholding Interests of Shareholders Who Own Qualified Shares The names of ultimate controlling real-person shareholders who are registered in Bank Asya’s shareholders’ register as of 31 December 2009 and whose direct and indirect ownership of Group A preference shares entitles them to designate candidates to fill seats on the Board of Directors and Audit Committee as per articles 32 and 49 of the articles of association are presented below. (*) (**) No Name/Surname Share in the Bank (%) No Name/Surname Share in the Bank (%) No Name/Surname Share in the Bank (%) Tuncay Baydak 0.0500 71 Sadi Çakar 0.1000 37 Bahri Bayram 0.0272 72 Şerafettin Çakar 0.1250 38 M. Salih Bayram 0.0272 73 İbrahim Çakır 0.0500 39 Mehmet Emin Bayram 0.0685 74 Ahmet Hamdi Çakmaz 0.2012 40 A. Selçuk Berksan 1.4960 75 Ahmet Çelik 0.5844 0.4872 41 Ahmet Levent Berksan 1.1362 76 Ahmet Çelik 0.0500 Ali Ağaç 0.0000 42 Ayse Tülin Berksan 0.0494 77 Hüseyin Çelik 0.2500 Recep Ağaç 0.0000 43 Bülent Berksan 1.4325 78 Mustafa Çelik 0.0025 1 Işıl Abay 2 Adem Acar 0.2417 3 Lutfi Acet 0.0242 4 Ali Açıl 0.0448 5 Elif Adıyaman 0.0365 6 Kazım Afşar 7 8 9 Yalçın Akarsu 10 Ali Akbulut 11 0.3717 36 0.1517 44 Fatma Emine Berksan 2.5000 79 Ömer Lütfi Çelik 0.0002 13.2858 45 Mehmet Sinan Berksan 1.6667 80 Saffet Çerçi 0.2000 Cemil Akbulut 0.0010 46 Mehmet Berksan 1.4325 81 Doğan Çetin 0.0500 12 Fikri Akbulut 3.0534 47 Ömer Faruk Berksan 0.5129 82 Cengiz Çırak 0.0508 13 Hakan Cem Akbulut 1.0002 48 Atıf Bilgin 0.5900 83 İsmail Cem Çitak 0.0308 14 Mustafa Akbulut 0.0333 49 Mustafa Bilgin 0.0500 84 Cahit Değerli 0.0019 15 Şükran Akbulut 0.0050 50 Ayşe İfakat Bilginoğlu 0.3783 85 Mustafa Demir 0.0500 16 Mehmet Akçay 0.0292 51 Elif Bilginoğlu 0.3717 86 Yüksel Demirci 0.0278 17 Ahmet Akgül 0.0049 52 Faruk Bilginoğlu 0.3783 87 Duygu Demirel 0.0365 18 Zeki Murat Akhan 0.0461 53 Ömer Bilginoğlu 0.5575 88 Zeki Demirtaş 0.2500 19 Ali Akın 0.3015 54 Rıfat Bilginoğlu 0.5575 89 Kamil Dere 0.0300 20 Adnan Aksoylar 0.1731 55 Nur Bilginoğlu Anaç 0.3717 90 Niyazi Dere 0.0656 Ethem Dizdar 0.0500 21 Erol Aktürk 0.0750 56 Osman Nuri Bora 0.0125 91 22 Nuri Alım 0.0825 57 Ali İhsan Bostan 0.5033 92 Mehmet Semih Doğan 0.1000 23 Fehim Arıcı 1.5500 58 Turan Boztepe 0.0000 93 Hüseyin Duğral 0.0167 24 Hüsamettin Arlı 0.0010 59 E. Altan Bursal 0.0001 94 Mustafa Duğral 0.2567 25 Mehmet Artukaslan 0.0834 60 S. Atilla Bursal 0.0000 95 Nuri Duman 0.4548 26 Mustafa Atçı 0.0029 61 Aykut Büyükekşi 0.2500 96 Yusuf Durmuş 0.0500 27 Zehra Aydın 0.2419 62 Yavuz Canikli 0.4375 97 Soner Eken 0.0500 28 Aydan Aydın Sağlık 1.6533 63 Mustafa Cemaloğlu 0.5000 98 Mehmet Eldem 0.0331 29 Erdal Babadağ 0.0128 64 Halil İbrahim Ceylan 0.2500 99 Kemal Elibal 0.4442 30 Recep Bahtiyar 0.0500 65 Kadir Ceylan 0.0667 100 Yalçın Ercan 0.1083 31 Nüsret Barış 0.0167 66 Hakkı Coşkun 0.1933 101 Nurettin Eroğlu 0.1936 32 Zübeyir Barış 0.0500 67 Mehmet Coşkun 0.1933 102 Yavuz Eroğlu 1.4500 33 Ziya Başcı 0.0333 68 Abdurrahman Çakar 0.1250 103 Mehmet Şevki Erol 0.1583 34 Ahmet Başoğlu 0.2075 69 Hadi Çakar 0.1000 104 Avni Ertansel 0.0500 35 Arif Başoğlu 0.0278 70 Mustafa Çakar 0.1250 105 Mehmet Fayik Esen 0.0500 (*) In the case of shareholders who are corporate entities, the real-person ultimate controlling individuals have been identified as persons holding indirect shareholding interests in the bank. (**) The shareholding interests of Group A shareholders which are less than 1/100,000 are represented as “0”. 18 Bank Asya Annual Report 2009 Changes in Capital and Shareholder Structure During the Reporting Period No Name/Surname Share in the Bank (%) No Name/Surname Share in the Bank (%) No Name/Surname Share in the Bank (%) 106 Sabri Esen 0.0500 147 Celal Karayol 0.3333 188 Mehmet Salih Konakçı 0.5110 107 Ahmet Evci 0.1000 148 Emre Katırcı 0.0750 189 Abdulkadir Konukoğlu 5.5800 108 M. Abdulcebbar Ezgin 0.1000 149 Mehmet Katırcı 0.1625 190 Abdurrahman Kopuz 1.1000 109 Memet Fırat 0.0611 150 Mustafa Şevki Kavurmacı 0.1244 191 Musa Korkmaz 0.0500 110 Adnan Osman Güldaş 0.0000 151 A. İskender Kaya 0.0001 192 Mustafa Aydın Koyuncu 0.8000 111 Yılmaz Güldaş 0.0508 152 Adem Kaya 0.0015 193 Metin Kulaberoğlu 0.1000 112 Ali Gülen 0.2012 153 Ali İhsan Kaya 0.0014 194 Burhan Kurt 0.1258 113 İlhami Gülen 0.2012 154 Alpaslan Kaya 0.0014 195 Hasan Kurt 0.0500 114 Mehmet Gülen 0.2012 155 Aynihal Kaya 0.0026 196 Turan Kurt 0.1258 115 Sadık Gülen 0.2012 156 Bayram Kaya 0.0024 197 Yalçın Atilla Kurtuluş 0.0219 116 Yusuf Gülen 0.2012 157 Celal Kaya 0.0015 198 Avni Kuşol 0.0600 117 Faik Gün 0.0500 158 Cengiz Kaya 0.0041 199 Hasan Kuşol 0.0667 Hüseyin Kuşol 0.0750 118 Emine Gündüz 0.0547 159 Coşkun Kaya 0.0026 200 119 Rıdvan Güngör 0.0500 160 Etem Kaya 0.0015 201 Mesut Kuşol 0.0600 120 Cemil Gürleroğlu 0.0500 161 Gül Kaya 0.0016 202 Selahaddin Kuşol 0.0600 121 Fevzi Gürses 0.0003 162 Gülten Kaya 0.0033 203 Hasan Kutlutaş 0.0500 122 Hüseyin Güzel 0.0875 163 Hakan Kaya 0.0002 204 Kamil Yavuz Malkatan 0.0278 123 İrfan Hacıosmanoğlu 2.1561 164 Halit Kaya 0.0055 205 Cengiz Manav 0.0020 124 Mehmet Emin Hasırcılar 0.2308 165 Hasan Kaya 0.0039 206 Ahmet Metin 0.0143 125 Derviş İnce 0.0500 166 Hayati Kaya 0.0015 207 Ahmet Mutafoğlu 0.0000 126 Ünal Kabaca 0.0000 167 Hayri Kaya 0.0015 208 İlhami Negiş 0.3749 127 Eyyup Kadıoğlu 0.1250 168 İlgül Kaya 0.0001 209 Nermin Negiş 0.1095 128 Makbule Kadıoğlu 0.1250 169 İskender Kaya 0.0024 210 Tacettin Negiş 4.5043 129 Mehmet Murat Kadıoğlu 0.0132 170 İslam Kaya 0.0200 211 Kemal Övün 0.0276 130 Mehmet Kafarcı 0.5000 171 İsmail Hakkı Kaya 0.0076 212 Fazlı Özalp 0.0000 131 Mevlüt Kaklık 0.2000 172 Nesrin Kaya 0.0000 213 Abdullah Özata 0.0125 132 Cemal Kalafat 0.0222 173 Şenay Kaya 0.0017 214 Adnan Özata 0.0021 133 Ayhan Kalaycı 0.0250 174 Şükrü Kaya 0.0074 215 Ahmet Özata 0.0021 134 Erhan Kalaycı 0.0250 175 T. Bayram Kaya 0.0001 216 Erol Özata 0.0021 135 Muammer İhsan Kalkavan 2.2578 176 Kadir Kayalı 0.5025 217 Hürriyet Özata 0.0058 136 Kamil Kandemir 0.0087 177 Hüseyin Kayıkçıoğlu 0.0500 218 Mustafa Özata 0.0372 137 Mehmet Emin Kara 0.2000 178 Hasan Keklik 0.0500 219 Yakup Özata 0.0021 138 Müyesser Karadayı 0.6944 179 Kenan Kelekçi 0.2992 220 Ramis Özaydın 0.0500 139 Gülsüm Betül Karagöz 0.8988 180 Ayhan Keser 0.0000 221 Mustafa Özaydınlık 0.0000 140 Sami Karahan 0.0608 181 Vildane Kılıç 0.1250 222 Şükrü Murat Özcan 0.0500 141 Maksut Karakaya 0.0123 182 Hasan Kırgöz 0.0258 223 Cemil Özdemir 0.0000 142 Murat Karakaya 0.0123 183 İsmail Kırgöz 0.2000 224 İdris Özdemir 0.3871 143 Sadık Mutlu Karakaya 0.0067 184 Nail Kıygın 0.8839 225 Mustafa Kemal Özdemir 0.0050 144 Salih İhsan Karakaya 0.0067 185 Mesut Kızılhisar 0.3250 226 Recep Özdemir 0.0056 İsmail Özen 0.5000 Enver Özeren 0.0500 145 Fahri Karatay 0.0862 186 Mustafa Koç 0.2569 227 146 Hasan Karatay 0.8758 187 Mehmet Nevzat Koçak 0.0500 228 19 Bank Asya Annual Report 2009 No Name/Surname Share in the Bank (%) No Name/Surname Share in the Bank (%) 229 Rafet Özeren 0.0500 271 Ali Cem Tekoğlu 0.0107 230 Osman Gürbüz Özkara 0.0583 272 Ömer Tekoğlu 0.0781 231 Fatih Özkaragöz 0.2767 273 Tahsin Tekoğlu 0.1901 232 Kemal Özkaragöz 0.1000 274 Ergin Tonyalı 0.0500 233 Ali Özturan 0.0221 275 Kamil Topçu 0.1425 234 Ali Öztürk 0.0079 276 Murat Toplaoğlu 0.0080 235 Zekai Öztürk 0.0437 277 Ümit Topuz 0.1000 Mehmet Torun 0.0700 Information on Titles and Shares of Shareholders holding Preferred Shares Name/Surname No Trade Name Share in the Bank (%) 1 Birim Birleşik İnşaatçılık Mümessillik San. ve Tic. A.Ş. 4.9398 2 BJ Tekstil Ticaret ve Sanayi A.Ş. 5.0000 3 Forum İnşaat Dekorasyon Turizm San. ve Tic. A.Ş. 6.2681 4 Galaksi İnşaat Tek. San. A.Ş 0.5000 236 Osman Can Pehlivan 4.0000 278 237 Rahmi Peker 0.5000 279 Sadık Tuğcu 0.2500 238 Meral Pişan 0.0708 280 İbrahim Tulum 0.0625 239 Onur Pişan 0.1250 281 Ahmet Tuna 0.0500 240 Sibel Pişan 0.0833 282 Haluk Tunçak 0.0889 241 Uğur Pişan 0.1250 283 Ahmet Turalioğlu 0.0367 242 Sinan Saraç 0.1000 284 Mehmet Hanifi Turalioğlu 0.0367 243 İrfan Sarı 0.0000 285 Ömer Turalioğlu 0.0367 244 Salih Sarıgül 0.1198 286 Vural Tutak 0.0468 245 Ahmet Sarıkaya 0.0131 287 Kazım Türkkaynağı 0.0083 246 Kadri Sarıkurt 0.1000 288 Ahmet Tüysüz 0.1000 247 Asım Sayın 0.4150 289 Mahmut Nedim Uğur 0.0125 248 Hasan Sayın 4.4354 290 Murat Ulus 0.0003 249 İbrahim Sayın 3.5218 291 Mustafa Nazım Ulusoy 0.1250 250 Burak Serdaroğlu 0.1268 292 Erdoğan Ustaömer 0.0500 251 Semih Serhatlıoğlu 0.0003 293 Ali Rıza Uysal 0.0500 252 Salih Seyhan 0.0023 294 Mehmed Uzun 0.2500 253 Osman Sezer 0.0500 295 Salih Uzunlar 0.0067 254 Arzu Silahtar 0.3783 296 Savaş Ünal 0.0761 No Trade Name 255 Murat Sungurlu 0.3683 297 Ahmet Ruhi Ünlü 0.0896 1 Forum İnşaat Dekorasyon Turizm 256 Hüseyin Fikret Şahinbaşoğlu 0.0003 298 Mustafa Ünlü 0.0000 257 M. Talha Şahsuvaroğlu 0.0603 299 Nesrin Vural 0.0025 2 İbrahim Arı 0.8423 258 Orhan Şeker 0.1917 300 Mustafa Vuran 0.0458 3 Asım Sayın 0.0500 259 Yaşar Şeker 0.0021 301 Ali Yarkın 0.4872 4 Hasan Sayın 0.0222 260 Harun Şimşek 0.4000 302 Ahmet Yaşar 0.0150 5 Burhan Kurt 261 Namık Kemal Şimşek 0.1250 303 Niyazi Yıldırım 0.0500 262 Sebahat Şimşek 0.0500 304 Mehmet Yılmaz Yıldız 0.3651 Şenol Yıldız 0.0500 263 Abdülvahit Tabakçı 0.0107 305 264 Cemil Tan 0.0825 306 Hasan Yılmaz 0.0500 265 Halis Tan 0.3297 307 İbrahim Yöndem 0.0333 266 Seyyithan Tan 0.3433 308 Muammer Yurtsever 0.0000 267 Ali Rıza Tanrıseven 0.9257 309 Mehmet Fevzi Yüce 0.0288 268 Mehmet Tari 0.2500 310 Others 0.0285 269 Aşır Taşkıran 0.0500 BDDK İzni Beklenenler 4.3565 270 Mehmet Sıddık Tekin 0.3312 5 Karakaya Yedek Parça ve Otomotiv San. Tic. Ltd. Şti. 0.0449 6 Koçkaya Motorlu Araçlar San. ve Tic. A.Ş. 0.0656 7 Linateks Tekstil İthalat İhracat Sanayi ve Ticaret Limited Şirketi 0.2500 8 Meltem Turizm İnş. Tic. A.Ş. 0.0210 9 Negiş Giyim İmalat ve İhracat A.Ş. 0.1806 10 Ortadoğu Tekstil Tic. San. A.Ş. 10.5535 11 Serra Turizm Ltd. Şti 4.1667 12 Teksen Tekstil End. A.Ş. 0.2676 13 Verim Plastik İth. Mad. A.Ş. 0.4167 Group A pending as of December 31, 2009 for approval from BRSA Name/Surname Share in the Bank (%) San. ve Tic. A.Ş. Total 3.4337 0.0083 4.3565 Changes Made in the Articles of Association in 2009 In 2009, no changes were made in the Bank’s Articles of Association. 20 Bank Asya Annual Report 2009 A Message from Tahsin Tekoğlu Esteemed Bank Asya shareholders: Effective 12 February 2010 I have resigned from the position of Chairman of the Board of Directors which I have held since 2004. I would therefore like to take this occasion to share my thoughts with you briefly. Backed by the strong financial and operational structure, the knowledge and experience, the corporate competencies, and–most important of all–the brand that it has built up in the brief time since it was founded, Bank Asya is embarking upon a process of much rapider growth and development in 2010. In this process, our bank’s dedicated employees will continue to provide solutions specially designed to meet the needs of our millions of customers and to demonstrate the Bank Asya difference while remaining firmly committed to our principles and performing their jobs with zeal. Both the consistent performance that it has demonstrated during the last seven years and the huge potential that it harbors have made our national economy a focal point of attention not just at the regional level but on a global scale as well. Bank Asya is ready to take maximum advantage of the growth and new business opportunities that markets will be revealing in the near future and to transform such potential into performance. I want to extend my gratitude to all members of the Board of Directors with whom I have worked in such perfect harmony during my term of office. Similarly I also sincerely thank our professional senior management teams and all my colleagues for their great efforts in making Bank Asya a “model of success”. I wish our bank’s new board chairman my heartfelt success. I have every reason to believe that he will be administering our bank in the very best and soundest way during his term at the helm. Tahsin Tekoğlu Chairman of the Board of Directors (Until 12 February 2010) Bank Asya Annual Report 2009 21 A Message from the Board of Directors Esteemed shareholders: We have completed a year which suffered from the effects of an economic crisis that shook the whole world and will forever be remembered in the history of the international economy and which for us was marked by both difficulties and successes. 2009 will have a special place for us in the future as the year in which Bank Asya reached an important stage in its upward progress while proving its performance under the most critical of conditions. We may say that the process referred to as the “global crisis” was the outcome of flaws in the structure of the international financial system and that this structure failed because it no longer inspired confidence. The international consensus of opinion and action that emerged with respect to remedies to get out of the crisis and to deal with its aftermath may be regarded as one beneficial result to come out of that process. Nevertheless it would not be a mistake to say that the most striking outcome of the crisis has been a change in consumer behavior in the United States and other developed countries–which is to say cutbacks in consumption and a heightened propensity to save. 22 Bank Asya Annual Report 2009 A message from the Board of Directors The next period should not pose problems for the sector as banks maintain high levels of capital adequacy and liquidity ratios. As of the third quarter of 2009 it appeared that the global economy had begun to emerge from recession and that the crisis was giving way to recovery, however slowly that might be. An increasingly important consideration in this process was the need for governments and monetary authorities to act without haste and deliberation in winding up their support plans in order to head off the risks that markets might lose confidence and that macroeconomic balances might be upset once again. For participation banks, events unfolded somewhat differently. Participation banks’ funding costs did not drop as fast as did those of commercial banks due to the effects of their different business models. For this reason the dividends paid out by participation banks were well above those of commercial banks even as the latter cut their interest rates last year. Although the overall growth in lending throughout the banking industry remained flat in 2009, participation banks actually increased their credit volumes. Turkey’s economy and banking sector encountered this latest global crisis under relatively better conditions thanks to the experience which had been gained in the 2001 crisis and to changes which had been made in light of that experience. Banks in Turkey not only possessed high levels of liquidity, strong capital structures, high levels of debt serviceability, good-quality asset portfolios, and high capital adequacy ratios but were also paying attention to risk management, internal control, and corporate governance while the banking system as a whole was not seriously encumbered by an uncovered foreign exchange position. Such factors made the country’s banking sector more resilient when dealing with the difficulties posed by the crisis. Looking at asset quality, the anticipated growth in non-performing loans turned out to be much less than pessimistic projections had thought it would be. BRSA regulation and loan restructurings by banks in support of corporate clients undoubtedly played a great role in this development. Banks in Turkey had a rather good year in 2009, particularly in terms of profitability. The Central Bank cut interest rates drastically, which reduced the cost of banks’ resources to quite reasonable levels. At the same time, banks also booked substantial profits thanks to the returns that they received on the increasingly higher proportion of their portfolios consisting of high-interest securities. The next period should not pose problems for the sector as banks maintain high levels of capital adequacy and liquidity ratios. No one however should harbor any hopes of achieving the same high level of profitability as in 2009. From the second half of 2010 on, banks will respond to the expected recovery in the real sector by lending increasingly more of the liquidity that they have been holding onto. In their efforts to make up for profit margins made thinner by lower interest yields on their security portfolios, all banks will try to play a more active role in the credit market, with particular emphasis being given to lending to the retail and small-business segments. We are putting our knowledge and experience to work for the prosperity of our country’s economy and people. Our bank is the strongest representative in our country of participation banking, a financial system business model which is being held in increasingly higher esteem as its value becomes better understood. Our bank continued to grow and perform soundly in 2009 and it posted balance sheet results that put it in the front ranks of the sector. Bank Asya Annual Report 2009 top 10 Bank Asya’s corporate governance practices, its transparency, and its accountability have earned it a place among the top ten companies included in the ISE-30 banking industry index. Bank Asya acts in accordance with the realities both of Turkey and of its sector. Due to the nature of our business model, our core business activity is lending and for that reason we regard ourselves as an essential element of the production process. We see participation banking as the best recipe for production sector growth. Deploying it to support enterprises and to grow along with them as business partners is the way to open the path to our own success. Our bank continued to supply funding to the real sector without interruption even under economic crisis conditions as a financial institution which has an advanced credit culture and which works with firms of every size. Indeed the remarkable growth in our cash loans last year is the clearest possible expression of just this approach on our part. Bank Asya is the newest entry into the business of participation banking but it is also the bank that has been growing the fastest and making the most progress. Sound and determined steps in the direction of institutionalization have made as much of a contribution to our bank’s success as have the knowledge and experience of our professional staff. With a significant proportion of its stock publicly traded, Bank Asya’s corporate governance practices, its transparency, and its accountability have earned it a place among the top ten companies included in the ISE-30 banking industry index. We invest in the future. Bank Asya plans to continue pursuing organic growth in 2010. The engine of that growth once again will be our investment in people and technology, which is to say our investment in the future. Our bank ranks first among participation banks in terms of the number of people it employs and among the top contenders in terms of the average number of personnel per branch. The projects that we have carried out are proof that our intention to lead the way in innovation by supporting our progressive human resources with technology is no dream. 23 Nor are our investments in the future limited exclusively to our bank. Bank Asya continued to give importance to social responsibility projects in 2009 and it played an active role in efforts in many different areas such as education, environment, culture, and art by supporting projects and events that make a contribution to social wellbeing. The key to our success is believing: Believing that we are going to be successful and acting out of shared wisdom and values… None of our successes have been by chance. They are all the outcome of a strategy that has been thought over, laid out, and implemented in the finest detail. In everything that we have accomplished and will accomplish, our biggest mainstays are first of all our commitment to solid growth, into which we have channeled all of our energies and on which we are focused, and secondly our team of experts who have the ability to duly carry out our strategies. In conclusion I offer my deepest thanks to everyone who has contributed towards our superior success as well as to all our other stakeholders. Behçet Akyar Chairman of the Board of Directors (Since 12 February 2010) 24 Bank Asya Annual Report 2009 A Message from Ünal Kabaca Esteemed Bank Asya customers and colleagues: Effective 28 January 2010 I have relinquished my position as a CEO of Bank Asya, a responsibility that I have held for ten years, to my esteemed colleague Cemil Özdemir. I am convinced that under the guidance of its new CEO and through the peerless efforts and contributions of its professional management team and strong human resources, our bank will continue to advance and to be our country’s leading participation bank in 2010 and the years that follow. At a time when structural strength and institutionalization have become more important than ever, Bank Asya continues to produce increasingly more value as much for all of Turkey as for its stakeholders through its superior competencies and the human resources that represent its most precious asset. Keeping productivity and effectiveness in the forefront of everything that it does, our bank is also an exemplary and responsible corporate citizen both in its sector and in its country. Although my term of office is over, I wish to make it clear that I shall continue to be the most faithful supporter of the mission and vision which we hold in common at Bank Asya and that I shall be proud to contribute both my knowledge and my efforts on behalf of the bank whenever you may be in need of them. Ünal Kabaca CEO (Until 28 January 2010) Bank Asya Annual Report 2009 CEO’s Message Esteemed shareholders: Although 2009 was a difficult year for the world’s economies, the Turkish banking sector as a whole successfully demonstrated its mettle during the crisis. Through the prudent policies that they adhered to, Turkish banks strengthened both their equity and their profitability and indeed their crisis management abilities are being pointed to as models for banks elsewhere to follow. As a consequence of their business model and principles, participation banks do not maintain portfolios of fixed-income securities. Their lending therefore increased at a rate above the banking sector’s average last year as they continued to supply the real sector with even more financial support. 25 26 Bank Asya Annual Report 2009 CEO’s Message During 2009 Bank Asya maintained both its profitability and its growth in line with its stated targets thanks to its strong capital base and to its balanced balance sheet structure. Bank Asya successfully defended its leading position among participation banks in terms of total assets, loan placements, non-cash loans, deposits, and net profit while registering above sector average rates of growth in total assets, loans, and deposits. According to third quarter 2009 figures, Bank Asya ranked 14th among Turkey’s biggest banks from the standpoint of total assets. 15% The shareholders’ equity that makes up 15% of its total assets is one of the best evidences of the bank’s healty financial structure. Full support for the real sector Bank Asya’s total assets reached TRY 11.6 billion in value in 2009, a figure that corresponds to a yearon-year rise of 43%. The growth in the bank’s assets stemmed largely from increased lending, with loans making up fully 72% of the overall total. Continuing to provide its customers with credit support at an ever-increasing rate at a time when the effects of the international financial crisis were felt, Bank Asya demonstrated its ability to stand by them even during hard times while successfully expanding its total lending by 31% in a year when the total volume of banking sector loans increased by only 6.9%. Last year Bank Asya also expanded its cash loan portfolio while registering a 5.3% rate of growth in its NPLs, a figure that is consistent with the sectoral average. Deposits received were once again the most important source of Bank Asya’s funding resources in 2009. Such deposits were up 56% last year, going from TRY 5.8 billion in 2008 to TRY 9.1 billion in 2009. This rise is clear evidence of the confidence that customers have in Bank Asya during such a fraught period of time. The most profitable participation bank for 3 years in a row In the 12 months to end-2009 our net profit was up 22% and reached TRY 301 million. By successfully increasing its profitability by such a figure at a time when inflation was in the single-digit range, Bank Asya ranked as Turkey’s most profitable participation bank for the third year in a row. Dividend income received from having lent out the additional resources resulting from the 56% rise in deposits together with commission earnings on non-cash loans were the two main sources of the bank’s profitability. As a result of all these developments, our bank posted a 19.4% return on equity and a 3.1% return on assets. The high dividends earned by the bank as a result of its productive lending policies made it possible for its customers to secure high returns on their participation accounts as well. One outcome of this was that the average length of term on deposits held by the bank was also above the sectoral average. As a result of a more prudent lending policy that gave importance to liquidity, the ratio of loans to deposits was down to 91% in 2009 from 109% in 2008. To put it another way, Bank Asya continued to support its customers financially despite its heightened sense of cautiousness. With such a large influx of deposits and in view of the needs of the business climate, Bank Asya chose to pursue growth in cash loans in 2009. One outcome of this conscious decision was a 13% year-on-year decline in non-cash loans. Another reason for this contraction in non-cash loans was the bank’s strategy of maintaining its capital adequacy ratio at around the 15% or so level. Despite our decision to reduce our non-cash loan exposure, there was a noteworthy 22% rise in income received on such placements. Last year Bank Asya successfully maintained its fourthplace position in the banking industry in terms of letters of guarantee issued. A sound and strong capital structure Regulatory authorities in Turkey approach the matter of capital adequacy with prudence and have therefore set a minimum 12% requirement, four points above the 8% ratio that is generally recognized as acceptable elsewhere in the world. Bank Asya for its part has decided that an even higher capital adequacy ratio, on the order of 14.45%, is an optimum level that is more in line with its need to make productive use of its deposits combined with its own sense of prudence. Maintaining its strong capital structure, Bank Asya’s profitability also contributed to the 22% year-on-year rise in its equity, which reached TRY 1.7 billion. No letup in planned organic growth In light of its strategy of controlled, deliberate growth and also in line with customer demand, Bank Asya opened nine new branches in 2009, five of them outside İstanbul. This corresponds to a year-on-year rise of 6% and brought the total number of branches from 149 to 158. During the same period, the number of bank personnel also increased 7% to 4,074. Recognizing the crisis as an opportunity, Bank Asya reviewed its own internal systems and accelerated its efforts to improve its business processes during 2009. Bank Asya Annual Report 2009 In the period ahead, we will strive in every possible way to realize our vision of being “a respected, trusted, and effective bank that provides service at world standards through the products that it develops in the business of participation banking” Bank Asya has been initiating activities outside Turkey with the intention of becoming a potent financial force in the international arena as well. 2009 was a year in which we took the first steps in our strategy of expanding abroad. Bank Asya has signed a strategic partnership agreement with the Islamic Corporation for the Development of the Private Sector (ICD), an agency of the Islamic Development Bank (IDB), with the aims of taking advantage of growth potential in Africa, of providing banking services to Turkish companies active in African countries, and of advising Turkish businessmen on business and investment opportunities in the region. As a result of this partnership, Bank Asya will be engaging in interestfree banking activities along with IDB and ICS throughout the continent with a particular focus on West Africa at the outset. In another international venture project, the bank has received a license from the Banking Regulation and Supervision Agency (BRSA) to open a representative office in the city of Mumbai in India. A project to transform our construction company subsidiary Asyafin İnşaat Sanayi AŞ into a real estate investment trust was also brought to completion last year. Bank Asya’s innovative products and services continued to make it the preferred bank of its customers in 2009 as well. Last year the bank registered a 20% increase in the number of its retail customers. The total number of credit cards issued under our AsyaCard brand reached 1.5 million while our credit card turnover also rose 25% year-on-year. The success of AsyaCard DIT, which ranks among the world’s most advanced and functionally capable payment cards, was confirmed twice last year in the form of the “Best Cash Displacement Initiative” award in the “Visa Europe Best Card & Payment Sector Awards” and the Cards & Payments Organization’s “Best New Credit Card Product Launch” award. Under the heading of mass transit projects carried out jointly with municipalities, last year Karabük and Bolu joined Kahramanmaraş and Balıkesir on the list of provinces in which municipal bus fares can be paid using AsyaCard DIT. Discussions are currently in progress with many other municipalities to introduce the same system in their own localities. 27 According to December 2009 figures published by Interbank Card Center, Bank Asya ranks 10th in credit card and 9th in POS numbers. This is indicative of the general rises that the bank has been experiencing in payment card rankings and market shares. DIT Pratik, Turkey’s first prepaid contactless bank card, completed 2009 as the leader of its category having only recently joined the DIT family in November. In addition to supporting the national economy, Bank Asya also regularly contributes towards sport and culture for the better health and wellbeing of young people and it continued to do so in 2009. In that respect, our sponsorship of the Bank Asya 1st League, which consists of grassroots teams from provinces outside İstanbul, is a matter of particular pride and importance for us. Constantly forward into the future with sound goals… Our bank is a rising star in a country that is expected to become one of the world’s biggest economies in the future and our highest priority will always be to ensure that Bank Asya enjoys the stature that it deserves. While strengthening our present position, we will also continue our efforts to achieve our goals and to take Bank Asya even further ahead without even a hint of indecision or hesitation. In the period ahead, we will strive in every possible way to realize our vision of being “a respected, trusted, and effective bank that provides service at world standards through the products that it develops in the business of participation banking” and I have full faith and conviction that our inherent love of service and superior sense of duty will enable us to be the authors of even greater successes. In closing, I offer my thanks and respects to all of our customers, shareholders, and employees whose unstinting material and moral support since the day Bank Asya was founded have made our bank what it is today. Cemil Özdemir CEO (Since 28 January 2010) 28 Bank Asya Annual Report 2009 Falling employment 100% Rising stock market Awash with liquidity, developed countries’ stock exchanges posted average returns on the order of 20% while rises of close to 100% were experienced in some emerging markets. Recoiling from tighter credit conditions inherited from the previous year, growth, consumption, investment, and consequently employment numbers all dropped significantly all over the world in 2009. Bank Asya Annual Report 2009 29 Contracting economies In the first quarter of 2009, only the Baltic countries suffered more from the global economic downturn than Turkey did. The Turkish economy shrank 8.4% in the first nine months of the year. (8.4)% Asia The engine of the global economy for the period ahead The generally prevailing view of the period ahead is that the country risk map has been transformed and that Asian economies will be the engines of global growth, with those of China and India leading the way forward. 30 Bank Asya Annual Report 2009 Macroeconomic Overview and the Banking Sector Global overview 2009 was a year in which economic recession spread throughout the world and there was never any lack of either debate or speculation as to the timing and speed of economic recovery. 2009 was a year in which economic recession spread throughout the world and there was never any lack of either debate or speculation as to the timing and speed of economic recovery. Recoiling from tighter credit conditions inherited from the previous year, growth, consumption, investment, and consequently employment numbers dropped significantly all over the world in 2009. The hallmark concerns last year were concerned primarily with when and to what degree the recovery observed in financial markets (which were thought to have put the worst of the global economic crisis behind them) would make itself felt in the real economy and in employment numbers. The deep impact of the crisis on the banking industry forced governments and central banks in many countries to take serious measures. A host of measures were taken to restore stability to financial markets ranging from rapid interest rate cuts and liquidity support to nationalization. Throughout most of the year, central banks kept their interest rates at historically low levels and pumped liquidity into their markets with the result that financial asset prices appeared to be on the rise again in the second half of the year. Finding themselves awash with liquidity, stock exchanges in countries like Germany, the UK, and the USA generated average returns on the order of 20% while rises of close to 100% were experienced in some emerging markets like Argentina, Brazil, Russia, and Turkey. In 2008 the euro lost ground against the US dollar in reaction to the USD liquidity crunch, with the EUR/ Annual Growth Rate USD exchange rate falling as low as 1.28. In 2009 the situation reversed itself somewhat as USD began to flow freely with global markets recovering and the euro began to appreciate once again. In response to seriously depressed international demand, commodity prices had shrunk significantly in 2008 but began to regain their lost ground in 2009. In 2008 crude oil prices plummeted sharply to below USD 40 from their record-breaking USD 140/barrel high point. Although the price began to rise again in 2009, it nevertheless closed the year at the USD 78/ barrel level. Towards the end of 2009 the Dubai government released an announcement saying that Dubai World, an investment company in which it controls a stake, intended to ask for a “standstill” in its debt servicing while international credit rating agencies downgraded Greek government bonds noting that the country’s debt service abilities were fraught with long-range risks. Such events caused more turbulence in financial markets that was exacerbated by worries over the euro when Fitch Ratings announced that it could not guarantee France’s or the UK’s AAA sovereign debt ratings if those two potent Eurozone countries did not take measures to enforce budget discipline. As we entered 2010, it was still unclear as to how and when the USA, the UK, Eurozone countries, and Japan would put an end to their expansionist policies. The generally prevailing view of the period ahead is that the country risk map has been transformed and that Asian economies will be the engines of global growth, with those of China and India leading the way forward. World Developed countries Developing 10 8% 8 6% 6 4 5% 3% 2 5% 2% 1% 0 1% (1)% (2) (4) 3% 3% (3)% 2007 2008 2009 (T) 2010 (P) Bank Asya Annual Report 2009 69.7% The production-weighted capacity utilization rate, which was 64.7% in December 2008, was up five points to 69.7% in December 2009. Turkish economy overview Like other developing economies, Turkey embarked upon a period of sustained high growth in the 2000s. With the onset of the global economic downturn in 2008, economic growth in Turkey dropped to below 1.1%. In the first quarter of 2009, Turkey was the world’s most contracted economy excluding Baltic countries. As international efforts to revive the global economy met with varying degrees of success, measures taken by the government here in Turkey had the effect of slowing down the contraction. In that contraction, depressed domestic demand had a significantly adverse impact on growth figures. An effort was made to prevent the recession from becoming deeper by maintaining government expenditures at existing levels–even in the face of shrinking tax revenues. The arrival of net export effects in the latter part of the year somewhat mitigated the seriousness of the contraction in GDP, which was nevertheless down 3.5% in the third quarter of the year. Growth in the Turkish economy is expected to have resumed in the fourth quarter of 2009 as a result of the low national income base effects that prevailed in the last quarter of 2008 and the first quarter of 2009 combined with the overall global recovery. In 2009 there were sharp year-on-year declines in the industrial output index. The particularly dismal appearance at the beginning of the year however began to improve as government tax and investment incentive policies took hold and data suggesting that a global recovery was underway started coming in. The index, purged of its season and calendar effect had begun to fall around the middle of 2008 but began to recover as of February 2009. Along with the rise in industrial output there were also some noteworthy increases in capacity utilization rates. The production-weighted capacity utilization 31 rate, which was 64.7% in December 2008, was up five points to 69.7% in December 2009. The consumer confidence index, which is based on the results of the monthly consumer sentiment poll conducted jointly by the Turkish Statistical Institute and the Central Bank, closed the year at 78.8. The real sector confidence index, which began rising in January, topped 100 in July but subsequently subsided and closed the year at the 92.2 level. As the full force of the global crisis made itself felt in the last quarter of 2008, official unemployment figures entered the double-digit range and peaked at 16.1% in February 2009. In response to slower rates of contraction in industrial output and elsewhere in the economy, there began to be modest improvements in employment in the later months. The posted rate of unemployment at year-end was around 13%. Inflation rates remained low and essentially flat as a result of very weak demand brought on by the global economic crisis. While there was something of a rise in the last quarter, that may be attributable to seasonal effects. The highest one-month increase last year was 2.41% and it took place in November. The twelve-month rise in the consumer price index at the beginning of 2009 was 9.50%. By the end of the same year, this figure was down nearly three whole points to 6.53%. During the same period, the producer price index went from 7.90% to 5.93%. Demand picked up somewhat in response to the government’s investment incentives and economic stimulus package after the first quarter, which countered the effects of declining inflation and leveled the index out at around 5% from May on. As economic recovery began to push consumer prices upwards, inflationary trends became less relaxed. On the domestic front, tax cuts were the main reason for the partial recovery even as producer prices continued to push inflation down. GDP Growth Rates by Sector (%) (*) as of January-September Agriculture Industry Services Construction 5 0 (5) (10) (15) (20) 2008 2009* GDP 32 Bank Asya Annual Report 2009 Macroeconomic Overview and the Banking Sector Inflation and FC Basket (annual change by months %) PPI 35 CPI FC Basket 25 15 5 (5) (15) 6.50% In the twelve months to December 2009, TCMB reduced its overnight rates no fewer than 8.5 points from 15% to 6.50%. As a result of this action, TCMB ended up as the monetary authority which had axed interest rates the most during 2009. J F M A M J J 2008 A S O N D J The low-inflation environment brought on by the downward trends observed in domestic and foreign demand prompted the Central Bank (TCMB) to cut its policy interest rates quite aggressively. In the twelve months to December 2009, the bank reduced its overnight rates no fewer than 8.5 points from 15% to 6.50%. As a result of this action, TCMB ended up as the monetary authority which had axed interest rates the most during 2009. Having moved within a fairly stable–albeit broad–band during 2008, the Turkish lira (TRY) USD exchange rate continued to do so in 2009 as well and closed the year at around the TRY 1.50 level, pretty much where it had been for most of the time. In response to signals that normalcy was returning at both the global and the local levels, the dollar slipped to below TRY 1.50 as we entered 2010. In the wake of the Lehman Brothers collapse in 2008, stock exchanges began dropping sharply nearly everywhere. Encouraged by the potentially beneficial results of the measures that governments were taking, buyers began returning to the markets however. Events at the İstanbul Stock Exchange (ISE) followed an almost identical course from March 2009 onward, with prices recovering nearly all of the ground that they had lost since the onset of the crisis. The ISE index opened the year at 26,284 points and bottomed out at 22,583 before embarking upon a reversal that was driven especially by demand for shares in banking industry firms. The market’s vigor reached its highest level towards the end of the year, with ISE generating an average net premium of 97%. When Fitch upped Midterm Program Basic Assumptions GDP (% change) Year-end CPI* (% change) Unemployment (%) Current accounts balance / GDP (%) National budget deficit / GDP National budget tax revenues / GDP F M A M J J 2009 A S O N D Turkey’s country rating, ISE broke its previous TRY 3.85 one-day trading volume. In response to depressed domestic and foreign demand brought on by the global economic crisis, there were substantial declines in Turkey’s import and export numbers during 2009. Most of the losses were concentrated in the first half of the year however and there was something of a recovery nourished by modest monthly rises in the second. Nevertheless the overall picture was rather grim: CIF imports were down 30.3% year-on-year to USD 140.8 billion and FOB exports down 22.6% to USD 102.2 billion. Even Turkey’s “suitcase trade” suffered, dropping 22.9% to USD 4.8 billion last year. With foreign trade volumes depressed by weak demand brought on by the global economic crisis, Turkey also had less of a need to import energy, the prices of which were in decline. One outcome of this was a significant contraction in the country’s current account deficit last year, which plummeted 67% year-on-year in 2009 from USD 41.9 billion to USD 13.9 billion. Central government budget expenditures in 2009 amounted to TRY 267.3 billion and budget revenues to TRY 215.1 billion. While this brought the budget deficit up to TRY 52.2 billion, it also reduced the non-interest surplus to TRY 986 million. There was a 199.5% yearon-year rise in the budget deficit last year while the ratio of the deficit to GDP, which was 1.8% in 2008, is now thought to have been about 5.5% in 2009. 2009 2010 2011 2012 (6.0) 3.5 4.0 5.0 5.9 5.3 4.9 4.8 14.8 (1.8) (6.6) 17.3 14.6 (2.8) (4.9) 18.8 14.2 (3.3) (4.0) 18.8 13.3 (3.9) (3.2) 18.7 * Estimate. Inflation targets are 7.5% for 2009, 6.5% for 2010, and 5.5% for 2011. Bank Asya Annual Report 2009 14% The sector’s total assets increased 14% in the twelve months to end-2009 and reached TRY 834 billion in value. Banking sector overview The Turkish banking industry distinguished itself in 2009 as the sector that was the least affected by the global economic crisis. It passed a very important test last year, increasing its profitability and attracting international attention by virtue of its not having had any need for a government bailout. The sector’s total assets increased 14% in the twelve months to end-2009 and reached TRY 834 billion in value. During the same period, the banking industry’s total deposits increased 13% to TRY 515 billion although the overall rate at which deposits were lent out slipped four points from 81% to 77% as the economic crisis throttled the demand for credit. Participation banks appeared to have a somewhat greater willingness to lend than did deposit banks. 333 Overall growth in loans remained weak as banks cut back their lending particularly in the first quarter of the year. Total lending amounted to TRY 396.6 billion, corresponding to a year-on-year rise of just 7% while the ratio of loans to total assets fell to 47.4%. Banks in general shifted their placements away from loans in favor of securities throughout 2009 and they showed a particular appetite for T-bills as the instrument of choice with which to build up their portfolios. The steady rise in the share of investment securities among total assets may be seen as out of keeping with banks’ function as financial intermediaries. In line with expectations, one effect of the business recession on the banking industry was an increase in its non-performing assets. In 2008, 3.7% of the sector’s loans had to be marked as “non-performing”; in 2009, that ratio was up to 5.3%. Total Assets (TRY thousand) Period 2005 Participation Banks 9,945 Change (%) 36.3 Deposit Banks 384,097 Total 394,042 Participation Banks/Total (%) 2.5 13,752 19,445 25,770 33,627 38.3 41.4 32.5 30.5 470,635 543,272 683,823 773,299 484,387 562,717 709,593 806,926 2.8 3.5 3.6 4.2 Participation Banks 8,369 Change (%) 39.7 Deposit Banks 243,121 Total 251,490 Participation Banks/Total (%) 3.3 11,152 14,834 19,045 26,711 33.3 33.0 28.4 40.3 296,495 342,031 435,554 487,907 307,647 356,865 454,599 514,618 3.6 4.2 4.2 5.2 Participation Banks 7,408 Change (%) 51.3 Deposit Banks 144,729 Total 152,137 Participation Banks/Total (%) 4.9 10,249 15,113 18,588 24,344 38.4 47.5 23.0 32.0 203,213 263,699 340,537 358,424 213,462 278,812 359,125 382,768 4.8 5.4 5.2 6.4 2006 2007 2008 2009 Deposits (TRY thousand) Period 2005 2006 2007 2008 2009 Loans (TRY thousand) Period 2005 2006 2007 2008 2009 34 Bank Asya Annual Report 2009 profitable Focusing on sustainable profitability Throughout the year Bank Asya kept a close watch on both national and international developments as it took a prudent approach to its banking activities and focused its attention on sound growth and sustainable profitability. Growth in corporate lending 53% Share of foreign trade finance 2.34% Corporate Governance Rating Bank Asya was one of the participants to take part in the İstanbul Stock Exchange’s corporate governance index (CGI) project. The bank’s sensitivity towards corporate governance and transparency issues raised its CGI rating to 7.82. Bank Asya Annual Report 2009 “Best in Class” In less than three months of its launch, AsyaCard website received the “Best in Class” award from the Interactive Media Council. Increase in the number of retail customers 2.4 million retail customers in total Strategic partnerships In line with its strategy of expanding abroad, in 2009 Bank Asya signed a strategic partnership agreement with the Islamic Corporation for the Development of the Private Sector (ICD), an agency of the Islamic Development Bank (IDB). As a result of this partnership, Bank Asya will be engaging in interest-free banking activities with a particular focus on West Africa. 20% 35 36 Bank Asya Annual Report 2009 Assessment of Bank Asya’s Activities in 2009 56.4% Bank Asya increased its deposits to TRY 9.1 billion, up 56.4% that is significantly above the sectoral average. The average maturity of deposits is above 100 days which is also above the market average. 2009 highlights… While strengthening its position in the national market in 2009, Bank Asya started to gain recognition in the international arena, and had important successes are contributing towards the bank’s longterm sustainability. Throughout the year Bank Asya kept a close watch on both national and international developments and took a prudent approach to banking activities and focused on sound growth and sustainable profitability. Deploying the most effective practices of participation banking in line with its strategic goals, the bank demonstrated a successful performance in terms of both growth and profitability in 2009 by increasing market share and customer penetration despite economic recession. Bank Asya demonstrated above sector average growth rate both in total assets and in cash loans. Cash loans increased 30.93% to TRY 8.3 billion while total assets reached TRY 11.6 billion, which is equal to43.16% rise during the same period. Similarly the ratio of the bank’s cash loans to total assets reached 71.97%. Despite the rather large overall expansion in cash loan portfolio, the ratio of non-performing loans increased only marginally from 4.94% to 5.26%, appreciably below the sectoral average of 6% last year. The growth in Bank Asya’s lending in 2009 was accompanied by healthy growth in deposits. Deposits are an indication of the confidence that customers have in a bank and last year Bank Asya increased its own to TRY 9.1 billion, which corresponds to a 56.4% rate of growth that is significantly above the sectoral average. The average maturity of deposits is above 100 days which is also above the market average. In line with its policy of giving greater importance to liquidity in lending decisions, Bank Asya reduced the ratio of loans to deposits from 109.2% in 2008 to 91.5% in 2009. In 2009 Bank Asya increased the number of its branches from 149 to 158 with the addition of five new branches located outside İstanbul. During the same period, the number of bank personnel also rose 7% to 4,074. The rapid rise that Bank Asya embarked upon in 2006 continued in 2009 as well with the bank successfully demonstrating growth rates above sector averages. In terms of total assets, Bank Asya ranked 14th among Turkey’s biggest banks in the third quarter of 2009. At the same time Bank Asya also ranked 13th in terms of total deposits and total cash loans. In the July 2009 issue, The Banker magazine cited Bank Asya for its impressive performance while also moving the bank 235 positions forward to 520th place in its highly respected list of the world’s 1,000 biggest banks. One of the best practitioners of corporate governance With 51% of its shares publicly traded, Bank Asya is committed to fully comply with corporate governance principles in order to maximize the fulfillment of its responsibilities not just to its private and institutional shareholders but also to all of its stakeholders whether national or international. As one of the very first concerns to take part in the İstanbul Stock Exchange’s newly-introduced corporate governance index (CGI) project, Bank Asya sensitively fulfills all of the requirements of keeping private and institutional investors who hold shares in the bank informed within the framework of both corporate governance principles and the rule of transparency. One outcome of that sensitivity is that Bank Asya’s CGI rating was revised from 7.56 to 7.82 points out of a possible 10. According to a report prepared by Sabancı University Corporate Governance Forum based on methodologies developed by Standard & Poor’s, Bank Asya is “the most transparent bank” in the “partnership structure and corporate structure” category among banks whose shares are traded on the İstanbul Stock Exchange. This is yet another indication of how indispensable a principle transparency is for Bank Asya. DIT Pratik: Contactless, prepaid, multifunctional In order to increase the quality of service while enhancing customer satisfaction, Bank Asya gives importance to adopting and deploying the most advanced technology to develop new products and services. In keeping with its vision of being the leading bank in contactless payment systems, Bank Asya expanded the utility of the limited-feature “DIT Pratik” prepaid contactless bank card that had been introduced for use in metropolitan transportation projects in a number of provinces in 2008 and transformed it into a brand-new and multifunctional “DIT Pratik”, which is now being offered to customers all over the country. Bank Asya Annual Report 2009 Bank Asya’s unbounded innovative strength is crowned with awards. As an outcome of the bank’s ongoing investments in innovative products and services, AsyaCard DIT already controls a 30% share of the contactless credit card market. In addition to being a contactless credit card, it provides an integrated solution for transportation fare and highway toll payments as well. For such reasons, AsyaCard DIT was awarded by two international awards in 2009. AsyaCard DIT that was awarded by two international awards already controls a 30% share of the contactless credit card market. Last year AsyaCard DIT received both the “Best Cash Displacement Initiative” award in the “Visa Europe Best Card & Payment Sector Awards” and the Cards & Payments Organization’s “Best New Credit Card Product Launch” award. Both awards are granted to recognize and support innovative products that are designed to meet users’ different needs and serve them in different areas. In 2009 AsyaCard DIT also received an award in the “Best New Credit Card Product Launch” category in the “Cards & Payments Awards” program which the international publications Cards International and Electronic Payments International have been conducting for 22 years and in which banks and banking products are rated in 10 different categories. www.asyacard.com.tr: “Best in Class” As a result of its ongoing efforts to perfect its alternative distribution channels, Bank Asya has begun reaching out to its customers through a brand-new website located at www.asyacard.com. tr that has been specially designed to allow users to keep up to date on the latest AsyaCard innovations and to manage their credit card accounts. In less than three months of its launch, the AsyaCard website received the “Best in Class” award from the Interactive Media Council. The council, whose 100 members number among leading names in the internet webscape and come from fourteen different countries, picked the AsyaCard website for the “Best in Class” award in the “Banking” category. A more user-friendly online banking In order to serve its customers better way via its alternative distribution channels, Bank Asya online banking underwent a renovation. and new features were added, some of which have never been available before over the internet banking services. Acting in line with its vision of being a respected, trustworthy, and effective bank which provides world-class service through the products that it develops and in keeping with its status as a bank in which 70% of its publicly traded shares are held by international investors, Bank Asya opened its English language internet banking for service in 2009. 37 Strategic partnership with Islamic Development Bank In line with its strategy of expanding abroad, in 2009 Bank Asya entered into a strategic partnership agreement with Islamic Corporation for the Development of the Private Sector (ICD), an agency of the Islamic Development Bank (IDB). Under this partnership, Bank Asya will be engaging in interestfree banking activities along with IDB and ICD throughout the continent with a particular focus on West Africa. Thanks to subject partnership agreement, taking advantage of growth potential in Africa, providing banking services to Turkish companies active in African countries, and advising Turkish businessmen on business and investment opportunities in the region is aimed. Bank Asya has received a license from the Banking Regulation and Supervision Agency (BRSA) to open a representative office in the city of Mumbai in India. Corporate, Commercial, and Enterprise Banking Standing by the customer everywhere and always… In the constantly changing and intensely competitive environment of financial markets, Bank Asya provides more effective and productive financing opportunities and it supports entrepreneurs by offering multidimensional project-based solutions that satisfy all of its customers’ banking needs. Bank Asya serves its corporate, commercial, and small business banking customers with an extensive lineup of products that range from loans to cash management services and from foreign trade finance transaction to project finance and other banking transactions. Bank Asya considers its relationship with its customers as long term business partneship. Banks Asya aims to reach out to all economic actors, with particular attention being given to the real sector, through its expert marketing, sales, portfolio, and operations teams, through its comprehensive array of products, through its extensive branch and distribution network, through its technological clout, and through its effective business processes. Bank Asya’s goal is to be a bank whose trust-based, sustainable relationships make it a preferred service provider under all market conditions. 38 Bank Asya Annual Report 2009 Assessment of Bank Asya activities in 2009 14.5% Bank Asya’s customer-focused marketing policy principles Bank Asya: The bank’s small business banking cash loan portfolio increased approximately 14.5% in value to TRY 275 million last year. • Ensures that its customers are visited regularly and continuous communication is maintained with them in order to keep abreast of their current concerns and to respond correctly to their needs. • Takes action in a timely and effective manner when dealing with customers’ requests. • Responds clearly to customer requests in order to achieve customer satisfaction and maintains confidence so as to ensure the continuity of business relationships. A healthy and growing loan portfolio In order to spread its risk exposure while also increasing the efficiency of its lending activities in line with its credit allocation policy, Bank Asya utilizes customer and sector segmentation when assessing loan applications. This segmentation is based on a sensitive appreciation of the factors of security, liquidity, and efficiency. During 2009 Bank Asya once again used its real sector financing experience to continue supporting both its major corporate customers and a wide range of small and medium business enterprises from many different sector. The bank’s small business banking cash loan portfolio increased approximately 14.5% in value to TRY 275 million last year while its total non-cash risk exposure rose 8.1% to TRY 344 million. Total risk under management in the small business banking segment was up approximately 11% year-on to TRY 619 million. • Adds new products and services to to meet customers’ wishes and expectations. • Is open for customer suggestions and makes reconstructing business processes in case of need • Steadily enhances its sectoral presence and effectiveness by adding new customers to its portfolio while also further developing its relationships with existing ones. Bank Asya supplied more real sector financing than any other bank in Turkey in 2009. Cash loans grew 31%, above the sector average, and reached TRY 8,355 million in total. 69.4% of the bank’s cash loans were in Turkish liras and with the remaining 30.6% denominated in foreign currency. • Supplies products and services that are efficient, profitable , and with competitive prices.. • Organizes itself and produces results in line with its corporate objectives. The bank’s total corporate finance risk exposure rose 36% above the previous year’s level and reached TRY 7,069. This growth was in line with the bank’s targets. Cash Loans Breakdown of Cash Loans* Non-cash Loans (TRY million) (%) (TRY million) 8,355 FC TRY Corporate Finance Support* (TRY million) 10,215 7,069 6,381 5,184 31% 36% 30.6 (13)% 8,886 (*) including FCindexed loans (*) including leasing receivables 69.4 08 09 08 09 08 09 Bank Asya Annual Report 2009 A stronger marketing team A pioneering institution in the interest-free banking system, Bank Asya correctly analyzes its customers’ changing needs and reflects its findings in its marketing efforts. Marketing structure consisting of corporate and commercial marketing teams makes it possible to develop closer relationships with customers. Bank Asya employs 333 commercial marketing personnel who are based in its 152 commercial branches and 37 corporate marketing personnel who are based in its six corporate branches (three in İstanbul and one each in İzmir, Bursa, and Ankara). Branches’ marketing teams are also supported by 37 commercial marketing and 11 corporate marketing personnel who are based in headquarters units. During 2009 a customer relationship management (CRM) strategy development project was completed in collaboration with an international consultancy. Under this project, a roadmap has been laid out. In line with this, work has also begun on developing a segment-based business model as well. A segment with high growth potential In 2009 the number of Bank Asya’s active small business banking customers increased 44% from 22,219 to 31,924. Such segment make up a target group that the bank plans to focus increasingly greater attention on in the period ahead because of the long-term growth potential that they have to offer. 44% In 2009 the number of Bank Asya’s active small business banking customers, a segment that offers a long-term growth potential, increased 44% to 31,924. Paralleling its growth targets in small business banking, Bank Asya has introduced its “Business Support Package Loan” for customers in this business line. This package contains a selection of cash and non-cash loan product options such as corporate finance support and leasing that are designed to address the needs of customers in different sectors and different parts of the country. Collaboration with Credit Guarantee Fund In 2009 Bank Asya continued to take part in government-supported projects. Under this heading and within the framework of its ongoing partnership and collaboration with Credit Guarantee Fund Inc (KGF), the bank extended a total of TRY 981,500 in KGF-underwritten loan to six firms that were having difficulties posting guarantees of their own. Last year Bank Asya also took part in an SME Development and Support Administration (KOSGEB) project and extended loan to SMEs for the first time. 39 Expanding the customer base through cash management products Added-value cash management products play an important role to attract new customers while deepening relationships with existing ones. During 2009 Bank Asya once again made important progress in the direction of becoming its customers’ main bank by meeting their cash management and credit needs through innovative products and services. Under the heading of cash management products and services, many different options are on offer ranging from checkbooks, POS devices, salary disbursement, and tax and social security payments to utility bill payments, automatic payment and collection systems, company credit cards, and foreign trade transactions. Technology-based cash management products such as direct debiting and card-based collection systems seek to give customers a cost advantage by helping them to lower their operational costs while enhancing their ability to make collections. The direct debiting system (DDS) makes it possible for firms to automatically receive payments for the goods and services that they sell to their dealers and regular customers by serving as a channel through which the collections can be made with maximum efficiency. An alternative to DDS is a cash management product known as “virtual commercial card”, which allows payments and collections between a wholesaler/ franchiser and retailer/dealer on a closed-circuit basis. Bank Asya has so far issued virtual commercial cards to 55 of its customer firms. Bank Asya cash management product involves the launching of the bank’s sequential note collection system, which has considerably reduced customers’ operational workloads and costs. Asya Asist Kart is specialized credit card designed to provide support in unexpected/emergency situations when users need to avail themselves of medical, legal, or accountancy services. Introduced in late 2008, this product proved immediately popular and the number of active users more than doubled from 5,000 to 10,500 in 2009 alone. AsyaCard Business is a Bank Asya credit card specially designed for companies. The number of cards issued increased 9% in 2009 from 4,444 to 4,826. 40 Bank Asya Annual Report 2009 Assessment of Bank Asya activities in 2009 25% The total number of credit cards issued by the bank reached 1.5 million. Paralleling the rise in the number of card users, credit card turnover was also up 25% year-on-year to TRY 4 billion. Bank Asya’s Merchant Partner Support Team, an important arm of the bank’s small business banking operations, was heavily involved in direct sale and commercial signage activities last year. The team increased the total number of its merchant partner visits 97% to 90,000 in 2009. The outlook for 2010 In 2010 Bank Asya intends to: • Expand its customer portfolio and improve the quality of its assets. • Support existing customers’ projects while taking on new customers. • Maintain the existing rate of growth in cash loans while reversing the contraction in non-cash loan techniques in 2009. • Keep the ratio of NPL/cash loans within the sector average. • Make use of untapped potential in small business banking. Retail Banking An active year in retail banking 2009 was an active year in the retail banking business line at Bank Asya during which new initiatives were undertaken and new products that are innovative both in Turkey and abroad were introduced through the use effective use of technology in line with customers needs and expectations. Newly opened Bank Asya branches brought the total number to 158 in 2009 while the number of retail marketing personnel topped 560 and the number of retail customers increased 20% to 2,373,000. The total number of credit cards issued by the bank reached 1.5 million. Paralleling the rise in the number of card users, credit card turnover was also up 25% year-on-year to TRY 4 billion. AsyaCard DIT: Europe’s most advanced credit card Launched in the second half of 2008, AsyaCard DIT brings together in just a single card all of the functions for which users normally need many different cards. AsyaCard DIT’s all-inclusive features make it the first card of its kind in the European market and rank it among the most advanced, multipurpose cards available anywhere in the world today. AsyaCard DIT’s success has already been recognized twice with the “Best Cash Displacement Initiative” award in the “Visa Europe Best Card & Payment Sector Awards” program and the Cards & Payments Organization’s “Best New Credit Card Product Launch” award, both in 2009. AsyaCard DIT’s prepaid toll card features make it a great convenience for bank customers who regularly use toll bridges and highways. Since the card can be obtained in just fifteen minutes at any Bank Asya branch , it become widespread and number of users in a very short time. The number of AsyaCard DIT cards in use at end-2009 was 490,000 while the cards were used to pay tolls more than 3 million times last year. Thanks to its contactless transaction technology, AsyaCard DIT is particularly suited to smallsum payments that must be made frequently and rapidly, as is the case with tolls and fares. Originally introduced to pay municipal bus fares Volume of Retail Loans Breakdown of Retail Loans (TRY million) (%) 225 (Million) Housing Vehicles Consumer 270 Number of Retail Customers 2,4 2.0 20% 10,0 20% 37,0 53.0 08 09 08 09 Bank Asya Annual Report 2009 The number of AsyaCard DIT’s prepaid toll cards that offers a great convenience for bank customers was 490,000 at end-2009. in Kahramanmaraş and municipal and public bus fares in Balıkesir, in 2009 use of AsyaCard DIT was expanded to include fares on 31 public buses in Karabük and another 31 in Bolu. Discussions are currently in progress with many other municipalities to introduce the same system in their localities. Advanced credit card assurance In 2009 Bank Asya introduced its Card Protection Plan, a product that makes it possible for a bank or credit card that has been lost or stolen to be cancelled immediately with just single toll-free phone call from anywhere in the world. DIT Pratik: Turkey’s first prepaid contactless bank card In the wake of the success of AsyaCard DIT, Turkey’s first prepaid contactless bank card–DIT Pratik–was added to the Bank Asya DIT family in November 2009. By the end of the same year the number of cards in use reached 13,691, giving Bank Asya undisputed leadership in this business line. 200,000 DIT Pratik transactions generated a total turnover amounting to TRY 550,000. Similarly in order to further diversify the bank’s insurance product line and create a new insurance product capable of addressing market needs, Bank Asya joined forces with ACP and the insurer Işık Sigorta to introduce an unemployment insurance policy for credit card users in the last quarter of 2009. DIT Pratik is a contactless prepaid card containing an embedded chip that can be programmed with features etc according to user requirements. This makes it useful for many different applications such as paying reduced-rate fares on public transport, monthly subscriptions, and even university student ID cards. Because they are programmable, DIT Pratik cards are extremely versatile and can be designed for both specific and general uses. So far five different cards have been developed for the DIT Pratik family: • DIT Pratik Anonymous • DIT Pratik User ID • DIT Pratik Gift • DIT Pratik Allowance • DIT Pratik Campus Number of Credit Cards Credit Card Volume (Million) (TRY million) 1,5 1.3 3.2 17% 08 09 08 As a result of the brand-related regional and national campaign support provided through branded vendor agreements, there was a net 22% rise in the number of the bank’s merchant partners, which reached 62,220. There was also a 21% year-on-year increase in total merchant business turnover, which reached TRY 4.7 billion. Merchant Business Turnover (Thousand) (TRY million) 4.7 62.2 51.0 25% 09 Rapid rise in merchant partner and POS numbers In 2009 Bank Asya took part in joint-POS use activities with Türkiye Finans, HSBC, and Akbank as well as with İşbank, Finansbank, and GarantiBank. Such involvement not only greatly improves the operational productivity of POS units but also provides the bank with real-time marketing opportunities involving many different brands and vendors. As of end-2009, such alliances gave the bank access to about 10,000 POS terminals. Number of Merchant Businesses 4,0 08 41 3.9 22% 09 08 21% 09 42 Bank Asya Annual Report 2009 Assessment of Bank Asya activities in 2009 Agreements were entered into with more than 50 new brands and chain store vendors while more than 200 campaigns targeted at credit card customers were conducted at either the local or national level. One outcome of these activities was that there was a strong 37% year-on-year rise particularly in installment-based expenditure turnover, which reached TRY 411 million. As a result of all these activities, Bank Asya ranked 10th in credit card and 9th in POS numbers according to December 2009 figures published by the Interbank Card Center. Bank Asya online banking underwent a renovation. and new features were added, some of which have never been available before over the internet banking services. Strong growth in retail lending to finance real estate Last year Bank Asya registered a 20% rise in its total retail lending, which went from TRY 225 million in 2008 to TRY 270 million in 2009. As a result of agreements that the bank has entered into with construction firms to support the sales of the dwelling units they build, home-finance loans accounted for a 53% share of the bank’s overall retail lending last year. Vehicle purchase loans ranked second at 37% while consumer finance loans came in third at 10%. Bank Asya’s overall exposure to retail loan risk increased 20% and reached TRY 476,917,000 in 2009. Cash management products make life easier Taking advantage of its solid infrastructure and extensive knowledge and experience in collection and payment solutions, Bank Asya was providing salary payment services for some 172,000 employees of about 2,300 firms as of end-2009. Number of Online Branch Customers Number of ATMs (Units) (Thousand) 360 450 367 271 23% 33% Under the heading of tuition fee and related payments, the bank handled a total of TRY 593 million worth of payments for 76,000 students attending 561 schools. In 2009 Bank Asya handled utility and similar bill payments amounting to TRY 599 million, which corresponds to a year-on-year rise of 36%. An increase in the number of firms for which bill payments are accepted contributed significantly to this growth in turnover as did allowing automatic bill payment instructions to be given using the AsyaCard credit card and the introduction of features making it possible for bills to be paid by credit card or on account from the online branch. During 2009 the bank handled TRY 1,112 million in social security premium and TRY 1,186 million in tax collections for its retail and corporate customers. Bank Asya began selling the standard prepaid cards that can be used to pay tolls on bridges and highways. During 2009 the bank sold 160,000 such cards. A more effective service platform In January 2009 Bank Asya entered into an agency agreement with the Bizim Menkul Değerler brokerage house in order to expand its own product lineup. By December of the year, the bank was providing stock trading brokerage services to 5,000 customers. In 2009 a customer relationship management project was launched in order to respond more effectively to the needs of an increasingly expanding customer portfolio. Seeking to serve customers quickly and in as many different ways as possible by deploying the latest advances in technology, Bank Asya has begun using its alternative distribution channels (ADC) more intensively and effectively in its retail loan business line. Under this heading, the bank’s ADC Marketing Department Telemarketing Team made more than a million customer calls and made 190,000 primary card, 15,300 supplementary card, 3,120 Education Insurance Policy, and 18,,422 Card Protection Plan sales. During 2009 the bank received 320,000 SMS and online credit card applications. 08 09 08 09 The Bank Asya Online Branch underwent a renovation with a more user-friendly design and a number of new features. One result of this is that the total number of users increased 23% from 367,000 in 2008 to 450,000 in 2009. Bank Asya Annual Report 2009 360 At end-2009, Bank Asya had 360 ATM units in its network, up 33% versus the previous year. There was a 33% year-on-year rise in the number of ATM units in the bank’s network. At end-2009 there were 360 machines of which 162 were in off-site locations. “Virtual-operator mobile phone top-up” service In its capacity as a banking sector technology pioneer, Bank Asya added another “first” to its list of services with “virtual-operator mobile phone top-up” service”. The first service of its kind in Turkey, this allows customers to add minutes to their mobile phone accounts faster and more conveniently without having to wait, connect to an operator, or even press any keys. Fully integrated into Bank Asya’s existing interactive voice recognition and response system, the service makes use of “virtual operator” technology to allow the bank’s customers to buy mobile phone units whenever they wish just by speaking. The outlook for 2010 • Pursue an aggressively competitive pricing policy • Conduct campaigns that will increase market share • Expand the product line with innovative products • Increase both the effectiveness and use of ADC. 43 International Banking Solid foundations for international banking While making a significant contribution to the national economy through its support for production, Bank Asya has also been increasing both its effectiveness and its market share in foreign trade finance as a result of its respected position and strong correspondent relationships in international markets. In the conduct of all of its foreign trade transactions, Bank Asya delivers service which fully complies with international banking standards and practices and which makes use of modern banking opportunities in order to supply its customers with solutions that demand superior knowledge and experience. At the beginning of 2009 the bank began centralizing all of its international transactions. All foreign exchange operations were transferred back to headquarters with the exception of those retained by six corporate branches. Since the completion of this process there have been significant improvements in the speed, reliability, and standard-compliance of foreign exchange transactions. International awards for excellence The effectiveness of Bank Asya’s technological infrastructure and service competencies is confirmed by the “excellence in straight-through-processing” (STP) citations that it has received from some of the world’s leading banks. Bank Asya holds Commerzbank’s STP AWARD 2008. It has also received The Bank of New York Mellon award for excellence in USD payments four times. Import Transactions Export Transactions Share in Turkey’s Imports Share in Turkey’s Exports (USD million) (USD million) (%) (%) 2,721 4,870 2,430 2.46 2.36 (11)% 3,452 2.34 2.05 4% 14% (29)% 08 09 08 09 08 09 08 09 44 Bank Asya Annual Report 2009 Assessment of Bank Asya activities in 2009 1,300 Bank Asya continued to provide international financing services to its customers through an extensive network of more than 1,300 correspondents, of which two are in Turkey and the rest in 110 countries. A greater share of foreign trade Despite significant contractions in Turkey’s imports and exports in 2009 due to the global economic downturn, Bank Asya continued to increase its share of Turkey’s foreign trade. Last year the bank handled USD 17,135 million worth of foreign trade transactions of which USD 3,452 million consisted of imports, USD 2,430 million of exports, USD 10,858 million of other transfers, and USD 395 million of guarantees. In 2009 the bank negotiated USD 1,572 million worth of import letters of credit and USD 395 million worth of international letters of guarantee. Having negotiated 2.36% of Turkey’s total imports in 2008, Bank Asya increased that share to 2.46% in 2009. In the case of export transactions, the bank’s share rose from 2.05% to 2.34% during the same interval. Financial institutions An enduring and trusted presence in international markets In a year during which international finance opportunities were significantly fewer and borrowing costs were substantially higher than hitherto because of the ongoing global economic crisis, Bank Asya nevertheless maintained good relations with international financial institutions. In 2009 Bank Asya continued to provide international financing services to its customers through an extensive network of more than 1,300 correspondents, of which two are in Turkey and the rest in 110 countries. In this way the bank successfully increased both its profitability and its foreign trade finance market share despite the business downturn. Bank Asya also continued to supply its customers with medium- and long-term credit opportunities and resources made available under a variety of export credit agency insurance programs as well as US Department of Agriculture GSM102 credit, which can be used to finance imports of agricultural products from the United States. Bank Asya intends to continue taking advantage of its extensive knowledge and experience with foreign trade finance and its strong international relations in order to be even more active in this business line in 2010. In 2009 Bank Asya also gave attention to securing ECA financing from abroad. Once again taking advantage of its strong correspondent relations, the bank supported its customers by securing long-term credit under favorable conditions from many banks around the world under bilateral agreements. Treasury Effective liquidity and FX position management As the effects of the global economic crisis were deeply felt for most of 2009, effectively managing both liquidity and FX positions was an issue of the utmost importance. For this reason, Bank Asya kept a close and continuous watch on domestic and international market developments and risk parameters, remained attentive to the uncertainties and market volatilities engendered by the financial crisis, and gave maximum attention to coordinating risk management among its treasury and other units. In addition to effectively deploying Bank Asya’s increasing liquidity through short- and longterm instruments, the Treasury Department also successfully managed the bank’s FX position as well, thereby making a significant participation to overall profitability. Income-indexed instruments that had been issued in accordance with the principles of participation banking were added to the bank’s investment securities portfolio in 2009. These instruments were used as important tools in the management of the bank’s liquidity position. Treasury transaction volume growth Investments in technology and new products at the Bank Asya Treasury Department made it possible to further increase the quality of service supplied to customers and branches. A close watch was kept on developments taking place in domestic and international markets and customers were kept informed about them both by telephone and in writing. New banks were added to the list of the ones that Bank Asya does business with and relations with existing banks were further developed in an ongoing effort to price deals more competitively. Thanks to such competitive pricing, there were substantial increases both in the volume of treasury trading and in the customer portfolio. The Bank Asya Treasury Department handled about USD 14.5 billion worth of FX trading during 2009. An important player at the Gold Exchange Having become a member of the İstanbul Gold Exchange in 2007, Bank Asya registered significant growth in its own precious metal trading there in 2009. Widely regarded as an attractive and alternative investment vehicle, there was a significant demand for gold products from the bank’s customers last year. The substantial rises in both transaction numbers and transaction volumes in this business line made Bank Asya a major player at the İstanbul Gold Exchange in 2009. 45 Bank Asya Annual Report 2009 56% rise in deposits As a result of the joint efforts of different units of the bank in line with their requests, Bank Asya began allowing customers to open participation accounts in currencies other than USD and EUR in 2009. This enabled the bank to access to new sources of funding. Bank Asya’s deposits increased 56.4% in 2009, well above the sectoral average. Bank Asya’s respected market position and trustbased relationships with its customers found their greatest expression in the volume of the bank’s deposits. Bank Asya’s deposits increased 56.4% in 2009, well above the sectoral average. Total deposits reached TRY 9,137 million of which 65.4% were in Turkish liras and 34.6% were in foreign currencies. TRY 7,544 million of the bank’s deposits are held in participation accounts and TRY 1,593 million in demand accounts. Quality Management System Ever since commencing operation in 1996, Bank Asya has always advanced along the path of being a bank that comes up with different solutions in order to reflect the concept of “quality” in all of its banking products and services. Conducting all of its activities under ISO 9001:2001 Quality Management System certification awarded by TÜV NORD, Bank Asya develops and delivers its products and services with a thoroughly customerfocused approach. As a result of the close attention given to quality ever since Bank Asya was founded, a quality management system has grown up at the bank that is uniquely its own. Incorporating universal notions as its most fundamental elements, the Asya Quality Management System adapts them to the bank’s corporate culture and enriches them with local and corporate values with which all employees can identify. The basic elements of the Asya Quality Management System consist of the following: • Asya 8 Management Principle • Asya Quality Management Pyramid • Asya Process Based Quality Management In line with these basic elements at Bank Asya: • A quality policy, mission, vision, and goals have been identified with broad involvement, explicitly defined and documented, and announced to all employees. • All documentation (quality manual, procedures, regulations, and service specifications) required by the system has been prepared and records pertaining to such documents are maintained. • Senior management has expressed its commitment on such issues and declared its responsibilities. • Processes have been defined and documented. Process flow charts and the steps involved in making those processes operational have been set forth. • Unit and branch organizational elements along with job definitions and requirements have been specified for all process functions. • As a result of the close attention given to quality ever since Bank Asya was founded, a quality management system has grown up at the bank that is uniquely its own. Deposits Breakdown of Deposits Breakdown of Deposits (TRY million) (%) (%) 9,137 56% 5,843 08 09 FC TL Participation Accounts Current Accounts 34.6 17.0 65.4 83.0 46 Bank Asya Annual Report 2009 Assessment of Bank Asya activities in 2009 Ever since commencing operation in 1996, Bank Asya has always advanced along the path of being a bank that comes up with different solutions in order to reflect the concept of “quality” in all of its banking products and services. • Human resources have been recruited to fulfill product and service requirements and they have been trained to system compliant. • Materials and equipment resources have been procured and suitable workplaces have been provided to fulfill product and service requirements. • Control points have been created where necessary to ensure ongoing measurement, analysis, and improvement. The Asya Quality Management System encompasses all of the bank’s units, branches, and staff and all of its products and services. Bank Asya demonstrates its commitment and its ability to continuously develop, apply, and increase the effectiveness of its quality management system at all times. Employees are accordingly regularly provided with information, training, and guidance so that they may fulfill customers’ needs and expectations as required by law and in the manner specified by the quality management system. Because a customer-focused management approach is regarded as vital to the sustainable existence of companies in today’s competitive environment, such an approach is strictly adhered to. Customers’ needs and expectations are continuously monitored in order to determine exactly what they are and how they may be fulfilled. Feedback from such monitoring is used as input to maintain ongoing product and service quality at every stage from design to delivery. Under a new organizational structure, an Organization and Quality Department has been set up and given the duty of making sure that all the elements–policies, human resources, system infrastructure, and workplaces–needed to ensure that all aspects of the company and of its products and services are in compliance with the Quality Management System. This department is responsible for developing and monitoring the system, for continuously improving it where needed by increasing its productivity and effectiveness, and for coordinating all matters related to these efforts. Describing and managing all of the banks’ products and services as processes are fundamental to the department’s activities. Information Technologies Bank Asya’s information technology working model is based upon standard methods and approaches that are regarded as generally accepted practices throughout the world. The standards with which the bank complies consist of COBIT (corporate governance), ITIL (operations), ISO 27001 (information security management), CMMI (software engineering), and PMI (project management). In 2009 the bank’s Help Desk was reorganized and began using a standard call center infrastructure. Use of the HP Service Manager system was deployed throughout the bank in the center’s event, problem, configuration, and change management processes. Project management processes were reviewed under the supervision of the Project Management Office, which was set up in 2008. All projects and projectrelated requests are now being managed by means of the HP Project and Portfolio Manager system. The HP Quality Center system has been introduced to manage information system testing processes and to improve product quality. It was also decided to make use of automated testing procedures in order to reduce testing costs and the frequency of errors. Testing processes defined in accordance with this methodology were launched using the Quick Test Professional system. The infrastructure of the Bank Asya internet branch was renewed using Java technology in 2009. The advantages offered by Web 2.0 technology were combined with a completely different visual design and made available for customers to use. The new online branch has been improved with design features that allow users to make visual changes according to their preferences and with an advanced navigation system that provides quick access to frequently used menus. The bank’s www.asyacard.com.tr was opened for credit card customers. Not long afterward the website received the “Best in Class” award in the “Banking” category from Interactive Media Council. In line with the strategic goals that had been set for the year, customer relationship management (CRM) activities were launched in 2009. CRM strategies have been identified and a roadmap for the deployment of their associated projects in the years ahead has been drawn up. Under the same heading, work has also begun on the development of a segment-based business model. It was decided to use the TONBELLER Siron system to bring the bank into compliance with anti-money laundering regulations. This project was initiated in 2009. Under the heading of note-related process centralization, the entire cycle from note scanning to collection was redesigned. The new system, which is now in operation, has already resulted in significant improvements in operational efficiencies and cost savings. Bank Asya Annual Report 2009 Bank Asya’s information technology working model is based upon standard methods and approaches that are regarded as generally accepted practices throughout the world. 47 Virtual cards were introduced during 2009 for both MasterCard and Visa customers. By allowing users to define limits from the bank’s internet branch, these cards significantly reduce the risk of losses due to fraud etc when shopping online. We have reached the final stage in a project to change over to a more advanced version of the bank’s call center infrastructure. The bank’s disaster recovery center systems will also be commissioned in the period ahead. In 2009 Bank Asya introduced “cashback” service for customers who use the bank’s debit cards when shopping. This feature allows them to receive an additional amount of cash along with the goods that they buy from vendors, with both amounts being immediately withdrawn from their accounts. Work has begun on the bank’s Central Log Management system. This is also slated to become operational in the period ahead. Bank Asya has introduced an FC-denominated virtual POS to meet the needs of vendors who serve the bank’s foreign customers. After a lengthy research and development process, Bank Asya’s “DIT Pratik”, the world’s first prepaid contactless bank card, was introduced to the market along with MasterCard. Since the end of 2009, Bank Asya branches have been authorized to issue these cards to anyone who walks in, whether they are bank customers or not. The issuing process usually takes just fifteen minutes. Mass-produced “anonymous” cards can also be purchased from merchant partners. IT Infrastructure Investments Operations management solutions have been introduced in order to ensure the detailed and proactive “end-to-end” monitoring of the bank’s information technology (IT) infrastructure systems. These solutions make it possible to spot problems in infrastructure, network, software, and hardware systems ahead of time and to ensure that the IT environment is effectively controlled. The Bank Asya Active Directory infrastructure was upgraded to the Windows Server 2008 platform, with is more advanced and more secure. The bank’s virtualization infrastructure was doubled in size during 2009. In addition to its cost advantages, the virtualization platform which the bank has deployed allows hardware to be used more effectively, flexibly, and productively while also providing a high degree of accessibility to system infrastructure through faster and easier system management. Data link capacities between headquarters and branches were increased, making it possible for branches to serve customers faster. In the coming year we intend to change over to a faster infrastructure by upgrading the basic banking system data base system one level. Development and testing work for this project is now under way. Research and development Research work is being conducted in ways to allow clients in different locations to download and install software from remote sources. This system will also provide for automatic monitoring of client/server inventories. A large number of research projects that are being run in parallel with one another are looking into ways to make use of appropriate alternative communication technologies in different aspects of banking. A variety of web and mobile technologies are being explored for possible use in order to make some of the processes that customers initiate more accessible and efficient. Under the heading of operational process optimization and centralization, research and development work is currently being carried out in the areas of document management systems and document processing hardware. Research work is being conducted into ways in which voice recognition technology may be used to improve security in call center and online branch applications. Bank Asya-designed transportation fare solutions are now being used on buses in four cities, at highway toll collection booths, on Turyol passenger ferries, and in some taxis. New and innovative features are constantly being introduced in this business line. R&D work is currently looking into single-use cards, anonymous cards, unattended POS, parking facility, and a variety of university campus solutions. R&D work has begun on the creation of a “service oriented architecture” that will be providing the infrastructure for projects that are being planned in the years ahead. R&D work has begun on the creation of a new roof that will support a project whose aim is to simplify the structure of the bank’s call center. 48 Bank Asya Annual Report 2009 responsible Investing in our country’s future Believing that investing in Turkish football is the same as investing in the country’s future, Bank Asya has been a named sponsor of the Turkish Football Federation’s 1st League since the beginning of 2008. Through its sponsorship, Bank Asya seeks to improve both the brand value of the 1st League and the quality of football that is played in it. International awards “Best Film” Wrong Rosary, a film produced with Bank Asya support, returned from the 38th Rotterdam Film Festival and the 6th Crossing European Film Festival with the “Best Film” awards. Conservationist, artistic, sensitive, sport fan During the year, Bank Asya sponsored a variety of activities in order to highlight its “conservationist, artistic, sensitive, sport fan” aspects along with its reputation as a “banking specialist”. The Hijra: A Sacred Journey The Hijra: A Sacred Journey, the ninth in Bank Asya’s series of cultural publications, was released in February 2009. Bank Asya Annual Report 2009 49 50 Bank Asya Annual Report 2009 Corporate Social Responsibility In addition to its league sponsorship, Bank Asya also provides material support to the league by supplying liveried uniforms to fourteen of its eighteen teams. Corporate communication and publicity Bank Asya sponsors a variety of sport, cultural, artistic, and other events as a way of undertaking and supporting projects that contribute to the wellbeing of society while drawing attention to the importance of shared values whose aim is to create a better and more livable world for future generations. of sports in Turkey, Bank Asya has undertaken the sponsorship of Aşkın Karaca, a 19-year-old track athlete. Mr Karaca broke Turkish indoor and outdoor junior-league records a total of four times in 2009 while finishing second in the European Athletics Junior Championship and third in the World Junior Championship. Throughout the year Bank Asya remained in effective and constant communication with its customers and employees and with media organizations and the public at large. All of the bank’s corporate communication and marketing activities are intended to reach out to all of its stakeholders. The Bank Asya Çırağan Kolej Spor Basketball Team, a third-league team of which Bank Asya is a named sponsor, once again successfully carried the Bank Asya name to new heights through its superior performance during the year. Sponsorships During the year, Bank Asya sponsored a variety of activities in order to highlight its “conservationist, artistic, sensitive, sport fan” aspects along with its reputation as a “banking specialist”. Event sponsorships Events such as the İNEPO International Environmental Project Olympiad and the Turkish Olympiads, which have become identified with Bank Asya over the years, continue to be sponsored. In addition, the bank also sponsors events that focus on trade and finance-related matters like the Active Academy 7th Financial Summit and meetings held by the Turkish Confederation of Businessmen and Industrialists (TUSKON). Culture and art sponsorships Continuing to support culture and art, Bank Asya has been a prime sponsor of the Fatih University “Crystal Clapperboard Short Film Competition” for three years. The objectives of this competition are to take Turkish cinema to new heights and to encourage youngergeneration filmmakers. In 2009 Bank Asya also sponsored two feature-length films. The bank intends to continue such support in the years ahead as well. Wrong Rosary, a film produced with Bank Asya support, returned from the 38th Rotterdam Film Festival and the 6th Crossing European Film Festival with the “Best Film” awards and was also the recipient of numerous awards at both the İstanbul Film Festival and the Golden Boll Film Festival. Eşrefpaşalılar, another feature-length film sponsored by Bank Asya, will be shown around the country in 2010. Media sponsorships During 2009 Bank Asya sponsored a variety of appearances and presences which supported the bank’s corporate image and which took place variously in 5 newspapers, 6 radio stations, and 15 TV channels. The bank also sponsored a variety of TV, radio, and newspaper activities that appeared during Ramadan. Sport sponsorships Believing that talented young people need to be supported individually for the sake of the future Bank Asya 1st League Believing that investing in Turkish football is the same as investing in the country’s future, Bank Asya has been a named sponsor of the Turkish Football Federation’s 1st League since the beginning of 2008. Through its sponsorship, Bank Asya seeks to improve both the brand value of the 1st League and the quality of football that is played in it. In addition to its league sponsorship, Bank Asya also provides material support to the league by supplying liveried uniforms to fourteen of its eighteen teams. Under the heading of the Bank Asya 1st League Awards, conducted for the first time in the history of the 1st League in May 2009, 1st League players selected by popular vote became the recipients of the bank’s “11 of the Year” awards in seven categories. In addition to the material support that Bank Asya provides to Turkish football and sport clubs, it also gives out awards in a number of categories with the aim of supporting institutionalization in such clubs. Periodical publications Bank Asya publishes Biz Asya, a quarterly inhouse magazine whose aims are to strengthen communication within the company while also appealing to the interests of customers as well. Another bank-published periodical is Bank Asya 1. Lig, which first appeared at the beginning of 2009 and is the first and still the only 1st league magazine in Turkey. This monthly is delivered personally to subscribers and can also be obtained free of charge at Bank Asya branches by anyone who wants a copy. The publication has already attracted a wide readership. Bank Asya cultural services As a requirement of its social responsibility policy, Bank Asya continues to support cultural services carried out with the aims of taking responsibility for our historical and cultural assets and of promoting and keeping our cultural heritage alive. As part of this effort, Mukaddes Göç Hicret (The Hijra: A Sacred Journey) was published in February 2009. The ninth in the series of works supported by Bank Asya, the book introduces the concept of “hijra” in the broad sense while providing detailed explanations of previous prophets’ hijras and finally that of Muhammad. The accounts are accompanied by photographs of the routes that were taken. Bank Asya Annual Report 2009 51 Subsidiaries and Affiliates Işık Sigorta Işık Sigorta is an İstanbul-based general insurer established in 1996 with the special mission of attracting those who were unfamiliar with insurance or had negative attitudes about it. Işık Sigorta’s capitalization amounts to TRY 60 million in which Bank Asya controls a 65.42% stake. Işık Sigorta has adopted a customer-focused structure making use of an advanced data processing network and experienced personnel in order to supply better service on insurance consultancy issues to its customers. It develops products in line with customers expectations and needs and delivers them with a perfectionist service approach before, during, and after sales. Işık Sigorta also gives importance to its corporate structure and is continuing its efforts in this direction. Investing in technology in order to ensure both the continuity of its services and its uninterrupted ability to supply them, Işık Sigorta was the first insurance company to set up an online system connecting itself with its agents. This system continues to give the company a huge advantage in terms of business conduct and service quality. In November 2007 the company moved its headquarters into a modern, fully-automated “smart” building along with Bank Asya and since then it has been serving its agents and customers from its prestigious new premises. Işık Sigorta conducts its activities through its Marmara, Ankara, İzmir, Adana, and Antalya regional departments and its Bursa and Trabzon regional representatives, through more than 400 authorized agents located all over the country, and through the branches of Bank Asya, Albaraka Türk, and Türkiye Finans. Tuna Gayrimenkul Yatırım Ortaklığı AŞ Tuna Gayrimenkul Yatırım Ortaklığı AŞ is a real estate investment trust. Formerly a construction company known as Asyafin Turizm Proje İnşaat Emlak Sanayi ve Ticaret AŞ, the company turned itself into a REIT after obtaining a license from the Capital Markets Board and it commenced operations in that capacity as of 30 September 2009. Tuna GYO is authorized to invest in real estate properties, in capital market vehicles based on real estate properties, in real estate development projects, in real estate-based rights, and in capital market vehicles and also to engage in all other activities allowed by CMB regulations and communiques pertaining to real estate investment trusts. Bank Asya directly controls a 22.94% stake in Tuna GYO. Nil Yönetim Hizmetleri Emlak Turizm Sanayi ve Ticaret AŞ, a majority-held Bank Asya subsidiary, controls a 46.45% stake. Nil Yönetim Hizmetleri Emlak Turizm Sanayi ve Ticaret AŞ Nil Yönetim Hizmetleri Emlak Turizm Sanayi ve Ticaret AŞ is a real estate management services company that operates the Asya Termal Holiday Village owned by Tuna GYO. Bank Asya controls a 99.93% stake in the company. Asya Termal Holiday Village is located in Kızılcahamam, a thermal springs spa located 70 kms north of Ankara that has been known and used for centuries by many different cultures and civilizations. Occupying an area of approximately 100,000 m², Asya Termal Holiday Village contains a 5-star hotel with 94 rooms and a 200 bed capacity, 494 deluxe timeshare houses (held under 11,856 two-week contracts), recreation facilities, indoor and outdoor swimming pools, health units, a shopping center, a cultural center, and a congress center. Asya Termal Holiday Village quickly established a solid reputation as a prestigious venue for holidays and as a health and congress tourism destination. Since the day it was founded, it has played host to many famous Turkish and international guests and to important meetings and events. The resort plays a major role in promoting Kızılcahamam as a nationally and internationally famous spa. 52 Bank Asya Annual Report 2009 Independent Auditors’ Compliance Opinion on Annual Report Asya Katılım Bankası A.Ş. Genel Kurulu’na; Asya Katılım Bankası A.Ş.’nin 31 Aralık 2009 tarihi itibarıyla hazırlanan yıllık faaliyet raporunda yer alan finansal bilgilerin ilgili hesap dönemi sonu itibarıyla düzenlenen bağımsız denetim raporu ile uyumluluğunu ve doğruluğunu denetlemiş bulunuyoruz. Rapor konusu yıllık faaliyet raporu Banka yönetiminin sorumluluğundadır. Bağımsız denetimi yapan kuruluş olarak üzerimize düşen sorumluluk, yıllık faaliyet raporunda yer alan finansal bilgilerin bağımsız denetimden geçmiş finansal tablolar ve açıklayıcı notlar ile uyumuna ilişkin olarak denetlenen yıllık faaliyet raporu üzerinde görüş bildirmektir. Denetim, 5411 sayılı Bankacılık Kanunu uyarınca yürürlüğe konulan yıllık faaliyet raporu hazırlanmasına ve yayımlanmasına ilişkin usul ve esaslar ile bağımsız denetim ilkelerine ilişkin düzenlemelere uygun olarak gerçekleştirilmiştir. Bu düzenlemeler, yıllık faaliyet raporunda önemli bir hatanın olup olmadığı konusunda makul güvence sağlamak üzere planlanmasını ve yürütülmesini gerektirmektedir. Gerçekleştirilen denetimin, görüşümüzün oluşturulmasına makul ve yeterli bir dayanak oluşturduğuna inanıyoruz. Görüşümüze göre, ilişikteki yıllık faaliyet raporunda yer alan finansal bilgiler, bütün önemli taraflarıyla, Asya Katılım Bankası A.Ş.’nin 31 Aralık 2009 tarihi itibarıyla 5411 sayılı Bankacılık Kanununun 40’ıncı maddesi gereğince yürürlükte bulunan düzenlemelerde belirlenen usul ve esaslara uygun olarak bankanın finansal durumuna ilişkin bilgileri doğru bir biçimde yansıtmakta ve özet yönetim kurulu raporu ile tarafımızca verilen bağımsız denetçi görüşünü içermekte olup, bağımsız denetimden geçmiş finansal tablolar ve açıklayıcı notlarda verilen bilgiler ile uyumludur. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU Sibel Türker Sorumlu Ortak Başdenetçi, SMMM İstanbul, 2 Mart 2010 Bank Asya Annual Report 2009 Information on Management and Corporate Governance Practices 54 56 58 60 62 64 66 68 69 76 76 77 78 Board of Directors Statutory Auditors Senior Management Organization Chart Committees Summary Annual Report Human Resources Transaction Volume of the Risk Group of the Bank, Outstanding Loan and Deposit Balances and Current Income and Expense Amounts Corporate Governance Principles Compliance Report The Bank’s Profit Distribution Policy Proposal to Distribute Bank Asya 2009 Year Profits 2009 Ordinary General Meeting Agenda Explanatory notes concerning the items on the 2009 Ordinary General Meeting Agenda 53 54 Bank Asya Annual Report 2009 Board of Directors 1 (1) Behçet Akyar (*) Chairman Industrialist & businessman. Born in İstanbul in 1955, Behçet Akyar graduated from the İstanbul Academy of Economic Sciences (Department of Economics and Public Finance) in 1978. He began his career in 1979 as a managing partner of the firm of Aker Kumaş Kollektif Şti and he subsequently served in a number of companies of which he was the owner. He has been a partner and member of the board of directors of Feza Gazetecilik AŞ since 1992. During the same years Mr Akyar also served as a managing partner of Aker Mağazacılık Tekstil Ticaret ve Sanayi Ltd Şti, a position that he has also held at Akerler Tekstil Ticaret ve Sanayi Ltd Şti since 1997. He has been chairman of the Bank Asya Board of Directors since February 2010. 2 (2) Salih Sarıgül Vice Chairman Businessman. Born in Van in 1955, Salih Sarıgül is a graduate of Ege University (Faculty of Economics). He was appointed to a seat on Bank Asya’s board of directors in December 2006 after having previously served as a statutory auditor since July 2004. He currently also holds the positions of vice chairman at Nil Yönetim Hizmetleri Turizm Sanayi ve Ticaret AŞ, board member at Işık Sigorta AŞ, board member at Asya Kart Teknolojileri Hizmetleri AŞ, vice chairman at Yeni Mağazacılık AŞ, vice chairman at Landmark Supply Holding AŞ, and statutory auditor at Tuna Gayrimenkul Yatırım Ortaklığı AŞ. 3 (3) Cemil Özdemir (**) Board Member and CEO Born in Sivas in 1960, Cemil Özdemir graduated from Ankara University (Faculty of Political Sciences, Department of Business Administration) in 1984. Having successfully sat for the qualifying examinations the same year, he began his career as an assistant certified banks comptroller. In that capacity he spent a year in the United States doing research on the subjects of investment banking and risk capital. In December 1995 he resigned his position as chief certified banks comptroller and subsequently served as an assistant general manager at Yurtbank AŞ, chief assistant general manager at Family Finans Kurumu AŞ, and managing director at T. Halk Bankası AŞ before joining Bank Asya as a member of the Board of Directors in 2005. Mr Özdemir served as the bank’s vice chairman and as a member of the Audit Committee in 2009. He has held the position of board member and CEO of Bank Asya since February 2010. * Tahsin Tekoğlu resigned his positions as chairman and member of the Bank Asya Board of Directors effective 12 February 2010 and was replaced by Behçet Akyar in his capacity as chairman and by İsmail Erol İşbilen as board member and member of the Audit Committee. ** Ünal Kabaca resigned his position as Bank Asya general manager and board member effective 28 January 2010. He was replaced by Vice Chairman Cemil Özdemir in his capacity as general manager and by Behçet Akyar as a member of the Board of Directors. *** Tacettin Negiş was elected to a seat on the Audit Committee as of 12 February 2010. Bank Asya Annual Report 2009 4 (4) Tacettin Negiş (***) Board Member Businessman. Born in Bayburt in 1948, Tacettin Negiş has been a member of the Bank Asya Board of Directors since July 2004. He also holds a seat on the Board of Directors of Tuna Gayrimenkul Yatırım Ortaklığı AŞ and is the chairman of the firm of Negiş Giyim İmalat ve İhracat AŞ. 5 6 (5) İsmail Erol İşbilen Board Member Born in Çankaya in 1959, İsmail Erol İşbilen graduated from Ankara University (Faculty of Political Sciences, Department of Economics and Public Finance) in 1981. He began his banking career in 1983 as an assistant inspector at T. Garanti Bankası AŞ. After serving in a number of positions at the same bank and eventually becoming its assistant regional manager for İzmir, he joined Bank Asya in 1997, where he served for three years as a branch manager and for four years as head of the loans unit before resigning his position in April 2004. From June 2005 to February 2010, Mr İşbilen served as head of the financial analysis and business intelligence department of T.C. Ziraat Bankası AŞ and he rejoined Bank Asya in the latter year. Since then he has held seats on the bank’s Board of Directors and Audit Committee. Board members and their terms of office Details pertaining to the constitution of the bank’s board of directors and to the terms of office of its members are governed by article 32 of the bank’s articles of association. Board members serve for three-year terms. A director whose term of office has expired may be reelected. Board of Directors TTahsin Tekoğlu Cemil Özdemir Tacettin Negiş Salih Sarıgül Ahmet Çelik Murat Sungurlu Ünal Kabaca Position held Chairman Vice Chairman Board Member Board Member Board Member Board Member Board Member and CEO 55 Since 1996 2005 2004 2006 2009 2009 1997 (6) Murat Sungurlu Board Member Textile manufacturer & businessman. Born in Ankara in 1966, Murat Sungurlu is a member of the İstanbul Chamber of Commerce Board of Governors. He has been a member of the Bank Asya Board of Directors since March 2009. 7 (7) Ahmet Çelik Board Member Businessman. Born in Erzurum in 1955, Ahmet Çelik graduated from İstanbul University (Faculty of Economics) in 1984. He began his career in 1983 as a founding shareholder in the firms of Yapı Yatırım ve Gayrimenkul AŞ (housing and industrial construction), Hamle Oto AŞ (corporate and fleet vehicle rentals), Çelikeller AŞ (white goods dealership), Çelikeller Ltd Şti (foods), and Birim Gayrimenkul Ltd Şti (real estate). Mr Çelik has been a member of the Bank Asya Board of Directors since 2009. Board of Directors Meetings Under article 38 of the bank’s articles of association, the Board of Directors must convene at least four times during a fiscal year. The board meets whenever the company’s business requires and/or upon the invitation of its chairman. The bank’s board usually meets four times a month. Meetings are usually attended by all members except in situations where members may have to excuse themselves. Under article 44 of the bank’s articles of association, directors are paid a fee for each board meeting that they attend. 56 Bank Asya Annual Report 2009 Statutory Auditors 1 (1) Atif Bilgin Statutory Auditor Businessman. Born in Elbistan in 1952, Atif Bilgin has been a statutory auditor of Bank Asya since 2006. He also holds a seat on the Board of Directors of Asya Kart Teknolojileri Hizmetleri AŞ and serves as a statutory auditor for Nil Yönetim Hizmetleri Turizm Sanayi ve Ticaret AŞ. 2 (2) İrfan Hacıosmanoğlu Statutory Auditor Businessman. Born in Of in 1962, İrfan Hacıosmanoğlu is the owner of the firm of İrfan Tekstil Sanayi Ticaret Ltd Şti. He was appointed a statutory auditor of Bank Asya in March 2009. He currently serves as a board vice chairman at Forum İnşaat Dekorasyon Turizm Sanayi ve Ticaret AŞ, as a board member at Işık Sigorta AŞ, as a board member at Asya Kart Teknolojileri Hizmetleri AŞ, as a board member at Yeni Mağazacılık AŞ, and as a board member at Landmark Supply Holding AŞ. 3 (3) Ali Akbulut Statutory Auditor Textile manufacturer & businessman. Born in Malatya in 1956, Ali Akbulut is a graduate of İnönü University (Faculty of Economic and Administrative Sciences). He has been a statutory auditor at Bank Asya since 2000. He holds the license for Feza Gazetecilik AŞ, a news paper publisher and also currently serves as a board member at Nil Yönetim Hizmetleri Turizm Sanayi ve Ticaret AŞ, as board chairman at Ortadoğu Tekstil Ticaret ve Sanayi AŞ, and as a board member at Asya Kart Teknolojileri Hizmetleri AŞ. Bank Asya Annual Report 2009 The statutory auditors and their terms of office Details pertaining to the constitution of the bank’s board of statutory auditors and to the terms of office of its members are governed by article 49 of the bank’s articles of association. Statutory auditors serve for three-year terms. Board of Statutory Auditors Ali Akbulut Atif Bilgin İrfan Hacıosmanoğlu Position held Statutory Auditor Statutory Auditor Statutory Auditor Since 2000 2006 2009 57 Changes in the memberships of the Board of Directors and among the Statutory Auditors during 2009 Elections were held to seats on the bank’s board of directors and to its positions of statutory auditor at the general meeting of 21 March 2009 due to the expiration of the three-year terms of the existing incumbents. In these elections: Tahsin Tekoğlu, Cemil Özdemir, Tacettin Negiş, Salih Sarıgül, Ünal Kabaca, Ahmet Çelik, and Murat Sungurlu were elected to three-year terms as members of the Board of Directors. Ali Akbulut, Atif Bilgin, and İrfan Hacıosmanoğlu were elected to three-year terms as statutory auditors. 58 Bank Asya Annual Report 2009 Senior Management 1 (1) Cemil Özdemir Board Member and CEO Born in Sivas in 1960, Cemil Özdemir graduated from Ankara University (Faculty of Political Sciences, Department of Business Administration) in 1984. Having successfully sat for the qualifying examinations the same year, he began his career as an assistant certified banks comptroller. In that capacity he spent a year in the United States doing research on the subjects of investment banking and risk capital. In December 1995 he resigned his position as chief certified banks comptroller and subsequently served as an assistant general manager at Yurtbank AŞ, chief assistant general manager at Family Finans Kurumu AŞ, and managing director at T. Halk Bankası AŞ before joining Bank Asya as a member of the Board of Directors in 2005. Mr Özdemir served as the bank’s vice chairman and as a member of the Audit Committee in 2009. He has held the position of board member and CEO of Bank Asya since February 2010. 2 (2) Ayhan Keser Executive Vice President Born in Ankara-Kalecik in 1970, Ayhan Keser graduated from Middle East Technical University (Department of Economics) in 1991. After working briefly at T.C. Ziraat Bankası, he served as an assistant and then full certified banks comptroller at the Treasury Undersecretariat. Mr Keser joined Bank Asya in September 1997 and currently holds the position of executive vice president at the bank. 3 (3) Mustafa Büyükateş Executive Vice President Born in Konya in 1957, Mustafa Büyükateş graduated from Atatürk University (Faculty of Business Administration) in 1981. He began his banking career in 1985 on the Board of Inspectors of Garanti Bankası and also served in the same bank’s inspection and project implementation units between 1985 and 1996. Mr Büyükateş joined Bank Asya in 1996, serving in positions in the retail banking and corporate marketing departments. He has held the position of executive vice president at the bank since 2004. 4 (4) Yusuf İzzettin İmre Executive Vice President Born in Konya-Doğanhisar in 1958, Yusuf İzzettin İmre graduated from the Tarsus College of Foreign Languages in 1978 and from Uludağ University (Faculty of Economic and Administrative Sciences, Department of Public Finance) in 1984. He began his career in banking in 1985 as an assistant bank inspector at Egebank. He subsequently held management positions in accounting, budget, and financial control at Egebank (1990-1994) and at Arap Türk Bankası (1994-1996). Mr İmre joined Bank Asya in October 1996 as an accounting, budget, and financial control manager and he has held the position of executive vice president at the bank since June 2004. He is also a member of the Board of Directors of Senegalbased Tamweel Africa Holdings Inc. Bank Asya Annual Report 2009 5 (5) Dr. Mahmut Demirkan Executive Vice President Born in Kayseri in 1964, Mahmut Demirkan graduated from İstanbul University (Faculty of Political Sciences, Department of Public Administration) in 1991 and also holds a master’s degree in Management and Organization (1991) and a doctorate in Social Policy (1996) from İstanbul University (Institute of Social Sciences). Dr Demirkan served as a national project specialist for the United Nations Development Program (UNDP) Bin 1990-1993 and began his academic career as a researcher at the Sakarya University Faculty of Economic and Administrative Sciences in the latter year. He has been a member of the faculty of the Department of Human Resources Management at the same school since 1997. Dr Demirkan joined Bank Asya in 2003 as the bank’s organization and quality manager and served as information technologies and management systems group manager in 2005-2008. He has held the position of executive vice president at the bank since February 2008. 6 (6) Buket Gereçci Executive Vice President Born in Gaziantep in 1967, Buket Gereçci is a is a graduate of Ankara University (Faculty of Political Sciences, Department of International Relations). She began her banking career at Garanti Bankası in 1990 and subsequently worked at Toprakbank and then Finansbank. She joined Bank Asya in 2002 as the manager of the bank’s Gaziantep branch and has held the position of executive vice president since February 2008. 7 (7) Ali Tuğlu Executive Vice President Born in İstanbul in 1969, Ali Tuğlu is a graduate of İstanbul Technical University (Department of Computer Engineering) and holds a masters in computer science from Virginia Tech University (1995). He began his career as a teaching assistant at the same school and served there from 1993 to 1995. In 1995-1996 he was a software project manager for CGN Consulting in the United States and in 1997-1998 a software group manager for the Minerva software house. From 1998 to 2008, he served in a variety of positions in the national and regional organizations of Hewlett Packard in Turkey, eventually becoming HP’s Consulting Segment Manager for the Middle East, Africa, and Mediterranean. Mr Tuğlu joined Bank Asya in March 2008 and currently holds a position as an executive vice president responsible for the bank’s Information Technologies Group. 59 8 (8) Salim Köse Group Manager and Chief Legal Advisor Born in Afyon in 1966, Salim Köse is a graduate of İstanbul University (Faculty of Law). He began his career at Emlak Bankası while still a student in 1990 and he remained at that bank until 1998. He was subsequently recruited by Etibank to serve as a bank attorney and assistant legal consultant. In 2001 he joined the Savings Deposit Insurance Fund and worked there until 2007 serving as attorney, group manager, assistant office head, and group coordinator. During his tenure there, he also held directorial and administrative positions with management and auditing responsibilities on a number of firms that were taken over by the fund. Mr Köse joined Bank Asya as chief legal advisor in August 2007. Since December 2008, he has been heading a group consisting of the bank’s Legal Office, Non-Performing Loans Department, and Risk Monitoring Department. 60 Bank Asya Annual Report 2009 Organization Chart BOARD OF DIRECTORS CEO Consultancy to the CEO Board of Directors Office Management Osman Nuri Ersen Investor Relations Rifat A. Çağlayan Executive Vice President Executive Vice President Executive Vice President Ayhan Keser Mustafa Büyükateş Buket Gereçci Corporate Marketing Ali Şenel Retail Products Management Semih Alşar Commercial Marketing-I Retail Loans Allocation Ender Gürer Hasan A. Küçük Legislation and Compliance Commercial Marketing-II Nazan Ergün Atilla M. Topçu SME Banking Tolga Sasık Financial Institutions İbrahim Öğüdücü Treasury Cenk Yavuz Advertising and Public Relations N. Çiğdem Belgutay Payment Systems Mustafa Ölmez ADC Operations İsrafil Aydın ADC Marketing Banking Services Yasemin Aydın J. Başak Ünal Retail Sales Management Cash Management Elif Özmen Cem Günçavdı Credit Operations Adil Zeki Şahin International Transactions Olcay Çakır Bank Asya Annual Report 2009 Executive Vice President Executive Vice President Executive Vice President Yusuf İzzet İmre Dr. Mahmut Demirkan Ali Tuğlu Group Manager and Chief Legal Advisor Salim Köse Budget and Reporting Human Resources System Development Legal Consultancy Inspection Board Kamil Yılmaz Ömer Faruk Şenel Mustafa Saraç Serhat Güler Hilali Yıldırım General Accounting Administrative Affairs Software Development Non-performing Loans Internal Control Fuat Akgün Erol Anlı Bülent Güngör Zafer Ertan Mahmut Yalçın Financial Analysis & Information Construction & Development System Operations Risk Monitoring Risk Management Erdal Erdem Hüseyin Sevil Bekir Başkurt Mete Eryaşar Mehmet Kamil Tümer Credit Allocation-I Ali F. Taşkesenlioğlu Credit Allocation-II Özcan Özverim Training Ömer Faruk Şenel (acting) Information Technology Project Management M. Ergün Aydemir Purchasing Card Technologies Sabahattin Kaplan Sami Özen Organization and Quality Jale Doğu 61 62 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Committees Credit Committee Position Member Member Member Name Ahmet ÇELİK Salih SARIGÜL Ünal KABACA Title Board member Board member President & CEO The Credit Committee is responsible for evaluating proposals to extend commercial, corporate, and small business credit throughout the bank and it convenes regularly every week. The Credit Committee has the power to extend or refuse to extend credit within the limits of its own authorities subject to the requirements of banking laws and regulations. Proposals that exceed those limits are submitted to the Board of Directors for approval. Corporate Governance Committee Position Chairman Member Member Member Member Member Name Tahsin TEKOĞLU Cemil ÖZDEMİR Yusuf İzzettin İMRE Mahmut DEMİRKAN Mehmet Kamil TÜMER A. Rifat ÇAĞLAYAN Title Chairman of the Board of Directors Board member Executive Vice President Executive Vice President Head of Risk Management Investor Relations Manager The Corporate Governance Committee convenes at least three times a year in order to follow up the Bank’s compliance with the corporate governance principles and bring forward proposals to the Board of Directors for improvement in this manner. Audit Committee Position Member Member Name Tahsin TEKOĞLU Cemil ÖZDEMİR Title Chairman of the Board of Directors Deputy Chairman of the Board of Directors The Audit Committee periodically prepares a “Audit Committee Activity Report” of the auditing and risk management results obtained in order to ensure that an effective internal audit and risk management system has been established throughout the bank it and reports them to the Board of Directors. The Audit Committee convened ten times during 2009 and all committee members were present at all meetings. The Audit Committee also met an additional four times with the independent auditors in order to evaluate their independent auditing activities. Assets and Liabilities Committee Position Chairman Member Member Member Member Member Member Member Member Member Member Member Member Member Member Member Member Name Ünal KABACA Ayhan KESER Yusuf İ. İMRE Mustafa BÜYÜKATEŞ Buket GERECÇİ Mahmut DEMİRKAN Ali TUĞLU Salim KÖSE Kamil YILMAZ Ali ŞENEL Ender GÜRER Atilla M. TOPÇU Tolga SASIK Mehmet Kamil TÜMER Elif ÖZMEN Semih ALŞAR Cenk YAVUZ Title President & CEO Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Executive Vice President Group Manager & Chief Legal Advisor Budget & Reporting Manager Corporate Marketing Manager Commercial Marketing I Manager Commercial Marketing II Manager Enterprise Banking Manager Head of Risk Management Retail Sales Manager Retail Products Manager Treasury Manager Bank Asya Annual Report 2009 63 Asya Katılım Bankası A.Ş. Committees Member İbrahim ÖĞÜDÜCÜ Financial Institutions Manager The Assets and Liabilities Committee convenes every week in meetings which are presided over by the president & CEO and are attended by executive vice presidents and by the managers of units whose activities might have an impact on balance sheet results. Meeting agendas consist of assessing the bank’s balance sheet and business line activities, general economic data, and current political and economic developments and of determining strategies for the coming week. Information Technologies Strategy and Steering Committee Position Chairman Member Member Member Member Member Name Ünal KABACA Ali TUĞLU Bekir BAŞKURT Bülent GÜNGÖR M. Ergün AYDEMİR Mustafa SARAÇ Title President & CEO Executive Vice President System Hardware Manager Software Development Manager Information Technology Projects Manager Systems Development Manager The Information Technologies Strategy and Steering Committee convened periodically during 2009 in meetings at which strategic and tactical plans in line with business targets and IT budgets were formulated and IT activity and plan compliance issues were reviewed and reported. Discipline Committee Position Chairman Member Member Member Name Ünal KABACA Mahmut DEMİRKAN Salim KÖSE Ömer Faruk ŞENEL Title President & CEO Executive Vice President Group Manager & Chief Legal Advisor Human Resources Manager The Discipline Committee determines the existence of acts and transactions that necessitate disciplinary action as per the bank’s own bylaws and regulations as well as the perpetrators, the degrees of culpability, and the possible liabilities thereof. The Discipline Committee convenes as circumstances warrant in meetings which are presided over by the president & CEO and are attended by such managers as may be involved and at which the issues on the agenda are decided upon. Information Security Management Committee Position Chairman Member Member Member Name Ali TUĞLU Mahmut DEMİRKAN Buket GEREÇCİ Ender ŞAHİNASLAN Title Executive Vice President Executive Vice President Executive Vice President Information Security Manager The Information Security Management Committee convenes regularly every three months in meetings at which information security activities are reviewed, developments are observed, and managerial decisions are made. 64 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Summary Annual Report The Turkish banking sector grew more slowly in 2009 than it did in previous years as the effects of the global economic crisis began to make themselves felt in Turkey in line with developments taking place in domestic and international markets. Considered from the standpoint of Bank Asya however, the bank performed better in 2009 notwithstanding the effects of the global economic crisis. Despite its adverse economic environment, 2009 was a positive and successful year for Bank Asya in terms of both growth and profitability. According to Bank Asya’s key financial indicators for 2009, profits were up 22% year-on and amounted to TRY 301 million. In the twelve months to end-2009, the bank’s total assets had increased 43% and reached TRY 11.6 billion. The deposit base was expanded and the deposits were extended as credit to corporate, commercial, enterprise, and retail banking customers. Cash loans, which had a significant impact on the bank’s balance sheet growth, increased 31% year-on and amounted to TRY 8.3 billion while deposits, the most important of the bank’s liability-side items, grew 56% and reached TRY 9.1 billion in value. In 2009 Bank Asya posted a 3.06% rate of return on assets and a 19.36% rate of return on equity. In light of the developments briefly summarized above, in the year to 31 December 2009 Bank Asya’s: • Total assets increased 43.16% to TRY 11,609 million • Cash loans increased 30.93% to TRY 8,355 million • Deposits increased 56.37% to TRY 9,137 million • Equity increased 21.67% to TRY 1,708 million • Net profit increased 22.21% to TRY 301 million • Capital adequacy ratio reached 14.45%. We hereby submit Bank Asya’s annual report and financial statements showing the results of the bank’s activities during the 31 January to 31 December 2009 period for your information and consideration. Asya Katılım Bankası AŞ Board of Directors Bank Asya Annual Report 2009 65 Asya Katılım Bankası A.Ş. Human Resources Information on the Number of Personnel Number of personnel by month is as follows: Number of Personnel December 09 November 09 October 09 September 09 August 09 July 09 June 09 May 09 April 09 March 09 February 09 January 09 4,100 4,050 4,000 3,950 3,900 3,850 3,800 3,750 3,700 3,650 31.12.2008 3,806 31.12.2009 4,074 Change (%) 7.04% Number 1,510 2,564 30.4 Ratio (%) 37 63 Breakdowns of the personnel by sex and average age are as follows: %37 Male Female %63 Female Male Average age Educational background of the personnel PhD Graduate Undergraduate 0.4% 0.1% 5.1% 16.7% 17.2% 60.5% Associate High school Primary school 66 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Human Resources Educational background PhD Graduate Undergraduate Associate Lycee Primary Number 3 207 2,468 702 679 15 % 0.1 5.1 60.5 17.2 16.7 0.4 As the tables show, Bank Asya is a rather youthful and dynamic bank that gives importance to education. 66% of its personnel hold an associate’s degree or higher. The bank’s lycee graduates are employed as security personnel and collecting agents. The bank gives the utmost importance to personnel training, which is supported by participation in both in-house and extramural training programs and in university-level graduate education. Hiring and promotion The primary goal of the Bank Asya Human Resources Department in its hiring processes is to recruit team players who identify with the bank’s mission and vision in every way, who are interested in banking as a profession, and who will be able to keep up with the demanding pace required of their individual and institutional development in an environment that is both tolerant and dynamic. In line with this, we seek to create and maintain a workplace in which personnel conforming to the bank’s business and culture who have been hired after being evaluated on the basis of their education, experience, and abilities may be employed and in which they will be provided with appropriate opportunities and a high level of job satisfaction. The first step of the recruitment and hiring process consists of identifying the bank’s requirements, in view of its growing and proliferating aims, for human resources who will be able to sustain its high level of quality and its dynamic structure. The second is to evaluate both candidates from among the bank’s own personnel and applicants who satisfy basic position requirements. Everyone who submits a job application to Bank Asya is required to sit for recruitment examinations that are determined according to the positions they aspire to. Only those who are successful in this position-based exams continue on to the next step of the recruitment process. The third and final step consists of interviews which are conducted by human resource personnel and unit managers as dictated by the nature of job positions and during which candidates’ abilities are assessed in light of the bank’s policy of “the right person for the right job”. All career paths leading to even the highest positions at Bank Asya are open to all employees. Under Bank Asya’s promotion system, all employees who have fulfilled minimum term of service requirements and who have performed successfully in their current jobs may be promoted to any vacant position to which they are entitled to advance. For employees at the bank to be promoted: • There must be a vacant position to which they may advance • They must be successful in their current job • They must have fulfilled the minimum term of service in their current position • They must have demonstrated a successful performance during their testing period • They must have been successful in the training required for promotion • They must never have been the target of disciplinary action. Bank Asya Annual Report 2009 67 Asya Katılım Bankası A.Ş. Human Resources Human Resources Department The essential constituents of Bank Asya’s corporate culture are the principles of Professionalism, Innovativeness, Rectitude and Honesty, Trust, Confidentiality, Love and Respect, Fairness, Effectiveness, Productiveness and Quality, Teamwork, and Social Responsibility. All of Bank Asya Human Resources Department’s practices are informed by these principles. We fulfill the requirements of our jobs without sacrificing our precepts or essentials and without involving our emotions in what we do. Our actions our guided by the realization that no two days are ever the same. Relations among the bank’s personnel are rooted in the principle of mutual trust and everything is done accordingly. We do not reveal any information about any person or organization with which we have a business relationship with any other person or organization except to the degree permitted by law. We love what we do. We never sacrifice fairness. We focus on our objectives at all times and in all ways. Our actions are inspired by our sense of teamwork. The Bank Asya Human Resources Department’s primary objective is to plan, recruit, and employ an appropriate number of suitably qualified people. In addition to this fundamental concern, achieving the highest possible level of productivity and effectiveness among our personnel, inspiring their morale and motivation, protecting and advancing their material and moral rights, creating a workplace that enhances employees’ willingness to work with their supervisors while striving to maintain good relations also number among the objectives of this department. The Bank Asya Human Resources Department is organized into function-based units in order to manage the bank’s human resource activities more effectively and to serve its personnel more efficiently. These departmental units consist of: • Recruitment and Career Progression: This office is responsible for all unit and branch hiring, promotion, career planning, and performance management systems. • Compensation and Health Services: This office is responsible for handling matters pertaining to employees’ salary, health, meal, and other benefits. • Records: This office is responsible for handling matters pertaining to employees’ records and to all legal reporting requirements. Benefits Paid to the Bank’s Senior Management In the year to end-2009, monetary benefits amounting to TRL 8,954,000 in total were paid to the members of the bank’s senior management. This figure does not include the value of real rights which are provided to senior managers. 68 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Transaction Volume of the Risk Group of the Bank, Outstanding Loan and Deposit Balances and Current Income and Expense Amounts RISK GROUP CURRENT PERIOD (31.12.2009) (TRY THOUSAND): Subsidiaries and Direct and Indirect Other Entities Included Risk Group of the Bank Associates Shareholders of the Group in the Risk Group Cash Non-Cash Cash Non-Cash Cash Non-Cash Loans and Other Receivables (*) Balance at Beginning of Period 63,903 2,215 - - 88,820 58,989 Balance at End of Period 52,357 9,225 - - 220,914 68,491 Profit Share and Commission Income 17,917 - - - 25,148 1 (*) The risk group balance includes TRY 237 Thousand finance lease receivables (December 31, 2008: TRY 483 Thousand). PRIOR PERIOD (31.12.2008) (TRY THOUSAND): Subsidiaries and Direct and Indirect Other Entities Included Risk Group of the Bank Associates Shareholders of the Group in the Risk Group Cash Non-Cash Cash Non-Cash Cash Non-Cash Loans and Other Receivables (*) Balance at Beginning of Period 76 432 - - 27,587 33,530 Balance at End of Period 63,903 2,215 - - 88,820 58,989 Profit Share and Commission Income 6,654 - - - 8,985 120 (*) The risk group balance includes TRY 483 Thousand finance lease receivables (December 31, 2007: TRY 818 Thousand). RISK GROUP DEPOSITS BALANCES OF THE BANK: Risk Group of the Bank Current and Profit Sharing Accounts Balance at Beginning of Period Balance at End of Period Profit Share Expense Subsidiaries and Associates Current Period 48,108 56,994 6,803 Direct and Indirect Shareholders of the Group Current Period - - - Other Entities Included in the Risk Group Current Period 77,269 77,749 4,553 Bank Asya Annual Report 2009 69 Asya Katılım Bankası A.Ş. Corporate Governance Principles Compliance Report Statement of compliance with corporate governance principles Asya Katılım Bankası’s corporate governance structures, processes, and principles are formulated so as to be in compliance with the requirements of the Banks Act as well as of all other applicable laws, regulations, and administrative provisions. Bank Asya publicly discloses all rules and practices which determine the bank’s relationships with its board of directors, shareholders, and other stakeholders in line with its sense of social responsibility subject always to the requirements of the Banks Act. Relations with shareholders and investors Our conducts its investor relations activities within the framework of its public disclosure and corporate governance principles through the Investor Relations Department only and through the Shareholder Relations Unit of the Budget and Reporting Department, both of which departments are responsible to the Board of Directors. Investor Relations Department In line with its primary objective of contributing towards the bank’s value in all respect by serving as a bridge between the Board of Directors and investors in accodance with the bank’s public disclosure policy so as to ensure that the bank’s growth model and future goals are explicitly and clearly understood and to increase the bank’s visibility and transparency in the financial services industry and sector, Bank Asya’s Investor Relations Department holds meetings with the bank’s existing and potential investors by taking part in investor conferences organized in Turkey and abroad and by conducting roadshows; holds meetings and communicates with brokerage officers and bank analysts; prepares investor presentations concerning the bank’s activities at the ends of quarters and makes these available to investors on the bank’s website; holds teleconferences; and responds to all verbal and written requests for information about the company with the exception of such matters about the bank which are not publicly disclosed and which are neither confidential nor in the nature of trade secrets. Contact information about the individuals responsible for the Investor Relations Department is presented below. Name A. Rifat Çağlayan Uğur Güney Nevzat Mutlu Responsibility/Title Investor Relations / Manager Investor Relations / Officer Investor Relations / Asst. Chief Telephone 0216 633 5960 0216 633 5961 0216 633 5963 Email rifat@bankasya.com.tr ugur@bankasya.com.tr nevzat@bankasya.com.tr Shareholder Relations Unit The principal duties of the Shareholder Relations Unit consist of: • Ensuring that records pertaining to shareholders are maintained in a sound, secure, and current manner. • Responding to shareholders’ written requests for all information about the bank except that which has not been publicly disclosed or is confidential and/or in the nature of a trade secret. • Ensuring that general meetings are conducted in accordance with the requirements of current laws and regulations and of the bank’s articles of association and other bylaws. • Preparing documents for the use of shareholders at general meetings. • Recording the results of voting at general meetings and ensuring that such results are reported to shareholders. • Supervising and following up on all issues related to public disclosures as required by law and the bank’s public disclosure policy. • Making use of a section of the bank’s website to inform shareholders about issues that may be of close concern to them such as the bank’s shareholder structure, board members, annual reports, capital structure, developments significantly impacting the bank’s financial well being, quarterly profit/loss statements, information about branches and important personnel, and general meeting resolutions and ensuring that such information is kept up to date. The Shareholder Relations Unit sends reports about the activities of pertinent units to authorities through designated channels. Contact information about the individuals responsible for the Shareholder Relations Unit is presented below. Name Kamil Yılmaz Özlem Coşkun Alpay Güneralp Responsibility/Title Pay Shareholder Relations / Manager Shareholder Relations / Officer Shareholder Relations / Chief Telephone 0 216 633 5450 0216 633 5457 0216 633 5458 Email kamil.yilmaz@bankasya.com.tr ozlem.coskun@bankasya.com.tr alpay.guneralp@bankasya.com.tr 70 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Corporate Governance Principles Compliance Report Shareholders’ exercise of their right to obtain information Bank Asya’s website located at www.bankasya.com.tr contains an “Investor Relations” section in both the Turkish and English languages where issues about the bank that may be of concern to shareholders and to the public at large are published immediately. The same website also contains details about Bank Asya shares, corporate brief, regularly published financial statements and reports, presentations, and corporate governance structure. Legally stipulated information as prescribed by the Banks Act, the Turkish Commercial Code, and the Capital Markets Law is publicly disclosed in the form of “special circumstance announcements”. All questions asked by shareholders about matters that are neither confidential nor in the nature of trade secrets are responded to by the units concerned in keeping with the principles of fairness and equality. During 2009 an average of 300 questions a month were received from shareholders by telephone and email and were responded to. The Investor Relations Department took part in an average of ten individual or group meetings with existing or potential investors and bank analysts, at which times their questions about Bank Asya were responded to. During 2009 the Investor Relations Department took part in 32 foreign investor conferences and engaged in personal meetings with 320 investors. Information about general meetings Announcements concerning general meetings are published within the legally prescribed periods of time in the trade registry gazette and in the press. Such announcements include a copy of the meeting agenda and a specimen proxy statement. Invitations are also sent out to shareholders by mail. During the reporting period, Bank Asya held its annual general meeting on 21 March 2009. Shareholders exercised their right to ask questions at this meeting and all questions that were raised were responded to. No shareholder advanced any motion on any issue that had not been included in the agenda. The bank’s articles of association permits votes to be cast by proxy at general meetings. Voting rights and minority rights Shareholders are entitled to one vote for each one-lira share of stock that they own. Shareholders may exercise their voting rights personally or through proxies. • Voting at general meetings is by an open show of hands. Recourse may be had to secret ballot upon the demand of shareholders representing at least one-twentieth of the capital present and voting. Issues pertaining to proxy voting are determined within the framework of pertinent laws, regulations, and administrative provisions. This matter is set forth in article 24 of the bank’s articles of association. Dividend payment policy and timing Principles pertaining Asya Katılım Bankası AŞ’s dividend payments are set forth in detail in the bank’s articles of association, a copy of which is posted on the bank’s website. Matters concerning the implementation of the dividend payment policy are dealt with within the framework of these articles of association. Dividends are paid out within statutorily prescribed periods of time. The Board of Directors’ dividend payment proposal is one of the items placed on general meeting agendas. It is presented for the consideration of shareholders and voted on by the general assembly. This matter is set forth in article 54 of the bank’s articles of association. Transfer of shares The issue of share transfers is governed by article 11 of the bank’s articles of association as follows: Transfers of A group shares, all of which are registered in the name of their owners, are subject to the approval of the Board of Directors. The board may, entirely at its own discretion and without advancing any reason for doing so, refuse to allow such transfers; similarly it may approve and allow such transfers under such terms and conditions as it may deem to be appropriate. Transfers of these shares are legally binding upon the company only if they have been duly registered by the company. Bank Asya Annual Report 2009 71 Asya Katılım Bankası A.Ş. Corporate Governance Principles Compliance Report Transfers of B group shares, all of which are registered in the name of their owners, may take place without any need for Board of Directors approval subject to the Turkish Commercial Code, the Capital Markets Law, and Central Registry Agency regulations. Share transfers for which the Banks Act requires Banking Regulation and Supervision Agency approval may be made only if that agency’s permission has been obtained. No transfer that does not have this required approval may be registered by the company. Those who acquire shares for which Banking Regulation and Supervision Agency approval is required but for which permission is not obtained may not exercise any shareholder rights other than that of receiving dividend payments. Public disclosures and transparency Company disclosure policy A company disclosure policy was formulated by the Board of Directors in line with corporate governance principles with the aims of ensuring that all stakeholders, including shareholders and the public at large, are kept informed in a timely, correct, complete, intelligible, and coordinated manner. This policy was approved at an ordinary general meeting of the bank held on 31 March 2006. In order to ensure that correct and timely information is supplied in line with this, presentations are made of the financial statements published at quarterly intervals and these presentations are shared with investors on the bank’s website. Information about Bank Asya is provided by the Investor Relations Department through its participation in investor meetings. Questions that investors and shareholders may have about these issues are also responded to by telephone and email. Public Disclosures During 2009 Bank Asya published 23 (twenty-three) special circumstance announcements within the framework of CMB regulations. Company website and content The Asya Katılım Bankası AŞ website is in service at the address of www.bankasya.com.tr. The bank’s website contains detailed information about the bank and about the products and services provided by the bank. Banking transactions may be performed from the Bank Asya internet branch. The “Investor Relations” section in both the Turkish and English languages on Bank Asya’s website contains information about the bank’s management structure; the current text of the articles of association; general meeting invitations, agendas, and resolutions; annual reports; periodical financial statements and reports; and Public Disclosures. Particular attention is given to ensuring that the information on the bank’s website is kept up to date. Disclosure of ultimate non-corporate controlling shareholder(s) As of 31 December 2009 Bank Asya had a total of 255 shareholders. No shareholder controls more than a 10% stake in the bank. Information about this matter is publicly disclosed on the bank’s website. Public disclosure of those who may have access to internal information A list of those who may have access to insider information about the bank has been published on the bank’s website since 30 April 2009. The names of members of the Board of Directors and of senior managers who may be in such a position are published in annual reports and on the website. Stakeholders Keeping stakeholders informed Stakeholders are regularly kept informed about such matters as are deemed to be necessary. Organizational arrangements have been made as needed to satisfy shareholders’, employees’, and customers’ requests for information. Through these arrangements, shareholders, customers, employees, and regulatory agencies are kept effectively informed. Stakeholder participation in management Bank Asya has always encouraged employees to take part in management. For this reason, employees are able to express all of their opinions and suggestions about the bank’s activities through an in-house suggestion system (Asya Öneri Sistemi) whose use requires no prior approval. These opinions and suggestions are processed by personnel who are charged with this duty. They are then forwarded to suitable members of 72 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Corporate Governance Principles Compliance Report management for action to be taken as appropriate. All suggestions received from employees are responded to. Once a year, an assessment is made of those suggestions on which action has been taken and awards are made accordingly. During 2009 1,701 suggestions were received from the bank’s employees. Human resources policy These are basic principles of our human resources policy: • Give attention to both quality and quantity in personnel planning. Employ personnel who conform to the bank’s business and culture. • Maintain personnel productivity and effectiveness at the highest levels. • Provide personnel with opportunities for professional, personal, and social development through effective training plans and programs. • Maintain the highest degree morale and motivation among personnel possible at every level. • Safeguard and advance employees’ material and moral rights. • Create a workplace environment that will foster the willingness of all employees to work with their superiors while also striving to develop human relations skills. • Provide an open, two-way communication environment. • Involve employees in career planning that provides everyone with fair and equal career opportunities. A performance management system is used at Bank Asya. Under this system, employees are evaluated at regular intervals in terms of their performance during the most recent period and they are informed about the results of such evaluations. Every year an Internal Customer Satisfaction Survey is conducted at the bank in which employee satisfaction and job satisfaction is evaluated. Employee job, social, and psychological satisfaction is also supported through an in-house club for personnel called “Yediveren” (“Semperflorens”). During 2009 this club conducted a variety of meetings, events, and activities. Work has been completed on a job description and associated salary scale system in our growing Bank. The new compensation system has been in effect since 2008. A total of 338,580 hours of training were provided to personnel in 2009. Average training time per person was 13.34 days. Relations with customers and suppliers Bank Asya employees: • Provide correct, complete, and timely information on all matters during every stage of every relationship involving all the products and services that are supplied to the bank’s customers. • Are obliged to uphold and carefully maintain the confidentiality of all information and documents about customers that they may have access to and not reveal anything to anyone other than those individuals and organizations whose authority to demand information and documents is explicitly prescribed by law. • Regard quality as an essential prerequisite for supplying any service that is intended to satisfy a customer’s needs and expectations; make every possible effort to deploy the technological infrastructure and qualified human resources that are the two most fundamental elements of this concept in such a way as to achieve continuous improvements in service quality. • Make no distinctions with respect to nationality, religion, financial or social status, or sex when serving customers. • The existence of an organizational structure and product lineup that identifies and differentiates among target groups and approaching customers in different risk groups differently is not to be interpreted as justification for discriminating among customers or categorizing them. Bank Asya investigates the reasons for any customer complaints that it receives via the (Customer Request Web Module, Alo Asya Call Center, Happy Customer Hotline) systems that it has created. Measures are taken as necessary to avoid the repetition of any issues that led to justifiable complaints. Such action includes correcting the practices that provoked the complaint and informing employees in order to prevent any recurrences. Social responsibility Within the framework of its sense of social responsibility and of the requirements of the laws and regulations to which it is subject, Bank Asya donates to and assists publicly beneficial foundations and associations, supports cultural publications, and sponsors congresses and conferences dealing with matters pertaining to economics and banking. Bank Asya Annual Report 2009 73 Asya Katılım Bankası A.Ş. Corporate Governance Principles Compliance Report Bank Asya is respectful of people, of individual rights and liberties, and of the environment. It takes the requirements thereof into account in all of its business processes, and strives materially and morally to fulfill those requirements at every opportunity. During 2009 the bank provided assistance and donations to a variety of agencies and organizations in an aggregate amount corresponding to about three ten-thousandths of its shareholders’ equity. The bank is not a respondent in any suit on account of any environmental damage. Penalties imposed by public authorities During the reporting period the bank paid an amount equal to 0.07% of its current profit as fines imposed by a number of public authorities on account of violations of the requirements of law. Board of Directors Structure and formation of the Board of Directors; non-executive members Information about the members of the Board of Directors and president & CEO is presented below. Name Tahsin Tekoğlu Cemil Özdemir Ünal Kabaca Salih Sarıgül Tacettin Negiş Ahmet Çelik Murat Sungurlu Position/Title Chairman Deputy Chairman President & CEO Board Member Board Member Board Member Board Member Members of the bank’s board of directors are elected in accordance with article 32 of the bank’s articles of association and the requirements of the Banks Act. Qualifications of members of the Board of Directors The qualification that members of banks’ boards of directors must have are set forth in the Banks Act. Bank Asya complies with such requirements in the election of its board members. Mission, vision, and strategic goals of the company The Board of Directors has formulated clear and intelligible statements of the bank’s vision and mission. These are set forth on its website and in its annual reports. Bank Asya’s mission and vision are presented below. Mission: To contribute to shareholders and to the Turkish economy by satisfying customers’ needs and expectations with a “different solutions for different expectations” approach and developing modern banking services within the framework of interest-free banking principles. Vision: To be a respected, trusted, and effective bank that provides service at world standards through the products that it develops. During the reporting period, the Board of Directors regularly reviewed the bank’s performance towards achieving the bank’s strategic goals and it provided guidance on such issues. Risk management and internal control mechanisms Bank Asya has created an effective internal control and risk management system within the framework of the requirements of the Banks Act and other laws, regulations, and administrative provisions to which it is subject. This system consists of three separate units: Department of Internal Control, Risk Management Department, and Board of Inspectors. All three of these report directly to the Board of Directors. Duties and authorities of the bank’s board of directors The duties and authorities of the Bank Asya Board of Directors are governed by article 35 of the bank’s articles of association, according to which the board may decide on any matter that does not require a decision by the general assembly of shareholders. 74 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Corporate Governance Principles Compliance Report Specifically, the board: a) prepares and approves internal regulations governing which matters pertain to the company’s internal affairs and thus may be dealt with by the president & CEO and which matters only may be dealt with by means of Credit Committee or Board of Directors decisions; b) reviews any issue that is deemed to be necessary and continuously oversees day-to-day administrative activities (for which duties board members may be assigned by a board decision); c) prepares the bank’s annual balance sheet and profit & loss statement; submits reports that describe a year’s activities as well as profit distribution proposals to general meetings; specifies and makes arrangements for cash positions and guarantees taking the requirements of applicable laws into account; has auditors’ reports available for examination within fifteen days of a general meeting; d) comes to decisions on the forms of any and all procedures pertaining to the objectives regarding the company is founded; e) determines, stipulates, and decides upon matters pertaining to the assignment, promotion, and dismissal and the annual salaries and expense allowances of those who have power of signature, of the president & CEO and especially of those who report directly to the general manager, and of other key personnel; f) decides to open branches, offices, liaison offices, and regional offices and to grant them authorities within the framework of applicable laws, regulations, and administrative provisions; g) decides upon principles pertaining to real estate properties and equity stakes that are to be bought or sold in the company’s name. h) performs all the duties stipulated in the Turkish Commercial Code and in other relevant laws, regulations, and administrative provisions; deals with all matters other than those assigned to the general assembly of shareholders or to the statutory auditors by laws or under these articles of association. i) The Board of Directors may, when necessary as provided for article 319 of the Turkish Commercial Code, decide to delegate its powers to represent and administer the company to one or more of its members or managers or committees consisting thereof for such a period of time and under such terms and conditions as it deems to be appropriate. j) The authority to extend credit rests with the Board of Directors. The Board of Directors is responsible for formulating policies pertaining to extending and approving credit and to other administrative principles; for ensuring that these policies are applied and followed; and for taking all necessary precautions. The Board of Directors may delegate its authority to extend credit to a credit committee or to a president & CEO in accordance with the requirements of applicable laws and within the framework of principles and procedures to be determined by the board. Operating principles of the Board of Directors The Board of Directors convenes when necessary and/or upon an invitation by the chairman. Any member may submit a written request to the chairman asking for a meeting to be convened. According to the bank’s articles of association, the Board of Directors must convene at least four times during a fiscal year; however the tradition at Bank Asya is for board meetings to be held regularly at weekly or biweekly intervals except under exceptional conditions. This tradition was upheld during 2009. Board of Directors meetings are held at the company’s headquarters. With the approval of a majority of members however, board meetings may be held at some other location and in some other city or country. Board of Directors meetings are conducted according to agendas that are provided to members before the meetings take place. Board members and statutory auditors may request the chairman to include on such agenda any issues that they wish to have discussed. The Board of Directors convenes in the presence of a simple majority of its membership. Resolutions are passed by a simple majority of the members who are present. Decisions about a proposal advanced by any member may be made by obtaining the written consent of other members so long as none of them request that that the matter be discussed in a meeting. Decisions made in this way without a meeting however must be unanimous. Every member of the Board of Directors is entitled to one vote. Neither the chairman nor any other board member may cast votes on behalf of any member who is absent from a meeting. Bank Asya Annual Report 2009 75 Asya Katılım Bankası A.Ş. Corporate Governance Principles Compliance Report If the voting on an issue under consideration results in a tie at any meeting, the matter is to be bound over to another meeting. If the tie cannot be broken at the next meeting, the proposal is deemed to have been rejected. Decisions made by the Board of Directors are recorded the same day, in a matter indicating the date and sequential order of each resolution, in a register which has been certified in accordance with the requirements of the Turkish Commercial Code and the Banks Act pertaining to books of account and whose pages have been sequentially numbered. Every resolution must be undersigned by the board members who voted for it. Prohibition on doing business or competing with the company Neither the chairman nor any member of the Board of Directors may engage in business with the company as provided for under articles 334 and 335 of the Turkish Commercial Code nor may they compete with the company. However a general assembly of shareholders may allow the chairman and all or any number of board members to engage in such business or competition. This matter is governed by article 42 of the bank’s articles of association. Rules of ethics At the Ordinary meeting held on 31 May 2006, it was decided that the Ethical Principals published by the Participation Banks Association of Turkey, of which Bank Asya is a year-end, would be observed in the conduct of the bank’s activities as well. Number, structure, and independence of committees established by the Board of Directors Under a Board of Directors resolution dated 2 February 2006, the bank has created an “Audit Committee” and a “Corporate Governance Committee” pursuant to article 24 of the Banks Act concerning the formation of audit committees and other relevant laws, regulations, and administrative provisions to which the bank is subject. Board of Directors Chairman Tahsin Tekoğlu and Board of Directors Deputy Chairman Cemil Özdemir are members of the Corporate Governance Committee. The committees which have been set up are active in compliance with the requirements of law and of which the bank’s board members are members are the following: • Corporate Governance Committee • Credit Committee • Audit Committee • Assets and Liabilities Committee • Information Technologies Strategy and Steering Committee • Discipline Committee • Information Security Management Committee Financial benefits provided to the Board of Directors The chairman and members of the Board of Directors are paid a fee for each board meeting that they attend. The forms and amounts of such payments are determined at a general meeting. Activities for which support services are outsourced Bank and credit card printing Plastikkart Akıllı Kart İletişim Sistemleri San. ve Tic. AŞ Eczacıbaşı E-Kart Elektronik Kart Sistemleri AŞ Checkbook printing Güzel Sanatlar Çek Basım Ltd Şti Bank statement printing Bilgi İşlem Hizmetleri AŞ 76 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. The bank’s Profit Distribution Policy Principles governing the bank’s profit distribution policy are governed by article 54 of the articles of association as follows: The company’s “net profit” consists of the amount remaining after all of the company’s expenses, depreciation allowances, and sundry provisions which have been paid or are accrued have been deducted from its income as determined at the end of the fiscal year. Net profit shall, after the deduction of prior-year losses if any, be apportioned in the order indicated below. 1. 5% of net profit shall be set aside as a legal reserve as per Turkish Commercial Code Article 466/1. 2. From the amount remaining, a first dividend shall be set aside at a percentage and in an amount determined by the Capital Markets Board. 3. Of the remaining profit: • A portion of up to 2% shall be set aside for members of the Board of Directors • A portion of up to 5% shall be set aside for bank managers and white-collar workers. 1. The general assembly of shareholders is authorized to have some or all of the net profit remaining after the deduction and allocation of the amounts in paragraphs (1), (2), and (3) above carried forward to the next year or to retain in the company it as an extraordinary reserve. The Board of Directors may recommend that the general meeting take such action when the board deems it to be necessary. (The provisions of article 466/3 of the Turkish Commercial Code are reserved.) 2. Subject to the provisions of the Capital Markets Law, the general assembly of shareholders is authorized to have some or all of the remaining profit distributed as dividends to shareholders in the manner indicated below or else to have some or all of it set aside as an extraordinary reserve. The Board of Directors may recommend to the general assembly of shareholders that the remaining profit be distributed in the following ways as the board sees fit: a) Distribute all of it in cash. b) Distribute all of it as shares of stock. c) Distribute a specific percentage as cash and a specific percentage as shares of stock and retain the remainder in the company. d) Distribute neither cash nor shares of stock and retain the entire amount in the company. The Board of Directors shall determine the date(s) on which dividends are to be paid pursuant to this article. Proposal to Distribute Bank Asya 2009 Year Profits At a meeting of the Board of Directors on 18 February 2010 it was decided “that the sum remaining after the amounts that must be set aside as required by law and the articles of association have been set aside from the net profit shown in the balance sheet dated 31 December 2009 will not be distributed but instead will be retained as an extraordinary reserve in order to strengthen the bank’s equity resources and that this action will be presented for shareholder approval at the annual general meeting.” Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. 2009 Ordinary General Meeting Agenda 1. Opening the meeting and forming the presiding committee 2. Authorizing the presiding committee to sign the minutes of the meeting 3. Reading and deliberating the Board of Directors’ annual report, the statutory auditors’ report, and the independent auditor’s report for 2009 4. Examining and deliberating the balance sheet and profit & loss statement; reading and deliberating the Board of Directors profit distribution proposal; deciding how to distribute profits 5. Approving the appointments made during the year to fill vacancies on the Board of Directors 6. Acquitting the company’s board members and statutory auditors of their fiduciary responsibilities 7. Deciding board members’ and statutory auditors salaries and entitlements 8. Authorizing the Board of Directors to choose the members of the Senior Advisory Committee and to determine their salaries payments 9. Approving the independent auditors chosen by the Board of Directors under a one-year contract for the bank’s 2010 accounts 10. Providing information about assistance and donations given during 2009 11. Reading and deliberating changes made in public disclosure policy principles within the framework of Asya Katılım Bankası AŞ’s corporate governance principles 12. Authorizing the company’s board members to engage in the activities governed by articles 334 and 335 of the Turkish Commercial Code 13. Petitions and suggestions. 77 78 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Explanatory notes concerning the items on the 2009 Ordinary General Meeting Agenda 1. Opening the meeting and forming the presiding committee Explanation: A president and presiding committee will be chosen to conduct the general meeting as required by the provisions of the Turkish Commercial Code and of Ministry of Industry and Commerce regulations. 2. Authorizing the presiding committee to sign the minutes of the meeting Explanation: As required by the provisions of the Turkish Commercial Code and of Ministry of Industry and Commerce regulations, the general assembly will authorize the presiding committee to record decisions made at the meeting and to sign them on behalf of the entire general assembly. 3. Reading and deliberating the Board of Directors’ annual report, the statutory auditors’ report, and the independent auditor’s report for 2009 Explanation: the Board of Directors’ annual report, the statutory auditors’ report, and the independent auditor’s report for the 1 January 2009 to 31 December 2009 fiscal year will be read and deliberated. These reports may be obtained from the company’s headquarters and from its website located at www.bankasya.com.tr. 4. Examining and deliberating the balance sheet and profit & loss statement; reading and deliberating the Board of Directors profit distribution proposal; deciding how to distribute profits Explanation: The Board of Directors’ balance sheet and profit & loss statement for 2009 will be read to the general assembly, deliberated, and voted on. The financial statements may be obtained from the company’s headquarters and from its website located at www.bankasya.com.tr. The proposal based on the Board of Directors’ profit distribution resolution will be read and voted on by the general assembly. 5. Approving the appointments made during the year to fill vacancies on the Board of Directors Explanation: In addition to the regular items on the bank’s agenda, appointments that were made to fill vacancies on the Board of Directors will be submitted for approval. 6. Acquitting the company’s board members and statutory auditors of their fiduciary responsibilities Explanation: As required by the provisions of the Turkish Commercial Code and of Ministry of Industry and Commerce regulations, the general assembly will vote on acquitting the company’s board members and statutory auditors of their fiduciary responsibilities for the company’s activities and transactions in 2009. 7. Deciding board members’ and statutory auditors salaries and entitlements Explanation: As required by the provisions of the Turkish Commercial Code and of Ministry of Industry and Commerce regulations, the meeting attendance fees to be paid to members of the Board of Directors will be determined and voted on by the general assembly. As required by the provisions of the Turkish Commercial Code and of Ministry of Industry and Commerce regulations, the salaries to be paid to the statutory auditors will be determined and voted on by the general assembly. 8. Authorizing the Board of Directors to choose the members of the Senior Advisory Committee and to determine their salaries payments Explanation: A proposal authorizing the Board of Directors to choose the members of the Senior Advisory Committee and to determine their salaries payments as per article 45 of the bank’s articles of association will be voted on by the general assembly. 9. Approving the independent auditors chosen by the Board of Directors under a one-year contract for the bank’s 2010 accounting period. Explanation: As required by Capital Markets Board communique X:22, approval of the independent auditors selected by the Board of Directors will be voted on by the general assembly. 10. Providing information about assistance and donations given during 2009 Explanation: As required by article 7/b of Capital Markets Board communique IV:27, the general meeting must be informed about any donations that were made during the reporting year. This item is not voted on by the general assembly. It is included in the agenda only for the purpose of informing the general assembly. 11. Reading and deliberating changes made in public disclosure policy principles within the framework of Asya Katılım Bankası AŞ’s corporate governance principles Explanation: Changes made in the bank’s public disclosure policy under Board of Directors resolution 1452 dated 25 June 2009 will read and deliberated. 12. Authorizing the company’s board members to engage in the activities governed by articles 334 and 335 of the Turkish Commercial Code Explanation: The issue of authorizing and allowing members of the Board of Directors to do business with and compete against the company under the rules of Turkish Commercial Code articles 334 and 335 will be voted on. Under Turkish Commercial Code articles 334 and 335, board members may not compete against or do business with their own company except with general assembly approval. The ability of board members to engage in such actions will be voted on by the general assembly. 13. Petitions and suggestions. Bank Asya Annual Report 2009 Assessment on Financial Information and Risk Management 80 81 82 82 84 85 87 88 Concise Statutory Auditors Report 5-Year Summary Financial Information Including the Reporting Period Financial Standing, Profitability, and Debt Service Ability Assessment of the Audit Committee’s Internal Systems and Their Operation Information About Internal System Unit Managersr Risk Management Policies Being Implemented According to Risk Types Credit Ratings and Reports Independent Auditors’ Report for the Year January 1, 2009 – December 31, 2009 79 80 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Concise Internal Auditors Report Company name Headquarters Capital Principal business activity Asya Katılım Bankası AŞ İstanbul TRY 900,000,000.00 All activities permitted to participation banks Names, terms of office, and company shareholder /employee internal auditors Number of Board of Directors meetings attended and number of internal auditors’ meetings held Ali Akbulut, Atif Bilgin, İrfan Hacıosmanoğlu. Three-year terms. Company shareholders At least two of the board meetings held every month were attended. The internal auditors also convened in committee on such days. Scope, dates, and results of examinations performed The books of account were examined and checked on 18 June 2009 and 19 November 2009. on the company’s accounts, books, and documents It was ascertained that cash items were in accordance with book of account entries. Charges or complaints of improprieties received No charges or complaints of improprieties were referred to us in 2009. and the action taken We have examined the accounts and transactions of the firm of Asya Katılım Bankası Anonim Şirketi for the period 1 January 2009 to 31 December 2009 for compliance with the requirements of the Turkish Commercial Law, the company’s articles of association, relevant laws and regulations, and generally accepted accounting principles and standards. In our opinion the income statement for the period 1 January 2009 to 31 December 2009 accurately and truly reflects the results of business activities during the same period and the proposed distribution of profits is in compliance with the requirements of law and with the company’s articles of association. In our opinion the enclosed balance sheet drawn up as of 31 December 2009, the contents of which we endorse, accurately reflects the true financial standing of the company on that date and we hereby recommend that the balance sheet and income statement be approved and that the members of the Board of Directors be acquitted of their fiduciary responsibilities. The Internal Auditors Ali Akbulut A tif Bilginİrfan Hacıosmanoğlu Bank Asya Annual Report 2009 81 Asya Katılım Bankası A.Ş. 5-Year Summary Financial Information Including the Reporting Period SELECTED ASSETS ITEMS (TRY thousand) Liquid Assets Loans Fixed Assets Total Assets 2005 382,656 2,090,521 61,499 2,610,406 2006 939,645 3,060,181 75,027 4,179,189 2007 1,382,702 4,609,665 115,727 6,260,048 2008 1,247,486 6,381,322 232,958 8,108,829 SELECTED LIABILITIES ITEMS (TRY thousand) 2005 2006 2007 2008 Deposits 2,148,595 3,200,655 4,697,750 5,842,821 Borrowings 14,307 126,696 312,921 457,552 Shareholders’ Equity 296,168 632,519 853,856 1,403,692 -Paid-in Capital 240,000 300,000 300,000 900,000 -Net Period Profit 92,681 146,351 221,337 246,529 Total Liabilities 2,610,406 4,179,189 6,260,048 8,108,829 INCOME STATEMENT (TRY thousand) 2005 2006 2007 2008 Profit Share Income 327,468 510,991 805,275 1,068,206 Profit Share Expenses 168,479 224,155 388,117 566,816 Expenses Other than Profit Share Income 109,768 257,592 244,773 357,294 Other than Profit Share Expenses 157,237 260,046 389,030 546,780 Income before Taxation 111,520 196,250 272,901 311,904 Tax Provisions (8,061) (49,899) (51,564) (65,375) Net Period Profit 103,459 146,351 221,337 246,529 2009 2,572,230 8,355,346 320,118 11,608,955 2009 9,136,578 191,461 1,707,894 900,000 301,281 11,608,955 2009 1,305,652 705,805 454,757 676,212 378,392 (77,111) 301,281 82 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Financial Standing, Profitability, and Debt Service Ability During 2009 Bank Asya continued to be a leader among participation banks in terms of total assets, cash loans, non-cash credit, deposits, and net profit. Its posted rates of growth in total assets, cash loans, and deposits were above banking sector averages. Net profit, which was on the order of TRY 301 million, was also higher than that secured by any other participation bank. Bank Asya’s total assets increased 43% year-on and reached TRY 11.6 billion. The growth in the bank’s assets stemmed primarily from its loans. Loans were up 31% year-on and accounted for 72% of the bank’s total assets. Deposits once again remained Bank Asya’s most important source of funding in 2009. The growth in total deposits last year increased their share of the bank’s total liabilities from 72% in 2008 to 79% in 2009. This ratio is above the sector average, which was 71% as of December 2009. Deposits, which amounted to TRY 5.8 billion in 2008, increased 56% and reached TRY 9.1 billion last year. The bank’s broad deposit base is indicative of a favorable position from the standpoint of the bank’s financing of its assets. Bank Asya’s strong capital structure together with its profitability resulted in increasing the bank’s equity 22% to TRY 1.7 billion in the year to end-2009. Net profit, which amounted to TRY 247 million in 2008, increased 22% in 2009 and reached TRY 301 million. This result makes Bank Asya Turkey’s most profitable participation bank for the third year in a row. Dividend income received from having lent out the additional resources resulting from the 56% rise in deposits together with commission earnings on non-cash credit were the two main sources of the bank’s profitability. Bank Asya’s profit share income was up 22% to TRY 1.3 billion while its earnings on its loans also increased 25% to about TRY 1.2 billion. Bank Asya’s net profit share income last year amounted to TRY 600 million. As a result of greater importance given to liquidity in order to protect itself against the effects of the global economic crisis in 2009, the share of liquid assets among the bank’s total assets rose from 15% to 22%. This increase had a positive impact on the bank’s debt service ability. Furthermore the bank’s deposits, which are the most important source of its funding, are broadly-based and strongly structured and they have average terms that are high compared with sector norms. This situation also contributes favorably to the bank’s ability to service its short-term debt. Assessment of the Audit Committee’s Internal Systems and Their Operation The Audit Committee regularly met with personnel of the Board of Inspectors, the Department of Internal Control, and the Risk Management Department in order to keep a close watch on the activities of those units, all of which report directly to it. An “Audit Committee Activity Report” in which are reported the auditing and risk management results of efforts to achieve an effective internal audit and risk management system throughout the bank is submitted to the Board of Directors at regular intervals. Internal auditing and risk management findings received from internal system units and reported by the committee to the Board of Directors are assessed by the latter together with the senior managers concerned. Guidance is provided as needed to mitigate risks and to improve processes and practices. The committee also performs the statutorily mandated duties of selecting independent auditing, support service, evaluation, and rating organizations and of overseeing such organizations’ relationships with the bank. Under this heading, the committee met with officers of the independent auditors and during these meetings the independence of the independent auditors in their relationship with the bank as well as the adequacy of the resources allocated for the bank’s independent auditing and the results of such auditing were all evaluated. Bank Asya Annual Report 2009 83 Asya Katılım Bankası A.Ş. Assessment of the Audit Committee’s Internal Systems and Their Operation Board of Inspectors The Board of Inspectors conducts risk-focused inspections within the framework of international standards at the bank’s headquarters units, branches, and consolidated subsidiaries and it provides the Board of Directors with assurances and advice as needed on the issues of carrying out the bank’s activities in line with the requirements of laws and regulations and with the bank’s strategies, policies, principles, and objectives. Internal auditing activities are carried out at all headquarters units, branches, and consolidated subsidiaries in accordance with an annual auditing plan that is approved by the Board of Directors. The Board of Inspectors reports the results of its activities at quarterly intervals to the Board of Directors through the Audit Committee. Under the heading of branch inspections last year, inspections were carried out at 83 branches in which matters pertaining to credit risks, operational risks, and organization were looked into. The results of these inspections along with risk-mitigating recommendations were reported to appropriate units and senior managers. Under the heading of process inspections conducted at headquarters units, eight primary business processes (including information system and risk management systems) were examined and the results were reported to appropriate units and senior managers. Under the heading of inspections conducted at consolidated subsidiaries, inspections took place at two subsidiaries and the results were reported to appropriate units and senior managers. In addition to the activities described above, the Board of Inspectors also engaged in examinations and investigations as needed both at the bank and among its consolidated subsidiaries. Based on the results of its inspection activities, the board performs risk analyses, makes recommendations, and provides advice on administrative, technological, fiscal, legal, and organizational issues in order to mitigate risk within the scope of its inspections. Department of Internal Control The internal control system is designed to be an integral part of day-to-day activities with the fundamental aim of reducing to acceptable levels the risks to which the bank is exposed on account of its assets and the activities in which it engages. The internal control system, of which every employee of the bank at every level is a part, seeks to ensure that the protection of the bank’s assets, the effectiveness and productivity of the bank’s activities, the reliability of the bank’s accounting and financial reporting systems, and the conduct of all of the bank’s activities are in compliance with internal and external regulatory requirements and with the bank’s policies. The Department of Internal Control reports to the Board of Directors and it is responsible for the design and management of the bank’s internal control system and internal control activities in accordance with the requirements of the Banks Act and of the Internal Systems Regulations associated therewith. In order to make it possible for it to fulfill these responsibilities more effectively, the organizational structure of the Department of Internal Control was redesigned in 2009. With the aims of carrying out, in cooperation with the senior managers of the units involved based on the particulars of all the activities in which the bank engages, activities necessary to design an internal control system that must be set up in such a way as to encompass the bank’s branches, headquarters units, and consolidated subsidiaries and all of their activities and of determining how these functions are to be performed, during 2009 the department worked, along with other units involved, to determine the procedures and existing controls involved in all of the activities in which the bank engages and to schematize work flows. Work is continuing at this time to identify existing controls, to evaluate controls, and to design newer and more effective controls. Under the heading of internal control activities, two units’ processes were reviewed and internal control checks were carried out at branches 295 times. In order to make distance control more effective and productive, units’ and branches’ transactions were examined through a centralized control system external to both while checks were carried out in light of scenarios that had been formulated using computer programs (ACL) to determine erroneous/irregular transactions and instances of misconduct. Under the heading of compliance control activities, ten compliance checks were performed concerning new products, services, and practices during 2009. Under the heading of information system controls, 32 basic and 100 secondary IT processes and their existing controls were identified and schematized. Existing controls were also reviewed in light of COBIT requirements. Risk Management Department The Risk Management Department is responsible for the deployment of the risk management system that the bank has set up to detect all risks arising from the bank’s activities and for ensuring that such risks are managed in compliance with the requirements of laws and regulations. Policies and procedures that will make it possible for this system to operate effectively throughout the bank have been defined. Work is currently in progress on quantifying, controlling, and reporting risks. Bank Asya’s internal control system units are being supported with qualified personnel in order to meet the increased need for auditing arising from the rapid changes and growth that have begun to take place in its banking activities and to achieve a function-based risk management and internal auditing system. 84 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Information About Internal System Unit Managersr Length of Professional Name service Areas of responsibility Education background experience Hilali YILDIRIM 49 months Board of Inspectors Master’s (Banking) / Bachelor’s (Business Administration) 15 years Mahmut YALÇIN 14 months Department of Internal Control Master’s (Human Resources) / Bachelor’s (Business Administration) 10 years Mehmet Kamil TÜMER 50 months Risk Management Department Bachelor’s (Business Administration) 29 years Bank Asya Annual Report 2009 85 Asya Katılım Bankası A.Ş. Risk Management Policies Being Implemented According to Risk Types Bank Asya conducts its risk management activities within the framework of credit risk, market risk, liquidity risk, operational risk, reputational risk, and strategy risk management policies that it has established in order to conduct its banking activities in accordance with the requirements of laws, regulations, and administrative provisions. Through such policies, the bank ensures that the stages of identifying the possible risks to which the bank is exposed or may be exposed in its risk management processes and of quantifying, monitoring, controlling, and reporting such risks are properly managed and also that, deploying a variety of measures and techniques, risks are reduced and risk management resources are transferred from areas where risks are low to those where risks are high. Credit risk Management of credit risk at Bank Asya is fundamentally rooted in assessing all of the credit risk arising from the bank’s lending activities. The most important element of this process is determining customer and counterparty limits and in order to achieve that, the bank complies with prescribed policies pertaining to “Lending and Credit Risk Management”. In addition, early warning mechanisms that are focused on spotting in advance any credit risks to which the bank may be exposed make it possible to continuously review the financial circumstances, credit ratings, and credit needs of borrowers with heightened credit risk and to reconsider their credit worthiness and limits as appropriate. Bank Asya classifies its loans in two categories–“On-balance sheet” and “Off-balance sheet”–and it determines portfolio particulars, sectoral/ regional/group concentrations, and performances accordingly. On the basis of risk/return balances, collateral worthiness, and bank asset quality, a determination is made as to whether the provisions set aside for loans are adequate or not. Scenario analyses are formulated in order to more proactively manage credit risk exposure. Volatilities in credit risk and their impact on the bank’s financial indicators are regularly reported to those concerned. A system that makes it possible for the bank’s corporate and commercial loans to be rated intrinsically is used in decision mechanisms. This system has been structured so as to facilitate integration with statistical models that allow credit risk to be quantified and managed. The rating system has been made particularly sensitive to existing and potential impairments in a loan’s structure and this is what permits it to fulfill its early warning and risk management functions. Financial situation analyses of borrowers whose loans have become subject to legal action or are placed under close watch are carried out in coordination with all units concerned. Use is made of scorecard models developed by an international firm in order to manage the risks to which the bank is exposed on account of its retail lending and credit card portfolio. Market risk Market risk is quantified and assessed in accordance with procedures that comply with the requirements of law and international regulations and with Bank Asya’s “Market Risk Management Policy”. The bank makes use of the internationally recognized “Value at Risk” (VaR) method, inasmuch as it conforms well to Bank Asya’s own market activities. VaR is an expression of the likelihood, at a specified confidence level, of a loss that the bank’s portfolio may suffer due to volatilities that may occur in risk factors within a specified period of time. Bank Asya’s VaR model has been developed in-house and is employed simultaneously and in conjunction with the “Standardized Approach”, whose use is prescribed by authorities. The amount of market risk to which the bank is exposed based on these calculations is reported daily to the Board of Directors as are the results of backtests that are conducted (also on a day-to-day basis) to determine the model’s reliability. By means of scenario analyses and stress tests that are performed using reverse changes in the bank’s own portfolio and in the market prices that are taken into account, the value of the bank’s portfolio is reconsidered under existing and potential market conditions. The effects that the results of scenario analyses and stress tests may have on Bank Asya’s standard capital adequacy ratio are also separately analyzed and reported. Liquidity risk Reports which have been prepared in line with the requirements of the Regulations concerning the measurement and assessment of bank’s liquidity adequacy published by the Banking Regulation and Supervision Agency are examined by the Risk Management Department, the Treasury Unit, and senior management. Measures are taken as needed by the Assets and Liabilities Committee to ensure that the ratios which are reported in this way remain within legally prescribed limits. Potential mismatches in the terms of the bank’s asset and liability items and percentages based on maturity segments are kept track of by means of day-to-day liquidity gap analyses. The bank has formulated a “Liquidity Emergency Action Plan” whose aim is to deal appropriately with any liquidity shortages from which it may suffer in the face of such situations as impairment of asset quality, an increase in non-performing loans, or unexpected withdrawals of deposits. 86 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Risk Management Policies Being Implemented According to Risk Types Operational risk Bank Asya began reporting its operational risks using the “Basic Indicator Approach” as of 1 June 2007. The impact of the amounts exposed to such risks on the Capital Adequacy Standard Ratio are taken into account by means of scenario analyses based on changes in the years since then. The amounts exposed to operational risk are also calculated using the Standard and Alternative Standard Approaches specified by the Banking Regulation and Supervision Agency. It is expected that these approaches will also be used in the bank’s statutorily mandated reports once changes in the regulatory framework have been made. Bank Asya accumulates its potential operational risk losses in a format which complies with a “risk catalogue” that is based on event classifications. Data about actual losses is used as the basis for creating advanced statistical models that are being planned. Action plans are also being formulated to prevent the recurrence of instances of operational risk whose financial impact is unusually severe. Business Continuity Management is an integrated management process that identifies critical situations that the bank may encounter and their potential impact on its business activities should they actually occur. Bank Asya’s Business Continuity and Disaster Plan was put into effect in 2007 as a result of a project undertaken jointly with a consultancy that specializes in such matters. Other risks Due to the extremely volatile nature of events at the global level in 2009, banks had to be more sensitive than ever to interpreting macroeconomic indicators. In line with this, efforts at Bank Asya focused on correctly identifying and understanding such indicators. To a significant degree, these efforts were successful and the Board of Directors was kept regularly informed of developments and trends as they unfolded. In addition to managing its financial risks, Bank Asya also keeps a close watch on the possible effects of political, legislative, and global developments which may cause economic and/or financial sector volatilities even though they are not strictly financial themselves. For this purpose it makes use of extrinsic risk reports that are prepared by the Risk Management Department. Risk management in subsidiaries whose results are subject to consolidation Bank Asya’s standard ratio calculations of its risk exposures and legal liabilities are made on a consolidated basis. This means that the risks to which the bank is exposed on account of the bank’s shareholding interests in its subsidiaries are also directly monitored and managed and the functions of the bank’s own internal systems are complied with in its subsidiaries as well. Basel II compliance The Basel II International Convergence of Capital Measurement and Capital Standards Project got underway in Turkey in May 2005 with the publication of a draft roadmap showing the stages of implementation of the Basel II accord. According to that map, implementation of the standards was to have begun as of January 2008 but that date was later changed to the beginning of 2009 and has since been postponed again. Bank Asya regards Basel II as the foundation for a comprehensive risk management culture that goes far beyond capital adequacy calculation issues and for this reason, the bank is continuing with the Basel II compliance projects and activities that it initiated in previous years. Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Credit Ratings and Reports FITCH RATINGS Foreign Currency Long Term B Short Term B Outlook Stable Turkish Lira Long Term B Short Term B Outlook Stable National Long Term BBB+(tur) Outlook Stable Individual Rating D Support Points 5 The information is taken from the Fitch Ratings Report as of November 9, 2009. MOODY’S Financial Strength Outlook Foreign Currency Long Term Short Term Outlook Turkish Lira Long Term Short Term Outlook National Long Term Short Term D Stable B1/NP B1/NP Stable Ba1/NP Ba1/NP Stable A1+r TR-1 The information is taken from the Moody’s Investor Service report as of August 19, 2009. JCR EURASIA Foreign Currency Long Term Short Term Outlook International Foreign Currency Long Term Short Term Outlook National Long Term Short Term Outlook Stand Alone Support Points The information is taken from the JCR Eurasia Rating report as of May 21, 2009. BBB Stable BBB Stable A- (Trk) A- 1(Trk) Stable BC 3 87 88 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Independent Auditors’ Report for the Year January 1, 2009 – December 31, 2009 To the Board of Directors of Asya Katılım Bankası A.Ş. Istanbul We have audited the accompanying balance sheet of Asya Katılım Bankası A.Ş. as at December 31, 2009 and the related statements of income, cash flows and changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements: The Board of Directors of the Bank is responsible for the preparation and fair presentation of the financial statements in accordance with the regulation on “Procedures and Principles Regarding Banks’ Accounting Practices And Maintaining Documents” published in the Official Gazette dated November 1, 2006 and numbered 26333 and Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”) and other regulations, circulars, communiqués and pronouncements in respect of accounting and financial reporting made by Banking Regulation and Supervision Agency (“BRSA”). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility: Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the regulation on “Licensing and Operations of Audit Firms in Banking” published in the Official Gazette No: 26333 on November 1, 2006 and the International Standards on Auditing. We planned and performed our audit to obtain reasonable assurance whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the consideration of the effectiveness of internal control and appropriateness of accounting policies applied relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independent Auditors’ Opinion: In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Asya Katılım Bankası A.Ş. as at December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with the prevailing accounting principles and standards set out as per Article 37 of the Banking Act No: 5411 and other regulations, circulars and communiqués in respect of accounting and financial reporting and pronouncements made by Banking Regulation and Supervision Agency (“BRSA”). Additional paragraph for the English translation: The effect of the differences between the accounting principles summarized in Section 3 and the accounting principles generally accepted in countries in which the accompanying financial statements are to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements. The accounting principles used in the preparation of the accompanying financial statements differ materially from IFRS. Accordingly, the accompanying financial statements are not intended to present the Bank’s financial position and results of its operations in accordance with accounting principles generally accepted in such countries of users of the financial statements and IFRS. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU Sibel Türker Partner Istanbul, February 18, 2010 Bank Asya Annual Report 2009 89 Asya Katılım Bankası A.Ş. The Unconsolidated Financial Report of Asya Katılım Bankası A.Ş. for the Year Ended December 31, 2009 THE UNCONSOLIDATED FINANCIAL REPORT OF ASYA KATILIM BANKASI A.Ş. FOR THE YEAR ENDED DECEMBER 31, 2009 Address of the Headquarter of the Bank Phone and Fax Numbers of the Bank Website of the Bank Electronic Mail Address to Contact : Küçüksu Caddesi Akçakoca Sokak No:6 34768 Ü mraniye/İSTANBUL : 0 216 633 50 00/0 216 633 50 24 : www.bankasya.com.tr : raporlama@bankasya.com.tr The unconsolidated financial report designed by the Banking Regulation and Supervision Agency in line with Communiqué on “Financial Statements to be Publicly Announced and the Related Policies and Disclosures” consists of the sections listed below: • GENERAL INFORMATION ABOUT THE BANK • UNCONSOLIDATED FINANCIAL STATEMENTS OF THE BANK • EXPLANATIONS ON THE CORRESPONDING ACCOUNTING POLICIES APPLIED IN THE RELATED PERIOD • INFORMATION ON FINANCIAL STRUCTURE OF THE BANK • EXPLANATORY DISCLOSURES AND FOOTNOTES ON UNCONSOLIDATED FINANCIAL STATEMENTS • OTHER EXPLANATIONS • INDEPENDENT AUDITOR’S REPORT The unconsolidated financial statements and the explanatory footnotes and disclosures, unless otherwise indicated, are prepared in Thousands of Turkish Lira, in accordance with the Communiqué on Banks’ Accounting Practice and Maintaining Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards, related communiqués and the Banks’ records, have been independently audited and presented as attached. February 18, 2010 Behçet Akyar Chairman of the Board of Directors Cemil Özdemir Member of the Board and General Manager Tacettin Negiş İsmail Erol İşbilen Member of the Board and Member of the Board and Member of the Audit Committee Member of the Audit Committee Yusuf İzzettin İmre Assistant General Manager Responsible of Financial Reporting Kamil Yılmaz Manager In Charge of Financial Reporting Responsible personnel for the questions that can be raised on the financial statements: Name-Surname/Title:Mehmet ARSLAN/Assistant Manager in Charge of Budgeting and Financial Controlling Telephone Number: 0 216 633 54 91 Fax Number: 0 216 633 50 24 90 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. SECTION ONE GENERAL INFORMATION I. Incorporation Date, Initial Status and Subsequent Changes in the Existing Status of the Bank II. Shareholding Structure, Shareholders Having Direct or Indirect, Joint or Individual Control Over the Management of the Bank and Disclosures on any Related Changes in the Current Year, if any III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the Bank They Possess IV. Individuals and Institutions that have Qualified Shares in the Bank V. Summary on the Functions and Areas of Activity of the Bank Page 92 92 92 93 93 SECTION TWO THE UNCONSOLIDATED FINANCIAL STATEMENTS I. Balance Sheet II. Statement of Off-Balance Sheet Contingencies and Commitments III. Statement of Income IV. Statement of Profit and Loss Accounted under Equity V. Statement of Changes in Shareholders’ Equity VI. Statement of Cash Flows VII. Profit Distribution 94 96 98 99 100 101 102 SECTION THREE ACCOUNTING PRINCIPLES I. Basis of Presentation II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions III. Explanations on Forward and Option Contracts and Derivative Instruments IV. Explanations on Profit Share Income and Expenses V. Explanations on Fees and Commission Income and Expenses VI. Explanations on Financial Assets VII. Explanations on Impairment of Financial Assets VIII. Explanations on Offsetting Financial Assets and Liabilities IX. Explanations on Sales and Repurchase Agreements and Lending of Securities X. Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to Those Assets XI. Explanations on Goodwill and Other Intangible Assets XII. Explanations on Tangible Fixed Assets XIII. Explanations on Leasing Transactions XIV. Explanations on Provisions and Contingent Liabilities XV. Explanations on Liabilities for Employee Benefits XVI. Explanations on Taxation XVII. Additional Disclosures on Borrowings XVIII. Explanations on Exported Share Certificates XIX. Explanations on Acceptances XX. Explanations on Government Incentives XXI. Explanations on Reporting According to Segmentation XXII. Explanations on Other Matters 104 104 104 104 105 105 106 106 107 107 107 108 108 108 108 109 109 109 109 109 110 110 Bank Asya Annual Report 2009 91 Asya Katılım Bankası A.Ş. SECTION FOUR INFORMATION ON FINANCIAL STRUCTURE I. Explanations Related to Capital Adequacy Standard Ratio II. Explanations Related to Credit Risk III. Explanations Related to Market Risk IV. Explanations Related to Operational Risk V. Explanations Related to Currency Risk VI. Explanations Related to Interest Rate Risk VII. Explanations Related to Liquidity Risk VIII. Presentation of Financial Assets and Liabilities at Fair Value IX. Explanations Related to Transactions Carried out on Behalf of Other Parties and Fiduciary Assets Page 111 113 116 117 117 120 120 122 124 SECTION FIVE EXPLANATIONS AND DISCLOSURES ON THE UNCONSOLIDATED FINANCIAL STATEMENTS I. Explanations and Disclosures Related to the Assets 1. Information on Cash and Balances with the Central Bank of Turkish Republic II. Explanations and Disclosures Related to the Liabilities III. Explanations and Disclosures Related to the Off-Balance Sheet Contingencies and Commitments IV. Explanations and Disclosures Related to the Income Statement V. Explanations and Disclosures Related to the Statements of Shareholders’ Equity Movement VI. Explanations and Disclosures Related to Statement of Cash Flows VII. Explanations on the Risk Group of the Bank VIII. Explanations on the Bank’s Domestic Branches, Agencies and Branches Abroad and Off-shore Branches 124 124 140 147 152 156 157 158 159 SECTION SIX OTHER EXPLANATIONS I. Other Disclosures: 160 SECTION SEVEN INDEPENDENT AUDITOR’S REPORT I. Explanations on the Independent Auditor’s Report II. Other Footnotes and Explanations Prepared by the Independent Auditors 160 160 160 92 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SECTION ONE GENERAL INFORMATION I.Incorporation Date, Initial Status and Subsequent Changes in the Existing Status of the Bank Incorporation of Asya Katılım Bankası A.Ş. (“the Bank”) is permitted with the decision of the Council of Ministers No: 96/8041 on April 11, 1996 as published in the Official Gazette dated April 25, 1996. The Bank was registered on September 20, 1996 and “the Articles of Association” was published in the Trade Registry Gazette on September 25, 1996. The Decision regarding the change in the title of the Bank was settled in the Extraordinary General Board of Directors’ meeting dated December 22, 2005 and the title was changed from Asya Finans Kurumu A.Ş. into Asya Katılım Bankası A.Ş. and it was published in the Trade Registry Gazette on December 26, 2005. II.Shareholding Structure, Shareholders Having Direct or Indirect, Joint or Individual Control Over the Management of the Bank and Disclosures on any Related Changes in the Current Year, if any The Bank has no shareholders having more than 10% shareholding or direct or indirect, joint or individual control over the management of the Bank. The Bank is not included in any group. III.Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the Bank They Possess Title Name Area of Responsibility Ownership Percentage % Chairman of the Board of Directors Tahsin TEKOĞLU (**) Chairman of the Board of Directors and Member of the Audit Committee 0,0050 Member of the Board of Directors Cemil ÖZDEMİR (*) Vice Chairman of the Board of Directors and Member of the Audit Committee 0,0026 Tacettin NEGIŞ (***) Member of the Board of Directors 0,2467 Salih SARIGÜL Member of the Board of Directors 0,4983 Ahmet ÇELİK Member of the Board of Directors 0,4467 Murat SUNGURLU Member of the Board of Directors 0,1073 General Manager Ünal KABACA (*) Member of the Board and General Manager 0,0267 Assistant General Managers Ayhan KESER Corporate/Commercial Loans, Business Banking, Treasury, Financial Institutions and Public Relations 0,0069 Mustafa BÜYÜKATEŞ Retail Sales Management, Retail Product Management, ADC (Alternative Distribution Channels) Marketing and Consumer Loans Yusuf İzzettin İMRE Financial Affairs, Credit Allocation and Financial Analysis and Advertising Buket GEREÇCİ Banking Operations Dr. Mahmut DEMİRKAN Human Resources, Education, Administrative, Purchase and Organization and Quality Management Ali TUĞLU Information Technologies Group Manager Salim KÖSE Law, Credit and Risk Monitoring Auditors Ali AKBULUT Auditor 0,0002 Atif BİLGİN Auditor 0,3057 İrfan HACIOSMANOĞLU Auditor 2,0068 (*) The Board member and General Manager Mr. Ünal Kabaca has resigned from his position as of January 28, 2010. Vice-Chairman of the Board Mr. Cemil OZDEMİR has been appointed as the new General Manager and Mr. Behçet AKYER has been assigned as the new board member. (**)Tahsin TEKOĞLU has resigned from chairman position and the board of directors membership on February 12, 2010. Afterwards, Behçet AKYER has been assigned as the Chairman of the Board of Directors and Ismail Erol IŞBİLEN has been assigned as member of both the Board of Directors and the Audit Committee. (***) Tacettin NEGİŞ has been assigned as the Audit Committee member as of February 12, 2010. Bank Asya Annual Report 2009 93 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) IV. Individuals and Institutions that have Qualified Shares in the Bank The Bank’s capital, amounting to TRY 900.000.000, consists of qualified shares, amounting to TRY 360.000.000 and qualified shareholders are listed below. Name/Commercial Name ORTADOĞU TEKSTİL TİC. SAN. A.Ş. FORUM İNŞAAT DEKORASYON TURİZM SAN. VE TİC. A.Ş. ABDULKADİR KONUKOĞLU BJ TEKSTİL TİCARET VE SANAYİ A.Ş. BİRİM BİRLEŞİK İNŞAATÇILIK MÜMESSİLLİK SAN. VE TİC. A.Ş. SERRA TURİZM LTD.ŞTİ. OSMAN CAN PEHLİVAN HASAN SAYIN NEGİŞ GİYİM İMALAT VE İHRACAT A.Ş. İBRAHİM SAYIN MUAMMER İHSAN KALKAVAN İRFAN HACIOSMANOĞLU AYDAN AYDIN SAĞLIK FEHİM ARICI YAVUZ EROĞLU ABDURRAHMAN KOPUZ DİĞER Total Share Amount 37.992 22.565 20.088 18.000 17.783 15.000 14.400 13.430 13.142 12.679 7.456 6.861 5.952 5.580 5.220 3.960 139.892 360.000 Share Ratio 10,55 6,27 5,58 5,00 4,94 4,17 4,00 3,73 3,65 3,52 2,07 1,91 1,65 1,55 1,45 1,10 38,86 100,00 Paid Shares Unpaid Shares 37.992 22.565 20.088 18.000 17.783 15.000 14.400 13.430 13.142 12.679 7.456 6.861 5.952 5.580 5.220 3.960 139.892 360.000 - V.Summary on the Functions and Areas of Activity of the Bank The Bank operates in accordance with the principles of interest-free banking as a participation bank by collecting funds through current accounts and profit sharing accounts, and lending such funds through production support, finance lease and profit/loss sharing partnership and shared investments. The Bank has two ways of collecting funds; current accounts and profit sharing accounts. The Bank classifies current accounts and profit sharing accounts in accordance with their maturities in its accounting system. Profit sharing accounts are classified into five different maturity groups; up to one month, up to three months (three months included), up to six months (six months included), up to one year (one year included) and one year and more than one year (one month, three months, six months and one year profit share payment). The Bank could determine the participation rates on profit/loss sharing accounts with respect to the maturity group of TRY and foreign currency accounts, separately under the limitation that the participation rate on loss shall not be less than 50%, for different currency type, amount and maturity groups specifically. The Bank constitutes specific fund pools allocated to the individually predetermined projects for financing purposes. Profit sharing accounts, which are part of the funds collected for project financing purpose, are distinguished from others with respect to the terms, accounted separately from the others and no transfers can be made from these accounts to any other maturity groups. Specific fund pools are liquidated at the end of the financing period. The Bank has no specific fund pools as of December 31, 2009. In addition to ordinary banking activities, the Bank operates as an agency on behalf of Işık Sigorta A.Ş. and intervenes stock purchase-sell transactions on behalf of Bizim Menkul Değerler A.Ş. through its branches. 94 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Consolidate Balance Sheet (Statement of Financial Position) (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited ASSETS Note (31/12/2009) (31/12/2008) TRY FC Total TRY FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK (1) 979.395 1.365.613 2.345.008 686.697 442.872 1.129.569 II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net) (2) - 3.889 3.889 - 30.035 30.035 2.1 Trading financial assets - 3.889 3.889 - 30.035 30.035 2.1.1 Public sector debt securities - - - - - 2.1.2 Share certificates - - - - - 2.1.3 Derivative financial assets held for trading - 3.889 3.889 - 30.035 30.035 2.1.4 Other marketable securities - - - - - 2.2 Financial assets at fair value through profit and loss - - - - - 2.2.1 Public sector debt securities - - - - - 2.2.2 Share certificates - - - - - 2.2.3 Loans - - - - - 2.2.4 Other marketable securities - - - - - III. BANKS (3) 7.951 139.067 147.018 10.058 107.859 117.917 IV. MONEY MARKET PLACEMENTS - - - - - V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (4) 80.204 - 80.204 - - 5.1 Share certificates 93 - 93 - - 5.2 Public sector debt securities - - - - - 5.3 Other marketable securities 80.111 - 80.111 - - VI. LOANS AND RECEIVABLES (5) 7.563.752 632.923 8.196.675 5.875.657 271.989 6.147.646 6.1 Loans and receivables 7.430.475 632.281 8.062.756 5.748.814 270.670 6.019.484 6.1.1. Loans to risk group of the Bank 267.900 5.134 273.034 142.643 9.597 152.240 6.1.2. Public sector debt securities - - - - - 6.1.3. Other 7.162.575 627.147 7.789.722 5.606.171 261.073 5.867.244 6.2 Non-performing loans 454.360 1.850 456.210 322.795 1.953 324.748 6.3 Specific provisions (-) (321.083) (1.208) (322.291) (195.952) (634) (196.586) VII. HELD TO MATURITY INVESTMENTS (Net) (6) 76.460 - 76.460 - - VIII. INVESTMENTS IN ASSOCIATES (Net) (7) 45.063 - 45.063 23.975 - 23.975 8.1 Accounted for under equity method - - - - - 8.2 Unconsolidated 45.063 - 45.063 23.975 - 23.975 8.2.1 Financial associates - - - - - 8.2.2 Non-financial associates 45.063 - 45.063 23.975 - 23.975 IX. INVESTMENTS IN SUBSIDIARIES (Net) (8) 139.810 - 139.810 138.094 - 138.094 9.1 Unconsolidated financial subsidiaries 82.858 - 82.858 43.285 - 43.285 9.2 Unconsolidated non-financial subsidiaries 56.952 - 56.952 94.809 - 94.809 X. ENTITIES UNDER COMMON CONTROL (Net) (9) - - - - - 10.1 Consolidated under equity method - - - - - 10.2 Unconsolidated - - - - - 10.2.1 Financial subsidiaries - - - - - 10.2.2 Non-financial subsidiaries - - - - - XI. FINANCE LEASE RECEIVABLES (10) 124.807 33.864 158.671 233.676 - 233.676 11.1 Finance lease receivables 141.774 38.916 180.690 264.791 - 264.791 11.2 Operating lease receivables - - - - - 11.3 Other - - - - - 11.4 Unearned income (-) (16.967) (5.052) (22.019) (31.115) - (31.115) XII. DERIVATIVE FINANCIAL ASSETS FOR HEDGING PURPOSES (11) - - - - - 12.1 Fair value hedge - - - - - 12.2 Cash flow hedge - - - - - 12.3 Hedge of net investment risks in foreign operations - - - - - XIII. TANGIBLE ASSETS (Net) (12) 309.894 - 309.894 226.626 - 226.626 XIV. INTANGIBLE ASSETS (Net) (13) 10.224 - 10.224 6.332 - 6.332 14.1 Goodwill - - - - - 14.2 Other 10.224 - 10.224 6.332 - 6.332 XV. INVESTMENT PROPERTY (Net) (14) - - - - - XVI. TAX ASSET (15) 4.754 - 4.754 - - 16.1 Current tax asset - - - - - 16.2 Deferred tax asset 4.754 - 4.754 - - XVII. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) (16) 9.196 - 9.196 24.100 - 24.100 17.1 Held for Sale 9.196 - 9.196 24.100 - 24.100 17.2 Discontinued Operations - - - - - XVIII. OTHER ASSETS (17) 81.862 227 82.089 29.300 1.559 30.859 TOTAL ASSETS 9.433.372 2.175.583 11.608.955 7.254.515 854.314 8.108.829 Bank Asya Annual Report 2009 95 Asya Katılım Bankası A.Ş. Consolidate Balance Sheet (Statement of Financial Position) (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited LIABILITIES AND EQUITY Note (31/12/2009) (31/12/2008) TRY FC Total TRY FC Total I. FUND COLLECTED (1) 5.979.825 3.156.753 9.136.578 3.603.487 2.239.334 5.842.821 1.1 Fund from risk group of the Bank 99.744 34.999 134.743 67.967 57.410 125.377 1.2 Other 5.880.081 3.121.754 9.001.835 3.535.520 2.181.924 5.717.444 II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING (2) - 155 155 - - III. FUNDS BORROWED (3) - 191.461 191.461 - 457.552 457.552 IV. MONEY MARKET BALANCES - - - - - V. MARKETABLE SECURITIES ISSUED (NET) - - - - - VI. SUNDRY CREDITORS 198.910 2.234 201.144 148.364 2.413 150.777 VII. OTHER LIABILITIES (4) 181.834 12.509 194.343 99.589 9.393 108.982 VIII. FINANCE LEASE PAYABLES (5) - - - 6 - 6 8.1 Finance lease payables - - - 6 - 6 8.2 Operating lease payables - - - - - 8.3 Other - - - - - 8.4 Deferred finance lease expenses (-) - - - - - IX. DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING PURPOSES (6) - - - - - 9.1 Fair value hedge - - - - - 9.2 Cash flow hedge - - - - - 9.3 Hedge of net investment in foreign operations - - - - - X. PROVISIONS (7) 113.726 15.021 128.747 94.571 12.252 106.823 10.1 General loan loss provisions 75.756 13.612 89.368 61.625 10.661 72.286 10.2 Restructuring provisions - - - - - 10.3 Reserve for employee benefits 16.689 - 16.689 14.450 - 14.450 10.4 Insurance technical reserves (Net) - - - - - 10.5 Other provisions 21.281 1.409 22.690 18.496 1.591 20.087 XI. TAX LIABILITY (8) 48.627 6 48.633 38.173 3 38.176 11.1 Current tax liability 48.627 6 48.633 36.923 3 36.926 11.2 Deferred tax liability - - - 1.250 - 1.250 XII. PAYABLES RELATED TO ASSETS HELD FOR SALE (Net) (9) - - - - - 12.1 Held for sale - - - - - 12.2 Discontinued operations - - - - - XIII. SUBORDINATED LOANS (10) - - - - - XIV. SHAREHOLDERS’ EQUITY (11) 1.707.894 - 1.707.894 1.403.692 - 1.403.692 14.1 Paid-in capital 900.000 - 900.000 900.000 - 900.000 14.2 Capital reserves 10.503 - 10.503 7.582 - 7.582 14.2.1 Share premium 3.307 - 3.307 3.307 - 3.307 14.2.2 Share cancellation profits - - - - - 14.2.3 Marketable securities revaluation reserve 2.921 - 2.921 - - 14.2.4 Tangible assets revaluation reserve 4.275 - 4.275 4.275 - 4.275 14.2.5 Intangible assets revaluation reserve - - - - - 14.2.6 Investment property revaluation reserve - - - - - 14.2.7 Bonus shares obtained from associates, subsidiaries and jointly controlled entities - - - - - 14.2.8 Hedging funds (Effective portion) - - - - - 14.2.9 Value increase on assets held for resale - - - - - 14.2.10 Other capital reserves - - - - - 14.3 Profit reserves 496.110 - 496.110 249.581 - 249.581 14.3.1 Legal reserves 37.886 - 37.886 25.561 - 25.561 14.3.2 Status reserves - - - - - 14.3.3 Extraordinary reserves 458.224 - 458.224 224.020 - 224.020 14.3.4 Other profit reserves - - - - - 14.4 Profit or loss 301.281 - 301.281 246.529 - 246.529 14.4.1 Prior year income / (losses) - - - - - 14.4.2 Current year income / (losses) 301.281 - 301.281 246.529 - 246.529 14.5 Minority shares - - - - - TOTAL LIABILITIES AND EQUITY 8.230.816 3.378.139 11.608.955 5.387.882 2.720.947 8.108.829 96 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Statement of Off-Balance Sheet Contingengies and Commitments (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited Note (31/12/2009) (31/12/2008) TRY FC Total TRY FC Total A. OFF BALANCE SHEET COMMITMENTS AND CONTINGENCIES (I+II+III) 6.632.958 5.627.280 12.260.238 6.848.787 6.016.960 12.865.747 I. GUARANTEES (1), (2) 3.984.518 4.901.459 8.885.977 4.600.807 5.614.608 10.215.415 1.1. Letters of guarantees 3.968.241 3.401.220 7.369.461 4.594.063 4.052.510 8.646.573 1.1.1. Guarantees subject to State Tender Law - - - - - 1.1.2. Guarantees given for foreign trade operations - - - - - 1.1.3. Other letters of guarantee 3.968.241 3.401.220 7.369.461 4.594.063 4.052.510 8.646.573 1.2. Bank loans - 120.412 120.412 - 169.474 169.474 1.2.1. Import letter of acceptances - 120.412 120.412 - 169.474 169.474 1.2.2. Other bank acceptances - - - - - 1.3. Letter of credits 270 1.249.850 1.250.120 41 1.221.227 1.221.268 1.3.1. Documentary letter of credits - - - - - 1.3.2. Other letter of credits 270 1.249.850 1.250.120 41 1.221.227 1.221.268 1.4. Prefinancing given as guarantee - - - - - 1.5. Endorsements - - - - - 1.5.1. Endorsements to the Central Bank of Turkey - - - - - 1.5.2. Other endorsements - - - - - 1.6. Other guarantees 16.007 129.977 145.984 6.703 171.397 178.100 1.7. Other collaterals - - - - - II. COMMITMENTS (1), (2) 2.196.163 277.122 2.473.285 1.809.786 5.816 1.815.602 2.1. Irrevocable commitments 2.196.163 277.122 2.473.285 1.809.786 5.816 1.815.602 2.1.1. Forward asset purchase commitments 240.276 254.576 494.852 1.537 5.816 7.353 2.1.2. Share capital commitment to associates and subsidiaries 7.153 22.546 29.699 6.869 - 6.869 2.1.3. Loan granting commitments 140.538 - 140.538 128.301 - 128.301 2.1.4. Securities underwriting commitments - - - - - 2.1.5. Commitments for reserve deposit requirements - - - - - 2.1.6. Payment commitment for checks 434.811 - 434.811 408.821 - 408.821 2.1.7. Tax and fund liabilities from export commitments 1.596 - 1.596 - - 2.1.8. Commitments for credit card expenditure limits 1.365.927 - 1.365.927 1.256.191 - 1.256.191 2.1.9. Commitments for promotions related with credit cards and banking activities 5.862 - 5.862 8.067 - 8.067 2.1.10. Receivables from short sale commitments - - - - - 2.1.11. Payables for short sale commitments - - - - - 2.1.12. Other irrevocable commitments - - - - - 2.2. Revocable commitments - - - - - 2.2.1. Revocable loan granting commitments - - - - - 2.2.2. Other revocable commitments - - - - - III. DERIVATIVE FINANCIAL INSTRUMENTS (3) 452.277 448.699 900.976 438.194 396.536 834.730 3.1. Derivative financial instruments for hedging purposes - - - - - 3.1.1. Fair value hedge - - - - - 3.1.2. Cash flow hedge - - - - - 3.1.3. Hedge of net investment in foreign operations - - - - - 3.2. Held for trading transactions 452.277 448.699 900.976 438.194 396.536 834.730 3.2.1. Forward foreign currency buy/sell transactions 452.277 448.699 900.976 438.194 396.536 834.730 3.2.1.1. Forward foreign currency transactions-buy 452.277 - 452.277 438.194 - 438.194 3.2.1.2. Forward foreign currency transactions-sell - 448.699 448.699 - 396.536 396.536 3.2.2. Other Forward buy/sell transactions - - - - - 3.3. Other - - - - - - Bank Asya Annual Report 2009 97 Asya Katılım Bankası A.Ş. Statement of Off-Balance Sheet Contingengies and Commitments (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited Note (31/12/2009) (31/12/2008) TRY FC Total TRY FC Total B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 86.043.258 63.997.965 150.041.223 70.017.593 57.208.709 127.226.302 IV. ITEMS HELD IN CUSTODY 620.403 366.541 986.944 587.342 785.871 1.373.213 4.1. Assets under management - - - - - 4.2. Investment securities held in custody 2.885 - 2.885 2.885 - 2.885 4.3. Checks received for collection 498.606 198.477 697.083 431.058 272.104 703.162 4.4. Commercial notes received for collection 118.907 65.752 184.659 153.260 69.617 222.877 4.5. Other assets received for collection - 63.335 63.335 - 444.120 444.120 4.6. Assets received for public offering - - - - - 4.7. Other items under custody 4 - 4 139 30 169 4.8. Custodians 1 38.977 38.978 - - V. PLEDGED ITEMS 85.422.855 63.631.424 149.054.279 69.430.251 56.422.838 125.853.089 5.1. Marketable securities 488.378 293.318 781.696 351.244 299.026 650.270 5.2. Guarantee notes 29.086.179 24.163.628 53.249.807 23.828.375 21.440.634 45.269.009 5.3. Commodity 1.522.022 402.926 1.924.948 948.499 336.811 1.285.310 5.4. Warranty - - - - - 5.5. Properties 12.372.061 1.218.189 13.590.250 10.458.296 1.306.210 11.764.506 5.6. Other pledged items 41.954.215 37.553.363 79.507.578 33.843.837 33.040.157 66.883.994 5.7. Pledged items-depository - - - - - VI. ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES - - - - - TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) 92.676.216 69.625.245 162.301.461 76.866.380 63.225.669 140.092.049 98 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Consolidated Statement of Income (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) STATEMENT OF INCOME Note I. PROFIT SHARE INCOME (1) 1.1 Profit share on loans 1.2 Profit share on reserve deposits 1.3 Profit share on banks 1.4 Profit share on money market placements 1.5 Profit share on marketable securities portfolio 1.5.1 Held-for-trading financial assets 1.5.2 Financial assets at fair value through profit and loss 1.5.3 Available-for-sale financial assets 1.5.4 Investment-held for maturity 1.6 Finance lease income 1.7 Other profit share income II. PROFIT SHARE EXPENSE (2) 2.1 Expense on profit sharing accounts 2.2 Profit share expense on funds borrowed 2.3 Profit share expense on money market borrowings 2.4 Expense on securities issued 2.5 Other profit share expense III. NET PROFIT SHARE INCOME (I - II) IV. NET FEES AND COMMISSIONS INCOME 4.1 Fees and commisions received 4.1.1 Non-cash loans 4.1.2 Other (12) 4.2 Fees and commisions paid 4.2.1 Non-cash loans 4.2.2 Other (12) V. DIVIDEND INCOME (3) VI. NET TRADING INCOME (4) 6.1 Securities trading gains / (losses) 6.2 Profit on derivative financial instruments gains / (losses) 6.3 Foreign exchange gains / (losses) VII. OTHER OPERATING INCOME (5) VIII. NET OPERATING INCOME (III+IV+V+VI+VII) IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) (6) X. OTHER OPERATING EXPENSES (-) (7) XI. NET OPERATING INCOME/(LOSS) (VIII-IX-X) XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER XIII. GAIN / (LOSS) ON EQUITY METHOD XIV. GAIN / (LOSS) ON NET MONETARY POSITION XV. PROFIT/(LOSS) FROM CONTINUED OPERATIONS BEFORE TAXES (XI+…+XIV) (8) XVI. TAX PROVISION FOR CONTINUED OPERATIONS (±) (9) 16.1 Provision for current income taxes 16.2 Provision for deferred taxes XVII. NET PROFIT/(LOSS) FROM CONTINUED OPERATIONS (XV±XVI) (10) XVIII. INCOME ON DISCONTINUED OPERATIONS 18.1 Income on assets held for sale 18.2 Income on sale of associates, subsidiaries and jointly controlled entities (Joint Vent.) 18.3 Income on other discontinued operations XIX. LOSS FROM DISCONTINUED OPERATIONS (-) 19.1 Loss from assets held for sale 19.2 Loss on sale of associates, subsidiaries and jointly controlled entities (Joint vent.) 19.3 Loss from other discontinued operations XX. PROFIT / (LOSS) ON DISCONTINUED OPERATIONS BEFORE TAXES (XVIII-XIX) XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) 21.1 Provision for current income taxes 21.2 Provision for deferred taxes XXII. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) XXIII. NET PROFIT/LOSS (XVII+XXII) (11) 23.1 Group’s profit/loss 23.2 Minority shares Earnings per share THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited (01/01/2009-31/12/2009) (01/01/2008-31/12/2008) 1.305.652 1.068.206 1.203.356 963.490 19.734 25.841 52.215 48.862 - 14.040 - - 7.020 7.020 16.300 30.013 7 (705.805) (566.816) (686.142) (543.831) (18.259) (21.630) - - (1.404) (1.355) 599.847 501.390 258.373 226.215 311.003 289.429 174.517 143.560 136.486 145.869 (52.630) (63.214) (69) (481) (52.561) (62.733) - 3.925 93.765 59.420 - 203.194 15.366 (109.429) 44.054 102.619 67.734 1.054.604 858.684 (217.159) (156.614) (459.053) (390.166) 378.392 311.904 - - - 378.392 311.904 (77.111) (65.375) (83.845) (63.147) 6.734 (2.228) 301.281 246.529 - - - - - - - - - - - - - 301.281 246.529 301.281 246.529 - 0,33 0,33 Bank Asya Annual Report 2009 99 Asya Katılım Bankası A.Ş. Statement of Profit and Loss Items Accounted Under Equity (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited STATEMENT OF PROFIT AND LOSS ITEMS ACCOUNTED UNDER EQUITY (01/01/2009-31/12/2009) (01/01/2008-31/12/2008) I. Additions to marketable securities revaluation differences for available for sale financial assets 3.651 II. Tangible assets revaluation differences - 4.275 III. Intangible assets revaluation differences - IV. Foreign exchange differences for foreign currency transactions - V. Profit/Loss from derivative financial instruments for cash flow hedge purposes (Effective portion of fair value differences) - VI. Profit/Loss from derivative financial instruments for hedge of net investment in foreign operations (Effective portion of fair value differences) VII. The effect of corrections of errors and changes in accounting policies - VIII. Other profit loss items accounted under equity due to TAS - IX. Deferred tax of valuation differences (730) X. Total Net Profit/Loss accounted under equity (I+II+…+IX) 2.921 4.275 XI. Profit/Loss - 11.1 Change in fair value of marketable securities (Transfer to Profit/Loss) - 11.2 Reclassification and transfer of derivatives accounted for cash flow hedge purposes to Income Statement - 11.3 Transfer of hedge of net investments in foreign operations to Income Statement - 11.4 Other - XII. Total Profit/Loss accounted for the period (X±XI) 2.921 4.275 100 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Consolidated Statement of Changes in Shareholder’s Equity (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Effect of inflation Share Accounting on Certificate Paid-in Capital and Other Share Cancellation Legal Statutory STATEMENT OF CHANGES OF SHAREHOLDER’S EQUITY Note Capital Capital Reserves Premium Profits Reserves Reserves PRIOR PERIOD Audited (01/01-31/12/2008) I. Prior Period Balance - 31.12.2007 300.000 - 150.000 - 14.708 - II. Corrections according to TAS 8 - - - - - - 2.1. The effect of corrections of errrors - - - - - - 2.2. The effects of changes in accounting policy - - - - - - III. New Balance (I+II) 300.000 - 150.000 - 14.708 - Changes in period - - - - - - IV. Increase/Decrease related to merger - - - - - - V. Marketable securities revaluation differences - - - - - - VI. Hedging Funds (Effective Portion) - - - - - - 6.1 Cash-flow hedge - - - - - - 6.2 Hedge of net investment in foreign operations - - - - - - VII. Tangible assets revaluation differences - - - - - - VIII. Intangible assets revaluation differences - - - - - - IX. Bonus shares obtained from associates, subsidiaries and jointly controlled entities (Joint vent.) - - - - - - X. Foreign exchange differences - - - - - - XI. The disposal of assets - - - - - - XII. The reclassification of assets - - - - - - XIII. The effect of change in associate’s equity - - - - - - XIV. Capital increase 600.000 - (150.000) - - - 14.1 Cash 300.000 - - - - - 14.2 Internal sources 300.000 - (150.000) - - - XV. Share premium - - 3.307 - - - XVI. Share cancellation profits - - - - - - XVII. Inflation adjustment to paid-in capital - - - - - - XVIII. Other - - - - - - XIX Period net income/(loss) - - - - - - XX. Profit distribution - - - - 10.853 - 20.1 Dividends distributed - - - - - - 20.2 Transfers to reserves - - - - 10.853 - 20.3 Other - - - - - - Closing Balance (I+II+III+-…...+XVI+XVII+XVIII) 900.000 - 3.307 - 25.561 - CURRENT PERIOD Audited (01/01-31/12/2009) I. Prior Period Balance - 31.12.2008 900.000 - 3.307 - 25.561 - Changes in period - - - - - - II. Increase/Decrease related to merger - - - - - - III. Marketable securities revaluation differences - - - - - - IV. Hedging Funds (Effective Portion) - - - - - - 4.1 Cash-flow hedge - - - - - - 4.2 Hedge of net investment in foreign operations - - - - - - V. Tangible assets revaluation differences - - - - - - VI. Intangible assets revaluation differences - - - - - - VII. Bonus shares obtained from associates, subsidiaries and jointly controlled entities (Joint vent.) - - - - - - VIII. Foreign exchange differences - - - - - - IX. The disposal of assets - - - - - - X. The reclassification of assets - - - - - - XI. The effect of change in associate’s equity - - - - - - XII. Capital increase - - - - - - 12.1 Cash - - - - - - 12.2 Internal sources - - - - - - XIII. Share premium - - - - - - XIV. Share cancellation profits - - - - - - XV. Inflation adjustment to paid-in capital - - - - - - XVI. Other - - - - - - XVII. Period net income/(loss) - - - - - - XVIII. Profit distribution - - - - 12.325 - 18.1 Dividends distributed - - - - - - 18.2 Transfers to reserves - - - - 12.325 - 18.3 Other - - - - - - Closing Balance (I+II+III+-…...+XVI+XVII+XVIII) 900.000 - 3.307 - 37.886 - Bank Asya Annual Report 2009 101 Asya Katılım Bankası A.Ş. Consolidated Statement of Changes in Shareholder’s Equity (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Marketable Tangible and Acc. Val. Diff. Current Prior Securities Intangible Assets Bonus Sharesfrom Assets Held Equity Extraordinary Other Period Net Period NetRevaluation Revaluation Obtained Hedging for Sale and Attributable Minority Reserve Reserve Income/(Loss) Income/(Loss) Reserve Differences from Associates Funds from Disc. Op. to the Parent Shares 167.811 - 221.337 - - - - - - 853.856 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 167.811 - 221.337 - - - - - - 853.856 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 4.275 - (4.275) - - - - - - - - - - - - - - - - - - Total Equity 853.856 853.856 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (150.000) - - - - - - - - 300.000 - 300.000 - - - - - - - - - 300.000 - 300.000 (150.000) - - - - - - - - - - - - - - - - - - - 3.307 - 3.307 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 246.529 - - - - - - 246.529 - 246.529 206.209 - (221.337) 4.275 - - - - - - - - - - - - - - - - - - 206.209 - - (217.062) - - - - - - - - - (221.337) 221.337 - - - - - - - - - - - - - - - 224.020 4.275 246.529 - - - - - - 1.403.692 - 1.403.692 224.020 4.275 246.529 - - - - - - 1.403.692 - 1.403.692 - - - - - - - - - - - - - - - - - - - - - - - - - - 2.921 - - - - 2.921 - 2.921 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 301.281 - - - - - - 301.281 - 301.281 234.204 - (246.529) - - - - - - - - - - - - - - - - - - - 234.204 - - (246.529) - - - - - - - - - (246.529) 246.529 - - - - - - - 458.224 4.275 301.281 - 2.921 - - - - 1.707.894 - 1.707.894 102 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Consolidated Statement of Cash Flows (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited Note (01/01/2009-31/12/2009) (01/01/2008-31/12/2008) A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating profit before changes in operating assets and liabilities 456.994 115.077 1.1.1 Profit share income received 1.206.091 954.551 1.1.2 Profit share expense paid (723.532) (539.483) 1.1.3 Dividend received - 1.1.4 Fees and commissions received 311.003 289.429 1.1.5 Other income 224.716 32.762 1.1.6 Collections from previously written off loans 21.917 12.114 1.1.7 Payments to personnel and service suppliers (213.048) (174.283) 1.1.8 Taxes paid (90.450) (77.312) 1.1.9 Others (279.703) (382.701) 1.2 Changes in operating assets and liabilities 1.097.393 (463.499) 1.2.1 Net (increase) decrease in financial assets - 1.2.2 Net (increase) decrease in financial assets at fair value through profit or loss - 1.2.3 Net (increase) decrease in due from banks and other financial institutions - 1.2.4 Net (increase) decrease in loans (2.049.726) (1.387.846) 1.2.5 Net (increase) decrease in other assets (131.550) (19.046) 1.2.6 Net increase (decrease) in bank deposits (1.157) (2.031) 1.2.7 Net increase (decrease) in other deposits 3.347.481 889.102 1.2.8 Net increase (decrease) in funds borrowed (215.346) 71.503 1.2.9 Net increase (decrease) in due payables - 1.2.10 Net increase (decrease) in other liabilities 147.691 (15.181) - I. Net cash provided from banking operations 1.554.387 (348.422) B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash provided from investing activities (204.757) (76.770) 2.1 Cash paid for purchase of entities under common control, associates and subsidiaries (22.804) (26.265) 2.2 Cash obtained from sale of entities under common control, associates and subsidiaries - 2.3 Fixed assets purchases (42.932) (52.656) 2.4 Fixed assets sales 10.979 2.151 2.5 Cash paid for purchase of financial assets available for sale (75.000) 2.6 Cash obtained from sale of financial assets available for sale - 2.7 Cash paid for purchase of investment securities (75.000) 2.8 Cash obtained from sale of investment securities - 2.9 Other - C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net cash provided from financing activities (6) 289.473 3.1 Cash obtained from funds borrowed and securities issued - 3.2 Cash used for repayment of funds borrowed and securities issued - 3.3 Capital increase - 303.307 3.4 Dividends paid - 3.5 Payments for finance leases (6) (13.834) 3.6 Other - IV. Effect of change in foreign exchange rate on cash and cash equivalents (2.641) (619) V. Net increase in cash and cash equivalents 1.346.983 (136.338) VI. Cash and cash equivalents at the beginning of the year (1) 1.240.507 1.376.845 VII. Cash and cash equivalents at the end of the year (1) 2.587.490 1.240.507 Bank Asya Annual Report 2009 103 Asya Katılım Bankası A.Ş. Profit Distribution Table (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited (01/01-31/12/2008) (01/01-31/12/2009) I. DISTRIBUTION OF CURRENT PERIOD PROFIT (**) 1.1 CURRENT PERIOD PROFIT 378.392 311.904 1.2 TAXES AND DUES PAYABLE (-) (77.111) (65.375) 1.2.1 Corporate Tax (Income Tax) (83.845) (63.147) 1.2.2 Withholding Tax - 1.2.3 Other taxes and dues (*) 6.734 (2.228) A. NET PERIOD PROFIT (1.1-1.2) 301.281 246.529 1.3 PRIOR YEAR’S LOSSES (-) - 1.4 FIRST LEGAL RESERVES (-) - (12.325) 1.5 OTHER STATUTORY RESERVES (-) - B. DISTRIBUTABLE NET PERIOD PROFIT [(A-(1.3+1.4+1.5)] 301.281 234.204 1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) 1.6.1 To Owners of Ordinary Shares - 1.6.2 To Owners of Preferred Stocks - 1.6.3 To Owners of Preferred Stocks (Preemptive Rights) - 1.6.4 To Profit Sharing Bonds - 1.6.5 To Owners of the profit /loss Sharing Certificates - 1.7 DIVIDEND TO PERSONNEL (-) - 1.8 DIVIDEND TO BOARD OF DIRECTORS (-) - 1.9 SECOND DIVIDEND TO SHAREHOLDERS (-) - 1.9.1 To Owners of Ordinary Shares - 1.9.2 To Owners of Preferred Stocks - 1.9.3 To Owners of Preferred Stocks (Preemptive Rights) - 1.9.4 To Profit Sharing Bonds - 1.9.5 To Owners of the profit /loss Sharing Certificates - 1.10 SECOND LEGAL RESERVE (-) - 1.11 STATUS RESERVES (-) - 1.12 EXTRAORDINARY RESERVES - 234.204 1.13 OTHER RESERVES - 1.14 SPECIAL FUNDS - II. DISTRIBUTION FROM RESERVES 2.1 DISTRIBUTED RESERVES - 2.2 SECOND LEGAL RESERVES (-) - 2.3 SHARE TO SHAREHOLDERS (-) - 2.3.1 To Owners of Ordinary Shares - 2.3.2 To Owners of Preferred Stocks - 2.3.3 To Owners of Preferred Stocks (Preemptive Rights) - 2.3.4 To Profit Sharing Bonds - 2.3.5 To Owners of the profit /loss Sharing Certificates - 2.4 SHARE TO PERSONNEL (-) - 2.5 SHARE TO BOARD OF DIRECTORS (-) - III. EARNINGS PER SHARE 3.1 TO OWNERS OF STOCKS - 3.2 TO OWNERS OF STOCKS ( % ) - 3.3 TO OWNERS OF PREFERRED STOCKS - 3.4 TO OWNERS OF PREFERRED STOCKS ( % ) - IV. DIVIDEND PER SHARE - 4.1 TO OWNERS OF STOCKS - 4.2 TO OWNERS OF STOCKS ( % ) - 4.3 TO OWNERS OF PREFERRED STOCKS - 4.4 TO OWNERS OF PREFERRED STOCKS ( % ) - (*) Deferred tax expense is presented in “other tax and dues” line. (**) Profit distribution is agreed on the General Assembly Meeting and as of the reporting date, the General Assembly meeting has not been held, yet. 104 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SECTION THREE ACCOUNTING PRINCIPLES I. Basis of Presentation 1. Presentation of Financial Statements The Bank prepares its financial statements and notes in accordance with the Communiqué on Banks’ Accounting Practice and Maintaining Documents, Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”), other communiqués, pronouncements and explanations about accounting and financial reporting issued by the Banking Regulation and Supervision Agency (BRSA), Turkish Commercial Code and the Tax Legislation. The prior period financial statements are presented in line with the principles of TAS No: 1 “Fundamentals of Preparing and Presenting Financial Statements” published in the Official Gazette on January 16, 2005 with No: 25702, and in accordance with Turkish Accounting Standards and Turkish Financial Reporting Standards; and other principles, methods and explanations about accounting and financial reporting issued by the BRSA. Certain reclassifications have been made to the prior year financial statements to comply with the current year presentation. 2. Basis of Accounting The accompanying financial statements are based on the Bank’s legal records. The Bank has recorded the adjustments of inflation accounting to its legal records beginning from June 30, 2004 to December 31, 2004 in accordance with Act No: 5024 of the Tax Procedural Code. As of December 31, 2003, the financial statements are prepared in accordance with the legal books and historical cost principle except for the revaluation of fixed assets and includes adjustments and reclassifications, including restatement for the changes in the general purchasing power of the Turkish Lira in accordance with International Accounting Standard No: 29 “Financial Reporting in Hyperinflationary Economies” (“TAS 29”) prior to December 31, 2004 for the purpose of fair presentation. II.Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions The Bank manages its financial instrument strategies depending on the financing sources. The sources mainly constitute of the current and profit sharing accounts. As of the balance sheet date, the Bank’s assets and equity structure are sufficient to cover its liabilities. The Bank allocates 27% of its profit sharing accounts to liquid instruments (December 31, 2008: 21%). The Bank does not carry a significant foreign currency position risk due to the existing floating exchange rate regime. The investment decisions are made by taking into consideration the maturity structure of the balance sheet items. The allocations of asset items are designated, and yield analysis are made based on this designation. In the statutory records of the Bank, the transactions recorded in foreign currencies (all other currencies except Turkish Lira) are translated into the Turkish Lira at the exchange rates prevailing at the transaction dates. Monetary asset and liabilities denominated in foreign currencies are translated into the Turkish Lira at the balance sheet date of the Bank. Foreign exchange gains or losses arising from the translation of monetary items and foreign currency denominated collections or disbursements are recognized in the income statement. III.Explanations on Forward and Option Contracts and Derivative Instruments In determination of fair value of forward and swap transactions, forward rates discounted to the balance sheet date by prevailing are compared with the expected discounted rates at maturity calculated based on the prevailing profit shares as of the balance sheet date and arising foreign exchange differences are recognized in the income statement. Although some of the derivative transactions provide economic hedging, since all necessary conditions for hedge accounting have not been, yet, the bank classifies these transactions as “held for trading” therefore changes in the fair value of derivative financial instruments are recognized in profit or loss as they arise. IV.Explanations on Profit Share Income and Expenses Profit share income and expenses are recognized in the income statement on an accrual basis. Realized and unrealized profit share accruals of the non-performing loans are reversed and profit share income in connection with these loans is recorded as profit share income only when they are collected. Bank Asya Annual Report 2009 105 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) V.Explanations on Fees and Commission Income and Expenses Banking service revenues are recognized as income only when they are collected while only the current portion of the prepaid commission income obtained from loans is recorded as income based on the periodicity principle. VI. Explanations on Financial Assets Financial instruments comprise of financial assets, financial liabilities and derivative instruments. Financial assets and financial liabilities are recognized on the Bank’s balance sheet when the Bank becomes a party to the contractual provisions of the instrument. Basically, financial assets form majority of the commercial activities and operations of the Bank. Financial instruments expose, change or reduce the liquidity and credit risks of the Bank’s financial statements. Fair value is the amount for which an asset could be exchanged or a liability settled, between knowledgeable willing parties in an arms length transaction. Fair value is best evidenced by a market price, being the amount obtainable from the sale, or payable on the acquisition, of a financial instrument in an active market, if one exists. Estimated fair values of financial assets are determined by the Bank by using the information about the market and relevant valuation methods. However, interpretation of market information is necessary to determine fair value. Therefore, estimated fair values presented in this report may not be necessarily equivalent of the disposal values of such assets derived from current market conditions. Some carrying values of the financial instruments which are same with their cost values are assumed to be equal to their fair values because of their short term nature. The methods and assumptions used in determining the reasonable estimated values of all financial instruments are mentioned below: Cash, Banks, and Other Financial Institutions: Cash and cash equivalents comprise of cash on hand, demand deposits, and highly liquid short-term investments not bearing risk of significant value change, and that are readily convertible to a known amount of cash. The book value of these financial assets approximate to their fair value. Financial Assets at Fair Value Through Profit and Loss: Marketable securities at fair value through profit or loss are classified in two categories; i) marketable securities classified as trading securities: acquired or incurred principally for the purpose of selling or repurchasing it in the near term in order to benefit from short-term profit opportunities; ii) marketable securities classified as marketable securities at fair value through profit or loss at initial recognition. The Bank uses the above-mentioned classification when permitted, or for the purposes of providing a more appropriate presentation. In this group, trading securities are initially recognized at cost and measured at fair value on the financial statements. Fair value of debt securities traded in an active market is determined based on the quoted prices or current market prices. The difference between initial cost and fair value of financial assets at fair value through profit and loss is reflected to profit share income or diminution in value of marketable securities accounts. Profit share income from financial assets at fair value through profit and loss is reflected in profit share income. As of December 31, 2009, the Bank has TRY 3.889 Thousand of derivative financial assets held for trading at fair value through profit or loss (December 31, 2008: TRY 30.035 Thousand). Held to Maturity Investments: Investments held to maturity include securities with fixed or determinable payments and fixed maturity when there is an intention of holding till maturity and the relevant conditions for fulfillment of such intention, including the funding ability. This portfolio excludes loans and receivables. Subsequent to initial recognition, held to maturity investments are measured at amortized cost by using the effective interest rate less impairment losses, if any. The Bank has no financial assets acquired and classified as held to maturity investments that cannot be subject to such classification for two years because of the non-performance of tainting rules. The profit share income received from held to maturity investments is recorded as profit share income in the income statement. As of December 31, 2009, the Bank has TRY 76.460 Thousand of held to maturity investments (December 31, 2008: None). 106 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Financial Assets Available for Sale: Marketable securities classified as available for sale are initially recognized at cost including the transaction costs. After initial recognition, available for sale securities are measured at fair value and unrealized gains/losses originating from the difference between the amortized cost and the fair value are recorded in “Marketable Securities Value Increase Fund” under equity. At the disposal of available for sale financial assets, value increase/ decrease recorded in “Marketable Securities Value Increase Fund” under equity is transferred to the income statement. Equity instruments that are classified as available for sale assets are recorded with their value after deduction of any impairment from original cost. As of December 31, 2009, the Bank has TRY 80.204 Thousand of available for sale financial assets (December 31, 2008: None). Loans and Receivables: Loans and receivables are recognized at amortized cost. Fees, transaction costs and other similar costs in connection with the guarantees of loans and receivables are not considered as part of the transaction cost and recognized as expense in the income statement. Loans are transferred to the relevant accounts in with their cash amounts and income accruals are calculated by using the internal rate of return method and the related income is recorded in the profit share income item. Foreign currency and foreign currency indexed loans are evaluated and evaluation differences are accounted under “Foreign Exchange Gains” and/or “Foreign Exchange Losses” in the income statement. The classification and provisioning of doubtful loans/receivables are appropriately accounted for in accordance with the prevailing regulations, and specific provisions allocated are recognized in the income statement for the period. Collections made from such loans are recognized under the “Non-performing loans” (including receivables from the doubtful receivables) account and “Profit share income received from Uncollectible Loans and Other Receivables” account. Released provisions are accounted as a cancellation of such provisions if realized in the current year, and the remaining amounts are recognized in the account of collections from the prior year expenses. In addition to specific loan loss provisions, within the framework of the regulation and principles referred to above; the Bank records a general loan loss provision for loans and other receivables. The Bank calculated the general loan provision at 0, 5% for cash loans and other receivables, and 0, 1% for non-cash loans until November 1, 2006. Subsequent to the change in the regulation on “Determining the Nature of Loan and Other Receivable Provisions Allocated By Banks and Procedures and Principles of Allocating Provisions” which was published in the Official Gazette No: 26333 on November 1, 2006; the Bank started to book general loan loss provision at 1% for cash loans and other receivables; and 0,2% for non-cash loans on the increase in the cash and non-cash loan portfolio as compared to their October 31, 2006 balances whereas allocating 0,5% general loan loss provision for cash loans and other receivables, and 0,1% for non-cash loans for the balances as of October 31, 2006. Together with the change in the same regulation made on February 6, 2008, the Bank started to book general loan loss provision at 2% for cash loans under watch-list and 0, 4% for non-cash loans under watch-list. VII.Explanations on Impairment of Financial Assets At each balance sheet date, the Bank evaluates the carrying amounts of its financial asset or a group of financial assets to determine whether there is an objective indication that those assets have suffered an impairment loss. If such an indication exists, the Bank determines the related impairment. A financial asset or a financial asset group incurs impairment loss only if there is an objective indicator related to the occurrence (loss/damage event) of one or more than one event (or occurrence) subsequent to initial recognition of that asset; and such loss event causes an impairment loss as a result of the effect on the reliable estimate of the expected future cash flows of the related financial asset and asset group. Any amounts attributable to expected losses arising from any future events is not recognized under no circumstances. Companies that are required to prepare separate financial statements under the statutory requirements in accordance with TAS 27 “Consolidated and Separate Financial Statements” can represent their subsidiaries or associates either at cost or based on requirements set out in TAS 39, “Financial Instruments: Recognition and Measurement”. In this respect, the Bank chooses to use the first method and presents the subsidiaries, jointly controlled entities and associates at cost less impairment loss, if any. VIII.Explanations on Offsetting Financial Assets and Liabilities Financial assets and liabilities are offset when the Bank has a legally enforceable right to set off, and when the Bank has the intention of collecting or paying the net amount of related assets and liabilities or when the Bank has the right to offset the assets and liabilities simultaneously. Bank Asya Annual Report 2009 107 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) IX.Explanations on Sales and Repurchase Agreements and Lending of Securities The Bank does not have any repurchase agreements or lending of securities. X.Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to Those Assets The principles on accounting, assessment and disposal of assets held for sale are determined based on the Communiqué of “Principles and Procedures on Bank’s Disposal of Precious Metals and Assets Held for Sale” published on November 1, 2006 in the official Gazette numbered 26333. Although the Bank has assets held for sale in the balance sheet, due to the fact that the Bank does not have a formal plan to dispose of these assets in one year subsequent to their classification date, such assets are continued to be depreciated. For this reason, these assets are classified as tangible assets instead of assets held for sale in the accompanying financial statements. Assets held for sale are measured at the lower of the carrying amount of assets and fair value less any cost incurred for disposal. Assets held for sale are not amortized and presented in the financial statements separately. In order to classify an asset as held for sale, only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale. Highly saleable condition requires a plan by the management regarding the sale of the asset to be disposed of (or else the group of assets), together with an active program for the determination of buyers as well as for the completion of the plan. Also the asset (or else the group of assets) shall be actively marketed in conformity with its fair value. On the other hand, the sale is expected to be recognized as a completed sale within one year after the classification date; and the necessary transactions and procedures to complete the plan should demonstrate the fact that there is remote possibility of making any significant changes or cancellation of the plan. Various events and conditions may extend the completion period of the disposal more than a year. If such delay arises from any events and conditions beyond the control of the entity and there is sufficient evidence that the entity has an ongoing disposal plan for these assets, such assets (or else group of assets) are continued to be classified as assets held for sale (or else group of assets). As of December 31, 2009, assets held for sale amounts to TRY 9.196 Thousand (December 31, 2008: TRY 24.100 Thousand). A discontinued operation is a division of a bank that is either disposed of or held for sale. Results of discontinued operations are included in the income statement separately. XI.Explanations on Goodwill and Other Intangible Assets Goodwill arising on the acquisition of a subsidiary or a jointly controlled entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary or jointly controlled entity recognized at the date of acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period. On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. No goodwill amount is recognized in the unconsolidated financial statements of the Bank as of the balance sheet date. Intangible assets acquired prior to January 1, 2005 are accounted for at restated cost less accumulated depreciation and any impairment loss, and the intangible assets acquired in subsequent periods are accounted for at acquisition cost less accumulated depreciation and any impairment loss if any, for those acquired prior to January 1, 2005. Intangible assets are amortized by using the straight line method considering their useful lives. Amortization method is reviewed at the end of each year periodically. Intangible assets mainly constitute of rights and amortized using the straight line method in 5 years. 108 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) XII.Explanations on Tangible Fixed Assets Prior to January 1, 2005, tangible assets are accounted for at acquisition cost plus any other direct costs incurred to bring the asset for ready to use. Tangible assets are remeasured at their acquisition cost less accumulated depreciation and impairment loss, if any. Depreciation of assets held less than one year as of the balance sheet date is accounted for proportionately. If the fair value of tangible assets is under their carrying value, impairment loss is allocated for exceeding amounts and these amounts are recognized as an impairment in the financial statements. Gains or losses resulting from disposals of tangible assets are recognized in the income statement. Maintenance costs of the tangible assets are recognized in the income statement as an expense. There are no pledges, mortgages or other restrictions on tangible assets. Tangible Asset Safety Boxes Office Equipment Furniture and Fixtures Vehicles Leasehold Improvements Buildings Useful Life 5 years 5 years 5 years 5 years 5 years 50 years XIII.Explanations on Leasing Transactions Bank as a Lessor: Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the amount of the Bank’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Bank’s net investment outstanding in respect of the leases. Bank as a Lessee: Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Assets held under finance leases are recognized as assets of the Bank at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Bank’s general policy on borrowing costs. As of December 31, 2009, the Bank, as a lessee, has operating leases for vehicles and branches in addition to its assets through financial lease. XIV. Explanations on Provisions and Contingent Liabilities Provisions are recognized when there is a present obligation, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Contingent liabilities are continuously reviewed in order to determine whether there is any possibility of cash flow with regards to the sources having economic benefit for the Bank. XV.Explanations on Liabilities for Employee Benefits Under the Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarily leaving the Bank. The retirement pay provision recognized represents the present value of the defined benefit obligation as adjusted for unrecognized gains and losses in accordance with TAS 19 “Employee Benefits”. The defined obligation is determined by independent actuaries. Bank Asya Annual Report 2009 109 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) XVI. Explanations on Taxation Tax expense comprises of current tax and deferred tax expenses. Current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. According to the Article 32 of the Corporate Tax Law No. 5520, announced in the Official Gazette dated June 21, 2006, the corporate tax rate is 20%. eferred tax asset or liability is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and the D corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realized and recognized in the income statement. If deferred tax is in connection with the assets directly associated with the equity, it shall be directly associated with shareholder’s equity items. Taxes payables and prepaid taxes are offset since they are levied by the same taxation authority. Deferred tax assets and liabilities are also offset. The Bank has adjusted its statutory financial statements based on inflation accounting as of January 1, 2004 in accordance with Law No: 5024. XVII. Additional Disclosures on Borrowings Borrowings are recognized in accordance with TAS 39 “Financial Instruments: Recognition and Measurement”. No specific hedging technique is applied for borrowings, their accounting and valuation methods excluding some general methods applied for avoiding any liquidity and currency risks. There are no debt securities or convertible bonds issued by the Bank. XVIII.Explanations on Exported Share Certificates As of the reporting date, there are no disclosures made on the profit sharing in connection with the Bank’s shares subsequent to the balance sheet date. XIX. Explanations on Acceptances Acceptances are realized simultaneously with the payment dates of the customers and they are presented as probable commitments in the offbalance sheet accounts. XX.Explanations on Government Incentives There are no government incentives used by the Bank. 110 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) XXI.Explanations on Reporting According to Segmentation The Bank operates in corporate, commercial and retail banking areas in line with its mission by means of profit/loss sharing methodology. Current Period Retail Corporate and Commercial Treasury Undistributed Total Assets 1.101.731 7.108.176 2.461.065 937.983 Total Liabilities 6.169.720 2.966.859 191.616 2.280.760 Net Profit Share Income/(Expense)(*) (359.390) 891.255 49.559 18.423 Net Fees and Commissions Income/(Expense) (2.577) 253.953 (1.598) 8.595 Other Operating Income/(Expense) (2.951) (8.870) - (468.007) Profit Before Tax (364.918) 1.136.338 47.961 (440.989) Tax Provision - - - (77.111) Net Profit for the Period (364.918) 1.136.338 47.961 (518.100) Total 11.608.955 11.608.955 599.847 258.373 (479.828) 378.392 (77.111) 301.281 (*) The allocation of retail, corporate and commercial banking segments above is the result of differentiation in fund collection and allocation procedures of the participation banks. Prior Period Retail Corporate and Commercial Treasury Undistributed Total Assets 927.147 5.400.297 1.095.986 685.399 Total Liabilities 3.811.738 2.031.089 457.552 1.808.450 Net Profit Share Income/(Expense)(*) (253.302) 701.436 27.273 25.983 Net Fees and Commissions Income/(Expense) (9.757) 221.099 (1.262) 16.135 Other Operating Income/(Expense) (5.370) (11.115) - (399.216) Profit Before Tax (268.429) 911.420 26.011 (357.098) Tax Provision - - - (65.375) Net Profit for the Period (268.429) 911.420 26.011 (422.473) Total 8.108.829 8.108.829 501.390 226.215 (415.701) 311.904 (65.375) 246.529 (*) The allocation of retail, corporate and commercial banking segments above is the result of differentiation in fund collection and allocation procedures of the participation banks. XXII. Explanations on Other Matters None. Bank Asya Annual Report 2009 111 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SECTION FOUR INFORMATION ON FINANCIAL STRUCTURE I.Explanations Related to Capital Adequacy Standard Ratio The unconsolidated capital adequacy ratio of the Bank is 14,45% (December 31, 2008: 13,40%). Capital Adequacy Standard Ratio is calculated in accordance with the Communiqué on “Measurement and Assessment of Capital Adequacy of Banks”, which was published on November 1, 2006 in the Official Gazette No: 26333. The calculation of Capital Adequacy Ratio includes the methods used in determining the Capital Adequacy Ratio, determination of risk weighted assets and non-cash credits in line with the relevant banking regulation and measuring the market risk and operational risk ratio in line with the same regulation. R isk Weights Bank Amount Subject to Credit Risk 0% 10% 20% 50% 100% Balance Sheet Items (Net) 2.598.621 - 246.686 1.966.051 4.900.362 Cash and Cash Equivalents 131.917 - - - - Matured Marketable Securities - - - - - Due from Central Bank of Turkish Republic 2.008.055 - - - - Due from Domestic Banks, Foreign Banks, Branches and Head Office Abroad - - 145.745 - 1.273 Interbank Money Market Placements - - - - - Receivables from Reverse Repo Transactions - - - - - Reserve Deposits 153.015 - - - - Loans 66.497 - 100.780 1.908.529 3.888.193 Non-Performing Loans (Net) - - - - 104.346 Financial Lease Receivables 5.829 - - 7.193 101.190 Available-for-Sale Financial Assets 75.000 - - - 93 Held to Maturity Investments 75.000 - - - - Receivables from Installment Sales of Assets - - - - - Sundry Debtors - - - - 15.729 Accrued Profit Share and Income Accruals 11.521 - 161 50.329 280.441 Subsidiaries, Associates and Entities Under Common Control (Net) - - - - 184.839 Tangible Assets - - - - 268.242 Other Assets 71.787 - - - 56.016 Off-Balance Sheet Items 57.675 - 72.110 789.564 4.033.835 Guarantees and Commitments 57.675 - 63.064 789.564 4.033.835 Derivative Financial Instruments - - 9.046 - - Non Risk Weighted Accounts - - - - - Total Risk Weighted Assets 2.656.296 - 318.796 2.755.615 8.934.197 150% 24.041 - - - 200% 1.753 - - - - - 24.041 - - - - - - - - - - - - - - 24.041 1.753 1.753 Summary of the Capital Adequacy Standard Ratio of the Bank: Total Risk Weighted Assets (TRWA) Amount Subject to Market Risk (ASMR) Amount Subject to Operational Risk (ASOR) (*) Shareholders’ Equity Shareholders’ Equity/(TRWA + ASMR + ASOR) *100 Bank Current Period 10.415.331 21.175 1.228.699 1.685.734 14,45 Prior Period 9.776.820 65.750 859.883 1.434.570 13,40 (*) The amount subject to operational risk is in accordance with the ‘Regulation Regarding Measurement and Evaluation of the Bank’s Capital Adequacy Ratio published in the Official Gazette No: 26333 dated 1 November 2006 which is effective from 1 June 2007. Operational risk is calculated by using the Basic Indicator Approach. 112 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Components of Shareholders’ Equity: CORE CAPITAL Paid-in Capital Nominal Capital Capital Commitments (-) Paid-in Capital Indexation Difference Share Premium Share Cancellations Profits Legal Reserves First Legal Reserve (Turkish Commercial Code 466/1) Second Legal Reserve (Turkish Commercial Code 466/2) Other Legal Reserve per Special Legislation Status Reserves Extraordinary Reserves Reserves Allocated by the General Assembly Retained Earnings Accumulated Losses Foreign Currency Share Capital Exchange Difference Inflationary Adjustment to Legal Reserve, Status Reserves and Extraordinary Reserves Profit Current Year Profit Prior Years’ Profits Provision for Possible Losses up to 25% of the Core Capital Gains on Sale of Associates and Subsidiaries and Properties to be added to Capital Primary Subordinated Loans up to 15% of the Core Capital Losses that cannot be Covered by Reserves (-) Net Current Period Loss Prior Years’ Losses Leasehold Improvements (-) Prepaid Expenses (-) Intangible Assets (-) Deferred Tax Asset Exceeding 10% of the Core Capital (-) Excess Amount in the Article 56, Clause 3 of the Banking Law (-) Total Core Capital Current Period 900.000 900.000 - - 3.307 - 37.886 35.959 1.927 - - 458.224 458.224 - - - - 301.281 301.281 - - 4.275 - - - - 50.616 8.840 10.224 - - 1.635.293 Prior Period 900.000 900.000 3.307 25.561 23.634 1.927 224.020 224.020 246.529 246.529 4.275 8.131 6.332 1.389.229 Bank Asya Annual Report 2009 113 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SUPPLEMENTARY CAPITAL Current Period General Loan Loss Provision 49.393 45% of the Revaluation Reserve for Movable Fixed Assets - 45% of the Revaluation Reserve for Properties - Bonus Shares Obtained from Associates, Subsidiaries and Entities Under Common Control - Primary Subordinated Loans Excluded in The Calculation of the Core Capital - Secondary Subordinated Loans - Marketable Securities Value Increase Fund 45% 1.314 Associates and Subsidiaries - Available for Sale Securities 1.314 Indexation Differences for Capital Reserves, Profit Reserves and Retained Earnings (Except Indexation Differences for Legal Reserves, Statutory Reserves and Extraordinary Reserves) - Total Supplementary Capital 50.707 TIER III CAPITAL - CAPITAL 1.686.000 DEDUCTIONS FROM THE CAPITAL 266 Shareholdings of Banks and Financial Institutions (Domestic, Foreign) from which the Bank Keeps Ten Percent or More of Capitals 34 Shareholdings of Banks and Financial Institutions (Domestic, Foreign) from which the Bank Keeps Less than Ten Percent of Capitals which Exceed Ten Percent of Bank’s Core And Supplementary Capital - Secondary Subordinated Loans Granted to Banks and Financial Institutions (Domestic, Foreign) or Qualified Shareholders and Placements That Possess the Nature of Their Primary or Secondary Subordinated Debt - Loans Granted Being Non-Compliant with the Articles 50 and 51 of the Banking Law - The Net Book Value of Properties Exceeding Fifty Percent of Equity and Properties Held for Sale and Properties and Commodity to be Disposed, Acquired in Exchange of Loans a nd Receivables according to the Article 57 of the Banking Law and have not been Disposed yet After 5 Years after Foreclosure 232 Other - TOTAL SHAREHOLDERS’ EQUITY 1.685.734 Prior Period 45.493 45.493 1.434.722 152 84 - 68 1.434.570 II. Explanations Related to Credit Risk Credit worthiness of loan customers are monitored and semiannually and regularly reviewed by the Risk Monitoring Department of the Bank in accordance with the Communiqué on “Determining the Nature of Loan and Other Receivable Provisions Allocated by Banks and Procedures and Principles of Allocating Provisions”. The account statements are obtained based on the prevailing regulations. Credit limits are determined by the Board of Directors, the Credit Committee of the Bank and the Credit Administration. The Bank obtains sufficient guarantees for its risks, comprising of personal surety, real-estate mortgage, cash blockage and customer cheques. For the derivative transactions and other similar positions of the Bank, operational limits are set by the Board of Directors and the transactions are performed within these limits. There are no options or any other similar transactions. Indemnified non-cash loans are subject to the same risk weight with the overdue loans. The Bank monitors restructured and rescheduled loans in accordance with the Communiqué on “Determining the Nature of Loan and Other Receivable Provisions Allocated by Banks and Procedures and Principles of Allocating Provisions”. Financial position and business operation of those customers are analyzed systematically and, principal and profit payments based on the restructured payment plan are monitored by the corresponding departments. As of December 31, 2009, the risk of the Bank from its top 100 cash loan customers share in total cash loans ratio is 46,57% (December 31, 2008: 38,86%). 114 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) As of December 31, 2009, the risk of the Bank from its top 100 non-cash loan customers share in total non-cash loan ratio is 46,62% (December 31, 2008: 45,77%). As of December 31, 2009, the cash and non-cash receivables of the Bank from its top 100 loan customers share in total balance sheet assets and non-cash loan ratio is 39,86% (December 31, 2008: 32,05%). As of December 31, 2009 the Bank’s general provision amount for its credit risk is TRY 89.368 Thousand (December 31, 2008: TRY 72.286 Thousand). Distribution of Credit Risk by Types of Borrowers and Geographical Concentration: Loans to Banks Loans to Real Person and Other Marketable and Legal Entities Financial Institution Securities (***) Other Loans (**) Current Prior Current Prior Current Prior Current Prior Period Period Period Period Period Period Period Period Loans According to Borrowers 7.962.432 6.018.740 100.324 744 160.553 30.035 12.260.238 12.865.747 Private Sector 6.854.661 5.084.072 163 744 3.889 30.035 10.562.645 11.811.395 Public Sector 12.051 7.521 - - 156.571 - - Banks - - 100.161 - - - 1.572.945 924.791 Retail 1.095.720 927.147 - - - - 124.648 129.561 Share Certificates - - - - 93 - - Information According to Geographical Concentration 7.962.432 6.018.740 100.324 744 160.553 30.035 12.260.238 12.865.747 Domestic 7.720.332 5.959.325 163 744 156.571 - 10.692.378 11.798.954 European Union Countries 105.111 7.709 100.161 - 3.982 15.818 1.434.787 937.908 OECD Countries (*) 5.117 - - - - - 40.976 4.747 Off-Shore Banking Regions 112.451 174 - - - - 13.265 USA, Canada 775 - - - - 14.217 7.234 7.272 Other Countries 18.646 51.532 - - - - 71.598 116.866 Total 7.962.432 6.018.740 100.324 744 160.553 30.035 12.260.238 12.865.747 (*) OECD countries other than European Union countries, USA and Canada. (**) Includes non-cash loans, commitments and derivative transactions. (***) Includes marketable securities designated at fair value through profit or loss, available-for-sale and held-to-maturity. Bank Asya Annual Report 2009 115 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Information according to geographical concentration: Assets Liabilities Non-Cash LoansEquity Investments Current Period – December 31, 2009 Domestic 10.980.324 9.605.691 8.733.493 - European Union Countries 252.579 76.203 66.518 - OECD Countries (*) 7.576 11.292 16.416 - Off-shore Banking Regions 112.451 21.106 13.265 - USA, Canada 51.233 46.964 7.234 - Other Countries 19.919 139.805 49.051 - Associates, Subsidiaries and Entities Under Common Control - - - 184.873 Unallocated Assets/Liabilities (**) - - - - Total 11.424.082 9.901.061 8.885.977 184.873 Prior Period – December 31, 2008 Domestic 7.805.387 6.186.643 10.072.831 - European Union Countries 48.204 158.570 95.066 - OECD Countries (*) 5.312 7.415 5.380 - Off-shore Banking Regions 174 81.919 - - USA, Canada 35.591 65.780 7.273 - Other Countries 52.092 204.810 34.865 - Associates, Subsidiaries and Entities Under Common Control - - - 162.069 Unallocated Assets/Liabilities (**) - - - - Total 7.946.760 6.705.137 10.215.415 162.069 Net Profit 301.281 301.281 246.529 246.529 (*) OECD countries other than European Union countries, USA and Canada. (**) Assets and liabilities that cannot be allocated on a coherent basis. Sector concentration for cash loans: Agriculture Farming and Raising Livestock Forestry, Wood and Paper Fishery Manufacturing Mining and Quarry Production Electricity, Gas and Water Construction Services Wholesale and Retail Trade Hotel, Tourism, Food and Beverage Services Transportation and Communication Financial Institutions Real Estate and Renting Services Self-Employment Services Education Services Health and Social Services Other Total TRY 131.208 93.908 31.023 6.277 3.265.977 294.079 2.439.245 532.653 1.475.039 1.381.412 406.557 172.054 286.818 117.937 176.019 16.294 46.275 159.458 1.176.839 7.430.475 Current PeriodPrior Period (%) FC (%) TRY (%) FC 1,76 12.782 2,02 86.254 1,51 11.064 1,26 10.245 1,62 58.439 1,02 10.374 0,42 - - 17.726 0,31 496 0,08 2.537 0,40 10.089 0,18 194 43,96 246.420 38,97 2.609.840 45,39 119.449 3,96 67.589 10,69 136.267 2,37 2.927 32,83 126.293 19,97 2.089.322 36,34 116.522 7,17 52.538 8,31 384.251 6,68 - 19,85 114.173 18,06 877.605 15,27 53.412 18,60 258.906 40,95 1.185.544 20,63 86.432 5,47 63.542 10,05 300.063 5,22 27.555 2,32 - - 208.005 3,62 29.720 3,86 172.354 27,26 263.816 1,59 - - 45.922 2,37 - - 179.849 0,22 4.306 0,68 15.331 0,62 18.704 2,81 45.985 2,15 - 0,15 126.573 15,83 - - 989.571 100,00 632.281 100,00 5.748.814 4,59 0,80 3,13 0,27 0,80 2,20 17,20 100,00 14.315 - 667 4.363 9.812 - 313 270.670 (%) 4,08 3,83 0,18 0,07 44,13 1,08 43,05 19,73 31,94 10,18 10,98 5,29 0,25 1,61 3,63 0,12 100,00 116 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) The table below shows the maximum exposure to credit risk for the components of the financial statements: The Central Bank of Turkish Republic Due from Banks Derivative Financial Assets Held for Trading Available-for-Sale Financial Assets Held to Maturity Investments Loans Finance Lease Receivables Total Contingent Liabilities Commitments Total Total Credit Risk Exposure Current Period 2.213.091 147.018 3.889 80.204 76.460 8.196.675 158.671 10.876.008 8.885.977 2.473.285 11.359.262 22.235.270 Prior Period 1.062.597 117.917 30.035 6.147.646 233.676 7.591.871 10.215.415 1.815.602 12.031.017 19.622.888 Credit Rating System: The credit risk is assessed through the internal rating system of the Bank, by classifying loans from highest grade to lowest grade according to the probability of default. As of December 31, 2009 consumer loans are excluded from the internal rating system of the Bank. Additional scoring methodologies are applied for these loans. The risks that are subject to rating models can be allocated as follows: Category Description of Category Above Average The borrower has a very strong financial structure Average The borrower has an intermediate level of financial structure Under Average The financial structure of the borrower has to be closely monitored in the medium term Not Graded The borrower is not assessed by the Bank Total Share in the Total (%) 30% 34% 7% 29% 100% III. Explanations Related to Market Risk The amount subject to market risk is calculated and reported with the Standard Method described in Section 4 of the Communiqué on “Measurement and Assessment of Banks’ Capital Adequacy” published in the Official Gazette No: 26333 dated November 1, 2006. Market risk is measured on a monthly basis. a) Information related to market risk: (I) Capital Requirement to be Employed For General Market Risk - Standard Method (II) Capital Requirement to be Employed For Specific Risk - Standard Method (III) Capital Requirement to be Employed For Currency Risk - Standard Method (IV) Capital Requirement to be Employed For Commodity Risk - Standard Method (V) Capital Requirement to be Employed For Settlement Risk - Standard Method (VI) Total Capital Requirement to be Employed For Market Risk Resulting From Options - Standard Method (VII) Total Capital Requirement to be Employed For Market Risk in Banks Using Risk Measurement Model (VIII) Total Capital Requirement to be Employed For Market Risk (I+II+III+IV+V+VI) (IX) Amount Subject to Market Risk (12,5 x VIII) or (12,5 x VII) Amount 263 1.431 1.694 21.175 Bank Asya Annual Report 2009 117 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) b)Average market risk table calculated at the end of each month in the current period: Current Period Average Maximum Minimum Average Interest Rate Risk (*) 14.675 29.350 - 6.730 Common Stock Risk - - - - Currency Risk 44.250 85.213 3.288 28.663 Commodity Risk - - - - Settlement Risk - - - - Option Risk - - - - Total Value Subject to Risk 58.925 114.563 3.288 35.393 Prior Period Maximum 19.863 - 104.575 - - - 124.438 Minimum 264 9.275 9.539 (*) The Bank calculates by considering market risk of share certificates and forward transactions . c) Other price risks: The Bank does not share certificates investments, hence it is not subject to share price risk. IV.Explanations Related to Operational Risk The Bank calculates the amount subject to operational risk based on “Basic Indicator Method” by using 2008, 2007 and 2006 year end gross income balances of the Bank, in accordance with the Section 4 of the “Regulation Regarding Measurement and Evaluation of Banks’ Capital Adequacy Ratio” published in the Official Gazette No: 26333 dated November 1, 2006, namely “The Calculation of the Amount Subject to Operational Risk”. V. Explanations Related to Currency Risk Foreign currency risk indicates the probability of loss that banks are subject to due to the exchange rate changes in the market. While calculating the share capital requirement, all foreign currency assets, liabilities and forward transactions of the Bank are taken into consideration and value at risk is calculated by using the standard method. The currency risk of the Bank is monitored on a daily basis. Net foreign currency position/capital ratio is also controlled using the same basis. The Bank does not use any derivative instruments for hedging. T he Standard Method stated in the statutory reporting is used to measure the currency risk of the Bank. The risk measurements with the context of the Standard Method are performed on a monthly basis. The announced current foreign exchange buying rates of the Bank as of December 31, 2009 and the previous five working days are as follows: US Dollar “FC Evaluation Rate” of the Bank 1,5057 Previously; 30.12.2009 (Day 1) 1,5026 29.12.2009 (Day 2) 1,5065 28.12.2009 (Day 3) 1,5052 25.12.2009 (Day 4) 1,5070 24.12.2009 (Day 5) 1,5186 December 31, 2009 Eur Sterling Japanese Yen 2,1590 2,4212 1,6247 2,1547 2,3851 1,6296 2,1682 2,4089 1,6423 2,1667 2,4014 1,6475 2,1635 2,3997 1,6399 2,1740 2,4199 1,6547 The simple arithmetic averages of the major current foreign exchange buying rates of the Bank for the thirty days before the balance sheet date are as follows; TRY 1,4983 per US Dollar, TRY 2,1855 per EUR, TRY 2,4296 per GBP and TRY 1,6628 per 100 JPY. 118 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Information on the Foreign Currency Risk of the Bank: Foreign Currencies (Thousand TRY) EUR USD YEN Other Current Period - December 31, 2009 Assets Cash (Cash in Vault, Effectives, Money in Transit, Cheques Purchased) and Balances with the Central Bank of Turkish Republic 286.246 1.041.455 - 37.912 Due from Banks 42.417 87.555 888 8.207 Financial Assets at Fair Value Through Profit and Loss (**) - - - - Money Market Placements - - - - Available-for-Sale Financial Assets - - - - Loans (*) 609.555 1.949.517 - - Subsidiaries, Associates and Entities Under Common Control - - - - Held-to-Maturity Investments - - - - Derivative Financial Assets for Hedging Purposes - - - - Tangible Assets - - - - Intangible Assets - - - - Other Assets 23 204 - - Total Assets 938.241 3.078.731 888 46.119 Liabilities Current and Profit Sharing Accounts of Banks 607 1.128 - 8 Current and Profit Sharing Accounts 870.094 2.239.791 315 44.810 Money Market Borrowings - - - - Funds Provided from Other Financial Institutions 58.389 133.072 - - Marketable Securities Issued - - - - Sundry Creditors 223 2.011 - - Derivative Financial Liabilities for Hedging Purposes - - - - Other Liabilities (**) 8.067 8.912 5 58 Total Liabilities 937.380 2.384.914 320 44.876 Net Balance Sheet Position 861 693.817 568 1.243 Net Off-Balance Sheet Position 2.159 (689.605) (579) (60) Financial Derivative Assets (***) 4.318 3.046 171 60 Financial Derivative Liabilities (***) 2.159 692.651 750 120 Non-Cash Loans (****) 1.450.841 3.320.841 37.080 92.697 Prior Period - December 31, 2008 Total Assets 774.089 2.291.042 3.888 55.175 Total Liabilities 718.664 1.936.069 4.096 52.107 Net Balance Sheet Position 55.425 354.973 (208) 3.068 Net Off-Balance Sheet Position (44.791) (353.249) - (30) Financial Derivative Assets - 2.141 - - Financial Derivative Liabilities 44.791 355.390 - 30 Non-Cash Loans (****) 1.735.286 3.668.940 76.844 133.538 Total 1.365.613 139.067 2.559.072 227 4.063.979 1.743 3.155.010 191.461 2.234 17.042 3.367.490 696.489 (688.085) 7.595 695.680 4.901.459 3.124.194 2.710.936 413.258 (398.070) 2.141 400.211 5.614.608 (*) TRY 1.892.285 Thousand of foreign currency indexed loan is also shown under this line (December 31, 2008: TRY 2.299.915 Thousand). (**) In accordance with the principles of the Regulations on the “Measurement and Practices of Bank’s Net Overall FX position Shareholders’ Equity Ratio on a consolidated and unconsolidated Basis”, general reserves recorded to expense accounts amounting to TRY 10.494 Thousand (December 31, 2008: TRY 10.011 Thousand) in assets and income accrual from derivative financial instruments amounting to TRY 3.889 Thousand (December 31, 2008: TRY 30.035 Thousand) in liabilities and expense accrual from derivate financial instruments amounting to TRY 155 Thousand (December 31, 2008:-), are not taken into consideration in the currency risk calculation. (***) Forward asset purchase-sale commitments of TRY 7.595 Thousand is added to derivative financial assets and TRY 246.981 is added to derivative financial liabilities (December 31, 2008: TRY 2.141 Thousand is added to derivative financial assets and TRY 3.675 is added to derivative financial liabilities). (****) The related balances do not have any effect on the currency risk position. Bank Asya Annual Report 2009 119 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Foreign currency sensitivity: The Bank is mainly exposed to USD and EUR currency risks. The following table details the Bank’s sensitivity to a 10% increase and decrease in the TRY against USD and EUR. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. A positive number indicates an increase in profit or loss and other equity in the case of short position and a decrease in the case of long position where the TRY strengthens against USD and EUR. Change in Currency Rate in % USD 10 % increase USD 10 % decrease EUR 10 % increase EUR 10 % decrease Effect on Profit or Loss Effect on Equity Current Period Prior Period Current Period Prior Period 421 173 - (421) (173) - 302 1.064 - (302) (1.064) - - Forward foreign exchange transaction contracts: The following table details the forward foreign currency contracts outstanding as of the balance sheet date: Purchase Contracts Sales Contracts Fair Value Average Exchange Rate Original Amount Original Amount TRY Current Prior Current Prior Current Prior Current Prior Outstanding Contracts (*) Period Period Period Period Period Period Period Period Swap Transactions TRY Purchase-EUR Sale Less than 3 Months - 2,1863 - 43.725 - 20.000 - 347 TRY Purchase-USD Sale Less than 3 Months 1,5142 1,7472 452.278 130.895 298.000 75.000 3.028 14.705 Between 3-6 Months - 1,6516 - 256.598 - 155.000 - 14.190 Forward Transactions TRY Purchase-USD Sale Less than 3 Months - 1,7440 - 6.976 - 4.000 - 793 Other Term Foreign Exchange Transactions (**) TRY purchase-USD sale Less than 3 months 1,5013 1,5365 240.277 1.536 159.000 1.000 687 USD Purchase-EUR Sale Less than 3 Months 1,4429 1,3954 1.443 1.395 1.000 1.000 14 EUR Purchase-USD Sale Less than 3 Months 1,4321 - 2.000 - 2.864 - 5 USD Purchase-JPY Sale Less than 3 Months 92,369 - 500 - 46.184 - - JPY Purchase-USD Sale Less than 3 Months 91,770 - 10.509 - 114 - - USD purchase-DKK sale Less than 3 months 5,1870 5,2583 80 20 415 105 - DKK purchase- sale Less than 3 months 5,1840 - 207 - 40 - - (*) Maturity dates on the table are set based on the agreement period. (**) It is presented in commitments within off balance sheet liabilities. 120 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) VI.Explanations Related to Interest Rate Risk Since the Bank has interest-free banking operations, it does not have any interest sensitive asset or liability and consequently, it does not have any interest rate risk. VII.Explanations Related to Liquidity Risk In order to avoid the liquidity risk, the Bank diversifies its funding resources as customer deposits and foreign borrowings, considers the maturity match between assets and liabilities, focuses on strategies especially for the provision of long-term resources and retains its liquid assets in order to provide sufficient liquidity in any market fluctuations. Maturity structure of the TRY and FC deposits, cost and change in the total amount are monitored on daily basis by considering the past developments and future expectations. The Bank’s policy is to establish an asset structure that primarily meets all kinds of liabilities by using liquid resources. The Board of Directors of the Bank determines a standard for the liquidity ratios, and applies the standard on a regular basis in order to ensure. The table below gives a summary of the liquidity ratio of the Bank: Current Period Average (%) Highest (%) Lowest (%) 1st Term Period (Weekly) 192,55 233,06 161,13 2nd Term Period (Monthly) 141,96 165,89 121,42 Prior Period Average (%) Highest (%) Lowest (%) 1st Term Period (Weekly) 161,97 218,26 130,34 2nd Term Period (Monthly) 110,42 125,10 100,34 Bank Asya Annual Report 2009 121 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Presentation of Assets and Liabilities According to Their Maturities: Current Period- Up to 1 3-12 Over December 31, 2009 Demand Month1-3 Months Months 1-5 Years 5 Years Undistributed (*) Total Assets Cash (Cash in Vault, Effectives, Money in Transit, Cheques Purchased) and Balances with the Central Bank of Turkish Republic 1.042.463 1.302.545 - - - - - 2.345.008 Due from Banks 136.763 10.255 - - - - - 147.018 Financial Assets at Fair Value Through Profit and Loss - 3.889 - - - - - 3.889 Money Market Placements - - - - - - - Available-for-Sale Financial Assets - - - 55.111 25.000 - 93 80.204 Loans (**) - 1.605.399 1.239.467 2.700.780 2.533.253 142.528 - 8.221.427 Held-to-Maturity Investments - - - 51.460 25.000 - - 76.460 Other Assets - 71.195 - - - - 663.754 734.949 Total Assets 1.179.226 2.993.283 1.239.467 2.807.351 2.583.253 142.528 663.847 11.608.955 Liabilities Current and Profit Sharing Accounts of Banks 1.990 - - - - - - 1.990 Current and Profit Sharing Accounts 1.590.828 3.608.702 1.551.155 2.383.891 12 - - 9.134.588 Funds Provided from Other Financial Instruments - 15.195 29.217 80.081 64.556 2.412 - 191.461 Money Market Borrowings - - - - - - - Marketable Securities Issued - - - - - - - Sundry Creditors 30.995 170.149 - - - - - 201.144 Other Liabilities (***) - 183.862 - - - - 1.895.910 2.079.772 Total Liabilities 1.623.813 3.977.908 1.580.372 2.463.972 64.568 2.412 1.895.910 11.608.955 Net Liquidity Gap (444.587) (984.625) (340.905) 343.379 2.518.685 140.116 (1.232.063) Prior Period - December 31, 2008 Total Assets 825.390 1.289.351 639.629 2.112.277 2.550.847 133.974 557.361 8.108.829 Total Liabilities 1.023.766 2.916.392 995.733 1.528.257 90.744 1.875 1.552.062 8.108.829 Net Liquidity Gap (198.376)(1.627.041) (356.104) 584.020 2.460.103 132.099 (994.701) (*) Certain assets in the balance sheet that are necessary for the banking operations but cannot be readily convertible into cash in the near future such as tangible assets, investments in associates and subsidiaries, stationary supplies, prepaid expenses and non-performing loans are included in this column. (**) Loans include Finance Lease Receivables balance. (***) Equity is presented in the “Undistributed” column under “Other Liabilities”. 122 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Analysis of financial liabilities based on the remaining contractual maturities: The table below is drawn up based on the undiscounted contractual maturities of the financial assets and liabilities. Profit share expenses to be paid on such liabilities are included in this table. “Adjustments” column indicates items that may lead to potential cash flows in the following period. These items are included in maturity analysis, but not included in the balance sheet value of such financial liabilities. Up to 1 1-3 3-12 Demand Month Months Months 1-5 Years Over 5 Year Adjustments Total December 31, 2009 Funds Collected 1.592.818 3.608.702 1.551.155 2.383.891 12 - - 9.136.578 Funds Borrowed - 15.666 30.634 84.806 68.538 2.453 (10.636) 191.461 Total 1.592.818 3.624.368 1.581.789 2.468.697 68.550 2.453 (10.636) 9.328.039 December 31, 2008 Funds Collected 1.006.850 2.648.607 916.498 1.253.016 17.850 - - 5.842.821 Funds Borrowed - 30.940 80.657 285.514 64.188 1.983 (5.730) 457.552 Total 1.006.850 2.679.547 997.155 1.538.530 82.038 1.983 (5.730) 6.300.373 Analysis of contractual expiry by maturity of the Bank’s derivative financial instruments: Up to 1 Month 1-3 Months 3-12 Months 1-5 Years Over 5 Year December 31, 2009 Derivative Financial Instruments for Hedging Purposes Fair Value Hedge - - - - - Held for Trading Transactions Forward Sales Contracts - - - - - Swap Sales Contracts 448.699 - - - - Total 448.699 - - - - Up to 1Month 1-3 Months 3-12 Months 1-5 Years Over 5 Year December 31, 2008 Derivative Financial Instruments for Hedging Purposes Fair Value Hedge - - - - - Held for Trading Transactions Forward Sales Contracts - 6.049 - - - Swap Sales Contracts - 156.080 234.407 - - Total - 162.129 234.407 - - VIII. Presentation of Financial Assets and Liabilities at Fair Value As the loan portfolio has fixed profit sharing rates, estimated fair value is calculated by using the discounted cash flows. Total 448.699 448.699 Total 6.049 390.487 396.536 Bank Asya Annual Report 2009 123 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) The table below summarizes the book value and fair value of the financial assets and liabilities. Book value is the sum of the acquisition value and accumulated profit share accruals. Financial Assets Money Market Placements Banks and Other Financial Institutions (*) Financial Assets Available For Sale (**) Held to Maturity Investments Loans (***) (*****) Financial Liabilities Funds Collected (****) Other Current and Profit Sharing Accounts (****) Funds Provided From Other Financial Institutions Issued Securities Finance Lease Payables Sundry Creditors Book Value Fair Value Current Period Prior Period Current Period Prior Period 10.738.200 7.433.674 11.395.123 7.747.900 - - - 2.360.109 1.180.514 2.360.109 1.180.514 80.204 - 80.204 76.460 - 80.111 8.221.427 6.253.160 8.874. 699 6.567.386 9.529.183 6.451.156 9.528.521 6.449.462 1.990 3.147 1.990 3.147 9.134.588 5.839.674 9.134.588 5.839.674 191.461 - - 201.144 457.552 - 6 150.777 190.799 - - 201.144 455.858 6 150.777 (*) As receivables from banks and other financial institutions are in short-term nature, their fair value approximates to their book value. (**) Amounting to TRY 93 Thousand of share certificates within financial asset available for sale is reflected to financial statements as cost by the reason of not trading an active market. (***) In order to calculate the fair value of loans, current profit sharing rates are used as of the balance sheet date. Loan balance also includes finance lease receivables. Fair value of loans is calculated under the assumption that all installments are distributed equally. (****) Book value of the funds collected approximates to their fair value as it is revalued with the year end unit value. (*****) Net balance of follow up loans is not included. The following table shows an analysis of financial instruments recorded at fair value, between those whose fair value is recorded on quoted market prices, those involving valuation techniques where all model inputs are observable in the market and, those where the valuation techniques involves the use of non observable inputs: December 31, 2009 1st Level TRY 2nd Level TRY Financial Assets Financial Assets at Fair Value Through Profit and Loss - 3.889 Financial Assets Available for Sale - 80.111 Total - 84.000 Financial Liabilities Financial Liabilities at Fair Value Through Profit and Loss - 155 Other Financial Liabilities - - Total - 155 3rd Level TRY (*) 93 93 - (*) Equity shares classified as available for sale assets amounting to TRY 93 Thousand which are not traded in an active market have been accounted at cost and presented as 3rd level in this table. December 31, 2008 1st Level TRY 2nd Level TRY Financial Assets Financial Assets at Fair Value Through Profit and Loss - 30.035 Financial Assets Available For Sale - - Total - 30.035 Financial Liabilities Financial Liabilities at Fair Value Through Profit and Loss - - Other Financial Liabilities - - Total - - 3rd Level TRY - 124 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Beginning and ending term reconciliation of financial assets and liabilities appreciated at 3rd level is stated as below: Opening Balance Total Loss/Income Profit/Loss Reflected Profit and Loss Accounted Under Equity Purchases Issued Accrued Transfers from 3rd Level to Other Level Ending Balance Financial Assets at Fair Value Through Profit and Loss Held for Trading Derivative Financial Instruments - - - - - - - - - - - - - - - - - - Financial Assets Available for Sale Share Certificates Total - - - - 93 93 - - - 93 93 IX.Explanations Related to Transactions Carried out on Behalf of Other Parties and Fiduciary Assets The Bank does not deal with fiduciary operations or transactions made on behalf of others. SECTION FIVE EXPLANATIONS AND DISCLOSURES ON THE UNCONSOLIDATED FINANCIAL STATEMENTS I. Explanations and Disclosures Related to the Assets 1.Information on Cash and Balances with the Central Bank of Turkish Republic 1.1. Information on Cash: Cash/Foreign Currency The Central Bank of Turkish Republic Other Total Current Period TRY FC 64.154 67.010 914.489 1.298.602 752 1 979.395 1.365.613 TRY 38.945 647.130 622 686.697 Prior Period Current Period TRY FC 914.489 1.097.509 - - - - - 201.093 914.489 1.298.602 Prior Period TRY FC 647.130 253.653 - - - 161.814 647.130 415.467 FC 27.395 415.467 10 442.872 1.2. Information on the Central Bank of Turkish Republic Accounts: Unrestricted Demand Deposit Unrestricted Time Deposit Restricted Time Deposit Other (*) Total (*) Represents the reserve deposit held in the Central Bank of Turkish Republic in relation to foreign currency liabilities. 2.Information on Financial Assets at Fair Value through Profit and Loss 2.1. Information on Financial Assets at Fair Value Through Profit and Loss Blocked/Given as a Collateral or Subject to Repurchase Agreements: None. Bank Asya Annual Report 2009 125 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 2.2.Positive Differences Related to Derivative Financial Assets Held-for-Trading: Forward Transactions Swap Transactions Futures Transactions Options Other Total Current Period TRY FC - 861 - 3.028 - - - - - - - 3.889 Prior Period TRY FC - 793 - 29.242 - - - - 30.035 Current Period TRY FC 7.951 139.067 7.951 41.552 - 97.515 - - 7.951 139.067 Prior Period TRY FC 10.058 107.859 10.058 55.936 - 51.923 - 10.058 107.859 3. Information on Banks 3.1. Information on Banks: Banks Domestic Foreign Branches and Head Office Abroad Total 3.2. Information on Foreign Bank Accounts: European Union Countries USA and Canada OECD Countries (*) Off-Shore Banking Regions Other Total Unrestricted Amount Restricted Amount Current Period Prior Period Current Period Prior Period 43.325 24.678 - 50.458 21.373 - 2.459 5.312 - - - - 1.273 560 - 97.515 51.923 - - (*) OECD countries other than European Union countries, USA and Canada. 4.Information on Financial Assets Available for Sale 4.1. Information on Available for Sale Financial Assets Blocked/Given as a Collateral or Subject to Repurchase Agreements: None. 4.2.Information on Financial Assets Available for Sale: The Bank has TRY 80.111 Thousand revenue sharing certificate as of December 31, 2009. Debt Securities Quoted on a Stock Exchange Not Quoted Share Certificates Quoted on a Stock Exchange Not Quoted Impairment Provision (-) Total Current Period 80.111 - 80.111 93 - 93 - 80.204 Prior Period - 126 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5. Information on Loans 5.1. Information on All Types of Loans and Advances Given to Shareholders and Employees of the Bank: Direct Loans Granted to Shareholders Corporate Shareholders Real Person Shareholders Indirect Loans Granted to Shareholders Loans Granted to Employees Total Current Period Cash Non-Cash 156.604 8.471 54.020 8.193 102.584 278 64.310 60.020 6.500 - 227.414 68.491 Prior Period Cash Non-Cash 30.901 3.847 17.944 3.529 12.957 318 57.919 55.142 5.642 94.462 58.989 5.2.Information on First and Second Group Loans and Other Receivables Including Restructured or Rescheduled Loans: Standard Loans and Loans and Other Receivables Other Receivables Under Close Monitoring Loans and Restructured or Loans and Restructured or Cash Loans Other Receivables Rescheduled Other Receivables Rescheduled Loans Discount Notes - - - Export Loans 660.502 80.418 2.142 393.637 Import Loans 48.449 - - Business Loans 5.060.081 - 126.122 9.648 Consumer Loans 454.788 711 12.596 8.822 Credit Cards 580.095 - 24.561 46.224 Investments on Profit/Loss Partnership - - - Precious Metals Loans - - - Loans Given to Financial Sector 163 - - International Loans 257.795 - 14.682 69.784 Other 128.796 5.898 68.013 8.829 Other Receivables (*) - - - Total 7.190.669 87.027 248.116 536.944 (*) In addition to the balances mentioned in the table above, the Bank has TRY 2.410 Thousand of leasing receivables followed under the watch list (December 31, 2008 TRY 24.506 Thousand). 5.3. Loan Distribution Based on the Maturity Structure: Standard Loans andLoans and Other Other Receivables Under Close Monitoring Loans and Restructured or Loans and Restructured or Other Receivables Rescheduled Other Receivables Rescheduled Short-Term Loans and Other Receivables 3.243.829 6.616 133.152 55.634 Loans 3.243.829 6.616 133.152 55.634 Other Receivables - - - Medium-Term and Long-Term Loans 3.946.840 80.411 114.964 481.310 Loans 3.946.840 80.411 114.964 481.310 Other Receivables - - - - Bank Asya Annual Report 2009 127 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.4.Information on Consumer Loans, Retail Credit Cards, Loans Given to Personnel and Personnel Credit Cards: Consumer Loans-TRY Housing Loans Vehicle Loans Consumer Loans Other Consumer Loans-FC Indexed Housing Loans Vehicle Loans Consumer Loans Other Consumer Loans-FC Housing Loans Vehicle Loans Consumer Loans Other Retail Credit Cards-TRY With Installments Without Installment Retail Credit Cards-FC With Installments Without Installment Personnel Loans-TRY Housing Loans Vehicle Loans Consumer Loans Other Personnel Loans-FC Indexed Housing Loans Vehicle Loans Consumer Loans Other Personnel Loans-FC Housing Loans Vehicle Loans Consumer Loans Other Personnel Credit Cards-TRY With Installments Without Installment Personnel Credit Cards-FC With Installments Without Installment Overdraft Account-TRY(Real Person) Overdraft Account-FC (Real Person) Total Short Term 15.426 8.809 3.790 979 1.848 1.170 1.170 - - - - - - - - 607.968 111.595 496.373 - - - 326 21 194 111 - 5 5 - - - - - - - - 2.120 1.058 1.062 - - - - - 627.015 Medium-term and Long-Term 442.004 405.565 33.536 2.903 - 13.985 12.517 1.367 101 - - - - - - 8.667 8.667 - - - - 3.869 1.632 1.869 368 - 132 123 - 9 - - - - - - 48 48 - - - - - - 468.705 Total 457.430 414.374 37.326 3.882 1.848 15.155 13.687 1.367 101 616.635 120.262 496.373 4.195 1.653 2.063 479 137 128 9 2.168 1.106 1.062 1.095.720 128 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.5.Informations on Installment Basis Commercial Loans and Corporate Credit Cards: Installment Commercial Loans-TRY Business Loans Vehicle Loans General Purpose Loans Other Installment Commercial Loans-FC Indexed Business Loans Vehicle Loans General Purpose Loans Other Installment Commercial Loans-FC Business Loans Vehicle Loans General Purpose Loans Other Corporate Credit Cards-TRY With Installments Without Installment Corporate Credit Cards-FC With Installments Without Installments Overdraft Account-TRY(Legal Entity) Overdraft Account-FC (Legal Entity) Total Short Term 54.949 18 346 - 54.585 - - - - - - - - - - 32.007 2.591 29.416 - - - - - 86.956 Medium-term and Long Term 6.221 2.065 4.156 - - - - - - - - - - - - 70 70 - - - - - - 6.291 Total 61.170 2.083 4.502 54.585 32.077 2.661 29.416 93.247 5.6.Loan Distribution According to Borrowers: Public Sector Private Sector Total Current Period 12.051 8.050.705 8.062.756 Prior Period 7.521 6.011.963 6.019.484 Current Period 7.720.495 342.261 8.062.756 Prior Period 5.960.069 59.415 6.019.484 Current Period 52.357 - 52.357 Prior Period 63.903 63.903 5.7. Domestic and Foreign Loans: Domestic Loans Foreign Loans Total 5.8. Loans Granted to Subsidiaries and Associates: Loans Granted to Subsidiaries and Associates Directly Loans Granted to Subsidiaries and Associates Indirectly Total Bank Asya Annual Report 2009 129 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.9. Specific Provisions Provided Against Loans: Loans and Receivables with Limited Collectibility Loans and Receivables with Doubtful Collectibility Uncollectible Loans and Receivables Total Current Period 21.500 70.985 229.806 322.291 Prior Period 25.294 51.994 119.298 196.586 5.10.Informations on Non-Performing Loans (Net): 5.10.1.Informations on Loans and Other Receivables included in the Non-Performing Loans which are Restructured or Rescheduled: Group III Group IV Group V Loans and Receivables Loans and Receivables Uncollectible Loans with Limited Collectibility with Doubtful Collectability and Receivables Current Period (Gross Amount Before Specific Provision) 2.083 6.931 9.192 Restructured Loans and Other Receivables 1.509 4.105 8.386 Rescheduled Loans and Other Receivables 574 2.826 806 Prior Period (Gross Amount Before Specific Provision) 1.008 5.358 15.924 Restructured Loans and Other Receivables - - Rescheduled Loans and Other Receivables 1.008 5.358 15.924 5.10.2. Informations on Movement of Non-Performing Loans: Ending Balance of Prior Period Additions in the Current Period (+) Inflows from Other Overdue Loans Account (+) Outflows to Other Overdue Loans Account (-) Collections in the Current Period (-) Write offs (-) Corporate and Commercial Loans Retail Loans Credit Cards Other Ending Balance of the Current Period Specific Provisions (-) Net Balance at the Balance Sheet Group III Group IV Group V Loans and Receivables Loans and Receivables Uncollectible Loans with Limited Collectibility with Doubtful Collectability and Receivables 52.038 113.005 159.705 330.612 122.395 91.583 - 206.399 152.662 (206.399) (152.662) (133.597) (161.686) (69.510) - (1.827) (46.508) - (76) (31.232) - (79) (2.209) - (1.012) (12.667) - (660) (400) 42.654 125.624 287.932 (21.500) (70.985) (229.806) 21.154 54.639 58.126 130 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.10.3.Informations on Foreign Currency Non-Performing Loans and Other Receivables: Group III Group IV Group V Loans and Receivables Loans and Receivables Uncollectible Loans with Limited Collectibility with Doubtful Collectability and Receivables Current Period Ending Balance - 260 1.590 Specific Provisions (-) - (130) (1.078) Net Balance at the Balance Sheet - 130 512 Prior Period Ending Balance 66 - 1.887 Specific Provisions (-) (13) - (621) Net Balance at the Balance Sheet 53 - 1.266 5.10.4.Gross and Net Amounts of Non-Performing Loans with Respect to User Groups: Group III Group IV Group V Loans and Receivables Loans and Receivables Uncollectible Loans with Limited Collectibility with Doubtful Collectability and Receivables Current Period (Net) Loans to Real Persons and Legal Entities (Gross) 42.654 125.624 287.932 Specific Provisions (-) (21.500) (70.985) (229.806) Loans to Real Persons and Legal Entities (Net) 21.154 54.639 58.126 Banks (Gross) - - Specific Provisions (-) - - Banks (Net) - - Other Loans and Receivables (Gross) - - Specific Provisions (-) - - Other Loans and Receivables (Net) - - Prior Period (Net) Loans to Real Persons and Legal Entities (Gross) 52.038 113.005 159.705 Specific Provisions (-) (25.294) (51.994) (119.298) Loans to Real Persons and Legal Entities (Net) 26.744 61.011 40.407 Banks (Gross) - - Specific Provisions (-) - - Banks (Net) - - Other Loans and Receivables (Gross) - - Specific Provisions (-) - - Other Loans and Receivables (Net) - - 5.10.5.Non-Performing Loans and Main Guidelines of Liquidation Process for Loans and Receivables: If the Bank has collateral components stated in Article 9 of the Communiqué on “Determining the Nature of Loan and Other Receivable Provisions Allocated by Banks and Procedures and Principles of Allocating Provisions”, such components are immediately liquidated by applying managerial or legal procedures. In the absence of collateral component, even if there is an indication of insolvency, the Bank reviews the financial intelligence of the debtor systematically to determine subsequently acquired property holdings and applies the legal procedures. Prior and subsequent to the legal procedures, as a result of reviews performed regarding the financial information provided, the Bank intends to liquidate its loans and other receivables from the companies that have potential development in the production and consequent contribution to the economy by means of the rescheduled agreements. 5.10.6. Explanation on Write–off Policy: Provision allocations arising from during or after the transfer of any loan receivables to “Non-performing loans” are performed by the Bank’s Loan Monitoring Department within the framework of the Banking Regulations and Supervisory Agency. Additionally, loans are written-off of against Bank Asya Annual Report 2009 131 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) the assets, at least once a year, by the Credit Monitoring Agency to the extent that at least one of the following below is met and provision is fully made for all non-performing loans in accordance with the decision made by the Board of Directors: - Receivables are classified as unrecoverable; - If receivables are classified as unrecoverable, specific documents should be obtained from the Collections Agency; or - The Law Department remarks that there are still uncollectible receivables although the execution proceedings are in progress. 5.10.7.Other Explanations and Disclosures: The information related to loan quality is stated as below: Neither past due nor Current Period – December 31, 2009 Impaired Loans (*) Corporate and Commercial Lending 4.534.779 Small Business Lending 1.707.323 Consumer Lending 455.499 Credit Cards 580.095 Total 7.277.696 Past due, not Impaired Past due, Impaired (**) Total 437.711 255.146 21.418 70.785 785.060 143.198 203.869 10.129 99.014 456.210 5.115.688 2.166.338 487.046 749.894 8.518.966 (*) The Bank classifies small medium entities (“SME”) considering the criteria set out in the Council of Ministers’ decision dated November 18, 2005 and numbered 25997 published in the Official Gazette and the Communiqué on “Descriptions, Nature and Classification of Small Medium Entities”. (**) The balance also comprises of impaired finance lease receivables and loans. Neither past due nor Prior Period – December 31, 2008 Impaired Loans (*) Corporate and Commercial Lending 2.992.721 Small Business Lending 1.427.311 Consumer Lending 376.405 Credit Cards 520.093 Total 5.316.530 Past due, not Impaired Past due, Impaired (**) Total 379.956 254.269 22.082 46.647 702.954 128.952 137.985 10.539 47.272 324.748 3.501.629 1.819.565 409.026 614.012 6.344.232 (*) The Bank classifies small medium entities (“SME”) considering the criteria set out in the Council of Ministers’ decision dated November 18, 2005 and numbered 25997 published in the Official Gazette and the Communiqué on “Descriptions, Nature and Classification of Small Medium Entities”. (**) The balance also comprises of impaired finance lease receivables and loans. The details of loan guarantees and leasing portfolio are stated as below: Current Period (*) (**) (***) Group I Loans Group II Loans Group III Loans Group IV Loans Group V Loans Total Residential, Commercial or Industrial Property 2.160.280 305.954 9.223 32.371 69.270 2.577.098 Financial Assets 301.626 90.609 - - - 392.235 Other 649.005 202.145 534 3.494 48.104 903.282 Total 3.110.911 598.708 9.757 35.865 117.374 3.872.615 (*) Individual loan agreements, general loan agreements, foreign currency cheques, suretyships, customer cheques and notes and other guarantees are not included in the table above. (**) The table above is prepared by taking into consideration the lowest value presented as a result of the comparison made between the outstanding loan balance as of the balance sheet date and the lower of the net amount reached at the fair value of collaterals stated in the corresponding expertise reports or the net collateral amount less any pledges or incumbrances on such amounts, if any. (***) Guarantee details of the credit portfolio are determined based on the “Measurement and Assessment of Capital Adequacy of Banks” published on November 1, 2006 in the Official Gazette numbered 26333. 132 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Prior Period (*) (**) (***) Group I Loans Group II Loans Group III Loans Group IV Loans Group V Loans Total Residential, Commercial or Industrial Property 1.799.114 319.446 15.561 29.158 50.276 2.213.555 Financial Assets 172.753 58.461 - 121 - 231.335 Other 390.233 69.386 1.525 2.243 43.774 507.161 Total 2.362.100 447.293 17.086 31.522 94.050 2.952.051 (*) Individual loan agreements, general loan agreements, foreign currency cheques, suretyships, customer cheques and notes and other guarantees are not included in the table above. (**) The table above is prepared by taking into consideration the lowest value presented as a result of the comparison made between the outstanding loan balance as of the balance sheet date and the lower of the net amount reached at the fair value of collaterals stated in the corresponding expertise reports or the net collateral amount less any pledges or incumbrances on such amounts, if any. (***) Guarantee details of the credit portfolio are determined based on the “Measurement and Assessment of Capital Adequacy of Banks” published on November 1, 2006 in the Official Gazette numbered 26333. Aging analysis of past due but not impaired loans per classes of financial statements is stated as below: Current Period – December 31, 2009 Less than 30 Days (*) 31-60 Days 61-90 Days More than 91 Days Loans and Advances to Customers Corporate Lending 386.028 31.935 19.748 - SME Lending 200.919 33.840 20.387 - Consumer Lending 6.031 11.653 3.734 - Credit Cards 51.194 14.666 4.925 - Leasing Receivables 1.092 13 1.305 - Total 645.264 92.107 50.099 - Total 437.711 255.146 21.418 70.785 2.410 787.470 (*) The Bank follows up the entire loan balance having less than 30 days overdue in the watch list based on conservatism principal and TRY 558.567 Thousand of such amount does not have payment overdue as of December 31, 2009 (Finance Lease TRY 1.082 Thousand). Prior Period – December 31, 2008 Less than 30 Days (*) 31-60 Days 61-90 Days More than 91 Days Loans and Advances to Customers Corporate Lending 299.597 48.323 32.036 - SME Lending 109.993 101.227 43.049 - Consumer Lending 347 15.638 6.097 - Credit Cards 29.782 16.865 - - Leasing Receivables 5.006 6.616 12.884 - Total 444.725 188.669 94.066 - Total 379.956 254.269 22.082 46.647 24.506 727.460 (*) The Bank follows up the entire loan balance having less than 30 days overdue in the watch list based on conservatism principal and TRY 232.698 Thousand of such amount does not have payment overdue as of December 31, 2008 (Finance Lease TRY 3.767 Thousand). 6. Informations on Held-to-Maturity Investments (Net) 6.1. Informations on Financial Assets Blocked/Given as Collateral or Subject to Repurchase Agreements: None. Bank Asya Annual Report 2009 133 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 6.2. Informations on Government Bonds Classified as Held- to-Maturity Investments: The Bank has TRY 76.460 Thousand of revenue sharing certificate as of December 31, 2009. Share Certificates Bonds, Treasury Bill and Similar Securities Other Total Current Period TRY FC - - - - 76.460 - 76.460 - TRY - - - - Prior Period Current Period TRY FC - - - - 76.460 - - - 76.460 - TRY - - - - - FC - 6.3. Informations on Investments Held-to-Maturity: Debt Securities Quoted on a Stock Exchange Not Quoted Impairment Provision (-) Total Prior Period FC - 6.4. Movement of Held-to-Maturity Investments: Beginning Balance Foreign Currency Differences on Monetary Assets Purchases During Year Disposals Through Sales and Redemptions Impairment Provision (-) Valuation Effects Closing Balance Current Period - - 75.000 - - 1.460 76.460 Prior Period - 7. Informations on Associates (Net) 7.1. Informations on Associates: (1) (2) (2) Company Name Yeni Mağazacılık A.Ş. (*) Landmark Holding A.Ş. (*) Kredi Garanti Fonu A.Ş. (**) Address (City/Country) İstanbul/Turkey İstanbul/Turkey Ankara/Turkey Bank’s Share Percentage, Bank’s Risk Group Share If Different-Voting Percentage (%) Percentage (%) 21,84% 21,84% 21,84% 21,84% 1,67% 1,67% (*) The Bank participated in Yeni Mağazacılık A.Ş. and in Landmark Holding A.Ş. with the Financing Method for Participation Banks explained in the regulation No:19 regarding “Banks’ Lending Transactions” published and became effective in the Official Gazete numbered 26333, dated November 1, 2006 by means of joint investment method. These are recorded as associates in accordance with the Uniform Chart of Accounts published in the Official Gazette numbered 26415 and dated January 26, 2007. (**) In the Board of Directors meeting on June 25, 2009, the Bank has decided to participate in Kredi Garanti Fonu A.Ş. with the amount of up to TRY 4.000 Thousand. Upon this decision related to the capital increase of Kredi Garanti Fonu A.Ş. on September 11, 2009, the Bank paid TRY 2.000 Thousand of its TRY 4.000 Thousand capital commitment on October 15, 2009. 134 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 7.2. Informations on Associates: (1) (2) (*)Total Total Fixed Profit Share Assets Equity Assets Income 96.607 (26.667) 29.432 - 45.017 44.866 24 25 Income from Marketable Current Period Securities Portfolio Profit/Loss - (89.975) - (931) Prior Period Profit/Loss (55.237) (389) Fair Value (**) 175.227 (***) 56.966 (*) Financial information is provided from the associate’s unaudited financial statements as of December 31, 2009. (**) It is expertise value of the Bank’s associate, Yeni Mağazacılık A.Ş., as of February 4, 2010. (**) It is expertise value of the Bank’s associate, Landmark Holding A.Ş., as of February 9, 2010. 7.3. Movement of Associates: Balance at the Beginning of the Period Movements In Period Purchases Free Shares Obtained Dividends from Current Year Income Sales Revaluation Increase Provision for Diminution in Value Balance at the End of the Period Capital Commitments (*) Share Percentage at the End of the Period (%) Current Period 23.975 21.088 21.088 - - - - - 45.063 2.000 1,67%-21,84% Prior Period 23.975 23.975 23.975 25% (*) It is consists of capital commitment amounts of TRY 2.000 Thousand form Bank’s subsidiary, Kredi Garanti Fonu A.Ş. 7.4. Sectoral Informations on the Financial Associates and the Related Carrying Amounts: Banks Insurance Companies Factoring Companies Leasing Companies Finance Companies Other Subsidiaries Current Period - - - - - 45.063 Prior Period 23.975 8. Informations on Subsidiaries (Net) 8.1. Informations on Subsidiaries: Company Name (1) Asyafin Sigorta Aracılık Hizmetleri Ltd. Şti. (2) Nil Yönetim Hizmetleri Tur. San. ve Tic. A.Ş. (*) (3) Işık Sigorta A.Ş. (3) Tuna Gayrimenkul Yatırım Ortaklığı A.Ş. (*) (5) Asya Kart Teknoloji Hizmetleri A.Ş. Address Bank’s Share Percentage, (City/Country) If Different-Voting Percentage (%) İstanbul/Turkey 95,00% İstanbul/Turkey 99,93% İstanbul/Turkey 65,42% İstanbul/Turkey 22,94% Istanbul/Turkey 99,50% Bank’s Risk Group Share Percentage (%) 95,00% 99,93% 65,42% 69,42% 99,50% (*) Based on the announcement of Capital Markets Board of Turkey made on 13 August 2009, it has been permitted the transformation of affiliate of the Parent Bank “Asyafin Turizm İnşaat San. A.Ş.” into “Tuna Gayrimenkul Yatırım Ortaklığı A.Ş.” on March 27, 2009 under the Act No: 7/194, and transformation procedures has started on September 30, 2009. As a consequence, “Asyafin Turz. İnş. San. A.Ş.” has been renamed as “Tuna Gayrimenkul Yatırım Ortaklığı” while “Asyafin İnş. San. A.Ş.” has been renamed as “Nil Yönetim Hizmetleri Tur. San. ve Tic. A.Ş.”. Bank Asya Annual Report 2009 135 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 8.2. Informations on Subsidiaries: (1) (2) (3) (4) (5) (*)Total Total Fixed Profit Share Assets Equity Assets Income 203 202 - 21 65.687 63.445 176 20 154.346 61.156 2.125 8.614 115.149 114.982 38.784 680 23 20 - - Income from Marketable Current Period Securities Portfolio Profit/Loss - 11 - 118 13.950 7.728 - (547) - (13) Prior Period Profit/Loss 9 (145) (3.369) (1.396) (13) Fair Value (**) 190.616 (***) 192.051 - (*) Financial information is provided from the unaudited financial statements of subsidiaries as December 31,2009.. (**) It is expertise value of the Bank’s associate, Işık Sigorta A.Ş., as of February 4, 2010. (***) VAT excluded fair value is TRY 192.051 Thousand, including land, per expertise appraisal dated January 26, 2010. 8.3. Movement of Subsidiaries: Balance at the Beginning of the Period Movements in Period Purchases Free Shares Obtained Dividends from Current Year Income Sales Revaluation Increase Provision for Diminution in Value Balance at the End of the Period Capital Commitments Share Percentage at the End of the Period (%) Current Period 138.094 1.716 1.716 - - - - - 139.810 5.153 22,94%-99,93% Prior Period 130.810 7.284 2.290 3.925 1.069 138.094 6.869 22,94%-99,93% 8.4. Sectoral Informations on the Financial Subsidiaries and the Related Carrying Amounts: Subsidiaries Banks Insurance Companies Factoring Companies Leasing Companies Finance Companies Other Subsidiaries 8.5.Subsidiaries Quoted on the Stock Exchange: None. 9.Informations on Entities Under Common Control None. Current Period - 45.001 - - - 37.857 Prior Period 43.285 - 136 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 10.Informations on Finance Lease Receivables (Net) 10.1. Presentation of Remaining Maturities of Finance Leases Method: Less than 1 Year 1 to 4 Years More than 4 Years Total Current Period Gross Net 5.100 4.479 158.531 139.212 17.059 14.980 180.690 158.671 Prior Period Gross Net 19.867 17.532 238.083 210.106 6.841 6.038 264.791 233.676 Current Period 180.690 (22.019) - 158.671 Prior Period 264.791 (31.115) 233.676 10.2. Informations on Net Investments in Finance Leases: Gross Receivable from Finance Leases Unearned Finance Lease Income (-) Cancelled Amounts (-) Net Receivable from Finance Leases 11. Informations on Derivative Financial Assets for Hedging Purposes None. 12. Informations on Tangible Assets Leased Assets Held Other Tangible Buildings Tangible Assets Vehicles for Resale Assets (*) Cost Opening Balance - January 1, 2009 11.553 39.926 1.560 110.843 128.295 Additions - - 62 75.413 42.870 Disposals - (1.009) (329) (6.901) (7.338) Transfers (**) - - - 10.399 - Impairment (Losses)/Reversal 559 - - (2.890) - Ending Balance - December 31, 2009 12.112 38.917 1.293 186.864 163.827 Accumulated Depreciation (-) Opening Balance - January 1, 2009 1.795 14.572 600 1.533 47.051 Depreciation Expense 308 7.932 240 2.965 24.410 Accumulated Depreciation of Tangible Assets Held for Resale - (872) (137) (372) (6.931) Transfers - - - 64 - Impairment (Losses)/Reversal 24 - - (63) - Ending Balance - December 31, 2009 2.127 21.632 703 4.127 64.530 Net Book Value - December 31, 2008 9.758 25.354 960 109.310 81.244 Net Book Value - December 31, 2009 9.985 17.285 590 182.737 99.297 Total 292.177 118.345 (15.577) 10.399 (2.331) 403.013 65.551 35.855 (8.312) 64 (39) 93.119 226.626 309.894 (*) Other tangible fixed assets comprise leasehold improvements, safety box, office equipments, furniture and other fixed assets. (**) TRY 23.037 Thousand of the balance is transferred from assets held for sale to tangible fixed assets, TRY 12.701 Thousand of real estate’s to be disposed have acquired the classification as fixed assets is transferred to assets held for sale. TRY 23.038 Thousand of assets held for sale includes impairment losses of TRY 1.006 Thousand. Bank Asya Annual Report 2009 137 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Leased Assets Held Other Tangible Buildings Tangible Assets Vehicles for Resale Assets (*) Cost Opening Balance - January 1, 2008 10.187 36.397 1.079 25.924 78.763 Additions - 3.529 563 87.397 52.093 Disposals - - (82) (731) (2.561) Transfers (**) 1.855 - - (818) - Impairment (Losses)/Reversal (489) - - (929) - Ending Balance - December 31, 2008 11.553 39.926 1.560 110.843 128.295 Accumulated Depreciation(-) Opening Balance - January 1, 2008 1.559 6.648 400 363 32.248 Depreciation Expense 310 7.924 232 1.541 17.004 Accumulated Depreciation of Tangible Assets Held for Resale - - (32) (35) (2.201) Transfers 5 - - (5) - Impairment (Losses)/Reversal (79) - - (331) - Ending Balance - December 31, 2008 1.795 14.572 600 1.533 47.051 Net Book Value - December 31, 2007 8.628 29.749 679 25.561 46.515 Net Book Value - December 31, 2008 9.758 25.354 960 109.310 81.244 Total 152.350 143.582 (3.374) 1.037 (1.418) 292.177 41.218 27.011 (2.268) (410) 65.551 111.132 226.626 (*) Other tangible fixed assets comprise leasehold improvements, safety box, office equipments, furniture and other fixed assets. (**) In the current period, tangible assets amounting to TRY 1.037 Thousand previously included in assets held for resale column were transferred to tangible assets since they had not been sold and assets held for resale amounting to TRY 1.855 Thousand previously presented in tangible assets were transferred to land and buildings column. TRY 1.855 Thousand balance comprises impairment losses provisions of TRY 3.385 Thousand. 13. Informations on Intangible Assets 13.1. Opening and Ending Book Values and Accumulated Depreciation Balances: Book Value Accumulated Depreciation Net Book Value Current Period 17.261 (7.037) 10.224 Prior Period 11.173 (4.841) 6.332 13.2. Intangible Assets Movement Table: Cost Opening Balance- January 1, 2009 Additions Disposals Ending Balance- December 31, 2009 Accumulated Amortization (-) Opening Balance- January 1, 2009 Amortization Expense Disposals Ending Balance- December 31, 2009 Net Book Value- December 31, 2008 Net Book Value- December 31, 2009 Computer Software 11.173 6.088 17.261 4.841 2.196 7.037 6.332 10.224 138 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Cost Opening Balance- January 1, 2008 Additions Disposals Ending Balance- December 31, 2008 Accumulated Amortization (-) Opening Balance- January 1, 2008 Amortization Expense Disposals Ending Balance- December 31, 2008 Net Book Value- December 31, 2007 Net Book Value- December 31, 2008 Computer Software 7.866 3.307 11.173 3.271 1.570 4.841 4.595 6.332 14. Information on Investment Properties None (December 31, 2008: None). 15. Informations on Deferred Tax Asset As of December 31, 2009, deferred tax asset computed on the temporary differences, except for general loan provision and provision for possible risks, is TRY 4.754 Thousand and is recorded in the deferred tax asset account. Retirement Pay Provision Short-Term Employee Benefits Credit Card Promotion Provision Fixed Asset Depreciation Difference Impairment Loss on Fixed Assets Held for Resale Finance Lease Adjustment Fair Value Differences of Derivative Financial Instruments Impairment Loss on Buildings Impairment Loss on Assets Held For Sale Deferred Commission Income Marketable Security Valuation Differences Other Deferred Tax Asset (Net) Current Period Deferred Tax Base Deferred Tax Asset/(Liability) 7.974 1.595 8.715 1.743 4.909 982 (35.537) (7.107) 12.508 2.502 2.124 425 (3.734) (747) 3.260 652 11 2 26.379 5.276 (3.682) (736) 845 167 23.772 4.754 Retirement Pay Provision Short-Term Employee Benefits Credit Card Promotion Provision Fixed Asset Depreciation Difference Impairment Loss on Fixed Assets Held for Resale Finance Lease Adjustment Fair Value Differences of Derivative Financial Instruments Impairment Loss on Buildings Impairment Loss on Assets Held for Sale Deferred Commission Income Other Deferred Tax Liability (Net) Deferred Tax Base 7.148 7.302 5.673 (31.434) 8.675 4.743 (30.035) 3.795 1.006 16.903 (26) (6.250) Prior Period Deferred Tax Asset/(Liability) 1.430 1.460 1.135 (6.287) 1.735 949 (6.007) 759 201 3.381 (6) (1.250) Bank Asya Annual Report 2009 139 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Movement of the deferred tax asset as of December 31, 2009 and December 31, 2008 is stated as below: Deferred Tax Asset, January 1 Deferred Tax Accounted for Under Equity Charge/Benefit for Current Period Deferred Tax Asset/Liability Current Period (1.250) (730) 6.734 4.754 Prior Period 978 (2.228) (1.250) 16. Informations on Assets Held for Sale Assets held for sale consist of tangible assets which are obtained from non-performing loans and they are recognized as required in accordance with the prevailing the Communiqué of “Principles and Procedures on Bank’s Disposal of Precious Metals and Assets Held for Sale” published on November 1, 2006 in the Official Gazette numbered 26333 in the unconsolidated financial statements. As of December 31, 2009, assets held for sale amounts to TRY 9.196 Thousand (December 31, 2008: TRY 24.100 Thousand). Opening Balance- January 1 Additions Outflows Transfers (net) (*) Impairment Losses Provisions Ending Balance Current Period 24.100 460 (5.018) (10.336) (11) 9.196 Prior Period 1.037 25.106 (1.037) (1.006) 24.100 (**) TRY 23.037 Thousand of the balance is transferred from assets held for sale to tangible fixed assets, TRY 12.701 Thousand of real estates to be disposed have acquired the classification as fixed assets is transferred to assets held for sale. TRY 23.038 Thousand of assets held for sale includes impairment losses of TRY 1.006 Thousand. 17. Informations on Other Assets Other assets amount to TRY 82.089 Thousand. Other assets account does not exceed 10% of the total assets (December 31, 2008: TRY 30.859 Thousand). Clearing Account (*) Prepaid Rent Expenses Other Prepaid Expenses Receivables from Credit Card Payments Office Supply Inventory Other Total Current Period 54.284 4.274 4.566 14.248 1.441 3.276 82.089 Prior Period 3.690 4.441 15.619 1.941 5.168 30.859 (*) At the previous period, debit transitory clearing account amounted TRY 49.438 Thousand was net-off by the credit transitory clearing account. 140 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) II.Explanations and Disclosures Related to the Liabilities 1.1.Informations on Maturity Structure of Deposits: Accumulated Up to 1 Up to 3 Up to 6 Up to 9 Up to 1 Year Profit Sharing Current Period Demand Month Months Months Months 1 Year and Over Accounts Total I. Real Persons Current Deposits-TRY 378.510 - - - - - - - 378.510 II. Real Persons Profit Sharing Accounts-TRY - 809.888 1.258.531 318.877 - 155.259 1.484.479 - 4.027.034 III. Other Current Accounts-TRY 638.448 - - - - - - - 638.448 Public Sector 20.212 - - - - - - - 20.212 Commercial Sector 607.076 - - - - - - - 607.076 Other Institutions 10.696 - - - - - - - 10.696 Commercial and Other Institutions 217 - - - - - - - 217 Banks and Finance Houses 247 - - - - - - - 247 Central Bank - - - - - - - - Domestic Banks - - - - - - - - Foreign Banks - - - - - - - - Banks 247 - - - - - - - 247 Other - - - - - - - - IV. Profit Sharing Accounts-TRY - 171.512 311.624 25.345 - 130.357 296.995 - 935.833 Public Sector - 4 - - - - - - 4 Commercial Sector - 166.504 293.586 16.917 - 129.457 279.657 - 886.121 Other Institutions - 5.002 17.466 8.428 - 805 16.483 - 48.184 Commercial and Other Institutions - 2 572 - - 95 855 - 1.524 Banks - - - - - - - - V. Real Persons Current Deposits-FC 248.744 - - - - - - - 248.744 VI. Real Persons Profit Sharing Accounts-FC - 267.485 524.460 154.067 - 125.869 405.700 - 1.477.581 VII. Other Current Accounts-FC 289.266 - - - - - - - 289.266 Commercial Residents in Turkey 263.700 - - - - - - - 263.700 Commercial Residents in Abroad 23.823 - - - - - - - 23.823 Banks 1.743 - - - - - - - 1.743 Central Bank - - - - - - - - Domestic Banks - - - - - - - - Foreign Banks - - - - - - - - Banks 1.743 - - - - - - - 1.743 Other - - - - - - - - VIII. Profit Sharing Accounts- FC - 162.294 411.217 294.104 - 70.748 164.949 - 1.103.312 Public Sector - - - - - - - - Commercial Sector - 159.793 316.550 273.681 - 65.009 153.527 - 968.560 Other Institutions - 78 75.992 20.351 - - 7.787 - 104.208 Commercial and Other Institutions - 2.423 18.675 72 - 5.739 3.635 - 30.544 Banks and Finance Houses - - - - - - - - IX. Precious Metal Deposits 37.850 - - - - - - - 37.850 X. Profit Sharing Accounts Special Fund Pools-TRY - - - - - - - - Residents in Turkey - - - - - - - - Residents Abroad - - - - - - - - XI. Profit Sharing Accounts Special Fund Pools-FC - - - - - - - - Residents in Turkey - - - - - - - - Residents Abroad - - - - - - - - Total(I+II+…..+IX+X+XI) 1.592.818 1.411.179 2.505.832 792.393 - 482.233 2.352.123 - 9.136.578 Bank Asya Annual Report 2009 141 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Accumulated Up to 1 Up to 3 Up to 6 Up to 9 Up to 1 Year Profit Sharing Prior Period Demand Month Months Months Months 1 Year and Over Accounts Total I. Real Persons Current Deposits-TRY 187.109 - - - - - - - 187.109 II. Real Persons Profit Sharing Accounts-TRY - 584.118 1.030.396 220.251 - 142.241 473.196 - 2.450.202 III. Other Current Accounts-TRY 435.940 - - - - - - - 435.940 Public Sector 70.718 - - - - - - - 70.718 Commercial Sector 356.099 - - - - - - - 356.099 Other Institutions 4.831 - - - - - - - 4.831 Commercial and Other Institutions 2.476 - - - - - - - 2.476 Banks and Finance Houses 1.816 - - - - - - - 1.816 Central Bank - - - - - - - - Domestic Banks 2 - - - - - - - 2 Foreign Banks - - - - - - - - Banks 1.814 - - - - - - - 1.814 Other - - - - - - - - IV. Profit Sharing Accounts-TRY - 58.674 189.118 55.034 - 79.061 148.349 - 530.236 Public Sector - 24 18 - - - - - 42 Commercial Sector - 56.925 155.077 54.490 - 79.038 144.607 - 490.137 Other Institutions - 1.723 33.224 544 - 23 2.991 - 38.505 Commercial and Other Institutions - 2 799 - - - 751 - 1.552 Banks - - - - - - - - V. Real Persons Current Deposits-FC 125.716 - - - - - - - 125.716 VI. Real Persons Profit Sharing Accounts-FC - 211.034 385.994 138.826 - 105.605 207.252 - 1.048.711 VII. Other Current Accounts-FC 258.085 - - - - - - - 258.085 Commercial Residents in Turkey 244.296 - - - - - - - 244.296 Commercial Residents in Abroad 12.458 - - - - - - - 12.458 Banks 1.331 - - - - - - - 1.331 Central Bank - - - - - - - - Domestic Banks - - - - - - - - Foreign Banks - - - - - - - - Banks 1.331 - - - - - - - 1.331 Other - - - - - - - - VIII. Profit Sharing Accounts- FC - 87.935 250.366 92.447 - 267.524 108.550 - 806.822 Public Sector - - 2 - - - - - 2 Commercial Sector - 83.712 238.790 50.660 - 218.490 102.307 - 693.959 Other Institutions - 1.352 10.736 38.477 - 46.330 109 - 97.004 Commercial and Other Institutions - 2.871 838 3.310 - 2.704 6.134 - 15.857 Banks and Finance Houses - - - - - - - - IX. Precious Metal Deposits - - - - - - - - X. Profit Sharing Accounts Special Fund Pools-TRY - - - - - - - - Residents in Turkey - - - - - - - - Residents Abroad - - - - - - - - XI. Profit Sharing Accounts Special Fund Pools-FC - - - - - - - - Residents in Turkey - - - - - - - - Residents Abroad - - - - - - - - Total(I+II+…..+IX+X+XI) 1.006.850 941.761 1.855.874 506.558 - 594.431 937.347 - 5.842.821 142 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 1.2.Current and Participation Accounts Attributable to Real Entities/Persons Under the Guarantee of Saving Deposit Insurance Fund Exceeding the Limit of the Deposit Insurance Fund: Under the Guarantee of Saving Deposit Insurance Current Period Prior Period Real Persons Current and Profit Sharing Accounts that are not Subject to Commercial Activities 2.945.503 2.137.505 TRY Accounts 2.400.527 1.684.785 FC Accounts 544.976 452.720 Foreign Branches’ Deposits Under Foreign Authorities’ Insurance - - Off-shore Banking Regions’ Deposits Under Foreign Authorities’ Insurance - - Exceeding the Limit of Saving Deposit Insurance Current Period Prior Period 3.183.707 1.983.628 1.200.079 - - 1.510.716 926.721 583.995 - 1.3.Current and Profit Sharing Accounts which are not Under the Guarantee of Deposit Insurance Fund: The Bank has no current or profit sharing accounts which are not under the guarantee of the Saving Deposit Insurance Fund except for the current and profit sharing accounts of Board of Directors, general manager, assistant general managers and their close families. 2. Informations on Derivative Financial Liabilities Held for Trading As of December 31, 2009, derivative financial liabilities held for trading amounts to TRY 155 Thousand (December 31, 2008: None). Forward Transactions Other Total Current Period TRY FC - 155 - - - 155 Prior Period TRY FC - - - - Current Period (*) TRY FC - - - - - 191.461 - 191.461 Prior Period (*) TRY FC - - - 457.552 - 457.552 3. Informations on Borrowings 3.1.Informations on Banks and Other Financial Institutions: Loans from The Central Bank of Turkish Republic From Domestic Banks and Institutions From Foreign Banks, Institutions and Funds Total (*) The bank does not have any syndicated loan in the current period (December 31, 2008: TRY 129.239 Thousand). The details of the syndicated loans and other loans that are provided from banks and financial institutions are stated as below: Current Period 2010 2011 2012 2014 2016 Total Foreign Currency Type EUR USD 5.549 110.005 - 4.580 - 17.281 42.390 1.206 10.450 - 58.389 133.072 Total 115.554 4.580 17.281 43.596 10.450 191.461 143 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Prior Period Foreign Currency Type AED EUR USD 2009 45.202 78.435 259.146 2010 - 5.326 33.804 2011 - - 7.656 2012 - - 26.107 2016 - 1.876 - Total 45.202 85.637 326.713 Total 382.783 39.130 7.656 26.107 1.876 457.552 3.2. Maturity Analysis of Borrowings: Short-Term Medium-Term and Long-Term Total Current Period TRY FC - 47.206 - 144.255 - 191.461 Prior Period TRY FC - 164.502 - 293.050 - 457.552 3.3. Additional Explanation Related to the Concentrations of the Bank’s Major Liabilities: None. 4.Other Liabilities with Exceeding 10% of the Balance Sheet Total (Excluding Off-Balance Sheet Commitments) and the Breakdown of Such Liabilities Constituting at Least 20% of the Grand Total Other liability items amount to TRY 194.343 Thousand and do not exceed 10% of the total balance sheet total (December 31, 2008: TRY 108.982 Thousand). Clearing Account (*) Fees and Commissions Collected in Advance Payment Orders Import Transfer Orders Other Total Current Period 149.086 26.379 4.304 9.980 4.594 194.343 Prior Period 79.768 16.903 4.968 7.068 275 108.982 (*) At the previous period, debit transitory clearing account amounted TRY 49.438 Thousand was net-off by the credit transitory clearing account. 5.Informations on Financial Lease Obligations None. Finance Lease Payables Deferred Finance Lease Expenses(-) Total 6. Informations on Derivative Financial Liabilities for Hedging Purposes None. Current Period TRY FC - - - - - - Prior Period TRY 6 - 6 FC - 144 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 7. Explanations on Provisions 7.1. Informations on General Provisions: General provisions I. Provisions for First Group Loans and Receivables Profit Sharing Accounts’ Share The Bank’s Share Other II. Provisions for Second Group Loans and Receivables Profit Sharing Accounts’ Share The Bank’s Share Other Provisions for Non Cash Loans Current Period 89.368 59.812 35.448 24.347 17 13.908 4.527 9.381 - 15.648 Prior Period 72.286 41.608 19.637 21.850 121 12.631 7.156 5.475 18.047 7.2. Movement of General Provisions: Current Period Opening Balance - January 1, 2009 Charge for Period Reversal of Prior Period Expenses Profit Sharing Accounts Share Closing Balance- December 31, 2009 Prior Period Opening Balance – January 1, 2008 Charge for Period Reversal of Prior Period Expenses Profit Sharing Accounts Share Closing Balance- December 31, 2008 72.286 12.317 (8.833) 13.598 89.368 44.182 17.381 (212) 10.935 72.286 7.3. Informations on Provision for Foreign Exchange Losses on The Foreign Currency Indexed Loans and Finance Lease Receivables: As of December 31, 2009, the Bank’s provision for foreign currency indexed loans amounts to TRY 18.331 Thousand (December 31, 2008: TRY 6.268 Thousand). Provisions for foreign currency indexed loans are offset under the loan balance in the financial statements. 7.4. Informations on the Specific Provisions Provided for Unindemnified Non-Cash Loans: As of December 31, 2009, the Bank’s specific provision provided for unindemnified non-cash loans amounts to TRY 11.551 Thousand (December 31, 2008: TRY 11.698 Thousand). 7.5. Informations on Other Provisions: 7.5.1. Informations on Provisions for Potential Risks: None (December 31, 2008: None). 7.5.2. Informations on Other Provisions: Other Provisions Provision for Credit Cards and Promotion of Banking Services Provision for Unindemnified Non-Cash Loans Payment Commitment for Checks Litigation Provision Total Current Period 4.909 11.551 5.389 841 22.690 Prior Period 5.673 11.698 2.338 378 20.087 Bank Asya Annual Report 2009 145 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 7.5.3. Movement of the Retirement Pay Provision: Opening Balance - January 1, 2009 Current Service Cost Interest Cost Severance Pay Actuarial Loss/(Gain) Closing Balance - December 31, 2009 Current Period 7.148 1.490 785 (711) (738) 7.974 Prior Period 5.141 2.360 323 (676) 7.148 Bank employee benefit money, actuary valuation method used for calculation of financial tables which sated in numbered 19 Turkish Accounting Standards. As of December 31, 2009, the Bank also provided a provision of TRY 8.715 Thousand for the unused vacation pays (December 31, 2008: TRY 7.302 Thousand). 8. Explanations on Taxes Payable 8.1. Informations on Current Tax Liability: As of December 31, 2009, the Bank’s corporate tax payable is TRY 18.316 Thousand after offsetting pre-paid corporate tax (December 31, 2008: TRY 16.051 Thousand). Provision for Corporate Taxes Prepaid Corporate Tax Corporate Tax Payable Current Period 83.845 (65.529) 18.316 Prior Period 63.147 (47.096) 16.051 Current Period 18.316 8.360 468 6.331 - 375 9.116 42.966 Prior Period 16.051 7.931 361 6.935 374 2.562 34.214 8.2. Informations on Taxes Payable: Corporate Taxes Payable Taxation of Securities Property Tax Banking Insurance Transaction Tax (BITT) Foreign Exchange Transaction Tax Value Added Tax Payable Other Total 146 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 8.3. Premiums: Social Security Premiums-Employee Social Security Premiums-Employer Bank Social Aid Pension Fund Premium-Employee Bank Social Aid Pension Fund Premium-Employer Pension Fund Membership Fees and Provisions-Employee Pension Fund Membership Fees and Provisions-Employer Unemployment Insurance-Employee Unemployment Insurance-Employer Other Total Current Period 2.165 3.041 - - - - 154 307 - 5.667 Prior Period 1.032 1.461 73 146 2.712 8.4.Explanations on Deferred Tax Liabilities: None (December 31, 2008 TRY 1.250 Thousand). 9. Informations on Liabilities Regarding Assets Held for Sale and Discontinued Operations: None. 10. Informations on Subordinated Loans None. 11. Informations on Shareholders’ Equity 11.1. Presentation of Paid-in Capital: Common Stock Preferred Stock (*) Current Period 540.000 360.000 Prior Period 540.000 360.000 (*) Preferred stockholders have the right to nominate candidates for the Board of Directors and the Audit Committee. 11.2. Paid-in Capital Amount, Explanation as to whether the Registered Share Capital System is Applicable at Bank if so Amount of the Registered Share Capital Ceiling: Registered capital system is not applied in the Bank. 11.3.Share Capital Increases and Their Sources; Other Informations on Increased Capital Shares in the Current Period: None. 11.4.Informations on Share Capital Increases from Capital Reserves: None. 11.5. Informations on Share Capital Increases from Revaluation Funds: None. Bank Asya Annual Report 2009 147 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 11.6.Capital Commitments in the Last Fiscal Year and at the End of the Following Interim Period, General Purpose of These Commitments and Projected Resources Required to Meet These Commitments: None. 11.7.Indicators of the Bank’s Income, Profitability and Liquidity for Prior Periods and Possible Effects of These Future Assumptions on the Bank’s Equity due to the Uncertainty of These Indicators: The Bank carries its activities in profitable level and retains the major portion of its net profit within equity by means of transfers to reserve accounts and capital increases. The Bank, also allocates its equity to highly liquid and profit generating assets. 11.8. of Privileges Granted to Preferred Stocks: The holders of the preferred stocks have the right to nominate candidates for the Board of Directors and the Audit Committee. 11.9.Explanations on Marketable Securities Value Increase Fund: From Associates, Subsidiaries, and Entities Under Common Control (Joint Vent.) Valuation Difference Foreign Exchange Difference From Financial Assets Available for Sale Valuation Difference Foreign Exchange Difference Total Current Period - - - 2.921 2.921 - 2.921 Prior Period - III.Explanations and Disclosures Related to the Off-Balance Sheet Contingencies and Commitments 1. Explanation on Contingent Liabilities 1.1.Nature and Amounts of Irrevocable Loan Commitments: Asset Purchase-Sale Commitments Time Deposit Purchase-Sale Commitments Capital Commitments for Associates And Subsidiaries (*) Loan Granting Commitments Commitments for Credit Card Expenditure Limits Commitments for Credit Card And Retail Banking Promotions Payment Commitments for Checks Tax and Fund Liabilities from Export Commitments Other Irrevocable Commitments Total Current Period 494.852 - 29.699 140.538 1.365.927 5.862 434.811 1.596 - 2.473.285 Prior Period 7.353 6.869 128.301 1.256.191 8.067 408.821 1.815.602 (*) Consist of capital commitment amounts of TRY 5.153 Thousand form Bank’s subsidiary Işık Sigorta, TRY 2.000 Thousand from Kredi Garanti Fonu A.Ş. and TRY 22.546 Thousand from Tamweel Holding S.A. 148 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 1.2.Non-cash Loans Including Guarantees, Banker’s Acceptances, Letters of Credit and Other Financial Guarantees: 1.2.1.Non-cash Loans Including Guarantees, Banker’s Acceptances, Letters of Credit and Other Financial Guarantees: Guarantees Acceptances Letter of Credits Other Guarantees Total Current Period 7.369.461 120.412 1.250.120 145.984 8.885.977 Prior Period 8.646.573 169.474 1.221.268 178.100 10.215.415 1.2.2. Long Standing Guarantees, Temporary Guarantees, Sureties and Similar Transactions: Long Standing Guarantees Temporary Guarantees Sureties and Similar Transactions Total Current Period 5.825.274 598.432 945.755 7.369.461 Prior Period 6.658.536 753.207 1.234.830 8.646.573 Current Period 148.667 2.888 145.779 8.737.310 8.885.977 Prior Period 163.418 29.495 133.923 10.051.997 10.215.415 1.3. Total Amount of Non-Cash Loans: Guarantees Given Against Achieving Cash Loans With Maturity of 1 Year or Less With Maturity of More than 1 Year Other Non-Cash Loans Total 2.Sectoral Risk Concentration of Non-Cash Loans TRY Agricultural 46.585 Farming and Raising Livestock 32.608 Forestry 12.793 Fishery 1.184 Manufacturing 1.398.487 Mining 88.855 Production 813.949 Electric, Gas and Water 495.683 Construction 1.740.366 Services 751.342 Wholesale and Retail Trade 183.147 Hotel, Food and Beverage Services 45.744 Transportation and Telecommunication164.260 Financial Institutions 93.653 Real Estate and Renting Services 84.904 Self-Employment Services 39.387 Education Services 22.210 Health and Social Services 118.037 Other 47.738 Total 3.984.518 Current Period Prior Period (%) FC (%) TRY (%) FC 1,17 43.471 0,89 48.099 1,05 84.553 0,82 40.700 0,83 39.854 0,87 81.017 0,32 2.452 0,05 7.849 0,17 1.556 0,03 319 0,01 396 0,01 1.980 35,10 2.681.363 54,71 1.861.976 40,47 2.949.649 2,23 117.976 2,41 415.709 9,04 274.539 20,43 1.716.457 35,02 1.242.636 27,01 2.384.334 12,44 846.930 17,28 203.631 4,42 290.776 43,66 1.306.045 26,65 2.006.367 43,61 1.637.825 18,87 854.004 17,42 576.561 12,53 903.798 4,61 130.553 2,66 166.667 3,62 92.581 1,15 30.537 0,62 28.804 0,63 85.887 4,12 428.509 8,74 105.990 2,30 469.977 2,35 184.197 3,76 55.880 1,21 156.473 2,13 50.302 1,03 44.053 0,96 13.416 0,99 9.436 0,19 46.960 1,02 67.531 0,56 3.885 0,08 14.144 0,31 3.888 2,96 16.585 0,34 114.063 2,48 14.045 1,20 16.576 0,33 107.804 2,34 38.783 100,00 4.901.459 100,00 4.600.807 100,00 5.614.608 (%) 1,51 1,44 0,03 0,04 52,54 4,89 42,47 5,18 29,17 16,10 1,65 1,53 8,37 2,79 0,24 1,20 0,07 0,25 0,68 100,00 Bank Asya Annual Report 2009 149 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 3. Informations on Ist and IInd Group Non-Cash Loans Non-Cash Loans Letters of Guarantee Endorsements and Acceptances Letters of Credit Endorsements Underwriting Commitments Factoring Commitments Other Commitments and Contingencies I st Group TRY 3.920.035 3.903.758 - 270 - - - 16.007 FC 4.866.117 3.368.824 120.412 1.248.134 - - - 128.747 II nd Group TRY FC 64.483 35.342 64.483 32.396 - - 1.716 - - - - 1.230 4. Derivative Financial Instruments Derivative Transactions according to Purposes Trading Hedging Current Period Prior Period Current Period Prior Period Type of Trading Transactions Foreign Currency Related Derivative Transactions (I): 900.976 834.730 - Forward Transactions - 13.025 - Swap Transactions 900.976 821.705 - Futures Transactions - - - Option Transactions - - - Interest Related Derivative Transactions (II): - - - Forward Rate Transactions - - - Interest Rate Swap Transactions - - - Interest Option Transactions - - - Futures Interest Transactions - - - Marketable Securities Call-Put Options (III) - - - A. Total Trading Derivative Transactions (I+II+III+IV) 900.976 834.730 - Types of Hedging Transactions Fair Value Hedges - - - Cash Flow Hedges - - - Net Investment Hedges - - - B. Total Hedging Related Derivatives - - - Total Derivative Transactions (A+B) 900.976 834.730 - - 150 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) As of December 31, 2009, the breakdown of the Bank’s foreign currency forward transactions based on currencies are disclosed below in their TRY equivalents. Current Period Forward Buy TRY 452.277 USD - EUR - Total 452.277 Prior Period Forward Buy TRY 438.194 USD - EUR - Total 438.194 Forward Sell 448.699 448.699 Forward Sell 353.878 42.658 396.536 As of December 31, 2009, the Bank does not have any derivative transactions for the purpose of cash flow hedge. 5.Explanations on Contingent Liabilities and Assets As of the balance sheet date, there are 185 ongoing court cases against the Bank amounting to TRY 18.076 Thousand and EUR 946 based on the information provided from the legal department of the Bank. For one of the ongoing court cases mentioned above, provision amounting to TRY 841 Thousand has been made. Besides, a lawsuit is filed in the Tax Court as of January 11, 2007 in connection with the penalty of TRY 10.232 Thousand with the claim of participation of the Bank under the Article 360 of the Tax Procedure Law, as an extension of an investigation of the Anatolian Corporate Tax Office’s Management held on a customer of the Bank, due to the transactions of the customer made at one of the branches of the Bank. The Bank management believes that the court would end up in favor of the Bank. Therefore, the Bank did not make any provisions in the accompanying financial statements. 6. Explanations on Custodian and Intermediary Services None. 7. Summary Informations on the Bank’s Rating by the International Rating Institutions FITCH RATINGS Foreign Currency Long Term Short Term Outlook Turkish Lira Long Term Short Term Outlook International Long Term Outlook Individual Rating Support Points The information is taken from the Fitch Ratings Report as of November 9, 2009. B B Stable B B Stable BBB+ (tour) Stable D 5 Bank Asya Annual Report 2009 151 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) MOODY’S Financial Strength Outlook Foreign Currency Long Term Short Term Outlook Turkish Lira Long Term Short Term Outlook International Long Term Short Term D Stable B1/NP B1/NP Stable Ba1/NP Ba1/NP Stable A1+r TR-1 The information is taken from the Moody’s Investor Service report as of August 19, 2009. JCR EURASIA Foreign Currency Long Term Short Term Outlook International Foreign Currency Long Term Short Term Outlook National Local Rating Long Term Short Term Outlook Stand-Alone Support Points The information is taken from the JCR Eurasia Rating report as of May 21, 2009. BBB Stable BBB Stable A- (Trk) A- 1 (Trk) Stable BC 3 152 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) IV.Explanations and Disclosures Related to the Income Statement 1. Informations on Profit Share Income 1.1. Informations on Profit Share on Loans: Profit Share on Loans Short Term Loans Medium and Long Term Loans Profit Share on Non-Performing Loans Premiums Received from Resource Utilization Support Fund Group I TRY 1.118.138 587.026 509.195 21.917 - FC 55.542 23.829 31.713 - - Group II TRY 26.482 6.226 20.256 - - FC 3.194 546 2.648 - 1.2. Profit Share from Banks: The Central Bank of Turkish Republic (Reserve Deposit) Domestic Banks Foreign Banks (*) Branches and Head Office Abroad Total Current Period TRY FC 19.661 73 - - 50.740 1.475 - - 70.401 1.548 Prior Period TRY FC 22.345 3.496 - 38.590 10.272 - 60.935 13.768 (*) Foreign banks include profit shares from murabaha loans. 1.3. Informations on Interest Received from Marketable Securities: Held-for-Trading Financial Assets Financial Assets at Fair Value through Profit and Loss Available-for-Sale Financial Assets Investments Held-to-Maturity Total Current Period TRY FC - - - - 7.020 - 7.020 - 14.040 - Prior Period TRY - - - - - FC - 1.4. Informations on Profit Share Income Received from Associates and Subsidiaries: Profit Share Income Received from Associates and Subsidiaries Current Period 17.917 Prior Period 6.654 Bank Asya Annual Report 2009 153 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 2. Informations on Profit Share Expenses 2.1. Informations on Interest on Funds Borrowed: Banks The Central Bank of Turkish Republic Domestic Banks Foreign Banks Branches and Head Office Abroad Other Institutions Total Current Period TRY FC - 18.259 - - - - - 18.259 - - - - - 18.259 Prior Period TRY FC - 21.630 - - 144 - 21.486 - - - 21.630 Current Period 6.803 Prior Period 6.947 2.2. Informations on Profit Share Expense Given to Associates and Subsidiaries: Profit Share Expenses Given to Associates and Subsidiaries 2.3. Informations on Profit Share Expense to Marketable Securities Issued: None. 2.4.Distribution of Profit Share Expense on Deposits Based on Maturity of Deposits: Profit Sharing Accounts Up to 1 Up to 3 Up to 6 Up to 9 More than Account Name Month Months Months Months Up to 1 Year 1 Year TRY Banks and Finance Houses - - - - - - Real Person’s Profit Sharing Acc. 77.613 163.026 56.275 - 18.948 139.568 Public Sector Profit Sharing Acc. 23 1 - - - 10 Commercial Sector Profit Sharing Acc. 11.196 35.687 6.530 - 18.795 26.817 Other Institutions Profit Sharing Acc. 371 1.761 1.422 - 76 3.538 Total 89.203 200.475 64.227 - 37.819 169.933 FC Banks and Finance Houses 183 91 22 - - - Real Person’s Profit Sharing Acc. 11.047 17.453 12.438 - 8.667 22.637 Public Sector Profit Sharing Acc. - - - - - - Commercial Sector Profit Sharing Acc. 3.017 13.336 9.294 - 9.596 9.584 Other Institutions Profit Sharing Acc. 13 490 4.762 - 1.553 302 Precious Metal Deposits - - - - - - Total 14.260 31.370 26.516 - 19.816 32.523 Grand Total 103.463 231.845 90.743 - 57.635 202.456 3. Informations on Dividend Income None (31 December, 2008 TRY 3.925 Thousand). Total 455.430 34 99.025 7.168 561.657 296 72.242 44.827 7.120 124.485 686.142 154 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 4.Informations on Net Trading Income (Net) Income Profit on Capital Market Operations Profit on Derivative Financial Instruments Foreign Exchange Gains Losses (-) Losses on Capital Market Operations Losses on Derivative Financial Instruments Foreign Exchange Losses Current Period 2.203.838 - 276.561 1.927.277 (2.110.073) - (73.367) (2.036.706) Prior Period 2.909.018 53.505 2.855.513 (2.849.598) (38.139) (2.811.459) Current Period 6.843 4.309 77.440 14.027 102.619 Prior Period 6.452 1.691 49.773 9.818 67.734 Current Period 194.762 85.562 18.408 82.224 8.568 12.317 - - - - - - - - - 10.080 217.159 Prior Period 128.982 54.969 20.553 48.882 4.578 17.381 10.251 156.614 5. Informations on Other Operating Income The detail of other operating income is stated as below: Communication Expense Reversal Gain on Sale of Assets Change in Expense of Previous Years Other Total 6. Provision Expenses of the Bank for Loans and Other Receivables Specific Provisions for Loans and Other Receivables III. Group Loans and Receivables IV. Group Loans and Receivables V. Group Loans and Receivables Doubtful Commission, Fee and Other Receivables General Provision Expenses Provision Expenses for Possible Losses Marketable Securities Impairment Losses Financial Assets at Fair Value through Profit and Loss Investment Securities Available for Sale Impairment Provision Expense Associates Subsidiaries Entities Under Common Control Investments Held to Maturity Other Total Bank Asya Annual Report 2009 155 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 7. Informations on Other Operating Expenses Personnel Expenses Provision for Employee Termination Benefits Bank Social Aid Provision Fund Deficit Provision Impairment Expenses of Fixed Assets Depreciation Expenses of Fixed Assets Impairment Expenses of Intangible Assets Impairment Expense of Goodwill Amortization Expenses of Intangible Assets Impairment Provision for Investments Accounted for Under Equity Method Impairment Expenses of Assets Held for Resale (*) Depreciation Expenses of Assets Held for Resale Impairment Expenses of Assets Held for Resale Other Operating Expenses Rent Expenses Maintenance Expenses Advertisement Expenses Other Expenses Loss on Sales of Assets Other Total Current Period 213.048 1.537 - - 32.890 - - 2.196 - 3.698 2.965 11 158.577 40.059 3.248 30.544 84.726 5.612 38.519 459.053 Prior Period 174.283 2.683 410 25.470 1.570 598 1.541 1.006 150.083 32.166 4.158 32.130 81.629 646 31.876 390.166 (*) Amounting TRY 871 Thousands reversal of impairment of asset held for sale is accounted within the adjustment account related to prior year losses. 8. Informations on Continuing Operations Profit or Loss Before Tax The Bank’s profit before tax is increased by 21, 32% as compared to the prior year figures and total profit before tax amounts to TRY 378.392 Thousand. Profit before tax includes TRY 599.847 Thousand net profit share income, TRY 258.373 Thousand net fees and commissions income. Total operating expense amount is TRY 459.053 Thousand. 9. Informations on Continuing Operations Tax Provision As of December 31, 2009, current tax expense is TRY 83.845 Thousand (December 31, 2008: TRY 63.147 Thousand) and deferred tax income is TRY 6.734 Thousand (December 31, 2008: TRY 2.228 Thousand deferred tax expense). 10. Informations on Operating Profit/Loss After Taxes Net profit of the Bank is increased by 22, 21 % as of December 31, 2009 as compared to the prior year’s net profit. 11. Explanations on Net Income/Loss for the Period: The nature and amount of certain income and expense items from ordinary operations is disclosed if the disclosure for nature, amount and repetition rate of such items is required for the complete understanding of the Bank’s performance for the period: None. Effect of changes in accounting estimates on income statement for the current and, if any, for subsequent periods: None. 156 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 12. The Description and Amounts of Items which Constitute at Least 20% of Other Items in the Income Statement, If These Liabilities Exceed 10% of the Total Income Statement Other fees and commissions income/expense are stated as below: Current Period Other Fees and Commissions Received Member Firm-POS 64.712 Credit Cards Commissions and Fees 39.363 Other 32.411 Total 136.486 Prior Period Current Period Other Fees and Commissions Given Credit Cards Commissions and Fees 47.355 Other 5.206 Total 52.561 Prior Period 61.584 45.294 38.991 145.869 59.206 3.527 62.733 13. Nature and Amount of Changes in Accounting Estimates which Have Material Effects on the Current Period or Expected to Have Material Effects on the Subsequent Periods None. V.Explanations and Disclosures Related to the Statements of Shareholders’ Equity Movement 1.Increases from Valuation of Financial Assets Available for Sale Increase resulting from revaluation of financial assets available for sale is TRY 2.921 Thousand (December 31, 2008: None). 2. Increases Due to Cash Flow Hedges None. 3. Reconciliation of Foreign Exchange Differences at Beginning and End of Current Period None. 4.Dividends Declared Subsequent to the Balance Sheet Date, but Before the Announcement of the Financial Statements None. 5.Dividends per Share Proposed Subsequent to the Balance Sheet Date None. 6.Proposals to General Assembly for the Payment Dates of Dividends and if It will not be Appropriated the Reasons for This The Board of Directors has not decided for profit appropriation as of the date of the financial statements are authorized for issue. 7.Amounts Transferred to Legal Reserves As of December 31, 2009, amount transferred to legal reserves is TRY 12.325 Thousand (December 31, 2008: TRY 10.853 Thousand). 8. Information on Shares Issued None. Bank Asya Annual Report 2009 157 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) VI. Explanations and Disclosures Related to Statement of Cash Flows 1. Cash and Cash Equivalents 1.1.Components of Cash and Cash Equivalents and Accounting Policies Used to Determine Such Components: “Cash” is defined as cash in vault and foreign currency cash, money in transit, cheques purchased, unrestricted amount in the Central Bank and demand deposits in Banks, and “Cash equivalents” is defined as time deposits in Banks having original maturity less than three months. Reserve deposits provided in the Central Bank blocked accounts are presented as cash equivalents. 1.2.Cash and Cash Equivalents at the Beginning of the Period: Cash Cash in TRY/Foreign Currency Central Bank Banks-Demand Deposit Cash Equivalents Banks-Time Deposit Murabaha Transactions Classified as Loans Total Cash and Cash Equivalents Current Period 1.240.507 66.972 1.055.618 117.917 - - - 1.240.507 Prior Period 1.376.845 62.683 930.952 383.210 1.376.845 Current Period 2.477.235 131.325 2.209.147 136.763 110.255 10.255 100.000 2.587.490 Prior Period 1.240.507 66.972 1.055.618 117.917 1.240.507 1.3.Cash and Cash Equivalents at the End of the Period: Cash Cash in TRY/Foreign Currency Central Bank Banks-Demand Deposit Cash Equivalents Banks-Time Deposit Murabaha Transactions Classified as Loans Total Cash and Cash Equivalents 158 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) VII.Explanations on the Risk Group of the Bank 1. Transaction Volume of the Risk Group of the Bank, Outstanding Loan and Deposit Balances and Current Income and Expense Amounts 1.1. Current Period (31.12.2009): Subsidiaries and Direct and Indirect Other Entities Included Risk Group of the Bank Associates Shareholders of the Group in the Risk Group Cash Non-Cash Cash Non-Cash Cash Non-Cash Loans and Other Receivables (*) Balance at Beginning of Period 63.903 2.215 - - 88.820 58.989 Balance at End of Period 52.357 9.225 - - 220.914 68.491 Profit Share and Commission Income 17.917 - - - 25.148 1 (*) The risk group balance includes TRY 237 Thousand finance lease receivables (December 31, 2008: TRY 483 Thousand). 1.2. Prior Period (31.12.2008): Subsidiaries and Direct and Indirect Other Entities Included Risk Group of the Bank Associates Shareholders of the Group in the Risk Group Cash Non-Cash Cash Non-Cash Cash Non-Cash Loans and Other Receivables (*) Balance at Beginning of Period 76 432 - - 27.587 33.530 Balance at End of Period 63.903 2.215 - - 88.820 58.989 Profit Share and Commission Income 6.654 - - - 8.985 120 (*) The risk group balance includes TRY 483 Thousand finance lease receivables (December 31, 2007: TRY 818 Thousand). Bank Asya Annual Report 2009 159 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 1.3. Risk Group Deposits Balances of the Bank: Risk Group of the Bank Current and Profit Sharing Accounts Balance at Beginning of Period Balance at End of Period Profit Share Expense Subsidiaries and Associates Current Period 48.108 56.994 6.803 Direct and Indirect Shareholders of the Group Current Period - - - Other Entities Included in the Risk Group Current Period 77.269 77.749 4.553 1.4.Informations on Forward and Option Agreements and Other Similar Agreements with Related Parties: None. 1.5.Informations on Compensation of Key Management Personnel: During the current period, the total amount of remuneration and benefits provided to the key management personnel of the Bank is TRY 8.954 Thousand (December 31, 2008: TRY 7.138 Thousand). Besides remuneration, the key management personnel also receives some further tangible rights. VIII.Explanations on the Bank’s Domestic Branches, Agencies and Branches Abroad and Off-shore Branches 1. Explanations on the Bank’s Domestic Branches, Agencies and Branches Abroad and Off-shore Branches Number Employees Domestic Branches 158 4.074 Rep-Offices Abroad - - Branches Abroad - - Off-shore Branches - - 2. Explanations on Branch and Agency Openings or Closings of the Bank: The Bank opened 9 new branches in 2009. Country - - - Total Assets - - Capital - 160 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes and Disclosures to the Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SECTION SIX OTHER EXPLANATIONS I. Other Disclosures: 1. Subsequent Events: As of February 4, 2010, the Bank has paid for TRY 21.548 Thousand of capital commitment and as a consequence, became owner of 40% of Tamwell Africa Holding SA that is owned by the Islamic Corporation for the Development of the Private Sector (“ICD”) which is a group establishment of the Islamic Development Bank (“IDB”). SECTION SEVEN INDEPENDENT AUDITOR’S REPORT I.Explanations on the Independent Auditor’s Report The financial statements of the Bank for the period January 1 – December 31, 2009 were audited by DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş. (Member of Deloitte Touche Tohmatsu). The independent auditor’s report is presented at the beginning of the financial statements and related notes. II.Other Footnotes and Explanations Prepared by the Independent Auditors There is no significant matter or disclosure which may be in connection with the Bank’s operations but not explained in the above sections. Bank Asya Annual Report 2009 161 Independent Auditors’ Report, Consolidated Financial Statements and Notes for the Year Ended December 31, 2009 162 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Independent Auditors’ Report for the Year January 1, 2009 – December 31, 2009 To the Board of Directors of Asya Katılım Bankası A.Ş. Istanbul We have audited the accompanying consolidated balance sheet of Asya Katılım Bankası A.Ş. (“the Bank”) and its financial subsidiaries (“the Group”) as at December 31, 2009, and the related consolidated statements of income, cash flows and changes in equity for the year then ended, and a summary of significant accounting policies and other explanatory notes. Management’s Responsibility for the Financial Statements: The Board of Directors of the Bank is responsible for the preparation and fair presentation of the financial statements in accordance with the regulation on “Procedures and Principles Regarding Banks’ Accounting Practices And Maintaining Documents” published in the Official Gazette dated November 1, 2006 and numbered 26333 and Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”) and other regulations, circulars, communiqués and pronouncements in respect of accounting and financial reporting made by Banking Regulation and Supervision Agency (“BRSA”). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors’ Responsibility: Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the regulation on “Licensing and Operations of Audit Firms in Banking” published in the Official Gazette No: 26333 on November 1, 2006 and the International Standards on Auditing. We planned and performed our audit to obtain reasonable assurance whether the financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the consideration of the effectiveness of internal control and appropriateness of accounting policies applied relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independent Auditors’ Opinion: In our opinion, accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2009 and the results of its operations and its cash flows for the year then ended in accordance with the prevailing accounting principles and standards set out as per Article 37 and 38 of the Banking Act No: 5411 and other regulations, circulars, communiqués and circulars in respect of accounting and financial reporting and pronouncements made by Banking Regulation and Supervision Agency. Additional paragraph for English translation: The effect of the differences between the accounting principles summarized in Section 3 and the accounting principles generally accepted in countries in which the accompanying financial statements are to be distributed and International Financial Reporting Standards (IFRS) have not been quantified and reflected in the accompanying financial statements. The accounting principles used in the preparation of the accompanying financial statements differ materially from IFRS. Accordingly, the accompanying financial statements are not intended to present the Group’s financial position and results of its operations in accordance with accounting principles generally accepted in such countries of users of the financial statements and IFRS. DRT BAĞIMSIZ DENETİM VE SERBEST MUHASEBECİ MALİ MÜŞAVİRLİK A.Ş. Member of DELOITTE TOUCHE TOHMATSU Sibel Türker Partner Istanbul, March 19, 2010 Bank Asya Annual Report 2009 163 Asya Katılım Bankası A.Ş. The Consolidated Financial Report of Asya Katılım Bankası A.Ş. for the Year Ended December 31, 2009 Address of the Headquarter of the Bank Phone and Fax Numbers of the Bank Website of the Bank Electronic Mail Address : Küçüksu Caddesi Akçakoca Sokak No: 6 34768 Ü mraniye/İSTANBUL : 0 216 633 50 00/0 216 633 50 24 : www.bankasya.com.tr : raporlama@bankasya.com.tr The consolidated financial report designed by the Banking Regulation and Supervision Agency in line with Communiqué on “Financial Statements to be Publicly Announced and the Related Policies and Disclosures” consists of the sections listed below: • GENERAL INFORMATION ABOUT THE PARENT BANK • CONSOLIDATED FINANCIAL STATEMENTS OF THE PARENT BANK • EXPLANATIONS ON THE CORRESPONDING ACCOUNTING POLICIES APPLIED IN THE RELATED PERIOD • INFORMATION ON CONSOLIDATED FINANCIAL STRUCTURE OF THE GROUP • EXPLANATORY DISCLOSURES AND FOOTNOTES ON CONSOLIDATED FINANCIAL STATEMENTS • OTHER EXPLANATIONS • INDEPENDENT AUDITORS’ REPORT The subsidiaries consolidated within the framework of the reporting package are as follows: Subsidiaries (1) Işık Sigorta A.Ş. (2) Tuna Gayrimenkul Yatırım Ortaklığı A.Ş. Investments in Associates - - Joint Ventures - The consolidated financial statements and the explanatory footnotes and disclosures, unless otherwise indicated, are prepared in Thousands of the Turkish Lira, in accordance with the Communiqué on Banks’ Accounting Practice and Maintaining Documents, Turkish Accounting Standards, Turkish Financial Reporting Standards, related communiqués and the Banks’ records, have been independently audited and presented as attached. March 19, 2010 Behçet AKYAR Cemil ÖZDEMİR Chairman of the Board Member of the Board of Directors and General Manager Yusuf İzzettin İMRE Kamil YILMAZ Assistant General Manager Member of the Board and Member Responsible of Financial Reporting of the Audit Committee Tacettin NEGİŞ Member of the Board and Member of the Audit Committee İsmail Erol İŞBİLEN Member of the Board and Member of the Audit Committee Responsible personnel for the questions that can be raised on the financial statements: Name-Surname/Title: Mehmet ARSLAN/Assistant Manager in Charge of Budgeting and Financial Controlling Telephone Number: 0 216 633 54 91 Fax Number : 0 216 633 50 24 164 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. GENERAL INFORMATION I. Incorporation Date, Initial Status and Subsequent Changes in the Existing Status of the Parent Bank II. Shareholding Structure, Shareholders Having Direct or Indirect, Joint or Individual Control Over the Management of the Parent Bank and the Disclosures on any Related Changes in the Current Year, if any III. Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the Parent Bank They Possess IV. Individuals and Institutions that have Qualified Shares in the Parent Bank V. Summary on the Functions and Areas of Activity of the Parent Bank Page 166 166 166 167 167 SECTION TWO THE CONSOLIDATED FINANCIAL STATEMENTS I. Consolidated Balance Sheet II. Consolidated Statement of Off-Balance Sheet Contingencies and Commitments III. Consolidated Statement of Income IV. Statement of Profit and Loss Items Accounted under Equity V. Consolidated Statement of Changes in Shareholders’ Equity VI. Consolidated Statement of Cash Flows VII. Consolidated Profit Distribution Table 168 170 172 173 174 175 176 SECTION THREE ACCOUNTING PRINCIPLES I. Basis of Presentation II. Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions III. Information about the Parent Bank and its Consolidated Subsidiaries IV. Explanations on Forward and Option Contracts and Derivative Instruments V. Explanations on Profit Share Income and Expenses VI. Explanations on Fees and Commission Income and Expenses VII. Explanations on Financial Assets VIII. Explanations on Impairment of Financial Assets IX. Explanations on Offsetting Financial Assets and Liabilities X. Explanations on Sales and Repurchase Agreements and Lending of Securities XI. Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to Those Assets XII. Explanations on Goodwill and Other Intangible Assets XIII. Explanations on Tangible Fixed Assets XIV. Explanations on Leasing Transactions XV. Explanations on Provisions and Contingent Liabilities XVI. Explanations on Liabilities for Employee Benefits XVII. Explanations on Taxation XVIII. Additional Disclosures on Borrowings XIX. Explanations on Exported Share Certificates XX. Explanations on Acceptances XXI. Explanations on Government Incentives XXII. Explanations on Reporting According to Segmentation XXIII. Explanations on Other Matters 178 178 178 179 179 179 179 181 181 181 181 182 182 183 183 183 183 184 184 184 184 184 185 Bank Asya Annual Report 2009 165 Asya Katılım Bankası A.Ş. SECTION FOUR INFORMATION ON THE CONSOLIDATED FINANCIAL STRUCTURE I. Explanations Related to the Consolidated Capital Adequacy Standard Ratio II. Explanations Related to Consolidated Credit Risk III. Explanations Related to the Consolidated Market Risk IV. Explanations Related to Consolidated Operational Risk V. Explanations Related to the Consolidated Currency Risk VI. Explanations Related to Consolidated Interest Rate Risk VII. Explanations Related to Consolidated Liquidity Risk VIII. Presentation of Financial Assets and Liabilities at Fair Value IX. Fiduciary Operations and Transactions Made on Behalf of Others Page 186 188 191 192 192 195 195 197 199 SECTION FIVE EXPLANATIONS AND DISCLOSURES ON THE CONSOLIDATED FINANCIAL STATEMENTS I. Explanations and Disclosures Related to the Consolidated Assets II. Explanations and Disclosures Related to the Consolidated Liabilities III. Explanations and Disclosures Related to the Consolidated Off-Balance Sheet Contingencies and Commitments IV. Explanations and Disclosures Related to the Consolidated Income Statement V. Explanations and Disclosures Related to the Statements of Shareholders’ Equity Movement VI. Explanations and Disclosures Related to Statement of Cash Flows VII. Explanations on the Risk Group of the Parent Bank VIII. Explanations on the Parent Bank’s Domestic Branches, Agencies and Branches Abroad and Off-Shore Branches 200 219 226 230 233 234 234 236 SECTION SIX OTHER EXPLANATIONS I. Other Explanations on Operations of the Group: 236 SECTION SEVEN INDEPENDENT AUDITOR’S REPORT I. Explanations on the Independent Auditor’s Report II. Other Footnotes and Explanations Prepared by the Independent Auditors 236 236 166 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SECTION ONE GENERAL INFORMATION I.Incorporation Date, Initial Status and Subsequent Changes in the Existing Status of the Parent Bank Incorporation of the Parent Bank is permitted with the decision of the Council of Ministers No: 96/8041 on April 11, 1996 as published in the Official Gazette dated April 25, 1996. The Parent Bank was registered on September 20, 1996 and “the Articles of Association” was published in the Trade Registry Gazette on September 25, 1996. The decision regarding the change in the title of the Bank was settled in the Extraordinary General Board of Directors’ meeting dated December 22, 2005 and the title was changed from Asya Finans Kurumu A.Ş. into Asya Katılım Bankası A.Ş. and it was published in the Trade Registry Gazette on December 26, 2005. Information on Consolidated Subsidiaries: Işık Sigorta A.Ş. Işık Sigorta A.Ş. (“the Company”) was established in 1995 in İstanbul and operates in various insurance and reinsurance sectors excluding life insurance. The Company is registered in Turkey, and it’s headquarter is located in Küçüksu Cad. Akçakoca Sok. No: 6 34768 Ümraniye, İstanbul. The Company currently has 180 personnel as of December 31, 2009. Işık Sigorta A.Ş. currently has 4 regional management office, 2 regional representation office and 940 (including the Bank branches) agencies. Tuna Gayrimenkul Yatırım Ortaklığı A.Ş. Based on the announcement of the Capital Market Board dated August 13, 2009, it has been permitted transformation of the subsidiary of the Parent Bank “Asyafin Turizm İnşaat San. A.Ş.” into “Tuna Gayrimenkul Yatırım Ortaklığı A.Ş.” with the decision dated 27 March 2009 and numbered 7/194. The transformation and registration have been completed as of September 30, 2009 and “the Articles of Association’’ has been published in the Trade Registry Gazette on October 8, 2009. The company’s main operations are development of residential and saleable real estate and generation of rental revenue from its own real estate portfolio. The company is registered in Turkey, and its headquarter is located in Küçüksu Cad. Akçakoca Sok. No: 6/1 Ümraniye, İstanbul. The company currently has 1 personnel as of December 31, 2009. II.Shareholding Structure, Shareholders Having Direct or Indirect, Joint or Individual Control Over the Management of the Parent Bank and the Disclosures on any Related Changes in the Current Year, if any The Parent Bank has no shareholders having more than 10% shareholding or direct or indirect, joint or individual control over the management of the Parent Bank. The Parent Bank is not included in any group. III.Explanations Regarding the Chairman and the Members of Board of Directors, Audit Committee, General Manager and Assistants and Shares of the Parent Bank They Possess Title Name & Surname Chairman of the Board of Directors Tahsin TEKOĞLU (**) Member of the Board of Directors Cemil ÖZDEMİR (*) Tacettin NEGİŞ (***) Salih SARIGÜL Ahmet ÇELİK Murat SUNGURLU General Manager Ünal KABACA (*) Assistant General Managers Ayhan KESER Mustafa BÜYÜKATEŞ (****) Yusuf İzzettin İMRE Buket GEREÇCİ Dr. Mahmut DEMİRKAN (****) Ali TUĞLU Group Manager Salim KÖSE Auditors Ali AKBULUT Atif BİLGİN İrfan HACIOSMANOĞLU Area of Responsibility Ownership Percentage % Chairman of the Board of Directors and Member of the Audit Committee 0,0050 Vice Chairman of the Board of Directors and Member of the Audit Committee 0,0026 Member of the Board of Directors 0,2467 Member of the Board of Directors 0,4983 Member of the Board of Directors 0,4467 Member of the Board of Directors 0,1073 Member of the Board and General Manager 0,0267 Corporate/Commercial Loans, Business Banking, Treasury, Financial Institutions and Public Relations 0,0069 Retail Sales Management, Retail Product Management, ADC (Alternative Distribution Channels) Marketing and Consumer Loans Financial Affairs, Credit Allocation and Financial Analysis Banking Operations Human Resources, Education, Administrative, Purchase and Organization and Quality Information Technologies Law, Credit and Risk Monitoring Auditor 0,0002 Auditor 0,3057 Auditor 2,0068 Bank Asya Annual Report 2009 167 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) (*) Board member and President-CEO Mr. Ünal Kabaca has resigned from his position as of January 28, 2010. Vice-Chairman of the Board Mr. Cemil ÖZDEMİR has appointed as the new President & CEO and Mr. Behçet AKYAR has assigned as a new board member. (**) Tahsin TEKOĞLU was resigned from chairman position and board of directors membership in February 12, 2010. Afterwards, Behçet AKYAR has been selected as the Board President whereas İsmail Erol İŞBİLEN has been selected as Board of Directors and Audit Committee Member. (***) Tacettin NEGİŞ was selected as Audit Committee member as of February 12, 2010. (****) Assistant General Manager Mr. Mustafa BÜYÜKATEŞ and Mr. Mahmut DEMİRKAN have resigned from their position as of February 26, 2010. Ali Fuat TAŞKESENLİOĞLU, Erdal ERDEM, Ömer Faruk ŞENEL and Hasan ÜNAL was selected as Assistant General Manager member as of March 8, 2010. IV. Individuals and Institutions that have Qualified Shares in the Parent Bank The Parent Bank’s capital, amounting TRY 900.000.000, consists of qualified shares, amounting TRY 360.000.000 and qualified shareholders are listed below: Name & Surname/Commercial Title ORTADOĞU TEKSTİL TİC. SAN. A.Ş. FORUM İNŞAAT DEKORASYON TURİZM SAN. VE TİC. A.Ş. ABDULKADİR KONUKOĞLU BJ TEKSTİL TİCARET VE SANAYİ A.Ş. BİRİM BİRLEŞİK İNŞAATÇILIK MÜMESSİLLİK SAN. VE TİC. A.Ş. SERRA TURİZM LTD. ŞTİ. OSMAN CAN PEHLİVAN HASAN SAYIN NEGİŞ GİYİM İMALAT VE İHRACAT A.Ş. İBRAHİM SAYIN MUAMMER İHSAN KALKAVAN İRFAN HACIOSMANOĞLU AYDAN AYDIN SAĞLIK FEHİM ARICI YAVUZ EROĞLU ABDURRAHMAN KOPUZ DİĞER Total Share Amount 37.992 22.565 20.088 18.000 17.783 15.000 14.400 13.430 13.142 12.679 7.456 6.861 5.952 5.580 5.220 3.960 139.892 360.000 Share Ratio 10,55 6,27 5,58 5,00 4,94 4,17 4,00 3,73 3,65 3,52 2,07 1,91 1,65 1,55 1,45 1,10 38,86 100,00 Paid Shares 37.992 22.565 20.088 18.000 17.783 15.000 14.400 13.430 13.142 12.679 7.456 6.861 5.952 5.580 5.220 3.960 139.892 360.000 Unpaid Shares - V. Summary on the Functions and Areas of Activity of the Parent Bank The Parent Bank operates in accordance with the principles of interest-free banking as a participation bank, by collecting funds through current accounts and profit sharing accounts, and lending such funds through production support, finance lease and profit/loss sharing partnership. The Parent Bank has two ways of collecting funds; current accounts and profit sharing accounts. The Parent Bank classifies current accounts and profit sharing accounts in accordance with their maturities in its accounting system. Profit sharing accounts are categorized into five different maturity groups; up to one month, up to three months (three months included), up to six months (six months included), up to one year and one year (one year included) and more than one year (one month, three months, six months and one year profit share payment). The Parent Bank could determine the participation rates on profit/loss sharing accounts with respect to the maturity group of TRY and foreign currency accounts, separately under the limitation that the participation rate on loss shall not be less than 50%, for different currency type, amount and maturity groups specifically. The Parent Bank constitutes specific fund pools, allocated to the individually predetermined projects for financing purposes. Profit sharing accounts, which are part of the funds collected for project financing purpose, are distinguished from others with respect to the terms, accounted separately from the others and it is not allowed to make any transfers from these accounts to any other maturity groups. Specific fund pools are clarified at the end of the financing period. The Parent Bank has no specific fund pools as of December 31, 2009. In addition to the regular banking activities, the Parent Bank operates as an agency on behalf of Işık Sigorta A.Ş. and intervenes stock purchase-sell transactions on behalf of Bizim Menkul Değerler A.Ş. through its branches. 168 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Consolidate Balance Sheet (Statement of Financial Position) (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited ASSETS Note (31/12/2009) (31/12/2008) TRY FC Total TRY FC Total I. CASH AND BALANCES WITH THE CENTRAL BANK (1) 979.397 1.365.613 2.345.010 686.699 442.872 1.129.571 II. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS (Net) (2) 18.791 3.889 22.680 13.869 30.035 43.904 2.1 Trading financial assets 18.791 3.889 22.680 13.869 30.035 43.904 2.1.1 Public sector debt securities - - - - - 2.1.2 Share certificates 18.791 - 18.791 13.866 - 13.866 2.1.3 Derivative financial assets held for trading - 3.889 3.889 - 30.035 30.035 2.1.4 Other marketable securities - - - 3 - 3 2.2 Financial assets at fair value through profit and loss - - - - - 2.2.1 Public sector debt securities - - - - - 2.2.2 Share certificates - - - - - 2.2.3 Loans - - - - - 2.2.4 Other marketable securities - - - - - III. BANKS (3) 33.777 139.389 173.166 33.471 108.408 141.879 IV. MONEY MARKET PLACEMENTS - - - - - V. FINANCIAL ASSETS AVAILABLE FOR SALE (Net) (4) 80.335 - 80.335 131 - 131 5.1 Share certificates 224 - 224 131 - 131 5.2 Public sector debt securities - - - - - 5.3 Other marketable securities 80.111 - 80.111 - - VI. LOANS AND RECEIVABLES (5) 7.563.752 632.923 8.196.675 5.875.577 271.989 6.147.566 6.1 Loans and receivables 7.430.475 632.281 8.062.756 5.748.734 270.670 6.019.404 6.1.1. Loans to risk group of the Bank 267.900 5.134 273.034 142.563 9.597 152.160 6.1.2. Public sector debt securities - - - - - 6.1.3. Other 7.162.575 627.147 7.789.722 5.606.171 261.073 5.867.244 6.2 Non-performing loans 454.360 1.850 456.210 322.795 1.953 324.748 6.3 Specific provisions (-) (321.083) (1.208) (322.291) (195.952) (634) (196.586) VII. HELD TO MATURITY INVESTMENTS (Net) (6) 76.460 - 76.460 - - VIII. INVESTMENTS IN ASSOCIATES (Net) (7) 45.063 - 45.063 23.975 - 23.975 8.1 Accounted for under equity method - - - - - 8.2 Unconsolidated 45.063 - 45.063 23.975 - 23.975 8.2.1 Financial associates - - - - - 8.2.2 Non-financial associates 45.063 - 45.063 23.975 - 23.975 IX. INVESTMENTS IN SUBSIDIARIES (Net) (8) 56.986 - 56.986 94.843 - 94.843 9.1 Unconsolidated financial subsidiaries 34 - 34 34 - 34 9.2 Unconsolidated non-financial subsidiaries 56.952 - 56.952 94.809 - 94.809 X. ENTITIES UNDER COMMON CONTROL (Net) (9) - - - - - 10.1 Consolidated under equity method - - - - - 10.2 Unconsolidated - - - - - 10.2.1 Financial subsidiaries - - - - - 10.2.2 Non-financial subsidiaries - - - - - XI. FINANCE LEASE RECEIVABLES (10) 124.807 33.864 158.671 233.676 - 233.676 11.1 Finance lease receivables 141.774 38.916 180.690 264.791 - 264.791 11.2 Operating lease receivables - - - - - 11.3 Other - - - - - 11.4 Unearned income (-) (16.967) (5.052) (22.019) (31.115) - (31.115) XII. DERIVATIVE FINANCIAL ASSETS FOR HEDGING PURPOSES (11) - - - - - 12.1 Fair value hedge - - - - - 12.2 Cash flow hedge - - - - - 12.3 Hedge of net investment risks in foreign operations - - - - - XIII. TANGIBLE ASSETS (Net) (12) 310.993 - 310.993 227.493 - 227.493 XIV. INTANGIBLE ASSETS (Net) (13) 14.364 - 14.364 10.447 - 10.447 14.1 Goodwill 4.111 - 4.111 4.111 - 4.111 14.2 Other 10.253 - 10.253 6.336 - 6.336 XV. INVESTMENT PROPERTY (Net) (14) 37.973 - 37.973 963 - 963 XVI. TAX ASSET (15) 5.946 - 5.946 2.432 - 2.432 16.1 Current tax asset - - - - - 16.2 Deferred tax asset 5.946 - 5.946 2.432 - 2.432 XVII. ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS (Net) (16) 9.196 - 9.196 24.100 - 24.100 17.1 Held for Sale 9.196 - 9.196 24.100 - 24.100 17.2 Discontinued Operations - - - - - XVIII. OTHER ASSETS (17) 202.515 2.519 205.034 70.091 3.938 74.029 TOTAL ASSETS 9.560.355 2.178.197 11.738.552 7.297.767 857.242 8.155.009 Bank Asya Annual Report 2009 169 Asya Katılım Bankası A.Ş. Consolidate Balance Sheet (Statement of Financial Position) (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited LIABILITIES AND EQUITY Note (31/12/2009) (31/12/2008) I. FUND COLLECTED (1) 5.937.462 3.147.772 9.085.234 3.566.718 2.235.643 5.802.361 1.1 Fund from risk group of the Bank 57.381 26.018 83.399 31.198 53.719 84.917 1.2 Other 5.880.081 3.121.754 9.001.835 3.535.520 2.181.924 5.717.444 II. DERIVATIVE FINANCIAL LIABILITIES HELD FOR TRADING (2) - 155 155 - - III. FUNDS BORROWED (3) - 191.461 191.461 - 457.552 457.552 IV. MONEY MARKET BALANCES - - - - - V. MARKETABLE SECURITIES ISSUED (NET) - - - - - VI. SUNDRY CREDITORS 200.003 4.212 204.215 150.264 4.642 154.906 VII. OTHER LIABILITIES (4) 185.628 12.658 198.286 102.124 9.429 111.553 VIII. FINANCE LEASE PAYABLES (5) - - - 6 - 6 8.1 Finance lease payables - - - 6 - 6 8.2 Operating lease payables - - - - - 8.3 Other - - - - - 8.4 Deferred finance lease expenses (-) - - - - - IX. DERIVATIVE FINANCIAL LIABILITIES FOR HEDGING PURPOSES (6) - - - - - 9.1 Fair value hedge - - - - - 9.2 Cash flow hedge - - - - - 9.3 Hedge of net investment in foreign operations - - - - - X. PROVISIONS (7) 193.604 15.539 209.143 161.020 12.316 173.336 10.1 General loan loss provisions 75.756 13.612 89.368 61.625 10.661 72.286 10.2 Restructuring provisions - - - - - 10.3 Reserve for employee benefits 18.103 - 18.103 14.942 - 14.942 10.4 Insurance technical reserves (Net) 78.420 518 78.938 65.957 64 66.021 10.5 Other provisions 21.325 1.409 22.734 18.496 1.591 20.087 XI. TAX LIABILITY (8) 50.636 6 50.642 39.892 3 39.895 11.1 Current tax liability 50.636 6 50.642 38.642 3 38.645 11.2 Deferred tax liability - - - 1.250 - 1.250 XII. PAYABLES RELATED TO ASSETS HELD FOR SALE (Net) (9) - - - - - 12.1 Held for sale - - - - - 12.2 Discontinued operations - - - - - XIII. SUBORDINATED LOANS (10) - - - - - XIV. SHAREHOLDERS’ EQUITY (11) 1.799.416 - 1.799.416 1.415.400 - 1.415.400 14.1 Paid-in capital 900.000 - 900.000 900.000 - 900.000 14.2 Capital reserves 10.503 - 10.503 7.582 - 7.582 14.2.1 Share premium 3.307 - 3.307 3.307 - 3.307 14.2.2 Share cancellation profits - - - - - 14.2.3 Marketable securities revaluation reserve 2.921 - 2.921 - - 14.2.4 Tangible assets revaluation reserve 4.275 - 4.275 4.275 - 4.275 14.2.5 Intangible assets revaluation reserve - - - - - 14.2.6 Investment property revaluation reserve - - - - - 14.2.7 Bonus shares obtained from associates, subsidiaries and jointly controlled entities - - - - - 14.2.8 Hedging funds (Effective portion) - - - - - 14.2.9 Value increase on assets held for resale - - - - - 14.2.10 Other capital reserves - - - - - 14.3 Profit reserves 491.609 - 491.609 250.073 - 250.073 14.3.1 Legal reserves 38.378 - 38.378 26.053 - 26.053 14.3.2 Status reserves - - - - - 14.3.3 Extraordinary reserves 453.231 - 453.231 224.020 - 224.020 14.3.4 Other profit reserves - - - - - 14.4 Profit or loss 291.813 - 291.813 240.119 - 240.119 14.4.1 Prior year income/(losses) (13.978) - (13.978) 1.329 - 1.329 14.4.2 Current year income/(losses) 305.791 - 305.791 238.790 - 238.790 14.5 Minority shares (12) 105.491 - 105.491 17.626 - 17.626 TOTAL LIABILITIES AND EQUITY 8.366.749 3.371.803 11.738.552 5.435.424 2.719.585 8.155.009 170 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Statement of Off-Balance Sheet Contingengies and Commitments (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited Note (31/12/2009) (31/12/2008) TRY FC Total TRY FC Total A. OFF BALANCE SHEET COMMITMENTS AND CONTINGENCIES (I+II+III) 6.632.958 5.627.280 12.260.238 6.848.787 6.016.960 12.865.747 I. GUARANTEES (1), (2) 3.984.518 4.901.459 8.885.977 4.600.807 5.614.608 10.215.415 1.1. Letters of guarantees 3.968.241 3.401.220 7.369.461 4.594.063 4.052.510 8.646.573 1.1.1. Guarantees subject to State Tender Law - - - - - 1.1.2. Guarantees given for foreign trade operations - - - - - 1.1.3. Other letters of guarantee 3.968.241 3.401.220 7.369.461 4.594.063 4.052.510 8.646.573 1.2. Bank loans - 120.412 120.412 - 169.474 169.474 1.2.1. Import letter of acceptances - 120.412 120.412 - 169.474 169.474 1.2.2. Other bank acceptances - - - - - 1.3. Letter of credits 270 1.249.850 1.250.120 41 1.221.227 1.221.268 1.3.1. Documentary letter of credits - - - - - 1.3.2. Other letter of credits 270 1.249.850 1.250.120 41 1.221.227 1.221.268 1.4. Prefinancing given as guarantee - - - - - 1.5. Endorsements - - - - - 1.5.1. Endorsements to the Central Bank of Turkey - - - - - 1.5.2. Other endorsements - - - - - 1.6. Other guarantees 16.007 129.977 145.984 6.703 171.397 178.100 1.7. Other collaterals - - - - - II. COMMITMENTS (1), (2) 2.196.163 277.122 2.473.285 1.809.786 5.816 1.815.602 2.1. Irrevocable commitments 2.196.163 277.122 2.473.285 1.809.786 5.816 1.815.602 2.1.1. Forward asset purchase commitments 240.276 254.576 494.852 1.537 5.816 7.353 2.1.2. Share capital commitment to associates and subsidiaries 7.153 22.546 29.699 6.869 - 6.869 2.1.3. Loan granting commitments 140.538 - 140.538 128.301 - 128.301 2.1.4. Securities underwriting commitments - - - - - 2.1.5. Commitments for reserve deposit requirements - - - - - 2.1.6. Payment commitment for checks 434.811 - 434.811 408.821 - 408.821 2.1.7. Tax and fund liabilities from export commitments 1.596 - 1.596 - - 2.1.8. Commitments for credit card expenditure limits 1.365.927 - 1.365.927 1.256.191 - 1.256.191 2.1.9. Commitments for promotions related with credit cards and banking activities 5.862 - 5.862 8.067 - 8.067 2.1.10. Receivables from short sale commitments - - - - - 2.1.11. Payables for short sale commitments - - - - - 2.1.12. Other irrevocable commitments - - - - - 2.2. Revocable commitments - - - - - 2.2.1. Revocable loan granting commitments - - - - - 2.2.2. Other revocable commitments - - - - - III. DERIVATIVE FINANCIAL INSTRUMENTS (4) 452.277 448.699 900.976 438.194 396.536 834.730 3.1. Derivative financial instruments for hedging purposes - - - - - 3.1.1. Fair value hedge - - - - - 3.1.2. Cash flow hedge - - - - - 3.1.3. Hedge of net investment in foreign operations - - - - - 3.2. Held for trading transactions 452.277 448.699 900.976 438.194 396.536 834.730 3.2.1. Forward foreign currency buy/sell transactions 452.277 448.699 900.976 438.194 396.536 834.730 3.2.1.1. Forward foreign currency transactions-buy 452.277 - 452.277 438.194 - 438.194 3.2.1.2. Forward foreign currency transactions-sell - 448.699 448.699 - 396.536 396.536 3.2.2. Other Forward buy/sell transactions - - - - - 3.3. Other - - - - - - Bank Asya Annual Report 2009 171 Asya Katılım Bankası A.Ş. Statement of Off-Balance Sheet Contingengies and Commitments (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited Note (31/12/2009) (31/12/2008) TRY FC Total TRY FC Total B. CUSTODY AND PLEDGED ITEMS (IV+V+VI) 86.043.258 63.997.965 150.041.223 70.017.593 57.208.709 127.226.302 IV. ITEMS HELD IN CUSTODY 620.403 366.541 986.944 587.342 785.871 1.373.213 4.1. Assets under management - - - - - 4.2. Investment securities held in custody 2.885 - 2.885 2.885 - 2.885 4.3. Checks received for collection 498.606 198.477 697.083 431.058 272.104 703.162 4.4. Commercial notes received for collection 118.907 65.752 184.659 153.260 69.617 222.877 4.5. Other assets received for collection - 63.335 63.335 - 444.120 444.120 4.6. Assets received for public offering - - - - - 4.7. Other items under custody 4 - 4 139 30 169 4.8. Custodians 1 38.977 38.978 - - V. PLEDGED ITEMS 85.422.855 63.631.424 149.054.279 69.430.251 56.422.838 125.853.089 5.1. Marketable securities 488.378 293.318 781.696 351.244 299.026 650.270 5.2. Guarantee notes 29.086.179 24.163.628 53.249.807 23.828.375 21.440.634 45.269.009 5.3. Commodity 1.522.022 402.926 1.924.948 948.499 336.811 1.285.310 5.4. Warranty - - - - - 5.5. Properties 12.372.061 1.218.189 13.590.250 10.458.296 1.306.210 11.764.506 5.6. Other pledged items 41.954.215 37.553.363 79.507.578 33.843.837 33.040.157 66.883.994 5.7. Pledged items-depository - - - - - VI. ACCEPTED INDEPENDENT GUARANTEES AND WARRANTIES - - - - - TOTAL OFF BALANCE SHEET ACCOUNTS (A+B) 92.676.216 69.625.245 162.301.461 76.866.380 63.225.669 140.092.049 172 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Consolidated Statement of Income (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) STATEMENT OF INCOME Note I. PROFIT SHARE INCOME (1) 1.1 Profit share on loans 1.2 Profit share on reserve deposits 1.3 Profit share on banks 1.4 Profit share on money market placements 1.5 Profit share on marketable securities portfolio 1.5.1 Held-for-trading financial assets 1.5.2 Financial assets at fair value through profit and loss 1.5.3 Available-for-sale financial assets 1.5.4 Investment-held for maturity 1.6 Finance lease income 1.7 Other profit share income II. PROFIT SHARE EXPENSE (2) 2.1 Expense on profit sharing accounts 2.2 Profit share expense on funds borrowed 2.3 Profit share expense on money market borrowings 2.4 Expense on securities issued 2.5 Other profit share expense III. NET PROFIT SHARE INCOME (I - II) IV. NET FEES AND COMMISSIONS INCOME 4.1 Fees and commissions received 4.1.1 Non-cash loans 4.1.2 Other (12) 4.2 Fees and commissions paid 4.2.1 Non-cash loans 4.2.2 Other (12) V. DIVIDEND INCOME (3) VI. NET TRADING INCOME (4) 6.1 Securities trading gains/(losses) 6.2 Profit on derivative financial instruments gains/(losses) 6.3 Foreign exchange gains/(losses) VII. OTHER OPERATING INCOME (5) VIII. NET OPERATING INCOME (III+IV+V+VI+VII) IX. PROVISION FOR LOAN LOSSES AND OTHER RECEIVABLES (-) (6) X. OTHER OPERATING EXPENSES (-) (7) XI. NET OPERATING INCOME/(LOSS) (VIII-IX-X) XII. AMOUNT IN EXCESS RECORDED AS GAIN AFTER MERGER XIII. GAIN/(LOSS) ON EQUITY METHOD XIV. GAIN/(LOSS) ON NET MONETARY POSITION XV. PROFIT/(LOSS) FROM CONTINUED OPERATIONS BEFORE TAXES (XI+…+XIV) (8) XVI. TAX PROVISION FOR CONTINUED OPERATIONS (±) (9) 16.1 Provision for current income taxes 16.2 Provision for deferred taxes XVII. NET PROFIT/(LOSS) FROM CONTINUED OPERATIONS (XV±XVI) (10) XVIII. INCOME ON DISCONTINUED OPERATIONS 18.1 Income on assets held for sale 18.2 Income on sale of associates, subsidiaries and jointly controlled entities (Joint Vent.) 18.3 Income on other discontinued operations XIX. LOSS FROM DISCONTINUED OPERATIONS (-) 19.1 Loss from assets held for sale 19.2 Loss on sale of associates, subsidiaries and jointly controlled entities (Joint vent.) 19.3 Loss from other discontinued operations XX. PROFIT/(LOSS) ON DISCONTINUED OPERATIONS BEFORE TAXES (XVIII-XIX) XXI. TAX PROVISION FOR DISCONTINUED OPERATIONS (±) 21.1 Provision for current income taxes 21.2 Provision for deferred taxes XXII. NET PROFIT/LOSS FROM DISCONTINUED OPERATIONS (XX±XXI) XXIII. NET PROFIT/LOSS (XVII+XXII) (11) 23.1 Group’s profit/loss 23.2 Minority shares Earnings per share THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited (01/01/2009-31/12/2009) (01/01/2008-31/12/2008) 1.322.119 1.071.245 1.203.356 963.490 19.734 25.841 55.239 51.572 - 27.353 329 13.313 294 - 7.020 35 7.020 16.300 30.013 137 (699.572) (560.771) (679.857) (537.786) (18.259) (21.630) - - (1.456) (1.355) 622.547 510.474 245.391 218.982 314.870 289.382 174.517 143.560 140.353 145.822 (69.479) (70.400) (69) (481) (69.410) (69.919) 3.588 312 93.888 60.716 - 203.194 15.366 (109.306) 45.350 191.915 141.085 1.157.329 931.569 (220.110) (171.786) (551.050) (457.170) 386.169 302.613 - - - 386.169 302.613 (78.351) (65.277) (83.845) (65.212) 5.494 (65) 307.818 237.336 - - - - - - - - - - - - - 307.818 237.336 305.791 238.790 2.027 (1.454) 0,34 0,32 Bank Asya Annual Report 2009 173 Asya Katılım Bankası A.Ş. Statement of Profit and Loss Items Accounted Under Equity (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited STATEMENT OF PROFIT AND LOSS ITEMS ACCOUNTED UNDER EQUITY (01/01/2009-31/12/2009) (01/01/2008-31/12/2008) I. Additions to marketable securities revaluation differences for available for sale financial assets 3.651 II. Tangible assets revaluation differences - 4.275 III. Intangible assets revaluation differences - IV. Foreign exchange differences for foreign currency transactions - V. Profit/Loss from derivative financial instruments for cash flow hedge purposes (Effective portion of fair value differences) - VI. Profit/Loss from derivative financial instruments for hedge of net investment in foreign operations (Effective portion of fair value differences) VII. The effect of corrections of errors and changes in accounting policies - VIII. Other profit loss items accounted under equity due to TAS - IX. Deferred tax of valuation differences (730) X. Total Net Profit/Loss accounted under equity (I+II+…+IX) 2.921 4.275 XI. Profit/Loss - 11.1 Change in fair value of marketable securities (Transfer to Profit/Loss) - 11.2 Reclassification and transfer of derivatives accounted for cash flow hedge purposes to Income Statement - 11.3 Transfer of hedge of net investments in foreign operations to Income Statement - 11.4 Other - XII. Total Profit/Loss accounted for the period (X±XI) 2.921 4.275 174 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Statement of Changes of Shareholder’s Equity (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Effect of inflation Share Accounting on Certificate Paid-in Capital and Other Share Cancellation Legal Statutory Note Capital Capital Reserves Premium Profits Reserves Reserves PRIOR PERIOD Audited (01/01-31/12/2008) I. Prior Period Balance - 31.12.2007 300.000 - 150.000 - 14.756 - II. Corrections according to TAS 8 - - - - - - 2.1. The effect of corrections of errors - - - - - - 2.2. The effects of changes in accounting policy - - - - - - III. New Balance (I+II) 300.000 - 150.000 - 14.756 - Changes in period - - - - - - IV. Increase/Decrease related to merger - - - - - - V. Marketable securities revaluation differences - - - - - - VI. Hedging Funds (Effective Portion) - - - - - - 6.1 Cash-flow hedge - - - - - - 6.2 Hedge of net investment in foreign operations - - - - - - VII. Tangible assets revaluation differences - - - - - - VIII. Intangible assets revaluation differences - - - - - - IX. Bonus shares obtained from associates, subsidiaries and jointly controlled entities (Joint vent.) - - - - - - X. Foreign exchange differences - - - - - - XI. The disposal of assets - - - - - - XII. The reclassification of assets - - - - - - XIII. The effect of change in associate’s equity - - - - - - XIV. Capital increase 600.000 - (150.000) - - - 14.1 Cash 300.000 - - - - - 14.2 Internal sources 300.000 - (150.000) - - - XV. Share premium - - 3.307 - - - XVI. Share cancellation profits - - - - - - XVII. Inflation adjustment to paid-in capital - - - - - - XVIII. Other - - - - - - XIX Period net income/(loss) - - - - - - XX. Profit distribution - - - - 11.297 - 20.1 Dividends distributed - - - - - - 20.2 Transfers to reserves - - - - 11.297 - 20.3 Other - - - - - - Closing Balance (III+-…...+XVI+XVII+XVIII) 900.000 - 3.307 - 26.053 - CURRENT PERIOD Audited (01/01-31/12/2009) I. Prior Period Balance - 31.12.2008 900.000 - 3.307 - 26.053 - Changes in period - - - - - - II. Increase/Decrease related to merger - - - - - - III. Marketable securities revaluation differences - - - - - - IV. Hedging Funds (Effective Portion) - - - - - - 4.1 Cash-flow hedge - - - - - - 4.2 Hedge of net investment in foreign operations - - - - - - V. Tangible assets revaluation differences - - - - - - VI. Intangible assets revaluation differences - - - - - - VII. Bonus shares obtained from associates, subsidiaries and jointly controlled entities (Joint vent.) - - - - - - VIII. Foreign exchange differences - - - - - - IX. The disposal of assets - - - - - - X. The reclassification of assets - - - - - - XI. The effect of change in associate’s equity - - - - - - XII. Capital increase - - - - - - 12.1 Cash - - - - - - 12.2 Internal sources - - - - - - XIII. Share premium - - - - - - XIV. Share cancellation profits - - - - - - XV. Inflation adjustment to paid-in capital - - - - - - XVI. Other - - - - - - XVII. Period net income/(loss) - - - - - - XVIII. Profit distribution - - - - 12.325 - 18.1 Dividends distributed - - - - - - 18.2 Transfers to reserves - - - - 12.325 - 18.3 Other - - - - - - Closing Balance (I+II+III+-…...+XVI+XVII+XVIII) 900.000 - 3.307 - 38.378 - Bank Asya Annual Report 2009 175 Asya Katılım Bankası A.Ş. Statement of Changes of Shareholder’s Equity (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Marketable Tangible and Acc. Val. Diff. SecuritiesIntangible Assets Bonusfrom Assets Held Equity Extraordinary Other Current Period Prior Period Revaluation Revaluation Shares Obtained Hedging for Sale and Attributable Minority Total Reserve Reserve Net Income/(Loss) Net Income/(Loss) Reserve Differences from Associates Funds from Disc. Op. to the Parent Shares Equity 167.811 - 227.621 (4.511) - - - - - 855.677 17.803 873.480 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 167.811 - 227.621 (4.511) - - - - - 855.677 17.803 873.480 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (4.275) - 4.275 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (150.000) - - - - - - - - 300.000 1.277 301.277 - - - - - - - - - 300.000 1.277 301.277 (150.000) - - - - - - - - - - - - - - - - - - - 3.307 - 3.307 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 238.790 - - - - - - 238.790 (1.454) 237.336 206.209 - (227.621) 10.115 - - - - - - - - - - - - - - - - - - 206.209 - - (217.506) - - - - - - - - - (227.621) 227.621 - - - - - - - 224.020 - 238.790 1.329 - 4.275 - - - 1.397.774 17.626 1.415.400 224.020 - 238.790 1.329 - 4.275 - - - 1.397.774 17.626 1.415.400 - - - - - - - - - - - - - - - - - - - - - - - - - - 2.921 - - - - 2.921 - 2.921 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 900 900 - - - - - - - - - - 900 900 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (12.561) - - - - - (12.561) 84.938 72.377 - - 305.791 - - - - - - 305.791 2.027 307.818 229.211 - (238.790) (2.746) - - - - - - - - - - - - - - - - - - 229.211 - - (241.536) - - - - - - - - - (238.790) 238.790 - - - - - - - 453.231 - 305.791 (13.978) 2.921 4.275 - - - 1.693.925 105.491 1.799.416 176 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Consolidated Statement of Cash Flows (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited Note (01/01/2009-31/12/2009) (01/01/2008-31/12/2008) A. CASH FLOWS FROM BANKING OPERATIONS 1.1 Operating profit before changes in operating assets and liabilities 467.141 137.953 1.1.1 Profit share income received 1.213.017 972.324 1.1.2 Profit share expense paid (717.332) (532.977) 1.1.3 Dividend received 3.588 312 1.1.4 Fees and commissions received 314.870 289.382 1.1.5 Other income 313.967 106.113 1.1.6 Collections from previously written off loans 21.917 12.114 1.1.7 Payments to personnel and service suppliers (227.763) (182.998) 1.1.8 Taxes paid (94.624) (79.377) 1.1.9 Others (360.499) (446.940) 1.2 Changes in operating assets and liabilities 1.089.550 (488.447) 1.2.1 Net (increase) decrease in financial assets 6.522 (13.582) 1.2.2 Net (increase) decrease in financial assets at fair value through profit or loss - 1.2.3 Net (increase) decrease in due from banks and other financial institutions (133) 137 1.2.4 Net (increase) decrease in loans (2.049.806) (1.387.842) 1.2.5 Net (increase) decrease in other assets (148.228) (27.447) 1.2.6 Net increase (decrease) in bank deposits (1.157) (2.416) 1.2.7 Net increase (decrease) in other deposits 3.336.630 881.410 1.2.8 Net increase (decrease) in funds borrowed (215.346) 71.503 1.2.9 Net increase (decrease) in due payables - 1.2.10 Net increase (decrease) in other liabilities 161.068 (10.210) I. Net cash provided from banking operations 1.556.691 (350.494) B. CASH FLOWS FROM INVESTING ACTIVITIES II. Net cash provided from investing activities (205.907) (74.874) 2.1 Cash paid for purchase of entities under common control, associates and subsidiaries (22.804) (23.975) 2.2 Cash obtained from sale of entities under common control, associates and subsidiaries - 2.3 Fixed assets purchases (44.359) (53.010) 2.4 Fixed assets sales 11.256 2.174 2.5 Cash paid for purchase of financial assets available for sale (75.000) (63) 2.6 Cash obtained from sale of financial assets available for sale - 2.7 Cash paid for purchase of investment securities (75.000) 2.8 Cash obtained from sale of investment securities - 2.9 Other - C. CASH FLOWS FROM FINANCING ACTIVITIES III. Net cash provided from financing activities 894 290.715 3.1 Cash obtained from funds borrowed and securities issued - 3.2 Cash used for repayment of funds borrowed and securities issued - 3.3 Capital increase 900 304.584 3.4 Dividends paid - 3.5 Payments for finance leases (6) (13.869) 3.6 Other - IV. Effect of change in foreign exchange rate on cash and cash equivalents (2.654) (742) V. Net increase in cash and cash equivalents 1.349.024 (135.395) VI. Cash and cash equivalents at the beginning of the year (1) 1.264.471 1.399.866 VII. Cash and cash equivalents at the end of the year (1) 2.613.495 1.264.471 Bank Asya Annual Report 2009 177 Asya Katılım Bankası A.Ş. Consolidated Profit Distribution Table (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) THOUSAND TURKISH LIRA CURRENT PERIOD PRIOR PERIOD Audited Audited (01/01-31/12/2009) (01/01-31/12/2008) I. DISTRIBUTION OF CURRENT PERIOD PROFIT 1.1 CURRENT PERIOD PROFIT - 1.2 TAXES AND DUES PAYABLE (-) - 1.2.1 Corporate Tax (Income Tax) - 1.2.2 Withholding Tax - 1.2.3 Other taxes and dues - A. NET PERIOD PROFIT (1.1-1.2) - 1.3 PRIOR YEAR’S LOSSES (-) - 1.4 FIRST LEGAL RESERVES (-) - 1.5 OTHER STATUTORY RESERVES (-) - B. DISTRIBUTABLE NET PERIOD PROFIT [(A-(1.3+1.4+1.5)] - 1.6 FIRST DIVIDEND TO SHAREHOLDERS (-) 1.6.1 To Owners of Ordinary Shares - 1.6.2 To Owners of Preferred Stocks - 1.6.3 To Owners of Preferred Stocks (Preemptive Rights) - 1.6.4 To Profit Sharing Bonds - 1.6.5 To Owners of the profit/loss Sharing Certificates - 1.7 DIVIDEND TO PERSONNEL (-) - 1.8 DIVIDEND TO BOARD OF DIRECTORS (-) - 1.9 SECOND DIVIDEND TO SHAREHOLDERS (-) - 1.9.1 To Owners of Ordinary Shares - 1.9.2 To Owners of Preferred Stocks - 1.9.3 To Owners of Preferred Stocks (Preemptive Rights) - 1.9.4 To Profit Sharing Bonds - 1.9.5 To Owners of the profit/loss Sharing Certificates - 1.10 SECOND LEGAL RESERVE (-) - 1.11 STATUS RESERVES (-) - 1.12 EXTRAORDINARY RESERVES - 1.13 OTHER RESERVES - 1.14 SPECIAL FUNDS - II. DISTRIBUTION FROM RESERVES 2.1 DISTRIBUTED RESERVES - 2.2 SECOND LEGAL RESERVES (-) - 2.3 SHARE TO SHAREHOLDERS (-) - 2.3.1 To Owners of Ordinary Shares - 2.3.2 To Owners of Preferred Stocks - 2.3.3 To Owners of Preferred Stocks (Preemptive Rights) - 2.3.4 To Profit Sharing Bonds - 2.3.5 To Owners of the profit/loss Sharing Certificates - 2.4 SHARE TO PERSONNEL (-) - 2.5 SHARE TO BOARD OF DIRECTORS (-) - III. EARNINGS PER SHARE 3.1 TO OWNERS OF STOCKS - 3.2 TO OWNERS OF STOCKS (%) - 3.3 TO OWNERS OF PREFERRED STOCKS - 3.4 TO OWNERS OF PREFERRED STOCKS (%) - IV. DIVIDEND PER SHARE - 4.1 TO OWNERS OF STOCKS - 4.2 TO OWNERS OF STOCKS (%) - 4.3 TO OWNERS OF PREFERRED STOCKS - 4.4 TO OWNERS OF PREFERRED STOCKS (%) - (*) Based on the prevailing regulations in Turkey, profit distribution is not made on the consolidated income. 178 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SECTION THREE ACCOUNTING PRINCIPLES I. Basis of Presentation 1. Presentation of Financial Statements The Parent Bank prepares its financial statements and notes in accordance with the Communiqué on Banks’ Accounting Practice and Maintaining Documents published in the Official Gazette No: 26333 dated November 1, 2006, Turkish Accounting Standards (“TAS”), Turkish Financial Reporting Standards (“TFRS”), other communiqués, pronouncements and explanations about accounting and financial reporting issued by the Banking Regulation and Supervision Agency, Turkish Commercial Code and the Tax Legislation. The Parent Bank prepares financial statements by applying accounting policies and basis of accounting in accordance with the Turkish Accounting Standards (“TAS”) and related communiqués, pronouncements and explanations issued by the Banking Regulation and Supervision Agency. The related accounting policies and basis of accounting are explained below. The prior period financial statements are presented in line with the principles of TAS No: 1 “Fundamentals of Preparing and Presenting Financial Statements” published in the Official Gazette on January 16, 2005 with No: 25702, and in accordance with Turkish Accounting Standards and Turkish Financial Reporting Standards; and other principles, methods and explanations about accounting and financial reporting issued by the BRSA. Certain reclassifications have been made to the prior year financial statements to comply with the current year presentation. 2. Basis of Accounting The accompanying consolidated financial statements are based on the Group’s legal books. The Group has recorded the adjustments of inflation accounting to its legal books beginning from June 30, 2004 to December 31, 2004 in accordance with Act No: 5024 of the Tax Procedural Code. As of December 31, 2003 the consolidated financial statements are prepared in accordance with the legal books and historical cost principle except for the revaluation of fixed assets and includes adjustments and reclassifications, including restatement for the changes in the general purchasing power of the Turkish Lira in accordance with International Accounting Standard No: 29 “Financial Reporting in Hyperinflationary Economies” (“TAS 29”) before December 31, 2004 for the purpose of fair presentation. II.Explanations on Usage Strategy of Financial Assets and Foreign Currency Transactions The Group manages its financial instrument strategies depending on the financing sources. The sources mainly constitute of the current and profit sharing accounts. As of the balance sheet date, the Group’s assets and equity structure are sufficient to cover its liabilities. The Group uses 29% of the funds collected in liquid instruments (December 31, 2008: 22%). The Group does not carry a significant foreign currency position risk due to the existing floating exchange rate regime. The investment decisions are made by taking into consideration of the maturity structure of the balance sheet items. The allocation of asset items are designated, and yield analysis are made based on this designation. In the statutory books of the Group, the transactions recorded in foreign currencies (all other currencies except Turkish Lira) are translated into the Turkish Lira at the exchange rates prevailing at the transaction dates. Monetary asset and liabilities denominated in foreign currencies are translated into the Turkish Lira at the year end exchange rates. Foreign exchange gains or losses arising from the translation of monetary items and foreign currency denominated collections or disbursements are recognized in the income statement. III. Information about the Parent Bank and its Consolidated Subsidiaries Asya Katılım Bankası A.Ş. and its subsidiaries Işık Sigorta A.Ş. and Tuna Gayrimenkul Yatırım Ortaklığı A.Ş. are consolidated by line by line consolidation method in the accompanying consolidated financial statements. Entities that are consolidated are assessed based on the communiqué on “Regulations Regarding Banks’ Consolidated Financial Statements” published on Official Gazette numbered 26340 dated November 8, 2006. The Parent Bank and the consolidated subsidiaries are referred to as “Group”. The subsidiaries, Işık Sigorta A.Ş. prepares the financial statements in accordance with accounting principles and standards prevailing in Insurance Law decree numbered 5684 and insurance regulations and Tuna Gayrimenkul Yatırım Ortaklığı A.Ş. prepares the financial statements in conformity with the Capital Markets Board legislation. Bank Asya Annual Report 2009 179 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) When there are differences between the accounting policies of the subsidiaries and the Parent Bank, the financial statements are adjusted in accordance with the principle of materiality. Based on the announcement of the Capital Market Board dated August 13, 2009, it has been permitted transformation of the subsidiary of the Parent Bank “Asyafin Turizm İnşaat San. A.Ş.” into “Tuna Gayrimenkul Yatırım Ortaklığı A.Ş.” with the decision dated 27 March 2009 and numbered 7/194. The transformation and registration have been completed as of September 30, 2009 and “the Articles of Association’’ has been published in the Trade Registry Gazette on October 8, 2009. Based on Banking Act No: 5411 and “Regulation Regarding Banks’ Consolidated Financial Statements”, Tuna Gayrimenkul Yatırım Ortaklığı A.Ş. has been classified as financial subsidiary and consolidated in the financial statements for the first time as of September 30, 2009. IV.Explanations on Forward and Option Contracts and Derivative Instruments In determination of fair value of forward and swap transactions, forward rates discounted to the balance sheet date by prevailing rates are compared with the expected forward rates at maturity calculated based on the prevailing profit share rates as of the balance sheet date and arising foreign exchange differences are recognized in the income statement. Although some of the derivative transactions provide economic hedging, since all necessary conditions for hedge accounting have not been met, yet, the Parent Bank classifies these transactions as “held for trading” therefore changes in the fair value of derivative financial instruments are recognized in profit or loss as they arise in accordance with Turkish Accounting Standard No: 39 “Financial Instruments: Recognition and Measurement” (“TAS 39”). V.Explanations on Profit Share Income and Expenses Profit share income and expenses are recognized in the income statement on an accrual basis. Realized and unrealized interest accruals of the non-performing loans are reversed and interest income in connection with these loans is recorded as interest income only when they are collected. VI.Explanations on Fees and Commission Income and Expenses Banking service revenues are recognized as income only when they are collected while only the current portion of the prepaid commission income obtained from loans is recorded as income based on the periodicity principle. Fees and commissions for funds borrowed paid to other financial institutions, as part of the transaction costs, are recorded as prepaid expenses and are recognized as expense on the relevant periods. VII. Explanations on Financial Assets Financial instruments comprise of financial assets, financial liabilities and derivative instruments. Financial assets and financial liabilities are recognized on the Group’s consolidated balance sheet when the Group becomes a party to the contractual provisions of the instrument. Basically, financial assets form majority of the commercial activities and operations of the Group. Financial instruments expose, change or reduce the liquidity and credit risks of the financial statements. Fair value is the amount for which an asset could be exchanged or a liability settled, between knowledgeable willing parties in an arms length transaction. Fair value is best evidenced by a market price, being the amount obtainable from the sale, or payable on the acquisition, of a financial instrument in an active market, if one exists. Estimated fair values of financial assets are determined by the Group by using the information about the market and relevant valuation methods. However, interpretation of market information is necessary to determine fair value. Therefore, estimated fair values presented in this report may not be necessarily equivalent of the disposal values of such assets derived from current market conditions. Some carrying values of the financial instruments (which are same with their cost values) are assumed to be equal to their fair values because of their short term nature. The methods and assumptions used in determining the reasonable estimated values of all financial instruments are mentioned below: Cash, Banks, and Other Financial Institutions: Cash and cash equivalents comprise of cash on hand, demand deposits, and highly liquid short-term investments not bearing risk of significant value change, and that are readily convertible to a known amount of cash. The book value of these financial assets approximate to their fair value. 180 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Financial Assets at Fair Value Through Profit and Loss: Marketable securities at fair value through profit or loss are classified in two categories; i) marketable securities classified as trading securities: acquired or incurred principally for the purpose of selling or repurchasing it in the near term in order to benefit from short-term profit opportunities; ii) marketable securities classified as marketable securities at fair value through profit or loss at initial recognition. The Parent Bank uses the above-mentioned classification when permitted, or for the purposes of providing a more appropriate presentation. In this group, trading securities are initially recognized at cost and measured at fair value on the financial statements. Fair value of debt securities traded in an active market is determined based on the quoted prices or current market prices. The difference between initial cost and fair value of financial assets at fair value through profit and loss is reflected to profit share income or diminution in value of marketable securities accounts. Profit share income from financial assets at fair value through profit and loss is reflected in profit share income. As of December 31, 2009, the Group has TRY 22.680 Thousand of derivative financial assets held for trading at fair value through profit or loss (December 31, 2008: TRY 43.904 Thousand). Held to Maturity Investments: Investments held to maturity include securities with fixed or determinable payments and fixed maturity when there is an intention of holding till maturity and the relevant conditions for fulfillment of such intention, including the funding ability. This portfolio excludes loans and receivables. Subsequent to initial recognition, held to maturity investments are measured at amortized cost by using the effective interest rate less impairment losses, if any. The Group has no financial assets acquired and classified as held to maturity investments that cannot be subject to such classification for two years because of the nonperformance of tainting rules. The profit share income received from held to maturity investments is recorded as profit share income in the income statement. As of December 31, 2009, the Group has TRY 76.460 Thousand of held to maturity investments (December 31, 2008: None). Financial Assets Available for Sale: Marketable securities classified as available for sale are initially recognized at cost including the transaction costs. After initial recognition, available for sale securities are measured at fair value and unrealized gains/losses originating from the difference between the amortized cost and the fair value are recorded in “Marketable Securities Value Increase Fund” under equity. At the disposal of available for sale financial assets, value increase/ decrease recorded in “Marketable Securities Value Increase Fund” under equity is transferred to the income statement. Equity instruments classified as available for sale are accounted at cost less impairment, if any. As of December 31, 2009, the Group has TRY 80.335 Thousand of financial assets available for sale (December 31, 2008: TRY 131 Thousand). Loans and Receivables: Loans and receivables are recognized at amortized cost. Fees, transaction costs and other similar costs in connection with the guarantees of loans and receivables are not considered as part of the transaction cost and recognized in the income statement. Loans are transferred to the relevant accounts in cash amounts and income accruals are calculated by using the internal rate of return method and the related income is recorded in the profit share income item. Foreign currency and foreign currency indexed loans are evaluated and evaluation differences are accounted under “Foreign Exchange Gains” and/or “Foreign Exchange Losses” in the income statement. The classification and provisioning of doubtful loans/receivables are appropriately accounted for in accordance with the prevailing regulations, and specific provisions allocated are recognized in the income statement for the period. Collections made from such loans are recognized under the “Non-performing loans” (including receivables from the doubtful receivables) account and “Profit share income received from Uncollectible Loans and Other Receivables” account. Released provisions are accounted as a cancellation of such provisions if realized in the current year, and the remaining amounts are recognized in the account of collections from the prior year expenses. In addition to specific loan loss provisions, within the framework of the regulation and principles referred to above; the Parent Bank records general loan loss provisions for loans and other receivables. The Parent Bank calculated the general loan provision at 0,5% for cash loans and other receivables, and 0,1% for non-cash loans until November 1, 2006. Subsequent to the change in the regulation on “Methods and Principles for the Bank Asya Annual Report 2009 181 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Determination of Loans and Other Receivables to be Reserved for and Allocation of Reserves” published in the Official Gazette No: 26333 dated November 1, 2006; The Parent Bank started to book general loan loss provision at 1% for cash loans and other receivables; and 0,2% for non-cash loans on the increase in the cash and non-cash loan portfolio as compared to their October 31, 2006 balances whereas allocating 0,5% general loan loss provision for cash loans and other receivables, and 0,1% for non-cash loans for the balances as of October 31, 2006. Together with the change in the same regulation made on February 6, 2008, the Parent Bank started to book general loan loss provision at 2% for cash loans under watch-list and 0,4% for non-cash loans under watch-list. VIII.Explanations on Impairment of Financial Assets At each balance sheet date, the Group evaluates the carrying amounts of its financial asset or a group of financial assets to determine whether there is an objective indication that those assets have suffered an impairment loss. If such an indication exists, the Group determines the related impairment. A financial asset or a financial asset group incurs impairment loss only if there is an objective indicator related to the occurrence (loss/damage event) of one or more than one event (or occurrence) subsequent to initial recognition of that asset; and such loss event causes an impairment loss as a result of the effect on the reliable estimate of the expected future cash flows of the related financial asset and asset group. Any amounts attributable to expected losses arising from any future events is not recognized under no circumstances. Companies that are required to prepare separate financial statements under the statutory requirements in accordance with TAS 27 “Consolidated and Separate Financial Statements” can represent their subsidiaries or associates either at cost or the requirements set out in IAS 39, “Financial Instruments: Recognition and Measurement”. In this case, the Parent Bank prefers to use the first method and presents the subsidiaries, jointly controlled entities and associates at cost less impairment loss, if any. IX. Explanations on Offsetting Financial Assets and Liabilities Financial assets and liabilities are offset when the Group has a legally enforceable right to set off, and when the Group has the intention of collecting or paying the net amount of related assets and liabilities or when the Group has the right to offset the assets and liabilities simultaneously. X.Explanations on Sales and Repurchase Agreements and Lending of Securities The Group does not have any sales and repurchase agreements or lending of securities. XI. Explanations on Assets Held for Sale, Discontinued Operations and Liabilities Related to Those Assets The principles on accounting, assessment and disposal of assets held for sale are determined based on the Communiqué of “Principles and Procedures on Bank’s Disposal of Precious Metals and Assets Held for Sale” published on November 1, 2006 in the official Gazette numbered 26333. Although the Parent Bank has assets held for sale in the balance sheet, due to the fact that the Parent Bank does not have a formal plan to dispose of these assets in one year subsequent to their classification date, such assets are continued to be depreciated. For this reason, these assets are classified as tangible assets instead of assets held for sale. Assets held for sale are measured at the lower of the carrying amount of assets or the fair value less any cost incurred for disposal. Assets held for sale are not amortized and presented in the financial statements separately. An asset is classified as held for sale, only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale. Highly saleable condition requires a plan by the management regarding the sale of the asset to be disposed of (or else the group of assets), together with an active program for the determination of buyers as well as for the completion of the plan. Also the asset (or else the group of assets) shall be actively marketed in conformity with its fair value. On the other hand, the sale is expected to be recognized as a completed sale within one year after the classification date; and the necessary transactions and procedures to complete the plan should demonstrate the fact that there is remote possibility of making any significant changes or cancellation of the plan. Various events and conditions may extend the completion period of the disposal more than a year. If such delay arises from any events and conditions beyond the control of the entity and there is sufficient evidence that the entity has an ongoing disposal plan for these assets, such assets (or else group of assets) are still classified as assets held for sale (or else group of assets). As of December 31, 2009, assets held for sale amounts to TRY 9.196 Thousand (December 31, 2008: 24.100 Thousand). 182 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) A discontinued operation is a division of a bank that is either disposed of or held for sale. The results of discontinued operations are included in the income statement separately. The Group does not have any discontinued operations. XII.Explanations on Goodwill and Other Intangible Assets Goodwill arising on the acquisition of a subsidiary or a jointly controlled entity represents the excess of the cost of acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary or jointly controlled entity recognized at the date of acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period. On disposal of a subsidiary or a jointly controlled entity, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Intangible assets acquired prior to January 1, 2005 are accounted for at restated cost less accumulated depreciation and any impairment loss, and the intangible assets acquired in subsequent periods are accounted for at acquisition cost less accumulated depreciation and any impairment loss if any, for those acquired prior to January 1, 2005. Intangible assets are amortized by using the straight line method considering their useful lives. Amortization method is reviewed at the end of each year periodically. Intangible assets mainly constitute of rights and amortized using the straight line method in 5 years. As of December 31, 2009, goodwill amounts to TRY 4.111 Thousand (December 31, 2008: 4.111 Thousand). XIII.Explanations on Tangible Fixed Assets Prior to January 1, 2005, tangible assets are accounted for at acquisition cost plus any other direct costs incurred to bring the asset for ready to use. Tangible assets are remeasured at their acquisition cost less accumulated depreciation and impairment loss, if any. Depreciation of assets held less than one year as of the balance sheet date is accounted for proportionately. If the fair value of tangible assets exceeds their carrying value, impairment loss is allocated for exceeding amounts and these amounts are recognized as impairment in the financial statements. Gains or losses resulting from disposals of tangible assets are recognized in the income statement as the difference between the net proceeds and net book value. Maintenance costs of the tangible assets are recognized in the income statement as an expense. There are no pledges, mortgages or other restrictions on tangible assets. Tangible Asset Safety Boxes Office Equipment Furniture and Fixtures Vehicles Leasehold Improvements Buildings Useful Life 5 years 5 years 5 years 5 years 5 years 50 years Bank Asya Annual Report 2009 183 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) XIV.Explanations on Leasing Transactions Group as a Lessor: Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Amounts due from lessees under finance leases are recorded as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases. Group as a Lessee: Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. ssets held under finance leases are recognized as assets of the Group at their fair value at the inception of the lease or, if lower, at the present A value of the minimum lease payments. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalized in accordance with the Group’s general policy on borrowing costs. As of December 31, 2009, the Group, as a lessee, has operating leases for vehicles, general management and branches in addition to its assets through financial lease. XV.Explanations on Provisions and Contingent Liabilities Provisions are recognized when there is a present obligation, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, a reliable estimate can be made of the amount of the obligation. Contingent liabilities are continuously reviewed in order to determine whether there is any possibility of cash flow with regards to the sources having economic benefit. XVI.Explanations on Liabilities for Employee Benefits Under the Turkish law and union agreements, lump sum payments are made to employees retiring or involuntarily. The retirement pay provision recognized represents the present value of the defined benefit obligation as adjusted for unrecognized gains and losses in accordance with TAS 19 “Employee Benefits”. The defined obligation is determined by independent actuaries. XVII. Explanations on Taxation Turkish tax legislation does not permit a parent company and its subsidiary to file a consolidated tax return. Therefore, provisions for taxes, as reflected in the accompanying consolidated financial statements, have been calculated on a separate-entity basis. Tax expense is comprised of current tax and deferred tax expenses. Current tax payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. According to the Article 32 of the Corporate Tax Law No: 5520, announced in the Official Gazette dated June 21, 2006, the corporate tax rate is 20%. eferred tax asset or liability is recognized on differences between the carrying amounts of assets and liabilities in the financial statements and D the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. T he carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. 184 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realized and recognized in the income statement. If deferred tax is in connection with the assets directly associated with the equity, it shall be directly associated with shareholders’ equity items. Taxes payables and prepaid taxes are offset since they are levied by the same taxation authority. Deferred tax assets and liabilities are also offset. The Group has adjusted its statutory financial statements based on inflation accounting as of January 1, 2004 in accordance with Law No: 5024. T he revenue earned from real estate investment activities of the Group’s subsidiary (Tuna Gayrimenkul Yatırım Ortaklığı A.Ş.) which has acquired the status of the real estate investment trust, is exempt from Corporate Tax according to Article 5/(1) (d) (4) of the Corporate Tax Law No: 5520. XVIII.Additional Disclosures on Borrowings Borrowings are recognized in accordance with TAS 39 “Financial Instruments: Recognition and Measurement”. No specific hedging technique is applied for borrowings, their accounting and valuation methods excluding some general methods applied for avoiding any liquidity and currency risks. There are no debt securities issued by the Group. There are no convertible bonds issued by the Group. XIX.Explanations on Exported Share Certificates As of December 31, 2009, there are no disclosures made on the profit sharing in connection with the Group’s shares subsequent to the balance sheet date. XX. Explanations on Acceptances Acceptances are realized simultaneously with the payment dates of the customers and they are presented as probable commitments in the offbalance sheet accounts. XXI. Explanations on Government Incentives As of the balance sheet date, there are no government incentives used by the Group. XXII.Explanations on Reporting According to Segmentation The Parent Bank operates in corporate, commercial and retail banking areas in line with its mission by means of profit/loss sharing methodology. Current Period Retail Corporate and Commercial Treasury Undistributed Elimination Total Total Assets 1.101.749 7.139.445 2.550.891 1.081.842 (135.375) 11.738.552 Total Liabilities 6.169.720 2.976.149 191.616 2.536.442 (135.375) 11.738.552 Net Profit Share Income/(Expense) (*) (359.390) 913.163 49.559 19.215 - 622.547 Net Fees and Commissions Income/(Expense) (2.577) 253.953 (1.598) (4.387) - 245.391 Other Operating Income/(Expense) (2.951) (8.870) - (469.948) - (481.769) Profit Before Tax (364.918) 1.158.246 47.961 (455.120) - 386.169 Tax Provision - - - (78.351) - (78.351) Net Profit for the Period (364.918) 1.158.246 47.961 (533.471) - 307.818 Minority Share 2.027 Group Share 305.791 (*) The allocation of retail, corporate and commercial banking segments of the Parent Bank above is the result of differentiation in fund collection and allocation procedures of the participation banks. Bank Asya Annual Report 2009 185 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Prior Period Retail Corporate and Commercial Treasury Undistributed Elimination Total Total Assets 927.150 5.421.457 1.174.410 716.562 (84.570) 8.155.009 Total Liabilities 3.812.233 2.038.306 457.632 1.931.408 (84.570) 8.155.009 Net Profit Share Income/(Expense) (*) (253.302) 710.520 27.273 25.983 - 510.474 Net Fees and Commissions Income/(Expense) (9.757) 213.867 (1.262) 16.134 - 218.982 Other Operating Income/(Expense) (5.370) (10.803) - (405.681) (4.989) (426.843) Profit Before Tax (268.429) 913.584 26.011 (363.564) (4.989) 302.613 Tax Provision - - - (65.277) - (65.277) Net Profit for the Period (268.429) 913.584 26.011 (428.841) (4.989) 237.336 Minority Share (1.454) Group Share 238.790 (*) The allocation of retail, corporate and commercial banking segments of the Parent Bank above is the result of differentiation in fund collection and allocation procedures of the participation banks. XXIII. Explanations on Other Matters None. 186 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SECTION FOUR INFORMATION ON THE CONSOLIDATED FINANCIAL STRUCTURE I.Explanations Related to the Consolidated Capital Adequacy Standard Ratio The capital adequacy ratio of the Group based on the consolidated financial statements is 14,81% (December 31, 2008: 13,22%). Capital Adequacy Standard Ratio is calculated in accordance with the Communiqué on “Measurement and Assessment of Capital Adequacy of Banks”, which was published on November 1, 2006 in the Official Gazette numbered 26333. The calculation of Capital Adequacy Ratio includes the methods used in determining the capital adequacy ratio, determination of risk weighted assets and non-cash loans in line with the relevant banking regulation and measuring the market risk and operational risk ratio in line with the same regulation. Risk WeightsRisk Weights ConsolidatedParent Bank Amount Subject to Credit Risk 0% 10% Balance Sheet Items (Net) 2.601.205 Cash and Cash Equivalents 50% 100% 150% 200% 0% 10% 4.965.824 24.041 1.753 2.598.621 20% 50% 100% 150% 200% - 246.686 1.966.051 4.900.362 24.041 1.753 131.919 - - - - - - 131.917 - - - - - - - - - - - - - - - - - - - - 2.008.055 - - - - - - 2.008.055 - - - - - - Matured Marketable Securities Due From Central Bank of Turkey 20% - 272.834 1.966.051 Due From Domestic Banks, Foreign Banks, Branches and Head Office Abroad - - 171.747 - 1.273 - - - - 145.745 - 1.273 - Interbank Money Market Placements - - - - - - - - - - - - - - Receivables From Reverse Repo Transactions - - - - - - - - - - - - - - - - - - - - 153.015 - - - - - - 3.888.193 24.041 1.753 66.497 - Reserve Deposits Loans 153.015 66.497 Non-Performing Loans (Net) Financial Lease Receivables - 100.780 1.908.529 100.780 1.908.529 3.888.193 24.041 1.753 - - - - 104.346 - - - - - - 104.346 - - 5.829 - - 7.193 101.190 - - 5.829 - - 7.193 101.190 - - Available-for-Sale Financial Assets 75.000 - - - 93 - - 75.000 - - - 93 - - Held to Maturity Investments 75.000 - - - - - - 75.000 - - - - - - Receivables From Installment Sales of Assets - - - - - - - - - - - - - - Sundry Debtors - - - - 58.185 - - - - - - 15.729 - - Accrued Profit Share and Income Accruals 11.521 - 307 50.329 280.440 - - 11.521 - 161 50.329 280.441 - - Subsidiaries, Associates and Entities Under Common Control (Net) - - - - 102.015 - - - - - - 184.839 - - Tangible Assets - - - - 307.242 - - - - - - 268.242 - - Other Assets 74.369 - - - 122.847 - - 71.787 - - - 56.016 - - Off-Balance Sheet Items 57.675 - 72.110 789.564 4.033.835 - - 57.675 - 72.110 789.564 4.033.835 - - Guarantees and Commitments 57.675 - 63.064 789.564 4.033.835 - - 57.675 - 63.064 789.564 4.033.835 - - Derivative Financial Instruments - - 9.046 - - - - - - 9.046 - - - - Non Risk Weighted Accounts - - - - - - - - - - - - - - Total Risk Weighted Assets 2.658.880 - 344.944 2.755.615 8.999.659 24.041 1.753 2.656.296 - 318.796 2.755.615 8.934.197 24.041 1.753 Summary of the capital adequacy standard ratio of the group: Total Risk Weighted Assets (TRWA) Amount Subject to Market Risk (ASMR) Amount Subject to Operational Risk (ASOR) (*) Shareholders’ Equity Shareholders’ Equity/(TRWA + ASMR + ASOR) *100 Consolidated Current Period Prior Period 10.486.023 9.773.141 58.325 93.888 1.345.149 963.074 1.760.645 1.431.953 14,81 13,22 Parent Bank Current Period Prior Period 10.415.331 9.776.820 21.175 65.750 1.228.699 859.883 1.685.734 1.434.570 14,45 13,40 (*) The amount subject to operational risk is in accordance with the “Regulation Regarding Measurement and Evaluation of the Bank’s Capital Adequacy Ratio” published in the Official Gazette No: 26333 dated November 1, 2006 which is effective from June 1, 2007. Operational risk is calculated by using the Basic Indicator Approach. Bank Asya Annual Report 2009 187 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Consolidated components of shareholders’ equity: CORE CAPITAL Paid-in Capital Nominal Capital Capital Commitments (-) Paid-in Capital Indexation Difference Share Premium Share Cancellations Profits Legal Reserves First Legal Reserve (Turkish Commercial Code 466/1) Second Legal Reserve (Turkish Commercial Code 466/2) Other Legal Reserve Per Special Legislation Status Reserves Extraordinary Reserves Reserves Allocated by the General Assembly Retained Earnings Accumulated Losses Foreign Currency Share Capital Exchange Difference Inflationary Adjustment to Legal Reserve, Status Reserves and Extraordinary Reserves Profit Current Year Profit Prior Years’ Profits Provision for Possible Losses up to 25% of the Core Capital Gains on Sale of Associates and Subsidiaries and Properties to be Added to Capital Primary Subordinated Loans up to 15% of the Core Capital Minority Interest Losses that cannot be Covered by Reserves (-) Net Current Period Loss Prior Years’ Losses Leasehold Improvements (-) Prepaid Expenses (-) Intangible Assets (-) Deferred Tax Asset Exceeding 10% of the Core Capital (-) Excess Amount in Clause 3, Article 56 of the Banking Law (-) Consolidated Goodwill (Net) (-) TOTAL CORE CAPITAL Consolidated Parent Bank Current Period Prior Period Current Period Prior Period 900.000 900.000 900.000 900.000 900.000 900.000 900.000 900.000 - - - - - - 3.307 3.307 3.307 3.307 - - - 38.378 26.053 37.886 25.561 36.451 24.126 35.959 23.634 1.927 1.927 1.927 1.927 - - - - - - 453.231 224.020 458.224 224.020 453.231 224.020 458.224 224.020 - - - - - - - - - - 305.791 305.791 - - - 240.119 238.790 1.329 - - 301.281 301.281 - - 246.529 246.529 - 4.275 - 105.491 13.978 - 13.978 50.688 21.108 10.253 - - 4.111 1.710.335 4.275 - 17.626 - - - - 18.210 6.336 - - 4.111 1.386.743 4.275 - - - - - 50.616 8.840 10.224 - - - 1.635.293 4.275 8.131 6.332 1.389.229 188 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SUPPLEMENTARY CAPITAL Consolidated Parent Bank Current Period Prior Period Current Period Prior Period General Loan Loss Reserves 49.393 45.493 49.393 45.493 45% of The Revaluation Reserve for Movable Fixed Assets - - - 45% of The of Revaluation Reserve for Properties - - - Bonus Shares Obtained From Associates, Subsidiaries and Entities Under Common Control - - - Primary Subordinated Loans Excluded in the Calculation of the Core Capital - - - Secondary Subordinated Loans - - - 45% of The Marketable Securities Value Increase Fund 1.314 - 1.314 Associates and Subsidiaries - - - Available for Sale Financial Assets 1.314 - 1.314 Indexation Differences for Capital Reserves, Profit Reserves and Retained Earnings (Except Indexation Differences for Legal Reserves, Statutory Reserves and Extraordinary Reserves) - - - Minority Interest - - - TOTAL SUPPLEMENTARY CAPITAL 50.707 45.493 50.707 45.493 TIER III CAPITAL - - - CAPITAL 1.761.042 1.432.236 1.686.000 1.434.722 DEDUCTIONS FROM THE CAPITAL 397 283 266 152 Equity Shares in Banks and Financial Institutions Acquired 10% or More of Their Capital (Domestic, Foreign) that are Excluded from the Consolidation 165 215 34 84 Secondary Subordinated Loans and Primary or Secondary Subordinated Debt Placements Granted to Banks and Financial Institutions (Domestic, Foreign) or Qualified Shareholders - - - Shareholdings in the Banks and Financial Institutions which are Accounted for Under the Equity Pick up Method but the Assets and Liabilities are not Consolidated - - Loans Granted not in Compliance with Articles 50 and 51 of the Banking Law - - - Total Net Book Value of the Bank’s Real Estates in Excess of 50% of the Equity and in accordance with Article 57 of The Act, Net Book Value of Real Estates and Commodities Acquired in Exchange of Loans and Receivables that should be Disposed of However; have not been Disposed of Although It has been 5 Years since the Beginning of the Acquisition Date. 232 68 232 68 Other - - - TOTAL SHAREHOLDERS’ EQUITY 1.760.645 1.431.953 1.685.734 1.434.570 II. Explanations Related to Consolidated Credit Risk Credit worthiness of loan customers are monitored and reviewed regularly by the Risk Monitoring Department of the Parent Bank in accordance with the Communiqué on “Determining the Nature of Loan and Other Receivable Provisions Allocated by Banks and Procedures and Principles of Allocating Provisions” . The account statements are obtained based on the prevailing regulations. Credit limits of the Parent Bank are determined by the Board of Directors, the Credit Committee of the Parent Bank and the Credit Administration. The Parent Bank obtains sufficient guarantees for its risks, comprising of personal surety, real-estate mortgage, cash blockage and customer cheques. For the forward transactions and other similar positions of the Parent Bank, operational limits are set by the Board of Directors and the transactions are performed within these limits. There are no options or any other similar transactions. Indemnified non-cash loans are subject to the same risk weight with the overdue loans. The Parent Bank monitors restructured and rescheduled loans in accordance with the Communiqué on “Determining the Nature of Loan and Other Receivable Provisions Allocated by Banks and Procedures and Principles of Allocating Provisions”. Financial position and business operation of those customers are analyzed systematically and, principal and profit payments based on the restructured payment plan are monitored by the corresponding departments. Bank Asya Annual Report 2009 189 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) As of December 31, 2009, the risk of the Parent Bank from its top 100 cash loan customers share in total cash loans and financial lease receivable ratio is 46,57% (31 December 2008: 38,86%). As of December 31, 2009, the risk of the Parent Bank from its top 100 non-cash loan customers share in total non-cash loan ratio is 46,62% (31 December 2008: 45,77%). As of December 31, 2009, the cash and non-cash receivables of the Parent Bank from its top 100 loan customers share in total balance sheet assets and non-cash loan ratio is 39,86% (31 December 2008: 32,05%). As of December 31, 2009 the Parent Bank’s general provision amount for its credit risk is TRY 89.368 Thousand (31 December 2008: TRY 72.286 Thousand). Distribution of credit risk by types of borrowers and geographical concentration: Loans to Loans to Banks Real Person and Other and Legal Entities Financial Institution Marketable Securities (***) Other Loans (**) Current Prior Current Prior Current Prior Current Prior Period Period Period Period Period Period Period Period Loans according to Borrowers 7.962.432 6.018.660 100.324 744 179.475 43.904 12.260.238 12.865.747 Private Sector 6.854.661 5.083.992 163 744 22.680 43.904 10.562.645 11.811.395 Public Sector 12.051 7.521 - - 156.571 - - Banks - - 100.161 - - - 1.572.945 924.791 Retail 1.095.720 927.147 - - - - 124.648 129.561 Share Certificates - - - - 224 - - Information according to Geographical Concentration 7.962.432 6.018.660 100.324 744 179.475 43.904 12.260.238 12.865.747 Domestic 7.720.332 5.959.245 163 744 175.493 13.869 10.692.378 11.798.954 European Union Countries 105.111 7.709 100.161 - 3.982 15.818 1.434.787 937.908 OECD Countries (*) 5.117 - - - - - 40.976 4.747 Off-Shore Banking Regions 112.451 174 - - - - 13.265 USA, Canada 775 - - - - 14.217 7.234 7.272 Other Countries 18.646 51.532 - - - - 71.598 116.866 Total 7.962.432 6.018.660 100.324 744 179.475 43.904 12.260.238 12.865.747 (*) OECD countries other than European Union countries, USA and Canada. (**) Includes non-cash loans, commitments and derivative transactions. (***) Includes marketable securities designated at fair value through profit or loss, available-for-sale and held-to-maturity. 190 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Geographical concentration: Assets Liabilities Non-Cash Loans Equity Investments Current Period – December 31, 2009 Domestic 11.192.745 9.643.766 8.733.493 - European Union Countries 252.579 76.203 66.518 - OECD Countries (*) 7.576 11.292 16.416 - Off-Shore Banking Regions 112.451 21.106 13.265 - USA, Canada 51.233 46.964 7.234 - Other Countries 19.919 139.805 49.051 - Associates, Subsidiaries and Entities Under Common Control - - - 102.049 Unallocated Assets/Liabilities (**) - - - - Total 11.636.503 9.939.136 8.885.977 102.049 Prior Period – December 31, 2008 Domestic 7.894.687 6.221.115 10.072.831 - European Union Countries 48.204 158.570 95.066 - OECD Countries (*) 5.312 7.415 5.380 - Off-Shore Banking Regions 174 81.919 - - USA, Canada 35.591 65.780 7.273 - Other Countries 52.092 204.810 34.865 - Associates, Subsidiaries and Entities Under Common Control - - - 118.949 Unallocated Assets/Liabilities (**) - - - - Total 8.036.060 6.739.609 10.215.415 118.949 Net Profit 305.791 305.791 238.790 238.790 (*) OECD countries other than European Union countries, USA and Canada. (**) Assets and liabilities that cannot be allocated on a coherent basis. Sector concentration for cash loans: TRY Agriculture 131.208 Farming and Raising Livestock 93.908 Forestry, Wood and Paper 31.023 Fishery 6.277 Manufacturing 3.265.977 Mining and Quarry 294.079 Production 2.439.245 Electricity, Gas and Water 532.653 Construction 1.475.039 Services 1.381.412 Wholesale and Retail Trade 406.557 Hotel, Tourism, Food and Beverage Services 172.054 Transportation and Communication 286.818 Financial Institutions 117.937 Real Estate and Renting Services 176.019 Self-Employment Services 16.294 Education Services 46.275 Health and Social Services 159.458 Other 1.176.839 Total 7.430.475 C urrent Period (%) FC (%) TRY 1,76 12.782 2,02 86.254 1,26 10.245 1,62 58.439 0,42 - - 17.726 0,08 2.537 0,40 10.089 43,96 246.420 38,97 2.609.840 3,96 67.589 10,69 136.267 32,83 126.293 19,97 2.089.322 7,17 52.538 8,31 384.251 19,85 114.173 18,06 877.605 18,60 258.906 40,95 1.185.464 5,47 63.542 10,05 300.063 2,32 - - 208.005 3,86 172.354 27,26 263.816 1,59 - - 45.842 2,37 - - 179.849 0,22 4.306 0,68 15.331 0,62 18.704 2,96 45.985 2,15 - - 126.573 15,83 - - 989.571 100,00 632.281 100,00 5.748.734 The table below shows the maximum exposure to credit risk for the components of the financial statements. Prior Period (%) FC (%) 1,51 11.064 4,08 1,02 10.374 3,83 0,31 496 0,18 0,18 194 0,07 45,39 119.449 44,13 2,37 2.927 1,08 36,34 116.522 43,05 6,68 - 15,27 53.412 19,73 20,63 86.432 31,94 5,22 27.555 10,18 3,62 29.720 10,98 4,59 14.315 5,29 0,80 - 3,13 667 0,25 0,27 4.363 1,61 0,80 9.812 3,63 2,20 - 17,20 313 0,12 100,00 270.670 100,00 Bank Asya Annual Report 2009 191 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Current Period The Central Bank of Turkish Republic 2.213.091 Banks 173.166 Derivative Financial Assets Held for Trading 22.680 Available-for-Sale Financial Assets 80.335 Held to Maturity Investments 76.460 Loans 8.196.675 Finance Lease Receivables 158.671 Total 10.921.078 Contingent Liabilities 8.885.977 Commitments 2.473.285 Total 11.359.262 Total Credit Risk Exposure 22.280.340 Prior Period 1.062.597 141.879 43.904 131 6.147.566 233.676 7.629.753 10.215.415 1.815.602 12.031.017 19.660.770 Credit rating system: The credit risk is assessed through the internal rating system of the Parent Bank, by classifying loans from highest grade to lowest grade according to the probability of default. As of December 31, 2009 consumer loans are excluded from the internal rating system of the Parent Bank. Additional scoring methodologies are applied for these loans. The risks that are subject to rating models can be allocated as follows: Category Description of Category Above Average The borrower has a very strong financial structure Average The borrower has an intermediate level of financial structure Under Average The financial structure of the borrower has to be closely monitored in the medium term Not Graded The borrower is not assessed by the Parent Bank Total Share in the Total (%) 30% 34% 7% 29% 100% III. Explanations Related to the Consolidated Market Risk The amount subject to market risk is calculated and reported with the Standard Method described in Section 4 of the Communiqué on “Measurement and Assessment of Banks’ Capital Adequacy” published in the Official Gazette No: 26333 dated November 1, 2006. Market risk is measured on a monthly basis. a) Information related to market risk: (I) Capital Requirement to be Employed for General Market Risk - Standard Method (II) Capital Requirement to be Employed for Specific Risk - Standard Method (III) Capital Requirement to be Employed for Currency Risk - Standard Method (IV) Capital Requirement to be Employed for Commodity Risk - Standard Method (V) Capital Requirement to be Employed for Settlement Risk - Standard Method (VI) Total Capital Requirement to be Employed for Market Risk Resulting From Options – Standard Method (VII) Total Capital Requirement to be Employed for Market Risk in Banks Using Risk Measurement Model (VIII) Total Capital Requirement to be Employed for Market Risk (I+II+III+IV+V+VI) (IX) Amount Subject to Market Risk (12,5 x VIII) or (12,5 x VII) Amount 1.766 752 2.148 4.666 58.325 192 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) b) Average market risk table calculated at the end of each month in the current period: Interest Rate Risk (*) Common Stock Risk Currency Risk Commodity Risk Settlement Risk Option Risk Total Value Subject to Risk Current Period Average Maximum Minimum Average 13.819 32.138 3.288 10.466 28.250 29.663 27.525 20.575 29.694 42.588 22.575 28.978 - - - - - - - - - - - - 71.763 104.389 53.388 60.019 Prior Period Maximum 23.900 21.563 49.175 - - - 94.638 Minimum 2.725 18.688 16.200 37.613 (*) The Parent Bank calculates by considering market risk of share certificates and forward transactions. c) Other price risks: The Group is exposed to stock price risk as a consequence of investing in publicly traded companies in İstanbul Stock Exchange. As of reporting date, assuming that all other variables are fixed and 10% increase or decrease in valuation method parameters (stock prices) is appeared, TRY 1.371 Thousand increase or decrease before tax is anticipated (December 31, 2008: TRY 1.109 Thousand). IV.Explanations Related to Consolidated Operational Risk The Group calculates the amount subject to operational risk based on “Basic Indicator Method” by using 2008, 2007 and 2006 year end gross income balances of the Group, in accordance with the Section 4 of the “Regulation Regarding Measurement and Evaluation of Banks’ Capital Adequacy Ratio” published in the Official Gazette No:26333 dated November 1, 2006, namely “The Calculation of the Amount Subject to Operational Risk”. V. Explanations Related to the Consolidated Currency Risk Foreign currency risk indicates the probability of loss that banks are subject to due to the exchange rate changes in the market. While calculating the share capital requirement, all foreign currency assets, liabilities and forward transactions of the Parent Bank are taken into consideration and value at risk is calculated by using the standard method. Net foreign currency position/capital ratio of the Parent Bank is also controlled using the same methods. The Parent Bank does not use any derivative instruments for hedging. T he Standard Method stated in the statutory reporting is used to measure the currency risk of the Parent Bank. The risk measurements are performed on a monthly basis. The announced current foreign exchange buying rates of the Parent Bank as of December 31, 2009 and the previous five working days are as follows: US Dollar “FC Evaluation Rate” 1,5057 Previously; 30 December 2009 (Day 1) 1,5026 29 December 2009 (Day 2) 1,5065 28 December 2009 (Day 3) 1,5052 25 December 2009 (Day 4) 1,5070 24 December 2009 (Day 5) 1,5186 31 December 2009 Euro Sterling 100 Japanese Yen 2,1590 2,4212 1,6247 2,1547 2,3851 1,6296 2,1682 2,4089 1,6423 2,1667 2,4014 1,6475 2,1635 2,3997 1,6399 2,1740 2,4199 1,6547 The simple arithmetic averages of the major current foreign exchange buying rates of the Parent Bank for the thirty days before December 31, 2009 are as follows; TRY 1,4983 per US Dollar, TRY 2,1855 per EURO, TRY 2,4296 per GBP and TRY 1,6628 per 100 JPY. Bank Asya Annual Report 2009 193 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Information on the foreign currency risk of the group: Foreign currencies (Thousand TRY) EUR USD YEN Other Current Period - December 31, 2009 Assets Cash (Cash in Vault, Effectives, Money in Transit, Cheques Purchased) and Balances with the Central Bank of Turkish Republic 286.246 1.041.455 - 37.912 Due from Banks 42.427 87.867 888 8.207 Financial Assets at Fair Value Through Profit and Loss (**) - - - - Money Market Placements - - - - Available-for-Sale Financial Assets - - - - Loans (*) 609.555 1.949.517 - - Subsidiaries, Associates and Entities Under Common Control - - - - Held-to-Maturity Investments - - - - Derivative Financial Assets for Hedging Purposes - - - - Tangible Assets - - - - Intangible Assets - - - - Other Assets 234 2.285 - - Total Assets 938.462 3.081.124 888 46.119 Liabilities Current and Profit Sharing Accounts of Banks 607 1.128 - 8 Current and Profit Sharing Accounts 867.881 2.233.025 314 44.809 Money Market Borrowings - - - - Funds Provided from Other Financial Institutions 58.389 133.072 - - Marketable Securities Issued - - - - Sundry Creditors 629 3.573 - 10 Derivative Financial Liabilities for Hedging Purposes - - - - Other Liabilities (**) 8.299 9.347 5 58 Total Liabilities 935.805 2.380.145 319 44.885 Net Balance Sheet Position 2.657 700.979 569 1.234 Net Off-Balance Sheet Position 2.159 (689.605) (579) (60) Financial Derivative Assets (***) 4.318 3.046 171 60 Financial Derivative Liabilities (***) 2.159 692.651 750 120 Non-Cash Loans (****) 1.450.841 3.320.841 37.080 92.697 Prior Period - December 31, 2008 Total Assets 774.953 2.293.106 3.888 55.175 Total Liabilities 717.631 1.935.748 4.090 52.105 Net Balance Sheet Position 57.322 357.358 (202) 3.070 Net Off-Balance Sheet Position (44.791) (353.249) - (30) Financial Derivative Assets - 2.141 - - Financial Derivative Liabilities 44.791 355.390 - 30 Non-Cash Loans (****) 1.735.286 3.668.940 76.844 133.538 Total 1.365.613 139.389 2.559.072 2.519 4.066.593 1.743 3.146.029 191.461 4.212 17.709 3.361.154 705.439 (688.085) 7.595 695.680 4.901.459 3.127.122 2.709.574 417.548 (398.070) 2.141 400.211 5.614.608 (*)TRY 1.892.285 Thousand of foreign currency indexed loan is also shown under this line (December 31, 2008: TRY 2.299.915 Thousand). (**) In accordance with the principles of the Regulations on the “Measurement and Practices of Bank’s Net Overall FX position Shareholder’s Equity Ratio on a consolidated and unconsolidated Basis”, general reserves recorded to expense accounts amounting to TRY 10.494 Thousand (December 31, 2008: TRY 10.011 Thousand) in assets and income accrual from derivative financial instruments amounting to TRY 3.889 Thousand (December 31, 2008: TRY 30.035 Thousand) in liabilities and expense accrual from derivate financial instruments amounting to TRY 155 Thousand (December 31, 2008:-), are not taken into consideration in the currency risk calculation. (***) Forward asset purchase-sale commitments of TRY 7.595 Thousand is added to derivative financial assets and TRY 246.981 is added to derivative financial liabilities (December 31, 2008: TRY 2.141 Thousand is added to derivative financial assets and TRY 3.675 is added to derivative financial liabilities). (****) The related balances do not have any effect on the currency risk position. 194 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Foreign currency sensitivity: The Group is mainly exposed to USD and EUR currency risks. The following table details the Parent Bank’s sensitivity to a 10% increase and decrease in the TRY against USD and EUR. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the possible change in foreign exchange rates. A positive number indicates an increase in profit or loss and other equity in the case of short position and a decrease in the case of long position where the TRY strengthens against USD and EUR. Change in Currency Rate in % Effect on Profit or Loss Effect on Equity Current Period Prior Period Current Period Prior Period USD 10% increase 1.137 329 - USD 10% decrease (1.137) (329) - EUR 10% increase 482 1.003 - EUR 10% decrease (482) (1.003) - Forward foreign exchange contracts: The following table details the forward foreign currency contracts outstanding as of the balance sheet date: Purchase Contracts Sales Contracts Fair Value Average Exchange Rate Original Amount Original Amount TRY Outstanding Contracts (*) Current Prior Current Prior Current Prior Current Prior Period Period Period Period Period Period Period Period Swap Transactions TRY Purchase-EUR Sale Less than 3 Months - 2,1863 - 43.725 - 20.000 - 347 TRY Purchase-USD Sale Less than 3 Months 1,5142 1,7472 452.278 130.895 298.000 75.000 3.028 14.705 Between 3-6 Months - 1,6516 - 256.598 - 155.000 - 14.190 Forward Transactions TRY Purchase-USD Sale Less than 3 Months - 1,7440 - 6.976 - 4.000 - 793 Other Term Foreign Exchange Transactions (**) TRY Purchase-USD Sale Less than 3 Months 1,5013 1,5365 240.277 1.536 159.000 1.000 687 USD Purchase-EUR Sale Less than 3 Months 1,4429 1,3954 1.443 1.395 1.000 1.000 14 EUR purchase-USD sale Less than 3 months 1,4321 - 2.000 - 2.864 - 5 USD Purchase-JPY Sale Less than 3 Months 92,369 - 500 - 46.184 - - JPY Purchase-USD Sale Less than 3 Months 91,770 - 10.509 - 114 - - USD Purchase-DKK Sale Less than 3 Months 5,1870 5,2583 80 20 415 105 - DKK Purchase- USD Sale Less than 3 Months 5,1840 - 207 - 40 - - (*) Maturity dates on the table are set based on the agreement period. (**) It is presented in commitments within off balance sheet liabilities. Bank Asya Annual Report 2009 195 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) VI.Explanations Related to Consolidated Interest Rate Risk As the Group has interest-free banking operations, it does not have any interest sensitive asset or liability and consequently, it does not have any interest rate risk. VII.Explanations Related to Consolidated Liquidity Risk In order to avoid the liquidity risk, the Parent Bank diversifies its funding resources as customer deposits and foreign borrowings, considers the maturity match between assets and liabilities, focuses on strategies especially for the provision of long-term resources and retains its liquid assets in order to provide sufficient liquidity in any market fluctuations. Maturity structure of the TRY and FC deposits, cost and change in the total amount are monitored on daily basis by considering the past developments and future expectations. The Parent Bank’s policy is to establish an asset structure that primarily meets all kinds of liabilities by using liquid resources. To do this, the Board of Directors of the Bank determines a standard for the liquidity ratios, and applies the standard on a regular basis. The table below gives a summary of the liquidity ratio of the Parent Bank. Current Period Average (%) Highest (%) Lowest (%) First Term Period (Weekly) 192,55 233,06 161,13 Second Term Period (Monthly) 141,96 165,89 121,42 Prior Period Average (%) Highest (%) Lowest (%) First Term Period (Weekly) 161,97 218,26 130,34 Second Term Period (Monthly) 110,42 125,10 100,34 196 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Presentation of assets and liabilities according to their maturities: Current Period – Up to 1 3-12 Over 31 December 2009 Demand Month 1-3 Months Months 1-5 Years 5 Years Undistributed (*) Total Assets Cash (Cash in Vault, Effectives, Money in Transit, Cheques Purchased) and Balances with the Central Bank of Turkish Republic 1.042.465 1.302.545 - - - - - 2.345.010 Due from Banks 136.988 34.384 244 1.550 - - - 173.166 Financial Assets at Fair Value through Profit and Loss 18.791 3.889 - - - - - 22.680 Money Market Placements - - - - - - - Available-for-Sale Financial Assets - - - 55.111 25.000 - 224 80.335 Loans (**) - 1.605.399 1.239.467 2.700.780 2.533.253 142.528 - 8.221.427 Held-To-Maturity Investments - - - 51.460 25.000 - - 76.460 Other Assets 9.843 79.546 10.779 14.313 203 - 704.790 819.474 Total Assets 1.208.087 3.025.763 1.250.490 2.823.214 2.583.456 142.528 705.014 11.738.552 Liabilities Current and Profit Sharing Accounts of Banks 1.990 - - - - - - 1.990 Other Current and Profit Sharing Accounts 1.589.973 3.585.760 1.539.921 2.367.578 12 - - 9.083.244 Funds Provided from Other Financial Instruments - 15.195 29.217 80.081 64.556 2.412 - 191.461 Money Market Borrowings - - - - - - - Marketable Securities Issued - - - - - - - Sundry Creditors 32.471 169.086 1.123 728 167 - 640 204.215 Other Liabilities (***) - 184.964 837 - - - 2.071.841 2.257.642 Total Liabilities 1.624.434 3.955.005 1.571.098 2.448.387 64.735 2.412 2.072.481 1 1.738.552 Net Liquidity Gap (416.347) (929.242) (320.608) 374.827 2.518.721 140.116 (1.367.467) Prior Period – 31 December 2008 Total Assets 851.033 1.316.360 648.633 2.120.402 2.550.874 133.974 533.733 8.155.009 Total Liabilities 1.023.269 2.905.489 992.863 1.507.048 90.764 1.875 1.633.701 8.155.009 Net Liquidity Gap (172.236) (1.589.129) (344.230) 613.354 2.460.110 132.099 (1.099.968) - (*) Certain assets in the balance sheet that are necessary for the banking operations but cannot be readily convertible into cash in the near future such as tangible assets, investments in associates and subsidiaries, stationary supplies, prepaid expenses and non-performing loans are included in this column. (**) Loans include Finance Lease Receivables. (***) Equity is presented in the “Undistributed” column under “Other Liabilities”. Bank Asya Annual Report 2009 197 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Analysis of financial liabilities based on the remaining contractual maturities: The table below is drawn up based on the undiscounted contractual maturities of the Group’s liabilities. Profit share expenses to be paid on such liabilities are included in this table. “Adjustments” column indicates items that may lead to potential cash flows in the following period. These items are included in maturity analysis, but not included in the balance sheet value of such financial liabilities. Demand Up to 1Month 1-3 Months 3-12 Months 1-5 Years Over 5 Years Adjustments Total December 31, 2009 Funds Collected 1.591.963 3.585.760 1.539.921 2.367.578 12 - - 9.085.234 Funds Borrowed - 15.666 30.634 84.806 68.538 2.453 (10.636) 191.461 Total 1.591.963 3.601.426 1.570.555 2.452.384 68.550 2.453 (10.636) 9.276.695 December 31, 2008 Funds Collected 1.003.354 2.638.557 912.590 1.230.010 17.850 - - 5.802.361 Funds Borrowed - 30.940 80.657 285.514 64.188 1.983 (5.730) 457.552 Total 1.003.354 2.669.497 993.247 1.515.524 82.038 1.983 (5.730) 6.259.913 Analysis of contractual expiry by maturity of the Group’s derivative financial instruments: Up to 1Month 1-3 Months 3-12 Months 1-5 Years Over 5 Years December 31, 2009 Derivative Financial Instruments for Hedging Purposes Fair Value Hedge - - - - - Held for Trading Transactions Forward Sales Contracts - - - - - Swap Sales Contracts 448.699 - - - - Total 448.699 - - - - Up to 1 Month 1-3 Months 3-12 Months 1-5 Years Over 5 Years December 31, 2008 Derivative Financial Instruments for Hedging Purposes Fair Value Hedge - - - - - Held for Trading Transactions Forward Sales Contracts - 6.049 - - - Swap Sales Contracts - 156.080 234.407 - - Total - 162.129 234.407 - - VIII. Presentation of Financial Assets and Liabilities at Fair Value As the loan portfolio has fixed profit sharing rates, estimated fair value is calculated by using the discounted cash flows. Total 448.699 448.699 Total 6.049 390.487 396.536 198 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) The table below summarizes the book value and fair value of the financial assets and liabilities. Book value is the sum of the acquisition value and accumulated profit share accruals. Financial Assets Money Market Placements Banks and Other Financial Institutions (*) Financial Assets Available For Sale (**) Held to Maturity Investments Loans (***) (*****) Financial Liabilities Funds Collected from Banks (****) Other current and profit sharing accounts(****) Funds Provided from Other Financial Institutions Issued Securities Finance Lease Payables Sundry Creditors Book Value Current Period Prior Period 10.764.479 7.457.687 - - 2.386.257 1.204.476 80.335 131 76.460 - 8.221.427 6.253.080 9.480.910 6.414.825 1.990 3.147 Fair Value Current Period Prior Period 11.421.402 7.771.913 - 2.386.257 1.204.476 80.335 131 80.111 8.874.699 6.567.306 9.480.248 6.413.131 1.990 3.147 9.083.244 5.799.214 9.083.244 5.799.214 191.461 - - 204.215 457.552 - 6 154.906 190.799 - - 204.215 455.858 6 154.906 (*) As receivables from banks and other financial institutions are in short-term nature, their fair value approximates to their book value. (**) Amounting to TRY 224 Thousand of share certificates within financial asset available for sale is reflected to financial statements as cost by the reason of not traded an active market. (***) In order to calculate the fair value of loans, current profit sharing rates are used as of the balance sheet date. Loan balance also includes finance lease receivables. Fair value of loans is calculated under the assumption that all installments are distributed equally. (****) Book value of the funds collected approximates to their fair value as it is revalued with the year end unit value. (*****) Net balance of follow up loans is not included. Bank Asya Annual Report 2009 199 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) The following table shows an analysis of financial instruments recorded at fair value, between those whose fair value is recorded on quoted market prices, those involving valuation techniques where all model inputs are observable in the market and, those where the valuation techniques involves the use of non observable inputs. December 31, 2009 First Level TRY Second Level TRY Financial Assets Financial Assets at Fair Value Through Profit and Loss 18.791 3.889 Financial Assets Available For Sale - 80.111 Total 18.791 84.000 Financial Liabilities Financial Liabilities at Fair Value Through Profit and Loss - 155 Other Financial Liabilities - - Total - 155 Third Level TRY (*) 224 224 - (*) Equity shares classified as available for sale assets amounting to TRY 224 Thousand which are not traded in an active market have been accounted at cost and presented as 3rd level in this table. December 31, 2008 First Level TRY Second Level TRY Financial Assets Financial Assets at Fair Value through Profit and Loss 13.869 30.035 Financial Assets Available for Sale - - Total 13.869 30.035 Financial Liabilities Financial Liabilities at Fair Value through Profit and Loss - - Other Financial Liabilities - - Total - - Third Level TRY 131 131 - Beginning and ending term reconciliation of 3rd level valuated financial assets and liabilities follows at below: Opening Balance Total Loss/Income Profit/Loss Reflected Profit and Loss Accounted Under Equity Purchases Issued Accrued Transfers from 3rd Level to Other Level Ending Balance Financial Assets at Fair Value Financial Assets Through Profit and Loss Available for Sale Held for Trading Derivative Financial Instruments Share Certificates Total - - 131 131 - - - - - - - - - - - 93 93 - - - - - - - - - - - 224 224 IX. Fiduciary Operations and Transactions Made on Behalf of Others The Group does not deal with fiduciary operations or transactions made on behalf of others. 200 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) SECTION FIVE EXPLANATIONS AND DISCLOSURES ON THE CONSOLIDATED FINANCIAL STATEMENTS I. Explanations and Disclosures Related to the Consolidated Assets 1.Information on Cash and Balances with the Central Bank of Turkish Republic 1.1. Information on Cash: Cash/Foreign Currency The Central Bank of Turkish Republic Other Total Current Period TRY FC 64.156 67.010 914.489 1.298.602 752 1 979.397 1.365.613 Prior Period TRY FC 38.947 27.395 647.130 415.467 622 10 686.699 442.872 Current Period TRY FC 914.489 1.097.509 - - - - - 201.093 914.489 1.298.602 Prior Period TRY FC 647.130 253.653 - - - 161.814 647.130 415.467 1.2. Information on the Central Bank of Turkish Republic Accounts: Unrestricted Demand Deposit Unrestricted Time Deposit Restricted Time Deposit Other (*) Total (*) Represents the reserve deposit held in the Central Bank of Turkish Republic in relation to foreign currency liabilities. 2.Information on Financial Assets at Fair Value Through Profit and Loss 2.1. Information on Financial Assets at Fair Value Through Profit and Loss Blocked/Given as Collateral or Subject to Repurchase Agreements: None. 2.2.Positive Differences Related to Derivative Financial Assets Held-for-Trading: Forward Transactions Swap Transactions Futures Transactions Options Other Total Current Period TRY FC - 861 - 3.028 - - - - - - - 3.889 Prior Period TRY FC - 793 - 29.242 - - - - 30.035 Bank Asya Annual Report 2009 201 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 3. Information on Banks 3.1. Information on Banks: Banks Domestic Foreign Branches and Head Office Abroad Total Current Period (*) TRY FC 33.777 139.389 33.777 41.874 - 97.515 - - 33.777 139.389 Prior Period (*) TRY FC 33.471 108.408 33.471 56.485 - 51.923 - 33.471 108.408 (*) It also contains TRY 14.171 Thousand blocked currency (December 31, 2008: TRY 12.620 Thousand) which is deposited by Işık Sigorta included in its accounts as elementary branches insurance warranty in favor of Turkish Treasury. 3.2. Information on Foreign Bank Accounts: European Union Countries USA, Canada OECD Countries (*) Off-Shore Banking Regions Other Total Unrestricted Amount Restricted Amount Current Period Prior Period Current Period Prior Period 43.325 24.678 - 50.458 21.373 - 2.459 5.312 - - - - 1.273 560 - 97.515 51.923 - - (*) OECD countries other than European Union countries, USA and Canada. 4.Information on Financial Assets Available-for-Sale 4.1. Information on Available-for-Sale Financial Assets Blocked/Given as Collateral or Subject to Repurchase Agreements: None. 4.2. Information on Financial Assets Available-for-Sale: Available for sale financial assets consist of 4,35% and TRY 131 Thousand of Tarsim Tarım Sigortaları Havuz İşletmesi A.Ş.’s shares, TRY 80.111 Thousand revenue share certificate and TRY 93 Thousand other share certificates as of December 31, 2009. Debt Securities Quoted on a Stock Exchange Not Quoted Share Certificates Quoted on a Stock Exchange Not Quoted Impairment Provision (-) Total Current Period 80.111 - 80.111 224 - 224 - 80.335 Prior Period 131 131 131 202 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5. Information on Loans 5.1. Information on All Types of Loans or Advances Given to Shareholders and Employees of the Parent Bank: Direct Loans Granted to Shareholders Corporate Shareholders Real Person Shareholders Indirect Loans Granted to Shareholders Loans Granted to Employees Total Current Period Cash Non-Cash 156.604 8.471 54.020 8.193 102.584 278 64.310 60.020 6.500 - 227.414 68.491 Prior Period Cash Non-Cash 30.901 3.847 17.944 3.529 12.957 318 57.919 55.142 5.642 94.462 58.989 5.2.Information on First and Second Group Loans and Other Receivables Including Restructured or Rescheduled Loans: Standard Loans and Loans and Other Receivables Other Receivables Under Close Monitoring Loans and Other Restructured or Loans and Other Restructured or Receivables Rescheduled Receivables Rescheduled Cash Loans Discount Notes - - - Export Loans 660.502 80.418 2.142 393.637 Import Loans 48.449 - - Business Loans 5.060.081 - 126.122 9.648 Consumer Loans 454.788 711 12.596 8.822 Credit Cards 580.095 - 24.561 46.224 Investments on Profit/Loss Partnership - - - Precious Metal Loans - - - Loans Given to Financial Sector 163 - - International Loans 257.795 - 14.682 69.784 Other 128.796 5.898 68.013 8.829 Other Receivables (*) - - - Total 7.190.669 87.027 248.116 536.944 (*) In addition to the balances mentioned in the table above, the Parent Bank has TRY 2.410 Thousand of leasing receivables followed under the watch list (December 31, 2008: TRY 24.506 Thousand). 5.3.Loan Distribution Based by Maturity Structure: Short-Term Loans and Other Receivables Loans Other Receivables Medium-Term and Long-Term Loans Loans Other Receivables Standard Loans and Other Receivables Loans and Other Restructured or Receivables Rescheduled 3.243.829 6.616 3.243.829 6.616 - - 3.946.840 80.411 3.946.840 80.411 - - Loans and Other Receivables Under Close Monitoring Loans and Other Restructured or Receivables Rescheduled 133.152 55.634 133.152 55.634 - 114.964 481.310 114.964 481.310 - - Bank Asya Annual Report 2009 203 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.4.Information on Consumer Loans, Retail Credit Cards, Loans Given to Personnel and Personnel Credit Cards: Short Term Medium-term and Long-Term Consumer Loans-TRY 15.426 442.004 Housing Loans 8.809 405.565 Vehicle Loans 3.790 33.536 Consumer Loans 979 2.903 Other 1.848 - Consumer Loans-FC Indexed 1.170 13.985 Housing Loans 1.170 12.517 Vehicle Loans - 1.367 Consumer Loans - 101 Other - - Consumer Loans-FC - - Housing Loans - - Vehicle Loans - - Consumer Loans - - Other - - Retail Credit Cards-TRY 607.968 8.667 With Installments 111.595 8.667 Without Installment 496.373 - Retail Credit Cards-FC - - With Installments - - Without Installment - - Personnel Loans-TRY 326 3.869 Housing Loans 21 1.632 Vehicle Loans 194 1.869 Consumer Loans 111 368 Other - - Personnel Loans-FC Indexed 5 132 Housing Loans 5 123 Vehicle Loans - - Consumer Loans - 9 Other - - Personnel Loans-FC - - Housing Loans - - Vehicle Loans - - Consumer Loans - - Other - - Personnel Credit Cards-TRY 2.120 48 With Installments 1.058 48 Without Installment 1.062 - Personnel Credit Cards-FC - - With Installments - - Without Installment - - Overdraft Account-TRY (Real Person) - - Overdraft Account-FC (Real Person) - - Total 627.015 468.705 Total 457.430 414.374 37.326 3.882 1.848 15.155 13.687 1.367 101 616.635 120.262 496.373 4.195 1.653 2.063 479 137 128 9 2.168 1.106 1.062 1.095.720 204 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.5.Information on Installment Basis Commercial Loans and Corporate Credit Cards: Installment Commercial Loans-TRY Business Loans Vehicle Loans General Purpose Loans Other Installment Commercial LoansFC Indexed Business Loans Vehicle Loans General Purpose Loans Other Installment Commercial Loans-FC Business Loans Vehicle Loans General Purpose Loans Other Corporate Credit Cards-TRY With Installments Without Installment Corporate Credit Cards-FC With Installments Without Installment Overdraft Account-TRY (Legal Entity) Overdraft Account-FC (Legal Entity) Total Short Term 54.949 18 346 - 54.585 Medium and Long Term 6.221 2.065 4.156 - - Total 61.170 2.083 4.502 54.585 - - - - - - - - - - 32.007 2.591 29.416 - - - - - 86.956 - - - - - - - - - - 70 70 - - - - - - 6.291 32.077 2.661 29.416 93.247 5.6. Loan Distribution according to Borrowers: Public Private Total Current Period 12.051 8.050.705 8.062.756 Prior Period 7.521 6.011.883 6.019.404 Current Period 7.720.495 342.261 8.062.756 Prior Period 5.959.989 59.415 6.019.404 Current Period 52.357 - 52.357 Prior Period 63.823 63.823 5.7. Domestic and Foreign Loans: Domestic Loans Foreign Loans Total 5.8. Loans Granted to Subsidiaries and Associates: Loans Granted to Subsidiaries and Associates Directly Loans Granted to Subsidiaries and Associates Indirectly Total Bank Asya Annual Report 2009 205 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.9. Specific Provisions Provided Against Loans: Loans and Receivables with Limited Collectibility Loans and Receivables with Doubtful Collectability Uncollectible Loans and Receivables Total Current Period 21.500 70.985 229.806 322.291 Prior Period 25.294 51.994 119.298 196.586 5.10. Information on Non-Performing Loans (Net): 5.10.1. Information on Loans and Other Receivables Included in the Non-Performing Loans which Restructured or Rescheduled: Group III Group IV Loans and Receivables with Loans and Receivables with Limited Collectibility Doubtful Collectability Current Period (Gross Amount Before Specific Provision) 2.083 6.931 Restructured Loans and Other Receivables 1.509 4.105 Rescheduled Loans and Other Receivables 574 2.826 Prior Period (Gross Amount Before Specific Provision) 1.008 5.358 Restructured Loans and Other Receivables - - Rescheduled Loans and Other Receivables 1.008 5.358 Group V Uncollectible Loans and Receivables 9.192 8.386 806 15.924 15.924 5.10.2. Information on Movement of Non-Performing Loans: Ending Balance of Prior Period Additions in the Current Period (+) Inflows from Other Overdue Loans Account (+) Outflows to Other Overdue Loans Account (-) Collections in the Current Period (-) Write offs (-) Corporate and Commercial Loans Retail Loans Credit Cards Other Ending Balance of the Current Period Specific Provisions (-) Net Balance at the Balance Sheet Group III Loans and Receivables with Limited Collectibility 52.038 330.612 - (206.399) (133.597) - - - - - 42.654 (21.500) 21.154 Group IV Loans and Receivables with Doubtful Collectability 113.005 122.395 206.399 (152.662) (161.686) (1.827) (76) (79) (1.012) (660) 125.624 (70.985) 54.639 Group V Uncollectible Loans and Receivables 159.705 91.583 152.662 (69.510) (46.508) (31.232) (2.209) (12.667) (400) 287.932 (229.806) 58.126 206 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.10.3.Information on Foreign Currency Non-Performing Loans and Other Receivables: Group III Group IV Loans and Receivables with Loans and Receivables with Limited Collectibility Doubtful Collectability Current Period Ending Balance - 260 Specific Provisions (-) - (130) Net Balance at the Balance Sheet - 130 Prior Period Ending Balance 66 - Specific Provisions (-) (13) - Net Balance at the Balance Sheet 53 - Group V Uncollectible Loans and Receivables 1.590 (1.078) 512 1.887 (621) 1.266 5.10.4.Gross and Net Amounts of Non-Performing Loans with Respect to User Groups: Group III Group IV Loans and Receivables with Loans and Receivables with Limited Collectibility Doubtful Collectability Current Period (Net) Loans to Real Person and Legal Entities (Gross) 42.654 125.624 Specific Provisions (-) (21.500) (70.985) Loans to Real Person and Legal Entities (Net) 21.154 54.639 Banks (Gross) - - Specific Provisions (-) - - Banks (Net) - - Other Loans and Receivables (Gross) - - Specific Provisions (-) - - Other Loans and Receivables (Net) - - Prior Period (Net) Loans to Real Person and Legal Entities (Gross) 52.038 113.005 Specific Provisions (-) (25.294) (51.994) Loans to Real Person and Legal Entities (Net) 26.744 61.011 Banks (Gross) - - Specific Provisions (-) - - Banks (Net) - - Other Loans and Receivables (Gross) - - Specific Provisions (-) - - Other Loans and Receivables (Net) - - Group V Uncollectible Loans and Receivables 287.932 (229.806) 58.126 159.705 (119.298) 40.407 - 5.10.5.Non-Performing Loans and Main Guidelines of Liquidation Process for Loans and Receivables: If the Parent Bank has collateral components stated in Article 9 of the Communiqué on “Determining the Nature of Loan and Other Receivable Provisions Allocated by Banks and Procedures and Principles of Allocating Provisions”, such components are immediately liquidated by applying managerial or legal procedures. In the absence of collateral component, even if there is an indication of insolvency, the Parent Bank reviews the financial intelligence of the debtor systematically to determine subsequently acquired property holdings and applies the legal procedures. Prior and subsequent to the legal procedures, as a result of reviews performed regarding the financial information provided, the Parent Bank intends to liquidate its loans and other receivables from the companies that have potential development in the production and consequent contribution to the economy by means of the rescheduled agreements. Bank Asya Annual Report 2009 207 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 5.10.6.Explanations on Write–off Policy: Provision allocations arising from during or after the transfer of any loan receivables to “Non-performing loans” are performed by the Parent Bank’s Loan Monitoring Department within the framework of the Banking Regulations and Supervisory Agency. Additionally, loans are written-off against the assets, at least once a year, by the Credit Monitoring Agency to the extent that at least one of the following below is met and provision is fully made for all non-performing loans in accordance with the decision made by the Board of Directors: - Receivables are classified as unrecoverable; - If receivables are classified as unrecoverable, specific documents should be obtained from the Collections Agency; or - The Law Department remarks that there are still uncollectible receivables although the execution proceedings are in progress. 5.10.7.Other Explanations and Disclosures: The information related to loan quality is stated as below: Current Period – December 31, 2009 Neither past due nor Impaired Past due, not Impaired Past due, Impaired (**) Total Loans (*) Corporate and Commercial Lending 4.534.779 437.711 143.198 5.115.688 Small Business Lending 1.707.323 255.146 203.869 2.166.338 Consumer Lending 455.499 21.418 10.129 487.046 Credit Cards 580.095 70.785 99.014 749.894 Total 7.277.696 785.060 456.210 8.518.966 (*) The Parent Bank classifies small medium entities (“SME”) considering the criteria set out in the Council of Ministers’ decision dated November 18, 2005 and numbered 25997 published in the Official Gazette and the Communiqué on “Descriptions, Nature and Classification of Small Medium Entities”. (**) The balance also comprises of impaired finance lease receivables and loans. Prior Period – December 31, 2008 Neither past due norImpaired Past due, not Impaired Past due, Impaired (**) Total Loans (*) Corporate and Commercial Lending 2.992.641 379.956 128.952 3.501.549 Small Business Lending 1.427.311 254.269 137.985 1.819.565 Consumer Lending 376.405 22.082 10.539 409.026 Credit Cards 520.093 46.647 47.272 614.012 Total 5.316.450 702.954 324.748 6.344.152 (*) The Parent Bank classifies small medium entities (“SME”) considering the criteria set out in the Council of Ministers’ decision dated November 18, 2005 and numbered 25997 published in the Official Gazette and the Communiqué on “Descriptions, Nature and Classification of Small Medium Entities”. (**) The balance also comprises of impaired finance lease receivables and loans. The details of loan guarantees and leasing portfolio of the Parent Bank are stated as below: Current Period (*) (**) (***) Group I Loans Group II Loans Group III Loans Group IV Loans Group V Loans Total Residential, Commercial or Industrial Property 2.160.280 305.954 9.223 32.371 69.270 2.577.098 Financial Assets 301.626 90.609 - - - 392.235 Other 649.005 202.145 534 3.494 48.104 903.282 Total 3.110.911 598.708 9.757 35.865 117.374 3.872.615 (*) Individual loan agreements, general loan agreements, foreign currency cheques, suretyships, customer cheques and notes and other guarantees are not included in the table above. (**) The table above is prepared by taking into consideration the lowest value presented as a result of the comparison made between the outstanding loan balance as of the balance sheet date and the lower of the net amount reached at the fair value of collaterals stated in the corresponding expertise reports or the net collateral amount less any pledges or incumbrances on such amounts, if any. (***) Guarantee details of the credit portfolio are determined based on the “Measurement and Assessment of Capital Adequacy of Banks” published on November 1, 2006 in the Official Gazette numbered 26333. 208 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Prior Period (*) (**) (***) Group I Loans Group II Loans Group III Loans Group IV Loans Group V Loans Total Residential, Commercial or Industrial Property 1.799.114 319.446 15.561 29.158 50.276 2.213.555 Financial Assets 172.753 58.461 - 121 - 231.335 Other 390.233 69.386 1.525 2.243 43.774 507.161 Total 2.362.100 447.293 17.086 31.522 94.050 2.952.051 (*) Individual loan agreements, general loan agreements, foreign currency cheques, suretyships, customer cheques and notes and other guarantees are not included in the table above. (**) The table above is prepared by taking into consideration the lowest value presented as a result of the comparison made between the outstanding loan balance as of the balance sheet date and the lower of the net amount reached at the fair value of collaterals stated in the corresponding expertise reports or the net collateral amount less any pledges or incumbrances on such amounts, if any. (***) Guarantee details of the credit portfolio are determined based on the “Measurement and Assessment of Capital Adequacy of Banks” published on November 1, 2006 in the Official Gazette numbered 26333. Aging analysis of past due but not impaired loans per classes of financial statements is stated as below: Current Period – December 31, 2009 Less than 30 Days (*) 31-60 Days 61-90 Days More than 91 Days Loans Corporate Lending 386.028 31.935 19.748 - SME Lending 200.919 33.840 20.387 - Consumer Lending 6.031 11.653 3.734 - Credit Cards 51.194 14.666 4.925 - Leasing Receivables 1.092 13 1.305 - Total 645.264 92.107 50.099 - Total 437.711 255.146 21.418 70.785 2.410 787.470 (*)The Parent Bank follows up the entire loan balance having less than 30 days overdue in the watch list based on precautionary principal and TRY 558.567 Thousand of such amount does not have payment overdue as of December 31, 2009 (Finance Lease TRY 1.082 Thousand). Prior Period – December 31, 2008 Less than 30 Days (*) 31-60 Days 61-90 Days More than 91 Days Loans Corporate Lending 299.597 48.323 32.036 - SME Lending 109.993 101.227 43.049 - Consumer Lending 347 15.638 6.097 - Credit Cards 29.782 16.865 - - Leasing Receivables 5.006 6.616 12.884 - Total 444.725 188.669 94.066 - Total 379.956 254.269 22.082 46.647 24.506 727.460 (*)The Parent Bank follows up the entire loan balance having less than 30 days overdue in the watch list based on precautionary principal and TRY 232.698 Thousand of such amount does not have payment overdue as of December 31, 2008 (Finance Lease TRY 3.767 Thousand). 6.Information on Held-to-Maturity Investments (Net) 6.1. Information on Available-for-Sale Financial Assets Blocked/Given as Collateral or Subject to Repurchase Agreements: None. Bank Asya Annual Report 2009 209 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 6.2. Information on Government Bonds Classified as Held to Maturity Investments: The Group has TRY 76.460 Thousand of revenue sharing certificate as of December 31, 2009. Share Certificates Bonds, Treasury Bill and Similar Securities Other Total Current Period TRY FC - - - - 76.460 - 76.460 - Prior Period TRY FC - - - - - Current Period TRY FC - - - - 76.460 - - - 76.460 - Prior Period TRY FC - - - - - - Current Period - - 75.000 - - 1.460 76.460 Prior Period - 6.3. Information on Investments Held-to-Maturity: Debt Securities Quoted on a Stock Exchange Not Quoted Impairment Provision (-) Total 6.4. Movement of Held-to-Maturity Investments: Beginning Balance Foreign Currency Differences on Monetary Assets Purchases During Year Disposals Through Sales and Redemptions Impairment Provision (-) Valuation Effects Closing Balance 7. Information on Associates 7.1. Information on Associates: (1) (2) (3) Company Name Yeni Mağazacılık A.Ş. (*) Landmark Holding A.Ş. (*) Kredi Garanti Fonu A.Ş. (**) Address (City/Country) İstanbul/Turkey İstanbul/Turkey Ankara/Turkey Bank’s share percentage, if different-voting percentage (%) 21,84% 21,84% 1,67 % Bank’s risk group share percentage (%) 21,84% 21,84% 1,67% (*) The Parent Bank participated in Yeni Mağazacılık A.Ş. and in Landmark Holding A.Ş. with the Financing Method for Participation Banks explained in the regulation No:19 regarding “Banks’ Lending Transactions” published and became effective in the Official Gazette numbered 26333, dated November 1, 2006 by means of joint investment method. These are recorded as associates in accordance with the Uniform Chart of Accounts published in the Official Gazette numbered 26415 and dated January 26, 2007. (**) In the Board of Directors meeting on June 25, 2009, the Parent Bank has decided to participate in Kredi Garanti Fonu A.Ş. with the amount of up to TRY 4.000 Thousand. Upon this decision related to the capital increase of Kredi Garanti Fonu A.Ş. on September 11, 2009, the Parent Bank paid TRY 2.000 Thousand of its TRY 4.000 Thousand capital commitment on October 15, 2009. 210 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 7.2. Information on Associates: (*) Total Assets Equity (1) 96.607 (26.667) (2) 45.017 44.866 Total Fixed Assets 29.432 24 Profit Income from Share Marketable Income Securities Portfolio - - 25 - Current Period Profit/Loss (89.975) (931) Prior Period Profit/Loss (55.237) (389) Fair Value (**) 175.227 (***) 56.966 (*) Financial information is provided from the associates’ unaudited financial statements as of December 31, 2009. (**) It is expertise value of the Parent Bank’s associate, Yeni Mağazacılık A.Ş., as of February 4, 2010. (***) It is expertise value of the Parent Bank’s associate, Landmark Holding A.Ş., as of February 9, 2010. 7.3. Movement of Associates: Balance at the Beginning of the Period Movements in Period Purchases Free Shares Obtained Dividends from Current Year Income Sales Revaluation Increase Provision for Diminution in Value Balance at the End of the Period Capital Commitments (*) Share Percentage at the End of the Period (%) Current Period 23.975 21.088 21.088 - - - - - 45.063 2.000 %1,67-%21,84 Prior Period 23.975 23.975 23.975 %25 (*) It is consists of capital commitment amounts of TRY 2.000 Thousand form the Parent Bank’s subsidiary, Kredi Garanti Fonu A.Ş.. 7.4. Sectoral Information on the Financial Associates and the Related Carrying Amounts: Banks Insurance Companies Factoring Companies Leasing Companies Finance Companies Other Subsidiaries Current Period - - - - - 45.063 Prior Period 23.975 8. Information on Subsidiaries (Net) 8.1.Information on Unconsolidated Subsidiaries: (1) (2) (3) Company Name Asyafin Sigorta Aracılık Hizmetleri Ltd. Şti. Nil Yönetim Hizmetleri Tur. San. ve Tic. A.Ş. (*) Asyakart Teknoloji Hizmetleri A.Ş. Bank’s share percentage, Bank’s risk group share Address (City/Country) if different-voting percentage (%) percentage (%) İstanbul/Turkey 95,00% 95,00% Istanbul/Turkey 99,93% 99,93% Istanbul/Turkey 99,50% 99,50% (*) Affiliate of the Parent Bank “Asyafin İnş. San. A.Ş.” renamed as “Nil Yönetim Hizmetleri Tur. San. ve Tic. A.Ş.” on September 30, 2009. Bank Asya Annual Report 2009 211 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 8.2. Information on Unconsolidated Subsidiaries: (1) (2) (3) (*) Total Assets Equity 203 202 65.687 63.445 23 20 Total Fixed Assets - 176 - Profit Income from Share Marketable Income Securities Portfolio 21 - 20 - - - Current Period Profit/Loss 11 118 (13) Prior Period Profit/Loss 9 (145) (13) Fair Value - (*) Financial information is provided from the unaudited financial statements of subsidiaries. 8.3. Information on Consolidated Subsidiaries: Balance at the Beginning of the Period Movements in Period Purchases (*) Free Shares Obtained Dividends from Current Year Income Sales Revaluation Increase Provision for Impairment Addition/(Reversal) Balance at the End of the Period Capital Commitments Share Percentage at the End of the Period (%) Current Period 43.251 39.573 39.573 - - - - - 82.824 5.153 22,94% - 65,42% Prior Period 35.967 7.284 2.290 3.925 1.069 43.251 6.869 65,42% (*) The amount of TRY 37.857 Thousand in the purchases row consists of the impact of change in consolidation scope as a result of inclusion of Tuna Gayrimenkul Yatırım Ortaklığı A.Ş.. 8.4.Sectoral Information on the Consolidated Financial Subsidiaries and the Related Carrying Amounts: Subsidiaries Banks Insurance Companies Factoring Companies Leasing Companies Finance Companies Other Subsidiaries Current Period - 44.967 - - - 37.857 Prior Period 43.251 - 8.5.Subsidiaries Quoted on the Stock Exchange: None. 8.6.Other Information on Consolidated Subsidiaries: Company Title Address (City/Country) (1) Işık Sigorta A.Ş. Küçüksu Cad. Akçakoca Sok. No: 6 34768 Ümraniye/İstanbul (2) Tuna Gayrimenkul Küçüksu Cad. Akçakoca Sok. Yatırım Ortaklığı A.Ş. (*) No: 6 34768 Ümraniye/İstanbul Main Partnership Bank’s Share-If Different Voting Percentage (%) Share of Other Partners (%) Consolidation Method 65,42% 34,58% Fully Consolidated 22,94% 77,06% Fully Consolidated (*) The company has been considered as subsidiary due to the Parent Bank’s control power over the company. 212 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) (1) (2) Total Assets Equity 154.535 60.514 110.437 109.721 Total Fixed Assets 1.099 - Profit Income from Share Marketable Income Securities Portfolio 8.596 13.313 845 - Current Period Profit/Loss 7.086 (549) Prior Period Profit/Loss (3.369) (1.396) Fair Value (*) 190.616 (**) 192.051 (*) It is the expertise value of the Parent Bank’s associate, Işık Sigorta A.Ş. as of February 4, 2010. (**) Based on the appraisal report of the facility dated 26 January 2010, the fair value of buildings and land is TRY 192.051 Thousand including VAT. 9.Information on Entities under Common Control None. 10. Information on Finance Lease Receivables (Net) 10.1. Presentation of Remaining Maturities of Net Finance Leases Method: Less than 1 Year 1 to 4 Years More than 4 Years Total Current Period Gross Net 5.100 4.479 158.531 139.212 17.059 14.980 180.690 158.671 Prior Period Gross Net 19.867 17.532 238.083 210.106 6.841 6.038 264.791 233.676 Current Period 180.690 (22.019) - 158.671 Prior Period 264.791 (31.115) 233.676 10.2. Information on Net Investments in Finance Leases: Gross Receivable from Finance Leases Unearned Finance Lease Income (-) Cancelled Amounts (-) Net Receivable from Finance Leases 11.Derivative Financial Assets for Hedging Purposes None. Bank Asya Annual Report 2009 213 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 12. Information on Tangible Assets Leased Assets Held Other Buildings Tangible Assets Vehicles for Resale Tangible Assets (*) Cost Opening Balance - January 1, 2009 11.553 39.966 1.834 110.843 131.672 Additions - - 322 75.412 43.229 Disposals - (1.009) (396) (6.901) (7.338) Transfers (**) - - - 10.400 - Impairment (Losses)/Reversal 559 - - (2.890) - Ending Balance - December 31, 2009 12.112 38.957 1.760 186.864 167.563 Accumulated Depreciation (-) Opening Balance - January 1, 2009 1.795 14.583 674 1.533 49.790 Depreciation Expense 308 7.942 326 2.965 24.652 Accumulated Depreciation of Tangible Assets Held for Resale - (872) (155) (372) (6.931) Transfers - - - 64 - Impairment (Losses)/Reversal 24 - - (63) - Ending Balance - December 31, 2009 2.127 21.653 845 4.127 67.511 Net Book Value - December 31, 2008 9.758 25.383 1.160 109.310 81.882 Net Book Value - December 31, 2009 9.985 17.304 915 182.737 100.052 Total 295.868 118.963 (15.644) 10.400 (2.331) 407.256 68.375 36.193 (8.330) 64 (39) 96.263 227.493 310.993 (*) Other tangible fixed assets comprise leasehold improvements, safety box, office equipments, furniture and other fixed assets. (**)TRY 23.037 Thousand of the balance is transferred from assets held for sale to tangible fixed assets, TRY 12.701 Thousand of real estate’s to be disposed have acquired the classification as fixed assets is transferred to assets held for sale. TRY 23.037 Thousand of assets held for sale includes impairment losses of TRY 1.006 Thousand. 214 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Leased Assets Held Other Buildings Tangible Assets Vehicles for Resale Tangible Assets (*) Cost Opening Balance - January 1, 2009 10.187 36.439 1.270 25.924 81.934 Additions - 3.527 691 87.397 52.319 Disposals - - (127) (731) (2.581) Transfers (**) 1.855 - - (818) - Impairment Losses (489) - - (929) - Ending Balance - December 31, 2009 11.553 39.966 1.834 110.843 131.672 Accumulated Depreciation (-) Opening Balance - January 1, 2009 1.559 6.649 455 363 34.789 Depreciation Expense 310 7.934 277 1.541 17.218 Accumulated Depreciation of Tangible Assets Held for Resale - - (58) (35) (2.217) Transfers 5 - - (5) - Impairment Losses (79) - - (331) - Ending Balance - December 31, 2009 1.795 14.583 674 1.533 49.790 Net Book Value - December 31, 2008 8.628 29.790 815 25.561 47.145 Net Book Value - December 31, 2009 9.758 25.383 1.160 109.310 81.882 Total 155.754 143.934 (3.439) 1.037 (1.418) 295.868 43.815 27.280 (2.310) (410) 68.375 111.939 227.493 (*) Other tangible fixed assets comprise leasehold improvements, safety box, office equipments, furniture and other fixed assets. (**)TRY 1.037 Thousand of the balance is transferred from assets held for sale to tangible fixed assets, TRY 1.855 Thousand of real estate’s to be disposed have acquired the classification as fixed assets is transferred to assets held for sale. TRY 1.855 Thousand of assets held for sale includes impairment losses of TRY 3.385 Thousand. 13. Information on Intangible Assets 13.1.Opening and Ending Book Values and Accumulated Depreciation Balances: Book Value Accumulated Depreciation Net Book Value Current Period 17.490 (7.237) 10.253 Prior Period 11.177 (4.841) 6.336 Bank Asya Annual Report 2009 215 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 13. Information on Intangible Assets 13.2. Intangible Assets Movement Table: Rights Other Intangible Assets Cost Opening Balance- January 1, 2009 5 11.172 Effect of Change at Consolidation Scope (*) 138 190 Additions - 6.102 Disposals - (117) Ending Balance- December 31, 2009 143 17.347 Accumulated Amortization (-) Opening Balance- January 1, 2009 1 4.840 Effect of Change at Consolidation Scope (*) 115 181 Amortization Expense 16 2.201 Disposals - (117) Ending Balance- December 31, 2009 132 7.105 Net Book Value- December 31, 2008 4 6.332 Net Book Value- December 31, 2009 11 10.242 Total 11.177 328 6.102 (117) 17.490 4.841 296 2.217 (117) 7.237 6.336 10.253 (*) Express the impact of change in consolidation scope as a result of inclusion of Tuna Gayrimenkul Yatırım Ortaklığı A.Ş.. Cost Opening Balance- January 1, 2008 Additions Disposals Ending Balance- December 31, 2008 Other Intangible Assets 7.870 3.307 11.177 Accumulated Amortization (-) Opening Balance- January 1, 2008 Amortization Expense Disposals Ending Balance- December 31, 2008 Net Book Value- December 31, 2007 Net Book Value- December 31, 2008 3.270 1.571 4.841 4.600 6.336 13. Information on Intangible Assets 13.3. Information on Goodwill: Consolidation Goodwill From Tangible Fixed Assets From Intangible Fixed Assets From Non-Monetary Assets Goodwill From Mergers and Turnovers From Tangible Fixed Assets From Intangible Fixed Assets From Non-Monetary Assets Current Period 4.111 - - 4.111 - - - - Prior Period 4.111 4.111 - 216 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 14.Explanations on Investment Properties Leased Other Buildings Lands Tangible Assets Tangible Assets Cost Opening Balance - January 1, 2009 1.193 - - - Effect of Change at Consolidation Scope(*) 32.365 4.898 2.255 11.613 Additions 276 50 - 482 Disposals (55) - (116) (498) Ending Balance - December 31, 2009 33.779 4.948 2.139 11.597 Accumulated Depreciation (-) Opening Balance - January 1, 2009 230 - - - Effect of Change at Consolidation Scope (*) 1.879 - 2.191 8.915 Depreciation Expense 678 - 6 1.040 Accumulated Depreciation of Tangible Assets Held for Resale (1) - (58) (390) Ending Balance - December 31, 2009 2.786 - 2.139 9.565 Net Book Value - December 31, 2008 963 - - - Net Book Value - December 31, 2009 30.993 4.948 - 2.032 Total 1.193 51.131 808 (669) 52.463 230 12.985 1.724 (449) 14.490 963 37.973 (*) Express the impact of change in consolidation scope as a result of inclusion of Tuna Gayrimenkul Yatırım Ortaklığı A.Ş.. A subsidiary of the Parent Bank Tuna Gayrimenkul Yatırım Ortaklığı A.Ş. has rented the facility in Kızılcahaman with all its tangible assets to Nil A.Ş.. Buildings Cost Opening Balance - January 1, 2008 1.129 Additions - Disposals - Revaluation Increases 85 Impairment (Losses)/Reversal (21) Ending Balance - December 31, 2008 1.193 Accumulated Depreciation(-) Opening Balance - January 1, 2008 197 Depreciation Expense 32 Accumulated Depreciation of Tangible Assets Held for Resale - Impairment (Losses)/Reversal 1 Ending Balance - December 31, 2008 230 Net Book Value - December 31, 2007 932 Net Book Value - December 31, 2008 963 Total 1.129 85 (21) 1.193 197 32 1 230 932 963 Bank Asya Annual Report 2009 217 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 15. Explanations on Deferred Tax Asset As of December 31, 2009, deferred tax asset is calculated according to the temporary differences, except for general loan loss provision and provision for possible risks, is TRY 5.946 Thousand and is accounted in the deferred tax asset account (December 31, 2008: TRY 1.182 Thousand deferred tax asset; TRY 1.250 Thousand deferred tax liability from the Parent Bank and TRY 2.432 Thousand deferred tax asset from the Subsidiary accounted in gross terms at the financial statements). Current Period Deferred Tax Base Deferred Tax Asset/(Liability) Retirement Pay Provision 8.211 1.642 Short-Term Employee Benefits 9.096 1.819 Credit Card Promotion Provision 4.909 982 Fixed Asset Depreciation Difference (35.741) (7.148) Impairment Loss on Fixed Assets to be Disposed 12.508 2.502 Impairment Loss on Investment Properties 605 121 Finance Lease Adjustment 2.124 425 Fair Value Differences of Derivative Financial Instruments (3.734) (747) Impairment Loss on Buildings 3.260 652 Impairment Loss on Assets Held for Sale 11 2 Insurance Technical Reserves 584 117 Income Accruals 388 78 Deferred Commission Income 26.379 5.276 Marketable Security Valuation Differences (4.368) (873) Carry Forward Tax Losses 4.156 831 Other 1.344 267 Deferred Tax Asset (Net) 29.732 5.946 Retirement Pay Provision Short-Term Employee Benefits Credit Card Promotion Provision Fixed Asset Depreciation Difference Impairment Loss on Fixed Assets to be Disposed Impairment Loss on Investment Properties Finance Lease Adjustment Fair Value Differences of Derivative Financial Instruments Impairment Loss on Buildings Impairment Loss on Assets Held for Sale Insurance Technical Reserves Income Accrual Marketable Security Valuation Differences Other Deferred Tax Asset (Net) Current Period Deferred Tax Base Deferred Tax Asset/(Liability) 7.360 1.472 7.582 1.516 5.673 1.135 (31.564) (6.313) 8.675 1.735 605 121 4.743 949 (30.035) (6.007) 3.795 759 1.006 201 53 11 256 51 10.771 2.154 16.991 3.398 5.911 1.182 Movement of the deferred tax asset as of December 31, 2009 and December 31, 2008 is summarized below: Deferred Tax Asset, January 1 Deferred Tax Accounted for Under Equity Benefit/(Charge) for Current Period Deferred Tax Asset/Liability Current Period 1.182 (730) 5.494 5.946 Prior Period 1.247 (65) 1.182 218 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 16. Explanations on Assets Held for Sale Assets held for sale consist of tangible assets which are obtained from non-performing loans and they are recognized as required in accordance with the prevailing Communiqué of “Principles and Procedures on Bank’s Disposal of Precious Metals and Assets Held for Sale” published on November 1, 2006 in the official Gazette numbered 26333 in the consolidated financial statements. As of the balance sheet date, assets held for sale of the Group amount to TRY 9.196 Thousand (December 31, 2008: TRY 24.100 Thousand). Opening Balance- January 1 Additions Disposals Transfers (Net) (*) Impairment Ending Balance Current Period 24.100 460 (5.017) (10.336) (11) 9.196 Prior Period 1.037 25.106 (1.037) (1.006) 24.100 (*) TRY 23.037 Thousand of the balance is transferred from assets held for sale to tangible fixed assets, TRY 12.701 Thousand of real estates to be disposed have acquired the classification as fixed assets is transferred to assets held for sale. TRY 23.038 Thousand of assets held for sale includes impairment losses of TRY 1.006 Thousand. 17. Information on Other Assets As of December 31, 2009, other assets amount to TRY 205.034 Thousand. Other assets account does not exceed 10% of the total assets (December 31, 2008: TRY 74.029 Thousand). Inventories (*) Clearing Account (**) Insurance Receivables Receivables from Credit Card Payments Other Prepaid Expenses Prepaid Rent Expenses Office Supply Inventory Other Total Current Period 56.129 54.284 28.645 27.798 16.814 4.294 1.441 15.629 205.034 Prior Period 33.536 15.619 13.011 3.690 1.941 6.232 74.029 (*) Inventory balance consists of saleable timeshare ownership interests as of the balance sheet date. (**) At the previous year, debit transitory clearing account amounting to TRY 49.438 Thousand was netted off with the credit transitory clearing account. Bank Asya Annual Report 2009 219 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) II.Explanations and Disclosures Related to the Consolidated Liabilities 1.1. Information on Maturity Structure of Deposits: Accumulated Up to 1 Up to 3 Up to 6 Up to 9 1 YearProfit Sharing Current Period Demand Month Months Months Months Up to 1 Year and Over Accounts I. Real Persons Current Deposits-TRY 378.510 - - - - - - - II. Real Persons Profit Sharing Accounts-TRY - 809.888 1.258.531 318.877 - 155.259 1.484.479 - III. Other Current Accounts-TRY 637.921 - - - - - - - Public Sector 20.212 - - - - - - - Commercial Sector 606.549 - - - - - - - Other Institutions 10.696 - - - - - - - Commercial and Other Institutions 217 - - - - - - - Banks and Finance Houses 247 - - - - - - - Central Bank - - - - - - - - Domestic Banks - - - - - - - - Foreign Banks - - - - - - - - Banks 247 - - - - - - - Other - - - - - - - - IV. Profit Sharing Accounts-TRY - 165.049 290.408 25.345 - 130.357 282.838 - Public Sector - 4 - - - - - - Commercial Sector - 160.041 272.370 16.917 - 129.457 265.500 - Other Institutions - 5.002 17.466 8.428 - 805 16.483 - Commercial and Other Institutions - 2 572 - - 95 855 - Banks - - - - - - - - V. Real Persons Current Deposits-FC 248.744 - - - - - - - VI. Real Persons Profit Sharing Accounts-FC - 267.485 524.460 154.067 - 125.869 405.700 - VII. Other Current Accounts-FC 288.938 - - - - - - - Commercial Residents in Turkey 263.372 - - - - - - - Commercial Residents in Abroad 23.823 - - - - - - - Banks 1.743 - - - - - - - Central Bank - - - - - - - - Domestic Banks - - - - - - - - Foreign Banks - - - - - - - - Banks 1.743 - - - - - - - Other - - - - - - - - VIII. Profit Sharing Accounts- FC - 160.028 406.998 294.104 - 70.748 162.781 - Public Sector - - - - - - - - Commercial Sector - 157.527 312.331 273.681 - 65.009 151.359 - Other Institutions - 78 75.992 20.351 - - 7.787 - Commercial and Other Institutions - 2.423 18.675 72 - 5.739 3.635 - Banks and Finance Houses - - - - - - - - IX. Precious Metal Deposits 37.850 - - - - - - - X. Profit Sharing Accounts Special Fund Pools-TRY - - - - - - - - Residents in Turkey - - - - - - - - Residents Abroad - - - - - - - - XI. Profit Sharing Accounts Special Fund Pools-FC - - - - - - - - Residents in Turkey - - - - - - - - Residents Abroad - - - - - - - - Total (I+II+…..+IX+X+XI) 1.591.963 1.402.450 2.480.397 792.393 - 482.233 2.335.798 - Total 378.510 4.027.034 637.921 20.212 606.549 10.696 217 247 247 893.997 4 844.285 48.184 1.524 248.744 1.477.581 288.938 263.372 23.823 1.743 1.743 1.094.659 959.907 104.208 30.544 37.850 9.085.234 220 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) Up to 1 Up to 3 Up to 6 Up to 9 Prior Period Demand Month Months Months Months Up to 1 Year I. Real Persons Current Deposits-TRY 187.109 - - - - - II. Real Persons Profit Sharing Accounts-TRY - 584.118 1.030.396 220.251 - 142.241 III. Other Current Accounts-TRY 433.121 - - - - - Public Sector 70.718 - - - - - Commercial Sector 353.280 - - - - - Other Institutions 4.831 - - - - - Commercial and Other Institutions 2.476 - - - - - Banks and Finance Houses 1.816 - - - - - Central Bank - - - - - - Domestic Banks 2 - - - - - Foreign Banks - - - - - - Banks 1.814 - - - - - Other - - - - - - IV. Profit Sharing Accounts-TRY - 58.674 177.487 55.034 - 56.742 Public Sector - 24 18 - - - Commercial Sector - 56.925 143.446 54.490 - 56.719 Other Institutions - 1.723 33.224 544 - 23 Commercial and Other Institutions - 2 799 - - - Banks - - - - - - V. Real Persons Current Deposits-FC 125.716 - - - - - VI. Real Persons Profit Sharing Accounts-FC - 211.034 385.994 138.826 - 105.605 VII. Other Current Accounts-FC 257.408 - - - - - Commercial Residents in Turkey 243.619 - - - - - Commercial Residents in Abroad 12.458 - - - - - Banks 1.331 - - - - - Central Bank - - - - - - Domestic Banks - - - - - - Foreign Banks - - - - - - Banks 1.331 - - - - - Other - - - - - - VIII. Profit Sharing Accounts- FC - 87.935 248.108 91.691 - 267.524 Public Sector - - 2 - - - Commercial Sector - 83.712 236.532 49.904 - 218.490 Other Institutions - 1.352 10.736 38.477 - 46.330 Commercial and Other Institutions - 2.871 838 3.310 - 2.704 Banks and Finance Houses - - - - - - IX. Precious Metal Deposits - - - - - - X. Profit Sharing Accounts Special Fund Pools-TRY - - - - - Residents in Turkey - - - - - - Residents Abroad - - - - - - XI. Profit Sharing Accounts Special Fund Pools-FC - - - - - - Residents in Turkey - - - - - - Residents Abroad - - - - - - Total (I+II+…..+IX+X+XI) 1.003.354 941.761 1.841.985 505.802 - 572.112 Accumulated 1 YearProfit Sharing and Over Accounts - - 473.196 - - - - - - - - - - - - - - - - - - - - - - - 148.349 - - - 144.607 - 2.991 - 751 - - - - - 207.252 - - - - - - - - - - - - - - - - - - - 108.550 - - - 102.307 - 109 - 6.134 - - - - - - - - - - - - - - - - - 937.347 - Total 187.109 2.450.202 433.121 70.718 353.280 4.831 2.476 1.816 2 1.814 496.286 42 456.187 38.505 1.552 125.716 1.048.711 257.408 243.619 12.458 1.331 1.331 803.808 2 690.945 97.004 15.857 5.802.361 1.2.Current and Participation Accounts Attributable to Real Entities/Persons Under the Guarantee of Saving Deposit Insurance Fund Exceeding the Limit of the Deposit Insurance Fund: Under the Guarantee of Exceeding the Limit of Saving Deposit Insurance Saving Deposit Insurance Current Period Prior Period Current Period Prior Period Real Persons Current and Profit Sharing Accounts that are not Subject to Commercial Activities 2.945.503 2.137.505 3.183.707 1.510.716 TRY Accounts 2.400.527 1.684.785 1.983.628 926.721 FC Accounts 544.976 452.720 1.200.079 583.995 Foreign Branches’ Deposits Under Foreign Authorities’ Insurance - - - Off-shore Banking Regions’ Deposits Under Foreign Authorities’ Insurance - - - 1.3. Current and Profit Sharing Accounts which are not under the Guarantee of Deposit Insurance Fund: The Parent Bank has no current or profit sharing accounts which are not under the guarantee of the Saving Deposit Insurance Fund except for the current and profit sharing accounts of Board of Directors, general manager, assistant general managers, and their close families. Bank Asya Annual Report 2009 221 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 2. Information on Derivative Financial Liabilities Held-for-Trading As of December 31, 2009, derivative financial liabilities held for trading amounts to TRY 155 Thousand (December 31, 2008: None). Forward Transactions Other Total Current Period TRY FC - 155 - - - 155 Prior Period TRY FC - - - - Current Period (*) TRY FC - - - - - 191.461 - 191.461 Prior Period (*) TRY FC - - - 457.552 - 457.552 3. Information on Borrowings 3.1.Information on Banks and Other Financial Institutions: Loans from the Central Bank of Turkish Republic From Domestic Banks and Institutions From Foreign Banks, Institutions and Funds Total (*) The Parent Bank does not have any syndicated loan in the current period (December 31, 2008: TRY 129.239 Thousand). The details of the syndicated loans and short term, medium term and long term loans that are provided from banks and financial institutions are summarized below: Current Period Foreign Currency 2010 5.549 2011 - 2012 - 2014 42.390 2016 10.450 Total 58.389 Prior Period Foreign Currency 2009 45.202 2010 - 2011 - 2012 - 2016 - Total 45.202 Total EUR 110.005 4.580 17.281 1.206 - 133.072 Total AED 78.435 5.326 - - 1.876 85.637 USD 115.554 4.580 17.281 43.596 10.450 191.461 EUR 259.146 33.804 7.656 26.107 - 326.713 USD 382.783 39.130 7.656 26.107 1.876 457.552 3.2. Maturity Analysis of Borrowings: Current Period TRY FC Short-Term - 47.206 Medium-Term and Long-Term - 144.255 Total - 191.461 3.3. Additional Explanation Related to the Concentrations of the Parent Bank’s Major Liabilities: None. Prior Period TRY FC - 164.502 - 293.050 - 457.552 222 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 4.Other Liabilities Exceeding 10% of the Balance Sheet Total Excluding Off-Balance Sheet Commitments and the Breakdown of Such Liabilities Constituting at Least 20% of the Grand Total Other liability items amount to TRY 198.286 Thousand and do not exceed 10% of the balance sheet total (December 31, 2008: TRY 111.553 Thousand). Clearing Account (*) Fees, Commissions Collected in Advance and Other Income Payment Orders Import Transfer Orders Other Total Current Period 149.086 30.696 4.304 9.980 4.220 198.286 Prior Period 79.768 19.306 4.968 7.068 443 111.553 (*) At the previous year, debit transitory clearing account amounting to TRY 49.438 Thousand was netted off with the credit transitory clearing account. 5.Information on Finance Lease Obligations None. Finance Lease Payables Deferred Finance Lease Expenses (-) Total Current Period TRY FC - - - - - - Prior Period TRY FC 6 - 6 - Current Period 89.368 59.812 35.448 24.347 17 13.908 4.527 9.381 - 15.648 Prior Period 72.286 41.608 19.637 21.850 121 12.631 7.156 5.475 18.047 6. Information on Derivative Financial Liabilities for Hedging Purposes None. 7. Explanations on Provisions 7.1. Information on General Provisions: General Provisions Provisions for First Group Loans and Receivables Profit Sharing Accounts’ Share The Bank’s Share Other Provisions for Second Group Loans and Receivables Profit Sharing Accounts’ Share The Bank’s Share Other Provisions for Non Cash Loans Bank Asya Annual Report 2009 223 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 7.2. Movement of General Provisions: Current Period Opening Balance - January 1, 2009 Charge for Period Reversal of Prior Period Expenses Profit Sharing Accounts Share Closing Balance- December 31, 2009 Prior Period Opening Balance – January 1, 2008 Charge for Period Reversal of Prior Period Expenses Profit Sharing Accounts Share Closing Balance- December 31, 2008 72.286 12.317 (8.833) 13.598 89.368 44.182 17.381 (212) 10.935 72.286 7.3. Information on Provision for Foreign Exchange Losses on the Foreign Currency Indexed Loans and Finance Lease Receivables: As of December 31, 2009, the Group’s provision for foreign currency indexed loans amounts to TRY 18.331 Thousand (December 31, 2008: TRY 6.268 Thousand). Provisions for foreign currency indexed loans are offset under the loan balance in the financial statements. 7.4. Information on the Specific Provisions Provided for Unindemnified Non-Cash Loans: As of December 31, 2009, the Group’s specific provision for unindemnified non-cash loans amounts to TRY 11.551 Thousand (December 31, 2008: TRY 11.698 Thousand). 7.5. Explanations on Other Provisions: 7.5.1 .Information on Provisions for Potential Risks: None (December 31, 2008: None). 7.5.2. Information on Other Provisions: Other Provisions Provision for Credit Cards and Promotion of Banking Services Provision for Unindemnified Non-cash Loans Payment Commitment for Checks Litigation Provision Total Current Period 4.909 11.551 5.389 885 22.734 Prior Period 5.673 11.698 2.338 378 20.087 Current Period 7.360 256 1.833 813 (952) (738) - 8.572 Prior Period 5.625 2.382 352 (733) (266) 7.360 7.5.3.Movement of the Retirement Pay Provision: Opening Balance- January 1, 2009 Change in Scope of Consolidation Effect Current Service Cost Interest Cost Severance Pay Actuarial Loss/(Gain) Provision Reversal Closing Balance - December 31, 2009 The Parent Bank employee benefits money, actuary valuation method used for calculation of financial tables which sated in numbered 19 Turkish Accounting Standards. As of December 31, 2009, the Group provided a provision of TRY 9.109 Thousand for the unused vacation liability (December 31, 2008: TRY 7.582 Thousand). The Group also allocated TRY 422 Thousand bonus provision for the current year. 224 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 8. Explanations on Taxes Payable 8.1. Information on Current Tax Liability: As of December 31, 2009, the Group’s corporate tax payable is TRY 18.316 Thousand offsetting the prepaid corporate tax (December 31, 2008: TRY 16.051 Thousand). Provision for Corporate Taxes Prepaid Corporate Tax Corporate Tax Payable 8.2. Information on Taxes Payable: Current Period 83.845 (65.529) 18.316 Prior Period 65.212 (49.161) 16.051 Corporate Taxes Payable Taxation of Securities Property Tax Banking Insurance Transaction Tax (BITT) Foreign Exchange Transaction Tax Value Added Tax Payable Other Total Current Period 18.316 8.360 468 7.073 - 416 10.129 44.762 Prior Period 16.051 7.931 361 7.521 403 3.483 35.750 Current Period 2.257 3.137 - - - - 161 320 5 5.880 Prior Period 1.111 1.543 79 157 5 2.895 8.3. Premiums Payable: Social Security Premiums-Employee Social Security Premiums-Employer Bank Social Aid Pension Fund Premium-Employee Bank Social Aid Pension Fund Premium-Employer Pension Fund Membership Fees and Provisions-Employee Pension Fund Membership Fees and Provisions-Employer Unemployment Insurance-Employee Unemployment Insurance-Employer Other Total 8.4. Explanations on Deferred Tax Liabilities: None (December 31, 2008: TRY 1.250 Thousand). 9. Information on Liabilities Regarding Assets Held for Sale and Discontinued Operations None. 10. Information on Subordinated Loans None. 11. Information on Shareholders’ Equity 11.1. Presentation of Paid-in Capital: Common Stock Preferred Stock (*) Current Period 540.000 360.000 (*)The holders of the preferred stocks have the right to nominate candidates for the Board of Directors and the Audit Committee. Prior Period 540.000 360.000 Bank Asya Annual Report 2009 225 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 11.2.Paid-in Capital Amount, Explanation as on whether the Registered Share Capital System is Applicable at the Parent Bank, if so, Amount of the Registered Share Capital Ceiling: Registered capital system is not applied in the Parent Bank. 11.3.Share Capital Increases and Their Sources; Other Information on Increased Capital Shares in the Current Period: None. 11.4. Information on Share Capital Increases from Capital Reserves: None. 11.5.Information on Share Capital Increases from Revaluation Funds: None. 11.6.Capital Commitments in the Last Fiscal Year and at the End of the Following Interim Period, General Purpose of These Commitments and Projected Resources Required to Meet These Commitments: None. 11.7.Indicators of the Parent Bank’s Income, Profitability and Liquidity for Prior Periods and Possible Effects of These Future Assumptions on the Equity due to the Uncertainty of These Indicators: The Parent Bank carries its activities in a high profitable level and retains the major portion of its net profit within equity by means of transfers to reserve accounts and capital increases. Also, the Parent Bank allocates its equity to highly liquid and profit generating assets. 11.8.Summary Information of Privileges Granted To Preferred Stocks: The holders of the preferred stocks have the right to nominate candidates for the Board of Directors and the Audit Committee. 11.9.Explanations on Marketable Securities Value Increase Fund: From Associates, Subsidiaries, and Entities under Common Control (Joint Vent.) Valuation Difference Foreign Exchange Difference Financial Assets Available for Sale Valuation Difference Foreign Exchange Difference Total 12. Explanations on Minority Shares Paid in Capital Share Premium Legal Reserve Prior Year Profit or Loss Net Profit/(Loss) for the Period Total Current Period Prior Period - - - 2.921 2.921 - 2.921 - Current Period 95.788 18.383 260 (10.967) 2.027 105.491 Prior Period 17.184 260 1.636 (1.454) 17.626 226 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) III.Explanations and Disclosures Related to the Consolidated Off-Balance Sheet Contingencies and Commitments 1. Explanation on Contingent Liabilities 1.1.Nature and Amounts of Irrevocable Loan Commitments: Asset Purchase-Sale Commitments Time Deposit Purchase-Sale Commitments Capital Commitments for Associates and Subsidiaries (*) Loan Granting Commitments Commitments for Credit Card Expenditure Limits Commitments for Credit Card and Retail Banking Promotions Payment Commitments for Checks Tax and Fund Liabilities from Export Commitments Other Irrevocable Commitments Total Current Period 494.852 - 29.699 140.538 1.365.927 5.862 434.811 1.596 - 2.473.285 Prior Period 7.353 6.869 128.301 1.256.191 8.067 408.821 1.815.602 (*) Consist of capital commitment amounts of TRY 5.153 Thousand form the Parent Bank’s subsidiary Işık Sigorta, TRY 2.000 Thousand from Kredi Garanti Fonu A.Ş. and TRY 22.546 Thousand from Tamweel Holding S.A. 1.2.Non-cash Loans Including Guarantees, Banker’s Acceptances, Letters of Credit and Other Financial Guarantees: 1.2.1.Non-cash Loans Including Guarantees, Banker’s Acceptances, Letters of Credit and Other Financial Guarantees: Guarantees Acceptances Letter of Credits Other Guarantees Total Current Period 7.369.461 120.412 1.250.120 145.984 8.885.977 Prior Period 8.646.573 169.474 1.221.268 178.100 10.215.415 1.2.2. Long Standing Guarantees, Temporary Guarantees, Sureties and Similar Transactions: Long Standing Guarantees Temporary Guarantees Sureties and Similar Transactions Total Current Period 5.825.274 598.432 945.755 7.369.461 Prior Period 6.658.536 753.207 1.234.830 8.646.573 Current Period 148.667 2.888 145.779 8.737.310 8.885.977 Prior Period 163.418 29.495 133.923 10.051.997 10.215.415 1.3. Total Amount of Non-Cash Loans: Guarantees Given Against Achieving Cash Loans With Maturity of 1 Year or Less With Maturity of More than 1 Year Other Non-Cash Loans Total Bank Asya Annual Report 2009 227 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 2.Sectoral Risk Concentration of Non-Cash Loans TRY Agricultural 46.585 Farming and Raising Livestock 32.608 Forestry 12.793 Fishery 1.184 Manufacturing 1.398.487 Mining 88.855 Production 813.949 Electric, Gas and Water 495.683 Construction 1.740.366 Services 751.342 Wholesale and Retail Trade 183.147 Hotel, Food and Beverage Services 45.744 Transportation and Telecommunication 164.260 Financial Institutions 93.653 Real Estate and Renting Services 84.904 Self-Employment Services 39.387 Education Services 22.210 Health and Social Services 118.037 Other 47.738 Total 3.984.518 Current Period Prior Period (%) FC (%) TRY (%) FC (%) 1,17 43.471 0,89 48.099 1,05 84.553 1,51 0,82 40.700 0,83 39.854 0,87 81.017 1,44 0,32 2.452 0,05 7.849 0,17 1.556 0,03 0,03 319 0,01 396 0,01 1.980 0,04 35,10 2.681.363 54,71 1.861.976 40,47 2.949.649 52,54 2,23 117.976 2,41 415.709 9,04 274.539 4,89 20,43 1.716.457 35,02 1.242.636 27,01 2.384.334 42,47 12,44 846.930 17,28 203.631 4,42 290.776 5,18 43,66 1.306.045 26,65 2.006.367 43,61 1.637.825 29,17 18,87 854.004 17,42 576.561 12,53 903.798 16,10 4,61 130.553 2,66 166.667 3,62 92.581 1,65 1,15 30.537 0,62 28.804 0,63 85.887 1,53 4,12 428.509 8,74 105.990 2,30 469.977 8,37 2,35 184.197 3,76 55.880 1,21 156.473 2,79 2,13 50.302 1,03 44.053 0,96 13.416 0,24 0,99 9.436 0,19 46.960 1,02 67.531 1,20 0,56 3.885 0,08 14.144 0,31 3.888 0,07 2,96 16.585 0,34 114.063 2,48 14.045 0,25 1,20 16.576 0,33 107.804 2,34 38.783 0,68 100,00 4.901.459 100,00 4.600.807 100,00 5.614.608 100,00 3.Information on Ist and IInd Group Non-Cash Loans Non-Cash Loans Letters of Guarantee Bank Acceptances Letters of Credit Endorsements Underwriting Commitments Factoring Commitments Other Commitments and Contingencies I st Group TRY 3.920.035 3.903.758 - 270 - - - 16.007 FC 4.866.117 3.368.824 120.412 1.248.134 - - - 128.747 II nd Group TRY FC 64.483 35.342 64.483 32.396 - - 1.716 - - - - 1.230 228 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 4.Information on Derivative Financial Instruments Derivative Transactions According to Purposes Trading Hedging Current Period Prior Period Current Period Prior Period Type of Trading Transactions Foreign Currency Related Derivative Transactions (I) 900.976 834.730 - Forward Transactions - 13.025 - Swap Transactions 900.976 821.705 - Futures Transactions - - - Option Transactions - - - Interest Related Derivative Transactions (II) - - - Forward Rate Transactions - - - Interest Rate Swap Transactions - - - Interest Option Transactions - - - Futures Interest Transactions - - - Marketable Securities Call-Put Options (III) - - - Other Trading Derivative Transactions (IV) - - - A. Total Trading Derivative Transactions (I+II+III+IV) 900.976 834.730 - Types of Hedging Transactions Fair Value Hedges - - - Cash Flow Hedges - - - Net Investment Hedges - - - B. Total Hedging Related Derivatives - - - Total Derivative Transactions (A+B) 900.976 834.730 - As of December 31, 2009, the breakdown of the Bank’s foreign currency forward transactions based on currencies are disclosed below in their TRY equivalents. Current Period TRY USD EUR Total Prior Period TRY USD EUR Total Forward Buy 452.277 - - 452.277 Forward Buy 438.194 - - 438.194 Forward Sell 448.699 448.699 Forward Sell 353.878 42.658 396.536 As of December 31, 2009, the Group does not have any derivative transactions for the purpose of cash flow hedge. 5.Explanations on Contingent Liabilities and Assets As of the balance sheet date, there are 859 ongoing court cases against the Group amounting to TRY 28.239 Thousand, USD 2.319 and EUR 946 based on the information provided from the legal department of the Group. For some of the ongoing court cases mentioned above, provision amounting to TRY 885 Thousand has been made in the accompanying consolidated financial statements. Besides, a lawsuit is filed in the Tax Court as of January 11, 2007 in connection with the penalty of TRY 10.232 Thousand with the claim of participation of the Parent Bank under the Article 360 of the Tax Procedure Law, as an extension of an investigation of the Anatolian Corporate Tax Office’s Management held on a customer of the Parent Bank, due to the transactions of the customer made at one of the branches of the Parent Bank. The Parent Bank management believes that the court would end up in favor of the Parent Bank. Therefore, they did not make any provision in the accompanying consolidated financial statements. 6. Explanations related to Custodian and Intermediary Services None. Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 7. Summary Information on the Parent Bank’s Rating by the International Rating Institutions FITCH RATINGS Foreign Currency Long Term B Short Term B Outlook Stable Turkish Lira Long Term B Short Term B Outlook Stable National Long Term BBB+(tur) Outlook Stable Individual Rating D Support Points 5 The information is taken from the Fitch Ratings Report as of November 9, 2009. MOODY’S Financial Strength Outlook Foreign Currency Long Term Short Term Outlook Turkish Lira Long Term Short Term Outlook National Long Term Short Term D Stable B1/NP B1/NP Stable Ba1/NP Ba1/NP Stable A1+r TR-1 The information is taken from the Moody’s Investor Service report as of August 19, 2009. JCR EURASIA Foreign Currency Long Term Short Term Outlook International Foreign Currency Long Term Short Term Outlook National Long Term Short Term Outlook Stand Alone Support Points The information is taken from the JCR Eurasia Rating report as of May 21, 2009. BBB Stable BBB Stable A- (Trk) A- 1(Trk) Stable BC 3 229 230 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) IV.Explanations and Disclosures Related to the Consolidated Income Statement 1. Information on Profit Share Income 1.1. Information on Profit Share on Loans: Profit Share on Loans Short Term Loans Medium and Long Term Loans Profit Share on Non-Performing Loans Premiums Received from Resource Utilization Support Fund Group I TRY 1.118.138 587.026 509.195 21.917 - FC 55.542 23.829 31.713 - - Group II TRY 26.482 6.226 20.256 - - FC 3.194 546 2.648 - 1.2. Profit Share from Banks: The Central Bank of Turkish Republic (Reserve Deposit) Domestic Banks Foreign Banks (*) Branches and Head Office Abroad Total Current Period TRY FC 19.661 73 3.024 - 50.740 1.475 - - 73.425 1.548 Prior Period TRY FC 22.345 3.496 2.710 38.590 10.272 - 63.645 13.768 Current Period TRY FC 13.313 - - - 7.020 - 7.020 - 27.353 - Prior Period TRY FC 294 - 35 - 329 - (*) Foreign banks include profit shares from murabaha loans. 1.3. Information on Interest Received from Marketable Securities: Held-for-Trading Financial Assets Financial Assets at Fair Value through Profit and Loss Available-for-Sale Financial Assets Investments Held-to-Maturity Total 1.4. Information on Profit Share Income Received from Associates and Subsidiaries: Profit Share Income Received from Associates and Subsidiaries Current Period 17.917 Prior Period 1.325 Current Period TRY FC - 18.259 - - - - - 18.259 - - - - - 18.259 Prior Period TRY FC - 21.630 - - 144 - 21.486 - - - 21.630 2. Information on Profit Share Expenses 2.1. Information on Interest on Funds Borrowed: Banks The Central Bank of Turkish Republic Domestic Banks Foreign Banks Branches and Head Office Abroad Other Institutions Total Bank Asya Annual Report 2009 231 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 2.2. Information on Profit Share Expense Given to Associates and Subsidiaries: Profit Share Expenses Given to Associates and Subsidiaries Current Period 517 Prior Period 902 2.3. Information on Profit Share Expense to Marketable Securities Issued: None. 2.4. Distribution of Profit Share Expense on Deposits Based on Maturity of Deposits: Profit Sharing Accounts Up to 1 Up to 3 Up to 6 Up to 9 Up to 1 More than Account Name Month Months Months Months Year 1 Year TRY Funds Collected from Banks - - - - - - Real Person’s Profit Sharing Acc. 77.613 163.026 56.275 - 18.948 139.568 Public Sector Profit Sharing Acc. 23 1 - - - 10 Commercial Sector Profit Sharing Acc. 11.052 33.349 6.530 - 18.795 23.170 Other Institutions Profit Sharing Acc. 371 1.761 1.422 - 76 3.538 Total 89.059 198.137 64.227 - 37.819 166.286 FC Funds Collected from Banks 183 91 22 - - - Real Person’s Profit Sharing Acc. 11.047 17.453 12.438 - 8.667 22.637 Public Sector Profit Sharing Acc. - - - - - - Commercial Sector Profit Sharing Acc. 3.017 13.220 9.263 - 9.596 9.575 Other Institutions Profit Sharing Acc. 13 490 4.762 - 1.553 302 Precious Metal Deposits - - - - - - Total 14.260 31.254 26.485 - 19.816 32.514 Grand Total 103.319 229.391 90.712 - 57.635 198.800 Total 455.430 34 92.896 7.168 555.528 296 72.242 44.671 7.120 124.329 679.857 3. Explanations on Dividend Income The Parent Bank’s subsidiary Işık Sigorta A.Ş. has obtained TRY 3.588 Thousand of dividend income (December 31, 2008: TRY 312 Thousand). 4. Information on Net Trading Income Income Profit on Capital Market Operations Profit on Derivative Financial Instruments Foreign Exchange Gains Losses (-) Losses on Capital Market Operations Losses on Derivative Financial Instruments Foreign Exchange Losses Current Period 2.205.092 - 276.561 1.928.531 (2.111.204) - (73.367) (2.037.837) Prior Period 2.912.257 53.505 2.858.752 (2.851.541) (38.139) (2.813.402) Current Period 6.843 4.354 77.440 79.500 23.778 191.915 Prior Period 6.452 1.691 49.773 74.170 8.999 141.085 5. Explanations on Other Operating Income The detail of other operating income is stated as below: Communication Expense Reversal Gain on Sale of Assets Change in Expense of Previous Years Insurance Technical Reserves Other Total (*) Change in expense of previous years consists of amounting to TRY 76.026 Thousand special provision, general loan provision and provision reversal related to receivables and fees from the doubtful receivables (December 31, 2008: TRY 48.704 Thousand). 232 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 6.Provision Expenses Related to Loans and Other Receivables of the Banks Specific Provisions for Loans and Other Receivables III. Group Loans and Receivables IV. Group Loans and Receivables V. Group Loans and Receivables Doubtful Commission, Fee and Other Receivables General Provision Expenses Provision Expenses for Possible Losses Marketable Securities Impairment Losses Financial Assets at Fair Value through Profit and Loss Investment Securities Available for Sale Impairment Provision Expense Associates Subsidiaries Entities under Common Control Investments Held to Maturity Other Total Current Period 194.762 85.562 18.408 82.224 8.568 12.317 - 2.951 2.951 - - - - - - 10.080 220.110 Prior Period 128.982 54.969 20.553 48.882 4.578 17.381 15.172 15.172 10.251 171.786 Current Period 227.763 1.908 - - 34.952 - - 2.217 - 3.698 2.965 11 162.852 40.457 3.423 31.241 87.731 5.649 109.035 551.050 Prior Period 182.998 2.734 410 25.739 1.571 598 1.541 1.006 152.203 33.196 4.208 33.170 81.629 646 87.724 457.170 7. Information on Other Operating Expenses Personnel Expenses Provision for Employee Termination Benefits Bank Social Aid Provision Fund Deficit Provision Impairment Expenses of Fixed Assets Depreciation Expenses of Fixed Assets Impairment Expenses of Intangible Assets Impairment Expense of Goodwill Amortization Expenses of Intangible Assets Impairment Provision for Investments Accounted for under Equity Method Impairment Expenses of Assets to be Disposed (*) Depreciation Expenses of Assets to be Disposed Impairment Expenses of Assets Held for Sale Other Operating Expenses Rent Expenses Maintenance Expenses Advertisement Expenses Other Expenses Loss on Sales of Assets Other Total (*) Amounting TRY 871 Thousands reversal of impairment of asset held for sale is accounted within the adjustment account related to prior year losses. 8. Explanation on Continuing Operations and Discontinued Operations Profit or Loss Before Tax The Group’s profit before tax is increased by 27,61% as compared to the prior year figures and total profit before tax amounts to TRY 386.169 Thousand. Profit before tax includes TRY 622.547 Thousand net profit share income, TRY 245.391 Thousand net fees and commission income. Total operating expense amount is TRY 551.050 Thousand. Bank Asya Annual Report 2009 233 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 9. Explanation on Continuing Operations and Discontinued Operations Tax Provision As of December 31, 2009, current tax expense is TRY 83.845 Thousand (December 31, 2008: TRY 65.212 Thousand) and deferred tax income is TRY 5.494 Thousand (December 31, 2008: TRY 65 Thousand deferred tax expense). 10. Explanation on Continuing Operations and Discontinued Operations Net Operating Profit/Loss After Taxes Net profit of the Group is increased by 28,06% as of December 31, 2009 as compared to the prior year’s net profit. 11. Explanations on Net Income/Loss for the Period The nature and amount of certain income and expense items from ordinary operations is disclosed if the disclosure for nature, amount and repetition rate of such items is required for the complete understanding of the Group’s performance for the period: None. Effect of changes in accounting estimates on income statement for the current and, if any, for subsequent periods: None. 12. The Description and Amounts of Items which Constitute at Least 20% of Other Items in the Income Statement, if These Liabilities Exceed 10% of the Total Income Statement Other fees and commissions received/given are stated as below: Other Fees and Commissions Received Member firm-POS Credit Cards Commissions and Fees Other Total Current Period 64.712 39.363 36.278 140.353 Prior Period 61.584 45.294 38.944 145.822 Other Fees and Commissions Given Credit Cards Commissions and Fees Other Total Current Period 47.355 22.055 69.410 Prior Period 59.206 10.713 69.919 13. Nature and Amount of Changes in Accounting Estimates which have Material Effects on The Current Period or Expected to have Material Effects on the Subsequent Periods None. V.Explanations and Disclosures Related to the Statements of Shareholders’ Equity Movement 1.I ncreases from Valuation of Financial Assets Available for Sale Increase resulting from revaluation of financial assets available for sale is TRY 2.921 Thousand (December 31, 2008: None). 2. Increases Due to Cash Flow Hedges None. 3. Reconciliation of Foreign Exchange Differences at Beginning and End of Current Period None. 4.Dividends Declared Subsequent to the Balance Sheet Date, but before the Announcement of the Financial Statements None. 5.Dividends per Share Proposed Subsequent to the Balance Sheet Date None. 6.Proposals to General Assembly for the Payment Dates of Dividends and if It will not be Appropriated the Reasons for This The Board of Directors has not decided for profit appropriation as of the date of the financial statements are authorized for issue. 234 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) 7.Amounts Transferred to Legal Reserves As of December 31, 2009, amount transferred to legal reserves is TRY 12.325 Thousand (December 31, 2008: TRY 11.297 Thousand). 8. Information on Shares Issued None. VI. Explanations and Disclosures Related to Statement of Cash Flows 1. Cash and Cash Equivalents 1.1.Components of Cash and Cash Equivalents and Accounting Policies Used to Determine Such Components: “Cash” is defined as cash in vault and foreign currency cash, money in transit, cheques purchased, unrestricted amount in the Central Bank and demand deposits in banks, and “Cash equivalents” is defined as time deposits in banks having original maturity less than three months. Reserve deposits provided in the Central Bank blocked accounts are presented as cash equivalents. 1.2.Cash and Cash Equivalents at the Beginning of the Period: Cash Cash in TRY/Foreign Currency Central Bank Banks-Demand Deposit Cash Equivalents Banks-Time Deposit Murabaha Transactions Classified as Loans Total Cash and Cash Equivalents Current Period 1.241.440 66.974 1.055.618 118.848 23.031 23.031 - 1.264.471 Prior Period 1.399.866 62.690 930.952 406.224 1.399.866 Current Period 2.477.462 131.327 2.209.147 136.988 136.033 36.033 100.000 2.613.495 Prior Period 1.241.440 66.974 1.055.618 118.848 23.031 23.031 1.264.471 1.3.Cash and Cash Equivalents at the End of the Period: Cash Cash in TRY/Foreign Currency Central Bank Banks-Demand Deposit Cash Equivalents Banks-Time Deposit Murabaha Transactions Classified as Loans Total Cash and Cash Equivalents Bank Asya Annual Report 2009 235 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) VII.Explanations on the Risk Group of the Parent Bank 1.Transaction Volume of the Risk Group of the Parent Bank, Outstanding Loan and Deposit Balances and Current Income and Expense Amounts 1.1. Current Period (31.12.2009): Direct and Indirect Other Entities Included Risk Group of the Parent Bank Subsidiaries and Associates Shareholders of the Group in the Risk Group Cash Non-Cash Cash Non-Cash Cash Non-Cash Loans and Other Receivables (*) Balance at Beginning of Period 63.823 2.215 - - 88.820 58.989 Balance at End of Period 52.357 9.225 - - 220.914 68.491 Profit Share and Commission Income 17.917 - - - 25.148 1 (*) The risk group balance includes TRY 237 Thousand finance lease receivables (December 31, 2008: TRY 483 Thousand). 1.2. Prior Period (31.12.2008): Direct and Indirect Other Entities Included Risk Group of the Parent Bank Subsidiaries and Associates Shareholders of the Group in the Risk Group Cash Non-Cash Cash Non-Cash Cash Non-Cash Loans and Other Receivables (*) Balance at Beginning of Period - 432 - - 27.587 33.530 Balance at End of Period 63.823 2.215 - - 88.820 58.989 Profit Share and Commission Income 1.325 - - - 8.985 120 (*) The risk group balance includes TRY 483 Thousand finance lease receivables (December 31, 2008: TRY 818 Thousand). 1.3.Risk Group Deposits Balances of the Parent Bank: Risk Group of the Parent Bank Current and Profit Sharing Accounts Balance at the Beginning of Period Balance at the End of Period Profit Share Expense Subsidiaries and Associates Current Period 7.648 5.650 517 Direct and Indirect Shareholders of the Group Current Period - - - Other Entities Included in the Risk Group Current Period 77.269 77.749 4.553 1.4. Information on Forward and Option Agreements and Other Similar Agreements with Related Parties: None. 1.5 Information on Compensation of Key Management Personnel: During the current period, the total amount of remuneration and benefits provided to the key management personnel of the Group is TRY 10.212 Thousand (December 31, 2008: TRY 8.132 Thousand). Besides remuneration, the key management personnel also receive some further tangible rights. 236 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Notes to the Consolidated Financial Statements for the Year Ended December 31, 2009 (Amounts expressed in thousands of Turkish Lira (“TRY”) unless otherwise stated.) VIII.E xplanations on the Parent Bank’s Domestic Branches, Agencies and Branches Abroad and Off-Shore Branches 1. Explanations on the Parent Bank’s Domestic Branches, Agencies and Branches Abroad and Off-Shore Branches Domestic Branches Rep-Offices Abroad Branches Abroad Off-shore Branches Number 158 Employees 4.074 - - - - - - Country - - - Total Assets - - Capital - Işık Sigorta A.Ş. from the consolidated subsidiaries operates domestically and currently has 4 regional management office, 2 regional representation office and 940 (including the Bank branches) agencies and 180 personnel as of 31 December 2009. Tuna Gayrimenkul Yatırım Ortaklığı A.Ş. operates domestically and currently has 1 personnel as of December 31, 2009. 2. Explanations on Branch and Agency Openings or Closings of the Parent Bank: The Parent Bank opened 9 new branches in 2009. SECTION SIX OTHER EXPLANATIONS I.Other Explanations on Operations of the Group: 1. Subsequent Events: As of February 4, 2010, the Parent Bank has paid for TRY 21.548 Thousand of capital commitment and as a consequence, became owner of 40% of Tamwell Africa Holding SA that is owned by the Islamic Corporation for the Development of the Private Sector (“ICD”) which is a group establishment of the Islamic Development Bank (“IDB”). SECTION SEVEN INDEPENDENT AUDITOR’S REPORT I.Explanations on the Independent Auditor’s Report The financial statements of the Parent Bank for the period January 1 – December 31, 2009 were audited by DRT Bağımsız Denetim ve Serbest Muhasebeci Mali Müşavirlik A.Ş (Member of Deloitte Touche Tohmatsu). The independent auditor’s report is presented at the beginning of the financial statements and related notes. II.Other Footnotes and Explanations Prepared by the Independent Auditors There is no significant matter or disclosure which may be in connection with the Group’s operations but not explained in the above sections. Bank Asya Annual Report 2009 237 Asya Katılım Bankası A.Ş. Branches Branch Head Office Head Office Operations Center Southern Anatolia Regional Hedquarters Address Küçüksu Cad. Akçakoca Sok. No: 6 Ümraniye 34768 İstanbul Phone (0216) 633 50 00 Fax (0216) 633 50 50 Kısıklı Cad. Haluk Türksoy Sok. No: 14 Altunizade-İstanbul (0216) 554 50 00 (0216) 554 03 03 Mücahitler Mah. Gazimuhtarpaşa Bulvarı No: 65 Şehitkamil-Gaziantep (0342) 323 53 12 (0342) 323 51 61 (0216) 372 13 00 (0312) 219 18 39 (0212) 272 50 04 (0232) 441 47 40 (0212) 657 95 77 (0224) 224 50 50 (0216) 372 15 50 (0312) 219 18 40 (0212) 272 60 69 (0232) 441 52 04 (0212) 657 61 54 (0224) 221 86 14 BANK ASYA CORPORATE BRANCHES Anadolu Corporate Branch Değirmen Sok. Nidakule iş merkezi No: 18 Kat: 19 Kozyatağı/Kadıköy/İstanbul Başkent Corporate Branch Armada İş Merkezi,Eskişehir yolu, No: 6 Kat: 20/34 Söğütözü 06520 Ankara Boğaziçi Corporate Branch Esentepe Mah. Büyükdere Cad. No: 102 Maya Center B Blok K: 22 Şişli/İstanbul Ege Corporate Branch Akdeniz Mah. Akdeniz Cad. No: 1 Reyent İşhanı Kat: 6 Konak 35210 İzmir Trakya Corporate Branch Güneşli Evren Mah. Koçman Cad. No: 54 Kat: 1 Güneşli 34212 İstanbul Uludağ Corporate Branch Haşim İşcan Cad. Tuğsa İş Merkezi Kat: 1 Osmangazi 16030 Bursa BANK ASYA İSTANBUL BRANCHES İstanbul Asian Side Acıbadem Branch Acıbadem Cad. Kazaca Apt. A Blok No: 97/B Kadıköy-İstanbul Altıyol Branch Osmanağa Mah. Söğütlüçeşme Cad. No: 29 Kadıköy/İstanbul Altunizade Branch Kısıklı Cad. No: 7 Altunizade/İstanbul Beykoz Branch Fevzi Paşa Cad .No: 78 Beykoz/İstanbul Çekmeköy Branch Meclis Mah. Teraziler Cad. Aşkın Sok. No: 19/B Sancaktepe/İstanbul Dolayoba Branch Çınardere Mah. Akan Sok. No: 19 Pendik 34895 İstanbul Erenköy Branch Şemsettin Günaltay Cad. Çiğdem Apt. No: 238 Erenköy/İstanbul İmes Sanayi Branch İmes Sanayi Sitesi C Blok 301 Sok. No: 3/A Yukarı Dudullu 34775 İstanbul Kadıköy Branch Tuğlacıbaşı Mah. Poyraz Sok. Sadıkoğlu 1 İş Merkezi No: 16 Ziverbey Kadıköy 34710 İstanbul Kartal Branch Ankara Cad. No: 96 Kartal-İstanbul Kavacık Branch Mihrabad Cad. Martı İş Merkezi No: 238 Beykoz 34810 İstanbul Kozyatağı Branch Şaşmaz Plaza Saniye Ermutlu Sok. No: 4 Kozyatağı 34742 İstanbul Kurtköy Branch Kurtköy Mah. Üstün Cad. No: 2 Kurtköy-Pendik/İstanbul Libadiye Branch Libadiye Cad.No: 60 Üsküdar-İstanbul Maltepe Branch Bağlarbaşı Mah. Bağdat Cad. No: 485/B Maltepe/İstanbul Merkez Branch Küçüksu Cad. Akçakoca Sok. No: 6 Ümraniye/İstanbul Pendik Branch Doğu Mah. 23 Nisan Cad. No: 59 Pendik 34895 İstanbul Sarıgazi Branch Meclis Mah. Eski Ankara Cad. No: 34 Sancaktepe Sarıgazi/İstanbul Sultanbeyli Branch Fatih Bulvarı No: 193 Sultanbeyli 34920 İstanbul Tepeüstü Branch Alemdağ Cad. No: 572/A Ümraniye 34776 İstanbul Tuzla Free Zone Branch Tuzla Serbest Bölgesi Hakkı Matraş Cad. No: 11 Tuzla 34950 İstanbul Tuzla Branch Aydıntepe Mah. Irmak Sok. No: 1 Tuzla 34947 İstanbul Ümraniye Branch Namık Kemal Mah. Sütçü Cad. No: 2 Ümraniye 34762 İstanbul Ümraniye Çarşı Branch İstiklal Mah. Alemdağ Cad. No: 174/A Ümraniye/İstanbul Üsküdar Branch Atlas Çıkmazı No: 5/ 40 Üsküdar 34672 İstanbul İstanbul European Side Arnavutköy Branch Merkez Mah. Fatih Cad. No: 118 Arnavutköy Gaziosmanpaşa/İstanbul Avcılar Branch E-5 Yolu Üzeri Merkez Mah. Engin Sok. No: 1 Avcılar 34310 İstanbul Bağcılar Branch Merkez Mah. 1.Sok. No: 9 Bağcılar/İstanbul Bahçelievler Branch Adnan Kahveci Bulvarı Tuğcular Apt. No: 45-1 Bahçelievler/İstanbul Bakırköy Branch İncirli Cad. No: 113 Bakırköy 34740 İstanbul Bakırköy Çarşı Branch Fişekhane Cad. No: 46 Bakırköy-İstanbul Başakşehir Branch Başakşehir Konutları 1.Etap Girişi Başakşehir-İkitelli/İstanbul Bayrampaşa Branch Yenidoğan Mah. Abdi İpekçi Cad. Parkhan No: 8/B Bayrampaşa/İstanbul Beşiktaş Branch Sinanpaşa Mah. Beşiktaş Cad. No: 1/A Beşiktaş/İstanbul Beşyüzevler Branch Yıldırım Mah. Eski Edirne Asfaltı Cad. No: 213/A Bayrampaşa/İstanbul Beylikdüzü Branch Beylikdüzü Mevkii E-5 Yolu Üzeri (İstanbul Outlet Park AVM Girişinde) B.Çekmece/İstanbul Çağlayan Branch Çağlayan Vatan Cad. Avrasya İş Merkezi No: 6/A Çağlayan-Kağıthane 34403 İstanbul Esenler Branch Menderes Mah. Atışalanı Cad. No: 15 Esenler 34230 İstanbul Esenyurt Branch Doğan Araslı Cad. No: 1/3 Esenyurt 34517 İstanbul Fatih Branch Akdeniz Cad. No: 10 Fatih 34260 İstanbul Fevzipaşa Branch İskenderpaşa Mah. Macar Kardeşler Cad. No: 59 Fatih/İstanbul Florya Branch Şenlikköy Mah. Florya Asfaltı No: 76/3 Florya Bakırköy 34153 İstanbul GOP Branch Salihpaşa Cad. Şirinler Sok. No: 1 Gaziosmanpaşa 34130 İstanbul Güneşli Branch Evren Mah. Koçman Cad. No: 40 Güneşli-Bağcılar/İstanbul (0216) 545 07 85 (0216) 330 71 21 (0216) 474 42 11 (0216) 323 91 06 (0216) 466 13 53 (0216) 379 74 84 (0216) 467 16 06 (0216) 540 24 24 (0216) 449 27 10 (0216) 389 99 96 (0216) 537 19 70 (0216) 445 36 26 (0216) 378 34 31 (0216) 545 30 90 (0216) 305 00 50 (0216) 633 69 43 (0216) 491 69 42 (0216) 620 95 00 (0216) 419 90 00 (0216) 466 43 50 (0216) 394 07 81 (0216) 392 93 89 (0216) 523 04 50 (0216) 328 50 30 (0216) 532 55 55 (0212) 597 08 28 (0212) 694 80 00 (0212) 435 78 00 (0212) 502 81 00 (0212) 466 05 06 (0212) 542 77 09 (0212) 486 19 24 (0212) 493 13 00 (0212) 227 95 00 (0212) 618 80 35 (0212) 872 68 48 (0212) 291 80 08 (0212) 611 00 15 (0212) 450 00 66 (0212) 531 88 87 (0212) 521 10 70 (0212) 573 48 28 (0212) 418 49 99 (0212) 630 93 93 (0216) 327 54 22 (0216) 330 72 85 (0216) 474 41 48 (0216) 323 91 05 (0216) 466 13 43 (0216) 379 96 60 (0216) 467 00 76 (0216) 540 51 70 (0216) 449 27 09 (0216) 389 55 66 (0216) 425 02 77 (0216) 445 33 62 (0216) 595 28 10 (0216) 545 08 11 (0216) 305 00 40 (0216) 632 13 50 (0216) 491 69 46 (0216) 620 99 10 (0216) 419 21 10 (0216) 466 43 65 (0216) 394 07 87 (0216) 392 30 37 (0216) 523 04 56 (0216) 328 40 99 (0216) 532 90 90 (0212) 597 70 44 (0212) 694 78 78 (0212) 435 75 57 (0212) 502 80 88 (0212) 466 37 00 (0212) 542 51 46 (0212) 485 35 68 (0212) 493 16 16 (0212) 227 22 40 (0212) 618 70 65 (0212) 873 13 16 (0212) 291 66 64 (0212) 611 00 98 (0212) 450 04 33 (0212) 531 80 87 (0212) 521 10 75 (0212) 573 40 39 (0212) 418 47 70 (0212) 630 36 20 238 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Branches Branch Address Hadımköy Branch Akçaburgaz Mah. Hadımköy Yolu No: 148 Esenyurt/İstanbul İkitelli Branch İkitelli Organize Sanayi Bölgesi Atatürk Cad.No: 137 İkitelli/İstanbul İstoç Branch İstoç Tic.Merkezi 3. Ada No: 85-87 Mahmutbey Bağcılar 34217 İstanbul Kağıthane Branch Mezbaha Sok. No: 1 Kağıthane/İstanbul Karaköy Branch Müyeeyyedzade Mah. Kemeraltı Cad. No: 6/A Karaköy/İstanbul Kuyumcukent Branch 29 Ekim Cad. Kuyumcukent Sitesi Atölye Bloğu Zemin Kat 1.Sok No: 12 Yenibosna/İstanbul Laleli Branch Mustafa Kemal Paşa Cad. No: 86 Aksaray Fatih/İstanbul Levent Sanayi Branch Sanayi Mah.S ultan Selim Cad.No: 1/C Kağıthane/İstanbul Maslak Branch Ayazağa Mah. Büyükdere Cad. No: 71 Maslak-Şişli/İstanbul Mecidiyeköy Branch Mecidiyeköy Mah. Mecidiyeköy Cad. No: 6/A Şişli/İstanbul Mercan Branch Prof. Cemil Birsel Cad. No: 25 Eminönü/İstanbul Merter Branch Fatih Cad. No: 24 Merter/İstanbul Sarıyer Branch Şehit Midhat Cad. No: 27 Sarıyer/İstanbul Sefaköy Branch Tevfik Bey Mah. Emrullah Efendi Cad. No: 22 Sefaköy 34295 İstanbul Sultançiftliği Branch Eski Edirne Asfaltı No: 710 Sultançiftliği 34270 İstanbul Sultanhamam Branch Vasıfçınar Cad. No: 95 Sultanhamam- Eminönü 34430 İstanbul Şirinevler Branch Hürriyet Mah. Mahmutbey Cad. No: 3/B Bahçelievler/İstanbul Şişli Branch Meşrutiyet Mah. Halaskargazi Cad. No: 98/A Şişli/İstanbul Taksim Branch İnönü Mah. Cumhuriyet Cad. Şakirpaşa İşhanı No: 89 Şişli/İstanbul Topçular Branch Kışla Cad. Kurtoğlu İş Merkezi No: 21/7 Eyüp/İstanbul Topkapı Branch Merkezefendi Mah. Davutpaşa Cad. No: 119 Zeytinburnu 34010 İstanbul Zeytinburnu Branch Prof. Muammer Aksoy Cad. No: 41 Zeytinburnu 34020 İstanbul BANK ASYA ANATOLIA BRANCHES Adana Adana Branch Çınarlı Mah. Atatürk Cad. Kemal Özülkü İş Merkezi No: 23 Zeminkat Seyhan 01060 Adana Çukurova Branch Turgut Özal Bulvarı Dosteller Apt. No: 176 Seyhan/Adana Adapazarı Branch Atatürk Bulvarı No: 75 Adapazarı Adıyaman Branch Atatürk Cad. Ulu Cami Yanı 444 Sok. No: 10 Adıyaman Afyon Branch Yüzbaşı Agâh Cad. No: 1 Diler İş Merkezi 03200 Afyon Aksaray Branch Hacı Hasanlı Mah. 716 Sok. No: 16 Aksaray Ankara Ankara Branch Kızılelma Mah. Anafartalar Cad. No: 63 Ulus 06060 Ankara Balgat Branch Ehlibeyt Mah. Ceyhun Atuf Kansu Cad. No: 100/T(B Blok No: 20) Balgat/Ankara Çankaya Branch Güzeltepe Mah. Hoşdere Cad. No: 222 Çankaya 06550 Ankara Etlik Branch Yunus Emre Cad. No: 5 Etlik Keçiören 06010 Ankara Kızılay Branch Meşrutiyet Cad. No: 16/A Kızılay 06640 Ankara Kızılcahamam Branch Cengiz Topel Cad. No: 5/17 Kızılcahamam 06890 Ankara Ostim Branch 100.Yıl Bulvarı No: 74 06370 Yenimahalle/Ostim/Ankara Polatlı Branch Ankara Cad. No: 36 Polatlı/Ankara Sincan Branch Atatürk Mah. Onur Sok. No: 16/A Sincan/Ankara Siteler Branch Demirhendek Cad. No: 68 Siteler 06160 Ankara Yenimahalle Branch Ragıp Tüzün Cad. No: 167 Yenimahalle/Ankara Antalya Alanya Branch Atatürk Cad. No: 60 Karat Otel Altı Alanya 07400 Antalya Antalya Branch Adnan Menderes Bulvarı Has İş Merkezi No: 9 07040 Antalya Aspendos Bulvarı Branch Tarım Mah. Aspendos Bulvarı Olimpos Erüst İş Merkezi B Blok No: 4 Antalya Kepez Branch Yükseliş Mah. Mithat Paşa Cad. Görkem Apt. No: 22/1 07020 Antalya Aydın Branch İstiklal Cad. No: 9 Aydın Nazilli Branch Altıntaş Mh. İstasyon Bulvarı No: 23 Nazilli/Aydın Balıkesir Branch Altıeylül Mah. Kızılay Cad. No: 6 10100 Balıkesir Batman Branch Cumhuriyet Cad. Hamidiler Pasajı No: 1/2 72050 Batman Bolu Branch İzzet Baysal Cad. Güney Kaya Pasajı No: 77 Bolu Telefon (0212) 886 26 10 (0212) 549 81 41 (0212) 659 60 00 (0212) 295 81 33 (0212) 243 85 40 (0212) 603 12 40 (0212) 458 77 77 (0212) 283 34 20 (0212) 286 09 32 (0212) 356 37 00 (0212) 526 64 04 (0212) 637 69 00 (0212) 271 50 65 (0212) 541 68 08 (0212) 667 34 34 (0212) 522 22 85 (0212) 639 18 19 (0212) 296 70 05 (0212) 240 22 95 (0212) 674 66 43 (0212) 482 51 65 (0212) 546 42 42 (0322) 457 67 00 (0322) 233 09 81 (0264) 281 39 10 (0416) 216 60 50 (0272) 214 50 00 (0382) 212 74 36 (0312) 310 47 47 (0312) 473 54 20 (0312) 439 52 50 (0312) 321 86 31 (0312) 419 37 00 (0312) 736 05 90 (0312) 354 84 74 (0312) 621 33 58 (0312) 276 81 10 (0312) 353 42 00 (0312) 315 34 43 (0242) 519 07 02 (0242) 248 00 71 (0242) 313 18 18 (0242) 345 94 45 (0256) 213 03 90 (0256) 314 10 70 (0266) 239 66 13 (0488) 212 07 95 (0374) 212 15 15 Faks (0212) 886 26 25 (0212) 549 81 40 (0212) 659 33 11 (0212) 294 98 64 (0212) 243 85 41 (0212) 603 12 49 (0212) 458 78 58 (0212) 269 67 69 (0212) 328 16 68 (0212) 356 17 17 (0212) 526 64 15 (0212) 637 69 10 (0212) 271 55 88 (0212) 541 78 44 (0212) 667 53 53 (0212) 522 53 00 (0212) 639 18 29 (0212) 296 70 06 (0212) 240 64 13 (0212) 674 81 55 (0212) 483 20 33 (0212) 546 45 60 (0322) 457 52 53 (0322) 233 09 31 (0264) 281 39 01 (0416) 216 66 90 (0272) 214 33 33 (0382) 213 15 70 (0312) 310 47 57 (0312) 473 54 30 (0312) 439 52 55 (0312) 322 61 45 (0312) 417 29 00 (0312) 736 09 30 (0312) 354 40 05 (0312) 621 26 49 (0312) 276 81 15 (0312) 353 57 00 (0312) 315 53 80 (0242) 519 05 84 (0242) 242 43 45 (0242) 311 77 80 (0242) 345 95 59 (0256) 225 22 26 (0256) 314 15 88 (0266) 239 68 40 (0488) 212 07 22 (0374) 212 35 07 Bank Asya Annual Report 2009 239 Asya Katılım Bankası A.Ş. Branches Branch Bursa Bursa Branch Demirtaş Branch İnegöl Branch Nilüfer Branch Yıldırım Branch Çanakkale Branch Çorum Branch Denizli Branch Diyarbakır Dağkapı Branch Diyarbakır Branch Address Haşim İşçan Cad. No: 2 Osmangazi 16220 Bursa Panayır Mah. Yeni Yalova Cad. No: 455/H Özyıldırım Plaza Osmangazi/Bursa Nuri Doğrul Cad. No: 29 İnegöl/Bursa İhsaniye Mah. İzmir yolu Bankalar Cad. Çilek Sok. Atalay 9 Sitesi A Blok No: 22 Nilüfer/ Bursa Duaçınarı Mah. Ankara Yolu Cad. No: 237 Yıldırım/Bursa Çarşı Cad. No: 131 Çanakkale İnönü Cad. No: 51 19100 Çorum Saraylar Mah. Enver Paşa Cad. Bayram Yeri No: 11 Merkez 20100 Denizli Gazi Cad. No: 18 Diyarbakır Şanlıurfa Yolu Bulvarı Serin Apt. No: 57/C Diyarbakır Telefon (0224) 225 14 80 (0224) 211 19 09 (0224) 715 17 55 (0224) 249 49 09 (0224) 367 78 00 (0286) 212 05 00 (0364) 224 11 60 (0258) 241 87 88 (0412) 224 39 39 (0412) 251 62 61 Düzce Branch Elazığ Branch Ereğli Branch Erzurum Branch Eskişehir Branch Gaziantep Gatem Branch Gaziantep Branch Suburcu Branch Hatay Antakya Branch İskenderun Branch Isparta Branch İzmir Aliağa Branch Bornova Branch İzmir Branch Karabağlar Branch Karşıyaka Branch Yenişehir Branch Gazi Bulvarı Branch Kahramanmaraş Branch Karabük Branch Kayseri Kayseri Branch Sanayi Branch Kocaeli Gebze Branch Gebze Çarşı Branch İzmit Branch Konya Büsan Branch Konya Branch Konya Ereğli Branch Mevlana Branch Kırıkkale Branch Kütahya Branch Malatya Branch İstanbul Cad. No: 3/B Düzce Rızaiye Mah. Gazi Cad.No: 2 Zemin Kat: 4 Elazığ Müftü Mah. Yukarı Sk. No: 4 Karadeniz Ereğli 67300 Zonguldak İstasyon Cad. No: 20 25200 Erzurum İstiklal Cad. Şair Fuzuli Cad. No: 24 Eskişehir Gatem Toptancılar Sitesi Sarı Ada 1.Blok No: 2 Şehit Kamil/Gaziantep İncilipınar Mah. Muammer Aksoy Bulvarı Prestij İş Merkezi No: 9-10 Şehit Kamil 27020 Gaziantep Karagöz Mah. Karagöz Cad. No: 2/A Şahinbey/Gaziantep Yavuz Selim Cad. Zühtiye Ökten İşhanı No: 6 Antakya/Hatay Savaş Mah. Mareşal Fevzi Çakmak Cad. No: 10 Modern İş Hanı İskenderun/Hatay Demirel Bulvarı No: 71 Isparta Kazımdırık Mah. İstiklal Cad. No: 49 Aliağa/İzmir Fevzi Çakmak Cad. No: 15/A Bornova/İzmir Gaziosmanpaşa Bulvarı No: 58/1 Çankaya/İzmir Yeşillik Cad. No: 417 Karabağlar 35400 İzmir Girne Bulvarı No: 152-154/A Karşıyaka/İzmir 1203-3 Sok. No: 1/F Ege Ticaret İş Merkezi Gıda Çarşısı Yenişehir/İzmir Gaziosmanpaşa Bulvarı No: 15/A Çankaya/İzmir İsmetpaşa Mahallesi Yeni Hükümet Cad. Beyzade Apt. Altı No: 8/A Merkez/Kahramanmaraş Bayır Mah. Hürriyet Cad. No: 116 78100 Karabük Cumhuriyet Mah. Nazmi Toker Cad. No: 28 38020 Kayseri Sanayi Mah. Osman Kavuncu Bulvarı No: 120 Kocasinan/Kayseri Hacıhalil Mah. Körfez Cad. No: 10 Gebze 41400 Kocaeli Zübeyde Hanım Cad. No: 37 Gebze 41400 Kocaeli Karabaş Mah. Cengiz Topel Cad. No: 12 İzmit Fevzi Çakmak Mah. Kosgeb Cad. Büsan San. Sitesi No: 19 Karatay 42040 Konya Musalla Bağları Mah. Belh Cad. No: 10 Selçuklu 42060 Konya Pirömer Mah. İnönü Cad. Çimenlik Sok. No: 2/A Ereğli/Konya Pürçüklü Mah. Aziziye Cad. No: 24 Karatay/Konya Hüseyin Kahya Mah. Barbaros Hayrettin Cad. No: 22 Kırıkkale Cumhuriyet Cad. Karakol Sok. Acar Apt. No: 1/2 43030 Kütahya Hüseyin Bey Mah. Atatürk Cad. No: 26 44100 Malatya (0380) 523 57 80 (0424) 237 37 00 (0372) 322 06 00 (0442) 213 59 10 (0222) 230 82 00 (0342) 238 37 37 (0342) 215 17 79 (0342) 232 65 10 (0326) 225 13 83 (0326) 617 93 10 (0246) 223 11 19 (0232) 617 23 00 (0232) 343 16 16 (0232) 445 37 10 (0232) 254 79 79 (0232) 372 77 20 (0232) 457 93 83 (0232) 484 12 50 (0344) 221 59 00 (0370) 412 66 06 (0352) 221 00 69 (0352) 320 11 40 (0262) 644 07 07 (0262) 645 02 80 (0262) 323 09 00 (0332) 345 46 46 (0332) 238 95 05 (0332) 712 40 40 (0332) 350 08 80 (0318) 225 20 00 (0274) 216 85 85 (0422) 323 31 31 Faks (0224) 225 14 89 (0224) 211 19 08 (0224) 715 72 75 (0224) 249 45 99 (0224) 367 77 61 (0286) 214 12 09 (0364) 224 24 36 (0258) 241 35 70 (0412) 223 25 50 (0412) 251 98 08 (0380) 524 94 24 (0424) 237 53 53 (0372) 322 18 78 (0442) 213 59 20 (0222) 230 55 47 (0342) 238 37 77 (0342) 215 17 93 (0342) 232 66 72 (0326) 225 26 42 (0326) 613 70 86 (0246) 223 20 75 (0232) 617 23 09 (0232) 343 71 20 (0232) 445 62 21 (0232) 254 11 61 (0232) 372 86 70 (0232) 457 97 96 (0232) 484 12 61 (0344) 221 59 60 (0370) 413 14 74 (0352) 221 29 88 (0352) 320 12 80 (0262) 644 15 05 (0262) 645 02 93 (0262) 323 09 08 (0332) 345 46 55 (0332) 238 95 13 (0332) 712 42 32 (0332) 353 30 80 (0318) 225 26 17 (0274) 216 74 74 (0422) 323 47 77 240 Bank Asya Annual Report 2009 Asya Katılım Bankası A.Ş. Branches Branch Manisa Manisa Subesi Akhisar Branch Mardin Branch Mersin Branch Nevşehir Branch Osmaniye Branch Rize Branch Samsun Branch Sivas Branch Şanlıurfa Branch Tekirdağ Çerkezköy Branch Çorlu Branch Tekirdağ Branch Tokat Branch Trabzon Branch Uşak Branch Van Branch Yalova Branch Address 1. Anafartalar Mah. Gaziosmanpaşa Cad. No: 36 45010 Manisa Paşa Mah. Haşim Haşimoğlu Cad. 50. Sok. No: 23 Akhisar/Manisa 13 Mart Mah. Vali Ozan Cad. No: 50 Mardin Cami Şerif Mah. Uray Cad. No: 58 33060 Mersin Aksaray Cad. No: 17 50100 Nevşehir İstiklal Mah. Atatürk Cad. No: 150 Osmaniye Tevfik İleri Caddesi No: 1 Rize Kale Mah. Cumhuriyet Cad. No: 14 55030 Samsun Sularbaşı Mah. Afyon Sok. No: 1/A Sivas Yusufpaşa Mah. Asfaltyol Cad. No: 4 63100 Şanlıurfa Gazi M.Kemal Paşa Mah. Atatürk Cad. Gamze Apt. No: 82 Çerkezköy 59500 Tekirdağ Cemaliye Mah. Omurtak Cad. No: 236/1 Çorlu 59860 Tekirdağ Hükümet Cad. No: 142 Tekirdağ Gaziosmanpaşa Bulvarı Yar Ahmet Mah No: 185 /A Tokat Kahramanmaraş Cad. Maraş Apt. No: 51 61200 Trabzon İsmet Paşa Cad. No: 3 64100 Uşak Cumhuriyet Cad. (Vali Konağı Karşısı) Sempaş Yanı No: 118/A-B Merkez 65100 Van Yalı Cad. Gürer İş Merkezi No: 11 Merkez/Yalova Telefon (0236) 231 21 00 (0236) 412 11 58 (0482) 212 65 45 (0324) 238 77 10 (0384) 213 05 55 (0328) 812 00 66 (0464) 217 09 82 (0362) 432 51 52 (0346) 225 56 96 (0414) 216 80 80 (0282) 725 37 05 (0282) 653 22 40 (0282) 260 64 90 (0356) 214 07 07 (0462) 321 93 00 (0276) 224 54 56 (0432) 210 23 40 (0226) 813 15 00 Faks (0236) 232 42 31 (0236) 412 11 28 (0482) 212 65 15 (0324) 238 81 66 (0384) 213 07 35 (0328) 814 86 66 (0464) 217 09 77 (0362) 435 57 07 (0346) 224 25 34 (0414) 216 49 49 (0282) 725 32 26 (0282) 653 31 80 (0282) 260 59 04 (0356) 213 11 50 (0462) 321 94 70 (0276) 224 61 30 (0432) 214 02 90 (0226) 811 59 43 Produced by Tayburn Kurumsal Tel: (90 212) 227 04 36 Fax: (90 212) 227 88 57 www.tayburnkurumsal.com www.bankasya.com.tr